<PAGE>
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549




                                    FORM 10-Q
                                QUARTERLY REPORT
                     PURSUANT TO SECTION 13 OR 15 (d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934




For the quarterly period ended March 31, 2002        Commission File No. 0-27338


                                INFOGRAMES, INC.
             (Exact name of registrant as specified in its charter)



            DELAWARE                                              13-3689915
(State or Other Jurisdiction of                               (I.R.S. Employer
Incorporation or Organization)                               Identification No.)




                      417 FIFTH AVENUE, NEW YORK, NY 10016
                    (Address of principal executive offices)




       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (212) 726-6500

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

                                 Yes /X/ No / /

         As of May 14, 2002 there were 69,825,571 shares of the registrant's
Common Stock outstanding.


                                     Page 1
<PAGE>






                                INFOGRAMES, INC.
                  MARCH 31, 2002 QUARTERLY REPORT ON FORM 10-Q
                                TABLE OF CONTENTS




PART I - FINANCIAL INFORMATION



<TABLE>
<CAPTION>
                                                                                                                    PAGE
                                                                                                                    ----
<S>                                                                                                                  <C>
   Item 1.      Financial Statements:


                Consolidated Balance Sheets as of June 30, 2001 and March 31, 2002 (unaudited)                       3

                Consolidated Statements of Operations and Comprehensive Loss (unaudited) for the Three Months
                and the Nine Months Ended March 31, 2001 and for the Three Months and Nine Months Ended March
                31, 2002                                                                                             4

                Consolidated Statements of Cash Flows for the Nine Months Ended March 31,
                2001 and 2002 (unaudited)                                                                            5

                Consolidated Statements of Stockholders' Deficiency for the Year Ended June 30, 2001 and the
                Nine Months Ended March 31, 2002 (unaudited)                                                         6

                Notes to the (unaudited) Consolidated Financial Statements                                           7


   Item 2.      Management's Discussion and Analysis of Financial Condition and Results
                of Operations                                                                                        16

   Item 3.      Quantitative and Qualitative Disclosures about Market Risk                                           23




PART II - OTHER INFORMATION


   Item 1.      Legal Proceedings                                                                                   24

   Item 6.      Exhibits and Reports on Form 8-K                                                                    26

  Signatures                                                                                                        27
</TABLE>





                                     Page 2
<PAGE>


ITEM 1.     FINANCIAL STATEMENTS


                                INFOGRAMES, INC.
                           CONSOLIDATED BALANCE SHEETS
                        (IN THOUSANDS, EXCEPT SHARE DATA)


<TABLE>
<CAPTION>
                                                                                   JUNE 30,            MARCH 31,
                                                                                     2001                2002
                                                                               ----------------    ----------------
                                                                                                      (UNAUDITED)
ASSETS

<S>                                                                                 <C>                  <C>
Current assets:
   Cash and cash equivalents.................................................          $   5,378           $   5,311
   Marketable securities.....................................................                554                   -
   Receivables, net of allowances for bad debts, returns, price protection
    and other customer promotional programs of $56,554 and $60,195
    respectively.............................................................             37,240              40,457
   Inventories, net of reserves of $20,360 and $9,342 respectively...........             29,182              42,476
   Income taxes receivable...................................................              2,273               6,288
   Due from related parties..................................................              4,388               6,062
   Prepaid expenses and other current assets.................................              6,743               9,374
                                                                                     -----------         -----------
     Total current assets....................................................             85,758             109,968
Property, plant and equipment, net...........................................             12,996              15,987
Investments..................................................................              7,122               7,122
Goodwill, net of accumulated amortization of $26,116 at both dates...........             29,211              29,211
Other assets.................................................................              9,997               6,172
                                                                                     -----------         -----------
     Total assets............................................................        $   145,084         $   168,460
                                                                                     ===========         ===========

LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current liabilities:
   Accounts payable..........................................................         $   37,777          $   40,249
   Accrued liabilities.......................................................             31,491              27,659
   Revolving credit facility.................................................             34,888              25,000
   Related party credit facility.............................................              9,316              63,058
   Royalties payable.........................................................             12,842               6,193
   Deferred revenue..........................................................              1,753                 193
   Due to related parties....................................................             15,036               5,233
                                                                                     -----------         -----------
     Total current liabilities...............................................            143,103             167,585
Long-term debt...............................................................             39,954                   -
Related party debt...........................................................             65,408             110,002
Deferred revenue.............................................................              1,750               3,500
Other long-term liabilities..................................................              1,405               3,026
                                                                                     -----------         -----------
     Total liabilities.......................................................            251,620             284,113
                                                                                     -----------         -----------

Commitments and contingencies
Stockholders' deficiency:
   Preferred stock, $0.01 par value, 5,000 shares authorized, none issued or
   outstanding...............................................................                  -                   -
   Common stock, $0.01 par value, 300,000 shares authorized, 69,759 shares
    issued and 69,524 shares outstanding at June 30, 2001 and 69,814 issued
    and outstanding at March 31, 2002........................................                698                 698
   Additional paid-in capital................................................            486,306             485,013
   Accumulated deficit.......................................................           (593,991)           (604,211)
   Accumulated other comprehensive income....................................              2,803               2,847
   Treasury shares, at cost, 235 shares and 0 shares, respectively...........             (2,352)                  -
                                                                                     -----------         -----------
         Total stockholders' deficiency......................................           (106,536)           (115,653)
                                                                                     -----------         -----------
         Total liabilities and stockholders' deficiency......................        $   145,084         $   168,460
                                                                                     ===========         ===========
</TABLE>


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


                                     Page 3
<PAGE>


                                INFOGRAMES, INC.
          CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)
                                   (UNAUDITED)



<TABLE>
<CAPTION>
                                                                            THREE MONTHS ENDED              NINE MONTHS ENDED
                                                                                  MARCH 31,                      MARCH 31,
                                                                        ---------------------------      -----------------------
                                                                            2001            2002            2001          2002
                                                                        -----------    ------------      ----------   ----------
<S>                                                                     <C>            <C>               <C>          <C>
Net revenues                                                            $   67,657     $     50,519       $ 227,517   $  289,442
Cost of goods sold                                                          36,960           35,320          97,765      152,355
                                                                        ----------     ------------       ---------   ----------
    Gross profit                                                            30,697           15,199         129,752      137,087
Selling and distribution expenses                                           17,852           15,346          56,141       61,943
General and administrative expenses                                         14,445            7,068          49,873       30,991
Research and development                                                    10,647           17,606          39,968       48,251
Restructuring costs                                                          2,116                -           2,116            -
Merger costs                                                                     -                -           1,700            -
Gain on sale of line of business                                                 -                -           5,501            -
Depreciation and amortization                                                4,469            1,368          13,375        3,535
                                                                        ----------      -----------       ---------    ---------

    Operating loss                                                         (18,832)         (26,189)        (27,920)      (7,633)
Interest expense, net                                                        2,508            1,530          11,176        7,894
Other (expense) income                                                         (90)            (230)          1,427          293
                                                                        ----------      -----------       ---------    ---------
    Loss before benefit from income taxes                                  (21,430)         (27,949)        (37,669)     (15,234)
Benefit from income taxes                                                        -           (5,002)              -       (5,014)
                                                                        ----------      -----------       ---------    ---------
     Net loss                                                            $ (21,430)     $   (22,947)      $ (37,669)  $  (10,220)
                                                                        ==========      ===========       =========   ==========
Basic and diluted net loss per share                                     $   (0.31)     $     (0.33)      $   (0.71)  $   ( 0.15)
                                                                        ==========      ===========       =========   ==========
     Weighted average number of shares outstanding, basic and
          diluted                                                           69,734           69,799          53,086       69,686
                                                                        ==========      ===========       =========   ==========
Other comprehensive loss:
Net loss                                                                 $ (21,430)     $   (22,947)      $ (37,669)  $  (10,220)
    Foreign currency translation adjustments                                  (171)             158            (997)         488
    Unrealized gain (loss) on securities                                       780               -             (137)        (444)
                                                                        ----------      -----------       ---------    ---------
       Comprehensive loss                                                 $(20,821)     $   (22,789)      $ (38,803)  $  (10,176)
                                                                        ==========      ===========       ==========   ==========
</TABLE>





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


                                     Page 4
<PAGE>




                                INFOGRAMES, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                                              NINE MONTHS ENDED
                                                                                  MARCH 31,
                                                                    ----------------------------------------
                                                                          2001                  2002
                                                                    ------------------    ------------------
<S>                                                                  <C>                   <C>
   CASH FLOWS FROM OPERATING ACTIVITIES:
   Net loss.........................................................  $       (37,669)     $        (10,220)

   Adjustments to reconcile net loss to net cash used in operating
    activities:
      Depreciation and amortization.................................           13,375                 3,535
      Amortization of discount on long-term debt....................            2,153                 2,153
      Amortization of deferred financing fees.......................              717                   717
      Deferred royalty income.......................................                -                (1,750)
      Accrued interest..............................................            2,666                 2,911
      Write-off of fixed assets.....................................            1,409                    52
   Changes in operating assets and liabilities:
         Receivables, net...........................................          (14,042)               (3,073)
         Inventories, net...........................................           (1,510)              (13,191)
         Due to / from related parties, net.........................           17,829               (11,910)
         Prepaid expenses and other current assets..................            1,293                (2,543)
         Accounts payable...........................................          (17,896)                2,420
         Accrued liabilities........................................          (10,178)               (4,027)
         Bank overdraft.............................................           (3,355)                    -
         Royalties payable..........................................           (3,006)               (5,756)
         Income taxes receivable....................................            1,084                (3,973)
         Marketable securities......................................            2,133                   108
         Short-term and long-term deferred income...................            1,750                 1,940
         Long-term liabilities......................................            1,352                 1,618
         Other assets...............................................           (2,341)                3,238
         Other......................................................             (590)                    -
                                                                      ----------------     ----------------
           Net cash used in operating activities                              (44,826)              (37,751)
                                                                      ----------------     ----------------
   CASH FLOWS FROM INVESTING ACTIVITIES:
   Purchases of property and equipment..............................           (3,802)               (6,553)
                                                                      ----------------     ----------------
           Net cash used in investing activities                               (3,802)               (6,553)
                                                                      ----------------     ----------------
   CASH FLOWS FROM FINANCING ACTIVITIES:
   Borrowings under related party credit facility...................           48,736                54,000
   Repayments under revolving credit facility.......................                -               (10,000)
   Proceeds from issuance of stock from employee stock purchase plan                -                   127
   Proceeds from exercise of stock options..........................                8                    35
   Conversion of 955 warrants by Infogrames  Entertainment  S.A. @
    $0.05 per share..................................................              48                     -
                                                                      ----------------     ----------------
           Net cash provided by financing activities                           48,792                44,162
                                                                      ----------------     ----------------
   Effect of exchange rates on cash and cash equivalents                         (484)                   75
                                                                      ----------------     ----------------
   Net decrease in cash and cash equivalents                                     (320)                  (67)
   Cash and cash equivalents - beginning of period                             13,463                 5,378
                                                                      ----------------     ----------------
   Cash and cash equivalents - end of period                          $        13,143      $          5,311
                                                                      ================     ================
</TABLE>




