<PAGE>

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

                                   FORM 10-QSB

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

         For the quarterly period ended:           September 30, 2001
                                         ---------------------------------------
                                       OR
[ ]      TRANSITION REPORT PURSUANT SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

         For the transition period from: ______________   to  _______________

Commission file number:                      000-25855
                       ---------------------------------------------------------

                             VendingData Corporation
--------------------------------------------------------------------------------
                     (Exact name of small business issuer as
                            specified in its charter)

               Nevada                                         91-1696010
--------------------------------------               ---------------------------
    (State or other jurisdiction                           (I.R.S. Employer
  of incorporation or organization)                       Identification No.)

                  6830 Spencer Street, Las Vegas, Nevada 89119
--------------------------------------------------------------------------------
                    (Address of principal executive offices)

                                 (702) 733-7195
--------------------------------------------------------------------------------
                           (Issuer's telephone number)


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

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

        YES    X        NO
            --------       --------

                APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                   PROCEEDINGS DURING THE PRECEDING FIVE YEARS

         Check whether the registrant filed all documents and reports required
to be filed by Section 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by court.

        YES             NO
            --------       --------

                      APPLICABLE ONLY TO CORPORATE ISSUERS

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

   38,129,072 shares of common stock, $.001 par value, as of November 12, 2001
--------------------------------------------------------------------------------

         Transitional Small Business Disclosure Format (check one);

        YES             NO    X
            --------       --------

<PAGE>

                                   FORM 10-QSB

                                TABLE OF CONTENTS

                                                                          PAGE
                                                                         NUMBER
                                                                         ------

PART I.  FINANCIAL INFORMATION

     Item 1.      Financial Statements                                      3

                  Balance Sheet                                             3

                  Statement of Operations                                   4

                  Statement of Cash Flows                                   5

                  Notes to Financial Statements                             6

     Item 2.      Management's Discussion and Analysis of Financial
                  Condition and Results of Operations                       7

PART II. OTHER INFORMATION

     Item 1.      Legal Proceedings                                        16

     Item 2.      Changes in Securities and Use of Proceeds                17

     Item 3.      Defaults Upon Senior Securities                          17

     Item 4.      Submission of Matters to a Vote of Security Holders      17

     Item 5.      Other Information                                        17

     Item 6.      Exhibits and Reports on Form 8-K                         17

SIGNATURE                                                                  19


                                       2
<PAGE>

PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS.

<TABLE>
                                  VENDINGDATA CORPORATION
                                       BALANCE SHEET
<CAPTION>

                                                              September 30,    December 31,
                                                                  2001             2000
                                                              -------------   -------------
                                                               (UNAUDITED)
<S>                                                           <C>             <C>
                                           ASSETS
Current assets:
   Cash and cash equivalents                                  $  1,343,889    $    432,070
   Accounts receivable, trade                                      351,364         885,338
   Other receivables                                               764,160          45,445
   Inventories                                                   2,049,630       1,539,005
   Prepaid expenses                                                 59,370          55,142
                                                              -------------   -------------
     Total current assets                                        4,568,413       2,957,000

Property and equipment, including revenue producing
  equipment, at cost, net of accumulated depreciation
  of $1,681,739 and $1,312,591, respectively                     2,308,999       2,440,508

Intangible assets, at cost, net of
  accumulated amortization of $111,483 and $93,054,
  respectively                                                     413,027         239,186
Deferred interest                                                  565,083         631,672
Deposits                                                           680,825         591,266
                                                              -------------   -------------
                                                              $  8,536,347    $  6,859,632
                                                              =============   =============

                           LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Notes and credit line payable                              $    726,191    $  2,275,358
   Current portion of leases payable                             2,346,223       1,715,223
   Accounts payable                                                652,663         952,512
   Accrued expenses                                                326,576         405,722
    Stockholder loans                                                    -               -
   Accrued interest                                                299,060         310,152
   Customer deposits                                               224,555         281,253
                                                              -------------   -------------
     Total current liabilities                                   4,575,268       5,940,220

Leases payable                                                   2,489,071       3,030,572
Convertible debt                                                 2,603,077       3,300,000
Stockholder loans                                                        -         151,836
Deferred charges                                                   132,984         198,769
                                                              -------------   -------------
     Total liabilities                                           9,800,400      12,621,397

Stockholders' equity:
   Common stock, $.001 par value,
     40,000,000 shares authorized, 11,259,302 shares and
     10,746,144 shares issued and outstanding, respectively         36,897          10,855
   Additional paid-in capital                                   27,204,132      17,238,756
   Deficit accumulated during development stage                (28,505,082)    (23,011,376)
                                                              -------------   -------------
     Total stockholders' equity                                 (1,264,053)     (5,761,765)
                                                              -------------   -------------
                                                              $  8,536,347    $  6,859,632
                                                              =============   =============

                 See accompanying notes to unaudited financial statements.

                                             3
</TABLE>
<PAGE>

<TABLE>
                                      VENDINGDATA CORPORATION
                                      STATEMENT OF OPERATIONS
                   THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
                                            (UNAUDITED)
<CAPTION>

                                           Three Months Ended              Nine Months Ended
                                      September 30,   September 30,   September 30,   September 30,
                                           2001            2000            2001           2000
                                      -------------   -------------   -------------   -------------
<S>                                   <C>             <C>             <C>             <C>
Sales                                 $    186,823    $    111,211    $  1,005,194    $  2,572,184
Rental income                              337,946         242,141         952,492         843,012
Other income                                     -             205               -          56,820
                                      -------------   -------------   -------------   -------------
                                           524,769         353,557       1,957,686       3,472,016

Cost of sales                              596,799       1,002,533       2,747,203       3,493,517
                                      -------------   -------------   -------------   -------------
Gross margin                               (72,030)       (648,976)       (789,517)        (21,501)

General and administrative                 635,897         784,014       2,275,780       2,674,827
Research and development                   534,717         324,735       1,087,930       1,029,273
                                      -------------   -------------   -------------   -------------
(Loss) from operations                  (1,242,644)     (1,757,725)     (4,153,227)     (3,725,601)

Interest expense, net                      346,981         266,006         938,276         667,474
Interest expense - related parties         112,507          76,854         401,371         168,723
                                      -------------   -------------   -------------   -------------
                                           459,488         342,859       1,339,647         836,197
                                      -------------   -------------   -------------   -------------
(Loss) before income taxes              (1,702,132)     (2,100,584)     (5,492,874)     (4,561,798)
Provision for income taxes                     391             456             832             964
                                      -------------   -------------   -------------   -------------
Net (loss)                            $ (1,702,523)   $ (2,101,040)   $ (5,493,706)   $ (4,562,762)
                                      =============   =============   =============   =============

Basic (loss) per share                $      (0.07)   $      (0.19)   $      (0.36)   $      (0.42)
                                      =============   =============   =============   =============

Weighted average shares outstanding     23,953,335      10,854,801      15,349,720      10,811,974
                                      =============   =============   =============   =============

                     See accompanying notes to unaudited financial statements.

