U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                               AMENDMENT NO. 2 TO
                                   FORM 10-QSB

(Mark One)

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

     For the quarterly period ended September 30, 2002

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

     For the transition period from _____ to _______

                         Commission file number 0-32323

                                  TEN STIX INC.
                            -------------------------
        (Exact name of small business issuer as specified in its charter)

           COLORADO                                               84-1351184
           --------                                               ----------
(State or other jurisdiction of                               (I.R.S. Employer
incorporation of organization)                               Identification No.)

                              3101 Riverside Drive
                          Idaho Springs, Colorado 80452
                         -------------------------------
                    (Address of Principal Executive Offices)

                                 (303) 567-0163
                                 --------------
                           (Issuer's telephone number)

                                       N/A
                                       ---
              (Former name, former address and former fiscal year,
                          if changed since last report)

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.

         Yes      X       No

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:

Class                                       Outstanding as of November 18, 2002
-----                                       -----------------------------------
Common Stock, $0.001 par value                          18,168,688

Transitional Small Business Disclosure Format (check one)

         Yes              No      X

<PAGE>

PART I.  FINANCIAL INFORMATION

      ITEM 1. FINANCIAL STATEMENTS:

      BALANCE SHEET AS OF SEPTEMBER 30, 2002                                  2

      STATEMENTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED
      SEPTEMBER 30, 2002 AND 2001, AND THE PERIOD FROM INCEPTION
      TO SEPTEMBER 30, 2002                                                   4

      STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER
      30, 2002 AND 2001, AND THE PERIOD FROM INCEPTION TO
      SEPTEMBER 30, 2002                                                      5

      NOTES TO FINANCIAL STATEMENTS                                           6

      ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
      CONDITION AND RESULTS OF OPERATIONS                                     7

PART II. OTHER INFORMATION AND SIGNATURES

      ITEM 1. LEGAL PROCEEDINGS                                              16

      ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS                      17

      ITEM 3. DEFAULTS UPON SENIOR SECURITIES                                17

      ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS            17

      ITEM 5. OTHER INFORMATION                                              17

      ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K                               17

SIGNATURES                                                                   18

<PAGE>
<TABLE>
<CAPTION>

PART 1. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                                 TEN STIX, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                                  BALANCE SHEET

                                     ASSETS


                                                                  September 30, 2002
                                                                  ------------------
                                                                     (Unaudited)
CURRENT ASSETS:
<S>                                                                   <C>
Cash                                                                  $   5,778
Accounts receivable                                                      16,456
Inventory                                                                82,144
Prepaid expenses                                                         12,000
                                                                      ---------

                    Total Current Assets                                116,378
                                                                      ---------

PROPERTY AND EQUIPMENT, at cost, net                                    170,136

LOAN RECEIVABLE - STOCKHOLDER                                             8,500

PATENT/COPYRIGHT, net                                                    87,169

GAME RIGHTS                                                             153,010
                                                                      ---------

TOTAL ASSETS                                                          $ 535,193
                                                                      =========


                 SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS

                                       2
<PAGE>

                                 TEN STIX, INC
                         (A DEVELOPMENT STAGE COMPANY)
                      LIABILITIES AND STOCKHOLDERS' EQUITY


                                                                 September 30, 2002
                                                                 ------------------
                                                                     (Unaudited)
CURRENT LIABILITIES:
    Accounts payable and accrued expenses                             $ 166,445
    Accounts payable, related party                                      30,000
    Notes payable, current portion                                      121,888
                                                                      ---------

                Total Current Liabilities                               318,333
                                                                      ---------

NOTES PAYABLE, net of current portion                                   192,282
                                                                      ---------


                                                                        510,615
                                                                      ---------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
    Preferred A stock, $.001 par value, 100,000 shares authorized;
      76 shares issued and outstanding                                     --
    Common stock, $.001 par value, 500,000,000 shares
      authorized; 18,058,488 issued and outstanding                      18,058
    Additional paid-in capital                                          890,439
    Subscription receivable                                              (5,000)
    (Deficit) accumulated during the development stage                 (878,919)
                                                                      ---------

                Total Stockholders' Equity                               24,578
                                                                      ---------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                            $ 535,193
                                                                      =========


                 SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS

                                        3
<PAGE>

                                                          TEN STIX, INC.
                                                   (A DEVELOPMENT STAGE COMPANY)
                                                     STATEMENTS OF OPERATIONS

                                                                                                            For the Period
                                             For the Three   For the Three   For the Nine    For the Nine   From Inception
                                             Months Ended    Months Ended    Months Ended    Months Ended (January 10, 1996)
                                             September 30,   September 30,   September 30,   September 30,  to September 30,
                                                 2002            2001            2002            2001            2002
                                             ------------    ------------    ------------    ------------    ------------
                                             (Unaudited)     (Unaudited)     (Unaudited)     (Unaudited)     (Unaudited)
REVENUES:
      Fees from games                        $     48,536    $     19,800    $     79,392    $     31,000    $    116,759
      Other income                                   --              --             8,671             250           9,241
                                             ------------    ------------    ------------    ------------    ------------

             Total Revenue                         48,536          19,800          88,063          31,250         126,000
                                             ------------    ------------    ------------    ------------    ------------

EXPENSES:
      Amortization                                  3,404           2,731          10,212           6,693          25,182
      Depreciation                                 11,329           5,806          33,987          17,419          59,701
      General and administrative                  134,377          14,317         174,214          36,924         934,004
                                             ------------    ------------    ------------    ------------    ------------

             Total Expenses                       149,110          22,854         218,413          61,036       1,018,887
                                             ------------    ------------    ------------    ------------    ------------

OPERATING (LOSS)                                 (100,574)         (3,054)       (130,350)        (29,786)       (892,887)
                                             ------------    ------------    ------------    ------------    ------------

OTHER INCOME (EXPENSES):
      Interest expense                             (1,771)         (5,261)        (11,941)         (8,769)        (30,682)
      Other                                          --              --              --              --              --
                                             ------------    ------------    ------------    ------------    ------------

             Net Other Income (Expense)            (1,771)         (5,261)        (11,941)         (8,769)        (30,682)
                                             ------------    ------------    ------------    ------------    ------------

NET (LOSS)                                   $   (102,345)   $     (8,315)   $   (142,291)   $    (38,555)   $   (923,569)
                                             ============    ============    ============    ============    ============


NET (LOSS) PER SHARE-BASIC AND DILUTED       $      (0.01)              *    $      (0.01)              *
                                             ============    ============    ============    ============

Weighted Average Number of Common
    Shares Outstanding, basic and diluted      17,659,488      17,659,488      17,659,488      17,654,718
                                             ============    ============    ============    ============


*Less than $.01 per share


                                          SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS

                                                                4
<PAGE>

                                                  TEN STIX, INC.
                                           (A DEVELOPMENT STAGE COMPANY)
                                             STATEMENTS OF CASH FLOWS

                                                                                                         For the Period
                                                                        For the Nine     For the Nine    From Inception
                                                                        Months Ended     Months Ended  (January 10, 1996)
                                                                        September 30,    September 30,   to September 30,
                                                                            2002             2001             2002
                                                                         ---------        ---------        ---------
                                                                        (Unaudited)      (Unaudited)      (Unaudited)
CASH FLOWS FROM (TO) OPERATING ACTIVITIES:

