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, 1996       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 December  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

                                                        [TOEN\10K\TG53196.10K]-5

<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 ........................................................2

Item 6.   Management's Discussion and Analysis of Financial Condition
           and Results of Operations ......................................3

Item 7.   Financial Statements.............................................4

Item 8.   Change in and Disagreements With Accountants.....................4

                                    PART III

Item 9.   Directors and Executive Officers.................................5

Item 10.  Executive Compensation...........................................7

Item 11.  Security Ownership of Certain Beneficial Owners and
           Management .....................................................10

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

                                     PART IV

Item 13.  Exhibits and Reports on Form 8-K ................................13

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

                                                        [TOEN\10K\TG53196.10K]-5

<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  acquiring an interest in one 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  ("SEC").  The
Company, through an underwriter, sold a total of 50,000,000 shares of the its no
par  value  common  stock  and  redeemable   common  stock   purchase   warrants
("Warrants")  which  entitle the holders to purchase of  162,000,000  additional
shares of common stock at a later date.

         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
following  which Sunbelt became a wholly-owned  subsidiary of the Company.  From
March 1990 to October 1992 Sunbelt owned,  operated, and provided programming to
low power television stations and related businesses.  The Company  discontinued
the Sunbelt business in October 1992 and sold all the assets associated with the
operation of Sunbelt 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 re-conveyed  back to the Company  98,795,000
shares of the its common stock for cancellation.  Since October 1992 the Company
has not had any revenues or operations.

         The Company is currently in the process of seeking the  acquisition  of
or merger  with a  business  entity or  entities.  The  Registrant's  day-to-day
business  affairs are handled by three directors and three  officers.  Executive
compensation  has been accrued but not paid to them or to any other employees or
consultants  during the fiscal year ended May 31, 1996. As of the filing date of
this  Report  the  Registrant  had  one  employee  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.

         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  the  Warrants  from
Kitchen.  In March 1993 Stroud sold the 173,995,000  shares of the  Registrant's
common stock and the Warrants.

         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

                                                        [TOEN\10K\TG53196.10K]-5

                                                         1

<PAGE>



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, exercisable at $5.00 per share.

         Effective October 8, 1996 the Company's  Articles of Incorporation were
amended to change the name of the Company  from The Toen Group,  Inc. to Virtual
Enterprises, Inc.

         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.

ITEM 2.           PROPERTIES

         The  Registrant's  principal  executive  offices  are located in shared
leased premises of approximately 3,000 square feet in Irvine, California.  These
premises  are  provided  to 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

         None.


                                     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  presently  consist of 799,372  shares of $.01 par value common stock
and 668,000 Warrants,  following the shareholders'  approval of a 1:1000 reverse
split of the Company's common stock on September 28, 1994, decreasing the number
of issued and outstanding common stock from 249,371,667 to 249,372,  and 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, 1997. Each Warrant currently  entitles the
holder to purchase at a price of $5.00, one share of the Company's common stock.

                                                        [TOEN\10K\TG53196.10K]-5

                                                         2

<PAGE>

          There has not been a market bid and ask price for the Company's common
stock  during  the last three  fiscal  years as there has been no market for the
Registrant's Common Stock since September 6, 1990.

(b)      Holders

         The  approximate  number of  holders  of record of each class of equity
securities of the Registrant as of May 31, 1996, was as follows:


                                                               NUMBER OF
                   TITLE OF CLASS                           RECORD HOLDERS
-----------------------------------------                   --------------
$.01 Par Value Common Stock                                       40
Redeemable Common Stock Purchase Warrants                         30

(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, 1996 Compared to Year Ended May 31, 1995

         There were no operations  during fiscal 1996 and as such, there were no
         revenues or cost of revenues recorded during fiscal 1996.

         General and administrative  expenses decreased to $1,761 in fiscal 1996
         compared  to  $175,065  in fiscal  1995.  The  decrease  was  primarily
         attributable to a credit in the approximate amount of $163,000 received
         from NuVen  Advisors,  Inc.  ("NuVen"),  an  affiliate  and  contracted
         advisor. Due to minimal services performed by NuVen during fiscal 1996,
         the Registrant received a credit against  outstanding  invoices owed to
         NuVen.

