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                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
       OF 1934

                      For the Year Ended December 31, 1999

/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934

                 For the transition period from            to
                                               ----------    ----------

                          COMMISSION FILE NO.: 0-25244

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


                            TRANS WORLD GAMING CORP.
             (Exact name of registrant as specified in its charter)

               Nevada                                        13-3738518
     (State or other jurisdiction of                      (I.R.S. Employer
     incorporation or organization)                       Identification No.)

     545 FIFTH AVENUE, SUITE 940                                10017
           NEW YORK, NEW YORK                                 (Zip Code)
     (Address of principal executive offices)

       Registrant's telephone number, including area code: (212) 983-3355

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


                         COMMON STOCK, $.001 PAR VALUE
                       WARRANTS TO PURCHASE COMMON STOCK
                           ---------------------------

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

         Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-B is not contained herein, and will not 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.
         / /

         The issuer's revenues for the year ended December 31, 1999 were
approximately $12,294,000

         As of December 31, 1999, 5,365,449 shares of Common Stock of the
Registrant were deemed outstanding, and the aggregate market value of the Common
Stock of the Registrant as of that date (based upon the closing price of the
Common Stock at that date as reported by the OTC Bulletin Board, excluding
outstanding shares beneficially owned by directors and executive officers, was
approximately $0.51.

         Transitional Small Business Disclosure Format (check one;
YES / /   NO /X/)

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PART I

ITEM 1.  DESCRIPTION OF BUSINESS

GENERAL DEVELOPMENT OF BUSINESS

Trans World Gaming Corp. (the "Company" or "TWG") was organized as a Nevada
corporation in October 1993 to acquire, develop and manage, to the extent
permitted by applicable local laws, gaming establishments featuring live and
mechanized gaming, including video gaming devices such as video poker machines.

TWG proceeded to enter into this business through its 1994 acquisition of
several Louisiana based entities. In 1998, in response to changes in the laws
governing the legality of operating video gaming devices in the state of
Louisiana and faced with a closing date of June 30, 1999 for its Louisiana
operations as a result of this change in law, TWG amended its operating strategy
by shifting its focus to the casino market overseas and acquired five casinos,
one of which includes a hotel, and a parcel of land in Europe. The Company has
since closed two of the casinos due, as in Louisiana, to local gaming law
changes, but has recently opened an additional casino on the parcel of land that
was purchased in 1998, which leaves the Company with a total of four casinos
currently in operation.

CZECH REPUBLIC

On March 31, 1998, the Company consummated a Stock Purchase Agreement ("Stock
Purchase Agreement") with 21st Century Resorts a.s., an owner-operator of two
casinos, and the owner of property to build a third casino, in the Czech
Republic ("Resorts"), Gameway Leasing Limited ("Gameway") and Monarch Leasing
Limited ("Monarch Leasing"), two off-shore affiliates of Resorts which leased
equipment to Resorts and the stockholders of Resorts (the "Selling
Stockholders") pursuant to which the Company acquired 100% of the equity
interests of Resorts and its two operating subsidiaries and all of the assets of
Gameway and Monarch Leasing. On March 31, 1998, the Company, with the assistance
of Libra Investments, Inc., Los Angeles, California ("Libra") acting as
placement agent, borrowed $17.0 million from fourteen sophisticated, accredited
investors (the "Investors") in a private placement (the "Private Placement").
The loan is represented by 12% Senior Secured Notes (the "Senior Notes") issued
pursuant to indentures (the "Indentures") by and among TWG, TWG International
U.S. Corporation ("TWGI"), TWG Finance Corp. ("TFC") (TWGI and TFC) are
wholly-owned subsidiaries of TWG) and U.S. Trust Company of Texas, N.A., Dallas,
Texas ("USTCT") acting as indenture trustee. The Senior Notes require mandatory
prepayments based upon excess cash flow generated by TWGI from the operation of
Resorts and bear interest at the rate of 12% per annum. (See - Periodic Reports
Form 8-K and the Amended Periodic Report on Form 8-K/A filed with the Securities
and Exchange Commission ("SEC") on April 14, 1998 and June 15, 1998,
respectively.) The proceeds of the Senior Notes were used to pay the net
acquisition costs of, and improvements to, Resorts totaling approximately $12.6
million, to repay the First Amended Loan Agreement in the amount of $1.3
million, to cover costs and expenses of $1.4 million relating to the Private
Placement and to provide working capital of $1.7 million.

As a result of a change in Czech gaming law which effectively banned foreign
ownership of casinos, the Company restructured the ownership of Resorts through
the use of a new Czech limited liability company and amended the indentures (the
"Amended Indentures"), both of which Amended Indentures relate to, but do not
alter, the Senior Notes.

On October 15, 1999, the Company borrowed $3.0 million ($2.7 million from Value
Partners) in a private placement ("October 1999 Private Placement"). The loan is
represented by 12% Senior Secured Notes ("October 1999 Senior Notes") issued
pursuant to indentures by and among the Company and an independent indenture
trustee. The October 1999 Senior Notes, which are due March 2005, require
mandatory prepayments based on excess cash flow generated from Resorts. The
October 1999 Senior Notes are collateralized primarily by all of Resort's gaming
equipment and a majority interest in the capital stock of all of the Company's
subsidiaries (except Casino de Zaragoza, S.A. ("CDZ"), a company


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incorporated in Zaragoza, Spain). In addition to the October 1999 Senior Notes,
each investor received a proportionate share of warrants to purchase 1,250,728
shares of the Company's common stock.

The proceeds of the October 1999 Senior Notes were used to retire a $1 million
short-term debt obligation, related to the acquisition of the casino in
Zaragoza, Spain, to make an interest payment of approximately $250,000 on said
debt, and to finance the equipping, working capital, and pre-opening costs
associated with the opening of a third casino in the Czech Republic on the land
that had been previously purchased in conjunction with the issuance of the
Senior Notes on March 31, 1998. That casino, located near Snojmo, on the border
with Austria, opened on December 22, 1999.

SPAIN

On April 17, 1998, the Company acquired 90% of CDZ, which holds the exclusive
casino license in the region of Aragon. Following approval of its
recapitalization plan by the Council of Ministers in Spain and the subsequent
forfeiture of the shares of the holder of the remaining 10% ownership in the
Company, who declined to participate in the recapitalization the Company. TWG
presently owns 99.92% of CDZ (See: Item 6. "Management's Discussion and Analysis
or Plan of Operation - Liquidity and Capital Resources"). The Company acquired
90% of the outstanding stock of CDZ for approximately $780,000 (excluding
related acquisition costs of approximately $678,000) and assumed its outstanding
debt obligations of approximately $4.9 million.

The Company intends to move the casino, which is currently located approximately
fifteen miles outside of the city of Zaragoza, to a downtown location. An
understanding had been reached with an agency of the provincial government, the
Diputacion General de Aragon ("DGA"), to allow the casino to execute this move,
subject to the issuance of a decree; however, instead of a decree, in February
2000, the DGA introduced a law that would allow the casino to relocate. The law
is expected to be presented to local Spanish parliament in June 2000. Management
believes, based on its discussions with Spanish authorities, the law has little
opposition and is expected to pass.

LOUISIANA OPERATIONS

Although the Company's Louisiana video poker operations terminated as of June
30, 1999, references to Company's Louisiana activities are presented here with
respect to activities which occurred through December 31, 1999 and in the event
that the appeal being undertaken by an industry group on behalf of all similarly
situated companies to the U.S. Supreme Court (discussed below) results in the
reversal of the lower court's decision.

Trans World Gaming of Louisiana, Inc. ("TWGLa"), a wholly-owned subsidiary of
TWG, owned certain ownership interests in two gaming establishments at truck
stops in Louisiana, which included (i) an establishment located at the 76 Plaza
in Lafayette, Louisiana known as the "Gold Coin" (formerly known as the Gold
Nugget), which had 50 video lottery terminals ("VLTs" or "Devices"), and (ii)
the Toledo Palace (the "Toledo Palace"), which the Company established and
licensed at a truck stop located in DeRidder, Louisiana, known as the Woodlands
Travel Plaza (the "Woodlands") and at which TWGLa operated 33 VLTs. Both the
Gold Coin and the Toledo Palace establishments were licensed to operate only
VLTs. As a result of a referendum in 1996 in 35 parishes in Louisiana, including
the two parishes in which the Gold Coin and the Toledo Palace, are located, it
was determined that video poker would cease effective June 30, 1999 (the "Voter
Mandate"). In accordance with the Voter Mandate, the Louisiana gaming
authorities terminated the operations at both the Gold Coin and the Toledo
Palace on June 30, 1999. The Company has appealed the Louisiana State Court's
recent decision to uphold the Voter Mandate to the U.S. Supreme Court. The U.S.
Supreme Court will decide in 2000 whether or not to consider the case (See Item
3 "Legal Proceedings"). The Company cannot, as of the date hereof, predict the
outcome of its litigation or when a decision relating hereto will be rendered.

In accordance with the Voter Mandate and the outcome of subsequent judicial
decisions, the Company ceased all operations in Louisiana on June 30, 1999 and
its lease at the Gold Coin location in Lafayette was


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terminated on July 31, 1999. The Company sold the Woodlands truck stop in
DeRidder on October 4, 1999 for $295,000 and sold the video poker machines for
$84,000.

In accordance with the Company's strategy to further concentrate on profitable
businesses and minimize risk, the Company is in the process of disposing of its
non-voting 49% interest in Chrysolith, LLC, a Louisiana limited liability
company ("Chrysolith"). Chrysolith provided on-site management for all of the
operations of both the Gold Coin and the Toledo Palace, including the operation,
servicing and maintenance of the VLTs, pursuant to a management agreement, the
Amended and Restated Regulations and Operating Agreement of Chrysolith, dated
December 1994 and amended December 1996 (the "Chrysolith Operating Agreement").
Through June 30, 1999, the Company received the net revenue at both the Gold
Coin and the Toledo Palace, which is the revenue generated by VLTs at both
facilities after payment of franchise taxes by Chrysolith to the State of
Louisiana and after payment of all prizes to the players (the "Net Win After
Tax"). The Company, in conjunction with this arrangement, further reimbursed
Chrysolith for all direct operating costs incurred in the operation of the VLTs.
Although the Company does not foresee any further business involvement in
Louisiana, the Chrysolith Operating Agreement will continue pending the decision
of the U.S. Supreme Court regarding the Company's appeal of the termination of
the operations at the Gold Coin and Toledo Palace.

On December 22, 1994, the Company acquired from Chrysolith and Prime Properties,
Inc., a Louisiana corporation ("Prime"), which leased the 76 Plaza, a truckstop
in which the Gold Coin was located, certain rights therein including an 18 year
sub-leasehold interest (the "Sub-Lease"), subject to the terms of an Over-Lease
on the 76 Plaza between Prime, as lessee and National Auto Truckstops, Inc.
("National") as lessor. At the same time, the Company acquired from Prime the
right to a 50% interest in the profits of the Gold Coin under the terms of an
agreement (the "Prime Agreement") under which the Company agreed to pay Prime a
total of $6.0 million for such profit interests in the form of a promissory note
(the "Prime Note"). On November 10, 1997, the Company was advised that on
October 16, 1997, National had placed Prime on notice that its rights to occupy
the 76 Plaza would terminate on January 23, 1998, due to an alleged breach of
the Over-Lease by Prime. Subsequently, on December 23, 1997, the Company filed a
Petition for Concursus in the 15th Judicial District Court, Lafayette Parish,
Louisiana, Case No. 976174-D, and paid the final $292,000 then owing under the
Prime Note into the registry of the court, protesting that such sum was not
actually due and owing based on the alleged breach of the Over-Lease by Prime.
On or about December 30, 1997, the Company received notice from Prime that Prime
(which was not aware of the Company's Petition for Concursus) considered the
Company in default of the Sub-Lease demanded that the Company pay to Prime an
amount equal to approximately $299,513 on or before January 7, 1998 to cure its
alleged default. Upon receipt of this correspondence, the Company contacted
counsel for Prime and notified him of the Company's prior Petition for Concursus
filing. On or about January 19, 1998, Prime filed in United States District
Court, Western District of Louisiana, Case No. CV98-0076L-0, a Complaint for
Damages and Violation of the Petroleum Marketing Practices Act against National,
alleging breaches by National in the franchise agreement between Prime and
National and seeking to enjoin National from terminating the Over-Lease. On or
about January 21, 1998, Prime filed a Voluntary Petition in Bankruptcy under
Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the
Western District of Louisiana, Case No. 98BK-50087, listing National as the
holder of an unsecured claim for $925,000 (the "National Claim"). (See Form
10KSB/A for the year ended December 31, 1997, Item 6, "Management's Discussion
and Analysis and Results of Operations - Important Factors to Consider".) On
March 20, 1998, National filed various motions, as permitted under section
362(d) of the Bankruptcy Code, to lift the automatic stay and to permit certain
actions by Prime. On April 13, 1998, the United States Bankruptcy Court granted
National's motions and dismissed Prime's bankruptcy case. Following that
decision, on April 17, 1998, National filed a "Motion for Expedited Hearing on
Motion to Return Possession of Premises to National Auto" in the United States
District Court, Western District of Louisiana, Case No. 98-0076.

On May 22, 1998, the owners of Prime sold their interests in the 76 Plaza
truckstop property to Mr. Lee Young, who is the 51% member of Chrysolith. At the
same time, National and Prime (under its new ownership by Mr. Lee Young)
executed an Amended and Restated Lease Agreement expired on December 31, 1999
(the "Lease"). Under the terms of the Lease, National has the right to terminate
the Lease under certain circumstances, including default or non-renewal of the
fuel franchise by Prime.


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On May 22, 1998, the Company negotiated settlements by and among TWGLa,
Chrysolith, Prime and National (the "Settlement"). The terms of the Settlement
were as follows: (i) TWGLa and the former owners of Prime agreed that TWGLa
would make a final settlement payment to said former owners of $450,000, subject
to certain deductions, noted below, (the "Settlement Payment"), (ii) the claim
of National against Prime would be satisfied by: (a) liquidating the assets of
Prime, (b) paying to National the funds previously placed in the registry of the
court (Petition for Concursus file number 976174-D), and (c) paying to National
available cash in Prime relating to the sale of Prime's truckstop inventory to
National (the "Prime Assets") and (d) delivering a promissory note from Prime
(guaranteed by TWGLa and TWG) in the principal amount of $239,597 bearing
interest at the rate of 10% per annum payable in four equal monthly installments
beginning on June 22, 1998 (the "National Promissory Note"); (iii) to the extent
that the Prime Assets proved insufficient to satisfy the National Claim, TWGLa
would reduce the Settlement Payment by the amount of such deficiency and remit
such amount to National; (iv) the remaining funds of the Settlement Payment
first were used to pay trade creditors and to reimburse TWGLa for payments made
under the National Promissory Note and any funds remaining after such payments
and reimbursements were paid to the former owners of Prime; (v) all of the
litigation among the parties was dismissed (See Item 3 "Legal Proceedings"); and
(vi) all parties agreed to mutually acceptable releases of all claims and
liabilities against the others. As of the date of this report, $450,000 has been
paid by the Company to the former owners of Prime.

OTHER TERMINATED VENTURES:

MULTIPLE APPLICATION TRACKING SYSTEMS, INC.

On April 15, 1997, the Company acquired Multiple Application Tracking Systems,
Inc. of Colorado ("MATS"), a supplier of casino software products. The purchase
price was $250,000, consisting of $15,000 in cash and a $235,000 promissory note
(the "MATS Note") which was set to mature in November, 2000. In addition, the
Company entered into a five-year employment agreement with Mr. James Hardman,
Jr. ("Hardman"), the previous owner of MATS, at an annual compensation of
$100,000. Mr. Hardman also was to receive ten percent (10%) of all MATS sales as
a license royalty. On February 15, 1999, however, the Company sold MATS back to
Hardman in return for his cancellation of the MATS Note, termination of the
employment agreement and $38,000 of severance payments to benefit Hardman and
one other employee.

THE BOXER CASINO

On March 31, 1997, Art Marketing, Ltd., d/b/a Tottenham & Co. ("Tottenham &
Co."), a wholly-owned subsidiary of the Company, executed a Joint Activity
Agreement with Mr. Mahmud Avdiyev, an individual engaged in various businesses
in Azerbaijan (the "Avdiyev Agreement"). The Avdiyev Agreement which is for a
term of twenty years, sets forth the parties' relative obligations with respect
to operation of the Boxer Casino located in Gyandja, Azerbaijan Republic. In
January 1998, the President of Azerbaijan ordered the closing of all of the
casinos in Azerbaijan including the Boxer Casino. The shutdown resulted in the
1998 write-off of the unamortized balance of the Company's investment of
$295,000. Management cannot predict when, or if, the Boxer Casino will reopen
for business.

THE BISHKEK CASINO

In June 1998, the Company opened the Bishkek Casino located in the Kyrgyz
Republic, a former member of the Soviet Union. TWG has a twenty-year management
contract with Jockey Clubs Casinos, LLC ("JCC") under which TWG was to receive
40% of the pre-tax profits of the casino. During 1998, the Kyrgyz parliament
passed a law which banned all casinos except those protected by the country's
foreign investment laws. The Bishkek casino is one of two casinos that were
allowed to remain open. However, in light of mounting losses and unrealistic
future prospects, the Company wrote-off its investment in the Bishkek Casino of
approximately $264,000 during 1998. In 1999, the Kyrgyz parliament eliminated
the foreign investment protection and the Bishkek Casino was forced to close.


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OTC BULLETIN BOARD

The Common Stock and Warrants currently are trading on the OTC Bulletin Board.

ACCOUNTING AND FINANCIAL ISSUES

In December 1998, the Company reviewed the carrying amount of long-lived assets,
identifiable intangibles and goodwill related to its Czech Republic, Spanish,
Boxer and Bishkek casino operations under FASB No. 121 "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of."
Based on a comparison of those assets against the expected future cash flows
generated by those operations, the Company recorded an asset impairment charge
of $2.5 million for the Czech operation, $1.5 million for the Spanish operation
and amortized its entire investment in Bishkek ($264,000) and Boxer casinos
($295,000) during the year ended December 31, 1998. The Company based the
write-off in the Czech Republic on increased competition in Ceska Kubice, lower
than anticipated revenue in Rozvadov and the fears that the proposed casino near
Snojmo would be a smaller operation with fewer gaming tables and machines than
originally forecasted. In Spain, delays in receiving permission to move the
casino to a more favorable location, together with a smaller operation than
originally planned, is the basis for the impairment charge.

The Company has, from time to time, been in technical default of the Amended
Indentures and has relied upon the forbearance and waivers from a majority
interest of the holders of the Senior Notes. Value Partners represents this
majority in interest of the holders of the Senior Notes. At December 31, 1999,
Value Partners owned 59% of the Company's long-term debt and owned warrants
which, upon exercise, would result in Value Partner's beneficial ownership of
Common Stock equaling 61.2% of the Company's issued and outstanding shares of
Common Stock.

The accompanying consolidated financial statements have been prepared assuming
the Company will continue as a going concern. The Company has suffered
significant losses from operations, has a working capital deficit of $3.9
million, and a stockholders' deficit of $14.2 million as of December 31, 1999.
Further, the Company is highly-leveraged with debt and, from time to time has
been able to pay its obligations when they become due. These conditions raise
substantial doubt about the Company's ability to continue as a going concern.
The consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty. The Company has taken steps to
improve its situation including the December 1999 opening of its third Czech
Republic casino and certain cost cutting measures. Furthermore, management's
plans include the growth of its existing business through relocation of the
Ceska casino; expansion of the Rozvadov casino; the addition of five gaming
tables to the casino near Snojmo; continued marketing campaigns and promotional
events; and CDZ's move to the center of Zaragoza. Further, the Company's
strategy for the future includes development of a hotel division and expansion
of its portfolio of gaming operations in terms of geographical location.

CORPORATE INFORMATION

The Company's corporate offices are located at 545 Fifth Avenue, Suite 940, New
York, New York 10017 and its telephone number is (212) 983-3355.

FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS.

The Company previously operated in three business areas, which, for accounting
purposes, were consolidated into two industry segments: the ownership and
management of gaming establishments overseas, which includes the operation of a
full service hotel overseas; and the operation of truckstops featuring VLTs. As
a result of the June 30, 1999 termination of its Louisiana gaming operations,
the Company has reported them as discontinued operations.


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NARRATIVE DESCRIPTION OF BUSINESS.

The Company is engaged in the acquisition, development and management of niche
casino operations worldwide which feature table games and mechanized gaming
devices, such as slot and video poker machines as well as development and
management of small to midsize hotels which include casino facilities. On March
31, 1998, the Company acquired two casinos in the Czech Republic and land upon
which a third casino was built and opened in December 1999. The Czech Republic
casinos are located close to major border crossings with Germany in Ceska Kubice
and Rozvadov and near the border crossing with Austria close to Snojmo. The
Zaragoza casino and hotel, was acquired on April 17, 1998, is located
approximately 15 miles outside of Zaragoza, Spain, and is the exclusive casino
licensee in the region of Aragon. (See "- General Development of Business,"
above, and "Future Operations," below).

INDUSTRY OVERVIEW

Prior to the amendments to the Czech gaming regulations in December 1998, local
municipalities were empowered to grant casino licenses in their regions. The
amendments to the gaming legislation removed that right from the local
governments and effectively eliminated exclusivity. Another entity has recently
opened a competing casino in Folmava, Czech Republic, near the Company's Ceska
Kubice location which, because of its location, may negatively impact Ceska
Kubice's revenue.

In Spain, the regional government, DGA, which is also the largest creditor of
CDZ, signed a protocol in April 1998 with TWG stating its intent to pass a law
allowing the casino to move to a more favorable location. There is opposition by
an Aragonian parliamentary party to the new law unless an amendment that would
allow casino-style slot machines in bingo parlors is included. Rather than agree
to this amendment, the DGA decided to issue a governmental decree which will
circumvent the parliament and allow CDZ to move from its current location.
Instead of a decree, in February 2000, the DGA introduced a law that would allow
the casino to relocate nonetheless. The law is expected to be presented to local
Spanish parliament in June 2000. Management believes, based on its discussions
with Spanish authorities, the law has little opposition and is expected to pass.

THE COMPANY'S FACILITIES

LOUISIANA GAMING

The Gold Coin and Toledo Palace gaming facilities were closed June 30, 1999, and
the Gold Coin sub-lease was terminated by the landlord effective July 31, 1999.
The VLT machines were sold in 1999 for $84,000.

WOODLANDS TRUCKSTOP

The Woodlands, where the Toledo Palace was located, was sold on October 4, 1999
for $295,000.

CZECH REPUBLIC

The Ceska Kubice casino currently has fifteen gaming tables, seventy slot
machines and parking for approximately forty cars. In Rozvadov, there are seven
tables, thirty-eight slot machines and parking for forty cars. In Snojmo, there
are eleven gaming tables, forty-two slot machines, and parking for one hundred
twenty cars.

SPAIN

The casino currently has nine gaming tables and twenty-four slot machines. The
facility also has thirty-seven sleeping rooms, approximately 7,169 square feet
of Banquet space, four shooting ranges, a swimming pool, a tennis court, and
approximately 3,557 of space that was formerly operated as a nightclub.


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FUTURE OPERATIONS

CZECH REPUBLIC

In April 1999, the Company purchased a parcel of land in Folmova, Czech Republic
in the same region as the existing Ceska casino but nearer to the German border.
The Company intends to construct a new casino on this land and to relocate the
Ceska operation to the new facility. This move would give the casino excellent
exposure because it would be located directly on the border road; would be
located nearer to the border than the access road for the casino of Ceska's main
competitor; would allow for a larger parking facility than that which exists in
Ceska; would address the issue of capacity constraints on the weekend in that it
would allow for an increase in the number of gaming tables over the existing
space; and would allow for a floor plan to be designed which, unlike the Ceska
building, would optimize the casino's equipment layout. Subsequent to relocation
of the casino operation from Ceska to Folmova, the Ceska facility will be used
as office space and as a training center supporting all of the Czech casinos.

Based on the attendance versus capacity challenges experienced at the existing
casino in Rozvadov, the Company is moving forward with its budget plan to expand
the facility by adding two gaming tables.

The casino near Snojmo opened on December 22, 1999 and has, in terms of both
attendance and Total Drop (the dollar amount of gaming chips sold), thus far
exceeded budgeted expectations. The budget calls for the addition of five table
gaming tables in October, 2000, and based on the promising results in the first
quarter of 2000, that timetable may be accelerated.

SPAIN

In anticipation of receiving permission to move CDZ to center city Zaragoza, TWG
is in the process of completing negotiations to lease available space in a
cinema adjacent to a downtown hotel location. The cinema was chosen due to its
desirable location, together with the advantages of providing common services
with the hotel (food, maintenance, parking and accommodations). CDZ, which is
expected to reopen at this new location within ten months after it receives
permission to move, pending local planning board approvals, will have
approximately 17 gaming tables and 120 slot machines. The investment required by
TWG upon receipt of the approvals is anticipated to total approximately $5.0
million (See Item 6. "Management's Discussion and Analysis or Plan of Operation
- Liquidity and Capital Resources".).

Except as described above, the Company has no other specific arrangements or
understandings with respect to the management or acquisition of any gaming
facility. There can be no assurance that the Company will manage or acquire any
other gaming facilities in the future, although it hopes to do so.

LONG RANGE OBJECTIVE

The Company's long-range objectives are to develop the Company's casino
operations brand name, American Chance Casinos, into the premier name in the
small casino niche market overseas; to establish Trans World Gaming Corp. as the
industry leading owner/operator and management company in this market; and to
further diversify the Company's operations to include ownership and/or
management of small to midsize hotels which are complementary to the Company's
casino operations. To achieve these goals, the Company's strategy consists of:
(i) identifying business opportunities in areas where economic conditions,
cultural habits, and political climates are favorable to investment in existing,
or construction of new, gaming and hotel facilities; (ii) forming a team of
TWG's casino and hotel experts to develop and market a complete set of
operational and administrative guidelines for the purpose of securing casino and
hotel management contracts; and (iii) continuing to demonstrate its
effectiveness as an owner/operator of small casinos through improved
efficiencies in its existing operations.

Some of the specific action plan initiatives, which support this third strategy,
are as follows:

TWG management will continue to develop marketing and operational initiatives
designed to increase attendance and revenues at its existing locations in the
Czech Republic and Spain. The Company has


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acquired land close to the German border near Ceska Kubice, at Folmava, Czech
Republic and is planning to build a casino to replace the existing facility and
relocate the Ceska Kubice to this facility. Management believes that the new
location will be more accessible to its main target market in Germany and will
result in improved attendance and play. In addition, TWG transferred excess slot
machines from Ceska Kubice and Rozvadov to its new location near Snojmo.

The Company will continue to seek ways to reduce operational and overhead costs.
For example, the Company has recently reorganized the Czech Republic management
structure and is in the process of closing its London offices, measures that
will produce an annual savings of approximately $450,000.

Financial reporting, which was identified by management as an area in need of
improvement, will continue to be a focus of attention. Beginning in January
2000, a new monthly financial reporting program was successfully introduced. The
Company, also, is exploring the possibility of replacing its general ledger
systems and has included the purchase thereof in its 2000 Capital Plan.

MARKETING

CZECH REPUBLIC

In 1999, the Management implemented a marketing strategy designed to increase
the number of visitors to its casinos in Ceska and Rozvadov. The target area was
the sixty-mile radius surrounding each of these casinos. These areas were
addressed through the use of direct mailings, flyers, radio, newspaper,
billboard advertising and improved directional signage in English, German and
Czech, as appropriate. Customer loyalty programs, special events and promotions
and a busing program were also developed and implemented. The Company's new
casino near Snojmo was introduced to the residents of Vienna and its northern
suburbs through a campaign of radio spots using the Rhett Butler and Scarlet
O'Hara characters; free standing and bus mounted billboard advertising; and
"Gone With The Wind" theme newspaper advertisements. The casino was then
launched with opening parties on three successive nights. These parties, which
targeted local politicians and business leaders as well as foreign investors and
other foreign VIPs, included ribbon cutting ceremonies, fireworks, fire dancers,
a live band, and a professionally catered dinner. The introductory marketing
strategy proved to be highly successful with the casino receiving positive press
coverage in well-reputed publications in the Vienna area. Moreover, as
previously noted, the casino's attendance has, for the first three months of
operations, surpassed the Company's projections.

SPAIN

TWG is currently marketing the new CDZ casino through direct mailings, radio,
newspapers and billboard advertising in English and Spanish, as appropriate. By
Spanish law, casinos are not permitted to do any direct advertising. Promotions
of the casino, therefore, must be piggybacked on advertisements of other
services that the property offers. In 1999, the Company suspended its food and
beverage banquet ("Catering") operations in response to profitability and
personnel issues. Pursuant to the reorganization of this department and the
introduction of pro-forma profit and loss reports for all event inquiries, the
Company has relaunched the Catering business. The advertising associated with
the Catering business will provide a vehicle for greater advertising exposure
for the casino as well.