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





                                     Page 5
<PAGE>


                                INFOGRAMES, INC.
               CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY
                        (IN THOUSANDS, EXCEPT SHARE DATA)


<TABLE>
<CAPTION>
                                                                                      ACCUMULATED
                                          COMMON               ADDITIONAL               OTHER                  TREASURY
                                           STOCK    COMMON      PAID-IN    RETAINED  COMPREHENSIVE  TREASURY    SHARES
                                          SHARES     STOCK      CAPITAL    DEFICIT   INCOME (LOSS)   SHARES      COST        TOTAL
                                          ------     -----      -------    -------   -------------   ------      ----        -----
<S>                                     <C>        <C>        <C>        <C>           <C>         <C>      <C>         <C>
BALANCE, JULY 1, 2000.................    20,685   $   208    $ 293,284  $ (533,323)   $    933        332   $  (3,322)  $ (242,220)
Issuance of shares for INA merger.....    28,000       280            -           -           -          -           -          280
Conversion of warrants at $0.05 a share      955         9           39           -           -          -           -           48
Conversion of related party credit
facility at $6.40 a share.............    20,089       200      128,370           -           -          -           -      128,570
Conversion of INA related party
payables..............................         -         -       64,907           -           -          -           -       64,907
Issuance of common stock pursuant to
employee stock purchase plan..........        25         1           71           -           -          -           -           72
Sales of treasury shares..............         -         -        (370)           -           -        (97)        970          600
Exercise of stock options.............         5         -            5           -           -          -           -            5
Net loss..............................         -         -            -     (60,668)          -          -           -      (60,668)
Currency translation adjustment.......         -         -            -           -       1,382          -           -        1,382
Unrealized gain on securities.........         -         -            -           -         488          -           -          488
                                        --------    ------   ----------   ---------     -------     ------     -------    ---------
BALANCE, JUNE 30, 2001................    69,759       698      486,306    (593,991)      2,803        235      (2,352)    (106,536)
Net loss..............................         -         -            -     (10,220)          -          -           -      (10,220)
Currency translation adjustment.......         -         -            -           -         488          -           -          488
Unrealized loss on securities.........                                                                   -           -
                                               -         -            -           -        (444)         -           -         (444)
Issuance of common stock pursuant to
employee stock purchase plan..........        17         -          127           -           -          -           -          127
Issuance of common stock in lieu of
partial royalty payment...............        11         -           42           -           -          -           -           42
Sales of treasury shares in lieu of
partial royalty payment...............         -         -      (1,497)           -           -       (235)      2,352          855
Exercise of stock options.............        27         -          35            -           -          -           -           35
                                        --------    ------   ----------   ---------     -------     ------     -------    ---------
BALANCE, MARCH 31, 2002 (UNAUDITED)...    69,814     $ 698    $485,013    $(604,211)    $ 2,847          -      $    -   $ (115,653)
                                        ========    ======   ==========   =========     =======     ======     =======    =========
</TABLE>






                                     Page 6
<PAGE>




                                INFOGRAMES, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)



NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES



   Nature of Business

         Infogrames, Inc., a Delaware corporation (the "Company"), is a leading
worldwide developer, publisher and distributor of interactive entertainment
software for use on various platforms, including PCs, Sony PlayStation and
PlayStation2, Microsoft Xbox and Nintendo's Game Boy. The Company derives its
revenues primarily from the sale of its created, published, licensed and
purchased products to mass merchants, specialty software stores, computer
superstores and distributors located throughout North America. Infogrames
Entertainment S.A., a French corporation ("Infogrames SA"), owns approximately
89% of the Company.

   Basis of Presentation

         On September 6, 2000, the Company entered into a merger agreement with
Infogrames North America, Inc. ("INA"), a wholly-owned subsidiary of Infogrames
SA. The Company acquired INA through the creation of a wholly-owned subsidiary
that merged with and into INA (the "INA Merger"). Upon completion of the INA
Merger, INA became a wholly-owned subsidiary of the Company. The effective date
of the INA Merger was October 2, 2000 and was accounted for on an "as if pooled"
basis. The accompanying consolidated financial statements of the Company have
been combined with those of INA as of December 16, 1999, the date as of which
the Company and INA have been under the common control of Infogrames SA.

         The accompanying interim consolidated financial statements of the
Company are unaudited, but in the opinion of the Company's management, reflect
all adjustments consisting of normal recurring accruals necessary for a fair
presentation of the results for the interim period in accordance with
instructions for Form 10-Q. Accordingly, they do not include all information and
notes required by generally accepted accounting principles for complete
financial statements. These interim consolidated financial statements should be
read in conjunction with the consolidated financial statements and notes thereto
included in the Company's Annual Report on Form 10-K for the year ended June 30,
2001.

   Principles of Consolidation

         The consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiaries. All intercompany transactions and
balances have been eliminated.

   Revenue Recognition

         Revenue is recognized upon shipment of merchandise to customers. At the
time the revenue is recognized, a reserve is provided for expected future
returns net of the related cost of such items.

         The Company is not contractually obligated to accept returns, except
for defective product. However, the Company may permit its customers to return
or exchange product and may provide allowances for estimated returns, price
concessions and other allowances. Such allowances are estimated and provided for
at the time of sale.

   Net Loss Per Share

         Basic net loss per share ("EPS") is computed by dividing net loss by
the weighted average number of shares of common stock outstanding for the
period. Diluted EPS reflects the potential dilution that could occur from the
conversion of convertible debt and shares of common stock issuable through
stock-based compensation plans including stock options, restricted stock awards
and warrants using the treasury stock method. The impact on loss per share of
the


                                     Page 7
<PAGE>

assumed exercise of options and warrants and the assumed conversion of
convertible debt is not included in the computation of diluted EPS if their
inclusion is anti-dilutive.


   Developer Royalty Advances

         Rapid technological innovation, shelf-space competition, shorter
product life cycles and buyer selectivity have made it extremely difficult to
determine the likelihood of individual product acceptance and success. As a
result, the Company follows the policy of expensing developer royalty advances
as incurred, treating such costs as research and development expenses.

   License Advances

         Payments made to license intellectual property from third parties are
capitalized and amortized over projected unit sales. Management evaluates the
carrying value of these capitalized licenses quarterly and records any
impairment in value through research and development expense.


RECENT ACCOUNTING PRONOUNCEMENTS

         The Company has adopted the new accounting requirements of EITF Issue
No. 00-25, "Vendor Income Statement Characterization of Consideration from a
Vendor to a Retailer", effective January 1, 2002. EITF Issue No. 00-25 requires
the Company to report certain customer related payments and allowances as a
reduction of net revenues. The impact of the new accounting principle resulted
in the reclassification of cooperative advertising from selling and distribution
expenses to a reduction of net revenues and has no impact on the Company's
financial position or net income. All comparative periods have been reclassified
to conform to the new requirements.

         Effective January 1, 2002, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 144 "Accounting for the Impairment or Disposal
of Long-Lived Assets". SFAS No. 144 replaces SFAS No. 121 "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of" and
establishes accounting and reporting standards for long-lived assets to be
disposed of by sale. SFAS No. 144 requires that those assets be measured at the
lower of carrying amount or fair value less cost to sell. SFAS No. 144 also
broadens the reporting of discontinued operations to include all components of
an entity with operations that can be distinguished from the rest of the entity
that will be eliminated from the ongoing operations of the entity in a disposal
transaction. The adoption of this new principle did not have a material impact
on the Company's financial condition or results of operations.

         In August 2001, the FASB issued SFAS No. 143 "Accounting for Asset
Retirement Obligations". SFAS No. 143 addresses financial accounting and
reporting for obligations and costs associated with the retirement of tangible
long-lived assets. The Company is required to implement SFAS No. 143 on January
1, 2003. Management believes that the effect of implementing this pronouncement
will not have a material impact on the Company's financial condition or results
of operations.




NOTE 2 - INVENTORIES, NET

         Inventories consist of the following:

                                     Page 8
<PAGE>

<TABLE>
<CAPTION>
                                                                                           JUNE 30,         MARCH 31,
                                                                                             2001              2002
                                                                                             ----              ----

<S>                                                                                    <C>               <C>
Finished goods..................................................................       $   45,260        $    45,544
Return inventory................................................................            3,449              5,073
Raw materials...................................................................              833              1,201
                                                                                       ----------        -----------
                                                                                           49,542             51,818

Less:  Obsolescence reserve                                                               (20,360)            (9,342)
                                                                                       ----------        -----------
                                                                                       $   29,182        $    42,476
                                                                                       ==========        ===========
</TABLE>




                                     Page 9
<PAGE>




NOTE 3 - COMMITMENTS AND CONTINGENCIES

LITIGATION

         During the nine months ended March 31, 2002, no new significant claims
were asserted against or by the Company, the resolution of which would have a
material adverse affect on the Company's liquidity, financial condition or
results of operations, although the Company is involved in various claims and
legal actions arising in the ordinary course of business. The following
litigation matters are pending, however, and the Company continues to believe
that the underlying complaints are without merit and intends to defend itself
vigorously against these actions.

