UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                             ----------------------
                                    FORM 10-K
                ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 OF THE
                             SECURITIES ACT OF 1934
                     FOR THE FISCAL YEAR ENDED JUNE 30, 2000
                           COMMISSION FILE NO. 0-22191

                           CCA COMPANIES INCORPORATED
               (EXACT NAME OF COMPANY AS SPECIFIED IN ITS CHARTER)

         Delaware                                       IRS NO. 65-0675901
(State of Incorporation)                          (IRS Employer Identification)

              9130 SOUTH DADELAND BLVD., SUITE 1602 MIAMI, FLORIDA
                 33156 (Address of principal executive offices)

                                 (305) 670-3838
                (Company'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:
               Title of each Class: Common Stock $0.001 par value

         Indicate by check mark whether the Company (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Act during the
preceding 12 months (or for such shorter period that the Company 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 in response
to Item 405 of Regulation S-K of Section 299.405 of this chapter is not
contained herein, and will not be contained, to the best of the Company's
knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this Form 10-K.

         The aggregate market value of the Company's common stock held by
non-affiliates (all persons other than executive officers or directors) of the
Company at June 30, 2000 was $2,359,260, and at April 25, 2001 was $544,200.

         The Company's common stock outstanding at June 30, 2000 was 16,326,666
shares, and at April 25, 2001 was 18,140,000

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                                TABLE OF CONTENTS
                                     PART I

                                                                            Page

Item 1.  Business...........................................................   3
         Company Overview...................................................   3
         Divisional Overviews...............................................   7
         Casino Division....................................................   7
         Hotel Management Division..........................................   8
         Sakhalin Project...................................................  10
         Insurance..........................................................  13
         Employees..........................................................  13
         Segments/foreign operations........................................  13

Item 2.  Properties.........................................................  13

Item 3.  Legal Proceedings..................................................  14

Item 4.  Submission of Matters to a Vote of Securities Holders..............  15

                                     PART I

Item 5.  Market for Common Equity and Related Stockholder Matters ..........  16

Item 6.  Selected Financial Data............................................  17

Item 7.  Management's Discussion and Analysis of Financial
         Condition and Results of Operation.................................  18
           Results of Operations............................................  19
           Liquidity and Capital Resources..................................  23
           Subsequent Events................................................  27

Item 8.  Financial Statements...............................................  29

Item 9.  Changes in and Disagreements with Accountants
         On Accounting and Financial Disclosure.............................  29

                                    PART III

Item 10. Directors and Executive Officers of the Registrant.................  29
         Compliance with Section 16(a) of the Securities Exchange Act
         of 1934............................................................  32

Item 11. Executive Compensation
         Summary Compensation Table.........................................  33
         Option Grants for the Twelve Months Ended June 30, 1999............  34

Item 12. Security Ownership of Certain Beneficial Owners and Management.....  36

Item 13. Certain Relationships and Related Transactions.....................  38

                                     PART IV

Item 14. Exhibits, Financial Statements and Schedules, and Reports on
         Form 10-k..........................................................  40
         Financial Statements...............................................  40
         Exhibits...........................................................  41
         Signatures.........................................................  44

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           This Annual Report on Form 10-K contains "forward looking statements"
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. All statements
other than statements of historical fact included in this document regarding the
Company's strategies, plans, objectives, expectations, and future operating
results are forward-looking statements. Although the Company believes that the
expectations reflected in such forward-looking statements are reasonable at this
time, it can give no assurance that such expectations will prove to have been
correct. Actual results could differ materially based upon a number of factors
including but not limited to, risks of a development stage company, the
Company's working capital deficit and accumulated deficit; significant capital
requirements; need for additional financing; going concern qualifications; risks
associated with geographic expansion and new lines of business; risks inherent
in international; risks relating to the Sakhalin Project; lack of a gaming
license; possible change in control; political and economic factors; risks of
foreign legal systems; business infrastructure issues; potential conflicts with
other stockholders in the Company's projects; restrictions and controls on
foreign investments and acquisitions of majority interests; government
regulation; construction risks, nature of hospitality and gaming industry;
dependence on successful gaming operations; collectability of casino
receivables; effects of inflation and currency fluctuations; competition;
reliance on advances and dividends from subsidiaries; dependence on personnel
associated with developing the Sakhalin Project; lack of key man insurance;
volatility of prices of shares; potential adverse impact on market price of
shares, shares eligible for future sale, and additional registered securities;
potential adverse effect of future issuances of authorized preferred stock;
potential adverse effect of Underwriter's Warrants and other Warrants;
classified board of directors; limited public market and liquidity, and other
risks detailed in the Company's Securities and Exchange Commission filings.

ITEM 1. BUSINESS

                                COMPANY OVERVIEW

           CCA Companies Incorporated ("CCA") was incorporated under the laws of
the State of Delaware on March 6, 1996 as Conserver Corporation of America and
changed its name on December 2, 1997. The current active business of CCA
Companies Incorporated (with its subsidiaries, the "Company") is (i) operation
of a gaming casino in Suriname 50% owned by the Company, and (ii) pursuing the
development of a casino and hotel project in Sakhalin in the Russian Federation
on an island north of Japan (the "Sakhalin Project").

           Since March 1999 the Suriname casino, owned by Suriname
Leisure Company A.V.V. ("SLC"), an Aruba joint venture

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entity 50% owned by the Company, has been operating in permanent quarters in the
hotel where previously SLC maintained temporary facilities for its casino
operation. The Company's 100% owned Delaware subsidiary, Dorsett Hotel &
Resorts, Inc. ("Dorsett") manages the casino. The Company is also seeking to
acquire, develop and/or operate other casinos abroad. In September 1998 the
Company had acquired a fully operating casino in Budapest, Hungary. This casino
was closed in October 1999 upon the government's failure to extend its license.

           The Sakhalin Project is currently in development and requires the
Company to obtain substantial financing to progress further. Despite numerous
discussions and several agreements the Company has not yet been able to obtain
the necessary financing. The Company is continuing to seek financing. As
required by applicable accounting rules, in the fiscal year ended June 30, 2000
the Company wrote down approximately $13,552,000 in capitalized expenditures and
goodwill related to the Sakhalin Project, leaving approximately $2,100,000 of
Sakhalin Project capitalized expenditures on the Company's accounts. This
proposed new hotel/casino is intended to attract gaming clientele from Japan,
China, Korea, and the Russian mainland. The Sakhalin Project involves plans to
develop a $140 million dollar 450- room hotel/casino complex on a ten-acre site
in the center of the City of Yuzhno-Sakhalinsk ("the City") with further
development proposed at a nearby ski mountain. The related casino as planned
would initially have 70 tables and 350 slot machines.

           In February 2001 the Company entered into a nonbinding letter of
intent to acquire Applied Gaming Solutions of Canada Inc. ("AGC"), including a
related marketing company. AGC operates an on-line lottery in Vietnam and
anticipates expanding the marketing efforts and geographic area covered by the
lottery, as well as introducing on-line sports betting. There are several
significant pre-conditions to the acquisition, including the Company raising US
$3 million or more to finance the marketing efforts and expansion, settlement of
various issues with AGC's noteholders and major creditor, and approval by AGC's
and the Company's stockholders. If the acquisition were consummated as currently
intended, Mr. David Aftergood, the current President of AGC would become chief
executive officer and President of the Company, and Mr. Dallas Dempster,
currently the Company's President, would become Executive Chairman. Further, the
Company anticipates issuing to the stockholders of AGC and others such number of
shares as would likely cause a change in control of the Company, a significant
change in its business operations, and a significant change in its financial
condition. As of April 25, 2001 the Company was pursuing this acquisition but
has not entered into any definitive

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agreements to do it, to raise the funds necessary to do it, or to clarify or
verify various essential facts and arrangements necessary to do it.

           On March 24, 2000 the Company's wholly owned Delaware subsidiary
Dorsett Hotels & Resorts, Inc. ("Dorsett")entered into a Casino Management
Agreement ("the Ramallah Agreement") with Ramallah Hotel and Casino Company,
Ltd. ("Ramallah"), a limited liability company under the laws of the Palestinian
National Authority. Ramallah proposes to build and own a hotel, casino and spa
resort to be named the "Ramallah Palace" within the jurisdiction of the
Palestinian National Authority. Ramallah retained the services of Dorsett to
provide technical assistance in design and construction of the casino during the
pre-operating period, and then to manage the casino operation. Dorsett paid
Ramallah a signing payment of $250,000. Ramallah indicated that it expects to
hold a gaming license for the casino. Dorsett is to receive a technical fee for
pre-operating technical assistance, and reimbursement of out-of-pocket expenses.
The amount of the technical fee has not yet been specifically agreed upon.
Dorsett is to receive a basic management fee for managing the casino operation
of 3% of Revenue, as defined, plus an incentive management fee based on Gross
Operating Profit, as defined. On June 30, 2000 the Company reserved against the
full signing fee that had been paid Ramallah. The Company believes that current
political conditions in the area will delay the construction of the project
indefinitely. During the fiscal year ended June 30, 2000 the Company took a
charge of $305,000 against the Ramallah Agreement, representing all related
capitalized expenditures.

FORMER FOOD PRESERVATION TECHNOLOGY AND HOTEL BUSINESSES

           The Company's original principal business was food preservation
technology. In November 1999, the Company's Board of Directors determined to
discontinue operations in that business.

           After mid-1997 the Company entered into hotel management agreements
to obtain (over about two years) eight hotel management contracts, mostly for
hotels in Asia. All the agreements and contracts have now been terminated, and
all operations discontinued. Currently, the Company has no active hotel
management operations, and no staff for hotel management. The Company does not
currently anticipate re-entry into this business.

RECENT FINANCIAL HISTORY

           The Company has incurred losses since its inception, and has a
limited operating history upon which an evaluation of its future performance can
be made. From inception in March 1996 to June 30, 1997 the Company did not have
any revenues. During the year ended June 30, 1998 the Company had revenues of
approximately $650,000, primarily attributable to its hotel management
operations commenced in January 1998 and

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discontinued beginning in November 1998. During the year ended June 30, 1999 the
Company had revenues of $5.9 million, of which approximately $5.5 million was
attributable to the Company's casino operations in Suriname and Budapest, with
the remainder attributable to the Company's hotel management operations
discontinued between November 1998 and April 1999. In November 1999 the Company
also discontinued its food preservation technology operations. During the year
ended June 30, 2000 the Company had revenues of $6,981,000, all from the
Suriname casino operations. On June 30, 2000 the Company had a working capital
deficit of $1.15 million and $216,000 in cash or cash equivalents on hand.

           Since July 1998 the Company has actively sought to raise cash through
loans or sales of its securities in order to fund its past due obligations,
current operations and completion of the Suriname casino, which opened in
October 1999. The Company was successful in raising sufficient funds from
several private investors through the sale of its securities, enabling it to
fund its ongoing operational costs during that period and to complete the
construction of the Suriname casino. The Company continued to finance itself in
part by further issuances of securities, and to seek loans to finance itself and
the Sakhalin Project. In addition, the Company settled various accounts payable
by issuance of its securities.

           In August 1999, after the completion of the Suriname casino, the
Company began to receive cash payments from the Suriname joint venture entity.
Prior to August 1999, all cash from operating profits of the casino had been
used to first pay the remaining balance due on the casino construction contract
and then to repay a $750,000 loan previously made by the Company's joint
venturer.

           Since August, 1999 the Company's primary recurring source of cash,
exclusive of certain loans and securities sales described above and hereinafter,
was the cash payments from SLC which is the joint venture entity that owns the
Suriname casino.

           On November 16, 1999 the Company's Common Stock was delisted from the
Nasdaq SmallCap Market. The Company's Common Stock is now traded in the Pink
Sheets of the National Quotation Bureau.

           Until March 1998 the Company was for accounting purposes deemed a
development stage company. Receipt of revenues, primarily from hotel management
operations, technically ended that status. However, the Company's operations are
still subject to all of the risks inherent in the establishment of new business
enterprises, including the need to obtain financing, and the uncertainty of
market acceptance of its products and services.

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                              DIVISIONAL OVERVIEWS

CASINO DIVISION

           Dorsett (the Company's 100% owned subsidiary) and SLC (the
Company's 50% owned joint venture entity) are currently operating a casino in
Suriname. The Company anticipates eventually operating the casino in the
Sakhalin Project, if and when that project is built and licensed, and is also
seeking to operate or acquire interests in other casinos outside the U.S. The
Company has one officer (Mr. David Hartley) and approximately 305 employees
engaged directly in casino operations.

           The Company's Suriname casino, part of a joint venture, occupies two
leased floors totaling about 20,000 square feet in the Plaza Hotel, which is a
downtown hotel in the capital city of Paramaribo. The Company began operations
of its Suriname casino in October 1998 in temporary quarters. The permanent
casino was completed and became operational in March 1999. The casino has 20
gaming tables, 161 slot machines and a 50-seat restaurant. There are other
casinos in Paramaribo, the capital city, but only two compete with the Company
for the same local gaming clientele.

           The Suriname casino was constructed by the Company pursuant to an
agreement with Parbhoe Handelmij NV ("Parbhoe"), the local company that owned
the casino license and which became the 50% owner of the joint venture entity,
SLC. The casino license is now held by SLC. SLC entered into the Suriname Casino
Management Agreement in April 1998 for the Company, through Dorsett, to operate
the Casino for fifteen years at a base fee equal to 3% of gross revenues
calculated on an annual basis and payable monthly, plus an incentive fee of ten
percent of gross operating profits, payable monthly. SLC leased the casino
premises from Parbhoe, the hotel owner, for fifteen years beginning February
1998 for $200,000 per year, subject to locally based escalation. The Company is
seeking a refund of rent paid and a limitation on future rent.

           The Orfeum Casino in Budapest, Hungary was acquired in September of
1998 when the Company's subsidiary Dorsett Hotels and Resorts, Inc. acquired a
95% equity interest in Roulette Kft. ("Roulette"), the local company that owned
the rights to the casino. In December 1998, the Company entered into an
agreement with A.G.M. International LTD ("AGM"), an Israeli junket operator
experienced in organizing junket and premium player groups, whereby AGM was
granted 50% ownership of Roulette primarily for agreeing to fund various costs.
During 1999, the Hungarian Gaming Board made a decision to reduce the number of
casino licenses. The Company submitted an application during 1999 in an attempt
to obtain one of the three licenses that the gaming board would be granting, but
was unsuccessful. Consequently, the casino was closed at the

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end of October 1999. At June 30, 1999 the Company fully reserved the balance of
its loans to Roulette Kft. which totaled approximately $610,000, and does not
anticipate repayment of any part of the loans.

           In August 1997, the Company had entered into the two-year Star Casino
Consulting Agreement with Star Casinos Limited ("Star") as consultant, primarily
to obtain the services of Mr. David Hartley who is an experienced casino
consultant. He is now the full-time President of the Company's Casino Division.
The Company is informed that Star is owned and controlled by Mr. Hartley. The
active term of the agreement began in October 1997 and ended in December 1999.
Pursuant to the agreement the Company agreed to pay Star $250,000 per year. Mr.
Hartley did not receive a direct salary from the Company during that period. In
October 1997, the Company had granted to Star three year plan options to
purchase 100,000 shares of Common Stock at a price of $6.50 per share. (The
exercise price was reduced to $1.50 per share in September 1998, then to $.25
per share in December 1999, then to $.10 per share on October 18, 2000. The
reductions were part of several more general and simultaneous reductions in the
exercise price of options held by directors, employees or consultants.) The
options vested and became exercisable in 2 equal installments, on each
succeeding October anniversary. The agreement imposed non-compete and
non-solicitation restrictions on Star for two years after the term. Upon the
expiration of the Star Casino Consulting Agreement in 1999 the Company issued
Star 250,000 shares of Stock as payment of a $250,000 cash bonus which Star was
entitled to receive under the terms of that agreement. The Company currently
continues to engage Star on a month-to-month basis to maintain Mr. Hartley's
services, for which the Company pays Star $250,000 per year. Mr. Hartley still
does not receive a direct salary from the Company. On October 24, 2000, the
Company issued 480,000 shares of Common Stock to Star as payment for $120,000
which Star was entitled to receive as of June 30, 2000 under the terms of the
Star Casino Consulting Agreement. The market price of a share of the Company's
Common Stock in June 2000 when the parties agreed to the issuance of such shares
was $.15.

HOTEL MANAGEMENT DIVISION

           The Company currently has no hotel management activities. Until
November 1998, the Company had 1 officer (Mr. Kai Michaelsen) and 3 employees
engaged directly in hotel management, and had hotel operating contracts for
three open hotels, only one of which it actively managed (the Dorsett Regency
Hotel in Kuala Lumpur, Malaysia). To make its initial entry into the hotel
management and operating business, from mid-1997 and into early 1998 the Company
had entered into two Hotel Management Agreements (as amended). One was with
Dorsett Hotels and Resorts International Ltd. ("DHI"), a company

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represented to be owned by David Chiu, and one with Far East Consortium
International Ltd. ("FEC"). (Not to be confused with the Company's current
subsidiary "Dorsett") Under these agreements, the Company was granted the right
(directly or through a subsidiary) to be the exclusive manager of three
particular hotels then open, and five others then to be opened, and to do so
pursuant to long-term hotel operating contracts to be entered into with the
owners of the various hotels. Until November 4, 1998, the Company held the
resulting individual Hotel Operating Contracts for three open hotels with a
total of about 1200 rooms, one of which was being actively managed by the
Company.

           FEC and DHI failed to deliver to the Company physical control and
practical management power over two open hotels, and gave notice to the Company
that renovation or construction of five other hotels was deferred and being
reviewed. In November 1998, the Company reached a settlement terminating the
Hotel Management Agreements and all then existing Hotel Operating Contracts, and
exchanged mutual releases of related obligations. The Company received $450,000
cash, was returned 950,000 shares of its Common Stock with the obligation to
reissue 250,000 shares, retained $1,625,000 in payments of management fees and
loans, and FEC agreed to assume any and all future financial obligations with
respect to the employment and consulting agreements the Company entered into for
the services of Mr. Michaelsen, then President of the Company's hotel management
company. Both the employment and consulting agreements were scheduled to expire
in May 2000. Consequently, as of November 4, 1998 the Company had no active
hotel management operating business. Subsequent to the November 1998 settlement
agreement, FEC made allegations regarding the authority and reasonableness of
operating decisions made by Mr. Michaelsen while he was in charge of the
Company's hotel management division which operated the Dorsett Regency Hotel for
FEC. After an independent review of Mr. Michaelsen's performance as the
President of the Company's hotel management division, including an investigation
into the allegations made by FEC, Mr. Michaelsen's employment was officially
terminated in April 1999 and Mr. Michaelsen thereafter brought an arbitration
proceeding against the Company, seeking substantial payments. The proceeding was
dismissed and the matter settled. See "Item 3 - Legal Proceedings." The Company
is considering any remedy it may have against FEC as a result of Mr.
Michaelsen's proceeding. FEC held the one issued share of Preferred Stock in the
Company. The share was cancelled in November 1999 in connection with the
settlement of Hotel Management Agreements. The 250,000 shares of Common Stock
that were to be reissued to FEC in connection with that settlement have not been
delivered, and are being held back pending full and final performance of the
settlement by FEC.

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SAKHALIN PROJECT

           The Company entered into a stock purchase agreement on October 24,
1997, (the "Sakhalin Agreement") with Sakhalin General Trading Investments
Limited ("SGTI") and an assignment agreement with Sovereign Gaming and Leisure
Limited ("Sovereign") on December 12, 1997, each a limited liability company
organized under the laws of Cyprus. Pursuant to the Sakhalin Agreement, the
Company would acquire all of the outstanding shares of SGTI and SGTI's rights
and interest in a project to develop the Sakhalin Project, and SGTI's ownership
interest in 65% of Sakhalin City Center Ltd. ("SCC"). SCC is a closed joint
stock company incorporated under the laws of the Russian Federation that holds
certain rights, including a 101-year ground lease on the proposed site of the
Sakhalan Project, and a guarantee by the city of Yuzhno-Sakhalinsk (the "City")
to issue a gaming license to SCC. In addition, the assignment agreement covers
all rights and interest to or in the Sakhalin Project held by Sovereign,
including certain operating and project management agreements with respect to
the Sakhalin Project (collectively, the "Shares and Rights") which are to be
conveyed to the Company.

           On December 12, 1997, the Company completed the acquisition of 100%
of the shares of SGTI in exchange for 2,000,000 shares of the Company's common
stock. In addition the Company acquired all rights and interests of Sovereign in
exchange for 200,000 shares of common stock issued to the owners of Sovereign.
Two then-former directors of the Company were granted options to purchase
300,000 and 200,000 shares of common stock at an exercise price equal to $6.125
per share in exchange for their services in connection with the acquisition of
the Sakhalin project ("Sakhalin Options"). The Sakhalin Options subsequently
expired without being exercised. The Company advanced $3 million to SGTI.

           Pursuant to the Sakhalin Agreement, SCC will develop, subject to
obtaining financing, a $140 million dollar 450-room hotel/casino complex on a
ten-acre site in the center of the City of Yuzhno-Sakhalinsk with further
development proposed at a nearby ski mountain. The related casino would
initially have 70 tables and 350 slot machines. The City will provide the land
and an existing ski resort under a 101-year lease, at no annual cost. Dorsett
will manage both the hotel resort and the casino for a management fee equal to
3% of turnover, as well as an incentive fee of 10% of gross profits.

           Although, there are currently several small casinos operating on the
island, the City has committed contractually that it will not permit them to
increase their floor areas or extend the range of their operations without the
written approval of SCC. In addition, the Company will also have certain rights
to participate in the development and management of any future casinos within
the jurisdiction of the City of Yuzhno-Sakhalinsk.

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           The Sakhalin Agreement provides that, upon request of the Company,
Sovereign agrees to become project manager during the construction phase of the
Sakhalin project, subject to an agreement on reasonable compensation for such
services, which shall not exceed the lesser of 5% of the construction cost of
the Sakhalin Project or $5,000,000. Subsequent to the Sakhalin Agreement, Mr.
Dallas Dempster, then a paid consultant to Sovereign was recruited to be the
President and CEO of CCA. Accordingly it is the Company's current intent not to
employ Sovereign and possibility to manage the construction phase of the
Sakhalin Project directly.

           On October 2, 1997, the Company entered into an agreement (the
"Development Services Agreement") with Mr. David Chiu for certain development
services by Mr. Chiu to the Company in connection with the Sakhalin Project,
including using his best efforts to procure or secure the necessary debt
financing and guarantees for the complete turnkey construction of the Sakhalin
Project. The Development Service Agreement expired in August 1998 without Mr.
Chiu rendering any services.

           On September 23, 1998, the Company entered into a letter of intent
with JSC Rosneftegazstroy ("RNGS"), which is a large Russian construction
company. The letter of intent was aimed at RNGS guaranteeing the financing of a
turnkey construction contract on the Sakhalin Project and acting as a
subcontractor. The Company and RNGS never contractually acted on the letter of
intent and it subsequently was abandoned.

           The Company is currently party to an agreement (the "SCC
Restructuring Agreement") dated June 25, 1999 contemplating reorganization of
the ownership structure of SCC if its current loan application to Sberbank for
financing of the Sakhalin Project is approved. The proposed restructuring
assumes one hundred percent (100%) ownership of the Sakhalin Project by SCC.
SGTI's equity interest in SCC will be increased to eighty percent (80%), and the
remaining SCC equity will be held by the City and the surrounding regional
authority, the Sakhalin Oblast Administration ("Oblast"). The City and Oblast
will not be involved in management of SCC or the Sakhalin Project.

           Pursuant to the "Arter/Valmet Agreement" entered into in June 1999,
subject to funding of the project the Company is to share management and
ownership of SGTI, and thus SCC, with Arter Group Limited ("Arter") and Valmet
S.A.("Valmet"). The Company is to own 50% of SGTI and effective ownership of 40%
of SCC. Arter and Valmet are to be responsible for negotiating with financial,
governmental, regulatory and other entities and institutions on behalf of the
Company. Arter, whose focus will be entities within the Russian Federation, is
to own 31.25% of SGTI and effective ownership of 25% of SCC, while Valmet, who
will concentrate on those outside the Russian Federation, will own 18.75% and
effective ownership of 15% of

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SCC. Oblast and the City will own the remaining 20% of SCC. SGTI will have a
five-member board of directors. Two directors will be chosen by the Company, two
by Arter and one by Valmet. The Valmet director will act as chair, although such
director will not be allowed to vote in the event of a tie. The Company, Arter
and Valmet will bear their own expenses under the proposed arrangements,
although the Company will be responsible for most payments to third parties.
Until adequate funding is achieved, which is defined as 70% of the total
estimated cost of the Sakhalin Project, the Company has the right to terminate
the proposed arrangements upon sixty days notice. The proposed arrangements will
be effective from the day of acceptance of adequate funding for the project and
following signing of the agreement memorializing the arrangements by all
parties. On June 22, 1999, the Company issued to Valmet S.A. 300,000 shares of
Common Stock and warrants to purchase 150,000 shares of Common Stock as full and
final payment on all amounts due totaling $300,000 for services provided and
expenses incurred by Valmet S.A. up to June 22. The value of the shares and
warrants recorded by the Company was calculated as $250,000. In November 1999
the Company applied to Sberbank for financing of the development of the Sakhalin
Project. Sberbank has not acted on this application. The Company is seeking
other financing sources. Consequently, the Company does not now anticipate
further implementation of the SCC Restructuring Agreement or the Arter/Valmet
Agreement. The Valmet/Arter Agreement is terminable by the Company prior to
Arter and Valmet obtaining the required financing, but has not been formally
terminated.

