<PAGE>

                       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, 1996
               
                                       or

     []   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 of Incorporation)                (IRS Employer Identification No.)

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

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

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

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

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

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

      State issuer's revenues for its most recent fiscal year: - $291,200

      The aggregate market value of the voting stock held by  non-affiliates  of
the  registrant  was  $15,016,090  computed  on the basis of the average bid and
asked  prices of the Common  Stock of $0.44 per share as  reported  by NASDAQ on
January 31, 1997.

     Number of common shares outstanding of the issuer's classes of Common Stock
as of January 31, 1997: 34,898,349

DOCUMENTS INCORPORATED BY REFERENCE:  NONE


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                             1

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                          PART I


Item 1.DESCRIPTION OF BUSINESS

General

Background and Business and Basis of Presentation

      Las Vegas Entertainment  Network ("LVEN", "the Company") is engaged in the
business of acquiring,  developing and operating media and gaming facilities and
businesses. The Company's primary project to date was the renovation,  expansion
and redevelopment of the El Rancho Hotel (the "El Rancho" or the "Property"),  a
1,006 room hotel and casino  located on 20.86 acres in Las Vegas,  Nevada  which
was acquired on November 24, 1993,  and  subsequently  sold on January 22, 1996.
The Company is also active in the  development  of media related  opportunities,
including formulating a business plan to develop, produce, market and distribute
television  and video  programming.  The  Company  is also  investigating  other
potential  businesses for acquisition in the gaming,  entertainment,  lodging or
communications industry.

      The  Company,  as  formed  in  October  1990,   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  for  $36,500,000.  However,  on
January 22, 1996,  the Company  sold the El Rancho to Orion  Casino  Corporation
("Orion"), a subsidiary of International Thoroughbred Breeders, Inc. ("ITB") for
$43,500,000 of cash,  notes and assumption of debt. It is the current  intention
of the new  owners of the El  Rancho  to  develop  and open the  Property  as an
international country music attraction called "CountryLand,  USA", a major hotel
and casino  destination.  As part of the sale  agreement,  once the  Property is
opened and invested  amounts have been recouped by Orion and the Company,  which
the Company can provide no assurance  can be achieved,  the Company will receive
as additional  consideration  for entering into the sale  agreement  (but not as
part of the Purchase Price for the assets) 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 Orion and the Company  first  receive 100% of the adjusted  cash flow
until all invested amounts have been recouped.
 In addition, commencing with the development of the Property, the Company's Las
Vegas  Communications  Corporation  subsidiary ("LVCC") was granted an exclusive
contract  for up to twenty (20) years to provide  entertainment  at the Property
site which will  provide for minimum  annual  fees of $800,000  plus  additional
commissions.

      The Company presently has two (2) operating subsidiaries: Casino-Co, which
in  connection  with the sale of the El  Rancho  will  maintain  the  continuing
interest  in the  adjusted  cash  flow of the  property;  and,  LVCC,  which  in
connection  with the sale of the El  Rancho,  will  maintain  the  entertainment
contracts on the Property,  and will also continue to develop,  produce,  market
and distribute television and video programming.

Casino and Gaming Operations

          On November  24,  1993,  the Company  acquired the El Rancho Hotel and
      Casino property in Las Vegas,  Nevada. The Property had been closed before
      its acquisition by the Company and was never operated by the Company.  The
      casino and gaming  activities  of the Company to date had been  limited to
      managing the El Rancho  property site,  developing site  construction  and
      architectural  plans for the renovation and expansion of the hotel as well
      as obtaining  the  necessary  permits and  approvals,  and  arranging  for
      potential  financing,  equity or joint  ventures  to further  develop  and
      renovate the property.


                             2

<PAGE>



          On January 22, 1996,  the Company sold the assets and  liabilities  of
the El  Rancho  to  Orion  Casino  Corporation,  a  wholly-owned  subsidiary  of
International Thoroughbred Breeders, Inc., for consideration of $43,500,000. The
Purchase  Price was paid as follows:  (i)  $12,500,000  paid at closing in cash;
(ii)  issuance of an 8% unsecured  promissory  note in the  principal  amount of
$6,500,000  which was paid in full on March 15,  1996;  (iii)  issuance of an 8%
promissory note in the principal  amount of $10,500,000,  co-signed by Orion and
ITB (see "Item 6 Management's Discussion and Analysis - Notes Receivable"),  and
(iv)  assumption  of existing  mortgage  indebtedness  and  accrued  interest of
$14,000,000,  (the "Refinance  Obligation").  In addition, once the property has
been  developed,  of which the Company can provide no assurance can be achieved,
the Company will share in a percentage of the on-going adjusted  cumulative cash
flow from the operation of the property up to $160,000,000)as defined above.

          On  January  15,  1997  ITB   announced   that  they  had  received  a
      $100,000,000  funding  proposal,  the  proceeds of which will be used,  in
      part,  for the  renovation  and opening of the former El Rancho  Hotel and
      Casino  site  as  an  international   country  music   attraction   called
      "CountryLand  USA",  a major  destination  hotel and casino.  The proposed
      funding is subject to the execution of a definitive loan agreement between
      ITB and the proposed lender,  which the Company can give no assurance will
      be made.  The proceeds of this loan are  anticipated  to be  sufficient to
      renovate  and reopen the  Property  site,  as well as repay the  Company's
      remaining  outstanding note receivable.  ITB had previously announced that
      it  intended to develop the El Rancho  property  under a "Starship  Orion"
      multiple-casino  theme. It was estimated that the total cost of completion
      would be  approximately 1 billion dollars and that ITB intended to develop
      the property with up to as many as six  partners.  ITB had not engaged any
      partners for its "Starship Orion" theme development,  and will now develop
      the property under a more modest "CountryLand, USA" theme.

          In accordance with the initial sale agreement,  if by October 25, 1996
(i) Orion had not closed on or received  permanent  financing  and  obtained the
required lease commitments to develop the "Starship Orion", and (ii) and had not
closed or received a firm  commitment for  alternative  financing to develop the
Property,  and if the Company had arranged for the  refinancing  and also placed
into an escrow  account  amounts  sufficient to cover the financing and carrying
costs of the  property  for  either  a six  month or year  period  (the  "option
period"),  LVEN may either (i) appoint and authorize a reputable commercial real
estate broker to sell the property at an amount,  after  expenses,  in excess of
the  underlying  mortgage and invested  amounts of both Orion and LVEN,  or (ii)
arrange on behalf of Orion, in conformity  with  prevailing  financing terms and
conditions for a major Las Vegas hotel/casino project,  alternative financing of
not less than  fifty-five  million dollars  ($55,000,000).  On October 25, 1996,
LVEN advised that it was asserting its rights  afforded during the Option Period
by arranging the prescribed  escrow account.  On October 28, 1996, ITB announced
that LVEN  forfeited its rights with respect to the purchase  agreement  because
they believed LVEN failed to satisfy  certain  contractual  preconditions.  LVEN
advised ITB that it contested its position. On February 2, 1997, the Company and
ITB announced that they had settled their disagreement.  As described above, and
with  the  assistance  of the  Company,  ITB has  announced  its  plans  for the
development of the Property as  "CountryLand,  USA", and had received a proposal
for $100 Million of financing which will be used, in part, for such development.
If the Property is not developed,  or if the expected  funding is not completed,
the  Company  believes it still  maintains  the rights  under the option  period
described above. In connection therewith,  the Company has engaged an investment
banking firm,  Standard Capital Group Inc., to seek funding necessary to provide
the alternative financing described above.

          The Company is actively seeking other  investments and acquisitions in
the 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 casinos, hotels or other ancillary businesses
in the gaming  industry.  The  Company can give no  assurance  that any of these
contemplated  transactions will close or occur as the successful  closing of any
of the  contemplated  transactions  is  subject  to  many  variable  factors,  a
significant number of which are outside the control of the Company.  The Company
will also  continue to manage its cash flow  interest as described  above in the
former El Rancho Property site.


                             3

<PAGE>



Las Vegas Gaming Market and Marketing

       Although there are various  segments to the Las Vegas gaming market,  the
largest  segment  in  terms of  revenue  and the one in  which  the  hotel to be
developed on the El Rancho site will  compete is comprised of the hotel  casinos
located in the heart of Las Vegas on Las Vegas  Boulevard  South,  also known as
the Las Vegas Strip. Some of the newer hotel casinos on the Strip have attempted
to broaden  their  appeal to  families  and repeat  visitors  by  adoption  of a
theme-park atmosphere.

Competition

      The gaming industry in the United States and Canada has experienced  rapid
growth in recent  years,  and has not been limited to the  traditional  areas of
Nevada and Atlantic City, New Jersey.  Casino gaming is currently permitted in a
number of  states,  including  Colorado,  Illinois,  Indiana,  Iowa,  Louisiana,
Mississippi,  Missouri,  Montana,  Nevada,  New  Jersey,  South  Dakota,  and in
Windsor,  Ontario,  Canada, as well as on Indian lands in certain states.  Other
jurisdictions may legalize gaming in the near future. New or expanded operations
by other  persons  can be expected to  increase  competition  for the  Company's
proposed gaming operations and could result in the saturation of gaming markets.
In particular,  casinos and other gaming businesses in Las Vegas, Nevada compete
directly  with  those in  Laughlin  and  Henderson,  Nevada,  which are  rapidly
expanding  markets.  In addition,  several  jurisdictions in various states have
received  proposals to permit  Indian  tribes to  designate  Indian land for the
purpose of building gaming facilities. As new gaming opportunities arise, new or
expanded  operations by others can be expected to increase  competition  for the
Company,  and any other  gaming  operations  which the  Company  may  develop or
acquire could result in the saturation of gaming markets. The gaming industry is
highly  fragmented and  characterized  by a high degree of  competition  among a
large  number  of  participants,  many  of  whom  may  have  greater  financial,
management and other resources than the Company.

      Broadly,  the Company will compete with all hotel casinos in the Las Vegas
area and in other cities in Nevada for its gaming and hotel customers, including
several which have recently  opened or have  undergone or are  undergoing  major
expansions.  Competition  in the Las Vegas  hotel  casino  industry  is based on
location,  price,  ambience,  quality  of  accommodations  and  facilities,  and
ancillary attractions such as shows or amusement facilities.  As of December 31,
1996,  there  were   approximately   99,000  hotel  rooms  in  Las  Vegas,  with
approximately  11,200  rooms being  added in 1997.  The  Property's  most direct
competition will be with other major hotel casinos in Las Vegas,  namely the MGM
Grand, Treasure Island, The Mirage, The Riviera Hotel & Casino,  Caesars Palace,
Luxor,  Excalibur  Hotel & Casino,  Tropicana  Resort & Casino,  Circus  Circus,
Sahara Hotel & Casino, Frontier, Stardust Resort & Casino, Aladdin Hotel, Desert
Inn, Sands Hotel & Casino,  Flamingo Hilton Las Vegas, Bally's Casino Resort Las
Vegas,  Hacienda  Resort Hotel & Casino,  Imperial  Palace  Hotel & Casino,  and
Harrah's Las Vegas.  As compared to these hotel casinos,  the Hotel developed on
the El Rancho site will have slightly fewer rooms than the average,  and will be
more highly  leveraged and less well financed and  established  than some of its
competitors.  Several large hotel casinos have recently opened or will soon open
in Las Vegas,  and the effect of such openings and the increased number of hotel
rooms will increase competition.

Governmental Regulation - Nevada Gaming

          The ownership and operation of casino gaming  facilities in Nevada are
subject  to the  Nevada  Gaming  Control  Act  and the  regulations  promulgated
thereunder  and  to  licensing  and  regulatory  control  by the  Nevada  Gaming
Authorities.  The laws,  regulations  and  supervisory  procedures of the Nevada
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 Nevada Gaming  Authorities,
(v) fair operation of games,  and (vi) the raising of revenues  through taxation
and licensing fees.

                             4

<PAGE>

          The Company must  register with the Nevada  Gaming  Commission  and be
found  suitable  and be granted all  requisite  licenses  under the terms of the
Nevada Act to conduct a nonrestricted  gaming  operation in Nevada.  The sale of
alcoholic  beverages and the operation of a gaming  establishment by the Company
in Las Vegas is subject to licensing,  control and  regulation by the applicable
local  authorities.  All  licenses  are  revocable  and not  transferrable.  The
agencies  have the full  power to limit,  condition,  suspend or revoke any such
license,  and any such disciplinary  action could (and revocations would) have a
material adverse effect upon the operations of the Company.

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

Media and Entertainment

          The   Company  is  active  in  the   development   of  media   related
opportunities,  and is formulating a business plan to develop,  produce,  market
and distribute television and video programming.  It is the current intention of
the Company to develop  programming  and technology that will respond to the new
business  opportunities  resulting  from the  current  evolution  of  electronic
program delivery systems. The Company has also obtained a management contract to
manage all aspects of the entertainment activities at the proposed "CountryLand,
USA" Hotel and Casino, and will seek to manage entertainment activities at other
Las Vegas hotels, casinos, and venues.

