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

                                   FORM 10-K

          / X /   Annual Report Pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934
                  For the fiscal year ended February 28, 1997
                                      or
          /   /  Transition Report Pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934

                         Commission File Number: 0-20840

                            PRESIDENT CASINOS, INC. 
              (Exact name of registrant as specified in its charter)

               Delaware                                  51-0341200 
    (State or other jurisdiction of                   (I.R.S. Employer
     incorporation or organization)                  Identification No.)

                802 North First Street, St. Louis, Missouri  63102 
                    Address of principal executive offices
                                    
                                 314-622-3000 
               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, $.01 par value 

  Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 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 / /
  Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Registration S-K is not contained herein, and will not be contained, to
the best of the registrant's knowledge, in the definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or
amendment to this Form 10-K.  /X/
  As of May 20, 1997, the aggregate market value of the voting stock held by
non-affiliates of the Registrant was approximately $11,522,389.*
  As of May 20, 1997, the number of shares outstanding of the Registrant's
Common Stock was approximately 30,194,700.
* Calculated by excluding all shares that may be deemed to be beneficially
owned by executive officers and directors of the Registrant, without conceding
that all such persons are "affiliates" of the Registrant for purposes of the
federal securities laws.
                    DOCUMENTS INCORPORATED BY REFERENCE
Part III - The Registrant's definitive Proxy Statement for its annual meeting
of stockholders scheduled to be held July 23, 1997.
<PAGE>
                                     PART I

Items 1. and 2.  Business and Properties.

General

  President Casinos, Inc. (the "Company") develops, owns and operates
riverboat and/or dockside gaming casinos and related operations through its
subsidiaries.  The Company's current gaming facilities and operations are
summarized as follows:

  Davenport, Iowa
    Managing entity                   - The Connelly Group, L.P.
    Vessel                            - "The President"
    Casino square footage             - 37,000
    Slots                             -    815
    Gaming tables                     -     44
    Opening of casino                 - April 1, 1991


  Biloxi, Mississippi
    Managing entity                   - The President Riverboat Casino-
                                        Mississippi, Inc.
    Vessel                            - "The Biloxi Barge"
    Casino square footage             - 38,000 
    Slots                             -    957
    Gaming tables                     -     39
    Opening of casino                 - August 13, 1992
    Opening of current facility       - June 30, 1995


  St. Louis, Missouri
    Managing entity                   - President Riverboat Casino-
                                        Missouri, Inc.
    Vessel                            - "The Admiral"
    Casino square footage             - 56,000 
    Slots                             -  1,122
    Gaming tables                     -     63
    Opening of casino without slots   - May 27, 1994
    Opening of casino with slots      - December 9, 1994

  In addition to its gaming operations, the Company owns and manages certain
hotel and ancillary facilities associated with its riverboat operations in
Davenport, Iowa and operates two nongaming dinner cruise, excursion and
sightseeing vessels on the Mississippi River in St. Louis, Missouri.  The
Company also charters certain of its unused vessels to unrelated third
parties.  Because of the integrated nature of these operations, the Company is
considered to be engaged in one industry segment.

  The Company was incorporated in the State of Delaware in June 1992 and
completed the initial public offering of its Common Stock in December 1992.

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The Company is the successor to businesses operated in St. Louis, Missouri
since 1985, Davenport, Iowa since October 1990 and Biloxi, Mississippi since
August 1992.  The Company's principal executive offices are located in an
approximately 9,500 square foot building owned by the Company at 802 North
First Street, St. Louis, Missouri 63102, and its telephone number is (314)
622-3000.

Current Operations

  Davenport Operations 

  In April 1991, the Company began riverboat gaming operations on the
Mississippi River in Davenport, Iowa on "The President."  The Company's
operating license is renewable annually at the discretion of the Iowa Racing
and Gaming Commission after receipt of a renewal application from the Company. 
The license was last renewed in April 1997.  Davenport, Iowa along with
Bettendorf, Iowa and Rock Island and Moline, Illinois comprise the Quad Cities
metropolitan area.  The Quad Cities metropolitan area has a population of
approximately 360,000, and is approximately a three-hour drive from Chicago.

  "The President," built in 1924, is a five-deck, steel-hulled passenger
vessel and is approximately 300 feet in length.  During the period November
13, 1995 through April 1, 1996, "The President" underwent a $4.0 million
refurbishment and a Coast Guard mandated five-year hull inspection.  During
this time "The President" was temporarily replaced with the Company-owned
vessel, "The President Casino-Mississippi."  "The President," upon completion
of its hull inspection and renovations, reopened on April 3, 1996 with an
increased number of slot machines and other amenities.

  Prior to May 1994, Iowa gaming legislation contained certain limitations
which provided Illinois gaming riverboats a competitive advantage over gaming
concerns in Iowa.  However, in May 1994, Iowa gaming laws were amended to
remove all per passenger loss limitations (previously set at $200 per gaming
session), size of bet limitations (previously set at $5.00) and the
restriction on the percentage of space on a riverboat which may be utilized
for gaming (previously set at 30%).  In addition, the Iowa Racing and Gaming
Commission was granted the authority to set cruising schedules for riverboats
and to permit dockside gaming throughout the year.  The legislation has
enabled the Company to compete more effectively against Illinois riverboats
which are required to cruise during gaming sessions. The Company must
currently conduct at least 100 riverboat cruises per year, the timing of which
are set at the Company's discretion with the approval of the Iowa Racing and
Gaming Commission.  Iowa riverboats can remain dockside for all other gaming
sessions.  The casino is open 24 hours per day, seven days per week.

  Competition for local customers continues to intensify in the Quad Cities
metropolitan area.  In April 1995 a new casino commenced operations in
Bettendorf, Iowa, which is located on the Mississippi River five miles upriver
from the Davenport operations.  With the addition of this casino, there are
now four casinos competing in the Quad Cities market within a 25 mile radius
of "The President."  One of those casinos is located on the Illinois side of 

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the Mississippi River where the gaming laws currently require riverboat
casinos to cruise for all of their gaming sessions.  A change in the Illinois
cruising laws could have an adverse effect on the Davenport operation.

  The Company's other Davenport facilities are an adjunct to its gaming
operations and are not viewed as independent profit centers.  The Company owns
and operates The Blackhawk Hotel in downtown Davenport, located approximately
two blocks from "The President."  The Blackhawk Hotel has 189 rooms and is
connected to the RiverCenter, a 10,000 square foot convention center operated
by the City of Davenport.  The hotel also features a 500-seat grand ballroom
and five additional meeting rooms to accommodate meetings and convention
activities.  During fiscal 1996, a new 223-room hotel opened directly across
from "The President."  While the new hotel has intensified competition for The
Blackhawk Hotel, management believes the addition of hotel rooms to the Quad
Cities market has improved the marketability of the Quad Cities for the
Company's gaming operations.

  Pursuant to a development agreement with the City of Davenport, the Company
submitted to the City plans for the development of certain Company-owned
property located in close proximity to "The President."  During fiscal 1996,
the Company and the City reached a mutually acceptable development plan that
included the expansion of the Company's parking areas.  The Company has fully
funded its obligation under the agreement.  However, the construction has not
yet been completed.  The construction is scheduled to be completed in the
Summer of 1997, at which time the Company will be released from its $250,000
surety bond (see Note 11 to the Consolidated Financial Statements).

  The Company leases certain levee property in Davenport, Iowa from the City
of Davenport.  This lease expires in 2017. The Company is required to pay
certain boarding and docking fees and a special payment in lieu of property
taxes to the City.  These fees currently aggregate to a base amount of
$814,000 plus 82 cents per passenger over 1,117,579 passengers.  Both the base
amount and per passenger charges related to the docking fees are subject to an
annual 4% escalator.

  Biloxi Operations

  The Company conducted dockside gaming operations in Biloxi, Mississippi on
"The President Casino-Mississippi" from August 13, 1992 through June 18, 1995
through its wholly-owned subsidiary, The President Riverboat Casino-
Mississippi, Inc. ("President Mississippi").  "The President Casino-
Mississippi" was the smallest of 13 casinos operating in the Mississippi Gulf
Coast market.  On June 30, 1995, the Company reopened the Biloxi gaming
operations aboard the newly renovated "The Biloxi Barge."  Replacing "The
President Casino-Mississippi" with "The Biloxi Barge" increased casino square
footage from 20,500 to 38,000.  In addition, "The Biloxi Barge" features a
full service 250-seat dining facility, an amenity not available on the
previous facility.  Biloxi is located on the Gulf of Mexico 75 miles east of
New Orleans.  The Biloxi/Gulfport/Bay St. Louis area has a population of
approximately 125,000.   The Company's Mississippi gaming license was last
renewed in June 1996 for a two-year period.

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<PAGE>

  Since gaming began in Mississippi in August 1992, competition has increased
significantly in the Mississippi Gulf Coast market.  There are currently ten
casinos operating in this area.  The Company's operating results have been
materially and adversely affected as a result of such increased competition. 
The Company also faces competition from gaming operations in the metropolitan
New Orleans area and elsewhere in Louisiana and Mississippi.  As of February
28, 1997, the New Orleans metropolitan area had four casinos in operation.

  Management believes Biloxi is now moving into a new generation of casino
operations and is becoming a major destination point for gaming entertainment. 
The area is becoming more widely known with many guests coming long distances
to enjoy the weather, beaches, golfing and other entertainment.  During recent
years, several large gaming companies have built large hotel/casino complexes
and have captured a significant portion of the Mississippi Gulf Coast market. 
This trend is continuing, with several new large projects under construction. 
Many of these competitors have substantially greater name recognition and
financial and marketing resources than the Company.

  In order to provide the Company with the opportunity to compete more
effectively in the Biloxi market, on February 17, 1995, President Mississippi
Charter Corporation ("Charter Corporation"), a newly formed, wholly-owned,
non-guarantor subsidiary of the Company, entered into a charter agreement (the
"Charter Agreement") with American Gaming and Entertainment, Ltd. ("AGE"). 
Pursuant to the Charter Agreement, Charter Corporation agreed to charter "The
Biloxi Barge" from AGE for an initial term of five years at a cost of
approximately $329,000 per month commencing on June 19, 1995 (the "Charter"). 
Under the Charter Agreement, Charter Corporation is responsible for all
insurance, maintenance and other operating costs relating to "The Biloxi
Barge" during the term of the Charter.  The Charter Agreement provides that
Charter Corporation may, at its option, extend the term of the Charter
Agreement for two additional five-year terms at the same charter rate.  In
addition, Charter Corporation has the option to purchase "The Biloxi Barge" at
any time during the term of the Charter Agreement for a purchase price equal
to the lower of the appraised value or the amortized value (as such terms are
defined in the Charter Agreement); provided, however, that AGE may refuse to
sell "The Biloxi Barge" for a purchase price of less than 90% of the amortized
value.  Charter Corporation acquired approximately 600 slot machines utilized
by AGE on "The Biloxi Barge" in exchange for the assumption of certain related
indebtedness.  The monthly payments of such indebtedness, which total
$121,000, began in June 1995 and end in August 1997.  The Company retained
"The President Casino-Mississippi" for use at the Company's other gaming
operations (see Davenport Operations and St. Louis Operations).  President
Mississippi subleases "The Biloxi Barge" from Charter Corporation for a term
of five years on substantially the same terms contained in the Charter
Agreement.  AGE has filed an action against Charter Corporation and President
Mississippi with respect to certain disputed charter payments under the
Charter Agreement.  See "Item 3.  Legal Proceedings."

  Management believes that "The Biloxi Barge" improved the Company's presence
in Biloxi and has positioned the Company to continue to capture a portion of 
the remaining market.  However, management believes that as newer and larger

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<PAGE>
casino complexes enter the Mississippi Gulf Coast market, it will become more
difficult to compete.  Thus, the Company continues to study strategic
alternatives related to the Biloxi casino operation.

  "The Biloxi Barge" is docked near the Broadwater Beach Hotel and Resort (the
"Resort") where the Company leases a mooring site, parking facilities and
offices from BH Acquisition Corporation ("BH").  BH is wholly-owned by John E.
Connelly, Chairman, President, Chief Executive Officer and principal
stockholder of the Company.

  The Resort, together with its affiliated hotels, The Broadwater Tower and
Broadwater Inn (collectively, "the Resorts"), have approximately 800 rooms and
are in close proximity to the Biloxi convention center.  The Company,
generally through tour operators, arranges for groups to be brought to the
Resorts in anticipation that members of these groups will utilize the
Company's gaming facilities.  Room costs, at fair market value, are paid
either by group members, the tour operator, the Company or a combination
thereof.

  The initial term of the lease of the mooring site, parking facilities and
offices for the Company's Biloxi operations (the "Biloxi Lease") expired July
14, 1995 and the Company exercised its right for the first of nine three-year
renewal options.  The current rent under the lease is approximately $3.3
million per year and the Company is required to pay for all improvements to
the leased premises and to bear the cost of all taxes, fees, assessments and
expenses.  Upon each such renewal, the rent will be increased to reflect
changes in the consumer price index or adjusted to an independent fair market
appraisal of the property.

  The premises subject to the Biloxi Lease have been determined by the
Secretary of State of Mississippi to constitute tidelands under the
Mississippi Trust Tidelands Act (the "Tidelands Act").  Under the Tidelands
Act, land which falls below the mean high tide level may be determined to
constitute tidelands by the Secretary of State of Mississippi.  The Tidelands
Act provides that land which is designated as tidelands is deemed to be owned
by the State of Mississippi in trust.  Property owners of affected land are
provided the first opportunity to negotiate with the State of Mississippi for
a lease of the property.  During December 1996, BH entered into a 40-year
lease agreement (the "Tidelands Lease") with the State of Mississippi for said
tidelands for an annual rental fee of approximately $21,000, adjustable every
five years as defined in the lease agreement.  The Company has entered into a
sublease agreement from BH under the same terms as the Tidelands Lease.

  On May 13, 1997 the Company announced that it has agreed in principal to
purchase for approximately $40.5 million certain real estate and improvements
located on the Gulf Coast in Biloxi, Mississippi from BH.  The property
comprises approximately 260 acres and includes the Resort and the Broadwater
Tower (two hotels with over 500 rooms), the 138-slip Broadwater Marina, and
the adjacent 18-hole Sun Golf Course.  The Broadwater Marina is currently the
site of the Company's casino operations in Biloxi and is leased by the Company
from BH under a long-term lease agreement.  The purchase is subject to 

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<PAGE>

finalization of financing and various other details related to the transition.

  The Company anticipates investing $5.0 million in President Broadwater
Hotel, LLC, which would own and operate the new properties.  This entity would
finance the purchase with $30.0 million of outside financing and $10.0 million
of purchase money preferred equity from BH.  Such financing would be non-
recourse to the Company.

  St. Louis Operations

  On May 27, 1994, the Missouri Gaming Commission licensed the Company to
conduct dockside gaming operations on "The Admiral" in St. Louis, Missouri
through its wholly-owned subsidiary, President Riverboat Casino-Missouri, Inc.
("President Missouri"). The Company's initial license was subsequently renewed
and has been extended until June 30, 1998.

  "The Admiral," an approximately 400-foot long vessel, is continuously docked
near the base of the Gateway Arch at a mooring site leased by the Company from
the City of St. Louis.  The Company commenced limited gaming operations on
"The Admiral" with 64 blackjack tables, 10 craps tables, 22 poker tables and
approximately 400 video poker games.  On November 8, 1994, in a statewide
referendum, Missouri voters approved a constitutional amendment permitting the
operation of "games of chance," including slot machines, on riverboat gaming
facilities in Missouri.  Following such approval, the Company re-configured
"The Admiral" to include slot machines.

  The Company leases five mooring sites in St. Louis, Missouri from the City
of St. Louis.  The Company's leases (including the lease for "The Admiral's"
mooring site) provide that upon the use of a vessel as a gaming facility, the
rentals will increase by an amount equal to 2% of the gross receipts realized
from its riverboat gaming activities (total amount wagered less winnings paid
to wagerers).  This percentage may be adjusted (higher or lower) to equal the
gaming rentals charged to other properties in the riverfront area of St. Louis
where gaming is conducted.  Such an agreement may result in a substantial
increase in the Company's St. Louis lease fee.  A substantial increase may
have a material adverse effect on the Company's future St. Louis gaming
operations.

  The St. Louis mooring leases expire on dates ranging from 2002 to 2013,
assuming the exercise of all extension options provided therein.  The lease
for "The Admiral" mooring site terminates in December 2008.  The extension
options provided under two of the leases must be approved by the City, which
approval the City may not unreasonably withhold.  However, the City will be
deemed to have approved each extension exercised by the Company if the Company
is in compliance with the lease terms.  Each lease grants the City the right
to change or cancel the lease or to relocate the Company's mooring locations
for right-of-way, sewer or flood wall construction purposes.  Each lease,
except "The Admiral" lease, allows the City to terminate the lease for any
municipal use, including the economic development of a designated portion of
the central riverfront area of St. Louis, where the lease sites are located. 
The City is also permitted to terminate any lease if the Company does not 

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operate at the leased moorings for 12 consecutive months. 

  Competition is intense in the St. Louis market area.  There are presently
five other casino companies operating in the market area and competing for
local customers. Two of these are Illinois casino companies operating single
casino vessels on the Mississippi River, one directly across the Mississippi
from the "The Admiral" and the second 20 miles upriver in Alton, Illinois. 
There are three Missouri casino companies, each of which operates two casino
vessels approximately 20 miles west of St. Louis on the Missouri River, one in
the City of St. Charles, Missouri and two in Maryland Heights, Missouri.  The
two in Maryland Heights opened in March 1997.  Riverboats in each of the
states, Illinois and Missouri, have competitive advantages/disadvantages
resulting from gaming regulations in their respective states.  While Missouri
regulations do not require the vessels to actually cruise, simulated cruising
requirements are imposed which allow entry on a vessel for only a 45 minute
period every two hours.  Those competitors having two casino vessels can
alternate hourly boarding times and provide virtually continuous boarding for
guests.  Thus, they have a distinct competitive advantage over the Company,
which has only one vessel, "The Admiral."  Illinois casino vessels are
required to cruise, thereby limiting ingress and egress to the casinos.  In
addition, Missouri regulations limit the loss per cruise per passenger by
limiting the amount of chips or tokens a guest may purchase to $500 per two-
hour gaming session.  The lack of a statutory loss limit on Illinois casinos
allows them to attract higher stake gamblers; additionally, their guests are
not burdened with the administrative requirements related to the loss limits. 
Any change in the legislation related to these requirements could have a
positive or negative impact on the competitive environment between Missouri
and Illinois casinos.

  In April 1996, the Company applied to the Missouri Gaming Commission for a
license to operate a second riverboat casino on the St. Louis riverfront.  A
second riverboat would allow for virtually continuous boarding for guests upon
one of the two vessels.  While opening a second boat will remain under
consideration, the Company currently believes that the potential economic
benefits do not justify the necessary capital outlay.

  On November 17, 1995, the Board of Aldermen of the City of St. Louis
approved a lease agreement with a new developer (the "Developer") for the
development of the Laclede's Landing site, a section of waterfront property
north of the present mooring site of "The Admiral".  Such lease is contingent
upon various events occurring including, among others, the selection of the
Developer by the Missouri Gaming Commission for investigation for a gaming
license and a determination by the Developer that development of the Laclede's
Landing site would be economically feasible.  The lease provides for up to
twenty months for completion of the above and other pre-development matters,
and for up to an additional thirty months for completion of the project.  In
the event that the Developer develops the Laclede's Landing site and commences
gaming operations, "The Admiral" will face increased competition, which may
have a material adverse impact on its gaming operations.  Additionally, it may
result in an increase to "The Admiral's" mooring lease fees and other
consideration payable to the City, as discussed above.

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  The Company has operated dinner cruise, excursion and sightseeing riverboats
on the Mississippi River at St. Louis since 1985.  The Company currently owns
and operates two such vessels, each with a capacity of approximately 350
passengers.

  Vessels Owned/Chartered

  In addition to the vessels presently used in its gaming operations, the
Company owns the "Majestic Star" (formerly "The President Casino-V").  The
"Majestic Star" is a 308 foot long sea-worthy passenger boat which the Company
had intended to use in a Gary, Indiana gaming development which was
subsequently abandoned.  On August 15, 1995, the Company entered into a
charter agreement with its former Indiana partner ("Barden") to lease the
"Majestic Star," without gaming equipment, for a five-year term (which term is
cancelable at any time by Barden upon 180-day advance written notice) at an
annual rental fee of $1.5 million for the first two years and for fair market
value thereafter.  This charter commenced in May 1996.  Barden has publicly
announced its intent to replace the "Majestic Star" with a newly constructed
vessel in October 1997. A new vessel is required under the terms of Barden's
bond indenture.  The Company has not received the 180-day advance written
notice, but anticipates that the charter will end in late Fall of 1997.

  The Company also owns "The President Casino-Mississippi", previously
utilized at the Company's Biloxi and Davenport operations.  "The President
Casino-Mississippi" is 292-feet long and 65-feet wide, contains 22,000 square
feet of gaming space on three decks and will accommodate approximately 620
slot machines and 40 table games.  Gaming can be conducted on all three of the
vessel's decks.  The Company is currently seeking various alternatives,
including, but not limited to, the sale or lease of this vessel. 

Potential Growth Opportunities

  The Company continually and selectively explores gaming developments in
current and emerging gaming markets, including riverboat, land-based and
Indian gaming opportunities.  Pursuit of such opportunities by the Company is
dependant upon a number of economic and regulatory factors including the
Company's ability to secure required federal, state and local governmental
licenses and approvals and the availability of financing for such projects on
acceptable terms.  In addition, the Company is subject to intense competition
from other companies in the same industry for the development of new gaming
opportunities, many of which have significantly greater financial, marketing
and other resources than the Company.  Accordingly, there can be no assurance
that the Company will be able to pursue other identified gaming opportunities
or recover its investment in any such new opportunities.

  Biloxi, Mississippi

  See "Current Operations - Biloxi" for details regarding the Company's
potential acquisition of 260 acres in Biloxi, Mississippi.  This site, with
its beachfront location and contiguous golf course, has excellent potential
for being developed into a full-scale luxury destination resort offering an 

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array of entertainment attractions in addition to gaming.  It is also uniquely
qualified to be a multi-casino facility.  If the acquisition of the property
is completed, the Company would seek a joint venture partner to develop the
site.

  Philadelphia, Pennsylvania

  In December 1993, the Company entered into an agreement for the rights to
utilize an 18-acre riverfront site in Philadelphia, Pennsylvania (the
"Philadelphia Property") either through entering a long-term lease on the
property or, under certain conditions, to purchase the property at its
determined fair market value.  The Company also acquired an option to lease a
city-owned pier which is located on property immediately contiguous to the
Philadelphia Property (the "Pier").  The Company believes that the
Philadelphia Property is a prime gaming site because it is readily accessible
from major highways and will permit adequate parking and room for additional
development.  The Company entered into the lease option and the option for the
pier in anticipation of the legalization of gaming in Pennsylvania.  The
agreement prohibits the Company from owning or managing any gaming facility in
Philadelphia, other than a facility to be located on the Philadelphia
Property.

  The lessor of the Philadelphia Property also assigned (the "Assignment") to
the Company all of the lessor's rights, title and interest under an option
agreement with the City of Philadelphia which provides that the lessor may
enter into a 99-year lease of the Pier.

  During fiscal 1996, based upon developments which indicated an uncertainty
as to the passage of riverboat gaming legislation in Pennsylvania prior to the
expiration of the initial option agreement, the Company wrote-off the
accumulated cost of the option of $11.0 million.

  On May 7, 1996, the Company entered into a separate agreement to secure
additional lease rights with respect to the same property.  As part of the
agreement, the Company paid $2.0 million to secure the right to purchase
additional options for five separate periods extending from January 1, 1997
through December 31, 1999.  The first option period covers the twelve-month
period January 1 through December 31, 1997.  The four remaining option periods
are for subsequent six-month intervals.
  
  In December 1996, the Company modified and exercised its option agreement to
secure the above lease rights for the period January 1, 1997 through December
31, 1997.  Pursuant to the modified option agreement, the Company remitted 
$1.2 million.  The modified agreement also calls for additional payments of up
to $2.1 million if an authorized state-wide voter referendum on the
legalization of full scale riverboat gaming in Philadelphia County,
Pennsylvania is placed on the ballot during calendar 1997 or a new gaming
company is obtained for the second gaming site at the location.
 
  Each of the four remaining option periods require the Company to pay $0.3
million per month through the option period.  Upon the exercise of any option, 

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the Company would begin a ten-year lease with five (5), five (5) year
extensions available.  If the Company exercises this option, the Company will
be obligated to pay annual rent based upon a combination of fixed minimum
payments or a percentage of the Company's "net gaming win" (as defined in the
lease agreement), but in no event will such minimum annual rent be less than
$3.5 million.  During the option period and the lease period, the Company will
be obligated to pay all maintenance costs, taxes and insurance with respect to
the property.

  Massena, New York

  In October 1993, the Company entered into a joint venture with an unrelated
third party to manage one of the land based gaming casinos to be owned by the
St. Regis Mohawk Indian Tribe (the "Tribe") on its reservation near Massena,
New York.  Massena is located approximately 50 miles from Montreal, Canada. 
The Company, through a wholly-owned subsidiary, owns a 50% interest in the
joint venture.  The Tribe has entered into a Compact with the State of New
York.  The Compact has been approved by the Bureau of Indian Affairs and the
management agreement was submitted to the National Indian Gaming Commission
("NIGC") for its approval.  However, a new chief of the Mohawk Indian Tribe
was elected after the execution of the management agreement and the Tribe
subsequently notified the NIGC of its desire to withdraw its request for
approval of the management agreement in order to provide the members of the
Tribe an opportunity to review the agreement.  Due to the uncertainty with
respect to this transaction and the Company's ability to recover its costs,
the Company wrote-off its $4.1 million investment in this project during
fiscal 1995.

  On December 1, 1995, the joint venture entered into an amended and restated
management agreement with the Tribe.  This agreement was later amended on
April 18, 1996.  The management agreement, which is for a term of five years,
was submitted to the Bureau of Indian Affairs for approval.  Such approval is
contingent upon the Company receiving project financing that is acceptable to
both the Company and the NIGC.  The Tribe may terminate the management
agreement at any time prior to the receipt of such approval.  There can be no
assurance that the joint venture will obtain financing on acceptable terms, if
at all, or if such financing is obtained, that the NIGC will approve the
management agreement.  If the management agreement is approved, the Company
will be obligated to contribute an additional $2.3 million to the joint
venture for use primarily for licensing and related fees and to lend
approximately $15.0 million to the joint venture for use primarily for the
construction and the equipping of a 76,800 square foot gaming facility which
the Company expects to initially contain approximately 100 tables games and
1,500 bingo seats.  Current New York law does not permit slot machines to be
utilized at the proposed gaming facility and a federal court has held that the
use of video pull tabs is not permitted.  The Company, with the consent of the
Tribe, may make an additional investment of up to $2.3 million if such
investment is warranted.  Subject to guaranteed minimum monthly payments to
the Tribe of $250,000 to $800,000 and the repayment of the Company's loan, the
joint venture will receive 25% of the net revenues generated from the gaming
facility, one-half of which will be the Company's share.  In the event the 

                                     10
<PAGE>
Company proceeds with this project, there can be no assurance that the joint
venture will be profitable.

Marketing and Sales 

  The Company targets its marketing efforts at middle income recreational
gaming customers.  The Company relies on a mix of billboards, television,
radio and print advertisements in both the local and regional markets, to
attain a high recognition level.  The Company also has its "Captain's Club"
preferred slot player program, together with electronic slot player tracking,
a table player tracking and rating system, hosts, gaming tournaments, special
events, direct mailing, telemarketing and other casino marketing techniques to
identify, recognize and cultivate frequent and better casino customers.  This
effort is supported by direct marketing, a targeted trade advertising schedule
and attendance at industry trade shows and sales gatherings.

Regulatory Matters

  Gaming Regulations

  General.  The ownership and operation of gaming facilities are subject to
extensive state and local regulation.  The Company's Davenport operations are
regulated by the Iowa Racing and Gaming Commission, the Company's Biloxi
operations are regulated by the Mississippi Gaming Commission and the
Company's St. Louis gaming operations are regulated by the Missouri Gaming
Commission.  As a condition to obtaining and maintaining a gaming license, the
Company must submit detailed financial, operating and other reports to each
such Commission, each of which has broad powers to suspend or revoke licenses. 
In addition, substantially all of the Company's material transactions are
subject to review and/or approval by the various regulatory bodies.  Any
person acquiring 5% or more of the Common Stock or of the equity securities of
any gaming entity must be found suitable by the appropriate regulatory body.

  Various license fees and taxes are payable to the jurisdictions in which the
Company conducts gaming operations.  These taxes are calculated in various
ways, are generally payable either weekly, monthly, quarterly or annually and
may be based upon (i) a percentage of the gross gaming revenues received by
the casino operation, (ii) the number of slot machines operated by the casino,
(iii) the number of table games operated by the casino and/or (iv) passenger
counts.  A casino entertainment tax is also paid by the licensee where
entertainment is furnished in connection with the selling of food or
refreshments.  The Company estimates that state and local gaming taxes for the
Company's Biloxi operation approximate 12% of net gaming win plus certain
fees.  Iowa has a graduated tax of approximately 20% of net gaming win and
charges additional fees on a per customer and per boat basis.  Under the
Operator's Contract, as amended, the Company is required to pay the Riverboat
Development Authority (the "Authority") $27,500 per week and $1.50 per
passenger in excess of 1,117,579 passengers during the period April 1 through
March 31 of each year.  The Company also pays the Authority an amount equal to
2% of the adjusted gaming receipts in excess of $34.0 million for each of the
Authority's fiscal years commencing July 1, 1994.  The Company also pays the 

                                      11
<PAGE>
City of Davenport (i) an annual minimum boarding fee equal to the greater of
$558,790 or 50 cents per passenger, (ii) a guaranteed docking fee of $131,000
plus 11.7 cents per passenger in excess of 1,117,579 passengers during the
period April 1 through March 31 of each year and (iii) an annual lump sum
payment of $123,516 plus 20 cents per passenger in excess of 1,117,579
passengers during the period January 1 to December 31, commencing January 1,
1995.  The Missouri gaming legislation imposes a tax of 20% of adjusted gross
receipts from gaming activities and a $2.00 per passenger fee.

