Financial Information

                   VIRTUAL GAMING ENTERPRISES, INC.

                  (A Development Stage Enterprise)


                     AUDITED FINANCIAL STATEMENTS

                For the Quarters Ended November 30, 2001
                  and the year ended May 31, 2001

<PAGE>

INDEX TO FINANCIAL STATEMENTS



Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . F-2

Statements of Operations . . . . . . . . . . . . . . . . . . . . . F-3

Statements of Stockholders' Equity (Deficiency). . . . . . . . . . F-4

Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . F-5

Notes to Financial Statements. . . . . . . . . . . . . . . . . . . F-6
     F-1

<PAGE>


       Virtual Gaming Enterprises, Inc.
       (A Development Stage Enterprise)
              Balance Sheets
       November 30, 2001 and May 31, 2001

<TABLE>
<S>                                      <C>            <C>
                                           November         May
                                         ----------     ----------
ASSETS
CURRENT ASSETS
   Cash                                  $        0     $    2,045
   Advance receivable - related party        14,355         82,198
                                         ----------     ----------
     Total current assets                    14,355         84,243

PROPERTY AND EQUIPMENT
   Equipment                                  5,000          5,000
   Less: accumulated depreciation            (5,000)        (4,167)
                                         ----------     ----------


      Total property and equipment                0            833

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                             $3,759,355     $3,830,076
                                         ==========     ==========

LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIENCY)

 CURRENT LIABILITIES
   Bank overdraft                        $      288              0
   Accrued salaries payable                 604,382        441,882
   Accrued litigation payable               283,750        272,500
   Short-term notes payable               1,798,464      1,711,575
                                         ----------     ----------
     Total current liabilities            2,686,884      2,425,957


Total Liabilities                         2,686,884      2,425,957


STOCKHOLDERS EQUITY (DEFICIENCY)
   Common stock, $0.001 par value,
     authorized 25,000,000 shares;
     40,303,067 and 40,303,067 issued
     and outstanding shares                  40,303         40,303
   Additional paid-in capital             3,930,948      3,930,948
   Stock held in treasury, 20,000,000       (20,000)       (20,000)
   Deficit accumulated during
     the development stage               (2,878,780)    (2,547,132)
                                         ----------     ----------
     Total Stockholders
           Equity (Deficiency)            1,072,471      1,404,119
                                         ----------     ----------
Total Liabilities and Stockholders
           Equity (Deficiency)           $3,759,355     $3,830,076
                                         ==========     ==========
</TABLE>

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

                              F-2

<PAGE>




              Virtual Gaming Enterprises, Inc.
              (A Development Stage Enterprise)
                 Statements of Operations
    For the Six Months Ending November 30, 2001 and 2000
       and Period Since Inception Ended May 31, 2001

<TABLE>
<S>                         <C>             <C>              <C>
                                                             Period from
                                                             November 1997
                                                             (Inception)
                                                             through
                               2001            2000         May 31, 2001
                            ------------    ------------    -------------------

Revenues                    $          0    $          0    $           0

Expenses
   Compensation:
      Officers                   162,500         178,250        1,022,110
      Other                        7,200          12,000           54,073
      Consultants                  9,000           8,500          334,174
   General and
      administrative expenses     53,976          73,344          667,709
   Depreciation                      833             833            5,000
   Research and development            0           8,500          130,500
   Loss due to litigation              0               0          250,000
                            ------------    ------------    -------------------
    Total expenses              (233,509)       (281,427)      (2,463,566)
                            ------------    ------------    -------------------
Interest expense                ( 98,139)        (90,290)        (415,214)
Loss from operations            (233,509)       (281,427)      (2,463,566)
                            ------------    ------------    -------------------
Net loss                    $   (331,648)   $   (371,717)   $  (2,878,780)
                            ============    ============   ===================
Basic net loss per
    weighted average share  $       (.02)   $      (0.02)
                            ============    ============
Weighted average
    number of shares          20,303,067     18,281,159
                            ============    ============
</TABLE>

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

                              F-3

<PAGE>




               Virtual Gaming Enterprises, Inc.
              (A Development Stage Enterprise)
                 Statements of Operations
    For the Three Months Ending November 30, 2001 and 2000

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



                                2001            2000
                            ------------    ------------

Revenues                    $          0    $          0

Expenses
   Compensation:
      Officers                    81,250         100,750
      Other                        1,000           6,500
      Consultants                      0           1,000
   General and
      administrative expenses      9,766          36,585
   Depreciation                      416             417
   Research and development            0           4,000
   Loss due to litigation              0               0
                            ------------    ------------

    Total expenses               (92,432)       (149,252)
                            ------------    ------------
Interest expense                 (49,373)        (45,259)
Loss from operations             (92,432)       (149,252)
                            ------------    ------------

Net loss                    $   (141,805)   $   (194,511)
                            ============    ============

