SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549
                                  ------------

                                   FORM 10-KSB
                Annual Report Pursuant to Section 13 or 15(d) of
                       the Securities Exchange Act of 1934
                                  ------------

For the Fiscal Year Ended May 31, 1995      Commission file number   33-23430-D

                              THE TOEN GROUP, INC.
             (Exact name of registrant as specified in its charter)

                                     Nevada
         (State of other jurisdiction of incorporation or organization)

                                   84-1091271
                      (I.R.S. Employer Identification No.)

                   2 Park Plaza, Suite 470, Irvine, California
                    (Address of Principal Executive Offices)

                                     92614
                                    Zip Code

       Registrant's telephone number, including area code: (714) 833-2091

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

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

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

         At July 31, 1996,  799,372 shares of  Registrant's  no par value common
stock issued and outstanding.  There were also outstanding  warrants to purchase
up to 668,000 shares of the Registrant's  common stock. There has been no bid or
asked  prices  of the  Registrant's  common  stock  quoted in any  market  since
September 6, 1990.

                      Documents Incorporated by Reference:
                                      None

                                                 Total Pages including cover: 63

                                                         TOEN\10K\TG53195.10K]-9

<PAGE>



                                TABLE OF CONTENTS

                                                                         Page

                                     PART I

Item 1.   Business ........................................................1

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

Item 3.   Legal Proceedings................................................2

Item 4.   Submission of Matters to a Vote of Security Holders..............2

                                     PART II

Item 5.   Market for Registrant's Common Equity and Related Stockholder
           matters ........................................................3

Item 6.   Management's Discussion and Analysis of Financial Condition
           and Results of Operations ......................................4

Item 7.   Financial Statements and Supplementary Data......................5

Item 8.   Change in and Disagreements With Accountants.....................5

                                    PART III

Item 9.   Directors and Executive Officers.................................6

Item 10.  Management Remuneration and Transactions.........................8

Item 11.  Security Ownership of Certain Beneficial Owners and Management...9

Item 12.  Certain Relationships and Related Transactions...................11

                                     PART IV

Item 13.  Exhibits, Financial Statement Schedules and Reports on Form 8-K..12

          Index to Consolidated Financial Statements and Schedules.........F-1

                                                         TOEN\10K\TG53195.10K]-9

<PAGE>



                                     PART I

ITEM 1.           BUSINESS

         The  Toen  Group,   Inc.  (the   Registrant"   or  the  "Company")  was
incorporated  in the  State of  Colorado  on June 10,  1988 for the  purpose  of
searching  for,  evaluating  and  organizing  an  interest  in or more  business
opportunities.  On December 3, 1989, the Company  completed a public offering of
its stock  pursuant  to a  registration  statement  on Form S-18  filed with the
Denver Regional Office of the Securities and Exchange  Commission.  The Company,
through an  underwriter,  sold a total of 50,000,000  shares of the Company's no
par value  common  stock and  5,000,000  warrants  for the purchase of 5,000,000
shares of common stock.

         On March 9, 1990,  the Company  completed  an agreement to exchange its
common  stock for all of the issued  and  outstanding  capital  stock of Sunbelt
Media Group Inc.  ("Sunbelt").  Pursuant to the terms of the agreement  with the
shareholders  of Sunbelt,  the Company issued  278,400,000  shares of its common
stock in exchange for all the outstanding  shares of common stock of Sunbelt and
Sunbelt  became a  wholly-owned  subsidiary  of the Company.  From March 1990 to
October  1992  Sunbelt  owned and  operated  low power  television  stations and
related  businesses,  and provided  programming to those  stations.  The Company
discontinued  the  Sunbelt  business  in  October  1992 and sold all the  assets
associated  with the  operation of Sunbelt,  including  all  contracts and lease
agreements  necessary for its  operations to William J. Kitchen  ("Kitchen")  in
consideration of 1) Kitchen's forgiveness of notes and other obligations owed to
Kitchen by the Registrant; and 2) Kitchen's assumption of miscellaneous debts of
Sunbelt.  Pursuant to the sale, Kitchen also delivered  98,795,000 shares of the
Registrant's common stock to the Registrant for cancellation. Since October 1992
the Company has not had any revenues or operations.

         Accordingly,  Toen is  currently  in the process of seeking a merger or
acquisition with a business entity or entities expected to be private companies,
partnerships  or sole  proprietorships.  Management  believes the Registrant can
offer owners of potential  merger or acquisition  candidates the  opportunity to
acquire a controlling  interest in a public company at  substantially  less cost
than is required to conduct an initial public offering.

         On August 31, 1992 Jeffrey Paul Stroud ("Stroud") acquired  173,995,000
shares of the Registrant's common stock, representing 51% of the then issued and
outstanding shares, from Kitchen.  Stroud also acquired from Kitchen 162,000,000
warrants to acquire  162,000,000  shares of the  Registrant's  common stock.  On
March 31, 1993 Stroud  entered into a Stock  Purchase  Agreement  with New World
Capital Markets, Ltd. under which he sold 173,995,000 shares of the Registrant's
common  stock and  162,000,000  warrants  to acquire an  additional  162,000,000
shares of common stock.

         On June 17, 1993 the  Registrant's  then  existing  Board of  Directors
resigned  and Fred G.  Luke and Jon L.  Lawver  were  appointed  as  replacement
Directors.  The  outgoing  Board also  elected  Fred G. Luke as President of the
Registrant  and Jon L.  Lawver  as  Secretary,  Treasurer  and  Chief  Financial
Officer.

         In September  1994 the Company's  shareholders  voted to effect a 1 for
1000 reverse split of the Company's  issued and  outstanding  common stock.  The
split was implemented  through a merger with a newly formed Nevada  corporation.
The  accompanying  financial  statements  have been  retroactively  restated  to
reflect the merger  including  the change from no par value common stock to $.01
par value common stock.  In connection  with the merger and reverse  split,  the
Company's authorized number of

                                                         TOEN\10K\TG53195.10K]-9

                                                         1

<PAGE>



shares  was  reduced  from  785,000,000  to  50,000,000.   There  are  presently
outstanding  warrants to purchase  668,000 shares of common stock.  The warrants
are exercisable at $5.00 per share.

         The  Registrant's  day-to-day  business  affairs  are  handled by three
directors and two officers.  No executive  compensation has been paid to them or
to any other officers or directors during the fiscal year ended May 31, 1995. As
of the  filing  date of this  Report  the  Registrant  had no  employees  and no
operations.  Current  management  is  pursuing  business  opportunities,  but no
assurance can be given that the  Registrant  will be successful in acquiring any
business  opportunities,  or if acquired,  what revenues  might be provided from
such operations.

