FORM 10-KSB
                U.S. SECURITIES AND EXCHANGE COMMISSION
                          Washington, DC 20549

     [X]  ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
                          EXCHANGE ACT OF 1934

                For Fiscal Year Ended  December 31, 1997


                    Commission File Number: 0-24058

                      WESTERN COUNTRY CLUBS, INC.
         (Exact name of registrant as specified in its charter)

            Colorado                              84-1131343
(State or other jurisdiction of        (IRS Employer Identification No.)
incorporation or organization)

                    1601 N.W. Expressway, Suite 1610
                     Oklahoma City, Oklahoma  73118
          (Address of principal executive offices)  (Zip Code)

Registrant's telephone number, including area code:    (405) 848-0996

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

Securities registered pursuant to
Section 12(g) of the Act:               Common Stock, $.01 par value

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

Check if there is no disclosure of delinquent filers pursuant to Item 405
of Regulation S-B 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.  [  ]

Revenues of registrant for year ended December 31, 1997:        $7,116,777

Aggregate market value of voting stock held by
non-affiliates as of March 26, 1998                             $2,366,193

Shares of Common Stock, $.01 par value, outstanding
as of March 26, 1998:                                            3,634,721

                  DOCUMENTS INCORPORATED BY REFERENCE

The Company's definitive proxy statement in connection with the Annual
Meeting of Shareholders to be filed with the Commission pursuant to
Regulation 14A, is incorporated by reference into Part III of this report.

<PAGE>

                      WESTERN COUNTRY CLUBS, INC.

                     1997 Form 10-KSB Annual Report

                           Table of Contents

       Item

                                 Part I

        Special Note Regarding Forward Looking Statements

    1.  Description of Business

    2.  Description of Properties

    3.  Legal Proceedings

    4. Submission of Matters to a Vote of Security Holders

                                Part II

    5.  Market for Common Equity and Related Stockholder Matters

    6.  Management's Discussion and Analysis

    7. 	Financial Statements and Supplementary Data

    8. 	Changes In and Disagreements With Accountants on Accounting and
        Financial Disclosure

                                Part III

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

    10. Executive Compensation

    11.	Security Ownership of Certain Beneficial Owners and Management.

    12. Certain Relationships and Related Transactions

    13. Exhibits and Reports on Form 8-K

         Signatures

                                 PART I

Special Note Regarding Forward-Looking Statements

    Certain statements in this Form 10-KSB under "Item 1. Description of
Business", "Item 3. Legal Proceedings", "Item 6. Management's Discussion and
Analysis" and elsewhere constitute "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995 (the "Reform
Act").  Such forward-looking statements involve known and unknown risks,
uncertainties and other facts which may cause the actual results,
performance or achievements of Western Country Clubs, Inc. (the
"Company") and its nightclubs to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements.  Such factors include, among others, the
following: general economic and business conditions; competition;
success of operating initiatives; development and operating costs;
advertising and promotional efforts; adverse publicity; customer appeal
and loyalty; availability, locations and terms of sites for nightclub
development; changes in business strategy or development plans; quality
of management; availability, terms and development of capital; business
abilities and judgment of personnel; availability of qualified
personnel; food, labor and employee benefit costs; changes in, or the
failure to comply with government regulations; regional weather
conditions; construction schedules; and other factors referenced in the
Form 10-KSB.  The use in this Form 10-KSB of such words as "believes",
"anticipates", "expects", "intends" and similar expressions are intended
to identify forward-looking statements, but are not the exclusive means
of identifying such statements.  The success of the Company is dependent
on the efforts of the Company and its management and personnel and the
manner in which they operate and develop stores.

Item 1.  Description of Business.

General

    Western Country Clubs, Inc. (the "Company") was organized under
the laws of the State of Colorado in December 1989, but had no
operations until April 1993.  The Company completed its initial public
offering in May 1994, from which it received net proceeds of approximately
$1.9 million from the sale of 460,000 shares of Common Stock. In late 1996,
a change of control took place which resulted in the replacement of senior
management and changes in the Company's operating and growth strategies.  The
Company's prior strategies focused heavily on cost reduction as the preferred
means of improving profitability.  Such strategies resulted in lean Club-level
management and loss of experienced personnel, low levels of physical facility
maintenance and reinvestment, and reduced levels of advertising, promotion and
entertainment expense.  Current management has replaced much of the Club-level
management with more experienced personnel, instituted management training
procedures, implemented a cost management system which includes daily
unit-level accounting and reporting, improved the sound, light and video
systems, increased radio buys within the local markets, and implemented new
advertising and in-store promotions.  These changes reflect current
management's belief that long-term strategies involving greater investment
in personnel and physical facilities will produce a superior financial
performance.  See Item 6. "Management's Discussion and Analysis."

The Company

    The Company currently operates two "country-western" theme
nightclubs located in St. Louis, Missouri (the "St. Louis Club") and
Wichita, Kansas, (the "Wichita Club").  Each Club combines live
entertainment, dancing, bar and food in a country-western atmosphere.
The Wichita Club has operated as InCahoots since its inception in 1994,
and the St. Louis Club was changed to an InCahoots in 1996, having
previously operated as A Little Bit of Texas.  The Company acquired its
interest in the Wichita Club, an 80% general partner interest, in
December 1996 from a corporation affiliated with James E. Blacketer and
Joe R. Love, Directors of the Company.  During 1997, the Company sold a
nightclub located in Tucson, Arizona (the "Tucson Club"). Additionally,
the Company also operated a nightclub in Indianapolis, Indiana (the
"Indy Club") until December, 1997 when the club was closed in
anticipation of its sale in early 1998. See Item 6. "Management's
Discussion and Analysis."

    The Company intends to expand its network of Clubs, either through
acquisition of existing Clubs or by building new clubs.  Potential future
locations include Topeka, Kansas; Arlington, Texas; Dallas, Texas; and
Atlanta, Georgia.  Decisions as to potential club locations are subject to
many variables, such as management's evaluation of the market opportunities,
cost of doing business in a particular locale, and the liquor licensing
application process in a state and the prognosis for issuance of a license.
Gross revenues by Club for each of the past three fiscal years are as follows:

                                              Year Ended December 31,
     Club (1)                              1995         1996         1997
     --------------------------         ----------   ----------   ----------

     The Indy Club (2)                  $2,249,516   $1,956,448   $1,441,140
     The St. Louis Club (3)             $3,843,062   $3,360,756   $2,823,771
     The Wichita Club (4)               $2,419,755   $1,988,095   $1,947,449
     The Tucson Club (5)                $2,257,848   $1,796,549   $  726,806

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

(1) The Company is also a limited partner of Cowboys Concert Hall/Atlanta,
    Ltd, a Texas limited partnership (the "Atlanta Partnership") formed
    June 29, 1995 to own and operate a country-western nightclub in Atlanta
    under the name of "Cowboys" (the "Atlanta Club").  The general partner of
    the Atlanta Partnership is Cowboys Concert Hall/Atlanta I, Inc., a wholly
    owned subsidiary of Cowboys Concert Hall - Arlington, Inc., a Texas
    corporation ("Cowboys").  For the six month period ended December 31,
    1995, gross revenues earned by the Atlanta Club were $1,344,262.  The
    Company accounted for its interest in the Atlanta Club using the equity
    method, pursuant to which it recognized a loss of $123,676, net of income
    taxes, for the fiscal year ended December 31, 1995.  As of December 31,
    1995, the Company wrote off its investment in the Atlanta Club, resulting
    in a charge against income of $274,621 after taxes.  Cowboys placed the
    Atlanta Partnership in Chapter 11 bankruptcy in September 1996.  The
    Company sold its interest in the Atlanta Club in January, 1998. See
    "Atlanta Partnership."

(2) The Indy Club opened in April 1993. The Club ceased operations on
    December 13, 1997 in anticipation of its sale after year end under a
    contract of sale dated November 25, 1997.  See "The Indy Club."

(3) The St. Louis Club opened as a non-alcoholic establishment in April 1994,
    and began marketing alcoholic beverages in May 1994.

(4) The Wichita Club opened in February 1994. The Company acquired its
    interest in the Wichita Club in December 1996.  See "The Wichita Club."

(5) The Company purchased the Tucson Club in November 1994, and sold the
    operation in May 1997.  See "The Tucson Club."


The St. Louis Club

    The St. Louis Club is located on the I-70 corridor between St. Louis,
Missouri and Kansas City, Kansas.  The Club occupies roughly one-half of a
building which previously housed a Sam's Club wholesale warehouse operation
and is in excess of 56,000 square feet making it the largest nightclub in
Missouri.  This mammoth nightclub operates under the name InCahoots and
features a design with the look and feel of an authentic rustic western town.
The Club, with a capacity of almost 3,000, houses a huge dance floor,
performance stage, a billiards and video arcade area and several retail
stores including Sundance Silver & Hide, which sells wardrobe items,
including hats and boots, and the Homestead Store which sells Indian
artifacts, clothing and jewelry.  Sundance Silver and Hide occupies
approximately 800 square feet of the Club, for which it pays $1,200 per
month pursuant to an oral agreement with the Company.  The Homestead Store
occupies approximately 600 square feet of the Club, for which it pays $300
plus 10% of sales per month pursuant to an oral agreement with the Company.
The Club also features a walk-up restaurant selling various food items in
addition to its extensive drink offerings.  The St. Louis Club featured
numerous nationally known entertainers during the past year, including such
performers as Tracy Lawrence, Lone Star, Chris LeDoux and Blackhawk.

    The St. Louis Club opened for business as a non-alcoholic club on
April 22, 1994.  It began marketing alcoholic beverages on May 19, 1994
upon receipt of a liquor license from the Supervisor of Liquor Control
of the State of Missouri.  The customer's average expenditure, exclusive
of food and souvenirs, is approximately $11.00.

The Wichita Club

    The Wichita Club opened in February 1994, and has been voted the top
country-western club in Wichita since opening.  It consists of approximately
30,000 square feet and has parking for 900 cars.  The Wichita Club is
designed to appeal to rodeo cowboys as well as the casual country western
music lover.  It blends high tech, state-of-the-art, and "good old country
boy" entertainment.  The high tech presentation includes giant 20 foot
video screens, double CD players, a roll up lighted American flag, neon
lighting and the capability to include a live band's sound throughout
the house speaker system.  A comfortable ambiance is achieved through rustic
wooden floors, old west photographs, antique back bars, and a huge,
hand-painted mural of past and present Country and Western
entertainers.  The showcase of the Club is the circular, race track
style dance floor, complete with a bar in the center allowing for more
dancing room.

    The Company acquired its interest in the Wichita Club on December 16,
1996, when it acquired Entertainment Wichita, Inc. ("EWI"), the general
partner and 80% owner of InCahoots, Limited Partnership, a Kansas limited
partnership. In exchange for the 80% interest, the Company issued 400,000
shares of its Common Stock and assumed $150,000 in debt through a merger
transaction.  EWI was owned 45.5% by Shane Investments, L.C. ("Shane
Investments"), a corporation which is solely owned and controlled by Joe
Robert Love, Jr., the adult son of Joe R. Love, a Director of the Company.
Shane Investments received 250,500 shares of the Company's Common Stock
upon completion of the transaction in December 1996.


The Tucson Club

    In November 1994, the Company purchased the Wild Wild West nightclub from
Wild Wild West, Inc. and Buckaroos, Inc. for $1,000,000 in cash and $700,000
in notes payable to certain individuals in consideration of covenants not to
compete through October 31, 1997.  The Tucson Club was remodeled to the
A Little Bit of Texas format and operated under that name until November 1996,
when the Club was again remodeled and its name was changed to Stampede.
Revenues at the Tucson Club steadily declined and the Club was not profitable.
As a result, the Company concluded that the Tucson Club's assets were
completely impaired at the end of 1996 and booked an impairment write off
in the amount of approximately $1.7 million.  Subsequently, the Company sold
the Club's assets and settled the leasehold obligations, which resulted in a
net gain of $210,645 during 1997. See Item 6. "Management's Discussion and
Analysis."