Net (loss)                                                               $(142,291)       $ (38,555)       $(878,919)
Adjustments to reconcile net (loss) to net cash from operating
    activities:
        Depreciation and amortization                                       44,199           24,112           84,883
        Services provided at no charge                                       7,500           11,250           97,500
        Issuance of common stock for services                                8,000             --            535,660
        Changes in assets and liabilities:
        Inventory                                                             (750)            --               (750)
        Accounts receivable                                                (16,136)            --            (16,136)
        Note receivable - stockholder                                         --             (8,500)          (8,500)
        Accounts payable                                                    28,376            1,763           57,206
                                                                         ---------        ---------        ---------

                    Net Cash (Used) by Operating Activities                (71,102)          (9,930)        (129,056)
                                                                         ---------        ---------        ---------

CASH FLOWS FROM (TO) INVESTING ACTIVITIES:
        Purchase of equipment                                             (101,500)            --           (105,412)
        Patent costs accumulated                                              --               --            (37,954)
                                                                         ---------        ---------        ---------

                    Net Cash (Used) by Investing Activities               (101,500)            --           (143,366)
                                                                         ---------        ---------        ---------

CASH FLOWS FROM (TO) FINANCING ACTIVITIES:
        Proceeds from notes payable                                         87,000             --             87,000
        Payments on notes payable                                          (14,377)            --            (14,377)
        Proceeds from issuance of common stock                              86,500            8,400          187,062
        Proceeds from issurance of preferred stock                          18,950             --             23,915
        Repurchase of common shares                                           --               --            (10,400)
        Loans from stockholders                                               --               --              5,000
                                                                         ---------        ---------        ---------

                    Net Cash Provided by Financing Activities              178,073            8,400          278,200
                                                                         ---------        ---------        ---------

INCREASE (DECREASE) IN CASH                                                  5,471           (1,530)           5,778

Cash and Cash Equivalents at Beginning of Period                               307            5,323             --
                                                                         ---------        ---------        ---------

Cash and Cash Equivalents at End of Period                               $   5,778        $   3,793        $   5,778
                                                                         =========        =========        =========


                                  SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS

                                                         5
</TABLE>
<PAGE>

NOTE 1 - BASIS OF PRESENTATION

The accompanying unaudited financial statements include the accounts of Ten
Stix, Inc. (the "Company"). The financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and in accordance with the instructions for Form 10-QSB.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles.

In the opinion of management, the unaudited interim financial statements for the
three and nine months ended September 30, 2002 are presented on a basis
consistent with the audited financial statements and reflect all adjustments,
consisting only of normal recurring accruals, necessary for fair presentation of
the results of such period. The results for the three and nine months ended
September 30, 2002 are not necessarily indicative of the results of operations
for the full year. These unaudited financial statements should be read in
conjunction with the audited financial statements and notes thereto included in
the Company's Annual Report on Form 10-KSB of the year ended December 31, 2001.

Certain amounts in the prior period's financial statements have been
reclassified for comparative purposes to conform to the current year
presentation.

NOTE 2 - STOCKHOLDERS' EQUITY

In July 2002 the Company entered into an option agreement to purchase the rights
to the Bonus 6 games within the states of Colorado, South Dakota, California,
and Arizona for $100,000 payable in five equal installments through April 2003
and issued 10,000 shares of restricted common stock valued at $1,010 upon
acceptance of the option agreement. An additional 65,000 shares of restricted
common stock valued at $52,000 were issued in August 2002 when the option was
exercised and the first installment was paid.

In July 2002 the Company entered into an option agreement to purchase the video
rights for Bonus 6 Stud Poker. The Company issued 20,000 shares of common stock
valued at $12,000 when the option was accepted. The option period expires
January 30, 2003. If the option is exercised, the Company will pay $150,000 and
issue 200,000 shares of common stock.

The Company sold 272,000 shares of common stock for $86,500 and a subscription
receivable for $5,000, whose terms are being negotiated, and 76 shares of Series
A preferred stock for $18,950.

NOTE 3 - NOTES PAYABLE

In April 2002 the Company entered into a promissory note for $7,000 with a
lender. The note bore interest at prime plus 11.25% and was due April 2003. In
September 2002 an unrelated individual paid the note in full. The Company is
negotiating payment of the principal balance of $6,250 to the individual.

Subsequent to September 30, 2002 the Company renegotiated the liability due to
Xpectra to $15,000 due by November 15, 2002 in three equal installments.

                                       6
<PAGE>

     Statements made in this Form 10-QSB that are not historical or current
facts are "forward-looking statements" made pursuant to the safe harbor
provisions of Section 27A of the Securities Act of 1933 (the "Act") and Section
21E of the Securities Exchange Act of 1934. These statements often can be
identified by the use of terms such as "may," "will," "expect," "believe,"
"anticipate," "estimate," "approximate" or "continue," or the negative thereof.
The Company intends that such forward-looking statements be subject to the safe
harbors for such statements. The Company wishes to caution readers not to place
undue reliance on any such forward-looking statements, which speak only as of
the date made. Any forward-looking statements represent management's best
judgment as to what may occur in the future. However, forward-looking statements
are subject to risks, uncertainties and important factors beyond the control of
the Company that could cause actual results and events to differ materially from
historical results of operations and events and those presently anticipated or
projected. The Company disclaims any obligation subsequently to revise any
forward-looking statements to reflect events or circumstances after the date of
such statement or to reflect the occurrence of anticipated or unanticipated
events.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

GENERAL

     Ten Stix Inc. (the "Company") was incorporated on January 10, 1996 under
the laws of the State of Colorado to engage in the design, development and
marketing of unique card games, of which some are derived from Native American
heritage, and other gaming products for the gaming industry. The Company named
itself "Ten Stix" based on its most popular and creative product known as "Ten
Stix 21" (currently being marketed and referenced herein as "Ten to Win"). The
Company has designed and developed certain card games, which are currently being
marketed to casinos located in the States of California, Colorado, Kansas, New
Mexico, Nevada, South Dakota and Wisconsin.

     The Company has designed and developed a line of card games and other
gaming products for the gaming industry. There are two types of gaming products
that the Company has designed and will distribute and market. One type of gaming
product is the "table game with electronics", which includes Ten to Win and
Shotgun 21. Both the Ten to Win and Shotgun 21 card games utilize an electronics
system that was designed and developed by the Company and which provides, among
other things, the managers of casinos with an accounting system allowing for
real-time win/loss statistics. The basic unit hardware is the same for the two
card games, although the Shotgun 21 electronics system has certain modifications
and will perform more sophisticated functions. The other type of gaming product
is a "layout game", which includes all of the other gaming products. The other
gaming products of the Company utilize a tablecover or layout with no electronic
system. The Company offers no warranty pursuant to the sale or lease of any of
its gaming products.

     During the nine-month period ended September 30, 2002, the Company
generated approximately $88,063 in revenues from the sale and/or lease of its
gaming products. Management of the Company believes that the Company will
continue to generate such revenues. Management further believes that there are
certain material factors applicable to all of the Company's products relevant to
the generation of revenues which include, but are not limited to, the following:
(i) adequate capital required to fund operational expenses, which directly and
adversely affects travel associated with the market and distribution of
products; (ii) state approval of the specific game being marketed; and (iii)
timely delivery of and/or back-ordered parts associated with particular games.
Together with the specific material factors listed under the description of each
gaming product, management believes that all such material factors have been
disclosed pertaining to the timing of bringing each product to market and the
generation of revenues.