         Liquidity and Capital Resources.

         As of May 31,  1996 the  Registrant  had a working  capital  deficit of
         $314,337,  a decrease of $739 from May 31, 1995. The small decrease was
         attributable  to the  offsetting  effect of the  continued  accrual  of
         professional, consulting and advisory fees during fiscal 1996 that were
         incurred but not paid and a credit received by NuVen, discussed above.

         The Registrant had cash balances of approximately  $51 and $161, at May
         31, 1996 and 1995, respectively. The limited cash balances are a direct
         result of the Registrant having no operations during fiscal year 1996.

                                                        [TOEN\10K\TG53196.10K]-5

                                                         3

<PAGE>

         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  $465,000 for
         the next fiscal year based upon current  agreements and obligations the
         Company has at May 31, 1996.  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  capital   expenditures  or
         additional  equity or debt financing and no assurances can be made that
         its working capital needs can be met.

         Additionally,  as of May 31, 1996,  the Registrant had no operations or
         employees other than its President.

ITEM 7.           FINANCIAL STATEMENTS

         Financial Statements are referred to in Item 13(a), listed in the Index
to Financial  Statements  and filed and included  elsewhere  herein as a part of
this Annual Report on Form 10-KSB.

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.

         The Reports of Spurgeon, Kang & Associates with respect to the 1994 and
1995 fiscal years  financial  statements  include an explanatory  paragraph with
respect to the  substantial  doubt  existing about the ability of the Company to
continue as a going concern due to its recurring net losses, negative cash flows
from  operating  activities  since its inception,  limited liquid  resources and
negative working capital.

         Mr.  Charles  R.  Williams,  one of the  principals  of C.  Williams  &
Associates,  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

                                                        [TOEN\10K\TG53196.10K]-5

                                                         4

<PAGE>

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.

         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 and Executive Officers.

         The following table furnishes the information  concerning the directors
and executive  officers of the  Registrant as of May 31, 1996.  The directors of
the  Registrant  are elected  every year and serve until  their  successors  are
elected and qualify.

<TABLE>
<CAPTION>

                                   Period Served as               Officer                  Period Served
        Name             Age           Director                   Position                  as Officer
---------------          ---    -------------------     -----------------------      -------------------
<S>                      <C>    <C>                     <C>                          <C>

Fred G. Luke             50     6-17-93 to Present      President                    6-17-93 to Present
Jon L. Lawver            58     6-17-93 to Present      Secretary,                   6-17-93 to Present
                                                        Chief Financial Officer      6-17-93 to 4-24-96
John D. Desbrow          41     9-28-94 to Present      N/A                          N/A
Steven H. Dong           30     N/A                     Chief Financial Officer      4-24-96 to Present

</TABLE>

(b)      Business Experience.

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

         The officers of the  Registrant are chosen by and serve at the pleasure
of the Board of Directors.

         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.