           When the Company acquired the stock in SGTI, its 65% owned subsidiary
SCC, and Sovereign Gaming and Leisure Ltd., a Cyprus company, already had a 1994
Construction Management Agreement (for Sovereign to manage the construction of
the Sakhalin Project) and a 1994 Operation Management Agreement (for it to
operate the Project). As part of the SGTI transaction, Sovereign assigned both
agreements to the Company, along with Sovereign's other rights relating to the
Project, and received 200,000 shares of the Company's Common Stock. The Common
Stock was valued at $5.25 per share and thus the value attributed to the shares
was $1,050,000. Consequently, the Company is currently the holder of the rights
to manage the development and construction of the Sakhalin Project, and upon its
completion, to operate and manage it. Under the 1994 Construction Management
Agreement, SCC is to pay the Company a project management fee of 5% of the
estimated cost of the Project for its general office expenses and management
supervision, a significant portion of which fee may be paid to the entity that
ultimately constructs the Sakhalin Project. As set forth above, it is the
current intention of the Company not to retain Sovereign as project manager,

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since Mr. Dallas Dempster was hired by the Company. He had been a paid
consultant to Sovereign. Mr. Dempster has informed the Company that he had no
other material interest in Sovereign.

           The Sakhalin Project (other than its financing) has been managed by
SCC in Sakhalin City, primarily by Mr. Valery Mozolevsky, who has had long-term
employment with SCC and is experienced in the Project. If the Sakhalin Project
substantially proceeds, SCC (and the Company) may have to substantially expand
relevant management and staff, and obtain consultants and contractors for
project design, construction and management. Mr. Dallas Dempster was, and still
is, one of two Executive Directors of SCC. Mr. Valery Mozolevsky was, and still
is, the other Executive Director.

           The casino and hotel project in Sakhalin requires the Company to get
substantial financing to progress further. The Company has continued to explore
various alternatives of financing, including discussions with numerous major
Russian companies, foreign and domestic financial and investment firms and Asian
contractors. To date, no definitive agreements have been reached. In June 1999
the Company entered into the SCC Restructuring Agreement and the Arter/Valmet
Agreement described above. In November 1999, the Company submitted a loan
application for financing of the Sakhalin Project to Sberbank - Savings Bank of
the Russian Federation. Construction and operation of the Sakhalin Project might
require substantial expertise and company infrastructure, which the Company does
not currently have and which it does not currently have financial resources to
acquire.

INSURANCE

           The Company currently maintains comprehensive general liability
insurance with coverage of $1,000,000 per occurrence and umbrella insurance of
$2,000,000 per occurrence. There can be no assurance that the Company's coverage
will be adequate to protect the Company from all potential losses.

EMPLOYEES

           As of April 25, 2001 the Company had 308 employees, including its 3
executive officers.

SEGMENTS/FOREIGN OPERATIONS

           See Note 12 to the Company's consolidated financial statements.

ITEM 2. PROPERTIES

           The Company maintains its principal executive offices at 9130 S.
Dadeland Boulevard, Suite 1602, Miami, Florida 33156. This office space occupies
approximately 1000 square feet, and is subject to a 3-year lease, commenced
August 1999, at a monthly rental of $2,000.

           The Company's Sakhalin Project is managed from a 450 square foot
leased office in Sakhalin City pursuant to one-year renewable leases. The
monthly rental for the office is approximately $1,000.

                                       13

<PAGE>

           The Company believes its existing facilities are adequate to meet
current needs.

ITEM 3. LEGAL PROCEEDINGS

           An arbitration proceeding before the American Arbitration Association
in New York City was initiated by Fox Haven Capital Corporation and United
Resources Partners (collectively "Fox Haven") in August of 1999. Fox Haven
sought $250,000 from the Company as a liquidated damages fee, based on a
provision in a loan commitment letter between the parties providing that the
lender (Fox Haven) would be entitled to that amount if the borrower (the
Company) "fails or refuses to comply with the terms and conditions of this
commitment." Fox Haven alleged that the Company breached the letter agreement by
failing to provide adequate collateral for the proposed loan according to the
terms of the letter agreement. The Company asserted counterclaims against Fox
Haven in the amount of $25,000, representing the return of a $25,000 "Commitment
Fee" paid to Fox Haven, along with the legal fees and related costs incurred in
defending the arbitration proceeding. On August 22, 2000, the arbitrator
rendered an award in favor of the Company which denied all of Fox Haven's
claims, and awarded the Company the total amount of $106,289 representing a full
refund of the $25,000 paid to Fox Haven, plus the Company's attorney's fees and
expenses, and its costs and fees paid to the American Arbitration Association.
This arbitration award was confirmed by the New York Supreme Court, and a
judgment in the amount of $111,092 was subsequently entered by that Court in
favor of the Company and against Fox Haven on February 2, 2001. There is no
assurance that any of the amounts of the judgment are collectible.

           The Company and Dorsett Hotels & Resorts, Inc. ("Dorsett"), a
subsidiary of the Company were named defendants, in connection with an
arbitration filed in April of 1999 by Kai Michaelsen ("Michaelsen") with the
American Arbitration Association in New York City. Michaelsen alleged in his
arbitration claim that his employment in Malaysia was improperly terminated
without cause by Dorsett Hotels & Resorts (M) Sdn Bhd ("Dorsett-Malaysia"), with
whom he had an employment agreement. Michaelsen sought damages of approximately
$240,000, plus unspecified additional expenses. By decision and judgment dated
March 31, 2000, the Court granted the petition of the Company and Dorsett-USA,
permanently staying the arbitration initiated by Michaelsen, and prohibiting
Michaelsen from asserting in arbitration any of the claims he alleged against
the Company or Dorsett. However, Michaelsen has claimed that Michaelsen's
company, Zamora Investments Pte Ltd. ("Zamora"), had a separate contract with
Dorsett, which required Dorsett to pay Zamora $80,000 for Michaelsen's services.
That claim was asserted by

                                       14

<PAGE>

Zamora in a new arbitration demand seeking $239,971 (which also included a claim
by Michaelsen against the Malaysian subsidiary of Dorsett). In September of
2000, the Company settled this matter with Michaelsen and Zamora. In exchange
for a complete release of the Company and all of its subsidiaries, affiliated
corporations, agents, officers, etc., the Company agreed to pay Michaelsen
$40,000, payable over a twelve-month period in equal installments starting on
September 30, 2000.

           An action was brought in the United States District Court for the
District of Oregon by Maritime Services Corp. ("MSC") in September of 2000. MSC
seeks damages in the amount of $200,250 plus interest, claiming that the Company
was obligated to buy back, for this amount, the Company's own shares which had
been issued to MSC in or about September of 1998 as partial payment for
construction work on the Suriname casino performed for the Company by MSC. The
Company has denied all material allegations of the complaint, and believes that
the Company has no liability for MSC's claims, since neither the written
agreement between the parties nor any other evidence of which the Company is
currently aware supports MSC's claim that the Company had any obligation to buy
back its shares from MSC. Discovery is now proceeding in this action.

     In September 1998, Parbhoe had loaned CCA approximately $600,000 which CCA
then loaned to SLC. In late 2000 Parbhoe brought an action against SLC in
Suriname courts claiming that because of direct repayments by SLC to Parbhoe,
the debt was functionally and legally assumed by SLC. Parbhoe's action against
SLC sought to collect the loan from SLC. SLC denied any assumption or liability
to Parbhoe. The case is proceeding on this and other aspects. The Company is
currently unable to evaluate the possible outcome. The Company believes that SLC
did not assume the loan, that the Company is not in default under the loan, and
that repayment of the loan by SLC or the Company is subject to the cash payment
priorities of the Suriname Casino Agreement and the loan agreement governing the
loan.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS

           The last annual meeting of holders of Common Stock of the Company was
held on November 22, 1999 for the purpose of authorizing a 1 for 10 reverse
split of the Company's Common Stock, subject to a determination of the Board of
Directors (that was required to be made prior to March 28, 2000) that the
reverse split was necessary to qualify the Company's Common Stock for continued
listing on the NASDAQ Small Cap Market. The proposal to authorize a 1 for 10
reverse split of the Company's Common Stock was approved by the holders of more
than 75% of the Company's issued and outstanding shares of Common Stock. The
Board, however, was unable to make the

                                       15

<PAGE>

required further determination prior to March 28, 2000, and consequently, the
reverse split did not occur. Proxies for the meeting were solicited pursuant to
Regulation 14A of the Securities Exchange Act of 1934 and there was no
solicitation in opposition. No directors were nominated or elected.

                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

           Price Range of Common Stock. Between June 6, 1997 (the date the
Common Stock was first listed, and November 16, 1999 the Common Stock was quoted
on the Nasdaq SmallCap market under the symbol "RIPE" or "RIPEE". Prior to June
6, 1997, there was no market for the Company's Common Stock. Since November 16,
1999 the Company's Common Stock has been traded on the OTC Bulletin Board or
Pink Sheets of the National Quotation Service.

           The following sets forth, for the quarterly periods indicated, high
and low per share bid information for the Common Stock reported by Nasdaq on the
Nasdaq SmallCap market:

  FOR THE QUARTERLY PERIODS BEGINNING JULY 1, 1997 AND ENDING NOVEMBER 16, 1999

                                                              HIGH       LOW
                                                              ----      -----

July 1-Sept. 30, 1997....................................... $11.00      $5.50
Oct. 1-Dec. 31, 1997........................................ 11.625      5.375
Jan. 1-March 31, 1998....................................... 8.8125       4.50
April 1-June 30, 1998.......................................   8.00       4.00
July 1-Sept. 30, 1998.......................................  4.125       1.25
Oct. 1-Dec. 31, 1998........................................ 1.9375    0.28125
Jan. 1-March 31, 1999....................................... 1.1875     0.4375
April 1-June 30, 1999.......................................   0.75      1.375
July 1, 1998-Sept. 30, 1999................................. 1.0938      0.375
Oct. 1 - Nov. 16, 1999......................................  0.625    0.28125

     The high and low per share closing price information for the Common Stock
reported on OTC Bulletin Board or Pink Sheets (i) during the period commencing
November 17, 1999 and ending December 31, 1999 was $.37 (High) and $.12 (Low),
(ii) during the period commencing January 1, 2000 and ending March 31, 2000 was
$.40 (High) and $.13 (Low), (iii) during the period commencing April 1, 2000 and
ending June 30, 2000 was $.35 (High) and $.13 (Low) (iv) during the period
commencing July 1, 2000 and ending September 30,2000 was $75 (High) and
$.06(Low); (v) during the period commencing September 30, 2000 and ending
December 31, 2000 was $.06 (High) and $.01 (Low); and during the period
commencing January 1, 2001 and ending March 31, 2001 was $.13 (High) and $.04
(Low).

     (The above prices reflect inter-dealer prices, without retail mark-up,
markdown or commission, and may not represent actual transactions. Beginning in
1998 the Small Cap market began quoting on the decimal system.)

                                       16

<PAGE>

     Approximate Number of Security Holders. As of June 30, 2000 the Company had
approximately 650 registered holders of record of its Common Stock. As of
February 28, 2001 it had 650 registered holders.

     Dividend Information. The Company has not paid any cash dividends to date
and does not anticipate or contemplate paying dividends in the foreseeable
future. It is the present intention of management to utilize all available funds
and profits, if any, in the development of the Company's business.

     Sale of Unregistered Securities. Information required by Item 701 of
Regulation S-K (as to unregistered equity securities sold during fiscal 1999),
was previously reported in the Company's Quarterly Reports on Form 10-Q for the
quarterly periods ended September 30, 1999, December 31, 1999 and March 31,
2000.

      On October 24, 2000, the Company issued 480,000 shares of Common Stock to
Star as payment for $120,000 which Star was entitled to receive as of June 30,
2000 under the terms of the Star Casino Consulting Agreement. The market price
of a share of the Company's Common Stock in June 2000 when the parties agreed to
the issuance of the shares was $.15.

     In January 2001, a private investor purchased 1,333,334 shares of Common
Stock at $.075 per share. The proceeds were used for general working capital.

     In completing the above transactions, the Company relied upon Section 4(2)
of the Securities Act of 1933, as amended with respect to such transactions.

ITEM 6.  SELECTED FINANCIAL DATA

     The selected financial data set forth below have been derived from the
audited consolidated financial statements of the Company, certain of which are
included elsewhere in this Report, and should be read in conjunction with those
consolidated financial statements (including the notes thereto) and with
"Managements's Discussion and Analysis of Financial Condition and Results of
Operations" also included elsewhere herein.

                                       17

<PAGE>

                          STATEMENT OF OPERATIONS DATA

<TABLE>
<CAPTION>
                                                            YEAR ENDED          YEAR ENDED          YEAR ENDED
                                                          JUNE 30, 1998       JUNE 30, 1999       JUNE 30, 2000
                                                          -------------       -------------       -------------
<S>                                                       <C>                   <C>                  <C>
REVENUES.................................................         --            $5,534,249           6,981,758
OPERATING EXPENSE
  MARKETING AND PROMOTION................................         --               360,572             333,500
  GENERAL AND ADMINISTRATIVE EXPENSE.....................    3,397,974           7,566,040           6,415,452
  COMPENSATION CHARGES IN CONNECTION WITH
  ISSUANCE OF STOCK OPTIONS AND WARRANTS.................      921,569             783,000              10,000
                                                          ------------        ------------        ------------
INCOME (LOSS) FROM OPERATIONS............................   (4,319,543)         (3,175,363)            222,806
OTHER INCOME (EXPENSES):.................................
  WRITE-DOWN OF ASSETS...................................         --              (609,822)        (13,857,192)
  INTEREST INCOME (EXPENSE), NET.........................      213,840            (433,991)           (417,972)
  FOREIGN INCOME TAXES...................................         --                  --              (552,625)
                                                          ------------        ------------        ------------
LOSS FOR CONTINUING OPERATIONS BEFORE
MINORITY INTEREST........................................   (4,105,703)         (4,219,187)        (14,604,983)
MINORITY INTEREST........................................         --               (89,278)           (582,204)
                                                          ------------        ------------         -----------
LOSS FROM CONTINUING OPERATIONS..........................   (4,105,703)         (4,308,465)        (15,187,187)
                                                          ------------        ------------        ------------
GAIN (LOSS) FROM DISCONTINUED OPERATIONS
  FOOD PRESERVATION......................................   (2,878,863)           (425,175)            (64,500)
  HOTEL MANAGEMENT.......................................   (5,558,506)            141,550             (87,623)
                                                          ------------        ------------        ------------
                                                            (8,437,369)           (283,625)           (152,123)
                                                          ------------        ------------        ------------
NET LOSS.................................................  (12,543,072)         (4,592,090)        (15,339,310)
                                                          ------------        ------------        ------------
LOSS PER SHARE OF COMMON STOCK:
   BASIC AND DILUTED:
      LOSS FROM CONTINUING OPERATIONS....................         (.45)               (.34)             (1.01)
      LOSS FROM DISCONTINUED OPERATIONS..................         (.92)               (.02)              (.01)
                                                          ------------        ------------        -----------
NET LOSS PER SHARE.......................................        (1.37)               (.36)             (1.02)
                                                          ------------        ------------        -----------
WEIGHTED AVERAGE NUMBER OF COMMONS SHARES
   OUTSTANDING...........................................    9,175,536          12,607,037         15,234,405
                                                          ------------        ------------        -----------
</TABLE>


ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS

         The Company has a limited operating history upon which an evaluation of
its performance and prospects can be made. During the period from March 6, 1996
to March 31, 1998, the Company's activities were primarily limited to
organizational efforts and raising public and private capital to fund its
organizational expenses and the development and initial implementation of its
business plan for its food technology business. Commencing in August 1997, the
Company's activities also included organizational and fund raising efforts
relating to its entrance into the business of managing and owning hotels and
casinos. From March 6, 1996 to June 30, 1997 the Company had no revenues. During
the year ended June 30, 1998 the Company had limited revenues of $649,620
primarily attributable to the January 1998 commencement of its hotel management
operations which were later discontinued.

                                       18

<PAGE>
         On November 4, 1998, the Company reached a settlement agreement
terminating its hotel operating contracts with FEC and DHI and subsequently in
April 1999, dismissed all of its hotel management employees. Consequently, as of
April 1999 the Company had no active hotel management operating business.
Additionally, in November 1999 the Company's Board of Directors determined that
it would discontinue all activities and efforts with respect to the Company's
food preservation business since the Company could not effectively develop a
sufficient market with the Company's food preservation technology. Accordingly,
for the years ended June 30, 2000, 1999 and 1998, the Company has reported all
activities related to its food division and hotel management operations
separately as gains or losses from discontinued operations. Consequently, the
activities reflected in the statements of operations as revenues and expenses
from continuing operations represent those revenues and expenses which are
directly related or apportioned to the Company's casino operations.

RESULTS OF OPERATIONS FOR THE YEAR ENDED JUNE 30, 2000 AS COMPARED WITH THE
YEAR ENDED JUNE 30, 1999

         Loss from Continued Operations. The Company incurred a loss from its
continuing operations of $15,187,187 or $1.01 per share during the year ended
June 30, 2000 as compared to a loss of $4,308,465 or $.34 per share for the year
ended June 30, 1999. The increase in loss during the current year resulted
primarily from the write-off of assets totaling $13,857,000 including goodwill
and construction in progress of approximately $13,552,000 related to the
Sakhalin project. This was partially offset by more profitable operations of the
Company's Suriname casino and reductions in general corporate overhead expenses.

         Revenues. During the year ended June 30, 2000, the Company generated
revenues of $6,981,758 from its Suriname casino. For the year ended June 30,
1999, the Company generated revenues of $5,534,249 attributable to its casino
operations in Suriname and Budapest which generated $4,864,989 and $669,260,
respectively. The Company's Budapest and Suriname casinos began operations in
September and October 1998, respectively. The Company in December 1998
transferred its majority interest in the Budapest casino after which no
additional revenues or income were recorded by the Company with respect to such
casino. The casino was later closed in October 1999 when the casino license
expired.

         Marketing and Promotion. During the years ended June 30, 2000 and 1999,
the Company incurred $333,500 and $360,572, respectively, in marketing and
promotional expenses in connection with its casino operations. The Company's
sales and marketing expenses during the 1999 year included $30,659 related to
the Budapest casino. The Company had no such expenses related to the Budapest
casino for the year ended June 30, 2000.

         General and Administrative Expenses. General and administrative
expenses were $6,415,452 for the year ended June 30, 2000 as compared to
$7,566,040 for the year ended June 30, 1999. Included in the current year's
expenses were $3,659,145 of operating expenses associated with the Company's
Suriname casino

                                       19
<PAGE>

and $2,756,307 for general corporate overhead including salaries, consulting,
professional fees and travel. Included in the 1999 expenses were $3,758,233 of
operating expenses associated with the Company's casino operations and
$3,807,807 for general corporate overhead. The $1,051,500 or 28% reduction in
general corporate overhead during the current year was primarily attributable to
reductions in consulting, travel, legal and professional, insurance and
telephone expenses.

         Compensation Charges. During the year ended June 30, 1999, the Company
recorded non-cash compensation charges of $783,000 attributable to (i) the
reduction in exercise price of certain stock options and warrants previously
issued non-employee directors and (ii) the issuance of stock options to purchase
500,000 shares of Common Stock. For the year ended June 30, 2000, non-cash
compensation charges were $10,000 related to the reduction in exercise price of
certain stock options and warrants previously issued to non-employee directors
to purchase 750,000 shares of Common Stock.

         Write-down of Assets. Since 1997, the Company has entered into numerous
discussions and several agreements in attempts to raise capital to finance the
Sakhalin Project without success. During the year ended June 30, 2000, due to
the Company's failure to proceed and based on its evaluation of assets for
financial impairment as required by SFAS No. 121, certain capitalized
expenditures and goodwill, totaling approximately $13,552,000 have been written
down. Additionally during 2000, as a result of the unstable political conditions
in the Palestinian West Bank of the Middle East, the Company wrote off its
investment of $305,000 for a casino operating management agreement entered into
for a casino project to be constructed in Ramallah. During the 1999 year, the
Hungarian Gaming Board made a decision to reduce the number of casino licenses
in Budapest to three. After the Company's submission of an application for a new
license was unsuccessful, the casino was closed in October 1999 when its then
current license expired. At June 30, 1999, the Company wrote off the balance of
its outstanding loans to Roulette Kft. totaling approximately $610,000.

           Interest Expense. For the year ended June 30, 2000, interest expense
amounted to $423,630 compared to $445,105 for the year ended June 30, 1999. The
current year's expense included approximately $245,000 attributable to interest
accrued on loans made to the Suriname casino joint venture by the Company's
joint venture partner and $179,000 of expense on loans made to the Company for
general working capital purposes ($145,000 related to the amortization of debt
discount recorded for the value of Common Stock warrants issued to debenture
holders). The prior year's expense included approximately $379,000 attributable
to interest accrued on loans made to the Suriname casino joint venture by the
Company's joint venture partner and $66,000 of interest on loans made to the
Company for general working capital purposes.

                                       20

<PAGE>

         Minority Interest. The Company's Suriname casino joint venture began
operations during the 1999 fiscal year. The Company controls the management of
the joint venture company and has a 50% equity interest. The casino's operations
are consolidated with those of the Company and a minority interest has been
recorded for the current and prior fiscal year of $582,204 and $89,278,
respectively.

         Loss from Discontinued Operations of Food Division. In November 1999
the Company's Board of Directors determined that it would discontinue all
activities and efforts with respect to the Company's food preservation business
since the Company could not effectively develop a sufficient market with the
Company's food preservation technology. During the years ended June 30, 2000 and
1999, the Company had no revenues from its food division operations while
expenses related to efforts to sell or joint venture the food division were
$64,500 and $425,175, respectively.

         Gain (Loss) from Discontinued Operations of Hotel Management. During
the year ended June 30, 1999, the Company had revenues of $363,301 from its
hotel management contracts which commenced January 1998 and were terminated on
November 4, 1998. Related marketing and administrative expenses during the 1999
period were $221,751. During the current year ended June 30, 2000, the Company
had no revenues while incurring final expenses of $87,623 during the period
related to legal fees and settlement arrangements with a former officer of the
Company's hotel management operation.

         Income taxes. The corporate income tax in Suriname assessed on casino
operations is 50% of net taxable income. The Company has recorded income taxes
related to the Suriname casino for the year ended June 30, 2000 in the amount of
$552,625 which includes a $192,884 deferred tax liability. No taxes were
recorded in 1999.

RESULTS OF OPERATIONS FOR THE YEAR ENDED JUNE 30, 1999 AS COMPARED WITH THE
YEAR ENDED JUNE 30, 1998

         Loss from Continued Operations. The Company incurred a loss from its
continuing operations of $4,308,465 or $.34 per share during the year ended June
30, 1999 as compared to a loss of $4,105,703 or $.45 per share for the year
ended June 30, 1998. The increase in loss during the 1999 year resulted from
the write-off of loans totaling approximately $610,000 made to the Budapest
casino which was closed in October 1999. This was partially offset by profitable
operations of the Company's Suriname casino which opened in October 1998 and
reductions in general corporate overhead expenses.

         Revenues. During the year ended June 30, 1999, the Company generated
revenues of $5,534,249 attributable to its casino operations in Suriname and
Budapest which generated $4,864,989 and $669,260, respectively. For the year
ended June 30, 1998, the Company had no revenues attributable to its casino
operations. The Company's Budapest and Suriname casinos began operations in
September and October 1998, respectively.

                                       21
<PAGE>

         Marketing and Promotion. During the year ended June 30, 1999,
the Company incurred $360,572 in marketing and promotional expenses in
connection with its casino operations. The Company's Budapest and Suriname
casinos began operations in September and October 1998, respectively.
Accordingly, the Company had no such expenses for the year ended June 30, 1998.

         General and Administrative Expenses. General and administrative
expenses were $7,566,040 for the year ended June 30, 1999 as compared to
$3,397,974 for the year ended June 30, 1998. Included in the 1999 year's
expenses were $3,758,233 of operating expenses associated with the Company's
Suriname and Budapest casinos opened or acquired during the 1999 year and
$3,807,807 for general corporate overhead including salaries, consulting,
professional fees and travel. The 1998 year expenses were attributable to
general corporate overhead after reclassification of approximately $2.8 million
related to expenses directly related or apportioned to the discontinued food and
hotel management operations.

         Compensation Charges. During the year ended June 30, 1999, the Company
recorded non-cash compensation charges of $783,000 attributable to the (i)
reduction in exercise price of certain stock options and warrants previously
issued to officers, directors and employees and (ii) the issuance of stock
options to purchase 500,000 shares of Common Stock. For the year ended June 30,
1998, non-cash compensation charges were $921,569 related to the issuance of
stock options to purchase 390,000 shares of Common Stock and warrants to
purchase 100,000 shares of Common Stock.

         Write-down of Assets. During 1999, the Hungarian Gaming Board made a
decision to reduce the number of casino licenses in Budapest to three. After the
Company's submission of an application for a new license was unsuccessful, the
casino was closed in October 1999 when its then current license expired. At June
30, 1999, the Company wrote off the balance of its outstanding loans to Roulette
Kft. totaling approximately $610,000.

         Interest Income. For the year ended June 30, 1999, interest income was
$11,114, compared to $288,518 for the year ended June 30, 1998. This decrease in
the 1999 year was due to additional cash being available for investment
during the 1998 year from the proceeds of the Company's public and private
offerings.

          Interest Expense. For the year ended June 30, 1999, interest expense
amounted to $445,105 compared to $74,678 for the year ended June 30, 1998. The
1999 year's expense was primarily attributable to interest accrued on loans made
to the Suriname casino joint venture by the Company's joint venture partner. The
1998 years expense related to amortization of debt discount recorded for the
value of Common Stock shares issued to convertible debentureholders.

         Minority Interest. The Company's Suriname casino joint venture began
operations during the 1999 fiscal year. The Company controls the management
of the joint venture company and

                                       22

<PAGE>

has a 50% equity interest. The casino's operations are consolidated with those
of the Company and after combining the casino's current year operating results
with the casino's 1998 year operating loss attributable to pre-opening
expenses, a minority interest has been recorded for the 1999 fiscal year of
$89,278.