ACQUISITION AGREEMENT

TOTTENHAM & CO. On January 1, 1997, the Company completed the acquisition of
Tottenham & Co., which was founded in 1988 by Andrew Tottenham, the Company's
President and Chief Operating Officer ("COO"). Tottenham & Co. is engaged in
providing consulting services to gaming companies worldwide. The consideration
paid for Tottenham & Co. by the Company included 500,000 shares of the Company's
Common Stock, and warrants to purchase 250,000 shares at an exercise price of
$.5938, the bid price of the Company's Common Stock on the date of the
acquisition as reported by the Nasdaq SmallCap Market System. In addition, the
Company issued two promissory notes in the aggregate principal amount of
$200,000 bearing interest at the rate of 10% per annum and payable on January 1,
2002 (the "Tottenham Notes"). On December 31, 1998, the Company and Mr.
Tottenham converted the Tottenham Notes and


                                       9
<PAGE>


accrued interest totaling $240,000 into 320,000 shares of the Company's Common
Stock. All of the Common Stock, as well as the Common Stock underlying the
warrants, carries certain "piggyback" registration rights.

REGULATIONS AND LICENSING

SPAIN. The new law that would allow CDZ to move to the center of Zaragoza has
been passed from a parliamentary committee to the floor of the regional
parliament. However, a certain amendment to the law is of concern to TWG. The
proposed amendment would allow bingo operators in Aragon to install casino-style
slot machines. The DGA, which is controlled by the largest party in parliament,
opposed the amendment and decided to issue a governmental decree to circumvent
the parliament and allow the casino to move to the center city. However, instead
of a decree, in February 2000, the DGA introduced a law that would allow the
casino to relocate. The law is expected to be presented to local Spanish
parliament in June 2000. Based on discussions with Spanish authorities, the law
has little opposition and is expected to pass.

CZECH REPUBLIC. During the quarter ended June 30, 1998, the Czech Republic House
of Deputies passed an amendment to the gaming law which restricted foreign
ownership of casino licenses. In response thereto, the Company restructured its
subsidiaries and Czech legal entities to comply with the amendment and was
subsequently granted a ten-year license. It is currently anticipated that the
foreign ownership restriction will be lifted in 2000. There may be increased
competition, however, at that time, in the areas where the Company operates
because local municipalities no longer have control over the issuance of casino
licenses, thereby effectively eliminating exclusivity. There can be no assurance
that the authorities in the Czech Republic will not amend the gaming law as it
pertains to foreign ownership of casino licenses. In the event the gaming laws
are amended in the future, it may have a material adverse effect on the
Company's future profitability and operations.

APPLICATION OF FUTURE OR ADDITIONAL REGULATORY REQUIREMENTS. In the future, the
Company intends to seek the necessary licenses, approvals and findings of
suitability for the Company and its personnel in other jurisdictions; however,
there can be no assurance that such licenses, approvals or findings of
suitability will be obtained or will not be revoked, suspended or conditioned or
that the Company will be able to obtain the necessary approvals for its future
activities. If a license, approval or finding of suitability is required by a
regulatory authority and the Company fails to seek or does not receive the
necessary license or finding of suitability, the Company may be prohibited from
owning or operating gaming establishments in that jurisdiction.

GAMING TAXES. Gaming taxes in the various locations where the Company operates
range from 10% to 55% of net gaming revenues. There can be no assurance that tax
rates, fees or other payments applicable to the Company's gaming operations will
not be increased in the future.

FEDERAL REGULATION

The Federal Gambling Devices Act of 1962 (the "Federal Act") generally makes it
unlawful for a person to manufacture, deliver, or receive gaming machines,
gaming machine type devices, and related components across state lines or to
operate gaming machines unless that person has first registered with the
Attorney General of the United States. In order to manufacture, sell, deliver,
or operate certain of its current and proposed products, the Company must
register and renew its registration annually. In addition, various record
keeping and equipment identification requirements are imposed by the Federal
Act. Violation of the Federal Act may result in seizure and forfeiture of
equipment, as well as other penalties. The Company is currently registered and
maintains the reports required under the Federal Act.

COMPETITION

The Gold Coin and the Toledo Palace competed with other forms of legal and
illegal gambling, including bingo and pull-tab games, card clubs, pari-mutual
betting on horse racing and dog racing and state-sponsored lotteries, as well as
other forms of wagering entertainment. Neither of these entities is operational
at this time, due to the Voter Mandate. The Company's Czech casinos compete with


                                       10
<PAGE>


approximately twelve other casinos in the area with two new casinos under
construction across the German border. Due to the exclusivity of the Spanish
casino license, the bingo operations in Zaragoza are CDZ's only competition.
(See Item 1. "Description of Business - Industry Overview").

EMPLOYEES

As of March 31, 2000, the Company had 464 full-time employees (including three
executive officers): 372 in the Czech Republic, 84 in Spain, 4 in London, and 4
in New York, respectively. The Company believes that its employee relations are
excellent.


                                       11
<PAGE>


There can be no assurance that the Company will achieve profitability as a
result of these operations or otherwise. The Company's independent public
accountants' have issued their report dated February 17, 2000 with an
explanatory paragraph relating to the Company's ability to continue as a going
concern.

TERMINATION OF LOUISIANA OPERATIONS IN 1999; NEED TO DIVERSIFY

In November 1996, residents in 35 parishes in Louisiana, including the two
parishes in which the Gold Coin and the Toledo Palace are located, voted to
discontinue video poker effective June 30, 1999. The Company is currently
involved in litigation to overturn the voter referendum. See Item 3 - "Legal
Proceedings." No assurances can be given that such litigation will be
successful. At this time, the Company has operations in the Czech Republic and
Spain, but no U.S. gaming operations. The Company is currently seeking to
develop or acquire interests in gaming operations and hotels at other locations;
however, there can be no assurance that the Company will be able to develop or
acquire such new operations in the future.

TAXATION OF GAMING OPERATIONS

Gaming operators are typically subject to significant taxes and fees in addition
to federal and state corporate income taxes, and such taxes and fees are subject
to increase at any time. Any material increase in these taxes or fees would
adversely affect the results of operations of the Company. The Czech Republic
currently has a number of laws related to various taxes imposed by governmental
authorities. Applicable taxes, include value added tax, corporate tax, and
payroll (social) taxes, together with others. In addition, laws related to these
taxes have not been in force for significant periods, in contrast to more
developed market economies; therefore, implementing regulations are often
unclear or nonexistent. Accordingly, few precedents with regard to issues have
been established. Often, differing opinions regarding legal interpretations
exist both among and within government ministries and organizations, creating
uncertainties and areas of conflict. Tax declarations, together with other legal
compliance areas (for example, customs and currency control matters) are subject
to review and investigation by a number of authorities, who are enabled by law
to impose extremely severe fines, penalties and interest charges. These facts
create tax risks in the Czech Republic substantially more significant than
typically found in countries with more developed tax systems. Management
believes that it has adequately provided for tax liabilities; however, the risk
remains that relevant authority in the Czech Republic, and to a lesser extent as
of the date of this report in Spain could take differing positions with regard
to interpretive issues and the effect could be significant.

DEPENDENCE UPON KEY PERSONNEL

The Company's ability to successfully implement its strategy, manage the Czech
and Spanish casinos and maintain a competitive position will depend in a large
part on the ability of Rami S. Ramadan, the Company's newly-hired Chief
Executive Officer ("CEO") and Chief Financial Officer ("CFO"). Mr. Ramadan has
served as Executive Vice President of Finance for the Ian Schrager Hotels and
also held financial positions with Hyatt Hotels, Euro-Disney and Meridien
Hotels. The Company may also be highly dependent upon other key employees,
casino managers and consultants whom the Company may retain from time to time.
Although Mr. Ramadan has an employment agreement with the Company that continues
for an additional two years, there can be no assurances that the Company will be
able to continue to retain Mr. Ramadan or any of such other personnel.

NEED FOR ADDITIONAL FINANCING

The Company believes, although there can be no assurance, that existing cash,
together with anticipated cash flows from operations, will be sufficient to
satisfy its current obligations for the next twelve months. However, the Company
will require additional capital for the relocation of the Ceska, Rozvadov, and
Zaragoza casinos as well as the expansion of the casino near Snojmo and for
growth opportunities. If such additional financing is not available, this would
have a materially adverse effect on the financial condition and operations of
the Company. The Company may require additional debt and/or equity financing for
the acquisition of other businesses when and if an opportunity to acquire such
businesses arises. The Company's ability to obtain additional financing may be
limited for a number of reasons, including the fact that because the Company is
highly-leveraged, a substantial portion of the Company's assets are subject to



                                       23
<PAGE>


liens. There can be no assurance that such financing will be available on terms
favorable to the Company or at all.

Because the Company is highly leveraged with debt, it is more vulnerable to
extended economic downturns and reduces the Company's ability to respond to
changing economic and industry conditions. This high leverage may adversely
impact the holders of the Company's equity securities by impairing the Company's
ability to obtain additional financing needed for working capital, capital
expenditures, acquisitions or general corporate purposes.

INTERNATIONAL ACTIVITIES

Since July 1, 1999, the Company's operations were totally outside of the United
States. Operating internationally involves additional risks relating to such
things as currency exchange rates, different legal or regulatory environments,
political and economic risks relating to the stability or predictability of
foreign governments, differences in the manner in which different cultures do
business, difficulties in staffing and managing foreign operations, differences
in financial reporting, operating difficulties, different types of criminal
threats and other factors. The occurrence of any of these risks, if severe
enough, could have a material adverse effect on the financial condition or
results of operations of the Company.

LICENSING AND REGULATION

The Company's operations are subject to regulation by each local jurisdiction in
which it operates or plans to operate business, as well as federal laws and the
laws of any foreign country. Each of the Company's officers, and directors, and
in certain instances, persons who have more than a 5% income or profit interest
in, or who exercise significant influence over the activities of, the Company
may be subject to strict scrutiny and approval from the gaming commission or
other regulatory body of each jurisdiction in which the Company may conduct
gaming operations.

The failure to obtain any license for properties upon which the Company plans to
operate or manage a gaming establishment in the future would have a materially
adverse effect on the Company's business. Obtaining required licenses can be
time consuming and costly with no assurance of success. In addition, the Company
is subject to changes in the laws of the jurisdictions in which it operates,
which could materially limit the Company's ability to conduct business
profitably. In the event that a required license is not granted for any
particular location, the Company's options would include effecting a transfer of
substantially all of its related gaming assets to a different location or
selling its interest in the gaming operations at that location to a third party.
There can be no assurance that the Company would be able to relocate gaming
assets or sell its interests on acceptable terms or at all, and the inability to
do so would have a materially adverse effect upon the business and prospects of
the Company.

LIABILITY INSURANCE

The Company currently maintains and intends to maintain general liability
insurance in each of those locations in which it operates. There can be no
assurance that liability claims will not exceed the coverage limits of such
policies or that such insurance will continue to be available on commercially
reasonable terms or at all. There can be no assurance that such insurance will
be adequate to cover unanticipated liabilities.

NO DIVIDENDS

The Company has not paid any dividends to date on its Common Stock, and does not
expect to declare or pay any dividends in the foreseeable future. The Company
intends to retain future earnings, if any are generated, for investment in its
business.



                                       24
<PAGE>


POSSIBLE ADVERSE EFFECT OF ISSUANCE OF PREFERRED STOCK

The Company's Articles of Incorporation authorize the issuance of 2,000,000
shares of "blank check" Preferred Stock, with designations, rights and
preferences determined from time to time by its Board of Directors. Accordingly,
the Company's Board of Directors is empowered, without further stockholder
approval, to issue Preferred Stock with dividend, liquidation, conversion,
voting or other rights that could adversely affect the voting power or other
rights of the holders of the Common Stock. In the event of issuance, the
Preferred Stock could be used, under certain circumstances, as a method of
discouraging, delaying or preventing a change in control of the Company. The
Company has no current plans to issue any shares of Preferred Stock. However,
there can be no assurance that Preferred Stock will not be issued at some time
in the future.

DILUTIVE EFFECT OF WARRANTS

In March 1998, in connection with the completion of the Private Placement, the
Company issued warrants to purchase approximately 9.5 million shares of the
Company's Common Stock. In addition, in connection with the restructuring of the
Senior Bonds, in March 1998 the Company issued approximately 3.2 million
warrants to purchase the Company's Common Stock. The Company also issued
approximately 1.25 million warrants to purchase the Company's Common Stock in
the connection with the October 1999 Private Placement. The issuance of such
securities will have a dilutive effect on the Company's earnings, if any are
generated, on a diluted basis. Together these warrants represented at December
31, 1999, 260% of the Company's issued and outstanding shares of Common Stock.

ITEM 7.  FINANCIAL STATEMENTS.

The following items are included in this Report:

         Consolidated Financial Statements

         Index to Consolidated Financial Statements
         Independent Auditors' Report
         Consolidated Balance Sheet
         Consolidated Statements of Operations and Comprehensive Loss
         Consolidated Statements of Stockholders' Deficit
         Consolidated Statements of Cash Flows
         Notes to Consolidated Financial Statements
         Financial Statements of Other Auditors
         Audit Report for Casino de Zaragoza

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

Pannell Kerr Forster PC ("PKF") completed the Company's audit for the year ended
December 31, 1997. In August, 1998, PKF informally indicated that it did not
wish to act as the Company's independent auditor for the year ended December 31,
1998 and that it would decline to stand for reelection to audit the Company's
financial statements for the year ended December 31, 1998 for which PKF tendered
its formal resignation on February 25, 1999 to the Company without having
performed an audit for the Company's year ended December 31, 1998.

Upon receipt of notice from PKF that it would resign and not stand for
reelection as the Company's independent accountant, the Company began its search
for a new independent accountant in September 1998. On February 19, 1999, the
Company and Rothstein Kass & Company, P.C. ("RKC") signed a letter of engagement
whereby RKC agreed to perform an audit of the Company for the year ended
December 31, 1998.



                                       25
<PAGE>


Prior to the date of engagement of RKC, the Company had not consulted with RKC
regarding the application of accounting principles to a specified transaction or
the type of audit opinion that might be rendered on the Company's financial
statements.

The decision to accept the engagement of RKC as the Company's independent
accountant was recommended by the Audit Committee and approved by the Board of
Directors of the Company. At the October 29, 1999 Annual Meeting of the Company,
the appointment of RKC was ratified by the Company's shareholders.



                                       26
<PAGE>


PART III

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

The following table provides information as of March 31, 2000 with respect to
each of the Company's directors and each Executive Officer:

<TABLE>
<CAPTION>

-------------------------------------- ------- -------------------------------- -------------------------------
Name(1)                                Age     Position in the Company          Director or Executive Since
-------------------------------------- ------- -------------------------------- -------------------------------
<S>                                    <C>                                      <C>
Rami S. Ramadan (2)..............      50      CEO, CFO and Director            1999

Andrew Tottenham(2)..............      42      President, Chief Operating       1996
                                                        Officer and Director

Julio E. Heurtematte, Jr.(3).....      64      Director                         1998

Malcolm M.B. Sterrett(3).........      57      Director                         1998

Geoffrey Baker(3)...................   51      Director                         1999

-------------------------------------- ------- -------------------------------- -------------------------------
</TABLE>

(1)      Mr. Geoffrey Baker,  who was appointed to a fill a vacancy on the Board
         of Directors on December 22, 1998,  resigned from his position on May
         13, 1999 and rejoined the Board on  August 4, 1999.
(2)      Member of the Executive Committee.
(3)      Member of Audit Committee and Compensation Committee.

         Dominick J. Valenzano, resigned on July 12, 1999 from his position as
CFO of the Company, to pursue other business interests.

         Stanley Kohlenberg, resigned on June 30, 1999 from has position as CEO,
but remained as Chairman, until February 8, 2000.

         RAMI S. RAMADAN has served as CEO/CFO since July 12, 1999. His most
recent prior position had been Executive Vice President of Finance for the Ian
Schrager Hotels from November 1997 to July 1999. Prior to that, Mr. Ramadan held
senior financial positions with Hyatt Hotels from January 1994 to November 1997,
Euro Disney from October 1990 to December 1993 and Meridien Hotels from
September 1975 to September 1990.

         ANDREW TOTTENHAM was appointed as President and CEO of the Company on
January 1, 1997 and served in such capacities until September 1998 when he was
appointed to the offices of President and COO. Mr. Tottenham was a consultant to
the Company from July 1996 to December 31, 1996 and has been a director of the
Company since May 1996. He has been the President of Tottenham & Co., since
1988. Mr. Tottenham commenced his career in the gaming industry in 1975 and has
worked for the Silhouette Club, Bally's Park Place, Connoisseur Club, and
Victoria Casino. Mr. Tottenham is the son-in-law of Mr. Kohlenberg.

         JULIO E. HEURTEMATTE, JR. Mr. Heurtematte currently is a private
consultant, specializing in international projects, trade and investments and
has acted in such capacity since 1989. From 1963 to 1989, Mr. Heurtematte served
with the Inter-American Development Bank in several capacities, most recently as
its Deputy Manager for Project Analysis.



                                       27
<PAGE>


         MALCOLM M. B. STERRETT. Mr. Sterrett is a private investor. From 1989
to 1993, he was a partner at the law firm of Pepper Hamilton & Scheetz,
Washington, D.C. From 1988 to 1989, he served as General Counsel to the U.S.
Department of Health and Human Services and from 1982 to 1988 he was a
Commissioner on the U.S. Interstate Commerce Commission. Prior thereto, he was
Vice President and General Counsel to the United States Railway Association and
served as Staff Director and Counsel to the U.S. Senate Committee on Commerce,
Science and Transportation.

         GEOFFREY B. BAKER. Mr. Baker is a private investor. From 1983 to the
present, Mr. Baker has been a member of the private investment firm, Baker &
Donaldson. From 1977 to 1982, he was Legislative Director to U. S. Senator
Lowell P. Weicker, Jr. and from 1975 to 1977, he served on the Senate Committee
on Commerce as a minority staff member for surface transportation.

INFORMATION ABOUT THE BOARD AND ITS COMMITTEES

The business and affairs of the Company are managed by the Company's Board of
Directors. Meetings of the Board are held quarterly and on an as-needed basis.
The Board has established several committees, described below, which also meet
on an as-required basis during the year. The Board held six meetings during the
Company's fiscal year ended December 31, 1999. No director of the Company
attended fewer than 75% of the total number of meetings of the Board or meetings
of committees of the Board during the year ended December 31, 1999.

The Board of Directors has established the following committees:

AUDIT COMMITTEE. The Audit Committee reviews and approves internal accounting
controls, internal audit operations and activities, the Company's annual report
and audited financial statements, the selection of the Company's independent
auditors, the activities and recommendations of the Company's independent
auditors, material changes in the Company's accounting procedures, the Company's
policies regarding conflicts of interest and such other matters as may be
delegated by the Board. The Audit Committee, composed of Messrs. Heurtematte and
Sterrett, both non-employee directors, met once in 1999.

EXECUTIVE COMMITTEE. The Executive Committee recommends a list of potential
director nominees to the Board of the Company, develops guidelines for corporate
structuring and Board-related issues and acts as an oversight committee.
Although the Executive Committee will consider nominees recommended by the
Company's shareholders, it has neither actively solicited nominations nor
established any procedures for this purpose. The Executive Committee, composed
of Messrs. Ramadan and Tottenham, met once during 1999.

 COMPENSATION COMMITTEE. The Compensation Committee sets the compensation for
executive officers of the Company and sets the terms of grants of awards under
the Company's 1993 Incentive Stock Option Plan (the "1993 Plan"), the Company's
1998 Stock Option Plan (the "1998 Plan"), the 1999 Non-Employee Director Stock
Option Plan and any other equity-based compensation plans adopted by the
Company. The Compensation Committee, composed of Messrs. Heurtematte and
Sterrett, met three times during 1999.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Exchange Act requires the Company's officers, directors and
persons who own more than 10% of the Company's Common Stock to file reports of
ownership and changes in ownership with SEC and the National Association of
Securities Dealers, Inc. by certain dates. The Company believes that in the
fiscal year ended December 31, 1999, these filing requirements were not
satisfied by its directors and executive officers. For the year ended December
31, 1999, Geoffrey Baker, Julio Heurtematte, Malcolm Sterrett, Maureen Weppler,
Stanley Kohlenberg, Dominick Valenzano and Andrew Tottenham each were late once
in reporting one transaction; each of which were subsequently filed. In making
the foregoing statements, the Company has relied on representations of its
directors and executive officers and copies of the reports that they have filed
with the SEC. The Company knows of no person who owns 10% or more of the
Company's Common Stock.



                                       28
<PAGE>


ITEM 10.      EXECUTIVE COMPENSATION.

SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION

The following table sets forth the cash and non-cash compensation paid or earned
during the fiscal years ending December 31, 1999, 1998, and 1997 by the Chief
Executive Officer(s) and Chief Financial Officer of the Company (the "Named
Officers") during those periods.



                           SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>

--------------------------------- ------ ---------- ---------- ---------------------------------- ---------------------
                                                                                                  Long-Term
                                                                                                  Compensation
--------------------------------- ------ ---------- ---------- -------------------- -------------- --------------------
                                                                      OTHER         STOCK               ALL OTHER
                                  YEAR   SALARY     BONUS(4)          ANNUAL        OPTIONS(5)       COMPENSATION(6)
                                                                   COMPENSATION
<S>                               <C>    <C>         <C>                <C>         <C>                 <C>

  Rami Ramadan
       Chief Executive Officer    1999   $150,000                                   100,000              2,200
       Chief Financial Officer(1)

Andrew Tottenham
     President and Chief          1999   $195,000
     Executive Officer(2)         1998   $180,000                                    25,000               9,000
                                  1997    150,000    60,000             100,000       8,600
Stanley Kohlenberg
     Former  President and Chief  1999    180,000
     Executive Officer(3)         1998     43,750                                    25,000              42,500
                                  1997

Dominick J. Valenzano
     Former   Chief    Financial  1999    120,000
     Officer(7)                   1998    120,000                                    25,000               4,300
                                  1997     90,000     30,000                         50,000               6,360
--------------------------------- ------ ---------- ---------- -------------------- -------------- --------------------
</TABLE>

(1)      Mr. Ramadan joined the Company as its CEO and CFO, July 12, 1999.
(2)      Mr. Tottenham was elected President and CEO of the Company as of
         January 1, 1997 and became President and COO on September 16, 1998.
(3)      Mr. Kohlenberg served as President and CEO of the Company from March 6,
         1996 to December 31, 1996 and again from September 16, 1998 to June 30,
         1999, the date of his resignation. Under the terms of a severance
         agreement dated May 23, 1999, Mr. Kohlenberg received six months salary
         and will participate in the Company's health plan for that period.
(4)      Bonus amounts shown were earned with respect to each year indicated.
(5)      Amounts shown represent the number of qualified stock options granted
         each year. With the exception of Mr. Valenzano's options which have
         expired, options listed are exercisable; all of the options, at
         December 31, 1999, were issued at the fair market value of one share of
         the Company's Common Stock on the date of grant.
(6)      The amounts shown represent the cost of a leased automobile provided to
         Messrs. Tottenham, Valenzano and Ramadan (received Mr. Valenzano's car
         on September 1, 1999) by the Company for each year indicated and
         represent a consulting fee paid to Mr. Kohlenberg under the terms of a
         Consulting Agreement which terminated on September 15, 1998.
(7)      Mr. Valenzano resigned from the Company on August 5, 1999. Under the
         terms of a severance agreement, executed on August 5, 1999, Mr.
         Valenzano received six months salary and participated in the Company's
         health plan for six months following such termination.



                                       29
<PAGE>


OPTION GRANTS AND EXERCISES

The following table summarizes certain information concerning individual grants
of options during fiscal 1999 to the executive officers named in the Summary
Compensation Table above and the potential realizable value of the options held
by such persons at December 31, 1999.

                                           OPTIONS GRANTED IN FISCAL 1999
                                                  INDIVIDUAL GRANTS
<TABLE>
<CAPTION>

---------------------------------- --------------------- --------------------- ----------------------- ----------------
                                   SHARES OF COMMON      % OF TOTAL OPTIONS
                                   STOCK UNDERLYING      GRANTED TO            EXERCISE OF BASE        EXPIRATION DATE
                                   OPTIONS GRANTED       EMPLOYEES IN FISCAL   PRICE ($/SH)
                                                         YEAR
---------------------------------- --------------------- --------------------- ----------------------- ----------------
<S>                                <C>                        <C>                       <C>               <C>   <C>
RAMI RAMADAN.................      100,000                    100%                      0.50              07/30/08
---------------------------------- --------------------- --------------------- ----------------------- ----------------
</TABLE>

        No options were exercised by the executive officers named in the Summary
Compensation Table during fiscal 1999.

        The following table summarizes the option values held by the executive
officers named in the Summary Compensation Table as of December 31, 1999.

                  AGGREGATE OPTION EXERCISES IN FISCAL 1998 AND

                                       FISCAL 1999 YEAR-END OPTION VALUE TABLE
<TABLE>
<CAPTION>

-------------------------- ---------- ------------------------------------ -------------------------------------
                                                                           VALUE OF UNEXERCISED IN-THE-MONEY
                                      NUMBER OF UNEXERCISED OPTIONS        OPTIONS AT DECEMBER 31, 1999
                                      AT DECEMBER 31, 1999
-------------------------- ---------- ------------------------------------ -------------------------------------
                           SHARES
NAME                       ACQUIRED      EXERCISABLE    UNEXERCISABLE   EXERCISABLE
                           ON  EXERCISE                                               UNEXERCISABLE
<S>                                      <C>
RAMI RAMADAN                             100,000
STANLEY KOHLENBERG                       137,000
ANDREW TOTTENHAM                         127,000
DOMINICK J VALENZANO                     145,000
-------------------------- ------------- -------------- --------------------- --------------------------------
</TABLE>

DIRECTORS' COMPENSATION

Directors receive a cash fee of $2,000 for each meeting attended and all members
of the Board are reimbursed for out-of-pocket expenses in connection with
attending Board meetings. Pursuant to the 1999 Non-Employee Director Stock
Option adopted at the October 29, 1999 Annual Meeting, each non-employee
director is provided with an automatic grant of a non-qualified option to
purchase 2,000 shares of Common Stock on the date following each fiscal quarter
in which the director serves. Each such option (i) has a ten-year term, (ii) has
an exercise price per share equal to 100% of the fair market value of one share
of Common Stock on the date of grant, and (iii) becomes fully exercisable on the
date of grant.

EMPLOYMENT/SEVERANCE AGREEMENTS

RAMI S. RAMADAN. Effective July 12, 1999, the Company entered into a three year
employment agreement with Mr. Ramadan pursuant to which he will serve as the
Company's Chief Executive Officer and Chief Financial Officer at an annual
salary of $300,000. Mr. Ramadan is eligible to participate in the 1998 Plan,
Executive Compensation Plan and any present or future employee benefit plans. He
also will be reimbursed



                                       30
<PAGE>


for reasonable travel and out-of-pocket expenses necessarily incurred in the
performance of his duties. Mr. Ramadan will also receive three separate equal
annual installments of options to acquire the Company's Common Stock, each of
which shall have a five-year term commencing upon the date on which each
installment is granted. Upon commencement of the employment agreement, Mr.
Ramadan received 100,000 options exercisable at $0.50 per share; upon
commencement of the second year of the employment agreement an additional
100,000 options exercisable at $0.55 per share will be granted; and upon
commencement of the third year of the employment agreement the final installment
of 100,000 options exercisable at $0.61 per share will be granted. Upon
commencement of the second and third year of the employment agreement, the
exercise price for all unexercised options granted in the preceding year will be
increased to the current year's exercise price up to $0.61. In the event the
employment agreement is terminated other than for cause, as defined in the
agreement, within six months of the commencement date, the Company shall pay to
Mr. Ramadan one year's salary in a lump sum within 30 days of the notice of
termination. If the agreement is terminated other than for cause at anytime
after six (6) months following commencement of the employment agreement, Mr.
Ramadan will receive two years' salary.

ANDREW TOTTENHAM. Effective as of January 1, 1997, the Company entered into a
five-year employment agreement with Mr. Tottenham pursuant to which he serves as
the Company's President and Chief Operating Officer at an annual salary of
$150,000. On June 1, 1999, Mr. Tottenham's salary was increased to $180,000.00
and on November 1, 1999, it was increased to $200,000. Mr. Tottenham will be
eligible for participation in the Company's 1993 Plan, 1998 Plan, the Executive
Compensation Plan, and any present or future employee benefit plans. He also
will be reimbursed for reasonable travel and out-of-pocket expenses necessarily
incurred in the performance of his duties. Mr. Tottenham works from the
Company's offices in London, England. The Company is entitled to terminate Mr.
Tottenham's employment, and its salary obligation to him, upon 30 days written
notice in the event of (i) disability (assuming there is disability insurance
sufficient to pay Mr. Tottenham his full salary for the remaining term of the
employment agreement), (ii) conviction of a felony, or (iii) a breach of the
employment agreement. If Mr. Tottenham dies during the term of the employment
agreement, his estate is entitled to three months' salary at his base salary
rate on the date of death. If Mr. Tottenham is terminated for any other reason,
he is entitled to three months' severance pay at his base salary rate in effect
on the date of such termination.