                                                        [TOEN\10K\TG53196.10K]-5

                                                         5

<PAGE>



         Fred G. Luke.  Mr. Luke has been Chairman of the Board and President of
         the Registrant  since June, 1993. Mr. Luke has over  twenty-seven  (27)
         years of  experience  in domestic and  international  financing and the
         management of privately and publicly held  companies.  Since 1982,  Mr.
         Luke has provided consulting services and has served, for brief periods
         lasting usually not more than six months,  as Chief  Executive  Officer
         and/or  Chairman of the Board of various  publicly  held and  privately
         held  companies  in  conjunction  with  such  financial  and  corporate
         restructuring   services.   In  addition  to  his  position   with  the
         Registrant,  Mr. Luke currently  serves as Chairman and Chief Executive
         Officer of the Nona  Morelli's  II, Inc  ("Nona"),  Chairman and former
         President of NuOasis  Gaming,  Inc.  ("NuOasis  Gaming"),  Chairman and
         President of NuVen  Advisors,  Inc.,  ("NuVen  Advisors")  formerly New
         World  Capital,  Inc.  ("New  World"),  Chairman and  President of Hart
         Industries,  Inc.  ("Hart"),  and Chairman and President of Diversified
         Land &  Exploration  Co.  ("DL&E").  DL&E is a former  publicly  traded
         independent  natural resource  development  company engaged in domestic
         oil and gas  exploration,  development and  production.  Prior to 1995,
         DL&E was a 90%  owned  subsidiary  of  Basic  Natural  Resources,  Inc.
         ("BNR"). From 1991 through 1994, Mr. Luke served as the President and a
         Director of BNR. BNR is presently inactive. Hart and DL&E were formerly
         in the  environmental  services  and natural gas  processing  business,
         respectively.  Hart is a public  company  which was formerly  traded on
         NASDAQ  or  the  OTC  Bulletin  Board.   Hart  does  not  have  ongoing
         operations.  Nona is a publicly traded (OTC Bulletin Board) diversified
         holding  company with  overseas  gaming and domestic  pasta  production
         subsidiaries.  NuOasis Gaming is a publicly traded (OTC Bulletin Board)
         holding  company with domestic  gaming  development  activities.  NuVen
         Advisors provides managerial,  acquisition and administrative  services
         to public and private companies including the Registrant, Nona, NuOasis
         Gaming  and  Hart  pursuant  to  independent  Advisory  and  Management
         Agreements.  NuVen  Advisors,  which is  controlled by Fred G. Luke, as
         Trustee of the Luke Family  Trust,  is an affiliate of the  Registrant.
         NuVen Advisors is a stockholder of Hart, DL&E, NuOasis Gaming and Nona,
         and benficial stockholder of the Registrant.  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.  Mr.
         Luke received a Bachelor of Arts Degree in Mathematics  from California
         State University, San Jose in 1969.

         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  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.  Mr.  Lawver also serves as an  executive  officer of one of
         Nona's wholly-owned subsidiaries.

         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 Hart  Industries,  Inc., 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.

                                                        [TOEN\10K\TG53196.10K]-5

                                                         6

<PAGE>

         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.

(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)      Compliance with Section 16(a) of the Securities Exchange Act.

         Section 16(a) of the  Securities  Exchange Act of 1934, as amended (the
"Exchange Act") requires the  Registrant's  officers and directors,  and persons
who own more than ten percent of a registered class of the  Registrant's  equity
securities,  to file  reports of  ownership  and changes in  ownership  with the
Securities and Exchange  Commission.  Officers and  directors,  and greater than
ten-percent  shareholders  are required by  Securities  and Exchange  Commission
regulations  to furnish the  Registrant  with copies of all Section  16(a) forms
they file.

         Based  solely on review of the  copies of such forms  furnished  to the
Registrant,  or  representations  that no Forms 5 were  required  or filed,  the
Registrant  believes  that during  fiscal year 1996,  all Section  16(a)  filing
requirements applicable to its officers, directors, and greater than ten-percent
beneficial owners were complied with.

ITEM 10.       EXECUTIVE COMPENSATION

(a)     Summary Compensation Table.

        The following summary  compensation table sets forth in summary form the
compensation  received  during  each of the  Registrant's  last three  completed

                                                        [TOEN\10K\TG53196.10K]-5

                                                         7

<PAGE>

fiscal  years by the  Registrant's  President  and four most highly  compensated
officers (the "Named Executive Officers").  There were no executive officers who
were compensated in excess of $100,000 during fiscal year 1996.

<TABLE>
<CAPTION>

        Name and Principal             Fiscal            Salary               Other Annual               Options
             Position                   Year               ($)               Compensation($)          Granted (#)22)
--------------------------             ------            ------              ---------------          --------------
<S>                                    <C>               <C>                 <C>                      <C>

Fred G. Luke (1)                        1996             54,000                     -                       -
               -
 Chairman and President                 1995             54,000                     -                    750,000
 (6-93 to Present)                      1994                -                       -                       -

</TABLE>

(1)     The dollar value of base salary (cash and non-cash).

(2)     Except for stock option plans,  the  Registrant  does not have in effect
        any plan that is intended to serve as incentive for performance to occur
        over a period longer than one fiscal year.

