UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549


                                 FORM 10-QSB

  [X}   QUARTERLY report under section 13 or 15(d) of the Securities
   Exchange Act of 1934 for the quarter ended February 28, 2001.

  [ ]   Transition report under section 13 or 15(d) of the Securities
   Exchange Act of 1934.


COMMISSION FILE NUMBER: 33-55254-43

                       Virtual Gaming Enterprises, Inc.
            (Exact name of registrant as specified in its charter)

        Nevada                                       87-0485308
 (State of Organization)                       (I.R.S. Employer
                                                   Identification No.)

                   2580 SEASCAPE GLEN, ESCONDIDO, CA 92026
                   (Address of Principal Executive Offices)

Registrant's Telephone Number, Including Area Code:  (760) 510-0188

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 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  [ ]

    Transitional Small Business Disclosure Format: Yes [ ] No [X]

      40,140,867 Common Shares, $0.001 Par Value, Issued and Outstanding

     1

<PAGE>

                                    PART I
                            FINANCIAL INFORMATION

             Virtual Gaming Enterprises, Inc.
            (A Development Stage Enterprise)
                    Balance Sheets
<TABLE>
<S>                                      <C>            <C>
                                         February 28,      May 31,
                                            2001           2000
                                         ----------     ----------
ASSETS
CURRENT ASSETS
   Cash                                  $        0     $  109,142
   Advance receivable - related party        66,384         62,333
                                         ----------     ----------
     Total current assets                    66,384        171,475

PROPERTY AND EQUIPMENT
   Equipment                                  5,000          5,000
   Less: accumulated depreciation            (3,750)        (2,500)
                                         ----------     ----------
      Total property and equipment            1,250          2,500

OTHER ASSETS
   Intangible assets                      3,375,000      3,375,000
   Less: accumulated amortization                 0              0
                                         ----------     ----------
   Net intangibles                        3,375,000      3,375,000
   Investment - EBB Venture Capital          50,000         50,000
   Investment - Vegas Book, Ltd             320,000        320,000
                                         ----------     ----------
      Total other assets                  3,745,000      3,745,000

Total Assets                             $3,812,634     $3,918,975
                                         ==========     ==========

LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIENCY)

CURRENT LIABILITIES
   Cash overdraft                        $    1,002     $        0
   Accrued salaries payable                 362,632        204,007
   Short-term notes payable               1,669,524      1,550,309

     Litigation payable                     266,875        250,000
                                         ----------     ----------
     Total current liabilities            2,300,033      2,004,316
                                         ----------     ----------
Total Liabilities                         2,300,033      2,004,316

STOCKHOLDERS EQUITY (DEFICIENCY)
   Common stock, $0.001 par value,
     authorized 25,000,000 shares;
     40,140,867 and 2,181,822 issued
     and outstanding shares with 20,000,000
     Shares of Treasury Stock held at par
     value                                   40,141          8,288
   Additional paid-in capital             3,604,969      3,423,963
   Stock held in treasury, 20,000,000       (20,000)             0
   Deficit accumulated during
     the development stage               (2,112,509)    (1,517,592)
                                         ----------     ----------
     Total Stockholders
           Equity (Deficiency)            1,512,601      1,914,659
                                         ----------     ----------
Total Liabilities and Stockholders
           Equity (Deficiency)           $3,812,634     $3,918,975
                                         ==========     ==========

The accompanying notes are an integral part of the financial statements.
</TABLE>
                              F-3

<PAGE>
              Virtual Gaming Enterprises, Inc.
              (A Development Stage Enterprise)
                 Statements of Operations
            For the nine months ended February 28,
<TABLE>
<S>                         <C>             <C>              <C>
                                                             Period from
                                                             November 1997
                                                             (Inception) through
                                2001            2000         February 28, 2001

                            ------------    ------------    -------------------
Revenues                    $          0    $          0    $                 0

