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

                                  FORM 10-KSB
(Mark One)

[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934
                  For the fiscal year ended December 31, 1999
                                       OR
[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

            For the transition period ____________ to _____________

                         Commission file number 0-5474

                             NORTH AMERICAN GAMING
                         AND ENTERTAINMENT CORPORATION
                (Name of small business issuer in its charter)

         Delaware                                                75-2571032
(State or other jurisdiction of                               (I.R.S. Employer
incorporation or organization)                               Identification No.)

          13150 Coit Road, Suite 125, Dallas, Texas        75240
          (Address of principal executive offices)       (Zip Code)

        Issuer's telephone number, including area code:  (972) 671-1133

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

Securities registered pursuant to Section 12(g) of the Act:  Common Stock, par
value $.01 per share

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

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained herein, and none will be contained, to the best of
registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB.  [X]

The issuer's revenues for its most recent fiscal year were: $6,033,627.

The aggregate market value of the voting common stock held by non-affiliates of
the issuer, based on the average bid and asked price of such stock, was $933,062
as March 1, 2000.

At March 1, 2000, the registrant had outstanding 33,120,920 shares of par value
$.01 common stock.

                      DOCUMENTS INCORPORATED BY REFERENCE

None.

Transitional Small Business Disclosure Format (check one):

               Yes          No   X
                   -----       -----
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                               TABLE OF CONTENTS

ITEM 1.  DESCRIPTION OF BUSINESS...........................................  1
ITEM 2.  DESCRIPTION OF PROPERTY........................................... 15
ITEM 3.  LEGAL PROCEEDINGS................................................. 15
ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS............... 16

                                    PART II
ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.......... 17
ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION......... 18
ITEM 7.  FINANCIAL STATEMENTS.............................................. 22
ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
         ACCOUNTING AND FINANCIAL DISCLOSURE............................... 22

                                   PART III
ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
         COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT................. 23
ITEM 10. EXECUTIVE COMPENSATION............................................ 24
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.... 25
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.................... 26
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.................................. 27

                                       i
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              NORTH AMERICAN GAMING AND ENTERTAINMENT CORPORATION

                                    PART I

ITEM 1.  DESCRIPTION OF BUSINESS
--------------------------------

General

     North American Gaming and Entertainment Corporation (the "Company") was
incorporated under the laws of the State of Delaware in 1969.  The Company
changed its name from Western Natural Gas Company to North American Gaming and
Entertainment Corporation on October 17, 1994 in connection with its merger (the
"Merger") with OM Investors, Inc. ("OM").   Following the Merger, the Company
has concentrated its business in the gaming industry and will continue to pursue
additional opportunities and developments in this industry, as well as in other
industries.

Forward Looking Statements

     This Form 10-KSB includes certain statements that are not historical facts
and are deemed to be "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995.  See Item 6 --"Management's
Discussion and Analysis or Plan of Operations -- Forward Looking Statements" for
a further discussion of these "forward-looking statements".

Purported Cash Out Merger of Company's Interests

     On March 15, 2000 meetings of the members of OM Operating, L.L.C.
("Operator") and River Port Truck Stop, LLC ("River Port LLC") were called by
Donald I. Williams ("Williams") and The 146, LLC ("146LLC"), the other two
members of Operator and River Port LLC.  The purpose of each meeting was to
merge newly-formed limited liability companies owned by Williams and 146LLC into
Operator and River Port and to cancel, or "cash out", the Company's membership
interests in exchange for a cash payment of $375,000 by Operator and $50,000 by
River Port LLC.  The Company objected to the holding of the meetings and the
cancellation of its membership interests.  The Articles of Organization or the
Operating Agreement of each of Operator and River Port LLC provide that a
member's interest may not be changed and the Articles of Organization may not be
amended without the unanimous vote of all members. Despite the Company's
objections and the requirements of the Articles of Organization, a meeting of
members was held by each of OM and River Port on March 27, 2000 at which
Williams and 146LLC purported to approve both mergers. The Company voted against
the merger at each meeting.  The purpose of both mergers was to terminate the
Company's interests in OM and River Port LLC without its consent.  A Certificate
of Merger was filed by Operator and River Port LLC with the Secretary of State
of Louisiana on March 28, 2000 purporting to finalize both mergers.

     The Company has filed a lawsuit, styled North American Gaming and
Entertainment Corporation v. OM Operating, L.L.C., River Port Truck Stop,
L.L.C., Donald I. Williams, Loy F. Weaver and The 146, L.L.C., Civil Action No.
CV00-0575S, United States District Court, Western District of Louisiana,
Shreveport Division, against Operator, River Port LLC, Williams, 146LLC and Loy
F. Weaver, an affiliate of 146LLC ("Weaver"), for breach of fiduciary duty and
breach of contract, and to declare as a nullity the mergers purportedly approved
by Williams and 146LLC.  The Company intends to vigorously pursue its rights,
seek a judicial declaration nullifying the purported mergers of both Operator
and River Port LLC, and seek damages for these and other breaches of fiduciary
duty.  A hearing on the Company's motion for preliminary injunction to unwind
the mergers pending final resolution of the case is scheduled for May 11, 2000.

     The purported mergers and the pending lawsuit should be considered in the
review of the remainder of this Form 10-KSB.  The discussion of Operator and
River Port LLC, and the Company's ownership interests in them, contained in the
remainder of this Form 10-KSB assumes that the purported mergers will be set
aside and that the Company's ownership interests will be reinstated.  The final
decision in this regard will not be known until the court renders final judgment
in the lawsuit.

                                      -1-
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Sale of Travel Industry Assets

     General.  The Company entered into a Purchase of Assets Agreement (the
"Purchase Agreement") on October 15, 1999 with Travelbyus.com Ltd.
("Travelbyus"), International Tours, Inc. ("International") and two of the
Company's subsidiaries, GalaxSea Cruises and Tours, Inc. ("GalaxSea") and IT
Cruise, Inc. ("IT Cruise").  Under the Purchase Agreement, each of International
and GalaxSea sold substantially all of their respective cruise related assets to
Travelbyus and the Company sold to Travelbyus the stock of IT Cruise owned by
the Company, representing 100% of the outstanding stock of IT Cruise.

     The purchase and sale of the assets of International funded and closed on
October 15, 1999, with an effective date of October 1, 1999.  The purchase and
sale (the "Sale") of assets of GalaxSea and the stock of IT Cruise (the "Cruise
Business") closed into escrow on October 15, 1999.  The only condition to the
release of escrow and the closing becoming effective was the mailing of an
Information Statement to the stockholders of the Company.  Escrow was to be
released and the closing was to become effective 20 days after the first mailing
of such Information Statement to the Company's stockholders (the "Effective
Date"), but with a financial and accounting effective date to relate back to
October 1, 1999.  In the interim, the Company entered into a management
agreement pursuant to which Travelbyus managed the Cruise Business  pending the
Effective Date.  The Information Statement was mailed on December 23, 1999 and,
therefore, the Effective Date was January 12, 2000.

     Assets Sold.  The assets sold included machinery, equipment, fixtures,
furniture, prepaid expenses, intellectual property rights (including the name
"GalaxSea"), licenses, computer software, books and records and third-party
agreements and supply contracts existing at October 1, 1999.  The assets sold
did not include cash, accounts receivable or intra-company indebtedness existing
at October 1, 1999.

     Purchase Price.  The Company received $1,333,334 in cash and 666,667 shares
of common stock of Travelbyus, with a stated value under the Purchase Agreement
of $.75 per share (an aggregate of $500,000), as the purchase price for the
Cruise Business.  The cash was paid to the Company, less an escrow reserve of
$66,667, on October 15, 1999 and the shares were placed in escrow until the
Effective Date.  Of the shares received by the Company, 66,667 shares were
transferred to a former officer of GalaxSea and IT Cruise as a bonus and 100,000
shares were transferred to a nonaffiliated entity in satisfaction of a $100,000
advisory fee payable to such entity for assisting the Company in evaluating
Travelbyus, leaving the Company with a net of 500,000 shares of common stock of
Travelbyus. International received $666,667 in cash, less an escrow reserve of
$33,333, and 333,333 shares of common stock of Travelbyus as the purchase price
for its cruise related assets.

     Allocation of Purchase Price.  The Company and International agreed upon
the allocation of the aggregate purchase price two-thirds to the Company and
one-third to International based on the following factors: (1) historical
financial operating statements; (2) the cruise segment versus the tour segment
of the leisure travel industry; (3) the relative values of the companies to
Travelbyus; and (4) the relative asset values of the respective companies on a
going forward basis.  No fairness opinion was obtained and no other third-party
appraisal or review was conducted to arrive at the allocation between the
Company and International.  The Board of Directors of the Company and
International decided they were capable of evaluating the factors to be taken
into account to determine the allocation of the aggregate purchase price, and
determined that the expense of engaging an investment banking firm or another
third party review of the transaction and allocation was not necessary.

     Shares of Travelbyus Not a Long-Term Investment.  The 666,667 shares of
common stock of Travelbyus received by the Company represented approximately
1.3% of the outstanding common stock of Travelbyus as of November 15, 1999.  The
Company does not presently intend to hold these shares as a long term investment
or distribute them to the stockholders of the Company.  Instead, the Company
presently intends to sell these shares on the Toronto Stock Exchange, where the
shares of Travelbyus are listed, as soon as it can do so in an orderly
disposition, in order to maximize the Company's return on the shares, in
accordance with the rules of the Toronto Stock Exchange.  As of March 1, 2000,
the Company had transferred 166,667 shares as an advisory fee and bonus, as
discussed above, and had sold 175,094 of such shares and continues to hold
324,906 shares.  On such date, the closing sale price on the Toronto stock
exchange for Travelbyus common stock was $3.45 (US) per share.

     Expenses.  The Purchase Agreement provided that each party would pay all of
the fees and expenses incurred by it (including the fees and expenses of
counsel) in connection with the negotiation, execution and delivery and
performance of the Purchase Agreement and the transactions contemplated by the
Purchase Agreement.

                                      -2-
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     Non-Competition Agreement.  The Company agreed not to compete in the Cruise
Business for a period ending on October 13, 2004  anywhere in North America.
The Company also agreed to hold confidential all confidential and proprietary
information and trade secrets of the Cruise Business sold to Travelbyus.

     Accounting Treatment.  The effective date of the Sale of the Cruise
Business related back to October 1, 1999. Consequently, the transaction was
recorded as a disposition of assets in the fourth quarter of 1999.  The sales
proceeds exceed the net book value of the assets sold and, therefore, the
Company realized a gain from the Sale effective October 1, 1999. The financial
statements included with this Annual Report reflect the Sale of the Cruise
Business as being effective as of October 1, 1999, and the financial statements
for prior periods have been restated to remove the separate segment information
for the Cruise Business operations as discontinued operations.  Consequently,
separate segment information, and a separate discussion of the Cruise Business,
is not included in this Annual Report.


Restructure of OM Operating, L.L.C.

     Effective April 15, 1998, the Company and Williams entered into Amendment
No. One (the "Amendment") to the Operating Agreement (the "Operating Agreement")
of Operator to effect a restructuring of Operator which the Company believed
effectively addressed certain preliminary questions and concerns raised by the
Louisiana Gaming Control Board ("Gaming Control Board") and the Video Gaming
Division of the Gaming Enforcement Section of the Office of State Police within
the Department of Public Safety and Corrections (the "Division") in their review
of Operator's application for renewal of its license to operate video poker
casinos.  See "Assignment to OM Operating, L.L.C." and "License Renewal
Process", below.  The Company elected to voluntarily effect the restructure of
Operator even though the Gaming Control Board had not made a final determination
whether Operator's existing structure satisfied the Louisiana residency
requirements of the Louisiana Video Draw Poker Devices Control Law and the Rules
and Regulations promulgated thereunder (the "Louisiana Act").  However, after
the Company presented the Amendment and related documents to the Division, the
Company had a meeting on November 13, 1998 with the Division, wherein the
Division expressed serious concerns and doubts that the Amendment would satisfy
the Louisiana Act and indicated the Division would recommend that Operator's
license to operate video poker casinos in Louisiana not be renewed, unless
various changes were implemented to comply with the Louisiana Act.  Among the
concerns expressed by the Division were the 20% gross income allocation to the
Company under the Operating Agreement and its contribution, pursuant to the
Amendment, by the Company to Operator for additional interests in Operator which
were then assigned to Williams in exchange for a $4 million nonrecourse note
(the "Note"), in addition to certain other aspects of Amendment No. One and the
related documents.  Rather than risk loss of the Operator's license, the Company
entered into further amendments to the Operating Agreement and various documents
put into place in conjunction with the Amendment, and agreed to transfer 50% of
its remaining Louisiana gaming interests (including 50% of its interest in
Operator, River Port LLC and the Gold Rush Truck Stop) to certain former holders
of Class A Preferred Stock of the Company and certain related persons and
entities in exchange for mutual releases and settlements, dismissal of pending
litigation and cancellation of debentures, accrued dividends and Common Stock of
the Company ("Common Stock").  The Company believes the further restructuring of
Operator effectively addresses the concerns raised by the Division.  The Company
has submitted to the Division and Gaming Control Board the documents effecting
the further restructure of Operator for their review in connection with
Operator's license renewal request.  There can be no assurance that the Gaming
Control Board will agree with the Company's conclusion that Operator, as further
restructured, complies with the residency requirements of the Louisiana Act, but
the Company believes the Gaming Control Board will agree with such restructure
and with the Company's conclusion.

     As part of the further restructure of Operator, the Company entered into a
Release and Settlement Agreement (the "Settlement Agreement") with, among
others, Williams and ten former holders of Class A Preferred Stock of the
Company (the "North Louisiana Group") on February 2, 1999, but to become
automatically effective as of March 31, 1999.  At February 2, 1999, the North
Louisiana Group owned 5,614,632 shares of Common Stock (representing
approximately 13.4% of the issued and outstanding shares of Common Stock) and
were owed $306,959.61 in original principal amount of subordinated debentures,
and were owed accrued dividends of $255,072 accrued on the Class A Preferred
Stock prior to its conversion to Common Stock.  As part of the Settlement
Agreement and pursuant to related documents executed in connection therewith,
the North Louisiana Group agreed, among other things, to (i) dismiss with
prejudice its pending lawsuit against the Company for the payment of accrued
dividends and agreed to cancel all accrued dividends payable to the North
Louisiana Group; (ii) mark their subordinated debentures "canceled" and return
them to the Company and cancel all principal and accrued interest thereunder;
(iii) return to the Company for cancellation 5,614,632 shares of Common Stock
owned by the North Louisiana Group; (iv) be responsible on a 50/50 basis with
the

                                      -3-
<PAGE>

Company for any funds expended in settlement with any other former holders of
Class A Preferred Stock which the Company may desire to pursue; (v) assume 50%
of the debt owed by the Company, to Regions Bank, Springhill Branch, formerly
known as Springhill Bank & Trust Company, relating to the Company's Gold Rush
Truck Stop; and (vi) release all claims, known or unknown, which the North
Louisiana Group might have against, among others, the Company, International
Tours, Inc. ("International") and the officers and directors of the Company as
of the date of the Settlement Agreement. In return, the Company (a) released all
claims it might have, known or unknown, against, among others, the North
Louisiana Group as of the date of the Settlement Agreement; (b) agreed to assign
to 146LLC, on behalf of the North Louisiana Group, a 24.5% interest in Operator
and a 25% interest in River Port LLC; and (c) agreed to assign to 146LLC, on
behalf of the North Louisiana Group, 50% of the Company's ownership of the Gold
Rush Truck Stop.

     Under the Settlement Agreement, Williams agreed to release all claims he
might have, known or unknown, against, among others, the Company, International,
the officers and directors of the Company and the North Louisiana Group as of
the date of the Settlement Agreement, and the Company agreed to release all
claims the Company might have, known or unknown, against, among others, Williams
as of the date of the Settlement Agreement.  Williams also agreed, among other
things, to (i) mark his subordinated debenture in the original principal amount
of $93,900 "canceled" and return it to the Company and cancel all principal and
accrued interest thereunder; (ii) return to the Company for cancellation 824,000
shares of Common Stock owned by Williams, 1,279,000 shares of Common Stock owned
by P. & J. Williams, L.L.C. (an affiliated entity) and 450,000 shares of Common
Stock owned by New Orleans Video Poker Company, Inc. (an affiliated entity), an
aggregate of 2,553,000 shares (representing approximately 6.1% of the issued and
outstanding shares of Common Stock); (iii) cancel the $78,000 of accrued
dividends payable to Williams accrued on the Class A Preferred Stock prior to
its conversion to Common Stock; and (iv)  pay to the Company certain amounts
which could aggregate between $150,000 and $300,000 over six years in
conjunction with the possible additional settlements by the Company with other
former holders of Class A Preferred Stock which the Company may desire to
pursue. The Company and Williams also entered into amendments to several other
existing agreements in connection with the Settlement Agreement as described in
the following paragraphs.

     The Company and Williams entered into a Second Amendment (the "Second
Amendment") to Operator's Operating Agreement, effective March 31, 1999.  The
Second Amendment operates to amend the Operating Agreement, as amended by the
Amendment, to delete all references to the Note and to the contribution of the
20% special gross income allocation so that neither provision shall ever have
been deemed to have existed and neither provision shall have ever been of any
force or effect.  As a result, the Note is deemed to never have existed and the
20% special gross income allocation was not deemed to have been contributed by
the Company for additional ownership interests in Operator. Under the Second
Amendment, the Operating Agreement was amended to terminate, and to delete all
references to, the 20% gross income allocation after March 31, 1999 and no
further allocation or distributions will be made to the Company pursuant to such
20% special gross income allocation.  Thereafter, distributions will be made in
accordance with capital accounts and the Sharing Ratios of the Members, which
will be 51% to Williams, 24.5% to the Company and 24.5% to one or more members
of the North Louisiana Group; provided, however, Williams is entitled under the
Second Amendment to distribution of the initial $4,166 to be distributed per
month up to a maximum of $50,000 per year, which distributions are to be
credited against any other distributions to Williams during such year.  Pursuant
to the Second Amendment, Operator will no longer be managed by a manager and,
instead, will be managed by the members, who shall take actions by the vote of
members owning at least 65% of the Sharing Ratios, except for certain enumerated
major decisions which require unanimous vote.  Related agreements were also
entered into effective as of March 31, 1999 canceling the Note and the Company's
security interest in the ownership interests of Williams securing the Note.

     The Company and Operator also entered into a Termination of Consulting and
Administrative Agreement (the "Termination") effective March 31, 1999.  The
Termination has the effect of terminating the Consulting and Administrative
Agreement entered into between the Company and Operator on April 15, 1998 (the
"Consulting Agreement") pursuant to which the Company agreed to provide
consulting and administrative services relating to the daily management of each
of Operator's video poker casinos, and pursuant to which the Company received a
fee of $400,000 per year for rendering such services, reduced by $50,000 for
each existing video poker casino Operator loses the right to operate, and
increased by $50,000 for each new video poker casino operated by Operator during
the term of the Consulting Agreement.

     Williams and Operator also entered into a Second Amendment to Employment
Agreement (the "Employment Amendment") effective March 31, 1999 which amends the
Employment Agreement dated April 15, 1998 pursuant to which Williams received an
annual salary of $250,000, was eligible to participate in any employee benefit
plans of Operator, was furnished the use of a company automobile and was
reimbursed for expenses incurred on behalf of

                                      -4-
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Operator during the course of his employment. Under the Employment Amendment,
Williams will receive an annual salary of $100,000 and will continue to be
eligible to participate in any employee benefit plans of Operator, but will no
longer be furnished the use of a company automobile or be reimbursed for
expenses. Under the Employment Agreement, as amended by the Employment
Amendment, the Employment Agreement terminates on March 31, 2004.

     As part of the Settlement Agreement, the Company and Operator have modified
the terms of the lease of the Gold Rush Truck Stop by the Company to Operator.
The Company and Operator have entered into a Lease Agreement (the "Lease")
effective March 31, 1999 for an initial term of six months and thereafter to be
a month-to-month lease until terminated by either party, with or without cause,
on 60 days' prior written notice.  The Company will be responsible for major
repairs and Operator will be responsible for nonmajor repairs and maintenance,
and Operator will pay a rental of $33,333.33 per month for the term of the
Lease.  The Company and Williams also mutually agreed to terminate the right of
first refusal previously granted to Williams to purchase the land and buildings
constituting the Gold Rush Truck Stop, or any portion thereof, if the Company
proposed to sell them to a third party.  In conjunction with the Lease, the
Company has agreed to be solely responsible for the indebtedness to Regents
Bank, Springhill Branch, formerly known as Springhill Bank & Trust Company,
which is secured by a mortgage on the Gold Rush Truck Stop.  As of December 31,
1999, the outstanding principal balance of such indebtedness was approximately
$382,109.

     Pursuant to the Second Amendment, the parties agreed to delete the
requirement that all video poker gaming opportunities within Louisiana that
either party desires to pursue must first be presented to Operator for its
review and determination whether it desires to pursue such opportunity.
Effective March 31, 1999, all parties will be free to pursue any video poker
gaming opportunities they may desire without first offering the opportunity to
Operator or any other member.  Likewise, Williams is no longer entitled to
receive a finder's fee of $50,000 for each opportunity brought by him to
Operator which is consummated by Operator.

     As part of the Settlement Agreement, Williams and the Company also agreed
that to the extent any of the truck stop, convenience store, restaurant or
gaming interests that are part of King's Luck Lady, Pelican Palace, Lucky
Longhorn, The Diamond Jubilee or the Video Poker Tavern Route are held or
operated in the name of the Company, effective March 31, 1999 they shall be
deemed to be in the name of and operated by Operator.

Restructure of River Port Truck Stop, LLC

     Pursuant to the Settlement Agreement, the Operating Agreement of River Port
LLC (the "River Port Operating Agreement") was also amended to provide that it
shall be managed by the members in the same manner as described above for
Operator under its amended Operating Agreement, and to provide that Williams
will own 50% of the membership interests and Sharing Ratios, and the Company
will own 25% and one or more members of the North Louisiana Group will own the
remaining 25%.  Other conforming changes were made to make the River Port
Operating Agreement consistent with the Operating Agreement of Operator, as
amended by the Second Amendment.  The amendments to the River Port Operating
Agreement also became effective March 31, 1999.

Ownership of Ozdon Investments, Inc.

     Ozdon Investments, Inc. ("Ozdon") is a Louisiana corporation owned 50% by
the Company and 50% by 146LLC, a Louisiana limited liability company owned by
members of the North Louisiana Group.  The Company has not entered into a
shareholders' agreement or similar agreement with the other 50% owner of Ozdon.
Consequently, if the two shareholders cannot agree on various actions, deadlocks
may arise which, if they cannot be satisfactorily resolved otherwise, may
require either shareholder to apply to a court to appoint a receiver or
otherwise intervene to break the deadlock.  In the past, the Company has had
difficulties with the other shareholder, or affiliates thereof, resolving
controversial matters.  See "Purported Cash Out Merger of Company's Interests",
above, and Item 3--"Legal Proceedings".

Development of River Port Truck Stop

     In January of 1997 the Company formed a subsidiary called River Port Truck
Stop, Inc. ("RPTS") and entered into an agreement with S.W. Day and T. Joe
Calloway ("Lessor") to lease property in Port Allen, Louisiana, for a period of
50 years.  The terms of the lease call for a monthly base rent payment of $7,000
plus Additional Rent of 10% of Net Revenue as defined in the lease agreement.
Lessor further agreed that for the first 24 months after the commencement of
video poker operations the Additional Rent would be 5% (rather than 10%) and
that commencing with the 25th month

                                      -5-
<PAGE>

of video poker operations the Additional Rent would be 10% of Net Revenue. RPTS
assigned the lease to River Port LLC on May 19, 1998. River Port LLC is a
Louisiana limited liability company formed on April 13, 1998 by the Company and
Williams to build and operate a video poker casino, restaurant, truck stop and
convenience store on the leased property. See "Restructure of River Port Truck
Stop, LLC", above. A convenience store and fuel facility was operated from June
1, 1997 until July 21, 1998 by the Company, through its subsidiary RPTS, and
effective July 21, 1998 the operations were taken over by River Port LLC. On
January 10, 1999, River Port LLC entered into a Convenience Store and Restaurant
Sub-Lease (the "Sublease") and a Fuel Service and Truck Stop Operating Agreement
(the "Fuel Service Agreement") with RVC Operations, L.L.C., a nonaffiliated
limited liability company ("RVC"), pursuant to which RVC will operate the
restaurant, convenience store and truck stop for an initial term of 15 years
with an option to extend for an additional 15 years, in exchange for an
escalating annual base rent ($42,000 in year 1, $84,000 in years 2 and 3,
$96,000 in years 4-6, $100,800 in years 7-9, $105,840 in years 10-12 and
$111,132 in years 13-15) with an adjustment every three years for increases in
the Consumer Price Index; percentage rate based on gross sales in excess of
certain benchmark amounts; and a royalty on fuel sales based on sales in excess
of certain benchmark amounts. The Sublease and Fuel Service Agreement are also
intended to be triple-net leases under which RVC is responsible for maintenance,
taxes and insurance. River Port LLC also assigned to RVC the option to purchase
the leased premises which River Port LLC has under the lease agreement with
Lessor. River Port LLC completed the convenience store, fuel facility and
parking lot in January 1999. Construction of the video poker casino was
completed in October 1999 and the casino is expected to open for business in May
2000. Effective July 17, 1998, River Port LLC borrowed $1,750,030 from
Cottonport Bank (the "Bank") for purposes of funding construction of the truck
stop and video poker casino to be owned and operated by River Port LLC. This
note bears interest at an annual rate of 10.25% until May 10, 2000, at which
time all principal and interest must be paid in full, unless the Bank extends
the due date of the note. River Port LLC is negotiating for an extension or
refinancing of the note. The full amount of the loan is guaranteed by the
Company and Operator; $1,000,000 of the loan is guaranteed by Williams and his
spouse; and $750,000 is guaranteed by E.H. Hawes, II, the President and Chief
Executive Officer of the Company, and an unaffiliated individual (which guaranty
is secured by a second lien on the Company's Gold Rush property). The lease of
the property upon which the truck stop and video poker casino were constructed
has been pledged as collateral for the loan, and the improvements constructed
thereon have also been pledged as collateral for the loan.

