SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

     (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, 2001

/ /       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 000-25306

                            EQUUS GAMING COMPANY L.P.
          ------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

           Virginia                                             54-1719877
      --------------------                                    --------------
(State or other jurisdiction of                              (I.R.S. Employer
incorporation or organization)                              Identification No.)

                            El Comandante Race Track
                            Main Building First Floor
                              65th Infantry Avenue
                                 Rd. 3 Km. 15.3
                              Canovanas, PR 00729
          ------------------------------------------------------------
              (Address of Principal Executive Offices and Zip Code)

                                 (787) 641-5844
          ------------------------------------------------------------
              (Registrant's telephone number, including area code)


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

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 report(s), and (2) has been subject to such filing
requirements for the past 90 days.
                              Yes  /X/     No / /

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date  (June 12, 2002). 14,389,824
Class A Units


<PAGE>
<TABLE>
<CAPTION>
                                  EQUUS GAMING COMPANY L.P.
                                          FORM 10 Q
                                            INDEX


                                                                                   PAGE
                                                                                  NUMBER
<S>         <C>                                                                   <C>
PART I  -   FINANCIAL INFORMATION

Item 1.     Consolidated Financial Statements

            Consolidated Statements of Operations for the Nine Months and Three
            Months ended September 30, 2001 and 2000 (Unaudited)                    3

            Consolidated Statements of Comprehensive Loss for the Nine Months
            and Three Months Ended September 30, 2001 and 2000 (Unaudited)          5

            Consolidated Balance Sheets at June 30, 2001 (Unaudited)
            and December 31, 2000 (Audited)                                         6

            Consolidated Statement of Changes in Partners' Deficit for the Nine
            Months Ended September 30, 2001 (Unaudited)                             8

            Consolidated Statements of Cash Flows for the Nine Months
            Ended September 30, 2001 and 2000 (Unaudited)                           9

            Notes to Consolidated Financial Statements                             11

Item 2.     Management's Discussion and Analysis of Financial Condition
              and Results of Operations
            Results of Operations                                                  28
            Liquidity and Capital Resources                                        33

PART II  -  OTHER INFORMATION

Item 1.     Legal Proceedings                                                      37
Item 2.     Material Modifications of Rights of Registrant's Securities            40
Item 3.     Default upon Senior Securities                                         40
Item 4.     Submission of Matters to a Vote of Security Holders                    40
Item 5.     Other Information                                                      40
Item 6.     Exhibits and Reports on Form 8-K                                       40

Signatures                                                                         41
</TABLE>


                                        2
<PAGE>
<TABLE>
<CAPTION>
                            EQUUS GAMING COMPANY L.P.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                     FOR THE NINE MONTHS ENDED SEPTMEBER 30,

                                   (UNAUDITED)

                                                      2001           2000
                                                  -------------  ------------
<S>                                               <C>            <C>
REVENUES:
  Commissions on wagering                         $ 38,581,909   $47,905,671
  Net revenues from lottery services                         -       170,348
  Gain on sale of assets                                     -       179,500
  Loss on sale of investments                       (1,149,579)            -
  Other revenues                                     3,366,848     2,630,702
                                                  -------------  ------------
                                                    40,799,178    50,886,221
                                                  -------------  ------------
EXPENSES:
  Payments to horseowners                           20,771,999    23,156,398
  Salaries, wages and employee benefits              6,757,868     7,865,441
  Operating expenses                                 8,413,056     8,318,209
  General and administrative                         4,778,776     3,164,131
  Marketing, television and satellite costs          4,407,323     4,101,756
  Financial expenses                                 7,263,359     7,407,210
  Depreciation and amortization                      2,907,981     2,819,239
                                                  -------------  ------------
                                                    55,300,362    56,832,384
                                                  -------------  ------------

LOSS  BEFORE INCOME TAXES AND MINORITY INTEREST    (14,501,184)   (5,946,163)

PROVISION FOR INCOME TAXES                             127,451       243,933
                                                  -------------  ------------


LOSS  BEFORE MINORITY INTEREST                     (14,628,635)   (6,190,096)


MINORITY INTEREST IN LOSSES                         (1,101,944)     (377,142)
                                                  -------------  ------------

NET LOSS                                          $(13,526,691)  $(5,812,954)
                                                  =============  ============

ALLOCATION OF NET LOSS:
  General partners                                $   (135,267)  $   (58,130)
  Limited partners                                 (13,391,424)   (5,754,824)
                                                  -------------  ------------
                                                  $(13,526,691)  $(5,812,954)
                                                  -------------  ------------
BASIC AND DILUTED LOSS PER UNIT AMOUNTS:          $      (0.94)  $     (0.69)
                                                  =============  ============
WEIGHTED AVERAGE UNITS OUTSTANDING                  14,389,824     8,364,824
                                                  -------------  ------------
</TABLE>

  The accompanying notes are an integral part of these consolidated statements


                                        3
<PAGE>
<TABLE>
<CAPTION>
                            EQUUS GAMING COMPANY L.P.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                    FOR THE THREE MONTHS ENDED SEPTEMBER 30,

                                   (UNAUDITED)

                                                      2001          2000
                                                  ------------  ------------
<S>                                               <C>           <C>

REVENUES:
  Commissions on wagering                        $11,807,009   $15,477,239
  Gain on sale of assets                                           179,500
  Loss on Sale of investments                              -
  Other revenues                                   1,180,639     1,126,552
                                                 ------------  ------------
                                                  12,987,648    16,783,291
                                                 ------------  ------------
EXPENSES:
  Payments to horseowners                          6,349,152     8,936,906
  Salaries, wages and employee benefits            2,384,290     2,855,351
  Operating expenses                               2,709,358     3,183,685
  General and administrative                       1,803,555     1,013,022
  Marketing, television and satellite costs        1,307,141     1,601,652
  Financial expenses                               1,971,499     2,505,038
  Depreciation and amortization                    1,017,181       903,551
                                                 ------------  ------------
                                                  17,542,176    20,999,205
                                                 ------------  ------------

LOSS BEFORE INCOME TAXES AND MINORITY INTEREST    (4,554,528)   (4,215,914)

PROVISION FOR INCOME TAXES                            16,609        45,862
                                                 ------------  ------------


LOSS  BEFORE MINORITY INTEREST                    (4,571,137)   (4,261,776)


MINORITY INTEREST IN LOSSES                         (164,213)     (183,692)
                                                 ------------  ------------

NET LOSS                                         $(4,406,924)  $(4,078,084)
                                                 ============  ============

ALLOCATION OF NET LOSS:
  General partners                               $   (44,069)  $   (40,781)
  Limited partners                                (4,362,855)   (4,037,303)
                                                 ------------  ------------
                                                 $(4,406,924)  $(4,078,084)
                                                 ------------  ------------
BASIC AND DILUTED LOSS PER UNIT AMOUNTS:         $     (0.31)  $     (0.49)
                                                 ============  ============
WEIGHTED AVERAGE UNITS OUTSTANDING                14,389,824     8,364,824
                                                 ------------  ------------
</TABLE>

  The accompanying notes are an integral part of these consolidated statements


                                        4
<PAGE>
<TABLE>
<CAPTION>
                            EQUUS GAMING COMPANY L.P.
                  CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
                FOR THE NINE AND THREE MONTHS ENDED SEPTEMBER 30,

                                   (UNAUDITED)

FOR THE NINE MONTHS ENDED SEPTEMBER 30,

                                              2001           2000
                                          -------------  ------------
<S>                                       <C>            <C>

NET LOSS                                  $(13,526,691)  $(5,812,954)

OTHER COMPREHENSIVE LOSS:

  Currency translation adjustments              21,819       252,814

                                          -------------  ------------
COMPREHENSIVE LOSS                        $(13,504,872)  $(5,560,140)
                                          -------------  ------------


FOR THE THREE MONTHS ENDED SEPTEMBER 30,


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

NET (LOSSES) EARNINGS                     $ (4,406,924)  $(4,078,084)

OTHER COMPREHENSIVE (LOSSES) INCOME:

  Currency translation adjustments             184,417        31,743

                                          -------------  ------------
COMPREHENSIVE (LOSSES) INCOME             $ (4,222,507)  $(4,046,341)
                                          -------------  ------------
</TABLE>

  The accompanying notes are an integral part of these consolidated statements


                                        5
<PAGE>
<TABLE>
<CAPTION>
                            EQUUS GAMING COMPANY L.P.
                           CONSOLIDATED BALANCE SHEETS

                                     ASSETS

                                          SEPTEMBER 30    DECEMBER 31
                                              2001           2000
                                         --------------  -------------
                                           (UNAUDITED)     (AUDITED)
<S>                                      <C>             <C>
CASH AND CASH EQUIVALENTS:
  Unrestricted                           $   1,126,094   $  7,019,121
  Restricted                                   374,220        418,180
                                         --------------  -------------
                                             1,500,314      7,437,301
                                         --------------  -------------

PROPERTY AND EQUIPMENT:
  Land                                       8,749,680      8,879,113
  Building and improvements                 51,210,732     55,404,357
  Equipment                                 19,759,896     17,753,880
                                         --------------  -------------
                                            79,720,308     82,037,350
  Accumulated depreciation                 (23,885,250)   (22,282,599)
                                         --------------  -------------
                                            55,835,058     59,754,751
                                         --------------  -------------

DEFERRED COSTS, NET:
  Financing                                  1,282,284      1,933,361
  Costs of Panama contract                           -      1,870,000
  Other                                         44,011        206,714
                                         --------------  -------------
                                             1,326,295      4,010,075
                                         --------------  -------------

OTHER ASSETS:
  Accounts receivable, net                   4,528,018      4,492,311
  Notes receivable                             241,658      2,960,074
  Investment in Panama Preferred Stock       3,089,231              -
  Other assets                               1,403,713      1,480,258
                                         --------------  -------------
                                             9,262,620      8,932,643
                                         --------------  -------------

                                         $  67,924,287   $ 80,134,770
                                         ==============  =============
</TABLE>

                                  (continues)


                                        6
<PAGE>
<TABLE>
<CAPTION>
                            EQUUS GAMING COMPANY L.P.
                           CONSOLIDATED BALANCE SHEETS

                                   (continued)

                        LIABILITIES AND PARTNERS' DEFICIT


                                                     SEPTEMBER 30    DECEMBER 31
                                                         2001           2000
                                                    --------------  -------------
<S>                                                 <C>             <C>
                                                      (UNAUDITED)     (AUDITED)
FIRST MORTGAGE NOTES:
  Principal, net of note discount of
    $594,729 and $786,261                           $  53,859,271   $ 53,667,739
  Accrued interest                                      1,860,001      3,916,669
                                                    --------------  -------------
                                                       55,719,272     57,584,408
                                                    --------------  -------------

OTHER LIABILITIES:
  Accounts payable and accrued liabilities             27,700,057     23,741,039
  Outstanding winning tickets and refunds               1,598,171      1,552,128
  Notes payable                                         5,948,700      6,549,961
  Bonds payable                                                 -      4,000,000
  Capital lease obligations                             1,466,439      2,232,559
                                                    --------------  -------------
                                                       36,713,367     38,075,687
                                                    --------------  -------------

DEFERRED INCOME TAXES                                   3,741,411      3,933,144
                                                    --------------  -------------

MINORITY INTEREST                                      (1,415,171)       753,288
                                                    --------------  -------------

COMMITMENTS AND CONTINGENCIES, SEE NOTE 2

PARTNERS' DEFICIT
  General Partner                                      (1,031,193)      (896,144)
  Limited Partners - 20,000,000 units authorized;
   14,389,824 units issued and outstanding.           (25,803,399)   (19,315,613)
                                                    --------------  -------------
                                                      (26,834,592)   (20,211,757)
                                                    --------------  -------------

                                                    $  67,924,287   $ 80,134,770
                                                    ==============  =============
</TABLE>

  The accompanying notes are an integral part of these consolidated statements


                                        7
<PAGE>
<TABLE>
<CAPTION>
                                    EQUUS GAMING COMPANY L.P.
                      CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' DEFICIT
                           FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001

                                          (UNAUDITED)

                                                          GENERAL      LIMITED
                                                          PARTNERS     PARTNERS         TOTAL
                                                         ----------  -------------  -------------
<S>                                                      <C>         <C>            <C>
BALANCES, DECEMBER 31, 2000                              $(896,144)  $(19,315,613)  $(20,211,757)

  Net loss for the period                                 (135,267)   (13,391,424)   (13,526,691)

  Currency translation adjustments                             218         21,601         21,819

  Issuance of preferred stock, net of costs (see below)     68,820      6,813,217      6,882,037
                                                         ----------  -------------  -------------
BALANCES, SEPTEMBER 30, 2001                             $(962,373)  $(25,872,219)  $(26,834,592)
                                                         ==========  =============  =============
</TABLE>


     On July 13, 2001, Kempt Corporation, a Puerto Rico corporation wholly owned
by  Wilson  Securities  Corporation,  an entity controlled by the Wilson family,
purchased  seven  (7)  million  shares  of  Equus  Entertainment  Class  A,  12%
cumulative  preferred  stock,  $1.00  par  value.