         Loss from Discontinued Operations of Food Division. In November 1999
the Company's Board of Directors determined that it would discontinue all
activities and efforts with respect to the Company's food preservation business
since the Company could not effectively develop a sufficient market with the
Company's food preservation technology. During the year ended June 30, 1999, the
Company had no revenues from its food division operations while expenses related
to efforts to sell or joint venture the food division were $425,175. The 1998
year's period included nominal revenues of $9,879 and marketing and
administrative expenses of $2,888,742, including a $1.62 million provision for
bad debt on loans made for inventory purchases and other obligations related to
its food technology product.

         Gain (Loss) from Discontinued Operations of Hotel Management. During
the year ended June 30, 1999, the Company had revenues of $363,301 from its
hotel management contracts which commenced January 1998 and were terminated on
November 4, 1998. Related marketing and administrative expenses during the 1999
period were $221,751. The 1998 years period included revenues of $639,741 and
marketing, administrative and other expenses of $6,198,247, including a $4.2
million write-down in the value of hotel management contracts. Subsequent to
June 30, 1998, the Company entered into a settlement agreement with FEC, Dorsett
and Mr. David Chiu in which both parties withdrew from and released all parties
to the Hotel Management Agreements. At June 30, 1998, the carrying value of the
related assets was reduced to the fair value based on the terms of the
settlement agreement, and accordingly, the Company recorded a charge of
$4,200,000 to write down the carrying amount of the management contract
agreements, trade names, and deposit on assets. Expenses during the 1998 period
also included amortization of management contracts, direct expenses of operating
the hotel management division and indirect expenses related to general corporate
overhead apportioned to the division.

LIQUIDITY AND CAPITAL RESOURCES

     From March 1996 through February 1998, the Company raised capital necessary
for its business development through debt and equity private placements. In 1996
it had a private offering of Common Stock and convertible debentures in which it
raised about $4.9 million. In June 1997, while the Company was developing its
food preservation technology business, the Company completed an initial
underwritten public offering (the "Initial Public Offering") in which it
received net proceeds of about $10,306,000 from the sale of 2,530,000 shares of
its Common Stock at a per share price of $5.00. At that time the Common Stock
began being quoted on the Nasdaq SmallCap market. In November 1997 through

                                       23

<PAGE>

February 1998 the Company began and completed another private offering of Common
Stock (the "1997 Private Offering") in which it received net proceeds of about
$8.9 million from the sale of 2,044,763 shares of its Common Stock at $5.14 per
share. The 1997 Private Offering was largely intended by the Company to raise
cash for its initial expenditures for its new hotel and casino businesses. The
Company's stockholders at a meeting in December 1997 approved entry into those
businesses. As of June 30, 1998, the Company had spent all proceeds of the 1997
Private Offering directly for those initial expenditures.

     From July 1998 to August 1999 the Company actively sought to raise cash
through loans or sales of its securities in order to fund its past due
obligations, current operations and completion of the Suriname casino, which
opened in October 1998 and occupied permanent quarters in March 1999. Because of
the Company's dependance on outside financing, recurring losses and significant
outflows of cash, in the report on the Company's financial statements for the
year ended June 30, 1998, it was noted that there was substantial doubt about
the Company's ability to continue as a going concern. The Company was successful
in raising sufficient funds from several private investors through the sale of
its securities, enabling it to fund its ongoing operational costs during that
period and to complete the construction of the Suriname casino. The Company has
continued to finance itself in part by further issuances of securities, and to
seek loans to finance itself and the Sakhalin Project. In addition, the Company
settled various accounts payable by issuance of its securities. During the
fiscal year ended June 30, 1999 the Company received a total of $1,676,600 from
the sale of 2,053,200 shares of Common Stock to private investors together with
warrants to purchase 1,280,334 shares at $1.00 per share. The receipts were used
for general working capital, to pay down existing liabilities and towards the
construction of the Suriname casino. During the fiscal year ended June 30, 2000
the Company received a total of $125,000 from the sale of 166,667 shares of
Common Stock to private investors, together with warrants to purchase 83,334
shares at $1.00 per share. The receipts were used for general working capital.

     In October 1999, the Company entered into a convertible loan agreement with
a private investor and received $350,000 which it used to fund current and past
due obligations. On December 22, 1999 the lender converted $185,000 of the loan
amount together with interest to common stock of the Company. The balance of
the loan of $165,000 together with 15% interest was paid on April 30, 2000.

     On November 16, 1999 the Company's Common Stock was delisted from the
Nasdaq SmallCap Market. The Company's Common Stock is now traded in the Pink
Sheets of the National Quotation Bureau. The Company believes that the delisting
was a result of its inability to timely file its Form 10-K, its failure to
provide a definitive plan to obtain and maintain filing compliance and the
decline of

                                       24

<PAGE>

its stock price below the price required for continued listing. These factors
impaired the Company's subsequent ability to issue its stock, options and
warrants at prices it deemed favorable. Since delisting the Company's stock
price has generally declined further.

     On January 18, 2000, Mr. James V. Stanton, Vice-Chairman of the Company,
provided a $300,000 loan to the Company with interest at the bank prime rate.
The loan was due in full on December 31, 2000. As part of the consideration for
providing the loan Mr. Stanton was granted warrants to purchase 500,000 shares
of the Company's Common Stock at an exercise price of $.25 per share. The loan
maturity was extended indefinitely and the Company is paying interest on a
current basis and principal as funds are available. At April 25, 2001 the loan
balance was $115,000.

     On March 1, 2000, Galileo Capital LLC ("Galileo") provided a $150,000
convertible loan to the Company with interest at 10% per annum. The loan was due
on October 31, 2000. As part of the consideration for providing the loan Galileo
was granted warrants to purchase 150,000 shares of the Company's Common Stock at
an exercise price of $.25 per share. Further, the loan was convertible into
shares of the Company's Common Stock, at $.25 per share at any time during the
term of the loan, as to all or a portion of the then outstanding principal and
interest. If all or a portion of the loan is converted the Company would issue
additional warrants to purchase one (1) share of its Common Stock for each four
(4) shares issued to Galileo under its conversion option. The warrants would be
exercisable at $.25 per share. In February, 2001 the loan and interest was paid
in full.

     In January 2001 a private investor purchased 1,333,334 shares of Common
Stock at $.075 per share. The proceeds were used for general working capital.

     Since August, 1999 CCA's almost sole recurring source of cash, exclusive of
the loans and securities sales described above, was the cash payments from SLC
which is the joint venture entity that owns the Suriname casino. Parbhoe owns
the hotel where the casino has its leased premises, and is the Company's 50%
joint venturer in SLC. Dorsett, the Company's 100% owned Delaware subsidiary,
manages SLC and the casino. Cash payments from SLC to CCA, Parbhoe or their
affiliates are made by SLC, under the management control of Dorsett, according
to a cash allocation priority established under the Suriname Casino Agreement.
That priority is roughly described below. From the monthly cash profits
generated by the casino payments were initially made for certain construction
loans from Parbhoe and for the balance of costs of the casino construction, all
of which, were fully paid by August 1999. After August 1999 payments of net cash
flow were made to Dorsett for the accrued management fees owed, and thereafter
for interest and some principal or both

                                       25

<PAGE>

Parbhoe's loans and the Company's loans, in roughly the respective applicable
proportions of such total loans. After all such total loans are repaid, cash is
to be distributed according to the 50%- 50% ownership interests of the joint
venturers. There have been no such distributions and none are expected until the
substantial amounts of loans due to the joint venturers are repaid. Loans to SLC
(and interest thereon) from Parbhoe and the Company at June 30, 2000 were
approximately $516,000 and $3,040,000 respectively. Since January 2000 about 15%
of the distributable cash flow of the casino has been paid to Parbhoe or set
aside for payment and 85% to the Company and Dorsett. Dorsett paid its receipts
to CCA. Thus, the total paid to the Company was approximately $300,000 per month
from September 1999 through May 2000. The Company believes that payments were
and are in accordance with the Suriname Casino Agreement, Parbhoe loan agreement
and applicable law.

     Suriname has price controls on rents. The Company has been advised that the
rent for the casino required by the lease exceeds the lawful rent by
approximately $14,000 per month. SLC has sued Parbhoe in Suriname to recover
approximately $314,000 in past overpayments. The Company is unable to predict
the outcome of that suit, but has been advised by counsel that SLC's position
has substantial merit. Any cash recovery or reduction in rent would be subject
to the cash payment priorities described above.

    Beginning in June 2000 the casino's revenues were adversely affected by
increased local competition from other casinos, by a declining local economy and
by worsening conversion value of the local currency. During the nine months from
June 2000 to February 2001 revenues had declined by approximately 25% to 30%
from the same period in the prior year, and for this and other reasons payments
to the Company had declined to about $150,000 per month.

     In June 2000 the Suriname government asserted that an exemption from its
50% tax on local corporate income provided for by the Investment Tax Act did not
apply to casino income. As a consequence it assessed what the Company believed
were arbitrarily determined amounts of tax. In June 2000 the Company paid an
initial assessment of $200,000 against past tax and penalties for calendar years
ended 1998 and 1999 and subsequently paid an additional $110,000 as tax for
calendar year 2000. In April 2001, SLC submitted tax reports to the Suriname
government for the calendar years ended 1998, 1999 and 2000. The aggregate
amount of tax expense calculated was $375,000 payable for periods from inception
through June 30, 2000 which has been provided for in the current years financial
statements.

     The Company's Suriname legal counsel has advised the Company that SLC or
the Company are entitled to a concession refund of import duty on SLC's imported
operating assets. The Company paid all import duties associated with the casino
construction in full subsequent to the fiscal year ended June 30, 2000. Suriname
tax

                                       26

<PAGE>

authorities have been petitioned for the concession refund of about $67,000 that
the Company believes it or SLC is entitled to. However, the Company is unable to
predict when or if it will actually receive the refund. The government is also
contemplating imposing a value added tax on slot machine revenues.

         The Sakhalin Project is currently generating cash losses for the
Company. Any future development of that project will require substantial
financing. Despite numerous discussions and several agreements the Company has
not yet been able to obtain the necessary financing. The Company is currently
able to provide only what it believes is the minimum cash funding required to
maintain the prospects of the project. The other shareholders in SCC are not
required either to fund SCC's losses, the continued prospects of the project, or
the development of the project. On June 25, 1999 the Company entered into the
Arter/Valmet Agreement and in November, 1999 applied to Sberbank for financing
to develop the project. Sberbank has not acted on the application and the
Company is seeking other sources of financing. If financing is not obtained, the
Company might be forced to abandon the project and to sell its rights for
whatever price or other recovery that could be obtained. The Company is not able
to quantify what price or recoveries might be obtained. If the Company obtains
financing and proceeds with the Sakhalin Project it will have to plan and
establish an organization and infrastructure that is not currently in place, and
will have to hire other specialists.

         On June 30, 2000 the Company had $216,000 in cash or cash equivalents
on hand. At March 31, 2001 the figure was approximately $604,000. The Company
believes that the distribution of profits from the Suriname casino will provide
adequate cash flow to maintain the Company's current operations for the next 12
months.

SUBSEQUENT EVENTS

         In October 2000, Star Casinos Limited received 480,000 shares of the
Company's Common Stock as payment in full on $120,000 of accrued consulting for
services provided by David Hartley, President of the Casino Division. The market
price of the shares at the time of acceptance was $.15 per share.

         On October 18, 2000, the Company's Board of Directors approved a
reduction of the exercise price of all stock options and warrants previously
issued to the then existing officers and directors of the Company. Consequently,
2,730,000 stock options and 650,000 warrants having exercise prices of $.25 per
share were reduced to an exercise price of $.10. The five day average of the
market value share price on October 18, 2000 was $.06 per share. Additionally,
Miles Greenberg, Chief Financial Officer of the Company, was granted by the
Board on the same date 500,000 stock options exercisable at $.10 per share.

         In January 2001, the Richard Devries Professional Corporation purchased
1,333,334 shares of the Company's Common Stock at a purchase price of $.075 per
share. The proceeds were used for general working capital purposes.

                                       27

<PAGE>

         As noted above, in February, 2001, the Company entered into a
nonbinding letter of intent to acquire AGC, a Canadian corporation which
conducts an on-line lottery in Vietnam. The transaction is subject to the
fulfillment of numerous conditions, including the negotiation and execution of
definitive documents, due diligence by both companies, the Company's raising at
least $3 million to provide necessary funding, settlement of various issues with
creditors and noteholders of AGC, and corporate and regulatory approvals.

RECENT ACCOUNTING STANDARDS AND PRONOUNCEMENTS

         In June 1998, the Financial Accounting Standards Board issued SFAS No.
133, Accounting for Derivative Instruments and Hedging Activities. SFAS No. 133
requires companies to recognize all derivatives contracts as either assets or
liabilities in the balance sheet and to measure them at fair value. If certain
conditions are met, a derivative may be specifically designated as a hedge, the
objective of which is to match the timing of gain or loss recognition on the
hedging derivative with the recognition of (i) the changes in the fair value of
the hedged asset or liability that are attributable to the hedged risk or (ii)
the earnings effect of the hedged forecasted transaction. For a derivative not
designated as a hedging instrument, the gain or loss is recognized in operations
in the period of change. SFAS No. 133 is effective for all fiscal quarters of
fiscal years beginning after June 15, 2000. The Company has not entered into
derivatives contracts either to hedge existing risks or for speculative
purposes. Accordingly, the Company does not expect adoption of the new standard
on July 1, 2000 to affect its consolidated financial statements.

         In October 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 134 "Accounting for
Mortgage-Backed Securities Retained After the Securitization of Mortgage Loans
Held for Sale by a Mortgage Banking Enterprise", which is effective for the
first fiscal quarter beginning after December 15, 1998. There is no impact to
the Company's financial reporting or presentation due to the adoption of SFAS
No. 134.

         In February 1999, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 135 "Recission of FASB Statement
No. 75 and Technical Corrections", which is effective for financial statements
issued after February 15, 1999. There is no impact to the Company's financial
reporting or presentation due to the adoption of SFAS No. 135.

         In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin 101, "Revenue Recognition in Financial Statements" ("SAB
101"). SAB 101 provides guidance on the recognition, presentation and disclosure
of revenues in financial statements and requires adoption no later than the
fourth quarter of fiscal 2001. There is no impact to the Company's financial
reporting or personation due to the adoption of SAB 101.

                                       28

<PAGE>

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         See pages F-1 through F-46 contained herein as part of this Form 10-K
annual report.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
        ACCOUNTING AND FINANCIAL DISCLOSURE

        N/A

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY

         The Board of Directors is divided into three classes. The terms of each
class expire successively over a three-year period. At each annual meeting of
stockholders, successors to directors whose terms expire at that meeting are to
be elected for three-year terms. The directors and officers of the Company on
June 30, 2000 and April 25, 2001 are as follows, except that Mr. Stein resigned
effective October 15, 2000.

<TABLE>
<CAPTION>
NAME                                    AGE          POSITION AND OFFICE HELD
----                                    ---          ------------------------
<S>                                    <C>           <C>
Dallas Dempster........................59(1)         President, Chief Executive Officer and Director

Charles H. Stein.......................72(2)         Chairman of the Board of Directors (Resigned
                                                     October 15, 2000)

James V. Stanton.......................69(1)(2)      Vice Chairman of the Board of Directors

Miles R. Greenberg.....................44            Chief Financial Officer and Secretary

David. A. Hartley......................53            President of Casino Division
<FN>
(1)Member of the Compensation Committee.
(2)Member of the Audit Committee.
</FN>
</TABLE>

CLASS A DIRECTOR

         DALLAS DEMPSTER was elected to the Board and also elected President and
Chief Executive Officer on July 20, 1998. Since its inception he has been one of
the two executive directors of the entity developing the Sakhalin Project, and
is a founder of that project. From 1985 to 1991 Mr. Dempster was the Chairman
and Managing Director of Burswood Resort Complex, of which he was the founder.
Burswood is the largest tourist destination resort development in Western
Australia, costing A$320 million, employing over 2,700 employees, and with
revenues in excess of A$400 million. Between 1983 and 1990 he was Chairman of
the Rottenest Island Authority on behalf of the Western Australia government.
Mr. Dempster was principal project director and/or owner of substantial other
property development projects in Sydney and Perth, a member of the Airline
Deregulation Committee, and a member of the Board of the Aboriginal Enterprise
Company Limited. Mr. Dempster worked as an independent consultant since 1991
until joining the Company in July 1998.

                                       29

<PAGE>

CLASS B DIRECTOR

         JAMES V. STANTON has been a director of the Company since its inception
and Vice Chairman of the Company since 1998. Mr. Stanton has his own law and
lobbying firm, Stanton & Associates, in Washington, D.C. From 1971 to 1978, Mr.
Stanton represented the 20th Congressional District of Ohio in the United States
House of Representatives. While in Congress Mr. Stanton served on the Select
Committee on Intelligence, the Government Operations Committee, and the Public
Works and Transportation Committee. Mr. Stanton has held a wide variety of
public service positions, including service as the youngest City Council
President in the history of Cleveland, Ohio and membership on the Board of
Regents of the Catholic University of America in Washington, D.C. Mr. Stanton is
also former Executive Vice President of Delaware North, a privately held
international company which, during Mr. Stanton's tenure, had annual sales of
over $1 billion and became the leading pari-mutual wagering company in the
United States, with worldwide operations including horse racing, harness racing,
dog racing, and Jai-Lai. Delaware North also owned the Boston Garden and the
Boston Bruins hockey team. From 1985 to 1994 Mr. Stanton was a principal and
co-founder of Western Entertainment Corporation, which pioneered one of the
first Indian gaming operations in the United States, a 90,000 square foot bingo
and casino gaming operation located on the San Manuel Indian Reservation in
California, which generated annual revenues in excess of $50 million. Mr.
Stanton also serves on the boards of MTR Gaming Group, Inc. and Saf T Lok, Inc.

CLASS C DIRECTOR

         CHARLES H. STEIN was the Chairman, President and Chief Executive
Officer of the Company from its inception in March 1996 through July 20, 1998,
after which he had been Chairman. Mr. Stein resigned from the Board of Directors
effective October 2000. From June 1994 until March 1996, Mr. Stein was a
private investor and consultant. From October 1993 until June 1994, Mr. Stein
was Chairman of HMI International Ltd. a Florida based wholesaler and retailer
of resale products. From 1985 to 1987, he was President and Chief Executive
Officer of Night Hawk Resources, Ltd. (Vancouver Stock Exchange) which was
engaged in oil and gas exploration in Texas and Alaska. Prior to that time and
from 1987, Mr. Stein was a private investor. Early in his career, Mr. Stein
pioneered the concept of packing fresh orange juice in "milk-type" cartons,
which concept was sold to Kraft Foods, Inc. From December 1968 to October 1983,
Mr. Stein was Chairman and Chief Executive Officer of Hardwicke Companies Inc.
(Nasdaq), which built, developed, or operated more than 50 restaurants
(including Tavern on the Green, Maxwell's Plum, and Benihana), health spas,
theme parks in North America, Europe and Asia (including Great Adventure in New
Jersey), and duty-free shops. Prior to 1968, he was

                                       30

<PAGE>

President and Chief Executive Officer of Kitchens of Sara Lee, the world's
largest bakery, as well as a director, member of the Executive Committee, and a
Vice President of Consolidated Foods Corporation (NYSE), the parent company of
Sara Lee.

         The Company currently has authorized five directorships, three of which
are currently vacant due to Mr. Jay M. Haft's and Mr. Jonathan M. Caplan's
resignations in 1998 and 1999, respectively and Mr. Stein's resignation
effective October 2000. In 1997, the Company amended its Certificate of
Incorporation to provide for a classified Board of Directors. The Company's
Board of Directors is divided into three classes. Class A has two directorships,
of which one is held by Mr. Dempster and one of which is vacant and previously
held by Mr. Haft. Mr. Dempster was elected a director in July 1998 by the Board
of Directors, to replace a director who had resigned. Class B has two
directorships, one of which is now held by Mr. Stanton and the other which was
held by Mr. Caplan. Mr. Caplan was elected a director on December 2, 1997 by the
Board of Directors to replace a director who had resigned. Class C consists of
one directorship, until November 1999 held by Mr. Stein. That directorship is
vacant. Except for Mr. Dempster, stockholders elected Mr. Stein and all the
current directors in 1997 when the Company's stockholders first approved a
classified board. At each annual stockholder meeting commencing with the 1998
annual meeting, the successors to directors whose terms then expire are to be
elected to serve from the time of election and qualification until the third
annual meeting following election and until their successors have been duly
elected and qualified. No directors were nominated or elected at the Company's
annual meeting in November 1999. Any additional directorships resulting from an
increase in the number of directors will be distributed among the three classes
so that, as nearly as possible, such class will consist of an equal number of
directors. All stockholders of the Company's Common Stock are entitled to vote
in elections for the directors of each Class.

         The Company has agreed that, for a period of five years from June 6,
1997, Janssen/Meyers Associates, L.P. ("J/M") may designate one person to be
elected to the Board of Directors of the Company subject to Board approval or,
in the alternative, J/M may designate one person to attend all meetings of the
Company's Board of Directors and to receive all notices of meetings of the
Company's Board of Directors and all other correspondence and communications
sent by the Company to members of its Board of Directors. Such designee may be
an officer or director of J/M. If J/M's designee is elected to the Board of
Directors, such designee will sit on the Company's Audit Committee. J/M has not
designated an individual to serve in such capacity. J/M was, among other things,
the Company's underwriter in the June 1997 initial public offering.

                                       31

<PAGE>

IDENTIFICATION OF EXECUTIVE OFFICERS AND KEY EMPLOYEE WHO ARE NOT DIRECTORS

         MILES R. GREENBERG was appointed Vice President and Chief Financial
Officer upon joining the Company in September 1996 and appointed Senior Vice
President on January 18, 1997. From 1994 until joining the Company, Mr.
Greenberg served as Vice President and Chief Financial Officer of F3 Software
Corporation ("F3"), a developer and marketer of electronic forms composition and
automation software. From 1992 until assuming his positions at F3, he served as
Controller of BLOC Development Corporation (former parent company of F3), a
publicly held entity primarily engaged in the development, publishing and direct
marketing of computer software and hardware products. From 1985 to 1992, Mr.
Greenberg served as Vice President and Chief Financial Officer of The Levenshon
Companies, Inc. and its affiliates, a diversified financial services company.
Mr. Greenberg is a Certified Public Accountant formerly with KPMG Peat Marwick.

         DAVID A. HARTLEY has been President of the Casino Division since
October 1997. Mr. Hartley has spent the past 20 years in the casino gaming
industry. Originally trained as a Clinical Psychologist, he has had extensive
experience in virtually all aspects of casino operations, from the Queen
Elizabeth II cruise ship, to six London-based casinos. After serving as the
Manager of the Ritz Casino Club in London, he was appointed Gaming Executive in
charge of management development and training. He served in several positions at
London Clubs International Ltd., where he was responsible for that company's
expansion outside the United Kingdom. This involved researching and evaluating
prospective markets, acquiring new casino licenses, and other related activity.
Subsequent to that, he joined Regency Casinos Limited in 1992, where, until
joining the Company, he held several positions, and was most recently Chairman.
In this employment he negotiated a joint venture with Hyatt International
Corporation to establish an international casino management company, and
organized several international casinos. These included Regency Casino
Thessaloniki, a US$120 million project, including a new hotel, which is the
largest casino in Europe with gross gaming win approaching US$140 million. Also
included was a Regency Casino Baku Azerbaijan, constructed within the Hyatt
Hotel, at a project cost of US$15 million, including the hotel, casino,
restaurants and business facilities, as well as the Mimosa Regency Casino,
Philippines, with a project cost of US$5 million. Mr. Hartley has also been
responsible for the establishment and planning and development strategy for
several other casinos, including projects in Cape Town, South Africa and a
second operation in Baku. Mr. Hartley is a hands-on manager with the background,
experience, and knowledge of the casino industry in emerging markets.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

         Under the provisions of Section 16(a) of the Exchange Act, the
Company's officers, directors and 10% beneficial stockholders are required to
file reports of their transactions in the Company's securities with the
Commission. Based solely on a review of the Forms 3 and 4 and amendments thereto
furnished to the Company during its most recent fiscal year and Forms 5 and

                                       32

<PAGE>

amendments thereto furnished to the Company with respect to its most recent
fiscal year, the Company believes that as of June 30, 2000, all of its executive
officers, directors and greater than 10% beneficial stockholders were in
compliance with all filing requirements applicable to them during the fiscal
year ending June 30, 2000.

ITEM 11. EXECUTIVE COMPENSATION

         The following table sets forth the compensation awarded to, paid to, or
earned by Mr. Stein, the Company's former Chairman, former Chief Executive
Officer and former Chief Operating Officer and three others (all,"Named
Executive Officers") during the period July 1, 1997 to June 30, 2000. No other
executive officer of the Company serving as an executive officer on June 30,
2000, or since that date, received a total salary and bonus of $100,000 for the
periods specified. Accordingly, no information is reported for such persons.
Since that date through April 25, 2001 the rates of annual salary compensation
of the Named Executive Officers have not changed.