Gaming Industry Restrictions on Stock Ownership

     Upon the effective date of the Merger with OM, the Company's Certificate of
Incorporation was amended to adopt various restrictions on ownership of the
common and preferred stock of the Company in order to comply with applicable
gaming statutes.  Persons who are not suitable to be stockholders of the Company
under such statutes may not own common or preferred stock of the Company.
Further, any stockholder may be required, at such stockholder's expense, to make
filings with applicable gaming authorities to determine suitability, and if
found not suitable will be required to dispose of such stockholder's stock and
will not be entitled to vote or receive distributions pending such disposal.
These restrictions are further described, below, under the caption entitled
"Restrictions on Stockholders; Mandatory Disposition if Found Unsuitable".

Operation of Truck Stop Facilities

     Ozdon presently operates the truck stop facilities (i.e. the fuel pumps,
convenience store and restaurant) at the Gold Rush truck stop located in
Opelousas, Louisiana, Operator operates the truck stop facility at the Pelican
Palace, located in Toomey, Louisiana and operated the truck stop facility at
King's Lucky Lady, located in Port Barre, Louisiana until April 1, 1999, and
River Port LLC will be responsible for operating the truck stop facility at Port
Allen, Louisiana, but has entered into the Sublease and Fuel Services Agreement
with RVC who will be responsible for day-to-day operations of the River Port
truck stop facility.  Ozdon owns the facility in Opelousas; Operator operates
the facility in Toomey pursuant to a long term contract with the owner of the
truck stop; and River Port operates the facility in Port Allen pursuant to a
long term lease with the owner of the land.  These facilities and the agreements
with the owners, as well as the agreements with RVC, are described below.

      The Gold Rush - Opelousas, Louisiana.  The Gold Rush truck stop is located
in Opelousas, St. Landry Parish, Louisiana, a town with a population of
approximately 19,273 located at the intersection of Interstate Highway 49 and
U.S. Highway 167, approximately 20 miles from Lafayette, Louisiana.  The Gold
Rush truck stop facility opened for business on February 17, 1993, and the video
poker casino opened for business on the same date.  The Gold Rush has 31 fuel
dispensers, an approximately 4,234 square foot convenience store and a
restaurant.  At December 31, 1999, Ozdon employed 55 persons in the combined
truck stop and video poker casino operations.  Ozdon has granted Operator a
license to handle all sales of alcoholic beverages at the convenience store and
restaurant.

                                      -6-
<PAGE>

      Pelican Palace - Toomey, Louisiana.  The Pelican Palace truck stop is in
Toomey, Louisiana, a town with a population under 1,000 located three miles east
of the Texas state line on Interstate 10, approximately three miles from Vinton,
Louisiana (population approximately 3,150).  The Company, as successor in merger
to OM, entered into an Operating and Financing Agreement on July 21, 1993 (as
amended March 17, 1995) with Curray Corporation ("Curray"), a nonaffiliate
corporation that owns the land on which the Pelican Palace now stands, pursuant
to which the Company agreed to furnish the financing for, and to build, operate
and manage, a truck stop facility and video poker casino.  The Company also
agreed to purchase 50 video poker machines to be used in the casino, at a cost
of approximately $282,000. The Pelican Palace has 14 fuel dispensers, an
approximately 1,200 square foot convenience store and a restaurant. Pursuant to
the Operating and Financing Agreement, which was assigned by the Company to
Operator concurrently with the Merger with OM, Operator has the right and the
obligation to operate and manage both the truck stop facility and the video
poker casino for an initial term of five years (commencing March 30, 1994) and
Operator has the option to renew it for three additional five year terms on the
same terms as the original five year period; and Operator is presently in the
first five-year renewal term.  However, on October 19, 1995, the Company,
Operator and Curray agreed to co-management of the Pelican Palace whereby
Operator serves as the operator of the video poker casino, restaurant and
beverage facilities, with Curray assuming the role of landlord, pursuant to
which Curray assumes all responsibility for property maintenance.  Under the
Operating and Financing Agreement, the net income from operations is split 50%
to Operator and 50% to Curray.  However, Operator has agreed to pay from its
share of net income an amount equal to 2% of the net revenues generated from the
video poker machines to a nonaffiliate party as a finder's fee in connection
with the Pelican Palace acquisition.  Operator has entered into a subcontract
with a nonaffiliate corporation to manage and operate the fuel pump operations
and convenience store in return for a monthly payment to Operator of $2,500,
plus a percentage of all fuel sales and a percentage of merchandise sales over
$500,000.  Consequently, Operator will not employ on site personnel to manage
these operations.  Operator will, however, remain primarily responsible for
management of such operations.  At December 31, 1999, Operator was operating the
restaurant at the Pelican Palace and employed 35 persons for such operations.
Pursuant to the Settlement Agreement, Operator is responsible for management of
the truck stop facility commencing March 31, 1999, subject to the existing
subcontract.

     River Port Truck Stop - Port Allen, Louisiana.  The River Port Truck Stop
is in Port Allen, Louisiana, a town with a population of approximately 30,000
located approximately 6 miles West of Baton Rouge on Highway 415.  The River
Port truck stop has nine fuel dispensers, and an approximately 4,710 square foot
restaurant/convenience store. River Port LLC finished construction of the
convenience store, fuel facility and restaurant on January 2, 1999, and entered
into the Sublease and Fuel Service Agreement with RVC on January 10, 1999.  The
Sublease and Fuel Service Agreement are discussed in further detail under
"Development of River Port Truck Stop", above.  Pursuant to the Sublease, RVC is
responsible for operating the convenience store and restaurant and pursuant to
the Fuel Service Agreement, RVC is responsible for the day-to-day sale of fuel
at the truck stop and maintenance of the truck parking lot and truckers' lounge
facilities.  River Port LLC occupies the premises pursuant to a lease with a
term of 50 years, commencing January 1997, and pays a monthly base rent of
$7,000 plus Additional Rent of 10% of Net Revenues as defined in the Lease
Agreement, provided that during the first twenty-four months after commencement
of video poker operations, the Additional Rent will be 5% (rather than 10%).  As
a result of the Sublease and Fuel Service Agreement, River Port LLC will not
employ onsite personnel to manage the truck stop, convenience store, restaurant
or fuel facility, but will remain primarily responsible for management of such
operations under the Lease Agreement.

      King's Lucky Lady - Port Barre, Louisiana.  King's Lucky Lady truck stop
is in Port Barre, Louisiana, a town with a population of approximately 2,150
located five miles east of Opelousas, on U.S. Highway 190.  King's Lucky Lady
has 16 fuel dispensers, an approximately 800 square foot convenience store and a
restaurant.  As of April 1, 1999, the Company and Operator will no longer
operate King's Lucky Lady truck stop as a result of settlement of litigation
involving this truck stop.  See "Item 3 -- Legal Proceedings" for a discussion
of this litigation and the settlement.  Prior to such litigation, the Company,
as successor in merger to OM, had operated the King's Lucky Lady Truck Stop
pursuant to the Commercial Lease dated April 18, 1992 with T.B. Guillory, Inc.
("Guillory"), a nonaffiliated corporation that owns the facility.  The lease was
for an initial term of five years (commencing May 1, 1992), and the Company had
the option to renew it for three additional five year terms, subject to the
parties negotiating a percentage rental for the renewal period acceptable to
both parties.  The parties were unable to negotiate an acceptable renewal
percentage rental before May 1, 1997, and Guillory delivered notice to Operator
that the lease terminated effective April 30, 1997 and that Operator no longer
had any right to operate the video poker casino after such date.  Litigation was
commenced between Guillory and the Company and Operator for a determination
whether the lease was terminated or whether the Company and Operator had the
right to extend the lease.  As discussed in Item 3 -- "Legal Proceedings",
Guillory prevailed in the litigation and the Company will no longer operate this
truck stop facility effective April 1, 1999.

                                      -7-
<PAGE>

Assignment to OM Operating, L.L.C.

     Louisiana law requires a device operator's license in order to own and
operate truck stop video poker devices, and further requires that a licensed
device owner and operator be at least majority owned by Louisiana residents.
See "Regulation and Licensing", below.  Following the Merger, there could be no
assurance that the Company would be majority owned by Louisiana residents, and
if not, then OM would not be deemed majority owned by Louisiana residents and
would lose its device operator's license to operate and manage the five truck
stop video poker casinos.  Consequently, on the effective date of the Merger
with OM, OM contributed and assigned to Operator all of its rights, duties and
obligations to operate the five existing video poker casinos and the tavern
route, and Operator became the licensed device operator.  Operator is a
Louisiana limited liability company organized by OM and Williams, a former
director and Vice President of OM.  Effective March 31, 1999, Operator is owned
51% by Williams, 24.5% by the Company and 24.5% by members of the North
Louisiana Group, and will exist until the earlier of December 31, 2050 or the
date that Operator no longer owns or operates any video poker devices.  See
"Restructure of OM Operating, L.L.C.", above, for a further discussion of
Operator.

License Renewal Process

     As further discussed under "Regulation and Licensing", below, the Louisiana
Gaming Control Board ("Gaming Control Board") has undertaken a review of all
licensees operating video poker casinos, including the Operator.  The Company
has had preliminary meetings with the State Police, which is conducting the
initial reviews for the Gaming Control Board, concerning the structure of
Operator described above and whether such structure satisfies the Louisiana
residency requirements necessary for a license to operate video poker casinos,
and has made various modifications to its structure in an attempt to satisfy
certain concerns raised by the State Police.  The Company believes its modified
structure satisfies the residency requirements, but the State Police has not
completed its examination or made any conclusion or recommendation to the Gaming
Control Board whether it disagrees or concurs.  If the State Police concludes
that the modified structure of Operator does not satisfy the Louisiana residency
requirements, it will forward its conclusion to the Gaming Control Board and the
Company and Operator will be entitled to a hearing before the Gaming Control
Board.  In such event, it is possible that the Company and Operator would be
required to further restructure Operator, which could, depending on the nature
of any such further restructure, result in material adverse changes to the
Company's ownership interest in, and revenues received from, Operator, which in
turn could have a material adverse effect on the Company's financial condition.
It is also possible that the Gaming Control Board would not allow the Company
and Operator an opportunity to further restructure Operator, and instead revoke
Operator's license, although the Company does not presently believe the  Gaming
Control Board will take such action.  The revocation of Operator's license would
have a material adverse effect on the Company's business operations and
financial condition.

Operation of Video Poker Casinos

     Under Louisiana law, a licensed truck stop facility covering at least five
contiguous acres which has overnight facilities, a restaurant and service
facilities for 18 wheel tractor-trailers may segregate an area of the facility
as the video poker casino for adult patronage only and place up to 50 video
poker devices for play in the casino area; while racetracks and off track
betting ("OTB") parlors are permitted to install an unlimited number of video
poker devices, and qualifying locations with liquor licenses ("taverns") are
limited to three such devices.  As of December 31, 1999, Operator, through a
month-to-month lease from Ozdon, operates the video poker casino at the Gold
Rush, and Operator operates the video poker casinos at the Pelican Palace and
the Lucky Longhorn truck stops in Louisiana (and until April 1, 1999 and August
17, 1999, operated the King's Lucky Lady and the Diamond Jubilee, respectively,
video poker casinos in Louisiana) and handles all sales of alcoholic beverages
at the convenience store and restaurant at the Gold Rush and the Pelican Palace.
See "Operation of Truck Stop Facilities", above.  At December 31, 1999, Operator
employed approximately 40 persons in connection with its casino operations.
Operator generally operates its video poker casinos pursuant to long term
contracts with the owners of the truck stop.  River Port LLC will operate the
video poker casino in Port Allen, Louisiana.  River Port LLC will also operate
its video poker casino pursuant to a long term contract with the owner of the
truck stop.  These casinos and the agreements with the owners are described
below.  See, also, "Regulation and Licensing -- Louisiana -- Recent Changes in
Louisiana Act", below, for a discussion of recent changes to Louisiana law
regarding operation of truck stop video poker casinos.

      The Gold Rush - Opelousas, Louisiana.  The Gold Rush is also described
above under "Operation of Truck Stop Facilities".  The video poker casino and
lounge at the Gold Rush contains approximately 1,752 square feet and 50 video
poker devices.  Operator's right to operate the casino and lounge is granted
pursuant to a month-to-month lease with Ozdon which may be terminated by either
Ozdon or Operator upon 60 days' prior written notice to the other party.

                                      -8-
<PAGE>

A non-affiliate of the Company is entitled to a revenue participation interest
of 10% of the gaming profits (total cash played in the machines less winnings
paid out and less all franchise, licensing and device fees paid to the State of
Louisiana or any other political subdivision) from the operations of the video
poker casino. There are two other truck stops operating a total of approximately
85 video poker devices within 20 miles of the Gold Rush, and a Native American
gaming casino approximately 35 miles from the Gold Rush. Of the two other truck
stops with video poker casinos, one is the King's Lucky Lady video poker casino.
See "Marketing and Competition", below. Operator employed 55 persons in the
combined operations of the Gold Rush truck stop and casino at December 31, 1999.

      Pelican Palace - Toomey, Louisiana.  The Pelican Palace is also described
above under "Operation of Truck Stop Facilities".  The video poker casino and
lounge at the Pelican Palace contains approximately 2,200 square feet and 50
video poker devices.  Operator's right to operate the casino and lounge is
granted pursuant to the Operating and Financing Agreement previously discussed.
There are eight other truck stops operating a total of approximately 370 video
poker devices, and a race track operating approximately 350 video poker devices,
within 20 miles of the Pelican Palace. The Lucky Longhorn, one of these truck
stops, is also operated by Operator and is located across Interstate 10.
Additionally, there is a Native American gaming casino operating approximately
40 miles from the Pelican Palace, and four riverboat casinos operating within
approximately 25 miles. See "Marketing and Competition," below.   Operator
employed 35 persons at the Pelican Palace at December 31, 1999.

      Lucky Longhorn - Vinton, Louisiana.  The Lucky Longhorn video poker casino
contains approximately 3,000 square feet and 50 video poker devices within the
Lucky Longhorn truck stop in Vinton, Louisiana, across Interstate 10 from the
Pelican Palace.  Operator operates the video poker casino pursuant to an Act of
Contract and Agreement dated June 5, 1992 with three nonaffiliated corporations
and two nonaffiliated individuals who own the truck stop (referred to
collectively as "Longhorn") which was assigned to Operator by OM.  Operator has
the exclusive right to place and operate video poker devices in the Lucky
Longhorn for a period of 10 years (commencing August 2, 1992).  Operator and
Longhorn split 50%/50% the net revenues generated from operation of the video
poker devices; net revenues being defined as all money played in the devices
less winnings paid out and the (32.5% net device revenue tax payable to the
state.  Operator is solely responsible from its share of the revenues for paying
all other costs and expenses related to the video poker casino, with the
exception of contracted security.  There are eight other truck stops operating a
total of approximately 370 video poker devices, and a race track operating
approximately 350 video poker devices, within 20 miles of the Lucky Longhorn.
Additionally, there is a Native American gaming casino operating approximately
40 miles from the Lucky Longhorn, and four riverboat casinos operating within
approximately 25 miles. See "Marketing and Competition", below.  Operator
employed 17 persons at the Lucky Longhorn at December 31, 1999.

     River Port - Port Allen, Louisiana.  River Port is also described above
under "Operation of Truck Stop Facilities."  On January 17, 1997, a wholly owned
subsidiary of the Company entered into a Lease Agreement with S.W. Day and T.
Joe Calloway, two nonaffiliated individuals, to lease undeveloped land for a
term of 50 years and to construct on it a truck stop and video poker casino.
The Company assigned the Lease Agreement to River Port LLC on May 19, 1998.
River Port LLC has built an approximately 3,500 square foot video poker casino
and bar and an approximately 4,710 square foot restaurant/convenience store on
the land at an approximate cost of $2,000,000 (including equipment) which River
Port LLC funded through long-term indebtedness borrowed from Cottonport Bank and
two notes with original principal balances of $250,000 and $1,750,000, which had
a combined outstanding balance of approximately $2,000,000 at December 31, 1999.
The Lease Agreement provides for payment of a base rent of $7,000 per month,
commencing on the earlier of commencement of construction or June 30, 1997, and
additional rent equal to 10% of the net revenues generated from video poker
operations; net revenues meaning all money played in the devices less winnings
paid out and all franchise fees, device fees and other taxes payable to the
state or any other governmental agency, other than federal or state income
taxes.  The River Port video poker casino is scheduled to open for business in
May 2000. It will have 40 video poker devices, and River Port LLC will employ
approximately 15 persons in connection with the operations of the video poker
casino.

      King's Lucky Lady - Port Barre, Louisiana.  King's Lucky Lady is also
described above under "Operation of Truck Stop Facilities".  Until April 1,
1999, Operator operated the video poker casino at King's Lucky Lady, but will no
longer operate such video poker casino effective as of that date.  See the
discussion of King's Lucky Lady, above, under "Operation of Truck Stop Facility"
for a discussion of the Company's loss of the right to operate the video poker
casino at King's Lucky Lady.

     The Diamond Jubilee - New Orleans, Louisiana.  The Diamond Jubilee video
poker casino contains approximately 2,700 square feet and 35 video poker devices
(50 devices prior to February 1, 1997, 40 devices from February 1, 1997 through
August 16, 1998 and 35 devices from August 17, 1998 through August 17, 1999, the
date Operator ceased operating the casino) within The Diamond Jubilee truck stop
in east New Orleans, Louisiana.

                                      -9-
<PAGE>

Operator operated the video poker casino pursuant to a Sublease Agreement (the
"Casino Sublease") dated July 1, 1996 between Operator and New Orleans Video
Poker, Inc. ("NOVP"), a Louisiana corporation 50.1% owned by Donald I. Williams
and his spouse and 29.5% owned by nine other stockholders of the Company. NOVP
leases the truck stop operations and the video poker casino from Stanley Doussan
("Doussan") pursuant to a Lease Agreement, Addendum to Lease and Sublease and
Operator's Agreement dated July 10, 1992, as amended by an Amendment to Lease
and Addendum to Lease dated December 15, 1992 (collectively, the "Operator's
Agreements"). Operator attempted to renegotiate the Operator's Agreements on
terms more favorable to Operator, but Doussan was not able to reach an agreement
with Operator concerning these terms, so Operator elected to terminate the
Casino Sublease effective August 17, 1999 and no longer operates the Diamond
Jubilee.

Video Poker Tavern Route

     Operator also operated three video poker devices in one third-party tavern
as of December 31, 1999 through a subcontract with a nonaffiliated which
provides that Operator is entitled to 30% of the net revenues payable to the
subcontractor generated from the devices, and the subcontractor and Operator
split certain costs of operations on an agreed basis.  OM assigned this
subcontract to Operator and the subcontractor has consented to this assignment.

Marketing and Competition

      Marketing.   Ozdon, Operator and River Port LLC market their video poker
casinos through limited newspaper and radio advertising, and from word of mouth
referrals.  Customers are drawn primarily from the local population and
surrounding area, except for the properties on the Texas state line which draw
largely from residents of Texas, which does not have video poker gaming.

      Competition.    The gaming industry is highly fragmented and characterized
by a high degree of competition among a large number of participants, including
riverboat casinos, dockside casinos, land-based casinos, video lottery
terminals, video poker devices, Native American gaming ventures and other forms
of legalized gaming in the United States.  Many of the competitors and potential
competitors of Ozdon, Operator and River Port LLC have significantly greater
experience and financial resources than the Company and Ozdon, Operator and
River Port LLC.  The Company believes that competition in the gaming industry is
based on the quality and location of gaming facilities, the effectiveness of
marketing efforts and customer service and satisfaction.  The truck stops
casinos of Ozdon, Operator and River Port LLC are subject to extensive
competition from other truck stops and taverns located within the market area
for each truck stop, and from Louisiana's racetracks and OTB parlors which may
install an unlimited number of video poker devices. As of December 31, 1999,
there were over 15,000 video poker devices in operation in Louisiana.  Most are
one to three devices located in taverns.  As of such date, there were
approximately 100 licensed truck stops with approximately 3,500 devices in the
aggregate.  Each truck stop is permitted to have up to 50 video poker devices
and each tavern is permitted to have up to three video poker devices.  In
addition, Louisiana has authorized riverboat gaming, and one land-based casino
located in New Orleans.  Thirteen riverboats were in operation at December 31,
1999, four in Lake Charles (approximately 23 miles from Operator's Lucky
Longhorn and Pelican Palace), three in New Orleans (over 100 miles from any of
the truck stop casinos in which the Company has an interest), three in Bossier
City (over 100 miles from any of the truck stop casinos in which the Company has
an interest), one in Shreveport (over 100 miles from any of the truck stop
casinos in which the Company has an interest), and two in Baton Rouge (over 40
miles from any of the truck stop casinos in which the Company has an interest).
At December 31, 1999, there were three Native American casinos in operation in
Louisiana, one in Kinder, one in Marksville and one in Charentan. The riverboats
and land-based casinos are permitted to have table games, slot machines and
video poker devices.  It is anticipated that the riverboats and the casinos will
focus their marketing efforts on the tourist market.  Although Ozdon, Operator
and River Port LLC have focused their marketing efforts primarily on local
residents, such other gaming operations will provide substantial competition.

     The adjacent state of Mississippi has also legalized dockside gaming.
Dockside gaming in Mississippi, riverboat casinos in Louisiana and the land-
based casino in New Orleans have or are anticipated to have a wide variety of
gaming devices and table games, while Louisiana law limits the operations of
Ozdon, Operator and River Port LLC to video poker devices.  Further, Louisiana
law limits the jackpot that may be paid by a video poker device to $500 per play
while other gaming activities have no such limit.  The Company believes the
limit to be a competitive disadvantage.

     The operation of truck stop video poker casinos is a highly competitive
business.  The principal competitive factors in the industry include the quality
and location of the facility, the nature and quality of the amenities, customer
services offered, and the implementation and success of marketing programs.  The
Company believes Ozdon and

                                      -10-
<PAGE>

Operator compete effectively, and that River Port LLC will compete effectively
after its opening in May 2000, with other truck stops and taverns in their
respective market in these areas.

     There has been a moderate increase during the last two years in the number
of gaming establishments opening for operation in Louisiana and Mississippi, and
competition for the business of gaming patrons has become very intense. As a
result, it is expected that the profit margins which may be expected by gaming
establishments like those in which the Company has an interest will be adversely
affected, and that various gaming establishments may be forced to close because
they cannot compete effectively at such reduced margins.  The Company believes
the video poker casinos in which the Company has an interest will be able to
maintain a competitive position if they are able to carefully manage expenses
and cash flow.  However, there can be no assurance in this regard and the
Company has no control over such management.

Employees

     As of December 31, 1999, the Company employed 4 persons full time and part
time.  As of December 31, 1999, Ozdon and Operator employed 55 and 52 persons,
respectively, full and part time, including one executive and seven managerial
personnel, with the remainder involved in on-site operation of the four truck
stop casinos.  None of the current employees of the Company, Operator or River
Port LLC are covered by any collective bargaining agreements. The Company
considers its employee relations to be good and believes the employee relations
of Ozdon, Operator and River Port LLC to be good, but it has no control over
such employee relations.

Environmental Matters

     A number of jurisdictions have adopted laws and regulations relating to
environmental controls and the development and operation of various projects.
Ozdon, Operator and River Port LLC are responsible for complying with various
federal and state waste disposal and licensing laws in connection with the truck
stop facilities they operate, including the requirement of obtaining permits for
underground storage tanks for fuel products and the requirement of properly
disposing of waste motor oil and other regulated products.  The Company believes
Ozdon, Operator and River Port LLC have obtained all permits required of them,
and is not aware of any material violation of applicable environmental
regulations with respect to the truck stop operations in which it has an
interest.  There have been no changes to the Company's operations and no
reserves have been established for any environmental hazards with respect to
such truck stop operations.  Environmental contingencies are not expected to
have a material adverse effect on future results of operations or financial
condition.