     Equus  Entertainment  then  applied  $3.8  million  to  offset the advances
against  dividends  made  to  the  Company.

     Equus  Entertainment  reimbursed  the  El  Comandante  Group (consisting of
Housing  Development  Associates  S.E., El Comandante Capital Corporation and El
Comandante  Management  Company LLC)  for all advances made by the El Comandante
Group  to  affiliate  companies.  Equus  Entertainment  also  purchased  the
inter-company  receivables  of  the  El  Comandante  Group  that  were  due from
affiliate  companies.

     The  Net  proceeds  of  $6,882,037  were  used  to  pay  the  following:

     1.   The  June  14,  2001  interest  payment on the First Mortgage Notes of
          $3,595,500  plus  $32,408  of penalty interest for the period June 15,
          2001  through  July  13,  2001.

     2.   Payoff  of  $2,604,747  HDA  Note  payable  to FirstBank together with
          interest  accrued  through  July  13,  2001,  of  $14,370.

     3.   Payoff  of  $500,000  HDA  line of credit with FirstBank together with
          interest  accrued  through  July  13,  2001,  of  $2,903.

     4.   Advances  to  consolidated affiliates of $132,108 to cover operational
          expenses.


                                        8
<PAGE>
<TABLE>
<CAPTION>
                            EQUUS GAMING COMPANY L.P.
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                     FOR THE NINE MONTHS ENDED SEPTEMBER 30,
                                   (UNAUDITED)


                                                     2001           2000
                                                 -------------  ------------
<S>                                              <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES

  Net loss                                       $(13,526,691)  $(5,812,954)

  Adjustments to reconcile losses to net cash
    (used in) provided by operating activities
      Depreciation and amortization                 3,499,703     3,509,075
      Deferred income tax provision                    61,309       243,933
      Currency translation adjustments                617,319      (194,328)
      Minority interest                            (1,101,944)     (377,142)
      Loss on sale of investments                   1,149,579             -

  Increase in assets
    Accounts receivable                              (503,542)     (989,963)
    Prepayments and other assets                     (105,941)     (798,003)

  Increase (decrease) in liabilities
    Accounts payable and accrued liabilities        4,723,788     8,372,938
    Outstanding winning tickets and refunds           435,463       (65,507)

                                                 -------------  ------------
      Total adjustments                             8,775,734     9,701,003
                                                 -------------  ------------

  Net cash used in operating activities            (4,750,957)    3,888,049
                                                 -------------  ------------


CASH FLOWS FROM INVESTING ACTIVITIES

  Capital expenditures (net of retirements)        (4,508,992)   (2,346,870)
  Deferred costs                                      196,475      (324,054)
  Panama Desconsolidation                             (83,895)            -
  Purchase of Panama Preferred stock               (3,089,231)            -
  (Increase) decrease in notes receivable, net        286,301    (1,109,872)

                                                 -------------  ------------
  Net cash used in investing activities            (7,199,342)   (3,780,796)
                                                 -------------  ------------
</TABLE>

  The accompanying notes are an integral part of these consolidated statements


                                        9
<PAGE>
<TABLE>
<CAPTION>
                            EQUUS GAMING COMPANY L.P.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                    FOR THE NINE MONTHS ENDED SEPTEMBER 30,
                                  (UNAUDITED)
                                  (continued)


                                                      2001          2000
                                                  ------------  ------------
<S>                                               <C>           <C>

CASH FLOWS FROM FINANCING ACTIVITIES:
  Payments of financing costs                     $         -   $         -
  Loan proceeds from affiliates                     3,288,454
  Loan proceeds from financial institutions                 -       720,000
  Increase in deferred costs                                       (119,848)
  Issuance of preferred stock net of costs          6,882,037
  Payments on notes payable and capital
    lease obligations                              (4,157,178)   (2,423,454)
                                                  ------------  ------------
Net cash used in financing activities               6,013,313    (1,823,302)
                                                  ------------  ------------

NET DECREASE IN CASH AND
  CASH EQUIVALENTS                                 (5,936,987)   (1,716,049)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD      7,437,301     2,307,933

                                                  ------------  ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD          $ 1,500,314   $   591,884
                                                  ============  ============
SUPPLEMENTAL INFORMATION:
  Interest paid                                   $ 8,173,896   $ 4,589,673

NON-CASH TRANSACTIONS:
  Equipment acquired through capital leases                 -        80,362
</TABLE>

  The accompanying notes are an integral part of these consolidated statements


                                       10
<PAGE>
                            EQUUS GAMING COMPANY L.P.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.   BASIS  OF  PRESENTATION  AND  SIGNIFICANT  ACCOUNTING  POLICIES:

     Equus Gaming Company L.P. (the "Company"), a Virginia limited partnership,
is engaged in thoroughbred racing, wagering and other gaming businesses in the
Caribbean and South America. Through its subsidiaries, the Company currently
operates three racetracks and manages an extensive off-track betting ("OTB")
system in the various countries where the Company operates.

     The Company has a 99% interest in Housing Development Associates S.E.
("HDA"), the owner of El Comandante Race Track ("El Comandante"), the only
licensed thoroughbred racing facility in Puerto Rico. El Comandante has been
operated since January 1, 1998 by the wholly owned subsidiary of HDA, El
Comandante Management Company, LLC ("ECMC").  The Company also has a controlling
100% interest in Satellite Services International, Inc. ("SSI") and Agency
Betting Network, Inc. ("ABN").  SSI will provide up-link services, satellite
time (contracted from a third party), and leasing of video and data
telecommunication equipment, to transmit (or simulcast) live races from and to
the Company's race tracks and OTB agencies, including live races from outside
the Company's operational territories to the agency distribution network in
order to increase the level of wagering revenues through the Company's OTB
system. ABN is establishing and operating an OTB agency system in Colombia in
conjunction with Los Comuneros Race Track in Medellin, Colombia ("Los
Comuneros"), owned and operated by Equus Comuneros SA. ("Equus-Comuneros").
The Colombia OTB system is expected to operate in Bogota, Medellin and other
major cities.

     In 1999 the Company initiated a vertical integration process to consolidate
its telecommunications needs into a centralized hub-and-spoke system based at El
Comandante racetrack in Puerto Rico.  During 2000 and 2001 the development of
this system encountered significant technical obstacles which necessitated
redesigning of its architecture, reallocation of the equipment and ultimately, a
strategic revision of the objectives for the system.

     The vertical integration process began with the development of a C-Band
satellite uplink facility in Panama in the fall of 1999 to fulfill the
broadcasting needs of this jurisdiction which, at the time, belonged to the
Company's international network of pari-mutuel operations.  By December of that
year the consolidation process had identified VSAT technology via the Ku-Band
medium as the application necessary to address the Company's needs for video and
data transmission throughout its proprietary agency-betting network in Puerto
Rico, Panama, Colombia and Dominican Republic.

     The significant investment made by the Company during 1999-2000 in the
satellite telecommunications equipment required to implement the VSAT system
included the development of a main uplink Hub in Puerto Rico, and of supporting
Ku-Band uplinks to service the markets of Panama and Colombia. Initial steps
were also taken to establish a supporting uplink in the Dominican Republic
although the facility has not been completed at this time.

     Several factors altered the course of the VSAT project, and namely, the
incompatibility of this technology with the Autotote system currently in use
throughout the Company's pari-mutuel operations hindered its deployment as the
primary means of transmission for the agency-betting network's wagering data.
Consequently, the Company is in the process of evaluating several alternate
commercial applications for this equipment both in Colombia and Puerto Rico.

     Conversely, the aforementioned satellite uplink facilities continue to
provide video broadcasting services for the Company's pari-mutuel operations in
Puerto Rico, Colombia and the Dominican Republic.    In addition to the
alternate commercial uses being sought for the VSAT equipment, the Company's
uplink facilities are uniquely positioned to provide satellite broadcast
services to prospective clients in Puerto Rico, Colombia, and potentially in the
Dominican Republic.


                                       11
<PAGE>
     In 2000, the Company was awarded exclusive rights by the Government of
Uruguay to operate the Maronas racetrack in Montevideo and an off-track betting
agency network together with the right to operate up to 5,000 slot machines in 5
locations.   The necessary  restoration of the racetrack would , in management's
opinion,  have required an initial investment of $12 million.   Efforts to raise
the $12 million by the due date were unsuccessful.   Consequently, the
concession expired in March 31, 2001, and the Company's bid bond in the amount
of $500,000 was forfeited and thus, expensed during the period ended June 30,
2001.   Subsequently,  the concession was awarded to another operator in the
fourth quarter of 2001 which will result in the Company writing off its entire
investment by December 31, 2001.

     The Company has a 55% interest in Galapagos, S.A. ("Galapagos"), the
operator since April 1995 of the V Centenario Race Track in the Dominican
Republic ("V Centenario")   The racetrack is government-owned and operated by
the Company's subsidiary under a long-term contract.

     The Company had a 51% interest in Equus Entertainment de Panama, S.A., the
operator since January, 1998 of the Presidente Remon Race Track in the Republic
of Panama.

     On October 9, 2001, the Company entered into the following restructuring
with its minority shareholder of Equus Entertainment de Panama, Wall Street
Securities Trading Group, Inc. effective September 30, 2001.

     1.   The Company entered into a stock purchase agreement whereby in
          exchange for release from all liabilities related to the operation of
          Equus Entertainment de Panama, the company gave to its minority
          partner, Wall Street Securities, its 204,000 shares of common stock
          which represented 51% of the total issued and outstanding shares of
          Equus Entertainment de Panama. This transaction resulted in a net loss
          of $1,149,579 to the Company.

               a)   The Company has been released of all prior, present and
                    future obligations, known or unknown from October 9, 2001,
                    until the "Termination and Mutual Release" document is
                    signed.

               b)   The issuer has committed to using its best efforts to
                    release the Company from any obligations the Company may
                    have assumed under its concession from the Government of
                    Panama in opening and managing Hipodromo Presidente Remon.
                    Until such time as the aforementioned release is received by
                    the Company, the purchaser has drafted an "Undertaking and
                    Indemnity" document indemnifying the Company from any claims
                    by the Government of Panama under the Concession Agreement.

     2.   The Company then acquired 3,000 shares of $1,000 par value, preferred
          stock in exchange for net claims due the Company. The number of shares
          issued will be reduced if the net claims are les than $2,859,680. The
          final net claims on the Company's books amount to $3,294,391 and the
          investment and recorded at that amount as of September 30, 2001. Terms
          and conditions of the preferred stock issue are as follows:

               a)   The shares will be redeemed by the issuer upon the
                    racetrack's concession agreement being terminated or on
                    October 31, 2031, whichever comes first.

               b)   The issuer has the option to redeem the shares at par at any
                    time.

               c)   No dividends will accumulate up to October 31, 2006;
                    thereafter, the shares will earn an annual cumulative
                    dividend of 12%, payable quarterly.


                                       12
<PAGE>
               d)   The shares have no voting rights except that no change in
                    the terms can occur without the consent of the preferred
                    shareholders.

               e)   No other preferred shares can be issued with priority over
                    these shares, and in liquidation these shares have the same
                    priority as common shares now existing.

               f)   No dividends will be paid to common shares while accumulated
                    dividends are payable to the preferred shares.


     As of June 12, 2002, the Company has not received copies of the fully
executed documents mentioned above, nor received the 3,000 shares of preferred
stock.,

     In addition, all attempts to obtain certified financial statements from
Equus Entertainment de Panama as of September 30, 2001 have failed; therefore,
Panama has been "deconsolidated" for years 2001 and 2000.

     The Company owns a controlling 50% interest in Equus Comuneros S.A.
("Equus-Comuneros"), the owner and operator of Los Comuneros in Colombia.
Equus-Comuneros received in 1999 the assets and liabilities of the prior
operator of the racetrack. The assets consisted of land, buildings and equipment
valued at approximately $4.7 million and liabilities of approximately $2.6
million. The Company paid $2.1 million for its interest in Equus-Comuneros

     On July 13, 2001, Kempt Corporation, a Puerto Rico corporation wholly owned
by Wilson Securities Corporation, an entity controlled by the Wilson family,
purchased seven (7) million shares of Equus Entertainment Class A, 12%
cumulative preferred stock, $1.00 par value.

