U.S. SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB


(Mark One)
[x]     ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                  For The Fiscal Year Ended: December 31, 1998

                                       or

[ ]       TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

 For the transition period from _____________ to _______________

 Commission file number  000-21991______

                        ADVANCED GAMING TECHNOLOGY, INC.
                 (Name of small business issuer in its charter)

         Wyoming                                                 98-0152226
State or other jurisdiction of                                (I.R.S. Employer
incorporation or organization                                Identification No.)

                     P O Box 46855, Las Vegas, Nevada 89114
               (Address of principal executive offices)(Zip code)

Issuer's telephone number             (702) 227-6668

Securities registered under Section 12(b) of the Act: NONE

Securities registered under Section 12(g) of the Act:

                          Common Stock Par Value $.005
                                (Title of Class)

                                       -1-
 <PAGE>

     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 required for the past 90 days. Yes X No



                                                                 Total pages: 29
                                                          Exhibit Index Page: 27



     Check if there is no disclosure of delinquent  filers  pursuant to Item 405
of  Regulation  S-B is not  contained in this form,  and no  disclosure  will be
contained,  to the  best of  registrant's  knowledge,  in  definitive  proxy  or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this form 10-KSB. [X]


     State issuer's revenues for its most recent fiscal year: $ 537,827


     As of June 28,  1999,  there were  115,330,600  shares of the  Registrant's
common stock,  par value $0.005,  issued and  outstanding.  The aggregate market
value of the Registrant's  voting stock held by non-affiliates of the Registrant
was approximately  $1,729,959  computed at the average bid and asked price as of
June 28, 1999.

                         ISSUERS INVOLVED IN BANKRUPTCY
                     PROCEEDING DURING THE PAST FIVE YEARS

     Check  whether the issuer filed all  documents  and reports  required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the  distribution  of
securities under a plan confirmed by a court. Yes X No

                       DOCUMENTS INCORPORATED BY REFERENCE

     If the following documents are incorporated by reference,  briefly describe
them and identify the part of the Form 10-KSB (e.g., Part I, Part II, etc.) Into
which  the  document  is  incorporated:   (1)  any  annual  report  to  security
holders;(2)  any proxy or information  statement;  and (3) any prospectus  filed
pursuant to Rule 424(b) or (c) of the Securities Act of 1933 ("Securities Act"):

     None

     Transitional Small Business Disclosure Format (check one): Yes___ NO X





                                       -2-
<PAGE>

                                TABLE OF CONTENTS



Item Number and Caption                                                     Page


PART I

Item 1 Description of Business............................................... 4

Item 2 Description of Property...............................................14

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

Item 4 Submission of Matters to a Vote of Security Holders...................16

PART II

Item 5 Market for Common Equity and Related Stockholder Matters..............17

Item 6 Management's Discussion and Analysis or Plan of Operations ...........18

Item 7 Financial Statements..................................................20

Item 8 Changes in and Disagreements with Accountants on Accounting and
       Financial Disclosure..................................................20

PART III

Item 9 Directors,  Executive Officers, Promoters and Control Persons;
       Compliance with Section 16(a) of the Exchange Act.....................21

Item 10 Executive Compensation...............................................22

Item 11 Security Ownership of Certain Beneficial Owners and Management.......25

Item 12 Certain Relationships and Related Transactions.......................25

Item 13 Exhibits and Reports on form 8-K ....................................27


                                       -3-
<PAGE>
                                     PART I

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                         ITEM I DESCRIPTION OF BUSINESS
--------------------------------------------------------------------------------

GENERAL

     Advanced Gaming Technology, Inc., a Wyoming corporation (the "Company"), is
engaged in the design,  assembly,  supply, marketing and servicing of electronic
gaming products,  the core of which is its MAX Bingo Systems.  In addition,  the
Company owns 178 acres of undeveloped  property in Stone County,  Missouri.  The
Company's  common  stock is traded on the  National  Association  of  Securities
Dealers, Inc. (the "NASD") OTC Bulletin Board Under the symbol "AGTI."

     The Company was  incorporated  pursuant to the laws of the state of Wyoming
on November 20, 1963,  under the name "MacTay  Investment Co." On June 19, 1987,
the Company  changed its name to "Auto N  Corporation."  On April 22, 1991,  the
Company  changed its name again to "Advanced  Gaming  Technology,  Inc." when it
acquired all of the assets and certain  liabilities  of Selectro  Vision Ltd., a
California corporation, in exchange for 1,359,000 shares of the Company's common
stock, $.005 par value per share (the "Common Stock").

     The Company has the following  wholly owned  subsidiaries:  Executive Video
Systems, Inc., a Maryland corporation  ("Executive Video"), Palace Entertainment
Limited,   a  company   organized   under  the  laws  of  the   British   Virgin
Islands("Palace"),   Branson  Signature  Resorts,  Inc.,  a  Nevada  corporation
("Branson"),River  Oaks Holdings,  Inc., a Missouri  corporation ("River Oaks"),
Branson Bluffs Resorts, Inc. ("Branson Bluffs") a Missouri  corporation,  Allied
Resorts, Inc. ("Allied") a Missouri corporation,  River Oaks Resorts and Country
Club,  Inc.("River  Oaks  Resort") a Texas  corporation,  Prisms,  Inc., a North
Carolina corporation  ("Prisms"),  Pleasure World Ltd.,  ("Pleasure World"), and
its  subsidiary  Prisms  (Bahamas)  Ltd.  ("Prisms  Bahamas"),   both  companies
organized under the laws of the Bahamas,  and A.G.T.  Acceptance Corp., a Nevada
Corporation("A.G.T. Acceptance Corp.").

     Executive Video owns certain  proprietary  software and technology relating
to the MAX Bingo  Systems,  and prior to the merger with the  Company,  supplied
five bingo locations.

     Palace  Entertainment,  an inactive company was organized in August 1996 to
be a joint venture  partner with various  entities in China for the operation of
entertainment centers in China, none of which materialized.


                                       -4-

<PAGE>
     Branson and its  wholly-owned  subsidiaries are a resort and land developer
located in Branson,  Missouri  which owned two separate real estate  properties:
(i) a resort  property with limited  existing  development on site; and (ii) 178
acres of undeveloped property in Stone County,  Missouri.  On November 17, 1995,
the Company  disposed of the resort  property.  The Company  transferred the 178
acres of undeveloped  property to River Oaks and subsequently to Advanced Gaming
Technology,  Inc. The company is currently attempting to sell the property.  See
"Description of Business - Real Estate Holdings."

     Prisms, Inc.  transferred certain patents to Prisms (Bahamas) Ltd., for the
development of bingo and other entertainment  games. Prisms has invented several
games  under the patents and Prisms  Bahamas  has  trademarks  in place for such
games. The company has not begun development of any of these games.

     The  principal  office of the  Company is  located at 3400 West  Desert Inn
Road, Las Vegas,  Nevada. The Company moved the executive office from Vancouver,
British  Colombia  during  1998.  The company  also closed an office in Branson,
Missouri, where its real estate holdings are located.

     On August 26, 1998 Advanced Gaming  Technology,  Inc and Branson  Signature
Resorts  filed for  reorganization  in Las Vegas  under  chapter 11 of The U. S.
bankruptcy code. The cases are being jointly administered. The company continues
to operate as "debtor in possession" while the reorganization  effort continues.
The  company  filed  a plan of  reorganization  with  the  bankruptcy  court  in
December,  1998.  The company's  plan  disclosure  statement was approved by the
court on March 22, 1998. The plan was confirmed by the bankruptcy  court on June
29, 1999. The plan becomes effective on early August, 1999.


     RECENT DEVELOPMENTS.  The company filed for reorganization under chapter 11
of the U S bankruptcy  code in Las Vegas on August 26, 1998. The company filed a
plan of  reorganization  with the court in  December  1998.  There were  several
objections  to the plan and  disclosure  statement  that were  addressed  by the
company  during the first  quarter of 1999.  The company's  plan and  disclosure
statement  was  approved  by  the  court  on  March  22,  1999.   The  company's
reorganization  plan was confirmed by the bankruptcy court on June 29, 1999. The
plan becomes effective on early August, 1999.

     Pursuant to the plan,  obligations to secured creditors were re-negotiated.
The new  amount  of  secured  debt on the  effective  date  is  $2,634,000.  All
remaining  liabilities of the company have been fully satisfied through issuance
of new common  stock.  Other secured  creditors  received 3 shares of new common
stock for each $1 of allowed secured claim.  Unsecured  creditors  received 1.88
shares of new common stock for each $1 of allowed claim.

                                       -5-
<PAGE>
     The company will issue 25 million shares of new common stock in conjunction
with  the  plan.  The  existing   common  stock  will  be  cancelled.   Existing
shareholders  of the company on the  effective  date will receive 1 share of new
common stock for each 66 shares of common stock currently  owned.  Approximately
18 million  shares will be issued to creditors,  existing  shareholders  and new
investors.  A reserve of  approximately  7 million shares will be maintained for
additional allowed claims.


     OPERATING LOSSES. The Company incurred net losses of $3,628,887, $9,575,512
and  $5,629,961  for the fiscal years ended  December  31, 1998,  1997 and 1996,
respectively.  Such operating  losses reflect  developmental  and other start-up
activities.  Substantial  cost reductions were made in conjunction with the plan
of  reorganization.  However,  the company has  generated  minimal  revenue from
product  distribution.  The Company's  operations  are subject to numerous risks
associated with establishing any new business,  including  unforeseen  expenses,
delays  and  complications.  There can be no  assurance  that the  Company  will
achieve or sustain  profitable  operations  or that it will be able to remain in
business.


     FUTURE  CAPITAL  NEEDS AND  UNCERTAINTY  OF ADDITIONAL  FUNDING.  Since the
Company's  formation,  it has funded its  operations  and  capital  expenditures
primarily through private placements of debt and equity securities.  See "Recent
Sales of Unregistered  Securities." The company raised $1,000,000 in conjunction
with  the  reorganization  effort  through  new  investment  and  settlement  of
outstanding  litigation.  Should the Company require additional financing in the
future there can be no assurance that such financing will be available at all or
available on terms acceptable to the Company.


     GOVERNMENT REGULATION. The Company's operations are subject to gaming laws,
which vary according to the jurisdiction in which each product is marketed.  The
state and local  laws in the  United  States  that  govern  the lease and use of
gaming  products  vary  widely  and change  frequently  due to  legislative  and
administrative  actions and judicial  interpretations.  If any changes  occur in
gaming laws through  statutory  enactment  or  amendment,  judicial  decision or
administrative  action restricting the manufacture,  distribution or use of some
or all of the Company's  products,  the Company's  present and proposed business
could be  adversely  affected.  The  operation  of  gaming  on  Native  American
reservations is subject to the Indian Gaming  Regulatory Act ("IGR").  Under IGR
certain types of gaming  activities are classified as Class I, Class II or Class
III. The  Company's  business  will be impacted  based upon how its products are
ultimately  classified.  See  "Business - Government  Regulation"  and "Business
-Native American Bingo Operations."


                                       -6-
<PAGE>
     RISK OF LOW-PRICED STOCKS.  Rules 15g-1 through 15g-9 promulgated under the
Securities  Exchange Act of 1934 (the "Exchange  Act") impose sales practice and
disclosure  requirements  on certain  brokers  and dealers who engage in certain
transactions involving "a penny stock."

     Currently,  the  Company's  Common  Stock is  considered  a penny stock for
purposes of the  Exchange  Act. The  additional  sales  practice and  disclosure
requirements imposed on certain brokers and dealers could impede the sale of the
Company's  Common  Stock  in the  secondary  market.  In  addition,  the  market
liquidity and price for the Company's securities may be adversely affected.

     Under the penny stock  regulations,  a broker or dealer selling penny stock
to   anyone    other   than   an    established    customer    or    "accredited
investor"'(generally,  an individual with a net worth in excess of $1,000,000 or
annual incomes exceeding $200,000,  or $300,000 together with his or her spouse)
must make a special suitability determination for the purchaser and must receive
the purchaser's  written consent to the  transaction  prior to sale,  unless the
broker or dealer or the transaction is otherwise exempt.

