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-1

(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, 1999

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
Incorporation or Organization) Identification Number)

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)

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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 54,331,687 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, 1999 was approximately $5,433,169.

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, 1999,
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 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"). 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. Despite
commitments made by various parties throughout 1997 and 1998, none were able
to provide the required financing timely and all contracts to do so were
terminated prior to June 1999.

In June 1999, the Company signed a Letter of Intent with Beverly
Hillbillies Gaming Company Inc. and Beverly Hillbillies Gaming Entertainment
LLC to enter into a joint venture to finalize development of and finance its
Black Hawk, Colorado Casino and Hotel project.

The new entity will be titled, "Jethro's Beverly Hillbillies Mansion and
Casino", and will be redesigned around the characters, settings, events and
theme of the 1960's and '70's television sitcom, The Beverly Hillbillies.

Max Baer, Jr., the founder and chairman of Beverly Hillbillies Gaming
Entertainment, LLC successfully secured the exclusive master licenses from CBS
and Viacom, Inc. to exploit the Beverly Hillbillies theme in connection with
gaming and other entertainment venues. Mr. Baer, who is best known for his
portrayal of "Jethro Bodine" during the nine year run of the television
series, is also planning a facility in Reno.

Under the terms of the joint venture, named "Jethro's Black Hawk, LLC,"
the parties will enter into an operating agreement with each party's
participation to be established and set forth in accordance with an equity
ownership formula. Beverly Hillbillies Gaming Entertainment, LLC will provide
management services for the facility.

Financing, financial advisory services and placement agent services will be
provided by Westwood Capital, LLC of New York City, New York who is an

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investment banking firm specializing in structured debt financing and merger
and acquisition transactions for companies in the financial services and real
estate industries. Additionally, Westwood Capital provides project and
corporate financing for companies in the gaming and hospitality industries.

During September 1999, the Company completed its final review of an
Admission and Operating Agreement securing the commitment of all parties to
bring the project to fruition. Under the aforementioned agreements' terms,
Jethro's Black Hawk, LLC will assume all existing secured indebtedness of the
Company, begin making the required interest payments as of September 30, 1999,
and make full payment of all such indebtedness by March 31, 2000.

All parties acknowledge their responsibility to be approved by the
Colorado Gaming Commission and will proceed to do so prior to project
completion.

It is anticipated that construction will begin in early 2000 with an
opening set for early 2001.

Although the Company is confident in the abilities of all parties to
provide financing and accomplish all the above mentioned goals, there can be
no assurance that any of these items will be provided or completed immediately
or in the future.

Black Hawk is a picturesque mountain town approximately 40 miles west of
Denver. In the past year, July 1998 through June 1999, Black Hawk hosted
approximately 3 million visitors and generated over 60% of the state's gaming
revenues. The Hotel Casino, 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 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 theme, 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.

COLORADO GAMING REGULATIONS

The State of Colorado created the Division of Gaming (the "Division")

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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. 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 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

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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.

The Colorado Gaming Commission also has the right to request information

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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 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.

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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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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, 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.

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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 a covered
on-site bus turnaround for the convenience of day trip customers.

COMPETITION

Most of the 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. 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. The Isle of Capri opened this year and has 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 did not initially provide any hotel
accommodations, although it begun construction of a hotel on top of the

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casino. Riviera Holdings Corporation has recently broke ground to construct a
large casino with 1,000 slot machines and parking for 500 cars.

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 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 facility will
have 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.

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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. New Allied and TKCC appealed
the Court's ruling in July 1999.

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. In June
1999, the Tenth Circuit Court of Appeals ruled in favor of the Company in two
of the three appeal issues raised. As the matters were unopposed by New
Allied and TKCC, the matter has been referred back to the Bankruptcy Court for
a final determination as to the amount New Allied and TKCC must return to the
Company. The Company believes it is entitled to in excess of $1,000,000.

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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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, 1998 and 1999. The quotations represent
inter-dealer quotations without retail markups, markdowns or commissions and
may not represent actual transactions.

Quarter Ended High Low
September 30, 1997 .15 .13
December 31, 1997 .34 .25
March 31, 1998 .24 .11
June 30, 1998 .19 .10
September 30, 1998 .16 .06
December 31, 1998 .14 .06
March 31, 1999 .21 .06
June 30, 1999 .20 .05

At June 30, 1999, there were approximately 1,000 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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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.