                                       7
<PAGE>

     Management of the Company believes that future sales of Ten to Win and
related products to the casinos in the State of Colorado will be an important
line of business for the Company for the next several years, however, management
intends to pursue the marketplaces of several other primary states. It is
anticipated that the Company will derive its revenues principally from the
marketing and sale of Ten to Win and other related products to casinos generally
located in the States of California, Colorado, Kansas, New Mexico, Nevada, South
Dakota, Mississippi and Wisconsin. Management anticipates that Ten to Win will
be leased for approximately $600.00 per month or sold for approximately
$5,000.00 plus a royalty fee to casinos. Management anticipates that Shotgun 21
will be leased for approximately $800.00 per month or sold for approximately
$10,000 plus a royalty fee to casinos. Management further anticipates that the
marketing and sale of the products pursuant to the distributorship agreements
will result in revenues during fiscal year 2002.

     The Company's principal executive offices are located at 3101 Riverside
Drive, Idaho Springs, Colorado 80542. Its telephone number is (303) 567.0163 and
its facsimile number is (303) 567.0163.

PRODUCTS

     There are two types of gaming products that the Company has designed and
will distribute and market. One type of gaming product is the "table game with
electronics", which includes Ten to Win and Shotgun 21. Management believes that
the table game using an electronic system, such as Ten to Win and Shotgun 21,
will generally be leased by casinos on a monthly basis at the rate of
approximately $600.00 and $800.00, respectively. However, in the alternative,
Ten to Win and Shotgun 21 can be purchased by a casino at the approximate price
of $5,000.00, plus royalty fee, and $10,000.00, plus royalty fee, respectively.

     The other type of gaming product is a "layout game", which includes all of
the other gaming products. The layout game is a table game utilizing a
tablecover or layout with no electronic system. Management believes that the
layout games will typically be leased on a monthly basis at approximately
$400.00 per month.

     In general, the marketing of Ten to Win and the Company's other gaming
products will involve implementation of either a sales agreement or a leasing
arrangement with a third party.

     The Company's gaming products may be subject to approval by state
regulatory agencies prior to distribution and marketing the games. State
regulations vary regarding which gaming products may be played in that
respective state. In general, the Company is required to apply to the respective
state regulatory agency for verification that the game is legal under the
state's laws and for approval to distribute and market such game. Management
believes that in general such approvals are rarely denied by the respective
state regulatory agencies, unless the particular game is not legal in that
state. The table below identifies and lists each of the Company's gaming
products, the applicability of state regulatory requirements in each state where
the Company is or will be distributing and marketing the respective game, and
the current status of the regulatory process.

                                       8
<PAGE>

--------------------------------------------------------------------------------
                                      States and Status of
Gaming Product                         Regulatory Approval
--------------------------------------------------------------------------------

                      CA      CO       KN       NM       NV       SD       WI

Ten to Win            (1)              (3)      (1)      (5)      PA*      PA(4)
--------------------------------------------------------------------------------

ShotGun 21            (1)     PA(5)    (3)      (1)      (5)      (3)      Not
                                                                          Legal
--------------------------------------------------------------------------------

Bet the House         (1)     PA       PA       (1)      (2)      PA       Not
                                                                          Legal
--------------------------------------------------------------------------------

Bonus 6               (1)     A**      A        (1)      (2)      A        Not
                                                                          Legal
--------------------------------------------------------------------------------

Push Your Luck        (1)     PA       (3)      (1)      (2)      (3)      Not
                                                                          Legal
--------------------------------------------------------------------------------

Hold'em 88            (1)     A        (3)      (1)      (3)      A        Not
                                                                          Legal
--------------------------------------------------------------------------------

Catalina Dice         Not     Not      (3)      (1)      (2)      Not      Not
                     Legal   Legal                               Legal    Legal
--------------------------------------------------------------------------------

Pro Shuffle           (6)     (6)      (6)      (6)      (6)      (6)      (6)
--------------------------------------------------------------------------------
*Pending Approval
**Approved

(1) As of the date of this Quarterly Report, neither the State of California nor
New Mexico has any rules or regulations regarding licensing of the Company's
gaming products. Therefore, all of the Company's gaming products, with the
exception of Catalina Dice, can be played in the State of California and New
Mexico without state regulatory approval. Dice and roulette games, such as
Catalina Dice, are not legal in California.

(2) As of the date of this Quarterly Report, the State of Nevada has rules and
regulations which provide that the gaming products of the Company may be
distributed and marketed without prior licensing but with state approval. Bet
the House, Bonus 6, Push Your Luck and Catalina Dice have all been approved by
the State of Nevada.

(3) As of the date of this Quarterly Report, management of the Company has not
pursued applications for approval and/or licensing.

(4) In the State of Wisconsin, management believes that state regulatory
approval may not be obtainable until the laws governing blackjack gaming in
Wisconsin are changed.

(5) In the State of Colorado, management believes that state regulatory approval
will be obtained by approximately fourth quarter 2002 and in the State of
Nevada, management believes that state regulatory approval will be obtained by
approximately third quarter of 2003.

(6)  Approved and generating revenues.

--------------------------------------------------------------------------------

                                       9
<PAGE>

     The Company intends to seek to capture market niches in the gaming industry
within the States of California, Colorado, Mississippi, Nevada, New Mexico,
Kansas, South Dakota and Wisconsin. Although the Company's principal office is
located within the State of Colorado, management believes that the market in
Colorado is limited for the Company's gaming products. Therefore, management
intends to move into the marketplaces of primary states such as New Mexico,
Nevada, California, Kansas and Wisconsin. By fiscal year ended 2003, management
intends to commence marketing its gaming products in foreign countries, such as
Africa, Canada, South America, Caribbean Islands and Southeast Asia, which have
legalized gaming.

     As of the date of this Quarterly Report, the Company is currently focusing
on marketing its gaming products within the States of Colorado, New Mexico,
Nevada, California, Kansas and Wisconsin by (i) implementation of sales trips
and contacts by independent commissioned representatives, (ii) use of direct
mail, trade publications and press releases for advertising of the gaming
products, and (iii) attendance and display of the gaming products at well-known
gaming trade shows and/or conferences. The Company intends to market its gaming
products through the use of direct sales and independent commissioned
representatives. To aid in the marketing of its gaming products, the Company
intends to utilize several marketing approaches including advertising in trade
publications, submitting press releases, and continuing its participation in
trade shows. The Company's services and gaming products are also electronically
advertised on the Company's web page at www. Ten Stix.com.