                                                 4
</TABLE>
<PAGE>

<TABLE>
                              VENDINGDATA CORPORATION
                              STATEMENT OF CASH FLOWS
                   NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
                                    (UNAUDITED)
<CAPTION>

                                                             Nine Months Ended
                                                        ---------------------------
                                                        September 30,  September 30,
                                                            2001           2000
                                                        ------------   ------------
<S>                                                     <C>            <C>
Net (loss)                                              $(5,493,706)   $(4,562,762)
   Adjustments to reconcile net income (loss) to net
     cash provided by operating activities:
     Depreciation and amortization                          600,264        641,111
     Amortization of deferred interest                      250,914        227,217
   Changes in assets and liabilities:
     (Increase) decrease in trade accounts receivable       533,974       (995,305)
     (Increase) decrease in other receivables              (718,715)       110,808
     (Increase) decrease in inventory                      (510,625)      (575,357)
     (Increase) decrease in prepaid expenses                 (4,228)       196,128
     Increase (decrease) in accounts payable               (299,849)        89,214
     Increase (decrease) in accrued expenses                (90,238)       123,085
     Increase (decrease) in customer deposits               (56,698)        73,898
     Increase (decrease) in deferred charges                (65,785)       163,680
                                                        ------------   ------------
       Total adjustments                                   (360,987)        54,480
                                                        ------------   ------------

Net cash (used in) operating activities                  (5,854,692)    (4,508,282)
                                                        ------------   ------------

Cash flows from investing activities:
   Acquisition of plant and equipment                      (361,155)      (258,076)
   Equipment produced and held for rental                  (107,600)             -
   Increase in patents and trademarks                      (173,842)       (29,384)
   Deposits                                                 (89,559)       (89,596)
                                                        ------------   ------------
Net cash (used in) investing activities                    (732,156)      (377,056)
                                                        ------------   ------------

Cash flows from financing activities:
   Common stock sold for cash                             9,991,419        282,502
   Proceeds from (repayment of) stockholder loans          (151,836)       (78,525)
   Proceeds from leases payable                           1,154,171      1,850,675
   Repayment of leases payable                           (1,248,997)    (1,016,774)
   Proceeds from convertible debentures                    (696,923)     1,650,000
   Proceeds from (repayment of) notes payable            (1,549,167)     1,416,000
                                                        ------------   ------------

Net cash provided by financing activities                 7,498,667      4,103,878
                                                        ------------   ------------
                                                            911,819       (781,460)
(Decrease) in cash
Cash and cash equivalents, beginning of period              432,070      1,169,924
                                                        ------------   ------------
   Cash and cash equivalents, end of period             $ 1,343,889    $   388,464
                                                        ============   ============

             See accompanying notes to unaudited financial statements.

                                         5
</TABLE>
<PAGE>

                             VendingData Corporation
                          Notes to Financial Statements
                                   (Unaudited)


NOTE 1 - BASIS OF PRESENTATION.

The accompanying unaudited financial statements of VendingData Corporation (the
"Company") and its wholly-owned subsidiaries (collectively with the Company, the
"Company") have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions
incorporated in Regulation S-B of the Securities and Exchange Commission.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
adjustments and accruals) considered necessary for a fair presentation have been
included.

The results of operations for the periods presented are not necessarily
indicative of the results to be expected for the full year. The accompanying
financial statements should be read in conjunction with the Company's audited
financial statements for the year ended December 31, 2000, as included in the
Company's Annual Report on Form 10-KSB as filed with the Securities and Exchange
Commission on March 30, 2001.

Certain reclassifications have been made to amounts presented in prior periods
for comparability to the current period presentation.

Basic loss per share was computed using the weighted average number of common
shares outstanding.

NOTE 2 - STATEMENT REGARDING COMPUTATION OF LOSS PER SHARE.

Fully diluted loss per share excludes any dilutive effects of options, warrants
and convertible securities. Fully diluted loss per share is not presented
because the effect would be anti-dilutive.

NOTE 3 - EQUIPMENT FINANCING.

For the three months ending September 30, 2001, the Company received proceeds of
$351,402 from a third-party leasing company. The leases have a mandatory buyout
and terms of 36 months.

NOTE 4 - STOCKHOLDER RIGHTS OFFERING.

On June 14, 2001, the Company's board of directors declared a distribution of
rights to purchase the Company's common stock to stockholders of record as of
June 15, 2001, or the record date, and holders of vested options, warrants and
convertible notes that possess anti-dilution rights as of the record date.
Through the Company's Registration Statement on Form S-3 (File No. 333-64012),
as declared effective on July 13, 2001, the Company offered an aggregate of
26,869,770 shares of its common stock upon the exercise of these rights by
rightsholders. All rights expired on or before 5:00 p.m., Las Vegas, Nevada time
on September 24, 2001. As of October 5, 2001, all 26,869,770 shares offered in
the rights offering had been purchased. Rightsholders purchased 8,566,584 shares
of common stock. Rightsholders applied $1,891,631.40 in amounts payable under
short-term notes or bridge loans toward the purchase of the rights shares, and
the Company received a total of $1,106,672.80 in cash proceeds from the exercise
of these rights. The Company's standby purchaser, James E. Crabbe, the Company's
controlling stockholder and Chairman of the Board of Directors, purchased
18,303,186 shares of common stock. Mr. Crabbe paid $3,052,115.30 in cash and
applied $850,000 in short-term notes and $2,504,000 in bridge loans for the
purchase of these shares.