(b)     Stock Options

        There  were  no  options   granted   during  fiscal  year  1996  to  the
Registrant's Named Executive Officers. The following table sets forth in summary
form the aggregate  options  exercised  during fiscal year 1996, and the May 31,
1996 value of unexercised options for The Registrant's Named Executive Officer.

<TABLE>
<CAPTION>
                                                                                                         Value of Unexercised
                                                                         Number of Unexercised               In-the-Money
                                                                        Option/SAR's at Fiscal         Options/SAR's at Fiscal
                                                                             Year-End (#)                    Year-End ($)
                                  Shares
                              Acquired on             Value                  Exercisable/                    Exercisable/
            Name               Exercise (#)       Realized ($)              Unexercisable                    Unexercisable
----------------------------  ------------------  ------------      ------------------------------  --------------------------
<S>                           <C>                 <C>               <C>                             <C>

Fred G. Luke, President
and Director                          -                  -                750,000  Exercisable             (2)(3) Exercisable
                                                                                             -
NuVen Advisors, Inc.(1)               -                  -                100,000  Exercisable               (3)  Exercisable
                                                                                             -

</TABLE>

(1)     The Luke Family  Trust (the "Luke  Trust")  owns 93% of NuVen  Advisors,
        formerly  New  World.  Fred G.  Luke,  as Co-  Trustee of the Luke Trust
        determines the voting of such shares and, as a result,  may be deemed to
        control the Luke Trust.

(2)     Exercise  price for Mr.  Luke's  options  are 110% of net book  value on
        August 1, 1995 of the  Company.  Since the Company  had a negative  book
        value on August 1,  1995,  the  exercise  price is deemed to be $.01 per
        share.

(3)     As of the date of this Report the potential realizable value of each
        grant of options is not aplicable due to a lack of a market price for
        the shares of common stock underlying the options.


(c)     Long Term Incentive Plans.

        None.

                                                        [TOEN\10K\TG53196.10K]-5

                                                         8

<PAGE>

(d)     Compensation of Directors

        The  Company  has  no  standard  arrangement  for  the  compensation  of
directors or their committee participation or special assignments.  There was no
compensation paid to any directors during fiscal year 1996.

(e)     Contracts with Named Executive Officer and other Officers and 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.  No cash payments were made to Mr. Luke,  but the
Company expensed $54,000 during fiscal 1995 and 1996 and had $100,000 due to Mr.
Luke as of May 31, 1996.

        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. Effective July 1, 1996, the Consulting Agreement was renewed for
fiscal year 1997 for an amount of $1,000 per month.  No cash  payments were made
to Mr. Dong by the Company during fiscal 1996. The Company  expensed  $5,000 and
$0 during fiscal 1996 and 1995, respectively,  and had $5,000 due to Mr. Dong as
of May 31, 1996.

        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.  Effective  January 1, 1997, the Consulting
Agreement  was  renewed  for fiscal  year 1997 for  $1,000  per  month.  No cash
payments were made to Mr. Desbrow by the Company during fiscal 1996. The Company
expensed $12,000 and $8,000 during fiscal 1996 and 1995,  respectively,  and had
$20,000 due to Mr. Desbrow as of May 31, 1996.

        In  July  1996,  the  Company  memorialized  a prior  verbal  consulting
agreement  effective  June 1,  1995  with  Mr.  Lawver,  to hold the  office  of
Secretary  through  December 31,  1996.  Pursuant to the  agreement  the Company
agreed to pay Mr.  Lawver  $1,000 per  month.  Effective  January  1, 1997,  the
Consulting  Agreement was renewed for fiscal year 1997 for $1,000 per month.  No
cash  payments were made to Mr.  Lawver by the Company  during fiscal 1996.  The
Company expensed $12,000 and $0 during fiscal 1996 and 1995,  respectively,  and
had $12,000 due to Mr. Lawver as of May 31, 1996.

(f)     Report on Repricing of Options

        During fiscal year 1996,  the Registrant has not adjusted or amended the
exercise price of stock options.