Television and Video Programming

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

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

          The Company also intends to  capitalize  on the evolution of Las Vegas
into one of the world's premier  entertainment  centers by providing  television
programming  with  fast-paced  music and  entertainment  programming,  featuring
excerpts  from  performances  in Las  Vegas,  as well as  throughout  the United
States,  interviews  with  personalities,  information  on Las Vegas  gaming and
non-gaming  attractions and related topics. This entertainment  programming will
include  segments  dedicated to the  merchandising of such goods and services as
Las Vegas travel  packages,  concert  tickets,  memorabilia  and audio and video
recordings  featuring  entertainers  that appear in the  programming  as well as
other  entertainers.  The Company intends to produce this programming  primarily
using its own creative  staff and third party crews on location in Las Vegas and
other remote  locations as well as at  production  studios.  The Company will be
required to obtain  rights to use excerpts  from Las Vegas shows and to contract
with performers  directly for their services.  No arrangements have been made to
obtain such rights or contracts with performers. The Company will also use stock
footage and segments of a program  originally  produced by LVEN for a television
show entitled "Las Vegas  Tonight." The Company  intends to use portions of this
program inventory to create certain segments. The Company intends to market to a
national  audience and  syndicate  its  programming  utilizing  the services and
contacts  in  the  television  industry  of the  Company's  officers  and  other
employees. The Company ultimately plans to distribute its programming nationally
by  satellite to various  broadcast  and cable  television  outlets by providing
programming seven days per week.

                             5

<PAGE>

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

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

Live Entertainment Management

      In  connection  with the sale of the El Rancho,  and once the  project has
been developed,  completed and opened either under the "CountryLand,  USA" theme
or another  theme,  the Company's  LVCC  subsidiary  has the exclusive  right to
manage all aspects of Orion's entertainment  activities (including "CountryLand,
USA"). This would include;  (i)  responsibility  for management and oversight of
booking all acts,  performers,  entertainers,  movies, virtual reality rides and
other  non-gaming  attractions of any kind or nature at the property site,  (ii)
arranging  all  advertising  for all of  Orion's  advertising  needs,  and (iii)
managing all other entertainment  venues for Orion. The term of the agreement is
for ten (10) years  commencing  on the date which is six (6) months prior to the
projected opening date of the property,  and LVCC shall have the option to renew
the agreement for two (2) consecutive  five year terms.  The agreement  provides
the Company  with an annual fee of $800,000  subject to annual  increases.  LVCC
will also receive an additional  (i)  twenty-five  percent (25%) of profits from
entertainment activities,  (ii) ten percent (10%) of the cost of all advertising
placed  by Orion,  and (iii)  booking  fee equal to ten  percent  (10%) of gross
compensation paid to talent. The Company has agreed with Orion that at all times
during the term of the agreement,  it will make available the services of Joseph
A. Corazzi, the Company's Chairman of the Board.

Electronic Media Delivery

          The Company  entered  into an agreement on January 31, 1997 whereby it
acquired a 5% equity  interest in Electric Media Co. Inc. (EMC) and a continuing
royalty in certain of its operations,  for $400,000 plus the contingent issuance
of up to 5,500,000  shares of LVEN common stock as described  below.  EMC, along
with a  joint  venture  partner/developer,  is  developing  technology  that  if
successful,  of which the Company can give no assurance,  will allow delivery of
media, Internet and telecommunication  services to customers all over the world,
utilizing  existing  power  utility  infrastructures.   Field  testing  of  this
technology will occur during 1997, and in connection therewith,  the Company has
agreed to provide a guarantee  up to  $1,500,000  for the  financing  of certain
equipment  necessary  for the field tests.  The  equipment is  returnable to the
vendor, without cost to the Company, should the test not be satisfactory. Upon a
successful  field test of this  technology,  the Company is committed to deliver
500,000  restricted  shares  of its  common  stock  to  the  developer  of  this
technology.

If the field tests are successful,  EMC will begin  worldwide  marketing of this
technology,  including the sale and  distribution of addressable  receiver boxes
that are necessary to receive the data communication.  The Company will receive,
in  perpetuity,  a $25 per unit royalty for each receiver box sold, if any. Each
time the sale of these units generates $10,000,000 of net after tax profits, the
Company will deliver the developer an additional  500,000  restricted  shares of
the Company's common stock, up to a maximum of 5,000,000  restricted shares. The
Company may terminate the agreement at its sole discretion,  and have no further
liability to EMC or the developer.


                             6
<PAGE>

Competition.

          Competition   in  the  areas  of  television   programming   and  live
entertainment  is intense and the Company will face intense  competition  in all
areas of its  media  and  entertainment  operations.  The  Company's  television
programming  will  compete  not  only  against  other  television  entertainment
sources,  such as existing  cable  channels,  but also against other  television
programming  in general and other forms of leisure time  entertainment,  such as
videocassette, radio and live entertainment. The Company will compete with major
companies in the television  industry as well as with numerous smaller companies
for the  services  of  performing  artists  and  other  creative  and  technical
personnel and creative material.

          The   Company's   programming   will  compete  with  other  first  run
programming,  network reruns and programs produced by local television stations.
The Company  will face  competition  from  companies  that have been  acquiring,
producing  and  distributing  programs  for  several  years,  and  many of these
companies  have  greater  financial  resources  than those of the  Company.  The
Company  also  will  compete  with  other   companies  for  sale  of  television
advertising time and  merchandising of goods and services.  Should the Company's
programming and marketing efforts find wide public acceptance, it is likely that
one or more of such competitors will seek to emulate the Company's programming.

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

Employees

      The Company currently has 3 officers and 5 other full-time secretarial and
administrative  employees involved in corporate  administration,  accounting and
marketing  and  development.  The Company also  employs  various  employees  and
consultants for gaming,  financing,  architectural  and security and maintenance
matters who are engaged to work on either a consulting  or part-time  basis.  If
the Company  develops  its  television  programming  and live  entertainment  as
described above, it intends to employ 5 additional full-time  employees,  and up
to seven  persons on a part time basis.  Additional  personnel  will be hired as
needed,  or on a project by project basis.  None of the Company's  employees are
represented by unions,  and the Company believes that its employee relations are
good.

                             7

<PAGE>

Item 2.DESCRIPTION OF PROPERTY

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

      The Company sold on January 22, 1996, the assets and liabilities of the El
Rancho Hotel and Casino. The El Rancho consisted of a 1,006 room hotel, a 90,000
square foot casino and ancillary areas, a 52-lane bowling alley, a swimming pool
and a parking garage and was encumbered by a $12 million  purchase-money deed of
trust as of October 31, 1995.  The El Rancho is located in Las Vegas,  Nevada at
2755 Las Vegas  Boulevard  South  (also  known as the Las Vegas  Strip) on 20.86
acres on a quadrilateral  parcel of land bounded by Las Vegas Boulevard South on
the west, Riviera Boulevard on the south, a vacant lot on the east, and the "Wet
and Wild"  attraction  on the north.  The El Rancho  was one of the first  large
scale  hotel-casinos  built in Las Vegas, and was operated on a western theme by
its former owners.

Item 3.LEGAL PROCEEDINGS

          On October 18,  1996,  an  unaffiliated  third party filed a complaint
against the company in California Superior Court, County of Los Angeles, seeking
damages of $1,800,000,  plus attorney  fees,  for breach of contract,  breach of
implied  contract,  and certain damages the individual  claims are due him under
terms of a 1992 retainer agreement. The Company believes there are no funds due,
and that the case is without merit.  Management intends to vigorously defend the
lawsuit.  Additionally,  the Company has commenced  action against the owners of
Patmore  Broadcasting  relating  to an option to acquire a radio  station in Las
Vegas, and intends to aggressively  pursue the Company's  position that it still
has a valid option to purchase the radio station.

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

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

      No matters were  submitted to a vote of security  holders  during the last
quarter of the year ended October 31, 1996.

                             8

<PAGE>

                          PART II


Item 5MARKET 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, 1994 to December 31, 1996.
<TABLE>
<CAPTION>

                                    High                  Low
                                    ----                  ---- 
<S>     <C>    <C>    <C>    <C>    <C>    <C>
                               
Fiscal 1995
Quarter ended January 31, 1995     $1.94                  $0.97
Quarter ended April 30, 1995       $1.81                  $0.63
Quarter ended July 31, 1995        $1.59                  $0.81
Quarter ended October 31, 1995     $1.44                  $0.66

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

</TABLE>

     The number of record  holders of Common  Stock as of January  31,  1997 was
approximately  786. On January 31,  1997,  the high and low bid asked prices for
the Common Stock were $0.47 and $0.44 respectively.

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



                             9

<PAGE>

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.

General

       Background.  The Company was formed in October  1990 to develop,  produce
and distribute  television  programming utilizing Las Vegas themes. Upon receipt
of $4,657,241 of net proceeds from its initial public offering in February 1992,
LVEN commenced the development and production of the Las Vegas Tonight Show. The
first programming developed,  called "Las Vegas Tonight," featured excerpts from
Las Vegas shows and was sold outside the United States.  In connection  with the
development  of "Las Vegas  Tonight"  Management  became  aware that,  while the
casino  hotels  on the Las Vegas  Strip  had  adopted  various  themes,  such as
Egyptian (at the Luxor),  medieval (at the  Excalibur  Hotel & Casino) and Roman
(at Caesars  Palace),  there was no  hotel-casino  on the Las Vegas Strip with a
country  music theme.  In light of the  popularity of country music and based on
management's experience in that genre and in the Las Vegas marketplace (acquired
in connection with developing "Las Vegas Tonight"),  management  believed that a
hotel casino utilizing a country music theme could be successful.

       On November 24, 1993,  the Company  acquired the El Rancho,  a 1,006-room
hotel  with  90,000  square  feet of casino  and  ancillary  space and a 52-lane
bowling  alley,  located on the Las Vegas Strip.  The purchase  price for the El
Rancho was $36.5 million, including cash of $21.5 million, an 8% promissory note
(the "El Rancho  Note") in the face amount of up to $12 million  purchase  money
mortgage  secured by a deed of trust on the Property,  and 2.3 million shares of
LVEN common stock valued at $3 million to a third party  finder.  On January 22,
1996, the Company sold the El Rancho to Orion Casino  Corporation,  a subsidiary
of International  Thoroughbred Breeders, Inc. for $43,500,000 of cash, notes and
assumption  of debt.  It is the  current  intention  of the new owners of the El
Rancho (the "Property") to develop and open the Property as "CountryLand,  USA",
a major hotel and casino  destination.  As part of the sale agreement,  once the
Property  is opened and  invested  amounts  have been  recouped by Orion and the
Company,  of which there can be no assurance will be achieved,  the Company will
also  receive  a  continuing  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 first
casino on the Property,  and thereafter a twenty-five  percent (25%) interest in
adjusted  cash flow until such time as the Company has  received an aggregate of
$160,000,000.  In addition, commencing with the development of the Property, the
Company's  LVCC  subsidiary  was granted an exclusive  contract for up to twenty
(20) years to provide  entertainment at the Property site which will provide for
minimum annual fees of $800,000 plus additional fees ( See "Item 1 - Description
of Business - General").

                            10

<PAGE>

       The Company  presently  has two (2)  operating  subsidiaries:  Casino-Co,
which in connection  with the sale of the Property will maintain the  continuing
interest in the cumulative  adjusted cash flow as defined from operations of the
property,  and;  LVCC,  which will maintain the  entertainment  contracts on the
Property and also continue to develop, produce, market and distribute television
and video programming.

       Cash   Requirements.   The  Company's   current  monthly  operating  cash
requirements are approximately $250,000,  composed of general and administrative
expenses, salary and consulting fees and interest payments on existing debt. The
Company is also  responsible  for managing and paying the operating costs of the
Property,  but is  reimbursed  by Orion on a monthly  basis  for these  costs in
amounts  sufficient  to  cover  the  company's  cash  outlay,   which  currently
approximates  $60,000 per month but may  increase  to a greater  amount as Orion
begins the  renovation  of this  property.  The  Company  may also  incur  other
consulting  and  professional  fees  in the  development  and  financing  of its
business  activities.  During the year ended October 31, 1996,  the Company made
$1,476,000 in advances and deposits to certain businesses, individuals or others
to secure potential acquisitions or investments. Subsequent to October 31, 1996,
the Company has made an  additional  $500,000 of such  advances.  The Company is
currently  in  the  process  of  evaluating  these  potential   acquisitions  or
investments for future  development.  The Company will continue to make deposits
or advances as it deems  necessary to secure  potential  investments or business
acquisitions.

       Subsequent to October 31, 1996, the Company's Casino-Co subsidiary made a
90-day secured loan of $2,900,000 to NPD Inc., an unaffiliated  third party (See
"Liquidity and Capital  Resources - Notes  Receivable").  This loan, which bears
interest at 10% per annum, is due on April 15, 1997.  Additionally subsequent to
October  31,  1996,  the  Company  paid to Mr.  Nunzio  DeSantis,  now the Chief
Operating  Officer of ITB, $110,000 of loan fees and also granted to him options
to acquire  1,500,000  shares of the Company's Common Stock at an exercise price
of $1 per share,  as  consideration  for providing a $6,000,000  standby funding
commitment for replacement  financing on the Property (See "Item 1.  Description
of Business; Casino and Gaming Operations").

