UNITED STATES
    SECURITIES AND EXCHANGE COMMISSION 
    WASHINGTON, D.C. 20549



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: June 30, 2002                                               
|    |                                                                                             
|Or  |                                                                                             
|    |                                                                                             
|[ ] | 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 - 26597

DOT COM ENTERTAINMENT GROUP, INC.
(Exact name of small business issuer as specified in its charter)



|Florida                         | 58-2466312                     
|------------------------------- | -------------------------------
|(State or other jurisdiction of | (I.R.S. Employer Identification
|incorporation or organization)  | Number)                        



150 Randall St.,
Oakville, Ontario, Canada L6J 1P4
(Address of principal executive offices)



(905) 337-8524
Issuer's telephone number



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__X__ No_____

As of August 12, 2002, the registrant had 10,912,500 shares of Common Stock
outstanding.

Transitional Small Business Disclosure Format (check one);

Yes_____ No__X__

This quarterly report contains forward-looking statements that involve
substantial risks and uncertainties. Any statement in this quarterly report and
any documents incorporated by reference into this quarterly report that is not a
statement of an historical fact constitutes a forward-looking statement within
the meaning of the Private Securities Litigation Reform Act of 1995. Further,
when we use the words "may", "expect", "anticipate", "plan", "believe", "seek",
"estimate" and similar words, we intend to identify statements and expressions
that may be forward-looking statements. We believe it is important to
communicate certain of our expectations to our investors. Forward-looking
statements are not guarantees of future performance. They involve risks,
uncertainties and assumptions that could cause dot com's future results to
differ materially from those expressed in any forward-looking statements. Many
factors are beyond our ability to control or predict. You are accordingly
cautioned not to place undue reliance on such forward-looking statements. We
have no obligation or intent to update publicly any forward-looking statements
whether in response to new information, future events or otherwise. Important
factors that may cause our actual results to differ from such forward-looking
statements include, but are not limited to, the risk factors discussed below
under Item 2 "MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION",
including in the section entitled "RISKS AND UNCERTAINTIES" and in dot com's
Annual Report on Form 10-KSB.

Part I - Financial Information

Item 1. - Financial Statements

|dot com ENTERTAINMENT GROUP, INC.
|---------------------------------
|AND SUBSIDIARIES                 
|                                 
|CONSOLIDATED BALANCE SHEETS      

|                                            |                                      | (Unaudited) |           |             
|------------------------------------------- | ------------------------------------ | ----------- | --------- | ------------
|                                            |                                      | June 30,    |           | December 31,
|                                            | ASSETS                               | 2002        |           | 2001        
|                                            |                                      |             |           |             
|Current assets:                             |                                      |             |          
|Cash
    and cash equivalents               | $1,073,207                           |             | $965,041 
|Accounts receivable:                        |                                      |             |          
|                                            | Trade, net                           | 797,305     |           | 1,306,931   
|                                            | Other                                | 11,140      |           | 8,964       
|Income taxes recoverable                    | 145,294                              |             | -        
|Prepaid expenses and deposits               | 10,456                               |             | 26,578   
|                                            | Total current
    assets             | 2,037,402   |           | 2,307,514   
|                                            |                                      |             |           |             
|Fixed
    assets - net                      | 106,962                              |             | 105,114  
|                                            |                                      |             |           |             
|Deferred tax asset                          | 122,000                              |             | 122,000  
|                                            |                                      |             |           |             
|                                            |                                      | $2,266,364  |           | $2,534,628  
|                                            |                                      |             |           |             
|                                            | LIABILITIES AND STOCKHOLDERS' EQUITY |             |          
|                                            |                                      |             |           |             
|Current liabilities:                        |                                      |             |          
|Accounts payable and accrued expenses       | $104,751                             |             | $96,544  
|Accounts payable - officers                 | 300                                  |             | 50,000   
|Income taxes payable                        | -                                    |             | 338,968  
|Deferred revenue                            | 206,504                              |             | 214,701  
|                                            | Total current
    liabilities        | 311,555     |           | 700,213     
|                                            |                                      |             |           |             
|Stockholders' equity:                       |                                      |             |          
|Common stock, $0.001 par value, 50,000,000  |                                      |             |          
|shares authorized, 10,912,500 shares issued |                                      |             |          
|and
    outstanding (10,787,500 - 2001)     | 10,913                               |             | 10,788   
|Additional paid in capital                  | 1,548,513                            |             | 1,454,887
|Retained earnings                           | 395,383                              |             | 368,740  
|                                            |                                      | 1,954,809   |           | 1,834,415   
|                                            |                                      |             |           |             
|                                            |                                      | $2,266,364  |           | $2,534,628  