The Indy Club

    The Indy Club, founded in 1993, was the Company's first nightclub. The
Company was a General Partner with an 80% ownership interest.  While initially
profitable, declining sales led new management in 1997 to conclude that the
location and market were not favorable to future profitability.  In November
1997, the Company entered into a contract to sell the Indy Club's assets to a
company controlled by the former president and former largest shareholder of
the Company, Troy H. Lowrie.  The agreement, which provided that Lowrie's
company would pay a total of $1.15 million for the Club and its assets by
assuming approximately $550,000 in mortgages and taxes on the property and by
executing a note payable to the Company for $600,000, said note secured by
approximately 738,000 shares of the Company's common stock, was consummated in
February 1998.  In anticipation of completion of this agreement in 1998, the
Company recognized a reserve of $250,272 as of December 31, 1997, as the
anticipated loss to be recognized on completion of the transaction.  See Item
6. "Management's Discussion and Analysis."

Entertainment

    The Company seeks to book nationally known entertainers as well as
regionally-known entertainers and/or bands which do not yet have national
recognition.  National name entertainers such as Brian White, Tracy Lawrence
and Blackhawk have performed at one or more of the Company's Clubs during
the last year and the Company currently has Jerry Lee Lewis booked for
engagements in 1998. The Company utilizes these performers to enhance its
customer traffic and revenues in what would otherwise be less busy time
periods in the nightclub business.  Typically, the Company charges admission
fees which approximate the fee payable to the performers and realizes the
benefit from the increased sales which are generated due to the large numbers
of customers in attendance.


Expansion Strategy

    The Company intends to grow primarily in two ways:  (i) an increase in
the number of country-western nightclubs it owns and operates, and (ii) the
acquisition and development of one or multiple restaurant concepts.
Additional nightclubs and/or restaurant operations may be financed through
the formation of limited partnerships, internal funding, bank financing or
private and/or public equity offerings, or a combination of the foregoing.
The Company may also purchase existing operations through transactions
involving the issuance of the Company's stock and/or cash.  Future nightclub
locations under consideration by the Company include Topeka, Kansas,
Arlington, Texas, Dallas, Texas and Atlanta, Georgia.  The Company is
currently pursuing the acquisition of a restaurant group based in Houston,
Texas.  See Item 6. "Management's Discussion and Analysis."


Atlanta Partnership

    The Company was previously a limited partner in a partnership formed in
1995 to own and operate a club in Atlanta.  The Company was forced to write
off its investment in the partnership as well as a loan made to the partner-
ship when the club had substantial losses and eventually filed for bankruptcy.
In late 1997, the Company agreed to sell its 50% limited partnership interest
to Backstage Entertainment, an affiliate of the general partner, for $220,000,
payable during 1998 and evidenced by a promissory note payable to the Company.
While the note provides for certain discounts if paid early, there is no
certainty that such early payoff will occur.  Backstage is current in its
payments on said note.  The Company expects to recognize a gain in the amount
of $220,000 on the sale of this partnership interest in the first quarter of
1998.

Government Regulation

    The Company's business is subject to extensive federal, state and local
government regulations, including regulations relating to alcoholic beverage
control, public health and safety, zoning and fire codes.  In addition, each
nightclub restaurant must have food service licenses from local health
authorities.

    Alcoholic beverage control regulations require each of the nightclubs
to apply to a state authority, and, in certain locations, county or municipal
authorities for a license or permit to sell alcoholic beverages
on the premises and to provide service for extended hours and on Sundays.
Alcoholic beverage control regulations relate to numerous aspects of the
daily operation including advertising, wholesale purchasing, inventory
control and handling, storage and dispensing of alcoholic beverages.
Licenses to sell alcoholic beverages must be renewed annually and are subject
to suspension or revocation for cause, including violation by the Company
or its employees of any law or regulation pertaining to alcoholic
beverage control, such as those regulating the minimum age of patrons or
employees, advertising, wholesale purchasing, and inventory control,
handling and storage.  Each nightclub is operated in accordance with
stringent procedures designed to assure compliance with all applicable
codes and regulations.

    In recent years, certain states have enacted "dram-shop" statutes, which
generally provide a person injured by an intoxicated person the right to
recover damages from an establishment which wrongfully served alcoholic
beverages to such person.  Presently, Missouri and Kansas, the states in
which the Company operates, do not have dram-shop statutes.  However, should
these states enact such statutes, the Company would be subject to additional
exposure in such cases where judgments for damages exceeded its insurance
coverage.

    The development and construction of additional nightclubs will be
subject to compliance with applicable zoning, land use and environmental
regulations.  Management believes that federal and state environmental
regulations have not had a material effect on the Company's operations,
but more stringent and varied requirements of local governmental bodies
with respect to zoning, land use and environmental factors could delay
construction of new nightclubs and add to their cost.

    The Company is also subject to the Fair Labor Standards Act, the
Immigration Reform and Control Act of 1986 and various state laws governing
such matters as minimum wages, overtime, tip credits and other working
conditions.  A significant number of the Company's hourly personnel are paid
at rates relating to the federal minimum wage and, accordingly, increases in
the minimum wage or decrease in the allowable tip credit will increase the
Company's labor cost.  The Company may also incur labor cost increases
as a result of certain mandatory medical and parental leave benefits
legislation enacted by the United States Congress.

    The Americans With Disabilities Act prohibits discrimination in
employment and public accommodations, such as restaurants and nightclubs, on
the basis of disability.  Under the Act, the Company is required to provide
service to, or make usable accommodations for the employment and service of,
disabled persons.


Competition

    The nightclub business is highly competitive.  Most of the companies
which own and/or operate nightclubs are substantially larger than the Company,
and have greater resources, operating histories and experience.  They include
many national, regional and local chains with more locations and larger
advertising budgets.  Nightclub and theme entertainment businesses are also
affected by changing customer tastes, local and national economic conditions
affecting spending habits, population shifts and traffic patterns.  Quality
of service, attractiveness of facilities, popularity of entertainment and
price are also important factors.

    The popularity of the concept of "country-western" nightclubs has spawned
a number of companies and nightclubs seeking to capitalize on that phenomenon.
The Company seeks to identify markets which have a favorable competitive
environment such that the Company's club can be the major operation of its
type in the area and benefit from its competitive position as such.


Trademarks

    The Company uses the trademark InCahoots in the operation of its business.
This mark is used by others in the operation of businesses throughout the
country, including other nightclub operators.  Because of these uses, the
Company believes that it cannot, nor can its competitors, register the mark
with the United States Patent and Trademark office to obtain exclusive,
nationwide rights to the mark.  The Company believes, however, that it has
enforceable common law rights to its mark for use in the immediate trade
areas in which the Clubs operate, and it has encountered no claims of
trademark infringement.  As the Company expands, it may encounter claims of
trademark infringement requiring the Company to negotiate license agreements
with the prior user or to use other non-infringing trademarks for nightclubs
in the affected areas.

    The Company also believes that, in the food service industry, its service
marks and "look" ("trade dress"), as well as its advertising and promotional
design and artwork, can be adequately protected by common law, and that it
has enforceable rights to this proprietary information.


Employees and Consultants

    The Company presently has three full time employees in the corporate
office, including James E. Blacketer, President and a Director of the
Company, and Dominic W. Grimmett, Vice President of Operations.  The Company
has approximately 120 employees in the Clubs.

Year 2000 Compliance

   The Company has and will continue to make certain investments in
software systems and applications to ensure it is year 2000 compliant.  The
financial impact to the Company to ensure year 2000 compliance has not been
and is not anticipated to be material to its financial position or results
of operations.

Item 2.  Description of Properties

    The Company's principal offices are located at 1601 N. W. Expressway,
Suite 1610,  Oklahoma City, Oklahoma, 73118.  The Company's offices occupy
approximately 2,460 square feet, for which it pays $3,075 per month pursuant
to a lease which expires in June 2001.  The Company subleases a portion of
this space to a non-affiliated company on a monthly basis for which it
receives a total monthly fee of $1,076.

    In August, 1993, the Company entered into a lease for nightclub space in
St. Louis, Missouri.  The lease, which expires in August 2003, is for a
10 acre parcel of land housing a 106,744 square foot building and parking
facilities.  The rental for the first five years is $22,238 per month,
escalating to $26,686 per month for the second five years.  The Company has
the right to extend the lease for two additional five year periods at
increased rental rates.  The lease is guaranteed by International
Entertainment Consultants, Inc., a company affiliated with Mr. Lowrie.  The
Company subleases approximately 50,000 feet of this facility for which it
receives $14,000 per month under a two year sublease which expires in August,
1999.

    The Wichita Club is leased from Boots, Inc., a 20% limited partner in the
InCahoots Limited Partnership but otherwise unaffiliated with the Company.
The lease is for a ten-year term, expiring in the year 2003, with an option
to extend the term for two, five-year periods, and requires monthly
payments of the greater of $12,500 or 6% of gross sales.

    The Indy Club, which was under contract of sale at December 31, 1997,
occupies a 34,306 square foot building adjacent to approximately 3.4 acres
of land used for parking by the Indy Club's customers.  On January 31, 1994,
WCC I, Ltd. exercised an option to purchase the building for $750,000.
WCC I, Ltd. borrowed $600,000 at prime plus 3% from the Dulaney National Bank
and the seller financed the remaining $150,000 at 10% interest.  Monthly
payments of $3,187 and $7,546 were payable to the seller and to the
Dulaney National Bank, respectively.  Troy H. Lowrie personally
guaranteed repayment of the note to the seller.  The note to the Dulaney
National Bank was secured by the building and the furniture, equipment
and fixtures therein, and by rental payments from the tenants of the
Indy Club.  WCC I, Ltd. also owned the 3.4 acres of parking adjacent to
the building.  It purchased the adjacent land for $105,000 on February
24, 1993.  A Little Bit of Texas, Ltd. assumed the mortgages on the Indy
Club at the time of its purchase of the facility on February 6, 1998.
See Item 6. "Management's Discussion and Analysis."

    On November 1, 1994, in connection with its acquisition of the
Tucson Club, the Company took an assignment of the lease covering the
Club's building and entered into a lease with the sellers for the
parking lot.  The building lease was to terminate in February 2001, and
required monthly rental payments of $22,145, which were to escalate to
approximately $24,200 over the term of the lease.  The lease on the
parking lot was for a four year term, expiring on October 31, 1998, and
required monthly rental payments of $3,000.  These lease obligations
were terminated under a settlement agreement dated September 19, 1997.
See Item 6. "Management's Discussion and Analysis."

    The Company carries general liability insurance for the St. Louis Club
in the amount of $2,000,000 and $850,000 in property liability coverage.
InCahoots Limited Partnership, owner of the Wichita Club, carries $2,000,000
general liability insurance and building and property insurance coverage in
the amount of $1,200,000 and $450,000, respectively.

    The Company had general liability insurance for the Tucson Club in the
amount of $2,000,000 and property insurance coverage in the amount of
$700,000.  WCC I, Ltd. carried general liability insurance in the amount of
$2,000,000 for the Indy Club, and building and property insurance coverage
in the amount of $1,200,000 and $550,000, respectively.

    The Company maintains $1,000,000 in liquor liability insurance coverage
at each of its nightclubs, including coverage for assault and battery and
other risks associated with the nightclub business.

Item 3.  Legal Proceedings

    Special Note:  Certain statements set forth below under this caption
constitute "forward-looking statements" within the meaning of the Reform Act.
See "Special Note Regarding Forward-Looking Statements" for additional
factors relating to such statements.

