COUNTRY WORLD CASINOS INC, 10KSB/A, 2001-01-17

COUNTRY WORLD CASINOS INC
10KSB/A, 2001-01-17
MISCELLANEOUS AMUSEMENT & RECREATION

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________

FORM 10-KSB/A-2
(Mark One)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934

For the fiscal year ended June 30, 1998

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934

For the transition period from ______________ to _________________

Commission file number 0-22450

COUNTRY WORLD CASINOS, INC.
(Name of Small Business Issuer in its charter)

Nevada 13-3140389
(State or Other Jurisdiction of (IRS Employer Identification Number)
Incorporation or Organization)

200 Monument Road, Suite 10, Bala Cynwyd, Pennsylvania 19004
(Address of Principal Executive Offices) (Zip Code)

Issuer's Telephone Number, Including Area Code: (610) 617-9990

Securities registered pursuant to Section 12(b) of the Exchange Act: None

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

$.001 Par Value Common Stock
(Title of Class)

<PAGE>

Check whether the issuer: (1) has filed all reports required to be filed by
Section 13 or 15 (d) of the Exchange Act during the past 12 months (or 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 the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB.

State the issuer's revenues for its most recent fiscal year. $ None

The aggregate market value of the approximately 21,448,359 shares of the
Company's voting stock held by non-affiliates, computed at the average bid and
asked prices of such stock in the over-the-counter market, as quoted on the
Electronic Bulletin Board on September 30, 1998 was approximately $3,431,737.

Issuers Involved in Bankruptcy Proceedings During the Past Five Years

Check whether the issuer has filed all documents and reports to be filed by
Section 12, 13 or 5(d) of the Exchange Act of the distribution of securities
under a plan confirmed by a court.

Yes X No

Indicate the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: At September 30, 1998, there
were outstanding 54,331,687 shares of the issuer's Common Stock, par value
$.001.

<PAGE>

PART I
Description of Business
Item 1
General Development of Business

Country World Casinos, Inc., the Registrant (the "Company" or "Country World")
was incorporated on November 9, 1982 under the name, Innovative Medical
Technology, Inc. The Company was organized to engage in the medical industry.
The Company effected a public offering in 1983. The Company was essentially
inactive until 1990 when it undertook the manufacturing of monolithic composite
panels for use in the construction of semi-truck trailers, shipping containers
and industrial buildings. The Company discontinued this business in September
1992.

In 1993, the Company changed the focus of its planned business operations to the
construction of a large, full service, first class casino in Black Hawk,
Colorado. In August 1993, the Company completed the acquisition from New Allied
Development Corporation and its subsidiary, Tommyknocker Casino Corp., of
certain real property located in Black Hawk, Colorado known as Mill Sites 12 and
13, and the Smith Lode Mining Claim, U.S. Survey No. 502 (the "Property").
Except as specifically provided elsewhere herein to the contrary, New Allied
Development Corporation and Tommyknocker Casino Corp. will be referred to
hereinafter collectively as "New Allied."

Since the Company's purchase of the Property in August 1993, the Company's
activities have focused on obtaining the necessary financing and making
preparations for construction of the casino on the Property. In July 1997, the
Company signed a financing agreement with U2 Consulting, LLC., an affiliate of
Pacific Genesis, Inc. and Western Equities, Inc., to raise $79.5 million through
the issuance of corporate bonds. The parties had 180 days to provide for the
financing, were unable to complete same and said agreement with U2 Consulting
was terminated in December 1997.

In January 1998, the Company again began the process of acquiring financing.
After much discussion and many contacts with a wide range of financing groups,
the Company has entered into three separate agreements to provide the necessary
financing. Although the Company is confident in the abilities of these three
organizations to provide the necessary capital, there can be no assurance that
any funds will be provided immediately or in the future.

Once financed, the Company's ability to operate the casino will be dependent
upon substantial other conditions, including the obtaining of licenses and
compliance with governmental regulations, grading and construction of the
casino, obtaining the necessary permits and approvals from the City of Black
Hawk and other regulatory bodies, procuring gaming equipment on satisfactory
terms, and accomplishing these objectives in a timely manner.

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In order to begin the process of timely completing its goals, in July 1997, the
Company contracted with Colorado Gaming Development Company, Inc., Semple Brown
Roberts, P.C. and PCL Construction Services, Inc., all of Denver, Colorado to
design and construct the planned casino and hotel complex. In addition, the
Company signed a management agreement with Signature Hospitality Resources, Inc.
of Denver, Colorado to manage its Radisson Black Hawk Hotel, a separate
agreement to use the national flag of Radisson on the hotel and contract with
Luciani & Associates, LLC of Atlantic City, New Jersey, to manage the casino
operations. All parties assisted the architect in design of their respective
operations. The Agreement with Luciani & Associates, LLC has expired and they
advised the Company of such in writing in February 1998. Once financing has been
secured, the Company will attempt to negotiate a new agreement, either with
Luciani & Associates or others yet to be determined.

The Company is engaged in the design, development and construction of the Hotel
and Casino (the "Hotel Casino") in Black Hawk, Colorado. The revised plan for
the Hotel Casino will be an eight level complex, featuring three stories of
hotel rooms above a two-story, 75,000 square foot casino, and a three story
parking garage. Other amenities will include one or more full service
restaurants, a buffet, entertainment lounge and retail shops. When completed as
planned, the Hotel Casino will be largest hotel and casino complex in Colorado.
Construction and opening of the Hotel Casino is dependent upon the Company's
ability to successfully raise the required capital discussed above.

The casino level of the project, at approximately 75,000 square feet, will be
the largest in Colorado and will be capable of accommodating 1,800 slot machines
and 32 gaming tables. The Company will open the facility with 1,000 slot
machines, 20 blackjack tables and 12 poker tables, and may add up to 800
additional slot machines if management determines that the additional gaming
devices will produce equal per square foot revenue and will not create excess
capacity. The Company expects that slot machines will be the greatest source of
its gaming revenues. Slot machines are less labor intensive and require less
square footage than table games, and also generate higher profit margins.

The Country World Casino's atmosphere will feature a country western music theme
similar to the rock and roll music theme successfully employed by the Hard Rock
Cafe. The Casino decor is planned to include memorabilia from the great country
singers, both past and present. The country western theme has not been
established in the Black Hawk/Central City, Colorado gaming market, and
therefore will give the Country World Casino its own unique identity. Management
believes that as casinos have become more numerous, the gaming industry has
begun to recognize that popular themes and amenities such as quality dining and
hotel accommodations play an important role in attracting customers to casinos.
The theme is intended to appeal to the Hotel Casino's target customer base,
which consists primarily of residents of the Denver metropolitan area as well as
other Colorado communities located within driving distance of Black Hawk.

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The Hotel and Casino will provide overnight accommodations with 200 +/- rooms
and suites, making it one of the first destination resort of its kind in Black
Hawk. Complimenting both the casino and hotel will be a three story underground
parking facility for approximately 1,000 cars featuring both valet and self
parking options, and the only covered on-site bus turnaround currently available
in Black Hawk for the convenience of day trip customers.

Black Hawk is a picturesque mountain town approximately 40 miles west of Denver.
In the past year, Black Hawk hosted approximately 3 million visitors and
generated almost 60% of the state's gaming revenues. The 536,000 square foot
Hotel Casino facility on the northern most end of the Black Hawk gaming district
will be in a most highly visible location as it is in a direct line of site to
all visitors approaching Black Hawk's Gregory Street intersection on State
Highway 119. The eight story structure will tower high above all existing
facilities. The Black Hawk and nearby Central City casino market includes many
small, privately held gaming facilities that the Company believes offer limited
amenities and are characterized by a shortage of convenient on-site parking.
There are a few large facilities currently operating with varying levels of
services and amenities, as well as new facilities planned. The Country World
Casino's country western music theme, country hospitality, ample parking, modern
hotel accommodations and a full line of amenities, will set it apart from, and
should give it a competitive advantage over, the other casinos in the Black
Hawk/Central City market.

The Hotel Casino complex will be designed and constructed pursuant to a
guaranteed maximum price agreement which is to be finalized prior to
construction. The design and construction team consists of Semple Brown Roberts,
P.C., a Denver based architectural firm (the "Architect") and PCL Construction
Services, Inc., a multi-million dollar North American construction firm with
U.S. headquarters located in Denver. The Architect is the designer of
Fitzgerald's Casino in Black Hawk, while the Contractor's gaming credits include
the MGM Grand Hotel Casino and Stratosphere Tower in Las Vegas, Nevada, as well
as the Chinook Winds Gaming and Convention Center in Lincoln City, Oregon.
Gaming operations at the Country World Casino were to be under the management of
Luciani & Associates of Atlantic City, New Jersey, who are leaders in casino
design and management services. At this time, the agreement has expired, however
once financing has been secured, the Company will attempt to negociate a new
agreement or seek another management company.

Hotel operations will be under the management of Signature Hospitality
Resources, Inc. of Denver, Colorado (the "Hotel Manager'), which provides a full
range of hotel and resort support services including operations, sales,
marketing, food, beverage, human resources, MIS and technical services. The
Hotel Manager's current portfolio of facilities under management includes 16
hotel and resort properties, comprising 4,398 rooms, in eight states and the
Caribbean. Signature's executive team represents over 120 years of combined
hospitality related experience, spanning 200 properties in 34 states and three
countries.

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<PAGE>

COLORADO GAMING REGULATIONS

The State of Colorado created the Division of Gaming (the "Division") within the
Department of Revenue to license, implement, regulate and supervise the conduct
of limited gaming under the Colorado Limited Gaming Act and the regulations
promulgated thereunder (the "Colorado Gaming Act"). The Director of the
Division, under the supervision of a five-member Colorado Limited Gaming Control
Commission (the "Colorado Gaming Commission"), has been granted broad power to
ensure compliance with the Colorado Gaming Act. The Director may inspect,
without notice, impound or remove any gaming device. He may examine and copy any
licensee's records, may investigate the background and conduct of licensees and
their employees, and may bring disciplinary actions against licensees and their
employees. He also may conduct detailed background investigations of persons who
loan money to the Company.

The Colorado Gaming Commission is empowered to issue five types of gaming and
gaming related licenses. The licenses are revocable and non-transferrable. The
failure or inability of the Company or the Casino Manager to obtain and maintain
the necessary gaming licenses could prevent the Company from operating the
Casino and could have a material adverse effect on the Company. All persons
employed by the Company and the Casino Manager and involved, directly or
indirectly, in gaming operations in Colorado also are required to obtain a
Colorado gaming license. All licenses must be renewed annually.

The Company's President, Roger Leclerc currently holds a key employee license
which entitles him to operate a casino in the State of Colorado. The Company,
its Chairman and Chief Executive Officer, Larry Berman, and its
Secretary/Treasurer, William Patrowicz will apply for their respective licenses
at the conclusion of financing to coincide with the start of construction.

