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 AUGUST 31, 1998             COMMISSION FILE NO.    33-23430-D
                                   
                            VIRTUAL ENTERPRISES 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 COURT, STE. 530, NEWPORT BEACH, CALIFORNIA
                    (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

                                      92660
                                   (ZIP CODE)

                                 (949) 475-6755
              (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 SEPTEMBER 1, 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 SHEET - AUGUST 31, 1998 (UNAUDITED) .....................1

          STATEMENTS OF OPERATIONS - THREE MONTHS ENDED
             AUGUST 31, 1998 AND 1997 (UNAUDITED)..........................2

          STATEMENTS OF CASH FLOWS - THREE MONTHS ENDED AUGUST 31, 1998
             (UNAUDITED) AND AUGUST 31, 1997 (UNAUDITED)...................3

          NOTES TO FINANCIAL STATEMENTS (UNAUDITED)........................4

ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF

          FINANCIAL CONDITION AND RESULTS OF OPERATIONS....................6

                                     PART II

ITEM 1.   LEGAL PROCEEDINGS................................................7

ITEM 2.   CHANGES IN SECURITIES............................................7

ITEM 3.   DEFAULTS UPON SENIOR SECURITIES..................................7

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS..............7

ITEM 5.   OTHER INFORMATION................................................7

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K.................................7

                                        I

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<PAGE>

<TABLE>
<CAPTION>

                            VIRTUAL ENTERPRISES INC.
                         (FORMERLY, THE TOEN GROUP INC.)
                                  BALANCE SHEET
                        AS OF AUGUST 31, 1998 (UNAUDITED)

                                                                                         August 31,
                                                                                            1998
                                                                                         (UNAUDITED)
                                                                                 --------------------------
<S>                                                                              <C>

ASSETS
CURRENT ASSETS:
 CASH AND CASH EQUIVALENTS                                                       $                       10
                                                                                 --------------------------
   TOTAL CURRENT ASSETS                                                                                  10
                                                                                 --------------------------
TOTAL ASSETS                                                                     $                       10
                                                                                 ==========================
CURRENT LIABILITIES:
 ACCOUNTS PAYABLE AND ACCRUED EXPENSES                                           $                   39,172
 DUE TO AFFILIATES                                                                                  449,457
                                                                                 --------------------------
   TOTAL CURRENT LIABILITIES                                                                        488,629
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                                                                               (904,716)
 TREASURY STOCK                                                                                     (24,845)
                                                                                 ---------------------------
    TOTAL STOCKHOLDERS' DEFICIENCY                                                                 (488,619)

TOTAL LIABILITIES AND STOCKHOLDERS'
   DEFICIENCY                                                                    $                       10
                                                                                 ==========================
</TABLE>

              SEE ACCOMPANYING NOTES TO THESE FINANCIAL STATEMENTS

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                                                         1

<PAGE>

<TABLE>
<CAPTION>

                            VIRTUAL ENTERPRISES INC.
                         (FORMERLY, THE TOEN GROUP INC.)
                            STATEMENTS OF OPERATIONS
                           FOR THE THREE MONTHS ENDED
                       AUGUST 31, 1998 AND 1997(UNAUDITED)

                                                                           FOR THE THREE MONTHS ENDED,
                                                                                    AUGUST 31,
                                                                 ------------------------------------------------
                                                                           1998                    1997
                                                                 ----------------------- ------------------------
<S>                                                              <C>                     <C>

                                                                        (UNAUDITED)             (UNAUDITED)
COSTS AND EXPENSES:
 GENERAL AND ADMINISTRATIVE                                      $                29,957 $                48,120
                                                                 ----------------------- ------------------------
     TOTALS                                                                       29,957                  48,120
                                                                 ----------------------- ------------------------
NET LOSS                                                         $               (29,957)$               (48,120)
                                                                 ======================= ========================
NET LOSS PER COMMON SHARE                                        $                  (.04)$                  (.06)
                                                                 ======================= ========================
WEIGHTED AVERAGE COMMON
 SHARES OUTSTANDING                                                              799,372                 799,372
                                                                 ======================= ========================
</TABLE>

              SEE ACCOMPANYING NOTES TO THESE FINANCIAL STATEMENTS

                                                           [VEI\10Q\83198.QSB]-7

                                                         2

<PAGE>

<TABLE>
<CAPTION>

                            VIRTUAL ENTERPRISES INC.
                         (FORMERLY, THE TOEN GROUP INC.)
                            STATEMENTS OF CASH FLOWS
                           FOR THE THREE MONTHS ENDED
                      AUGUST 31, 1998 AND 1997 (UNAUDITED)

                                                                             THREE MONTHS ENDED AUGUST 31,
                                                                              1998                   1997
                                                                    ------------------------ --------------------
<S>                                                                 <C>                      <C>

