U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                       
                                   FORM 10-QSB
                                       

(Mark One)

[x]  QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
     OF 1934
     
     For the quarterly period ended   September 30, 1996
                                      -------------------

[  ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
     
     For the transition period from                       to
                                     --------------------    ------------------
     
     Commission file number   0-19049
                             ---------
                                       
                                       
                                       
                      American Gaming & Entertainment, Ltd.
        -----------------------------------------------------------------
        (Exact name of small business issuer as specified in its charter)


               Delaware                                     74-2504501
               --------                                     ----------
        
        (State or other jurisdiction of        (IRS Employer Identification No.)
         incorporation or organization)                   

                                       
 Bayport One, Yacht Club Drive, Suite 300, West Atlantic City, New Jersey 08232
 ------------------------------------------------------------------------------
                    (Address of principal executive offices)
                                       
                                       
                                       
                                 (609) 272-9099
               --------------------------------------------------
                           (Issuer's telephone number)
                                       
                                       
                                       
                                 Not Applicable
        -----------------------------------------------------------------
         (Former name, former address and former fiscal year, if changed
                               since last report)
          
Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports),  and (2) has been
subject to such filing requirements for the past 90 days. Yes X No ___
          
Number of shares  outstanding of each of the issuer's  classes of common equity,
as of the latest practicable date.


              Class                     Outstanding at November 11, 1996
    ----------------------------        --------------------------------
    
    Common Stock, $.01 par value                12,532,102 shares


                    Exhibit Index is on page 29 of 43 pages




<PAGE>
                     AMERICAN GAMING & ENTERTAINMENT, LTD.
                          CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>

                                                                       September 30,  December 31,
                                                                           1996           1995
                                                                       (Unaudited)        
                                                                       -----------    ------------

<S>                                                                   <C>             <C>

ASSETS
Current Assets
    Cash                                                               $  $50,000     $  487,000
    Prepaid expenses                                                      592,000         97,000
    Investments in gaming projects - deposit                                   --      1,027,000 
    Inventories and other current assets                                  260,000         25,000
                                                                       ----------     ----------
Total current assets                                                      902,000      1,636,000

Casino barge and improvements, net of accumulated depreciation
 of $2,536,000 - 1996 and $2,384,000 - 1995                             1,263,000     14,128,000

Furniture, fixtures and equipment, net of accumulated depreciation
 of $64,000 - 1996 and $112,000 - 1995                                     25,000        152,000

Equipment under operating leases, net of accumulated depreciation
 of $1,470,000 - 1995                                                          --        851,000

Investments in gaming projects                                          1,856,000      2,152,000
Deferred financing fees                                                         0      2,275,000
Other non-current assets                                                  795,000         41,000
                                                                       -----------    ----------
                                                                        14,841,000    21,235,000
                                                                       ===========    ==========
</TABLE>

See Notes to Consolidated Financial Statements



<PAGE>

                      AMERICAN GAMING & ENTERTAINMENT, LTD.
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>

                                                                        September 30,   December 31,
                                                                            1996           1995
                                                                         (Unaudited)
                                                                        ------------    -----------
<S>                                                                     <C>            <C> 
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current Liabilities
    Amounts due to related parties:
          Accrued interest                                              $  9,684,000   $  6,036,000
          Dividends payable                                                1,203,000        778,000
          Accrual for unutilized lease costs                               3,506,000      4,463,000
          Current portion of long term debt                               39,746,000     39,072,000
                                                                        ------------   ------------
                                                                          54,139,000     50,349,000

    Accounts payable                                                         200,000        420,000
    Accrued payroll and related expenses                                       6,000         48,000
    Accrued expenses and other current liabilities                         1,383,000      1,933,000
    Current portion of mortgage note payable                                  27,000         24,000
                                                                        ------------   ------------
Total current liabilities                                                 55,755,000     52,774,000
Long term portion of estimated net liabilities for subsidiaries
 in bankruptcy                                                             2,500,000      2,250,000
Long term portion of mortgage note payable                                   104,000        126,000
                                                                        ------------   ------------
                                                                          58,359,000     55,150,000
                                                                        ------------   ------------

Commitments and Contingencies

Stockholders' Deficiency

Preferred stock, 1,000,000 shares authorized:
    Series A preferred stock, par value $.01 per share, 55,983
     shares issued                                                             1,000          1,000
    Series C  and D cumulative preferred stock, and Series E preferred
     stock, par value $.01 per share, 4,000 shares authorized and
     issued for each series                                               13,019,000     12,102,000
Common stock, par value $.01 per share; 50,000,000 shares
    authorized 12,532,102 shares issued and 12,508,067 outstanding           126,000        126,000
Additional paid-in capital                                                45,621,000     46,963,000
Cost of shares held in treasury                                              (25,000)       (25,000)
Deferred financing and commitment fees                                            --     (1,547,000)
Accumulated deficit                                                     (102,260,000)   (91,535,000)
                                                                        ------------   ------------
                                                                         (43,518,000)   (33,915,000)
                                                                        ------------   ------------
                                                                        $ 14,841,000   $ 21,235,000
                                                                        ============   ============

</TABLE>

See Notes to Consolidated Financial Statements


<PAGE>

                      AMERICAN GAMING & ENTERTAINMENT LTD.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)
<TABLE>
<CAPTION>


                                                Three months ended September 30,    Nine months ended September 30,
                                                --------------------------------    -------------------------------
                                                    1996           1995                  1996          1995
                                                ------------   ------------         ------------   ------------

<S>                                             <C>            <C>                  <C>            <C>         
Consulting services and other revenues          $      9,000   $  1,081,000         $  2,181,000   $  1,848,000
                                                ------------   ------------         ------------   ------------

Costs and expenses
    Direct operating and cost of sales                 --           212,000               65,000        365,000
    Selling, general and administrative            1,036,000        596,000            2,347,000      2,521,000
    Casino project development costs including
         accrual for unutilized lease costs          100,000        929,000              204,000      2,527,000
    Depreciation and amortization                    248,000        901,000              916,000      2,231,000
    Writedown of impaired assets                   2,485,000          --               2,504,000      2,530,000
    Equity in losses of subsidiaries
         in bankruptcy                                  --        1,001,000              250,000      5,408,000
                                                ------------   ------------         ------------   ------------
Total costs and expenses                           3,869,000      3,639,000            6,286,000     15,582,000
                                                ------------   ------------         ------------   ------------

Operating loss                                    (3,860,000)    (2,558,000)          (4,105,000)   (13,734,000)
                                                ------------   ------------         ------------   ------------

Other income (expense)
    Interest income                                   21,000         11,000               49,000         56,000
    Interest expense                              (4,781,000)    (1,332,000)          (7,609,000)    (3,911,000)
    Net gain on sale of investments                   (8,000)       301,000              940,000        301,000
                                                ------------   ------------         ------------   ------------
Total other income (expense)                      (4,768,000)    (1,020,000)          (6,620,000)    (3,554,000)
                                                ------------   ------------         ------------   ------------

Net loss                                          (8,628,000)    (3,578,000)         (10,725,000)   (17,288,000)

Dividends and accretion on preferred stock           467,000        325,000            1,342,000      1,083,000
                                                ------------   ------------         ------------   ------------

Net loss for common stockholders                $ (9,095,000)  $ (3,903,000)        $(12,067,000)  $(18,371,000)
                                                ============   ============         ============   ============

Net loss per common share                       $      (0.73)  $      (0.32)        $      (0.96)  $      (1.49)
                                                ============   ============         ============   ============
Weighted average number of common
    shares outstanding                            12,532,102     12,296,003           12,532,102    12,355,155
                                                ============   ============         ============   ============

</TABLE>

    See Notes to Consolidated Financial Statements



<PAGE>


                      AMERICAN GAMING & ENTERTAINMENT, LTD.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                          Nine months ended September 30,
                                                                        ---------------------------------
                                                                              1996               1995
                                                                        ------------------   -------------

<S>                                                                     <C>                  <C>          
Operating Activities
Net loss                                                                $ (10,725,000)       $(17,288,000)

Adjustments to reconcile net loss to net cash used in
 operating activities:
     Gain on disposition of fixed assets                                                         (262,000)
     Depreciation and amortization                                            916,000           3,718,000
     Amortization of deferred financing costs                               3,822,000             477,000
     Net gain on sale of keno operations                                     (948,000)                 --
     Stock option compensation expense                                             --             208,000
     Consulting expense / Common Stock                                             --              44,000
     Reorganization expense                                                        --             530,000
     Writedown of impaired assets                                           2,504,000           2,530,000
Changes in operating assets and liabilities, net of effect
 from business combination:
     Prepaids, inventories and other current assets                          (502,000)           (479,000)
     Other non-current assets                                                 153,000             149,000
     Accounts payable, accrued expenses and other current
        liabilities                                                         3,218,000           6,216,000
                                                                        -------------        ------------ 
          Net cash used in operating activities                            (1,562,000)         (4,157,000)
                                                                        -------------        ------------ 
Investing activities
Proceeds from sale of keno operations                                         500,000           3,188,000
Capital expenditures                                                               --            (328,000)
Investments in gaming activities                                              973,000          (1,450,000)
Amounts received under financing agreement                                     87,000             191,000
                                                                        -------------        ------------ 
          Net cash provided by (used in) investing activities               1,560,000           1,601,000
                                                                        -------------        ------------ 
Financing Activities
Proceeds from notes payable and other long-term obligations                   986,000           3,077,000
Proceeds from issuance of common stock                                             --              28,000
Interest payments on accrued interest                                        (132,000)                 --
Principal payments on capitalized leases                                           --          (1,230,000)
Principal payments on notes payable                                        (1,289,000)                 --
                                                                        -------------        ------------ 
          Net cash (used in) provided by financing activities                (435,000)          1,875,000
                                                                        -------------        ------------ 

Decrease in cash                                                             (437,000)           (681,000)
Cash at beginning of quarter                                            $     487,000      $    1,605,000
                                                                        -------------        ------------ 
Cash at end of quarter                                                  $      50,000      $      924,000
                                                                        =============      ==============

</TABLE>

See Notes to Consolidated Financial Statements




<PAGE>



AMERICAN GAMING & ENTERTAINMENT, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1:  BASIS OF PRESENTATION

The accompanying  unaudited  consolidated interim financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Article 10 of
Regulation  S-X.  The  consolidated  interim  financial  statements  include the
accounts of American  Gaming &  Entertainment,  Ltd. and its  subsidiaries  (the
"Company").  The  unaudited  consolidated  interim  financial  statements do not
include all of the  information  and  footnotes  required by generally  accepted
accounting principles for complete financial  statements.  In the opinion of the
Company,  all adjustments  (including normal recurring accruals) and disclosures
(including  events  occurring  subsequent  to  September  30,  1996)  considered
necessary for a fair presentation have been included.  Operating results for the
three and nine month periods  ended  September 30, 1996 may not be indicative of
the results  that may be expected for the year ending  December  31,  1996.  For
further  information,  reference  is  also  made to the  consolidated  financial
statements  contained in the Company's Annual Report on Form 10-KSB for the year
ended December 31, 1995.