         As used herein,  the term "Company" or the  "Registrant"  refers to The
Toen Group Inc. The Registrant  currently  maintains its executive  offices at 2
Park Plaza, Suite 470, Irvine, California 92614.
The telephone number is (714)833-2094.

         Effective  October 8, 1996, the Board of Directors  authorized a change
in the Company's name from The Toen Group, Inc. to Virtual Enterprises, Inc.

ITEM 2.           PROPERTIES

         The  Registrant's  principal  executive  offices  are located in leased
premises  of  approximately  3,000  square  feet in  Irvine,  California.  These
premises  are  occupied  by the  Registrant  under an  Advisory  and  Management
Agreement with NuVen Advisors, Inc. ("NuVen"), an affiliate.

ITEM 3.            LEGAL PROCEEDINGS

         As of the date of this report there are no legal  proceedings  to which
the Registrant is a party, or of which any of the Registrant's properties is the
subject.

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

         On September  28, 1994 the Annual  Meeting of the  stockholders  of the
Registrant  was held.  Fred G.  Luke,  Jon L.  Lawver and John D.  Desbrow  were
elected as directors for the 1995 fiscal year.

         The  matters  voted upon and the  number of votes cast for,  against or
withheld, as well as the number of abstentions were as follows:

<TABLE>
<CAPTION>

                                                                                Votes
                                                                   Votes        Abstaining/Broker
                                                  Votes For      Against        Non-Votes
                                                  -----------    ---------      -----------------
<S>                                               <C>            <C>            <C>


I.       Election of Fred G. Luke, Jon L.
         Lawver and John D. Desbrow               184,930,000    0              0

II.      Approval and Adoption of an
         Agreement of Merger with a newly
         formed Nevada corporation                184,930,000    0              0

III.     Approval and Adoption of a 1994
         Non-Qualified Stock Compensation Plan    183,330,000    1,600,000      0

</TABLE>


         All of the above  matters were approved by a majority of the issued and
outstanding shares.


                                     PART II



ITEM 5.           MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
                  STOCKHOLDER MATTERS

(a)      Market Information

         Following the  completion  of the public  offering on November 30, 1989
and until  September  6,  1990,  the  Company's  common  stock was traded on the
over-the-counter  market and  reported  by the  National  Quotation  Bureau Pink
Sheets.  Trading  ceased on  September  6, 1990.  The  Registrant's  outstanding
securities,  consist of no par value  common stock and  Redeemable  Common Stock
Purchase  Warrants  ("Warrants").   The  Registrant's  Board  of  Directors  and
shareholders  approved a 1:1000  reverse  split of its common stock on September
28,  1994  decreasing  the number of issued and  outstanding  common  stock from
249,371,667 to 249,372.  The Registrant's  board of directors,  shareholders and
warrantholders  approved a 1:250  reverse split of the Warrants  decreasing  the
number of issued and  outstanding  Warrants  from  167,000,000  to  668,000  and
increasing  the  exercise  price  from $.02 per  Warrant  to $5.00 per  Warrant.
Additionally,  the expiration  date of the Warrants was extended to December 31,
1996.  Each  Warrant  entitles  the holder to purchase at a price of $5.00,  one
share of the Company's common stock.

         There  has been no  market  for the  Registrant's  Common  Stock  since
September  6,  1991.  Prior to such date the  closing  bid and ask price for the
Company's  common  stock,  giving  effect  to the  1:1000  revenue  split of the
outstanding common shares which became effective  September 28, 1994 reported by
the National Quotation Bureau Inc., is follows:


          BID PRICE OF
          COMMON STOCK
    ----------------------
     HIGH              LOW
    ------          ------
    $10.00          $10.00

(b)      Holders

         The  approximate  number of  holders  of record of each class of equity
securities of the Registrant as of May 31, 1995, was as follows:

                                                               NUMBER OF
                   TITLE OF CLASS                           RECORD HOLDERS
-----------------------------------------                   --------------
Common Stock No Par Value                                         40
Redeemable Common Stock Purchase Warrants                         30

                                                         TOEN\10K\TG53195.10K]-9

                                       2

<PAGE>



(c)      Dividends

         The Registrant has never declared or paid a cash dividend on its common
stock.  The Registrant does not intend to pay a cash dividend in the foreseeable
future.


ITEM 6.           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                  AND RESULTS OF OPERATIONS

         Results of Operations

         Year Ended May 31, 1995 Compared to Year Ended May 31, 1994

         There were no operations  during fiscal 1995 and as such, there were no
         revenues or cost of revenues recorded during fiscal 1995.

         General and  administrative  expenses  increased  to $175,065 in fiscal
         1995  compared to  $170,751 in fiscal 1994 due to a slight  increase in
         professional services provided for fiscal 1995.

         Liquidity and Capital Resources.

         As of May 31,  1995 the  Registrant  had a working  capital  deficit of
         $315,076,  an  increase  of  $145,065  from fiscal year 1994 due to the
         continued accrual of professional,  consulting and advisory fees during
         fiscal 1995 that were incurred but not paid.

         The Registrant had cash balances of approximately $161 at May 31, 1995.
         The limited cash balances are a direct result of the Registrant  having
         no operations during fiscal year 1995.

         The  Registrant's  plan is to keep searching for additional  sources of
         capital  and  new  operating   opportunities.   In  the  interim,   the
         Registrant's  existence is dependent on  continuing  financial  support
         from an affiliate which is estimated to be  approximately  $425,000 for
         the next fiscal year based upon current  agreements and obligations the
         Company has at May 31, 1995.  Furthermore,  the  Registrant may have to
         utilize its common  stock for future  financial  support to finance its
         needs.  Such conditions raise  substantial doubt about the Registrant's
         ability to  continue  as a going  concern.  As such,  the  Registrant's
         independent  accountants  have  modified  their  report to  include  an
         explanatory paragraph with respect to the uncertainty.

         The  Registrant  has no  commitments  for  additional  equity  or  debt
         financing and no assurances can be made that its working  capital needs
         can be met.

         Additionally,  as of May 31, 1995,  the  Registrant had no employees or
operations.

                                                         TOEN\10K\TG53195.10K]-9

                                                         3

<PAGE>



ITEM 7.           FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         The following  financial  statements are filed as a part of this Annual
         Report  on Form  10-KSB  and are  included  immediately  following  the
         signature page.

