VENTURE CATALYST INC, 10KSB40, 2000-09-25

VENTURE CATALYST INC
10KSB40, 2000-09-25
MISCELLANEOUS AMUSEMENT & RECREATION

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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------

FORM 10-KSB
(MARK ONE)

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

FOR THE FISCAL YEAR ENDED: JUNE 30, 2000

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO .

COMMISSION FILE NUMBER: 0-11532
VENTURE CATALYST INCORPORATED
(NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)

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UTAH 33-0618806
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)

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16868 VIA DEL CAMPO COURT, SUITE 200, SAN DIEGO, CALIFORNIA 92127
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)

ISSUER'S TELEPHONE NUMBER: (858) 385-1000

SECURITIES REGISTERED UNDER SECTION 12(B) OF THE EXCHANGE ACT: NONE

SECURITIES REGISTERED UNDER SECTION 12(G) OF THE EXCHANGE ACT:
COMMON STOCK, $.001 PAR VALUE PER SHARE
(TITLE OF CLASS)

Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes [X]
No [ ]

Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B contained in this form, and no disclosure will 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]

State issuer's revenues for its most recent fiscal year: $14,843,245

As of September 15, 2000, the aggregate market value of the voting stock
held by non-affiliates of the registrant (based on the closing sale price of
such stock on such date) was approximately $17,704,330.

State the number of shares outstanding of each of the issuer's classes of
common equity as of the latest practicable date: At September 15, 2000, there
were 7,422,490 shares outstanding of the issuer's common stock, $.001 par value
per share (the only class of common equity).

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Proxy Statement prepared in connection with the Annual
Meeting of Shareholders to be held in 2000 -- Part III.

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

================================================================================

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VENTURE CATALYST INCORPORATED

ANNUAL REPORT ON FORM 10-KSB
FOR THE FISCAL YEAR ENDED JUNE 30, 2000

TABLE OF CONTENTS
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PAGE
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PART I
ITEM 1: DESCRIPTION OF BUSINESS.........................................3
ITEM 2: DESCRIPTION OF PROPERTY........................................13
ITEM 3: LEGAL PROCEEDINGS..............................................13
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS............13

PART II
ITEM 5: MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.......13
ITEM 6: MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION......14
ITEM 7: FINANCIAL STATEMENTS...........................................28
ITEM 8: CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.............53

PART III
ITEM 9: DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT..............53
ITEM 10: EXECUTIVE COMPENSATION.........................................53
ITEM 11: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.....................................................53
ITEM 12: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.................53
ITEM 13: EXHIBITS AND REPORTS ON FORM 8-K...............................54
SIGNATURES ..................................................57
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This Form 10-KSB, including Management's Discussion and Analysis of
Financial Condition and Results of Operations, and the Notes to the Consolidated
Financial Statements, contains certain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995 reflecting our
current expectations. Although we believe that our expectations are based on
reasonable assumptions, there can be no assurance that the Company's financial
goals or expectations will be realized. Such forward-looking statements involve
known and unknown risks, uncertainties and other factors that may cause the
actual results, performance or achievements of VCAT, or industry results, to be
materially different from future results, performance or achievements expressed
or implied by such forward-looking statements. Numerous factors may affect our
actual results and may cause results to differ materially from those expressed
in forward-looking statements made by or on behalf of VCAT. We assume no
obligation to update or revise any such forward-looking statements or the
factors listed below to reflect events or circumstances that may arise after
this Report is filed, and that may have an effect on our overall performance.

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PART I

ITEM 1. DESCRIPTION OF BUSINESS

OVERVIEW

Venture Catalyst Incorporated, or VCAT, provides professional services to
support and facilitate the development of our clients' businesses. We act as the
clients' ally in organizing, developing and growing businesses at a faster rate.
We offer comprehensive gaming and hospitality consulting services, web
development services, public and governmental relations, Internet marketing,
strategic planning, technology solutions, and professional and technical
expertise. Our objective is to make our clients money by working with them
during every stage of their development and financial growth. In connection with
the implementation of our strategy, we have, in the past, made investments, or
taken all or a portion of our fees, in securities of our clients. However, we do
not expect this to be a significant part of our strategy going forward.

VCAT was organized in 1980 and is a successor to Inland Casino Corporation,
a Delaware corporation.

BUSINESS STRATEGY

Our goal is to make our clients money through delivery of our services. In
particular, we intend to (a) continue our long-standing relationship with the
Barona Tribe, (b) expand and market our services to Native American Tribes, and
(c) develop and expand our client services, including gaming and hospitality
consulting, Internet solutions and technology solutions. We continually review
our services that we believe will provide the greatest value to our clients to
help them achieve success, which may include adding or discontinuing particular
services. We have made, and will continue to make, significant investments in
personnel and resources to allow our services to grow and to better position us
to leverage our resources and expertise. We plan to grow our services business
internally and possibly through acquisitions, joint ventures or other
arrangements we believe to be appropriate. Additionally, we may expand our
portfolio of companies, which would involve acquiring additional ownership
positions, to the extent we deem appropriate to carry out our strategic plans.

CLIENT SERVICES

We have provided many of these services to several Native American Indian
Tribes, including the Barona Group of Capitan Grande Band of Mission Indians
(the "Barona Tribe"), since 1991. We currently provide services to the Barona
Tribe in connection with their operation of the Barona Casino and development of
the Barona Valley Ranch. The Barona Tribe is our largest client and represents a
significant portion of our revenues. The Barona Casino includes 1,500 video
games, 21 table games, and a buffet restaurant. The complex exceeds 100,000
square feet and is located on approximately 15 acres, including parking for over
3,000 cars. The Barona Casino is open 24 hours a day,

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365 days a year. The Barona Casino is currently undergoing a $225 million
development project known as the Barona Valley Ranch which, when complete, will
expand its gaming and resort facilities to include a new casino with
approximately 80,000 square feet of gaming space, a 400 room resort hotel and an
18-hole championship golf course.

In August 1998, we acquired Cyberworks, Inc. ("Cyberworks"), a web-site
development and Internet marketing company to expand our Internet services,
including those of Worldwide Media Holdings, N.V. ("WMH"). Cyberworks was merged
into VCAT following the sale of the Cyberworks domain name to Pacific Century
CyberWorks in August 2000, as part of our strategy to consolidate and use a
single service brand. Our Internet services include full service web-site
development, Internet marketing, strategic consulting for interactive and online
business development and custom Internet applications. Our clients have included
more than 350 local, national and international clients, in a wide array of
industries, including gaming, entertainment, technology and consumer goods.

In July 1999, we expanded our services to include broader consulting
services to emerging and Internet businesses, to further grow our client base.
We provide our spectrum of services to public and private companies. In
connection with this expansion, we acquired the assets of Typhoon Capital
Consultants, LLC ("Typhoon"), an investor relations and business consulting
firm. In September 2000, we decided to discontinue offering investor relations
services.

In January 2000, we acquired all of the outstanding shares of capital stock
of webinc. Inc. ("webinc"), a recently-organized corporation whose business plan
focused on consulting, incubation and venture capital-related services to
start-up and early stage companies focusing on Internet infrastructure and
technology. The operations of webinc have been merged into Venture Catalyst.
While we are not a venture capitalist, we provide strategic consulting to our
clients at all stages of their development.

In March 2000 we acquired CTInteractive, Incorporated ("CTI"), a
full-service technology management firm, whose operations have been merged into
VCAT. Our technology solution services include business application development,
network management, web site development and hosting, and hardware sales and
service. We provide these services to a broad spectrum of clients, from large
corporations to emerging businesses.

AGREEMENT WITH THE BARONA TRIBE

We have provided services to the Barona Tribe since 1991. We entered into a
consulting agreement with the Barona Tribe, effective April 1, 1996 (the
"Consulting Agreement"), which was subsequently amended and restated to correct
an inadvertent mistake in the provision relating to consulting fees. The
majority of our services to the Barona Tribe are pursuant to the Consulting
Agreement. The Consulting Agreement expires March 31, 2004, unless renewed or
extended.

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Our services under the Consulting Agreement are to consult with the Barona
Tribe, members of the Barona Tribal Council and the Barona Tribal Gaming
Commission. Our services have included consulting in the area of general casino
operations, security and surveillance, marketing and advertising, food &
beverage operation, architecture, interior design and construction, governmental
affairs, regulatory matters and public relations. The Barona Tribe may request
additional services from us.

The Barona Tribe may terminate the Consulting Agreement without cause at
any time by giving us nine months' prior notice. Either party may terminate the
Consulting Agreement if the other party commits or knowingly allows to be
committed any act of theft or embezzlement; however, theft or embezzlement by an
officer or employee of VCAT without our knowledge shall not terminate the
Consulting Agreement if VCAT repays all funds stolen or embezzled as soon as we
become aware of it. Disputes arising under the Consulting Agreement are first
submitted to the Barona Tribal Council or the Barona Tribal Gaming Commission;
if not resolved, disputes will be arbitrated in San Diego.

For our services under the Consulting Agreement, we receive a monthly base
fee of $475,000 and may receive additional consulting fees if certain net
operating levels are reached by the Barona Casino. The Barona Tribe has the
right to draw from the gross revenues of the Barona Casino annual income at
least equal to the distributions received by the Barona Tribe for the
twelve-month period ended December 31, 1995.

The Barona Casino relies extensively on a wide range of video gaming
devices. VCAT does not own any of the gaming devices. However, we have entered
into three leases for gaming devices which are in the process of being
discontinued by the Barona Tribe. To the extent that these leases are
"collateral agreements" to the Consulting Agreement under the Indian Gaming
Regulatory Act ("IGRA"), each lessor is required to comply with IGRA and its
regulations. To our knowledge, none of these leases have been submitted to the
National Indian Gaming Commission ("NIGC") for its approval as "collateral
agreements." If these leases are "collateral agreements" and are not approved,
the Barona Tribe has expressed its present intention to enter into other legally
permissible agreements.

OTHER BUSINESSES

In July 1999, as an adjunct to our Internet Gaming Consulting business, we
launched the "Vegas At Home" portal web-site to provide both the gaming industry
and its patrons with an online central location containing a variety of gaming
related products, merchandise, information and links to most significant
traditional casinos. We are in the process of seeking a partner for an updated
Vegas At Home portal site and have shut down the existing site.

In July 2000, we acquired DayPlan.com, Inc. ("DayPlan"), a software company
offering a complete web-based scheduling platform. DayPlan contains features,
such as a

<PAGE> 6

group calendar function, which allows users to coordinate activities with an
affinity group or organization by allowing multiple users to post to the same
calendar. This group calendar can be made available only to a specific affinity
group, or can be made public to reach the entire web audience. We intend to
offer DayPlan as a service to our clients and to build the user base. We also
are exploring enhancements and features for broader application, which may
include a strategic partner to develop or market DayPlan.

COMPETITION

The professional services industry is highly competitive. VCAT competes in
varying degrees with numerous other professional services companies for clients,
including Internet and technology service firms, accounting firms, management
consulting firms and casino operators. The financial, technological, personnel
resources and service offerings of these firms vary significantly and certain
competitors may have greater resources and ability to supply clients with
certain strategic, technical and creative skills. We believe that reputation and
client satisfaction are the principal competitive factors in our service
markets.

Additionally, we expect competition to increase in Indian gaming in
California due to the recent expansion of authorized gaming activities and a
resulting increase in casinos. In the past, experienced gaming companies have
not been active in Indian gaming operations in California. However, certain
operators have recently negotiated agreements with Indian tribes located in
California and we anticipate that as California gaming operations continue to
grow, there will be significantly more competition from other casino consulting
or management companies for new business and for customers to casinos. In
addition, more Indian tribes may choose to develop and operate their casinos
without engaging either a management or consulting company.

MARKETING AND SALES STRATEGIES

We market our services through a direct sales staff, continuing personal
contact with existing and prospective customers and industry leaders, media
advertising, sponsorships, attendance at industry conferences and presentations
of our qualifications and credentials. We believe a high level of customer
satisfaction is critical to attracting and retaining clients.

REGULATORY MATTERS

Except for our work with Native American gaming, our services are only
subject to ordinary business regulations. The operation of any type of gaming
casino on Indian land is subject to extensive Federal, state and tribal
regulation. The regulatory environment regarding Indian gaming is evolving
rapidly. Changes in Federal, state, or tribal law or regulations may limit or
otherwise affect Indian gaming and could therefore have a material adverse
effect on our operations.

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FEDERAL REGULATION OF NATIVE AMERICAN GAMING.

IGRA categorizes gaming as Class I, Class II and Class III activities.
Class I activities defined as social games solely for prizes of minimal value or
traditional forms of Indian gaming engaged as a part of, tribal ceremonies or
celebrations. Class II gaming includes (a) bingo, if played in the same
location, pull-tabs, lotto, punch boards, tip jars, and other games similar to
bingo, and (b) card games that are authorized by the laws of the state, or are
not explicitly prohibited by the laws of the state and are played at any
location in the state, if played in conformity with the laws and regulations of
the state regarding hours or periods of operation of such card games or
limitations on wagers or pot sizes in such card games. Class II gaming does not
include (a) any banked card games, including baccarat, chemin de fer or
blackjack, or (b) electronic or electromechanical facsimiles of any games of
chance or slot machines of any kind. Class III gaming means all other forms of
gaming.

The Chairman of the NIGC can impose civil fines of up to $25,000 per
violation against the tribal operator or a management contractor for any
violation of IGRA. The NIGC also may impose Federal criminal sanctions for
illegal gaming on Indian land and for theft from Indian gaming facilities. The
Chairman of the NIGC also has the power to order temporary closure of an Indian
gaming operation for substantial violation of the provisions of IGRA, or of
tribal regulations, ordinances or resolutions approved under IGRA. After a
temporary closure order, the Indian tribe or management contractor involved has
a right to a hearing before the NIGC to decide whether a permanent closure of
the gaming operation order will be issued.

IGRA provides that an Indian tribe may permit Class II gaming on its lands
if (a) the gaming is located within a state that permits such gaming for any
purpose by any person, and (b) the governing body of the Indian tribe adopts an
ordinance or resolution which is approved by the Chairman of the NIGC. Gaming
profits received by the Indian tribe may only be used to (a) fund tribal
government operations or programs; (b) provide for the general welfare of the
Indian tribe and its members; (c) promote tribal economic development; (d)
donate to charitable organizations; or (e) fund operations of local government
agencies.

Any Indian tribe engaged in Class II gaming may petition the NIGC for a
certificate of self-regulation if is has (a) continuously conducted such
activity for a period of at lease three years, including at least one year after
1988; and (b) otherwise complied with the applicable provisions of the IGRA. The
NIGC will issue a certificate if it determines that the Indian tribe has, among
other things, (a) conducted gaming activity in a manner which has resulted in an
effective and honest accounting of all revenues, has resulted in a reputation
for safe, fair and honest operation of the activity, and has been generally free
of evidence of criminal or dishonest activity; and (b) adopted and is
implementing adequate systems for accounting for all revenues from the activity,
monitoring of all employees and prosecuting violations of its gaming ordinance
and regulations. An Indian tribe may only engage in Class III gaming if it
enters into a tribal-

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state compact, or agrees to abide by a set of regulatory rules obtained from the
U.S. Secretary of the Interior.

An Indian tribe may enter into a management contract for the operation and
management of gaming activities if the Chairman of the NIGC has approved the
contract. Laws regarding approval of Class II and Class III management contracts
place limitations on the amount of any management fee which is based on a
percentage of the operation's net revenues from gaming. The Chairman of the NIGC
(or the Chairman's designee), after notice and hearing, has the authority to
require contract modifications or may void any contract in the event of certain
violations. In addition, under IGRA regulations, management agreements that have
not been approved by the U.S. Secretary of the Interior or the Chairman of the
NIGC may be deemed void.

Under IGRA, tribal governments have primary regulatory authority over
gaming on Indian land unless a tribal-state compact has delegated this
authority. Therefore, persons engaged in gaming activities, including VCAT, are
subject to the provisions of tribal ordinances and regulations on gaming. Such
ordinances and regulations must be consistent with IGRA and the Indian Civil
Rights Act of 1968, and cannot impose criminal penalties upon non-Indians. IGRA
also requires that the NIGC review tribal gaming ordinances and approve such
ordinances only if they meet certain requirements relating to the ownership,
security, personnel background, record keeping and auditing of the tribe's
gaming expenses; the use of the revenues from such gaming; and the protection of
the environment and the public health and safety.