                                        6
<PAGE>

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

STATEMENT ON FORWARD-LOOKING INFORMATION

         Certain information included herein contains statements that may be
considered forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), such as
statements relating to plans for future expansion, capital spending, future
operations, sources of liquidity and financing sources. Such statements refer to
events that could occur in the future and may be identified by the use of words
such as "intend," "plan," "believe," correlative words, and other expressions
indicating that future events are contemplated. Such forward-looking information
involves important risks and uncertainties that could significantly affect
anticipated results in the future, and accordingly, such results may differ from
those expressed in any forward-looking statements made herein. These risks and
uncertainties include, but are not limited to, those relating to liquidity
requirements for VendingData Corporation (the "Company"), the continued growth
of the gaming industry, the success of the Company's product-development,
marketing and sales activities, vigorous competition in the gaming industry,
dependence on existing management, gaming regulations (including actions
affecting licensing and product approvals), locating and obtaining sources of
liquidity, completion of the pending rights offering and the standby purchase
agreement in connection therewith, leverage and debt service (including
sensitivity to fluctuations in interest rates), domestic or global economic
conditions, and changes in federal or state tax laws or the administration of
such laws. For a description of additional risk factors and information related
to forward-looking statements, see "Risk Factors and Forward-Looking
Information" below.

OVERVIEW

         The Company's primary business is the development, manufacturing and
marketing of various concepts and products focused primarily on products that
increase security, productivity, and profitability for the gaming industry.

         As of September 30, 2001, the Company had placed 397 units of its
Random Ejection Shuffler(TM) ("Shuffler") under rental contracts compared to 455
at December 31, 2000. As of September 30, 2001, the Company had placed 34 units
of its Continuous Random Ejection Shuffler (the "Continuous Shuffler") under
rental contract, with an additional 19 units on trial. The Company maintains
parts inventories required to build additional Shufflers and Continuous
Shufflers. During the period of January 1, 2001 through September 30, 2001 the
Company sold and installed 5,234 units of the SecureDrop(TM) 2000 System and 315
units of the SecureDrop(TM) 3000 System.

         The following discussion summarizes the Company's results of operations
for the three months and nine months ended September 30, 2001 and 2000,
respectively, and the Company's liquidity and capital resources.

RESULTS OF OPERATIONS

     THREE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000

         REVENUES. For the three months ended September 30, 2001, the Company
generated total revenues of $524,769 compared to $353,557 for the three months
ended September 30, 2000. The revenues for the three months ended September 30,
2001, consisted of Shuffler rentals of $337,946, Shuffler sales of $33,630, and
SecureDrop(TM) sales of $153,193. The increase of $171,212, or 48%, in revenues
from the three months ended September 30, 2000, to the three months ended

                                       7
<PAGE>

September 30, 2001, resulted from an increase of $41,982 in SecureDrop(TM)
sales, an increase of $33,630 in Shuffler sales, and an increase of $95,805 in
Shuffler rentals, offset by a decrease of $205 in other sales. SecureDrop(TM)
sales were again delayed as customers awaited the introduction of the Soft Count
module for the system. The increase in Shuffler sales resulted from the
conversion of several rental contracts into purchases. The decrease in other
sales results from the Company's discontinuance of its table games product line.
The increase in Shuffler rentals is a direct result of the addition of dedicated
Shuffler sales representatives. Despite this level of revenues, the Company
believes revenue will increase through additional SecureDrop(TM) sales, as the
SecureDrop(TM) Soft Count module gains additional regulatory approvals, through
sales of Shufflers through international distributors and through continued
Shuffler rental placements.

         COST OF SALES. For the three months ended September 30, 2001, the cost
of sales was $596,799 compared to $1,002,533 for the three months ended
September 30, 2000. The cost of sales for the three months ended September 30,
2001, consisted of approximately $105,074 for the Company's SecureDrop(TM)
products, $107,943 for depreciation expense associated with the Shufflers held
for rental, $233,954 for costs related to servicing the Shufflers held for
rental, $16,406 for costs related to sales of the Shuffler, and $133,422 for
labor and other manufacturing costs. The decrease of $405,734, or 40%, in cost
of sales from the three months ended September 30, 2000 to the three months
ended September 30, 2001 resulted from a decrease of $116,298 for the Company's
SecureDrop(TM) products and a decrease of $356,662 related to manufacturing
costs, offset by an increase of $9,383 in depreciation expense associated with
the Shufflers held for rental, an increase of $41,962 for costs related to
servicing the Shufflers held for rental, and an increase of $15,881 in costs
related to Shuffler sales. The increases in Shuffler depreciation and service
costs result from additional rental placements in 2001 and the addition of
service personnel and locations as the Company expands its territory. The
decrease in other manufacturing costs resulted from utilization of existing
inventory.

          GROSS MARGIN. For the three months ended September 30, 2001, the gross
margin was $(72,030) compared to $(648,976) for the three months ended September
30, 2000, an increase of $576,946. As a result, the gross margin percentage on
revenues for the three months ended September 30, 2001 was (14)% compared to
(184)% for the three months ended September 30, 2000. The increase in gross
margin and negative gross margin percentage resulted primarily from the increase
in revenues and a decrease in other manufacturing costs, offset by higher
Shuffler depreciation and service costs.

         SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. For the three months
ended September 30, 2001, selling, general and administrative expenses decreased
approximately $148,117, or approximately 19%, to $635,897, compared to $784,014
for the three months ended September 30, 2000. For the three months ended
September 30, 2001, selling, general and administrative expenses included:
salaries and related costs of $361,817; advertising and marketing services of
$133,714; gaming show costs of $12,260; travel and entertainment costs of
$61,831; printing and office expenses of $14,245; depreciation and amortization
of $62,847; office rent and utilities of $90,3983; professional fees of $22,707;
bad debt adjustment of $(150,000); regulatory expense of $20,235 and $5,843 in
miscellaneous expenses. The decrease of $148,117 resulted from a decrease in
printing and office expenses of $25,582, a decrease in office rent and utilities
of $15,156, a decrease in professional fees of $27,956, a decrease in travel and
entertainment expenses of $243, a decrease in depreciation and amortization of
$22,584, an adjustment in bad debt accrual of $150,000 and a decrease in
miscellaneous expenses of $74,085; offset by an increase in salaries of $79,482,
an increase in advertising and marketing costs of $126,710, and an increase of
$20,235 in regulatory expenses. The Company incurred increased costs for
advertising and marketing and professional and regulatory expenses as it moved
to expand into new market regions. The increase in salaries was due to the
hiring of additional sales and marketing personnel.