                          INDEX TO FINANCIAL STATEMENTS
                                                                          Page

         Report of Independent Certified Public Accountants ...............F-2
         Balance Sheet for May 31, 1995....................................F-3
         Statements of Operations for the years ended May 31, 1995
           and 1994 .......................................................F-4
         Statements of Stockholders' Equity for May 31, 1995 and 1994......F-5
         Statements of Cash Flows for May 31, 1995 and 1994................F-6
         Notes to Financial Statements.....................................F-7


ITEM 8.           CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS

         Following  May  31,  1990,  Jerome  W.  Karsh  & Co.  resigned  as  the
Registrant's  principal  accountants.  In April,  1993, the Registrant  notified
O'Neal & White of its  appointment  as the  Registrant's  principal  independent
accountants.  On July 19, 1995, C. Williams & Associates replaced O'Neal & White
as the Registrant's principal accountants.  On April 24, 1996, Spurgeon,  Kang &
Associates  replaced C.  Williams &  Associates  as the  Registrant's  principal
accountants.

         Mr.  Charles R. Williams,  one of the  principals of C.  Williams,  was
advised by the Texas State Board of Public Accountancy in a letter dated January
29, 1996,  addressed  to the Chief  Accountant  of the  Division of  Corporation
Finance of the Securities and Exchange Commission (the  "Commission"),  that his
certificate as a Certified Public Accountant was revoked effective as of May 18,
1995,  which was  subsequently  revised to provide for a  revocation  date as of
March 2, 1995.  The Chief  Accountant  of the  Division of  Corporation  Finance
advised Mr.  Williams  by means of a letter  dated  February  7, 1996,  that the
Commission does not recognize any person as a certified public accountant who is
not duly  registered and in good standing as such under the laws of the place of
his  residence  or  principal  office as of March 2,  1995.  No  opinion  on the
Registrant's financial statements was ever issued by C. Williams & Associates.

         In  connection  with the audit for the fiscal year ended May 31,  1990,
and  for  the  period  from  June  10,  1988,  to May 31,  1990,  there  were no
disagreements  between the Registrant and Jerome W. Karsh & Co. on any matter of
accounting  principles or practices,  financial statement disclosure or auditing
scope or procedures, which disagreements, if not resolved to the satisfaction of
Jerome W. Karsh & Co. would have caused it to make reference in connection  with
its report.

         None of the  reports  of  Jerome  W.  Karsh & Co.  on the  Registrant's
financial  statements contained an adverse opinion or a disclaimer of opinion or
was qualified as to uncertainty,  audit scope, or accounting  principles  except
that the opinion was  qualified  by the  assumption  that the  Registrant  would
continue as a going concern.

                                                         TOEN\10K\TG53195.10K]-9

                                                         4

<PAGE>



         The decision to change  principal  independent  accountants was made by
the Registrant's Board of Directors.


                                    PART III

ITEM 9.           DIRECTORS AND EXECUTIVE OFFICERS

(a)      Identification of Directors.

         The following table furnishes the information  concerning the directors
and those persons  nominated and chosen to become directors of the Registrant as
of September 28, 1994.  The directors of the  Registrant  are elected every year
and serve until their successors are elected and qualify.

                                           Period Served as
           Name                Age             Director
----------------------         ---      -------------------
Fred G. Luke                   50       6-17-93 to Present
Jon L. Lawver                  58       6-17-93 to Present
John D. Desbrow                41       9-28-94 to Present

(b)      Identification of Executive Officers.

         The officers of the  Registrant are chosen by and serve at the pleasure
of the Board of Directors.  The following table furnishes information concerning
executive  officers and all persons chosen to become  executive  officers of the
Registrant. The officers of the Registrant serve at the pleasure of the Board of
Directors.

                      Positions and Office
Name           Age    with Company                     Period Served as Officer
-------------  ---    -----------------------------    ------------------------
Fred G. Luke   50     Chairman and President           June, 1993 to Present

Jon L. Lawver  58     Secretary and Chief Financial    June, 1993 to April 24,
                      Officer                          1996

         The Registrant has no audit,  compensation or nominating committees. No
family relationships exist between any of the officers or directors.

         In August 1995, the Company  entered into an Employment  Agreement with
Fred G. Luke, the Company's Chairman and President.  The terms of the Employment
Agreement  call  for  Mr.  Luke  to  receive   approximately  $54,000  per  year
retroactive to June 1, 1994, for five (5) years as a base salary;  grants him an
option to purchase  750,000 shares of the Company's  common stock at an exercise
price of 110% of the book value per share on August 1, 1995;  and  requires  the
Company to purchase life insurance coverage, reimburse him for vehicle expenses,
and provide fringe  benefits.  The Company  expensed $54,000 during fiscal 1995,
and had $54,000 due to Mr. Luke as of May 31, 1995.

                                                         TOEN\10K\TG53195.10K]-9

                                                         5

<PAGE>



         Effective  April  24,  1996,  the  Company  entered  into a  consulting
agreement  with Mr.  Steven H. Dong,  pursuant  to which Mr.  Dong is to perform
accounting  services and to hold the office of Chief  Financial  Officer through
June 30,  1996.  Pursuant to the  agreement  the Company  agreed to pay Mr. Dong
$5,000 in cash or in the  Company's  common  stock and  granted him an option to
purchase  100,000  shares of the Company's  common stock at an exercise price of
$.10 per share.  No cash  payments  were made to Mr. Dong by the Company  during
fiscal 1995.  The Company  expensed $0 during fiscal 1995 and had no amounts due
as of May 31, 1995.

         In July  1996,  the  Company  memorialized  a prior  verbal  consulting
agreement entered into in September 1994 with Mr. Desbrow, to hold the office of
Director through December 31, 1996. Pursuant to the agreement the Company agreed
to pay Mr. Desbrow  $1,000 per month.  No cash payments were made to Mr. Desbrow
by the Company  during fiscal 1995.  The Company  expensed  $8,000 during fiscal
1995 and had $8,000 due as of May 31, 1995.

(c)      Identification of Certain Significant Employees.

         There are no  employees  other than the  executive  officers  disclosed
above  who  make or are  expected  to  make,  significant  contributions  to the
business of the Registrant, the disclosure of which would be material.

(d)      Family Relationships.

         None.

(e)      Business Experience.

         The following is a brief account of the business  experience during the
past five  years of each  director  and  executive  officer  of the  Registrant,
including  principal  occupations and employment during that period and the name
and principal  business of any  corporation or other  organization in which such
occupation and employment were carried on.

         Fred G. Luke, has been Chairman and President of the  Registrant  since
         June,  1993. Mr. Luke has over  twenty-four (24) years of experience in
         domestic and international  financing and the management of private and
         publicly-held  companies. In addition to his position with the Company,
         Mr. Luke currently  serves as Chairman and Chief  Executive  Officer of
         Nona  Morelli's II Inc.,  Diversified  Land &  Exploration  Co. and New
         World Capital Inc. Since 1982 Mr. Luke has provided consulting services
         and has served,  for brief  periods  usually  lasting not more than six
         months,  as Chief  Executive  Officer  and/or  Chairman Of The Board of
         various public and  privately-held  companies in conjunction  with such
         financial and corporate  restructuring  services.  Mr. Luke also served
         from 1973 through 1985 as President of American Energy  Corporation,  a
         privately  held  oil and  gas  company  involved  in the  operation  of
         domestic oil and gas properties. From 1970 through 1985 Mr. Luke served
         as an officer  and  Director  of  Eurasia,  Inc.,  a private  equipment
         leasing company specializing in oil and gas industry equipment.

