<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:      March 31, 2002
                                          --------------------------------------
                                       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 April 30, 2002
--------------------------------------------------------------------------------

         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                 16


         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                                                                  18






                                        2

<PAGE>
<TABLE>

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

                                     VENDINGDATA CORPORATION
                                          BALANCE SHEET

<CAPTION>
                                                                 March 31,      December 31,
                                                                   2002            2001
                                                               -------------   -------------
                                       ASSETS                   (UNAUDITED)
<S>                                                            <C>             <C>
Current assets:
   Cash and cash equivalents                                   $     83,186    $    866,998
   Accounts receivable, trade                                       835,865         159,065
   Other receivables                                                 20,781          40,438
   Inventories                                                    1,468,271       1,514,073
   Prepaid expenses                                                 182,127         271,933
                                                               -------------   -------------
     Total current assets                                         2,590,229       2,852,507

Property and equipment, including revenue
   producing equipment, at cost, net of
   accumulated depreciation of                                 $  2,172,579
   and $2,081,582, respectively                                   1,839,295       2,150,291

Intangible assets, at cost, net of
   accumulated amortization of $151,351 and
   $131,606, respectively                                           389,728         403,078
Other Assets                                                        529,862          34,862
Deferred interest                                                   517,627         542,790
Deposits                                                            728,642         705,980
                                                               -------------   -------------
                                                               $  6,595,382    $  6,689,508
                                                               =============   =============

                        LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Current portion of leases payable                              2,951,448       2,721,607
   Accounts payable                                                 833,126         566,427
   Accrued expenses                                                 765,490         441,538
   Accrued wages                                                    122,733         221,718
   Accrued interest                                                 416,180         338,457
   Shareholder loans - due currently                              1,415,391         620,791
   Customer deposits                                                625,167         882,573
                                                               -------------   -------------
     Total current liabilities                                    7,129,535       5,793,111

Leases payable - non-current                                      1,837,962       2,127,186
Convertible debt                                                  2,603,077       2,603,077
Stockholder loans - non-current                                      16,000          16,000
                                                               -------------   -------------
     Total liabilities                                           11,586,574      10,539,374

Stockholders' equity:
   Common stock, $.001 par value,
     80,000,000 shares authorized, 38,129,072
     shares and 38,129,072 shares issued and
     outstanding, respectively                                       38,129          38,129
   Additional paid-in capital                                    26,689,477      26,689,477
   Deficit accumulated during development stage                 (31,718,799)    (30,577,472)
                                                               -------------   -------------
     Total stockholders' equity                                  (4,991,193)     (3,849,866)
                                                               -------------   -------------
                                                               $  6,595,382    $  6,689,508
                                                               =============   =============
</TABLE>

                    See accompanying notes to unaudited financial statements.

                                               3

<PAGE>

                             VENDINGDATA CORPORATION
                             STATEMENT OF OPERATIONS
                   THREE MONTHS ENDED MARCH 31, 2002 AND 2001
                                   (UNAUDITED)



                                                  Three Months Ended March 31,
                                                      2002              2001
                                                 -------------     -------------

Sales                                            $  1,023,163           612,780
Rental income                                         354,627           292,017
Other income                                            5,722                 -
                                                 -------------     -------------
                                                    1,383,512           904,797

Cost of sales                                       1,105,082         1,149,693
                                                 -------------     -------------
Gross margin                                          278,430          (244,896)

Selling, general and administrative                   669,033           717,455
Research and development                              373,221           238,342
                                                 -------------     -------------
(Loss) from operations                               (763,824)       (1,200,693)

Interest expense, net                                 291,250           302,031
Interest expense - related parties                     85,557           131,749
                                                 -------------     -------------
      Total interest expense net                      376,807           433,780
                                                 -------------     -------------
(Loss) before income taxes                         (1,140,631)       (1,634,473)
Provision for income taxes                                696                14
                                                 -------------     -------------
Net income (loss)                                $ (1,141,327)     $ (1,634,487)
                                                 =============     =============

Basic earnings (loss) per share                  $      (0.03)     $      (0.15)
                                                 =============     =============