       As of January 31, 1997, the Company had approximately  $9,200,000 in cash
and current notes  receivable and believes that its current cash and receivables
(including  funds  expected to be received by April 15, 1997 by repayment of the
NPD Note  Receivable)  will be sufficient to meet its cash  requirements for the
next 12 months, as well as the repayment of existing debt of $781,248 at January
31, 1997.  However,  these  sources of cash may not be  sufficient to enable the
Company to fund the  expansion  and  commencement  of  operations of its planned
television  programming.  The Company may obtain such funds, if required, from a
public  offering.  If a public offering is not  successful,  the Company will be
required to seek other sources of funding.  There can be no assurance such other
funding will be available on terms satisfactory to the Company or at all.

Results of Operations

     Year Ended  October  31,  1996  Compared  to Year Ended  October 31, 1995 -
Continuing Operations

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

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

     General and  Administrative  expenses  decreased  $3,642,581  to $3,202,893
during  the year  ended  October  31,  1996 as  compared  to  $6,774,448  in the
corresponding  period in 1995.  The majority of the decrease  relates in part to
legal,  accounting and professional fees previously  incurred in connection with
investigating and negotiating  various  alternatives to developing the El Rancho
and various other business opportunities during the year ended October 31,

                            11

<PAGE>



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

      Significant  general and administrative  expenses are expected to continue
while the Company seeks new acquisitions and projects.

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

     Other  Income and  Charges - Included  in other  income and charges for the
year ending October 31, 1996 is $625,000 which  represents cash and the value of
800,000  restricted  shares of the Company's  Common Stock and 167,000 shares of
Common Stock of Satellite  Networks Inc. paid in connection with settling claims
arising  from  arranging  certain  financing  in  connection  with  the  initial
acquisition of the El Rancho  Property  site; a valuation  allowance of $450,000
relating to  advances  made to Malbec,  Inc. an  unaffiliated  third  party,  in
connection  with the  development  of certain  hotel  properties in Miami Beach,
Fla.;  $295,000  related to an adjustment to reflect the value of certain shares
of  common  stock  previously  issued  for  services;  and  $150,000  issued  in
settlement of an outstanding loan and stock purchase agreement.

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

     Year Ended  October  31,  1995  Compared  to Year Ended  October 31, 1994 -
Continuing Operations

     Revenues for 1995  represented  principally  receipts  earned in connection
with renting out the parking  facilities at the El Rancho Hotel  property  site.
There were no corresponding revenues for the year ended October 31, 1994.

     Programming  costs,  which  relate  to  write-downs  made to the  Company's
television  programming  library to  reflect  management's  estimate  of its net
realizable value,  increased  $442,500 to $722,500 during the year ended October
31, 1995 as compared to $300,000 in the corresponding period in 1994.


                            12

<PAGE>

     General and  Administrative  expenses  increased  $4,163,543  to $6,774,448
during  the year  ended  October  31,  1995 as  compared  to  $2,610,905  in the
corresponding period in 1994. The major reason for the increase was the expenses
related to investigating and negotiating various  alternatives to developing the
El Rancho and various other  business  opportunities.  In connection  therewith,
professional  advisory and  investment  banking  fees  increased  $2,457,000  to
$2,513,000  from  $56,000,  accounting  and legal  fees  increased  $302,000  to
$427,000  from  $125,000 and travel costs  increased  $384,000 to $408,000  from
$24,000 during the year ended October 31, 1995 as compared to the  corresponding
period in 1994. Additionally,  costs incurred in preparation of certain intended
underwritings increased $629,000 to $1,029,000 during the year ended October 31,
1995 as compared to $400,000 in the  corresponding  period in 1994. The increase
was due to legal,  accounting and professional  fees incurred in connection with
the intended  spin-off of LVCC and public  registration  of its shares,  and the
potential  spin-off  of CLND,  and also  includes a  write-off  of  $542,000  of
offering costs previously deferred as of October 31, 1994.

     Management  salaries and consulting costs increased  $851,000 to $1,513,000
during  the  year  ending  October  31,  1995 as  compared  to  $662,000  in the
corresponding  period in 1994.  The  increase is due to an increase in officers'
salary of $288,000 and consulting costs of $344,000  incurred in connection with
developing  the operations of LVCC and CLND  properties,  and for the accrual of
$115,000 in retirement benefits under a plan which did not exist in 1994.

     Interest Income and Expense. Interest income decreased $124,000 to $121,000
for the fiscal year ended  October  31, 1995 as compared to $245,000  for fiscal
year 1994. The majority of the decrease  related to the interest  accrued on the
Lake Tropicana note receivable of $1,868,463. Interest of $37,000 was accrued on
this note in 1995 as compared to $118,000 of interest which was accrued in 1994.
Interest  expense  increased  $151,000  to  $343,000  for the fiscal  year ended
October 31, 1995 as  compared  to $192,000  for fiscal year 1994.  Approximately
$100,000 of the increase was directly attributable to the increase in the amount
of outstanding  convertible debt during the period, and $44,000 was attributable
to interest  accrued on $1,500,000 note to UK Foods which did not exist in 1994.
Additionally  in  the  year  ended  October  31,  1995,  the  Company   incurred
approximately  $338,500  of loan fees and other  financing  costs as compared to
only $15,000 of such costs in 1994.

     Other Income and Charges.  Included in other charges as of October 31, 1995
is $500,000  allowance  for  reduction to market  value of  4,000,000  shares of
common stock of Sky Scientific Inc; $33,000 loss on the sale of 25,000 shares of
American Network Group, Inc. common stock ; $72,850 for an additional  allowance
against  the  Company's  investment  in  Patmore  Radio  Broadcasting;  $107,000
additional  allowance  against  existing  notes  receivable,  and  $70,000  loss
relating to investments no longer pursued.

     Reserve on  disposal of El Rancho  Hotel and Casino.  On January 22 , 1996,
the Company sold the assets and certain  liabilities  of the El Rancho Hotel and
Casino to Orion Casino  Corporation  for  consideration  of $43,500,000 of cash,
notes and  assumption  of existing  indebtedness.  The Company has reflected the
effects of the above  transaction  as if it had  occurred as of October 31, 1995
and  accordingly  provided an allowance of $9,000,000  for  accounting  purposes
reflecting an adjustment to the net realizable value of the El Rancho Property.

Liquidity and Capital Resources

     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. The Company's cash has been used for selling, general and
administrative expenses, and for investments and advances made to third paries.

     Issuance  of debt and  equity.  The Company  sold  3,034,294  shares of its
Common  Stock in a series  of  private  placements  made to  non-U.S.  (foreign)
purchasers,  under the exemption of Regulation S of the  Securities  Act of 1933
during the year ended  October 31, 1996 (all during the first  quarter of fiscal
1996).  The  Company  received  net  proceeds of  $1,242,500  in 1996 from these
issuances.  The  Company  also  issued  604,651  shares of its  common  stock to
extinguish $252,500 of outstanding  convertible bridge notes payable and accrued
interest  during the year ended  October  31,  1996.  Also during the year ended
October 31,  1996  (during the first and second  quarters),  the Company  issued
2,752,588 shares of its Common Stock valued at $1,369,135 for services  provided
and to settle accounts payable.


                            13

<PAGE>

     As of October 31, 1996, the Company had outstanding $1,056,444 of notes and
loans payable  which are  currently  due and payable.  Subsequent to October 31,
1996,  $275,000 of this debt has been repaid.  The Company  intends to repay the
remaining outstanding notes, along with all accrued interest, during the current
year from its current cash  balances.  Also  subsequent to year end, the Company
agreed to guarantee up to $1,500,000 of equipment  financing in connection  with
an  investment  it made  in  Electronic  Media  Corp.(See  "Item  1,  Media  and
Entertainment, Electronic Media Delivery")

     Refinance  Obligations.  In  connection  with  the sale of El  Rancho,  the
Company  refinanced the existing El Rancho  indebtedness  with a $14,000,000 13%
first mortgage note due SunAmerica Life Insurance  Company on December 20, 1996.
In connection  therewith,  the Company issued to SunAmerica  1,912,588 shares of
its Common Stock.  Orion assumed the Company's  obligations  under the refinance
note concurrent with the sale transaction (the "Refinance Obligations"). As part
of the sale agreement, the Company agreed to co-guarantee the assumed note for a
certain amount of time. The SunAmerica  note was refinanced and retired by Orion
on June 4, 1996,  and in accordance  with the  agreement,  500,000 shares of the
Company's  Common Stock have been returned,  and the co-guarantee of the note by
LVEN has been released.  In addition to the above, the Company  initially agreed
to  be  responsible  for  one-half  (1/2)  of  the  interest  on  the  Refinance
Obligations, limited to its original stated maturity of one year at 13% interest
per annum.  Such funds,  aggregating  $950,000,  were escrowed at closing of the
sale of the El Rancho. Concurrent with the refinancing of the SunAmerica loan by
Orion on June 4, 1996,  $339,000 of this escrow  amount was paid to  SunAmerica,
and the remaining $611,000 was returned to LVEN.

     Notes Receivable. In connection with the sale of the El Rancho, the Company
received  two  promissory  notes due from Orion and ITB as  co-makers  under the
notes. The first note was an 8% unsecured promissory note co-signed by Orion and
ITB in the principal amount of $6,500,000 which was paid in full March 15, 1996.
The second note is an 8% promissory note in the principal amount of $10,500,000,
secured by a subordinated  junior position in the deed of trust on the El Rancho
Hotel and  Casino  Property.  This note is due upon the  successful  raising  of
financing  to develop the Property by Orion,  or upon the  ultimate  sale of the
Property. The Company expects that this note receivable should be collected from
the proceeds from Orion's  $100,000,000  funding proposal;  however, the Company
can give no assurance the closing of such funding will actually occur ( see Item
1, General " Casino and Gaming Operations").

     If the Property is sold through  foreclosure  or other forced sale or based
upon mutual  decision of Orion and the Company,  the proceeds of such sale shall
be paid in the  following  order  of  priority:  (i)  first,  to pay in full all
principal,   interest  and  costs  owing  under  the  Refinancing  Loan  or  any
substitution or additional mortgage refinancing  thereof;  (ii) second, to repay
Orion for its investment in the property or any additions  thereto in the amount
of all cash payments comprising a part of the purchase price plus $2,000,000 and
any and all reasonable  documented costs, expenses and any additional investment
in, or debt  incurred  in  furtherance  of the  development  of,  the  Property,
together with an accrued  return thereon in the amount of eight percent (8%) per
annum; (iii) third, to pay the Company the outstanding  balance of principal and
accrued interest owing under the Note, plus an additional  $4,000,000,  together
with an accrued  return  thereon in the amount of eight  percent (8%) per annum.
Any excess will then be allocated fifty percent (50%) to Orion and fifty percent
(50%) to the Company.

     As of October 31, 1996, 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 has reorganized its debt position,  and
with such  financing,  is anticipated to have the funds to commence  development
and sale of the  time  share  units.  As a result  of such  reorganization,  the
Company's  secured note receivable moved up to a second position.  As of October
31, 1996,  the Company has provided an allowance  of  $2,929,511  against  these
notes (including an allowance for imputed  interest on the non-interest  bearing
note).


                            14

<PAGE>

     As of October  31,  1996,  the  Company  had made  advances  of $912,606 to
Malbec,  Inc.,  an  unaffiliated  company,  for the  purpose of  developing  and
operating a hotel project in Miami Beach,  Florida. The advances accrue interest
at the rate of 10% per annum,  are due July 31, 1997, and are secured by a first
security interest in a cash escrow account, after payment of all expenses (which
has a balance of $667,000 as of January 31, 1997).  The Company has  reevaluated
this project and has decided not to pursue  development,  and expects the escrow
account to be liquidated with the net amounts, after payment of all expenses, to
be  returned to the  Company.  The  Company  has  provided a $450,000  allowance
against this advance, for a net investment of $462,606 as of October 31, 1996.

     On September 4, 1996, 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.  Principal  and  interest  at a rate of 17% per  annum are  payable  in
monthly installments of $14,832 until maturity,  November 1, 1998. In connection
with making this loan, the Company  received a 3% equity  interest in the common
shares  of Tee One Up.  The  Company  has  given no value  this  investment  for
financial statement purposes.

