SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   Form 10-QSB

                   Quarterly Report Under Section 13 or 15(d)
                     of the Securities Exchange Act of 1934

For Quarter Ended November 30, 1997           Commission File No.    33-23430-D

                            VIRTUAL ENTERPRISES INC.
                         (formerly, The Toen Group Inc.)
             (Exact name of registrant as specified in its charter)

                                     Nevada
         (State or other jurisdiction of incorporation or organization)

                                   84-1091271
                     (I.R.S. Employer Identification Number)

             4695 MacArthur Ct., Suite 530 Newport Beach, California
                    (Address of principal executive offices)

                                      92660
                                   (Zip Code)

                                 (949) 833-2091
              (Registrant's telephone number, including area code)


                   2 Park Plaza, Suite 470, Irvine, California
                 (Former Address, if changed since last report)

                                      92614
                 (Former Zip Code, if changed since last report)

                                 (714) 833-2091
             (Former telephone number, if changed since last report)

         Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934 during the preceding 12 months (or for shorter  period that the  Registrant
was  required  to file such  reports),  and (2) has been  subject to such filing
requirements for the past 90 days.

                              Yes              No X

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

         As of July 15, 1998,  there were 799,372 shares of the  Registrant's no
par value  common  stock  issued and  outstanding.  There were also  outstanding
warrants to  purchase up to 668,000  shares of the  Registrant's  common  stock.
There has been no bid or asked prices of the Registrant's common stock quoted in
any market since September 6, 1990.

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<PAGE>

                            VIRTUAL ENTERPRISES INC.
                         (formerly, The Toen Group Inc.)
                                      INDEX



                                                                            Page
                                     PART I

Item 1.   Financial Statements

          Balance Sheets - November 30, 1997 ..............................1

          Statements of Operations - Three and Six Months Ended
             November 30, 1997 and 1996....................................2

          Statements of Cash Flows - Six Months Ended
             November 30, 1997 and 1996....................................3

          Notes to Financial Statements....................................4


Item 2.   Management's Discussion and Analysis of

          Financial Condition and Results of Operations....................7

                                     PART II

Item 1.   Legal Proceedings................................................8

Item 2.   Changes In Securities............................................8

Item 3.   Defaults Upon Senior Securities..................................8

Item 4.   Submission of Matters to a Vote of Security Holders..............8

Item 5.   Other Information................................................8

Item 6.   Exhibits and Reports on Form 8-K.................................8

                                                         I

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<PAGE>

<TABLE>
<CAPTION>

                            VIRTUAL ENTERPRISES INC.
                         (formerly, The Toen Group Inc.)
                                  Balance Sheet
                       As of November 30, 1997 (Unaudited)

                                                                                 November 30,
                                                                                     1997
                                                                                 (Unaudited)
                                                                             -------------------
<S>                                                                          <C>

ASSETS
Current Assets:
 Cash and cash equivalents                                                   $                14
                                                                             -------------------
   Total Current Assets                                                                       14
TOTAL ASSETS                                                                 $                14
                                                                             ===================
Current Liabilities:
 Accounts payable and accrued expenses                                       $            31,892
 Due to affiliates                                                                       360,156
                                                                             -------------------
   Total Current Liabilities                                                             392,048
Stockholders' Deficiency:
 Common stock - $.01 par value; 50,000,000 shares authorized;
 799,372 shares issued and outstanding                                                     7,994
 Additional paid-in capital                                                              432,948
 Accumulated deficit                                                                    (808,131)
 Treasury stock (98,795 Shares, at Cost)                                                 (24,845)
                                                                             --------------------
    Total Stockholders' Deficiency                                                      (392,034)

TOTAL LIABILITIES AND STOCKHOLDERS'
   DEFICIENCY                                                                $                14
                                                                             ====================

</TABLE>

              See accompanying notes to these financial statements

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<PAGE>

<TABLE>
<CAPTION>

                            VIRTUAL ENTERPRISES INC.
                         (formerly, The Toen Group Inc.)
                            Statements of Operations
                       For the Three and Six Months Ended
                      November 30, 1997 and 1996(Unaudited)

                                                    For the Three Months Ended             For the Six Months Ended,
                                                           November 30,                           November 30,
                                              --------------------------------------  -------------------------------------
                                                      1997               1996                1997              1996
                                              --------------------------------------  -------------------------------------
                                                   (Unaudited)        (Unaudited)         (Unaudited)       (Unaudited)
                                              ------------------- ----------------    ----------------- -------------------
<S>                                           <C>                 <C>                 <C>               <C>

Costs and expenses:
 General and administrative                   $            31,261 $         45,432    $          79,381 $           71,948
                                              ------------------- ------------------  ----------------- -------------------
     Totals                                                31,261           45,432               79,381             71,948
                                              ------------------- ------------------  ----------------- -------------------
Net loss                                      $           (31,261)$        (45,432)   $         (79,381)$          (71,948)
                                              =================== ==================  ================= ===================
Net loss per common share                     $              (.04)$           (.06)   $            (.10)$             (.09)
                                              =================== ==================  ================= ===================
Weighted average common
 shares outstanding                                       799,372           799,372             799,372            799,372
                                              =================== ==================  ================= ===================