  The Company, its employees and other individuals or entities having material
relationships with the Company are required to obtain and hold various
licenses and approvals in Iowa, Mississippi and Missouri and will most likely
be required to do so in each other jurisdiction in which the Company may
conduct a gaming operation.  If a gaming authority were to find a director,
officer or key employee unsuitable for licensing or unsuitable to
continue having a relationship with the Company, the Company would have to
suspend or dismiss such person.  The failure of the Company or any of its key
personnel to obtain or retain a license in any jurisdiction could have a
material adverse effect on the Company and its prospects or its ability to
obtain or retain licenses in other jurisdictions.  Generally, regulatory
authorities have broad discretion in granting, renewing and revoking licenses.
Moreover, any jurisdiction into which the Company may seek to expand its
gaming operations may require the Company to apply for and obtain regulatory
approvals with respect to the construction, design and operational features of
the vessel it intends to utilize.  Obtaining such licenses and approvals may
be costly, time consuming and cannot be assured.  Riverboat as well as certain
dockside operations are also subject to stringent regulation by the U.S. Coast
Guard and to marine insurance requirements.

  The Company may be subject to substantial fines for each violation of a
gaming law or regulation.  In addition, a violation of a gaming law or
regulation may subject a license to suspension or revocation.  Limitation,
conditioning or suspension of a gaming license could (and revocation of any
gaming license would) materially adversely affect the operations in that
jurisdiction.

  In July 1996, a bill was passed by the U.S. Congress establishing a National
Gaming Impact and Policy Commission to conduct a comprehensive study of the
social and economic impacts of gambling in the United States and make
recommendations for changes to the policies governing gambling that the
Commission may deem appropriate.  While it is not possible at this time to
predict the outcome of the Commission's deliberations, any further regulation
of gaming at the federal level may result in further regulation of the
Company's gaming operations which could have a material adverse impact on the
Company's future results of operations.

  Mississippi Gaming Regulations.  Gaming was authorized in Mississippi in
June 1990 but gaming operations did not commence until August 1992.  The
ownership and operation of casino gaming facilities in Mississippi are subject
to extensive state and local regulation.  The Company is registered as a
publicly traded holding company under the Mississippi Gaming Control Act and 

                                      12
<PAGE>
its gaming operations are subject to the licensing and regulatory control of
the Mississippi Gaming Commission (the "Mississippi Commission") and various
local, city and county regulatory agencies.

  Licenses to conduct gaming operations in the State of Mississippi are not
transferable and are required to be renewed on a periodic basis.  Each issuing
agency may at any time revoke, suspend, condition, limit or restrict a license
or deny approval to own shares of stock in the Company or a gaming entity for
any cause deemed reasonable by such agency.

  The Mississippi Commission has the authority to require a finding of
suitability with respect to any stockholder regardless of such stockholder's
percentage of ownership.  In this regard, the Company's Certificate of
Incorporation provides that the Company may redeem any shares of the Company's
capital stock held by any person or entity whose holding of shares may cause
the loss or non-reinstatement of a governmental license held by the Company. 
Such redemption shall be at fair market value, as defined in the Company's
Certificate of Incorporation, regardless of the price the stockholder paid for
the shares.  Mississippi law also contains a provision which requires the
Company to purchase for cash all shares of any stockholder found unsuitable by
the Mississippi Commission and requires such purchase to be made within ten
days of the finding of unsuitability.  In either case, the stockholder is
required to pay all costs of investigation.  In addition, any individual who
is found to have a material relationship to, or material involvement with, the
Company may be required to be investigated in order to be found suitable or to
be licensed as a business associate.  Key employees, controlling persons or
others who exercise significant influence upon the management or affairs of
the Company may also be deemed to have such a relationship or involvement.

  In connection with its license, the Company and President Mississippi are
required to submit detailed financial, operating and other reports to the
Mississippi Commission.  Substantially all loans, leases, sales of securities
and similar financing transactions entered into by President Mississippi must
be reported to or approved by the Mississippi Commission.  In addition, the
Mississippi Commission regulates the Company's ability to engage in certain
types of transactions.  For example, a change in control of the Company or a
plan of reorganization (as defined in the regulations) by the Company may not
occur without the prior approval of the Mississippi Commission.  Similarly,
Mississippi gaming legislation requires that each person employed by President
Mississippi as a gaming employee obtain a valid work permit issued by the
Mississippi Commission.  In addition, applicable provisions of the Local
Option Alcoholic Beverage Control Law of the State of Mississippi require that
each employee of a licensed retailer who handles alcoholic beverages obtain a
valid permit issued by the Alcoholic Beverage Control Division of the
Mississippi State Tax Division.  All employees of President Mississippi who
are required to obtain such permits have either obtained such permits or have
completed applications therefor and are permitted to act in the positions for
which they were hired pending approval of such applications.

  The Mississippi Commission has the authority to approve or disapprove the
Company's future operations outside of Mississippi.  The Company's Davenport 

                                    13
<PAGE>
operations were reviewed and approved during its Biloxi licensing process.  On
May 24, 1993, the Company received all requisite approvals from the
Mississippi Commission to conduct gaming operations in the jurisdictions in
which it was then operating or proposing to operate without further action by
the Mississippi Commission.  The Company's current non-Mississippi gaming
operations do not require re-approval by the Mississippi Commission except as
part of the Company's application for renewal of its license.  The Mississippi
regulations require that the Company notify the Mississippi Commission prior
to conducting gaming operations in any additional jurisdictions and provide
certain documentation to the Mississippi Commission relating to proposed
gaming operations.

  Iowa Gaming Regulations.  In 1989, the State of Iowa enacted The Excursion
Gambling Act which legalized riverboat gaming on the Mississippi and Missouri
Rivers and certain other waterways located in Iowa.  Pursuant to The Excursion
Gambling Act, the Iowa Racing and Gaming Commission (the "Iowa Commission")
was established with jurisdiction to regulate all gaming operations in Iowa. 
In May 1994, the Iowa gaming laws were amended to remove all per passenger
loss limitations, size of bet limitations and restrictions on the percentage
of space on a riverboat which may be utilized for gaming and authorized the
Iowa Commission to set cruising schedules for riverboats and to permit
dockside gaming throughout the year.

  The ownership and operation of gaming facilities in Iowa are subject to
extensive state laws, regulations of the Iowa Commission and various county
and municipal ordinances concerning, among other things, the responsibility,
financial stability and character of gaming operators and persons financially
interested or involved in gaming operations.  All gaming operators must be
approved and licensed by the Iowa Commission.  Gaming licenses are issued for
not more than three years and are subject to annual renewals thereafter.  The
Iowa Commission has broad discretion with respect to such renewals.  Licenses
issued by the Iowa Commission may not be transferred to another person or
entity.  The Company is required to submit detailed financial and operating
reports to the Iowa Commission.  Contracts in excess of $50,000 must be
submitted to and approved by the Iowa Commission.

  Gaming is permitted only on riverboats which recreate, as nearly as
practicable, Iowa's riverboat history and have a capacity for at least 250
persons.  In addition, the licensee must utilize Iowa resources, goods and
services in the operation of the riverboat.  An excursion gambling boat must
operate at least one excursion each day for 100 days during the excursion
season from April 1 through October 31.  Excursions consist of a minimum of
two hours.  While an excursion gaming boat is docked, passengers may embark or
disembark at any time.

  Pursuant to its rule-making authority, the Iowa Commission requires
officers, directors and certain key employees of the Company to be licensed by
the Iowa Commission.  In addition, anyone having a material relationship or
involvement with the Company may be required to be found suitable or to be
licensed.  The Iowa Commission has jurisdiction to disapprove a change in
position by such officers or key employees and the power to require the 

                                     14
<PAGE>
Company to suspend or dismiss officers, directors or key employees or sever
relationships with other persons who refuse to file appropriate applications
or whom the Iowa Commission finds unsuitable to act in such capacities.

  The Iowa Commission may also require any individual who has a material
relationship with the Company to be investigated and licensed or found
suitable.  Any person who acquires 5% or more of the Company's equity
securities must be approved by the Iowa Commission prior to such acquisition. 
The applicant stockholder is required to pay all costs of such investigation. 

  Missouri Gaming Regulations.  Gaming on the Missouri and Mississippi Rivers
in the State of Missouri was originally authorized pursuant to a statewide
referendum on November 3, 1992. On April 29, 1993, Missouri enacted revised
legislation (the "Missouri Gaming Law") which amended the existing
legislation.  The Missouri Gaming Law also established the Missouri Gaming
Commission (the "Missouri Commission"), which is responsible for the licensing
and regulation of gaming in Missouri and has the discretion to approve license
applications for both permanently moored ("dockside") riverboat casinos and
powered ("excursion") riverboat casinos.

  On January 25, 1994, the Missouri Supreme Court held that games of chance,
including certain games authorized under the Missouri Gaming Law such as bingo
and keno, constituted "lotteries" and were therefore prohibited under the
Missouri Constitution.  On April 5, 1994, Missouri voters narrowly defeated
the adoption of a constitutional amendment which would have exempted excursion
boats and floating facilities from such constitutional prohibition on
lotteries.  In a statewide election on November 8, 1994, Missouri voters
approved the adoption of an amendment to the Missouri Constitution which
authorizes both games of skill and games of chance, a measure virtually
identical to the one which was defeated in April 1994.

  Under the Missouri Gaming Law, the ownership and operation of riverboat
gaming facilities are subject to extensive state and local regulation.  The
Missouri Commission has broad discretion to revoke or suspend gaming licenses
and impose other penalties for violation of the Missouri Gaming Law and the
rules and regulations promulgated thereunder.  Licenses issued by the Missouri
Commission to conduct gaming operations are subject to periodic renewals and
may not be transferred or pledged as collateral.  The Company, its
subsidiaries and certain of its officers and employees are subject to various
regulations.  The Company is prohibited from making a public issuance of debt
or equity or engaging in various other financial transactions without first
notifying the Missouri Commission at least 60 days prior to consummation of
such a transaction.  The Missouri Commission may disapprove such issuance or
require such issuance to be delayed pending further investigation.  

  The Missouri Gaming Law imposes operational requirements on riverboat
operators, including a charge of two dollars per gaming customer that
licensees must pay to the Missouri Commission, a minimum payout requirement of
80% for slot machines, prohibitions against providing credit to gaming
customers (except for the use of credit cards and cashing checks) and a
requirement that each licensee reimburse the Missouri Commission for all costs 

                                      15
<PAGE>

of any Missouri Commission staff necessary to protect the public on the
licensee's riverboat.  Licensees must also submit audited quarterly financial
reports to the Missouri Commission and pay the associated auditing fees.  The
Missouri Gaming Law provides for a loss limit of $500 per person per
excursion.  Although the Missouri Gaming Law does not limit the amount of
riverboat space that may be used for gaming, the Missouri Commission is
empowered to impose such space limitations through the adoption of rules and
regulations.

  With respect to the availability of dockside gaming, which may be more
profitable than excursion gaming, the Missouri Commission is empowered to 
determine on a site by site basis where such gaming is appropriate and shall
be permitted. 

  Nongaming Regulations

  The Company and its gaming subsidiaries are subject to certain federal,
state and local safety and health laws, regulations and ordinances that apply
to non-gaming businesses generally, such as the Americans with Disabilities
Act, the Clean Air Act, Clean Water Act, Occupational Safety and Health Act,
Resource and Conservation Recovery Act and the Comprehensive Environmental
Response, Compensation and Liability Act.  The Company has not made material
expenditures with respect to such laws and regulations.  However, the coverage
and attendant compliance costs associated with such laws, regulations and
ordinances may result in future additional costs to the Company's operations. 
For example, in 1990 the U.S. Congress enacted the Oil Pollution Act to
consolidate and rationalize mechanisms under various oil spill response laws. 
The Department of Transportation has proposed regulations requiring owners and
operators of certain vessels to establish through the U.S. Coast Guard
evidence of financial responsibility in the amount of $5.5 million for
clean-up of oil pollution.  This requirement would be satisfied by either
proof of adequate insurance (including self-insurance) or the posting of a
surety bond or guaranty.

  Additionally, the Environmental Protection Agency (the "EPA") has requested
certain information regarding compliance by President Missouri with federal
environment laws in connection with the operation of "The Admiral" in St.
Louis.  See "Legal Proceedings."

  All vessels operated by the Company must comply with U.S. Coast Guard
requirements as to safety and must hold a Certificate of Inspection.  These
requirements set limits on the operation of the vessels and require that each
vessel be operated by a minimum complement of licensed personnel.  Loss of the
vessel's Certificate of Inspection would preclude its use as a riverboat. 
Every five years, excursion vessels must be drydocked for an inspection of the
outside of the hull resulting in a loss of service which may have an adverse
effect on the Company.  Less stringent rules apply permanently moored vessels.

                                     16

<PAGE>



 Employees

  As of February 28, 1997, the Company had approximately 2,800 employees.  

  Hotel Employees and Restaurant Employees Local 74 and Service Employees
International Union, AFL-CIO (the "Unions") have been engaged since July 1995
in an effort to organize certain service and maintenance employees of PRC-
Missouri.  The Unions failed to receive a majority of the votes cast in the
first election, and ultimately withdrew the petition.  Following a second
election, conducted in November 1996, both the Company and the Unions filed
objections to the election.  The National Labor Relations Board (the "NLRB")
has ruled that the Unions interfered with the election and recommended that a
third election be held.  Also pending before the NLRB are certain charges 
filed by the Unions stemming from the November 1996 election alleging the
Company interfered with employee rights under the National Labor Relations
Act.  Such charges are presently under investigation by the NLRB Regional
Director, and the Company is seeking a settlement with respect to such
charges.

Item 3.  Legal Proceedings.

  On January 16, 1997 a case entitled "Whalen v. John E. Connelly, J. Edward
Connelly and Associates, Inc., President Casinos, Inc. and PRC-Iowa, Inc." was
filed in the Iowa District Court for Scott County by Michael L. Whalen
("Whalen"), who is a five percent limited partner in TCG.  Whalen filed this
lawsuit after accepting from Della III, Inc., the former general partner,
shares of Common Stock and cash to which he was determined to be entitled
pursuant to a previous judgment.  Whalen claims in this lawsuit that because
he asked for the stock and cash while he was appealing the judgment in a
previous lawsuit and was not given the stock or cash until after the judgment
was affirmed, the named defendants committed the tort of conversion.  Whalen
seeks as damages the difference in the value of the stock on the date of its
"highest valuation" and the date he accepted the stock in 1996.  The Company,
after consultation with legal counsel, believes this lawsuit is without merit
and intends to defend this action vigorously.  Although the results of
litigation are inherently uncertain, the Company does not believe this matter
will have a material adverse effect on the Company's financial condition or
results of operations.

  In 1994, William H. Poulos filed a class-action lawsuit in the United States
District Court for the Middle District of Florida against over thirty-eight
(38) casino operators, including the Company, and certain suppliers and
distributors of video poker and electronic slot machines.  This lawsuit was
followed by several additional lawsuits of the same nature against the same,
as well as additional, defendants, all of which have now been consolidated
into a single class-action pending in the United States District Court for the
District of Nevada.  Following a court order dismissing all pending pleadings
and allowing the plaintiffs to re-file a single complaint, a complaint has
been filed containing substantially the same claims, alleging that the
defendants fraudulently marketed and operated casino video poker machines and
electronic slot machines, and asserting common law fraud and deceit, unjust 

                                     17
<PAGE>
enrichment and negligent misrepresentation.  Various motions have now been
filed by the defendants seeking to have this new complaint dismissed or
otherwise limited, and the plaintiffs are responding to these motions.  To
date, the court has not entered any order concerning the merits of the
complaint.  Although the outcome of litigation is inherently uncertain,
management, after consultation with legal counsel, believes the action is
without merit and does not expect the lawsuit will have a material adverse
effect on the Company's financial position or results of operations.

  On April 11, 1997, an action captioned "American Gaming & Entertainment,
Ltd. v. President Mississippi Charter Corporation and President Riverboat
Casino-Mississippi, Inc." was filed in the Chancery Court of Harrison County,
Mississippi by American Gaming & Entertainment, Ltd. ("AGE").  AGE is the
owner of "The Biloxi Barge" which is utilized in connection with the Company's
Biloxi, Mississippi operations pursuant to a Charter Agreement between AGE and
Charter Corporation.  The action filed by AGE alleges that President
Mississippi and Charter Corporation have not complied with their respective
obligations under the Charter Agreement, and requests the Court to require
President Mississippi and Charter Corporation to perform the Charter Agreement
and to pay all sums due thereunder with interests and costs.  In the
alternative, AGE requests a judgement for the sum of $23.4 million with
interests and costs or such other relief as the Court may deem just and
proper.  The Company believes that AGE has breached its obligations under the
Charter Agreement in a number of respects and, in connection therewith, the
Company has withheld a portion of the charter payments due to AGE under the
Charter Agreement.  The Company has continued to accrue the full amount of
such payments due under the Charter Agreement.  The Company believes that is
has meritorious defenses to the claims of AGE, and is in the process of
evaluating and formulating a response to this action.

  The Company has been notified that the Environmental Protection Agency and
the U.S. Attorney's Office for the Eastern District of Missouri are conducting
a federal criminal investigation with respect to compliance by President
Missouri with federal environmental laws in connection with the operation of
"The Admiral" in St. Louis.  The Company is cooperating fully with the
investigation and has provided certain information regarding "The Admiral"'s
operations to the Environmental Protection Agency and the U.S. Attorney's
Office.  In the event that the Company is charged with violating federal
environmental laws, the Company may be subject to substantial civil and
criminal penalties, including monetary fines.  Based upon the Company's
preliminary discussions with the U.S. Attorney's Office and the results of the
Company's internal investigation of this matter, management does not believe
that the investigation will result in any monetary or other penalties which
would have a material adverse effect on the Company's financial condition or
results of operations, or which would have any material adverse impact upon
the gaming licenses of the Company or its subsidiaries.

  The Company serves alcoholic beverages at its gaming facilities and has from
time to time been the subject of claims related thereto.  Although the Company
believes it maintains adequate insurance to cover these types of claims, it is
often difficult to predict the outcome of such litigation and the amount of 

                                    18
<PAGE>
damages which may be awarded in these types of cases.  The Company does not
believe that the outcome of any pending litigation related to the Company's
serving of alcoholic beverages will have a material adverse effect on its
financial position or results of operations.

  The Company is also from time to time party to litigation, which may or may
not be covered by insurance, arising in the ordinary course of its business. 
The Company does not believe that the outcome of such litigation will have a
material adverse effect on the Company.

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

  There were no matters submitted to a vote of security holders during the
fourth quarter of fiscal 1997.

Item A.

Executive Officers of the Company.

  The executive officers of the Company, together with their respective ages
and positions with the Company, are set forth below.

         Name           Age        Positions with the Company
         ----           ---        --------------------------
   John E. Connelly      71        Chairman of the Board, Chief Executive
                                     Officer and President
   John S. Aylsworth     46        Executive Vice President, Chief
                                     Operating Officer and Director
   Terrence L. Wirginis  45        Vice President-Marine and
                                     Development and Director
   James A. Zweifel      51        Vice President and Chief
                                     Financial Officer
----------------

  Mr. Connelly has served as Chairman and a director of the Company and its
predecessors since their inception.  Mr. Connelly also served as Chief
Executive Officer of the Company from its inception until March 1995 and from
July 1995 through the present.  Entities controlled by Mr. Connelly have owned
and operated the Gateway Clipper Fleet in Pittsburgh since 1958, the Station
Square Sheraton Hotel in Pittsburgh since 1981 and the Broadwater Beach Hotel
and Resort since 1992.  In 1984, Mr. Connelly founded World Yacht Enterprises,
a fleet of dinner cruise, sightseeing and excursion boats in New York City. 
In 1985, he started Gateway Riverboat Cruises in St. Louis.  Mr. Connelly is
also the founder, owner and Chief Executive Officer of J. Edward Connelly
Associates, Inc., a marketing firm based in Pittsburgh, Pennsylvania.  Mr.
Connelly is Mr. Wirginis's grandfather.

  Mr. Aylsworth has been Executive Vice President and Chief Operating Officer
of the Company since March 1995.  From 1977 until March 1995, Mr. Aylsworth
was associated with the Davis Companies, most recently as Managing Executive
Officer.  Previously, he served the Davis Companies as Chief Executive Officer 

                                     19
<PAGE>
of the Sports Club Company, an operator of premier health and fitness
facilities, and as Chief Financial Officer of Spectra Vision, a provider of
in-room entertainment and interactive information systems to the lodging
industry.

  Mr. Wirginis has been Vice President of Marine and Development since August,
1995. He also has served as President of the Gateway Clipper Fleet in
Pittsburgh, which is wholly-owned by Mr. Connelly, since January 1987, and has
had primary responsibility for the marine operations of the Connelly-related
riverboat and sightseeing cruises in Pittsburgh, St. Louis and Davenport.  Mr.
Wirginis is the grandson of Mr. Connelly.

  Mr. Zweifel has been Vice President and Chief Financial Officer of the
Company since November 1995.  Prior to joining the Company, Mr. Zweifel was
Executive Director of FANS, Inc., the organization formed to bring the Los
Angeles Rams to St. Louis.  From July 1992 to November 1994, Mr. Zweifel was
Vice President and Controller of Clark Refining and Marketing.  From July 1988
to July 1992, Mr. Zweifel was Vice President, Chief Financial Officer and
Secretary for Engineered Support Systems, a manufacturer of ground support
systems.
                                    PART II

Item 5.  Market for the Registrant's Common Equity and Related Stockholder
Matters.

  The Company's Common Stock has been traded in the over-the-counter market
and listed on The NASDAQ National Market under the symbol "PREZ" since
December 11, 1992.  Prior thereto, there was no established public trading
market for the Common Stock.  The following table sets forth, for the fiscal
quarters indicated, the high and low sale prices for the Common Stock, as
reported by The NASDAQ National Market:
                                                High        Low
                                               ------      -----
            Fiscal 1997
              First Quarter................   $ 2.6875    $ 1.375
              Second Quarter...............   $ 2.25      $ 1.375
              Third Quarter................   $ 1.5625    $ 0.71875
              Fourth Quarter...............   $ 0.9375    $ 0.5625

            Fiscal 1996
              First Quarter................   $ 6.875     $ 4.00
              Second Quarter...............   $ 5.625     $ 3.50
              Third Quarter................   $ 4.625     $ 2.0625
              Fourth Quarter...............   $ 2.50      $ 1.125

  On May 19, 1997, there were approximately 1,782 holders of record of the
Company's Common Stock.

  The Company has never paid any dividends on its Common Stock.  The Company
anticipates that for the foreseeable future all earnings, if any, will be
retained for the operation and expansion of its business.  Accordingly, the 

                                     20
<PAGE>

Company does not anticipate paying any cash dividends in the foreseeable
future.  The payment of dividends by the Company is restricted under the terms
of the indenture governing the Company's Senior Notes due 2001.  See
"Management's Discussion and Analysis of Financial Position and Results of
Operations-Liquidity and Capital Resources."

Item 6.  Selected Consolidated Financial Data.

  The following selected financial data of the Company is qualified by
reference to and should be read in conjunction with the consolidated financial
statements and notes thereto included elsewhere herein.  The selected
consolidated statement of operations and balance sheet data are derived from
the Company's consolidated financial statements certain of which are included
elsewhere herein.  Certain reclassifications have been made to the prior
years' financial data to conform with the presentation of the fiscal 1997
data.
<TABLE>
<CAPTION>
                                                        Years Ended February 28/29, (1) 
                                              1997       1996       1995       1994        1993
                                             ------     ------     ------     ------      ------ 
                                                     (in thousands, except share data)
<S>                                         <C>        <C>        <C>        <C>        <C>
Consolidated Statement of Operations Data:
Total operating revenues..................  $187,027   $192,685   $160,350   $107,099   $102,700

Operating income (loss)...................  $  3,784   $(21,471)  $(13,224)  $ 11,593   $ 17,055

Income (loss) before extraordinary item
  and cumulative effect of a change
  in accounting principle (2).............  $ (8,785)  $(58,150)  $(16,179)  $ 10,089   $ 12,608

Net income (loss).........................  $ (8,785)  $(58,150)  $(20,232)  $ 10,691   $ 12,608

Pro forma net income (3)..................                                              $  8,651

Earnings (loss) per common and
  common equivalent share.................  $ (0.29)   $ (1.93)   $  (0.67)  $   0.35

Pro forma earnings per common and
  common equivalent share.................                                              $   0.39

Consolidated Balance Sheet Data:
Total assets..............................  $155,904   $168,024   $234,275   $258,615   $131,213
Long-term liabilities.....................  $104,862   $106,082   $112,917   $ 67,822   $ 22,010
Stockholders' equity......................  $ 23,721   $ 32,506   $ 90,656   $108,924   $ 84,479

(1)  Gaming operations commenced in Davenport, Iowa on April 1, 1991, in
Biloxi, Mississippi on August 13, 1992, in Tunica, Mississippi on December 6,
1993 and in St. Louis, Missouri on May 27, 1994.  On July 8, 1994, the
Company's Tunica, Mississippi operations were terminated.

(2)  During fiscal year 1995, the Company realized a $4,053 extraordinary loss
on the exchange of subordinated notes.  During fiscal year 1994, the Company
recognized the cumulative effect of changing to a different method of
accounting for income taxes of $602.

                                     21
<PAGE>
(3)  The Company was formed in June 1992 to acquire the operations of five
entities controlled by affiliates of John E. Connelly and International Game
Technology, Inc. ("IGT").  At the closing of the Company's initial public
offering of its Common Stock on December 18, 1992, affiliates of Mr. Connelly
and IGT contributed their equity interests in exchange for shares of the
Company's Common Stock and certain other consideration (the "Reorganization"). 
Prior to the Reorganization, the Company generally was not subject to income
taxes.  A pro forma income tax adjustment was made to reflect the effect of
income taxes had the Reorganization taken place at the beginning of fiscal
1992.

Item 7.  Management's Discussion and Analysis of Financial Condition and
Results of Operations.

  The following discussion, which covers the fiscal years 1995 through 1997,
should be read in conjunction with the consolidated financial statements of
the Company and the separate financial statements of The Connelly Group, L.P.
and PRC Holdings Corporation and the notes thereto included elsewhere in the
report.

Overview

  The Company's operating results are affected by a number of factors,
including competitive pressures, changes in regulations governing the
Company's activities, the seasonal nature of its business, the timing of the
commencement of its proposed gaming operations, the amount of pre-opening
expenses incurred by the Company and general weather conditions. 
Consequently, the Company's operating results may fluctuate from period to
period and the results for any period may not be indicative of results for
future periods.

  Competition has had a significant impact on the results of operations at
each of the Company's three casino properties.  Since gaming began in Biloxi
in August 1992, steadily increasing competition along the Mississippi Gulf
Coast, including New Orleans and elsewhere in Louisiana and Mississippi, has
had an adverse effect on the results of operations in Biloxi.  Several large
hotel/casino complexes have been built in recent years and several new large
projects are under construction.  The replacement of the smaller M/V
"President Casino-Mississippi" by "The Biloxi Barge", in July 1995, improved
the Company's presence in Biloxi.  However, it is apparent that it will
continue to be more difficult to compete as larger casino complexes enter the
Biloxi market, many being built by competitors having substantially greater
name recognition and financial and marketing resources than the Company.

  In May 1994, legislation became effective in Iowa which enabled the
Davenport operation to compete more effectively against Illinois riverboat
casinos.  This legislation removed all per passenger loss and bet limitations
and essentially allowed for dockside gaming throughout the year, except for a
required 100 cruises per year.  The Davenport operating results improved
substantially after the implementation of this legislation.  However, in April
1995 a new casino commenced operations in Bettendorf, Iowa, which is located 

                                     22
<PAGE>
on the Mississippi River five miles from the Davenport operations.  The new
casino captured a portion of the market and, as a result, the Davenport
operations were negatively impacted.  Davenport's operating revenues were also
negatively impacted from the period November 12, 1995 through April 3, 1996
while "The President" was removed from service for a U.S. Coast Guard mandated
five-year hull inspection and a smaller vessel was substituted.

  In May, 1994, the Company commenced limited gaming operations in St. Louis,
Missouri aboard "The Admiral".  At such time, Missouri law did not permit the
operation of "games of chance," including slot machines.  In December 1994,
after the Missouri State Constitution was amended, the Company was permitted
to add games of chance to its casino.

  Competition is intense in the St. Louis market area.  There are presently
five other casino companies operating in the market area and competing for
local customers. Two of these are Illinois casino companies operating single
casino vessels on the Mississippi River, one directly across the Mississippi
from the "The Admiral" and the second 20 miles upriver in Alton, Illinois. 
There are three Missouri casino companies, each of which operates two casino
vessels approximately 20 miles west of St. Louis on the Missouri River, one in
the City of St. Charles, Missouri and two in Maryland Heights, Missouri.  The
two in Maryland Heights opened in March 1997.  Riverboats in each of the
states, Illinois and Missouri, have competitive advantages/disadvantages
resulting from gaming regulations in their respective states.  While Missouri
regulations do not require the vessels to actually cruise, simulated cruising
requirements are imposed which allow entry on a vessel for only a 45 minute
period every two hours.  Those competitors having two casino vessels can
alternate hourly boarding times and provide virtually continuous boarding for
guests.  Thus, they have a distinct competitive advantage over the Company,
which has only one vessel, "The Admiral".  Illinois casino vessels are
required to cruise, thereby limiting ingress and egress to the casinos.  In
addition, Missouri regulations limit the loss per cruise per passenger by
limiting the amount of chips or tokens a guest may purchase to $500 per two-
hour gaming session.  The lack of a statutory loss limit on Illinois casinos
allows them to attract higher stake gamblers; additionally, their guests are
not burdened with the administrative requirements related to the loss limits. 
Any change in the legislation related to these requirements could have a
positive or negative impact on the competitive environment between Missouri
and Illinois casinos.

