TAURUS ENTERTAINMENT COMPANIES INC, 10KSB, 1999-01-20

TAURUS ENTERTAINMENT COMPANIES INC
10KSB, 1999-01-20
CRUDE PETROLEUM & NATURAL GAS

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB

[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934; for the Fiscal Year Ended: September 30, 1998

[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934

Commission File Number: 0-8835

TAURUS ENTERTAINMENT COMPANIES INC.
(Exact name of registrant as specified in its charter)

Colorado 84-0736215
(State or other jurisdiction of (IRS Employer
incorporation or organization) identification No.)

16770 Hedgecroft
Houston, Texas 77060
(Address of principal executive offices, including zip code)

(281) 820-1181
(Registrant's telephone number, including area code)

Securities registered under Section 12(b) of the Exchange Act:

Title of Each Class Name of Each Exchange on which Registered

N/A N/A

Securities registered pursuant to 12(g) of the Exchange Act:

Title of Each Class

Common Stock, $.001 par value

Indicate by check mark whether the registrant (i) has 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 (ii) has been subject to such filing requirements for the past 90
days. Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [X]

Issuer's revenues for the year ended September 30, 1998 were $3,394,780. There
has been no reported bid price on the OTBCC during the last sixty days,
therefore, the aggregate market value of common stock held by non-affiliates of
the registrant at November 9, 1998 cannot be calculated. See, Market for
Registrant's Common Equity and Other Stockholder Matters. As of January 11,
1999. there were 4,305,012 shares of Common Stock outstanding.

<TABLE>
<CAPTION>
TABLE OF CONTENTS

<S> <C> <C>
PART I

Item 1. Business 1

Item 2. Properties 7

Item 3. Legal Proceedings 8

Item 4. Submission of Matters to a Vote of Security Holders 10

PART II

Item 5. Market for Registrant's Common Equity and
Related Stockholder Matters 10

Item 6. Management's Discussion and Analysis of Financial Condition and
Results of Operations 11

Item 7. Financial Statements 15

Item 8. Changes in and Disagreements With Accountants
on Accounting and Financial Disclosure 15

PART III

Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of The Exchange Act 18

Item 10. Executive Compensation 19

Item 11. Security Ownership of Certain Beneficial Owners and
Management 21

Item 12. Certain Relationships and Related Transactions 22

Item 13. Exhibits and Reports on Form 8-K 24
</TABLE>

<PAGE>
PART I

ITEM 1. BUSINESS

Taurus Entertainment Companies, Inc. (the "Company"), formerly Taurus
Petroleum, Inc., changed its name in November 1997, to reflect its entry into
the adult entertainment business. Presently, the Company owns and operates an
adult cabaret in Austin, owns one other cabaret facility in north Houston which
suffered damage in a fire in May, 1998 and which has been renovated, leased to
Rick's Cabaret International, Inc. ("Rick's) and re-opened as an adult cabaret
in December, 1998. Additionally the Company owns an adult cabaret located in
South Houston which suffered damage in a fire in December, 1998 and which is
presently closed as a result of that damage. The company also leases premises on
Bourbon Street, in New Orleans, Louisiana which are presently closed.

The Company was formed as a Colorado corporation in 1977, and was
previously an independent oil and gas exploration, development and production
company. In November, 1984 Taurus Oil Corporation and The Methane Gas Company
were merged into the Company under Chapter 11 of the Bankruptcy Reform Act of
1978, as amended. The Company owned interests in 67 productive oil and gas
wells located in Texas, Louisiana, Wyoming, Oklahoma, and Montana, and operated
39 of the wells, until July 1, 1996, when the Company divested all of its oil
and gas assets.

Entry into Adult Entertainment Industry

During 1997 and 1998, the Company successfully effectuated its entry into
the adult entertainment business. In December, 1997, the Company entered into
an Asset Purchase Agreement (the "Enigma Agreement") with The Enigma Group, Inc.
("Enigma") which provided for the acquisition by the Company of substantially
all of the assets of Enigma (the "Enigma Assets"). The Enigma Assets consisted
of: (i) certain real estate commonly known as 410 N. Sam Houston Parkway E.
Houston, Texas 77060 (the "Enigma Location"); (ii) furniture, fixtures,
equipment, goods, and other personal property of Enigma as such existed on
December 31, 1997, located at the Enigma Location (the "Personal Property");
(iii) Enigma's lease interest as lessor for the Enigma Location; and (iv) all
right, title and interest in and to any and all trademarks, trade names, trade
dress, service marks, slogans, logos, corporate or partnership names (and any
existing or possible combination or derivation of any or all of the same) and
general intangibles. Pursuant to the terms of the Enigma Agreement, as
consideration for the Enigma Assets, the Company paid to Enigma 350,000 shares
of common stock of the Company valued at $1.00 per share. The Enigma Agreement
was the result of negotiations between the Company and Enigma and was based on
numerous factors including the Company's estimate of the value of the Enigma
Location and the Personal Property. Eric Langan, a Director of the Company, and
Stephen E. Fischer, a former Director of the Company, controlled Enigma.

The lessee of the Enigma Location was Atcomm Services, Inc. ("Atcomm"),
which operated an adult entertainment business. In December, 1997, the Company,
through its wholly owned subsidiary Broadstreets Cabaret, Inc.
("Broadstreets"), entered into an Asset Purchase Agreement with Atcomm which
provided for the acquisition by the Company of substantially all of the assets
of Atcomm (the "Atcomm Agreement"). The assets acquired by Broadstreets
consisted of: (i) all right, title, interest and claim to the permit to operate
a sexually oriented business at the Enigma Location; (ii) all inventory located
at the Enigma Location; (iii) Atcomm's lease interest as lessee for the Enigma
Location; and (iv) all right, title and interest in and to any and all
trademarks, trade names, trade dress, service marks, slogans, logos, corporate
or partnership names (and any existing or possible combination or derivation of
any or all of the same) and general intangibles. Pursuant to the terms of the
Asset Purchase Agreement with Atcomm, Broadstreets agreed to pay, as
consideration, $225,000 to Atcomm, payable pursuant to the terms of a four year
unsecured promissory note of Broadstreets, payable monthly, in arrears and
bearing interest at the rate of six percent (6%) per annum. The Atcomm
Agreement was the result of negotiations between the Company and Atcomm and was
based on numerous factors including the Company's estimate of the value of the
sexually oriented business permit owned by Atcomm, current revenues of Atcomm
and the leasehold rights held by Atcomm. Atcomm is owned by the son of Stephen
E. Fischer, a former Director of the Company.

In December, 31, 1997, the Company entered into an Exchange Agreement with
the members of Citation Land, L.L.C. (the "Citation Agreement") which provided
for the acquisition by the Company of all of the outstanding membership
interests in Citation Land, L.L.C. ("Citation"). Citation owns certain real
estate in Houston, Texas at which another company, XTC Cabaret, Inc. ("XTC")
operates an adult entertainment business (the "XTC Location"). As discussed
below, the Company has acquired all of the stock of XTC and intends to continue
operating an adult entertainment business at the XTC Location. Citation also
owns approximately 350 acres of ranch land in Brazoria County, Texas,
approximately 50 acres of raw land in Wise County, Texas, and, at the time of
this transaction, owned options to purchase real estate in Austin, Texas and San
Antonio, Texas, at which the Company had contemplated operating adult
entertainment businesses. Mr. Langan received 1,153,137 shares of the Company
as a result of this transaction.

In December, 1997, pursuant to the terms of the Citation Agreement, the
Company paid to the Citation Stockholders an aggregate of 2,500,000 shares of
common stock of the Company which the Company valued at $1.00 per share. The
Citation Agreement was the result of negotiations between the Company and the
members of Citation and was based on numerous factors including the Company's
estimate of the value of the assets of Citation which the Company estimated,
based upon the existing lease, the estimated value of the real estate and the
options, to be approximately $2,500,000. Eric Langan, Chairman of the Board of
the Company controlled Citation.

Pursuant to the terms of the XTC Agreement, the Company paid the XTC
Stockholders an aggregate of 525,000 shares of common stock of the Company
valued at $1.00 per share. The XTC Agreement was the result of negotiations
between the Company and the XTC Stockholders and was based on numerous factors
including the Company's estimate of the value of the assets of XTC which the
Company estimated, based upon current operations and future revenues from its
three existing adult nightclubs to be approximately $525,000. Eric Langan, a
Director of the Company and Mitchell White, a former director of the Company,
were the sole stockholders of XTC on voting on this transaction.

In February, 1998, the Company entered into a Stock Purchase Agreement with
the sole stockholder of Lucky's of Bourbon Street, Inc. ("Lucky's") to acquire
all of the outstanding common stock of Lucky's. Lucky's is the lessee for a
cabaret location at 735 Bourbon Street in New Orleans, Louisiana (the "Bourbon
Street Location"). The Company opened the Bourbon Street Location for business
in April, 1998, and subsequently closed this location. The Company has the
necessary permits to serve alcoholic beverages and provide topless adult
entertainment. The Company's lease for the Bourbon Street Location provides
that the Company has an option to acquire the Bourbon Street Location under
certain conditions. The company is presently evaluating its options as they
relate to the future development of this property.

In May, 1998, a fire damaged Broadstreets Cabaret, which is located in
north Houston, Texas and this facility was closed for remodeling and repair.
The Company was fully insured for the property damage. However, the Company did
not maintain business interruption insurance. Thus, the Company experienced a
reduction in company-wide revenues due to the loss of revenue from Broadstreets.
This resulted in a material decline in revenues during the closure of
Broadstreets. In August, 1998, the Company leased the Broadstreets Cabaret
facility to Rick's Cabaret International, Inc and the facility was renovated and
opened as an adult cabaret in December, 1998.

In August, 1998, Rick's Cabaret International, Inc. ( "Rick's") acquired
approximately 93% of the common stock (the "Shares") of the Company. Rick's
acquired the Shares in a private transaction (the "Exchange") with certain
principal shareholders (the "Shareholders") of Taurus. Rick's now controls
Taurus.

Rick's is a publicly owned company in the adult entertainment business
trading on NASDAQ under the symbol RICK, for Rick's common stock. Rick's
operates adult entertainment busiG23
nesses in Houston, Texas, New Orleans, Louisiana and Minneapolis, Minnesota, and
a dance club in Houston. Robert L. Watters, Chairman and President of Rick's,
was appointed as a new Director of Taurus.

Business Strategy

The Company presently plans to operate its existing cabaret in Austin, and
to receive rental revenue for the Broadstreets Cabaret facility from Rick's.
The Company intends to evaluate its options for development of the New Orleans
property, including pursuing possible joint venturers or sub-leasing the
property and to evaluate the redevelopment of its property in south Houston
which was damaged in a fire in December, 1998. The Company intends to place its
Wise County, Texas land for sale. The Company intends to place its Brazoria
County, Texas ranch for sale . See, Properties.

Compliance Policies

The Company has a policy of ensuring that its business is carried on in
conformity with local, state and federal laws. In particular, the Company's
management has a "no tolerance" policy as to illegal drug use in or around the
premises. Posters placed throughout the nightclub reinforce this policy as do
periodic unannounced searches of the entertainer's lockers. Entertainers and
waitresses who arrive for work are not allowed to leave the premises without the
permission of management. Once an entertainer does leave the premises, she is
not allowed to return to work until the next day. Management continually
monitors the behavior of entertainers, waitresses and customers to ensure that
proper standards of behavior are observed. The Company's management has the
power to levy fines on entertainers for breaches of the Company's rules. In the
event an entertainer is fined three times by management, the entertainer is
barred from future performances.

Management also reviews all credit card charges made by customers.
Specifically, management has in place a formal policy which provides that all
credit card charges must be approved, in writing, by management before any
charges are accepted. Management is particularly trained to review credit card
charges to ensure that the only credit card charges approved for payment are for
food, drink and entertainment.

Controls

Operational and accounting controls are essential to the successful
operation of a cash intensive nightclub and bar business. The Company has
implemented internal procedures and controls designed to ensure the integrity of
its operational and accounting records. The Company separates management
personnel from all cash handling to ensure that management is isolated from and
does not handle any cash. The Company uses a combination of accounting and
physical inventory control mechanisms to ensure a high level of integrity in its
accounting practices. Computers play a significant role in capturing and
analyzing a variety of information to provide management with the information
necessary to efficiently manage and control the nightclub. Deposits of cash and
credit card receipts are reconciled each day to a daily income report. In
addition, management reviews on a daily basis (i) cash and credit card summaries
which tie together all cash and credit card transactions occurring at the front
door, the bars in the club and the cashier station, (ii) a summary of the daily
bartenders' check-out reports, and (iii) a daily cash requirements analysis
which reconciles the previous day's cash on hand to the requirements for the
next day's operations. These daily computer reports alert management of any
variances from expected financial results based on historical norms.

Competition

The adult entertainment business is highly competitive with respect to
price, service and location, as well as the professionalism of its
entertainment. For example, the Company in Austin, Texas competes with a number
of locally-owned adult cabarets, some of whose names may enjoy recognition
greater than the Company. Although the Company believes that it is
well-positioned to compete successfully, there can be no assurance that it will
remain competitive.

Governmental Regulations

The Company is subject to various federal, state and local laws affecting
its business activities. The Company takes all steps necessary to ensure
compliance with all licensing and regulatory requirements for the sale of
beverages as well as the sale of food.

In Houston, and in many other cities, location of a topless or nude cabaret
is subject to restriction by city ordinance. The Company in Houston is subject
to "The Sexually Oriented Business Ordinance" (the "Ordinance") which contains
prohibitions on the location of an adult cabaret. The prohibitions deal
generally with distance from schools, churches, and other sexually oriented
businesses and contain restrictions based on the percentage of residences within
the immediate vicinity of the sexually oriented business. The granting of a
Sexually Oriented Business Permit ("Business Permit") is not subject to
discretion; the Business Permit must be granted if the proposed operation
satisfies the requirements of the Ordinance.

In January 1997, the City Council of the City of Houston passed a
comprehensive new Ordinance regulating the location of and the conduct within
Sexually Oriented Businesses. The new Ordinance established new distances that
Sexually Oriented Businesses may be located to schools, churches, playgrounds
and other sexually oriented businesses. There were no provisions in the
Ordinance exempting previously permitted sexually oriented businesses from the
effect of the new Ordinance. In 1997, the Company was informed that its
locations in north and south Houston failed to meet the requirements of the
Ordinance and accordingly the renewal of the Company's Business Licenses at
those locations were denied.

The Ordinance provided that a business which was denied a renewal of its
operating permit due to changes in distance requirements under the Ordinance
would be entitled to continue in operation for a period of time (the
"Amortization Period") if the owner were unable to recoup, by the effective date
of the Ordinance, its investment in the business that was incurred through the
date of the passage and approval of the Ordinance.

The Company filed a written request with the City of Houston requesting an
extension of time during which the Company could continue operations at its
locations Broadstreets Cabaret in North Houston and XTC Cabaret in South Houston
under the Amortization Period provisions of the Ordinance since the Company was
unable to recoup its investment prior to the effective date of the Ordinance.
An administrative hearing (the "Hearing") was held by the City of Houston to
determine the appropriate Amortization Period to be granted to the Company. At
the Hearing, the Company was granted an amortization period through June 2000
for its location in north Houston and was denied an extension of time for its
location in south Houston. The Company has the right to appeal any decision of
the Hearing official to the district court in the State of Texas.

In May, 1997, the City of Houston agreed to defer implementation of the
Ordinance until the constitutionality of the entire Ordinance was decided by
court trial. In February, 1998, the U.S. District Court for the Southern
District of Texas, Houston, Division, struck down certain provisions of the
Ordinance, including the provision mandating a 1,500 foot distance between a
club and schools, churches and other sexually oriented business, leaving intact
the provision of the 750 foot distance as it existed in the prior Houston, Texas
Ordinance.

There are other provisions in the Houston, Texas Ordinance, such as
provisions governing the level of lighting in a sexually oriented business, the
distance between a customer and dancer while the dancer is performing in a state
of undress and provisions regarding the licensing of dancers that were upheld
which may be detrimental to the business by the Company. The Company, in
concert with other sexually oriented businesses, is appealing these aspects of
the Houston, Texas Ordinance.

The City of Houston has appealed the court's rulings. In the event that
the City of Houston is successful in an appeal, the Company's south Houston
location could be out of compliance. Such an outcome could have an adverse
impact on the Company's future.

On April 1, 1998, the City of Houston began enforcing certain portions of
the Ordinance, including the distance requirement between a customer and a
dancer while dancing, and the requirement that dancers be licensed. The City of
Houston's enforcement of the recently implemented provisions of the Ordinance
could have an adverse impact on the Company's location in Houston, Texas. The
current requirement of a three foot distance between a dancer and a customer
could reduce customer satisfaction and could result in fewer customers at the
Houston location. The requirement that a dancer be licensed may result in fewer
dancers working, which could have an adverse impact on the Houston locations.
It is unknown what impact the enforcement of the Ordinance may have on the
Company's Houston locations.

In Austin, the Company is required to be in compliance with liquor
licensing laws and with Travis County restrictions on the location of sexually
oriented businesses.

Employees and Independent Contractors

As of September 30, 1998, the Company had approximately 15 full-time
employees, of which 8 are in management positions, including corporate and
administrative operations, and approximately 7 are engaged in customer service,
including bartenders and waitresses. None of the Company's employees are
represented by a union and the Company considers its employee relations to be
good.

Additionally, the Company has independent contractor relationships with
over 80 entertainers, who are self-employed and work with the Company on a
non-exclusive basis as independent contractors.

Transfer Agent and Registrar

The transfer agent and registrar for the Company's Common Stock is American
Securities Transfer & Trust, Inc., 1825 Lawrence Street, Suite 444, Denver,
Colorado 80202-1817.

ITEM 2. PROPERTIES

The Company's principal executive offices are located in leased facilities
in Houston, Texas, consisting of a total of approximately 700 square feet at a
rental rate of $1000.00 per month . The Company believes that its offices are
adequate for its present needs and that suitable space will be available to
accommodate its future needs.

The Company leases a 11,000 square foot facility in New Orleans, Louisiana
at a rental rate of $10,000 per month. Pursuant to this lease, the Company has
an option to purchase the facility. This lease expires in 2001.

The Company owns its location at 410 Sam Houston Parkway East in Houston.
This facility has undergone renovation after a fire in May, 1998. This facility
is leased to Rick's Cabaret International, Inc. and re-opened in late December,
1998. The Company receives $15,000 per month in lease income from this facility.
The lease expires in July, 2018. The club will occupy 10,000 square feet in a
one story building. A mortgage on the property was executed in December, 1996 by
another party with an original principal amount of $660,000, bearing interest of
10% per annum, with monthly principal and interest payments of $10,790 and a
balloon payment due in January, 2005.

The Company owns its XTC Cabaret location in Houston, which was damaged in
a fire in December, 1998. The Company believes that it was fully insured against
the loss arising from the fire. The company's insurance policy included coverage
for loss arising from business interruption. The club occupies 8,000 square
feet in a one story building, which sits on approximately one acre of land.

The Company owns its XTC Cabaret in Austin. The club occupies 7000 square
feet in a one story building, which sits on 1.2 acres of land. The mortgage on
the property was executed in July, 1998 in the original principal amount of
$557,000, bearing interest of 10% per annum, amortized over 20 years with
monthly principal and interest payments of $5,380, and a balloon payment due in
July 2003.

The Company owns approximately 350 acres of ranch land in Brazoria County,
Texas.

The Company owns approximately 50 acres of raw land in Wise County, Texas

ITEM 3. LEGAL PROCEEDINGS

The Company is a party to litigation in All City Beverage and
Entertainment, Inc. v. Taurus Entertainment, Inc., No. 98-49119, in the 61st
Judicial District Court of Harris County, Texas. The plaintiff is seeking
damages in connection with an asset purchase agreement between the parties. The
Company has filed a counterclaim that is greater than the amount sought by the
plaintiff. The Company intends to pursue a vigorous defense and to vigorously
pursue its counterclaim.

Sexually Oriented Business Ordinance of Houston, Texas

The City of Houston has appealed the court's rulings. In the event that
the City of Houston is successful in an appeal, the Company's south
Houston location could be out of compliance. Such an outcome could have an
adverse impact on the Company's future.

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

During the fourth quarter of 1998, there were no matters submitted to a
vote of the Security Holders, through solicitation of proxies or otherwise.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS

The Company's Common Stock is traded on the OTCBB under the symbol "TAUR"
The following table sets forth, for the periods indicated the high and low
closing bid prices for the Common Stock of the Company taking into account and
restated for all stock splits. The bid prices are believed to reflect
inter-dealer quotations, do not include retail markups, markdowns or commissions
and do not necessarily reflect actual transactions. Periods for which the
Company believes no bids were being made are indicted by an asterisk (*).

