<PAGE>   1
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                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

(Mark One)

[X]     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
        EXCHANGE ACT OF 1934 

        For the quarterly period ended: September 30, 1997

[ ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE ACT

        For the transition period from ___________ to ___________


                         Commission File Number: 0-11532



                            INLAND CASINO CORPORATION
        (Exact name of small business issuer as specified in its charter)

                    Utah                              33-0618806
        (State or other jurisdiction of            (I.R.S. Employer
         incorporation or organization)           Identification No.)
  

        16868 Via Del Campo Court, Suite 200, San Diego, California 92127
                    (Address of principal executive offices)

         Issuer's telephone number, including area code: (619) 546-9383

  Former address: 4225 Executive Square, Suite 1650, La Jolla, California 92037
--------------------------------------------------------------------------------
   (Former name, former address and former fiscal year, if changed since last
                                    report)

        Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act 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 the past 90 days.
Yes [X] No [ ]

                      APPLICABLE ONLY TO CORPORATE ISSUERS

        State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: as of November 7, 1997,
3,886,348 shares of common stock, $.001 par value per share, were outstanding.

        Transitional Small Business Disclosure Format (check one) Yes [ ] No [X]


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<PAGE>   2
                            INLAND CASINO CORPORATION

                                  FORM 10-QSB
                    FOR THE PERIOD ENDED SEPTEMBER 30, 1997

                                TABLE OF CONTENTS

                                                                         Page
                                                                        Number
                                                                        ------
PART I.  FINANCIAL INFORMATION

    ITEM 1.  FINANCIAL STATEMENTS (Unaudited):

             Balance Sheets -
             June 30, 1997 and September 30, 1997....................      1

             Statements of Operations -
             Three months ended September 30, 1996 and 1997..........      2

             Statements of Cash Flows -
             Three months ended September 30, 1996 and 1997..........      3

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

    ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS
               OR PLAN OF OPERATION..................................      9

PART II.  OTHER INFORMATION

    ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K........................     13

SIGNATURES...........................................................     14
<PAGE>   3
                         PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS.

                            INLAND CASINO CORPORATION
                                 BALANCE SHEETS
                      JUNE 30, 1997 AND SEPTEMBER 30, 1997


<TABLE>
<CAPTION>
                                                                  June 30, 1997   September 30, 1997
                                                                  -------------   ------------------
                                                                                         (Unaudited)
<S>                                                               <C>             <C>        
                                     ASSETS

CURRENT ASSETS:
     Cash and cash equivalents                                      $ 8,004,078          $ 8,783,052
     Accounts receivable                                                 70,100              104,844
     Prepaid expenses and other current assets                           58,069              127,653
                                                                    -----------          -----------

               Total current assets                                   8,132,247            9,015,549
RESTRICTED CASH AND OTHER INVESTMENTS                                 1,981,750            1,982,320
OTHER NON-CURRENT ASSETS
          Receivables due after one year                                240,000              323,000
          Furniture and equipment, net                                  159,633              399,862
          Deferred contract costs, net                                5,843,023            5,315,242
          Deferred taxes                                                270,183              164,183
          Deposits and other assets                                      87,291              104,641
                                                                    -----------          -----------

                                                                    $16,714,127          $17,304,797
                                                                    ===========          ===========

                      LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:

     Advances of future consulting fees--Barona Casino              $ 2,173,135          $ 2,567,866
     Current portion of long-term debt                                1,020,054              400,000
     Accounts payable and accrued expenses                              975,424              710,185
     Income taxes payable                                               190,737              409,737
                                                                    -----------          -----------

                                 Total current                        4,359,350            4,087,788
                                                                    -----------          -----------
liabilities

LONG TERM DEBT, LESS CURRENT PORTION                                  6,469,591            6,700,000

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY:

     Common stock, $.001 par, 100,000,000
        shares authorized, 3,854,548                                      3,855                3,855
        shares outstanding
     Retained earnings                                                5,881,331            6,513,154
                                                                    -----------          -----------
               Total shareholders' equity                             5,885,186            6,517,009
                                                                    -----------          -----------

                                                                    $16,714,127          $17,304,797
                                                                    ===========          ===========
</TABLE>


                                       1
<PAGE>   4
                          INLAND CASINO CORPORATION
                           STATEMENTS OF OPERATIONS
            FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997
                                 (UNAUDITED)


<TABLE>
<CAPTION>
                                                           1996                   1997
                                                       ------------           ------------
<S>                                                    <C>                    <C>         

CONTRACT REVENUE
     Barona Casino                                     $  3,950,000           $  3,780,000
     Other                                                                         152,000
                                                       ------------           ------------
                                                          3,950,000              3,932,000
                                                       ------------           ------------

OPERATING EXPENSES:
     General and administrative expenses                  1,878,391              1,962,297
     Amortization of deferred contract costs                604,371                872,868
                                                       ------------           ------------
                                                          2,482,762              2,835,165
                                                       ------------           ------------