  In previous years, the Company pursued various unsuccessful development
opportunities, the results of which negatively impacted operations, including
the impact these investment decisions had on the ultimate recoverability of
various assets.  Specifically, the Company began operations in Tunica,
Mississippi in December 1993 and as a result of competition, poor location and
various other factors, closed this facility in July 1994.  The Company
incurred net losses of $2.7 million related to Tunica in fiscal year 1995.  In
October 1993 the Company entered into a joint venture with an unrelated third
party to manage a land-based gaming casino to be owned by the St. Regis Mohawk
Indian Tribe (the "Tribe").  In fiscal year 1995, due to uncertainty related
to various matters, including the execution of a management agreement with the 

                                     23
<PAGE>
Tribe, the Company wrote-off its $4.1 million investment in this project.  In
December 1994 the Company entered into a joint venture to develop a riverboat
casino operation in Gary, Indiana.  As a result of a number of events and as
part of the Company's strategy to concentrate its resources and capital on its
existing operations, the Company reexamined its participation in this joint
venture, and on June 30, 1995, transferred its entire interest in the venture
to its partner.  The Company wrote-off $1.1 million in fiscal 1996 as a result
of the decision to withdraw from the Gary, Indiana development.  In December
1993, the Company entered into a lease/purchase option agreement covering an
18-acre riverfront site and a city-owned pier located immediately contiguous
to this property in Philadelphia, Pennsylvania.  This option agreement expired
December 31, 1996.  In fiscal year 1996, the Company wrote-off its $11.0
million investment in this option due to the uncertainty as to the timely
passage of Pennsylvania riverboat gaming legislation prior to the expiration
of the option.

  In December 1996, the Company modified and exercised a new option agreement
to secure the above Pennsylvania lease rights for the period January 1, 1997
through December 31, 1997.  Pursuant to the modified option agreement, the
Company remitted $1.2 million.  The modified agreement also calls for
contingent payments, not to exceed $2.1 million, based on the status of
certain Pennsylvania gaming legislation during calendar year 1997.  During the
option period and the lease period, the Company will be obligated to pay all
maintenance costs, taxes and insurance with respect to the property.

  The Company's operations are seasonal in nature, with the heaviest activity
occurring during the period from May through September.  In addition, all of
the Company's operations are susceptible to the adverse effects of flooding
and weather conditions.  On various occasions the Company has temporarily
suspended operations in Davenport and St. Louis as a result of flooding and
the Biloxi operation has been temporarily closed on occasion as a result of
hurricanes.

Results of Operations

  The results of operations for fiscal years 1995 through 1997 include the
gaming results for Davenport, Iowa and Biloxi, Mississippi for the entire
period and St. Louis, Missouri for only a portion of that period.  St. Louis
commenced limited gaming operations in May 1994, which operations were
expanded to include "games of chance" in December 1994.  Gaming operations
were also conducted in Tunica, Mississippi from December 1993 through July
1994.  Of much lesser significance, the non-gaming operations for Davenport
(The Blackhawk Hotel) and St. Louis (Gateway Riverboat Cruises) are included
during all three years.

  The following table highlights the results of operations for the Company's
gaming and non-gaming cruise operating subsidiaries.  The table does not
include results of operations for the Company's corporate subsidiaries or The
Blackhawk Hotel.  Certain reclassifications have been made to fiscal years
1995 and 1996 to conform to fiscal 1997 presentation (dollars in millions).

                                      24
<PAGE>

                                         Twelve Months Ended
                                            February 28/29,      
                                     1997        1996        1995
                                    ------      ------      ------
Davenport, Iowa
  Operating revenues               $  65.1     $  70.3      $  70.9
  Operating income                 $  10.1     $  15.8      $  18.8
  EBITDA (a)                       $  14.1     $  20.4      $  22.7 
  Operating margin                    15.5%       22.5%        26.5%
 
Biloxi, Mississippi
  Operating revenues               $  43.8     $  38.7      $  42.9
  Operating income (loss)          $  (2.9)    $  (5.0)     $   1.1
  EBITDA (a)                       $   --      $  (2.0)     $   3.7
  Operating margin (deficit)          (6.6)%     (12.9)%        2.6%

St. Louis, Missouri
  Operating revenues               $  70.9     $  76.8      $  42.6  
  Operating income (loss)          $   2.0     $   4.1      $ (13.3) 
  EBITDA (a)                       $   7.0     $   9.4      $  (9.0) 
  Operating margin (deficit)           2.8%        5.3%       (31.2)%

(a)  "EBITDA" consists of earnings from operations before income taxes,
depreciation and amortization for each of the operating subsidiaries. 
However, it does not include corporate operating expenses.  EBITDA should not
be construed as an alternative to operating income as an indicator of the
Company's operating performance, or as an alternative to cash flows from
operational activities as a measure of liquidity.  The Company has presented
EBITDA solely as a supplemental disclosure to facilitate a more complete
analysis of the Company's financial position.  The Company believes that this
disclosure enhances the understanding of the financial performance of a
company with substantial depreciation and amortization.

Fiscal 1997 Compared to Fiscal 1996

  Operating revenues.  The Company generated consolidated operating revenues
of $187.0 million during fiscal 1997 compared to $192.7 million in fiscal
1996, a decrease of $5.7 million or 3.0%.  Operating revenue increases from
the Company's Biloxi property were offset by decreases at the Davenport and
St. Louis properties.  The Davenport property experienced a decrease in
operating revenue primarily as the result of two factors.  Steadily increasing
competition for patrons in the Davenport market began with the addition of a
third casino in April 1995.  Additionally, construction activity during fiscal
1997 relating to road access and parking negatively impacted customer access
to the casino.

  The increase in revenues from the Biloxi property was primarily attributable
to a full year of gaming operations aboard "The Biloxi Barge", which was
placed in service on June 30, 1995.  This barge has provided the Company with
increased casino square footage, more slot machines and more table games than
the previous facility.  In addition, "The Biloxi Barge" features a full

                                    25
<PAGE>

service 250-seat dining facility, not available in the previous casino.  

  During both years, operating revenues from the Company's St. Louis
operations were adversely affected by high water and flooding conditions on
the Mississippi River.  High water and flooding conditions adversely affected
parking availability for casino patrons and caused the Company to close its
gaming operations in both years.  However, business interruption insurance
proceeds of $2.8 million were included in St. Louis's fiscal 1996 operating
revenues with no comparable proceeds in fiscal 1997.

  The Company's revenues from food and beverage, hotel, retail and other
nongaming activities (net of promotional allowances) decreased to $16.1
million during fiscal 1997, from $18.1 million in fiscal 1996, a decrease of
$2.0 million or 11.0%.  This decrease was primarily attributable to the
inclusion of $3.3 million of business interruption and other insurance
proceeds during fiscal 1996 offset by an increase of $0.6 million from the
charter of certain vessels and an increase in the Biloxi operation's food and
beverage revenue as the result of a full year of expanded food service
discussed above.

  Operating costs and expenses.  The Company's consolidated gaming and gaming
cruise operating costs and expenses were $100.8 million during fiscal 1997,
compared to $100.9 million in fiscal 1996, a decrease of $0.1 million. As a
percentage of gaming revenues, gaming and gaming cruise costs increased to
59.0% during fiscal 1997 from 57.8% in fiscal 1996. This decrease in gaming
margin was attributable to the decrease in gaming revenues at the Davenport
and St. Louis operations and their related contributions towards the fixed
portion of gaming costs.

  The Company's consolidated selling, general and administrative expenses were
$51.8 million during fiscal 1997, compared to $56.7 million in fiscal 1996, a
decrease of $4.9 million or 8.6%. Such decrease was primarily attributable to
a decrease in corporate overhead and development costs, offset by three and a
half months of additional lease payments during fiscal 1997 for "The Biloxi
Barge", which commenced in June 1995.  As a percentage of consolidated
revenues, selling, general and administrative expenses decreased to 27.7%
during fiscal 1997 from 29.4% in fiscal 1996.

  During fiscal 1997, the Company recognized a net gain on the sale and
disposal of assets of $1.5 million.  This gain was primarily related to the
exercise of a purchase option by the charterer of the Company's casino vessel,
the "Diamond Jo."  During fiscal 1996, the Company recognized a net loss on
the disposal of assets of $0.4 million, primarily due to the sale of non-
income producing gaming equipment.

  During fiscal 1997, the Company recognized an impairment of long-lived
assets of $0.7 million primarily related to assets being refurbished for use
with the implementation of a proposed second vessel in St. Louis.  See "Fiscal
1996 Compared to Fiscal 1995 -- Significant Charges Against Income" for
discussion of fiscal 1996 impairments of long-lived assets.


                                     26
<PAGE>

  Depreciation and amortization expenses were $15.3 million during fiscal
1997, compared to $16.5 million in fiscal 1996, a decrease of $1.2 million or
7.2%. This decrease was primarily attributable to the sale of various assets
partially offset by the additional depreciation expense related to placing the
"Majestic Star" in service at the beginning of its charter in May 1996.

  The Company incurred a $1.2 million loss in unconsolidated entities during
fiscal 1996, primarily related to the write-off of the Company's Gary, Indiana
investment.  There was no comparable expense in during fiscal 1997.

  During fiscal 1997, the Company incurred pre-opening costs of $0.3 million
related to the application and proposed implementation of a second vessel in
St. Louis.

  Operating income (loss).  As a result of the items discussed above, the
Company had operating income of $3.8 during fiscal 1997, compared to an
operating loss of $21.5 million during fiscal 1996.

  Interest expense, net.  The Company incurred net interest expense of $13.7
million during fiscal 1997, compared to $14.7 million in fiscal 1996, a
decrease of $1.0 million or 6.8%.  Such decrease was primarily attributable to
the early extinguishment of various debt instruments in fiscal 1996.
 
  During fiscal 1997, the Company recognized a $1.4 million tax benefit as the
result of a state income tax refund.  During fiscal 1996, the Company
recognized a $21.9 million tax charge to income as the result of the income
tax valuation allowance discussed in "Fiscal 1996 Compared to Fiscal 1995-
Significant Charges Against Income".

  Net loss.  As a result of the items discussed above, the Company incurred a
net loss of $8.8 million during fiscal 1997, compared to a net loss of $58.2
million in fiscal 1996.

Fiscal 1996 Compared to Fiscal 1995

Significant Charges Against Income

  The financial results for fiscal year 1996 were negatively impacted by
significant charges against income of $24.8 million for impairment of long-
lived assets and $21.9 million for income tax expense, as discussed below.

Impairment of Long-Lived Assets

  The 1996 charge of $24.8 million included the following:

  -An $11.0 million charge against earnings related to the write-down of two
vessels, specifically $7.0 million and $4.0 million on the "Majestic Star" and
"The President Casino-IV," respectively.

  As a result of the occurrence of certain events during fiscal 1996, the
Company transferred its interest, including all financial and other

                                     27
<PAGE>
obligations related thereto, in its Gary, Indiana joint venture (the "Gary
Joint Venture") to Barden Development, Inc. ("Barden") and revised its
estimate of the net realizable value of certain of its other assets.  On June
30, 1995, the Indiana Gaming Commission approved the transfer of the Company's
interest in the Gary Joint Venture.  As a result of the Company's decision to
withdraw from Gary, Indiana, the resulting uncertainty as to the future use of
the "Majestic Star" and the then current market conditions, the Company wrote-
off its $1.1 million investment in its Gary, Indiana subsidiary (included in
equity loss in unconsolidated entity) and reduced the carrying value of the
"Majestic Star" by $7.0 million to its estimated market value.  The Company
was in negotiation to sell "The President Casino-IV" and based on such
negotiations, the Company wrote down the value of "The President Casino-IV" by
$4.0 million.

  -An $11.0 million charge against earnings in the fourth quarter to write-off
the accumulated costs incurred in connection with an agreement that provided
the Company the option to either enter into a long-term lease or purchase
certain property in Philadelphia, Pennsylvania.  Management deemed the charge
appropriate based on the likelihood that the option would not be exercised
within the time period set forth in the option agreement or before the timely
passage of riverboat gaming legislation in Pennsylvania.

  -A $2.8 million charge against earnings for various write-downs including
write-downs of other vessels, investments and various gaming and nongaming
equipment not in use.

  During the fourth quarter of fiscal 1995 the Company wrote-down $5.0 million
of long-lived assets which consisted of the following:  1) $2.3 million for
certain non-gaming cruise boats and barges that were not used in operations or
planned to be used in future developments;  2) $1.2 million for an office
building and related machinery and equipment for the Davenport operations
which the Company offered to the City of Davenport in connection with an
agreement to establish a mutually acceptable development plan which would
satisfy the Company's development commitment (see Note 11 to Consolidated
Financial Statements); and 3) $1.5 million for a barge, based upon the
discounted cash flows under a lease agreement with a non-affiliated gaming
company.

Income Taxes

  Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting for
Income Taxes," requires the recognition of deferred tax assets related to
certain temporary differences between the Company's tax and accounting records
and net operating loss carryforwards to the extent that realization of such
benefit is "more likely than not."  In fiscal year 1995, management believed
that the Company would return to profitability and that it was more likely
than not that the Company would be able to generate sufficient taxable income
to recognize fully these assets over the carryforward period.  This belief was
based upon the Company's history of prior earnings, the fact that the 1995
losses suffered by the Company were attributable, in large part, to certain
unprofitable operations which were terminated and recent regulatory changes

                                     28
<PAGE>

which enhanced the Company's earnings prospects.  The Company's fiscal year
1995 losses were attributable in large part to operating losses incurred by
the Company's St. Louis gaming operations, the extraordinary loss recognized
by the Company as a result of the exchange of its Senior Subordinated Notes
and investment losses associated with both the Company's Tunica operations and
its Massena project.  Moreover, regulatory changes in both Missouri (allowing
the utilization of "games of chance", including slot machines, at the
Company's St. Louis gaming operations) and in Iowa (eliminating the per
passenger loss and per bet limitations and permitting the Company to operate
primarily dockside) enhanced the Company's prospects of generating earnings.

  In early fiscal 1996, the Company continued its strategic focus on existing
income-generating properties and in connection with this strategy directed
investments to existing properties while pursuing efforts to find alternative
uses for existing non-income producing assets either through lease or sale. 
In furtherance of this strategy, the Company decided not to pursue the joint
venture in Gary, Indiana.  Efforts by the Company to return to profitability
in 1996, though enhanced by the aforementioned regulatory changes in Iowa and
Missouri, were hampered by flooding in Missouri and increased competition in
all of the Company's jurisdictions.  Disruptions in Biloxi from the changes in
completing the switch to "The Biloxi Barge" (eventually fully completed in
December) and in Iowa for the mandatory Coast Guard hull inspection further
impacted 1996 profitability.  In the fourth quarter of 1996, additional write
offs related to the Company's lease option on property in Philadelphia and
other vessels and gaming equipment were incurred.  Furthermore, the Company
incurred further losses in the fourth quarter from its core operations.  Given
the current level of operations, the increased competition and the overall
uncertainty as to the Company's ability to return to profitability, management
believed that the deferred tax benefits do not continue to satisfy the
recognition requirements of SFAS No. 109.  Accordingly, based on the
uncertainty regarding the Company's ability to generate future taxable income,
the Company established a valuation allowance of $36.3 million for the
deferred tax asset resulting in net income tax expense of $21.9 million in
fiscal year 1996.

  Operating revenues.  The Company generated consolidated operating revenues
of $192.7 million during fiscal 1996 compared to $160.3 million in fiscal
1995, an increase of $32.4 million or 20.2%.  This increase was attributable
to an increase in operating revenues generated by the Company's St. Louis
operations.  Fiscal year 1996 included full scale gaming operations for the
entire year.  St. Louis began gaming operations in May 1994 but was limited to
"games of skill" until December 1994 when "games of chance" (slot machines)
were added.  Also, during fiscal 1996, operating revenues in St. Louis were
adversely affected by flood conditions on the Mississippi River.  These flood
conditions caused the Company to suspend its gaming operations for a 41-day
period from May 10 to June 20.  The Company's business interruption insurance
policy provided the Company with $2.8 million of proceeds for the period
operations were impaired, which proceeds are included in St. Louis' operating
revenues.

  The increase in operating revenues generated by St. Louis gaming operations

                                     29
<PAGE>

was offset, in part, by the decrease in operating revenues from the Company's
Biloxi gaming operations.  Revenues were down the first four months of fiscal
1996 versus 1995 in Biloxi due to increased competition in the market and the
fact that the new competition has newer and larger casinos and are able to
offer casino guests more amenities.  To offset this competitive disadvantage,
"The Biloxi Barge" was placed in service on June 30, 1995, however, it was not
fully renovated until December 1995.  This provided the Company with the sixth
largest casino on the Mississippi Gulf Coast, increased casino square footage
and provided more slot machines and more table games.  In addition, "The
Biloxi Barge" features a full service 250-seat dining facility, not available
in the previous casino.  Revenues for the eight months subsequent to opening
"The Biloxi Barge" trended slightly above the prior year, but were not
sufficient to offset the increased cost related to "The Biloxi Barge" lease.

  Revenues for Davenport during fiscal year 1996 were flat as compared to the
previous year.  Revenues in early fiscal 1996 (March and April) were
significantly higher than the previous comparable period due to the fact that
until May, 1994, Iowa gaming laws included passenger-bet and loss limitations
and did not allow for continuous access due to cruising requirements. 
Revenues during fiscal year 1996 were negatively impacted as compared to
fiscal year 1995 due to increased competition when a new casino commenced
operations in late April 1995 in Bettendorf, Iowa, five miles from the 
Davenport operations.  Also, 1996 revenues were negatively impacted from
November 13, 1995 through year end while "The President" was undergoing its
Coast Guard mandated five-year hull inspection and was replaced with a much
smaller vessel.

  The Company's revenues from food and beverage, hotel, retail and other
nongaming activities (net of promotional allowances) increased to $18.1
million during fiscal 1996, from $12.1 million in fiscal 1995, an increase of
$6.0 million or 49.6%.  This increase was primarily attributable to the
inclusion of $3.3 million of business interruption and other insurance
proceeds and $3.3 million of fees from the charter of certain vessels.

  Operating costs and expenses.  The Company's consolidated gaming and gaming
cruise operating costs and expenses were $100.9 million during fiscal 1996,
compared to $83.9 million in fiscal 1995, an increase of $17.0 million or
20.3%.  This increase was primarily attributable to increased operating costs
associated with the Company's St. Louis gaming operations and additional
gaming taxes incurred by the Company as a result of increased revenues.  As a
percentage of gaming revenues, gaming and gaming cruise costs increased to
57.8% during fiscal 1996 from 56.6% in fiscal 1995.  This increase was
primarily attributable to low operating margins experienced by the Company's
St. Louis gaming operations, which operations were adversely affected by the
flooding in May and June of 1995.

  The Company's consolidated selling, general and administrative expenses were
$56.7 million during fiscal 1996, compared to $48.4 million in fiscal 1995, an
increase of $8.3 million or 17.1%.  This increase was primarily attributable
to increased marketing and promotion costs in Davenport, increased lease costs
associated with the new Biloxi facility and the inclusion of a full year of

                                      30
<PAGE>

gaming operations in St. Louis during fiscal 1996.  As a percentage of
consolidated revenues, selling, general and administrative expenses decreased
to 29.4% during fiscal 1996 from 30.2% in fiscal 1995.

  Depreciation and amortization expenses were $16.5 million during fiscal
1996, compared to $12.7 million in fiscal 1995, an increase of $3.8 million or
29.9%.  This increase was primarily attributable to depreciation expense
related to "The Admiral", gaming equipment thereon and additions relating to
the new Biloxi casino.  The Company did not incur any depreciation related to
slot machines in St. Louis until their placement on "The Admiral" in December
1994.

  The Company incurred no pre-opening expenses during fiscal 1996, compared to
$3.2 million in fiscal 1995, which expenses related primarily to the opening
of the Company's St. Louis gaming operations in May 1994.

  The Company incurred a $1.2 million loss in unconsolidated entities during
fiscal 1996, primarily related to the write-off of the Company's Gary, Indiana
investment.  The Company incurred a $6.8 million loss in unconsolidated
entities during fiscal 1995, primarily related to the Company's Tunica
operations, which operations were terminated in such period, and its
investment in Massena, New York.

  Operating loss.  As a result of the items discussed above, the Company had
an operating loss of $21.5 million during fiscal 1996, compared to $13.2
million during fiscal 1995.

  Interest expense, net.  The Company incurred net interest expense of $14.7
million during fiscal 1996, compared to $8.7 million in fiscal 1995, an
increase of $6.0 million or 69.0%.  This increase was attributable, in large
part, to the capitalization of $5.4 million of interest in fiscal 1995.  No
interest was capitalized by the Company during fiscal 1996.

  Extraordinary loss on the exchange of Senior Subordinated Notes.  In fiscal
1995, the Company recognized a $4.1 million extraordinary loss, net of income
taxes, in connection with the exchange of its then outstanding 11.75% Senior
Subordinated Notes due 2001 for its currently outstanding 13% Senior Notes due
2001 ("Senior Notes") and certain other consideration.  The Company had no
such costs during fiscal 1996.

  Net loss.  As a result of the items discussed above, the Company incurred a
net loss of $58.2 million during fiscal 1996, compared to a net loss of $20.2
million in fiscal 1995.

Liquidity and Capital Resources.

  The Company meets its working capital requirements from a combination of
internally generated sources including cash from operations and the sale or
charter of assets no longer utilized in the Company's operations.

  The Company requires approximately $9.0 million of cash in order to fund 

                                     31
<PAGE>
daily operations.  At February 28, 1997, the Company had approximately $16.7
million in cash and short-term investments in excess of $9.0 million.  The
Company is heavily dependant on cash generated from operations to continue to
operate as planned in its existing jurisdictions and for capital expenditures. 
The Company anticipates that its existing available cash and cash equivalents
and its anticipated cash generated from operations will be sufficient to fund
all of its ongoing operations.  To the extent cash generated from operations
is less than anticipated, the Company may be required to curtail certain
planned 1998 expenditures or seek other sources of financing.  The Company may
be limited in its ability to raise additional financing.

  The Company generated cash flow from operating activities of $5.5 million
during fiscal 1997, compared to $7.2 million in fiscal 1996.

  The Company experienced a net cash increase from investing activities of
$0.9 million during fiscal 1997, compared to $1.5 million in fiscal 1996.  The
net cash increase from investing activities during fiscal 1997 resulted
primarily from the receipt of $14.2 million from the sale of assets offset by
$10.6 million of expenditures in property and equipment.  Such capital
expenditures included $4.3 million in Davenport (including the construction of
improved access and parking facilities) and $3.8 million in St. Louis
(including the construction of a new 250-seat capacity buffet and certain
other improvements).  The net cash increase from investing activities in
fiscal 1996 resulted primarily from the receipt of $19.9 million from the sale
of assets ($18.0 million from the sale of "The President Casino-IV") offset by
$16.8 million of expenditures in property and equipment.  Additionally, in
1997, the Company invested $3.4 million to purchase certain lease options in
Philadelphia, Pennsylvania.

  The Company expended $1.1 million in connection with financing activities in
fiscal 1997, compared to $13.7 million in fiscal 1996.  These expenditures
consisted of principal payments on capital lease and notes payable
obligations.  In addition to the scheduled fiscal 1996 debt payments, such
payments included the early extinguishment of various debt instruments from
the net cash proceeds from the sale of "The President Casino-IV".  During
fiscal 1997, there were no early extinguishments. 

  The Indenture governing the Company's Senior Notes due 2001 (the
"Indenture"), restricts the Company's ability, among other things, to dispose
of or create liens on certain assets, to make certain investments and to pay
dividends.  Under the Indenture, the Company has the ability to seek to borrow
additional funds of $15.0 million.  The Indenture also provides that the
Company must use cash proceeds from the sale of certain assets within 180 days
to either (i) permanently reduce certain indebtedness or (ii) contract with an
unrelated third party to make investments or capital expenditures or to
acquire long-term tangible assets, in each case, in gaming and related
businesses (provided any such investment is substantially complete in 270
days).  The Company intends to utilize all of such cash proceeds in accordance
with the Indenture.  In the event such cash proceeds are not so utilized, the
Company must make an offer to all holders of Senior Notes to repurchase at par 
an aggregate principal amount of Senior Notes equal to the amount by which

                                    32
<PAGE>

such cash proceeds exceeds $5.0 million.  The Company does not believe that
the unutilized proceeds will exceed $5.0 million.

  During fiscal 1998, the Company intends to make investments in property,
plant and equipment at its current operations approximating $5.0 million.  The
completion and timing of such investments will be dependant upon cash
availability.

  The Company has a $4.2 million outstanding term note payable that is
collateralized by a boat and various equipment with a net book value of $8.6
million.  Currently the note contains a covenant whereby the Company must
maintain a minimum net worth of $20.0 million during fiscal 1998.  Management
believes that during fiscal 1998 the Company's net worth will fall below
$20,000 and that the loan will be subject to call.  However, the fair market
value of the vessel is in excess of the outstanding note balance and
management believes that the Company will renegotiate the terms, buy down a
portion of the note or refinance the loan.

  On May 13, 1997 the Company announced that it has agreed in principal to
purchase for approximately $40.5 million certain real estate and improvements
located on the Gulf Coast in Biloxi, Mississippi from BH.  The property
comprises approximately 260 acres and includes the Broadwater Resort and the
Broadwater Tower (two hotels with over 500 rooms), the 138-slip Broadwater
Marina, and the adjacent 18-hole Sun Golf Course.  The Broadwater Marina is
currently the site of the Company's casino operations in Biloxi and is leased
by the Company from BH under a long-term lease agreement.  BH is wholly-owned
by John E. Connelly, the Chairman and principal stockholder of the Company. 
The purchase is subject to finalization of financing and various other details
related to the transition.

  The Company anticipates investing $5.0 million in President Broadwater
Hotel, LLC, which would own the Broadwater properties.  The $5.0 million
investment would consist of $3.0 million in cash from the Company and $2.0
million in the form of a reduction of debt owed to the Company by BH.  This
entity would finance the purchase with $30.0 million of outside financing and
$10.0 million of purchase money preferred equity from BH.  Such financing
would be non-recourse to the Company.

Forward Looking Statements

  The statements contained herein include forward-looking statements based on
management's current expectations of the Company's future performance. 
Predictions relating to future performance are inherently uncertain and
subject to a number of risks.  Consequently, the Company's actual results
could differ materially from the expectations expressed in the preceding
paragraphs.  Factors that could cause the Company's actual results to differ
materially from the expected results include, among other things:  the
intensely competitive nature of the riverboat and dockside casino gaming
industry; increases in the number of competitors in the markets in which the
Company operates; the seasonality of the riverboat and dockside casino gaming 
industry in certain markets in which the Company operates; the susceptibility

                                    33
<PAGE>
of the Company's operating results to floods, adverse weather conditions and
natural disasters; the risk that jurisdictions in which the Company proposes
to operate do not enact legislation permitting riverboat or dockside casino
gaming or do not enact such legislation in a timely manner; changes in
governmental regulations governing the Company's activities and other risks
detailed in the Company's filings with the Securities and Exchange Commission.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

  Not applicable.

Item 8.  Financial Statements and Supplementary Data.

  Reference is made to the Index to Financial Statements and Schedules on Page
F-1.

Item 9.  Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.

  Not applicable.

                                    Part III

Item 10.  Directors and Executive Officers Registrant

  Information regarding the directors of the Company is contained in "Security
Ownership of Certain Beneficial Owners and Management" and "Election of
Directors" included in the Company's Proxy Statement for the 1997 Annual
Meeting of Stockholders, which information is incorporated herein by
reference.

  Information regarding executive officers of the Company is contained in Part
I hereof under the caption "Executive Officers of the Company."

Item 11.  Executive Compensation

  Information regarding executive compensation is contained in "Compensation
of Executive Officers" included in the Company's Proxy Statement for the 1997
Annual Meeting of Stockholders, which information is incorporated herein by
reference.

Item 12.  Security Ownership of Certain Beneficial Owners and Management

  Information regarding security ownership of certain beneficial owners and
management is contained in "Security Ownership of Certain Beneficial Owners
and Management" included in the Company's Proxy Statement for the 1997 Annual
Meeting of Stockholders, which information is incorporated herein by
reference.

                                      34
<PAGE>

Item 13.  Certain Relationships and Related Transactions

  Information regarding certain relationships and related transactions is
contained in "Certain Transactions" included in the Company's Proxy Statement
for the 1997 Annual Meeting of Stockholders, which information is incorporated
herein by reference.

                                    PART IV

Item 14.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K.

(a) 1.     Financial Statements.

           See the Index to Financial Statements and Schedules on page F-1.

    2.     Financial Statement Schedules.

           See the Index to Financial Statements and Schedules on page F-1.

    3.     Exhibits.

           See Exhibit Index on page F-68.

(b)        Reports on Form 8-K.

           None.

                                     35
<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.

PRESIDENT CASINOS, INC.

By:     /s/ James A. Zweifel
    ---------------------------            
    Name:   James A. Zweifel
    Title:  Vice President and Chief Financial Officer

    Date:   May 28, 1997

  Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed on this 28th day of May, 1997 by the following persons
on behalf of the registrant in the capacities indicated.

Signature                           Capacity
---------                           --------
  /s/ John E. Connelly              President, Chief Executive Officer,
--------------------------          Chairman and Director
John E. Connelly

  /s/ John S. Aylsworth             Executive Vice President,
--------------------------          Chief Operating Officer and Director
John S. Aylsworth

  /s/ Karl G. Andren                Director
 --------------------------
Karl G. Andren

  /s/ Royal P. Walker, Jr.          Director
 --------------------------
Royal P. Walker, Jr.