    InCahoots Limited Partnership, ("InCahoots"), owner of the Wichita
Club, was a party to a lawsuit claiming negligence on the owner/operator's
part, which action resulted in a jury award in the fall of 1997 in favor of the
plaintiff in the amount of $771,000 plus court costs, expenses and interest.
Shortly thereafter, the partnership's insurance carrier won a declaratory
judgment against the partnership declaring that the carrier was not obligated
to provide coverage against the plaintiff's claims.  In February of 1998, the
Company and the partnership entered into an Agreement and Covenant Not to
Execute, whereby InCahooots agreed to pay the plaintiff $166,808 over two
years, plus 100,000 shares of the Company's common stock and 200,000 warrants
to purchase the Company's common stock in exchange for a covenent by the
plaintiff not to attempt collection of the judgment against InCahoots so long
as the agreed payments were made.  The Agreement and Covenant allow the
plaintiff to pursue collection of the judgment against the insurance carrier.
The Company recorded settlement costs of $216,808 for the year ended December
31, 1997, to reflect the impact of this Agreement.

    The Company is involved in various other legal actions associated with
the normal conduct of its business operations.  No other such actions involve
known material gain or loss contingencies not reflected in the consolidated
financial statements of the Company.

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

    During the recently completed fiscal year, the Company did not submit any
matter to a vote of its shareholders.



                                PART II

Item 5.  Market for Common Equity and Related Stockholder Matters

Market Information

    On March 26, 1998, there were approximately 80 shareholders of record of
the Company's Common Stock.  Based upon information received from brokers and
others in fiduciary capacity, the Company estimates that the total number of
shareholders of the Company's Common Stock exceeds 500 as of that date.  The
Company's Common Stock was approved for listing on the NASDAQ SmallCap
MarketSM, effective May 18, 1994, under the symbol "WCCI."  Prior to listing
on NASDAQ, the Company's Common Stock briefly traded in the pink sheets.

    The following table sets forth, for the periods indicated, the range of
high and low closing bid quotations for the Company's Common Stock, as
reported by NASDAQ:

    1996 Fiscal Year                        High Bid ($)       Low Bid ($)
    -----------------                       ------------       -----------
    First Quarter                               5.875              3.75
    Second Quarter                              5.25               3.50
    Third Quarter                               4.625              3.25
    Fourth Quarter                              4.25               2.00

    1997 Fiscal Year
    -----------------
    First Quarter                               2.25               1.375
    Second Quarter                              1.125              1.00
    Third Quarter                               1.125               .625
    Fourth Quarter                              1.0625              .50

    On December 31, 1997, the last reported bid and asked prices for the
Common Stock were $.50 and $.75, respectively.

Revised NASDAQ Listing Requirements

    Effective February 23, 1998, the NASDAQ SmallCap Market implemented
revised listing requirements for companies wishing to continue their
listing on the exchange.  These revised requirements included
provisions that listed companies maintain net tangible assets of at
least $2 million, public float of at least 500,000 shares with a market
value of at least $1 million, and a minimum bid price for the Company's
stock of $1 per share.  The Company is currently in compliance with the
revised listing requirements and believes it can stay in such compliance,
though there is no assurance that the Company will be able to continue to meet
these listing requirements in the future.

Dividends

    The Company has never declared a cash dividend with respect to its Common
Stock and intends to retain future earnings to support the Company's growth.
There are no contractual restrictions on the Company's present or future
ability to pay dividends. Future dividend policy is subject to the discretion
of the Board of Directors and is dependent upon a number of factors, including
future earnings, capital requirements and the financial condition of the
Company.


Item 6.  Management's Discussion and Analysis

    Special Note:  Certain statements set forth below under this caption
constitute "forward-looking statements" within the meaning of the Reform
Act.  See "Special Note Regarding Forward-Looking Statements" for
additional factors relating to such statements.

    The following discussion and analysis should be read in conjunction with
the Company's Consolidated Financial Statements and Notes thereto appearing
elsewhere in this Report.

General

    The Company commenced operations in April 1993 with a
country-western nightclub in Indianapolis, Indiana (the "Indy Club").
In April 1994, the Company opened a nightclub in a suburb of St. Louis,
Missouri (the "St. Louis Club"). The Company financed these Clubs
through limited partnerships in which it was the general partner.  In
May 1994, the Company completed its initial public offering of
securities receiving net proceeds of approximately $1.9 million. In
November 1994, the Company purchased a nightclub in Tucson, Arizona (the
"Tucson Club").  At this time, the Company also increased its ownership
interest in the Indy Club to 80% and acquired 100% of the St. Louis
Club.

    In June 1995, the Company participated as a 50% limited partner in
a partnership formed to acquire a nightclub in Atlanta, Georgia (the
"Atlanta Club").  The Company contributed $500 in partnership capital
and loaned an additional $638,822 to the partnership.  Due to continuing
losses, the Company wrote off its interest in the Atlanta Club effective
December 31, 1995.  On January 9, 1998, the Company sold its interest in
the Atlanta Club for $220,000. Details of the sale are described more
fully below.

    In September 1996, Troy H. Lowrie, then President and largest shareholder
of the Company, entered into a Stock Purchase Agreement whereby (i) Red
River Concepts, Inc., a Delaware corporation ("Red River"), or its
designees would acquire in three installments 1,300,000 shares of Mr.
Lowrie's Common Stock; (ii) new management assumed control of the
operations of the Company; and (iii) James E. Blacketer and Joe R. Love,
directors of Red River, were appointed to the Company's Board of
Directors.  The change of control occurred in October 1996.

    Subsequently, on December 16, 1996, new management acquired a
nightclub in Wichita, Kansas (the "Wichita Club") for 400,000 shares of
the Company's Common Stock and assumption of $150,000 in debt.  The
Wichita Club was owned in part by entities affiliated with James E.
Blacketer and Joe R. Love, directors of the Company.  See Item 12,
"Certain Relationships And Related Transactions."

    New management also undertook steps to improve the financial performance
of the Tucson Club, which was hampered by high acquisition, leasehold
and operating costs and declining revenues. During October 1996, the
Club was remodeled into two entertainment venues in order to attract new
customers and revenues, cost cutting measures were instituted, and new
unit-level management was installed. Despite these measures, based on
the Club's continuing decline in performance, high overhead and
occupancy costs, the Tucson Club's assets were deemed to be impaired and
were written off as of December 31, 1996.  The Company sold the Tucson
Club's assets in May 1997 and completed an agreement to settle the
leasehold obligations in August 1997.  Details of the sale and lease
settlement are described more fully below.

    In February 1997, the Company filed a registration statement for a public
offering of up to 460,000 shares of preferred stock and up to 1,150,000
warrants to purchase the Company's Common Stock (the "Public Offering").
The Company cleared all regulatory requirements concerning the Public
Offering but the Company's underwriter was not successful in placing the
preferred shares. Therefore, costs associated with the Public Offering
which had previously been capitalized were written off at December 31,
1997.

    During the fourth quarter of 1997, the Stock Purchase Agreement between
Troy H. Lowrie and Red River Concepts, Inc. was amended whereby Mr.
Lowrie retained 430,000 of the shares which were originally to be sold
to Red River.

    On February 6, 1998, the Company sold all of the assets of the Indy Club
to A Little Bit of Texas, Ltd. ("Texas"), a company controlled by Mr. Lowrie
for $1.15 million.  Details of the sale are described more fully below.

    In February 1998, the Company signed a letter of intent to acquire certain
assets, including two Mexican restaurants, from Berryhill Hot Tamales, L.L.C.,
for shares of the Company's common stock, newly issued preferred stock, and
assumption of certain debt.  While the terms and conditions of this agreement
are currently being negotiated and due diligence is still being performed by
both parties, and while it is anticipated that a closing may occur on or before
May 1, 1998, there is no assurance that this transaction will be completed.

Liquidity and Capital Resources

    Historically, the Company has funded its capital needs through a
combination of cash flows from operations, proceeds from public and
private securities issuances, and loans from commercial banks, principal
shareholders or related persons or entities. During 1997, the Company
borrowed $30,000 from a bank, $160,000 from a third party lender, and
$278,276 from a major stockholder to help fund operations.  The Company
also received a $100,000 down payment on the sale of the Tucson Club
assets. Repayment of notes payable of $762,047 included: $505,742 repaid
to banks on short-term debt; $41,320 to Dulaney Bank, holder of the
first mortgage on the Indianapolis Club; $29,439 to Expo Bowl, holder on
the second mortgage for the Indy club; $18,756 paid on a note issued in
connection with the settlement of the Tucson Club lease obligations, and
$161,160 in payments on notes payable to related parties. The Company
also invested $13,571 in capital expenditures at its Clubs during 1997.
See "Consolidated Statement of Cash Flows."

    During the first quarter of 1998, two note holders agreed to convert
their notes amounting to $560,000 due from the Company into new issues
of preferred stock.  Specifically, Mr. Lowrie will receive 40,000 shares
of Series A 10% Cumulative Convertible Preferred Stock in exchange for
the Company's note and accrued interest of $400,000 owing at December
31, 1997.  Ceres, L.L.C., an Oklahoma limited liability company, will
exchange its $160,000 note for 16,000 shares of Series B 12% Cumulative
Convertible Preferred Stock.

    As of December 31, 1997, the Company had cash of $85,949, which was
generated from operating activities, financing activities and equity
participation.  Cash for the twelve months ended December 31, 1997
decreased $104,675 from cash of $190,624 reported at December 31, 1996.
For the year ended December 31, 1997, the Company generated a negative
$94,785 in cash flow from operations compared to a positive $827,003
cash flow from operations for the year ended December 31, 1996, or a net
decrease of $921,788.  The negative cash flow for 1997 is primarily due
to the net loss from operations of $987,376 coupled with a mostly
non-cash gain of $210,645 on the sale of the Tucson Club assets (in the
form of a note receivable), substantially offset by depreciation and
amortization of $467,121, a $250,272 non-cash impairment of assets on
the Indy Club, a $142,857 decrease in capitalized offering costs, and a
$220,899 increase in accrued expenses of which $182,500 relates to the
expected settlement of the Wichita Club lawsuit judgment.

    At December 31, 1997, the Company's working capital position (current
assets minus current liabilities) was a negative $833,348, compared with
a negative $533,633 at the end of 1996, or a decline of $299,715.
Working capital was negatively impacted most heavily by the $104,675
decrease in cash, the $142,857 write off of capitalized offering costs,
and the increase in accrued expenses of $139,783.  These amounts were
partially offset by the increase in notes and loans receivable of
$167,020. Management does not believe the negative working capital
position poses a liquidity risk or is unusual in the Company's line of
business, which is labor intensive, has significant payables and does
not have significant receivables or inventory.

    Property and equipment is primarily made up of assets required to open
and operate the  St. Louis, Wichita and Indy Clubs.  Leasehold
improvements total $1,510,529; equipment, furniture and fixtures are
$1,011,272; buildings and improvements are $1,361,335; and land and
improvements are $298,286.  On December 13, 1997, the Company closed its
Indianapolis Club due to its pending sale.  A reserve of $250,272 was
recorded at December 31, 1997 for impairment of the carrying value of
the assets based on the estimated sales proceeds of the Club.

    Goodwill decreased by $143,777 due to amortization during the
year and the write off of $75,687 at December 31, 1997 relating to the
acquisition of the Indy Club.

    The deferred income tax asset increased $83,789 to $417,410 due primarily
to the expected tax benefit from the net operating loss carryforwards
resulting from the loss on the write-off of the Tucson assets. Future
realization of this asset is dependent upon the Company generating
sufficient future taxable income against which its loss carryforward and
losses from the impairment of the Tucson assets can be offset.  The
amount of the deferred tax asset at December 31, 1997 does not include
$836,074 reserved as a deferred income tax valuation allowance, due to
the uncertainty of the Company being able to realize the benefit from
such losses in future periods. However, management expects to receive
benefit from the amount reserved in future periods.