Operating profit                                          1,467,238              1,096,835

Other income and (expense):
     Interest income                                         56,653                146,307
     Interest expense                                       (15,750)              (102,319)
                                                       ------------           ------------
                                                             40,903                 43,988
                                                       ------------           ------------
Income before income taxes                                1,508,141              1,140,823

Income tax provision                                        715,000                509,000
                                                       ------------           ------------

Net income                                             $    793,141           $    631,823
                                                       ============           ============

Earnings per share                                     $       0.07           $       0.10
                                                       ============           ============

Shares used in the computation of  income per
common and common equivalent share                       11,913,102              6,408,700
                                                       ============           ============
</TABLE>


                                       2
<PAGE>   5
                            INLAND CASINO CORPORATION
                            STATEMENTS OF CASH FLOWS
             FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                                     1996                  1997
                                                                 -----------           -----------
<S>                                                              <C>                   <C>        

Net cash generated by (used in) operating activities:
    Net income                                                   $   793,141           $   631,823
    Adjustments to reconcile net income to net cash
      provided by operating activities:
       Depreciation and amortization                                 616,213               891,667
       Deferred taxes                                                158,000               106,000
       Changes in assets and liabilities:
         Accounts receivable                                        (222,438)              (34,744)
         Prepaid expenses and other current assets                   (11,511)              (69,584)
         Deposits and other assets                                   (17,350)
         Accounts payable and accrued expenses                       424,637              (265,239)
         Income taxes payable                                        345,000               219,000
         Advances of future consulting fees                           81,452               394,731
                                                                 -----------           -----------
Net cash provided by operating activities                          2,184,494             1,856,304
                                                                 -----------           -----------

 Cash flows provided by (used) in investing activities:
    Purchase of furniture and equipment                                                   (259,598)
    Deferred contract costs                                         (226,450)             (114,678)
                                                                 -----------           -----------
Net cash used in investing activities                               (226,450)             (374,276)
                                                                 -----------           -----------

Cash flows provided by (used in) financing activities:
   Payment of notes payable                                                               (620,054)
   Loans to employees                                                                      (83,000)
   Repurchase and cancellation of common stock                      (200,000)                 --
                                                                 -----------           -----------
Net cash provided by (used in) financing activities                 (200,000)             (703,054)
                                                                 -----------           -----------

Increase in cash                                                   1,758,044               778,974
Cash, beginning of period                                          4,347,985             8,004,078
                                                                 -----------           -----------
Cash, end of period                                              $ 6,106,029           $ 8,783,052
                                                                 ===========           ===========

Supplemental disclosures of cash flow information:

   Interest expense paid                                         $      --             $   375,624
                                                                 ===========           ===========
   Interest income received                                      $    57,862           $   123,307
                                                                 ===========           ===========
   Income taxes paid                                             $   212,000           $   184,000
                                                                 ===========           ===========
   Issuance of notes payable in connection
             with the repurchase of common stock                 $ 3,500,000           $      --
                                                                 ===========           ===========
</TABLE>


                                       3
<PAGE>   6
                            INLAND CASINO CORPORATION
                      NOTES TO INTERIM FINANCIAL STATEMENTS
                               SEPTEMBER 30, 1997


1. PRESENTATION OF INTERIM FINANCIAL INFORMATION.

Basis of Presentation - The accompanying interim unaudited financial statements
have been prepared by Inland Casino Corporation, a Utah corporation (the
"Company" or "Inland Casino"), in conformity with generally accepted accounting
principles for interim financial information and with the rules and regulations
of the U.S. Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such regulations. The interim unaudited financial statements reflect
all normal, recurring adjustments and disclosures which are, in the opinion of
management, necessary for a fair presentation. The results of operations for the
interim periods are not necessarily indicative of the results of the full fiscal
year. The interim financial statements should be read in conjunction with the
Company's Annual Report on Form 10-KSB for the fiscal year ended June 30, 1997.

Earnings per share - Earnings per common and common equivalent share are
computed using the weighted average number of shares outstanding for the three
month periods ended September 30, 1996 and 1997. Equivalent shares are those
issuable upon the assumed exercise of stock options reflected under the treasury
stock method using the average market price of the Company's shares during the
periods when their effect is dilutive.

2. BUSINESS AND BASIS OF ACCOUNTING. The Company provides consulting and other
professional services for gaming operations under consulting agreements with
Native American Tribes. Currently, the Company provides services to The Barona
Group of Capitan Grande Band of Mission Indians (the "Barona Tribe") in
connection with the Barona Tribe's operation of a gaming facility located north
of Lakeside, California, in eastern San Diego County. The Company reports
revenues and expenses using the accrual method of accounting. All of the
Company's fee revenue for the three months ended September 30, 1996 and 1997 was
generated from services provided to the Barona Tribe, with the exception of
$152,000 in fees received for work performed for a tribe in Oregon.