The NIGC does not approve consulting contracts; however, the NIGC reviews
such contracts to determine whether they are management or consulting contracts.
If a contract is determined to be a management contract, it is subject to
approval by the NIGC; if determined to be a consulting contract, it is then
forwarded to the Bureau of Indian Affairs (the "BIA") for approval.

Under IGRA, a management contract can be approved only after a federal
determination that there will be (a) adequate accounting procedures and
financial reports furnished to the tribe; (b) tribal access to the daily
operations of the gaming enterprise; (c) minimum payments to the Tribe prior to
paying development and construction costs; (d) a cap on the repayment of
development and construction costs; and (e) a maximum contract term of five
years and a maximum management fee of 30% of profits; provided, that the NIGC
may approve up to a seven year term and a management fee not to exceed 40% of
net revenues or profits if a very substantial capital investment is required or
the income projections justifies a larger fee or a longer term.

Under IGRA, the management company must provide the NIGC with background
information on each interested party, including a complete financial statement
and a description of such person's gaming experience. Such a person also must
agree to respond to questions from the NIGC.

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The Regulations also impose detailed requirements for background
investigations of each officer, director, key employee and interested party of
Indian gaming management companies, gaming equipment suppliers and certain
lenders to Indian gaming operations. The NIGC will not approve a management
contract and may void an existing management contract if an officer, director,
key employee or an interested party of the management company (a) is an elected
member of the Indian tribal government; (b) has been or is convicted of a felony
gaming offense; (c) has knowingly and willfully provided false information to
the NIGC or the tribe; (d) has refused to respond to questions from the NIGC; or
(e) whose prior history, reputation and associations pose a threat to the public
interest or to effective gaming regulation and control, or increase the chance
of unsuitable activities in gaming. In addition, the NIGC will not approve a
management contract if the management company has attempted to unduly influence
any decision or process of tribal government relating to gaming, or has
materially breached the terms of the management contract, or the tribe's gaming
ordinance.

Our Articles of Incorporation provide that if an interested party fails to
provide information requested by the NIGC or otherwise gives it cause to either
deny approval of or seek to void a management contract to which we are a party,
the interested party shall be required to divest all of our stock owned by such
party within a 90 day period. If unable to sell the stock, we must purchase it
at a price below the fair market value of such stock. As a public company, we
have limited ability to regulate who our shareholders may be. In the
event that VCAT cannot purchase such shares, and the NIGC denies approval of, or
seeks to void any of the agreements, such action by the NIGC would have a
material adverse effect on VCAT.

In March 1996, the Barona Tribe submitted the VCAT consulting agreement to
the NIGC. In May 1996, the NIGC determined that the consulting agreement was not
a management agreement and, therefore, not subject to NIGC approval. In July
1997, the BIA determined that no action was required.

In January 1997, we entered into a settlement agreement with the NIGC.
Under the terms of the settlement agreement, the NIGC held, among other things,
that our relationship with the Barona Tribe benefited the Barona Tribe and we
had not violated any laws. The Company agreed to reimburse the NIGC for
administrative, investigative and legal expenses in the aggregate amount of
$250,000. In addition, we agreed to contribute $2,000,000 to the Barona Tribe
for general improvements on the reservation, payable in five annual
installments, commencing in January 1997 (the "NIGC Settlement Obligation").

In January 1997, we amended the consulting agreement to correct errors in
the fee calculation, which was submitted to the NIGC. In April 1997, The Company
received a letter from the NIGC questioning whether the consulting agreement, as
amended was a management contract and stating that additional review would be
necessary. In March 1999, the NIGC started a preliminary review of our
relationship with the Barona Tribe, including the consulting agreement. In
September 1999, the Company submitted a further modification of the consulting
agreement to the NIGC, extending the consulting agreement to 2004. The review
remains pending.

<PAGE> 10

The Company believes that the consulting agreement, as amended, is not a
management contract, based upon (a) the previous determinations of the NIGC and
the BIA, (b) the NIGC's findings in the January Settlement Agreement, and (c)
our relationship with the Barona Tribe. However, there can be no assurance that
the NIGC will decide the consulting agreement, as amended, is not a management
contract. The failure of the NIGC to determine that the consulting agreement, as
amended, is not a management contract could have a material adverse effect on
our business and financial condition. If the NIGC concludes that the consulting
agreement, as amended, is not a management agreement, it will forward the
consulting agreement to the BIA. If the BIA determines that its approval is
required, there can be no assurance that the BIA will approve the consulting
agreement, as amended. The failure to approve the consulting agreement, as
amended, could have a material adverse effect on our business and financial
condition.

INDIAN NATION SOVEREIGNTY/BARONA TRIBAL REGULATION

Indian tribes are sovereign nations with their own governmental systems. As
such, they enjoy sovereign immunity with respect to most disputes, claims and
demands. However, in the consulting agreement there is a limited waiver of
sovereign immunity with respect only to suits by us to enforce the agreement. We
would expect similar limited waiver provisions to be contained in any other
material agreements that we entered into with a Native American tribe.

The Barona Tribe's governmental system consists of the Tribal Council and
the General Council. The Tribal Council consists of elected representatives who
manage the day-to-day operations of the Barona Tribe and its land. The General
Council consists of all of the adult members of the Barona Tribe. The Tribal
Council and the Chairman of the Barona Tribe supervise the day-to-day operations
of the gaming activities on the Barona Tribe's land.

STATE REGULATION OF NATIVE AMERICAN GAMING

Pursuant to IGRA, certain electronic gaming activities and banked table
games are permissible only if agreed upon by state governments and tribal
representatives. Such an agreement is referred to as a "compact." Compacted
gaming must be consistent with the permissible scope of gaming allowed by state
law.

On September 10, 1999 the state of California and several tribes, including
the Barona Tribe, entered into new tribal-state gaming compacts (the "Barona
Compact"). Under its terms the Barona Compact was not effective until ratified
by statute, and approved by the California voters in the March 2000 primary
election. On March 7, 2000 the people of the State of California amended the
State constitution and enacted the Indian Self-Reliance Amendment. In May 2000,
the Barona Compact was approved by the U.S. Secretary of the Interior, and the
approval was published in the Federal Register on May 16, 2000.

<PAGE> 11

The Barona Compact authorizes 1,057 Class III machines, which may be
increased by acquiring a license for additional machines and terminates on
December 31, 2020. If the parties have not agreed to extend the Barona Compact
or entered into a new compact by the termination date, the Barona Compact will
automatically be extended to June 30, 2022, unless the parties have agreed to an
earlier termination date. The Barona Compact can be amended at any time by the
mutual and written agreement of both parties and is subject to renegotiation in
the event the Tribe wishes to engage in forms of Class III gaming other than
those games authorized under the Barona Compact, provided that no renegotiation
may be sought for 12 months following the effective date of the Barona Compact.
In addition, the Tribe shall have the right to terminate the compact in the
event the right of Indian tribes to operate gaming devices in California is no
longer exclusive.

Under the Barona Compact, the gaming activities which may be offered by the
Tribe include: (a) the operation of up to 2000 Class III gaming machines, (b)
banked and percentage card games, and (c) any devices or games that are
authorized by the California State Lottery, provided that the Tribe does not
offer such games through use of the Internet unless others in California are
permitted to do so.

The Barona Compact establishes limitations on Class III gaming which may
restrict gaming activities. Among those which are of importance to the Barona
Casino are the following: (a) the Barona Tribe must adopt and comply with
California laws prohibiting a gaming enterprise from cashing any check drawn
against any public fund; (b) the Barona Tribe must adopt and comply with any
California laws prohibiting a gaming enterprise from providing or arranging
alcoholic beverages, food or lodging for no charge or at reduced prices as an
incentive; (c) the Tribe must adopt and comply with any California laws
prohibiting extension of credit for gaming activities; (d) no person under 18
(under 21 if alcohol may be consumed) is permitted to be present in any room
where Class III gaming is offered.

The Barona Tribe's allocation of 1,057 machines may be increased by
acquiring a license for additional machines. The Barona Tribe must make
contributions to a Special Distribution Fund based on the number of gaming
devices operated by the Tribe as of September 1, 1999. The Special Distribution
Funds are subject to appropriation by the state Legislature including for (a)
programs designed to address gambling addiction; (b) the support of government
agencies impacted by tribal gaming; (c) regulatory costs incurred by the State
Gaming Agency and the state Department of Justice in connection with the
compact; and (d) the Revenue Sharing Trust Fund (under which tribes without a
compact receive an estimated $1.1 million per year).

Pursuant to the Barona Compact, the State of California and the Barona
Tribe must establish a method for the licensing of all key employees of a gaming
entity and issuing work permits for other service employees. While the Barona
Tribe does not have to be licensed because it is a sovereign governmental
entity, the State Gambling Control Act applies to all others associated with
Class III gaming at the Barona Casino. The Barona Tribe established a Tribal
Gaming Commission four years ago and adopted a

<PAGE> 12

Tribal Gaming Ordinance to authorize gaming on the Barona Reservation, which was
approved by the NIGC. Tribal Gaming Licenses are subject to biennial renewal.

State findings of suitability are granted for only a year and key
employees, tour operators, certain vendors, anyone with an interest in the
casino, and anyone who has significant influence over gaming operations,
including members of the Barona Tribe, must apply for a license and a finding of
suitability. Work permits for other employees of the tribal gaming operations
must be obtained from the State Gaming Control Agency. Such work permits must be
renewed annually.

The Barona Compact also requires the Barona Tribe to carry public liability
insurance with initial limits of $5,000,000 for personal injury and property
damage claims. The Barona Tribe is not required to generally waive its sovereign
immunity, but may not invoke sovereign immunity up to the $5,000,000 liability
insurance limits.

The Barona Compact also requires the Barona Tribe to comply with most
California and federal employment, health and safety laws.

FEDERAL AND STATE GAMING LAWS OTHER THAN IGRA

In addition to the regulations imposed by IGRA, tribally owned gaming
facilities on Indian land are subject to a number of other Federal statutes,
including the Assimilative Crimes Act, which imposes Federal criminal penalties
for the violation of state laws on Indian reservations, and the Johnson Act,
which imposes Federal criminal penalties for the operation of mechanical
gambling devices on Indian reservations. If gaming activities on Indian land are
not in compliance with IGRA, the Assimilative Crimes Act or the Johnson Act,
(prohibiting mechanical gambling devices on Indian lands) may apply, imposing
criminal and civil penalties on such activities. In addition, the Treasury
Department has adopted regulations under the Bank Secrecy Act which apply
specifically to Indian gaming operations. These regulations impose Federal
criminal penalties for the violation of Federal regulations requiring the
reporting of information on unusual or large cash transactions. The Barona
Casino has implemented procedures and programs to comply with these regulations.

DISCONTINUED OPERATIONS

As part of our strategic focus we discontinued our Internet gaming
consulting business and are in the process of liquidating our wholly owned
subsidiary, WMH. From March 1998 through March 2000 WMH provided consulting
services related to Internet casinos, including marketing and promoting of
Internet casinos through technical and distribution services, web-site
development, Internet advertising and conventional advertising. WMH's portfolio
of clients has included the following international Internet casinos: Casino
Australia, the Kenny Rogers Casino, The Good Luck Club and Las Vegas At Home
Casino. WMH did not operate any of the casinos and none of the casinos accepted
wagers from the United States and its territories.

<PAGE> 13

EMPLOYEES

As of June 30, 2000, we had 67 full-time employees and 3 part-time
employees, none of whom are covered by collective bargaining agreements. We
believe our relations with our employees are good.

ITEM 2. DESCRIPTION OF PROPERTY

VCAT's executive offices are located at 16868 Via Del Campo Court, Suite
200, San Diego, California 92127, and consist of approximately 20,000 square
feet under a lease that will expire in October 2002. We lease approximately
1,000 square feet of office space in Santa Monica, California. That lease
expires in March 2002. We also sublease approximately 4,232 square feet of
office space in Los Angeles, California, 1,200 square feet in Orange County,
California and approximately 9,800 square feet in West Los Angeles, which we are
currently in the process of subleasing. We believe that the current facilities
will be adequate to meet our needs for the foreseeable future. Should we need
additional space, management believes that we will be able to secure additional
space at reasonable rates.

ITEM 3. LEGAL PROCEEDINGS

We are not involved in material legal proceedings.

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

On May 30, 2000 at a special meeting of shareholders of the Company, the
Board submitted and the shareholders approved an amendment to the Company's 1995
Stock Option Plan as follows: to (i) increase the number of shares of the
Company's Common Stock available for issuance thereunder by 3,000,000; (ii)
increase the maximum number of option which may be granted under the Option Plan
to any individual during any three consecutive fiscal years to 1,500,000; and
(iii) provide for automatic adjustment in the option price and in the number or
kind of shares of Common Stock.

PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

MARKET FOR COMMON STOCK

The common stock of the Company, par value $.001 per share (the "Common
Stock"), trades on the Nasdaq National Market under the symbol VCAT. The table
below reflects the high and low closing prices of the Common Stock as reported
by the Nasdaq National Market for the periods indicated.

<PAGE> 14
<TABLE>
<CAPTION>
HIGH LOW
----- -----
<S> <C> <C>
Fiscal Year 2000
First Quarter...........................................$ 3.38 $2.31
Second Quarter.......................................... 5.00 2.50
Third Quarter........................................... 18.13 5.38
Fourth Quarter.......................................... 8.00 3.44

Fiscal Year 1999
First Quarter........................................... $7.50 $2.30
Second Quarter.......................................... 6.00 2.69
Third Quarter........................................... 5.00 1.69
Fourth Quarter.......................................... 3.31 2.25
</TABLE>

HOLDERS

The number of shareholders of record as of September 15, 2000 was 3,135.

DIVIDEND POLICY

To date, we have not paid any dividends and do not intend to pay any
dividends in the foreseeable future. We are not currently restricted from paying
cash dividends. We presently plan to reinvest earnings in order to finance the
expansion and development of our business.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

OVERVIEW

VCAT provides professional services to support and facilitate our clients'
businesses. We act as our clients' ally in organizing, developing and growing
their businesses at a faster rate. We offer comprehensive gaming and hospitality
consulting services, web development services, public and governmental
relations, Internet marketing, strategic planning, technology solutions, and
professional and technical expertise. We have offices in San Diego, Orange
County, Santa Monica and Los Angeles.

Previously, we operated in four business segments: (a) Indian Gaming
Consulting; (b) Web-site Development Services; (c) Emerging and Internet
Business Consulting; and (d) Internet Gaming Consulting. During the year, in
connection with our overall plan to leverage our service capabilities and expand
our client base, VCAT changed the way it manages its business and consolidated
its operations and organization into service groups that were combined into one
business segment. All services have been consolidated into the client services
business segment, and are reported under "Client Services". Additionally, during
the third quarter of fiscal 2000 we decided to discontinue our Internet Gaming
Consulting Business and liquidate our wholly owned

<PAGE> 15

subsidiary WMH. The operations of that business are reported as "Discontinued
Operations".

Our revenues and earnings may fluctuate from quarter to quarter based on
the number, size and scope of projects in which we are engaged, the contractual
terms and degree of completion of such projects, any delays incurred in
connection with a project, employee utilization rates, the adequacy of
provisions for losses, the use of estimates of resources required to complete
ongoing projects, the performance of our investment securities, general economic
conditions and other factors. In addition, revenues from our largest client, the
Barona Tribe, may constitute a significant portion of our total revenues in any
particular quarter, and the revenues we earn from the Barona Tribe may fluctuate
significantly from quarter to quarter.

CLIENT SERVICES

We provide to clients, in a wide array of industries, various consulting
and professional services, including gaming and hospitality consulting services,
web development services, public and governmental relations, Internet marketing,
strategic planning, technology solutions, and professional and technical
expertise. Our objective is to make our clients money by working with them
during every stage of their development and financial growth. In connection with
the implementation of our strategy, we have in the past, and in the future may,
from time to time, make investments or take all or a portion of our fees in
securities of our clients. However, we do not expect this to be a significant
part of our strategy going forward. We continually review our services to
provide the greatest value to our clients to help them achieve success.

We have provided many of these services to the Barona Tribe since 1991. We
currently provide consulting services to the Barona Tribe in connection with the
Barona Tribe's operation of the Barona Casino and development of the Barona
Valley Ranch, which includes a championship golf course and a proposed resort
hotel. Our services are provided under the terms of the Consulting Agreement
which expires in March 2004. The consulting fees paid to us are based upon a net
profit formula that includes the Barona Casino's income and expenses.
Accordingly, although gross revenues of the Barona Casino may increase, our
consulting revenue may not correspondingly increase because expenses at the
Barona Casino also may increase.