As a general rule, under the Colorado Gaming Act, it is a criminal violation for
any person to have a legal, beneficial, voting or equitable interest, or right
to receive profits, in more than three retail gaming licenses in Colorado. The
Colorado Gaming Commission has ruled that a person does not have an interest in
a licensee for purposes of the multiple-license prohibition if: (i) such person
has less than a five percent (5%) interest in an institutional investor which
has an interest in a publicly traded licensee or publicly traded company
affiliated with a licensee (such as the Company); (ii) a person has a five
percent (5%) or more financial interest in an institutional investor, but the
institutional investor has less than a five percent (5%) interest in a publicly
traded licensee or publicly traded company affiliated with a licensee; (iii) an
institutional investor has less than a five percent (5%) financial interest in a
publicly traded licensee or publicly traded company affiliated with a
licensee;(iv) an institutional investor possesses securities in a fiduciary
capacity for another person, and does not exercise voting control over five
percent (5%) or more of the outstanding voting securities of a

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publicly traded licensee or of a publicly traded company affiliated with a
licensee; (v) a registered broker or dealer retains possession of securities of
a publicly traded licensee or of a publicly traded company affiliated with a
licensee for its customers in street name or otherwise, and exercises voting
rights for less than five percent (5%) of the publicly traded licensee's voting
securities or of a publicly traded company affiliated with a licensee; (vi) a
registered broker or dealer acts as a market maker for the stock of a publicly
traded licensee or of a publicly traded company affiliated with a licensee and
possesses a voting interest in less than five percent (5%) of the stock of the
publicly traded licensee or of a publicly traded company affiliated with a
licensee; (vii) an underwriter is holding securities of a publicly traded
licensee or of a publicly traded company affiliated with a licensee as part of
an underwriting for no more than 90 days if it exercises voting rights of less
than five percent (5%) of the outstanding securities of a publicly traded
licensee or of a publicly traded company affiliated with a licensee; (viii) a
stock clearinghouse holds voting securities for third parties, if it exercises
voting rights with respect to less than five percent (5%) of the outstanding
securities of a publicly traded licensee or of a publicly traded company
affiliated with a licensee; or (ix) a person owns less than five percent (5%) of
the voting securities of the publicly traded licensee or publicly traded company
affiliated with a licensee. Hence, the Company's and its stockholders' business
opportunities in Colorado are limited to such interests that comply with the
statute and Commission's rule.

Although attorneys for the Colorado legislature initially expressed concern that
the promulgation of the above-described regulation was beyond the Colorado
Gaming Commission's statutory delegated authority, they appear to have retreated
from this position. Therefore, unless the Colorado legislature repeals the
regulation, it is likely that it will continue in effect.

In addition, pursuant to the Colorado Gaming Act, no manufacturer or distributor
of slot machines may have an interest in any casino operator, allow any of its
officers to have such an interest, employ any person if such person is employed
by a casino operator, or allow any casino operator or person with a substantial
interest therein to have an interest in a manufacturer's or distributor's
business. The Colorado Gaming Commission has ruled that a person does not have a
"substantial interest" if it directly or indirectly has less than five percent
(5%) of such voting securities of a licensee.

Under the Colorado Gaming Act, any person or entity having any direct or
indirect interest in a gaming licensee or an applicant for a gaming license,
including, but not limited to, the Company and stockholders of the Company,
maybe required to supply the Colorado Gaming Commission with substantial
information, including, but not limited to, background information, source of
funding information, a sworn statement that such person or entity is not holding
his interest for any other party, and finger prints. Such information,
investigation and licensing as an "associated person" automatically will be
required of all persons (other than certain institutional investors discussed
below) which directly or indirectly own ten percent (10%) or more of a direct or
indirect legal, beneficial or voting interest in the Company. Such persons must
report their interest and file appropriate applications within 45 days after
acquiring such interest. Persons directly or indirectly having a five percent
(5%) or more interest (but less than 10%) in the Company, must report their
interest to the Colorado Gaming Commission within ten (10) days after acquiring
such interest and may be required to provide additional information and to be
found suitable. If certain institutional investors provide certain information
to the Colorado Gaming Commission, such investors, at the Colorado Gaming
Commission's discretion, may be permitted to own up to 14.99% of the Company,
before being required to be found suitable. All licensing and investigation fees
will have to be paid for by the person in question. The associated person
investigation fee currently is $48 per hour.

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The Colorado Gaming Commission also has the right to request information from
any person directly or indirectly interested in, or employed by, a licensee, and
to investigate the moral character, honesty, integrity, prior activities,
criminal record, reputation, habits and associations of (i) all persons licensed
pursuant to the Colorado Limited Gaming Act, (ii) all officers, directors and
stockholders of a licensed privately held corporation, (iii) all officers,
directors and stockholders holding either a five percent (5%) or greater
interest or a controlling interest in a licensed publicly traded corporation,
(iv) all general partners and all limited partners of a licensed partnership,
(v) all persons which have a relationship similar to that of an officer,
director or stockholder of a corporation (such as members and managers of a
limited liability company), (vi) all persons supplying financing or loaning
money to any licensee connected with the establishment or operation of limited
gaming, and (vii) all persons having a contract, lease or ongoing financial or
business arrangement with any licensee, where such contract, lease or
arrangement relates to limited gaming operations, equipment, devices or
premises. For purposes of the Colorado Gaming Act, a note secured by a deed of
trust on casino property is considered a "lease."

In addition, under the Colorado Gaming Act regulations, every person who is a
party to a "gaming contract" with an applicant for a license, or with a
licensee, upon the request of the Colorado Gaming Commission or the Director,
promptly must provide to the Colorado Gaming Commission or Director all
information which may be requested concerning financial history, financial
holdings, real and personal property ownership, interests in other companies,
criminal history, personal history and associations, character, reputation in
the community, and all other information which might be relevant to a
determination whether a person would be suitable to be licensed by the Colorado
Gaming Commission. Failure to provide all information requested constitutes
sufficient grounds for the Director or the Colorado Gaming Commission to require
a licensee or applicant to terminate its "gaming contract" (as defined below)
with any person who failed to provide the information requested. In addition,
the Director or the Colorado Gaming Commission may require changes in "gaming
contracts" before an application is approved or participation in the contract is
allowed. A "gaming contract" is defined as an agreement in which a person does
business with or on the premises of a licensed entity.

An application for licensure or suitability may be denied for any cause deemed
reasonable by the Colorado Gaming Commission or the Director, as appropriate.
Specifically, the Colorado Gaming Commission and the Director must deny a
license to any applicant who (i) fails to prove by clear and convincing evidence
that the applicant is qualified; (ii) fails to provide information and
documentation requested; (iii) fails to reveal any fact material to
qualification, or supplies information which is untrue or misleading as to a
material fact pertaining to qualification; (iv) has been, or has any director,
officer, general partner, stockholder, limited partner or other person who has a
financial or equity interest in the applicant who has been, convicted of certain
crimes, including the service of a sentence upon conviction of a felony in a
correctional facility, city or county jail, or community correctional

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facility or under the state board of parole or any probation department within
ten years prior to the date of the application, gambling-related offenses, theft
by deception or crimes involving fraud or misrepresentation, is under current
prosecution for such crimes (during the pendency of which license determination
may be deferred), is a career offender or a member or associate of a career
offender cartel, or is a professional gambler; or (v) has refused to cooperate
with any state or federal body investigating organized crime, official
corruption or gaming offenses.

If the Colorado Gaming Commission determines that a person or entity is
unsuitable to own interests in the Company, then the Company may be sanctioned,
which may include the denial or revocation of the approvals and licenses
required to operate the Casino.

The Colorado Gaming Commission does not need to approve in advance a public
offering of securities, but rather requires a filing of notice and additional
documents with regard to such public offering prior to such public offering.
Under the regulations, the Colorado Gaming Commission may, in its discretion,
require additional information and prior approval of such public offering.

In addition, the Colorado Gaming Act regulations prohibit a licensee or
affiliated company thereof, such as the Company, from paying dividends, interest
or other remuneration to any unsuitable person, or recognizing the exercise of
any voting rights by any unsuitable person. Further, the Company may repurchase
the shares of anyone found unsuitable at the lesser of the cash equivalent to
the original investment in the Company or the current market price. Further, the
regulations require anyone with a material involvement with a licensee,
including a director or officer of a holding company, such as the Company, to
file for a finding of suitability if required by the Colorado Gaming Commission.

In addition to its authority to deny an application for a license or
suitability, the Colorado Gaming Commission has jurisdiction to disapprove a
change incorporate position of a licensee and may have such authority with
respect to any entity which is required to be found suitable by the Colorado
Gaming Commission. The Colorado Gaming Commission has the power to require the
Company to suspend or dismiss managers, officers, directors and other key
employees or sever relationships with other persons who refuse to file
appropriate applications or whom the authorities find unsuitable to act in such
capacities, and may have such power with respect to any entity which is required
to be found suitable.

Once the Company obtains the required gaming licenses, a person or entity will
not be permitted to sell, lease, purchase, convey or acquire a controlling
interest in the Company without the prior approval of the Colorado Gaming
Commission, and the Company will be prohibited from selling any interest in the
Casino without the prior approval of the Colorado Gaming Commission.

The Casino may operate only between 8:00 am. to 2:00 am., and may permit only
individuals 21 years or older to gamble. Only slot machines, blackjack and
poker, with a maximum single bet of $5.00, are permitted. A Colorado casino may
not provide credit to its gaming patrons. The Casino must not exceed certain
gaming square footage limits as a total of each floor and the full building.

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GAMING TAXES

The Colorado Constitution permits a gaming tax of up to 20% on adjusted gross
gaming proceeds. The Colorado Gaming Commission has set a gaming tax rate of 2%
on adjusted gross gaming proceeds of up to and including $2 million, 4% from $2
million to $4 million, 14% from $4 million to $5 million, 18% from $5 million to
$10 million, and 20% above $10 million for the period ended June 30, 1998. The
Colorado Gaming Commission also has imposed an annual device fee of $75 per
gaming device. The Colorado Gaming Commission may revise the gaming tax rate and
device fee from time to time. Black Hawk has imposed an annual device fee of
$700 per gaming device and may revise the same from time to time.

OTHER REGULATIONS

The sale of alcoholic beverages is subject to licensing, control and regulation
by the Colorado Liquor Agencies. All persons who directly or indirectly own 10%
or more of the Company must file applications and possibly be investigated by
the Colorado Liquor Agencies. The Colorado Liquor Agencies also may investigate
those persons who, directly or indirectly, loan money to or have any financial
interest in liquor licensees. All licenses are revocable and not transferable.
The Colorado Liquor Agencies have the full power to limit, condition, suspend or
revoke any such license and any such disciplinary action could (and revocation
would) have a material adverse effect upon the operations of the Company. No
person with an interest in any holder of a hotel and restaurant liquor license
can have an interest in a liquor licensee which holds anything other than a
hotel and restaurant liquor license, and specifically cannot have an interest in
an entity which holds a gaming tavern license.