<TABLE>
<CAPTION>
COMMON STOCK PRICE RANGE
HIGH LOW
<S> <C> <C>
1997
First Quarter $ .001 $ .001
Second Quarter $ .001 $ .001
Third Quarter $ .001 $ .001
Fourth Quarter $ .001 $ .001

1998
First Quarter $ .001 $ .001
Second Quarter $ .001 $ .001
Third Quarter $ .75 $ .75
Fourth Quarter (*) (*)
<FN>
____________________
(*) During the last quarter of fiscal 1998, the Company believes there were
no bids or trades for its Common Stock on the OTCBB, which the Company believes
is a result of the acquisition of 93% of the Company's common stock by Rick's in
August, 1998. On November 9, 1998, there were approximately 1,405 stockholders
of record of the Common Stock.
</TABLE>

Transfer Agent and Registrar

The transfer agent and registrar for the Company's Common Stock is American
Securities Transfer & Trust, Inc., 1825 Lawrence Street, Suite 444, Denver,
Colorado 80202-1817.

Dividend Policy

The Company has not paid, and the Company does not currently intend to pay
cash dividends on its Common Stock in the foreseeable future. The current
policy of the Company's Board of Directors is to retain all earnings, if any, to
provide funds for operation and expansion of the Company's business. The
declaration of dividends, if any, will be subject to the discretion of the Board
of Directors, which may consider such factors as the Company's results of
operations, financial condition, capital needs and acquisition strategy, among
others.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the financial
statements and notes thereto for the fiscal years ended September 30, 1998 and
1997.

Forward Looking Statement and Information

This Management Discussion and Analysis contains various forward looking
statements which represent the Company's expectations or beliefs concerning
future events and involve a number of risks and uncertainties. Important
factors that could cause actual results to differ materially from those
indicated include risks and uncertainties relating to the impact and
implementation of the sexually oriented business ordinance in the City of
Houston, competitive factors, the timing of the openings of other clubs, the
compatibility of operations of Taurus Entertainment Companies, Inc. with the
operations and management of Rick's Cabaret International, Inc., and the
availability of acceptable financing to fund corporate expansion efforts. The
Company has no obligation to update or revise these forward looking statements
to reflect the occurrence of future events or circumstances.

General

The Company had been operated as an oil and gas company until 1997. All
oil and gas properties and operations were divested by 1996 and the Company
entered the adult entertainment business in December, 1997.

Results of Operations

Year Ended September 30, 1998 Compared to Year Ended September 30, 1997.

For the 1998 fiscal year, the Company had consolidated total revenues of
$3,394,783, an increase of $1,634,397 from fiscal 1997 revenues of $1,760,386.

Consolidated net losses were $620,464 and $90,048 for fiscal years 1998 and
1997 respectively. Operating revenue increased by $1,634,397 during fiscal 1998
over fiscal 1997. The increase in operating revenue in fiscal 1998 was the
direct result of the Company's acquisitions and entry into the adult
entertainment business.

The overall decline in profitability is due is attributable to the chilling
effect of a new ordinance passed in by Houston City Council in January, 1997, by
the failure of a new location in New Orleans to produce significant sales from
the time of its opening in April, 1998 to the time of its closure in July, 1998
and by a fire in May, 1998 which closed the company's location at 410 Sam
Houston Parkway East, Houston, Texas. The company intends to remedy this decline
in profitability by seeking a profitable use for the New Orleans property,
selling non-income producing properties and by receiving a rental stream from
the lease of its location at 410 Sam Houston Parkway East in Houston, Texas to
Rick's.

Salaries and wages increased $434,408 or 60% from fiscal 1997 due to the
addition of personnel in all areas of the company due to the acquisition of
Taurus Entertainment Companies, Inc. and in preparation for the opening of
other locations.

Other general and administrative expenses increased 262% or $1,409,262 from
fiscal 1997 to fiscal 1998. Charge card fees increased $37,750 largely due to
the operation of Broadstreets Cabaret for a portion of the fiscal year. Legal
and accounting fees increased $89,775 as a result of the opening of the New
Orleans property and legal and accounting assistance obtained in connection with
the acquisition of the majority of the company's issued stock by Rick's Cabaret
International, IncAdvertising and promotion increased by $93,038 because of the
opening of the New Orleans location and the company's location at 410 Sam
Houston Parkway East. The company's current media expenditures have declined
reflecting the decrease in need for advertising due to the closure of the New
Orleans location and the Broadstreets locationOther costs increased $765,623
during fiscal 1998 as a result of the costs associated with opening the New
Orleans location and the operation of Broadstreets Cabaret until its closure in
May 1998 due to a fire.

This Company experienced a net loss of $620,464 for fiscal 1998 compared to
a net loss of $90,048 for fiscal 1997. Management has taken steps as discussed
in greater detail below to ensure the Company will become profitable in 1999,
principally as a result of increased revenues and decreased interest expense
resulting from the sale of non-income producing properties. See, Liquidity and
Capital Resources.

Interest expense was ($156,238) during fiscal 1998.

Fiscal Year Ended September 30, 1997 Compared to 1996

As explained in Note 2 to the consolidated financial statements, the
acquisitions of the entities described above have been accounted for as a
"reverse acquisition." Therefore, the combined entities have been deemed the
reporting entity. Consequently, the historical combined financial statements
and financial information as of and for the year ended September 30, 1997 are
for the combined entities. The consolidated financial statements and financial
information as of and for the year ended September 30, 1998 represent the
combined financial position and results of operations of the combined entities
for the entire period and Taurus since the date of acquisition. Herein, the
"Company" refers to the combined entities before the acquisitions and to the
entire consolidated group after the acquisitions. No pro forma information, as
if the combination had occurred as of the beginning of the earliest year
presented, is provided since Taurus had no continuing operations. Since the
Company's adult entertainment businesses were not begun until the year ended
September 30, 1997, the Company had no continuing operations during the year
ended September 30, 1996. Therefore, no comparison of operations of the years
is practicable.

Subsequent Event

The Company owns its XTC Cabaret location in Houston, which was damaged in a
fire in December, 1998. The Company believes that it was fully insured against
the loss arising from the fire. The company's insurance policy included coverage
for loss arising from business interruption. The Company does not expect that
any material loss will arise as a result of the fire.

Liquidity and Capital Resources

At September 30, 1998 the Company had working capital of $73,734, compared
to working capital of $318,591 at the end of fiscal 1997. The decrease in
working capital is primarily due to the closure of the topless cabaret in New
Orleans and the closure of the company's location at 410 Sam Houston Parkway
East due to a fire in May, 1998.

In the opinion of management, working capital is not a true indicator of
the status of the Company due to the short cycle to liquidity, which results in
the realization of cash within no more than five (5) days after the culmination
of a transaction.

Net cash provided by operating activities in fiscal 1998 was $ 147,129
compared to net cash provided by operating activities of $80,922 in fiscal 1997.
The increase in cash provided by operating activities was due primarily to the
net loss of $620,464 being balanced by depreciation of $66,388, an increase in
accounts payable and accrued liabilities of $339,421, common stock being issued
for services in the amount of $323,600 and a loss on fire and disposal of
damaged assets of $154,634 . Net cash used in investing activities was
$(785,619) in 1998 and was due to additions to property and equipment to the
value of $(1,137,348) being offset by Insurance proceeds received from fire
damaged assets to the value of $351,729.

Cash provided by financing activities was $875,964 in 1998 due primarily to
increase in notes payable and long-term debt $839,991, Common Stock issued was
$155,500 and was balanced in part by payments on long term debt in the amount
of $(262,918).

Management believes it has implemented plans that will ensure that the
Company will become profitable in fiscal 1999. Management intends to sell
non-income producing assets, and to ensure a productive use of the New Orleans
property. Emphasis will continue to be placed on reduction of Cost of Goods
Sold by setting and monitoring management goals at each location.

Although the Company has not established lines of credit other than the
existing debt, there can be no assurance that the Company will be able to obtain
additional financing on reasonable terms, if at all. The Company has, however,
developed numerous contacts with professionals who have expertise in raising
capital through private placement of securities and the Company will look to the
public marketplace to find the resources necessary to continue its planned
expansion.

The adult club entertainment business is highly competitive with respect to
price, service and location, as well as the professionalism of the
entertainment. The Company competes with a number of locally-owned adult
cabarets. The Company believes it is well-positioned to compete successfully in
the future.

Seasonality

The Company is significantly affected by seasonal factors. Typically, the
Company experiences reduced revenues from May through September. The Company
has historically experienced its strongest operating results during October
through April.

Change of Control

In August, 1998, Rick's Cabaret International, Inc. ( "Rick's") acquired
approximately 93% of the common stock (the "Shares") of the Company. Rick's is
a publicly owned company in the adult entertainment business trading on NASDAQ
under the symbol RICK. Rick's operates adult entertainment businesses in
Houston, Texas, New Orleans, Louisiana and Minneapolis, Minnesota, and a dance
club in Houston. Rick's also owns land in San Antonio, Texas and plans to build
an adult cabaret there. The Company believes that its recent affiliation with
Rick's will be synergistic.

Year 2000

The Company currently believes that it does not have any significant
exposure to uncertainties nor material anticipated costs related to Year 2000
issues including Company, vendor and customer issues. The Company's believes
that its current systems and any anticipated upgrades are Year 2000 compliant.

ITEM 7. FINANCIAL STATEMENTS

The information required hereunder is included in this report as set forth
in the "Index to Financial Statements" on page F-1.

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

The Company has had two changes in independent auditors during the past two
years.

Ernst & Young L.L.P. ("Ernst & Young"), Certified Public Accountants, of
San Antonio, Texas, audited the financial statements of the Company for the year
ended December 31, 1995. Ernst and Young was dismissed as of January 6, 1997.

Simonton, Kutac & Barnidge, L.L.P. ("SB&K"), Certified Public Accountants,
of Houston, Texas was engaged as the Company's accountant on June 3, 1997. SB&K
was subsequently dismissed when the Company had a change in control. See
below.

There were no disagreements between the Company and Ernst & Young, whether
resolved or not resolved, on any matter of accounting principles or practices,
financial statement disclosure or auditing scope or procedure, which, if not
resolved, would have caused them to make reference to the subject matter of the
disagreement in connection with their report.

The report of Ernst & Young for 1995 did not contain any adverse opinion or
disclaimer of opinion, excepting a "going concern" qualification, and was not
qualified or modified as to uncertainty, audit scope or accounting principles.

The decision to change principal accountants was not submitted for approval
to the Board of Directors. The change was made by the Company's then President,
Stephen E. Fischer, because SK&B's offices were located near the new principal
executive offices of the Company.

Also, during the Company's 1995 fiscal year, and since then, Ernst & Young
has not advised the Company that any of the following exist or are applicable:

(1) That the internal controls necessary for the Company to develop reliable
financial statements do not exist, that information has come to their attention
that has lead them to no longer be able to rely on management's representations,
or that has made them unwilling to be associated with the financial statements
prepared by management;

(2) That the Company needs to expand significantly the scope of its audit,
or that information has come to their attention that if further investigated may
materially impact the fairness or reliability of a previously issued audit
report or the underlying financial statements or any other financial
presentation, or cause him to be unwilling to rely on management's
representations or be associated with the Company's financial statements for the
foregoing reasons or any other reason; or
(3) That they have advised the Company that information has come to their
attention that they have concluded materially impacts the fairness or
reliability of either a previously issued audit report or the underlying
financial statements for the foregoing reasons or any other reason.

Further, during 1995 and since then, the Company has not consulted Ernst &
Young regarding the application of accounting principles to a specified
transaction, either completed or proposed; or the type of audit opinion that
might be rendered on the Company's financial statements or any other financial
presentation whatsoever.

The Company has provided Ernst & Young with a copy of the disclosure
provided under this caption, and Ernst & Young has provided the Company with a
letter addressed to the Securities and Exchange Commission agreeing with the
disclosures made herein.

Simonton, Kutac & Barnidge, L.L.P. ("SK&B") served as Taurus Entertainment
Companies, Inc.'s (the "Company"") independent auditor until October 13, 1998,
when SK&B was dismissed. Also on October 13, 1998, the firm of Jackson &
Rhodes, P.C. was appointed as the Company's independent auditors for the fiscal
year ended June 30, 1998.

There were no disagreements between the Company and SK&B whether resolved
or not resolved, on any matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedure, which, if not resolved,
would have caused them to make reference to the subject matter of the
disagreement in connection with their report.

The report of SK&B for 1997 did not contain any adverse opinion or
disclaimer of opinion, excepting a "going concern" qualification, and was not
qualified or modified as to uncertainty, audit scope or accounting principles.

The decision to change principal accountants was submitted for approval to
the entire Board of Directors and made at their request. The change was made as
result of the acquisition of the Company by Rick's. Jackson & Rhodes, the
independent auditor of Rick's, became the independent auditor of the Company in
order to achieve a more cost efficient audit.

Also, during the Company's most recent fiscal year, and since then, SK&B
has not advised the Company that any of the following exist or are applicable:

(3) That they have advised the Company that information has come to their
attention that they have concluded materially impacts the fairness or
reliability of either a previously issued audit report or the underlying
financial statements for the foregoing reasons or any other reason.

Prior to the engagement of Jackson & Rhodes as independent auditors, the
Company had not consulted Jackson & Rhodes regarding the application of
accounting principles to a specified transaction, either completed or proposed;
or the type of audit opinion that might be rendered on the Company's financial
statements or any other financial presentation whatsoever.

SK&B provided the Company with a letter addressed to the Securities and
Exchange Commission in which SK&B agreed with the disclosure contained herein.

PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

Directors and Executive Officers

Directors are elected annually and hold office until the next annual
meeting of the stockholders of the Company or until their successors are elected
and qualified. Officers are elected annually and serve at the discretion of the
Board of Directors. There is no family relationship between or among any of the
directors and executive officers of the Company. The Company's Board of
Directors consists of two persons.

<TABLE>
<CAPTION>
Name Age Position
- ------------------ --- ---------------------------------------------------------
<S> <C> <C>
Eric Langan 30 Director, Chairman of the Board, Chief Executive Officer,
President and Chief Accounting Officer

Robert L. Watters 47 Director

Timothy Winata 44 Chief Accounting Officer
</TABLE>

Eric Langan, age 30, has been involved in the adult entertainment business
since 1989. He has served as the President and Director of Taurus since
November, 1997. From January 1997 through the present, he has held the position
of President with XTC Cabaret, Inc., which was subsequently acquired by Taurus.
From November 1992 until January 1997, Mr. Langan was the President of Bathing
Beauties, Inc. Since 1989, Mr Langan has exercised managerial control over the
grand openings and operations of more than twelve adult entertainment
businesses. Through these activities, Mr. Langan has acquired the knowledge and
skills necessary to successfully operate adult entertainment businesses. Mr.
Langan has also been an officer of Citation Land Company which owned commercial
income real estate in Houston, Texas, which also was subsequently acquired by
Taurus. Mr. Langan became a Director of Rick's Cabaret International, Inc. in
August, 1998.

Robert L. Watters, age 47, has been a director of the Company since
August, 1998. Mr. Watters has been president and chief executive officer of
Rick's Cabaret International, Inc. since 1991 and presently serves also as its
chief financial officer. He was also a founder in 1989 and operator until 1993
of the Colorado Bar & Grill, an adult cabaret located in Houston, Texas and in
1988 performed site selection, negotiated the property purchase and oversaw the
design and permitting for the cabaret that became the Cabaret Royale, in Dallas,
Texas. Mr. Watters practiced law as a solicitor in London, England and is
qualified to practice law in New York state. Mr. Watters worked in the
international tax group of the accounting firm of Touche, Ross & Co. (now
succeeded by Deloitte & Touche) from 1979 to 1983 and was engaged in the private
practice of law in Houston, Texas from 1983 to 1986, when he became involved in
the full-time management of Rick's Cabaret International, Inc. Mr. Watters
graduated from the London School of Economics and Political Science, University
of London, in 1973 with a Bachelor of Laws (Honours) degree and in 1975 with a
Master of Laws degree from Osgoode Hall Law School, York University.

Timothy Winata, age 44, had served as the Chief Accounting Officer of the
Company since April 1, 1998. From September 1986 to March 1998 Mr. Winata
practiced as a Certified Public Accountant with Winata, Charabaht & Associates,
Inc. as President of the company.

Certain Securities Filings

The Company believes that all persons subject to Section 16(a) of the
Exchange Act in connection with the Company have complied on a timely basis.

ITEM 10. EXECUTIVE COMPENSATION

The following table reflects all forms of compensation for services to the
Company for the fiscal years ended September 30, 1998, 1997, 1996 of the chief
executive officer of the Company. No executive officer (other than the chief
executive officer) of the Company received compensation which exceeded $100,000
during 1998.

<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE

Annual Compensation Long Term Compensation
Awards Payouts
Other Securities
Name and Annual Restricted Underlying Other All
Principal Compen- Stock Options/ LTIP Compens-
Position Year Salary Bonus sation (1) Awards SARs Payouts sation
- --------- ---- -------- ----- ---------- ---------- ---------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>

Eric 1998 $108,275 -0- -0- -0- -0- -0- -0-
Langan 1997 -0- -0- -0- -0- -0- -0- -0-
CEO 1996 -0- -0- -0- -0- -0- -0- -0-
<FN>
_____________________
(1) The Company provides Mr. Langan with certain personal benefits. Since the value of
such benefits does not exceed the lesser of $50,000 or 10% of annual compensation, the amounts
are omitted. Mr. Langan is also an employee of Rick's Cabaret International, Inc. which owns
93% of the Common Stock of the Company. Mr. Langan also receives compensation from Rick's
Cabaret International, Inc.
</TABLE>

Director Compensation

The Company does not currently pay any cash director's fees, but it pays
the expenses, if any, of its directors in attending board meetings.

Employee Stock Option Plan

The Company does not presently have a stock option plan in place and has no
present intention to implement such a plan.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information at January 11, 1999 with
respect to the beneficial ownership of shares of Common Stock by (i) each person
known to the Company who owns beneficially more than 5% of the outstanding
shares of Common Stock, (ii) each director of the Company, (iii) each executive
officer of the Company and (iv) all executive officers and directors of the
Company as a group. Rick's Cabaret International, Inc. has sole voting and
investment power with respect to the shares shown as beneficially owned by it.
As of January 11, 1999. there were 4,305,012 shares of Common Stock outstanding.

<TABLE>
<CAPTION>
Name and Number of Title of Percent
Address Shares Class of Class
- ----------------------------------- --------- ------------ ---------
<S> <C> <C> <C>
Rick's Cabaret International, Inc.
3113 Bering
Houston, Texas 77057 4,002,006 Common Stock 93.0%

Robert L. Watters
3113 Bering
Houston, Texas 77057 -0- Common Stock 0.0%

Eric Langan
3113 Bering
Houston, Texas 77057 -0- Common Stock 0.0%

Timothy Winata
3113 Bering
Houston, Texas 77057 -0- Common Stock 0.0%

All directors and officers as
a group (three (3) persons) -0- Common Stock 0.0%
</TABLE>

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The current Board of Directors of the Company has adopted a policy that
Company affairs will be conducted in all respects by standards applicable to
publicly-held corporations and that the Company will not enter into any
transactions and/or loans between the Company and its officers, directors and 5%
stockholders unless the terms are no less favorable than could be obtained from
independent, third parties and will be approved by a majority of the
independent, disinterested directors of the Company.

In connection with all of the transactions below, interested persons who
are or were directors of the Company refrained from board votes reflecting these
matters:
In December, 1997, the Company entered into an Asset Purchase Agreement
(the "Enigma Agreement") with The Enigma Group, Inc. ("Enigma") which provided
for the acquisition by the Company of substantially all of the assets of Enigma
(the "Enigma Assets"). The Enigma Assets consisted of: (i) certain real estate
commonly known as 410 N. Sam Houston Parkway E. Houston, Texas 77060 (the
"Enigma Location"); (ii) furniture, fixtures, equipment, goods, and other
personal property of Enigma as such existed on December 31, 1997, located at the
Enigma Location (the "Personal Property"); (iii) Enigma's lease interest as
lessor for the Enigma Location; and (iv) all right, title and interest in and to
any and all trademarks, trade names, trade dress, service marks, slogans, logos,
corporate or partnership names (and any existing or possible combination or
derivation of any or all of the same) and general intangibles. Pursuant to the
terms of the Enigma Agreement, as consideration for the Enigma Assets, the
Company paid to Enigma 350,000 shares of common stock of the Company valued at
$1.00 per share. The Enigma Agreement was the result of negotiations between
the Company and Enigma and was based on numerous factors including the Company's
estimate of the value of the Enigma Location and the Personal Property. Eric
Langan, a Director of the Company, and Stephen E. Fischer, a former Director of
the Company, controlled Enigma.