From February 1992 through March 1996, we provided casino management
services at the Barona Casino pursuant to a management agreement with the Barona
Tribe. During that same period, all of the approximately $13,000,000 to purchase
or construct the fixed assets at the Barona Casino, such as buildings, equipment
and capital improvements, were contributed by us. Due in part to our investment
in the Barona Casino, the value of the Barona Casino has increased, which is
expected to enhance the fees that we may earn over the life of our relationship
with the Barona Tribe. We treat these investments as intangible assets, which
are recorded as "deferred contract costs" and are being amortized over the
remaining life of the Consulting Agreement. However,

<PAGE> 16

if the recoverability of these assets is determined not to be probable, VCAT
will expense the unamortized portion.

By 1996, the Barona Casino became financially self-sufficient and our
relationship with the Barona Tribe evolved from manager of the Barona Casino to
consultant to the Barona Tribe, which is managing the Barona Casino. Since our
transition from manager to consultant, there have been only two categories of
investments by us in the Barona Casino. The first category relates to
commitments made to the Barona Tribe, while we were acting as manager, pursuant
to a management agreement, of approximately $550,000. The second category
relates to a NIGC settlement with VCAT and the Barona Tribe. Commencing in
November 1996, we agreed to contribute $2,000,000 to construct a new road and
entrance to the Barona Casino. As of August 31, 2000, we have paid $1,600,000 of
the $2,000,000 commitment.

At this time, we have no plans to contribute funds other than those
committed to the Barona Casino or the Barona Tribe. However, we will continue to
assist the Barona Casino, from time to time, in obtaining third party outside
financing. See the discussion below under the caption "Liquidity and Capital
Resources" relating to our advance of funds to the Barona Casino in connection
with the current expansion project.

In September 1999 the Governor of the State of California entered into
new Tribal-State Compacts with over 50 Federally recognized Indian tribes,
including the Barona Tribe. These compacts permit Federally recognized Indian
tribes to engage in broader forms of Class III gaming, including slot machines
and electronic video games, house-banked card games, percentage games and any
games the California Constitution authorizes the California lottery to offer. In
May 2000, the Barona Compact was approved by the U.S. Secretary of the Interior,
and the approval was published in the Federal Register on May 16, 2000. The
Barona Compact replaces the prior Tribal-State Compact with the Barona Tribe. We
believe the Barona Compact ended a significant amount of uncertainty and concern
about the future of gaming activities at the Barona Casino.

In August 1998, we acquired Cyberworks, a web-site development and Internet
marketing company, to expand our Internet services. The operations of Cyberworks
have been consolidated into VCAT, and the Cyberworks name has been discontinued
as part of our strategic plan. VCAT sold the Cyberworks Internet domain names to
Pacific Century CyberWorks Limited in August 2000 for $1,000,000 and agreed to
cease using the name. VCAT's web solutions division offers full service web-site
development, strategic consulting for interactive and online business
development, Internet marketing and custom Internet applications.

In July 1999, we expanded our services to include broader consulting
services to emerging and Internet businesses. We provide our spectrum of
services to public and private companies. In connection with this expansion, we
acquired the assets of Typhoon, an investor relations and business consulting
firm.

<PAGE> 17

In January 2000, as part of our diversification strategy, we acquired all
of the outstanding shares of capital stock of webinc, a recently-organized
corporation whose business plan focused on consulting, incubation and venture
capital-related services to start-up and early stage companies focusing on
Internet infrastructure and technology. The operations of webinc have been
consolidated into VCAT.

In March 2000, we acquired CTI, a full-service technology management firm.
The operations of CTI have been consolidated into VCAT, as part of its strategic
plan. VCAT's technology solutions services include business application
development, network management, web-development and hosting, and hardware sales
and service.

We have made, and will continue to make, significant investments in
personnel and resources to allow Client Services to grow and to better position
us to leverage our financial resources and expertise. We plan to grow our
services business internally and possibly through acquisitions. Additionally, we
may continue to build our portfolio of clients, which would involve acquiring
additional ownership positions in exchange for both cash and services, to the
extent management deems appropriate to carry out VCAT's strategic plans. We are
continually evaluating and negotiating potential acquisitions and investments,
none of which may come to fruition or may not be material to our business as a
whole. There can be no assurance as to the completion or success of any
acquisition or investment.

VEGAS AT HOME

DAYPLAN.COM

In July 2000, we acquired DayPlan, a software company offering a complete
web-based scheduling platform. DayPlan contains features, such as a group
calendar function, which allows users to coordinate activities with an affinity
group or organization by allowing multiple users to post to the same calendar.
This group calendar can be made available only to a specific affinity group, or
can be made public to reach the entire web audience. We intend to offer DayPlan
as a service to our clients and to build the user base. We also are exploring
enhancements and features for broader application, which may include a strategic
partner to develop or market DayPlan.

DISCONTINUED OPERATIONS

In March 1998, we established WMH to leverage our gaming business
expertise.

<PAGE> 18

WMH offered marketing, advertising, technical and distribution services for
Internet related gaming businesses. In February 2000, our Board of Directors
adopted a plan to discontinue the Internet Gaming Consulting business and we are
in the process of liquidating WMH. Internet Gaming Consulting has not produced a
material portion of our revenues and was not profitable. We believe the
resources committed to such business will be more effectively used in our other
businesses.

RESULTS OF OPERATIONS

FISCAL YEAR ENDED JUNE 30, 2000 COMPARED WITH THE FISCAL YEAR ENDED JUNE 30,
1999.

REVENUE. Consolidated revenues for fiscal 2000 from continuing operations
increased slightly to $14,843,000 from $14,772,000 for fiscal 1999.

Revenues for services provided to the Barona Tribe in fiscal 2000 decreased
20% to $10,512,000 from $13,145,000. The decrease is a result of significantly
higher human resources, marketing and operational expenses at the Barona Casino,
primarily due to the ongoing expansion project, which was partially offset by
increased revenues at the Barona Casino. Approximately 71% of the revenues
earned during fiscal 2000 are attributable to fees earned under the consulting
agreement with Barona Tribe, compared to 89% in fiscal 1999. Revenues for
services provided to clients other than the Barona Tribe in fiscal 2000
increased 166% to $4,331,000 from $1,627,000 earned during fiscal 1999. The
increase was primarily due to: (a) twelve months of fees earned from web-site
development during fiscal 2000, as opposed to approximately ten months of fees
of Cyberworks following its acquisition in fiscal 1999; (b) approximately three
months of fees earned during fiscal 2000 from CTI, since its acquisition during
fiscal 2000; (c) an increase in the scope of services offered, primarily
resulting from the acquisition during fiscal 2000 of the assets of Typhoon; and
(d) an increase in services performed to additional and existing clients, some
of which were performed at higher rates.

COST OF REVENUES. Cost of revenues for continuing operations increased 26% to
$5,178,000 for fiscal 2000, from $4,117,000 during fiscal 1999. The increase was
primarily attributable to increases in: (a) compensation and benefits, resulting
primarily from an increase in the average number of employees of the Company and
increased payroll costs for existing employees; (b) client relation expenses,
which included a contribution for the design and construction of a Native
American museum on the Barona Reservation; (c) expenses incurred in connection
with the development, operation and marketing of the "Vegas At Home" portal
site; and (d) consulting fees to outside consultants incurred in connection with
our performance of services to the Barona Tribe. These increases were partially
offset by a significant decrease in political contributions made during fiscal
2000 compared to fiscal 1999.

GENERAL OPERATING AND ADMINISTRATIVE EXPENSES. General operating and
administrative expenses for continuing operations increased 37% to $7,570,000
for fiscal 2000 from $5,523,000 for fiscal 1999. The increase was primarily
attributable to

<PAGE> 19

increases in: (a) compensation and benefits, resulting from the increase in the
average number of employees and increased payroll costs for existing employees;
(b) consulting fees and professional services incurred in connection with
general corporate activities; (c) legal services incurred by the Company; (d)
bad debt allowances established for loans and accounts receivable; and (e)
expenses incurred in connection with shareholder communications and investor
relations. These increases were partially offset by decreases in general
accounting services by outside accountants incurred by the Company.

AMORTIZATION OF INTANGIBLE ASSETS AND STOCK BASED COMPENSATION. Amortization of
intangible assets and stock based compensation for continuing operations
increased 106% to $2,090,000 for fiscal 2000 from $1,016,000 for fiscal 1999 as
a result of: (a) an increase in stock based compensation related to options
granted to consultants and advisory panel members, continued vesting of options
for a former officer and director of the company who is now a consultant, and
for discounted options granted to four employees in connection with their
employment; and (b) an increase in the amortization of goodwill and other
intangible assets in connection with the acquisition of Cyberworks, CTI and the
assets of Typhoon.

OTHER INCOME AND EXPENSE. For fiscal 2000, interest income was $473,000 compared
to $597,000 for fiscal 1999. This decrease was due to lower balances in our
investments and cash equivalents during the year.

Interest expense increased to $866,000 for fiscal 2000 from $708,000 for
fiscal 1999 primarily as a result of an increase in notes payable to two
shareholders, including a former director of the Company, in connection with the
1996 repurchase of shares of the Company's common stock. In fiscal 2000,
$3,069,000 of corporate indebtedness was exchanged for equity prior to its
maturity. The transaction resulted in a non-cash extraordinary loss of $324,000,
attributable to the deemed value of warrants issued in connection with the debt
conversion.

During fiscal 2000 we recorded a $120,000 loss on impairment of assets, to
reduce the carrying value of our investment in KINeSYS Pharmaceutical, based on
their inability to pay their cash obligations and the extended period of time in
which they have not traded on a public exchange.

INCOME TAX BENEFIT / PROVISION. For fiscal 2000, we recorded an income tax
provision for continuing operations of $99,000, a change of $1,935,000 from the
$2,034,000 income tax provision recorded for fiscal 1999. The effective tax rate
for fiscal 2000 dropped to (19%) from 51% in fiscal 1999, primarily due to the
loss during fiscal 2000, compared to income during the comparable period in
fiscal 1999. Our effective tax rate may continue to vary significantly from
period to period based on our profitability and the deductibility of certain
costs and expenses.

<PAGE> 20

DISCONTINUED OPERATIONS.

Operating results of the Internet Gaming Consulting segment through June
30, 2000, have been included in net results from discontinued operations for the
periods reported.

During fiscal 2000, the Internet Gaming Consulting business realized
revenues of $315,000, and a loss, net of tax benefit, of $94,000, compared to
revenues of $429,000 and a loss, net of tax benefit, of $1,179,000, for fiscal
1999.

LIQUIDITY AND CAPITAL RESOURCES

Our principal source of liquidity at June 30, 2000 consisted of
unrestricted cash and cash equivalents of $4,767,000. We believe that this will
be sufficient to meet our operating and capital requirements for the foreseeable
future.

During fiscal 2000, our cash position decreased by $4,519,000 to $4,767,000
from the June 30, 1999 balance of $9,286,000. This decrease was a result of cash
flows used in operating activities of $5,700,000 and cash flows used in
investing activities of approximately $2,399,000 partially offset by cash flows
provided by financing activities of $3,580,000 during the period.

Cash flows used in operating activities include: (a) a net loss of
$1,029,000; (b) $6,495,000 in advances to the Barona Casino for the Barona
Casino expansion project; (c) estimated income tax payments made during the year
of approximately $1,030,000; (d) $463,000 in securities and convertible notes
received for services in lieu of cash; and (e) increases in accounts receivable
of $427,000.

Cash flows provided by operating activities include: (a) depreciation on
property and equipment and amortization of intangible assets and goodwill of
$1,586,000; (b) the amortization of stock based compensation costs of $888,000;
(c) establishment of bad debt reserves of approximately $270,000 for customer
receivables and third-party loans; (d) loss on conversion of debt of $324,000;
(e) a loss on impairment of investments of $120,000; and (f) a write-off of
other assets of $80,000.

Cash flows used in investing activities include: (a) purchases of
$1,386,000 in available-for-sale securities; (b) cash payments made in
connection with the acquisitions of CTI and webinc and the assets of Typhoon of
$441,000; (c) net investments in fixed assets of $375,000; and (d) the purchase
of $350,000 in convertible promissory notes. Cash flows provided by investing
activities include: (a) the redemption of $100,000 in principal amount of bonds
and (b) payments on notes receivable of approximately $54,000.

Cash flows used in financing activities include a $400,000 payment on
long-term debt related to the NIGC settlement discussed above. Cash flows
provided by financing activities include $3,979,000 in proceeds from the
exercise of stock options.

<PAGE> 21

With respect to the current project to expand the Barona Casino, VCAT, the
Barona Tribe and the Barona Casino will share in funding the expansion costs
incurred prior to obtaining all outside financing. We expect to advance
approximately $10,000,000 as an unsecured, non-interest-bearing advance to the
Barona Casino of which $9,685,000 was advanced as of June 30, 2000. These
advances are accounted for as a receivable from the Barona Casino to VCAT. In
January 2000, the Barona Tribe obtained approximately $19 million in outside
financing from the issuance of tax-exempt bonds, primarily for the golf course
development (discussed below). In May 2000, the Barona Tribe obtained
approximately $30 million in outside financing from Sodak Gaming, Inc. for
gaming machines, systems, furniture and technologies. Payment of the receivable
is expected to occur when the Barona Tribe obtains remaining financing of
approximately $175 million, which is expected to be in the fourth quarter of
calendar 2000, unless we are in a cash position that would allow the Barona
Casino to retain the advanced funds for use in its operations during the
expansion. If the advances are not repaid when the Barona Tribe obtains all
outside financing they would be payable upon terms agreed to between VCAT and
the Barona Tribe at that time.

In January 2000, the Barona Tribe completed a placement of tax-exempt
limited general obligation bonds in the principal amount of $18,890,000 (the
"Tax-Exempt Bond Financing"). The principal use of the bond proceeds is to build
a public golf course and related facilities. This project is a part of the $225
million Barona Casino expansion project. In connection with the Tax-Exempt Bond
Financing, we entered into a Consulting Fee Subordination Agreement pursuant to
which no consulting fee earned under the Barona Consulting Agreement shall be
paid to us so long as we have received notice from the trustee for the benefit
of the bondholders of an event of default for which there is a payment default
under the indenture and such default shall be continuing or we shall have been
notified that any levied Government Service Tax remains unpaid in whole or in
part.

In 1992, there was a one-time advance of future fees under the Consulting
Agreement with the Barona Tribe of approximately $2,500,000. At the beginning of
the management relationship in 1992 with the Barona Tribe, the Barona Tribe was
not in a financial position to make required investments in the Barona Casino.
We invested approximately $2,500,000 into the Casino that was accounted for as
revenue to the Barona Casino and expensed by us due to the uncertainty of
recovery. The amount was not accounted for as a deferred contract cost (similar
to those investments discussed above). As the Barona Casino became profitable
between 1992 and 1994, $2,500,000 of the initial profits of the Barona Casino
were distributed to VCAT and were recorded on our books as an obligation called
"advances of future consulting fees." The Barona Casino established a
corresponding receivable. Sometime prior to when the consulting relationship
ends in 2004 VCAT and the Barona Tribe will discuss how to handle this balance.
Depending on the outcome, if the obligation is forgiven by the Barona Tribe, we
may have an additional source of liquidity in the sense that a debt may not need
to be repaid; however, if the balance reverts back to the Barona Casino or the
Barona Tribe we may have a debt to repay. There is no indication how this issue
will ultimately be

<PAGE> 22

resolved. All other transactions between the two parties are being treated
independently. The remaining difference of the June 30, 2000 balance in advances
of future consulting fees of $379,000 is due primarily to timing differences
between consulting revenues earned and recognized and the actual payments to
VCAT.

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

The Initial Contingent Obligations are contingent upon the Company's
retained earnings balance, with certain adjustments, being at least $4,000,000
for the fiscal year ending immediately prior to the date the notes are to be
issued. The test is to be made each year for eight successive years that
commenced with the fiscal year ended June 30, 1997. The Initial Contingent
Obligation has been met for the first four test periods; accordingly, $2,000,000
in obligations were recorded at each of June 30, 1997, 1998, 1999 and 2000, and
have been treated as additional consideration for the common stock repurchased
under the Stock Purchase Agreement. The Second Contingent Obligation is subject
to the following conditions: (a) the Barona Tribe enters into a Class III Gaming
Compact with the State of California which permits the operation of video gaming
machines at the Barona Casino in San Diego County; (b) at the time that the
Barona Tribe enters into a compact, the Company has a consulting agreement or
similar contractual arrangement with the Barona Tribe; and (c) consulting fees
paid to the Company by the Barona Tribe relating to the Barona Casino for any
consecutive 12-month period within five years after the Barona Tribe has entered
into the Compact, equal or exceed one and one-half times the consulting fees for
the fiscal year ended June 30, 1996. Two of the foregoing criteria were
satisfied during fiscal 2000. The contingent obligations will be recorded as the
additional cost of the repurchase of our common stock, as each contingency or
condition is met. All payments pursuant to the Stock Purchase Agreement are
further subject to compliance with certain state law provisions and the
Company's Articles of Incorporation concerning repurchase transactions.