Weighted average shares outstanding                38,129,072        11,079,801
                                                 =============     =============



                                        4

<PAGE>
<TABLE>

                                 VENDINGDATA CORPORATION
                                 STATEMENT OF CASH FLOWS
                       THREE MONTHS ENDED MARCH 31, 2002 AND 2001
                                       (UNAUDITED)
<CAPTION>
                                                               Three Months Ended
                                                        -------------------------------
                                                        March 31, 2002   March 31, 2001
                                                        --------------   --------------

<S>                                                     <C>              <C>
Net (loss)                                              $  (1,141,327)   $  (1,634,487)
   Adjustments to reconcile net income (loss) to net
     cash provided by operating activities:
     Depreciation and amortization                            205,545          189,466
     Amortization of deferred interest                        100,113           73,918
   Changes in assets and liabilities:
     (Increase) decrease in trade accounts receivable        (676,800)          87,220
     (Increase) decrease in other receivables                  19,657           11,841
     (Increase) decrease in inventory                          45,802         (577,642)
     (Increase) decrease in prepaid expenses                   89,806           20,450
     (Increase) decrease in other assets                     (495,000)               -
     Increase (decrease) in accounts payable                  266,699          217,486
     Increase (decrease) in accrued expenses                 (197,742)          52,625
     Increase (decrease) in customer deposits                (257,406)          90,290
     Increase (decrease) in deferred charges                  500,432          (28,309)
                                                        --------------   --------------
       Total adjustments                                     (398,893)         137,346
                                                        --------------   --------------

Net cash (used in) operating activities                    (1,540,220)      (1,497,141)
                                                        --------------   --------------

Cash flows from investing activities:
   Acquisition of plant and equipment                               -         (106,516)
   Equipment produced and held for rental                     118,802                2
   Increase in patents and trademarks                               -           (8,383)
   Deposits                                                   (22,662)         (37,662)
                                                        --------------   --------------
Net cash (used in) investing activities                        96,140         (152,559)
                                                        --------------   --------------

Cash flows from financing activities:
   Common stock sold for cash                                       -          585,000
   Proceeds from stockholder loans                          1,000,000        1,559,358
   Repayment of stockholder loans                            (205,399)               -
   Proceeds from leases payable                               499,661          386,346
   Repayment of leases payable                               (633,993)        (432,529)
   Proceeds from convertible debentures                             -                -
   Proceeds from notes payable                                      -                -
   Repayment of notes payable                                       -         (759,358)
                                                        --------------   --------------

Net cash provided by financing activities                     660,268        1,338,817
                                                        --------------   --------------

Increase (decrease) in cash                                  (783,812)        (310,883)
Cash and cash equivalents, beginning of period                866,998          432,070
                                                        --------------   --------------
   Cash and cash equivalents, end of period             $      83,186    $     121,187
                                                        ==============   ==============
</TABLE>


                See accompanying notes to unaudited financial statements.

                                            5

<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, 2001, as included in the
Company's Annual Report on Form 10-KSB as filed with the Securities and Exchange
Commission on April 1, 2002.

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, thereby decreasing the loss per share
of common stock.

NOTE 3 - NOTES PAYABLE.

For the three months ended March 31, 2002, the Company borrowed $1,000,000 from
a member of the Board of Directors. The notes memorializing the loans bear an
interest rate of 9.5% per annum, mature on demand thirty (30) days after the
date of the notes and are unsecured. The proceeds from these notes were used for
general working capital purposes.

NOTE 4 - EQUIPMENT FINANCING.

For the three months ended March 31, 2002, the Company received proceeds of
$499,661 from a third-party leasing company. The leases have a mandatory buyout
and terms of 36 months.

NOTE 5 - OTHER ASSETS.

Effective February 26, 2002, the Company transferred, on terms and conditions to
be mutually agreed upon, one hundred (100) units of its shuffling machines, at a
price of $4,950 per unit, to Casinovations Sales Incorporated for the conduct of
business in Mississippi.