Regulation and Licensing

      Louisiana

      Device Owner's License.  The manufacture, distribution, servicing and
operation of video draw poker gaming devices ("Devices") in Louisiana is subject
to the Louisiana Gaming Control Law and the Louisiana Video Draw Poker Devices
Control Law and the Rules and Regulations promulgated thereunder (the "Louisiana
Act").  Licensing and regulatory control is provided by the Louisiana Gaming
Control Board (the "Gaming Control Board") and the Video Gaming Division of the
Gaming Enforcement Section of the Office of State Police within the Department
of Public Safety and Corrections (the "Division").  The laws and regulations of
the Gaming Control Board and the Division are based upon a primary consideration
of maintaining the health, welfare and safety of the general public and upon a
policy which is concerned with protecting the video gaming industry from
elements of organized crime, illegal gambling activities and other harmful
elements, and protection of the public from illegal and unscrupulous gaming to
ensure the fair play of video gaming Devices.  The Louisiana Act was amended in
1994 to further qualify and restrict video gaming operations in truck stops.
See "Recent Changes in Louisiana Act", below.

     Operator, which operates the Gold Rush, the Lucky Longhorn and the Pelican
Palace Video Poker casinos, has been granted a license as a Device owner by the
Division, and River Port LLC has applied for a license as a Device owner by the
Division for operation of the River Port video poker casino. Prior to
terminating the lease with Operator for the Gold Rush video poker casino, Ozdon
will be required to obtain a license as a Device owner or will be required to
enter into a lease or operating agreement with another person or entity who
maintains a license as a Device owner. Under the terms of the Louisiana Act,
licenses expire at midnight on June 30 of each year and must be renewed annually
through payment of certain fees and continued compliance with the suitability
requirements of the Louisiana Act.  All license fees must be paid on or before
May 15 in each year licenses are renewable.  The Company believes Operator has
timely submitted its renewal applications, but there is a backlog existing at
the Division and the Division is behind in

                                      -11-
<PAGE>

reviewing applications, including the application of Operator. See, also,
"License Renewal Process", above, for a discussion of the renewal examination to
which Operator is presently subject and the possible results thereof if the
Operator is found not to meet the residency requirements.

     The Gaming Control Board may deny, impose a condition or fine, suspend or
revoke any license, renewal, or application for a license for violation of any
rules and regulations of the Gaming Control Board or Division or any violations
of the Louisiana Act. Fines for violations of gaming laws or regulations may be
levied against the licensees and the persons involved.  In addition, the
licensees could be subject to separate fines for each violation of the gaming
laws.  The Louisiana Act states that a license issued by the Gaming Control
Board is a pure and absolute privilege.  The issuance, condition, denial,
suspension or revocation of a license is at the discretion of the Gaming Control
Board in accordance with the provisions of the Louisiana Act.  A license is not
property or a protected interest under the constitution of either the United
States or the State of Louisiana.  Suspension or revocation of the license of
Operator or the failure of River Port LLC to be approved for a license could
have a material adverse effect upon the business of the Company.

     The Gaming Control Board has the authority to conduct overt and covert
investigations of any person, entity, applicant or participant involved directly
or indirectly in the video gaming industry in Louisiana.  This investigation may
extend beyond the information provided in the formal application, including
information with regard to the licensee's immediate family and relatives and
their affiliations with certain groups, organizations, corporations, firms or
other business entities.  The investigation may also extend to every person who
has or controls more than a 5% ownership, income or profit interest in an entity
which applies for a license in accordance with the Louisiana Act, or who is a
key employee or who has the ability to exercise significant influence over the
licensee.  All persons or entities investigated must meet all suitability
requirements and qualifications for a licensee.  The Gaming Control Board may
deny an application for licensing or renewal of a license for any cause which it
may deem reasonable.  The applicant for licensing must pay a filing fee which
also covers the cost of investigation.

     In order for a corporation or limited liability company like the Company,
Ozdon, Operator or River Port LLC to be licensed by the Gaming Control Board, it
must be demonstrated that a majority of the corporation or limited liability
company is owned by persons who have been domiciled in Louisiana for a period of
at least two years prior to the date of the application.  See "License Renewal
Process", above, for a discussion of the renewal examination to which the
Company and Operator are presently subject and the possible results thereof if
the Operator is found not to meet the residency requirements.

     Devices must meet strict specifications established by the Gaming Control
Board.  The number of Devices is limited depending on the type of location at
which the Devices are located.  Fees payable to the Gaming Control Board include
an application fee, which is non-refundable, an annual fee, based upon a
percentage of the net revenues from the operation of each Device, a Device
owner's fee, a Device operations fee, license establishment fee and a Device
owner's franchise fee.  All fees are payable in either semi-monthly, quarterly
or annual installments depending on the fee being paid.

      Establishment License.  The Louisiana Act also provides that a truck stop
facility ("Establishment") must obtain a license as an Establishment to allow
the placement and operation of Devices within the Establishment.  The
Establishment license is typically granted to the owner of the truck stop
facility, but may also be granted to a lessee of the facility.  The owners are
the Establishment licensees for the Pelican Palace and the Lucky Longhorn.
Ozdon is the Establishment licensee for the Gold Rush. River Port LLC has
applied for the Establishment license for River Port.

     Establishment licenses are also subject to annual renewal at the same time
Device owner licenses are renewable, and the payment of an annual fee.  The
Gaming Control Board has the same authority to deny, suspend, condition or
revoke an Establishment license, and to conduct investigations (including
investigations of all parties deriving a share of gaming revenue), as it does
for Device owner licenses.  As with the Device owner license, the Establishment
license is a pure and absolute privilege.  The loss by Ozdon or River Port LLC
of their respective Establishment licenses, or the loss of the Establishment
licenses by the Establishment licensees for the Pelican Palace and the Lucky
Longhorn, would have a material adverse effect upon the business of the Company.

     The Gaming Control Board has issued a directive to the Division to strictly
enforce the requirements of the Louisiana Act which require the Establishment
Licensee to be in control of the fuel operations at the truck stop.  The
determination whether the Establishment Licensee has satisfied such control
requirements involves various subjective criteria and the determination is not
easily predictable. It is possible that the Gaming Control Board or the Division
could interpret these subjective criteria in such a manner to conclude that the
Establishment Licensee at one or more of the

                                      -12-
<PAGE>

truck stops in which the Company has an interest was not in compliance, in which
case their Establishment license could be revoked, which would also result in
the Operator or River Port LLC, as applicable, losing its ability to operate the
video poker truck stop casino at such truck stop. The Company has reviewed
arrangements between the Establishment Licensees and the fuel operators at the
existing truck stops in which the Company has an interest in an attempt to
determine whether they are in compliance or whether modifications need to be
made to bring them into compliance. There can be no assurance that the Gaming
Control Board or the Division might not have a different interpretation than the
Company or Establishment licensee with regard to such arrangements and their
compliance with the fuel operations control requirement.

      Recent Changes in Louisiana Act.  Effective July 1, 1994, the Louisiana
legislature adopted amendments to the Louisiana Act which have a material effect
on operations of truck stop casinos.  The franchise payment payable to the State
of Louisiana was raised from 22.5% of net device revenues (money played in video
poker devices less winnings paid) to 32.5% and 26% of net device revenues for
those operated in truck stops and taverns, respectively.

     In addition to raising the franchise payment, the Louisiana legislature
also adopted additional standards to be satisfied for a truck stop facility to
be considered a qualified truck stop facility for placement of video poker
devices. These standards include strict compliance with the parking area
requirements for 18-wheel vehicles; requiring a 24-hour on-site restaurant
facility; requiring access to repair facilities; and requiring certain other
amenities be available for truck drivers.  Under the new law, operators had
until January 1, 1996 to bring their truck stops into compliance with these new
standards.  As of December 31, 1999, each of Gold Rush, Luck Longhorn, Pelican
Palace and River Port Truck Stops satisfied these additional criteria.

     The Louisiana legislature also adopted minimum fuel sales requirements for
qualified truck stops effective July 1, 1994, except that existing licensed
facilities had until January 1, 1996 to satisfy such requirements.  The fuel
sales requirements and their relationship to the number of video poker devices
that may be operated at the truck stop are based on average monthly sales, as
follows: (i) up to 50 devices if sales equal at least 100,000 gallons per month
and 40,000 of such gallons are diesel, (ii) up to 40 devices if sales equal at
least 75,000 gallons, but are less than 100,000 gallons, per month and 30,000 of
such gallons are diesel, and (iii) up to 35 devices if sales equal at least
50,000 gallons, but are less than 75,000 gallons, and 10,000 of such gallons are
diesel.  During the grandfather period for existing licensed facilities (which
expired January 1, 1996), facilities were required to average monthly sales of
at least 25,000 gallons per month, commencing October 1994, in order to continue
operating video poker devices at the facility. As of December 31, 1999, the
truck stop facilities at the Gold Rush, Lucky Longhorn and Pelican Palace
satisfied the fuel sales necessary to allow the operation of the maximum number
of 50 devices. The truck stock facility at River Port has current fuel sales
sufficient to allow a maximum of 40 video poker devices.  It is anticipated that
the Division will review fuel sales at truck stops on a quarterly basis to
determine whether the average monthly fuel sales volumes are being satisfied for
the number of devices operated, and, if not, the number of operating devices
will be reduced until the next quarterly review.  The reduction in the number of
devices operated at any of the truck stop casinos in which the Company has an
interest could have an adverse effect on the cash flow of the Company if the
level of fuel sales cannot be increased to reach the former level of devices
maintained, although such effect will be mitigated by the fact that rarely are
all devices in a location in operation at the same time.

     There has been during the past several years a perceived increase in anti-
gaming sentiment in Louisiana within certain segments of the population and with
certain politicians.  In April 1996, the Louisiana Legislature approved a local-
option bill which gave the voters in each parish the right to decide during the
November 5, 1996, general election what forms of gaming they want to continue in
their parish.  At this general election, all parishes in which video poker
casinos were operated in which the Company had an interest voted to continue
truck stop video poker, but two parishes voted to discontinue video poker
casinos which will result in the closure of various taverns and the loss of
various video poker devices.  The Company believes there is continuing anti-
gaming sentiment prevailing within certain segments of the population and with
certain politicians.  From time to time bills are proposed in the legislature to
restrict or terminate truck stop video poker casinos, and the Gaming Control
Board and Division are interpreting very strictly various regulatory
requirements which sometimes involve subjective criteria, which interpretations
may result in the loss of licenses by certain licensees.  The Company cannot
predict whether anti-gaming sentiment or any future proposed legislation will
result in further changes to the gaming laws of Louisiana, or an outright ban on
certain forms of gaming, including truck stop video poker casinos.  The State of
Louisiana and the local parishes generate substantial revenues from license fees
and taxes on the gaming industry, so the loss of portions of these revenues
would most likely be carefully examined in connection with any future proposed
limitations on gaming.  The Company continues to monitor these proceedings and
provides input as appropriate.  The Company also continues to review other
gaming opportunities outside Louisiana, and other non-gaming opportunities, for
purposes of diversification.

                                      -13-
<PAGE>

     The Gaming Control Board has undertaken a review of all licensees operating
video poker casinos.  The Company is aware of at least two operators who have
lost their licenses on the grounds they were not in compliance with Louisiana
requirements. The Operator is being examined as part of this process.  See
"License Renewal Process", above, for a description of this examination and the
possible results thereof. River Port LLC submitted its license application to
the Attorney General's office on March 29, 2000 and is awaiting communication
from the Attorney General and the Gaming Control Board.

     Other States

     The ownership and operation of gaming facilities in other states where
gaming is legal are subject to extensive state and local regulation.  To the
extent the Company expands its gaming operations into other states, the Company
will, among other things, be required to register under the gaming acts of such
states and its gaming operations will be subject to the licensing and regulatory
control of the gaming commissions of such states, and various local, city and
county regulatory agencies.  The Company will be required to submit detailed
financial, operating and other reports to such gaming commissions, and
substantially all loans, leases, sales of securities and similar financing
transactions entered into by the Company will be required to be reported to or
approved by such gaming commissions.  The Company will also be required to
periodically submit detailed financial and operating reports and to furnish any
other information required thereby.

     Each of the directors, officer and key employees of the Company who are
actively and directly engaged in the administration or supervision of gaming, or
who have any other significant involvement with the activities of the Company,
will be required to be found suitable therefor, and may be required to be
licensed, by applicable gaming commissions.  The finding of suitability is
comparable to licensing, and both require submission of detailed personal
financial information followed by a thorough investigation.  In addition, any
individual who is found to have a material relationship to, or material
involvement with, the Company may be required to be investigated in order to be
found suitable or to be licensed as a business associate of the Company.  Key
employees, controlling persons or others who exercise significant influence upon
the management or affairs of the Company may also be deemed to have such a
relationship or involvement.  There can be no assurance that such persons will
be found suitable by the applicable gaming commissions in states in which the
Company may seek to expand.

     Federal Regulation

     Operator is required to file, and River Port LLC will be required to file,
annually with the United States Department of Justice under the Gambling Devices
Act of 1962.  The Company believes all currently required filings have been made
although it has no control over such annual filing compliance.

Restrictions on Stockholders; Mandatory Disposition if Found Unsuitable

     The Louisiana Act requires holders of 5% or more of the Company's Common
Stock to meet the suitability requirements applicable for the types of licenses
held or to be held by Ozdon, Operator or River Port LLC, and, if required by the
Division, to file a license application with the Division.  Failure to meet such
suitability requirements or file any required application can result in
suspension or forfeiture of the Louisiana licenses.  Other states grant their
gaming commissions the discretion to require a suitability finding with respect
to anyone who acquires any security of the Company, regardless of the percentage
of ownership.  Furthermore, certain of these states provide that any owner of
voting securities found unsuitable and who holds, directly or indirectly, any
beneficial ownership of equity interests in the Company beyond such period of
time as may be prescribed by the gaming commission of such state may be guilty
of a crime.  Any person who fails or refuses to apply for a finding of
suitability or a license within a specified number of days after being ordered
to do so by an applicable gaming commission may be found unsuitable.  In
addition, certain of these states provide that if any owner of voting securities
is found to be unsuitable, such owner must immediately surrender all securities
to the Company, and the Company must refund any money or other thing of value
that may have been invested in or made use of by the Company.

     As a result of the foregoing restrictions on ownership, the Company's
Certificate of Incorporation was amended in conjunction with the Merger with OM
to provide that if a holder or a beneficial holder of Common Stock or any other
class of capital stock is required by the Division or the gaming commission of
any other state to be found suitable, the holder shall apply for a finding of
suitability within the time period required by applicable law or by such
regulatory authority.  Further, the applicant for a finding of suitability will
be required to pay all costs of the investigation for such finding of
suitability.  The amended Certificate also provides that if a holder or
beneficial owner who is required to be found suitable does not apply for such
finding within the required time period, or is not found suitable by the
applicable

                                      -14-
<PAGE>

regulatory authority, (i) the holder shall, upon request of the Company, dispose
of his Common Stock or any other class of capital stock within 30 days or within
the time prescribed by the applicable regulatory authority, whichever is
earlier, or (ii) the Company may, at its option, redeem the holder's Common
Stock or any other class of capital stock at the lesser of the market price
thereof on the date of the finding of unsuitability or the price at which such
Common Stock or any other class of capital stock was acquired by the holder, and
(iii) if required under applicable state law, such shares may not be voted by
such unsuitable person and no dividends or distributions of any kind may be made
on such shares to such unsuitable person.


ITEM 2.  DESCRIPTION OF PROPERTY
--------------------------------

     Ozdon owns the Gold Rush truck stop facility and the building in which the
video poker casino is operated. This property is subject to a mortgage having a
remaining principal balance of $382,109 at December 31, 1999, and which requires
monthly payments of principal and interest of approximately $22,814 through June
20, 2001, at which time the note will be paid in full.  This property is further
described under Item 1- - "Description of Business -- Operation of Truck Stop
Facilities" and "-- Operation of Video Poker Casinos".  Reference is hereby made
to these sections for a description of this property and the Company's various
rights relative to this property.

     A description of the various agreements under which Operator operates and
manages the Pelican Palace truck stop facility and operates the truck stop video
poker casinos at the Gold Rush, Pelican Palace and Lucky Longhorn, and a
description of the River Port lease, is also included under Item 1--"Description
of Business -- Development of River Port Truck Stop", "--Operation of Truck Stop
Facilities" and "--Operation of Video Poker Casinos".  Reference is also hereby
made to these sections for a description of those agreements and the Company's
various rights relative to the truck stops.

     The Company's principal executive office is located in Dallas, Texas.  The
Company leases approximately 5,645 square feet pursuant to a 72 month lease
(commencing November 1996) which provides for a rental rate of approximately
$5,090 per month.  Until the Sale of the Cruise Business, the Company subleased
approximately 2,015 square feet of its office space to International for $1,595
per month pursuant to a month to month verbal agreement. The Company presently
has more office space than it needs and is attempting to sublease or assign a
portion of the premises to a nonaffiliated party.

ITEM 3.  LEGAL PROCEEDINGS
--------------------------

     T.B. Guillory ("Guillory") et al versus North American Gaming and
Entertainment Corporation and O.M. Operating, LLC, 27th Judicial District Court,
St. Landry Parish, Louisiana.  The preliminary question to be decided by the
court was whether the option to renew the term of the contract of lease on
King's Lucky Lady Truck Stop was in compliance with the requirements of the
Louisiana Civil Code governing the validity of such options.  The validity of
the option was assailed on grounds that the alleged failure of the option to
stipulate a price rendered it invalid.  On March 3, 1998, the court rendered
judgment against the Company and Operator on the grounds that the failure to
stipulate a price rendered the option invalid, and the Company and Operator were
ordered to vacate the premises effective April 30, 1997.  The Company and
Operator filed an appeal of this judgment.  The Third Circuit Court of Appeals
heard the appeal on November 6, 1998 and upheld the ruling of the trial court
that the renewal option was not valid.  The Company and Operator appealed to the
Supreme Court of Louisiana which refused to review the Court of Appeals'
decision on March 29, 1999.  The Company and Operator have no further right to
appeal the decision that the lease will not be renewed.  During the course of
the litigation, Operator was ordered by the court to escrow 50% of the monthly
operating profit generated by King's Lucky Lady, and effective from the date of
the judgment on March 3, 1998 Operator was required to escrow 100% of the
operating profit.  As of March 1, 1999, Operator had placed in escrow $775,595
for the period from May 1997 through February 1999.  Operator and the Company
also petitioned the court to grant a management fee for services from April 30,
1997 through the date the appeal was concluded and also asserted a claim for
damages for unjust enrichment against Guillory.  On March 31, 1999, the parties
agreed to a full settlement regarding the remaining outstanding issues including
the ownership of the escrowed funds.  As a result of the settlement, the Company
and Operator agreed to vacate the property effective 12:01 a.m., April 1, 1999.
Under the terms of the settlement, the Company and Operator received $325,000
from the escrow fund and will be entitled to 20% of the net profits of King's
Lucky Lady for the month of March 1999.  All remaining claims were dismissed.

     Harry Woodall, et al v. North American Gaming and Entertainment
Corporation, Civil Action No. 98-1503 S, United States District Court, Western
District of Louisiana, Shreveport Division, which was removed to federal
district court on August 17, 1998.  This suit represented a suit for declaratory
judgment by former holders of Class A Preferred

                                      -15-
<PAGE>

Stock seeking to have the court order that accrued dividends thereon must be
paid. This suit was dismissed with prejudice by the plaintiffs in connection
with the consummation of the Settlement Agreement.

     Arlington Farms, Inc., et al v. North American Gaming and Entertainment
Corporation, et al, Civil Action No. 00-106-C-M2, United States District Court,
Middle District of Louisiana.  This suit represents a suit by certain of the
plaintiffs in the Harry Woodall, et al v. North American Gaming and
Entertainment Corporation lawsuit which was dismissed as part of the Settlement
Agreement with the North Louisiana Group.  These plaintiffs have sued the
Company seeking specific performance under the Settlement Agreement to require
the Company, among other things, to deliver various instruments of ownership
reflecting the ownership interests of the North Louisiana Group in Operator,
River Port LLC and Ozdon and to declare that the effective date of the transfer
was December 17, 1998 rather than March 31, 1999, and for unspecified damages
allegedly caused by the delay of the Company in delivering such ownership
interests and unspecified damages allegedly caused for unspecified violations of
Rule 10b-5 promulgated under the Securities Act of 1933.  The Company intends to
file an answer on or before April 7, 2000.  The Company intends to vigorously
defend any claims for damages and to require the members of the North Louisiana
Group to deliver to the Company all instruments required to be delivered under
the Settlement Agreement.  The suit also involves a claim against E.H. Hawes,
II, the President and Chief Executive Officer of the Company, and a
nonaffiliated third party to set aside a second lien on the Gold Rush granted by
the Company to secure the personal guaranty of Mr. Hawes and such third party
guaranteeing the indebtedness of River Port LLC incurred in connection with the
construction of River Port.

     See Item 1 -- "Description of Business - Purported Cash Out Merger of
Company's Interests" for a discussion of an additional pending legal litigation.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
------------------------------------------------------------

     The Company mailed an Information Statement to it stockholders on or around
December 23, 1999 pursuant to which the stockholders were informed that the Sale
of the Cruise Business had been approved by written consent of five stockholders
owning approximately 62.2% of the outstanding shares of Common Stock.  Pursuant
to the terms of the Purchase Agreement with Travelbyus, the Sale of the Cruise
Business closed January 12, 2000, twenty days after the mailing of such
Information Statement, with an effective date of October 1, 1999.



                     [This Space Intentionally Left Blank]

                                      -16-
<PAGE>

                                    PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
-----------------------------------------------------------------

        The Company's Common Stock is traded over-the-counter and quoted from
time to time in the OTC Bulletin Board "pink sheets" under the trading symbol
"NAGM". Consequently, there is currently no established public trading market
for the Company's Common Stock. The following table sets forth the range of high
and low bid prices as reported by the OTC Bulletin Board for the periods
indicated. Such quotations represent inter-dealer prices without retail markup,
markdown, or commission, and may not necessarily represent actual transactions.

<TABLE>
<CAPTION>
        Calendar Years                     Bid Price
          by Quarter                    --------------
        --------------                    High    Low
                                        --------------
<S>     <C>                             <C>     <C>
1999    First                           $1/20   $1/32
        Second                           1/16    1/32
        Third                            1/25    1/32
        Fourth                           1/25    1/25


1998    First                           $1/32   $1/32
        Second                           3/16    1/32
        Third                            1/10    1/16
        Fourth                           1/16    1/20

</TABLE>


     At December 31, 1999, the Company had approximately 3,146 common
stockholders of record.

     The Company has not paid cash dividends on Common Stock during the last two
years and the Board of Directors of the Company does not currently intend to pay
cash dividends on Common Stock in the foreseeable future. The Company may not
declare or pay dividends on Common Stock if there are accumulated and unpaid
dividends on its former outstanding Class A Preferred Stock.  From October 17,
1994 through May 31, 1996, the former outstanding Class A Preferred Stock bore a
dividend of $.30 per annum (payable monthly), an annual dividend of $480,000
because all 1,600,000 shares were outstanding.   The Company is $447,018 in
arrears on dividends on its former outstanding Class A Preferred Stock as of
December 31, 1999.  These dividends will accumulate and be payable in full prior
to any distributions on the Common Stock.  All shares of Class A Preferred Stock
were converted into Common Stock during 1998 and there are no outstanding shares
of Class A Preferred Stock and no continuing accrual of dividends upon Class A
Preferred Stock.

     The Company used $1,000,223 from the proceeds of the Sale of the Cruise
Business to pay past due principal and accrued interest on the promissory note
payable by the Company to International.  As of April 6, 2000, the Company is in
arrears a total of approximately $10,000 in principal to International under the
note.  The note had an original principal balance of $1,400,000 and requires
monthly payments of principal and interest of $50,000.  Until such time as the
International note is paid in full, all payments are suspended on the
subordinated debentures issued by the Company in connection with the redemption
of 313,000 shares of Class A Preferred Stock, which had aggregate remaining
principal balances of $514,067 and accrued interest of $126,905 at December 31,
1999, and require aggregate payments of principal and interest of approximately
$9,500 per month until paid in full.  The subordinated debentures and the
amounts unpaid are expressly made subordinate to the International note as well
as other senior debt of the Company.  Until the International note is paid in
full and the subordinated debentures are paid in full, the Company is prohibited
from paying dividends on its Common Stock.

                                      -17-
<PAGE>

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
------------------------------------------------------------------

Liquidity and Capital Resources

     Present Cash Shortfall.  As of April 6, 2000, the Company was in arrears a
total of approximately $10,000 on the promissory note payable to International
by the Company.  The note had an original principal balance of $1,400,000 and
requires monthly payments of principal and interest of $50,000.