The lessee of the Enigma Location is Atcomm Services, Inc. ("Atcomm"),
which operates an adult entertainment business. In December, 1997, the Company,
through its wholly owned subsidiary Broadstreets Cabaret, Inc.
("Broadstreets"), entered into an Asset Purchase Agreement with Atcomm which
provided for the acquisition by the Company of substantially all of the assets
of Atcomm (the "Atcomm Agreement"). The assets acquired by Broadstreets
consisted of: (i) all right, title, interest and claim to the permit to operate
a sexually oriented business at the Enigma Location; (ii) all inventory located
at the Enigma Location; (iii) Atcomm's lease interest as lessee for the Enigma
Location; and (iv) all right, title and interest in and to any and all
trademarks, trade names, trade dress, service marks, slogans, logos, corporate
or partnership names (and any existing or possible combination or derivation of
any or all of the same) and general intangibles. Pursuant to the terms of the
Asset Purchase Agreement with Atcomm, Broadstreets agreed to pay, as
consideration, $225,000 to Atcomm, payable pursuant to the terms of a four year
unsecured promissory note of Broadstreets, payable monthly, in arrears and
bearing interest at the rate of six percent (6%) per annum. The Atcomm
Agreement was the result of negotiations between the Company and Atcomm and was
based on numerous factors including the Company's estimate of the value of the
sexually oriented business permit owned by Atcomm, current revenues of Atcomm
and the leasehold rights held by Atcomm. Atcomm is owned by the son of Stephen
E. Fischer, a former Director of the Company.

In December, 31, 1997, the Company entered into an Exchange Agreement with
the members of Citation Land, L.L.C. (the "Citation Agreement") which provided
for the acquisition by the Company of all of the outstanding membership
interests in Citation Land, L.L.C. ("Citation"). Citation owns certain real
estate in Houston, Texas at which another company, XTC Cabaret, Inc. ("XTC")
operates an adult entertainment business (the "XTC Location"). As discussed
below, the Company has acquired all of the stock of XTC and intends to continue
operating an adult entertainment business at the XTC Location. Citation also
owns approximately 350 acres of ranch land in Brazoria County, Texas, 50 acres
of raw land in Wise County, Texas, and, at the time of this transaction, owned
options to purchase real estate in Austin, Texas and San Antonio, Texas, at
which the Company had contemplated operating adult entertainment businesses.
Mr. Langan, a Director of the Company received 1,153,137 shares of the Company
as a result of this transaction.

In December, 1997, the Company entered into a Stock Exchange Agreement with
the stockholders of XTC Cabaret, Inc. (the "XTC Agreement") which provided for
the acquisition by the Company of all of the outstanding stock of XTC Cabaret,
Inc. ("XTC"). XTC operates two adult entertainment businesses, in Houston and
Austin. Citation is the landlord of one of XTC's adult nightclubs in Houston,
Texas and has an option to purchase the real estate in Austin. Pursuant to the
terms of the XTC Agreement, the Company paid the XTC Stockholders an aggregate
of 525,000 shares of common stock of the Company valued at $1.00 per share. The
XTC Agreement was the result of negotiations between the Company and the XTC
Stockholders and was based on numerous factors including the Company's estimate
of the value of the assets of XTC which the Company estimated, based upon
current operations and future revenues from its three existing adult nightclubs
to be approximately $525,000. Eric Langan, a Director of the Company and
Mitchell White, a former director of the Company, were the sole stockholders of
XTC.

The Company leases a premises located on the north side of Houston, Texas
to its parent, Rick's Cabaret International, Inc. , where a Rick's Cabaret
opened in December, 1998. The lease for this location continues until July 31,
2018 at a monthly rent of $15,000.00. The lease is a triple net lease with
tenant paying taxes, maintenance and insurance. Rick's will occupy 10,000
square feet in a one story building.

Item 13. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

<TABLE>
<CAPTION>
Exhibit No. Identification of Exhibit
<C> <C> <S>
3.1 * The Company's Articles of Incorporation as amended.

3.2 * The Company's By-laws as amended.

4.1 * Specimen of the Company's common stock certificate.
10.1 ** Asset Purchase Agreement dated December 31, 1997, between the Company and The
Enigma Group, Inc.-- incorporated by reference to the Company's report on Form 8-K dated
December 31, 1997 and exhibits thereto.
10.2 ** Asset Purchase Agreement dated December 31, 1997 between Broadstreets Cabaret, Inc.
and Atcomm Services, Inc.-- incorporated by reference to the Company's report on Form 8-K
dated December 31, 1997 and exhibits thereto.
10.3 ** Stock Exchange Agreement dated December 31, 1997 between the Company and the
Stockholders of XTC Cabaret, Inc.-- incorporated by reference to the Company's report on
Form 8-K dated December 31, 1997 and exhibits thereto.
10.4 ** Exchange Agreement dated December 31, 1997 between the Company and the Members of
Citation Land, L.L.C.-- incorporated by reference to the Company's report on Form 8-K
dated December 31, 1997 and exhibits thereto.
16.1 ** First letter on change in certifying accountant -- incorporated by reference to the Company's
report on Form 8-K filed as of January 13, 1997 and exhibits thereto.
16.2 ** Second letter on change in certifying accountant -- incorporated by reference to the
Company's report on Form 8-K dated October 15, 1998 and exhibits thereto.
21.1 * Subsidiaries
27.1 * Financial Data Schedule
<FN>
- -----------------------------
* Filed herewith
** Incorporated by reference
</TABLE>

(b) Reports on Form 8-K. The Company filed a report on Form 8-K dated
October 13, 1998 which reported Changes in Registrant's Certifying Accountant.

<PAGE>
SIGNATURES

In accordance with the requirements of Section 13 of 15(d) of the Exchange
Act, the Registrant has caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized, on the January 11, 1999.

TAURUS ENTERTAINMENT COMPANIES INC.

/s/ ERIC LANGAN
-----------------
Eric Langan
Director, Chairman of the Board,
Chief Executive Officer
and President

Pursuant to the requirements of the Exchange Act, this report has been signed
below by the following persons in the capacities and on the dates indicated:

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ----------------------- -------------------------------- ----------------
<S> <C> <C>
/s/ ERIC LANGAN Director, Chairman of the Board, January 11, 1999
- -----------------------
Eric Langan Chief Executive Officer
and President

/s/ ROBERT L. WATTERS Director January 11, 1999
- -----------------------
Robert L. Watters

/s/ TIMOTHY WINATA Chief Accounting Officer January 11, 1999
- -----------------------
Timothy Winata
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TAURUS ENTERTAINMENT COMPANIES, INC. AND SUBSIDIARIES

AUDITED FINANCIAL INFORMATION

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

PAGE
------
<S> <C>
Independent Auditors' Report . . . . . . . . . . . . . . . F-2-3

Consolidated Balance Sheets for the years ended
September 30, 1998 and 1997. . . . . . . . . . . . . . . F-4

Consolidated Statements of Operations for the years ended
September 30, 1998 and 1997. . . . . . . . . . . . . . . F-5

Consolidated Statements of Changes in Stockholders' Equity
for the years ended September 30, 1998 and 1997. . . . . F-6

Consolidated Statements of Cash Flows for the years ended
September 30, 1998 and 1997. . . . . . . . . . . . . . . F-7

Notes to Consolidated Financial Statements . . . . . . . . F-8
</TABLE>

F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT

Board of Directors and Stockholders
Taurus Entertainment Companies, Inc.

We have audited the accompanying consolidated balance sheets of Taurus
Entertainment Companies, Inc. and subsidiaries as of September 30, 1998, and the
related consolidated statements of operations, changes in stockholders' equity
and cash flows for the year then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Taurus
Entertainment Companies, Inc. and subsidiaries as of September 30, 1998, and the
results of their operations and their cash flows for the year then ended in
conformity with generally accepted accounting principles.

Jackson & Rhodes P.C.

Dallas, Texas
November 13, 1998, except for Note 10,
which is as of December 16, 1998

F-2
<PAGE>

Independent Auditors Report

Board of Directors and Stockholders
Taurus Entertainment Companies, Inc.

We have audited the accompanying balance sheet of Taurus Entertainment
Companies, Inc. and subsidiaries as of September 30, 1997, and the related
consolidated statements of operations, stockholders' equity and cash flows for
the year then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
These standards require that we plan and perform the audits to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Taurus Entertainment
Companies, Inc and Subsidiaries at September 30, 1997, and the results of their
operations and their cash flows for the years then ended, in conformity with
generally accepted accounting principles.

Simonton, Kutac & Barnidge, L.L.P.

Houston, Texas
May 13, 1998

F-3
<PAGE>
<TABLE>
<CAPTION>
TAURUS ENTERTAINMENT COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1998 AND 1997

ASSETS
1998 1997
------------ -----------
<S> <C> <C>
Current assets:
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 243,346 $ 5,872
Accounts receivable. . . . . . . . . . . . . . . . . . . . . . 2,343 5,289
Accounts receivable - related party. . . . . . . . . . . . . . 9,755 65,077
Inventories. . . . . . . . . . . . . . . . . . . . . . . . . . 765 6,525
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . 1,600 -
Land held for sale . . . . . . . . . . . . . . . . . . . . . . 569,069 567,501
------------ -----------
Total current assets . . . . . . . . . . . . . . . . . . . . 826,878 650,264
------------ -----------

Property and equipment:
Buildings, land and leasehold improvements . . . . . . . . . . 1,769,572 1,079,558
Furniture and equipment. . . . . . . . . . . . . . . . . . . . 169,671 308,897
------------ -----------
1,939,243 1,388,455

Less accumulated depreciation. . . . . . . . . . . . . . . . . (69,751) (81,992)
------------ -----------

1,869,492 1,306,463
------------ -----------

Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . 108,705 -
------------ -----------
$ 2,805,075 $1,956,727
============ ===========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Note payable (Note 4). . . . . . . . . . . . . . . . . . . . . $ 25,000 $ -
Current portion of long-term debt (Note 5) . . . . . . . . . . 220,527 222,427
Payable to Parent. . . . . . . . . . . . . . . . . . . . . . . 79,851 -
Accounts payable - trade . . . . . . . . . . . . . . . . . . . 185,644 4,691
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . 203,677 51,259
Income taxes payable . . . . . . . . . . . . . . . . . . . . . 38,445 53,296
------------ -----------
Total current liabilities. . . . . . . . . . . . . . . . . . 753,144 331,673

Long-term debt, less current portion (Note 5). . . . . . . . . . 1,932,967 1,230,094
------------ -----------

Total liabilities. . . . . . . . . . . . . . . . . . . . 2,686,111 1,561,767
------------ -----------

Commitments and contingencies (Note 8) . . . . . . . . . . . . . - -

Stockholders' equity (Notes 1 and 3):
Preferred stock - $.10 par, authorized
10,000,000 shares; none issued and outstanding . . . . . . . - -
Common stock - $.01 par, authorized
20,000,000 shares; issued and outstanding 4,305,012 shares. 4,305 2,000
Additional paid-in capital . . . . . . . . . . . . . . . . . . 4,026,383 284,256
Retained earnings (deficit). . . . . . . . . . . . . . . . . . (3,911,724) 108,704
------------ -----------
Total stockholders' equity . . . . . . . . . . . . . . . . . 118,964 394,960
------------ -----------
$ 2,805,075 $1,956,727
============ ===========
</TABLE>

See accompanying notes to consolidated financial statements.

F-4
<PAGE>
<TABLE>
<CAPTION>
TAURUS ENTERTAINMENT COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED SEPTEMBER 30, 1998 AND 1997

1998 1997
----------- -----------
<S> <C> <C>
Revenues:
Sales of alcoholic beverages . . . . . . . . . $ 781,566 $ 253,812
Sales of food. . . . . . . . . . . . . . . . . 311,611 121,659
Service revenues . . . . . . . . . . . . . . . 2,275,937 1,224,011
Other. . . . . . . . . . . . . . . . . . . . . 25,669 160,904
----------- -----------

3,394,783 1,760,386
----------- -----------

Operating expenses:
Cost of goods sold . . . . . . . . . . . . . . 372,585 154,758
Salaries and wages . . . . . . . . . . . . . . 1,084,457 650,049
Other general and administrative:
Taxes and permits. . . . . . . . . . . . . . 414,323 137,336
Charge card fees . . . . . . . . . . . . . . 46,905 9,155
Rent . . . . . . . . . . . . . . . . . . . . 231,168 85,079
Legal and accounting . . . . . . . . . . . . 141,915 52,140
Advertising. . . . . . . . . . . . . . . . . 199,627 106,589
Other. . . . . . . . . . . . . . . . . . . . 1,241,042 475,419
----------- -----------

3,732,022 1,670,525
----------- -----------

Income (loss) from operations. . . . . . . . . . (337,239) 89,861

Interest expense . . . . . . . . . . . . . . . (156,238) (130,569)
----------- -----------

Loss before income taxes and extraordinary item. (493,477) (40,708)

Income taxes (benefit) (Note 8). . . . . . . . (8,390) 49,340
----------- -----------

Net loss before extraordinary item . . . . . . . (485,087) (90,048)

Extraordinary item - fire damage loss (Note 7) . (135,377) -
----------- -----------

Net loss . . . . . . . . . . . . . . . . . . . . $ (620,464) $ (90,048)
=========== ===========

Basic net loss per common share:
Loss before extraordinary item . . . . . . . . $ (0.12) $ (0.03)
Extraordinary item . . . . . . . . . . . . . . (0.03) -
----------- -----------
Net loss . . . . . . . . . . . . . . . . . . . $ (0.16) $ (0.03)
=========== ===========

Weighted average shares outstanding. . . . . . . 3,922,711 3,576,026
=========== ===========
</TABLE>

See accompanying notes to consolidated financial statements.

F-5
<PAGE>
<TABLE>
<CAPTION>
TAURUS ENTERTAINMENT COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED SEPTEMBER 30, 1998 AND 1997

Common Stock Additional Retained
-------------------
Number of Paid-in Earnings
Shares Amount Capital (Deficit) Total
---------- ------- ----------- ------------ ----------
<S> <C> <C> <C> <C> <C>
Balance, September 30, 1996 . . . . . 1,000 $ 1,000 $ 284,256 $ 198,752 $ 484,008

Sale of common stock for cash . . . . 1,000 1,000 - - 1,000

Net loss. . . . . . . . . . . . . . . - - - (90,048) (90,048)
---------- ------- ----------- ------------ ----------

Balance, September 30, 1997 . . . . . 2,000 2,000 284,256 108,704 394,960

Revaluation of equity accounts of the
acquisition of Taurus Entertainment
Companies, Inc. . . . . . . . . . . . 3,674,026 1,676 3,194,094 (3,181,464) 14,306

Deemed dividend on acquisition. . . . - - - (218,500) (218,500)

Purchase of treasury stock. . . . . . (172) - (38) - (38)

Sale of common stock for cash . . . . 195,500 196 155,304 - 155,500

Issuance of common stock for services 340,500 340 323,260 - 323,600

Conversion of debt to common stock. . 93,158 93 69,507 - 69,600

Net loss. . . . . . . . . . . . . . . - - - (620,464) (620,464)
---------- ------- ----------- ------------ ----------

Balance, September 30, 1998 . . . . . 4,305,012 $ 4,305 $4,026,383 $(3,911,724) $ 118,964
========== ======= =========== ============ ==========
</TABLE>

See accompanying notes to consolidated financial statements.

F-6
<PAGE>
<TABLE>
<CAPTION>
TAURUS ENTERTAINMENT COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED SEPTEMBER 30, 1998 AND 1997

1998 1997
------------ ----------
<S> <C> <C>
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . $ (620,464) $ (90,048)

Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization. . . . . . . . . . . . . . 66,388 73,538
Common stock issued for services . . . . . . . . . . . . 323,600 -
Extraordinary item - loss on fire and disposal of assets 154,634 -
Changes in assets and liabilities:
Accounts receivable. . . . . . . . . . . . . . . . . . 2,946 (5,289)
Inventories. . . . . . . . . . . . . . . . . . . . . . 5,760 (6,525)
Prepaid expenses and other assets. . . . . . . . . . . (110,305) -
Accounts payable and accrued liabilities . . . . . . . 339,421 55,950
Income taxes payable/receivable. . . . . . . . . . . . (14,851) 53,296
------------ ----------
Net cash provided by operating activities. . . . . . 147,129 80,922
------------ ----------

Cash flows from investing activities:
Additions to property and equipment. . . . . . . . . . . (1,137,348) (803,129)
Insurance proceeds from fire damaged assets. . . . . . . 351,729 -
------------ ----------
Net cash used by investing activities. . . . . . . . (785,619) (803,129)
------------ ----------

Cash flows from financing activities:
Common stock issued. . . . . . . . . . . . . . . . . . . 155,500 1,000
Increase in notes payable and long-term debt . . . . . . 839,991 780,329
Payments on long-term debt . . . . . . . . . . . . . . . (262,918) (175,042)
Increase decrease in accounts receivable - related party 63,540 (74,290)
Increase in loan from Parent . . . . . . . . . . . . . . 79,851 -
Decrease in loan to shareholder. . . . . . . . . . . . . - 192,382
------------ ----------
Net cash provided by financing activities. . . . . . 875,964 724,379
------------ ----------

Net increase (decrease) in cash. . . . . . . . . . . . . . 237,474 2,172

Cash at beginning of year. . . . . . . . . . . . . . . . . 5,872 3,700
------------ ----------

Cash at end of year. . . . . . . . . . . . . . . . . . . . 243,346 5,872
============ ==========

Cash paid during the period for:
Interest . . . . . . . . . . . . . . . . . . . . . . . . 156,238 130,569
============ ==========

Income taxes . . . . . . . . . . . . . . . . . . . . . . 6,461 11,168
============ ==========
<FN>
Noncash transactions:
During the year ended September 30, 1998, the Company issued $225,000 of debt
in connection with the acquisition (Note 3). The Company also issued 93,158
shares of common stock to convert $69,600 of debt.
</TABLE>

See accompanying notes to consolidated financial statements.

F-7
<PAGE>
TAURUS ENTERTAINMENT COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1998 AND 1997

1. ORGANIZATION

Taurus Entertainment Companies, Inc. ("Taurus"), formerly Taurus Petroleum,
Inc., changed its name in November 1997 to reflect its entry into the adult
entertainment business. The Company, which was formed as a Colorado corporation
in 1977, was previously an independent oil and gas exploration, development and
production company until it divested all of its oil and gas assets in July 1996.
In November 1997, Taurus' stockholders approved a 1 for 300 reverse common stock
split and the number of authorized shares of common stock was reduced from
200,000,000 to 20,000,000. Additionally, Taurus authorized 10,000,000 shares of
preferred stock. See Note 3 for information regarding acquisitions by Taurus in
December 1997 and the basis of presentation of the accompanying consolidated
financial statements. On August 4, 1998, the Company's principal shareholders
entered into an agreement with Rick's Cabaret International, Inc. ("Rick's"),
whereby Rick's acquired approximately 90% of the outstanding common stock of the
Company. Rick's is a publicly held company in the adult entertainment business.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The Company's financial statements have been presented on the basis that it is a
going concern, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
The Company is reporting net losses of $620,464 and $90,048 for the years ended
September 30, 1998 and 1997.

Management believes it has implemented plans that will ensure that the Company
will become profitable in fiscal 1999, including opening its Austin location,
renting its refurbished Broadstreets location to its parent, taking steps to
restructure management compensation, and reorganizing the accounting function to
more effectively manage the business. Additionally, funds will be generated by
sale of the land held for sale.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiaries. All significant intercompany balances and
transactions are eliminated in consolidation. (Also see Note 3.)

F-8
<PAGE>
TAURUS ENTERTAINMENT COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Net Loss Per Common Share

In March 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, Earnings Per Share ("SFAS 128"). SFAS
128 provides a different method of calculating earnings per share than was
formerly used in APB Opinion 15. SFAS 128 provides for the calculation of basic
and diluted earnings per share. Basic earnings per share includes no dilution
and is computed by dividing income available to common stockholders by the
weighted average number of common shares outstanding for the period. Dilutive
earnings per share reflect the potential dilution of securities that could share
in the earnings of the Company. The Company was required to adopt this standard
in the fourth quarter of calendar 1997. Because the Company has no potential
dilutive securities outstanding, the accompanying presentation is only of basic
loss per share.