         The Company's management believes that the ultimate resolution of any
of the complaints summarized below and/or any other claims which are not stated
herein will not have a material adverse effect on the Company's liquidity,
financial condition or results of operations.

Scavenger

         On September 18, 1997, Scavenger, Inc. ("Scavenger"), a software
developer, filed a lawsuit against the Company in Supreme Court, New York
County, claiming that the Company breached a software development contract
between the parties dated November 28, 1995. The contract provided for the
development of four personal computer games, Amok, Scorcher, Into the Shadows
and Mudkicker. The Company paid royalty advances of $2 million ($500,000 per
game) in January 1996. Scavenger delivered and the Company accepted Amok and
Scorcher, but Scavenger did not deliver Into the Shadows or Mudkicker. The
Company paid an additional royalty advance of $500,000 upon delivery of Amok.

         The complaint alleges four causes of action: (1) breach of contract in
the amount of $1.9 million claimed as royalty advances for Amok and Scorcher
(first cause); (2) breach of contract in the amount of $2.4 million claimed as
additional royalty advances for Into the Shadows and Mudkicker (second cause);
(3) breach of contract in the amount of $5 million allegedly due above the
additional royalty advances (third cause); and (4) consequential damages in the
amount of $100 million based on the allegation that the Company's failure to pay
the additional royalty advances forced Scavenger out of business and Scavenger
allegedly was worth $100,000,000 as of January 1997 (fourth cause). The Company
asserted three counterclaims: (1) breach of contract for failure to deliver Into
the Shadows and Mudkicker seeking at least $5 million in damages (first
counterclaim); (2) breach of contract for failure to deliver Scorcher timely and
the failure to deliver Amok and Scorcher in conformance with the quality
requirements of the software development contract seeking at least $5 million in
damages (second counterclaim); and (3) unjust enrichment seeking the return of
the $2.5 million in royalty advances paid to Scavenger (third counterclaim).
By Order entered March 3, 2000, the Court granted Scavenger's motion for partial
summary judgment as to the first cause of action and denied the motion as to the
second cause. Judgment was thereupon entered March 14, 2000 in the amount of
$2.4 million ($1.9 million plus $0.5 million of accrued interest), which was
affirmed by Order of the Appellate Division, First Department entered June 8,
2000. Motions to the Appellate Division, First Department and to the Court of
Appeals for leave to appeal to the Court of Appeals were denied. In January
2001, the Company paid approximately $2.6 million satisfying the partial summary
judgment. Such amount includes interest accrued on the judgement amount from the
date of judgement.

         In an Order entered June 21, 2000, the Court denied the Company's
motion for summary judgment dismissing the third and fourth causes of action.
The Company simultaneously moved for reargument of and appealed from that
portion of the June 21, 2000 Order denying partial summary judgment on the
fourth cause. By Order entered September 8, 2000, the Court granted reargument
and, on reargument, dismissed the fourth cause of action (and the Company
withdrew its appeal). Scavenger unsuccessfully moved for reargument of the
September 8, 2000 Order, and appealed the September 8, 2000 Order to the
Appellate Division, First Department. By Order entered December 19, 2000, the
Court separately ruled with respect to each of the Company's counterclaims that
the Company cannot seek to recover as a measure of damages any of the royalty
advances paid under the software development contract. Subject to this
limitation, the Court otherwise sustained the Company's first counterclaim for
damages for the undelivered games Into the Shadows and Mudkicker. The Court
dismissed the second counterclaim finding that the Company had not shown
provable damages other than the $1.5 million in royalty advances paid on Amok
and Scorcher which the Court held could not be recovered. The Court also
dismissed the third counterclaim for unjust enrichment, which sought to recover
the entire $2.5 million in royalty advances paid to Scavenger. The Company
appealed this dismissal only as to the $1 million in royalty advances paid for
the undelivered Into the Shadows and Mudkicker.



                                    Page 10
<PAGE>

         By Order entered January 8, 2001, the Court granted a motion by the
Company to dismiss the second cause of action, a motion prompted by and premised
on the reasoning of the Court's March 3, 2000 Order granting partial summary
judgment on the first cause of action as well as of the Appellate Division,
First Department's June 8, 2000 Order of affirmance. Scavenger appealed the
January 8, 2001 Order.

         On April 24, 2001, Scavenger brought a motion for reargument and
renewal of the January 8, 2001 Order dismissing the second cause of action. By
Order entered July 5, 2001, the Commercial Division denied this motion. On or
about July 17, 2001, Scavenger noticed an appeal from the July 5, 2001 Order.
All of the pending appeals were consolidated for oral argument in the November
2001 Term of the Appellate Division, First Department.

         By Order entered December 11, 2001, the Appellate Division, First
Department affirmed the September 8, 2000 Order, the December 19, 2000 Order,
the January 8, 2001 Order, and the July 5, 2001 Order.

         Subsequently, this action has been settled for a nominal amount and a
Stipulation of Discontinuance was filed with the Court on or about February 4,
2002.

Herzog

         In January, February and March 1998, ten substantially similar
complaints were filed against the Company, its former Chairman and its former
Chief Executive Officer, and in certain actions, its former Chief Financial
Officer, in the U.S. District Court for the Southern District of New York. The
plaintiffs, in general, purport to sue on behalf of a class of persons who
purchased shares (and as to certain complaints, purchased call options or sold
put options) of the Company during the period from December 15, 1995 through
December 12, 1997. In their consolidated and amended complaint, the plaintiffs
allege that the Company violated the federal securities laws by making
misrepresentations and omissions of material facts that allegedly artificially
inflated the market price of the Company's common stock during the class period.
The plaintiffs further allege that the Company failed to expense properly
certain prepaid royalties for software products that had been terminated or had
failed to achieve technological feasibility, or had overstating the Company's
net income and net assets. By Order dated January 23, 1999, the plaintiffs were
granted leave to file a second consolidated and amended complaint, which added
claims under the federal securities laws against the Company's former
independent auditors, Arthur Andersen LLP. The Company and Arthur Andersen LLP
each filed motions to dismiss the second consolidated and amended complaint. By
Order and opinion dated November 29, 1999, the District Court granted the motion
to dismiss. Plaintiffs appealed from the dismissal of the action, and on July
11, 2000, the Court of Appeals for the Second Circuit issued an opinion and
judgment reversing the dismissal of the complaint as to the Company and
individual defendants (but not as to Arthur Andersen LLP) and remanding the
action to the District Court. On July 21, 2000, the Company filed with the Court
of Appeals a petition for rehearing with suggestion for rehearing en banc. On
September 1, 2000, the Court of Appeals denied the petition for rehearing and
suggestion for rehearing en banc. Following the remand to the District Court,
the parties engaged in extended settlement negotiations, including a mediation
and a neutral evaluation proceeding and executed a stipulation of settlement,
which is pending before the District Court for a determination of the fairness
and reasonableness of the settlement. The Company does not believe that, if
approved, the contemplated settlement, which is expected to be funded through
insurance proceeds, will have a material adverse effect upon its results of
operations or financial condition.

James

         On April 12, 1999, an action was commenced by the administrators for
three children who were murdered on December 1, 1997 by Michael Carneal at the
Heath High School in McCracken County, Kentucky. The action was brought against
25 defendants, including the Company and other corporations in the videogame
business, companies that produced or distributed the movie The Basketball
Diaries, and companies that provide allegedly obscene internet content. The
complaint alleges, with respect to the Company and other corporations in the
videogame business, that Carneal was influenced by the allegedly violent content
of certain videogames and that the videogame manufacturers are liable for
Carneal's conduct. The complaint seeks $10 million in compensatory damages and
$100 million in punitive damages. The Company and approximately 10 other
corporations in the videogame business have entered into a joint defense
agreement and have retained counsel. By order entered April 6, 2000, the Court
granted a motion to dismiss the complaint. Plaintiffs have filed a motion to
vacate the dismissal of the action. On June 16, 2000, the Court denied the
motion to vacate. On June 28, 2000, plaintiffs appealed the dismissal of the
action to the Court of Appeals for the Sixth Circuit. Plaintiffs' and
defendants' final appellate briefs were submitted on November 30, 2000, and oral
argument was heard on November 28, 2001.

Sanders



                                    Page 11
<PAGE>

         On April 19, 2001, a putative class action was commenced by the family
of William David Sanders, a teacher murdered on April 2, 1999 in a shooting
rampage committed by Eric Harris and Dyland Klebold at the Columbine High School
in Jefferson County, Colorado. The action was brought against 25 defendants,
including the Company and other corporations in the videogame business,
companies that produced or distributed the movie The Basketball Diaries, and
companies that provide allegedly obscene internet content. The complaint
alleges, with respect to the Company and other corporations in the videogame
business, that Harris and Klebold were influenced by the allegedly violent
content of certain videogames and that the videogame manufacturers are liable
for Harris' and Klebold's conduct. The complaint seeks a minimum $15,000 for
each plaintiff and up to $15 million in compensatory damages for certain
plaintiffs and $5 billion in punitive damages, injunctive relief in the form of
a court established "monitoring system" requiring video game companies to comply
with rules and standards set by the court for marketing violent games to
children. On June 6, 2001 the Company waived service of a summons, and on July
9, 2001 the Company filed a motion to dismiss. Plaintiffs filed papers opposing
the Company's motion to dismiss and on September 14, 2001 the Company filed its
reply brief. On March 4, 2002 the Court granted our motion to dismiss and on
March 29, 2002 denied plaintiffs' motion for reconsideration. On April 5, 2002
plaintiffs filed a notice of appeal to the Court of Appeals for the Tenth
Circuit.