The Company's operations will be subject to a wide variety of other federal,
state and local laws and government regulations that could increase its costs of
construction and its operating expenses. Such regulations include architectural
and requirements, building codes, health and safety laws, environmental laws,
minimum wage and employment laws, and laws such as the Americans With
Disabilities Act that require public facilities such as the Company's Hotel and
Casino to be assessable and usable by people in wheel chairs.

Slot machines are the most popular gaming devices in Colorado, and the Company
expects that slot machines will be the greatest source of its gaming revenues.
Slot machines are less labor intensive and require less square footage than
table games, and also generate higher profit margins. Slot machines in Colorado
permit play in denominations of nickels, quarters, half dollars, dollars and
five dollars. Casinos are permitted to provide "progressive jackpots" that
increase with continued play at the designated slot machines. Slot machines come
in both the mechanical spinning reels variety and video slot machines.

Twenty-five varieties of poker are authorized for play in Colorado casinos.
Sixteen varieties of poker are "traditional" games in which the players play
against each other to win a "pot" built upon their own wagers. These games
include a variety of five-card draw, five-card and seven-card stud,

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and "hold 'em" games. In those games, the casino takes a fee or "rake" from
each pot. Nine other poker games the players play against the casino to win
payout. The casino does not take a "rake" from the pot in those games, but
rather retains players' losses.

Five varieties of blackjack or "21" are authorized for play in Colorado casinos.
Under Colorado rules, dealer must draw to hands of 16 or less and must stand on
hands of 17 or higher. Players are allowed to split pairs, double down (doubling
the wager after seeing the first two cards, but drawing not more than one
additional card) and purchase "insurance". An "insurance" wager may be made when
the dealer's face up card is an ace. The insurance wager is up to 50% of the
original wager and entitles the player to 2 to 1 payout if the dealer has a 10
or face card in the whole (a natural 21), but the insurance wager is lost if the
dealer's whole card has a value other than 10.

ITEM 2. DESCRIPTION OF PROPERTY

The Company's Property is located in the town of Black Hawk. The town of Black
Hawk is part of the Central City and Black Hawk National historic Landmark,
established in 1989 by the United States Department of Interior, National Park
Service. In conformance with this designation, the town of Black Hawk in October
1990 established the Architectural and Design Review Guidelines, authorizing the
town to regulate historical and architectural matters within the town. These
guidelines are used by Black Hawk's Historic Architectural Review Commission
("HARC") to evaluate and approve all applications for construction.

Furthermore, the amendment to the Colorado Constitution authorizing limited
stakes gaming provides that such gaming shall be conducted in structures which
conform, as determined by the respective municipal governing body, to the
architectural styles and designs common to the area prior to World War I and
which conform to the requirements of applicable respective municipal ordinances,
regardless of the age of the structure. Accordingly, the Company is designing
its building in conformance with the requirements of HARC, and the building
design will reflect the architectural style consistent with the guidelines.

The site is located on Colorado State Highway 119, approximately one-quarter
mile past the Gregory Street turn-off that leads to Central City through Black
Hawk. As such, the Company's casino facility will not be contiguous to the many
casinos which are located on Gregory Street and Main Street in Black Hawk. The
facility will be designed to allow for a maximum exposure to approaching
traffic, and will be in a direct site line from the turn from the Highway into
the town of Black Hawk. The Company believes that it is this ability, and ease
of access that should provide the Company a competitive benefit as compared to
the other casinos which are located in the central portion of town. Moreover,
many casinos in Black Hawk/Central City lack contiguous or convenient parking
and, as a result, have had difficulty in attracting and retaining customers. In
contrast, the Company's site will offer convenient valet and self parking to its
customers, as well as the only covered on-site bus turnaround to date for the
convenience of day trip customers.

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COMPETITION

Most of the 32 casinos in the Black Hawk/Central City market are small
facilities that provide limited or no parking and do not provide hotel
accommodations. Presently, the largest hotel in the Black Hawk/Central City
market is the 118 room Harvey's Wagon Wheel located in Central City, which has
on-site parking for 195 cars. In contrast, the Company's Hotel Casino will have
200+/- hotel rooms and suites and will have a parking garage that can
accommodate approximately 1,000 cars. Several of the larger casinos are planning
to expand their facilities to provide additional casino space, hotel rooms and
parking, and several new casinos are either planned, under construction, or
recently opened, including the Black Hawk/Jacobs Casino which will include 1,000
gaming devices and parking for 280 cars with provision for a 50 room hotel. Now
under construction, the Isle of Capri, will purportedly have more than 1,100
slot machines, 24 card tables (for blackjack and poker) and a parking garage for
1,000 cars. The Isle of Capri Casino will not initially provide any hotel
accommodations, although it purportedly will be designed to permit the
construction of a hotel on top of the casino. Riviera Holdings Corporation has
recently broke ground to construct a large casino with 1,000 slot machines and
parking for 500 cars.

The following table presents certain information about the six largest casinos
currently operating in the Black Hawk/Central City market, which control
approximately 61% of the slot machines, 65% of the blackjack tables and 100% of
the poker games in the Black Hawk/Central City market.

<TABLE>
Size Date Number of Gaming Devices*
Casino Sq. Ft.* Opened Slots Blackjack Poker
<S> <C> <C> <C> <C> <C>
Harvey's Wagon Wheel 40,000 12/94 850 18 9
Colorado Central Station 44,300 12/93 720 10 9
Bullwhackers 33,200 7/92 649 8 6
Canyon Casino 62,600 12/93 607 8 --
Gilpin Hotel/Black Hawk Gaming 35,300 1/95 520 8 8
Fitzgeralds Casino 26,700 2/95 492 6 5
</TABLE>
*Estimated

The Company plans to attain a competitive advantage over the established casinos
by offering superior lodging, an entertainment lounge, indoor self-parking, and
dining facilities, as well as a casino that is larger than the rest. In
comparison to the casinos that are presently operating in the Black Hawk/Central
City market, and those that are planned, the Company's Hotel Casino will offer a
75,000 square foot casino featuring 1,000 mechanical and video slot machine, 20
blackjack tables, and 12 poker tables, all located on a single level.

Guests will be able to access the Company's Hotel Casino directly from State
Highway 119, without having to drive through Main Street or Gregory Street,
which are the two main streets that comprise the town of Black Hawk. The
location of the Hotel Casino at the north end of the town will enable guests to
avoid traffic congestion on the two main streets of the town. There is presently
a shortage of parking space in Black Hawk and

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<PAGE>

Central City, especially parking spaces located close to the casinos. The
Company's Hotel Casino will have an underground parking garage that will be
sheltered from inclement weather and will permit customers to quickly park and
retrieve their cars. Valet parking will also be provided. In addition, the
Company plans to build a covered bus stop and turn-around that will facilitate
access to the Hotel Casino by customers on one-day, over-night or weekend
excursions. The Company may also sponsor charter bus services from the Denver
metropolitan area as a promotional consideration.

THE BLACK HAWK GAMING MARKET

Black Hawk, Colorado is a picturesque mountain town approximately 40 miles west
of Denver and approximately one mile from Central City. The Black Hawk/Central
City casino industry draws its customers primarily from the Denver metropolitan
area. The Company's Hotel Casino will target middle to upper income customers
who seek a quality gaming experience, convenient parking and overnight
accommodations. Statistics released by the Denver Regional Council of
Governments ("DRCOG") in September 1992 indicate that the eight county Denver
metropolitan area had a population of nearly 2,000,000 people at January 1,
1992. The DRCOG estimates that the population of the region will grow by more
than 300,000 during the ten year period ending in the year 2000 and will exceed
2,700,000 by the year 2020.

According to information provided by the Colorado Department of Revenue Division
of Gaming, based upon unaudited information reported by the owners of gaming
establishments, during the 12 months ended June 30, 1996, the Black Hawk/Central
City casinos generated more than $300,000,000 of gaming revenues. Gaming
revenues in the Black Hawk/Central City market were derived from slot machines,
black jack and poker in the following amounts: slot machines -- $278,901,209;
blackjack -- $13,089,446; and poker -- $8,866,760. Food and beverage sales
(including complimentary sales) for the 12 months exceeded $25,000,000.

Gaming revenues in the Black Hawk/Central City market have grown steadily since
gaming began in 1991. The following table shows the growth in Black Hawk/Central
City gaming revenues for the last six full 12 month periods ended September 30,
1997, as reported by the Colorado Department of Revenue Division of Gaming. The
Company believes that growth in gaming revenues will continue to increase in the
Black Hawk area sufficient in number to support the Company's Hotel Casino, as
well as new casinos and hotels planned by other operators. Management also
believes that the Company's planned theme, parking, hotel accommodations,
entertainment and other amenities will draw additional customers.

Twelve Months Ended September 30,
(In Millions)
1992 1993 1994 1995 1996 1997
$110 $177.9 $229.5 $280.6 $288.8 $319.6

-13-
<PAGE>

ITEM 3. LEGAL PROCEEDINGS

The Company was the plaintiff and a counterclaim defendant in a lawsuit pending
in Denver, Colorado District Court, Case No. 95CV2310. This lawsuit was
commenced by the Company on May 26, 1995. The lawsuit between the Company and
New Allied and TKCC was stayed upon the filing of the Company's bankruptcy
petition in October 1995. That stay was lifted when the bankruptcy case was
dismissed in March 1997, and the Company moved forward with these proceedings.
The Company filed for Summary Judgment in this matter and hearings were held
September and October 1998. Such Summary Judgement was granted in favor of the
Company in October 1998. In addition, the Company filed an appeal of the
Bankruptcy Court's ruling. New Allied cross appealed. Such appeals were denied
by the United States District Court in August 1998 and the appeals matters are
continuing as the Company has appealed this matter to a higher court unopposed.

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

No matters were submitted during the fiscal year covered by this Report to a
vote of security holders.

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<PAGE>

PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The Company's Common Stock is traded in the over-the-counter market and is
quoted and is listed on the Electronic Bulletin Board under the symbol, "CWRC".
The market for the Company's Common Stock must be characterized as a limited
market due to the relatively low trading volume. Set forth in the following
table are high and low bid quotations for the Company's common stock for the
fiscal years ended June 30, 1997 and 1998. The quotations represent inter-dealer
quotations without retail markups, markdowns or commissions and may not
represent actual transactions.

Quarter Ended High Low
September 30, 1996 .41 .12
December 31, 1996 .38 .19
March 31, 1997 .38 .15
June 30, 1997 .40 .20
September 30, 1997 .15 .13
December 31, 1997 .34 .25
March 31, 1998 .24 .11
June 30, 1998 .19 .10

At June 30, 1998, there were approximately 1,090 record holders of the Company's
Common Stock.