                                                        [TOEN\10K\TG53196.10K]-5

                                                         9

<PAGE>

(g)     Change in Control.

        None.

ITEM 11.       SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
               MANAGEMENT

(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.

<TABLE>
<CAPTION>

                                                                            Amount and Nature
                                           Name and Address                   of Beneficial
       Title of Class                     of Beneficial Owner                   Interest           Percent of Class(1)
--------------------------    -------------------------------               -----------------      -------------------
<S>                           <C>                                           <C>                    <C>

$.01 par value                New World Capital Markets, Ltd.
Common Stock                  Companies House                                      173,995             21.76%(1)
                              Tower Street
                              Ramsey, Isle of Man

                              John D.  Desbrow                                      60,000               7.5%(1)
                              2 Park Plaza, Ste.  470
                              Irvine, Ca  92614

                              J.  L.  Lawver Corp                                   60,000               7.5%(1)
                              2 Park Plaza, Ste.  470
                              Irvine, Ca  92614

                              Fred G.  Luke                                         60,000               7.5%(1)
                              2 Park Plaza, Ste.  470
                              Irvine, Ca  92614

                              Fred Graves  Luke                                     60,000               7.5%(1)
                              2 Park Plaza, Ste.  470
                              Irvine, Ca  92614

                              Structure America, Inc.                               60,000               7.5%(1)
                              550 N. Jefferson
                              Loveland, CO 80537

Redeemable Common             New World Capital Markets, Ltd.                      648,000             97.00%(2)
 Stock  Warrants              Companies House             
                              Tower Street
                              Ramsey, Isle of Man

Combined $.01 par value       New World Capital Markets, Ltd.                      821,995             56.18%(3)
Common Stock and              Companies House              
Redeemable Common             Tower Street
 Stock  Warrants              Ramsey, Isle of Man

</TABLE>

                                                        [TOEN\10K\TG53196.10K]-5

                                                        10

<PAGE>

(1)      Based upon 799,372 common shares outstanding.

(2)      Based upon 668,000 Warrants outstanding.

(3)      Based upon 1,467,372 Combined Common Stock and Warrants outstanding.

         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.

<TABLE>
<CAPTION>

                                                                           Amount and Nature
                                       Name and Address                      of Beneficial
     Title of Class                   of Beneficial Owner                      Interest            Percent of Class(5)
------------------------- -----------------------------------------   -------------------------- ---------------------
<S>                       <C>                                         <C>                        <C>

$.01 par value            Fred G.  Luke                                          810,000(1)               52%
Common Stock              2 Park Plaza, Suite 470
                          Irvine, CA  92614
                          NuVen Advisors, Inc.(2)                              350,000(3)                 39%
                          2 Park Plaza, Suite 470
                          Irvine, CA 92614
                          Jon L.  Lawver                                           60,000                 7.5%
                          2 Park Plaza, Suite 470
                          Irvine, CA  92614
                          John D.  Desbrow                                         60,000                 7.5%
                          2 Park Plaza, Suite 470
                          Irvine, CA  92614
                          Steven H. Dong                                      100,000(4)                  11%
                          2 Park Plaza, Suite 470
                          Irvine, CA 92614
Redeemable Common         Fred G.  Luke                                                 0                  0%
Stock  Warrants           2 Park Plaza, Suite 470
                          Irvine, CA  92614
                          Jon L.  Lawver                                                0                  0%
                          2 Park Plaza, Suite 470
                          Irvine, CA  92614
                          Steven H. Dong                                                0                  0%
                          2 Park Plaza, Suite 470
                          Irvine, CA 92614
                          All Officers and Directories as a group               1,380,000                 79%
</TABLE>

(1)      As of the date of this Report, 60,000 shares are held by Mr. Luke, with
         750,000 shares subject to stock options held.

(2)      The Luke Family Trust (the "Luke  Trust")  owns 93% of NuVen  Advisors,
         formerly  New  World.  Fred G. Luke,  as Co-  Trustee of the Luke Trust
         determines the voting of such shares and, as a result, may be deemed to
         control the Luke Trust.