                                       8
<PAGE>

         RESEARCH AND DEVELOPMENT. For the three months ended September 30,
2001, research and development expenses increased $116,629, or approximately
34%, to $459,488, compared to $342,859 for the three months ended September 30,
2000.

         INTEREST EXPENSE, NET. For the three months ended September 30, 2001,
the Company incurred interest expenses, net of interest income, of $456,488
compared to $342,859 for the three months ended September 30, 2000, an increase
of $116,629, or 34%. This increase was attributable to the increased borrowings
during the three month period by the Company.

         NET INCOME (LOSS). For the three months ended September 30, 2001, the
Company had a net loss of $1,702,523 compared to a net loss of $2,101,040 for
the three months ended September 30, 2000, a decrease of $398,517. The smaller
net loss was primarily due to a decrease in SecureDrop(TM) and Shuffler cost of
sales, offset by an increase in service, manufacturing and total interest
expense, net. Basic loss per share was $.07, based on 23,953,335 weighted
average shares outstanding, for the three months ended September 30, 2001,
compared to $.19, based on 10,854,801 weighted shares outstanding, for the three
months ended September 30, 2000.

     NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000

         REVENUES. For the nine months ended September 30, 2001, the Company
generated total revenues of $1,957,686 compared to $3,472,016 for the nine
months ended September 30, 2000. The revenues for the nine months ended
September 30, 2001, consisted of Shuffler rentals of $952,492 Shuffler sales of
$85,880, and SecureDrop(TM) sales of $919,314. The decrease of $1,514,330, or
44%, in revenues from the nine months ended September 30, 2000, to the nine
months ended September 30, 2001, resulted from a decrease of $1,000,960 in
SecureDrop(TM) sales, a decrease of $566,030 in Shuffler sales, and a decrease
of $113,862 in other sales, offset by an increase of $166,522 in Shuffler
rentals. SecureDrop(TM) sales were again delayed as customers awaited the
introduction of the Soft Count module for the system. The decrease in Shuffler
sales resulted from the conversion in 2000 of several rental contracts into
purchases. The decrease in other sales results from the Company's discontinuance
of its table games product line. The increase in Shuffler rentals is a direct
result of the addition of dedicated Shuffler sales representatives. Despite this
level of revenues, the Company believes revenue will increase through additional
SecureDrop(TM) sales, as the SecureDrop(TM) Soft Count module gains additional
regulatory approvals, through sales of Shufflers through international
distributors and through continued Shuffler rental placements.

         COST OF SALES. For the nine months ended September 30, 2001, the cost
of sales was $2,747,203 compared to $3,493,517 for the nine months ended
September 30, 2000. The cost of sales for the nine months ended September 30,
2001, consisted of approximately $755,034 for the Company's SecureDrop(TM)
products, $320,243 for depreciation expense associated with the Shufflers held
for rental, $737,797 for costs related to servicing the Shufflers held for
rental, $44,006 for costs related to sales of the Shuffler, and $890,123 for
labor and other manufacturing costs. The decrease of $746,314, or 21% in cost of
sales from the nine months ended September 30, 2000 to the nine months ended
September 30, 2001 resulted from a decrease of $630,173 for the Company's
SecureDrop(TM) products, a decrease of $63,743 in other manufacturing costs and
a decrease of $173,410 related to Shuffler sales, offset by an increase of
$24,563 in depreciation expense associated with Shufflers held for rental and an
increase of $96,449 for costs related to servicing Shufflers held for rental.
The increases in Shuffler depreciation and service costs result from additional
rental placements in 2001 and the addition of service personnel and locations as
the Company expands its territory. The decrease in other manufacturing costs
resulted from utilizing of existing inventory.

                                       9
<PAGE>

         GROSS MARGIN. For the nine months ended September 30, 2001, the gross
margin was $(789,517) compared to $(21,501) for the nine months ended September
30, 2000, a decrease of $768,016. As a result, the gross margin percentage on
revenues for the nine months ended September 30, 2001 was (40)% compared to (1)%
for the nine months ended September 30, 2000. The decrease in gross margin and
the larger negative gross margin percentage resulted primarily from the decrease
in revenues and an increase in service related costs.

         SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. For the nine months ended
September 30, 2001, selling, general and administrative expenses decreased
approximately $399,047, or approximately 15%, to $2,275,780, compared to
$2,674,827 for the nine months ended September 30, 2000. For the nine months
ended September 30, 2001, selling, general and administrative expenses included:
salaries and related costs of $1,050,386; advertising and marketing services of
$281,142; gaming shows of $12,260; travel and entertainment costs of $183,803;
printing and office expenses of $57,774; depreciation and amortization of
$168,012; office rent and utilities of $257,548; professional fees of $164,542;
bad debt adjustment of $(60,000); regulatory expense of $82,947 and $77,366 in
other miscellaneous expenses. The decrease of $399,047 resulted from a decrease
in salaries of $23,245, a decrease in travel and entertainment expense of
$78,367, a decrease in depreciation and amortization of $39,246, an adjustment
in bad debt accrual of $60,000, a decrease in gaming show expense of $187,052, a
decrease in printing and office expenses of $61,222, and a decrease in
miscellaneous expenses of $62,503; offset by an increase in advertising and
marketing costs of $237,104, an increase in office rent and utilities of $203,
an increase in professional fees of $28,443, and an increase of $82,947 in
regulatory expenses. The Company incurred increased costs for advertising and
marketing and professional and regulatory expenses as it moved to expand into
new market regions; however, these were offset by reductions in salary, travel
and entertainment, gaming show expenses, printing and office expenses and bad
debt accrual adjustment.

         RESEARCH AND DEVELOPMENT. For the nine months ended September 30, 2001,
research and development expenses increased $58,657, or approximately 6%, to
$1,087,930, compared to $1,029,273 for the nine months ended September 30, 2000.
The increase is due to increased spending on the SecureDrop(TM) Soft Count
module and work on the Specialty Shuffler model.

         INTEREST EXPENSE, NET. For the nine months ended September 30, 2001,
the Company incurred interest expenses, net of interest income, of $1,339,647
compared to $836,197 for the nine months ended September 30, 2000, an increase
of $503,450, or 60%. This increase was attributable to the increased borrowings
during the nine month period by the Company.