     Until such time as the International note is paid in full, all payments
will be suspended on the subordinated debentures issued by the Company in
connection with the redemption of 313,000 shares of Class A Preferred Stock,
which had aggregate remaining principal balances of $514,067 and accrued
interest of $126,905 at December 31, 1999. These debentures require aggregate
payments of principal and interest of approximately $9,500 per month until paid
in full and are expressly made subordinate to the International note as well as
other senior debt of the Company.  The Company plans to enter into negotiations
with the holders of the subordinated debentures to attempt to negotiate a
revised payment schedule for all of the Company's indebtedness to such persons
which will accommodate the Company's expected cash flow.  Any such revised
schedule will need to be flexible enough to anticipate revenue fluctuations due
to seasonal changes in revenue, the restructuring of the Company's ownership,
revenue and profits interests in the Operator, River Port LLC and Ozdon, and any
loss of video poker devices at any of the Company's video poker casinos as a
result of reduced fuel sales.  The Company believes it will be able to negotiate
a satisfactory revised payment schedule by the middle of the second quarter of
2000, but there can be no assurance.  If not, it is possible that the Company
might continue to experience certain cash shortfalls in 2000, depending on the
level of revenues generated from the Company's operations.  It is not possible
to predict whether such cash shortfalls might be experienced.

     As described in Item 1 -- "Description of Business", the structure of
Operator and River Port LLC  and the various interests (including revenue and
profits interests) of the Company in Operator and River Port LLC have been
restructured in an attempt to satisfy certain concerns raised by the Division.
The Company believes the further restructuring of Operator and River Port LLC
addresses the concerns raised by the Division.  The Company has submitted to the
Division and Gaming Control Board the documents effecting the further
restructure of Operator and River Port LLC for their review in connection with
Operator's license renewal request and the granting of a license to River Port
LLC. There can be no assurance that the Gaming Control Board will agree with the
Company's conclusion that Operator and River Port LLC, as restructured, comply
with the residency requirements of the Louisiana Act, but the Company believes
the Gaming Control Board will agree with the Company's conclusion.  Any adverse
ruling by the Gaming Control Board could further compound the Company's cash
flow situation and possibly result in the inability to meet its scheduled debt
payments, even as revised.  The Company does not believe the review will result
in further material adverse changes in Operator's or River Port's structure, but
it cannot predict the results of the review until the review is completed.  See
also, Item 1 -- "Description of Business -- Restructure of OM Operating,
L.L.C.", --"Restructure of River Port Truck Stop, LLC, -- "Regulation and
Licensing - Gaming Operations -- Louisiana --Establishment License" and --
"Recent Changes in Louisiana Act" for a discussion of the strict enforcement of
the Louisiana Act and the perceived anti-gaming sentiment in Louisiana within
certain segments of the population and with certain politicians, which sentiment
may also impact the review of Operator and River Port LLC and any possible
further restructuring of Operator or River Port, or even a possible loss of
Operator's license to operate the video poker casinos and the inability of River
Port LLC to obtain a license to operate its video poker casino.

     The Company will seek to meet its long-term liquidity needs primarily
through cash flow from operations, restructuring its payment obligations on
certain debt described above, additional borrowings from the Company's
traditional lending sources and possible sales of equity or debt securities.
While the Company believes it will be able to generate and obtain the necessary
capital to meet such needs if it is able to satisfactorily restructure its
payment obligations as described above, there can be no assurance that all of
such capital will be available on terms acceptable to the Company, which could
delay or cause the Company to postpone certain planned activities.

     General Condition.  The Company ended fiscal 1999 with $248,491 in cash and
other current assets amounting to $1,766,818, including accounts receivable
(net) of $110,843 and investments in 666,667 shares of Travelbyus common stock
with a value of $1,654,101 (of which 166,667 shares, or $194,101, is restricted
for payment of a bonus and an advisory fee in connection with the sale of the
Cruise Business).  At March 1, 2000, the Company continued to own 324,906 shares
of common stock of Travelbyus.  On that date, the closing sale price for a share
of common stock of Travelbyus on the Toronto Stock Exchange was $3.45 (US).
Total liabilities were $1,797,081 at December 31, 1999, including accounts
payable and accrued liabilities of $471,557, long-term notes payable of $781,369
and preferred stock dividends payable of $447,018.  The Company also reflected a
deferred tax liability of $97,137.  The Company's

                                      -18-
<PAGE>

liabilities decreased $4,672,347 from $6,469,428 at December 31, 1998 to
$1,797,081 at December 31, 1999. This decrease was comprised primarily at a
decrease in accounts payable, dividends payable, subordinated debentures and
long-term debt due to the restructure of Operator, River Port LLC and Ozdon
effective April 1, 1999. In addition, the Company paid approximately $915,000 on
long-term debt, including the International note.

     Intense competition for the business of gaming patrons in Louisiana and
Mississippi resulted in a decline in operating profit margins during 1999.  It
is expected that the profit margins may continue to be adversely affected, and
that various gaming establishments may be forced to close because they cannot
compete effectively at such reduced margins.  The Company believes Ozdon, the
Operator and River Port LLC will be able to maintain a competitive position if
they are able to carefully managing expenses and cash flow.  However, there can
be no assurance in this regard and the Company has no control over such
management.

Results of Operations

     The Company's continuing operations resulted in income before taxes of
$401,734 for the year ended December 31, 1999, an increase of $165,807 or 70%
from income before taxes of $235,927 for the year ended December 31, 1998.  The
increase is primarily a result of a gain on sale of certain interests in its
gaming operations (see Note 2 to the consolidated financial statements) and
other assets of approximately $634,000 and a decline in interest and other non-
operating expenses, offset by a decline in income from operations of $784,029.
Income from operations was $318,836 (including $275,769 of income from its
equity investments in gaming operations) for the year ended December 31, 1999,
down from $1,102,865 for the year ended December 31, 1998.

     In addition, the Company recorded a loss from its cruise operations of
$(184,531) in 1999 compared to a loss of $(404,698) in 1998.  The decrease in
the loss is due to the Company selling the cruise operations effective October
1, 1999 so there was a decreased operating period in 1999 and the Company
reduced marketing and promotional costs in 1999.

     The Company recorded a gain on the Sale of the Cruise Business of
$1,130,589, net of $297,434 of selling costs, in 1999.  There was no such gain
in 1998.

     Net income for the year ended December 31, 1999 was $1,302,792, an increase
of 613% from the net loss of $(253,750) realized for the year ended December 31,
1998.  The primary reasons for the increase are discussed above.

     The following comparisons are based on the operational results of the
Company and include certain operational information from April 1, 1999 to
December 31, 1999 of the gaming entities in which the Company holds an equity
investment.  This presentation is used to provide comparable video poker and
retail operating results for the year ended December 31, 1999 to 1998.

     The following is unaudited financial information of Operator, River Port
LLC and Ozdon (collectively "OM and Related Entities").

                                      -19-
<PAGE>

                            OM AND RELATED ENTITIES
                    SELECTED COMBINED OPERATING INFORMATION
                                  (UNAUDITED)


<TABLE>
<CAPTION>
                              Three Months   Nine Months    Year Ended
                              Ended March   Ended December   December
                                31, 1999        31, 1999     31, 1999
                              ------------  --------------  -----------
<S>                           <C>            <C>             <C>
Revenues:
     Video Poker                $4,128,171     $ 8,874,471  $13,002,642
     Truck stop and
         convenience store       1,905,456       4,207,479    6,112,935
                                ----------     -----------  -----------

                                $6,033,627     $13,081,950  $19,115,577
                                ==========     ===========  ===========

Costs of Revenue:
     Video Poker                $2,375,965     $ 4,893,709  $ 7,269,674
     Truck stop and
         convenience store       1,568,287       3,517,533    5,085,820
                                ----------     -----------  -----------

                                $3,944,252     $ 8,411,242  $12,355,494
                                ==========     ===========  ===========
</TABLE>


     Revenues totaled $19,115,577 through December 31, 1999 compared to
$24,383,294 for 1998, down 22% (including approximately $13,081,950 of revenue
generated by OM and Related Entities during the nine months from April 1, 1999
to December 31, 1999, which is included in the income from equity investments
for the same period in the accompanying consolidated financial statements).

Video Poker revenues totaled $13,002,642 through December 31, 1999, down
$2,701,589, or 17% from 1998's $15,704,231.  The primary reason for the loss in
revenues is due to the discontinuation of operations at King's Lucky Lady in
Port Barre, Louisiana, a decline of revenues of approximately $1,900,000, and
Diamond Jubilee in New Orleans, Louisiana a decline in revenues of approximately
$837,000.  Revenue increases were achieved at the Pelican Palace of
approximately $229,000 and at the Gold Rush of $193,000 and a revenue decrease
of approximately $287,000 was realized at the Lucky Longhorn.

Retail revenues  from fuel and convenience store, food and beverage operations
amounted to $6,112,935 for the year ended December 31, 1999, compared to 1998's
$8,679,063, a decrease of 30%.  The loss of the King's Lucky Lady Truck Stop and
convenience store in early 1999 resulted in a decrease of approximately
$2,267,000 in revenues. Revenues increased approximately $368,000 at the Diamond
Jubilee as it was in operation eight months in 1999 and four months in 1998.
River Port truck stop revenues were down approximately $943,000 as the store was
closed in December 1998 for reconstruction and when it reopened in 1999, was
operated by a third party.  River Port LLC received rental income and other fees
from the operator in 1999.  All other retail locations were up approximately
$276,000.

Cost of revenues totaled $12,355,494 through December 31, 1999 compared to
$16,221,408 for 1998, down 24% (including approximately $8,411,242 of costs of
revenue generated by OM and Related Entities during the nine months ended
December 31, 1999, which is included in the income from equity investments for
the same period in the accompanying financial statements).

Video poker  operations recorded a direct cost of revenue of $7,269,674 in 1999
and $9,091,113 in 1998, a decrease of 20%.  The primary reason for the decrease
in total dollars was a direct result of the decline in revenues generated as
discussed above.  As a percentage of video poker revenue, video poker costs
decreased to 56% from 58% of revenues as a result of a decline in depreciation
expense of approximately $166,000 as video poker assets become fully
depreciated.  Profit sharing distributions and state fees remained comparable.

Retail operations  (fuel, convenience store, food and beverage) recorded cost of
revenue of $5,085,820 for the year ended December 31, 1999 compared to
$7,130,295 for 1998, a decrease of $2,044,475, or 29%, due to discontinued
operations at King's Lucky Lady truck stop as of March 31, 1999 and the fact
that in 1998 Ozdon operated the River

                                      -20-
<PAGE>

Port truck stop and in 1999, when reopened, a third party operated the River
Port truck stop and paid Ozdon rent. As a percentage of retail revenues, total
cost of revenues increased to 83% from 82%.

     In order to comply with State regulations governing truck stops, OM and
Related Entities continued to be very competitive in the marketing and pricing
of fuel during the year ended December 1999, in order to maintain and/or
increase fuel sales.  The regulations require a minimum sales level of 100,000
gallons per month per location, in order to maintain a complement of 50 video
poker machines.

General operating and administrative expenses  were $2,046,308 in 1999 and
$7,059,021 in 1998, a decline of $5,012,713, or 71%, due to the change in
ownership of the gaming operations at March 31, 1999.  The Company's portion of
general and administrative expenses related to OM, River Port LLC and Ozdon from
April 1,1999 to December 31, 1999 is included in income from equity investments
in the consolidated statement of operations.  General and administrative
expenses represented 34% and 29% of total revenue for 1999 and 1998,
respectively.  The increase as a percent of revenue is a result of a decline in
revenue due to the change in ownership of the gaming operations along with an
increase in corporate overhead for consulting costs.

Other income (expenses) totaled $358,667 through December 31, 1999, compared to
$(866,938), up 141%.

Depreciation and amortization  amounted to $320,887 for the year ended December
31, 1999 and $630,994 in 1998. The decrease is due to the change in ownership of
the gaming operations and the decline in goodwill amortization upon the sale of
IT Cruise effective October 1, 1999.

Interest expense  was $193,340 in 1999 and $306,352 in 1998.  The decrease is
attributable to debt on the Gold Rush property and River Port construction that
was consolidated through March 31, 1999 and is included in income from equity
investment for the Company's ownership percentage from April 1, 1999 to December
31, 1999.

Net other expense  was $(357,733) in 1999, compared to $(486,610) in 1998.  The
decrease is due to the decrease in the reserve of King's Lucky Lady operating
revenue through March 31, 1999 when a settlement was reached.  The Company had
been reserving 100% of the income generated by King's Lucky Lady since March 3,
1998.

Income from equity investments  in the amount of $275,769 was recorded beginning
April 1, 1999, representing the Company's share of net income/loss in gaming and
truck stop operations (see Note 2 to the consolidated financial statements).

Year 2000 Issues

     The Company made the transition through the change to the year 2000 without
apparent service interruption and with no apparent effects from the year 2000
change.  We will continue to monitor our information technology and non-
information technology systems as well as those of our third-party vendors and
suppliers.  We spent approximately $23,000 during 1999 on hardware and software
upgrades and approximately $15,000 for labor and testing in preparation of the
change to the year 2000.  We do not anticipate that material expenditures will
be required in the year 2000 to further upgrade our systems, nor do we expect
our third-party vendors and suppliers to have significant year 2000 problems
based on our experience to date.

Forward Looking Statements

     Statements that are not historical facts included in this Form 10-KSB are
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995 that involve risks and uncertainties that could
cause actual results to differ from projected results. Such statements address
activities, events or developments that the Company expects, believes, projects,
intends or anticipates will or may occur, including such matters as future
capital, debt restructuring, the possible effects of anti-gaming sentiment, the
restructuring of Operator and River Port LLC maintaining or increasing fuel
sales, compliance with other gaming law requirements, maintaining a competitive
position in the Company's markets, pending legal proceedings, business
strategies, expansion and growth of the Company's operations, and cash flow.
Factors that could cause actual results to differ materially ("Cautionary
Disclosures") are described throughout this Form 10-KSB. Cautionary Disclosures
include, among others: general economic conditions, the Company's ability to
find, acquire, market, develop and produce new properties, the strength and
financial resources of the Company's competitors, anti-gaming sentiment, labor
relations, availability and cost of material and equipment, the results of debt
restructuring efforts, regulatory developments and compliance, and pending legal
proceedings.  All

                                      -21-
<PAGE>

written and oral forward-looking statements attributable to the Company are
expressly qualified in their entirety by the Cautionary Disclosures. The Company
disclaims any obligation to update or revise any forward-looking statement to
reflect events or circumstances occurring hereafter or to reflect the occurrence
of anticipated or unanticipated events.

ITEM 7.  FINANCIAL STATEMENTS
-----------------------------

     The financial statements required by this item begin at Page F-1 hereof.

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

     On December 4, 1998, the Company received a letter from its independent
accountant, Arthur Andersen LLP, that it was terminating the client-auditor
relationship between Arthur Andersen LLP and the Company.  There were no
disagreements with Arthur Andersen LLP on any matters of accounting principles
or practices, financial statement disclosure, or auditing scope or procedure,
which, if not resolved to its satisfaction, would have caused it to make
reference to such disagreement in its report.  A copy of a letter from Arthur
Andersen LLP, addressed to the Securities and Exchange Commission, concurring
with the Company's statements herein is filed as an Exhibit to this Form 10-KSB.
Neither of the reports of Arthur Andersen LLP on the Company's financial
statements for the Company's fiscal years ended December 31, 1997 and 1996
contained an adverse opinion or disclaimer of opinion, or was modified as to
uncertainty, audit scope, or accounting principles.

     Effective February 1, 1999, the Company engaged Sartain Fischbein & Co. as
its independent accountant to audit the Company's financial statements.

                                      -22-
<PAGE>

                                    PART III

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

     The following table provides information as of March 1, 2000, with respect
to each of the Company's directors and each executive officer:

<TABLE>
<CAPTION>
                                                           Served as Executive
                                                               Officer or
            Name              Age         Position           Director Since
----------------------------  ---  ----------------------  -------------------

                       Directors and Executive Officers
<S>                           <C>  <C>                     <C>
     E.H. Hawes, II            60  Director (Chairman),                   1998
                                   President and Chief
                                   Executive Officer

     Daryl N. Snadon/(1)/      54  Director                               1994

     Richard P. Crane, Jr.     60  Director and Secretary                 1994
</TABLE>
_______________

(1)  Member of Audit and Compliance Review Committee.


     E. H. Hawes, II.  Mr. Hawes has been the Chairman of the Board, President
and Chief Executive Officer of the Company since January 7, 1998.  He has been
the Chairman of the Board of IT Financial Corporation ("ITFC"), which is the
holding company for International Tours, Inc. ("International"), since 1969, and
has been the Chairman of the Board of International since 1969.  ITFC and
International are privately owned corporations engaged in the business of travel
agency franchising and travel agency training and schools.  Mr. Hawes has also
been President of Glacier Petroleum, Inc., a privately owned oil and gas
exploration company, since 1971.

     Daryl N. Snadon.  Mr. Snadon has been a Director of the Company since
January 1994.  He has been sole proprietor of Beltway Development Company, a
real estate development company, in Dallas, Texas since 1973. Mr. Snadon has
also been the Chief Executive Officer of Beltway Construction Incorporated, a
general contractor, in Dallas, Texas since 1975, and President of Beltway
Management Corporation, a real estate leasing and management company, since
1988.  Mr. Snadon holds an undergraduate degree from the University of Missouri
and is a graduate of the University of Missouri School of Law.

     Richard P. Crane, Jr.  Mr. Crane has been a partner in the law firm of
Musick, Peeler and Garrett, Santa Monica, California, since February 1997, and
prior to that time was a partner in the laws firms of Crane & McCann, Santa
Monica, California, for approximately three years, Crane, Rayle & Lennemann,
Santa Monica, California, for approximately two years, and Girardi, Keese &
Crane, Los Angeles, California, for 14 years.  Mr. Crane has practiced law for
over 34 years, seven of which were with the U.S. Attorney General's Office where
for five years he was the Attorney in Charge and Chief Trial Counsel of the
Organized Crime and Racketeering Section of the Western Regional Office. He has
served as a Director and as Secretary of the Company since October 1994.  Mr.
Crane is also a director of Service Merchandise, Inc. which is a publicly traded
company.  He is a graduate of Vanderbilt University and holds a law degree from
Vanderbilt University Law School.

     During 1999, the Board of Directors held six meetings, and took six
corporate actions by unanimous written consent. The Company has an Audit and
Compliance Review Committee, but does not have a nominating or compensation
committee or any committee performing similar functions.

                                      -23-
<PAGE>

     The Audit and Compliance Review Committee presently consists of Daryl N.
Snadon.  This Committee is responsible for serving in an oversight and
supervisory capacity in the areas of accounting, auditing, licensing and
statutory and regulatory compliance.  The Committee did not hold a meeting in
1999.

     Non-officer directors of the Company were paid a fee of $500 for each
meeting of the Board attended.  In addition, the Company reimburses the
directors for their expenses (if any) incurred in connection with their duties
as directors.  Messrs. Crane and Snadon were each granted options on January 20,
2000 to purchase 1,000,000 shares of Common Stock at an exercise price of
$.03125 per share, the approximate fair market value on such date, with such
options vesting immediately and having a term of five years from the date of
grant.

Section 16(a) Beneficial Ownership Reporting Compliance

     Based solely upon a review of Forms 3, 4 and 5 furnished to the Company
pursuant to Rule 16a-3(e) promulgated under the Securities Exchange Act of 1934
(the "Exchange Act"), or upon written representations received by the Company,
the Company is not aware of any failure by any officer, director or beneficial
owner of more than 10% of the Company's Common Stock to timely file with the
Securities and Exchange Commission any Form 3, 4 or 5 relating to 1999.

ITEM 10.   EXECUTIVE COMPENSATION
-----------------------------------

     The following table sets forth the compensation paid by the Company for
services rendered during the fiscal years ended December 31, 1999, 1998 and
1997, and the number of options granted, to the Chief Executive Officer of the
Company, and the value of the unexercised options held by such Chief Executive
Officer on December 31, 1999. No other executive officer of the Company received
remuneration in excess of $100,000 during 1999.

                           Summary Compensation Table
<TABLE>
<CAPTION>
                                                                     Long Term
                                              Annual              Compensation-
        Name and                           Compensation             Securities           All
        Principal                      --------------------         Underlying          Other
        Position                Year   Salary         Bonus     Options or Warrants  Compensation
------------------------------  -----  ------         -----     -------------------  ------------
<S>                             <C>    <C>          <C>         <C>                  <C>
E. H. Hawes, II,                 1999  $   -        $   -                -           $190,000/(1)/
 Chief Executive                 1998      -            -                -             63,125/(1)/
 Officer                         1997      -            -                -             37,500/(1)/

</TABLE>
___________________

(1)  Represents consulting fees paid by the Company.



                             Option/SAR Grant Table
                (Option/Warrant/SAR Grants in Last Fiscal Year)

<TABLE>
<CAPTION>
                   Number of
                   Securities    Percent of
                   Underlying      Total
                   Options or  Option/Warrant                Market Price
                    Warrants     Granted to    Exercise or      on Date
                    Granted     Employees in    Base Price     of Grant     Expiration
      Name             #        Fiscal Year       ($/Sh)        ($/Sh)         Date
-----------------  ----------  --------------  ------------  -------------  ----------
<S>                <C>          <C>             <C>          <C>             <C>
  E. H. Hawes, II      -             -            $   -         $    -          -
</TABLE>

                                      -24-
<PAGE>

             Aggregated Option/Warrant/SAR Exercises in Last Fiscal
                       Year and FY-End Option/SAR Values
<TABLE>
<CAPTION>
                                                                    Value of
                                                                  Unexercised
                    Shares               Number of Securities     In-the-Money
                   Acquired             Underlying Unexercised  Options/Warrants/
                      on       Value    Options/Warrants/SARs     SARs at 1998
                   Exercise   Realized     at 1998 FY-End            FY-End
      Name             #         $                #                     $
-----------------  ---------  --------  ----------------------  -----------------
<S>                <C>        <C>       <C>                     <C>

 E. H. Hawes, II     None       None              -                    $ -
</TABLE>

ITEM 11.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
-------------------------------------------------------------------------

     The following table sets forth certain information regarding the ownership
of Common Stock as of March 1, 2000, by each stockholder known to the Company to
own beneficially more than five percent of the outstanding Common Stock, each
current director, and all executive officers and directors as a group, based on
information provided to the Company by such persons.  Except as otherwise
stated, each such person has sole investment and voting power with respect to
the shares set forth in the table:
<TABLE>
<CAPTION>

        Name and Address
      of Beneficial Owner                     Number of Shares        Percent
      -------------------                     ----------------        -------
     <S>                                     <C>                      <C>

      International Tours, Inc./(1)/             18,079,286              54.6
      13150 Coit Road
      Suite 125
      Dallas, Texas 75240

      Hawes Partners/(1)/                        18,079,286              54.6
      Shangri-La Vista Tower
      Route 3
      Afton, Oklahoma 74331

      E.H. Hawes, II/(1)/                        18,081,620              54.6
      Shangri-La Vista Tower
      Route 3
      Afton, Oklahoma 74331

      Lamar E. Ozley, Jr./(2)/                    2,054,329               6.2
      6306 Mill Point Circle
      Dallas, Texas  75248

      D.W. Morton, Ltd./(3)/                      2,454,354               7.4
      Delwin W. Morton
      Brevely G. Morton
      777 #. 15th Street
      Plano, Texas 75074

      Daryl N. Snadon/(4)/                        1,535,666               4.5
      15280 Addison Rd., Ste 300
      Dallas, Texas  75248

      Richard P. Crane, Jr./(5)/                  1,785,556               5.2
      530 Wilshire Blvd., Ste. 400
      Santa Monica, California 90401

      All Executive Officers and                 21,402,842              60.1
      Directors as a Group
     (3 persons)/(1)(4)(5)/
</TABLE>

                                      -25-
<PAGE>

-----------------

(1)  International Tours, Inc. ("International") owns 18,079,286 shares of
     Common Stock of record and beneficially. E. H. Hawes, II, owns of record
     and beneficially 2,334 shares of Common Stock.  Hawes Partners is a
     partnership owned 100% owned by Mr. Hawes.  Hawes Partners beneficially
     owns 100% of the outstanding capital stock of International.  Consequently,
     the 18,079,286 shares of Common Stock owned of record and beneficially by
     International may also be deemed to be beneficially owned by each of Hawes
     Partners and Mr. Hawes, and are reflected accordingly in the table above
     for their respective ownership positions.

(2)  Includes 12,000 shares owned of record and beneficially by Mr. Ozley's
     spouse, and 100,000 shares owned of record by his spouse as custodian for
     their minor son under the Uniform Transfer to Minors Act.  Mr. Ozley
     disclaims beneficial ownership of these 112,000 shares.

(3)  D. W. Morton, Ltd. is a Texas limited partnership for which Delwin W.
     Morton and his wife, Brevely G. Morton, serve as general partners.  D.W.
     Morton, Ltd. owns of record and beneficially 1,610,100 shares of Common
     Stock.  Mr. and Mrs. Morton may direct the voting, or share in the
     direction of the voting, of these shares and, therefore, are deemed to
     beneficially own these shares with D. W. Morton, Ltd.   Mrs. Morton owns of
     record and beneficially 844,254 shares of Common Stock.  Mr. Morton and
     D.W. Morton, Ltd. disclaim beneficial ownership of the shares owned by Mrs.
     Morton.

(4)  Includes a vested option to acquire 1,000,000 shares and 535,666 shares
     pledged as collateral on a note payable to Mr. Snadon's former wife.