(see accompanying notes)





|dot com ENTERTAINMENT GROUP, INC.                    
|-----------------------------------------------------
|AND SUBSIDIARIES                                     
|                                                     
|CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND RETAINED
|EARNINGS (ACCUMULATED DEFICIT)                       
|(Unaudited)                                          



|                                               | Three-Months Ended |         | Six-Months Ended
|---------------------------------------------- | ------------------ | ------- | ----------------
|                                               |                    | June 30 |                 
|                                               | 2002               |         | 2001            
|                                               |                    |         |                 
|Revenues:                                      |                    |         |                 
|Royalties                                      | $684,193           |         | $687,249        
|Installation fees                              | 84,771             |         | 76,392          
|e-digital and
    support services             | 60,325             |         | 70,225          
|                                               | 829,289            |         | 833,866         
|                                               |                    |         |                 
|Expenses:                                      |                    |         |                 
|Sales, marketing
    and services to licensees | 205,346            |         | 182,873         
|Research,
    software development             |                    |         |                 
|and support
    services                       | 371,405            |         | 207,668         
|General and
    administrative                 | 218,525            |         | 254,984         
|Loss on
    contractual settlement             | 345,207            |         | -               
|                                               | 1,140,483          |         | 645,525         
|                                               |                    |         |                 
|Income (loss)
    before income taxes          | (311,194)          |         | 188,341         
|                                               |                    |         |                 
|Income tax
    provision (benefit)             | (108,333)          |         | 75,337          
|                                               |                    |         |                 
|Net income
    (loss)                          | (202,861)          |         | 113,004         
|                                               |                    |         |                 
|Retained earnings
    (accumulated deficit),   |                    |         |                 
|beginning of
    period                        | 598,244            |         | (197,661)       
|                                               |                    |         |                 
|Retained
    earnings (accumulated             |                    |         |                 
|deficit), end
    of period                    | $395,383           |         | $(84,657)       
|                                               |                    |         |                 
|Net income
    (loss) per share:               |                    |         |                 
|Basic                                          | $(0.02)            |         | $0.01           
|                                               |                    |         |                 
|Diluted                                        | $ (0.02)           |         | $0.01           
|                                               |                    |         |                 
|Weighted
    average number of common          |                    |         |                 
|shares
    outstanding:                        |                    |         |                 
|Basic                                          | 10,870,833         |         | 10,755,000      
|                                               |                    |         |                 
|Diluted                                        | 10,870,833         |         | 11,808,952      
|                                               |                    |         |                 

(see accompanying notes)





|dot com ENTERTAINMENT GROUP, INC.    
|-------------------------------------
|AND SUBSIDIARIES                     
|                                     
|CONSOLIDATED STATEMENTS OF CASH FLOWS
|(Unaudited)                          
|                                     