     In addition,  the penny stock  regulations  require the broker or dealer to
deliver, prior to any transaction involving a penny stock, a disclosure schedule
prepared by the Securities and Exchange  Commission  (the "SEC") relating to the
penny  stock  market,  unless the  broker,  or  dealer,  or the  transaction  is
otherwise exempt. A broker,  or dealer is also required to disclose  commissions
payable to the broker or dealer and the  registered  representative  and current
quotations for the  Securities.  In addition,  a broker or dealer is required to
send monthly statements  disclosing recent price information with respect to the
penny stock held in a  customer's  account and  information  with respect to the
limited market in penny stocks.

     TRADEMARK AND PATENT  PROTECTION.  The Company  relies on a combination  of
patent,  copyright and trademark law and technical  security measures to protect
its products.  Notwithstanding these safeguards,  it is possible for competitors
of the Company to imitate it  products.  Furthermore,  others may  independently
develop  products  similar  or  superior  to those  developed  or planned by the
Company.  While the Company may obtain  patents  with  respect to certain of its
products,  the Company may not have sufficient resources to defend such patents;
such patents may not afford all necessary protection and competitors may develop
equivalent  or  superior  products  that  may not  infringe  such  patents.  See
"Business - Patents and Trademarks."






                                       -7-
<PAGE>
PRODUCTS

MAX BINGO SYSTEMS

     The Company's MAX Bingo Systems products  currently include three different
products:

     [i] MAXPLUS. The MAXPLUS Bingo System was the first proprietary  electronic
bingo system  developed by the  Company.  MAXPLUS is designed to increase  bingo
revenue at bingo halls, reduce  administration costs and increase the excitement
of play and the opportunity for bingo players to win.  MAXPLUS gives players the
opportunity  to  electronically  play up to 300 bingo cards  simultaneously.  In
addition,  the System tracks necessary  financial and analytical  information by
providing a fully integrated accounting package.

     [ii] MAXLITE. The MAXLITE Bingo system is a portable,  hand-held electronic
bingo unit that allows  users to play up to 300 bingo  cards per game.  The unit
offers many of the  advantages of the MAXPLUS  system in a lightweight  wireless
package.  Approximately  100 MAXLITE  units are  currently  in use in the United
States.

     [iii] TurboMAX.  TurboMAX is a pari-mutuel electronic bingo system that has
five  progressive  jackpots  with  five  different  patterns  for each  game.  A
percentage of player purchases can be allocated toward a jackpot, which allows a
jackpot to be offered on every game.  This  high-speed  bingo game can be played
every 45 to 60 seconds.

     In February, 1998 the Company executed a Financing,  Licensing, and Royalty
agreement with a major competitor,  Bingo Technologies Corporation ("BTC"). This
agreement  granted BTC the exclusive  right to sell,  market,  manufacture,  and
distribute  the MAXPLUS and TurboMAX  products in the United States for a period
of five years. This agreement  produced a one-time  licensing fee of $1,500,000,
and was to generate  royalties of 15% based on the gross  revenues  generated by
BTC from marketing these products. The royalty amount was in dispute at December
31, 1998. In January of 1999 BTC was acquired by Gametech International, another
competitor.  Gametech  continued to dispute the amount of royalty payments.  AGT
filed  suit  regarding  the  issue in June  1999.  In July of 1999  the  parties
resolved  the  dispute.  In  settlement,  Gametech  made a one time  payment  of
$850,000 to AGT. Gametech was allowed to retain and operate existing MAXPLUS and
Turbo MAX  locations.  AGT  re-acquired  the  rights to these  products  for the
future.  In  clarification  of an existing  patent license  between the parties,
Gametech was granted an non-exclusive license to the AGT patents.



                                       -8-
<PAGE>
OTHER PRODUCTS

     The company has expended  considerable  resources to develop two additional
products  known  as Sonic  Bingo  and  PartiMAX.  These  products  have not been
completed.  The company is currently  evaluating  the cost  involved to complete
development.  These  projects  will  not  proceed  until a  market  analysis  is
performed to  determine  the  potential  return on  investment.  The company may
decide to abandon these efforts if the market potential is not sufficient.

     Sonic  Bingo is a  high-stakes  electronic  speed  bingo unit that uses the
Company's  TurboMAX   software,   and  is  capable  of  playing  multiple  cards
simultaneously in sixty (60) second  intervals.  This system is capable of being
networked  throughout gaming halls as well as on a wide area basis,  (subject to
regulatory approvals).  The Company sold an 18.75% interest in this project to a
third  party for  $750,000;  $390,000  of which  had been  received  up  through
December 31, 1997.  The executory  contract with the third party was rejected in
the bankruptcy proceeding. AGT believes it has no further relationship with this
party.  Development  of Sonic  Bingo  has not been  completed.  The  company  is
currently evaluating the merits of this project.

     Parti MAX is a hand held unit designed for use in the United  Kingdom.  The
unit,   although  similar  in  concept  to  the  MAXLITE  requires   significant
development cost to design and produce. The United Kingdom was identified as new
market for a portable  unit since no portable  electronic  bingo  systems are in
use. The bingo market there is substantial.

     The Company  entered into a marketing and sales  agreement with the leading
supplier of bingo paper and related  products in the United Kingdom.  This party
has not participated in the development cost of the project.  This agreement was
rejected as an  executory  contract  in the  bankruptcy  proceeding.  AGT has no
current relationship with this supplier.

     Development  of PartiMAX has not been  completed.  It is unlikely  that the
company will continue development.


SALES AND MARKETING

     MAX Bingo Systems are leased to bingo halls.  The cost to the hall operator
is based on a daily  lease rate per unit,  which  reduces  the  initial  capital
outlay of the operator.  The Company's MAX Bingo Systems complement  paper-based
bingo halls. The Systems are modular;  consequently, as their popularity builds,
additional units can be added to the systems.

                                       -9-
<PAGE>
     TARGET MARKETS. Native American,  charity, military, casino and cruise line
bingo operations are considered by the Company to be prospective markets for the
Company's  electronic  bingo  systems.  Currently,  the Company is focusing  its
marketing efforts on the Native American and charity markets.


     MARKET SEGMENTS. The key segments of the bingo market are as follows:


     HIGH STAKES  NATIVE  AMERICAN  BINGO.  There are  presently  over 200 bingo
operations  located on Native  American  reservations  in the United  States and
Canada. It is believed that the largest bingo games in the United States are run
on Native American  reservations.  The bingo halls located on these reservations
typically seat between 300 and 2,000 players. Bingo games are conducted three to
seven days per week, playing up to 28 bingo sessions per week.


     CHARITY  BINGO.  Charity bingo sessions are conducted on a regular basis by
parochial,  private and public schools, churches, and other organizations across
the United States and Canada.  Many of these bingo  operations  are too small to
consider for permanent electronic installations.

     In many states,  it is legal for a number of  charities  to associate  with
each other for the purpose of operating  bingo halls.  In North  America,  it is
estimated that the majority of charity bingo is conducted in this manner.  Under
this concept, the association leases a suitable hall, plays bingo seven days per
week, with a specific charity accepting  responsibility  for operations for that
particular  day of the week.  In the United  States,  this type of  operation is
known as a "bingo  barn."  The  result  is a bingo  operation  that is much more
efficient  than isolated  charity  games.  These charity  bingo  operations  are
candidates for electronic bingo systems.


REAL ESTATE HOLDING

     On June 22, 1995, the Company  acquired all of the capital stock of Branson
Signature  Resorts  (Branson) and its wholly-owned  subsidiaries in exchange for
5,999,820 shares of the Company's Common Stock.

     Branson  was a resort and land  development  company  located  in  Branson,
Missouri.  Branson  owned two  separate  real  estate  properties:  (i) a resort
property  with  limited  existing  development  on site;  and (ii) 178  acres of
undeveloped  property in Stone  County,  Missouri.  On November  17,  1995,  the
Company disposed of the resort property by forfeiture to the mortgage holder.

                                      -10-
<PAGE>
     The Company is currently  attempting  to sell the 178 acres of  undeveloped
property.  The  property  is burdened  with a first  trust deed of $1.6  million
including  accrued  interest  and a  second  mortgage  of  $884,000.  Management
believes  that the proceeds  from sale of the property may not be  sufficient to
pay the secured debt in full.


NATIVE AMERICAN BINGO OPERATIONS

     THE INDIAN GAMING  REGULATORY ACT. IGR classifies  games that may be played
on  Native  American  land  into  three  categories.  Class  I  gaming  includes
traditional Native American social and ceremonial games and is regulated only by
the tribes.  Class II gaming includes  bingo,  pull tabs,  lotto,  punch boards,
instant bingo,  certain card games played under limited  circumstances and other
games  similar  to bingo if those  games are played at the same  location  where
bingo is played.  Class III gaming  consists of all forms of gaming that are not
Class I or Class II, such as video casino games, slot machines, most table games
such as black jack, craps and keno. Generally,  Class II gaming may be conducted
on Native American lands if the state in which the Native  American  reservation
is located  permits such gaming for any purpose by any person.  Class III gaming
may only be conducted  pursuant to a compact reached between the Native American
tribe  and the state in which the tribe is  located.  See"  Business  Government
Regulation."

GOVERNMENT REGULATION

     In the United  States,  bingo is legal in the  District of Columbia and all
states,  except  Utah and  Hawaii.  In 46 of those  states,  it must be operated
either by, or in association with, a not-for-profit organization. The two states
where it may be played under private ownership for profit are Nevada and certain
parts of Maryland. In any of the 48 states where bingo and other forms of gaming
are legal,  bingo may be played on tribal lands under tribal  ordinance and with
licensing approval by the tribes without state regulation. In each of the states
where bingo is legal, the opening and operation of a game requires a license. In
some states licensing is controlled at the state level and in other states it is
controlled  and issued at the local level.  Some states have formed and maintain
formal gaming  commissions.  In several states, the gaming  commissions  require
that  distributors,  manufacturers and suppliers of bingo products and equipment
as well as their sales  representative  obtain licenses.  State  regulations may
limit the amount of  revenues  that the Company  can  generate  by limiting  the
number of  sessions,  revenues per  session,  number of  locations  which may be
operated,  or other matters. The application for administrative  approval by the
Nevada Gaming Control Board to market and operate the Company's electronic bingo
systems was filed to obtain access to the Nevada market. The Company is licensed
in Alaska, Mississippi, Nevada, Texas, Virginia and Wisconsin, and has submitted
an application for licensing to the Province of British Columbia, Canada.

                                      -11-
<PAGE>
     The state and local laws in the United States that govern the lease and use
of  gaming  products  are  widely  disparate  and  continually  changing  due to
legislative  and  administrative  actions and judicial  interpretations.  If any
changes occur in gaming laws through statutory enactment or amendment,  judicial
decision or administrative  action restricting the manufacture,  distribution or
use of some or all of the Company's products, the Company's present and proposed
business could be adversely affected.

     Under IGR certain  types of gaming  activities  are  classified as Class I,
Class II or Class  III.  Class I gaming  includes  traditional  Native  American
Social and ceremonial games and is regulated only by the tribes. Class II gaming
includes bingo,  pull-tabs,  lotto,  punch boards,  instant bingo,  certain card
games played under  limited  circumstances  and other games  similar to bingo if
those games are played at the same  location  where  bingo is played.  Class III
gaming consists of all forms of gaming that are not Class I or Class II, such as
video casino games,  slot machines,  most table games such as black jack,  craps
and keno.  Generally,  Class II gaming may be conducted on Native American lands
if the state in which the Native  American  reservation is located  permits such
gaming for any purpose by any person.  Class III gaming,  on the other hand, may
only be  conducted  pursuant to a compact  reached  between the Native  American
tribe and the state in which the tribe is located.  The Company's  business will
be impacted based upon how its products are ultimately classified.

     No  assurances  can be given that any of the  Company's  contracts  will be
renewed upon the  expiration  of their term or that,  if renewed,  the terms and
conditions  thereof will be favorable to the Company,  nor can any assurances be
given  that a tribe or  tribes  will not  cancel  any such  agreements  prior to
expiration of their stated term.


COMPETITION

     The  Company  believes  it has five main  competitors,  most of which  have
substantially greater financial,  marketing and technological resources than the
Company. In addition, since electronic bingo comprises only a very small segment
of the  industry,  it is  conceivable  that there will be new  products  and new
companies entering this area of business. Notwithstanding this, the Company will
continue to pursue a meaningful share of the electronic bingo market.