The Company has begun exploring new opportunities, including researching,
reviewing and evaluating other services and products that the Company may
develop and market in electronic format, including through the Internet.

3. AGREEMENTS WITH THE BARONA TRIBE. The Company has provided services to the
Barona Tribe since 1991. The Company currently provides consulting services in
accordance with the terms and conditions of an Amended and Restated Consulting
Agreement (the "Barona Consulting Agreement" or "Consulting Agreement").

The Barona Consulting Agreement expires in March 1999; however, it contains an
option to extend the Consulting Agreement for an additional five year period.
Under the terms of the Barona Consulting Agreement, the Barona Tribe has the
right to draw from the gross revenues of the Barona Casino an annual income
stream at least equal to the distributions received by the Barona Tribe for the
twelve month period ended December 31, 1995, and fees paid or payable to the
Company may accordingly be reduced.

In March 1996, the Barona Tribe submitted the Initial Consulting Agreement, (the
predecessor agreement to the Consulting Agreement), to the the National Indian
Gaming Commission (the "NIGC") and, in May


                                       4
<PAGE>   7
                            INLAND CASINO CORPORATION
                NOTES TO INTERIM FINANCIAL STATEMENTS (CONTINUED)
                               SEPTEMBER 30, 1997

1996, the NIGC determined that the Initial Consulting Agreement was not a
management agreement and, therefore, not subject to NIGC approval, and forwarded
such agreement to the Bureau of Indian Affairs (the "BIA"). In July 1997, the
BIA reviewed the Initial Consulting Agreement and determined that no further
action by it with respect to such agreement was required.

In January 1997, the Company entered into a settlement agreement with the NIGC
regarding the Company's relationship with the Barona Tribe. Under the terms of
the settlement agreement, the NIGC held, among other things, that the
relationship between the Barona Tribe and the Company had benefitted the Barona
Tribe, and that the Company had not violated any law. The Company agreed to
reimburse the NIGC for administrative, investigative and legal expenses in the
aggregate amount of $250,000. In addition, the Company agreed to contribute $2
million to the Barona Tribe for general improvements on the reservation, payable
in five equal annual installments, commencing in January 1997. The Company
accounted for the $2 million commitment as deferred contract costs, which will
be amortized over the remaining initial term of the Consulting Agreement with
the Barona Tribe.

In January 1997, the Company submitted the Consulting Agreement to the NIGC. In
April 1997, the Company received a letter from the NIGC questioning whether the
Consulting Agreement was in fact a management contract. The Company believes
that the NIGC will ultimately determine that the Consulting Agreement is not a
management contract, based on (i) the May 1996 and July 1997 determinations of
the NIGC and the BIA, respectively, with respect to the Initial Consulting
Agreement, (ii) the NIGC's findings in the January 1997 settlement agreement and
(iii) the actual elements of the relationship between the Barona Casino and the
Company. However, there is no assurance that the NIGC will determine that the
Consulting Agreement is not a management contract. If such a determination is
not made by the NIGC, the failure of the NIGC to approve the Consulting
Agreement could have a material adverse effect on the business and financial
condition of the Company. If the NIGC concludes that the Consulting Agreement is
not a management agreement, the NIGC will forward the Agreement to the BIA for
its review. To the extent that the BIA determines that its approval is required,
there can be no assurance that such Agreements will be approved by the BIA, and
such failure to approve the Consulting Agreement may have a material adverse
effect on the business and financial condition of the Company.


4. DEFERRED CONTRACT COSTS. Pursuant to oral agreements with the Barona Tribe,
the Company has agreed to fund, or to arrange acceptable financing for, the
construction of facility improvements, furniture and equipment, the
establishment of initial working capital, and the losses, if any, of the Barona
Casino's operations. Because the Barona Tribe will not allow its land to be
encumbered and has not assumed liability for any of these obligations, the
Company has capitalized those costs incurred as deferred contract costs since
(i) the Company had the ultimate responsibility for such costs incurred in
connection with developing the Barona Casino and (ii) management believes that
these costs are fully recoverable over the life of the Consulting Agreement
through receipt of fee income from the Barona Casino. However, given the nature
of the asset, if the recoverability is determined to be not probable, the
Company will expense the unamortized portion. On an ongoing basis, the Company
reviews the valuation and recoverability of these unamortized deferred contract
costs. As part of this review, the Company estimates the discounted present
value of the future projected net income generated by the Barona Casino and the
resulting revenue to the Company to determine whether impairment has occurred.

Amortization of the deferred costs is calculated using the straight-line method
over the remaining term of the Consulting Agreement. Under the terms of the
Consulting Agreement, title to the Barona Casino facilities, furniture and
equipment rests solely with the Barona Tribe, unless the Barona Tribe agrees


                                       5
<PAGE>   8
                            INLAND CASINO CORPORATION
                NOTES TO INTERIM FINANCIAL STATEMENTS (CONTINUED)
                               SEPTEMBER 30, 1997

otherwise. The Consulting Agreement can be terminated by the Barona Tribe for
any material breach by the Company, as defined in such agreement. Management is
not aware of any material breach of the Consulting Agreement.