|                                                      |                                                | Three-Months Ended |          | Six-Months Ended
|----------------------------------------------------- | ---------------------------------------------- | ------------------ | -------- | ----------------
|                                                      |                                                |                    | June 30  |                 
|                                                      |                                                | 2002               |          | 2001            
|                                                      |                                                |                    |          |                 
|Cash flows from operating activities:                 |                                                |                    |          |                 
|Net
    income (loss)                                 | $(202,861)                                     |                    | $113,004 |                 
|Adjustments to reconcile net income (loss) to         |                                                |                    |          |                 
|net
    cash provided (used) by operating activities: |                                                |                    |          |                 
|                                                      | Depreciation                                   | 11,164             |          | 5,573           
|                                                      | Deferred income
    tax expense                |                    |          | 44,500          
|                                                      | Changes in
    non-cash working capital items: |                    |          |                 
|                                                      | Accounts
    receivable                        | 535,498            |          | (119,800)       
|                                                      | Prepaid expenses
    and deposits              | 14,793             |          | 5,928           
|                                                      | Accounts payable
    and accrued expenses      | (13,499)           |          | (64,570)        
|                                                      | Accounts payable
    - officers                | (27,200)           |          | (66,000)        
|                                                      | Income taxes
    recoverable / payable         | (261,328)          |          | 30,837          
|                                                      | Deferred revenue                               | (7,571)            |          | 27,608          
|Net cash provided (used) by operating activities      | 48,996                                         |                    | (22,920) |                 
|                                                      |                                                |                    |          |                 
|Cash flows from investing activities:                 |                                                |                    |          |                 
|Purchases of fixed assets                             | (13,342)                                       |                    | (28,611) |                 
|Net cash used in investing activities                 | (13,342)                                       |                    | (28,611) |                 
|                                                      |                                                |                    |          |                 
|Cash flows from financing activities:                 |                                                |                    |          |                 
|Proceeds from issuance of common stock                | 93,751                                         |                    | 37,500   |                 
|Net cash provided by financing activities             | 93,751                                         |                    | 37,500   |                 
|                                                      |                                                |                    |          |                 
|Net increase (decrease) in cash and                   |                                                |                    |          |                 
|cash equivalents during the period                    | 129,405                                        |                    | (14,031) |                 
|                                                      |                                                |                    |          |                 
|Cash
    and cash equivalents, beginning of period    | 943,802                                        |                    | 817,973  |                 
|                                                      |                                                |                    |          |                 
|Cash and cash equivalents, end of period              | $1,073,207                                     |                    | $803,942 |                 
|                                                      |                                                |                    |          |                 
|                                                      |                                                |                    |          |                 
|Supplemental cash flow activities                     |                                                |                    |          |                 
|Income taxes paid                                     | $152,995                                       |                    | $    -   |                 

(see accompanying notes)



dot com Entertainment Group, Inc.

NOTES TO FINANCIAL STATEMENTS - SIX-MONTH PERIOD ENDED JUNE 30, 2002



NOTE 1. - BASIS OF PRESENTATION



The accompanying unaudited consolidated financial statements of the dot com
Entertainment Group, Inc. and its Subsidiaries (the "Company") have been
prepared in accordance with accounting principles generally accepted in the
U.S.A. for interim financial information and with the instructions to Form
10-QSB. Accordingly, they do not include all of the information and footnotes
required by accounting principles generally accepted in the U.S.A. for complete
financial statements. In the opinion of management, all adjustments considered
necessary for fair presentation have been included. Operating results for the
six-month period ended June 30, 2002 are not necessarily indicative of the
results that may be expected for the year ended December 31, 2002. For further
information, refer to the Company's Annual Report on Form 10-KSB for the year
ended December 31, 2001, which includes audited financial statements and
footnotes as at and for the years ended December 31, 2001 and 2000.



NOTE 2. - STOCK OPTIONS



During the six-month period ended June 30, 2002, the Company
granted 670,000 options to directors and employees of the Company to purchase
common stock of the Company at exercise prices ranging from $0.48 to $1.08 per
share. These options will be accounted for under APB 25. Accordingly, no
compensation expense has been recognized in the statements of income, since the
option price is expected to be greater or equal to the market value of the
Company's common stock at the measurement date. During the three-month period
ended June 30, 2002, 125,000 employee stock options were exercised for proceeds
of $93,751. During the three-month period ended June 30, 2002, 150,000 employee
stock options were forfeited.