     On  January  15,  1997,  the  Company,  through  it's  wholly-owned  Nevada
subsidiary  Casino-Co,  made a 90-day  secured loan of  $2,900,000  to NPD, Inc,
("NPD"),  in order to enable NPD to close the  acquisition  from Robert  Brennan
("the  Seller")  of  2,904,016  shares  (the  "Shares")  of the common  stock of
International  Thoroughbred  Breeders,  Inc. ("ITB"),  representing  twenty-five
percent (25%) of the  outstanding  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
sale of the Shares was  instrumental  to LVEN,  as it will allow ITB to (i) meet
the requirements of a $100 Million funding proposal that would be used, in part,
for the  renovation  and opening by ITB of ITB's 21-acre  Strip  property in Las
Vegas,  Nevada,  formerly  know as the El Ranch Hotel and  Casino,  in which the
Company has a continuing cash flow interest,  and (ii) meet the  requirements of
The New  Jersey  Racing  Commission  and  Division  of  Gaming  Enforcement  for
continued racing licencing at ITB's New Jersey facilities.  The Company believes
that the sale of the Shares will also  facilitate  ITB's  application for Nevada
Gaming Licencing.

     The loan to NPD is evidenced by a 10% Secured  Promissory Note due on April
15, 1997 (the "NPD Note"). The NPD Note is secured by a security interest in and
to certain rights of NPD in and to the Shares,  subject to a purchase money lien
in favor of the Seller for the  balance of the  purchase  price  owing to him in
respect of the sale of the  Shares.  In  addition,  1,452,088  of the Shares are
subject to an  existing  purchase  option in favor of a third  party,  and would
likely  cease to provide  collateral  to the Company  upon the  exercise of such
option. The NPD Note is personally guaranteed by Mr. DeSantis.

     Upon a default  by NPD  under  its  payment  obligations  to the  Seller in
respect of the balance of the purchase price for the Shares, the Seller would be
free to exercise certain  creditor's rights under a Pledge Agreement between the
Seller and ITB in respect of the Shares (the "Pledge  Agreement").  Such actions
could have the effect of  modifying  the  Company's  security  interest  in such
collateral, which at all times is subordinated to and secondary to the rights of
the Seller. In the event that the Seller elects to foreclose on the Shares,  the
Company will be obligated  to execute all  documents  requested by the Seller to
reflect the discharge of the Company's  security interest therein.  In the event
of a  sale  by  the  Seller  after  a  default,  the  Company's  right  in  such
circumstance  shall be limited to the right to receive  any  proceeds  from such
sale over and above the amounts due the Seller under the Pledge Agreement.  Upon
satisfaction of NPD's purchase money obligation to the Seller during the term of
the NPD Note, the Company would then have a first priority  security interest in
the Shares.

Item 7.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

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

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

       Not Applicable.


                            15

<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    47  Chairman  of the Board,  President,  Chief  Executive
                         Officer and Director of the Company; proposed Chairman 
                         of the Board of LVCC
   
Carl Sambus         46   Executive Vice  President,  Chief Financial  Officer,  
                         Chief Operating Officer,  Secretary,  Treasurer and
                         Director of the Company; proposed  Chairman  of  the  
                         Board,  Chief  Executive  Officer,  Chief Financial
                         Officer and Director of  CountryLand; and Chief  
                         Financial Officer and Director of LVCC
   
Ken Scholl          59   President, Casino-Co.

Paul Whitford       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
the entertainment  and marketing  industry.  In 1974, he founded  Communications
Associates,  Inc., which became one of the first suppliers of hotel/motel  video
entertainment, using master antenna television systems to carry movies from 3/4"
videotape machines into hotel guest rooms. In connection with this business, Mr.
Corazzi  pioneered the usage of 1/2" videotape  machines,  followed by the first
installation of 24 hour satellite  transmission  in lieu of videotape  machines.
From 1981 to 1985, Mr. Corazzi was President and Chief  Operating  Officer,  and
from  1985 to  February  1989 he was  Vice-Chairman  of the  Board,  of  Telstar
Corporation,  and an  executive  officer of  Telstar  Satellite  Corporation  of
America ("Telstar"),  which was engaged in the business of satellite programming
and  distribution  to cable  television  systems  and to motel,  hotel and other
private cable systems. From 1975 to 1982, Mr. Corazzi owned and operated several
cable television and private cable television  systems  throughout the southwest
United States.  In 1985, Mr. Corazzi created Country Music  Television  ("CMT"),
the first  all-country,  all-music video programming  service.  CMT is currently
distributed  to more than 20 million  homes  nationwide.  From  January  1987 to
December  1990,  Mr.  Corazzi  was  Chairman  of  SelecTV  of  California,  Inc.
("SelecTV"),  a wireless cable television operator in Los Angeles.  From 1989 to
the  present,  Mr.  Corazzi  engages in the  business  of  advising  financially
troubled  companies  with  respect  to  their   reorganization  under  the  U.S.
Bankruptcy  Code.  Bankruptcy  petitions for both Telstar and SelecTV were filed
under Chapter 11 of the U.S. Bankruptcy Code in 1989. The plan of reorganization
for each of these  companies was confirmed by the  bankruptcy  court in November
1992.  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.

     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' 

                           16

<PAGE>

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.

     Ken Scholl has been a  President  of the  Company's  Casino-Co  Corporation
subsidiary  since January 23, 1996. Since 1984, Mr. Scholl has been President of
Stanford  Company,  in Las Vegas,  Nevada and from November 1992 until  February
1993  he  was  an  independent  contractor  with  Minami  Development,  Inc.  in
connection with the closing of the Dunes Hotel and Casino in Las Vegas,  Nevada.
From July 1990 until June 1962,  Mr.  Scholl was the  President and a Management
Consultant  for the Peabody  Hotel Group in  Memphis,  Tennessee,  and from 1986
until 1996 he was the President and a partner in the Aristocrat Hotels, Inc. and
Aristocrat  Hotels of Nevada,  Inc. which operated the Sands Hotel in Las Vegas,
Nevada.  Mr. Scholl was President and CEO of Princess Hotels  International  and
employed from November 1967 through 1978.  Mr. Scholl held a Nevada State Gaming
License,  and is a Licensed  Nevada Real  Estate  Broker.  Mr.  Scholl is also a
director of International Thoroughbred Breeders Inc.

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


Compliance with Section 16(a)

     There were no corresponding transactions..


                           17

<PAGE>



Item 10. EXECUTIVE COMPENSATION

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

<TABLE>
<CAPTION>
                SUMMARY COMPENSATION TABLE

        ANNUAL COMPENSATION                                         LONG TERM COMPENSATION(2)
-------------------------------------------------------------------------------------------------        
     
                                                                        Awards       Payouts   All
                                                                   -------------------------  Other  
Name and                                        Other Annual    Restricted Optional    LTIP    (3)    
Principal Position      Year   Salary(1) Bonus  Compensation      Stock     SARs(#)   Payouts($)                              
------------------      ----   --------- -----  ------------      -----     -------   -------   -----                              
<S>                     <C>    <C>        <C>            <C>        <C>       <C>        <C>   <C>     
Joseph A. Corazzi,      1996   $550,000   -0-            -0-        -0-       -0-        -0-    $124,000
President and Chairman  1995   $500,000   -0-            -0-        -0-    4,000,000     -0-    $115,000
                        1994   $267,151   -0-            -0-        -0-      130,000(4)  -0-        -0-
                          
Executive Vice          1996    $96,667   -0-            -0-        -0-       -0-        -0-        -0-
President, Chief        1995    $80,000   -0-            -0-        -0-       -0-        -0-        -0-
Financial Officer       1994    $73,863   -0-            -0-        -0-     250,000      -0-        -0-
and Secretary         

Ken Scholl,             1996   $120,000    -0-            -0-        -0-       -0-        -0-       -0-  
President, Casino-Co    1995   $120,000    -0-            -0-        -0-       -0-        -0-       -0-
                        1994   $100,000    -0-            -0-        -0-       -0         -0-       -0-


All executive officers
 as a group (3 Persons) 1996  $766,667     -0-            -0-        -0-       -0-        -0-   $124,000
                        1995  $700,000     -0-            -0-        -0-   4,100,000      -0    $115,000
                        1994  $441,014     -0-            -0-        -0-     380,000      -0-       -0-
</TABLE>


   The company issued 200,000 shares of its Common Stock, valued at $125,000, to
James Sargent, a former director of its CountryLand  Properties Inc. subsidiary,
for consulting  fees during the year ended October 31, 1996. The Company paid to
Mr. Paul Whitford,  director fees of $13,500. There were no other directors fees
(other than stated above) paid during the years ended October 31, 1996 or 1995.

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

(2)The officers and directors have not  participated in the Company's 1992 Stock
     Option  Plan and  have no stock  options  or other  long-term  compensation
     except as stated below.
     
(3)Represents amount accrued on Mr. Corazzi's retirement plan which entitles him
     to an annual retirement  benefit starting with the calendar month after his
     retirement or  termination,  equal to fifty  percent of his average  annual
     Company  salary and bonus  received in the  twenty-four  (24) month  period
     prior to his termination  (the  retirement plan becomes  effective once Mr.
     Corazzi has been  employed 10 years,  including any time  pre-dating  these
     agreements)

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


<PAGE>

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

<TABLE>
<CAPTION>
<S>                 <C>                 <C>             <C>            <C>    
                                   Percentage of
                                   Total Options
                                   Granted to
                    Options        Employees in        Exercise    Expiration
Name                Granted        Fiscal Year         Price       Date
----                 -------        ----------         -----       ----

Options Granted in Fiscal 1996;
None

Options Granted in Fiscal 1995;
Joseph Corazz       4,000,000           98%             $1.00    June 1997
Dean Homayoun         100,000            2%             $1.00    June 1997(1)

     (1) These options have lapsed as a result of Mr. Homayouni's resignation in
September 1995.
</TABLE>

   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, 1995 by the named executive officers:

Options Exercises and Year-end Value Table
                                                    
<TABLE>
<CAPTION>                                             
                                                               Value of Unexercised
                                        Number of unexercized  In-the-Money Options
                                        Options 7 Warrants     at October 31, 1995
                                        ------------------     -------------------
               Shares
               Acquired On  Value                 
Name           Exercize     Realized(1) Exercisable Non-Exercisable Exercisable(2) 
----           --------     ----------- ----------- --------------- ---------------- 
<S>              <C>       <C>               <C>       <C>              <C>   

Joseph Corazz    -0-        -0-          4,130,000     -0 -            - 0-
Carl Sambus      -0-        -0-            250,000     -0               -0-
--------------------------------------------------------
(1)Market Value at time of exercise less exercise price.
(2)The average of the closing bid and ask prices of the Common  Stock at October
   31,  1996 was $.40  Value  equals the  difference  between  market  value and
   exercise price.
</TABLE>

   The Company entered into a one year employment agreement on February 20, 1992
with Joseph  Corazzi,  the Chairman of the Board of the Company,  providing  for
annual  salary of $80,000.  The annual  salary for Mr.  Corazzi was increased to
$350,000 as of March 1, 1994. On March 1, 1995, the Company and its  subsidiary,
LVCC,  entered into two (2) separate five year  employment  agreements  with Mr.
Corazzi,  which  provide  for  an  annual  aggregate  salary  of  $550,000.  The
agreements  may be renewed by mutual  agreement  of the parties  for  successive
terms of one  year and 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,  and prohibits
him from engaging in a business  competitive with the Company during the term of
the agreement.  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.

   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

                            19

<PAGE>



agreements),  and (iii) an annual lump sum cash payment  equal to 5% of earnings
before income taxes, depreciation and amortization of the LVCC subsidiary.

   The Company entered into a one year employment agreement on February 20, 1992
with Mr. Sambus providing for an annual salary of $60,000.  The annual salary of
Mr. Sambus increased as of March 1, 1994 to $80,000,  and $100,000 as of January
1, 1996.  The agreement  with Mr. Sambus was renewed until February 8, 1997, and
may be renewed by mutual  agreement of the parties for  successive  terms of one
year. All the  agreements are subject to annual salary  increases and bonuses at
the discretion of the Board of Directors. The employment agreements also entitle
these  individuals  to  participate  in any employee  benefit plans which may be
offered in the future, such as group and life insurance.

   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,
1996 or 1995 other than as described above for Mr. Corazzi.

   In connection  with the Company's  initial public  offering in February 1992,
Mr.  Byron Lasky and Messrs.  Corazzi and Sambus and  Communications  Associates
Partnership ("CAP"), a partnership of which Mr. Corazzi was the general partner,
escrowed with American Stock  Transfer & Trust  Company,  New York, New York, as
depositary,  an  aggregate  of 750,000  shares of Common Stock held by them (the
"Escrow  Shares").   On  March  2,  1994,  Messrs.  Lasky,  Corazzi  and  Sambus
surrendered their rights to receive all Escrow Shares. Subsequently, the Company
issued five-year  options under the Stock Option Plan to purchase 250,000 shares
of Common  Stock  granted  to each of Messrs.  Lasky and  Sambus and  options to
purchase 130,000 shares were granted to Mr. Corazzi.  All such options are fully
vested and have an exercise  price of $1.00 per share.  A five-year  option (not
under the Stock  Option Plan) to purchase  1,500,000  shares was also granted to
Mr.  Corazzi.  On March 1, 1995, the Company  canceled Mr.  Corazzi's  option to
acquire  1,500,000  shares.  Mr.  Corazzi  was  subsequently  issued  options to
purchase  4,000,000 shares of common stock of CountryLand  Properties Inc. which
are  transferrable to any new subsidiary  formed to operate the gaming assets of
the Company,  including  Casino-Co.  The 4,000,000  CountryLand  Properties Inc.
warrants are fully  transferable  and convertible  into options to purchase LVEN
Common Stock at $1.00 per share.  These  shares are not  issuable in  connection
with the "Stock Option Plan" described below.