The Company has not paid or declared cash distributions or dividends on its
common stock and does not intend to pay cash dividends in the foreseeable
future. Future cash dividends will be determined by the Company's Board of
Directors based on the Company's earnings (if any), financial condition, capital
requirements and other relevant factors. The Company may not pay dividends on
its common stock without the consent of the holders of at least a majority of
the outstanding Series A preferred stock. In addition, the holders of the Series
A preferred stock shall be entitled to receive dividends, when and if declared
by the Board of Directors of the Company, on an equal share-per-share basis with
all outstanding shares of the Company's common stock.

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<PAGE>

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
CERTAIN STATEMENTS INCLUDED HEREIN OR INCORPORATED BY REFERENCE CONSTITUTE
"FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995 (THE "REFORM ACT"). THE COMPANY DESIRES TO TAKE
ADVANTAGE OF CERTAIN "SAFE HARBOR" PROVISIONS OF THE REFORM ACT AND IS INCLUDING
THIS SPECIAL NOTE TO ENABLE THE COMPANY TO DO SO. FORWARD-LOOKING STATEMENTS
INCLUDED OR INCORPORATED BY REFERENCE IN THIS PART INVOLVE KNOWN AND UNKNOWN
RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH WOULD CAUSE THE COMPANY'S ACTUAL
RESULTS, PERFORMANCE (FINANCIAL OR OPERATING) OR ACHIEVEMENTS TO DIFFER
MATERIALLY FROM THE FUTURE RESULTS, PERFORMANCE (FINANCIAL OR OPERATING) OR
ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD LOOKING STATEMENTS.

Since the Company's purchase of the Black Hawk Property in August 1993, the
Company's activities have focused on obtaining the necessary financing and
making preparations for construction of the casino on the Property. In July
1997, the Company signed a financing agreement with U2 Consulting, LLC., an
affiliate of Pacific Genesis, Inc. and Western Equities, Inc., to raise $79.5
million through the issuance of corporate bonds. The parties had 180 days to
provide for the financing, were unable to complete same and said agreement with
U2 Consulting was terminated in December 1997.

Each of the three agreements, which are strictly confidential until completed,
obligates the respective parties to provide at least $80 million for the
development and construction of the project. Each agreement provides for
distinctly different means of raising the required funds, as well as distinctly
different means of repayment and different levels of equity participation.
Once financed, the Company's ability to operate the casino will be dependent
upon substantial other conditions, including the obtaining of licenses and
compliance with governmental regulations, grading and construction of the
casino, obtaining the necessary permits and approvals from the City of Black
Hawk and other regulatory bodies, procuring gaming equipment on satisfactory
terms, and accomplishing these objectives in a timely manner.

In order to begin the process of timely completing its goals, in July 1997 the
Company contracted with Colorado Gaming Development Company, Inc., Semple Brown
Roberts, P.C. and PCL Construction Services, Inc., all of Denver, Colorado to
design and construct the planned casino and hotel complex. In addition, the
Company signed a management agreement with Signature Hospitality Resources, Inc.
of Denver, Colorado to

-16-
<PAGE>

manage its Radisson Black Hawk Hotel, a separate agreement to use the national
flag of Radisson on the hotel and a contract with Luciani & Associates, LLC of
Atlantic City, New Jersey, to manage the casino operations. All parties assisted
the architect in design of their respective operations. The Agreement with
Luciani & Associates, LLC has expired and they advised the Company of such in
writing in February 1998. Once financing has been secured, the Company will
attempt to negotiate a new agreement, either with Luciani & Associates or others
yet be determined.

The Company is engaged in the design, development and construction of the
Radisson Hotel and Country World Casino (the "Hotel Casino") in Black Hawk,
Colorado. The revised plan for the Hotel Casino will be an eight level complex,
featuring three stories of hotel rooms above a two-story, 75,000 square foot
casino, and a three story parking garage. Other amenities will include one or
more full service restaurants, a buffet, entertainment lounge and retail shops.
When completed as planned, the Hotel Casino will be largest hotel and casino
complex in Colorado. Construction and opening of the Hotel Casino is dependent
upon the Company's ability to successfully raise the required capital discussed
above.

The Hotel will provide overnight accommodations with 200 +/- rooms and suites,
making it one of the first destination resort of its kind in Black Hawk.
Complimenting both the casino and hotel will be a three story underground
parking facility for approximately 1,000 cars featuring both valet and self
parking options, and the only covered on-site bus turnaround currently available
in Black Hawk for the convenience of day trip customers.

-17-
<PAGE>
LIQUIDITY & CAPITAL RESOURCES

The Company's ability to obtain the financing and to proceed with its plans for
a gaming facility had been affected by the Company's disputes with New Allied,
which had culminated in litigation and foreclosure proceedings on the Property
in 1995, and the Company's filing of a bankruptcy petition under Chapter 11. The
Bankruptcy Case was dismissed in March 1997 and Summary Judgement was granted in
favor of the Company with regard to all other litigation issues.

In March 1996, the Company borrowed $5 million from Kennedy Funding, Inc. The
Company issued a Promissory Note effective May 20, 1996 payable at the rate of
15% per annum until May 19, 1997 (the "First Year Interest Obligation") and at a
rate of 24% per annum thereafter. Payments of principal and interest are payable
as follows: (a) the First Year Interest Obligation was prepaid at closing; (b)
commencing on May 19, 1997 and for each month thereafter, the Company is to make
interest only payments, in advance, in the amount of 2% of the then existing
principal balance due under the Note; and (c) the entire outstanding principal
balance, together with all accrued and unpaid interest, if not previously paid,
shall be finally due and payable on May 19, 1999. The holder of the Note may
accelerate the due date for the entire balance of principal, interest and other
sums due upon maturity in the event of default under the Note. The default rate
of interest is 24% during the first loan year and 36% thereafter. The Note is
secured by a first deed of trust on the Property.

In May 1997, the Company issued a promissory note and second deed of trust on
the property to Norlar, Inc. for a maximum of $600,000 (First Norlar Note), or
so much thereof as may have been advanced by maker, for payments due on the
Kennedy loan and for general corporate purposes. As of June 1998, the Company
owed $600,000 on the First Norlar Note. In October 1997, the Company issued a
second promissory note (Second Norlar Note) and a fourth deed of trust on the
property to Norlar, Inc., again for a maximum of $600,000. As of June 1998, the
Company owed $600,000 on the Second Norlar Note. In April 1998, the Company
issued a third promissory note (Third Norlar Note) and fifth deed of trust on
the property to Norlar, Inc. again for a maximum of $600,000. As of August 1998,
the Company owed $600,000 on the Third Norlar Note. In August 1998, the Company
issued a fourth promissory note (Fourth Norlar Note) and sixth deed of trust on
the property to Norlar, Inc. again for $600,000. As of September 1998, the
Company owed $177,773 on the Fourth Norlar note. In addition, for each $100,000
Norlar, Inc. has loaned to the Company, it has authorized the issuance of
500,000 warrants to purchase shares of common stock at $0.20 per share. Norlar,
Inc. is a closely-held corporation beneficially owned by Larry Berman and his
wife. Mr. Berman is Chairman and Chief Executive Officer of the Company. The
loans bear interest at 12% per annum and is to be repaid upon the earlier of the
sale of the property, refinance of the property or the financing of the project.

In September and October of 1997, PCL Construction Services, Inc. advanced the
Company $998,000 to begin the development and design process in advance of
funding. As of June 1998, the Company owes PCL Construction approximately
$1,075,000, including interest.

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<PAGE>
In July 1997, the Company issued 1,000,000 shares of its common stock to Eastern
Equities Consultants, Ltd. As full and final compensation for the placement of
financing.

In September 1997, the Company issued 395,000 shares of common stock to Sommer &
Schneider LLP, its securities attorneys, for payment of legal fees and a six
month retainer.

In March 1998, the Company issued 850,000 shares for the same purpose as
described above.

In May 1998, the Company issued 100,000 shares of Series B preferred stock to
Gold Coast Consortium to retire an outstanding debt owed by the Company. Gold
Coast Consortium is a company owned by the spouse of Mr. Roger Leclerc, the
Company's President.

In July 1998, the Company settled an ongoing dispute with New Allied Development
Corporation with regard to a piece of property outside the gaming district in
Black Hawk, Colorado. Title to such property was returned to New Allied,
therefore reducing the Company's debt by $750,000, plus applicable taxes due.

RESULTS OF OPERATIONS

The Company has had no revenues from operations. The Company continues to incur
losses of approximately $100,000 per month to service the debt to Kennedy
Funding, Inc. and other ongoing obligations such as rent and utilities for the
Company's corporate office. This estimated loss of $1,200,000 in the fiscal year
ended June 30, 1998 compares to a loss of operations of $1,080,391 for the year
ended June 30, 1997. The ability of the Company to achieve revenues in the
future will be dependent upon realization of its plans to develop a gaming and
hotel complex on the property.

ITEM 7. FINANCIAL STATEMENTS

See attached pages F1 - F22 for audited financials which fairly represent the
Company's status for the year ended June 30, 1998.

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

On November 13, 2000, the Company filed a Form 8-K with The Securities and
Exchange Commission with regard to a change in auditing firms to be used by the
Company. The new firm is Stefanou & Company, LLP of McLean, Virginia.

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<PAGE>

PART 111

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

The following persons serve as officers and directors or the Company:
Name Position
Larry S. Berman Chairman of the Board and Chief Executive Officer
Roger D. Leclerc President and Director
William H. Patrowicz Secretary, Treasurer and Director

The following is brief biographical information concerning the Company's
officers, directors and significant employees:

Larry S. Berman, age 62, has served as Chief Executive Officer of the Company
since June 1995. Mr. Berman served as Chairman of the Board of Directors and
Secretary of Holly Holdings, Inc. from June 1992 until December 1997. Since
1982, Mr. Berman has been Vice President of Coastal Leasing and Investment, Inc.
where he is responsible for restructuring and otherwise assisting companies to
raise debt and equity funds.

Roger D. Leclerc, age 48, has served as President of the Company since December
1994. Prior thereto Mr. Leclerc served as the Company's project manager for its
proposed facility since May 1994. Prior to his involvement with the Country
World Casino project, Mr. Leclerc was the General Manager for the Bull Durham
Casino in Black Hawk. Immediately prior thereto, he served as a General Manager
of the Miner's Pick Casino in Central City. From March 1990 to June 1992, he was
the General Manager of A&L Enterprises Inc. in Deadwood, South Dakota, which
operated Ms. Kitty's Wilderness Edge Casino and Days Inn Hotel and Casino.

William H. Patrowicz, age 50, has served as Secretary, Treasurer or the Company
since April 1995 and was formerly President of Holly Holdings, Inc. from June
1992 to March 1998. From 1982 to December 1991, Mr. Patrowicz was employed by
Gunnebo Fastening Corp., as Senior Vice President of Operations.