Use of Estimates and Assumptions

Preparation of the Company's financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect certain reported amounts and disclosures. Accordingly,
actual results could differ from those estimates.

Inventories

Inventories, consisting principally of liquor and food products, are stated at
the lower of cost or market (first-in, first-out method).

Cash Equivalents

For purposes of the statement of cash flows, the Company considers all highly
liquid debt instruments purchased with an original maturity of three months or
less to be cash equivalents.

Property and Equipment

Property and equipment are stated at cost. Cost of property renewals and
betterments are capitalized; costs of property maintenance and repairs are
charged against operations as incurred. Depreciation is computed using the
straight-line method over the estimated useful lives of the individual assets,
as follows:

Building and improvements 31 years
Equipment 5-7 years
Leasehold improvements 10 years

F-9
<PAGE>
TAURUS ENTERTAINMENT COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Land Held for Sale

Land held for sale is stated at lower of cost or market and is expected to be
liquidated within the next fiscal year.

Revenue Recognition

The Company recognizes all revenues at point-of-sale upon receipt of cash, check
or charge sale.

Income Taxes

The Company accounts for its income taxes in accordance with Statement of
Financial Accounting Standards No. 109, which reflects an asset and liability
approach in accounting for income taxes. The objective of the asset and
liability method is to establish deferred tax assets and liabilities for the
temporary differences between the financial reporting basis and the tax basis of
the Company's assets and liabilities at enacted tax rates expected to be in
effect when such amounts are realized or settled.

3. ACQUISITIONS AND BASIS OF PRESENTATION

On December 31, 1997, Taurus Entertainment Companies, Inc. ("Taurus"), entered
into an Asset Purchase Agreement (the "Enigma Agreement") with The Enigma Group,
Inc. ("Enigma") which provided for the acquisition by Taurus of substantially
all of the assets of Enigma (the "Enigma Assets"). The Enigma Assets consisted
of: (i) certain real estate commonly known as 410 N. Sam Houston Parkway E.
Houston, Texas 77060 (the "Enigma Location") which is the existing location of
Broadstreets Cabaret, an adult entertainment cabaret ("Broadstreets Cabaret");
(ii) furniture, fixtures, equipment, goods, and other personal property, located
at the Enigma Location; (iii) Enigma's lease interest as lessor for the Enigma
Location; and (iv) all right, title and interest in and to any and all
trademarks, trade names, trade dress, service marks, slogans, logos, corporate
or partnership names and general intangibles. Pursuant to the terms of the
Enigma Agreement, as consideration for the Enigma Assets, Taurus paid to Enigma
350,000 shares of common stock of Taurus.

The lessee of the Enigma Location is Atcomm Services, Inc. ("Atcomm"), which
operates Broadstreets Cabaret. Taurus, through its wholly owned subsidiary,
Broadstreets Cabaret, Inc. ("Broadstreets"), entered into an Asset Purchase
Agreement with Atcomm which provided for the acquisition by Taurus of
substantially all of the assets of Atcomm (the "Atcomm Agreement"). The assets
acquired by Broadstreets consisted of: (i) all right, title, interest and claim
to the permit to operate a sexually oriented business at the Enigma Location;
(ii) all inventory located at the Enigma Location; (iii) Atcomm's lease interest
as

F-10
<PAGE>
TAURUS ENTERTAINMENT COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3. ACQUISITIONS AND BASIS OF PRESENTATION (CONTINUED)

lessee for the Enigma Location; and (iv) all right, title and interest in and to
any and all trademarks, trade names, trade dress, service marks, slogans, logos,
corporate or partnership names (and any existing or possible combination or
derivation of any or all of the same) and general intangibles. The Company
intends to continue to operate the adult nightclub at this location (see Note 6
regarding a fire at this location). Pursuant to the terms of the Asset Purchase
Agreement with Atcomm, Broadstreets agreed to pay, as consideration, $225,000 to
Atcomm, payable pursuant to the terms of a four year unsecured promissory note
of Broadstreets, payable monthly, in arrears and bearing interest at the rate of
six percent (6%) per annum. Atcomm was owned by the son of a director of
Taurus.

On December 31, 1997, Taurus entered into an Exchange Agreement with the members
of Citation Land, L.L.C. (the "Citation Agreement") which provided for the
acquisition by Taurus of all of the outstanding membership interests in Citation
Land, L.L.C. ("Citation"). Citation owns certain real estate in Houston, Texas
at which another company, XTC Cabaret, Inc. ("XTC") operates an adult
entertainment business (the "XTC Location"). As discussed below, Taurus has
acquired all of the stock of XTC and intends to continue operating an adult
entertainment business at the XTC Location. Citation also owns approximately
350 acres of ranch land in Brazoria County, Texas, 50 acres of raw land in Wise
County, Texas, and owns options to purchase real estate in Austin, Texas and San
Antonio, Texas, at which locations Taurus contemplates operating adult
entertainment businesses. Pursuant to the terms of the Citation Agreement,
Taurus paid to the Citation Stockholders an aggregate of 2,500,000 shares of
common stock of Taurus.

On December 31, 1997, Taurus entered into a Stock Exchange Agreement with the
stockholders of XTC Cabaret, Inc. (the "XTC Agreement") which provided for the
acquisition by Taurus of all of the outstanding stock of XTC Cabaret, Inc.
("XTC"). XTC operates three adult entertainment businesses, two in Houston and
one in Austin. Citation is the landlord of one of XTC's adult nightclubs in
Houston, Texas and has an option to purchase the real estate in Austin. Taurus
intends to continue operating XTC as an adult entertainment business. Pursuant
to the terms of the XTC Agreement, Taurus paid the XTC Stockholders an aggregate
of 525,000 shares of common stock of Taurus.

Each of the aforementioned acquired businesses had common ownership and are
referred to below as "the combined entities". The acquisitions have been
accounted for as a "reverse acquisition" whereby the combined entities acquired
Taurus in a transaction accounted for as a purchase. The purchase price has
been determined based on the fair value of Taurus' net assets (liabilities) at
the date of acquisition. Because Taurus' balance sheet at that date consisted
of cash and accounts payable, the purchase price was determined essentially to
be the net book value of Taurus and no goodwill was recognized in the
transaction. The note consideration of $225,000 paid for the acquired
businesses is accounted for as a deemed dividend.

F-11
<PAGE>
TAURUS ENTERTAINMENT COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3. ACQUISITIONS AND BASIS OF PRESENTATION (CONTINUED)

Since the acquisition has been accounted for as a reverse acquisition, the
combined entities have been deemed the reporting entity. Consequently, the
historical combined financial statements and financial information as of and for
the year ended September 30, 1997 are for the combined entities. The
consolidated financial statements and financial information as of and for the
year ended September 30, 1998 represent the combined financial position and
results of operations of the combined entities for the entire period and Taurus
since the date of acquisition. Herein, the "Company" refers to the combined
entities before the acquisitions and to the entire consolidated group after the
acquisitions. No pro forma information, as if the combination had occurred as
of the beginning of the earliest year presented, is provided since Taurus had no
continuing operations.

4. NOTE PAYABLE

At September 30, 1998, the Company has a $25,000 non-interest bearing note
payable to a corporation which is in default. The note agreement is for the
purchase of the common stock of Lucky's of Bourbon Street, Inc. d/b/a Lucky
Pierre's Cabaret, a Louisiana corporation that operates an adult entertainment
club in New Orleans. As of September 30, 1998, the Company has not paid the
note or issued the common stock due to a dispute regarding certain post-closing
costs paid by Taurus on behalf of the Seller.

5. LONG-TERM DEBT

Long-term debt at year-end consists of the following at September 30:

<TABLE>
<CAPTION>
1998 1997
------- -------
<S> <C> <C>
Note payable to partnership maturing March 2026,
due in monthly installments of $576 including principal
and interest at 12%; secured by real estate.. . . . . . $55,443 $55,686

Note payable to partnership maturing July 2007,
due in monthly installments of $653 including principal
and interest at 12%; secured by real estate.. . . . . . 62,868 63,144

Note payable to partnership maturing July 2007,
due in monthly installments of $309 including principal
and interest at 12%; secured by real estate.. . . . . . 29,842 29,956
</TABLE>

F-12
<PAGE>
TAURUS ENTERTAINMENT COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5. LONG-TERM DEBT (CONTINUED)

<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
Note payable to corporation maturing December 2000,
due in monthly principal installments of $2,000 plus
interest at 9%; secured by real estate. . . . . . . . . . $ 147,854 $ 204,302

Note payable to individual maturing July 2004,
due in monthly installments of $2,868 including principal
and interest at 12%; secured by real estate.. . . . . . . 286,745 156,169

Note payable to individual maturing March 2006,
due in monthly installments of $2,573, plus interest at
9.25%; secured by real estate.. . . . . . . . . . . . . . 310,455 312,509

Note payable to corporation maturing April 2002,
due in monthly installments of $13,758 including
principal and interest at 10%; secured by real estate.. . 528,970 605,032

Note payable to corporation maturing June 2001,
due in monthly installments of $667, plus interest at
8.3%; secured by certain equipment. . . . . . . . . . . . 19,624 25,723

Note payable to a financing company maturing
August 2003, due in monthly installments of $5,380,
including interest at 10%, secured by real estate . . . . 556,566 -

Note payable to corporation in connection with
Atcomm acquisition maturing December 2001,
due in monthly installments of $5,284 including
principal and interest at 6%; unsecured . . . . . . . . . 155,127 -
----------- -----------
2,153,494 1,452,521
Less current maturities . . . . . . . . . . . . . . . . . (220,527) (222,427)
----------- -----------
$1,932,967 $1,230,094
=========== ===========
</TABLE>

F-13
<PAGE>
TAURUS ENTERTAINMENT COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5. LONG-TERM DEBT (CONTINUED)

Scheduled maturities of long-term debt are as follows for the years ending
September 30:

<TABLE>
<CAPTION>
<S> <C>
1999. . . . .$ 220,527
2000. . . . . 330,234
2001. . . . . 248,308
2002. . . . . 176,850
2003. . . . . 450,976
Thereafter . 726,599
----------

$2,153,494
==========
</TABLE>

6. FIRE DAMAGE

On May 5, 1998, a fire damaged the adult entertainment facility known as
Broadstreets Cabaret located in Houston, Texas. The Company incurred a material
decline in revenues subsequent to the closure of Broadstreets. The insurance
settlement resulted in an extraordinary loss of $135,577 in 1998.

7. INCOME TAXES

Income tax expense (benefit) consisted of current taxes for 1998 and 1997.

Following is a reconciliation of income taxes (benefit) at the U.S. Federal tax
rate to the amounts recorded by the Company for the years ended September 30:

<TABLE>
<CAPTION>
1998 1997
---------- ---------
<S> <C> <C>
Tax credit on loss before income
taxes at the statutory rate . . . . . . . . . $(168,000) $(31,000)
Separate return limitation - unavailable
loss carrybacks and nonconsolidated companies 159,610 80,340
---------- ---------
$ (8,390) $ 49,340
========== =========
</TABLE>

The components of the net deferred tax asset/liability are as follows at
September 30:

<TABLE>
<CAPTION>
1998 1997
---------- -----
<S> <C> <C>
Operating loss carryforwards . . . . . $(226,000) $ -
Deductible preopening costs. . . . . . 16,000
Deferred tax asset valuation allowance 210,000 -
$ - $ -
========== =====
</TABLE>

F-14
<PAGE>
TAURUS ENTERTAINMENT COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

7. INCOME TAXES (CONTINUED)

For tax purposes, the Company has a net operating loss carryforward amounting to
approximately $664,000 which will expire, if not utilized, beginning in 2012.

8. COMMITMENTS AND CONTINGENCIES

Leases

The Company, as lessee, has entered into and/or assumed various non-cancelable
leases for office space and operating facilities. Future minimum lease payments
under non-cancelable leases at September 30, 1998 are as follows:

<TABLE>
<CAPTION>
Years Ending
September 30,
- ----------------------------
<S> <C>
1999. . . . . . . . . . $125,445
2000. . . . . . . . . . 120,000
2001. . . . . . . . . . 50,000
--------

Total minimum lease payments $295,445
========
</TABLE>

Concentration of Credit Risk

The Company invests its cash and certificates of deposit primarily in deposits
with major banks. Certain deposits may be in excess of federally insured
limits. The Company has not incurred losses related to its cash on deposit with
banks.

Litigation

In November, 1998, LMTD, Inc. initiated litigation against a subsidiary of the
Company, Citation Land, LLC ("Citation"), in a case styled LMTD, Inc. v. Texas
Warehouse Company, Inc., et al. Cause No. 98-12570, in the 200th Judicial
District Court of Travis County, Texas. The suit seeks specific performance and
damages against Texas Warehouse Company, Inc. regarding a Purchase Option
Agreement. Plaintiff also alleges a tortious interference claim against
Citation in the amount of $540,000. Counsel for Citation intends to file a
counterclaim and or cross action at the time that its answer is do. Counsel for
Citation believes that the exposure to Citation is minimal. The Company intends
to vigorously defend itself in this matter and to deny all allegations.

On October 15, 1998, All City Beverage and Entertainment, Inc. initiated
litigation against the Company in a case styled All City Beverage and
Entertainment, Inc. v. Taurus Entertainment Companies, Inc.("Taurus"), Cause No.
98-49119, in the 61st Judicial District Court of Harris County, Texas. The suit
seeks damages in the amount of $25,000

F-15
<PAGE>
TAURUS ENTERTAINMENT COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

8. COMMITMENTS AND CONTINGENCIES (CONTINUED)

and 175,000 shares of common stock of Taurus in connection with an Asset
Purchase Agreement between All City Beverage and Entertainment, Inc. and Taurus.
The Company has filed a counter-claim asserting that there were undisclosed
obligations which Taurus was required to pay. The counter-claim seeks damages
in an amount in excess of $25,000. This matter is in the early stages of
litigation and no discovery has taken place. The Company intends to vigorously
defend itself in this matter.

The Company is in certain lawsuits arising in the ordinary course of business.
In the opinion of the Company's legal counsel and management, any liability
resulting from such litigation would not be material in relation to the
Company's financial position.

Sexually Oriented Business Ordinance of Houston, Texas

In January 1997, the City Council of the City of Houston passed a comprehensive
new Ordinance regulating the location of and the conduct within Sexually
Oriented Businesses. The new Ordinance established new distances that Sexually
Oriented Businesses may be located to schools, churches, playgrounds and other
sexually oriented businesses. There were no provisions in the Ordinance
exempting previously permitted sexually oriented businesses from the effect of
the new Ordinance. In 1997, the Company was informed that its locations in
north and south Houston failed to meet the requirements of the Ordinance and
accordingly the renewal of the Company's Business License at those locations
were denied.

The Company filed a written request with the City of Houston requesting an
extension of time during which the Company could continue operations at its
original location under the Amortization Period provisions of the Ordinance
since the Company was unable to recoup its investment prior to the effective
date of the Ordinance. An administrative hearing (the "Hearing") was held by
the City of Houston to determine the appropriate Amortization Period to be
granted to the Company. At the Hearing, the Company was granted an amortization
period through June 2000 for its location in north Houston and was denied an
extension of time for its location in south Houston. The Company has the right
to appeal any decision of the Hearing official to the district court in the
State of Texas.

F-16
<PAGE>
TAURUS ENTERTAINMENT COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

8. COMMITMENTS AND CONTINGENCIES (CONTINUED)

In May, 1997, the City of Houston agreed to defer implementation of the
Ordinance until the constitutionality of the entire Ordinance was decided by
court trial. In February 1998 the U.S. District Court for the Southern
District of Texas, Houston, Division, struck down certain provisions of the
Ordinance, including the provision mandating a 1,500 foot distance between a
club and schools, churches and other sexually oriented business, leaving intact
the provision of the 750 foot distance as it existed in the prior Houston, Texas
Ordinance.

There are other provisions in the Houston, Texas Ordinance, such as provisions
governing the level of lighting in a sexually oriented business, the distance
between a customer and dancer while the dancer is performing in a state of
undress and provisions regarding the licensing of dancers that were upheld,
which may be detrimental to the business by the Company. The Company, in
concert with other sexually oriented businesses, is appealing these aspects of
the Houston, Texas Ordinance.

It is unknown if the City of Houston will appeal the court's rulings. In the
event that the City of Houston is successful in an appeal, the Company's Houston
location could be out of compliance. Such an outcome could have an adverse
impact on the Company's future.

On April 1, 1998, the City of Houston began enforcing certain portions of the
Ordinance, including the distance requirement between a customer and a dancer
while dancing, and the requirement that dancers be licensed. The City of
Houston's enforcement of the recently implemented provisions of the Ordinance
could have an adverse impact on the Company's locations in Houston, Texas. The
current requirement of a three foot distance between a dancer and a customer
could reduce customer satisfaction and could result in fewer customers at the
Houston location. The requirement that a dancer be licensed may result in fewer
dancers working, which could have an adverse impact on the Houston location. It
is unknown what impact the enforcement of the Ordinance may have on the
Company's Houston locations.

Fair Value of Financial Instruments

The following disclosure of the estimated fair value of financial instruments is
made in accordance with the requirements of SFAS No. 107, Disclosures about Fair
Value of Financial Instruments. The estimated fair value amounts have been
determined by the Company, using available market information and appropriate
valuation methodologies.

The fair value of financial instruments classified as current assets or
liabilities including cash and cash equivalents and notes and accounts payable
approximate carrying value due to the short-term maturity of the instruments.
The fair value of short-term and long-term debt approximate carrying value base
on their effective interest rates compared to current market rates.

F-17
<PAGE>
TAURUS ENTERTAINMENT COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

9. ACCOUNTING DEVELOPMENTS

SFAS 129

Statement of Financial Accounting Standards No. 129, Disclosure of Information
about Capital Structure ("SFAS 129"), effective for periods ending after
December 15, 1997, establishes standards for disclosing information about an
entity's capital structure. SFAS 129 requires disclosure of the pertinent
rights and privileges of various securities outstanding (stock, options,
warrants, preferred stock, debt and participating rights) including dividend and
liquidation preferences, participant rights, call prices and dates, conversion
or exercise prices and redemption requirements. Adoption of SFAS 129 has had no
effect on the Company as it currently discloses the information specified.

SFAS 130
In June 1997, the Financial Accounting Standards Board issued two
new disclosure standards. Results of operations and financial position are
unaffected by implementation of these new standar
Statement of Financial Accounting Standards (SFAS) 130, "Reporting Comprehensive
Income", establishes standards for reporting and display of comprehensive
income, its components and accumulated balances. Comprehensive income is
defined to include all changes in equity except those resulting from investments
by owners and distributions to owners. Among other disclosures, SFAS 130
requires that all items that are required to be recognized under current
accounting standards as components of comprehensive income be reported in a
financial statement that is displayed with the same prominence as other
financial statements. Results of operations and financial position are
unaffected by implementation of this new standard.

SFAS 131

SFAS 131, "Disclosure about Segments of a Business Enterprise", establishes
standards for the way that public enterprises report information about operating
segments in annual financial statements and requires reporting of selected
information about operating segments in interim financial statements issued to
the public. It also establishes standards for disclosures regarding products
and services, geographic areas and major customers. SFAS 131 defines operating
segments as components of an enterprise about which separate financial
information is available that is evaluated regularly by the chief operating
decision maker in deciding how to allocate resources and in assessing
performance. This accounting pronouncement will not have an effect on the
Company's financial statements, since the Company only operates in one segment
of business, the operation of adult night clubs.

10. SUBSEQUENT EVENT

The Company owns its XTC Cabaret location in Houston, which was damaged in a
fire in December, 1998. The Company believes that it was fully insured against
the loss arising from the fire. The company's insurance policy included coverage
for loss arising from business interruption. The Company does not expect that
any material loss will arise as a result of the fire.

F-18
<PAGE>
TAURUS ENTERTAINMENT COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

11. RELATED PARTY TRANSACTIONS

See Note 3 for various related transactions with related parties which comprise
the "reverse acquisitions."

Beginning in December 1998, the Company will lease its Broadstreets location
(see Note 6) to Rick's for $15,000 per month on a twenty-year operating lease.

F-19
<PAGE>
<TABLE>
<CAPTION>
INDEX TO EXHIBITS

EXHIBIT SEQUENTIAL
NUMBER DESCRIPTION
- ------- ---------------------------------------------------------------------------------------------
<C> <C> <S>
3.1 * The Company's Articles of Incorporation as amended.

3.2 * The Company's By-laws as amended.