                                        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 and Section 21E of the Exchange Act, such as statements relating
to plans for future expansion, capital spending and financing sources. 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 the Company, the continued growth
of the gaming industry, the success of the Company's product-development
activities, vigorous competition in the gaming industry, dependence on existing
management, gaming regulations (including actions affecting licensing), leverage
and debt service (including sensitivity to fluctuations in interest rates),
resolution of the Company's ongoing legal proceedings, domestic or global
economic conditions and changes in federal or state tax laws or the
administration of such laws.

OVERVIEW

         The Company is headquartered in Las Vegas, Nevada, and develops,
manufactures and distributes products that increase security, productivity and
profitability for the gaming industry. The company's principal products include
the SecureDrop(TM) Slot Accounting System (the "SecureDrop(TM) System"), an
electronically identified coin collection and accounting system for gaming
machines, a bill canister tracking system for gaming machines. In addition, the
Company offers two computer-based card shuffling devices, the Random Ejection
Shuffler(TM) (the "Shuffler") and the Continuous Random Ejection Shuffler(TM)
(the "Continuous Shuffler"). The Company is developing advancements for its
present product line as well as additional technology for the expansion of its
products to the vending and amusement industries.

         As of March 31, 2002, the Company had placed 359 of the Shufflers and
46 of the Continuous Shufflers under rental contracts. In addition, the Company
has to date sold 126 Shufflers and 6 Continuous Shufflers. The Company maintains
parts inventories required to build additional shufflers. As for the
SecureDrop(TM) System, the Company has 6056 Hard Count units installed and is
currently completing the installation of an additional 3169 units of the Hard
Count Module and the first installation of the Soft Count Module, which consists
of 3169 units.

ACCOUNTING POLICIES

         The preparation of financial statements in conformity with generally
accepted accounting principles requires the Company's management to make
estimates and assumptions that affect reported amounts and disclosures, some of
which may require revision in future periods. Actual results could differ from
these estimates. The following is a summary of what management believes are the
critical accounting policies related to the Company. The application of these
policies, in some cases, requires the Company's management to make subjective
judgments regarding the effect of matters that are inherently uncertain. See
Note 1, "Significant Accounting Policies," to the Company's Financial Statements
included in Item 7 for a more detailed discussion of the Company's accounting
policies.

         REVENUE RECOGNITION. The Company recognizes revenue from the sale of
its products upon installation at customer locations. Revenue from rentals of
shufflers is recorded as revenue at the first of each month in accordance with
lease terms. Sales returns and allowances are recorded after returned goods are
received and inspected. The Company plans to provide currently for estimated
product returns arising therefrom.

                                        7

<PAGE>

         INVENTORY. Inventory is stated at the lower of cost or market using the
first in, first out method. Finished goods include raw materials, direct labor
and overhead. Raw materials include purchase and delivery costs.

         PROPERTY AND EQUIPMENT. Property and equipment are carried at cost.
Depreciation is computed using the straight-line method over the estimated
useful lives of the assets. When assets are retired or otherwise disposed of,
the cost and the related accumulated depreciation are removed from the accounts,
and any resulting gain or loss is recognized in operations for the period. The
cost of repairs and maintenance is charged to operations as incurred, and
significant renewals or betterments are capitalized. The useful lives for office
equipment, computer software and leasehold improvements is five years and for
tooling is three years.

RESULTS OF OPERATIONS

         The following discussion summarizes the Company's results of operations
for the three months ended March 31, 2002 and 2001, and the Company's liquidity
and capital resources.

THREE MONTHS ENDED MARCH 31, 2002 AND 2001

         REVENUES. For the three months ended March 31, 2002, the Company
generated total revenues of $1,383,512 compared to $904,797 for the three months
ended March 31, 2001. The revenues for the three months ended March 31, 2002,
consisted of Shuffler rentals of $354,627, SecureDrop(TM) sales of $1,023,163
and other income of $5,722. The increase of $478,715, or 53%, in revenues from
the three months ended March 31, 2001, to the three months ended March 31, 2002,
resulted primarily from the increase of $410,383 in SecureDrop(TM) sales over
the same period. The Company believes revenue will increase through additional
SecureDrop(TM) sales, as the SecureDrop(TM) Soft Count module gains additional
regulatory approvals and customer acceptance and through placements of
additional Shufflers in newly opened territories, such as Wisconsin, and in
prospective territories to be opened, such as Louisiana and Indiana.