Section 16(a) of the Exchange Act requires the Company's officers and directors
and persons who own more than 10% of a registered class of the Company's equity
securities, to file reports of ownership and changes in ownership to the
Securities and Exchange Commission. Officers, directors and greater than 10%
stockholders are required by the regulations of the Commission to furnish the
Company with copies of all Section 16(a) reports received by it, the Company
believes that all filing requirements applicable to its current officers and
directors were complied with for the fiscal year ended June 30, 1998. The
Company is unaware of the compliance of its 10% shareholders and its former
officers and directors.

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<PAGE>

ITEM 10. EXECUTIVE COMPENSATION

The following table sets forth all cash compensation paid by the Company to each
Executive Officer whose total annual salary and bonus exceeded $100,000,
including all cash compensation paid the Company's Chief Executive Officer.

Name and Principal Fiscal Salary Other Annual
Position Year $ Bonus Compensation
None

The Company has no stock option, defined benefit or restricted stock award
plans.

The Company estimates that Mr. Berman and Mr. Patrowicz spend substantially all
of their time in management activities relating to the Company. Neither party,
although holding employment contracts, has received any payment for current or
previously rendered services to date. Consideration for remuneration will be
addressed after completion of the Company's financing activities.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth the persons known to the Company to own
beneficially more than 5% of the outstanding share of common stock on June 30,
1998 and information as of June 30, 1998 with respect to the ownership of common
stock by each director of the Company and by all officers and directors as a
group.

Name of Shares Beneficially
Beneficial Owner Owned Percent

Western Equities, Inc. 16,000,000 29.4%
Holly Holdings, Inc. 8,850,453 16.3%
Larry S. Berman 19,380,000 35.7%
Roger D. Leclerc 0 0%
William H. Patrowicz 4,120,000 7.6%
All Officers and Directors 23,500,000 43.3%
as a Group (3 Persons)
___________

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The sole holder of the Company's Series A Convertible Preferred stock, New
Allied, acquired its shareholdings in connection with a sale to the

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<PAGE>

Company in August 1993, of the Property upon which the Company proposes to
construct its casino and hotel complex. New Allied also received cash and a
promissory note (secured by a deed of trust on the Property) in connection with
this transaction. In June 1994, the Company completed the acquisition of an
additional 375,000 square feet of vacant land located in close proximity to the
land which is the site for the proposed casino and hotel complex. The Company
paid $200,000 to New Allied, delivered a promissory note in the amount of
$725,000 and issued 250,000 shares of its common stock. In April 1997, the
Company elected and New Allied has accepted a return of the property for the
balance due on the note as it is of no value to the Company within its current
plans. In July 1998, such transaction was completed.

During the fiscal year ended June 30, 1995, the Company borrowed $1,000,000 from
Holly, which indebtedness plus accrued interest was then canceled by the
issuance to Holy of 5,000,000 shares of the Company's common stock. The Company
also agreed with Holly that Holly would have the right to purchase up to an
additional 20,000,000 shares of common stock at $0.20 per share if additional
funding were provided within a reasonable time and progress continued to be made
concerning financing for the proposed casino and hotel complex. In April 1997
Holly exercised its right under said agreement and converted $250,000 of its
debt into 1,250,000 shares of the Company's common stock.

Holly had continually provided advances to the Company throughout the bankruptcy
proceedings. Prior to the conversion of debt to equity by Holly and assumption
of certain parties' debt by the Company, the Company was indebted to Holly in
the amount of approximately $1,449,588. In May 1997, the Company eliminated
$1,000,000 of its debt to its shareholder, Holly Holdings, Inc. in an exchange
of debt with two directors of the Company and a non-affiliate of the Company. As
of June 1998, the Company is no longer indebted to Holly.

In April 1997, the Company filed with the State of Nevada, under Section
78.1055, a Designation of Rights Privileges and Preferences for 5,000,000 shares
of Class B preferred stock. In May 1997, the Company issued 4,000,000 shares to
two directors and a non-affiliate of the Company in exchange for $1,000,000 in
debt to the parties. The terms of the class B preferred stock rank it junior to
all classes of the Company's stock now issued and on parity with any class of
capital stock hereafter created. The Class B preferred stock shall be voted with
the common stock as a single class and shall not be entitled to vote as a
separate class nor shall the Class B preferred be entitle to receive dividends
of any kind. Each share of Class B preferred stock can be converted into common
stock of the corporation one year after the date of issuance at the rate for 10
for 1 and the holders are entitled to vote the underlying shares as if
converted. In May 1998, all such shares were converted to common stock.

In March 1996, the Company borrowed $5 million from Kennedy Funding, Inc. The
Company delivered to the lender a Promissory Note effective May 20, 1996 payable
at the rate of 15% per annum until May 19, 1997 (the "First Year Interest
Obligation") and at a rate of 24% per annum thereafter. Payments of principal
and interest are payable as follows: (a) the First Year Interest Obligation was
prepaid at closing; (b) commencing on May 19, 1997 and for each month
thereafter, the Company is to make interest only payments, in advance, in the
amount of 2% of the then existing

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<PAGE>

principal balance due under the Note; and (c) the entire outstanding principal
balance, together with all accrued and unpaid interest, if not previously paid,
shall be finally due and payable on May 19, 1999. The holder of the Note may
accelerate the due date for the entire balance of principal, interest and other
sums due upon maturity in the event of default under the Note. The default rate
of interest is 24% during the first loan year and 36% thereafter. The Note is
secured by a first deed of trust on the Property.

In July 1997, the Company issued 1,000,000 shares of its common stock to Eastern
Equities Consultants, Ltd. as full and final compensation for the placement of
financing.

In September 1997, the Company issued 395,500 shares of its Common Stock to
Sommer & Schneider LLP, its securities attorneys, for payment of legal fees and
a six month retainer.

In March 1998, the Company issued 850,000 shares of its Common Stock to Sommer &
Schneider LLP, its securities attorneys, for payment of legal fees and a six
month retainer.

-23-
<PAGE>

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

None for the required filing period.

-24-
<PAGE>

SIGNATURES

In accordance with the requirements of Sections 13 or 15(d) of the
Securities Exchange Act of 1934, as amended, the Registrant has
caused this Report to be signed on its behalf by the undersigned,
there unto duly authorized.
COUNTRY WORLD CASINOS, INC.
Dated: January 10, 2001 By: /s/ Roger D. Leclerc
Roger D. Leclerc, President

In accordance with the Securities Exchange Act of 1934, as amended, this
Report has been signed below by the following persons on behalf of the
Registrant and int he capacities and on the dates indicated.

Dated: January 10, 2001 /s/ Roger D. Leclerc
Roger D. Leclerc, President and Director

Dated: January 10, 2001 /s/ William H. Patrowicz
William H. Patrowicz, Secretary,
Treasurer and Director

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<PAGE>

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FINANCIAL STATEMENTS AND SCHEDULES

JUNE 30, 1998 AND 1997

FORMING A PART OF ANNUAL REPORT
PURSUANT TO THE SECURITIES EXCHANGE ACT OF 1934

COUNTRY WORLD CASINOS, INC

<PAGE>
COUNTRY WORLD CASINOS, INC.

Index to Financial Statements

Page No
Report of Independent Certified Public Accountants F-3
Balance Sheet at June 30, 1998 and 1997 F-4 to F5
Statements of Losses for the two years ended June 30, 1998
and 1997, and for the period November 9, 1982 (date of F-6
inception) to June 30, 1998
Statements of Stockholders' Equity for the period November
9, 1982 (date of inception) to June 30, 1998 F-7 to F-8
Statements of Cash Flows for the two years ended June 30,
1998 and 1997, and for the period November 9, 1982 (date F-9
of inception) to June 30, 1998
Notes to Financial Statements F-10 to F-22

<PAGE>
STEFANOU & COMPANY, LLP
Certified Public Accountants

1360 Beverly Road
Suite 305
McLean, VA 22101-3621
703-448-9200
703-448-3515 (fax)
Philadelphia, PA

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors
Country World Casinos, Inc
Bala Cynwyd, PA

We have audited the accompanying balance sheet of Country World
Casinos, Inc. (a development stage Company) as of June 30, 1998 and the
related statement of losses, stockholders' equity, and cash flows for the
year then ended. These financial statements are the responsibility of the
company's management. Our responsibility is to express an opinion on these
financial statements based upon our audit. The financial statements of
Country World Casinos, Inc. as of June 30, 1997 were audited by another
auditor whose report October 10, 1997 on those statements included an
explanatory paragraph describing conditions that raised substantial doubt
about the Company's ability to continue as a going concern.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatements. 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 our audit
provides a reasonable basis for our opinion.

In our opinion, the June 30, 1998 financial statements referred to
above present fairly, in all material respects, the financial position of
Country World Casinos, Inc. (a development stage Company) as of June 30,
1998 and the results of its operations and its cash flows for the year
then ended in conformity with generally accepted accounting principles. We
express no opinion on the cumulative period from inception through June 30,
1998.

/s/ STEFANOU & COMPANY, LLP
Stefanou & Company., LLP

McLean, Virginia
December 15, 2000
F-3

<PAGE>

COUNTRY WORLD CASINOS, INC.
(A developmental stage company)
BALANCE SHEET
June 30, 1998 and 1997

1998 1997

ASSETS
CURRENT ASSETS:
Cash $ 180 $ 4,961
Prepaid Expenses 61,290 73,140
Total Current Assets 61,470 78,101

Property and Equipment, 17,448,883 12,891,412
net (Note B)

OTHER ASSETS:
Deposits 35,630 630

$17,545,983 $12,970,143

See accompanying notes to financial statements
F-4

<PAGE>

COUNTRY WORLD CASINOS, INC.
(A developmental stage company)
BALANCE SHEET
June 30, 1998 and 1997

1998 1997

LIABILITIES
CURRENT LIABILITIES
Accounts payable and accrued $3,244,869 $ 343,275
liabilities
Due to officers and Parent 417,000 196,878
(Note H)
Other liabilities 14,304 4,198
Notes payable (Note C) 5,998,000 5,000,000

Notes payable to related parties 2,199,200 880,000
(Note D)
Total current liabilities 11,873,373 6,424,351

COMMITMENTS & CONTINGENCIES
(Note G)

STOCKHOLDER'S EQUITY (NOTE F): 2,250 2,250
Series A Preferred Stock , par
value $.001 per share,
25,000,000 shares authorized,
2,250,000 shares outstanding at
June 30, 1998 and 1997

Class B Preferred Stock, par 25,000 1,000,000
value $.25 per share, 5,000,000
shares authorized, 100,000
shares outstanding at June 30,
1998 and 4,000,000 at June 30,
1997

Common Stock, par value $.001 54,332 12,086
per share, 75,000,000 shares
authorized, 54,331,687 shares
outstanding at June 30, 1998 and
12,086,187 at June 30, 1997

Additional paid In capital 11,176,312 9,871,301
Deficiency accumulated during (5,585,284) (4,339,845)
development stage