  /s/ Terrence L. Wirginis          Vice President and Director
--------------------------
Terrence L. Wirginis

  /s/ James A. Zweifel              Vice President and Chief Financial Officer
--------------------------
James A. Zweifel

                                    36
<PAGE>

                  INDEX TO FINANCIAL STATEMENTS AND SCHEDULES

I.   PRESIDENT CASINOS, INC.
     Consolidated Financial Statements:
       Independent Auditors' Report ......................................F-1
       Consolidated Balance Sheets as of February 28/29, 1997 and 1996....F-2
       Consolidated Statements of Operations for the Years 
         Ended February 28/29, 1997, 1996 and 1995........................F-4
       Consolidated Statements of Stockholders' Equity for the Years
         Ended February 28/29, 1997, 1996 and 1995........................F-6
       Consolidated Statements of Cash Flows for the Years 
         Ended February 28/29, 1997, 1996 and 1995........................F-7
       Notes to Consolidated Financial Statements.........................F-9
     Financial Statement Schedule:
       Schedule II - Valuation and Qualifying Accounts................... F-41
       All other schedules are omitted as the required information is
       inapplicable or is presented in the Company's Consolidated
       Financial Statements or Notes thereto.
II.  THE CONNELLY GROUP, L.P.
     Financial Statements:
       Independent Auditors' Report.......................................F-42
       Balance Sheets as of February 28/29, 1997 and 1996.................F-43
       Statements of Operations for the Years
         Ended February 28/29, 1997, 1996 and 1995........................F-45
       Statements of Partners' Preferred Redeemable Capital and 
         General Capital (Deficiency) for the Years
         Ended February 28/29, 1997, 1996 and 1995........................F-46
       Statements of Cash Flows for the Years
         Ended February 28/29, 1997, 1996 and 1995........................F-47
       Notes to Financial Statements......................................F-49
     Financial Statement Schedule:
       Schedule II - Valuation and Qualifying Accounts....................F-590
       All other schedules are omitted as the required information is
       inapplicable or is presented in the Company's Financial Statements
       or Notes thereto.
III. PRC HOLDINGS CORPORATION
     Financial Statements:
       Independent Auditors' Report.......................................F-60
       Balance Sheets as of February 28/29, 1997 and 1996.................F-61
       Statements of Operations for the Years
         Ended February 28/29, 1997, 1996 and 1995........................F-62
       Statements of Stockholder's Equity for the Years
         Ended February 28/29, 1997, 1996 and 1995........................F-63
       Statements of Cash Flows for the Years
         Ended February 28/29, 1997, 1996 and 1995........................F-64
       Notes to Financial Statements......................................F-65
     Financial Statement Schedule:
       Schedule II - Valuation and Qualifying Accounts....................F-67
       All other schedules are omitted as the required information is
       inapplicable or is presented in the Company's Financial Statements
       or Notes thereto.
<PAGE>

INDEPENDENT AUDITORS' REPORT


President Casinos, Inc.:


We have audited the accompanying consolidated balance sheets of President
Casinos, Inc. and affiliates as of February 28, 1997 and February 29, 1996,
and the related consolidated statements of operations, stockholders' equity,
and cash flows for each of the three years in the period ended February 28,
1997.  Our audits also include the financial statement schedule listed in the
Index at Item 14(a)2.  These financial statements and financial statement
schedule are the responsibility of the Company's management.  Our
responsibility is to express an opinion on these financial statements and
financial statement schedule based on our audits.

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

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of President Casinos, Inc. and
affiliates as of February 28, 1997 and February 29, 1996, and the results of
their operations and their cash flows for each of the three years in the
period ended February 28, 1997, in conformity with generally accepted
accounting principles.  Also, in our opinion, such financial statement
schedule, when considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.


/s/ Deloitte & Touche LLP
-------------------------



May 13, 1997

                                     F-1
<PAGE>

                           PRESIDENT CASINOS, INC.
                         CONSOLIDATED BALANCE SHEETS
                       (in thousands except share data)

</TABLE>
<TABLE>
<CAPTION>
                                                        Feb. 28,   Feb. 29,
                                              Notes       1997       1996
                                              -----     --------   --------
<S>                                                    <C>        <C>
ASSETS

Current Assets:
  Cash and cash equivalents......................      $ 25,115   $ 19,756 
  Short-term investments.........................           600      1,008
  Receivables, net of allowance for doubtful
    accounts of $393 and $423 as of February
    28/29, 1997 and 1996, respectively...........           982      1,943
  Receivables from related parties...............         2,022         31
  Inventories....................................         1,623      1,233 
  Prepaid expenses and other current assets......         4,527      3,146 
                                                       ---------  ---------
      Total current assets.......................        34,869     27,117
                                                       ---------  ---------
Property and Equipment, net..............3,6,7,13       117,163    135,630
                                                       ---------  --------- 
Other Assets:
  Deferred financing costs.......................         2,040      2,858
  Notes receivable from related party..........13           --       2,000
  Lease options.................................5         1,325        -- 
  Other assets...................................           507        419
                                                       ---------  ---------
      Total other assets.........................         3,872      5,277
                                                       ---------  --------- 
                                                       $155,904   $168,024
                                                       =========  =========


                                  (Continued)
</TABLE>
See Notes to Consolidated Financial Statements.

                                     F-2
<PAGE>

                            PRESIDENT CASINOS, INC.
                         CONSOLIDATED BALANCE SHEETS
                       (in thousands except share data)
                                  (Continued)
<TABLE>
<CAPTION>
                                                        Feb. 28,   Feb. 29,
                                              Notes       1997       1996
                                              -----     --------   --------
<S>                                                     <C>        <C>
LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
  Current maturities of long-term debt........6,7       $  1,772   $  1,769
  Accounts payable...............................          2,414      3,981
  Income taxes payable..........................8            --         183 
  Accrued payroll and benefits...................          7,156      6,349
  Other accrued expenses........................9         15,664     17,018
  Due to related parties........................4             50        103
                                                        ---------  ---------
      Total current liabilities..................         27,056     29,403
                                                        ---------  --------- 
Long-Term Liabilities:
  Notes payable and capital lease obligations.6,7        104,862    105,677
  Other liabilities..............................            --         405
                                                        ---------  ---------
      Total long-term liabilities................        104,862    106,082
                                                        ---------  ---------
      Total liabilities..........................        131,918    135,485
                                                        ---------  --------- 
Commitments and Contingent Liabilities..4,7,10,11            --         --  
 
Minority Interest................................            265        33

Stockholders' Equity:
  Preferred Stock, $.01 par value per share;
    10,000,000 shares authorized; none
    issued and outstanding.......................            --         --   
  Common Stock, $.01 par value per share;
     100,000,000 shares authorized; 30,194,700
     shares issued and outstanding...............            302        302
  Additional paid-in capital.....................        101,729    101,729 
  Accumulated deficit............................        (78,310)   (69,525)
                                                        ---------  --------- 
      Total stockholders' equity.................         23,721     32,506
                                                        ---------  ---------
                                                        $155,904   $168,024
                                                        =========  =========

</TABLE>
See Notes to Consolidated Financial Statements.

                                    F-3
<PAGE>
                            PRESIDENT CASINOS, INC.
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                (in thousands)
<TABLE>
<CAPTION>                                         Years Ended February 28/29,
                                        Notes     1997       1996       1995
                                        -----    ------     ------     ------
<S>                                            <C>        <C>        <C>
OPERATING REVENUES:
Gaming and gaming cruise...................    $170,910   $174,567   $148,286
Food and beverage..........................      19,691     17,217     14,988
Hotel, retail and other....................       8,797     11,157      5,917
Less promotional allowances................     (12,371)   (10,256)    (8,841)
                                               ---------  ---------  ---------
  Total operating revenues.................     187,027    192,685    160,350
                                               ---------  ---------  ---------
OPERATING COSTS AND EXPENSES:
Gaming and gaming cruise...................     100,847    100,903     83,924
Food and beverage..........................      13,194     11,830     10,154
Hotel, retail and other....................       2,482      2,211      3,392
Selling, general and administrative........      51,819     56,312     48,408
Depreciation and amortization..............      15,324     16,470     12,708
Pre-opening expenses.......................         328        --       3,207
Impairment of long-lived assets...........3         728     24,848      4,974
(Gain) loss on sale of
   property and equipment..................      (1,479)       408          8
                                               ---------  ---------  ---------
  Total operating costs and expenses.......     183,243    212,982    166,775
                                               ---------  ---------  ---------
OPERATING INCOME (LOSS) BEFORE EQUITY
  LOSS IN UNCONSOLIDATED ENTITIES..........       3,784    (20,297)    (6,425)
Equity loss in unconsolidated entities....4         --       1,174      6,799 
                                               ---------  ---------  ---------
OPERATING INCOME (LOSS)....................    $  3,784   $(21,471)  $(13,224)
                                               ---------  ---------  ---------

                                    (Continued)
</TABLE>
See Notes to Consolidated Financial Statements.

                                       F-4
<PAGE>

                            PRESIDENT CASINOS, INC.
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                (in thousands)
                                  (Continued)
<TABLE>
<CAPTION>
                                                  Years Ended February 28/29,
                                        Notes     1997       1996       1995
                                        -----    ------     ------     ------
<S>                                            <C>        <C>        <C>
OTHER INCOME (EXPENSE):
Interest income (related party interest
  income of $260, $135 and $4 for the
  years ended February 28/29, 1997,
  1996 and 1995, respectively)...........13    $  1,159   $  1,170   $  1,452
Interest expense...........................     (14,863)   (15,908)   (10,186)
                                               ---------  ---------  ---------
Total other expense........................     (13,704)   (14,738)    (8,734)
                                               ---------  ---------  ---------
LOSS BEFORE INCOME TAXES, MINORITY
  INTEREST AND EXTRAORDINARY ITEM..........      (9,920)   (36,209)   (21,958)
Income tax expense (benefit)..............8      (1,367)    21,908     (5,779)
Minority interest..........................         232         33        -- 
                                               ---------  ---------  ---------
LOSS BEFORE EXTRAORDINARY ITEM.............      (8,785)   (58,150)   (16,179)
Extraordinary loss on exchange of
  subordinated notes, net of income
  tax benefit of $2,182...................6         --         --      (4,053)
                                               ---------  ---------  ---------
NET LOSS...................................    $ (8,785)  $(58,150)  $(20,232)
                                               =========  =========  =========
LOSS PER COMMON AND COMMON
  EQUIVALENT SHARE:
  Loss before extraordinary item...........     $ (0.29)   $ (1.93)   $ (0.54)
  Extraordinary loss on exchange of
    subordinated notes....................6         --         --       (0.13)
                                                --------   --------   --------
  Net loss.................................     $ (0.29)   $ (1.93)   $ (0.67)
                                                ========   ========   ========
Weighted average common
  and common equivalent shares
  outstanding...............................     30,195     30,195     30,195
                                                 ======     ======     ======
</TABLE>
See Notes to Consolidated Financial Statements.

                                    F-5
<PAGE>

                            PRESIDENT CASINOS, INC.
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                        (in thousands except share data)
<TABLE>
<CAPTION>
                                                          Retained
                                              Additional  Earnings
                                     Common     Paid-In (Accumulated
                               Notes  Stock     Capital    Deficit)    Total
                               -----  -----     -------    --------    -----
<S>                                 <C>        <C>        <C>        <C>
Years Ended February 28/29,
  1995, 1996 and 1997:

Balance as of February 28, 1994...  $    302   $ 99,765   $  8,857   $108,924

Issuance of Senior Notes with
  883,000 warrants to purchase
  Common Stock...................6       --       1,964        --       1,964
Net loss..........................       --         --     (20,232)   (20,232)
                                    ---------  ---------  ---------  ---------
Balance as of February 28, 1995...       302    101,729    (11,375)    90,656
Net loss..........................       --         --     (58,150)   (58,150)
                                    ---------  ---------  ---------  ---------
Balance as of February 29, 1996...       302    101,729    (69,525)    32,506 
Net loss..........................       --         --      (8,785)    (8,785)
                                    ---------  ---------  ---------  ---------
Balance as of February 28, 1997...  $    302   $101,729   $(78,310)  $ 23,721
                                    =========  =========  =========  =========
</TABLE>
See Notes to Consolidated Financial Statements.

                                     F-6
<PAGE>

                            PRESIDENT CASINOS, INC.
                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                               (in thousands)
<TABLE>
<CAPTION>
                                                Years Ended February 28/29,
                                       Notes   1997        1996        1995
                                      ------- ------      ------      ------
<S>                                          <C>         <C>         <C>
Cash flows from operating activities:
Net loss..................................   $ (8,785)   $(58,150)   $(20,232)
Adjustments to reconcile net loss to net
  cash provided by operating activities:
    Extraordinary loss on exchange of
      subordinated notes..................        --          --        4,053 
    Impairment of long-lived assets.......        728      24,848       4,974 
    Depreciation and amortization.........     15,324      16,470      12,708
    Deferred income tax expense (benefit).        --       21,908      (6,267)
    Amortization of deferred financing
      costs and discount..................      1,091       1,149       1,068
    Amortization of lease options.........        320         --          --
    Equity loss in unconsolidated
      entities............................        --        1,174       6,799
    Minority interest.....................        232          33         -- 
    Other items...........................     (1,479)        408         329
    Net change in working
      capital accounts..................14     (1,469)       (312)      6,021
    Net change in long-term accounts....14       (415)       (338)         33
                                             ---------   ---------   ---------
      Net cash provided by
        operating activities..............   $  5,547    $  7,190    $  9,486
                                             ---------   ---------   ---------

                                    (Continued)
</TABLE>
See Notes to Consolidated Financial Statements.

                                     F-7
<PAGE>

                            PRESIDENT CASINOS, INC.
                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                               (in thousands)
                                 (Continued)
<TABLE>
<CAPTION>
                                                Years Ended February 28/29,
                                       Notes   1997        1996        1995
                                      ------- ------      ------      ------
<S>                                         <C>         <C>         <C>
Cash flows from investing activities:
  Expenditures for property and
    equipment.............................  $(10,582)   $(16,810)   $(27,024)
  Proceeds from the sale of equipment.....    14,245      19,907       2,189 
  Investment in/advances to 
    unconsolidated entities...............        --        (179)     (3,791) 
  Investment in lease options.............    (3,368)       (197)       (226)
  Loan to related party...................        --      (1,000)     (1,000) 
  Purchase of short-term investments......        --        (208)       (800)
  Maturity of short-term investments......       408          --          -- 
  Other...................................       231          --          -- 
                                            ---------   ---------   ---------
       Net cash provided by (used in) 
         investing activities.............       934       1,513     (30,652)
                                            ---------   ---------   ---------
Cash flows from financing activities:
  Repayment of notes payable..............      (400)    (12,476)     (4,907)
  Payment of deferred financing costs.....        --          --      (4,571)
  Payments on capital lease obligations...      (722)     (1,186)       (301)
                                            ---------   ---------   ---------
      Net cash used in
        financing activities..............    (1,122)    (13,662)     (9,779)
                                            ---------   ---------   ---------
Net increase (decrease) in cash
  and cash equivalents....................     5,359      (4,959)    (30,945)
Cash and cash equivalents
  at beginning of year....................    19,756      24,715      55,660
                                            ---------   ---------   ---------
Cash and cash equivalents at
  end of year.............................  $ 25,115    $ 19,756    $ 24,715
                                            =========   =========   =========

</TABLE>
See Notes to Consolidated Financial Statements.

                                      F-8
<PAGE>

                           PRESIDENT CASINOS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  (Dollars in thousands, except per share data and unless otherwise stated)

1.  BASIS OF PRESENTATION

  The consolidated financial statements include the accounts and operations of
President Casinos, Inc., its wholly-owned subsidiaries and a 95% owned limited
partnership (collectively, the "Company" or "PCI").  All material intercompany
balances and transactions have been eliminated.

  PCI develops, owns and operates riverboat and/or dockside gaming casinos
through its subsidiaries.  The Company conducts riverboat and/or dockside
gaming operations in Davenport, Iowa; in Biloxi, Mississippi through its
wholly-owned subsidiary The President Riverboat Casino-Mississippi, Inc.
("President Mississippi") and in St. Louis near the base of the Arch through
its wholly-owned subsidiary, President Riverboat Casino-Missouri, Inc.
("President Missouri").  The Davenport operations are managed by the Company's
wholly-owned subsidiary, President Riverboat Casino-Iowa, Inc. ("PRC-Iowa"),
which is the general partner of the 95% Company-owned operating partnership,
The Connelly Group, L.P. ("TCG").  The Company also operates two nongaming
dinner cruise, excursion and sightseeing vessels on the Mississippi River in
St. Louis, Missouri.  In addition, the Company owns and manages certain hotel
and ancillary facilities associated with its riverboat operations.  Because of
the integrated nature of these operations, the Company is considered to be
engaged in one industry segment.

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 

   Cash and Cash Equivalents -- Cash and cash equivalents include highly
liquid investments with original maturities of ninety days or less.

  Short-term Investments -- The Company invests in certificates of deposit and
other short-term investments with original maturities greater than ninety
days.  Short-term investments are stated at cost, which approximates market.

  Inventories -- Inventories, consisting principally of food, beverages and
operating supplies, are stated at the lower of first-in, first-out cost or
market.

  Property and Equipment -- Property and equipment are recorded at cost and
capitalized lease assets are recorded at their fair market value at the
inception of the lease.  Repairs and maintenance are expensed as incurred.
Improvements are capitalized.  Depreciation and amortization are computed on a
straight-line basis over the following estimated useful lives:

         Buildings and improvements           10-40 years
         Riverboats, barges and improvements   9-20 years
         Leasehold improvements                4-20 years
         Furnishings and equipment             5-10 years

                                     F-9
<PAGE>

  Interest incurred during the construction period on major projects is
capitalized as part of the related asset's cost.  Total interest incurred
during the years ended February 28/29, 1997, 1996 and 1995 was $14,863,
$15,908 and $15,606 of which $5,419 was capitalized in 1995.

  Deferred Financing Costs -- Costs associated with the issuance of debt have
been deferred and are being amortized over the life of the related
indebtedness using the effective interest method.

  Gaming Revenue -- In accordance with industry practice, the Company
recognizes gaming revenue as the net win from gaming activities, which is the
difference between gaming wins and losses.

  Indirect Expenses -- Certain indirect expenses of operating departments such
as selling, general and administrative, depreciation and amortization and
management fees are shown separately in the accompanying statements of
operations and are not allocated to departmental operating costs and expenses.

  Promotional Allowances -- Food, beverage, admissions and other items
furnished without charge to customers are included in gross revenues at a
value which approximates retail value and then deducted as complimentary
services to arrive at total operating revenues.  The cost of such
complimentary services is charged to gaming and gaming cruise expense.  Such
estimated costs of providing complimentary services for the years ended
February 28/29, 1997, 1996 and 1995 are as follows:

                                     1997      1996       1995
                                    ------    ------     ------
              Food and beverage    $ 4,557   $ 3,574    $ 2,768
              Admissions tax           --        --         140 
              Other                    194       270        171
                                   --------  --------   --------
                                   $ 4,751   $ 3,844    $ 3,079
                                   ========  ========   ========

  Pre-Opening Expenses -- All pre-opening expenses directly related to gaming
operations of wholly-owned subsidiaries are expensed as incurred.

  Self-Insurance -- The Company is partially self-insured for both employee 
and third party liability costs.  The self-insurance claim liability is
determined based on claims filed and an estimate of claims incurred but not
reported.

  Fair Value of Financial Instruments -- The Company calculates the fair value
of financial instruments and includes this additional information in the Notes
to the Consolidated Financial Statements when the fair value is different than
the book value of those financial instruments.  When the fair value is equal
to the book value, no additional disclosure is made.  The Company uses quoted
market prices whenever available to calculate these fair values.  When quoted
market prices are not available, the Company uses valuation methodologies
which take into account the present value of estimated future cash flows to
determine fair value.
                                     F-10
<PAGE>
  Use of Management Estimates -- The preparation of financial statements in
conformity with generally accepted accounting principles requires management
to make certain estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the amounts of revenues and expenses
during the reporting period.  Actual results may differ from those estimates.

  Loss Per Share Information -- Loss per share information is computed using
the weighted average number of shares of Common Stock outstanding and common
stock equivalent shares from dilutive stock options from date of grant, using
the treasury stock method, and the greater of the closing stock price per
share for the period or the average stock price per share during the period. 
Earnings (loss) per common share assuming full dilution is computed using the
weighted average number of shares of Common Stock outstanding and common stock
equivalents from all dilutive stock options from date of grant using the
treasury stock method and the stock price per share at period end.  The
Financial Accounting Standards board ("FASB") has issued Statement of
Financial Accounting Standards ("SFAS") No. 128 "Earnings per Share" ("EPS")
which is to be implemented by companies whose fiscal year ends after December
15, 1997.  This statement introduces a new method for computing and presenting
EPS, basic EPS, which simplifies previous computational requirements under
Accounting Principles Board Opinion No. 15.  Management does not believe the
adoption of this accounting standard will have a material impact on the
Company's reported earnings per share.

  Recoverability of Long-Lived Assets to be Held and Used in the Business --
The Company reviews long-lived assets for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset or a
group of assets may not be recoverable.  The Company considers a history of
operating losses or a change in the Company's intended use of the asset to be
primary indicators of potential impairment.  Assets are grouped and evaluated
for impairment at the lowest level for which there are identifiable cash flows
that are largely independent of the cash flows of other groups of assets (the
"Asset").  The Company deems the Asset to be impaired if a forecast of
undiscounted future operating cash flows directly related to the Asset,
including disposal value if any, is less than its carrying amount.  If the
Asset is determined to be impaired, the loss is measured as the amount by
which the carrying amount of the Asset exceeds its fair value.  Fair value is
based on quoted market prices in active markets, if available.  If quoted
market prices are not available, an estimate of fair value is based on the
best information available, including prices for similar assets or the results
of valuation techniques such as discounting estimated future cash flows.  
Considerable management judgment is necessary to estimate fair value. 
Accordingly, actual results could vary significantly from such estimates.

  Reclassifications -- Certain amounts for fiscal 1996 and 1995 have been
reclassified to conform with fiscal 1997 financial statement presentations.

                                     F-11
<PAGE>

3.  PROPERTY AND EQUIPMENT

  Property and equipment as of February 28/29, 1997 and 1996, are summarized
as follows:

                                                    1997        1996
                                                   ------      ------
      Owned property:
        Land..................................   $    650    $    650
        Buildings and improvements............      5,757       5,477
        Riverboats, barges and improvements...     69,846      65,780
        Leasehold improvements................     11,555       9,492
        Furnishings and equipment.............     44,200      42,114
        Property leased to third parties......     22,798      42,183
        Property held for development or sale.      2,696       2,414
        Construction in progress..............      2,645       3,437
                                                 ---------   ---------
                                                  160,147     171,547
          Accumulated depreciation
            and amortization..................    (44,597)    (38,333)
                                                 ---------   ---------
                                                  115,550     133,214
                                                 ---------   ---------
       Property under capital leases..........      2,867       3,208 
          Accumulated amortization............     (1,254)       (792)
                                                 ---------   ---------
                                                    1,613       2,416 
                                                 ---------   ---------
            Property and equipment, net.......   $117,163    $135,630
                                                 =========   =========

  During fiscal 1996, the Company entered into an agreement to charter the
"Diamond Jo" (formerly "The President Casino-Missouri") to an unrelated third
party for a two-year period beginning September 1995.  The Company received an
initial non-refundable deposit of $500 which was being amortized over the term
of the agreement.  Charter revenue of $1,730 and $1,949 for fiscal 1997 and
1996, respectively, is included in "Operating Revenue-Hotel, Retail and
Other".  The terms of the agreement provided the third party an option to
purchase the vessel at any time throughout the charter period.  During July
1996, the Company sold the "Diamond Jo" under the terms of the charter
agreement for an aggregate purchase price of $11,355.  The Company recognized
a gain of $999 as a result of this transaction.

  During fiscal 1995, the Company leased a restaurant barge to an unrelated
third party for a two-year period commencing in October 1994.  Charter revenue 
of $900, $1,342 and $465, for fiscal 1997, 1996 and 1995, respectively, is
included in "Operating Revenue-Hotel, Retail and Other".  Upon expiration of
the charter agreement, the Company sold the barge for an aggregate purchase
price of $2,503 to an unrelated third party and recognized a gain of $392 as a
result of the transaction.

 
                                     F-12
<PAGE>
  During fiscal 1997, the Company recognized an impairment of long-lived
assets of $728 primarily related to assets being refurbished for use with the
implementation of a proposed second vessel in St. Louis.  Based on regulatory
and economic factors, the Company subsequently determined a second vessel was
not justified in St. Louis at this time.

  During fiscal 1996, the Company wrote-down the carrying value of "The
President Casino-IV" by $4,000 to its net realizable value. The vessel and
certain nongaming equipment were subsequently sold for an aggregate purchase
price of $18,000.  No additional material gain or loss was recognized as a
result of this sale.  Additionally, as a result of the Company's decision to
withdraw from Gary, Indiana and the resulting uncertainty regarding the future
use of "The Majestic Star" (see Note 4), the Company reduced the carrying
value of "The Majestic Star" by $7,000 to its estimated fair value.

  During fiscal 1996, the Company wrote-down long-lived assets of $2,490
exclusive of the $11,000 discussed above, consisting of the following: (i)
$1,496 for a nongaming cruise boat and barges based on current market
conditions and the uncertainty of future use in operations; (ii) $713 of
gaming equipment and related accessories not currently utilized by the
Company, based on current market prices; (iii) $199 of various computer
software and hardware which has been abandoned or will be abandoned in the
near foreseeable future; and, (iv) $82 for various other property.

  During fiscal 1995, based upon regulatory, political and market conditions,
the Company made a strategic decision to focus on its existing income-
generating properties and to be more selective in pursuing gaming
opportunities in new jurisdictions.  In connection with this strategy, the
Company conducted an evaluation of the estimated net realizable value of its
assets based upon their intended future use and, as a result, made a decision
to write-down $4,974.  The long-lived assets and the respective write-downs
consisted of: i) $2,263 for certain non-gaming cruise boats and barges that
were not used in operations or planned to be used in future developments; ii)
$1,201 for an office building and related machinery and equipment for the
Davenport operations which the Company had offered to the City of Davenport in
connection with an agreement satisfying the Company's development commitment;
and, iii) $1,510 for a barge, based upon the discounted cash flows under a
lease agreement with an unrelated third party.

4.  INVESTMENT IN UNCONSOLIDATED ENTITIES

  Gary Project

  In December 1994, a joint venture (the "Gary Joint Venture") between a
wholly-owned subsidiary of the Company and Barden Development, Inc. ("Barden")
received one of two conditional certificates of suitability awarded by the
Indiana Gaming Commission.  The certificate of suitability was conditioned
upon the joint venture's satisfaction of certain development and other
commitments to the City of Gary aggregating approximately $116,000.  As a
result of the occurrence of a number of events and as part of the Company's 
continuing strategy to concentrate its resources and capital on its existing

                                      F-13
<PAGE>

operations, the Company re-examined its participation in the Gary Joint
Venture.  On June 30, 1995, the Company entered into a series of agreements
with Barden pursuant to which the Company transferred its interest, including
all financial and other obligations related thereto, in the Gary Joint Venture
to Barden.  The Indiana Gaming Commission approved the transfer of the
Company's interest in the Gary Joint Venture at that time.

  Pursuant to these agreements, on August 15, 1995, the Company entered into a
charter agreement with Barden to lease the "Majestic Star", without gaming
equipment, for a five-year term (which term is cancelable at any time by
Barden upon 180 days advance written notice) at an annual rental fee of $1,500
for the first two years and for fair market value thereafter.  The charter
began in May 1996 and is anticipated to end in fall of 1997. 

  As a result of the Company's decision to withdraw from Gary, Indiana, the
Company wrote-off its $1,145 investment in the Gary Joint Venture in fiscal
1996.

  Massena, New York Project

  In October 1993, the Company entered into a joint venture with an unrelated
third party to manage one of the land based gaming casinos to be owned by the
Mohawk Indian Tribe (the "Tribe") on its reservation near Massena, New York. 
Massena is located approximately 50 miles from Montreal, Canada.  The Company,
through a wholly-owned subsidiary, owns a 50% interest in the joint venture. 
The Tribe has entered into a Compact with the State of New York.  The Compact
has been approved by the Bureau of Indian Affairs and the management agreement
was submitted to the National Indian Gaming Commission ("NIGC") for its
approval.  However, a new chief of the Mohawk Indian Tribe was elected after
the execution of the management agreement and the Tribe subsequently notified
the NIGC of its desire to withdraw its request for approval of the management
agreement in order to provide the members of the Tribe an opportunity to
review the agreement.  Due to the uncertainty with respect to this transaction
and the Company's ability to recover its costs, the Company wrote-off its
$4,106 investment in this project in fiscal 1995.

  On December 1, 1995, the joint venture entered into an amended and restated
management agreement with the Tribe.  This agreement was later amended on
April 18, 1996.  The management agreement, which is for a term of five years,
was submitted to the Bureau of Indian Affairs for approval.  Such approval is
contingent upon the Company receiving project financing that is acceptable to
both the Company and the NIGC.  The Tribe may terminate the management
agreement at any time prior to the receipt of such approval.  There can be no
assurance that the joint venture will obtain financing on acceptable terms, if
at all, or if such financing is obtained, that the NIGC will approve the
management agreement.  If the management agreement is approved, the Company
will be obligated to contribute an additional $2,300 to the joint venture for
use primarily for licensing and related fees and to lend approximately $14,973
to the joint venture for use primarily for the construction and the equipping 
of a 76,800 square foot gaming facility which the Company expects to initially
contain approximately 100 table games and 1,500 bingo seats.  Current New York

                                    F-14
<PAGE>

law does not permit slot machines to be utilized at the proposed gaming
facility and a federal court has held that the use of video pull tabs is not
permitted.  The Company, with the consent of the Tribe, may make an additional
investment of up to $2,250 if such investment is warranted.  Subject to
guaranteed minimum monthly payments to the Tribe of $250-$800 and the
repayment of the Company's loan, the joint venture will receive 25% of the net
revenues generated from the gaming facility, one-half of which will be the
Company's share.

  Tunica Project

  During December 1993, the Company, in a joint venture (the "Joint Venture")
with Jackpot Enterprises, Inc. ("Jackpot"), opened a dockside gaming operation
in Tunica County, Mississippi.  The Joint Venture was scheduled to terminate
in December 1994.  However, on July 8, 1994, the Company and Jackpot
terminated the Joint Venture and closed the Tunica gaming facility.  The
Company's share of the Joint Venture's net loss was $2,698, including
termination expenses of $1,742, for the year ended February 28, 1995.