The accompanying  unaudited  consolidated interim financial statements have been
prepared on a going concern basis, which contemplates  continuity of operations,
realization of assets and  liquidation of liabilities in the ordinary  course of
business.  As further  described in Note 2, the Company has sustained  recurring
operating  losses  since its  inception.  The  Company has also had a history of
insufficient  liquidity  and has been  dependent  upon its largest  stockholder,
Shamrock  Holdings  Group,  Inc.,  formerly  known  as  Bennett  Holdings,  Inc.
("Shamrock Holdings"),  and certain related entities (The Bennett Funding Group,
Inc. ("Bennett Funding") and Bennett Management and Development Corp.  ("Bennett
Management"))  for both  working  capital and project  related  financing.  As a
result, the Company's recurring losses, negative working capital,  stockholders'
deficiency,  defaults under its debt agreements,  uncertainties  relating to the
ability to consummate the liquidation of certain of its subsidiaries  (see Notes
2 and 3) and  uncertainties  relating to the bankruptcy of, and charges relating
to, Bennett Funding and Bennett  Management (see Note 2) raise substantial doubt
about the ability of the Company to  continue as a going  concern.  Management's
plans  concerning  these  matters  are  discussed  in Note 2.  The  accompanying
unaudited   consolidated   interim  financial  statements  do  not  include  any
additional   adjustments   that  might   result   from  the   outcome  of  these
uncertainties.

As a  result  of  the  bankruptcy  proceedings  under  Chapter  11 of  the  U.S.
Bankruptcy  Code (the "Code") with respect to two of the Company's  wholly owned
subsidiaries,   AMGAM  Associates,  a  Mississippi  partnership  ("AMGAM"),  and
American  Gaming and Resorts of  Mississippi,  Inc., a  Mississippi  corporation
("AGRM"), and the expected liquidation of these subsidiaries in the near future,
the Company's control of these entities is likely to be temporary. In accordance
with generally accepted accounting  principles,  the Company elected,  effective
beginning the year ended December 31, 1995, to deconsolidate  AMGAM and AGRM and
present  the  results of  operations  for AMGAM and AGRM on the equity  basis of
accounting as a single line item in the Consolidated Statement of Operations for
financial reporting purposes.

<PAGE>


Certain reclassifications have been made to the 1995 amounts in order to conform
to the classifications used in 1996.

NOTE 2:  LIQUIDITY AND CONTINUATION OF BUSINESS

The  Company has  sustained  recurring  operating  losses  since its  inception,
including significant losses related to the Gold Shore Casino, as more fully set
forth below.  The Company also has had a history of  insufficient  liquidity and
has  been  dependent  upon  Shamrock  Holdings,   Bennett  Funding  and  Bennett
Management for both working capital and project related financing. However, as a
result of the bankruptcy  filings of Bennett  Funding and Bennett  Management on
March 29, 1996 and the filing by the U.S.  Securities  and  Exchange  Commission
(the  "Commission")  of securities  fraud charges  against  Bennett  Funding and
Bennett Management on March 28, 1996, the Company does not anticipate  receiving
any additional  funds from the Bennett  entities.  As of September 30, 1996, the
Company owes approximately  $52,936,000 to Shamrock Holdings (see Note 4), which
amount  includes  approximately  $2,524,000  under a  66-month  operating  lease
between the Company and Bennett Management (the "SCS Lease") with respect to the
"Sioux City Sue" riverboat vessel and its supporting barge (the "Vessels") which
lease,  as discussed  below,  Shamrock  Holdings has orally  represented  to the
Company that Bennett  Management,  prior to its bankruptcy  filing,  assigned to
Shamrock Holdings.

In the AMGAM bankruptcy  proceeding  pending before the United States Bankruptcy
Court,  Southern District of Mississippi (the "Bankruptcy Court"), the committee
for  unsecured  creditors  in the  bankruptcy  proceeding  of AMGAM (the  "AMGAM
Committee") has filed an adversary  complaint (the "Complaint")  challenging the
1995  transfers of the  ownership  interests in the Gold Coast Casino barge (the
"Gold Coast  Barge") by AGRM and AMGAM to the  Company and the 1995  transfer of
the  leasehold  interest  in the Gold  Coast  Barge by AMGAM to the  Company  as
fraudulent transfers or voidable preferences under the Code, and seeking,  among
other  things,  that all rental  payments  from  President  Mississippi  Charter
Corporation  ("PMCC") under an agreement (the "Charter  Agreement")  between the
Company and PMCC  whereby  PMCC is leasing from the Company the Gold Coast Barge
which the Company owns and on which the Company had previously operated the Gold
Shore  Casino,  be  deposited  into an escrow  account  for the  benefit  of the
creditors of AMGAM and AGRM (see Note 5).

On April 29, 1996, a  preliminary  injunction  (the  "Preliminary  Injunction"),
which was agreed upon by the AMGAM  Committee  and the  committee  for unsecured
creditors in the  bankruptcy  proceeding  of AGRM  (collectively  with the AMGAM
Committee,  the  "Committees")  and the Company,  was entered by the  Bankruptcy
Court  (i)  to  require  the  May  1996  through   July  1996  rental   payments
(approximately  $329,000 per month) from PMCC under the Charter  Agreement  (the
"PMCC  Payments") be deposited  into an escrow account (the  "AMGAM/AGRM  Escrow
Account")   for  the  benefit  of  the  creditors  of  AMGAM  and  AGRM  pending
confirmation of a proposed joint plan of liquidation and (ii) to allow a monthly
payment  from such escrow  account to the Company in the amount of $304,000  for
its monthly operating expenses.

<PAGE>


The  Preliminary  Injunction  was revised and extended by the  Bankruptcy  Court
effective  August 1, 1996 (i) to require the PMCC  Payments  from August 1996 to
the  end of the  Injunction  Term  (as  defined  in the  last  sentence  of this
paragraph)  be  deposited  into  such  escrow  account  for the  benefit  of the
creditors of AMGAM and AGRM  pending  confirmation  of a proposed  joint plan of
liquidation  and (ii) to allow a monthly payment from such escrow account to the
Company  in the  amount of  approximately  $282,000  for its  monthly  operating
expenses (subject, however, to the Term Sheet and the PMCC Agreement, both terms
as defined  below).  Such  payments are the Company's  only present  significant
source of net cash flow and liquidity. The Preliminary Injunction will remain in
effect until the agreement by the Company and the  Committees on a joint plan of
liquidation  of the  AMGAM  and  AGRM  estates  or  upon  further  order  of the
Bankruptcy Court (the "Injunction Term").

The Company, Shamrock Holdings, AMGAM, AGRM and the Committees have negotiated a
term sheet (the "Term  Sheet")  for a proposed  joint plan of  liquidation  (the
"Plan"),  more fully  described  below,  pursuant to which the PMCC Payments and
payments  with  respect to certain  slot  machines  acquired  by PMCC from AMGAM
formerly  used in the  operation of the Gold Shore Casino (the "FF&E  Payments")
would be  deemed  assets  of the  bankruptcy  estates  of AMGAM and AGRM and the
Company  would  receive a portion of such  aggregate  payments,  if any. As more
fully  described  below,  upon  confirmation  of the Plan, the Complaint and all
other  litigation  brought  by the  Committees  against  the  Company  would  be
dismissed.  There can be no assurance  that the Plan will be implemented or that
the Company will receive any payments  from the AMGAM or AGRM  bankruptcy  cases
pursuant to the Plan or otherwise.  Pursuant to the Term Sheet,  notwithstanding
the Preliminary  Injunction,  the Company will be allowed a monthly payment from
the escrow  account  for the benefit of the  creditors  of AMGAM and AGRM in the
amount of approximately  $261,000 for the Company's monthly  operating  expenses
beginning with the December 1996 PMCC Payment.

On October 14, 1996, the Company advised PMCC that PMCC was in default under the
Charter Agreement for failure to make the October 1996 PMCC Payment when due. On
October  28,  1996,  PMCC  alleged  that the Company  had  breached  the Charter
Agreement by failing to ensure  PMCC's  peaceful  use and  enjoyment of the Gold
Coast  Barge.  On November  4, 1996,  the  Company,  and PMCC  agreed,  with the
concurrence of the Committees and Shamrock Holdings,  (the "PMCC Agreement") (i)
to allow PMCC to pay one-half of the amounts of the PMCC  Payments  from October
1996  through   December  1996  (of  which  amounts  the  Company  has  received
approximately  $141,000  relating to each of the October 1996 and November  1996
PMCC Payments and is entitled to receive approximately  $130,000 relating to the
December 1996 PMCC Payment), during which time the Company and PMCC will attempt
to  negotiate  a  purchase  of the  Gold  Coast  Barge by  PMCC,  (ii)  that the
acceptance  of such  payments  will not  constitute  satisfaction  of such  PMCC
Payments or be considered a waiver by the Company of any of its rights under the
Charter  Agreement,  and (iii) to withdraw and toll until  December 15, 1996 all
declarations of default.