</TABLE>

              See accompanying notes to these financial statements

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                                                         2

<PAGE>

<TABLE>
<CAPTION>

                            VIRTUAL ENTERPRISES INC.
                         (formerly, The Toen Group Inc.)
                            Statements of Cash Flows
         For the Six Months Ended November 30, 1997 and 1996 (Unaudited)

                                                                             Six Months Ended November 30,
                                                                              1997                   1996
                                                                    ------------------------ ---------------------
                                                                           (Unaudited)            (Unaudited)
                                                                    ------------------------ ---------------------

<S>                                                                 <C>                      <C>

Operating activities:
  Net income (loss)                                                 $              (175,300) $            (71,948)
  Adjustments to reconcile net income (loss) to net
    cash provided (used) in operating activities:
         Increase (decrease) from changes in:
         Accounts payable and accrued expenses                                        3,832                 7,020
         Due to affiliate                                                            75,551                64,923
                                                                    ------------------------ ---------------------
           Net cash provided (used) in operating activities                               2                    (5)
                                                                    ------------------------ ---------------------


Net increase (decrease) in cash and cash equivalents                                      2                    (5)

Cash and cash equivalents, beginning of period                                           12                    51
                                                                    ------------------------ ---------------------

Cash and cash equivalents, end of period                            $                    14  $                 46
                                                                    ======================== =====================

Supplemental Disclosure:
 Cash payments for income taxes                                     $                     -  $                  -
 Cash payments for interest                                         $                     -  $                  -

</TABLE>

              See accompanying notes to these financial statements

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<PAGE>

                            VIRTUAL ENTERPRISES INC.
                         (formerly, The Toen Group Inc.)
                          NOTES TO FINANCIAL STATEMENTS
                                November 30, 1997

Note 1.       Summary of Significant Accounting Policies

Business and Organization

The  Company  was  incorporated  in June,  1989 as a Colorado  corporation.  The
Company was primarily  engaged in the acquisition,  maintenance and operation of
television stations in various states through 1992.

In August 1992, the Company sold its Sunbelt Media Group  ("Sunbelt")  division,
operating the television stations, to a majority stockholder of the Company.

Since  August  1992  through  the date of this  report,  the  Company has had no
operations  and  management  is  seeking  a merger  and/or  sale of  controlling
interest in its stock.

In  September  1994,  the  Company's  shareholders  voted to effect a 1 for 1000
reverse split of the Company's  issued and outstanding  common stock.  The split
was  implemented  through a merger with a newly formed Nevada  corporation.  The
accompanying  financial  statements have been retroactively  restated to reflect
the merger including the change from no par value common stock to $.01 par value
common stock.  In connection  with the merger and reverse  split,  the Company's
authorized number of shares was reduced from 785,000,000 to 50,000,000.

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

Principals of Management Estimates

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

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of
three months or less as cash equivalents.

Income Taxes

The Company accounts for income taxes using the liability  method.  Income taxes
are provided on all revenue and expense items, regardless of the period in which
such items are recognized for tax purposes,  except for those items representing
a permanent  difference  between pre-tax income and taxable income.  A valuation
allowance is recorded  when it is more likely than not that  benefits  resulting
from deferred tax assets will not be realized.

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<PAGE>

                            VIRTUAL ENTERPRISES INC.
                         (Formerly, The Toen Group Inc.)
                          NOTES TO FINANCIAL STATEMENTS
                                November 30, 1997

Earnings (Loss) Per Common Share

Net income  (loss) per common share is  calculated by dividing net income (loss)
by the weighted average number of shares  outstanding  during each year. All per
share amounts are reported as adjusted  after the merger and  resulting  reverse
stock split.  Common stock equivalents were not considered in the loss per share
calculations as the effect would have been anti dilutive.

Issuance of Stock for Services

Shares of the  Company's  common  stock  issued for  services  are  recorded  in
accordance  with APB16 at the fair market  value of the stock issued or the fair
market of the services  provided,  whichever value is the more clearly  evident.
The value of the services are typically stipulated by contract.

Reclassification of Prior Year Amounts

To  enhance  comparability,  the  fiscal  1996  financial  statements  have been
reclassified,  where  appropriate,  to  conform  with the  financial  statements
presentation used in fiscal 1997.

Note 2.    Going Concern

The Company has experienced  recurring net losses, has limited liquid resources,
negative  working  capital and its primary  operating  subsidiary was liquidated
during fiscal year 1993. Management's intent is to keep searching for additional
sources of capital and new operating opportunities.  In the interim, the Company
will keep operating with minimal overhead and key administrative  functions will
be provided by NuVen  Advisors,  Inc., an affiliate  ("NuVen").  It is estimated
that NuVen will have to contribute  future financial  support for the Company to
exist for the next  fiscal  year.  Accordingly,  the  accompanying  consolidated
financial  statements have been presented under the assumption the Company would
continue as a going Concern.