         COST OF SALES. For the three months ended March 31, 2002, the cost of
sales was $1,105,082 compared to $1,149,693 for the three months ended March 31,
2001, a decrease of $44,611, or 4%. The cost of sales for the three months ended
March 31, 2002, consisted of approximately $599,027 for the Company's
SecureDrop(TM) products, $120,368 for depreciation expense associated with the
Shufflers held for rental, $213,069 for costs related to servicing the Shufflers
held for rental, and $172,618 for labor and other manufacturing costs. The 4%
decrease in cost of sales coupled with the 53% increase in revenues is the
result of more efficient operations of the manufacturing and service areas.

         GROSS MARGIN. For the three months ended March 31, 2002, the gross
margin was $278,430 compared to $(244,896) for the three months ended March 31,
2001, an increase of $523,326. As a result, the gross margin percentage on
revenues for the three months ended March 31, 2002 was 20% compared to (27)% for
the three months ended March 31, 2001. The increase in gross margin and in gross
margin percentage resulted primarily from the increase in revenues coupled with
the reduction in cost of sales.

         SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. For the three months
ended March 31, 2002, selling, general and administrative expenses decreased
approximately $48,422, or approximately 7%, to $669,033, compared to $717,455
for the three months ended March 31, 2001. For the three months ended March 31,
2002, selling, general and administrative expenses included: salaries and

                                        8

<PAGE>

related costs of $272,772; advertising and marketing services of $55,947; travel
and entertainment costs of $94,797; printing and office expenses of $16,584;
depreciation and amortization of $51,105; office rent and utilities of $84,009;
professional fees of $43,638; bad debt accrual of $10,500 and $39,681 in other
miscellaneous expenses.

         RESEARCH AND DEVELOPMENT. For the three months ended March 31, 2002,
research and development expenses increased $134,879, or approximately 57%, to
$373,221, compared to $238,342 for the three months ended March 31, 2001. The
increase is due to increased expenditures for the refinement of the
SecureDrop(TM) Soft Count Cart and development of the Company's specialty
shuffler.

         INTEREST EXPENSE, NET. For the three months ended March 31, 2002, the
Company incurred interest expenses, net of interest income, of $376,807 compared
to $433,780 for the three months ended March 31, 2001, a decrease of $56,973, or
13%. This decrease was attributable to the conversion of interest bearing debt
into equity during the Company's stockholder rights offering in the third
quarter of 2001.

         NET INCOME (LOSS). For the three months ended March 31, 2002, the
Company had a net loss of $1,141,327 compared to a net loss of $1,634,487 for
the three months ended March 31, 2002, a decrease of $493,160. The decrease in
net loss was primarily due to the increases in SecureDrop(TM) sales and rental
income and the decreases in cost of sales, selling, general, administrative
expenses and interest expenses, offset, in part, by an increase in research and
development expenses. Basic loss per share was $0.03, based on 38,129,072
weighted average shares outstanding, for the three months ended March 31, 2002,
compared to $0.15, based on 11,079,801 weighted shares outstanding, for the
three months ended March 31, 2001.

LIQUIDITY AND CAPITAL RESOURCES

         OVERVIEW. The Company has generated cash flow deficits from operations,
including cash used in operating activities of $1,540,220 and $1,497,141 in the
three months ended March 31, 2002 and 2001, respectively. Consequently, the
Company has been substantially dependent on cash from financing activities to
fund development and operating activities, including cash from financing
activities of $660,268 and $1,338,817 in the three months ended March 31, 2002
and 2001, respectively. The primary source of cash remains loans from a
director-controlling stockholder, which totaled $1,000,000 in the three months
ended March 31, 2002 and was offset by repayments of $205,399 and net payments
on leases of $134,332 in the three months ended March 31, 2002. Unless
alternative sources of cash are located, the Company is substantially dependent
upon loans from its director-controlling stockholder and will continue to be so
dependent until its operations begin to generate sufficient cash flow to support
such cash requirements.