RESTATED ARTICLES OF INCORPORATION,
WITH AMENDMENTS, OF

TAURUS PETROLEUM, INC.

FIRST: Pursuant to Section 7-2-112 of the Colorado Revised Statutes, Taurus
Petroleum, Inc., originally incorporated under the name Taurus Oil Corporation,
whose Articles of Incorporation were originally filed with the Secretary of
State of Colorado on April 26, 1977 and amended on May 27, 1977, June 26, 1980,
December 21, 1982 and November 19, 1984, adopts the following Restated Articles
-----------
of Incorporation, with Amendments, which shall supersede the original Articles
of Incorporation and all amendments thereto:

ARTICLE I

NAME

The corporate name of our corporation is:

TAURUS PETROLEUM, INC.

ARTICLE II

NATURE OF BUSINESS

The nature of the business of the corporation and the objects and purposes
to be transacted and promoted or carried on by it are as follows:

1. To engage in the oil and gas business including but not limited to
the leasing of mineral interests, exploration, drilling, producing, marketing,
selling, gathering, processing, distributing, or otherwise dealing in and with
petroleum, minerals, natural gas, hydrocarbons, oil shale, metals, and any other
valuable substances of every kind and to establish and maintain a drilling
business with authority to own and operate drilling rigs, machinery, tools,
equipment, and any other item or apparatus necessary to or incident to the
boring or sinking of wells for production of oil, gas, and such other minerals
and for mining or otherwise extracting any valuable substance from the earth; to
acquire by purchase or lease interest or in any other legal manner such lands,
rights-of-way, easements or other property and rights as may be necessary,
useful or proper in the conduct of said business; and generally to do all other
and further acts and to own, acquire,

<PAGE>

hold, use, mortgage and dispose of real and personal property as may be
necessary or convenient in pursuit of the foregoing.

2. To engage in the production, development, exploration, sale,
purchase or distribution of energy in any form whatsoever.

3. To make, manufacture, alter, repair, buy, sell, distribute and deal
in minerals, metals, goods, wares and merchandise of every kind in any and all
materials or articles required for or useful in connection with the carrying on
of business of the corporation.

4. To carry on any other lawful business whatsoever which may seem to
the corporation capable of being carried on in connection with the above or
calculated directly or indirectly to promote the interest of the corporation or
to enhance the value of its properties; and to have, enjoy and exercise all the
rights, purposes and privileges which are now or which may hereafter be
conferred upon corporations organized under the present laws of the State of
Colorado or as such laws may be amended to grant any further rights, purposes
and privileges.

ARTICLE III

TERM OF EXISTENCE

The term of existence of this corporation shall be perpetual.

ARTICLE IV

POWERS

In furtherance of the foregoing purposes and in furtherance of the conduct
of all of its business and affairs, the corporation shall have and may exercise
all the rights, powers and privileges now or hereafter conferred upon
corporations organized under the laws of the State of Colorado and all other
rights, powers and privileges of any kind whatever.

ARTICLE V CAPITAL

The aggregate number of shares which this corporation shall have authority
to issue is thirty million (30,000,000) shares with no par value which shall be
designated as common

-2-
<PAGE>

stock. No share shall be issued until it has been paid for, and it shall
thereafter be nonassessable.

ARTICLE VI

SHAREHOLDERS

Meetings of shareholders may be held at such time and place as the Bylaws
shall provide. One-third of the shares entitled to vote or such greater
percentages as provided in the Bylaws, represented in person or by proxy, shall
constitute a quorum at any meeting of the shareholders.

ARTICLE VII VOTING

Cumulative voting shall not be allowed in voting shares of the capital
stock of the corporation.

ARTICLE VIII

RIGHTS OF DIRECTORS AND OFFICERS TO CONTRACT WITH CORPORATION

Any of the directors or officers of this corporation shall not, in the
absence of actual fraud, be disqualified by his office from dealing or
contracting with the corporation either as vendor, purchaser, or otherwise, nor
shall any firm, association or corporation of which he shall be a member or in
which he may be pecuniarily interested in any manner be disqualified. No
director or officer nor any firm, association, or corporation with which he is
connected as aforesaid shall be liable to account to this corporation or its
stock-holders for any profit realized by him from or through any transaction or
contract, it being the express purpose and intent of this article to permit this
corporation to buy from, sell to, or otherwise deal with partnerships, firms or
corporations of which the directors and officers of this corporation, or any one
or more of them may be members, directors or officers, or in which they or any
of them may have pecuniary interests; and the contracts of this corporation, in
the absence of actual fraud, shall not be void or voidable or affected in any
manner by reason of any such membership.

-3-
<PAGE>

ARTICLE IX

DIRECTORS

The management and control of the affairs of this corporation shall be
vested in a Board of not less than three (3) nor more than nine (9) Directors,
and the Board of Directors, as from time to time constituted, shall have the
right to alter the size of the Board of Directors within the limits herein
prescribed.

The Board of Directors is expressly authorized to make, alter, amend and
repeal such Bylaws of the corporation for the government and management of the
affairs of said corporation as to them shall seem proper and necessary, and also
to hold meetings beyond the limits of the State of Colorado.

The Board of Directors, by majority vote of the whole Board, may sell,
lease, exchange and/or convey all of the property and assets of the corporation,
including its good will, for such consideration or considerations as its Board
of Directors shall deem expedient and for the best interests of the corporation,
and such consideration or considerations may consist in whole or in part of
shares of stock in and/or other securities of any other corporation or
corporations.

ARTICLE X

CORPORATE OPPORTUNITIES DOCTRINE

The officers, directors and other members of management of this corporation
shall be subject to the doctrine of corporate opportunities only insofar as it
applies to business opportunities in which this corporation has expressed an
interest as determined from time to time by the corporation's Board of Directors
as evidenced by resolutions appearing in the corporation's Minutes. When such
areas of interest are delineated, all such business opportunities within such
areas of interest which come to the attention of the officers, directors and
other members of management of this corporation shall be disclosed promptly to
this corporation and made available to it. The Board of Directors may reject any
business opportunity presented to it and thereafter any officer, director or
other member of management may avail himself of such opportunity. Until such
time as this corporation, through its Board of Directors, has designated an area
of interest, the officers, directors and other members of management of this
corporation shall be free to engage in such areas of interest on their own and
this doctrine shall not limit the rights of any officer, director or any other
member of management of this corporation

-4-
<PAGE>

to continue a business existing prior to the time that such area of interest is
designated by this corporation. This provision shall not be construed to release
any employee of corporation (other than an officer, director or member of
management) from any duties which he may have to the corporation.

ARTICLE XI

INDEMNIFICATION

(A) The corporation shall indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending, or completed
action, suit, or proceeding, whether civil, criminal, administrative, or
investigative (other than an action by or in the right of the corporation), by
reason of the fact that he is or was a director, officer, employee, fiduciary or
agent of the corporation or of any Predecessor to this corporation or is or was
serving at the request of the corporation as a director, officer, employee,
fiduciary or agent of another corporation, partnership, joint venture, trust, or
other enterprise, against expenses (including attorney fees), judgments, fines,
and amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit, or proceeding, if he acted in good faith and
in a manner he reasonably believed to be in the best interests of the
corporation or of any Predecessor to this corporation, as the case may be, and,
with respect to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful. The termination of any action, suit, or
proceeding by judgment, order, settlement, or conviction or upon a plea of nolo
contendere or its equivalent shall not of itself create a presumption that the
person did not act in good faith and in a manner which he reasonably believed to
be in the best interests of the corporation or of any Predecessor to this
corporation, as the case may be, and, with respect to any criminal action or
proceeding, had reasonable cause to believe his conduct was unlawful.

(B) The corporation shall indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending, or completed action
or suit by or in the right of the corporation or of any Predecessor to this
corporation to procure a judgment in its favor by reason of the fact that he is
or was a director, officer, employee, fiduciary or agent of the corporation or
of any Predecessor to this corporation or is or was serving at the request of
the corporation as a director, officer, employee, fiduciary or agent of another
corporation, partnership, joint venture, trust or other enterprise against
expenses (including attorney fees) actually

-5-
<PAGE>

and reasonably incurred by him in connection with the defense or settlement of
such action or suit if he acted in good faith and in a manner he reasonably
believed to be in the best interests of the corporation or of any Predecessor to
this corporation, as the case may be; but no indemnification shall be made in
respect of any claim, issue, or matter as to which such person has been adjudged
to be liable for negligence or misconduct in the performance of his duty to the
corporation or of any Predecessor to this corporation, as the case may be,
unless and only to the extent that the court in which such action or suit was
brought determines upon application that, despite the adjudication of liability,
but in view of all circumstances of the case, such person is fairly and
reasonably entitled to indemnification for such expenses which such court deems
proper.

(C) To the extent that a director, officer, employee, fiduciary or
agent of the corporation or of any Predecessor to this corporation has been
successful on the merits in defense of any action, suit, or proceeding referred
to in (A) or (B) of this Article XI or in defense of any claim, issue, or matter
therein, he or she shall be indemnified against expenses (including attorney
fees) actually and reasonably incurred by him in connection therewith.

(D) Any indemnification under (A) or (B) of this Article XI (unless
ordered by a court) and as distinguished from (C) of this Article shall be made
by the corporation only as authorized in the specific case upon a determination
that indemnification of the director, officer, employee, fiduciary or agent is
proper in the circumstances because he or she has met the applicable standard of
conduct set forth in (A) or (B) above. Such determination shall be made by the
board of directors by a majority vote of a quorum consisting of directors who
were not parties to such action, suit, or proceeding, or, if such a quorum is
not obtainable or, even if obtainable, if a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, or by the
shareholders.

(E) Expenses (including attorney fees) incurred in defending a civil or
criminal action, suit, or proceeding may be paid by the corporation in advance
of the final disposition of such action, suit, or proceeding as authorized in
(C) or (D) of this Article XI upon receipt of an undertaking by or on behalf of
the director, officer, employee, fiduciary or agent to repay such amount unless
it is ultimately determined that he is entitled to be indemnified by the
corporation as authorized in this Article XI.

(F) The indemnification provided by this Article XI shall not be deemed
exclusive of any other rights to which

-6-
<PAGE>

those indemnified may be entitled under any bylaw, agreement, vote of
shareholders or disinterested directors, or otherwise, and any procedure
provided for by any of the foregoing, both as to action in his official capacity
and as to action in another capacity while holding such office, and shall
continue as to a person who has ceased to be a director, officer, employee,
fiduciary or agent and shall inure to the benefit of heirs, executors, and
administrators of such a person.

(G) The corporation may purchase and maintain insurance on behalf of
any person who is or was a director, officer, employee, fiduciary or agent of
the corporation or who is or was serving at the request of the corporation as a
director, officer, employee, fiduciary or agent of another corporation,
partnership, joint venture, trust, or other enterprise against any liability
asserted against him and incurred by him in any such capacity or arising out of
his status as such, whether or not the corporation would have the power to
indemnify him against such liability under provisions of this Article XI.

(H) The corporation shall indemnify any director, officer, employee,
fiduciary or agent of the corporation or of any Predecessor to this corporation
in any dispute arising prior to the adoption of this Article XI by the
shareholders under the terms and conditions of the indemnification provisions
set forth above.

(I) For purposes of this Article XI, the term "Predecessor" shall mean
Taurus Oil Corporation, Methane Gas Company, Inc., and any partnership, joint
ventures or other entities in which Taurus Oil Corporation or Methane Gas
Company, Inc. served as a general partner, joint venturer or owner of 10% or
more of the ownership interests of such entity.

ARTICLE XII

REGISTERED AGENT

The current registered agent and office is Gayle S. Higbee, 717 Seventeenth
Street, Suite1310, Denver, Colorado 80202.

ARTICLE XIII

PLACE OF BUSINESS

The principal office and books of the company are kept at 717 Seventeenth
Street, Suite 1310, Denver, Colorado 80202. This corporation is created for, but
not limited to, the purpose of carrying on most of its business within the
limits of

-7-
<PAGE>

this state. Any original stock ledger and books required to be kept by the
Colorado Revised Statutes, as amended, shall be kept and maintained in the State
of Colorado.

ARTICLE XIV

PREEMPTIVE RIGHTS

No holder of shares of the common stock of the corporation shall be
entitled, as such, to any preemptive or preferential right to subscribe to any
unissued or treasury stock of any class or to any other securities which the
corporation may now or hereafter be authorized to issue. The Board of Directors
of the corporation, however, in its discretion by resolution, may determine that
any unissued or treasury stock or securities of the corporation shall be offered
for subscription solely to the holders of the common stock, which the
corporation may now or hereafter be authorized to issue, in such proportions
based on stock ownership as said Board in its discretion may determine.

The Board of Directors may cause the corporation to enter into agreements
with other persons restricting the transfer of any shares whether by giving the
corporation or any other person a "first right of refusal" to purchase the
shares, and the Board of Directors may also restrict the transfer of shares by
making them redeemable or by restricting the transfer of the stock under such
terms and in such manner as the directors may deem necessary and as are not
inconsistent with the laws of the State of Colorado. Any stock so restricted
must carry a conspicuous legend noting the restriction and the place where such
restriction may be found in the records of the corporation.

The judgment of the Board of Directors as to the adequacy of any
consideration received or to be received for any shares, options, or any other
securities which the corporation at any time may be authorized to issue or sell
or otherwise dispose of shall be conclusive in the absence of fraud, subject to
the provisions of these Articles of Incorporation and any applicable law.

In consideration of the issue by the corporation, and the purchase by the
holders thereof, of shares of the capital stock of the corporation, each and
every present and future holder of shares of the capital stock of the
corporation shall be conclusively deemed, by acquiring or holding such shares,
to have expressly consented to all and singular the terms and provisions of this
Article XIV.

-8-
<PAGE>

These Restated Articles of Incorporation, with Amendments, correctly sets
forth the provisions of the Articles of Incorporation, as amended, and have been
duly adopted as required by law.

SECOND: The number of shares of the corporation outstanding at the time
of such adoption was 16,239~465 and the number of shares entitled to vote
thereon was 16t239t465

THIRD: The designation and number of outstanding shares of each class
entitled to vote thereon as a class were as follows: None.

FOURTH: The number of shares voted for the amendment to Article V was
9,928,770*; and the number of shares voted against such amendment was 132,146.
- ----------- --------
The number of shares voted for the amendment to Article XI was 9,928,770 and the
---------
number of shares voted against such amendment was 132,146 The number of shares
-------
voted for the amendment to Article XIV was 9,928,770* ; and the number of shares
----------
voted against such amendment was 132,146
-------

FIFTH: The number of shares of each class entitled to vote thereon as a
class voted for and against such amendment, respectively, was: None.

SIXTH: The manner, if not set forth in such amendment, in which any
exchange, reclassification, or cancellation of issued shares provided for in the
amendment shall be effected, is as follows: No change.

SEVENTH: The manner in which such amendment effects a change in the
amount of stated capital, and the amount of stated capital as changed by such
amendment, is as follows: No change.

TAURUS PETROLEUM, INC.

By: /S/ J. Joe Mena
----------------------------------
J. Joe Mena, President

By: /S/ Gayle S. Higbee
------------------------------------
Gayle S. Higbee, Secretary

*The United States Bankruptcy Act required no less than the affirmative vote of
66.67% of the total number of shares of Taurus Oil Corporation actually voted at
a meeting of shareholders held for the purpose of voting for or against the
adoption of the Restated Articles of Incorporation.

-9-

<PAGE>
The undersigned, J. Joe Mena, being first duly sworn, deposes and says that he
has executed the foregoing Restated Articles of Incorporation, with Amendments,
on and in behalf of the corporation and that he is the President of the
corporation and is fully authorized to file such document.

By: /S/ J. Joe Mena
----------------------------------
J. Joe Mena, President

STATE OF )
) ss.
CITY & COUNTY OF )

Before me, Kathryn Canfield a notary public in aforesaid County and State,
-----------------
personally appeared J. Joe Mena and Gayle S. Rigbee, who acknowledged before me
that they are President and Secretary, respectively, of Taurus Petroleum, Inc.,
a Colorado corporation, and that they signed the foregoing Restated Articles of
Incorporation, with Amendments, as their free and voluntary act for the uses and
purposes herein set forth, and that the facts contained therein are true.

IN WITNESS WHEREOF, I have hereunto set my hand and official seal this 19th
----
day of November, 1984.
--------

/s/ Kathryn Canfield
----------------------
Notary/Public

My Commission Expires: 460 E. Louisiana Avenue
--------------------------
June 17, 1985 Denver, CO 80210
- --------------- --------------------------
Address
--------------------------

-10-

RESTATED ARTICLES OF INCORPORATION,
WITH AMENDMENTS, OF

TAURUS PETROLEUM, INC.

ARTICLE I

NAME

The corporate name of our corporation is:

TAURUS PETROLEUM, INC.

ARTICLE II

NATURE OF BUSINESS

The nature of the business of the corporation and the objects and purposes
to be transacted and promoted or carried on by it are as follows:

<PAGE>

hold, use, mortgage and dispose of real and personal property as may be
necessary or convenient in pursuit of the foregoing.

2. To engage in the production, development, exploration, sale,
purchase or distribution of energy in any form whatsoever.

ARTICLE III

TERM OF EXISTENCE

The term of existence of this corporation shall be perpetual.

ARTICLE IV

POWERS

ARTICLE V CAPITAL

The aggregate number of shares which this corporation shall have authority
to issue is thirty million (30,000,000) shares with no par value which shall be
designated as common

-2-
<PAGE>

stock. No share shall be issued until it has been paid for, and it shall
thereafter be nonassessable.

ARTICLE VI

SHAREHOLDERS

ARTICLE VII VOTING

Cumulative voting shall not be allowed in voting shares of the capital
stock of the corporation.

ARTICLE VIII

RIGHTS OF DIRECTORS AND OFFICERS TO CONTRACT WITH CORPORATION

-3-
<PAGE>

ARTICLE IX

DIRECTORS

ARTICLE X

CORPORATE OPPORTUNITIES DOCTRINE

-4-
<PAGE>

ARTICLE XI

INDEMNIFICATION

-5-
<PAGE>

(F) The indemnification provided by this Article XI shall not be deemed
exclusive of any other rights to which

-6-
<PAGE>

ARTICLE XII

REGISTERED AGENT

The current registered agent and office is Gayle S. Higbee, 717 Seventeenth
Street, Suite1310, Denver, Colorado 80202.

ARTICLE XIII

PLACE OF BUSINESS

-7-
<PAGE>

this state. Any original stock ledger and books required to be kept by the
Colorado Revised Statutes, as amended, shall be kept and maintained in the State
of Colorado.

ARTICLE XIV

PREEMPTIVE RIGHTS

-8-
<PAGE>

These Restated Articles of Incorporation, with Amendments, correctly sets
forth the provisions of the Articles of Incorporation, as amended, and have been
duly adopted as required by law.

SECOND: The number of shares of the corporation outstanding at the time
of such adoption was 16,239~465 and the number of shares entitled to vote
thereon was 16t239t465

THIRD: The designation and number of outstanding shares of each class
entitled to vote thereon as a class were as follows: None.

FIFTH: The number of shares of each class entitled to vote thereon as a
class voted for and against such amendment, respectively, was: None.

SEVENTH: The manner in which such amendment effects a change in the
amount of stated capital, and the amount of stated capital as changed by such
amendment, is as follows: No change.

TAURUS PETROLEUM, INC.

By: /S/ J. Joe Mena
----------------------------------
J. Joe Mena, President

By: /S/ Gayle S. Higbee
------------------------------------
Gayle S. Higbee, Secretary

-9-

By: /S/ J. Joe Mena
----------------------------------
J. Joe Mena, President

STATE OF )
) ss.
CITY & COUNTY OF )

IN WITNESS WHEREOF, I have hereunto set my hand and official seal this 19th
----
day of November, 1984.
--------

/s/ Kathryn Canfield
----------------------
Notary/Public

My Commission Expires: 460 E. Louisiana Avenue
--------------------------
June 17, 1985 Denver, CO 80210
- --------------- --------------------------
Address
--------------------------

-10-
<PAGE>
Exhibit 3.1.2

MAIL TO:
Colorado Secretary of State
Corporations Officer
1560 Broadway, Suite 200
Denver, Colorado 80202
(303) 866-2361

ARTICLES OF AMENDMENT
to the
ARTICLES OF INCORPORATION

Pursuant to the provisions of the Colorado Corporation Code, the
undersigned corporation adopts the following Articles of Amendments to its
Articles of Incorporation.