   Subsequent to October 31, 1996, Mr. Nunzio DeSantis,  now the Chief Operating
Officer of ITB, was granted 1,500,000 options to acquire shares of the Company's
Common  Stock at an exercise  price of $1 per share.  The options were issued as
part of the consideration for providing a $6,000,000  standby funding commitment
for  replacement  financing on the El Rancho  Property Site (See "Item 1, Casino
and Gaming  Operations").  These shares are not issuable in connection  with the
Stock Option Plan described below.

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

Stock Option Plan

   The Company  adopted the 1993 Stock Option Plan in February  1993.  The Stock
Option Plan enables the Company to offer an incentive based compensation  system
to key employees, officers, directors, consultants and to employees of companies
who do business with the Company.  In the discretion of a committee comprised of
non-employee directors (the "Committee"),  directors, officers and key employees
of the Company and its  Subsidiaries  or employees  of companies  with which the
Company  does  business  become  participants  in the  Stock  Option  Plan  upon
receiving  grants  of stock  options  or  awards  of  restricted  stock or stock
appreciation rights.
                            20

<PAGE>

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

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

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

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

                            21
<PAGE>

Item 1SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

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

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


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


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

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

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

Paul Whitford
1208 Cochise Drive
Arlington, Texas 76012                       -                    *

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

* Less than 1%
</TABLE>

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

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

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

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


                            22

<PAGE>

Item 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

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

      Salary and  benefits  due Joseph A.  Corazzi  amounting  to  $645,622  and
$701,739  has been accrued as of October 31, 1996 and 1995,  respectively.  This
amount  includes an accrual for $124,00 and $115,000 for amounts due Mr. Corazzi
under his  retirement  plan as of October 31, 1996 and 1995,  respectively.  The
Company paid and reimbursed  Mr.  Corazzi  $730,177 and $283,360 for accrued and
current  salary during the years ended October 31, 1996 and 1995,  respectively.
Such sums were due Mr.  Corazzi  from  inception  of the  Company to October 31,
1996.

     The company issued 200,000 shares of its Common Stock,  valued at $125,000,
to  James  Sargent,  a  former  director  of  its  CountryLand  Properties  Inc.
subsidiary,  for  consulting  fees during the year ended  October 31, 1996.  The
Company paid to Mr. Paul Whitford, director fees of $13,500. There were no other
directors fees (other than stated above) paid during the years ended October 31,
1996 or 1995.

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

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

                           23

<PAGE>

                         PART IV


Item 13EXHIBITS 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)

    4. Instruments Defining the Rights of Security Holders

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

    10.Material Contracts

     10.1  Compensatory  Plan for  Directors  and  Officers,  with schedule of
           details(1) 
     10.2  Employment  Agreement with Stan Irwin(1) 
     10.4  Employment Agreement  with Carl A.  Sambus(1)  
     10.11 1993 Stock Option Plan(7) 
     10.12 Stock  Compensation  Plan(7) 
     10.13 Employment  Agreement  with Joseph A.Corazzi(7)  
     10.15 Form of Mergers and  Acquisitions  Agreement with D.H. Blair 
           Investment Banking Corp.(formerly Exhibit 4.4)(1)
     10.16 Finders Agreement with Anker Bank(9)
     10.17 Joint Venture Agreement between the Registrant, through Pacific DNS,
           Inc. and Consolidated Resort Enterprises, Inc.(9)
     10.18 Form of Mergers and Acquisitions Agreement with D.H. Blair 
           Investment Banking Corp.(formerly Exhibit 4.4)(1)
     10.19 Settlement  Agreement with Winner's  Entertainment,  Inc.(9) 
     10.20 Loan Agreements between the Company and BP Group-$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)     
     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)

                           24

<PAGE>

       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)


    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.
(11)Incorporated  by reference to the Company's Current Report on Form 8-K dated
     January 15, 1997.
(12)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 6, 1997.


                          LAS VEGAS ENTERTAINMENT NETWORK, INC.




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


  Pursuant to the  requirements  of the Securities Act of 1934,  this report has
been signed below by the following  persons on behalf of the  registrant  and in
the capacities indicated on February 6, 1997.


Signature


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



\s\  Carl A.  Sambus
------------------------
Carl A.  Sambus               Executive  Vice President, hief  Financial
                              OfficerSecretary  and  Director (principal
                              accounting and financial officer)


                           26

<PAGE>







               INDEX TO FINANCIAL STATEMENTS




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


Consolidated Balance Sheets as of October 31, 1996 and
   October 31, 1995 ..................................................F-2


Consolidated Statements of Operations for the
   Years  Ended October 31, 1996 and 1995.............................F-3


Consolidated Statement of Stockholders' Equity for the Years Ended
   October 31, 1996 and 1995..........................................F-4


Consolidated Statements of Cash Flows for the
   Years Ended October 31, 1996 and 1995............................. 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  consolidated  balance  sheets of Las Vegas  Entertainment
Network,  Inc. and Subsidiaries as of October 31, 1996 and 1995, and the related
consolidated  statements of operations,  stockholders' equity and cash flows for
the two 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 audit.

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, 1996 and 1995 and
the consolidated results of its operations,  stockholders' equity and cash flows
for the two years then ended, in conformity with generally  accepted  accounting
principles.




                                HOLLANDER, GILBERT & CO.



Los Angeles, California
January 26, 1997

                            F-1

<PAGE>



<TABLE>
<CAPTION>
             LAS VEGAS ENTERTAINMENT NETWORK, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                            OCTOBER 31, 1996 AND 1995


                                              1996             1995
                                              ----             ----
                   ASSETS
<S>                                         <C>               <C>   

CURRENT ASSETS:
   CASH AND CASH EQUIVALENTS
                                             $ 10,385,292    $    789,338

                                             ------------    ------------
       TOTAL CURRENT ASSETS                    10,385,292         789,338

ASSETS HELD FOR SALE, net of associated
     liabilities and allowances -  Note 2               -      20,700,415

LONG TERM NOTE RECEIVABLE - Note 2              5,900,000               -  

INVESTMENTS & ADVANCES - Note 3                 1,024,312         370,150
                                                                
NOTES RECEIVABLE - LAKE TROPICANA - Note 4        806,489         806,489
                                                                       
PROGRAMING AND FILM COSTS,  Net of 
 amortization                                     180,000         805,061

PROPERTY AND EQUIPMENT
 net of accumulated depreciation
 of $180,981 (1996) and $78,370 (1995)            171,397         260,421
                                                                    
OTHER ASSETS                                       10,770          10,770
                                             ------------    ------------

                                             $ 18,478,260    $ 23,742,644
                                             ============    ============


    LIABILITIES AND STOCKHOLDERS' EQUITY


CURRENT LIABILITIES:
    ACCOUNTS PAYABLE AND ACCRUED EXPENSES   $     144,650    $    638,631
    NOTES PAYABLE - Note 5                      1,056,444       3,612,968
    ACCRUED INTEREST PAYABLE                      102,346         312,834
    ACCRUED OFFICER'S SALARIES & BENEFITS         645,622         701,739
     - NOTE 8
    PATMORE DEPOSIT - Note 3                         --           327,150
                                             ------------    ------------
       TOTAL CURRENT LIABILITIES                1,949,062       5,593,322

COMMITMENTS AND CONTINGENCIES - Note 8

STOCKHOLDERS' EQUITY: - Note 6
 PREFERRED STOCK - SERIES A, AUTHORIZED              
  30,000,000 SHARES, ISSUED AND 
  OUTSTANDING - NONE                                   -               -
 COMMON STOCK - AUTHORIZED 50,000,000
  SHARES, $.001 PAR VALUE; ISSUED AND
  OUTSTANDING 34,898,349 (1996) AND         
  28,506,816 (1995)                               34,895          28,503                                
 ADDITIONAL PAID-IN CAPITAL                   47,280,080      44,166,137
 DEFICIT                                     (30,785,777)    (26,045,318)
                                             ------------    ------------
      TOTAL STOCKHOLDERS' EQUITY               16,529,198      18,149,322
                                             ------------    ------------

                                             $ 18,478,260    $ 23,742,644
                                             ============    ============


  The accompanying notes are an integral part of these consolidated financial
                                   statements.
</TABLE>
<PAGE>

<TABLE>
<CAPTION>

             LAS VEGAS ENTERTAINMENT NETWORK, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                      YEARS ENDED OCTOBER 31, 1996 AND 1995


                                            1996            1995
                                            ----            ----
<S>                                       <C>             <C>   

REVENUES                               S   291,200    $    205,972

COSTS AND EXPENSES
     Programming                           805,061         722,500
     Selling                                     -           9,585
     General & Administrative            3,202,893       6,774,448
                                      ------------    ------------
TOTAL COSTS AND EXPENSES                 4,007,954       7,506,533

LOSS BEFORE OTHER
 INCOME AND (CHARGES) AND
 PROVISION FOR DISPOSAL OF ASSETS 
 HELD FOR SALE                          (3,716,754)     (7,300,561)

OTHER INCOME AND (CHARGES):
 Interest Income                           495,350         121,167
 Other Charges - Note 7                 (1,558,651)       (800,447)
 Interest and Finance Costs               (537,081)       (681,585)
                                      ------------    ------------
 TOTAL OTHER INCOME AND (CHARGES)       (1,600,382)     (1,360,865)
                                       ------------    ------------
LOSS BEFORE PROVISION FOR
 DISPOSAL OF ASSETS HELD FOR SALE       (5,317,136)     (8,661,426)

GAIN ON (PROVISION FOR) DISPOSAL
 OF ASSETS HELD FOR SALE - Note 2          576,677      (9,000,000)
                                      ------------    ------------

NET LOSS                             $ (4,740,459)   $(17,661,426)
                                      ============    ============


WEIGHTED AVERAGE NUMBER OF SHARES
 OF COMMON STOCK OUTSTANDING            33,238,660      21,468,037
                                      ============    ============

LOSS PER SHARE OF COMMON STOCK       $      (0.14)   $      (0.82)
                                      ============    ============


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

</TABLE>
<PAGE>

<TABLE>
<CAPTION>
             LAS VEGAS ENTERTAINMENT NETWORK, INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

                     YEARS ENDED OCTOBER 31, 1996 AND 1995





                                             Common
                                             Stock
                                             ------         Additional
                                       Number                Paid-in
                                     of Shares    Amount     Capital       Deficit          Total
                                   ----------    ------     --------       --------        -------- 
                       
<S>                                <C>             <C>      <C>             <C>          <C>    

BALANCE, November 1, 1994          18,887,600     $18,888   $36,872,417     $(8,383,892)  $28,507,413

Issuance of Common Stock 
 for  Services                      3,081,500       3,081     3,006,508                     3,009,589
Sales of Common Stock                 592,858         593       399,409                       400,002 
Conversion of Debt                  5,944,858       5,941     3,887,803                     3,893,744 
Net Loss for the Year   
 Ended October 31, 1995                                                     (17,661,426)  (17,661,426)
                                   ----------      ------    ----------     -----------   ------------   
BALANCE - October 31, 1995         28,506,816      28,503    44,166,137     (26,045,318)   18,149,322
  
Issuance of Common Stock
 for Services                       2,752,588       2,753     1,366,382                     1,369,135
Sales of Common Stock               3,034,294       3,034     1,239,466                     1,242,500
Conversion of Debt                    604,651         605       251,895                       252,500
Issuance of Warrants                              256,200                                     256,200
Net Loss for the Year
Ended October 31, 1996                                                      (4,740,459)    (4,740,459)
                                   -- ---------   --------  -----------     -----------    ----------

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


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


</TABLE>
<PAGE>
<TABLE>
<CAPTION>
             LAS VEGAS ENTERTAINMENT NETWORK,INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

                     YEARS ENDED OCTOBER 31, 1996 AND 1995

                                              1996            1995
                                              ----            ----
<S>                                            <C>        <C> 

CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss                                      $ (4,740,459)   $(17,661,426)
(Gain) Loss on Assets Held for Sale               (576,677)      9,000,000
Depreciation                                       102,611          40,000
Amortization of Program Inventory                  805,061         700,000
Adjustments to reconcile net loss
to net cash used in operating activities:
   (Increase) Decrease in;
     Program Inventory                            (180,000)
     Other Assets                                                   77,975
    Increase (Decrease) in;
      Accounts Payable                            (493,979)       (199,162)
      Accrued Officer's Salaries                   (56,117)        216,739
                                               ------------    ------------
CASH USED IN OPERATING ACTIVITIES               (5,139,560)     (7,825,874)