         NET INCOME (LOSS). For the nine months ended September 30, 2001, the
Company had a net loss of $5,493,706 compared to a net loss of $4,562,762 for
the nine months ended September 30, 2000, an increase of $930,944. The larger
net loss was primarily due to a decrease in SecureDrop(TM) and Shuffler sales, a
decrease in gross margin and an increase in service, marketing and total
interest expense, net. Basic loss per share was $.36, based on 15,349,720
weighted average shares outstanding, for the nine months ended September 30,
2001, compared to $.42, based on 10,811,974 weighted shares outstanding, for the
nine months ended September 30, 2000.

LIQUIDITY AND CAPITAL RESOURCES

         OVERVIEW. The Company has generated cash flow deficits from operations,
including cash used in operating activities of $5,854,693 and $4,508,282 in the
nine months ended September 30, 2001 and 2000, respectively. To fund development
activities, the Company used cash in investing activities of $732,155 and
$377,056 in the nine months ended September 30, 2001 and 2000, respectively.
Consequently, the Company has been substantially dependent on cash from
financing activities to fund development and operating activities, receiving
cash from financing activities of $7,498,667 and $4,103,878 in the nine months
ended September 30, 2001 and 2000, respectively. The Company will continue to

                                       10
<PAGE>

require cash from financing activities for both its current operating needs and
to fund its anticipated expansion of present gaming sales and marketing
activities and the Company's intended expansion into non-gaming sales markets.
This reliance on financing activities will continue until operations begin to
generate sufficient cash flow to support such cash requirements.

         CASH AND WORKING CAPITAL. At September 30, 2001, the Company had cash,
cash equivalents and investments of $1,343,889, compared to $432,070 at December
31, 2000, an increase of $1,166,697. At September 30, 2001, the Company's
working capital was $(6,854), compared to $(2,983,220) at December 31, 2000. At
September 30, 2001, the Company's current ratio, I.E. the ratio of current
assets to current liabilities, was 1.00 compared to .50 at December 31, 2000.
Until the Company reaches a level of cash flow from operations to sustain its
research and operating activities, the Company will be relying upon existing
cash balances, accounts receivable collections, placements of debt or equity and
institutional sources of debt and equity capital for working capital purposes.

         CASH FLOW. For the nine months ended September 30, 2001, net cash used
in operating activities was $5,854,693, compared to $4,508,282 for the nine
months ended September 30, 2000. Cash used in operating activities during the
nine months ended September 30, 2001, is net of depreciation and amortization of
$600,264, compared to $641,111 for the nine months ended September 30, 2000 and
amortization of deferred interest of $250,914 for the nine months ended
September 30, 2001, compared to $227,217 for the nine months ended September 30,
2000, and reflects a decrease in accounts receivable of $533,974, compared to an
increase of $995,305 for the nine months ended September 30, 2000; an increase
in inventory of $510,625, compared to an increase of $575,357 for the nine
months ended September 30, 2000; an increase in prepaid expenses of $4,228,
compared to a decrease of $196,128 for the nine months ended September 30, 2000;
an increase in other receivables of $718,715, compared to a decrease of $110,808
for the nine months ended September 30, 2000; a decrease in accounts payable of
$299,849, compared to an increase of $89,214 for the nine months ended September
30, 2000; a decrease in accrued expenses of $90,238, compared to an increase of
$123,085 for the nine months ended September 30, 2000; a decrease in customer
deposits of $56,698, compared to a decrease of $73,898 for the nine months ended
September 30, 2000; and a decrease in deferred charges of $65,785, compared to
an increase of $163,680 for the nine months ended September 30, 2000.

         For the nine months ended September 30, 2001, the Company used net cash
from investing activities of $732,155 compared to $377,056 for the nine months
ended September 30, 2000. Cash used in investing activities for the nine months
ended September 30, 2001 was used for the acquisition of equipment and tooling
in the amount of $361,155, production of inventory of $107,600, the acquisition
of patents and trademarks in the amount of $173,842 and deposits of $89,559.

         For the nine months ended September 30, 2001, net cash provided by
financing activities was $7,498,667 compared to $4,103,878 for the nine months
ended September 30, 2000. The increase in cash from financing activities is
attributable to the proceeds received through the Company's stockholder rights
offering. For the nine months ended September 30, 2001, cash from financing
activities consisted of $9,991,419 from the sale of stock and proceeds of
$1,154,171 from leases payable, reduced by the repayment of leases payable of
$1,248,997, and the repayment of stockholder loans, private notes and the line
of credit in the amount of $2,397,926.

         DEBT REDUCTION. Through the quarter ended September 30, 2001, the
Company reduced its outstanding indebtedness through payment of $5,787,131.40 in
short-term notes or bridge loans and through payment in full of the Company's
$450,000 credit line.

         EQUIPMENT FINANCING. For the nine months ending September 30, 2001, the
Company received proceeds of $1,154,171 from a third-party leasing company. The
leases have a mandatory buyout and terms ranging from 24 to 39 months.

                                       11
<PAGE>

         STOCKHOLDER RIGHTS OFFERING. On June 14, 2001, the Company's board of
directors declared a distribution of rights to purchase the Company's common
stock to stockholders of record as of June 15, 2001, or the record date, and
holders of vested options, warrants and convertible notes that possess
anti-dilution rights as of the record date. Through the Company's Registration
Statement on Form S-3 (File No. 333-64012), as declared effective on July 13,
2001, the Company offered an aggregate of 26,869,770 shares of its common stock
upon the exercise of these rights by rightsholders. All rights expired on or
before 5:00 p.m., Las Vegas, Nevada time on September 24, 2001. As of October 5,
2001, all 26,869,770 shares offered in the rights offering had been purchased.
Rightsholders purchased 8,566,584 shares of common stock. Rightsholders applied
$1,891,631.40 in amounts payable under short-term notes or bridge loans toward
the purchase of the rights shares, and the Company received a total of
$1,106,672.80 in cash proceeds from the exercise of these rights. The Company's
standby purchaser, James E. Crabbe, the Company's controlling stockholder and
Chairman of the Board of Directors, purchased 18,303,186 shares of common stock.
Mr. Crabbe paid $3,052,115.30 in cash and applied $850,000 in short-term notes
and $2,504,000 in bridge loans for the purchase of these shares.