Total stockholder's equity 5,672,610 6,545,792

$17,545,983 $12,970,143

See accompanying notes to financial statements

F-5

<PAGE>

COUNTRY WORLD CASINOS, INC.
(A developmental stage company)
STATEMENTS OF LOSSES

For the
Year Ended Year Ended period from
June 30, June 30, November 9,
1998 1997 1982 (Date
of
Inception)
through
June 30,
1998
Costs and expenses:
Research & Development $ - $ - $ 122,000
General and Administrative 1,120,428 1,030,257 5,257,139
Depreciation 7,905 6,867 50,419
Interest Expense 131,784 71,445 203,229
Total costs and expenses 1,260,117 1,108,569 5,632,787

Operating loss (1,260,117) (1,108,569) (5,632,787)

Other Expense and Income
Interest Income 14,678 27,443 109,490
Other Income - 735 735
Rental Income - - 45,126
Loss on Non-Marketable Securities - - (85,000)
Write Off of Loan Receivable - - (90,000)
Forfeited Deposit - - (100,000)
Net other income (expenses) 14,678 28,178 (119,649)

Loss from continuing operations before (1,245,439) (1,080,391) (5,752,436)
extraordinary item and income taxes
Provision for income taxes (benefit) - - -
Loss from continuing operations, before (1,245,439) (1,080,391) (5,752,436)
extraordinary item

Extraordinary Item:
Extraordinary gain on forgiveness - - 167,152
of debt, primarily related party,
net of related income taxes

Net loss $(1,245,439) $(1,080,391) $(5,585,284)

Loss per common share (basic and $ (0.05) $ (0.10) $ (1.32)
assuming dilution)

Weighted average common shares 23,668,479 10,985,493 4,201,701
outstanding (see Note I)

See accompanying notes to financial statements

F-6
<PAGE>
<TABLE>
COUNTRY WORLD CASINOS, INC.
(A developmental stage company)
STATEMENTS STOCKHOLDERS' EQUITY

Preferred Stock Common Stock Additional Deficit Total
Series A Class B Subscribed Paid In During Stockholder's
Shares Amount Shares Amount Shares Amount Shares Amount Capital Development Equity
Stage
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>

November 9, 1982 - - - - - - - - - - -
(Date of Inception)

Issuance of shares - - - - 2,971 15 - - 1,510 - 1,525
for Cash

Issuance of Common - - - - 1,474 8 - - 644,992 - 645,001
Stock pursuant to
private placement, net

Deferred offering costs - - - - - - - - (115,690) - (115,690)

Cancellation of common - - - - (800) (4) - - 4 - -
stock

Issuance of shares in - - - - 85,714 429 - - 14,571 - 15,000
exchange for services

Issuance of shares for - - - - 1,339,212 6,696 - - 13,304 - 20,000
cash

Capital contribution - - - - - - - - 2,850 - 2,850

Net loss of the period - - - - - - - - - (221,169) (221,169)
ended June 30, 1992

Balance at June 30, 1992 - - - - 1,428,571 7,144 - - 561,541 (221,169) 347,517

Issuance of shares in - - - - 714,287 3,571 - - 8,929 - 12,500
exchange for services

Net loss of the year - - - - - - - - - (373,401) (373,401)
ended June 30, 1993

Balance at June 30, 1993 - - - - 2,142,858 10,715 - - 570,470 (594,570) (13,384)

Adjustment for change - - - - - (8,572) - - 8,572 - -
in par value from
$.005 to $.001

Issuance of stock for - - - - 1,500,000 1,500 - - 1,498,500 - 1,500,000
cash

Issuance of 2,250,000 2,250 - - - - - - 2,247,750 - 2,250,000
Convertible
Preferred Stock
in exchange for
Land

Issuance of Common - - - - 600,000 600 - - 599,400 - 600,000
Stock for cash

Issuance of Common - - - - 250,000 250 - - 249,750 - 250,000
Stock for Cash and
Services Pursuant
to Exercise of
Options

Acquisition and - - - - (125,000) (125) - - (124,875) - (125,000)
cancellation of
Treasury Stock

Issuance of Stock - - - - 140,000 140 - - 349,860 - 350,000
for Cash

Issuance of Stock - - - - 60,662 60 - - 149,941 - 150,000
for Cash

Issuance of Common - - - - 250,000 250 - - 249,750 - 250,000
Stock in exchange
for Land

Issuance of Common - - - - 95,000 95 - - 237,405 - 237,500
Stock for Cash and
Services Pursuant to
Exercise of Options

Issuance of Common - - - - 200,000 200 - - 499,800 - 500,000
Stock in exchange
for services

Issuance of Common - - - - - - 262,667 263 787,737 - 788,000
Stock Pursuant to
Private Placement

Net Loss of the - - - - - - - - - (1,490,785) (1,490,785)
Period Ending
June 30, 1994

Balance at 2,250,000 2,250 - - 5,113,520 5,113 262,667 263 7,324,060 (2,085,355) 5,246,331
June 30, 1994

Issuance of common - - - - 460,000 460 - - 1,229,040 - 1,229,500
stock pursuant to
Private Placement
offering

Issuance of common - - - - 262,667 263 (262,667) (263) - - 0
stock subscribed

Issuance of Stock to - - - - 5,000,000 5,000 - - 1,009,451 - 1,014,451
Parent in exchange
for debt

Net Loss for year - - - - - - - - - (757,659) (757,659)
ended June 30, 1995

Balance at 2,250,000 2,250 - - 10,836,187 10,836 - - 9,562,550 (2,843,014) 6,732,623
June 30, 1995

Net loss for year - - - - - - - - - (416,440) (416,440)
ended June 30, 1996

Balance at 2,250,000 2,250 - - 10,836,187 10,836 - - 9,562,551 (3,259,454) 6,316,183
June 30, 1996

See accompanying notes to financial statements
F-7

</TABLE>
<PAGE>
<TABLE>

COUNTRY WORLD CASINOS, INC.
(A developmental stage company)
STATEMENTS OF STOCKHOLDERS' EQUITY
(continued)

Issuance of Preferred - $ - 4,000,000 $1,000,000 - $ - - $ - $ - $ - $1,000,000
Stock - Class B in
exchange for debt
to Parent

Common Stock Issued - - - - 1,250,000 1,250 - - 248,750 - 250,000
in Exchange for
Parent Debt

Warrant to purchase - - - - - - - - 60,000 - 60,000
common stock issued
in exchange for services

Net loss for the year - - - - - - - - - (1,080,391) (1,080,391)
ended June 30, 1997

Balance at 2,250,000 2,250 4,000,000 1,000,000 12,086,187 12,086 - - 9,871,301 (4,339,845) 6,545,792
June 30, 1997

Issuance of Common - - - - 1,000,000 1,000 - - 199,000 - 200,000
Stock in exchange
for services

Issuance of Common - - - - 395,500 396 - - 73,761 - 74,157
Stock in exchange
for debt and services

Issuance of Common - - - - 850,000 850 - - 72,250 - 73,100
Stock for in exchange
for debt and services

Issuance of Stock - - 100,000 25,000 - - - - - - 25,000
in exchange for services

Conversion of Preferred - -(4,000,000)(1,000,000) 40,000,000 40,000 - - 960,000 - -
Stock to Common Stock

Net Loss of Period - - - - - - - - - (1,245,439) (1,245,439)
Ended June 30, 1998

Balance at 2,250,000 $2,250 100,000 $25,000 54,331,687 $54,332 - $ - $11,176,312 $(5,585,284) $5,672,610
June 30, 1998

See accompanying notes to financial statements
F-8
</TABLE>
<PAGE>
<TABLE>
COUNTRY WORLD CASINOS, INC.
(A developmental stage company)
STATEMENTS OF CASH FLOWS

Year Year For the period from
Ended Ended November 9, 1982
June 30, June 30, (Date of Inception)
1998 1997 through June 30, 1998
<S> <C> <C> <C>
Cash flows from operating
activities:
Net income from operating $(1,245,439) $(1,080,391) $(5,752,436)
activities
Adjustments to reconcile
net income to net cash:
Depreciation 2,353 21,867 59,867
Common stock issued in - - 14,451
exchange for interest
Common stock issued in 347,257 - 1,184,757
exchange for services
Preferred stock issued 25,000 - 25,000
in exchange for services
Loss on nonmarketable - - (85,000)
Securities
Write off of loan - - (90,000)
receivable
Extraordinary Item, - - 167,152
primarily related party
Allocation of management - 408,000 408,000
fees - related party
Change in:
Prepaid expenses 11,850 (73,140) (748,790)
and other assets
Accounts payable 2,911,700 (637,075) 3,302,512
and accrued expenses

Discontinued Operations:
Net loss - - (389,286)

Adjustments to reconcile
loss to net cash
Used in operating
activities
Gain on disposal - - 389,286
of assets
Net cash (used in) provided 2,052,721 (1,360,739) (1,514,487)
by operating activities

Cash flows (used in) provided
by investing activities:
Acquisition of property, (4,559,824) (126,860) (9,832,101)
improvements and equipment
Investment in patent - - (62,000)
Deposits and other (35,000) (190) (35,630)
Decrease in restricted cash - 49,994 -
Net cash used in investing (4,594,824) (77,056) (9,929,731)
activities

Cash flows (used in) provided by
financing activities:
Repayment of capital lease - (1,515) (4,233)
obligation
Proceeds from notes 2,537,322 (329,238) 6,224,946
payable, net
Proceeds from stock and - - 5,220,835
warrant Issuance
Capital contribution - - 2,850
Net cash (used in) provided 2,537,322 (330,753) 11,444,398
by financing activities
Net increase (decrease) in cash (4,781) (1,768,548) 180
and cash equivalents
Cash and cash equivalents at 4,961 1,773,509 -
beginning of period
Cash and cash equivalents at end $ 180 $ 4,961 $ 180
of period
Supplemental Disclosure of Cash Flow:
Cash paid during the period for $ - $ 3,931 $ 5,761
interest
Cash paid during the period for - - -
income taxes
Common stock issued for property - - 250,000
Preferred stock issued for - - 2,250,000
property
Common stock issued for services 347,257 - 1,184,757
Preferred stock issued for 25,000 - 25,000
services
Non cash acquisition of 3,871,790 - 3,871,790
property, improvements and
equipment
Non cash proceeds from notes 378,432 $ - 378,432
payable

See accompanying notes to financial statements
F-9
</TABLE>
<PAGE>

COUNTRY WORLD CASINOS, INC.
(A developmental stage company)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998 and 1997

NOTE A-SUMMARY OF ACCOUNTING POLICIES

A summary of the significant accounting policies applied in
the preparation of the accompanying financial statements
follows.

Business and Basis of Presentation

Country World Casinos, Inc., (the "Company" or "Country
World") is incorporated under the laws of the state of
Nevada. The Company is engaged in the development of a full
service hotel and casino in Blackhawk, Colorado. As of June
30, 1998, the Company has not commenced construction of the
planned casino, nor has it realized any revenues from its
planned operations. Accordingly, the Company is considered to
be in the development stage.