BONUS 6

     The Company currently has the distributorship and marketing rights to a
card game called "Bonus 6". Bonus 6 is a Class III game and is a five-card stud
game. Prior to the Company's incorporation, Mr. Thomas Sawyer together with
other individuals created and designed a card game called "Bonus 6". On
approximately October 13, 1997, the board of directors of the Company held a
special meeting in which it was decided that the Company was not interested in
acquiring or marketing Bonus 6. Therefore, Mr. Sawyer in his individual capacity
entered into a distribution agreement with Tom Perkins, the owner of Bonus 6
("Perkins"), for the distribution rights of Bonus 6 (the "Distribution
Agreement"). Pursuant to the terms of the Distribution Agreement, Mr. Sawyer was
responsible for all marketing costs and received 35% of gross revenues generated
from the sale of Bonus 6 to casinos. Mr. Sawyer individually proceeded to market
and distribute Bonus 6 to casinos located within Colorado.

     Thereafter, the Company and Mr. Sawyer entered into an assignment agreement
dated December 28, 2000 (the "Sawyer Assignment Agreement") in which (i) Mr.
Sawyer agreed to gift and grant to the Company his distribution rights under the
Distribution Agreement to market and distribute Bonus 6 within the United
States, excluding the State of Colorado, and (ii) the Company agreed to assume
Mr. Sawyer's obligations under the Distribution Agreement as such obligations
pertain to the marketing and distribution of Bonus 6 within the United States,
excluding the State of Colorado. As of the date of this Quarterly Report, the
Company has generated revenues from its distribution rights in connection with
the marketing of Bonus 6 to casinos.

Option Contracts

     Bonus 6 Option. On July 3, 2002, the Company and Perkins entered into an
option agreement (the "Bonus 6 Option"), pursuant to which Perkins granted to
the Company an option from July 5, 2002 through August 30, 2002 to acquire the
ownership rights to Bonus 6 table games which exist or may exist in the future
for the states of Colorado, South Dakota, California and Arizona. Pursuant to
the terms of the Bonus 6 Option, the Company (i) issued to Perkins 10,000 shares
of its restricted common stock upon execution of the Bonus 6 Option; (ii) will
issue to Perkins an additional 65,000 shares of its restricted common stock in
the event the Company exercised its option; and (iii) will pay to Perkins an
aggregate of $100,000 (with $20,000 due upon exercise of the option). See "Part
II. Other Information. Item 2. Changes in Securities and Use of Proceeds."

     During August 2002, the Company exercised its option. Pursuant to the terms
of the Bonus 6 Option, and as of the date of this Quarterly Report, the Company
has (i) issued to Perkins an additional 65,000 shares of its restricted common
stock; and (ii) paid to Perkins an aggregate of $40,000. In accordance with the
terms of the Bonus 6 Option, management anticipates that the Company will pay to
Perkins an additional $60,000 as follows: (i) $20,000 due on December 30, 2002;
(ii) $20,000 due on February 28, 2003; and (iii) $20,000 due on April 30, 2002.
In the event the Company fails to make such payments, the terms of the Bonus 6
Option provide that Perkins will retain all monies paid to him and will retain
all of his right, title and interest in and to Bonus 6. See "Part I. Financial
Information. Item 2. Management's Discussion and Analysis or Plan of Operation -
Material Commitments."

     Bonus 6 Video Option. On July 3, 2002, the Company and Perkins entered into
an option agreement (the "Bonus 6 Video Option"), pursuant to which Perkins
granted the Company an option from July 30, 2002 through January 30, 2003 to
acquire the ownership rights to Bonus 6 Stud Poker video games and to any and
all video applications related thereto for the United States. Pursuant to the
terms of the Bonus 6 Video Option, the Company (i) issued to Perkins 20,000
shares of restricted common stock upon execution of the Bonus 6 Video Option;
(ii) will pay to Perkins an aggregate of $150,000, either in one lump sum or in
six equal consecutive monthly payments in the event the Company exercises its
option; (iii) will issue to Perkins an additional 200,000 shares of its
restricted common stock in the event the Company exercises its option; and (iv)
will pay to Perkins a 3.0% royalty interest on sales revenue generated from
Bonus 6 Stud Poker video games. See "Part II. Other Information. Item 2. Changes
in Securities and Use of Proceeds."

     As of the date of this Quarterly Report, the Company has not exercised its
option pursuant to the Bonus 6 Video Option."

PRO SHUFFLE

     On approximately May 1, 2001, the Company and Summit International Group,
Inc., a Colorado corporation ("Summit") entered into an asset purchase agreement
(the "Asset Purchase Agreement"). Under the terms of the Asset Purchase
Agreement, the Company acquired from Summit (i) all of Summit's right, title and
interest to U.S. Patent No. 5,718,427 regarding a card shuffling device marketed
by Summit under the name "Pro Shuffle"; (ii) all Pro Shuffle devices, parts,
inventory and equipment related to the manufacturing and assembly of the Pro
Shuffle; (iii) all contracts related to the Pro Shuffle; (iv) all accounts
receivable arising out of the sale or lease of the Pro Shuffle; (v) two
promissory notes made by Mr. Tony Cranford, one payable to Summit in the
approximate amount of $2,500.00 and one payable to Phil Lacerte in the
approximate amount of $6,000.00; (vi) two Blackjack tables located in Las Vegas,
Nevada; and (vii) all other business assets located in Colorado (of which no
material assets were actually acquired).

     Under the terms of the Asset Purchase Agreement, the Company assumed (i) on
the part of Summit a liability to Xpectra of up to an aggregate amount of
$110,000.00 related to fifty updated Pro Shuffle devices and parts; and (ii) two
liabilities owed by Summit to Jerry Delferro and Dick Stewart in the approximate
amount of $3,000.00, respectively. Pursuant to further terms of the Asset
Purchase Agreement, the Company agreed to (i) pay the amount of $300,000.00 to
Summit as evidenced by the execution of two promissory notes, one payable to
Summit in the amount of $220,000.00 and the other payable to Michael Humecki in
the amount of $80,000.00; and (ii) surrender to Summit all of the shares of
common stock of Summit held of record by Mr. Sawyer and Mr. Cranford,
respectively (an approximate 10% equity interest each).

     In order to facilitate consummation of the Asset Purchase Agreement, an
agreement was entered into dated May 1, 2001 among the Company, Thomas Sawyer,
Tony Cranford, Michael Humecki, P. Chad Lacerte, Roger Adams, and Summit (the
"Agreement"). The purpose of the Agreement was to resolve any and all claims,
counterclaims and defenses that Messrs. Humecki, Lacerte and Adams may have
against Summit pursuant to ongoing litigation. According to the terms of the
Agreement, the parties agreed that (i) the Company would acquire from Mr.

                                       10
<PAGE>

Humecki his 10.04% equity interest in Summit (which was returned to Summit);
(ii) the Company would pay Mr. Humecki $100,000, with $20,000 paid by Summit
upon execution of the Agreement and $80,000 evidenced by a promissory note;
(iii) the Company would sign a security agreement for the benefit of Mr. Humecki
as security for the payments under the promissory note; and (iv) Messrs.
Humecki, Lacerte, Adams and Summit would waive and release all claims,
counterclaims, causes of action and demands, known or unknown, that they have or
may claim to have against each other.

     As of the date of this Quarterly Report, the marketing and sale of the Pro
Shuffle generates approximately $5,600 in monthly revenue; however, the Company
pays debt service of approximately $2,800 monthly in accordance with the terms
of the above-described notes.

