<PAGE>

             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 period ended February 29, 2004.

[ ]      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]

       198,485,771 Common Shares, $0.001 Par Value, Issued and Outstanding



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                   VIRTUAL GAMING ENTERPRISES, INC.

                   (A Development Stage Enterprise)

                         FINANCIAL STATEMENTS

INDEX TO FINANCIAL STATEMENTS

Balance Sheet...........................................................     F-2

Statement of Operations.................................................     F-3

Notes to Financial Statements...........................................     F-4



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<TABLE>

                         Virtual Gaming Enterprises, Inc.
                         (A Development Stage Enterprise)
                                   Balance Sheet
<CAPTION>

                                                       February 29,     May 31,
                                                          2004           2003
                                                       ------------   ------------
<S>                                                    <C>            <C>
ASSETS
CURRENT ASSETS
         Cash                                          $        29    $        34
         Advances Receivables
                                                       ------------   ------------
         Total Current Assets                          $        29    $        34

OTHER ASSETS
         Intangible Assets                             $ 3,745,000    $ 3,745,000
                                                       ------------   ------------
         Total Other Assets                            $ 3,745,000    $ 3,745,000
                                                       ------------   ------------
TOTAL ASSETS                                           $ 3,745,029    $ 3,745,034
                                                       ============   ============

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
CURRENT LIABILITIES
         Accrued Salaries Payable                      $ 1,335,632    $ 1,091,882
         Accrued Litigation Payable                        334,375        317,500
         Loan Payable-Related Parties                    2,245,824      2,085,331
         Short-Term Notes Payable                          106,387         91,262
                                                       ------------   ------------
         Total Current Liabilities                     $ 4,022,218    $ 3,585,975
                                                       ------------   ------------
TOTAL LIABILITIES                                      $ 4,022,218    $ 3,585,975
STOCKHOLDERS' EQUITY (DEFICIENCY)
         Common Stock, 0.001 par value,                $    40,141    $    40,142
            authorized 200,000,000 shares,
            198,485,771 and 159,485,771 issued and
            outstanding, respectively
         Additional Paid in Capital                      3,931,108      3,931,108
         Stock held in Treasury,                           (20,000)       (20,000)
            85,008,000 and 400,000,000 respectively
         Deficit Accumulated Since Inception            (4,228,438)    (3,792,191)
                                                       ------------   ------------
         Stockholders' Equity (Deficiency)             $  (277,189)   $  (159,059)
                                                       ------------   ------------
TOTAL LIABILITIES and EQUITY                           $ 3,745,029    $ 3,745,034
                                                       ============   ============

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

                                       F-2
</TABLE>


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<TABLE>

                         Virtual Gaming Enterprises, Inc.
                         (A Development Stage Enterprise)
                             Statement of Operations
          For the Quarters ended February 29, 2004 and February 28, 2003
                   And From Inception Through February 29, 2004

                             February 29,       February 28,      September 1997
                                                                   (Inception)
                           ----------------   ----------------   ----------------
<S>                        <C>                <C>                <C>
Revenues                   $          0.00    $          0.00    $           0.00

Expenses
Compensation
         Officers                81,250.00          81,250.00       1,509,610.00
         Others                       0.00               0.00          54,073.00
Consultants                           0.00               0.00         335,174.00
General & Administrative          5,064.00           4,507.00         728,284.00
Depreciation                          0.00               0.00           5,000.00
Research & Development                0.00               0.00         130,500.00
Loss Due to Litigation                0.00               0.00         250,000.00
                           ----------------   ----------------   ----------------
Total Expenses             $     86,314.00    $     85,757.00    $  3,012,641.00

Interest Expense                 60,255.00          54,573.00         751,470.00
                           ----------------   ----------------   ----------------

Loss From Operations       $   (146,569.00)   $   (140,330.00)   $ (3,764,111.00)
                           ================   ================   ================

Weighted Loss Per Share             (.0108)            (.0115)            (.0934)

Weighted Average Shares         40,303,067         40,303,067         40,303,067

                                      F-3
</TABLE>



<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.

         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.

2) ADVANCES RECEIVABLE - RELATED PARTIES
         The Company had borrowed $91,262 for the year ended May 31, 2003 and
         $28,032 for the year ended May 31, 2002 from officers. The Company had
         advanced $82,198 to officers of the Company during the year ended May
         31, 2001. These loan receivables and advances are due on demand and
         carry no stated interest rate.

(3) STOCKHOLDERS' EQUITY
         The Company has authorized 50,000,000 shares of $0.001 par value common
         stock. The Company had 40,303,067 shares of common stock issued and
         outstanding at May 31, 2001 and 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



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                        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 year ended May 31, 2001, the Company issued 2,848,700 shares for
         $451,833, 9,166,666 shares as compensation for $67,167 and 20,000,000
         shares as treasury stock for $20,000.