         CASH AND WORKING CAPITAL DEFICIT. At March 31, 2002, the Company had
cash, cash equivalents and investments of $83,186, compared to $866,998 at
December 31, 2001. At March 31, 2002, the Company's working capital deficit was
$4,539,306, compared to $2,940,604 at December 31, 2001, an increase of
$1,598,702. The increase in working capital deficit resulting primarily from
increases in the current portion of shareholder loans, accounts payable and
accrued expenses. At March 31, 2002, the Company's current ratio, I.E. the ratio
of current assets to current liabilities, was 0.36 compared to 0.49 at December
31, 2001. Until the Company's normalized cash flows from operations are
achieved, the Company will be relying primarily upon loans from its
director-controlling stockholder and, to a lesser extent, upon existing cash
balances, accounts receivable collections, other placements of debt or equity
and institutional sources of debt and equity capital for working capital
purposes.

                                        9

<PAGE>

         CASH FLOW. For the three months ended March 31, 2002, net cash used in
operating activities was $1,540,220, compared to $1,497,141 for the three months
ended March 31, 2001. Cash used in operating activities during the three months
ended March 31, 2002, is net of depreciation and amortization of $205,545,
compared to $189,466 for the three months ended March 31, 2001 and amortization
of deferred interest of $100,113 for the three months ended March 31, 2002,
compared to $73,918 for the three months ended March 31, 2001, and reflects an
increase in accounts receivable of $676,800, compared to a decrease of $87,220
for the three months ended March 31, 2001; a decrease in inventory of $45,802,
compared to an increase of $577,642 for the three months ended March 31, 2001;
an increase in other assets of $495,000, compared to $0 for the three months
ended March 31, 2001; a decrease in prepaid expenses of $89,806, compared to a
decrease of $20,450 for the three months ended March 31, 2001; decreases in
other receivables of $19,657, compared to a decrease of $11,841 for the three
months ended March 31, 2001; increases in accounts payable of $266,699, compared
to an increase of $217,486 for the three months ended March 31, 2001; decreases
in accrued expenses of $197,742, compared to an increase of $52,625 for the
three months ended March 31, 2001; decreases in customer deposits of $257,406,
compared to an increase of $90,290 for the three months ended March 31, 2001;
and an increase in deferred charges of $500,432, compared to a decrease of
$28,309 for the three months ended March 31, 2001. The increase in accounts
receivable results from customer billings that the Company has not yet
recognized as revenue. With regard to the increase in other assets, see Note 5
to the financial statements. The variance in accrued expenses results from the
reclassification of prior contingent liabilities from long term to short term
liabilities.

         For the three months ended March 31, 2002, investing activities
provided net cash of $96,140, compared to $152,559 of net cash used in investing
activities for the three months ended March 31, 2001. Net cash provided by
investing activities for the three months ended March 31, 2002 consisted of the
production of equipment for rental in the amount of $118,802 offset by deposits
of $22,662 offset.

         For the three months ended March 31, 2002, net cash provided by
financing activities was $660,268 compared to $1,338,817 for the three months
ended March 31, 2001. The decrease is attributable to fewer placements of notes
with a private individual for working capital and higher repayments of leases.
For the three months ended March 31, 2002, cash from financing activities
consisted of $1,000,000 from the shareholder loans and proceeds of $499,661 from
leases payable, reduced by the repayment of leases payable of $633,993, and the
repayment of shareholder loans of $205,399. In addition, as part of the
Company's financing activities, during the three months ending March 31, 2002,
the Company received proceeds of $499,661 from a third-party leasing company
through which the Company has financed most of its furniture, equipment, and
tooling. The leases have a mandatory buyout and terms ranging from 24 to 39
months.

CONTRACTUAL CASH OBLIGATIONS AND COMMERCIAL COMMITMENTS

         The following table presents our contractual cash obligations and
commercial commitments as of March 31, 2002. We have no other significant
contractual obligations or commercial commitments either on or off balance sheet
as of this date.