5.  PHILADELPHIA LEASE OPTION

  In December 1993, the Company entered into an agreement for the rights to
utilize an 18-acre riverfront site in Philadelphia, Pennsylvania (the
"Philadelphia Property") either through entering a long-term lease on the
property or, under certain conditions, to purchase the property at its
determined fair market value.  The Company also acquired an option to lease a
City-owned pier which is located on property immediately contiguous to the
Philadelphia Property (the "Pier").  The Company believes that the
Philadelphia Property is a prime gaming site because it is readily accessible
from major highways and will permit adequate parking and room for additional
development.  The Company entered into the lease option and the option for the
pier in anticipation of the legalization of gaming in Pennsylvania.  The
agreement prohibits the Company from owning or managing any gaming facility in
Philadelphia, other than a facility to be located on the Philadelphia
Property.

  The lessor of the Philadelphia Property also assigned (the "Assignment") to
the Company all of the lessor's rights, title and interest under an option
agreement with the City of Philadelphia which provides that the lessor may
enter into a 99-year lease of the Pier.

  During fiscal 1996, based upon developments which indicated an uncertainty
as to the passage of riverboat gaming legislation in Pennsylvania prior to the
expiration of the initial option agreement, the Company wrote-off the
accumulated cost of the option of $10,957.

  On May 7, 1996, the Company entered into a separate agreement to secure
additional lease rights with respect to the same property.  As part of the 
agreement, the Company paid $2,000 to secure the right to purchase additional 
options for five separate periods extending from January 1, 1997 through
December 31, 1999.  The first option was purchased in fiscal 1997 and is for a 

                                     F-15
<PAGE>

period of twelve months (beginning January 1, 1997) and each of the four
remaining option periods are for six month intervals.  Each of the four
remaining option periods require the Company to pay $277 per month through the
option period.  Upon the exercise of any option, the Company would begin a
ten-year lease with five (5), five (5) year extensions available.  If the
Company exercises this option, the Company will be obligated to pay annual
rent based upon a combination of fixed minimum payments or a percentage of the
Company's "net gaming win" (as defined in the lease agreement), but in no
event will such minimum annual rent be less than $3,500.  During the option
period and the lease period, the Company will be obligated to pay all
maintenance costs, taxes and insurance with respect to the property.

  In December 1996, the Company modified and exercised its May 1996 option
agreement to secure the above lease rights for the period January 1, 1997
through December 31, 1997.  Pursuant to the modified option agreement, the
Company remitted $1,200.  The modified agreement also calls for additional
payments if an authorized state-wide voter referendum on the legalization of
full scale riverboat gaming in Philadelphia County, Pennsylvania is placed on
the ballot during calendar 1997 or a new gaming company is obtained for the 
second gaming site at the location.  Based on the terms of this agreement,
contingent payments will not exceed $2,124.

6.  NOTES PAYABLE

  Notes payable as of  February 28/29, 1997 and 1996, are summarized as
follows:
                                                        1997           1996 
                                                       ------         ------
  Senior notes, 13%, principal payments due
   annually of $25,000 beginning fiscal 2000
   with a final principal payment of $50,000 in
   fiscal 2002, net of discount of $1,189.........   $ 98,811        $ 98,501
  Line of credit, prime plus .5%, combined
   rate of 8.75% as of February 28, 1997..........      2,251           2,251
  Term note payable, variable interest rate,
   8.94% as of February 28, 1997, principal
   payments due quarterly of $100, with a final
   payment of $2,000 in fiscal 2003...............      4,200           4,600
                                                     ---------       ---------
     Total notes payable..........................    105,262         105,352
       Less current maturities....................       (400)           (400)
                                                     ---------       ---------
        Long-term notes payable...................   $104,862        $104,952
                                                     =========       =========

  On September 23, 1993, the Company completed a private placement of $100,000
of 11.75% (12% effective rate of interest) Senior Subordinated Notes Due 2001 
(the "Senior Subordinated Notes") and warrants to purchase 900 thousand shares
of Common Stock.  The Senior Subordinated Notes were general unsecured
obligations of the Company.  The Senior Subordinated Notes were also
unconditionally guaranteed, jointly and severally on a senior subordinated 

                                     F-16
<PAGE>

basis, by all of the Company's wholly-owned subsidiaries (the "Guarantors"),
and, under certain circumstances, the Company's future subsidiaries, although
the subsidiary guarantee from TCG was limited in amount (see Note 17).  The
Senior Subordinated Notes were subordinated in right of payment to all present
and future senior debt of the Company.  Each warrant entitled the holder
thereof to purchase one share of the Company's Common Stock at $26.67 per
share, subject to adjustment under certain circumstances, and expired on
September 23, 1996.

  The Senior Subordinated Notes contained certain restrictive covenants which,
among other things, limited the Company's ability to pay dividends, incur
additional indebtedness (exclusive of an unsecured $20,000 revolving credit
facility), merge or consolidate with another company and sell or otherwise
dispose of a substantial portion of its properties or assets and required the
Company to maintain at least $40,000 in cash and cash equivalents until such
time as it commenced gaming operations on "The Admiral" in St. Louis in a
manner substantially consistent with the manner described in the offering
document for the sale of the Senior Subordinated Notes.  If the Company did
not commence gaming operations on "The Admiral" in such manner by September
23, 1994, the Company would have been required to make an offer to the holders
of the Senior Subordinated Notes to purchase at par such amount as would have
been necessary to reduce the then outstanding principal amount to $50,000.

  During fiscal 1995, the Company exchanged (the "Exchange") $100,000 of a
newly issued series of the Company's 13% Senior Notes due 2001 (the "Senior
Notes"), warrants to purchase an aggregate of 883 thousand shares of the
Company's Common Stock and an aggregate cash payment equal to $3,140 for all
of its outstanding Senior Subordinated Notes.  The Exchange eliminated certain
obligations the Company had to maintain $40,000 in cash and cash equivalents
and to offer to repurchase up to $50,000 aggregate principal amount of the
Senior Subordinated Notes prior to their scheduled maturity.  On April 4,
1995, pursuant to a registration rights agreement governing the Senior Notes,
the Company exchanged all of the Senior Notes for an equal principal amount of
13% Senior Exchange Notes due 2001 ("Senior Exchange Notes") registered under
the Securities Act of 1933, as amended.  The Senior Exchange Notes rank equal
in right of payment to all present and future senior debt (as defined in the
indenture governing the Senior Exchange Notes (the "Senior Exchange Note
Indenture")) of the Company and its subsidiaries and are payable as follows: 
25% of the outstanding principal amount on each of September 15, 1999 and
September 15, 2000 and the remainder of the outstanding principal amount on
September 15, 2001.  In addition, the Senior Exchange Notes are
unconditionally guaranteed, jointly and severally on a senior basis, by the
Guarantors, although the guarantee of TCG is limited in amount (see Note 17). 
As security for the obligations of the Company and the Guarantors under the
Senior Exchange Notes, the Company and the Guarantors have pledged their
equity interests in each Guarantor and all of their rights in certain
management agreements with, certain indebtedness from, and certain investments
in, certain gaming ventures.  The Senior Exchange Note Indenture contains
certain restrictive covenants which, among other things, limit the Company's
ability to pay dividends, incur additional indebtedness (exclusive of $15,000
of senior debt), issue preferred stock, create liens on certain assets, merge

                                     F-17
<PAGE>
 or consolidate with another company and sell or otherwise dispose of a
substantial portion of its properties or assets.  Each warrant entitles the
holder thereof to purchase one share of the Company's Common Stock at $7.925
per share and expires on September 30, 1999.

  The Company recorded an extraordinary loss associated with the Exchange as
follows:

           Prepaid expenses-current portion of
             deferred financing costs..............     $    503
           Non-current deferred financing costs....        3,040
           Original issue discount.................        2,692
                                                        ---------
                                                           6,235
           Income tax benefit......................       (2,182)
                                                        ---------
             Extraordinary loss....................     $  4,053 
                                                        =========

  The market value of such notes on February 28, 1997 was $85,000.

  The Indenture governing the Company's 13% Senior Notes due 2001 provides
that the Company must use the cash proceeds from the sale of assets within 180
days after receipt either (i) to permanently reduce certain indebtedness or
(ii) to contract with an unrelated third party to make investments or capital
expenditures or to acquire long-term tangible assets, in each case, in gaming
and related businesses (provided any such investment is substantially complete
within 270 days of such receipt).  If such cash proceeds are not so utilized,
the Company must make an offer to all holders of Senior Notes to repurchase at
par an aggregate principal amount of Senior Notes equal to the amount by which
such cash proceeds exceed $5,000.  The Company does not currently anticipate
that unutilized proceeds will exceed $5,000.

  The Company's line of credit is collateralized by a boat and real property
with net book values of $8,816 and $3,750 respectively, as of February 28,
1997, certain personal property and an assignment of certain contracts. 
During March 1997, the line of credit was extended to $4,500, of which $2,249
is available.  The line of credit terminates in March 2001.

  The 8.94% term note payable is collateralized by a boat and various
equipment with a net book value of $8,583 as of February 28, 1997, and is
personally guaranteed by John E. Connelly, President, Chairman, Chief
Executive Officer and principal stockholder.  This note also contains certain
covenants which, among other things, require the Company to maintain a minimum
tangible net worth of $40,000.  On November 18, 1996, the Company received a 
waiver of the net worth covenant, whereby the Company is required to maintain
a minimum net worth of $20,000, through the period ended March 1, 1998, at 
which time the Company's net worth requirement will return to $40,000. 
Management believes that during fiscal 1998 the Company's net worth will fall
below $20,000 and that the loan will be subject to call.  However, the fair
market value of the vessel is in excess of the outstanding note balance and

                                     F-18
<PAGE>
management believes that the Company will renegotiate the terms, buy down a
portion of the note or refinance the loan.

  The various agreements governing the notes described above generally limit
borrowings by the Company's affiliates without the respective lenders' prior
consent.

  Principal maturities on long-term notes payable as of February 28, 1997, are
as follows: 

                Years ending February 28/29: 
                  1998........................    $    400
                  1999........................       1,300
                  2000........................      26,300
                  2001........................      25,851
                  2002........................      50,400
                  Thereafter..................       2,200
                                                  ---------
                                                   106,451
                    Less discount on Senior
                      Exchange Notes..........     ( 1,189)
                                                  ---------
                  Total maturities............    $105,262
                                                  =========

7.  CAPITAL AND OPERATING LEASES

  The Company entered into an operating lease with an affiliate of Mr.
Connelly for its Biloxi, Mississippi mooring site, parking facilities and
offices in July 1992 and a warehouse lease in August 1993.  The operating
lease was for an initial term of three years and the Company has nine renewal
options of three years each.  In fiscal 1996, the Company exercised its option
for the second three year renewal term.  The current rent is $3,302 per year
on a triple net basis.  The Company is required to pay for all improvements to
the leased premises and to bear the cost of all taxes, fees, assessments and
expenses.  On each renewal, the rent will be increased to reflect changes in
the consumer price index, unless either party requests a new appraisal. 
Management believes that the amount being paid by the Company under the leases
represents a fair market value annual rental charge.  Future renewals and any
other changes to the leases are subject to approval by the independent members
of the Company's Board of Directors.
  
  The Company leases certain levee and property in Davenport, Iowa, certain 
docking locations on the St. Louis, Missouri riverfront and certain other
equipment under operating leases.  The levee lease and its associated parking
lot lease in Davenport expire in 2017 and a second parking lot lease in
Davenport expires in 2002 with one fifteen-year renewal option.

  The St. Louis riverfront leases are generally for ten year periods with
multiple five year renewal options and are subject to rate changes by the Port
Commission every five years.  In addition, the St. Louis riverfront leases
 
                                     F-19
<PAGE>
provide for rental payments at 2% of adjusted gross receipts (gross receipts
net of winnings paid to wagerers).  This fee may be adjusted (higher or lower)
to equal the percentage of gaming revenues charged on other properties in the
central riverfront area of St. Louis on which gaming is conducted.  The
Company is aware that another gaming operator chosen by the City of St. Louis
agreed to pay more than 2% of its gross gaming receipts as a lease fee for
another location.  Such an agreement may result in a substantial increase in
the Company's St. Louis lease fee.  A substantial increase may have a material
adverse effect on the Company's future St. Louis gaming operations.

  In February 1995, a non-guarantor subsidiary of the Company (the "Charter
Company") entered into a charter agreement (the "Charter Agreement") to
charter a dockside casino and certain equipment to be utilized by the
Company's Biloxi, Mississippi gaming operations.  The lease commenced June 15,
1995.  Under the terms of the Charter Agreement, rent is $3,945 annually for a
term of five years from the commencement date, renewable at the option of the
Company for two successive five year periods.  Upon commencement, the Charter
Company assumed certain indebtedness of the lessor for the deferred purchase
price of certain gaming equipment on the vessel in an amount of $2,867. 
Charter Company has the option, subject to certain limitations, to purchase
the vessel and equipment at any time prior to six months from the lease
expiration date, including renewal periods, for the lower of the appraised
value or the amortized value (as such terms are defined by the Charter
Agreement), and upon satisfaction of certain other terms of the Charter
Agreement.  Charter Company is required to pay for all improvements and bear
the cost of all taxes, insurance and repairs.  AGE has filed an action against
Charter Corporation and President Mississippi with respect to certain disputed
charter payments under the Charter Agreement.  (See Footnote 11.)

  Rental expense incurred under operating leases was $11,988, $9,203 and
$4,964 for the years ended February 28/29, 1997, 1996 and 1995, respectively.

                                     F-20
<PAGE>

  Future minimum lease commitments under noncancellable long-term operating
leases and capital leases as of February 28, 1997, are as follows:

                                   Non-cancelable
                                      Operating          Capital
                                        Leases           Leases
                                    ------------      ------------
    Years ending February 28/29: 
      1998........................    $  9,939           $ 1,449
      1999........................       7,883               -- 
      2000........................       6,436               -- 
      2001........................       1,852               -- 
      2002........................         430               -- 
      Thereafter..................       4,874               -- 
                                      ---------         ---------
                                        31,414             1,449
        Less interest amount......         --                (77)
                                      ---------         ---------
     Lease obligations............    $ 31,414             1,372
                                      =========
        Less current maturities...                        (1,372)
                                                        ---------
     Long-term capital lease
       obligations................                      $    -- 
                                                        =========

8.  INCOME TAXES

  The Company recognizes deferred tax assets, net of applicable reserves,
related to net operating loss carryforwards and certain temporary differences. 
Recognition of future tax benefits is based on the extent the realization of
such benefit is "more likely than not."  As such, the realization of the
deferred tax benefit is dependent on the Company's ability to generate future
taxable income.  In fiscal 1996, given the level of operations, the increased
competition and the overall uncertainty as to the Company's ability to return
to profitability, the Company determined that the tax benefit did not satisfy
the recognition criteria.  Accordingly, a valuation allowance was established
in fiscal year 1996 for the applicable deferred tax assets in the amounts of
$36,287.  The valuation allowance increased $2,181 to $38,468 in fiscal 1997.

                                    21
<PAGE>

  Income tax expense (benefit) attributable to loss before income taxes,
minority interest and extraordinary item for the years ended February 28/29,
1997, 1996 and 1995 is as follows:

                                                 1997       1996       1995
                                                ------     ------     ------
   Current:
     Federal................................   $    --    $   --    $   163
     State..................................     (1,367)    1,360       325
                                                --------  --------  --------
                                                 (1,367)    1,360       488
   Deferred:
     Federal................................        --     15,659    (5,011)
     State..................................        --      4,889    (1,256) 
                                                --------  --------  --------
                                                    --     20,548    (6,267)
                                                --------  --------  --------
                                                $(1,367)  $21,908   $(5,779)
                                                ========  ========  ========

  The difference between the statutory federal tax rate and the effective tax
rate, expressed as a percentage of loss before income taxes, minority interest
and extraordinary item, for the years ended February 28/29, 1997, 1996 and
1995 is as follows:

                                                  1997      1996      1995
                                                 ------    ------    ------
   
  Statutory tax rate........................     (35.0%)   (35.0%)   (35.0%)
   Increases (decreases) in tax
     resulting from:
       Establishment of a valuation
         allowance...........................      29.5     91.0       0.0
       Nondeductible lobbying expenses.......       0.3      0.0       5.3
       Disallowed meal and
         entertainment expenses..............       0.2      0.1       5.9
       State tax provision (benefit),
         net of federal tax expense..........      (8.8)     4.0      (2.7)
       Other.................................       0.0      0.4        .2 
                                                 -------   -------   -------
                                                  (13.8%)   60.5%    (26.3%)
                                                 ========  =======   =======

                                      F-22
<PAGE>

  The components of the net deferred tax asset as of February 28/29, 1997 and
1996 are as follows:
                                                     1997          1996
                                                    ------        ------
     Deferred tax assets:
       Net operating loss carryforward.......     $ 33,949      $ 28,786
       Pre-opening costs and intangible
         assets..............................        9,063         9,761
       Accounting reserves...................           59           -- 
       Tax credits...........................          280           280
       Other.................................        2,269         1,106
                                                  ---------     ---------
                                                    45,620        39,933
       Less: Valuation allowance                   (38,468)      (36,287)
                                                  ---------     ---------
                                                     7,152         3,646
     Deferred tax liabilities:
       Property..............................        7,152         3,646
                                                  ---------     ---------
          Net deferred tax asset.............     $    --       $    --
                                                  =========     =========

  As of February 28, 1997, the Company had federal, Missouri and Mississippi
net operating loss carryforwards of $85,141, $82,987 and $20,400,
respectively.  These tax benefits will expire between 2008 and 2012 unless
first offset against taxable income.  The availability of the loss
carryforwards may be limited in the event of a significant change in ownership
of the company or its subsidiaries.

 9.  OTHER ACCRUED EXPENSES

  The components of other accrued expenses as of February 28/29, 1997 and
1996, are as follows:
<TABLE>
<CAPTION>
                                                 1997        1996
                                                ------      ------
        <S>                                   <C>         <C>
        Interest........................      $  6,120    $  6,135
        Taxes, other than income
          and payroll taxes.............         1,984       2,754
        Other...........................         7,560       8,129
                                              ---------   ---------
                                              $ 15,664    $ 17,018
                                              =========   =========
</TABLE>

10. COMMITMENTS AND CONTINGENT LIABILITIES

  On January 16, 1997 a case entitled "Whalen v. John E. Connelly, J. Edward
Connelly and Associates, Inc., President Casinos, Inc. and PRC-Iowa, Inc." was
 
                                     F-23
<PAGE>
filed in the Iowa District Court for Scott County by Michael L. Whalen
("Whalen"), who is a five percent limited partner in TCG.  Whalen filed this
lawsuit after accepting from Della III, Inc., the former general partner,
shares of the Company's Common Stock and cash to which he was determined to be
entitled pursuant to a previous judgment.  Whalen claims in this lawsuit that
because he asked for the stock and cash while he was appealing the judgment in
a previous lawsuit and was not given the stock or cash until after the
judgment was affirmed, the named defendants committed the tort of conversion. 
Whalen seeks as damages the difference in the value of the stock on the date
of its "highest valuation" and the date he accepted the stock in 1996.  The
Company, after consultation with legal counsel, believes this lawsuit is
without merit and intends to defend this action vigorously.  Although the
results of litigation are inherently uncertain, the Company does not believe
this matter will have a material adverse effect on the Company's financial
position or results of operations. 

  In 1994, William H. Poulos filed a class-action lawsuit in the United States
District Court for the Middle District of Florida against over thirty-eight
(38) casino operators, including the Company, and certain suppliers and
distributors of video poker and electronic slot machines.  This lawsuit was
followed by several additional lawsuits of the same nature against the same,
as well as additional, defendants, all of which have now been consolidated
into a single class-action pending in the United States District Court for the
District of Nevada.  Following a court order dismissing all pending pleadings
and allowing the plaintiffs to re-file a single complaint, a complaint has
been filed containing substantially the same identical claims, alleging that
defendants fraudulently marketed and operated casino video poker machines and
electronic slot machines, and asserting common law fraud and deceit, unjust 
enrichment and negligent misrepresentation.  Various motions have now been
filed by the defendants seeking to have this new complaint dismissed or
otherwise limited, and the plaintiffs are responding to these motions.  To
date, the court has not entered any order concerning the merits of the
complaint.  Although the outcome of litigation is inherently uncertain,
management, after consultation with legal counsel, believes the action is
without merit and does not expect the lawsuit will have a material adverse
effect on the Company's financial position or results of operations. 

  On April 11, 1997, and action captioned "American Gaming & Entertainment,
Ltd. v. President Mississippi Charter Corporation and President Riverboat
Casino-Mississippi, Inc." was filed in the Chancery Court of Harrison County,
Mississippi by American Gaming & Entertainment, Ltd. ("AGE").  AGE is the
owner of "The Biloxi Barge" which is utilized in connection with the Company's
Biloxi, Mississippi operations pursuant to a Charter Agreement between AGE and
Charter Corporation.  The action filed by AGE alleges that President
Mississippi and Charter Corporation have not complied with their respective
obligations under the Charter Agreement, and requests the Court to require
President Mississippi and Charter Corporation to perform the Charter Agreement
and to pay all sums due thereunder with interests and costs.  In the
alternative, AGE requests a judgement for the sum of $23,425 with interests
and costs or such other relief as the Court may deem just and proper.  The
Company believes that AGE has breached its obligations under the Charter
 
                                     F-24
<PAGE>
Agreement in a number of respects and, in connection therewith, the Company
has withheld a portion of the charter payments due to AGE under the Charter
Agreement.  The Company has continued to accrue the full amount of such
payments due under the Charter Agreement.  The Company believes that is has
meritorious defenses to the claims of AGE, and is in the process of evaluating
and formulating a response to this action.

  The Company has been notified that the Environmental Protection Agency and
the U.S. Attorney's Office for the Eastern District of Missouri are conducting
a federal criminal investigation with respect to compliance by President
Missouri with federal environmental laws in connection with the operation of
"The Admiral" in St. Louis.  The Company is cooperating fully with the
investigation and has provided certain information regarding "The Admiral"'s
operations to the Environmental Protection Agency and the U.S. Attorney's
Office.  In the event that the Company is charged with violating federal
environmental laws, the Company may be subject to substantial civil and
criminal penalties, including monetary fines.  Based upon the Company's
discussions with the U.S. Attorney's Office and the results of the Company's
internal investigation of this matter, management does not believe that the
investigation will result in any monetary or other penalties which would have
a material adverse effect on the Company's financial condition or results of
operations, or which would have any material adverse impact upon the gaming
licenses of the Company or its subsidiaries.

  The Company serves alcoholic beverages at its gaming facilities and has from
time to time been the subject of claims related thereto.  Although the Company
believes it maintains adequate insurance to cover these types of claims, it is
often difficult to predict the outcome of such litigation and the amount of 
damages which may be awarded in these types of cases.  The Company does not
believe that the outcome of any pending litigation related to the Company's
serving of alcoholic beverages will have a material adverse effect on its
financial position or results of operations.

  The Company is also from time to time party to litigation, which may or may
not be covered by insurance, arising in the ordinary course of its business. 
The Company does not believe that the outcome of such litigation will have a
material adverse effect on the Company.

  Operator's Contract

  TCG and the Riverboat Development Authority (the "Authority"), an Iowa non-
profit corporation, entered into an operator's contract on December 28, 1989,
which enables TCG to be the operator of an excursion gambling boat pursuant to
the rules and regulations of the Iowa Racing and Gaming Commission.  This
contract was last amended on September 30, 1994.  The contract, as amended,
requires TCG to make weekly payments of $28, an annual payment of 2% of
adjusted gross receipts in excess of $34,000 for each year commencing July 1,
1994, and an annual payment equal to one dollar and fifty cents for each 
admission, either paid or complimentary, in excess of 1,117,579 admissions for
each contract year.  The current contract expires March 31, 1998, provided 
however, that so long as TCG has substantially complied with the Iowa Racing

                                     F-25
<PAGE>
and Gaming Rules, and the Authority's gaming license is renewed and/or is in
effect, the parties will renegotiate thereafter the extension of the agreement
for succeeding three year periods, the last of which will terminate on the
anniversary date of the license in the year in which Scott County, Iowa may
vote to extend its riverboat gaming referendum.

  Other

  The ownership and operation of casino gaming facilities are subject to
extensive state and local regulation.  As a condition to obtaining and
maintaining a gaming license, the Company must submit detailed financial,
operating and other reports to each such Commission, each of which has broad
powers to suspend or revoke licenses.  In addition, substantially all of the
Company's material transactions are subject to review and/or approval by the
various regulatory bodies.  Any person acquiring 5% or more of the Common
Stock or of the equity securities of any gaming entity must be found suitable
by the appropriate regulatory body.  The Davenport license was last renewed in
April 1996 and expires April 1998.  The Biloxi license was last renewed in
June of 1996 for a two-year period.  The St. Louis license was last renewed in
June of 1996 and expires in June of 1998.
  
  In March 1996, a bipartisan bill was passed by the U.S. House of
Representatives to establish a National Gaming Impact and Policy Commission
which would provide regulatory oversight of the gaming industry at the federal
level.  The bill has been sent to the Senate for consideration.  Although it
is not possible to predict if, when or in what form the proposed legislation
may be adopted, if adopted, such legislation may result in further regulation 
of the Company's gaming operations which could have a material adverse impact
on the Company's future results of operations.

11.  DEVELOPMENT AGREEMENT WITH CITY OF DAVENPORT, IOWA

  TCG and the City of Davenport (the "City") are parties to a development
agreement, which provides, among other things, for the following:

  Development Agreement -- TCG was required to submit to the City plans for
the development of certain property in close proximity to "The President". 
During the year ended February 29, 1996, TCG and the City reached a mutually
acceptable development plan whereby, among other things, TCG was obligated to
expend certain amounts for leasehold improvements in exchange for certain
lease rights.  As of February 28, 1997, TCG had made capital expenditures of
$1,662 with regard to this obligation.  As a result of this agreement, TCG
will be released from its $250 surety bond obligation upon completion of the
project, which is estimated to be the Summer of 1997.

  Fees -- TCG is required to pay certain boarding and docking fees and a
special payment in lieu of property taxes to the City.  TCG is required
annually to pay the City of Davenport a base amount of $814 plus 82 cents per
passenger over 1,117,579 passengers.  Both the base amount and per passenger
charges related to the docking fees are subject to an annual 4% escalator.


                                     F-26
<PAGE>


  Exclusive Agreement -- TCG will not pursue a gaming license in any other  
Iowa city or in Rock Island County, Illinois.

  Boat Operations -- TCG may not substitute another vessel to replace "The 
President" in Davenport, Iowa so long as an average of 2,250 passengers per
day during the cruise season is maintained.  If such passenger count is not
maintained or if there is a material adverse change in the Iowa gaming law,
TCG will be permitted to substitute an 800-passenger boat.  However, temporary
substitution during U.S. Coast Guard mandated hull inspections is permitted.

12.  EMPLOYEE BENEFIT PLANS

  Savings Plan

  The Company maintains an employee savings plan which covers all full-time,
non-union employees.  Pursuant to this savings plan, participating employees
may contribute (defer) a percentage of eligible compensation.  Employee
contributions to the savings plan, up to certain limits, are partially matched
by the Company.  The expense applicable for the Company's contribution to the
savings plan was $451, $433 and $311 for the years ended February 28/29, 1997,
1996 and 1995, respectively.

  Stock Option Plan

  The Company maintains a stock option plan which provides for the granting of
nonqualified and incentive stock options pursuant to the applicable provisions
of the Internal Revenue Code and regulations.

  All directors, officers and other key employees who are in positions in
which their decisions, actions and counsel may significantly impact the
profitability and success of the Company are eligible to receive options under
the plan.  In addition, the plan authorizes the issuance of tandem stock
appreciation rights in connection with the issuance of certain options.  The
plan is administered by the Compensation Committee of the Board of Directors,
whose members determine to whom options will be granted and the terms of each
option.  The exercise price of stock options granted under the plan is
established by the Compensation Committee, but the exercise price may not be
less than the market price of the Company's Common Stock on the date the
option is granted.  Each option granted is exercisable in full at any time or
from time to time as determined by the Compensation Committee and provided in
the option agreement, provided that no option may have a term exceeding ten
years.  In December 1996, the plan was amended primarily to allow
transferability of options granted under certain circumstances and with the
consent of the Compensation Committee.

  Stock appreciation rights may only be issued in connection with a
nonqualified stock option.  This right will entitle the holder to receive in
cash or stock an amount equal to the excess of the fair market value on the
date of exercise over the exercise price of the tandem stock option.  The
maximum value of any stock appreciation right will be limited to the exercise
 
                                     F-27
<PAGE>
price of the tandem stock option.  A stock appreciation right may be
exercisable only at the same time and to the same extent as the tandem stock
option.

  On June 19, 1996, the Compensation Committee of the Board of Directors (the
"Committee") approved amendments to certain of the outstanding stock option
agreements of each of the executive officers and certain other employees of
the Company.  Pursuant to such amendments, options to purchase an aggregate of
766,500 shares of Common Stock at exercise prices ranging from $6.00 to $9.00
per share were repriced (the "Repricing") at an exercise price of $1.9375 per
share, the market value of the Common Stock on the date of the Repricing.  In
addition, the trading price at which certain options granted to an executive
officer with respect to 100,000 shares of Common Stock will vest was amended
from $14.00 to $4.00 per share.  Except for such amendments, the vesting
periods and other terms of the stock options affected by the Repricing were
not changed.

  The Committee believes that the Repricing was necessary and appropriate in
light of competitive conditions in the gaming industry and in order to provide
a meaningful long-term incentive compensation opportunity in light of recent
trading prices of the Common Stock to key personnel whose efforts are
essential to the Company's success.