CASH FLOWS FROM INVESTING ACTIVITIES:
  Investments & Advances                          (981,312)        (43,000)
  Increase in El Rancho Capitalized Costs                       (3,599,858)
  Sale of El Rancho and Capitalized Costs       35,371,987
  Lark Landing                                                      72,850
  Proceeds from sale of securities                                 151,952
  Loss on securities held for sale                                 533,048
  Acquisition of Property and Equipment            (13,588)        (26,533)
                                               ------------    ------------
CASH PROVIDED BY (USED IN)INVESTING ACTIVITIES   34,377,087      (2,911,541)

CASH FLOWS FROM FINANCING ACTIVITIES:
  Issuance of Notes Payable                        850,000       5,028,000
  Repayment of Notes Payable                    (3,156,524)         (2,986)
  Issuances and Sales of Common Stock            2,604,135       3,344,091
  Issuances of Warrants                            256,200
  Decrease in Deferred Offering Costs                              542,019
  Issuance of Notes and Loans Receivable       (12,400,000)
  Collections on Notes and Loans Receivable      6,500,000
  Loans and interest payable - El Rancho       (14,094,895)      1,681,145
  Interest Payable                                (200,489)        333,934
                                              ------------    ------------
CASH PROVIDED BY (USED IN)FINANCING ACTIVITIES (19,641,573)     10,926,203

INCREASE IN CASH                                 9,595,954         188,788

CASH BALANCE - BEGINNING                           789,338         600,550
                                               ------------    ------------
CASH BALANCE - ENDING                          $10,385,292     $   789,338
                                               ============    ============
NON-CASH TRANSACTIONS
---------------------
Conversion of Notes Payable and
 Accrued Interest to Equity                       $260,000      $3,959,244
Accrued Interest and Fees - El Rancho              695,832         413,750
Reclassification of Patmore Deposit                327,100              -
Reclassification of investment in                                  403,244
 Lake Tropicana to Notes Receivable
Settlement of Accounts Receivable                                  500,000
 and Payable - Investment

CASH PAID FOR
-------------
 Interest                                           $405,847       $434,601


  The accompanying notes are an integral part of these consolidated financial
                                  statements.
</TABLE>
<PAGE>





           LAS VEGAS ENTERTAINMENT NETWORK INC.

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1. SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

   Background and Business and Basis of  Presentation - Las Vegas  Entertainment
   Network,  Inc.  ("The  Company") was  incorporated  in October  1990,  and is
   engaged in the business of  acquiring,  developing  and  operating  media and
   gaming facilities and businesses. In prior years, the Company had been in the
   development  stage. The Company's primary project to date was the renovation,
   expansion and  redevelopment of the El Rancho Hotel & Casino (the "El Rancho"
   or the  "Property"),  which was acquired on November 24, 1993, and is located
   in Las Vegas,  Nevada. On January 22, 1996, the Company sold the El Rancho to
   a third party for $43,500,000 of cash, notes and assumption of debt, and will
   also  receive  a  continuing  interest  in  the  adjusted  cash  flow  up  to
   $160,000,000  from the Property once it has been  developed by the new owners
   (see  Note  2).  In  connection  with  the  sale,  the  Company's  Las  Vegas
   Communications  Corporation  subsidiary was granted the exclusive contract to
   provide  entertainment  at the  Property  site,  and  accordingly  will begin
   developing  Las Vegas style  entertainment  shows once the Property  site has
   been developed.

   The Company is also active in the development of media related opportunities,
   including  formulating  a  business  plan to  develop,  produce,  market  and
   distribute   television   and  video   programming.   The   Company  is  also
   investigating   other   potential   businesses   for   acquisition   in   the
   entertainment, lodging, or communications industry.

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

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

   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.

   Revenues - Revenues are  recognized  when earned,  and consist of fees earned
   under the Company's interim entertainment  management agreement (see Note 2),
   and fees earned from  renting  out the  parking  facilities  at the El Rancho
   Property site.

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

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

                            F-6

<PAGE>

           LAS VEGAS ENTERTAINMENT NETWORK INC.

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


   Concentrations of Credit Risk - As of October 31, 1996, 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,  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,
   1996,   the  Company  had   approximately   $10,000,000  on  deposit  in  two
   institutions that was subject to such risk. The Company has also made certain
   advances to  unaffiliated  third  parties  where the company  believes it has
   obtained sufficient underlying collateral.

   Accounting  for Stock Based  Compensation  - In October  1995,  the Financial
   Accounting  Standards  Board (the "FASB")  issued SFAS 123,  "Accounting  for
   Stock Based  Compensation,"  which is effective  for fiscal  years  beginning
   after  December 15, 1995.  Under SFAS 123,  companies can elect,  but are not
   required,  to recognize  compensation  expense for all stock-based  awards to
   employees,  using a fair value  methodology.  The Company will  implement the
   disclosure  only  provisions of the fair value method for awards to employees
   in the fiscal year beginning  November 1, 1996, as permitted by SFAS 123. The
   Company will continue to account for  stock-based  awards to employees  under
   the intrinsic  value method in accordance with  Accounting  Principles  Board
   Opinion No. 25  "Accounting  for Stock  Issued to  Employees."  SFAS 123 also
   applies to transactions  in which an entity issues its equity  instruments to
   acquire  goods or services from  non-employees.  Those  transactions  must be
   accounted  for based on the fair value of the  consideration  received or the
   fair  value of the  equity  instrument  issued,  whichever  is more  reliably
   measurable. Adoption on November 1, 1996 of the above is not expected to have
   a significant effect on the Company.

   Accounting  for  Impairment  of  Long  Lived  Assets  - The  Company  adopted
   Financial Accounting Standards ("SFAS") No. 121 "Accounting for Impairment of
   Long Lived  Assets to be  disposed  of" on  November  1,  1995.  SFAS No. 121
   established  accounting  standards  that require that  long-lived  assets and
   certain identifiable intangibles held and used by the Company be reviewed for
   impairment  whenever  events or changes in  circumstances  indicate  that the
   carrying value of such assets may not be recoverable. Adoption of SFAS No.
   121 had no significant impact on the Company.

   Re-classifications  -  Certain  1995  amounts  have been  re-classified  to
   conform with 1996 presentation.

2. ASSETS HELD FOR SALE

   On January 22, 1996 the Company  sold the assets and certain  liabilities  of
   the former El Rancho Hotel and Casino to Orion Casino Corporation  ("Orion"),
   a  wholly-owned  subsidiary  of  International   Thoroughbred  Breeders  Inc.
   ("ITB"),  for  consideration  of  $43,500,000.  The Company  also  received a
   continuing  interest  in the  future  adjusted  cumulative  cash  flow of the
   property as defined,  if any, of up to $160,000,000 as described  below.  The
   purchase price was paid as follows: $12,500,000 paid at closing in cash; (ii)
   an 8% unsecured  promissory note in the principal  amount of $6,500,000 which
   was paid in full on  March  15,  1996;  (iii)  an 8%  promissory  note in the
   principal amount of $10,500,000, secured by a subordinated junior position in
   assets of the El Rancho Hotel and Casino  (which may be further  subordinated
   if additional  borrowing is made against the  property),  and is due upon the
   successful  raising of financing to develop the  Property  (see  "Development
   Plans" below), or upon the ultimate sale of the Property, and (iv) assumption
   of existing mortgage indebtedness and accrued interest of $14,000,000.  As of
   October 31, 1996, the Company has provided an allowance of $4,600,000 against
   the remaining note.

   Once the  Property  has been  developed  by Orion  (see  "Development  Plans"
   below), of which there can be no assurance will be achieved, the Company will
   receive as additional consideration for entering into the sale agreement (but
   not as part of the  Purchase  Price  for the  assets) 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 casino on 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  $160,000,000,
   but only after Orion and the Company  first receive 100% of the adjusted cash
   flow

                            F-7
<PAGE>

           LAS VEGAS ENTERTAINMENT NETWORK INC.

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


   until all invested  amounts,  plus $8,000,000,  have been recouped,  plus any
   other additional  costs incurred,  together with interest thereon at the rate
   of eight percent (8%) per annum from the closing date.

   Additionally,  commencing with the development of the Property, the Company's
   LVCC subsidiary was granted an exclusive contract to provide entertainment at
   the Property site, subject to meeting certain  profitability  criteria.  This
   would include; (i) responsibility for management and oversight of booking all
   acts,  performers,  entertainers,  movies,  virtual reality rides,  and other
   non-gaming  attractions,  of any kind or nature at the  property  site,  (ii)
   arranging  all  advertising  for  all of the  properties  needs,  and  (iii),
   managing all other entertainment  venues for Orion. The term of the agreement
   is for ten (10) years commencing on the date which is six (6) months prior to
   the opening date of the property, and LVCC shall have the option to renew the
   agreement for two consecutive  five year terms.  The agreement  provides LVCC
   with an annual fees of $800,000 subject to annual  increases.  LVCC will also
   receive an  additional;  (i)  twenty-  five  percent  (25%) of  profits  from
   entertainment  activities,  (ii)  ten  percent  (10%)  of  the  cost  of  all
   advertising placed by Orion, and (iii) booking fee equal to ten percent (10%)
   of gross compensation paid to talent.

   For October 31, 1995 Financial Statement  purposes,  the net assets of the El
   Rancho Hotel and Casino were  segregated on the Balance Sheet as "Assets Held
   for Sale" as follows;
<TABLE>
<CAPTION>
<S>                                 <C>   

     Hotel and Casino Assets;
     ------------------------
     Original purchase price (1)      $36,500,000
     Other purchase related costs       3,847,450
     Capitalized interest               3,447,860
                                      -----------  
          Total Assets                 43,795,310
                                      -----------  
     Hotel and Casino Liabilities;
     -----------------------------
     Loan payable                      13,350,000
     Accrued Interest                     413,751
     Assessment Payable                   331,144
     Provision for loss on disposal     9,000,000
                                       ---------- 
     Total Liabilities                 23,094,895
                                       ----------
 
     Net Assets                       $20,700,415
                                      ===========  
</TABLE>

    (1) On November  24,  1993,  the Company  acquired  the El Rancho  Hotel and
    Casino,  a 1,006-room  hotel with 90,000 square feet of casino and ancillary
    space and a 52-lane bowling alley, which is located in Las Vegas, Nevada, on
    the Las Vegas Strip at 2755 Las Vegas  Boulevard  South.  The purchase price
    for the El Rancho  was $36.5  million,  including  a cash  payment  of $21.5
    million, issuance of a promissory note in the face amount of $12 million and
    the  issuance of 2,300,000  shares of Company  common stock to a third party
    valued at $3 million.

    (2)  The  El  Rancho  property  had  been  encumbered  by a  first  mortgage
    promissory note in the face amount of  $12,000,000,  which was initially due
    November 24, 1994, and was secured by the real and personal  property assets
    comprising  the former El Rancho Hotel & Casino.  On January 22,  1996,  the
    Company replaced this loan with a one year, 13%,  $14,000,000 mortgage note,
    secured by a first deed of trust on the El Rancho  Property,  due SunAmerica
    Life  Insurance  Company.  In connection  therewith,  the Company  issued to
    SunAmerica  1,912,588  shares of its Common Stock.  This note was assumed by
    Orion  as  part  of the El  Rancho  sale  agreement.  As  part  of the  sale
    agreement, the Company agreed to co-guarantee the assumed note for a certain
    amount of time. The  SunAmerica  note was refinanced and retired by Orion on
    June 4, 1996, and in accordance  with the  agreement,  500,000 shares of the
    Company's Common Stock have been returned,  and the co-guarantee of the note
    by the Company  has been  released.  In  addition to the above,  the Company
    initially

                            F-8

<PAGE>

           LAS VEGAS ENTERTAINMENT NETWORK INC.

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


    agreed to be responsible for one-half (1/2) of the interest on the Refinance
    loan,  limited to its original  stated  maturity of one year at 13% interest
    per annum. Such funds, aggregating $950,000, were escrowed at closing of the
    sale of the El Rancho.  Concurrent  with the  refinancing  of the SunAmerica
    loan by Orion on June 4, 1996,  $339,000 of this  escrow  amount was paid to
    SunAmerica, and the remaining $611,000 of was returned to the Company.

    (3)  Assessments  payable  represent  amounts  due the city of Las Vegas for
    general  roadway  improvements  made during the year ended October 31, 1995.
    This assessment was assumed by Orion as part of the El Rancho sale.

    The Company previously recorded an allowance of $9,000,000 as of October 31,
    1995 to reflect the net  realizable  value of the El Rancho Hotel and Casino
    based on the January 22, 1996 sale.  This  allowance was reduced by $576,677
    during the year ended  October 31, 1996 to reflect the actual  settlement of
    all charges.