<PAGE> 23

In April 2000, VCAT and the two note holders announced an agreement that
$3,069,000 of current and future corporate indebtedness will be exchanged for
equity prior to its maturity. Under terms agreed to, a total of 579,105 shares
of our restricted stock and warrants to acquire an additional 144,775 shares of
our common stock at $5.894 per share will be issued to retire the debt. Of the
approximately $3,069,000 being retired, $590,000 represents principal that was
classified as current portion of long-term debt and $2,000,000 represents
principal that was classified as long-term debt. The remaining amount of
$480,000 represents accrued interest on the debt being retired of $361,000 and
interest of $119,000 that would have accrued on the remaining portion of
long-term debt held from the date of conversion through September 2000. The
transaction resulted in a non-cash extraordinary loss of $324,000, attributable
to the deemed value of the warrants.

Our remaining long-term debt related to this stock repurchase was
$8,910,000 as of June 30, 2000. In addition, if all contingent obligations are
met, a maximum of $4,856,000 of aggregate additional consideration may still
have to be repaid under the Stock Purchase Agreement. Our management believes
that future revenues generated from operations and unrestricted cash will be
sufficient to service and repay the aggregate amount of this debt.

Restricted cash and other investments of $1,655,000 include; (a) an
irrevocable letter of credit for $133,000 to satisfy the terms of the corporate
lease agreement that will automatically renew on an annual basis until October
31, 2002, unless canceled by the lessor; and (b) funds in the amount of
$1,518,000 which have been pledged as security for amounts borrowed by third
parties in connection with the construction of the Kla-Mo-Ya Casino, a gaming
facility near Chiloquin, in south central Oregon. From June 1996 to May 1997, we
provided consulting services to the Klamath and Modoc Tribes and the Yahooskin
Band of Snake Indians (collectively, the "Klamath Tribes"). Pre-opening costs
and expenses of approximately $1.5 million were financed by loans made pursuant
to a third-party bank credit agreement with the Klamath Tribes. We pledged a
certificate of deposit for $1,518,000 as collateral for such loans. If the
Klamath Tribes are unable to pay its obligations, we may lose all or a portion
of its certificate of deposit pledged as collateral for bank loans to the
Klamath Tribes. The Klamath Tribes are in the process of refinancing the loans,
which we expect, if completed, to release our certificate of deposit.

VCAT has invested in the securities of several companies and may continue
to invest in the securities of other companies, in connection with our strategy.
The aggregate amount invested will depend on our available cash and our ability
to identify potential investment candidates. As of June 30, 2000, we have
acquired approximately $1,386,000 in securities from other companies in exchange
for cash.

YEAR 2000 READINESS DISCLOSURE

As of February 2000, we had completed all year 2000 readiness work. Our
most significant customer, the Barona Casino has not experienced any major
incidents related to Year 2000 issues. However, it is possible that the full
impact of the date change has

<PAGE> 24

not been fully recognized. We believe that any such problems are likely to be
minor and correctable. We will continue to monitor all systems for Year 2000
related concerns. As of June 30, 2000, total costs relating to our compliance
efforts, based upon our management's best estimates, were 55 man-hours of the
Company's personnel and $3,400. Costs for Year 2000 compliance will continue to
be expensed as incurred and are not expected to have a material impact on the
our consolidated results of operations

The information set forth above under this caption "Year 2000 Readiness
Disclosure" relates to the Company's efforts to address the Year 2000 concerns
regarding our (a) operations; (b) services, products and technologies sold to
third parties; and (c) major suppliers and customers. Such statements are
intended as Year 2000 Statements and Year 2000 Readiness Disclosures and are
subject to the Year 2000 Information Readiness Act.

o DEPENDENCY ON REVENUES FROM THE BARONA CASINO

We derive the majority of our revenue from services provided to the Barona
Tribe. For the fiscal year ended June 30, 2000 revenues from services to the
Barona Tribe declined as a percentage of sales. While we are continuing to take
steps to diversify our business activities and resulting revenues, including our
current plan to acquire and provide services for additional businesses, those
activities are not yet producing revenues as significant as those being earned
from the Barona Tribe. Accordingly, any material reduction in fees payable to us
by the Barona Tribe could have a material adverse affect on our business and
financial condition. In connection with the Barona Casino's $225 million
expansion project, the Barona Casino has incurred, and expects to continue to
incur, significantly higher expenses. As a result, the consulting revenues paid
to us during the expansion project may decrease.

o THE BARONA CONSULTING AGREEMENT

Appropriate regulatory authorities have not yet approved the Barona
Consulting Agreement. If the Consulting Agreement is not approved or is
significantly modified from the standpoint of consulting revenue, such action
would have a material adverse effect on our business and financial condition.

o LIMITED RECOURSE AGAINST TRIBES AND TRIBAL ASSETS

We have made, and may make, advances or loans (including guarantees of
indebtedness) to tribes for the construction, development, equipment and
operation of casinos for which we may act as a consultant or manager. These
amounts are not conventional indebtedness loans subject to customary mortgages
or security. If these casinos do not generate sufficient cash flow to repay such
indebtedness, our loans may not be repaid. Our principal recourse for collection
of indebtedness from a tribe or money damages for breach or wrongful termination
of a contract is from revenues, if any, from casino operations. We have agreed
to, and in the future may agree to, subordinate the repayment of a tribe's
indebtedness and payment of other fees due to us from a tribe

<PAGE> 25

to other obligations of the tribe, such as indebtedness to a commercial lender.
Accordingly, in the event of a default by a tribe, a tribe's indebtedness to us
may not be repaid, if at all, until any senior creditors have been repaid in
full.

As of June 30, 2000 we had advanced $9,685,000 to the Barona Casino in
connection with the ongoing expansion project. We have committed to advance up
to $10 million to the Barona Casino, if needed, until all outside financing is
obtained. These advances are scheduled to be repaid when the $225 million
financing is completed. In addition, as noted above, the consulting fees earned
by VCAT are now subject to a Subordination Agreement relating to the Tax-Exempt
Bond Financing. We also have $1,914,000 in the form of cash pledged as a
guarantee for and bonds issued by the Klamath Tribes. We have agreed to hold the
bonds for a period of five years. If default occurs, it would have a material
adverse effect on our business and financial condition.

o VOLATILITY OF AVAILABLE-FOR-SALE SECURITIES

The Company's assets are, and will be, partially comprised of securities of
other publicly and non-publicly traded companies, and include positions in
equity securities that have experienced significant volatility in their stock
prices. It is possible that the number of, and our investment in, these assets
will increase in the future. The market price and valuations of the securities
that we hold in other companies may fluctuate due to reported results of those
companies, market conditions and other conditions over which we have no control.
We do not currently attempt to reduce or eliminate our market exposure on these
securities. An adverse change in the price of securities we hold would result in
a material decrease in the fair value of our available-for-sale securities,
which could have a material adverse impact on our business and financial
condition.

o SOME OF OUR SERVICE ACTIVITIES HAVE A LIMITED OPERATING HISTORY

Certain of our services for emerging businesses have been offered for less
than a year. Because of our short operating history in these activities, we are
unable to provide you with significant data upon which you can evaluate our
prospects. We cannot be certain that our expanded business strategy or the
business strategies of our clients will be successful. Because we provide
services to and have interests in early stage companies and emerging businesses
and have only recently expanded our business strategy, we are exposed to not
only the business risks of our clients but also to the risks of our own business
activities.

o RISKS OF BEING DEEMED AN INVESTMENT COMPANY

We may incur significant costs to avoid investment company status and may
suffer other adverse consequences if we are deemed to be an investment company
under the United States Investment Company Act of 1940, as amended (the "1940
Act"). A company may be deemed to be an investment company if it owns investment
securities with a value exceeding 40% of its total assets, subject to certain
exclusions. Investment companies are subject to registration under, and
compliance with, the 1940 Act unless a

<PAGE> 26

particular exclusion or SEC safe harbor applies. If we were deemed to be an
investment company, we would become subject to the requirements of the 1940 Act.
As a consequence, we would be prohibited from engaging in business or issuing
our securities as we have in the past and might be subject to civil and criminal
penalties for non-compliance. In addition, certain of our contracts might be
voidable. Such repercussions from being deemed an investment company could have
a material adverse affect on the Company's operating results and financial
condition.

Specifically, if we are deemed to be, and are required to register as, an
investment company, we will be forced to comply with substantive requirements
under the 1940 Act, including:

o limitations on our ability to borrow;
o limitations on our capital structure;
o restrictions on acquisitions of interests in portfolio and/or
affiliated companies;
o prohibitions on transactions with affiliates;
o restrictions on specific investments; and
o compliance with reporting, record keeping, voting, proxy disclosure and
other rules and regulations.

If we were forced to comply with the rules and regulations of the 1940 Act,
our operations would significantly change, and we would be prevented from
successfully executing our business strategy.

In addition, to avoid regulation under the 1940 Act and related SEC rules,
we may need to sell assets which we would otherwise want to retain and may be
unable to sell assets which we would otherwise want to sell. In addition, we may
be forced to acquire additional, or retain existing, income-generating or
loss-generating assets which we would not otherwise have acquired or retained
and may need to forego opportunities to acquire interests in attractive
companies that would benefit our business. If we were forced to sell, buy or
retain assets in this manner, we would be prevented from successfully executing
our business strategy.

Although investment securities currently comprise less than 40% of our
assets, fluctuations in the value of these securities or of our other assets may
cause this limit to be exceeded. This would require us to attempt to reduce our
investment securities as a percentage of our total assets. This can be attempted
in a number of ways, including the disposition of investment securities and the
acquisition of non-investment security assets. If we sell investment securities,
we may sell them sooner than we otherwise would. These sales may be at depressed
prices and we may never realize anticipated benefits from, or may incur losses
on, these investments. Some investments may not be sold due to contractual or
legal restrictions or the inability to locate a suitable buyer. Moreover, we may
incur tax liabilities when we sell assets. We may also be unable to purchase
additional investment securities that may be important to our operating
strategy. If we

<PAGE> 27

decide to acquire non-investment security assets, we may not be able to identify
and acquire suitable assets and businesses.

o VOLATILITY OF OUR STOCK PRICE

The trading price of our common stock has been, and will likely continue to
be, subject to wide fluctuations because of regulatory developments, performance
of our public clients in which we own equity securities, quarterly variations in
our operating results, announcements of new services or business activities by
us or our competitors, general market fluctuations, and other events and
factors. These factors, coupled with the small public float, have in the past,
and could in the future, result in wide fluctuations in the market trading
price.

o INFLATION

To date, inflation has not had a material impact on our financial condition
or our results of operations.

27
<PAGE> 28
ITEM 7. FINANCIAL STATEMENTS

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Certified Public Accountants .................................... 29
Financial Statements:
Consolidated Balance Sheet -- June 30, 2000 ......................................... 30
Consolidated Statements of Operations and Comprehensive Income --
Years Ended June 30, 2000 and 1999 ............................................... 31
Consolidated Statement of Shareholders' Equity -- Years Ended June 30, 2000 and 1999. 32
Consolidated Statements of Cash Flows -- Years Ended June 30, 2000 and 1999 ......... 33
Notes to Consolidated Financial Statements .......................................... 35
</TABLE>

28
<PAGE> 29

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Shareholders of
Venture Catalyst Incorporated
San Diego, California

We have audited the accompanying consolidated balance sheet of Venture
Catalyst Incorporated as of June 30, 2000, and the related consolidated
statements of operations and comprehensive income, shareholders' equity and cash
flows for the years ended June 30, 2000 and 1999. These financial statements are
the responsibility of the Corporation's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those 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
audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Venture
Catalyst Incorporated as of June 30, 2000, and the consolidated results of its
operations and its consolidated cash flows for the years ended June 30, 2000 and
1999, in conformity with accounting principles generally accepted in the United
States of America.

/s/ GRANT THORNTON LLP

Irvine, California
August 25, 2000

29
<PAGE> 30

VENTURE CATALYST INCORPORATED

CONSOLIDATED BALANCE SHEET
JUNE 30, 2000

ASSETS

<TABLE>
<S> <C>
CURRENT ASSETS:
Cash and cash equivalents .............................. $ 4,766,743
Due from Barona Casino - expansion project ............. 9,685,296
Accounts receivable, net ............................... 753,012
Prepaid expenses and other current assets .............. 504,712
-----------
Total current assets ........................... 15,709,763
NONCURRENT ASSETS:
Restricted cash and other investments .................. 1,655,460
Property, plant and equipment, net ..................... 1,092,669
Deferred contract costs, net ........................... 2,514,403
Available-for-sale securities, net ..................... 3,176,189
Goodwill and other intangibles, net .................... 5,279,401
Non-current receivables (net of allowance of $208,613).. 167,983
Convertible notes, net ................................. 590,842
Held-to-maturity investments ........................... 395,812
Deferred tax asset ..................................... 947,558
Deposits and other assets .............................. 322,890
-----------
Total noncurrent assets ........................ 16,143,207
-----------
Total assets ................................... $31,852,970
===========

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
Advances of future consulting fees - Barona Casino ..... $ 2,879,271
Accounts payable and accrued expenses .................. 1,165,007
Current portion of long-term debt ...................... 977,150
Deferred revenues ...................................... 301,708
Deferred tax liability ................................. 221,084
-----------
Total current liabilities ...................... 5,544,220
LONG-TERM DEBT, less current portion ..................... 8,333,333
-----------
Total liabilities .............................. 13,877,553
SHAREHOLDERS' EQUITY:
Common stock, $.001 par value, 100,000,000 shares
authorized and 7,247,490 shares outstanding ........... 7,248
Additional paid in capital ............................. 13,387,560
Accumulated unrealized holding losses, net of deferred
taxes ................................................. (191,383)
Deferred compensation .................................. (1,674,387)
Retained earnings ...................................... 6,446,379
-----------
Total shareholders' equity ..................... 17,975,417
-----------
Total liabilities and shareholders' equity ..... $31,852,970
============
</TABLE>

The accompanying notes are an integral part of this statement.

30
<PAGE> 31

VENTURE CATALYST INCORPORATED

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
YEARS ENDED JUNE 30,

<TABLE>
<CAPTION>
2000 1999
------------ ------------
<S> <C> <C>
REVENUES:
Client services .............................................. $ 14,843,245 $ 14,771,536

OPERATING EXPENSES:
Cost of revenues ............................................. 5,178,461 4,116,505
General and administrative expenses .......................... 7,570,295 5,522,980
Amortization of intangible assets and stock based
compensation ................................................ 2,089,913 1,015,929
------------ ------------
Operating expenses ........................................... 14,838,669 10,655,414
------------ ------------
Operating income ............................................. 4,576 4,116,122

OTHER INCOME (EXPENSE):
Interest income .............................................. 472,757 596,594
Interest expense ............................................. (866,334) (708,333)
Loss on impairment/disposal of assets ........................ (123,216) --
------------ ------------
Other income (expense) ....................................... (516,793) (111,739)
------------ ------------
(Loss) income before income taxes .............................. (512,217) 4,004,383
Income tax provision ........................................... 99,000 2,033,999
------------ ------------
(Loss) income from continuing operations ....................... (611,217) 1,970,384
Discontinued operations, net of taxes ($63,000 benefit and
1,248,000 benefit, respectively) .............................. (94,051) (1,178,692)
------------ ------------
(Loss) income before extraordinary item ........................ (705,268) 791,691
Extraordinary item, debt extinguishment ........................ (324,021) --
------------ ------------
NET (LOSS) INCOME .............................................. $ (1,029,289) $ 791,691
============ ============
OTHER COMPREHENSIVE (LOSS), NET OF TAX:
Unrealized loss on securities ............................... (191,383) --
------------ ------------
COMPREHENSIVE (LOSS) INCOME .................................... $ (1,220,672) $ 791,691
============ ============
Basic earnings per share:
(Loss) income from continuing operations .................... $ (.11) $ .43
Loss on discontinued operations, net of taxes ............... $ (.02) $ (.26)
------------ ------------
(Loss) income before extraordinary item ..................... $ (.13) $ 17
Extraordinary loss, net of tax .............................. $ (.06) $ --
Net (loss) income per share-basic ........................... $ (.19) $ .17
------------ ------------
Diluted earnings per share:
(Loss) income from continuing operations .................... $ (.11) $ .40
Loss on discontinued operations, net of tax ................. $ (.02) $ (.24)
------------ ------------
(Loss) income before extraordinary item ..................... $ (.13) $ .16
Extraordinary loss, net of tax .............................. $ (.06) $ --
------------ ------------
Net (loss) income per share - diluted ....................... $ (.19) $ .16
============ ============
Weighted average common shares outstanding:
Basic ....................................................... 5,435,157 4,605,734
============ ============
Diluted ..................................................... 5,435,157 4,977,338
============ ============
</TABLE>

The accompanying notes are an integral part of this statement.