Expenses
   Compensation:
      Officers                   259,500         124,000                783,360
      Other                       16,500          13,800                 44,173
      Consultants                  8,500               0                 79,060
   General and
      administrative expenses    1,64,575       1,009,423               562,268
   Depreciation                    1,250           1,250                  3,750
   Research and development        8,500          29,010                120,500
                            ------------    ------------    -------------------
    Total expenses               458,825       1,177,483              1,593,111
                            ------------    ------------    -------------------
Loss from operations            (458,825)     (1,177,483)           (1,593,111)
                            ------------    ------------    -------------------
Interest (expense)              (136,092)              0             (269,398)
Loss from litigation                   0               0             (250,000)
                            ------------    ------------    -------------------
Net loss                    $   (594,917)   $ (1,177,483)   $      (2,112,509)
                            ============    ============    ===================
Basic net loss per
    weighted average share  $      (0.03)   $      (0.20)
                            ============    ============
Weighted average
    number of shares          18,878,391       5,755,384
                            ============    ============

The accompanying notes are an integral part of the financial statements.
<PAGE>
              Virtual Gaming Enterprises, Inc.
              (A Development Stage Enterprise)
                 Statements of Operations
            For the three months ended February 28,

</TABLE>
<TABLE>
<S>                         <C>             <C>




                                2001            2000
                            ------------    ------------
Revenues                    $          0    $          0

Expenses
   Compensation:
      Officers                    81,250               0
      Other                        4,500           7,050
      Consultants                      0               0
   General and
      administrative expenses     91,233         383,638
   Depreciation                      417             416
   Research and development            0               0
                            ------------    ------------
    Total expenses               177,400         391,104
                            ------------    ------------
Loss from operations            (177,400)       (391,104)
                            ------------    ------------
Interest (expense)               (45,801)              0
Loss from litigation                   0               0
                            ------------    ------------
Net loss                    $   (223,201)   $   (391,104)
                            ============    ============


The accompanying notes are an integral part of the financial statements.

</TABLE>
                              F-4

<PAGE>
              Virtual Gaming Enterprises, Inc.
              (A Development Stage Enterprise)
         Statement of Changes in Stockholders Equity
            From Inception through February 28, 2001
<TABLE>
<S>                 <C>           <C>     <C>         <C>          <C>
                                                      Deficit
                                                      Accumulated
                                          Additional  During the   Total

                   Number        Common  Paid-in     Development  Stockholders'
                   Of Shares     Stock   Capital     Stage        Equity
                   ------------  ------  ----------  -----------  -------------

BEGINNING BALANCE,
  November 1997
   (Inception)                0  $    0  $        0  $         0  $           0

Shares issued
  for cash           13,000,000  46,400           0            0         46,400
Net loss                      0       0           0      (20,506)       (20,506)
                   ------------  ------  ----------  -----------  -------------
BALANCE,
  May 31, 1998       13,000,000  46,400           0      (20,506)        25,894

June 1998 - reverse
  merger             10,209,647 (44,079)     44,109            0             30

February 1999 -
  reverse split     (22,707,774) (1,819)      1,819            0              0

Shares issued
  for cash            1,679,949   1,680     184,382            0        186,062

Net loss                      0       0           0     (311,214)      (311,214)
                   ------------  ------  ----------  -----------  -------------
BALANCE,
  May 31, 1999        2,181,822   2,182     230,310     (331,720)       (99,228)

Shares issued
  for cash            6,105,879   6,106   3,193,653            0      3,199,759

Net loss                                              (1,185,872)    (1,185,872)
                   ------------  ------  ----------  -----------  -------------
BALANCE,
 May 31, 2000         8,287,701   8,288   3,423,963   (1,517,592)     1,914,659

Shares issued
 for cash             1,093,880   1,094      33,640                      34,734


Shares issued
  to officers for
  compensation under
  stock option and
  compensation plan   9,166,666   9,166     58,001                      67,167

Shares issued for
 Treasury            20,000,000  20,000                                 20,000

Shares held
 as Treasury stock  (20,000,000)(20,000)                               (20,000)

Net loss                                                 (594,917)    (594,917)
                    ----------- -------   -----------  -----------  -----------
Balance,
 February 28, 2001   20,140,867 20,141   $3,604,969  $ (2,112,509)   $1,512,601
                    =========== =======   ===========  ===========  ===========