                                       10

<PAGE>
<TABLE>
<CAPTION>
                                                           PAYMENTS DUE BY PERIOD
CONTRACTUAL CASH
OBLIGATIONS                         TOTAL            1 YEAR          1-3 YEARS         4-5 YEARS        5 YEARS
----------------------------    ---------------    ------------    -------------     ------------    -------------
<S>                                 <C>              <C>              <C>                <C>                    <C>
Long-term Debt                       4,034,468       1,415,391        2,619,077                -                -
Capital Lease Obligations            4,789,410       2,951,448        1,837,962                -                -
Operating Leases                     3,063,542         593,415        1,567,799          902,328                -
Other Long-term Obligations                  -              -                 -                -                -
----------------------------    ---------------    ------------    -------------     ------------    -------------
TOTAL                               11,887,420       4,960,254        6,024,838          902,328
</TABLE>

OUTLOOK

         Based on the assumption that the Company continues to receive
additional revenue from its controlling stockholder and based on the assumption
that the Company will place additional units of Convertible Debt pursuant to the
plan approved by the Company's Board of Directors in February 2002, the Company
believes that it will be able to fund its operations and required expenditures
for the remainder of 2002 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. If we continue to generate
significant losses from our operations, and are not able to locate additional
sources of liquidity, we may be unable to continue as a going concern.

                                       11

<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. IN ADDITION TO THE OTHER INFORMATION
CONTAINED HEREIN, INVESTORS SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK
FACTORS.

         DEPENDENCE ON CONTROLLING STOCKHOLDER. The Company has relied on loans
and equity investments from its controlling stockholder. The controlling
stockholder loaned the Company $1,000,000 during the first quarter ended March
31, 2002 and has already loaned the Company additional funds during the first
month of the second quarter of 2002. If the controlling stockholder should cease
such funding, there is no assurance that other sources of cash will be
available.

         ADDITIONAL FINANCING WILL BE REQUIRED. Since the Company's revenue is
not sufficient to support our operations, the Company currently anticipates the
need to raise funds through private or public offerings of our equity or
convertible debt securities. The issuance of additional equity or convertible
debt securities will have the effect of reducing the percentage ownership of the
Company's current stockholders. In addition, these equity or convertible debt
securities may have additional rights, preferences or privileges to those of the
Company's common stock, such as registration rights. 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. If adequate funds are not
available or are not available on acceptable terms, the Company may not be able
to fund operations or otherwise continue as a going-concern.

         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 have 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. Although the Company anticipates significant sales
development and revenue growth during 2002, 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 Hard Count Module and may adversely affect the
Company's operations in the future.

         RELIANCE ON THE GAMING INDUSTRY. Nearly all of our revenue is generated
by the sale or placement of our products to existing gaming properties. The
economic health of the gaming industry, and, therefore, our revenues, are
affected by a number of factors beyond our control, including general economic
conditions, levels of disposable income of gaming patrons, acts of terrorism and
anti-terrorism efforts, increased transportation costs resulting in decreased
travel by gaming patrons, changes or proposed changes in tax laws, legal and

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regulatory issues affecting the development, operation and licensing of gaming
properties and competitive conditions in the gaming industry. These factors may
impact the demand for the Company's products and could materially affect
revenues that the Company realizes on the sale or placement of our products.

         EFFECT OF EXTRAORDINARY EVENTS, SUCH AS TERRORIST ATTACKS, ON OUR
BUSINESS. Extraordinary events, such as terrorist attacks or acts of war, may
cause damage or disruption to the Company and its employees, facilities and
customers, which, in turn, could significantly impact the Company's revenues,
costs and expenses, and financial condition. The terrorist attacks that took
place in the United States on September 11, 2001 were unprecedented events that
have created many economic and political uncertainties, especially to the gaming
industry, some of which have materially adversely affected the Company's
business, results of operations, and financial condition and may do so again in
the future. In particular, the gaming industry has been affected by the downturn
in the tourist industry as a result of the September 11 attacks. Because our
business is closely tied to the gaming industry, the long-term effects on the
Company from the September 11, 2001 attacks are unknown. The potential for
future terrorist attacks, the national and international responses to terrorist
attacks, and other acts of war or hostility have created many economic and
political uncertainties, which could materially adversely affect our business,
results of operations, and financial condition in ways that we currently cannot
predict.