31
<PAGE> 32

VENTURE CATALYST INCORPORATED

CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
YEARS ENDED JUNE 30, 2000 AND 1999

<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL TOTAL
----------------------- PAID IN UNREALIZED DEFERRED RETAINED SHAREHOLDERS'
SHARES AMOUNT CAPITAL LOSSES COMPENSATION EARNINGS EQUITY
----------- ----------- ----------- ---------- ------------ ---------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at June 30, 1998 ........... 3,924,186 $ 3,924 $ -- $ -- $ (90,000) $6,683,977 $ 6,597,901
Issuance of new shares ........... 750,000 750 3,044,250 -- -- -- 3,045,000
Exercise of stock options ........ 79,600 80 246,458 -- -- -- 246,538
Granting of non-employee stock
options ........................ -- -- 7,100 -- 90,000 -- 97,100
Additional consideration for 1996
stock Redemption ............... -- -- (2,000,000) -- -- -- (2,000,000)
Net income ....................... 791,691 791,691
---------- ------------ ----------- --------- ----------- ---------- -----------
Balance at June 30, 1999 ........... 4,753,786 4,754 1,297,808 -- -- 7,475,668 8,778,230
Issuance of shares for
acquisition .................... 687,818 689 4,075,492 -- -- -- 4,076,181
Exercise of stock options ........ 1,226,781 1,226 3,978,310 -- -- -- 3,979,536
Granting of non-employee stock
options ........................ -- -- 2,643,243 -- (1,674,387) -- 968,856
Unrealized loss on securities,
net of taxes of $143,203 ....... -- -- -- (191,383) -- --
(191,383)
Conversion of debt to equity ..... 579,105 579 3,392,707 -- -- -- 3,393,286
Additional consideration for 1996
stock Redemption ............... -- -- (2,000,000) -- -- -- (2,000,000)
Net (loss) ....................... (1,029,289) (1,029,289)
---------- ----------- ----------- ---------- ----------- ---------- -----------
Balance at June 30, 2000 ........... $7,247,490 $ 7,248 $13,387,560 $(191,383) $(1,674,387) $6,446,379 $17,975,417
========== =========== =========== ========= =========== ========== ===========
</TABLE>

The accompanying notes are an integral part of this statement.

<PAGE> 33

VENTURE CATALYST INCORPORATED

CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED JUNE 30,

<TABLE>
<CAPTION>
2000 1999
----------- -----------
<S> <C> <C>
Increase (decrease) in cash:
Net cash (used in) operating activities:
Net (loss) income ..................................................... $(1,029,289) $ 791,691
Adjustments to reconcile net (loss) income to net cash
(used in) operating activities:
Depreciation and amortization ......................................... 1,585,989 1,336,010
Provision for bad debts ............................................... 270,357 174,805
Write-off of asset classified as other asset .......................... 80,000 --
Loss on conversion of debt ............................................ 324,021 --
Loss on disposal of asset ............................................. 2,994 --
Deferred taxes ........................................................ (331,682) (43,088)
Amortization of stock based compensation .............................. 888,337 97,100
Due from Barona Casino - expansion project ............................ (6,495,150) (3,190,146)
Loss on impairment of investment ...................................... 120,000 --
Equity and convertible notes received for services .................... (463,435) --
Changes in assets and liabilities:
Accounts receivable ................................................... (426,858) (162,894)
Prepaid expenses and other current assets ............................. (257,562) 23,928
Deposits and other assets ............................................. 17,681 (27,093)
Accounts payable and accrued expenses ................................. (51,258) 125,465
Deferred revenues ..................................................... 176,636 100,784
Income taxes payable .................................................. (386,745) 158,401
Advances of future consulting fees .................................... 275,814 6,527
----------- -----------
Net cash (used in) operating activities ............................ (5,700,150) (608,508)
----------- -----------
Cash flows (used in) provided by investing activities:
Cash paid for acquisitions ............................................ (341,005) (742,530)
Purchase of other intangible assets ................................... (100,000) --
(Purchase)/maturity of short-term investments and convertible notes ... (350,000) 1,876,667
Purchase of available-for-sale securities ............................. 1,386,000) --
Payment on restricted investment ...................................... 100,000 --
Purchase of furniture and equipment ................................... (375,380) (280,362)
Payments of loans .................................................... 53,814 138,622
Issuance of loans ..................................................... -- (150,000)
----------- -----------
Net cash (used in) provided by investing activities ............... (2,398,571) 842,396
----------- -----------
Cash flows provided by (used in) financing activities:
Payment of notes payable .............................................. (400,000) (400,000)
Proceeds from exercise of stock options ............................... 3,979,536 246,538
----------- -----------
Net cash provided by (used in) financing activities ................ 3,579,536 (153,462)
----------- -----------
Net increase (decrease) in cash .................................... (4,519,185) 80,426
Cash at beginning of period ............................................. 9,285,928 9,205,502
----------- -----------
Cash at end of period ................................................... $ 4,766,743 $ 9,285,928
=========== ===========
Supplemental disclosures of cash flow information:
Interest expense paid ................................................. $ 1,164,677 $ 532,655
=========== ===========
Income taxes paid ..................................................... $ 1,030,000 $ 1,138,000
=========== ===========
Supplemental disclosure of non-cash investing and financing activities:
</TABLE>

<PAGE> 34
<TABLE>
<CAPTION>
2000 1999
----------- -----------
<S> <C> <C>
Redemption of common stock by issuance of notes payable ............... $ 2,000,000 $ 2,000,000
----------- -----------
Unrealized holding loss on available for sale securities, less deferred
taxes of $143,203 .................................................. $ 191,383 $ --
----------- -----------
Conversion of note payable to equity .................................. $ 3,393,286 $ --
----------- -----------
Acquisition:
Fair value of tangible assets acquired ............................ $ 204,435 $ --
Goodwill .......................................................... 2,309,096 --
Liabilities assumed ............................................... (136,448) --
Stock issued (237,358 shares) ..................................... (2,036,078) --
----------- -----------
Cash paid ......................................................... $ 341,005 $ --
=========== ===========
</TABLE>

The accompanying notes are an integral part of this statement.

<PAGE> 35

VENTURE CATALYST INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000 AND 1999

NOTE 1 -- THE COMPANY

Venture Catalyst Incorporated ("VCAT") provides professional services to
support and facilitate our clients' businesses. VCAT acts as a client's ally in
organizing, developing and growing businesses at a faster rate. VCAT offers a
comprehensive gaming and hospitality consulting services, web solutions
services, public and governmental relations, Internet marketing, strategic
planning, technology solutions , and professional and technical expertise. VCAT
has offices in San Diego, Orange County and Santa Monica.

NOTE 2 -- DISCONTINUED OPERATIONS

In March 1998, VCAT established a wholly-owned subsidiary, Worldwide Media
Holdings, N.V., a Curacao, Netherland Antilles corporation ("WMH"). WMH was
formed to provide comprehensive marketing, advertising, technical and
distribution services for Internet related gaming businesses. In February 2000,
the Board of Directors of VCAT adopted a plan to discontinue the Internet Gaming
Consulting business, and is in the process of terminating all contracts related
to that business and liquidating WMH. Operations ceased as of March 31, 2000.
There will be no additional material gains or losses related to the disposal of
the business, as all remaining assets are cash and receivables, which are
carried at their net realizable value.

During fiscal 2000, the Internet Gaming Consulting business realized net
revenues of $315,000, and losses, net of taxes, of $94,000. During fiscal 1999
the Internet Gaming Consulting business realized net revenues of $429,000 and
losses, net of taxes, of $1,179,000.

NOTE 3 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. BASIS OF ACCOUNTING

VCAT reports revenues and expenses using the accrual method of accounting.

B. PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of VCAT and its
wholly owned subsidiaries, Cyberworks, webinc, CTI and WMH. All material
intercompany accounts and transactions have been eliminated.

35
<PAGE> 36

C. DEFERRED CONTRACT COSTS

Pursuant to oral agreements with the Barona Tribe, VCAT agreed to fund, or
to arrange acceptable financing for, the construction of facility improvements,
furniture and equipment, the establishment of initial working capital, and the
losses, if any, of the Barona Casino's operations. Because the Barona Tribe will
not allow its land to be encumbered and has not assumed liability for any of
these obligations, VCAT has capitalized those costs incurred as deferred
contract costs since (a) VCAT had the ultimate responsibility for such costs
incurred in connection with developing the Barona Casino and (b) VCAT's
management believes that these costs are fully recoverable over the life of the
Barona Consulting Agreement (hereinafter defined) through receipt of fee income
from the Barona Casino. On an ongoing basis, VCAT will review the valuation and
recoverability of these unamortized deferred contract costs, and given the
nature of the asset, if the recoverability is determined to be not probable, at
such time, VCAT will expense the unamortized portion.

Amortization of the deferred costs is calculated using the straight-line
method over the remaining term of the Barona Consulting Agreement. Under the
terms of the Barona Consulting Agreement, title to the Barona Casino facilities,
furniture and equipment rests solely with the Barona Tribe, unless the Barona
Tribe agrees otherwise. At this time, VCAT has no plans to contribute additional
funds to the Barona Casino or the Barona Tribe in the form of deferred contract
costs.

D. REVENUE RECOGNITION

Revenue earned from the Barona Tribe is recorded as earned under the terms
of the Barona Consulting Agreement. Revenue generated from fixed-price contracts
is recognized on the percentage-of-completion method of accounting based on the
ratio of costs incurred to total estimated costs. Revenue generated from time
and material contracts is recognized as services are provided. Revenue from
hosting, maintenance and monthly retainer agreements is recognized ratably over
the terms of the agreements.

Provisions for project adjustments and losses are recorded in the period
such items are identified. Deferred revenue represents amounts billed in advance
of services being performed and work performed for projects where collection of
fees is deemed highly unlikely.

E. CREDIT CONCENTRATIONS, CASH AND CASH EQUIVALENTS

For purposes of the balance sheet and the statement of cash flows, cash
equivalents include time deposits and all highly liquid debt instruments with
original maturities of three months or less.

VCAT maintains its cash in bank deposit and checking accounts that, at
times, may exceed Federally insured limits. To date VCAT has not experienced any
losses in such accounts. VCAT cash equivalents consist primarily of commercial
paper,

<PAGE> 37

certificates of deposits, banker's acceptances and U.S. treasury securities with
maturities ranging from one month to three months. At June 30, 2000 the amount
held in U.S treasury securities was $1,990,000. Interest rates earned during
fiscal 2000 on such investments ranged from 3.9% to 6.0%.

F. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are stated at cost, net of accumulated
depreciation. Depreciation is calculated using the straight-line method over the
estimated useful lives of the assets, which range from three to five years.
Leasehold improvements are expensed over the lessor of the estimated useful
lives of the assets or the lease term. Accelerated methods of depreciation are
used for tax purposes.

G. ADVANCES OF FUTURE CONSULTING FEES - BARONA CASINO

Advances of future consulting fees represent payments made to VCAT in
excess of consulting fees earned. These advances are unsecured and non-interest
bearing.

H. DEFERRED INCOME TAXES

Deferred income taxes are recognized for the tax consequences of
"temporary differences" by applying enacted statutory tax rates applicable to
future years to differences between the financial statement carrying amounts and
the tax bases of existing assets and liabilities. The effect of a change in tax
rates is recognized in earnings in the period that includes the enactment date.
A valuation allowance is provided when it is more likely that a portion of
deferred tax assets will not be realized.

I. EARNINGS PER SHARE

Basic earnings per share is based on the weighted effect of all common
shares issued and outstanding, and is calculated by dividing net income
available to common shareholders by the weighted average shares outstanding
during the period. Diluted earnings per share is calculated by dividing net
income available to common shareholders by the weighted average number of common
shares used in the basic earnings per share calculation plus the number of
common shares that would be issued assuming conversion

<PAGE> 38

of all potentially dilutive securities outstanding. Below is the calculation of
basic and diluted earnings per share for the past two fiscal years:

<TABLE>
<CAPTION>
JUNE 30,
---------------------------
2000 1999
----------- ----------
<S> <C> <C>
Net (loss) income available to common
shareholders ................................... $(1,029,289) $ 791,691
=========== ==========
Weighted average shares outstanding
-- Basic ......................................... 5,435,157 4,605,734
Effect of stock options .......................... -- 371,604
----------- ----------
Weighted average shares outstanding
-- Diluted ....................................... 5,435,157 4,977,338
=========== ==========
Net (loss) income per common share:
Basic: ......................................... $ (.19) .17
=========== ==========
Diluted: ....................................... (.19) .16
=========== ==========
</TABLE>

Options to purchase 8,230,659 shares of our common stock with exercise
prices ranging from $1.00 to $ 12.50 per share were outstanding during fiscal
2000. During fiscal 2000 options were not included in the computation of diluted
EPS because they were anti-dilutive. The options, which expire on various future
dates through June 2010, were still outstanding at June 30, 2000.

J. COMPREHENSIVE INCOME

During fiscal 2000, VCAT adopted Statement of Financial Accounting
Standards No. 130, "Reporting Comprehensive Income" ("SFAS 130"). SFAS 130
establishes standards for reporting comprehensive income and its components in
the body of the financial statements. Comprehensive income includes net income
as currently reported under generally accepted accounting principles and also
considers the effect of additional economic events that are not required to be
recorded in determining net income but are rather reported as a separate
component of stockholders' equity. VCAT reported unrealized gains and losses on
investments as a component of comprehensive income.

K. ACCOUNTING FOR STOCK OPTIONS

In October 1995, the FASB issued Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS No. 123"),
which requires entities to calculate the fair value of stock awards granted to
employees. This statement provides entities with the option of either electing
to expense the fair value of employee stock-based compensation or continue to
recognize compensation expense under previously existing accounting
pronouncements and provide pro forma disclosures of net income and, if
presented, earnings per share, as if the above-referenced fair value

38
<PAGE> 39

method of accounting was used in determining compensation expense. VCAT
continues to account for stock based compensation arrangements in accordance
with Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees" ("APB No. 25"). VCAT has included additional disclosures about
stock-based employee compensation plans required by SFAS No. 123 (see Note 17.
Stock Options, herein).

Deferred compensation appearing in the consolidated financials statements
primarily relates to stock options that were granted to non-employees. The
amounts were valued using either the Black-Scholes option-pricing model or the
fair value of services received and the value is charged to expense over the
service period. Additionally, deferred compensation has been recorded for stock
options issued to employees at prices below fair market value where such options
are not fully vested. The amounts are recorded using their intrinsic value, and
the value is charged to expense over the vesting period. Unearned amounts are
shown as deferred compensation in shareholders' equity.

L. USE OF ESTIMATES

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

M. FAIR VALUE OF FINANCIAL INSTRUMENTS

Management believes that the fair value of financial instruments
approximates their carrying amounts. The carrying-value of the cash and cash
equivalents and restricted cash and other investments approximate their
estimated fair values. Management believes the fair values of notes payable and
notes receivable approximate their carrying values based on the current rates
for instruments with similar characteristics.

N. ADVERTISING, MARKETING AND PROMOTION COSTS

Advertising, marketing and promotion costs are expensed as incurred.

O. CERTAIN RECLASSIFICATIONS

Certain reclassifications of historical financial presentations have been
made to conform to the fiscal 2000 financial presentation and did not have a
material effect on the information presented.