    Development Plans
    On January  15, 1997 ITB  announced  that they had  received a  $100,000,000
    funding  proposal,  the  proceeds  of which will be used,  in part,  for the
    renovation  and opening of the former El Rancho  Hotel and Casino site as an
    international  country music attraction  called  "CountryLand  USA", a major
    destination  hotel and  casino.  The  proposed  funding  is  subject  to the
    execution  of a  definitive  loan  agreement  between  ITB and the  proposed
    lender,  which the Company can give no assurance  will be made. The proceeds
    of this loan are  anticipated  to be  sufficient  to renovate and reopen the
    Property  site, as well as repay the Company's  remaining  outstanding  note
    receivable.  ITB had previously announced that it intended to develop the El
    Rancho  property  under a "Starship  Orion"  multiple-casino  theme.  It was
    estimated that the total cost of completion would be approximately 1 billion
    dollars and that ITB intended to develop the property  with up to as many as
    six  partners.  ITB had not engaged any  partners for its  "Starship  Orion"
    theme  development,  and will now develop the  property  under a more modest
    "CountryLand, USA" theme.

    In accordance  with the initial sale  agreement,  if by October 25, 1996 (i)
    Orion had not closed on or received  permanent  financing  and  obtained the
    required lease  commitments  to develop the "Starship  Orion" , and (ii) and
    has not closed or received a firm commitment for the alternative  financing,
    and if CLND has  arranged  for the  refinancing  of the  refinance  loan and
    places into an escrow account amounts  sufficient to cover the financing and
    carrying costs of the refinance loan and the operating costs of the property
    for either a six month or year period (the "option period"), LVEN may either
    (i) appoint and authorize a reputable  commercial real estate broker to sell
    the  property  at an amount,  after  expenses,  in excess of the  underlying
    mortgage  and  invested  amounts of both Orion and LVEN,  or (ii) arrange on
    behalf  of  Orion,  in  conformity  with  prevailing   financing  terms  and
    conditions fro major Las Vegas hotel/casino projects,  alternative financing
    of not less than $55,000,000.  On October 25, 1996, LVEN advised that it was
    asserting  its rights  afforded  during the Option  Period by arranging  the
    prescribed  escrow  account.  On October 28, 1996,  ITB announced  that LVEN
    forfeited  its rights with  respect to the purchase  agreement  because they
    believed LVEN failed to satisfy  certain  contractual  pre-conditions.  LVEN
    advised ITB that it contested its position. On February 2, 1997, the Company
    and ITB  settled  their  disagreement.  As  described  above,  and  with the
    assistance of the Company, ITB has announced its plans for the financing and
    development of the El Rancho site as  "CountryLand,  USA" and had received a
    proposal of  $100,000,000 of financing  which,  if funded,  will be used, in
    part,  for such  development.  If the Property is not  developed,  or if the
    expected  funding is not completed,  the Company believes it still maintains
    the rights under the option period described above. In connection therewith,
    the Company has engaged an investment banking firm to seek funding necessary
    to provide the alternative financing described above.

    If Orion,  with the consent of the Company,  sells the Property prior to the
    commencement  of  casino  operations  or if the  Property  is  sold  through
    foreclosure or other forced sale, the proceeds of such sale shall be paid in
    the following  order of priority:  (i) first,  to pay in full all principal,
    interest and costs owing under the current $14,000,000 mortgage refinancing;
    (ii) second, to repay Orion for its investment in the property or any

                            F-9

<PAGE>


           LAS VEGAS ENTERTAINMENT NETWORK INC.

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


    additions  thereto in the amount of all cash  payments  comprising a part of
    the Purchase price plus  $2,000,000  and any and all  reasonable  documented
    costs,  expenses  and any  additional  investment  in, or debt  incurred  in
    furtherance of the  development  of, the Property,  together with an accrued
    return  thereon in the amount of eight percent (8%) per annum;  (iii) third,
    to pay the Company the outstanding balance of principal and accrued interest
    owing under the remaining note,  plus  $4,000,000 and any documented  costs,
    expenses and any  additional  investment in, or debt incurred in furtherance
    of the development of, the Property, together with an accrued return thereon
    in the amount of eight percent (8%) per annum from closing;  (iv) fourth, to
    pay Orion  $2,000,000  together with an accrued return thereon in the amount
    of eight percent (8%) per annum from closing and (v) fifth, any excess to be
    divided fifty percent (50%) to Orion and fifty percent (50%) to the Company,
    provided  however,  that if the property is sold after  January 25, 2001, in
    order for the  Company to receive  its fifty  percent  (50%)  share from and
    after such date,  the Company  must pay on an ongoing  basis  fifty  percent
    (50%) of the carrying  costs of the  property,  including  interest,  taxes,
    maintenance, and insurance.

3.     INVESTMENT AND ADVANCES

     Investments  and advances  consist of the  following as of October 31, 1996
     and 1995;

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

         (A)  Malbec, Inc.           $ 462,606    $   43,000
         (B)  Tee One Up, Inc          300,000             -
         (C)  Orion Inc.               261,706             -
         (D)  Patmore Broad               -          327,150
                                   -----------    ----------

                                    $1,024,312      $370,150
                                   ===========    ==========
</TABLE>

(A) During  1996,  the Company  made  advances of $912,606 to Malbec,  Inc.,  an
    unaffiliated  company,  for the purpose of developing  and operating a hotel
    project in Miami Beach, Florida. The advances accrue interest at the rate of
    8% per annum,  are due July 31,  1997,  and are secured by a first  security
    interest  in a cash  escrow  account  (which has a balance of $667,000 as of
    January 31, 1997). The Company has re-evaluated this project and has decided
    not to pursue  development,  and expects the escrow account to be liquidated
    with the net amounts,  after payment of all expenses,  to be returned to the
    Company. The Company has provided a $450,000 allowance against this advance,
    for a net investment of $462,606 as of October 31, 1996.

(B) On September 4, 1996,  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.  Principal and interest at a rate of 17% per
    annum are  payable  in  monthly  installments  of  $14,832  until  maturity,
    November 1, 1998. In connection with making this loan, the Company  received
    a 3% equity  interest  in the common  shares of Tee One Up. The  Company has
    given no value to this investment for financial statement purposes.

(C) Advances  to Orion Inc.  represent  amounts  currently  due the  Company for
    monthly entertainment management fees, and for the reimbursement for certain
    operational advances made for the El Rancho Property.

(D) The Company  acquired an option to acquire  Patmore Radio  Broadcasting  for
    $515,258  during the year ended October 31, 1993.  Notice of exercise of the
    option by LVEN was given in  September  1993,  with the  closing  originally
    scheduled  to occur by March 31,  1994.  Patmore  alleges  that the purchase
    option expired in March 1994,  and informed the Company they  considered the
    purchase option as terminated.  The Company received $327,150 of unsolicited
    funds from Patmore in 1994 in an effort by Patmore to terminate LVEN's right
    to  purchase  the radio  station.  Management  reflected  the  $327,150 as a
    liability on the balance sheet at October 31, 1995.  The Company  recorded a
    reserve of $188,108 against its investment  resulting in a net investment of
    $327,150 at October 31, 1995.

                           F-10

<PAGE>

           LAS VEGAS ENTERTAINMENT NETWORK INC.

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


    Management  became  aware  that  Patmore  attempted  to sell the  Station to
    Compass  Communications  on  November  7, 1995,  and  obtained  a  temporary
    restraining  order to block the sale of the  station on February  23,  1996.
    However,  on March 6, 1996 the  restraining  order was  dissolved,  allowing
    Patmore the ability to proceed with its sale.  As of October 31,  1996,  the
    Company has applied the $327,150 liability as an offset to its investment in
    Patmore.  Management  still  considers  its  purchase  option as valid,  and
    continues to investigate and pursue various options.

4.  NOTES  RECEIVABLE - LAKE TROPICANA

     Notes  receivable - Lake  Tropicana  consist of the following as of October
     31, 1996 and 1995;

                                                        1996     1995

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

    On July 24,  1993,  the Company  acquired  for  $806,488 a 45% interest in a
    venture which owns a 184 unit apartment  complex in Las Vegas,  Nevada.  The
    complex is being  converted into vacation  interval  ownership  (time-share)
    project.  During 1994, the managing general partner of the joint venture,  a
    subsidiary  of MPTV,  Inc.,  agreed to purchase  one-half  of the  Company's
    interest  (22.5%)  for  $1,868,643.  The  purchase  price was  payable  by a
    promissory  note  bearing  interest at a rate of 8% per annum,  secured by a
    deed of trust on the  property.  During 1994 the  managing  general  partner
    filed for bankruptcy  protection,  and  management  recorded an allowance of
    $1,584,172  against the $1,987,417  receivable  (principal of $1,868,643 and
    interest receivable of $118,774) for a net receivable of $403,245 at October
    31, 1994.

    During 1995, the project emerged from bankruptcy  protection and reorganized
    its debt with its  creditors.  As part of the  reorganization,  the  Company
    replaced its original $1,868,000  principal note with a new note of the same
    amount dated March 22, 1995,  and sold to MPTV its remaining  22.5% interest
    in the project for an  additional  note of  $1,868,000.  Accordingly,  as of
    October 31, 1996 and 1995, Notes  Receivable - Lake Tropicana  represent two
    (2) separate notes payable to the Company of $1,868,000 each. The first note
    bears interest at a rate of 8% per annum, payable monthly, and is secured by
    a fifth position in a deed of trust.  The first interest  payment is due one
    month after the  borrower has  completed  certain  refinancing  currently in
    process.  The second note is unsecured and non-interest  bearing.  Principal
    payments  for both notes will be at a rate of $205 ($410 for both  notes) as
    each  time-share  interval  sold until  August 1, 1998,  when any  remaining
    outstanding  principal  is due in full.  The notes  contain a  cross-default
    provision so that a default under one note shall also be deemed a default on
    the other.  As of January 15, 1997,  the joint venture had  reorganized  its
    debt position,  and with such financing,  anticipates it will have the funds
    to commence  development  and sale of the time share units.  Concurrent with
    such  reorganization,  the Company's  secured note receivable  moved up to a
    second position.

                           F-11

<PAGE>


           LAS VEGAS ENTERTAINMENT NETWORK INC.

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


    5.             NOTES  PAYABLE
<TABLE>
<CAPTION>


Notes payable consist of the following as of October 31, 1996 and 1995;

<S>                                    <C>      <C> 
                                             1996          1995
                                        -----------      --------
(A)   Convertible Bridge Loans          $1,050,249     $  778,000
(B)   BP Group                                   -      1,325,000
(C)   UK Foods                                   -      1,500,000
      Other                                  6,195          9,968
                                          ---------     ---------

    Total                                $1,056,444    $3,612,968
                                         ==========    ==========
</TABLE>

     (A) Convertible  bridge loans consist of five (5) one-year unsecured notes.
     The notes,  which are currently due and payable,  accrue interest at a rate
     of 8% per annum until the  principal  and accrued  interest  are paid.  The
     notes and any accrued  interest are  convertible,  at the lender's  option,
     into shares of the Company's common stock at a price of $1.25 per share, or
     approximately 90% of the market price, whichever is less, at any time prior
     to the repayment by the Company.  Subsequent to October 31, 1996,  $275,000
     of these notes were repaid.

     (B) The BP Group note consisted of a $1,325,000,  8% unsecured bridge loan.
     The note and all  outstanding  interest  was repaid in full on February 20,
     1996.

     (C) The UK Foods note consisted of a $1,500,000,  8% unsecured bridge loan.
     The note and all outstanding interest was repaid on January 31, 1996.

     Consolidated  interest  expense  for the years  ended  October 31, 1996 and
     1995,  excluding  any interest  capitalized,  was  $205,352  and  $343,085,
     respectively.  Interest  expense of $2,548,351 was  capitalized  during the
     year ended October 31, 1995.

    6.          STOCKHOLDERS' EQUITY

    Description of securities - The Company's  authorized capital stock consists
    of 50,000,000 shares of Common Stock, at $.001 per share par value, of which
    34,898,349 and 28,506,816 shares of common stock were issued and outstanding
    as of  October  31,  1996  and  1995,  respectively.  The  Company  has also
    authorized  30,000,000 shares of Preferred Stock, par value $.001 per share,
    none of which was  outstanding  during the years ended  October 31, 1996 and
    1995.  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.

    Issuances of common stock - The Company has made the following  issuances of
    common stock during the years ended October 31, 1996 and 1995;

    Shares  Issued for Services - The Company  issued  2,752,588  shares of its
    Common Stock for services  provided and to settle  accounts  payable during
    the year ended  October 31, 1996  (during the first and second  quarters of
    fiscal 1996) and 3,081,500 shares of its Common Stock for services provided
    and to settle accounts  payable during the year ended October 31, and 1995.
    The shares were valued at $1,369,135 and $3,009,589,  respectively, for the
    years ended  October  31,  1996 and 1995.  The shares were issued at prices
    ranging  from $.40 to $.63 per share during 1996 and from $.70 to $1.50 per
    share in 1995.  The shares were valued at the average bid market  price for
    the shares 10 days prior to issuance or the estimated selling price.  Since
    inception,  the Company has issued 5,230,885 shares valued at $5,860,677 at
    an average price ranging from $.40 to $5.63 per share.

                          F-12

<PAGE>


           LAS VEGAS ENTERTAINMENT NETWORK INC.