  In fiscal 1997, the Company adopted  SFAS No. 123, "Accounting for Stock-
Based Compensation".  SFAS No. 123 is effective for years beginning after
December 15, 1995 and provides, among other things, that companies may elect
to account for employee stock options using a fair value-based method or
continue to apply the intrinsic value-based method prescribed by Accounting
Principles Board Opinion No. 25 ("APB No. 25").  As permitted, the Company has
elected to continue to apply the intrinsic value-based method for stock
options.  Accordingly, no compensation cost has been recognized.

  Under the Company's Plan, the Company is authorized to grant options up to
an aggregate of 3,150,000 shares, of which 600,000 have been exercised, to key
employees and directors. Options under the plan are generally granted at
market value at the date of the grant and expire 10 years from the date of
grant.  The outstanding options that have been granted under the plan
generally vest either at (i) a rate of 20% each anniversary date or {ii} 20%
on date of grant 20% each anniversary date thereafter.  The Company has also
granted stock options to external board members under a non-qualified plan. 
These options are generally granted at market value at the date of the grant;
vest at 50% on date of grant and 25% each anniversary date thereafter; and
expire 10 years from date of grant.

  Effective with options granted in 1996 and subsequently, the fair value of
each option grant is estimated on the date of grant using the Black-Scholes
option-pricing model with the following weighted-average assumptions used for
grants in 1997 and 1996, respectively: no dividend yield expected volatility
of 97.0% and 62.8%; risk-free interest rates of 7.0% and 7.3%; and expected
lives of 9.2 and 10 years.

                                     F-28

<PAGE>
  The following table discloses the Company's pro forma net loss and loss per
share assuming compensation cost for stock options had been determined using
the fair value-based method prescribed by SFAS No. 123.  
<TABLE>
<CAPTION>
                                                 1997        1996
                                                ------      ------
            <S>                               <C>         <C>
            Net loss:
              As reported................     $ (8,785)   $(58,150)
              Pro forma..................     $ (9,357)   $(58,481)
            Loss per share:
              As reported................      $ (0.29)    $ (1.93)
              Pro forma..................      $ (0.31)    $ (1.94)
</TABLE>
  Because the accounting method prescribed by SFAS No. 123 is not applicable
to options granted prior to January 1, 1995, the compensation cost reflected
in the pro forma amounts shown above may not be representative of that to be
expected in future years.

  The summary of the status of the Company's fixed stock option plans as of
February 28/29, 1997, 1996, and 1995, and changes during the years ending on
those dates is presented below:
<TABLE>
<CAPTION>
                            1997                      1996                      1995
                 -------------------------  -------------------------  -------------------------
                          Weighted-Average           Weighted-Average           Weighted-Average
Fixed Options    Shares    Exercise Price   Shares    Exercise Price   Shares    Exercise Price   
-------------------------------------------------------------------------------------------------
<S>              <C>           <C>           <C>          <C>           <C>          <C>

Outstanding at
 beginning
 of year          2,244,900    $ 6.49        2,091,500    $ 6.75        1,744,500    $ 6.41 
-------------------------------------------------------------------------------------------------
Granted           1,019,000      1.84          430,000      6.00          369,500      9.00
Forfeited        (1,120,300)     6.43         (276,600)     7.71          (22,500)    17.33
Expired                 --        --               --        --               --        --
-------------------------------------------------------------------------------------------------
Outstanding
 at end
 of year          2,143,600      4.31        2,244,900      6.49        2,091,500      6.75
-------------------------------------------------------------------------------------------------
Options
 exercisable
 at year-
 end              1,616,700                  1,713,500                  1,215,300

Weighted-
 average fair
 value of
 options
 granted
 during
 the year              1.63                       4.69
-------------------------------------------------------------------------------------------------
</TABLE>
                                      F-29
<PAGE>
  The following table summarizes information about fixed stock options
outstanding at February 28, 1997:

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------
                             Options Outstanding                       Options Exercisable
                ------------------------------------------------   ----------------------------
   Range of       Number       Weighted-Average     Weighted-        Number        Weighted-
   Exercise     Outstanding       Remaining          Average       Exercisable      Average
    Prices      at 02/28/97   Contractual Life    Exercise Price   at 02/28/97   Exercise Price
-------------------------------------------------------------------------------------------------
<S>               <C>            <C>                <C>             <C>             <C> 
$ 0.00 - 0.99        53,500      9.71 years         $ 0.9375           19,700       $ 0.9375
  1.00 - 1.99       846,100      7.72 years           1.8870          368,000         1.9110
  2.00 - 2.99        30,000      9.26 years           2.0000           15,000         2.0000
  6.00 - 6.99     1,200,000      5.73 years           6.1667        1,200,000         6.1667
  9.00 - 9.99        14,000      7.16 years           9.0000           14,000         9.0000
-------------------------------------------------------------------------------------------------
  Total           2,143,600                                         1,616,700
-------------------------------------------------------------------------------------------------
</TABLE>

  On November 19, 1993, a stock option grant of 75,000 shares of Common Stock
at an exercise price of $25.67 was awarded outside of the above described
plan.

13. RELATED PARTY TRANSACTIONS 

  The Company is related to other entities through common ownership by its
principal owners or officers.  The Company purchases legal, promotional
(primarily hotel accommodations), travel, personnel and various other services
and products from such related parties.  The amounts charged are based on
specific identification of the products and services provided by such
entities.  The Company also leases its Biloxi, Mississippi mooring site,
parking facilities, offices and a warehouse from a related party under
operating leases.  In management's opinion, such related party transactions
are equivalent to amounts which would have been charged by unrelated third
parties.

  Transactions with such related parties occurring during the years ended
February 28/29, 1997, 1996 and 1995 are summarized as follows:

                 Description               1997      1996      1995
                -------------             ------    ------    ------
        Rent..........................    $ 3,286   $ 3,228   $ 2,827
        Legal services................        --        873     1,461
        Other products and services...      1,503     1,335     1,549

  During fiscal 1995, the Company, Mr. Connelly and certain other parties were
defendants in litigation involving The Broadwater Hotel complex.  On February
17, 1995, the Company, as well as the other parties to such litigation, 
entered into a settlement agreement pursuant to which all claims in such
litigation were dismissed with prejudice.  In connection with the settlement,

                                     F-30
<PAGE>
on February 17, 1995, the Company entered into a loan agreement with BH
Acquisition Corp. ("BH"), a company controlled by Mr. Connelly, for principal
amount of $1,000 (the "Existing Note") to fund the first of four payments for
the litigation settlement.  On February 15, 1996, the Existing Note was
amended and restated (the "Amended and Restated Note") to extend the maturity
date one calendar year and the Company entered into a second loan agreement
(the "New Note") with BH for principal amount of $1,000 to fund the third
installment of the settlement.  The Amended and Restated Note and the New Note
(collectively, the "Notes") bear interest at the rate of 13.0% per annum
payable monthly.  Principal on the Amended and Restated Note is payable on the
earlier of (i) February 8, 1998 or (ii) the transfer by BH of its interest in
any one or more of the following assets: the Broadwater Hotel and Resort, the
Broadwater Tower or the Broadwater Inn.  Principal on the New Note is payable
August 17, 1997.  Mr. Connelly has personally guaranteed the repayment of the
Notes to the Company.  Interest earned on such related party borrowings was
$260, $135 and $4 for the years ended February 28/29, 1997, 1996 and 1995,
respectively.  See Note 15--Subsequent Event.

  Mr. Connelly has guaranteed debt of the Company totaling $4,200 as of
February 28, 1997.

14. SUPPLEMENTAL CASH FLOW STATEMENT DISCLOSURES

  The components of net change in working capital accounts and long-term
assets and liabilities for the years ended February 28/29, 1997, 1996 and
1995, are as follows:
<TABLE>
                                                  1997       1996       1995
                                                 ------     ------     ------
  <S>                                           <C>        <C>        <C>
  Changes in working capital accounts:
    Receivables, net........................... $   961    $(1,167)   $    65
    Receivables from related parties...........       9        (27)       798
    Inventories................................    (390)       240        195
    Prepaid expenses and other current assets..     301       (322)       (50)
    Accounts payable...........................  (1,567)    (2,344)    (6,331)
    Accrued payroll and benefits...............     807       (369)     3,392
    Other accrued expenses.....................  (1,354)     5,480        413
    Income taxes receivable/payable............    (183)    (1,550)     7,491
    Due to related parties.....................     (53)      (253)        48
                                                --------   --------   --------
      Net change in working capital accounts... $(1,469)   $  (312)   $ 6,021
                                                ========   ========   ========
  Changes in long-term asset
    and liability accounts:
    Other non-current assets................... $   (10)   $  (311)   $  (167)
    Other liabilities..........................    (405)       (27)       200
                                                --------   --------   --------
      Net change in long-term asset
        and liability accounts................. $  (415)   $  (338)   $    33
                                                ========   ========   ========
</TABLE>
                                     F-31
<PAGE>
  Supplemental schedule of noncash investing and financing activities:

  Year Ended February 28, 1997

  There were no material non-cash investing or financing activities in fiscal
1997.

  Year Ended February 29, 1996

  The Company acquired assets under capital lease agreements of $2,983.

  Year Ended February 28, 1995

  The Company exchanged $100,000 of Senior Notes, warrants and cash for
$100,000 of its Senior Subordinated Notes resulting in an allocation of $1,964
to additional paid in capital for the warrants described in Note 6.

  During fiscal 1997, the Company paid no income taxes and received an income
tax refund of $1,367.  The Company paid income taxes, net of amounts
recovered, of $1,550 and $2 in fiscal 1996 and 1995, respectively.  Interest
paid by the Company, net of amounts capitalized, was $13,768, $14,006 and
$10,246 for the years ended February 28/29, 1997, 1996 and 1995, respectively.

15. SUBSEQUENT EVENT

  On May 13, 1997 the Company announced that it has agreed in principal to
purchase for approximately $40,500 certain real estate and improvements
located on the Gulf Coast in Biloxi, Mississippi from BH.  The property
comprises approximately 260 acres and includes the Broadwater Resort and the
Broadwater Tower, two hotels with over 500 rooms, the 138-slip Broadwater
Marina, and the adjacent 18-hole Sun Golf Course.  The Broadwater Marina is
currently the site of the Company's casino operations in Biloxi and is leased
by the Company from BH under a long-term lease agreement.  The purchase is
subject to finalization of financing and various other details related to the
transition.

  The Company anticipates investing $5,000 in President Broadwater Hotel, LLC,
which would own the Broadwater properties.  This entity would finance the
purchase with $30,000 of outside financing and $10,000 of purchase money
preferred equity from BH.  Such financing would be non-recourse to the
Company.

                                     F-32
<PAGE>

16. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

  The following table sets forth consolidated income statement data for the
periods indicated.  The quarterly information is unaudited, but in
management's opinion reflects all adjustments necessary for a fair
presentation of the information for the periods presented.
<TABLE>
<CAPTION>
                                           Fiscal 1997 Quarters Ended
                                     May 31     Aug. 31    Nov. 30    Feb. 28
                                    --------   ---------  ---------  ---------
<S>                                 <C>        <C>        <C>        <C>
Net operating revenues...........   $ 49,593   $ 47,522   $ 46,528   $ 43,384

Operating income (loss)..........      3,004      2,044      1,547     (2,811)
Loss before income tax
  and minority interest..........       (548)    (1,410)    (1,779)    (6,183)
Income tax benefit..............1        --         --        (275)    (1,092)
Net loss.........................       (625)    (1,495)    (1,574)    (5,091)
                                    =========  =========  =========  =========
Loss per share...................    $ (0.02)   $ (0.05)   $ (0.05)   $ (0.17)
                                     ========   ========   ========   ========
</TABLE>
<TABLE>
<CAPTION>
                                           Fiscal 1996 Quarters Ended
                                     May 31     Aug. 31    Nov. 30    Feb. 29
                                    --------   ---------  ---------  ---------
<S>                                 <C>        <C>        <C>        <C>
Net operating revenues...........   $ 48,725   $ 51,253   $ 48,986   $ 43,721

Operating income (loss)..........     (8,348)     3,972      1,729    (18,824)
Income (loss) before income tax, 
  and minority interest..........    (12,114)       157     (1,849)   (22,403)
Income tax expense (benefit)....1     (2,577)        53       (279)    24,711
Net income (loss)................     (9,537)       104     (1,570)   (47,147)
                                    =========  =========  =========  =========
Loss per share...................    $ (0.32)   $  0.00    $ (0.05)   $ (1.56)
                                     ========   ========   ========   ========
</TABLE>
(1)  The fourth quarters of fiscal 1997 and 1996 include income tax expense
(benefit) adjustments of $(240) and $2,803, respectively, related to the
change in the effective income tax rates.
 
17. SUMMARIZED AND CONDENSED FINANCIAL INFORMATION OF THE COMPANY

  The following summarized and condensed financial information presents the
separate financial information of the parent company (PCI) and the Non-
Guarantor and the combined financial information of all of the Guarantors of
the Company's 13% Senior Exchange Notes due 2001 as of the dates presented 
(see Note 6).  All of the Guarantors (other than TCG) are wholly-owned

                                    F-33
<PAGE>
subsidiaries of the Company and are full joint and several guarantors of the
Senior Exchange Notes (limited only to the extent necessary to insure that it
does not constitute a fraudulent conveyance under applicable law).  The
guarantee of TCG, which is 95% owned by the Company, is limited to the amount
owed from time to time by TCG to PRC Holdings ($4,376 and $4,630 as of
February 28/29, 1997 and 1996, respectively).  As security for the obligations
of the Company and the Guarantors under the Senior Exchange Notes, the Company
and the Guarantors have pledged their equity interests in each Guarantor and
all of their rights in certain management agreements with, certain
indebtedness from, and certain investments in, certain gaming ventures. 
Separate financial information for TCG and PRC Holdings are presented
elsewhere herein.

                                     F-34
<PAGE>

               SUMMARIZED AND CONDENSED CONSOLIDATING BALANCE SHEET
                                FEBRUARY 28, 1997
                                  (in thousands)
<TABLE>
<CAPTION>
                                      President                  Non-    Eliminating
                                    Casinos, Inc. Guarantors  Guarantor    Entries   Consolidated
                                      ---------   ---------   ---------   ---------   ---------
<S>                                    <C>         <C>         <C>         <C>         <C>
ASSETS

CURRENT ASSETS:
  Cash and cash equivalents.........   $       1   $  25,112   $       2   $     --    $  25,115 
  Short-term investments............         --          600         --          --          600 
  Other current assets..............       6,717      14,916       1,546     (14,025)      9,154
                                       ----------  ----------  ----------  ----------  ----------
    Total current assets............       6,718      40,628       1,548     (14,025)     34,869
                                       ----------  ----------  ----------  ----------  ----------

PROPERTY AND EQUIPMENT, NET.........         --      115,550       1,613         --      117,163 
                                       ----------  ----------  ----------  ----------  ----------
OTHER ASSETS:
  Related party notes receivable....      98,811     250,141         --     (348,952)        --
  Investments in subsidiaries.......      21,574      20,678         --      (42,252)        --
  Other assets......................       2,019       1,853         --          --        3,872
                                       ----------  ----------  ----------  ----------  ----------
    Total other assets..............     122,404     272,672         --     (391,204)      3,872
                                       ----------  ----------  ----------  ----------  ----------
                                       $ 129,122   $ 428,850   $   3,161   $(405,229)  $ 155,904
                                       ==========  ==========  ==========  ==========  ==========

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
  Current maturities of
    long-term debt..................   $     --    $   4,524   $   1,372   $  (4,124)  $   1,772
  Accounts payable..................         --        2,405           9         --        2,414
  Other current liabilities.........       6,325      25,562         884      (9,901)     22,870 
                                       ----------  ----------  ----------  ----------  ----------
    Total current liabilities.......       6,325      32,491       2,265     (14,025)     27,056
                                       ----------  ----------  ----------  ----------  ----------

LONG-TERM LIABILITIES:
  Notes payable and capital
   lease obligations................      98,811     354,107         896    (348,952)    104,862 
                                       ----------  ----------  ----------  ----------  ----------
    Total liabilities...............     105,136     386,598       3,161    (362,977)    131,918
                                       ----------  ----------  ----------  ----------  ----------

MINORITY INTEREST...................         265         265         --         (265)        265

STOCKHOLDERS' EQUITY................      23,721      41,987         --      (41,987)     23,721
                                       ----------  ----------  ----------  ----------  ----------
                                       $ 129,122   $ 428,850   $   3,161   $(405,229)  $ 155,904
                                       ==========  ==========  ==========  ==========  ==========
</TABLE>

                                     F-35
<PAGE>

              SUMMARIZED AND CONDENSED CONSOLIDATING BALANCE SHEET
                                FEBRUARY 29, 1996
                                  (in thousands)
<TABLE>
<CAPTION>
                                      President                 Non-     Eliminating
                                    Casinos, Inc. Guarantors  Guarantor    Entries   Consolidated
                                      ---------   ---------   ---------   ---------   ---------
<S>                                    <C>         <C>         <C>         <C>         <C>
ASSETS

CURRENT ASSETS:
  Cash and cash equivalents.........   $       1   $  19,745   $      10   $     --    $  19,756 
  Short-term investments............         --        1,008         --          --        1,008 
  Other current assets..............       6,742      11,121         --      (11,510)      6,353
                                       ----------  ----------  ----------  ----------  ----------
    Total current assets............       6,743      31,874          10     (11,510)     27,117
                                       ----------  ----------  ----------  ----------  ----------

PROPERTY AND EQUIPMENT, NET.........         --      133,213       2,417          --      135,630 
                                       ----------  ----------  ----------  ----------  ----------
OTHER ASSETS:
  Related party notes receivable....      98,501     234,465         --     (330,966)      2,000
  Investments in subsidiaries.......      29,567      16,060         --      (45,627)        --
  Other assets......................       2,830         447         --          --        3,277
                                       ----------  ----------  ----------  ----------  ----------
    Total other assets..............     130,898     250,972         --     (376,593)      5,277
                                       ----------  ----------  ----------  ----------  ----------
                                       $ 137,641   $ 416,059   $   2,427   $(388,103)  $ 168,024
                                       ==========  ==========  ==========  ==========  ==========

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
  Current maturities of
    long-term debt..................   $     --    $   4,534   $   1,359   $  (4,124)  $   1,769
  Accounts payable..................         123       3,858         --          --        3,981
  Income taxes payable..............         183         --          --          --          183
  Other current liabilities.........       6,020      24,493         343      (7,386)     23,470 
                                       ----------  ----------  ----------  ----------  ----------
    Total current liabilities.......       6,326      32,885       1,702     (11,510)     29,403
                                       ----------  ----------  ----------  ----------  ----------

LONG-TERM LIABILITIES:
  Notes payable and capital
   lease obligations................      98,501     337,417         725    (330,966)    105,677 
  Other liabilities.................         275         130         --          --          405
                                       ----------  ----------  ----------  ----------  ----------
    Total long-term liabilities.....      98,776     337,547         725    (330,966)    106,082
                                       ----------  ----------  ----------  ----------  ----------
    Total liabilities...............     105,102     370,432       2,427    (342,476)    135,485
                                       ----------  ----------  ----------  ----------  ----------

MINORITY INTEREST...................          33          33         --          (33)         33

STOCKHOLDERS' EQUITY................      32,506      45,594         --      (45,594)     32,506
                                       ----------  ----------  ----------  ----------  ----------
                                       $ 137,641   $ 416,059   $   2,427   $(388,103)  $ 168,024
                                       ==========  ==========  ==========  ==========  ==========
</TABLE>

                                     F-36
<PAGE>

       SUMMARIZED AND CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
                               (in thousands)
<TABLE>
<CAPTION>
                                      President                 Non-     Eliminating
                                    Casinos, Inc. Guarantors  Guarantor    Entries   Consolidated
                                      ---------   ---------   ---------   ----------   ---------
<S>                                  <C>         <C>         <C>         <C>         <C>
Year Ended February 28, 1997:
Operating revenues.................  $     --    $ 187,377   $   5,404   $ (5,754)   $ 187,027
Operating costs and expenses.......        101     183,705       5,191     (5,754)     183,243
                                     ----------  ----------  ----------  ---------   ----------
  Operating income (loss)..........       (101)      3,672         213         --        3,784
Equity income (loss) in 
  consolidated subsidiaries........     (9,819)      6,502         --        3,317         --
Interest expense, net..............        --      (13,491)       (213)        --      (13,704)
                                     ----------  ----------  ----------  ----------  ----------
  Loss before income taxes and
    minority interest..............     (9,920)     (3,317)        --        3,317      (9,920)
Income tax benefit.................      1,367         --          --          --         1,367
Minority interest..................      (232)        (232)        --          232        (232)
                                     ----------  ----------  ----------  ----------  ----------
    Net loss.......................  $  (8,785)  $  (3,549)  $     --    $   3,549   $  (8,785)
                                     ==========  ==========  ==========  ==========  ==========
Year Ended February 29, 1996:
Operating revenues.................  $     --    $ 190,912   $   3,692   $ (1,919)   $ 192,685
Operating costs and expenses.......        141     211,247       3,513     (1,919)     212,982
                                     ----------  ----------  ----------  ---------   ----------
  Operating loss...................       (141)    (20,335)        179         --      (20,297)
Equity loss in unconsolidated
  entities.........................        --       (1,174)        --          --       (1,174)
Equity income (loss) in 
  consolidated subsidiaries........    (36,068)     11,055         --       25,013         --
Interest expense, net..............        --      (14,559)       (179)        --      (14,738)
                                     ----------  ----------  ----------  ----------  ----------
  Loss before income taxes and
    minority interest..............    (36,209)    (25,013)        --       25,013     (36,209)
Income tax expense.................    (21,908)        --          --          --      (21,908)
Minority interest..................        (33)        (33)        --          33          (33)
                                     ----------  ----------  ----------  ----------  ----------
    Net loss.......................  $ (58,150)  $ (25,046)  $     --    $  25,046   $ (58,150)
                                     ==========  ==========  ==========  ==========  ==========

Year Ended February 28, 1995:
Operating revenues.................  $     --    $ 160,350   $     --    $     --    $ 160,350
Operating costs and expenses.......        151     166,624         --          --      166,775
                                     ----------  ----------  ----------  ----------  ----------
  Operating loss...................       (151)     (6,274)        --          --       (6,425)
Equity loss in unconsolidated
  entities.........................        --       (6,799)        --          --       (6,799)
Equity income (loss) in
  consolidated subsidiaries........    (21,807)     14,257         --        7,550         --
Interest expense, net..............        --       (8,734)        --          --       (8,734)
                                     ----------  ----------  ----------  ----------  ----------
  Loss before income taxes and
    extraordinary loss.............    (21,958)     (7,550)        --        7,550     (21,958)
Income tax benefit.................      5,779        --           --          --        5,779
Extraordinary loss.................     (4,053)       --           --          --       (4,053)
                                     ----------  ----------  ----------  ----------  ----------
    Net loss.......................  $ (20,232)  $  (7,550)  $     --    $   7,550   $ (20,232)
                                     ==========  ==========  ==========  ==========  ========== 
 </TABLE>

                                      F-37
<PAGE>
        SUMMARIZED AND CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
                        YEAR ENDED FEBRUARY 28, 1997
                                (in thousands)

<TABLE>
<CAPTION>
                                      President                 Non-     Eliminating
                                    Casinos, Inc. Guarantors  Guarantor    Entries   Consolidated
                                      ---------   ---------   ---------   ----------   ---------
<S>                                    <C>         <C>         <C>         <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss.............................  $ (8,785)   $ (3,549)   $    --     $  3,549    $ (8,785)
Adjustments to reconcile net loss
  to net cash provided by
  operating activities:
  Depreciation and amortization......       --       14,604         720         --       15,324
  Impairment of long-lived assets....       --          728         --          --          728
  Equity (income) loss in
    consolidated subsidiaries........     9,819      (6,502)        --       (3,317)        --
  Other..............................     1,289        (893)        --         (232)        164
  Changes in assets and liabilities..      (497)     (2,253)        866         --       (1,884)
                                       ---------   ---------   ---------   ---------   ---------
    Net cash provided by
      operating activities...........     1,826       5,449       1,586         --        5,547
                                       ---------   ---------   ---------   ---------   ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Expenditures for property
   and equipment.....................       --      (10,582)        --          --      (10,582)
  Proceeds from the sale of property.       --       14,245         --          --       14,245
  Purchase of lease options..........       --       (3,368)        --          --       (3,368)
  Investment in subsidiaries.........    (1,826)        --          --        1,826         --
  Other..............................       --          556          83         --          639
                                       ---------   ---------   ---------   ---------   ---------
    Net cash provided by (used in)
      investing activities...........    (1,826)        851          83       1,826         934
                                       ---------   ---------   ---------   ---------   ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Repayment of notes payable.........       --         (400)         --         --         (400)
  Payments on capital
    lease obligations................       --          (10)       (712)        --         (722)
  Net change in intercompany accounts       --          965        (965)        --            --
  Capital contributions..............       --        1,826          --      (1,826)         --
                                       ---------   ---------   ---------   ---------   ---------
    Net cash provided by (used in) 
      financing activities...........       --        2,381      (1,677)     (1,826)     (1,122)
                                       ---------   ---------   ---------   ---------   ---------
NET INCREASE (DECREASE) IN CASH
  AND CASH EQUIVALENTS...............       --        5,367          (8)        --        5,359

CASH AND CASH EQUIVALENTS
  AT BEGINNING OF YEAR...............         1      19,745          10         --       19,756
                                       ---------   ---------   ---------   ---------   ---------
CASH AND CASH EQUIVALENTS
  AT END OF YEAR.....................  $      1    $ 25,112    $      2    $    --     $ 25,115
                                       =========   =========   =========   =========   =========
</TABLE>

                                      F-38
<PAGE>

        SUMMARIZED AND CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
                        YEAR ENDED FEBRUARY 29, 1996
                                (in thousands)


<TABLE>
<CAPTION>
                                      President                 Non-     Eliminating
                                    Casinos, Inc. Guarantors  Guarantor    Entries   Consolidated
                                      ---------   ---------   ---------   ----------   ---------
<S>                                    <C>         <C>        <C>         <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss.............................  $(58,150)   $(25,046)  $     --     $ 25,046    $(58,150)
Adjustments to reconcile net loss
  to net cash provided by
  operating activities:
  Depreciation and amortization......       --       15,904         566         --       16,470
  Deferred income tax expense........    21,908         --          --          --       21,908
  Equity loss in unconsolidated
    entities.........................       --        1,174         --          --        1,174
  Impairment of long-lived assets....       --       24,848         --          --       24,848
  Equity (income) loss in
    consolidated subsidiaries........    36,068     (11,055)        --      (25,013)        --
  Other..............................     1,105         518         --          (33)      1,590
  Changes in assets and liabilities..       (99)       (894)        343         --         (650)
                                       ---------   ---------   ---------   ---------   ---------
    Net cash provided by
      operating activities...........       832       2,135         909         --        7,190
                                       ---------   ---------   ---------   ---------   ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Expenditures for property
   and equipment.....................       --      (16,810)        --          --      (16,810)
  Proceeds from the sale of property.       --       19,907         --          --       19,907
  Investment in unconsolidated
    entities.........................       --         (179)        --          --         (179)
  Investment in subsidiaries.........      (831)        --          --          831         --  
  Other..............................       --       (1,405)        --          --       (1,405) 
                                       ---------   ---------   ---------   ---------   ---------
    Net cash provided by (used in)
      investing activities...........      (831)      1,513         --          831       1,513
                                       ---------   ---------   ---------   ---------   ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Repayment of notes payable.........       --      (12,476)        --          --      (12,476)
  Payments on capital
    lease obligations................       --         (287)       (899)        --       (1,186)
  Capital contributions..............       --          831         --         (831)        --
                                       ---------   ---------   ---------   ---------   ---------
    Net cash used in 
      financing activities...........       --      (11,932)       (899)       (831)    (13,662)
                                       ---------   ---------   ---------   ---------   ---------
NET INCREASE (DECREASE) IN CASH
  AND CASH EQUIVALENTS...............         1      (4,970)         10         --       (4,959)

CASH AND CASH EQUIVALENTS
  AT BEGINNING OF YEAR...............       --       24,715         --          --       24,715
                                       ---------   ---------   ---------   ---------   ---------
CASH AND CASH EQUIVALENTS
  AT END OF YEAR.....................  $      1    $ 19,745    $     10    $    --     $ 19,756
                                       =========   =========   =========   =========   =========
</TABLE>

                                      F-39
<PAGE>

        SUMMARIZED AND CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
                        YEAR ENDED FEBRUARY 28, 1995
                                (in thousands)

<TABLE>
<CAPTION>
                                      President                 Non-     Eliminating
                                    Casinos, Inc. Guarantors  Guarantor    Entries   Consolidated
                                      ---------   ---------   ---------   ----------   ---------
<S>                                    <C>         <C>         <C>         <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss.............................  $(20,232)   $ (7,550)   $    --     $  7,550    $(20,232)
Adjustments to reconcile net loss
  to net cash provided by
  operating activities:
  Depreciation and amortization......       --       12,708         --          --       12,708
  Deferred income tax benefit........    (6,267)        --          --          --       (6,267)
  Equity loss in unconsolidated
    entities.........................       --        6,799         --          --        6,799
  Extraordinary loss.................     4,053         --          --          --        4,053
  Impairment of long-lived assets....       --        4,974         --          --        4,974
  Equity (income) loss in
    consolidated subsidiaries........    21,807     (14,257)        --       (7,550)        --
  Other..............................       986         411         --          --        1,397
  Changes in assets and liabilities..     7,521      (1,467)        --          --        6,054
                                       ---------   ---------   ---------   ---------   ---------
    Net cash provided by
      operating activities...........     7,868       1,618         --          --        9,486
                                       ---------   ---------   ---------   ---------   ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Expenditures for property
   and equipment.....................       --      (27,024)        --          --      (27,024)
  Investment in unconsolidated
    entities.........................       --       (3,791)        --          --       (3,791)
  Investment in subsidiaries.........    (3,302)        --          --        3,302         --  
  Other..............................       --          163         --          --          163 
                                       ---------   ---------   ---------   ---------   ---------
    Net cash used in 
      investing activities...........    (3,302)    (30,652)        --        3,302     (30,652)
                                       ---------   ---------   ---------   ---------   ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Repayment of notes payable.........       --       (4,907)        --          --       (4,907)
  Payments on capital
    lease obligations................       --         (301)        --          --         (301)
  Capital contributions..............       --        3,302         --       (3,302)        --
  Payment of deferred
    financing costs..................    (4,571)        --          --          --       (4,571)
                                       ---------   ---------   ---------   ---------   ---------
    Net cash used in 
      financing activities...........    (4,571)     (1,906)        --       (3,302)     (9,779)
                                       ---------   ---------   ---------   ---------   ---------
NET DECREASE IN CASH
  AND CASH EQUIVALENTS...............        (5)    (30,940)        --          --      (30,945)

CASH AND CASH EQUIVALENTS
  AT BEGINNING OF YEAR...............         5      55,655         --          --       55,660
                                       ---------   ---------   ---------   ---------   ---------
CASH AND CASH EQUIVALENTS
  AT END OF YEAR.....................  $    --     $ 24,715    $    --     $    --     $ 24,715
                                       =========   =========   =========   =========   =========
</TABLE>

                                      F-40
<PAGE>

                            PRESIDENT CASINOS, INC.
                SCHEDULE II --VALUATION AND QUALIFYING ACCOUNTS
            For the Years Ended February 28/29, 1997, 1996 and 1995
                                (in thousands)

<TABLE>
<CAPTION>
                                                           Additions
                                              Balance at   Charged to
                                              Beginning    Costs and                 Balance at
        Description                            of Year      Expenses    Deductions   End of Year
        -----------                           ---------    ----------    ---------    ---------
<S>                                            <C>          <C>          <C>          <C> 
Allowance for Doubtful Accounts Receivable:

Year ended February 28, 1997...............    $   423      $   271      $  (301)(a)  $   393

Year ended February 29, 1996...............        199          536         (312)(a)      423

Year ended February 28, 1995...............        796          621       (1,218)(a)      199

Allowance for Deferred Income Tax
  Asset Valuation:

Year ended February 28, 1997...............     36,287        2,181 (b)      --        38,468  

Year ended February 29, 1996...............        --        36,287 (b)      --        36,287 

Year ended February 28, 1995...............        --           --           --           --  

</TABLE>

(a)  Write-offs of uncollectible accounts receivable, net of recoveries.

