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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                             ----------------------

                                    FORM 20-F

                                   (MARK ONE)
[ ]     REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE
        SECURITIES EXCHANGE ACT OF 1934
OR

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

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

        For the transition period from May 1, 2001 to December 31, 2001

                         Commission file number 0-32793

                                WORLD GAMING PLC
                       -----------------------------------
             (Exact Name of Registrant as Specified in Its Charter)

                                England and Wales
                 (Jurisdiction of Incorporation or Organization)

                               33 St. James Square
                                 London, England
                  Tel: (44) 207-661-9332 Fax: (44) 207-661-9400
                    (Address of Principal Executive Offices)

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

        Securities registered pursuant to Section 12(g) of the Act: Ordinary
Shares, nominal value (pound)0.002 per share, represented by American Depositary
Shares evidenced by American Depositary Receipts.

        Securities for which there is a reporting obligation pursuant to Section
15(d) of the Act: NONE

Indicate the number of outstanding shares of each of the issuer's classes of
capital or common stock as of the close of the period covered by the annual
report: As of December 31, 2001, the Registrant had 34,193,181 Ordinary Shares
issued and outstanding, nominal value (pound)0.01 per share.


        Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 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 [ ]    No [X]

        Indicate by check mark which financial statement item the registrant has
elected to follow.  [X] Item 17    [ ] Item 18
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                                        WORLD GAMING PLC

                                 TRANSITION REPORT ON FORM 20-F
                FOR THE TRANSITION PERIOD FROM MAY 1, 2001 TO DECEMBER 31, 2001

                                       TABLE OF CONTENTS

<S>                                                                                         <C>
Certain Definitions and Conventions..........................................................1

Special Note Regarding Forward-Looking Statements............................................1

PART I.......................................................................................2

   Item 1. Identity of Directors, Senior Management and Advisors.............................2

   Item 2. Offer Statistics and Expected Timetable...........................................2

   Item 3. Key Information...................................................................2
           Selected Financial Data...........................................................2
           Risk Factors......................................................................3
       We have experienced net losses in the past............................................3
       We have three customers who account for a substantial portion of our revenues, and the
       loss of any of them may significantly impact our cash flow............................4
       We need additional financing and there is no assurance it can be obtained.............4
       We have been involved in civil and criminal litigation, which has resulted in
       significant expenses and other consequences...........................................4
       We have experienced turnover among our senior management and directors................4
       The Internet gaming industry may be sensitive to economic conditions..................4
       We may be subject to regulation of Internet gaming....................................5
       We face significant competition and there is no assurance that we will be able to
       compete...............................................................................5
       Our software and hardware systems may face problems if the volume of usage increases..5
       Our future growth depends on continued growth in the use of the Internet..............6
       Our computer systems face online security risks.......................................7
       Our licensees rely on credit cards for a substantial portion of the deposits by their
       customers.............................................................................7
       The market for Internet services is in a state of rapid technological change and we
       may not be able to keep up............................................................7
       We must continue to improve and expand our skills and personnel to expand our business
       operations, but may not be able to do so..............................................8
       We have limited intellectual property protection and there is risk that our
       competitors will be able to appropriate our technology................................8
       We may be held liable for the content of our web sites................................8
       The trading market for our shares may be illiquid.....................................8
       We may be subject to product liability claims,and we lack product liability insurance.8
       We may become subject to changes in English law or political circumstances............9
       You may be subject to both United States and United Kingdom taxes.....................9
       United States civil liabilities may not be enforceable against us.....................9
       Our reporting obligations under the U.S. securities laws differ from those of U.S.
       issuers, and you may find it difficult to evaluate our performance quarterly..........9
       Under English law a vote of the holders of 75% or more of our issued and outstanding
       shares is required to approve certain corporate matters..............................10
       Significant adverse U.S. federal tax consequences could arise for U.S. Holders under
       the passive foreign investment company rules.........................................10

   Item 4. Information on the Company.......................................................11
           History and Development..........................................................11
           Our Operations...................................................................12
           Restructuring of Operations......................................................13

                                               i
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<S>                                                                                        <C>
           Marketing........................................................................13
           Competitive Environment..........................................................13
           Intellectual Property............................................................14
           Technology.......................................................................14
       Redundant High-Speed Network.........................................................14
       Security Measures....................................................................15
           Products and Services............................................................16
       Casino Games.........................................................................16
       The Sportsbook.......................................................................16
       Partner's Program....................................................................16
       Pari-mutuel Gaming...................................................................17
       EFS Server, Reporting and Tools......................................................17
           Gaming Products Under Development................................................18
       Poker................................................................................18
       Wireless Casino/Sportsbook...........................................................18
       Sports Betting.......................................................................18
           Our Licensees....................................................................18
           Business Strategy................................................................19
       Rapidly Penetrate the Internet Gaming Markets........................................19
       Provide High Quality, Innovative and Superior Products and Services..................19
       Maintain Technological Lead..........................................................19
           Organizational Structure.........................................................21
       WG International Limited.............................................................21
       World Gaming Europe Limited...........................................................i
       Starnet Communications International, Inc............................................21
       Starnet Systems International Inc....................................................21
       EFS Subsidiaries.....................................................................22
       Inphinity Interactive Inc............................................................22
       602662 British Columbia Ltd..........................................................22
       World Gaming Services Inc............................................................22
       WorldBroadcasts.com Inc..............................................................22
       Starnet Communications Canada Inc....................................................23
           Government Licensing and Regulation and Related Risks............................23
           Property, Plants and Equipment...................................................25
       United Kingdom.......................................................................25
       Antigua..............................................................................25
       Canada...............................................................................25
       Equipment............................................................................25

   Item 5. Operating and Financial Review and Prospects.....................................25
           Change in Fiscal Year............................................................25
           Results of Operations............................................................26
           Liquidity and Capital Resources..................................................27
           Commitments......................................................................29
           Research and Product Development.................................................29
           Trend Information................................................................29

   Item 6. Directors, Senior Management and Employees.......................................30
           Directors and Senior Management..................................................30
           Background Information Concerning Directors......................................30
       Clare Kamau Roberts, Director........................................................30
       Harold Nicholas Shaw Jackson, Director...............................................30
           Background Information Concerning Senior Management and Certain Key Employees....31
       David Craven, Chief Executive Officer................................................31

                                              ii
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<S>                                                                                        <C>
       Mark A. Thompson, Vice President of Finance..........................................31
       Liam Gillen, Managing Director, Antigua..............................................31
       David Fleming, Managing Director, Inphinity Interactive Inc..........................31
       Jason Joseph Bolduc, Vice President of Information Technology........................32
           Compensation.....................................................................32
       Compensation of Our Senior Management................................................32
           World Gaming plc 2001 Share Option Plan..........................................35
       Number of Ordinary Shares............................................................36
       Eligibility..........................................................................36
       Grant of Options.....................................................................36
       Option Price.........................................................................36
       Exercise of Options..................................................................36
       Issues of Ordinary Shares or ADSs....................................................37
       Variation in Share Capital...........................................................37
       Termination of the 2001 Plan.........................................................37
       Amendments...........................................................................37
           Board Practices..................................................................37
           Committees of the Board of Directors.............................................37
       Audit Committee......................................................................37
       Compensation Committee...............................................................38
       Strategic Planning Committee.........................................................38
           Employees........................................................................38
           Share Ownership of Senior Management.............................................39

   Item 7. Major Shareholders and Related Party Transactions................................39
           Major Shareholders...............................................................39
       Significant Changes in Ownership of Ordinary Shares..................................40
       Securities and Record Holders in the United States...................................40
       Change of Control....................................................................40
           Related Party Transactions.......................................................40
       Simpson Bay Ltd. and AIM Investments Ltd.............................................40
       Settlement of Dispute with Chisel Inc................................................40
       Loan agreement with Sportingbet Plc..................................................40

   Item 8. Financial Information............................................................41
           Consolidated Financial Statements................................................41
           Legal Proceedings................................................................41
       Her Majesty the Queen in Right of Canada.............................................41
       Canada Customs and Revenue Agency ("CCRA")...........................................42
       Las Vegas Casino Inc. lawsuit........................................................42
       U.S. Delaware Class Action Claims....................................................42
       Our claims against Wiremix Media Inc.................................................43
       Lawsuit by our former Vice President, Finance Chris Thompson.........................43
       Subpoenas Received by Our Auditors...................................................43
       Lawsuit by Casino on Air World Entertainment Ltd.....................................43
           Policy on dividend distribution..................................................44

   Item 9. The Offer and Listing............................................................45
           Nature of Trading Market.........................................................45
           Dividend Information.............................................................46
           Registrar, Transfer Agent and Depositary.........................................46

   Item 10. Additional Information..........................................................46
           Memorandum of Association and Articles of Association............................46
           Board Action and Powers..........................................................46

                                              iii
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<S>                                                                                        <C>
       Borrowing Powers.....................................................................47
       Compensation and Expenses............................................................47
       Pensions and Other Benefits..........................................................47
       Interested Director Transactions.....................................................48
       Indemnification of Directors.........................................................49
           Description of Share Capital.....................................................49
       General..............................................................................49
       Ordinary Shares......................................................................49
       Issuance of Shares...................................................................49
       Alteration of Share Capital..........................................................50
       Dividend Rights......................................................................50
       Rights in Liquidation................................................................50
       Notification of Interest in Ordinary Shares..........................................50
       Voting Rights of Ordinary Shares and Shareholder Meetings............................51
       Transfer of Shares...................................................................52
       Issuance of American Depositary Shares...............................................52
       Voting of ADSs by Proxy..............................................................53
           Exchange Controls and Other Limitations Affecting Security Holders...............53
           Change of Control................................................................53
           Material Contracts...............................................................53
       The Daily Racing Form Online Affiliate Agreement between Daily Racing Form, LLC and
       Starnet..............................................................................54
       Software License Agreement between Global Interactive and Starnet Systems............54
       Operating Agreement between TrackData Systems Corporation and Starnet................55
       Operating Agreement between Bloodstock Research Information Services,Inc. and Starnet55
       AmTote International Totalisator Service Agreement...................................55
       Software License Agreement between International Gaming Ltd (f.k.a BBF International
       Gaming Antigua Inc.) and Starnet Systems.............................................55
       Loan Agreement between Starnet, World Gaming and Sportingbet PLC.....................55
           General Security Agreement with Sportingbet PLC..................................55
           Escrow Agreement with NCC Escrow International Limited...........................55
           Employment and Consulting Agreements.............................................56
       Liam Gillen, Managing Director of Operations.........................................56
       David Fleming, Managing Director, Inphinity..........................................57
           Taxation.........................................................................57
           United Kingdom Tax Consequences..................................................57
       Distributions on American Depositary Shares or Ordinary Shares.......................58
       Taxation of Capital Gains of U.S. Holders............................................58
       Inheritance Tax and Gift Taxes on U.S. Holders.......................................59
       Stamp Duty and Stamp Duty Reserve Tax................................................59
       Taxation of the Company..............................................................59
       Taxation of a U.K. Company that Controls Certain Controlled Foreign Companies........60
       Taxation of Certain Dividends Received by a U.K. Holding Company.....................60
           United States Federal Income Tax Consequences....................................60
           Tax Consequences for U.S. Holders................................................61
       Taxation of Dividends Paid on American Depositary Shares or Ordinary Shares..........61
       Taxation on disposition of ordinary shares...........................................62
       Tax consequences if we are a passive foreign investment company......................63
       Controlled foreign corporation rules.................................................66
       Foreign personal holding company and personal holding company rules..................67
       Foreign investment company rules.....................................................67
           Tax Consequences for Non-U.S. holders............................................67
       Information reporting and back-up withholding........................................67
           Taxation of the Company..........................................................68
           Documents on Display.............................................................68

                                              iv
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<S>                                                                                        <C>
   Item 11.  Quantitative and Qualitative Disclosures About Market Risk.....................68

   Item 12.  Description of Securities Other than Equity Securities.........................69

PART II.....................................................................................69

   Item 13.  Defaults, Dividend Arrearages and Delinquencies................................69

   Item 14.  Material Modifications to the Rights of Security Holders and
             Use of Proceeds from Offering..................................................69

PART III....................................................................................69

   Item 17.  Financial Statements...........................................................69
             Consolidated Financial Statements..............................................69

   Item 18.  Financial Statements...........................................................70

   Item 19.  Exhibits.......................................................................70





                                               v
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                       CERTAIN DEFINITIONS AND CONVENTIONS

        In this annual report, references to the "Company", "our company,"
"World Gaming," "we," "us" and "our" refer to World Gaming plc and one or more
of its operating subsidiaries as the context may require. World Gaming plc and
its subsidiary, WG International Ltd., are holding companies and they conduct
their businesses through their operating subsidiaries. All references to
"Starnet" refer to one of our subsidiaries, Starnet Communications
International, Inc. As a result of a holding company reorganization effected in
May 2001, we became a successor to the business of Starnet. References to $ and
"U.S. dollars" are to United States currency, any references to "(pound)",
"pounds sterling", "pence" or "p" are to U.K. currency, and any references to
"CDN" are references to Canadian currency. Percentages and certain amounts
contained herein have been rounded for ease of presentation. Any discrepancies
in any table between totals and the sums of amounts listed are due to rounding.


                SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

        We make certain forward-looking statements in this Form 20-F within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended, relating to our
financial condition, profitability, liquidity, resources, business outlook,
proposed acquisitions, market forces, corporate strategies, contractual
commitments, capital requirements and other matters. The Private Securities
Litigation Reform Act of 1995 provides a safe harbor for forward-looking
statements. To comply with the terms of the safe harbor, we note that a variety
of factors could cause our actual results and experience to differ substantially
from the anticipated results or other expectations expressed in our
forward-looking statements. When words and expressions such as: "believes,"
"expects," "anticipates," "estimates," "plans," "intends," "objectives,"
"goals," "aims," "projects," "forecasts," "possible," "seeks," "may," "could,"
"should," "might," "likely," "enable" or similar words or expressions are used
in this Form 20-F, as well as statements containing phrases such as "in our
view," "there can be no assurance," "although no assurance can be given" or
"there is no way to anticipate with certainty," forward-looking statements are
being made. These forward-looking statements speak as of the date of this Form
20-F.

        The forward-looking statements are not guarantees of future performance
and involve risk and uncertainties. These risks and uncertainties may affect the
operation, performance, development and results of our business and could cause
future outcomes to differ materially from those set forth in our forward-looking
statements. These statements are based on our current beliefs as to the outcome
and timing of future events, and actual results may differ materially from those
projected or implied in the forward looking statements. Further, some
forward-looking statements are based upon assumptions of future events which may
not prove to be accurate. The forward-looking statements involve risks and
uncertainties including, but not limited to, the risks and uncertainties
referred to under "Item 3. Key Information - Risk Factors," and elsewhere within
the document and in other of our filings with the Securities and Exchange
Commission.

        We undertake no obligation to publicly update or revise any
forward-looking statements as a result of future developments, events and
conditions outside of our control. New risk factors emerge from time to time and
it is not possible for us to predict all such risk factors, nor can we assess
the impact of all such risk factors on our business or the extent to which any
factor, or combination of factors, may cause actual results to differ
significantly from those forecast in any forward-looking statements. Given these
risks and uncertainties, investors should not overly rely or attach undue weight
to our forward-looking statements as an indication of our actual future results.

                                       1
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                                     PART I

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS.

        Not applicable.

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE.

        Not applicable.

ITEM 3. KEY INFORMATION.

        SELECTED FINANCIAL DATA

        The data below should be read in conjunction with "Item 5. Operating and
Financial Review and Prospects" and our audited consolidated financial
statements and notes relating thereto appearing elsewhere in this annual report,
and which have been audited by our independent auditors, HJ & Associates, LLC,
as of and for the eight months ended December 31, 2001, and as of and for the
years ended April 30, 2001 and 2000, and by Ernst & Young, our prior independent
auditors, as of and for the year ended April 30, 1999. The selected financial
data for the financial years ended April 30, 2000, 1999 and 1998 is derived from
the financial statements of our subsidiary Starnet, which we acquired subsequent
to the fiscal year ended April 30, 2001 pursuant to a holding company
reorganization.

        The data below, except for per share information, is in thousands of
U.S. dollars.
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                              FOR THE      FOR THE
                               EIGHT        EIGHT
                               MONTHS       MONTHS
                               ENDED        ENDED               FOR THE YEARS ENDED APRIL 30,
                              DECEMBER     DECEMBER     ----------------------------------------------
                              31, 2001     31, 2000       2001         2000         1999        1998
--------------------------    --------     --------     --------     --------     --------    --------
STATEMENT OF OPERATIONS DATA:
<S>                           <C>          <C>          <C>          <C>          <C>         <C>
Net sales ................    $ 12,107     $ 14,085     $ 20,153     $ 17,881     $  6,255    $    257

Income (loss) from
  operations .............      (2,371)      (2,925)     (17,019)      (4,886)       1,004        (746)

Income (loss) from
  continuing operations ..      (2,236)      (2,715)     (16,756)      (4,462)       1,031        (818)

Income (loss) from
  continuing operations
  per common share .......       (0.07)       (0.08)       (0.52)       (0.16)        0.04       (0.04)

Weighted average number
  of shares (in
  thousands) .............      33,997       32,170       32,201       29,625       22,952      21,003

Diluted earnings per
  share ..................       $   -        $   -        $   -         $  -       $ 0.08        $  -

Cash dividends declared
  per common share .......       $   -        $   -        $   -         $  -         $  -        $  -
--------------------------    --------     --------     --------     --------     --------    --------
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                                       2
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        Selected balance sheet data as at December 31 and April 30 for the years
indicated (in thousands of U.S. dollars):
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                           AS OF DECEMBER 31,                       AS OF APRIL 30,
                        --------------------------   ----------------------------------------------
                          2001           2000          2001        2000        1999         1998
                        ----------   -------------   ---------   ---------   ---------    ---------
BALANCE SHEET DATA:                   (UNAUDITED)
<S>                       <C>             <C>         <C>         <C>         <C>           <C>
Total assets........      $12,181         $26,099     $20,188     $27,983     $13,439       $3,275
Net assets..........        1,686          16,577       2,211      19,376       9,420        1,298
Debt obligations....        1,083           2,975       2,784         979         818          419
Capital stock.......       24,188          22,335      22,394      22,143       8,584        2,421
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        RISK FACTORS

        You should carefully consider the following risks in making an
investment decision regarding our company. If any of the following risks
actually occur, our business, financial condition or results of operations may
suffer. As a result, the trading price of our American Depositary Shares and the
value of our ordinary shares could decline, and you may lose all or part of your
investment.

WE HAVE EXPERIENCED NET LOSSES IN THE PAST.

        We had negative cash flows during the eight months ended December 31,
2001, and while we had previously reached profitability, we are not now
profitable. We had net losses from continuing operations of approximately $16.7
million for the year ended April 30, 2001, and approximately $2.2 million for
the eight months ended December 31, 2001. Our independent auditors have noted
that we have accumulated significant losses, have negative working capital and a
deficit in stockholders' equity, all of which our independent auditors believe
raise substantial doubt about our ability to continue as a going concern. Even
if we achieve profitability, we may not be able to sustain or increase
profitability on an annual basis in the future. Our future performance will
depend in part, on the amount and rates of growth in our net revenue from
licensing of our gaming software products and revenues generated by our own
Internet gaming business, and on our ability to control our operating expenses.
In addition, our future success will depend upon many factors, including those
which may be beyond our control or which cannot be predicted at this time, such
as the emergence of additional competitors, downturn in the global economy,
emergence of new technologies and changes in governmental regulations. As a
result of these and other factors, there can be no assurance that we will ever
achieve profitability.

                                       3
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WE HAVE THREE CUSTOMERS WHO ACCOUNT FOR A SUBSTANTIAL PORTION OF OUR REVENUES,
AND THE LOSS OF ANY OF THEM MAY SIGNIFICANTLY IMPACT OUR CASH FLOW.

        Three of our licensees account for a substantial portion of our
consolidated revenue. Our three largest licensees accounted for 47 %, 12% and
9%, respectively of our consolidated revenue for the eight month period ended
December 31, 2001. The loss of any of these three licensees may adversely and
significantly affect our cash flow.

WE NEED ADDITIONAL FINANCING AND THERE IS NO ASSURANCE IT CAN BE OBTAINED.

        We currently have insufficient capital to meet our future development
plans for new gaming products, and require an inflow of additional capital or
financing. There can be no assurance that any such capital or additional
financing will be available on terms acceptable to us, or at all. Any such
additional financing, if available, could result in substantial dilution of the
equity interests of existing shareholders. If additional financing is not
available, we are not certain whether we will have sufficient cash flow and
expense flexibility to bring us into a positive cash flow position.

WE HAVE BEEN INVOLVED IN CIVIL AND CRIMINAL LITIGATION, WHICH HAS RESULTED IN
SIGNIFICANT EXPENSES AND OTHER CONSEQUENCES.

        We are presently involved in several lawsuits and one of our
subsidiaries, Starnet Communications International Inc., is being investigated
by Canada Customs and Revenue Agency. We could lose these pending lawsuits and
be subject to significant damages. We have also defended ourselves against a
class action lawsuit that alleged that Starnet knowingly made material
misrepresentations regarding the nature and inherent risks of Starnet's business
in filings to the United States Securities and Exchange Commission, press
releases and other public statements. We have entered into a settlement
agreement and the plaintiffs' counsel have petitioned the court to approve the
settlement. If the settlement is approved we will have to issue one million USD
worth of our shares to the plaintiffs. An investigation by the Canadian
government authorities was settled in August 2001 and resulted in a guilty plea
by Starnet to a criminal charge and a substantial fine. There is a risk that we
or our subsidiaries will be subject to similar lawsuits or government actions in
the future. (See Item 8. Legal Proceedings and see also Item 4. Government
Regulation and Related Risks).

WE HAVE EXPERIENCED TURNOVER AMONG OUR SENIOR MANAGEMENT AND DIRECTORS.

        Several of our senior personnel including the Chairman of the Board, the
Chief Executive Officer, the Chief Financial Officer, Vice President of Finance
and all but two members of the Board of Directors have recently resigned. Our
former Chairman of the Board, Frederick Hazell resigned at the insistence of one
of our major licensees. The remaining members of the Board of Directors are
independent directors, and are not involved in our day-to-day operations. Such
senior management turnover may affect our earnings, product development
schedules, and relationships with our customers and licensees. There is a risk
that we will continue to experience the senior management turnover and would not
be able to attract and keep the experienced senior personnel necessary for our
stability and development.

THE INTERNET GAMING INDUSTRY MAY BE SENSITIVE TO ECONOMIC CONDITIONS.

        The Internet gaming industry is relatively new and there is insufficient
history for us to predict the impact that changes in economic conditions will
have on our business. Although it is likely that a downturn in the economy will
have a negative impact on our revenues, the extent of such impact is uncertain.
The U.S. economy is in recession. We have suffered losses due to the
cancellation of the sporting events after the terrorist attacks in the United
States. If consumer confidence does not rise and the US economy does not show
signs of recovery in the near future, we may lose a significant portion of our
business and revenues.

                                       4
<PAGE>

WE MAY BE SUBJECT TO REGULATION OF INTERNET GAMING.

        The licensees of our software products, and our company itself, are
subject to applicable laws in various jurisdictions. As companies and consumers
involved in Internet gaming are located around the globe, including the
end-users of our licensees, there is uncertainty regarding exactly which
governments have jurisdiction or authority to regulate or legislate with respect
to various aspects of the industry. The uncertainty surrounding the regulation
of Internet gaming could have a material adverse effect on our business,
revenues, operating results and financial condition.

        There is a risk that criminal and civil proceedings could be initiated
in various jurisdictions against us or our licensees, and such proceedings could
involve substantial litigation expense, penalties, fines, diversion of the
attention of key executives, injunctions or other prohibitions being invoked
against us or our licensees. Such proceedings could have a material adverse
effect on our business, revenues, operating results and financial condition. In
addition, as electronic commerce develops further, it may generally be the
subject of government regulation. Also, current laws that pre-date or are
incompatible with Internet electronic commerce may be enforced in a manner that
restricts the electronic commerce market. Any such developments could have a
material adverse effect on our business, revenues, operating results and
financial condition. (See Item 4. Government Licensing and Regulation and
Related Risks; and Item 8. Legal Proceedings.)

WE FACE SIGNIFICANT COMPETITION AND THERE IS NO ASSURANCE THAT WE WILL BE ABLE
TO COMPETE.

        The Internet entertainment industry involves rapid technological change
and is characterized by intense and substantial competition. Many of our
competitors are well established, substantially larger and have substantially
greater resources than we do. It is also likely that other competitors will
emerge in the future. Additionally, we will have to compete with other companies
that have greater market recognition, greater resources and broader distribution
capabilities than us. Increased competition by existing and future competitors
could materially and adversely affect our business, financial condition and
results of operations.

OUR SOFTWARE AND HARDWARE SYSTEMS MAY FACE PROBLEMS IF THE VOLUME OF USAGE
INCREASES.

        The performance of our online services is critical to our reputation and
to achieving market acceptance. Any system failure, including network, software
or hardware failure, that causes interruption or an increase in response time of
our online services could result in decreased usage of our services and, if
sustained or repeated, could reduce the attractiveness of our online services to
our clients. An increase in the volume of usage of online services could strain
the capacity of the software or the hardware employed, which could lead to
slower response time or system failures, thereby adversely affecting our
revenues.

        The process of managing traffic within large, high traffic Internet
online services such as those provided by us is an increasingly important and
complex task. Our operations are dependent in part upon our ability to protect
our operating systems against physical damage from acts of God, power loss,
telecommunications failures, physical break-ins and similar events. The
occurrence of any of these events could result in interruptions, delays or
cessation in service to users of our online services, which could have a
material adverse effect on our business, financial condition and results of
operations. A large portion of our network infrastructure is located at a
single, leased facility in Antigua, West Indies. Our systems and operations are
vulnerable to damage or interruption from fire, flood, power loss,
telecommunications failure, Internet failure, break-ins, hurricanes and similar
events. While we do not have redundant facilities at a secondary location in the
event of an emergency, we have a variety of backup servers at our primary site
to deal with system failures.

                                       5
<PAGE>

        Services based on sophisticated software and computer systems often
encounter development delays and the underlying software may contain undetected
errors that could cause system failures when introduced. We are also dependent
upon search engines, web browsers, Internet service providers ("ISPs") and
online service providers ("OSPs") to provide Internet users access to our web
sites. Our clients may experience difficulties accessing or using our web sites
due to system failures or delays unrelated to our systems. We do not carry
business interruption insurance to compensate us for these types of losses.


OUR FUTURE GROWTH DEPENDS ON CONTINUED GROWTH IN THE USE OF THE INTERNET.

        Our future success is substantially dependent upon continued growth in
the use of the Internet and, as it relates to our business, in the acceptance
and volume of commercial transactions on the Internet. There can be no assurance
that the number of Internet users will continue to grow or that commerce over
the Internet will become more widespread. The Internet may not prove to be a
viable commercial marketplace for a number of reasons, including:

o       lack of acceptable security technologies,

o       lack of access and ease of use,

o       congestion of traffic,

o       inconsistent quality of service and lack of availability of
        cost-effective, high-speed service,

o       potentially inadequate development of the necessary infrastructure,

o       excessive governmental regulation, and

o       uncertainty regarding intellectual property ownership or timely
        development and commercialization of performance improvements, including
        high speed modems.

        Our success also depends upon, among other things, the continued
development and maintenance of a viable Internet infrastructure to support the
continued growth in the use of the Internet. The maintenance and improvement of
this infrastructure will require timely development of products, such as high
speed modems and communications equipment, to continue to provide reliable
Internet access and improved content. The current Internet infrastructure may
not be able to support an increased number of users or the increased bandwidth
requirements of users and, as such, the performance or reliability of the
Internet may be adversely affected. Furthermore, the Internet has experienced
certain outages and delays as a result of damage to portions of its
infrastructure. Similar outages and delays in the future could adversely affect
the level of traffic on our web site destination.

        The effectiveness of the Internet may decline due to delays in the
development or adoption of new standards and next-generation Internet protocols
designed to support increased levels of activity, and our results of operations
and financial condition could be materially and adversely affected. Such
infrastructure, standards or protocols, including additional domain levels, or
complementary products, services or facilities may cause us to incur substantial
expenditures in order to adapt our services to changing or emerging
technologies. To the extent additional domain levels are added, their existence
may greatly increase the level of competition for our web site destination.

                                       6
<PAGE>

OUR COMPUTER SYSTEMS FACE ONLINE SECURITY RISKS.

        Despite the implementation of security measures, our network may be
vulnerable to unauthorized access, computer viruses and other disruptive
problems. For example, given the content of our web sites, there is an incentive
for "hackers" to penetrate our network security. A party that is able to
circumvent security measures could misappropriate proprietary information and,
perhaps, most critically, cause interruptions in our operations. ISPs and OSPs
have in the past experienced, and may in the future experience, interruptions in
service as a result of the accidental or intentional actions of Internet users,
current and former employees or others. We may be required to expend significant
capital or other resources to protect against the threat of security breaches or
to alleviate problems caused by such breaches. There can be no assurance that
any measures implemented will not be circumvented in the future. Eliminating
computer viruses and alleviating other security problems may require
interruptions, delays or cessation of service to clients accessing our web
sites, which could have a material adverse effect on our business, results of
operations and financial condition.

OUR LICENSEES RELY ON CREDIT CARDS FOR A SUBSTANTIAL PORTION OF THE DEPOSITS BY
THEIR CUSTOMERS.

        We derive most of our revenues from the revenues of our licensees, which
are directly dependent on the amounts of funds deposited by their customers. A
substantial portion of these deposits are made by credit cards. Many issuing
banks of the major credit cards, Visa and MasterCard, like MBNA, Bank of America
and Chase Manhattan Bank and Citibank have announced that they will decline
authorization to Americans who try to use their credit cards for online gaming.
Non-U.S. Banks processing the online gaming transactions can become targets of
the U.S. criminal proceedings under the newly enacted Patriot Act. The
jurisdiction of the United States now extends to all non-U.S. banks that have
correspondent accounts in the United States. United States can freeze the
non-U.S. bank's U.S. correspondent account, if that bank is processing U.S.
gaming transactions or holding operating funds or the profits of an operator
accepting U.S. wagers, because the U.S. Justice Department currently views all
offshore gaming funds as tainted, and all offshore gaming as illegal. This
creates a disincentive to the banks to process online gaming transactions and
could adversely impact the revenues of our licensees.

        Additionally, many banks currently will not process transactions with
the industry code for Internet gaming when the credit card is not physically
presented to the merchant, due to the perceived increased risk of chargebacks.
If additional issuing banks also decide not to process such transactions, this
will make it more difficult for customers to deposit funds for betting. This
would likely lead to lower revenues for the licensees and consequently would
have a negative effect on our royalty revenues.

THE MARKET FOR INTERNET SERVICES IS IN A STATE OF RAPID TECHNOLOGICAL CHANGE AND
WE MAY NOT BE ABLE TO KEEP UP.

        The market for Internet services is characterized by rapid technological
developments, frequent new product introductions and evolving industry
standards. The emerging character of these products and services and their rapid
evolution will require us to effectively use leading technologies, continue to
develop our technological expertise, enhance our current services and continue
to improve the performance, features and reliability of our web sites. There can
be no assurance that we will be successful in responding quickly, cost
effectively and sufficiently to these or other such developments. In addition,
the widespread adoption of new Internet technologies or standards could require
substantial expenditures to modify or adapt our web sites. A failure to respond
rapidly to technological developments could have a material adverse effect on
our business, results of operations and financial condition.

                                       7
<PAGE>

WE MUST CONTINUE TO IMPROVE AND EXPAND SKILLS OF OUR PERSONNEL TO EXPAND OUR
BUSINESS OPERATIONS, BUT MAY NOT BE ABLE TO DO SO.

        In order to expand our business operations, we must continue to improve
and expand the expertise of our personnel and must attract, train and manage
qualified managers and employees to oversee and manage our contemplated expanded
operations. There can be no assurance that we will be able to manage effectively
the expansion of our operations or that our current personnel, systems,
procedures and controls will be adequate to support operations. Any failure of
management to manage effectively our growth could have a material adverse effect
on our business, results of operations and financial conditions. Although
management intends to ensure that our internal controls remain adequate to meet
the demands of further growth, there can be no assurance that our systems,
controls or personnel will be sufficient to meet these demands. Inadequacies in
these areas could have a material adverse effect on our business, financial
condition and results of operations.

WE HAVE LIMITED INTELLECTUAL PROPERTY PROTECTION AND THERE IS RISK THAT OUR
COMPETITORS WILL BE ABLE TO APPROPRIATE OUR TECHNOLOGY.

        We regard to our proprietary software, trade secrets and similar
intellectual property as critical to our success. In that context, we rely on a
combination of copyright and trademark laws, trade secret protection,
confidentiality and non-disclosure agreements and contractual provisions. There
is no guarantee that these efforts will be adequate, or that third parties will
not infringe upon or misappropriate our proprietary rights. In addition, if we
obtain copyright and trademark protection, effective copyright and trademark
protection may be unenforceable or limited in certain countries, and the global
nature of the Internet makes it impossible to control the ultimate destination
of our web sites. Since trademark and copyright protections are not
"self-enforcing", future litigation may be necessary to enforce and protect our
secrets and other intellectual property rights. We may also may be sued for
claims of infringement of the rights of others or to determine the scope and
validity of the intellectual property rights of others. Such litigation could
result in substantial costs. An adverse outcome could require us to cease using
such intellectual property. Any litigation regarding propriety rights could be
costly and divert management's attention, result in the loss of certain of
proprietary rights, require us to seek licensees from third parties and prevent
us from selling our services, any one of which could have a material adverse
effect on our business, results of operations and financial condition.

WE MAY BE HELD LIABLE FOR THE CONTENT OF OUR WEB SITES.

        As a distributor of Internet content, we face potential liability for
negligence, copyright, patent, trademark infringement, defamation, indecency,
disparagement and other claims based on the nature and content of the materials
that we transmit. Any imposition of liability that is not covered by insurance,
is in excess of insurance coverage or is not covered by an indemnification by a
content provider could have a material adverse effect on our business, results
of operations and financial condition.

THE TRADING MARKET FOR OUR SHARES MAY BE ILLIQUID.

        Our ordinary shares in the form of American Depositary Shares are quoted
on the National Association of Securities Dealers' Over-The-Counter Bulletin
Board ("OTC Bulletin Board"). This quotation system generally supports companies
that do not meet the listing requirements of the NASDAQ SmallCap Market. As a
result, investors may find it more difficult to dispose of or to obtain accurate
quotations of our shares. In addition, quotations on the OTC Bulletin Board
depend on the willingness of broker-dealers to make a market for the shares.
There can be no assurance that our shares will continue to be quoted on the OTC
Bulletin Board or that there will continue to be a market for such shares.

                                       8
<PAGE>

WE MAY BE SUBJECT TO PRODUCT LIABILITY CLAIMS, AND WE LACK PRODUCT LIABILITY
INSURANCE.

        We face an inherent risk of exposure to product liability claims in the
event that the products we develop and license contain errors, "bugs" or
defects. There can be no assurance that we will avoid significant product
liability exposure. We do not currently have product liability insurance, and
there can be no assurance that insurance coverage will be available in the
future on commercially reasonable terms, or at all. Further, there can be no
assurance that such insurance, if obtained, will be adequate to cover potential
product liability claims, or that a loss of insurance coverage or the assertion
of a product liability claim or claims would not materially adversely affect our
business, financial condition and results of operations.