<PAGE>


If (i) the  Company,  AMGAM,  AGRM and the  Committees  can not agree on a joint
consensual plan of liquidation for AMGAM and AGRM incorporating the terms of the
Term Sheet or any other acceptable terms or any such plan is agreed upon but not
approved  by the  creditors  in the AMGAM  and AGRM  bankruptcy  proceedings  in
accordance  with the  provisions  of the  Code or  thereafter  confirmed  by the
Bankruptcy  Court  and  (ii) a  motion  filed by the  AMGAM  Committee  with the
Bankruptcy  Court seeking the  substantive  consolidation  of the AMGAM and AGRM
bankruptcy proceedings, resulting in a combination of the assets and liabilities
of AMGAM and AGRM into one bankruptcy estate, is granted by the Bankruptcy Court
and the AMGAM Committee prevails on the Complaint, the Company would not be able
to meet its obligations as they come due.  Additionally,  if the Company and the
Committees can not agree on a joint consensual plan of liquidation for AMGAM and
AGRM  incorporating  the terms of the Term Sheet or any other acceptable  terms,
and, as a result,  the Court (i) terminates the Preliminary  Injunction and (ii)
disallows  any payments to the Company for its monthly  operating  expenses from
the PMCC Payments, the Company would not be able to meet its obligations as they
come due.  In either such case,  the Company  would then need to pursue a formal
plan of  reorganization  or liquidation which would generally result in the sale
of the Company's assets to be applied to outstanding  obligations.  There can be
no  assurance  that if either  action is  required  to be pursued  that all such
obligations  would be  completely  satisfied.  Further,  in the  event of either
action,  it is unlikely  that  stockholders  of the Company  will recover any of
their investment in the Company.  Even if the Plan is confirmed in the AMGAM and
AGRM  bankruptcies,  and the Company  receives its portion of the PMCC Payments,
such  payments  would not be  sufficient  to  satisfy  the  Company's  currently
anticipated operating needs and its obligations to Shamrock Holdings and Bennett
Management.

As discussed  below,  the Company is seeking the  modification or termination of
certain agreements  (excluding  Shamrock Holdings'  assumption of the obligation
related to a first  preferred  ship mortgage  (the "Ship  Mortgage") on the Gold
Coast Barge of approximately $2,278,000,  which assumption has been consummated)
executed between the Company,  Shamrock Holdings and Bennett  Management whereby
the  Company  agreed to assign  all its  rights  and  interests  in the  Charter
Agreement,  including the rights to all PMCC Payments,  and the Gold Coast Barge
to Shamrock Holdings and Bennett Management,  respectively,  for cancellation of
approximately $22,722,000 in debt due Shamrock Holdings with respect to the Gold
Shore Casino (the "Barge  Debt") and Shamrock  Holdings'  assumption of the Ship
Mortgage (collectively,  the "Bennett Debt Exchange") and a restructuring of all
other  obligations  due from the  Company to Shamrock  Holdings  because (i) the
Company would not be able to meet all of its obligations as they come due if all
or a  significant  portion  of the PMCC  Payments  were  required  to be paid to
Shamrock  Holdings and (ii) the Company is otherwise  unable to service the debt
or  repay  the  principal  due  to  Shamrock   Holdings  under  all  other  such
obligations.

<PAGE>


Shamrock Holdings has orally represented to the Company that Bennett Management,
prior to its  bankruptcy  filing,  assigned to Shamrock  Holdings all of Bennett
Management's rights and obligations under all agreements  previously executed by
and between the Company and Bennett Management  including,  without  limitation,
(i) agreements constituting the Bennett Debt Exchange, (ii) a security agreement
whereby the Company granted to Bennett  Management a security interest in all of
the  Company's  accounts  receivable  and all bank  accounts in the State of New
Jersey to secure all obligations owing by the Company to Bennett  Management and
its  affiliates  and to obtain the agreement of Shamrock  Holdings to enter into
the Bennett Debt Exchange (the  "Security  Agreement")  and (iii) the SCS Lease.
However,  the  Company  has not been  provided  with  written  evidence  of such
assignment  and, as the result of the bankruptcy  filing of Bennett  Management,
any such  assignment  might be challenged  as a fraudulent  transfer or voidable
preference  under the Code.  There can be no assurance that such  assignment was
entered into between  Shamrock  Holdings and Bennett  Management  or, if entered
into, that it will not be voided as a fraudulent transfer or voidable preference
in the bankruptcy  proceeding of Bennett Management or otherwise voided on other
grounds if any such  assignment  became  effective  within one year prior to the
bankruptcy filing of Bennett Management.

If Shamrock  Holdings,  and, to the extent an assignment to Shamrock Holdings of
Bennett  Management's  interest in the agreements  constituting the Bennett Debt
Exchange  never  took  place or is voided  as a  fraudulent  transfer,  voidable
preference  or otherwise in the  bankruptcy  proceeding  of Bennett  Management,
Bennett  Management,  agree to a termination  of the Bennett Debt Exchange as of
the  respective  dates of the  agreements  comprising  the Bennett Debt Exchange
(excluding  Shamrock  Holdings'  assumption  of the Ship  Mortgage) and agree to
continue to let the Company  utilize the PMCC Payments  (subject in all cases to
the  Preliminary  Injunction) (i) the Company would recognize as revenue amounts
previously recorded as indebtedness to Shamrock Holdings arising out of the PMCC
Payments received by the Company (the  "PMCC/Bennett  Debt") from July 21, 1995,
the  scheduled  effective  date of the Bennett Debt  Exchange  (the "BDE Date"),
through  December  31,  1995 as of the  date of such  termination  and  (ii) the
Company would reverse interest  expense  recognized on such  PMCC/Bennett  Debt.
Based upon (a) a verbal  understanding  which the  Company  believed it had with
Shamrock  Holdings to allow the Company to utilize and retain the PMCC  Payments
while  the  Company  and  Shamrock  Holdings  were  negotiating  the  terms of a
comprehensive  restructuring  and (b) the course of conduct of Shamrock Holdings
from  January 1, 1996  through  June 1996,  the Company  utilized,  retained and
recorded as revenues  the PMCC  Payments  from  January 1, 1996 through June 30,
1996.  If  the  Company's  understanding  is  determined  to be  incorrect  or a
restructuring  of  the  Company's  obligations  to  Shamrock  Holdings  and,  if
necessary,  Bennett Management is not consummated, the Company would (1) reverse
as revenue the PMCC  Payments  from January 1, 1996  through June 30, 1996,  (2)
record such payments as  additional  PMCC/Bennett  Debt and (3) record  interest
expense on such PMCC/Bennett Debt.

In June 1996,  the  Trustee  (the  "Trustee")  for  Bennett  Funding and Bennett
Management  under  Chapter  11 of the Code (see Note 7),  to whom,  pursuant  to
information from the Trustee,  Mr. Michael  Bennett,  the sole owner of Shamrock
Holdings,  has transferred of all of the outstanding stock of Shamrock Holdings,
orally  notified  the  Company  that  Shamrock  Holdings is entitled to all PMCC
Payments to be received  by the Company as a result of Shamrock  Holdings  being
the holder of the Ship Mortgage and a second preferred ship mortgage on the Gold
Coast Barge in the amount of $33,000,000 (the "Second Mortgage"),  which secures

<PAGE>


the Barge Debt. However,  the Company has continued to utilize the PMCC Payments
for its operating  needs after June 30, 1996 in accordance with the terms of the
Preliminary Injunction because the Company's management determined that, because
of the Company's liquidity problems,  transferring the PMCC Payments received by
the Company under the Preliminary  Injunction to Shamrock Holdings would prevent
the Company from meeting its  obligations to its creditors and would require the
Company to file for protection  under the Code. The Company has not  transferred
to Shamrock  Holdings the Gold Coast Barge,  the Charter  Agreement  and related
PMCC  Payments  received by the Company for  revenues  earned  under the Charter
Agreement since July 1, 1996 (totaling  approximately $987,000 from July 1, 1996
through   September  30,  1996,   and  which  payments  are  being  recorded  as
PMCC/Bennett Debt in the accompanying Unaudited Consolidated Balance Sheet as of
September  30,  1996).  Additionally,  Shamrock  Holdings  or, to the  extent an
assignment  to  Shamrock  Holdings  of  Bennett  Management's  interest  in  the
agreements constituting the Bennett Debt Exchange never took place or are voided
as a fraudulent transfer or voidable preference in the bankruptcy  proceeding of
Bennett  Management,  Bennett  Management has not yet canceled the Barge Debt as
required by the Bennett Debt Exchange. In addition, the Company has (a) recorded
interest expense on the  PMCC/Bennett  Debt recorded by the Company from July 1,
1996 through September 30, 1996 (totaling approximately $23,000) and (b) for the
reasons  set forth  below,  continued  to  record  for the  three  months  ended
September 30, 1996 (i) interest  expense on the Barge Debt that was to have been
canceled by Shamrock Holdings, or, if necessary,  Bennett Management pursuant to
the Bennett Debt Exchange and (ii) depreciation and amortization  expense on the
Gold  Coast  Barge  that  were to have been  transferred  to  Shamrock  Holdings
pursuant to the Bennett Debt Exchange (totaling  approximately  $240,000 for the
three months  ended  September  30, 1996)  (although,  as discussed  below,  the
Company did not recognize any rental revenue  associated  with such expenses for
the three months ended  September  30, 1996).  If Shamrock  Holdings and, to the
extent an assignment to Shamrock  Holdings of Bennett  Management's  interest in
the  agreements  constituting  the Bennett Debt Exchange never took place or are
voided  as a  fraudulent  transfer  or  voidable  preference  in the  bankruptcy
proceeding of Bennett  Management,  Bennett Management agree to a termination of
the  Bennett  Debt  Exchange  as of  the  respective  dates  of  the  agreements
comprising  the Bennett  Debt  Exchange and agree to continue to let the Company
utilize the PMCC Payments,  (i) the Company would  recognize as revenue  amounts
previously recorded as PMCC/Bennett Debt from July 1, 1996 through September 30,
1996 as of the  date of such  termination  and (ii) the  Company  would  reverse
interest expense recognized on such PMCC/Bennett Debt.