OUTLOOK

         Based on presently known commitments and plans, the Company believes
that it will be able to fund its operations and required expenditures for the
remainder of 2001 through cash on hand, cash flow from operations, and cash from
private placements of debt or equity or from lease financing sources. In the
event that such sources are insufficient or unavailable, the Company will need
to seek cash from public or private placements of debt or equity, institutional
or other lending sources, sell certain assets or change operating plans to
accommodate such liquidity issues. No assurances can be given that the Company
will successfully obtain necessary liquidity sources necessary to fund the
Company's operations in the upcoming year.

                                       12
<PAGE>

RISK FACTORS AND FORWARD-LOOKING INFORMATION

         THIS REPORT CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS WITHIN THE
MEANING OF SECTION 27A OF THE SECURITIES ACT AND SECTION 21E OF THE EXCHANGE
ACT. SUCH STATEMENTS REFER TO EVENTS THAT COULD OCCUR IN THE FUTURE AND MAY BE
IDENTIFIED BY THE USE OF WORDS SUCH AS "INTEND," "PLAN," "BELIEVE," CORRELATIVE
WORDS, AND OTHER EXPRESSIONS INDICATING THAT FUTURE EVENTS ARE CONTEMPLATED.
SUCH STATEMENTS ARE SUBJECT TO INHERENT RISKS AND UNCERTAINTIES, AND ACTUAL
RESULTS COULD DIFFER MATERIALLY FROM THOSE PROJECTED IN THE FORWARD-LOOKING
STATEMENTS AS A RESULT OF CERTAIN OF THE RISK FACTORS SET FORTH BELOW AND
ELSEWHERE IN THIS QUARTERLY REPORT.

         ADDITIONAL FINANCING WILL BE REQUIRED. Based on presently known
commitments and plans, the Company believes that it will be able to fund its
operations and required expenditures for the remainder of 2001 through cash on
hand, cash flow from operations, and cash from private placements of debt or
equity or from lease financing sources. In the event that such sources are
insufficient or unavailable, the Company will need to seek cash from public
placements of debt or equity, institutional or other lending sources, sell
certain assets or change operating plans to accommodate such liquidity issues.
No assurances can be given that the Company will successfully obtain necessary
liquidity sources necessary to fund the Company's operations in the upcoming
year.

         LIMITED OPERATING RESULTS; NO INDEPENDENT MARKET RESEARCH OF POTENTIAL
DEMAND FOR CURRENT OPERATIONS. Until January 2000, the Company was in the
development stage and had limited sales of its products. The Company's
activities had been limited to analyzing the gaming industry, consulting with
persons in the gaming industry, negotiating interim financing arrangements,
developing products, establishing a distribution network for its products,
marketing its products to the gaming industry, manufacturing its products and
commencing product sales. There is no guarantee that the Company will generate
sufficient revenue to sustain its operations. No independent organization has
conducted market research providing management with independent assurance from
which to estimate potential demand for the Company's business operations.

         COINLESS GAMING. Certain gaming operators have tested and employed as
part of their current operations certain gaming devices that have eliminated the
use of coin or tokens, or use a combination of coin and "cashless" vouchers. The
acceptance and expansion of coinless gaming devices may reduce the demand for
the SecureDrop(TM) System and may adversely affect the Company's operations in
the future.

         FOCUS ON NON-GAMING MARKETS. The Company has recently begun to explore
the shift of its focus to the non-gaming application of certain of its products
and technology. The refocus to non-gaming markets will have significant risks
for the Company, including, but not limited to, management's lack of experience
in non-gaming markets, the need to hire sales and technical persons with
expertise in non-gaming markets, additional research, development, distribution
and marketing expenses necessary to proceed into non-gaming application of the
Company's products and technology, significant competitive factors and forces
applicable to non-gaming markets and a variety of other factors. There is no
assurance that the Company will be able to successfully execute the strategy to
refocus a significant portion of its marketing and product technology strategies
to the non-gaming markets.

         REGULATION. The gaming industry is a highly regulated industry and is
subject to numerous statutes, rules and regulations administered by the gaming
commissions or similar regulatory authorities of each jurisdiction. Generally,
the Company and other entities which seek to introduce gaming products or
concepts into such jurisdictions may be required to submit applications relating
to their activities or products (including detailed background information
concerning controlling persons within their organization) which are then
reviewed for approval. The Company may incur significant expenses in seeking to
obtain licenses for its gaming products and concepts, and no assurance can be
given that its products will be approved in any particular jurisdiction. The
failure to obtain such approval in any jurisdiction in which the Company may
seek to introduce its products or concepts could have a material adverse effect
on the Company's business.

                                       13
<PAGE>

         INFLUENCE BY CONTROLLING STOCKHOLDERS. The Company's executive officers
and members of the Company's Board of Directors beneficially own 31,458,097
shares of common stock, or approximately 78% of the outstanding shares of the
Company's common stock, assuming exercise of options, warrants and convertible
debentures. These stockholders have the power to influence all matters requiring
approval by the Company's stockholders, including the election of directors and
approval of mergers and other significant corporate transactions. This
concentration of ownership also has the effect to delay, prevent or expedite, as
the case may be, a change in control of the Company.

         UNCERTAINTY OF MARKET FOR COMPANY'S PRODUCTS. The Company has completed
development and begun distribution of the Shufflers and the SecureDrop(TM)
System. Although the market appears to be receptive to the Company's products,
there is no guarantee that the market will remain receptive and that the
Company's future products will be received by the market in the same manner.

         CUSTOMER PREFERENCE FOR ONE SHUFFLER VENDOR. There is no guarantee the
Company's development of the specialty shufflers will be successfully completed.
The failure to successfully complete the development and marketing of the
specialty shuffler could negatively impact the Company's ability to distribute
its remaining shuffler products. Since the Company's customers have demonstrated
a strong preference to conduct business with only one provider of automatic
shuffler products, the Company's inability to complete its shuffler product line
may adversely affect the Company.

         CONTINUED CUSTOMER ACCEPTANCE. To the Company's knowledge, although the
Company's shufflers have not proved vulnerable to card counters or expert
players, and although the Company's casino customers have not experienced
financial loss from their use of the shufflers, there is no guaranty that the
shufflers will not become vulnerable to card counters or expert players or that
the use of the Company's shufflers will not result in financial losses for the
Company's customers. The occurrence of such events could have a material adverse
effect on the Company.