WE MAY BECOME SUBJECT TO CHANGES IN ENGLISH LAW OR POLITICAL CIRCUMSTANCES.

        In March 26, 2002 the British Government published a white paper "Safe
Bet For Success-Modernizing Britain's Gambling Laws" in response to the Gambling
Review Report of 2001 prepared by the Gambling Review Body. The recommendations
in the white paper are generally supportive of the industry provided it takes
place in a properly regulated environment. The government intends to introduce
the licensing procedures for the Internet gaming operators in Britain. We are
unable to predict with certainty when any resulting legislation may be enacted,
and what impact it will have on our business. Therefore, there remains a risk
that any future legislation could be unfavorable to our business.

YOU MAY BE SUBJECT TO BOTH UNITED STATES AND UNITED KINGDOM TAXES.

        We strongly urge you to consult with your tax advisors concerning the
consequences of investing in our ordinary shares. Our ordinary shares
represented by American Depositary Shares are traded in the United States, but
we are incorporated under the laws of England and Wales. A U.S. holder of our
American Depositary Shares will be treated as the owner of the underlying
ordinary shares for purposes of U.S. and U.K. tax laws. Therefore, U.S. federal,
state and local tax laws and U.K. tax laws may apply to ownership of our
American Depositary Shares and the underlying ordinary shares. Tax laws of other
jurisdictions may also apply.

UNITED STATES CIVIL LIABILITIES MAY NOT BE ENFORCEABLE AGAINST US.

        Most of our directors, all of our executive officers and certain of the
experts named in this annual report are not residents of the United States, and
virtually all of the assets of these non-U.S. persons, and virtually all of our
assets are located outside the United States. As a result, it may not be
possible for you to serve summons and complaints within the United States upon
these persons. Similarly, it may not be possible to enforce in U.S. courts,
against these persons or against us, judgments of the U.S. courts based upon
civil liability provisions of the U.S. federal or state securities laws. In
addition, it may be difficult for you in original suits or in suits for the
enforcement of judgments of U.S. courts to enforce certain civil liabilities
based upon U.S. federal or state securities laws in England against us, our
directors, executive officers, or our experts.

OUR REPORTING OBLIGATIONS UNDER THE U.S. SECURITIES LAWS DIFFER FROM THOSE OF
U.S. ISSUERS, AND YOU MAY FIND IT DIFFICULT TO EVALUATE OUR PERFORMANCE
QUARTERLY.

        We are a foreign private issuer for the purposes of reporting to the
SEC, and we are not required under the Securities Exchange Act of 1934 to file
quarterly reports after the end of each financial quarter. We are exempt from
the rules prescribing furnishing of proxies and content of annual reports and
proxy statements to our shareholders. Additionally, major shareholders and
insiders are not required to report their transactions with our stock. As a
result it may not be possible for you to evaluate our financial performance as
often as you could for a U.S. issuer. You may not become aware of trading
activities of our insiders and major shareholders, and may generally be less
informed in making a decision on how to vote your shares at the shareholders
meetings.

                                       9
<PAGE>

UNDER ENGLISH LAW A VOTE OF THE HOLDERS OF 75% OR MORE OF OUR ISSUED AND
OUTSTANDING SHARES IS REQUIRED TO APPROVE CERTAIN CORPORATE MATTERS.

        Under English law we are required to obtain the vote or consent of
holders of 75% or more of our outstanding shares to complete certain significant
transactions, including amendments to our memorandum and articles of
association. This supermajority requirement may make it more difficult for
shareholders to approve certain transactions if the Board recommends and
approves such transactions.

WE MAY BE SUBJECT TO TAX IN MANY JURISDICTIONS, FOR WHICH NO PROVISION HAS BEEN
MADE.

        We may be subject to tax in many jurisdictions, including jurisdictions
where our subsidiaries are incorporated in, or have a branch or agency or
permanent establishment or office. We may also be subject to tax in
jurisdictions where any of our servers or ISPs or computers or customers or
licensees are situated or operate from. Most laws relating to taxation in most
jurisdictions pre-date or are not drafted with the potential of their applying
to internet trading. Consequently, there is uncertainty as to the jurisdictions
in which our subsidiaries could be subject to tax, the extent to which they
could be so subject to tax and what their overall tax liability in respect of
any income, profit or gain could be. There is a risk that the overall tax
liability could be quite high, depending on the construction of the legislation
relating to tax in each of the relevant jurisdictions. No provision has been
made by us for such tax liabilities. To the extent that such risk materializes,
this could materially adversely affect our business, financial condition and
results of operation.

SIGNIFICANT ADVERSE U.S. FEDERAL TAX CONSEQUENCES COULD ARISE FOR U.S. HOLDERS
UNDER THE PASSIVE FOREIGN INVESTMENT COMPANY RULES

        If we are a passive foreign investment company, or PFIC, a U.S. Holder
of our American Depositary Shares or ordinary shares could be subject to
significant adverse U.S. federal tax consequences. Part or all of our
distributions, and gain inherent in our American Depositary Shares or ordinary
shares at the time of a disposition thereof, whether or not that disposition is
a taxable event, could be subject to a special set of rules. In general, those
rules would treat the distributions, whether or not they are dividends paid out
of our earnings and profits, and the gain as realized ratably over the period
the U.S. Holder held, or is treated as having held, the American Depositary
Shares or ordinary shares. Income or gain allocable to prior years would be
taxable at the highest effective rates in effect in those years, regardless of
the rate actually applicable to the U.S. Holder, would be treated as ordinary
income and could not be offset by any losses available in those years, and the
foregoing amount would be subject to an interest charge as if the tax on those
amounts were due in the prior years. Income or gain allocable to the year of the
distribution or disposition would be treated as ordinary income. Stock in a PFIC
is generally not eligible for a step-up in basis on the death of a holder.

        Certain elections can be available to change the tax consequences to
U.S. Holders described in the preceding paragraph. One of those elections, the
"qualified electing fund", or QEF, election, however, requires the electing U.S.
Holder to include in income each year his share of our ordinary earnings and
profits and net capital gain, whether or not distributed to him. However, a QEF
election generally is available to U.S. Holders only if we provide certain
information to our U.S. Holders, and we provide no assurance that we will make
that information available. Another election, a mark-to-market election,
requires the electing U.S. Holder to pay U.S. federal income tax as if he sold
his American Depositary Receipts or ordinary shares at the end of each year,
recognizing gains and, subject to limitations, certain losses. However, a
mark-to-market election is available only if our American Depositary Shares or
ordinary shares are "marketable stock" as specially defined in Treasury
regulations. We believe that our American Depositary Shares and ordinary share
are not "marketable stock" at this time within the meaning of those Treasury
regulations.

                                       10
<PAGE>

        We have not undertaken any determination of whether we are a PFIC and
therefore cannot provide any assurance that we are not. In addition, we can
provide no assurance that we will make any determination in the future whether
we are a PFIC at that time. In the absence of an analysis of our status as a
PFIC performed by us, any assertion by the IRS with respect to a U.S. Holder
that we are a PFIC could be upheld against that U.S. Holder, whether or not we
are in fact a PFIC.

        Accordingly, U.S. Holders should take into account the risk that they
may be subject to the rules described in the second preceding paragraph. You are
urged to read the more detailed rules regarding PFICs set forth in the
discussion below under the headings "Taxation--United States Federal Income Tax
Consequences--Tax Consequences for U.S. Holders--Tax consequences if we are a
passive foreign investment company." In addition, you are strongly urged to
consult your tax adviser regarding the risk that our American Depositary Shares
and ordinary shares may be treated as stock in a PFIC, whether or not we are a
PFIC, the unavailability of various elections regarding the tax treatment of
stock in PFICs and the tax consequences to you under the PFIC rules with respect
to an investment in our American Depositary Shares or ordinary shares.

ITEM 4. INFORMATION ON THE COMPANY.

        HISTORY AND DEVELOPMENT

        World Gaming plc is a holding company incorporated under the laws of
England and Wales, and conducts its business through its operating subsidiaries.
As a result of a holding company reorganization effected in May 2001, which we
describe below, we have become a successor to the business of Starnet
Communications International Inc. ("Starnet"), which now functions as one of our
subsidiaries. Our other subsidiaries comprise WG International Ltd., World
Gaming Europe Limited, Starnet Systems International Inc., EFS USA Inc., EFS
International Inc., EFS Australian Pty Ltd., Inphinity Interactive Inc., World
Gaming Services Inc., EFS St. Kitts Inc., Starnet Communications Canada Inc.,
WorldBroadcasts.com Inc. and 602662 British Columbia Ltd. (See Item 4
"Organization Structure").

        Starnet was incorporated on June 28, 1996 in the State of Nevada as
Creative Sports Marketing Inc., and subsequently its name was changed to Gelato
Brats Inc. On February 24, 1997, the name of the company was changed to Starnet
Communications International Inc. In March of 1997, Starnet was redomiciled in
Delaware.

        On March 25, 1997, Starnet entered into a share purchase agreement with
Murray Partners (BVI) Inc. ("Murray Partners"), pursuant to which Starnet
acquired all of the outstanding shares of Starnet Communications Canada Inc.
("Starnet Canada"), a company incorporated in British Columbia that provided
adult entertainment services via the Internet. In exchange, Murray Partners
received 10,000,000 Class A Common Voting Shares of Starnet. Shares held by
Murray Partners were subsequently distributed to its constituent members. On
March 17, 2000, Starnet and its subsidiaries sold all assets related to the
adult entertainment business in order to focus on the Internet gaming business.
Additionally, in 1999, Starnet and its subsidiaries relocated their gaming
operations to Antigua and in June of 2000, they moved their development
activities to other offices in Canada.

        Starnet became our wholly-owned subsidiary through a holding company
reorganization completed in May 2001. The reorganization was structured as a
merger, in accordance with the laws of the State of Delaware, of Starnet with WG
Reorganization Sub, Inc., our wholly-owned subsidiary, formed for the purposes
of the reorganization, with Starnet as the surviving company. The reorganization
was approved by the shareholders of Starnet who exchanged their shares of
Starnet common stock for our American Depositary Shares (ADSs), each
representing one ordinary share, on a one-for-one basis. Each American
Depositary Share issued in connection with the reorganization was evidenced by
one American

                                       11
<PAGE>

Depositary Receipt (ADR) issued in accordance with a Deposit Agreement with
Continental Stock Transfer and Trust Company.

        Subsequently, all of Starnet's stock was exchanged for shares of WG
International Limited, our wholly-owned subsidiary. The acquisition by WG
International Limited, was effected by way of a share for share exchange such
that the existing shares held by us in WG International Limited were subdivided
and redesignated as B shares of (pound)0.002 each. The balance of the authorized
share capital was subdivided and redesignated as A shares of (pound)0.002 each,
20,000 of which were issued and allotted to us as consideration for the
acquisition of Starnet's stock.

        Through our wholly-owned subsidiaries, we now focus our business on the
development, production and licensing of Internet technologies for gaming
applications. Our business strategy is to identify and commercialize leading
edge technologies for the online gaming markets.

        Our office is located at 33 St. James Square, London, England, and the
telephone number is (44) (207) 661-9332.

        OUR OPERATIONS

        We are a leading developer and provider of Internet gaming systems.
Through various wholly-owned subsidiaries (see Item 4. Organizational Structure
below), we develop and provide our software products, transaction system and
online gaming management services to independent licensees. Our gaming systems
have been designed to:

|X|     offer customers a user-friendly interface, superior interactive
        experience and a wide selection of gaming options;

|X|     provide licensees with financially attractive returns, easy site
        maintenance and limited administration; and

|X|     protect gaming customers and licensees through our proprietary fully
        integrated technology.

        We invested the profits and technology from our earlier,
entertainment-oriented online interactive business to build a worldwide Internet
gaming business. By growing a gaming licensee network along with our own site
operations, we plan to continue rapidly expanding our market share in this
emerging Internet commerce industry. We offer fully integrated gaming software
and systems, developed by our wholly-owned Vancouver-based subsidiary, Inphinity
Interactive Inc. ("Inphinity"), along with fee-based use of our Electronic
Financial Services ("EFS") Internet transaction system. Our gaming software is
owned by our wholly-owned Antigua-based licensing subsidiary, Starnet Systems
International, Inc. ("Starnet Systems") which licenses the software to a growing
list of licensees. Starnet Systems provides a licensee with an installed turnkey
gaming system. Starnet Systems receives a monthly royalty based on the
licensee's net revenues in exchange for hosting the licensee's interactive
casino. In addition, the licensee must obtain a gaming license from the
Government of Antigua and Barbuda or another jurisdiction that licenses online
gaming systems. Our first license sale closed in March 1998, and we had 32
licensees signed and operating as of December 31, 2001.

        Along with the current suite of gaming products which include over 20
C++ casino games, a variety of "instant play" Java Games and a complete live
sports wagering product line, we are currently working on enhancement to our
pari-mutuel betting system, which went live last year, and have plans to add
multiplayer Bingo, wireless, and multi-player poker.

                                       12
<PAGE>

        We develop the new licensee's interactive casino to reflect their
intended market segment. This development can reflect a particular motif (e.g.
sports theme or French Riviera theme) or ethnic market (e.g., Japan, China,
Indonesia, or Latin America). Our gaming systems are now available in a variety
of languages including English, Portuguese, Chinese (traditional and simplified)
and Japanese.

        RESTRUCTURING OF OPERATIONS

        In March 2000, our subsidiary, Starnet Canada, completed the sale of
substantially all of the assets and undertakings comprising its adult
entertainment division. The sale price for the assets was $2.3 million, of which
$460,000 was paid on March 31, 2000 into an attorney trust account, but
subsequently released to Starnet Canada on April 30, 2000, and the balance was
to be paid in monthly installments through July 1, 2003. The deferred portion of
the purchase price is secured by a general security agreement in favor of
Starnet Canada, and a pledge of the shares of Chisel Media Inc., the purchaser.
The monthly installments referred to above which were to begin July 1, 2000 have
not been paid by Chisel Media Inc. and at December 31, 2001, we have reserved
for the potential of not being able to collect the principal amount from the
buyer. We are in negotiations with Chisel Media Inc. regarding the resolution to
this dispute. From June 19 until July 17, 2002, James MacKay, the shareholder of
Chisel Media, Inc. has served as our Interim CEO. Our Board intends to
investigate the dispute and the underlying transaction with Chisel Media Inc.,
and such settlement will be scrutinized by our Board as a related party
transaction. (See Also Item 7. "Related Party Transactions")

        In January 2001, we terminated the employment of 26 employees at
Inphinity's development office in Vancouver, Canada, in order to reduce
expenditure levels and increase operational efficiencies. The employees affected
were in the areas of management, administration, operational support and
production. Inphinity's core development team remained intact.

        In April 2001, we restructured our operations in both St. John's,
Antigua and Vancouver, Canada to decrease our costs by reducing inefficiencies
and eliminating duplicated functions. Reductions in staff were made throughout
the organization and included management and administration, sales, marketing,
software development, production and operations. A total of 29 staff were
terminated, 11 in Antigua and 18 in Canada. The combined cost of the
terminations both in January and April of 2001 was $1,536,000.

        In June 2002, we closed our Toronto sales office and terminated 4
employees. This was done as part of relocation of our sales and administrative
functions to London.

        MARKETING

        We have to date focused our marketing efforts in the Americas, Europe
and Asia as these are the areas that have relatively high internet usage, an
interest in gambling activities, and disposable income for gambling. We
concentrate our marketing on attracting licensees and the licensees, in turn,
advertise their sites to the end user. In addition to potential licensees, we
seek strategic partnerships for content as well as other entertainment and media
opportunities.

        We utilize internet based marketing activities, such as e-mail
broadcasts and affiliate programs, as well as traditional media, such as print
in industry publications. We also regularly sponsor industry trade shows and
attend such shows as an exhibitor.

        COMPETITIVE ENVIRONMENT

        The Internet gaming and wagering industry is increasingly competitive.
New competitors have entered segments such as development and licensing of
casino games, sports betting software, pari-mutuel wagering, and lottery and
bingo products. In each of these segments there currently exist several major
competitors. However, nearly all these competitors offer only a portion of the
breadth of product that we offer.

                                       13
<PAGE>

        Our largest competitors for casino products - Boss Media, Cryptologic,
and Microgaming - do not offer any complementary products such as sportsbook.
Because these competitors focus on delivering limited products, as opposed to a
full suite of products as we do, the competition may offer an equivalent or
superior single product compared to ours. However, we believe we currently have
a competitive advantage by offering complementary products.

        One company, IQ-Ludorum, is a key competitor in the sportsbook product
segment. It is also now offering a downloadable casino software package, which
although not as extensive as ours, increases its competitive threat.

        We also face increased competition from name brand land based
sportsbooks and casinos. European companies, such as William Hill, already have
an online presence and compete for end-users. In addition, three land-based
casino operators -- Sun International, Littlewoods, and MGM-Mirage - have been
granted online gaming licenses from the Isle of Man. This is a very real direct
threat to our licensees and therefore also to us.

        We expect to compete directly with all the companies discussed above, as
well as other established companies that may enter the industry. Many of our
current and potential competitors have far greater resources than us.

        INTELLECTUAL PROPERTY

        Our intellectual property includes all software products and URLs. We
own the software that we license to third parties and we own copyright in the
source code to that software. Our software that is completed and in development
is protected through a combination of non-disclosure and non-competition
agreements with employees, restricted and controlled use of third party
developers, a check in/check out system for code, and copyright law (though no
software is registered). Our products are dependent on platforms that are
licensed from other parties. These include Oracle databases, SONA for wireless
communications, Sun Microsystems for Java products, and Microsoft for C++/xml
applications. Trademark protection for the World Gaming brand has not yet been
applied for, but we possess common law trademark rights in the various
trademarks and service marks used in our business.

        TECHNOLOGY

REDUNDANT HIGH-SPEED NETWORK.

        Our network is connected to the Internet via redundant high-speed fiber,
ensuring multiple backup connections to the Internet. This high performance
network infrastructure ensures reliable and responsive game play for our
licensees and the end users/players. Most of the critical system components,
such as the game servers and web servers, are distributed across multiple
machines, which protect the gaming service from failures due to malfunctioning
equipment. The highly scalable nature of the design of our system makes
provisioning for additional capacity relatively easy. The network monitoring
staff tracks the system at all times to maintain constant awareness of the
system's operating parameters. New equipment is installed when necessary to
compensate for increased activity or anticipated peak demands for popular
events.

        The high quality Internet connection at our network facility in Antigua
is provided by an international service provider and contributes to responsive
game play. Each gaming transaction is stored on a database that is replicated
for redundancy and backed up daily to prevent data loss and the gaming
components communicate using the Secure Sockets Layer (SSL) to encrypt and
protect sensitive data from potential hackers.

                                       14
<PAGE>

        In addition to our digital network serving gaming content, we have
developed a state of the art proprietary Electronic Funds Transfer System that
provides a high level of security and integrity for funds wagered.

        We are working on creating a fully-redundant data center in Curacao,
because at present there is a risk of failure of the communication line into our
operations center in Antigua.

SECURITY MEASURES.

        We offer four protective security layers of prevention, protection, and
response. These components, available 24 hours a day, 7 days a week, 365 days a
year consist of:

        Software. Our engines are designed to assume that all communication is
        from "hostile" clients so that only specific message types from a known
        game client are acknowledged. The software incorporates industry "de
        facto" security standards such as Checkpoint Firewall 1, 128 bit
        encryption and SSL. The 'n-tier' software architecture has been designed
        with security at the forefront and is monitored through 'real-time'
        System and Game event monitoring and logging.

        The Gaming Client Application is a casino graphical interface. The game
        server performs gaming calculations, while the client application
        displays the results and accepts input from the player for further
        interaction. Communications between the client and server are encrypted
        using the SSL protocol. The SSL prevents hackers from monitoring a
        gaming session should they be able to intercept communications.

        Fraud Detection and Legal Compliance. We ensure legal compliance and
        player protection through industry leading financial fraud protection
        software provided by Vscrub and HNC. Further, Address Verification
        Services (AVS), a basic fraud detection system offered by the financial
        industry, is incorporated into our fraud detection solution.

        While no system is 100% secure, we believe that we have the ability to
        identify attempts and prevent attacks such as Denial of Service and
        'Invasive' hacks into game payout code or customer information.
        Specifically, Denial of Service Attacks can be alleviated through our
        network of close business partnerships with global ISP's. Using a
        combination of the aforementioned four layers of security i.e. Software,
        Fraud Detection, Hardware and Vigilance, we offer security protection
        that reduces the risks that would lead to prolonged periods of irregular
        game play and access to, and manipulation of, the game code.

        We have implemented a leading software-based Random Number Generator to
        support our game play payouts. The Random Number Algorithm employed by
        us is known as the "Mersenne Twister" algorithm. This algorithm is
        employed to determine the random pattern in which numbers are generated
        for casino games. The algorithm was originally created at the University
        of Keio in Japan. We retained Dr. James Ngai (Ph.D. University of
        British Columbia), to conduct an independent study of the algorithm,
        which resulted in his finding that at a rate of calling 50 random
        numbers per second, it would take 10 to the power of 5994.56 days before
        the generator will repeat itself.

        To tamper with the odds and payouts, a hacker would have to modify the
        game server or database system. Both of these systems are protected from
        external access. The game server can only be accessed by the gaming
        client. Learning the client/server protocol will not aid a hacker in

                                       15
<PAGE>

        gaining additional winnings from the system, since he/she would still be
        limited by the game server's rules and constraints. The machines that
        the game server processes run on are only accessible from our private
        network. Users cannot connect to these servers using telnet, rlogin,
        ssh, X windows, or any other login method. Therefore, we believe that it
        would be almost impossible for a hacker to tamper with game server code.
        The database systems are completely shut off from the Internet and can
        only be accessed by a limited number of applications on a closed
        network, such as the game servers and report generators.

        All the information provided to us is kept strictly confidential, and is
used only to support the player's relationship with us and the licensee.

        PRODUCTS AND SERVICES

        Our current software product areas include casino gaming, sportsbook
wagering, and pari-mutuel wagering, while multiplayer bingo, play-for-fun, and
multiplayer poker are under development. During the last fiscal year, casino
gaming contributed approximately 39% of gaming and licensee revenue, while
sportsbook wagering accounted for the remaining 61%.

CASINO GAMES

        Our casino games can be categorized into two types: Java games and C++
downloadable software.

        Our Java games utilize the Java language to provide easily accessible
online games to the licensees' websites. The cross-platform nature of Java makes
it possible to play these games on all major operating systems, online, with
virtually no downloading required. The games are simplified to optimize loading
times. We currently have 10 Java Casino games (Blackjack, Blackjack Super 7s,
Bermuda Poker, Free Ride, Pai Gow Poker, two Slot Machines, and three Video
Pokers) and 6 Java Lottery games (Cash Explosion, High Roller, Zodiac, Scratch
Bingo, 3-Pointer Pulltabs, and Las Vegas Slots Pulltabs) for players to wager
on, with several additional Java games projected to be released throughout the
current fiscal year.

        More than 20 different casino games are available in the C++ version of
the casino gaming product line. These games are provided for players who are
willing to take the time required to download and install the games. However,
once downloaded, they are easy and convenient to play and offer a more
heightened visual and audio experience. The C++ games are also offered by most
software licensees via a CDROM, which is mailed to players who request this
version.

THE SPORTSBOOK

        The Sportsbook generates revenues based on booking bets that have fixed
payouts. These payouts have a commission that provides revenue for the
Sportsbook. There are varying commissions that are dependent on a variety of bet
offerings. These include: pointspreads, totals, moneylines, straight wagers,
parlays, teasers, futures, propositions and others. The Sportsbook's overall
commission is typically between 4 to 6% of total wagering dollars.

PARTNER'S PROGRAM

        Our affiliate program provides a powerful marketing tool for our
licensees by creating an advertising vehicle with no up-front costs. The
affiliate program effectively transforms webmasters into a sales force for our
licensees, as webmasters earn a commission on the "sales" they make. Webmasters

                                       16
<PAGE>

will earn their commission based on the players that they send through their
sites. The licensee pays webmaster only after the casino has generated revenues
from webmaster's players.

        Additional functionality like "sliding scale" percentage payouts,
detailed banner statistics, and IP/cookie tracking, is another key component of
our affiliate program that promises to enhance the licensee's ability to market.

PARI-MUTUEL GAMING

        We fully launched our pari-mutuel games on July 31, 2001, and are in the
process of upgrading it. In developing the proprietary, interactive pari-mutuel
software, our subsidiary Inphinity again employed the cross-platform nature of
Java, making it possible to play this game on all major operating systems,
online, with virtually no downloading required. This interface is simplified to
optimize loading times.

        After signing a simulcast distribution agreement with the host raceway,
this system links directly to the host track's pool, enabling instant access to
real-time betting lines and the live host pool. The live audio and video
satellite signal from the host track are up-linked via satellite and
subsequently web-cast directly to the customer's computer.

        Strategic partnerships with prestigious organizations such as Amtote
International, The Daily Racing Form, Bloodstock Research Information Systems
(BRIS) and TrackData provide customers with easy access to handicapping
information and up to-date content on current Thoroughbred, Standardbred,
Quarter Horse, Greyhound and Jai-Alai events from North America and around the
world. (See Item 10. Material Contracts).

        Pari-mutuel wagering is the lowest maintenance form of wagering a
company can offer. The bettors wager against themselves and not against the
house, therefore lowering the house exposure to zero. The house makes its profit
by taking a predetermined commission (or take-out) from the total pool, usually
between 10% and 20%. Because the players are wagering against each other there
is no need for the lines (or odds) to be monitored. The lines are determined by
the amount of money wagered on each competitor/team involved in the wager. The
more money wagered on one specific outcome the lower the odds for that
competitor will be.

EFS SERVER, REPORTING AND TOOLS

        We launched our fully functional e-commerce system known as the EFS
Server in 2001. The EFS Server provides licensees with a fully scalable
financial system running on an Oracle database designed to handle thousands of
simultaneous players.

        The EFS Server also supports several reporting and management tools.
These tools include:

|X|     Eye-in-the-Sky reports, more than 50 management reports produced in
        popular Adobe Acrobat and Microsoft XML file formats;

|X|     Command Center, a licensee management tool that allows full control over
        promotions, bonuses, payouts and other features;

|X|     Customer Service Dashboard, a fully integrated set of customer service
        tools and reports that provide real-time information on a customer's
        status; and

|X|     Money Manager, a management tool set that provides us and our licensees
        the ability to track and monitor the flow of deposits and payouts
        including a fully integrated security monitoring system.

                                       17
<PAGE>

        GAMING PRODUCTS UNDER DEVELOPMENT

POKER

        We have identified the positive implications of offering a Multiplayer
Poker product to our Licensee base. We intend to either develop the software,
license external software, or acquire a multiplayer poker software developer.

WIRELESS CASINO/SPORTSBOOK

        We have announced our intention to expand our product line into wireless
delivery systems facilitated by extensive cellular networks globally. We have
entered into an agreement with a wireless software company, Sona Innovations
Inc., to develop wireless blackjack, slots and Sportsbook for Palm and Windows
CE devices. The wireless strategy also extends to I-mode phones currently
experiencing wide-spread adoption in Japan and other Pacific Asia markets.

SPORTS BETTING

        In addition to maintenance of the current turnkey Sportsbook product,
Inphinity is developing new proprietary sports betting software. This sports
betting software encapsulates our current Sportsbook features, provides
additional Sportsbook betting options that are geographically specific and
exciting new products such as pools and pari-mutuels. In addition, the new
product will allow for a variety of operational flexibility for licensees. The
launch, which is dependent on successful testing, is targeted for the third
quarter of 2002.

        OUR LICENSEES

        We have historically focused our growth strategy on licensing our
software and services in order to become a leading technology provider to the
online gaming industry. Our gaming software is owned by our Antigua-based
licensing subsidiary, Starnet Systems, which licenses its fully-integrated
systems to a growing list of licensees. A one-time license fee provides an
installed, fully operational system. The licensee's interactive casino is
generally operational within 90-120 days of signing a license agreement. We
receive monthly fees and a royalty based on the licensee's revenues, in exchange
for continuing to host and maintain the site. The licensee must obtain a gaming
license from the jurisdiction where the gaming servers are located, which
currently is Antigua. We modify the new licensee's interactive casino to reflect
its intended market segment. We never modify the random number generator or the
game rules and cannot, therefore, affect the odds. This change can reflect a
particular motif or niche market (e.g., Japanese, Indonesia, or Latin America).
We also provide continuous support for both software and hardware, 24 hours a
day and 7 days a week. We seek a licensee with knowledge of the target market in
order to maximize sales potential. Licensees generally establish their marketing
efforts from within their target market and are generally expected to be capable
of investing more than $1 million to purchase the software, apply for the gaming
license and invest in marketing.

        Pursuant to the terms of the license agreements, the licensee is solely
responsible for determining from which geographic locations they will accept
customers, although licensees are contractually prohibited from accepting wagers
from residents of Canada.

        Should any licensee become delinquent in payment to us, we have the
technological ability to "shut down" the licensee's interactive casino(s)
remotely.

                                       18
<PAGE>

        Our largest licensee accounts for 47% of our consolidated revenues, and
the loss of this licensee would have a material adverse effect on our results of
operations. This licensee has committed to use our software on its current sites
for a period of at least two years.

        It is anticipated that the majority of our future revenue and earnings
growth will come from our ongoing participation in the licensees' revenue
stream, not from initial license fees. We receive a sliding scale from 25% - 10%
of a licensee's net revenue (wagers less payouts, less chargebacks (credit card
reversals), house bonuses and other compensation). For most customers, we
convert available credit on credit cards to Internet gaming funds, known as
V-chips, through our offshore E-commerce subsidiary, EFS. Our primary cost
against continuing license income is the cost of continuing software
improvements, direct site operating costs and merchant banking fees.

        Management emphasizes that the licensees are structured operationally so
that a licensee's prime responsibility, aside from the ownership of the customer
data base and the casino web pages, is to market its gaming site to its
respective market. Management notes that our monthly license fees, which it
believes are lower than many current competitors, should make more funds
available for marketing, which increases site utilization and revenues.

        BUSINESS STRATEGY

        The development of telecommunications and the emergence of new
technology have created opportunities to develop new, efficient and secure ways
to deliver information and entertainment to customers. We intend to capitalize
on our technological expertise to become a world leader in online gaming
systems. Our key strategic objectives are to: (i) maintain our role as a leading
provider of Internet gaming technologies and to build on the success of our
existing licensee base; and (ii) lead the consolidation of the industry by
pursuing strategic alliances, partnerships and joint ventures.

        We intend to implement our business strategy by: (i) maintaining and
enhancing our technological lead; (ii) seeking key strategic alliances; and
(iii) developing a global brand name in on-line gaming. The following summarizes
our strategic focus and operating strategy:

RAPIDLY PENETRATE THE INTERNET GAMING MARKETS

        We intend to capitalize on our technological lead and early market entry
to capture a significant share of the Internet Gaming market. We believe that we
are well positioned to achieve this goal since we possess the competitive
advantage of being one of the first to both operate and license proprietary
turnkey gaming systems, which incorporate the industry's largest selection of
gaming products and services.

PROVIDE HIGH QUALITY, INNOVATIVE AND SUPERIOR PRODUCTS AND SERVICES

        We, in collaboration with our strategic partners, have focused on
designing a gaming experience using state-of-the-art technology. Additionally,
licensees may benefit from other methods of revenue generation that conventional
gaming machines cannot provide, such as data mining customer information and
sublicensing sites to other software operators.

MAINTAIN TECHNOLOGICAL LEAD

        We have achieved our technological lead through the development of
proprietary software and networked architecture. Furthermore, we have made a
strong commitment to continue research and development activities to enhance our

                                       19
<PAGE>

products and software and to develop new applications for potential markets. We
will continue to use such methods to protect our technology and mitigate
competition from current and future entrants. In addition, we are committed to
developing the technical capabilities to facilitate integration between our
platform and third party platforms.

                                       20
<PAGE>
        ORGANIZATIONAL STRUCTURE
<TABLE>
<CAPTION>
<S>                                        <C>
                                           ----------------
                                           WORLD GAMING PLC
                                           ----------------
                                                   |
                                                   |
                                                   |
                                         --------------------
                                         WG INTERNATIONAL LTD
                                         --------------------
                                                   |
                                                   |
                                   ---------------------------------
                                   |                               |
                                   |                               |
                        ----------------------              --------------
                        STARNET COMMUNICATIONS               WORLD GAMING
                          INTERNATIONAL, INC.               EUROPE LIMITED
                        ----------------------              --------------
                                   |
                                   |
       ---------------------------------------------------------------------------------------
       |          |         |        |            |           |         |          |         |
       |          |         |        |            |           |         |          |         |
---------------   |   ------------   |   ------------------   |   --------------   |   --------------
STARNET SYSTEMS   |                  |                        |   602662 BRITISH   |      STARNET
 INTERNATIONAL    |   EFS USA INC.   |   EFS ST. KITTS INC.   |    COLUMBIA LTD.   |   COMMUNICATIONS
      INC.        |                  |                        |                    |     CANADA INC.
---------------   |   ------------   |   ------------------   |   --------------   |   --------------
                  |                  |                        |                    |
                  |                  |                        |                    |
            -------------     -------------              -----------         -------------
                 EFS          EFS AUSTRALIA               INPHINITY          WORLD GAMING
            INTERNATIONAL        PTY LTD.                INTERACTIVE         SERVICES INC.
                 INC.                                        INC.
            -------------     -------------              -----------         -------------
</TABLE>

        We are a holding company and conduct our operations worldwide through
our operating subsidiaries, which are located in various jurisdictions as
described elsewhere in this annual report.

WG INTERNATIONAL LIMITED.

        We created WG International Ltd. as an intermediate holding company to
hold interests in Starnet, which in turn holds the interests in the operating
subsidiaries.

WORLD GAMING EUROPE LIMITED.

        World Gaming Europe Limited was incorporated to provide us with a
European-based company to market the services of our various subsidiaries,
including Starnet.

STARNET COMMUNICATIONS INTERNATIONAL, INC.

        Starnet holds the interests in our operating subsidiaries. It became our
subsidiary in the course of the holding company reorganization discussed
elsewhere in this annual report. (See Item 4. History and Development).

STARNET SYSTEMS INTERNATIONAL INC.

        Starnet Systems, based in St. John's, Antigua, is in the business of
licensing customized, fully-integrated Internet gaming systems (similar to our
World Gaming virtual gaming system) to independent parties wishing to enter the
online gaming industry. Starnet Systems provides a complete range of services
that the operator needs in order to launch an online gaming website, including

                                       21
<PAGE>

customized software, website development and management on our network, custom
database systems to manage customer accounts, 24-hour technical support for the
licensee and its customers, and an EFS gateway to facilitate online wagers and
financial transactions. Starnet Systems provides these services in exchange for
a monthly royalty fee, providing us with the opportunity to spread our gaming
development and operating costs among multiple operators and broaden our
penetration of the market.

EFS SUBSIDIARIES.