The accompanying notes are an integral part of the financial statements.
</TABLE>
                              F-5
<PAGE>
              Virtual Gaming Enterprises, Inc.
              (A Development Stage Enterprise)
                   Statement of Cash Flows
   For the Quarters Ended and Period Since Inception Ended February 28,
<TABLE>
<S>                           <C>          <C>              <C>
                                                            Period from
                                                            November 1997
                                                           (Inception) through
                                  2001           2000       February 28, 2001
                             ------------   ------------   -------------------

CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss                     $   (594,917)  $ (1,177,483)  $        (2,112,509)
Adjustments to reconcile net
 loss to net cash used
 for operating activities:

    Depreciation                    1,250          1,250                 3,751

    Stock compensation             67,167                               67,167
Changes in operating
 assets and liabilities:
    (Increase) decrease advance
      receivable - related party   (4,051)        14,824               (66,384)
    Increase (decrease) accrued
      salaries payable            158,625       (172,967)              362,632
    Increase (decrease) accrued
      Interest                    119,214              0               252,522
    Increase (decrease) accrued
      Litigation payable           16,875              0               266,875
                             ------------   ------------   -------------------
Net cash used by
  operating activities           (235,837)    (1,334,376)           (1,225,946)
                             ------------   ------------   -------------------

CASH FLOW FROM INVESTING ACTIVITIES:
  Purchase of property
    and equipment                       0              0                (5,000)
  Purchase of investments               0              0              (340,000)
  Acquisition of
    intangible assets                   0     (1,394,426)           (1,958,001)
                             ------------   ------------   -------------------
Net cash (used) provided by
  investing activities                  0     (1,394,426)           (2,303,001)
                             ------------   ------------   -------------------

CASH FLOW FROM FINANCING ACTIVITIES:
     Proceeds from issuance
       of common stock            173,958      2,892,157             9,760,099
     Cash paid on Common
       stock fund raise           (48,265)             0            (6,232,154)
                             ------------   ------------   -------------------
Net cash provided by
  financing activities            125,693      2,892,157             3,527,945
                             ------------   ------------   -------------------

Net increase
  (decrease) in cash             (110,144)       168,606                (1,002)

CASH, beginning of period         109,142         (5,251)                    0
                             ------------   ------------   -------------------

CASH, end of period          $     (1,002)  $    163,355   $            (1,002)
                             ============   ============   ===================
</TABLE>

The accompanying notes are an integral part of the financial statements.

                              F-6
<PAGE>
              VIRTUAL GAMING ENTERPRISES, INC.
              (A Development Stage Enterprise)
               NOTES TO FINANCIAL STATEMENTS

(1) SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
    THE COMPANY   Virtual Gaming Enterprises, Inc. is a
Nevada chartered development stage corporation which
conducts business from its headquarters in Escondido,
California.  The Company was incorporated on August 9, 1990.
The operating company, now dissolved, was established in
November 1997.

    The Company has not yet engaged in its expected
operations.  The Company's future operations will be to
provide casino gambling via the Internet.  Current
activities include raising additional equity and negotiating
with potential key personnel and facilities.  There is no
assurance that any benefit will result from such activities.
The Company  will not receive any operating revenues until
the commencement of operations, but will nevertheless
continue to incur expenses until then.

    The following summarize the more significant accounting
and reporting policies and practices of the Company:

        A) START-UP COSTS Costs of start-up activities,
including organization costs, are expensed as incurred, in

accordance with Statement of Position (SOP) 98-5.

        B)  NET LOSS PER SHARE Basic is computed by dividing
the net loss by the weighted average number of common shares
outstanding during the period.

        C) USE OF ESTIMATES  The financial statements have
been prepared in conformity with generally accepted
accounting principles.  In preparing the financial
statements, management is required to make estimates and
assumptions that affect the reported amounts of assets and
liabilities as of the date of the statements of financial
condition and revenues and expenses for the period then
ended.  Actual results may differ significantly from those
estimates.