The Company was a majority owned subsidiary of Holly
Holdings, Inc. ("Parent") until May 1997.

Certain prior year amounts have been reclassified for
comparative purposes.

Revenue Recognition

Casino revenues will consist of the net win from gaming
activities, which is the difference between gaming wins and
losses. Revenues exclude the retail value of complimentary
food, beverages and hotel services furnished to customers.
All revenues will be recognized as occurred.

Advertising

The Company follows the policy of charging the costs of
advertising to expenses incurred. The Company did not incur
any advertising costs during the years ended June 30, 1998
and 1997.

Income Taxes

Income taxes are provided based on the liability method for
financial reporting purposes in accordance with the
provisions of Statements of Financial Standards No. 109,
"Accounting for Income Taxes". Under this method deferred
tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the
financial statement carrying amounts of existing assets and
liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those temporary
differences are expected to be removed or settled. The
effect on deferred tax assets and liabilities of a change in
tax rates is recognized in the statements of operations in
the period that includes the enactment date.

F-10

<PAGE>

COUNTRY WORLD CASINOS, INC.
(A developmental stage company)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998 AND 1997

NOTE A-SUMMARY OF ACCOUNTING POLICIES (continued)

Cash Equivalents

For purposes of the Statements of Cash Flows, the Company
considers all highly liquid debt instruments purchased with a
maturity date of three months or less to be cash equivalents.

Property and Equipment

For financial statement purposes, property and equipment are
depreciated using the straight-line method over their
estimated useful lives of the related assets ranging from
three to seven years. An accelerated method of depreciation
is used for tax purposes.

Depreciation expense for the years ended June 30, 1998 and
1997 is $ 7,905 and $ 6,867, respectively.

Costs incurred in connection with the acquisition,
development and preparation of the Company's land are
capitalized and stated at cost. In addition, interest on
borrowings incurred during the preparation period related to
acquisition and development of the land are capitalized.

The Company reviews the carrying value of the property for
impairment whenever events and circumstances indicate that
the carrying value of the asset may not be recoverable from
the estimated future cash flows expected to result from its
use and eventual disposition. In the case where undiscounted
expected future cash flows are less than the carrying value,
an impairment loss is recognized equal to an amount by which
the carrying value exceeds the fair value of assets.

Long-Lived Assets

The Company has adopted Statement of Financial Accounting
Standards No. 121 (SFAS 121). The Statement requires that
long-lived assets and certain identifiable intangibles held
and used by the Company be reviewed for impairment whenever
events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. SFAS No. 121 also
requires assets to be disposed of be reported at the lower of
the carrying amount or the fair value less costs to sell.

F-11

<PAGE>

COUNTRY WORLD CASINOS, INC.
(A developmental stage company)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998 and 1997

NOTE A-SUMMARY OF ACCOUNTING POLICIES (continued)

Use of Estimates

The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect certain
reported amounts and disclosures. Accordingly actual results
could differ from those estimates.

Concentrations of Credit Risk

Financial instruments and related items which potentially
subject the Company to concentrations of credit risk consist
primarily of cash, cash equivalents and trade receivables.
The Company places its cash and temporary cash investments
with high credit quality institutions. At times, such
investments may be in excess of the FDIC insurance limit.

Stock Based Compensation

The Company accounts for stock transactions in accordance
with APB Opinion 25, "Accounting for Stock Issued to
Employees." In accordance with statement of Financial
Accounting Standards No. 123, "Accounting for Stock Based
Compensation," the Company has adopted the proforma
disclosure requirements.

Liquidity

As shown in the accompanying financial statements, the
Company incurred a net loss of $ 1,245,439 during the year
ended June 30, 1998 and $1,080,391 during the year ended
June 30, 1997. The Company's current liabilities exceeded its
current assets by $11,811,904 as of June 30, 1998. Substantially
all the company's assets are illiquid.

Comprehensive Income

The Company does not have any items of comprehensive income
in any of the periods presented.

F-12

<PAGE>

COUNTRY WORLD CASINOS, INC.
(A developmental stage company)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998 and 1997

NOTE A-SUMMARY OF ACCOUNTING POLICIES (continued)
Segment Information

The Company adopted Statement of Financial Accounting
Standards No. 131, Disclosures about Segments of an
Enterprise and Related Information (SFAS 131) in the year
ended June 30, 1998. SFAS establishes standards for
reporting information regarding operating segments in annual
financial statements and requires selected information for
those segments to be presented in interim financial reports
issued to stockholders. SFAS 131 also establishes standards
for related disclosures about products and services and
geographic areas. Operating segments are identified as
components of an enterprise about which separate discrete
financial information is available for evaluation by the
chief operating decision maker, or decision making group, in
making decisions how to allocate resources and assess
performance. The information disclosed herein, materially
represents all of the financial information related to the
Company's principal operating segment.

Net Loss Per Share

The Company has adopted Statement of Financial Accounting
Standard No. 128, "Earnings Per Share," specifying the
computation, presentation and disclosure requirements of
earnings per share information. Basic earnings per share has
been calculated based upon the weighted average number of
common shares outstanding. Stock options and warrant's have
been excluded as common stock equivalents in the diluted
earnings per share because they are either antidilutive, or
their effect is not material. There is no effect on earnings
per share information for the year ended June 30, 1998
relating to the adoption of this standard.

New Accounting Pronouncements

The Company adopted Statement of Financial Accounting
Standards No. 132, Employers' Disclosures about Pension and
Other -Post Employment Benefits (SFAS 132) in the year
ended June 30, 1998. SFAS No. 132 establishes disclosure
requirements regarding pension and post employment
obligations. SFAS No. 132 does not effect the Company as of
June 30, 1998.

In March 1998, Statement of Position No. 98-1 was issued,
which specifies the appropriate accounting for costs incurred
to develop or obtain computer software for internal use. The
new pronouncement provides guidance on which costs should be
capitalized, and over what period such costs should be
amortized and what disclosures should be made regarding such
costs. This pronouncement is effective for fiscal years
beginning after December 15, 1998, but earlier application is
acceptable. Previously capitalized costs will not be
adjusted. The Company believes that it is already in
substantial compliance with the accounting requirements as
set forth in this new pronouncement, and therefore believes
that adoption will not have a material effect on financial
condition or operating results.

F-13

<PAGE>

COUNTRY WORLD CASINOS, INC.
(A developmental stage company)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998 and 1997

NOTE A-SUMMARY OF ACCOUNTING POLICIES (continued)

In April 1998, Statement of Position No. 98-5 was issued
which requires that company's expense defined previously
capitalized start-up costs including organization costs and
expense future start-up costs as incurred. Adoption of this
statement does not have an effect on financial condition or
operating results.

The Company adopted Statement of Financial Standards No. 133,
Accounting for Derivative Instruments and for Hedging
Activities (SFAS No. 133) in the year ended June 30, 1998.
SFAS No. 133 requires that certain derivative instruments be
recognized in balance sheets at fair value and for changes in
fair value to be recognized in operations. Additional
guidance is also provided to determine when hedge accounting
treatment is appropriate whereby hedging gains and losses are
offset by losses and gains related directly to the hedged
item. SFAS No. 133's impact on the Company's consolidated
financial statements is not expected to be material as the
Company has not historically used derivative and hedge
instruments.

In December 1999, the Securities and Exchange Commission
issued Staff Accounting Bulletin No. 101 ("SAB 101"),
Revenue Recognition in Financial Statements, which will
become effective December 31, 2000. The Company does not
expect the standard to have a material effect on its
financial position or results of operations.

In March 2000, the Financial Accounting Standards Board
issued FIN No. 44, Accounting for Certain Transactions
Involving Stock Compensation, an interpretation of
Accounting Principles Board No. 25 for (a) the definition of
an employee for purposes of applying APB No. 25, (b) the
criteria for determining whether a plan qualifies as a
noncompensatory plan, (c) the accounting consequences of
various modifications to the terms of a previously fixed
stock option or award, and (d) the accounting for an exchange
of stock compensation awards in a business combination. FIN
44 was effective July 1, 2000, but certain conclusions cover
specific events that occur after either December 15, 1998, or
January 12, 2000. Management does not anticipate that this
interpretation will have a material impact on the Company's
consolidated financial statements.

In September 2000, The Financial Accounting Standards Board
issued SFAS No. 140, Accounting for Transfers and Servicing
of Financial Assets and Extinguishments of Liabilities, a
replacement of SFAS Statement No. 125. SFAS No. 140 revises
the standards for accounting for securitizations and other
transfers of financial assets and collateral and require
certain disclosures, but carries over most of the provisions
of SFAS No. 125 without reconsideration. SFAS No. 140 is
effective for transfers and servicing of financial assets and
extinguishments of liabilities occurring after March 31, 2001
and is effective for recognition and reclassification of
collateral and for disclosures relating to securitization
transactions and collateral for the fiscal years ending after
December 15, 2000. Management does not anticipate that this
interpretation will have a material impact on the Company's
consolidated financial statements.

F-14

<PAGE>

COUNTRY WORLD CASINOS, INC.
(A developmental stage company)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998 and 1997

NOTE B- PROPERTY AND EQUIPMENT, NET

Property and equipment at June 30 were as follows:

1998 1997
Land and improvements $ 17,433,349 $ 12,864,346
Furniture and fixtures 38,889 48,068
17,472,238 12,912,414

Less: accumulated depreciation (23,355) (21,002)
$ 17,448,883 $ 12,891,412

Interest capitalized during the years ended June 30, 1998 and
1997 amounted to $ 1,275,284 and $ 887,663, respectively.

NOTE C :NOTES PAYABLE

Notes payable at June 30, 1998 and 1997 are as follows:

1998 1997
Mortgage note payable in monthly $ 998,000 $ -
installments of interest only at
the bank prime rate + 3%;
payable on demand and secured
by a third deed of trust on real
property and improvements. The
Company is in default under the
terms of the mortgage note.

Mortgage note payable in monthly 5,000,000 5,000,000
installments of interest only at
24% per annum; due on or before
May, 1999 and secured by a first
deed of trust on real property and
improvements. The Company is in
default under the terms of the
mortgage note (see Note J).

$ 5,998,000 $ 5,000,000

F-15

<PAGE>

COUNTRY WORLD CASINOS, INC.
(A developmental stage company)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998 and 1997

NOTE D-NOTES PAYABLE TO RELATED PARTIES

Notes payable to related parties at June 30, 1998 and 1997
are as follows:

1998 1997

Mortgage note payable to an entity $ 600,000 $ 155,000
controlled by a significant stockholder
of the Company, payable in monthly
installments of interest only at 12 %
per annum; payable on demand due and
secured by a second deed of trust on real
property and improvements. The Company
is in default under the terms of the
mortgage note (see Note F).