FIRST: The name of the corporation is (note 1) Taurus Petroleum, Inc.
----------------------

SECOND, The following amendment to the Articles of Incorporation was
adopted on June 12, 1986, as prescribed by the Colorado Corporation Code, in the
-------- ---
manner marked with an X below:

____ Such amendment was adopted by the board of directors where no shares
have been issued

xx Such amendment was adopted by a vote of the shareholders. The number
----
of shares voted for the amendment was sufficient for approval.

ARTICLE V

CAPITAL

The aggregate number of shares which this corporation shall have authority
to issue is thirty million (30,000,000) shares of common stock. par value $0.001
per share. No share shall be issued until It has been paid for. and it shall
thereafter be nonassessable.

THIRD: The manner, if not set forth in such amendment, in which any
exchange, reclassification, cancellation of issued shares provided for in the
amendment shall be effected, is as follows:

No change.

FOURTH: The manner in which such amendment effects a change in the amount
of stated capital, and the amount of stated capital as changed by such
amendment, are as follows: The stated capital of the company would now be the
number of outstanding shares times $0.001 or $4,801 at the date of this filing.
Stated capital at March 31, 1986, was $1,513,447. The difference between the
stated capital under no par value at the data of this filing and the stated
capital at a par value of $0.001 per share will be classified as additional
paid-in capital.

TAURUS PETROLEUM, INC. (Note 1)
-------------------------------------

By: /S/ J. Joe Mena
-------------------------------------
J. Joe Mena

and /S/ Gayle S. Higbee (Note 2)
-------------------------------------
Gayle S. Higbee

(Note 3)
-------------------------------------

COMPUTER UPDATE COMPLETED
HK

Note: 1. Esset corporate name of corporation adopting the Articles of
Amendments. (If this is a change of name amendment the name
before this amendment is filed)
2. Signature and titles of officers signing for the corporation.
3. Where no shares have been issued, signature of a director.

<PAGE>
Exhibit 3.1.3

MAIL TO:
Colorado Secretary of State
Corporations Officer
1560 Broadway, Suite 200
Denver, Colorado 80202
(303) 866-2361

ARTICLES OF AMENDMENT
to the
ARTICLES OF INCORPORATION

Pursuant to the provisions of the Colorado Corporation Code, the
undersigned corporation adopts the following Articles of Amendments to its
Articles of Incorporation.

FIRST: The name of the corporation is (note 1) Taurus Petroleum, Inc.
----------------------

SECOND, The following amendment to the Articles of Incorporation was
adopted on May 26, 1988, as prescribed by the Colorado Corporation Code, in the
------- ---
manner marked with an X below:

___ Such amendment was adopted by the board of directors where no shares
have been issued

x Such amendment was adopted by a vote of the shareholders. The number
---
of shares voted for the amendment was sufficient for approval.

The following two amendments to the Articles of Incorporation were adopted:

Article V, CAPITAL, is deleted in its entirety and the following is
inserted in lieu thereof:

ARTICLE V

CAPITAL

The aggregate number of shares which this corporation shall have authority to
issue is two hundred million (200,000,000) shares $.00l par value which shall be
designated as common stock. No share shall be issued until it has been paid for,
and it shall thereafter be nonassessable.

Paragraph (J) to Article XI, INDEMNIFICATION, has been added and shall read
as follows:
ARTICLE XI

J) To the fullest extent permitted by the Colorado Corporation Code as
the same exists or may hereafter be amended, a director of the corporation shall
not be liable to the corporation or its stockholders for monetary damages for
breach of fiduciary duty as a director.

THIRD: The manner, if not set forth in such amendment, in which any
exchange, reclassification, cancellation of issued shares provided for in the
amendment shall be effected, is as follows:

No change.

FOURTH: The manner in which such amendment effects a change in the amount
of stated capital, and the amount of stated capital as changed by such
amendment, are as follows:

No change.

TAURUS PETROLEUM, INC. (Note 1)
-------------------------------------

By: /S/ J. Joe Mena
-------------------------------------
J. Joe Mena

and /S/ Gayle S. Higbee (Note 2)
-------------------------------------
Gayle S. Higbee

(Note 3)
-------------------------------------

<PAGE>

Exhibit 3.1.4

Mail to: Secretary of State
Corporations Section
1560 Broadway, Suite 200
Denver, CO 80202
(303) 894-2251
Fax (303) 894-2242

MUST BE TYPED
FILING FEE $25.00
MUST SUBMIT TWO COPIES

ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION

Please include a typed
self-addressed envelope

Pursuant to the Provisions of the Colorado Business Corporation Act the
undersigned corporation adopts the follow Articles of Amendment to its Articles
of incorporation:

FIRST: The name of the corporation is Taurus Petroleum, Inc.,
-------------------------

SECOND: The following amendment to the Articles of Incorporation was adopted on
November 24, 1997, as prescribed by the Colorado Business Corporation Act, in
- ------------- ---
the manner marked with an X below:
- --

____ No shares have been issued of Directors Elected-Action by Incorporators.

____ No shares have been issued but Directors Elected-Action by Directors.

____ Such amendment was adopted by the board of directors where shares have
been issued and shareholders action was not required.

xx Such amendment was adopted by a vote of the shareholders. The number of
- ----
shares voted for the amendment was sufficient for approval.

See attached for amendments

THIRD: If changing corporate name, the new name of the corporation is Taurus
------
Entertainment Companies, Inc.
- ------------------------------

FOURTH: The manner, if not set forth in such amendment, in which any exchange.
reclassification, or cancellation of issued shares provided for in the amendment
shall be effected, is as follows: Not applicable

It these amendments are to have a delayed effective date, please list that date:
Not applicable
- ---------------
(Not to exceed ninety (90) days from the date of filing)

Taurus Petroleum, Inc.
------------------------

Signature ________________________________
Title ________________________________
Stephen E. Fischer, President

Revised 7/95
<PAGE>

ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF TAURUS PETROLEUM, INC.
CHANGING ITS NAME TO
TAURUS ENTERTAINMENT COMPANIES, INC.

pursuant to the provisions of the Colorado Business Corporation Act, the
undersigned corporation adopts the following Articles of Amendment to its
Articles of Incorporation:

FIRST: The name of the corporation is Taurus Petroleum, Inc.

SECOND: The following amendments to the Articles of Incorporation were adopted
on November 24, 1997, as prescribed by the Colorado Business Corporation Act, in
the manner marked with an X below:

___ No shares have been issued or Directors Elected-Action by Incorporators.

___ No shares have been issued but Directors Elected-Action by Directors.

___ Such amendment was adopted by the board of directors where shares have been
issued and shareholder action was not required.

X Such amendment was adopted by a vote of the shareholders. The number of
- ---
shares

voted for the amendment was sufficient for approval.

ARTICLE I -- shall be amended to read as follows:
------------------

ARTICLE I

NAME

The name of the Corporation is Taurus Entertainment Companies, Inc."

ARTICLE V -- CAPITAL shall be amended to read as follows:
-------------------

ARTICLE V

CAPITAL

(a) The aggregate number of shares of common stock which the corporation
shall have authority to issue is twenty million (20,000,000) shares with $0.001
par value which shall be designated as common stock. No share of common stock
shall be issued until it has been paid for and it shall thereafter be
non-assessable."

<PAGE>
(b) The aggregate number of shares of preferred stock which the corporation
shall have authority to issue is ten million (10,000,000) shares of preferred
stock with a par value of $0.0 1. No share of preferred stock shall be issued
until it has been paid for and it shall thereafter be non-assessable

(c) The Preferred Stock may be divided into and issued in one or more
series. The preferences, limitations, and relative rights of the Preferred Stock
may vary between series in any and all respects, but shall not vary within a
series. The Board of Directors may establish one or more series of unissued
shares of the Preferred Stock and fix and determine the preferences,
limitations, and relative rights of any series to the fullest extent set forth
herein and permitted by Colorado law, as now or hereafter in force. The Board of
Directors may increase or decrease the r of shares within each such series;
provided, however, that the Board of Directors may not number decrease the
number of shares within a series below the number of shares within such series
that issued. The preferences, limitations, and relative rights of any
Preferred Stock to be issued is then shall be fixed by the Board of Directors
adopting a resolution or resolutions to such effect and filing a statement with
respect thereto as required by the Colorado law."

THIRD: If changing corporate name, the new name of the corporation is Taurus
------
Entertainment Companies. Inc.
- -------------------------------

FOURTH: The manner, if not set forth in such amendment, in which any exchange,
reclassification, or cancellation of issued shares provided for in the amendment
shall be effected, is as follows: Not applicable.
----------------

If these amendments are to have a delayed effective date, please list that date:
Not applicable.
- ----------------
(Not to exceed ninety (90) days from the date of filing)

Taurus Petroleum, Inc., changing its name to
Taurus Entertainment Companies, Inc.

Signature ________________________________
Stephen E. Fischer
Title President

<PAGE>

AS ACCEPTED JUNE 10, 1980

BYLAWS

TAURUS OIL CORPORATION

ARTICLE I. OFFICES
------------------

THE PRINCIPAL OFFICE OF THE CORPORATION IN THE STATE OF COLORADO SHALL BE
LOCATED IN THE CITY OF DENVER, COUNTY OF DENVER. THE CORPORATION MAY HAVE SUCH
OTHER OFFICES, EITHER WITHIN OR WIHTOUT THE STATE OF INCORPORTION AS THE BOARD
OF = DIRECTORS MAY DESIGNATE OR AS THE BUSINESS OF THE CORPORATION MAY FROM TIME
TO TIME REQUIRE.

ARTICLE II. STOCKHOLDERS
------------------------

SECTION 1. ANNUAL MEETING. THE ANNUAL MEETING OF THE STOCKHOLDERS SHALL BE
---------------
HELD AT SUCH TIME AS MAY BE FIXED BY THE BOARD OF DIRECTORS; PROVIDED, HOWEVER,
THAT IF THE BOARD OF DIRECTORS FAILS TO FIX A TIME, THE ANNUAL MEETING SHALL BE
HELD ON THE SECOND TUESDAY OF JUNE IN EACH YEAR AT THE HOUR OF 2:00 P.M. THE
ANNUAL MEETING OF THE STOCKHOLDERS SHALL BE HELD FOR THE PURPOSE OF ELECTING
DIRECTORS AND FOR THE TRANSACTION OF SUCH OTHER BUSINESS AS MAY COME BEFORE THE
MEETING. IF THE DAY FIXED FOR THE ANNUAL MEETING SHALL BE A LEGAL HOLIDAY SUCH
MEETING SHALL BE HELD ON THE NEXT SUCCEED-ING BUSINESS DAY.

SECTION 2. SPECIAL MEETINGS. SPECIAL MEETINGS OF THE STOCKHOLDERS FOR ANY
-----------------
PURPOSE OR PURPOSES, UNLESS OTHERWISE PRESCRIBED BY STATUTE, MAY BE CALLED BY
THE PRESIDENT OR BY THE BOARD OF DIRECTORS, AND SHALL BE CALLED BY THE PRESIDENT
AT THE REQUEST OF THE HOLDERS OF NOT LESS THAN TEN PERCENT (10%) OF ALL THE
OUTSTANDING SHARES OF THE CORPORATION EN-TITLED TO VOTE AT THE MEETING.

SECTION 3. PLACE OF MEETING. THE BOARD OF DIRECTORS MAY DESIGNATE ANY
-------------------
PLACE, EITHER WITHIN OR WITHOUT THE STATE UNLESS OTHERWISE PRESCRIBED BY
STATUTE, AS THE PLACE OF MEET-ING FOR ANY ANNUAL MEETING OR FOR ANY SPECIAL
MEETING CALLED BY THE BOARD OF DIRECTORS. A WAIVER OF NOTICE SIGNED BY ALL

<PAGE>

STOCKHOLDERS ENTITLED TO VOTE AT A MEETING MAY DESIGNATE ANY PLACE, EITHER
WITHIN OR WITHOUT THE STATE UNLESS OTHERWISE PRESCRIBED BY STATUTE, AS THE PLACE
FOR HOLDING SUCH MEETING. IF NO DESIGNATION IS MADE, OR IF A SPECIAL MEETING BE
OTHER-WISE CALLED, THE PLACE OF MEETING SHALL BE THE PRINCIPAL OFFICE OF THE
CORPORATION IN THE STATE OF COLORADO.

SECTION 4. NOTICE OF MEETING. WRITTEN OR PRINTED NOTICE STATING THE PLACE,
------------------
DAY AND HOUR OF THE MEETING AND, IN CASE OF A SPECIAL MEETING, THE PURPOSE OR
PURPOSES FOR WHICH THE MEETING IS CALLED, SHALL BE DELIVERED NOT LESS THAN TEN
(10) NOR MORE THAN FIFTY (50) DAYS BEFORE THE DATE OF THE MEETING, EITHER
PERSONALLY OR BY MAIL, BY OR AT THE DIRECTION OF THE PRESIDENT, OR THE
SECRETARY, OR THE OFFICER OR PERSCMS CALLING THE MEETING, TO EACH STOCKHOLDER OF
RECORD ENTITLED TO VOTE AT SUCH MEETING. IF MAILED, SUCH NOTICE SHALL BE DEEMED
TO BE DELIVERED WHEN DEPOSITED IN THE UNITED STATES MAIL, ADDRESSED TO THE
STOCKHOLDER AT HIS ADDRESS AS IT APPEARS ON THE STOCK TRANSFER BOOKS OF THE
CORPORATION, WITH POSTAGE THEREON PREPAID.

SECTION 5. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE. FOR THE
------------------------------------------------------
PURPOSE OF DETERMINING STOCKHOLDERS ENTITLED TO NOTICE OF OR TO VOTE AT ANY
MEETING OF STOCK-HOLDERS OR ANY ADJOURNMENT THEREOF, OR STOCKHOLDERS ENTITLED TO
RECEIVE PAYMENT OF ANY DIVIDEND, OR IN ORDER TO MAKE A DETERMINATION OF
STOCKHOLDERS FOR ANY OTHER PROPER PURPOSE, THE BOARD OF DIRECTORS MAY PROVIDE
THAT THE STOCK TRANSFER BOOKS SHALL BE CLOSED FOR A STATED PERIOD BUT NOT TO
EXCEED, IN ANY CASE, FIFTY (50) DAYS. IF THE STOCK TRANSFER BOOKS SHALL BE
CLOSED FOR THE PURPOSE OF DETERMINING STOCKHOLDERS ENTITLED TO NOTICE OF OR TO
VOTE AT A MEETING OF STOCK-HOLDERS, SUCH BOOKS SHALL BE CLOSED FOR AT LEAST TEN
(10) DAYS IMMEDIATELY PRECEDING SUCH MEETING. IN LIEU OF CLOSING THE STOCK
TRANSFER BOOKS, THE BOARD OF DIRECTORS MAY FIX IN ADVANCE A DATE AS THE RECORD
DATE FOR ANY SUCH DETERMINATION OF STOCKHOLDERS, SUCH DATE IN ANY CASE TO BE NOT
MORE THAN FIFTY I50) DAYS AND, IN CASE OF A MEETING OF STOCKHOLDERS, NOT LESS
THAN TEN (10) DAYS PRIOR TO THE DATE ON WHICH THE PARTICULAR ACTION REQUIRING
SUCH DETERMINATION OF STOCK-HOLDERS IS TO BE TAKEN. IF THE STOCK TRANSFER BOOKS
ARE NOT CLOSED AND NO RECORD DATE IS FIXED FOR THE DETERMINATION OF STOCKHOLDERS
ENTITLED TO NOTICE OF OR TO VOTE AT A MEETING OF STOCKHOLDERS, OR STOCKHOLDERS
ENTITLED TO RECEIVE PAYMENT OF A DIVIDEND, THE DATE ON WHICH NOTICE OF THE
MEETING IS MAILED OR THE DATE ON WHICH THE RESOLUTION OF THE BOARD OF DIRECTORS

<PAGE>

DECLARING SUCH DIVIDEND IS ADOPTED, AS THE CASE MAY BE, SHALL BE THE RECORD DATE
FOR SUCH DETERMINATION OF STOCKHOLDERS. WHEN A DETERMINATION OF STOCKHOLDERS
ENTITLED TO VOTE AT ANY MEETING OF STOCKHOLDERS HAS BEEN MADE AS PROVIDED IN
THIS SECTION, SUCH DETERMINATION SHALL APPLY TO ANY ADJOURNMENT THEREOF.

SECTION 6. VOTING LISTS. THE OFFICER OR AGENT HAVING CHARGE OF THE STOCK
--------------
TRANSFER BOOKS FOR SHARES OF THE CORPORATION SHALL MAKE, AT LEAST TEN (10) DAYS
BEFORE EACH MEETING OF STOCKHOLDERS, A COMPLETE LIST OF THE STOCKHOLDERS
ENTITLED TO VOTE AT SUCH MEETING, OR ANY ADJOURNMENT THEREOF, ARRANGED IN
ALPHABETICAL ORDER, WITH THE ADDRESS OF AND THE NUMBER OF SHARES HELD BY EACH,
WHICH LIST, FOR A PERIOD OF TEN (10) DAYS PRIOR TO SUCH MEETING, SHALL BE KEPT
ON FILE AT THE PRINCIPAL OFFICE OF THE CORPORATION AND SHALL BE SUBJECT TO
INSPECTION BY ANY STOCKHOLDER AT ANY TIME DURING USUAL BUSINESS HOURS. SUCH LIST
SHALL ALSO BE PRODUCED AND KEPT OPEN, AT THE TIME AND PLACE OF THE MEETING AND
SHALL BE SUBJECT TO THE INSPECTION OF ANY STOCKHOLDER DURING THE WHOLE TIME OF
THE MEETING. THE ORIGINAL STOCK TRANSFER BOOK SHALL BE PRIMA FACIE EVIDENCE AS
TO WHO ARE THE STOCKHOLDERS ENTITLED TO EXAMINE SUCH LIST OR TRANSFER BOOKS OR
TO VOTE AT THE MEETING OF STOCKHOLDERS.

SECTION 7. QUORUM. AT ANY MEETING OF STOCKHOLDERS, A MAJORITY OF THE
-------
OUTSTANDING SHARES OF THE CORPORATION ENTITLED TO VOTE, REPRESENTED IN PERSON OR
BY PROXY, SHALL CONSTITUTE A QUORUM. IF LESS THAN SAID NUMBER OF THE OUTSTANDING
SHARES ARE REPRESENTED AT A MEETING, A MAJORITY OF THE SHARES SO REPRESENTED MAY
ADJOURN THE MEETING FROM TIME TO TIME WITHOUT FURTHER NOTICE; PROVIDED, HOWEVER,
THAT NO SINGLE ADJOURNMENT MAY EXCEED SIXTY (60) DAYS. AT SUCH ADJOURNED MEETING
AT WHICH A QUORUM SHALL BE PRESENT OR REPRESENTED, ANY BUSINESS MAY BE
TRANSACTED WHICH MIGHT HAVE BEEN TRANSACTED AT THE MEETING AS ORIGINALLY
NOTIFIED. THE STOCKHOLDERS PRESENT AT A DULY ORGANIZED MEETING MAY CONTINUE TO
TRANSACT BUSINESS UNTIL ADJOURNMENT, NOTWITHSTANDING THE WITHDRAWAL OF ENOUGH
STOCKHOLDERS TO LEAVE LESS THAN A QUORUM.

SECTION 8. PROXIES. AT ALL MEETINGS OF STOCKHOLDERS, A STOCKHOLDER MAY VOTE
--------
BY PROXY EXECUTED IN WRITING BY THE STOCKHOLDER OR BY HIS DULY AUTHORIZED
ATTORNEY IN FACT. SUCH PROXY SHALL BE FILED WITH THE SECRETARY OF THE
CORPORATION BEFORE OR AT THE TIME OF THE MEETING. NO PROXY SHALL BE VALID AFTER
ELEVEN MONTHS FROM THE DATE OF ITS EXECUTION, UNLESS OTHERWISE PROVIDED IN THE
PROXY.

SECTION 9. VOTING. EACH STOCKHOLDER ENTITLED TO VOTE
-------

IN ACCORDANCE WITH THE TERMS AND PROVISIONS OF THE CERTIFICATE OF INCORPORATION
AND THESE BYLAWS SHALL BE ENTITLED TO ONE VOTE, IN PERSON OR BY PROXY, FOR EACH
SHARE OF STOCK ENTITLED TO VOTE HELD BY SUCH STOCKHOLDERS. UPON THE DEMAND OF
ANY STOCKHOLDER, THE VOTE FOR DIRECTORS AND UPON ANY QUESTION BEFORE THE MEETING
SHALL BE BY BALLOT. ALL ELECTIONS FOR DIRECTORS SHALL BE DECIDED BY PLURALITY
VOTE OF THE SHARES REPRESENTED AT THE MEETING AND ENTITLED TO VOTE THERE ON; ALL
OTHER QUESTIONS SHALL BE DECIDED BY MAJORITY VOTE OF THE SHARES REPRESENTED AT
THE MEETING AND ENTITLED TO VOTE THEREON EXCEPT AS OTHERWISE PROVIDED BY THE
CERTIFICATE OF INCORPORATION OR THE LAWS OF THE STATE OF COLORADO.