        D) PROPERTY AND EQUIPMENT  All property and
equipment are recorded at cost and depreciated over their
estimated useful lives, using the straight-line method.
Upon sale or retirement, the costs and related accumulated
depreciation are eliminated from their respective accounts,
and the resulting gain or loss is included in the results of
operations.  Repairs and maintenance charges which do not
increase the useful lives of the assets are charged to
operations as incurred. Depreciation expense was $833 and $0
for the periods ended May 31, 1999 and 1998, respectively.

        E) SIGNIFICANT ACQUISITION  In June 1998, Interbet,
Inc. issued 13,136,539 shares of common stock to acquire all
of the issued and outstanding shares of the common stock of
Virtual Gaming Enterprises, Inc. (VGEI) in a reverse merger,
accounted for as a reorganization of VGEI.

        F) PRINCIPLES OF CONSOLIDATION  The consolidated
financial statements include the accounts of Virtual Gaming
Enterprises, Inc. (VGEI) and its wholly owned subsidiary and
majority owned subsidiary.  Inter-company balances and
transactions have been eliminated.

(2) ADVANCES RECEIVABLE - RELATED PARTIES   The Company has

advanced $104,506 to officers of the Company.  These advances
are due on demand and carry no stated interest rate.

(3) STOCKHOLDERS' EQUITY   The Company has authorized
25,000,000 shares of $0.001 par value common stock.  The
Company had 8,287,701 shares of common stock issued and
outstanding at May 31, 2000.  The Company, in August 1990,
issued 1,000,000 shares for $1,000 in cash.  In August 1996,
the Company issued 100,000 shares for $50,000 in cash.  In
December 1997, the Company issued 4,973,108 shares in
conjunction with the acquisition of Interbet, Inc.  In June
1998, the Company issued 2,000,000 shares in exchange for
services valued at $313,200.  In June 1998, the Company
issued 600,000 shares in settlement of a loan amounting to
$93,957.  In June 1998, the Company issued 1,400,000 shares
for $46,400 in cash. In June 1998, the Company

                           F-7
<PAGE>
            VIRTUAL GAMING ENTERPRISES, INC.
           (A Development Stage Enterprise)
            NOTES TO FINANCIAL STATEMENTS

(3) STOCKHOLDERS' EQUITY (CONTINUED) issued 13,136,539
shares for the acquisition of Virtual Gaming Enterprises,
Inc.  In February 1999, the Company completed a reverse
split of its common stock, leaving 501,873 shares issued and
outstanding.  During the fourth quarter of fiscal 1999, the
Company issued 1,679,949 shares for $186,062 in cash.
During the Year ended May 31, 2000, the Company issued
6,105,879 shares for $3,169,759.  During the quarter ending
August 31, 2000, the Company paid out of additional paid in
capital $48,265 for raising these funds.  During the quarter
ending November 30, 2000, the Company raised 83,000 in cash.

(4) INCOME TAXES  Deferred income taxes (benefits) are
provided for certain income and expenses which are
recognized in different periods for tax and financial
reporting purposes.  The Company has net operating loss

carry-forwards for income tax purposes of approximately
$1,694,798, expiring $20,506 at May 31, 2018, $311,214 at
May 31, 2019 and $1,185,872 at May 31, 2020 and $177,207 at
May 31, 2021.

The amount recorded as deferred tax assets is approximately
$227,639 and $50,000 as of May 31, 2000 and May 31, 1999,
respectively, and $283,395 at November 30, 2000, which represents
the amount of tax benefit of
the loss carryforward.  The Company has established a 100%
valuation allowance against this deferred tax asset, as the
Company has no history of profitable operations.

(5) GOING CONCERN As shown in the accompanying financial
statements, the Company incurred a net loss of $1,694,799
for the period from November 1997 (Inception) through August
31, 2000.  The ability of the Company to continue as a going
concern is dependent upon commencing operations and
obtaining additional capital and financing.  The financial
statements do not include any adjustments that might be
necessary if the Company is unable to continue as a going
concern.  The Company is currently seeking financing to
allow it to begin its planned operations.