     Equus Entertainment then applied $3.8 million to offset the advances
against dividends made to the Company.

     Equus Entertainment reimbursed the El Comandante Group (consisting of
Housing Development Associates S.E., El Comandante Capital Corporation and El
Comandante Management Company LLC) for all advances made by the El Comandante
Group to affiliate companies. Equus Entertainment also purchased the
inter-company receivables of the El Comandante Group that were due from
affiliate companies.

     The  Net  proceeds  of  $6,882,037  were  used  to  pay  the  following:

     1)   The June 14, 2001 interest payment on the First Mortgage Notes of
          $3,595,500 plus $32,408 of penalty interest for the period June 15,
          2001 through July 13, 2001.

     2)   Payoff of $2,604,747 HDA Note payable to FirstBank together with
          interest accrued through July 13, 2001, of $14,370.

     3)   Payoff of $500,000 HDA line of credit with FirstBank together with
          interest accrued through July 13, 2001, of $2,903.

     4)   Advances to consolidated affiliates of $132,108 to cover operational
          expenses.

     As noted in the accompanying consolidated financial statements, the Company
has incurred recurring losses from operations, has a partners' deficit of
$26,834,592 and had negative cash flows for the remainder of 2001.  It also
failed to make the mandatory interest and principal payments due in December
2001 as required under the First Mortgage Notes Indenture.  These factors, among
others, raise substantial doubts about the Company's ability to continue as a
going concern.   The accompanying financial statements do not include any


                                       13
<PAGE>
adjustments relating to the recoverability and classification of asset carrying
amounts or the amount and classification of liabilities that might result should
the Company be unable to continue as a going concern.

     Management's plans to deal on its Company's financial problems are as
follow:

     (i)  Continue to implement cost reductions at the racetracks.

     (ii) Seek legislation designating El Comandante as a tourist zone to allow
          for the refinancing of the First Mortgage Notes with low interest
          government backed bonds and reduced utility charges.

    (iii) Seek legislation and approvals to operate slot machines and other
          gaming devices at El Comandante. As of May 31, 2002, such approvals
          have not been obtained.

     (iv) Obtain new bank financing or financing by private investors.


     For  the  nine  months  ended  September  30, 2001,  accumulated losses not
allocated  to  minority  partners  were  $2,125,964.  Equus-Comuneros  minority
partners  own  a  50%  interest.

     GOVERNMENT MATTERS

     El Comandante is required to pay the Government of Puerto Rico various
taxes on wagering placed on thoroughbred horse races held at or simulcasted by
El Comandante (Puerto Rico).  The taxes on  wagering are required to be remitted
to the Department of the Treasury of Puerto Rico within two (2) days of the date
wagers are placed.   From October 16, 2000 to February 7, 2001,  El Comandante
failed to remit tax payments totaling $9,949,182

     On May 24, 2001, ECMC executed a "Closing Agreement"(the "Agreement") with
the Secretary of the Treasury of Puerto Rico (the "Secretary") whereby ECMC will
settle its assessed debt of unpaid excise taxes and commissions for the period
October, 2000 through February, 2001, in the amount of $11,172,450 (including
interest and late charges), plus an additional assessment of $60,141 (including
interest) for unpaid commissions for the period February 2, 2001 through
February 7, 2001 as follows:

     1.   Upon execution of the Agreement, ECMC delivered a check to the
          Secretary for $60,141 in full payment of the February, 2001
          assessment.

     2.   For a six-month period commencing June 1,2001 and ending November 30,
          2001, ECMC will pay $50,000 per week against the October, 2000 through
          January, 2001 assessment. After the six-month period, the Secretary
          will reevaluate the financial condition of ECMC, and may, upon
          reasonable grounds, continue, modify or revoke the Agreement.

     3.   ECMC will continue to pay on a timely basis current excise taxes and
          commissions.

     4.   ECMC will provide and maintain a bond in favor of the Secretary in the
          amount of $500,000.

     5.   In the event ECMC defaults during the term of the Agreement, the
          Secretary may accelerate the balance due plus any additional amounts
          owed as a result of the default.

     As of June 12, 2002, ECMC has fully complied with all terms and provisions
of the Agreement.

     On April 2, 2001, the House of Representatives of the Commonwealth of
Puerto Rico adopted a resolution ordering an investigation of the operations of


                                       14
<PAGE>
ECMC with emphasis on the fiscal and financial administration of El Comandante
and its tax delinquency. As of October 22, 2001, all requested information had
been submitted by ECMC. The investigation has been completed, but as of this
date, the House of Representatives has not issued their report or otherwise
disclosed their findings.

     As of September 30, 2001, Equus Comuneros owed the Colombian Tax and
National Customs Administration approximately $837,373, including interest, for
withholding at source tax. Management has recently met with the Government to
settle the amount outstanding. The plan proposed to the government is as
follows.

     1.   Five (5) year amortization of 10%, 15%, 25% and 30%, respectively.

     2.   The Government is requesting a down payment, which is currently being
          negotiated.


     On August 18, 2001, ECMC executed a Closing Agreement (the "Agreement")
with the Municipality of Canovanas whereby ECMC settled its longstanding dispute
over the payment of the Volume of Business Tax assessed by the municipality.

     The following schedule lists the deficiencies by fiscal year with the
corresponding interest and surcharges:

<TABLE>
<CAPTION>
          FISCAL               INTEREST
          TAX     TAX          AND
          YEAR    DEFICIENCY   SURCHARGES    TOTAL
          ------  -----------  -----------  --------
<S>               <C>          <C>          <C>
          93/94   $    74,087  $    67,913  $142,000
          96/97       120,397       68,224   188,621
          97/98       126,666       59,110   185,776
          98/99       123,366       45,233   168,599
          99/00        93,367       45,233   118,264
          00/01       116,735       19,455   136,190
                  -----------  -----------  --------

          Totals  $   654,618  $   284,832  $939,450
                  ===========  ===========  ========
</TABLE>

     Prior to settlement, the Company had accrued a total of $838,396 as of June
30, 2001. On June 30, 2001, the Company recorded additional penalties and
interest of $101,054.

     The terms of the Agreement are as follows:

     1)   For the period August 1, 2001 through January 31, 2003, ECMC will pay
          the Municipality of Canovanas $5,000 per week.

     2)   At the end of this eighteen (18) month period, the Municipality can
          decide to request full payment of the remaining balance, $559,450, or
          renegotiate a final twelve (12) month payoff of the balance.

     3)   Should ECMC default at any time on the agreed terms, the Municipality,
          on demand, may declare the remaining balance due.

     4)   To guarantee timely payments, ECMC will provide two (2) payments bonds
          in the amount of $503,732 and $94,886, respectively.

          As of June 12, 2002, ECMC was in compliance with the provisions of the
          Agreement.


                                       15
<PAGE>

     CONSOLIDATION  AND  PRESENTATION

     The consolidated financial statements as of September 30, 2001 and for the
nine months ended September 30, 2001 and 2000 are unaudited but include all
adjustments (consisting of normal recurring adjustments) which management
considers necessary for a fair presentation of the consolidated results of
operations for the interim periods. The operating results for the nine months
ended September 30, 2001 are not necessarily indicative of results for the year.
Net losses per unit are calculated based on weighted average number of Units
outstanding. Outstanding warrants to purchase Units do not have a material
dilutive effect on the calculation of earnings per Unit.

     The preparation of financial statements in conformity with accounting
principles generally accepted in the United States ("GAAP") requires management
to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities, if any, at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.

     These unaudited consolidated financial statements have been prepared
pursuant to the rules and regulations of the Securities and Exchange Commission.
Certain information and note disclosures normally included in financial
statements prepared in accordance with GAAP have been condensed or omitted.
While management believes that the disclosures presented are adequate to make
the information not misleading, it is suggested that these financial statements
be read in conjunction with the financial statements and the notes of the
Company included in the Company's Annual Report filed on Form 10-K for the year
ended December 31, 2000.

     The Company consolidates the entities in which it has a controlling
interest. The accompanying consolidated financial statements include the
accounts of the Company and its subsidiaries after eliminating all significant
intercompany transactions.  All of the entities included in the consolidated
financial statements are hereinafter referred to collectively, when practicable,
as the "Company".

     The Company has minority partners in HDA, Galapagos and Equus-Comuneros.
Therefore, the Company recorded minority interest based on the earnings (losses)
of these consolidated subsidiaries that are attributable to the minority
partners, as follows:

<TABLE>
<CAPTION>
                        FOR THE NINE MONTHS ENDED SEPTEMBER 30,       FOR THE THREE MONTHS ENDED SEPTEMBER 30,
                     --------------------------------------------  ---------------------------------------------
                             2001                   2000                    2001                   2000
                     ---------------------  ---------------------  ----------------------  ---------------------
<S>                  <C>                    <C>                    <C>                     <C>
SUBSIDIARY:
    HDA              $            (62,800)  $            (33,940)  $             (27,650)  $            (21,848)
    Equus - Panama                 40,292                (73,460)
    Galapagos                           -                      -                       -                      -
    Equus-Comuneros            (1,039,144)              (383,494)               (136,563)               (88,383)
                     ---------------------  ---------------------  ----------------------  ---------------------
                     $         (1,101,944)  $           (377,142)  $            (164,213)  $           (183,691)
                     ---------------------  ---------------------  ----------------------  ---------------------
</TABLE>

     In general, the minority interest is calculated based on the ownership
interest of the minority partners. HDA has a minority partner owning a 1%
interest. Galapagos' minority partners own a 45% interest. However, during the
nine months ended September 30, 2001 and 2000 the Company did not recognize a
minority interest in Galapagos' losses amounting to $279,182, and $309,058,
respectively, because the minority partners have no legal obligation to fund
losses in excess of their investment. As of September 30, 2001 the accumulated
losses, not allocated to the minority partners, amount to $2,376,830.
Equus-Comuneros minority partners own a 50% interest.


                                       16
<PAGE>
     CURRENCIES

     The Company consolidates its accounts with Galapagos and Equus-Comuneros
whose functional currency are the Dominican Republic peso and the Colombian
peso, respectively. The United States dollars ("US$") are also a recording
currency in these countries. US$ are exchanged into those foreign currencies
("FC$") and vice versa through commercial banks and/or the central banks of the
respective countries. The Company remeasures the monetary assets and liabilities
of the foreign subsidiaries that were recorded in US$ into the FC$ using the
exchange rates in effect at the balance sheet date (the "current rate") and all
other assets and liabilities and capital accounts, at the historical rates. The
Company then translates the financial statements of the foreign subsidiaries
from FC$ into US$ using the current rates, for all assets and liabilities, and
the average exchange rates prevailing during the year, for revenues and
expenses.

     For the nine months ended September 30, 2001 and 2000, net exchange losses
resulting from re - measurement of accounts, together with losses from foreign
currency transactions, amounted to $373,795 and $150,915 respectively, which
amounts are included as operating expenses. Accumulated net loss from changes in
exchange rates due to the translation of assets and liabilities of the foreign
subsidiaries are included in partners' deficit and at September 30, 2001 and
December 31, 2000 amounted to $216,176 and $237,995 respectively.

     The current exchange rates in Dominican Republic as of September 30, 2001
and 2000 were US$1.00 to FC$17.15 and US$1.00 to FC$16.40, respectively. The
average exchange rates in Dominican Republic prevailing during the nine months
ended September 30, 2001 and 2000 were US$1.00 to FC$16.99 US$1.00 to FC$16.48,
respectively. The current exchange rate in Colombia as of September 30, 2001and
2000 were US$1.00 to FC$2,407 and $US1.00 to FC$2,212. The average exchange rate
in Colombia prevailing during the nine months ended September 30, 2001 and 2000
were US$1.00 to FC$2,301 and US$1.00 to FC$2,060.


2.   COMMITMENTS  AND  CONTINGENCIES:

     HORSE OWNERS' AGREEMENTS

     The Company has separate agreements with the Horse Owners' Confederation of
each country. The agreements establish the amount payable to horse owners as
purses. In general, payments to horse owners are based on a percentage of
wagering.

     The Panama contract expires in December 2007. Commencing with the year
2000, and each year thereafter, there is no longer a "minimum guaranteed
payment" to horse owners, as previously. However for the year 2000, $4.1 million
was paid to the horse owners even though the calculated payment per the contract
was $2.7 million. The payment of $1.4 million was recorded as an account
receivable from the Horse Owners' Association. On October 9, 2001, the Company
exchanged its common stock and various claims for 3,000 shares of preferred
stock and at the same time was released from any further liability under the
Panama Horse Owners Agreement.

     The Dominican Republic contract expires in December 2005. The Colombia
contract expires on December 31, 2009. It provides for certain minimum
guaranteed payments to horse owners during the first three years, $1.2 million
in 2001, increased in 2002 and 2003 in accordance with an inflation factor.