(b)  Recognition criteria under SFAS No. 109 not satisfied.

                                     F-41
<PAGE>

INDEPENDENT AUDITORS' REPORT


To the Partners
The Connelly Group, L.P.:


We have audited the accompanying balance sheets of The Connelly Group, L.P., a
limited partnership, (the "Partnership") (an affiliate of President Casinos,
Inc., see Note 1) as of February 28, 1997 and February 29, 1996, and the
related statements of operations, partners' preferred redeemable capital and
general capital (deficiency), and cash flows for each of the three years in
the period ended February 28, 1997.  Our audits also included the financial
statement schedule listed in the Index at Item 14(a)2.  These financial
statements and financial statement schedule are the responsibility of the
Partnership's management.  Our responsibility is to express an opinion on
these financial statements and financial statement schedule based on our
audits.

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

In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Partnership as of February 28, 1997
and February 29, 1996, and the results of its operations and its cash flows
for each of the three years in the period ended February 28, 1997, in
conformity with generally accepted accounting principles.  Also, in our
opinion, such financial statement schedule, when considered in relation to the
basic financial statements taken as a whole, presents fairly in all material
respects the information set forth therein.


/s/ Deloitte & Touche LLP
-------------------------



May 13, 1997

                                      F-42
<PAGE>

                          THE CONNELLY GROUP, L.P.
                               BALANCE SHEETS
                               (in thousands)
<TABLE>
<CAPTION>
                                                        Feb. 28,    Feb. 29,
                                              Notes       1997        1996
                                             -------     ------      ------
<S>                                                    <C>         <C>
ASSETS

CURRENT ASSETS:
  Cash and cash equivalents......................      $  8,497    $  3,009
  Receivables (net of allowance for doubtful
    accounts of $195 and $166 as of February
    28/29, 1997 and 1996, respectively ..........           209         231
  Receivables from related parties...............             8         -- 
  Inventories....................................           501         399
  Prepaid expenses and other current assets......           492         395
                                                       ---------   ---------
    Total current assets.........................         9,707       4,034
                                                       ---------   ---------
PROPERTY AND EQUIPMENT, NET................2,3,10        24,540      24,139
                                                       ---------   ---------
OTHER ASSETS.....................................           433         322
                                                       ---------   --------- 
                                                       $ 34,680    $ 28,495
                                                       =========   =========
</TABLE>
                                   (Continued)
See Notes to Financial Statements.

                                      F-43
<PAGE>

                           THE CONNELLY GROUP, L.P.
                               BALANCE SHEETS
                               (in thousands)
                                (Continued)
<TABLE>
<CAPTION>
                                                        Feb. 28,    Feb. 29,
                                              Notes       1997        1996
                                             -------     ------      ------
<S>                                                    <C>         <C>
LIABILITIES, PARTNERS' PREFERRED REDEEMABLE
  CAPITAL AND GENERAL CAPITAL

CURRENT LIABILITIES:
  Current maturities of long-term
    debt to related parties...................3,5       $  3,420    $  3,420
  Accounts payable...............................            558         920
  Accrued payroll and benefits...................          1,670       1,414
  Other accrued expenses.........................          3,045       2,860
  Due to related parties.........................          2,149         406
                                                        ---------   ---------
    Total current liabilities....................         10,842       9,020
                                                        ---------   ---------
LONG-TERM DEBT:
  Notes payable ($254 to related parties as of
    February 29, 1996)........................3,5          2,251       2,505
  Subordinated debt due to related party.....5,10            909         909
                                                        ---------   ---------
    Total long-term debt.........................          3,160       3,414
                                                        ---------   ---------
      Total liabilities..........................         14,002      12,434
                                                        ---------   ---------
COMMITMENTS AND CONTINGENT LIABILITIES.....4,9,11            --          -- 
                                                        ---------   ---------
PARTNER'S PREFERRED REDEEMABLE CAPITAL
  (redeemable at book value)....................7         14,494      14,494
                                                        ---------   ---------
PARTNERS' GENERAL CAPITAL.......................8          6,184       1,567
                                                        ---------   ---------
                                                        $ 34,680    $ 28,495
                                                        =========   =========
</TABLE>
See Notes to Financial Statements.

                                      F-44
<PAGE>

                            THE CONNELLY GROUP, L.P.
                            STATEMENTS OF OPERATIONS
                                 (in thousands)
<TABLE>
<CAPTION>
                                               Years Ended February 28/29,
                                     Notes     1997        1996        1995
                                    -------   ------      ------      ------ 
<S>                                          <C>         <C>         <C>
OPERATING REVENUES:
Gaming and gaming cruise...............      $ 62,456    $ 67,715    $ 68,348
Food and beverage......................         5,467       4,681       4,866
Retail and other.......................           684         582         753
Less promotional allowances............        (3,461)     (2,679)     (3,071)
                                             ---------   ---------   ---------
  Total operating revenues.............        65,146      70,299      70,896
                                             ---------   ---------   ---------
OPERATING COSTS AND EXPENSES:
Gaming and gaming cruise...............        36,202      35,778      33,280
Food and beverage......................         3,172       3,026       3,170
Retail and other.......................           340         335         462
Selling, general and administrative....        11,345      10,564      10,093
Depreciation and amortization..........         3,970       4,518       3,906
Impairment of long-lived assets.......2           --          232       1,201 
Charter fees to related parties......10           350       1,260         --
Management fees to related parties...10         2,619       2,796       2,827
                                             ---------   ---------   ---------
  Total operating costs and expenses...        57,998      58,509      54,939
                                             ---------   ---------   ---------

OPERATING INCOME.......................         7,148      11,790      15,957
                                             ---------   ---------   ---------
OTHER INCOME (EXPENSE):
Interest income........................           155         192         229
Interest expense (related party
  interest expense of $579, $646 and
  $1,329 for the years ended
  February 28/29, 1997, 1996 and 1995,
  respectively)......................10          (802)       (926)     (1,709)
                                             ---------   ---------   ---------
  Total other expense..................          (647)       (734)     (1,480)
                                             ---------   ---------   ---------
NET INCOME.............................      $  6,501    $ 11,056    $ 14,477
                                             =========   =========   =========

</TABLE>
See Notes to Financial Statements.

                                      F-45
<PAGE>

                               THE CONNELLY GROUP, L.P.
                  STATEMENTS OF PARTNERS' PREFERRED REDEEMABLE CAPITAL
                           AND GENERAL CAPITAL (DEFICIENCY)
                                   (in thousands)
<TABLE>
<CAPTION>

                                                          Partners' General Capital (Deficiency)
                                                         ---------------------------------------
                                                                          General        Total
                                             Partner's      Limited      Partner's     Partners'
                                             Preferred     Partner's      General       General
                                             Redeemable     General       Capital       Capital
                                              Capital       Capital    (Deficiency)  (Deficiency)
                                             ---------     ---------     ---------     ---------
<S>                                         <C>          <C>           <C>           <C>
Years Ended February 28/29, 1995,
 1996 and 1997 (Notes 7 and 8):

Balance as of February 28, 1994.......      $ 11,452      $    --       $ (2,190)     $ (2,190)

Capital distributions.................       (11,348)          --            --            --
Net income allocated..................        12,287           --          2,190         2,190
                                            ---------     ---------     ---------     ---------
Balance as of February 28, 1995.......        12,391           --           --            --

Capital distributions.................        (7,386)          --           --            --
Net income allocated..................         9,489            33         1,534         1,567
                                            ---------     ---------     ---------     ---------
Balance as of February 29, 1996.......        14,494            33         1,534         1,567

Capital distributions.................        (1,884)           --           --            --
Net income allocated..................         1,884           232         4,385         4,617
                                            ---------     ---------     ---------     ---------
Balance as of February 28, 1997.......      $ 14,494      $    265      $  5,919      $  6,184
                                            =========     =========     =========     =========

</TABLE>
See Notes to Financial Statements.

                                     F-46
<PAGE>

                          THE CONNELLY GROUP, L.P.
                          STATEMENTS OF CASH FLOWS 
                              (in thousands)
<TABLE>
<CAPTION>

                                                Years Ended February 28/29,
                                               1997        1996        1995
                                              ------      ------      ------
<S>                                          <C>         <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ..............................    $  6,501    $ 11,056    $ 14,477
Adjustments to reconcile net income to
  net cash provided by
  operating activities:
    Depreciation and amortization........       3,970       4,518       3,906 
    Impairment of long-lived assets......         --          232       1,201
    Amortization of deferred
      financing costs....................          26          26          34 
    (Gain) loss on disposal of
      property and equipment.............          (4)       (254)        134 
    Changes in assets and liabilities:
      Receivables, net...................          22          28         195
      Receivables from related parties...          (8)         38         (38)
      Inventories........................        (102)         56         (13)
      Prepaid expenses and other
       current assets....................        (123)         (1)        (95)
      Other non-current assets...........        (111)       (322)        --
      Accounts payable...................        (362)        460          (9)
      Accrued payroll and benefits.......         256         (68)        748
      Other accrued expenses.............         185         506       1,197
      Due to related parties.............           9        (204)        279
                                             ---------   ---------   ---------
         Net cash provided by 
         operating activities............    $ 10,259    $ 16,071    $ 22,016
                                             ---------   ---------   ---------
</TABLE>
                                  (Continued)
See Notes to Financial Statements.
 
                                     F-47
<PAGE>

                          THE CONNELLY GROUP, L.P.
                          STATEMENTS OF CASH FLOWS 
                              (in thousands)
                               (Continued)
<TABLE>
<CAPTION>
                                                Years Ended February 28/29,
                                               1997        1996        1995
                                              ------      ------      ------
<S>                                          <C>         <C>         <C>
CASH FLOWS FROM INVESTING ACTIVITIES:
  Expenditures for property and equipment
   ($120, $237 and $1,008 to related
    parties for the years ended
    February 28/29, 1997, 1996
    and 1995, respectively)...............   $ (4,388)   $ (8,479)   $ (2,415)
  Proceeds from sales of property and
    equipment ($26 from related parties
    for the year ended February 29, 1996).         21       1,014         --
                                             ---------   ---------   ---------
       Net cash used in investing
         activities.......................     (4,367)     (7,465)     (2,415)
                                             ---------   ---------   ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Capital distributions to 
    related parties.......................       (150)     (7,386)    (11,348)
  Repayment of notes payable..............        --         (900)       (849)
  Proceeds from advances from
    related parties.......................        --          254         --  
  Repayment of advances and subordinated
   debt from related parties..............       (254)     (4,159)     (3,467)
  Payments on capital lease obligations ..        --         (234)       (190)
                                             ---------   ---------   ---------
       Net cash used in
         financing activities............        (404)    (12,425)    (15,862)
                                             ---------   ---------   ---------
NET INCREASE (DECREASE) IN CASH AND
  CASH EQUIVALENTS.......................       5,488      (3,819)      3,739

CASH AND CASH EQUIVALENTS AT
   BEGINNING OF YEAR.....................       3,009       6,828       3,089
                                             ---------   ---------   ---------
CASH AND CASH EQUIVALENTS
   AT END OF YEAR........................    $  8,497    $  3,009    $  6,828
                                             =========   =========   =========
</TABLE>
See Notes to Financial Statements.

                                      F-48
<PAGE>

                            THE CONNELLY GROUP, L.P.
                         NOTES TO FINANCIAL STATEMENTS
                  (Dollars in thousands unless otherwise stated)

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

  Basis of Presentation -- The Connelly Group, L.P. ( the "Partnership") is a
Delaware limited partnership which was organized in January 1990.  The
Partnership was formed to own, manage and operate The President Riverboat
Casino, a riverboat gaming operation, and ancillary facilities in Davenport,
Iowa.

  In December 1992, all preferred and general capital interests, except a
limited partner's general capital interest of 5%, were contributed by the
general partners to a newly formed corporation, President Casinos, Inc.
("PCI") in exchange for common stock.  PCI subsequently transferred its
ownership interest in the Partnership to a wholly-owned subsidiary, President
Riverboat Casino Iowa, Inc. ("PRC-Iowa").  PCI and its affiliates are engaged
in the business of owning, operating, managing and developing entertainment
oriented operations with its primary focus on riverboat gaming.  Prior to
December 1992, the affiliates were under the common control of the general
partners.

  The financial statements include only those assets, liabilities, revenues
and expenses which relate to the Partnership.

  Cash and Cash Equivalents -- Cash and cash equivalents include interest
earning deposits with original maturities of ninety days or less.

  Inventories -- Inventories, consisting principally of food, beverages and
operating supplies, are stated at the lower of first-in, first-out (FIFO) cost
or market.

  Property and Equipment -- Property and equipment are recorded at cost and
capitalized lease assets are recorded at their fair market value at the
inception of the lease.  Repairs and maintenance are charged to expense as
incurred.  Improvements are capitalized.  Depreciation and amortization are
computed on a straight-line basis over the following estimated useful lives:

           Riverboat, barges and improvements.     9 - 15 years
           Leasehold improvements.............     4 -  9 years
           Furnishings and equipment..........     5 - 10 years

  Amortization of Deferred Financing Costs -- Costs associated with the
issuance of debt have been deferred and are being amortized over the life of
the related indebtedness using the effective interest method.

  Gaming Revenue -- In accordance with industry practice, the Partnership
recognizes as gaming revenue the net win from gaming activities, which is the
difference between gaming wins and losses.


                                   F-49
<PAGE>
  Promotional Allowances -- Food, beverage, admissions and other items
furnished without charge to customers are included in gross revenues at a 
value which approximates retail value and then deducted as complimentary
services to arrive at net revenues.  The cost of such complimentary services
is charged to gaming and gaming cruise expense.  Such estimated costs of
providing complimentary services for the years ended February 28/29, 1997,
1996 and 1995, are as follows:
<TABLE>
<CAPTION>
                                         1997       1996       1995
                                        ------     ------     ------ 
          <S>                          <C>        <C>        <C>
          Food and beverage.........   $ 1,510    $ 1,127    $ 1,031
          Admissions tax............       --         --         123
          Other.....................       142        114        100
</TABLE>

  Indirect Expenses -- Certain indirect expenses of operating departments such
as selling, general and administrative, depreciation and amortization and
management fees are shown separately in the accompanying statements of
operations and are not allocated to departmental operating costs and expenses.

  Income Taxes -- The Partnership is not subject to federal and state income
taxes.  Taxable income and losses of the Partnership are reportable on the
income tax returns of the respective partners.

  Self-Insurance -- The Partnership is partially self-insured for both
employee liability and third party liability costs.  The self-insurance claim
liability is determined based on claims filed and an estimate of claims
incurred but not reported.

  Use of Management Estimates -- The preparation of financial statements in
conformity with generally accepted accounting principles requires management
to make certain estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the amounts of revenues and expenses
during the reporting period.  Actual results may differ from those estimates.

  Reclassifications -- Certain amounts for fiscal 1996 and 1995 have been
reclassified to conform with fiscal 1997 financial statement presentations.

                                    F-50
<PAGE>

2.  PROPERTY AND EQUIPMENT

  Property and equipment as of February 28/29, 1997 and 1996, are summarized
as follows:
<TABLE>
<CAPTION>
                                                    1997       1996
                                                   ------     ------
          <S>                                     <C>        <C>
          Riverboat, barges and improvements...   $ 19,147   $ 16,312
          Leasehold improvements...............      5,628      3,526
          Furnishings and equipment............     14,196     13,391
          Construction in progress.............      1,172      3,361
                                                  ---------  ---------
                                                    40,143     36,590
            Accumulated depreciation
              and amortization.................    (15,603)   (12,451)
                                                  ---------  ---------
          Property and equipment, net .........   $ 24,540   $ 24,139
                                                  =========  =========
</TABLE>

  The Partnership elected early adoption of SFAS No. 121 "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of"
in fiscal 1995.  The Partnership continues to evaluate the estimated net
realizable value of its long-lived assets based on current regulatory,
political and market conditions.  As a result of such evaluations, during
fiscal 1996, the Partnership wrote-down the net book value of gaming equipment
and related accessories to estimated net realizable value which resulted in an
impairment of $232. 

  During fiscal 1995, the Partnership wrote down by $1,201 the carrying value
of long-lived assets to estimated net realizable value.  The long-lived assets
consisted of an office building and related machinery which the Partnership
subsequently conveyed to a non-profit organization in connection with an
agreement satisfied the Partnership's development commitment to the City of
Davenport (see Note 9).

                                   F-51
<PAGE>

3.  NOTES PAYABLE

  Notes payable as of February 28/29, 1997 and 1996, are summarized as
follows:
<TABLE>
<CAPTION>
                                                     1997       1996
                                                    ------     ------
       <S>                                         <C>        <C>
       Advances from related party, 14%.....       $   --     $   254
       Bank line of credit, prime plus .5%
        (combined rate of 8.75% as of 
         February 28, 1997).................         2,251      2,251
                                                   --------   --------
                                                   $ 2,251    $ 2,505
                                                   ========   ========
</TABLE>
  During fiscal 1996, the Partnership partially funded construction capital
expenditures through advances from PCI and its subsidiaries.  Advances from
related parties are intended to be on a long-term basis.  Interest accrues at
the incremental borrowing rate of PCI (14% as of February 29, 1996).  Unpaid
interest is compounded to principal on a quarterly basis.  Interest incurred
on such borrowings was $16 and $23 for the years ended February 28/29, 1997
and 1996, respectively, and is included in due to related parties.

  The bank line of credit is collateralized by a first mortgage on a boat and
first mortgages on real property with net book values of $8,816 and $3,750,
respectively, as of February 28, 1997, various personal property and an
assignment of various contracts.  The real property consists of assets of The
Blackhawk Hotel which is a subsidiary of PCI.  During March 1997, the line of
credit was extended to $4,500, of which $2,249 is available.  The line of
credit terminates in March 2001.  The line of credit also limits additional
borrowings without the lender's prior consent.

  Principle maturities on the bank line of credit as of February 28, 1997, are
as follows:
<TABLE>
               <S>                               <C>
               Year ending February 28/29:
               1998........................      $   -- 
               1999........................          900
               2000........................          900
               2001........................          451
                                                 --------                      
                                                 $ 2,251
                                                 ========
</TABLE>

4.  OPERATING LEASES

  The Partnership leases various office facilities, parking lots, equipment 

                                     F-52
<PAGE>
and levee property.  The levee lease and its associated parking lot lease
expire in 2017 and a second parking lot lease expires in 2002 with a fifteen-
year renewal option.  The various other leases with unrelated parties are for
periods of 36 to 72 months.  Future minimum lease commitments under these
noncancellable long-term operating leases as of February 28, 1997, are as
follows:
<TABLE>
                  <S>                          <C>
                  Years Ending February 28/29:
                  1998.......................  $    834
                  1999.......................       707
                  2000.......................       479
                  2001.......................       249
                  2002.......................       257
                  Thereafter.................     4,663
                                               ---------
                    Total....................  $  7,189
                                               =========
</TABLE>

  Rental expense incurred under operating leases was $720, $2,238 and $497 for
the years ended February 28/29, 1997, 1996 and 1995, respectively.  Rent
expense during fiscal 1997 and 1996 includes the charter of a riverboat from a
related party (see Note 10).

5.  SUBORDINATED DEBT TO RELATED PARTY

  Subordinated debt as of February 28/29, 1997 and 1996, is summarized as
follows:
<TABLE>
<CAPTION>
                                                 1997         1996
                                                ------       ------
       <S>                                     <C>         <C>
       Subordinated debt due to related
         party, 13%, variable payments.....    $  4,329    $  4,329 
       Less current maturities.............      (3,420)     (3,420)
                                               ---------   ---------
         Long-term subordinated debt.......    $    909    $    909
                                               =========   =========
</TABLE>

  Under the subordinated debt agreement, interest is payable annually or if
unpaid is added to the outstanding principal balance.  Principal payments on
the debt shall be made equal to the following percentage of the outstanding
balance, including any accrued, but unpaid interest, each year as follows:
1998 - 79% and 1999 - 100%.  Payment of principal and interest on the debt may
only be made if the Partnership's cash flow is sufficient.

  The debt is subordinated to the payment of principal and interest on the     
 bank line of credit (see Note 3) and to trade debt of the Partnership.

                                  F-53
<PAGE>
6.  EMPLOYEE BENEFIT PLAN

  The Partnership participates in an employee savings plan sponsored by PCI,
which covers all full-time employees.  Pursuant to this savings plan,
participating employees may contribute (defer) a percentage of eligible
compensation.  Employee contributions to the savings plan, up to certain
limits, are partially matched by the Partnership.  The expense applicable for
the Partnership's contribution to the savings plan was $144, $138 and $108 for
the years ended February 28/29, 1997, 1996 and 1995, respectively.

7.  PARTNER'S PREFERRED REDEEMABLE CAPITAL

  Partner's preferred redeemable capital outstanding as of February 28/29,
1997, 1996 and 1995, is summarized as follows:
<TABLE>
<CAPTION>

                                   1997                    1996                    1995
                             -----------------       -----------------       -----------------
                            Stated     Recorded     Stated     Recorded     Stated     Recorded
                             Value       Value       Value       Value       Value       Value
<S>                        <C>         <C>         <C>         <C>         <C>         <C>
Partner's preferred
  redeemable capital...    $ 14,494    $ 14,494    $ 14,494    $ 14,494    $ 19,771    $ 12,391
                           =========   =========   =========   =========   =========   =========
</TABLE>

  The preferred capital has cumulative distribution rights of 13% on the
stated value which have been accrued as of February 28/29, 1997, 1996 and
1995.  The preferred capital is redeemable out of future cash flows of the
Partnership, to the extent available as defined in the partnership agreement.

  The preferred capital was originally recorded at the historical cost of
assets and advances contributed by the partners which were entities under
common control and such carrying value was less than the stated value of the
preferred capital as set forth in the partnership agreement.  The Partnership
accrues the difference between the recorded value and stated value each year
to the extent of available net income.  No amount was accrued for the year
ended February 28, 1997, as the difference was fully accrued as of February
28, 1996.  During the years ended February 29/28, 1996 and 1995, $7,380 and
$9,824, respectively, was accrued related to the difference between the
carrying value and the stated value.  The preferred capital has certain
preferences in liquidation over the interests of the general capital accounts.

8.  PARTNERS' GENERAL CAPITAL

  The partnership agreement provides for the allocation of income (losses)
from the date of formation of the Partnership, between the general partner and 
limited partner at 95% and 5%, respectively, after preferred capital accounts
are allocated their cumulative preferred return and any difference between the
carrying value and stated value of preferred capital is accrued.  The limited 

                                     F-54
<PAGE>

partner's capital account cannot be reduced below its original contributed
amount.

9.  DEVELOPMENT AGREEMENT

  The Partnership and the City of Davenport (the "City") are parties to a
development agreement, which provides, among other things, for the following:

  Additional Development -- The Partnership was required to submit to the City
plans for the development of certain property in close proximity to "The
President".  During the year ended February 29, 1996, the Partnership and the
City reached a mutually acceptable development plan whereby, among other
things, the Partnership was obligated to expend certain amounts for leasehold
improvements in exchange for certain lease rights.  As of February 28, 1997,
the Partnership had made capital expenditures of $1,662 with regard to this
obligation.  As a result of this agreement, the Partnership will be released
from its $250 surety bond obligation upon completion of the project, which is
estimated to be the Summer of 1997.

  Boarding Fees -- The Partnership, pursuant to Chapter 99F of the Iowa Code
and an ordinance enacted by the City, is required to pay the City an annual
minimum fee equal to the greater of $559 or 50 cents per passenger boarding
"The President".

  Docking Fees -- The Partnership is required to make docking fee payments to
the City.  The Partnership has guaranteed the City an annual lump sum payment
of a base amount plus a per passenger payment for each passenger in excess of
1,117,579 passengers during the period April 1 to March 31.  Such base and per 
passenger amounts for the periods ended March 31, 1997, 1996 and 1995 were
$131, $126 and $121, and 11.7 cents, 11.2 cents and 10.8 cents, respectively. 
Both base and per passenger amounts are subject to an annual increase of 4.0%. 
Each payment prepays the docking fees for the following twelve month period.

  Special Payments in Lieu of Property Taxes -- The Partnership is required to
make a special payment in lieu of property taxes on the "Guest Service
Center".  The Partnership has guaranteed the City an annual lump sum payment
of $124 plus 20.0 cents per passenger for each passenger in excess of
1,117,579 during each period from January 1 to December 31, commencing January
1, 1995.

  Exclusive Agreement -- The Partnership will not pursue a gaming license in
any other Iowa city or in Rock Island County, Illinois.

  Boat Operations -- The Partnership may not substitute another vessel to
replace "The President" in Davenport, Iowa so long as an average of 2,250
passengers per day during the cruise season is maintained.  If such passenger
count is not maintained or if there is a material adverse change in the Iowa   
gaming law, the Partnership will be permitted to substitute an 800 passenger
boat.  However, temporary substitution during U.S. Coast Guard mandated hull
inspections is permitted.

                                     F-55
<PAGE>


10.  RELATED PARTY TRANSACTIONS

  The Partnership is related to other entities through common ownership by its
partners or principal officers.  The Partnership purchased various services
and property and equipment from such related parties.  The amounts charged
were based on specific identification of the products or services provided. 
In addition, the Partnership entered into management advisory agreements with
the general partner(s) for advisory services related to gaming and riverboat
operations.  The agreements provide for management fees based on a percentage
of revenues.  Transactions with such related parties occurring during the
years ended February 28/29, 1997, 1996 and 1995, are summarized as follows:
<TABLE>
<CAPTION>
                                         1997       1996       1995
                                        ------     ------     ------
        <S>                            <C>        <C>        <C> 
        Management fees............    $  2,619   $  2,796   $  2,827
        Riverboat charter..........         350      1,260        -- 
        Property and equipment.....         120        237      1,008
        Hotel, retail and other....         262        250        267
        Legal services.............          --         20        222
        Miscellaneous services.....          23         16         22
</TABLE>

  During November 1995, the Partnership entered into a lease agreement with a
subsidiary of PCI for the charter of a riverboat.  The terms of the agreement
were for monthly charter fees of $350 for the period during which "The
President" underwent its U.S. Coast Guard five-year mandated hull inspection. 
The Partnership paid $350 and $1,260 in such charter fees during 1997 and
1996, respectively.   

  Interest incurred on related party borrowings totaled $579, $646 and $1,329
for the years ended February 28/29, 1997, 1996 and 1995, respectively.

11.  COMMITMENTS AND CONTINGENT LIABILITIES

Litigation

  The Partnership is a party to legal proceedings arising in the normal
conduct of  business.  Management believes that the final outcome of these
matters will not have a material adverse effect upon the Partnership's
financial position or results of operations.
 
Operator's Contract

  The Partnership and the Riverboat Development Authority (the "Authority"), 
an Iowa non-profit corporation, entered into an operator's contract on 
December 28, 1989, which enables the Partnership to be the operator of an
excursion gambling boat pursuant to the rules and regulations of the Iowa
Racing and Gaming Commission.  This contract was last amended on September 30,

                                     F-56
<PAGE>

1994.  The contract, as amended, requires the Partnership to make payments of
$28 weekly and an amount equal to one dollar and fifty cents for each
admission, either paid or complimentary, in excess of 1,117,579 admissions for
the period April 1 through March 31 of each year.  The Partnership is also
required to pay an annual payment of 2% of adjusted gaming receipts in excess
of $34,000 for each of the Authority's fiscal years commencing July 1, 1994. 
The current contract expires March 31, 1998, provided however, that so long as
the Partnership has substantially complied with the Iowa Racing and Gaming
Rules, and the Authority's gaming license is renewed and/or is in effect, the
parties will renegotiate thereafter the extension of the agreement for
succeeding three-year periods, the last of which will terminate on the
anniversary date of the license in the year to which Scott County, Iowa may
extend its riverboat gaming referendum.

Guarantee of Indebtedness

  The Partnership, along with certain wholly-owned subsidiaries of PCI, has
guaranteed on a senior subordinated basis certain debt of PCI.  The
Partnership's guarantee is limited to the amount owed from time to time by the
Partnership to a subsidiary of PCI ($4,376 and $4,630 as of February 28/29,
1997 and 1996, respectively).