SECTION 10. ORDER OF BUSINESS. THE ORDER OF BUSINESS AT ALL MEETINGS OF THE
------------------
STOCKHOLDERS, SHALL BE AS FOLLOWS:

1. ROLL CALL.

2. PROOF OF NOTICE OF MEETING OR WAIVER OF NOTICE.

3. READING OF MINUTES OF PRECEDING MEETING.

4. REPORTS OF OFFICERS.

5. REPORTS OF COMMITTEES.

6. ELECTION OF DIRECTORS.

7. UNFINISHED BUSINESS.

8. NEW BUSINESS.

SECTION 11. INFORMAL ACTION BY STOCKHOLDERS. UNLESS OTHERWISE PROVIDED BY
--------------------------------
LAW, ANY ACTION REQUIRED TO BE TAKEN AT A MEETING OF THE STOCKHOLDERS, OR ANY
OTHER ACTION WHICH MAY BE TAKEN AT A MEETING OF THE STOCKHOLDERS, MAY BE TAKEN
WITHOUT A MEETING IF A CONSENT IN WRITING, SETTING FORTH THE ACTION SO TAKEN,
SHALL BE SIGNED BY ALL OF THE STOCKHOLDERS ENTITLED TO VOTE WITH RESPECT TO THE
SUBJECT MATTER THEREOF.

ARTICLE III. BOARD OF DIRECTORS
-------------------------------

SECTION 1. GENERAL POWERS. THE BUSINESS AND AFFAIRS OF THE CORPORATION
----------------
SHALL BE MANAGED BY ITS BOARD OF DIRECTORS. THE DIRECTORS SHALL IN ALL CASES
ACT AS A BOARD, AND THEY MAY ADOPT SUCH RULES AND REGULATIONS FOR THE CONDUCT OF
THEIR
MEETINGS AND THE MANAGEMENT OF THE CORPORATION, AS THEY MAY DEEM PROPER, NOT
INCONSISTENT WITH THESE BYLAWS AND THE LAWS
OF THE STATE OF COLORADO.

SECTION 2. NUMBER, TENURE AND QUALIFICATIONS. THE NUMBER OF DIRECTORS OF
-----------------------------------
THE CORPORATION SHALL BE NOT LESS THAN

<PAGE>
5

THREE OR MORE THAN NINE AS MAY BE FIXED FROM TIME TO TIME BY RESOLUTION OF THE
BOARD OF DIRECTORS; PROVIDED, HOWEVER, THAT NO DECREASE IN THE NUMBER OF
DIRECTORS SHALL HAVE THE EFFECT OF SHORTENING THE TERM OF ANY INCUMBENT
DIRECTOR. EACH DIRECTOR SHALL HOLD OFFICE UNTIL THE NEXT ANNUAL MEETING OF
STOCKHOLDERS AND UNTIL HIS SUCCESSOR SHALL HAVE BEEN ELECTED AND QUALIFIED.

SECTION 3. REGULAR MEETINGS. A REGULAR MEETING OF THE DIRECTORS SHALL BE
------------------
HELD WITHOUT OTHER NOTICE THAN THIS BYLAW IMMEDIATELY AFTER, AND AT THE SAME
PLACE AS, THE ANNUAL MEETING OF STOCKHOLDERS. THE DIRECTORS MAY PROVIDE, BY
RESOLUTION, THE TIME AND PLACE FOR THE HOLDING OF ADDITIONAL REGULAR MEETINGS
WITHOUT OTHER NOTICE THAN SUCH RESOLUTION.

SECTION 4. SPECIAL MEETINGS. SPECIAL MEETINGS OF THE DIRECTORS MAY BE
------------------
CALLED BY OR AT THE REQUEST OF THE PRESIDENT OR ANY TWO DIRECTORS. THE PERSON OR
PERSONS AUTHORIZED TO CALL SPECIAL MEETINGS OF THE DIRECTORS MAY FIX THE PLACE
FOR HOLDING ANY SPECIAL MEETING OF THE DIRECTORS CALLED BY THEM.

SECTION 5. NOTICE. NOTICE OF ANY SPECIAL MEETING SHALL BE GIVEN AT LEAST
-------
FIVE (5) DAYS PREVIOUSLY THERETO BY WRITTEN NOTICE DELIVERED PERSONALLY, OR BY
TELEGRAM OR MAILED TO EACH DIRECTOR AT HIS BUSINESS ADDRESS. IF MAILED, SUCH
NOTICE SHALL BE DEEMED TO BE DELIVERED WHEN DEPOSITED IN THE UNITED STATES MAIL
SO ADDRESSED, WITH POSTAGE THEREON PREPAID. IF NOTICE BE GIVEN BY TELEGRAM, SUCH
NOTICE SHALL BE DEEMED TO BE DELIVERED WHEN THE TELEGRAM IS DELIVERED TO THE
TELEGRAPH COMPANY. THE ATTENDANCE OF A DIRECTOR AT A MEETING SHALL CONSTITUTE A
WAIVER OF NOTICE OF SUCH MEETING, EXCEPT WHERE A DIRECTOR ATTENDS A MEETING-FOR
THE EXPRESS PURPOSE OF OBJECTING TO THE TRANSACTION OF ANY BUSINESS BECAUSE THE
MEETING IS NOT LAWFULLY CALLED OR CONVENED.

SECTION 6. QUORUM. AT ANY MEETING OF THE DIRECTORS A MAJORITY OF THE TOTAL
-------
NUMBER OF DIRECTORS SHALL CONSTITUTE A QUORUM FOR THE TRANSACTION OF BUSINESS,
BUT IF LESS THAN SAID NUMBER IS PRESENT AT A MEETING, A MAJORITY OF THE
DIRECTORS PRESENT MAY ADJOURN THE MEETING FROM TIME TO TIME WITHOUT FURTHER
NOTICE.

SECTION 7. MANNER OF ACTING. THE ACT OF THE MAJORITY OF THE DIRECTORS
-------------------
PRESENT AT A MEETING AT WHICH A QUORUM I'S PRESENT SHALL BE THE ACT OF THE BOARD
OF DIRECTORS. MEETINGS OF THE BOARD OF DIRECTORS SHALL BE CONDUCTED BY THE
CHAIRMAN

<PAGE>
6

OF THE BOARD, IF ANY, OR BY THE PRESIDENT OR, IF NEITHER IS PRESENT, BY A
CHAIRMAN TO BE ELECTED AT THE MEETING.

SECTION 8. NEWLY CREATED DIRECTORSHIPS AND VACANCIES. NEWLY CREATED
----------------------------------------------
DIRECTORSHIPS RESULTING FROM AN INCREASE IN THE NUMBER OF DIRECTORS AND
VACANCIES OCCURRING IN THE BOARD OF DIRECTORS FOR ANY REASON EXCEPT THE REMOVAL
OF DIRECTORS WITHOUT CAUSE MAY BE FILLED BY A VOTE OF A MAJORITY OF THE
DIRECTORS THEN IN OFFICE, ALTHOUGH LESS THAN A QUORUM EXISTS. VACANCIES
OCCURRING BY REASON OF THE REMOVAL OF DIRECTORS WITHOUT CAUSE SHALL BE FILLED BY
VOTE OF THE STOCKHOLDERS. A DIRECTOR ELECTED TO FILL A VACANCY CAUSED BY
RESIGNATION, DEATH OR REMOVAL SHALL BE ELECTED TO HOLD OFFICE FOR THE UNEXPIRED
TERM OF HIS PREDECESSOR.

SECTION 9. REMOVAL. AT A MEETING OF STOCKHOLDERS CALLED EXPRESSLY FOR-THAT
--------
PURPOSE, THE ENTIRE BOARD OF DIRECTORS, OR ANY MEMBER THEREOF, MAY BE REMOVED,
WITH OR WITHOUT CAUSE, BY A VOTE OF THE HOLDERS OF A MAJORITY OF THE SHARES THEN
ENTITLED TO VOTE AT AN ELECTION OF DIRECTORS.

SECTION 10. RESIGNATION. A DIRECTOR MAY RESIGN AT ANY TIME BY GIVING
------------
WRITTEN TO THE BOARD OF DIRECTORS, THE PRESIDENT OR THE SECRETARY OF THE
CORPORATION. UNLESS OTHERWISE SPECIFIED IN THE NOTICE, THE RESIGNATION SHALL
TAKE EFFECT UPON RECEIPT THEREOF BY THE BOARD OR SUCH OFFICER, AND THE
ACCEPTANCE OF THE RESIGNATION SHALL NOT BE NECESSARY TO MAKE IT EFFECTIVE.

SECTION 11. COMPENSATION. NO COMPENSATION SHALL BE PAID TO DIRECTORS, AS
-------------
SUCH, FOR THEIR SERVICES, BUT BY RESOLUTION OF THE BOARD OF DIRECTORS A FIXED
SUM AND EXPENSES FOR ACTUAL ATTENDANCE AT EACH REGULAR OR SPECIAL MEETING OF THE
BOARD MAY BE AUTHORIZED. NOTHING HEREIN CONTAINED SHALL BE CONSTRUED TO PRECLUDE
ANY DIRECTOR FROM SERVING THE CORPORATION IN ANY OTHER CAPACITY AND RECEIVING
COMPENSATION THEREFOR.

SECTION 12. PRESUMPTION OF ASSENT. A DIRECTOR-OF THE CORPORATION WHO IS
------------------------
PRESENT AT A MEETING OF THE DIRECTORS AT WHICH ACTION ON ANY CORPORATE MATTER IS
TAKEN SHALL BE PRESUMED TO HAVE ASENTED TO THE ACTION TAKEN UNLESS HIS DISSENT
SHALL BE ENTERED IN THE MINUTES OF THE MEETING OR UNLESS HE SHALL FILE HIS
WRITTEN DISSENT TO SUCH ACTION WITH THE P~RSON ACTING AS THE SECRETARY OF THE
MEETING BEFORE THE ADJOURNMENT THEREOF OR SHALL FORWARD SUCH DISSENT BY
REGISTERED MAIL TO THE SECRETARY OF THE CORPORATION IMMEDIATELY AFTER THE AD-

<PAGE>
7

JOURNMENT OF THE MEETING. SUCH RIGHT TO DISSENT SHALL NOT APPLY TO A DIRECTOR
WHO VOTED IN FAVOR OF SUCH ACTION.

SECTION 13. EXECUTIVE AND OTHER COMMITTEES. THE BOARD OF DIRECTORS, BY
----------------------------------
RESOLUTION ADOPTED BY A MAJORITY OF THE NUMBER OF DIRECTORS FIXED PURSUANT TO
THESE BYLAWS, MAY DESIGNATE FROM AMONG ITS MEMBERS AN EXECUTIVE COMMITTEE AND
OTHER COMMITTEES, EACH CONSISTING OF THREE OR MORE DIRECTORS. EACH SUCH
COMMITTEE SHALL SERVE AT THE PLEASURE OF THE BOARD AND, TO THE EXTENT PROVIDED
IN THE RESOLUTION, SHALL HAVE ALL OF THE AUTHORITY OF THE BOARD OF DIRECTORS
EXCEPT THAT NO SUCH COMMITTEE SHALL HAVE THE AUTHORITY OF THE BOARD OF DIRECTORS
IN REFERENCE TO AMENDING THE ARTICLES OF INCORPORATION, ADOPTING A PLAN OF
MERGER OR CONSOLIDATION, RECOMMENDING TO THE STOCKHOLDERS THE SALE, LEASE,
EXCHANGE OR OTHER DISPOSITION OF ALL OR SUBSTANTIALLY ALL OF THE PROPERTY AND
ASSETS OF THE CORPORATION OTHERWISE THAN IN THE USUAL AND REGULAR COURSE OF ITS
BUSINESS, RECOMMENDING TO THE STOCKHOLDERS A VOLUNTARY DISSOLUTION OF THE
CORPORATION OR A REVOCATION THEREOF, OR AMENDING THE BYLAWS OF THE CORPORATION.
THE DESIGNATION OF SUCH COMMITTEES AND THE DELEGATION THERETO OF AUTHORITY SHALL
NOT OPERATE TO RELIEVE THE BOARD OF DIRECTORS, OR ANY MEMBER THEREOF, OF ANY
RESPONSIBILITY IMPOSED BY LAW.

ARTICLE IV. OFFICERS

SECTION 1. NUMBER. THE OFFICERS OF THE CORPORATION SHALL BE A PRESIDINT,
-------
ONE OR MORE VICE PRESIDENTS, A SECRETARY AND A TREASURER, EACH OF WHOM SHALL BE
ELECTED BY THE BOARD OF DIRECTORS. SUCH OTHER OFFICERS AND ASSISTANT OFFICERS AS
MAY BE DEEMED NECESSARY MAY BE ELECTED OR APPOINTED BY THE BOARD OF DIRECTORS.

SECTION 2. ELECTION AND TERM OF OFFICE. THE OFFICERS OF THE CORPORATION TO
----------------------------
BE ELECTED BY THE BOARD OF DIRECTORS SHALL BE ELECTED ANNUALLY AT THE FIRST
MEETING OF THE DIRECTORS HELD AFTER THE ANNUAL MEETING OF THE STOCKHOLDERS. EACH
OFFICER SHALL HOLD OFFICE UNTIL HIS SUCCESSOR SHALL HAVE BEEN DULY ELECTED AND
SHALL HAVE QUALIFIED OR UNTIL HIS DEATH OR UNTIL HE SHALL RESIGN OR SHALL HAVE
BEEN REMOVED IN THE MANNER HEREINAFTER PROVIDED.

SECTION 3. REMOVAL. ANY OFFICER OR AGENT ELECTED OR APPOINTED BY THE BOARD
--------
OF DIRECTORS MAY BE REMOVED BY THE

<PAGE>
8

BOARD WHENEVER IN ITS JUDGMENT THE BEST INTERESTS OF THE CORPORATION WOULD BE
SERVED THEREBY, BUT SUCH REMOVAL SHALL BE WITHOUT PREJUDICE TO THE CONTRACT
RIGHTS, IF ANY, OF THE PERSON SO REMOVED.

SECTION 4. VACANCIES. A VACANCY IN ANY OFFICE BECAUSE OF DEATH, RESIGNATION
----------
REMOVAL, DISQUALIFICATION OR OTHERWISE, MAY BE FILLED BY THE BOARD OF DIRECTORS
FOR THE UNEXPIRED PORTION OF THE TERM.

SECTION 5. PRESIDENT. THE PRESIDENT SHALL BE THE PRINCIPAL EXECUTIVE
----------
OFFICER OF THE CORPORATION AND, SUBJECT TO THE CONTROL OF THE BOARD OF
DIRECTORS, SHALL IN GENERAL SUPERVISE AND CONTROL ALL OF THE BUSINESS AND
AFFAIRS OF THE: CORPORATION. HE SHALL, WHEN PRESENT, PRESIDE AT ALL MEETINGS OF
THE STOCKHOLDERS AND, IN THE ABSENCE OR INABILITY OF THE CHAIRMAN OF THE BOARD,
OF THE BOARD OF DIRECTORS. HE MAY SIGN, WITH THE SECRETARY OR ANY OTHER PROPER
OFFICER OF THE CORPORATION THEREUNTO AUTHORIZED BY THE BOARD OF DIRECTORS,
CERTIFICATES FOR SHARES OF THE CORPORATION, ANY DEEDS, MORTGAGES, BONDS,
CONTRACTS OR OTHER INSTRUMENTS WHICH THE BOARD OF DIRECTORS HAS AUTHORIZED TO BE
EXECUTED, EXCEPT IN CASES WHERE THE SIGNING AND EXECUTION THEREOF SHALL BE
EXPRESSLY DELEGATED BY THE BOARD OF DIRECTORS OR BY THESE BYLAWS TO SOME OTHER
OFFICER OR AGENT OF THE CORPORATION, OR SHALL BE REQUIRED BY LAW TO BE OTHERWISE
SIGNED OR EXECUTED; AND IN GENERAL SHALL PERFORM ALL DUTIES INCIDENT TO THE
OFFICE OF PRESIDENT AND SUCH OTHER DUTIES AS MAY BE PRESCRIBED BY THE BOARD OF
DIRECTORS FROM TIME TO TIME.

SECTION 6. VICE PRESIDENTS. IN THE ABSENCE OF THE President or in event of
----------------
his death, inability or refusal to ACT, THE VICE PRESIDENT (OR, IN THE EVENT
THAT THERE IS MORE THAN ONE VICE PRESIDENT, THE VICE PRESIDENTS IN THE ORDER
DESIGNATED AT THE TIME OF THEIR ELECTION, OR, IN THE ABSENCE OF ANY DESIGNATION,
THEN IN THE ORDER OF THEIR ELECTION) SHALL PERFORM THE DUTIES OF THE PRESIDENT,
AND WHEN SO ACTING, SHALL HAVE ALL THE POWERS OF AND BE SUBJECT TO ALL THE
RESTRICTIONS UPON THE PRESIDENT. ANY VICE PRESIDENT SHALL PERFORM SUCH OTHER
DUTIES AS FROM TIME TO TIME MAY BE ASSIGNED BY THE PRESIDENT OR BY THE BOARD OF
DIRECTORS.

SECTION 7. SECRETARY. THE SECRETARY SHALL KEEP THE MINUTES OF THE MEETINGS
----------
OF THE STOCKHOLDERS AND THE DIRECTORS IN ONE OR MORE BOOKS PROVIDED FOR THAT
PURPOSE, SEE THAT ALL NOTICES ARE DULY GIVEN IN ACCORDANCE WITH THE PRO-

<PAGE>
9

VISIONS OF THESE BYLAWS OR AS REQUIRED BY LAW, BE CUSTODIAN OF THE CORPORATE
RECORDS AND OF THE SEAL OF THE CORPORATION AND KEEP A REGISTER OF THE POST
OFFICE ADDRESS OF EACH STOCKHOLDER WHICH SHALL BE FURNISHED TO THE SECRETARY BY
SUCH STOCKHOLDER, HAVE GENERAL CHARGE OF THE STOCK TRANSFER BOOKS OF THE
CORPORATION AND IN GENERAL PERFORM ALL DUTIES INCIDENT TO THE OFFICE OF
SECRETARY AND SUCH OTHER DUTIES AS FROM TIME TO TIME MAY BE ASSIGNED TO HIM BY
THE PRESIDENT OR BY THE BOARD OF DIRECTORS.

SECTION 8. TREASURER. IF REQUIRED BY THE BOARD OF DIRECTORS, THE TREASURER
----------
SHALL GIVE A BOND FOR THE FAITHFUL DISCHARGE OF HIS DUTIES IN SUCH SUM AND WITH
SUCH SURETY OR SURETIES AS THE BOARD OF DIRECTORS SHALL DETERMINE. HE SHALL HAVE
CHARGE AND CUSTODY OF AND BE RESPONSIBLE FOR ALL FUNDS AND SECURITIES OF THE
CORPORATION; RECEIVE AND GIVE RECEIPTS FOR MONEYS DUE AND PAYABLE TO THE
CORPORATION FROM ANY-SOURCE WHATSOEVER, AND DEPOSIT ALL SUCH MONEYS IN THE NAME
OF THE CORPORATION IN SUCH BANKS, TRUST COMPANIES OR OTHER DEPOSITORIES AS SHALL
BE SELECTED IN ACCORDANCE WITH THESE BYLAWS AND IN GENERAL PERFORM ALL OF THE
DUTIES INCIDENT TO THE OFFICE OF TREASURER AND SUCH OTHER DUTIES AS FROM TIME TO
TIME MAY BE ASSIGNED TO HIM BY THE PRESIDENT OR BY THE BOARD OF DIRECTORS.

SECTION 9. SALARIES. THE SALARIES OF THE OFFICERS SHALL BE FIXED FROM TIME
---------
TO TIME BY THE DIRECTORS AND NO OFFICER SHALL BE PREVENTED FROM RECEIVING
SUCH SALARY BY REASON OF THE FACT THAT HE IS ALSO A DIRECTOR OF THE
CORPORATION.