PATENTS AND TRADEMARKS

     The Company relies on a combination of patent, trade secret,  copyright and
trademark  law,  nondisclosure  agreements  and technical  security  measures to
protect its  products.  Notwithstanding  these  safeguards,  it is possible  for
competitors of the Company to imitate its products.

                                      -12-
<PAGE>
     Furthermore,  others may independently develop products similar or superior
to those  developed  or planned by the  Company.  While the  Company  may obtain
patents  with  respect to  certain of its  products,  the  Company  may not have
sufficient  resources  to defend such  patents,  such patents may not afford all
necessary protection and competitors may develop equivalent or superior products
which may not infringe such patents.


RESEARCH AND MARKET DEVELOPMENT

     During the fiscal  years ended  December  31, 1998 and 1997,  research  and
market development  expenses of the Company totaled  approximately  $279,059 and
$1,230,426  respectively.  During 1998 and 1997 the  majority of these  expenses
were related to the  development  of MAXLITE,  the  refinement  of MAXPLUS,  and
TurboMAX  and the further  development  of its new  products  PartiMAX and Sonic
Bingo.


EMPLOYEES

     As of March 31,  1999,  the Company had 1 employee.  This  employee was not
represented by a labor union.


                                      -13-
<PAGE>
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                         ITEM 2. DESCRIPTION OF PROPERTY
--------------------------------------------------------------------------------

     The Company's principal executive offices are located in Las Vegas, Nevada.
The offices were relocated from  Vancouver,  British  Columbia  during 1998. The
company also closed a small office previously located in Branson, Missouri.

     In  February,  1998  pursuant  to  an  agreement  with  Bingo  Technologies
Corporation, ("BTC") the Company assigned it's obligations for it's distribution
facility in Colorado, and its sales and marketing office located in Ohio to BTC.

     On June 22, 1995, pursuant to the Exchange Agreement,  the Company acquired
all the capital stock of Branson and its  wholly-owned  subsidiaries in exchange
for 5,999,820 shares of the Company's Common Stock. Branson is a resort and land
developer  located in Branson,  Missouri,  which owned two separate  real estate
properties: (i) a resort property with limited existing development on site; and
(ii) 178 acres of undeveloped  property in Stone County,  Missouri.  On November
17,  1995,  the Company  disposed of the resort  property by  forfeiture  to the
mortgage  holder.  The Company is currently  attempting to sell the 178 acres of
undeveloped property.

     The  undeveloped  property has been pledged to secure the repayment of: (i)
promissory notes in an aggregate principal amount of $1,339,792 bearing interest
at nine percent (9%) per annum and due in July 2002;  (ii) a promissory  note in
the principal  amount of $60,812 bearing interest at ten percent (10%) per annum
and due on demand;  and (iii) a convertible  debenture in the  principal  amount
of$,884,000  bearing  interest at seven  percent  annually.  This note is due in
seven years from the date of confirmation of a plan of reorganization.

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

     In addition to  ordinary  routine  litigation  incidental  to its  business
operations,  which the Company does not believe,  in the aggregate,  will have a
material  adverse  effect on the  Company,  or its  operations,  the  Company is
engaged in the following lawsuits:

     In January 1996, Tierra Corporation  ("Tierra")  commenced an action in the
Circuit  Court of Stone  County,  Missouri,  claiming that River Oaks Resort and
Country Club, Inc. a Texas  corporation and a subsidiary of Branson ("River Oaks
Resort") defaulted on a promissory note.

                                      -14-
<PAGE>
     A judgment  is sought in the  principal  amount of $75,106,  plus  interest
since October 18, 1995, at 10% per annum.

     An answer  has been  filed on behalf of River  Oaks  Resort  averring  that
Tierra has not performed  conditions  precedent to assessing any  deficiency and
that no accounting  regarding the disposition of security for such note has been
provided and, in addition, a counter claim was filed,  asserting Tierra disposed
of stock collateral in a commercially unreasonable manner.

     A principal  of Tierra  filed suit in Dallas,  Texas  concerning  the stock
collateral.  A summary judgement was awarded to Tierra Corp in June of 1999. The
River Oaks  resort  subsidiary  has no assets at this time.  This  wholly  owned
subsidiary of Branson Signature Resorts is subject to dissolution in conjunction
with the effective date of the bankruptcy plan.

     In  February  1996,  P.D.I.,  LLC, a  Missouri  limited  liability  company
("PDI")commenced  an  action  in the  Circuit  Court of Stone  County  Missouri,
claiming breach of a real estate purchase agreement which in part,  provided for
the construction of a sewage  treatment  facility for which damages are claimed,
including the awarding to PDI of all escrow funds,  costs and expenses  incurred
by PDI  over and  above  the  amount  of  escrow  funds  and cost and  expenses,
including attorney fees in connection with the commencement of the action.

     In  response,  the Company and River Oaks Resort have  counter  claimed for
damages,  in an amount to be  determined at trial,  incurred when  plaintiff PDI
withdrew  funds from the escrow  fund  created  for  construction  of the sewage
treatment facility and the permit  application for construction  approval by the
Missouri Department of Natural Resources.  Moreover,  a claim has also been made
by River Oaks Resort and the Company that  subsequent  development  attempted by
PDI has encroached upon property development  belonging to River Oaks Resort and
the  Company  without  the  right to do so,  including  damages  for  disruption
resulting therefrom.

     In April 1996, Larry Newman  ("Newman")  commenced a mechanics' lien in the
Circuit Court of Stone County,  Missouri,  seeking $177,282,  plus interest, for
excavation  work performed  during the period between July 19, 1995 to September
25,  1995  on a  road  across  the  River  Oaks  development  in  Stone  County.
Thereafter,  on or about June 24, 1996,  Jack L. Holt  ("Holt")  filed a similar
petition in the Circuit Court of Stone County,  Missouri,  claiming a mechanics'
lien for engineering and land surveying during the period May 16, 1995 to July4,
1995 for a road  across  the  River  Oaks  development  property  in the  amount
of$9,610,  plus interest.  The Holt case has now been  consolidated  in the case
originally filed by Newman.


                                      -15-
<PAGE>
     The Company has filed a counterclaim  alleging Newman and Holt extended the
road beyond the  boundaries  of the River Oaks  development  property  onto land
owned by Sunset Cove, Ltd., a Missouri corporation.

     The court has since ordered Sunset Cove,  Ltd. joined as a party needed for
justadjudication. Discovery has not yet commenced.

     On   November   15,   1996,   Fortunet,    Inc.,   a   Nevada   corporation
("Fortunet"),filed  a patent  infringement  claim in the United States  District
court  Southern  District of  California  against the company and certain  other
companies which manufacture and distribute  electronics bingo systems,  claiming
that the defendants,  including the Company,  infringed Fortunet's United States
Patent No.4,624,462 (the "Patent"). Fortunet seeks to enjoin the defendants from
any  further  alleged  infringement  of the  Patent  and is  seeking  actual and
enhanced  damages as well as attorneys  fees and other costs.  In July 1997, the
case was  transferred  from the federal  court in San Diego,  California  to the
federal court in Phoenix, Arizona. Discovery has not yet commenced.

     The Company  entered  into a Lease  License  Agreement,  dated  December 7,
1995with G&J  Production  Trust.  Pursuant to the Lease License  Agreement,  G&J
Production  Trust leased 200 MAXPLUS Bingo System units from the Company for use
in G&J Production's  bingo operation located in Victorville,  California.  As of
January 23, 1997, G&J Production Trust was approximately  three months behind in
their  payments  to the  Company and the  Company  removed  its  equipment  from
Victorville. In July 1997, the Company commenced a lawsuit. This action includes
a claim  for all  outstanding  accounts  receivable,  breach  of  Contract,  and
reimbursement  for  various  costs  expended  by the  Company  in regards to the
Contract.

     In December 1997, a former employee commenced an action against the Company
in the District Court of the County of Hennepin,  Minnesota alleging non-payment
of certain expenses incurred while in the employ of the Company. The Company has
entered a defense and denies any liability.

     The Company is defending these lawsuits. However, no assurance can be given
as to the outcome of these cases.  Management  and counsel  believe the ultimate
liability  will not have a material  adverse  effect on the company's  financial
position or results of operations.


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

     No matters  were  submitted to a vote of security  holders  during the year
ended December 31, 1998.

                                      -16-
<PAGE>

                                     PART II


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


     MARKET INFORMATION.  The Company's Common Stock is traded on the NASD's OTC
Bulletin  Board under the symbol  "AGTI." The following  table presents the high
and low bid  quotations  for the Common  Stock as  reported by the NASD for each
quarter during the last two years. Such prices reflect  inter-dealer  quotations
without  adjustments  for retail  markup,  markdown  or  commission,  and do not
necessarily represent actual transactions.

  Year                    Period               Low             High
  1997
                       First Quarter           .45             1.04
                       Second Quarter          .31              .83
                       Third Quarter           .18              .46
                       Fourth Quarter          .04              .20
  1998
                       First Quarter           .02              .08
                       Second Quarter          .02              .08
                       Third Quarter           .01              .03
                       Fourth Quarter          .01              .02

     DIVIDENDS.  The Company has never declared or paid  dividends.  The Company
does not  anticipate  paying  dividends on its Common  Stock in the  foreseeable
future.

     The number of  shareholders  of record of the Company's  Common Stock as of
June 28, 1999 was 408.


     RECENT SALES OF UNREGISTERED  SECURITIES.  Sales of unregistered securities
during the past year were filed pursuant to 8-K on the following dates:  January
14, 1998; March 3, 1998.


                                      -17-
<PAGE>
--------------------------------------------------------------------------------
                       ITEM 6. MANAGEMENT'S DISCUSSION AND
                         ANALYSIS OR PLAN OF OPERATIONS
--------------------------------------------------------------------------------


GENERAL

     The  company  experienced  operating  losses  of  $3,628,887  in  1998  and
$9,575,512  in  1997.  During  1998  liabilities  of the  company  significantly
exceeded  assets.  The company was in default on debt obligations and was unable
to meet the cash flow needs in the  ordinary  course of  business.  The  company
believes it had exhausted  additional financing sources.  Management  determined
that the best course of action was to seek  reorganization  under  chapter 11 of
the U. S.  bankruptcy  code.  A petition for  reorganization  was filed with the
bankruptcy  court in the District of Las Vegas on August 26,  1998.  The company
filed a plan of  reorganization  in  December  1998.  The  plan  and  disclosure
statement was approved in March 0f 1999.  The  bankruptcy  plan was confirmed by
the court on June 29, 1999. The plan becomes effective on early August, 1999.

RESULTS OF OPERATIONS

     The company was able to reduce losses during 1998 to $3.6 million  compared
to a loss of $9.5 million in 1997. The reduced  operating loss was primarily due
to a substantial  cost reduction  program  implemented  in conjunction  with the
reorganization  effort.  The company has reduced  costs to minimum  levels until
additional revenue can be generated through new marketing efforts.

     Revenue  production  during 1998 was generated  primarily from lease of Max
Lite  handheld  electronic  bingo  units.  The company  did not realize  royalty
revenue expected from licensing of the Max Plus fixed based electronic units due
to a dispute with the  licensee.  This  dispute was  resolved in July 1999.  The
company  settled  the  dispute  for a  one-time  payment  of  $850,000  from the
licensee.  The company retains the rights to the Max Plus product and is able to
market the product without restrictions.

     Revenue  subsequent  to  December  31,  1998 was minimal due to the lack of
product placements.  The company is currently seeking placement for Max Lite and
Max Plus units.  The company is also exploring new revenue sources to ultimately
diversify revenue to decrease reliance on the electronic bingo markets.

     Future  success of the  company  depends on its  ability to place  existing
electronic bingo products and its ability to identify and achieve new sources of
revenue.