The Gold Coast Barge and  related  leasehold  improvements  (with a value on the
Company's   books  totaling   approximately   $11,263,000   net  of  accumulated
depreciation and amortization,  as of September 30, 1996) that were to have been
transferred to Bennett Management  pursuant to the Bennett Debt Exchange and the
Barge Debt that was to have been canceled by Shamrock Holdings or, if necessary,
Bennett Management pursuant to the Bennett Debt Exchange (totaling approximately
$25,000,000 as of September 30, 1996, and interest on such debt of approximately
$4,117,000 from the BDE Date through September 30, 1996) are shown as assets and
liabilities, respectively, of the Company as of September 30, 1996. Such amounts
are  shown  on the  accompanying  Unaudited  Consolidated  Balance  Sheet  as of
September 30, 1996 because documents have not been executed to formally transfer
the Gold Coast Barge from the Company to Bennett  Management and to forgive such
indebtedness by Shamrock  Holdings or, if necessary,  Bennett  Management all in
accordance with the terms of the Bennett Debt Exchange. The related revenues for
the three months ended  September  30, 1996 however were not  recognized as such
and instead were recorded as PMCC/Bennett  Debt because (i) the Trustee notified

<PAGE>


the Company  that  Shamrock  Holdings  is  entitled  to all PMCC  Payments to be
received by the Company and (ii) as of September 30, 1996 Shamrock  Holdings had
not executed  documents agreeing to a termination or postponement of the Bennett
Debt  Exchange and  therefore  the Company may not have had a right to keep such
revenues.

There can be no  assurance  that  Shamrock  Holdings or, if  necessary,  Bennett
Management  will agree to modify or  terminate  the  Bennett  Debt  Exchange  or
restructure all other obligations due from the Company to Shamrock Holdings and,
if  applicable,   Bennett  Management.  Failure  to  obtain  such  modification,
termination or restructuring would have a material adverse effect on the Company
and the  Company  would  need to  pursue  a  formal  plan of  reorganization  or
liquidation.  Any action to be taken by Bennett  Management in  connection  with
modifying or terminating  the Bennett Debt Exchange  would probably  require the
approval of the bankruptcy court before which the Bennett Management  bankruptcy
proceeding is being heard.

In  addition  to the  foregoing,  the  Company is  delinquent  in the payment of
interest  due  on  its  various   obligations  to  Shamrock   Holdings  totaling
approximately  $9,684,000  as of September  30, 1996 and is therefore in default
with respect to such payments under the Company's  various loan  agreements with
Shamrock  Holdings.  If Shamrock  Holdings  takes any action with respect to its
rights and remedies in connection  with such defaults,  it would have a material
adverse effect on the Company's business and financial condition and the Company
would need to pursue a formal plan of reorganization or liquidation. The Company
is also delinquent in the payment of rent totaling  approximately  $2,524,000 as
of  September  30,  1996  under the SCS  Lease.  Shamrock  Holdings  or  Bennett
Management,  to the  extent  an  assignment  to  Shamrock  Holdings  of  Bennett
Management's interest in the Security Agreement never took place or is voided as
a fraudulent  transfer,  voidable  preference  or  otherwise  in the  bankruptcy
proceeding of Bennett  Management,  has a security interest in certain assets of
the Company  including (i) the Gold Coast Barge  pursuant to the Ship  Mortgage,
the Second Mortgage and other agreements and (ii) all of the Company's  accounts
receivable  and bank  accounts  located in the State of New Jersey and therefore
because of such  defaults  could  foreclose on such assets in the amount of such
defaults.  There can be no assurance  that Shamrock  Holdings and, if necessary,
Bennett  Management  will agree on and execute an  agreement  restructuring  the
Company's   obligations  to  Shamrock  Holdings  and,  if  applicable,   Bennett
Management.  Additionally, any action required to be taken by Bennett Management
would  probably  require the approval of the  bankruptcy  court before which the
Bennett Management  bankruptcy proceeding is being heard. Since the announcement
of  securities  fraud  charges  against,  and  the  commencement  of  bankruptcy
proceedings by, certain Bennett entities,  including Bennett Funding and Bennett
Management, and the agreement by Mr. Michael Bennett, the sole owner of Shamrock
Holdings,  to transfer all of the outstanding  stock of Shamrock Holdings to the
Trustee,  the Company  has had  preliminary  negotiations  with the Trustee on a

<PAGE>


restructuring  of  the  Company's  obligations  to  Shamrock  Holdings  and,  if
applicable,  Bennett  Management.  Even if the  Plan is  confirmed,  and  such a
restructuring  is consummated,  there can be no assurance that the Company would
receive  payments  pursuant  to the Plan  sufficient  to satisfy  the  Company's
currently  anticipated  operating needs and its obligations to Shamrock Holdings
and, if applicable, Bennett Management, as restructured.

The Company has not experienced any success in raising debt or equity  financing
from  sources  independent  of  Shamrock  Holdings,  Bennett  Funding or Bennett
Management  and has no  present  commitments  or  other  alternatives  for  such
financing. Given the Company's historical operating losses and present liquidity
position and the legal  problems  described  above  relating to certain  Bennett
entities it is unlikely that the Company will achieve any success in its attempt
to raise  additional  equity,  working  capital  or  long-term  project  related
financing.

Given the Company's present financial and liquidity position, the legal problems
described  above relating to certain  Bennett  entities and the Company's  other
litigation described below (see Note 5), the business of the Company is unlikely
to continue to be the ownership of equity  interests in casino gaming  ventures.
Additionally,  the Company's  ability to continue in business is dependent  upon
its  ability  (i) to  obtain  Shamrock  Holdings'  and,  if  necessary,  Bennett
Management's agreement to modify on terms acceptable to the Company or terminate
the Bennett Debt Exchange (excluding  Shamrock Holdings'  assumption of the Ship
Mortgage) and restructure all other obligations due from the Company to Shamrock
Holdings  and,  if  applicable,  Bennett  Management,  (ii)  to  consummate  the
liquidations  under  Chapter  11 of the  Code of  AMGAM  and  AGRM  under  plans
acceptable to the Company,  resulting in a liquidation  of the various trade and
debt  obligations of those  entities,  and (iii) to  satisfactorily  resolve the
litigation  filed  against the Company  (see Note 5).  However,  there can be no
assurance the Company will be successful in obtaining Shamrock Holdings' and, if
necessary,  Bennett Management's  agreement to modify on terms acceptable to the
Company or terminate the Bennett Debt  Exchange  (excluding  Shamrock  Holdings'
assumption of the Ship Mortgage) and restructure all other  obligations due from
the Company to Shamrock Holdings and possibly Bennett  Management,  consummating
the  liquidations  of AMGAM and AGRM under  Chapter  11 of the Code under  plans
acceptable  to the Company or  satisfactorily  resolving  the  litigation  filed
against  the  Company.  If the Company is  unsuccessful  in these  efforts,  the
Company would then need to pursue a formal plan of reorganization or liquidation
of the  Company.  Either such action would  generally  result in the sale of the
Company's assets to satisfy outstanding  obligations.  There can be no assurance
that if either action is required to be pursued that all such obligations  would
be completely satisfied.  Further, in the event of either action, it is unlikely
that the stockholders of the Company will recover any of their investment in the
Company.



<PAGE>


NOTE 3:  SIGNIFICANT DEVELOPMENTS WITH RESPECT TO INVESTMENTS IN GAMING PROJECTS

Mississippi
-----------

The Company, Shamrock Holdings, AMGAM, AGRM and the Committees have executed the
Term Sheet,  which terms are to be incorporated  into the Plan.  Pursuant to the
Plan as currently agreed upon by such parties, (i) the Company would transfer to
a  creditors  trust  for  the  holders  of  allowed  claims  in  the  bankruptcy
proceedings of AMGAM and AGRM  (excluding the Company and Shamrock  Holdings) an
undivided  22.7%  ownership  interest  in the Gold Coast  Barge and the  Charter
Agreement,  which assets will be held by a trustee (the "Mississippi  Trustee"),
(ii) the  Mississippi  Trustee would receive and disburse in accordance with the
terms  of the  Plan  all  PMCC  Payments  and  all  FF&E  Payments,  (iii)  each
administrative  and  priority  claim,  as  defined  in  the  Code,  incurred  in
connection  with the  bankruptcy  proceedings of AMGAM and AGRM would be paid in
full from the respective  estates of AMGAM and AGRM in accordance with statutory
priorities  pursuant to the Code,  (iv) each secured claim  (excluding  the Ship
Mortgage)  would be paid in full from the sale of the  related  collateral,  (v)
each unsecured claim, excluding any claims of the Company and Shamrock Holdings,
would be paid on a pro rata basis (a) from the assets of the respective  estates
of AMGAM and AGRM, including all FF&E Payments made from October 1, 1995 through
October  1, 1997 and the  funds  remaining  in the  escrow  account  established
pursuant  to the  Preliminary  Injunction,  (b) from a  monthly  payment  in the
aggregate amount of $67,500 out of the PMCC Payments (which total  approximately
$329,000  per  month)  from the date the Plan is  confirmed  (the  "Confirmation
Date")  through the end of the initial  term of the  Charter  Agreement  and the
renewal  term,  if any,  and (c) from 22.7% of the net proceeds of a sale of the
Gold Coast Barge, if any, (vi) the  Mississippi  Trustee would escrow $2,500 per
month, up to an aggregate amount of $60,000, for use in paying any and all costs
of  protecting  the Gold  Coast  Barge in the event of default by PMCC under the
Charter  Agreement,  and (vii) the  Company's and Shamrock  Holdings'  unsecured
claims (in the collective  claimed amount of $33,000,000)  and the Ship Mortgage
would be paid  from  the  balance  of (a) the  monthly  payments  (approximately
$259,000) made by PMCC pursuant to the Charter  Agreement from the  Confirmation
Date and (b) the net proceeds of a sale of the Gold Coast Barge, if any.