(5)  Includes vested options to acquire 1,500,000 shares.


ITEM 12.     CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
-----------------------------------------------------------

     Overhead Sharing Agreement.  The Company and International have agreed to
an overhead sharing arrangement pursuant to which the Company subleases
approximately 2,015 square feet of office space to International in the
Company's principal executive offices for a monthly rental of $1,595, and
reimburses International for the portion of the salaries of International's
employees attributable to services performed by them for GalaxSea and I.T.
Cruise. During 1999 and 1998, the Company paid approximately $79,000 and
$38,000, respectively, in salary and employee reimbursements to International,
and International paid $22,095 in rent to the Company during 1999 and $19,100
during 1998.

     Guarantees of Indebtedness of River Port LLC.  The Company has guaranteed
all of the $2.0 million loan from Cottonport Bank to River Port LLC for
construction of the River Port Truck Stop, Williams and his spouse have
guaranteed $1,000,000 of such loan, and $750,000 is guaranteed by E.H. Hawes, II
and A. Keith Weber.  The guarantee by Hawes and Weber is secured by a second
lien on the Company's Gold Rush property.

     Consulting Fees.  On May 16, 1997 (but to be retroactive to January 1,
1997), the Company entered into a Consulting Agreement with E.H. Hawes, II,
pursuant to which the Company paid Mr. Hawes $6,250 per month for providing
various consulting services to the Company.  This Consulting Agreement was
terminated effective January 14, 1998 after Mr. Hawes was appointed Chairman of
the Board, President and Chief Executive Officer of the Company.  Mr. Hawes has
continued to provide consulting services to the Company and was paid $190,000
and $63,125 in consulting fees during 1999 and 1998, respectively.  The Company
has agreed to pay Mr. Hawes $200,000 during fiscal 2000 for consulting services
and expense reimbursements.

     International Note.  As discussed under Item 5--"Market for Common Equity
and Related Stockholder Matters" and Item 6--"Management's Discussion and
Analysis or Plan of Operation", the Company paid International $725,223 in 1999
and $275,000 in 2000 pursuant to a promissory note in the original principal
amount of $1,400,000, and the Company is in arrears  in the amount of
approximately $10,000 at April 6, 2000.

                                      -26-
<PAGE>

ITEM 13.   EXHIBITS AND REPORTS ON FORM 8-K
-------------------------------------------

     (a)  The following documents are filed as part of this Annual Report on
Form 10-KSB:

          1.  Financial Statements:  The financial statements filed as part of
     this report are listed in the "Index to Financial Statements" on Page F-1
     hereof.

          2.  Exhibits required to be filed by Item 601 of Regulation S-B:

   Exhibit
   Number     Description of Exhibits
   ------     -----------------------

     2.1        Restated Plan and Agreement of Merger, dated as of January 21,
                1994, as amended and restated, by and between the Company, OM
                Investors, Inc. ("OM") and a subsidiary of the Company (without
                schedules) filed as Exhibit 2.1 to the Company's Registration
                Statement on Form S-4, Registration No. 33-79384, and
                incorporated herein by reference.

     3.1.1      Certificate of Incorporation of the Company, as amended, filed
                as Exhibit 3.1 to the Company's Annual Report on Form 10-K for
                the fiscal year ended December 31, 1986 (the "1986 Form 10-K"),
                and incorporated herein by reference.

     3.1.2      Certificate of Amendment of Certificate of Incorporation of the
                Company dated April 18, 1994, filed as Exhibit 3.1.8 to the
                Company's Annual Report on Form 10-K for the fiscal year ended
                December 31, 1993 (the "1993 Form 10-K"), and incorporated
                herein by reference.

     3.1.3      Certificate of Amendment of Certificate of Incorporation of the
                Company effecting one-for-three reverse stock split filed as
                Exhibit 3.1 to the Company's Current Report on Form 8-K dated
                October 17, 1994, and incorporated herein by reference.

     3.1.4      Certificate of Amendment of Certificate of Incorporation of the
                Company effecting name change, increase of authorized shares,
                authorization of Class A preferred stock and stock ownership
                limitations filed as Exhibit 3.2 to the Company's Current Report
                on Form 8-K dated October 17, 1994, and incorporated herein by
                reference.

     3.1.5      Form of "Certificate of Designation, Preferences and Rights of
                Series B Convertible Preferred Stock" creating the Series B
                Preferred Stock filed as Exhibit 10.1.4 to the Company's Current
                Report on Form 8-K dated June 10, 1996, and incorporated herein
                by reference.

     3.1.6      Certificate of Amendment of Certificate of Incorporation of the
                Company increasing the number of authorized shares of Common
                Stock to 100,000,000 shares filed as Exhibit 3.1.6 to the
                Quarterly Report on Form 10-QSB for the fiscal quarter ended
                June 30, 1998 and incorporated herein by reference.

     3.2        Amended and Restated Bylaws of the Company filed as Exhibit 3.2
                to the Company's Quarterly Report on Form 10-QSB for the fiscal
                quarter ended September 30, 1998, and incorporated herein by
                reference.

                                      -27-
<PAGE>

     Exhibit
     Number         Description of Exhibits
     ------         -----------------------

     10.1.1         Operating and Financing Agreement dated July 21, 1993
                    between OM and Curray Corporation relating to the Pelican
                    Palace filed as Exhibit 10.27.1 to the Form S-4 and
                    incorporated herein by reference.

     10.1.2         Letter Agreement dated September 21, 1993 between OM and
                    Mary Merrell Fountain relating to the Pelican Palace filed
                    as Exhibit 10.27.2 to the Form S-4 and incorporated herein
                    by reference.

     10.1.3         Commercial Lease dated February 14, 1994 between Tobacco
                    Plus, Inc. and OM and Curray Corporation relating to the
                    Pelican Palace filed as Exhibit 10.27.3 to the Form S-4 and
                    incorporated herein by reference.

     10.1.4         Lease dated February 18, 1994 between Albert and Jay, Inc.
                    and OM relating to the Pelican Palace filed as Exhibit
                    10.27.4 to the Form S-4 and incorporated herein by
                    reference.

     10.1.5         Collateral Promissory Note dated July 21, 1993 in the
                    original principal amount of $1,450,000 payable by Curray
                    Corporation to OM filed as Exhibit 10.27.5 to the Form S-4
                    and incorporated herein by reference.

     10.1.6         Collateral Mortgage dated July 21, 1993 between Curray
                    Corporation and OM relating to Exhibit 10.27.5 filed as
                    Exhibit 10.27.6 to the Form S-4 and incorporated herein by
                    reference.

     10.1.7         Notarial Endorsement and Assignment of Note dated October
                    29, 1993 relating to Exhibit 10.27.5 filed as Exhibit
                    10.27.7 to the Form S-4 and incorporated herein by
                    reference.

     10.1.8         Consent dated April 20, 1994 relating to the Pelican Palace
                    filed as Exhibit 10.14.1 to the Form S-4 and incorporated
                    herein by reference filed as Exhibit 10.27.8 to the Form S-4
                    and incorporated herein by reference.

     10.2.1         Commercial Lease dated April 28, 1992 between OM and T.B.
                    Guillory, Inc. and Bill Guillory relating to King's Lucky
                    Lady filed as Exhibit 10.28.1 to the Form S-4 and
                    incorporated herein by reference.

     10.2.2         Consent dated April 21, 1994 relating to King's Lucky Lady
                    filed as Exhibit 10.28.2 to the Form S-4 and incorporated
                    herein by reference.

     10.3.1         Act of Contract and Agreement dated June 5, 1992 between The
                    Longhorn Club, Inc., The Longhorn Truck & Car Plaza, Inc.,
                    D.M.L. Cattle Company, Inc., Dorothy M. Leach, Charles R.
                    Cotton, Southern Trading Corporation and OM relating to the
                    Lucky Longhorn filed as Exhibit 10.29.1 to the Form S-4 and
                    incorporated herein by reference.

     10.3.2         Amendment to Act of Contract and Agreement dated July 15,
                    1992, amending Exhibit 10.29.1 filed as Exhibit 10.29.2 to
                    the Form S-4 and incorporated herein by reference.

                                      -28-
<PAGE>

     Exhibit
     Number         Description of Exhibits
     ------         -----------------------

     10.3.3         Act of Contract between OM and Southern Trading Corporation
                    dated June 5, 1992 relating to Exhibit 10.29.1 filed as
                    Exhibit 10.29.3 to the Form S-4 and incorporated herein by
                    reference.

     10.3.4         Assignment dated February 15, 1993 between OM and Southern
                    Trading Corporation relating to Exhibit 10.29.1 filed as
                    Exhibit 10.29.4 to the Form S-4 and incorporated herein by
                    reference.

     10.3.5         Assignment dated June 22, 1993 between OM and John F.
                    DeRosier relating to Exhibit 10.29.1 filed as Exhibit
                    10.29.5 to the Form S-4 and incorporated herein by
                    reference.

     10.3.6         Consent dated May 1, 1994 relating to the Lucky Longhorn
                    filed as Exhibit 10.29.6 to the Form S-4 and incorporated
                    herein by reference.

     10.4.1         Amended and Restated Articles of Organization of OM
                    Operating, L.L.C. filed as Exhibit 10.32.1 to the Form S-4
                    and incorporated herein by reference.

     10.4.2         Corrected Operating Agreement of OM Operating, L.L.C. filed
                    as Exhibit 10.32.2 to the Company's Annual Report on Form
                    10-KSB for the fiscal year ended December 31, 1994 and
                    incorporated herein by reference.

     10.5           License Agreement dated effective December 15, 1995 between
                    the Company and Operator licensing sales of alcoholic
                    beverages at the Pelican Palace filed as Exhibit 10.35 to
                    the Company's Annual Report on Form 10-KSB for the fiscal
                    year ended December 31, 1995 and incorporated herein by
                    reference.

     10.6           Option Agreement dated January 17, 1996 between the Company
                    and Richard P. Crane, Jr. representing 500,000 shares of
                    Common Stock filed as Exhibit 10.38 to the Company's Annual
                    Report on Form 10-KSB for the fiscal year ended December 31,
                    1995 and incorporated herein by reference.

     10.7.1         Stock Purchase and Registration Rights Agreement dated July
                    1, 1996 between the Company and New Orleans Video Poker
                    Company, Inc. ("NOVP"), filed as Exhibit 10.1 to the
                    Company's Quarterly Report on Form 10-QSB for the fiscal
                    quarter ended September 30, 1996 and incorporated herein by
                    reference.

     10.7.2         Sublease Agreement dated July 1, 1996 between OM Operating
                    Company, LLC ("Operating") and NOVP filed as Exhibit 10.1.2
                    to the Company's Quarterly Report on Form 10-QSB for the
                    fiscal quarter ended September 30, 1996 and incorporated
                    herein by reference.

     10.7.3         Consent to Sublease entered into as of October 7, 1996, by
                    and between Operating, NOVP and Stanley Doussan filed as
                    Exhibit 10.1.3 to the Company's Quarterly Report on Form 10-
                    QSB for the fiscal quarter ended September 30, 1996 and
                    incorporated herein by reference.

                                      -29-
<PAGE>

     Exhibit
     Number         Description of Exhibits
     ------         -----------------------


     10.8           License to Operate Video Poker Casino dated effective
                    December 15, 1995 between Operating and Ozdon Investments,
                    Inc., relating to The Gold Rush Truck Stop filed as Exhibit
                    10.2 to the Company's Quarterly Report on Form 10-QSB for
                    the fiscal quarter ended September 30, 1996 and incorporated
                    herein by reference.

     10.9.1         Agreement and Plan of Merger dated effective June 7, 1996,
                    relating to the acquisition of GalaxSea and I.T. Cruise
                    filed as Exhibit 10.1.1 to the Company's Current Report on
                    Form 8-K dated June 10, 1996 and incorporated herein by
                    reference.

     10.9.2         Form of Note dated June 10, 1996 in the original principal
                    amount of $1,400,000 payable by the Company to International
                    relating to the acquisition of I.T. Cruise filed as Exhibit
                    10.1.2 to the Company's Current Report on Form 8-K dated
                    June 10, 1996 and incorporated herein by reference.

     10.9.3         Form of Security Agreement dated effective June 10, 1996
                    between International and the Company securing repayment of
                    the Note filed as Exhibit 10.27.2 filed as Exhibit as 10.1.3
                    to the Company's Current Report on Form 8-K dated June 10,
                    1996 and incorporated herein by reference.

     10.9.4         Form of GalaxSea Cruise Marketing Agreement dated May 1,
                    1996 between International and GalaxSea filed as Exhibit
                    10.1.5 to the Company's Current Report on Form 8-K dated
                    June 10, 1996 and incorporated herein by reference.

     10.9.5         Form of Cruise Marketing Agreement dated May 1, 1996 between
                    International and I.T. Cruise filed as Exhibit 10.1.6 to the
                    Company's Current Report on Form 8-K dated June 10, 1996 and
                    incorporated herein by reference.

     10.9.6         Form of Assignment between International and I.T. Cruise
                    dated June 1, 1996 filed as Exhibit 10.1.7 to the Company's
                    Current Report on Form 8-K dated June 10, 1996 and
                    incorporated herein by reference.

     10.9.7         Form of Security Agreement dated June 10, 1996 between the
                    Company, Ozdon Investments, and Lamar E. Ozley, Jr., as
                    Trustee for the former shareholders of Ozdon Investments,
                    Inc. filed as Exhibit 10.1.8 to the Company's Current Report
                    on Form 8-K dated June 10, 1996 and incorporated herein by
                    reference.

     10.10.1        Lease Agreement dated January 17, 1997 between S.W. Day and
                    T. Joe Calloway and River Port Truck Stop, Inc. (a
                    subsidiary of the Company) filed as Exhibit 10.28.1 to the
                    Company's Annual Report on Form 10-KSB for the fiscal year
                    ended December 31, 1996 and incorporated herein by
                    reference.

     10.11          Operating Agreement of River Port Truck Stop, LLC between
                    the Company and Donald I. Williams ("Williams") filed as
                    Exhibit 10.1 to the Company's Quarterly Report on Form 10-
                    QSB for the fiscal quarter ended June 30, 1998 and
                    incorporated herein by reference.

     10.12          Amendment to Employment Agreement between River Port Truck
                    Stop, LLC, O.M. Operating, L.L.C. and Williams filed as
                    Exhibit 10.2 to the Company's Quarterly Report on Form 10-
                    QSB for the fiscal quarter ended June 30, 1998 and
                    incorporated herein by reference.

                                      -30-
<PAGE>

     Exhibit
     Number         Description of Exhibits
     ------         -----------------------

     10.13          Consulting and Administrative Agreement between the Company
                    and River Port Truck Stop, LLC filed as Exhibit 10.3 to the
                    Company's Quarterly Report on Form 10-QSB for the fiscal
                    quarter ended June 30, 1998 and incorporated herein by
                    reference.

     10.14          Letter Agreement between the Company and Williams relating
                    to River Port Truck Stop, LLC filed as Exhibit 10.4 to the
                    Company's Quarterly Report on Form 10-QSB for the fiscal
                    quarter ended June 30, 1998 and incorporated herein by
                    reference.

     10.15          Assignment and Assumption of Lease dated May 19, 1998, by
                    and between River Port Truck Stop, Inc. and River Port Truck
                    Stop, LLC filed as Exhibit 10.5 to the Company's Quarterly
                    Report on Form 10-QSB for the fiscal quarter ended June 30,
                    1998 and incorporated herein by reference.

     10.16          Amendment No. One to Operating Agreement of OM Operating,
                    L.L.C. dated effective April 15, 1998 filed as Exhibit 10.1
                    to the Company's Current Report on Form 8-K dated April 15,
                    1998 and incorporated herein by reference.

     10.17          Note dated April 15, 1998 in the original principal amount
                    of $4,000,000 payable to the Company by Williams filed as
                    Exhibit 10.2 to the Company's Current Report on Form 8-K
                    dated April 15, 1998 and incorporated herein by reference.

     10.18          Assignment and Security Agreement dated April 15, 1998
                    between the Company and Williams filed as Exhibit 10.3 to
                    the Company's Current Report on Form 8-K dated April 15,
                    1998 and incorporated herein by reference.

     10.19          Consulting and Administrative Agreement dated April 15, 1998
                    between the Company and Operator filed as Exhibit 10.4 to
                    the Company's Current Report on Form 8-K dated April 15,
                    1998 and incorporated herein by reference.

     10.20          Employment Agreement dated April 15, 1998 between Operator
                    and Williams filed as Exhibit 10.5 to the Company's Current
                    Report on Form 8-K dated April 15, 1998 and incorporated
                    herein by reference.

     10.21          Release and Settlement Agreement dated February 2, 1999 by
                    and among the parties referenced therein, together with
                    various Exhibits thereto (but exclusive of various Schedules
                    thereto) filed as Exhibit 10.1 to the Company's Current
                    Report on Form 8-K dated February 1, 1999 and incorporated
                    herein by reference.

     10.22          Settlement Agreement dated February 2, 1999 by and among the
                    parties referenced therein filed as Exhibit 10.2 to the
                    Company's Current Report on Form 8-K dated February 1, 1999
                    and incorporated herein by reference.

     10.23          Convenience Store and Restaurant Sub-Lease dated January 10,
                    1999 between RVC Operations, L.L.C. and River Port Truck
                    Stop, LLC filed as Exhibit 10.41 to the Company's Annual
                    Report on Form 10-KSB for the fiscal year ended December 31,
                    1998 and incorporated herein by reference.

                                      -31-
<PAGE>

     Exhibit
     Number         Description of Exhibits
     ------         -----------------------

     10.24          Fuel Service and Truck Stop Operating Agreement dated
                    January 10, 1999 between RVC Operations, L.L.C. and River
                    Port Truck Stop, LLC filed as Exhibit 10.42 to the Company's
                    Annual Report on Form 10-KSB for the fiscal year ended
                    December 31, 1998 and incorporated herein by reference.

     *10.25         Purchase of Assets Agreement dated October 13, 1999 relating
                    to the Sale of the Cruise Business.

     16.1           Letter from Arthur Andersen LLP addressed to the Securities
                    and Exchange Commission dated December 10, 1998 filed as
                    Exhibit 16.1 to the Company's Current Report on Form 8-K
                    dated December 4, 1998 and incorporated herein by reference.

     *21.1          Subsidiaries of the Company.

     *27.1          Financial Data Schedule required by Item 601 of Regulation
                    S-B.

________________________

*    Filed herewith.

b)   Reports on Form 8-K

     None.

                                      -32-
<PAGE>

                                   SIGNATURES


In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934,
the Company has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.


                                    NORTH AMERICAN GAMING AND
                                    ENTERTAINMENT CORPORATION


April 14, 2000                      By:  /s/ E. H. Hawes, II, President
                                         ---------------------------------------
                                         E. H.  Hawes, II, President
                                         and Chief Executive Officer
                                         (Principal Executive Officer and
                                         Principal Financial and Accounting
                                         Officer)



In accordance with the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the Company and in the
capacities and on the dates indicated.

April 14, 2000                      /s/ E. H. Hawes, II
                                    --------------------------------------------
                                    E.H. Hawes, II
                                    Director (Chairman)

April 14, 2000                      /s/ Daryl N. Snadon
                                    --------------------------------------------
                                    Daryl N. Snadon
                                    Director

April 14, 2000                      /s/ Richard P. Crane, Jr.
                                    --------------------------------------------
                                    Richard P. Crane, Jr.
                                    Director

                                      -33-
<PAGE>

NORTH AMERICAN GAMING AND ENTERTAINMENT
 CORPORATION AND SUBSIDIARIES
TABLE OF CONTENTS
===============================================================================


Financial Statements of North American Gaming and
 Entertainment Corporation and Subisidiaries



                                                                     Page
                                                                   ---------


Independent Auditors' Report                                             F-2

Financial Statements:

    Consolidated Balance Sheet - December 31,1999                        F-3

    Consolidated Statements Of Operations - Years Ended
      December 31, 1999 And 1998                                     F-4-F-5

    Consolidated Statements Of Comprehensive Income (Loss) -
      Years Ended December 31, 1999 And 1998                             F-6

    Consolidated Statements Of Stockholders' Equity (Deficit) -
      Years Ended December 31,1999 And 1998                              F-7

    Consolidated Statements Of Cash Flows - Years Ended
      December 31, 1999 And 1998                                     F-8-F-9

    Notes To Consolidated Financial Statements                     F-10-F-27

Unaudited Financial Statements of OM and Related Entities

Introduction to Unaudited Financial Statements                          F-28

Financial Statements:

    Combined Balance Sheet - December 31,1999                           F-29

    Combined Statement Of Operations And Equity -
      Year Ended December 31, 1999                                      F-30

    Combined Statement Of Cash Flows - Year Ended
      December 31, 1999                                                 F-31

    Notes To Combined Financial Statements                         F-32-F-40


                                      F-1
<PAGE>

Independent Auditors' Report



To the Stockholders
North American Gaming and Entertainment Corporation


We have audited the accompanying consolidated balance sheet of North American
Gaming and Entertainment Corporation (a Delaware corporation) and Subsidiaries
as of December 31, 1999, and the related consolidated statements of operations,
comprehensive income (loss), stockholders' equity (deficit) and cash flows for
the years ended December 31, 1999 and 1998.  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 audits.

We conducted our audits in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the 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
consolidated financial statement presentation.  We believe that our audits
provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of North
American Gaming and Entertainment Corporation and Subsidiaries as of December
31, 1999, and the results of their operations and their cash flows for the years
ended December 31, 1999 and 1998 in conformity with generally accepted
accounting principles.



                                                /s/ Sartin Fischbein & Co.


March 2, 2000, except for Notes 2, 8, and 9
  which the date is April 6, 2000
Tulsa, Oklahoma

                                      F-2
<PAGE>

<TABLE>
<CAPTION>

NORTH AMERICAN GAMING AND ENTERTAINMENT
 CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
======================================================================================================
December 31,                                                                                      1999
------------------------------------------------------------------------------------------------------

ASSETS
<S>                                                                          <C>           <C>
Current Assets:

Cash                                                                                       $   248,491
Accounts receivable, net of allowance for doubtful accounts of $32,206                         110,843
Investment in available-for-sale securities                                                  1,460,000
Investments - restricted                                                                       194,101
Prepaid expenses                                                                                 1,874
                                                                                           -----------

Total Current Assets                                                                         2,015,309
                                                                                           -----------
Furniture And Equipment, net of accumulated depreciation                                        21,309
                                                                                           -----------
Other Assets:

Deposits                                                                                         3,246
Investments - other                                                                            382,479
                                                                                           -----------

Total Other Assets                                                                             385,725
                                                                                           -----------
Total Assets                                                                               $ 2,422,343
                                                                                           ===========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:

Accounts payable and accrued liabilities                                                   $   471,557
Deferred tax liability                                                                          97,137
Preferred stock dividends payable                                                              447,018
                                                                                           -----------

Total Current Liabilities                                                                    1,015,712

Notes Payable - long-term                                                                      781,369
                                                                                           -----------

Total Liabilities                                                                            1,797,081
                                                                                           -----------

Commitments And Contingencies

Stockholders' Equity:

Class A preferred stock, $3.00 par value, 10% annual cumulative dividend,
  1,600,000 shares authorized, no shares issued and outstanding                                      -
Preferred stock, $.01 par value, 10,000,000 shares authorized
  Series "B", 8,000,000 shares designated, no shares issued and outstanding                          -
Common stock, $.01 par value, 100,000,000 shares authorized, 41,788,552
  shares issued                                                                                417,886
Additional paid-in capital                                                                     466,959
Treasury stock, 8,667,632 shares, at cost                                                     (111,676)
Accumulated other comprehensive income                                                         548,562
Accumulated deficit                                                                           (696,469)
                                                                                           -----------

                                                                                               625,262
                                                                                           -----------

Total Liabilities and Stockholders' Equity                                                 $ 2,422,343
                                                                                           ===========
</TABLE>

                                      F-3
================================================================================
The accompanying notes are an integral part of the consolidated financial
statements.