        There are four subsidiaries dedicated to the electronic transferring of
funds: EFS International Inc. (based in Antigua) ("EFS International"), EFS USA
Inc. (based in Nevada), EFS Australia Pty Ltd., and EFS St. Kitts Inc. ("EFS
Subsidiaries") The EFS Subsidiaries are established in these countries in order
to facilitate local banking relationships for transaction processing. Online
revenues generated by our subsidiaries and licensees are processed through the
EFS Subsidiary appropriate to the country they are domiciled in. The EFS
Subsidiaries utilize proprietary processing technology which processes credit
card transactions via the Internet with ease and security.

        The EFS Subsidiaries intend to expand their services to the constantly
increasing number of independent online licensees and establish subsidiaries in
several other key financial centers as needed.

INPHINITY INTERACTIVE INC.

        Inphinity Interactive Inc. ("Inphinity") was incorporated in British
Columbia in 1999 as our software development arm and its primary focus is to
design, create and develop software products for the interactive gaming
industry. Traditional gaming product categories have been adapted to online
applications for real-time wagering capabilities while new types of gaming have
been created strictly for the Internet environment. Inphinity employs over 50
software professionals who provide a variety of products and services to our
Antigua-based licensing subsidiary, Starnet Systems. Inphinity entered into a
strategic partnership with Akamai for Internet broadcasting services. (See Item
10. Material Contracts).

602662 BRITISH COLUMBIA LTD.

        602662 British Columbia Ltd. was incorporated as a wholly-owned
subsidiary of Starnet in March 2000 to provide our investor relations services
and administrative support. It is currently dormant.

WORLD GAMING SERVICES INC.

        World Gaming Services, Inc. ("World Gaming Services")
(www.play.worldgaming.com), also based in Antigua, is a full-service online
gaming operation. Through its product lines, World Gaming Services accepts,
processes and manages wagers for casino-style games of chance and sporting
events. World Gaming Services enables users resident outside of Canada and the
United States to wager with real funds, which can be deposited, converted to
"Virtual Chips," or withdrawn from personal accounts with complete security.
World Gaming site has been translated into five European languages and stand
alone Japanese (www.pachinkocasino.com) and Chinese (www.joyluckcasino.com)
sites have been developed to target the emerging Asian Internet gaming market.

WORLDBROADCASTS.COM INC.

        WorldBroadcasts.com Inc. was incorporated in September 1999 as a
wholly-owned subsidiary of Starnet. It is now dormant.

                                       22
<PAGE>

STARNET COMMUNICATIONS CANADA INC.

        Since the sale of substantially all of the assets and undertakings
comprising the adult entertainment division of Starnet Canada, and the transfer
of substantially all of its other assets to Inphinity, Starnet Canada has been
inactive.

        GOVERNMENT LICENSING AND REGULATION AND RELATED RISKS

        Our subsidiaries have various connections with the online gaming
industry. Inphinity develops interactive gaming software under contract with
Starnet Systems. Starnet Systems, in turn, licenses online gaming systems to
various licensees, including affiliates, which deploy such software for the
purpose of conducting interactive gaming casinos utilizing the Internet. These
licensees are licensed to operate interactive casinos in the country where their
gaming equipment is physically located. For World Gaming Services, it is the
Country of Antigua and Barbuda. Most of the licensees of our software are also
licensed by the Country of Antigua and Barbuda to operate interactive casinos.
In addition, some of the licensees of our software are licensed by other
countries as well. EFS International (Antigua) from its offices in Antigua
performs various services for our licensees, including financial transaction
processing. Starnet Systems, from its offices in Antigua, performs various
services for the licensees, including, but not limited to, providing customer
support and technical support. Inphinity also provides support to Starnet
Systems, which benefits our licensees, by maintaining software systems developed
by Inphinity for Starnet Systems.

        The licensees operate their interactive casinos from servers maintained
by Starnet Systems and located in Antigua. All our licensees are, to our
knowledge, licensed by the Country of Antigua and Barbuda and other
jurisdictions where their respective operations are located.

        A significant debate exists whether the laws of any country other than
the country where the computer gaming servers are physically located have
jurisdiction over the operations of the licensees of Starnet Systems. In
addition, a significant debate exists whether the laws of any country other than
the country where the computer gaming servers are physically located have
jurisdiction over the operations of our affiliates, which perform services for
the licensees. Many licensees believe that they are not subject to the laws of
any country other than the laws of the country where they are licensed. As a
result, they accept customers from any country, without regard to the laws of
the country where the customer is located, including the United States. For our
proprietary site, www.play.worldgaming.com, we have a policy not to accept
wagers from the residents of the United States and Canada and have implemented
procedures that prevent customers from collecting on winnings from wagers from
the residents of such countries, but our licensees may choose to accept wagers
from the United States for their sites. While such procedures, as with most
precautions, may be able to be circumvented, we believe that the procedures
largely prevent such wagers from occurring.

        Historically, gaming activities have been subject to extensive statutory
and regulatory control by government authorities, and have been very dependant
and likely significantly affected by any changes in the political climate and
economic and regulatory policies of the countries where gaming facilities are
located. These changes may impact our operations in a materially adverse way.
Various laws and regulations could have a direct and material effect on the
business, and indirectly could have a material effect on the public demand for
our gaming software. Most countries and jurisdictions within countries have laws
or regulations restricting gaming activities. For example, in the United States,
the Federal Interstate Wire Act contains provisions which make it a crime for
anyone in the business of gaming to use an interstate or international wire
communication line to make wagers or to transmit information assisting in the
placing of wagers, except, with respect to transmitting information, the
wagering is legal in the jurisdictions from which and into which the
transmission is made. Other United States laws impacting

                                       23
<PAGE>

gaming activities include the Interstate Horse Racing Act, the Interstate
Wagering Paraphernalia Act, the Travel Act and the Organized Crime Control Act.

        We believe that the activities of our subsidiaries do not violate or are
not subject to such laws and regulations. However, because there is very little
clear statutory and case law authority, this conclusion is not free from doubt.
We face the risk of either civil or criminal proceedings brought by governmental
or private litigants who disagree with our interpretation of laws and
regulations. Because there is little guiding authority, there is a risk that we
could lose such lawsuits or actions and be subject to significant damages or
civil or criminal penalties and fines. Such proceedings could also involve
substantial litigation expense, diversion of the attention of key executives,
injunctions or other prohibitions being invoked against our licensees or us and
our subsidiaries. The uncertainty surrounding the regulation of the Internet
gaming could have a material adverse effect on our business, revenues, operating
results and financial condition.

        Several countries, most notably law enforcement agencies in the United
States, believe that the laws of their country restrict, and in some instances
prohibit, interactive gaming operators from doing business with residents of
their countries and, in some instances, prohibit or restrict residents of their
respective countries from doing business with interactive gaming operators
located in a foreign country, specifically the United States federal law (18
U.S.C. ss. 1084), commonly referred to as the Wire Act, a federal statute that
purports to make it illegal for a betting or wagering business to use a wire
communication facility to transmit bets or wagers in interstate or foreign
commerce.

        In response to the events of September 11, 2001 the United States
enacted the USA PATRIOT ACT, which is intended to address worldwide terrorism.
However, the USA PATRIOT ACT includes provisions targeted against Internet
gaming. The jurisdiction of the United States now extends to all non-U.S. banks
that have correspondent accounts in the United States. This means that any such
non-U.S. bank processing U.S. gaming transactions will be violating the U.S.
law, regardless of the fact that they are in full compliance with the laws of
their own country. Pursuant to the USA PATRIOT ACT, the United States can now
obtain a pretrial restraining order freezing assets, including bank accounts, of
defendants in U.S. civil actions, once process has been served on the non-U.S.
party. This means that the U.S. merely has to serve papers on a non-U.S. bank,
and it can freeze the non-U.S. bank's U.S. correspondent account, if that bank
is processing U.S. Gaming transactions or holding operating funds or the profits
of an operator accepting U.S. wagers. Thus, if allegedly tainted funds are
deposited in a non-U.S. bank account of a non-U.S. bank, the United States can
seize and forfeit an equal amount of funds on deposit in the non-U.S. bank's
correspondent account.

        Currently, the U.S. Justice Department views all offshore gaming funds
as tainted, because it believes that all offshore gaming is illegal. This
creates a disincentive for non-U.S. banks to provide banking services to
Internet gaming operators, and thus negatively impacting our market of potential
licensees. MBNA, Bank of America and Chase Manhattan Bank and Citibank has
announced that they will decline authorization to Americans who try to use their
credit cards for online gaming.

        We believe that if current laws or any future laws become applicable to
activities of our licensees or our affiliates that perform services for the
licensees, such laws would have a material adverse effect on our business,
revenues, operating results and financial condition. If it was determined that
such law was applicable to the activities of our licensees and affiliates, the
licensees would have to change the types of wagering provided to residents of
the United States. This would impact their current operations and there may be a
delay in offering acceptable wagering products to such customers. There would be
no assurance that the wagering products offered to such customers would be as
profitable to our licensees or to our affiliates as the wagering products
currently offered to such customers by the licensees.

                                       24
<PAGE>

        PROPERTY, PLANTS AND EQUIPMENT

UNITED KINGDOM

        Our corporate office and European marketing team of our subsidiary,
Starnet Systems, are located at 33 St. James Square, London U.K. We intend to
terminate this lease and relocate into a new office in London.

ANTIGUA

        The operations of Starnet Systems and EFS International (Antigua) are
located in 6,400 square feet of commercial space at the CIBC Banking Centre, Old
Parham Road, St. John's, Antigua at an annual cost of approximately $170,000
plus utilities. The last year of the term expired on November 1, 2001, and the
lease has been on a month to month basis. We will be relocating our Antigua
office to a new location as of August 1, 2002. The new location comprises 6,500
square feet of office space and has an approximate annual cost of $120,000 which
is exclusive of utility.

CANADA

        Inphinity leases 27,000 square feet for its development and production
activities at 1401 West 8th Avenue, Vancouver, Canada. The base rent is
approximately $198,000 per year for the term of the lease. The five year lease
expires May 31, 2005 with an option to renew for an additional five years at
market rates. The annual cost is approximately $382,000. We are currently
attempting to sublease 15,000 square feet of the premises.

        We are currently in the process of terminating the lease or subleasing
our office space in Toronto. The lease was for a term of five years expiring
September 30, 2006 and a base rent of approximately $90,000 in the first year,
increasing to approximately $100,000 per year by the end of the lease. Annual
operating costs were estimated at $37,000 per year.

EQUIPMENT

        During the fiscal years ended April 30, 1999, 2000 and 2001, and the
eight months ended December 31, 2001 we made capital expenditures of
approximately $3.2 million, $5.2 million, $1.3 million and $0.7 million,
respectively. The expenditures were primarily for computer equipment and related
items in order to increase our capacity to process transactions.

ITEM 5.  OPERATING AND FINANCIAL REVIEW AND PROSPECTS.

        YOU SHOULD READ THE FOLLOWING DISCUSSION AND ANALYSIS IN CONJUNCTION
WITH "ITEM 3. SELECTED FINANCIAL DATA" AND OUR CONSOLIDATED FINANCIAL STATEMENTS
AND NOTES THERETO SET FORTH ELSEWHERE IN THIS ANNUAL REPORT. IN ADDITION TO
HISTORICAL INFORMATION, THE FOLLOWING DISCUSSION CONTAINS CERTAIN
FORWARD-LOOKING STATEMENTS THAT INVOLVE KNOWN AND UNKNOWN RISKS AND
UNCERTAINTIES, SUCH AS STATEMENTS OF OUR PLANS, OBJECTIVES, EXPECTATIONS AND
INTENTIONS. SEE "SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS" APPEARING ON
PAGE 1 OF THIS ANNUAL REPORT. CURRENCY AMOUNTS IN THOUSANDS OF U.S. DOLLARS,
UNLESS OTHERWISE SPECIFIED.

        CHANGE IN FISCAL YEAR

        On May 17, 2001, we changed our fiscal year end from April 30 to
December 31.

                                       25
<PAGE>

        RESULTS OF OPERATIONS

        On May 25, 2001, pursuant to an agreement and Plan of Reorganization
executed on May 17, 2001, Starnet Communications International Inc. ("Starnet")
became a direct, wholly-owned subsidiary of World Gaming Plc ("World Gaming" or
the "Company"), a company organized in England and Wales for the purpose of
facilitating a new holding company structure.

        Starnet Systems International Inc., a subsidiary of ours incorporated
and operating out of Antigua, licenses its gaming software to third parties for
an initial licensing fee and monthly royalties. Inphinity Interactive Inc., a
wholly-owned subsidiary of ours develops gaming software and web pages. Our
Internet casino, which targets only customers outside North America, is operated
by our subsidiary, World Gaming Services, Inc., also incorporated and operating
out of Antigua.

        The following tables set out selected consolidated information from the
statements of operations for the eight months ended December 31, 2001 and 2000
(unaudited) and the years ended April 30, 2001 and 2000 and the balance sheets
as at December 31, 2001 and 2000 (unaudited) and April 30, 2001:

SELECTED STATEMENT OF OPERATIONS INFORMATION
<TABLE>
<CAPTION>
                                          EIGHT MONTHS ENDED               FOR THE YEARS ENDED
                                          ------------------               -------------------
                                     DECEMBER           DECEMBER          APRIL           APRIL
                                     31, 2001           31, 2000        30, 2001         30, 2000
                                     --------           --------        --------         --------
                                                       (UNAUDITED)
<S>                                   <C>                <C>             <C>             <C>
Net Sales ........................... $12,107            $14,085         $20,153         $17,881
Gross Margin ........................   9,831             10,196          14,224          12,738
Operating Expenses ..................  12,202             13,121          31,243          17,624
(Loss) From Continuing Operations ...  (2,236)            (2,715)        (16,756)         (4,462)
Net (Loss) ..........................  (2,236)            (2,715)        (16,756)         (3,255)
</TABLE>

SELECTED BALANCE SHEET INFORMATION
<TABLE>
<CAPTION>
                                   AT DECEMBER         AT DECEMBER      AT APRIL         AT APRIL
                                     31, 2001           31, 2000        30, 2001         30, 2000
                                     --------           --------        --------         --------
                                                       (UNAUDITED)
<S>                                   <C>                <C>             <C>              <C>
Working Capital ..................... $(2,426)           $12,016         $(1,253)         $6,714
Total Assets ........................  12,181             26,099          20,188          27,983
Long Term Debt ......................   1,083              2,975           2,784             979
Accumulated Deficit .................  21,363              5,093         (19,127)         (2,371)
Total Shareholders' Equity ..........   1,686             16,577           2,211          19,376
</TABLE>

        Revenues from all components of the gaming business, which include
licensing, casino operations and financial transaction processing, decreased 14
percent or $1,978 to $12,107 for the eight months ended December 31, 2001 when
compared to $14,085 for the same period last year.

        The revenue decrease is primarily due to a 43 per cent decrease in
revenue derived from financial transaction processing for licensees to $1,610 as
an increasing number of licensees assumed their own merchant processing
responsibilities. Licensing revenue decreased 73 per cent to $425 primarily
because we are no longer selling gaming licenses.

                                       26
<PAGE>

        Despite the decrease in total revenue, royalty revenue for the eight
months ended December 31, 2001, climbed 4 per cent to $10,072 compared to the
same period last year. The growth in royalty revenue was as a result of a 27 per
cent increase in the revenue of our licensees' business. The growth was dwarfed
partially as a result of the terrorist attacks on September 11, 2001 as this
resulted in the cancellation of major sporting events and thus eliminated
betting and wagering opportunities. For the period, the growth in sports betting
activity contributed significantly to the growth in our royalty revenue.

        During the eight months ended December 31, 2001, we completed software
for 3 new licensees but cancelled or lost 6 licensees as a result of some
smaller, low revenue licensees merging with larger licensees, resulting in a net
decrease of 3 for a total of 32 active licensees as of December 31, 2001.
Royalty revenue from one of the operating licensees represented approximately 47
per cent of our total sales for the eight months ended December 31, 2001
compared to 31 per cent for the year ended April 30, 2001.

        The gross margin increased significantly to 81.2 per cent for the eight
month ended December 31, 2001 from 72.4 per cent when compared to the same
period last year reflecting a more profitable revenue mix. The reduction of
revenues from transaction processing and reselling of gaming licenses played a
role in improving our gross margins as these revenue sources have historically
been low margin revenue.
        As a result of our continuing effort to reduce operating costs, expenses
decreased by 7 per cent to $12,202 during the eight months ended December 31,
2001 compared to $13,121 for the same period last year. The decrease was
primarily due to the following :

o       A reduction in sales and marketing expense resulting from the
        cancellation of our marketing consulting arrangement with Wiremix Media,
        Inc during the year ended April 30, 2001. This was offset by the
        deployment of our direct sales force during the eight months ended
        December 31, 2000.

o       A reduction in our operations expenses as we began to realize savings
        from the rationalization of this department during the early part of
        2001. These savings were partially offset by redomiciling costs of $438
        expensed during the fourth quarter. The loss from continuing operations
        for the eight months ended December 31, 2001 was $2,236 compared to
        $2,715 for the same period last year. Bad debts charges accounted for
        the increased losses in the comparable period.

        LIQUIDITY AND CAPITAL RESOURCES

        At December 31, 2001, we had $2,206 in cash and cash equivalents down
from $4,518 at April 30, 2001. The decrease in the period resulted from the use
of cash in operations net of the use of previously restricted funds to settle
legal matters related to the restrictions. Cash was also used to purchase new
capital equipment of $653 and repay capital leases of $286.

        Working capital at December 31, 2001 decreased to $ (2,426) from $
(1,253) at April 30, 2001. Included in working capital is $1,200 related to the
anticipated settlement of the class action lawsuit. This is calculated as the
value of shares expected to be issued for settlement of the suit and no cash is
anticipated to be paid to cover this matter.

                                       27
<PAGE>

        We also had reserves held by credit card processors totaling $2,532
which includes $72 relating to discontinued business. A majority of the funds
are held as rolling reserves and are typically released to us after six months.
Accounts receivable increased significantly from $1,476 at April 30, 2001 to
$2,591 at December 31, 2001. The increase is primarily due to increased
royalties and fees due from licensees who manage their own financial transaction
processing. Accounts receivable is comprised of royalty and transaction fees due
from operating licensees that have their own merchant accounts and from new
licensees that were offered an installment payment plan on the initial licensing
fees. Royalty and transaction fees due from operating licensees are usually
collected prior to the end of the following month. Licensing fees are usually
collected in full prior to recognition of the revenue. At December 31, 2001,
accounts receivable consisted primarily of royalty and transaction fees due from
operating licensees.

        Prepaid expenses and deposits decreased by $138 to $438 at December 31,
2001 compared to $576 at April 30, 2001. Deferred gaming license costs at
December 31, 2001 were fully amortized. The decrease is the net effect of
prepayments made to the Antiguan Government for the purchase of additional
casino licenses, less the portion allocated to cost of sales during the period.
The casino licenses are held for sale to prospective licensees. There were no
casino licenses available for sale by us during the eight months ended December
31, 2001. Deferred revenue which relates to amounts collected from new licensees
not yet live at the end of the month, increased $110 to $260 at December 31,
2001 from $150 at April 30, 2001. At December 31, 2001, there were a number of
new licensees waiting to go live on our system from whom deposits were
previously collected.

        Net cash generated from investing activities for the eight months ended
December 31, 2001 was $3,272 compared to $835 for the year ended April 30, 2001.
The increase from investing activities was primarily due to the release of funds
held by the Canadian authorities as discussed above. We did not make any
significant capital purchases during the eight months ended December 31, 2001 as
a result of capital purchases in the prior period, consisting of computer
equipment for use in operations to support IT infrastructure and hosting
applications.

        Net cash provided by financing activities for the eight months ended
December 31, 2001 was $39 compared to $1,560 in the year ended April 30, 2001.
Also a majority of the cash generated in the prior period from financing
activities was generated from a note payable. The note payable was converted to
equity on May 17, 2001 (See Note 11 included in the notes to the audited
financial statements).

        We are currently in arrears on payments to two of our equipment
suppliers. Please see discussion in Item 13 in Part II of this report.

        On August 1, 2002 we entered into a loan agreement with Sportingbet PLC
pursuant to which Sportingbet will loan us up to a maximum principal amount of
$1,500,000. The loan bears interest at a rate of 2% above LIBOR. We will repay
the loan from the funds that Sportingbet is obligated to pay to Starnet under
the terms of the license agreement. (See. Item 10. Material Contracts). We have
historically funded our growth through cash flow from our operations and sales
of assets. We expect to fund our future capital needs through operations,
security offerings, and borrowings. There is no guaranty that such funds will be
raised. Our independent auditors have noted that we have accumulated significant
losses, have negative working capital and a deficit in stockholders' equity, all
of which our independent auditors believe raise substantial doubt about our
ability to continue as a going concern.

                                       28
<PAGE>

        COMMITMENTS

        On September 16, 1999, Las Vegas Casino Inc. ("LVC") commenced an action
against Starnet, a number of its subsidiaries and various employees of Starnet
and its subsidiaries. LVC, a former software licensee of Starnet Systems,
alleges a $1 billion loss arising from alleged misappropriation of funds, and
breach and wrongful termination of its software license agreement. Starnet
Systems terminated the software license agreement with LVC on July 22, 1999 as a
result of LVC's failure to pay over $200,000 in fees owed to Starnet Systems. On
July 12, 2000, Starnet Systems was granted a stay of the lawsuit as against it
only, with the result that LVC's claim and Starnet Systems' claim for unpaid
fees will proceed to arbitration. We believe that LVC's allegations are without
merit and we intend to defend LVC's lawsuit and to contest arbitration
proceedings vigorously. As this matter is at a preliminary stage, its financial
impact, if any, cannot be determined at this time, although we are of the
opinion that it will not result in any significant losses to us.(See Item 8
Legal Proceedings).

        Between October 15, 1999 and December 9, 1999, ten class action claims
were commenced in the United States against Starnet and some of its directors
and officers. The class action lawsuits allege that material misrepresentations
regarding the nature and inherent risks of Starnet's business were knowingly
made in filings to the United States Securities and Exchange Commission, press
releases and other public statements. The amount of the damages claimed is
unspecified. These actions have now been consolidated in a single proceeding. On
June 20, 2001, Starnet entered into a memorandum of understanding with the
plaintiffs for the settlement of the litigation, which is still subject to the
court's approval. The amount of the settlement and related costs totaling
$1,200,000 were included in the current year financial statements for the eight
months ended December, 2001. (See Item 8 Legal Proceedings).

        RESEARCH AND PRODUCT DEVELOPMENT

        New product development will be our primary focus for the current fiscal
year. As the traditional casino gaming market and the interactive online gaming
market begin to converge, new games that redefine the online gaming market will
emerge. We hope to lead this convergence by redefining the online gaming
experience. We plan to focus on a variety of different types, styles and themes
of games, focusing on different demographic and niche markets in order to
penetrate a larger user base. Different revenue models may also be explored, as
we consider developing games of skill as well as the traditional games of
chance. Research and development expenses reported for the eight months ended
December 31, 2001 were $2.3 million compared to $3.6 million and $2.3 million
for the years ended April 30, 2001 and 2000 respectively.

        TREND INFORMATION

        We have not identified any changes in trends in our operations since the
end of the financial period ended December 31, 2001. The postponement of
sporting events in North America immediately following the terrorist attacks in
New York and Virginia, USA, on September 11, 2001 had a short-term effect on our
revenues. However, upon resumption of these events, our revenues have returned
to expected levels. We are uncertain as to what effect the continued military
action may have on our operations.

                                       29
<PAGE>

ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES.

        DIRECTORS AND SENIOR MANAGEMENT

        The names, positions and ages of our directors and senior management as
of August 20, 2002 are as follows:
<TABLE>
<CAPTION>
   NAME               AGE                    POSITION                        DATE APPOINTED
-----------------     ---   ---------------------------------------------    -----------------
<S>                    <C>  <C>                                              <C>
David Craven           36   CEO                                              July 15, 2002
Mark Thompson          33   Vice President of Finance                        November 1, 2001
Clare Roberts          53   Director                                         October 18, 2000
Nicholas Jackson       59   Director                                         October 18, 2000
Liam Gillen            48   Managing Director, Antigua Operations            November 27, 2000
David Fleming          44   Managing Director, Inphinity Interactive,Inc.    January 1, 2002
Jason Bolduc           26   Vice President, IT                               October 15, 2001
</TABLE>

        Currently we are in transition to the new management. Several members of
our Board of Directors have resigned since January, 2002, among them Mr. Fred
Hazell, Mr. Wolf Bergelt and Mr. Jason Bolduc, who remains employed as Vice
President of IT. At present our Board consists of two independent directors
Mr. Nicholas Jackson and Mr. Clare Roberts. Michael Aymong, our former President
and CEO resigned on June 19, 2002 and Rodney Davis, our former CFO resigned on
June 20, 2002. Mark Thompson, our Vice President of Finance has provided his
resignation, effective as of September 15, 2002. From June 19, 2002 to July 17,
2002 James MacKay has served as our Interim CEO and Director. Mr. MacKay
resigned from both positions on July 17, 2002. David Craven started in his new
position as our CEO on July 15, 2002.

        BACKGROUND INFORMATION CONCERNING DIRECTORS

CLARE KAMAU ROBERTS, DIRECTOR

        Mr. Roberts has served as our director since October 18, 2000. He has
also served as a director of our subsidiary, Starnet, since May of 1999. He is a
member of our Compensation Committee. Mr. Roberts is a former Attorney General &
Minister of Justice and Legal Affairs of Antigua and Barbuda from 1994 to 1997.
Mr. Roberts has been founder and principal at Roberts & Company, Attorneys at
Law, since 1986. He served as a consultant to the government of Antigua from
1986 to 1990 and preceding that, served as Solicitor General for Antigua and
Barbuda as well as Parliamentary Counsel. He is a founding member and director
of the National Development Foundation of Antigua and Barbuda and Vice President
of the Antigua offshore Association. He is presently a director and chairman of
ACB Mortgage and Trust Company Limited, a wholly owned subsidiary of Antigua
Commercial Bank, the leading bank in Antigua. He has served as a consultant to
various government agencies throughout the Caribbean region and has led many
seminars and workshops. Mr. Roberts received a BA and L.L.B. from the University
of West Indies, a Legal Education Certificate from the Caribbean Council of
Legal Education, a Diploma in Legislative Drafting from the University of Ottawa
in Canada and attended Harvard University for a program of instruction for
lawyers in 1995 and 1996.

HAROLD NICHOLAS SHAW JACKSON, DIRECTOR

        Mr. Jackson was elected to our Board on October 18, 2000. He has served
as a director of Starnet since April 12, 1999. As an outside director, Mr.
Jackson brings over 30 years of international business and financial experience
to the Board. Raised and educated in South Africa, Mr. Jackson has been involved
in a number of very successful entrepreneurial ventures, establishing his first
company, Jackson's Fiberglass (PTY) Ltd. in 1964, followed by a number of other
highly successful businesses across Europe. Mr. Jackson serves as an executive
and consultant at Enyati Valley Anthracite Pty Ltd., a coal company in Belgium
and South Africa involved in trading and shipping of coal.

                                       30
<PAGE>

        BACKGROUND INFORMATION CONCERNING SENIOR MANAGEMENT AND CERTAIN KEY
EMPLOYEES

DAVID CRAVEN, CHIEF EXECUTIVE OFFICER

        Mr. Carven became our Chief Executive Officer on July 15, 2002. He was
the founder and Chief Executive Officer of 24dogs, an Internet and Digital TV
greyhound racing business owned by global gaming giant Wembley Plc. 24dogs,
valued by Merrill Lynch at (pound)125 million, acquired 22,000 customers betting
(pound)11million in turnover in its first year. Mr. Carven began his
professional life as a newspaper journalist. After a three year's basic training
at an evening newspaper, he became Editor of The Glaswegian which was Awarded
Scottish Local Newspaper of the Year 1993, 1994 and 1995. He was also Editor -
Daily Record and Sunday Mail International before launching the UK's first
tabloid Internet newspaper The Daily Record and Sunday Mail in 1994. He was one
of the pioneers of commercial Internet publishing and launched Europe Online,
followed by LineOne a consumer Internet service from News International and BT
and then NetChannel, the UK's first TV set top box Internet service. He then
became a founding member of European start-up Chello Broadband where he
developed and launched the first Pan-European broadband Internet service. He
then defined and deployed Interactive TV Services including a betting channel
for Chello Broadband parent UPC. Besides gaining significant management
experience in start-up businesses, Mr. Craven has wide-ranging gaming and
gambling experience. He has advised various sporting bodies on rights
exploitation through gaming. He developed an Interactive Gaming JV with Sony
(Who Wants to be a Millionaire, Wheel of Fortune etc.) and at Chello Broadband -
developed a betting channel. He was also involved in sponsorship commercial
negotiations with Arrows/TWR and UPC. Mr. Craven has a Diploma In Journalism
(Westminster Press) and a Master of Arts, (University of Glasgow).

MARK A. THOMPSON, VICE PRESIDENT OF FINANCE

        Mr. Thompson has served as our Vice President of Finance since November
2001. He has tendered his resignation effective as of September 15, 2002. Mr.
Thompson has a background in the areas of accounting, finance, acquisitions,
divestitures and financing. Most recently, he held the position of Director of
Finance at MGI Software Corporation, a leading global provider of visual media
software and infrastructure solutions distributed in over 40 countries. At MGI,
Mr. Thompson managed staff of 9 accounting and 2 information systems employees.
Prior to joining MGI, Mr. Thompson was a Manager at KPMG Corporate Finance Inc.
and senior accountant at KPMG LLP. Mr. Thompson is a Chartered Accountant. He
received his bachelor of commerce degree from University of Toronto in 1990.

LIAM GILLEN, MANAGING DIRECTOR, ANTIGUA

        Mr. Gillen is our Managing Director, Antigua Operations. Mr. Gillen has
served as a Chief Operating Officer of Starnet from November 27, 2000 until
April 15, 2001. He brings a comprehensive understanding of gaming operations and
vendor relationships through more than 25 years experience in casino operations.
Before joining Starnet he served as President of Global Interactive, as a
country head at Asian Village, Antigua, and as a director of enrollment at
Management Training University.

DAVID FLEMING, MANAGING DIRECTOR, INPHINITY INTERACTIVE INC.

        David Fleming, Managing Director, Inphinity Interactive Inc. Mr. Fleming
has served as Managing Director of Inphinity since January 1, 2002. He initially
commenced his employment with us as Vice President of Product Development on
September 10, 2001. Mr. Fleming brings more than 12 years experience in
Information Technology to the World Gaming group of companies. Prior to joining

                                       31
<PAGE>

Inphinity Interactive, Mr. Fleming was CTO and a founding partner in IronLion
Management Inc., a wireless incubation company during 2001. He was also CTO for
White Picket Defense Inc., a wireless security company, from May 1999 to
December 2000 where he worked with such clients as CDS, mBanx, KPMG, CIBC,
CEBRA, 724 Solutions and Internet Secure. Mr. Fleming has also built the very
successful e-Commerce Inc., Canada's first Internet and e-commerce company and
held a management team position in LGS Groupe's e-commerce division. Mr. Fleming
was a member of Centennial College E-Commerce Steering Committee and is a
regular public speaker.

JASON JOSEPH BOLDUC, VICE PRESIDENT OF INFORMATION TECHNOLOGY

        Mr. Bolduc is our Vice President of Information Technology. He has
served as our Vice President of Information Technology since October 15, 2001.
He has served as a director of Starnet, and then of World Gaming since January
27, 1997 until his resignation in March of 2002. Having served previously as
President and Technical Director for Starnet since 1995, Mr. Bolduc has
extensive experience in the information technology industry. He was a technical
director and a network administrator at Cyberstore Systems, Inc. from 1994 to
1995. From 1993 to 1994 Mr. Bolduc was an owner and a President of GlobalImage
Services, Inc. Between 1990 and 1993 he was a partner and served as a technical
director of Compuwiz Computers Inc. Mr. Bolduc is currently attending Athabasca
University.

        COMPENSATION

        We have entered into agreements with our independent directors which
provide that each independent director receives a fee of $12,000 per year plus
$1,000 per day for attending our Board of Directors meetings as it relates to
the year ended December 31, 2001. Directors who are employees receive no cash
compensation for serving on our Board of Directors. Directors who resigned
during the year were paid pro rata up to when they ceased performing duties for
us. All directors are reimbursed for their reasonable expenses incurred to
attend meetings of the Board of Directors. We anticipate that our Board of
Directors will hold regularly scheduled meetings at least quarterly.

COMPENSATION OF OUR SENIOR MANAGEMENT

        The following table sets forth all compensation, in U.S. dollars, we
paid to our senior management and directors including stock options grants
during the eight months ended December 31, 2001. All of the options listed in
the table below represent options to purchase our ordinary shares or ADSs.
Options granted to our directors will vest and become exercisable as to 25% of
the original number of option shares on the date of grant and a further 25% upon
the expiration of each of the following three periods of three months. All new
options granted to our employees and officers will normally vest over a
three-year period from the date of the grant. Any options that were granted in
exchange for the former Starnet's options normally vest over a two-year period.
Please see "Item 10. Material Contracts" for a description of employment
agreements with of our senior management.

                                       32
<PAGE>
<TABLE>
<CAPTION>
                                                                        OPTION GRANTS/
                                                     COMPENSATION       VESTED OPTIONS
          NAME AND PRINCIPAL POSITION                     ($)         AS OF MAY 31, 2002
          ---------------------------                ------------     ------------------
<S>                                                     <C>          <C>
David Craven, CEO (1) ...............................   276,064
James MacKay, former Interim President and CEO(2) ...         -                100,000/0
Mark Thompson,  Vice President of Finance (3)........    38,269           110,000/76,667
Liam Gillen, Managing Director - Operations (4) .....    93,333           165,000/50,000
Clare Roberts, Director (5) .........................    37,000          350,000/350,000
Nicholas Jackson, Director (6) ......................    93,333          352,459/352,459
David Fleming, Managing Director, Inphinity
Interactive (7) .....................................    19,432                100,000/0
Michael Aymong, former  President & CEO (8) .........   321,480      2,940,000/2,049,085
Rodney Davis, former COO, CFO (9) ...................    62,020           300,000/50,000
Frederick Hazell, former Chairman of the
Board, (10) .........................................    26,500          370,928/370,928
Wolf Bergelt, former Director & former
Consultant (11) .....................................    79,800          426,967/426,967
Winston Brown, former Chief Operating Officer (12) ..    25,000          200,000/200,000
Meldon Ellis, former Consultant (13) ................   105,000          377,623/377,623
Jason King, former CEO Inphinity (14) ...............    67,653          195,000/195,000
Eugene Nizker, former Chief Technical Officer,
Inphinity Interactive (15) ..........................    65,800          135,000/135,000
Jason Bolduc, former Director & V.P. I.T. and
ASP Hosting (16) ....................................    34,666          100,000/100,000
Brownell Combs II, former Director (17) .............    38,000          309,016/309,016
Mathew Stasior, former Director (18) ................    22,000          309,016/309,016
Chris Thompson, former V.P. Finance (19) ............    71,500          100,000/100,000
David Pasieka , former COO (20) .....................    88,688        1,022,000/412,741
R. Michael Steele, VP Strategy & Corporate
Communications, former Managing Director,
Inphinity Interactive Inc.(21) ......................    43,290           175,000/58,334
</TABLE>

(1) David Craven became our CEO on July 15, 2002. His terms of employment and
    compensation, except for an annual salary of $276,064, have not been
    determined yet.