(3)      As of the date of this Report, 250,000 shares are held by Nuven, with
         100,000 shares subject to stock options held.

                                                        [TOEN\10K\TG53196.10K]-5

                                                        11

<PAGE>

(4)      As of the date of this Report, no shares are held by Mr. Dong, with
         100,000 shares subject to stock options held.

(5)      Number of shares deemed outstanding  includes799,732 as of December 31,
         1996,  and any shares  subject to stock  options  held by the person or
         entity.


ITEM 12.          CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

(a)      Transactions With Management and Affiliates.

         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 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. Due to the minimal  services  performed by NuVen,  the
Company  received  a credit  of  $162,909  against  amounts  owed to  NuVen  and
accordingly,  the Company  recorded a net credit of $102,909 during fiscal 1996.
Also, the Company expensed$100,000 during fiscal year 1995, and had $144,864 due
to NuVen as of May 31, 1996.

(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\TG53196.10K]-5

                                                        12

<PAGE>

                                     PART IV

ITEM 13.          EXHIBITS 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\TG53196.10K]-5

                                                        13

<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, 1995]

         10(e)    Employment  Agreement with Fred G. Luke.  [incorporated herein
                  by reference  to Exhibit  10(e) to Form 10-KSB for fiscal year
                  ended May 31, 1995]

         10(f)    Consulting  Agreement  with  John  D.  Desbrow.  [incorporated
                  herein by reference to Exhibit 10(f) to Form 10-KSB for fiscal
                  year ended May 31, 1995]

         10(g)    Consulting Agreement with Steven Dong. [incorporated herein by
                  reference  to Exhibit  10(g) to Form  10-KSB  for fiscal  year
                  ended May 31, 1995]

         27       Financial Data Schedule [Exhibit included herein]

                                                        [TOEN\10K\TG53196.10K]-5

                                                        14

<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:    May 9, 1997                    By:  /s/  Fred G. Luke
                                                  -----------------------------
                                                  Fred G. Luke,
                                                  Chairman of the Board
                                                  and President

Date:    May 9, 1997                    By:  /s/  Jon L. Lawver
                                                  -----------------------------
                                                  Jon L. Lawver,
                                                  Secretary and Director

Date:    May 9, 1997                    By:  /s/  John D. Desbrow
                                                  -----------------------------
                                                  John D. Desbrow, Director

Date:    May 9, 1997                    By:  /s/  Steven H. Dong
                                                  -----------------------------
                                                  Steven H. Dong,
                                                  Chief Financial Officer

                                                        [TOEN\10K\TG53196.10K]-5

                                                        15

<PAGE>

                              THE TOEN GROUP, INC.

                          INDEX TO FINANCIAL STATEMENTS


Financial Statements, Fiscal Year 1996                                Page

         Independent Auditors Report ......................................F-2

         Balance Sheet as of May 31, 1996.................................F-3

         Statements of Operations for the years
          ended May 31, 1996 and 1995.....................................F-4

         Statements of Stockholders' Deficiency
          for the years Ended May 31, 1996 and 1995.......................F-5

         Statements of Cash Flows for the Years
          Ended May 31, 1996 and 1995 ....................................F-6

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

                                                        [TOEN\10K\TG53196.10K]-5

<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 1996


Board of Directors and Stockholders
THE TOEN GROUP, INC.
2 Park Plaza, Suite 470
Irvine, CA  92614

We have audited the accompanying balance sheet of The Toen Group, Inc. as of May
31, 1996 and the related  statements of income,  retained earnings and cash flow
for the years ended May 31, 1996 and 1995.  These  financial  statements are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards  require that we plan and perform the audit to obtain reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our 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,  1996 and the results of its  operations  and cash flows for the years ended
May  31,  1996  and  1995  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, 1996.  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.