NOTE 3. - EARNINGS PER SHARE



In accordance with Statement of Financial Accounting Standards No. 128,
"Earnings Per Share," the Company has reported basic earnings per share and
diluted earnings per share. The diluted weighted average number of common shares
outstanding for the six-month period ended June 30, 2002 includes the impact of
the assumed exercise of 2,335,000 stock options with exercise prices ranging
from $0.48 to $0.88 per share. The amount was determined using the treasury
stock method. All other securities, consisting of 1,995,000 stock options and
warrants with exercise prices ranging from $0.69 to $4.00, are anti-dilutive and
have not been included in the calculation. For the three-month period ended June
30, 2002 all outstanding stock options and warrants have not been considered
common stock equivalents because their assumed exercise would be anti-dilutive
for that period.

NOTE 4. - LOSS ON CONTRACTUAL SETTLEMENT



During fiscal 2001, the Company signed a new license agreement with its
principal customer which provided for a base royalty of $645,000 for fiscal 2001
together with a reduction in the royalty rate for the term of the new license
agreement. This new license agreement had a term through 2011. During the
three-month period ended March 31, 2002, the Company entered into an agreement
with this customer whereby certain amounts owed under the new license agreement
would be paid pursuant to a deferred payment arrangement with all amounts owed
paid by September 30, 2002. The customer was not in conformity with this
deferred payment arrangement as at April 30, 2002. On June 28, 2002, the Company
entered into an interim agreement with this customer which established the
principles for amending the license agreement entered into with this customer in
2001. Under the terms of this interim agreement, aggregate accounts receivable
owed as at May 31, 2002 in the amount of $345,207 will not be collected. This
item is described as loss on contractual settlement in the statement of income
(loss) and retained earnings. In addition, the royalty rate on this customer's
net sales has been further reduced commencing June 1, 2002. Under this interim
agreement, amounts aggregating to $184,405, which are included in accounts
receivable as at June 30, 2002, were required to be paid and these payments were
received on July 4, 2002. The remaining accounts receivable under the interim
agreement in the amount of $227,000, which are included in accounts receivable
as at June 30, 2002, are payable by installments of $80,000 no later than each
of July 31, 2002 and August 30, 2002 and by an installment of $67,000 no later
than September 30, 2002.

This customer represented 30% of the Company's revenue for the six-month
period ended June 30, 2002 and 34% of the Company's revenue for the three-month
period ended June 30, 2002 (75% and 77% respectively for the comparable periods
in fiscal 2001). This customer represented 59% of the accounts receivable
balance as at June 30, 2002 and 77% as at December 31, 2001.



NOTE 5. - DEFERRED TAXES

At June 30, 2002, the Company has a deferred tax asset in the amount of
$122,000 which represents the anticipated tax deduction for non-qualified stock
option expense related to options issued in 1999. The tax deduction will be
available if and when the stock options are exercised. The stock options expire
in February 2004 and are all-exercisable at $3.00 per share. If, in the view of
management, it becomes more likely than not that the stock options will not be
exercised then it will be necessary to establish a valuation allowance against
the deferred tax asset. If required, this valuation allowance will be recognized
no later than December 31, 2003.

NOTE 6. - RECLASSIFICATIONS

Certain amounts and related disclosures in the financial statements for the
three-month period ended March 31, 2002 have been reclassified to conform with
the presentation in the financial statements for the three and six-month period
ended June 30, 2002 with no impact on net income (loss).



Item 2. - Management's Discussion and Analysis or Plan of Operation

Management's Discussion and Analysis of Financial Condition and Results of
Operations

General

dot com Entertainment Group, Inc. ("dot com" or the "Company") is an Internet
software development company specializing in the creation and support of
Internet gaming products and related services.

dot com is not an Internet gaming company, in that it does not directly or
indirectly accept wagers used to play games of chance on the Internet. Rather,
it develops and licenses the use of its commercial software products and
trademarks to independent third parties located in jurisdictions where Internet
gaming is regulated or tolerated.

The Company derives its revenues from several sources, including its
assessment of installation fees and royalties from the use of its software.
Additionally, dot com generates revenue by providing licensees with technical
support, maintenance, software upgrades, e-digital and systems consulting
services. e-digital services include the production and maintenance of websites.

The following tables set forth selected information from the statements of
income (loss) for the three-month period and the six-month period ended June 30,
2002 and 2001 and the balance sheets as at June 30, 2002 and December 31, 2001.