(6) RELATED PARTIES  As discussed in Note 2, the Company
extended an advance to an officer.  Related party balances
and amounts for the period since inception, (November 1997),
ended November 30, 2000 are as follows:

   Advance receivable - related party       $104,506
                                            ========

(7) INTANGIBLE ASSETS During the year ended May 31, 2000,
the Company Entered into agreements for the development of
software that Will provide gaming capabilities on the
internet.  The Company has Invested $2,093,001 during the
year for 17 of these programs.  The Company plans to lease
and/or manage these sites for a fee.  In May 1999, the
Company formed Hung Sai, Ltd., a Nevis Corporation.  In May
1999, Hung Sai entered into a license agreement with a third

party to provide an Internet gateway for future Internet
casinos to be located in St. Kitts, West Indies.  This
agreement required a $60,000 initial license fee and future
revenue sharing from the Company's future on-line casinos.
The Company expects to amortize the license fee over a five-
year period, once commercialization has begun.

(8) COMMITMENTS AND CONTINGENCIES  EMPLOYMENT AGREEMENTS In
July 1998, the Company entered into employment agreements
with two of its officers.  These agreements have three-year
terms expiring June 30, 2001.  The agreements contain base
pay amounts of $250,000, $280,000 and $325,000, combined.
These contracts also call for the issuance of options for
3,000,000 shares of the Company's common stock, 1,500,000 of
which vested on December 1, 1998, and 150,000 per month
beginning June 1, 1999 for a period of ten months.

(9) LEGAL PROCEDINGS   On or about June 11, 1999, the United
States Securities and Exchange Commission initiated a
proceeding in the United States District Court, Southern
District of California, against the Company seeking to hold
the Company in Civil Contempt for failure to respond to a
Subpoena issued by the Commission.  The Court granted the
Commission's request and issued an Order that sanctioned the
Company Ten Thousand ($10,000.00) Dollars per day until such
time as it complied with the Commission's Subpoena.

Subsequent to the Company's compliance with the Commission's
Subpoena, the Company and the Commission entered into a
Stipulation and Order whereby the Company, having purged
itself of the civil contempt citation, agreed to pay and did
pay Ten Thousand ($10,000.00) Dollars as a sanction. The
Stipulation and Order was signed by the Court and filed on
or about November 18, 1999.

Virtual Gaming Enterprises, Inc., and its President, Virgil
Williams, in or about May, 2000, submitted Offers of
Settlement to the United States Securities and Exchange
Commission that stemmed from certain matters reviewed by the
Commission.


The Company, without admitting or denying any wrongdoing,
consented to entry of an Order by the Commission that:

     A)     Orders it to cease and desist from committing or
causing any violation, and any future violation, of Section
13(a) of the Exchange Act and Rules 13a-1 and 13a-13
thereunder; and

     B)      Orders the effectiveness of Virtual Gaming's
Form S-8 be suspended.

On July 24, 2000, the Company and the Commission agreed to
modify a portion of this Offer of Settlement to reflect
that, "As a result of Virtual Gaming's failure to meet its
reporting obligations, the Form S-8 never became effective."

Virgil Williams, without admitting or denying any
wrongdoing, consented to entry of an Order by the Commission
that:

     A)     Orders him to cease and desist from committing
or causing any violation, and any future violation, of
Section 17(a) of the Securities Act and Section 10(b) of the
Exchange Act and Rule 10b-5 thereunder.

Both of these Offers of Settlement have yet to be acted upon
by the Commission.

     In a civil proceeding filed in the United States
District Court for the Eastern District of New York in
January 2000, identified by Case Number 00 CIV 0276,
Platinum I.T. Consulting, Inc., and Edward Marian, alleged
that Virtual Gaming Enterprises, Inc., Virgil Williams,
Brenda Williams and others violated Section 12(1) of the
Securities Act, Violated Section 10(b) of the Exchange Act
and Rule 10b-5 thereunder, Breached their Contract(s) with
Plaintiff(s), Fraudulently Induced Plaintiff(s) to purchase
the Company's securities, Converted Plaintiff(s) funds, and
were Unjustly Enriched at Plaintiff's expense. Plaintiffs

sought damages in excess of Five Million ($5,000,000.00)
Dollars.