     The Puerto Rico horse owners contract expires in July 2010. Under the
contract, the horse owners are guaranteed minimum earnings of $25,032,000 for
years 2002 and 2001. ECMC is obligated among other things to pay the horse
owners $90,000 annually for administrative costs and 50% of the principal and
interest owed on an outstanding Confederation loan with a principal balance due
of $526,000, plus accrued interest. ECMC must also invest $3,000,000 in
improvements to the racetrack during the 10-year term of the contract, as well


                                       17
<PAGE>
as provide up to $2,000,000 of financing for the purchase of horses. Additional
costs incurred for the three and nine months ended September 30, 2001 related to
the new horse owners contract are included in other expenses.

     On March 16, 2001, an "Addendum to Contract" was executed by the Horse
Owners Confederation and the Company, whereby the parties agreed to:

     (i)  Increase the number of simulcast races each live race day from three
          (3) to six (6).

     (ii) Place three (3) of the simulcast races before the first live races and
          three (3) after the fifth live race.

    (iii) Include simulcasting of nine (9) to twelve (12) races on Thursday,
          currently a dark day.

     (iv) In consideration of the above, ECMC will pay an additional $1,000,000
          to the Horse Owners Confederation when and if the additional
          simulcasting is approved by the Racing Board

     On June 28, 2001, the Puerto Rico Racing Board granted ECMC the right to
increase the number of simulcast races from the United States from three (3) to
six (6) per live race day. The Order allowed a three (3) month probationary
period commencing July 1, 2001, for ECMC to place three (3) simulcast races
before the first live race and three (3) after the fifth live race.

     The Racing Board declined the simulcasting of races during the probationary
period on Thursday's, a day that currently holds no live races.

     Pending final approval of the complete simulcast package by the Racing
Board, ECMC is obligated to pay the Horse Owners' Confederation $1,000,000.

     On October 16, 2001, the Racing Board suspended, effective October 22, 2001
simulcasting permitted during the probationary period but not otherwise.

     Simulcasting of special events such as the Breeders' Cup, Kentucky Derby
and the Preakness as well as the Caribbean Classic and the Confraternity Classic
is still permitted. However, ECMC is doing a cost/benefit analysis to determine
if the limited simulcasting is economically viable per event.

     WAGERING SERVICES AGREEMENTS

     The Company has separate agreements with Autotote Systems, Inc.
("Autotote") and United Tote Company ("United Tote") to provide wagering
services, software and equipment to each racetrack, necessary for the operation
of the off-track betting system. Payments under these contracts are summarized
as follows:

1.   AUTOTOTE
     --------

                          EL COMANDANTE    V CENTENARIO    LOS COMUNEROS
                         ---------------  --------------   --------------
Expiration date            March 2004       March 2004      January 2006
Cost of services, as a
 percentage of wagering           0.65%        0.65% (a)        1.20%
Minimum amount per year    $    800,800   $  200,000         $     -  (b)


     (a)  Galapagos is also to receive services from Autotote for the
          distribution system of the electronic lottery. Fees to Autotote are 2%
          of gross sales at lottery agencies and 1% of gross sales at OTB
          agencies. See Note 8, "Legal Proceedings".


                                       18
<PAGE>
     (b)  Based on a minimum monthly payment of $39,795 for 2001, increased each
          subsequent year, up to $50,240 in 2005. For the year 2000 the minimum
          payment was $450,480.


2.   UNITED  TOTE
     ------------

     In August, 2000 the Company obtained a $2.5 million unsecured loan at 3%
over prime due in December 29, 2004. Principal and interest are to be paid from
..25% of the wagering handle for the first four (4) years of the service contract
with United Tote.

<TABLE>
<CAPTION>
                          EL COMANDANTE   V CENTENARIO    LOS COMUNEROS
                          --------------  -------------  --------------
<S>                       <C>             <C>             <C>
Commencement date (a)      March 2004      March 2004      August 2000
Expiration date           December 2010   December 2010   December 2010
Cost of services, as a
 percentage of wagering       (b)             (b)             (b)
Minimum amount per year(c)    n/a             n/a             n/a
Additional fees (d)           n/a             n/a             n/a
</TABLE>

     (a) The services agreement with United Tote specifies that the commencement
     date shall be the earlier of the date that the agreement with Autotote
     expires or the date the agreement is properly terminated. See note 2. (1.c)
     above for the termination of the Autotote agreement with Los Comuneros.

<TABLE>
<CAPTION>
     (b) Total Handle in a contract year   % of Total Handle received by United Tote
     ------------------------------------  -----------------------------------------
<S>                                        <C>
     $350,000,000                          0.95% in the first four (4) years and .7%
                                           thereafter, see note (e) below.

     350,000,001 to $500,000,000           0.5% of Total Handle

     500,000,001 and over                  0.4% of Total Handle
</TABLE>

     (c) Pursuant to the service contract, there are minimum annual guaranteed
     wagering handles for the twelve months from the date that totalizator
     service is first initiated by United Tote at two or more existing or new
     racetracks, and continues in twelve months intervals subsequent to that
     date for the remaining term of the contract.

     (d) The Company will also pay United Tote a weekly fee of $2,625 as a
     "central hub allocation fee" until service by United Tote is furnished to
     two or more existing or new racetracks.

     (e) During the first four (4) years, a fee of 0.25% of the handle will be
     applied to principal and interest on the unsecured note of $2.5 million due
     December 29, 2004.

     OTHER LONG-TERM AGREEMENTS

     The Company has also entered in other long-term contracts that are
essential for the operation of its racetracks such as to guarantee television
coverage in Puerto Rico. ECMC has an agreement with S&E Network, Inc. (S&E")
that requires the purchase of television time for an annual minimum of 910 hours
at the rate of $725 (effective February 1997) per hour, adjusted annually by the
Consumer Price Index ("CPI"), or at the rate of $900 per hour, also subject to
CPI adjustments for television time after 7:00 PM. The contract is
non-cancelable by either party during the initial term, which expires in


                                       19
<PAGE>
December 2006. The term is automatically extended for successive 5 years periods
by request of ECMC. During an extended term, the contract can be canceled by
S&E, upon payment of liquidated damages of $2 million plus CPI after January
1997.


3.  FIRST MORTGAGE NOTES:

     On December 15, 1993, pursuant to a private offering, (i) El Comandante
Capital Corp. ("ECCC"), a single-purpose wholly owned subsidiary of HDA, issued
first mortgage notes in the aggregate principal amount of $68 million (the
"First Mortgage Notes") under an indenture (the "Indenture") between ECCC, HDA
and Banco Popular de Puerto Rico, as trustee (the "Trustee"), and (ii) Housing
Development Associates Management Company ("HDAMC") issued Warrants to purchase
68,000 shares of Class A Common Stock of HDAMC. In March 1995, the Warrants
automatically became exercisable to purchase an aggregate of 1,205,232 units of
the Company from HDAMC. Upon issuance of the Warrants, HDA recorded note
discount of $2,040,000 equal to the fair value of the Warrants. Such note
discount is being amortized using the interest method over the term of the First
Mortgage Notes.

     The First Mortgage Notes mature on December 15, 2003 and bear interest at
11.75% payable semiannually. Payment of the First Mortgage Notes is guaranteed
by HDA. The First Mortgage Notes are secured by a first mortgage on El
Comandante and by certain other collateral which together encompass a lien on
(i) the fee interests of HDA in the land and fixtures comprising El Comandante,
(ii) all related equipment, structures, machinery and other property, including
intangible property, ancillary to the operations of El Comandante, and (iii)
substantially all of the other assets and property of HDA, including the capital
stock of ECCC owned by HDA.

     During the past several years HDA has made early redemptions of First
Mortgage Notes in connection with certain transactions. The Company has also
purchased in the open market First Mortgage Notes which the Company intends to
hold until maturity in cancellation of required partial redemptions in 2000 and
2001, as explained below. Following is a summary of these transactions:

<TABLE>
<CAPTION>
                                                         HELD BY THE
                                 FACE    COMPANY AT       (PREMIUM)
TYPE OF TRANSACTION              DATE      VALUE      SEPTEMBER 30,2001    DISCOUNT
------------------------------  ------  -----------  -------------------  -----------
<S>                             <C>     <C>          <C>                  <C>
Redemption                      Mar-97  $   737,000  $                -   $        -
Redemption                      Sep-97    2,500,000                   -     (250,000)
Purchase in open market         Dec-98    7,500,000           7,500,000    1,000,000
Redemption, reduced by amount
  of notes held by the Company  Jan-99    2,620,000            (380,000)    (262,000)
Purchase in open market         May-99      189,000             189,000       22,680
Redemption, reduced by amount
  of notes held by the Company  Jan-01      563,000            (563,000)           -
                                        -----------  -------------------  -----------
                                        $14,109,000  $        6,746,000   $  510,680
                                        -----------  -------------------  -----------
</TABLE>

     In  connection  with these transactions, the Company wrote-off a portion of
the  note  discount  and  deferred  financing  costs.

     ECCC is required to partially redeem First Mortgage Notes commencing on
December 15, 2000.  The stated maturities of the First Mortgage Notes, reduced
by prior redemptions, are as follows (in thousands):


                                       20
<PAGE>
          DUE DURING THE TWELVE MONTHS   GROSS    PURCHASED IN      NET
          ENDING DECEMBER 31,            AMOUNT    OPEN MARKET     AMOUNT
          ----------------------------  --------  -------------  ----------

                    2001                 10,200           6,746      3,454
                    2002                 10,200               -     10,200
                    2003                 40,800               -     40,800
                                        --------  -------------  ----------
                                         61,200           6,746     54,454
               Less - discount             (509)             86       (595)
                                        --------  -------------  ----------
                                        $60,691         $ 6,832  $  53,859
                                        --------  -------------  ----------

     On July 13, 2001, Kempt Corporation, a Puerto Rico corporation wholly owned
by Wilson Securities Corporation, an entity controlled by the Wilson family,
purchased seven (7) million shares of Equus Entertainment Class A, 12%
cumulative preferred stock, $1.00 par value.

     Equus Entertainment then applied $3.8 million to offset the advances
against dividends made to the Company.

     Equus Entertainment reimbursed the El Comandante Group (consisting of
Housing Development Associates S.E., El Comandante Capital Corporation and El
Comandante Management Company LLC) for all advances made by the El Comandante
Group to affiliate companies. Equus Entertainment also purchased the
inter-company receivables of the El Comandante Group that were due from
affiliate companies.

     The  Net  proceeds  of  $6,882,037  were  used  to  pay  the  following:

     1.   The June 14, 2001 interest payment on the First Mortgage Notes of
          $3,595,500 plus $32,408 of penalty interest for the period June 15,
          2001 through July 13, 2001.

     2.   Payoff of $2,604,747 HDA Note payable to FirstBank together with
          interest accrued through July 13, 2001, of $14,370.

     3.   Payoff of $500,000 HDA line of credit with FirstBank together with
          interest accrued through July 13, 2001, of $2,903.

     4.   Advances to consolidated affiliates of $132,108 to cover operational
          expenses.

     It  is  not  expected  that  the Company will be able to meet the mandatory
maturity  dates of the First Mortgage Notes as set forth above without obtaining
additional  financing  from  lending  institutions  or  investors.  Although the
Company had had discussions with possible lenders and investors, it has received
no  commitments  or  other  form  of  assurance  that  such  financing  will  be
forthcoming.  Absent  such  financing,  the Company will not be able to meet its
long-term  commitments.  The Trustee of the First Mortgage Notes had advised the
Company's  legal counsel that the bondholders will demand payment in full of the
First  Mortgage  Notes,  as  provided  by  the  Indenture.


                                       21
<PAGE>
     HDA may also redeem First Mortgage Notes at the following redemption prices
(expressed as percentages of principal amount), in each case together with
accrued and unpaid interest:


          DURING THE 12 MONTH PERIOD
          BEGINNING ON DECEMBER 15,
          --------------------------
                    2000                                101.50%
                    2001                                100.00%


     HDA is required to purchase First Mortgage Notes, at face value, to the
extent that HDA has accumulated excess cash flow, asset sales with net proceeds
in excess of $5 million (to the extent these proceeds are not invested in HDA's
racing business within a year), or a total taking or casualty, or in the event
of a change of control of HDA.