Selected Statement of Income (Loss) Information

|                  | Three-Months Ended |          | Six-Months Ended
|----------------- | ------------------ | -------- | ----------------
|                  |                    |          |                 
|                  | June 30,           |          | June 30,        
|                  | 2002               | 2001     |                 
|                  |                    |          |                 
|Revenues          | $829,289           | $833,866 |                 
|Expenses          | $1,140,483         | 645,525  |                 
|Net income (loss) | (202,861)          | 113,004  |                 

Selected Balance Sheet Information



| | As at    | As at       
| | -------- | ------------
| | June 30, | December 31,
| | 2002     | 2001        



|Current assets       | $2,037,402 |  | $2,307,514 | 
|-------------------- | ---------- |  | ---------- | 
|Current liabilities  | 311,555    |  | 700,213    | 
|Stockholders' equity | 1,954,809  |  | 1,834,415  | 

Review of the three-month period ended June 30, 2002 compared with the
three-month period ended June 30, 2001

Revenues decreased to $829,289 for the three-month period ended June 30, 2002
from $833,866 for the comparable 2001 quarter. Royalty revenue decreased to
$684,193 for the three-month period ended June 30, 2002 from $687,249 for the
comparable 2001 quarter reflecting the impact of amendments to royalty
arrangements with the Company's principal customer. As discussed further below,
in fiscal 2001, the Company entered into a new license agreement with this
principal customer which reduced the royalty rate. On June 28, 2002 the royalty
rate for this customer was further reduced effective June 1, 2002. The aggregate
impact of both these amendments to the royalty structure resulted in royalty
revenue from this customer decreasing by approximately $310,000 for the
three-month period ended June 30, 2002 compared to the comparable 2001 quarter.
A substantial offset to this reduction was the new royalty revenue generated by
the increase in the number of the Company's licensees and from the increase in
the activity level of licensees. While no new installations arose in the
three-month-period ended June 30, 2002, installation fees, representing fees
earned on the delivery of the Company's software to licensees, increased to
$84,771 during the three-month period ended June 30, 2002 from $76,392 for the
comparable 2001 quarter. The fees recognized during the three-month period ended
June 30, 2002 represented amounts that could not be recognized in earlier
periods under the Company's revenue recognition practices. Two sites where
installations were completed in the three-month period ended March 31, 2002
commenced deriving royalty revenue in the three-month period ended June 30,
2002. Two remaining sites where installations were completed during the
three-month period ended March 31, 2002 are now expected to commence deriving
royalty revenue in the third quarter of 2002. e-digital and support services
revenue decreased to $60,325 for the three-month period ended June 30, 2002 from
$70,225 in the comparable 2001 quarter.

During the three month period ended June 30, 2002, 34% (three-month period
ended June 30, 2001 - 77%) of the Company's revenue was generated by its
principal customer. The loss of this customer or its bankruptcy would have a
material adverse impact on the Company's financial condition and results of
operations. This customer also represents 59% of the trade accounts receivable
at June 30, 2002 (77% at December 31, 2001). If the customer became insolvent
and could not pay the balances owing to the Company, it would have a material
adverse impact on the financial condition and results of operations of the
Company.

Total expenses increased to $1,140,483 for the three-month period ended June
30, 2002 from $645,525 for the comparable 2001 quarter. The increase represents
the loss on contractual settlement, discussed further below, together with the
significantly higher level of activity at the Company, including an increase in
the average staffing complement of approximately 15 employees for the
three-month period ended June 30, 2002 compared to the comparable 2001 quarter.

Sales, marketing and services to licensees expenses increased to $205,346 for
the three-month period ended June 30, 2002 from $182,873 for the comparable 2001
quarter. The increase reflects the Company's enhancement of its e-digital
division, Inferno Media, and the allocation of additional resources to
marketing, selling and front end product development to provide licensees with
customization services. Sales, marketing and services to licensees expenses
represented 25% of revenue for the three-month period ended June 30, 2002
compared to 22% for the comparable 2001 quarter.