NOTE 4 - DEBT


         The Company has a $75.0 million Credit Agreement with Infogrames SA
which bears interest at LIBOR plus 2.5%. On March 29, 2002, the maturity date
was extended from March 31, 2002 to June 30, 2002 and the commitment increased
from $50.0 million to $75.0 million. The outstanding borrowings under the Credit
Agreement, as of March 31, 2002 were approximately $63.1 million. As of March
31, 2002 there are approximately $5.4 million of letters of credit outstanding.

         In connection with the INA Merger, the Company assumed a $35.0 million
revolving credit facility with BNP Paribas, which was to mature on November 30,
2001. On November 30, 2001, the facility was extended to May 31, 2002. The
amendment also reduces the amount available in the facility by $5.0 million a
month over a four month period starting February 1, 2002, reducing the amount
available to $15.0 million as of May 1, 2002. The amended facility bears
interest at a rate equal to the lender's cost of funds plus 1.5% on domestic
term loans and at LIBOR plus 1.5% on Eurodollar term loans, payable at maturity.
Any demand loans bear interest at the prime rate. The facility fee of $15,000
was paid on November 30, 2001, and a commitment fee of 75 basis points, which is
payable on the unutilized portion of the facility is due at the end of each
quarter. The Company had approximately $25.0 million of borrowings outstanding
under the BNP Paribas credit facility as of March 31, 2002.

Related party debt consists of the following at March 31, 2002:

<TABLE>
<S>                                                                           <C>
Infogrames SA 0% subordinated convertible note (a) ......................     $      42,107
5% subordinated convertible note with a
subsidiary of Infogrames SA, due December 16, 2004.......................            67,895
                                                                              -------------
                                                                              $     110,002
                                                                              =============
</TABLE>

(a) In conjunction with the 1999 purchase of the Company by Infogrames SA, the
Company issued to General Atlantic Partners ("GAP") $50 million principal amount
of non-interest bearing subordinated convertible notes (the "GAP 0% Notes") in
exchange for 600,000 shares of Series A Preferred Stock and $20 million of
subordinated notes of the Company. The GAP 0% Notes are convertible into the
Company's common stock at $20.00 per share. Interest on the GAP 0% Notes are
being accreted at the rate of 7% and will have a redemption value of $50.0
million at maturity, which is December 16, 2004. On December 28, 2001,
Infogrames SA assumed the GAP 0% Notes from GAP in exchange for Infogrames SA
shares of common stock. Infogrames SA has not changed any of the terms of the
former GAP 0% Notes ("Infogrames SA 0% subordinate convertible note") as they
relate to the Company.



                                    Page 12
<PAGE>

NOTE 5 - SUPPLEMENTAL CASH FLOW INFORMATION


<TABLE>
<CAPTION>
                                                                                     NINE MONTHS ENDED
                                                                                         MARCH 31,
                                                                                     -----------------
                                                                                     2001         2002
                                                                                     ----         ----
<S>                                                                               <C>          <C>
    Conversion of INA related party payables with Infogrames SA.................  $   51,345   $     -
    Conversion of revolving credit facility into shares of the Company's
    Common stock by Infogrames SA at $6.40 per share............................     128,571         -
    Issuance of treasury stock in lieu of partial royalty payment...............         600       855
    Issuance of stock in lieu of partial royalty payment........................           -        42
    Issuance of stock in exchange for the assets of INA.........................         280         -
    Cash paid for interest......................................................       5,250     2,344
</TABLE>




NOTE 6 - RESTRUCTURING RESERVES

         During the year ended June 30, 2001, the Company implemented a
restructuring plan to improve efficiencies in its publishing and internal
development operations. This plan included the shutdown and move of the
Company's San Jose facility to Santa Monica, California, and the shutdown of the
Humongous publishing group. This resulted in charges of approximately $3.5
million.

         The following table sets forth activity for the restructuring reserve,
which is included in accrued liabilities at March 31, 2002: (IN THOUSANDS)


<TABLE>
<CAPTION>
                                                BALANCE                          BALANCE
                                                JUNE 30,          CASH           MARCH 31,
                                                  2001          PAYMENTS           2002
                                                -------        ---------         ---------
<S>                                             <C>            <C>                 <C>
       Severance.................               $ 2,647        $  (1,947)          $ 700
                                                -------        ---------           -----
                                                $ 2,647        $  (1,947)          $ 700
                                                =======        =========           =====
</TABLE>




NOTE 7 - OPERATIONS BY REPORTABLE SEGMENTS

         The Company has three reportable segments: publishing, distribution and
corporate. Publishing is comprised of three studios located in Santa Monica,
California; Beverly, Massachusetts; and Minneapolis, Minnesota. Distribution
constitutes the sale of other publishers' titles to various mass merchants and
other retailers. Corporate includes the costs of senior executive management,
legal, finance, administration, and amortization of goodwill of the Company. The
majority of depreciation expense for fixed assets is charged to the Corporate
segment and a portion is recorded to the publishing segment. This amount
consists of depreciation on computers and office furniture at the publishing
unit offices. Historically, the Company does not separately track or maintain
records, other than fixed asset records, which identify assets by segment and,
accordingly, such information is not available.


         The accounting policies of the segments are the same as those described
in the summary of significant accounting policies. The Company evaluates
performance based on operating results of these segments.

         The Company's reportable segments are strategic business units with
different associated costs and profit margins. They are managed separately
because each business unit requires different planning, merchandising and
marketing strategies.


                                    Page 13
<PAGE>

         The following unaudited summary represents the consolidated net
revenues and operating profit (loss) by reportable segment for the three months
ended March 31, 2001 and 2002 and the nine months ended March 31, 2001 and 2002:
(IN THOUSANDS)

<TABLE>
<CAPTION>
                                                        PUBLISHING     DISTRIBUTION     CORPORATE        TOTAL
                                                        ----------     ------------     ---------        -----
<S>                                                    <C>            <C>             <C>            <C>
 Three months ended March 31, 2001:
      Net revenues..........................           $  44,920      $    22,737     $      -       $  67,657
      Operating (loss) profit...............              (6,305)           3,638      (16,165)        (18,832)
Three months ended March 31, 2002:
      Net revenues..........................              27,112           23,407            -          50,519
      Operating (loss) profit...............             (18,014)           4,230      (12,405)        (26,189)
 Nine months ended March 31, 2001:
      Net revenues..........................             170,117           57,400            -         227,517
      Operating profit (loss)...............               6,085           16,498      (50,503)        (27,920)
Nine months ended March 31, 2002:
      Net revenues..........................             211,902           77,540            -         289,442
      Operating profit (loss)...............              20,640           14,934      (43,207)         (7,633)
</TABLE>



NOTE 8 - GOODWILL

          The Company adopted SFAS No. 142, Goodwill and Other Intangible
Assets, effective July 1, 2001. Under SFAS No. 142, goodwill is no longer
amortized but reviewed for impairment annually, or more frequently if certain
indicators arise. The Company is required to complete the initial step of a
transitional impairment test within six months of adoption of SFAS No. 142 and
to complete the final step of the transitional impairment test by the end of the
fiscal year.

         A goodwill impairment test (the "initial step") was conducted by an
independent appraisal firm in December 2001 who determined that the fair value
of the reporting unit to which the goodwill was assigned exceeded its carrying
value.

         Had the Company been accounting for its goodwill under SFAS No. 142 for
all periods presented, the Company's net loss and loss profit per share would
have been as follows: (IN THOUSANDS)


<TABLE>
<CAPTION>
                                                                                   THREE MONTHS ENDED
                                                                                        MARCH 31,
                                                                               -----------------------------
                                                                                   2001               2002
                                                                               -----------          --------
<S>                                                                            <C>                 <C>
Net loss...................................................................... $   (21,430)        $ (22,947)
Add: Goodwill amortization, net of tax........................................       2,799                 -
                                                                               -----------         ---------
Pro-forma loss................................................................ $   (18,631)        $ (22,947)
                                                                               ===========         =========
Basic and diluted net loss per share.......................................... $     (0.31)        $   (0.33)
Goodwill amortization, net of tax.............................................        0.04                 -
                                                                               -----------         ---------
Proforma basic and diluted net loss per share................................. $     (0.27)        $   (0.33)
                                                                               ===========         =========
</TABLE>



                                    Page 14
<PAGE>


<TABLE>
<CAPTION>
                                                                                      NINE MONTHS ENDED
                                                                                          MARCH 31,
                                                                                -----------------------------
                                                                                    2001              2002
                                                                                -----------       -----------
<S>                                                                             <C>               <C>
Net loss....................................................................... $  (37,669)       $  (10,220)
Add: Goodwill amortization, net of tax.........................................      8,361                 -
                                                                                -----------       ----------
Pro-forma loss................................................................. $  (29,308)       $  (10,220)
                                                                                ==========        ==========

Basic and diluted net loss per share........................................... $    (0.71)       $    (0.15)
Goodwill amortization, net of tax..............................................       0.16                 -
                                                                                -----------       ----------
Proforma basic and diluted net loss per share.................................. $    (0.55)       $    (0.15)
                                                                                ==========        ==========
</TABLE>


NOTE 9 - SUBSEQUENT EVENT

Shiny Acquisition

         On April 30, 2002, the Company purchased 100% of the stock of Shiny
Entertainment, Inc. ("Shiny"), a video game development studio, from Interplay
Entertainment Corp. and other shareholders for a purchase price consisting of
cash and notes aggregating approximately $49.2 million. As part of the
transaction, the Company secured the exclusive worldwide rights to develop and
publish interactive games based on sequels to the highly acclaimed, Academy
Award-winning action thriller, "THE MATRIX" and has signed a long-term
employment agreement with the current president of Shiny. To fund the
acquisition, the Company secured a $50.0 million senior secured credit facility
from Infogrames SA on April 22, 2002, which matures on June 30, 2004.