     The Indenture contains certain covenants, one of which restricts the amount
of distributions by HDA to its partners, including the Company. Permitted
distributions are limited to approximately 48% of HDA's consolidated net
earnings. In connection with certain approvals required from noteholders, HDA
agreed to temporarily reduce these distributions by 17%. HDA is permitted to
make additional cash distributions to partners and other Restricted Payments, as
defined under the Indenture, equal to 44.25% of the excess of HDA's cumulative
consolidated net income after December 31, 1993 over the cumulative amount of
the 48% Distributions, provided that HDA meets a certain minimum debt coverage
ratio. HDA has not met this debt coverage ratio. As of June 30, 2001, HDA has
advanced to the Company approximately $3.8 million against its allowable future
distributions of profits, which is not in conformity with the terms of the
Indenture.

     Management repaid these advances with the proceeds of a private placement
offering of Equus Entertainment preferred stock on July 13, 2001. See Note 5,
"Related Party Transactions".


4.  BONDS AND NOTES PAYABLE AND CAPITAL LEASES:

     The  Company's  outstanding  notes  payable  consist  of  the  following:


<TABLE>
<CAPTION>
                                                                                   BALANCE AT
                                                   MATURITY   INTEREST     SEPTEMBER 30,  DECEMBER 31,
  BORROWER                 DESCRIPTION               DATE       RATE          2001           2000
  -----------------------  ---------------  -----  ---------  -----------  -------------  ------------
<S>                        <C>              <C>    <C>        <C>          <C>            <C>
  H D A                    Note payable       (a)  15-Dec-01  P+1.00%      $           -  $ 3,000,000
  H D A                    Line of credit     (b)  15-Dec-01  P+1.00%                  -      500,000
  Equus-Panama             Line of credit     (c)  various      10.75%                 -      280,349
  Equus-Comuneros          Term loans         (d)  various    variable           106,496      269,612
  Equus Entertainment      Note payable       (e)  29-Dec-04  P+3.00%          2,500,000    2,500,000
  Equus Entertainment      Promissory Note    (f)  On Demand  P+1.00%            100,000            -
  Equus Entertainment      Promissory Note    (g)  On Demand  P+1.00%             50,000            -
  Equus Entertainment      Promissory Note    (h)  On Demand  P+1.00%            120,000            -
  Equus Entertainment      Promissory Note    (i)  On Demand  P+1.00%            250,025            -
  Equus Entertainment      Promissory Note    (j)  On Demand  P+1.00%            300,000            -
  Equus Entertainment      Promissory Note    (k)  On Demand  P+1.00%            205,000            -
  Equus Entertainment      Promissory Note    (l)  On Demand  P+1.00%          1,300,000            -
  Satellite Service Int    Promissory Note    (m)  On Demand  P+1.00%             53,750            -
  Equus Entertainment      Promissory Note    (n)  On Demand  P+1.00%            563,429
  Equus Entertainment      Promissory Note    (o)  On Demand  P+1.00%            330,000
  Equus Entertainment      Promissory Note    (p)  On Demand  P+1.00%             70,000
                                                                       -----------------  -----------
                                                                              $5,948,700   $6,549,961
                                                                       -----------------  -----------
</TABLE>

     At September 30, 2001 and December 31, 2000, the prime rate (P) was 6.00%
and 9.50%, respectively.

     a)   Considered Refinancing Indebtedness under the terms of the Indenture.
          Collateralized by First Mortgage Notes purchased in the open market
          (see Note 3). Payable in quarterly installments commencing on March
          31, 2000. Paid in full July 13, 2001. See Note 5 "Related Party
          Transactions".


                                       22
<PAGE>
     b)   Revolving line of credit available until December 15, 2001, for its
          operational needs. Interest is calculated on balances outstanding at a
          rate equivalent to one point over prime rate. Principal is due upon
          maturity on December 15, 2001. Paid in full July 13, 2001. See Note 5
          "Related Party Transactions".

     c)   Management is in the process of renegotiating the terms of these
          financial obligations. Interest rates range from 7% to 14.01% over
          Colombia's Fixed Term Deposit (FTD) rate. FTD at September 30, 2001
          was 11.43%.

     d)   In August 2000 the Company obtained a $2.5 million unsecured loan at
          3% over prime due December 29, 2004. Principal and interest payments
          are to be paid from .25% of the wagering handle for the first four (4)
          years of the service contract with United Tote as outlined in Note 2
          of the consolidated financial statements, "Wagering Service
          Agreements".

     e)   On March 21, 2001, the Company received $100,000 from El Monte
          Properties, an entity controlled by the Wilson family which also owns
          a controlling interest in the Company under an unsecured promissory
          note payable on demand with interest accruing at 1% over prime. The
          proceeds were used to purchase El Comandante receivable from
          non-Puerto Rico affiliates and working capital.

     f)   On March 21, 2001, the Company received $50,000 from Santa Maria
          Associates, an entity controlled by the Wilson family which also owns
          a controlling interest in the Company under an unsecured promissory
          note payable on demand with interest accruing at 1% over prime. The
          proceeds were used to purchase El Comandante receivable due from
          non-Puerto Rico affiliates and working capital.

     g)   On April 6, 2001, the Company received $120,000 from El Monte
          Properties, an entity controlled by the Wilson family which also owns
          a controlling interest in the Company, under an unsecured promissory
          note payable on demand with interest accruing at 1% over prime,
          payable on demand by El Monte Properties, controlled by the Wilson
          family which also owns a controlling interest in the Company. The
          proceeds were used to purchase El Comandante receivables due from
          non-Puerto Rico affiliates and working capital.

     h)   On April 26, 2001, the Company received $250,025 from Insular
          Properties, an entity controlled by the Wilson family which also owns
          a controlling interest in the Company, under an unsecured promissory
          note payable on demand with interest accruing at 1% over prime. The
          proceeds were used to purchase El Comandante receivables due from
          non-Puerto Rico affiliates and working capital.

     i)   On April 30, 2001, the Company received $300,000 from Insular
          Properties, an entity controlled by the Wilson family which also owns
          a controlling interest in the Company, under an unsecured promissory
          note payable on demand with interest accruing at 1% over prime. The
          proceeds were used to purchase El Comandante receivables due from
          non-Puerto Rico affiliates and working capital.

     j)   On May 11, 2001, the Company received $205,000 from Insular
          Properties, an entity controlled by the Wilson family which also owns
          a controlling interest in the Company under an unsecured promissory
          note payable on demand with interest accruing at 1% over prime. The
          proceeds were used to purchase El Comandante receivables due from
          non-Puerto Rico affiliates and working capital.


                                       23
<PAGE>
     k)   On June 14, 2001, the Company received $1,300,000 from El Monte
          Properties, an entity controlled by the Wilson family which also owns
          a controlling interest in the Company, under an unsecured promissory
          note payable on demand with interest accruing at 1% over prime. The
          proceeds were used to purchase El Comandante receivables due from
          non-Puerto Rico affiliates and working capital.

     l)   The Company also guarantees a $250,000 loan by the operator of the
          restaurant at Presidente Remon. The proceeds of this loan were used by
          Equus-Panama to finance improvements to the restaurant. On October 9,
          2001, the Company entered into a stock purchase agreement whereby in
          exchange for release from all liabilities related to the operation of
          Equus Entertainment de Panama, the Company gave to its minority
          partner, Wall Street Securities, its 204,000 shares of common stock
          which represented 51% of the total issued and outstanding shares of
          Equus Entertainment de Panama. At the same time, the Company was
          released from any further liability under this loan guarantee.

     m)   In October 1998, Equus-Panama issued $4 million in unsecured bonds
          pursuant to a public offering. Interest is payable quarterly at the
          rate of 11% per annum. The bonds may be redeemed by Equus-Panama prior
          to June 30, 2001 at a redemption price of 102% of the principal amount
          and thereafter at par. Under the loan documents there are certain
          restrictions that limit the capacity of Equus-Panama to incur
          indebtedness and pay dividends to shareholders. On October 9, 2001,
          the Company entered into a stock purchase agreement whereby in
          exchange for release from all liabilities related to the operation of
          Equus Entertainment de Panama, the Company gave to its minority
          partner, Wall Street Securities, its 204,000 shares of common stock
          which represented 51% of the total issued and outstanding shares of
          Equus Entertainment de Panama. At the same time, the Company was
          released from any further liability under this Bond Indenture.


     The following table summarizes future minimum payments on capital leases
and notes payable of   the Company and its consolidated subsidiaries:

              DUE DURING THE TWELVE          CAPITAL       NOTES
            MONTHS ENDING SEPTEMBER 30,      LEASES       PAYABLE
            ---------------------------   -----------  -----------
                      2002                $  828,063   $3,687,524
                      2003                   485,799            -
                      2004                   319,666    2,500,000
                      2005                     9,701            -
                      2006                         -            -
                                          -----------  -----------
                                           1,643,229    6,187,524
            Imputed interest                (176,790)    (238,824)
                                          -----------  -----------
                                          $1,466,439   $5,948,700
                                          -----------  -----------

5.  RELATED PARTY TRANSACTIONS:

     The following is a summary of amounts accrued for services rendered by or
from certain related parties, namely, EMC, American Community Properties Trust
("ACPT") and Interstate General Company L.P. ("IGC") during the nine and three
months ended September 30, 2001 and 2000:


                                       24
<PAGE>
<TABLE>
<CAPTION>
                               NINE MONTHS ENDED SEPTEMBER 30,      THREE MONTHS ENDED SEPTEMBER 30,
                             -----------------------------------  ------------------------------------
NATURE OF SERVICE                  2001              2000               2001               2000
---------------------------  ----------------  -----------------  -----------------  -----------------
<S>                          <C>               <C>                <C>                <C>
Support agreement            $            800  $          24,300  $               -  $           8,100
Rent office space                      14,000             31,500                  -             10,500
Directors' fees                        67,450             82,150             21,950             38,650
Services of James J. Wilson           339,638            101,250            132,010             33,750
                             ----------------  -----------------  -----------------  -----------------
                             $        421,888  $         239,200  $         153,960  $          91,000
                             ================  =================  =================  =================
</TABLE>


     Equus  Entertainment  then  applied  $3.8  million  to  offset the advances
against  dividends  made  to  the  Company.

     Equus  Entertainment  reimbursed  the  El  Comandante  Group (consisting of
Housing  Development  Associates  S.E., El Comandante Capital Corporation and El
Comandante  Management  Company  LLC) for all advances made by the El Comandante
Group  to  affiliate  companies.  Equus  Entertainment  also  purchased  the
inter-company  receivables  of  the  El  Comandante  Group  that  were  due from
affiliate  companies.

     The Net proceeds of $6,882,037 were used to pay the following:

     1.   The June 14, 2001 interest payment on the First Mortgage Notes of
          $3,595,500 plus $32,408 of penalty interest for the period June 15,
          2001 through July 13, 2001.

     2.   Payoff of $2,604,747 HDA Note payable to FirstBank together with
          interest accrued through July 13, 2001, of $14,370.

     3.   Payoff of $500,000 HDA line of credit with FirstBank together with
          interest accrued through July 13, 2001 of $2,903.

     4.   Advances to consolidated affiliates of $132,108 to cover operational
          expenses.


     During the first six (6) months of 2001 the Company executed various
unsecured promissory notes with several of its affiliates, see Note 4, "Bonds
and Notes Payable and Capital Leases"


6.   FAIR  VALUE  OF  FINANCIAL  INSTRUMENTS:

     Based on quoted market prices, the fair value of the First Mortgage Notes
as of September 30, 2001 was approximately $37,846,000 (as compared with a
carrying value of $53,807,458). The carrying value of notes payable, capital
leases and notes receivable approximates fair value. These obligations provide
for variable rate interest. The carrying value of accounts receivable and
accounts payable approximates fair value due to their short maturities.


7.   SEGMENT  INFORMATION:

     The Company has identified three reportable segments, based on geographical
considerations:  Puerto Rico, Dominican Republic and Colombia.  The accounting
policies of the segments are the same as those described in the summary of
accounting policies.  The Company evaluates performance based on profit or loss
before income taxes, not including nonrecurring gains and losses and foreign
exchange gains and losses.  The following presents the segment information for
the nine and three months ended September 30, 2001 and 2000 (in thousands).