                           SUMMARY COMPENSATION TABLE

                               AWARD COMPENSATION

<TABLE>
<CAPTION>
                                                                           Long Term Compensation
                                                                      ----------------------------------------
                                                                                        Awards        Payouts
                                                                                       --------      ---------
                                                           Securities  Restricted     Securities
                                                           Underlying     Stock       Underlying        LTIP      All Other
Name and Principal Position  Fiscal Year         Salary    Options(#)    Awards     Options/SAR's(3)   Awards   Compensation
---------------------------  -----------         ------    ----------  ----------   ----------------   ------   ------------
<S>                               <C>             <C>      <C>         <C>             <C>             <C>      <C>
Charles H. Stein             July 1, 1998 to      (1)         --           --          100,000          --      $40,000(2)
Former Chairman, Former      June 30, 1999        (1)         --           --
Chief Executive Officer      July 1, 1997 to
President and Director       June 30, 1998                    --

Dallas Dempster              July 1, 1999 to    $300,000   1,000,000       --
President, Chief             June 30, 2000
Executive Officer and        August 1, 1998     $275,000   1,000,000(3)    --             --            --          --
Director                     June 30, 1999

Miles R. Greenberg           July 1, 1999 to    $125,000
Chief financial              June 30, 2000
Officer and                  July 1, 1998 to    $115,000      75,000(3)    --             --            --          --
Secretary                    June 30, 1999
                             July 1, 1997 to
                             June 30, 1998           *        10,000(3)    --             --            --          --

David Hartley                July 1, 1999 to
President Casino             June 30, 2000      $210,000      --           --             --            --          --
Division                     July 1, 1998       $250,000      --           --             --            --          --
                             June 30, 1999
                             October 1997 to    $189,000     100,000(3)    --             --            --          --
                             June 30, 1998
<FN>
* Less than $100,000

(1) As of June 30, 1998 Mr. Stein had waived (not merely deferred) his right to
any annual salary and, as of the date of this report, has continued to waive
this right. The Board of Directors has accepted Mr. Stein's waiver, but had
reserved the right to award Mr. Stein, in its sole discretion, the amounts so
waived. During the 12-month period ended June 30, 1998 the Company recorded
non-cash compensation charges of $90,000 for services contributed by Mr. Stein.

(2) The Company purchased a life insurance policy for Mr. Stein's benefit,
paying a premium of about $40,000. The life insurance policy terminated on his
October 2000 resignation.

(3) Reflects shares underlying options that were repriced in September 1998 (to
$1.50 per share), and in December 1999 (to $.25 per share) and in October 2000
(to $.10 per share).
</FN>
</TABLE>
                                       33
<PAGE>
     The Company has no defined benefit plan, actuarial plan, pension plan or
long-term incentive plan.

     After the Company acquired a 65% interest in SGTI in December 1997, SGTI
continued to pay Sovereign Gaming and Leisure Ltd. consulting fees of $15,000
per month through July 1998. Mr. Dempster was paid by Sovereign consulting fees
in a similar amount for the same services, or other services, during the same
seven-month period.

                                  OPTION GRANTS

     In September 1998 the Board of Directors: (i) reduced the exercise price of
all Plan and non-Plan Options (and any warrants) previously granted any then
officer, director, employee and certain consultants to the then market price of
$1.50 (which was subsequently reduced to $.25 per share in December 1999); and
(ii) granted seven persons and entities new Plan and non-Plan options to
purchase 1,500,000 shares at an exercise price of $1.50 per share (which was
subsequently reduced to $.25 per share in December 1999). On October 18, 2000
the Board of Directors again reduced the exercise price of all Plan and non-Plan
options (and warrants) previously granted to any then officer, director,
employee or consultant to the then market price of $.10. A Plan option to
purchase 500,000 shares was granted to Mr. Greenberg at the then market price of
$.10 per share. The following table provides certain information regarding the
stock options granted during the 12 month period ended June 30, 2000 to the
Named Executive Officers named in the Summary Compensation Table.

          OPTION GRANTS FOR THE TWELVE-MONTH PERIOD ENDED JUNE 30, 2000

<TABLE>
<CAPTION>
                                                                                              POTENTIAL REALIZED
                                                                                               VALUE AT ASSUMED
                                                                                                ANNUAL RATES OF
                      NUMBER OF       % OF TOTAL                                                  STOCK PRICE
                      SECURITIES      OPTIONS                                                  APPRECIATION FOR
                      UNDERLYING      GRANTED TO        EXERCISE OR                              OPTION TERM(2)
                      OPTIONS         EMPLOYEES IN      BASE PRICE         EXPIRATION         ------------------
    NAME              GRANTED(#)(1)   FISCAL PERIOD     $/SHARE(1)(3)      DATE                  5%       10%
    -----             ------------    ------------      -------------      ----------            ---      ----
<S>                   <C>             <C>               <C>                <C>                   <C>       <C>
Dallas Dempster       1,000,000       100%              $.25               December 2003         0         0
<FN>
(1) In December 1999, the Board had granted Tilden Park Limited, a nominee of
Mr. Dempster, a four-year Plan option to purchase an additional 1,000,000 shares
of Common Stock at an exercise price of $.25 per share. In December 1999 Dabus
International Limited transferred to that nominee non-Plan options to purchase
1,000,000 shares of Common Stock previously issued to Dabus.

(2) In accordance with the rules of the Securities and Exchange Commission,
"Potential Realizable Value" has been calculated assuming annual appreciation
over the option term of the fair market value of the Company's common stock on
the date of the grant at annual compounded rates of 5% and 10%, respectively.

(3) These options were repriced to $.10 per share on October 18, 2000 when the
market value of a share was $.06 per share. There would be no potential
realizable value at the 5% and 10% appreciation rates.
</FN>
</TABLE>

                                       34

<PAGE>

     No other option was granted to any of the Named Executive Officers under
the 1996 Stock Option Plan, or otherwise granted to any such officer during the
year ended June 30, 2000, and no options were exercised by any of them during
that period. On October 18, 2000 Mr. Greenberg was granted a four-year Plan
option to purchase 500,000 shares of Common Stock at $.10 per share. No other
options were granted to or exercised by any Named Executive Officers between
June 30, 2000 and February 25, 2001. The unexercised options held by the Named
Executive Officers had no value at June 30, 2000 as the exercise prices exceeded
the fair market value closing price of the Common Stock on such date.

   AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
                                     VALUES

     The following table sets forth information about the number and value of
options held as of June 30, 2000 by each of the Company's executive officers
named in the Summary Compensation Table.

<TABLE>
<CAPTION>
                                                      NUMBER OF SECURITIES           VALUE OF UNEXERCISED
                                                      UNDERLYING UNEXERCISED            IN-THE-MONEY
                        SHARES                      OPTIONS AT FISCAL YEAR END     OPTIONS AT YEAR END($)(1)
                      ACQUIRED ON       VALUE      ---------------------------    ---------------------------
                     EXERCISED (#)    REALIZED($)  EXERCISABLE   UNEXERCISABLE    EXERCISABLE   UNEXERCISABLE
                     -------------    -----------  -----------   -------------    -----------   -------------
<S>                       <C>             <C>       <C>               <C>              <C>          <C>
Charles H. Stein          0               --          100,000          0                0            --
Dallas Dempster           0               --        2,100,000          0                0            --
Miles R. Greenberg        0               --          175,000          0                0            --
David Hartley             0               --          100,000          0                0            --
<FN>
(1) Based on the market price of the Company's Common Stock of $.15 on June 30,
2000, as reported by Nasdaq.
</FN>
</TABLE>

         The Company's outstanding options at June 30, 2000 totaled 4,934,619
and 4,964,619 at April 25, 2001. The Company uses the Black-Scholes
option-pricing model to value options issued to non-employee directors and
consultants. Other options issued are valued using APB 25. See Note 10 to the
Consolidated Financial Statements included in this 10-K.

                                       35

<PAGE>

DIRECTORS COMPENSATION

         Since August 1998, non-employee directors have waived all fee
compensation. No other compensation was paid to non-employee directors in the
twelve months ended June 30, 2000 or through February 28, 2000. Directors who
are employees of the Company receive no additional compensation for their
services rendered as directors. All directors are reimbursed for reasonable
expenses incurred in connection with their services rendered as directors.

         In June 1997, the Board voted to form an executive compensation
committee which currently consists of Messrs. Dempster and Stanton (the
"Committee"). The Committee is authorized to review all compensation matters
involving directors and executive officers and Committee approval is required
for any compensation to be paid to executive officers or directors who are
employees of the Company. As a matter of policy and to assure compliance with
Rule 16b-3(d)(1) of the Securities Exchange Act of 1934, the decisions of the
Compensation Committee are subject to ratification by a majority of the Board.

INDEMNIFICATION OF DIRECTORS AND OFFICERS AND RELATED MATTERS

         The Company's Certificate of Incorporation limits, to the maximum
extent permitted by the Delaware General Corporation Law ("DGCL"), the personal
liability of directors and officers for monetary damages for breach of their
fiduciary duties as directors and officers (other than liabilities arising from
acts or omissions which involve intentional misconduct, fraud or knowing
violations of law or the payment of distributions in violation of the DGCL). The
Certificate of Incorporation provides further that the Company shall indemnify
to the fullest extent permitted by the DGCL any person made a party to an action
or proceeding by reason of the fact that such person was a director, officer,
employee or agent of the Company. Subject to the Company's Certificate of
Incorporation, the By-laws provide that the Company shall indemnify directors
and officers for all costs reasonably incurred in connection with any action,
suit or proceeding in which such director or officer is made a party by virtue
of his being an officer or director of the Company, except where such director
or officer is finally adjudged to have been derelict in the performance of his
duties as such a director or officer.

         The Company expects to enter into separate indemnification agreements
with its officers and directors containing provisions which are in some respects
broader than the specific indemnification provisions contained in the Company's
Certificate of Incorporation and By-laws. The indemnification agreements may
require the Company, among other things, to indemnify such directors and
officers against certain liabilities that may arise by reason of their status as
directors and officers (other than liabilities arising from willful misconduct
of a culpable nature), to advance their expenses incurred as a result of any
proceeding against them as to which they could be indemnified, and to obtain
directors' and officers' insurance, if available on reasonable terms. The
Company believes these agreements are necessary to attract and retain qualified
persons as directors and officers.

         There is no pending litigation or proceeding involving any director,
officer, employee or agent of the Company where indemnification will be required
or permitted. The Company is not aware of any threatened litigation or
proceeding which may result in a claim for such indemnification.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following table sets forth information as of April 25, 2001, to the
best of the Company's knowledge, about each person (including any "group" as
that term is used in Section 13(d)(3) of the Securities Exchange Act of 1934)
known to the Company to be the beneficial owner of more than 5% of the Company's
Common Stock. The percentage of shares outstanding is based on the Company's
shares of Common Stock outstanding as of

                                       36

<PAGE>

April 25, 2001, as adjusted in each case pursuant to Rule 13-3(d)1 under the
Securities and Exchange Act of 1934. As of April 25, 2000, there were 18,140,000
shares of Common Stock outstanding.

                                        TOTAL NUMBER OF SHARES   PERCENTAGE OF
NAME AND ADDRESS OF STOCKHOLDER           BENEFICIALLY OWNED     VOTING SHARES*
-------------------------------         ----------------------   --------------
Charles Stein Inter Vivos Trust (1)            900,000                4.99%
c/o CCA Companies Incorporated

James V. Stanton (2)                         1,326,844                6.99%
c/o CCA Companies Incorporated

Dallas Dempster (3)                          2,000,000                 9.9%
c/o CCA Companies Incorporated (3)

Peter Janssen (4)                            2,411,719                12.3%
c/o Janssen Partners
1345 Old Northern Blvd.
Roslyn, N.Y.  11576

Miles R. Greenberg-Senior Vice
President-Finance, Treasurer and
Chief Financial Officer (5)                    580,000                 3.1%

David A. Hartley-President-Casino
Division (6)                                   830,000                 4.6%

All executive officers and directors
as a  group (4 persons)                      4,736,844                21.5%
-----------
(1) Represents 800,000 shares held by the Charles Stein Inter Vivos Trust for
the benefit of Mr. Stein's spouse and children. Mr. Stein, former Chairman of
the Company, disclaims voting and investment power with respect to those shares.
Mr. Stein currently has an exercisable option to purchase 100,000 shares of
Common Stock at $.10 per share.

(2) Includes 20,000 shares of Common Stock which are held by Mr. Stanton, a
Director of the Company, as joint tenant with his wife, Margaret M. Stanton,
currently exercisable warrants to purchase 650,000 shares of Common Stock at a
price equal to $.10 per share, and currently exercisable options to purchase
500,000 shares and 23,644 shares of Common Stock at $.10 and $2.00 per share,
respectively. Does not include shares of Common Stock owned by Michael J.
Stanton, Bridget M. Stanton, Richard P. Stanton and Joseph M. Stanton each of
whom are adult children of Mr. James Stanton and each of whom own 20,000 shares
of Common Stock. Mr. Stanton denies beneficial ownership of such 80,000 shares.

(3) Represents currently exercisable non-Plan options granted in September 1998
to purchase 1,000,000 shares at $.10 and Plan options granted in December 1999
to purchase 1,000,000 shares at $.10 in the name of Tilden Park Limited for the
benefit of Mr. Dempster's family.

(4) Includes currently exercisable warrants to purchase 73,269 shares at $8.25
per share; warrants to purchase 235,453 shares at $5.135 per share; warrants to
purchase 666,667 shares at $1.00 per share; and warrants to purchase 450,000
shares at $.50 per share.

(5) Represents currently exercisable options to purchase 580,000 shares of
Common Stock at $.10 per share.

(6) Includes currently exercisable options to purchase 100,000 shares at $.10
per share.

         As used in the table above, "beneficial ownership" means the sole or
shared power to vote or direct the voting or to dispose, or direct the
disposition of any security. A person is deemed to have "beneficial ownership"
of any security that such person has

                                       37

<PAGE>

a right to acquire within 60 days of the date of the above table. Any security
that any person named above has the right to acquire within 60 days is deemed to
be outstanding for purposes of calculating the ownership of such person but is
not deemed to be outstanding for purposes of calculating the ownership
percentage of any other person. Unless otherwise noted, each person listed is
believed by the Company to have the sole power to vote, or direct the voting of,
and power to dispose, or direct the disposition of all such shares. The amount
of outstanding shares of Common Stock is the amount actually outstanding plus
shares deemed outstanding pursuant to Rule 13d-3(d)(1) under the Securities and
Exchange Act of 1934.

         In acquiring Sakhalin General Trading and Investments Limited ("SGTI")
the Company issued 2,000,000 shares to the former stockholders in SGTI. The
Company does not know the ultimate beneficial ownership of these shares.

         Item 13. Certain Relationships and Related Transactions

         During the year ended June 30, 1998, the Company had entered into hotel
management agreements with DHI and FEC and into hotel operating contracts with
other hotel owners. These agreements are described above in the Divisional
Overview of the Hotel Division. The Company believes that Mr. David Chiu was
then the beneficial owner of the stock in Dorsett International. These
agreements were settled and terminated by a November 1998 settlement agreement
dated November 4, 1998. Mr. Chiu is also a party to the Development Services
Agreement relating to the Sakhalin Project. That agreement is described above in
the Divisional Overview of the Sakhalin Project. The Company believes Mr. Chiu
was a beneficial owner of stock in DHI when the Company acquired it and its
subsidiaries for $500,000. He was the assignee of certain of DHI rights under
that agreement. The Company believes FEC, Mr. Chiu, his relatives or their
associates held interests in hotel owners with whom the Company had or might
have entered into Hotel Operating Contracts. FEC claims that it is entitled to
be issued 250,000 shares of Common Stock pursuant to the November 1998
settlement.

         Mr. Dallas Dempster was a paid consultant to Sovereign Gaming and
Leisure Ltd. ("Sovereign"), which assigned to the Company its 1994 Construction
Management Agreement and 1994 Operation Management Agreement with SCC. The
Company believes that he held, and currently holds, no beneficial interest in
stock in Sovereign. In September 1998, Mr. Dempster's nominee, Dabus
International Limited, for the benefit of his family, was granted non-Plan
options to purchase 1,000,000 shares of the Company's common stock at $1.50 per
share which have been repriced twice in connection with general repricings of
options and warrants held by officers and others. The most recent general
repricing was in October 2000 to $.10 per share. In December 1999, Mr.
Dempster's nominee, Tilden Park Limited for the benefit of his family, was
granted Plan options to purchase 1,000,000 shares of the Company's Common Stock
at $.25 per share. These were similarly repriced. Tilden Park Limited
transferred on that date from Dabus International Limited the non-Plan options
to purchase 1,000,000 shares of common stock previously issued to Dabus
International Limited. Sovereign was a consultant to SGTI. Mr. Dempster was a
consultant to Sovereign and received $15,000 per month from January through July
1998.

         The Company believes Mr. David Hartley controls Star and holds a
substantial interest in it. Star was a party with the Company to the Star Casino
Consulting Agreement, and was granted options in October 1992 to purchase shares
of the Company's Common Stock. These options were repriced three times in
connection with the general repricings of options and warrants held by officers,
directors, employees and consultants of the Company. The Company issued 250,000
shares of Common Stock to Star in December 1999 in lieu of a cash bonus payment
which Star was entitled to receive pursuant to The Star Consulting Agreement. On
October 24, 2000 the Company issued Star 480,000 shares

                                       38

<PAGE>

of Common Stock as payment for $120,000 Star was entitled to receive as of June
30, 2000 under the terms of a consulting agreement with the Company.

         Janssen-Myers Associates ("J-M"), among other things, were the
underwriters of the Company's initial public offering in June 1997 and also the
placement agent in the Company's November 1997 Private Offering. Messrs. Janssen
and Meyers are principals in J-M and received their Company warrants from J-M.
Pursuant to the placement agreement relating to the November 1997 Private
Offering, the Company agreed to pay J-M, as placement agent, a fee equal to 10%
of the "gross proceeds" of that offering. In addition, the Company agreed to pay
J-M a non-accountable expense allowance equal to 3% of the "gross proceeds" from
the sale of shares in that offering and to reimburse certain accountable
expenses of J-M. The Company also agreed to indemnify J-M against certain
liabilities incurred under the Securities Act in connection with the November
1997 offering. The Company also granted J-M, for a period of one year after the
final closing date of the Private Offering, a right of first refusal to
purchase, or to sell for the account of the Company, any securities of the
Company which the Company may seek to sell through an underwriter, placement
agent or broker-dealer. A number of principal stockholders in the Company
granted J-M a similar right in any such sale by those stockholders of the
Company, its subsidiaries and successors.

          Peter Janssen, a principal of Janssen Myers Associates, completed the
following acquisition of Company securities: (i) On December 3, 1998 he
purchased 133,334 shares at $.75 per share and received four-year warrants to
purchase 66,667 shares of Common Stock at an exercise price of $1.00 per share;
(ii) on March 1, 1999 he purchased 200,000 shares at $.50 per share and received
four-year warrants to purchase 250,000 shares of Common Stock at an exercise
price of $1.00 per share; (iii) on April 9, 1999 he purchased 150,000 shares at
$.67 per share and received four-year warrants to purchase 350,000 shares of
Common Stock at an exercise price $1.00 per share; and (iv) on December 22,
1999, in consideration of consulting services rendered to the Company during
1998 and 1999, he received three-year warrants to purchase 450,000 shares of
Common Stock at an exercise price of $.50 per share. These were repriced in the
subsequent general repricings.

         In June 1997, and from December 1997 through February 1998, the Company
issued to J-M for nominal consideration, the "Underwriter's Warrants" to
purchase 220,000 shares at $8.25 per share and to purchase 715,668 shares at
various prices based on the market price of the Company's shares in 1997-1998.
The warrants were issued in connection with the Company's initial public
offering completed in June 1997, and the Company's private offering which began
in November 1997 and was completed in February 1998. They are exercisable for a
period of four years from issue. Sale of shares by the Company at less than the
then current average market price or less than the exercise price will trigger
anti-dilution provisions in all the Warrants held by the Underwriter. No
anti-dilution adjustment is made under any series of such warrants for issuance
of securities (i) in the same offering as the Warrant series was issued, or (ii)
upon exercise of Warrants of that series or of any other warrants or options
outstanding on the date that series of Warrants was issued. In the case of the
1997 Placement Agent Warrants, no adjustment is made for issuance of securities
(i) in contemplated transactions described in the related Private Placement
Memorandum, but not in excess of 5,500,000 shares, (ii) under the Company's 1996
Stock Option Plan as it may be amended from time to time, or (iii) upon merger
or acquisition with unaffiliated third parties.

         The Company has been advised that Mr. Peter Janssen and Mr. Bruce
Meyers, principals of J-M, purchased an aggregate of 58,422 shares in the 1997
Private Offering. In connection with the Company's initial public offering, the
Company entered into an agreement whereby it (i) agreed to employ J-M as its
investment banker and financial

                                       39

<PAGE>

consultant for three years for an aggregate fee of $100,000 paid at the closing
of the Company's initial public offering; and (ii) for a period of five years,
agreed to pay J-M a fee equal to five percent of the amount up to $5 million,
and 2 1/2% of the excess, if any, over $5 million, of the consideration in any
transaction consummated by the Company with a party introduced to the Company by
J-M.

         In January 2000, Mr. Stanton provided a loan to the Company of
$300,000, which the Company used to repay past due obligations. The loan bears
interest at the bank prime rate to be calculated and billed monthly by the
National City Bank of Cleveland, Ohio. The loan was to be repaid on December 31,
2000. Mr. Stanton also received warrants to purchase 500,000 shares of Common
Stock at an exercise price of $.25 per share exercisable on or before January
18, 2004. On October 18, 2000 the exercise price was reduced to $.10 per share.
After December, the due date of the loan extended and the Company is paying
interest on a current basis and principal as funds are available. On January 25,
1999 Mr. Stanton converted all $75,000 principal and $1,600 of accrued unpaid
interest on a $75,000 loan he had made to the Company in October 1998 into
153,200 shares at a conversion price of $.50 per share. At April 25, 2001 the
loan balance was $115,000.

                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENTS & SCHEDULES, AND REPORTS ON FORM 8-K

         (a)(1) Financial Statements

                Reports of Independent Certified Public Accountants (F-2-3)

                Consolidated Balance Sheets as of June 30, 2000 and June 30,
                1999 (F-4)

                Consolidated Statements of Operations for the years ended June
                30, 2000, June 30, 1999 and June 30, 1998 (F-6)

                Consolidated Statements of Stockholders' Equity for the years
                ended June 30, 2000, June 30, 1999 and June 30, 1998 (F-7)

                Consolidated Statements of Cash Flows for the years ended June
                30, 2000, June 30, 1999 and June 30, 1998 (F-10)

                Notes to Consolidated Financial Statements (F-13)

                                       40

<PAGE>

EXHIBIT NO.                     ITEM TITLE
----------                      ----------

   2.1   Contract on the Extension of the Concession Period for the Operation of
         a Casino dated 21 July 1997 issued by the Minister of Finance in favor
         of Roulette; Loan Agreement dated 9 April 1998 between Roulette and
         Dorsett providing for a US $420,000 loan to Roulette; Amendment No.1
         dated 5 June 1998 to the Agreement dated 3 April 1998 between CBC,
         Juste and Dorsett (incorporated by reference to the Company's Form 10-Q
         for the period ended September 30, 1998)

   3.1   Certificate of Incorporation and amendments thereto (incorporated
         herein by reference to the Company's Registration Statement on Form S-1
         (File No. 333-16571))

   3.2   Amendment to Company's Certificate of Incorporation (incorporated
         herein by reference to the Company's Registration Statement on Form S-1
         (File No. 333-16571), Amendment No. 5)

   3.3   Amendment to Company's Certificate of Incorporation (incorporated
         herein by reference to the Company's Proxy Statement dated November 27,
         1997)

   3.4   By-law of Company (incorporated herein by reference to the Company's
         Registration Statement on Form S-1 (File No. 333-16571)

   4.2   Form of certificate evidencing shares of Common Stock (incorporated
         herein by reference to the Company's Registration Statement on Form S-1
         (File No. 333-16571), Amendment No. 2)

   4.3   Form of Underwriter's Warrant Agreement between Company and the
         Underwriter Janssen-Meyers Associates L.P. (including form of
         Underwriter's Warrant) (incorporated herein by reference to the
         Company's Registration Statement on Form S-1 (File No. 333-16571),
         Amendment No. 5)

   4.5   Amendatory Agreement dated November 6, 1996 between the Company and the
         SES Family Investment and Trading Partnership, L.P. (incorporated
         herein by reference to the Company's Registration Statement on Form S-1
         (File No. 333-16571))

                                       41

<PAGE>

   4.6   Form of 10% Debenture dated September 1996 (incorporated herein by
         reference to the Company's Registration Statement on Form S-1 (File No.
         333-16571))

   4.7   Form of 10% Convertible Debenture dated November 1996 (incorporated
         herein by reference to the Company's Registration Statement on Form S-1
         (File No. 333-16571))

   10.1  1996 Stock Option Plan, as amended and restated (incorporated herein by
         reference to the Company's Registration Statement on Form S-1 (File No.
         333-16571))

   10.2  Form of Stock Option Agreement (incorporated herein by reference to the
         Company's Registration Statement on Form S-1 (File No. 333-16571))

   10.3  Distribution Agreement dated October 9, 1996 between Company and
         Agrotech 2000, S.L. (incorporated herein by reference to the Company's
         Registration Statement on Form S-1 (File No. 333-16571), Amendment No.
         4)

   10.4  Employment Agreement between Charles H. Stein and the Company,
         effective as of June 13, 1997

   10.5  Form of $5.00 Warrant Agreement dated August 1996 (incorporated herein
         by reference to the Company's Registration Statement on Form S-1 (File
         No. 333-16571))

   10.6  Loan Agreement dated October 9, 1996 between Company and Conserver
         Purchasing Corporation ("CPU"), as amended by Letter Agreement dated
         December 31, 1996 between Company and CPC (incorporated herein by
         reference to the Company's Registration Statement on Form S-1 (File No.
         333-16571), Amendment No. 2)

   10.7  Form of Financial Consulting Agreement between Company and Underwriter
         (incorporated herein by reference to the Company's Registration
         Statement on Form S-1 (File No. 333-16571), Amendment No. 5)

                                       42
<PAGE>

   10.8  Agreement dated as of August 12, 1997 by and among the Company,
         Sakhalin Trading and Investments Limited ("SGTI") and Sovereign Gaming
         and Leisure Limited ("Sovereign") (incorporated herein by reference to
         Exhibit 10.8 to the Company's Form 10-K for the fiscal year ended June
         30, 1997)

   10.9  Amendment dated as of August 12, 1997 by and among the Company, SGTI
         and Sovereign (incorporated herein by reference to Exhibit 10.9 to the
         Company's Form 10-K for the fiscal year ended June 30, 1997)

   10.10 Development Services Agreement dated as of October 2, 1997 between the
         Company and Dato David Chiu (incorporated herein by reference to
         Exhibit 10.10 to the Company's Form 10-K for the fiscal year ended June
         30, 1997)

   10.11 Consulting Agreement effective as of August 14, 1997 between the
         Company and Star Casino Limited (incorporated herein by reference to
         Exhibit 10.11 to the Company's Form 10-K for the fiscal year ended June
         30, 1997)

   10.12 Proposed form Pledge Agreement by and among the Company, Brian J.
         Bryce, Jasmine Trustees, Ltd., Jay M. Haft and James V. Stanton
         (incorporated herein by reference to Exhibit 10.12 to the Company's
         Form 10-K for the fiscal year ended June 30, 1997)

   10.13 Hotel Management Agreement dated as of October 2, 1997 between the
         Company and Dorsett Hotels and Resorts International Ltd. (incorporated
         herein by reference to Exhibit 10.13 to the Company's Form 10-K for the
         fiscal year ended June 30, 1997)

   10.15 Heads of Agreement dated October 3, 1997 between the Company and
         Parbhoe's Handelmij N.V. (incorporated herein by reference to Exhibit
         10.15 to the Company's Form 10-K for the fiscal year ended June 30,
         1997)

   10.16 Agreement of Ownership Structure in the Sakhalin Palace Resort Project
         dated as of June 25, 1999 between the Company, Arter Capital Ltd. and
         Valmet S.A. (filed herewith)

   16.1  Letter regarding change in certifying accountant (incorporated herein
         by reference to the Company's Form 8-K dated December 18, 1997 and Form
         8-K dated June 16, 1998)

   16.2  Letter regarding change in certifying accountant (incorporated herein
         by reference to the Company's Form 8-K dated July 23, 1999 and Form 8-K
         dated October 13, 1999

                                       43

<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.