         On June 18, 2001, the Company issued 775,000 common shares to the
         Company's officers in accordance with their compensation agreements for
         a value of $7,750. On November 10, 2001, the Company authorized a
         50-for-1 reverse stock split. On April 15, 2002, the Company issued
         10,000,000 common shares to the Company's officers in accordance with
         compensation agreements for a value of $100,000. On April, 2002, the
         Company issued 10,993,851 common shares in accordance with agreements
         entered into with consultants for a value of $109,939. In August of
         2002, the Company authorized a 50-for-1 reverse stock split. On
         September 10, 2002, the Company issued 40,000,000 shares of common
         shares to its Company officers under a compensation and anti-share
         dilution agreement for a value of $40,000. During the year ended May
         31, 2003, the Company entered into several consulting agreements with
         Company consultants whereby the company issued as compensation
         34,427,879 common shares of stock for a value of $34,428.

(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 $2,649,532,
         expiring $20,500 at May 31, 2018, $311,200 at May 31, 2019, $771,523 at
         May 31, 2020, $154,500 at May 31, 2021, $690,115 at May 31, 2022 and
         102,400 at May 31, 2023.

         The amount recorded as deferred tax assets is approximately $1,072,185
         and $382,100 as of May 31, 2002 and May 31, 2001, respectively, 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 $6,704,309 for the period from November 1997 (Inception)
         through May 31, 2003. 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) ASSET IMPAIRMENT
         In accordance with Financial Accounting Standard 121, "Accounting for
         the Impairment of Longed-Lived assets", the Company's management has
         reviewed its purchase and investments in internet gaming and
         business-to-business web sites and has determined, based on future cash
         in-flows, that these assets have been impaired with a loss of
         $2,620,000. The Company intends to continue its efforts to redesign its
         gaming sites and direct the sites to a different market.

(7) INTANGIBLE ASSETS
         During the year ended May 31, 2001, the Company has engaged consultants
         to upgrade operating systems for the internet gambling casinos. 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 $1,898,001 during the year 2000
         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) EMPLOYMENT AGREEMENTS
         In July of 2001, the Company extended its employment agreements with
         two of its officers whereby the agreements call for base pay amounts to
         total $325,000. The agreement also calls for stock to be issued as
         compensation in order to maintain the officer's percentage of ownership
         of all outstanding stock as well as stock bonuses. 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 Compan'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,
         On 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. On July 29, 2002 the investigation
         had been terminated and no enforcement action has been recommended to
         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.



<PAGE>

Item 2. Management's Discussion and Analysis of Financial Conditions and Results
of Operations

Plan of Operation

The Registrant is continuing its efforts to provide management of, rent of or
sales of casino gambling via the internet. The casinos are currently in the
testing stage of their development. It is possible that the registrant will be
successful in this plan of operation; however, there is no assurance for
success.

Results of Operation

The Company did not have any operating income during the quarters ended November
30, 2003 and 2002. For the quarter ended November 30, 2003, the registrant
recognized a net loss of $145,206 as compared to $198,907 during the prior
year's quarter. Some compensation expenses, general and administrative cost were
accrued. The Company issued stock for a value of $319,000 for consulting
services. All of the interest expense of $58,187 was accrued during the quarter.
Expenses for general and administrative were comprised of costs mainly
associated with office overhead, legal and accounting fees.

Liquidity and Capital Resources

At November 30, 2003 the Company had not raised capital from the issuance of
stock. The Company had no other capital resources other than funding casinos
with notes payable from the creators of those casinos and the possibly of
raising operating capital through the sale of additional common stock.

                                     Part II
                                OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

         See footnote 9 to the financial statements included herein.

ITEM 2. CHANGES IN SECURITIES

         Inapplicable/None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

         Inapplicable/None.

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

         Inapplicable/None.

ITEM 5. OTHER INFORMATION

         Inapplicable/None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

         A. EXHIBITS

         Exhibit 31.1:    Certification pursuant to Rule 13a-14(a) or 15d-14(a)
                          under the Securities Exchange Act of 1934, as
                          amended.*

         Exhibit 32.1:    Certification of Chief Executive Officer and President
                          of the Company, pursuant to 18 U.S.C. Section 1350, as
                          adopted pursuant to Section 906 of the Sarbanes-Oxley
                          Act of 2002.*

         * Filed herewith

         B. REPORTS ON FORM 8-K

         None



<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: July 26, 2004                  /s/ Virgil G. Williams
                                        -------------------------
                                        Virgil G. Williams
                                        President