         Jon L.  Lawver,  has been  Secretary  and a Director of the  Registrant
         since  June,  1993 and was Chief  Financial  Officer  from June 1993 to
         April 24, 1996. Mr. Lawver has  twenty-two  (22) years of experience in
         the area of bank financing  where he has assisted medium size companies
         ($5 million to $15  million) by providing  expertise  in  documentation
         preparation and locating

                                                         TOEN\10K\TG53195.10K]-9

                                                         6

<PAGE>



         financing  for  expansion  requirements.  Mr.  Lawver  was with Bank of
         America from 1961 to 1970,  ending his employment as Vice President and
         Manager of one of its  branches.  From 1970 to Present  Mr.  Lawver has
         served as President and a Director of J.L.  Lawver  Corp.,  a financial
         consulting  firm.  Since 1988 Mr.  Lawver has served as President and a
         Director  of  Eurasia,  a private  finance  equipment  leasing  company
         specializing in oil and gas industry equipment.

         John D.  Desbrow,  has served as a  Director  of the  Registrant  since
         September 28, 1994. Mr. Desbrow is also a Director of Hart  Industries,
         Inc. and holds the office of Secretary of Nona  Morelli's  II, Inc. and
         NuOasis  Gaming,  Inc. Mr.  Desbrow is a member in good standing of the
         State Bar of California  and has been since 1980.  Prior to joining the
         Company Mr.  Desbrow was in the private  practice of law.  Mr.  Desbrow
         received his Bachelor of Science degree in Business Administration from
         the University of Southern California in 1977, his Juris Doctorate from
         the  University  of  Southern  California  Law Center in 1980,  and his
         Master of  Business  Taxation  degree from the  University  of Southern
         California Graduate School of Accounting.

         Steven H. Dong.  Mr. Dong,  a Certified  Public  Accountant,  and as an
         independent  Consultant  serves  as  Chief  Financial  Officer  of  the
         Registrant.  Mr.  Dong  replaced  Jon L.  Lawver  who  resigned  as the
         Registrants'  Chief Financial Officer and as a Director effective April
         24,  1996.  Prior to joining the  Registrant,  Mr. Dong worked with the
         international  accounting  firm of Coopers & Lybrand  since 1988. As an
         Assurance  Manager  with  Coopers  &  Lybrand,  Mr.  Dong's  experience
         consisted of providing financial  accounting and consulting services to
         privately and publicly held companies. In addition to his position with
         the Registrant, Mr. Dong currently serves as Chief Financial Officer of
         Nona,  NuOasis  Gaming and Hart.  Mr.  Dong  received  his  Bachelor of
         Science  degree in  Accounting  from  Babson  College  in 1988 and is a
         member in good standing with the California Society of Certified Public
         Accountants and American Institute of Certified Public Accountants.

ITEM 10.       MANAGEMENT REMUNERATION AND TRANSACTIONS

(a)     Cash Compensation.

        None  of  the  Registrant's   executive   officers   received  any  cash
compensation  during the fiscal year ended May 31, 1994. On March 31, 1995, Fred
G. Luke,  Fred Graves Luke,  J.L.  Lawver  Corp.,  John D. Desbrow and Structure
America, Inc. each were issued 60,000 shares of restricted common stock.

(b)     Stock Options

        During fiscal year 1995 there were no individual grants of stock options
made to the Company's Chief Executive  Officer or to any of the four most highly
compensated executive officers other than the Chief Executive Officer.

(c)     Aggregated Option Exercises

        During the fiscal year ended May 31,  1995,  there were no  exercises of
stock  options by the Chief  Executive  Officer  or any of the four most  highly
compensated executive officers other than the Chief Executive Officer.

                                                         TOEN\10K\TG53195.10K]-9

                                                         7

<PAGE>



(d)     Long-Term Incentive Plans

        During the fiscal year ended May 31,  1995,  there were no awards  under
any Long Term Incentive Plan to the Chief  Executive  Officer or any of the four
most  highly  compensated  executive  officers  other  than the Chief  Executive
Officer.

(e)     Compensation of Directors

        The  Company  has  no  standard  arrangement  for  the  compensation  of
directors or their committee participation or special assignments.

(f)     Employment Contracts and Change of Control

        The Luke Family  Trust (the  "Trust") and J.L.  Lawver  Corp.  (the "JLL
Corp.") owns 93% and 7%,  respectively,  of the common  stock of NuVen.  Fred G.
Luke,  as the trustee of the Trust,  controls the Trust and Jon L. Lawver is the
majority  stockholder of JLL Corp. Mr. Luke and Mr. Lawver are also officers and
directors of the Company.

        On March 31, 1995 Fred G. Luke,  J.L.  Lawver Corp.  and John D. Desbrow
were each issued 60,000 shares of restricted  common stock for services rendered
to the Company as officers and directors or legal counsel  through May 31, 1994.
The Company also issued  60,000  shares of  restricted  common stock each to two
consultants  for merger and  acquisition  services in fiscal  1994,  the Company
recorded an expense of $30,000  during  fiscal  year 1994  related to such share
issuances.

(g)     Report on Repricing of Options

        During fiscal year 1995,  the Registrant has not adjusted or amended the
exercise price of stock options.

(h)     Termination of Employment and Change of Control Arrangements.

        None


ITEM 11.          SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
                  MANAGEMENT AS OF MAY 31, 1995

(a)  Beneficial  owners of five  percent  (5%) or  greater  of the  Registrant's
     Outstanding Voting Securities.

         The  following  sets forth  information  with  respect to  ownership by
holders of more than five (5%) of the Registrant's outstanding voting securities
known by the Registrant.