                                       33
<PAGE>

(2) James MacKay became our Interim CEO upon the resignation of Michael Aymong
    on June 19, 2002. He resigned on July 17, 2002. He had a Consulting
    Agreement with us entered into on May 1, 2002 for a period of one year,
    pursuant to which he was to provide advisory services. His compensation is
    $16,667 per month. He was granted 100,000 options vesting on a monthly basis
    of 8,334 shares per month. The first 8,334 shares vest on June 30, 2002. The
    Consulting Agreement was terminated as of August 17, 2002. Upon termination,
    he will be entitled to receive his fees for the services rendered through
    the date of termination plus fees for 12 months or the fees through the
    remaining term of the contract, which ever amount is less.

(3) Mark Thompson's consulting arrangement with us began on August 7, 2001, he
    is currently serving as Vice President of Finance. His annual consulting fee
    is $100,000. He has resigned from our company effective as of September 15,
    2002. Pursuant to his consulting agreement, he has been granted options of
    110,000 of which 30,000 have an exercise price of $1.47 and 80,000 at $0.47.
    At May 31, 2002, 76,667 of his option grant have been vested with the
    remainder to be fully vested by November 1, 2002. 30,000 vested options at
    $1.47; and, 46,667 vested options at $0.47. As part of his severance
    package, Mr. Thompson will receive six months compensation payable in 12
    semi-monthly installments and accrued vacation pay for 22 days.

(4) Liam Gillen's employment began November 27, 2000. Stock options: 50,000
    vested at an exercise price of $.75; 115,000 vest in three years at an
    exercise price of $1.18. (See Item 10. Material Contracts).

(5) Clare Roberts was paid director's fees and granted options, of which 100,000
    are exercisable at $2.13; 50,000 at $1.44; and 200,000 at $0.31.

(6) Nicholas Jackson serves as a director. He was paid director's fees and
    granted stock options, of which 102, 459 are exercisable at $2.13, 50,000 at
    $1.44, and 200,000 at $0.31.

(7) David Fleming's employment began September 10, 2001 and has an annual salary
    of $96,000. He has been granted options of 100,000 which have an exercise
    price of $0.88. (See Item 10. Material Contracts).

(8) Michael Aymong's employment with Starnet began April 9, 2001. He resigned on
    June 19, 2002. Payments due to him under his contract for housing and car
    allowances have not been paid as a house and car in Antigua have been
    provided to him. Options: 1,200,000 have an exercise price of $0.31, subject
    to 6 month hold requirement upon exercise; 1,200,000 vest over 22 months
    (54,545 each month) with the exercise prices as follows: first 200,000 at
    $1.25, second 200,000 at $2.25, third 200,000 at $4.25, fourth 200,000 at
    $4.25, fifth 200,000 at $6.25, sixth 200,000 at $8.25. 400,000 options vest
    on April 30, 2003, and are exercisable at the closing market price on March
    31, 2003. Pursuant to antidilution provisions of Mr. Aymong's employment
    agreement, he was granted 140,000 options in connection with the issuance of
    ordinary shares to AIM Investments Ltd., these options have vested and are
    exercisable at the closing market price on May 25, 2001 per share. At May
    31, 2002, 2,049,085 options had vested: 1,200,000 vested at $0.31, 200,000
    at $0.78, 200,000 at $1.25, 200,000 at $2.25, 109,085 at $4.25, and 140,000
    (Aim Options) at $0.75. Pursuant to his proposed severance agreement Mr.
    Aymong will receive his salary through June 30, 2002. He will also receive
    $175,000 bonus owed to him, 50% of which will be payable upon receiving the
    $1.5 million funding, and the remainder bi-monthly over the next three
    months. His severance agreement is still subject to the Board's approval.

(9) Rodney Davis' employment with us began on July 7, 2001. He resigned on June
    20, 2002. His options will continue to vest until November 21, 2002. 100,000
    vested options at $1.34; 25,000 vested options at $2.25; 50,000 vested
    options at $0.45; $25,000 vested options at $0.90; 25,000 vested options at
    $0.60. As part of his proposed severance package Mr. Davis will receive six
    moth salary payable in 12 equal semi-monthly installments; accrued 50% bonus
    for January to May 2002; severance 50% bonus for the period June-November,
    2002 and accrued vacation pay for 16 days. His total severance package is
    $191,598. His severance package is still subject to the Board's approval.

                                       34
<PAGE>

(10) Frederick Hazell resigned as chairman and a director on March 19, 2002. His
     options are vested and 110,298 are exercisable at $2.13, 200,000 at $0.31;
     and 60,000 at $0.31.

(11) Wolf Bergelt served as a consultant pursuant to a consulting agreement with
     us, which was terminated on August 31, 2001. The termination agreement
     provided for a payment of $84,000 payable through June 30, 2002. He
     resigned from the Board of Directors on May 24, 2002. During the fiscal
     year ended April 30, 2001 he was paid for his consulting services and for
     his services as the director. 70,000 options are exercisable at $1.44 per
     share. 106,967 options are exercisable at $2.13 per share, 50,000 at $0.62,
     and 200,000 options vested exercisable at 0.31 per share.

(12) Winston Brown was an employee from July 1, 2000 to December 31, 2000. His
     stock options are vested and exercisable at $3.03 per share.

(13) Meldon Ellis ceased office of President and CEO on September 15, 2000 but
     continued a contractual relationship as a consultant with us through
     September 30, 2001. All of his options are vested; 10,000 are exercisable
     at $8.72, 50,000 at $3.06, 300,000 at $3.03 and 17,623 at 2.13.

(14) Jason King's duties as President and CEO of Inphinity Interactive ceased on
     January 4, 2001 but he continued receiving his salary under the terms of
     severance through December 31, 2001. 45,000 of his options are exercisable
     at $1.44, and 150,000 at $3.03.

(15) Eugene Nizker's options became vested upon the termination of his
     employment. 20,000 of his options are exercisable at $12.50, 50,000 at
     $3.06, and 65,000 at $3.03.

(16) Jason Bolduc resigned as a director on March 27, 2002 . He is still
     employed as Vice President of IT and Application Hosting commencing on
     October 15, 2001. He was originally granted 300,000 options of which
     100,000 are vested and are exercisable at $2.12. and 200,000 at $0.31. Mr.
     Bolduc gave up 200,000 of his options when he resigned from the Board.

(17) Brownell Combs resigned as a director on October 2, 2001. He was paid
     director's fees and granted stock options. His stock options are vested,
     and 109,016 are exercisable at $2.13, and 200,000 at $0.31.

(18) Matthew Stasior resigned as a director on October 2, 2001. He was paid
     director's fees and granted stock options. His stock options are vested,
     and 109,016 are exercisable at $2.13, and 200,000 at $0.31.

(19) Christopher Thompson served as our Vice President, Finance until July 31,
     2001; his 100,000 stock options are vested and exercisable at $3.03.
     Recently Mr. Thompson filed a lawsuit against us described elsewhere in
     this report. (See Item 8. Legal Proceedings).

(20) David Pasieka's employment with Starnet began May 2, 2001. Effective
     December 31, 2001, Mr. Pasieka resigned from his position as chief
     operating officer. He was granted 1,022,000 stock options of which 466,481
     were cancelled upon his resignation. The remaining 555,519 stock options
     are exercisable at $0.69. Under his severance agreement Mr. Pasieka
     received $154,667 or 8 months salary as severance.

(21)R. Michael Steele's employment began on April 12, 2001 and had an annual
    salary of $64,000. Effective January 1, 2002, he assumed the position of VP
    of Strategy and Corporate Communications. He resigned effective June 15,
    2002. His options have an exercise price of $0.75 per share.

        WORLD GAMING PLC 2001 SHARE OPTION PLAN

        We operate a share option plan, the World Gaming plc 2001 Share Option
Plan (the "2001 Plan"), under which eligible persons may acquire options to
purchase ordinary shares or ADSs as determined by the Share Option Committee.

                                       35
<PAGE>

Our Compensation Committee serves as the Share Option Committee. The 2001 Plan
was adopted by our Board of Directors on May 17, 2001 and approved by ordinary
resolution of our shareholders on May 17, 2001 in substitution of the Starnet
Stock Option Plans (1997, 1999 and 1999 (No. 2)), which were terminated in the
course of the reorganization and options thereunder were exchanged for new
options in the 2001 Plan.

NUMBER OF ORDINARY SHARES

        The maximum number of the ordinary shares (or ADSs) with respect to
which options may be granted under the 2001 Plan is 15,000,000. If any option
shall lapse or shall be cancelled, then the shares represented by such option
shall become available for new options. An option may be exercised for an
ordinary share or an ADS.

ELIGIBILITY

        All employees, officers, directors and all other persons who provide
services to the us or any of our subsidiaries, as determined by the Board of
Directors, are eligible to participate in the 2001 Plan.

GRANT OF OPTIONS

        Our Compensation Committee administers the 2001 Plan and has discretion
in awarding share options to the eligible participants. (See Item 6. Committees
of the Board below).

OPTION PRICE

        Options will be granted at exercise prices to be determined by the
Compensation Committee, which may be more or less than 100% of the fair market
value of the ordinary shares (or ADSs) on the date of grant. Fair market value
for these purposes means the closing price of our American Depositary Shares, as
traded on the OTC Bulletin Board or the other principal U.S. market for our
securities, on the business day immediately preceding the date of grant.

EXERCISE OF OPTIONS

        Our share option agreement provides that the options granted to
directors will vest and become exercisable as to 25% of the original number of
option shares on the date of grant and a further 25% upon the expiration of each
of the following three periods of three months. Options granted to our employees
and officers and the employees and officers of our subsidiaries will normally
vest over a three year period from the date of the grant. The options granted in
exchange for Starnet's options vest over a two-year period. The exercise of the
options for other categories of optionholders may be tied to certain performance
conditions. Any new options to be granted to an officer, director or a major
shareholder shall not become exercisable until at least six months after the
date of such grant. Options will terminate if an optionholder's employment is
terminated for cause, or if an option holder voluntarily resigns without
appropriate or agreed notice and termination terms, unless otherwise agreed by
the Compensation Committee. If the employment or office or directorship is
terminated for another reason not contemplated by an option agreement then the
option shall be exercisable for a period of 12 months after termination but only
to the extent that it is vested and exercisable on the date of termination,
except as permitted by the Compensation Committee. If an optionholder's
employment or office or directorship is terminated due to his or her death or
disability, the options will remain exercisable for a period of 12 months after
termination but only to the extent that they have vested and are exercisable on
the date of termination. Notwithstanding the foregoing, all options lapse at the
end of the option period applicable to them. Options are not transferable and
may only be exercised by the persons to whom they are granted, except in the
case of the death or disability of the optionholder in which case they would be
exercisable by the guardian or personal representative of the optionholder (as
the case may be).

                                       36
<PAGE>

ISSUES OF ORDINARY SHARES OR ADSS

        Ordinary shares or ADSs issued upon the exercise of options will rank
equally with ordinary shares or ADSs, as applicable, of the same class as them,
but shall not be entitled to any dividends or other distributions declared prior
to the date of the exercise.

VARIATION IN SHARE CAPITAL

        Options may be adjusted following certain variations in our share
capital, including a capitalization or rights issue.

TERMINATION OF THE 2001 PLAN

        No options may be granted under the 2001 Plan after the tenth
anniversary of its adoption.

AMENDMENTS

        The Board of Directors may amend the 2001 Plan, provided that no
amendment or modification will become effective without shareholder approval, if
such approval is required by law or exchange rules, except for minor amendments
relating to administrative matters. Additionally, no amendments which would
adversely affect the rights of the existing optionholders may be made without
their consent.

        BOARD PRACTICES

        In English companies, when a director ceases to be a director, whether
voluntarily or otherwise, we say that the director has "retired." Our directors
are subject to retirement by rotation. At every one of our annual general
meetings, one-third of our directors who are subject to retirement by rotation
or, if their number is not three or a multiple of three, the number nearest to
one-third of our directors, shall retire from office. If there is only one
director who is subject to retirement by rotation, that director shall retire.
Subject to the provisions of the U.K. Companies Act 1985, the directors to
retire by rotation shall be those who have been longest in office since their
last appointment or retirement. As between persons who became or were last
reappointed directors on the same day, those to retire shall be determined by
lot unless they otherwise agree among themselves. If a director retires by
rotation and he is not reappointed, the retiring director may retain its office
until the meeting appoints someone in his place or until the end of the meeting.
However, the director in that situation shall not be deemed to be reappointed,
if the shareholders determine not to fill the vacancy or a resolution to
reappoint the director is voted upon and defeated. Our shareholders holding a
majority of our ordinary shares may remove any director from office at any time,
with or without cause, subject to the requirements of the U.K. Companies Act of
1985 and our Articles of Association.

        COMMITTEES OF THE BOARD OF DIRECTORS

        Our Board of Directors has appointed an Audit Committee, a Compensation
Committee and a Strategic Planning Committee.

AUDIT COMMITTEE

        The Audit Committee has the authority to recommend to our Board of
Directors independent public accountants to be nominated for shareholder
ratification to audit our books, records and financial statements and to review
our systems of accounting (including systems of internal control). During the
eight months ended December 31, 2001 Mr. Brownell Combs served as Chairman of
the Audit Committee. He resigned from the Board in July 2001. Mr. Bergelt, the
other member of our Audit

                                       37
<PAGE>

committee resigned from the Board May 24, 2002. The Board has not appointed new
members of the Audit Committee, and will do so when the vacancies on the Board
are filled.

COMPENSATION COMMITTEE

        The Compensation Committee is responsible for administering the
operation of the 2001 Plan and for recommending to our Board of Directors
compensation plans and arrangements, including awards of any stock options, with
respect to our executive officers, directors, and key personnel. The current
members of the Compensation Committee are Nicholas Jackson, Chairman and Clare
Roberts.

STRATEGIC PLANNING COMMITTEE

        The Strategic Planning Committee is responsible for recommending to the
Board of Directors the long term strategic direction which we should pursue.
Matthew Stasior was Chairman of the Strategic Planning Committee until his
resignation as director in October 2001. The positions on the Strategic Planning
Committee are currently vacant.

        EMPLOYEES

        The number of employees by location as of June 26, 2002 and at the end
of each of the fiscal years set forth below is as follows:

                 JUNE 26,       DECEMBER 31,    APRIL 30,   APRIL 30,  APRIL 30,
                   2002            2001            2001        2000        1999
                   ----            ----            ----        ----        ----
Antigua              56              69              79          64           -
Canada               34              60              54         114         163
London               12               6               -           -           -
                    ---             ---             ---         ---         ---
US                    2               -               -           -           -
                    ===             ===             ===         ===         ===
Total               103             135             133         178         163
                    ===             ===             ===         ===         ===

        The London office is our corporate office and it is also a marketing
office for our software and licensing activities based in Antigua. Development
and administrative functions are in Vancouver, Canada. In June 2002 our Toronto
office was closed and 4 employees from that office were terminated. The total
number of our employees as of June 26, 2002 is 103.

        Our employees are not represented by a union or other collective
bargaining organization and we have never experienced a work stoppage. We
believe that our employee relations are good.

                                       38
<PAGE>

        SHARE OWNERSHIP OF SENIOR MANAGEMENT

        The table below sets forth certain information concerning the share
ownership of our directors and senior management as of June 26, 2002.
<TABLE>
<CAPTION>
                                    NUMBER OF
                                     ORDINARY                                       PERCENTAGE
                                    SHARES OR                                           OF
                                      (ADSS)                                         ORDINARY
                       NUMBER OF    WHICH MAY      RANGE OF                         SHARES OR
                       ORDINARY    BE ACQUIRED     EXERCISE         RANGE OF           ADSS
                       SHARES OR   UNDER SHARE     PRICES OF    EXPIRATION DATES   BENEFICIALLY
   NAME               ADSS OWNED   OPTION PLAN    OPTIONS($)       OF OPTIONS       OWNED (1)
   ----               ----------   -----------    ----------       ----------       ---------
<S>                      <C>          <C>         <C>            <C>                   <C>
David Craven                  -             -              -                -              -
Mark Thompson                 0       110,000     .47 - 1.47     8/06 - 11/06             0%
David Fleming                 0       100,000            .88             9/06             0%
Liam Gillen              30,000       165,000     .75 - 1.18            11/05          .088%
Nicholas Jackson              0       352,459     .31 - 2.13      4/04 - 4/06             0%
Clare Roberts                 0       350,000     .31 - 2.13      1/04 - 4/06             0%
</TABLE>
---------------

(1) The information in this table is based on our records, information provided
    to us by our directors and executive officers and a review of any Schedules
    13D and 13G filed by our shareholders with the Securities and Exchange
    Commission. Beneficial ownership is determined in accordance with the rules
    of the Securities and Exchange Commission and includes shares over which the
    indicated beneficial owner exercises voting and/or investment power. This
    information is based on 34,193,181 ordinary shares issued and outstanding as
    of June 26, 2002.

ITEM 7.  MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS.

        MAJOR SHAREHOLDERS

        The following table contains information regarding the beneficial
ownership of our ordinary shares, including our American Depositary Shares, as
of June 26, 2002, for all shareholders known by us to beneficially own 5% or
more of our ordinary shares.

                                            NUMBER OF           PERCENTAGE OF
                                         ORDINARY SHARES    OUTSTANDING ORDINARY
                                             OR ADSS           SHARES OR ADSS
NAME OF BENEFICIAL OWNER                BENEFICIALLY OWNED   BENEFICIALLY OWNED
------------------------                ------------------   ------------------
AIM Investments Ltd.                       2,000,000 (1)               5.8%

(1) The information in this table is based on our records, information provided
to us by our directors and executive officers and a review of any Schedules 13D
and 13G filed by our shareholders with the Securities and Exchange Commission.
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and includes shares over which the indicated
beneficial owner exercises voting and/or investment power. This information is
based on 34,193,181 ordinary shares issued and outstanding as of August 20,
2002.

                                       39
<PAGE>

SIGNIFICANT CHANGES IN OWNERSHIP OF ORDINARY SHARES

        There were no significant changes in ownership of our ordinary shares.
However, prior to the holding company reorganization, Starnet issued 2,000,000
shares of its common stock to AIM Investments Ltd. pursuant to Starnet's
agreement with AIM Investments Ltd's parent Simpson Bay Ltd. described elsewhere
in this report. (See Item 6. Related Party Transactions and Material Contracts).

SECURITIES AND RECORD HOLDERS IN THE UNITED STATES

        As of August 22, 2002, 31,946,307 American Depositary Shares were held
in the name of CEDE & Co., which is not obligated to disclose publicly the
residence of the beneficial owners of those shares. We know that, excluding CEDE
& Co. shares, approximately 6.2% of our ordinary shares were held by 142 U.S.
record holders.

CHANGE OF CONTROL

        We are not aware of any arrangements, the operation of which may at a
subsequent date result in a change in control of our company.

        RELATED PARTY TRANSACTIONS

SIMPSON BAY LTD. AND AIM INVESTMENTS LTD

        AIM Investments Ltd, an affiliate of Simpson Bay Ltd., is a 5.8%
shareholder of World Gaming holding 2,000,000 ADSs. It became a shareholder when
Starnet issued 2,000,000 common shares to AIM Investments Ltd. as repayment in
full of a June 2000 loan of $1,500,000 extended to Starnet by Simpson Bay Ltd.
The Starnet shares owned by AIM were exchanged for our ADSs in the course of the
holding company reorganization. Additionally, Simpson Bay Ltd. is one of our
significant licensees. (See Item 10. Material Contracts).

SETTLEMENT OF DISPUTE WITH CHISEL INC.

        In March 2000, our subsidiary, Starnet Canada, sold substantially all of
the assets and undertakings comprising its adult entertainment division to
Chisel Media Inc. The sale price for the assets was $2.3 million, of which
$460,000 was paid on March 31, 2000 into an attorney trust account, but
subsequently was released to Starnet Canada on April 30, 2000, and the balance
was to be paid in monthly installments through July 1, 2003. The deferred
portion of the purchase price is secured by a general security agreement in
favor of Starnet Canada, and a pledge of the shares of Chisel Media Inc. The
monthly installments referred to above which were to begin July 1, 2000 have not
been paid by Chisel Media Inc. and at December 31, 2001, we have reserved for
the potential of not being able to collect the principal amount from the buyer.
Our independent directors are currently investigating the situation around the
Chisel Media, Inc. purchase and will continue to negotiate a settlement with
Chisel Media, Inc. From June 19, 2002 until July 17, 2002, James MacKay, the
shareholder of Chisel Media Inc., has served as our interim CEO and a director,
therefore any settlement will be scrutinized by the Board as a related party
transaction, and will be subject to the Board's approval as such.

LOAN AGREEMENT WITH SPORTINGBET PLC.

        On August 1, 2002 we entered into a loan agreement with Sportingbet, PLC
one of our licensees. Sportingbet will loan us up US $1,500,000, which will be
repaid by deducting $225,000 per month from November 2002 to March 2003 and
$62,500 per month from April 2003 to September 2003 from the amounts due to us
from Sportingbet under the license. Sportingbet has security interest in our
software and will have the right to access and use the software and the secure
site where the hardware is located in the event of our default.

                                       40
<PAGE>

ITEM 8.  FINANCIAL INFORMATION.

        CONSOLIDATED FINANCIAL STATEMENTS

        Our consolidated financial statements for the eight months ended
December 31, 2001 and for the years ended April 30, 2001 and 2000 set forth in
this report following Part III, are included herein at Item 17 of the annual
report.

        LEGAL PROCEEDINGS

        The following are material existing and pending or recently concluded
legal claims against us and our subsidiaries:

HER MAJESTY THE QUEEN IN RIGHT OF CANADA

        On August 25, 1999, the Royal Canadian Mounted Police ("RCMP") obtained
an ex parte restraint order from the Honorable Associate Chief Justice of the
Supreme Court of British Columbia pursuant to the provisions of the Criminal
Code of Canada. This order prevented Starnet and Starnet Systems from accessing
funds located in their Canadian bank accounts. The amount of money in these
accounts was approximately $7,620,000 as of August 17, 2001. The basis for the
claim was the allegation that the funds in these bank accounts are proceeds of
crime, obtained as a result of the breach of certain gaming provisions contained
in the Criminal Code of Canada, and should therefore be forfeited to the Crown.
The restraint Order was extended several times, with the last extension
extending the restraint until August 24, 2001. During the pendency of the
Restraint Orders, the RCMP continued an investigation into whether Starnet or
Starnet Systems, and certain of its former officers and directors, engaged in
unlawful activities in Canada from the time period up to August, 1999, in
connection with the business of such companies in licensing and providing
support services to licensees engaged in online gaming.

        The investigation of Starnet and Starnet Systems by the RCMP in
Vancouver, Canada, was concluded on August 17, 2001, with a single charge
against Starnet, a plea to such charge, the imposition of a fine and a
forfeiture of funds. Specifically, a charge was laid against Starnet as follows:

        Starnet Communications International, Inc., between the 1st day of May,
1997 and the 20th day of August, 1999, at or near the City of Vancouver,
Province of British Columbia, in Antigua and Barbuda and elsewhere, did keep a
device for gambling or betting, to wit, computer services and computer
applications operating on a computer system, or systems, which systems, when
accessed via the internet, enabled persons to engage in gambling or betting
contrary to section 202(1)(b) of the Criminal Code of Canada.

        Starnet plead guilty to this charge. In response to a joint submission
by the Crown and Starnet, a Provincial Court in Vancouver imposed a fine of
$100,000 CDN, together with a statutory victim surcharge of $15,000 CDN. In
addition, an order was entered providing for the forfeiture of $3,925,000 CDN
out of restrained funds held by the RCMP in connection with the investigation.
No individuals have been charged. The balance of the funds, approximately
$3,620,000 CDN was returned to Starnet and Starnet Systems.

                                       41
<PAGE>

        The investigation is now concluded, and during the hearing before the
Court, the Crown agreed that there was no legal complaint with regard to
Starnet's operations since August, 1999 and as of the date of the plea.

CANADA CUSTOMS AND REVENUE AGENCY ("CCRA").

        CCRA is in the process of auditing our subsidiary, Starnet
Communications International, Inc. We have provided the auditors with all
relevant information, and are cooperating with the agency. At present the CCRA
is reviewing that information. We believe that the audit will not result in any
negative findings or financial penalties for the company.

LAS VEGAS CASINO INC. LAWSUIT

        On September 16, 1999, Las Vegas Casino Inc. ("LVC") commenced an action
against Starnet, a number of its subsidiaries and various employees of Starnet
and its subsidiaries. LVC, a former software licensee of Starnet Systems,
alleges a $1 billion loss arising from alleged misappropriation of funds, and
breach and wrongful termination of its software license agreement. Starnet
Systems terminated the software license agreement with LVC on July 22, 1999 as a
result of LVC's failure to pay over $200,000 in fees owed to Starnet Systems. On
July 12, 2000, Starnet Systems was granted a stay of the lawsuit as against it
only, with the result that LVC's claim and Starnet Systems' claim for unpaid
fees will proceed to arbitration. On May 13-16, 2002 the plaintiff failed to
appear for examinations for discovery as ordered by the court, and we now intend
to file a motion to strike LVC's claim. We believe that LVC's allegations are
without merit and we intend to defend LVC's lawsuit and to contest arbitration
proceedings vigorously. As this matter is at a preliminary stage, its financial
impact, if any, cannot be determined at this time, although we are of the
opinion that it will not result in any significant losses to us.

U.S. DELAWARE CLASS ACTION CLAIMS

        Starnet and certain officers and directors were named as defendants in
ten class action lawsuits filed in 1999. The class alleged in the class action
claims consists of all persons who purchased Starnet's common stock from March
11, 1999 to August 20, 1999 inclusive, excluding the defendants and persons
connected with Starnet. The basis for all of the class action claims is similar;
the plaintiffs generally allege that Starnet:

o       Failed to properly advise its investors of the risks associated with the
        business;

o       Misled its investors as to the risks associated with the business;

o       Misled its investors by stating that Starnet did not accept wagers from
        persons resident in Canada or the United States, when, in fact, it did
        do so; and

o       Misled its investors by stating that their business was legal within
        Canada and the United States when it was not.

        The relief sought included declaration of a class, damages and costs for
the class. The amount of the damages claimed is unspecified.

        On March 7, 2000, the United States District Court for the District of
Delaware ordered that these ten actions be consolidated under the heading In Re
Starnet Communications International Inc. Securities Litigation, C.A. No. 99-681
(SLR). On June 7, 2000, plaintiffs filed an Amended Consolidated Class Action
Complaint (the "Amended Complaint"), which supercedes all prior complaints in
all of the actions.

                                       42
<PAGE>

On June 20, 2001, Starnet entered into a memorandum of understanding with the
plaintiffs for the settlement of the litigation, which is still subject to the
court's approval. The amount of the settlement and related costs totaling
$1,200,000 were included in the current year financial statements for the eight
months ended December 31, 2001. The settlement was approved by our Board. All of
the members of plaintiff's class were notified of the settlement, and the
plaintiffs' counsel moved to have the settlement approved by the court.
Presently, we expect that a court hearing regarding the settlement will occur in
late August or early September, 2002. Upon the approval of the settlement the by
court, we will be required to issue common shares valued at one million USD to
the members of the plaintiff's class.

OUR CLAIMS AGAINST WIREMIX MEDIA INC.

        On August 28, 2001 our subsidiary, Starnet Canada, filed a complaint
against Wiremix Media Inc. in Vancouver, Canada for approximately $154,645 CDN
due under an asset purchase agreement dated February 18, 2000. Under the asset
purchase agreement, Wiremix Media purchased certain assets from Starnet Canada.
Wiremix Media filed its answer to Starnet Canada's complaint and filed a
separate action in Vancouver, Canada on October 1, 2001 against another of our
subsidiaries, Starnet Systems, for a breach of contract. In its lawsuit, Wiremix
Media alleges that Starnet Systems arbitrarily terminated a marketing and
consulting agreement with Wiremix, pursuant to which Wiremix was to provide
Internet marketing services to Starnet Systems, and claims damages of
approximately $2 million remaining under the contract. We intend to prosecute
our claim against Wiremix Media. We believe that Wiremix Media's allegations in
its lawsuit against Starnet Systems are without merit and we intend to defend
the lawsuit vigorously. Our agreement with Wiremix provides that all disputes
must be first referred to arbitration. We intent to proceed with such
arbitration. The financial impact of these actions, if any, cannot be determined
at this time. Our Board intends to investigate the Wiremix Media transaction.

LAWSUIT BY OUR FORMER VICE PRESIDENT, FINANCE CHRIS THOMPSON

        On August 2, 2001, our former Vice President, Finance Chris Thompson
brought a wrongful termination claim against us alleging that we breached his
employment agreement and claiming damages of approximately $196,800. We have
filed motions to dismiss the claim on jurisdictional grounds and to force
deposition of the plaintiff. We are making attempts to negotiate a settlement
with Mr. Thompson. The financial impact of this action, if any, cannot be
determined at this time, although we are of the opinion that it will not result
in any significant losses to us.

SUBPOENAS RECEIVED BY OUR AUDITORS

        We have learned that our auditors have received two subpoenas, one in
August 2001 and the other in September 2001, from the Securities and Exchange
Commission ("SEC") requesting copies of documentation in their possession
related to their audit of us. The subpoenas were issued with respect to an
investigation of a third party unrelated to us. We have also learned that some
of our former directors have received subpoenas from the SEC relating to the
same matter. We have not received any subpoenas or any requests for information
from the SEC, nor are we aware of the nature of the investigation.

                                       43
<PAGE>

LAWSUIT BY CASINO ON AIR WORLD ENTERTAINMENT LTD.

        In March 2002, Casino on Air World Entertainment Ltd., a former licensee
of ours, filed a lawsuit against us alleging breach of contract in Antigua. The
amount of the claim is U.S. $1.84 million. We believe that the allegations are
without merit and we intend to defend the lawsuit vigorously. At present we are
preparing a motion to dismiss the complaint because the license agreement
requires Casino on Air to pursue their claims against us in arbitration in
Canada. The financial impact of this action, if any, cannot be determined at
this time.

WHITE VS. STARNET COMMUNICATIONS CANADA INC.

        Mr. White, a former employee, commenced an action against our
subsidiary, Starnet Communications International, Inc. in the fall of 1998. Mr.
White was employed by our subsidiary in 1996 through 1998. His employment was
terminated in July of 1998. The trial is scheduled in the fall of 2003. We do
not believe that this action will have any significant financial impact on us.

INPHINITY VS. GAME WORKS MEDIA INC.

        Our subsidiary sued Game Works Media, Inc. and several of its former
employees who were hired by Game Works Media Inc. for breach of nondisclosure
and confidentiality agreements and misappropriation of trade secrets. At this
point the lawsuit is in early stages of discovery. We believe that we have a
strong case and will prevail. The financial impact of this action is not yet
ascertainable.

A DISPUTE WITH CABLE & WIRELESS

        We believe that Cable & Wireless has breached their Internet Service
Agreement with us. We have sent a demand letter to that effect. Cable & Wireless
has retained counsel and presently we are negotiating a solution to our dispute
with Cable & Wireless. If such negotiations fail, we will pursue our claims in
court. The financial impact of this action is not yet ascertainable.

A DISPUTE WITH PWR SEARCH

        Our subsidiary Inphinity retained PWR Search in the spring of 2001 to
assist it in hiring a manager for its pari-mutuel business. An engagement
agreement provided that certain fees and expenses of PWR would be paid
regardless of PWR's performance. PWR Search failed to provide any reasonable
assistance to Inphinity, and Inphinity refused to pay PWR's bill. PWR Search
filed a complaint in the Court of Queen's Bench in Alberta suing for $40,000
CDN. Inphinity responded with its statement of defense. We intend to defend this
lawsuit vigorously, and believe that the financial impact of that lawsuit is not
significant.

SUNRISE CORPORATION LAWSUIT

        Sunrise Corporation has commenced a lawsuit against us in the Superior
Court of Ontario. Sunrise Corporation alleges that Starnet Canada failed to make
payments for the equipment leased from Sunrise Corporation. The amount of the
claim is $600,000 CDN. We have not filed the response to this lawsuit and we are
still investigating the matter. We cannot ascertain at this time the merits or
financial impact of this lawsuit.

        POLICY ON DIVIDEND DISTRIBUTION

        Our Articles of Association provide that dividends are declared by the
shareholders upon the recommendation of the Board of Directors.

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<PAGE>

        SIGNIFICANT CHANGES

        Except for changes in our senior management and the Board, we have
experienced no significant changes since the date of the annual financial
statements other than those disclosed in those financial statements.

ITEM 9. THE OFFER AND LISTING.

        NATURE OF TRADING MARKET

        Our ordinary shares are not directly publicly traded in the United
States or any foreign market. Our American Depositary Shares are traded on the
OTC Bulletin Board. Each American Depositary Share represents one ordinary
share. Price quotations for our American Depositary Shares were reported on the
OTC Bulletin Board under the symbol "WGMGY" beginning on May 29, 2001. As of
August 22, 2002, we had 34,197,181 ordinary shares issued and outstanding, all
of which are represented by American Depositary Shares evidenced by American
Depositary Receipts issued by Continental Stock Transfer and Trust Company, as
depositary. As of August 22, 2002, 34,197,180 of our ordinary shares were held
of record by Continental Stock Transfer and Trust Company, one ordinary share
was held by Continental Stock Transfer and Trust Company and Mr. Steve Nelson
jointly. This represents 100% of our issued and outstanding ordinary shares.

        The following table sets forth the high and low closing sale prices for
our American Depositary Shares on the OTC Bulletin Board, from the beginning of
trading on May 29, 2001 to May 31, 2001 and for Starnet, as our predecessor,
starting on September 22, 1997 to May 28, 2001. Such prices do not reflect
retail markup, markdown or commissions and may not necessarily represent actual
transactions.

                                                           HIGH             LOW
                                                           ----             ---
FIVE MOST RECENT FINANCIAL YEARS
  Year ended April 30, 1997........................            -               -
  Year ended April 30, 1998........................        3.375           0.500
  Year ended April 30, 1999........................       17.010           0.375
  Year ended April 30, 2000........................       29.000           1.750
  Year ended April 30, 2001........................        4.187           0.312
  Eight months ended December 31, 2001 ............        2.100           0.410

YEAR ENDED APRIL 30, 2000
  First Quarter....................................       29.000           8.560
  Second Quarter...................................       15.940           3.000
  Third Quarter....................................        4.560           1.750
  Fourth Quarter...................................       10.000           2.810

YEAR ENDED APRIL 30, 2001
  First Quarter....................................        4.187           2.343
  Second Quarter...................................        3.937           1.125
  Third Quarter....................................        1.687           0.312
  Fourth Quarter...................................        1.500           0.593

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<PAGE>

EIGHT MONTHS ENDED DECEMBER 31, 2001
  May to June 2001.................................        2.100           0.630
  Third Quarter....................................        1.630           0.520
  Fourth Quarter...................................        0.700           0.410

MOST RECENT SIX MONTHS
  December 2001....................................        0.600           0.450
  January 2002.....................................        0.495           0.410
  February 2002....................................        0.670           0.485
  March 2002.......................................        0.600           0.410
  April 2002.......................................        0.450           0.400
  May, 2002 .......................................        0.410           0.300

        DIVIDEND INFORMATION

        We have never paid cash dividends on our ordinary shares and do not
anticipate paying cash dividends on our ordinary shares in the foreseeable
future.