</TABLE>

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

                              F-3
             Virtual Gaming Enterprises, Inc.
              (A Development Stage Enterprise)
         Statement of Changes in Stockholders' Equity
 For the Years and Period Since Inception through November 30, 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     230,280     (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             2,848,700   2,849     448,984                  451,833

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 stock      20,000,000  20,000                               20,000


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

Net loss                                                (1,029,540)(1,029,540)
                   -------------- ------- ----------- ------------ -----------
BALANCE
 May 31, 2001         20,303,067  20,303    3,930,948   (2,547,132) 1,404,119

Net Loss                                                  (331,648)  (331,648)
                   -------------- ------- ----------- ------------ -----------

Balance
 November 30, 2001    20,303,067 $20,303  $ 3,930,948 $ (2,878,780) $1,072,471
                   ============== ======= =========== ============ ===========
</TABLE>

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

                              F-4

<PAGE>


              Virtual Gaming Enterprises, Inc.
              (A Development Stage Enterprise)
                   Statement of Cash Flows
     For the Six Months Ended November 30, 2001 and 2000
          and Period Since Inception Ended May 31,



<TABLE>
<S>                           <C>          <C>              <C>
                                                            Period from
                                                            November 1997
                                                            (Inception)
                                                            through
                                  2001           2000       May 31, 2001
                              ------------   ------------   -------------------

CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss                      $   (331,648)  $   (371,717)  $  (2,878,780)
Adjustments to reconcile net
 loss to net cash used
 for operating activities:
    Depreciation                       833            833           5,000
    Loss due to litigation               0              0         250,000
    Compensation by stock                0              0          67,167
Changes in operating
 assets and liabilities:
    (Increase) decrease advance
      receivable - related party    67,843        (42,173)        (14,355)


    Increase (decrease) overdraft      288         33,265             288
    Increase (decrease) accrued
      salaries payable             162,500         85,625         604,382
    Increase (decrease) accrued
      Interest payable              98,139         90,289         415,214
                              ------------   ------------   -------------------
Net cash used by
  operating activities              (2,045)      (203,878)     (1,551,084)
                              ------------   ------------   -------------------

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             0       (1,958,001)
                              ------------   ------------   -------------------
Net cash (used) provided by
  investing activities                   0             0       (2,303,001)
                              ------------   ------------   -------------------

CASH FLOW FROM FINANCING ACTIVITIES:
     Proceeds from issuance
       of common stock and
       Commissions paid                  0        34,735        3,854,085
                              ------------   ------------   -------------------
Net cash provided by
  financing activities                   0        34,735        3,854,085
                              ------------   ------------   -------------------

Net increase
  (decrease) in cash                (2,045)      (142,407)              0

CASH, beginning of period            2,045        109,142               0
                              ------------   ------------   -------------------

CASH, end of period           $          0  $      38,765  $            0
                              ============   ============  ===================
</TABLE>

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

                              F-5

<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 has advanced
        $82,198 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
        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

     F-6

<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 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.

(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 $2,547,132, expiring $20,500 at
        May 31, 2018, $311,200 at May 31, 2019, $771,523 at May 31, 2020
	and$154,500 at May 31, 2021.

        The amount recorded as deferred tax assets is approximately
        $382,100 and $227,700 as of May 31, 2001 and May 31, 2000,
        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 $2,547,132 for the period
        from November 1997 (Inception) through May 31, 2001.  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 officers.  Related party balances and amounts
        for the period since inception, (November 1997), ended May
        31, 2001 are as follows:


               Advance receivable - related party       $ 82,198
                                                        ========

(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) 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   The Company is currently dealing with questions that
        the U.S. Securities and Exchange Commission (SEC) has about the
        Company and timely filing of the financial reports of the Company.
        The Company and its attorney has disclosed that the SEC may have
        further questions and may bring an enforcement action.  The Company
        intends to defend itself if an action is taken.  The Company is
        involved in a lawsuit with Silicon Valley IPO Net work, et all.  The
        Company and its attorney has disclosed that a settlement will be
        discussed.  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 the Company 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 provisionsof 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.


     F-7

<PAGE>

<SEQUENCE>2

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BALANCE SHEET AND STATEMENTS OF OPERATIONS AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH 10KSB FOR THE YEAR ENDED MAY 31, 2001.
</LEGEND>

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, 2001 and 2000.  For the quarter ended November 30, 2001, the
registrant recognized a net loss of $141,805 as compared to $194,511 during
the prior year's quarter.  For the year ended November 30, 2001, the
registrant recognized a net loss of $331,648 as compared to $371,717 during
the prior year.  Some compensation expenses, general and administrative cost
were accrued.  All of the interest expense of $49,373 was accrued during the
quarter.  Expenses for general and administrative were comprised of costs
mainly associated with office overhead, trave, legal and accounting fees.

Liquidity and Capital Resources

At November 30, 2001 the Company had not raised capital from the issuance
of stock. At November 30, 2000 the Company had raised $34,735 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.