                                                         TOEN\10K\TG53195.10K]-9

                                                         8

<PAGE>

<TABLE>
<CAPTION>

                                                                            Amount and Nature
                                           Name and Address                   of Beneficial
       Title of Class                     of Beneficial Owner                   Interest            Percent of Class
----------------------------- -----------------------------------------   ---------------------  -------------------
<S>                           <C>                                         <C>                    <C>

No par value                  Rubec B.V.
Common Stock                  Keizer KarelWeg 381, 1181 RE                         173,995                31.67%
                              Amstelveen
                              The Netherlands

                              John D.  Desbrow                                      60,000                10.92%
                              2 Park Plaza, Ste.  470
                              Irvine, Ca  92714

                              J.  L.  Lawver Corp                                   60,000                10.92%
                              2 Park Plaza, Ste.  470
                              Irvine, Ca  92714

                              Fred G.  Luke                                         60,000                10.92%
                              2 Park Plaza, Ste.  470
                              Irvine, Ca  92714

                              Fred Graves  Luke                                     60,000                10.92%
                              2 Park Plaza, Ste.  470
                              Irvine, Ca  92714

                              Structure America, Inc.                               60,000                10.92%
                              3753 Howard Hughes Parkway.  Ste.  200
                              Las Vegas, NV 89109

Redeemable Common Stock       Rubec B.V.                                                                  97.00%
Purchase Warrants             Keizer KarelWeg 381, 1181 RE                         648,000
                              Amstelveen
                              The Netherlands

Combined no par value         Rubec B.V.                                                                  67.50%
Common Stock and              Keizer KarelWeg 381, 1181 RE                         821,995
Redeemable Common Stock       Amstelveen
Purchase Warrants             The Netherlands

</TABLE>

         The following sets forth  information  with respect to the Registrant's
Common  Stock  beneficially  owned  by each  Officer  and  Director,  and by all
Officers and Directors as a group. No Officer or Director personally owns any of
the Registrant's Redeemable Common Stock Purchase Warrants.

                                                         TOEN\10K\TG53195.10K]-9

                                                         9

<PAGE>

<TABLE>
<CAPTION>

                                                                           Amount and Nature
                                       Name and Address                      of Beneficial
     Title of Class                   of Beneficial Owner                      Interest             Percent of Class
-------------------       -------------------------------------------      ------------------       ----------------
<S>                       <C>                                              <C>                      <C>

No par value              Fred G.  Luke
Common Stock              2 Park Plaza, Suite 470                                  60,000                 10.92%
                          Irvine, CA  92714

                          Jon L.  Lawver                                           60,000                 10.92%
                          2 Park Plaza, Suite 470
                          Irvine, CA  92714

                          John D.  Desbrow                                         60,000                 10.92%
                          2 Park Plaza, Suite 470
                          Irvine, CA  92714

Redeemable Common         Fred G.  Luke                                                 0                     0%
Stock Purchase            2 Park Plaza, Suite 470
Warrants                  Irvine, CA  92714

                          Jon L.  Lawver                                                0                     0%
                          2 Park Plaza, Suite 470
                          Irvine, CA  92714

                          All Officers and Directories as a group                       0                     0%

</TABLE>

ITEM 12.          CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

(a)      Transactions With Management and Others.

         During fiscal 1995 there were no transactions with related parties that
exceeded $60,000 other than the following:

         The Luke Family  Trust (the  "Trust") and J.L.  Lawver Corp.  (the "JLL
Corp.") owns 93% and 7%,  respectively,  of the common  stock of NuVen.  Fred G.
Luke,  as the trustee of the Trust,  controls the Trust and Jon L. Lawver is the
majority  stockholder of JLL Corp. Mr. Luke and Mr. Lawver are also officers and
directors of the Company.

         Effective  April 1,  1993,  the  Company  and  NuVen,  entered  into an
Advisory  and  Management  Agreement  for the  engagement  of NuVen  to  perform
advisory  services on behalf of the Company for a 3 year term.  Pursuant to such
agreement  the Company is  obligated to pay NuVen  $120,000  annually in monthly
installments  of  $10,000.  Under the terms of such  agreement,  the Company has
granted NuVen an option to purchase 100,000 shares of the Company's common stock
exercisable at a price of $1.00 per share.  The option vested on the date of the
agreement.

         Effective  February  1,  1995 the  Company  amended  its  Advisory  and
Management  Agreement  with NuVen.  The amended terms require the Company to pay
NuVen,  for  services  rendered,  $5,000 a month for an annual  total of $60,000
through January 31, 1998.

(b)      Certain Business Relationships.

         There are no  employees  other than the  executive  officers  disclosed
above  who make,  or are  expected  to make,  significant  contributions  to the
business of the Registrant, the disclosure of which would be material.

(c)      Indebtedness of Management.

         None.

                                                         TOEN\10K\TG53195.10K]-9

                                                        10

<PAGE>



                                     PART IV

ITEM 13.          EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM
                  8-K.

(a)  Financial  Statements:  The  Financial  Statements  are included  elsewhere
     herein and are indexed on Page F-1, "Index to Financial Statements."

(b)  8-K Reports:

         On October 9, 1992 the  Registrant  filed a Current  Report on Form 8-K
dated  September  25,  1992  reporting  the sale to  William  J.  Kitchen by the
Registrant of all assets owned by the Registrant  associated  with the operation
of Sunbelt,  including  all  contracts  and lease  agreements  necessary for its
operations (the "Sunbelt  Assets").  In return for the Sunbelt  Assets,  Kitchen
forgave all notes and other  obligations of the Registrant to Kitchen and/or all
entities  owned or  controlled  by Kitchen,  as well as Kitchen's  assumption of
other miscellaneous debts of Sunbelt. Kitchen also returned to the Registrant of
98,795,000 shares of the Registrant's common stock as partial  consideration for
the sale by the Registrant of the Sunbelt assets to Kitchen.  The  consideration
offered and accepted by the Registrant and Kitchen was the result of arms length
negotiations. The amounts were arbitrarily determined by the parties and bore no
relationship to assets,  shareholders'  equity, or any other recognized criteria
of value.

         The sale of the trade name "Sunbelt  Media Group" and all of the assets
owned by the Registrant  associated with its Sunbelt  operation  constituted the
sale of substantially all of the Registrant's assets.

         In the same Report on Form 8-K the Registrant reported that pursuant to
an  Agreement  to  Purchase  Stock  dated as of August  31,  1992 (the  "Sunbelt
Agreement"), Jeffrey Paul Stroud acquired 173,995,000 shares of the Registrant's
common stock (the "Stroud Shares")  representing  fifty-one percent (51%) of the
issued  and  outstanding  shares  of stock of the  Registrant  from  Kitchen,  a
shareholder of the Registrant who, prior to closing the Sunbelt Agreement, owned
272,790,000  shares of common stock of the  Registrant  (the "Kitchen  Shares"),
said shares  representing  eighty  percent  (80%) of the issued and  outstanding
shares of the Registrant at the time as set forth above.  Under the terms of the
Agreement,  Stroud also acquired from Kitchen, all other equity rights, options,
warrants and the like in and to the Registrant's shares owned by Kitchen,  which
rights  included  Warrants  representing  the  right to  acquire  an  additional
162,000,000 shares of common stock of the Registrant.  As partial  consideration
for the sale of the Warrants and the Stroud Shares to Stroud by Kitchen,  Stroud
agreed to release  Kitchen  from any and all  claims  which  Stroud had  against
Kitchen as a result of Stroud's  investment in the registered  securities of the
Registrant prior to closing the Sunbelt Agreement.