Note 3.     Federal Incomes Taxes

The Company  accounts for income taxes using the liability  method.  The Company
has  net  operating  loss  carryforwards  as of May 31,  1997  of  approximately
$729,000,  which  expire at  various  times  from  1999  through  2009,  and are
available to reduce future Federal taxable income, if any.

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

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<PAGE>

                            VIRTUAL ENTERPRISES INC.
                         (Formerly, The Toen Group Inc.)
                          NOTES TO FINANCIAL STATEMENTS
                                November 30, 1997

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

Note 4.    Capital Stock

In  September  1994 the  Company's  shareholders  voted  to  effect a 1 for 1000
reverse split of the Company's  issued and outstanding  common stock.  The split
was  implemented  through a merger with a newly formed Nevada  corporation.  The
accompanying  financial  statements have been retroactively  restated to reflect
the merger including the change from no par value common stock to $.01 par value
common stock.  In connection  with the merger and reverse  split,  the Company's
authorized  number of shares was reduced from  785,000,000 to 50,000,000.  There
are presently  outstanding  warrants to purchase 668,000 shares of common stock.
The warrants are exercisable at $5.00 per share.

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<PAGE>

ITEM 2.           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                  AND RESULTS OF OPERATIONS

         Going Concern

         The Company has  experienced  recurring net losses,  has limited liquid
         resources,  and negative  working  capital.  Management's  intent is to
         continue  searching for  additional  sources of capital and the Company
         intends  to  continue   operating   with   minimal   overhead  and  key
         administrative functions provided by consultants who are compensated in
         the form of the Company's common stock. It is estimated, based upon its
         historical operating expenses and current obligations, that the Company
         may need to utilize its common  stock for future  financial  support to
         finance its needs during  fiscal 1998.  Accordingly,  the  accompanying
         consolidated   financial  statements  have  been  presented  under  the
         assumption the Company will continue as a going concern.

         Results of Operations

         Quarter Ended November 30, 1997 Compared to Quarter Ended November 30,
         196

         There were no operations during the quarter ended November 30, 1997 and
         as such, there were no revenues or cost of revenues recorded during the
         current quarter.

         General and administrative  expenses was $31,261 in the current quarter
         compared to $45,432 in the  comparable  period last year. The change is
         attributable to fewer services provided by professional consultants and
         other advisors.

         Six  Months  Ended  November  30,  1997  Compared  to  Six Months Ended
         November 30, 1996

         There were no operations  during the period ended November 30, 1997 and
         as such, there were no revenues or cost of revenues recorded during the
         current quarter.

         General and  administrative  expenses was $79,381 in the current period
         compared to $71,948 in the  comparable  period last year. The change is
         attributable to continue services provided by professional  consultants
         and other advisors.

         Liquidity and Capital Resources

         As of November  30, 1997 the Company had a working  capital  deficit of
         $392,034,  an increase  of $79,382  from May 31,  1997.  The change was
         attributable  to the accrual of  professional,  consulting and advisory
         fees during the quarter that were incurred but not paid.

         The Company had cash balances of approximately  $14 and $46 at November
         30, 1997 and 1996, respectively. The limited cash balances are a direct
         result of the Company having no operations during the quarters.

         The  Company's  plan is to keep  searching  for  additional  sources of
         capital and new operating opportunities.  In the interim, the Company's
         existence is dependent on continuing  financial  support from NuVen for
         the next fiscal year. Furthermore,  the Company may have to utilize its

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                                                         7

<PAGE>

         common stock for future  financial  support to finance its needs.  Such
         conditions  raise  substantial  doubt  about the  Company's  ability to
         continue  as a  going  concern.  As  such,  the  Company's  independent
         accountants  have modified their report for the Company's latest fiscal
         year  ended May 31,  1997 to  include  an  explanatory  paragraph  with
         respect to the uncertainty.

         The Company has no commitments  for capital  expenditures or additional
         equity or debt financing and no assurances can be made that its working
         capital needs can be met.

         Additionally, as of November 30, 1997, the Company had no operations or
         employees other than its President.


PART II:          OTHER INFORMATION

Item 1.    Legal Proceedings

                  The Company knows of no  significant  changes in the status of
                  the  pending  litigation  or claims  against  the  Company  as
                  described in Form 10-KSB for the  Company's  fiscal year ended
                  May 31, 1997.

Item 2.    Changes In Securities

                  None

Item 3.    Defaults Upon Senior Securities

                  None

Item 4.    Submission Of Matters To A Vote Of Security Holders

                  None

Item 5.    Other Information

                  None

Item 6.    Exhibits And Reports On Form 8-K

                  (a)  Exhibits:

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

                       27                    Financial Data Schedule

                  (b)  Reports on Form 8-K:

                                    None

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<PAGE>

                                   SIGNATURES



         Pursuant to the  requirements  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.


                                        VIRTUAL ENTERPRISES INC.
                                        (Formerly, The Toen Group Inc.)
                                        (Registrant)



Date:    August 10, 1998                By:/s/    Fred G. Luke
                                                  -----------------------------
                                                  Fred G. Luke,
                                                  Chairman of the Board
                                                  and President

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