                                              CCA COMPANIES INCORPORATED

                                              /s/ Miles R. Greenberg
                                              --------------------------
                                              Miles R. Greenberg

Date:  May 4, 2001

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

SIGNATURE                             TITLE                     DATE
---------                             -----                     ----
Dallas R. Dempster           Officer and President
                             Chief Executive Officer,
                             Chief Operating Officer
                             and President (Principal
                             Executive Officer), Director       May 4, 2001

James V. Stanton             Vice Chairman and Director         May 4, 2001

Miles R. Greenberg           Chief Financial Officer
                             (Principal Financial
                             Officer Chief Accounting
                             Officer)                           May 4, 2001

                                       44
<PAGE>
                           CCA COMPANIES INCORPORATED

                                    CONTENTS
                                                                       Page
                                                                       ----
Independent Auditors Reports.........................................  F-2

Consolidated Balance Sheets as of June 30, 2000 and 1999.............  F-4

Consolidated Statements of Operations for the years ended
June 30, 2000, 1999 and 1998.........................................  F-6

Consolidated Statements of Stockholders' Equity for the years
 ended June 30, 2000, 1999 and 1998..................................  F-7

Consolidated Statements of Cash Flows for the years ended
 June 30, 2000, 1999 and 1998........................................  F-10

Notes to Consolidated Financial Statements...........................  F-13

                                       F-1

<PAGE>
               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors and Stockholders
of CCA Companies Incorporated

We have audited the accompanying consolidated balance sheets of CCA Companies
Incorporated (a Delaware corporation) and subsidiaries as of June 30, 2000 and
1999, and the related consolidated statements of income, retained earnings, and
cash flows for the years then ended. These consolidated financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audit.

We conducted our audit in accordance with U.S. generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated 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 audit provides a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of CCA Companies
Incorporated and subsidiaries as of June 30, 2000 and 1999, and the results of
its operations and its cash flows for the year then ended in conformity with
U.S. generally accepted accounting principles.

                                              SPEAR SAFER HARMON & CO.
Miami, Florida
March 15, 2001

                                       F-2
<PAGE>
               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors and Stockholders of
CCA Companies Incorporated

We have audited the accompanying consolidated statements of operations,
stockholders' equity and cash flows of CCA Companies Incorporated and
subsidiaries for the year ended June 30, 1998. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. 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 audit provides a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the results of operations and cash flows of
CCA Companies Incorporated and subsidiaries for the year ended June 30, 1998 in
conformity with accounting principles generally accepted in the United States of
America.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company's dependence on outside
financing, recurring losses since inception and significant outflows of cash
from operations, raise substantial doubt about its ability to continue as a
going concern. Management's plans in regard to these matters are described in
the consolidated financial statements. The consolidated financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.

Miami, Florida                                                 BDO SEIDMAN, LLP
December 15, 1998

                                       F-3

<PAGE>
                           CCA COMPANIES INCORPORATED

                           Consolidated Balance Sheets

                             June 30, 2000 and 1999

                                   A S S E T S

                                                         2000           1999
                                                      ----------    -----------
Current Assets:
   Cash and cash equivalents                          $  215,559    $   425,662
   Accounts receivable                                         -         18,000
   Prepaid and other current assets                       65,788        165,262
   Assets of discontinued operations:
     Hotel Management                                          -              -
                                                      ----------    -----------
       Total Current Assets                              281,347        608,924

Excess of cost over fair value of assets
 acquired, net of accumulated amortization
 of $529,349 at June 30, 1999                                  -     10,014,967
Property, equipment and leasehold
  improvements, net                                    5,489,279      6,131,139
Sakhalin development costs                             2,100,000      5,251,396
Other assets                                              20,300        632,664
                                                      ----------    -----------
                                                      $7,890,926    $22,639,090
                                                      ==========    ===========

See accompanying notes to consolidated financial statements.

                                       F-4

<PAGE>
                           CCA COMPANIES INCORPORATED

                     Consolidated Balance Sheets (Continued)

                             June 30, 2000 and 1999

                      LIABILITIES AND STOCKHOLDERS' EQUITY
                                                      2000             1999
                                                  ------------     ------------
Current Liabilities:
   Accounts payable                               $    440,048     $    363,018
   Accrued expenses                                    406,755        1,060,904
   Income tax payable                                  144,650                -
   Notes payable                                       335,000                -
   Current portion of long-term notes payable                -          500,000
   Liabilities of Discontinued Operations:
     Food                                               49,000          203,273
     Hotel Management                                   45,000                -
                                                  ------------     ------------
         Total Current Liabilities                   1,420,453        2,127,195
                                                  ------------     ------------
Long-term notes payable                                515,900          600,000
                                                  ------------     ------------
Deferred income taxes                                  192,884                -
                                                  ------------     ------------
Minority interest in consolidated subsidiary           671,482           89,278
                                                  ------------     ------------
Commitments and contingencies

Stockholders' Equity:
   Preferred stock, par value $.01; 5,000,000
    shares authorized in 2000 and 1999,
    one share of junior preferred stock
    issued and outstanding at June 30, 1998,
    canceled in 1999                                         -                -
   Common stock, par value $.001; 50,000,000
    shares authorized in 2000 and 1999;
    16,326,666 shares issued June 30, 2000,
    and 14,014,939 shares issued June 30, 1999          16,328           14,016
   Additional paid-in capital                       47,497,489       46,892,901
   Accumulated deficit                             (42,423,610)     (27,084,300)
                                                  ------------     ------------
         Total Stockholders' Equity                  5,090,207       19,822,617
                                                  ------------     ------------
                                                  $  7,890,926     $ 22,639,090
                                                  ============     ============

See accompanying notes to consolidated financial statements.

                                       F-5
<PAGE>
                           CCA COMPANIES INCORPORATED

                      Consolidated Statements of Operations

<TABLE>
<CAPTION>
                                                               Year Ended         Year Ended         Year Ended
                                                              June 30, 2000      June 30, 1999      June 30, 1998
                                                             ---------------    ---------------    ---------------
<S>                                                          <C>                      <C>           <C>
Casino Revenues                                                 6,981,758         $ 5,534,249       $          -
                                                             ------------         -----------       ------------
Operating Expenses:
   Marketing and promotional                                      333,500             360,572                  -
   General and administrative                                   6,415,452           7,566,040          3,397,974
   Compensation paid by the issuance
    of stock options and warrants                                  10,000             783,000            921,569
                                                             ------------         -----------       ------------
         Total Operating Expenses                               6,758,952           8,709,612          4,319,543
                                                             ------------         -----------       ------------
Income (Loss) from Operations                                     222,806          (3,175,363)        (4,319,543)
                                                             ------------         -----------       ------------
Other Income (Expense):
   Write-down of assets                                       (13,857,192)           (609,833)                 -
   Interest income                                                  5,658              11,114            288,518
   Interest expense                                              (423,630)           (445,105)           (74,678)
                                                             ------------         -----------       ------------
         Total Other Income (Expense)                         (14,275,164)         (1,043,824)           213,840
                                                             ------------         -----------       ------------
Foreign Income Taxes                                             (552,625)                  -                  -
                                                             ------------         -----------       ------------
Loss from Continuing Operations
   Before Minority Interest                                   (14,604,983)         (4,219,187)        (4,105,703)

Minority Interest                                                (582,204)            (89,278)                 -
                                                             ------------         -----------       ------------
Loss from Continued Operations                                (15,187,187)         (4,308,465)        (4,105,703)
                                                             ------------         -----------       ------------
Income (Loss) from Discontinued
 Operations:
   Food                                                           (64,500)           (425,175)        (2,878,863)
   Hotel Management                                               (87,623)            141,550         (5,558,506)
                                                             ------------         -----------       ------------
                                                                 (152,123)           (283,625)        (8,437,369)
                                                             ------------         -----------       ------------
Net Loss                                                     $(15,339,310)        $(4,592,090)      $(12,543,072)
                                                             ============         ===========       ============
Loss per Share of Common Stock:
   Basic and Diluted:
     Loss from continuing operations                         $      (1.01)        $     (0.34)      $       (.45)
     Loss from discontinued operations                              (0.01)              (0.02)              (.92)
                                                             ------------         -----------       ------------
Net Loss                                                     $      (1.02)        $      (.36)      $      (1.37)
                                                             ============         ===========       ============
Weighted Average Number of Common
   Shares Outstanding                                          15,234,405          12,607,037          9,175,536
                                                             ============         ===========       ============
</TABLE>

See accompanying notes to consolidated financial statements.

                                       F-6

<PAGE>
                           CCA COMPANIES INCORPORATED

                 Consolidated Statements of Stockholders' Equity
<TABLE>
<CAPTION>
                                                  Common Stock
                                                Par Value $.001
                                              ------------------                                 Junior
                                                                 Subscriptions   Additional    Preferred  Accumulated
                                                Shares    Amount  Receivable   Paid-In Capital   Stock      Deficit       Total
                                              ---------- ------- ------------- ---------------  ------- -------------  ------------
<S>                                           <C>        <C>        <C>         <C>             <C>     <C>            <C>
Balance - June 30, 1997                        6,385,404 $ 6,386    $ -         $16,672,672     $ -     $ (9,949,138)  $  6,729,920
Net proceeds from exercise of over allotment
   option                                        330,000     330      -           1,447,239       -                -      1,447,569
Conversion of debentures                          73,000      73      -             364,927       -                -        365,000
Issuance of common stock in exchange for
   professional services                           5,000       5      -              26,245       -                -         26,250
Issuance of common stock as part of the
   Sakhalin business acquisition               2,000,000   2,000      -          10,398,000       -                -     10,400,000
Issuance of common stock in consideration
   for rights and interests held by Sovereign    200,000     200      -           1,049,800       -                -      1,050,000
Issuance of common stock in consideration
   for securing the Far East Consortium
   Management Agreements                         950,000     950      -           3,490,300       -                -      3,491,250
Sale of common stock ($5.14 per share) from
   December 1997 to February 1998              2,044,763   2,045      -           8,952,625       -                -      8,954,670
Exercise of options at $2.00 per share             7,881       8      -              15,754       -                -         15,762
Options issued in consideration of the
   acquisition of the Sakhalin business                -       -      -           1,091,820       -                -      1,091,820
Options and warrants issued as compensation
   for consulting services                             -       -      -             921,569       -                -        921,569
Options issued in exchange for legal services          -       -      -             285,619       -                -        285,619
Services performed by Officer charged
   to compensation  and treated as a
   contribution to capital                             -       -      -              90,000       -                -         90,000
Issuance of junior preferred stock -
  (1 share outstanding)                                -       -      -                  -        -                 -             -
Net loss for 1998                                      -       -      -                  -        -      (12,543,072)   (12,543,072)
                                              ---------- -------    ---        -----------      ----    ------------  -------------
Balance - June 30, 1998                       11,996,048  11,997      -         44,806,570         -     (22,492,210)    22,326,357

</TABLE>

See accompanying notes to consolidated financial statements.

                                       F-7
<PAGE>
                           CCA COMPANIES INCORPORATED

           Consolidated Statements of Stockholders' Equity (Continued)

<TABLE>
<CAPTION>
                                                  Common Stock
                                                Par Value $.001
                                              ------------------                                 Junior
                                                                 Subscriptions   Additional    Preferred  Accumulated
                                                Shares    Amount  Receivable   Paid-In Capital   Stock      Deficit       Total
                                              ---------- ------- ------------- ---------------  ------- -------------  ------------
<S>                                           <C>        <C>        <C>         <C>             <C>     <C>            <C>
Balance - June 30, 1998                       11,996,048 $11,997    $ -         $44,806,570     $ -     $(22,492,210)  $22,326,357

Cancellation of shares issued to FEC at
   $1.50 per share                              (700,000)   (700)     -          (1,049,300)      -                -    (1,050,000)
Sale of common stock                           2,053,201   2,053      -           1,674,547       -                -     1,676,600
Issuance of common stock in consideration
   for the acquisition of Roulette                17,857      18      -             124,982       -                -       125,000
Issuance of additional stock, per Roulette
   agreement, to compensate for fall in
   stock price                                   116,813     117      -                (117)      -                -             -
Issuance of shares in exchange for services
   in acquisition of Roulette                      7,143       7      -              49,993       -                -        50,000
Issuance of shares in exchange for
   construction services in Suriname              89,000      89      -             200,161       -                -       200,250
Issuance of common stock in consideration
   for the acquisition of food technology        127,877     128      -                (128)      -                -             -
Exercise of options at $0.50 per share             7,000       7      -               3,493       -                -         3,500
Consulting services to Sakhalin project
   paid by the Issuance of shares                300,000     300      -             224,700       -                -       225,000
Non-employee directors compensated by the
   issuance of options                                 -       -      -             233,000       -                -       233,000
Compensation charges incurred by reducing
   the exercise price of 1,462,500 options and
   warrants granted to directors and others            -       -      -             550,000       -                -       550,000
Consulting  services paid by the issuance
   of warrants                                         -       -      -              75,000       -                -        75,000
Cancellation of Junior Preferred Stock
   (one share outstanding in 1998)                     -       -      -                   -       -                -             -
Net loss for 1999                                      -       -      -                   -       -       (4,592,090)   (4,592,090)
                                              ---------- -------    ---         -----------     ---     ------------   -----------
Balance - June 30, 1999                       14,014,939 $14,016    $ -         $46,892,901     $ -     $(27,084,300)  $19,822,617

</TABLE>

See accompanying notes to consolidated financial statements.

                                       F-8
<PAGE>
                           CCA COMPANIES INCORPORATED

           Consolidated Statements of Stockholders' Equity (Continued)
<TABLE>
<CAPTION>
                                                  Common Stock
                                                Par Value $.001
                                              ------------------                                 Junior
                                                                 Subscriptions   Additional    Preferred  Accumulated
                                                Shares    Amount  Receivable   Paid-In Capital   Stock      Deficit       Total
                                              ---------- ------- ------------- ---------------  ------- -------------  ------------
<S>                                           <C>        <C>        <C>         <C>             <C>     <C>            <C>
Balance - June 30, 1999                       14,014,939 $14,016    $ -         $46,892,901     $ -     $(27,084,300)  $19,822,617

Issuance of common stock to consultant
 as bonus per contract                           250,000     250      -              24,750       -                -        25,000

Issuance of shares upon conversion of
 principal and interest of loan from Danville  1,481,060   1,481      -             194,019       -                -       195,500

Issuance of shares in consideration for
 legal services                                  150,000     150      -              19,850       -                -        20,000

Issuance of shares to consultant
 for services                                    264,000     264      -              65,736       -                -        66,000

Sale of common stock at $0.75 per share          166,667     167      -             124,833       -                -       125,000

Repricing of warrants and options                      -       -      -              20,000       -                -        20,000

Warrants issued in connection with debt                -       -      -             155,400       -                -       155,400

Net loss for 2000                                      -       -      -                  -        -      (15,339,310)  (15,339,310)
                                              ---------- -------    ---         -----------     ---     ------------   -----------
Balance - June 30, 2000                       16,326,666 $16,328    $ -         $47,497,489     $ -     $(42,423,610)  $ 5,090,207
                                              ========== =======    ===         ===========     ===     ============   ===========
</TABLE>

See accompanying notes to consolidated financial statements.

                                       F-9

<PAGE>
                           CCA COMPANIES INCORPORATED

                      Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>

                                                            Year Ended                 Year Ended                Year Ended
                                                           June 30, 2000              June 30, 1999             June 30, 1998
                                                          ---------------            ---------------           ---------------
<S>                                                      <C>                        <C>                       <C>
Operating Activities:
   Net loss                                              $    (15,339,310)          $     (4,592,090)         $    (12,543,072)
                                                         ----------------           ----------------          ----------------
   Adjustments to reconcile net loss to net cash
    used in operating activities, net of effect of
    acquisition -
     Loss from discontinued operations                            152,123                    283,625                 8,437,369
     Minority interest                                            582,204                     89,278                         -
     Compensation paid by the issuance of
      stock options and warrants                                   20,000                    783,000                   921,569
     Write-down of assets                                      13,857,192                    609,833                   554,262
     Depreciation and amortization                                784,462                    499,494                    16,168
     Interest accrued treated as
      contribution to capital                                      10,500                          -                         -
     Services performed by Officer charged
      to compensation and treated as a
      contribution to capital                                           -                          -                    90,000
     Legal services provided by shareholder                        20,000                    114,619                   171,000
     Consulting services provided for
      common stock                                                 91,000                     75,000                    26,250
     Amortization of goodwill                                     351,475                    351,475                   177,874
     Deferred income taxes                                        192,884                          -                         -
     Changes in current assets and liabilities:
       Accounts receivable                                         18,000                    (12,875)                        -
       Prepaid expenses and other current assets                   99,474                    348,017                  (299,531)
       Accounts payable and accrued  expenses                    (432,469)                   (60,539)                1,429,461
                                                         ----------------           ----------------          ----------------
         Total Adjustments                                     15,746,847                  3,080,927                11,524,422
                                                         ----------------           ----------------          ----------------
     Net Cash Provided (Used) by
       Continuing Operations                                      407,537                 (1,511,163)               (1,018,650)

        Net Cash Used by Discontinued Operations                 (261,396)                  (355,322)               (3,179,133)
                                                         ----------------           ----------------          ----------------
Net Cash Provided (Used) by Operating Activities                  146,141                 (1,866,485)               (4,197,783)
                                                         ----------------           ----------------          ----------------
Investing Activities:
   Property, equipment and leasehold
    improvements                                                 (142,602)                (3,642,111)               (2,250,193)
   Deposits on assets                                            (115,208)                         -                  (422,015)
   Project development costs and other                           (305,000)                   (42,813)               (4,308,637)
   Construction finance costs and other                            (9,734)                  (313,364)                 (344,300)
   Cash from acquisition, net of funds acquired                         -                          -                   544,632
   Funds applied against (used for)
    loans and notes receivable                                          -                     57,252                  (877,085)
                                                         ----------------           ----------------          ----------------
         Net Cash Used for Continued Operations                  (572,544)                (3,941,036)               (7,657,598)

         Net Cash Provided (Used) for
            Discontinued Operations                                     -                  1,810,000                (4,570,325)
                                                         ----------------           ----------------          ----------------
Net Cash Used in Investing Activities                            (572,544)                (2,131,036)              (12,227,923)
                                                         ----------------           ----------------          ----------------

</TABLE>

See accompanying notes to consolidated financial statements.

                                      F-10
<PAGE>
                           CCA COMPANIES INCORPORATED

                Consolidated Statements of Cash Flows (Continued)

<TABLE>
<CAPTION>

                                                            Year Ended                 Year Ended                Year Ended
                                                           June 30, 2000              June 30, 1999             June 30, 1998
                                                          ---------------            ---------------           ---------------
<S>                                                      <C>                        <C>                       <C>
Financing Activities:
   Warrants issued for debt                              $        155,400           $             -           $              -
   Net proceeds from initial public offering                            -                         -                  1,447,569
   Proceeds from sale of common stock                             310,000                  1,603,500                 8,970,432
   Cash advance to (repayment by)
    Suriname Casino                                               (50,000)                    50,000                         -
   Borrowings                                                     800,000                  2,426,600                         -
   Repayments of notes payable                                   (999,100)                (1,250,000)                 (114,672)
                                                         ----------------           ----------------          ----------------
Net Cash Provided by Financing Activities                         216,300                  2,830,100                10,303,329
                                                         ----------------           ----------------          ----------------
Net Increase (Decrease) in Cash and
 Cash Equivalents                                                (210,103)                (1,167,421)               (6,122,377)
Cash and Cash Equivalents, Beginning of Year                      425,662                  1,593,083                 7,715,460
                                                         ----------------           ----------------          ----------------
Cash and Cash Equivalents, End of Year                   $        215,559           $        425,662          $      1,593,083
                                                         ================           ================          ================
</TABLE>

See accompanying notes to consolidated financial statements.

                                      F-11

<PAGE>


                                        CCA COMPANIES INCORPORATED
                            Consolidated Statements of Cash Flows (Continued)

<TABLE>
<CAPTION>
                                                            Year Ended                 Year Ended                Year Ended
                                                           June 30, 2000              June 30, 1999             June 30, 1998
                                                          ---------------            ---------------           ---------------
<S>                                                             <C>                         <C>                    <C>
Supplemental Disclosures of Cash Flow
 Information:
   Cash paid during the period for:
     Interest                                                   $375,817                    $325,778               $         -
     Foreign income tax                                          200,384                           -                         -
   Non-cash transactions:
     Issuance of common stock in order to
      secure convertible debt                                          -                      76,600                   365,000
     Issuance of common stock in consideration
      for the Sakhalin Business Acquisition                            -                           -                10,400,000
     Options issued in consideration for
       the Sakhalin Business Acquisition                               -                           -                 1,091,820
     Issuance of common stock in consideration
      for the acquisition of Sovereign's rights
      and interests                                                    -                           -                 1,050,000
     Issuance of common stock to consultants for
      services                                                    91,000                     225,000                         -
     Issuance of common stock in consideration
      for the investment in Roulette                                   -                     175,000                         -
     Issuance of common stock to construction
      contractor of Suriname Casino                                    -                     200,250                         -
     Cancellation of convertible debentures
      against loan receivable                                          -                           -                   210,000
     Stock issued in consideration for the
      acquisition of agreements                                        -                           -                 3,491,250
     Cancellation of common stock as part of
      termination of the Hotel Management
      Agreements                                                       -                  (1,050,000)                        -
     Shares from debt conversion                                 195,500                           -                         -
     Compensation charges incurred on reducing
       exercise price of options and warrants
       granted to directors and others                            20,000                     550,000                         -
     Issuance of warrants for consulting services                      -                      75,000                         -
     Non-employee directors compensated by
       issuance of options                                             -                     233,000                         -
     Issuance of shares in consideration for
       legal services                                             20,000                           -                         -

</TABLE>

See accompanying notes to consolidated financial statements.

                                      F-12
<PAGE>
                           CCA COMPANIES INCORPORATED

                   Notes to Consolidated Financial Statements

                    Years Ended June 30, 2000, 1999 and 1998

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

              The Company - During the fiscal year ended June 30, 1998, CCA
              Companies Incorporated (the "Company") changed its name from
              Conserver Corporation of America. The Company was considered a
              development stage Company until March 1998.

              Subsidiaries - The consolidated financial statements include the
              accounts of the Company and its subsidiaries. The active
              subsidiaries are Sakhalin General Trading and Investments Ltd.
              ("SGTI"), Sakhalin City Center Ltd. ("SCC"), Dorsett Hotel &
              Resorts Inc. ("Dorsett") and Suriname Leisure Company A.V.V.
              ("SLC") and are based and operating in Cyprus, Russian Federation,
              the United States and Suriname, respectively. The inactive
              subsidiaries are Dorsett Hotels and Resort International (m)Snd.
              Bhd. ("DHRI"), and Roulette Kft. ("Roulette") (majority
              shareholding disposed of in December 1998) and are based in
              Malaysia and Hungary, respectively.

              Nature of Operations - The Company's principal line of operation
              is to provide gaming services through the ownership and management
              of a Casino in Suriname. In addition, the Company is in the
              planning and design stage relating to a Casino and mountain resort
              project on Sakhalin Island and is actively pursuing other
              opportunities.

              Principles of Consolidation - The accompanying consolidated
              financial statements include the accounts of CCA and its
              subsidiaries (collectively, the "Company"). Accounts of Roulette
              have been consolidated from the date of acquisition to the date on
              which CCA disposed of its majority interest, December 1998.
              Inter-company transactions and balances have been eliminated in
              consolidation.

              SCC is currently generating losses and the minority shareholders
              are not obligated to fund these losses. Accordingly, minority
              interest held in SCC is not reflected in the financial statements.