         The strength and profitability of our business depends on the overall
demand for our products and growth in the gaming industry. Further, gaming
industry revenues are sensitive to general economic conditions and generally
rise or fall more rapidly in relation to the condition of the overall economy.
Although the Company cannot accurately estimate the economic impact of the
recent terrorist attacks at this time, the gaming industry has been negatively
affected by the reduction in air travel and tourism, and the Company expects
that any significant decline in the economic health or growth of the lodging
industry will reduce demand for our products.

         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.

         INFLUENCE BY CONTROLLING STOCKHOLDERS. The executive officers and
members of the Board beneficially own 33,334,421 shares of common stock, or
approximately 85.12% of the outstanding shares of 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 THE COMPANY'S PRODUCTS. The Company has only
recently completed development and begun distribution of the shuffler 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.

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<PAGE>

         CUSTOMER PREFERENCE FOR ONE SHUFFLER VENDOR. There is no guarantee the
Company's development of 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 manufactured and marketed
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. Persons should not invest unless they can afford to lose their
entire investment. 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
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

                                       14

<PAGE>

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 an employment agreement
with Steven J. Blad and seven other 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; (d)
international currency fluctuations; and (e) the possibility of future terrorist
attacks.

         "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
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

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<PAGE>

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 March 27, 2002, Shuffle Master, Inc. ("Shuffler Master") filed a
complaint (Case No. CV-S-02-0438-JCM-PAL) against the Company in the United
States District Court, District of Nevada. The complaint alleges, among other
things, claims for patent infringement and requests treble damages, an
injunction enjoining the Company from infringing Shuffle Master's patent, an
accounting of the Company's gains and profits that resulted from its alleged
infringement, and for interest, costs and attorneys' fees. The Company filed its
Answer and Counterclaims against Shuffle Master on April 25, 2002. In its
Answer, the Company denies Shuffle Master's allegation of patent infringement
and requests that Shuffle Master's complaint be dismissed. The Company also
seeks, in its counterclaim, a declaration that the Company dos not infringe
Shuffle Master's patent and that Shuffle Master's patent and certain of its
related patents are invalid. The Company further asserts counterclaims against
Shuffle Master for breach of contract, violation of the Uniform Trade Secrets
Act, conversion, breach of duty of candor to the United States Patent and
Trademark Office, and fraud. Shuffle Master has filed a Motion for Preliminary
Injunction against the Company, and the Company has filed its Opposition to this
Motion. The Court has tentatively set a hearing for May 20, 2002, to address
this Motion and the Company's Opposition.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.

2002 CONVERTIBLE DEBT PROGRAM

         On February 21, 2002, the Company's Board of Directors authorized a
private placement of $4,999,995 of convertible notes. The convertible notes
accrue interest at 9.5% per annum, mature one year from the date of issuance
(where the holder has the discretion to extend maturity date for up to four
one-year periods) and are convertible into shares of the Company's common stock
one year after issuance at a rate of $.35 per share. The $4,999,995 of
convertible notes are convertible into a maximum of 14,285,700 shares of the
Company's common stock. In addition, for each convertible note of $49,999.95,
the Company will issue a warrant to purchase 12,500 shares of the Company's
common stock with an exercise price of $0.35. The Company intends to rely upon
the exemption from registration provided by Section 4(2) of the Securities Act
and Rule 506 of Regulation D thereunder. Through April 30, 2002, the Company had
placed convertible notes totaling $149,999.85 and representing 428,571
convertible shares and 37,500 warrants pursuant to this private placement. The
Company has used and will use the proceeds from this private placement for
general corporate purposes and working capital.

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ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

        Not applicable.

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

        Not applicable.

ITEM 5. OTHER INFORMATION.

        Not applicable.

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

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

             None.

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

             None.

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                                    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:      May 14, 2002           By:  /s/ Stacie L. Brown, Attorney-in-Fact for
                                       -----------------------------------------
                                       Steven J. Blad
                                  Its: President, Chief Executive Officer and
                                       Treasurer




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