5. RESTRICTED CASH AND OTHER INVESTMENTS. From June 1996 to May 1997, the
Company provided consulting services to the Klamath and Modoc Tribes and the
Yahooskin Band of Snake Indians (collectively, the "Klamath Tribes"). The
Klamath Tribes constructed the Kla-Mo-Ya Casino near Chiloquin, in south-central
Oregon, a temporary gaming facility funded by revenue bonds issued by the
Klamath Tribes. In connection with such bond financing, the Company has a net
investment of $464,320 in revenue bonds with a principal face amount of
$500,000. As a condition of the bond financing, the Company agreed to hold the
bonds for a five year period. Preopening costs and expenses of approximately
$1.5 million were financed by loans made pursuant to a third-party bank credit
agreement with the Klamath Tribes. The Company pledged to such bank a
certificate of deposit for $1,518,000 as collateral for such loans.

If the Klamath Tribes are unable to pay its obligations, the Company may lose
all or a portion of its investment in the revenue bonds it purchased and its
certificate of deposit pledged as collateral for bank loans to the Klamath
Tribes, which could have a material adverse effect on the financial condition of
the Company.

6.      STOCK REPURCHASE/LONG-TERM DEBT.

Stock Repurchase Obligations - The Company repurchased its own common stock and
outstanding options from a former executive officer, director and principal
shareholder of the Company. The purchase price consisted of a $500,000 cash
payment and issuance of a $900,000, 7% unsecured promissory note, payable in
three equal installments of $342,947. The notes were paid in full in September
1997. If the Company's common stock trading price reaches certain levels during
measurement periods prior to March 1998 and 1999, such former executive officer
will be entitled to up to $250,000 in additional compensation for each
measurement period.

The Company entered into a Stock Purchase and Settlement and Release Agreement
with two shareholders, including a former director in September 1996 (the "Stock
Purchase Agreement"). The terms of the Stock Purchase Agreement included (i) an
aggregate cash payment of $200,000 to such shareholders upon closing, (ii) the
issuance of two unsecured promissory notes in the aggregate principal amount of
$3,500,000, with interest at the rate of 10% per annum, payments of interest
only for the first three years, followed by three equal annual installments of
principal repayment, with interest on the remaining balance commencing September
30, 1997, (iii) a contingent obligation (the "Initial Contingent Obligations")
to issue an aggregate principal amount of $9,856,488 in unsecured promissory
notes to such shareholders including $2,000,000 in principal amount of notes
each year for four years and $1,856,488 in principal amount of notes to be
issued in a fifth year, each note with interest at 10%, payment of interest only
for three years, followed by three equal annual installments of principal plus
interest on the remaining principal balance, and (iv) another contingent
obligation (the "Second Contingent Obligation") to issue an additional aggregate
principal amount of $3,000,000 in unsecured promissory notes, (or cash, if the
Company has closed a firm commitment underwritten public offering of securities
of not less than $35 million prior to the contingencies being met).

The Initial Contingent Obligations are contingent upon the Company's retained
earnings balance, with certain adjustments, being at least $4,000,000 for the
fiscal year ending immediately prior to the date the notes are to be issued. The
test is to be made each year for eight successive years commencing with the


                                       6
<PAGE>   9
                            INLAND CASINO CORPORATION
                NOTES TO INTERIM FINANCIAL STATEMENTS (CONTINUED)
                               SEPTEMBER 30, 1997

fiscal year ending June 30, 1997. The Second Contingent Obligation is subject to
the following conditions: (i) the Barona Tribe enters into a Class III Gaming
Compact (the "Compact") with the State of California which permits the operation
of video gaming machines at the Barona Casino in San Diego County; (ii) at the
time that the Barona Tribe enters into the Compact, the Company has a consulting
agreement or similar contractual arrangement with the Barona Tribe; and (iii)
consulting fees paid to the Company by the Barona Tribe relating to the Barona
Casino for any consecutive 12-month period within five years after the Barona
Tribe has entered into the Compact, equals or exceeds one and one-half times
such consulting fees for the year ended June 30, 1996. The Company intends to
record as the additional cost of the repurchase of its common stock, each
contingent obligation as each contingency or condition is met. All payments
pursuant to the Stock Purchase Agreement are further subject to compliance with
certain state law provisions and the Company's Articles of Incorporation
concerning repurchase transactions.

As of June 30, 1997, the Company's retained earnings exceeded $4,000,000.
Accordingly, a $2,000,000 obligation has been recorded at June 30, 1997, and has
been treated as additional consideration for the common stock repurchased under
the Stock Purchase Agreement.