        REGISTRAR, TRANSFER AGENT AND DEPOSITARY

        From June 25, 2001, Continental Stock Transfer and Trust Company has
acted as our registrar, transfer agent and depositary with respect to our
American Depositary Receipts. Prior to that our registrar, transfer agent and
depositary was Pacific Stock Transfer.

ITEM 10. ADDITIONAL INFORMATION.

        MEMORANDUM OF ASSOCIATION AND ARTICLES OF ASSOCIATION

        Set forth below is information concerning our equity capital structure
and related summary information concerning provisions of our Memorandum of
Association and Articles of Association and applicable English law. Since it is
a summary, it does not contain all of the information that may be important to
you, and the summary is qualified in its entirety by reference to the U.K.
Companies Acts of 1985 and 1989, our Memorandum of Association and our Articles
of Association. Our Memorandum of Association was filed as Exhibit 3.1 to
Registration Statement on Form F-4 (SEC File No. 333-48280) on October 19, 2000.
Our Articles of Association, adopted by special resolution on May 17, 2001, were
filed as Exhibit 4.2 to Registration Statement on Form S-8 (SEC File No.
333-70056) on September 24, 2001.

        We are incorporated under the name World Gaming plc and our company is
incorporated in England and Wales with the registered number 4094204. Our
Articles of Association do not include a stated purpose.

        BOARD ACTION AND POWERS

        Our Articles of Association provide that unless otherwise determined by
ordinary resolution, our Board of Directors shall consist of not less than two
nor more than 10 members.

        Except as noted below, the Board of Directors may at any time appoint
any person to be a director either to fill a vacancy or as an additional
director, provided that the number of directors does not exceed 10. Any person
so appointed by the Board of Directors shall hold office only until the next

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<PAGE>

annual general meeting of shareholders and shall then be eligible for election
by the shareholders, but shall not be taken into account in determining the
number of directors who are to retire by rotation at such meeting as set out
below.

        At each annual general meeting of shareholders, one-third of our
directors (or, if their number is not a multiple of three, the number nearest to
but not greater than one-third) must retire from office by rotation. The
directors to retire by rotation shall be in addition to any director who wishes
to retire and not to offer himself for re-election. The directors to retire by
rotation shall include those members who have served the longest on the Board of
Directors. A retiring director is eligible for immediate re-election.

        Any provisions of the U.K. Companies Act 1985 or other United Kingdom
statutes applicable to us which would have the effect of rendering any person
ineligible for appointment as a director or liable to vacate office as a
director by virtue of his having reached any specified age or of requiring
special notice or any other special formality in connection with the appointment
or election of any director over a specified age, do not apply to us.

        Directors are not required to hold any of our ordinary shares by way of
qualification. A director who is not a shareholder shall nevertheless be
entitled to attend and speak at shareholders' meetings.

BORROWING POWERS

        Subject to the limitations noted below, the directors may exercise all
our powers to borrow money and to mortgage or charge our undertaking, property
and uncalled capital or any part or parts thereof, and to issue debentures and
other securities, whether outright or as collateral security for any debt,
liability or obligation of us or of any third party.

COMPENSATION AND EXPENSES

        The compensation of the directors is determined by the Board of
Directors but may not in the aggregate exceed (pound)100,000 per year
(disregarding any compensation payable to directors in their capacity as
executives) or such higher amount as may from time to time be determined by an
ordinary resolution of our Board. Such compensation shall (unless such
resolution otherwise provides) be divisible among the directors as the Board of
Directors may decide, or, failing agreement, equally, except that any director
who holds office for only part of the period with respect to which such
compensation is payable is entitled only to rank in such division for a
proportion of compensation related to the period during which he has held
office. Any director who is employed, or holds executive office may be paid such
extra compensation by way of a fixed sum of money, or in whole or in part by
participating in profits or otherwise, as the Board of Directors may determine,
and such compensation may be in addition to or instead of a fee payable to him
for his services as director. The directors may repay to any director all
reasonable expenses as he may incur in attending and returning from meetings of
the directors or of any committee of the directors or shareholders' meetings or
otherwise in connection with our business.

PENSIONS AND OTHER BENEFITS

        The directors shall have the power to pay and agree to pay gratuities,
pensions or other retirement benefits, death or disability benefits to (or to
any person in respect of) any director or ex-director and, for the purpose of
providing any such gratuities, pensions, or other benefits, to contribute to
such scheme or to pay premiums.

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<PAGE>

INTERESTED DIRECTOR TRANSACTIONS

        Subject to certain provisions of the U.K. Companies Acts 1985 and 1989
designed to enforce fair dealing by directors and prevent their taking financial
advantage, and provided that a director has disclosed to the directors the
nature and extent of any interest, a director:

o       may be party to or otherwise interested in any contract, transaction, or
        arrangement with us or in which we are otherwise interested;

o       may be a director or other officer of or employed by a party to any
        contract, transaction or arrangement with or otherwise interested in any
        corporate body promoted by us or in which we are in any way interested
        (or any firm of which he is a partner, employee or member) ; and

o       may act in a professional capacity for us (other than as auditor) and be
        compensated therefor and shall not (unless otherwise agreed by him) be
        accountable to us for any benefit which he derives from any such
        contract, transaction or arrangement or from any such office or
        employment or from any interest in any such corporate body or for such
        compensation.

        No such contract, transaction or arrangement shall be liable to be
avoided on the grounds of any such interest or benefit.

        Except as otherwise provided below, a director shall not vote in respect
of any contract or arrangement or any other proposal whatsoever in which he has
any material interest otherwise than by virtue of interests in shares or
debentures or other securities of, or otherwise in or through, us. A director
shall not be counted in the quorum of a meeting in relation to any resolution on
which he is not entitled to vote. Provided that a director has disclosed the
nature and extent of his interests, a director shall (in the absence of some
other material interest than is indicated below) be entitled to vote (and be
counted in the quorum) in respect of any resolution concerning any of the
following matters:

o       the giving of any security, guarantee or indemnity with respect to (a)
        money lent or obligations incurred by him or by any other person at the
        request of or for our benefit of our company or the benefit of any of
        our subsidiaries, or (b) a debt or other obligation of our company or
        any of our subsidiaries for which he himself has assumed responsibility
        in whole or in part under a guarantee or indemnity or by the giving of
        security;

o       any proposal concerning an offer of shares or debentures or other
        securities of or by us or any of our subsidiaries in which offer he is
        or may be entitled to participate as a holder of securities or in the
        underwriting or subunderwriting of which he is to participate;

o       any proposal concerning any other corporate body in which he is
        interested, directly or indirectly, and whether as an officer or
        shareholder or otherwise, provided that he (together with persons
        connected with him (within the meaning of Section 346 of the U.K.
        Companies Act 1985)) does not have any interest (as that term is used in
        Sections 198 to 211 of the U.K. Companies Act 1985) in 1% or more of the
        issued equity share capital of any class of such body corporate (or of
        any third company through which his interest is derived) or of the
        voting rights available to members of the relevant corporate body;

o       any proposal relating to an arrangement for the benefit of our employees
        or those of any of our subsidiaries which does not award him any
        privilege or benefit not generally awarded to the employees to whom such
        arrangement relates; and

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<PAGE>

o       any proposal concerning insurance which we propose to maintain or
        purchase for the benefit of directors or for the benefit of persons who
        include directors.

INDEMNIFICATION OF DIRECTORS

        Our Articles of Association entitles every director, secretary or
manager of our company, to be indemnified by us against liabilities incurred
during the discharge of his or her duties including where judgment is given in
his or her favor or if the claim is disposed of where he or she has not been
found to have been in material breach of his or her duty.

        DESCRIPTION OF SHARE CAPITAL

GENERAL

        Our authorized share capital is (pound)1,000,000 divided into
500,000,000 ordinary shares of (pound).002 nominal value per share.

ORDINARY SHARES

        As of June 26, 2002, 34,193,181 of our ordinary shares were issued and
outstanding and are fully paid or credited as fully paid, each of which is in
registered form. No holder of ordinary shares will be required to make
additional contributions of capital in respect of those shares in the future.
There are no rights of pre-emption attaching to the ordinary shares, save as set
out below under "Issuance of Share". Furthermore, they are not issued as
redeemable shares. However, it should be noted that we may choose to utilize the
power conferred upon us by Part V Chapter VII of the Companies Act 1985 to issue
redeemable shares subject to obtaining an appropriate authority from the
shareholders. Neither our Memorandum of Association, Articles of Association,
nor any statutory provision in England and Wales restrict in any way the
ownership of, nor voting rights attaching to, the ordinary shares held by
persons resident outside the United Kingdom. Under the terms of our Articles of
Association, we are obliged to give notice of shareholder meetings to all
persons, including those with an address for service outside the United Kingdom.

ISSUANCE OF SHARES

        Subject to any special rights previously conferred on the holders of any
issued shares or class of shares, any share of ours may be issued with any
preferred, deferred, or other special rights. They may also be issued subject to
restrictions, including without limitation restrictions on dividends, return of
capital, voting or otherwise, as an ordinary resolution of a general meeting of
our shareholders may from time to time direct, and failing such direction, as
our Board of Directors may determine.

        Subject to the provisions of the U.K. Companies Act 1985, the authorized
but not issued shares are at the disposal of the directors who may issue, grant
options over or otherwise dispose of them to those persons and on whatever terms
they deem appropriate.

        Pursuant to Section 80 of the U.K. Companies Act 1985, our directors are
authorized to issue shares (or grant any right to subscribe for or convert other
securities into shares) up to (pound)1,000,000, and such authorization will
expire five years from the date our incorporation.

        If ordinary shares are to be issued for cash, Section 89 of the U.K.
Companies Act 1985 requires, subject to limited exceptions in respect of
employee share schemes, that those shares first be offered to existing holders
of shares in proportion to their holdings. However, Section 95 of the U.K.
Companies Act 1985 provides that in certain circumstances the directors of a
company may by special resolution be given power to issue shares as if Section
89 did not apply. Our Articles of Association render Section 89 inapplicable up
to the aggregate nominal amount of (pound)50,000, and this authority will expire
at the close of business on May 17, 2006.

                                       49
<PAGE>

ALTERATION OF SHARE CAPITAL

        We may from time to time by ordinary resolution approved by our
shareholders at a general meeting:

o       increase our share capital by the sum, to be divided into shares of
        those amounts, as the resolution shall prescribe;

o       consolidate and divide all or any of our share capital into shares of
        larger amount than our existing shares;

o       cancel any shares which, at the date of the passing of the resolution,
        have not been taken, or agreed to be taken, by any person and diminish
        the amount of our capital by the amount of the shares so canceled; and

o       subdivide our shares, or any of them, into shares of smaller amount, and
        so that the resolution whereby any share is subdivided may determine
        that the shares resulting from that subdivision may, as compared with
        the others, have any preferred, or other special rights or be subject to
        any restrictions.

        We may purchase or enter into a contract under which we will or may
purchase any of our own shares of any class (including any redeemable shares, if
any then exist) on such terms and in such manner as permitted by the law.

        We may, by special resolution approved by our shareholders at a general
meeting, reduce our share capital or any capital redemption reserve, share
premium account, or other undistributable reserve in any way, subject to the
rights of the existing shares and English law.

DIVIDEND RIGHTS

        Holders of ordinary shares are entitled to receive those dividends as
may be recommended by our Board of Directors and declared by the shareholders in
a general meeting, but no larger dividend may be declared than is recommended by
our Board of Directors. No unpaid dividend bears interest as against us unless
otherwise provided by the rights attached to the shares.

RIGHTS IN LIQUIDATION

        In the event of our liquidation, after satisfaction of liabilities to
creditors, holders of ordinary shares are entitled to share pro rata in the net
assets of our company.

NOTIFICATION OF INTEREST IN ORDINARY SHARES

        Section 198 of the U.K. Companies Act 1985 obliges any person (subject
to exception) who acquires an interest of 3% or more of our ordinary shares to
notify us of his interest within two business days following the day on which
the obligation to notify arises. After the 3% level is exceeded, similar
notification must be made if the whole percentage figure increases or decreases,
rounded down to the next whole number. For the purposes of the notification
obligation, the interest of a person in the shares means any kind of interest in
shares (subject to certain exceptions) including any shares (1) in which his
spouse or his child or stepchild, is interested, (2) in which a corporate body
is interested where either (a) that corporate body or its directors are
accustomed to act in accordance with that person's directions or instructions,
or (b) that person controls one third or more of the voting power of that
corporate body, or

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<PAGE>

(3) in which another party is interested where the person and
that other party are parties to a "concert party" agreement under Section 204 of
the U.K. Companies Act 1985 and any interest in shares is in fact acquired by
any one of the parties pursuant to the agreement. A "concert party" agreement is
an agreement which provides for one or more parties to it to acquire interests
in shares of a particular company and imposes obligations or restrictions on any
one or more of the parties as to the use, retention or disposal of the
interests.

        In addition, Section 212 of the U.K. Companies Act 1985 enables us, by
notice in writing, to require a person whom we know or have reasonable cause to
believe to be, or to have been at any time during the three years immediately
preceding the date on which the notice is issued, interested in shares to
confirm that fact or (as the case may be) to indicate whether or not that is the
case, and where he holds or has during this relevant time held an interest in
the shares, to give further information as may be required relating to his
interest and any other interest in the shares of which he is aware.

        In addition to the restrictions on the rights attaching to shares
imposed by the U.K. Companies Act 1985 for noncompliance with Section 212 of
that Act, our Articles of Association apply additional restrictions. The
restrictions imposed or applied can potentially include disenfranchisement, loss
of entitlement to dividends and other payments and restrictions on alienability.

VOTING RIGHTS OF ORDINARY SHARES AND SHAREHOLDER MEETINGS

        Under English law, there are two types of general meeting of
shareholders: annual general meetings and extraordinary general meetings. An
annual general meeting must be held at least once in each calendar year and not
later than 15 months from the previous annual general meeting. At the annual
general meeting matters such as the election of directors, appointment of
auditors and the fixing of their remuneration, approval of the annual accounts
and the directors' report and declaration of dividends are considered. Any other
general meeting is known as an extraordinary general meeting.

        The directors may convene an extraordinary general meeting and must
convene one if demanded by holders of not less than 10% of the paid-up shares.
An annual general meeting and an extraordinary general meeting called to pass a
special resolution must be called by at least 21 days' notice specifying the
place, day and time of the meeting and the general nature of the business to be
transacted. No business may be transacted at any general meeting unless a quorum
of two persons entitled to vote on the business to be transacted is present in
person or by proxy.

        At a general meeting, a simple majority of the votes cast is sufficient
to pass an ordinary resolution. A special or extraordinary resolution is decided
on a poll. A special or extraordinary resolution can only be considered if our
shareholders receive at least 21 days' prior notice of the meeting at which such
resolution will be considered.

        Subject to the restrictions referred to in the following paragraph, at a
meeting of shareholders every holder of shares who (being an individual) is
present in person or (being a corporation) is present by a representative or
proxy not being himself a member shall have one vote on a show of hands, and on
a poll, every holder of shares present in person or by proxy shall have one vote
for every share held. A special or extraordinary resolution (such as, for
example, a resolution amending our Memorandum of Association or Articles of
Association or approving a winding-up of the company) requires approval of the
holders of 75% of our ordinary shares represented at the meeting, in person or
by proxy, and voting thereon. Shareholders are not entitled to cumulative voting
rights. A poll can be demanded by:

o       the chairman of the meeting;

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<PAGE>

o       not less than five shareholders present in person or by proxy having the
        right to vote at the meeting;

o       a holder or holders of shares or his or their proxy representing not
        less than 10% of the total voting rights of all shareholders having the
        right to attend and vote at the meeting; or

o       by a holder or holders of shares or his or their proxy conferring a
        right to attend and vote at the meeting on which an aggregate sum has
        been paid up equal to not less than one tenth of the total sum paid up
        on all shares conferring that right.

        A holder of shares shall not be entitled (except as a proxy for another
shareholder) to be present or vote at any general meeting:

o       in respect of any shares held by him in relation to which he or any
        other person appearing to be interested in those shares has been served
        with a notice under Section 212 of the U.K. Companies Act 1985,
        requiring him to provide information in accordance with that section and
        containing a statement that upon failure to supply such information
        before the expiration period specified in the notice (which may not be
        less than 28 days) the registered holder of the share is not entitled to
        vote in respect of those shares, and the person on whom such notice was
        served fails to supply the information within the specified period; or

o       unless all amounts presently payable by him in respect of such shares
        have been paid.

TRANSFER OF SHARES

        Fully paid ordinary shares are issued in registered form and may be
freely transferred pursuant to our Articles of Association. The instrument of
transfer of a share may be in any usual form or in any other form of which the
directors approve and shall be executed by or on behalf of the transferor and,
unless the share is fully paid, by or on behalf of the transferee. The directors
may restrict the transfer of a share which is not fully paid provided that any
such restriction will not prevent dealings in the shares from taking place on an
open and proper basis. Subject to the provisions of English law, our Articles of
Association provide that we may issue shares which may be held, evidenced and
transferred through a relevant system in an uncertificated form.

ISSUANCE OF AMERICAN DEPOSITARY SHARES

        The terms of our Deposit Agreement with Continental Stock Transfer &
Trust Company, as depositary ("ADS Depositary"), permits issuance of American
Depositary Receipts, or ADRs, evidencing American Depositary Shares, or ADSs,
for ordinary shares accepted for deposit by the depositary. Our ADS Depositary
also serves as an initial custodian.

        The Deposit Agreement provides that every person depositing ordinary
shares is deemed to represent to the depositary that

o       such shares are validly issued and outstanding;

o       were not acquired in violation of any pre-emptive rights;

o       such person is duly authorized to make such deposit; and

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<PAGE>

o       suchshares are not restricted securities as defined in Rule 144 under
        the Securities Act unless at the time of deposit they may be freely
        transferred under that rule, or have been registered under the
        Securities Act.

        The ADS Depositary may require a written delivery order listing the
persons in whose name an ADR or ADRs evidencing the ADSs representing such
deposited ordinary shares are to be issued. ADRs are issued only in
denominations of any whole number of ADSs. We are obligated to transmit to the
depositary a copy of all communications it makes generally available to holders
of ordinary shares or to any securities regulatory authority or stock exchange
as public information. The depositary will make such publication obligations
available to the holders. Our depositary keeps a register for the registration,
registration of transfer, combination or split-up of ADSs at its offices in New
York at 2 Broadway, New York, New York 10004, and such register is open for
inspection by registered holders of ADSs. In the registration statement that we
filed with the SEC on Form F-6 (SEC File No. 333-13286) on May 24, 2001,
50,000,000 ADSs, where each ADS represented one ordinary share, were registered.
The Deposit Agreement and a form of ADR have been filed as Exhibit (a) to a
registration statement on Form-6 (SEC File No. 333-13286) effective as of May
24, 2001.

VOTING OF ADSS BY PROXY

        The ADS Depositary can appoint more than one person to be its proxy. The
appointment shall set out the number of ordinary shares in relation to which
such proxy has been appointed, and such number shall not exceed the number of
the ordinary shares registered in the name of the ADS Depositary. The appointed
proxy may attend general meetings so long as it provides us with written
evidence of its appointment. At a general meeting, the appointed proxy is
entitled to the same rights and has the same obligations with respect to the
appointed number of the ordinary shares as if it were a registered owner of such
shares, or as if it were a duly appointed proxy in relation to those ordinary
shares.

        EXCHANGE CONTROLS AND OTHER LIMITATIONS AFFECTING SECURITY HOLDERS

        There are currently no United Kingdom foreign exchange control
restrictions on the payment of dividends or other payments to holders of
ordinary shares or on the conduct of our operations.

        There are currently no restrictions under our Articles of Association or
under English law which limit the rights of non-resident or foreign owners to
freely hold, vote and transfer ordinary shares in the same manner as United
Kingdom residents or nationals.

        CHANGE OF CONTROL

        We have a "classified" Board of Directors because our directors must
retire by rotation. This means that only approximately one-third of our
directors are eligible for election each year. Therefore, if shareholders wish
to change the composition of the Board of Directors, it would take at least two
years to remove a majority of the existing directors, and three years to change
all directors.

        MATERIAL CONTRACTS

        The following is a summary of our material contracts. We have included
the contracts entered into by our operating subsidiaries that we consider
material to our operations.

ACCORD AND SATISFACTION AGREEMENT AMONG STARNET, STARNET SYSTEMS, SIMPSON BAY,
LTD., AND AIM INVESTMENTS LTD

                                       53
<PAGE>

        An Accord and Satisfaction Agreement among Starnet, Starnet Systems,
Simpson Bay, Ltd., and AIM Investments Ltd. was entered into on May 17, 2001.
Simpson Bay loaned to Starnet Systems, a subsidiary of Starnet, $1,500,000
pursuant to a loan agreement dated June 23, 2000, which provided for the
conversion of the Loan into shares of Starnet. The Accord and Satisfaction
Agreement was entered into to effect such conversion. Pursuant to the agreement,
2,000,000 unregistered shares of Starnet's common stock were issued to Simpson
Bay as repayment in full of the loan. The parties further agreed that Starnet
would be free to utilize the equipment that had been located in Gibraltar in
other countries. Simpson Bay agreed to exclusively use Starnet software on its
sites www.playersonly.com, www.sportsbook.com, and www.acescasino.com for four
years from August 15, 2000. Starnet will have a right of first opportunity to
design new gaming software to Simpson Bay so long as it can be competitive with
other providers. An affiliate of Simpson Bay will give Starnet a right of first
refusal for two years to provide new Starnet sportsbook and casino software for
the new casino sublicensee sites that will be launched by such affiliates so
long as Starnet's software is competitive. In the event of change of control of
Simpson Bay such right will terminate. Simpson Bay and Starnet also agreed that
they will attempt to integrate Starnet's casino with the back-end software on
the Starnet's back-end when they launch a European sportsbook.

AKAMAI TECHNOLOGIES, INC. FREEFLOW STREAMING SERVICE LEVEL AGREEMENT

        On March 27, 2001, Inphinity Interactive, Inc. entered into a FreeFlow
Streaming Service Level Agreement with Akamai Technologies, Inc. Through this
Service Level Agreement, Akamai provides Inphinity access to Akamai's network of
streaming media servers, Akamai DNS service, and Akamai's SteadyStream
technology in addition to other incidental services. Additionally, Akamai will
provide Inphinity with co-location space in San Diego, California. The term of
the Service Level Agreement is twelve months, and it will renew indefinitely for
additional one year terms unless terminated. After the first 12 months, either
party may terminate the Service Agreement on 15 days written notice. Inphinity
is required to pay Akamai at least $5,000 per month for the services offered
under the Service Level Agreement.

THE DAILY RACING FORM ONLINE AFFILIATE AGREEMENT BETWEEN DAILY RACING FORM, LLC
AND STARNET

        The Daily Racing Form Online Affiliate Agreement between Daily Racing
Form, LLC and Starnet was entered into on April 1, 2000. According to this
agreement, Starnet may link to Daily Racing Form's website in order to post
handicapping information provided by Daily Racing Form on its website. Daily
Racing Form will pay Starnet a 10% commission for all subscriptions to its
service generated though Starnet's website. The term of the agreement is three
years and it may be extended for an additional period of three years. Daily
Racing Form may terminate the agreement without cause upon 30 days notice. The
agreement may also be terminated if either party breaches it or becomes
insolvent.

SOFTWARE LICENSE AGREEMENT BETWEEN GLOBAL INTERACTIVE AND STARNET SYSTEMS

        A Software License Agreement between Global Interactive and Starnet
Systems was entered into on February 19, 2000. Global Interactive of St. Kitts,
West Indies, licensed Starnet Systems' Internet casino software in order to
operate an Internet gaming site. The non-exclusive license covers two casinos
including such games as blackjack, roulette, pai gow poker, video poker and slot
machine, a sportsbook web site, an HTML version of the sportsbook, and a lottery
ticket distribution web site. Starnet Systems was to provide all necessary
computer hardware to run Global Interactive's site. The term of the license is
three years and five months, and it will renew indefinitely for additional one
year terms. During such renewal terms Global Interactive may cancel the license
upon at least 45 days notice prior to the end of such term, and Starnet Systems
may cancel upon at least six months notice. The agreement can also be terminated
if either party becomes insolvent; if Starnet Systems becomes the subject to
serious third party civil or criminal litigation as a result of Global
Interactive's actions; or in the event of breach by either party, the other
party may terminate this agreement. Global Interactive is required to pay to
Starnet Systems a monthly fee of not less than $25,000.

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OPERATING AGREEMENT BETWEEN TRACKDATA SYSTEMS CORPORATION AND STARNET

        An Operating Agreement between TrackData Systems Corporation and Starnet
was entered into February 18, 2000. According to the agreement, Starnet agreed
to place a banner on its website to serve as a link to TrackData website for
advertising purposes. TrackData is responsible for processing registrations and
orders generated through such link and will pay to Starnet a commission of 20%
upon the sales of TrackData's products. Starnet agreed not to purchase
TrackData's products for resale or commercial use of any kind.

OPERATING AGREEMENT BETWEEN BLOODSTOCK RESEARCH INFORMATION SERVICES, INC. AND
STARNET

        An Operating Agreement between Bloodstock Research Information Services,
Inc. ("BRIS") and Starnet was entered into on January 18, 2000. This agreement
allows Starnet to place a banner advertising and link its website to BRIS's
website. BRIS is responsible for processing all customer orders for BRIS
products and will pay Starnet a 20% commission on any sale generated through
Starnet's website. Starnet agreed not to purchase BRIS's products for commercial
use of any kind. The term of this agreement is two years and will renew
automatically for successive two year periods. This agreement may be terminated
by either party upon notice given not less than one year before the expiration
of the then current term, or in the event of a breach by the other party.

AMTOTE INTERNATIONAL TOTALISATOR SERVICE AGREEMENT

        World Gaming Services, Inc. and AmTote International, Inc. entered into
a Totalisator Service Agreement on October 12, 1999 through which AmTote is the
exclusive provider of totalisator pari-mutuel wagering services to World Gaming
Services outside the United States. Specifically, World Gaming Services leases
and licenses AmTote hardware and software in order for World Gaming Services'
customers to interface with the AmTote pari-mutuel wagering totalisator system.
Through the Totalisator Agreement, World Gaming Services customers can place
on-line wagers with World Gaming Services in Antigua on live horse races across
the United States. If World Gaming Services chooses to offer the AmTote
totalisator pari-mutuel wagering services to United States citizens, World
Gaming Services must provide AmTote six months notice and an opinion of counsel
stating it is legal to do so. The term of the Totalisator Agreement is four
years and AmTote has the option of renewing it by matching any competing offers
following the Totalisator Agreement's termination. World Gaming Services will be
charged a fee of .25% of each wager placed with AmTote's totalisator system
subject to minimum annual amounts. There are also additional agreements through
which World Gaming Services has paid AmTote to train technicians to maintain
AmTote's hardware and software in World Gaming Services' facilities.

SOFTWARE LICENSE AGREEMENT BETWEEN INTERNATIONAL GAMING LTD (F.K.A BBF
INTERNATIONAL GAMING ANTIGUA INC.) AND STARNET SYSTEMS

        A Software License Agreement between BBF International Gaming Antigua
Inc. and Starnet Systems' predecessor, Softec Systems Caribbean Inc. was entered
into on January 18, 1999. Starnet Systems licensed its Internet casino software
in order to allow BBF International to operate an Internet gaming site. The
non-exclusive license permits no more than three casinos including such games as
blackjack, roulette, pai gow poker, video poker and slot machine, a sportsbook
web site, an HTML version of the sportsbook, and a lottery ticket distribution
web site. Starnet Systems was to provide all necessary computer hardware to run
BBF International's site. The term of the license is for one year, and it will
renew indefinitely for additional one year terms.

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During such renewal terms BBF International may cancel the license upon at least
45 days notice prior to the end of such term, and Starnet Systems may cancel
upon at least six months notice. In the event of breach by either party, the
other party may terminate this agreement. Starnet can also terminate this
agreement if it becomes the subject of a serious third party civil or criminal
litigation as a result of BBF's actions. The agreement can also be terminated by
either party if the other party becomes insolvent. BBF International is required
to pay to Starnet Systems a monthly fee of not less than $10,000.

LOAN AGREEMENT BETWEEN STARNET, WORLD GAMING AND SPORTINGBET PLC

        On August 1, 2002, Starnet, World Gaming and Sportingbet PLC
("Sportingbet") entered into a Loan Agreement pursuant to which Sportingbet
agreed to loan up to Starnet and World Gaming a maximum principal amount of
$1,500,000. The Loan bears interest at a rate of 2% above LIBOR. Payments are
made under the loan based upon a deduction by Sportingbet of $225,000 per month
from November 2002 to March 2003 and $62,500 per month from April 2003 to
September 2003. The funds are deducted from amounts that are due by Sportingbet
to Starnet under the terms of the License Agreement between the parties
predecessors. The Loan is subject to an Escrow Agreement and a Charge Agreement,
which provide Sportingbet the right to access and use the software and the
secure site where the hardware is located in the event of our default.
Sportingbet has a security interest in our software.

GENERAL SECURITY AGREEMENT WITH SPORTINGBET PLC

        On August 1, 2002, in connection with the loan agreement, we entered
into a security agreement with Sportingbet. The security agreement provides that
we grant Sportingbet a security interest in the hardware used by us to provide
the services to Sportingbet under the license agreement between the parties. The
grant of the security interest secures our obligation to repay Sportingbet under
the loan agreement. If certain trigger events occur under the loan agreement,
Sportingbet may take possession of the hardware, subject to any restrictions by
law, or exercise other rights available to it, including selling or leasing the
hardware.

ESCROW AGREEMENT WITH NCC ESCROW INTERNATIONAL LIMITED

        On August 1, 2002, we entered into an escrow agreement with Internet
Opportunity Entertainment Limited (now a subsidiary of Sportingbet) and NCC
Escrow International Limited. The escrow agreement provides that the source code
that forms the software that we license to Sportingbet is held in escrow by NCC.
Upon a trigger event, subject to certain restrictions, Sportingbet may require
that NCC release the source code to Sportingbet. Sportingbet required under the
loan agreement that the escrow agreement be maintained as a continuing security
for repayment of the loan.

        EMPLOYMENT AND CONSULTING AGREEMENTS

LIAM GILLEN, MANAGING DIRECTOR OF OPERATIONS

        Starnet entered into an employment agreement with Liam Gillen on
November 27, 2000. Mr. Gillen's employment agreement is for a term of two years,
which term may be extended upon the written agreement of the parties, and
provides for full-time employment. Mr. Gillen's base salary in the year 2001 is
$96,000. As part of his compensation package, Mr. Gillen received 50,000 options
pursuant to the Starnet Option Plans to purchase Starnet's stock. Starnet pays
Mr. Gillen $1,000 per month as a vehicle allowance, $3,000 per month as a
housing allowance for housing in Antigua and $5,000 per year as a travel
allowance. Starnet also provided Mr. Gillen with an interest-free loan of
$25,000, repayable in 24 installments, to obtain a credit card in Antigua and a
$2,500 moving allowance to move to Antigua.

        The employment agreement may be terminated by Starnet for cause, which
includes any breach of the terms of the employment agreement or any common law
cause for termination. If Mr. Gillen's employment agreement is terminated
without cause, or if a change of control occurs, Starnet will be required to pay
him a severance payment of six months base salary plus six months of benefits
and a moving allowance.

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Additionally, upon such termination, Mr. Gillen's stock options will accelerate
and become exercisable. The employment agreement contains post-termination
restrictive covenants relating to non-competition with Starnet, non-solicitation
of its customers, non-dealing with its customers and non-solicitation of its
employees. The employment agreement contains an express obligation of
confidentiality in respect of its trade secrets and confidential information.

DAVID FLEMING, MANAGING DIRECTOR, INPHINITY

        Inphinity Interactive Inc. extended a written offer of employment to
David Fleming in the position of Vice President Product Development beginning
September 10, 2001. Mr. Fleming's base salary is $150,000 CDN. As part of his
compensation package, Mr. Fleming is entitled to 30% annual cash bonus, up to
50% of which may be used to purchase our stock options. Mr. Fleming also
received stock options to purchase 100,000 shares vesting over a three year
period in equal installments at a strike price to be set at the price at the
close of market on September 10, 2001. If Mr. Fleming employment agreement is
terminated without cause, Inphinity will be required to pay him a severance
payment of four months base salary.

        TAXATION

        The following discussion sets forth the material U.S. federal income tax
consequences and the material U.K. tax consequences of the ownership and
disposition of our American Depositary Shares or ordinary shares by a U.S.
Holder. This summary is for general information purposes only. A U.S. Holder is
a beneficial owner of our American Depositary Shares or ordinary shares that is:

o       a citizen or individual resident of the United States;

o       a corporation or other entity taxable as a corporation for U.S. federal
        income tax purposes that is created or organized in the United States or
        under the law of the United States or of any state or the District of
        Columbia;

o       an estate whose income is includible in gross income for U.S. federal
        income tax purposes regardless of its source; or

o       a trust if (1) a court within the United States is able to exercise
        primary supervision over the administration of the trust, and one or
        more United States persons have the authority to control all substantial
        decisions of the trust, or (2) the trust was in existence on August 20,
        1996 and properly elected to continue to be treated as a United States
        person.

        The following discussion addresses only the tax consequences to a U.S.
Holder that is a portfolio investor, that is, a U.S. Holder that does not own at
any time, directly or indirectly, American Depositary Shares or ordinary shares
representing ten percent or more of the voting power of our stock.

WE URGE YOU TO CONSULT YOUR OWN TAX ADVISERS REGARDING YOUR PARTICULAR TAX
CONSEQUENCES.

        UNITED KINGDOM TAX CONSEQUENCES

        The following discussion sets forth the material U.K. tax consequences
of the ownership and disposition of our ordinary shares or American Depositary
Shares by Qualifying U.S. Holders. A "Qualifying U.S. Holder" is a U.S. Holder
who is a resident of the United States for purposes of the current U.S.-U.K.
income tax treaty and who has acquired his American Depositary Shares or
ordinary shares for bona fide commercial reasons as an investment and not in
connection with any business carried on through a permanent establishment
situated in the United Kingdom or for the purposes of securing the benefit of
Article 10, relating to dividends, of the U.S.-U.K. income tax treaty. This
summary is for general information purposes only. It does not purport to be a
comprehensive description of all of the tax considerations that may be relevant
to each U.S. Holder.

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<PAGE>

This discussion is based on the current provisions of United Kingdom domestic
tax law, current regulations promulgated thereunder, judicial decisions and
published positions of the Inland Revenue and/or Customs and Excise and other
applicable authorities, all as in effect as of the date hereof, and each of
which is subject to change or to differing interpretations, possibly with
retroactive effect. This discussion does not address all aspects of U.K.
taxation that may be relevant to any particular shareholder based on the
shareholder's individual circumstances.

        For the purposes of U.K. tax on distributions on ordinary shares, the
holders of American Depository Shares are treated as the beneficial owners of
our ordinary shares underlying their American Depository Shares. A new U.S.-U.K.
income tax treaty has been agreed but the new treaty has not come into force and
will only come into force when ratified by both countries. The summary set out
below, therefore, does not take any account of the provisions of the proposed
new treaty. For the purposes of this summary it is assumed, and we are of the
opinion, that our business is managed and controlled in the United Kingdom.