                                      -18-
<PAGE>

INFLATION AND REGULATION

     REGULATION The Company's operations have not been, and in the near term are
not expected to be, materially affected by inflation or changing prices. This is
due in part to the  highly  capital  intensive  nature  of the  majority  of the
business of the Company,  thereby reducing the chances of competition  providing
for sales price  reductions  while  inflation in the costs are more likely to be
passed  through to the customer.  The Company's  operations are subject to state
and local gaming laws as well as various federal laws and regulations  governing
business activities with Native American Tribes. The State and local laws in the
United  States  which  govern  the lease and use of gaming  products  are widely
disparate and continually changing due to legislative and administrative actions
and  judicial  interpretations.  If any  changes  occur in gaming  laws  through
statutory  enactment or amendment,  judicial decision or  administrative  action
restricting the manufacture, distribution or use of some or all of the Company's
products,  the  Company's  present  and  proposed  business  could be  adversely
affected.  The operation of gaming on Native American reservations is subject to
the Indian  Gaming  Regulatory  Act ("IGR").  Under IGR certain  types of gaming
activities  are  classified  as Class I,  Class II or Class III.  The  Company's
business will be impacted based upon how its products are ultimately classified.
However,  the Company does not believe  that any  recently  enacted or presently
pending proposed  legislation will have a material adverse effect on its results
of operations.

LIQIUDITY AND CAPITAL RESOURCES

     The  company  exhausted   financing  sources  during  1998.  The  resulting
shortfall in operating capital required the company to seek reorganization under
chapter 11 of the U. S.  Bankruptcy  Code.  The  company's  bankruptcy  plan was
confirmed by the court in June 1999. The plan becomes effective on early August,
1999.

     The liabilities of the company were  substantially  reduced by the terms of
the plan of  reorganization.  The company will have $2.6 million in debt secured
by the Branson real estate. All other debt, secured and unsecured, was satisfied
in full  through  issuance of new common  stock.  The company  raised $1 million
through new investment and settlement of outstanding litigation.

     The company may require additional  capital to fund future projects.  There
is no assurance that such capital will be available  when needed.  The potential
lack of access to capital  could  inhibit the growth of the company.  This could
cause the  company  to delay  pursuit  of  projects  that may be  identified  as
substantial returns on investment.



                                      -19-

<PAGE>
--------------------------------------------------------------------------------
                          ITEM 7. FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

     The financial statements of the Company and supplementary data are included
immediately  following the signature page to this report. See Item 13 for a list
of the financial statements and financial statement schedules included.


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

     The Company has no changes in or disagreements  with its accountants on any
accounting and financial disclosure.


                                      -20-
<PAGE>
                                    PART III

--------------------------------------------------------------------------------
           ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
--------------------------------------------------------------------------------

                                                                        Director
Name, Age and Principal Employment for Past Five Years                   Since
--------------------------------------------------------------------------------

Firoz Lakhani, 53, was President, Chief Operating Officer                 1995
and Director of the company from September 1995 until his
resignation in February 1998.  Mr. Lakhani served as a Director
at Olds Industries, Inc., a Canadian public company, from August
1993 to September 1995, and was employed at Park Georgia
Realty, a real estate and land development brokering company,
from July 1990 to August 1993. From 1979 to 1990, Mr. Lakhani
was employed at Montreal Trust Company, where he headed the
Commercial Real Estate Division.

Robert C. Silzer, Sr., 51, was Chairman, Chief Executive Officer          1993
and Director of the Company from November 1993 until his
resignation in February 1998.  He also served as a Director of
InFOREtech Golf Technology, Inc., since September 1995.  From
1986 to 1992,Mr. Silzer served as President and Chief Executive
Officer of Supercart International, Inc.

Robert L. Hunziker, 53, was appointed as a Director of the                1998
Company effective January 14, 1998. Mr. Hunziker has been
employed in corporate relations and corporate finance with public
companies since 1992. Previously, he was a limited partner
(associate director)of Bear, Sterns & Company, Inc., and he was
a principal of Oppenheimer & Company, Inc.

Thomas S. Nieman, 49, was appointed Chief Executive Officer of            1998
the Company on February 15, 1998 and served in that capacity
until his resignation in August 1998. Mr. Nieman served as Vice
President of Sales & Marketing for Shuffle Master, Inc., a public
company supplying the casino gaming industry from1995 to 1997,
and was Vice President of Marketing for Bally Gaming Inc., a major
supplier of gaming equipment from 1992 to 1995.

Daniel H. Scott, 43, is currently Chairman, President and Chief           1998
Executive Officer of the company.
                                      -21-
<PAGE>
Prior to joining  the  company Mr.  Scott was Senior Vice President
and Chief Financial for MGM Grand Hotel Corp. of Las Vegas, Nevada,
a casino operator, from September 1995 until August 1998.  Prior
to that Mr. Scott was Vice President and Treasurer during a
twelve-year employment with Caesars Palace, a casino operator,
in Las Vegas, Nevada.

Other executive officers:

Robert C. Silzer, Jr., 32, was Executive Vice President of the company until his
termination in August 1998. Silzer, Jr. was a director of the Company from March
31, 1997 until December 17, 1997.

Donald Robert MacKay,  45, was the Chief  Financial  Officer of the Company from
August 1995 until his resignation in August 1998.

Compliance with Section 16(a) of the Exchange Act

     Based  solely  upon a review of forms 3, 4, and 5 and  amendments  thereto,
furnished to the Company during or respecting its last fiscal year, no director,
officer,  beneficial owner of more than 10% of any class of equity securities of
the  Company  or any other  person  known to be  subject  to  Section  16 of the
Exchange  Act of 1934,  as  amended,  failed to file on a timely  basis  reports
required by Section  16(a) of the Exchange Act for the last fiscal year or prior
fiscal years.

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

     The following  summary  compensation  table sets forth certain  information
regarding  compensation  paid in each of the Company's  last two fiscal years to
the  Company's  Chief  Executive  Officer  and other  executive  officers  whose
salaries and bonus exceeded $100,000:
<TABLE>
<CAPTION>

                           SUMMARY COMPENSATION TABLE

                                                               Other           All
Name and Principal          Fiscal                             Annual         Other
Position                     Year    Salary         Bonus   Compensation   Compensation (1)
-----------------------     -----   --------        -----   ------------   ------------
<S>                         <C>     <C>             <C>         <C>            <C>
Robert C. Silzer, Sr.,      1996    $175,000 (2)        -       $ 10,000       $ 16,692
Chairman and Chief          1997    $225,000 (3)        -       $ 10,000       $ 16,832 (4)
Executive Officer(10)       1998           -            -              -              -

                                      -22-
<PAGE>
Firoz Lakhani               1996    $125,000 (5)        -       $ 10,000       $ 16,692
President and               1997    $175,000 (6)        -       $ 10,000       $ 13,004 (7)
Chief Operating Officer     1998           -            -              -              -

Thomas Nieman               1998    $ 52,500            -              -       $    750
</TABLE>

(1)  Amounts  under "All Other  Annual  Compensation"  represent  an  automobile
     allowance for: Robert C. Silzer, Sr., of $10,800 for 1996, $12,000 for 1997
     and certain employee benefits; an automobile allowance for Firoz Lakhani of
     $9,600  for  1996,  $10,800  for 1997 and  certain  employee  benefits;  an
     automobile  allowance for Thomas Nieman $750 for 1998 and certain  employee
     benefits.
(2)  Includes $37,500 deferred to subsequent year.
(3)  Includes $29,375 deferred to subsequent year.
(4)  Includes $1,500 deferred to subsequent year.
(5)  Includes $33,333 deferred to subsequent year.
(6)  Includes $23,125 deferred to subsequent year.
(7)  Includes $1,350 deferred to subsequent year.

Effective  February 15, 1998, Mr. Silzer,  Sr. and Mr. Lakhani resigned as Chief
Executive Officer and Chief Operating Officer, respectively.

No bonuses were paid in 1998 and 1997.

Director Compensation

There are no  arrangements  pursuant to which  Directors are compensated for any
services provided as a Director.

Option Grants in Last Fiscal Year

     During 1998  2,850,000  options  were  granted to Thomas  Nieman.  Upon the
resignation of Mr. Nieman during August 1998, the 2,850,000 were cancelled.

                                      -23-
<PAGE>

Aggregate Option Exercises in Last Year, and Year-End Option Values

     No options were exercised during 1998.

Employment Agreements

     Effective January 1, 1994, the Company entered into an employment agreement
with Robert C. Silzer,  Sr., under which Mr. Silzer,  Sr. served as Chairman and
Chief  Executive  Officer  of  the  Company.  Pursuant  to  the  Agreement,  Mr.
Silzer,Sr,.  was paid a salary of $75,000 in 1994, $125,000 in 1995 and $137,500
in1996.  He  deferred  $37,500 of his  salary  for the year 1996.  He was paid a
salary  of  $225,000  in 1997  and  deferred  $29,375  to 1998.  The  employment
agreement  was  terminated  in February 1998 in  conjunction  with Mr.  Silzer's
resignation as chief executive  officer.  Mr. Silzer is pursuing a claim against
the bankruptcy for unpaid wages under the contract.

     Effective  September  5,  1995,  the  Company  entered  into an  employment
agreement  with Firoz  Lakhani,  under which Mr. Lakhani served as President and
Chief Operating Officer of the Company.  Pursuant to the Agreement,  Mr. Lakhani
was paid a salary of $6,250 per month from  September  1, 1995 to  December  31,
1995 and $91,667 in 1996.  He deferred  $33,333 of his salary for the year 1996.
Mr.  Lakhani was paid a salary of $175,000 in 1997,  and deferred  $23,125 1998.
The employment agreement was terminated in February 1998 in conjunction with Mr.
Lakhani's  resignation as President and chief operating officer.  Mr. Lakhani is
pursuing a claim against the bankruptcy for unpaid wages under the contract.

     On February 15, 1994,  the Company  entered into an  employment  agreement,
amended December 8, 1997 and February 17, 1998, with Robert C. Silzer,  Jr. (the
"Silzer Jr. Employment  Agreement") under which Mr. Robert C. Silzer, Jr. served
as  Executive  Vice  President  of the  Company,  effective  September  1, 1997.
Pursuant to the Silzer, Jr. Employment Agreement, and amendments thereto, Robert
C. Silzer, Jr. was paid a salary of $49,000 in 1994, $55,000 in 1995 and $85,937
in 1996 and  effective  September  1,  1997,  his  annual  salary  increased  to
$125,000.  The company terminated this agreement on July 31, 1998. Mr. Silzer is
pursuing a claim against the bankruptcy for unpaid wages under the contract.

     On March 6, 1998,  the Company  entered into an employment  agreement  with
Thomas N. Nieman,  under which Mr.  Nieman was to serve as  President  and Chief
Executive Officer.  This agreement was terminated upon Mr. Nieman's  resignation
from the company in August 1998.


                                      -24-
<PAGE>

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

     The following  table sets forth  information as of March 31, 1999 regarding
the beneficial  ownership of Common stock of the Company by (i) the directors of
the Company,  (ii) each executive named in the Summary  Compensation  Table that
appears under "Executive  Compensation-Summary  Compensation  Table," (iii) each
person  who was known by the  Company  to own  beneficially  more than 5% of the
outstanding  shares of Common  Stock of the  Company and (iv) all  officers  and
directors as a group.

Name and address of Beneficial Owner   Number of Shares Owned   Percent of Class

Robert L. Hunziker                            1,730,734               1.5% (1)
2482-650 West Georgia Street
PO Box 11610
Vancouver, British Columbia

All officers and directors                    1,730,734               1.5% (2)
 as a group (5 persons)

(1)  Includes  stock  options that are  exercisable  by Mr.  Hunziker to acquire
     750,000  shares of Common Stock and also  includes  897,720  shares held by
     indirect ownership.

(2)  All outstanding  options were cancelled in conjunction  with the bankruptcy
     plan which becomes effective early August, 1999.

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

     In  December  1995,  the Board of  Directors  instituted  a program to make
available to its  directors and key  employees  corporate  loans to exercise the
options  granted.  This program  allowed for directors to borrow up to $600,000,
secured by Promissory  Notes (Note),  with  principal due and payable five years
from the date of the Note and interest  payable  monthly at the U.S.  base rate.
Other  key  employees  were  allowed  to  borrow  up to  $50,000,  with  monthly
repayments including interest at U.S. base rate and principal.

     Firoz Lakhani,  the President,  Chief Operating Officer,  and a Director of
the  Company,  executed  Promissory  Notes  ("Lakhani  Notes") in  January  1996
and1997,   totaling   $599,325,   which   allowed   the   exercise   of  options
totaling1,770,000 common shares.