NIGC Settlement Obligation - In January 1997, the Company entered into a
settlement agreement with the NIGC regarding the Company's relationship with the
Barona Tribe. Under the terms of the agreement, the Company agreed to contribute
$2,000,000 to the Barona Tribe for general improvements on the Barona
reservation, payable in five equal annual installments, commencing in January
1997. Long-term debt at September 30, 1997, includes $1,600,000 relating to the
January Settlement Agreement, of which $400,000 is currently payable.

7. CONTINGENCIES. Indian Gaming is the subject of numerous lawsuits in various
court jurisdictions at both the federal and state levels. These court cases are
attempting to define the permissible gaming activities on Indian reservations,
the states' rights or limitations on control of gaming, and numerous other
issues. While the Barona Tribe is a party to certain of these cases, it is not a
party to many of these cases, nor is the Barona Reservation within the
jurisdiction of certain courts in which many of these cases will be decided;
therefore, the impact, if any, on the operations of the Barona Casino cannot be
determined at this time.

The impact of decisions in various cases, however, could have a significant
impact on the operations of Barona Casino and the Company when decided.
Specifically, current cases are addressing the legality of electronic gaming
equipment and certain card games in California (currently used in the Barona
Casino) and the enforcement rights applicable to Federal and State governments.
Various courts have ruled in different cases, or in different hearings on the
same case, both in the states' favor and in tribes' favor on the same or similar
issues. There are appeals remaining in a number of cases and other cases may
rise. Until there are definitive rulings by the courts, the legality of the
gaming activities in California will not be known.

On June 30, 1994, the U.S. Attorney's Office of the Southern District of
California ("USAO") announced a verbal understanding with a number of Southern
California tribes, including the Barona Tribe (collectively, the "Southern
District Tribes"), that allowed the Barona Tribe to continue to operate without
expansion of gaming activities subject to certain conditions.


                                       7
<PAGE>   10
                            INLAND CASINO CORPORATION
                NOTES TO INTERIM FINANCIAL STATEMENTS (CONTINUED)
                               SEPTEMBER 30, 1997

In June 1997, as a result of a recent Supreme Court decision, the Southern
District Tribes have acknowledged that certain currently operated video gaming
devices are not within the acceptable/permissible scope of compactible gaming
under present federal and state law and agreed to the commencement of a
voluntary phase-out plan with the USAO.

The phase-out plan commenced in August 1997, with the removal of 6% of each
affected Tribe's existing video gaming machines and continued in September 1997
with the removal of another 10% of each affected Tribe's video gaming machines.
The USAO stated that the phase-out plan (i) demonstrates a good faith effort by
the Southern District Tribes to continue to cooperate with the USAO and comply
with state and federal laws, (ii) is necessary in order to minimize the impacts
to affected Tribal employees and local negative economic impacts resulting from
the reduction in gaming operations, and (iii) is expected to facilitate
negotiations between the State of California and the Southern District Tribes
designed to determine the type of machine gaming permissible (otherwise referred
to as "compactible") under federal and state laws.

In September 1997, the USAO announced that it would defer further decisions
relating to the phase-out plan until (i) the completion of the ongoing compact
negotiations between the Pala Band of Mission Indians (the "Pala Tribe") and
(ii) the establishment of a framework for future negotiations between the Pala
Tribe and the State of California, and the State of California and the other
California Tribes, including those that are presently engaged in gaming.

The State of California is currently engaged in negotiations with the Pala
Tribe, which also is located in San Diego County, to determine what type of
gaming is permissible and the circumstances under which it may be conducted.
Management believes that these negotiations may lead to a model compact between
the State of California and the Pala Tribe.

The Southern District Tribes have renewed their request that the State of
California begin negotiations with them (similar to those being held with the
Pala Tribe) with a view towards reaching compacts allowing permissible machine
gaming in their facilities. However, the Governor of the State of California has
stated that he will not negotiate compacts with tribes currently operating
casino games which he believes are not permissible under California law.

To the extent that the Governor alters his position and decides to negotiate
with the Southern District Tribes and other tribes currently operating
electronic gaming machines, an issue in such compact negotiations will be the
conversion of electronic video machines to a lottery or pari-mutual format
designed to comply with both federal and state law. The USAO has stated that it
believes that the question of machine conversion would be consistent with the
criteria being established in the current Pala compact negotiations.

The phase-out of 16% of the video machines at the Barona Casino will result in
an estimated reduction of the Company's consulting fees of approximately
$193,000 per month beginning in October 1997. If the Barona Casino removes
additional machines at the request of USAO , the Company's consulting fees could
be reduced further. If the Barona Casino is forced to remove all of its current
video machines and is unable to obtain a compact with the State of California,
the Company could lose all of its consulting fee revenue from the Barona Casino,
which could have a material adverse effect on the financial condition of the
Company.