<PAGE>

<TABLE>
<CAPTION>

NORTH AMERICAN GAMING AND ENTERTAINMENT
 CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
======================================================================================================
Years Ended December 31,                                                            1999          1998
------------------------------------------------------------------------------------------------------
<S>                                                                          <C>          <C>
Revenue:
Video poker                                                                   $4,128,171   $15,704,231
Truck stop and convenience store                                               1,905,456     8,679,063
                                                                              ----------   -----------

                                                                               6,033,627    24,383,294
                                                                              ----------   -----------
Costs And Expenses:
Video poker:
Cost of revenue                                                                2,330,478     8,871,204
Depreciation and amortization                                                     45,487       219,909
                                                                              ----------   -----------

                                                                               2,375,965     9,091,113
                                                                              ----------   -----------
Truck Stop and Convenience Store:
Cost of revenue                                                                1,553,077     7,065,399
Depreciation and amortization                                                     15,210        64,896
                                                                              ----------   -----------

                                                                               1,568,287     7,130,295
                                                                              ----------   -----------

General and administrative                                                     2,036,040     7,045,782
Depreciation and amortization                                                     10,268        13,239
                                                                              ----------   -----------

Operating Income                                                                  43,067     1,102,865

Interest Expense                                                                (193,340)     (306,352)
Gain (Loss) on Sale of Assets                                                    633,971       (73,976)
Income from Equity Investments                                                   275,769             -
Other Expense                                                                   (357,733)     (486,610)
                                                                              ----------   -----------

Income Before Provision For Income Taxes                                         401,734       235,927

Provision For Income Taxes                                                       (45,000)      (84,979)
                                                                              ----------   -----------

Income from Continuing Operations                                                356,734       150,948

Discontinued Operations:

Loss from operations of cruise operations
  disposed of net of income tax expense (benefit)
  of $33,000 (1999) and $(45,000) (1998)                                        (184,531)     (404,698)

Gain on disposal of cruise operations, net of
  selling costs of $297,434 and income taxes
  of $109,000 (1999)                                                           1,130,589             -
                                                                              ----------   -----------

Net Income (Loss)                                                             $1,302,792   $  (253,750)
                                                                              ==========   ===========
</TABLE>
                                      F-4
===============================================================================
The accompanying notes are an integral part of the consolidated financial
statements.


<PAGE>

<TABLE>
<CAPTION>

NORTH AMERICAN GAMING AND ENTERTAINMENT
 CORPORATION AND SUBSIDIARIE
CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED
======================================================================================================
Years Ended December 31,                                                            1999          1998
------------------------------------------------------------------------------------------------------
<S>                                                                         <C>           <C>
Earnings Per Share:
Basic:
Income from continuing operations                                            $      0.01   $         *

Loss from discontinued operations                                                  (0.01)        (0.01)

Gain on disposal of cruise operations                                               0.03             *
                                                                             -----------   -----------

Net income (loss)                                                            $      0.03   $    $(0.01)
                                                                             ===========   ===========

Basic Weighted Average Shares Outstanding                                     41,788,552    31,980,331
                                                                             ===========   ===========



*  Less than $0.01 per share.









</TABLE>

                                      F-5
===============================================================================
The accompanying notes are an integral part of the consolidated financial
statements.



<PAGE>

<TABLE>
<CAPTION>

NORTH AMERICAN GAMING AND ENTERTAINMENT
 CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
======================================================================================================
Years Ended December 31,                                                            1999          1998
------------------------------------------------------------------------------------------------------
<S>                                                                             <C>         <C>
Net Income (Loss)                                                               $1,302,792   $(253,750)
                                                                                ----------  ----------

Other Comprehensive Income:
Unrealized gains on available-for-sale securities
  net of deferred income tax expense of $329,137                                   548,562           -
                                                                                ----------  ----------

                                                                                   548,562           -
                                                                                ----------  ----------

Total Comprehensive Income (Loss)                                               $1,851,354   $(253,750)
                                                                                ==========  ==========
</TABLE>
                                      F-6
===============================================================================
The accompanying notes are an integral part of the consolidated financial
statements.



<PAGE>

<TABLE>
<CAPTION>

NORTH AMERICAN GAMING AND ENTERTAINMENT
 CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
===================================================================================================================================
Years Ended December 31, 1999 and 1998
-----------------------------------------------------------------------------------------------------------------------------------

                                                                     Additional           Accumulated                   Total
                                     Class A   Preferred              Paid-in                Other                  Stockholders'
                                    Preferred    Stock    Common      Capital    Treasury Comprehensive  Accumulated      Equity
                                      Stock   Series "B"   Stock     (Deficit)      Stock    Income        Deficit     (Deficit)
                                   ---------- ----------  --------  ------------  ------- -------------  ----------  --------------

<S>                                <C>        <C>        <C>        <C>           <C>     <C>            <C>         <C>
Balance, December 31, 1997         $ 3,861,000 $  80,000  $200,957  $(3,257,112)  $      -     $      -  $(1,745,511) $  (860,666)

Conversion of 1,287,000 shares
 of Class A preferred stock into
 8,240,000 shares of common stock
                                    (3,861,000)        -    82,400    3,778,600          -            -            -             -

Conversion of 8,000,000 shares
 of preferred stock Series "B"
 into 8,000,000 shares of common
 stock                                       -   (80,000)   80,000            -           -            -           -             -

Issuance of 5,452,854 shares of
 common stock in connection with
 an anti-dilution provision
                                             -         -    54,529      (54,529)          -            -           -             -



Net loss - 1998                              -         -         -            -           -             -   (253,750)     (253,750)
                                   ----------- ---------  --------  -----------   ---------      --------  ---------   -----------

Balance, December 31, 1998                   -         -   417,886      466,959           -             - (1,999,261)   (1,114,416)

Redemption of 8,167,632 shares
 of stock at $.01 per share
                                             -         -         -            -     (81,676)            -          -       (81,676)


Purchase of 500,000 shares
of stock at $.06 per share                   -         -         -            -     (30,000)             -         -       (30,000)

Other comprehensive
income                                       -         -         -            -           -       548,562          -       548,562

Net income - 1999                            -         -         -            -           -             -  1,302,792     1,302,792
                                   ----------- ---------  --------  -----------   ---------      --------  ---------   -----------

Balance, December 31, 1999         $         - $       -  $417,886  $   466,959   $(111,676)     $548,562  $(696,469)  $   625,262
                                   =========== =========  ========  ===========   =========      ========  =========   ===========

</TABLE>
                                      F-7
================================================================================
The accompanying notes are an integral part of the consolidated financial
statements.


<PAGE>

<TABLE>
<CAPTION>

NORTH AMERICAN GAMING AND ENTERTAINMENT
 CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
========================================================================================
Years Ended December 31,                                       1999            1998
----------------------------------------------------------------------------------------
<S>                                                         <C>           <C>


Cash Flows From Operating Activities:
Net income (loss)                                           $ 1,302,792   $  (253,750)
Adjustments to reconcile net income (loss)
 to net cash provided by (used in) operating activities:
  Depreciation and amortization                                 320,887       630,994
  Deferred tax expense                                          176,000        39,978
  Income from equity investments                               (275,769)            -
  Gain on sale of an interest in gaming operations             (673,579)            -
  Gain on sale of cruise operations                          (1,537,023)            -
  Loss on disposal of assets                                     39,608        73,976
Changes in operating assets and liabilities:
  (Increase) decrease in:
     Accounts receivable                                        (27,026)       72,260
     Inventories                                                (11,027)       12,685
     Prepaid expenses                                            34,966        29,891
     Deposits                                                    14,253        33,959
  Increase (decrease) in:
     Accounts payable and accrued liabilities                   185,347       180,144
                                                            -----------   -----------

Net Cash Provided By (Used In) Operating Activities            (450,571)      820,137
                                                            -----------   -----------

Cash Flows From Investing Activities:
  Purchases of property, plant and equipment                    (58,724)     (123,292)
  Cash sold in sale of assets                                  (304,286)            -
  Proceeds from sale of assets                                1,701,759             -
  Repayments by borrowers                                        47,666         1,866
  Net capital contribution to equity investments                (14,137)            -
  Purchase of intangibles                                             -        (7,410)
  Cash and restricted cash transferred under
     contractual agreement                                            -      (292,582)
  Construction of casino and truck stop                          (8,500)   (1,604,923)
                                                            -----------   -----------

Net Cash Provided By (Used In) Investing Activities           1,363,778    (2,026,341)
                                                            -----------   -----------

Cash Flows From Financing Activities:
  Purchase of treasury stock                                    (30,000)            -
  Proceeds from borrowings                                            -     1,465,409
  Payments on borrowings                                       (915,825)     (593,808)
                                                            -----------   -----------

Net Cash Provided By (Used In) Financing Activities            (945,825)      871,601
                                                            -----------   -----------

Net Decrease In Cash                                            (32,618)     (334,603)

Cash, beginning of year                                         281,109       615,712
                                                            -----------   -----------

Cash, end of year                                           $   248,491   $   281,109
                                                            ===========   ===========

</TABLE>
                                      F-8
================================================================================
The accompanying notes are an integral part of the consolidated financial
statements.


<PAGE>

<TABLE>
<CAPTION>

NORTH AMERICAN GAMING AND ENTERTAINMENT
 CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
======================================================================================
Years Ended December 31,                              1999              1998
--------------------------------------------------------------------------------------
<S>                                                    <C>        <C>
Cash Paid During The Year For:
  Income taxes, net of refunds received                $   22,000  $   107,550
  Interest                                             $  237,436  $   204,440

Non-Cash Investing and Financing Activities:

Conversion of Class A Preferred Stock to
     common stock                                      $        -  $ 3,861,000
                                                       ==========  ===========

  Conversion of Class B Preferred Stock to
     common stock                                      $        -  $    80,000
                                                       ==========  ===========

  Issuance of common stock under anti-dilutive
     provision                                         $        -  $    54,529
                                                       ==========  ===========

  Redemption of common stock, cancellation
     of debt, dividends and accrued interest
     and receipt of marketable equity securities
     in connection with the sale of assets             $1,642,149  $         -
                                                       ==========  ===========

  Unrealized gain on available for sale securities,
     net of deferred income taxes                      $  548,562  $         -
                                                       ==========  ===========

</TABLE>
                                              F-9
===============================================================================
The accompanying notes are an integral part of the consolidated financial
statements.

<PAGE>

NORTH AMERICAN GAMING AND ENTERTAINMENT
 CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999 AND 1998
================================================================================

1.  BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
     POLICIES

The accompanying consolidated financial statements include the accounts of North
American Gaming and Entertainment Corporation, a Delaware corporation (NAGEC),
its wholly owned subsidiaries, GalaxSea Cruises and Tours, Inc. ("Galaxsea"),
I.T. Cruise, Inc. ("IT"), and River Port Truck Stop, Inc. (RPI), (collectively
the Company).  Through March 31, 1999, the consolidated financial statements
also included the accounts of OM Operating, LLC (OM), River Port Truck Stock,
LLC (RPLLC) and Ozdon Investments, Inc. (Ozdon) (see Note 2).  The operating
agreements of OM and RPLLC state the Companies will terminate no later than
December 31, 2050.  All significant intercompany balances and transactions have
been eliminated in consolidation.

The Company's operations for the three months ended March 31, 1999 consisted of
the truck stop facilities and/or video poker casinos in five truck stops, and
the video poker devices for a route of 4 bars and restaurants, all located in
the state of Louisiana.  From April 1, 1999 through December 31, 1999, the
Company received income from its equity investments in OM, RPLLC and Ozdon
(which owns the facility known as the Gold Rush Truck Stop), which operated four
video poker casinos and one bar operation.  The Company also operated in the
cruise travel business, through September 30, 1999, when it sold its operations
(see Note 3).


Use of Estimates:  The preparation of consolidated financial statements in
-----------------
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amount 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.


Reclassifications: Certain reclassifications have been made to the December 31,
------------------
1998 consolidated financial information in order to conform to the 1999
presentation.  The reclassifications had the following effect on the 1998 net
loss:

<TABLE>
<CAPTION>
                                                           As Previously         Reclass-              Adjusted
                                                              Reported          ification         December 31, 1998
                                                         ------------------  ----------------  ------------------------

<S>                                                      <C>                 <C>               <C>
Income (loss) from continuing operations                         $(253,750)        $ 404,698                 $ 150,948
Loss from operations of discontinued segment, net                        -          (404,698)                 (404,698)
                                                                 ---------         ---------                 ---------

Net Loss                                                         $(253,570)        $       -                 $(253,750)
                                                                 =========         =========                 =========
</TABLE>


Video Poker Revenue:  Video poker revenue is the net revenue from gaming
--------------------
activities, defined as the difference between gaming wins and losses.


                                     F-10
================================================================================
<PAGE>

NORTH AMERICAN GAMING AND ENTERTAINMENT
 CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999 AND 1998
================================================================================

1.  BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
     POLICIES (CONTINUED)

Investment Securities:  Investment securities that are held for short-term
----------------------
resale are classified as trading securities and carried at fair value.  Other
marketable securities are classified as available-for-sale and are carried at
fair value.  Unrealized gains and losses on securities available-for-sale are
reported net of income taxes in accumulated other comprehensive income.  Cost of
securities sold is recognized using the specific identification method.  Equity
securities, whose trade is restricted, are carried at cost.


Furniture and Equipment:  Expenditures for furniture and equipment are recorded
------------------------
at cost. Improvements which extend the economic life of such assets are
capitalized. Expenditures for maintenance and repairs are charged to expense.

Depreciation is provided over the estimated useful lives of assets, which range
from 5 to 7.5 years, using an accelerated method for financial accounting
purposes.


Long-Lived Assets:  Long-lived assets to be held and used in the Company's
------------------
business are reviewed for impairment, whenever events or changes in
circumstances indicate that the related carrying amount may not be recoverable.
When required, impairment losses on assets to be held and used are recognized
based on the fair value of the asset.


Income Taxes:  The Company uses the asset and liability method of accounting for
-------------
income taxes. Under the asset and liability method, deferred tax assets and
liabilities are recognized for the future tax consequences attributable to
differences between the consolidated financial statement carrying amounts of
existing assets and liabilities and their  respective tax consolidated basis.
Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date. The Company files a consolidated U. S.
Federal tax return.  OM and RPLLC are not subject to income taxes.  Income or
loss is required to be included in the income tax returns of the members.


Concentration:  Video poker revenue represents approximately 64% of the
--------------
Company's operating revenue for the year ended December 31, 1998.  During the
year ended December 31, 1999, video poker revenues represent approximately 68%
of operating revenues of its minority owned casino operations.  Failure to
comply with Louisiana gaming regulations regarding Video Poker could result in
license revocation (see Note 9).





                                     F-11
================================================================================
<PAGE>

NORTH AMERICAN GAMING AND ENTERTAINMENT
 CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999 AND 1998
================================================================================

1.  BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
     POLICIES (CONTINUED)

Basic Earnings Per Share:  Basic earnings per share of common stock was computed
-------------------------
by dividing income applicable to common stockholders, by the weighted average
number of common shares outstanding for the year.  Diluted earnings per share
are not presented because all potential common shares are anti-dilutive.


Fair Value of Financial Instruments:  The carrying amounts of financial
------------------------------------
instruments including cash, receivables, prepaids, accounts payable and accrued
expenses approximated fair value as of December 31, 1999 because of the
relatively short maturity of these instruments.

The carrying amounts of notes payable and debt issued approximate fair value as
of December 31, 1999 because interest rates on these instruments approximate
market interest rates.


Recently Issued Accounting Pronouncements:  In June of 1998, the FASB issued
------------------------------------------
Statement of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" (SFAS No. 133).  SFAS No. 133 addresses the
accounting for derivative instruments embedded in other contracts and hedging
activities.  SFAS No. 133 is effective for all fiscal quarters of all fiscal
years beginning after June 15, 1999.  Initial application of SFAS No. 133 shall
be as of the beginning of an entity's fiscal quarter, on that date, hedging
relationships shall be designated and documented under the provisions of this
statement.  This statement currently has no impact on the financial statements
of the Company, as the Company does not hold any derivative instruments or
participate in any hedging activities.


2.  MINORITY INTERESTS

OM Operating L.L.C. (OM):  In 1994 the Company contributed to OM its assets and
-------------------------
liabilities related to the operation of the video draw poker gaming devices.
Donald I. Williams (Williams), an employee of the Company, contributed $100 to
OM as his capital contribution. OM was formed to facilitate compliance with
Louisiana law which requires the operator of video poker devices in truck stops
to be at least majority owned by Louisiana residents.

Through April 15, 1998, the Company received a gross income allocation equal to
20% of OM's gross gaming income generated from the operation of the video poker
gaming devices. Gross gaming income is defined as total money played in all
devices, less all payouts on winnings to players and less all gaming and device
taxes and fees payable to the State of Louisiana.

Application of the above provisions of the Operating Agreement of OM resulted in
100% of the net income being allocated to the Company and 0% being allocated to
Williams for the period from January 1, 1998 to April 15, 1998.


                                     F-12
================================================================================
<PAGE>

NORTH AMERICAN GAMING AND ENTERTAINMENT
 CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999 AND 1998
================================================================================

2.  MINORITY INTERESTS (CONTINUED)

Effective April 15, 1998, the Company and Williams entered into Amendment Number
One (the "Amendment") to the Operating Agreement of OM.

The Company contributed to OM its right to the 20% gross income allocation in
exchange for 99% of the ownership interest in OM, and simultaneously assigned
50% of the ownership interests in OM to Williams in exchange for a $4,000,000
nonrecourse note (the "Note") payable by Williams to the Company.  Immediately
thereafter Williams owned 51% and the Company owned 49% of the ownership
interests in OM, the Company no longer had the 20% gross income allocation and
Williams owed the Company $4,000,000 pursuant to the Note.  The Note was payable
solely from cash flow distributions made by OM to Williams from five video poker
casinos, truck stops, and route operations operated by the Company and OM (less
an amount to allow Williams to pay his federal and state income taxes on OM's
net taxable income), and was secured by his 51% ownership interest and all cash
flow distributions made to him with respect to the five existing video poker
casinos, truck stops and route operations.  The principal balance of the Note
was automatically reduced pro-rata (at percentages agreed upon based on 1997 net
operating income of each of the five locations) if OM lost the right to operate
any of the five locations.

Until the Note was paid in full, the Company had the right to remove and appoint
a new manager of OM with the concurrence of Williams, and must at the request of
Williams remove and replace any such manager who fails to satisfactorily perform
his dutires.  Once the Note had been paid in full, the manager would be elected
by the owners of at least 65% of the ownership interest in OM.

In conjunction with the restructuring of OM, the Company and OM entered into a
five year Consulting and Administrative Agreement (see Note 11) pursuant to
which the Company would receive a fee of $400,000 per year.

Additionally, Williams and OM entered into a five year Employment Agreement
pursuant to which Williams would receive an annual salary of $250,000 (see Note
11).

The Company agreed to lease to OM the land and buildings constituting The Gold
Rush Truck Stop for payments of $400,000 per year expiring April 15, 2008 (see
Note 11).

Under the Amendment, Williams and the Company were allocated 51% and 49%,
respectively, of the profits and losses of OM after deducting Williams' salary,
the consulting fee and rent on the Gold Rush Truck Stop.  The allocated profits
of Williams were payable to the Company as a reduction of accrued interest on
the Note and then principal until such time as Williams allocation of profits
was sufficient to pay-off the Note.

Application of the above provisions of the Amendment resulted in 100% of the net
income being allocated to the Company and 0% to Williams for the period from
April 15, 1998 to December 31, 1998, and for the period from January 1, 1999 to
March 31, 1999.  The principal balance outstanding on the Note at December 31,
1998 and March 31, 1999 remained at $4,000,000.


                                     F-13
================================================================================
<PAGE>

NORTH AMERICAN GAMING AND ENTERTAINMENT
 CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999 AND 1998
================================================================================

2.  MINORITY INTERESTS (CONTINUED)

The restructure under the Amendment included an assignment of ownership
interests by the Company which did not qualify for sale treatment under
applicable accounting rules until Williams' share of distributions of cash flow
resulted in sufficient payments on the Note to make significant reductions
thereof.  Because of this, the assignment transaction and resulting $4,000,000
Note were not reflected in the consolidated financial statements.  The Company
continued to consolidate the operations of OM until significant payments were
made on the Note.


River Port Truck Stop,LLC (RPLLC):  During 1998, the Company and Williams agreed
----------------------------------
to form RPLLC to pursue development, construction, ownership and operation of a
truck stop and video poker facility.  RPLLC was owned 49.9% by the Company and
50.1% by Williams.

In May 1998, RPI assigned RPLLC its lease on a truck stop facility and, on July
21, 1998, the Company and Williams entered into an Operating Agreement to govern
the operations of RPLLC.  Until the Note was paid in full, the Company had the
right to remove and appoint a new manager of RPLLC with the concurrence of
Williams, and must at the request of Williams remove and replace any manager who
fails to satisfactorily perform his duties.  Once the Note had been paid in
full, managers would be elected by the owners of at least 65% of the ownership
interests in RPLLC.

In conjunction with the Operating Agreement of RPLLC, the Company and RPLLC
entered into a five year Consulting and Administrative Agreement (see Note 11)
pursuant to which the Company would receive a fee of $50,000 per year.

Additionally, Williams, RPLLC and OM also entered into an Amendment to the
Employment Agreement (see Note 11) pursuant to which Williams agreed to perform
the same services for RPLLC as he performed for OM under the Employment
Agreement and pursuant to which OM and RPLLC agreed to split his annual salary
of $250,000 pro rata based on the number of truck stop video poker casinos
operated by each entity.

Williams and the Company were allocated 50.1% and 49.9%, respectively of the
profits and losses of RPLLC.  Notwithstanding the above, each members'
distributive share of income, gain, loss, deduction or credit was allocated to
the Company and Williams' first to member accounts in order to cause the
accounts to approximate the 49.9% and 50.1% ownership percentages, respectively,
and then in proportion to the members' respective ownership percentage.

Application of the above provisions of the RPLLC Operating Agreement resulted in
100% of the net losses being allocated to the Company and 0% to Williams for the
period from July 21, 1998 to December 31, 1998 and for the period from January
1, 1999 to March 31, 1999.




                                     F-14
================================================================================
<PAGE>

NORTH AMERICAN GAMING AND ENTERTAINMENT
 CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999 AND 1998
================================================================================

2.  MINORITY INTERESTS (CONTINUED)

Restructure of OM and RPLLC:  In order to respond to additional concerns of the
----------------------------
Louisiana gaming regulators (see Note 9) related to the Amendment to the
Operating Agreement and the RPLLC Operating Agreement, the Company and Williams
executed Amendment Number Two to the Operating Agreement and Amendment Number
One to the RPLLC Operating Agreement in February 1999 ("the Amendments").

The Amendments were effective April 1, 1999 and effectively canceled the Note
and the Company's contribution of the 20% gross income allocation.  In addition,
Williams agreed to cancel his subordinated debenture in the amount of $103,651
(including accrued interest), return an aggregate of 2,553,000 shares of common
stock of the Company owned by Williams and entities related to Williams, to
cancel $78,000 of accrued dividends on Class A Preferred Stock, contribute .1%
interest in RPLLC to the Company, and pay the Company cash ranging from $150,000
to $300,000.  The Amendments terminated the Company's 20% gross income
allocation in OM and caused it to contribute operating assets and liabilities of
two truck stops and three restaurants to OM as of March 31, 1999.  Thereafter,
all profit and loss of OM and RPLLC will be allocated to the members based on
each members' ownership as detailed below.

Concurrent with the Amendments, the Company entered into an agreement with 10
former Class A Preferred Stockholders (former stockholders) whereby the Company
agreed to transfer 50% of its interest in all gaming operations (including OM,
RPLLC, and Ozdon) to the former stockholders.  In consideration, the former
stockholders agreed to cancel their subordinated debentures in the amount of
$338,837 (including accrued interest), return an aggregate of 5,614,632 shares
of common stock, and cancel $255,072 of accrued dividends on Class A Preferred
Stock.

As of April 1, 1999, ownership of OM, RPLLC and Ozdon were as follows:

                                   Former
                  Company       Stockholders     Williams      Total
                 ---------     --------------   ----------    ---------

OM                  24.5%            24.5%         51.0%         100.0%
RPLLC               25.0%            25.0%         50.0%         100.0%
Ozdon               50.0%            50.0%            -          100.0%

The Amendments constituted a transfer of ownership interest and control in all
of the Company's gaming operations.  The transfer became effective April 1,
1999.  At that time, the Company began recording its investment in OM, RPLLC and
Ozdon (collectively referred to as the "Operator" from April 1, 1999 to December
31, 1999) under the equity method.

The Company's investment in the equity of OM, RPLLC and Ozdon are as follows at
December 31, 1999:

          OM                                $271,978
          RPLLC                             (36,477)
          Ozdon                              146,978
                                           ---------

                                            $382,479
                                            ========



                                     F-15
================================================================================
<PAGE>

NORTH AMERICAN GAMING AND ENTERTAINMENT
 CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999 AND 1998
================================================================================

2.  MINORITY INTERESTS (CONTINUED)

The following is a condensed unaudited combined balance sheet for OM, RPLLC and
Ozdon as of December 31, 1999 and the condensed unaudited, combined statement of
income for the year then ended.