         BENEFIT TO MANAGEMENT. The Company may, in the future, compensate the
Company's management with substantial salaries and other benefits. The payment
of future larger salaries, commissions and the costs of these benefits may be a
burden on the Company and may be a factor in limiting or preventing the Company
from achieving profitable operations in the future. However, the Company would
not continue to compensate management with such substantial salaries and other
benefits under circumstances where to do so would have a material negative
effect on the Company's financial condition.

         NO DIVERSIFICATION. To date, the Company has intended to manufacture
and market certain gaming products and concepts. Therefore, the Company's
financial viability has depended almost exclusively on its ability to generate
revenues from its operations, and the Company has not had the benefit of
reducing its financial risks by relying on revenues derived from other
operations.

         ILLIQUID INVESTMENT; RISK OF LOSS. The capital stock of the Company is
at risk of complete loss if the Company's operations are unsuccessful. In
addition, there has been no trading market for the Company's common stock. There
can be no assurance that the Company's stock will ever be quoted, that an active
trading and/or a liquid market will ever develop or, if developed, that it will
be maintained. There are material risks in connection with the Company's common
stock.

         COMPETITION. There is significant competition in the gaming industry.
The Company competes with established companies and other entities (many of
which possess substantially greater resources than the Company). Almost all of
the companies with which the Company competes are substantially larger, have
more substantial histories, backgrounds, experience and records of successful
operations, greater financial, technical, marketing and other resources, more

                                       14
<PAGE>

employees and more extensive facilities than the Company now has, or will have
in the foreseeable future. It is also likely that other competitors will emerge
in the near future. There is no assurance that the Company will continue to
compete successfully with other established gaming product manufacturers. The
Company shall compete on the basis of quality and price. Inability to compete
successfully might result in increased costs, reduced yields and additional
risks to the investors herein.

         RISKS OF PROPRIETARY PRODUCTS AND GAMES. The Company places its
proprietary products, except SecureDrop(TM), in casinos under short-term lease
arrangements, making these products susceptible to replacement due to pressure
from competitors, changes in economic conditions, obsolescence, and declining
popularity. The Company intends to maintain and expand the number of installed
proprietary products through enhancement of existing products, introduction of
new products, and customer service, but there can be no assurance that these
efforts will be successful. Introduction of new proprietary products involves
significant risks, including whether the Company will be able to place its
products with casinos and non-gaming industries, the economic terms on which
these industries will accept the products, and the popularity of the products.
The Company has filed trademark and patent applications to protect its
intellectual property rights in certain of its trademarks and innovations on
certain of its proprietary products, respectively. At this time, however, the
United States Patent and Trademark Office has not acted upon all of these
applications. There can be no assurance that the pending patent or trademark
applications will actually issue as patents or trademark registrations or that
any of these rights will not be infringed by others. Certain of the Company's
products and games do or may have independent protection of the game itself, and
it is possible that competitors could produce a similar product or game without
violating any legal rights of the Company. The Company intends to promote
aggressively its trademarks to build goodwill and customer loyalty. There can be
no assurance, however, that the Company will be successful in these efforts,
that innovations will be subject to legal protection, or that the innovations
will give a competitive advantage to the Company.

         LACK OF DIVIDENDS. There can be no assurance that the operations of the
Company will become profitable. At the present time, the Company intends to use
any earnings which may be generated to finance the growth of the Company's
business.

         DEPENDENCE ON KEY INDIVIDUALS. The future success of the Company is
highly dependent upon the management skills of its key employees and the
Company's ability to attract and retain qualified key employees. The inability
to obtain and employ these individuals would have a serious effect upon the
business of the Company. The Company has entered into employment agreements with
Steven J. Blad and seven additional key employees. There can be no assurance
that the Company will be successful in retaining its key employees or that it
can attract or retain the additional skilled personnel required.

         VULNERABILITY TO FLUCTUATIONS IN THE ECONOMY. The demand for the
Company's products is dependent on, among other things, certain economic and
business factors to which the economy is subject. These factors are beyond the
control of the Company. Such factors include, without limitation: (a) general
economic conditions, such as inflation, business cycle fluctuation, interest
rates, and the availability of financing; (b) the possibility of recession; (c)
increases in operating expenses, taxes, insurance or maintenance costs which
might not be offset by increased revenues from the Company's business; and (d)
international currency fluctuations.

         "PENNY" STOCK REGULATION OF BROKER-DEALER SALES OF COMPANY SECURITIES.
The Company does not presently meet the requirements for a NASDAQ Small Cap
Market listing. The OTC Bulletin Board has no quantitative written standards and
is not connected with the NASD. Until the Company obtains a listing on the
NASDAQ Small Cap Market, if ever, the Company's securities may be covered by
Rule 15g-9 under the Exchange Act which imposes additional sales practice

                                       15
<PAGE>

requirements on broker-dealers who sell such securities to persons other than
established customers and institutional accredited investors (generally
institutions with assets in excess of $5,000,000 or individuals with net worth
in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly
with their spouse). For transactions covered by the rule, the broker-dealer must
furnish to all investors in penny stocks, a risk disclosure document required by
Rule 15g-9 of the Exchange Act, make a special suitability determination of the
purchaser and have received the purchaser's written agreement to the transaction
prior to the sale. In order to approve a person's account for transactions in
penny stock, the broker or dealer must (i) obtain information concerning the
person's financial situation, investment experience and investment objectives;
(ii) reasonably determine, based on the information required by paragraph (i)
that transactions in penny stock are suitable for the person and that the person
has sufficient knowledge and experience in financial matters that the person
reasonably may be expected to be capable of evaluating the rights of
transactions in penny stock; and (iii) deliver to the person a written statement
setting forth the basis on which the broker or dealer made the determination
required by paragraph (ii) in this section, stating in a highlighted format that
it is unlawful for the broker or dealer to effect a transaction in a designated
security subject to the provisions of paragraph (ii) of this section unless the
broker or dealer has received, prior to the transaction, a written agreement to
the transaction from the person, and stating in a highlighted format immediately
preceding the customer signature line that the broker or dealer is required to
provide the person with the written statement and the person should not sign and
return the written statement to the broker or dealer if it does not accurately
reflect the person's financial situation, investment experience and investment
objectives and obtain from the person a manually signed and dated copy of the
written statement. A penny stock means any equity security other than a security
(i) registered, or approved for registration upon notice of issuance on a
national securities exchange that makes transaction reports available pursuant
to 17 CFR 11Aa3-1; (ii) authorized or approved for authorization upon notice of
issuance, for quotation in the NASDAQ system; (iii) that has a price of five
dollars or more; or (iv) whose issuer has net tangible assets in excess of
$2,000,000 demonstrated by financial statements dated less than fifteen months
previously that the broker or dealer has reviewed and has a reasonable basis to
believe are true and complete in relation to the date of the transaction with
the person. Consequently, the rule may affect the ability of broker-dealers to
sell the Company's securities.


PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS.

         On November 22, 1999, Moll Industries, Inc. filed a complaint (Case No.
817296) against the Company in the Superior Court of the State of California for
the County of Orange, California. The parties have entered into a settlement
agreement, the fulfillment of which will lead to the dismissal of this
litigation.

         On May 18, 2000, Heath Electronics Manufacturing Corporation filed a
complaint (Case No. CV OC 00-02422D) against the Company in the District Court
of the Fourth Judicial District of the State of Idaho, Ada County. The Company
has answered the Complaint, which requests payment for goods in the amount of
$89,569 plus interest and costs, and has filed a counterclaim alleging claims
for breach of contract, breach of express warranty, breach of the implied
warranty of merchantability, and breach of the implied warranty of fitness for a
particular purpose. Trial has been set for November 20, and December 12, 2001.

         On March 21, 2001, RNB Enterprises, Inc. and other plaintiffs filed a
complaint (Case No. A432250) against the Company in the District Court of the
State of Nevada, Clark County. The parties have entered into a settlement, the
fulfillment of which will lead to the dismissal of this litigation.

                                       16
<PAGE>

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS.

         Of the $4,158,787.80 in cash proceeds that the Company received through
the rights offering, $1,000,000 was utilized for the retirement of debt,
$550,000 was applied to reduce payables, and approximately $1,300,000 was
utilized for working capital, with the balance of $1,308,787.80 remaining in the
Company's cash accounts.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES.

         None.

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

         None.

ITEM 5.  OTHER INFORMATION.

         STOCKHOLDER RIGHTS OFFERING. On June 14, 2001, the Company's board of
directors declared a distribution of rights to purchase the Company's common
stock to stockholders of record as of June 15, 2001, or the record date, and
holders of vested options, warrants and convertible notes that possess
anti-dilution rights as of the record date. Through the Company's Registration
Statement on Form S-3 (File No. 333-64012), as declared effective on July 13,
2001, the Company offered an aggregate of 26,869,770 shares of its common stock
upon the exercise of these rights by rightsholders. All rights expired on or
before 5:00 p.m., Las Vegas, Nevada time on September 24, 2001. As of October 5,
2001, all 26,869,770 shares offered in the rights offering had been purchased.
Rightsholders purchased 8,566,584 shares of common stock. Rightsholders applied
$1,891,631.40 in amounts payable under short-term notes or bridge loans toward
the purchase of the rights shares, and the Company received a total of
$1,106,672.80 in cash proceeds from the exercise of these rights. The Company's
standby purchaser, James E. Crabbe, the Company's controlling stockholder and
Chairman of the Board of Directors, purchased 18,303,186 shares of common stock.
Mr. Crabbe paid $3,052,115.30 in cash and applied $850,000 in short-term notes
and $2,504,000 in bridge loans for the purchase of these shares.

         REGULATORY UPDATE. On July 19, 2001, the Mississippi Gaming Commission
renewed the license of the Company's wholly-owned subsidiary, Casinovations
Sales Incorporated. The current license expires in 2004. The Jackson Rancheria
Tribal Gaming Agency granted the Company a license certificate, effective July
19, 2001. The license certificate is valid through July 19, 2003.

         EMPLOYMENT AGREEMENTS. On July 20, 2001, the Company entered into
employment agreements with seven key employees. Each agreement has a term of two
years and is renewable for successive one year terms. Through the agreements,
the Company granted an aggregate of 1,461,000 stock options and agreed to pay a
minimum of $832,500 per year in aggregate salaries. The agreements contain
confidentiality and non-competition provisions.

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

         a.       Exhibits.
                  --------

                  None.

         b.       Reports on Form 8-K.
                  -------------------

         During the three month period ended September 30, 2001, the Company
filed with the Securities and Exchange Commission a Current Report on Form 8-K/A
filed as of July 5, 2001, reporting the June 26, 2001, acquisition of the
worldwide right, title and interest to the patents, pending patent applications,
and all patent rights to the Coin Operated Machine Having An Electronically
Identified Coin Collection Box and the Electronically Identified Coin Collection

                                       17
<PAGE>

Box (collectively, the "Patent Rights") from Technology Development Center, LLC
("TDC"), the cancellation of the Company's Exclusive License Agreement with TDC
pursuant to which the Company was the exclusive licensee of the Patent Rights,
and the surrender of 20,500 shares of the Company's common stock by TDC; and
Current Reports on Forms 8-K filed as of: (i) July 27, 2001, announcing the
effectiveness of an amendment to the Company's Articles of Incorporation
increasing the Company's authorized shares from 40 million shares of common
stock, $.001 par value, and 10 million shares of blank-check preferred stock,
$.001 par value, to 80 million shares of common stock, $.001 par value and 10
million shares of blank-check preferred stock, $.001 par value; (ii) August 16,
2001, reporting the expiration of rights to non-California residents and the
purchase of shares of common stock by the Company's standby purchaser; (iii)
August 22, 2001, announcing the resignation of Bob L. Smith as Chairman of the
Board of Directors, the election of James E. Crabbe as Chairman of the Board and
the appointment of Bob L. Smith as Vice-Chairman of the Board; (iv) September
11, 2001, reporting the resignation of Richard S. Jaslow from the Board of
Directors due to other time commitments; and (v) October 9, 2001, reporting the
expiration of all rights issued to stockholders, the purchase of shares of
common stock by the Company's standby purchaser, and the purchase of all
26,869,770 shares offered pursuant to the stockholder rights offering.

                                       18
<PAGE>

                                    SIGNATURE

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

                                              VendingData Corporation
                                      ------------------------------------------
                                                    (Registrant)


Date:  November 14, 2001              By:  /S/ Steven J. Blad
                                          --------------------------------------
                                           Steven J. Blad
                                      Its: President, Chief Executive Officer
                                           and Treasurer