/s/Spurgeon, Kang & Associates
Spurgeon, Kang & Associates
Bellflower, CA

January 28, 1997

                                                        [TOEN\10K\TG53196.10K]-5

<PAGE>

                              THE TOEN GROUP, INC.
                                  Balance Sheet
                               As of May 31, 1996

<TABLE>
<CAPTION>

Assets
<S>                                                                 <C>

  Cash                                                              $                51
                                                                    -------------------

         Total Current Assets                                                        51
                                                                    -------------------
           Total Assets                                             $                51
                                                                    ===================
Liabilities and Stockholders' Equity
Current Liabilities:
  Accounts payable                                                  $            32,452
  Due to affiliates                                                             281,936
                                                                    -------------------

         Total Current Liabilities                                              314,388
Commitments and Contingencies                                                         -
Stockholders' Deficiency:
  Common stock, $.01 par value, 50,000,000 shares
     authorized; 799,372 shares issued and outstanding                            7,994
  Additional paid-in capital                                                    432,948
  Accumulated deficit                                                          (730,434)
  Treasury stock (98,795 Shares, at Cost)                                       (24,845)
                                                                    --------------------
       Total Stockholders' Deficiency                                          (314,337)
       Total Liabilities and Stockholders'
          Deficiency                                                $                51
                                                                    ===================

</TABLE>

                                                        [TOEN\10K\TG53196.10K]-5

    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,


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

Revenues                                                  $                  -  $                 -
Cost of Revenues                                                             -                    -
                                                          --------------------- -------------------
  Gross Profit                                                               -                    -
                                                          --------------------- -------------------
General and Administrative Expenses:
 Employment and Consulting Services                                    (25,239)             169,079
  Legal and Accounting                                                  27,000                5,986
                                                          --------------------- -------------------
          Total                                                          1,761              175,065
                                                          --------------------- -------------------
Operating loss                                                          (1,761)         (175,065)
                                                          --------------------- -----------------

Net Loss  Before Operations                                             (1,761)            (175,065)
                                                          --------------------- --------------------
Net Loss                                                  $             (1,761) $          (175,065)
                                                          ===================== ====================
Net Loss Per Share:
  Net Loss per Share                                      $              (.002) $             (.540)
                                                          ===================== ====================
  Weighted Average Number of Shares
    Outstanding                                                        778,539               324,372
                                                          ===================== ====================

</TABLE>

                                                        [TOEN\10K\TG53196.10K]-5

    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, 1996 and 1995


                               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 1,1994             249,372  $  408,442  $    (24,845) $          -  $       (553,608) $         (170,011)
Stock issued for services           300,000       3,000                      27,000                                30,000
Effect of merger and
 resulting change from
 no par to $.01 par value                      (405,948)                    405,948
Net Loss                                                                                     (175,065)           (175,065)
                             --------------- ----------- ------------- ------------- ----------------- -------------------
Balances at May 31, 1995            549,372       5,494       (24,845)      432,948          (728,673)           (315,076)
Conversion of debt for
 stock                              250,000       2,500                                                             2,500
Net Loss                                                                                       (1,761)             (1,761)
                             --------------- ----------- ------------- ------------- ----------------- -------------------
Balances at May 31, 1996            799,372  $    7,994  $    (24,845) $    432,948  $       (730,434) $         (314,337)
                             =============== =========== ============= ============= ================= ===================

</TABLE>

                                                        [TOEN\10K\TG53196.10K]-5

    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,

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

Operating Activities:
  Net loss                                                          $             (1,761) $           (175,065)
Adjustments to Reconcile Net Loss to Net Cash Provided
(Used) by Operating Activities:

   Stock issued for services                                                           -                30,000
Changes in Assets and Liabilities:
Increase (Decrease) in Liabilities:
   Accounts payable                                                               26,356                 6,096
   Due to affiliates                                                             (24,705)              134,141
                                                                    --------------------- --------------------
Net cash provided (used) by operating activities                                    (110)               (4,828)
                                                                    --------------------- ---------------------
Increase (decrease) in cash and cash equivalents                                    (110)               (4,828)
Beginning Balance, Cash and Cash Equivalents                                         161                 4,989
                                                                    --------------------- --------------------
Ending Balance, Cash and Cash Equivalents                           $                 51  $                161
                                                                    ===================== ====================
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
                                                                    ===================== ====================
   Stock exchanged for trade debt                                   $              2,500  $              2,500
                                                                    ===================== ====================

</TABLE>

                                                        [TOEN\10K\TG53196.10K]-5

    The accompanying notes are an integral part of these financial statements

<PAGE>

                              THE TOEN GROUP, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                  May 31, 1996

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.