                                                                           (UNAUDITED)            (UNAUDITED)
OPERATING ACTIVITIES:
  NET INCOME (LOSS)                                                 $               (29,957) $            (48,120)
  ADJUSTMENTS TO RECONCILE NET INCOME (LOSS) TO NET
    CASH PROVIDED (USED) IN OPERATING ACTIVITIES:
      INCREASE (DECREASE) FROM CHANGES IN:
         ACCOUNTS PAYABLE AND ACCRUED EXPENSES                                        2,492                 1,926
         DUE TO AFFILIATE                                                            30,465                46,265
                                                                    ------------------------ --------------------
           NET CASH PROVIDED (USED) IN OPERATING ACTIVITIES                           3,000                    71
                                                                    ------------------------ --------------------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                  3,000                    71

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                       (2,990)                   12
                                                                    ------------------------ --------------------

CASH AND CASH EQUIVALENTS, END OF PERIOD                            $                    10  $                 83
                                                                    ======================== ====================

SUPPLEMENTAL DISCLOSURE:
    CASH PAYMENTS FOR INCOME TAXES                                  $                     -  $                  -
    CASH PAYMENTS FOR INTEREST                                      $                     -  $                  -
</TABLE>

              SEE ACCOMPANYING NOTES TO THESE FINANCIAL STATEMENTS

                                                           [VEI\10Q\83198.QSB]-7

                                                         3

<PAGE>

                            VIRTUAL ENTERPRISES INC.
                         (FORMERLY, THE TOEN GROUP INC.)
                          NOTES TO FINANCIAL STATEMENTS
                                 AUGUST 31, 1998

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.  THERE
ARE PRESENTLY  OUTSTANDING  WARRANTS TO PURCHASE 668,000 SHARES OF COMMON STOCK.
THE WARRANTS ARE EXERCISABLE AT $5.00 PER SHARE.

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.

BASIS OF PRESENTATION

The accompanying  unaudited condensed financial statements have been prepared in
accordance with generally accepted  accounting  principles for interim financial
information.  Accordingly,  they  do not  include  all of  the  information  and
footnotes  required by generally  accepted  accounting  principles  for complete
consolidated  financial  statements.  In the opinion of  management,  all normal
adjustments, consisting of normal recurring accruals, considered necessary for a
fair  presentation  have  been  included.   The  unaudited  condensed  financial
statements  include the condensed  balance sheet as of August 31, 1998,  and the
related condensed statements of operations and cash flows of the Company for the
three months ended August 31, 1998 and 1997. These unaudited condensed financial
statements should be read in conjunction with the audited  financial  statements
included  in the  Company's  Form  10-KSB for its fiscal year ended May 31, 1998
("Fiscal  98").  The results of operations for the three months ended August 31,
1998 are not necessarily indicative of the operating results for the full year.

Cash and Cash Equivalents

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

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                                                         4

<PAGE>

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.

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.

Reclassification of Prior Year Amounts

To  enhance  comparability,  the  fiscal  1997  financial  statements  have been
reclassified,  where  appropriate,  to  conform  with the  financial  statements
presentation used in fiscal 1998.

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  financial
statements  have been presented  under the assumption the Company would continue
as a going Concern.

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                                                         5

<PAGE>

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

         Going Concern

         The Company  has  incurred  recurring  net  losses,  a working  capital
         deficiency and has limited liquid resources.  Management's intent is to
         continue  searching for additional sources of capital and new operating
         opportunities.  In the interim,  the Company will to continue 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  financial  support  in order  for the
         Company  to  exist  for  the  next  fiscal   year.   Accordingly,   the
         accompanying   financial  statements  have  been  presented  under  the
         assumption that the Company will continue as a going concern.

         Results of Operations

         Quarter Ended August 31, 1998 Compared to Quarter Ended August 31,1997

         There were no operations  during the quarter ended August 31, 1998 and,
         consequently,  no revenues or cost of revenues were recorded during the
         current quarter.

         General and  administrative  aggregated  expenses  were  $29,957 in the
         current quarter compared to $48,120 in the comparable period last year.
         The  decrease  is  primarily  attributable  to a decrease  in  services
         provided by professional consultants and other advisors.

         Liquidity and Capital Resources

         As of August 31,  1998 the  Company  had a working  capital  deficit of
         $488,619,  an increase of $30,257  from May 31,  1998.  The increase in
         working capital deficiency was primarily 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  $10 and $83 at August
         31, 1998 and 1997, respectively. The limited cash balances are a direct
         result  of the  Company  having no  operations  during  the  respective
         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
         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,  1998 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 August 31, 1998,  the Company had no operations or
         employees other than its President.

                                                           [VEI\10Q\83198.QSB]-7

                                                         6

<PAGE>

PART II:          OTHER INFORMATION

Item 1.    Legal Proceedings

                  The Company knows of no  significant  changes in the status of
                  any legal proceedings against the Company as described in Form
                  10-KSB for the Company's fiscal year ended May 31, 1998.

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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                                                         7

<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:    October 2, 1998                By:  /s/  Fred G. Luke
         ---------------------------         ----------------------------------
                                                  Fred G. Luke,
                                                  Chairman of the Board
                                                  and President

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                                                         8