Mortgage note payable to an entity 600,000 -
controlled by a significant stockholder
of the Company, payable in monthly
installments of interest only at 12 %
per annum; payable on demand due and secured
by a fourth deed of trust on real
property and improvements. The Company
is in default under the terms of the
mortgage note (see Note F).

Mortgage note payable to an entity 274,200 -
controlled by a significant stockholder
of the Company, payable in monthly
installments of interest only at 12 %
per annum; payable on demand due and
secured by a fifth deed of trust on real
property and improvements. The Company
is in default under the terms of the
mortgage note (see Note F).

Mortgage note payable to an entity 725,000 725,000
controlled by a significant stockholder
of the Company, payable in monthly
installments of interest only at 8 % per
annum; payable on demand due and secured
by deed of trust on real property and
improvements. The Company is in default
under the terms of the mortgage note
(see Note J).

$ 2,199,200 $ 880,000

F-16

<PAGE>

COUNTRY WORLD CASINOS, INC.
(A developmental stage company)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998 and 1997

NOTE E-INCOME TAXES

Financial Accounting Standard No. 109 requires the
recognition of deferred tax liabilities and assets for the
expected future tax consequences of events that have been
included in the financial statement or tax returns. Under
this method, deferred tax liabilities and assets are
determined based on the difference between financial
statements and tax bases of assets and liabilities using
enacted tax rates in effect for the year in which the
differences are expected to reverse. Temporary differences
between taxable income reported for financial reporting
purposes and income tax purposes are insignificant.

At June 30, 1998, the Company has available for federal
income tax purposes a net operating loss carryforward of $
5,585,284 expiring through the year 2013, that may be used to
offset future taxable income. The Company has provided a
valuation reserve against the full amount of the net operating
loss benefit, since in the opinion of management based upon the
earnings history of the Company, it is more likely than not
that the benefits will not be realized. Due to significant
changes in the Company's ownership, the Company's future use
of its existing net operating losses may be limited.

Components of deferred tax assets as of June 30, 1998 are as
follows:

Non current:
Net operating loss $ 1,898,997
carryforward
Valuation allowance (1,898,997)
Net deferred tax asset $ -

NOTE F-CAPITAL STOCK

Preferred Stock

The Company is authorized to issue 25,000,000 shares of
preferred stock, $.001 par value, with certain rights,
preferences and designations, to be issued in a manner to be
determined by the Company's Board of Directors.

F-17

<PAGE>
COUNTRY WORLD CASINOS, INC.
(A developmental stage company)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998 and 1997

NOTE F-CAPITAL STOCK (continued)

Series A Convertible Preferred Stock

The Company's preferred stock includes Series A Convertible
Preferred ("Convertible Preferred") stock valued at $.001 per
share. The maximum issuable shares under the series are
2,250,000 shares. Holders of the Convertible Preferred
shares shall be entitled to dividends as declared by the
Board of Directors.

The Convertible Preferred stockholders, in the event of
liquidation of the Company, will receive an amount equal to
$3.33 per share plus declared and unpaid dividends before any
holder of common stock. A sale, lease, or transfer of all or
substantially all of the Company's assets shall be deemed to
be a liquidation for purposes of the liquidation preference.

Each Convertible Preferred share is convertible into one
share of common stock at any time or automatically upon the
conversion of the majority of the Convertible Preferred stock
or in the event of a public offering of the Company's common
stock at not less than $6.66 per share.

As of June 30, 1998, there were 2,250,000 shares of the
Series A Convertible Preferred Stock issued and outstanding
(see Note J).

Class B Convertible Preferred Stock

In April 1997, the Board of Directors created a series of
Class B convertible preferred stock ("Class B") valued at
$.25 per share. The maximum issuable shares under the Class
B preferred stock is 5,000,000 shares. The holders of the
Class B shares are not entitled to receive dividends, and the
shares are entitled to vote with the common stock as a single
class. In the event of liquidation of the Company, the
holders of the Class B shares will receive an amount per
share equal to the sum of $0.25 for each outstanding share of
Class B preferred stock.

Each share of Class B preferred stock is convertible into
common stock at the rate of ten (10) shares of common stock
for each share of Class B Preferred. Each share of Class B
may be converted one year following the date of issuance at
the election of the holder. The Company is not required to
reserve and keep available out of its authorized but unissued
shares of common stock, common stock sufficient to effect the
conversion of the Class B. In the event that the number or
authorized share of common stock is not sufficient to effect
the conversion of the outstanding shares of Class B, the
Company will increase the number authorized but unissued
shares of common stock.
F-18

<PAGE>

COUNTRY WORLD CASINOS, INC.
(A developmental stage company)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998 and 1997

NOTE F-CAPITAL STOCK (continued)

During the year ended June 30, 1997, the Company issued
4,000,000 shares of Class B in exchange for $1,000,000 in
cash advances that had been made to the Company by the
Parent.

During the year ended June 30, 1998, the Company converted
4,000,000 shares of its Class B shares to 40,000,000 shares
of its Common Stock.

During the year ended June 30, 1998, the Company issued
100,000 shares of its Class B shares in exchange for
professional services.

As of June 30, 1998, there were 100,000 shares of the Class B
Convertible Preferred Stock issued and outstanding.

Common Stock

The Company is authorized to 75,000,000 shares of common
stock having a par value of $ .001 per share.

During the year ended June 30, 1997, the Company issued
1,250,000 shares of common stock to the Parent in exchange
for $250,000 owed to the Parent. During the year ended June
30, 1998, the Company issued 2,245,500 shares of its common
stock to non-employees for services rendered in exchange for
debts owed.

At June 30, 1998, there were 54,331,687 shares of common
stock outstanding.

Warrants to Purchase Common Stock

As of June 30, 1998, the Company had outstanding 1,000,000
warrants to purchase 1,000,000 shares of the Company's common
stock at $.06 per share with no expiration. The warrants were
issued as compensation for financial consulting services to
an entity controlled by a family member of the Company's
Chairman of the Board.

As of June 30, 1998 , the Company had outstanding
7,000,000 warrants to purchase 7,000,000 shares of the
Company's common stock at $.20 per share with no expiration.
The warrants were issued as additional consideration to an
entity controlled by the Company's Chairman of the Board
which advanced the Company funds in the form of mortgage
notes payable secured by deeds of trust on the Company's land
and improvements (see Note D).

F-19

<PAGE>

COUNTRY WORLD CASINOS, INC.
(A developmental stage company)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998 and 1997

NOTE G-COMMITMENTS AND CONTINGENCIES

Lease Commitments

The Company leases office space on a month-to-month basis .
During the years ended June 30, 1998 and 1997, the Company
incurred rental expense of $ 29,020 and $ 0, respectively.

Employment and Consulting Agreements

The Company has employment agreements with the Company's
Executive Chairman and Vice Chairman. In addition to salary
and benefit provisions, the Agreements include defined
commitments should the Company terminate the employment of
the Executives without cause.

The Company has consulting agreements with outside
contractors. The Agreements are generally for a term of 12
months from inception and renewable automatically from year
to year unless either the Company or Consultant terminates
such engagement by written notice.

Litigation

In June 1995, Tommyknocker Casino Corp. and New Allied
Development Corporation ("Tommyknocker") filed a counterclaim
against the Company in the District Court of the state of
Colorado. The counterclaim alleged the non-payment of
principal and interest of amounts owed by the Company in
connection with a mortgage loan agreement by and between the
Company and Tommyknocker Casino Corp. and New Allied
Development Corporation (see Note J).

F-20

<PAGE>

COUNTRY WORLD CASINOS, INC.
(A developmental stage company)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998 and 1997

NOTE G- COMMITMENTS AND CONTINGENCIES (continued)

In 1995, James Hamilton, a private investor, filed a
complaint against the Company and Robert Todd Financial
Corporation in the District Court of Travis County, Texas.
The Complaint alleges Robert Todd Financial Corporation, and
its agents and/or employees, made misrepresentations
regarding the Company's common stock, and allegedly induced
the Plaintiff to purchase the stock. The Plaintiff alleges
the Company is liable for the wrongful conduct of the co-
defendant. The Company denies liability in all respects and
vigorously intends to defend. In 1996 the Company moved to
dismiss the action and no decision has been reached by the
Court on the pending motion. While the ultimate outcome of
the litigation cannot be ascertained at this time, based upon
current knowledge of applicable law and facts, and taking
into consideration the opinion of the Company's general
counsel that the Plaintiff's claims lack merit and the
Company should prevail ultimately in this litigation,
management believes the lawsuit should not have a material
adverse effect on the financial position, results of
operations or cash flows of the Company.

Environmental Indemnification

The Company has entered into an environmental indemnity
agreement with the holders of the $5,000,000 mortgage loan
payable (see Note C) pursuant to which the Company will
defend and hold harmless the Lender from any environmental
claims connected to the property which secures the loan.
The Company through independent environmental consultants,
has conducted environmental examinations on the property and
has made environmental remediation pursuant to an
administrative consent order with the U.S. Environmental
Protection Agency. The remediation was performed in
accordance with the approved work plan. Based upon the work
performed, the Company does not believe that further remedial
activity will be required. However, there can be no
assurance what costs, if any, the Company might incur in the
future in connection with environmental matters related to
the property.

F-21

<PAGE>

COUNTRY WORLD CASINOS, INC.
(A developmental stage company)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998 and 1997

NOTE H-RELATED PARTY TRANSACTIONS

Due to Officers and Parent

The amounts due to the Company's officers and Parent at June
30, 1998 and 1997 represents aggregate advances to the
Company (net of repayments). No formal agreements or
repayment terms exist.

NOTE I-LOSSES PER SHARE

The following table presents the computation of basis and
diluted loss per share:

1998 1997
Net (loss) available for common $(1,245,439) $(1,080,391)
shareholders

Basic and fully diluted loss $(0.05) $(0.10)
per share
Weighted average common shares
outstanding 23,668,479 10,985,493

Net loss per share is based upon the weighted average of
shares of common stock outstanding June 30, 1998 and 1997.

NOTE J- SUBSEQUENT EVENTS

In July 1998, the Company executed and delivered a deed for
the real property in lieu for foreclosure to the holders of
the $ 725,000 mortgage note (see Note D).

In October 1999, the Company settled the lawsuit with
Tommyknocker at no cost to the Company. In connection with
the settlement, the Company issued 2,250,000 shares of
Company common stock to Tommyknocker in exchange for
2,250,000 shares of Series A Convertible Preferred stock
held by Tommyknocker (see Note F).

In July 2000, the Company signed a memorandum of
understanding with Dartmouth General Capital Management, Ltd.
(Dartmouth) to acquire certain Company assets, retire the
outstanding debts of Country World and provide $80 million in
financing to begin construction and development of its Black
Hawk, Colorado casino and hotel project. Subject to certain
conditions, the Dartmouth will commence funding the
commitment on or before January 15, 2001.

F-22

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