39
<PAGE> 40

NOTE 4 -- BARONA CONSULTING AGREEMENT

VCAT has provided services to the Barona Tribe since 1991. Consulting
services are provided in accordance with the terms and conditions of an Amended
and Restated Consulting Agreement (the "Amended and Restated Consulting
Agreement"). During February 1998, Modification #1 to the Amended and Restated
Consulting Agreement (the "Modification") extended the term by an additional 60
months. Unless otherwise stated herein, the Amended and Restated Consulting
Agreement, as amended by the Modification, shall be referred to herein as the
"Barona Consulting Agreement." The Barona Consulting Agreement expires in March
2004.

In March 1996, the Barona Tribe submitted the Initial Consulting Agreement
(a predecessor agreement to the Amended and Restated Consulting Agreement) to
the National Indian Gaming Commission (the "NIGC"). In May 1996, the NIGC
determined that the Initial Consulting Agreement was not a management agreement
and, therefore, not subject to NIGC approval, and forwarded such agreement to
the Bureau of Indian Affairs (the "BIA"). In July 1997, the BIA reviewed the
Initial Consulting Agreement and determined that no further action by it with
respect to such agreement was required. The NIGC conducted an investigation of
the past relationship between the Barona Tribe and VCAT that resulted in a
January 1997 settlement agreement.

In January 1997, VCAT submitted the Amended and Restated Consulting
Agreement to the NIGC. In April 1997, VCAT received a letter from the NIGC
declining to conclude the Amended and Restated Consulting Agreement was not a
management contract. The letter stated that additional review would be necessary
to make such a determination. In March 1999, the NIGC started a preliminary
review of the relationship between the Barona Tribe and VCAT, which has included
a review of the Barona Consulting Agreement. In September 1999, VCAT submitted
the Modification to the NIGC. This review is currently pending.

VCAT believes that the Barona Consulting Agreement is not a management
contract, based on (a) the May 1996 and July 1997 determinations of the NIGC and
BIA, respectively, with respect to the Initial Consulting Agreement, (b) the
NIGC's findings in the January 1997 settlement agreement and (c) the nature of
the relationship between the Barona Tribe and VCAT. However, there is no
assurance that the NIGC will determine that the Barona Consulting Agreement is
not a management contract. The failure of the NIGC to determine that the Barona
Consulting Agreement is not a management contract could have a material adverse
effect on VCAT's business and financial condition. If the NIGC concludes that
the Barona Consulting Agreement is not a management agreement, the NIGC will
forward such Agreement to the BIA for its review. If the BIA determines that its
approval is required, there can be no assurance that the BIA will approve the
Barona Consulting Agreement, and such failure to approve such Agreement may have
a material adverse effect on VCAT's business and financial condition.

40
<PAGE> 41

NOTE 5 -- BUSINESS CONCENTRATION

A significant portion of the company's revenues are earned from its main
client, the Barona Tribe. In fiscal 2000 and 1999 the revenues from the Barona
Tribe were $10,512,000, or 71% of the total revenues, and $13,145,000, or 89% of
total revenues, respectively.

NOTE 6 -- TRIBAL-STATE COMPACT

In September 1999, the Governor of the State of California entered into
new Tribal-State Compacts with over 50 Indian tribes, including the Barona Tribe
(the "Barona Compact"). In May 2000, the Barona Compact was approved by the U.S.
Secretary of the Interior, and the approval was published in the Federal
Register on May 16, 2000. The Barona Compact replaces the prior Tribal-State
Compact with the Barona Tribe. VCAT believes the Barona Compact ended a
significant amount of uncertainty and concern about the future of gaming
activities at the Barona Casino.

NOTE 7 -- DUE FROM BARONA CASINO - EXPANSION PROJECT

The Barona Tribe is in the early development stages of an approximately
$225 million expansion project. The Company is assisting the Barona Casino in
obtaining outside financing for the project. VCAT plans to share in funding the
expansion costs incurred with the Barona Tribe prior to the time that the Barona
Tribe obtains all such outside financing. VCAT expects to commit up to
$10,000,000 as an unsecured, non-interest-bearing advance to the Barona Casino.
As of June 30, 2000, VCAT had advanced $9,685,000; these advances are accounted
for as a receivable from the Barona Casino. Payment of VCAT's receivable is
expected to occur when the Barona Tribe obtains all outside financing totaling
$225,000,000 which is expected to be in the fourth quarter of calendar 2000. If
the advances are not repaid when the Barona Tribe obtains all outside financing
they would be payable upon terms agreed to between VCAT and the Barona Tribe at
that time.

NOTE 8 -- ACQUISITIONS

In August 1998, VCAT acquired all of the outstanding capital stock of
Cyberworks in exchange for 750,000 shares of our common stock and $500,000 in
cash, in a transaction valued, exclusive of acquisition costs, at $3,560,000.
The acquisition was accounted for as a purchase and the accounts of Cyberworks
have been included in the accompanying consolidated financial statements since
August 27, 1998. The excess of the total acquisition cost over the fair value of
net assets acquired ("goodwill") was approximately $3,732,000 and is being
amortized on a straight-line basis over 10 years.

In July 1999, VCAT purchased $100,000 in assets from Typhoon, an investor
relations and Internet consulting firm. The excess of the acquisition cost over
the fair value of net assets acquired ("other intangible assets") was
approximately $77,000 and is being amortized on a straight-line basis over 3
years.

41
<PAGE> 42

In January 2000, VCAT acquired all outstanding shares of capital stock of
webinc in exchange for 6,884 shares of stock and $20,000 in cash, in a
transaction valued, exclusive of acquisition costs, at $74,000. The operations
of webinc have been consolidated into VCAT. The acquisition was accounted for as
a purchase and the accounts of webinc have been included in the accompanying
consolidated financial statements since January 2000. The excess of the total
acquisition cost over the fair value of net assets acquired ("goodwill") was
approximately $127,000 and is being amortized on a straight-line basis over 2
years.

On March 24, 2000 VCAT acquired all of the outstanding shares of capital
stock of CTI, a technology management firm, in exchange for 230,474 shares of
common stock and $300,000 in cash, in a transaction valued, exclusive of
acquisition costs, at $2,282,000. The acquisition was accounted for as a
purchase and the accounts of CTI have been included in the accompanying
consolidated financial statements since March 24, 2000. The excess of the total
acquisition cost over the fair value of net assets acquired ("goodwill") was
approximately $2,182,000 and is being amortized on a straight-line basis over 5
years.

Goodwill and other intangible assets net of amortization as of June 30,
2000 was $5,279,000 and amortization expense of $531,000 has been recorded for
fiscal year 2000. On an annual basis, VCAT reviews the valuation and
recoverability of the unamortized goodwill and other intangible assets and
expenses any portion of the unamortized amounts determined necessary for fair
statement.

NOTE 9 -- HELD-TO-MATURITY INVESTMENTS AND RESTRICTED CASH

From June 1996 to May 1997, the Company provided consulting services to
the Klamath and Modoc Tribes and the Yahooskin Band of Snake Indians
(collectively, the "Klamath Tribes"). The Klamath Tribes constructed the
Kla-Mo-Ya Casino near Chiloquin, in south central Oregon, a gaming facility
funded by revenue bonds issued by the Klamath Tribes. In connection with such
bond financing, VCAT has a net investment of $396,000 in revenue bonds with a
principal face amount of $400,000. The bonds are classified as held-to-maturity
investments. As a condition of the bond financing, VCAT agreed to hold the bonds
for a five-year period. In addition, pre-opening costs and expenses of
approximately $1.5 million were financed by loans made pursuant to a third-party
bank credit agreement with the Klamath Tribes. VCAT pledged a certificate of
deposit for $1,518,000 as collateral for such loans. The certificate of deposit
is classified as restricted cash. If the Klamath Tribes are unable to pay its
obligations, VCAT could lose all or a portion of the investment in the revenue
bonds VCAT purchased and the certificate of deposit pledged as collateral for
bank loans to the Klamath Tribes. The Klamath Tribes have made all required
interest payments during fiscal 2000 on the bonds held by VCAT.

42
<PAGE> 43

Additionally, VCAT issued an irrevocable letter of credit for $133,000 to
satisfy the terms of the corporate office lease agreement. Such letter of credit
will automatically renew on an annual basis until October 31, 2002 unless
canceled by the lessor.

NOTE 10 -- AVAILABLE-FOR-SALE SECURITIES

At June 30, 2000, available-for-sale securities consist of equity
securities carried at fair value and based on quoted market prices.
Additionally, VCAT holds equity securities of companies for which no established
trading market existed at June 30, 2000. These securities are stated at cost
less any deemed impairment. On an on going basis, VCAT reviews the valuation and
recoverability of the investments and expenses any portion of the securities
determined necessary for fair statement.

Available-for-sale securities with quoted market prices on June 30, 2000
consist of investments in:

- CraftClick.com Inc.
- clickNsettle.com, Inc.
- Ultrexx Corporation
- Predict It Inc.
- WorldNet Resource Group, Inc.
- TheBigHub.com, Inc.

Collectively, these securities had a market value of $2,410,000 at June 30,
2000.

Available-for-sale securities with no established market prices at June
30, 2000 consist of investments in:

- Senscom, Inc.
- Idealab
- Invigo, Inc.
- companyfinance.com, Inc.
- Bullet Point News Inc.
- Watchnet, Inc.
- eFresh Incorporated
- Seatadvisor.com, Inc.
- KINeSYS Pharmaceutical, Inc.

These investments had a carrying value of $766,000 at June 30, 2000.
During fiscal 2000 there was a $120,000 realized loss recorded to reduce the
carrying value of our investment in KINeSYS Pharmaceutical based on their
inability to pay their cash obligations and the extended period of time in which
they have not traded on a public exchange. An unrealized holding loss of
$191,000, net of deferred income taxes of $143,000, has been reflected in the
equity section of the consolidated balance sheet based

43
<PAGE> 44

on the change in market value or carrying value of the available-for-sale
securities from dates of acquisition to June 30, 2000.

Additionally, VCAT holds securities, in the form of options, in the
following companies:

- CraftClick.com Inc.
- Entertainment Boulevard, Inc.

These securities were given to us as inducements to enter service
agreements. Such securities have no established cost basis on our books and were
determined to have minimal value, due to the significant option price premium
over market price at the time of grant, and the very limited operating history
for these companies. VCAT will continue to monitor the operations of the above
companies and the valuation of these securities, and will establish a fair value
if deemed appropriate, and recorded unrealized gain.

NOTE 11 -- CONVERTIBLE NOTES RECEIVABLE

As of June 30, 2000 the Company has a net investment of $591,000 in
Watchnet, Inc., Rapidcare.com, Inc, Fastestlink, Inc. and simplegov.com, Inc. in
the form of convertible notes. The notes were received for cash investments VCAT
made in the companies or as payment for services. The notes are convertible into
equity at any time or payable at maturity (as may be accelerated), pursuant to
the terms and conditions of the notes. The notes earn interest at a rate of 8%,
and have maturity dates ranging from October 2000 to March 2002. Each of the
companies are at the early development stage and there can be no assurance that
they will be successful in obtaining the financing necessary to be successful or
repay the notes. If one or all of the companies cannot obtain the necessary
financing to continue to develop their businesses, there could be a material
adverse effect on our financial performance, as VCAT will record losses in
connection with the impairment of value of these assets.

NOTE 12 -- DEFERRED CONTRACT COSTS

Deferred contract costs consist of the following at June 30, 2000:

<TABLE>
<S> <C>
Deferred contract costs under "Barona Consulting
Agreement per note 4 .............................................. $ 15,601,411
Less: accumulated amortization ...................................... (13,087,008)
------------
$ 2,514,403
============
</TABLE>

44
<PAGE> 45

NOTE 13 -- PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consisted of the following at June 30, 2000:

<TABLE>
<S> <C>
Leasehold improvements ............... $ 594,009
Computer equipment and software ...... 783,474
Equipment ............................ 318,129
Furniture ............................ 187,672
Automotive equipment ................. 145,037
Construction-in-process .............. 13,966
-----------
2,042,287
Accumulated Depreciation ............. (949,618)
-----------
$ 1,092,669
===========
</TABLE>

NOTE 14 -- STOCK REPURCHASE/LONG-TERM DEBT

A. STOCK REPURCHASE OBLIGATION

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

45
<PAGE> 46

operation of video gaming machines at the Barona Casino in San Diego County; (b)
at the time that the Barona Tribe enters into the Compact, the Company has a
consulting agreement or similar contractual arrangement with the Barona Tribe;
and (c) consulting fees paid to the Company by the Barona Tribe relating to the
Barona Casino for any consecutive 12-month period within five years after the
Barona Tribe has entered into the Compact, equal or exceed one and one-half
times the consulting fees for the fiscal year ended June 30, 1996. Two of the
foregoing criteria were satisfied during fiscal 2000. The contingent obligations
will be recorded as the additional cost of the repurchase of our common stock,
as each contingency or condition is met. All payments pursuant to the Stock
Purchase Agreement are further subject to compliance with certain state law
provisions and the Company's Articles of Incorporation concerning repurchase
transactions.

In April 2000, VCAT and the two note holders agreed to exchange $3,069,000
of current and future corporate indebtedness for equity prior to its maturity.
Under terms agreed to, a total of 579,105 shares of our common stock and
warrants to acquire an additional 144,775 shares of common stock at $5.894 per
share will be issued to retire the debt. Of the approximately $3,069,000 being
retired, $590,000 represents principal that was classified as current portion of
long-term debt and $2,000,000 represents principal that was classified as
long-term debt. The remaining amount of $480,000 represents accrued interest on
the debt being retired of $361,000 and interest of $119,000 that would have
accrued on the remaining portion of long-term debt held from the date of
conversion through September 2000 which has been treated as a pre-paid expense
at June 30, 2000. The transaction resulted in an extraordinary non-cash loss of
$324,000, net of taxes of $0, or $.06 per share. The loss is primarily
attributable to the deemed value of the warrants.

B. NIGC SETTLEMENT OBLIGATION

In January 1997, VCAT entered into a settlement agreement with the NIGC
regarding our relationship with the Barona Tribe (the "January Settlement
Agreement"). Under the terms of the January Settlement Agreement, the NIGC held,
among other things, that the relationship between the Barona Tribe and the
Company had benefited the Barona Tribe, and that VCAT had not violated any law.
VCAT agreed to reimburse the NIGC for administrative, investigative and legal
expenses in the aggregate amount of $250,000. In addition, VCAT agreed to
contribute $2,000,000 to the Barona Tribe for general improvements on the
reservation, payable in five equal annual installments, commencing in January
1997. VCAT accounted for the $2,000,000 in payments as deferred contract costs,
which are being amortized over the remaining term of the Barona Consulting
Agreement. The current portion of long-term debt at June 30, 2000, includes
$400,000 relating to the January Settlement Agreement.

46
<PAGE> 47

Debt payments related to the Stock Repurchase Obligation
referenced above in Note 14A and the NIGC Settlement are scheduled as follows:

<TABLE>
<CAPTION>
YEAR ENDING JUNE 30,
----------------------------------------------------------------
2001 2002 2003 2004 2005 THEREAFTER TOTAL
-------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Ungar Note #1........ $ 589,516 $ 589,516 $1,179,033
Ungar Note #2........ 333,333 333,334 $ 333,333 1,000,000
Ungar Note #3........ 333,333 333,334 333,333 1,000,000
Ungar Note #4........ 333,333 666,667 1,000,000

Woods Note #1........ $577,150 577,150 577,150 1,731,450

Woods Note #2........ 333,333 333,334 333,333 1,000,000
Woods Note #3........ 333,333 333,334 333,333 1,000,000
Woods Note #4........ 333,333 666,667 1,000,000

Barona Tribe......... $400,000 400,000
-------- ---------- ---------- ---------- ---------- ---------- ----------
Total............ $977,150 $1,833,332 $2,500,000 $1,333,334 $1,333,332 $1,333,334 $9,310,483
======== ========== ========== ========== ========== ========== ==========
</TABLE>

NOTE 15 - SEGMENT REPORTING

In previous years VCAT operated in four reportable segments: (a) Indian
Gaming Consulting; (b) Web-site Development Services; (c) Emerging and Internet
Business Consulting; and (d) Internet Gaming Consulting. During fiscal 2000, in
connection with our overall plan to leverage our service capabilities and expand
our client base, VCAT changed the way it managed its business and consolidated
the operations and organization into service groups that were combined into one
reportable segment. All service groups were consolidated into the client
services business segment, and are now being reported under "Client Services".
In addition, assets are included in "Client Services" and not allocated to
specific segments. The operations of VCAT's other businesses, VegasatHome.com
and DayPlan.com, are not significant at this time. Accordingly, the Company did
not consider segment reporting to be relevant and has discontinued such
reporting.