STANLEY KOHLENBERG. Effective July 12, 1999, the Company and Mr. Kohlenberg
entered into a severance agreement, pursuant to which Mr. Kohlenberg resigned as
Chief Executive Officer of the Company on June 30, 1999. Mr. Kohlenberg received
severance payments equal to six (6) months salary and continued to participate
in the Company's benefit plans for six (6) months.

Mr. Kohlenberg continued to serve as Chairman of the Company's Board of
Directors until his resignation in February 8, 2000.

DOMINICK J. VALENZANO. The Company and Mr. Valenzano executed a severance
agreement on August 5, 1999 pursuant to which Mr. Valenzano resigned as Chief
Financial Officer of the Company. Mr. Valenzano received severance payments
equal to six (6) months salary and continued to participate in the Company's
benefit plans for six (6) months.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following table sets forth information regarding the beneficial
ownership of the Common Stock as of March 31, 2000, unless otherwise noted, (a)
by each shareholder who is known by the Company to own beneficially more than
5.0% of the outstanding Common Stock, (b) by each director, (c) by each
executive officer named in the Summary Compensation Table below, and by all
executive officers and directors as a group. Unless otherwise noted, each of the
shareholders listed in the table or included within a group listed in the table
possesses sole voting and investment power with respect to the shares indicated
subject to community property laws where applicable. The business address for
each director and officer of the Company is 545 Fifth Avenue, Suite 940, New
York, New York 10017.




<PAGE>


ITEM 2.  DESCRIPTION OF PROPERTY.

CORPORATE OFFICES

The Company's corporate offices are located at 545 Fifth Avenue, Suite 940, New
York, New York, occupying approximately 1,559 square feet of office space under
a lease at the rental rate of $5,456.50 per month expiring in December, 2004 .

The Company leases approximately 1,500 square feet of office space in London,
England for the Development and Human Resources teams on a five-year lease
expiring in April 2003 at approximately $4,000 per month. In light of the fact
that the London-based employees work, almost exclusively, on the road, the
Company is in the process of closing the London office as part of its cost
cutting strategy.

LOUISIANA

The Company's lease for the Gold Coin was terminated effective July 31, 1999.
TWGLa owned the 20-acre site on which the Woodlands is located in DeRidder,
Louisiana which was sold on October 4, 1999 for $295,000.

CZECH REPUBLIC

The Company leases a 5,000 square foot casino facility in Ceska Kubice under the
terms of an agreement that expires in 2010. The Company also leases a hotel from
a local bank in nearby Krasnahorska for staff accommodations at the rate of
approximately $1,400 per month. The hotel will continue to be used for staff
accommodations should the casino be relocated to Folmova.

In Rozvadov, the Company owns the casino building and an adjacent facility for
staff accommodations.

As part of the acquisition of Resorts (See Item 1. "Description of Business -
General Development of Business"), TWG acquired approximately 10 acres of land
near Snojmo, close to the border in Austria, on which the Company constructed
and operates a casino. TWG negotiated an agreement with a local building
contractor who financed and built a 5,000 square foot casino facility leased it
to the Company under the terms of a ten-year lease for approximately $27,000 per
month. (See Item 1.

"Description of Business - Future Operations").

SPAIN

The Company leases the current CDZ casino facility from the DGA on a
month-to-month basis.

ITEM 3.  LEGAL PROCEEDINGS.

In March 1996, the Company learned that as of June 30, 1995, Monarch Casinos,
("Monarch"), a Louisiana-licensed video gaming device operator in which it owned
a 49% interest, had not renewed its operator's license as required by the State
of Louisiana, and as such, was no longer a licensed video poker operator in the
State. Pursuant to the management agreements between Monarch and the Company,
such a failure to renew or other termination of the operator's license created a
default under the agreements and the agreements were terminated by the Company
on March 14, 1996. On or about November 6, 1997, the Company was sued for breach
of contract by Monarch Casinos, Inc. of Louisiana and Michael A. Edwards in the
15th Judicial District Court, Lafayette Parish, Louisiana, Case No. 97-5037B.
Mr. Edwards claimed compensation charges of approximately $2.2 million and
punitive charges of $11.1 million and alleged that the Company breached a
management contract dated September 21, 1994. The lawsuit was settled for a cash
payment of $100,000 on May 15, 1999. The final order of dismissal with full
prejudice which terminated the litigation and disposed of all claims in the
lawsuit was issued by the United States District Court of Louisiana on May 24,
1999.

                                       12
<PAGE>

On January 25, 1997 (prior to the Company's acquisition of 90% of CDZ), the
directors of CDZ filed an application in the Court of First Instance Number 11
of Zaragoza to declare CDZ in temporary receivership. Temporary receivership was
granted on June 23, 1997 and the property continues to operate in receivership
status.

On May 22, 1998, the Company entered into the settlement relating to the Prime
Agreement. (See Item 1. "Description of Business - General Development of
Business").

The Company is currently involved as a plaintiff, through its Chrysolith
affiliate, in litigation challenging the Voter Mandate. (See Item 1.
"Description of Business - Regulations and Licensing - Louisiana Gaming
Reform").

The Company is not currently involved in any other material legal proceeding nor
was it involved in any other material litigation during the year ended December
31, 1999.

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

No matter was submitted to a vote of security holders during the fourth quarter
of the fiscal year covered by this Report.



                                       13
<PAGE>

<PAGE>

PART II

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

The Company's Common Stock and warrants (the "$8.50 Warrants") are currently on
the OTC Bulletin Board under the symbols IBET and IBETW, respectively. The
following table sets forth the high and low prices of the Company's Common Stock
and the $8.50 Warrants for fiscal years 1998 and 1999:

<TABLE>
<CAPTION>
        ----------------------------------------- ---------- ----------
        Common Stock                               High          Low
        ----------------------------------------- ---------- ----------
        <S>                                      <C>        <C>
        1998
        First Quarter.......................        0.78*      0.30*
        Second Quarter......................        0.75*      0.46*
        Third Quarter.......................        0.46*      0.31*
        Fourth Quarter......................        0.31*      0.24*
        1999

        First Quarter.......................        0.44       0.24
        Second Quarter......................        0.59       0.26
        Third Quarter.......................        1.50       0.31
        Fourth Quarter......................        0.85       0.50
        ----------------------------------------- ---------- ----------

</TABLE>

<TABLE>
<CAPTION>

        ---------------------------------------- ----------- ----------
        $8.50 Warrants                             High        Low
        ---------------------------------------- ----------- ----------
<S>                                              <C>         <C>
        1998
        First Quarter.......................        0.03*       0.00*
        Second Quarter......................        0.03*       0.02*
        Third Quarter.......................        0.02*       0.01*
        Fourth Quarter......................        0.02*       0.00*
        1999

        First Quarter.......................        0.02        0.01
        Second Quarter......................        0.01        0.00
        Third Quarter.......................        0.04        0.00
        Fourth Quarter......................        0.02        0.00
        ---------------------------------------- ----------- ----------
</TABLE>

* Quoted on OTC Bulletin Board

As of the date of this Report, there were (a) 5,365,449 shares of Common Stock
outstanding held of record by approximately 1,300 persons, (b) outstanding
options to purchase an aggregate of 35,000 shares of Common Stock not part of
the Company's 1993 Incentive Stock Option Plan (the "1993 Plan"), (c)
outstanding $8.50 Warrants to purchase an aggregate of 1,511,429 shares of
Common Stock, which have since expired, (d) outstanding $0.01 Series D Warrants
to purchase an aggregate of 2,051,912 shares of Common Stock issued in
connection with the March 1996 financing, (e) outstanding $11.55 Warrants to
purchase an aggregate of 151,143 shares of Common Stock, which have since
expired, (f) outstanding $13.50 Warrants to purchase an aggregate of 151,143
shares of Common Stock, which have since expired, (g) outstanding $1.50 Series B
Warrants to purchase an aggregate of 3,200,000 shares of Common Stock issued in
connection with the restructuring of certain long-term debt, (h) outstanding
$1.00 Series A Warrants to purchase an aggregate of 960,000 shares of Common
Stock issued in connection with the sale of certain debt instruments, (i)
outstanding $.5938 Warrants to purchase an aggregate of 250,000 shares of Common
Stock issued in connection with the acquisition of Tottenham & Co. (see Item 1.
"Description of Business - Narrative Description of Business - Acquisition
Agreements"), (j) outstanding $.50 warrants to purchase an aggregate of 220,760
shares of Common Stock issued in connection with the 1997 Promissory Note which
have since expired, (See Item 6 -"Management's Discussion and Analysis or Plan
of Operation - Liquidity and Capital Resources"), (k) outstanding $.01 warrants
to purchase an aggregate of 104,225 shares of Common Stock issued in connection
with the debt financing to fund the Bishkek Casino transaction and (l)
outstanding $0.01 Series C to purchase an aggregate of 5,440,663 shares of
Common Stock issued in connection with the March 1998 Private Placement,
1,646,789 of which have been exercised, and (m) outstanding $0.01 Series G
warrants to purchase an aggregate 1,250,728 shares of Common Stock issued in
connection with


                                       14
<PAGE>

the October 1999 Private Placement and the October 1999 Senior Notes. (See Item
6. "Management's Discussion and Analysis or Plan of Operation - Liquidity and
Capital Resources").

The Company has not declared or paid any cash dividends on its Common Stock
since its inception and does not intend to pay any dividends for the foreseeable
future.

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

FORWARD-LOOKING STATEMENTS

This Form 10-KSB contains certain forward-looking statements. For this purpose,
any statements contained in this Form 10-KSB that are not statements of
historical fact may be deemed to be forward-looking statements. Without limiting
the foregoing, words such as "may," "will", "expect," "believe," "anticipates,"
"estimates," or "intends" or comparable terminology are intended to identify
certain forward-looking statements in this and other sections of the Form 10-KSB
These statements by their nature involve substantial risks and uncertainties,
and actual results may differ materially depending on a variety of factors,
including those set forth in the section below entitled "Important Factors to
Consider."

RESULTS OF OPERATIONS

The following discussion and analysis relates to the financial condition and
results of operation of the Company for the year ended December 31, 1999.

This information should be read in conjunction with the Company's Consolidated
Financial Statements and notes appearing elsewhere herein. All amounts in the
following discussions have been rounded to the nearest thousand except where
indicated.

<TABLE>
<CAPTION>
         YEAR ENDED DECEMBER 31, 1999 COMPARED TO YEAR ENDED DECEMBER 31, 1998

-------------------------------------------------------- -----------------------------
Results of Operations                                    For the Years Ended December 31,
-------------------------------------------------------- -----------------------------
                                                                1999            1998
<S>                                                      <C>              <C>
Revenue...........................................           $12,294          $ 9,016
Pre-tax (loss)....................................            (6,187)         (10,500)
Loss from continuing operations...................            (6,187)         (10,691)
Loss from discontinued operations(1)..............              (222)            (38)
Net Loss .........................................            (6,409)         (10,729)
Other Comprehensive Income........................               923              112
Comprehensive Loss................................            (5,486)         (10,617)
Earnings/(loss) per common share - Basic..........          $ (1.78)         $ (3.52)
Earnings/(loss) per common share - Diluted........          $ (1.78)         $ (3.52)
Weighted average common shares outstanding:
         Basic....................................         3,598,000        3,044,286
         Diluted..................................         3,598,000        3,044,286
-------------------------------------------------------- ------------ ----------------
</TABLE>

(1)  Discontinued operations consist of those in Louisiana (i.e. Gold Coin and
     Toledo Palace).

REVENUES

The Company's net revenues in 1999 are derived from a full year of activity of
the operations in the Czech Republic and Spain and a partial year's activity in
the casino in the Kyrgyz Republic . The following table lists the revenue by
operation:



                                       15
<PAGE>





           TWG REVENUES FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
                              (Dollars in millions)

<TABLE>
<CAPTION>
------------------------------------- ------------------------------ -------------------------------
                                                                     Increase/(Decrease)
------------------------------------- -------------- --------------- --------------- ---------------
                                               1999            1998               $               %

<S>                                        <C>             <C>             <C>            <C>
Czech Republic(1) -  Ceska...........           6.5             4.2             2.3            55 %
Rozvadov.............                           1.8             1.3              .5             38%
Spain(2) ............................           3.9             3.5             0.4            10 %
Other(3).............................           0.1             0.0             0.1           100 %
                                              -----             ---            ----           -----
                                              $12.3            $9.0            $3.3            37 %
                                              =====             ===            ====           =====
------------------------------------- -------------- --------------- --------------- ---------------
</TABLE>

-----------
-----
(1)      The Czech Republic casinos were acquired on March 31, 1998.
(2)      The Spanish casino, CDZ, was acquired on April 17, 1998.
(3)      Includes Corporate Office generated consulting revenue.

Gaming revenues, the Company's primary source of income, are comprised of Table
Game Win, Table Game Tips, Slot Machines, Reception (entrance fees), and sales
of Food and Beverage.

Table Game Win, the largest contributor in the sales mix, is measured as a
percentage of Total Drop, the dollar amount of all gaming chips sold. The Total
Drop is the product of the attendance and the average dollar amount of chips
sold to each guest (Drop per Head). The Drop per Head statistic is used to
measure the "quality" of the guests in terms of their volume of play. Stated
simply, these key performance indicators tell us how many people attended the
casinos, the average dollar value of chips each person purchased, and what
portion of the purchased chips were lost to the House (i.e. were not cashed in).

The aforementioned statistics for the years ended December 31, 1999 and 1998 are
presented in the table below. Please note that, for comparison purposes, the
1998 statistical data represents the full year's operation, including the period
prior to acquisition of the properties by the Company.


<TABLE>
<CAPTION>
                                                  (dollars in thousands)
                                                                   1999                 1998
                                                                   -----               -----

<S>                          <C>                                <C>        <C>         <C>         <C>
TOTAL DROP / DROP PER HEAD   Ceska                              $ 22,197   $    386    $ 20,493    $     389
                             Rozvadov                           $  6,241   $    187    $  4,260    $     317
                             Zaragoza                           $ 14,774   $    610    $ 14,579    $     454
                             ------------------------------------------------------------------------------------
                             Total                              $ 43,212   $    375    $ 39,333    $    400
                             ------------------------------------------------------------------------------------



WIN / WIN%                   Ceska                              $  4,598       20.7%   $  3,937         19.2%
                             Rozvadov                           $  1,237       19.8%   $    825         19.4%
                             Zaragoza                           $  2,438       16.5%   $  2,434         16.7%
                             ------------------------------------------------------------------------------------
                             Total                              $  8,273       19.1%   $  7,197         18.3%
                             ------------------------------------------------------------------------------------



ATTENDANCE                   Ceska                                57,566                 52,690
                             Rozvadov                             33,359                 13,451
                             Zaragoza                             24,219                 32,101
                             ------------------------------------------------------------------------------------
                             Total                               115,144                 98,242
                             ------------------------------------------------------------------------------------
</TABLE>


The year over year growth of 10% in Total Drop is the net result of two
counterbalancing trends. While the overall attendance improved, the Drop per
Head decreased due to the higher proportion of casual players in the guest mix.



                                       16
<PAGE>


The attendance figure comparison (1999 vs. 1998) displayed on the following
tables reflects the marketing strategy that was employed in 1999, namely, to
grow the attendance in Ceska in off-peak times and to improve attendance in all
periods in Rozvadov.

                           [GRAPHIC]



                           [GRAPHIC]

As depicted in the table below, Zaragoza's attendance in 1999 was well below
that of 1998. This negative trend was due to the fact that the 1998 attendance
figure included guests who were attracted to the casino through very
attractively priced (below cost) buffets, but the vast majority of whom did not
play the tables. With the acquisition in 1998, TWG implemented the necessary
price increases which effectively drove away the discount diners. In addition,
bad press reports and suspension of the unprofitable Catering business, which
limited the advertising exposure for the casino, served to further erode the
client base in 1999.

                           [GRAPHIC]



                                       17
<PAGE>

Table Game Tip revenue consists of the gaming chip gratuities bestowed upon
gaming table Dealers by casino patrons. In the Czech Republic, one hundred
percent of this Tip revenue is retained by the House. In Spain, on the other
hand, per an employee bargaining agreement, employees enjoy thirty-five percent
participation in the Tip revenue. In 1999, total Tip revenue was $1.2 million
versus $1.4 million in 1998, a decrease of 13%. Tip revenue declined in Ceska
and Zaragoza and increased slightly in Rozvadov. As a percentage of Total Drop,
however, all three casinos experienced declines. The reason for the lower Tip
percentages in the Czech Republic casinos lies in the fact that the previous
operators and management of the company supported staff solicitation of
customers for tips. This culture, which management considers to have a negative
impact on customer relations, was terminated over time by TWG. In Zaragoza, the
Tip percentage decline was slight (.2 percentage points) and was indicative of
the fact that the number of French Roulette, a game that generally produces
higher Tip rates, tables was reduced in response to changes in the client mix.

Slot revenue, which is the cash generated net of paid wins, was $627,000 in 1999
versus $391,000 in 1998, an increase of 60%. The growth can be attributed to the
fact that the casino in Rozvadov operated without slot machines until September
1998 at which time eighty-seven machines were installed. Also in September 1998,
the number of slot machines in Ceska was increased from 22 to 100. In Zaragoza,
a 10% increase in Slot revenue was realized in 1999 despite the fact that
attendance at the casino decreased by 7,882. The increase can be attributed to
promotional efforts and the aforementioned shift in the client mix.

Gaming related Food and Beverage revenues are generated on only a portion of the
food and beverage that is served because they are, to a large extent, regarded
as a necessary amenity to the gaming patrons. Complimentary buffets and free
drinks to playing customers are the practice in the Czech Republic. In Spain,
food and beverage giveaways are at the discretion of the casino manager, who
uses them as a customer relations tool. In 1999, total gaming-related Food and
Beverage revenue was $198,000, which represents a 45% increase over 1998 revenue
of $137,000 and is indicative of the fact that the 1999 total represents a full
year of operation whereas the 1998 total reflects the post acquisition period
only.

In Zaragoza, revenues are also derived from rentals of the property's
thirty-seven sleeping rooms; telephone, laundry, and mini-bar revenues
associated with the sale of the sleeping rooms; and Food, Beverage, and Other
revenues associated with Catering operations. For the fiscal year ended December
31, 1999, revenues from these areas was $378,000 compared to 1998, where these
activities produced revenue of $553,000. The decline in revenue from 1998 to
1999 can be attributed to the halting of Catering operations in the Fall of 1999
in response to concerns about the profitability of the operations and to the
elimination of the below-cost buffets in the restaurant.

COST OF REVENUES

Cost of Revenues consists of the direct costs of operating the Czech Republic
and Spain casinos, primarily in the areas of labor, security, and general office
expenses. The Cost of Revenues is shown in the following table:

       TWG COST OF REVENUES FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
                              (Dollars in millions)
<TABLE>
<CAPTION>
------------------------------------- ------------------------------ -------------------------------
                               Increase/(Decrease)
------------------------------------- -------------- --------------- --------------- ---------------
                                                                                $          %
                                               1999            1998
<S>                                         <C>             <C>            <C>        <C>
Czech Republic....................              4.8             3.6            1.2        33%
Spain............................               3.3             3.9           (0.6)      (15%)
                                               $8.1            $7.5          $.0.6        8%
                                                ===             ===           ====
------------------------------------- -------------- --------------- --------------- ---------------
</TABLE>


Costs of revenues in 1999 were $4.8 million (58% of total revenues) in the Czech
Republic, which represents a 7 percentage point ("ppt") improvement over 1998,
and $3.3 million (85% of total revenues) in Spain, which represents a 26 ppt
improvement over 1998. The 51% revenue growth in the Czech Republic,



                                       18
<PAGE>

coupled with the successful implementation of several cost cutting measures, and
the Company overcoming startup issues relating to the casino near Snojmo, are
responsible for the positive trend in this area. Spain's high cost to revenue
ratio is due to a number of issues including: a lack of flexibility in labor
scheduling; the limited size of the casino (9 tables); the location of the
facility; and the limited number of guest rooms. Although considerably higher
than the cost of revenue ratio in the Czech Republic, 1999's 85% ratio in Spain
represents a significant improvement over 1998, a year in which the cost of
revenues exceeded the revenue by 11%. The total cost of revenues for the Company
was $8.1 million in 1999 versus $7.5 million in 1998, an increase of 8%.

Selling, general and administrative expenses were $4.3 million in 1999, which
represents a 75% increase over 1998. This increase is, primarily, attributable
to the fact that the costs reflected in 1998 do not represent a full year period
as well as the result of 1999 expenditures related to increased marketing
efforts; pursuit of other gaming opportunities (i.e. development);
administrative startup costs associated with the third casino located near
Snojmo, and the addition/replacement of several key Corporate positions while
continuing to pay severance to departed executives.

Depreciation and amortization increased from $2.5 million in 1998 to $2.8
million in 1999 due, primarily, to the amortization of assets acquired during
1998 and 1999. (See Item 1. "Description of Business"). Interest expense for the
year ended December 31, 1999 was $3.0 million compared to $2.5 million for the
year ended December 31, 1998. The increase is due, primarily, to twelve months
of interest on the $17 million Indenture being incurred in 1999 versus nine
months of interest having been incurred on this debt in 1998. In addition,
interest related to the supplementary $3 million Indenture was incurred in the
final two plus months of 1999.

Also of note is the fact that, unlike 1998, the Company did not incur any
impairment charges in 1999. In 1998, after reviewing the carrying amounts of
long-lived assets recorded, an asset impairment charge of $4 million was taken.

EARNINGS/(LOSS)

The Company incurred a loss of approximately $6.2 million from continuing
operations for the year ended December 31, 1999 as compared to $10.7 million in
the year ended December 31, 1998 an improvement of 42.1%. The improvement is
primarily attributable to the fact that there was no need for an impairment
charge in 1999. Other factors contributing to this improvement include, as
discussed previously, increased attendance and improved efficiency in the Czech
and Spanish gaming markets.

CESKA, CZECH REPUBLIC

Total revenue from the casino in Ceska, Czech Republic was $6.5 million for the
fiscal year ended December 31, 1999, which represents a 55% increase over the
previous year's revenue total of $4.2 million.

Comparison of the twelve month statistics between 1999 and 1998 reveals that the
revenue produced in the three additional months in which the casino operated, is
not the sole source of the 55% revenue growth. Part of the improvement can be
attributed to a 1.5 percentage point increase in the Win percentage (from 19.2%
in 1998 to 20.7% in 1999). Ceska's attendance improvement was the direct result
of a number of successful marketing campaigns including themed parties and a
midweek Tombola, which was designed to attract clients on off-peak days. A
Tombola is a prize drawing event, which is stretched out over several weeks. The
odds of winning a Tombola drawing are governed by the amount of play a customer
gives during off-peak times over the period of the event.

In 2000, the marketing emphasis in Ceska will be, in addition to building on the
success of the above initiatives, to increase the use of advertising media
(direct mail, television, radio and press) in order to further stimulate
off-peak attendance and to improve the "quality" of patrons.


                                       19
<PAGE>

In the Fall of 1999, a competitive casino opened in Folmova, which is closer to
the German border than the Company's Ceska property. This casino, which is
called the Schoolhouse, has employed a strategy of attracting clients through
the distribution of flyers at the border crossing and the posting of signs at
the casino's access road turnoff.

Despite the increased competition in the area, during peak weekend times, the
Company's casino in Ceska is often at full capacity which slows down the games
and, as a result, often lowers the hold percentages In addition, limitations of
the casino's parking facilities (40 spaces) create another obstacle for
potential patrons, particularly now that a competing casino is in the area.
Although the overall attendance growth in Ceska was solid, the improvement was
limited by competition and capacity constraints, issues that could curtail the
growth of, or even erode, attendance in the future.

In response to these challenges, in April 1999, the Company purchased a parcel
of land in Folmova, nearer to the border than the turnoff road for the
Schoolhouse casino. The Company has installed pre-emptive signage on the land
advertising the Ceska casino and is planning to move the Ceska casino operation
to a new facility on this parcel of land. This move would give the casino
excellent exposure because it would be located directly on the border road;
would allow for a parking facility of ample size; would address the issue of
capacity constraints on the weekend in that it would allow for an increase in
the number of gaming tables over the existing space; and would allow for a floor
plan to be designed which, unlike the Ceska building, would optimize the
casino's equipment layout. There can be no assurance that the relocation of the
casino in Ceska will enhance future revenues.

ROZVADOV, CZECH REPUBLIC

The total revenue in Rozvadov was $1.8 million in the twelve months of operation
in 1999, representing a 36% increase over the nine months of operation in 1998
($1.3 million), which primarily, is attributed to an increase in attendance. The
casino in Rozvadov opened in November of 1997. Prior to its acquisition in March
1998 by TWG, there was little advertising or promotion for the casino and
attendance was stagnant. In February 1999, TWG hired a Director of Marketing and
immediately launched a strong marketing campaign which included direct mail and
radio advertising in Germany as well as themed parties and other promotional
events. The result of the advertising was a 148% increase in attendance. In
fact, with this increase in attendance, the limited space (7 tables) is unable
to accommodate the peak time demand. While this trend is positive, the potential
drawback of the casino reaching capacity in certain periods is that some regular
attendees may be displaced. In response, the Company has included plans to add
two gaming tables to the casino in its year 2000 Operating Budget.

With the improvements to client base in both Ceska and Rozvadov, the 2000
marketing programs will be directed at filling in the off-peak times and
improving the "quality" of the peak time players.

ZARAGOZA, SPAIN

Total revenue in CDZ in the year ended December 31, 1999 was $3.9 million, which
represents a 10% increase over the $3.5 million in revenue achieved in 1998.
Despite a 25% erosion of the casinos attendance in 1999, the casino managed to
match the 1998 table game Win revenue of $2.4 million. This was accomplished,
primarily, through growth of the Drop per Head of the casino's core clientele
(i.e., catering to CDZ's preferred patrons). Due to CDZ's location, laws
preventing direct advertising of the casino, its high operating and overhead
costs, its limited number of guest rooms, and the poor condition of other parts
of the facility, the casino produced a Net Loss of $1.9 million in 1999.

The aforementioned challenges will be difficult to overcome should the casino
remain in its present location. It was anticipated that a law that would be
passed which would allow the casino to move to a downtown location and, as a
result, would alter the business environment in which the casino operates. This
move would give the casino direct exposure to the residents of and visitors to
Zaragoza; would allow the casino to tailor the size of the workforce to the
operation; would reduce the operation's overhead costs; and would allow the
casino to increase the number of gaming tables and slot machines to match the

                                       20
<PAGE>

anticipated increase in demand. Under this scenario, the disposition of the
existing CDZ facility would be decided at the time of the move.

The status of the intended move is as follows. An understanding has been reached
with an agency of the provincial government, the DGA, to allow the casino to
execute this move, subject to the issuance of a decree. However, instead of a
decree, in February 2000, the DGA introduced a law that would allow the casino
to relocate. The law is expected to be presented to local Spanish parliament in
June 2000. The Company believes based on its discussions with Spanish
authorities, the law has little opposition and is expected to pass.

LIQUIDITY AND CAPITAL RESOURCES

The Company's working capital deficit, defined as current assets minus current
liabilities, increased $700,000 million to a deficit of $4.0 million at December
31, 1999 from a working capital deficit at December 31, 1998 of $3.3 million.

For the year ended December 31, 1999, the Company had net cash used in
continuing operations of $667,000. This was primarily a result of a $6,187,000
loss from continuing operations, $2,839,000 of depreciation and amortization,
$542,000 of non-cash interest related to the amortization of debt discount
(recorded in connection with the warrants issued with March 1998 and October
1999 private placements) and a $2,139,000 net increase in cash attributable to
changes in operating assets and liabilities. For the year ended December 31,
1999, the Company had net cash used in discontinued operations of $197,000. For
the year ended December 31, 1999, net cash used in investing activities of
$2,077,000 included the purchases or property and equipment aggregating
$2,422,000, payments for deposits of $34,000 and the proceeds from the sale of
Louisiana property aggregating $379,000. For the year ended December 31, 1999,
net cash provided by financing activities of $2,110,000 included the proceeds
from an October 1999 private placement of $3,000,000 (see below) and a
short-term obligation of $450,000, the $1,000,000 repayment of an overdue
short-term obligation to Value Partners, $360,000 of repayments of other
short-term obligations and the proceeds from the exercise of warrants
aggregating $20,000.

