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

                                      92660
                                   (Zip Code)

                                 (949) 475-6755
              (Registrant's telephone number, including area code)

                 (Former Address, if changed since last report)

                 (Former Zip Code, if changed since last report)

             (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 November 30, 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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                            VIRTUAL ENTERPRISES, INC.
                                      INDEX

                                                                            Page

                                     PART I

Item 1.   Financial Statements

          Balance Sheets - November 30, 1998 ..............................1

          Statements of Operations - Three and Six Months Ended
             November 30, 1998 and 1997....................................2

          Statements of Cash Flows - Six Months Ended
             November 30, 1998 and 1997....................................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.
                             Condensed Balance Sheet
                       As of November 30, 1998 (Unaudited)

                                                                                 November 30,
                                                                                     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                                       $            44,242
 Due to affiliates                                                                       476,922
   Total Current Liabilities                                                             521,164
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                                                                    (937,251)
 Treasury stock (98,795 Shares, at Cost)                                                 (24,845)
    Total Stockholders' Deficiency                                                      (521,154)

TOTAL LIABILITIES AND STOCKHOLDERS'
   DEFICIENCY                                                                $                10

</TABLE>

              See accompanying notes to these financial statements

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<PAGE>

<TABLE>
<CAPTION>

                            VIRTUAL ENTERPRISES, INC.
                       Condensed Statements of Operations
                       For the Three and Six Months Ended
                      November 30, 1998 and 1997(Unaudited)

                                                    For the Three Months Ended             For the Six Months Ended,
                                                           November 30,                           November 30,
                                                      1998               1997                1998              1997
                                                   (Unaudited)        (Unaudited)         (Unaudited)       (Unaudited)
                                              ------------------- -----------------   ----------------- -------------------
<S>                                           <C>                 <C>                 <C>               <C>

Costs and expenses:
 General and administrative                   $            32,535 $          31,261   $          62,492 $           79,381
     Totals                                                32,535            31,261              62,492             79,381
Net loss                                      $           (32,535)$         (31,261)  $         (62,492)$          (79,381)
Net loss per common share                     $              (.04)$            (.04)  $            (.08)$             (.10)
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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<PAGE>

<TABLE>
<CAPTION>

                            VIRTUAL ENTERPRISES, INC.
                       Condensed Statements of Cash Flows
         For the Six Months Ended November 30, 1998 and 1997 (Unaudited)

                                                                             Six Months Ended November 30,
                                                                              1998                   1997
                                                                           (Unaudited)            (Unaudited)
                                                                    ------------------------ ---------------------
<S>                                                                 <C>                      <C>

Operating activities:
  Net income (loss)                                                 $               (62,492) $           (175,300)
  Adjustments to reconcile net income (loss) to net
    cash provided (used) in operating activities:
         Increase (decrease) from changes in:
         Accounts payable and accrued expenses                                        4,572                 3,832
         Due to affiliate                                                            57,930                75,551
           Net cash provided (used) in operating activities                              10                     2


Net increase (decrease) in cash and cash equivalents                                     10                     2

Cash and cash equivalents, beginning of period                                            -                    12

Cash and cash equivalents, end of period                            $                    10  $                 14

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

</TABLE>

              See accompanying notes to these financial statements

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                            VIRTUAL ENTERPRISES, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                November 30, 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.

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
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 financial  statements  include the balance
sheet and  statements of operations and cash flows of the Company as of November
30, 1998 and for the six months then ended. It is suggested that these unaudited
condensed financial statements be read in conjunction with the audited financial
statements  and notes thereto  included in the Company's Form 10KSB for the year
ended May 31, 1998. The results of operations for the periods ended November 30,
1998 and 1997 are not  necessarily  indicative of the operating  results for the
full year.

Reclassification of Prior Year Amounts

To  enhance  comparability,  the  fiscal  1998  financial  statements  have been
reclassified,  where  appropriate,  to  conform  with the  financial  statements
presentation used in fiscal 1999.

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Note 2.    Going Concern

The Company has experienced  recurring net losses,  has limited liquid resources
and negative  working  capital.  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  primarily  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.


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 advisors and 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 1999. 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, 1998 Compared to Quarter Ended November 30,
         1997

         There were no operations during the quarter ended November 30, 1998 and
         as such, there were no revenues or cost of revenues recorded during the
         current quarter.

         General and administrative expenses were $32,535 in the current quarter
         compared to $31,261 in the  comparable  period last year. The change is
         attributable to continued services provided by professional consultants
         and advisors.

         Six  Months  Ended  November  30,  1998  Compared  to  Six Months Ended
         November 30, 1997

         There were no operations  during the period ended November 30, 1998 and
         as such, there were no revenues or cost of revenues recorded during the
         current six month period.

         General  and  administrative  expenses  was  $62,492 in the current six
         month period  compared to $79,381 in the  comparable  period last year.
         The  change  is   attributable  to  continued   services   provided  by
         professional consultants and other advisors.

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         Liquidity and Capital Resources

         As of November  30, 1998 the Company had a working  capital  deficit of
         $521,154,  an increase  of $62,492  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  $10 and $14 at November
         30, 1998 and 1997, respectively. The limited cash balances are a direct
         result of the Company having no operations during the periods.

         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 November 30, 1998, 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, 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

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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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                                   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:     December 7, 1998              By:  /s/  Fred G. Luke
                                             ----------------------------------
                                                  Fred G. Luke,
                                                  Chairman of the Board
                                                   and President

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