                        CONDENSED COMBINED BALANCE SHEET
                                  (UNAUDITED)
                               December 31, 1999

<TABLE>
<CAPTION>

Assets                                                                        Total
                                                                          --------------

<S>                                                                       <C>
Cash                                                                          $  808,000
Restricted cash                                                                  136,000
Accounts receivable, net                                                         179,000
Prepaid expenses and other                                                       140,000
Due from related parties                                                         251,000
                                                                              ----------

                                                                               1,514,000

Property and equipment, net                                                    2,651,000
Intangibles and other, net                                                       180,000
                                                                              ----------

Total Assets                                                                  $4,345,000
                                                                              ==========
</TABLE>


<TABLE>
<CAPTION>
Liabilities and Equity

<S>                                                                       <C>
Accounts payable and accrued liabilities                                      $  817,000
Notes payable and current portion of long-term debt                            2,288,000
                                                                              ----------

                                                                               3,105,000

Long-term debt                                                                   147,000
                                                                              ----------

Total Liabilities                                                              3,252,000
                                                                              ----------

Equity                                                                         1,093,000
                                                                              ----------

Total Liabilities and Capital                                                 $4,345,000
                                                                              ==========
</TABLE>

                                     F-16
================================================================================
<PAGE>

NORTH AMERICAN GAMING AND ENTERTAINMENT
 CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999 AND 1998
================================================================================

2.  MINORITY INTERESTS (CONTINUED)

                    CONDENSED, COMBINED STATEMENT OF INCOME
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                            Year Ended
                                                                         December 31, 1999
                                                                      -----------------------

<S>                                                                   <C>
Revenues                                                                         $19,116,000
Costs of revenue                                                                  12,356,000
General and administrative                                                         5,207,000
                                                                                 -----------

Operating income                                                                   1,553,000

Interest expense, net                                                               (230,000)
Other expense, net                                                                  (438,000)
Income taxes                                                                         (76,000)
                                                                                 -----------

  Net income                                                                     $   809,000
                                                                                 ===========
</TABLE>

On March 24, 2000, the other two members of OM and RPLLC purportedly voted to
merge another limited liability company into each of OM and RPLLC and buyout the
Company's interest in each for $375,000 and $50,000, respectively.  The Articles
of Organization or Operating Agreement require that a member's interest may not
be changed and the Articles of Organization may not be amended without unanimous
consent of all members.  The Company voted against the purported merger and
buyout and subsequently filed a lawsuit to nulify the mergers and buyout.


3.  DISCONTINUED OPERATIONS

Effective October 1, 1999, the Company sold its cruise operations, including
fixed assets, tradenames and other intangibles and cruise deposits, and the
stock of IT for $1,360,127 and 666,667 shares of the purchaser's common stock
with a fair market value of $ 776,401.  The purchaser's common stock is listed
on the Toronto Exchange.

Net sales from cruise operations for the nine months ended September 30, 1999
and the year ended December 31, 1998 were $ 685,219 and $966,442, respectively.
These amounts are not included in revenues in the accompanying consolidated
statements of operations, but are included as part of discontinued operations.

Assets and liabilities of the cruise operations sold consisted of the following
at September 30, 1999:


              Furniture and equipment       $ 23,771
              Tradenames and intangibles     529,456
              Cruise deposits                 26,548
                                            --------

              Net assets disposed of        $579,775
                                            ========



                                     F-17
================================================================================
<PAGE>

NORTH AMERICAN GAMING AND ENTERTAINMENT
 CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999 AND 1998
================================================================================

3.  DISCONTINUED OPERATIONS (CONTINUED)

In connection with the sale, the Company had agreed to pay an officer of the
Company 10% of the proceeds (excluding the amount paid for cruise deposits),
totaling $133,333 and transfer 10% of the purchaser's common stock, or 66,667
shares with a fair market value of $77,334, as a bonus and to repurchase
500,000 shares of common stock at $.06 per share.  Additionally, the Company
agreed to transfer 100,000 shares of the purchaser's common stock with a fair
market value of $116,767 to a consultant as an advisory fee.

At December 31, 1999, the Company had paid an officer bonuses of $96,000,
leaving accrued bonuses of $7,333 and had paid $30,000 for the repurchase of
the 500,000 shares of common stock.  In addition, the Company had accrued both
the consultant and officers' costs of $194,101 related to the purchaser's
common stock.  The shares of the purchaser's common stock used for costs
were transferred after December 31, 1999 (see Notes 4 and 6).

In addition, the Company paid $19,730 of other costs related to the sale of
Galaxsea and IT Cruise.


4.  INVESTMENT SECURITIES

Investment securities which are all considered available-for-sale were
summarized as follows at December 31, 1999:


       Marketable equity securities, at cost              $  580,000
       Unrealized gains                                      880,000
                                                          ----------

       Marketable equity securities, fair market value    $1,460,000
                                                          ==========

In addition, the Company has marketable equity securities with an original cost
of $194,101 which are restricted to be distributed to an officer and consultant
in satisfaction of commissions on the sale of discontinued operations (see Note
3).

Subsequent to December 31, 1999, the Company sold marketable equity securities
with an original cost of approximately $225,000 for a realized gain of
approximately $303,000.


5.  FURNITURE AND EQUIPMENT

Furniture and equipment include the following at December 31, 1999:


Leasehold improvements                                    $  1,071
Furniture and equipment                                     76,342
                                                          --------

                                                            77,413

Less accumulated depreciation                              (56,104)
                                                          --------

Furniture and equipment - net                             $ 21,309
                                                          ========

                                     F-18
================================================================================
<PAGE>

NORTH AMERICAN GAMING AND ENTERTAINMENT
 CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999 AND 1998
================================================================================

6.  ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts payable and accrued liabilities as of December 31, 1999 include the
following:

<TABLE>
<S>                                                                    <C>
Trade accounts payable and other                                                 $  1,344
Accrued interest payable                                                          138,779
Accrued selling costs (Note 3)                                                    201,434
Due to related entity                                                             130,000
                                                                                 --------

                                                                                 $471,557
                                                                                 ========
</TABLE>


7.  INCOME TAXES

The components of the provision for income taxes as shown on the accompanying
consolidated statements of operations are as follows:

<TABLE>
<CAPTION>
                                                             Years Ended December 31,
                                                      ---------------------------------------

                                                           1999                1998
                                                      --------------  -----------------------

Current- Federal                                      $            -       $           -
<S>                                                   <C>             <C>
Current-State                                                 11,000                        -
Deferred                                                     176,000                   39,979
                                                            --------                  -------

                                                            $187,000                  $39,979
                                                            ========                  =======
</TABLE>

Components of the net deferred tax liability at December 31, 1999 are as
follows:

<TABLE>
<CAPTION>
Deferred tax assets:
<S>                                                                   <C>
Net operating loss carryforwards                                                $ 984,000
Other, net                                                                          7,000
                                                                                ---------

Total deferred tax assets                                                         991,000
Less - valuation allowance                                                       (759,000)
                                                                                ---------

                                                                                  232,000

Deferred tax liability:
   Unrealized gain on available-for-sale securities                              (329,000)
                                                                                ---------

Net deferred tax liability                                                      $ (97,000)
                                                                                =========
</TABLE>

At December 31, 1999, the Company had a net operating loss carryforward
available for Federal income tax purposes of approximately $9,400,000.  Because
of tax rules relating to changes in corporate ownership, the utilization by the
Company of these benefit carryforwards in reducing its tax liability is
restricted to a cumulative annual utilization of approximately $330,000.  The
amounts of operating loss carryforwards expire in varying amounts through 2014.
Due to the uncertainty of realization and the annual restriction discussed
above, a deferred tax asset valuation allowance has been provided.



                                     F-19
================================================================================
<PAGE>

NORTH AMERICAN GAMING AND ENTERTAINMENT
 CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999 AND 1998
================================================================================

7.  INCOME TAXES (CONTINUED)

The following is a reconciliation of the U. S. statutory tax rate to the
Company's effective rate for the years ended December 31, 1999 and 1998:

<TABLE>
<CAPTION>
                                                            1999                 1998
                                                   -----------------------  ---------------

<S>                                                <C>                      <C>
Statutory rate                                                       34.0%          (34.0)%
Goodwill amortization                                               (16.4)            50.7
State income taxes                                                     .7                -
Other                                                                (5.7)             2.0
                                                                    -----           ------

Company's effective rate                                             12.6%            18.7%
                                                                    =====           ======
</TABLE>


8.  NOTES PAYABLE

<TABLE>
<S>                                                                                      <C>
                                                                                                 December
                                                                                                 31, 1999
                                                                                                ---------
Note payable to International Tours, Inc. ("International") a stockholder, interest at
 9%, due January 1, 2001.  The loan is without collateral.                                      $ 267,302


Notes payable to certain stockholders, interest of 9%, payable in equal monthly
 installments until maturity on June 1, 2003.  The notes are unsecured and are
 subordinated to the International note.                                                          514,067
                                                                                                ---------


                                                                                                  781,369

Less: Current Portion                                                                                   -
                                                                                                ---------

Long-Term Portion                                                                               $ 781,369
                                                                                                =========
</TABLE>

The amounts due in subsequent years are as follows:


                                                     Notes
                December 31,                         Payable
                ------------                        ---------

                2000                                 $      -
                2001                                  290,249
                2002                                   73,419
                2003                                   80,306
                2004                                   87,839
                Thereafter                            249,556
                                                     --------

                Total                                $781,369
                                                     ========


Debt Restructuring:  As of December 31, 1999, the Company was in arrears in
-------------------
payments to International, a related party, on the promissory note issued to
International by the Company as partial  consideration for the I.T. Cruise
acquisition.  The note had an original principal balance of $1,400,000, required
monthly payments of principal and interest of $50,000, had an unpaid principal
balance of $267,302 at December 31, 1999, and is unsecured.



                                     F-20
================================================================================
<PAGE>

NORTH AMERICAN GAMING AND ENTERTAINMENT
 CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999 AND 1998
================================================================================

8.  NOTES PAYABLE (CONTINUED)

Until January 2000 when the available-for-sale securities could be sold, the
cash flow being generated by the Company was not sufficient to allow it to make
the required payments on the International note and to continue to remain
current on its other indebtedness and payables. Consequently, International
agreed to allow the amounts accrued and owed to it to continue to remain
outstanding (with interest accruing thereon) until January 1, 2001 when unpaid
principal and interest are due in full.  Until the International note is paid in
full, all payments will be suspended on the subordinated debentures issued by
the Company which have aggregate remaining principal balances of $514,067 at
December 31, 1999. These notes normally require aggregate payments of principal
and interest of approximately $9,500 per month, and are expressly made
subordinate to the International note as well as other senior debt of the
Company.

On April 6, 2000, the Company paid $275,000, including interest to
International, leaving an outstanding balance on the note of $9,980.


9.  CONCENTRATIONS, COMMITMENTS AND CONTINGENCIES

License Renewal Process:  The Louisiana gaming regulators (the "Regulators")
------------------------
have undertaken the review of all licensees operating video poker casinos.  The
Regulators reviewed the ownership structure of the Company's video poker
operations under the Amendment (see Note 2) and expressed concerns whether such
structure satisfies the Louisiana residency requirements necessary to operate
video poker casinos.  The Company was given until February, 1999 to restructure
the ownership of OM and RPLLC.  The Amendments were agreed to in February 1999
and given to the Regulators for review (also see Note 2).  The Company believes
its structure is satisfactory, but there can be no assurance that the Regulators
will concur.  If the Company's ownership structure is not found to satisfy the
residency requirements, the Company may have its license revoked.  A revocation
of the Company's license would have a material adverse effect on the Company's
and its minority-owned gaming entities' business operations and financial
condition.

The Regulators require the truck stop owner to maintain an "Establishment
License".  The holder of the Establishment License is required to maintain
control over the truck stop's fuel operations.  If any truck stop owners have
their Establishment License revoked, it would have a material adverse effect on
the Company's business operations and financial condition.


Louisiana Regulations:  The franchise payment payable by the Company and/or
----------------------
Operator to the State of Louisiana in 1999 and 1998 equals 32.5% of net gaming
device revenue for truck stop casinos and 26% of net gaming device revenue for
devices placed in bars and restaurants.

The Louisiana legislature adopted minimum fuel sale requirements for qualified
truck stops effective July 1, 1994.  The fuel sale requirements dictate the
number of video poker devices that may be operated at the truck stop, based on
average monthly sales. As of December 31, 1999, the Operator's three remaining
gaming facilities meet the monthly fuel sales requirements to keep the maximum
50 machines allowed.



                                     F-21
================================================================================
<PAGE>

NORTH AMERICAN GAMING AND ENTERTAINMENT
 CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999 AND 1998
================================================================================


9.  CONCENTRATIONS, COMMITMENTS AND CONTINGENCIES (CONTINUED)

Louisiana Regulations (Continued):  The Company and one of its stockholders have
----------------------------------
guaranteed debt of RPLLC.  The balance outstanding on the notes at December 31,
1999 was approximately $2,000,000.


Cash:  The Company maintains cash balances with financial institutions which
-----
periodically exceeds FDIC insured limits.


Litigation:  Subsequent to December 31, 1999, the Company became involved in
-----------
legal matters wherein the outcome is not readily determinable.  Management feels
that losses, if any, from such matter would not have a material impact on the
Company's consolidated financial statements.

Should the purported buyout of the Company's interest in OM and RPLLC be upheld,
it could materially affect future operating results (see Note 2).

In the opinion of management, there are no other contingent claims or litigation
against the Company which would materially affect its consolidated financial
position.


10.  STOCKHOLDERS' EQUITY

Preferred Stock
---------------

The Company has approved the authorization of 10,000,000 shares of preferred
stock with attributes as determined by the Board of Directors.

The Company has also authorized 1,600,000 shares of Class A Preferred Stock.
The Class A Preferred Stock has a par value of $3.00, bears a 10% annual
cumulative dividend, payable monthly and is convertible into common stock on a 1
to 1 basis.

The Class A Preferred Stock is redeemable at the option of the Company and
carries a liquidation preference of $3.00 per share.

In connection with the 1996 acquisition of GalaxSea and IT Cruise, the Company
redeemed 313,000 shares of Class A Preferred Stock, obtained an agreement to
discontinue accruing dividends for two years and changed the conversion ratio
into common stock to 6.4 to 1.

Additionally, in connection with the acquisitions of Galaxsea and IT Curise, the
Board of Directors created a new series of preferred stock, Preferred Stock
Series "B".  The maximum shares under the series is 8,000,000.  The Preferred
Stock Series B has a par value of $.01, accrues no dividends and converts on a 1
to 1 basis into common stock.

During 1998, the Company converted 1,287,000 shares of Class A Preferred Stock
and 8,000,000 shares of Preferred Stock Series B into 8,240,000 and 8,000,000
shares of common stock, respectively.




                                     F-22
================================================================================
<PAGE>

NORTH AMERICAN GAMING AND ENTERTAINMENT
 CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999 AND 1998
================================================================================


10.  STOCKHOLDERS' EQUITY (CONTINUED)

In conjunction with the conversion of the preferred stock, the Company issued
5,452,854 shares of common stock to International under the terms of an anti-
dilutive provision in the I.T. Cruise and GalaxSea purchase agreements.  As the
issuance of the stock maintains the value of the shares issued in the
acquisition, the shares were recorded as a reduction of paid in capital at their
par value.

During 1999, in conjunction with the restructure of the Company's gaming
operations (Note 2) the Company redeemed 8,167,632 shares of common stock at
$.01 per share.

During 1999, the Company repurchased 500,000 shares of common stock from an
officer of Galaxsea and IT Cruise for $30,000 (Note 3).


Restrictions on Ownership
-------------------------

The Company's Certificate of Incorporation restricts ownership of the common and
preferred stock of the Company in order to comply with applicable gaming
statutes.  Persons who are not suitable to be stockholders of the Company under
such statutes may not own common or preferred stock of the Company.  Further,
any stockholder may be required, at such stockholder's expense, to make filings
with applicable gaming authorities to determine suitability, and if found not
suitable will be required to dispose of such stockholder's stock and will not be
entitled to vote or receive distributions pending such disposal.


Stock Options
-------------

During 1996, the Company granted an officer and one of its directors options to
purchase 500,000 shares each of common stock for $.30 per share. The shares were
fully vested as of the date of the grant and expire five years from the date of
the grant. No options to purchase the Company's stock were issued during 1999
and 1998.

The following is a table of options granted:

<TABLE>
<CAPTION>
                                                               Shares                   Exercise
                                                                Under                   Price Per
                                                               Option                     Share
                                                             -----------             ---------------
<S>                                                          <C>                     <C>
Balance, December 31, 1997                                     1,000,000                    $.30
   Granted                                                             -                       -
                                                               ---------                    ----

Balance, December 31, 1998                                     1,000,000                    $.30
   Granted                                                             -                       -
                                                               ---------                    ----

Balance, December 31, 1999                                     1,000,000                    $.30
                                                               =========                    ====
</TABLE>

Subsequent to December 31, 1999, the Company granted two Board members options
to acquire 1,000,000 of company stock each at an exercise price of $.03125 per
share. The shares are fully vested as of the date of grant and expire five years
from the date of grant.




                                     F-23
================================================================================
<PAGE>

NORTH AMERICAN GAMING AND ENTERTAINMENT
 CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999 AND 1998
================================================================================


10.  STOCKHOLDERS' EQUITY (CONTINUED)

The Company has adopted the disclosure-only provisions of Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation."
Accordingly, no compensation cost has been recognized for the stock options.
There is no proforma effect in 1999 or 1998 as the Company granted no options
during those years.


11.  CONTRACTS

The Operator currently has three gaming and/or truck stop establishments as well
as video poker route operations in Louisiana.  Through March 31, 1999, the
Company consolidated the operations of the Operator (see Note 2).  Therefore,
the Company, through its consolidated subsidiaries, was the gaming operator
until March 31, 1999 when it sold a portion of its interest in the gaming
operations.  The gaming contracts assign various percentages of the gaming
revenues of these establishments to various property owners, lessors or lenders.
When the Operator enters into a contract with an establishment, it acquires the
right to place gaming devices in the establishment's truck stop facilities or
bars.  These agreements provide the establishments a percentage of the net
gaming income.  In addition, the Operator has a revenue sharing agreement on a
single location (Gold Rush) which operates similar to the other gaming
contracts, but Ozdon owns the truck stop facility.  Below is a listing of the
gaming contracts the Operator has at December 31, 1999, and a definition of
terms used.


Net Gaming Income:  Video poker revenue less state franchise fees and device
------------------
fees.


Route Operators:  Individuals who count, report, and deposit the gaming income.
----------------


Route Operations:  The Operator has a gaming contract with a bar.  This contract
-----------------
provides the establishment's owners with 50% of the net gaming income.


King's Lucky Lady:  In April 1992, the Company signed an agreement for the lease
------------------
of the King's Lucky Lady Truck Stop in Port Barre, Louisiana. This lease was for
a term of five years beginning on May 1, 1992, with monthly rental payments of
20% of the net revenue from the video poker machines. The Company had an option
to renew the lease for three additional five-year terms, subject to the parties
negotiating a percentage rental for the renewal period acceptable to both
parties.

As of March 31, 1999, the Company no longer operated King's Lucky Lady Truck
Stop and the video poker casino as a result of settlement of litigation
involving this truck stop.  Under the terms of the settlement, the Company
received $325,000 as proceeds for the sale of all video poker related equipment
and inventory resulting in a loss of approximately $35,000 and were entitled to
20% of the net profits of King's Lucky Lady for the month of March 1999.



                                     F-24
================================================================================
<PAGE>

NORTH AMERICAN GAMING AND ENTERTAINMENT
 CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999 AND 1998
================================================================================


11.  CONTRACTS (CONTINUED)

The Lucky Longhorn Club:  During 1993, the Company purchased the right to
------------------------
operate the gaming devices of this establishment.  The Company is bound by the
terms of an agreement signed by the previous owner on June 2, 1992, which is for
a period of ten years and provides for the establishment's owners to receive 50%
of the net gaming income.  In connection with the 1998 settlement of a previous
dispute, the Company and/or the Operator were required to pay the property
owners $3,000 per month through October 1999.


Pelican Palace:  The Company loaned approximately $1,450,000 to Curray
---------------
Corporation during 1994 for the construction of a truck stop in Vinton,
Louisiana.  Curray Corporation started construction in 1993 and in 1994, when
the construction was completed, the Company began operating 50 video poker
machines under a five year operating agreement.  Under the operating agreement
with Curray, 70% of the net profit from the premise's operations were dedicated
to repayment of the loan from the Company with the remainder split 50% to each
party.  After the note was paid in full, the revenues were split 50% to each
party.  The operating agreement allows for three, five year renewal options.

In addition, the Company and/or Operator have agreed to pay 2% of its share of
net profits to an unrelated third party for a finders fee.


Gold Rush Truck Stop:  The Operator owns this truck stop facility in addition to
---------------------
operating the gaming devices.

The Company and/or Operator are required to pay a former lender ten percent
(10%) of net gaming income as long as the Company and/or Operator continue to
operate the gaming establishment in St. Landry Parish, Louisiana.  In addition,
in the event that Ozdon is sold to an unrelated party, the agreement provides
for the former lender to receive ten percent (10%) of the proceeds from the sale
in excess of $265,000.


Diamond Jubilee:  The Company issued 450,000 shares of the Company's common
----------------
stock to New Orleans Video Poker, Inc. (NOVP) on July 1, 1996 in exchange for
the right to operate the gaming devices of this establishment.  The common stock
issued in conjunction with the acquisition was recorded as revenue interest
rights at $81,450, the historical basis of net assets acquired.  The Company and
NOVP were related parties at the time of the acquisition.  The Company subleases
the facility from NOVP.  The sublease agreement requires that the Company pay
NOVP an amount equal to 50% of the net operating cash flow from the truck stop
and casino after deductions for (i) all cash costs and expenses paid by the
Company and (ii) interest and principal on any indebtedness of the Company on
any furniture, fixtures, and equipment placed in the video poker casino, bar, or
parking lot.

In August, 1998, the Company and NOVP purchased the rights to operate the truck
stop fuel operations and restaurant.  As of August 1999, the Operator no longer
operated the Diamond Jubilee.


                                     F-25
================================================================================
<PAGE>

NORTH AMERICAN GAMING AND ENTERTAINMENT
 CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999 AND 1998
================================================================================


11.  CONTRACTS (CONTINUED)

RPLLC:  In January 1997, RPI entered into an agreement to lease a truck stop
------
facility for a period of 50 years.  The terms of the lease call for monthly base
rent of $7,000 plus Additional Rent of ten percent (10%) of Net Revenue as
defined in the lease agreement.  Lessor further agreed that for the first 24
months after the commencement of video poker operations the Additional Rent
would be five percent (5%) and that commencing with the twenty-fifth (25th)
month of video poker operations that the Additional Rent would be ten percent
(10%) of Net Revenue.  RPI assigned the lease to RPLLC in 1998.  Construction of
the River Port Truck Stop convenience store was completed in January 1999.  The
construction was financed with notes payable due in May 2000.

During 1999, RPLLC entered into a fifteen year operating agreement with a third
party to operate the convenience store, restaurant and truck stop.  The
operating fees due RPLLC for the truck stop are based on gallons of gasoline
sold and an escalating base rent for the convenience store.

Rent expense under the gaming leases was as follows:
<TABLE>
<CAPTION>

                         January 1, 1999   April 1, 1999 to
                        to March 31, 1999  December 31, 1999  December 31, 1998
                        -----------------  -----------------  -----------------
<S>                     <C>                <C>                <C>

Kings Lucky Lady                 $ 91,000         $        -         $  348,000
The Longhorn Club                 335,000            844,000          1,255,000
Pelican Place                     242,000            599,000            660,000
Gold Rush Truck Stop               53,000            171,000            210,000
Diamond Jubilee                   199,000            333,000            791,000
RPLLC                              21,000             63,000             84,000
                                 --------         ----------         ----------

                                 $941,000         $2,010,000         $3,348,000
                                 ========         ==========         ==========

</TABLE>

Consulting Agreements:  In April 1998, the Company entered into a four year
----------------------
consulting agreement with OM.  The agreement required OM to pay the Company an
annual consulting  fee of $400,000.

In July 1998, the Company entered into a consulting agreement with RPLLC.  The
agreement required RPLLC to pay the Company an annual consulting fee of $50,000.

In conjunction with the restructuring of OM and RPLLC, the agreements were
terminated effective April 1, 1999 (see Note 2).


                                     F-26
================================================================================
<PAGE>

NORTH AMERICAN GAMING AND ENTERTAINMENT
 CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999 AND 1998
================================================================================


11.  CONTRACTS (CONTINUED)

Employment Agreement:  In April 1998, OM entered into a four year employment
---------------------
agreement with Williams.  The agreement required OM to pay Williams $250,000 per
year for services provided.

In July 1998, the agreement was amended to require RPLLC to pay a proportionate
share of the salary to Williams.

In conjunction with the restructuring of OM and RPLLC, the annual salary was
reduced effective April 1, 1999 to $100,000 per year (see Note 2).


Gold Rush Truck Stop Lease:  In April 1998, Ozdon entered into a ten year,
---------------------------
triple net lease with OM to lease the truck stop and casino assets to OM.  The
lease called for annual base rent of $400,000.

In conjunction with the restructuring of OM and RPLLC, the lease was terminated
effective April 1, 1999 and Ozdon entered into a new month-to-month lease with
OM.  The new lease requires OM to pay Ozdon $33,333 per month (see Note 2).


Accounting and Management Agreement:  In connection with the sale of a portion
------------------------------------
of the Company's interest in the gaming operations, the Company agreed to
continue to perform certain accounting and management functions on behalf of the
Operator for a monthly fee.  The Company received approximately $165,000 under
the agreement which is netted in other expense in the accompanying consolidated
statement of operations.  These functions were moved to the Operator in December
1999.


Consulting Fee:  Subsequent to December 31, 1999, the Company agreed to pay an
---------------
officer of the Company $200,000 per year as a consulting fee.