RESULTS OF OPERATIONS

Nine-Month Period Ended September 30, 2002 Compared to Nine-Month Period Ended
September 30, 2001

     The Company's net loss for the nine-month period ended September 30, 2002
was approximately ($142,291) compared to a net loss of approximately ($38,555)
for the nine-month period ended September 30, 2001 (an increase of $103,736).

     Total revenue for the nine-month periods ended September 30, 2002 and 2001
were $88,063 and $31,250, respectively (an increase of $56,813). Total revenue
generated during the nine-month period ended September 30, 2002 was comprised of
(i) $79,392 in fees from gaming products; and (ii) $8,671 in other income. Total
revenue generated during the nine-month period ended September 30, 2001 was (i)
$2,500 in fees from gaming products; (ii) $28,500 in leases; and (iii) $250 in
other income. The increase in revenue during the nine-month period ended
September 30, 2002 was primarily due to an increase in fees generated from the
marketing of the Company's gaming products.

     During the nine-month period ended September 30, 2002, the Company incurred
operating expenses of $218,413 compared to $61,036 of operating expenses
incurred during the nine-month period ended September 30, 2001 (an increase of
$157,377). Operating expenses for the nine-month period ended September 30, 2002
primarily consisted of: (i) $33,987 as depreciation expense; (ii) $174,214 as
general and administrative expenses; and (iii) $10,212 as amortization expense.
Operating expenses for the nine-month period ended September 30, 2001 primarily
consisted of: (i) $17,419 as depreciation expense; (ii) $36,924 as general and
administrative expenses; and (iii) $6,693 as amortization expense. The Company
also incurred $11,941 as interest expense during the nine-month period ended
September 30, 2002 as compared to $8,769 incurred during the nine-month period
ended September 30, 2001. The increase in operational expenses during the
nine-month period ended September 30, 2002 compared to the nine-month period
ended September 30, 2001 was primarily due to an increase in general and
administrative expenses resulting from an operational emphasis on and increased
scale and scope of overall corporate activity pertaining to the marketing and
distribution of the Company's gaming products (which was primarily attributable
to an increase in salaries, professional fees and travel expenses).. General and
administrative expenses generally include corporate overhead, administrative
management, consulting costs and professional fees.

     As discussed above, although the Company generated revenues in the amount
of $88,063 during the nine-month period ended September 30, 2002, the increase
in net loss during such period compared to the nine-month period ended September
30, 2001 is attributable primarily to a substantial increase in general and
administrative expenses. The Company's net loss during the nine-month period
ended September 30, 2002 was approximately ($142,291) or ($0.01) per common
share compared to a net loss of approximately ($38,555) or ($0.00) per common
share during the nine-month period ended September 30, 2001. The weighted
average of common shares outstanding were 17,659,488 for the nine-month period
ended September 30, 2002 compared to 17,654,718 for the nine-month period ended
September 30, 2001.

                                       11
<PAGE>

Three-Month Period Ended September 30, 2002 Compared to Three-Month Period Ended
September 30, 2001

     The Company's net loss for the three-month period ended September 30, 2002
was approximately ($102,345) compared to a net loss of approximately ($8,315)
for the three-month period ended September 30, 2001 (an increase of $94,030).

     Total revenue for the three-month periods ended September 30, 2002 and 2001
was $48,536 and $19,800, respectively (an increase of $28,736). The generation
of revenue during the three-month period ended September 30, 2002 was comprised
primarily of fees generated from the marketing of its gaming products.

     During the three-month period ended September 30, 2002, the Company
incurred operating expenses of $149,110 compared to $22,854 of operating
expenses incurred during the three-month period ended September 30, 2001 (an
increase of $126,256). Operating expenses for the three-month period ended
September 30, 2002 primarily consisted of: (i) $11,329 as depreciation expense;
(ii) $134,377 as general and administrative expenses; and (iii) $3,404 as
amortization expense. This increase was primarily attributable to an increase in
salaries, professional fees and travel expenses related to the marketing of the
Company's gaming products. The Company also incurred $1,771 as interest expense
during the three-month period ended September 30, 2002 as compared to $5,261
incurred as interest expense during the three-month period ended September 30,
2001.

     As discussed above, although the Company generated revenue in the amount of
$48,536 during the three-month period ended September 30, 2002, the increase in
net loss during such period compared to the three-month period ended September
30, 2001 is attributable primarily to a substantial increase in general and
administrative expenses. The Company's net loss during the three-month period
ended September 30, 2002 was approximately ($102,345) or ($0.01) per common
share compared to a net loss of approximately ($8,315) or ($0.00) per common
share during the three-month period ended September 30, 2001. The weighted
average of common shares outstanding were 17,659,488 for the three-month periods
ended September 30, 2002 and 2001, respectively.

LIQUIDITY AND CAPITAL RESOURCES

     As of the date of this Quarterly Report, management of the Company believes
that an estimated $500,000 is required over the next fiscal year for payment of
expenses associated with the ongoing business operations of the Company. The
Company generated $88,063 in total revenue during the nine-month period ended
September 30, 2002 and $31,250 in total revenue during the nine-month period
ended September 30, 2001. Management anticipates that overall generation of
revenues will continue to increase on an annual basis based on existing
contracts and marketability of its gaming products. Management believes that the
Company can satisfy its cash requirements for approximately the next six months
based on its ability to successfully generate revenues from the marketing of its
gaming products and to obtain advances from certain investors and related
parties, as necessary.

     The Company has only recently generated sufficient cash flow to partially
fund its operations and activities. The Company may experience a liquidity
crisis and be required to raise additional capital. Historically, the Company
has relied upon internally generated funds and funds from the sale of shares of
stock and loans from its shareholders and private investors to finance its
operations and growth. Management may raise additional capital through future
public or private offerings of its stock or through loans from private
investors, although there can be no assurance that the Company will be able to
obtain such financing. The Company's future success and viability are entirely
dependent upon the ability of the Company's current management to (i) strengthen
and increase its customer base by enhancing the marketability of its products,
and (ii) increase the number of customers and expand into additional markets.
Management is optimistic that the Company will be successful in its capital
raising efforts. There can be no assurance, however, that the Company will be
able to continue to successfully distribute and market its gaming products and
to raise additional capital. The Company's failure to do so would have a
material and adverse affect upon the Company and its shareholders.

                                       12
<PAGE>

     The Company's financial statements have been prepared assuming that it will
continue as a going concern and, accordingly, do not include adjustments
relating to the recoverability and realization of assets and classifications of
liabilities that might be necessary should the Company be unable to continue in
operations.

For Nine-Month Period Ended September 30, 2002

     As of September 30, 2002, the Company's current assets were $116,378 and
its current liabilities were $201,735, resulting in a working capital deficit of
$97,357. As of September 30, 2002, current assets were comprised of (i) $5,778
in cash; (ii) $16,456 in accounts receivable; and (iii) $82,144 in inventory. As
of September 30, 2002, current liabilities were comprised of (i) $166,445 in
accounts payable and accrued expenses; (ii) $30,000 in accounts payable to
related party; and (iii) $121,888 in current portion of long-term debt due and
owing.

     As of September 30, 2002, the Company's total assets were $535,193 and its
total liabilities were $510,615. As of September 30, 2002, the Company's total
assets exceeded its total liabilities by $13,538.