The  amounts to be paid to  creditors  would be  subject to the claim  allowance
process in the AMGAM and AGRM bankruptcies,  pursuant to which all allowed claim
amounts,  in the  order  set  forth  above,  would  be  fixed  for  purposes  of
distributions  under the Plan.  Prior to the final  approval  of any  settlement
agreement incorporating the terms of the Plan, the Company and Shamrock Holdings
shall  advise  AMGAM,  AGRM and the  Committees  of the  allocation  between the
Company and Shamrock Holdings of the distributions to be made pursuant to clause
(vii) in the immediately  preceding paragraph.  The Bankruptcy Court set May 17,
1996 as the final date for filing  proofs of claim or interest in both the AMGAM
and AGRM bankruptcy cases, except with respect to Bennett Management and related
entities,  for which the Bankruptcy  Court has extended such date until November
18, 1996. Additionally, pursuant to the Plan, the Committees would agree to stay
all litigation,  including the Complaint,  until the Confirmation Date, at which
time the Committees would dismiss the Complaint and all other litigation brought
against the Company with prejudice,  that is, the Committees  would be precluded
from filing any action against the Company based on the alleged causes of action
set forth in the Complaint or any such other litigation.

<PAGE>


There can be no assurance that the Company,  AMGAM, AGRM and the Committees will
agree  on a joint  plan of  liquidation  for  AMGAM  and  AGRM  with  terms  and
conditions  substantially  equivalent to the Plan, that the Company will receive
any  distributions  under the  Plan,  that the  creditors  in the AMGAM and AGRM
bankruptcy  proceedings  will  approve  any  such  plan in  accordance  with the
provisions of the Code or that any such plan will thereafter be confirmed by the
Bankruptcy Court.

As  previously  described,  the Company and PMCC have  entered into an agreement
allowing  PMCC to pay one-half of the amounts of the PMCC  Payments from October
1996 through December 1996,  during which time the Company and PMCC will attempt
to negotiate a purchase of the Gold Coast Barge by PMCC (See Note 2).

In the third quarter of 1996, the Company  recognized a write down of $2,146,000
in the value of its investment in the Gold Coast Barge and the related leasehold
improvements  to reflect its  appraised  market value (see Note 8). In the first
quarter of 1996, the Company reevaluated the useful life of the Gold Coast Barge
and the related leasehold  improvements based on the Company's current plans for
the use of such  barge  and  determined  that it has a useful  life of 25 years,
which is the industry average for such type of barge. Previously, the Gold Coast
Barge and the related  leasehold  improvements  being  depreciated over a useful
life of 10 years based on their  previous  utilization  by AMGAM.  For the three
months and nine months  ended  September  30, 1996 the change in such  estimated
useful life  reduced  depreciation  and  amortization  expense by  approximately
$360,000 and $1,079,000,  respectively, and reduced net loss per common share by
approximately $.03 and $.09, respectively.

Harolds Club Casino
-------------------

Pursuant to an  agreement  between  Shamrock  Holdings  and the Company (the "HC
Purchase  Agreement") under which Shamrock Holdings provided the necessary funds
to the Company to close the purchase of the Harolds Club casino in Reno, Nevada,
the Company  transferred to Shamrock Holdings title to the land and the building
related  to  the  Harolds  Club,  Shamrock  Holdings  canceled  $650,000  of the
Company's then outstanding  indebtedness to Shamrock Holdings and caused Bennett
Funding to cancel  $500,000 of the Company's then  outstanding  indebtedness  to
Bennett Funding,  and the Company agreed to transfer to Shamrock Holdings all of
the Company's  rights,  title and interest in certain land leases related to the
Harolds Club by July 30, 1995. The Company is in breach of the latter  provision
because such  transfer has not been  completed  pending the  negotiation  by the
Company with Shamrock Holdings  relating to possible future  development or sale
of the Harolds Club. The HC Purchase  Agreement does not give Shamrock  Holdings
any particular  rights with respect to such breach by the Company.  Although the
Company is obligated  until such transfer to make all lease  payments under such
leases  and  notwithstanding  that such  leases  have not yet been  assigned  to

<PAGE>


Shamrock   Holdings,   since  July  30,  1995  Shamrock   Holdings  has  assumed
responsibility  for all carrying  costs of the Harolds Club property  including,
but not  limited  to,  such lease  payments,  taxes,  insurance  and  utilities.
However, even if the Company transfers to Shamrock Holdings all of the Company's
rights, title and interest in such leases, the Company could still be ultimately
obligated under such leases, pursuant to certain guaranties of lease executed by
the Company.  The Company has been informed by Shamrock Holdings and the lessors
under such leases that  Shamrock  Holdings has not made any lease  payments from
April 1996 through  November  1996 due under such leases or  quarterly  property
taxes due under such leases,  collectively totaling approximately  $543,000. The
lessors have, among other rights,  the right to terminate the respective  leases
and hold the Company  responsible for all obligations  under such leases through
the end of the  respective  lease terms.  Such leases require  aggregate  annual
lease payments of approximately  $620,000,  $584,000 and $548,000 for 1996, 1997
and 1998,  subject to increase based upon increases in the Consumer Price Index,
and have terms  ending  between  June 1997 and  October  2022.  The  Company has
recorded  the unpaid lease  payments and property  taxes from April 1996 through
September   1996   totaling   approximately   $439,000   (the  "Unpaid   Harolds
Obligations")  as current  liabilities as of September 30, 1996. The Company has
also recorded the amount of the Unpaid  Harolds  Obligations as a receivable due
from  Shamrock  Holdings  as of  September  30,  1996,  but,  as a result of the
Company's  determination  as of September  30, 1996 that there is a  substantial
likelihood that such amount will be  uncollectible,  wrote-off such amount as of
September 30, 1996. In September 1996, Shamrock Holdings and the Company entered
into an agreement pursuant to which Shamrock Holdings has agreed,  upon the sale
of the Harolds Club, to reimburse the Company for (i) all costs and expenses, in
an amount not to exceed $15,000, incurred by the Company in connection with such
sale, (ii) all reasonable  attorneys' fees incurred by the Company in connection
with litigation commenced against, among others, the Company by the five lessors
of the Harolds Club property seeking,  among other relief, payment of all unpaid
lease  payments  and property  taxes (see Note 5), and (iii) the Unpaid  Harolds
Obligations.

Indiana
-------

Effective  August 23,  1996,  the  Company  transferred  to NBD Bank,  N.A.,  as
trustee,  ("NBD") the Company's 24.5% equity  interest (the  "Interest") in RSR,
LLC  ("RSR"),  representing  the  equivalent  of a  4.9%  equity  interest  in a
riverboat gaming entertainment complex in the City of Rising Sun, Indiana on the
Ohio River (the "Rising Sun Project").  Additionally,  the Company has granted a
irrevocable  proxy to the other  members of RSR  (collectively,  the  "Remaining
Members")  to vote  the  Interest  in the  same  manner  and  proportion  as the
Remaining Members vote on any matter, provided, however, that such proxy may not
be exercised to vote in favor of any action that could  reasonably  be viewed as
decreasing  or otherwise  adversely  affecting  the value of the Interest or the
ability to sell or otherwise  transfer the  Interest.  Prior to August 23, 1998,
the  Company  may  instruct  NBD to sell any  portion of the  Interest,  for the
benefit  of the  Company,  to a  third  party  approved  by the  Indiana  Gaming
Commission  ("IGC"),  subject  to  rights  of  first  refusal  held by RSR,  the
Remaining  Members  and Indiana  RBG,  L.P.  ("RBG"),  the partner of RSR in the
Rising Sun Project.  Any portion of the Interest which is not transferred  prior
to August 23, 1998 shall be purchased  from NBD, for the benefit of the Company,
by either  the  Remaining  Members or RSR at an average  appraised  fair  market
value. As a result of the Company,  RSR, the Remaining  Members and RBG advising

<PAGE>


the  staff  of  the  IGC  of  their   intention  to  enter  into  the  foregoing
arrangements,  no determination  on the Company's  suitability for licensure was
made at the  meetings  of the IGC held on August 19 and 20, 1996 and the Company
does  not  believe  that  the  IGC  has  any  present   intention  of  making  a
determination on the Company's suitability for licensure.

NOTE 4:  LONG TERM DEBT AND ACCRUAL FOR UNUTILIZED LEASE COSTS

As discussed above, the Company is delinquent in the payment of (i) interest due
under the Company's various loan agreements with Shamrock Holdings and (ii) rent
under the SCS Lease (see Note 2) and therefore has classified  all  indebtedness
due to Shamrock  Holdings as current  liabilities in the accompanying  unaudited
consolidated  interim financial  statements.  At September 30, 1996 and December
31,  1995,   the  Company  had   outstanding   amounts  due  Shamrock   Holdings
approximating  $52,936,000  and  $45,108,000,  respectively,  including  accrued
interest of approximately $9,684,000 and $6,036,000,  respectively. Such amounts
due Shamrock  Holdings also include  approximately  $2,524,000  and  $1,567,000,
respectively, under the SCS Lease which Shamrock Holdings has orally represented
to the Company that Bennett Management, prior to its bankruptcy filing, assigned
to Shamrock Holdings (see Note 2). As a result of the Company's determination as
of December  31, 1995 that there is a  substantial  likelihood  that the Company
will not record any revenues  from the Vessels  through the end of the SCS Lease
term to offset the remaining  lease payments due Shamrock  Holdings  thereunder,
the portion of such lease  payments  for the period from October 1, 1996 through
the end of the  SCS  Lease  term  totaling  approximately  $3,506,000  has  been
recorded as a liability  under the "Accrual for unutilized  lease costs" account
as of September 30, 1996.  Additionally,  the amount due Shamrock Holdings as of
December 31, 1995 includes  approximately  $562,000  under a line of credit from
Bennett Funding to the Company which Shamrock Holdings has orally represented to
the Company that Bennett Funding,  prior to its bankruptcy  filing,  assigned to
Shamrock  Holdings.  All borrowings under such line of credit were repaid by the
Company to Bennett Funding in the first quarter of 1996.