    On February 6, 1997, the Company exchanged 114,800 shares of its common
stock for 57,400 shares and 57,400 purchase warrants of the stock of Cowboys
Concert Hall, Arlington, Inc. ("Cowboys").  The individual shareholders of
the Cowboy's stock had participated in a private placement conducted by
Cowboys in Fall 1995 to raise funds for Cowboys to pay its expenses in
connection with a proposed merger between Cowboys and the Company which did
not occur.  The Company valued the Cowboys stock and purchase warrants at
$1.00 for each share and warrant and recorded that amount as an investment
in Cowboys.

    The increase in accounts payable of $40,649 during 1997 relate to amounts
owing in connection with the terminated Public Offering.  Management intends
to settle these obligations with a combination of Company stock and payout
arrangements during 1998.  Short term liabilities increased by $11,004 due
to the increase in accounts payable and a $139,783 increase in accrued
liabilities offset in part by a decrease of $169,428 in notes payable.
Notes payable to related parties increased by $70,375 while long term
liabilities decreased by $61,718.

    The Company has and is aggressively looking toward expanding
its operations in the future.  Potential nightclub locations are being
considered in both the Midwestern and Southwestern sections of the
country. Additionally, the Company is seeking to develop one or multiple
restaurant concepts. These growth strategies will dictate the need for
and application of funding through 1998 and beyond.  Additional
nightclubs and restaurant acquisitions may be financed through the
formation of limited partnerships, internal funding, bank financing or
private and/or public equity or debt offerings, or a combination of the
foregoing.  The Company may also purchase existing clubs or restaurants
through transactions involving the issuance of the Company's Common
Stock or cash.  Until the Company's profitability is restored and debt
levels are decreased, management does not foresee commercial banks as a
significant source of capital financing.

Results of Operations - Year Ended December 31, 1997 Compared to the
Year Ended December 31, 1996

    Total revenues of the Company decreased by $550,908 or 7% during 1997,
consisting of a decline in beverage and food sales of $504,580 or 10%, a
decline in admission fees of $202,327 or 9%, a decline in other revenues
of $54,646 or 14%, offset in part by a gain on the sale of the Tucson
Club assets of $210,645.  The decline in core business of the Company is
attributable to management's reengineering of the Clubs such that
greater profit margins can be achieved at lower sales volumes due to
increased operating efficiencies and reduced expense levels coupled with
the elimination of sales in its Clubs that were sold or closed during
1997.  Of the continuing Clubs, The St. Louis Club experienced a sales
decline of $536,985 or 16% while the Wichita Club experienced a modest
sales decline of $40,646 or 2%.  At the time of its closing in December
1997, the Indy Club had experienced a sales decline of $515,308 or 26%
for 1997.  Other revenues, consisting of machine, boutique and
consignment income, declined by $54,646, mostly due to the elimination
of sales of the Company's branded merchandise at the Clubs. Management
is not overly concerned with the reduction in sales volume and believes
it has positioned its remaining Clubs to operate profitably at their
existing sales levels.

    The Indy Club was under contract of sale at December 31, 1997 and an
impairment in the carrying value of its assets in the amount of $250,272
was recorded due to the estimated loss on the sale which was expected to
close in early 1998.  Additionally, acquisition goodwill of $75,687 was
also expensed at year end in anticipation of the sale.  Due to several
amendments to the terms of the sale occurring in 1998, the Company
expects to report a gain of $47,931 on the sale of the Indy Club in the
first quarter of 1998, net of the tax effect of $8,735 and minority
interest of $14,166.

    Total costs and expenses in 1997 decreased by $1,514,687 or 15% compared
to 1996, which is primarily attributable to the additional 1996 expense
recorded on the impairment of the Tucson Club assets written off during
1996, and the 1997 reduction in general and administrative expenses of
$571,383.  The Company's cost of products and services increased by
$5,588 due to the increased costs associated with a substantial increase
in the number of live concerts offered at each of the Company's Clubs
during the first half of 1997, offset by a significant decrease in this
expense category of $649,920 for the last half of the year. Depreciation
expense decreased by $45,083 and amortization expense decreased by
$124,602 as a result of the sale of the Tucson Club in May, 1997.
General and administrative expenses decreased by $571,383 or 12%,
primarily due to termination of the excessive expenses associated with
the Tucson Club and a concentrated effort on the part of management to
control this expense category while still maintaining quality, appealing
operations.

    In September 1997, the Company terminated its agreement with an
underwriter in connection with the Public Offering.  As a result,
$374,653 in costs associated with the offering which were previously
capitalized were charged to operations.

    InCahoots was the defendant in a proceeding in Kansas District Court.
On September 23, 1997, the Court found in favor of the plaintiff and
awarded compensatory damages in the amount of $771,000, plus costs,
expenses and interest.  InCahoots' insurer was granted a motion for
summary judgment relieving it from responsibility for the damages.
During 1997, InCahoots reached tentative agreement with the plaintiff
which would limit its exposure in the matter to $216,808, and a
provision for that amount is provided for in the financial statements at
December 31, 1997.  Subsequently, on February 18, 1998, the agreement
was finalized under the same terms.

    For the year ended 1997, the Company incurred a consolidated loss of
$987,376 compared to a consolidated loss of $1,913,447 during 1996.
Although the Company's 1997 performance was a substantial improvement over
the 1996 results, management believes that the losses sustained in 1997 are
not indicative of the Company's future operating capabilities.  Several major
items which management believes were one-time occurrences substantially
contributed to 1997's losses.  These nonrecurring items include: (i) writeoffs
of previously capitalized costs in connection with the terminated Public
Offering in the amount of $374,653; (ii) settlement of the Wichita Club
judgment in the amount of $216,808; and (iii) loss on the sale of the Indy
Club in the amount of $325,959.  Management believes the success of its newly
implemented strategies (See discussion in Item 1. Description of Business)
will be reflected in positive earnings for the first quarter of 1998 and
thereafter.

Item 7.  Financial Statements and Supplementary Data

    The Company's audited financial statements, together with the report of
auditors, are included in the report after the signature page.

Item 8.  Changes In and Disagreements With Accountants on Accounting and
Financial Disclosure

    On January 30, 1997, the Company dismissed the auditing and accounting
firm of Causey, Demgen & Moore, Inc., Denver, Colorado, who have acted
as certifying accountants for the Company for the years ended December
31, 1993, 1994 and 1995, and engaged the auditing and accounting firm of
Gross, Collins + Cress, P.C., Atlanta, Georgia, to act as certifying
accountants for the years ended December 31, 1996 and 1997.  The Company
is not aware of any disagreements with the prior accountants, and the
decision to change accountants was not based upon any question as to
accounting treatment of any transaction or type of audit opinion that
might be issued.  Rather, the Company believed that the change in
accounting firms would be beneficial to the Company's planned expansion
over the next several years.


                                PART III

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

    The information required in response to this Item is incorporated
herein by reference to the Company's proxy statement to be filed with the
Securities and Exchange Commission pursuant to Regulation 14A, not later
than 120 days after the end of the fiscal year covered by this report.

Item 10. Executive Compensation

    The information required in response to this Item is incorporated herein
by reference to the Company's proxy statement to be filed with the Securities
and Exchange Commission pursuant to Regulation 14A, not later than 120 days
after the end of the fiscal year covered by this report.

Item 11. Security Ownership Of Certain Beneficial Owners And Management

    The information required in response to this Item is incorporated herein
by reference to the Company's proxy statement to be filed with the
Securities and Exchange Commission pursuant to Regulation 14A, not later
than 120 days after the end of the fiscal year covered by this report.

Item 12. Certain Relationships And Related Transactions

    The information required in response to this Item is incorporated herein
by reference to the Company's proxy statement to be filed with the Securities
and Exchange Commission pursuant to Regulation 14A, not later than 120 days
after the end of the fiscal year covered by this report.

Item 13.  Exhibits and Reports on Form 8-K

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

    1.  Financial statements:  See index to consolidated financial statements
        immediately following the signature page of this report.

    2.  Financial statement schedules:  Financial statement schedules
        have been omitted because they are not required or the
        information is included in the financial statements and notes
        thereto.

    3.  Exhibits:  Exhibits required to be filed with this Form 10-KSB are
        identified by the numbers  indicated, and, except where incorporated
        by reference, immediately follow the financial statements.



    Number                            Description

    3.1     Articles of Incorporation, dated December 20, 1989 (1)

    3.2     Amendment to Articles of Incorporation, dated November 30,
            1993 (1)

    3.3     Bylaws of Western Country Clubs, Inc. (1)

    4.0     Agreement to convert notes to Series A Preferred Stock dated
            January 1, 1998 between Troy H. Lowrie and Western Country Clubs,
            Inc. (12)

    4.1     Agreement to convert note to Series B Preferred Stock dated
            February 18, 1998 between Ceres, L.L.C. and Western Country
            Clubs, Inc. (12)

    9.0     Voting Trust Agreement, dated September 20, 1996, between Red
            River Concepts, Inc. and Troy H. Lowrie (7)

    10.1    Lease Agreement, dated August 26, 1993, between Wal-Mart Stores,
            Inc. and Western Country Clubs, Inc. (1)

    10.2    License Agreement, dated January 20, 1993, between Western
            Country Clubs, Inc. and Western Country Club I, Ltd. (1)

    10.3    Option for Limited Partnership Interest, dated September 23,
            1993, between Western Country Clubs, Inc. and Merrill E.
            Roberts (1)

    10.4    Stock Option Agreement, dated December 16, 1993 (1)

    10.5    Lease with Option to Purchase, dated December 26, 1993, between
            and among Edward L. and Barbara L. Benshoof and Western Country
            Clubs, Inc. (1)

    10.6    Agreement to Purchase and Sale of Business and Assets, with
            exhibits, dated November 1, 1994 (2)

    10.7    Bill of Sale, dated November 1, 1994, transferring Arizona Bar
            Liquor License No. 06100208 to Western (2)

    10.8    Amendment to Covenant Not To Compete, updated, between Western
            and Clarance O. Bond, Jack E. McMurrough and Ada L. Bond (9)

    10.9    Agreement and Plan of Merger, dated October 10, 1995, between
            Western Country Clubs, Inc., Western Newco, Inc., and Cowboys
            Concert Hall - Arlington, Inc. (6)

    10.10   Lease with Option to Purchase, dated October 14, 1992, between
            Expo Bowl, Inc. and Texas of Indy, Inc. (1)

    10.11   Guaranty of Lease with Option to Purchase, dated October 14, 1992,
            by Troy H. Lowrie (1)

    10.12   First Amendment to Lease with Option to Purchase, dated January
            20, 1993, between Expo Bowl Inc. and Texas of Indy, Inc. (1)

    10.13   Warranty Deed, dated February 28, 1993, in the name of Western
            Country Club I, Ltd. (1)

    10.14   State of Indiana, Certificate of Trade Mark Registration, dated
            August 18, 1993, in the name of Texas of Indy, Inc. for "A Little
            Bit of Texas" and Design (1)

    10.15   Lease, dated April 2, 1993, between Texas of Indy, Inc. and Great
            Western Boot Company (1)

    10.16   Operating Agreement dated March 17, 1993, between Texas of Indy,
            Inc. and Taco Bell Corp. (1)

    10.17   Option Agreement, dated January 20, 1993, between and among
            Western Country Club I, Ltd., Troy H. Lowrie and Merrill
            Roberts (1)

    10.18   Amended Limited Partnership Agreement of Western Country Club I,
            Ltd. (1)

    10.19   Consulting Agreement dated January 20, 1993, between Western
            Country Club I, Ltd. and Texas of Indy, Inc. (1)