     Robert C. Silzer, Sr., the Chairman and a Director of the Company, executed
Promissory  Notes ("Silzer  Notes") in January 1996,  totaling  $597,800,  which
allowed the exercise of options totaling 1,530,000 common shares.


                                      -25-
<PAGE>

     In view of the precipitous decline of the stock price, and given that these
shares were not freely transferable, the Board of Directors determined to:

1)   reduce the exercise price to more closely reflect the market value; and
2)   permit  the  interest  remittances  made on the Notes to be  applied to the
     revised exercise price of the shares.

     As a result the exercise  price for options was adjusted from a range $0.26
to $0.30 per share to $0.054 per share which more closely  reflected  the market
value at December 31, 1997.

     The Lakhani Notes were  therefore  revised to reflect a total of $95,757 of
which $79,834 had been paid by Mr.  Lakhani as of December 31, 1997. The balance
of $15,923 will be offset by monies owing to Mr. Lakhani by the Company.

     The  Silzer  Notes were also  revised  to reflect a total of $82,773  which
wasfully paid by Mr. Silzer as of December 31, 1997.

     During the fiscal year ended December 31, 1998, the Board of Directors held
approximately 10 meetings. The Company does not have a standing audit committee,
nominating committee or compensation committee.










                                      -26-
<PAGE>


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

(a)  The following documents are filed as part of this report.



1.   Financial Statements                                                   Page

Report of Robison, Hill & Co., Independent Certified Public Accountants    F - 1
Consolidated Balance Sheets as of December 31, 1998, and 1997              F - 2
Consolidated Statements of Operations for the years ended
     December 31, 1998, and 1997                                           F - 4
Consolidated Statement of Stockholders' Deficit for the year ended
     December 31, 1998                                                     F - 5
Consolidated Statement of Stockholders' Deficit for the year ended
     December 31, 1997                                                     F - 6
Consolidated Statements of Cash Flows for the years ended
     December 31, 1998, and 1997                                           F - 7
Notes to Financial Statements                                              F - 9

2. Financial Statement Schedules

     The following  financial statement schedules required by Regulation S-X are
included herein.

     All Schedules are omitted  because they are not  applicable or the required
information is shown in the financial statements or notes thereto.









                                      -27-
<PAGE>
 3. Exhibits

     The following exhibits are included as part of this report:

Exhibit
Number                                   Exhibit
2.1       (1) Articles of Amendment to Articles of Incorporation of the Company.
2.2       (1) Articles of Amendment to Articles of Incorporation of the Company.
2.3       (1) Articles of Amendment to Articles of Auto N Corporation.
2.4       (1) Articles of Amendment to Articles of MacTay Investments Co.
2.5       (1) Articles of Incorporation of MacTay Investments Co.
2.6       (1) Bylaws of the Company.
6.20      (1) Financing, Royalty and Licensing agreement with Bingo Technologies
              Corporation, dated February 9, 1998.

27.1          Financial Data Schedule

(1)  Documents  previously filed and incorporated by reference herein,  the same
     numbered exhibit to Registrant's Registration Statement on Form 10-SB filed
     on January 16, 1997.

(b)  Sales of unregistered  securities  during the past year were filed pursuant
     to 8-K on the  following  dates:  January 14,  1998;  March 3, 1998 and are
     incorporated by reference.

(c)  The exhibits listed under Item 14(a)(3) are incorporated by reference.

(d)  No financial statement schedules required by this paragraph are required to
     be filed as a part of this form.

                                      -28-
<PAGE>

--------------------------------------------------------------------------------
                                   SIGNATURES
--------------------------------------------------------------------------------


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

                        ADVANCED GAMING TECHNOLOGY, INC.


Dated: July 28, 1999                      By /s/ Daniel H. Scott
       -------------                      -------------------------------------
                                          President and Chief Executive Officer

     Pursuant to the  requirements  of the  Securities  Exchange Act of 1934, as
amended, this report has been signed below by the following persons on behalf of
the Registrant and in the capacities indicated on this 28th day of July, 1999.

Signatures                                                     Title


/s/ Daniel H. Scott,                       Chairman and Director
                                           (Principal Executive and Accounting
                                            Officer)


/s/ Robert L. Hunziker                     Director
















                                      -29-
<PAGE>
               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors
Advanced Gaming Technology, Inc.

     We have audited the  accompanying  consolidated  balance sheets of Advanced
Gaming  Technology,  Inc. and subsidiaries as at December 31, 1998 and 1997, and
the consolidated statements of operations, stockholders' deficit, and cash flows
for the years then ended.  These financial  statements are the responsibility of
the Company's  management.  Our responsibility is to express an opinion on these
financial statements based on our audits.

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

     In our opinion,  the financial statements referred to above present fairly,
in all material respects,  the financial position of Advanced Gaming Technology,
Inc. and  subsidiaries as of December 31, 1998 and 1997 and the results of their
operations,  and their cash flows for the years  then ended in  conformity  with
generally accepted accounting principles.

     The accompanying  financial statements have been prepared assuming that the
Company will continue as a going concern. As shown in the financial  statements,
the  Company  incurred  a net  loss of  $3,628,887  for  1998  and has  incurred
substantial  net  losses  in  recent  years.  At  December  31,  1998,   current
liabilities  exceed current assets by $7,603,775  and total  liabilities  exceed
total assets by $3,956,431.  These factors, and the others discussed in note 13,
raise  substantial  doubt  about the  Company's  ability to  continue as a going
concern. The financial statements do not include any adjustments relating to the
recoverability  and  classification  of  recorded  assets,  or the  amounts  and
classification  of liabilities  that might be necessary in the event the Company
cannot continue in existence.

                                                    Respectfully submitted,

                                                    /s/ Robison, Hill & Co.
                                                    Certified Public Accountants
Salt Lake City, Utah
July 20, 1999

                                       F-1
<PAGE>
                        Advanced Gaming Technology, Inc.
                           CONSOLIDATED BALANCE SHEETS
                                  December 31,



                                     ASSETS


                                                           1998          1997
                                                       ----------     ---------
Current Assets
  Cash and cash equivalents (note 2(h)) .............    $109,824      $ 17,276
  Accounts receivable, net ..........................       7,825       244,065
  Inventory (note 2 (c)) ............................      20,000       163,156
  Deferred charges ..................................         --        248,564
  Prepaid expenses ..................................       5,285        84,640
                                                       ----------     ---------

Total current assets ................................     142,934       757,701



Property and Equipment, net (note 2(d)) .............     204,740     2,119,817



Other Assets (note 3) ...............................   3,442,604     4,982,272
                                                       ----------     ---------


Total assets ........................................  $3,790,278    $7,859,790
                                                       ==========    ==========










    The accompanying notes are an integral part of these financial statements

                                       F-2
<PAGE>
                        Advanced Gaming Technology, Inc.
                           CONSOLIDATED BALANCE SHEETS
                                  December 31,



                      LIABILITIES AND STOCKHOLDERS' DEFICIT

                                                           1998          1997
                                                       ----------     ---------
Current Liabilities
Liabilities Subject to Compromise
 Accounts payable ...................................   1,736,734     1,463,624
 Accrued liabilities ................................   1,029,854       813,717
 Other ..............................................         --      2,032,984
 Notes payable (note 4) .............................     313,000       800,000
 Convertible notes (note 5) .........................     748,750     3,477,500
 Deferred revenue (note 2(k)) .......................         --        390,000
 Current maturities of long-term debt (note 6).......   3,918,371     1,911,256
                                                       ----------     ---------
 Total current liabilities ..........................   7,746,709    10,889,081


Long-Term Debt (note 9) .............................         --      1,724,302
                                                       ----------     ---------
 Total Liabilities Subject to Compromise ............   7,746,709    12,613,383

Commitments and Contingencies (notes 11, 12, 13 and 14)

Stockholders' Deficit
 Preferred stock - 10% cumulative $.10 par value;
 authorized 4,000,000 shares; issued - nil ..........         --            --
 Common stock - $.005 par value; authorized 150 million
 shares; issued and outstanding 115,330,600 in 1998 and
 24,609,858 in 1997..................................     576,653       123,049
 Additional paid-in capital .........................  32,044,903    28,072,458
 Accumulated deficit ................................ (36,577,987)  (32,949,100)
                                                       ----------     ---------
 Net stockholders' deficit ..........................  (3,956,431)   (4,753,593)
                                                       ----------     ---------
Total liabilities and stockholders' deficit .........  $3,790,278    $7,859,790
                                                       ==========    ==========


   The accompanying notes are an integral part of these financial statements.

                                       F-3
<PAGE>

                        Advanced Gaming Technology, Inc.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                        For the Years Ended December 31,



                                                          1998           1997
                                                       ----------     ---------

Revenue .............................................  $  537,827   $ 1,338,121
Cost of revenue .....................................     197,980       623,272
                                                       ----------     ---------
Gross margin ........................................     339,847       714,849
                                                       ----------     ---------

Expenses
Research and development ............................     279,059     1,230,426
 General and administration .........................   1,722,006     4,824,253
                                                       ----------     ---------
                                                        2,001,065     6,054,679
                                                       ----------     ---------
 Operating loss .....................................  (1,661,218)   (5,339,830)

Other (expense) income
 Foreign exchange adjustments (note 2 (g)) ..........      (2,338)        1,992
 Financing costs and interest .......................  (1,034,243)   (2,831,981)
 Asia project abandonment costs .....................      (9,986)     (564,062)
 Restructuring charge ...............................    (200,000)     (841,631)
 Write-down of Land held for investment .............  (1,137,432)          --
Loss on disposal of assets ..........................  (1,083,670)          --
Licensing income ....................................   1,500,000           --
                                                       ----------     ---------
Net Loss ............................................  (3,628,887)  $(9,575,512)
                                                       ==========   ===========

Net loss per common share (note 2(i)) ...............  $    (0.05)  $     (0.59)
                                                       ==========   ============
Weighted average common shares
outstanding (note 2 (i)) ............................  69,970,229    16,145,593
                                                      ===========   ===========


The accompanying notes are an integral part of these financial statements.

                                       F-4
<PAGE>
<TABLE>
                        Advanced Gaming Technology, Inc.
                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
                      For the Year Ended December 31, 1998
<CAPTION>


                             Price Range                            Additional
                             Per Share         Common Stock          Paid-in      Accumulated
                                 $         Shares       Amount       Capital        Deficit          Total
                             ---------   -----------   ---------   ------------   ------------    -----------
<S>                          <C>          <C>          <C>         <C>            <C>             <C>
Balance at January 1, 1998                24,609,858   $ 123,049   $ 28,072,458   $(32,949,100)   $(4,753,593)

To settle convertible
  notes and liabilities           --      90,720,742     453,604      3,972,445            --       4,426,049

Net loss for the year                            --          --             --      (3,628,887)    (3,628,887)
                                         -----------   ---------   ------------   ------------    -----------

Balance at December 31, 1998             115,330,600   $ 576,653   $ 32,044,903   $(36,577,987)   $(3,956,431)
                                         ===========   =========   ============   ============    ===========
</TABLE>


    The accompanying notes are an integral part of these financial statements








                                       F-5
<PAGE>

<TABLE>
                        Advanced Gaming Technology, Inc.
                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
                      For the Year Ended December 31, 1997
<CAPTION>

                             Price Range                            Additional
                             Per Share         Common Stock          Paid-in      Accumulated
                                 $         Shares       Amount       Capital        Deficit          Total
                             ---------   -----------   ---------   ------------   ------------    -----------
<S>                          <C>          <C>          <C>         <C>            <C>             <C>
Balance at January 1,1997
(as reported prior to split)              42,248,368   $ 211,242   $ 20,000,471   $(23,373,588)   $(3,161,875)
Reverse stock split                      (31,686,276)  $(158,432)  $    158,432   $(23,373,588)   $(3,161,875)
                                         -----------   ---------   ------------   ------------    -----------
Balance at January 1,1997                 10,562,092   $  52,810   $ 20,158,903   $(23,373,588)   $(3,161,875)

to settle liabilities          .05-.91       162,817         814        299,545            --         300,359
to settle convertible notes    .04-.75     8,134,318      40,672      7,036,012            --       7,076,684
for security                   .10-.34     2,639,510      13,197         39,593            --          52,790
for financing costs & interest .04-.42       147,315         737        218,029            --         218,766
for deferred finance charges       --            --          --        (936,392)           --        (936,392)
for cash                          .175     1,000,000       5,000        695,000            --         700,000
Prisms, Inc. acquisition,
  additional consideration         .21       641,939       3,210         (3,210)           --             --
for share & warrant options    .25-.55       827,559       4,138      1,220,170            --       1,224,308
for employee options               --            --          --      (1,094,224)           --      (1,094,224)
for finders' fees              .10-.70       340,206       1,701        229,044            --         230,745
for compensation               .59-.91        24,102         120         57,380            --          57,500
for consulting & other expenses.10-.50       130,000         650        152,608            --         153,258

Net loss for the year                            --          --             --      (9,575,512)    (9,575,512)
                                         -----------   ---------   ------------   ------------    -----------

Balance at December 31, 1997              24,609,858   $ 123,049   $ 28,072,458   $(32,949,100)   $(4,753,593)
                                         ===========   =========   ============   ============    ===========
</TABLE>






   The accompanying notes are an integral part of these financial statements.