On March 31, 1998, the Company, with the assistance of Libra, acting as
placement agent, borrowed $17.0 million from fourteen investors in the Private
Placement. The loan is represented by the Senior Notes issued pursuant to the
Indentures by and among TWG, TWGI, TFC and USTCT, as the case may be. The
Indentures were amended on October 29, 1998 in connection with the restructuring
of the Company's ownership of Resorts as a result of the change in the Czech
gaming law which restricted foreign ownership of Czech casinos. The Amended
Indentures, however, did not alter the underlying basis of the Senior Notes. The
Senior Notes require mandatory prepayments based upon excess cash flow generated
by TWGI from the operation of the Czech casinos acquired in the Resorts
acquisition and bear interest at the rate of 12% per annum. The proceeds of the
Senior Notes were used to pay the net acquisition costs of, and improvements to,
Resorts totaling $12.6 million, to repay the First Amended Loan Agreement in the
amount of $1.3 million, to cover costs and expenses of $1.4 million relating to
the Private Placement and to provide working capital of $1.7 million. Interest
payments under the terms of the Senior Notes were paid when due on March 17, and
September 17, 1999. The March 17, 2000 interest payment has also been paid, and
the Company was and is current on its payments under the Senior Notes.

On October 15, 1999, the Company borrowed $3.0 million ($2.7 million from Value
Partners) in the October 1999 Private Placement. The loan is represented by the
October 1999 Senior Notes issued pursuant to indentures by and among the Company
and an independent indenture trustee. The October 1999 Senior Notes, which are
due March 2005, require mandatory prepayments based on excess cash flow
generated from Resorts. The October 1999 Senior Notes are collateralized by
primarily all of Resort's gaming equipment and a majority interest in the
capital stock of all of the Company's subsidiaries (except CDZ). In addition to
the October 1999 Senior Notes, each investor received a proportionate share of
warrants to purchase 1,250,728 shares of the Company's common stock.

The proceeds of the October 1999 Senior Notes were used to retire a $1 million
short-term debt obligation related to the acquisition of the CDZ casino, to make
an interest payment of approximately $250,000 on



                                       21
<PAGE>

said debt, and to finance the equipping, working capital, and pre-opening costs
associated with the opening of a third casino in the Czech Republic on land that
had been previously purchased. That casino, located near Snojmo, opened on
December 22, 1999.

The Company has, from time to time, been in technical default of the Amended
Indentures and has relied upon the forbearance and waivers from a majority
interest of the holders of the Senior Notes. Value Partners represents a
majority in interest of the holders of the Senior Notes. The Company has
borrowed other amounts from Value Partners from time to time (some of which have
been in technical default for which forbearance or waivers have been granted)
and may seek to borrow additional funds or obtain equity investments from Value
Partners in the future. At December 31, 1999, Value Partners owned 59% of the
Company's long-term debt and owned warrants to acquire 61.2% of the Company's
issued and outstanding shares of Common Stock.

In accordance with Spanish law, in order for a casino company to remain solvent
it must have a minimum capitalization of approximately $1.8 million and such
recapitalization required the approval of both the CDZ's Board of Directors
(received in July 1998) and the Council of Ministers in Spain (received in
October 1999) . The owner of the remaining 10% of CDZ declined to participate in
the recapitalization and under Spanish law that 10% interest was diluted to zero
once the recapitalization was approved by the Council of Ministers, bringing the
total TWG ownership to 99.92%.

The Company estimates that approximately $5.0 million will be required to
execute the CDZ casino relocation, assuming permission is received from the DGA
for such move. An understanding had been reached with the DGA to allow the
casino to execute the move, subject to the issuance of a decree. However,
instead of a decree, in February 2000, the DGA introduced a law that would allow
the casino to relocate. The law is expected to be presented to local Spanish
parliament in June 2000. Management believes based on its discussions with
Spanish authorities, the law has little opposition and is expected to pass.

During the years ended December 31, 1999 and 1998, DGA granted the Company a
deferral of approximately 1.8 million in taxes on gaming winnings accruing
during 1997-1999. Furthermore, in April 1999, the Company reached an agreement
with the Spanish Social Security Authorities to defer approximately 1.2 million
related to all debts generated in 1997 and the first quarter of 1998.

 If the Company does not make its payments according to the receivership
schedule and is unable to obtain further deferral from the Spanish Taxing
Authorities, the debt would become immediately payable and revert to pre
receivership levels. Management has indicated that, based on its discussions
with Spanish Taxing Authorities, further deferral of payments until April 2001
is anticipated.

PLAN OF OPERATIONS

TWG management will continue to develop marketing and operational strategies
designed to increase attendance and revenues at its existing locations in the
Czech Republic and Spain. The Company has acquired land close to the German
border near Ceska Kubice, at Folmava, Czech Republic and is planning to build a
casino to replace the existing facility. Management believes that the new
location would be more accessible to its main target market in Germany and will
result in improved attendance and play. TWG transferred excess slot machines
from Ceska Kubice and Rozvadov to its new location near Snojmo.

IMPORTANT FACTORS TO CONSIDER

ACCUMULATED DEFICIT; OPERATING LOSSES; GOING CONCERN

On December 31, 1999, the Company had an accumulated deficit of approximately
$30.3 million and a working capital deficit of approximately $4 million. For the
year ended December 31, 1999, the Company incurred a net loss of approximately
$6.4 million. The ability of the Company to achieve profitability depends upon
the successful operation of gaming establishments in the Czech Republic and
Spain, their expansion and relocation, and the diversification of its operations
to include other sources of revenue.
<PAGE>



<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
                                                   Number of Shares of
                                                   Common Stock
Name of Beneficial Owner                           Beneficially Owned(1)    Percentage
                                                                            of Ownership(1)
-------------------------------------------------------------------------------------------

<S>                                                    <C>                          <C>
Value Partners, Ltd...........................          8,478,212(2)                 61.2%
Anasazi Partners Limited Partnership..........          1,354,334(3)                 21.0%
Fort Pitt Fund III, L.P.......................            312,682(4)                  5.5%
Ravich Children Permanent Trust                         1,250,727(5)                 23.3%
C.P. Baker & Co., Ltd.........................          3,186,037(6)                 39.4%
U.S. Bancorp..................................            575,335(7)                 9.7 %
Stanley Kohlenberg............................            237,000(8)                 4.3 %
Andrew Tottenham..............................          1,205,500(9)                 18.3%
Rami Ramadan..................................            100,000(10)                    *
Julio Heurtematte.............................            13,000(11)                     *
Malcolm M.B. Sterrett.........................            13,000(12)                     *
Geoffrey B. Baker.............................             9,000(13)                     *
All directors and executive officers as a              1,340,500(14)                 20.0%
         group (5 persons)....................

*    Less than 1%.
-------------------------------------------------------------------------------------------

</TABLE>


(1)    The percentage of outstanding shares is based on 5,365,449 shares
       outstanding as of March 31, 2000 (the "Calculation Date"). A person is
       deemed to be the beneficial owner of securities that can be acquired by
       such person within 60 days from the Calculation Date upon the exercise of
       options or warrants. Each beneficial owner's percentage ownership is
       determined by assuming that options or warrants that are held by such
       person (but not those held by any other person) are exercisable within 60
       days from the date of the Voting Record Date have been exercised.
       Included are shares of Common Stock issuable upon the exercise of options
       or warrants to purchase the Company's Common Stock.

(2)    Value Partners, Ltd. is a Texas limited partnership, whose business
       address is 4514 Cole Avenue, Suite 808, Dallas, Texas 75205. Includes
       warrants to purchase: 600,000 shares of Common Stock at an exercise price
       of $1.00, expiring December 31, 2005; 2,000,000 shares of Common Stock at
       an exercise price of $1.50 per share, expiring December 31, 2005;
       4,427,573 shares of Common Stock at an exercise price of $.01 per share,
       expiring March 31, 2008; includes warrants to purchase 675,392 shares
       from Credit Suisse First Boston Management Corporation in October 1999;
       220,760 shares of Common Stock at an exercise price of $.50 per share,
       expiring December 31, 1999; and 104,225 shares of Common Stock at an
       exercise price of $.01 per share expiring March 31, 2008; and 1,125,654
       shares of Common Stock at an exercise price of $.01 per share, expiring
       March 31,2008.

(3)    Anasazi Partners, Ltd. is a Massachusetts limited partnership whose
       business address is 120 Boylston Street, Suite 800, Boston, Massachusetts
       02116. Includes warrants to purchase: 250,000 shares of Common Stock at
       an exercise price of $1.00 per share, expiring December 31, 2005; (of
       these warrants, 50,000 were acquired from New Generation, Ltd. in 1999);
       and 833,334 shares of Common Stock at an exercise price of $1.50 per
       share, expiring December 31, 2005 (of these warrants 166,667 were
       acquired from New Generation in 1999).

(4)    The business address for Fort Pitt Fund III, L.P. is P.O. Box 974,
       Uniontown, Pennsylvania 15401. Includes warrants to purchase 312,682
       shares of Common Stock at an exercise price of $.01 per share expiring
       March 31, 2008.

(5)    The business address for the Ravich Children's Permanent Trust is 8730
       Wilshire Blvd., Beverly Hills, California 90021.

(6)    Represents warrants to purchase 2,723,537 shares of Common Stock at an
       exercise price of $.01 per share, expiring June 30, 2002 and held by C.P.
       Baker & Co., Ltd. and certain of its affiliates. The


                                       32
<PAGE>


       business address for C.P. Baker & Co., Ltd. is 120 Boylston Street, Suite
       800, Boston, Massachusetts 02116.

(7)    Represents warrants to purchase 575,335 shares of Common Stock at an
       exercise price of $.01 per share, expiring March 31, 2008 which were
       acquired from Credit Suisse First Boston Management Corporation in
       October 1999. The business address for U.S. Bancorp. is 11766 Wilshire
       Boulevard, Suite 870, Los Angeles, California 90025.

(8)    Does not include 929,500 shares (187,500 of which are immediately
       exercisable warrants and 107,000 of which are immediately exercisable
       options) held by Andrew Tottenham, a son-in-law of Mr. Kohlenberg, as to
       which beneficial ownership is disclaimed. Includes 1,000 shares, and
       25,000 shares and 1,000 shares at the end of each calendar quarter during
       the quarter ended March 31, 1997 through the quarter ended September 30,
       1998, respectively, subject to non-qualified options granted to Mr.
       Kohlenberg under the 1993 Plan on May 22, 1995, on March 7, 1996 and
       75,000 shares and 25,000 shares of Common Stock subject to incentive
       options granted to Mr. Kohlenberg on December 31, 1996 and December 31,
       1998 respectively, all of which fully vested on the dates of grant.

(9)    Includes 623,500 shares of Common Stock (240,000 shares were issued to
       Mr. Tottenham upon conversion of the Tottenham Notes on December 31,
       1998) and 1,000 shares and 1,000 shares subject to non-qualified options
       granted to Andrew Tottenham under the 1993 Plan on October 2, 1996 and on
       December 31, 1996, respectively, and 100,000 shares and 25,000 shares
       subject to incentive options granted to Mr. Tottenham on December 31,
       1997 and December 31, 1998 respectively, all of which fully vested on the
       dates of grant. Also includes 187,500 shares subject to immediately
       exercisable warrants which were granted to Mr. Tottenham on January 1,
       1997. Also includes 205,000 shares of Common Stock owned by Robin
       Tottenham, (80,000 shares were issued to Mrs. Tottenham upon conversion
       of the Tottenham Notes on December 31, 1998), the wife of Andrew
       Tottenham and the daughter of Mr. Kohlenberg, and 62,500 shares subject
       to immediately exercisable warrants that were granted to Mrs. Tottenham
       on January 1, 1997. Does not include shares owned by Mr. Kohlenberg, as
       set forth above, as to which beneficial ownership is disclaimed.

(10)   Consists of shares subject to incentive options granted to Mr. Ramadan on
       July 12, 1999, all of which fully vested on the date of grant.

(11)   Includes warrants to purchase 41,691 shares of Common Stock at an
       exercise price of $.01 per share expiring March 31, 2008; 1,000 shares of
       Common Stock subject to non-qualified options granted to Mr. Heurtematte
       under the 1998 Plan at the end of each calendar quarter ended March 31,
       1998 through December 31, 1998 and 2,000 shares of Common Stock subject
       to non-qualified options granted at the end of each calendar quarter
       ended March 31, 1999 through March 31, 2000, all of which fully vested on
       the dates of grant.

(12)   Includes warrants to purchase 41,691 shares of Common Stock at an
       exercise price of $.01 per share expiring March 31, 2008; 1,000 shares of
       Common Stock subject to non-qualified options granted to Mr. Sterrett
       under the 1998 Plan at the end of each calendar quarter ended March 31,
       1998 through December 31, 1998 and 2,000 shares of Common Stock, subject
       to non-qualified options, granted at the end of each calendar quarter
       ended since March 31, 1999 through March 31, 2000, all of which fully
       vested on the dates of grant.

(13)   Includes warrants to purchase 41,691 shares of Common Stock at an
       exercise price of $.01 per share expiring March 31, 2008; 1,000 shares of
       Common Stock subject to non-qualified options granted to Mr. Baker under
       the 1993 Plan at December 31, 1998, 2,000 shares of Common Stock, subject
       to non-qualified options, granted for the calendar quarter ended March
       31, 1999 and 2,000 shares of Common Stock subject to non-qualified
       options granted at the end of each quarter ended since September 31, 1999
       through March 31, 2000, all of which fully vested on these dates.

(14)   See Notes (10), (11), (12), and (13) above.

ITEM 12.     CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

TOTTENHAM & CO. On January 1, 1997, the Company completed the acquisition of
Tottenham & Co. which was founded in 1988 by Andrew Tottenham, the Company's
President and COO and is engaged in providing consulting services to gaming
companies worldwide. The consideration paid for Tottenham & Co. by the Company
included 500,000 shares of the Company's Common Stock, and warrants to purchase
250,000 shares at an exercise price of $.5938, the bid price of the Company's
Common Stock on the date of


                                       33
<PAGE>


the acquisition as reported by the Nasdaq SmallCap Market System. In addition,
the Company issued two promissory notes in the aggregate principal amount of
$200,000 bearing interest at the rate of 10% per annum and payable on January 1,
2002 (the "Tottenham Notes"). On December 31, 1998, the Company and Andrew
Tottenham converted the Tottenham Notes and accrued interest totaling $240,000
into 320,000 shares of the Company's Common Stock. All of the Common Stock, as
well as the Common Stock underlying the warrants, carries certain "piggyback"
registration rights.

CHRYSOLITH OPERATING AGREEMENT. The Company is a member under, and party to,
which sets forth the rights and obligations of the original members, all of whom
are individuals (the "Original Members"), and the Company. Under this agreement,
Chrysolith operated, serviced and maintained the VLTs at the Gold Coin and
Toledo Palace and the Company provided management, financial and consulting
services. The Chrysolith Operating Agreement will continue pending the decision
of the U.S. Supreme Court regarding the Company's appeal of the termination of
the operations at the Gold Coin and Toledo Palace.

MONARCH ACQUISITION. In April 1994, the Company acquired for $49,000 a 49%
ownership interest in Monarch Casinos ("Monarch"), a Louisiana-licensed video
gaming device operator which was founded in December 1993. In June and August
1994, the Company loaned Monarch an aggregate of $55,000 for working capital to
manage the operations of the Woodlands under an agreement between Monarch and
the previous owner of the Woodlands. All of such loans were payable on demand,
bore interest at the rate of 10% and were evidenced by promissory notes executed
by Monarch. In October 1994, the Company credited Monarch $25,000 against prior
advances, among other things, in consideration for the assignment by Monarch to
the Company of an option to purchase the Woodlands. Although it was originally
intended that Monarch would own, operate and maintain the VLTs at both the
Toledo Palace and the Gold Coin, the Company believed that Chrysolith was better
suited to operate the video poker parlors and thus entered into the Chrysolith
Agreement. In March 1996, the Company learned that as of June 30, 1995, Monarch
had not renewed its operator's license as required by the State of Louisiana,
and as such, was no longer a licensed video poker operator in the State.
Pursuant to the management agreements between Monarch and the Company, such a
failure to renew or other termination of the operator's license created a
default under the agreements and the agreements were terminated by the Company
on March 14, 1996. On or about November 6, 1997 Monarch and Michael Edwards,
President of Monarch, filed suit against the Company alleging, among other
things, breach of contract. The lawsuit was settled in May 1999 for a cash
payment by the Company of $100,000 and both parties released the other of any
and all further obligations. See Item 3 -"Legal Proceedings".

On October 29, 1997, the Company and Value Partners, executed a loan which was
amended on December 19, 1997, under which TWG had the ability to borrow up to
$2,538,000 (the "First Amended Loan Agreement"). As of December 31, 1998, the
Company had borrowed $1,538,000 under this loan, including the Bishkek Note
described below, of which $1,288,000 was repaid on March 31, 1998 from the
proceeds of the Private Placement.

On March 19, 1998, the Company and Value Partners executed a Lender's Waiver and
Option Agreement (the "Waiver") under which the Company borrowed $250,000 (the
"Bishkek Note") to fund the Bishkek Casino transaction. In February 1999, the
Company repaid the principal and accrued interest on the Bishkek Note in full,
and it was cancelled.

On March 31, 1998, the Company, with the assistance of Libra, acting as
placement agent, borrowed $17.0 million from fourteen investors in the Private
Placement. The loan is represented by the Senior Notes issued pursuant to the
Indentures by and among TWG, TWGI, TFC and USTCT, as the case may be. The
Indentures were amended on October 29, 1998 in connection with the restructuring
of the Company's ownership of Resorts as a result of the change in the Czech
gaming law which restricted foreign ownership of Czech casinos. The Amended
Indentures, however, did not alter the underlying basis of the Senior Notes. The
Senior Notes require mandatory prepayments based upon excess cash flow generated
by TWGI from the operation of the Czech casinos acquired in the Resorts
acquisition and bear interest at the rate of 12% per annum. The proceeds of the
Senior Notes were used to pay the net acquisition costs of, and improvements to,
Resorts totaling $12.6 million, to repay the First Amended Loan Agreement in the
amount of $1.3 million, to cover costs and expenses of $1.4 million relating to
the Private Placement and to


                                       34
<PAGE>


<PAGE>

provide working capital of $1.7 million. Interest payments under the terms of
the Senior Notes were paid when due on March 17, and September 17, 1999. The
March 17, 2000 interest payment has also been paid, and the Company was and is
current on its payments under the Senior Notes.

On May 19, 1998, the Company and Value Partners executed a Loan Agreement (the
"Loan Agreement") under which the Company borrowed $1,000,000 at 12% interest
per annum to fund the purchase of the stock of the Casino de Zaragoza (see -
"Plan of Operations"), which was payable in full on September 15,1998. The
interest rate automatically increased to 17% on September 15, 1998 which has
been accrued monthly by the Company since that date.

The Company was in technical default of, and has not timely paid the Value
Partners Loan which was due on September 15, 1998. On July 30, 1999, the Company
received from Value Partners a waiver of such default and a waiver of the cross
defaults on the Amended Indentures by the majority in interest of the holders of
the Senior Notes. Value Partners also granted an extension of this loan until
January 1, 2000.

On October 15, 1999, the Company borrowed $3.0 million ($2.7 million from Value
Partners) in the October 1999 Private Placement. The loan is represented by the
October 1999 Senior Notes issued pursuant to indentures by and among the Company
and an independent indenture trustee. The October 1999 Senior Notes, which are
due March 2005, require mandatory prepayments based on excess cash flow
generated from Resorts. The October 1999 Senior Notes are collateralized by
primarily all of Resort's gaming equipment and a majority interest in the
capital stock of all of the Company's subsidiaries (except CDZ). In addition to
the October 1999 Senior Notes, each investor received a proportionate share of
warrants to purchase 1,251,000 shares of the Company's common stock.

The proceeds of the October 1999 Senior Notes were used to retire a $1 million
short-term debt obligation related to the acquisition of the CDZ casino, to make
an interest payment of approximately $250,000 on said debt, and to finance the
equipping, working capital, and pre-opening costs associated with the opening of
a third casino in the Czech Republic on land that had been previously purchased.
That casino, located near Snojmo, opened on December 22, 1999.

The Company has, from time to time, been in technical default of the Amended
Indentures and has relied upon the forbearance and waivers from a majority
interest of the holders of the Senior Notes. Value Partners represents a
majority in interest of the holders of the Senior Notes. The Company has
borrowed other amounts from Value Partners from time to time (some of which have
been in technical default for which forbearance or waivers have been granted)
and may seek to borrow additional funds or obtain equity investments from Value
Partners in the future. At December 31, 1999, Value Partners owned 59% of the
Company's long-term debt and owned warrants to acquire 61.2% of the Company's
issued and outstanding shares of Common Stock.

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

         (a)      EXHIBITS

         Reference is made to the Exhibit Index hereinafter contained.

         A copy of any exhibits listed or referred to herein will be furnished
         at a reasonable cost to any person who was a shareholder of the Company
         as of August 2, 1999, upon written request from any such person.
         Requests should be sent to: Rami S. Ramadan, Chief Executive Officer,
         Trans World Gaming Corp., 545 Fifth Avenue, Suite 940, New York, New
         York 10017.

         (b)      REPORTS ON FORM 8-K

During the last quarter of the year ended December 31, 1999, the Company filed a
Periodic Report on Form 8-K with the SEC on October 28, 1999. This Periodic
Report related to the $3.0 million financing.


                                       35
<PAGE>




                            TRANS WORLD GAMING CORP.

                  EXHIBIT INDEX TO ANNUAL REPORT ON FORM 10-KSB

                      FOR THE YEAR ENDED DECEMBER 31, 1997

<TABLE>
<CAPTION>
                  ----------------------------------------       ------------------------------------------
Item No           Item                                           Method of Filing

<S>               <C>                                            <C>

2                 Deed of Sale of Shares Authenticated by        Incorporated  by  reference  to  Exhibit 2
                  Mr. Jose Maria Badia Gasco, Notary of          contained  in the Form 8-K/A filed on July
                  Zaragoza, dated April 17, 1998                 2, 1998 (File No. 0-25244)

3.1               Articles of Incorporation                      Incorporated  by  reference to Exhibit 3.1
                                                                 contained  in the  registration  statement
                                                                 on Form SB-2 (File No. 33-85446-A).

3.2               By-laws                                        Incorporated  by  reference to Exhibit 3.2
                                                                 contained  in the  registration  statement
                                                                 on Form SB-2 (File No. 33-85446-A).

4.1               Specimen Common Stock Certificate              Incorporated  by  reference to Exhibit 4.1
                                                                 contained  in the  registration  statement
                                                                 on Form SB-2 (File No. 33-85446-A).

4.2               Specimen Redeemable Common Stock Purchase      Incorporated  by  reference to Exhibit 4.2
                  Warrant                                        contained  in the  registration  statement
                                                                 on Form SB-2 (File No. 33-85446-A).

4.3               Form of Warrant Agreement                      Incorporated  by  reference to Exhibit 4.3
                                                                 contained  in the  registration  statement
                                                                 on Form SB-2 (File No. 33-85446-A).

4.4               Confidential Private Placement Memorandum      Incorporated  by  reference to Exhibit 4.4
                  dated June 17, 1996                            contained  in Form  10-KSB  for the fiscal
                                                                 year ended  December 31,  1996.  (File No.
                                                                 0-25244)

4.5               Supplement No. 1 dated January 14, 1997 to     Incorporated  by  reference to Exhibit 4.5
                  Confidential Private Placement Memorandum      contained  in Form  10-KSB  for the fiscal
                  dated June 17, 1996                            year ended  December 31,  1996.  (File No.
                                                                 0-25244)

4.6               Indenture dated as of November 1, 1996         Incorporated  by  reference to Exhibit 4.6
                  between the Company and Trans World Gaming     contained  in Form  10-KSB  for the fiscal
                  of Louisiana, Inc., as Issuer, and U.S.        year ended  December 31,  1996.  (File No.
                  Trust Company of Texas, N.A., as Trustee       0-25244)

4.7               Form of 12% Secured Convertible Senior         Incorporated  by  reference to Exhibit 4.7
                  Bond due June 30, 1999                         contained  in Form  10-KSB  for the fiscal
                                                                 year ended  December 31,  1996.  (File No.
                                                                 0-25244)

</TABLE>


                                       36
<PAGE>

<TABLE>

<S>                 <C>                                          <C>
4.8               Form of Warrant to Purchase Common             Incorporated   by   reference  to  Exhibit  4.8
                  Stock Dated July 1, 1996                       contained  in Form  10-KSB for the fiscal  year
                                                                 ended December 31, 1996. (File No. 0-25244)

4.9               Form of Warrant for Purchase of Shares of      Incorporated   by   reference  to  Exhibit  4.9
                  Common Stock dated January 1, 1997             contained  in Form  10-KSB for the fiscal  year
                                                                 ended December 31, 1996. (File No. 0-25244)

4.10              Form of Non-Negotiable Promissory Note         Incorporated   by  reference  to  Exhibit  4.10
                  dated January 1, 1997                          contained  in Form  10-KSB for the fiscal  year
                                                                 ended December 31, 1996. (File No. 0-25244)

4.11              First Amended Senior Secured Promissory        Incorporated   by  reference  to  Exhibit  4.11
                  Note dated December 19, 1997                   contained  in Form  10-KSB for the fiscal  year
                                                                 ended  December  31,  1997  filed on March  30,
                                                                 1998. (File No. 0-25244)

4.12              Form of Warrant for Purchase of Shares of      Incorporated   by  reference  to  Exhibit  4.12
                  Common Stock dated January 15, 1998            contained  in Form  10-KSB for the fiscal  year
                                                                 ended  December  31,  1997  filed on March  30,
                                                                 1998. (File No. 0-25244)

4.13              Lenders Waiver and Option Agreement dated      Incorporated   by  reference  to  Exhibit  4.13
                  March 9, 1998                                  contained  in Form  10-KSB for the fiscal  year
                                                                 ended  December  31,  1997  filed on March  30,
                                                                 1998. (File No. 0-25244)

4.14              Indenture dated March 31, 1998 among the       Incorporated   by  reference  to  Exhibit  4(I)
                  Company, TWG International U.S.                contained  in the Form 8-K  filed on April  14,
                  Corporation, TWG Finance Corp. and U.S.        1998 (File No. 0-25244)
                  Trust Company of Texas, N.A.

4.15              Series C Warrant to Purchase Common Stock      Incorporated  by  reference  to  Exhibit  4(II)
                  dated March 31, 1998                           contained  in the Form 8-K  filed on April  14,
                                                                 1998 (File No. 0-25244)

4.16              Indenture dated March 31, 1998 between         Incorporated  by  reference  to Exhibit  4(III)
                  TWG International U.S. Corporation  Trust      contained  in the Form 8-K  filed on April  14,
                  and U.S. Company of Texas, N.A.                1998 (File No. 0-25244)

4.17              Consent to Amend Indenture, Bonds and          Incorporated  by  reference  to  Exhibit  4(IV)
                  Warrants dated March 25, 1998 by and           contained  in the Form 8-K  filed on April  14,
                  between the Company, Trans World               1998 (File No. 0-25244)
                  Gaming of Louisiana, Inc.,U.S. Trust
                  Company of Texas, N.A., and certain
                  individuals

4.18              First Amended Indenture dated March 31,        Incorporated   by  reference  to  Exhibit  4(V)
                  1998 among the Company, TWGLa and U.S.         contained  in the Form 8-K  filed on April  14,
                  Trust Company of Texas, N.A.                   1998 (File No. 0-25244)

4.19              First Amended Indenture dated March 31,        Incorporated   by  reference  to  Exhibit  4(V)
                  1998 among the Company, TWGLa and U.S.         contained  in the Form 8-K  filed on April  14,
                  Trust Company of Texas, N.A.                   1998 (File No. 0-25244)

4.20              Series A Warrant to Purchase Common            Incorporated  by  reference  to  Exhibit  4(VI)
                  Stock dated March 31, 1998                     contained  in the Form 8-K  filed on April  14,
                                                                 1998 (File No. 0-25244)

4.21              Series B Warrant to Purchase Common            Incorporated  by  reference  to Exhibit  4(VII)
                  Stock dated March 31, 1998                     contained  in the Form 8-K  filed on April  14,
                                                                 1998 (File No. 0-25244)

4.22              Agreement to Amend Warrants dated March        Incorporated by reference to Exhibit 4(VIII)
                  31, 1998 among the Company and the named       contained in the Form 8-K filed on April 14,

</TABLE>



                                       37
<PAGE>


<TABLE>

<S>               <C>                                            <C>
                  Holders                                        1998 (File No. 0-25244)

10.1              Agreement for Exchange of Shares dated         Incorporated   by  reference  to  Exhibit  10.1
                  July 12, 1994,between  the Company  and        contained  in  the  registration  statement  on
                  the  shareholders of Lee Young                 Form SB-2 (File No. 33-85446-A).
                  Enterprises, Inc.

10.2              Asset Purchase  Agreement  dated as of         Incorporated   by  reference  to  Exhibit  10.2
                  September 21,1994,   between   the             contained  in  the  registration  statement  on
                  Company   and   Prime Properties, Inc.         Form SB-2 (File No. 33-85446-A).