    10.20   Security Agreement, dated March 18, 1993, between Western Country
            Club I, Ltd. and Texas of Indy, Inc. (1)

    10.21   Option to Purchase Assets, dated January 20, 1993, between
            Western Country Club I, Ltd. and Texas of Indy, Inc. (1)

    10.22   Promissory Note, dated January 31, 1994, from Western Country
            Club I, Ltd. to Expo Bowl, Inc. in the amount of $150,000 (1)

    10.23   Guaranty, dated January 31, 1994, of Promissory Note to Expo Bowl,
            Inc. by Troy H. Lowrie (1)

    10.24   Promissory Note, dated January 31, 1994, from Western Country Club
            I, Ltd. to Dulaney National Bank (1)

    10.25   Articles of Incorporation of WCWW Acquisition Corporation, dated
            January 20, 1995 (4)

    10.26   Interim Permit, dated February 9, 1995, from the Arizona
            Department of Liquor Licenses and Control for the Wild Wild West
            nightclub (5)

    10.27   Stock Purchase Agreement, dated September 21, 1996, between and
            among Troy H. Lowrie, Western Country Clubs, Inc. and Red River
            Concepts, Inc. (7)

    10.28   Lease Agreement,, dated July 30, 1993, by and between Boots, Inc.
            and In Cahoots Limited Partnership (9)

    10.29   Agreement and Plan of Merger, dated December 16, 1996, by and
            between Western Country Clubs, Inc., Entertainment Wichita, Inc.,
            and WCCI Acquisition Corp. (8)

    10.30   Contract of sale dated December 26, 1997, and note dated January
            9, 1998, between Western Country Clubs, Inc. and Backstage
            Entertainment. (11)

    10.31   Contract of sale dated November 25, 1997, along with addendum
            numbers 1 through 3 thereto, and note dated February 19, 1998,
            between Western Country Clubs, Inc. and A Little Bit of Texas,
            Ltd. (11)

    10.32   Agreement and Covenant Not to Execute dated February 18, 1998,
            between InCahoots Limited Partnership, Western Country Clubs, Inc.
            and Jana Oelkers. (11)

    11      Calculation of Earnings Per Share

    21      Subsidiaries of the Registrant

    27      Financial Data Schedule
	_______________

(1) 	Incorporated by reference from the like numbered exhibits filed
        with the Registrant's Registration Statement on Form SB-2,
        No. 33-72942.

(2) 	Incorporated by reference from Western's Current Report on
        Form 8-K, dated November 1, 1994, attached as Exhibits 10.1
        and 10.2 thereto.

(3) 	Incorporated by reference from Western's Annual Report on
        Form 10-KSB, dated February 27, 1995, attached as Exhibit 21
        thereto.

(4) 	Incorporated by reference from Western's Annual Report on
        Form 10-KSB, dated February 27, 1995, attached as Exhibit 28.16
        thereto.

(5) 	Incorporated by reference from Western's Annual Report on
        Form 10-KSB, dated February 27, 1995, attached as Exhibit 28.17
        thereto.

(6) 	Incorporated by reference from Western's Current Report on
        Form 8-K, dated October 19, 1995, attached as Exhibit 10.1
        thereto.

(7) 	Incorporated by reference from Western's Current Report on
        Form 8-K, dated October 10, 1996, attached as Exhibit 9 thereto.

(8) 	Incorporated by reference from Western's Current Report
        on Form 8-K, dated October 10, 1996, attached as Exhibit 2
        thereto.

(9)     Incorporated by reference from the like numbered exhibits
        filed with the Registrant's Registration Statement on Form SB-2,
        dated February 11, 1997, No. 333-21547.

(10)    Incorporated by reference from Western's Current Report on
        Form 8-K, dated February 6, 1998, attached as Exhibits 10.0,
        10.1 and 10.2 thereto.

(b)     During the last quarter of the period covered by this report,
        the Company filed Reports on Form 8-K as follows:

        1.  Form 8-K dated October 10, 1997, reporting that a Kansas
            court issued a verdict against a partnership owned 80% by
            a registrant subsidiary under Item 5 - Other Events.

(11) 	Incorporated by reference from the like numbered exhibits filed
        with Western's Current Report on Form 8-K, dated February 6, 1998.

(b) During the last quarter of the period covered by this report, the Company
    filed no Reports on Form 8-K.

                               SIGNATURES

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

March 31, 1998

                                    Western Country Clubs, Inc.


                                    By: /s/ James E. Blacketer

                                    James E. Blacketer, President


    Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates indicated.

Name                            Title                           Date

/s/ John Adams              Director                         March 31, 1998

/s/  James E. Blacketer     President, Principal
                            Executive Officer, Principal
                            Financial Officer and Director   March 31, 1998

/s/  Joe R. Love            Director                         March 31, 1998




<PAGE>


                      WESTERN COUNTRY CLUBS, INC.

                   CONSOLIDATED FINANCIAL STATEMENTS

                 Years Ended December 31, 1997 and 1996


<PAGE>

                       WESTERN COUNTRY CLUBS, INC.

                   CONSOLIDATED FINANCIAL STATEMENTS


                                 INDEX



Independent Auditors' Report                                    1


Consolidated Financial Statements

	Balance Sheets	                                        2-3

	Income		                                        4

	Stockholders' Equity	                                5

	Cash Flows	                                        6-7


Notes to Consolidated Financial Statements	                8-18


<PAGE>

                      INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders of

	Western Country Clubs, Inc.

        We have audited the accompanying consolidated balance sheets of
Western Country Clubs, Inc. as of December 31, 1997 and 1996 and the related
consolidated statements of income, stockholders' equity and cash flows
for the years then ended.  These financial statements are the
responsibility of the Company's management.  Our responsibility is to
express an opinion on these consolidated financial statements based on
our audits.

	We conducted our audits in accordance with generally accepted
auditing standards.  Those standards require that we plan and perform the
audits to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement.  An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the consolidated 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, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position
of Western Country Clubs, Inc. as of December 31, 1997 and 1996, the
results of its operations and its cash flows for the years then ended
in conformity with generally accepted accounting principles.

/s/Gross, Collins + Cress, P.C.
Atlanta, Georgia
January 29, 1998
(except for Note 17, as to which
the date is February 19, 1998)
<PAGE>
                      WESTERN COUNTRY CLUBS, INC.

                      CONSOLIDATED BALANCE SHEETS

                                                           December 31,
                                                         1997        1996
                                                     -----------  -----------
                                 ASSETS
CURRENT ASSETS
  Cash                                               $    85,949  $   190,624
  Certificate of deposit, restricted (Note 3)               -         200,000
  Accounts receivable                                     40,713       44,736
  Current portion of notes and loans receivable
    (Note 4)                                             155,522      100,000
  Inventories                                             54,897       79,628
  Prepaid expenses                                        31,323       68,889
  Income taxes receivable                                   -           7,269
  Capitalized offering costs (Note 15)                      -         142,857
  Deferred income taxes (Note 11)                        309,677      244,287
                                                     -----------  -----------
    TOTAL CURRENT ASSETS                                 678,081    1,078,290
                                                     -----------  -----------
PROPERTY AND EQUIPMENT, at cost
  Land and improvements                                  298,286      298,286
  Building and building improvements                   1,361,335    1,361,335
  Leasehold improvements                               1,510,529    1,507,507
  Equipment                                              677,942      667,393
  Furniture and fixtures                                 333,330      333,330
                                                     -----------  -----------
                                                       4,181,422    4,167,851
  Less reserve for impairment                            250,272         -
  Less accumulated depreciation                        1,499,072    1,104,353
                                                     -----------  -----------
    PROPERTY AND EQUIPMENT, net                        2,432,078    3,063,498
                                                     -----------  -----------
OTHER ASSETS
  Notes and loans receivable - noncurrent                111,498         -
  Deferred income taxes (Note 11)                        107,733       89,334
  Goodwill, net of accumulated amortization of
    $48,229 in 1997 and $170,701 in 1996                  25,970      169,747
  Deposits and other                                      67,980      108,257
  Investment (Note 10)                                   114,800         -
                                                     -----------  -----------
    TOTAL OTHER ASSETS                                   427,981      367,338
                                                     -----------  -----------
    TOTAL ASSETS                                     $ 3,538,140  $ 4,509,126
                                                     ===========  ===========

        The accompanying notes are an integral part of these statements.

                                  -2-
<PAGE>

                         WESTERN COUNTRY CLUBS, INC.

                         CONSOLIDATED BALANCE SHEETS

                                                           December 31,
                                                        1997         1996
                                                     -----------  -----------
                  LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
  Accounts payable                                   $   366,471  $   325,822
  Accrued expenses                                       529,950      390,167
  Notes payable (Note 8)                                    -         475,742
  Current portion of notes payable -
    related parties (Note 8)                             369,870      323,129
  Current portion of long-term debt (Note 8)             356,636       97,063
                                                     -----------  -----------
    TOTAL CURRENT LIABILITIES                          1,622,927    1,611,923

NOTES PAYABLE - related parties (Note 8)                 126,625       56,250

LONG-TERM DEBT (Note 8)                                  437,084      498,802
                                                     -----------  -----------
  TOTAL LIABILITIES                                    2,186,636    2,166,975
                                                     -----------  -----------
MINORITY INTERESTS (Note 1)                              147,645      265,716
                                                     -----------  -----------
COMMITMENTS AND CONTINGENCIES (Notes 13, 14 and 17)

STOCKHOLDERS' EQUITY (Note 10)
  Common stock, $.01 par value; 25,000,000
    shares authorized, 3,634,721 in 1997 and
    3,519,921 in 1996 shares issued and outstanding       36,347       35,199
  Additional paid-in capital                           4,314,739    4,201,087
  Retained deficit                                    (3,147,227)  (2,159,851)
                                                     -----------  -----------
    TOTAL STOCKHOLDERS' EQUITY                         1,203,859    2,076,435
                                                     -----------  -----------
      TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY     $ 3,538,140  $ 4,509,126
                                                     ===========  ===========

        The accompanying notes are an integral part of these statements.

                                  -3-
<PAGE>

                      WESTERN COUNTRY CLUBS, INC.

                   CONSOLIDATED STATEMENTS OF INCOME

                                                     Years Ended December 31,
                                                       1997           1996
                                                    -----------  -----------

REVENUES
  Beverage and food sales                           $ 4,456,887  $ 4,961,467
  Admission fees                                      2,110,665    2,312,992
  Other revenues                                        338,580      393,226
  Gain on sale of assets                                210,645         -
                                                    -----------  -----------
    TOTAL REVENUES                                    7,116,777    7,667,685
                                                    -----------  -----------
COSTS AND EXPENSES
  Cost of products and services                       2,493,806    2,488,218
  General and administrative expense                  4,261,093    4,832,476
  Depreciation                                          394,719      439,802
  Amortization                                           72,402      197,004
  Interest                                              158,821      135,630
  Impairment of long-lived assets (Note 7)              250,272    1,719,818
  Write off of acquisition goodwill (Note 7)             75,687         -
  Litigation loss (Notes 14 and 17)                     216,808         -
  Offering costs (Note 15)                              374,653         -
                                                    -----------  -----------
    TOTAL COSTS AND EXPENSES                          8,298,261    9,812,948
                                                    -----------  -----------

LOSS BEFORE INCOME TAXES, MINORITY INTERESTS,
  AND EXTRAORDINARY ITEM                             (1,181,484)  (2,145,263)

INCOME TAX BENEFIT (Note 11)                             83,789      202,473
                                                    -----------  -----------
  LOSS BEFORE MINORITY INTERESTS                     (1,097,695)  (1,942,790)

MINORITY INTERESTS IN NET (INCOME) LOSS OF
   CONSOLIDATED SUBSIDIARIES                            110,319      (36,386)
                                                    -----------  -----------
     NET LOSS BEFORE EXTRAORDINARY ITEM                (987,376)  (1,979,176)

GAIN ON EXTINGUISHMENT OF DEBT,
  net of income tax provision                              -          65,730
                                                    -----------  -----------
    NET LOSS                                        $  (987,376) $(1,913,446)
                                                    ===========  ===========
NET LOSS PER COMMON SHARE:

  Loss before extraordinary item                    $     (0.27) $     (0.65)
    Extraordinary item                                      -           0.02
                                                    -----------  -----------
  NET LOSS PER COMMON SHARE                         $     (0.27) $     (0.63)
                                                    ===========  ===========

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING            3,619,162    3,035,079
                                                    ===========  ===========

       The accompanying notes are an integral part of these statements.