                                       F-6
<PAGE>
                        Advanced Gaming Technology, Inc.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                        For the Years Ended December 31,



                                                          1998           1997
                                                       ----------     ---------
Cash flows from operating activities:
 Net loss ........................................... $(3,628,887)  $(9,575,512)
Adjustments to reconcile net loss to net cash
 used in operating activities:
 Depreciation and amortization ......................     437,410     1,535,791
 Issuance of common stock for expenses ..............         --        429,523
 Deferred revenue ...................................    (390,000)     (375,380)
Change in operating assets and liabilities:
 Accounts receivable ................................     236,240      (177,685)
 Inventory ..........................................     143,156      (120,156)
 Deferred charges ...................................     248,564      (248,564)
 Prepaid expenses ...................................      79,355        45,329
 Bank loan ..........................................         --       (354,100)
 Accounts payable ...................................     273,110       (30,993)
 Accrued liabilities ................................  (1,816,847)    1,165,208
                                                       ----------     ---------
Net cash used in operating activities ...............  (4,417,899)   (7,706,549)
                                                       ----------     ---------
Cash flows from investing activities:
Intangible assets....................................         --            --
Purchase of property and equipment ..................         --       (974,114)
Disposal of property and equipment ..................     986,894       244,400
Security deposits ...................................         --        (73,112)
Write down of property, equipment & Investment in land  1,857,990           --
Other ...............................................     172,451        75,709
                                                       ----------     ---------
Net cash used in investing activities ............... $ 3,017,335      (727,117)
                                                       ----------     ---------



 The accompanying notes are an integral part of these financial statements.





                                       F-7
<PAGE>
                        Advanced Gaming Technology, Inc.
                CONSOLIDATED STATEMENT OF CASH FLOWS (Continued)
                        For the Years Ended December 31,


                                                          1998          1997
                                                       ----------     ---------
Cash flows from financing activities:
Stockholder's loan ..................................  $      --      $ (28,387)
Proceeds from issuance of common stock ..............   4,426,049     8,773,119
Proceeds from convertible notes .....................     525,000     7,350,000
Payments of convertible notes .......................  (3,253,750)   (7,165,000)
Principal payments on notes payable .................    (625,000)     (744,356)
Proceeds from notes payable .........................     138,000       925,000
Principal payments of long-term debt ................         --       (986,049)
Proceeds from long-term debt ........................     282,813       250,000
                                                       ----------     ---------
Net cash provided by financing activities ...........   1,493,112     8,374,327
                                                       ----------     ---------

Net change in cash and cash equivalents .............      92,548       (59,339)
Cash and cash equivalents at beginning of year ......      17,276        76,615
                                                       ----------     ---------
Cash and cash equivalents at end of year ............  $  109,824     $  17,276
                                                       ==========     =========

Supplemental disclosure of cash flow information:
Cash paid during the year for interest ..............  $  122,377     $ 340,626
Non cash investing and financing activities:
 Issuance of common stock for finders' fees .........  $      --      $ 230,745
 Issuance of common stock for debt reduction
  and settlement of convertible notes ...............  $4,426,049     $7,377,043







   The accompanying notes are an integral part of these financial statements.

                                       F-8
<PAGE>
                        Advanced Gaming Technology, Inc.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1998 and 1997


NOTE 1 - HISTORY AND ORGANIZATION

     The Company was incorporated under the laws of the State of Wyoming in 1963
under the name of MacTay  Investment Co. In 1987, the name was changed to Auto N
Corporation. The Company changed its name to Advanced Gaming Technology, Inc. in
1991.  The Company's  executive  offices are located in Las Vegas,  Nevada.  The
Company is principally  engaged in the  development  and marketing of electronic
bingo equipment.

NOTE 2 - SUMMARY OF ACCOUNTING POLICIES

     A summary of the significant accounting policies applied in the preparation
of the accompanying financial statements is as follows:

(a)  Principles of Consolidation

     The  consolidated  financial  statements  include the  accounts of Advanced
Gaming  Technology,  Inc. and its  wholly-owned  subsidiaries,  Executive  Video
Systems,  Inc., Palace Entertainment  Limited,  Branson Signature Resorts, Inc.,
Branson Bluffs Resorts,  Inc., River Oaks Resorts and Country Club, Inc., Allied
Resorts,  Inc., River Oaks Holding,  Inc.,  Prisms,  Inc.,  Pleasure World Ltd.,
Prisms (Bahamas) Ltd., and A.G.T. Acceptance Corp. All significant  intercompany
accounts and transactions have been eliminated.

(b)  Joint Venture Operations Accounting

     Joint  venture  operations  are  accounted  for under the equity  method of
accounting.

(c)   Inventory

     Inventory consists of bingo equipment parts and is carried at lower of cost
(first-in, first-out method) and market value.

(d)    Property and Equipment

     Property  and  equipment  is stated at cost.  Depreciation  is  provided in
amounts  sufficient to relate the cost of depreciable  assets to operations over
their estimated  service lives,  principally on a straight-line  basis from 3 to
5years.

                                       F-9
<PAGE>
                        Advanced Gaming Technology, Inc.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1998 and 1997
                                   (Continued)


NOTE 2 - SUMMARY OF ACCOUNTING POLICIES (Continued)

     Upon sale or other  disposition  of property  and  equipment,  the cost and
related  accumulated  depreciation  or amortization is removed from the accounts
and any gain or loss is included in the determination of income or loss.

     Expenditures  for  maintenance  and  repairs  are  charged  to  expense  as
incurred.  Major overhauls and betterments are capitalized and depreciated  over
their useful lives.

(e)  Investment - Land

     Investment in land is carried at the lower of cost or net realizable value.

(f)  Intangible Assets

     Goodwill  and  software  rights were  created by the excess of the purchase
price over the cost of the acquisitions made in 1995 and 1996, and are amortized
on a straight-line basis over five years.  Software rights are capitalized after
technological  feasibility  has been  established.  Capitalization  of  computer
software cost is discontinued when the computer software product is available to
be sold,  leased or  otherwise  marketed.  Costs for  maintenance  and  customer
support are charged to operations when incurred,  or when the related revenue is
recognized,  whichever occurs first.  Management regularly assesses the carrying
amount of intangible assets and where, in their opinion,  the value is less than
the carrying amount, the loss is recognized  immediately.  Unamortized  computer
software costs that have been capitalized are reported at net realizable value.

     The company has implemented the provisions of SFAS No. 121, "Accounting for
the impairment of Long-Lived Assets and for Long-Lived Assets Disposed of." SFAS
No. 121 requires that long-lived assets and certain identifiable  intangibles to
be held and used by the Company be reviewed for  impairment  whenever  events or
changes in  circumstances  indicate that the carrying amount of an asset may not
be recoverable. If the sum of the expected future cash flows from the use of the
assets and its eventual disposition  (undiscounted and without interest charges)
is less than the carrying amount of the asset, an impairment loss is recognized.

                                      F-10
 <PAGE>
                        Advanced Gaming Technology, Inc.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1998 and 1997
                                   (Continued)

NOTE 2 - SUMMARY OF ACCOUNTING POLICIES (Continued)

(g)  Translation of Foreign Currency

     All balance sheet accounts of foreign  operations are translated  into U.S.
dollars at the year-end  rate of exchange.  Statement  of  operations  items are
translated at the weighted  average  exchange  rates for the year. The resulting
translation  adjustments  are  made  directly  to a  separate  component  of the
stockholders'  equity.  Certain  foreign  activities  are  considered  to  be an
extension  of  the  U.S.  operations,  and  the  gain  or  loss  resulting  from
re-measuring these  transactions into U.S. dollars is included in income.  Gains
or losses from other foreign currency transactions, such as those resulting from
the settlement of foreign receivables or payables, are included in the Statement
of Operations.

(h)  Cash and Cash Equivalents

     For purposes of the  Statement  of Cash Flows,  the Company  considers  all
highly  liquid debt  instruments  purchased  with a maturity of three  months or
less, as cash equivalents.

(i)  Net Loss per Common Share

     In  1997,  the  Financial   Accounting  Standards  Board  issued  SFAS  No.
128,"Earnings per Share" (EPS). SFAS No. 128 replaced the calculation of primary
and fully  diluted EPS with basic and  diluted  EPS.  The effect of  outstanding
common stock  equivalents are  anti-dilutive  for 1998 and 1997 and are thus not
considered.  The reconciliations of the numerators and denominators of the basic
EPS computations are as follows:

<TABLE>
                                 1998                                1997
                  --------------------------------    -----------------------------------
                                  Number                            Number
                                    Of       Loss                     of         Loss
                     Loss         Shares   per Share     Loss       Shares     per Share
Basic EPS
Loss to Common
<S>               <C>          <C>          <C>       <C>          <C>           <C>
 Shareholders     $(3,628,887)  69,970,234 $(0.05)   $(9,575,512) 16,145,593    $(0.59)
                  ===========  ===========  ======    ===========  ==========    ======
</TABLE>
                                      F-11
<PAGE>
                        Advanced Gaming Technology, Inc.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1998 and 1997
                                   Continued)

NOTE 2 - SUMMARY OF ACCOUNTING POLICIES (Continued)

(j)  Revenue

     Revenue is generated on operating  leases and is  recognized  on an accrual
basis.

(k)  Deferred Revenue

     Revenues are deferred until commencement of the project operations.

(l)  Persuasiveness of Estimates

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

     Certain  reclassifications  have been made in the 1997 financial statements
to conform with the 1998 presentation

NOTE 3 - OTHER ASSETS

                                                          1998          1997
                                                      -----------   -----------
Land                                                  $ 3,000,000   $ 4,132,000
Software rights and other, net                            442,604       850,272
                                                      -----------   -----------
                                                      $ 3,442,604   $ 4,982,272
                                                      ===========   ===========









                                      F-12
<PAGE>
                        Advanced Gaming Technology, Inc.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1998 and 1997
                                   (Continued)

NOTE 4 - NOTES PAYABLE

                                                          1998         1997
                                                      -----------   -----------
Due to an individual, interest at $300 per day,
 principal and interest due on demand, secured
 by certain revenue generating equipment and a
 personal guarantee of an officer and director        $       --    $   150,000

Due to a corporation, interest at $300 per day,
 principal and interest due on demand, secured
 by certain revenue generating equipment and a
 personal guarantee of an officer and director                --        150,000

Due to a corporation, interest at $350 per day,
 principal and interest due on demand, secured
 by certain revenue generating equipment and a
 personal guarantee of an officer and director                --        105,000

Due to an individual, interest at 59%, principal
 and interest due on January 17, 1998, secured
 by shares of the Company, and a personal
 guarantee of an officer and director                         --        200,000

Due to a corporation, interest negotiated at
 $10,000 per month, principal and interest due
 on demand, unsecured                                         --        120,000

Due to a corporation, non-interest bearing, due
 on demand, unsecured                                         --         75,000
Other                                                     313,000           --
                                                      -----------   -----------
Total notes payable                                   $   313,000   $   800,000
                                                      ===========   ===========

Of the 1997 notes, $505,000 was settled in 1998, for stock.