     As of September 30, 2002, the Company's total assets consisted primarily of
(i) $116,378 in current assets; (ii) $170,136 (less accumulated
depreciation/amortization) in property and equipment; (iii) a $87,169 net cost
of patent/copyright rights; and (iv) $153,010 in valuation of gaming rights.

     As of September 30, 2002, the Company's total liabilities consisted
primarily of $318,333 in current liabilities and $192,282 in notes payable (net
of current portion due and owing of long term debt). See "Part I. Item 2.
Management's Discussion and Analysis or Plan of Operation - Sources of
Funding/Material Commitments".

     Stockholders' equity for the nine-month period ended September 30, 2002 was
$24,578.

     For the nine-month period ended September 30, 2002, net cash flows used by
operating activities was ($71,102) compared to net cash flows used by operating
activities of ($9,930) for the nine-month period ended September 30, 2001. The
increase in net cash flows used by operating activities during the nine-month
period ended September 30, 2002 compared to the nine-month period ended
September 30, 2001 resulted primarily from (i) a net loss of ($142,291) incurred
during the nine-month period ended September 30, 2002 compared to a net loss of
($38,555) incurred during the nine-month period ended September 30, 2001; (ii)
an increase in accounts payable of $28,376; and (iii) an increase in
depreciation and amortization of $44,199.

     For the nine-month period ended September 30, 2002, net cash flows used by
investing activities was ($101,500) compared to $-0- of net cash flows used by
investing activities for the nine-month period ended September 30, 2001, which
relates primarily to the purchase of equipment and accumulated patent costs.

     Net cash flows provided by financing activities was $178,073 for the
nine-month period ended September 30, 2002 compared to net cash flows provided
by financing activities of $8,400 for the nine-month period ended September 30,
2001. The increase during the nine-month period ended September 30, 2002 was
primarily attributable to (i) $86,500 in proceeds from issuance of common stock;
(ii) $18,950 in proceeds from issuance of preferred stock; and (iii) $87,000 in
proceeds from notes payable.

                                       13
<PAGE>

SOURCES OF FUNDING/MATERIAL COMMITMENTS

Material Commitments

     Cranford Assignment Agreement. A significant and material commitment for
the Company for fiscal year 2002 is the amounts due and owing under an
assignment agreement with Mr. Tony Cranford dated January 19, 2001 (the
"Cranford Assignment Agreement"). Pursuant to the Cranford Assignment Agreement,
Mr. Cranford assigned all of his right, title and interest in Bet the House,
including his rights to the provisional patent application no. 60/240.091, to
the Company. In accordance with the terms and provisions of the Cranford
Assignment Agreement, the Company agreed to pay Mr. Cranford (i) for a period of
six months a monthly royalty fee of $175.00 for each Bet the House game that the
Company leases to a third party during the six month period; and (ii) an
aggregate purchase price of either (a) an amount to be calculated by multiplying
the average monthly gross revenues generated by the Company for each Bet the
House game leased during the six month period by three, or (b) $30,000,
whichever is greater. The terms of Cranford Assignment Agreement further provide
that such aggregate purchase price may be paid by the Company to Mr. Cranford on
a monthly basis or in one aggregate payment, with such aggregate purchase price
to be paid in full no later than March 31, 2002.

     Mr. Cranford has not previously received any payments from the Company and
agreed to extend such payment date to September 30, 2002. As of the date of this
Quarterly Report, Mr. Cranford has agreed to further extend such payment date to
December 31, 2002. Management has not determined the manner of payment to be
made to Mr. Cranford and may not make such determination until the Company is
adequately funded and several Bet the House games have been successfully
marketed generating revenues.

     Asset Purchase Agreement. A significant and material commitment for the
Company for fiscal year 2002 is the amount of $300,000.00 due and owing under
the terms of an asset purchase agreement entered into with Summit International
Group, Inc. dated May 1, 2001 (the "Asset Purchase Agreement"). Pursuant to the
terms of the Asset Purchase Agreement, the Company agreed to pay the amount of
$300,000.00, as evidenced by the execution of two promissory notes.

     The first promissory note dated May 1, 2001 is in the amount of $80,000.00
and is payable to Michael Humecki (the "Humecki Promissory Note"). The terms of
the Humecki Promissory Note require the Company to make payments as follows: (i)
on the 15th of each month commencing June 15, 2001, the greater of either (a)
50% of gross revenues collected during the prior month from the lease or sale by
the Company of any of the assets acquired by the Company pursuant to the Asset
Purchase Agreement (including the Pro Shuffle) or (b) $2,000.00; (ii) on the
15th of the month after the receipt of 25% of aggregate gross funds raised by
the Company at any time on or after May 1, 2001 pursuant to any private or
public offering of its securities (but such 25% shall not be paid on the first
$100,000 of funds so raised by the Company); and (iii) interest at the rate of
8% per annum commencing May 1, 2002 on any portion of the $80,000 outstanding on
the first of each month payable monthly.

     As of the date of this Quarterly Report, the Company has paid Humecki
approximately $37,741.66 in principal and $820.75 in interest pursuant to the
terms of the Humecki Promissory Note.

     The Company and Michael Humecki entered into a security agreement dated May
1, 2001 (the "Security Agreement") pursuant to which the Company agreed to grant
to Mr. Humecki a security interest in certain property which includes, but not
limited to, the following: (i) all items of personal property which were
acquired by the Company from Summit; (ii) all deposit accounts; (iii) all
receivables; (iv) all inventory; and (v) all equipment.

     The second promissory note dated May 1, 2001 is in the amount of
$220,000.00 and is payable to Summit International Group, Inc. (the "Summit
Promissory Note"). The terms of the Summit Promissory Note require the Company
to make payments to Summit after payment in full is made by the Company of the
Humecki Promissory Note as follows: (i) on the 15th of each month commencing

                                       14
<PAGE>

after the Humecki Promissory Note, the greater of either (a) 50% of gross
revenues collected during the prior month from the lease or sale by the Company
of any of the assets acquired by the Company pursuant to the Asset Purchase
Agreement (including the Pro Shuffle) or (b) $2,000.00; (ii) on the 15th of the
month after the receipt of 25% of aggregate gross funds raised by the Company at
any time on or after May 1, 2001 pursuant to any private or public offering of
its securities (but such 25% shall not be paid on the first $100,000 of funds so
raised by the Company and not until after payment in full of the Humecki
Promissory Note); and (iii) interest at the rate of 8% per annum commencing May
1, 2004 on any portion of the $220,000.00 outstanding on the first of each month
payable monthly.

     As of the date of this Quarterly Report, the Company has not paid Summit
any monies pursuant to the terms or the Summit Promissory Note.

     Xpectra Liability. A significant and material commitment for the Company
for the year 2002 is a liability to Xpectra of up to an aggregate amount of
approximately $110,000.00 (the "Xpectra Liability"). According to the terms of a
letter dated May 9, 2001 from the Company to Xpectra, the Company acknowledged
the valuation of $110,174.98 relating to Pro Shuffle units, parts, tools and
drawings held by Xpectra (the "Xpectra Inventory"). The Xpectra Liability
represents an opportunity for the Company to purchase from Xpectra some or all
of the Xpectra Inventory, up to an aggregate $110,174.98 and to determine
quantity to be acquired and price.