                                       25
<PAGE>
<TABLE>
<CAPTION>
                                 PUERTO     DOMINICAN
2001 - NINE MONTHS                RICO      REPUBLIC    COLOMBIA    PANAMA    URUGUAY     TOTAL
                                --------   ----------  ---------  ---------  ---------  --------
<S>                             <C>        <C>         <C>         <C>       <C>        <C>
Commissions on wagering         $ 34,726   $   2,448   $   1,408   $     -   $      -   $ 38,582
Total revenues                    36,017       3,536       1,240         -          6     40,799
Financial expenses                 6,977          11         267         -          8      7,263
Depreciation and amortization      2,360         291         257         -          -      2,908
Earnings (Loss) before income                                                                  -
  taxes and minority interest    (11,151)       (620)     (2,052)        -       (678)   (14,501)
Capital improvements (net)           622         259        (172)        -      3,800      4,509
Total assets                      58,929       2,187       3,008         -      3,800     67,924

2000 - NINE MONTHS
Commissions on wagering         $ 37,948   $   2,445   $   1,015   $ 6,497   $      -   $ 47,905
Total revenues                    39,717       3,083       1,179     6,908          -     50,887
Financial expenses                 6,687          22         236       463          -      7,408
Depreciation and amortization      1,935         262         155       466          -      2,818
Earnings (Loss) before income                                                                  -
  taxes and minority interest     (3,501)       (687)     (1,840)       82          -     (5,946)
Capital improvements (net)         2,910         100        (886)      223          -      2,347
Total assets                      55,618       1,989       4,523     9,554          -     71,684

2001 - QUARTER
Commissions on wagering         $ 10,649   $     692   $     466   $     -   $      -   $ 11,807
Total revenues                    11,406       1,157         424         -          -     12,987
Financial expenses                 2,126         (94)        (60)        -          -      1,972
Depreciation and amortization        816         112          89         -          -      1,017
Earnings (Loss) before income                                                                  -
  taxes and minority interest     (4,212)        (63)       (264)        -        (15)    (4,554)
Capital improvements (net)           211          96        (158)        -      3,800      3,949

2000 - QUARTER
Commissions on wagering         $ 12,332   $     828   $     285   $ 2,033   $      -   $ 15,478
Total revenues                    12,958       1,042         340     2,109          -     16,449
Financial expenses                 2,265           7          76       157          -      2,505
Depreciation and amortization        609          91          46       157          -        903
Earnings (Loss) before income                                                                  -
  taxes and minority interest     (2,207)       (269)       (512)     (150)         -     (3,138)
Capital improvements (net)         1,621          56        (139)       50          -      1,588
</TABLE>


8.   LEGAL  PROCEEDINGS:

     The Company had a case in arbitration at the American Arbitration
Association in defense of and against Autotote, involving all the racetracks in
which Equus has an ownership interest. Autotote filed a claim against El
Comandante for unpaid service fees of $186,415 plus interest. El Comandante
agreed to pay this amount but filed a counterclaim against Autotote.

     On July 27, 2001 and November 21, 2001 American Arbitration Association
rendered its award decision. The following is a summary of the awards by
racetrack:

     EL COMANDANTE, PUERTO RICO

          1.   El Comandante is to pay Autotote the principal amount of $355,496
               in unpaid service fees together with interest of $32,051, accrued
               through April 1, 2001.

          2.   El Comandante shall reimburse Autotote for costs incurred of
               $132,500.

          3.   As of September 30, 2001, the outstanding principal balance was
               $587,501 and accrued interest was $18,237.68.


                                       26
<PAGE>
     EQUUS  -  COMUNEROS

          1.   Equus-Comuneros is to pay Autotote the principal amount of
               $584,262 in unpaid service fees as of April 23, 2001, together
               with interest of $251,386 accrued through September 30, 2001.

          2.   Equus-Comuneros shall reimburse Autotote costs incurred of
               $132,500.


     GALAPAGOS

          1.   Galapagos owes Autotote the principal amount of $230,578 as of
               April 23, 2001, together with interest of $120,308 through
               November 21, 2001, the date of the award.

          2.   For breach of good faith and fair dealings, Autotote owes
               Galapagos $800,000, plus interest at the rate of seven (7)
               percent per annum from November 21, 2001 to the date of payment.

          3.   The parties have no further obligations to one another with
               respect to lottery operations in the Dominican Republic.

          4.   The parties shall bear equally the costs of arbitration which
               amount to $44,903 each. Any excess funds on deposit shall be
               reimbursed to the paying parties in equal amounts.

          5.   Autotote shall pay Galapagos $150,000 in reimbursement fees
               incurred in the proceedings.

          6.   Awards will be offset and the net amount owed to Galapagos of
               approximately $600,000 will accrue interest at seven (7) percent
               until paid.

     Each entity involved in the arbitration sustains individually the
consequences of the arbiters' final award and there are no performance
guarantees by any other entity including Equus Gaming Company L.P., the parent
company.

     Costs incurred by the Company in pursuing the Arbitration with Autotote to
date total $574,042 and have been allocated to each participating entity in the
same proportion that the arbiters awarded the costs incurred by Autotote to each
entity.

     On August 18, 2001, ECMC executed a Closing Agreement (the "Agreement")
with the Municipality of Canovanas whereby ECMC settled its longstanding dispute
over the payment of the Volume of Business Tax assessed by the municipality, see
Note 1, "Government Matters".

     Certain of the Company's subsidiaries are presently named as defendants in
various lawsuits and might be subject to other claims arising out of the normal
business operations. Management, based in part upon advice from legal counsel,
believes that the results of such actions will not have a material adverse
impact on the Company's financial position or results of operations.


                                       27
<PAGE>
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
           AND RESULTS OF  OPERATIONS

     The Company's operations consist principally of its interests in
thoroughbred horse race tracks in three countries, each of which is owned and/or
operated by a subsidiary: (i) El Comandante in Puerto Rico, owned by Housing
Development Associates S.E. ("HDA") and operated since January 1, 1998 by El
Comandante Management Company, LLC ("ECMC"), (ii) V Centenario in the Dominican
Republic, operated since April 1995 by Galapagos S.A., ("Galapagos") and (iii)
Los Comuneros in Medellin, Colombia, owned and operated since early 1999 by
Equus Comuneros, S.A. ("Equus-Comuneros").

     The  following discussion compares the results of operations of the Company
for  three  and  nine  months  ended September 30, 2001 with the results for the
three  and  nine  months  ended  September  30,  2000.


                              RESULTS OF OPERATIONS

  QUARTER AND NINE MONTHS ENDED SEPTEMBER 30, 2001 COMPARED TO QUARTER AND NINE
  -----------------------------------------------------------------------------
                         MONTHS ENDED SEPTEMBER 30, 2000
                         -------------------------------

REVENUES

     Consolidated Revenues decreased in the second quarter of 2001 by
$3,796,000, or (22.6%), as compared to the same quarter in 2000.  During the
nine months ended September 30, 2001, revenues decreased $10,088,000, (19.8%),
from the same period in 2000.  This decrease was primarily attributable to the
decrease in commissions at El Comandante, as explained below, and the loss of
revenues from lottery services at Galapagos, as explained below.

     COMMISSIONS ON WAGERING

     Commissions on wagering decreased by  $3,670,000, (23.7%) to $11,807,000
for the second quarter ended September 30, 2001 as compared to $15,477,000 in
the second quarter of 2000. During the nine months ended September 30, 2001,
commissions on wagering decreased $9,324,000, (19.5%), to $38,582,000 from
$47,906,000 in the same period for 2000. The decrease in commissions was
attributable to the following operations: El Comandante $(3,222,000) and Panama
$(6,497,000). However, the Colombia and Dominican Republic operations reflect an
increase of $393,000 and $3,000 respectively.

     During contract negotiations in January 2000, the Puerto Rico horse owners
cancelled their prior approval of simulcast of live races from Puerto Rico to
the Dominican Republic.  In February the Racing Board reversed this action.
This cancellation had an adverse economic impact on commissions on wagering in
the Dominican Republic and Puerto Rico for the three months ended March 31,
2000.

     PUERTO RICO.  Commissions on wagering at El Comandante decreased
$1,683,000, (13.6%), to $10,649,000 in the second quarter of 2001 as compared to
$12,332,000 in the second quarter of 2000.  During the nine months ended
September 30, 2001, commissions on wagering decreased $3,222,000, (8.5%), to
$34,726,000 as compared to  $37,948,000 for the nine months ended September 30,
2000.  The decrease in commissions was attributable to:

     (a)  Commissions from Live Racing declined $3.1 million as a result of
          wagering decline from short fields, integrity of the races as reported
          by the media and a shift in wagering from the "Exotic" bets to the
          "Win/Place" bets (which have a lower commission takeout).


                                       28
<PAGE>
     (b)  Offsetting the decrease, commissions from Simulcasting -In from the
          United States resulted in an added $1.4 million.

     (c)  Commission from Simulcasting out increased $65 thousand because
          Simulcast to Galapagos was for the entire period in 2001 whereas in
          2000 it was delayed until February 11, 2000 and simulcasting to Panama
          commenced March, 2001.


     PANAMA.   On October 9, 2001, the Company entered into a stock purchase
agreement whereby in exchange for release from all liabilities, related to the
operation of Equus Entertainment de Panama, the Company gave to its minority
partner, Wall Street Securities, its 204,000 shares of common stock which
represented 51% of the total issued and outstanding shares of Equus
Entertainment de Panama, Therefore, no revenues are reflected in 2001.

     DOMINICAN REPUBLIC.   Commissions on wagering at V Centenario ("Galapagos")
decreased by $136,000 (16.4%) to $692,000 in the second quarter of 2001 as
compared to $828,000 in the second quarter of 2000. During the nine months ended
September 30, 2001, commissions on wagering increased $3,000, (.1%), to
$2,448,000 as compared to $2,445,000 for the nine months ended September 30,
2000. The increase was primarily attributable to:

     (a)  The fact that for the first 1 1/2 months of 2000 there was no
          simulcasting from El Comandante race track.

     (b)  During the first six (6) months of 2000, commissions earned were
          shared equally with the horse owners. This practice was discontinued
          effective July 1, 2000.

     COLOMBIA.   Commissions on wagering at Comuneros S.A. increased by $181,000
(63.5%) to $466,000 in the second quarter of 2001 as compared to $285,000 in the
second quarter of 2000. During the nine months ended September 30, 2001,
commissions on wagering increased $393,000, (38.7%), to $1,408,000 as compared
to $1,015,000 for the nine months ended September 30, 2000. This increase was
primarily attributable to fifty-nine (59) additional race days for the nine
months ended September 30, 2001.

     NET REVENUES FROM LOTTERY SERVICES

     Net revenues from lottery services by Galapagos in the Dominican Republic
for the nine months ended September 30, 2001 decreased by $170,000 (100%) as
compared to the same period in 2000.

     Since June 30, 2000, Autotote has provided services directly to the Lottery
Operations [Dominican International Electronic Lottery, Inc. (LEIDSA)] and
refused to pay Galapagos service fees under its service contract.  The Company
has filed suit in Federal Court in Puerto Rico and has concluded arbitration.
See Note 8,  "Legal Proceedings".

     OTHER REVENUES

     Other revenues during the three and the nine months ended September 30,
2001 increased by  $54,000 (4.8%) and by $736,000 (28.0%), respectively, as
compared to the same period in 2000.


EXPENSES

     For the reasons set forth below, total expenses during the three and nine
months ended September 30, 2001 decreased by $3,459,000, (16.5%) and by
$1,531,000 (2.7%), respectively, as compared to the same period in 2000.


                                       29
<PAGE>
     PAYMENTS TO HORSE OWNERS

     Payments of purses to horse owners during the three and the nine months
ended September 30, 2001 decreased by $2,588,000 (29.0%) and by  $2,384,000
(10.3%), respectively, as compared to the same period in 2000.  This was
essentially due to the provisions of the respective horse owner contracts and/or
Government Racing Board orders that provided additional payments to horse owners
from sources other than purses.

     Under El Comandante  contract with horse owners, the horse owners are
guaranteed minimum earnings of $25,032,000 for 2000 and 2001.  ECMC is obligated
among other items to pay the horse owners $90,000 annually for administrative
costs and 50% of the principal and interest owed on an outstanding horse owners
loan with a principal balance due of $526,000, plus accrued interest.  ECMC must
also invest $3,000,000 in improvements to the racetrack during the 10-year term
of the contract, as well as provide $2,000,000 of financing for the purchase of
horses.

     On March 16, 2001 an "Addendum to Contract" was executed by the Horse
Owners' Confederation and the Company, whereby the parties jointly agreed to:

     (i)  Increase the number of simulcast races each live race day from three
          (3) to six (6).

     (ii) Place three (3) of the simulcast races before the first live race and
          place three (3) intermingled races after the fifth live race;.

    (iii) Include simulcasting of nine (9) to twelve (12) races on Thursdays of
          each week, a day that currently holds no live races.

     (iv) In consideration for the above items, ECMC will pay an additional
          $1,000,000 to the Horse owners Confederation if approved by the Racing
          Board.

      On June 28, 2001, the Puerto Rico Racing Board granted ECMC the right to
increase the number of simulcast races from the United States from three (3) to
six (6) per live race day. The Order allowed a three (3) month probationary
period commencing July 1, 2001 for ECMC to place three (3) simulcast races
before the first live race and three (3) after the fifth live race.