DISTRIBUTIONS ON AMERICAN DEPOSITARY SHARES OR ORDINARY SHARES

        Currently, an individual shareholder resident in the United Kingdom
generally is entitled to a tax credit, referred to as the "U.K. tax credit", in
respect of any cash dividend received equal to one-ninth of the dividend. Under
the U.S.-U.K. income tax treaty, the payment from the U.K. Inland Revenue to a
Qualifying U.S. Holder is reduced by a U.K. withholding tax equal to the lesser
of (1) 15 percent of the sum of the dividend and the amount of the U.K. tax
credit and (2) the amount of the U.K. tax credit.

        Currently, a Qualifying U.S. Holder would not be entitled to receive any
cash payment in respect of the U.K. tax credit for dividends paid by us. For
example, if a Qualifying U.S. Holder receives a dividend of(pound)90, that U.S.
Holder would be entitled to a U.K. tax credit of(pound)10. However, because the
maximum U.K. withholding tax, which would be 15 percent of (pound)100, exceeds
the U.K. tax credit, the U.K. Inland Revenue would not make any actual payment,
and the Qualifying U.S. Holder would receive only the cash dividend, which in
this case would be(pound)90.

        U.S. Holders that are not Qualifying U.S. Holders, depending on their
personal circumstances, may be liable to U.K. tax in respect of dividends at a
rate of up to 32.5 percent.

TAXATION OF CAPITAL GAINS OF U.S. HOLDERS

        A U.S. Holder who is neither resident nor ordinarily resident in the
United Kingdom for U.K. tax purposes generally will not be subject to U.K. tax
on capital gains realized on the disposition of our American Depositary Shares
or ordinary shares.

        A U.S. Holder who is resident or ordinarily resident in the United
Kingdom at the time of any disposal of his American Depositary Shares or
ordinary shares in our company, or at a time when he is deemed to have made such
a disposal, or if the disposal is deemed, for the purposes of U.K. tax, to occur
at such a time, may, depending on his circumstances, be subject to U.K. capital
gains tax at a rate of up to 40 percent, in the case of disposal of ordinary
shares, on the whole or, in the case of disposal of American Depositary Shares,
almost the whole, of the chargeable gain arising on the disposal.

        A U.S. Holder who owns his American Depositary Shares or ordinary shares
in our company in connection with any business or otherwise than as a capital
investment, depending on his circumstances, may be subject to U.K. tax on any
gain he makes on any disposal of his American Depositary Shares or ordinary
shares of our company at a rate of up to 40 percent, whether or not he is
resident or ordinarily resident in the United Kingdom.

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<PAGE>

INHERITANCE TAX AND GIFT TAXES ON U.S. HOLDERS

        Our ordinary shares and almost all of the American Depositary Shares are
assets situated in the United Kingdom for the purposes of U.K. inheritance tax.
An individual who is domiciled in the United States and who is not a national of
the United Kingdom for purposes of the U.S.-U.K. estate and gift tax treaty,
however, generally will not be subject to U.K. inheritance tax in respect of our
American Depositary Shares or ordinary shares on the individual's death or to
U.K. gift tax on a gift of World Gaming American Depositary Shares or ordinary
shares during the individual's lifetime, provided that any applicable U.S.
federal estate or gift tax liability is paid. In the exceptional case where
World Gaming American Depositary Shares or ordinary shares are subject both to
U.K. inheritance tax and to U.S. federal estate or gift tax, the U.S.-U.K.
estate and gift tax treaty generally provides for any tax paid to the United
Kingdom to be credited against tax payable to the United States or for any tax
paid to the United States to be credited against tax payable to the United
Kingdom based on priority rules set out in that treaty. Where, however, the
ordinary shares or American Depositary Shares are shares or American Depositary
Shares in a company which, when taken with its subsidiaries, exists wholly or
mainly for trading purposes, business property relief from U.K. inheritance tax
may be available to reduce or eliminate the tax unless, as in the case of our
American Depositary Shares or ordinary shares, they may be deemed "quoted on a
recognized stock exchange" for the purposes of U.K. domestic inheritance tax, if
the shareholding in questions does not carry control.

STAMP DUTY AND STAMP DUTY RESERVE TAX

        A transfer for value of our ordinary shares will normally be subject to
ad valorem stamp duty or to stamp duty reserve tax. Stamp duty tax will arise on
the execution of an instrument to transfer our ordinary shares. Stamp duty
reserve tax will arise on the entry into an agreement to transfer our ordinary
shares, but the charge may be canceled if stamp duty has been paid. Stamp duty
and stamp duty reserve tax are normally a liability of the purchaser. The rate
of stamp duty payable is 0.5 percent of the consideration rounded to the nearest
(pound)5, and 0.5 percent of the consideration in the case of stamp duty reserve
tax. There is no charge to U.K. stamp or other duties on the issue by a U.K.
incorporated company of shares in itself.

        There should be no charge to U.K. stamp duty on the transfer of American
Depositary Shares of World Gaming, provided the agreement and the conveyance of
transfer, if any, are executed outside the United Kingdom.

TAXATION OF THE COMPANY

        A company that is incorporated in the United Kingdom generally is
treated as being resident in the United Kingdom for tax purposes. However, this
treatment will not apply if the management and control of the U.K. resident
company, that is, broadly, the exercise by the board of directors of that U.K.
resident company of their function, takes place in another country with which
the United Kingdom has an appropriate double tax treaty. A company whose
management and control is exercised in the United Kingdom is also generally
resident in the United Kingdom. A company that is tax resident in the United
Kingdom is liable to U.K. tax on its worldwide income and gains at a maximum
effective rate of up to 30 percent. Tax credit for foreign taxes on the foreign
income is generally given. If the tax residence of a U.K. company changes from
the United Kingdom to that of another jurisdiction, by virtue of the above
provisions it would be deemed to have disposed of all of its chargeable assets,
i.e., its shares in its subsidiaries and any other chargeable assets that it
owns, including the goodwill of any trade carried on by it, for each asset's
market value at the date of the change of residence. It is, therefore, crucial
to ensure that the exercise by the board of directors of their functions is
exercised so as to ensure that there is no change of a U.K. resident company's
tax residence out of the United Kingdom.

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<PAGE>

TAXATION OF A U.K. COMPANY THAT CONTROLS CERTAIN CONTROLLED FOREIGN COMPANIES

        If any of the subsidiaries of a U.K. resident company are deemed
resident in another tax jurisdiction so that that subsidiary is liable to tax or
its profits, other than capital gains, that is less than 75 percent of the tax
it would have paid on those profits if liable to tax in the United Kingdom, then
unless 90 percent of that subsidiary's profits are paid up as a dividend to a
U.K. resident company, within 18 months of the end of the accounting period in
which they are earned or an exemption from these rules applies, those profits
will be treated as profits of the U.K. company and taxed accordingly (with
credit for foreign tax calculated in accordance with the applicable U.K. laws).
Therefore, in relevant circumstances, we would be subject to U.K. tax (currently
at the rate of 30 percent) on the profits of the overseas subsidiaries, subject
to appropriate credit for the relevant overseas tax in respect of such profits.

TAXATION OF CERTAIN DIVIDENDS RECEIVED BY A U.K. HOLDING COMPANY

        After the reorganization, we own WG International Limited, which in turn
owns the entire issued share capital of Starnet, which in turn wholly owns the
operating subsidiaries of Starnet. Thus, dividends received by WG International
Limited and World Gaming will have passed through its U.S. subsidiary and have
been subjected, in addition to any tax payable in the country of the operating
subsidiaries, to U.S. federal income tax, generally at a rate of 34 percent or
35 percent, after giving credit, subject to limitations, for foreign income tax
paid by the operating subsidiary. A dividend paid by the U.S. subsidiary will be
subject to a U.S. withholding tax unless the earnings of the operating
subsidiaries qualify the dividend for an exemption from that tax. Pursuant to
the current U.S.-U.K. income tax treaty, the 30% withholding tax imposed by U.S.
federal income tax law is reduced to five percent for non-exempt dividends from
the U.S. subsidiary to WG International Limited. Under the proposed new
U.S.-U.K. income tax treaty, if adopted, it is possible that WG International
Limited would not qualify for the benefits of the treaty, in which case that
rate reduction would not apply, and dividends from Starnet to WG International
Limited would be subject to a 30% U.S. withholding tax. We believe, based on the
current ownership and trading of our stock, that WG International Limited would
not qualify for the benefits of the proposed new treaty. Alternatively, if WG
International Limited were to qualify for the benefits of the proposed new
treaty, if adopted, it is possible that U.S. withholding tax on those dividends
would be eliminated entirely. For U.K. corporation tax purposes, the dividend
from the U.S. subsidiary will be subject to U.K. tax payable at effective rates
of between 20 percent and 30 percent, depending on the level of deemed or actual
profits of the Starnet group, but will be reduced by means of a credit for any
U.S. withholding tax and for the federal and state income tax paid by Starnet on
the earnings distributed by it and, to the extent that Starnet's income is
derived from dividends received from its operating subsidiaries, the corporate
income tax paid by such operating subsidiaries in their countries of operation.
However, the credit cannot exceed the effective U.K. corporation tax payable and
is further restricted by detailed and complicated tax anti-avoidance and other
provisions. Thus, the U.S. tax and the taxes paid in the countries in which the
operating subsidiaries are situated, if relevant, will exceed the U.K. tax, and
no credit will be available in respect of the excess. Further, the credit
against foreign taxes suffered on profits from which a dividend is paid is based
on an assumption that all available relief and exemptions from the foreign tax
have been claimed by the overseas company.

        UNITED STATES FEDERAL INCOME TAX CONSEQUENCES

        This discussion is based on current provisions of the Internal Revenue
Code of 1986, as amended, referred to as the Code, current and proposed Treasury
regulations promulgated thereunder, judicial decisions and published positions
of the U.S. Internal Revenue Service, known as the "IRS", and other applicable
authorities, all as in effect as of the date hereof, and each of which is
subject to change or to differing interpretations, possibly with retroactive
effect. This discussion does not address all aspects of U.S. federal income
taxation that may be relevant to any particular shareholder based on the
shareholder's individual circumstances.

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In particular, this discussion considers only U.S. Holders that will own
American Depositary Shares or ordinary shares as capital assets and does not
address the potential application of the alternative minimum tax or the U.S.
federal income tax consequences to U.S. Holders that are subject to special
treatment, including U.S. Holders that:

o       are broker-dealers;

o       have elected mark-to-market accounting;

o       are tax-exempt organizations;

o       are financial institutions or insurance companies or other entities that
        derive financial services income;

o       hold American Depositary Shares or ordinary shares as part of a
        straddle, "hedge", "conversion transaction" or other risk reduction
        strategy with other investments;

o       have a functional currency that is not the U.S. dollar; or

o       are regulated investment companies.

        In addition, this discussion does not consider the tax treatment of
persons who hold American Depositary Shares or ordinary shares through a
partnership or other pass-through entity. This discussion does not address any
aspect of state, local or non-U.S. tax laws or any U.S. federal tax laws other
than U.S. federal income tax laws.

        Subject to the limitations described in the next paragraph, the
following discussion describes the material U.S. federal income tax consequences
to a U.S. Holder. In addition, certain material aspects of U.S. federal income
tax relevant to a holder other than a U.S. Holder, referred to as a Non-U.S.
Holder, are discussed below.

        TAX CONSEQUENCES FOR U.S. HOLDERS

        For U.S. Federal income tax purposes, a holder of an American Depositary
Share will be treated as the owner of the ordinary share underlying the American
Depositary Share.

TAXATION OF DIVIDENDS PAID ON AMERICAN DEPOSITARY SHARES OR ORDINARY SHARES

        A U.S. Holder will be required to include in gross income as ordinary
income the amount of any distribution paid on an American Depositary Share or
ordinary share, including any U.K. tax withheld from the amount paid, on the
date the distribution is received, to the extent the distribution is paid out of
our current and/or accumulated earnings and profits as determined for U.S.
federal income tax purposes. A distribution in excess of earnings and profits
will be treated first as a nontaxable return of capital, reducing the U.S.
Holder's basis in the American Depositary Share or ordinary share and, to the
extent in excess of basis, will be treated as gain from the sale or exchange of
the American Depositary Share or ordinary share. The amount of any distribution
paid in any currency other than the U.S. dollar will equal the U.S. dollar value
of the other currency calculated by reference to the exchange rate in effect on
the date the distribution is received by the Depositary, in the case of American
Depositary Shares, or by the U.S. Holder, in the case of ordinary shares,
regardless, in each case, of whether the other currency is converted into U.S.
dollars. Gain or loss, if any, realized on a sale or other disposition of the
other currency will be ordinary income or loss. Our dividends will not qualify
for the dividends received deduction generally available to corporations.

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        A portfolio U.S. Holder, as defined above, may elect to be treated as
receiving the U.K. tax credit in respect of a dividend paid by us, as described
above in "Taxation --United Kingdom Tax Consequences--Tax Consequences for U.S.
Holders--Distributions on American Depositary Shares or Ordinary Shares". A U.S.
Holder that makes this election will be treated (1) as having received
additional dividend income equal to the gross amount of the U.K. tax credit
unreduced by any U.K. withholding tax and (2) as having paid U.K. withholding
tax in the same amount. Following the example above in "Taxation -United Kingdom
Tax Consequences -- Distributions on American Depositary Shares or Ordinary
Shares", a U.S. Holder that made this election would be treated for U.S. federal
income tax purposes as receiving a dividend in an amount equal to the U.S.
dollar value of(pound)100 and as having paid U.K. withholding tax in an amount
equal to the U.S. dollar value of(pound)10. U.S. Holders that are not portfolio
U.S. Holders are subject to different rules. Those rules, and the procedures for
making the election described above, are set forth in Revenue Procedure 2000-13.

        A U.S. Holder generally may elect either to deduct or to credit all of
the foreign income taxes it pays or accrues in any taxable year and, consistent
with that election, may deduct or credit any U.K. income tax withheld at the
source on dividends we pay. A deduction reduces the amount of income that is
subject to tax, while a credit is a dollar-for-dollar reduction of the U.S.
Holder's U.S. federal income tax liability. An individual who does not elect to
credit foreign income taxes and who does not claim itemized deductions, but
instead utilizes the standard deduction, may not claim a deduction for the
amount of U.K. withholding taxes.

        The amount of foreign income tax that may be claimed as a credit in any
year is subject to complex limitations, which apply on a
shareholder-by-shareholder basis. The limitations include, among others, rules
that divide a U.S. Holder's foreign source income among specified classes, or
"baskets", and prevent the credit for foreign income taxes imposed on any class
of foreign source income from exceeding the U.S. Holder's liability for U.S.
federal income tax on that class of income. For foreign tax credit purposes, our
dividends generally will be foreign source passive income.

        In addition, a U.S. Holder cannot credit U.K. tax withheld on a dividend
received on any American Depositary Share or ordinary share that the U.S. Holder
has not held for at least 16 days of the 30-day period beginning on the date
that is 15 days before the ex-dividend date or to the extent the U.S. Holder is
under an obligation to make related payments with respect to substantially
similar or related property. Any days during which a U.S. Holder has
substantially diminished its risk of loss on the American Depositary Share or
ordinary share are not counted toward meeting the 16-day holding period required
by the statute.

        The foreign tax credit rules in the Code are exceedingly complex, and
each U.S. Holder is urged to consult its own tax adviser regarding those rules.

TAXATION ON DISPOSITION OF ORDINARY SHARES

        Subject to the rules applicable to passive foreign investment companies,
controlled foreign corporations and foreign investment companies, discussed
below, upon the sale, exchange or other disposition of an American Depositary
Share or ordinary share, a U.S. Holder will recognize capital gain or loss in an
amount equal to the difference, if any, between the U.S. Holder's basis in the
American Depositary Share or ordinary share, which usually is the U.S. Holder's
cost of the American Depositary Share or ordinary share, and the amount realized
on the disposition computed in U.S. dollars. Capital gain from the sale,
exchange or other disposition of an American Depositary Share or ordinary share
held more than one year, including any capital gain recognized on a distribution
that exceeds earnings and profits and basis in the American Depositary Share or
ordinary share on which it is paid, is long-term capital gain, and, in the case
of a U.S. Holder that is not a corporation, is eligible for a maximum 20 percent
rate of taxation.

                                       62
<PAGE>

Gain or loss recognized by a U.S. Holder on a sale, exchange or other
disposition of an American Depositary Share or ordinary share generally will be
treated as U.S. source income or loss for purposes of the U.S. foreign tax
credit limitations. Unless an exception to that general source rule applies, or
unless the U.S. Holder has other foreign source income in the same class or
"basket" that is subject to foreign tax at a rate below the U.S. federal income
tax rate on that income, the limitations on the foreign tax credit may prevent
the U.S. Holder from claiming a foreign tax credit for part or all of any U.K.
tax paid by the U.S. Holder on the disposition of an American Depositary Share
or ordinary share. The deductibility of a capital loss recognized on the sale,
exchange or other disposition of an American Depositary Share or ordinary share
is subject to limitations. An exchange, deposit or withdrawal by a U.S. Holder
of ordinary shares in exchange for American Depositary Shares, or vice versa,
will not be subject to any U.S. Federal income tax.

TAX CONSEQUENCES IF WE ARE A PASSIVE FOREIGN INVESTMENT COMPANY

        In general, we will be a passive foreign investment company, or PFIC,
for any taxable year if either (1) 75 percent or more of our gross income in the
taxable year is passive income, or (2) 50 percent or more of the average value,
or, if our American Depositary Shares or ordinary shares are not regularly
traded on any of certain designated stock exchanges and if we so elect, the
adjusted basis, of our assets in the taxable year produces, or is held for the
production of, passive income. The IRS takes the position that interest on
working capital or any other cash is passive income and that the corresponding
asset is an asset that produces or is held for the production of passive income.
The PFIC rules can produce unfavorable tax consequences for a U.S. Holder if we
are treated as a PFIC for any year while a U.S. Holder owns our American
Depositary Shares or ordinary shares, and if that U.S. Holder does not make, or
has not made, a timely election that remains in effect, for the first taxable
year the U.S. Holder owns our American Depositary Shares or ordinary shares, and
we are a PFIC, either to treat us as a "qualified electing fund" or, to mark the
holder's American Depositary Shares or ordinary shares to market. As described
below, a "qualified electing fund" election will not be available to a U.S.
Holder unless we provide certain information to U.S. Holders, and we provide no
assurance that we will make that information available. In addition, a
mark-to-market election will not be available to a U.S. Holder unless our
American Depositary Shares or ordinary shares held by the U.S. Holder are
"marketable stock", which at the present time we believe they are not. If
neither of those elections is available to, or, if available, is made by, a U.S.
Holder, as described more fully below, the U.S. Holder will be subject to the
adverse tax consequences described in the following paragraph if we are a PFIC.
We have not undertaken any determination of whether we are a PFIC and therefore
cannot provide any assurance that we are not. Therefore, we may be a PFIC.
Moreover, in the absence of an analysis of our status as a PFIC performed by us,
any assertion by the IRS with respect to a U.S. Holder that we are a PFIC could
be upheld against that U.S. Holder, whether or not we are in fact a PFIC.

        Under the PFIC provisions, in any year in which the U.S. Holder either
disposes of an American Depositary Share or ordinary share at a gain or receives
an "excess distribution," special rules apply to the taxation of the gain and
the excess distribution. For purposes of these rules, "excess distributions" are
the portion of our distributions in any taxable year, whether or not out of our
earnings and profits, that exceed 125 percent of the average of the
distributions (whose amount is subject to adjustment to the extent there were
excess distributions) that the U.S. Holder received on the American Depositary
Share or ordinary share during the previous three years, or, if shorter, the
U.S. Holder's holding period for the American Depositary Share or ordinary share
on which the distributions are paid. A disposition of an American Depositary
Share or ordinary share, for purposes of these rules, includes many transactions
on which gain or loss is not realized under general U.S. federal income tax
rules. The gain or the excess distributions must be allocated ratably to each
day the U.S. Holder has held the American Depositary Share or ordinary share.
Amounts allocated to each year are taxable as ordinary income in their entirety
and not as capital gain, and amounts allocable to prior years may not be offset
by any deductions or losses.

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<PAGE>

Amounts allocated to each prior year are taxable at the highest rate in effect
for that year and are subject to an interest charge at the rates applicable to
deficiencies for income tax for those periods. In addition, a U.S. Holder's tax
basis in an American Depositary Share or ordinary share that is acquired from a
decedent would not receive a step-up to fair market value as of the date of the
decedent's death but instead would be equal to the decedent's basis, if lower.

        The special PFIC rules described in the preceding paragraph will not
apply to a U.S. Holder if the U.S. Holder makes a timely election, which remains
in effect, to treat us as a "qualified electing fund," or QEF, for the first
taxable year in which the U.S. Holder owns an American Depositary Share or
ordinary share and in which we are a PFIC. A U.S. Holder generally may make a
QEF election only if we provide to the U.S. Holder certain information regarding
our earnings and profits and net capital gain and certain other information
regarding us. As indicated above, we provide no assurance that we will make any
of that information available. A U.S. Holder that has made a valid QEF election
is required for each taxable year to include in income a pro rata share of our
ordinary earnings as ordinary income and a pro rata share of our net capital
gain as long-term capital gain, subject to a separate election to defer payment
of taxes, which deferral is subject to an interest charge. The QEF election is
made on a shareholder-by-shareholder basis and can be revoked only with the
consent of the IRS. A shareholder makes a QEF election by attaching to a timely
filed U.S. federal income tax return a properly completed IRS Form 8621 that
reflects the information provided in the PFIC Annual Information Statement
supplied by us to the shareholder and by filing a second copy of that form with
the IRS Service Center in Philadelphia, Pennsylvania. As indicated above, we
provide no assurance that we will make any of that information available. If we
do not provide that information, a U.S. Holder will not be able to make a QEF
election, in which case, unless our American Depositary Shares or ordinary
shares held by a U.S. Holder are "marketable stock" (which we do not believe
they are at this time) or become "marketable stock", a U.S. Holder will be
subject to the rules described in the preceding paragraph with respect to our
American Depositary Shares or ordinary shares unless if we are a PFIC or unless
the U.S. Holder is able to rebut an assertion by the IRS that we are a PFIC.
Without information provided by us a U.S. Holder may not be able to rebut an
assertion by the IRS that we are a PFIC.

        Even if a QEF election is not made, if we are a PFIC in the hands of a
U.S. Holder, that U.S. Holder must file each year a completed IRS Form 8621 with
its U.S. Federal income tax return and file a second copy of that form with the
IRS Service Center in Philadelphia, Pennsylvania. The annual Form 8621 filed by
a person who has made a QEF election must include the information provided to
the shareholder in the PFIC Annual Information Statement. As indicated above, we
provide no assurance that we will make any of that information available. If we
were to make that information available but later were to cease to make that
information available, a QEF election by a U.S. Holder likely would terminate.
We provide no assurance that, if we make any of that information available, we
will continue to do so. Although a QEF election generally cannot be revoked, if
a U.S. Holder made a timely QEF election for the first taxable year it owned an
American Depositary Share or ordinary share and we are a PFIC, the QEF election
does not apply in a later taxable year in which we do not satisfy the tests to
be a PFIC. If a QEF election was not made for that first taxable year, certain
elections can be made while a foreign corporation continues to satisfy the
definition of a PFIC that, combined with a valid QEF election, provided that
election is available by reason of our provision of necessary information, can
cause the QEF election to be treated as having been made for that first taxable
year. Those elections may require the electing shareholder to recognize gain on
a constructive sale or to be taxable on the shareholder's share of certain
undistributed profits of the foreign corporation. If gain or income is
recognized pursuant to one of these elections, the rules set forth in the
preceding paragraph would apply to that gain or income.

        Even if a QEF election ceases to apply because in a later taxable year
we cease to satisfy the tests to be a PFIC, the QEF election will apply again in
any subsequent year in which we again satisfy the tests to be a PFIC, provided
that election is available by reason of our provision of necessary information.

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<PAGE>

Moreover, if you sell all of the American Depositary Shares or ordinary shares
you own and later reacquire other ordinary shares, any QEF election you have
made that remains in effect will apply to the shares acquired later, provided
that election is available by reason of our provision of necessary information.
Treasury regulations provide that the Commissioner of Internal Revenue has the
discretion to invalidate or terminate a QEF election if the U S. Holder or we,
or an intermediary, fails to satisfy the requirements for the QEF election. As
noted above, we provide no assurance that we will make any of the necessary
information available.

        The special PFIC rules described above also will not apply to a U.S.
Holder if the U.S. Holder elects to mark the U.S. Holder's American Depositary
Shares or ordinary shares to market each year, provided our stock is considered
"marketable stock" within the meaning of the Treasury regulations. A U.S. Holder
that makes this election will recognize as ordinary income or loss each year an
amount equal to the difference, if any, as of the close of the taxable year
between the fair market value of the holder's American Depositary Shares or
ordinary shares and the holder's adjusted tax basis in the American Depositary
Shares or ordinary shares. Losses would be allowed only to the extent of net
mark-to-market gain previously included in income by the U.S. Holder under the
election for prior taxable years. If the mark-to-market election were made, then
the rules set forth above would not apply for periods covered by the election.

        In general, the American Depositary Shares or ordinary shares will be
marketable stock within the meaning of the Treasury regulations if they are
traded, other than in de minimis quantities, at least 15 days during each
calendar quarter on a "qualified exchange or other market" within the meaning of
the Treasury regulations. A U.S. exchange is a "qualified exchange or other
market" if such exchange is a national securities exchange registered with the
SEC, or the national market system established pursuant to section 11A of the
Securities Exchange Act of 1934. A non-U.S. exchange is a "qualified exchange or
other market" if the exchange is regulated or supervised by a governmental
authority of the country where the market is located and (1) the exchange has
trading volume, listing, financial disclosure, surveillance and other
requirements designed to prevent fraudulent and manipulative acts and practices,
to remove impediments to and perfect the mechanism of a free and open, fair and
orderly market, and to protect investors, and the laws of the country where the
exchange is located and the rules of the exchange ensure that those requirements
are actually enforced, and (2) the rules of the exchange effectively promote
active trading of listed stocks. If a non-U.S. exchange has more than one tier
or market level on which stock may be separately listed or traded, each such
tier is treated as a separate exchange. We believe that our American Depositary
Shares and ordinary shares are not "marketable stock" within the meaning of the
Treasury regulations. In that event, the mark-to-market election will not be
available to U.S. Holders. If a QEF election also is not available, for example,
because we do not provide the necessary information to U.S. Holders, or if a
U.S. Holder does not make a QEF election, the adverse PFIC rules set forth in
the fifth preceding paragraph will apply to all U.S. Holders or a non-electing
U.S. Holder. As noted above, we provide no assurance that we will make available
any of the information necessary for a QEF election.

        If a market-to-market election were available or were to become
available, and if a U.S. Holder were to make a mark-to-market election, but does
not make that election for the first taxable year in which the U.S. Holder owns
an American Depositary Share or ordinary share and in which we are a PFIC, and
if the U.S. Holder had not made a valid QEF election for that first such taxable
year, the rules set forth in the sixth preceding paragraph will apply to any
distributions on an American Depositary Share or ordinary share in the year of
the mark-to-market election, and to any gain recognized on an actual sale of an
American Depositary Share or ordinary share in that year, as well as in any
prior year that U.S. Holder owned our American Depositary Shares or ordinary
shares, and to any gain recognized in that year pursuant to the mark-to-market
election. Unlike the QEF rules, under which a U.S. Holder is not required to
continue to include in income any of our undistributed earnings in any year we
do not satisfy the tests to be a PFIC if the U.S. Holder made, or is treated as
making, the QEF election in the first taxable year the U.S. Holder owned our
American Depositary Shares or ordinary and we were a PFIC, the mark-to-market
rules generally continue to apply to a U.S. Holder who makes the mark-to-market
election, even in years we do not satisfy the tests to be a PFIC.

                                       65
<PAGE>

        A U.S. Holder who owns American Depositary Shares or ordinary shares
during a year we are a PFIC, who did not make a valid and timely QEF election
for the first taxable year in which the U.S. Holder owns an American Depositary
Share or ordinary share and in which we are a PFIC, or a valid QEF election in a
later year while we continue to satisfy the definition of a PFIC, as described
in the fifth preceding paragraph, and who has not made a valid mark-to-market
election generally will remain subject to the rules set forth in the seventh
preceding paragraph for all taxable years. In that event, those rules will apply
to any gains on dispositions of American Depositary Shares or ordinary shares
and to any "excess distributions." It is, however, possible for a U.S. Holder to
avoid this "once a PFIC, always a PFIC" result by electing to treat all of the
U.S. Holder's American Depositary Shares or ordinary shares as sold for their
fair market value as of the last day of the last taxable year we satisfy the
tests to be a PFIC, provided that election is made within three years of the due
date, including extensions, for the U.S. Holder's taxable year that includes the
last day of the taxable year we satisfy the tests to be a PFIC. If a gain is
recognized on that constructive sale, the rules set forth in the seventh
preceding paragraph would apply to that gain.

        We may be a PFIC for the year 2001. Many aspects of the taxation of
internet businesses that could be relevant to our status as a PFIC are subject
to considerable uncertainty. In addition, as noted above, we have not undertaken
any determination of whether we are a PFIC and therefore cannot provide any
assurance that we are not. In addition, the tests for determining PFIC status
are applied annually, and it is difficult to make accurate predictions of future
income and assets, which are relevant to this determination. Accordingly, there
can be no assurance that, even if we were not a PFIC for the year 2001, we will
not be a PFIC in 2002 or any subsequent year. Moreover, we provide no assurance
that we will make any determination in the future whether we are a PFIC at that
time. Finally, in the absence of an analysis of our status as a PFIC performed
by us, any assertion by the IRS with respect to a U.S. Holder that we are in any
particular year a PFIC could be upheld against that U.S. Holder, whether or not
we are in fact a PFIC.

        U.S. HOLDERS ARE URGED TO CONSULT THEIR TAX ADVISERS ABOUT THE PFIC
RULES, INCLUDING THE CONSEQUENCES TO THEM OF MAKING A QEF OR MARK-TO-MARKET
ELECTION, PROVIDED THOSE ELECTIONS ARE AVAILABLE, WITH RESPECT TO OUR American
Depositary Shares or ORDINARY SHARES IF WE ARE A PFIC.

CONTROLLED FOREIGN CORPORATION RULES

        Special U.S. federal income tax rules apply to certain holders in a
foreign corporation classified as a "controlled foreign corporation," or CFC. A
foreign corporation will not constitute a CFC unless U.S. shareholders, each of
whom owns ten percent or more of its voting power, referred to hereafter as "10%
Voting U.S. Shareholders", collectively own more than 50 percent of the total
combined voting power or total value of the corporation's stock. Any U.S. person
that owns, directly or indirectly through foreign persons, or is considered to
own, by application of certain constructive ownership rules, ten percent or more
of the total combined voting power of all classes of stock of a foreign
corporation will be considered to be a 10% Voting U.S. Shareholder.

        For purposes of the special rules that apply on a taxable disposition of
stock, the status of the foreign corporation as a CFC or the status of a U.S.
Holder as a 10% Voting U.S. Shareholder at any time within five years prior to
the taxable disposition can cause those rules to apply. Based on the current
ownership of our American Depositary Shares and ordinary stock, we believe that
we are not a CFC.

                                       66
<PAGE>

FOREIGN PERSONAL HOLDING COMPANY AND PERSONAL HOLDING COMPANY RULES

        Special U.S. federal income tax rules apply to a holder in a "foreign
personal holding company," or FPHC, and to the U.S. source income of a foreign
corporation that is a "personal holding company." A foreign corporation will not
constitute a FPHC unless five or fewer individuals who are U.S. citizens or
residents own, directly or constructively, more than 50 percent of the voting
power or the value of its shares. A corporation will not constitute a "personal
holding company," or PHC, unless five or fewer individuals own, directly or
constructively, more than 50 percent of the value of its shares at any time
during the last half of its taxable year. Based upon the current ownership of
our stock, we believe that we are not a FPHC or PHC.

FOREIGN INVESTMENT COMPANY RULES

        Special rules also apply to treat as ordinary income any gain realized
on the sale of shares of a "foreign investment company." We believe that we will
conduct our business and obtain controlling interests in subsidiaries so as not
to be a "foreign investment company."

        TAX CONSEQUENCES FOR NON-U.S. HOLDERS

        Except as described in "Information reporting and back-up withholding"
below, a Non-U.S. Holder of an American Depositary Share or ordinary share will
not be subject to U.S. federal income or withholding tax on any gain recognized
on the payment of dividends on, or gain from a disposition of, an American
Depositary Share or ordinary share, unless:

o       the income or gain is effectively connected with the conduct by the
        Non-U.S. Holder of trade or business in the United States and, in the
        case of a resident of a country that has a treaty with the United
        States, the income is attributable to a permanent establishment or, in
        the case of an individual, a fixed place of business, in the United
        States;

o       in case of gain from a disposition of an American Depositary Share or
        ordinary share, the Non-U.S. Holder is an individual who holds the
        American Depositary Share or ordinary share as a capital asset and is
        present in the United States for 183 days or more in the taxable year of
        the disposition and does not qualify for an exemption; or

o       the Non-U.S. Holder is subject to tax pursuant to the provisions of U.S.
        tax law applicable to U.S. expatriates.

INFORMATION REPORTING AND BACK-UP WITHHOLDING

        Under current U.S. federal income tax regulations, dividends we pay on
American Depositary Shares or ordinary shares will not be subject to U.S.
information reporting or to backup withholding unless they are paid in the
United States through a U.S. or U.S.-related paying agent, including a broker.
If a U.S. Holder furnishes the paying agent with a duly completed and signed IRS
Form W-9, the dividends will not be subject to backup withholding. Non-U.S.
Holders generally are not subject to information reporting or back-up
withholding with respect to dividends paid on, or upon the disposition of World
Gaming American Depositary Shares or ordinary shares, provided that the non-U.S.
Holder provides a taxpayer identification number, certifies to its foreign
status or otherwise establishes an exemption.

        The amount of any back-up withholding will be allowed as a credit
against a U.S. or Non-U.S. Holder's U.S. federal income tax liability and may
entitle the holder to a refund, provided certain required information is
furnished to the IRS.

                                       67
<PAGE>

        TAXATION OF THE COMPANY

        We are subject to U.S. federal income tax only to the extent that we
derive U.S. source income that is subject to U.S. withholding tax or income that
is effectively connected with the conduct of trade or business within the United
States and is not exempt from U.S. tax under the U.S.-U.K. income tax treaty.
Our indirect U.S. subsidiary will continue to be subject to U.S. tax on its
worldwide income, including dividends, if any, we receive from non-U.S.
subsidiaries, and dividends, if any, we pay to WG International Limited may be
subject to a U.S. withholding tax, unless the earnings of the operating
subsidiaries qualify the dividends for an exemption from that tax. Pursuant to
the current U.S.-U.K. income tax treaty, the 30% withholding tax imposed by U.S.
Federal income tax law is reduced to five percent for non-exempt dividends from
the U.S. subsidiary to WG International Limited. Under the proposed new
U.S.-U.K. income tax treaty, if adopted, it is possible that WG International
Limited would not qualify for the benefits of the treaty, in which case that
rate reduction would not apply, and dividends from Starnet to WG International
Limited would be subject to a 30% U.S. withholding tax. We believe, based on the
current ownership and trading of our stock, that neither WG International
Limited nor World Gaming plc would qualify for benefits under the proposed new
treaty. Alternatively, if WG International Limited were to qualify for the
benefits of the proposed new treaty, if adopted, it is possible that U.S.
withholding tax on those dividends would be eliminated entirely. In addition, if
the proposed new U.S.-U.K. income tax treaty is adopted, and WG International
Limited were not to qualify for the benefits of that treaty, other income of WG
International or World Gaming plc that is from U.S. sources or that is
effectively connected with trade or business conducted in the United States may
become subject to U.S. federal income tax or may become subject to U.S. Federal
income tax at higher rates.