                                  -4-
<PAGE>

                      WESTERN COUNTRY CLUBS, INC.

            CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                 Years Ended December 31, 1997 and 1996

                          Common Stock     Additional   Retained    Total
                       ------------------   Paid-in     Earnings Stockholders'
                        Shares    Amount    Capital     (Deficit)   Equity
                       _________  _______  __________ ____________ __________

Balance at
December 31, 1995      2,944,721  $29,447  $3,782,738 $  (243,557) $3,568,628

Common stock issued
for cash in private
placement (Note 10)       95,200      952     237,048        -        238,000

Common stock issued
pursuant to stock
compensation plan
(Note 10)                 80,000      800     158,366        -        159,166

Common stock issued
in acquisition of
subsidiary (Note 6)      400,000    4,000      22,935      (2,848)     24,087

Net loss for the year
ended December 31,
1996                        -        -           -     (1,913,446) (1,913,446)
                       ---------  -------  ---------- ----------- -----------

Balance at December
31, 1996               3,519,921   35,199   4,201,087  (2,159,851)  2,076,435

Common stock issued
for investment (Note
10)                      114,800    1,148     113,652        -        114,800

Net loss for the year
ended December 31, 1997     -        -           -       (987,376)   (987,376)
                       ---------  -------  ---------- -----------  ----------

Balance at December
31, 1997               3,634,721  $36,347  $4,314,739 $(3,147,227) $1,203,859
                       =========  =======  ========== ===========  ==========


       The accompanying notes are an integral part of these statements.

                                  -5-
<PAGE>

                          WESTERN COUNTRY CLUBS, INC.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                   Years Ended December 31,
                                                       1997          1996
                                                   -----------   -----------
CASH FLOWS FROM OPERATING ACTIVITIES
  Net loss                                         $  (987,376)  $(1,913,446)
  Adjustments to reconcile net loss to net
    cash provided by operating activities
      Depreciation and amortization                    467,121       636,806
      Gain on extinguishment of debt                      -         (105,506)
      Write off of note receivable                      17,978       100,000
      Write off of acquisition goodwill                 75,687          -
      Loss from impairment of assets                   250,272     1,719,818
      Gain on sale of assets                          (210,645)         -
      Minority interests in earnings of subsidiaries  (110,319)       36,386
      Common stock issued for services                    -          159,166
      Deferred tax provisions                          (83,789)     (136,621)
      Changes in assets (increase) decrease
        (Increase) decrease in accounts receivable       4,023        (9,203)
        (Increase) decrease in inventories              24,733        17,239
        (Increase) decrease in prepaid expenses         37,566        27,852
        (Increase) decrease in refundable income
          taxes                                          7,269       152,851
        (Increase) decrease in capitalized
          offering costs                               142,857      (142,857)
        Increase (decrease) in deposits and
          other assets                                   8,290         8,383
      Changes in liabilities increase (decrease)
        Increase in accounts payable                    40,649       145,467
        Increase in accrued expenses                   220,899       130,668
                                                   -----------   -----------
	  NET CASH PROVIDED (USED) BY OPERATING
            ACTIVITIES                                 (94,785)      827,003
                                                   -----------   -----------

CASH FLOWS FROM INVESTING ACTIVITIES
  Restricted certificate of deposit                    200,000      (200,000)
  Sale of property and equipment                       100,000          -
  Notes and loans receivable                            (3,000)     (100,000)
  Repayments of notes receivable                        13,002          -
  Acquisition of property and equipment                (13,571)     (226,818)
  Acquisition of Entertainment Wichita, Inc.              -           (2,936)
                                                   -----------   -----------
          NET CASH PROVIDED (USED) BY INVESTING
            ACTIVITIES                                 296,431      (529,754)
                                                   -----------   -----------

CASH FLOWS FROM FINANCING ACTIVITIES
  Proceeds from sale of common stock                      -          238,000
  Partnership distributions to minority interests       (7,750)      (32,050)
  Borrowings under notes payable                       190,000       234,851
  Repayments of notes payable                         (605,687)     (347,545)
  Borrowings under notes payable, related parties      278,276       100,000
  Repayments of notes payable, related parties        (161,160)     (523,720)
                                                   -----------   -----------
          NET CASH PROVIDED (USED) BY FINANCING
	    ACTIVITIES                                (306,321)     (330,464)
                                                   -----------   -----------
Continued.........

        The accompanying notes are an integral part of these statements.

                                      -6-

<PAGE>

                          WESTERN COUNTRY CLUBS, INC.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (continued)

                                                   Years Ended December 31,
                                                      1997          1996
                                                   -----------   -----------
NET DECREASE IN CASH                               $  (104,675)  $   (33,215)

CASH, BEGINNING OF YEAR                                190,624       223,839
                                                   -----------   -----------

CASH, END OF YEAR                                  $    85,949   $   190,624
                                                   ===========   ===========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
  Cash paid for interest                           $   179,174  $    141,225
                                                   ===========  ============

  Cash paid for income taxes                       $      -     $       -
                                                   ===========  ============

SUPPLEMENTAL DISCLOSURE OF NON-CASH TRANSACTIONS

	During 1996, the Company issued 80,000 shares of its common stock
	in exchange for various services, including legal, consulting, and
	promotional, aggregating $159,166.

	During 1996, the Company exchanged 400,000 shares of its common
	stock for all the common stock of Entertainment Wichita, Inc.
	(Note 6).

	The Company acquired the following assets and liabilities in
	the transaction:

        	Working capital                        $   (2,936)
                Property and equipment, net               380,648
                Notes payable                            (310,099)
                Minority interest                         (43,526)
                                                       ----------
                  Net book value of acquisition        $   24,087
                                                       ==========

        On February 6, 1997, the Company exchanged 114,800 shares of its
        common stock for 57,400 shares and 57,400 purchase warrants of the
        stock of Cowboys Concert Hall-Arlington, Inc. (Note 10).

	The Company sold the Tucson club in May 1997 for $325,000.  Assets
	and liabilities exchanged were as follows:

        	Working capital and other than cash    $  (56,722)
                Fixed assets, intangibles, and
                  other assets                            381,722
                                                       ----------
                  Net assets exchanged                    325,000
                Less note receivable                      225,000
                                                       ----------
                  Cash proceeds on sale of club        $  100,000
                                                       ==========

        The Company issued a note payable in May 1997 in the amount of
        $93,407 for unpaid rent expenses of the Tucson club.  In September,
        upon finalization of the agreement to sell the Tucson Club, this
        note was reissued in the amount of $133,000, and a second note was
        issued in the amount of $4,800.  The note receivable was reduced
        to $195,000.



        The accompanying notes are an integral part of these statements.

                                      -7-
<PAGE>

                          WESTERN COUNTRY CLUBS, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1)     Description of business

        Western Country Clubs, Inc. (the "Company") was incorporated in
        Colorado on December 19, 1989, and commenced operations in 1993.  The
        Company's operations have consisted primarily of owning and operating
        "country-western" theme nightclubs.  The Company's subsidiaries and
        divisions are as follows:

        Western Country Club 1, Ltd. ("Indy") is a limited partnership formed
        on January 19, 1993.  Western 1, Ltd. owns and operates a nightclub in
        Indianapolis, Indiana.  The operations of the nightclub began on April
        14, 1993.  The Company has an 80% profit interest in the partnership.

        WCWW Acquisition Corporation ("WCWW") is a wholly owned subsidiary
        formed in January 1995 to hold the interim and final liquor licenses
        for the Company's nightclub in Tucson, Arizona.

	The St. Louis division of the Company was acquired on October 7, 1994.
        This division operates a nightclub in St. Louis, Missouri.

	Entertainment Wichita, Inc. ("EWI"), a wholly owned subsidiary, owns
        an 80% interest in In Cahoots, Ltd. ("In Cahoots").  In Cahoots is a
        limited partnership that owns and operates a nightclub in Wichita,
        Kansas (Notes 6 and 14).

	In addition to these subsidiaries and divisions, the Company holds a
        50% interest in a nightclub in Atlanta, Georgia (Notes 17).

(2)	Summary of significant accounting policies

	The following is a summary of significant accounting policies followed
        by the Company:

	Cash and cash equivalents - The Company considers all highly liquid
        investments with original maturities of three months or less to be
        cash equivalents.

        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.

        Consolidation - The consolidated financial statements include the
        accounts of the Company, two limited partnerships over which the
        Company has financial control, and three wholly owned subsidiaries.
        All significant intercompany accounts and transactions have been
        eliminated in consolidation.


                                     -8-

<PAGE>
                         WESTERN COUNTRY CLUBS, INC.

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(2)	Summary of significant accounting policies (continued)

	Investments - Investments in partnerships, which the Company does not
        financially control, are accounted for on the equity method until
        financial control is established.

	Inventories - Inventories consist of liquor, wine, beer, and boutique
        items.  Inventories are stated at the lower of cost (first-in,
        first-out) or market.

        Depreciation and amortization - Property and equipment are stated at
        cost.  Depreciation is provided using the straight-line method over
        the assets' estimated useful lives as follows: land improvements,
        10-15 years; building and improvements, 10-30 years; leasehold
        improvements, 7-10 years; equipment, 7-10 years; furniture and
        fixtures, 7-10 years.

        Intangibles - Organization costs, liquor license costs, and goodwill
        are amortized over five years.  Certain costs incurred before a
        nightclub is opened are capitalized as pre-opening expenses and
        amortized over a 12-month period commencing the first full month the
        nightclub begins operation.  The covenant not to compete is amortized
        over 15 years, the period covered by the amended agreement.

        Measurement of impairment - At each balance sheet date, the Company
        reviews the amount of recorded goodwill, covenant not to compete and
        related nightclub assets (separately by club) for impairment.
        Whenever events or changes in circumstances indicate that the carrying
        amount of the assets may not be recoverable out of undiscounted future
        operating cash flows and the sum of the expected cash flows from these
        assets is less than the carrying amount of these assets, the Company
        will recognize an impairment loss in such period in the amount by
        which the carrying amount of the assets exceeds the fair value of the
        assets.

        Repairs and maintenance - Normal costs incurred to repair and maintain
        fixed assets are charged to operations as incurred.  Repairs and
        betterments which extend the life of an asset are capitalized and
        subsequently depreciated on a straight-line basis over the remaining
        useful life of the asset.  When assets are sold or retired, the cost
        and accumulated depreciation are removed from the accounts and any
        resulting gain or loss is included in operations.

        Income taxes - Income taxes are provided based on earnings reported in
        the financial statements.  The Company follows Statement of Financial
        Accounting Standards No. 109 whereby deferred income taxes are
        provided on temporary differences between reported earnings and
        taxable income.

        Net income per common share - Net income per common share is computed
        based on the weighted average number of shares outstanding during the
        periods.  Common stock equivalents included in the computation
        represent shares issuable upon assumed exercise of stock options which
        would have a dilutive effect.  Shares issuable under stock warrants
        have been excluded since they would be antidilutive.