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, of which all terminated during the first half
of 1999.

-14-
<PAGE>

Financing, financial advisory services and placement agent services will
be provided by Westwood Capital, LLC of New York City, New York who is an
investment banking firm specializing in structured debt financing and merger
and acquisition transactions for companies in the financial services and real
estate industries. Additionally, Westwood Capital provides project and
corporate financing for companies in the gaming and hospitality industries.

During September 1999, the Company is completing final review of an
Admission and Operating Agreement securing the commitment of all parties to
bring the project to fruition. Under the aforementioned agreements' terms,
Jethro's Black Hawk, LLC will assume all existing secured indebtedness of the
Company, begin making the required interest payments as of September 30, 1999,
and make full payment of all such indebtedness by March 31, 2000.

All parties acknowledge their responsibility to be approved by the
Colorado Gaming Commission and will proceed to do so prior to project
completion.

It is anticipated that construction will begin in early 2000 with an
opening set for early 2001.

-15-
<PAGE>

Las Vegas, Nevada, as well as the Chinook Winds Gaming and Convention Center
in Lincoln City, Oregon.

LIQUIDITY & CAPTIAL RESOURCES

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. Such loan has been extended by its assignee, pending completion
of the newest financing effort. 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 1999, 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 1999, 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 June 1999, 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 June 1999, the Company owed $600,000 on the Fourth Norlar
note. In January 1999, the Company issued a Fifth Promissory Note (Fifth
Norlar Note) and seventh deed of trust on the property to Norlar, Inc., again
for $600,000. As of June 1999, the Company owed $600,000 of the Fifth Norlar
Note. In July 1999, the Company issued a sixth promissory note (Sixth Norlar
Note) and eighth deed of trust on the property to Norlar, Inc. for
$1,000,000. As of September 1999, the Company owed approximately $700,000 of
the Sixth 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.

-16-
<PAGE>

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 1999, the Company owes PCL Construction
approximately $1,200,000, including interest.

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.

In October 1998, the Company converted $250,000 of debt to the Company's
officers into Series B Preferred stock.

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 of the
Kennedy Loan and other ongoing obligations such as rent and utilities for the
Company's corporate office. This loss of $1,175,181 in the fiscal year ended
June 30, 1999 compares to a loss of operations of $1,238,517 for the year
ended June 30, 1998. 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 - F21 for audited financials which fairly represent
the Company's status for the year ended June 30, 1999.

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.

-17-
<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 63, 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 49, 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 51, 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.

-18-
<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,
1999 and information as of June 30, 1999 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)
___________

-19-
<PAGE>

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
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

-20-
<PAGE>

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. Such loan has been extended by its assignee pending
completion of the newest financing effort. 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.

-21-
<PAGE>

In October 1998, the Company converted $250,000 of debt to the Company's
officers into Series B Preferred stock.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

None

-22-
<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, thereunto 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, CEO,
Secretary, Treasurer and Director

-23-
<PAGE>

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FINANCIAL STATEMENTS AND SCHEDULES

JUNE 30, 1999 AND 1998

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, 1999 and 1998 F-4

Statements of Losses for the two years ended June 30, 1999
and 1998, and for the period November 9, 1982 (date of F-5
inception) to June 30, 1999

Statements of Stockholders' Equity for the period November
9, 1982 (date of inception) to June 30, 1999 F-6 to F-7

Statements of Cash Flows for the two years ended June 30,
1999 and 1998, and for the period November 9, 1982 (date F-8
of inception) to June 30, 1999

Notes to Financial Statements F-9 to F-21

<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 sheets of Country World
Casinos, Inc. (a development stage Company) as of June 30, 1999 and 1998
and the related statements of losses, stockholders' equity, and cash flows
for the years 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 audits.

We conducted our audits 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 audits
provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Country World
Casinos, Inc. as of June 30, 1999 and 1998, and the results of its
operations and its cash flows for the two years ended in conformity with
generally accepted accounting principles. We express no opinion on the
cumulative period from inception through June 30, 1999.