     The Racing Board declined simulcasting of races during the probationary
period on Thursday's, a day that currently holds no live races.

     Pending final approval by the Racing Board, ECMC was obligated to pay the
Horse Owners' Confederation $1,000,000.

     On October 16, 2001 following a hearing,  the Racing Board suspended
effective October 22, all simulcasting temporarily allowed during the
probationary period.    Since no final approval was obtained from the Racing
Board for the simulcasting of races, ECMC is no longer obligated to pay the
additional $1,000,000 to the Horse Owners Confederation.

     The Racing Board will allow simulcasting of such special events as the
Breeders' Cup, Kentucky Derby and the Preakness as well as the Caribbean Classic
and the Confraternity Classic from the host country if these races are not held
in Puerto Rico. ECMC is currently doing a cost/benefit analysis to determine if
the limited simulcasting will be economically worthwhile.


     FINANCIAL EXPENSES

     Financial expenses for the three and the nine months ended September 30,
2001 decreased by $534,000 (21.3%) and by $144,000 (1.9%), respectively,  as
compared to the same period in 2000.  This increase is primarily attributable to
interest and late charges owed by ECMC on the delinquent excise taxes.  See Part
II, Item I, "Legal Proceedings".


                                       30
<PAGE>
     DEPRECIATION AND AMORTIZATION

     Depreciation and amortization expenses for the three and the nine months
ended September 30, 2001 increased by $113,000, 12.5% and by $89,000, 3.2%,
respectively, as compared to the same period in 2000,  which is primarily due to
additions of capital improvements at El Comandante as well as an increased
monthly provision in 2001 which more accurately reflects the true expense.

     OTHER EXPENSES

     Other expenses for the three and the nine months ended September 30, 2001
decreased by $450,000 (5.2%) and increased by $908,000 (3.9%), respectively, as
compared to the same period in 2000.  This increase is primarily attributable to
new: operations, including additional expenses relating to the SSI and the VSAT
system, satellite related expenses which have yet to be recovered through
revenues, severance payments and horse owners contract expenses incurred by El
Comandante and additional professional fees incurred by Equus Entertainment
Corporation (see tables below).

<TABLE>
<CAPTION>
                                     OTHER EXPENSES BY COUNTRY
        INCREASE (DECREASE) FOR THREE MONTHS ENDED SEPTEMBER 30, 2001 WHEN COMPARED WITH 2000

                 Salaries, wages    Operating     General and      Marketing , TV   Net (decrease)
Country           and benefits      expenses     administrative    and satellite       increase
---------------------------------------------------------------------------------------------------
<S>             <C>                <C>          <C>               <C>               <C>

Puerto Rico:    $         (4,000)  $  444,000   $       598,000   $       (93,000)  $      945,000
Dominican Rep.            15,000      (35,000)            4,000           (39,000)         (55,000)
Panama                  (479,000)    (585,000)         (144,000)          (96,000)      (1,304,000)
Colombia                  (3,000)    (312,000)          331,000           (66,000)         (50,000)
Uruguay                        -       13,000             1,000                 -           14,000
                -----------------------------------------------------------------------------------
                $       (471,000)  $ (475,000)  $       790,000   $      (294,000)  $     (450,000)
                ===================================================================================
</TABLE>

<TABLE>
<CAPTION>
                                      OTHER EXPENSES BY COUNTRY
         INCREASE (DECREASE) FOR NINE MONTHS ENDED SEPTEMBER 30, 2001 WHEN COMPARED WITH 2000

                 Salaries, wages    Operating      General and      Marketing , TV   Net (decrease)
Country           and benefits       expenses     administrative    and satellite       increase
----------------------------------------------------------------------------------------------------
<S>             <C>                <C>           <C>               <C>               <C>

Puerto Rico:    $        265,000   $ 1,588,000   $     1,207,000   $       609,000   $    3,669,000
Dominican Rep.            19,000       274,000            (8,000)          (24,000)         261,000
Panama                (1,388,000)   (1,774,000)         (405,000)         (277,000)      (3,844,000)
Colombia                  (3,000)     (100,000)          251,000            (3,000)         145,000
Uruguay                        -       107,000           570,000                 -          677,000

                ------------------------------------------------------------------------------------
                $     (1,107,000)  $    95,000   $     1,615,000           305,000          908,000
                ====================================================================================
</TABLE>

     SSI AND VSAT EXPENSES

     The increase in operating expenses and marketing/satellite expenses for the
three and nine months ended September 30, 2001, as compared to the same period
in 2000, are primarily due to the additional expenses for the planning,
engineering and startup expenses on the wagering system (VSAT) and leased
satellite time. The Company has not been able to recover these additional
operating expenses since the new equipment is not yet in service.


                                       31
<PAGE>
PROVISION FOR INCOME TAXES

     The provision for income tax relates to deferred Puerto Rico income taxes.


MINORITY INTEREST

     The Company's minority interest is attributed to the income and losses
allocable to the minority partners of HDA, Galapagos and Equus-Comuneros.  Since
the accumulated losses of Galapagos allocable to minority partners exceeded
their investment, for the nine months ended September 30, 2001, the Company did
not recognize minority interest losses of Galapagos of $279,182 and $309,058,
respectively.  During 2001:  (i) if and while Galapagos continues incurring
losses, no minority interest in Galapagos' net losses will be recognized, and
(ii) if Galapagos generates profits, no minority interest in Galapagos' net
income will be recognized up to $2,125,964.


                                       32
<PAGE>
                        LIQUIDITY AND CAPITAL RESOURCES

     OVERVIEW

     The Company is the owner of Housing Development Associates S.E. ("HDA") and
its consolidated subsidiary, El Comandante Management Company LLC ("ECMC"), as
well as the owner of Agency Betting Network, Inc. ("ABN"), Satellites Services
International, Inc. ("SSI") and foreign subsidiaries (Equus Comuneros S.A.,
Equus Entertainment de Panama, S.A. and Galapagos, S.A.). The principal source
of cash of Equus Gaming Company L.P. (the "Company" or, when referring to the
individual entity, "Equus") is related to its ownership interest in HDA, the
owner and operator (through its wholly owned subsidiary ECMC) of El Comandante
Race Track in Puerto Rico.   Due to certain restrictions under HDA's indenture
for the issuance of its 11.75% First Mortgage Notes due 2003 (the "Indenture"),
cash held by HDA or its consolidated subsidiaries (including ECMC) is restricted
to ensure payment of interest and certain obligations on the First Mortgage
Notes.

     The following is a discussion of the liquidity and capital resources of the
Company, including HDA and its subsidiary ECMC, as well as the Company's other
subsidiaries ABN and SSI.  Net cash flow from foreign subsidiaries of the
Company (Equus Comuneros, S.A., and Galapagos, S.A) did not materially affect
the consolidated cash flow of the Company for the three and nine months ended
September 30, 2001 and these activities are not discussed herein.

     LIQUIDITY AND CAPITAL RESOURCES OF THE COMPANY (AND ITS CONSOLIDATED
SUBSIDIARIES)

     Cash and cash equivalents of the Company and its consolidated subsidiaries
increased by approximately $147 thousand during the quarter ended September 30,
2001.  The Company has historically met its liquidity requirements principally
from cash flow generated by (i) the operations of El Comandante Race Track in
Puerto Rico and (ii) short-term loans and capital leases for acquisition of new
equipment.

     During the three and nine months ended September 30, 2001, the principal
uses of cash by the Company and its consolidated subsidiaries for its financing
and investing activities were as follows:

     (i)  Payment January 2, 2001 of interest on First Mortgage Notes due
          December 14, 2000 of $3.7 million.

     (ii) Payments on capital leases for equipment used in the Company's
          operations.

    (iii) Capital improvements and acquisition of equipment.

     (iv) Payments of financial obligations.

     (v)  Weekly payment of delinquent excise taxes pursuant to Agreement.

     (vi) Weekly payment of delinquent patente taxes pursuant to Agreement.


For the remainder of the year 2001 projected uses of cash for the Company's
activities are:

     (i)  Interest payments of $3.6 million on the First Mortgage Notes due
          December 15, 2001, (remains unpaid).

     (ii) Additional investments in ABN for its Colombian operations.


                                       33
<PAGE>
     (iii) Additional investments in SSI, principally for the payment of
          satellite time contracted from a third party.

     (iv) Redemption of First Mortgage Notes of $3,454,000 due December 15,
          2001, (remains unpaid).

     (v)  Weekly payment of delinquent excise taxes pursuant to Agreement, $1.3
          million, from July 1, 2001 through December 31, 2001.

     (vi) Weekly payment of delinquent volume of business taxes pursuant to
          Agreement, $1.3 million from August 1, 2001 through December 31, 2001.

     (vii) Monthly payment of prior arrearages owed to Puerto Rico Telephone
          Company pursuant to Agreement, $211 thousand from August 30, 2001,
          through December 31, 2001.

     INVESTMENTS  IN  TELECOMMUNICATIONS  EQUIPMENT  AND  MARKET  EXPANSION

     The Company plans to install over the next twelve (12) months 1,000 VSAT
(video and data communication) units for OTB agencies in all operations. The
communications up-link satellite control center (the "Hub") installation is
complete and operational. SSI will be the service provider for all
telecommunications and satellite usage by the Company's affiliates. The
estimated $12 million capital investment in the VSAT expansion for which
financing is sought is expected to be recovered over a five-year period from the
new VSAT units.

     There can be no assurance that the Company will be able to obtain the
financing or expand the satellite time required to build out the proposed video
and data communication system. The failure to do so could cause the Company not
to have sufficient funds to operate.

     LONG-TERM  COMMITMENTS.  In  addition  to  capital  leases,  long-term cash
commitments  of  the Company (excluding foreign subsidiaries) are a $2.5 million
unsecured  note  and  the  First  Mortgage  Notes.

     In August 2000 the Company obtained a $2.5 million unsecured loan at 3%
over prime due in December 29, 2004.    Principal and interest are to be paid
from .25% of the wagering handle for the first four (4) years of the service
contract with United Tote as outlined in note 2 of the consolidated financial
statements, "wagering service agreement".

     HDA's First Mortgage Notes bear interest at 11.75%, payable semiannually on
June 15th and December 15th, and are secured by El Comandante assets.  The First
Mortgage Notes are redeemable, at the option of HDA, in 2001 and thereafter at
100% of the principal amount, together with accrued and unpaid interest.  The
maturity dates of First Mortgage Notes, reduced by prior redemptions and by the
Notes purchased by ECMC, are as follows (in thousands):

           YEAR  ENDING      NET  AMOUNT
           DECEMBER 31,     (FACE VALUE)
          -------------     ------------

              2001           $     3,454
              2002                10,200
              2003                40,800
                            ------------
                                 $54,454
                            ============

     To the extent First Mortgage Notes are not acquired in the open market or
redeemed, Management expects to refinance this obligation not later than
December 2002.


                                       34
<PAGE>
     U.S. VIRGIN ISLANDS- The Company has been awarded the right to operate the
racetrack in St. Thomas and the off-track betting agency system in St. Thomas
and St. John. The Company has negotiated a contract with the Racing Board for
the exclusive rights to simulcast unlimited live races from the United States to
the Virgin Islands and is awaiting final approval from the Legislature and
Governor, which is expected by mid June, 2002. Revenues from simulcasting are
expected to begin in July, 2002. Revenues from live racing will be phased in as
the racetrack and spectator facilities are refurbished. This is expected to be
completed by September, 2002.

     The total investment in the Virgin Islands project is expected to be
approximately $500,000.

     GOVERNMENT  MATTERS.   El Comandante is required to pay the Government of
Puerto Rico various taxes on wagering placed on thoroughbred horse races held at
or simulcasted by El Comandante (Puerto Rico).  The taxes on  wagering are
required to be remitted to the Department of the Treasury of Puerto Rico within
two (2) days of the date wagers are placed.   El Comandante failed to remit tax
payments totaling $9,949,182 from October 16, 2000 to February 7, 2001.

     On May 24, 2001, ECMC executed a "Closing Agreement"(the "Agreement") with
the Secretary of the Treasury of Puerto Rico (the "Secretary") whereby ECMC will
settle its assessed debt of unpaid excise taxes and commissions for the period
October, 2000 through February, 2001, in the amount of $11,172,450 (including
interest and late charges), plus an additional assessment of $60,141 (including
interest) for unpaid commissions for the period February 2, 2001 through
February 7, 2001 as follows:

     1.   Upon execution of the Agreement, ECMC paid $60,141 in full payment of
          the February, 2001 assessment.

     2.   For a six-month period commencing June 1, 2001 and ending November 30,
          2001, ECMC will pay $50,000 per week against the October, 2000 through
          January, 2001 assessment. After the six-month period, the Secretary
          will reevaluate the financial condition of ECMC, and may, upon
          reasonable grounds, continue, modify or revoke the Agreement.