NOTE 16 -- INCOME TAXES

Deferred taxes are comprised of the following at June 30, 2000:

<TABLE>
<CAPTION>
<S> <C>
Deferred compensation related to non-employee stock options ... $ 483,347
Allowance for doubtful accounts ............................... 191,734
Unrealized loss on available for sale securities .............. 143,203
Capital loss carryforward ..................................... 51,408
Charitable contribution carryforward .......................... 40,144
California franchise taxes .................................... 37,722
---------
Gross deferred tax asset ...................................... 947,558
---------
Excess of financial statement over tax deferred contract costs (106,296)
</TABLE>

47
<PAGE> 48

<TABLE>
<CAPTION>
<S> <C>
Excess of tax over financial statement fixed
asset depreciation ........................ (72,749)
Deferred state taxes ........................ (42,039)
---------
Gross deferred tax liability ................ (221,084)
---------
Deferred tax asset, net ..................... $ 726,474
=========
</TABLE>

The composition of our income tax provision is as follows:

<TABLE>
<CAPTION>
JUNE 30,
----------------------------
2000 1999
---------- -----------
<S> <C> <C>
Current tax:
Federal ............................................ $ 328,284 $ 985,651
State .............................................. 119,919 304,437
----------- -----------
Current tax ........................................ 448,203 1,290,088
Deferred tax:
Federal ............................................ (302,032) (29,651)
State .............................................. (110,171) (13,437)
----------- -----------
Deferred tax ....................................... (412,203) (43,088)
----------- -----------
Income tax provision including discontinued
operations ......................................... 36,000 1,247,000
----------- -----------
Benefit allocated to discontinued operations ......... 63,000 787,000
----------- -----------
Income tax provision from continuing operations ...... $ 99,000 $ 2,034,000
=========== ===========
</TABLE>

A reconciliation from the U.S. statutory federal income tax rate to the
effective tax rate is as follows:

<TABLE>
<CAPTION>
YEAR ENDED
JUNE 30,
----------------
2000 1999
----- ----
<S> <C> <C>
U.S. Federal statutory rate ..... 34.0% 34.0%
Permanent differences ........... (58.3)% 11.1%
State income taxes .............. 6.0% 6.0%
Other ........................... (1.0)% (.3)%
----- ----
(19.3)% 50.8%
===== ====
</TABLE>

NOTE 17 -- COMMITMENTS AND CONTINGENCIES

A. LEASE OBLIGATIONS

VCAT has entered into or assumed operating leases for facilities,
equipment and automobiles that expire at various dates through fiscal 2007. The
minimum future

48
<PAGE> 49

payments due under operating lease contracts at June 30, 2000 for the years
ending June 30 are as follows:

<TABLE>
<S> <C>
2001 ..................... $ 667,091
2002 ..................... 784,823
2003 ..................... 491,245
2004 ..................... 295,800
2005 ..................... 276,000
Thereafter ............... 552,000
----------
Net minimum lease payments $3,066,959
==========
</TABLE>

Rental expense for fiscal 2000 and 1999 was $356,000 and $326,000,
respectively.

B. CONTINGENT LEASE OBLIGATIONS

The Company signed lease agreements covering video machines used in the
operation of the Barona Casino. Such agreements are cancelable upon 30 days
notice.

C. COMPANY LITIGATION

As of June 30, 2000, the Company was not subject to any material pending
legal proceedings or claims.

NOTE 18 -- STOCK OPTIONS

In 1994, VCAT adopted a Stock Option Plan (the "1994 Plan") under which
27,838 incentive stock options and 41,756 non-statutory stock options were
granted. In May 1995, new grants under the 1994 Plan were terminated, but
outstanding options under the 1994 Plan remain outstanding. Currently, options
to purchase 41,756 shares of the Company's common stock are outstanding and
exercisable under the 1994 Plan.

In 1995, VCAT adopted the 1995 Stock Option Plan (the "1995 Plan"), under
which options to purchase up to 4,000,000 shares of our common stock could be
granted. In December 1997, the number of shares of common stock available for
issuance was increased to 6,000,000. In December 1998, the number of shares of
common stock available for issuance was increased to 9,000,000. In April 2000,
the number of shares of common stock available for issuance was increased to
12,000,000. Options to purchase common stock that terminate without exercise are
available for re-issuance. Options may be issued to our employees, consultants
and directors either as (a) incentive stock options or (b) non-statutory stock
options.

Stock options are granted by the Compensation Committee of our Board of
Directors or, in the absence of the Compensation Committee, by the full Board of
Directors. Under the 1995 Plan, options granted to any single individual cannot
exceed 1,500,000 shares over any period of three consecutive fiscal years.
Options granted under the 1995 Plan can have a maximum term of up to ten years
and generally vest ratably over a four to five year period following the date of
grant. Incentive stock options must have an exercise price of not less than fair
market value on the date of grant.

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<PAGE> 50

Incentive stock options may be granted to any officer or key employee who owns
more than 10% of our common stock only if the exercise price is at least 110% of
the fair market value on the date of grant, and such options must have a maximum
term of five years from date of grant. Non-statutory stock options must have an
exercise price of not less than 85% of the fair market value on the date of
grant.

In 1996, VCAT adopted the 1996 Non-employee Directors Stock Option Plan
(the "1996 Plan"). Under the terms of the 1996 Plan, options to purchase up to
100,000 shares of our common stock may be granted. The 1996 Plan provides that
each non-employee director will automatically be granted an option to purchase
10,000 shares on the date such non-employee director is first elected to the
Board of Directors. In addition, the 1996 Plan provides that each non-employee
director will be granted an option to purchase 5,000 shares on each of our
Annual Meetings of Shareholders at which such non-employee director is elected
to the Board of Directors. These option grants are non-statutory stock options,
and the option price is equal to the closing price of our common stock on the
date of grant.

The following table summarizes stock option activity under the 1994 Plan,
the 1995 Plan and the 1996 Plan (collectively the "Plans") for the periods
indicated:

<TABLE>
<CAPTION>
FOR THE YEAR ENDED:
JUNE 30, 2000 JUNE 30, 1999
------------- -------------
OPTIONS OPTION PRICE OPTIONS OPTION PRICE
OUTSTANDING PER SHARE OUTSTANDING PER SHARE
----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Outstanding at beginning of year .......... 5,516,140 $1.00-$ 4.13 5,210,240 $1.00-$4.13
Granted ................................. 4,588,500 $2.56-$12.50 739,001 $2.75-$3.50
Exercised ............................... (1,226,781) $2.50-$ 4.13 (79,600) $2.75-$3.50
Cancelled ............................... (647,200) $2.75-$ 4.13 (353,500) $2.75-$4.13
---------- ----------
Outstanding at end of year ................ 8,230,659 $1.00-$12.50 5,516,140 $1.00-$4.13
---------- ----------
Options exercisable at year end ........... 3,065,161 $1.00-$12.50 2,743,036 $1.00-$4.13
Weighted avg. fair value of options
granted ................................. $5.15 $2.47
</TABLE>

<PAGE> 51

The following table summarizes information concerning options outstanding
at June 30, 2000:

<TABLE>
<CAPTION>
WEIGHTED-
AVERAGE
REMAINING
RANGE OF NUMBER CONTRACTUAL NUMBER
EXERCISE PRICES OUTSTANDING LIFE (YEARS) EXERCISABLE
--------------- ----------- ------------ -----------
<S> <C> <C> <C>
$1.00 - $ 4.00 5,510,409 7.40 2,706,161
$4.06 - $ 5.44 1,445,250 9.37 215,250
$7.50 - $ 8.81 760,000 9.59 68,750
$10.41 - $12.50 515,000 9.68 75,000
--------- ---------
8,230,659 3,065,161
========= =========
</TABLE>

VCAT granted options to non-employees to purchase 840,000 and 102,500
shares of our common stock (of which 5,000 have been subsequently canceled) to
non-employees during fiscal 2000 and fiscal 1999, respectively. VCAT recognized
expense related to these options of $888,000 and $97,000 in fiscal 2000 and
1999, respectively, using the Black-Scholes option-pricing model or the fair
value of services. In addition, unamortized deferred compensation of $1,674,000
has been recorded as deferred compensation within the stockholders equity
section of the consolidated balance sheet and will be charged to expense over
the remaining vesting period of the contracts.

Additionally, during fiscal 2000 VCAT granted options to four employees
with a 15% discount to market price at the time of grant, in connection with
terms of their employment agreements. VCAT recognized expense of $211,000
related to these options during the year. Also $295,000 has been recorded as
deferred compensation within the stockholders equity section of the consolidated
balance sheet and will be charged to expense over the remaining vesting period.

Employee stock options are accounted for under APB No. 25 and related
interpretations. The exercise price of each option equals the market price of
the Company's stock on the date of grant; accordingly, under APB No. 25, no
compensation costs for employee grants were recognized for the Plans. Had
compensation cost for the Plans been determined based on the fair value of the
options at the grant dates consistent with the method of SFAS No. 123, our net
income and earnings per share would have been reduced to the pro forma amounts
indicated below.

<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-----------------------------
2000 1999
----------- ------------
<S> <C> <C>
Net (loss) income
As reported ................ $(1,029,289) $ 791,691
Pro forma .................. $(5,517,607) $(1,159,530)
Net (loss) income per share ..
As reported ................ $ (0.19) $ 0.16
Pro forma .................. $ (1.02) $ (0.23)
</TABLE>

<PAGE> 52

The fair value of each option grant is estimated on the date of the grant
using the Black-Scholes options-pricing model with the following
weighted-average assumptions used for grants in fiscal 2000 and 1999,
respectively: dividend yield, 0% for both years; expected volatility of 1.30 and
1.24, respectively; average risk-free interest rates of 6.5% and 4.7%,
respectively; and expected lives of approximately 3 and 7 years; respectively.

The Black-Scholes option-pricing model was developed for use in estimating
the fair value of traded options that have no vesting restrictions and are fully
transferable. In addition, option valuation models require the input of highly
subjective assumptions including the expected stock price volatility. Because
employee stock options have characteristics significantly different from those
of traded options, and because changes in the subjective input assumptions can
materially affect the fair value estimate, in management's opinion, the existing
models do not necessarily provide a reliable single measure of the fair value of
its employee stock options.

The pro forma calculations are not indicative of current or future
operating results. In addition, the pro forma charges to income are calculated
without income tax benefit since none of the outstanding options have been
exercised. The stock option exercise date determines when the benefits may be
recorded.

NOTE 19 -- 401(k) SAVINGS PLAN

The Company has a 401(k) savings plan available to all employees.
Individuals may contribute up to 20% of their gross salary. VCAT does not
currently have a policy to match any employee contributions and, through June
30, 2000, the only costs incurred have been administrative fees.

NOTE 20 -- EVENTS (UNAUDITED) SUBSEQUENT TO DATE OF AUDITOR'S REPORT

In July 2000, VCAT acquired all of the outstanding shares of capital stock
of Dayplan in exchange for 175,000 shares of our common stock, in a transaction
valued, exclusive of acquisition costs, at $700,000. Dayplan became a
wholly-owned subsidiary of VCAT. The acquisition was accounted for as a purchase
and the accounts of Dayplan will be included in VCAT's consolidated financial
statements from the date of acquisition. The excess of the total acquisition
cost over the fair value of net assets acquired ("goodwill") will be amortized
on a straight-line basis over 3 years.

In August 2000, VCAT sold the Internet domain names "cyberworks.com" and
"cyberworks.net." and related intellectual property, including the name
"Cyberworks" for $1 million dollars to Pacific Century CyberWorks Limited. The
transaction will be recorded as a gain on the sale of assets on the date of the
transaction.

In September 2000, the Company merged three of it's wholly-owned
subsidiaries, Cyberworks, CTI and webinc, into VCAT.

<PAGE> 53

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

Not Applicable.

PART III

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

The information set forth under the captions "ELECTION OF DIRECTORS," and
"TRANSACTIONS WITH MANAGEMENT AND OTHERS -- Section 16(a) Beneficial Ownership
Reporting Compliance" in our definitive proxy statement (the "Proxy Statement")
for the Annual Meeting of shareholders scheduled to be held in December 2000, is
hereby incorporated herein by reference. The Proxy Statement will be filed with
the U.S. Securities and Exchange Commission (the "Commission") not later than
120 days after the close of Fiscal 2000.

ITEM 10. EXECUTIVE COMPENSATION

The information set forth under the captions "COMPENSATION OF EXECUTIVE
OFFICERS" and "INFORMATION ABOUT THE BOARD OF DIRECTORS AND COMMITTEES OF THE
BOARD -- Compensation of Directors" in the Proxy Statement is hereby
incorporated herein by reference.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information set forth under the caption "SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT" in the Proxy Statement is hereby incorporated
herein by reference.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information set forth under the caption "TRANSACTIONS WITH MANAGEMENT
AND OTHERS" in the Proxy Statement is hereby incorporated herein by reference.

<PAGE> 54

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits. The Exhibits listed below are filed with the Commission as part of
this annual report on Form 10-KSB.

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<S> <C>
2.1 Asset Purchase Agreement dated as of July 16, 1999 by and among the
Company, Typhoon Capital Consultants, LLC, Sanjay Sabnani and
Manisha Sabnani, previously filed as Exhibit 2.4 to the Company's
Annual Report on Form 10-KSB for the Fiscal Year ended June 30,
1999, dated September 27, 1999 and filed with the Commission on
September 28, 1999 (File No. 0-11532) (the "Fiscal 1999 Annual
Report"), Is hereby incorporated herein by reference.
2.2 Stock Purchase Agreement dated as of January 28, 2000 by and among
Ken King, Tom Green, Mary Anne Fuchs, Cameron Irrejon and Venture
Catalyst previously filed as Exhibit 2.1 to the Company's Quarterly
Report on Form 10QSB for the Quarterly Period Ended March 31, 2000,
filed with the Commission on May 15, 2000 (File No. 0-11532), is
hereby incorporated herein by reference.
2.3 Stock Purchase Agreement dated as of January 28, 2000 by and among
Venture Catalyst Incorporated, Stephen M. Dirks and webinc., Inc.,
previously filed as Exhibit 2.2 to the Company's Quarterly Report on
Form 10QSB for the Quarterly Period Ended March 31, 2000, filed with
the Commission on May 15, 2000 (File No. 0-11532), is hereby
incorporated herein by reference.
2.4 Agreement and Plan of Reorganization among Venture Catalyst
Incorporated, Venture Acquisition Corporation, CTInteractive, Inc.,
and Donald Scott Campbell dated as of March 23, 2000, previously
filed as Exhibit 2.3 to the Company's Quarterly Report on Form 10QSB
for the Quarterly Period Ended March 31, 2000, filed with the
Commission on May 15, 2000 (File No. 0-11532), is hereby
incorporated herein by reference.
2.5 Agreement and Plan of Reorganization dated as of June 26, 2000, by
and among the Company and Venture-Catalyst.com, Inc., DayPlan.com,
Inc., Sunvir S. Gujral, Gary U. Scapellati, Ajay Mehra, Michael
Trujillo and Liveleen K. Gujral.
3.1 Articles of Amendment of Articles of Incorporation of the Company,
filed with the Secretary of State of Utah on December 10, 1999,
previously filed as Exhibit 3.1 to the Company's Quarterly Report on
Form 10QSB for the Quarterly Period Ended December 31, 1999, filed
with the Commission on February 14, 2000 (File No. 0-11532), is
hereby incorporated herein by reference.
3.2 Amended and Restated Articles of Incorporation of the Company
(formerly known as Twin Creek Exploration Co., Inc.), previously
filed as Exhibit 3.1 to the Company's Annual Report on form 10-KSB
for the Fiscal Year Ended June 30, 1995, filed with the Commission
on October 12, 1995 (File No. 0-11532), is hereby incorporated
herein by reference.
</TABLE>