/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, 1999 and 1998

1999 1998
ASSETS
CURRENT ASSETS:
Cash $ - $ 180
Prepaid Interest 91,935 61,290
Total current assets 91,935 61,470

Property, Plant & Equipment,
Net (Note B) 18,299,381 17,448,883

OTHER ASSETS
Deposits 35,000 35,630

$18,426,316 $17,545,983

LIABILITIES
CURRENT LIABILITIES
Accounts Payable and Accrued
Liabilities $4,092,644 $3,244,869
Due to Officers and Parent
(Note H) 677,000 417,000
Other Liabilities 34,870 14,304
Note Payable (Note C) 998,000 5,998,000
Note Payable Related Parties
(Note D) 7,853,392 2,199,200
Total current liabilities 13,655,906 11,873,373

COMMITMENTS & CONTINGENCIES (NOTE G)

STOCKHOLDER'S EQUITY (NOTE F):

Series A Preferred Stock, par
value $.001 per share,
25,000,000 shares authorized,
2,250,000 shares outstanding
at June 30, 1999 and 1998 2,250 2,250

Class B Preferred Stock, par
value $.25 per share,
5,000,000 shares authorized,
1,100,000 shares outstanding
at June 30, 1999 and 100,000
at June 30, 1998 275,000 25,000

Common Stock, par value $.001
per share, 75,000,000 shares
authorized 54,331,687 shares
outstanding at June 30, 1999
and 1998 54,332 54,332

Additional Paid In Capital 11,176,311 11,176,312

Deficiency accumulated during
development stage (6,737,483) (5,585,284)

Total stockholder's equity 4,770,410 5,672,610

$18,426,316 $17,545,983

See accompanying notes to financial statements
F-4

<PAGE>

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

For the
period from
November 9,
Year Year 1982 (Date
Ended Ended of
June 30, June Inception)
1999 30, through
1998 June 30,
1999
Costs and Expenses:
Research & Development $ - $ - $ 122,000
General and Administrative 1,101,442 1,120,428 6,358,581
Depreciation - 7,905 50,419
Interest Expense 35,386 131,784 238,615
Total costs and expenses 1,136,828 1,260,117 6,769,615

Operating loss (1,136,828) (1,260,117) (6,769,615)

Other Expenses and Income
Interest Income - 14,678 109,490
Other Income - - 735
Rental Income - - 45,126
Loss on Non-Marketable - - (85,000)
Loss on Disposal of property,
improvements & equipment (15,533) - (15,533)
Write Off of Loan Receivable - - (90,000)
Forfeited Deposit - - (100,000)
Net other income (expenses) (15,533) 14,678 (135,182)

Loss from continuing operations
before extraordinary item and
income taxes (1,152,361) (1,245,439) (6,904,797)

Provision for income taxes
(benefit) - - -
Loss from continuing operations,
before extraordinary item (1,152,361) (1,245,439) (6,904,797)
Extraordinary Item
Extraordinary Gain on
Forgiveness of Debt,
Primarily Related Party - - 167,152

Net loss $(1,152,361) $(1,245,439) $(6,737,645)

Loss per common share (basic
and assuming dilution) $(0.02) $(0.05) $(0.75)

Weighted average common shares
outstanding (see Note I) 54,331,687 23,668,479 8,936,377

See accompanying notes to financial statements

F-5
<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-6

</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

Preferred Stock - - 1,000,000 250,000 - - - - - - 250,000
issued in
Exchange for Debt

Miscellaneous adjustment - - - - - - - - - 163 163

Net Loss of Period - - - - - - - - - (1,152,361) (1,152,361)
Ended June 30, 1999

Balance at
June 30, 1999 2,250,000 $2,250 1,100,000 $275,000 54,331,687 $54,332 - $ - $11,176,311 $(6,737.482) $4,770,410

See accompanying notes to financial statements
F-7
</TABLE>
<PAGE>

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

Year Year For the period
Ended Ended from November 9,
June June 1982 (Date of
30, 30, Inception)
1999 1998 through June 30,
1999
Cash flows from operating activities:
Net income from operating
activities (1,152,361) (1,245,439) (6,904,797)

Adjustments to reconcile net
income to net cash:
Depreciation - 2,353 59,867
Common stock issued in
exchange for interest - - 14,451
Common stock issued in
exchange for services - 347,257 1,184,757
Preferred stock issued
in exchange for services 250,000 25,000 275,000
Loss on Nonmarketable
Securities - - (85,000)
Write off of Loan Receivable - - (90,000)
Extraordinary Item,
Primarily Related Party - - 167,152
Allocation of Management
Fees - Related Party - - 408,000
Change in:
Prepaid expenses and
other assets (30,645) 11,850 (779,435)
Accounts payable and
accrued expenses 868,341 2,911,700 4,170,853