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.

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.

                                                        [TOEN\10K\TG53196.10K]-5

<PAGE>

                              THE TOEN GROUP, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                  May 31, 1996

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.

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  1995  financial  statements  have been
reclassified,  where  appropriate,  to  conform  with the  financial  statements
presentation used in fiscal 1996.

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  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.    Federal Income Taxes

The Company  accounts for income taxes using the liability  method.  The Company
has  net  operating  loss  carryforwards  as of May 31,  1996  of  approximately
$730,000,  which  expire at  various  times  from  1999  through  2009,  and are
available to reduce future Federal taxable income, if any.

As a result of a change in  ownership  that  occurred in fiscal  year 1993,  the
Company's use of net operating loss  carryforwards may be limited by section 382
of the Internal Revenue Code until such net operating loss carryforwards expire.
Deferred tax assets have been computed using the maximum  expiration terms of 13
to 5 years for federal and state tax purposes, respectively.

The deferred tax benefit  applicable to the net operating loss carryforwards has
been offset by a 100%  valuation  reserve  since it is more likely than not that
the Company  will not  recognize  any tax benefit  from the net  operating  loss
carryforwards.

                                                        [TOEN\10K\TG53196.10K]-5

<PAGE>

                              THE TOEN GROUP, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                  May 31, 1996

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 and expired December 31, 1996.

Note 5.    Commitments and Contingencies

The Company  maintains  its executive  offices at  facilities  provided by NuVen
under an Advisory and Management Agreement (Note 6).

Note 6.    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. Due to the minimal services performed by NuVen, the Company received a
credit of $162,909  against amounts owed to NuVen and  accordingly,  the Company
recorded a net credit of $102,909 during fiscal 1996. Also, the Company expensed
$100,000 during fiscal year 1995, and had $144,864 due as of May 31, 1996.

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,


                                                        [TOEN\10K\TG53196.10K]-5

<PAGE>

                              THE TOEN GROUP, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                  May 31, 1996

and provide  fringe  benefits.  No cash  payments  were made to Mr. Luke but the
Company expensed $54,000 during fiscal 1995 and 1996 and had $100,000 due to Mr.
Luke as of May 31, 1996.

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.
Effective  July 1, 1996,  the  Consulting  Agreement was renewed for fiscal year
1997 for an amount of $1,000 per month.  No cash  payments were made to Mr. Dong
by the Company  during fiscal 1996.  The Company  expensed  $5,000 and $0 during
fiscal 1996 and 1995, respectively, and had $5,000 due to Mr. Dong as of May 31,
1996.

Note 7.    Subsequent Events

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.  Effective  January  1,  1997,  the  Consulting
Agreement  was  renewed  for fiscal  year 1997 for  $1,000  per  month.  No cash
payments were made to Mr. Desbrow by the Company during fiscal 1996. The Company
expensed $12,000 and $8,000 during fiscal 1996 and 1995,  respectively,  and had
$20,000 due to Mr. Desbrow as of May 31, 1996.

In July 1996,  the Company  memorialized  a prior  verbal  consulting  agreement
effective June 1, 1995 with Mr. Lawver,  to hold the office of Secretary through
December  31,  1996.  Pursuant to the  agreement  the Company  agreed to pay Mr.
Lawver $1,000 per month. Effective January 1, 1997, the Consulting Agreement was
renewed for fiscal year 1997 for $1,000 per month. No cash payments were made to
Mr. Lawver by the Company during fiscal 1996. The Company  expensed  $12,000 and
$0 during fiscal 1996 and 1995, respectively,  and had $12,000 due to Mr. Lawver
as of May 31, 1996.

Effective October 8, 1996 the Company's  Articles of Incorporation  were amended
to  change  the name of the  Company  from  The  Toen  Group,  Inc.  to  Virtual
Enterprises, Inc.

                                                        [TOEN\10K\TG53196.10K]-5