Research, software development and support services expenses increased to
$371,405 for the three-month period ended June 30, 2002 from $207,668 for the
comparable 2001 quarter. The increase in research, software development and
support services expenses results from the hiring of software developers to
improve and diversify the Company's products and services to reflect the growing
demand realized, and anticipated, for these products and services. Research,
software development and support services expenses represented 45% of revenue
for the three-month period ended June 30, 2002 compared to 25% for the
comparable 2001 quarter.

General and administrative expenses decreased to $218,525 for the three-month
period ended June 30, 2002 from $254,984 for the comparable 2001 quarter. The
decrease reflects reduced compensation expenses, representing reduced benefit
costs and a net reduction in headcount, and reduced professional fees. General
and administration expenses represented 26% of revenue for the three-month
period ended June 30, 2002 compared to 31% for the comparable 2001 quarter.

Loss on contractual settlement in the three-month period ended June 30, 2002
was $345,207. As referred to above, during fiscal 2001, the Company signed a new
license agreement with its principal customer which provided for a base royalty
of $645,000 for fiscal 2001 together with a reduction in the royalty rate for
the term of the new license agreement. This new license agreement had a term
through 2011. During the three-month period ended March 31, 2002, the Company
entered into an agreement with this customer whereby certain amounts owed under
the new license agreement would be paid pursuant to a deferred payment
arrangement with all amounts scheduled for payment by September 30, 2002. The
customer was not in conformity with this deferred payment arrangement as at
April 30, 2002. On June 28, 2002, the Company entered into an interim agreement
with this customer which established the principles for amending the license
agreement entered into with this customer in 2001. Under the terms of this
interim agreement, aggregate accounts receivable owed as at May 31, 2002 in the
amount of $345,207 will not be collected. This item is described as loss on
contractual settlement in the statement of income (loss). In addition, the
royalty rate on this customer's net sales has been further reduced commencing
June 1, 2002. Under this interim agreement, amounts aggregating to $184,405,
which are included in accounts receivable as at June 30, 2002, were required to
be paid and these payments were received on July 4, 2002. The remaining accounts
receivable under the interim agreement in the amount of $227,000, which are
included in accounts receivable as at June 30, 2002, are payable by installments
of $80,000 no later than each of July 31, 2002 and August 30, 2002 and by an
installment of $67,000 no later than September 30, 2002.

The net loss for the three-month period ended June 30, 2002 was $202,861
compared to net income of $113,004 for the comparable 2001 quarter. The income
tax benefit was $108,333 for the three-month period ended June 30, 2002 compared
to an income tax provision of $75,337 for the comparable 2001 quarter.

Review of the six-month period ended June 30, 2002 compared with the
six-month period ended June 30, 2001

Revenues increased to $2,063,324 for the six-month period ended June 30, 2002
compared to $1,638,702 for the comparable period in 2001. Royalty revenue
increased to $1,347,738 for the six-month period ended June 30, 2002 compared to
$1,247,802 for the comparable period in 2001 reflecting the increased number and
activity of the Company's licensees. As a partial offset, and as discussed
further above, in fiscal 2001, the Company entered into a new license agreement
with its principal customer which reduced the royalty rate. On June 28, 2002 the
royalty rate for this customer was further reduced effective June 1, 2002. The
aggregate impact of both these amendments to the royalty structure resulted in
royalty revenue from this customer decreasing by approximately $516,000 for the
six-month period ended June 30, 2002 compared to the comparable 2001 period.
Installation fees, representing fees recognized on the delivery of the Company's
software to licensees, increased to $490,996 during the six-month period ended
June 30, 2002 compared to $235,617 for the comparable period in 2001. These
installation fees represented the installation of the Company's software to
eight licensee sites during the six-month period ended June 30, 2002. Six of
these sites derived royalty income in the six-month period ended June 30, 2002
and royalty revenue from two sites is expected to commence in the third quarter
of 2002. e-digital and support services revenue increased to $224,590 for the
six-month period ended June 30, 2002 compared to $155,283 for the comparable
period in 2001 resulting from the continued development and delivery of software
enhancements, e-digital services and marketing and promotional programs to
customers.