Discontinued Operations:
Net (Loss) - - (389,286)
Adjustments to Reconcile
Net (Loss) to Net Cash
(Used For) Operating
Activities Gain on
Disposal of Assets - - 389,286
Net cash from operating
activities (64,665) 2,052,721 (1,579,152)
Cash flows used in investing
activities:
Acquisition of Property,
improvements and equipment, net (850,500) (4,559,824) (10,682,601)
Investment in Patent - - (62,000)
Deposits & Other 630 (35,000) (35,000)
(Increase) Decrease in
Restricted Cash - - -
Net cash used in investing
activities (849,870) (4,594,824) (10,779,601)
Cash flows (used in) provided by
financing activities:
Payment of Capital Lease Obligation - - (4,233)
Proceeds from Long-Term
Borrowings, net 914,355 2,537,322 7,139,301
Proceeds from Stock and
Warrant Issuance - - 5,220,835
Capital Contribution - - 2,850
Net cash provided by financing
activities 914,355 2,537,322 12,358,753
Net increase in cash and cash equivalents (180) (4,781) -
Cash and cash equivalents at
beginning of period 180 4,961 -
Cash and cash equivalents at end of period $ - $ 180 $ -

Supplemental Disclosure of Cash Flow:
Cash paid during the period for interest $ - $ - $ 5,761
Cash paid during the period for taxes - - -
Common stock issued for property - - 250,000
Preferred stock issued for property - - 2,250,000
Common Shares issued for services - 347,257 1,184,757
Preferred Shares issued for services 250,000 25,000 275,000
Non Cash Acquisition of property,
improvements, and equipment 850,500 3,871,790 4,722,290
Non Cash Proceeds from Notes Payable 914,355 378,432 952,198

See accompanying notes to financial statements
F-8
<PAGE>

COUNTRY WORLD CASINOS, INC.
(A developmental stage company)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999 and 1998

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 engage in the development of a full
service hotel and casino in Blackhawk, Colorado. As of June
30, 1999, 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, 1999
and 1998.

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-9
<PAGE>

COUNTRY WORLD CASINOS, INC.
(A developmental stage company)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999 AND 1998

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, 1999 and
1998 is $ 0 and $ 7,905, 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-10
<PAGE>

COUNTRY WORLD CASINOS, INC.
(A developmental stage company)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999 and 1998

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
$ 1,152,361 during the year ended June 30, 1999 and $
1,245,439 during the year ended June 30, 1998. The Company's
current liabilities exceeded its current assets by $
13,563,971 as of June 30, 1999. 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-11
<PAGE>

COUNTRY WORLD CASINOS, INC.
(A developmental stage company)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999 and 1998

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, 1999.

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-12
<PAGE>

COUNTRY WORLD CASINOS, INC.
(A developmental stage company)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999 and 1998

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-13
<PAGE>

COUNTRY WORLD CASINOS, INC.
(A developmental stage company)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999 and 1998

NOTE B- PROPERTY AND EQUIPMENT, NET

Property and equipment at June 30 were as follows:

1999 1998
Land and improvements $18,299,381 $17,433,339
Furniture and fixtures - 38,889
18,299,381 17,472,238
Less: accumulated depreciation - (23,355)
----------- ----------
$18,299,381 17,448,883

Interest capitalized during the years ended June 30, 1999 and
1998 amounted to $ 1,549,666 and $ 1,275,284, respectively.

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).