              Casino Revenue - Casino revenue is the net win from gaming
              activities, which is the difference between gaming wins and
              losses.

              Cash and Cash Equivalents - The Company considers investments with
              original maturities of three months or less at the time of
              purchase to be cash equivalents. At times, cash balances in the
              Company's bank accounts in the United States may exceed federally
              insured limits.

                                      F-13
<PAGE>
                           CCA COMPANIES INCORPORATED

             Notes to Consolidated Financial Statements (Continued)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

              Use of Estimates in the Preparation of Financial Statements - The
              preparation of financial statements, in conformity with generally
              accepted accounting principles, requires management to make
              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
              reported amounts of revenues and expenses during the reporting
              period. Actual results could differ from those estimates.

              Financial Instruments - The carrying amounts of financial
              instruments including loans receivable, accounts receivable,
              accounts payable and debt approximates fair value.

              Excess Cost over Fair Value of Assets Acquired - The Company
              reviews the recoverability of the excess cost over the fair value
              of assets acquired on an on going basis and, accordingly, has
              determined that recoverability of goodwill associated with the
              SGTI assets acquired is doubtful and accordingly, the unamortized
              balance has been written off in fiscal 2000 (see Note 2).
              Historically, the excess cost over the fair value of assets
              acquired has been amortized, on a straight-line basis, over the
              estimated future periods to be benefited (30 years).

              Property, Equipment and Leasehold - Property and equipment is
              recorded at cost. Depreciation and amortization is computed by the
              straight-line method based on the estimated useful lives (3 - 5
              years) of the related assets. Leasehold improvements are amortized
              over the shorter of the life of the asset or the lease.

              Income Taxes - For the purpose of these financial statements the
              Company has adopted the provisions of SFAS No. 109, "Accounting
              for Income Taxes," for all periods presented. Under the asset and
              liability method of SFAS 109, deferred taxes are recognized for
              differences between financial statement and income tax bases of
              assets and liabilities.

              Preferred Stock - The Company is authorized to issue preferred
              stock. Specific powers, preferences, rights, qualifications,
              limitations and restrictions are to be designated by the Company's
              Board of Directors at the time of issuance.

              Stock Based Compensation - SFAS No. 123, "Accounting for Stock
              Based Compensation" establishes a fair value method for accounting
              for stock-based compensation plans either through recognition or
              disclosure. The Company did not adopt the fair value based method
              for employees but instead discloses the pro forma effects of the
              calculation required by the statement. (See Note 10)

              Impairment of Long-Lived Assets - The Company utilizes SFAS No.
              121, "Accounting for the Impairment of Long-Lived Assets and for
              Long-Lived Assets to be Disposed of". Under the provisions of this
              statement, the Company has evaluated its long-lived assets for
              financial impairment, and will continue to evaluate them as events
              or changes in circumstances indicate that the carrying amount of
              such assets may not be fully recoverable.

                                      F-14
<PAGE>
                           CCA COMPANIES INCORPORATED

             Notes to Consolidated Financial Statements (Continued)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

              The Company evaluates the recoverability of long-lived assets by
              measuring the carrying amount of the assets against the estimated
              un-discounted future cash flows associated with them. At the time
              such evaluations indicate that the future un-discounted cash flows
              of the Long-lived assets are not sufficient to recover the
              carrying value of such assets, the assets are adjusted to their
              fair values.

              The Company recorded charges of approximately $610,000 for the
              year ended June 30, 1999 relating to Roulette, $4,200,000 for the
              year ended June 30, 1998 relating to Dorsett (see Note 3) and
              $305,000 for costs of a management contract for the Ramallah
              Project (see Note 2) and $13,552,000 relating to SGTI and SCC (See
              Note 2) for the year ended June 30, 2000 as a result of a
              financial impairment of several of its long-lived assets.

              Earnings Per Share - Basic net loss per share of common stock is
              based on the weighted average number of common shares outstanding
              during each period. Diluted loss per share of common stock is
              computed on the basis of the weighted average number of common
              shares and common shares equivalent securities outstanding.
              Securities having an anti-dilutive effect are excluded from the
              calculation.

              The weighted average number of common shares outstanding for all
              periods presented retroactively reflects stock splits and reverse
              stock splits effected by the Company.

              Options amounting to 4,934,619 for the year ended June 30, 2000,
              4,062,619 for the year ended June 30, 1999, and 3,169,619 for the
              year ended June 30, 1998 and warrants amounting to 5,369,013 for
              the year ended June 30, 2000, 3,819,012 for the year ended June
              30, 1999 and 2,260,678 for the year ended June 30, 1998 have not
              been included in the computation of net loss per common
              stock-diluted because of their anti-dilutive effect.

              Foreign Currency Translation - The statutory currencies in the
              countries in which the Company's subsidiaries are based are the
              Cyprus Pound, the Russian Ruble, the Malaysian Ringgit, the United
              States Dollar, the Suriname Guilder and the Hungarian Forints. The
              reporting currency is the U.S. Dollar.

              For 1999, the Company determined that the functional currency for
              its subsidiaries, SGTI and SLC, is the United States Dollar. All
              assets and liabilities, materially all contracts, transactions and
              normal business activities have been transacted, conducted,
              negotiated and recorded in U.S. Dollars. It is the Company's
              position that the operations of the Company are not integrally
              connected to the currencies of Cyprus and Suriname. Pursuant to
              Financial Accounting Standards Board Statement No. 52, "Foreign
              Currency Translation" (FAS 52), the Company's Russian subsidiary,
              SCC, is situated in a highly inflationary economy. Accordingly,
              SCC's functional currency will be the U.S. Dollar.

                                      F-15
<PAGE>
                           CCA COMPANIES INCORPORATED

             Notes to Consolidated Financial Statements (Continued)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

              For 1998, the financial statements for its subsidiaries outside
              the U.S. have been translated to U.S. Dollars using a methodology
              consistent with Statement of Financial Accounting Standards (SFAS)
              No. 52, Foreign Currency Translation. Assets and liabilities are
              translated to U.S. Dollars at the rates prevailing on the balance
              sheet dates and the statements of operations have been translated
              from the functional currencies to U.S. Dollars using average
              exchange rates for the applicable years. As of June 30, 1998, the
              cumulative foreign currency translation adjustment was
              insignificant, and therefore, not disclosed as a separate
              component of stockholders' equity. Exchange losses of
              approximately $79,000 for the year ended June 30, 1998, are
              included in general and administrative expenses in the
              accompanying consolidated statements of operations.

              Recent Pronouncements

              In June 1998, the Financial Accounting Standards Board ("FASB")
              issued Statement of Financial Accounting Standards ("SFAS") No.
              133, "Accounting for Derivative Instruments and Hedging
              Activities" ("SFAS 133"). SFAS 133 requires the recognition of the
              fair value of all derivative instruments on the balance sheet.
              Subsequent to the issuance of SFAS 133, the FASB received many
              requests to clarify certain issues causing difficulties in
              implementation. In June 2000, the FASB issued SFAS 138, which
              responds to those requests by amending certain provisions of SFAS
              133. These amendments include allowing foreign-currency exposures
              that reduce the need for third-party derivatives and redefining
              the nature of interest rate risk to avoid sources of
              ineffectiveness. The impact of adopting SFAS 133, as amended by
              SFAS 138, is not significant.

              In October 1998, the Financial Accounting Standards Board issued
              Statement of Financial Accounting Standards No. 134 "Accounting
              for Mortgage-Backed Securities Retained After the Securitization
              of Mortgage Loans Held for Sale by a Mortgage Banking Enterprise",
              which is effective for the first fiscal quarter beginning after
              December 15, 1998. There is no impact to the Company's financial
              reporting or presentation due to the adoption of SFAS No. 134.

              In February 1999, the Financial Accounting Standards Board issued
              Statement of Financial Accounting Standards No. 135 "Recission of
              FASB Statement No. 75 and Technical Corrections", which is
              effective for financial statements issued after February 15, 1999.
              There is no impact to the Company's financial reporting or
              presentation due to the adoption of SFAS No. 135.

              In December 1999, the Securities and Exchange Commission issued
              Staff Accounting Bulletin 101, "Revenue Recognition in Financial
              Statements" ("SAB 101"). SAB 101 provides guidance on the
              recognition, presentation and disclosure of revenues in financial
              statements and requires adoption no later than the fourth quarter
              of fiscal 2001. There is no impact to the Company's financial
              reporting or presentation due to the adoption of SAB 101.

                                      F-16
<PAGE>
                           CCA COMPANIES INCORPORATED

             Notes to Consolidated Financial Statements (Continued)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

              Reclassifications - Certain prior year balances have been
              reclassified to conform to the 2000 presentation.

NOTE 2 - LINES OF BUSINESS

              The Company's original principal business was food preservation
              technology. (See Note 3) Due to the Company's desire to enter
              several new lines of business and its inability to market and
              distribute Preservit(TM), its food technology product, in a
              commercially viable fashion, the Company identified and explored
              several business opportunities and entered into a number of new
              lines of business.

              In August 1997, the Company announced that it was diversifying
              beyond its sole line of business of marketing, distributing and
              otherwise commercially exploiting its food technology product and
              was exploring new lines of business in the hotel and casino
              industry (the "New Lines of Business"). At a Special Meeting of
              Stockholders held in December 1997, the Company's stockholders
              voted on and approved various proposals regarding the New Lines of
              Business and New Business Opportunities as described herein.

              SAKHALIN ISLAND (RUSSIAN FEDERATION) CASINO AND RESORT

              Commencing in 1997, the Company acquired rights and secured
              property under a 101-year lease, at no annual cost, on a ten acre
              site to build and operate a 140 million-dollar 450-room year round
              hotel/casino resort. The Company initially planned to have 70
              tables and 350 slot machines with the intent to add additional
              gaming equipment. The site is located in the center of the City of
              Yuzhno-Sakhalinsk ("City") on Sakhalin Island (the "Sakhalin
              Project"). Sakhalin Island is a Russian territory located just
              north of Japan. This proposed hotel/casino, if built, would be
              easily accessible for gaming activities from Japan, China, Korea,
              and the Russian mainland. Further development was planned at a
              nearby ski mountain. The Company will manage both the hotel resort
              and the casino for a management fee equal to 3% of revenues, as
              defined, as well as an incentive fee of 10% of gross profits.

              Since that time, the Company has entered into numerous discussions
              and several agreements in attempts to raise capital to finance the
              Sakhalin Project without success. In 2000, due to the Company's
              failure to proceed and based on the its evaluation of assets for
              financial impairment as required by SFAS No. 121, certain
              capitalized expenditures and goodwill (the excess of the aggregate
              purchase price over the fair market value of net assets acquired),
              net of amortization, totaling approximately $13,552,000 have been
              written down (see Note 1). The Company is continuing to explore
              additional possibilities to finance the project and protect its
              investment.

                                      F-17
<PAGE>
                           CCA COMPANIES INCORPORATED

             Notes to Consolidated Financial Statements (Continued)

NOTE 2 - LINES OF BUSINESS (CONTINUED)

              The Company believes that its outlay to secure the lease with the
              City for the land and an existing ski resort and the money
              expended principally for demolition and the relocation of the
              residents living on the site has not been financially impaired.
              Accordingly, approximately $2,100,000 expended in connection with
              the lease and demolition remains on the Company's accounts.

              In addition to granting the lease, the City has committed
              contractually that it will not permit the several small existing
              casinos to increase their floor areas or extend the range of their
              operations without the written approval of SCC. The Company will
              also have certain rights to participate in the development and
              management of any future casinos within the jurisdiction of the
              City.

              ORDER OF EVENTS

              The Company, in October 1997, entered into a stock purchase
              agreement (the "Sakhalin Agreement") with SGTI and in December
              1997 executed an assignment agreement with Sovereign Gaming and
              Leisure Limited ("Sovereign"). Pursuant to the Sakhalin Agreement,
              the Company would acquire all of the outstanding shares of SGTI.
              SGTI owns a 65% interest in SCC. SCC is a closed joint stock
              company incorporated under the laws of the Russian Federation that
              holds rights, including the necessary gaming licenses to operate,
              that have been granted by various governmental units to develop a
              casino in Sakhalin. In addition to the acquisition of SGTI, the
              Company would acquire all rights and interest to or in the
              Sakhalin Project held by Sovereign, which include certain
              operating and project management agreements.

              In December 1997, the Company completed the acquisition of 100% of
              the shares of SGTI in exchange for 2,000,000 shares of its common
              stock. The Company also acquired all rights and interests of
              Sovereign in exchange for 200,000 shares of common stock to the
              owners of Sovereign. In addition, two directors of the Company
              were granted options to purchase 300,000 and 200,000 shares of
              common stock at an exercise price equal to $6.125 per share in
              exchange for their services relating to the acquisition of SGTI
              ("Sakhalin Options"). The Sakhalin Options have subsequently
              expired unexercised.

              The Company's common stock was valued at $5.20 per share on the
              date the acquisition was completed and as such, the value
              attributed to the 2,000,000 shares of the Company's common stock
              issued to the owners of SGTI was $10,400,000. The Sakhalin Options
              were valued at $1,091,819 and capitalized as part of the purchase
              price of SGTI. The Company's common stock issued to the owners of
              Sovereign was valued at $5.25 per share on the date the assignment
              agreement was consummated. Thus the value attributed to the shares
              was $1,050,000.

                                      F-18
<PAGE>
                           CCA COMPANIES INCORPORATED

             Notes to Consolidated Financial Statements (Continued)

NOTE 2 - LINES OF BUSINESS (CONTINUED)

              As part of the Sakhalin Agreement, the Company paid $3,000,000 to
              SGTI. The advance has been eliminated in consolidation as an
              inter-company account.

              The acquisition was accounted for as a purchase and accordingly
              the results of operations of SGTI have been included in the
              Company's consolidated financial statements since the date of
              acquisition.

              The transaction was recorded as follows:

              Common stock and options issued                       $11,491,819
              Acquisition costs                                         193,885
                                                                    -----------

              Purchase price                                         11,685,704
                                                                    -----------

              Construction in progress acquired                       3,638,957
              Liabilities assumed                                    (3,340,925)
              Other assets                                              843,356
                                                                    -----------

              Fair value of net assets acquired                       1,141,388
                                                                    -----------

              Excess of aggregate purchase price over the fair
                market value of the net assets acquired             $10,544,316
                                                                    ===========

              The excess of the aggregate purchase price over the fair market
              value of net assets acquired was being amortized over 30 years on
              a straight-line basis. During the fiscal year ending 2000, the
              Company wrote off the remaining goodwill.

              For the fiscal year ending June 30, 2000 and 1999, SGTI and SCC
              were subsidiaries of the Company.

              The Sakhalin Agreement provides that, upon request of the Company,
              Sovereign may agree to become project manager during the
              construction phase of the Sakhalin project, subject to reasonable
              compensation for such services, which shall not exceed the lesser
              of 5% of the construction cost of the Sakhalin Project or
              $5,000,000. Subsequent to the Sakhalin agreement, Mr. Dallas
              Dempster ("Dempster"), a paid consultant to Sovereign, was
              recruited to be the President and Chief Executive Officer ("CEO")
              of CCA. Accordingly, it is the Company's current intent not to
              employ Sovereign and to manage the construction phase of the
              Sakhalin project directly.

                                      F-19
<PAGE>
                           CCA COMPANIES INCORPORATED

             Notes to Consolidated Financial Statements (Continued)

NOTE 2 - LINES OF BUSINESS (CONTINUED)

              In October 1997, the Company entered into an agreement (the
              "Development Services Agreement") with Mr. David Chiu ("Chiu") for
              certain development services to be performed, including using his
              best efforts to secure the necessary debt financing and guarantees
              for the complete turnkey construction of the Sakhalin Project. The
              Development Service Agreement expired in August 1998 without Chiu
              rendering any services.

              In September 1998, the Company entered into a letter of intent
              with JSC Rosneftegazstroy ("RNGS"), a large Russian construction
              company. The letter of intent was aimed at RNGS guaranteeing the
              financing of a turnkey construction contract on Sakhalin Project
              and acting as a subcontractor. The Company and RNGS never
              contractually acted on the letter of intent and it subsequently
              was abandoned.

              In June 1999, the Company entered into an agreement ("Financing
              Agreement") with the Arter Group Limited ("Arter") and Valmet S.A.
              ("Valmet") (See Notes 4 and 8). According to the agreement, Arter
              and Valmet will negotiate on the Company's behalf to acquire
              financing of 70% of the Sakhalin Project's total estimated cost.
              The remaining 30% will be injected as equity financing arranged by
              the Company. In consideration for the additional equity raised,
              the Company's ownership in the SCC will increase to 80% (from the
              65% the Company currently owns). The Sakhalin Oblast Government
              and the City will own the remaining 20% of SCC, subject to final
              negotiations. If Arter and Valmet are successful obtaining a
              commitment for funding that is acceptable to Company, as defined
              by the agreement, the Company would arrange to transfer a
              percentage of its interest in SGTI to Arter and Valmet. The
              proposed structure of ownership shall be as follows:

              CCA      50% shares of SGTI - effective ownership in the
                       Sakhalin project of 40%

              Arter    31.25% shares of SGTI - effective ownership in the
                       Sakhalin project of 25%

              Valmet   18.75% shares of SGTI - effective ownership in the
                       Sakhalin project of 15%


              CCA can terminate the agreement with sixty days notice to all
              parties in writing at any time prior to Arter and Valmet securing
              sufficient funding for the completion of the project.

              The Sakhalin Project requires substantial financing to progress
              further. In November 1999, the Company submitted a loan
              application for financing to the Sberbank, a Russian Federation
              bank, for financing of $106.8 million which has not been
              successful to date. If financing is not obtained, the Company may
              be forced to abandon the project. If the Company is forced to
              abandon the project, the Company will attempt to market the plans,
              licenses and rights in order to recover as much of the historic
              expenditures as possible. The Company is unable at this time to
              quantify what recoveries it will attain, if any.

                                      F-20
<PAGE>
                           CCA COMPANIES INCORPORATED

             Notes to Consolidated Financial Statements (Continued)

NOTE 2 - LINES OF BUSINESS (CONTINUED)

              If the Company is successful in financing the Sakhalin Project,
              the Company will have to design and set up infrastructure that is
              not currently in place. In addition, the Company will have to
              employ a significant number of people and retain consultants and
              contractors to manage, design and construct the property, which
              will require significant financial resources.

              HOTEL MANAGEMENT AGREEMENT

              During the fiscal year ending June 30, 1998, the Company entered
              into two hotel management agreements (the "Hotel Management
              Agreements"). One agreement with Dorsett Hotels and Resorts
              International Ltd. ("DHR"), a company owned and controlled by
              David Chiu, and the other with Far East Consortium International
              Ltd. ("FEC"). Under the agreements, the Company acquired the right
              to (directly or through a subsidiary) exclusively manage and
              operate three hotels that were in service and the right to manage
              and operate five other hotels that were scheduled to open in the
              future. The right to manage the properties was pursuant to
              long-term contracts ("Hotel Operating Contracts") that had
              previously been entered into with the owners of each of the hotels
              by DHR and FEC.

              The Company paid consideration of 3 million dollars at the
              execution of the Hotel Management Agreements in cash and further,
              a promise to issue two million shares of the Company's common
              stock payable on a pro-rata basis on the assignment of the hotel
              operating contracts with each hotel. Subsequently, the Company
              issued 950,000 shares of its common stock on the assignment of
              contracts with three operating hotels.

              During July 1998, the Company borrowed 1 million dollars from FEC
              for six months and with interest at the prime rate plus 1%.

              Through November 4, 1998, the Company held Hotel Operating
              Contracts for the three operating hotels with a total of
              approximately 1,200 rooms. Contrary to the terms of the Hotel
              Operating Contracts, the Company was not permitted to actively
              manage two of the Hotels. In addition, the Company was notified
              that the renovation and/or construction of the five hotels that
              were to be turned over to the Company in the future had been
              stopped and that the projects were being reviewed for financial
              efficacy.

              As a result of the failure of FEC to comply with the terms of the
              Hotel Management Agreements, the parties to the agreements reached
              a settlement in November 1998 to terminate the agreements and
              exchange mutual releases of related obligations. According to the
              terms of the settlement, CCA received $450,000 in cash, the return
              of 700,000 shares of previously issued stock and retained
              $1,625,000 previously paid as management fees and loans. (See Note
              3)

                                      F-21
<PAGE>
                           CCA COMPANIES INCORPORATED

             Notes to Consolidated Financial Statements (Continued)

NOTE 2 - LINES OF BUSINESS (CONTINUED)

              THE SURINAME CASINO AND THE CASINO LEASE

              In April 1998, the Company entered into an agreement (the
              "Suriname Casino Agreement") with Parbhoe Handelmij NV (Parbhoe),
              a Suriname limited liability company. Under the agreement the
              parties formed and each acquired a 50% interest in Suriname
              Leisure Company (SLC), an Aruban limited liability company to
              develop a casino project (the "Suriname Casino") in Paramaribo,
              the capital city of Suriname.

              Pursuant to the Suriname Casino Agreement, the Company's fully
              owned subsidiary Dorsett, entered into the "Suriname Casino
              Management Agreement" with SLC to manage the Suriname Casino. As
              of June 30, 1999, the Company had advanced approximately 4.6
              million dollars to SLC for this project, of which approximately
              4.0 million dollars was spent for property, equipment and
              leasehold improvements. The Company retains a lien and security
              interest in the property and equipment until the advance is paid
              back by SLC. Repayment is subject to certain restrictions based
              upon an obligation to repay a loan received from Parbhoe. (See
              Note 7) As of June 30, 2000 the amount owing from SLC to CCA
              towards loans and interest costs approximated $3,657,000 of which
              $3,109,028 is eliminated in consolidation.

              The Suriname Casino Management Agreement provides for fifteen
              years exclusive operating rights of the Suriname Casino for a base
              fee equal to three percent of revenues, as defined, plus an
              incentive fee of ten percent of gross profits, as defined.

              Initially, the Company operated a small temporary casino
              commencing October 1998. The permanent casino facility was
              completed and opened in March 1999, which is when the Company
              vacated the temporary facility. The Suriname casino currently
              occupies two leased floors, totaling about 20,000 square feet, in
              the Plaza Hotel, which is in downtown Paramaribo. The casino has
              approximately 20 gaming tables, approximately 161 slot machines
              and a 50-seat restaurant.

              The Company leased the Casino premises from Parbhoe.  (See Note 9)

              BUDAPEST CASINO

              In April 1998, the Company's wholly owned subsidiary, Dorsett
              entered into an agreement with Casino Bahia De Cadiz S.A. ("CBC")
              and Mrs. Teresa Juste Picon, ("Juste") to purchase a 95% interest
              in the equity of Roulette, a Hungarian limited liability company.
              Roulette owned and operated the Orfeum Casino in Budapest. In
              addition and as part of the agreement, the Company acquired
              receivables of 1.5 million dollars due to CBC and Juste under loan
              agreements and lease agreements with Roulette. For arranging the
              transaction, the Company paid a minority shareholder of Roulette a
              fee of $75,000 that was capitalized as part of the Company's
              investment.

                                      F-22
<PAGE>
                           CCA COMPANIES INCORPORATED

             Notes to Consolidated Financial Statements (Continued)

NOTE 2 - LINES OF BUSINESS (CONTINUED)

              As of June 30, 1998, the Company paid $100,000 to the shareholders
              of Roulette as a deposit toward the purchase. In addition, prior
              to closing, the Company advanced additional funds of approximately
              $608,000 to Roulette. At the closing of the acquisition in
              September 1998 the Company delivered to Cadiz and Juste 17,857
              shares of the Company's common stock based on a value of $7.00 per
              share or $125,000 in total. In addition, the agreement required
              the issuance of additional shares to make up any shortfall in
              value from the $125,000 in value of shares delivered if the
              average stock price subsequently declined. The 10-day average
              price proceeding March 1, 1999 was $0.93 and as a result the
              Company issued an additional 116,813 shares of its common stock to
              CBC and Juste in May 1999.

              In December 1998, the Company entered into an agreement with
              A.G.M. International LTD ("AGM"). AGM is an Israeli junket
              operator experienced in organizing junket and premium casino
              player groups. AGM was granted 50% ownership of Roulette by
              agreeing to pay the Company $100,000 at closing and to pay an
              additional $100,000 if Roulette was able to renew its gaming
              license, which was due to expire November 1999, with the Hungarian
              Gaming Board. In addition, the agreement required AGM, as part of
              the transaction, to fund $100,000 of additional operating float
              needed in order to continue and $50,000 for general improvements.

              During 1999, the Hungarian Gaming Board made a decision to reduce
              the number of casino licenses that existed at the time the Company
              acquired its interest. Roulette was unsuccessful in its bid to
              obtain one of the reduced number of gaming licenses available and
              was forced to close the casino at the end of October 1999.

              At June 30, 1999, the Company wrote off its entire investment in
              Roulette as delineated below:

              Investment in Roulette                                  $ 300,000
              Loans to Roulette                                         608,311
                                                                      ---------
                                                                        908,311

              Less:  Loss from the Roulette subsidiary                 (298,478)
                                                                      ---------
                                                                        609,833

              Less:  Balance of investment written off                 (609,833)
                                                                      ---------
                                                                      $       -
                                                                      =========

                                      F-23
<PAGE>
                           CCA COMPANIES INCORPORATED

             Notes to Consolidated Financial Statements (Continued)

NOTE 2 - LINES OF BUSINESS (CONTINUED)

              RAMALLAH CASINO

              On March 24, 2000, Dorsett entered into a Casino Management
              Agreement (the "Ramallah Casino Agreement") with the Ramallah
              Hotel and Casino Company Ltd. to provide technical advice,
              developmental services and to manage a Casino in Ramallah on the
              West Bank. Subsequent to that time, acts of war, insurrection and
              riots have occurred on the West Bank and in Israel. As provided by
              the contracts, all obligations to proceed under the contract have
              been suspended while the disturbances exist. The Company incurred
              approximately $305,000 in costs associated with entering the
              Ramallah Casino Agreement which, based upon the circumstances have
              been written-off. (See Note 1)

              BUSINESS, POLITICAL AND ECONOMIC CONDITIONS

              The Company's operating activities are taking place principally in
              Suriname. Suriname has experienced within the last three years
              significant devaluation of its currency.