During the six-month period ended June 30, 2002, 30% (six-month period ended
June 30, 2001 - 75%) of the Company's revenue was provided by its principal
customer. The loss of this customer or its bankruptcy could have a material
adverse impact on the Company's financial condition and results of operations.

Total expenses increased to $1,992,012 for the six-month period ended June
30, 2002 compared to $1,210,775 for the comparable period in 2001. The increase
represents the loss on contractual settlement, discussed above, together with
the significantly higher level of activity at the Company, including an increase
in the average staffing complement of approximately 14 employees for the
six-month period ended June 30, 2002 compared to the comparable period in 2001.
At June 30, 2002 the Company had 44 full-time employees and consultants compared
to 32 at June 30, 2001.

Sales, marketing and services to licensees expenses increased to $421,927 for
the six-month period ended June 30, 2002 from $329,245 for the comparable period
in 2001. The increase partially reflects the Company's enhancement of its
e-digital division, and the allocation of additional resources to marketing,
selling and front end product development to provide licensees with
customization services. In addition, higher expenses related to trade show
attendance and other business development activities were incurred. Sales,
marketing and services to licensees expenses represented 20% of revenue for each
of the six-month periods ended June 30, 2002 and 2001.

Research, software development and support services expenses increased to
$744,507 for the six-month period ended June 30, 2002 compared to $400,364 for
the comparable period in 2001. The increase in research, software development
and support services expenses results from the hiring of software developers to
improve and diversify the Company's products and services to reflect the growing
demand realized, and anticipated, for these products and services. Research,
software development and support service expenses also includes an amount of
$45,000 representing the remaining marginal cost from a one-time non-recurring
buy-out of an existing management contract due to expire in December 2002.
Research, software development and support services expenses represented 36% of
revenue for the six-month period ended June 30, 2002 compared to 24% for the
comparable 2001 period.

General and administrative expenses decreased to $480,371 for the six-month
period ended June 30, 2002 from $481,166 for the comparable period in 2001. The
decrease reflects reduced compensation expenses, representing reduced benefit
costs and a net reduction in headcount, together with reduced professional fees
partially offset by incurred bad debt expense. General and administrative
expenses represented 23% of revenue for the six-month period ended June 30, 2002
compared to 29% for the comparable 2001 period.

Loss on contractual settlement in the six-month period ended June 30, 2002
was $345,207. As referred to above, on June 28, 2002, the Company entered into
an interim agreement with its principal customer which resulted in aggregate
accounts receivable owed as at May 31, 2002 in the amount of $345,207 not being
collected. This item is described as loss on contractual settlement in the
statement of income (loss).

Net income for the six-month period ended June 30, 2002 decreased to $26,643
from $256,756 for the comparable period in 2001. The income tax provision for
the six-month period ended June 30, 2002 decreased to $44,669 from $171,171 for
the comparable period in 2001. The deferred tax asset at June 30, 2002 in the
amount of $122,000 represents the anticipated tax deduction for non-qualified
stock option expense related to options issued in 1999. The tax deduction will
be available if and when the stock options are exercised. The stock options
expire in February of 2004 and are all exercisable at $3.00 per share. If, in
the view of management, it becomes more likely than not that the stock options
will not be exercised then it will be necessary to establish a valuation reserve
against the deferred tax asset. If required, this valuation allowance will be
recognized no later than December 31, 2003.

LIQUIDITY AND CAPITAL RESOURCES

At June 30, 2002, the Company had cash and cash equivalents of $1,073,207 as
compared with $965,041 as at December 31, 2001.

At June 30, 2002, the Company had working capital of $1,725,847 as compared
with $1,607,301 as at December 31, 2001. The increase primarily reflects higher
cash and cash equivalents balances from cash provided by operations and the
proceeds on the issuance of common stock. The Company intends to use these funds
to further develop its current products, create and develop new products and to
expand its sales and marketing efforts to increase the number of licensees of
its products. Within working capital, accounts receivable decreased to $797,305
at June 30, 2002 from $1,306,931 as at December 31, 2001. The decrease reflects
the loss on contractual settlement referred to above together with the
collection of amounts owed to the Company for software installations completed
during the three-month period ended March 31, 2002. The Company had made
installments on account of its income tax liabilities for its 2002 taxation year
prior to the recording of the loss on contractual settlement referred to above.
As a result, as at June 30, 2002, the Company has income taxes recoverable in
the amount of $145,294. At December 31, 2001, the Company had income taxes
payable of $338,968.