         At closing of the Agreement,  the  Registrant's  then existing Board of
Directors  systematically  resigned  and were  replaced by Jeffrey  Paul Stroud,
Gregory  Skufca  and  Patricia  Schoenbaum.  The  newly  reconstituted  Board of
Directors  then  elected  Stroud to serve as President  of the  Registrant,  and
Gregory Skufca to serve as Secretary/Treasurer.

                                                         TOEN\10K\TG53195.10K]-9

                                                        11

<PAGE>



(c)      Exhibits:

         Exhibit
         Number           Description
         ----------------------------------------------------------------------

          3    Articles  of  Incorporation  and Bylaws  [incorporated  herein by
               reference  to Exhibit  3.1 and 3.2 of  Registrant's  Registration
               Statement on Form S-18 (No. 33-23430- D)].

          4(a) Warrant Agreement and form of Warrant  Certificate  [incorporated
               herein by reference to Exhibit 4.6 of  Registrant's  Registration
               Statement on Form S-18 (No. 33-23430-D)].

          4(b) Specimen  Redeemable Common Stock Purchase Warrant  [incorporated
               herein by reference to Exhibit 4.2 of  Registrant's  Registration
               Statement on Form S-18 (No. 33-23403-D)].

          10(a)Underwriting   Agreement  with   Tri-Bradley   Investment,   Inc.
               [incorporated herein by reference as Exhibit 1.1 to Amendment No.
               5  to  Form  S-18  Registration   Statement  on  Form  S-18  (No.
               33-23430-D)].

          10(b)Agreement  to Purchase  Stock dated  August 31, 1992  between The
               Toen  Group,   Inc.,   Jeffrey  Stroud  and  William  J.  Kitchen
               [incorporated  herein by  reference  to  Exhibit  "A" to Form 8-K
               dated September 25, 1992, and filed October 9, 1992].

          10(c)Stock Purchase  Agreement  dated March 31, 1993 between New World
               Capital Markets,  Ltd. and Jeffrey Paul Stroud.  [Incorporated by
               reference  to Exhibit  10.c to Form  10-KSB for the fiscal  years
               ended May 31, 1992 and 1993].

          10(d)Advisory  and  Management  Agreement  with NuVen  Advisors,  Inc.
               [incorporated herein by reference to Exhibit 10(d) to Form 10-KSB
               for fiscal year ended May 31, 1994].

          10(e) Employment Agreement with Fred G. Luke.

          10(f) Consulting Agreement with John D. Desbrow.

          10(g) Consulting Agreement with Steven Dong.

                                                         TOEN\10K\TG53195.10K]-9

                                                        12

<PAGE>



                                                    SIGNATURES

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

                                        THE TOEN GROUP, INC.
                                        (Registrant)



Date:    January 20, 1997               By:  /s/  Fred G. Luke
                                             ----------------------------------
                                                  Fred G. Luke, Chairman
                                                  of the Board and President

Date:    January 20, 1997               By:  /s/  Jon L. Lawver
                                             ----------------------------------
                                                  Jon L. Lawver,
                                                  Secretary and Director

Date:    January 20, 1997               By:  /s/  John D. Desbrow
                                             ----------------------------------
                                                  John D. Desbrow, Director

Date:    January 20, 1997               By:  /s/  Steven H. Dong
                                             ----------------------------------
                                                  Steven H. Dong,
                                                  Chief Financial Officer

                                                         TOEN\10K\TG53195.10K]-9

                                                        13

<PAGE>

                              THE TOEN GROUP, INC.

                          INDEX TO FINANCIAL STATEMENTS

Financial Statements, Fiscal Year 1995                                     Page

         Reports of Independent Public Accountants ........................F-2

         Balance Sheet as of May 31, 1995..................................F-3

         Statements of Operations for the years
          ended May 31, 1995 and 1994......................................F-4

         Statements of Stockholders' Deficiency
          for the years Ended May 31, 1995 and 1994........................F-5

         Statements of Cash Flows for the Years
          Ended May 31, 1995 and 1994 .....................................F-6

         Notes to Financial Statements.....................................F-7

                                                         TOEN\10K\TG53195.10K]-9

                                                        16

<PAGE>



                           Spurgeon, Kang & Associates
                             Accountancy Corporation
                          Certified Public Accountants
                               9831 Belmont Street
                      Belmont Street, Bellflower, CA. 90706
                                  (310)251-2161


                      INDEPENDENT AUDITOR'S REPORT FYE 1995


Board of Directors and Stockholders THE TOEN GROUP, INC.
2 Park Plaza, Suite 470
Irvine, CA  92714

We have audited the accompanying balance sheet of The Toen Group, Inc. as of May
31, 1995 and the related  statements of income,  retained earnings and cash flow
for the years ended May 31, 1995 and 1994.  These  financial  statements are the
responsibility  is to express an opinion on these financial  statements based on
our audit.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the financial position of The Toen Group, Inc. as of May
31,  1995 and the results of its  operations  and cash flows for the years ended
May  31,  1995  and  1994  in  conformity  with  generally  accepted  accounting
principles.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company will continue as going concern.  As discussed in Note 1 to the financial
statements,  the Company has incurred net losses and  possesses  limited  liquid
resources and negative  working capital as of May 31, 1995.  Management's  plans
regarding those matters are described in Note 2. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.

Spurgeon, Kang & Associates
Bellflower, CA



November 4, 1996

                                                         TOEN\10K\TG53195.10K]-9

<PAGE>


                              THE TOEN GROUP, INC.
                                  Balance Sheet
                               As of May 31, 1995



Assets
  Cash                                            $              161
                                                  -------------------

         Total Assets                             $              161
                                                  ===================
Liabilities and Stockholders' Equity
Current Liabilities:
  Accounts payable                                $            6,096
  Due to affiliates                                          309,141
                                                  -------------------

         Total Current Liabilities                           315,237
Commitments and Contingencies                                      -
Stockholders' Deficiency:
  Common stock, no par value, 50,000,000 shares
       authorized; 549,372 shares issued
     and outstanding                                         411,442
  Additional paid-in capital                                  27,000
  Accumulated deficit                                       (728,673)
  Treasury stock (98,795 Shares, at Cost)                    (24,845)
                                                  --------------------
       Total Stockholders' Deficiency                       (315,076)
       Total Liabilities and Stockholders'
          Deficiency                              $               161
                                                  ===================