     As of the date of this Quarterly Report, the Company and Xpectra have
entered into a letter of intent dated October 10, 2002 pursuant to which the
Company has offered to purchase the Xpectra Inventory for the aggregate amount
of $15,000 as follows: (i) $5,000 to be paid at the time of execution of the
letter of intent; (ii) $5,000 to be paid by October 31, 2002; and (iii) $5,000
to be paid by November 15, 2002. As of the date of this Quarterly Report, the
Company has paid an aggregate of $10,000 to Xpectra. The Xpectra Inventory is
currently being stored in Xpectra's warehouse on pallets.

     Bonus 6 Option. A significant and material commitment for the Company for
the year 2002 and 2003 is the aggregate amount of $60,000 due and owing under
the terms of the Bonus 6 Option. Pursuant to the terms of the Bonus 6 Option,
the Company is required to pay to Perkins an additional $60,000 as follows: (i)
$20,000 on December 30, 2002; (ii) $20,000 on February 28, 2003; and (iii)
$20,000 on April 30, 2002. The terms of the Bonus 6 Option further provide that
in the event the Company fails to make such payments, Perkins will retain all
monies paid to him and will retain all of his right, title and interest in and
to Bonus 6.

Funding

     As of the date of this Quarterly Report, the Company is engaged in an
offering pursuant to which it intends to raise an aggregate of $1,000,000. In
accordance with the terms and provisions of the Private Placement Memorandum,
the Company will offer and sell 4,000 shares of Series A Convertible Preferred
Stock at $250.00 per share. Each share of Series A Convertible Preferred Stock
is convertible into two hundred shares of restricted Common Stock at any time
after December 31, 2001. The Series A Convertible Preferred Stock will be senior
to the Common Stock with respect to dividends and upon liquidation, dissolution
or winding up. The securities will not be registered under the 1933 Securities
Act and will therefore be offered pursuant to an exemption from registration
provided by Section 4(2) and Regulation D, Rule 506, of the 1933 Securities Act.
Management intents to use net proceeds received from the offering for the
Company's capital requirements, which consist primarily of marketing,
advertising and travel expenses and professional fees. As of the date of this
Quarterly Report, the Company has sold and issued 76 shares of Series A
Convertible Preferred Stock. See "Part II. Other Information. Item 2. Changes in
Securities and Use of Proceeds."

     Based upon a twelve-month plan proposed by management, it is anticipated
that the Company's operational work plan will require approximately $500,000 of
financing designed to fund the general business operations. As of the date of
this Quarterly Report, the Company does not have any material commitments other
than those described above nor does management anticipate any further material
commitments within the next twelve months. It is anticipated that any
expenditures to be incurred by the Company will be operational. Management
anticipates that a substantial portion of the initial budget of $500,000 for the
twelve-month work plan, which includes such expenditures, will be funded
pursuant to public or private offerings, including the private placement
offering described above under Regulation D, Rule 506, of its debt or equity
securities and future advancements. The Company may not be able to raise such
funds and, therefore, the successful marketing of its products may not be
accomplished.

                                       15
<PAGE>

     From the date of this Quarterly Report, management believes that the
Company can satisfy its cash requirements for approximately the next six months
based on its ability to obtain advances from certain investors and related
parties. In the event the Company is unable to obtain advances from certain
investors and related parties, management believes that the Company can satisfy
its cash requirements for approximately the next three months from its liquid
assets.

     As of the date of this Quarterly Report, the Company has generated little
revenue from operations and a working capital deficit. There is substantial
doubt that the Company will be able to retain its status as a "going concern",
that is assumption of the continuity of operations of the Company in the absence
of evidence to the contrary. Management believes that it can maintain its status
as a "going concern" based on its ability to raise funds pursuant to future
public and private offerings and to obtain advances and minimize operating
expenses by not duplicating expenses or incurring needless expenses.


PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

     During 1997, Progressive Games, Inc. ("Progressive") believed that the
Company was infringing upon certain of its products by virtue of the design,
manufacture and marketing of the Company's Ten Stix 21 and Shotgun 21 gaming
products. Therefore, on approximately November 20, 1997, Civil Action
97-WI-2689-CB, Progressive Games, Inc. v. Amusements Extra, Ten Stix, et. al.,
was filed in the Federal District Court in Denver, Colorado. This was a patent
infringement against the Company and others alleging certain of the Company's
products/games infringed upon Progressive's patents (the "Lawsuit").Mikohn
Corporation ("Mikohn") purchased Progressive and became a party to the lawsuit.

     Subsequently, the Company was dismissed as a party defendant to the
Lawsuit. Thus, the Company and Mikohn, BCD Mecanique Ltd. ("BCD"), DEQ Casinos,
Ltd. ("DEQ") and Amusements "Extra" Inc. ("AEI") entered into an amended
memorandum of agreement dated September 23, 1998 (the "Memorandum Agreement").
The Memorandum Agreement provided that (i) during litigation of the Lawsuit,
Mikohn would grant to the Company a license allowing the Company to continue to
manufacture, use, operate, sell and/or lease the Company's products, which
allegedly infringed upon Progressive's patents, in exchange for payment by the
Company of a royalty fee; and (ii) in the event the remaining defendants to the
Lawsuit were successful, the Company would be released from such contractual
obligations and any further liability.

     Subsequently, the remaining parties to the Lawsuit settled and made the
Company a party to the settlement. Therefore, the Company was released from all
of its duties and obligations under the license agreement and the underlying
license contained in the Memorandum Agreement was null and void.

     Based upon settlement of the lawsuit, on September 23, 1998, the Company
and BCD entered into a letter of understanding which modified the Memorandum
Agreement whereby (i) the Company assigned to BCD ownership of its rights in the
"continuation-in-part" under the Patent Application relating to its lighting
invention in all countries except for the United States of America, (ii) the
Company would remain the owner of all other patent rights with respect to all
aspects of the invention as claimed in the continuation-in-part to the Patent
Application; (iii) BCD granted to the Company the right to use in Ten Stix 21
any such features contained in the Patent Application, (iv) in the event Ten
Stix 21 is not in the format described in the Memorandum Agreement, the Company
agreed to pay BCD a royalty fee of $175.00 per table for use of such features,
and (v) the Company agreed that BCD, DEQ and AEI shall have the right to use the
Company's inventions as described in the Memorandum Agreement along with any
improvements and/or additions to those reserved patent rights.

                                       16
<PAGE>

     The Company had filed a patent application with the United States
Department of Commerce, Patent and Trademark Office for patent protection of its
"lighting" invention (the "Patent Application"). If granted, the Company
thereafter would need to file numerous international patent applications in
countries around the world in which the Company wanted protection of its
inventions. Therefore, because of the associated expenses, the Company agreed to
assign its ownership rights in the "continuation-in-part" under the Patent
Application relating to the "lighting invention" to allow BCD to allow BCD to
file for such international patents, excluding the United States, that relate to
the "lighting" protection. The parties agreed that if the Company does not first
receive the U.S. lighting patent and BCD does receive such patent protection
from the U.S., BCD would allow the Company to have exclusive rights to such
lighting patent in the United States.