NOTE 5 - CONVERTIBLE NOTES

     Due to individuals and corporations, bearing interest at rates between U.S.
base rate and 12% per year, due on demand.  Certain of the notes are convertible
into common shares of the Company at fixed prices ranging from $0.049 to $0.102,
and others are  convertible  at a 20%  discount  to the closing bid price at the
time of conversion.  Certain  convertible  notes have warrants attached thereto,
granting the holders the option to purchase a total of 1,404,348  common  shares
of the Company at prices ranging from $0.10 to $0.40, (see notes 7, 13 and 14).

                                      F-13
<PAGE>
                        Advanced Gaming Technology, Inc.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                     December 31, 1998 and December 31, 1997
                                   (Continued)

NOTE 6 - LONG-TERM DEBT

 Long-term debt consists of the following:                1998         1997
                                                      -----------   -----------
Notes payable, interest at 9%, quarterly interest
 only payments until July 2002, collateralized
 by deed of trust                                     $ 1,339,792   $ 1,339,792

Note payable, interest at 10%, quarterly interest
 only payments, balance due on demand,
 collateralized by deed of trust                           60,812        60,812

Loan payable, interest at 13.2%, due in monthly
 installments of $31,000 including interest, due
 on demand, secured by equipment                           86,862        86,862

Note payable, interest at 3% above the Chase
 Manhattan prime lending rate, due in quarterly
 principal installments of $17,857 plus accrued
 interest, matures January 2002                           464,286       464,286

Note payable, interest at 10%, principal is due, and
 is secured by 100,000 common shares of the Company        75,106        75,106

Note payable, interest at 10%, due on demand               37,644        37,644

Note payable, interest at 10%, due on demand                3,600         3,600

Note payable, interest at 9%, due on demand                55,000        55,000

Convertible debenture, total facility $1,000,000
 plus accrued interest, interest at 2% per month
 compounded monthly, principal and accrued interest
 convertible into common stock in whole or part at
 holder's option, redeemable by the Company at any
 time to maturity; bonus consideration of $150,000
 per year for four years, convertible into stock at
 holder's option, due on demand                         1,763,199     1,249,286

Loan payable, interest at 12%, due in monthly
 installments of $1,000 including interest, matures
 December 1999, secured by a patent                        32,070        32,070
                                                      -----------   -----------
                                                        3,918,371     3,635,558
Less: current maturities                                3,918,371     1,911,256
                                                      -----------   -----------
 Net long-term debt                                   $       --    $ 1,724,302
                                                      ===========   ===========

     All  of the  long-term  debt  obligations  are in  default  as at  December
31,1998, (see note 13 and 14).

                                      F-14
<PAGE>
                        Advanced Gaming Technology, Inc.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                     December 31, 1998 and December 31, 1997
                                   (Continued)


NOTE 7 - STOCK OPTIONS AND WARRANTS

     All options and warrants have been granted at exercise  prices greater than
the market  value on the date of  granting  except for  5,015,000  options.  All
options  vest 100% at the date of  granting  of the  options.  All  options  and
warrants  outstanding  were eliminated in 1999 in conjunction with the effective
date of the plan of reorganization.

                                                          1998          1997
                                                      -----------   -----------
Options and warrants outstanding, beginning of year    29,867,440    14,423,367
 Granted                                                2,850,000    24,441,019
 Expired                                                      --     (5,686,708)
 Cancelled                                            (32,717,440)          --
 Exercised                                                    --     (3,310,238)
                                                      -----------   -----------
Options and warrants outstanding, end of year                 --     29,867,440
                                                      ===========   ===========
Option and warrant price for options and warrants
 outstanding, end of year                                     --    $0.04-$3.00
                                                      ===========   ===========
Options and warrants granted subsequent to year end           --      2,850,000
                                                      ===========   ===========
Option and warrant price range granted subsequent
 to year end                                                  --    $0.03-$1.00
                                                      ===========   ===========

     In October 1995, the FASB issued SFAS No. 123,  "Accounting for Stock-Based
Compensation." As permitted by the standard, the Company has elected to continue
to follow existing  accounting  guidance,  Accounting  Principles  Board Opinion
No.25 and related  interpretations  (APB No. 25), for stock-based  compensation.
However,  SFAS No. 123 requires companies electing to follow existing accounting
rules to  disclose  in a note the pro forma  effects as if the fair value  based
method of accounting had been applied. The Company recorded compensation expense
of  $210,756  for the year ended  December  31,  1997,  in  connection  with its
performance  shares,  restricted stock and other stock  compensation  awards. In
accordance with APB No. 25, no compensation  expense has been recognized for the
Company's stock options.



                                      F-15
<PAGE>
                        Advanced Gaming Technology, Inc.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                     December 31, 1998 and December 31, 1997
                                   (Continued)


NOTE 7- STOCK OPTIONS AND WARRANTS (Continued)

     The fair value of each option grant is estimated on the date of grant using
the  Black-Scholes  option-pricing  model with the  following  weighted  average
assumptions  for grants in 1998 and 1997,  respectively:  dividend  yield of 0.0
percent  for both  years,  expected  volatility  of 149.75 and  149.05  percent,
respectively,  risk-free  interest  rates  of 6.2  percent  for both  years  and
expected  lives of 5 years  for both  years.  If  compensation  expense  for the
Company's stock options  granted in 1998 and 1997 had been  determined  based on
the fair  value at the grant  dates  for such  awards  in  accordance  with SFAS
No.123,  the effect on the  Company's net income and earnings per share for each
of the years ended December 31, 1998 and 1997 would have been immaterial.

NOTE 8 - SEGMENTED INFORMATION

     The company  derived all revenues in 1998 and 1997 from  operations  within
the United States.  The company has no assets outside of the United States.  The
company incurred an operating loss of $9,986 in 1998 due to an abandoned project
in Asia.

NOTE 9 - SELECTED FINANCIAL DATA (Unaudited)

     The  following  tables  set forth  certain  unaudited  quarterly  financial
information:

                                         1998 Quarters Ended,

                             Mar. 31        Jun. 30      Sep. 30       Dec. 31
                            ---------     ---------     ---------     ---------
 Revenues                   $ 184,790     $  60,265     $  68,664     $ 224,108
 Gross margin                  92,510        39,835        58,394       149,108
                            ---------     ---------     ---------     ---------
 Operating income(loss)      (967,608)     (572,444)     (444,332)      323,166
 Other expenses, net          873,318      (376,986)     (134,112)   (2,329,889)
                            ---------     ---------     ---------     ---------
 Loss before taxes             94,290       949,430       578,444     2,006,723
 Income taxes                     --            --            --            --
                            ---------     ---------     ---------     ---------
Net Loss                    $  94,290     $ 949,430     $ 578,444    $2,006,723
                            =========     =========     =========     =========

                                      F-16
<PAGE>
                        Advanced Gaming Technology, Inc.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                     December 31, 1998 and December 31, 1997
                                   (Continued)


NOTE 9 - SELECTED FINANCIAL DATA (Unaudited)(continued)

                                           1997 Quarters ended,

                             Mar. 31       Jun. 30       Sep. 30       Dec. 31
                            ---------     ---------     ---------     ---------
 Revenue                    $ 510,366     $ 212,836     $ 304,662     $ 310,257
 Gross margin                 403,632        79,096       135,309        96,812
                            ---------     ---------     ---------     ---------
 Operating loss               435,409     1,712,895     1,314,409     1,877,117
 Other expenses, net          298,301       692,142       520,784     2,724,455
                            ---------     ---------     ---------     ---------
 Loss before taxes            733,710     2,405,037     1,835,193     4,601,572
 Income taxes                     --            --            --            --
                            ---------     ---------     ---------     ---------
Net Loss                    $ 733,710    $2,405,037    $1,835,193    $4,601,572
                            =========     =========     =========     =========


NOTE 10 - INCOME TAXES

     Deferred  taxes result from  temporary  differences  in the  recognition of
income and expenses for income tax reporting and financial  statement  reporting
purposes.  Deferred  benefits of $12,000,000 and $11,000,000 for the years ended
December 31, 1998 and 1997 respectively,  are the result of net operating losses
and the gaming license rights reserve.

     The Company has  recorded net  deferred  income  taxes in the  accompanying
consolidated balance sheets as follows:

                                                          1998          1997
                                                      -----------   -----------
Future deductible temporary differences related to
 reserves, accruals, and net operating losses         $12,000,000   $11,000,000
Valuation allowance                                   (12,000,000)  (11,000,000)
                                                      -----------   -----------
Net deferred income tax                               $       --    $       --
                                                      ===========   ===========


                                      F-17
 <PAGE>
                        Advanced Gaming Technology, Inc.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
               December 31, 1998 and December 31, 1997 (Continued)

NOTE 10 - INCOME TAXES (continued)

     As of December  31,  1998,  the Company had a net  operating  loss  ("NOL")
carryforward  for income tax  reporting  purposes of  approximately  $34,000,000
available to offset future taxable income. This net operating loss carry-forward
expires at various dates between December 31, 2008 and 2013. A loss generated in
a particular year will expire for federal tax purposes if not utilized within 15
years.  Additionally,  the Internal Revenue Code contains  provisions that could
reduce  or limit the  availability  and  utilization  of these  NOLs if  certain
ownership  changes have taken place or will take place.  In accordance with SFAS
No. 109, a valuation  allowance is provided when it is more likely than not that
all or some portion of the  deferred tax asset will not be realized.  Due to the
uncertainty  with respect to the ultimate  realization  of the NOLs, the Company
established a valuation  allowance for the entire net deferred  income tax asset
of $12,000,000 as of December 31, 1998, which includes  $253,000 from the gaming
license and manufacturing rights reserve and $11,700,000 from net operating loss
carryforward.  Also  consistent  with SFAS No. 109, an  allocation of the income
(provision)  benefit has been made to the loss from continuing  operations.  The
differences  between the  effective  income tax rate and the  federal  statutory
income tax rate on the loss from continuing operations are presented below:

                                                          1998          1997
                                                      -----------   -----------
Benefit at the federal statutory rate of 34%          $ 1,234,000   $ 3,202,000
Non-deductible expenses                                    (5,000)      (21,000)
Utilization of gaming license rights                          --        527,000
Utilization of net operating loss carryforward         (1,357,000)   (3,542,000)
Other                                                     128,000      (166,000)
                                                      -----------   -----------
                                                      $       --    $       --
                                                      ===========   ===========

NOTE 11 - CONTINGENCIES

     The Company  entered  into a Leasing and Service  Agency  Agreement,  dated
September 15, 1996 with Edward  Thompson  Group,  a privately  held  corporation
established in 1867 and organized under the laws of the United  Kingdom.  Edward
Thompson has been producing bingo tickets since 1957, and the Company  believes,
is the leading  manufacturer and supplier of bingo paper and related products in
the United Kingdom. The Service Agency Agreement requires the Company to use its
best efforts to engineer, manufacturer, design and develop a wireless electronic
hand-held bingo unit named PartiMAX for the United Kingdom bingo market.

                                      F-18
<PAGE>
                        Advanced Gaming Technology, Inc.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
               December 31, 1998 and December 31, 1997 (Continued)


NOTE 11 - CONTINGENCIES (continued)

(a)  The  Company  entered  into an  agreement,  dated  July 17,  1996,  amended
     September  15,  1996 with  Fortune  Entertainment  Corporation,  a Delaware
     corporation   ("FEC"),   under  which  FEC  has  the  right  to  receive  a
     participating interest in certain of the Company's projects. As of December
     31, 1998,  Fortune  Entertainment had provided the Company with $1,025,738.
     The  company  has  stopped  development  efforts  on  the  projects  and is
     considering  abandonment.  The company has rejected  this  agreement in the
     reorganization process.

(b)  In addition to  ordinary  routine  litigation  incidental  to its  business
     operations, which the Company does not believe, in the aggregate, will have
     a material adverse effect on the Company, or its operations, the Company is
     engaged in the following lawsuits:

     Braintech,  Inc.  ("Braintech")  filed a statement  of claim in the Supreme
Court of British  Columbia  on  November  24, 1995 and amended on March 26, 1996
claiming default by the Company on three  promissory  notes.  Braintech  claimed
damages in the amount of $200,000, plus interest of ten percent (10%) per annum,
and costs.  In 1997, the Company  settled this dispute for $75,000 to be paid by
issuance of stock (see note 4).