                                       8
<PAGE>   11
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

OVERVIEW

Inland Casino Corporation (the "Company" or "Inland Casino") has provided
services to the Barona Group of Capitan Grande Band of Mission Indians (the
"Barona Tribe") since 1991. Since April 1, 1996, the Company has provided
consulting services to the Barona Tribe at the Barona Casino under the terms of
an Amended and Restated Consulting Agreement (the "Consulting Agreement"). The
Company provided certain personnel, at its expense, to operate the activities at
the Barona Casino, and it entered into agreements such as leases or other
contracts for the Barona Casino in which the Company was the obligor (e.g.,
leases for gaming equipment, the Big Top lease, etc.).

In addition to its obligations under the Consulting Agreement and collateral
contracts for the benefit of the Barona Tribe, the Company's consulting
activities include assisting clients in arranging or providing financing to
support casino construction projects and monitoring of Indian Gaming legislative
and litigation matters. The financing costs have been recognized as an asset in
the financial statements of the Company, designated as deferred contract costs,
and are being amortized to expense over the remaining life of the Consulting
Agreement through March 1999. The recovery of these deferred costs is achieved
through the fees earned by Inland Casino pursuant to agreements with the Barona
Tribe.

From June to October 1996, the Company provided consulting services to the
Confederated Tribes of Siletz Indians of Oregon (the "Siletz Tribes") at the
Chinook Winds Gaming and Convention Center in Lincoln City, Oregon, and with the
Associated Tribes of Northwest Indians in Oregon. Fees of $152,000 were earned
during this period and paid during the three months ended September 30, 1997.

From June 1996 to May 1997, the Company provided consulting services to the
Klamath and Modoc Tribes and the Yahooskin Band of Snake Indians (collectively,
the "Klamath Tribes") to assist with the development, construction and eventual
operation of the Kla-Mo-Ya Casino, near Chiloquin, in south-central Oregon.

In connection with the financing of the Kla-Mo-Ya Casino project, the Company
expended $879,933 to purchase revenue bonds with a principal amount of $900,000,
as part of a $4,735,000 principal amount bond financing. In January 1997, the
Company sold $200,000 principal amount of such bonds for $195,582 and in June
1997 sold another $200,000 principal amount of such bonds for $185,500. In
addition to the bond financing, the Company pledged a certificate of deposit for
$1,518,000 as collateral for third-party bank loans to the Klamath Tribes. If
the Kla-Mo-Ya Casino sustains operating losses after opening, the Company may
lose a portion or all of its $464,320 investment, ($500,000 principal amount),
in revenue bonds and its pledged $1,518,000 certificate of deposit, which could
have a material adverse effect on the Company's liquidity and financial
condition.


RESULTS OF OPERATIONS

THREE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED WITH THE THREE MONTHS ENDED
SEPTEMBER 30, 1997. 

REVENUE. Revenue decreased 0.5% from $3,950,000 for the three months ended
September 30, 1996 to $3,932,000 for the three months ended September 30, 1997,
as a result of lower profit margins at the Barona Casino. The Company's revenue
for the three months ended September 30, 1997 was entirely from fees earned as a
consultant to the Barona Tribe with the exception of $152,000 in fees received
from consulting services provided to the Siletz Tribes.

OPERATING EXPENSES. General and administrative expenses increased 4.5% from
$1,878,391 for the three months ended September 30, 1996 to $1,962,297 for the
three months ended September 30, 1997, resulting primarily from increases in
consulting and legal fees (in part related to the Company's exploration of new
business opportunities), partially offset by a decrease in provision for
doubtful 


                                       9
<PAGE>   12
accounts as allowances established during the quarter ending September 30, 1996
to cover anticipated losses resulting from certain consulting engagements.

Amortization of deferred contract costs increased 44.4% from $604,371 for the
three months ended September 30, 1996 to $872,868 for the three months ended
September 30, 1997, primarily as a result of an increase in deferred contract
costs, primarily resulting from the addition of the $2,000,000 commitment to the
Barona Tribe. (See Notes to Interim Financial Statements, Note 3. Agreements
with the Barona Tribe.)

OTHER INCOME AND EXPENSE. For the three months ended September 30, 1997,
interest income was $146,307 compared to $56,653 for the three months ended
September 30, 1996. The increase was due to the increase in investments and cash
equivalents.

Interest expense increased from $15,750 for the three months ended September 30,
1996 to $102,319 for the three months ended September 30, 1997, primarily as a
result of interest expense incurred on notes payable issued in March 1996 in
connection with the repurchase of 1,908,865 shares of the Company's common stock
from a former officer and director of the Company, and in September 1996 in
connection with the repurchase of shares of the Company's common stock from two
major shareholders, including a former director of the Company. (See Notes to
Interim Financial Statements, Note 6. Stock Repurchases/Long-term Debt.)

INCOME TAX PROVISION. The income tax provision decreased 28.8% from $715,000 for
the three months ended September 30, 1996 to $509,000 for the three months ended
September 30, 1997, based on decreased operating profit in the current quarter.