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     Included in the 1996  issuance of the  Company's  common  shares  described
     above were 1,412,588 shares of common stock issued to SunAmerica  Insurance
     Company in  connection  with  arranging the financing of the sale of the El
     Rancho Hotel and Casino  described in Note 2. The Company  initially issued
     1,912,588  shares to Sun America,  however in accordance with the refinance
     agreement,  500,000 of these  common  shares  were  returned to the Company
     during 1996 as the buyer subsequently prepaid this obligation.

     Sales of Common  Stock - The Company  sold  3,034,294  shares of its Common
     Stock during the year ended  October 31, 1996 (all during the first quarter
     ) and 592,858  shares of its Common Stock during the year ended October 31,
     1995,  respectively,  in a series of private  placements  made to  non-U.S.
     (foreign) purchasers, under the exemption of Regulation S of the Securities
     Act of 1933.  The Company  received net proceeds of  $1,242,500 in 1996 and
     $400,002 in 1995 from these  sales.  The sales prices per share ranged from
     $.50 to $.55 per share in 1996, and from $.60 to $.80 per share in 1995.

     Shares issued in lieu of Notes  Payable and Accrued  Interest - The Company
     issued  604,651  and  5,944,858  shares of its common  stock to  extinguish
     $252,500 and $3,893,744 of outstanding convertible bridge notes payable and
     accrued  interest  during  the  years  ended  October  31,  1996 and  1995,
     respectively.

    Outstanding  Warrants - The  Company  has issued and  outstanding  1,600,385
    Class A warrants and  1,263,115  Class B warrants as of October 31, 1996 and
    1995.  The holder of each Class A Warrant is entitled to purchase  one share
    of Common Stock of the Company and one Class B Warrant at an exercise  price
    of $4.00.  The holder of each Class B Warrant is entitled  to  purchase  one
    share of Common Stock at an exercise  price of $6.60.  The exercise dates of
    both the Class A and Class B warrants,  initially at any time until February
    20, 1997, have been extended until June 1, 1997.

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

    On January 22, 1996, in connection  with arranging the financing of the sale
    of the El Rancho Hotel and Casino  described  in Note 2, the Company  issued
    warrants  valued at $256,200,  based on the current market price at the date
    of the grant,  to a third  party to  purchase  600,000  shares of its Common
    Stock at $.10 per share.

    Stock Options- Outstanding stock options consist of the following;

    Chairman of the Board - On March 1, 1995, Mr. Joseph  Corazzi,  Chairman of
    the Board,  was  granted  4,000,000  options to  purchase  Common  Stock of
    CountryLand  Properties  Inc.,  which is transferable to any new subsidiary
    formed to operate the gaming  assets of the Company,  including  Casino-Co.
    The 4,000,000  CountryLand  Properties Inc. warrants are fully transferable
    and  convertible  into  options to purchase  LVEN Common Stock at $1.00 per
    share.  These shares are not issuable in  connection  with the Stock Option
    Plan described below.

                          F-13

<PAGE>


           LAS VEGAS ENTERTAINMENT NETWORK INC.

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     Other - Subsequent to October 31, 1996, Mr. Nunzio DeSantis,  now the Chief
    Operating Officer of ITB, was granted 1,500,000 options to acquire shares of
    the  Company's  Common  Stock at an  exercise  price of $1 per share,  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 (See Note 2). 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
    1,000,000  shares are reserved for issuance  under the Stock Option Plan, of
    which 190,000  shares are issuable  under options which have been granted to
    employees,  and  730,000  shares  under  options  granted  to  officers  and
    directors,  all with an  exercise  price of $. 71 to $1.50  per  share.  The
    Company may  increase the number of shares  reserved for issuance  under the
    Stock  Option  Plan or may make other  material  modifications  to the Stock
    Option Plan without stockholder  approval.  However, no amendment may change
    the  existing  rights of any option or award  holder.  The  following  table
    summarizes option transactions through October 31, 1996;

<TABLE>
<CAPTION>

                                        Shares          Share
                                        ------           -----
<S>                                     <C>            <C>    
    Balance, November 1, 1994                 -             -
    Granted                             880,000        $ 1.00
                                        -------        -------
    Balance, October 31, 1995           880,000        $ 1.00
    Canceled                           (100,000)       $ 1.00
    Granted                              40,000        $ 0.71
                                        --------       -------
   
    Balance, October 31, 1996           820,000    $0.71 - $1.00
                                        ========   ==============
</TABLE>


    7.OTHER CHARGES

    Included in other  charges  for the year ended  October 31, 1996 is $625,000
    which  represents  cash and the value of  800,000  restricted  shares of the
    Company's  Common  Stock and  167,000  shares of Common  Stock of  Satellite
    Networks Inc. paid in connection with settling claims arising from arranging
    certain  financing  in  connection  with the initial  acquisition  of the El
    Rancho Property site; an allowance of $450,000  relating to advances made to
    Malbec,   Inc.,  an  unaffiliated   third  party,  in  connection  with  the
    development  of certain  hotel  properties  in Miami Beach,  Fla.;  $295,000
    related to an  adjustment  to reflect the value of certain  shares of common
    stock previously issued for services;  and $150,000 to settle an outstanding
    loan and stock purchase agreement.

    Included in other  charges  for the year ended  October 31, 1995 is $500,000
    allowance for reduction to market value of 4,000,000  shares of common stock
    of Sky Scientific Inc; $33,000 loss on the sale of 25,000 shares of American
    Network  Group,  Inc.  common  stock ; $72,850 for an  additional  allowance
    against the Company's  investment in Patmore  Radio  Broadcasting;  $107,000
    additional  allowance against existing note  receivables,  and; $70,000 loss
    relating to investments no longer pursued.

    8.COMMITMENTS AND CONTINGENCIES

    Leases - The Company leases on a  month-to-month  basis 7,000 square feet 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.  Consolidated rent expense for the years ended October 31,
    1996 and 1995 was $257,590 and $205,434 respectively.

                           F-14

<PAGE>

         LAS VEGAS ENTERTAINMENT NETWORK INC.

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


    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 provide
    for an annual aggregate salary of $550,000. The agreements may be renewed by
    mutual  agreement  of the  parties  for  successive  terms of one year.  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,
    and prohibits him from engaging in a business  competitive  with the Company
    during  the term of the  agreement.  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.

    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.

    The Company paid and reimbursed Mr. Corazzi $730,177 and $283,360 during the
    years  ended  October 31,  1996 and 1995,  respectively  for amounts due him
    since inception through October 31, 1996.  Amounts due Mr. Corazzi amounting
    to $431,739 and $586,739  have been accrued as of October 31, 1996 and 1995,
    respectively. The Company has also accrued $239,000 and $115,000 for amounts
    due Mr.  Corazzi  under the  retirement  plan which is  included  in accrued
    officers salary and benefits as of October 31, 1996 and 1995.

    Legal -On October 18, 1996,  an  unaffiliated  third party filed a complaint
    against the company in  California  Superior  Court,  County of Los Angeles,
    seeking  damages of $1,800,000,  plus interest and attorney fees, for breach
    of contract,  breach of implied contract, and certain damages the individual
    claims are due him under  terms of a 1992  retainer  agreement.  The Company
    believes that the individual failed to competently perform all of his duties
    under  the  agreement,  that  there are no funds  due,  and that the case is
    without  merit.   Management  intends  to  vigorously  defend  the  lawsuit.
    Additionally, the Company has commenced action against the owners of Patmore
    Broadcasting  relating to an option to acquire a radio station in Las Vegas,
    and intends to aggressively  pursue the Company's position that it still has
    a valid option to purchase the radio station.

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

    Other - In connection  with its  investment  in  Electronic  Media Corp made
    subsequent to year end (See Note 10), the Company  agreed to guarantee up to
    $1,500,000  of  equipment  financing,  and is also  committed to issue up to
    5,500,00 shares of the Company's stock based on certain performance levels.


                           F-15

<PAGE>


           LAS VEGAS ENTERTAINMENT NETWORK INC.

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


    9.INCOME TAXES

    The  Company  has  available   unused   operating  loss   carryforwards   of
    approximately  $18,900,000  at October  31,  1996 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 2011.  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.

    10.  SUBSEQUENT EVENTS

    Note Receivable - On January 15, 1997, the Company, through its wholly-owned
    Nevada  subsidiary  Casino- Co, made a 90-day  secured loan of $2,900,000 to
    NPD,  Inc,  ("NPD"),  in order to enable NPD to close the  acquisition  from
    Robert  Brennan (" the  Seller") of 2,904,016  shares (the  "Shares") of the
    common  stock  of  International   Thoroughbred   Breeders,   Inc.  ("ITB"),
    representing  twenty-five  percent (25%) of the outstanding 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  sale  of the  Shares  was
    instrumental  to  the  Company,  as it  will  allow  ITB  to  (i)  meet  the
    requirements of a $100 Million funding proposal that would be used, in part,
    for the renovation and opening by ITB of ITB's 21-acre Strip property in Las
    Vegas, Nevada,  formerly know as the El Ranch Hotel and Casino, in which the
    Company has a continuing cash flow interest,  and (ii) meet the requirements
    of The New Jersey Racing  Commission and Division of Gaming  Enforcement for
    continued  racing  licencing  at ITB's New Jersey  facilities.  The  Company
    believes that the sale of the Shares will also facilitate ITB's  application
    for Nevada Gaming Licencing.

    The loan to NPD is evidenced by a 10% Secured  Promissory  Note due on April
    15, 1997 (the "NPD Note"). The NPD Note is secured by a security interest in
    and to  certain  rights of NPD in and to the  Shares,  subject to a purchase
    money  lien in favor of the Seller for the  balance  of the  purchase  price
    owing to him in respect of the sale of the Shares. In addition, 1,452,088 of
    the Shares are  subject to an existing  purchase  option in favor of a third
    party, and would likely cease to provide  collateral to the Company upon the
    exercise of such option.
    The NPD Note is personally guaranteed by Mr. DeSantis.

    Upon a default by NPD under its payment obligations to the Seller in respect
    of the balance of the  purchase  price for the Shares,  the Seller  would be
    free to exercise certain  creditor's rights under a Pledge Agreement between
    the Seller and ITB in respect of the Shares (the "Pledge  Agreement").  Such
    actions could have the effect of modifying the Company's  security  interest
    in such  collateral,  which at all times is subordinated to and secondary to
    the rights of the Seller.  In the event that the Seller  elects to foreclose
    on the  Shares,  the Company  will be  obligated  to execute  all  documents
    requested by the Seller to reflect the discharge of the  Company's  security
    interest therein. In the event of a sale by the Seller after a default,  the
    Company's  right in such  circumstance  shall  be  limited  to the  right to
    receive  any  proceeds  from such sale  over and above the  amounts  due the
    Seller under the Pledge Agreement. Upon satisfaction of NPD's purchase money
    obligation to the Seller during the term of the NPD Note,  the Company would
    then have a first priority security interest in the Shares.

                           F-16

<PAGE>

           LAS VEGAS ENTERTAINMENT NETWORK INC.

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

    Investment in Electric Media Co. - The Company  entered into an agreement on
    January 31, 1997 whereby it acquired a 5% equity  interest in Electric Media
    Co. Inc. (EMC) and a continuing  royalty in certain of its  operations,  for
    $400,000  plus the  contingent  issuance of up to  5,500,000  shares of LVEN
    common  stock  as  described   below.   EMC,  along  with  a  joint  venture
    partner/developer, is developing technology that if successful, of which the
    Company can give no assurance,  will allow  delivery of media,  Internet and
    telecommunication  services  to  customers  all  over the  world,  utilizing
    existing  power utility  infrastructures.  Field testing of this  technology
    will occur during 1997, and in connection therewith,  the Company has agreed
    to  provide a  guarantee  up to  $1,500,000  for the  financing  of  certain
    equipment  necessary for the field tests. The equipment is returnable to the
    vendor,  without cost to the Company,  should the test not be  satisfactory.
    Upon a successful field test of this technology, the Company is committed to
    deliver  500,000  restricted  shares of its common stock to the developer of
    this technology.

    If the field tests are  successful,  EMC will begin  worldwide  marketing of
    this technology, including the sale and distribution of addressable receiver
    boxes  that are  necessary  to  receive  the data  communication.  LVEN will
    receive,  in perpetuity,  a $25 per unit royalty for each receiver box sold,
    if any. Each time the sale of these units generates $10,000,000 of net after
    tax profits,  the Company will deliver the developer an  additional  500,000
    restricted  shares  of  the  Company's  common  stock,  up to a  maximum  of
    5,000,000  restricted shares. The Company may terminate the agreement at its
    sole discretion, and have no further liability to EMC or the developer.

    Other - Subsequent to October 31, 1996, Mr. Nunzio  DeSantis,  now the Chief
    Operating Officer of ITB, was granted 1,500,000 options to acquire shares of
    the  Company's  Common  Stock at an  exercise  price of $1 per share,  which
    expire in December 1999 as part of consideration  for providing a $6,000,000
    standby funding commitment (See Note 6).
                                      F-17