10.3              Agreement  of Sale  dated  as of  September    Incorporated   by  reference  to  Exhibit  10.3
                  21, 1994,between  the Company and Prime        contained  in  the  registration  statement  on
                  Properties, Inc.                               Form SB-2 (File No. 33-85446-A).

10.4              Form of Lease  between  Prime  Properties,     Incorporated  by  reference  to  Exhibit  10.4
                  Inc. and the Company.                          contained  in  the  registration  statement  on
                                                                 Form SB-2 (File No. 33-85446-A).

10.5              Agreement dated September 21,  1994, among     Incorporated   by  reference  to  Exhibit  10.5
                  Chrysolith, LLC, Prime Properties, Inc.,       contained  in  the  registration  statement  on
                  Monarch Casinos, Inc. of Louisiana,            Form SB-2 (File No. 33-85446-A).
                  ("Monarch") and the Company.

10.6              Asset Purchase Agreement dated September 21,   Incorporated   by  reference  to  Exhibit  10.6
                  1994, between Chrysolith L.L.C. and Monarch    contained  in  the  registration  statement  on
                                                                 Form SB-2 (File No. 33-85446-A).

10.7              Lease (with  option) dated May 10, 1994 among  Incorporated   by  reference  to  Exhibit  10.7
                  Lula  Miller, Inc., Charles A. Jones III and   contained  in  the  registration  statement  on
                  Kelly McCoy Jones, as Lessor, and Monarch, as  Form SB-2 (File No. 33-85446-A).
                  Lessee.

10.8              Offer to Purchase dated October 4, 1994,       Incorporated   by  reference  to  Exhibit  10.8
                  among Trans World Gaming of Louisiana,         contained  in  the  registration  statement  on
                  Inc., Monarch, Lula  Miller,  Inc.,            Form SB-2 (File No. 33-85446-A).
                  Charles  A.  Jones III and Kelly McCoy
                  Jones.

10.9              Memorandum of Agreement  dated March 18,       Incorporated   by  reference  to  Exhibit  10.9
                  1994, between  the   Company  and  Yves        contained  in  the  registration  statement  on
                  Gouhier  and Camille  Costard  to  acquire     Form SB-2 (File No. 33-85446-A).
                  shares  of Casino Cherbourg  S.A., as
                  amended (English translation, except
                  amendment is in French.)

10.10             Shareholder Agreement dated April 7, 1994,     Incorporated  by  reference  to  Exhibit  10.10
                  between the Company and Michael A. Edwards,    contained  in  the  registration  statement  on
                  as the shareholders of Monarch                 Form SB-2 (File No. 33-85446-A).

10.11             Employment   Agreement   dated   March  6,     Incorporated  by  reference  to  Exhibit  10.11
                  1996 between the Company and Stanley           contained  in the Form  10-KSB  for the  fiscal
                  Kohlenberg                                     year  ended   December   31,   1995  (File  No.
                                                                 0-25244).

10.12             Employment Agreement between the Company       Incorporated  by  reference  to  Exhibit  10.12
                  and Dominick J. Valenzano                      contained  in  the  registration  statement  on
                                                                 Form SB-2 (File No. 33-85446-A).

</TABLE>


<PAGE>


<TABLE>

<S>               <C>                                            <C>
10.13             1993 Incentive Stock Option Plan               Incorporated  by  reference  to  Exhibit  10.13
                                                                 contained  in  the  registration  statement  on
                                                                 Form SB-2 (File No. 33-85446-A).

10.14             Form of 41/2% Bridge Note                      Incorporated  by  reference  to  Exhibit  10.14
                                                                 contained  in  the  registration  statement  on
                                                                 Form SB-2 (File No. 33-85446-A).

10.15             Form of 10% Secured Bridge                     Incorporated  by  reference  to  Exhibit  10.15
                                                                 contained  in  the  registration  statement  on
                                                                 Form SB-2 (File No. 33-85446-A).

10.16             Collateral Mortgage relating to the            Incorporated  by  reference  to  Exhibit  10.16
                  Woodlands Travel Plaza.                        contained  in  the  registration  statement  on
                                                                 Form SB-2 (File No. 33-85446-A).

10.17             Operating Agreement dated as of                Incorporated  by  reference  to  Exhibit  10.17
                  December 22, 1994 Gold Coin.                   contained  between the  Company and  Chrysolith
                                                                 relating to the in the Form 10-KSB for the fiscal
                                                                 year ended December 31, 1994 (File No. 0-25244).

10.18             Note in principal amount $75,000 payable       Incorporated  by  reference  to  Exhibit  10.18
                  by Monarch (and assumed by the Company).       contained  in the Form  10-KSB  for the  fiscal
                                                                 year  ended   December   31,   1994  (File  No.
                                                                 0-25244).

10.19             Lease Agreement dated May 1, 1993 between      Incorporated  by  reference  to  Exhibit  10.19
                  National Auto/Truck Stops, Inc. and Prime      contained  in the Form  10-KSB  for the  fiscal
                  Properties with respect to the 76 Plaza        year  ended   December   31,   1995  (File  No.
                                                                 0-25244).

10.20             Agreement and General Release dated as         Incorporated  by  reference  to  Exhibit  10.20
                  of March 6, 1996 between the Company and       contained  in the Form  10-KSB  for the  fiscal
                  R. K. Merkey.                                  year  ended   December   31,   1995  (File  No.
                                                                 0-25244).

10.21             Forbearance Agreement dated January 19,        Incorporated  by  reference  to  Exhibit  10.21
                  1996 between the Company and Chrysolith        contained  in the Form  10-KSB  for the  fiscal
                                                                 year  ended   December   31,   1995  (File  No.
                                                                 0-25244).

10.22             Letter Agreement dated January 30, 1996        Incorporated  by  reference  to  Exhibit  10.22
                  between the Company and Chrysolith             contained  in the Form  10-KSB  for the  fiscal
                  regarding forbearance payments                 year  ended   December   31,   1995  (File  No.
                                                                 0-25244).

10.23             Consulting Agreement dated January 1, 1997     Incorporated  by  reference  to  Exhibit  10.23
                  between the Company and Stanley Kohlenberg     contains  in Form  10-KSB for the  fiscal  year
                                                                 ended December 31, 1996 (File No. 0-25244).

10.24             Employment Agreement dated December 26, 1996   Incorporated  by  reference  to  Exhibit  10.24
                  between the Company and Andrew Tottenham       contains  in Form  10-KSB for the  fiscal  year
                                                                 ended December 31, 1996 (File No. 0-25244).

</TABLE>


                                       39

<PAGE>

<TABLE>


------------------------------------------------------------------------------------------------------------------
<S>                 <C>                                               <C>
10.25               Employment Agreement date February 1, 1997        Incorporated by reference to Exhibit 10.25
                    between the Company and Christopher Moore         contains in Form 10-KSB for the fiscal
                                                                      year ended December 31, 1996 (File No.
                                                                      0-25244).

10.26               Cancellation Agreement dated as of October        Incorporated by reference to Exhibit 10.26
                    3, 1996 between the Company and Mid-City          contained in the Form 10-KSB for the
                    Associates                                        fiscal year ended December 31, 1996 (File
                                                                      No. 0-25244).

10.27               Agreement of Lease dated as of October 2,         Incorporated by reference to Exhibit 10.27
                    1996 between the Company and Mid-City             contained in the Form 10-KSB for the
                    Associates                                        fiscal year ended December 31, 1996 (File
                                                                      No. 0-25244).

10.28               Stock Purchase Agreement dated as of January      Incorporated by reference to Exhibit 10.28
                    1, 1997 among the Company, Andrew Tottenham       contained in the Form 10-KSB for the
                    and Robin Tottenham                               fiscal year ended December 31, 1996 (File
                                                                      No. 0-25244).

10.29               Employment Agreement dated April 15, 1997         Incorporated by reference to Exhibit 10.29
                    between Company and James Hardman                 contained in Form 10-KSB for the fiscal
                                                                      year ended December 31, 1997 filed on
                                                                      March 30, 1998. (File No. 0-25244)

10.30               Stock Purchase Agreement dated as of January      Incorporated by reference to Exhibit 10.30
                    20, 1998 between the Company and 21st             contained in Form 10-KSB for the fiscal
                    Century Resorts                                   year ended December 31, 1997 filed on
                                                                      March 31, 1998. (File No. 0-25244)

10.31               Form of the Subscription Agreement for the        Incorporated by reference to Exhibit 10.31
                    Private Placement                                 contained in Form 10-KSB for the fiscal
                                                                      year ended December 31, 1997 filed on
                                                                      March 31, 1998. (File No. 0-5244)

10.32               Escrow Agreement dated March 17, 1998 among       Incorporated by reference to Exhibit 10.32
                    the Company, TWG Finance Corp., TWG               contained in Form 10-KSB for the fiscal
                    International U.S. Corporation as Issuer and      year ended December 31, 1997 filed on
                    U.S. Trust Company of Texas, N.A., as Trustee     March 30, 1998. (File No. 0-25244)

10.33               Consulting Agreement between Chrysolith,          Incorporated by reference to Exhibit 10
                    L.L.C. and Lee Young dated January 1, 1997        contained in the Form 10-QSB for the
                                                                      quarter ended June 30, 1996 filed on
                                                                      August 14, 1996 (File No. 0-25244)

10.34               Purchase Agreement dated as of April 15,          Incorporated by reference to Exhibit 10.34
                    1997 among the Company, James R. Hardman,         contained in the Form 10-Q for the quarter
                    Jr. and Multiple Application Tracking System      ended March 31, 1997, filed on May 9, 1997
                                                                      (File No. 0-25244)

10.35               License Agreement dated as of April 15, 1997      Incorporated by reference to Exhibit 10.35
                    between the Company and James R. Hardman, Jr.     contained in the Form 10-Q for the quarter
                                                                      ended March 31, 1997, filed on May 9, 1997
                                                                      (File No. 0-25244)
------------------------------------------------------------------------------------------------------------------


                                       40
<PAGE>

-----------------------------------------------------------------------------------------------------------------------
10.36               Loan Agreement dated June 11, 1997 between     Incorporated by reference to Exhibit
                    the Company and Value Partners                 10.36 contained in the Form 8-K filed on
                                                                   June 17, 1997 (File No. 0-25244)

10.37               $350,000 Senior Promissory Note dated June     Incorporated by reference to Exhibit
                    11, 1997                                       10.37 contained in the Form 8-K filed on
                                                                   June 17, 1997 (File No. 0-25244)

10.38               Joint Activity Agreement dated March 31,       Incorporated by reference to Exhibit
                    1997 between Mr. Mahmud Avdiyev and            10.38 contained in the Form 8-K filed on
                    Tottenham & Co., d/b/a ART marketing Ltd.      June 17, 1997 (File No. 0-25244)

10.39               Loan Agreement dated October 27, 1997,         Incorporated by reference to Exhibit
                    between Value Partners, and the Company        10.39 contained in the Form 10-QSB for
                                                                   the quarter ended September 30, 1997,
                                                                   filed on November 12, 1997 (File No.
                                                                   0-25244)

10.40               $262,500 Senior Promissory Note dated          Incorporated by reference to Exhibit
                    October 27, 1997                               10.40 contained in the Form 10-QSB for
                                                                   the quarter ended September 30, 1997,
                                                                   filed on November 12, 1997 (File No.
                                                                   0-25244)

10.41               Warrant to Purchase Common Stock dated         Incorporated by reference to Exhibit
                    November 27, 1997                              10.41 contained in the Form 10-QSB for
                                                                   the quarter ended September 30, 1997,
                                                                   filed on November 12, 1997 (File No.
                                                                   0-25244)

10.42               Employment Agreement between the Company       Incorporated by reference to Exhibit
                    and Rami S. Ramadan dated July 12, 1999        10.42 contained in the Form 8-K filed on
                                                                   July 13, 1999 (File No. 0-25244)

10.43               Severance Agreement between the Company        Incorporated by reference to Exhibit
                    and Stanley Kohlenberg dated May 23, 1999      10.43 contained in the Form 8-K filed on
                                                                   July 13, 1999 (File No. 0-25244)

10.44               Severance Agreement among the Company,         Incorporated by reference to Exhibit
                    Trans World Gaming of Louisiana, TWG           10.44 contained in the Form 8-K filed on
                    International U.S. Corporation and TWG         July 13, 1999 (File No. 0-25244)
                    Finance Corp. and Dominick J. Valenzano
                    dated July 12, 1999

10.45               Form of Lease Agreement between London         Incorporated by reference to Exhibit
                    Investments s.r.o. and the Company             10.45 contained in the Form 8-K filed on
                                                                   July 13, 1999 (File No. 0-25244)

10.46               1998 Incentive Stock Option Plan               Filed herewith. (File No. 0-25244)
                                                                   Filed herewith. (File No. 0-25244)

10.47               1999 Non-Employee Director Stock Option        Filed herewith. (File No. 0-25244)
                    Plan


10.48               Form 12% Secured Senior Note due March 2005    Filed herewith. (File No. 0-25244)

10.49               Form of Warrant to Purchase Common Stock       Incorporated by reference to Exhibit
                    dated October 15, 1999                         16.1 contained in the Form 10-QSB for
                                                                   the fiscal year ended December 31, 1995,
                                                                   filed on November 12, 1997 (File No.
                                                                   0-25244)
16.1                Letter from Bederson & Co. (the Company's
                    former independent public accountants)
                    relating to a change of accountants

16.2                Letter from Pannell, Kerr, Forster PC (the     Incorporated by reference to Exhibit
                    Company's former independent public            16.2 contained in the Form 8-K filed
                    on accountants) relating to a change           of February 25, 1999 (File No. 0-25244)
                    accountants                                    Filed herewith (File No. 0-25244)
------------------------------------------------------------------------------------------------------------------

                                       41
<PAGE>
------------------------------------------------------------------------------------------------------------------
21.0                Subsidiaries                                   Filed herewith (File No. 0-25244)

27.1                Financial Data Schedule                        Filed herewith


</TABLE>




<PAGE>

                    TRANS WORLD GAMING CORP. AND SUBSIDIARIES

                        CONSOLIDATED FINANCIAL STATEMENTS
                                       AND
                          INDEPENDENT AUDITORS' REPORT

                           DECEMBER 31, 1999 AND 1998


<PAGE>


                    TRANS WORLD GAMING CORP. AND SUBSIDIARIES






                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


<TABLE>
<CAPTION>

                                                                                Page
                                                                                ----

<S>                                                                            <C>
     Independent Auditors' Report                                                   1

     Consolidated Balance Sheet                                                     2

     Consolidated Statements of Operations and Comprehensive Loss                   3

     Consolidated Statements of Stockholders' Deficit                               4

     Consolidated Statements of Cash Flows                                        5-6

     Notes to Consolidated Financial Statements                                  7-23
</TABLE>


<PAGE>




                          INDEPENDENT AUDITORS' REPORT

Board of Directors
Trans World Gaming Corp.

We have audited the accompanying consolidated balance sheet of Trans World
Gaming Corp. and Subsidiaries as of December 31, 1999, and the related
consolidated statements of operations and comprehensive loss, stockholders'
deficit and cash flows for the years ended December 31, 1999 and 1998. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits. We did not audit the financial
statements of a wholly-owned subsidiary, which statements reflect total assets
of approximately $1,636,000 as of December 31, 1999, and total revenues of
approximately $3,877,000 and $3,481,000 for the years ended December 31, 1999
and 1998, respectively. Those financial statements were audited by other
auditors whose report has been furnished to us, and our opinion, insofar as it
relates to the amounts included for the wholly-owned subsidiary, is based solely
on the report of the other auditors.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits 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 audits provide a reasonable basis for our opinion.

In our opinion, based on our report and the report of other auditors, the
consolidated financial statements referred to above present fairly, in all
material respects, the consolidated financial position of Trans World Gaming
Corp. and Subsidiaries as of December 31, 1999, and the consolidated results of
their operations and their cash flows for the years ended December 31, 1999 and
1998, in conformity with generally accepted accounting principles.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 1 to the
consolidated financial statements, the Company has suffered significant losses
from operations and has a working capital deficit and a stockholders' deficit at
December 31, 1999. These conditions raise substantial doubt about the Company's
ability to continue as a going concern. Management's plans regarding those
matters are also described in Note 1. The consolidated financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.

Roseland, New Jersey
February 17, 2000, except for Note
15, for which the date is March 28, 2000

                                       1

<PAGE>




                    TRANS WORLD GAMING CORP. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEET
                                December 31, 1999
                    (in thousands, except for per share data)


<TABLE>
<CAPTION>

                                     ASSETS

CURRENT ASSETS

<S>                                                                              <C>
Cash                                                                             $             934
Accounts receivable                                                                             38
Prepaid expenses and other current assets                                                      770
                                                                                 ------------------

TOTAL CURRENT ASSETS                                                                         1,742
                                                                                 ------------------

PROPERTY AND EQUIPMENT, net                                                                  5,112
                                                                                 ------------------

OTHER ASSETS

Goodwill and other intangible assets, less accumulated

 amortization of $3,999                                                                     10,429
Deposits and other assets                                                                      710
                                                                                 ------------------
                                                                                            11,139
                                                                                 ------------------

                                                                                 $          17,993
                                                                                 ==================


                      LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES

Short-term debt                                                                  $             146
Accounts payable                                                                             1,804
Accrued expenses and other current liabilities                                               3,768
                                                                                 ------------------

TOTAL CURRENT LIABILITIES                                                                    5,718
                                                                                 ------------------

LONG-TERM LIABILITIES

Long-term debt                                                                              20,549
Other long-term liabilities                                                                  5,970
                                                                                 ------------------
                                                                                            26,519
                                                                                 ------------------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' DEFICIT
Preferred stock, $.001 par value, 2,000 shares authorized,
    none issued
Common stock $.001 par value, 50,000 shares authorized,
    5,365 shares issued and outstanding                                                          5
Additional paid-in capital                                                                  10,104
Stock warrants outstanding                                                                   4,912
Accumulated other comprehensive income                                                       1,035
Accumulated deficit                                                                       (30,300)
                                                                                 ------------------

TOTAL STOCKHOLDERS' DEFICIT                                                               (14,244)
                                                                                 ------------------

                                                                                 $          17,993
                                                                                 ==================
</TABLE>

           SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


                                       2

<PAGE>

                    TRANS WORLD GAMING CORP. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                             AND COMPREHENSIVE LOSS
                     Years Ended December 31, 1999 and 1998
                    (in thousands, except for per share data)

<TABLE>
<CAPTION>

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

REVENUES                                                                        $          12,294     $           9,016
                                                                                ------------------    ------------------


COSTS AND EXPENSES

<S>                                                                             <C>                   <C>
Cost of revenues                                                                            8,149                 7,458
Depreciation and amortization                                                                                     2,485
                                                                                            2,839                 2,486
                                                                                            4,349                 4,000
Write-offs                                                                                                          559
                                                                                ------------------    ------------------
                                                                                           15,337                16,988
                                                                                ------------------    ------------------

LOSS FROM OPERATIONS                                                                      (3,043)               (7,972)
                                                                                ------------------    ------------------
OTHER INCOME (EXPENSE)
Interest income                                                                               40                    85
Interest expense                                                                          (3,025)               (2,465)
Foreign exchange gain (loss)                                                                (217)                  148
Other                                                                                         58                  (296)
                                                                                ------------------    ------------------
                                                                                          (3,144)               (2,528)
                                                                                ------------------    ------------------

LOSS BEFORE INCOME TAXES                                                                  (6,187)              (10,500)

INCOME TAXES, foreign                                                                                             (191)
                                                                                ------------------    ------------------

LOSS FROM CONTINUING OPERATIONS                                                           (6,187)              (10,691)

DISCONTINUED OPERATIONS, loss from operations of discontinued
truckstop segment                                                                           (222)                  (38)
                                                                                ------------------    ------------------

NET LOSS                                                                                                       (10,729)
                                                                                $         (6,409)     $
                                                                                ==================    ==================

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING, basic and diluted
                                                                                            3,598                 3,044
                                                                                ==================    ==================

LOSS PER COMMON SHARE, basic and diluted

From continuing operations                                                      $          (1.72)     $          (3.51)
From discontinued operations
                                                                                           (0.06)                (0.01)
                                                                                ==================      ================
Net loss                                                                        $          (1.78)                (3.52)
                                                                                ==================      ================

COMPREHENSIVE LOSS

NET LOSS                                                                        $         (6,409)     $        (10,729)

OTHER COMPREHENSIVE INCOME, foreign currency
  translation adjustment                                                                                            112
                                                                                              923
                                                                                ------------------    ------------------

COMPREHENSIVE LOSS                                                              $         (5,486)     $        (10,617)
                                                                                ==================    ==================
</TABLE>






          SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.




                                       3
<PAGE>






                    TRANS WORLD GAMING CORP. AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
                     Years Ended December 31, 1999 and 1998
                    (in thousands, except for per share data)

<TABLE>
<CAPTION>

                                                                                                    Additional
                                                                       Common Stock                  Paid-in
                                                             ---------------------------------
                                                                 Shares            Amount            Capital
                                                             ----------------  ---------------  -------------------

<S>                                                          <C>               <C>              <C>
BALANCES, January 1, 1998                                              3,044              $ 3              $ 8,896

ISSUANCE OF STOCK WARRANTS

ISSUANCE OF COMMON STOCK
  IN SETTLEMENT OF NOTES PAYABLE AND
  ACCRUED INTEREST                                                       320                                   240

FOREIGN CURRENCY TRANSLATION ADJUSTMENT

NET LOSS
                                                             ----------------  ---------------  -------------------


BALANCES, December 31, 1998                                            3,364                3                9,136


ISSUANCE OF WARRANTS


EXERCISE OF WARRANTS                                                   2,001                2                  968


FOREIGN CURRENCY TRANSLATION ADJUSTMENT


NET LOSS
                                                             ----------------  ---------------  -------------------


BALANCES, December 31, 1999                                            5,365              $ 5             $ 10,104
                                                               ==============     ============  ===================
</TABLE>


<TABLE>
<CAPTION>
                                                                               Accumulated
                                                      Stock                       Other
                                                     Warrants                 Comprehensive        Accumulated

                                                        Outstanding               Income             Deficit
                                                     ------------------      -----------------    ------------------

<S>                                                  <C>                     <C>             <C>
BALANCES, January 1, 1998                                        $ 537                    $ -             $ (13,162)

ISSUANCE OF STOCK WARRANTS                                       4,700

ISSUANCE OF COMMON STOCK
  IN SETTLEMENT OF NOTES PAYABLE AND
  ACCRUED INTEREST

FOREIGN CURRENCY TRANSLATION ADJUSTMENT                                                   112

NET LOSS                                                                                                    (10,729)
                                                     ------------------      -----------------    ------------------


BALANCES, December 31, 1998                                      5,237                    112               (23,891)


ISSUANCE OF WARRANTS                                               625


EXERCISE OF WARRANTS                                              (950)


FOREIGN CURRENCY TRANSLATION ADJUSTMENT                                                   923


NET LOSS                                                                                                     (6,409)
                                                     ------------------      -----------------       ---------------


BALANCES, December 31, 1999                                    $ 4,912                $ 1,035             $ (30,300)
                                                     ==================      =================       ===============
</TABLE>



<TABLE>
<CAPTION>

                                                  Total
                                              Stockholders'

                                                 Deficit
                                            -------------------

<S>                                         <C>
BALANCES, January 1, 1998                             $ (3,726)

ISSUANCE OF STOCK WARRANTS                               4,700

ISSUANCE OF COMMON STOCK
  IN SETTLEMENT OF NOTES PAYABLE AND
  ACCRUED INTEREST                                         240

FOREIGN CURRENCY TRANSLATION ADJUSTMENT                    112

NET LOSS                                               (10,729)
                                            -------------------


BALANCES, December 31, 1998                             (9,403)


ISSUANCE OF WARRANTS                                       625


EXERCISE OF WARRANTS                                        20


FOREIGN CURRENCY TRANSLATION ADJUSTMENT                    923


NET LOSS                                                (6,409)
                                                ---------------


BALANCES, December 31, 1999                          $ (14,244)
                                                ===============
</TABLE>
















           SEE ACCOMPANYING NOTES TO CONSOLIDATED FIANCIAL STATEMENTS.




                                       4
<PAGE>

                    TRANS WORLD GAMING CORP. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                     Years Ended December 31, 1999 and 1998
                    (in thousands, except for per share data)


<TABLE>
<CAPTION>

                                                                                      1999                  1998
                                                                                      ------------------    -------------------
<S>                                                                                   <C>                   <C>
CASH FLOWS FROM OPERATING ACTIVITIES

Net loss                                                                              $         (6,409)     $         (10,729)
Add: loss from discontinued operations                                                            (222)                   (38)
                                                                                      ------------------    -------------------
Loss from continuing operations                                                                 (6,187)               (10,691)
Adjustments to reconcile net loss from continuing operations to net cash used in
 continuing operations:
Provision for allowance for doubtful accounts                                                                              252
Depreciation and amortization                                                                     2,839                  2,485
Noncash interest                                                                                    542                    610
Provision for impairment                                                                                                 4,000
Write-offs                                                                                                                 559
Other                                                                                                                        8
       Increase (decrease) in cash attributable to changes in operating assets
         and liabilities:

Accounts and other receivables                                                                      186                   (25)
Prepaid expenses and other current assets                                                         (331)                  (540)
Other assets                                                                                       (85)                  (612)
Accounts payable, accrued expenses and other liabilities                                          2,369                  2,590

                                                                                      ------------------    ---------------------
                                                                                                  (667)                (1,364)
Net cash provided by (used in) discontinued operations                                            (197)                     28
                                                                                      ------------------    ---------------------

NET CASH USED IN OPERATING ACTIVITIES                                                             (864)                (1,336)
                                                                                      ------------------    ---------------------

CASH FLOWS FROM INVESTING ACTIVITIES
Acquisitions of Resorts and CDZ, net of cash acquired                                                                 (12,754)
Purchases of property and equipment                                                             (2,422)                (1,476)
Payment for deposit                                                                                (34)
Proceeds from the sale of property of discontinued operations                                       379
                                                                                      ------------------    -------------------

NET CASH USED IN INVESTING ACTIVITIES                                                           (2,077)               (14,230)
                                                                                      ------------------    -------------------

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from short-term debt                                                                       450                  1,250
Payments of short-term debt                                                                     (1,360)                  (194)
Proceeds from long-term debt                                                                      3,000                 17,525
Payments of long-term debt                                                                                             (1,312)
Proceeds from exercise of warrants                                                                   20
                                                                                      ------------------    -------------------

NET CASH PROVIDED BY FINANCING ACTIVITIES                                                         2,110                 17,269
                                                                                      ------------------    -------------------

EFFECT OF EXCHANGE RATE CHANGES ON CASH                                                           (190)                     54
                                                                                      ------------------    -------------------

NET INCREASE (DECREASE) IN CASH                                                                 (1,021)                  1,757

CASH
Beginning of year                                                                                 1,955                    198
                                                                                      ------------------    -------------------

End of year                                                                           $             934     $            1,955
                                                                                      ==================    ===================
</TABLE>

          SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.


                                       5
<PAGE>

                    TRANS WORLD GAMING CORP. AND SUBSIDIARIES


                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                      (CONTINUED) Years Ended December 31,
                                  1999 and 1998
                    (in thousands, except for per share data)


<TABLE>
<CAPTION>

                                                                                    1999                  1998
                                                                                    ------------------    ------------------
<S>                                                                                 <C>                   <C>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION,
cash paid during the year for:
Interest                                                                            $           2,515     $           1,706
                                                                                    ==================    ==================

Income taxes, foreign                                                               $             162                   346
                                                                                    ==================    ==================

SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND
  FINANCING ACTIVITIES

Common stock issued in settlement of notes payable
 and accrued interest                                                               $               -     $             240
                                                                                    ==================    ==================

Issuance of stock warrants with debt                                                $             625     $           4,700
                                                                                    ==================    ==================

Note payable forgiven in connection with sale of subsidiary                         $             206     $               -
                                                                                    ==================    ==================
</TABLE>



          SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.


                                       6
<PAGE>


                    TRANS WORLD GAMING CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   (IN THOUSANDS, EXCEPT FOR PER SHARE DATA)


NOTE 1 -      NATURE OF BUSINESS AND GOING CONCERN CONSIDERATION

              OVERVIEW

              Trans World Gaming Corp. and Subsidiaries (the "Company"), a
              Nevada corporation, is primarily engaged in the gaming business in
              the United States, the Czech Republic and Spain. Its United States
              gaming operations ceased as of June 30, 1999 (sEE NOTE 14).

              GAMING OPERATIONS - UNITED STATES

              Until March 1998, the Company's only gaming operations were two
              video poker parlors ("Gold Coin" and "Toledo Palace") situated at
              truck stops in Louisiana. The Company's video poker operations in
              Louisiana were managed by Chrysolith, LLC ("Chrysolith"), a
              Louisiana-licensed video gaming operator in which the Company owns
              49% of its Class B membership units.