The Company deemed it in its best interest to resolve this
matter, as the costs and fees for defense would largely
outweigh the costs of resolution. Accordingly, without
admitting or denying the allegations in the Complaint, the
Company and Virgil and Brenda Williams entered into a
Settlement and Consent Judgment whereby they agreed to
compensate the Plaintiffs in the amount of $170,00.00 within
75 days of the effective date of the Settlement and Consent
Judgment.

Due to the hospitalization of the Company's President Virgil
Williams, the Company did not make payment as required under
the Settlement and Consent Judgment. As a result, and by the
terms and provisions of the Settlement and Consent Judgment,
the Settlement Obligation has increased to $250,000.00. The
Company expects to remit this amount to the Plaintiffs, in
care of Plaintiffs' Attorney, in short order.

On February 14, 2000, the State of Indiana, Office of the
Secretary of State, Securities Division, filed an
Administrative Complaint against Virtual Gaming Enterprises,
Inc., Virgil Williams and others, alleging that all
Respondents sold and/or offered for sale certain securities
in violation of Indiana State Law. On this same date, the
Indiana Securities Division requested and received a Cease
and Desist Order.

On March 2, 2000, Virtual Gaming Enterprises, Inc., and
Virgil Williams filed their Answer and Affirmative Defenses
to the Administrative Complaint and demanded an immediate
administrative hearing pursuant to the terms and provision
of the Indiana Securities Act that requires a hearing to be
set within 45 days of the Indiana Securities Division.
Virtual Gaming Enterprises, Inc., and Virgil Williams have
and do expressly deny any and all allegations made against
them in the Administrative Complaint.


Counsel for the Company and Mr. Williams, having not had a
response to the hearing demand, provided the Indiana
Securities Division a second copy of the Answer and
Affirmative Defenses and Demand for Hearing via facsimile on
March 17, 2000. Subsequent to March 17, 2000, Counsel for
the Company made several attempts to contact the Indiana
Securities Division via telephone, leaving messages for the
Deputy Commissioner, Enforcement, who apparently is
responsible for this proceeding. The Indiana Securities
Division has never responded to the Demand for Hearing or
the telephonic inquiries of counsel.

Finally, in January or February 2000, Virtual Gaming
Enterprises, Inc., was named as a Defendant in a Complaint
for Interpleader filed in the Third Judicial District Court
in and for Salt Lake County, State of Utah, and identified
as Civil No. 000901201. Therein, National Stock Transfer,
Inc., the transfer agent for the Company's Stock, due to
competing demands for certain certificates. This action
remains pending.

10. SHORT-TERM LIABILITIES The Company entered into 17
agreements whereby they have invested funds with
International Business Assoc. Corp. to develop the software
for internet gaming sites.  The agreements mature on April
1, 2003 and accrue interest at a rate of 10%.  Each
agreement calls for a quarterly payment of $14,153.  The
principal and accrued interest, at the option of the holder,
become immediately due if a quarterly payment is 10 days
late.  As of May 31, 2000 the Company entered into an
informal agreement for prepayment of these notes as funds
become available.

11. Cash Flows The company has paid no interest or taxes during
the year ended May 31, 2000 and the quarters ended February 28,
2000 and 1999.  The Company has funded the purchase of intangible
assets through notes payable.  During the quarter ended November 30,
2000 the Company issued stock as compensation in accordance with
the officer's compensation agreements in the amount of $67,167.

                           F-8
<PAGE>

                       SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, the Registrant has
duly caused this 10-KSB report to be signed on its behalf
by the undersigned thereunto duly authorized.

                           VIRTUAL GAMING ENTERPRISES, INC.
                           (Registrant)

Date: April 23, 2001      /s/ Virgil G. Williams
                              -------------------------
                              Virgil G. Williams
                              President