                                    Page 15
<PAGE>



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

         This document includes statements that may constitute forward-looking
statements made pursuant to the Safe Harbor provisions of the Private Securities
Litigation Reform Act of 1995. The Company would like to caution readers
regarding certain forward-looking statements in this document and in all of its
communications to shareholders and others, press releases, securities filings,
and all other documents and communications. Statements that are based on
management's projections, estimates and assumptions are forward-looking
statements. The words "believe", "expect", "anticipate", "intend", "will",
"should", "may" and similar expressions generally identify forward-looking
statements. While the Company believes in the veracity of all statements made
herein, forward-looking statements are necessarily based upon a number of
estimates and assumptions that, while considered reasonable by the Company, are
inherently subject to significant business, economic and competitive
uncertainties and contingencies and known and unknown risks. Many of the
uncertainties and contingencies can affect events and the Company's actual
results and could cause its actual results to differ materially from those
expressed in any forward-looking statements made by, or on behalf of, the
Company. Some of the factors that could cause actual results or future events to
differ materially or otherwise include the Company's level of dependence on the
financial support of its parent, Infogrames SA, Infogrames SA's ability to
continue to support the Company, an inability to find suitable acquisition
candidates or equity or debt financing on terms commercially reasonable to the
Company, pricing of and demand for distributed products, inability to collect
outstanding accounts and notes receivable when due or within a reasonable period
of time thereafter, the actions of competitors with greater financial resources,
economic and market factors, and other factors. Please see the "Risk Factors" in
the Company's filings with the Securities and Exchange Commission for a
description of some, but not all, risks, uncertainties and contingencies. Except
as otherwise required by the applicable securities laws, the Company disclaims
any intention or obligation publicly to update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.

         The Company develops, publishes, and distributes interactive games for
leisure entertainment, gaming enthusiasts and children's markets for a variety
of platforms. The Company employs a portfolio approach to achieve a broad base
of published products across most major consumer software categories. Since it
began operations in February 1993, the Company has experienced rapid growth and
its product and customer mix has changed substantially.

         Publishing and distribution of interactive entertainment software are
the two major activities of the Company. Publishing is conducted through the
Company's three main studios: Santa Monica, California (sports/racing and
action/adventure games); Beverly, Massachusetts (kids/family games, racing, and
strategy); and Minneapolis, Minnesota (action/adventure games). Because each of
these product categories has different associated costs, the Company's margins
have depended, and will depend, in part, on the percentage of net revenues
attributable to each category. In addition, a particular product's margin may
depend on whether it has been internally or externally developed and on the
platform published. Furthermore, the Company's margins may vary significantly
from quarter to quarter depending on the timing of its new published product
releases. Distribution activities primarily include the sale of games produced
by software publishers which are unrelated to the Company ("Third-Party
Products"). To the extent that mass-merchants require greater proportions of
these products, some of which may yield lower margins, the Company's operating
results may be negatively impacted.

         The worldwide interactive entertainment software market is comprised
primarily of software for personal computers (PCs) and dedicated game consoles,
and the Company develops and publishes games for all of these platforms. During
the three months ended March 31, 2002, the Company's product mix consisted of
78% PC games, 11% Sony PlayStation games, 7% Sony PlayStation2 games, 1%
Microsoft Xbox games, 3% Nintendo Game Boy. During the nine months ended March
31, 2002, the Company's product mix consisted of 77% PC games, 10% Sony
PlayStation games, 8% Sony PlayStation2 games, 3% Microsoft Xbox games, and 2%
Nintendo Game Boy and other games. The Company believes that maintaining a
healthy mix of platform distribution in its product line-up is vital for its
continued growth. According to International Development Group ("IDG"), legacy
platforms such as the multimedia home PC will have a projected installed base of
nearly 71 million in North America by the end of 2002; that base is projected to
increase to more than 86 million by 2005. IDG also projects that PlayStation,
currently the most widely distributed gaming console will have an installed base
of nearly 31 million in North America by the end of 2002. While PlayStation's
growth may slow, growth of the installed base for PlayStation2, introduced in
North America in 2000, is projected to grow to over 35 million in 2005. IDG
projects that the Xbox will have a North American installed base of
approximately 24 million by 2005, while the Game Cube is projected to have a
North American installed base of nearly 20 million in the same time period.
Additionally, the Game Boy Advance is expected to have an installed base of more
than 31 million by 2005, as compared to an estimated 12 million in 2002. The
expansion of the gaming market, both organic and through the addition of new
consoles, opens additional opportunities for the Company's product while
increasing the competition for market share and shelf space.



                                    Page 16
<PAGE>

         There has been an increased rate of change and complexity in the
technological innovations affecting the Company's products, coupled with
increased competitiveness for shelf space and buyer selectivity. The market for
interactive games has become increasingly hit-driven, which has led to higher
production budgets, more complex development processes, longer development
cycles and generally shorter product life cycles. The importance of the timely
release of hit titles, as well as the increased scope and complexity of the
product development and production process, have increased the need for
disciplined product development processes that limit cost and schedule overruns.
This in turn has increased the importance of leveraging the technologies,
characters or storylines of such hit titles into additional interactive
entertainment software products in order to spread development costs among
multiple products. In this environment, the Company is determined to achieve
balances between internal/external development and licensed product/owned
franchises.

         The distribution channels for interactive software have changed
significantly in recent years. Traditionally, consumer software was sold through
specialty stores. Today, consumer software is sold through mass-merchants such
as Wal-Mart and Target, as well as major retailers, including Best Buy, CompUSA,
Toys `R' Us and Gamestop. The Internet and on-line networks also present new
distribution channels.


CRITICAL ACCOUNTING POLICIES

         The Company's discussion and analysis of financial condition and
results of operation are based upon the Company's consolidated financial
statements, which have been prepared in accordance with accounting principles
generally accepted in the United States. The preparation of these financial
statements requires the Company to make estimates and judgments that affect the
reported amounts of assets, liabilities, revenues and expenses, and related
disclosure of contingent assets and liabilities. On an on-going basis, the
Company evaluates its estimates, including those related to accounts and notes
receivable, inventories, intangible assets, investments, income taxes and
contingencies. The Company bases its estimates on historical experience and on
various other assumptions that are believed to be reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying values of assets and liabilities that are not readily apparent from
other sources. Actual results may differ from these estimates under different
assumptions or conditions.

         The Company believes the following critical accounting policies affect
its more significant judgments and estimates used in the preparation of its
consolidated financial statements.

Sales returns, price protection, and other customer related allowances

         Sales are recorded net of expected future returns, price protection and
other customer related allowances. The Company is not contractually obligated to
accept returns; however, based on facts and circumstances at the time a customer
may request approval for a return, the Company may permit the exchange of
products sold to certain customers. In addition, the Company may provide price
protection, co-operative advertising and other allowances to certain customers
in accordance with industry practice. These reserves are determined based on
historical experience, budgeted customer allowances and existing commitments to
customers. Although management believes it provides adequate reserves with
respect to these items, actual activity could vary from management's estimates
and such variances could have a material impact on reported results.

Allowance for doubtful accounts

         The Company maintains allowances for doubtful accounts and notes
receivable for estimated losses resulting from the inability of its customers to
make payments when due or within a reasonable period of time thereafter. If the
financial condition of the Company's customers were to deteriorate, resulting in
an impairment of their ability to make required payments, additional allowances
may be required.

Inventories

         The Company writes down its inventories for estimated obsolete or
slow-moving inventories equal to the difference between the cost of inventories
and estimated market value based upon assumed market conditions. If actual
market conditions are less favorable than those assumed by management,
additional inventory write-downs may be required.





                                    Page 17
<PAGE>

Developer royalty advances

         Rapid technological innovation, shelf-space competition, shorter
product life cycles and buyer selectivity have made it extremely difficult to
determine the likelihood of individual product acceptance and success. As a
result, the Company follows the policy of expensing developer royalty advances
(also known as developer advances) as incurred, treating such costs as research
and development expenses. Generally, developers are paid an advance upon the
signing of a contract. Subsequent payments are due as the specific contractual
milestones are met by the developer and approved by the Company. The timing of
when these contracts are entered into and when milestone payments are made could
vary significantly from budgeted amounts and, because these payments are
expensed as incurred, they could have a material impact on reported results in a
given period. The Company's success depends in part on its continued ability to
obtain or renew product development agreements with independent software
developers.

Income taxes

         The Company files income tax returns in every jurisdiction in which it
has reason to believe it is subject to tax. Historically, the Company has been
subject to examination by various taxing jurisdictions. To date, none of these
examinations has resulted in any material additional tax. Nonetheless, any tax
jurisdiction may contend that a filing position claimed by the Company regarding
one or more of its transactions is contrary to that jurisdiction's laws or
regulations.


RESULTS OF OPERATIONS

         The consolidated financial information has been combined as of December
16, 1999, with that of INA, as a result of the INA Merger. The effective date of
the INA Merger was October 2, 2000 and was accounted for on an "as if pooled"
basis. Since December 16, 1999, the Company and INA have been under the common
control of Infogrames SA. The following table sets forth certain consolidated
statements of operations data as a percentage of net revenues for the periods
indicated:


<TABLE>
<CAPTION>
                                                                THREE MONTHS ENDED              NINE MONTHS ENDED
                                                                      MARCH 31,                     MARCH 31,
                                                           -------------------------        -----------------------
                                                                2001             2002          2001           2002
                                                           ------------      ----------     ---------    -----------
<S>                                                            <C>             <C>           <C>             <C>
Net revenues                                                   100.0%          100.0%        100.0%           100.0%
Cost of goods sold                                               54.6            69.9          43.0            52.6
                                                           ----------      ----------       -------       ---------
    Gross profit                                                 45.4            30.1          57.0            47.4
Selling and distribution expenses                                26.4            30.4          24.7            21.4
General and administrative expenses                              21.4            14.0          21.9            10.7
Research and development                                         15.7            34.9          17.6            16.7
Restructing costs                                                 3.1             0.0           0.9             0.0
Merger costs                                                      0.0             0.0           0.7             0.0
Gain on sale of line of business                                  0.0             0.0           2.4             0.0
Depreciation and amortization                                     6.6             2.7           5.9             1.2
                                                           ----------     -----------      --------      ----------
    Operating loss                                              (27.8)          (51.9)        (12.3)           (2.6)
Interest expense, net                                             3.7             3.0           4.9             2.7
Other (expense) income                                           (0.1)           (0.5)          0.6             0.1
                                                           -----------    -----------      --------      ----------
    Loss before provision for benefit from income taxes         (31.6)          (55.4)        (16.6)           (5.2)
Benefit from income taxes                                         0.0            (9.9)          0.0            (1.7)
                                                           ----------     -----------      --------      ----------
    Loss from continuing operations                             (31.6)          (45.5)        (16.6)           (3.5)
                                                           ==========     ===========      ========      ==========
</TABLE>




 THREE MONTHS ENDED MARCH 31, 2002 VERSUS THE THREE MONTHS ENDED MARCH 31, 2001

         Net revenues for the three months ended March 31, 2002 decreased
approximately $17.2 million, or 25.4%, to $50.5 million from $67.7 million, as
compared to the 2001 period. Total publishing revenue decreased 39.6% to $27.1



                                    Page 18
<PAGE>

million for the three months ended March 31, 2002 from $44.9 million in the
comparable 2001 period due primarily to fewer significant new product releases
in the quarter. In the same period, total distribution net revenues increased
2.6% to $23.4 million from $22.8 million as the Company expanded its
relationships with third party vendors.