              As a result of parish (county) votes to eliminate video poker in
              the parishes in Louisiana where the Company's video poker
              operations are located, the Company ceased its video poker
              operations on June 30, 1999. The Company, together with other
              companies operating video poker parlors in the affected parishes,
              continue to challenge the votes through the courts. The viability
              of such challenge is uncertain.

              GAMING OPERATIONS - CZECH REPUBLIC

              In March 1998, the Company acquired a company operating two
              casinos in the western Czech Republic, close to the border of the
              German State of Bavaria (SEE NOTE 3). The larger casino, located
              in Ceska Kubice, currently has fifteen table games and seventy
              slot machines. The smaller casino, located in Rozvadov, currently
              has seven table games and thirty-eight slot machines.

              As part of the March 1998 transaction, the Company also acquired
              land in the southern Czech Republic, close to the border of
              Austria. In December 1999, construction of the Company's third
              Czech casino was completed on the land and operations commenced.
              The newly-opened casino, located in Hate (near Snojmo), currently
              has eleven table games and forty-two slot machines.

              GAMING OPERATIONS - SPAIN

              In April 1998, the Company acquired a company that owns the
              license to operate the only casino in the Spanish province of
              Aragon (SEE NOTE 3). The casino, with nine table games and
              twenty-four slot machines, is currently situated fifteen miles
              outside of Zaragoza. The Company had reached an understanding with
              an agency of the provincial government, the Diputacion General de
              Aragon ("DGA"), to allow the casino to move to the center of
              Zaragoza, subject to the issuance of a decree. However, instead of
              a decree, in February 2000, the DGA introduced a law that would
              allow the casino to relocate. The law is expected to be presented
              to local Spanish parliament in June 2000. Management has indicated
              that, based on its discussions with Spanish authorities, the law
              has little opposition and is expected to pass.

              OTHER -

              In March 1997, the Company, through a wholly-owned subsidiary,
              signed a twenty-year consulting agreement with the owner and
              operator of Boxer Casino located in Gyandja, Azerbaijan Republic
              (a former member of the Soviet Union). In January 1998, the
              Company, through a wholly-owned subsidiary, entered into a
              twenty-year management agreement with Jockey Club Casinos LLC for
              the management and operation of a casino in Bishkek, Kyrgyz
              Republic (a former member of the Soviet Union). Both of these
              arrangements were abruptly halted by local governments' decisions
              to cease casino operations and written off by the Company during
              the year ended December 31, 1998 (SEE NOTE 9).


                                       7
<PAGE>


                    TRANS WORLD GAMING CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   (IN THOUSANDS, EXCEPT FOR PER SHARE DATA)



NOTE 1 -      NATURE OF BUSINESS AND GOING CONCERN CONSIDERATION (CONTINUED)

              GOING CONCERN CONSIDERATION

              The accompanying consolidated financial statements have been
              prepared assuming the Company will continue as a going concern.
              The Company has suffered significant losses from operations and
              has a working capital deficit of $3,976 and a stockholders'
              deficit of $14,244 as of December 31, 1999. Furthermore, the
              Company is highly leveraged with debt (SEE NOTE 5). These
              conditions raise substantial doubt about the Company's ability to
              continue as a going concern. The consolidated financial statements
              do not include any adjustments that might result from the outcome
              of this uncertainty. The Company has taken steps to improve its
              situation including the December 1999 opening of its third Czech
              casino and certain cost cutting measures. Further, management's
              plans include an expansion strategy to counter the affects of
              seasonality on the Company's cash flows. The goals of the
              expansion strategy are to diversify the Company's portfolio of
              operations in terms of geographical location and to add hotels to
              the mix of operations. In implementing its expansion strategy, the
              Company is seeking management or joint venture agreements and
              leased space arrangements that will avoid further indebtedness.

NOTE 2 -      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

              PRINCIPLES OF CONSOLIDATION - The consolidated financial
              statements include the accounts of the Company and its
              wholly-owned and majority-owned subsidiaries. All significant
              intercompany balances and transactions have been eliminated in
              consolidation.

              CASH - Cash consists of cash in banks and on hand. The Company
              maintains its bank accounts at several financial institutions
              which, at times, may exceed Federal Deposit Insurance Corporation
              ("FDIC") insured limits. In addition, the Company's foreign cash,
              aggregating $818 at December 31, 1999, is not insured by the FDIC.
              The Company has not incurred any losses in such accounts and
              believes it is not exposed to any significant credit risk on cash.

              PROPERTY AND EQUIPMENT - Property and equipment is stated at cost
              less accumulated depreciation and amortization. The Company
              provides for depreciation and amortization using the straight-line
              method over the following estimated useful lives:

<TABLE>
<CAPTION>

                                                                             ESTIMATED
                                                                              USEFUL

                                              ASSETS                           LIFE

<S>                                                                        <C>
              Building and improvements                                       45   years
              Gaming equipment                                              4-12   years
              Furniture, fixtures and other equipment                        3-8   years
</TABLE>


              PRE-OPENING AND DEVELOPMENT COSTS - Pre-opening and development
              costs incurred in connection with the pursuit and development of
              new gaming projects in various jurisdictions are expensed as
              incurred.



                                       8
<PAGE>

                    TRANS WORLD GAMING CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   (IN THOUSANDS, EXCEPT FOR PER SHARE DATA)


NOTE 2 -      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

              GOODWILL - Goodwill, which represents the excess of cost of
              acquired companies over the fair value of their net assets at
              dates of acquisition, is being amortized on a straight-line basis
              over 7 years.

              The carrying value of goodwill is periodically reviewed by the
              Company based upon the expected future undiscounted operating
              cash flows of the related business (SEE NOTE 9).

              FOREIGN CURRENCY TRANSLATION - For foreign subsidiaries whose
              functional currency is the local foreign currency, balance sheet
              accounts are translated at exchange rates in effect at the end of
              the year and statement of operations accounts and cash flows are
              translated at average exchange rates for the year. Resulting
              translation adjustments are included in accumulated other
              comprehensive income.

              LOSS PER COMMON SHARE - Loss per common share is based on the
              weighted average number of common shares outstanding.

              The Company complies with Statement of Financial Accounting
              Standards ("SFAS") 128, "Earnings Per Share", which requires dual
              presentation of basic and diluted earnings per share. Basic
              earnings per share excludes dilution and is computed by dividing
              income available to common stockholders by the weighted-average
              common shares outstanding for the year. Diluted earnings per share
              reflects the potential dilution that could occur if securities or
              other contracts to issue common stock were exercised or converted
              into common stock or resulted in the issuance of common stock that
              then shared in the earnings of the entity.

              Since the effect of outstanding warrants and options is
              antidilutive, they have been excluded from the Company's
              computation of loss per common share.

              INCOME TAXES - The Company complies with SFAS 109, "Accounting for
              Income Taxes", which requires an asset and liability approach to
              financial accounting and reporting for income taxes. Deferred
              income tax assets and liabilities are computed for differences
              between the financial statement and tax bases of assets and
              liabilities that will result in future taxable or deductible
              amounts, based on enacted tax laws and rates applicable to the
              periods in which the differences are expected to affect taxable
              income. Valuation allowances are established, when necessary, to
              reduce deferred tax assets to the amount expected to be realized.

              CASINO REVENUE - Casino revenue is the net win from gaming
              activities, which is the difference between gaming wagers less the
              amount paid out to patrons.

              PROMOTIONAL ALLOWANCES - Promotional allowances primarily consist
              of food and beverages furnished gratuitously to customers. For the
              years ended December 31, 1999 and 1998, revenues do not include
              the retail amount of food and beverage of $128 and $194,
              respectively, provided gratuitously to customers. The cost of
              these items of $55 and $82, respectively, is included in cost of
              revenues.

              FAIR VALUE OF FINANCIAL INSTRUMENTS - The fair values of the
              Company's assets and liabilities which qualify as financial
              instruments under SFAS No. 107, "Disclosures about Fair Value of
              Financial Instruments," approximate their carrying amounts
              presented in the consolidated balance sheet at December 31, 1999.


                                       9
<PAGE>


                    TRANS WORLD GAMING CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   (IN THOUSANDS, EXCEPT FOR PER SHARE DATA)


NOTE 2 -      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

              USE 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
              those estimates.

              IMPAIRMENT OF LONG-LIVED ASSETS - The Company periodically reviews
              the carrying value of its long-lived assets in relation to
              historical results, as well as management's best estimate of
              future trends, events and overall business climate. If such
              reviews indicate that the carrying value of such assets may not be
              recoverable, the Company would then estimate the future cash flows
              (undiscounted and without interest charges). If such future cash
              flows are insufficient to recover the carrying amount of the
              assets, then impairment is triggered and the carrying value of any
              impaired assets would then be reduced to fair value.

              RECLASSIFICATIONS - Certain prior year amounts have been
              reclassified to conform to the 1999 presentation.

              INVESTMENT CARRIED AT EQUITY - The Company's investment in
              Chrysolith is being accounted for under the equity method of
              accounting. Accordingly, the investment is recorded at cost and
              adjusted for the Company's proportionate share of undistributed
              earnings or losses (SEE NOTE 13).

              DEBT ISSUANCE COSTS - Cost incurred in connection with certain of
              the Company's debt financing were deferred and amortized on a
              straight-line basis over the term of the related debt.
              Amortization of debt issuance costs were $145 and $279 for the
              years ended December 31, 1999 and 1998, respectively.

NOTE 3 -      BUSINESS COMBINATIONS

              On March 31, 1998, the Company acquired substantially all of the
              voting and non-voting interests of 21st Century Resorts a.s.
              ("Resorts"), a Czech Republic joint stock company, Resorts'
              subsidiaries and certain assets of companies affiliated with
              Resorts in a business combination accounted for as a purchase.
              Resorts, through its subsidiaries, operates three casinos in the
              Czech Republic including its newly-opened casino near Snojmo. The
              results of operations of Resorts have been included in the
              accompanying consolidated financial statements since the date of
              acquisition. The total cost of the acquisition of $12,356
              (including acquisition costs of $1,584) was allocated to the
              assets acquired and liabilities assumed based on their estimated
              fair values. The excess of the total cost over the fair value of
              the net assets acquired (goodwill), $10,537 is being amortized on
              the straight-line basis over seven years.

              On April 17, 1998, the Company acquired 90% of the shares of
              Casino de Zaragoza, S.A. ("CDZ") in a business combination
              accounted for as a purchase. The results of operations of CDZ have
              been included in the accompanying consolidated financial
              statements since the date of acquisition. The total cost of the
              acquisition of $1,458 (including acquisition costs of $678) was
              allocated to the assets acquired and liabilities assumed based on
              their estimated fair values. Goodwill of $7,367 is being amortized
              on the straight-line basis over seven years.


                                       10
<PAGE>


                    TRANS WORLD GAMING CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   (IN THOUSANDS, EXCEPT FOR PER SHARE DATA)


NOTE 3 -      BUSINESS COMBINATIONS (CONTINUED)

              During the fourth  quarter of 1998, the Company adjusted the
              carrying  amount of goodwill  as it relates to the  Resorts  and
              CDZ  acquisitions  by $2,500 and $1,500, respectively (SEE
              NOTE 9).

              The following summarized unaudited 1998 consolidated pro forma
              information assumes the 1998 acquisitions had occurred on January
              1, 1998.


<TABLE>
<CAPTION>

<S>                                                               <C>
Revenues                                                                    $ 11,370
                                                                  ===================

Loss from continuing operations                                            $ (11,705)
                                                                  ===================

Loss per common share from continuing operations,

 basic and diluted                                                           $ (3.85)
                                                                  ===================
</TABLE>



              The summarized unaudited 1998 consolidated pro forma results are
              not necessarily indicative of results which actually would have
              occurred if the acquisitions had actually occurred on January 1,
              1998. Further, the summarized unaudited 1998 consolidated pro
              forma results are not intended to be a projection of future
              results and do not reflect any integration costs or cost savings
              resulting from synergistic opportunities.

NOTE 4 -      PROPERTY AND EQUIPMENT

              At December 31, 1999, property and equipment consists of the
              following:


<TABLE>
<CAPTION>

<S>                                                                             <C>
Land                                                                            $ 1,121
Building and improvements                                                         1,519
Gaming equipment                                                                  1,650
Furniture, fixtures and other equipment                                           1,732
Construction in progress                                                            217
                                                                     -------------------
                                                                                  6,239
Less accumulated depreciation and amortization                                    1,127
                                                                     -------------------

                                                                                $ 5,112
                                                                     ===================
</TABLE>



                                       11
<PAGE>




                    TRANS WORLD GAMING CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   (IN THOUSANDS, EXCEPT FOR PER SHARE DATA)


NOTE 5 -      LONG-TERM DEBT

              At December 31, 1999, long-term debt consists of the following:

<TABLE>
<CAPTION>

<S>                                                                                <C>
12% Senior Secured Promissory Notes (a) (d)                                                   $ 17,000

12% Secured Convertible Senior Bonds (b)                                                         4,800

12% Senior Secured Note due March 17, 2005 ( c) (d)                                              3,000
                                                                                    -------------------
                                                                                                24,800
Less unamortized debt discount                                                                  (4,251)
                                                                                    -------------------

                                                                                              $ 20,549
                                                                                    ===================
</TABLE>


              (a) In March 1998, the Company borrowed $17,000 ($9,000 from Value
                  Partners, Ltd. - "Value Partners") in a private placement
                  ("March 1998 Private Placement"). The loan is represented by
                  12% Senior Secured Notes ("March 1998 Senior Notes") issued
                  pursuant to indentures by and among the Company and an
                  independent indenture trustee. The March 1998 Senior Notes,
                  which are due March 2005, require mandatory prepayments based
                  upon excess cash flows generated from Resorts. The March 1998
                  Senior Notes are collateralized by substantially all of
                  Resort's gaming equipment and a majority interest in the
                  capital stock of all of the Company's subsidiaries (except
                  CDZ). In addition to the March 1998 Senior Notes, each
                  investor received a proportionate share of warrants to
                  purchase 7,087 shares of the Company's common stock (SEE NOTE
                  11).

                  The indentures were amended in October 1998 in connection with
                  the restructuring of the Company's ownership of Resorts as a
                  result of a 1998 change in Czech gaming law which restricted
                  foreign ownership of Czech casinos. The amended indentures did
                  not alter the underlying basis of the March 1998 Senior Notes.

                  Of the $17,000 principal amount of notes and warrants issued
                  in the March 1998 Private Placement, the Company has allocated
                  approximately $4,700 as the estimated value of the warrants
                  issued with the notes. This amount is being amortized as
                  additional interest expense with a corresponding increase to
                  notes payable over the lives of the respective notes using the
                  effective interest method until such notes are repaid. At
                  December 31, 1999 approximately $1,054 has been amortized and
                  the remaining balance of approximately $3,646 at December 31,
                  1999 is reflected as a reduction of notes payable.

              (b) As a condition to the March 1998 Private Placement, the
                  Company was required to renegotiate the terms and conditions
                  of the 12% Secured Convertible Senior Bonds ("Senior Bonds")
                  originally due June 30, 1999. In March 1998, the Company and
                  the holders of the Senior Bonds agreed to amend such
                  indebtedness as follows: (i) the principal and interest
                  obligations was to be paid only from excess cash flow
                  generated from the terminated Louisiana operations and Bishkek
                  operations; (ii) the maturity date was extended to December
                  31, 2005; (iii) the ability to convert the Senior Bonds into
                  the Company's common stock was terminated; (iv) the holders of
                  the Senior Bonds received Series A warrants and Series B
                  warrants (SEE NOTE 11). Value Partners hold $3,000 of the
                  Senior Bonds. The Senior Bonds were collateralized by all of
                  the Company's Louisiana assets.


                                       12
<PAGE>


                    TRANS WORLD GAMING CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   (IN THOUSANDS, EXCEPT FOR PER SHARE DATA)


NOTE 5 -      LONG-TERM DEBT (CONTINUED)

              (c) In October 1999, the Company borrowed $3,000 ($2,700 from
                  Value Partners) in a private placement ("October 1999 Private
                  Placement"). The loan is represented by 12% Senior Secured
                  Notes ("October 1999 Senior Notes") issued pursuant to
                  indentures by and among the Company and an independent
                  indenture trustee. The October 1999 Senior Notes, which are
                  due March 2005, require mandatory prepayments based upon
                  excess cash flows generated from Resorts. The October 1999
                  Senior notes are collateralized by primarily all of Resort's
                  gaming equipment and a majority interest in the capital stock
                  of all of the Company's subsidiaries (except CDZ). In addition
                  to the October 1999 Senior Notes, each investor received a
                  proportionate share of warrants to purchase 1,251 shares of
                  the Company's common stock (SEE NOTE 11).

                  Of the $3,000 principal amount of notes and warrants issued in
                  the October 1999 Private Placement, the Company has allocated
                  approximately $625 as the estimated value of the warrants
                  issued with the notes. This amount is being amortized as
                  additional interest expense with a corresponding increase to
                  notes payable over the lives of the respective notes using the
                  effective interest method until such notes are repaid. At
                  December 31, 1999, approximately $20 has been amortized and
                  the remaining balance of approximately $605 at December 31,
                  1999 is reflected as a reduction to notes payable.

              (d) The Company was not in compliance with certain covenants in
                  certain of its long-term debt obligations. In March 2000, the
                  Company received waivers on the defaults from the holder of
                  the majority in interest of those debt instruments (Value
                  Partners) (SEE NOTE 15).

NOTE 6 -      ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

              At December 31, 1999, accrued expenses and other current
              liabilities consists of the following:

<TABLE>
<CAPTION>

<S>                                                                        <C>
Taxes payable to Spanish Taxing
  Authorities (SEE NOTE 7)                                                           $ 1,315
Accrued interest                                                                       1,399
Other                                                                                  1,054
                                                                           ------------------

                                                                                     $ 3,768
                                                                           =====================
</TABLE>



NOTE 7 -      COMMITMENTS AND CONTINGENCIES

              LEASE OBLIGATIONS - The Company is obligated under operating
              leases relative to its various facilities expiring through 2010.

              Future aggregate minimum annual rental payments under all of these
              leases for the next five years are as follows:

<TABLE>
<CAPTION>

                      <S>                               <C>
                      2000                                              464
                      2001                                              442
                      2002                                              444
                      2003                                              418
                      2004                                              410
</TABLE>



              Rent expense under these leases amounted to approximately $120 for
              each of the years ended December 31, 1999 and 1998.



                                       13
<PAGE>



                    TRANS WORLD GAMING CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   (IN THOUSANDS, EXCEPT FOR PER SHARE DATA)


NOTE 7 -      COMMITMENTS AND CONTINGENCIES (CONTINUED)

              EMPLOYMENT AGREEMENTS - The Company has entered into employment
              agreements with certain of its executives which provide for annual
              compensation plus, in most cases, participation in future benefit
              programs and stock options plans. Future annual compensation under
              these employment agreements is as follows:


<TABLE>
<CAPTION>

                      <S>                               <C>
                      2000                                            $ 733
                      2001                                              590
                      2002                                              157
                                                         -------------------

                                                                    $ 1,480
                                                         ===================
</TABLE>



              CONSULTING AGREEMENTS - The Company is obligated to pay a certain
              percentage of future revenues of its newly-opened Czech casino
              pursuant to a thirty year consulting contract.

              CONTINGENCIES - The Company is involved in certain legal actions
              that arose in the normal course of business. In the opinion of the
              Company's management, the resolution of these matters will not
              have a material adverse effect on the consolidated financial
              position, results of operations or cash flows of the Company.

              FOREIGN ACTIVITIES - During the years ended December 31, 1999 and
              1998, a substantial amount of the Company's operations are outside
              of the United States (SEE NOTE 13). Operating internationally
              involves additional risks relating to such things as currency
              exchange rates, different legal and regulatory environments,
              political and economic risks relating to the stability or
              predictability of foreign governments, differences in the manner
              in which different cultures do business, difficulties in staffing
              and managing foreign operations, differences in financial
              reporting, operating difficulties, different types of criminal
              threats and other factors. The occurrence of any of these risks,
              if severe enough, could have a material adverse effect on the
              consolidated financial condition, results of operations and cash
              flows of the Company.

              COLLECTIVE AGREEMENT - The Company has yet to sign the collective
              agreement with its Spanish workforce for the years 1994 through
              1999. In the opinion of the Company's management, the resolution
              of this matter will not have a material adverse effect on the
              consolidated financial position, results of operations or cash
              flows of the Company.

              TEMPORARY RECEIVERSHIP - On January 25, 1997 (prior to the
              Company's acquisition of 90% of CDZ), the directors of CDZ filed
              an application in Court of First Instance number 11 of Zaragoza to
              declare CDZ in temporary receivership. Temporary receivership was
              granted on June 23, 1997.

              On April 17, 1998 (the date of the Company's acquisition of 90% of
              CDZ), CDZ signed a composition with creditors, most notably the
              DGA, the Spanish Social Security Authorities and the City Council
              of Alfajarin ("Spanish Taxing Authorities"-SEE NOTES 6 AND 9),
              which set the terms of payment to the Spanish Taxing Authorities
              and other creditors for debts existing as of January 25, 1997. The
              composition with the Spanish Taxing Authorities and other
              creditors resulted in a debt reduction of approximately $1,743.
              This reduction was accounted for as a reduction of goodwill.

              During the years ended December 31, 1999 and 1998, DGA granted the
              Company a deferral of approximately $1,784 in taxes on gaming
              winnings accruing during 1997-1999. Furthermore, in April 1999,
              the Company reached an agreement with the Spanish Social Security
              Authorities to defer approximately $1,211 related to all debts
              generated in 1997 and the first quarter of 1998.



                                       14
<PAGE>


                    TRANS WORLD GAMING CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   (IN THOUSANDS, EXCEPT FOR PER SHARE DATA)


NOTE 7 -      COMMITMENTS AND CONTINGENCIES (CONTINUED)

              At December 31, 1999, taxes payable to Spanish Taxing Authorities
              consists of the following:


<TABLE>
<CAPTION>

<S>                                                                           <C>
Gaming tax                                                                               $ 4,369
Property tax                                                                                 683
Social security                                                                            1,470
Other                                                                                        553
                                                                              -------------------

                                                                                           7,075
Less current portion                                                                       1,315
                                                                              -------------------

Long-term portion                                                                        $ 5,760
                                                                              ===================
</TABLE>


              Included in deposits and other assets on the accompanying December
              31, 1999 consolidated balance sheet is $61 of restricted cash
              guaranteeing the social security tax obligation.

              Future aggregate payments to the Spanish Taxing Authorities are
              due as follows (excluding interest):


<TABLE>
<CAPTION>

 <S>                                                                       <C>
       YEAR ENDING DECEMBER 31,

                 2000                                                                  $ 1,315
                 2001                                                                    1,258
                 2002                                                                      468
                 2003                                                                      468
                 2004                                                                    1,249
               Thereafter (through 2009)                                                 2,317
                                                                             ------------------

                                                                                       $ 7,075
                                                                             ==================
</TABLE>



              If the Company does not make its payments according to the
              schedule and is unable to obtain further deferral from the Spanish
              Taxing Authorities, the debt would become immediately payable and
              revert to pre receivership levels. Management has indicated that,
              based on its discussions with Spanish Taxing Authorities, further
              deferral of payments until April 2001 is anticipated.

              TAXING JURISDICTION - The Czech Republic currently has a number of
              laws related to various taxes imposed by governmental authorities.
              Applicable taxes include value added tax ("VAT"), corporate tax,
              and payroll (social) taxes, together with others. In addition,
              laws related to these taxes have not been in force for significant
              periods, in contrast to more developed market economies;
              therefore, regulations are often unclear or nonexistent.
              Accordingly, few precedents with regard to issues have been
              established. Often, differing opinions regarding legal
              interpretations exist both among and within government ministries
              and organizations, thus, creating uncertainties and areas of
              conflict. Tax declarations, together with other legal compliance
              areas (as examples, customs and currency control matters) are
              subject to review and investigation by a number of authorities,
              who are enabled by law to impose extremely severe fines, penalties
              and interest charges. These facts create tax risks in the Czech
              Republic substantially more significant than typically found in
              countries with more developed tax systems. Management believes
              that it has adequately provided for tax liabilities.



                                       15
<PAGE>

                    TRANS WORLD GAMING CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   (IN THOUSANDS, EXCEPT FOR PER SHARE DATA)

NOTE 8 -      STOCKHOLDERS' DEFICIT

              In December 1998, the Company issued 320 shares of its common
              stock in settlement of unsecured notes payable, and accrued
              interest to its president and chief executive officer and his
              spouse aggregating $240.

              In March 1998 and October 1999, in connection with the issuance of
              certain debt instruments (SEE NOTE 5), the Company has allocated
              $4,700 and $625, respectively, as the estimated value of the
              warrants issued with the debt instruments. Upon surrender of a
              warrant , the holder is entitled to purchase one share of the
              Company's common stock for $.01. The warrants expire on various
              dates through March 31, 2008.

              During 1999, certain Series C and Series E warrant holders
              exercised warrants to purchase 2,001 shares of the Company's
              common stock.

NOTE 9 -      OTHER MATTERS

              PREPAID EXPENSES AND OTHER CURRENT ASSETS - Included in prepaid
              expenses and other current assets at December 31, 1999 is a VAT
              receivable from the Czech taxing authorities of $452 and other
              items aggregating $318.

              LICENSE BOND - Included in deposits and other assets at December
              31, 1999 is approximately $612 in restricted deposits relating to
              Czech license bond requirements.

              SHORT-TERM DEBT - At December 31, 1999, short-term debt consisted
              of a working capital loan payable in installments through April
              2000. The debt, which is collateralized by the Company's casino in
              Rozvadov and guaranteed by Resorts, bears interest at
              approximately 10% and is subject to certain covenants.

              OTHER LONG-TERM LIABILITIES - Included in other long-term
              liabilities at December 31, 1999 are taxes payable to Spanish
              Taxing Authorities of $5,760 (see Note 7) and other items
              aggregating $210.

              SETTLEMENTS - In connection with various legal proceedings related
              to the Company's sublease agreement with Prime Properties, Inc.
              (the lessor of the Gold Coin facility) which includes the right to
              operate its gaming license, the Company negotiated settlements by
              and amongst the involved parties. Under the terms of the
              settlement, the Company made a settlement payment of $450.

              In connection with an action brought by a former affiliate,
              alleging the Company's breach of a management contract, the
              Company executed a Mutual Release and Settlement Agreement whereby
              the Company paid the former affiliate $100 in exchange for release
              of all claims against it.

              Settlement charges in connection with the preceding legal
              proceedings have been reflected in selling, general and
              administrative expenses in the accompanying 1998 consolidated
              statement of operations.

              PROVISION FOR IMPAIRMENT - In light of certain 1998 developments,
              in accordance with its policy on impairment of long-lived assets,
              the Company adjusted the carrying amounts of its goodwill as it
              relates to the Resorts and CDZ acquisitions by $2,500 and $1,500,
              respectively, during the fourth quarter of 1998. However, the
              Company's management believes that, as a result of (i) improved
              revenues in all of its Czech and Spanish casinos, (ii) the
              December 1999 opening of its third Czech casino and (iii) positive
              developments regarding the relocation of the Spanish casino,
              further adjustment is not warranted in 1999.



                                       16
<PAGE>



                    TRANS WORLD GAMING CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   (IN THOUSANDS, EXCEPT FOR PER SHARE DATA)


NOTE 9 -      OTHER MATTERS (CONTINUED)

              In 1998, the Company further wrote-down the value of its
              DeRidder, Louisiana land by $192. During the year ended December
              31, 1999, the Company sold this land and related property for
              $295.

              WRITE-OFFS - During 1998, the President of the Azerbaijan Republic
              ordered the closure of all casinos in the Republic resulting in
              the write-off of the Company's unamortized investment in the Boxer
              Casino of approximately $295. Additionally, during 1998, in light
              of mounting losses and unrealistic future prospects, the Company
              wrote-off its investment in the Bishkek Casino of approximately
              $264. Other 1998 write-offs include $204 of receivables from
              Chrysolith.

              RECAPITALIZATION - Pursuant to Spanish law, in order to maintain
              solvency, a Spanish entity must maintain a defined minimum
              capitalization. In October 1999, the Company adjusted CDZ's
              capital to zero and simultaneously increased it to 250,000 pesetas
              (approximately $1,576). As a result of the October 1999
              recapitalization, the Company owns 99.92% of CDZ, as a result of
              CDZ's prior owner not subscribing to the new shares in the
              recapitalization process.