                                                         TOEN\10K\TG53195.10K]-9

    The accompanying notes are an integral part of these financial statements

<PAGE>

<TABLE>
<CAPTION>

                              THE TOEN GROUP, INC.
                            Statements of Operations
                           For the Years Ended May 31,

                                                                  1995                  1994
                                                          -------------------    --------------------
<S>                                                       <C>                    <C>

Revenues                                                  $                  -   $                  -
Cost of Revenues                                                             -                      -
                                                          ---------------------- --------------------
  Gross Profit                                                               -                      -
                                                          ---------------------- --------------------
General and Administrative Expenses:
 Employment and Consulting Services                                    164,726                170,000
  Legal and Accounting                                                   5,986                      -
  Other                                                                  4,353                    751
                                                          ---------------------- --------------------

             Total                                                     175,065                170,751
                                                          ---------------------- --------------------
Operating Loss                                                     (175,065)                 (170,751)
Other Income (Expense):
  Interest Expense, Net                                                      -                      -
                                                          ---------------------- --------------------
Net Loss Before Discontinued Operations                               (175,065)              (170,751)
Income  From Discontinued
  Operations                                                                 -                 14,286
                                                          ---------------------- --------------------
Net Loss                                                  $           (175,065)  $           (156,465)
                                                          ====================== =====================
Net Income (Loss) Per Share:
  Loss From Continuing Operations                         $              (.540)  $              (.685)
                                                          ====================== =====================
  Income Loss from Discontinued
    Operations                                                               -                   .057
                                                          ---------------------- --------------------
  Net Loss per Share                                      $              (.540)  $              (.627)
                                                          ====================== =====================
  Weighted Average Number of Shares
    Outstanding                                                        324,372                249,372

</TABLE>

                                                         TOEN\10K\TG53195.10K]-9

    The accompanying notes are an integral part of these financial statements

<PAGE>

<TABLE>
<CAPTION>

                              THE TOEN GROUP, INC.
                     Statements of Stockholders' Deficiency
                    For The Years Ended May 31, 1995 and 1994

                                COMMON                                     ADDITIONAL                        TOTAL
                                SHARES        COMMON        TREASURY        PAID-IN        ACCUMULATED   STOCKHOLDERS'
                              OUTSTANDING      STOCK          STOCK         CAPITAL          DEFICIT      DEFICIENCY
                             -------------   ---------      ----------     ---------      -------------  ------------
<S>                          <C>             <C>            <C>            <C>            <C>            <C>

Balances at June 1, 1993      249,371,667    $ 408,442      $ (24,845)     $      -       $  (397,143)   $  (13,546)
Effect of reverse stock
split                        (249,122,295)           -              -             -                 -             -
Net Loss                                -            -              -             -          (156,465)     (156,465)
                             -------------   ----------     ----------     ---------      -------------  ------------
Balances at May 31, 1994          249,372    $ 408,442      $ (24,845)     $      -       $  (553,608)   $ (170,011)
Stock issued for services         300,000        3,000              -        27,000                 -        30,000
Net Loss                                -            -              -             -          (175,065)     (175,065)
                             -------------   ----------     ----------     ---------      -------------  ------------
Balances at May 31, 1995          549,372    $ 411,442      $ (24,845)     $ 27,000       $  (728,673)   $ (315,076)
                             =============   ==========     ==========     =========      =============  ============

</TABLE>

                                                         TOEN\10K\TG53195.10K]-9

    The accompanying notes are an integral part of these financial statements

<PAGE>

<TABLE>
<CAPTION>

                              THE TOEN GROUP, INC.
                            Statements of Cash Flows
                           For the Years Ended May 31,

                                                                            1995                  1994
                                                                    --------------------- ---------------------
<S>                                                                 <C>                   <C>

Cash Flows From Operating Activities:
  Net income loss                                                   $           (175,065) $           (156,465)
Adjustments to Reconcile Net Loss to Net Cash Provided
(Used) by Operating Activities:
   Amortization                                                                        -                   739
   Stock issued for services                                                      30,000                     -
Changes in Assets and Liabilities:
Increase (Decrease) in Liabilities:
   Accounts payable                                                                6,096               (14,285)
   Due to affiliates                                                             134,141               175,000
                                                                    --------------------- --------------------
Net cash provided (used) by operating activities                                  (4,828)                4,989
                                                                    --------------------- --------------------
Increase (decrease) in cash and cash equivalents                                  (4,828)                4,989
Beginning Balance, Cash and Cash Equivalents                                       4,989                     -
                                                                    --------------------- --------------------
Ending Balance, Cash and Cash Equivalents                           $                161  $              4,989
                                                                    ===================== ====================
Supplemental Disclosure of Cash Flow Information:
   Cash payments for income taxes                                   $                  -  $                  -
   Cash payments for interest                                       $                  -  $                  -
                                                                    ===================== ====================
Supplemental Disclosure of Non-Cash Investing
 and Financing Activities:
   Stock issued for services                                        $             30,000  $                  -
                                                                    ===================== ====================

</TABLE>

                                                         TOEN\10K\TG53195.10K]-9

    The accompanying notes are an integral part of these financial statements

<PAGE>



                              THE TOEN GROUP, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                  May 31, 1995


Note 1.       Summary of Significant Accounting Policies

Business and Organization

The  Company  was  incorporated  in June,  1989 as a Colorado  corporation.  The
Company was primarily  engaged in the acquisition,  maintenance and operation of
television stations in various states through 1992.

In August 1992, the Company sold its Sunbelt Media Group  ("Sunbelt")  division,
operating the television stations, to a majority stockholder of the Company.

Since  August  1992  through  the date of this  report,  the  Company has had no
operations  and  management  is  seeking  a merger  and/or  sale of  controlling
interest in its stock.

Principals of Management Estimates

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

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of
three months or less as cash equivalents.

Income Taxes

The Company accounts for income taxes using the liability  method.  Income taxes
are provided on all revenue and expense items, regardless of the period in which
such items are recognized for tax purposes,  except for those items representing
a permanent  difference  between pre-tax income and taxable income.  A valuation
allowance is recorded  when it is more likely than not that  benefits  resulting
from deferred tax assets will not be realized.

Earnings (Loss) Per Common Share

Net income  (loss) per common share is  calculated by dividing net income (loss)
by the weighted average number of shares  outstanding  during each year. All per
share amounts are reported as adjusted  after the merger and  resulting  reverse
stock split.  Common stock equivalents were not considered in the loss per share
calculations as the effect would have been anti dilutive.

                                                         TOEN\10K\TG53195.10K]-9

<PAGE>


                              THE TOEN GROUP, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                  May 31, 1995


Issuance of Stock for Services

Shares of the  Company's  common  stock  issued for  services  are  recorded  in
accordance  with APB16 at the fair market  value of the stock issued or the fair
market of the services  provided,  whichever value is the more clearly  evident.
The value of the services are typically stipulated by contract.