In addition to the Company's indebtedness to Shamrock Holdings, at September 30,
1996 and  December  31,  1995,  the  Company  owed  approximately  $131,000  and
$150,000, respectively, under a mortgage note payable.

NOTE 5:  CONTINGENCIES

As previously disclosed in the Company's Quarterly Report on Form 10-QSB for the
period ended June 30, 1996,  the five lessors of the Harolds Club  property have
filed suit against,  among others,  the Company and Shamrock  Holdings  seeking,
among other relief, (i) payment of all unpaid lease payments and property taxes,
(ii) a court  order  voiding  the  transfer  of the  title  to the  land and the
building  related to the Harolds  Club from the Company to Shamrock  Holdings to

<PAGE>


the extent necessary to satisfy the claims of creditors of the Company,  (iii) a
court order  prohibiting and enjoining  Shamrock  Holdings from transferring the
title to the land and the  building  related  to the  Harolds  Club  during  the
pendency of the actions,  (iv)  temporary and permanent  court orders  mandating
that the Company protect the  grandfathered  right of nonlicensed  gaming on the
leaseholds by locating a suitable gaming sub-tenant and (v) reasonable attorneys
fees and costs. The plaintiffs in one of the suits have advised the Company that
they intend to dismiss their suit against the Company,  but have not yet done so
and the pleadings in such suit are not closed.  Similarly,  the pleadings in the
four other  suits are not closed.  The  parties in those suits have  advised the
Company that they intend to enter into agreements to extend until March 1997 the
period in which the Company's answers are due to permit the parties to negotiate
a settlement which will protect the grandfathered right of nonlicensed gaming on
the  leaseholds  and set forth the rights and  obligations of all parties upon a
sale of the leaseholds, but have not yet entered into such agreements. As such a
settlement  has not yet been agreed upon by such parties,  the pleadings are not
yet closed,  and  discovery  and  depositions  have not yet  commenced,  outside
counsel to the Company,  due to the limited facts  available on this matter,  is
unable to predict the outcome of these  suits.  However,  should the  plaintiffs
prevail,  these  suits  would have a material  adverse  effect on the  Company's
business and financial condition. The Company would then need to pursue a formal
plan of  reorganization  or liquidation which would generally result in the sale
of the  Company's  assets to satisfy  outstanding  obligations.  There can be no
assurance  that if  either  action  is  required  to be  pursued  that  all such
obligations  would be  completely  satisfied.  Further,  in the  event of either
action,  it is unlikely  that  stockholders  of the Company  will recover any of
their investment in the Company.

On September 16, 1996, two stockholders of the Company, who were bondholders and
stockholders  of AGRM  prior to its  merger  with and into a  subsidiary  of the
Company in  December  1994 (the  "Merger"),  filed suit  against the Company and
three former officers and/or  directors of AGRM in the Circuit Court of Harrison
County, Mississippi, Second Judicial District (Civil Action No. A2402-96-00210).
The plaintiffs  allege (i) federal and state  securities fraud by the defendants
based  on  alleged  fraudulent  misrepresentations  made  by the  defendants  in
connection  with  plaintiffs'  decision to  purchase  common  stock of AGRM,  to
convert  certain  debentures  issued  by AGRM into  common  stock of AGRM and to
tender their common stock of AGRM in exchange for common stock of the Company in
connection with the Merger and (ii) a breach of directors'  duties of good faith
and due  care by the  three  former  officers  and/or  directors  of  AGRM.  The
plaintiffs are seeking compensatory damages in the amount of $250,000,  punitive
damages in the amount of $1,000,000 and attorneys  fees and costs.  As discovery
and depositions have not yet commenced,  outside counsel to the Company,  due to
the limited facts available on this matter,  is unable to predict the outcome of
this lawsuit. However, should the plaintiffs prevail, this litigation would have
a material adverse effect on the Company's business and financial condition. The
Company would then need to pursue a formal plan of reorganization or liquidation
which  would  generally  result in the sale of the  Company's  assets to satisfy
outstanding  obligations.  There can be no  assurance  that if either  action is
required to be pursued that all such obligations would be completely  satisfied.
Further,  in the event of either action, it is unlikely that stockholders of the
Company will recover any of their investment in the Company.



<PAGE>


NOTE 6:  DECONSOLIDATION OF AMGAM AND AGRM

The Company has determined that,  because of the filings of AMGAM and AGRM under
the Code and the expected liquidation in the near future of AMGAM and AGRM, such
entities should be deconsolidated for financial statement  purposes.  A combined
unaudited condensed balance sheet of these entities as of September 30, 1996 and
December 31, 1995 is as follows:

<TABLE>
<CAPTION>
                                                                  September 30,  December 31,
                                                                      1996           1995
<S>                                                                <C>           <C>        
Assets
         Current Assets and Other                                  $ 3,830,000   $ 3,024,000
         Property and Equipment, Net                                    41,000     5,706,000
         Land                                                               --    10,000,000
                                                                   -----------   -----------
                  Total Assets                                     $ 3,871,000   $18,730,000
                                                                   ===========   ===========

Liabilities and Stockholders' Deficiency
         Current Liabilities                                       $24,244,000   $22,740,000
         Amounts Due to Parent                                      12,147,000    30,138,000
         Stockholders' Deficiency                                  (32,520,000)  (34,148,000)
                                                                   -----------   -----------
                  Total Liabilities and Stockholders' Deficiency   $ 3,871,000   $18,730,000
                                                                   ===========   ===========
</TABLE>


NOTE 7:  RECENT RELATED PARTY AND MANAGEMENT DEVELOPMENTS

The Company has been informed by the Trustee that Mr. Michael Bennett,  the sole
owner of Shamrock  Holdings,  has transferred  all of the  outstanding  stock of
Shamrock Holdings to the Trustee. Shamrock Holdings owns (i) 4,423,454 shares of
the Company's  Common Stock,  (ii) warrants to purchase  12,500 shares of Common
Stock at $4.00 per share and  (iii) all of the  Company's  outstanding  Series A
Preferred  Stock,  convertible  into, and voting as,  1,399,565 shares of Common
Stock.  Additionally,  the Trustee has filed a lawsuit against Mutual  Investors
Funding  Corporation  ("MIFCO"),  among  other  entities,  seeking,  among other
relief,  that MIFCO  turnover  to the  estates of certain  Bennett  entities  or
Shamrock  Holdings all of the Company's  stock owned by MIFCO. If the Trustee is
successful in such action,  the Bennett estates of certain  Bennett  entities or
Shamrock  Holdings would own (i) an additional  1,500,000 shares of Common Stock
and (ii) all of the Company's  outstanding Series C Cumulative  Preferred Stock,
Series D Cumulative Preferred Stock and Series E Preferred Stock, convertible as
of October 31, 1996 into  approximately  632,203,000 shares of Common Stock. The
Company does not have a sufficient  number of authorized  shares of Common Stock
to enable the conversion of all of the Series C Cumulative  Preferred Stock, the
Series D Cumulative  Preferred Stock and the Series E Preferred  Stock. On April
1, 1996 the Board of Directors voted to request the  stockholders of the Company
to approve an amendment to the Company's  Restated  Certificate of Incorporation
increasing the number of authorized shares of Common Stock to 500,000,000 shares
no later than the 1996 annual meeting of the Company's  stockholders.  The Board
of Directors has not set a date for such annual meeting. Assuming the Trustee is
successful in his action against MIFCO and converted as of October 31, 1996 that
number of shares of the Series C Cumulative Preferred Stock, Series D Cumulative

<PAGE>


Preferred Stock and Series E Preferred Stock  convertible  into the total number
of the Company's presently  authorized but unissued shares of Common Stock (i.e.
37,467,898  shares),  the Trustee,  on behalf of the Bennett  estates of certain
Bennett entities and Shamrock  Holdings,  would own  approximately  86.8% of the
total outstanding  shares of Common Stock and  approximately  87.1% of the total
voting power  represented  by the total  outstanding  voting  securities  of the
Company.  Assuming  the  Company's  stockholders  approve  an  amendment  to the
Company's  Restated  Certificate  of  Incorporation  increasing  the  number  of
authorized  shares  of  Common  Stock  to  500,000,000  shares  and the  Trustee
converted as of October 31, 1996 that number of shares of the Series C Preferred
Stock,  Series D Preferred  Stock and the Series E Preferred  Stock  convertible
into the total number of the Company's  authorized but unissued shares of Common
Stock  immediately  after giving effect to such amendment  (i.e.  resulting in a
total of  487,467,398  shares of Common  Stock being issued to the Trustee as of
such date),  the Trustee,  on behalf of the Bennett  estates of certain  Bennett
entities or Shamrock  Holdings and Shamrock  Holdings,  would own  approximately
98.7% of both the total outstanding  shares of Common Stock and the total voting
power represented by the total outstanding voting securities of the Company.  As
of November  11,  1996,  MIFCO has not asserted any rights they may have against
the  Company  for the  Company's  failure  to  maintain a  sufficient  number of
authorized  shares of Common Stock to enable the conversion of all of the Series
C Cumulative Preferred Stock, Series D Cumulative Preferred Stock and the Series
E Preferred Stock.