NOTE C -NOTES PAYABLE

Notes payable at June 30, 2000 and 1999 are as follows:

1999 1998
Mortgage note payable in monthly
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. $ 998,000 $ 998,000

Mortgage note payable to an entity
controlled by a significant
stockholder of the Company, payable
in monthly installments of interest
only at 24% per annum; payable on
demand 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 F). $ - $5,000,000

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

F-14
<PAGE>

COUNTRY WORLD CASINOS, INC.
(A developmental stage company)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999 and 1998

NOTE D-NOTES PAYABLE TO RELATED PARTIES

Notes payable to related parties at June 30, 1999 and 1998
are as follows:
1999 1998
Mortgage note payable to an entity
controlled by a significant stockholder of
the Company, payable in monthly
installments of interest only at 24% per
annum; payable on demand and secured by a
first deed of trust on real property and
improvements. The note was aquired in 1999
from an unrelated party. The Company is in
default under the terms of the mortgage
note (see Note F). $5,000,000 $ -

Mortgage note payable to an entity
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). 600,000 600,000

Mortgage note payable to an entity
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). 600,000 600,000

Mortgage note payable to an entity
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). 600,000 274,200

Mortgage note payable to an entity
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 sixth deed of trust on real property
and improvements. The Company is in default
under the terms of the mortgage note (see
Note F). 600,000 -

Mortgage note payable to an entity
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 seventh deed of trust on real property
and improvements. The Company is in default
under the terms of the mortgage note (see
Note F). 453,392 -

F-15
<PAGE>

COUNTRY WORLD CASINOS, INC.
(A developmental stage company)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999 and 1998

NOTE D-NOTES PAYABLE TO RELATED PARTIES (continued)

Mortgage note payable to an entity
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 trust on real property and
improvements. The Company delivered a deed
in lieu of foreclosure in 1999 (see Note
B). - 725,000
----------- -----------
$ 7,853,392 $ 2,199,200

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, 1999, the Company has available for federal
income tax purposes a net operating loss carryforward of $
6,737,645 expiring through the year 2014, 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, 1999 are as
follows:

Non current:
Net operating loss carryforward $ 2,290,799
Valuation allowance (2,290,799)
------------
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-16
<PAGE>

COUNTRY WORLD CASINOS, INC.
(A developmental stage company)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999 and 1998

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, 1999, 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.

F-17
<PAGE>

COUNTRY WORLD CASINOS, INC.
(A developmental stage company)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999 and 1998

NOTE F-CAPITAL STOCK (continued)

Each share of Class B preferred stock is convertible into
common stock at the rate of ten 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.

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.

During the year ended June 30, 1999, the Company issued
1,000,000 shares of its Class B Convertible Preferred Stock
in exchange for $ 250,000 owed to its officers in the form of
cash advances to the Company, and unpaid services and
expenses.

As of June 30, 2000, there were 1,100,000 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. At June 30,
1999, there were 54,331,687 shares of common stock
outstanding.

F-18
<PAGE>

COUNTRY WORLD CASINOS, INC.
(A developmental stage company)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999 and 1998

NOTE F-CAPITAL STOCK (continued)

Warrants to Purchase Common Stock

As of June 30, 1999 , the Company had outstanding
13,000,000 warrants to purchase 13,000,000 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).

As of June 30, 1999, 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.

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 warrants to
common stock. In the event that the number or authorized
share of common stock is not sufficient to effect the
conversion of the outstanding warrants, the Company will
increase the number authorized but unissued shares of common
stock.

NOTE G-COMMITMENTS AND CONTINGENCIES

Lease Commitments

Beginning in 1999, the Company leases office space on a
month to month basis from an entity whose principal owner is
a significant shareholder of the Company. During the years
ended June 30, 1999 and 1998, the Company incurred rental
expense of $ 34,258 and $29,020, respectively.

Employment and Consulting Agreements

The Company has an 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.

F-19
<PAGE>

COUNTRY WORLD CASINOS, INC.
(A developmental stage company)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999 and 1998

NOTE G- COMMITMENTS AND CONTINGENCIES (continued)

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).

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 Company.
The Company denies liability in all respects and vigorously
intends to defend. In 1996 the Company moved to dismiss the
action . 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 holder of the $5,000,000 mortgage loan
payable (see Note D) 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-20
<PAGE>

COUNTRY WORLD CASINOS, INC.
(A developmental stage company)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999 and 1998

NOTE H-RELATED PARTY TRANSACTIONS

Due to Officers

The amount due to the Company's officers at June 30, 1999
and 1998 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:
1999 1998
Net (loss) available for common shareholders $(1,152,361) $(1,245,439)
Basic and fully diluted loss per share $ (.02) $ (.05)
Weighted average common shares outstanding 54,331,687 23,668,479

Net loss per share is based upon the weighted average of
shares of common stock outstanding June 30, 1999 and 1998.

NOTE J- SUBSEQUENT EVENTS

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-21
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