NOTE 10 -     INCOME TAXES

              At December 31, 1999, the Company's deferred income tax asset is
              comprised of the tax benefit (cost) associated with the following
              based on the statutory tax rates currently in effect:


<TABLE>
<CAPTION>

                                                       U.S.               FOREIGN              TOTAL

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

<S>                                               <C>                 <C>                 <C>
Deferred tax assets
Loss carryforwards                                        $ 3,407             $ 4,492             $ 7,899
Impairment                                                  2,801                                   2,801
Other                                                                              52                  52
                                                  ----------------    ----------------    ----------------
                                                            6,208               4,544              10,752
Deferred tax liabilities                                                          (11)                (11)
                                                  ----------------    ----------------    ----------------
Deferred tax asset, gross                                   6,208               4,533              10,741

Valuation allowances                                       (6,208)             (4,533)            (10,741)
                                                  ----------------    ----------------    ----------------

Deferred tax asset, net                                       $ -                 $ -                 $ -
                                                  ================    ================    ================
</TABLE>



              The following table presents the U. S. and foreign components of
              pretax loss from continuing operations before income taxes for
              the years ended December 31, 1999 and 1998:

<TABLE>
<CAPTION>

                                                                1999                  1998

<S>                                                      <C>                   <C>
U.S.                                                     $           (4,400)    $          (8,562)
Foreign                                                              (1,787)               (1,938)
                                                         -------------------   -------------------

                                                         $           (6,187)    $         (10,500)
                                                         ===================   ===================
</TABLE>


              The 1998 provision for income taxes of $191 relates to earnings
              from certain of Resorts' wholly-owned subsidiaries, recognized
              under Czech tax laws, as separate reporting entities.




                                       17
<PAGE>




                    TRANS WORLD GAMING CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   (IN THOUSANDS, EXCEPT FOR PER SHARE DATA)

NOTE 10 -     INCOME TAXES (CONTINUED)

              The following table presents the principal reasons for the
              differences between the effective tax rate and the U.S. federal
              statutory income tax rate for the years ended December 31, 1999
              and 1998:

<TABLE>
<CAPTION>

                                                                     1999                  1998

<S>                                                           <C>                   <C>
U.S federal statutory income tax rate                                (34%)                 (34%)
Effect of nondeductibility of goodwill
 amortization and impariment                                          10                    19
Effect of net operating loss carryforwards
 and valuation allowances, net                                        29                    15
Other                                                                 (5)                    2
                                                               ------------------    ------------------
                                                                              34                    36
                                                                      -%                    2%
                                                               ==================    ==================
</TABLE>



              At December 31, 1999, the Company has net operating loss
              carryforwards available for income tax reporting purposes of
              approximately:


<TABLE>
<CAPTION>

<S>                                      <C>
U.S.                                                 $ 8,735
Foreign                                               12,857
                                          -------------------

                                                    $ 21,592
                                          ===================
</TABLE>




              The U.S. net operating loss carryforwards expire between 2009 and
              2019.  The foreign net operating loss carryforwards expire between
              2002 and 2009.


NOTE 11 -     WARRANTS AND STOCK OPTIONS

              WARRANTS

              In connection with the October 1999 Private Placement (SEE NOTE
              5), the Company issued Series G Warrants to purchase 1,251 shares
              of the Company's common stock with an exercise price of $.01 per
              share expiring March 31, 2008.

              In connection with the March 1998 Private Placement including the
              restructuring of certain long-term debt obligations (SEE NOTE 5),
              the Company issued the following series of warrants to purchase
              the Company's common stock:

                  Series A Warrants - consists of warrants to purchase 960
                  shares of the Company's common stock with an exercise price of
                  $1.00 per share expiring on December 31, 2005. These warrants
                  were issued to replace warrants in connection with the
                  issuance of convertible senior bonds dated July 1, 1996.

                  Series B Warrants - consists of warrants to purchase 3,200
                  shares of the Company's common stock with an exercise price of
                  $1.50 per share expiring on December 31, 2005. These warrants
                  were issued to replace conversion rights in connection with
                  the convertible senior bonds dated July 1, 1996.



                                       18
<PAGE>




                    TRANS WORLD GAMING CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   (IN THOUSANDS, EXCEPT FOR PER SHARE DATA)


NOTE 11 -     WARRANTS AND STOCK OPTIONS (CONTINUED)

              WARRANTS (CONTINUED)

                  Series C Warrants - consists of warrants to purchase 7,087
                  shares of the Company's common stock with an exercise price of
                  $.01 per share expiring on March 31, 2008. These warrants were
                  issued pursuant to the March 1998 Private Placement.

                  Series D Warrants - consists of warrants to purchase 2,052
                  shares of the Company's common stock with an exercise price of
                  $.01 per share expiring on March 31, 2008. These warrants were
                  issued to replace 500 warrants containing anti-dilution
                  provisions issued in connection with a September 1996
                  financing.

                  Series E Warrants - consists of warrants to purchase 354
                  shares of the Company's common stock with an exercise price of
                  $.01 per share expiring on March 31, 2008. These warrants were
                  issued to the placement agent and its affiliates pursuant to
                  the March 1998 Private Placement.

              In connection with a March 1998 debt financing to fund the Bishkek
              Casino transaction (SEE NOTE 1), the Company issued warrants to
              purchase 104 shares of the Company's common stock with an exercise
              price of $.01 per share expiring on March 31, 2008.

              All of the warrants issued in 1998 contain certain demand
              registration rights provided that the holders of such warrants
              hold in excess of 100 shares. The Series C and E Warrants also
              contain anti-dilution provisions.




                                       19
<PAGE>






NOTE 11 -     WARRANTS AND STOCK OPTIONS (CONTINUED)

              For the years ended December 31, 1999 and 1998, warrant activity
              is as follows:


<TABLE>
<CAPTION>

   PRICE       BALANCE,                                 BALANCE,                                              BALANCE,
    PER       JANUARY 1,      GRANTED     EXPIRED     DECEMBER 31,    GRANTED      EXERCISED     EXPIRED    DECEMBER 31,
   SHARE         1998          1998        1998           1998          1999         1999         1999          1999
------------  ------------  -----------  ----------   -------------  ----------   -----------   ----------  --------------

<S>           <C>           <C>          <C>          <C>            <C>          <C>           <C>         <C>
    $ 13.50           151                                      151                                   (151)
      11.55           151                                      151                                   (151)
       8.50         1,511                                    1,511                                 (1,511)
       1.50                      3,200                       3,200                                                  3,200
       1.00           960          960        (960)            960                                                    960
       0.59           250                                      250                                                    250
       0.50           131           90                         221                                   (221)
       0.01           500        9,598        (500)          9,598       1,251        (2,001)                       8,848
              ------------------------------------------------------------------------------------------------------------

                    3,654       13,848      (1,460)         16,042       1,251        (2,001)      (2,034)         13,258
              ============================================================================================================
</TABLE>



              All warrants outstanding at December 31, 1999 are exercisable.

              STOCK OPTION PLANS

              The Company has incentive and nonstatutory stock option plans
              under which certain key employees may purchase up to a total of
              2,000 common shares of the Company. Under the incentive stock
              option plan, the exercise price can not be less than the fair
              market value of a share on the date of grant or at 110 percent of
              the fair market value on the date of grant, if, any employee owns
              more than 10 percent of the total combined voting power of all
              classes of outstanding stock of the Company. In addition, the
              incentive stock option plan provided for automatic grant of an
              option to purchase 2 shares of common stock to non-employee
              directors on a quarterly basis. In the case of a nonstatutory
              stock option, the exercise price may be any amount determined by
              the Board on the date of grant, but not less than the par value of
              the stock subject to the option.

              During 1999, in light of diminishing shares remaining available
              for grant to non-employee directors, the Company's Board of
              Directors approved the 1999 Non-Employee Director Stock Option
              Plan (the "1999 Plan"). Under the 1999 Plan, an aggregate of 250
              shares of the Company's common stock were reserved for issuance
              pursuant to options issued pursuant to the 1999 Plan. The 1999
              Plan provides for an automatic grant of an option to purchase 2
              shares of common stock to non-employee directors on a quarterly
              basis. Under the 1999 Plan, the exercise price shall equal the
              fair market value of the Company's common stock on the date of
              grant. Options issued under the 1999 Plan shall be immediately
              exercisable over ten years.


                                       20
<PAGE>



                    TRANS WORLD GAMING CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   (IN THOUSANDS, EXCEPT FOR PER SHARE DATA)


NOTE 11 -     WARRANTS AND STOCK OPTIONS (CONTINUED)

              The activity in the stock option plans is as follows:


<TABLE>
<CAPTION>

                                                                    EXERCISE PRICE PER SHARE
                                          NUMBER OF                                   WEIGHTED
                                          OPTIONS                  RANGE               AVERAGE

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

Balance outstanding,
<S>                                  <C>                  <C>                     <C>
  January 1, 1997                                   573    $         .91-9.00                $ 4.64

Granted                                             267              .30-2.00                  0.56
Expired                                            (320)                 7.00                  7.00
                                     -------------------   -------------------    ------------------

Balance outstanding,
  January 1, 1998                                   520              .30-9.00                  1.09

Granted                                             125             .24 - .63                  0.25
Expired                                              (6)             .30-1.59                  0.80
                                     -------------------   -------------------    ------------------

Balance outstanding,
 December 31, 1998                                  639              .24-9.00                  0.93

Granted                                             131             .24 - .83                  0.50
                                     -------------------   -------------------    ------------------

Balance outstanding,
  December 31, 1999                                 770    $         .24-9.00                $ 0.86
                                     ===================   ===================    ==================

Exercisable,
  December 31, 1999                                 639    $         .24-9.00                $ 0.93
                                     ===================   ===================    ==================
</TABLE>




              There were no options exercised during 1999 or 1998. The option
              price per share was equal to or above the market value of the
              underlying stock on the date of grant. Options generally expire
              between five and ten years after the date of grant or earlier upon
              termination as defined in the plans.

              The Company complies with the disclosure-only provisions of SFAS
              123, "Accounting for Stock-Based Compensation".



                                       21
<PAGE>




                    TRANS WORLD GAMING CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   (IN THOUSANDS, EXCEPT FOR PER SHARE DATA)


NOTE 11 -     WARRANTS AND STOCK OPTIONS (CONTINUED)

              The Company applies APB Opinion No. 25 and related interpretations
              in accounting for its stock option plans and, accordingly, no
              compensation cost has been recognized because stock options
              granted under the plans were at exercise prices which were equal
              to or above the market value of the underlying stock at date of
              grant. Had compensation expenses been determined as provided by
              SFAS 123 using the Black-Scholes option-pricing model, the pro
              forma effect on the Company's net loss and per share amounts would
              have been:


<TABLE>
<CAPTION>

                                                                        1999                 1998

Net loss

<S>                                                                        <C>                 <C>
 As reported                                                               $ (6,409)           $ (10,729)
 Pro forma                                                                   (6,469)             (10,759)

Loss per common share,
 basic and diluted

  As reported                                                               $ (1.78)             $ (3.52)
  Pro forma                                                                   (1.80)               (3.53)
</TABLE>




              The fair value of each option grant is calculated using the
              following weighted average assumptions:



<TABLE>
<CAPTION>

                                                                         1999                 1998

<S>                                                                        <C>                  <C>
Expected life (years)                                                              5                    5
Risk-free rate                                                                    5%                   5%
Volatility                                                                      154%                 275%
Dividend yield                                                                    0%                   0%
</TABLE>




NOTE 12 -     INFORMATION CONCERNING GEOGRAPHIC AREAS

              During the years ended December 31, 1999 and 1998, the Company
              operated principally in three geographic areas: the United States,
              the Czech Republic and Spain. The following table presents
              information about the Company by geographic area. There were no
              material amounts of sales or transfers among geographic areas.

<TABLE>
<CAPTION>

                              UNITED           CZECH
                              STATES          REPUBLIC          SPAIN            OTHER        ELIMINATIONS     CONSOLIDATED
                           --------------  ---------------  ---------------  --------------   --------------  ---------------
1999

<S>                        <C>             <C>              <C>              <C>              <C>             <C>
Revenues                         $ 5,549          $ 8,250          $ 3,877           $ 167         $ (2,519)        $ 15,324
Long-lived assets                      9           10,475            4,711             346                            15,541

1998

Revenues                         $ 6,114          $ 5,466          $ 2,778         $ 1,080           $ (359)        $ 15,079
Long-lived assets                    184           10,524            5,444             441                            16,593
</TABLE>




                                       22
<PAGE>

                    TRANS WORLD GAMING CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   (IN THOUSANDS, EXCEPT FOR PER SHARE DATA)

NOTE 13 -     SUMMARIZED FINANCIAL INFORMATION

              The Company has a nonvoting 49% interest in Chrysolith and entered
              into an agreement with Chrysolith pursuant to which Chrysolith
              owns, maintains and operated (through June 30, 1999) the video
              lottery terminals at the Gold Coin and Toledo Palace properties.

              Prior to July 1, 1999, the Company received 100% of the net
              operating revenues (the "Net Win") derived from the Gold Coin and
              the Toledo Palace, after payment of all the gaming taxes payable
              to the State of Louisiana and payout of winnings from the gaming
              establishments. Further, the Company paid a management fee to
              Chrysolith in an amount equal to the direct operating expenses of
              the gaming establishment. A summary of the December 31, 1999 and
              1998 financial information of Chrysolith is as follows:

<TABLE>
<CAPTION>

                                                                     1999                 1998

<S>                                                            <C>                  <C>
Assets                                                                    $ 291                $ 442
Liabilities                                                                 216                  367
Stockholders' equity                                                         75                   75
Net income                                                                    -                    -
</TABLE>




NOTE 14 -     DISCONTINUED OPERATIONS

              The Company's United States gaming operations ceased as of June
              30, 1999. Summary operating results of discontinued operations
              for the years ended December 31, 1999 and 1998 is as follows:



<TABLE>
<CAPTION>

                                                                     1999                 1998

<S>                                                           <C>                  <C>
REVENUES                                                                 $ 3,030              $ 6,063
                                                              -------------------  -------------------

COSTS AND EXPENSES

Cost of revenues                                                           1,506                2,879
Depreciation and amortization                                                145                  285
Selling general and administrative                                         1,025                1,903
Provision for impairment                                                                          192
Write-offs                                                                                        204
                                                              -------------------  -------------------
                                                                           2,676                5,463
                                                              -------------------  -------------------

INCOME FROM OPERATIONS                                                       354                  600

INTEREST                                                                     576                  638
                                                              -------------------  -------------------
                                                                          $ (222)               $ (38)
</TABLE>



NOTE 15-      SUBSEQUENT EVENTS

              In March 2000, the Company received waivers on all defaults under
              the March 1998 Senior Notes and October 1999 Senior Notes.

              In March 2000, the Company executed an approximate $550,000 Czech
              bank note payable in equal monthly payments through September
              2001. The bank note bears interest at approximately 10.5% per
              annum and is collateralized by certain Czech property.

                                       23
<PAGE>


                            CASINO DE ZARAGOZA, S.A.





                          CONSOLIDATED ANNUAL ACCOUNTS

                             AS OF DECEMBER 31, 1999

                         TOGETHER WITH AUDITORS' REPORT



<PAGE>



                    CASINO DE ZARAGOZA, S.A. AND SUBSIDIARIES

                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 1999

(1)  DESCRIPTION OF BUSINESS

     Casino de Zaragoza, S.A. (hereinafter referred to as the Casino) was
     founded in 1978 and is located in Alfajarin (Zaragoza). The second article
     of the Casino's bylaws defines its corporate purpose, basically, as the
     operation of a gambling casino and appurtenant services, namely bar,
     restaurant, sitting rooms, show halls, night clubs, athletic facilities and
     shopping establishments located in the casino's building complex.

     Details of the Casino's holdings are as follows:

<TABLE>
<CAPTION>

------------------------------------- ------------------------- --------------------
Name                                  Catering y Gestion, S.L.  Los Albares, S.A.
Location                              Ctra. Nacional II         Ctra. Nacional II
                                      Km. 343,250               Km. 343,250
                                      Alfajarin (Zaragoza)      Alfajarin (Zaragoza)
Line of business                      Lodging                   Inoperative
-------------------------------------------------------------------------------------
                                                          U.S. Dollars
                                      -----------------------------------------------
<S>                                          <C>                          <C>

Proportion of stock held as of
  December 31, 1999                                100%                    50,31%

Capital stock as of December 31,
  1999                                         458,882                    448,315

Earnings/(Accumulated losses)
  as of December 31, 1999                     (835,648)                   299,004

Losses for the year ended
  December 31, 1999                           (271,748)                     (,145)
</TABLE>

<TABLE>
<CAPTION>

------------------------------------- ------------------------- ---------------------
                                                      Thousands of Pesetas
                                      -----------------------------------------------
<S>                                           <C>                         <C>
Proportion of stock held as of
  December 31, 1999                                100%                    50,31%

Capital stock as of December 31,
  1999                                          76,000                    74,250

Earnings/(Accumulated losses)
  as of December 31, 1999                     (138,400)                   49,521

Losses for the year ended
  December 31, 1999                           (271,748)                    (,145)
------------------------------------- ------------------------- ---------------------
</TABLE>


     This data was supplied by the Group companies, and their net worth is as
     shown in their unaudited annual accounts as of December 31, 1999.


<PAGE>


                                      -2-

     Up until October 1997, the properties and other assets needed to manage
     Catering y Gestion, S.L. were owned by and included in the book fixed
     assets of Casino de Zaragoza, S.A., which did not charge Catering y
     Gestion, S.L. for the use of those assets. In October 1997, Diputacion
     General de Aragon (the Aragon Provincial Council) acquired all of the
     properties that belonged to Casino de Zaragoza, S.A. through an auction
     (see Note 6). On May 28, 1998, the Company entered into a lease agreement
     with Diputacion General de Aragon in relation to the assets mentioned in
     the previous paragraph. This agreement is effective for six months from
     April 17, 1998, and automatically renewable for consecutive six-month
     periods unless either of the parties repudiates the agreement with a
     minimum of two months' notice. The amount was set at Ptas. 2,500,000
     thousand per month (including VAT).

     The Casino is subject to the regulations set forth in the Ministerial Order
     of January 9, 1979, which approved the Gambling Casino Regulations.

     The Casino holds a ten-year business license that is valid until December
     23, 2000.

(2)  BASIS OF PRESENTATION OF THE FINANCIAL STATEMENTS

     a)   ACCOUNTING POLICIES

          The accompanying financial statements as of December 31, 1999 were
          obtained from the accounting records and are presented in accordance
          with accounting principles generally accepted in the United States,
          which required certain adjustments and reclassifications to adapt the
          financial statements to US GAAP.

          All amounts are reported in local currency (thousands of pesetas) and
          in U.S. dollars. Assets and liabilities are translated using exchange
          rates published by Bank of Spain in effect at December 31, 1999.
          Revenues and expenses are translated using a monthly average exchange
          rate for the period. Resulting translation adjustments are recorded as
          a separate component of shareholders' equity.

          The following exchange rates were used to translate the financial
          statements as of December 31, 1999:

<TABLE>
<CAPTION>

                      ----------------------------------------
                                            Ptas./U.S. Dollars
                                           -------------------
<S>                                                    <C>
                      Balance Sheet Exchange Rate      165,620

                      Profit and Loss Exchange Rate    156,207
                      ----------------------------------------
</TABLE>


<PAGE>


                                      -3-

     b)   CONSOLIDATION PRINCIPLES

          The accompanying consolidated accounts have been prepared from the
          accounting records of Casino de Zaragoza, S.A. and of the companies
          included in the consolidation (listed in Note 1), whose respective
          annual accounts were prepared by the directors of each company in
          accordance with accounting principles generally accepted in the United
          States, and give a true and fair view of the net worth, financial
          position and results of the Group. These consolidated accounts, which
          have been prepared by the directors of Casino de Zaragoza, S.A., and
          the individual accounts of Casino de Zaragoza, S.A. and of each of the
          consolidated companies will be submitted to the respective Meetings of
          Shareholders for approval. It is anticipated that they will be
          approved without changes.

          All major intercompany balances and transactions have been eliminated
          on consolidation.

          The results of companies over which there is effective control through
          a majority of votes in their representative and decision-making bodies
          have been fully consolidated. Minority interests in the net worth and
          income of the consolidated companies are shown under "Minority
          interests" in the consolidated balance sheet and "Income (loss)
          attributable to minority interests" in the statement of consolidated
          income, respectively.

          The consolidated accounts do not provide for the tax effect of
          including in the parent company's books the results and reserves of
          the companies, because it is considered that reserves not taxable at
          source will not be transferred but used as funds to self-finance each
          consolidated company.

(3)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     a)   USE OF ESTIMATES

          The preparation of the 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 disclosures 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.


<PAGE>


                                      -4-

     b)   CURRENT ASSETS AND LIABILITIES

          Current assets are those assets which expect to be received within one
          year. Current liabilities are those liabilities which are expected to
          be paid within one year.

     c)   CASH AND CASH EQUIVALENTS

          Cash and cash equivalents include cash in hand and cash in bank
          current accounts, with original maturities of three months or less.

     d)   TANGIBLE FIXED ASSETS

          Tangible fixed assets are shown at cost.

          Expenditure on expansion, modernization or improvement is capitalized
          as an increased cost of the related assets provided that it increases
          productivity, capacity or efficiency, or extends the useful lives of
          these assets.

          Upkeep and maintenance costs are expensed currently.

          The Company depreciates its tangible fixed assets on a straight-line
          basis over the years of estimated useful life of each asset as
          follows:

<TABLE>
<CAPTION>

                      ---------------------------------------------
                                                 Years of estimated
                                                     useful life
                      -------------------------- ------------------
<S>                                                   <C>
                       Gaming equipment               10 to 12
                       Tools                           6 to 8
                       Furniture and fixtures          8 to 25
                       Data processing equipment          4
                      -------------------------- ------------------
</TABLE>


     e)   NON-TRADE LOANS

          Long-term loans are recorded on the basis of the amount delivered. The
          difference between said amount and the face value of the loan is
          recorded according to the effective interest method as interest
          revenue. Interest receivable is recognized under assets in the balance
          sheet until actual collection.

     f)   INCOME TAXES

          Period corporate income tax is computed on the basis of book income
          before tax adjusted by the corresponding permanent differences with
          regard to the income


<PAGE>
                                      -5-



          for tax purposes, i.e. the corporate income tax base, less any
          abatements and tax credits, excluding withholdings and payments on
          account.

          The Casino accounts for income taxes in accordance with Statement of
          Financial Accounting Standards (`SFAS') No. 109 `Accounting for Income
          Taxes'. SFAS 109 requires an asset and liability approach for
          financial accounting and reporting for income tax purposes. Under the
          asset and liability method, deferred income taxes are recognized on
          account of the consequences of timing differences and net operating
          carryforwards by applying the statutory tax rates applicable to future
          years. Valuation allowances are recorded when it is determined that
          realization of such amounts is not deemed more likely than not.

     g)   DEFERRED INDEMNITIES

          The Casino is obligated to compensate employees whom it dismisses, in
          certain circumstances, pursuant to ruling labor legislation. In 1997
          and 1998 the Casino dismissed some employees, as a result of which it
          is involved in various legal actions.

          The balance sheet as of December 31, 1999 does include provisions for
          Ptas. 10.4 million (US$ 62,855) for the liability which may result
          from the aforesaid dismissals (Note 9).

     h)   CASINO REVENUE

          Casino revenue is the net win from gaming activities, which is the
          difference between gaming wagers less the amount paid out to patrons,
          and the portion of customers' tips due to the Casino.

     i)   FOREIGN CURRENCY TRANSACTIONS

          Credits and debits denominated in foreign currency are translated into
          pesetas at the exchange rate ruling at the transaction date, and at
          year-end are valued at the rates of exchange then prevailing. Gains or
          losses from foreign currency transactions are reported in "Other
          income - Other, net".

(4)  ACCOUNTS RECEIVABLE

     Accounts receivable (debtors) as of December 31, 1999 consist of the
     following:


<PAGE>
                                      -6-


<TABLE>
<CAPTION>

            -------------------------------------------------------------------
                                                       U.S.        Thousands
                                                      Dollars     of Pesetas
            -------------------------------------------------------------------
<S>                                                    <C>           <C>
           Accounts Receivable                         518,506       85,875
           Less:
             Allowance for Doubtful Accounts          (496,026)     (82,152)
                                                   ----------------------------
                                                        22,480        3,723
           --------------------------------------------------------------------
</TABLE>

The rollforward of the allowance for doubtful accounts is as follows:

<TABLE>
<CAPTION>

          ----------------------------------------------------------------------
                                                         U.S.        Thousands
                                                        Dollars     of Pesetas
           ---------------------------------------------------------------------
<S>                                                   <C>             <C>
           ALLOWANCE FOR DOUBTFUL ACCOUNTS AS OF
             DECEMBER 31, 1998                        1,303,740       185,092
           Bad debt expense for the period ended
             December 31, 1999                                -             -
           Recoveries/other for the period ended
             December 31, 1999                          (20,867)       (3,456)
           Effect of consolidation                     (599,596)      (99,305)
           Other                                         (1,080)         (179)
           Translation adjustment                      (186,171)            -
                                                     ---------------------------
           ALLOWANCE FOR DOUBTFUL ACCOUNTS AS OF
             DECEMBER 31, 1999                          496,026        82,152
           ---------------------------------------------------------------------
</TABLE>

(5)  INTANGIBLE ASSETS

     Movement in the cost of the assets and the related accumulated depreciation
     was as follows:

<TABLE>
<CAPTION>

---------------------------------------------------------------------------------------------------------
                                                  December 31,                Translation  December 31,
                  U.S. Dollars                        1998        Additions    Adjustment      1999
---------------------------------------------------------------------------------------------------------
<S>                                                  <C>            <C>           <C>         <C>
Software                                              144,291         3,369       (20,604)     127,056
Accumulated depreciation                             (117,039)      (23,391)       16,713     (123,717)
                                                  -------------------------------------------------------
                                                       27,252       (20,022)       (3,891)       3,339
                                                  -------------------------------------------------------

Other                                                     725             -          (103)         622
Accumulated depreciation                                 (725)            -           103         (622)
                                                  -------------------------------------------------------
                                                            -             -             -            -
                                                  -------------------------------------------------------
TOTAL:

Cost                                                  145,016         3,369       (20,707)     127,678
Accumulated depreciation                             (117,764)      (23,391)       16,816     (124,339)
                                                  -------------------------------------------------------
TOTAL INTANGIBLE ASSETS - NET                          27,252       (20,022)       (3,891)       3,339
---------------------------------------------------------------------------------------------------------
</TABLE>


<PAGE>
                                      -7-


<TABLE>
<CAPTION>

           ---------------------------------------------------------------------------------
                                                   December 31,                  December
                         Thousands of Pesetas          1998        Additions     31, 1999
           ---------------------------------------------------------------------------------
<S>                                                    <C>            <C>          <C>
           Software                                     20,485           558        21,043
           Accumulated depreciation                    (16,616)       (3,874)      (20,490)
                                                   -----------------------------------------
                                                         3,869        (3,316)          553
                                                   -----------------------------------------
           Other                                           103             -           103
           Accumulated depreciation                       (103)            -          (103)
                                                   -----------------------------------------
                                                             -             -             -
                                                   -----------------------------------------
           TOTAL:
           Cost                                         20,588           558        21,146
           Accumulated depreciation                    (16,719)       (3,874)      (20,593)
           ---------------------------------------------------------------------------------
           TOTAL INTANGIBLE ASSETS - NET                 3,869        (3,316)          553
           ---------------------------------------------------------------------------------
</TABLE>


(6)  PROPERTY AND EQUIPMENT

     Movement in the cost of the assets and the related accumulated depreciation
     was as follows:

<TABLE>
<CAPTION>

---------------------------------- --------------- -------------- --------------- --------------
                                    December 31,                   Translation    December 31,
          U.S. Dollars                  1998         Additions      adjustment        1999
---------------------------------- --------------- -------------- --------------- --------------
<S>                                 <C>                <C>            <C>          <C>
Land                                    89,948          88,383 (*)    (12,844)        165,487
                                   --------------- -------------- --------------- --------------

Gaming equipment                       335,063          93,727        (47,846)        380,944
Accumulated depreciation              (229,464)        (23,747)        32,767        (220,444)
                                   --------------- -------------- --------------- --------------
Tools                                  158,554               -        (22,640)        135,914
Accumulated depreciation              (149,110)         (4,196)        21,293        (132,013)
                                   --------------- -------------- --------------- --------------
                                         9,444          (4,196)        (1,347)          3,901
                                   --------------- -------------- --------------- --------------
Furniture                            1,406,881           0,211       (200,897)      1,206,195
Accumulated depreciation            (1,321,908)        (16,018)       188,759      (1,149,167)
                                   --------------- -------------- --------------- --------------
                                        84,973         (15,807)       (12,138)         57,028
                                   --------------- -------------- --------------- --------------
Data Processing Equipment              137,373           6,672        (19,616)        124,429
Accumulated depreciation              (131,993)         (2,940)        18,848        (116,085)
                                   --------------- -------------- --------------- --------------
                                         5,380           3,732           (768)          8,344
                                   --------------- -------------- --------------- --------------

Other                                      500               -            (71)            500
Accumulated depreciation                  (500)              -             71            (500)
                                   --------------- -------------- --------------- --------------
                                             -                              -               -
                                   --------------- -------------- --------------- --------------
TOTAL:
Cost                                 2,128,319         188,993       (303,914)      2,013,398
Accumulated depreciation            (1,832,975)        (46,901)       261,738      (1,618,138)
---------------------------------- --------------- -------------- --------------- --------------
TOTAL TANGIBLE ASSETS - NET            295,344         142,092        (42,176)        395,260
---------------------------------- --------------- -------------- --------------- --------------
</TABLE>


<PAGE>
                                      -8-


     (*) The effect of applying global integration procedures in the
     consolidation process

<TABLE>
<CAPTION>

------------------------------------ --------------- -------------- ---------------
                                      December 31,                   December 31,
       Thousands of Pesetas               1998         Additions         1999
------------------------------------ --------------- -------------- ---------------
<S>                                      <C>              <C>           <C>
Land                                      12,770          14,638 (*)     27,408
                                     --------------- -------------- ---------------

Gaming equipment                          47,569          15,523         63,092
Accumulated depreciation                 (32,577)         (3,933)       (36,510)
                                     --------------- -------------- ---------------
                                          14,992          11,590         26,582
                                     --------------- -------------- ---------------

Tools                                     22,510                         22,510
Accumulated depreciation                 (21,169)           (695)       (21,864)
                                     --------------- -------------- ---------------
                                           1,341            (695)           646
                                     --------------- -------------- ---------------

Furniture                                199,735              35        199,770
Accumulated depreciation                (187,672)         (2,653)      (190,325)
                                     --------------- -------------- ---------------
                                          12,063          (2,618)         9,445
                                     --------------- -------------- ---------------

Data Processing Equipment                 19,503           1,105         20,608
Accumulated depreciation                 (18,739)           (487)       (19,226)
                                     --------------- -------------- ---------------
                                             764             618          1,382
                                     --------------- -------------- ---------------

Other                                         71               -             71
Accumulated depreciation                     (71)              -            (71)
                                     --------------- -------------- ---------------
                                               -               -              -
                                     --------------- -------------- ---------------
TOTAL:
Cost                                     302,158          31,301        333,459
Accumulated depreciation                (260,228)         (7,768)      (267,996)
------------------------------------ --------------- -------------- ---------------
TOTAL TANGIBLE ASSETS - NET               41,930          23,533
------------------------------------ --------------- -------------- ---------------
</TABLE>

          (*) The effect of applying global integration procedures in the
          consolidation process

     In October 1997 Diputacion General de Aragon (the Aragon Provincial
     Council) auctioned off all the properties of the Casino, that had been
     mortgaged or which secured its debt in respect of gambling tax. The
     properties were auctioned off to settle debt for Ptas. 865 million (US$ 6.1
     million), while their net book value for the Casino was Ptas. 396 million
     (US$ 2.8 million). Ptas. 469 million (US$ 3.9 million) in extraordinary
     revenues obtained on the auction were recorded in 1997 financial
     statements.