SECTION 10. COMBINED OFFICES. ANY TWO OR MORE OFFICES OF THE CORPORATION
------------------
MAY BE COMBINED EXCEPT THOSE OF PRESIDENT AND SECRETARY. OFFICERS MAY ALSO SERVE
AS DIRECTORS.

ARTICLE V. CONTRACTS, LOANS, CHECKS AND DEPOSITS
------------------------------------------------

SECTION 1. CONTRACTS. THE BOARD OF DIRECTORS MAY AUTHORIZE ANY OFF~ICEROR
----------
OFFICERS, AGENT OR AGENTS, TO ENTER INTO ANY CONTRACT OR EXECUTE AND DELIVER ANY
INSTRUMENT IN THE NAME OF AND ON BEHALF OF THE CORPORATION, AND SUCH AUTHORITY
MAY BE GENERAL OR CONFINED TO SPECIFIC INSTANCES.

SECTION 2. LOANS. NO LOANS SHALL BE CONTRACTED ON BEHALF OF THE CORPORATION
------
AND NO EVIDENCES OF INDEBTEDNESS SHALL BE ISSUED IN ITS NAME UNLESS AUTHORIZED
BY A RESOLUTION

<PAGE>
10

OF THE BOARD OF DIRECTORS. SUCH AUTHORITY MAY BE GENERAL OR CONFINED TO SPECIFIC
INSTANCES.

SECTION 3. CHECKS, DRAFTS, ETC. ALL CHECKS, DRAFTS OR OTHER ORDERS FOR THE
--------------------
PAYMENT OF MONEY, NOTES OR OTHER EVIDENCES OF INDEBTEDNESS ISSUED IN THE NAME OF
THE CORPORATION, SHALL BE SIGNED BY SUCH OFFICER OR OFFICERS, AGENT OR AGENTS OF
THE CORPORATION AND IN SUCH MANNER AS SHALL FROM TIME TO TIME BE DETERMINED BY
RESOLUTION OF THE BOARD OF DIRECTORS.

SECTION 4. DEPOSITS. ALL FUNDS OF THE CORPORATION NOT OTHERWISE EMPLOYED
---------
SHALL BE DEPOSITED FROM TIME TO TIME TO THE CREDIT OF THE CORPORATION IN SUCH
BANKS, TRUST COMPANIES OR OTHER DEPOSITARIES AS THE BOARD OF DIRECTORS MAY
SELECT.,

ARTICLE VI. CERTIFICATES FOR SHARES AND THEIR TRANSFER
------------------------------------------------------

SECTION 1. CERTIFICATES FOR SHARES. CERTIFICATES REPRESENTING SHARES OF THE
------------------------
CORPORATION SHALL IN SUCH FORM AS SHALL BE DETERMINED BY THE BOARD OF DIRECTORS.
SUCH CERTIFICATES SHALL BE SIGNED BY THE PRESIDENT AND BY THE SECRETARY OR BY
SUCH OTHER OFFICERS AUTHORIZED BY LAW AND BY THE BOARD OF DIRECTORS. ALL
CERTIFICATES FOR SHARES SHALL BE CONSECUTIVELY NUMBERED OR OTHERWISE IDENTIFIED.
THE NAME AND ADDRESS OF THE STOCKHOLDERS, THE NUMBER OF SHARES AND DATE OF ISSUE
SHALL BE ENTERED ON THE STOCK TRANSFER BOOKS OF THE CORPORATION. ALL
CERTIFICATES SURRENDERED TO THE CORPORATION FOR TRANSFER SHALL BE CANCELLED AND
NO NEW CERTIFICATE SHALL BE ISSUED UNTIL THE FORMER CERTIFICATE FOR A LIKE
NUMBER OF SHARES SHALL HAVE BEEN SURRENDERED AND CANCELLED, EXCEPT THAT IN CASE
OF A LOST, DESTROYED OR MUTILATED CERTIFICATE A NEW ONE MAY BE ISSUED THEREFOR
UPON SUCH TERMS AND INDEMNITY TO THE CORPORATION AS THE BOARD OF DIRECTORS MAY
PRESCRIBE.

SECTION 2. TRANSFER OF SHARES. (A) UPON SURRENDER TO THE CORPORATION OR THE
TRANSFER AGENT OF THE CORPORATION OF A CERTIFICATE FOR SHARES DULY ENDORSED OR
ACCOMPANIED BY PROPER EVIDENCE OF SUCCESSION, ASSIGNMENT OR AUTHORITY TO
TRANSFER, IT SHALL BE THE DUTY OF THE CORPORATION TO ISSUE A NEW CERTIFICATE TO
THE PERSON ENTITLED THERETO, AND CANCEL THE OLD CERTIFICATE; EVERY SUCH TRANSFER
SHALL BE ENTERED ON THE TRANSFER BOOK OF THE CORPORATION WHICH SHALL BE KEPT AT
ITS PRINCIPAL OFFICE.

<PAGE>
11

(B) THE CORPORATION SHALL BE ENTITLED TO TREAT THE HOLDER OF RECORD OF
ANY SHARE AS THE HOLDER IN FACT THEREOF, AND, ACCORDINGLY, SHALL NOT BE BOUND TO
RECOGNIZE ANY EQUI-TABLE OR OTHER CLAIM TO OR INTEREST IN SUCH SHARE ON THE PART
OF ANY OTHER PERSON WHETHER OR NOT IT SHALL HAVE EXPRESS OR OTHER NOTICE
THEREOF, EXCEPT AS EXPRESSLY PROVIDED BY THE LAWS OF THE STATE OF COLORADO.

ARTICLE VII. FISCAL YEAR
------------------------

THE FISCAL YEAR OF THE CORPORATION SHALL BE THE CALENDAR

YEAR.

ARTICLE VIII. DIVIDENDS
-----------------------

THE BOARD OF DIRECTORS MAY FROM TIME TO TIME DECLARE, AND THE CORPORATION
MAY PAY, DIVIDENDS ON ITS OUTSTANDING SHARES IN THE MANNER AND UPON THE TERMS
AND CONDITIONS PRO-VIDED BY LAW.

ARTICLE IX. SEAL
----------------

THE BOARD OF DIRECTORS SHALL PROVIDE A CORPORATE SEAL WHICH SHALL BE
CIRCULAR IN FORM AND SHALL HAVE INSCRIBED THEREON THE NAME OF THE CORPORATION,
THE STATE OF INCORPORA-TION, YEAR OF INCORPORATION AND THE WORDS "CORPORATE
SEAL."

ARTICLE X. WAIVER OF NOTICE
---------------------------

UNLESS OTHERWISE PROVIDED BY LAW, WHENEVER ANY NOTICE IS REQUIRED TO BE
GIVEN TO ANY STOCKHOLDER OR DIRECTOR OF THE CORPORATION UNDER THE PROVISIONS OF
THESE BYLAWS OR UNDER THE PROVISIONS OF THE ARTICLES OF INCORPORATION, A WAIVER
THEREOF IN WRITING, SIGNED BY THE PERSON OR PERSONS ENTITLED TO SUCH NOTICE,
WHETHER BEFORE OR AFTER THE TIME STATED THEREIN, SHALL BE DEEMED EQUIVALENT TO
THE GIVING OF SUCH NOTICE.

ARTICLE XI. AMENDMENTS
----------------------

THESE BYLAWS MAY BE ALTERED, AMENDED OR REPEALED AND NEW BYLAWS MAY BE
ADOPTED BY A MAJORITY VOTE OF THE BOARD OF DIRECTORS AT ANY SPECIAL DIRECTORS'
MEETING WHEN THE PROPOSED

<PAGE>
12

AMENDMENT HAS BEEN SET OUT IN THE NOTICE OF SUCH MEETING OR AT ANY REGULAR
DIRECTORS' MEETING.

ARTICLE XII. INDEMNIFICATION
----------------------------

SECTION 1. POWER TO INDEMNIFY--THIRD PARTY ACTIONS. THE CORPORATION SHALL
----------------------------------------
HAVE POWER TO INDEMNIFY ANY PERSON WHO WAS OR IS A PARTY OR IS THREATENED TO BE
MADE A PARTY TO ANY THREATENED, PENDING OR COMPLETED ACTION, SUIT OR PROCEEDING,
WHETHER CIVIL, CRIMINAL, ADMINISTRATIVE OR INVESTIGATIVE (OTHER THAN AN ACTION
BY OR IN THE RIGHT OF THE CORPORATION). THIS POWER TO INDEMNIFY SHALL ARISE ONLY
BY REASON OF THE FACT THAT THE PERSON IS OR WAS A DIRECTOR, OFFICER, EMPLOY~-E
OR AGENT OF THE CORPORATION OR IS OR WAS SERVING AT THE RDQUEST OF THE
CORPORATION AS A DIRECTOR, OFFICER, EMPLOYEE OR AGENT OF ANOTHER CORPORATION,
PARTNERSHIP, JOINT VENTURE, TRUST OR OTHER ENTERPRISE. THE CORPORATION SHALL
HAVE THE POWER TO INDEMNIFY AGAINST EXPENSES (INCLUDING ATTORNEYS' FEES),
JUDGMENTS, FINES AND AMOUNTS PAID IN SETTLEMENT ACTUALLY AND REASONABLY INCURRED
BY HIM IN CONNECTION WITH SUCH ACTION, SUIT OR PROCEEDING IF HE ACTED IN GOOD
FAITH AND IN A MANNER HE REASONABLY BELIEVED TO BE IN OR NOT OPPOSED TO THE BEST
INTERESTS OF THE CORPORATION, AND, WITH RESPECT TO ANY CRIMINAL ACTION OR
PROCEEDING, IF HE HAD NO REASONABLE CAUSE TO BELIEVE HIS CONDUCT WAS UNLAWFUL.
THE TERMINATION OF ANY ACTION, SUIT OR PROCEEDING BY JUDGMENT, ORDER,
SETTLEMENT, CONVICTION, OR UPON A PLEA OF NOLO CONTENDERE OR ITS EQUIVALENT,
SHALL NOT OF ITSELF CREATE A PRESUMPTION THAT THE PERSON DID NOT ACT IN GOOD
FAITH AND IN A MANNER WHICH HE REASONABLY BELIEVED TO BE IN OR NOT OPPOSED TO
THE BEST INTERESTS OF THE CORPORATION, AND, WITH RESPECT TO ANY CRIMINAL ACTION
OR PROCEEDING, THAT HE HAD REASONABLE CAUSE TO BELIEVE THAT HIS CONDUCT WAS
UNLAWFUL.

SECTION 2. POWER TO INDEMNIFY--ACTIONS BROUGHT IN THERIGHT OF THE
-------------------------------------------------------------
CORPORATION. THE CORPORATION SHALL HAVE POWER TO INDEMNIFY ANY PERSON WHO
---
WAS OR IS A PARTY OR IS THREATENED TO BE MADE A PARTY TO ANY THREATENED, PENDING
OR COMPLETED ACTION OR SUIT BY OR IN THE RIGHT OF THE CORPORATION TO PROCURE A
JUDGMENT IN ITS FAVOR BY REASON OF THE FACT THAT HE IS OR WAS A DIRECTOR,
OFFICER, EMPLOYEE OR AGENT OF THE CORPORATION, OR IS OR WAS SERVING AT THE
REQUEST OF THE CORPORATION AS A DIRECTOR, OFFICER, EMPLOYEE OR AGENT OF ANOTHER
CORPORATION, PARTNERSHIP, JOINT VENTURE, TRUST OR OTHER ENTERPRISE. THE
CORPORATION SHALL HAVE THE POWER TO

<PAGE>
13

INDEMNIFY AGAINST EXPENSES (INCLUDING ATTORNEYS' FEES) ACTUALLY AND REASONABLY
INCURRED BY HIM IN CONNECTION WITH THE DEFENSE OR SETTLEMENT OF SUCH ACTION OR
SUIT IF HE ACTED IN GOOD FAITH AND IN A MANNER HE REASONABLY BELIEVED TO BE IN
OR NOT OPPOSED TO THE BEST INTERESTS OF THE CORPORATION. NO INDEMNIFICATION
SHALL BE MADE IN RESPECT OF ANY CLAIM, ISSUE OR MATTER AS TO WHICH SUCH PERSON
SHALL HAVE BEEN ADJUDGED TO BE LIABLE FOR NEGLIGENCE OR MISCONDUCT IN THE
PERFORMANCE OF HIS DUTY TO THE CORPORATION UNLESS AND ONLY TO THE EXTENT THAT
THE COURT IN WHICH SUCH ACTION OR SUIT WAS BROUGHT SHALL DETERMINE UPON
APPLICATION THAT, DESPITE THE ADJUDICATION OF LIABILITY BUT IN VIEW OF ALL
CIRCUMSTANCES OF THE CASE, SUCH PERSON IS FAIRLY AND REASONABLY ENTITLED TO
INDEMNITY FOR SUCH EXPENSES WHICH SUCH COURT SHALL DEEM PROPER.

SECTION 3. RIGHT TO INDEMNIFICATION. TO THE EXTENT THAT A DIRECTOR,
---------------------------
OFFICER, EMPLOYEE OR AGENT OF THE CORPORATION HAS BEEN SUCCESSFUL ON THE MERITS
OR OTHERWISE IN DEFENSE OF ANY ACTION, SUIT OR PROCEEDING REFERRED TO IN THE
ABOVE SECTIONS 1 AND 2, OR IN DEFENSE OF ANY CLAIM, ISSUE OR MATTER THEREIN, HE
SHALL BE INDEMNIFIED AGAINST EXPENSES (INCLUDING ATTORNEYS' FEES) ACTUALLY AND
REASONABLY INCURRED BY HIM IN CONNECTION THEREWITH.

SECTION 4. DETERMINATION OF ENTITLEMENT TO INDEMNIFICATION. ANY
----------------------------------------------------
INDEMNIFICATION UNDER SECTIONS I AND 2 OF THIS ARTICLE XII (UNLESS ORDERED BY A
COURT) SHALL BE MADE BY THE CORPORATION ONLY AS AUTHORIZED IN THE SPECIFIC CASE
UPON A DETERMINATION THAT INDEMNIFICATION OF THE DIRECTOR, OFFICER, EMPLOYEE OR
AGENT IS PROPER IN THE CIRCUMSTANCES BECAUSE HE HAS MET THE APPLICABLE STANDARD
OF CONDUCT SET FORTH IN SECTIONS I AND 2 OF THIS ARTICLE XII. SUCH DETERMINATION
SHALL BE MADE (1) BY THE BOARD OF DIRECTORS BY A MAJORITY VOTE OF A QUORUM
CONSISTING OF DIRECTORS WHO WERE NOT PARTIES TO SUCH ACTION, SUIT OR PROCEEDING,
OR (2) IF SUCH A QUORUM IS NOT OBTAINABLE, OR EVEN IF OBTAINABLE, A QUORUM OF
DISINTERESTED DIRECTORS SO DIRECTS, BY INDEPENDENT LEGAL COUNSEL IN A WRITTEN
OPINION, OR (3) BY THE STOCKHOLDERS.

SECTION 5. ADVANCEMENT OF EXPENSES. EXPENSES INCURRED IN DEFENDING A CIVIL
------------------------
OR CRIMINAL ACTION, SUIT OR PROCEEDING MAY BE PAID BY THE CORPORATION IN ADVANCE
OF THE FINAL DISPOSITION OF SUCH ACTION, SUIT OR PROCEEDING AS AUTHORIZED INTHE
MANNER PROVIDED IN SECTION 4 OF THIS ARTICLE XII UPON RECEIPT OF AN UNDERTAKING
BY OR ON BEHALF OF THE DIRECTOR, OFFICER, EMPLOYEE OR AGENT TO REPAY SUCH AMOUNT
UNLESS IT

<PAGE>
14

SHALL ULTIMATELY BE DETERMINED THAT HE IS ENTITLED TO BE INDEMNIFIED BY THE
CORPORATION AS AUTHORIZED IN THIS ARTICLE.

SECTION 6. SAVINGS Clause. The indemnification proVIDED BY THIS ART SHALL
---------------
NOT BE DEEMED EXCLUSIVE OF ANY OTHER RIGHTS TO WHICH THOSE INDEMNIFIED MAY BE
ENTITLED UNDER ANY BYLAW, AGREEMENT, VOTE OF STOCKHOLDERS OR DISINTERESTED
DIRECTORS OR OTHERWISE, BOTH AS TO ACTION IN HIS OFFICIAL CAPACITY AND AS TO
ACTION IN ANOTHER CAPACITY WHILE HOLDING SUCH OFFICE, AND SHALL CONTINUE AS TO A
PERSON WHO HAS CEASED TO BE A DIRECTOR, OFFICER, EMPLOYEE OR AGENT AND SHALL
INURE TO THE BENEFIT OF THE HEIRS AND LEGAL REPRESENTATIVES OF SUCH A PERSON.

SECTION 7. INSURANCE. THE CORPORATION SHALL HAVE POWER TO PURCHASE AND
----------
MAINTAIN INSURANCE ON BEHALF OF ANY PERSON WHO IS OR WAS A DIRECTOR, OFFICER,
EMPLOYEE OR AGENT OF THE CORPORATION, OR IS OR WAS SERVING AT THE REQUEST OF THE
CORPORATION AS A DIRECTOR, OFFICER, EMPLOYEE OR AGENT OF ANOTHER CORPORATION,
PARTNERSHIP, JOINT VENTURE, TRUST OR OTHER ENTERPRISE AGAINST ANY LIABILITY
ASSERTED AGAINST HIM AND INCURRED BY HIM IN ANY SUCH CAPACITY OR ARISING OUT OF
HIS STATUS AS SUCH, WHETHER OR NOT THE CORPORATION WOULD HAVE THE POWER TO
INDEMNIFY HIM AGAINST SUCH LIABILITY UNDER THE PROVISIONS OF THIS ARTICLE.
<PAGE>

TAURUS
ENTERTAINMENT COMPANIES, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF COLORADO

----------------
Is the owner of

THIS IS TO CERTIFY THAT

FULLY PAID AND NON-ASSESSABLE SHARES, NO PAR VALUE, OF THE COMMON STOCK OF
TAURUS PETROLEUM, INC. (HEREINAFTER CALLED THE CORPORATION), TRANSFERABLE ON THE
BOOKS OF THE CORPORATION BY THE HOLDER HEREOF IN PERSON OR BY DULY AUTHORIZED
ATTORNEY UPON SURRENDER OF THIS CERTIFICATE PROPERLY ENDORSED. THIS CERTIFICATE
AND THE SHARES REPRESENTED HEREBY ARE ISSUED AND SHALL BE HELD SUBJECT TO ALL
THE PROVISIONS OF THE RESTATED CERTIFICATE OF INCORPORATION OF THE CORPORATION,
AS AMENDED, TO ALL OF WHICH THE HOLDER, BY ACCEPTANCE HEREOF, ASSENTS. THIS
CERTIFICATE IS NOT VALID UNTIL COUNTERSIGNED BY THE TRANSFER AGENT.

WITNESS THE FACSIMILE SEAL OF THE CORPORATION AND THE FACSIMILE SIGNATURES OF
ITS DULY AUTHORIZED OFFICERS.

Dated
-----------

Taurus Petroleum, Inc.

----------------- [Corporate SEAL] -----------------
Secretary President
<PAGE>

Exhibit 21.1 Subsidiaries

Citation Land, L.L.C. , a Texas limited liability company, 100% owned.
Broadstreets Cabaret, Inc. a Texas corporation, 100% owned.
XTC Cabaret, Inc., a Texas corporation, 100% owned.
Lucky's of Bourbon Street, Inc., a Louisiana corporation, 100% owned.

<PAGE>

<ARTICLE> 5
<MULTIPLIER> 1

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> SEP-30-1998
<CASH> 243346
<SECURITIES> 0
<RECEIVABLES> 12098
<ALLOWANCES> 0
<INVENTORY> 765
<CURRENT-ASSETS> 826878
<PP&E> 1939243
<DEPRECIATION> (69751)
<TOTAL-ASSETS> 2805075
<CURRENT-LIABILITIES> 753144
<BONDS> 2178494
<COMMON> 4305
0
0
<OTHER-SE> 114659
<TOTAL-LIABILITY-AND-EQUITY> 2805075
<SALES> 3394783
<TOTAL-REVENUES> 3394783
<CGS> 372585
<TOTAL-COSTS> 3732022
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 156238
<INCOME-PRETAX> (493477)
<INCOME-TAX> 8390
<INCOME-CONTINUING> (485087)
<DISCONTINUED> 0
<EXTRAORDINARY> (135377)
<CHANGES> 0
<NET-INCOME> (620464)
<EPS-PRIMARY> (.16)
<EPS-DILUTED> (.16)

</TABLE>