        Concentration of credit risk - Financial instruments which potentially
        subject the Company to concentrations of credit risk are primarily
        cash and temporary cash investments.  The Company places its cash
        investments in highly rated financial institutions.  At times, the
        Company may have bank deposits in excess of Federal Deposit Insurance
        Commission (FDIC) limits.

                                     -9-
<PAGE>
                         WESTERN COUNTRY CLUBS, INC.

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(3)	Restrictions of cash

	Restricted cash is composed of a certificate of deposit for $200,000.
        This money is used to secure an outstanding loan with a bank in the
        amount of $200,000 (Note 8).  The loan was paid in 1997.

(4)	Notes and loans receivable

        As partial payment for the sale of its Tucson club, the Company
        received an 8% note receivable payable $7,500 per month. All unpaid
        principal and accrued interest is due April 14, 1999.  At December 31,
        1997, $77,522 of the note is included in current notes and loans
        receivable and $111,498 in noncurrent.  The remaining $78,000 of the
        current notes and loans receivable balance is made up of two notes
        that are due on demand.

(5)	Fair value of financial instruments

	The carrying amounts of cash, short-term notes receivable, commercial
        paper and notes payable approximate fair value because of the
        short-term maturity of these instruments.

	The fair value of long-term debt, including current portion, is
        estimated based on quoted market prices for the same or similar issues
        or on the current rates offered to the Company for debt of the same
        maturities.

(6)	Acquisition

        EWI is the general partner of In Cahoots.  Through September 30, 1996,
        EWI owned a 1% interest in the profits and losses of In Cahoots.  On
        October 1, 1996, limited partners of In Cahoots owning an aggregate
        79% limited partnership interest exchanged these partnership interests
        for an aggregate of 36,800 shares of common stock of EWI and the
        assumption of $150,000 of debt related to a previous acquisition of
        limited partnership interest by another party.

        On December 16, 1996, the Company and EWI entered into an agreement
        and plan of merger whereby EWI would become a 100% subsidiary of the
        Company.  On December 16, 1996, the Company issued 400,000 shares of
        its common stock and assumed $150,000 of notes owed to former limited
        partners of In Cahoots in exchange for all of the outstanding common
        shares of EWI.

        The exchange of partnership interests of In Cahoots for shares of
        common stock of EWI and the merger of the Company with EWI have been
        treated as transactions between entities under common control and,
        therefore, the consolidated assets and liabilities of EWI are recorded
        at historical cost.  The operations of EWI and In Cahoots are included
        in the consolidated statements of income beginning October 1, 1996,
        the first date that common control existed between them and the
        Company.

                                     -10-
<PAGE>
                         WESTERN COUNTRY CLUBS, INC.

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(6)	Acquisition (continued)

        The following unaudited pro forma summary presents the consolidated
        results of operations as if the acquisitions had occurred at the
        beginning of the period presented and do not purport to be indicative
        of what would have occurred had the acquisitions been made as of that
        date or of results which may occur in the future.

                                             December 31, 1996
                                             -----------------

                     Net sales                  $ 9,118,206

                     Net loss                   $(1,880,916)

                     Net loss per common share  $	 (1)

(7)	Impairment of long-lived assets

        As of December 31, 1996, management determined that the long-lived
        assets related to its Tucson operations including furniture and
        fixtures, equipment, leasehold improvements, and intangibles would not
        be realized based on future expected cash flows.  Therefore, the
        carrying values of these assets have been charged to expense in 1996.
        In addition, the deferred rental obligation has been decreased by
        $45,955 to recognize the fact that the lease will not be renewed at
        the end of five years.  The charge to expense is included in
        "Impairment of long-lived assets" and the reduction of the deferred
        rental obligation is recorded as a reduction in rental expense.

        On December 13, 1997, the Company closed its Indianapolis club in
        anticipation of its pending sale.  A reserve of $250,272 was recorded
        for impairment of the long-lived assets including land and
        improvements, building and building improvements, furniture and
        fixtures, and equipment.  The amount of the impairment loss was
        determined after giving consideration to estimated sales proceeds for
        the club (Note 16).  In addition, the Company wrote off $75,687 of
        goodwill, net of accumulated amortization, related to the acquisition
        of the Indianapolis Club.

                                     -11-
<PAGE>
                         WESTERN COUNTRY CLUBS, INC.

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(8)	Notes payable

	Short-term notes payable consist of the following:

                                                            1997       1996
                                                          --------   --------
        Note payable, due in monthly installments
        of interest only through February 19, 1997,
        at which time a final payment of unpaid
        principal is due.  Interest is computed at
        6.36%.  Collateralized by an interest in
        certain cash accounts of the Company and of
        the Company's former president.                   $   -      $275,742

        Note payable, due on January 31, 1997.  Secured
        by a certificate of deposit (Note 3).                 -       200,000
                                                          --------   --------
          Total short-term notes                          $   -      $475,742
                                                          ========   ========

        Notes payable - related parties consist of the following:

                                                            1997       1996
                                                          --------   --------
        Note payable - major stockholder and former
        officer, payable in graduated monthly
        installments, including interest of 10%
        annually (Note 17).                               $278,276   $   -

        Note payable - major stockholder and former
        officer, bearing interest at 12% annually.
        The note is due on demand (Notes 9 and 17).        100,000    100,000

        Notes payable - affiliates of a limited partner,
        payable on demand, including interest at 10%.
        Secured by the personal guarantee of the Company's
        president (Note 9).                                   -        50,000

        Note payable - former limited partners, payable
        on demand, including interest at 10%, unsecured
        (Note 9).                                             -        10,000

        Note payable - former limited partner, payable
        in monthly installments of $6,250 plus interest
        at prime plus 1%.  Secured by the ownership
        interest of a stockholder and the guarantee
        of a financial corporation.  Prime was 8.5% at
        December 31, 1997 (Note 9).                        118,219    139,223

        Note payable - affiliate of a limited partner,
        due in monthly installments of $8,069, including
        interest at 18% through November 1997.  Secured
        by equipment, inventories, receivables, furniture
        and fixtures (Note 9).                                -        80,156
                                                          --------   --------
          Total notes payable - related parties            496,495    379,379
            Less current portion                           369,870    323,129
                                                          --------   --------
          Noncurrent portion                              $126,625   $ 56,250
                                                          ========   ========

                                     -12-
<PAGE>

                         WESTERN COUNTRY CLUBS, INC.

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(8)	Notes payable (continued)

	Maturities of notes payable - related parties are as follows:

        Years ending December 31,                     Amount
        ------------------------                     --------
          1998                                       $369,870
          1999                                        126,625
                                                     --------
            Total                                    $496,495
                                                     ========

        Long-term debt consists of the following at December 31, 1997
        and 1996:
                                                            1997       1996
                                                          --------   --------
        Note payable - bearing interest at 12%
        annually.  The note is due on demand and
        secured by mortgage of Indy (Note 17).            $160,000   $   -

        Note payable - due in monthly installments
        of $7,500, bearing interest of 10% annually.       120,538       -

        Note payable - due in monthly installments of
        $8,437, including interest at 3% above prime
        through February 2004.  Secured by first
        mortgage on real estate (Note 17).                 445,662    486,982

        Note payable - due in monthly installments of
        $3,187, including interest at 10% through
        January 1999.  Secured by second mortgage
        on real estate and the personal guarantee
        of the Company's former president (Note 17).        44,764     74,203

        Capitalized lease - due in monthly installments
        of $256, including interest at 20.5% through
        November 1998.  Secured by equipment.                2,756      4,834

        Note payable - noninterest-bearing, due in
        monthly installments of $1,000, through July
        1999.  Secured by equipment.                        20,000     29,846
                                                          --------   --------
          Total long-term debt                             793,720    595,865
            Less current portion                           356,636     97,063
                                                          --------   --------
          Noncurrent portion                              $437,084   $498,802
                                                          ========   ========

	Maturities of long-term debt are as follows:

        Years ending December 31,                     Amount
        ------------------------                     --------
          1998                                       $356,636
          1999                                        113,170
          2000                                         67,220
          2001                                         75,371
          2002                                         84,510
          Thereafter                                   96,813
                                                     --------
            Total                                    $793,720
                                                     ========

                                     -13-

<PAGE>
                         WESTERN COUNTRY CLUBS, INC.

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(9)	Related party transactions

        During the year ended December 31, 1996, the Company utilized a
        service organization whose president is a stockholder of the
        Company.  The service organization was responsible for the
        management of the daily operations of the Company through
        September 1996.  The total amount paid to the organization
        during 1996 was $59,936.  Of this amount, $91,604 represented
        reimbursement of Company expenses incurred.

        In August 1995, International Entertainment Consultants, Inc.
        ("IEC") loaned the Company $300,000 at 12% annual interest
        payable monthly, to complete the renovation of the Tucson club
        into the "A Little Bit of Texas" format.  IEC is owned by a
        relative of the Company's former president.  The loan was due
        December 28, 1995, and was extended until January 28, 1996 after
        the payment of $100,000 in principal by the Company.  During
        October 1995, the Company borrowed an additional $193,000 from
        IEC to make the required payment under the covenant not to
        compete.  The note bears interest at 12% annually, was due
        December 28, 1995, and was extended until January 28, 1996.
        During January 1996, $262,000 in principal had been repaid and
        the remaining balance was repaid on April 28, 1996.  In
        addition, the Company paid IEC $38,540 for the year ended
        December 31, 1996 for payroll and support services, including
        insurance and office expenses.

	On October 10, 1996, the former president loaned the Company an
        additional $100,000 which is due on demand and bears interest at
        12% annually (Note 8).

        On July 3, 1993, In Cahoots signed a ten-year lease.  The lessor
        is a 20% limited partner of In Cahoots.  Rent expense under this
        lease for the year ended December 31, 1997, and the three months
        ended December 31, 1996 amounted to $150,000 and $39,511,
        respectively (Note 15).

	During 1994, In Cahoots borrowed $150,000 from four limited
        partners, $90,000 of which was repaid in 1994.  The remaining
        balance consisted of two notes which were paid in 1997.

	On October 1, 1996, EWI assumed $150,000 of debt when it
        acquired control of In Cahoots.  The remaining balance of
        $118,219 at December 31, 1997 is due to a former limited partner
        of the Company (Notes 6 and 8).

(10)	Stockholders' equity

        Stock options - On December 16, 1993 the Company granted an
        option to purchase 250,000 shares of the Company's $.01 par
        value common stock at $2.50 per share to an employee of the
        Company.  The option expires on December 1, 1998.  During 1995,
        20,000 options were exercised resulting in proceeds to the
        Company of $50,000.

        The underwriter was issued warrants as compensation to purchase
        40,000 shares of common stock.  The warrants are exercisable at
        $6.30 per share commencing April 25, 1995 until April 25, 1999.
        The Company has granted the holders of the warrants certain
        customary registration rights.  As of December 31, 1997, none of
        these warrants have been exercised.

                                  -14-
<PAGE>

                      WESTERN COUNTRY CLUBS, INC.

               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(10)	Stockholders' equity (continued)

        Warrants granted - Effective July 1, 1994, the Company granted
        warrants to purchase 60,000 shares of the Company's common stock
        exercisable at $6.00 per share until June 30, 1999, in exchange
        for consulting services to be performed over a one-year period.
        In addition, stock appreciation rights were granted whereby the
        consultant could purchase shares of common stock for $.01 per
        share representing the increase in value of the 60,000 shares
        divided by the then market price of the stock.  Compensation
        will be recorded as the price of the Company's stock exceeds the
        warrant exercise price.

        Private placements of common stock - During June 1996, the
        Company sold 95,200 shares of common stock at $2.50 per share
        resulting in net proceeds of $238,000.

        Stock compensation plan - In 1996, the Company established a
        stock option compensation plan for employees and consultants.
        The aggregate number of common shares as to which options and
        awards may be granted shall not exceed 250,000, and the options
        and awards must be granted within five years.  At the time of
        grant, the Company will determine the exercise price and the
        vesting period which shall not exceed five years.