12.  SUPPLEMENTAL STATEMENT OF CASH FLOWS DISCLOSURES

  Supplemental schedule of noncash investing and financing activities:

  Years ended February 28/29, 1997, 1996 and 1995 -- No material noncash
investing and financing activities occurred.

  Interest paid by the Partnership, net of amounts capitalized, was $803, $931
and $1,579 for the years ended February 28/29, 1997, 1996 and 1995.
respectively.

                                      F-57
<PAGE>
13.  RECONCILIATION OF GAMING REVENUE REPORTED ON THE STATEMENTS OF OPERATIONS 
      TO NET WIN REPORTED TO THE IOWA RACING AND GAMING COMMISSION ("IRGC")
<TABLE>
<CAPTION>
                                            1997         1996        1995 
                                           ------       ------      ------
    <S>                                   <C>         <C>         <C>
    Gaming and gaming cruise revenue
      reported on the Statements 
      of Operations....................   $ 62,456    $ 67,715    $ 68,348
    Net admissions revenue.............        --          --         (663)
                                          ---------   ---------   ---------
    Gaming revenue reported on the
      Statements of Operations.........     62,456      67,715      67,685
    Change in progressive
      liability (1)....................        (22)        300         268
    Change in slot hopper
      inventory (2)....................         55                    --
                                          ---------   ---------   ---------
        Net win reported to IRGC.......   $ 62,489    $ 68,015    $ 67,953
                                          =========   =========   =========
</TABLE>
(1)  In accordance with industry practice, the Partnership accrues a liability
     for progressive jackpots and reduces gaming revenue by an equal amount.
     This adjustment is necessary to reconcile gaming revenue reported on an
     accrual basis on the Statements of Operations to net win reported on a
     cash basis to the Iowa Racing and Gaming Commission.

(2)  In accordance with IRGC regulations, the total slot machine hopper
     inventory level was determined by actual counts performed in a test
     basis.  The estimated change from the initial inventory level has been
     accrued as a reduction of gaming revenue.  The reduction has not yet been
     reported to the IRGC as an adjustment to adjusted gross revenue.

14.  SUBSEQUENT EVENT

  On April 14, 1997, the Partnership temporarily suspended operations as a
result of flooding on the Mississippi River.  The Partnership reopened on
April 27, 1997.  Although the Partnership has not experienced material damage
to the property, the interruption of operations is expected to have an adverse
impact on the Partnership's fiscal 1998 first quarter operating results.

                                      F-58
<PAGE>

                              THE CONNELLY GROUP, L.P.
                  SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
             For the Years Ended February 28/29, 1997, 1996 and 1995
                                  (in thousands)
<TABLE>
<CAPTION>
                                                           Additions
                                              Balance at   Charged to
                                               Beginning    Costs and                 Balance at
        Description                            of Year      Expenses    Deductions   End of Year
        -----------                           ---------    ----------   ----------   -----------
<S>                                            <C>          <C>          <C>           <C>
Allowance for Doubtful Accounts Receivable:

Year ended February 28, 1997...............    $  166       $   79       $  (50)(a)    $  195

Year ended February 29, 1996...............        73          153          (60)(a)       166

Year ended February 28, 1995...............        36           80          (43)(a)        73
</TABLE>

(a)  Write-offs of uncollectible accounts receivable, net of recoveries.

                                     F-59
<PAGE>

INDEPENDENT AUDITORS' REPORT


To the Members of the Board of Directors of
PRC Holdings Corporation:


We have audited the accompanying balance sheets of PRC Holdings Corporation (a
wholly-owned subsidiary of President Casinos, Inc.) (the "Company"), as of
February 28, 1997 and February 29, 1996, and the related statements of
operations, stockholder's equity, and cash flows for each of the three years
in the period ended February 28, 1997.  Our audits also included the financial
statement schedule listed in the Index as Item 14(a)2.  These financial
statements are the responsibility of the Company's management.  Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, such financial statements present fairly, in all material
respects, the financial position of PRC Holdings Corporation as of February
28, 1997 and February 29, 1996, and the results of its operations and its cash
flows for each of the three years in the period ended February 28, 1997 in
conformity with generally accepted accounting principles.  Also, in our
opinion, such financial statement schedule, when considered in relation to the
basic consolidated financial statements taken as a whole, presents fairly in
all material respects the information set forth therein.



/s/ Deloitte & Touche LLP
-------------------------



May 13, 1997

                                     F-60    
<PAGE>

                            PRC HOLDINGS CORPORATION
                                 BALANCE SHEETS 
                        (in thousands except share data)
<TABLE>
<CAPTION>
                                                      Feb. 28,      Feb. 29,
                                         Notes          1997          1996 
                                        -------        ------        ------
<S>                                                  <C>           <C>
ASSETS

Due from related parties (net of 
  allowance for doubtful accounts
  of $117,089 and $89,710 as of February
  28/29, 1997 and 1996, respectively).......         $ 128,526     $ 137,001
                                                     ==========    ==========

LIABILITIES AND STOCKHOLDER'S EQUITY

Due to related parties......................         $ 104,805     $ 104,495

COMMITMENTS AND CONTINGENT LIABILITIES.....2               --            --
                                                     ----------    ----------
STOCKHOLDER'S EQUITY:
Common Stock, $1 par value per share;
  1,000 shares authorized, 100 shares
  issued and outstanding....................                 1             1
Additional paid-in capital..................            96,218        96,566
Accumulated deficit.........................           (65,310)      (56,873)
Less due from related party.................            (7,188)       (7,188)
                                                     ----------    ----------
  Total stockholder's equity................            23,721        32,506
                                                     ----------    ----------
                                                     $ 128,526     $ 137,001
                                                     ==========    ==========
</TABLE>
See Notes to Financial Statements.

                                     F-61
<PAGE>

                            PRC HOLDINGS CORPORATION
                            STATEMENTS OF OPERATIONS
                                (in thousands)
<TABLE>
<CAPTION>
                                           Years Ended February 28/29,
                               Notes      1997         1996        1995
                              -------    ------       ------      ------
<S>                                    <C>          <C>          <C>
INTEREST INCOME:
 Related party interest income.....    $ 33,000     $ 30,761     $ 28,086

EXPENSE:
Provision for doubtful accounts-
  related party...................       27,379       89,710          -- 
Related party interest expense....       14,058       14,072       13,412 
                                       ---------    ---------    ---------
  Total expense...................       41,437      103,782       13,412
                                       ---------    ---------    ---------
NET INCOME (LOSS) BEFORE
  INCOME TAXES....................       (8,437)     (73,021)      14,674

Income tax expense................          --           --         5,154
                                       ---------    ---------    ---------

NET INCOME (LOSS).................      $(8,437)    $(73,021)    $  9,520
                                       =========    =========    =========
</TABLE>
See Notes to Financial Statements.

                                     F-62
<PAGE>

                          PRC HOLDINGS CORPORATION
                     STATEMENT OF STOCKHOLDER'S EQUITY
                              (in thousands)
<TABLE>
<CAPTION>
                                                              Retained
                                                 Additional   Earnings     Due from
                                        Common     Paid-In  (Accumulated   Related
                                        Stock      Capital     Deficit)     Party       Total
                                      ---------   ---------   ---------   ---------   ---------
<S>                                   <C>         <C>          <C>          <C>        <C>
Years Ended February 28/29,
1995, 1996 and 1997:

Balance at February 28, 1994.......   $      1    $100,015     $  6,628     $(7,188)   $ 99,456

Capital distributions..............        --       (2,079)         --          --       (2,079)
Net income.........................        --          --         9,520         --        9,520
                                      ---------   ---------    ---------   ---------   ---------
Balance at February 28, 1995.......          1      97,936       16,148      (7,188)    106,897

Capital contributions..............        --        6,514          --          --        6,514
Capital distributions..............        --       (7,884)         --          --       (7,884)
Net loss...........................        --          --       (73,021)        --      (73,021)
                                      ---------   ---------    ---------   ---------   ---------
Balance at February 29, 1996.......          1      96,566      (56,873)     (7,188)     32,506

Capital contributions..............        --        1,347          --           --       1,347
Capital distributions..............        --       (1,695)         --           --      (1,695)
Net loss...........................        --          --        (8,437)         --      (8,437)
                                      ---------   ---------   ----------   ---------   ---------
Balance as of February 28, 1997....   $      1    $ 96,218    $ (65,310)   $ (7,188)   $ 23,721
                                      =========   =========   ==========   =========   =========
</TABLE>
See Notes to Financial Statements.

                                      F-63
<PAGE>

                          PRC HOLDINGS CORPORATION
                          STATEMENTS OF CASH FLOWS
                               (in thousands)
<TABLE>
<CAPTION>
                                              Years Ended February 28/29,
                                             1997        1996        1995
                                            ------      ------      ------
<S>                                       <C>         <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME (LOSS)...................       $(8,437)   $(73,021)    $ 9,520

NON-CASH ITEMS INCLUDED IN EARNINGS:
  Provision for doubtful accounts...        27,379      89,710         --
                                          ---------   ---------   ---------
    Net cash provided by operating
      activities....................        18,942      16,689       9,520
                                          ---------   ---------   ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Advances to related parties, net..           310     (12,943)    (10,403)
                                          ---------   ---------   ---------
  Net cash provided by (used in)
   investing activities.............           310     (12,943)    (10,403)
                                          ---------   ---------   ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Advances from related parties, net       (18,904)     (2,376)      2,962
  Capital distributions.............        (1,695)     (7,884)     (2,079)
  Capital contributions.............         1,347       6,514         --
                                          ---------   ---------   ---------
    Net cash provided by (used in)
      financing activities..........       (19,252)     (3,746)        883
                                          ---------   ---------   ---------
NET DECREASE IN CASH
  AND CASH EQUIVALENTS..............           --          --          --

CASH AND CASH EQUIVALENTS
  AT BEGINNING OF YEAR..............           --          --          --
                                          ---------   ---------   ---------
CASH AND CASH EQUIVALENTS
    AT END OF YEAR.................       $    --     $    --     $    --
                                          =========   =========   =========
</TABLE>
See Notes to Financial Statements.

                                      F-64
<PAGE>

                             PRC HOLDINGS CORPORATION
                           NOTES TO FINANCIAL STATEMENTS

1.  SUMMARY OF SIGNIFICANT ACCOUNTING PROCEDURES

  Basis of Presentation -- PRC Holdings Corporation (the "Company"), a
Delaware corporation which was organized in February 1993, is a wholly-owned
subsidiary of President Casinos, Inc. ("PCI").  The Company was capitalized
with the proceeds of the initial public offering of PCI's Common Stock and
intercompany receivables owed from certain subsidiaries and affiliates.  The
Company has no operations and acts as a conduit for intercompany accounts
between PCI and its other subsidiaries and affiliates.

  Due to/from Related Parties -- Due from related parties primarily represents
cash advances made to various other subsidiaries and affiliates of PCI or
original intercompany receivable balances recorded in the recapitalization of
PCI after the initial public offering.  To the extent intercompany receivables
at the time of the initial public offering related to the excess of the fair
market value of assets contributed by a related party over their historical
cost basis, such receivables are reflected as a reduction of stockholder's
equity.  Due to related parties primarily represents cash advanced to the
Company by PCI after a private placement of notes in September 1993 and
intercompany tax payable amounts.  Related party interest income is recorded
on intercompany receivables based on the effective rate incurred by PCI (14%
as of February 28/29, 1997 and 1996).  Related party interest expense is set
equal to interest expense incurred by PCI on the notes discussed above.

  Allowance for Doubtful Accounts -- As a result of the nature of the
intercompany transactions discussed above and in Note 3, the Company's "stand
alone basis" equity may exceed that of PCI's equity.  Such equity of the
Company eliminates 100% in consolidation.  During the year ended February 29,
1996, significant losses were incurred by the affiliates of the Company and
their ability to repay amounts owed to the Company will be somewhat limited by
their operations and by the overall capitalization of the consolidated group. 
Accordingly, due to the uncertainty surrounding these entities' ability to
repay the Company, the Company has provided an allowance for doubtful accounts
to the extent the Company's net worth exceeds that of the consolidated group.

  Income Taxes -- The Company files as part of the consolidated income tax
return with its parent, PCI. Income tax expense represents an intercompany
allocation based on a rate applicable as if the Company filed on a separate
company basis.

  Use of Management Estimates -- The preparation of financial statements in
conformity with generally accepted accounting principles requires management
to make certain estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the amounts of revenues and expenses
during the reporting period.  Actual results may differ from those estimates.

                                   F-65
<PAGE>


2.  COMMITMENTS AND CONTINGENT LIABILITIES

  PCI and certain of its subsidiaries and affiliates are defendants in various
lawsuits related to their gaming operations in various jurisdictions.  Given
the nature of the Company's relationship as a wholly-owned subsidiary of PCI
and the intercompany nature of substantially all of its activities, any
material adverse determination regarding litigation experienced by the parent 
could materially adversely effect the Company.  Though the outcome of
litigation is difficult to predict with certainty, management, after
consultation with legal counsel, believes the ultimate resolution of all such
litigation will not have a material adverse effect on the operations or
financial condition of the Company.

3.  SUPPLEMENTAL CASH FLOW DISCLOSURES

  During fiscal 1994, the Company advanced all of its cash balances to another
subsidiary of PCI.  At that time such subsidiary became responsible for
advancing cash to the other subsidiaries of PCI for short-term working capital
requirements and the Company became responsible for long-term advances and
interest thereon.  As a result of this transaction, all changes in due to/due
from related parties represent a pass through of cash from one subsidiary of
PCI to another, intercompany allocations of income tax assets and liabilities
based on the intercompany tax allocation agreement, compounding of interest
accruals and short-term advances transferred to the Company as they mature to
long-term.

                                     F-66
<PAGE>

                           PRC HOLDINGS CORPORATION
                 SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
            For the Years Ended February 28/29, 1997, 1996 and 1995
                                 (in thousands)
<TABLE>
<CAPTION>
                                                           Additions
                                              Balance at   Charged to
                                              Beginning    Costs and                 Balance at
        Description                            of Year      Expenses    Deductions   End of Year
        -----------                           ---------    ----------   ----------   -----------
<S>                                           <C>          <C>          <C>           <C>
Allowance for Doubtful Accounts Receivable:

Year ended February 28, 1997...............   $ 89,710     $ 27,379     $    --       $117,089

Year ended February 29, 1996...............       --         89,710          --         89,710

Year ended February 28, 1995...............       --            --           --            --

</TABLE>

                                       F-67
<PAGE>

                            PRESIDENT CASINOS, INC.
                                EXHIBIT INDEX

  Exhibits
    3.1     Certificate of Incorporation of President Casinos, Inc., as
            amended. (2)
    3.2     Bylaws of President Casinos, Inc., as amended. (2)
    4.1     Indenture dated as of August 26, 1994 by and among the Company,
            the guarantors and United States Trust Company of New York ("U.S.
            Trust"). (6)
    4.2     Registration Rights Agreement dated August 26, 1994 by and among
            the Company, the Guarantors and Holders listed on Schedule A
            thereto. (6)
    4.3     Form of Senior Exchange Note issued pursuant to Indenture. (5)
    4.4     Warrant Agreement dated as of September 23, 1993 by and between
            the Company and U.S. Trust, as Warrant agent. (4)
    4.5     Warrant Agreement dated as of August 26, 1994 by and between the
            Company and U.S. Trust. (6)
    10.1    Amended and Restated Agreement of Limited Partnership of The
            Connelly Group, L.P. (1)
    10.2    Agreement between the Company and John E. Connelly. (2)
    10.3    Employment Agreement dated November 4, 1992 between the Company
            and John E. Connelly. (2)
    10.3.1  Amendment No. 1 to Employment Agreement dated December 15, 1994
            between the Company and John E. Connelly. (9)
    10.4    Employment Agreement dated November 4, 1992 between the Company
            and Edward S. Ellers. (2)
    10.4.1  Amendment No. 1 to Employment Agreement dated March 13, 1995
            between the Company and Edward S. Ellers. (9)
    10.4.2  Employment Separation and Consulting Agreement dated July 10, 1995
            by and between Edward S. Ellers and the Company. (10) 
    10.5    Mutual General Release and Non-Disparagement Agreement dated May
            29, 1995 between the Company and Gary Selesner. (12)
  * 10.6    Registrant's 1992 Stock Option Plan, as amended. (5)
  * 10.6.1  1996 President Casinos, Inc. Amended and Restated Stock Option
            Plan. (16)
    10.7    Amended and Restated Davenport - Connelly Development Agreement
            dated November 29, 1990 between The Connelly Group, L.P. and the
            City of Davenport, Iowa (the "Development Agreement"). (1)
    10.8    First Amendment to the Development Agreement dated August 21,
            1991.(1)
    10.9    Second Amendment to the Development Agreement dated April 10,
            1992.(1)
    10.10   Operator's Contract dated December 28, 1989 between the Riverboat
            Development Authority and The Connelly Group, L.P. (1)
    10.11   Amendment to Operator's Contract, dated December 29, 1993, between
            the Riverboat Development Authority and The Connelly Group, L.P.
            (4)
    10.12   Lease dated November 29, 1990 between the City of Davenport, Iowa
            and The Connelly Group, L.P. (1)
    10.13   Management Advisory Agreement for The Connelly Group, L.P. (1)

                                    F-68
<PAGE>

    10.14   Credit Agreement dated as of March 11, 1991 among The Connelly
            Group, L.P., TCG/Blackhawk and Firstar Bank Davenport, N.A. (1)
    10.15   Note dated March 11, 1991 from The Connelly Group, L.P. and
            TCG/Blackhawk to Firstar Bank Davenport, N.A. (1)
    10.16   Security Agreement dated March 11, 1991 between The Connelly
            Group, L.P. and Firstar Bank Davenport, N.A. (1)
    10.17   First Preferred Fleet Mortgage dated March 11, 1991 from The
            Connelly Group, L.P. to Firstar Bank Davenport, N.A. (1)
    10.18   Mortgage, Security Agreement, Fixture Financing Statement and
            Assignment of Leases and Rents, dated March 11, 1991, by The
            Connelly Group, L.P. to Firstar Bank Davenport, N.A. on the
            Landing Promenade Property.  A similar mortgage has been given to
            Firstar Bank Davenport, N.A. by TCG/Blackhawk on the Blackhawk
            Hotel Property. (1)
    10.19   Amendment to Note dated March 16, 1993 from The Connelly Group,
            L.P. and TCG/Blackhawk, Inc. to Firstar Bank Davenport, N.A. (2)
    10.19.1 Second Amendment to Note dated March 31, 1997 from The Connelly
            Group, L.P. and TCG/Blackhawk, Inc. to Firstar Bank Davenport,     
            N.A.
    10.20   Lease Agreement dated September 1, 1977 between the City of St.
            Louis and JECA (successor to James B. Eads, Incorporated) ("'Lt.
            Robert E. Lee' Lease"). (1)
    10.21   Amended Lease Agreement dated July 16, 1990, amending the "Lt.
            Robert E. Lee" Lease. (1)
    10.22   Second Amendment to Lease Agreement effective June 19, 1992,
            amending the "Lt. Robert E. Lee" Lease. (1)
    10.23   Lease Agreement dated January 16, 1985 between the City of St.
            Louis and St. Louis River Cruise Lines, Inc. ("The Former
            'President' Lease"). (1)
    10.24   Amended Lease Agreement dated July 16, 1990, amending The Former
            "President" Lease. (1)
    10.25   Second Amendment to Lease Agreement, effective June 19, 1992,
            amending The Former "President" Lease. (1)
    10.26   Lease Agreement dated August 7, 1986 between the City of St. Louis
            and St. Louis River Cruise Lines, Inc. (as successor to James B.
            Eads, Incorporated) ("'The Belle of St. Louis' Lease"). (1)
    10.27   Amended Lease Agreement dated July 16, 1990, amending "The Belle
            of St. Louis" Lease. (1)
    10.28   Second Amendment to Lease Agreement, effective June 19, 1992,
            amending "The Belle of St. Louis" Lease. (1)
    10.29   Lease Agreement dated November 30, 1988 between the City of St.
            Louis and JECA ("'The Becky Thatcher' Lease"). (1)
    10.30   Amended Lease Agreement dated July 16, 1990, amending "The Becky
            Thatcher" Lease. (1)
    10.31   Second Amendment to Lease Agreement effective June 19, 1992,
            amending "The Becky Thatcher" Lease. (1)
    10.32   Lease Agreement dated June 16, 1988 between the City of St. Louis
            and JECA ("Office Barge Lease"). (1)
    10.33   Amended Lease Agreement dated July 16, 1990, amending Office Barge
            Lease. (1)
    10.34   Second Amendment to Lease Agreement effective June 19, 1992,

                                    F-69
<PAGE>

            amending Office Barge Lease. (1)
    10.35   Lease Agreement dated December 20, 1983 between the City of St.
            Louis and S.S. Admiral Partners ("'The Admiral' Lease"). (1)
    10.36   Amendment and Assignment of Mooring Lease dated December 12, 1990,
            amending "The Admiral" Lease. (1)
    10.37   Second Amendment to Lease Agreement effective June 19, 1992,
            amending "The Admiral" Lease. (1)
    10.38   Promissory Note (Vessel-Term) dated July 8, 1992 from President
            Mississippi to Caterpillar. (3)
    10.39   Loan Agreement dated July 31, 1992 between President Mississippi
            and Caterpillar. (1)
    10.40   Preferred Fleet Mortgage dated July 8, 1992 between President
            Mississippi and Caterpillar. (1)
    10.41   Form of Indemnification Agreement for Directors and Officers. (1)
    10.42   Letter Agreement dated as of March 1, 1992 between John E.
            Connelly, Della III, Inc. and Edward S. Ellers. (2)
    10.43   Agreement among the Company, John E. Connelly, Edward S. Ellers,
            The Connelly Group, L.P., Della III, Inc. and Klehr, Harrison,
            Harvey, Branzburg & Ellers. (3)
    10.44   General Partnership Agreement of President R.C.-St. Regis
            Management Company dated as of August 9, 1993. (4)
    10.45   Management Agreement dated October 26, 1993 between The St. Regis
            Mohawk Tribe and President R.C.-St. Regis Management Company. (4)
    10.46   Lease Agreement, dated as of December 14, 1993, by and between
            Liberty Landing Associates and President Riverboat Casino-
            Philadelphia, Inc. (4)
    10.47   Assignment, dated as of December 14, 1993, pursuant to which
            Liberty Landing Associates ("Assignor") assigns, transfers and
            sets over unto President Riverboat Casino-Philadelphia, Inc. all
            of the rights, title and interest of Assignor in, to and under
            that certain Master Agreement to Lease, dated September 25, 1989,
            by and between Philadelphia Port Corporation and Assignor, as
            amended. (4)
    10.48   Subsidiary Stock Pledge and Collateral Assignment Agreement dated
            as of August 26, 1994 by the Company and Subsidiary Pledgors in
            favor of United States Trust, as collateral agent. (6)
    10.49   Amended and Restated Management Agreement between the St. Regis
            Mohawk Tribe and President R.C.-St. Regis Management Company. (7)
    10.50   Charter Agreement dated February 17, 1995 by and between American
            Gaming & Entertainment, Ltd.("AGE") and the President Mississippi
            Charter Corporation. (8)
    10.51   Subcharter Agreement dated February 17, 1995 by and between
            President Mississippi Charter Corp. and President Riverboat
            Casino-Mississippi Inc. (8)
    10.52   Collateral Assignment Agreement dated February 17, 1995 by the
            President Mississippi Charter Corporation to AGE. (8)
    10.53   Employment Agreement dated March 13, 1995 by and between the
            Company and John S. Aylsworth. (9)
    10.54   Option Agreement dated March 13, 1995 by and between John S.
            Aylsworth and the Company. (12)
    10.55   Promissory Note dated February 17, 1995 from BH Acquisition Corp.

                                    F-70
<PAGE>

            to PRC Management, Inc. (12)
    10.56   Surety Agreement dated February 13, 1995 between John E. Connelly
            and PRC Management, Inc. (12)
    10.57   Charter Agreement dated October 27, 1994 by and between President
            Riverboat Casino-New York, Inc. and Missouri Gaming Company. (12)
    10.58   Charter Agreement dated August 17, 1995 by and among New Yorker
            Acquisition Corporation, Barden-Davis Casino, LLC and the
            Company. (11)
    10.59   Charter Agreement dated August 18, 1995 by and between President
            Riverboat Casino-New York, Inc. and Greater Dubuque Riverboat
            Entertainment Company, L.C. (11)
    10.60   Amendment to Charter Agreement dated August 18, 1995 by and
            between President Riverboat Casino-New York, Inc. and Greater
            Dubuque Riverboat Entertainment Company, L.C. (11)
    10.60.1 Asset Acquisition Agreement dated July 30, 1996, by and between
            President Riverboat Casino-New York, Inc. and Greater Dubuque
            Riverboat Entertainment Company, L.C. (15)
    10.61   Employment Agreement dated November 1, 1995 by and between the
            Company and James A. Zweifel. (11)
    10.62   Mutual Release and Non-Disparagement Agreement dated November 14,
            1995 by and between David Friedman and the Company, John E.
            Connelly, John S. Aylsworth, Floyd R. Ganassi, William C. Nelson,
            Russell L. Ray, Terrence L. Wirginis and Karl G. Andren. (11)
    10.63   Second Amended and Restated Management Agreement dated December 1,
            1995 between The St. Regis Mohawk Tribe and President R.C.-St.
            Regis Management Company. (11)
    10.64   "Natatorium Site" Lease Agreement dated July 20, 1995 by and
            between the City of Davenport, Iowa and The Connelly Group, L.P.
            through the President Riverboat Casino-Iowa, Inc. (the "Natatorium
            Site Lease"). (11)
    10.65   Amended and Restated Promissory Note dated February 15, 1996 from
            BH Acquisition Corp. to PRC Management, Inc. (13)
    10.66   Promissory Note dated February 15, 1996 from BH Acquisition Corp.
            to PRC Management, Inc. (13)
    10.67   Amended and Restated Surety Agreement dated February 15, 1996 
            between John E. Connelly and PRC Management, Inc. (13)
    10.68   Collateral Pledge Agreement dated February 15, 1996 between
            Connelly Hotel Associates, Inc. and PRC Management, Inc. (13)
    10.69   Third Amended and Restated Management Agreement dated April 18,
            1996 by and between the St. Regis Mohawk Tribe and President R.C.-
            St. Regis Management Company. (13)
    10.70   Letter Agreement dated May 7, 1996 by and between President
            Riverboat Casino-Philadelphia, Inc., Liberty Landing Associates,
            The Sheet Metal Workers' International Association Local Union
            #19, Delaware Avenue Development Corp. and Delaware-Washington
            Corp.(13)
    10.71   Independent Contractor Consulting Agreement dated May 15, 1996 by
            and between the Company and Terrence Wirginis. (13)
    10.72   Employment Agreement dated May 1, 1996 by and between the Company
            and Terrence Wirginis. (13)
    10.73   Letter of Intent Agreement, dated as of July 17, 1996, by and

                                     F-71
<PAGE>
            between President Riverboat Casino-Mississippi, Inc. and
            Primadonna Resorts, Inc. (14)
    10.74   Letter of Intent Agreement, dated as of July 17, 1996, by and
            between BH Acquisition Corporation and Primadonna Resorts, Inc.
            (14)
    10.75   First Amendment to Lease Agreement dated July 31, 1996, by and
            between President Riverboat Casino-Philadelphia, Inc. and Liberty
            Landing Associates (15)
    10.76   Second Amended Lease Agreement dated July 31, 1996, by and between
            Liberty Landing Associates and President Riverboat Casino-
            Philadelphia, Inc. (15)
    10.77   First Amendment to Corporate Guaranty dates July 31, 1996 by
            President Casinos, Inc. (15)
    10.78   Option Agreement dated July 31, 1996, by and between Liberty 
            Landing Associates and President Riverboat Casino-Philadelphia,
            Inc. (15)
    10.78.1 Modification to Option Agreement dated December 12, 1996, by and
            between Liberty Landing Associates and President Riverboat
            Casinos-Philadelphia, Inc. (16)
    10.79   Asset Purchase Agreement dated October 14, 1996, by and between
            President Riverboat Casino-New York, Inc. and Southern Illinois
            Riverboat/Casino Cruises, Inc. (16)
  * 10.80   1998 Fiscal Year Management Incentive Plan Participant Form.
    21      Schedule of subsidiaries of the Company.
    23      Consent of Deloitte & Touche, L.L.P. with respect to the Company's
            Registration Statement on Form S-8, as filed on June 8, 1994.
    27      Financial Data Schedule.
    __________________

(1)  Incorporated by reference from the Company's Registration Statement on
     Form S-1 (File No. 33-48446) filed on June 5, 1992.
(2)  Incorporated be reference from the Company's Registration Statement on
     Form S-1 (Registration No. 33-63174), filed on May 21, 1993.
(3)  Incorporated by reference from the Company's Annual Report on Form 10-K
     for the Fiscal Year Ended February 28, 1993 filed on June 1, 1993.
(4)  Incorporated by reference from the Company's Registration Statement on
     Form S-4 (File No. 33-71332) filed November 5, 1993.
(5)  Incorporated by reference from the Company's Registration Statement on
     Form S-8 dated June 8, 1994.
(6)  Incorporated by reference from the Company's Registration Statement on
     Form S-4 (File No. 33-86386) filed November 15, 1994.
(7)  Incorporated by reference from the Company's Quarterly Report on Form 
     10-Q for the quarterly period ended May 31, 1994 filed July 14, 1994.
(8)  Incorporated by reference from the Company's Report on Form 8-K dated
     February 7, 1995.
(9)  Incorporated by reference from the Company's Report on Form 8-K dated
     March 16, 1995.
(10) Incorporated by reference from the Company's Report on Form 8-K dated
     July 10, 1995.
(11) Incorporated by reference from the Company's Quarterly Report on Form
     10-Q for the quarterly period ended November 30, 1995 filed January 12,

                                   F-72
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