     Management is not aware of any other legal proceedings contemplated by any
governmental authority or other party involving the Company or its properties.
No director, officer or affiliate of the Company is (i) a party adverse to the
Company in any legal proceedings, or (ii) has an adverse interest to the Company
in any legal proceedings. Management is not aware of any other legal proceedings
pending or that have been threatened against the Company or its properties.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

     (i) The Company has incurred a debt in the aggregate amount of $8,000.00 to
Leif A. Nelson ("Nelson") for prior services rendered by Nelson on behalf of the
Company including, but not limited to, electrical and design. Therefore, the
Company and Nelson entered into a settlement agreement dated July 11, 2002 (the
"Settlement Agreement"). Pursuant to the terms of the Settlement Agreement, (i)
the Company agreed to settle the $8,000.00 debt due and owing Nelson by the
issuance of 32,000 shares of its restricted Common Stock at the rate of $0.25
per share; and (ii) Nelson agreed to accept the issuance of the 32,000 shares of
restricted common stock as settlement and full satisfaction of the aggregate
debt due and owing it as of the date of the Settlement Agreement.

     (ii) On July 3, 2002, the Company and Thomas F. Perkins ("Perkins") entered
into the Bonus 6 Option pursuant to which Perkins granted to the Company an
option from July 5, 2002 through August 30, 2002 to acquire the ownership rights
from Perkins to Bonus 6 table games which exist or may exist in the future for
the states of Colorado, South Dakota, California and Arizona. As of the date of
this Quarterly Report, and pursuant to the terms of the Bonus 6 Option, the
Company has issued to Perkins an aggregate of 75,000 shares of its restricted
Common Stock.

     (iii) On July 3, 2002, the Company and Perkins entered into the Bonus 6
Video Option pursuant to which Perkins granted to the Company an option from
July 30, 2002 through January 30, 2003 to acquire the ownership rights from
Perkins to Bonus 6 Stud Poker video games and to any and all video applications
related thereto for the United States. As of the date of this Quarterly Report,
and pursuant to the terms of the Bonus 6 Video Option, the Company has issued to
Perkins an aggregate of 20,000 shares of its restricted Common Stock.

     (iv) As of the date of this Quarterly Report, the Company is engaged in a
offering pursuant to which it intends to raise an aggregate of $1,000,000. In
accordance with the terms and provisions of the Private Placement Memorandum,
the Company is offering and selling 4,000 shares of Series A Convertible
Preferred Stock at $250.00 per share. Each share of Series A Convertible
Preferred Stock is convertible into five hundred shares of restricted Common
Stock at any time after December 31, 2001. As of the date of this Quarterly
Report, the Company has issued 96 shares of Series A Convertible Preferred Stock
to 14 investors. Of the 14 investors one was an accredited investor as that term
is defined under Regulation D. The Company has received $24,000,000 in gross
proceeds. The Company issued the shares in reliance upon the exemption from
registration provided by Section 4(2) and Regulation D, Rule 506, of the 1933
Securities Act. The investors each executed subscription agreements and
acknowledged that the securities to be issued have not been registered under the
1933 Securities Act, that they understood the economic risk of an investment in
the securities, and that they had the opportunity to ask questions of and
receive answers from the Company's management concerning any and all matters
related to the acquisition of securities. No underwriter was involved in the
transaction, and no commissions or other remuneration were paid in connection
with the offer and sale of the securities.

     (v) On July 11, 2002, August 8, 2002 and August 30, 2002, the Company
issued 80,000, 40,000 and 40,000 shares of its restricted Common Stock,
respectively, to Damascus Group LLC ("Damascus") at $0.25 per share. The Board
of Directors of the Company and Damascus negotiated at arms-length the terms and
conditions for the sale and purchase of the securities. The Company received an
aggregate of $40,000.00 from Damascus as payment for acquisition of the
securities. The per share price of the securities was arbitrarily determined by
the Board of Directors based upon analysis of certain factors including, but not
limited to, potential future earnings, assets and net worth of the Company, and
the services to be provided by Damascus on behalf of the Company. The Company
issued the shares in reliance upon the exemption provided by Section 4(2) and
Regulation D, Rule 506, of the 1933 Securities Act. Damascus executed a
subscription agreement and acknowledged that the securities to be issued have
not been registered under the 1933 Securities Act, that it understood the
economic risk of an investment in the securities, and that it had the
opportunity to ask questions of and receive answers from the Company's
management concerning any and all matters related to the acquisition of
securities. No underwriter was involved in the transaction, and no commission or
other remuneration were paid in connection with the offer and sale of the
securities.

     (vi) On approximately August 27, 2002, the Company issued 2,000 units at
$1.00 per unit (the "Unit") to one investor. Each Unit consists of one share of
restricted Common Stock of the Company and one non-transferable share purchase
warrant of the Company. Each warrant is convertible into one additional share of
restricted Common Stock at an exercise price of $2.00 per warrant commencing
upon the date of issuance of the Unit for a two-year period. The Company
received $2,000.00 in gross proceeds. The per share price of the Units was
arbitrarily determined by the Board of Directors based upon analysis of certain
factors including, but not limited to, potential future earnings, assets and net
worth of the Company. The Company issued the securities in reliance upon the
exemption provided by Section 4(2) and Regulation D, Rule 506, of the 1933
Securities Act. The investor executed a subscription agreement and acknowledged
that the securities to be issued have not been registered under the 1933
Securities Act, that she understood the economic risk of an investment in the
securities, and that she had the opportunity to ask questions of and receive
answers from the Company's management concerning any and all matters related to
the acquisition of securities. No underwriter was involved in the transaction,
and no commission or other remuneration were paid in connection with the offer
and sale of the

     (vii) As of the date of this Quarterly Report, the Company is engaged in an
offering pursuant to which is intends to raise an aggregate of $1,000,000. In
accordance with the terms and provisions of the Private Placement Memorandum,
the Company is offering and selling 2,222,222 shares of its restricted Common
Stock at $0.45 per share. As of the date of this Quarterly Report, the Company
has issued 198,000 shares of its restricted Common Stock to approximately six
investors. None of the six investors is an accredited investor as that term is
defined under Regulation D. As of the date of this Quarterly Report, the Company
has received $89,100.00 in gross proceeds. The Company issued the shares in
reliance upon the exemption provided by Section 4(2) and Regulation D, Rule 506,
of the 1933 Securities Act. The investors each executed subscription agreements
and acknowledged that the securities to be issued have not been registered under
the 1933 Securities Act, that they understood the economic risk of an investment
in the securities, and that they had the opportunity to ask questions of and
receive answers from the Company's management concerning any and all matters
related to the acquisition of securities. No underwriter was involved in the
transactions, and no commissions or other remuneration were paid in connection
with the offer and sale of the securities.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

     No report required.

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

     No report required.

ITEM 5. OTHER INFORMATION

     No report required.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

     Reports:

     8-K report filed on October 17, 2002

     Exhibits:

     99.1 Certification Pursuant to 18 U.S.C. Section 1350.

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<PAGE>


SIGNATURES

     In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.


                                               TEN STIX INC.

Dated: January 3, 2003                         By: /s/ Thomas E. Sawyer
                                               ------------------------
                                               Thomas E. Sawyer, President/
                                               Treasurer/Chief Executive Officer


Dated: January 3, 2003                          By: /s/ Tony A. Cranford
                                                ------------------------
                                                Tony A. Cranford, Vice President




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