         Gross profit decreased to $15.2 million for the three months ended
March 31, 2002 from $30.7 million in the comparable 2001 period due largely to
lower sales volume, while gross profit as a percentage of revenue decreased from
45.4% to 30.1%. This margin decrease is primarily due to the Company's product
mix. Distribution sales as a percentage of net revenue, during the three months
ended March 31, 2002, increased to 46.3% from 33.7% in the comparable 2001
period. Distribution sales carry lower margins than our published product sales.
Also, a significant portion of the published product sold in the current quarter
was in the latter stages of its lifecycle, thereby earning lower margins than
earlier-stage product.

         Selling and distribution expenses primarily include shipping expenses,
personnel expenses, advertising and promotion expenses and distribution costs.
During the three months ended March 31, 2002, these expenses decreased
approximately $2.6 million, or 14.5%, to $15.3 million from $17.9 million in the
comparable 2001 period. The decrease in selling and distribution expenses
resulted primarily from decreased advertising and lower sales volume.
Advertising expenditures decreased 29.4% to approximately $3.6 million during
the three months ended March 31, 2002 as compared to approximately $5.1 million
in the comparable 2001 period due to fewer new product releases in the current
period.

         General and administrative expenses primarily include personnel
expenses, facilities costs, professional expenses and other overhead charges.
These expenses in the three months ended March 31, 2002 decreased approximately
$7.3 million, or 50.7%, to $7.1 million from $14.4 million in the comparable
2001 period. General and administrative expenses as a percentage of net revenues
decreased to 14.0% for the three months ended March 31, 2002 from 21.4% in the
comparable 2001 period. This decrease is primarily due to the reduction in
salaries due to the consolidation of various functions and the integration of
Infogrames North America ("INA"). Salaries and related costs decreased $3.7
million or 57.8% to $2.7 million for the three months ended March 31, 2002 as
compared to $6.4 million in the comparable 2001 period.

         Research and development expenses primarily include the payment of
royalty advances to third-party developers on products that are currently in
development and direct costs of internally developing and producing a title.
These expenses for the three months ended March 31, 2002 increased approximately
$7.0 million, or 66.0%, to $17.6 million from $10.6 million in the comparable
2001 period. Research and development expenses, as a percentage of net revenues,
increased to 34.9% for the three months ended March 31, 2002 from 15.7% in the
comparable 2001 period. This increase in research and development expenses for
the three months ended March 31, 2002 is primarily due to the Company signing
more arrangements with external developers and achieving more milestones in the
development process during the 2002 period. Research and development expenses
incurred by the Company's internal development studios, which primarily include
Humongous, Legend and Reflections, represented approximately 40.0% of total
research and development costs for both periods.

         Depreciation and amortization for the three months ended March 31, 2002
decreased approximately $3.1 million, or 68.9%, to $1.4 million from $4.5
million in the comparable 2001 period. This decrease is primarily attributable
to the cessation of goodwill amortization under Statement of Financial
Accounting Standards (SFAS) No. 142, Goodwill and Other Intangible Assets. The
Company amortized approximately $2.8 million in goodwill during the three months
ended March 31, 2001. Depreciation and amortization was further reduced by the
prior write-off of assets due to the consolidation of functions and facilities
in conjunction with the INA Merger.

         Interest expense, net decreased approximately $1.0 million for the
three months ended March 31, 2002 to $1.5 million from $2.5 million in the
comparable 2001 period. This decrease is mainly due to lower average borrowings
and lower interest rates in the current quarter as compared to the comparable
prior period.

         The benefit from income taxes recorded in this quarter represents a
refund based on The Job Creation and Workers Assistance Act of 2002. The Company
became eligible for a tax carry-back, which is recorded as a tax benefit during
the current period.


  NINE MONTHS ENDED MARCH 31, 2002 VERSUS THE NINE MONTHS ENDED MARCH 31, 2001

         Net revenues for the nine months ended March 31, 2002 increased
approximately $61.9 million, or 27.2%, to $289.4 million from $227.5 million, as
compared to the 2001 period. This increase is attributable to growth in both the



                                    Page 19
<PAGE>

Company's publishing business and distribution business. Total publishing
revenue increased 24.6% to $211.9 million for the nine months ended March 31,
2002 from $170.1 million in the comparable 2001 period from the addition of
sales of the former Hasbro Interactive titles which are now published by the
Company in conjunction with Infogrames SA's acquisition of Hasbro Interactive in
January 2001. Such titles include Rollercoaster Tycoon, and new releases,
Civilization III and Monopoly Tycoon. Additionally, the Company's continued
success of products such as Driver 1 and Driver 2 Greatest Hits for PlayStation,
the Humongous Backyard Sports Series and Test Drive Off Road: Wide Open for
PlayStation2 and Xbox, Nascar Heat for PlayStation2 and Xbox, as well as
Splashdown for PlayStation2 has helped grow its publishing business from a year
ago. Finally, total distribution net revenues increased 35.0% to $77.5 million
for the nine months ended March 31, 2002 from $57.4 million in the comparable
period as the Company expanded its relationships with third party vendors.

         Gross profit increased to $137.1 million for the nine months ended
March 31, 2002 from $129.8 million in the comparable 2001 period due mainly to
increased sales volume, while gross profit as a percentage of net revenues
decreased to 47.4% from 57.0% in the comparable 2001 period. This margin
decrease is due to the Company's change in product mix. The former Hasbro
Interactive products represented 42.4% of sales in the nine months ended March
31, 2002, as compared to 6.9% sales in the comparable 2001 period. These sales
have a royalty payable to an Infogrames SA subsidiary of approximately 11.3% of
total net revenue in the 2002 period. Additionally, distribution sales as a
percentage of net revenue increased slightly to 26.8% from 25.2% in the
comparable 2001 period. Distribution sales earn a lower margin than published
product sales. Finally, a significant portion of published product sold this
period was in the latter stages of its lifecycle, earning lower margins than
earlier-stage product.

         Selling and distribution expenses primarily include shipping expenses,
personnel expenses, advertising and promotion expenses and distribution costs.
During the nine months ended March 31, 2002, these expenses increased
approximately $5.8 million, or 10.3%, to $61.9 million from $56.1 million in the
comparable 2001 period. This increase in selling and distribution expenses
resulted primarily from increased advertising and an increase in variable
selling expenses. Advertising expenditures increased 26.4% to approximately
$24.4 million during the nine months ended March 31, 2002 as compared to $19.3
million in the comparable 2001 period, due to the increase in new product
releases in the current period. Distribution expenses increased 18.8% to
approximately $15.8 million during the nine months ended March 31, 2002 as
compared to $13.3 million in the comparable 2001 period due to the increase in
net revenues offset by distribution efficiencies such as reduction in express
shipments and increased shipments to customer distribution centers as opposed to
individual customer stores. These efficiencies created a decrease in selling and
distribution expenses as a percentage of net revenues to 21.4% for the nine
months ended March 31, 2002 as compared to 24.7% in the comparable 2001 period.

         General and administrative expenses primarily include personnel
expenses, facilities costs, professional expenses and other overhead charges.
These expenses in the nine months ended March 31, 2002 decreased approximately
$18.9 million, or 37.9%, to $31.0 million from $49.9 million in the comparable
2001 period. General and administrative expenses as a percentage of net revenues
decreased to 10.7% for the nine months ended March 31, 2002 from 21.9% in the
comparable 2001 period. This decrease is primarily due to decreased professional
fees (legal and other outside consultants) and decreased salaries from the
consolidation of various functions and the integration of INA and the Company
during the 2001 period. Professional fees decreased 41.5% to approximately $3.8
million for the nine months ended March 31, 2002 as compared to $6.5 million in
the comparable 2001 period. Salaries decreased 42.2% to approximately $9.6
million during the nine months ended March 31, 2002 as compared to $16.6 million
in the comparable 2001 period. Furthermore, the 2001 period includes
approximately $10.6 million of expenses related to special customer allowances
while the 2002 period includes a $4.2 million charge related to the Kmart
bankruptcy. Without these additional customer allowances and bad debts, general
and administrative expenses would have decreased $12.5 million.

         Research and development expenses primarily include the payment of
royalty advances to third-party developers on products that are currently in
development and direct costs of internally developing and producing a title.
These expenses for the nine months ended March 31, 2002 increased approximately
$8.3 million, or 20.8%, to $48.3 million from $40.0 million in the comparable
2001 period due to the Company signing more arrangements with external
developers and achieving more milestones in the development process during the
2002 period. Use of the Company's internal development studios, which include
Humongous, Legend and Reflections, also increased. Total internal research and
development costs were 43.0% for the nine months ended March 31, 2002 as
compared to 41.5% in the comparable 2001 period.