Reclassification of Prior Year Amounts

To  enhance  comparability,  the  fiscal  1994  financial  statements  have been
reclassified,  where  appropriate,  to  conform  with the  financial  statements
presentation used in fiscal 1995.

Note 2.    Going Concern

The Company has experienced  recurring net losses, has limited liquid resources,
negative  working  capital and its primary  operating  subsidiary was liquidated
during fiscal year 1993. Management's intent is to keep searching for additional
sources of capital and new operating opportunities.  In the interim, the Company
will keep operating with minimal overhead and key administrative  functions will
be provided by NuVen  Advisors,  Inc., an affiliate  ("NuVen").  It is estimated
that NuVen will have to contribute  approximately  $425,000 for future financial
support  for the  Company to exist for the next fiscal  year.  Accordingly,  the
accompanying  consolidated  financial  statements  have been presented under the
assumption the Company would continue as a going Concern.

Note 3.    Discontinued Operations

In August,  1992, the Company  executed an agreement with an 80%  shareholder of
the  Company,  whereby the Sunbelt  Media Group  ("Sunbelt")  trade name and all
assets and debt  related to Sunbelt,  were sold to the majority  shareholder.  A
note due to the majority stockholder in the amount of $24,500 was outstanding at
the date of the  agreement,  and was forgiven as part of the payment  price.  In
exchange,  the majority  shareholder  returned  98,795,000  shares of its common
stock  holdings  in  the  Company.  No  gain  or  loss  was  recognized  on  the
transaction,  as the resulting value of assets sold over liabilities assumed was
assigned as the cost of the treasury stock acquired.

Note 4.    Capital Stock

In  September  1994 the  Company's  shareholders  voted  to  effect a 1 for 1000
reverse split of the Company's  issued and outstanding  common stock.  The split
was  implemented  through a merger with a newly formed Nevada  corporation.  The
accompanying  financial  statements have been retroactively  restated to reflect
the merger including the change from no par value common stock to $.01 par value
common stock.  In connection  with the merger and reverse  split,  the Company's
authorized  number of shares was reduced from  785,000,000 to 50,000,000.  There
are presently  outstanding  warrants to purchase 668,000 shares of common stock.
The warrants are exercisable at $5.00 per share.

                                                         TOEN\10K\TG53195.10K]-9

<PAGE>


                              THE TOEN GROUP, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                  May 31, 1995


Note 5.    Related Party Transactions

The Luke Family Trust (the "Trust") and J.L. Lawver Corp. (the "JLL Corp.") owns
93% and 7%,  respectively,  of the common stock of NuVen.  Fred G. Luke,  as the
trustee  of the  Trust,  controls  the Trust and Jon L.  Lawver is the  majority
stockholder of JLL Corp. Mr. Luke and Mr. Lawver are also officers and directors
of the Company.

Effective  April 1, 1993,  the Company and NuVen,  entered  into an Advisory and
Management Agreement for the engagement of NuVen to perform advisory services on
behalf of the Company for a 3 year term.  Pursuant to such agreement the Company
is obligated to pay NuVen $120,000 annually in monthly  installments of $10,000.
Under the terms of such  agreement,  the Company has granted  NuVen an option to
purchase 100,000 shares of the Company's common stock  exercisable at a price of
$1.00 per share.  The option vested on the date of the agreement.

Effective  February 1, 1995 the  Company  amended its  Advisory  and  Management
Agreement  with NuVen.  The amended terms require the Company to pay NuVen,  for
services  rendered,  $ 5,000 a month  for an  annual  total of  $60,000  through
January 31, 1998.

NuVen's  advisory  services  include  the payment on behalf of the  Company,  of
monthly office rent,  telephone  expenses,  monthly accounting  expenses and the
costs  associated  with the  preparation of annual state and federal  regulatory
filings, and franchise and federal tax returns.

On March 31, 1995 Fred G. Luke,  J.L. Lawver Corp. and John D. Desbrow were each
issued  60,000 shares of  restricted  common stock for services  rendered to the
Company as officers,  directors,  or legal  counsel  through May 31,  1994.  The
Company  also  issued  60,000  shares of  restricted  common  stock  each to two
consultants  for merger and  acquisition  services in fiscal  1994.  The Company
recorded an expense of $30,000  during  fiscal  year 1994  related to such share
issuances.

Note 6.    Subsequent Events

In August 1995,  the Company  entered into an Employment  Agreement with Fred G.
Luke,  the  Company's  Chairman  and  President.  The  terms  of the  Employment
Agreement  which is  retroactive  to June 1, 1994 call for Mr.  Luke to  receive
approximately  $54,000 per year for five (5) years as a base salary;  grants him
an  option  to  purchase  750,000  shares of the  Company's  common  stock at an
exercise  price of 110% of the book  value  per share on  August  1,  1995;  and
requires the Company to purchase  life  insurance  coverage,  reimburse  him for
vehicle expenses,  and provide fringe benefits. The Company expensed $54,000 and
$0 during fiscal 1995 and 1994, respectively, and had $54,000 and $0 due to Mr.
Luke as of May 31, 1995 and 1994, respectively.

Effective April 24, 1996, the Company  entered into a consulting  agreement with
Mr. Steven H. Dong, pursuant to which Mr. Dong is to perform accounting services
and to hold the  office  of  Chief  Financial  Officer  through  June 30,  1996.
Pursuant to the agreement the Company agreed to pay Mr. Dong $5000 in cash or in
the Company's  common stock and granted him an option to purchase  10,000 shares

                                                         TOEN\10K\TG53195.10K]-9

<PAGE>


                              THE TOEN GROUP, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                  May 31, 1995


of the Company's  common stock at an exercise  price of $.10 per share.  No cash
payments were made to Mr. Dong by the Company  during  fiscal 1995.  The Company
expensed $0 during fiscal 1995 and had no amounts due as of May 31, 1995.

In July 1996,  the Company  memorialized  a prior  verbal  consulting  agreement
entered into in September 1994 with Mr. Desbrow,  to hold the office of Director
through  December 31, 1996.  Pursuant to the agreement the Company agreed to pay
Mr. Desbrow  $1,000 per month.  No cash payments were made to Mr. Desbrow by the
Company during fiscal 1995. The Company  expensed  $8,000 during fiscal 1995 and
had $8,000 due as of May 31, 1995.

Effective  October 8, 1996 the Company's Board of Directors  authorized a change
in the name from The Toen Group, Inc. to Virtual Enterpises, Inc.

                                                         TOEN\10K\TG53195.10K]-9

                                                        25