VIDEO GAMING MACHINE REDUCTION. As a result of negotiations between the U.S.
Attorney's Office of the Southern District of California ("USAO") and several
Southern California Indian tribes, including the Barona Tribe (the "Southern
District Tribes"), these Tribes each agreed to commence a phase-out plan of
certain electronic gaming machines.

The phase-out plan commenced in August 1997, with the removal of 6% of each
affected Tribe's existing video gaming machines and continued in September 1997
with the removal of another 10% of each affected Tribe's video gaming machines.
The USAO stated that the phase-out plan (i) demonstrates a good faith effort by
the Southern District Tribes to continue to cooperate with the USAO and comply
with state and federal laws, (ii) is necessary in order to minimize the impacts
to affected Tribal employees and local negative economic impacts resulting from
the reduction in gaming operations, and (iii) is expected to facilitate
negotiations between the State of California and the Southern District Tribes
designed to determine the type of machine gaming permissible (otherwise referred
to as "compactible") under federal and state laws.

In September 1997, the USAO announced that it would defer further decisions
relating to the phase-out plan until (i) the completion of the ongoing compact
negotiations between the Pala Band of Mission Indians (the "Pala Tribe") and
(ii) the establishment of a framework for future negotiations between the Pala
Tribe and the State of California, and the State of California and the other
California Tribes, including those that are presently engaged in gaming.

The phase-out of 16% of the video machines at the Barona Casino will result in
an estimated reduction of the Company's consulting fees of approximately
$193,000 per month beginning in October 1997. If the Barona Casino removes
additional machines at the request of USAO , the Company's consulting fees could
be reduced further. If the Barona Casino is forced to remove all of its current
video machines and is unable to obtain a compact with the State of California,
the Company could lose all of its consulting fee revenue from the Barona Casino,
which could have a material adverse effect on the financial condition of the
Company.

ADDITIONAL FACTORS THAT MAY AFFECT FUTURE RESULTS.

Gaming on Indian land is extensively regulated by Federal, State and Tribal
governments. The present regulatory environment is extremely uncertain because
of certain pending litigation and legislation. Adverse findings for any of the
Indian tribes in any of the pending actions could have a material adverse effect
on the operations of the Company, as would criminal and civil enforcement
actions taken by federal agencies which could be commenced before the outcome of
such litigation is known.

In addition, the Company's Consulting Agreement with the Barona Tribe has not
yet been approved by all regulatory authorities. If the Consulting Agreement is
not approved or is significantly modified from the standpoint of consulting
revenue, such action would have a material adverse effect on the business and
financial condition of the Company. (See Notes to Interim Financial Statements,
Note 3, Agreements with the Barona Tribe.)

In any event, any material reduction in fees payable to the Company, whether as
a result of (i) a modification to the Consulting Agreement between the Company
and the Barona Tribe as a result of regulatory compliance requirements or (ii)
weakness in the operations of the Barona Casino, could have a material adverse
effect on the business and financial condition of the Company, if the Company
could not either reduce expenses or increase revenues from other sources.

Currently, the State of California is engaged in negotiations with the Pala Band
of Mission Indians to determine what type of gaming is permissible in California
and the circumstances under which it may be conducted. These negotiations are
important to the Barona Tribe, as well as other California tribes, in connection
with establishing a framework for future permissible gaming activities for
Indian tribes in California. (See Notes to Interim Financial Statement, Note 7.
Contingencies.)

                                       10
<PAGE>   13
LIQUIDITY AND CAPITAL RESOURCES.

The Company's principal source of liquidity at September 30, 1997 consisted of
cash of $8,783,052, future revenues generated from operations and advances of
future fees under the Consulting Agreement with the Barona Tribe. The Company
finances its operations through cash provided by its operations and advances of
future fees, all (in the case of future fees) or substantially all (in the case
of cash provided by operations) derived from agreements with the Barona Tribe.
The Company believes that these sources of liquidity will be sufficient to meet
the Company's operating and capital requirements for the foreseeable future.

During the three months ended September 30, 1997, the Company's cash position
increased $778,974 from the June 30, 1997 balance of $8,004,078, to $8,783,052
at September 30, 1997. The increase was provided by net cash generated by
operating activities of $1,856,304 during the period reduced by cash flows used
in financing activities of $374,276 and investing activities of $703,054.

Deferred income taxes decreased $106,000 as the amortization of deferred
contract costs for tax purposes exceeded amortization of such costs for
financial statement purposes during the three months ended September 30, 1997.

Accounts payable and accrued expenses decreased $265,239 primarily as a result
of payments OF accrued interest on notes payable issued in connection with
repurchases of common stock.