<PAGE> 55

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<S> <C>
3.3 Amended and Restated Bylaws of the Company, as amended.
10.1 Assignment, Assumption and Consent dated September 28, 1999 by and
between Typhoon Capital Consultants, LLC., dba:
Venture-Catalyst.com, Inland Entertainment Corporation and Spieker
Properties, L.P. relating to the March 22, 1999 Santa Monica,
California Office Lease, previously filed as Exhibit 10.2 to the
Company's Quarterly Report on Form 10-QSB for the Quarterly Period
Ended September 30, 1999, filed with the Commission on November 15,
1999 (File No. 0-11532), is hereby incorporated herein by reference.
10.2 Lease Agreement dated March 22, 1999, by and between Typhoon Capital
Consultants, LLC, dba: Venture-Catalyst.com, and Spieker Properties,
L.P., previously filed as Exhibit 10.3 to the Company's Quarterly
Report on Form 10-QSB for the Quarterly Period Ended September 30,
1999, filed with the Commission on November 15, 1999 (File No.
0-11532), is hereby incorporated herein by reference.
10.3 Assignment and Assumption Agreement dated as of July 16, 1999, by
and among the Company, Typhoon Capital Consultants, LLC, Sanjay
Sabnani and Manisha Sabnani, previously filed as Exhibit 10.4 to the
Company's Quarterly Report on Form 10-QSB for the Quarterly Period
Ended September 30, 1999, flied with the Commission on November 15,
1999 (File No. 0-11532), is hereby incorporated herein by reference.
10.4 Negotiable Secured Promissory Note, dated August 5, 1999, of
Christopher Wm. Voisin, in favor of the Company in the principal
amount of $49,462.00, previously filed as Exhibit 10.37 to the
Fiscal 1999 Annual Report (File No. 0-11532), is hereby incorporated
herein by reference.
10.5 Settlement and Release Agreement dated December 17, 1999, by and
among Richard T. Harrison, the Company and Cyberworks, Inc.,
previously filed as Exhibit 10.1 to the Company's Quarterly Report
on Form 10-QSB for the Quarterly Period Ended December 31, 1999,
filed with the Commission on February 14, 2000 (File No. 0-11532),
is hereby incorporated herein by reference.
10.6 Amended and Restated Noncompetition Agreement dated as of December
25, 1999, by and between Richard T. Harrison and the Company,
previously filed as Exhibit 10.2 to the Company's Quarterly Report
on Form 10-QSB for the Quarterly Period Ended December 31, 1999, and
filed with the Commission on February 14, 2000 (File No. 0-11532),
is hereby incorporated herein by reference.
10.7 Call Agreement dated as of December 25, 1999, by and between Richard
T. Harrison and the Company, previously filed as Exhibit 10.3 to the
Company's Quarterly Report on Form 10-QSB for the Quarterly Period
Ended December 31, 1999, filed with the Commission on February 14,
2000 (File No. 0-11532), is hereby incorporated herein by reference.
10.8 Stock Pledge Agreement dated as of December 25, 1999, by and between
Richard T. Harrison and the Company, previously filed as Exhibit
10.4 to the Company's Quarterly Report on Form 10-QSB for the
Quarterly Period Ended December 31,
</TABLE>

<PAGE> 56

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<S> <C>
1999, filed with the Commission on February 14, 2000 (File No.
0-11532), is hereby incorporated herein by reference.
10.9 Consulting Agreement dated February 25, 2000 between Venture
Catalyst Incorporated and G. Fritz Opel, previously filed as Exhibit
10.1 to the Company's Quarterly Report on Form 10-QSB for the
Quarterly Period Ended March 31, 2000, filed with the Commission on
May 15, 2000 (File No. 0-11532), is hereby incorporated herein by
reference.
10.10 Settlement and Release Agreement dated February 25, 2000 between
Venture Catalyst Incorporated and G. Fritz Opel, previously filed as
Exhibit 10.2 to the Company's Quarterly Report on Form 10-QSB for
the Quarterly Period Ended March 31, 2000, filed with the Commission
on May 15, 2000 (File No. 0-11532), is hereby incorporated herein by
reference.
10.11 Consulting Fee Subordination Agreement dated as of January 13, 2000
among State Street Bank and Trust Company of California, National
Association, Venture Catalyst Incorporated and the Barona Group of
Capitan Grande Band of Mission Indians, previously filed as Exhibit
10.3 to the Company's Quarterly Report on Form 10-QSB for the
Quarterly Period Ended March 31, 2000, filed with the Commission on
May 15, 2000 (File No. 0-11532), is hereby incorporated herein by
reference.
10.12 Stock Purchase Agreement dated as of April 30, 2000, by and between
the Company and Jonathan Ungar and Alan Henry Woods.
10.13 Warrant Agreement dated as of April 30, 2000, by and between the
Company and Jonathan Ungar.
10.14 Stock Purchase Agreement dated as of April 11, 2000, by and between
the Company and Gary Cheng.
10.15 Stock Purchase Agreement dated as of April 11, 2000, by and between
the Company and Thomas Courts.
10.16 Stock Purchase Agreement dated as of April 11, 2000, by and between
the Company and Howard Yen.
10.17 Stock Purchase Agreement dated as of April 11, 2000, by and between
the Company and Paul Yahnke.
10.18 Stock Purchase Agreement dated as of April 13, 2000, by and between
the Company and Tony Yollin.
10.19 Stock Purchase Agreement dated as of April 13, 2000, by and between
the Company and Boniface O. Onubah.
10.20 Stock Purchase Agreement dated as of April 13, 2000, by and between
the Company and Keri Consulting Limited.
10.21 Sublease Agreement dated as of May 15, 2000, by and between Company
and Morton Jankel Zander, Inc., a California corporation.
</TABLE>

<PAGE> 57
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<S> <C>
10.22 Agreement of Sublease dated as of August 11, 2000, by and
between Company and iXL, Inc., a Delaware corporation.
10.23 Promissory Note dated as of September 15, 2000, by and between
Company and Jonathan Ungar.
10.24 Promissory Note dated as of September 15, 2000, by and between
Company and Alan Henry Woods.
10.25 Asset Purchase Agreement dated as of August 17, 2000, by and
between Cyberworks, Inc., and Cyber-Tech Group Limited.
21 Subsidiaries of Registrant.
23 Consent of Grant Thornton LLP.
27 Financial Data Schedule.
</TABLE>

(b) REPORTS ON FORM 8-K

No Report on Form 8-K were filed with the Commission during the fourth
quarter of the fiscal year covered by this Form 10-KSB

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

VENTURE CATALYST INCORPORATED,
a Utah corporation

Dated: September 25, 2000 By: /s/ L. DONALD SPEER, II
------------------------------
L. Donald Speer, II
Chairman of the Board and
Chief Executive Officer

(Principal Executive Officer)

In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on
the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>

/s/ L. DONALD SPEER, II Chairman of the Board and September 25, 2000
------------------------ Chief Executive Officer
L. Donald Speer, II Officer and Director
</TABLE>

<PAGE> 58

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
(Principal Executive Officer)

/s/ SANJAY SABNANI President and Chief Operating Officer September 25, 2000
------------------------------ and Director
Sanjay Sabnani

/s/ ANDREW B. LAUB Executive Vice President, Corporate September 25, 2000
------------------------------ Development and Director
ANDREW B. LAUB

/s/ GLENN D. SMITH Executive Vice President, General Counsel, September 25, 2000
------------------------------ Secretary and Director
Glenn D. Smith

/s/ STEPHEN M. DIRKS Vice President, Corporate Development September 25, 2000
------------------------------ and Director
Stephen M. Dirks

/s/ JANA McKEAG Vice President, Governmental September 25, 2000
------------------------------ Relations and a Director
Jana McKeag

/s/ KEVIN MCINTOSH Vice President and Chief Financial Officer September 25, 2000
------------------------------ (Principal Accounting Officer)
Kevin McIntosh

Director , 2000
------------------------------
Charles Reibel

Director , 2000
------------------------------
Cornelius E. ("Neil") Smyth

/s/ CHARLES THEODORE OWEN Director September 25, 2000
------------------------------
Charles Theodore ("Ted") Owen
</TABLE>

<PAGE> 59

EXHIBIT INDEX

<TABLE>
<S> <C>
2.1 Asset Purchase Agreement dated as of July 16, 1999 by and among the
Company, Typhoon Capital Consultants, LLC, Sanjay Sabnani and
Manisha Sabnani, previously filed as Exhibit 2.4 to the Company's
Annual Report on Form 10-KSB for the Fiscal Year ended June 30,
1999, dated September 27, 1999 and filed with the Commission on
September 28, 1999 (File No. 0-11532) (the "Fiscal 1999 Annual
Report"), is hereby incorporated herein by reference.
2.2 Stock Purchase Agreement dated as of January 28, 2000 by and among
Ken King, Tom Green, Mary Anne Fuchs, Cameron Irrejon and Venture
Catalyst previously filed as Exhibit 2.1 to the Company's Quarterly
Report on Form 10QSB for the Quarterly Period Ended March 31, 2000,
filed with the Commission on May 15, 2000 (File No. 0-11532), is
hereby incorporated herein by reference.
2.3 Stock Purchase Agreement dated as of January 28, 2000 by and among
Venture Catalyst Incorporated, Stephen M. Dirks and webinc., Inc.,
previously filed as Exhibit 2.2 to the Company's Quarterly Report on
Form 10QSB for the Quarterly Period Ended March 31, 2000, filed with
the Commission on May 15, 2000 (File No. 0-11532), is hereby
incorporated herein by reference.
2.4 Agreement and Plan of Reorganization among Venture Catalyst
Incorporated, Venture Acquisition Corporation, CTInteractive, Inc.,
and Donald Scott Campbell dated as of March 23, 2000, previously
filed as Exhibit 2.3 to the Company's Quarterly Report on Form 10QSB
for the Quarterly Period Ended March 31, 2000, filed with the
Commission on May 15, 2000 (File No. 0-11532), is hereby
incorporated herein by reference.
2.5 Agreement and Plan of Reorganization dated as of June 26, 2000, by
and among the Company and Venture-Catalyst.com, Inc., DayPlan.com,
Inc., Sunvir S. Gujral, Gary U. Scapellati, Ajay Mehra, Michael
Trujillo and Liveleen K. Gujral.
3.1 Articles of Amendment of Articles of Incorporation of the Company,
filed with the Secretary of State of Utah on December 10, 1999,
previously filed as Exhibit 3.1 to the Company's Quarterly Report on
Form 10QSB for the Quarterly Period Ended December 31, 1999, filed
with the Commission on February 14, 2000 (File No. 0-11532), is
hereby incorporated herein by reference.
3.2 Amended and Restated Articles of Incorporation of the Company
(formerly known as Twin Creek Exploration Co., Inc.), previously
filed as Exhibit 3.1 to the Company's Annual Report on form 10-KSB
for the Fiscal Year Ended June 30, 1995, filed with the Commission
on October 12, 1995 (File No. 0-11532), is hereby incorporated
herein by reference.
3.3 Amended and Restated Bylaws of the Company, as amended.
10.1 Assignment, Assumption and Consent dated September 28, 1999 by and
between Typhoon Capital Consultants, LLC., dba:
Venture-Catalyst.com, Inland Entertainment Corporation and Spieker
Properties, L.P. relating to the March 22, 1999 Santa Monica,
California Office Lease, previously filed as Exhibit 10.2 to the
Company's Quarterly Report on Form 10-QSB for the Quarterly Period
Ended
</TABLE>

<PAGE> 60

<TABLE>
<S> <C>
September 30, 1999, filed with the Commission on November 15, 1999
(File No. 0-11532), is hereby incorporated herein by reference.
10.2 Lease Agreement dated March 22, 1999, by and between Typhoon Capital
Consultants, LLC, dba: Venture-Catalyst.com, and Spieker Properties,
L.P., previously filed as Exhibit 10.3 to the Company's Quarterly
Report on Form 10-QSB for the Quarterly Period Ended September 30,
1999, filed with the Commission on November 15, 1999 (File No.
0-11532), is hereby incorporated herein by reference.
10.3 Assignment and Assumption Agreement dated as of July 16, 1999, by
and among the Company, Typhoon Capital Consultants, LLC, Sanjay
Sabnani and Manisha Sabnani, previously filed as Exhibit 10.4 to the
Company's Quarterly Report on Form 10-QSB for the Quarterly Period
Ended September 30, 1999, flied with the Commission on November 15,
1999 (File No. 0-11532), is hereby incorporated herein by reference.
10.4 Negotiable Secured Promissory Note, dated August 5, 1999, of
Christopher Wm. Voisin, in favor of the Company in the principal
amount of $49,462.00, previously filed as Exhibit 10.37 to the
Fiscal 1999 Annual Report (File No. 0-11532), is hereby incorporated
herein by reference.
10.5 Settlement and Release Agreement dated December 17, 1999, by and
among Richard T. Harrison, the Company and Cyberworks, Inc.,
previously filed as Exhibit 10.1 to the Company's Quarterly Report
on Form 10-QSB for the Quarterly Period Ended December 31, 1999,
filed with the Commission on February 14, 2000 (File No. 0-11532),
is hereby incorporated herein by reference.
10.6 Amended and Restated Noncompetition Agreement dated as of December
25, 1999, by and between Richard T. Harrison and the Company,
previously filed as Exhibit 10.2 to the Company's Quarterly Report
on Form 10-QSB for the Quarterly Period Ended December 31, 1999, and
filed with the Commission on February 14, 2000 (File No. 0-11532),
is hereby incorporated herein by reference.
10.7 Call Agreement dated as of December 25, 1999, by and between Richard
T. Harrison and the Company, previously filed as Exhibit 10.3 to the
Company's Quarterly Report on Form 10-QSB for the Quarterly Period
Ended December 31, 1999, filed with the Commission on February 14,
2000 (File No. 0-11532), is hereby incorporated herein by reference.
10.8 Stock Pledge Agreement dated as of December 25, 1999, by and between
Richard T. Harrison and the Company, previously filed as Exhibit
10.4 to the Company's Quarterly Report on Form 10-QSB for the
Quarterly Period Ended December 31, 1999, filed with the Commission
on February 14, 2000 (File No. 0-11532), is hereby incorporated
herein by reference.
10.9 Consulting Agreement dated February 25, 2000 between Venture
Catalyst Incorporated and G. Fritz Opel, previously filed as Exhibit
10.1 to the Company's Quarterly Report on Form 10-QSB for the
Quarterly Period Ended March 31, 2000, filed with the Commission on
May 15, 2000 (File No. 0-11532), is hereby incorporated herein by
reference.
10.10 Settlement and Release Agreement dated February 25, 2000 between
Venture
</TABLE>

<PAGE> 61

<TABLE>
<S> <C>
Catalyst Incorporated and G. Fritz Opel, previously filed as Exhibit
10.2 to the Company's Quarterly Report on Form 10-QSB for the
Quarterly Period Ended March 31, 2000, filed with the Commission on
May 15, 2000 (File No. 0-11532), is hereby incorporated herein by
reference.
10.11 Consulting Fee Subordination Agreement dated as of January 13, 2000
among State Street Bank and Trust Company of California, National
Association, Venture Catalyst Incorporated and the Barona Group of
Capitan Grande Band of Mission Indians, previously filed as Exhibit
10.3 to the Company's Quarterly Report on Form 10-QSB for the
Quarterly Period Ended March 31, 2000, filed with the Commission on
May 15, 2000 (File No. 0-11532), is hereby incorporated herein by
reference.
10.12 Stock Purchase Agreement dated as of April 30, 2000, by and between
the Company and Jonathan Ungar and Alan Henry Woods.
10.13 Warrant Agreement dated as of April 30, 2000, by and between the
Company and Jonathan Ungar.
10.14 Stock Purchase Agreement dated as of April 11, 2000, by and between
the Company and Gary Cheng.
10.15 Stock Purchase Agreement dated as of April 11, 2000, by and between
the Company and Thomas Courts.
10.16 Stock Purchase Agreement dated as of April 11, 2000, by and between
the Company and Howard Yen.
10.17 Stock Purchase Agreement dated as of April 11, 2000, by and between
the Company and Paul Yahnke.
10.18 Stock Purchase Agreement dated as of April 13, 2000, by and between
the Company and Tony Yollin.
10.19 Stock Purchase Agreement dated as of April 13, 2000, by and between
the Company and Boniface O. Onubah.
10.20 Stock Purchase Agreement dated as of April 13, 2000, by and between
the Company and Keri Consulting Limited.
10.21 Sublease Agreement dated as of May 15, 2000, by and between Company
and Morton Jankel Zander, Inc., a California corporation.
10.22 Agreement of Sublease dated as of August 11, 2000, by and between
Company and iXL, Inc., a Delaware corporation.
10.23 Promissory Note dated as of September 15, 2000, by and between
Company and Jonathan Ungar.
10.24 Promissory Note dated as of September 15, 2000, by and between
Company and Alan Henry Woods.
10.25 Asset Purchase Agreement dated as of August 17, 2000, by and between
Cyberworks, Inc., and Cyber-Tech Group Limited.
</TABLE>

61
<PAGE> 62

<TABLE>
<S> <C>
21 Subsidiaries of Registrant.
23 Consent of Grant Thornton LLP.
27 Financial Data Schedule.
</TABLE>