         The $1.7 million in merger costs incurred in the nine months ended
March 31, 2001 relate to the merger of the Company and INA.



                                    Page 20
<PAGE>

         The $5.5 million gain on sale of business during the 2001 period
relates to the sale of the Duke Nukem business.

         Depreciation and amortization for the nine months ended March 31, 2002
decreased approximately $9.9 million, or 73.9%, to $3.5 million from $13.4
million in the comparable 2001 period. This decrease is primarily attributable
to the cessation of goodwill amortization under Statement of Financial
Accounting Standards (SFAS) No. 142, Goodwill and Other Intangible Assets. The
Company amortized approximately $8.4 million in goodwill during the nine months
ended March 31, 2001. Depreciation and amortization was further reduced by the
prior write-off of assets due to the consolidation of functions in conjunction
with the INA Merger.

         Interest expense, net decreased approximately $3.3 million for the nine
months ended March 31, 2002 to $7.9 million from $11.2 million in the comparable
2001 period. This decrease in the nine months ended March 31, 2002 was
attributable to lower average borrowings in 2002 as compared to the comparable
2001 period, as well as lower interest rates.

         The benefit from income taxes recorded in the current nine month period
represents a refund based on The Job Creation and Worker Assistance Act of 2002.
The Company became eligible for a tax carry-back, which is recorded as a tax
benefit during the current period.


LIQUIDITY AND CAPITAL RESOURCES

         Cash and cash equivalents were $5.3 million at March 31, 2002 compared
to $5.4 million at June 30, 2001. As of March 31, 2002, the Company had a
working capital deficit of $57.6 million compared to $57.3 million working
capital deficit at June 30, 2001.

         During the nine months ended March 31, 2002, $44.2 million was provided
from financing activities. The Company utilized its borrowings from its credit
facilities to fund $37.8 million for operating activities and $6.6 million for
capital expenditures. The net cash used in operating activities primarily funded
inventories, related-party payables, royalty payables and accrued liabilities.
There were no significant changes in the credit terms with customers during the
nine month period.


DEBT

         The Company has a $75.0 million Credit Agreement with Infogrames SA
which bears interest at LIBOR plus 2.5%. On March 29, 2002, the maturity date
was extended from March 31, 2002 to June 30, 2002 and the commitment increased,
from $50.0 million to $75.0 million. The outstanding borrowings under the Credit
Agreement, as of March 31, 2002, were approximately $63.1 million. As of March
31, 2002 there are approximately $5.4 million of letters of credit outstanding.

         In connection with the INA Merger, the Company assumed a $35.0 million
revolving credit facility with BNP Paribas, which was to mature on November 30,
2001. On November 30, 2001, the facility was extended to May 31, 2002. The
amendment also reduces the amount available in the facility by $5.0 million a
month over a four month period starting February 1, 2002, reducing the amount
available to $15.0 million as of May 1, 2002. The amended facility bears
interest at a rate equal to the lender's cost of funds plus 1.5% on domestic
term loans and at LIBOR plus 1.5% on Eurodollar term loans, payable at maturity.
Any demand loans bear interest at the prime rate. The facility fee of $15,000
was paid on November 30, 2001, and a commitment fee of 75 basis points, which is
payable on the unutilized portion of the facility is due at the end of each
quarter. The Company had approximately $25.0 million of borrowings outstanding
under the BNP Paribas credit facility as of March 31, 2002.

Related party debt consists of the following at March 31, 2002:

<TABLE>
<S>                                                                           <C>
Infogrames SA 0% subordinated convertible note (a) ......................     $       42,107
5% subordinated convertible note with a subsidiary
           of Infogrames SA, due December 16, 2004.......................             67,895
                                                                              --------------
                                                                              $      110,002
                                                                              ==============
</TABLE>

(a) In conjunction with the 1999 purchase of the Company by Infogrames SA, the
Company issued to General Atlantic Partners ("GAP") $50 million principal amount
of non-interest bearing subordinated convertible notes (the "GAP 0%


                                    Page 21
<PAGE>

Notes") in exchange for 600,000 shares of Series A Preferred Stock and $20
million of subordinated notes of the Company. The GAP 0% Notes are convertible
into the Company's common stock at $20.00 per share. Interest on the GAP 0%
Notes are being accreted at the rate of 7% and will have a redemption value of
$50.0 million at maturity, which is December 16, 2004. On December 28, 2001,
Infogrames SA assumed the GAP 0% Notes from GAP in exchange for Infogrames SA
shares of common stock. Infogrames SA has not changed any of the terms of the
former GAP 0% Notes ("Infogrames SA 0% subordinate convertible note") as they
relate to the Company.

         The Company believes that existing cash and cash equivalents, together
with cash expected to be generated from operations, cash available under the
Credit Agreement between the Company and Infogrames SA and the continued
financial support of Infogrames SA, which has sufficient credit facilities
available to fund the operations of the Company if necessary, will be sufficient
to fund the Company's operations and cash flows. See the Company's Annual Report
on Form 10K for the year ended June 30, 2001 for a discussion of "Risk Factors"
that could materially impact expected cash flows.


RECENT ACCOUNTING PRONOUNCEMENTS

         The Company has adopted the new accounting requirements of EITF Issue
No. 00-25, "Vendor Income Statement Characterization of Consideration from a
Vendor to a Retailer", effective January 1, 2002. EITF Issue No. 00-25 requires
the Company to report certain customer related payments and allowances as a
reduction of net revenues. The impact of the new accounting principle resulted
in the reclassification of cooperative advertising from selling and distribution
expenses to a reduction of net revenues and has no impact on the Company's
financial position or net income. All comparative periods have been reclassified
to conform to the new requirements.

         Effective January 1, 2002, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 144 "Accounting for the Impairment or Disposal
of Long-Lived Assets". SFAS No. 144 replaces SFAS No. 121 "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of" and
establishes accounting and reporting standards for long-lived assets to be
disposed of by sale. SFAS No. 144 requires that those assets be measured at the
lower of carrying amount or fair value less cost to sell. SFAS No. 144 also
broadens the reporting of discontinued operations to include all components of
an entity with operations that can be distinguished from the rest of the entity
that will be eliminated from the ongoing operations of the entity in a disposal
transaction. The adoption of this new principle did not have a material impact
on the Company's financial condition or results of operations.

         In August 2001, the FASB issued SFAS No. 143 "Accounting for Asset
Retirement Obligations". SFAS No. 143 addresses financial accounting and
reporting for obligations and costs associated with the retirement of tangible
long-lived assets. The Company is required to implement SFAS No. 143 on January
1, 2003. Management believes that the effect of implementing this pronouncement
will not have a material impact on the Company's financial condition or results
of operations.


IMPACT OF INFLATION

         General inflation in the economy has driven the operating expenses of
many businesses higher, and, accordingly, the Company has experienced increased
salaries and higher prices for supplies, goods and services. The Company
continuously seeks methods of reducing costs and streamlining operations while
maximizing efficiency through improved internal operating procedures and
controls. While the Company is subject to inflation as described above,
management believes that inflation currently does not have a material effect on
the Company's operating results, but there can be no assurance that this will
continue to be so in the future.




                                    Page 22
<PAGE>


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         The Company's carrying value of cash, marketable securities, trade
accounts receivable, accounts payable, accrued liabilities, royalties payable
and its existing lines of credit are a reasonable approximation of their fair
value.

Foreign Currency Exchange Rates

         Through June 30, 2001, the Company has restructured its foreign
operations, which consist of a development studio in the UK and distribution
businesses in Europe and Australia. For the nine months ended March 31, 2002,
foreign operations represented 1.3%, 73.0% and 5.9% of consolidated net
revenues, operating loss and total assets, respectively. Consistent with our
accounting policy for developer royalty advances, the costs of our UK
development studio, which represent a large portion of the operating loss for
the period, are expensed as incurred. Currently, substantially all of the
Company's publishing business is conducted in the United States where its
revenues and expenses are transacted in U.S. dollars. As a result, the majority
of the Company's results of operations are not subject to foreign exchange rate
fluctuations. The Company does not hedge against foreign exchange rate
fluctuations due to the limited financial exposure it faces with respect to such
risk. The Company purchases certain of its inventories from foreign developers.
The Company's business in this regard is subject to certain risks, including,
but not limited to, differing economic conditions, changes in political climate,
differing tax structures, other regulations and restrictions and foreign
exchange rate volatility. The Company's future results could be materially and
adversely impacted by changes in these or other factors.

Interest Rates

         The Company is exposed to market risk from changes in interest rates on
its revolving credit facility and its related party credit facility. Outstanding
balances under these two facilities (which aggregated $88.1 million at March 31,
2002) bear interest at variable rates based on a margin over LIBOR. Based on the
amount outstanding as of March 31, 2002, a 100 basis point change in interest
rates would result in an approximate $0.9 million change to the Company's annual
interest expense. For fixed rate debt including the Infogrames SA 0%
subordinated convertible note and the 5% subordinated convertible note with a
subsidiary of Infogrames SA aggregating $110.0 million at March 31, 2002,
interest rate changes effect the fair market value of such debt, but do not
impact the Company's earnings or cash flows. The Company does not currently
anticipate entering into interest rate swaps and/or similar instruments.







                                    Page 23
<PAGE>




PART II. OTHER INFORMATION


ITEM 1. LEGAL PROCEEDINGS

LITIGATION

         During the nine months ended March 31, 2002, no new significant claims
were asserted against or by the Company, the resolution of which would have a
material adverse affect on the Company's liquidity, financial condition or
results of operations, although the Company is involved in various claims and
legal actions arising in the ordinary course of business. The following
litigation matters are pending, however, and the Company continues to believe
that the underlying complaints are without merit and intends to defend itself
vigorously against these actions.

         The Company's management believes that the ultimate resolution of any
of the complaints summarized below and/or any other claims which are not stated
herein will not have a material adverse effect on the Company's liquidity,
financial condition or results of operations.