12.  EMPLOYEE BENEFIT PLAN

The Company adopted a 401(k) plan effective, January 1, 1998.  Participation is
voluntary and employees are eligible to participate upon attaining age 21 and
completing one year of employment with the Company.  The Company provides no
matching contribution but may make a discretionary contribution which vests over
six years.  The Company made no discretionary contributions for the years ended
December 31, 1999 and 1998.


13.  RELATED PARTY TRANSACTIONS

International owns 44% of the total common stock of the Company.  The Company
subleased space in its corporate office to International receiving rents of
approximately $16,200 and $19,100 in 1999 and 1998.

During 1999 and 1998 the Company paid an officer of the Company consulting fees
totaling $190,000 and $63,125, respectively.


                                     F-27
================================================================================
<PAGE>

                Introduction to Unaudited Financial Statements



In the opinion of management, the following unaudited combined financial
statements contain all adjustments (consisting of only normal recurring
accruals) necessary to present fairly the finanical position of OM and Related
Entities at Decmber 31, 1999 and the results of their operations and changes in
cash flows for the year then ended.







                                     F-28
<PAGE>

OM OPERATING, L.L.C. AND RELATED ENTITIES

COMBINED BALANCE SHEET (UNAUDITED)
===============================================================================
December 31,                                                1999
-------------------------------------------------------------------------------

ASSETS

Current Assets:
    Cash                                                    $ 808,360
    Restricted cash                                           135,751
    Accounts receivable, net of allowance for doubtful
         accounts of $42,100                                  179,219
    Inventories, at cost                                       86,606
    Prepaid expenses                                           52,799
    Due from related parties                                  251,182
                                                           ----------

Total Current Assets                                        1,513,917
                                                           ----------

Property And Equipment, net of accumulated depreciation     2,651,196
                                                           ----------

Other Assets:
    Deposits                                                   47,440
    Intangibles, net                                          132,673
                                                           ----------

Total Other Assets                                            180,113
                                                           ----------

Total Assets                                               $4,345,226
                                                           ==========


LIABILITIES AND EQUITY

Current Liabilities:
    Notes payable                                          $2,000,000
    Current portion of long-term debt                         288,216
    Accounts payable                                          154,688
    Accrued liabilities                                       586,162
    Income taxes payable                                       76,000
                                                           ----------

Total Current Liabilities                                   3,105,066

Long-term debt, net of current portion                        147,014
                                                           ----------

Total Liabilities                                           3,252,080

Commitments And Contingencies

Equity                                                      1,093,146
                                                           ----------

Total Liabilities and Equity                               $4,345,226
                                                           ==========

                                     F-29


===============================================================================
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>

OM OPERATING, L.L.C. AND RELATED ENTITIES
COMBINED STATEMENT OF OPERATIONS AND EQUITY
  (UNAUDITED)
===================================================
Year Ended December 31,                   1999
---------------------------------------------------


Revenue:
    Video poker                         $13,002,642
    Truck stop and convenience store      6,112,935
                                        -----------

                                         19,115,577
                                        -----------

Costs of Revenue:
    Video poker                           7,269,674
    Truck Stop and Convenience Store      5,085,820
                                        -----------

Total Costs of Revenue                   12,355,494
                                        -----------

Gross profit                              6,760,083

General and administrative expenses       5,207,196
                                        -----------

Operating Income                          1,552,887

Interest Expense                           (229,958)
Other Expense                              (437,449)
                                        -----------

Income Before Income Taxes                  885,480

Provision for Income Taxes                  (76,000)
                                        -----------

Net Income                                  809,480

Deficit, beginning of year                 (173,517)

Capital Contributions                       915,670

Distributions/Dividends                    (458,487)
                                        -----------

Equity, end of year                     $ 1,093,146
                                        ===========



                                     F-30
=========================================================================
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>

OM OPERATING, L.L.C. AND RELATED ENTITIES

COMBINED STATEMENT OF CASH FLOWS (UNAUDITED)
=============================================================
Year Ended December 31,                              1999
-------------------------------------------------------------


Cash Flows From Operating Activities:
Net Income                                         $  809,480
Adjustments to reconcile net income to net cash
 provided by operating activities:
  Depreciation and amortization                       290,799
  Loss on disposal of assets                           95,336
  Allowance for doubtful accounts                      42,100
Changes in operating assets and liabilities:
  (Increase) decrease in:
     Restricted cash                                   64,053
     Accounts receivable                              (53,222)
     Inventories                                       38,157
     Prepaid expense                                  (13,199)
     Deposits                                          15,612
  Increase (decrease) in:
     Accounts payable and accrued liabilities        (206,153)
     Accrued income taxes                              76,000
                                                   ----------

Net Cash Provided By Operating Activities           1,158,963
                                                   ----------

Cash Flows From Investing Activities:
  Purchases of property and equipment                (558,548)
  Proceeds from sale of equipment                     130,000
  Cash received as contribution                         4,257
  Advances to related parties                        (130,000)
  Construction of casino and truck stop                (8,500)
                                                   ----------

Net Cash Used In Investing Activities                (562,791)
                                                   ----------

Cash Flows From Financing Activities:
  Proceeds from borrowings                            534,592
  Payments on borrowings                             (271,751)
  Capital contributions                                41,000
  Distributions paid                                 (458,487)
                                                   ----------

Net Cash Used In Financing Activities                (154,646)
                                                   ----------

Net Increase In Cash                                  441,526

Cash, beginning of year                               366,834
                                                   ----------

Cash, end of year                                  $  808,360
                                                   ==========

Cash Paid During The Year For:
   Interest                                        $   84,870
Non-Cash Investing And Financing Activities:
   Net assets contributed                             753,488
   Completion of construction in progress           1,613,423
   Capital contributions receivable                   121,182



                                     F-31
=========================================================================
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>

OM OPERATING, L.L.C. AND RELATED ENTITIES
NOTES TO COMBINED FINANCIAL STATEMENTS (UNAUDITED)
YEAR ENDED DECEMBER 31, 1999
================================================================================

1.  BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
     POLICIES

The accompanying combined financial statements include the accounts of OM
Operating, LLC (OM), a limited liability company, River Port Truck Stop, LLC
(RPLLC), a limited liability company, and Ozdon Investments, Inc. (Ozdon)
(collectively, the "Company") (See Note 2).  OM and RPLLC's operating agreements
state that OM and RPLLC will terminite no later than December 31, 2050.  All
significant intercompany balances and transactions have been eliminated in
combination.

The Company's operations for the year ended December 31, 1999 consisted of truck
stop facilities and/or video poker casinos in up to six truck stops, and the
video poker devices for a route of 4 bars and restaurants, all located in the
state of Louisiana.  At December 31, 1999, the Company operated 2 truck stops, 3
casinos and video poker devices in one bar.  Ozdon owns the property known as
"The Gold Rush Truck Stop and Casino".


Unaudited Financial Statements:  In the opinion of managment, the accompanying
------------------------------
unaudited combined financial statements contain all adjustments (consisting of
only normal recurring accruals) necessary to present fairly the financial
position of OM and Related Entities at December 31, 1999 and the results of
their operations and changes in cash flows for the year then ended.


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


Video Poker Revenue:  Video poker revenue is the net revenue from gaming
--------------------
activities, defined as the difference between gaming wins and losses.


Restricted Cash:  The Louisiana State Police regulations regarding Video Draw
----------------
Poker require the Company to maintain a minimum balance at all times in their
gaming account equivalent to 15% of the previous month's net device revenues or
to secure the account by a line of credit or bond.  The Company meets this
requirement by maintaining the required minimum balance in their gaming account.


Inventories:  Inventories, which consists of food, beverage, fuel and
------------
convenience store items, are stated at the lower of cost or market; cost is
determined by the average cost method.



                                     F-32
================================================================================
<PAGE>

OM OPERATING, L.L.C. AND RELATED ENTITIES
NOTES TO COMBINED FINANCIAL STATEMENTS (UNAUDITED)
YEAR ENDED DECEMBER 31, 1999
================================================================================

1.  BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
     POLICIES (CONTINUED)

Property and Equipment:  Expenditures for property and equipment are recorded at
-----------------------
cost. Improvements which extend the economic life of such assets are
capitalized. Expenditures for maintenance and repairs are charged to expense.

Depreciation is provided over the estimated useful lives of assets, which range
from 5 to 39 years, using an accelerated method for financial accounting
purposes.


Intangibles:  Intangibles, which consist of revenue interest rights to acquire a
------------
fixed percentage of revenues (see Note 10), are being amortized on a straight-
line basis over the term of the related agreements.


Long-Lived Assets:  Long-lived assets to be held and used in the Company's
------------------
business are reviewed for impairment, whenever events or changes in
circumstances indicate that the related carrying amount may not be recoverable.
When required, impairment losses on assets to be held and used are recognized
based on the fair value of the asset.


Income Taxes:  As limited liability companies, OM and RPLLC are not subject to
-------------
income taxes.  Income or loss of OM and PRLLC is included in the income tax
returns of their members.  Ozdon uses the asset and liability method of
accounting for income taxes. Under the asset and liability method, deferred tax
assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax basis.  Deferred tax
assets and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected to
be recovered or settled.  The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.


Fair Value of Financial Instruments:  The carrying amounts of financial
------------------------------------
instruments including cash, receivables, prepaids, accounts payable and accrued
expenses approximated fair value as of December 31, 1999 because of the
relatively short maturity of these instruments.

The carrying amounts of notes payable and debt issued approximate fair value as
of December 31, 1999 because interest rates on these instruments approximate
market interest rates.


Concentration:  Video poker revenue represents approximately 68% of the
--------------
Company's operating revenue for the year ended December 31, 1999 respectively.
Failure to comply with Louisiana gaming regulations regarding Video Poker could
result in license revocation (see Note 7).




                                     F-33
================================================================================
<PAGE>

OM OPERATING, L.L.C. AND RELATED ENTITIES
NOTES TO COMBINED FINANCIAL STATEMENTS (UNAUDITED)
YEAR ENDED DECEMBER 31, 1999
================================================================================


2.  OWNERSHIP STRUCTURE

Restructure of the Gaming Entities:  In order to respond to concerns of the
-----------------------------------
Louisiana gaming regulators, (see Note 8) Amendment Number Two to the OM
Operating Agreement and Amendment Number One to the RPLLC Operating Agreement
were executed in February 1999 ("the Amendments").  The Amendments were
effective April 1, 1999.

Concurrent with the Amendments, an agreement between members whereby Member #1
agreed to transfer 50% of its interest in all gaming operations (including OM,
RPLLC, and Ozdon) to another member (Member #3) for certain consideration, was
entered into.

As of April 1, 1999, ownership of OM, RPLLC and Ozdon were as follows:


                            Member #1       Member #2    Member #3     Total
                           ----------      ----------    ----------  --------
OM                           24.5%          51.0%         24.5%       100.0%
RPLLC                        25.0%          50.0%         25.0%       100.0%
Ozdon                        50.0%             -          50.0%       100.0%

Thereafter, all profit and loss of OM and RPLLC will be allocated to the members
based on each members' ownership as detailed above.

On March 24, 2000, Members #2 and #3 purportedly voted to merge another limited
liability company into each of OM and RPLLC and purchase Member #1's interest in
OM and RPLLC for $375,000 and $50,000, respectively.  Member #1 voted against
the purported merger and buyout and has filed a lawsuit against the other two
members to nullify the merger and transaction.


3.  PROPERTY AND EQUIPMENT

Property and equipment include the following at December 31, 1999:


Land                                                                $    10,000
Buildings                                                             2,325,863
Leasehold Improvements                                                  458,814
Furniture and Equipment                                               1,404,771
Vehicles                                                                 58,697
                                                                    -----------

                                                                      4,258,145

Less Accumulated Depreciation                                        (1,606,949)
                                                                    -----------

Property and Equipment - Net                                        $ 2,651,196
                                                                    ===========

During 1999, the Company paid $415,000 to construct a casino at the RPLLC
location.  The casino was complete at December 31, 1999, but was not in
operation as the Company was in the process of obtaining its license to operate
the casino.  No depreciaton was taken on the casino in 1999.



                                     F-34
================================================================================
<PAGE>

OM OPERATING, L.L.C. AND RELATED ENTITIES
NOTES TO COMBINED FINANCIAL STATEMENTS (UNAUDITED)
YEAR ENDED DECEMBER 31, 1999
================================================================================

4.  ACCRUED LIABILITIES

Accrued liabilities at December 31, 1999 include the following:

Gaming fees payable                                       $329,815
Accrued interest payable                                   151,088
Accrued payroll and payroll taxes                           82,199
Other                                                       23,060
                                                          --------

                                                          $586,162
                                                          ========



5.  NOTES PAYABLE AND LONG-TERM DEBT

Notes payable consist of:

 Notes payable to a bank, interest at 10.25%, secured by the receivables,
 inventory and equipment of RPLLC and a first mortgage on the newly
 constructed truck stop and casino. The notes are also guaranteed
 by the members. Unpaid principal and interest are due in May
 and July 2000.
                                                                   $2,000,000
                                                                   ==========

Long-term debt consists of:

 Note payable to a bank, interest at 8.5%, due in monthly installments of
 $22,814, including interest through June 2001 when unpaid principal and
 interest are due, secured by the Gold Rush real estate and guaranteed by
 certain members.
                                                                    $ 382,109
 Other                                                                 53,121
                                                                    ---------
 Less: Current Portion                                                435,230
                                                                     (288,216)
                                                                    ---------
 Long-Term Portion                                                  $ 147,014
                                                                    =========

Long-term debt matures as follows:

                 December 31,                    Total
                 ------------                   --------

                    2000                        $288,216
                    2001                         147,014
                                                --------

                    Total                       $435,230
                                                ========


6.  RELATED PARTY RECEIVABLES

Related party receivables of $251,182 at December 31, 1999 consist of amounts
due from the members of OM and RPLLC.



                                     F-35
================================================================================
<PAGE>

OM OPERATING, L.L.C. AND RELATED ENTITIES
NOTES TO COMBINED FINANCIAL STATEMENTS (UNAUDITED)
YEAR ENDED DECEMBER 31, 1999
================================================================================


7.  INCOME TAXES

The components of the provision for income taxes as shown on the accompanying
combined statement of operations are as follows:

<TABLE>
<CAPTION>
                                                           Year Ended
                                                        December 31, 1999
                                              -------------------------------------

<S>                                           <C>
Current- Federal                                                            $60,000
Current-State                                                                16,000
Deferred                                                                          -
                                                                            -------

                                                                            $76,000
                                                                            =======
</TABLE>

The following is a reconciliation of the U. S. statutory tax rate to Ozdon's
effective rate for the year ended December 31, 1999:

<TABLE>
<CAPTION>
                                                      1999
                                              ---------------------

<S>                                           <C>
Statutory rate                                                34.0%
State income taxes                                             3.0%
                                                              ----

Ozdon's effective rate                                        37.0%
                                                              ====
</TABLE>


8.  CONCENTRATIONS, COMMITMENTS AND CONTINGENCIES

The Company's gaming operations are located in south central and southwest
Louisiana. A change in general economic conditions or the extent and nature of
regulations enabling gaming in Louisiana or Texas could adversely effect future
operating results of the Company.

The Company's operations in Louisiana depend on the continued licensing and
qualifications of the Company under the laws enacted in the State of Louisiana.
Such licensing and qualifications are reviewed periodically by the Louisiana
gaming regulators.


License Renewal Process:  The Louisiana gaming regulators (the "Regulators")
------------------------
have undertaken the review of all licensees operating video poker casinos.  The
Regulators reviewed the ownership structure of the Company's video poker
operations and had expressed concerns whether such structure satisfied the
Louisiana residency requirements necessary to operate video poker casinos.  The
Company was given until February, 1999 to restructure the ownership of OM and
RPLLC.  As a result, the Company's ownership was restructed in February 1999 and
given to the Regulators for review (see Note 2).  The Company believes its
structure is satisfactory, but there can be no assurance that the Regulators
will concur.  If the Company's ownership structure is not found to satisfy the
residency requirements, the Company may have its license revoked.  A revocation
of the Company's license would have a material adverse effect on the Company's
business operations and financial condition.

The Regulators require the truck stop owner to maintain an "Establishment
License".  The holder of the Establishment License is required to maintain
control over the truck stop's fuel operations.  If any truck stop owners have
their Establishment License revoked, it would have a material adverse efect on
the Company's business operations and financial condition.



                                     F-36
================================================================================
<PAGE>

OM OPERATING, L.L.C. AND RELATED ENTITIES
NOTES TO COMBINED FINANCIAL STATEMENTS (UNAUDITED)
YEAR ENDED DECEMBER 31, 1999
================================================================================


8.  CONCENTRATIONS, COMMITMENTS AND CONTINGENCIES (CONTINUED)

Louisiana Regulations:  The franchise payment payable to the State of Louisiana
----------------------
in 1999 equals 32.5% of net gaming device revenue for truck stop casinos and 26%
of net gaming device revenue for devices placed in bars and restaurants.


The Louisiana legislature adopted minimum fuel sale requirements for qualified
truck stops effective July 1, 1994. The fuel sale requirements dictate the
number of video poker devices that may be operated at the truck stop, based on
average monthly sales. As of December 31, 1999, the Company's gaming facilities
meet the monthly fuel sales requirements to keep the maximum 50 machines
allowed.


Cash:  The Company maintains cash balances with financial institutions which
-----
periodically exceeds FDIC insured limits.

In the opinion of management, there are no other contingent claims or litigation
against the Company which would materially affect its combined financial
position.


9.  EQUITY

Restrictions on Ownership:  Each of the combining companies' ownership is
--------------------------
restricted in order to comply with applicable gaming statutes.  Persons who are
not suitable to be members or stockholders of the Companies under such statutes
may not own member interest or common stock in the Companies.  Further, any
member or stockholder may be required, at such member's or stockholder's
expense, to make filings with applicable gaming authorities to determine
suitability, and if found not suitable will be required to dispose of such
member's interest or common stock and will not be entitled to vote or receive
distributions pending such disposal.


Ozdon:  Ozdon has authorized 10,000 shares of no par value common stock, of
------
which all 10,000 shares are issued and outstanding.  Until March 31, 1999, all
the outstanding shares were owned by North American Gaming and Entertainment
Corporation, a publicly traded company.  In connection with the restructure of
the gaming utilities (Note 2), ownership of 5,000 shares was transferred to
Member #3, as discussed in Note 2.






                                     F-37
================================================================================
<PAGE>

OM OPERATING, L.L.C. AND RELATED ENTITIES
NOTES TO COMBINED FINANCIAL STATEMENTS (UNAUDITED)
YEAR ENDED DECEMBER 31, 1999
================================================================================

10.  CONTRACTS

OM and RPLLC currently have three gaming and/or truck stop establishments as
well as a video poker route operation in Louisiana.  OM and RPLLC's gaming
contracts assign various percentages of the gaming revenues of these
establishments to various property owners, lessors or lenders.  When OM or RPLLC
enter into a contract with an establishment, it acquires the right to place
gaming devices in the establishment's truck stop facilities or bars.  These
agreements provide the establishments and route operators a percentage of the
net gaming income.  In addition, OM has a revenue sharing agreement on a single
location (Gold Rush) which operates similar to the other gaming contracts, but
Ozdon owns the truck stop facility.  Below is a listing of the gaming
contracts OM and RPLLC have at December 31, 1999, and a definition of terms
used.


Net Gaming Income:  Video poker revenue less state franchise fees and device
------------------
fees.


Route Operators:  Individuals who count, report, and deposit the gaming income.
----------------


Route Operations:  OM has a gaming contract with a bar.  This contract provides
-----------------
the establishment's owner with 50% of the net gaming income.


King's Lucky Lady:  In April 1992, OM signed an agreement for the lease of the
------------------
King's Lucky Lady Truck Stop in Port Barre, Louisiana. This lease was for a term
of five years beginning on May 1, 1992, with monthly rental payments of 20% of
the net revenue from the video poker machines. OM had an option to renew the
lease for three additional five-year terms, subject to the parties negotiating a
percentage rental for the renewal period acceptable to both parties.

As of March 31, 1999, OM no longer operated King's Lucky Lady Truck Stop and the
video poker casino as a result of settlement of litigation involving this truck
stop.  Under the terms of the settlement, OM received $130,000 as proceeds for
the sale of all video poker related equipment and inventory resulting in a loss
of approximately $43,000 and were entitled to 20% of the net profits of King's
Lucky Lady for the month of March 1999.


The Lucky Longhorn Club:  During 1993, OM purchased the right to operate the
------------------------
gaming devices of this establishment. Revenue interest rights included in the
accompanying combined balance sheet are related to this purchase (See Note 1).
OM is bound by the terms of an agreement signed by the previous owner on June 2,
1992, which is for a period of ten years and provides for the establishment's
owners to receive 50% of the net gaming income.  In connection with the 1998
settlement of a previous dispute, OM was required to pay the property owners
$3,000 per month through October 1999.





                                     F-38
================================================================================
<PAGE>

OM OPERATING, L.L.C. AND RELATED ENTITIES
NOTES TO COMBINED FINANCIAL STATEMENTS (UNAUDITED)
YEAR ENDED DECEMBER 31, 1999
================================================================================


10.  CONTRACTS (CONTINUED)

Pelican Palace:  OM lent approximately $1,450,000 to Curray Corporation during
---------------
1994 for the construction of a truck stop in Vinton, Louisiana.  Curray
Corporation started construction in 1993 and in 1994, when the construction was
completed, OM began operating 50 video poker machines under a five year
operating agreement.  Under the operating agreement with Curray, 70% of the net
profit from the premise's operations were dedicated to repayment of the loan
from OM with the remainder split 50% to each party.  After the note was paid in
full, the revenues were split 50% to each party.  The operating agreement allows
for three, five year renewal options.

In addition, OM has agreed to pay 2% of its share of net profits to an unrelated
third party for a finders fee.


Gold Rush Truck Stop:  Ozdon owns this truck stop facility while OM operates the
---------------------
gaming devices.

OM is required to pay a former lender ten percent (10%) of net gaming income as
long as OM continues to operate the gaming establishment in St. Landry Parish,
Louisiana.  In addition, in the event that Ozdon is sold to an unrelated party,
the agreement provides for the former lender to receive ten percent (10%) of the
proceeds from the sale in excess of $265,000.


Diamond Jubilee:  OM operates the gaming devices of this establishment for an
----------------
amount equal to 50% of the net operating cash flow from the truck stop and
casino after deductions for (i) all cash costs and expenses paid by OM and (ii)
interest and principal on any indebtedness of OM on any furniture, fixtures, and
equipment placed in the video poker casino, bar, or parking lot.

In August, 1998, OM obtained the rights to operate the truck stop fuel
operations and restaurant.  As of August 1999, OM no longer operated the Diamond
Jubliee.


RPLLC:  In January 1997, an entity owned by a member entered into an agreement
------
to lease a truck stop facility for a period of 50 years.  The terms of the lease
call for monthly base rent of $7,000 plus Additonal Rent of ten percent (10%) of
Net Revenue as defined in the lease agreement.  Lessor further agreed that for
the first 24 months after the commencement of video poker operatons the
Additonal Rent would be five percent (5%) and that commencing with the twenty-
fifth (25th) month of video poker operations that the Additional Rent would be
ten percent (10%) of Net Revenue.  The related entity assigned the lease to
RPLLC in 1998.  Construction of the River Port Truck Stop convenience store was
completed in January 1999.  The construction was financed with a note payable
due in May 2000.

During 1999, RPLLC entered into a fifteen year operating agreement with a third
party to operate the convenience store, restaurant and truck stop.  The
operating fees due RPLLC for the truck stop are based on gallons of gasoline
sold and an escalating base rent for the convenience store.




                                     F-39
================================================================================
<PAGE>

OM OPERATING, L.L.C. AND RELATED ENTITIES
NOTES TO COMBINED FINANCIAL STATEMENTS (UNAUDITED)
YEAR ENDED DECEMBER 31, 1999
================================================================================

10.  CONTRACTS (CONTINUED)

Rent expense under the gaming leases was as follows for the year ended December
31, 1999:



Kings Lucky Lady                                     $   91,000
The Longhorn Club                                     1,179,000
Pelican Palace                                          841,000
Gold Rush Truck Stop                                    224,000
Diamond Jubilee                                         532,000
RPLLC                                                    84,000
                                                     ----------
                                                     $2,951,000
                                                     ==========


Consulting Agreements:  In April 1998, OM entered into a four year consulting
----------------------
agreement with a member.  The agreement required OM to pay the member an annual
consulting  fee of $400,000.

In July 1998, RPLLC entered into a consulting agreement with a member.  The
agreement required RPLLC to pay the member an annual consulting fee of $50,000.

In conjunction with the restructuring of the ownership of OM and RPLLC, the
agreements were terminated effective April 1, 1999 (see Note 2).


Employment Agreement:  In April 1998, OM entered into a four year employment
---------------------
agreement with a member.  The agreement required OM to pay the member $250,000
per year for services provided.

In July 1998, the agreement was amended to require RPLLC to pay a proportionate
share of the salary to the member.

In conjunction with the restructuring of the ownership of the Company, the
annual salary was reduced effective April 1, 1999 to $100,000 per year
(See Note 2).



                                     F-40