        DOCUMENTS ON DISPLAY

        We have filed this Annual Report on Form 20-F with the Securities and
Exchange Commission under the Securities Exchange Act of 1934, as amended.
Statements made in this Transitional Report as to the contents of any contract,
agreement or other document referred to are not necessarily complete. With
respect to each such contract, agreement or other document filed as an exhibit
to this annual report, reference is made to the exhibit for a more complete
description of the matter involved, and each such statement shall be deemed
qualified in its entirety by such reference.

        We are subject to the informational requirements of the Securities
Exchange Act and file reports and other information with the Securities and
Exchange Commission. Reports and other information which we file with the
Securities and Exchange Commission, including this Transitional Report on Form
20-F, may be inspected and copies at the public reference facilities of the
Securities and Exchange Commission at: 450 Fifth Street N.W., Room 1024,
Washington, D.C. 20549. Additionally, copies of this material may also be
obtained from the Securities and Exchange Commission's Interest site at
http://www.sec.gov. The Commission's telephone number is 1-800-SEC-0330.

ITEM 11.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

        Our reporting currency is the U.S. dollar. We are exposed to foreign
exchange risk on our net Canadian dollar asset position (approximately $6.0
million Canadian or $3.7 million U.S. as of December 31, 2001). The main
exposure in this regard is the Canadian dollar weakening against the U.S.
dollar, which would cause our net Canadian position to "decline" after
translation to the U.S. dollar.

        Exposure arises primarily from the operations of our subsidiaries in
Canada which incur development and certain administrative expenses in Canadian
dollars (approximately $4.4 million CDN or $2.8 million U.S. for the year ending
December 31, 2001) but do not derive any sales directly from customers. Funding
for Inphinity comes from our non-Canadian subsidiaries that derive their sales
in

                                       68
<PAGE>

U.S. dollars. Therefore the ultimate cost of our operations in Canada is
dependent on the relative strength of the Canadian dollar to the U.S. dollar. We
have not hedged against this risk.

        Our net Canadian asset position is summarized as follows (in thousands
of U.S. dollars):

           Cash and cash equivalents ............  $   100    $    -
           Other current assets .................    1,000       500
                                                   -------   -------
           Total current assets .................    1,100       500
           Other assets .........................    4,900     3,100
           Current liabilities ..................   (1,300)   (1,800)
           Long-term liabilities ................     (500)        -
                                                   -------   -------
           Net Canadian dollar denominated assets    4,200   $ 1,800
                                                   =======   =======

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES.

         Not applicable.

                                     PART II

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES.

        We are in arrears on payments under two of our equipment suppliers. The
net present value of the total obligation is approximately $1,134,000. The total
amount of payments in arrears as of March 31, 2002 is approximately $359,000. We
are presently in discussions with these suppliers to alter the terms of the
leases.

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
         PROCEEDS.

        MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS

        There are no material modifications to the rights of security holders
that are required to be disclosed.

        USE OF PROCEEDS FROM OFFERING

        Not applicable.

                                    PART III

ITEM 17. FINANCIAL STATEMENTS.

        Our consolidated financial statements together with the report of HJ &
Associates LLC with respect to the eight months ended December 31, 2001 and the
fiscal years ended April 30, 2001 and 2000 are filed as part of this annual
report.

        CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
                                                                                          Page
<S>                                                                                        <C>
Independent Auditors' Report of HJ & Associates, LLC...................................    F-3
Consolidated Balance Sheets as of  December 31, 2001 and April 30, 2001................    F-4
Consolidated Statements of Operations and Accumulated Other Comprehensive Income
   (Loss) for the eight months ended December 31, 2001 and years ended April 30, 2001
   and 2000............................................................................    F-6
Consolidated Statements of Stockholders' Equity for the eight months ended December
   31, 2001 and years ended April 30 2001 and 2000.....................................    F-8
Consolidated Statements of Cash Flows for the eight months ended December 31, 2001 and
   years ended April 30, 2001 and 2000.................................................    F-10
Notes to Consolidated Financial Statements.............................................    F-12
</TABLE>
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<PAGE>

ITEM 18. FINANCIAL STATEMENTS.

        Our consolidated financial statements have been prepared in accordance
with Item 17 hereof.

ITEM 19. EXHIBITS.


1.1     Memorandum of Association of World Gaming plc (incorporated by reference
        from Exhibit 3.1 to Registration Statement on Form F-4 (SEC File No.
        333-48280, dated 10/19/00) filed by World Gaming plc.)

1.2     Articles of Association of World Gaming plc adopted by special
        resolution on May 17, 2001 (incorporated by reference from Exhibit 4.2
        to Registration Statement on Form S-8 (SEC File No. 333-70056, dated
        09/24/01) filed by World Gaming plc.)

2.1     Form of ordinary share certificate of World Gaming plc. (incorporated by
        reference as contained in Registration Statement on Form 8-A (Sec File
        No. 000-32793, dated 05/23/01) filed by World Gaming plc.)

2.2     Form ADR (incorporated by reference from Exhibit A to the Form Deposit
        Agreement filed as Exhibit (a) to Registration Statement on Form F-6
        (SEC File No.333-13286, dated 05/24/01) filed by World Gaming plc)

2.3     Form Deposit Agreement among World Gaming plc and Continental Stock
        Transfer and Trust Company, as depositary, and others named therein
        dated as of March 2001 (incorporated by reference from Exhibit (a) to
        Registration Statement on Form F-6 (SEC File No.333-13286, dated
        05/24/01) filed by World Gaming plc)

2.4     World Gaming 2001 Share Option Plan (incorporated by reference from
        Exhibit 4.3 to Registration statement on Form S-8 (SEC File No.
        333-70056, dated 09/24/01) filed by World Gaming plc)

4.1     Agreement and Plan of Reorganization (incorporated by reference from
        Exhibit 2.1 to a report on Form 8-K (SEC File No. 000-29290, dated
        06/14/01) filed by Starnet Communications International, Inc.)

4.2     Operating agreement between TrackData Systems Corporation and Starnet
        Communications International, Inc., dated February 18, 2000
        (incorporated by reference form Exhibit 4.6 to a report on Form 20-F
        (SEC File No 0-32793, dated 11/01/01) filed by World Gaming PLC.

4.3     Operating agreement between Bloodstock Research Information Services,
        Inc. and Starnet Communications, Inc., dated January 18, 2000
        (incorporated by reference form Exhibit 4.6 to a report on Form 20-F
        (SEC File No 0-32793, dated 11/01/01) filed by World Gaming PLC.

4.4     The Daily Racing Form Online Affiliate Agreement with Starnet
        Communications International, Inc., dated August 1, 2000 (incorporated
        by reference form Exhibit 4.6 to a report on Form 20-F (SEC File No
        0-32793, dated 11/01/01) filed by World Gaming PLC.

                                       70
<PAGE>

4.5     Software License Agreement between International Gaming Ltd (f.k.a. BBF
        International Gaming Antigua Inc. and Softec Systems Caribbean Inc.,
        dated January 18, 1999 (incorporated by reference form Exhibit 4.6 to a
        report on Form 20-F (SEC File No 0-32793, dated 11/01/01) filed by World
        Gaming PLC.

4.6     Employment Agreement of Liam Gillen, dated November 27, 2000
        (incorporated by reference from Exhibit 10.14 to a quarterly report on
        Form 10-Q (File No. 000-29290, dated 03/19/01) filed by Starnet
        Communications International, Inc.

4.7     Software License Agreement between Starnet Systems International Inc.
        and Global Interactive Ltd. dated February 19, 2000 (incorporated by
        reference from an annual report on Form 10-K (SEC File 0-29290 dated
        07/31/00) filed by Starnet Communications International, Inc.

4.8*    Loan Agreement between WorldGaming Plc and Sortingbet Plc., dated
        08/01/02.

4.9*    General Security Agreement with Sportingbet PLC., dated 08/01/02.

4.10*   Escrow Agreement with NCC Escrow International Limited, dated 08/01/02.

21.1*   List of Subsidiaries

23.1*   Consent of HJ & Associates, Independent Auditors

99.1*   Sarbanes-Oxley Act Certification by David Craven, CEO

99.2*   Sarbanes-Oxley Act Certification by Mark Thompson, Vice President
        Finance, acting CFO

------------------
*Filed herewith.

                                       71
<PAGE>

                                   SIGNATURES


Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the registrant certifies that it meets all of the requirements for filing
on Form 20-F and has duly caused this annual report to be signed on its behalf
by the undersigned, thereunto duly authorized.

                             WORLD GAMING PLC


Date: August 22, 2002        By:  /s/ David Craven
                             -------------------------------------------
                             David Craven
                             CEO

Date: August 22, 2002        By:  /s/ Mark Thompson
                             -------------------------------------------
                             Mark Thompson
                             Vice President Finance


Date: August 22, 2002        By:  /s/ Clare Roberts
                             -------------------------------------------
                             Clare Roberts
                             Director

Date: August 22, 2002        By:  /s/ Nicholas Jackson
                             -------------------------------------------
                             Nicholas Jackson
                             Director


<PAGE>



                        WORLD GAMING PLC AND SUBSIDIARIES

                        CONSOLIDATED FINANCIAL STATEMENTS

                      DECEMBER 31, 2001 AND APRIL 30, 2001










                                       F-1
<PAGE>


                                 C O N T E N T S


Independent Auditors' Report................................................ F-3

Consolidated Balance Sheets..................................................F-4

Consolidated Statements of Operations and Other Comprehensive Loss...........F-6

Consolidated Statements of Stockholders' Equity..............................F-8

Consolidated Statements of Cash Flows.......................................F-10

Notes to the Consolidated Financial Statements..............................F-12




                                       F-2
<PAGE>
                          INDEPENDENT AUDITORS' REPORT


To the Board of Directors and Shareholders of
World Gaming Plc and Subsidiaries
Antigua, West Indies

We have audited the accompanying consolidated balance sheets of World Gaming Plc
and Subsidiaries as of December 31, 2001 and April 30, 2001 and the related
consolidated statements of operations and other comprehensive loss,
stockholders' equity and cash flows for the eight months ended December 31, 2001
and for the years ended April 30, 2001 and 2000. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the consolidated financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall consolidated financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of World
Gaming Plc and Subsidiaries at December 31, 2001 and April 30, 2001 and the
consolidated results of their operations and their cash flows for the eight
months ended December 31, 2001 and for the years ended April 30, 2001 and 2000
in conformity with accounting principles generally accepted in the United States
of America.

The accompanying consolidated financial statements have been prepared assuming
that the company will continue as a going concern. As discussed in Note 19 to
the consolidated financial statements, the Company has accumulated significant
losses, has negative working capital and deficit in stockholders' equity, all of
which raise substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these natters are also described in Note 19. The
consolidated financial statements do not include any adjustments that might
result from the outcome of these uncertainties.


HJ & Associates, LLC
Salt Lake City, Utah

February 25, 2002, except for Note 8 as relating to Contingencies and Note 19,
as to which the dates are July 31, 2002.


                                       F-3
<PAGE>

WORLD GAMING PLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS OF US$)
<TABLE>
<CAPTION>
                                                            DECEMBER 31, 2001       APRIL 30, 2001
--------------------------------------------------------------------------------------------------
ASSETS

Current assets
<S>                                                             <C>                    <C>
      Cash and cash equivalents ............................    $       2,206          $     4,518

      Reserves  and deposits with credit card
      processors (Note 3) ..................................            2,532                3,763

      Accounts receivable, net (Note 4) ....................            2,591                1,476


      Employee loans and advances - current portion ........               68                   59


      Prepaid expenses and deposits ........................              438                  576


      Deferred gaming license costs (Note 5) ...............              109                  300


      Deferred financing costs (Note 18) ...................              100                    -

      Restricted cash (Note 6) .............................                -                3,925
--------------------------------------------------------------------------------------------------
           Total Current Assets ............................            8,044               14,617

CAPITAL ASSETS, Net (Note 7) ...............................            4,133                5,239


OTHER ASSETS

      Employee advances - long term portion ................                4                   43

      Deposits .............................................                -                  289
--------------------------------------------------------------------------------------------------
           Total Other Assets ..............................                4                  332
--------------------------------------------------------------------------------------------------
           TOTAL ASSETS ....................................    $      12,181          $    20,188
==================================================================================================

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

                                                F-4
</TABLE>
<PAGE>

WORLD GAMING PLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (CONTINUED)
(IN THOUSANDS OF US$)
<TABLE>
<CAPTION>
                                                            DECEMBER 31, 2001       APRIL 30, 2001
--------------------------------------------------------------------------------------------------
LIABILITIES

Current liabilities
<S>                                                             <C>                    <C>
      Accounts payable and accrued liabilities .............    $       5,911          $     6,182

      Accrual for legal claims (Note 8) ....................            1,200                5,409

      Funds held on deposit (Note 9) .......................            2,041                3,452

      Deferred revenue .....................................              260                  150

      Current portion of capital lease obligations (Note 10)            1,058                  677
--------------------------------------------------------------------------------------------------
           Total Current Liabilities .......................           10,470               15,870
--------------------------------------------------------------------------------------------------

Loans payable (Note 11) ....................................                -                1,500

Capital lease obligations (Note 10) ........................               25                  607
--------------------------------------------------------------------------------------------------
           Total Liabilities                                           10,495               17,977
--------------------------------------------------------------------------------------------------

SHAREHOLDERS' EQUITY

      Capital stock (Note 12) ..............................           24,188               22,394

      Deferred Compensation ................................            (168)                 (38)

      Subscription receivable ..............................                -                (310)

      Deficit ..............................................         (21,363)             (19,127)

      Accumulated other comprehensive loss .................            (971)                (708)
--------------------------------------------------------------------------------------------------
          Total Shareholders' Equity .......................            1,686                2,211
--------------------------------------------------------------------------------------------------
          TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY .......    $      12,181          $    20,188
==================================================================================================

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

                                                F-5
</TABLE>
<PAGE>

WORLD GAMING PLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE LOSS
(IN THOUSANDS OF US$)
<TABLE>
<CAPTION>
                                                 EIGHT MONTHS   EIGHT MONTHS
                                                    ENDED           ENDED      YEAR ENDED   YEAR ENDED
                                                 DECEMBER 31,   DECEMBER 31,    APRIL 30,    APRIL 30,
                                                     2001           2000          2001         2000
------------------------------------------------------------------------------------------------------
                                                                (UNAUDITED)
REVENUE
<S>                                               <C>            <C>            <C>          <C>
      Royalties and fees .........................$   11,682     $   12,511     $  18,376    $  13,853

      Licensing ..................................       425          1,574         1,777        4,028
------------------------------------------------------------------------------------------------------
                                                      12,107         14,085        20,153       17,881


COST OF SALES ....................................     2,276          3,889         5,929        5,143
------------------------------------------------------------------------------------------------------
                                                       9,831         10,196        14,224       12,738

EXPENSES
      Development, selling, general and
        administrative ...........................     9,448          9,386        18,074       11,704
      Provision for bad debts ....................       267          1,388         3,290        1,734
      Legal ......................................       745            328           974        2,082
      Restructuring of operations (Note 15) ......         -              -         1,536            -
      Accrued settlement of legal issues (Note 8)       (183)             -         4,524            -
      Depreciation and amortization ..............     1,745          1,748         2,610        2,011
      Interest and bank charges ..................       180            271           235           93
------------------------------------------------------------------------------------------------------
                                                      12,202         13,121        31,243       17,624
------------------------------------------------------------------------------------------------------

LOSS FROM CONTINUING OPERATIONS ..................    (2,371)        (2,925)      (17,019)      (4,886)

OTHER INCOME .....................................       135            210           263          308
------------------------------------------------------------------------------------------------------
LOSS FROM CONTINUING OPERATIONS BEFORE
INCOME TAXES .....................................    (2,236)        (2,715)      (16,756)      (4,578)
------------------------------------------------------------------------------------------------------

INCOME TAX EXPENSE (RECOVERY)
     Current (Note 13) ...........................         -              -             -         (266)
     Deferred (Note 13) ..........................         -              -             -          150
------------------------------------------------------------------------------------------------------
        Total Income Taxes .......................         -              -             -         (116)
------------------------------------------------------------------------------------------------------
LOSS BEFORE DISCONTINUED OPERATIONS ..............$   (2,236)    $   (2,715)    $ (16,756)   $  (4,462)
------------------------------------------------------------------------------------------------------

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

                                                  F-6
</TABLE>
<PAGE>

WORLD GAMING PLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE LOSS (CONTINUED)
(IN THOUSANDS OF US$)
<TABLE>
<CAPTION>
                                                 EIGHT MONTHS   EIGHT MONTHS
                                                    ENDED           ENDED      YEAR ENDED   YEAR ENDED
                                                 DECEMBER 31,   DECEMBER 31,    APRIL 30,    APRIL 30,
                                                     2001           2000          2001         2000
------------------------------------------------------------------------------------------------------
                                                                (UNAUDITED)
<S>                                               <C>            <C>            <C>          <C>
LOSS FROM DISCONTINUED OPERATIONS OF THE
ON-LINE INTERACTIVE MEDIA DIVISION (LESS
APPLICABLE INCOME TAXES) (Note 14) ...............$       -      $       -      $      -     $    (355)

GAIN ON SALE OF THE ON-LINE INTERACTIVE
MEDIA DIVISION (INCLUDING APPLICABLE
INCOME TAXES OF $-0-) (Note 14) ..................        -              -             -         1,562
------------------------------------------------------------------------------------------------------

NET LOSS .........................................    (2,236)        (2,715)      (16,756)      (3,255)

OTHER COMPREHENSIVE INCOME (LOSS)

     Foreign currency translation ................      (263)          (284)         (693)          33
------------------------------------------------------------------------------------------------------
        Total Other Comprehensive Income(Loss) ...      (263)          (284)         (693)          33
------------------------------------------------------------------------------------------------------

NET COMPREHENSIVE LOSS ...........................$   (2,499)    $   (2,999)    $ (17,449)   $  (3,222)
======================================================================================================

BASIC LOSS PER SHARE FROM CONTINUING
  OPERATIONS .....................................$    (0.07)    $    (0.08)    $   (0.52)   $   (0.16)
======================================================================================================

BASIC LOSS PER SHARE .............................$    (0.07)    $    (0.08)    $   (0.52)   $   (0.12)
======================================================================================================

WEIGHTED AVERAGE NUMBER OF COMMON SHARES
  OUTSTANDING ....................................33,997,263     32,169,889    32,201,181   29,625,460
======================================================================================================

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

                                                  F-7
</TABLE>
<PAGE>

WORLD GAMING PLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE EIGHT MONTHS ENDED DECEMBER 31, 2001 AND THE YEARS ENDED APRIL 30, 2000
AND 2001 (IN THOUSANDS OF US$)
<TABLE>
<CAPTION>
                                                                                     Accumulated
                                   Common Stock                                        Other        Retained
                              ----------------------   Subscription     Deferred    Comprehensive   Earnings
                                Shares       Amount     Receivable    Compensation  Income (Loss)   (Deficit)
------------------------------------------------------------------------------------------------------------
<S>                           <C>           <C>           <C>           <C>          <C>            <C>
Balance, April 30, 1999 ......26,502,434    $  8,584      $     -       $      -     $     (48)     $    884

Shares issued for cash
pursuant to exercise of
options ...................... 3,109,692       3,759         (381)             -             -             -

Shares issued for cash
pursuant to exercise of
warrants ..................... 2,450,000       9,800            -              -             -             -

Movement in other
comprehensive income (loss)
- foreign currency
translation adjustments ......         -           -            -              -            33             -

Net loss for the year ended
April 30, 2000 ...............         -           -            -              -              -       (3,255)
------------------------------------------------------------------------------------------------------------

Balance, April 30, 2000 ......32,062,126      22,143         (381)             -           (15)       (2,371)

Shares issued for cash
pursuant to exercise of
options ......................   131,055         192            -              -              -            -

Options issued below market
value ........................         -          59            -            (38)             -            -

Cash received on
subscription receivable ......         -           -           71              -              -            -

Movement in other
comprehensive income (loss)
- foreign currency
translation adjustments ......         -           -            -              -          (693)            -

Net loss for the year ended
April 30, 2001 ...............         -           -            -              -             -       (16,756)
------------------------------------------------------------------------------------------------------------
Balance, April 30, 2001 ......32,193,181    $ 22,394      $  (310)      $    (38)    $    (708)     $(19,127)

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

                                                  F-8
</TABLE>
<PAGE>

WORLD GAMING PLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (CONTINUED)
FOR THE EIGHT MONTHS ENDED DECEMBER 31, 2001 AND THE YEAR ENDED APRIL 30, 2000
AND 2001 (IN THOUSANDS OF US$)
<TABLE>
<CAPTION>
                                                                                     Accumulated
                                   Common Stock                                        Other        Retained
                              ----------------------   Subscription     Deferred    Comprehensive   Earnings
                                Shares       Amount     Receivable    Compensation  Income (Loss)   (Deficit)
------------------------------------------------------------------------------------------------------------
<S>                           <C>           <C>           <C>           <C>          <C>            <C>
Balance, April 30, 2001 ......32,193,181    $ 22,394      $  (310)      $    (38)    $    (708)     $(19,127)

Shares issued pursuant to
conversion of long-term debt . 2,000,000       1,500            -              -             -             -

Options issued below market
value ........................         -         504            -           (130)            -             -

Cash received on
subscriptions receivable .....         -          15          310              -             -             -

Share issue costs pursuant
to reorganization ............         -        (225)           -              -             -             -

Movement in other
comprehensive income (loss)
- foreign currency
translation adjustments ......         -           -            -              -          (263)            -

Net loss for the eight
months ended December 31, 2001         -           -            -              -             -        (2,236)
------------------------------------------------------------------------------------------------------------

Balance, December 31, 2001 ...34,193,181    $ 24,188      $     -       $   (168)    $    (971)     $(21,363)
============================================================================================================

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

                                                  F-9
</TABLE>
<PAGE>

WORLD GAMING PLC AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS OF US$)
<TABLE>
<CAPTION>
                                                 EIGHT MONTHS   EIGHT MONTHS
                                                    ENDED           ENDED      YEAR ENDED   YEAR ENDED
                                                 DECEMBER 31,   DECEMBER 31,    APRIL 30,    APRIL 30,
                                                     2001           2000          2001         2000
------------------------------------------------------------------------------------------------------
                                                                (UNAUDITED)
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                               <C>           <C>            <C>          <C>
     Loss for the period .........................$   (2,236)   $   (2,715)    $ (16,756)   $  (3,255)
     Adjustments to reconcile net income
      (loss) to net cash provided by
      operating activities:
        Depreciation and amortization ............     1,745         1,748         2,610        1,665
        Amortization of deferred website costs ...         -             -             -          159
        Amortization of software development costs         -             -             -          611
        Option based compensation expense ........         -             -            22            -
        Deferred income tax ......................         -             -             -          150
        Write-off of long-term receivable ........         -             -         1,512            -
        Gain (Loss) on disposal of fixed assets ..        14             -             -       (1,562)
        Deferred compensation ....................       374             -             -            -
     Change in current assets and liabilities-
        Decrease (increase) in reserves with
         credit card processors ..................     1,231           810            94       (2,520)
        Decrease in accounts receivable
         and employee loans and advances .........    (1,047)       (2,103)          515          242
        Decrease (increase) in prepaid
        expenses and Deposits ....................       202           (29)          (39)        (384)
        Decrease (increase) in other assets ......        53           736         1,049           75
        Increase in accounts payable and
        accrued liabilities ......................    (4,395)       (1,520)        6,368        3,687
        (Decrease) in income taxes payable .......         -             -             -         (268)
        Increase in funds held on deposit ........    (1,411)          475         1,334        1,129
        Increase (decrease) in deferred revenue          110           (35)         (137)        (286)
------------------------------------------------------------------------------------------------------

         Net Cash Used in Operating Activities ...    (5,360)       (2,633)       (3,428)        (557)
------------------------------------------------------------------------------------------------------

CASH FLOWS FROM INVESTMENT ACTIVTIES

     Purchase of capital assets, net .............      (653)       (1,987)       (2,205)      (4,428)
     Transfer from (to) restricted cash ..........     3,925          (400)        3,040       (7,173)
     Proceeds from sale of on-line
     entertainment assets ........................         -             -             -        1,944
     Proceeds from sale of marketing assets ......         -             -             -          109
------------------------------------------------------------------------------------------------------
        Net Cash Provided by (Used in)
        Investing Activities) ....................$    3,272    $   (2,387)    $     835    $  (9,548)
------------------------------------------------------------------------------------------------------

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

                                                  F-10
</TABLE>
<PAGE>

WORLD GAMING PLC AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
(IN THOUSANDS OF US$)
<TABLE>
<CAPTION>
                                                 EIGHT MONTHS   EIGHT MONTHS
                                                    ENDED           ENDED      YEAR ENDED   YEAR ENDED
                                                 DECEMBER 31,   DECEMBER 31,    APRIL 30,    APRIL 30,
                                                     2001           2000          2001         2000
------------------------------------------------------------------------------------------------------
                                                                (UNAUDITED)
CASH FLOWS FROM FINANCING ACTIVITIES
<S>                                               <C>           <C>            <C>          <C>
     Proceeds from subscription receivable .......$      325    $       34     $       -    $       -
     Increase in long-term receivable ............         -             -             -       (2,053)
     Payments received on long-term receivable ...         -           481           493            -
     Proceed from issuance of shares .............         -           192           192       13,559
     Proceeds from note payable ..................         -         1,500         1,500            -
     Principal repayment under capital lease
     obligations .................................      (286)         (438)         (625)        (471)
------------------------------------------------------------------------------------------------------
     Net Cash Provided by Financing Activities ...        39         1,769         1,560       11,035
------------------------------------------------------------------------------------------------------

EFFECT OF EXCHANGE RATES ON CASH .................      (263)         (249)         (433)          54
------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH AND CASH
  EQUIVALENT DURING THE PERIOD ...................    (2,312)       (3,500)       (1,466)         984
------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD ...     4,518         5,984         5,984        5,000
------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD .........$    2,206    $    2,484     $   4,518    $   5,984
======================================================================================================
Other non-cash transactions:
    Leased assets acquired .......................$        -    $      959     $   1,001    $     732
    Compensation from options issued below
     market Value ................................$        -    $        -     $      59    $       -

Supplementary cash flow information:
    Interest paid ................................$        -    $        -     $     158    $      84
    Income tax paid ..............................$        -    $        -     $       -    $     128

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

                                                  F-11
</TABLE>
<PAGE>

NOTE 1 - NATURE OF BUSINESS AND BASIS OF PRESENTATION

On May 25, 2001, pursuant to an Agreement and Plan of Reorganization executed on
May 17, 2001, Starnet Communications International Inc. ("Starnet") became a
direct, wholly-owned subsidiary of World Gaming Plc ("World Gaming" or the
"Company"), a company organized in England and Wales for the purpose of
facilitating a new holding company structure. As part of the reorganization,
World Gaming established December 31 as its year end. (See Note 16 to the
consolidated financial statements for further discussion on the reorganization).

Starnet Systems International Inc., a subsidiary of the Company incorporated and
operating out of Antigua, licenses its gaming software to third parties for an
initial licensing fee and monthly royalties. Inphinity Interactive Inc., a
wholly-owned subsidiary of the Company develops gaming software and web pages.
The Company's Internet casino, which targets only customers outside North
America, is operated by its subsidiary, World Gaming Services, Inc., also
incorporated and operating out of Antigua.

NOTE 2 - ACCOUNTING POLICIES

The consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in the United States of America. A
summary of significant accounting policies is set out below:

a. Basis of Presentation

The consolidated financial statements include the accounts of the Company and
all its wholly-owned subsidiaries. All significant intercompany balances and
transactions have been eliminated. Unless otherwise stated, all amounts are in
thousands of US Dollars. The Company has 12 subsidiaries which have been listed
below:

WG International Limited (incorporated in UK)
World Gaming Europe Limited (incorporated in UK)
Starnet Communications International, Inc. (incorporated in Delaware, USA)
Starnet Systems International Inc. (incorporated in Antigua)
EFS International Inc. (incorporated in Antigua)
EFS USA Inc. (incorporated in Nevada, USA)
EFS Australia Pty Ltd. (incorporated in Australia)
EFS St. Kitts Inc. (incorporated in St. Kitts)
Inphinity Interactive Inc. (incorporated in Canada)
602662 British Columbia Ltd. (incorporated in Canada)
World Gaming Services Inc. (incorporated in Antigua)
Starnet Communications Canada Inc. (incorporated in Canada)
WorldBroadcasts.com, Inc.

All monetary amounts are stated in thousands of US Dollars with the exception of
per share amounts or unless stated otherwise.

b. Revenue Recognition

Initial license fees of gaming software are recognized as revenue upon the
completion of the license sale transactions. Before the revenues are recognized,
deposits from licensees are recorded as deferred revenue. Gaming and monthly
licensing royalty revenues and other fees are recognized over the period
services are provided. Revenues from the resale of Antigua government issued
gaming licenses are recognized when collection is assured. Gaming revenues,
which represent less than 1% of total revenues, are presented net of customer
winnings.

                                      F-12
<PAGE>

Note 2 - ACCOUNTING POLICIES (continued)

c. Capital Assets

Property and equipment are recorded at cost and are depreciated or amortized
using the straight-line method over the estimated useful life of the assets at
the following rates:


                    Furniture and fixtures ........  3 years
                    Computer hardware and equipment  3 years
                    Computer software .............  3 years
                    Automobiles ...................  4 years


Leasehold improvements are amortized over the term of the related lease using
the straight-line method.

One-half of the normal depreciation rate is applied in the year of acquisition
or capitalization of the capital assets.

d. Cash and Cash Equivalents

For the purposes of the statement of cash flows, cash and cash equivalents
consist of cash on hand, balances with banks, available balances with credit
card processors and investments in money market instruments. Included in cash
and cash equivalents are term deposits of $650 which mature from January 29,
2002 to March 12, 2003.

e. Foreign Currency Translation

All transactions in currencies other than the United States dollar during the
year are translated at the exchange rates on the transaction dates. Monetary
assets and liabilities denominated in a foreign currency are translated at the
prevailing year-end rates of exchange. Exchange gains or losses are included in
the consolidated statements of operations and other comprehensive income (loss).
The financial statements of all subsidiaries expressed in currencies other than
the United States dollar are translated into US dollars. All assets and
liabilities are translated at the exchange rate on the balance sheet date and
all revenues and expenditures are translated at the average rate for the year.
Translation adjustments are reflected as a separate component of stockholders'
equity.

In accordance with SFAS No. 95, "Statement of Cash Flows," the cash flows of the
Company's foreign subsidiaries are translated using the weighted average
exchange rates during the respective period. As a result, amounts in the
statement of cash flows related to changes in asset and liabilities will not
necessarily agree with the changes in the corresponding balances on the balance
sheet which were translated at the exchange rate at the end of the period. The
effect of exchange rate changes on foreign cash and cash equivalents is reported
as a separate element of the statement of cash flows, if significant

f. Leases

Leases which transfer substantially all of the benefits and risks of ownership
are recorded as the acquisition of assets and incurrence of obligations. Under
this method of accounting, both assets and obligations, including interest
thereon, are amortized over the life of the lease.

                                      F-13
<PAGE>

NOTE 2 - ACCOUNTING POLICIES (continued)

g. Advertising

The Company expenses the costs of advertising as incurred. During the eight
months ended December 31, 2001 and the years ended April 30, 2001 and 2000, the
Company expensed $ 234, $1,521, and $902, respectively of advertising costs.

h. Net Earnings (Loss) Per Common Share

The Company has adopted Statement of Financial Accounting Standards No. 128
("FAS 128") regarding the determination and disclosure of earnings (loss) per
share for the purpose of preparing its financial statements. The calculations of
net earnings (loss) per common share are based upon the weighted average number
of common shares of the Company outstanding during each year. The adoption of
FAS 128 has no impact on previously reported information. Diluted earnings
(loss) per share is not presented because of the anti-dilutive nature of the net
loss for each period presented.

i. Stock Options

As permitted by FASB Statement 123 "Accounting for Stock Based Compensation"
(SFAS No. 123), the Company elected to measure and record compensation cost
relative to employee stock option costs in accordance with Accounting Principles
Board ("APB") Opinion 25, "Accounting for Stock Issued to Employees," and
related interpretations and make proforma disclosures of net income and earnings
per share as if the fair value method of valuing stock options had been applied.
Under APB Opinion 25, compensation cost is recognized for stock options granted
to employees when the option price is less than the market price of the
underlying common stock on the date of grant.

j. Use of Estimates

The preparation of consolidated financial statements in conformity with
accounting principles generally accepted in the United States of America
requires the Company's management to make estimates and assumptions that affect
the amounts reported in the consolidated financial statements and related notes
to the consolidated financial statements. Actual results may differ from those
estimates.

k. Recent Accounting Pronouncements

 The Company has adopted the provisions of FASB Statement No. 140 "Accounting
for Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities (a replacement of FASB Statement No. 125.)" This statement provides
accounting and reporting standard for transfers and servicing of financial
assets and extinguishments of liabilities. Those standards are based on
consistent application of a financial-components approach that focuses on
control. Under that approach, the transfer of financial assets, the Company
recognized the financial and servicing assets it controls and the liabilities it
has incurred, derecognizes financial assets when control has been surrendered,
and derecognizes liabilities when extinguished. This statement provides
consistent standards for distinguishing transfers of financial assets that are
sales from transfers that are secured borrowings. This statement is effective
for transfers and servicing of financial assets and extinguishments of
liabilities occurring after March 31, 2001. This statement is effective for
recognition and reclassification of collateral and for disclosures relating to
securitization transactions and collateral for fiscal years ending after
December 15, 2000. The adoption of this principal had no material effect on the
Company's consolidated financial statements.

                                      F-14
<PAGE>

NOTE 2 - ACCOUNTING POLICIES (continued)

The Company has adopted the provisions of FIN 44 "Accounting for Certain
Transactions Involving Stock Compensation (an interpretation of APB Opinion No.
25.)" This interpretation is effective July 1, 2000. FIN 44 clarifies the
application of Opinion No. 25 for only certain issues. It does not address any
issues related to the application of the fair value method in Statement No. 123.
Among other issues, FIN 44 clarifies the definition of employee for purposes of
applying Opinion 25, the criteria for determining whether a plan qualifies as a
noncompensatory plan, the accounting consequence of various modifications to the
terms of a previously fixed stock option or award, and accounting for an
exchange of stock compensation awards in a business combination. The adoption of
this principal had no material effect on the Company's consolidated financial
statements.

l. Pronouncements Issued and Not Yet Adopted

In July, 2001, the Financial Accounting Standards Board issued two statements -
Statement 141, BUSINESS COMBINATIONS, and Statement 142, GOODWILL AND OTHER
INTANGIBLE ASSETS, which will potentially impact the Company's accounting for
its intangible assets.