        During the quarter ended September 30, 1996, the Company issued:
        (1) 10,000 shares of the Company's common stock to the Company's
        president for services rendered and recorded compensation of
        $35,000; (2) 15,000 shares of the Company's common stock to a
        consultant as a reduction of accounts payable of $46,666; (3)
        10,000 shares of the Company's common stock to a consultant for
        services valued at $35,000; and (4) 45,000 shares of the
        Company's common stock and 145,000 options to purchase the
        Company's common stock at $3.50 per share for three years in
        exchange for the cancellation of 240,000 options to purchase the
        Company's common stock at $2.50 per share.  Each of the above
        issuances of common stock was valued at $3.50 per share less the
        previously recorded compensation where warrants were returned.

        On February 6, 1997, the Company exchanged 114,800 shares of its
        common stock for 57,400 shares and 57,400 purchase warrants of
        the stock of Cowboys Concert Hall Arlington, Inc. ("Cowboys").
        The individual shareholders of the Cowboys' stock had participated
        in a private placement conducted by Cowboys in Fall 1995 to raise
        funds for Cowboys to pay its expense in connection with a proposed
        merger between Cowboys and the Company which did not occur.

        Effective April 18, 1997, subject to stockholder approval, the
        Board of Directors adopted the Omnibus Equity Compensation Plan
        ("Omnibus Plan").  The Plan incorporates and makes part of it
        all existing stock option plans and agreements.  On December 12,
        1997, the Board amended the Omnibus Plan to increase the number
        of shares which may be granted under the Plan from 5% to 15% of
        the total common shares outstanding at time of grant.  On the
        same date, the Board approved the grant of options totaling
        445,000 to officers, directors and employees.  All stock options
        granted are for a five-year term at a $.75 exercise price.  The
        Board also affirmed that the 50,000 options previously issued in
        1997 under the 1996 Plan are subject to the same terms as those
        granted on December 12, 1997.

(11)	Income taxes

        As of December 31, 1997 and 1996, the Company's deferred tax
        assets are as follows:

                                                          1997        1996
                                                       ----------  ----------
        Tax over book basis of fixed and
          intangible assets                            $  280,736  $  215,349
        Impairment of long-lived assets                    92,601     684,029
        Leases with scheduled rent increases               42,787      52,921
        Net operating loss carryforwards                  835,704      49,566
        Charitable contribution carryforwards               1,656        -
                                                       ----------  ----------
                                                        1,253,484   1,001,865

        Valuation allowance                              (836,074)   (668,244)
                                                       ----------  ----------
          Net deferred tax asset                          417,410     333,621
        Current asset                                    (309,677)   (244,287)
                                                       ----------  ----------
          Long-term asset                              $  107,733  $   89,334
                                                       ==========  ==========

                                      -15-

<PAGE>

                          WESTERN COUNTRY CLUBS, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(11)	Income taxes (continued)

        Realization of the deferred tax asset is dependent upon the Company
        generating sufficient future taxable income against which its loss
        carryforward and loss from impairment of long-lived assets can be
        offset.  Management has determined that it is not more likely than
        not that the Company will be able to realize all the tax benefits
        from the net operating loss carryforward and impairment of long-
        lived assets and has therefore reduced the deferred tax asset by
        a valuation allowance.

	Deferred income taxes resulting from temporary differences in the
        recognition of income and expense for tax and financial reporting
        purposes are as follows:

                                                          1997       1996
                                                        ---------  ---------

        Differences between book and tax
          Compensation element of stock options         $    -     $  (4,700)
          Differences between book and tax depreciation    65,387     58,649
          Impairment of long-lived assets                (591,428)   684,029
          Leases with scheduled rent increases            (10,134)    17,321
          Net operating loss carryforwards                786,138     49,566
          Charitable contribution carryforwards             1,656       -
                                                        ---------  ---------
                                                          251,619    804,865
          Change in valuation allowance                  (167,830)  (668,244)
                                                        ---------  ---------
            Net deferred tax benefit                    $  83,789  $ 136,621
                                                        =========  =========

        Components of the provision for income taxes attributable to
        continuing operations are as follows:

                                                           1997      1996
                                                        ---------  ---------
        Current income tax benefit                      $    -     $  65,852
        Deferred income tax benefit                        83,789    136,621
                                                        ---------  ---------
                                                        $  83,789  $ 202,473
                                                        =========  =========

        The difference between the Company's effective income tax rate and
        the United States statutory rate is reconciled below for the years
        ended December 31, 1997 and 1996:

                                                           1997      1996
                                                        ---------  ---------
        United States statutory rate                      (34.0)%    (34.0)%
        State income taxes, net of federal
          income tax benefit (cost)                        (3.0)%     (3.0)%
        Increase in valuation allowance                    14.2%      31.1%
        Other                                              15.7%      (2.8)%
                                                         -------     -------
          Total                                            (7.1)%     (8.7)%
                                                         ========    =======

	At December 31, 1997, the Company has a net operating loss
	carryforward of approximately $2,256,468 which expires in 2012.

(12)	Gain on extinguishment of debt

        During September 1996, the Company settled its outstanding debt
        agreement arising from the Tucson covenant not to compete for
        $300,000 in cash.  The difference between the amount paid and the
        basis of the debt on the books has been recorded as an extraordinary
        gain of $65,730, net of the related income tax effect of $39,776.

                                      -16-
<PAGE>

                          WESTERN COUNTRY CLUBS, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(13)	Lease commitments

        On July 30, 1993, In Cahoots entered into a building lease for club
        operations in Wichita, Kansas, with a 20% limited partner.  The lease
        term is ten years commencing October 15, 1993.  In addition to minimum
        rental payments of $12,500, In Cahoots is obligated to pay to the
        landlord, as additional rent, a percentage of gross sales after
        deductions for alcohol and sales taxes.  The lease agreement contains
        two five-year renewal options at the primary lease term rental rate
        (Note 9).

        In December 1993, the Company entered into a building lease for club
        operations in St. Louis, Missouri.  The lease term is ten years with
        two five-year renewal options.  Minimum rent per month is $22,238 for
        years one through five and $26,686 per month for years six through
        ten.  The lease requires a $25,000 security deposit, and is guaranteed
        by an affiliated company.

        On March 15, 1997, the Company entered into a 51.5-month lease
        agreement for an office building to serve as the corporate
        headquarters in Oklahoma City, Oklahoma.  From March 15, 1997 to
        August 31, 1998, the base rent will be $36,900 per year.  From
        September 1, 1998 to January 31, 2000, the rent increases to $39,360
        per year.  From February 1, 2000 to June 30, 2001, the base rent will
        be $41,820.

        Rent expense for the years ended December 31, 1997 and 1996 amounted
        to $614,522 and $740,613, respectively.  Rent expense for 1997 is net
        of $8,072 for rental income received.

        The minimum annual commitments under the real estate leases are as
        follows:

          Years ending December 31,                             Amount
          ------------------------                            ----------

            1998                                              $  461,745
            1999                                                 513,432
            2000                                                 513,127
            2001                                                 491,142
            2002                                                 470,232
            Thereafter                                           631,889
                                                              ----------
              Total                                           $3,081,567
                                                              ==========

(14)	Litigation

	InCahoots was the defendant in a proceeding in Kansas District Court.
        On September 23,1997, the Court found in favor of the plaintiff and
        awarded compensatory damages in the amount of $771,000 plus costs,
        expenses and interest.  The Partnership's insurer was granted a
        motion for summary judgment relieving it from responsibility for the
        damages.  The Partnership is negotiating a settlement with the
        plaintiff to limit its exposure in the matter.  A tentative agreement
        has been reached, and the amount of loss is estimated to be $216,808.
        Accordingly, a provision for this expense has been provided for in
        the financial statements (Note 17).

        The Company is involved in various other claims and legal proceedings
        of a nature considered normal to its business, principally personal
        injury claims resulting from incidents occurring on the premises of
        the Company's nightclubs.  While it is not feasible to predict or
        determine the financial outcome of these proceedings, management does
        not believe that they will result in a materially adverse effect on
        the Company's financial position, results of operations or liquidity.

                                     -17-

<PAGE>

                         WESTERN COUNTRY CLUBS, INC.

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(15)	Offering costs

	In September 1997, the Company terminated its agreement with an
        underwriter to offer preferred stock to the public due to
        nonperformance by the underwriter.  The Company's costs associated
        with the offering of $374,653 have been charged to operations.

(16)	Reclassifications

	Certain amounts on the 1996 financial statements have been
        reclassified in order to be consistent with the 1997 presentation.

(17)	Subsequent events

	On January 1, 1998, two notes payable from a major stockholder
        totaling $378,275 with accrued interest of $21,725 were converted to
        40,000 shares of the Company's Series A 10% cumulative convertible
        preferred stock (Note 8).

        Effective January 9, 1998, the Company sold its interest in a limited
        partnership for $10,000 in cash and a $210,000 note.  Due to extensive
        losses of the partnership, the investment in the partnership had been
        reduced to zero in 1995.  The sale resulted in a gain of $192,869, net
        of the tax effect of $27,131.

        On February 6, 1998, the Company sold its Indianapolis club to a major
        stockholder of the Company for a $600,000 note and the assumption of
        $490,426 of long-term debt and $60,078 of accrued interest and taxes,
        less $13,000 to be refunded to the buyer.  The sale resulted in a gain
        of $47,931, net of the tax effect of $8,735 and minority interest of
        $14,166 (Notes 7 and 8).

	On February 18, 1998, a note payable of $160,000 was converted to
        16,000 shares of the Company's Series B 12% cumulative convertible
        preferred stock (Note 8).

	On February 19, 1998, the Company settled a lawsuit for $92,808 in
        cash, a payment agreement totaling $74,000, and 100,000 shares of the
        Company's stock valued at $50,000.  Cash of $34,308 was paid in 1997
        and the remainder of the loss was fully accrued at December 31, 1997
        (Note 14).

<PAGE>

<PAGE>

Exhibit 11


                      WESTERN COUNTRY CLUBS, INC.

                   CALCULATION OF EARNINGS PER SHARE

                           DECEMBER 31, 1997


                                                                   Weighted
                                             Shares       Days      Average
                                    Date   Outstanding Outstanding   Shares
                                  -------- ----------- ----------- ---------
BASIC EARNINGS (LOSS) PER SHARE:
  Common shares outstanding at
    December 31, 1996             12/31/96   3,519,921     365     3,519,921

  Common stock issued for stock
    of Cowboys, Inc.              02/06/97     114,800     329       103,477
                                            ----------             ---------

  Shares outstanding at
    December 31, 1997                        3,634,721             3,623,398

      Net earnings (loss)                                          $(987,376)
                                                                   =========

      Basic earnings (loss) per share                                $(0.27)
                                                                     ======

PRIMARY EARNINGS (LOSS) PER SHARE:
  INCLUSION OF THESE SECURITIES WOULD BE ANTIDULITIVE.

FULLY DILUTED EARNINGS (LOSS) PER SHARE:
  THERE ARE NO SECURITIES IN THE COMPUTATION OF FULLY DILUTED EARNINGS PER
  SHARE.

<PAGE>

Exhibit 21

                          WESTERN COUNTRY CLUBS, INC.

                         SUBSIDIARIES OF THE REGISTRANT

                               DECEMBER 31, 1997


        1.      Western Country Club 1, Ltd.            80% Owned

        2.      WCWW Acquisition Corporation            100% Owned

        3.      Entertainment Wichita, Inc.             100% Owned

        4.      InCahoots, Ltd.                         80% Owned

        5.      Cowboys Concert Hall/Atlanta, Ltd.      50% Owned

        6.      Western Newco, Inc.                     100% Owned