              CURRENCY EXCHANGE CONTROLS

              With regard to the activities taking place in the Russian
              Federation and Suriname, it is management's belief that it will be
              able to repatriate earnings without official impediments. There
              are currency exchange controls in place in the Russian Federation,
              which the Company is addressing in order to assure the ready
              ability to transfer funds out of the country.

NOTE 3 - DISCONTINUED OPERATIONS

              FOOD PRESERVATION TECHNOLOGY

              In November 1999, the Company officially abandoned its food
              preservation business and, accordingly, has reflected all losses
              attributable to such business as discontinued operations. The
              assets of the food preservation business consisted principally of
              fully reserved loans to two companies, Agrotech and CPC. In
              addition, the Company does not plan to exercise its option to
              acquire a controlling equity interest in entities that possess
              other food preservation technologies.

                                      F-24
<PAGE>
                           CCA COMPANIES INCORPORATED

             Notes to Consolidated Financial Statements (Continued)

NOTE 3 - DISCONTINUED OPERATIONS

              The results of operations of the food preservation business
              through June 30, 2000 that have been classified as a loss from
              discontinued operations are as follows:


                                                 Year Ended June 30,
                                         ------------------------------------
                                           2000         1999         1998
                                         --------    ---------    -----------

              Revenues                   $     -     $      -     $     9,879
              Costs and expenses           64,500      425,175      2,888,742
                                         --------    ---------    -----------
              Loss from discontinued
                operations               $ 64,500    $ 425,175    $ 2,878,863
                                         ========    =========    ===========


              Included in Costs and Expenses are provisions for loans made to
              the Food Division of $1,620,830 in 1998.

              HOTEL MANAGEMENT

              As a result of the termination of the Hotel Management Agreements
              between Dorsett, FEC and DHR in November 1998 and the subsequent
              dismissal of the hotel management employees in April 1999, the
              Company had no active hotel management operating business. The
              Company discontinued this line of business and reflected the
              related income, assets and liabilities as discontinued operations.
              The Company recorded a charge of 4.2 million dollars in 1998 to
              write down the carrying value of the Hotel Management Agreements,
              assets and trade names. (See Note 2)

              The results of operations of the hotel management business through
              June 30, 2000 that have been classified as a loss from
              discontinued operations are as follows:


                                                  Year Ended June 30,
                                          ------------------------------------
                                            2000         1999          1998
                                          --------     --------    -----------

              Revenues                    $     -      $363,301    $   639,741
              Costs and expenses            87,623      221,751      6,198,247
                                          --------     --------    -----------
              Income (loss) from
               discontinued operations    $(87,623)    $141,500    $(5,558,506)
                                          ========     ========    ===========

                                      F-25
<PAGE>
                           CCA COMPANIES INCORPORATED

             Notes to Consolidated Financial Statements (Continued)

NOTE 3 - DISCONTINUED OPERATIONS (CONTINUED)

              Unforeseen litigation relating to discontinued operations occurred
              subsequent to the final accountings and required expenditures
              during the year. The Company currently does not anticipate any
              further activity connected with discontinued operations. No tax
              benefit due to the loss from discontinued operations has been
              recorded due to the Company's uncertainty regarding future
              earnings.

NOTE 4 - PUBLIC OFFERINGS AND PRIVATE PLACEMENTS

              In July 1997, the Company's underwriter exercised its over
              allotment option, that it received during the initial public
              offering in 1997, to purchase an aggregate of 330,000 shares of
              common stock at $5.00 per share, resulting in the Company
              receiving additional net proceeds of approximately $1,448,000.
              Aggregate net proceeds to the Company from the IPO amounted to
              approximately $10,307,000. At the time of the IPO, the
              underwriters obtained Underwriters' Warrants to purchase 220,000
              shares of common stock exercisable for a period of four years at
              $8.25 per share.

              In November 1997, the Company commenced efforts to raise
              additional capital to fund its new lines of business and new
              business opportunities. The Company completed its private
              placement offering in February 1998 and received net proceeds in
              the aggregate of approximately $8,955,000 from the sale of
              2,044,763 shares of its common stock at a per share price of
              $5.14. At the time of the offering, the underwriters obtained
              Underwriters' Warrants to purchase 715,678 shares of common stock
              exercisable for a period of four years at $5.14 per share.

              In January 2000, the Company's Board of Directors agreed to issue
              150,000 shares of the Company's common stock at $0.13 per share to
              one of its legal counsel for services rendered to the Company.

              At the end of the term of the agreement, provided that the Casino
              Consultant was not in breach of the Casino Consulting Agreement,
              the Casino Consultant was entitled to receive a $250,000 bonus. At
              that time, the Casino Consultant agreed to accept 250,000 shares
              of the Company's common stock in place of the $250,000 bonus due
              to him. In December 1999, when the consulting contract expired,
              the stock was delivered (market price per share - $0.13). (See
              Note 8)

              In September 1998, 89,000 shares of the Company's common stock
              were issued to Maritime Services Corporation ("MSC"), the building
              contractor for the Suriname casino. These shares were issued at a
              price of $2.25 per share or $200,250, which MSC agreed to accept
              as consideration and payment towards its construction contract
              with SLC. (Notes 8 and 9)

                                      F-26
<PAGE>
                           CCA COMPANIES INCORPORATED

             Notes to Consolidated Financial Statements (Continued)

NOTE 4 - PUBLIC OFFERINGS AND PRIVATE PLACEMENTS (CONTINUED)

              In January 1999, Stanton & Associates ("Stanton"), an entity
              controlled by one of the Company's directors, accepted 153,200
              shares at $0.50 per share of the Company's common stock against
              the principal and interest of $76,600 that it was owed. (See Notes
              7 and 8)

              During the year ended June 30, 1999, the Company received
              $1,676,600 from the sale of 2,053,200 shares of common stock to
              private investors. At the time of the sale of common stock, the
              Company issued warrants to purchase 1,280,334 shares of the
              Company's common stock exercisable for periods ranging from 1 to 4
              years and at exercise prices of $1.00. An additional 25,000
              warrants with an exercise period of one year and an exercise price
              of $2.00 per share were issued. All warrant exercise prices exceed
              the market value of the stock at the dates that they were issued.

              During the year ended June 30, 1999, the Company issued 300,000
              shares of its common stock at $0.75 per share to Valmet, a
              consultant, for services performed relating to the Sakhalin
              project. At the same time, the Company issued 150,000 two year
              warrants to Valmet with an exercise price of $1 and valued at
              $25,000. (See Notes 2 and 8)

              In July and August 1999, the Company received $125,000 from two
              investors for the purchase of 166,667 shares of the Company's
              common stock at market value ($0.75 per share). In addition, the
              Company agreed to issue warrants to purchase 83,334 shares of the
              Company's common stock, at $1.00 per share to these investors. The
              warrants can be exercised at any time and expire in two to three
              years from the issuance date. (Note 10)

              In October 1999, the Company obtained financing through a
              Convertible Note of $350,000 from Danville Investments Pty. Ltd.,
              Australia ("Danville"). During the term of the Note or until the
              full amount of the loan had been repaid, Danville had the option
              to convert the outstanding principal plus the then accrued
              interest due on the loan into shares of common stock of the
              Company. Such conversion would be at a price equal to the five-day
              average market closing price ending on the day prior to the day of
              conversion. Danville, in December 1999, exercised its option to
              convert $185,000 of the principal of the loan plus accrued
              interest of $10,500 into 1,481,060 shares of the Company's stock
              based on the five day average stock price of $0.132 per share.
              (Notes 7 and 10)

              In November 1999, the Company, at its annual meeting of the
              stockholders, granted the Board of Directors the authority to
              effect a 1 for 10 reverse split of its common stock on or before
              March 28, 2000. The Board elected not to exercise its authority to
              effect the reverse split and the expiration date for the action
              passed.

              In March 2000, the Company issued 264,000 shares of its common
              stock at $0.25 per share to a consultant, Michael Davis, in
              settlement for consulting fees and reimbursable business expenses.

                                      F-27
<PAGE>
                           CCA COMPANIES INCORPORATED

             Notes to Consolidated Financial Statements (Continued)

NOTE 5 - PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS

              At June 30, property, equipment and leasehold improvements consist
              of the following:

                                                       2000            1999
                                                   -----------     -----------

              Office equipment and other assets    $   384,977     $   358,591
              Casino and restaurant equipment        1,972,894       1,856,678
              Vehicle                                    6,500           6,500
              Leasehold improvements                 4,426,767       4,426,767
              Construction in progress               2,100,000       5,251,396
                                                   -----------     -----------
                                                     8,891,138      11,899,932

              Less:  Accumulated depreciation       (1,301,859)       (517,397)
                                                   -----------     -----------
                                                   $ 7,589,279     $11,382,535
                                                   ===========     ===========


              Depreciation expense is $784,462 for the year ended June 30, 2000,
              $499,494 for the year ended June 30, 1999 and $16,168 for the year
              ended June 30, 1998.


NOTE 6 - INCOME TAXES

              CCA AND DORSETT

              At June 30, 2000, the CCA and Dorsett had United States net
              operating loss carryforwards ("NOL") of approximately $7,663,000
              that expire through 2015. In the event of a change in ownership of
              the Company, the utilization of the NOL will be subject to
              limitation under certain provisions of the United States Internal
              Revenue Code. In addition, at June 30, 2000, CCA and Dorsett had
              capital loss carryovers of approximately $5,494,000 which
              generally can only be used to offset capital gains. Unused capital
              losses are carried forward indefinitely until they can be used
              against future capital gains.

                                      F-28
<PAGE>
                           CCA COMPANIES INCORPORATED

             Notes to Consolidated Financial Statements (Continued)

NOTE 6 - INCOME TAXES  (CONTINUED)

              DHRI AND ROULETTE

              The Company's subsidiaries DHRI and Roulette experienced
              substantial losses. DHRI and Roulette closed operations and
              liquidated their net assets and are currently dormant. The Company
              does not anticipate, at this time, any future earnings against
              which losses may be applied. Accordingly, the Company has not
              provided for deferred tax assets for DHRI and Roulette.

              SCC

              At June 30, 2000, the SCC had net operating loss carryforwards
              ("NOL") of approximately $5,065,000 that expire through 2006. The
              carryforward is limited to 20% of the loss per year for five
              consecutive years.

              SCC will be subject to Russian Corporate tax on taxable profits
              and gambling tax once the Sakhalin Project commences operations.
              Currently, the Federal profit tax is 11% and the regional tax can
              be as high as 19%. In addition, gambling tax is levied based on
              fixed rates per gambling table, betting booking office and slot
              machines.

              Repatriation of profits generated by SCC in the Russian Federation
              by CCA may be highly regulated by the Russian Central Bank and the
              Taxing Authority. Any transfers of funds to entities outside the
              Russian Federation require special authorization from the Central
              Bank and the payment of dividends are subject to heavy double
              taxation laws. The Company believes that once the Sakhalin Project
              commences operations, the Russian Central Bank and the Taxing
              Authority will make profit repatriation concessions available.

              SGTI

              SGTI, which holds the Company's investment in SCC, is incorporated
              in Cyprus. Companies that are registered in Cyprus but are managed
              and controlled outside of Cyprus are not liable for tax on income
              occurring, derived and received outside of the country.

              SURINAME CASINO

              In 1999, SLC requested that the Government of Suriname (the
              "Government") grant it certain concessions regarding the
              imposition of taxes and import duties under the Suriname
              Investment Act. To date the Government has not granted the Company
              any relief. The Company is continuing to pursue the concessions
              but, according to legal counsel, a favorable ruling is
              questionable.

                                      F-29
<PAGE>
                           CCA COMPANIES INCORPORATED

             Notes to Consolidated Financial Statements (Continued)

NOTE 6 - INCOME TAXES (CONTINUED)

              In 2000, SLC has provided for income taxes payable to the
              Government based on a tax rate of 50% of the net taxable income
              since its inception based on the Suriname Hazard Games Act of
              1962. The Act states that income tax is levied at a rate of 50% of
              proceeds from the hazard games industry (which includes Casinos).
              SLC made no provisions for income tax or duties in the past based
              on opinions from Counsel regarding tax concessions that should
              have been granted. SLC is still pursuing tax incentives and
              entitlements that it believes according to Suriname law are
              available.

              In June 2000 the Suriname Government arbitrarily assessed and
              demanded that SLC pay $161,765 for the calendar year 1998 and
              $42,600 for the calendar year 1999 against tax and penalties that
              may be owed. Subsequently, the Government arbitrarily assessed an
              additional tax of $110,000 for the calendar year 2000. After the
              assessments were imposed, the Company submitted tax accountings to
              the Government documenting actual tax liability payable of
              approximately $375,000 based on no Suriname tax concessions being
              granted.

              Subsequent to June 2000, the Government of Suriname imposed import
              duties on the SLC's operating assets. SLC accrued and capitalized
              the amount assessed as of June 30, 2000 and is amortizing the
              balance over five years commencing retroactively as of April 1,
              1999. The Company is attempting to obtain an import duty waiver
              for the investment it made, from the Ministry of Finance in
              Suriname through its lawyer. However, it will be difficult to
              obtain a decision in the Company's favor due to the current
              economic conditions in Suriname.

              Further, the Ministry of Finance is trying to impose value-added
              tax ("VAT") on slot machines. Currently the Ministry of
              Finance has not completed their study and reporting to Suriname's
              Parliament on the issue. At this time the Company cannot quantify
              the amount payable, if any, for VAT on slot machines.

              Until June 30, 1998 the Company, for tax purposes, did not have
              any operations. All expenses incurred to that date were
              pre-operating and accordingly were capitalized. At the
              commencement of operations capitalized expenses are being
              amortized over sixty months.

              DEFERRED INCOME TAXES

              The income tax provision consists of the following:

              Current
              Federal                                          $      -
              State and Local                                         -
              International                                     359,741
                                                               --------
              Total current tax provision                      $359,741
                                                               --------
              Deferred
              Federal                                          $      -
              State and Local                                         -
              International                                     192,884
                                                               --------
                                                               $192,884
                                                               --------
              Total provision for income taxes                 $552,625
                                                               ========

                                      F-30
<PAGE>
                           CCA COMPANIES INCORPORATED

             Notes to Consolidated Financial Statements (Continued)

NOTE 6 - INCOME TAXES  (OPEN)  (CONTINUED)

              Items that give rise to deferred tax accounts and June 30, 2000
              follows:

              Deferred tax liabilities:
              Property, plant and equipment                       $  (192,884)
                                                                  -----------
              Deferred tax assets:
              United States loss carryforwards                      4,605,000
              International (Russian) loss carryforwards            1,519,000
                                                                  -----------
              Net deferred tax asset before valuation allowances    5,931,116
              Deferred tax asset valuation allowance                6,124,000
                                                                  -----------
              Net deferred tax liabilities                        $  (192,884)
                                                                  ===========

              Realization of any portion of the Company's deferred tax asset at
              June 30, 2000 is dependent upon future earnings and capital gains.
              Due to the uncertainty of future earnings and capital gains,
              valuation allowances have been provided.

              Federal and State income taxes are not accrued on the cumulative
              undistributed earning of foreign subsidiaries because the earnings
              have been reinvested in the businesses of those companies. At June
              30, 2000, undistributed earnings of the foreign subsidiaries
              totaled approximately $760,000. The determination of the amount of
              the unrecognized deferred tax liability related to the
              undistributed earnings is not practical.

NOTE 7 - NOTES PAYABLE

              In October of 1998, the Company borrowed $75,000 from Stanton &
              Associates through two Promissory Notes. Mr. James Stanton the
              owner of Stanton & Associates is also a director of the Company.
              The loan was subject to interest at the rate of 8% per annum and
              was payable along with accrued interest in a lump sum in January
              of 1999. In January 1999, Stanton accepted shares of the Company's
              common stock against the principal and interest due. (See Notes 4
              and 8)

              In October 1999, the Company obtained financing through a
              Convertible Note of $350,000 from Danville Investments Pty. Ltd.,
              Australia ("Danville"). The Company received proceeds of $215,000
              that were funded net of a $135,000 discount, which was recorded as
              deferred interest expense. The deferred interest expense was
              amortized and expensed over the life of the loan. The loan was
              subject to interest at the rate of 15% per annum, payable in full
              at the maturity of the loan in April 2000. The Company was
              obligated to deposit on a monthly basis no less than $30,000 in a
              separate bank account towards payment of the loan. In addition,
              the Company also issued to Danville warrants to purchase Company's
              common stock. The Company pledged all principal payments, interest
              and management fees due to the Company from Suriname Leisure
              Company as security against the loan. Danville, in December 1999,
              exercised its option to convert $185,000 of the principal of the
              loan plus accrued interest of $10,500 into shares of the Company's
              stock. The Company paid off the remaining balance of $165,000 plus
              interest in April 2000. (Notes 4 and 10)

                                      F-31
<PAGE>
                           CCA COMPANIES INCORPORATED

             Notes to Consolidated Financial Statements (Continued)

NOTE 7 - NOTES PAYABLE (CONTINUED)

              In January 2000, the Company borrowed $300,000 from Stanton. The
              Company received proceeds of $283,000 that were funded net of a
              $17,000 discount, which was recorded as deferred interest expense.
              The deferred interest expense is being amortized and expensed over
              the life of the loan. Interest on the loan is calculated at the
              Wall Street Journal prime rate, payable on a monthly basis. The
              terms of the promissory note require that the Company repay the
              loan in four monthly installments of $15,000 commencing February
              2000, seven monthly installments of $30,000 commencing June 2000,
              and a final payment of $30,000 on or before December 31, 2000. The
              Company granted Stanton a security interest, subordinated to
              Danville's interests, in all principal payments, interest and
              management fees due to the Company from Suriname Leisure Company
              and issued Stanton warrants to purchase shares of the Company's
              common stock. The principal amount of the loan payable at year-end
              was $210,000. (See Notes 8, 10 and 14)

              In March 2000, the Company borrowed $150,000 from Galileo Capital
              LLC ("Galileo") utilizing convertible debt. The Company received
              proceeds of $146,600 that was funded net of a $3,400 discount,
              which was recorded as deferred interest expense. The deferred
              interest expense is being amortized and expensed over the life of
              the loan. The loan is subject to interest at the rate of 10% per
              annum, payable in full at the maturity of the loan in October
              2000. The Company is required to pay six equal monthly
              installments of $25,000 commencing May 2000. During the term of
              the loan Galileo has the option to convert the outstanding
              principal plus any accrued interest due on the loan into shares of
              the common stock of the Company. The conversion price is $0.25 per
              share. If Galileo exercises the conversion option, it will receive
              one warrant, exercisable at $0.25 per share, for every four shares
              of common stock it acquires. Any warrants issued on conversion of
              the loan as described above will terminate two years from the date
              of issuance or the date the underlying shares are registered,
              which ever is later. As additional consideration for the loan, the
              Company issued 150,000 warrants to Galileo to purchase shares of
              the Company's common stock. The warrants are exercisable at $0.25
              per share and expire in two years from the date that underlying
              shares are registered. (See Notes 10 and 14)

              LONG-TERM

              In September 1998, CCA borrowed $600,000 from its 50% co-owner,
              Parbhoe, in SLC for the construction of its permanent casino
              facilities. Interest on the loan is calculated using an interest
              rate of 3% per month. (See Note 9)

              In December 1998, the Company arranged to borrow an additional 1.0
              million dollars from Parbhoe. Ultimately, only $750,000 was
              advanced, which SLC used to complete the construction of the
              casino. The loan was subject to a 4% monthly interest rate and was
              payable within six months of the disbursement. The loan was paid
              off in full in August of 1999.

                                      F-32
<PAGE>
                           CCA COMPANIES INCORPORATED

             Notes to Consolidated Financial Statements (Continued)

NOTE 7 - NOTES PAYABLE (CONTINUED)

              The outstanding balance of loans owing to Parbhoe by CCA is being
              paid out of the excess cash flow generated by the operations of
              SLC. Principal payments of approximately $0.15 of every $1.00 of
              the excess cash flow is being utilized to pay back the advances
              owed to Parbhoe.
              (See Notes 2 and 9)

NOTE 8 - RELATED PARTY TRANSACTIONS

              LEGAL  (See Notes 10)

              The Company incurred legal fees of approximately $10,000 for the
              year ended June 30, 2000, $127,000 for the year ended June 30,
              1999, $546,000 for the year ended June 30, 1998 to legal counsel
              owning securities in the Company ("Related Counsel").

              The Company repriced the exercise price of options and warrants
              previously granted to Related Counsel during the year ending June
              30, 2000 and expensed approximately $2,000. (See Note 10)

              The Company also issued to Related Counsel additional warrants and
              expensed approximately $8,000 in June 30, 2000 (See Note 10).
              Options issued by the Company to Related Counsel in June 30, 1998
              valued at approximately $285,619 were amortized as legal expense
              as counsel rendered services. Legal expense of $171,000 was
              charged during the year ended June 30, 1998 and the balance,
              $115,000, was charged during the year ended June 30, 1999.

              CONSULTANTS

              In June 1999, the Company entered into a Financing Agreement with
              the Arter Group Limited ("Arter") and Valmet S.A. ("Valmet") to
              negotiate on the Company's behalf to acquire financing. (See Notes
              2 and 4)

              In August 1997, the Company entered into an agreement (the "Casino
              Consulting Agreement") with Star Casinos Limited, (the
              "Consultant"). Under the Casino Consulting Agreement, the
              Consultant agreed to provide consulting and technical services to
              the Company and any affiliated entities for a period of two years.
              An individual who subsequently became the president of the Casino
              Division of the Company owns the Consultant. Under the terms of
              the Casino Consulting Agreement, the Consultant will receive
              $250,000 annually plus reimbursement of reasonable expenses. In
              addition, in October 1997 the Company granted the Consultant
              options to purchase shares of the Company's common stock. The
              Company has recorded a consulting charge for the issuance of these
              options. At the end of the term of the agreement, provided that
              the Consultant was not in breach of the Casino Consulting
              Agreement, the Consultant was also entitled to receive a $250,000
              bonus. At that time, the Casino Consultant agreed to accept the
              Company's common stock in place of the $250,000 bonus due to him.
              The agreement also binds the Casino Consultant to a two-year
              non-compete, non-solicitation provision after termination of the
              agreement. The Casino Consultant agreed to accept shares of the
              Company's common stock in place of the $250,000 bonus due to him
              at the expiration of the contract. (See Note 4 and 10)

                                      F-33
<PAGE>
                           CCA COMPANIES INCORPORATED

             Notes to Consolidated Financial Statements (Continued)

NOTE 8 - RELATED PARTY TRANSACTIONS (CONTINUED)

              Although no new formal agreement has been entered, the Casino
              Consultant has agreed to continue providing the consulting
              services on a month to month basis at an annualized rate of
              $250,000.

              The Company paid the Casino Consultant $187,000 during the year
              ended June 30, 1999 and $130,000 during the years ended June 30,
              2000. In addition, the Company accrued an additional $63,000
              during the year ended June 30, 1999 and $72,000 during the year
              ended June 30, 2000 plus the reimbursement of reasonable expenses.
              (See Note 14)

              CONSTRUCTION CONTRACTORS

              In September 1998, Company issued shares of the Company's common
              stock to MSC, the building contractor for the Suriname casino, as
              payment towards, in part, its construction contract with SLC.
              (Notes 4 and 9)

              DIRECTORS

              The Company entered into a three-year employment contract with
              Charles H. Stein ("Stein"), the Chairman of the Board of
              Directors, the President and Chief Executive Officer of the
              Company, that took effect upon the consummation of the Company's
              initial public offering of securities in 1997. The contract
              provided for an annual salary of an amount not less than $125,000
              and a three-year non-compete clause upon termination. During the
              year ended June 30, 1998 Stein did not receive a salary.
              Accordingly, the Company recorded compensation charges in the year
              ended June 30, 1998 for an amount based upon his employment
              agreement as contribution to capital. Salary expense recorded was
              $90,000 for the year ended June 30, 1998. In addition, during the
              year ended June 30, 1998, the Company purchased a life insurance
              policy for the benefit of Stein and paid rent for two properties
              during 1999 and 1998 that Stein owned (see Note 9). The life
              insurance premium of approximately $40,000 has been charged to
              operations (no premium was incurred in 1999). Effective July of
              1998 Stein was no longer employed by the Company as its President
              and Chief Executive Officer, and accordingly received no
              compensation, but continued in his capacity as Chairman of the
              Board.

              In October of 1998, the Company borrowed $75,000 and in January
              2000, the Company borrowed $300,000 from Stanton & Associates. Mr.
              James Stanton, the owner of Stanton & Associates, is a director of
              the Company. (See Notes 4, 7 and 10)

                                      F-34
<PAGE>
                           CCA COMPANIES INCORPORATED

             Notes to Consolidated Financial Statements (Continued)

NOTE 8 - RELATED PARTY TRANSACTIONS (CONTINUED)

              OFFICER

              The Company's current president and CEO, Dempster, was a paid
              consultant to Sovereign which assigned to the Company its 1994
              Construction Management Agreement and 1994 Operation Management
              Agreement with SCC. Dempster has represented to the company that
              he has never held any beneficial interest in the stock of
              Sovereign. In September 1998, Dempster's nominees were granted
              non-plan options in consideration for Dempster joining the Company
              in July of 1998 and, in December 2000, plan options for services
              performed. (Note 10)

NOTE 9 - COMMITMENTS AND CONTINGENCIES

              RENTAL COMMITMENTS

              The Company rents office space and facilities in the United States
              under non-cancelable leases through September 2003. The minimum
              future rental commitment for leases in effect at June 30, 2000
              approximates the following:

              Years Ended
                June 30,
              -----------
                 2001                                              $ 34,153
                 2002                                                34,424
                 2003                                                 2,983
                                                                   --------
                                                                   $ 71,560
                                                                   ========

              The Suriname casino currently occupies two leased floors, totaling
              about 20,000 square feet, in the Plaza Hotel, which is in downtown
              Paramaribo. The Company leased the Casino premises from Parbhoe, a
              50% shareholder in SLC, for fifteen years ending in February 2013,
              for a yearly base rent of $200,000, subject to future increases
              based on the Suriname Consumer Price Index.