     In January 1996, Tierra Corporation  ("Tierra")  commenced an action in the
Circuit  Court of Stone  County,  Missouri,  claiming that River Oaks Resort and
Country Club, Inc., a Texas corporation and a subsidiary of Branson ("River Oaks
Resort")  defaulted on a promissory  note. A judgment is sought in the principal
amount of $75,106,  plus interest  since October 18, 1995, at 10% per annum (see
note 9). An answer has been filed on behalf of River Oaks Resort  averring  that
Tierra has not performed  conditions  precedent to assessing any  deficiency and
that no accounting  regarding the disposition of security for such note has been
provided and, in addition, a counter claim was filed,  asserting Tierra disposed
of stock collateral in a commercially unreasonable manner. Preliminary discovery
has occurred but no depositions have been taken.

     A principal of Tierra has recently filed a suit in Dallas, Texas concerning
the stock collateral.

     In February 1996, P.D.I., LLC, a Missouri limited liability company ("PDI")
commenced  an action in the Circuit  Court of Stone  County  Missouri,  claiming
breach of a real  estate  purchase  agreement  which in part,  provided  for the
construction  of a sewage  treatment  facility  for which  damages are  claimed,
including the awarding to PDI of all escrow funds,  costs and  expenses incurred

                                      F-19
<PAGE>
                        Advanced Gaming Technology, Inc.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
               December 31, 1998 and December 31, 1997 (Continued)


NOTE 11 - CONTINGENCIES (continued)

by PDI  over and  above  the  amount  of  escrow  funds  and cost and  expenses,
including  attorney fees in connection with the  commencement of the action.  In
response, the Company and River Oaks Resort have counter claimed for damages, in
an amount to be determined at trial,  incurred when plaintiff PDI withdrew funds
from the escrow fund created for construction of the sewage  treatment  facility
and the permit application for construction  approval by the Missouri Department
of Natural Resources.  Moreover, a claim has also been made by River Oaks Resort
and the Company that subsequent development attempted by PDI has encroached upon
property development  belonging to River Oaks Resort and the Company without the
right to do so, including damages for disruption resulting therefrom.

     In April 1996, Larry Newman  ("Newman")  commenced a mechanics' lien in the
Circuit Court of Stone County,  Missouri,  seeking $177,282,  plus interest, for
excavation  work performed  during the period between July 19, 1995 to September
25,  1995 on a road across the River Oaks  development  in Stone  County.  On or
about June 24,  1996,  Jack L. Holt  ("Holt")  filed a similar  petition  in the
Circuit  Court  of  Stone  County,  Missouri,  claiming  a  mechanics'  lien for
engineering  and land  surveying  during the period May 16, 1995 to July 4, 1995
for a road across the River Oaks  development  property in the amount of $9,610,
plus interest.  The Holt case has now been  consolidated  in the case originally
filed by Newman.  The Company has filed a counterclaim  alleging Newman and Holt
extended the road beyond the boundaries of the River Oaks  development  property
onto land owned by Sunset  Cove,  Ltd.,  a Missouri  corporation.  The court has
since ordered Sunset Cove, Ltd. joined as a party needed for just  adjudication.
Discovery has not yet commenced.

     On November 15, 1996,  Fortunet,  Inc., a Nevada corporation  ("Fortunet"),
filed a patent  infringement  claim in the United States District court Southern
District of  California  against the company and certain other  companies  which
manufacture  and  distribute  electronics  bingo  systems,   claiming  that  the
defendants, including the Company, infringed Fortunet's United States Patent No.
4,624,462  (the  "Patent").  Fortunet  seeks to enjoin the  defendants  from any
further  alleged  infringement  of the Patent and is seeking actual and enhanced
damages as well as attorney  fees and other  costs.  In July 1997,  the case was
transferred from the federal court in San Diego, California to the federal court
in Phoenix, Arizona. Discovery is expected to commence in 1999.



                                      F-20
<PAGE>
                        Advanced Gaming Technology, Inc.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
               December 31, 1998 and December 31, 1997 (Continued)


NOTE 11 - CONTINGENCIES (continued)

     In February and March 1998, actions were brought against the Company in the
District  Courts in the States of New York and  Colorado by certain  Convertible
Debenture  holders.  The plaintiffs alleged the Company was in default in regard
to the conversion of these debentures. A settlement was reached in April 1998.


NOTE 12 - SUBSEQUENT EVENTS

     On June 29, 1999 the company's plan of reorganization  was confirmed by the
bankruptcy  court in the district of Las Vegas.  The plan  becomes  effective on
early August, 1999.

     The company licensed the Max Plus and Turbomax  products to BTC in February
1998  under a 5 year  agreement.  In  addition  the  company  sold all  existing
accounts  relating to these products to BTC. The contract  allowed BTC to offset
royalties  against a $400,000  note  payable  by AGT to BTC.  The  contract  was
disputed by BTC almost  immediately.  BTC refused to pay royalties due and began
making up additional  offsets to the royalties for lost accounts,  miscellaneous
expenses,  etc. No royalties had been paid by BTC through  12/31/98.  In January
1999 BTC was  acquired by Gametech  International.  In March 1999 AGT received a
royalty  payment of $9,800  representing  royalties for January 1999. No further
payments were received.

     AGT filed suit against  BTC/Gametech  in bankruptcy  court in June 1999 for
unpaid royalties, breach of contract and other issues. The conflict was resolved
in July 1999.  AGT  received a one-time  payment of  $850,000.  The Max Plus and
Turbo max rights were  returned to AGT.  Gametech  received a license to the AGT
patents and was allowed to keep the existing accounts with the AGT products.

     No receivable for royalties was recorded at 12/31/98.  It would have had to
be reserved 100% due to the dispute. The $850,000 settlement has been considered
compensation for the remaining portion of the contract.

     In conjunction with the plan of  reorganization  that was confirmed on June
29, 1999, certain  outstanding  secured  obligations were settled by issuing new
notes for $2,634,000 an additional  unsecured  claim of $800,000.  The unsecured
claim  will be  converted  to equity  on the  effective  date of the  plan.  The
obligations including accrued interest was recorded at $3,491,190 at 12/31/98.

     All unsecured claims on the books of AGT will be converted to equity on the
effective date.  Several amounts recorded at 12/31/98 will not result in allowed
claims as the parties failed to file proof-of-claim.

     All  liabilities  of the Branson  subsidiaries  will be  eliminated  on the
effective  date.  No compensation  was provided in the plan.  These  obligations
totaled $1,330,481 at 12/31/98.

     The holders of convertible  notes all converted  prior to August 1998, with
the  exception of Landow  which was  outstanding  at  12/31/98.  The process for
conversion  called for the noteholders to notice their intent to convert and AGT
to deliver  stock to escrow.  Several  noteholders  maintain  that the  ultimate
conversion  value is based on the  price of the  stock on the day it is  removed
from escrow rather than the date of conversion.  As a result several noteholders
believe  they were due  additional  shares  due to the  decline  in stock  price
between the conversion date and the date they sold the shares.


                                      F-21
<PAGE>

                        Advanced Gaming Technology, Inc.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
               December 31, 1998 and December 31, 1997 (Continued)


NOTE 12 - SUBSEQUENT EVENTS (continued)

     The company  believes  these claims are equity  interests at 12/31/98.  The
noteholders  believed  they had a liability  claim of $579,242.  This matter was
resolved in the  bankruptcy  by allowing an unsecured  claim of  $579,242.  This
claim will be  converted  to equity with all other  unsecured  interests  on the
effective  date.  No  liability  is recorded at  12/31/98  due to the  company*s
contention that these were at most equity interests.

     The plan of reorganization will result in significant changes to the equity
make-up of the company.  Unsecured  creditors  and new  investors  will hold the
majority of the equity  interest.  The existing  shareholders did survive the in
the plan, but at a much reduced equity  interest.  Approximately  25 million new
shares of common stock will be issued under the confirmed plan.


NOTE 13 - GOING CONCERN

     The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles, which contemplates continuation of the
Company as a going  concern.  However,  the  Company has  sustained  substantial
operating losses in recent years. In addition,  the Company has used substantial
amounts of working  capital in its  operations.  On August 26,  1998 the Company
filed a petition for reorganization  under chapter 11 of the U S bankruptcy code
in Las Vegas, Nevada.

     In view of these  matters,  realization of a major portion of the assets in
the  accompanying  balance sheet is dependent upon  continued  operations of the
Company which in turn is dependent  upon the Company's  ability to  successfully
complete the  reorganization  process and meet its  financing  requirements  and
succeed in its future  operations.  Management  believes that actions  presently
being taken to revise the Company's operating and financial requirements provide
the opportunity for the Company to continue as a going concern.

NOTE 14 - PETITION FOR RELIEF UNDER CHAPTER 11

     The company filed for reorganization under chapter 11 of the U S bankruptcy
code in Las Vegas on August 26, 1998.  Under Chapter 11,  certain claims against
the Debtor in existence  prior to the filing of the  petitions  for relief under
the  federal  bankruptcy  laws are stayed  while the Debtor  continues  business
operations as  Debtor-in-possession.  These claims are reflected in the December
31 1998  and  1997  balance  sheets  as  "liabilities  subject  to  compromise."
Additional  claims  (liabilities  subject to compromise) may arise subsequent to
the filing date  resulting  from  rejection  of executory  contracts,  including
leases,  and from the  determination  by the court (or  agreed to by  parties in
interest) of allowed claims for contingencies and other disputed amounts. Claims
secured against the Debtor's assets ("secured claims") also are stayed, although
the  holders of such claims have the right to move the court for relief from the
stay.  Secured claims are secured  primarily by liens on the Debtor's  property,
plant, and Equipment.

                                      F-22
<PAGE>
                        Advanced Gaming Technology, Inc.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
               December 31, 1998 and December 31, 1997 (Continued)


NOTE 14 - PETITION FOR RELIEF UNDER CHAPTER 11 (continued)

     The Debtor received  approval from the Bankruptcy Court to pay or otherwise
honor  certain  of  its  obligations,   including  employee  wages  and  product
warranties.  The Debtor has Determined that there is insufficient  collateral to
cover the  interest  portion  of  scheduled  payments  on its  prepetition  debt
obligations.  Contractual interest on those obligations is in excess of reported
interest expense;  therefore,  the Debtor has discontinued  accruing interest on
these obligations.

     The company filed a plan of reorganization with the court in December 1998.
There were several  objections to the plan and  disclosure  statement  that were
addressed by the company  during the first quarter of 1999.  The company's  plan
and  disclosure  statement  was  approved  by the court on March 22,  1999.  The
company's  reorganization plan was confirmed by the bankruptcy court on June 29,
1999. The plan becomes effective on early August, 1999.

     Pursuant to the plan,  obligations to secured creditors were re-negotiated.
The new  amount  of  secured  debt on the  effective  date  is  $2,634,000.  All
remaining  liabilities of the company have been fully satisfied through issuance
of new common  stock.  Other secured  creditors  received 3 shares of new common
stock for each $1 of allowed secured claim.  Unsecured  creditors  received 1.88
shares of new common stock for each $1 of allowed claim.

     The company will issue 25 million shares of new common stock in conjunction
with  the  plan.  The  existing   common  stock  will  be  cancelled.   Existing
shareholders  of the company on the  effective  date will receive 1 share of new
common stock for each 66 shares of common stock currently  owned.  Approximately
18 million  shares will be issued to creditors,  existing  shareholders  and new
investors.  A reserve of  approximately  7 million shares will be maintained for
additional allowed claims.

NOTE 15 - STOCK SPLIT

     After the close of business on June 30, 1998 the Company effected a 4 for 1
reverse  stock split of the Company's  common  stock.  As a result of the split,
31,686,276 shares were cancelled,  and additional  paid-in capital was increased
by $158,432.  All  references in the  accompanying  financial  statements to the
number of common  shares and per share  amounts  for 1997 have been  restated to
reflect the reverese stock split.  This  transaction was previously  approved at
the Company's annual meeting. The number of shares outstanding immediately prior
to the split was 143,594,531.


                                      F-23