     3.   ECMC will continue to pay on a timely basis current excise taxes and
          commissions.

     4.   ECMC will provide and maintain a bond in favor of the Secretary in the
          amount of $500,000.

     5.   In the event ECMC defaults during the term of the Agreement, the
          Secretary may accelerate the balance due plus any additional amounts
          due as a result of the default.

     As of June 12, 2002, ECMC had fully complied with the terms and provisions
of the Agreement.

     On August 18, 2001, ECMC executed a Closing Agreement (the "Agreement")
with the Municipality of Canovanas whereby ECMC settled a long-standing dispute
over the payment of the Volume of Business Tax assessed by the municipality.


                                       35
<PAGE>
     The following schedule lists the deficiencies by fiscal year with the
corresponding interest and surcharges:

          FISCAL               INTEREST
          TAX     TAX          AND
          YEAR    DEFICIENCY   SURCHARGES    TOTAL
          ------  -----------  -----------  --------
          93/94   $    74,087  $    67,913  $142,000
          96/97       120,397       68,224   188,621
          97/98       126,666       59,110   185,776
          98/99       123,366       45,233   168,599
          99/00        93,367       45,233   118,264
          00/01       116,735       19,455   136,190
                  -----------  -----------  --------

          Totals  $   654,618  $   284,832  $939,450
                  ===========  ===========  ========

     Prior to settlement, the Company had accrued a total liability of $838,396
as of June 30, 2001. On June 30, 2001, the Company recorded additional penalties
and interest of $101,054.

     The terms of the Agreement are as follows:

     1.   For period August 1, 2001 through January 31, 2003, ECMC will pay the
          Municipality of Canovanas $5,000 per week.

     2.   At the end of this eighteen (18) month period, the Municipality can
          request full payment of the remaining balance, $559,450, or
          renegotiate a final twelve (12) month payoff of the balance.

     3.   Should ECMC default at any time on the agreed payment terms, the
          Municipality may declare the entire remaining balance due.

     4.   To guarantee the timely payments of the amounts due, ECMC has provided
          to the Municipality two (2) payments bonds in the amount of $503,732
          and $94,886, respectively.

     As of June 12, 2002, ECMC had fully complied with all the provisions of the
Agreement.

     On April 2, 2001, the House of Representatives of the Commonwealth of
Puerto Rico passed a resolution ordering an investigation of the operations of
El Comandante (Puerto Rico) with emphasis on the mechanisms of physical and
financial administration and the debts owed to the Department of the Treasury of
Puerto Rico and to the members of the Horse Owners' Confederation.

     As of June 12, 2002, all requested information had been submitted by ECMC.
The investigation has been completed, but as of this date, the House of
Representatives has not issued their report or otherwise disclosed their
findings.

     As of September 30, 2001, Equus Comuneros owed the Colombian Tax and
National Customs Administration approximately $837,373, including interest, for
withholding at source tax. Management has recently met with the Government to
settle the amount outstanding. The plan proposed to the government is as
follows.

     1.   Five (5) year amortization of 10%, 15%, 25% and 30%, respectively.

     2.   The Government is requesting a down payment, which is currently being
          negotiated.


                                       36
<PAGE>
FORWARD-LOOKING STATEMENT

     Certain matters discussed and statements made within this Form 10-Q are
forward-looking statements within the meaning of the Private Litigation Reform
Act of 1995 and as such may involve known and unknown risks, uncertainties, and
other factors that may cause the actual results, performance or achievements of
the Company to be different from any future results, performance or achievements
expressed or implied by such forward-looking statements.  Although the Company
believes the expectations reflected in such forward-looking statements are based
on reasonable assumptions, it can give no assurance that its expectations will
be attained. These risks are detailed from time to time in the Company's filing
within the Securities and Exchange Commission or other public statements.


PART II - OTHER INFORMATION


ITEM  1.  LEGAL  PROCEEDINGS:

     On May 24, 2001, ECMC executed a "Closing Agreement" (the "Agreement") with
the Secretary of the Treasury of Puerto Rico (the "Secretary"), whereby ECMC
will settle its assessed debt for unpaid excise taxes and commissions for the
period October, 2000 through February, 2001, in the amount of $11,172,450
(including interest and late charge), plus an additional assessment of $60,141
(including interest) for unpaid commissions for the period February 2, 2001
through February 7, 2001, as follows:

     1.   Upon execution of the Agreement, ECMC paid $60,141 in full payment of
          the February, 2001 assessment.

     2.   For a six-month period commencing June 1, 2001 and ending November 30,
          2001, ECMC is obligated to pay $50,000 per week against the October,
          2000 through January, 2001 assessment. After the six-month period, the
          Secretary will reevaluate the financial condition of ECMC and may,
          upon reasonable grounds, continue, modify or revoke the Agreement.

     3.   ECMC will continue to pay on a timely basis the current excise taxes
          and commissions.

     4.   ECMC will provide and maintain a bond to the Secretary in the amount
          of $500,000.

     5.   In the event ECMC defaults during the term of the Agreement, the
          Secretary may accelerate the balance due plus any additional amounts
          due as a result of the default.

     As of June 12, 2002 all terms and conditions of the Agreement had been met
by ECMC.

     As of September 30, 2001, Equus Comuneros owed the Colombian Tax and
National Customs Administration approximately $837,373, including interest, for
withholding at source tax. Management has recently met with the Government to
settle the amount outstanding. The plan proposed to the government is as
follows.

     1.   Five (5) year amortization of 10%, 15%, 25% and 30%, respectively.

     2.   The Government is requesting a down payment, which is currently being
          negotiated.

     On August 18, 2001, ECMC executed a Closing Agreement (the "Agreement")
with the Municipality of Canovanas whereby ECMC settled a long-standing dispute
over the payment of the Volume of Business Tax assessed by the municipality.


                                       37
<PAGE>
     The following schedule lists the deficiencies by fiscal year with the
corresponding interest and surcharges:

          FISCAL               INTEREST
          TAX     TAX          AND
          YEAR    DEFICIENCY   SURCHARGES    TOTAL
          ------  -----------  -----------  --------
          93/94   $    74,087  $    67,913  $142,000
          96/97       120,397       68,224   188,621
          97/98       126,666       59,110   185,776
          98/99       123,366       45,233   168,599
          99/00        93,367       45,233   118,264
          00/01       116,735       19,455   136,190
                  -----------  -----------  --------

          Totals  $   654,618  $   284,832  $939,450
                  ===========  ===========  ========

     Prior to settlement, the Company had accrued total liabilities of $838,396.
On June 30, 2001, the Company recorded additional penalties and interest of
$101,054.

     The terms of the Agreement are as follows:

     1.   For period August 1, 2001 through January 31, 2003, ECMC will pay the
          Municipality of Canovanas $5,000 per week.

     2.   At the end of this eighteen (18) month period, the Municipality can
          request full payment of the remaining balance, $559,450, or
          renegotiate a final twelve (12) month payoff of the balance.

     3.   Should ECMC default at any time on the agreed payment terms, the
          Municipality may declare the entire remaining balance due.

     4.   To guarantee the timely payments of the amounts due, ECMC has provided
          to the Municipality two (2) payments bonds in the amount of $503,732
          and $94,886, respectively.

     As of June 12, 2002, the terms and conditions of the Agreement have been
met by ECMC.


     The Company and/or its subsidiaries had a case in arbitration at the
American Arbitration Association in defense of and against Autotote, involving
all the racetracks in which Equus has an ownership interest. Autotote filed a
claim against El Comandante for unpaid service fees of $186,415 plus interest.
El Comandante agreed to pay this amount but filed a counterclaim against
Autotote.

     On July 27, 2001, American Arbitration Association rendered its award.  The
following is a summary of the awards by racetrack:

     EL COMANDANTE, PUERTO RICO

          1.   Comandante is to pay Autotote the principal amount of $355,496 in
               unpaid service fees together with interest of $32,051, accrued
               through April 1, 2001.

          2.   Comandante shall reimburse Autotote for costs incurred of
               $132,500.

          3.   As of September 30, 2001, the outstanding principal balance was
               $587,501 and accrued interest was $18,237.


                                       38
<PAGE>
     EQUUS - PANAMA

          1.   Equus - Panama is to pay Autotote the principal amount of
               $250,474 in unpaid service fees together with interest of $45,233
               accrued through June 30, 2001.

          2.   Equus-Panama shall reimburse Autotote for costs incurred of
               $25,000.


     EQUUS - COMUNEROS

          1.   Equus-Comuneros is to pay Autotote the principal amount of
               $584,262 in unpaid service fees as of April 23, 2001, together
               with interest of $218,059 accrued through June 30, 2001.

          2.   Equus-Comuneros shall reimburse Autotote costs incurred of
               $132,500.


     GALAPAGOS

     1.   Galapagos owes Autotote the principal amount of $230,578 as of April
          23, 2001, together with interest of $120,308 through November 21,
          2001, the date of the award.

     2.   For breach of good faith and fair dealings, Autotote owes Galapagos
          $800,000, plus interest at the rate of seven (7) percent per annum
          from November 21, 2001 to the date of payment.

     3.   The parties have no further obligations to one another with respect to
          lottery operations in the Dominican Republic.

     4.   The parties shall bear equally the cost of arbitration which amount to
          $44,903 each. Any excess funds on deposit shall be reimbursed to the
          paying parties in equal amounts.

     5.   Autotote shall pay Galapagos $150,000 in reimbursement fees incurred
          in the proceedings.

     6.   Awards will be offset and the net amount owed to Galapagos of
          approximately $600,000 will accrue interest at seven (7) percent until
          paid.

     Each entity involved in the arbitration sustains individually the
consequences of the arbiters' final award and there are no performance
guarantees by any other entity including Equus Gaming Company L.P., the parent
company.

     Costs incurred by the Company in pursuing the arbitration with Autotote to
date total $574,042 and have been allocated to each participating entity in the
same proportion that the arbiters awarded the costs incurred by Autotote to each
entity.

     On August 18, 2001, ECMC executed a Closing Agreement (the "Agreement")
with the Municipality of Canovanas whereby ECMC settled its longstanding dispute
over the payment of the Volume of Business Tax assessed by the municipality.


                                       39
<PAGE>
     The following schedule lists the deficiencies by fiscal year with the
corresponding interest and surcharges:


                  FISCAL       INTEREST
          TAX     TAX          AND
          YEAR    DEFICIENCY   SURCHARGES    TOTAL
          ------  -----------  -----------  --------
          93/94   $    74,087  $    67,913  $142,000
          96/97       120,397       68,224   188,621
          97/98       126,666       59,110   185,776
          98/99       123,366       45,233   168,599
          99/00        93,367       45,233   118,264
          00/01       116,735       19,455   136,190
                  -----------  -----------  --------

          Totals  $   654,618  $   284,832  $939,450
                  ===========  ===========  ========

     Prior to settlement, the Company had accrued as of June 30, 2001 a total
liability of $838,396 due for municipal taxes and other charges. On June 30,
2001, the Company recorded additional penalties and interest of $101,054.

     The terms of the Agreement are as follows:

     1.   For period August 1, 2001 through January 31, 2003, ECMC will pay the
          Municipality of Canovanas $5,000 per week.

     2.   At the end of this eighteen (18) month period, the Municipality can
          decide whether to request full payment of the remaining balance,
          $559,450, or renegotiate a final twelve (12) month payoff of said
          balance.

     3.   Should ECMC default at any time on the agreed to payment terms, the
          Municipality may declare the entire remaining balance due.

     4.   To guarantee timely payments of the amounts due, ECMC shall provide to
          the Municipality two (2) payments bonds in the amount of $503,732 and
          $94,886, respectively.

     As of June 12, 2002, ECMC has fully complied with the provisions of the
Agreement.

     Certain of the Company's subsidiaries are presently named as defendants in
various lawsuits and might be subject to other claims arising out of normal
business operations. Management, based in part upon advice from legal counsel,
believes that the results of such actions will not have a material adverse
impact on the Company's financial position or results of operations.


ITEMS  2-6  NONE


                                       40
<PAGE>
                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15 (d) of the Securities and
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.


                                             Equus Gaming Company L.P.
                                          -----------------------------------
                                                 (Registrant)


                                          By:  Equus Management Company
                                               Managing General Partner



June 21, 2002                             /s/  Thomas B. Wilson
-------------------                       -----------------------------------
                                          President, Chief Executive Officer,
                                            Director and Acting Chief
                                            Financial Officer



June 21, 2002                             /s/ James J. Wilson
------------------                        -----------------------------------
                                          Co-Chairman


                                       41
<PAGE>