At June 30, 2002, total assets decreased to $2,266,364 from $2,534,628 as at
December 31, 2001.

Total liabilities decreased to $311,555 at June 30, 2002 from $700,213 as at
December 31, 2001. The decrease represents the payment of 2001 income taxes in
addition to a decrease in deferred revenue. The Company's revenue recognition
policy for installation fees requires the delivery and installation of the
Company's software and a determination that the collection of the fee from the
licensee is assured.

Net cash provided by operating activities was $37,237 for the six-month
period ended June 30, 2002. This compares to $142,383 for the comparable period
in 2001. The decrease represents the reduction in net income for the period
together with the remittance of income taxes for the 2001 and 2002 taxation
years partially offset by collections on accounts receivable.



During the three-month period ended June 30, 2002, 125,000 employee stock
options were exercised for proceeds of $93,751.

Management believes that the Company will have sufficient resources to
support its growth through continued revenue improvements, the collection of its
trade accounts receivable in the ordinary course of business and by continuing
to monitor its expenses in light of the cash resources of the Company, but there
can be no assurance that management's growth plans can be met.

There are presently no material commitments for capital expenditures. Due to
the nature of its business, the Company does not require significant outlays for
capital expenditures and, as a result, is not planning for any material capital
expenditures for the foreseeable future.

RISKS AND UNCERTAINTIES

The Company has identified that there is uncertainty in North America
relating to the lawfulness of Internet gaming. As such, notwithstanding the fact
that its licensees operate from countries where such business is lawful if
licensed, governments elsewhere, including the federal, state or any local
governments in the United States may take the position that the Company's
software and support systems are being played and or used unlawfully in their
jurisdiction. Accordingly, the Company may face criminal prosecution in any
number of jurisdictions for aiding and abetting others, such as its licensees,
in operating an illegal gaming operation. The Company has devoted only limited
resources to investigating the legal climate in which it operates. Many of the
issues facing the Company are the same as those facing all other e-commerce and
other Internet software providers and traditional software providers, as current
laws are not clear as to who, if anyone, has jurisdiction over Internet-based
commerce. A number of bills have been introduced in the United States House of
Representatives to expressly ban Internet gaming. Although the Company intends
to do business worldwide, any enforceable ban on Internet gaming in the United
States would have a material adverse effect on the Company's business and both
its short-term and long-term liquidity and its results of operations.

Part II - Other Information

Item 6. - Exhibits and Reports on Form 8-K



|(a) | Exhibits.
|--- | ---------
|    |          





| | Exhibit No 99.1 Certification Pursuant to 18 U.S.C. 1350 As
    Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.     
| | ---------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                        
| | Exhibit No. 99.2 Certification Pursuant to 18
    U.S.C. 1350 As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
    2002.
| |                                                                                                                                        





|(b) | Reports on Form 8-K.
|--- | --------------------
|    |                     





| | None.
| | -----



SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

DOT COM ENTERTAINMENT GROUP, INC.
(Registrant)



|Date: August 12, 2002 | /s/ SCOTT WHITE                      
|--------------------- | -------------------------------------
|                      | Scott White                          
|                      | President and Chief Executive Officer
|                      |                                      
|Date: August 12, 2002 | /s/ DAVID CALLANDER                  
|                      | David Callander                      
|                      | Chief Financial Officer              



EXHIBIT INDEX



|No.  | Description                                                                                                      
|---- | -----------------------------------------------------------------------------------------------------------------
|99.1 | Certification Pursuant to 18 U.S.C. 1350 As
    Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|     |                                                                                                                  
|99.2 | Certification Pursuant to 18 U.S.C. 1350 As
    Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002