Scavenger

         On September 18, 1997, Scavenger, Inc. ("Scavenger"), a software
developer, filed a lawsuit against the Company in Supreme Court, New York
County, claiming that the Company breached a software development contract
between the parties dated November 28, 1995. The contract provided for the
development of four personal computer games, Amok, Scorcher, Into the Shadows
and Mudkicker. The Company paid royalty advances of $2 million ($500,000 per
game) in January 1996. Scavenger delivered and the Company accepted Amok and
Scorcher, but Scavenger did not deliver Into the Shadows or Mudkicker. The
Company paid an additional royalty advance of $500,000 upon delivery of Amok.

         The complaint alleges four causes of action: (1) breach of contract in
the amount of $1.9 million claimed as royalty advances for Amok and Scorcher
(first cause); (2) breach of contract in the amount of $2.4 million claimed as
additional royalty advances for Into the Shadows and Mudkicker (second cause);
(3) breach of contract in the amount of $5 million allegedly due above the
additional royalty advances (third cause); and (4) consequential damages in the
amount of $100 million based on the allegation that the Company's failure to pay
the additional royalty advances forced Scavenger out of business and Scavenger
allegedly was worth $100,000,000 as of January 1997 (fourth cause). The Company
asserted three counterclaims: (1) breach of contract for failure to deliver Into
the Shadows and Mudkicker seeking at least $5 million in damages (first
counterclaim); (2) breach of contract for failure to deliver Scorcher timely and
the failure to deliver Amok and Scorcher in conformance with the quality
requirements of the software development contract seeking at least $5 million in
damages (second counterclaim); and (3) unjust enrichment seeking the return of
the $2.5 million in royalty advances paid to Scavenger (third counterclaim).
By Order entered March 3, 2000, the Court granted Scavenger's motion for partial
summary judgment as to the first cause of action and denied the motion as to the
second cause. Judgment was thereupon entered March 14, 2000 in the amount of
$2.4 million ($1.9 million plus $0.5 million of accrued interest), which was
affirmed by Order of the Appellate Division, First Department entered June 8,
2000. Motions to the Appellate Division, First Department and to the Court of
Appeals for leave to appeal to the Court of Appeals were denied. In January
2001, the Company paid approximately $2.6 million satisfying the partial summary
judgment. Such amount includes interest accrued on the judgement amount from the
date of judgement.

         In an Order entered June 21, 2000, the Court denied the Company's
motion for summary judgment dismissing the third and fourth causes of action.
The Company simultaneously moved for reargument of and appealed from that
portion of the June 21, 2000 Order denying partial summary judgment on the
fourth cause. By Order entered September 8, 2000, the Court granted reargument
and, on reargument, dismissed the fourth cause of action (and the Company
withdrew its appeal). Scavenger unsuccessfully moved for reargument of the
September 8, 2000 Order, and appealed the September 8, 2000 Order to the
Appellate Division, First Department. By Order entered December 19, 2000, the
Court separately ruled with respect to each of the Company's counterclaims that
the Company cannot seek to recover as a measure of damages any of the royalty
advances paid under the software development contract. Subject to this
limitation, the Court otherwise sustained the Company's first counterclaim for
damages for the undelivered games Into the Shadows and Mudkicker. The Court
dismissed the second counterclaim finding that the Company had not shown
provable damages other than the $1.5 million in royalty advances paid on Amok
and Scorcher which the Court held could not be recovered. The Court also
dismissed the third counterclaim for unjust enrichment, which sought to recover


                                    Page 24
<PAGE>

the entire $2.5 million in royalty advances paid to Scavenger. The Company
appealed this dismissal only as to the $1 million in royalty advances paid for
the undelivered Into the Shadows and Mudkicker.

         By Order entered January 8, 2001, the Court granted a motion by the
Company to dismiss the second cause of action, a motion prompted by and premised
on the reasoning of the Court's March 3, 2000 Order granting partial summary
judgment on the first cause of action as well as of the Appellate Division,
First Department's June 8, 2000 Order of affirmance. Scavenger appealed the
January 8, 2001 Order.

         On April 24, 2001, Scavenger brought a motion for reargument and
renewal of the January 8, 2001 Order dismissing the second cause of action. By
Order entered July 5, 2001, the Commercial Division denied this motion. On or
about July 17, 2001, Scavenger noticed an appeal from the July 5, 2001 Order.
All of the pending appeals were consolidated for oral argument in the November
2001 Term of the Appellate Division, First Department.

         By Order entered December 11, 2001, the Appellate Division, First
Department affirmed the September 8, 2000 Order, the December 19, 2000 Order,
the January 8, 2001 Order, and the July 5, 2001 Order.

         Subsequently, this action has been settled for a nominal amount and a
Stipulation of Discontinuance was filed with the Court on or about February 4,
2002.

Herzog

         In January, February and March 1998, ten substantially similar
complaints were filed against the Company, its former Chairman and its former
Chief Executive Officer, and in certain actions, its former Chief Financial
Officer, in the U.S. District Court for the Southern District of New York. The
plaintiffs, in general, purport to sue on behalf of a class of persons who
purchased shares (and as to certain complaints, purchased call options or sold
put options) of the Company during the period from December 15, 1995 through
December 12, 1997. In their consolidated and amended complaint, the plaintiffs
allege that the Company violated the federal securities laws by making
misrepresentations and omissions of material facts that allegedly artificially
inflated the market price of the Company's common stock during the class period.
The plaintiffs further allege that the Company failed to expense properly
certain prepaid royalties for software products that had been terminated or had
failed to achieve technological feasibility, or had overstating the Company's
net income and net assets. By Order dated January 23, 1999, the plaintiffs were
granted leave to file a second consolidated and amended complaint, which added
claims under the federal securities laws against the Company's former
independent auditors, Arthur Andersen LLP. The Company and Arthur Andersen LLP
each filed motions to dismiss the second consolidated and amended complaint. By
Order and opinion dated November 29, 1999, the District Court granted the motion
to dismiss. Plaintiffs appealed from the dismissal of the action, and on July
11, 2000, the Court of Appeals for the Second Circuit issued an opinion and
judgment reversing the dismissal of the complaint as to the Company and
individual defendants (but not as to Arthur Andersen LLP) and remanding the
action to the District Court. On July 21, 2000, the Company filed with the Court
of Appeals a petition for rehearing with suggestion for rehearing en banc. On
September 1, 2000, the Court of Appeals denied the petition for rehearing and
suggestion for rehearing en banc. Following the remand to the District Court,
the parties engaged in extended settlement negotiations, including a mediation
and a neutral evaluation proceeding and executed a stipulation of settlement,
which is pending before the District Court for a determination of the fairness
and reasonableness of the settlement. The Company does not believe that, if
approved, the contemplated settlement, which is expected to be funded through
insurance proceeds, will have a material adverse effect upon its results of
operations or financial condition.

James

         On April 12, 1999, an action was commenced by the administrators for
three children who were murdered on December 1, 1997 by Michael Carneal at the
Heath High School in McCracken County, Kentucky. The action was brought against
25 defendants, including the Company and other corporations in the videogame
business, companies that produced or distributed the movie The Basketball
Diaries, and companies that provide allegedly obscene internet content. The
complaint alleges, with respect to the Company and other corporations in the
videogame business, that Carneal was influenced by the allegedly violent content
of certain videogames and that the videogame manufacturers are liable for
Carneal's conduct. The complaint seeks $10 million in compensatory damages and
$100 million in punitive damages. The Company and approximately 10 other
corporations in the videogame business have entered into a joint defense
agreement and have retained counsel. By order entered April 6, 2000, the Court
granted a motion to dismiss the complaint. Plaintiffs have filed a motion to
vacate the dismissal of the action. On June 16, 2000, the Court denied the
motion to vacate. On June 28, 2000, plaintiffs appealed the dismissal of the
action to the Court of Appeals for the Sixth Circuit. Plaintiffs' and
defendants' final appellate briefs were submitted on November 30, 2000, and oral
argument was heard on November 28, 2001.



                                    Page 25
<PAGE>

Sanders

         On April 19, 2001, a putative class action was commenced by the family
of William David Sanders, a teacher murdered on April 2, 1999 in a shooting
rampage committed by Eric Harris and Dyland Klebold at the Columbine High School
in Jefferson County, Colorado. The action was brought against 25 defendants,
including the Company and other corporations in the videogame business,
companies that produced or distributed the movie The Basketball Diaries, and
companies that provide allegedly obscene internet content. The complaint
alleges, with respect to the Company and other corporations in the videogame
business, that Harris and Klebold were influenced by the allegedly violent
content of certain videogames and that the videogame manufacturers are liable
for Harris' and Klebold's conduct. The complaint seeks a minimum $15,000 for
each plaintiff and up to $15 million in compensatory damages for certain
plaintiffs and $5 billion in punitive damages, injunctive relief in the form of
a court established "monitoring system" requiring video game companies to comply
with rules and standards set by the court for marketing violent games to
children. On June 6, 2001 the Company waived service of a summons, and on July
9, 2001 the Company filed a motion to dismiss. Plaintiffs filed papers opposing
the Company's motion to dismiss and on September 14, 2001 the Company filed its
reply brief. On March 4, 2002 the Court granted our motion to dismiss and on
March 29, 2002 denied plaintiffs' motion for reconsideration. On April 5, 2002
plaintiffs filed a notice of appeal to the Court of Appeals for the Tenth
Circuit.



ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

         (a) Exhibits

         Exhibit 10.1      Eleventh Amendment to the Credit Agreement, dated as
                           of March 29, 2002 by and between the Company and
                           Infogrames Entertainment S.A.

         (b) Reports on Form 8-K

         No reports on Form 8-K are filed or incorporated by reference as part
of this report.






                                    Page 26
<PAGE>



         SIGNATURES



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




                                                 INFOGRAMES, INC.





                                    By: /s/ DAVID J. FREMED
                                        -------------------------
                                    David J. Fremed
                                            Senior Vice President of Finance and
                                            Chief Financial Officer
                                            Date:  May 14, 2002


                                    Page 27