From the inception of the Company, the Company's most significant expenditure
has been the funding of the deferred contract costs related to expansion of the
facilities at the Barona Casino. The Company has received advances against
future fees from the Barona Tribe to assist in financing such activities. The
decrease in net deferred contract costs from $5,843,023 at June 30, 1997 to
$5,315,242 at September, 1997, resulted from amortization of $872,868, partially
offset by a $345,087 increase in deferred contract costs financed by the use of
$114,678 in cash flow and $230,409 in long-term advances of future fees from the
Barona Casino during the same period. At September 30, 1997, outstanding
advances of future fees from the Barona Casino totalled $2,567,866. Advances do
not bear interest and are due on demand.

Cash flows used in investing activities for the three months ended September 30,
1997 includes investments of $259,598 in furniture and equipment, primarily
computer software and hardware.

Restricted cash and other investments of $1,982,320 is comprised of a bank
certificate of deposit of $1,518,000 pledged as collateral by the Company to
secure loans made pursuant to a bank credit agreement with the Klamath Tribes in
connection with the development of the Kla-Mo-Ya Casino and the Company's net
investment of $464,320 in revenue bonds issued by the Klamath Tribes. (See Notes
to Interim Financial Statements, Note 5. Restricted cash and other investments.)

Cash flows used in financing activities include $620,054 for repayment of
promissory note to a former executive officer, director, and principal
shareholder for the repurchase of shares of common stock. This repayment also
decreased the current portion of long-term debt by $620,054. (See Notes to
Interim Financial Statements, Note 6, Stock repurchase/Long-term debt.)
Additionally, there was an $83,000 increase in loans made to employees of the
Company.

Long term debt increased $230,409, as a result of long term advances of future
fees to the Barona Casino.

It is the Company's intention to assist the Barona Tribe in funding, or finding
acceptable sources of funding, for future improvements in the Barona Casino.
Depending on the nature and extent of the improvement project and to the extent
practicable, it is the Company's intent to first explore funding such
improvement projects from the Company's working capital and through advances of
future fees, before seeking outside debt or equity financing. However, outside
sources of financing may be required or sought at any time.

The Barona Casino and all of the related facilities are capital improvements
upon land which belongs to the Barona Tribe. As such, the Company has no
ownership whatsoever in any of the improvements to such land. All of these
improvements belong to the Barona Tribe.


                                       11
                                        
<PAGE>   14
FORWARD-LOOKING STATEMENTS.

Included in the Notes to the Interim Financial Statements, this Item 2.
Management's Discussion and Analysis or Plan of Operation and elsewhere in this
Report are certain forward-looking statements reflecting the Company's current
expectations. Although the Company believes that its expectations are based on
reasonable assumptions, there can be no assurance that the Company's financial
goals or expectations will be realized. Numerous factors may affect the
Company's actual results and may cause results to differ materially from those
expressed in forward-looking statements made by or on behalf of the Company.
Some of these factors include the uncertainties regarding the current and
ongoing discussions between the Southern District Tribes (including the Barona
Tribe) and the U.S. Attorney for the Southern District of California regarding
the staged phase-out of electronic gaming machines at Indian-operated casinos,
the uncertainties regarding the compact negotiations between the State of
California and the Indian tribes, particularly the Barona Tribe, the
uncertainties involved in the regulatory approval process relating to the
Consulting Agreement, the outcome of a variety of pending litigation and
legislation at the federal and state levels regarding Indian gaming, the
possible loss of the Company's various investment and guaranties related to the
Kla-Mo-Ya Casino, the availability of funding alternatives to fulfill
development projects at the Barona Casino, and general economic factors
affecting the gaming industry in general and Indian gaming in particular in the
respective geographic markets within which the Company competes, particularly
Southern California.


                                       12
<PAGE>   15
                           PART II - OTHER INFORMATION


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

    (a) Exhibits. The Exhibits listed below are filed with the U.S. Securities
and Exchange Commission (the "Commission") as part of this Quarterly Report on
Form 10-QSB.

        Exhibit No.                         Description
        -----------                         -----------

            10.1        Lease Agreement dated September 27, 1997, by and between
                        the Company and Rancho Bernardo Associates, a California
                        General Partnership.

            27          Financial Data Schedule.

    (b) Reports on Form 8-K.

No reports on Form 8-K were filed with the Commission during the Company's first
quarter ended September 30, 1997.


                                       13
<PAGE>   16
                                   SIGNATURES

        In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                           INLAND CASINO CORPORATION,
                                           a Utah Corporation

Date:  November 12, 1997                         By:  /S/ Andrew B. Laub
                                                      -------------------
                                                 Andrew B. Laub
                                                 Executive Vice President,
                                                 Chief Financial Officer, and
                                                 Treasurer
                                                 (Principal Financial Officer)


                                       14
<PAGE>   17
                                  EXHIBIT INDEX


        Exhibit No.                         Description
        -----------                         -----------

            10.1        Lease Agreement dated September 27, 1997, by and between
                        the Company and Rancho Bernardo Associates, a California
                        General Partnership .

            27          Financial Data Schedule.


                                       15