Effective September 12, 1996, J. Douglas Wellington, the Company's President and
Chief Operating Officer,  was elected as Chief Executive Officer.  Also, Paul L.
Patrizio,  a partner in Rick,  Steiner &  Tannenbaum,  P.C.  and a member of the
Company's  Board  of  Directors,  was  appointed  Chairman  of the  Board of the
Company.

NOTE 8: WRITE-OFFS

In the third  quarter  of 1996,  the  Company  (i)  recognized  a  writedown  of
$2,146,000 in the value of its  investment in the Gold Coast Barge to reflect an
appraisal of its fair market value (see Note 3), (ii)  recognized a writedown of
$351,000 in the value of its  investment in real property in Mobile,  Alabama to
reflect an appraisal of its fair market value, and (iii) amortized $2,086,000 of
deferred  financing  fees due to Shamrock  Holdings and  $1,418,000  of deferred
financing and commitment fees due to Shamrock  Holdings  because the amounts due
under the financing  arrangements pursuant to which such fees were incurred have
been recorded as current liabilities in the accompanying  Unaudited Consolidated
Balance Sheet as of September 30, 1996.



<PAGE>


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS

Results of Operations: Comparison of the three month periods ended September 30,
1996 and September 30, 1995
--------------------------------------------------------------------------------

Revenues
--------

Consulting  service and other revenues for the three months ended  September 30,
1996 amounted to approximately $9,000, a decrease of approximately $1,072,000 or
approximately  99% compared to the three months ended  September  30, 1995.  The
decrease is  primarily  attributable  to  decreases  for the three  months ended
September 30, 1996 of approximately $358,000,  $615,000 and $60,000 attributable
to revenues from PMCC Payments, keno revenues and revenues from an assignment of
funds  received  under a video lottery  consulting  contract,  respectively.  As
discussed above,  PMCC Payments earned under the Charter Agreement since July 1,
1996 have not been  recorded  as revenue but have been  recorded  as  additional
PMCC/Bennett  Debt (see Note 2 to the unaudited  Consolidated  Interim Financial
Statements).  The Company's  keno assets and  operations  were sold on March 28,
1996 and the  assignment  of funds  received  under a video  lottery  management
contract terminated on December 15, 1995, therefore no keno revenues or revenues
from such assignment were generated  during the three months ended September 30,
1996.

Costs and Expenses
------------------

The Company  incurred  no direct  operating  expenses  and cost of sales for the
three months ended September 30, 1996, compared to direct operating expenses and
cost of sales for the three months  ended  September  30, 1995 of  approximately
$212,000.  The decrease was  attributable  to the expenses and costs  related to
sales of keno systems sold during the three months ended  September 30, 1995. No
such  expenses or costs were  incurred for the three months ended  September 30,
1996.

Selling,  general and administrative expenses were approximately  $1,036,000 for
the three months ended September 30, 1996, an increase of approximately $440,000
or approximately  69% compared to the three months ended September 30, 1995. The
increase was primarily due the write-off of Unpaid Harolds Obligations (see Note
3 to the unaudited  Consolidated Interim Financial  Statements) in the amount of
approximately  $563,000  for the three  months  ended  September  30,  1996,  an
increase  of  approximately  $171,000  in  consulting  expense  related  to  the
Company's restructuring efforts, partially offset by a decrease of approximately
$99,000 related to the Company's keno  operations,  which were sold on March 28,
1996,  and a  decrease  of  approximately  $155,000  due to the  resignation  or
termination  effective  December  15,  1995  of all but  five  of the  Company's
non-keno employees.

<PAGE>


Casino project  development  costs for the three months ended September 30, 1996
were   approximately   $100,000,   a  decrease  of  approximately   $829,000  or
approximately  89% compared to the three months ended  September 30, 1995.  Such
decrease was primarily due to decreases of approximately  $256,000,  $54,000 and
$96,000 in personnel,  consulting and other  operating  expenses,  respectively,
associated with the Company's change in business  direction from the development
of gaming projects to the management of its equity  interests in gaming projects
and  decreases  of  $319,000  and  $87,000  related to SCS Lease  expense of the
Company and  maintenance  expenses of the Vessels,  respectively.  The SCS Lease
payments from January 1, 1996 through the end of the lease term were  recognized
as an expense as of December 31, 1995 and  therefore no such SCS Lease  expenses
were recorded in 1996.

Depreciation and amortization  costs were  approximately  $248,000 for the three
months  ended  September  30,  1996,  a decrease  of  approximately  $653,000 or
approximately  72% compared to the three months ended  September  30, 1995.  The
decrease in  depreciation  and  amortization  expense was  principally  due to a
decrease of approximately $443,000 as a result of the transfer of certain assets
to PMCC in September 1995 and the change in the estimated useful life of certain
depreciable  or  amortizable  assets from 10 years to 25 years and a decrease of
approximately  $210,000  related to the Company's keno assets which were sold on
March 28, 1996.

Writedown of impaired assets was  approximately  $2,485,000 for the three months
ended September 30, 1996,  consisting  primarily of writedowns of $2,146,000 and
$351,000  in the  values of its  investments  in the Gold  Coast  Barge and real
property  in  Mobile,  Alabama,  respectively  (see  Note  8  to  the  unaudited
Consolidated Interim Financial Statements). No such writedowns were recorded for
the three months ended September 30, 1995.

Equity in  losses of  subsidiaries  in  bankruptcy  related  to the  results  of
operations for AMGAM and AGRM for the three months ended September 30, 1995 were
approximately  $1,001,000.  The Company wrote off its  investments  in AMGAM and
AGRM as of December 31, 1995 and therefore no such  additional  equity in losses
of subsidiaries in bankruptcy were realized for the three months ended September
30, 1996.

Net  interest  expense  for the  three  months  ended  September  30,  1996  was
approximately   $4,760,000,   an  increase  of   approximately   $3,439,000   or
approximately  260%  compared to the three  months  ended  September  30,  1995.
Interest  expense  increased  approximately  $3,449,000,  while interest  income
increased  approximately $10,000. The increase in interest expense was primarily
due to the  amortization  during the three  months ended  September  30, 1996 of
approximately $2,086,000 of deferred financing fees due to Shamrock Holdings and
approximately  $1,418,000  of  deferred  financing  and  commitment  fees due to
Shamrock  Holdings (see Note 8 to the unaudited  Consolidated  Interim Financial
Statements).

During the three months ended  September  30, 1996,  the Company  recorded a net
loss of  approximately  $8,000 as a result of sales of  furniture,  fixtures and
equipment.  During the three  months  ended  September  30,  1995,  the  Company
recorded  a gain of  $301,000  as a  result  of the  final  installment  payment
received  from the sale of  substantially  all of the Company's  bingo  business
assets.

<PAGE>


Results of Operations:  Comparison of the nine month periods ended September 30,
1996 and September 30, 1995
--------------------------------------------------------------------------------

Revenues
--------

Consulting  service and other  revenues for the nine months ended  September 30,
1996 amounted to approximately $2,181,000, an increase of approximately $333,000
or  approximately  18% compared to the nine months ended September 30, 1995. The
increase  is  primarily  attributable  to  revenues  for the nine  months  ended
September 30, 1996 from PMCC Payments in the amount of approximately $1,972,000,
compared to  revenues  for the nine months  ended  September  30, 1995 from PMCC
Payments  in  the  amount  of   approximately   $358,000.   This   increase  was
substantially  offset by decreases for the nine months ended  September 30, 1996
of   approximately   $953,000   attributable   to  keno  revenues  and  $264,000
attributable to revenues from a video lottery  management  contract and revenues
from an assignment of funds received under a video lottery consulting  contract.
The Charter  Agreement  became  effective on June 18, 1995. As discussed  above,
PMCC  Payments  earned  under the Charter  Agreement  from the BDE Date  through
December  31, 1995 and since July 1, 1996 have not been  recorded as revenue but
have  been  recorded  as  PMCC/Bennett   Debt  (see  Note  2  to  the  unaudited
Consolidated  Interim  Financial  Statements).  The  Company's  keno  assets and
operations were sold on March 28, 1996 and therefore keno revenues significantly
decreased  for the nine months  ended  September  30,  1996.  The video  lottery
management  contract  terminated  on June 30, 1995 and the  assignment  of funds
received under a video lottery  management  contract  terminated on December 15,
1995, and therefore no such revenues were generated during the nine months ended
September 30, 1996.

Costs and Expenses
------------------

Direct operating expenses and cost of sales were  approximately  $65,000 for the
nine months ended  September 30, 1996, a decrease of  approximately  $300,000 or
82%  compared to the nine months  ended  September  30,  1995.  The decrease was
attributable  to the  expenses  and costs  related to sales of keno systems sold
during the nine months ended  September 30, 1995.  The Company's keno assets and
operations  were sold on March 28, 1996 and  therefore  such  expenses and costs
significantly decreased for the nine months ended September 30, 1996.

Selling,  general and administrative expenses were approximately  $2,347,000 for
the nine months ended September 30, 1996, a decrease of  approximately  $174,000
or  approximately  7% compared to the nine months ended  September 30, 1995. The
decrease was  primarily  due to a decrease of $217,000  related to the Company's
keno  operations,  which  were  sold  on  March  28,  1996  and  a  decrease  of
approximately  $758,000 due to the resignation or termination effective December
15,  1995 of all but five of the  Company's  non-keno  employees,  substantially
offset by the  write-off of the Unpaid  Harolds  Obligations  (see Note 3 to the
unaudited   Consolidated   Interim  Financial   Statements)  in  the  amount  of
approximately $784,000 as of September 30, 1996.