(7)  INTERCOMPANY TRANSACTIONS

     Intercompany accounts receivable and payable as of December 31, 1999 were
     as follows:


<PAGE>
                                      -9-


<TABLE>
<CAPTION>

------------------------- --------------------------- --------------------------
                                 U.S. Dollars           Thousands of Pesetas
                          ------------- ------------- ------------- ------------
                            Accounts      Accounts      Accounts     Accounts
                           receivable     payable      receivable     payable
------------------------- ------------- ------------- ------------- ------------
<S>                          <C>           <C>           <C>            <C>
Transworld Gaming            900,000       184,603       149,058        30,574
------------------------- ------------- ------------- ------------- ------------
                             900,000       184,603       149,058        30,574
------------------------- ------------- ------------- ------------- ------------
</TABLE>


     In 1999, Casino de Zaragoza, S.A. granted a loan of US$ 900,000 (Ptas.
     142,738,000) to Trans World Gaming, its parent company. This loan falls due
     in 2002 and bears 3% interest. The difference between the amount granted
     and the amount recorded in the financial statements relates to variations
     in the exchange rate (Note 3-i).

     The account payable relates to the outstanding balance of certain payments
     that the parent company made on behalf of Casino de Zaragoza, and payables
     in respect of services provided by the parent company, comprising
     management, internal audit, management control and the company's marketing
     under an agreement entered into between the parties on October 1, 1999 for
     the period running from April 1, 1998. The amount recorded in this respect
     in 1999 amounted to Ptas. 73,789 and is recorded under the "Costs and
     expenses - Selling, general and administrative" caption in the accompanying
     statement of income.

(8)  TAX MATTERS

     Set out below are the balances payable to the Spanish tax authorities:

<TABLE>
<CAPTION>
-------------------------------------------- --------------------------------------------------------------------
                                             U.S. Dollars
                                             --------------------------------------------------------------------
                                             Long term                                 Short term
                                             ----------------------------------------- --------------------------
                                             Temporary                                 Temporary
                                             receivership  Other         Total         receivership  Other
-------------------------------------------- ------------- ------------- ------------- ------------- ------------
<S>                                          <C>           <C>           <C>           <C>           <C>
Diputacion General de Aragon
-  Gambling tax                              2,159,920     1,783,764     3,943,684     195,737       229,170

City Council of Alfajarin:
-  Tax on business activities, property tax  176,632       -             176,632       19,623        485,793

Central tax authorities:
-  Personal income tax                       -             428,090       428,090       -             122,503
-  Value added tax

Social Security authorities                  719,684       490,985       1,210,669     -             260,427

Other                                        -             1,449         1,449         -             2,072
                                             ------------- ------------- ------------- ------------- ------------
                                             3,056,236     2,704,288     5,760,524     215,360       1,099,965
-------------------------------------------- ------------- ------------- ------------- ------------- ------------
</TABLE>


<PAGE>

                                      -10-



<TABLE>
<CAPTION>

--------------------------------------------------------------------------------------------------------------
                                                       Thousands of Pesetas
                                                      --------------------------------------------------------
                                                       Long term                           Short term
                                                      --------------------------------------------------------
                                                       Temporary                           Temporary
                                                       receivership   Other      Total     receivership  Other
--------------------------------------------------------------------------------------------------------------
<S>                                                     <C>         <C>         <C>         <C>         <C>

Diputacion General de Aragon

--   Gambling tax                                       357,726     295,427     653,153     32,418      37,955

City Council of Alfajarin:

--   Tax on business activities, property tax            29,254        --        29,254      3,250      80,457

Central tax authorities:

--   Personal income tax                                   --        70,900      70,900       --        20,289
--   Value added tax

Social Security authorities                             119,194      81,317     200,511       --        43,132

Other                                                      --           240         240       --           343
                                                      --------------------------------------------------------
                                                        506,174     447,884     954,058     35,668     182,176
--------------------------------------------------------------------------------------------------------------

</TABLE>

     On April 17, 1998, the Company signed a composition with creditors
     (Diputacion General de Aragon, the Social Security authorities and the City
     Council of Alfajarin) which set the terms of payment for the Casino's debts
     as of January 25, 1997, which is the date of the Company's application for
     temporary receivership (see Note 14).

     In 1998 and 1999 Diputacion General de Aragon granted the Company a
     deferral of Ptas. 295.4 million (US$ 1.784 million) in taxes on game
     winnings accruing during 1997, 1998 and 1999. These taxes will begin to
     fall due between 2001 and 2006.

     Likewise, in April 1999 the Casino reached an agreement with the Social
     Security authorities to defer payment of debts affected by the temporary
     receivership and the debts generated in 1997 and in the first quarter of
     1998, with a combined total of Ptas. 200.5 million (US$ 1.211 million),
     maturing between 2002 and 2009.

     Corporate income tax is calculated on the basis of book income, which is
     determined in accordance with generally accepted accounting principles.
     Such income need not be equal to the income for tax purposes, i.e. the
     corporate income tax base.

     The reconciliation of 1999 results per books to the corporate income tax
     base is as follows:


<PAGE>

                                      -11-

<TABLE>
<CAPTION>

-----------------------------------------------------------------------
                                                U.S.        Thousand
                                              Dollars       of Pesetas
-----------------------------------------------------------------------
<S>                                          <C>           <C>
Results per books (loss) (after tax)         (1,859,955)   (290,538)
Permanent differences                             6,683       1,107
-----------------------------------------------------------------------
TAX BASE                                     (1,853,272)   (289,431)
-----------------------------------------------------------------------

</TABLE>


     The tax loss carryforwards and maximum terms (under Spanish tax
     legislation) allowed for offset are as follows:

-----------------------------------------------------------------------
                            U.S.      Thousands        Last year for
        Year              Dollars     of Pesetas          offset
-----------------------------------------------------------------------
        1992              360,899        56,375           2002
        1993              305,883        47,781           2003
        1994            1,534,579       239,712           2004
        1995            1,726,504       269,692           2005
        1996            1,060,068       165,590           2006
        1997            3,162,137       493,948           2007
        1998            2,488,781       388,765           2008
        1999            2,008,815       313,791           2009
-----------------------------------------------------------------------
                       12,647,666     1,975,654
                      --------------------------

     Under current legislation, losses incurred in a given year can be offset
     against taxable income in the following ten years. However, the ultimate
     amount to carry forward may depend on the outcome of a tax inspection of
     the years in which losses were incurred. The accompanying balance sheet
     does not reflect the possible impact of offsetting such tax losses. The
     last four years are open for review of all applicable taxes by the tax
     authorities.

(9)  COMMITMENTS AND CONTINGENCIES

     The main legal disputes in which the Casino is involved are set out below:

     -  Complaint filed on March 9, 1998 by the Casino against HERALDO DE ARAGON
        (a newspaper) in Court of First Instance no. 11 of Zaragoza, for
        infringement and violation of the right to honor, claiming Ptas. 1,456
        million (US$ 8.79 million) in damages. The case is currently at the
        discovery stage. No amounts have been recorded in respect of this gain
        contingency.

     -  An appeal for reversal filed by the Casino against the Superior Court of
        Justice of Aragon in November 1998 against a judgement handed down by
        Labor Court no.

<PAGE>

                                      -12-


        1 of Zaragoza in October 1998 sentencing the Casino to compensate an
        ex-employee. In 1998 the Casino booked Ptas. 10.4 million (US$ 0.06
        million) for the compensation in question in case it is finally
        sentenced to pay the ex-employee. On November 8, 1999, the Supreme Court
        discharged Casino de Zaragoza, S.A. from its payment obligations
        relating to back pays amounting to Ptas. 4.2 million (US$ 0.03 million).

     -  The Group's parent company has yet to sign the collective agreement with
        the workers for the years 1994 through 1999, inclusive, and this matter
        must be arranged with the Works' Committee. In addition, the last
        collective agreement signed by the Company provided for the payment of
        retirement bonuses to employees who retire before age 65. The balance
        sheet as of December 31, 1999 does not include any provision for the
        liabilities that could result from pay raises, the aforementioned
        retirement bonus or any other item that could come to light once the
        collective agreements have been settled.

     -  As a result of the different interpretations to which ruling tax
        legislation lends itself and the Company's tax treatment of certain
        transactions, tax contingencies that cannot be objectively quantified
        could arise in respect of the years still open to inspection.

     -  Net worth as per the accompanying balance sheet as of December 31, 1999
        is negative by Ptas. 1,063 million (US$ 6.3 million). This situation
        constitutes a cause for compulsory dissolution unless capital is
        increased or decreased accordingly, pursuant to the Revised Spanish
        Corporations Law, and it raises substantial doubt about its ability to
        continue as a going concern.

        In addition, as indicated in Note 14, in the first few months of 1998
        the Company signed a composition with creditors in connection with the
        application for temporary receivership that Casino de Zaragoza, S.A.
        filed in January 1997. Note 13 indicates the sums and terms agreed for
        the partial acquittance and deferral with the Company's creditors. In
        April 1998, the majority of the Company's capital stock was acquired by
        a new shareholder who plans to undertake a process of recapitalization
        and to relocate the Company's premises in order to boost the Company's
        operations and increase earnings. On February 1, 2000, in accordance
        with the terms of the letter of intent signed as of that date between
        the Aragon Provincial Council and the new shareholder, the Aragon
        Provincial Council passed the Gaming Bill, which will enable the Company
        to relocate its premises to the center of the city of Zaragoza. The
        aforesaid Bill is currently at the stage of being considered at the
        Aragon Parliament.


<PAGE>

                                      -13-


        The accompanying financial statements as of December 31, 1999 were
        prepared on a going concern basis, although, considering the above
        circumstances, the Company's ability to continue as a going concern is
        dependent on the success of its future operations and on the continued
        support of its shareholders so as to enable it to realize its assets and
        settle its liabilities for the amounts and according to the
        classification in the financial statements referred to above, which have
        been prepared assuming that the Company will continue as a going
        concern. The financial statements do not include any adjustments that
        might result from the outcome of this uncertainty.

(10) MINORITY INTERESTS

     This caption reflects the value of minority shareholdings in fully
     consolidated companies. Furthermore, the balance in the accompanying
     statement of consolidated income represents the minority shareholders'
     equity in results.


     The entire balance of this caption of the balance sheet relates to minority
     shareholdings in the equity of Los Albares, S.A.

(11) CAPITAL STOCK

     As of December 31, 1999 the Company's capital stock consisted of 2,500
     fully subscribed and paid registered shares of Ptas. 100,000 (US$ 604) par
     value each.

     On November 18, 1999 the resolutions adopted by the Company's Annual and
     Special Shareholders' Meeting held on July 21, 1998 were recorded in a
     public deed. At that meeting, it was agreed that the Company's capital
     stock be reduced from Ptas. 250 million (US$ 1.760 million) to zero in
     order to offset losses through the redemption of the 2,500 registered
     shares representing the Company's capital for Ptas. 250 million by means of
     cash contributions and to increase it by Ptas. 250 million (US$ 1.509
     million) by issuing 2,500 new registered shares of Ptas. 100,000 (US$ 604)
     each.

     In addition and as of the same date, the Company offset losses against
     reserves of an amount totaling Ptas. 580.8 million (US$ 3.5 million)

     The list of all shareholders by ownership percentage as of December 31,
     1999 was as follows:


<PAGE>

                                      -14-

<TABLE>

<S>                                          <C>
-------------------------------------------------------
Trans World Gaming Corp.                     99,92%
Andrew Tottenham                              0,04%
Jaime Vaca de Arrazola                        0,04%
-------------------------------------------------------

</TABLE>


(12) EXTRAORDINARY ITEMS

     The composition of Extraordinary items as of December 31, 1999 is as
     follows:

------------------------------------------------------------------------------
                                                   U.S. Dollars   Thousands
                                                                  of Pesetas
------------------------------------------------------------------------------
Parent company charges for expenses                    458,539        71,627
Other                                                   57,712         9,015
                                                       -----------------------
                                                       516,251        80,642
------------------------------------------------------------------------------

(13) SEGMENT DISCLOSURES

     SFAS 131 requires disclosures of segment information provided that it is
     used internally for evaluating segment performance and deciding how to
     allocate resources to segments.

     A breakdown of net sales for ordinary Group operations, by activity, is
     provided below:

<TABLE>
<CAPTION>

---------------------------------------------------------------
                                     U.S. Dollars   Thousands
                                                    of Pesetas
---------------------------------------------------------------
<S>                                    <C>             <C>
Games                                  3,579,475       559,139
Rooms                                    164,532        25,701
Restaurant                                56,675         8,853
Beverages                                 73,953        11,552
Other                                      2,170           339
---------------------------------------------------------------
                                       3,876,805       605,584
---------------------------------------------------------------

</TABLE>


     All of the Group's activities are carried out within Spain.

     As of December 31, 1999, no customer represents more than 10% of net sales.


<PAGE>

                                      -15-


(14) TEMPORARY RECEIVERSHIP

     On January 25, 1997, the directors of the Company filed an application in
     Court of First Instance number 11 of Zaragoza to declare Casino de
     Zaragoza, S.A. in temporary receivership, which was granted on June 23,
     1997.

     On April 17, 1998, the secondary creditors listed as such in the list of
     creditors approved by the court and the preferred creditors who attended
     the Meeting of Creditors voted for the proposed composition, in which
     Casino de Zaragoza, S.A. agreed to make the following payments:

<TABLE>
<CAPTION>

-------------------------------------------------------------------------------
                                                    Thousands
                                                    of Pesetas    US Dollars
-------------------------------------------------------------------------------
<S>                                                    <C>           <C>
Social Security authorities (Note 8)                   119,194       719,684

Partial acquittance of 35.75% of the credits of
  the rest of the creditors of the composition         206,529     1,247,005

Repayment schedule for the remaining 64.25%
 of the credits of the rest of the
 creditors of the composition:
    Year 1                                                   -             -
    Year 2                                              39,518       238,606
    Year 3                                              36,840       222,437
    Year 4                                              36,840       222,437
    Year 5                                              36,840       222,437
    Year 6                                             110,520       667,311
    Year 7                                             110,520       667,311
-------------------------------------------------------------------------------
TOTAL CREDIT OF THE CREDITORS WHO SIGNED THE
  COMPOSITION                                          696,801     4,207,228
-------------------------------------------------------------------------------

</TABLE>


     If the Casino does not make its payments according to the schedule, the
     debt would go back to pre-composition levels.

     In addition, there are Ptas 102.7 million (US$ 0.62 million) due to other
     privileged creditors that are subject to the same payment and acquittance
     conditions conditions as described for the rest of the creditors in the
     composition.


<PAGE>


                    CASINO DE ZARAGOZA, S.A. AND SUBSIDIARIES

                        STATEMENT OF SHAREHOLDERS' EQUITY

                             AS OF DECEMBER 31, 1999


<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------------
                                                                                      US Dollars
-------------------------------------------------------------------------------------------------------------------------------
                                                                                                 Accumulated
                                               Subscribed                                        Other
                                               Capital          Accumulated      Income          Comprehensive   Comprehensive
                                               Stock            Losses           for the year    Income          Income
-------------------------------------------------------------------------------------------------------------------------------
<S>                                            <C>              <C>              <C>             <C>             <C>
OPENING BALANCE AS OF DECEMBER 31, 1998        1,760,935        (9,413,115)      564,831         23,075          -
-------------------------------------------------------------------------------------------------------------------------------
Transfer to accumulated losses                 -                564,831          (564,831)       -               -
Capital reduction charged against reserves     (1,760,935)      1,760,935        -               -               -
Capital increase                               1,509,479        -                -               -               -
Translation adjustment                         -                -                -               1,114,466       1,114,466
Income (loss) for the year                     -                -                (1,859,955)     -               (1,859,955)
Other                                          -                -                -               29,839          29,839
-------------------------------------------------------------------------------------------------------------------------------
CLOSING BALANCE AS OF DECEMBER 31,  1999       1,509,479        (7,087,349)      (1,859,955)     1,167,380       (715,650)
-------------------------------------------------------------------------------------------------------------------------------

</TABLE>


<TABLE>
<CAPTION>

---------------------------------------------------------------------------------------------
                                                   Thousands of Pesetas
---------------------------------------------------------------------------------------------
                                                   Subscribed                      Income
                                                   Capital         Accumulated     for the
                                                   Stock           Losses          Year
---------------------------------------------------------------------------------------------

<S>                                                <C>             <C>             <C>
OPENING BALANCE AS OF DECEMBER 31, 1998            250,000         (1,336,380)     83,465
---------------------------------------------------------------------------------------------

Transfer to accumulated losses                     -               83,465          (83,465)
Capital reduction charged against reserves         (250,000)       250,000         -
Capital increase                                   250,000         -               -
Income (loss) for the year                         -               -               (290,538)
Other                                              -               4,942           -
---------------------------------------------------------------------------------------------
CLOSING BALANCE AS OF DECEMBER 31,  1999           250,000         (997,973)       (290,538)
---------------------------------------------------------------------------------------------

</TABLE>

<PAGE>


                    CASINO DE ZARAGOZA, S.A. AND SUBSIDIARIES

               CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 1999


<TABLE>
<CAPTION>
                                                                         U.S.         Thousands
                                      ASSETS                            Dollars       of Pesetas
                                                                       ----------------------------

<S>                                                                         <C>             <C>
   CURRENT ASSETS
   Cash and cash equivalents                                                165,457         27,403
   Short-Term  financial investments                                         65,560         10,858
   Due from affiliates (within TWG Group)                                     3,743            620
   Accounts receivable (Note 4)                                              22,480          3,723
   Inventories                                                               13,803          2,286
   Prepaid expenses and other receivables                                     5,585            925
                                                                       ----------------------------
   Total Current Assets                                                     276,628         45,815
                                                                       ----------------------------

   NON-CURRENT ASSETS
   Intangible assets, net (Note 5)                                            3,339            553
   Gross tangible assets (Note 6)                                           395,260         65,463
   Due from affiliates (within TWG Group) (Note 7)                          900,000        149,058
   Other long-term                                                           60,862         10,080
                                                                       ----------------------------
   Total Non-Current Assets                                               1,359,461        225,154
                                                                       ----------------------------

                                   TOTAL ASSETS                           1,636,089        270,969
                                                                       ============================


                                                                         U.S.         Thousands
                       LIABILITIES AND STOCKHOLDERS' EQUITY             Dollars       of Pesetas
                                                                       ----------------------------

   CURRENT LIABILITIES
   Accounts payable, trade                                                  190,195         31,500
   Accounts payable, affiliates (within TWG Group) (Note 7)                 184,603         30,574
   Taxes (Note 8)                                                         1,315,325        217,844
   Other current liabilities                                                135,539         22,448
                                                                       ----------------------------
   Total Current Liabilities                                              1,825,662        302,366
                                                                       ----------------------------

   NON-CURRENT LIABILITIES
   Taxes (Notes 8 and 14)                                                 5,760,524        954,058
   Long-term debt                                                           110,349         18,276
                                                                       ----------------------------
   Total Long-Term Debt                                                   5,870,873        972,334
                                                                       ----------------------------

   COMMITMENTS AND CONTINGENCIES (Note 9)                                   135,877         22,504
                                                                       ----------------------------

   MINORITY  INTERESTS (Note 10)                                             74,121         12,276
                                                                       ----------------------------

   SHAREHOLDERS' EQUITY
   Common Shares (Note 11)                                                1,509,480        250,000
   Accumulated losses                                                    (7,087,349)      (997,973)
   Accumulative translation adjustment                                    1,167,380       -
   Profit/Loss                                                           (1,859,955)      (290,538)
                                                                       ----------------------------
   Total Shareholders' Equity                                            (6,270,444)    (1,038,511)
                                                                       ----------------------------

                    TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY            1,636,089        270,969
                                                                       ============================

</TABLE>


The accompanying notes are an integral part of the consolidated financial
statements


<PAGE>


                    CASINO DE ZARAGOZA, S.A. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENT OF OPERATIONS

                             AS OF DECEMBER 31, 1999


<TABLE>
<CAPTION>
                                                                          U.S.           Thousands
                                                                         Dollars         of Pesetas
                                                                        -------------------------------

<S>                                                                         <C>                <C>
   REVENUES (Note 1)
   Gaming                                                                   3,579,475          559,139
   Other revenues                                                             297,330           46,445
                                                                        -------------------------------
                                                                            3,876,805          605,584
                                                                        -------------------------------

   COSTS AND EXPENSES
   Operating departments (Note 1)                                          (3,304,347)        (516,162)
   Selling, general and administrative (Note 7)                            (1,753,897)        (273,971)
   Depreciation and amortization                                              (78,210)         (12,217)
                                                                        -------------------------------
                                                                           (5,136,454)        (802,350)
                                                                        -------------------------------

   LOSS FROM OPERATIONS                                                    (1,259,649)        (196,766)
                                                                        -------------------------------

   OTHER INCOME (EXPENSE)
   Interest expenses                                                         (161,273)         (25,192)
   Interest income                                                              5,397              843
   Other, net                                                                  71,745           11,207
                                                                        -------------------------------
                                                                              (84,131)         (13,142)
                                                                        -------------------------------

   INCOME TAXES                                                             -                -

   NET LOSS BEFORE EXTRAORDINARY ITEM                                      (1,343,781)        (209,908)
                                                                        -------------------------------

   EXTRAORDINARY ITEMS, NET OF RELATED TAX EFFECT (Note 12)                  (516,251)         (80,642)
                                                                        -------------------------------

   NET INCOME                                                              (1,860,032)        (290,550)
                                                                        ===============================

   LOSS  ATTRIBUTABLE TO MINORITY INTERESTS                                     0,072               12

   INCOME ATTRIBUTABLE TO THE GROUP                                        (1,859,955)        (290,538)



   LOSS PER SHARE BEFORE EXTRAORDINARY ITEM                                   (537.51)          (83.96)
   EXTRAORDINARY LOSS PER SHARE                                               (206.52)          (32.26)
   LOSS PER SHARE (WEIGHTED AVERAGE SHARES: 2,500)                            (744.01)         (116.22)

</TABLE>


The accompanying notes are an integral part of the consolidated financial
statements


<PAGE>


                    CASINO DE ZARAGOZA, S.A. AND SUBSIDIARIES

          CONSOLIDATED STATEMENT OF CASH FLOWS AS OF DECEMBER 31, 1999

<TABLE>
<CAPTION>
                                                                                                       U.S.          Thousands
                                                                                                     Dollars         of Pesetas
                                                                                                   --------------------------------
<S>                                                                                                 <C>                <C>
CASH FLOW FROM OPERATING ACTIVITIES
Net income (loss) before extraordinary items                                                        (1,343,781)        (209,908)
Adjustments to reconcile net income to net cash provided by (used in) operating activitie:
Provision for allowance for doubtful accounts                                                          (22,124)          (3,456)
Depreciation and amortization                                                                           78,210           12,217
Unrealized net depreciation (appreciation) on investments                                              -                -
(Gain) loss from investments in affiliates                                                             -                -
Deferred income taxes                                                                                  -                -
Minority interest                                                                                           72               12
Changes in operating assets and liabilities:
(Increase) decrease in investments                                                                    (858,097)        (142,118)
(Increase) decrease in account receivable                                                              153,858           25,482
(Increase) decrease in account receivable, affiliates                                                      350               58
(Increase) decrease in inventories                                                                     (13,803)          (2,286)
(Increase) decrease in other current assets                                                              1,183              196
(Increase) decrease in other assets                                                                     58,562            9,699
Increase (decrease) in account payable                                                                  (5,042)            (835)
Increase (decrease) in account payable affiliates                                                     (136,034)         (22,530)
Increase (decrease) in accrued expenses and other current liabilities                                  484,682           80,273
Increase (decrease) in other long terms liabilities                                                    649,777          107,616

                                                                                                --------------------------------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES                                                   (952,186)        (145,580)
                                                                                                --------------------------------

CASH FLOW FROM OPERATING ACTIVITIES
Payment for purchase of fixed assets                                                                  (188,993)         (31,301)
Proceeds form sale of fixed assets                                                                     -                -
Payment for purchase of intangible assets                                                               (3,369)            (558)
Payment for purchase of investments                                                                    -                -

                                                                                                --------------------------------
NET CASH PROVIDED BY (USED IN) INVESTING  ACTIVITIES                                                  (192,362)         (31,859)
                                                                                                --------------------------------

CASH FLOW FROM FINANCIAL ACTIVITIES
Proceeds from long-term debt                                                                           -                -
Principal repayment of long-term debt                                                                  -                -
Proceeds from short-term debt                                                                          -                -
Principal repayment of short-term debt                                                                 -                -
Proceeds from issuance of common stock                                                               1,509,479          250,000
Proceeds from issuance of preferred stock                                                              -                -
Capital contributions (withdrawals), net                                                               -                -
Minority interest                                                                                       74,121           12,276

                                                                                                --------------------------------
NET CASH PROVIDED BY (USED IN) FINANCIAL  ACTIVITIES                                                 1,583,600          262,276
                                                                                                --------------------------------

CASH FLOW FROM EXTRAORDINARY ACTIVITIES
(Increase) decrease in extraordinary items                                                            (486,910)         (80,642)

                                                                                                --------------------------------
NET CASH PROVIDED BY (USED IN) EXTRAORDINARY  ACTIVITIES                                              (486,910)         (80,642)
                                                                                                --------------------------------

TRANSLATION ADJUSTMENT                                                                                  73,186
                                                                                                --------------------------------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                                    25,329            4,195

CASH AND CASH EQUIVALENTS
Beginning of the year                                                                                  140,128           23,208
                                                                                                --------------------------------
End of the year                                                                                        165,457           27,403
                                                                                                ================================

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year for:
Interest                                                                                             -                -
Income taxes                                                                                         -                -
                                                                                                ================================
                                                                                                     -                -
                                                                                                ================================

SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES
Property and equipment recorded pursuant to obligations under capital leases                         -                -
Other (please explain).                                                                              -                -
                                                                                                ================================
                                                                                                     -                -
                                                                                                ================================

</TABLE>