              However, the Company has continued to pay rent at the same rate
              since the beginning of the lease due to a dispute with Parbhoe
              regarding the rental charges. The Company has not provided for any
              increase in rent as of June 30, 2000. Suriname law regulates the
              maximum amount of rent that a landlord can charge. In July 2000,
              the Company determined that, based on the maximum rent that can be
              charged under Suriname laws, it had been overcharged. The Company
              is currently attempting to recover the excess rent charged of
              approximately $315,000 in the Courts based on a Government
              validated valuation of the maximum rent permissible under Suriname
              laws and commenced paying a reduced rental of approximately $3,200
              per month. Only once the litigation is settled will the Company be
              able to predict the future rental expense in Suriname. (See
              Note 2)

                                      F-35
<PAGE>
                           CCA COMPANIES INCORPORATED

             Notes to Consolidated Financial Statements (Continued)

NOTE 9 - COMMITMENTS AND CONTINGENCIES (CONTINUED)

              Rent expense was $256,698 for the year ended June 30, 2000,
              $532,916 for the year ended June 30, 1999 and $238,478 for the
              year ended June 30, 1998.

              Rent included payments of $6,921 for 1999, $91,000 for 1998 for
              two properties owned by the Chairman of the Board that were used
              as offices by the Company in New York and London. (See Note 8)

              THE NASDAQ SMALL CAP MARKET DELISTING

              In November 1999, the Securities of the Company were delisted from
              The NASDAQ Small Cap Market. The delisting occurred due to the
              Company's failure to comply with certain NASDAQ Marketplace Rules
              relating to the bid price and filing requirements. The NASDAQ was
              of the opinion that the Company failed to present a definitive
              plan that would enable it to attain compliance within a reasonable
              period of time and then to sustain the compliance. The panel also
              determined that it was unable to evaluate the true extent of the
              Company's compliance with NASDAQ's continued listing standards in
              the absence of accurate, complete and publicly filed audited
              financial statements.

              LITIGATION AND ARBITRATION

              The Company anticipates that it will be subjected to various
              lawsuits, claims and proceedings of a nature considered normal to
              its business.

              KAI MICHAELSON ("MICHAELSON") AND ZAMORA INVESTMENTS PTE LTD.
              ("ZAMORA")

              As a result of the termination of the Hotel Management Agreements
              in November (See Note 3), FEC assumed any and all financial
              obligations with respect to the employment of the President,
              Michaelsen, of the Company's hotel management subsidiary, DHRI.
              After a thorough independent review of Michaelsen's performance
              including an extensive investigation into allegations made by FEC
              regarding Michaelsen's operating decisions, Michaelsen's
              employment was officially terminated in April 1999. In April 1999,
              Michaelsen filed a claim against CCA for a lump sum payment of
              approximately $240,000 for past and future services under his
              employment and consulting agreements and requested an arbitration
              hearing with the American Arbitration Association.

                                      F-36
<PAGE>
                           CCA COMPANIES INCORPORATED

             Notes to Consolidated Financial Statements (Continued)

NOTE 9 - COMMITMENTS AND CONTINGENCIES (CONTINUED)

              The Company obtained a temporary restraining order staying the
              arbitration and petitioned the New York Supreme Court for a
              permanent stay of the hearing. It was the Company's contention
              that there was no arbitration agreement between Michaelsen and
              CCA. On March 31, 2000, the Court granted the Company's petition
              to permanently stay the arbitration. Subsequent to the order of
              stay, Michaelsen's Company, Zamora, filed a claim against Dorsett
              for $80,000 in a new arbitration claim.

              In September 2000, the Company settled the matter with Michaelson
              and Zamora. In exchange for complete releases, the Company agreed
              to pay $40,000 (a provision for the expense was provided for by
              the Company in June 2000) payable over twelve months in equal
              installments starting on September 30, 2000.

              The Company is currently holding 250,000 shares that were issued
              but never delivered to FEC pursuant to the November 1998
              termination agreement. It is the Company's position that the
              settlement of $40,000 plus legal fees of $47,000 incurred by the
              Company must be repaid by FEC for the Company to deliver the
              shares.

              FOX HAVEN CAPITAL CORPORATION AND UNITED RESOURCES PARTNERS
              (COLLECTIVELY "FOX HAVEN")

              During 1998 the Company utilized unsuccessfully the services of
              Fox Haven to secure financing.

              In August of 1999, Fox Haven filed a Demand for Arbitration before
              the American Arbitration Association demanding a payment of
              $250,000 from the Company as liquidated damages. Fox Haven alleged
              that the Company breached the letter of agreement by failing to
              secure adequate collateral for the proposed loan according to the
              terms of the letter agreement. The Company denied all material
              allegations of the claim and filed counterclaims alleging Fox
              Haven breached its obligations to the Company by misrepresenting
              its abilities to secure capital financing.

              On August 22, 2000, all of Fox Haven's claims were denied and the
              Company was awarded $106,289 representing a full refund of the
              $25,000 paid to Fox Haven by the Company plus the Company's
              attorney's fees and costs. To date the Company has not been paid
              any amount against the award and there is significant uncertainty
              regarding the judgements' collectibility.

                                      F-37
<PAGE>
                           CCA COMPANIES INCORPORATED

             Notes to Consolidated Financial Statements (Continued)

NOTE 9 - COMMITMENTS AND CONTINGENCIES (CONTINUED)

              BREACH OF SLC LEASE

              SLC's landlord, Parbhoe, by contract, is required to provide air
              conditioning for the areas leased. Due to Parbhoe's failure to
              perform timely, SLC paid $201,000 to have air conditioning
              equipment installed in order to get the leased area ready for
              occupancy more quickly. Litigation is anticipated to recover the
              expenditure.

              MARITIME SERVICES CORPORATION ("MSC")

              In September 2000, MSC brought an action in the United States
              District Court of Oregon seeking damages in the amount of $200,250
              plus interest. MSC claims that the Company issued its own shares
              in 1998 as partial payment for construction work performed and
              that the Company was obligated to buy the shares back for the
              amount claimed as damages. (Notes 4 and 8)

              The Company has denied all material allegations of the complaint
              and believes that it has no liability for the claim.

              LONG-TERM NOTE PAYABLE

              Parbhoe has made a demand for the repayment in full of the
              $600,000 loan it made to CCA on September 3, 1998. (See Note 7)

              This is being rigorously defended in Court on the basis that,
              among other defenses, based on the loan's terms, the loan is not
              repayable on demand but on a pro-rata basis along with existing
              and new loans that are outstanding to CCA.

NOTE 10 - STOCK OPTIONS AND WARRANTS

              The Company applies APB Opinion 25, Accounting for Stock Issued to
              Employees, and related interpretations in accounting for employee
              stock options. Under APB Opinion 25, because the exercise price of
              the Company's employee stock options equals or exceeds the market
              price of the underlying stock on the date of grant, no
              compensation cost is recognized.

              Options that have been granted are exercisable either one-third
              annually at each anniversary date from the date of grant or they
              are exercisable immediately. In addition, they have maximum terms
              of not more than four years and they are not transferable.

              The Company estimates the fair value of each stock option or
              warrant at the grant date by using the Black-Scholes
              option-pricing model.

                                      F-38
<PAGE>
                           CCA COMPANIES INCORPORATED

             Notes to Consolidated Financial Statements (Continued)

NOTE 10 - STOCK OPTIONS AND WARRANTS (CONTINUED)

              PLAN OPTIONS

              The Company's 1996 Stock Option Plan (the "Plan") was adopted in
              November 1996, and amended in December 1996, April 1997 and
              December 1997. The Plan provides for adjustments in the number and
              type of shares covered by the Plan and options granted thereunder
              in the event of any reorganization, merger, re-capitalization or
              certain other transactions involving the Company. Under the Plan,
              which authorizes the granting of incentive stock options or
              non-incentive stock options the maximum number of shares of common
              stock for which options may be granted is 5,000,000 shares. As of
              June 30, 2000, 3,172,500 options to purchase shares of common
              stock had been granted under the Plan. The Company has set aside
              1,827,500 shares of common stock for future options that may be
              granted under the Plan.

              In October 1997 the Company granted Star Casinos Limited options
              to purchase 100,000 shares of the Company's common stock
              exercisable at $6.50 per share. Fifty percent of the options are
              exercisable on each of the first and second anniversary dates of
              the commencement date and expire on the third anniversary date.
              The options were valued at $140,000. The Company has recorded a
              consulting charge for the issuance of these options. (Note 8)

              The Company granted a total of 500,000 options in 1999 to
              non-employee directors that vested immediately and 350,000 options
              in 1998 to non-employee directors, one-third of which vested
              annually at each anniversary date from the date of grant. All
              options issued to non-employee directors are exercisable between
              $0.25 and $1.50 and expire four years after their issuance. The
              Company has recorded a charge to operations with a corresponding
              credit to additional paid-in capital for the issuance of the
              options in the amounts of $233,000 in 1999 and $386,000 in 1998.

              The Company granted a total of 1,000,000 fully vested options,
              valid for four years, to Tilden Park Ltd., a nominee of Dempster,
              the President, CEO and Director of the Company in 2000 (See Notes
              8 and 14), a total of 1,130,000 options to employees in 1999 that
              vested immediately and 215,000 options in 1998, one-third of which
              vested annually at each anniversary date from the date of grant.
              The employee options are exercisable between $0.25 and $1.50.

                                      F-39
<PAGE>
                           CCA COMPANIES INCORPORATED

             Notes to Consolidated Financial Statements (Continued)

NOTE 10 - STOCK OPTIONS AND WARRANTS (CONTINUED)

              NON PLAN OPTIONS

              In addition to the options granted under the plan, the Company has
              issued an additional 1,890,119 non-plan options, of which, 128,000
              non plan options were forfeited in 2000.

              The Company issued to legal counsel ("Related Counsel") 25,000
              options valued at approximately $50,000 and expensed in June 30,
              1997 and 187,500 options valued at approximately $285,619 in June
              30, 1998 against future legal fees. The value of the options
              issued in 1998 was amortized as legal expense as counsel rendered
              services. Legal expense of $171,000 was charged during the year
              ended June 30, 1998 and the balance, $115,000, was charged during
              the year ended June 30, 1999. (See Note 8)

              In September 1998, Dempster's nominee, Dabus International
              Limited, established for the benefit of his family, was granted
              non-plan options to purchase 1,000,000 shares of the Company's
              common stock at $1.50 per share. These options were granted in
              consideration of Dempster joining the Company in July of 1998.
              (See Note 8)

              The Company granted 352,500 options during the fiscal year 1998 to
              lawyers and consultants for services rendered or to be rendered.
              Exercise prices for these options ranged from $5.00 to $6.50 per
              share. These options expire four years after their issuance. The
              Company has recorded a charge to consulting fees with a
              corresponding credit to additional paid in capital for the
              issuance of these options in the amount of $386,000 in 1998. No
              options were issued to lawyers or consultants during the fiscal
              year 1999 and 2000.

              The Company issued 500,000 options to investors at the time of
              private placements done by the Company during the ten-month period
              ended June 30, 1997. The exercise price for these options was
              $2.00 and they expire in April 2001. During the year ended June
              30, 1998, 7,881 options out of the 500,000 options issued were
              exercised.

              The Company also repriced 35,000 options issued to a consultant
              from $5.00 to $1.50 and the exercise date was extended from August
              1998 to August 1999.

              FASB Statement 123, "Accounting for Stock-Based Compensation,"
              requires the Company to provide pro forma information regarding
              net income (loss) and net income (loss) per share as if
              compensation cost for the Company's employee stock options had
              been determined in accordance with the fair value based method
              prescribed in FASB Statement 123.

                                      F-40
<PAGE>
                           CCA COMPANIES INCORPORATED

             Notes to Consolidated Financial Statements (Continued)

NOTE 10 - STOCK OPTIONS AND WARRANTS (CONTINUED)

              The Company utilized the following weighted-average assumptions to
              determine fair value:

<TABLE>
<CAPTION>
                                                                      Year Ended June 30,
                                                    -------------------------------------------------------
                                                      2000                  1999                   1998
                                                    -------                -------              -----------
<S>                                                 <C>                   <C>                   <C>
              Risk free interest rate                  6%                    6%                     6%
              Expected life                         4 years                4 years              3 - 4 years
              Expected volatility                     0.5                    0.5                    0.5
              Dividend yield                          0.0                    0.0                    0.0
</TABLE>

              Under the accounting provisions of FASB Statement 123, the
Company's pro forma net loss and loss per share would have been as follows:

<TABLE>
<CAPTION>
                                                                      Year Ended June 30,
                                                    ------------------------------------------------------
                                                      2000                   1999                   1998
                                                    -------                --------               --------
<S>                                               <C>                    <C>                   <C>
              Net loss:
                As reported                       $  (15,339,310)        $   (4,592,090)       $   (12,543,072)
                                                  ==============         ==============        ===============
                Pro forma                         $  (15,399,672)        $   (5,149,789)       $   (12,770,747)
                                                  ==============         ==============        ===============
              Net loss per common
                As reported                       $        (1.01)        $        (0.36)       $         (1.37)
                Pro forma                         $        (1.02)        $        (0.41)       $         (1.39)
</TABLE>
                                      F-40

<PAGE>
                           CCA COMPANIES INCORPORATED

             Notes to Consolidated Financial Statements (Continued)

NOTE 10 - STOCK OPTIONS AND WARRANTS (CONTINUED)

              A summary of the status of the Company's fixed stock option plan
              and non plan options as of June 30, 2000, 1999 and 1998 and
              changes during the years then ended is presented below:

<TABLE>
<CAPTION>
                                            June 30, 2000               June 30, 1999              June 30, 1998
                                         ----------------------      ----------------------     -----------------------
                                                       Weighted                    Weighted                    Weighted
                                                       Average                     Average                     Average
                                                       Exercise                    Exercise                    Exercise
                                           Shares       Price          Shares       Price          Shares       Price
                                         ----------   ---------      ----------   ---------     ----------    ---------

<S>                                       <C>         <C>             <C>         <C>            <C>          <C>
              Outstanding at
               beginning of period        4,062,619   $    1.99       3,169,619   $    4.72      1,970,000    $    4.02
              Granted                     1,000,000         .25       1,630,000        1.50      1,217,500         5.85
              Exercised                          -           -           (7,000)       0.50         (7,881)        2.00
              Forfeited                    (128,000)       (.77)       (730,000)       4.22        (10,000)        2.00
                                         ----------   ---------      ----------   ---------     ----------    ---------
              Outstanding at end of
               period                     4,934,619   $    1.10       4,062,619   $    1.99      3,169,619    $    4.72
                                         ==========   =========      ==========   =========     ==========    =========
              Options exercisable at
               end of period              4,789,619   $    1.09       3,824,287   $    2.03      1,803,333    $    4.18
                                         ==========   =========      ==========   =========     ==========    =========
              Weighted-average fair
               value of options
               granted during the
               period                                 $    0.02                   $    0.49                   $    2.08
                                                      =========                   =========                   =========
</TABLE>


              The following table presents information relating to stock options
              outstanding at June 30, 2000:

<TABLE>
<CAPTION>
                                              Options Outstanding                          Options Exercisable
                                    ---------------------------------------------      ---------------------------
                                                      Weighted                                            Weighted
                                                      Average          Average                            Average
                  Exercise                            Exercise        Remaining                           Exercise
                   Price               Shares          Price        Life in Years        Shares            Price
                  --------          ----------       ---------      -------------      ----------         --------
<S>                                  <C>             <C>                  <C>           <C>               <C>
                   $0.25             3,132,500       $     .25            2.28          3,107,500         $    .25
                   $0.50                25,000             .50             .58             25,000              .50
                   $1.50               760,000            1.50            1.67            640,000             1.50
                   $2.00               492,119            2.00             .83            492,119             2.00
                   $5.00               500,000            5.00             .73            500,000             5.00
                   $6.50                25,000            6.50            1.83             25,000             6.50
                                    ----------       ---------        --------         ----------         --------
                                     4,934,619       $    1.10            1.88          4,789,619         $   1.09
                                    ==========       =========        ========         ==========         ========
</TABLE>

                                      F-42
<PAGE>
                           CCA COMPANIES INCORPORATED

             Notes to Consolidated Financial Statements (Continued)

NOTE 10 - STOCK OPTIONS AND WARRANTS (CONTINUED)

              WARRANTS

              During the year ended June 30, 1999 the Company issued to two
              consultants three-year warrants to purchase 50,000 shares each of
              the Company's common stock at $1.00 per share. For the year ended
              June 30, 1998, the Company issued to one consultant four-year
              warrants to purchase 100,000 shares of the Company's common stock
              at $6.50 per share. The 1999 warrants were valued at $50,000 and
              the 1998 warrants were valued at $272,500. The Company's
              operations were charged for the value of all warrants issued to
              consultants for services at the time of issuance.

              In July and August 1999, the Company agreed to issue warrants to
              purchase 83,334 shares of the Company's common stock, at $1.00 per
              share to two investors. The warrants can be exercised at any time
              and expire in two to three years from the issuance date. (Note 4)

              The Company issued 1,308,334 warrants with exercise prices of
              $1.00 to $2.00 during the fiscal year ending 1999 and 715,678
              warrants with an exercise price of $5.14 during the fiscal year
              ending 1998.

              In June 1999, the Company issued to a consultant for services
              relating to the Sakhalin Project warrants to purchase 150,000
              shares of common stock at $1.00 per share. The warrants are valued
              at $25,000 and are recorded as capitalized finance costs.

              In connection with the acquisition of financing, the Company
              issued 700,000 warrants to Danville in October 1999 (see Notes 4
              and 7), 500,000 warrants to Stanton in January 2000 (see Notes 7
              and 8) and 150,000 to Galileo Capital, LLC in March 2000 to
              purchase the Company's common stock at $0.25 per share (see Note
              7). The Galileo warrants expire in two years from the date the
              Company files a new registration, the Danville warrants expire
              three years from the date of grant and the Stanton warrants expire
              four years from the date of grant. The warrants were valued at
              $155,400.

              In December 1999, the Company issued warrants to an investor and
              past underwriter for the Company to acquire 450,000 shares of
              common stock for past services rendered at a price of $0.50 per
              share.

              In January 2000, the Company issued warrants to Related Counsel
              for services rendered to acquire 225,000 shares of the Company's
              common stock at a price of $0.25 per share and expensed $8,000 in
              June 30, 2000. (See Note 8)

                                      F-43
<PAGE>
                           CCA COMPANIES INCORPORATED

             Notes to Consolidated Financial Statements (Continued)

NOTE 10 - STOCK OPTIONS AND WARRANTS (CONTINUED)

              At June 30, 2000, the Company had warrants amounting to 5,369,013
              outstanding. No warrants have been exercised. All warrants were
              exercisable on the day of grant. During 2000, 308,333 warrants
              expired.

              The weighted average fair value of the 2,283,000 warrants granted
              during the year was $.12.

              REPRICING OF OPTIONS AND WARRANTS

              The exercise price of warrants to purchase 325,000 shares of the
              Company's common stock issued to directors and a consultant in
              1996 was changed from $5.00 to $1.50 per share in September 1998.
              The Company recorded an additional charge to operations of
              approximately $125,000 on the warrants for the repricing.

              Additionally, in September 1998, the Company's Board of Directors
              agreed to reprice the exercise price of 1,567,500 stock options
              previously granted to directors, officers and employees at prices
              ranging between $5.00 and $6.50, to $1.50 and in December 1999,
              repriced 1,920,000 stock options previously granted to directors,
              officers and employees and priced at $1.50 to an exercise price of
              $0.25. In 1999, the Company recorded an additional charge to
              operations of approximately $335,000 on 900,000 options previously
              granted to the directors and approximately $90,000 on 237,500
              options previously granted to consultants during the 1998 and 1997
              fiscal years for the repricing. In 2000, the Company recorded an
              additional charge of approximately $10,000 for the repricing of
              600,000 options and 150,000 warrants from $1.50 to $0.25
              previously granted to directors.

              The Company repriced the exercise price of 212,500 options and
              25,000 warrants from $1.50 to $0.25 previously granted to Related
              Counsel and expensed approximately $2,000.

              COMMON STOCK SET ASIDE

              Currently, the Company has reserved 10,303,632 shares of common
              stock for exercise of options and warrants.

NOTE 11 - STOCKHOLDERS' EQUITY

              In December 1997, at a special meeting of the stockholders, an
              amendment to the Company's Certificate of Incorporation was
              approved increasing the number of common shares authorized from
              30,000,000 shares to 50,000,000 shares and increasing the number
              of preferred shares authorized from 5,000 shares to 5,000,000
              shares.

NOTE 12 - BUSINESS SEGMENT INFORMATION

              The Company ceased operations of its food preservation and hotel
              management business segments during the year ended June 30, 1999.
              Accordingly, at June 30, 1999, the Company's only line of business
              relates to its casino operations in Suriname and the Russian
              Federation.

                                      F-44
<PAGE>
                           CCA COMPANIES INCORPORATED

             Notes to Consolidated Financial Statements (Continued)

NOTE 12 - BUSINESS SEGMENT INFORMATION (CONTINUED)

              For the year ended June 30, 1998, the Company's operations have
              been classified into three business segments: Food preservation,
              Hotel management and Casino operations.

              Food preservation includes the development, selling and marketing
              of the product. The hotel management includes the management and
              exclusive operations of certain hotels. Casino operations include
              the development and management of certain casinos.

              Operating loss by segment is total operating revenues less
              expenses deemed to be related to the segment's operating revenue.
              Identifiable assets by segment are those assets that are used in
              the operation of that unit. Corporate assets consist principally
              of cash and equivalents, prepaid expenses and leasehold
              improvements related to the corporate unit.

              Summarized financial information by business segment for the year
              ended June 30, 1998 is as follows:

                                                 Continuing     Discontinued
                                                 Operations      Operations
                                                ------------    ------------

              Revenues by Segment:
                Food preservation                         -      $     9,900
                Hotel management                          -          639,700
                Casino                                    -               -
                Corporate                                 -               -
                                                ------------     -----------
              Total Revenues                              -      $   649,600
                                                ============     ===========

              Operating Loss by Segment:
                Food preservation               $         -      $ 2,878,800
                Hotel management                          -        5,558,500
                Casino                             1,374,900              -
                Corporate                          2,944,700              -
                                                ------------     -----------
              Total Operating Loss              $  4,319,600     $ 8,437,300
                                                ============     ===========

              Depreciation and:
                Amortization by Segment
                Food preservation               $         -      $        -
                Hotel management                          -          105,000
                Casino                               240,200              -
                Corporate                             32,800              -
                                                ------------     -----------
              Total Depreciation
                and Amortization                $    273,000     $   105,000
                                                ============     ===========

              Capital Additions by Segment:
                Food preservation               $         -      $        -
                Hotel management                          -        2,734,900
                Casino                             5,111,100              -
                Corporate                             86,800              -
                                                ------------     -----------
                                                $  5,197,900     $ 2,734,900
                                                ============     ===========

                                      F-45
<PAGE>
                           CCA COMPANIES INCORPORATED

             Notes to Consolidated Financial Statements (Continued)

NOTE 13 - PROVISIONS FOR VALUATION ALLOWANCES AND ASSETS WRITTEN OFF

              Allowances for Loans Receivables during the years ended June 30,
              1999 and 1998 are as follows:

                                                Year Ended June 30,
                                           ---------------------------
                                              1999             1998
                                           -----------      ----------

              Beginning balance            $ 2,620,830      $ 1,000,000
              Provision                        608,311        1,620,830
              Write-offs                    (3,229,141)              -
                                           -----------      ----------
              Ending balance               $        -       $ 2,620,830
                                           ===========      ===========

              At June 30, 1998, based on the termination of the Hotel Management
              Agreements, the carrying value of the management contracts, trade
              names and a deposit on assets to be acquired was reduced to fair
              value and the Company recorded a charge of $4,200,000. (See Note
              2)

NOTE 14 - SUBSEQUENT EVENTS

              In October 2000, the board of Directors issued 480,000 shares to a
              consultant at a market price of $0.15 as a final settlement of
              consulting fees of $120,000 accrued but not paid. The difference
              has been credited to consulting fees as of June 30, 2000. (See
              Note 8)

              Subsequent to year-end, the Company was unable to repay loans from
              Stanton and Galileo as required by the terms of the debt. The
              Company repaid the Galileo loan in full in February 2001 and has
              been making payments on the Stanton debt based on the availability
              of funds. (See Note 7)

              In October 2000, the Company granted fully vested four-year
              options to purchase 500,000 shares to its Chief Financial Officer
              at an exercise price of $0.10 per share.

              In October 2000, 2,230,000 options issued to officers and
              employees of the Company were repriced from $0.25 to $0.10.
              Options of 500,000 and warrants of 650,000 issued to Stanton, a
              related party, were also repriced from $0.25 to $0.10.

              In January 2001, the Company issued 1,333,334 shares of common
              stock to Richard W. Devries, Professional Corporation at a
              purchase price of $0.075 per share.

              In February 2001, the Company entered into a nonbinding letter of
              intent to acquire Applied Gaming Solutions of Canada Inc. ("AGC")
              subject to certain pre-conditions. AGC operates an on-line lottery
              in Vietnam and anticipates expanding the marketing efforts and
              geographic area covered by the lottery.

                                      F-46