<PAGE>


Casino project  development  costs for the nine months ended  September 30, 1996
were  approximately   $204,000,  a  decrease  of  approximately   $2,323,000  or
approximately  92% compared to the nine months ended  September  30, 1995.  Such
decrease was  primarily  due to decreases of  approximately  $932,000,  $78,000,
$64,000,  $157,000,  $230,000  in  personnel,  travel  &  entertainment,  legal,
consulting  and other  operating  expenses,  respectively,  associated  with the
Company's change in business direction  discussed above, a decrease in licensing
fees of approximately  $136,000  primarily  attributable to the reimbursement to
the  Company  during the nine months  ended  September  30,  1996 of  previously
expensed  and paid  licensing  fees,  and a decrease of $735,000  related to SCS
Lease expense of the Company,  partially  offset by an increase of approximately
$10,000 relating to maintenance  expenses of the Vessels. The SCS Lease payments
from  January 1, 1996  through the end of the lease term were  recognized  as an
expense as of December 31, 1995 and  therefore no such SCS Lease  expenses  were
recorded in 1996.

Depreciation and  amortization  costs were  approximately  $916,000 for the nine
months  ended  September  30, 1996, a decrease of  approximately  $1,315,000  or
approximately  59% compared to the nine months  ended  September  30, 1995.  The
decrease in  depreciation  and  amortization  expense was  principally  due to a
decrease of approximately $884,000 as a result of the transfer of certain assets
to PMCC in September 1995 and the change in the estimated useful life of certain
depreciable  or  amortizable  assets from 10 years to 25 years and a decrease of
approximately  $454,000  related to the Company's keno assets which were sold on
March 28, 1996.

Writedown of impaired  assets was  approximately  $2,504,000 for the nine months
ended September 30, 1996,  consisting  primarily of writedowns of $2,146,000 and
$351,000 in the values of the Company's  investments in the Gold Coast Barge and
real  property in Mobile,  Alabama,  respectively  (see Note 8 to the  unaudited
Consolidated Interim Financial Statements).  For the nine months ended September
30,  1995,  the Company  recognized  writedowns  of  $2,250,000  and $280,000 to
reflect the  estimated  sales values of the  Company's  investments  in the S.S.
Aquarama and real property in Mobile, Alabama, respectively, if the Company were
unable to develop such assets as gaming projects.

Equity in  losses of  subsidiaries  in  bankruptcy  related  to the  results  of
operations  for AMGAM and AGRM for the nine months ended  September  30, 1996 of
approximately $250,000,  representing a decrease of approximately  $5,158,000 or
approximately 95% when compared to the nine months ended September 30, 1995. The
Company wrote off its  investments in AMGAM and AGRM as of December 31, 1995 and
therefore the only  additional  equity in losses of  subsidiaries  in bankruptcy
recognized in the nine months ended September 30, 1996was an accrual of $250,000
as management's estimate of additional settlement  liabilities to be paid out of
the PMCC Payments.

Net  interest  expense  for  the  nine  months  ended  September  30,  1996  was
approximately   $7,560,000,   an  increase  of   approximately   $3,705,000   or
approximately 96% compared to the nine months ended September 30, 1995. Interest
expense  increased  approximately   $3,698,000  during  the  nine  months  ended

<PAGE>


September 30, 1996, while interest income decreased  approximately $7,000 during
the nine months ended  September 30, 1996. The increase in interest  expense was
primarily  due to the  amortization  during the nine months ended  September 30,
1996 of  approximately  $2,086,000  of deferred  financing  fees due to Shamrock
Holdings and approximately  $1,418,000 of deferred financing and commitment fees
due to  Shamrock  Holdings  (see Note 8 to the  unaudited  Consolidated  Interim
Financial Statements).

Net gain on sale of investments for the nine months ended September 30, 1996 was
substantially  due to a net gain of  approximately  $948,000 on the sale of keno
operations.  During the nine  months  ended  September  30,  1995,  the  Company
recorded  a gain of  $301,000  as a  result  of the  final  installment  payment
received  from the sale of  substantially  all of the Company's  bingo  business
assets.

Changes in Financial Condition, Liquidity and Capital Resources
---------------------------------------------------------------

As of September 30, 1996,  the Company had no committed  financing  arrangements
and a working capital deficiency of approximately $54,853,000.  For a discussion
of liquidity and capital  resources,  see Note 2 to the  unaudited  Consolidated
Interim Financial Statements.

Risk Factors; Forward Looking Statements
----------------------------------------

Management's  Discussion  and  Analysis  contains   forward-looking   statements
regarding the Company's future plans, objectives and expected performance. These
statements are based on assumptions  that the Company  believes are  reasonable,
but are  subject  to a wide  range of risks and  uncertainties,  and a number of
factors could cause the Company's actual results to differ materially from those
expressed  in the  forward-looking  statements.  These  factors  include,  among
others,  the uncertainties  related to (i) obtaining  Shamrock Holdings' and, if
necessary,  Bennett Management's  agreement to modify on terms acceptable to the
Company or terminate the Bennett Debt  Exchange  (excluding  Shamrock  Holdings'
assumption of the Ship Mortgage) and restructure all other  obligations due from
the Company to Shamrock Holdings and, if applicable,  Bennett  Management,  (ii)
consummating  the  liquidations  under  Chapter 11 of the Code of AMGAM and AGRM
under plans acceptable to the Company, resulting in a liquidation of the various
trade and debt obligations of those entities, (iii) satisfactorily resolving the
legal  proceedings  filed  against  the  Company  (see  Note 5 to the  unaudited
Consolidated  Interim  Financial  Statements),   and  (iv)  the  legal  problems
described above relating to certain  Bennett  entities (see Notes 1 and 2 to the
unaudited Consolidated Interim Financial Statements).



<PAGE>


PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

For a discussion of legal proceedings,  see Note 5 to the unaudited Consolidated
Interim Financial Statements.


ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

For a discussion of defaults with respect to the Company's  indebtedness  due to
Shamrock  Holdings,  see  Notes 2 and 4 to the  unaudited  Consolidated  Interim
Financial Statements.

The Company has accrued and declared,  but has not paid as of November 11, 1996,
dividends  totaling  approximately  $152,000  which were due and  payable on the
outstanding shares of its Series C Cumulative Preferred Stock as of December 31,
1994. The Company has accrued and declared,  but has not paid as of November 11,
1996,  dividends totaling  approximately  $152,000 which were due and payable on
the outstanding shares of its Series D Cumulative Preferred Stock as of December
31, 1994.

Additionally,  the  Company  has  accrued,  but has not  declared  or paid as of
November 11, 1996, dividends totaling  approximately $500,000 which were due and
payable on the  outstanding  shares of its Series C Cumulative  Preferred  Stock
from January 1, 1995 through  September 30, 1996.  (In the Company's  10-QSB for
the quarter  ended June 30,  1996,  the amount of  dividends  which were due and
payable on the  outstanding  shares of its Series C Cumulative  Preferred  Stock
from January 1, 1995 though June 30, 1996 is incorrectly  stated to be $577,000;
the correct amount is $425,000.)  The Company has accrued,  but has not declared
or paid as of November 11, 1996, dividends totaling approximately $400,000 which
were due and  payable  on the  outstanding  shares  of its  Series D  Cumulative
Preferred  Stock from  January  1, 1995  through  September  30,  1996.  (In the
Company's  10-QSB for the quarter  ended June 30, 1996,  the amount of dividends
which were due and payable on the outstanding  shares of its Series D Cumulative
Preferred Stock from January 1, 1995 though June 30, 1996 is incorrectly  stated
to be $477,000;  the correct amount is $325,000.) Although such dividends do not
constitute  actual  liabilities of the Company until  declared,  the Company has
accrued for such dividends  because,  under the terms of the Series C Cumulative
Preferred  Stock and the Series D  Cumulative  Preferred  Stock,  dividends  are
cumulative  whether or not  declared and the Company is  prohibited  from paying
dividends on,  purchasing  or redeeming  any of its Series A Preferred  Stock or
Common Stock so long as any such cumulated  dividends are unpaid. The Company is
prohibited  under the General  Corporation  Law of Delaware from  declaring such
dividends  unless the Company has (i) capital surplus or (ii) net profits in the
fiscal year in which such  dividends are declared  and/or the  preceding  fiscal
year.



<PAGE>


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

<TABLE>
<CAPTION>

(a)      Exhibits

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

<S>                 <C>
10.74               Letter  Agreement dated September 26, 1996 between  Shamrock
                    Holdings Group, Inc. and the Company

10.75               Form of AMGAM/AGRM - AGEL Settlement Agreement & Term  Sheet
                    between  AMGAM  Associates,  American  Gaming  & Resorts  of
                    Mississippi,  Inc., the  Company,  Shamrock  Holdings Group,
                    Inc.

11                  Computation of Earnings Per Share.

27                  Financial Data Schedule

</TABLE>

(b) Reports on Form 8-K.  Form 8-K dated August 23, 1996 with respect to (a) the
transfer  of the  Interest  to NBD  (see  Note 3 to the  unaudited  Consolidated
Interim Financial  Statements) and (b) the election of J. Douglas  Wellington as
Chief  Executive  Officer and the appointment of Paul L. Patrizio as Chairman of
the Board of the  Company  (see  Note 7 to the  unaudited  Consolidated  Interim
Financial Statements).


<PAGE>


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company
has duly  caused  this  report  to be signed  on its  behalf by the  undersigned
hereunto duly authorized.


                                American Gaming & Entertainment, Ltd.


Date:  11/14/96                 By: /s/ J. Douglas Wellington
     ---------------               ---------------------------------
                                        J. Douglas Wellington
                                        President and Chief Executive Officer,
                                        and Principal Accounting Officer


<PAGE>


EXHIBIT INDEX

<TABLE>
<CAPTION>

EXHIBIT
  NO.            DESCRIPTION                                                        PAGE NO.
-------          -----------                                                        --------

<S>              <C>                                                                  <C>
10.74            Letter  Agreement dated September 26, 1996 between  Shamrock          30
                 Holdings Group, Inc. and the Company

10.75            Form of AMGAM/AGRM - AGEL  Settlement  Agreement & Term Sheet         33
                 between AMGAM  Associates,  American Gaming & Resorts of
                 Mississippi,  Inc., the Company, Shamrock Holdings Group, Inc.

11               Computation of Earnings Per Share.                                    42

27               Financial Data Schedule                                               43

</TABLE>