Statement 141:
        o       Eliminates the pooling method for accounting for business
                combinations.
        o       Requires that intangible assets that meet certain criteria be
                reported separately from goodwill.
        o       Requires negative goodwill arising from a business combination
                to be recorded as an extraordinary gain.

Statement 142:
        o       Eliminates the amortization of goodwill and other intangibles
                that are determined to have an indefinite life.
        o       Requires, at a minimum, annual impairment tests for goodwill an
                other intangible assets that are determined to have an
                indefinite life.

Upon adoption of these Statements, the Company is required to:

        o       Re-evaluate goodwill and other intangible assets that arose from
                business combinations entered into before July 1, 2001. If the
                recorded other intangibles assets do not meet the criteria for
                recognition, they should be reclassified to goodwill. Similarly,
                if there are other intangible assets that meet the criteria for
                recognition but were not separately recorded from goodwill, they
                should be reclassified from goodwill.
        o       Reassess the useful lives of intangible assets and adjust the
                remaining amortization periods accordingly.
        o       Write-off any remaining negative goodwill.

The Company has not yet completed its full assessment of the effects of these
new pronouncements on its financial statements and so is uncertain as to the
impact. The standards generally are required to be implemented by the Company in
its 2002 financial statements.

m. Reclassifications

Certain prior year amounts have been reclassified to conform to the December 31,
2001 presentations.

n. Software Development Costs
The Company applies the provisions of SOP 98-1 "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use". During the eight
months ended December 31, 2001, the Company was completing the development of
the following products:

                                      F-15
<PAGE>

NOTE 2 - ACCOUNTING POLICIES (continued)

Bingo

Two types of bingo games are in development. "Multi-player" bingo games will
link players from around the world and provide them with fun, fast-paced games
in a variety of themed, interactive Bingo communities. "Personal play" bingo
games are also being developed, where players will be able to play instant bingo
games online that offer favorable odds of winning cash prizes. Both types of
bingo products are scheduled to launch during 2002.

Wireless Casino/Sportsbook

The Company has announced its intention to expand its product line into wireless
delivery systems facilitated by extensive cellular networks globally. As such,
it entered into an agreement with a wireless software company, Sona Innovations
Inc., to develop wireless blackjack, slots and Sportsbook for Palm and Windows
CE devices. The wireless strategy also extends to I-mode phones currently
experiencing wide-spread adoption in Japan and other Pacific Asia markets.

Sports Betting

In addition to maintenance of the current turnkey Sportsbook product, Inphinity
is developing new proprietary sports betting software. This sports betting
software encapsulates the Company's current Sportsbook features, provides
additional Sportsbook betting options that are geographically specific and new
products such as pools and pari-mutuels. In addition, the new product will allow
for a variety of operational flexibility for licensees. The launch, which is
dependent on successful testing, is targeted for the first quarter of 2002.

o. Long-lived assets

In accordance with SFAS No. 121, Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of, long-lived assets, including
goodwill associated with other long-lived assets, are evaluated for impairment
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. Any changes in estimated useful life are
recorded prospectively and any impairment adjustments are recorded as expense in
the period the impairment occurs. The amount of any impairment considered
necessary would be determined by comparing the book value of the net assets in
the applicable line of business to fair value using methods such as the
present-value of estimated future cash flows, sale value or other valuation
methodologies available at the time, depending on the stage of development of
the line of business and the Company's intentions at the time an impairment
adjustment was considered necessary.

p. Unaudited Information

The consolidated financial statements for the period ended December 31, 2000 has
been prepared by management without audit. In the opinion of management, all
adjustments (which include only normal recurring adjustments) necessary to
present the information have been made.

q. Reclassifications

Certain balances for the years ended April 30, 2001 and 2000 have been
reclassified to conform to current year presentation.

NOTE 3 - RESERVES WITH CREDIT CARD PROCESSORS

Reserves with credit card processors consist of rolling reserves held by
merchant banks awaiting transfer to the Company's bank accounts. At December 31,
2001 and April 30, 2001, the balance of these reserves was $2,532 and $3,763,
respectively.

                                      F-16
<PAGE>

NOTE 4 - ACCOUNTS RECEIVABLE

Accounts receivable consist of the following:


                                          December 31, 2001    April 30, 2001
                                          -----------------    --------------
    Amounts due from licensees ...........     $ 3,074             $ 1,596
    Income tax receivable (Note 13) ......         123                 123
    Other ................................         284                 648
    Less: allowance for bad debts ........        (890)               (891)
                                               -------             -------
                                               $ 2,591             $ 1,476
                                               =======             =======

NOTE 5 - DEFERRED GAMING LICENSE COSTS

                                          December 31, 2001    April 30, 2001
                                          -----------------    --------------
    Antigua ..............................       $    -           $   300
    Curacao ..............................          109                 -
                                                 ------           -------
                                                 $  109           $   300
                                                 ======           =======

Deferred gaming license costs related to amounts paid to the Antiguan government
for the purchase of casino licenses were $300 at April 30, 2001. These licenses
had been held for sale to prospective licenses. Subsequent to April 30, 2001,
all of the remaining gaming licenses were sold. During the fiscal period ended
December 31, 2001, the remaining deferred license costs were expensed to cost of
sales.

On June 6, 2001, the Company completed its registration of a five year Master
Gaming license in Curacao, costs associated with registration totaled $114.
These costs will be amortized over a five year period, which is the life of the
licenses. During the eight months ended December 31, 2001, the Company recorded
$5 as amortization expense which was charged to operations expense.

NOTE 6 - RESTRICTED CASH

                                          December 31, 2001    April 30, 2001
                                          -----------------    --------------

Funds restricted by Canadian Authorities      $   NIL            $  3,925
                                              =======            ========

See Note 8 for further discussion on this matter.

                                      F-17
<PAGE>

NOTE 7 - CAPITAL ASSETS

Capital assets are recorded at cost less accumulated depreciation and consist of
the following:
<TABLE>
<CAPTION>
                                                           ACCUMULATED
DECEMBER 31, 2001                            COST         DEPRECIATION     NET BOOK VALUE
                                         -------------- ------------------ ---------------
<S>                                            <C>                 <C>             <C>
Computer hardware and equipment                $ 5,382             $3,637          $1,745
Computer hardware under capital leases           1,729                792             937
Automobiles under capital leases                   114                 61              53
Leasehold improvements                             522                169             353
Furniture and fixtures                             385                218             167
Computer software                                2,386              1,529             857
Domain name                                         45                 24              21
                                         -------------- ------------------ ---------------
                                               $10,563            $ 6,430         $ 4,133
                                         ============== ================== ===============

<CAPTION>
APRIL 30, 2001                                             ACCUMULATED
                                             COST         DEPRECIATION     NET BOOK VALUE
                                         -------------- ------------------ ---------------
<S>                                             <C>               <C>              <C>
Computer hardware and equipment                 $5,143            $ 3,100          $2,043
Computer hardware under capital leases           1,729                298           1,431
Automobiles under capital leases                   114                 42              72
Leasehold improvements                             459                100             359
Furniture and fixtures                             352                160             192
Computer software                                2,176              1,061           1,115
Domain name                                         45                 18              27
                                         -------------- ------------------ ---------------
                                               $10,018            $ 4,779         $ 5,239
                                         ============== ================== ===============
</TABLE>

During the eight months ended December 31, 2001, and the years ended April 30,
2001 and 2000, the Company recorded depreciation expense of $1,745, $2,610 and
$1,665, respectively.

NOTE 8 - COMMITMENTS AND CONTINGENCIES

Commitments

At December 31, 2001, the Company has entered into commitments for leases for
premises. The future payments for the 12 months ended December 31 are:

                        2002                     $ 474
                        2003                       350
                        2004                       274
                        2005                       169
                        2006                        63
                                        ---------------
                                               $ 1,330
                                        ===============

                                      F-18
<PAGE>

NOTE 8 - COMMITMENTS AND CONTINGENCIES (Continued)

At December 31, 2001, the Company has entered into employment contracts with its
officers. The salary and bonus compensation resulting from these contracts are
as follows:

                                                                   Potential
                                        Term of                   Bonus (as a
                                          the         Base       percentage of
   Name and Principal Position          contract    Salary($)     Base Salary)
   ---------------------------          --------    ---------     ------------
   Michael Aymong, President & CEO       2 years      $ 350        Up to 100%
   Rodney Davis, CFO and acting COO      2 years      $ 150         Up to 50%


Michael Aymong's employment with the Company began April 9, 2001. Payments due
to him under his contract for housing and car allowances have not been paid
since a house and car in Antigua have been provided to him. Stock options:
1,200,000 have an exercise price of $0.31, subject to a 6 month hold requirement
upon exercise; 1,200,000 vest over 22 months (54,545 each month) with the
exercise prices as follows: first 200,000 at $1.25, second 200,000 at $2.25,
third 200,000 at $4.25, fourth 200,000 at $4.25, fifth 200,000 at $6.25, sixth
200,000 at $8.25. 400,000 options vest on April 30, 2003, and are exercisable at
the closing market price on March 31, 2003. Pursuant to anti-dilution provisions
of Mr. Aymong's employment agreement, he was granted 140,000 options in
connection with the issuance of ordinary shares to AIM Investments Ltd., these
options have vested and are exercisable at the closing market price on May 25,
2001 per share. As discussed in Note 18, Mr. Aymong resigned in June 2002.

Mr. Rodney Davis's employment with the Company began on July 7, 2001. As part of
his compensation package, Mr. Davis received 250,000 options to purchase Company
ordinary shares or ADRs, of which 200,000 have an exercise price of $1.34 per
share and 50,000 have an exercise price of $2.25 per share. All of the options
will vest ratably over a period of three years on a quarterly basis. As
discussed in Note 18, Mr. Davis resigned in June 2002.

Additionally, the Company has entered into several other employment contracts
with key employees and consultants which call for total payments of $256 per
year through November 27, 2002.

Contingencies

Her Majesty the Queen in Right of Canada

On August 20, 1999, the Royal Canadian Mounted Police (RCMP) obtained a search
warrant and searched the Vancouver, Canada offices of Starnet Communications
Canada, Inc., a subsidiary of the Company. The basis for the search and
continuing investigation ("the investigation") was the allegation by the RCMP
that the Company and some of its officers, directors and employees were
breaching certain gaming provisions contained in the Criminal Code of Canada.

On August 25, 1999, the RCMP obtained an ex parte restraint order pursuant to
the provisions of the Criminal Code of Canada. This order prevents the Company
and Starnet Systems International Inc. from accessing certain funds located in
their Canadian bank accounts. In September 1999, the Company brought an
application to have the restraint order revoked. This application was
unsuccessful. On February 24, 2000, the restraint order was renewed for a
further six months.

                                      F-19
<PAGE>

NOTE 8 - COMMITMENTS AND CONTINGENCIES (Continued)

On August 17, 2001, the Company reached a settlement with Canadian authorities
whereby a subsidiary of the Company pleaded guilty to a single charge under the
Criminal Code of Canada. The subsidiary was fined $100 CDN plus $15 CDN victim
surcharge. As well, the Company consented to a forfeiture of restricted cash in
the amount of $3,925 USD. The balance of the cash was returned to the Company,
and the matter has been fully settled.

U.S. Delaware Class Action Claims

Between October 15, 1999 and December 9, 1999, ten class action claims were
commenced in the United States against the Company and some of its directors and
officers. These class action lawsuits allege that material misrepresentations
regarding the nature and inherent risks of the Company's business were knowingly
made in filings to the United States Securities and Exchange Commission, press
releases and other public statements. The amount of the damages claimed is
unspecified. These actions have now been consolidated in a single proceeding.

On June 20, 2001, the parties signed a Memorandum of Understanding (MOU)
containing the essential terms of a settlement between the Company and the Class
Action Plaintiffs (Class). Under the MOU, the Class will receive 1,050,000
shares of ADRs of World Gaming Plc ("Settlement Shares") with a minimum value of
$1,050. If in the 10 trading days preceding the effective date of the settlement
the weighted mean trading price (as calculated by a formula in the MOU) of the
shares of ADRs of World Gaming is less than $1.00 per share, the Class will
receive additional shares so that the value of the Settlement Shares equals
$1,050. Also under the Settlement, the Company will pay certain administrative
expenses, up to $50, and certain expenses incurred by Plaintiffs' Co-Lead
Counsel, up to $50. The Plaintiffs have the right to conduct limited
confirmatory discovery of the Company.

The settlement is conditioned upon the occurrence of several events. The parties
must draft a mutually acceptable Stipulation of Settlement to be filed with the
Court. The Court must give preliminary approval to the terms of the Settlement.
Notice must be sent to the class members advising them of the terms of the
Settlement and of their right to opt out or object to the terms of the
Settlement. Finally, the Court must approve the Settlement after holding a
hearing on its terms. In addition, the Settlement is conditioned on the issuance
of the ordinary shares of World Gaming Plc underlying the Settlement Shares. The
Company has the right under the MOU to withdraw from the Settlement in the event
that members of the Class holding more than 3% of the outstanding shares of ADRs
of World Gaming Plc outstanding as of the date the settlement is filed determine
to opt out of the Settlement. At December 31, 2001, the Company has accrued a
total of $1,200 for the estimated settlement costs.

Las Vegas Casino Inc. Lawsuit

On September 16, 1999, Las Vegas Casino Inc. ("ALVC") commenced an action
against the Company, a number of its subsidiaries and various employees of the
Company and its subsidiaries. LVC alleges that the Company breached and
wrongfully terminated its license agreement and misappropriated $15 million
($15,000 in thousands) from LVC, and that LVC lost gambling revenues in the
amount of $1 billion ($1,000,000 in thousands) as a result of the breach and
wrongful termination. LVC had previously entered into a license agreement with
Starnet Systems International Inc. ("Starnet Systems"). Starnet Systems
terminated the license agreement because of LVC's non-payment of its royalty
fees.

                                      F-20
<PAGE>

NOTE 8 - COMMITMENTS AND CONTINGENCIES (Continued)

On July 12, 2000, the Supreme Court of British Columbia granted a stay of the
lawsuit as against Starnet Systems only. Should LVC wish to proceed with its
claim against Starnet Systems, it must do so through the arbitration process
provided for in the software license agreement. LVC has not yet taken any steps
to do so. The Company filed a motion with the Supreme Court of British Columbia
to require LVC to post security for costs sought against the Company. The court
denied the Company's motion of February 22, 2001, while allowing the Company the
opportunity to reapply as it may wish. LVC and it's representatives failed to
appear for scheduled examinations in May 2002 and the Company intends to file a
motion to strike LVC's claim. At the present time, the Company believes that
these allegations are without merit and management has been unable to determine
the likely outcome.

Lawsuit by Former Vice President, Finance

On August 2, 2001, the former Vice President of Finance, Chris Thompson, brought
a wrongful termination claim against the Company alleging that the Company
breached his employment agreement and claiming damages of approximately $197.
The Company believes that Mr. Thompson's allegations are without merit and
intends to defend the lawsuit vigorously. The financial impact of this action,
if any, cannot be determined at this time.

Lawsuit by Casino on Air World Entertainment Ltd.

In March 2002, Casino on Air World Entertainment Ltd., a former licensee of the
Company, filed a lawsuit alleging breach of contract in Antigua. The amount of
the claim is $1.84 million ($1,840 in thousands). The Company believe that the
allegations are without merit and intends to defend the lawsuit vigorously. The
Company is preparing a motion to dismiss the complaint because the license
agreement requires Casino on Air to pursue their claims against the Company in
arbitration in Canada. The financial impact of this action, if any, cannot be
determined at this time.

White vs. Starnet Communications Canada Inc.

Mr. White, a former employee, commenced an action against a subsidiary, Starnet
Communications International, Inc., in the fall of 1998. Mr. White was employed
in 1996 through 1998. His employment was terminated in July of 1998. The trial
is scheduled in the fall of 2003. The Company intends to defend this action
vigorously and does not believe that there is merit to these claims. The Company
does not believe that this action will have any significant financial impact.

Inphinity vs. Game Works Media Inc.

A subsidiary of the Company, Inphinity Interactive Inc. sued Game Works Media,
Inc. and several of its former employees who were hired by Game Works Media Inc.
for breach of nondisclosure and confidentiality agreements and misappropriation
of trade secrets. At this point the lawsuit is in early stages of discovery. The
Company believes that it has a strong case and will prevail. The financial
impact of this action is not yet ascertainable.

Dispute with Cable & Wireless

The Company believes that Cable & Wireless has breached their Internet Service
Agreement with the Company. The Company has sent a demand letter to that effect.
Cable & Wireless has retained counsel and presently a solution to the dispute is
being negotiated. If such negotiations fail, the Company will pursue its claims
in court. The financial impact of this action is not yet ascertainable.

                                      F-21
<PAGE>

NOTE 8 - COMMITMENTS AND CONTINGENCIES (Continued)

Dispute with PWR Search

A subsidiary of the Company, Inphinity Interactive Inc., retained PWR Search in
the spring of 2001 to assist it in hiring a manager for its pari-mutuel
business. An engagement agreement provided that certain fees and expenses of PWR
would be paid regardless of PWR's performance. PWR Search failed to provide any
reasonable assistance to Inphinity, and Inphinity refused to pay PWR's bill. PWR
Search filed a complaint in the Court of Queen's Bench in Alberta suing for $40
CDN. Inphinity responded with its statement of defense. The Company intends to
defend this lawsuit vigorously, and believes that the financial impact of that
lawsuit will not be significant.

Sunrise Corporation Lawsuit

Sunrise Corporation has commenced a lawsuit against the Company in the Superior
Court of Ontario. Sunrise Corporation alleges that Starnet Canada failed to make
payments for the equipment leased from Sunrise Corporation. The amount of the
claim is $600 CDN. The Company has not filed a response to this lawsuit and is
still investigating the matter. The Company cannot ascertain at this time the
merits or financial impact of this lawsuit.

The Company provides credit to its customers in the normal course of business.
The Company believes that it has adequately identified and provided for each
uncollectible account and has provided adequate reserves for other potentially
uncollectible receivables.

The Company maintains cash accounts in foreign bank accounts. These accounts are
not insured by the United States Federal Depository Insurance Corporation.
However, the Company does not believe that it is subject to any adverse
occurrences with regard to the cash balances.

The Company's main base of operations is in Antigua, West Indies which is a
developing country. The Company believes that it has provided for adequate
computer server and other backup systems to provide continuous service for its
licensees and customers.

NOTE 9 - FUNDS HELD ON DEPOSIT

As of December 31, 2001, the Company held $2,041 (April 30, 2001 - $3,452) in
cash representing funds held on deposit in the form of e-cash balances
representing cash funds deposited by customers and players of the Company's
licensees. These deposits are non-interest bearing and are repayable on demand.

NOTE 10 - CAPITAL LEASE OBLIGATIONS

At December 31, 2001, the Company had entered into capital leases for equipment
and automobiles. The future payments for the 12 months ended December 31 are:

            2002............................................  $1,082
            2003............................................      24
                                                              ------
                                Total minimum lease payments   1,106
            Less  amounts  representing  interest  at  rates
            varying from 6.0% to18.0% ......................      24
                                                              ------

            Present value of minimum lease payments ........   1,082
                                                              ------
            Current portion of capital lease obligations ...  $1,058
                                                              ======

                                      F-22
<PAGE>

NOTE 10 - CAPITAL LEASE OBLIGATIONS (Continued)

Some of the equipment leases require the Company to pledge term deposits for
$NIL (April 30, 2001 - $89). The term deposits will be returned upon the
expiration of the leases and are interest bearing.

The capital leases are collateralized by equipment with a net book value of $990
at December 31, 2001. Depreciation expense for the capitalized equipment was
$513, $770, and $749 for the eight months ended December 31, 2001, and for the
years ended April 30, 2001 and 2000, respectively. At December 31, 2001, the
Company was delinquent in the payments for a majority of the capital leases,
accordingly the entire portion of those capital leases are being presented as
current liabilities.

NOTE 11 - NOTE PAYABLE

At April 30, 2001, the Company was obligated on a note payable to a company in
the amount of $1,500 bearing interest at 8.0% per annum payable monthly with the
principal balance due December 31, 2001. On May 17, 2001, the note payable was
converted into two million shares of the Company's capital stock.


NOTE 12 - CAPITAL STOCK

Authorized

     100,000,000 Class A voting common shares, par value $0.001

      50,000,000 Class B nonvoting common  shares, par value $0.001

      50,000,000 Preferred shares, par value $0.001

(a) The Company had the following shares issued and outstanding:
<TABLE>
<CAPTION>
                                            Eight months ended
                                            December 31, 2001          Year ended April 30,
                                                                               2001
                                          -----------------------    -------------------------
<S>                                        <C>           <C>          <C>            <C>
Outstanding Class A shares, beginning
of year .................................  32,193,181    $22,394      32,062,126     $ 22,143

Options issued below market value                            504               -           59

Shares issued pursuant to conversion
of long-term debt .......................   2,000,000      1,500               -            -

Share issue costs pursuant to the
Company's Reorganization (Note 15) ......           -       (210)              -            -

Shares issued for cash pursuant to
exercise of options .....................           -          -         131,055          192
                                          ------------ ----------    ------------ ------------

Outstanding Class A shares, end of
year ....................................  34,193,181    $24,188     32, 193,181     $ 22,394
                                          ============ ==========    ============ ============
</TABLE>
                                      F-23
<PAGE>

NOTE 12 - CAPITAL STOCK (Continued)

(b) Stock Options

On March 12, 1998, the Board of Directors approved a stock option plan, which
authorized the issuance of 3,000,000 options to employees of the Company and its
subsidiaries at an exercise price of $0.74. The options expire on January 1,
2008. On December 31, 1998, the Board of Directors authorized the issuance of up
to 4,000,000 additional options at an exercise price to be determined based on
the trading price of the Company's shares on the grant date. On December 23,
1999, the Board of Directors authorized the issuance of up to 5,000,000
additional options at an exercise price to be determined based on the trading
price of the Company's shares on the grant date. Options issued to employees
generally vest straight-line on a monthly basis over two years while options
issued to directors vest one-half immediately and one-half after one year.
Options expire ten years after the date granted.

A summary of the Company's stock option activity and related information
follows:
<TABLE>
<CAPTION>
                                Eight months ended
                                 December 31, 2001         Year ended April 30, 2001
                             --------------------------    ---------------------------
<S>                             <C>             <C>          <C>              <C>
Outstanding at May 1 ........    7,799,457      $ 2.64         5,244,724      $  2.99
Granted .....................    4,261,408        0.98         4,296,371         2.47
Exercised ...................            -           -         (131,055)         1.47
Forfeited and adjusted ......    (266,003)        1.24       (1,610,583)         3.19
                             -------------- -----------    -------------- ------------

                                11,794,862      $ 1.98         7,799,457      $  2.64
                             ============== ===========    ============== ============
</TABLE>

At December 31, 2001, options outstanding were as follows:
<TABLE>
<CAPTION>
                              Options Outstanding                   Options Exercisable
                       ----------------------------------    -----------------------------------
                                    Weighted                             Weighted
                                     Average                              Average
                                    Remaining   Weighted                 Remaining   Weighted
                                   Contractual  Average      Number     Contractual  Average
  Range of Exercise    Number of      Life      Exercise     of            Life      Exercise
       Prices           Options      (Years)     Price        Options     (Years)      Price
---------------------- ----------- ------------ --------- -- ---------- ------------ -----------
<C>                     <C>            <C>       <C>         <C>            <C>         <C>
$0.31 - $1.00           4,548,593      9.2       $  0.39     1,049,003      8.8         $  0.49
$1.01 - $1.50           1,577,737      7.8       $  1.36       986,900      7.2         $  1.42
$1.51 - $2.50           1,351,671      8.0       $  2.21       676,333      7.8         $  2.24
$2.51 - $5.99           3,704,297      7.9       $  3.17     2,098,359      7.8         $  3.13
$6.00 - $11.00            569,696      7.3       $  7.34       140,436      8.2         $  7.57
$11.01 - $23.06            42,868      7.0       $ 13.73        35,200      7.0        $  13.63
---------------------- ----------- ------------ ---------    ---------- ------------ -----------

$0.31 - $23.06         11,794,862      8.4       $  1.98     4,986,231      7.9         $  2.31
====================== =========== ============ =========    ========== ============ ===========
</TABLE>
                                      F-24
<PAGE>

NOTE 12 - CAPITAL STOCK (Continued)

(c) Accounting for Stock Based Compensation

The Company has adopted the disclosure-only provisions of FAS 123, Accounting
for "Stock-Based Compensation". Accordingly, no compensation cost has been
recognized for the stock option plan. Had compensation cost for the Company's
stock option plan been determined based on the fair value at the grant date for
awards in 2001 and 2000 consistent with the provisions of SFAS No. 123, the
Company's loss and loss per share would have been increased to the pro forma
amounts indicated below:
<TABLE>
<CAPTION>
                                                      Eight months
                                                     ended December          Year ended
                                                        31, 2001           April 30, 2001
                                                    ------------------    ------------------
<S>                                                         <C>                   <C>
Net loss as reported ...............................        $ (2,236)             $(16,756)
Pro forma net loss under FAS 123 ...................        $ (4,320)             $(19,455)
Net loss per share - basic, as reported ............        $  (0.07)             $  (0.52)
Pro forma net loss per share - basic, under FAS 123         $  (0.13)             $  (0.60)
</TABLE>

For purposes of pro forma disclosures, the estimated fair value of options
granted is amortized to expense over a 2 year period. The fair value of option
grants is estimated on the date of grant using the Black-Scholes option-pricing
model with the following weighted-average assumptions.

                                       December 31, 2001        April 30, 2001
                                     --------------------     ------------------
Dividend yield ......................              0%                     0%
Expected volatility .................            164%                   171%
Risk-free interest rate .............           6.43%                  5.98%
Expected lives ......................         2 years                2 years

NOTE 13 - INCOME TAXES

The Company's operations located in Canada are subject to tax to the extent that
income is generated in the country. For the eight months ended December 31, 2001
and the year ended April 30, 2001, the losses related to development activities
allow a recovery of tax previously paid:
<TABLE>
<CAPTION>
                                                                          For the year
                                                Eight months ended       ended April 30,
                                                 December 31, 2001            2001
                                                --------------------    ------------------
<S>                                                           <C>                  <C>
 Tax payable (receivable) - beginning of year                 $(123)               $ (128)
 Provision for (recover of) current income tax                    -                     -
 Payments of tax                                                  -                     -
 Difference due to exchange rate                                  -                     5
                                                --------------------    ------------------

 Tax receivable - end of year (Note 4)                       $(123)               $ (123)
                                                ====================    ==================
</TABLE>

At December 31, 2001, the Company had net operating loss carryforwards in its
Canadian companies of approximately $8,055 that may be offset against future
taxable income in Canada through 2008. No tax benefit has been reported in the
consolidated financial statements as the Company believes that the carryforwards
will expire unused. Accordingly, the potential tax benefits of the net operating
loss carryforwards are offset by a valuation allowance of the same amount. The
income tax benefit differs from the amount computed at income tax rates of
approximately 45% as follows:

                                      F-25
<PAGE>

NOTE 13 - INCOME TAXES (Continued)

                                        Eight months ended   For the year ended
                                        December 31, 2001      April 30, 2001
                                        ------------------   ------------------
 Income tax benefit at statutory rate          $1,400              $ 1,465
 Change in valuation allowance                 (1,400)              (1,465)
                                        ------------------   ------------------
                                               $    -              $     -
                                        ==================   ==================

Deferred tax assets (liabilities) are comprised of the following:

                                        Eight months ended   For the year ended
                                        December 31, 2001      April 30, 2001
                                        ------------------   ------------------
 Income tax benefit at statutory rate          $3,625              $ 2,225
 Change in valuation allowance                 (3,625)              (2,225)
                                        ------------------   ------------------
                                               $    -              $     -
                                        ==================   ==================

NOTE 14 - SALE OF BUSINESS SEGMENTS

a. Marketing Department On February 18, 2000, the Company sold certain assets to
a group of former employees who were previously employed in the marketing
department. The Company also entered into an agreement whereby the new company
would employ a number of employees comprising the marketing department of the
Company and provide marketing services to the Company for a period of three
years. The assets with a net book value of $109 were sold for total
consideration of $109 consisting of a promissory note. The amount is subject to
interest at a rate of 5% per annum and is repayable in 36 installments of $3 per
month, ending February 2003. There was no gain or loss recorded on the
transaction.

          Total consideration                  $ 109
          Net book value of assets sold          109
                                          -----------
          Net gain or loss                     $   -
                                          ===========

b. On-line Entertainment Division On March 31, 2000, the Company sold certain
assets, consisting primarily of computer equipment, furniture, and website URL
domain names, for total consideration of $2,300. The amount is payable over a
three year period, including a down payment upon closing of $460, and is
non-interest bearing. The Company has recorded an 8% discount on the total
amount receivable amounting to $356. The minimum monthly payment is $10 but at
such time that the cumulative net profit of the business, before tax, amounts to
$460, the remaining amount, less a $700 final payment due on July 1, 2003, will
be paid in equal monthly installments from that date until July 1, 2003 at which
time any remaining amount will be due. The parties have also entered into an
escrow agreement whereby the URL domains will be used as security until the
purchase price is paid in full.

                                      F-26
<PAGE>

NOTE 14 - SALE OF BUSINESS SEGMENTS (Continued)

On August 28, 2001 our subsidiary, Starnet Canada, filed a complaint against
Wiremix Media Inc. in Vancouver, Canada for approximately $155 CDN due under an
asset purchase agreement dated February 18, 2000. Under the asset purchase
agreement, Wiremix Media purchased certain assets from Starnet Canada. Wiremix
Media filed its answer to Starnet Canada's complaint and filed a separate action
in Vancouver, Canada on October 1, 2001 against another of our subsidiaries,
Starnet Systems, for a breach of contract. In its lawsuit, Wiremix Media alleges
that Starnet Systems arbitrarily terminated a marketing and consulting agreement
with Wiremix, pursuant to which Wiremix was to provide Internet marketing
services to Starnet Systems, and claims damages of approximately $2 million
remaining under the contract. The Company intends to prosecute our claim against
Wiremix Media. The Company believes that Wiremix Media's allegations are without
merit and intends to defend the lawsuit vigorously. The financial impact of
these actions, if any, cannot be determined at this time. All receivables
related to the sale of the business segments have been fully allowed for as of
April 30, 2000.

The following is a summary of the discontinued operations:

                                Eight months    For the year   For the year
                               ended December   ended April    ended April
                                  31, 2001        30, 2001       30, 2000
                               --------------   ------------   ------------
Sales                              $     -         $    -        $   2,705
Cost of sales                            -              -            1,586
General and administrative               -              -            1,175
Depreciation and amortization            -              -              299
                               --------------   ------------   ------------
Income  (loss) from
discontinued operations            $     -         $    -        $   (355)
                               ==============   ============   ============

No income tax expense or benefit has been attributed to the discontinued
operations.

NOTE 15 - RESTRUCTURING OF OPERATIONS

In January 2001, the Company terminated 26 employees at a cost of $299 at its
development office in Vancouver, Canada. The employees affected were in the
areas of management, administration, and operational support. In April 2001, the
Company restructured its operations in both St. John's, Antigua and Vancouver,
Canada to decrease its costs by reducing inefficiencies and eliminating
duplicated functions. Reductions in staff were made throughout the organization
and included management and administration, sales, marketing, development, and
operations. A total of 29 staff were terminated, 11 in Antigua and 18 in Canada,
for a total cost of $1,179. The Company has accrued a further $58 for costs
associated with downsizing the physical requirements of the reduced staffing
levels. Of the total amount expensed, $1,276 remains accrued at April 30, 2001
and is included in the accounts payable and accrued liabilities. The balance
remaining unpaid at December 31, 2001 is $NIL.

                                      F-27
<PAGE>

NOTE 16 -  CORPORATE REORGANIZATION

On May 25, 2001, pursuant to an Agreement and Plan of Reorganization executed on
May 17, 2001 ("Reorganization Agreement"), Starnet Communications International
Inc. ("Starnet") became a direct, wholly-owned subsidiary of World Gaming Plc
("World Gaming"), a company organized in England and Wales for the purpose of
facilitating the reorganization of Starnet into a new holding company structure
("Reorganization"). In the Reorganization, each share of Class A common stock of
Starnet issued and outstanding was converted into one American Depositary
Receipts of World Gaming ("ADR"), where each ADR represents one ordinary share
of World Gaming. The Reorganization has effected by merging a newly-formed
direct, wholly-owned Delaware subsidiary of World Gaming with and into Starnet
with Starnet surviving. As part of the reorganization, World Gaming established
December 31 as its year end.

NOTE 17 - MAJOR CUSTOMERS

Pertinent details of the gross sales to major customers during the eight months
ended December 31, 2001 are as follows:

                                        PERCENT GROSS
       CUSTOMERS         GROSS SALES        SALES
       ----------      --------------- ---------------
       Customer A         $   5,726             47%
       Customer B             1,447             12%
       Customer C             1,150              9%
                       --------------- ---------------

                         $   8,299             68%
                       =============== ===============

NOTE 18 - SUBSEQUENT EVENTS

On February 18, 2002, the Company signed a letter of intent with Octagon Capital
Corporation with respect to a proposed two stage offering comprised of Loan
Notes and Options issued by World Gaming plc. subject to certain terms and
conditions. Under the terms of the proposed financing, Octagon capital will
assist the Company in raising up to $7 million in a private placement of 7,000
units. Each Unit will consist of: (a) $1 principal amount of loan notes
("Notes") and, (b) the number of options ("Options") equal to 30% of the
principal amount of the Note divided by the 30-day weighted average closing
price of WGMGY American Depositary Receipts ("ADRs") immediately prior to the
date of closing of this issue.

The proposed financing with Octagon Capital is subject to completion of due
diligence and negotiation and execution of definitive agreements acceptable to
World Gaming plc. and Octagon Capital Corporation. Accordingly, at December 31,
2001, the Company had incurred $100 in financing costs.

Subsequent to December 31, 2001, two members of the Company's board of directors
resigned including the chairman of the board. In June 2002, the Company's chief
executive officer and acting chairman of the board, along with the chief
financial officer resigned. Additionally, an interim chief executive officer
served from June 2002 to July 2002 before resigning. A new interim chief
executive officer has been appointed.

NOTE 19- GOING CONCERN

The Company's consolidated financial statements are prepared using generally
accepted accounting principles applicable to a going concern which contemplates
the realization of assets and liquidation of liabilities in the normal course of
business. However, the Company has accumulated significant losses, has negative
working capital, and a deficit in stockholders' equity. All of these items raise
substantial doubt

                                      F-28
<PAGE>

NOTE 19- GOING CONCERN (Continued)

about its ability to continue as a going concern. The Company has implemented
measures to greatly reduce operating costs. Among these measures are efforts to
eliminate non-value-added expenses through the consolidation of operations at
one primary location and a significant reduction in the company's work force.
The Company is also converting its sales staff from a direct sales force to a
business development group which will focus primarily on developing the
Company's existing client base. In addition to these measures, the Company
intends to continue to seek out additional financing.

                                      F-29