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

                                 FORM 10-QSB/A2

                                   (MARK ONE)

              [x] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                For the quarterly period ended September 30, 2004

                                  -------------

             [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
                                  EXCHANGE ACT

                    For the transition period from ___ to ___

                       Commission file number: 333-5278-NY

                       POWERHOUSE TECHNOLOGIES GROUP, INC.
                       -----------------------------------
        (Exact name of small business issuer as specified in its charter)

                Delaware                                   94-3334052
    -------------------------------              -------------------------------
    (State or other jurisdiction of                       (IRS Employer
    incorporation or organization)                      Identification No.)

      2694 Bishop Drive, Suite 270
             San Ramon, CA                                   94583
    -------------------------------              -------------------------------
         (Address of principal                             (Zip Code)
           executive offices)

      Issuer's telephone number:                        (925) 328-1100
                                                 -------------------------------

   Former name, former address and
   former fiscal year, if changed
          since last report                                   N/A
                                                 -------------------------------

 Check whether the issuer (1) filed all reports required to be filed by Section
  13 or 15(d) of the Securities 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 [ ]

   As of November 5, 2004, there were 2,899,169 shares of the issuer's common
                     stock, $0.0001 par value, outstanding.

Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
<PAGE>

                                Explanatory Note

This  Amendment  to the  Quarterly  Report on Form 10-QSB for the quarter  ended
September  30, 2004 being filed  herewith  reflects  changes made in response to
comments made by the staff of the Securities and Exchange  Commission  following
its review of certain  filings made by the Company under the  Securities  Act of
1933, as amended, and the Securities Exchange Act of 1934, as amended.


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ITEM 3.  CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Under the  supervision  and with the  participation  of our  senior  management,
including  our Chief  Executive  Officer  and  Chief  Financial  and  Accounting
Officer,  the Company conducted an evaluation of the effectiveness of the design
and operation of its  disclosure  controls and  procedures,  as defined in Rules
13a-15(e) and 15d-15(e)  under the  Securities  Exchange Act of 1934, as amended
(the  "Exchange  Act"),  as of the end of the period  covered by this  Quarterly
Report (the "Evaluation  Date").  Among other things,  the Company evaluated its
disclosure  controls and procedures  related to material  transactions to ensure
they are recorded  timely and accurately in the financial  statements.  Based on
this  evaluation,  our Chief  Executive  Officer  and  Principal  Financial  and
Accounting  Officer  concluded,  as of the Evaluation  Date, that certain of the
Company's disclosure controls and procedures were not effective.

During and shortly after the quarter ended June 30, 2004, the Company  completed
three  separate  transactions,  each  of  which  was  significant,  complex  and
non-recurring  in nature.  In connection  with its  preparation of the Quarterly
Report on Form  10-QSB  for the  quarter  ended  June 30,  2004 (the  "June 30th
Quarterly  Report"),  that was  required  to be filed by the  Company  under the
Exchange  Act,  the  Company  discovered  it  had  material  weaknesses  in  its
disclosure  controls and procedures  with respect to its ability to properly and
timely record and account for these  transactions.  Specifically,  subsequent to
June 30, 2004, the Company  presented a draft of the June 30th Quarterly  Report
to the Company's  outside  accountants  for review.  Commencing in July 2004 and
through  approximately August 17, 2004,  management  re-evaluated its disclosure
controls and procedures based upon the outside  accountant's  review and comment
that  certain  accounting  treatment  of certain  transactions  was not  proper.
Although  considering  at the time  only the  three  transactions  referred  to,
management  concluded  that the  weaknesses  that had been  uncovered  were more
general in nature and would likely affect future accounting for similar matters.
Based upon this re-evaluation, the Company determined that because the Company's
internal staff lacked the adequate  accounting  resources to initially  properly
record the transactions,  in terms of both the number of its internal accounting
staff and their  experience with and expertise in accounting for transactions of
the type in question,  the Company's disclosure controls and procedures were not
effective,  which, in turn, impacted on the Company's ability to timely file its
June 30th Quarterly Report.  The three  transactions  referred to above, and the
accounting issue presented by each, were as follows.

Rescission Offer

From May 5,  2004,  to June 4,  2004,  the  Company  offered  to  certain of its
existing  stockholders  who originally  acquired their shares of Common Stock in
connection with a private  placement  conducted from June 2002 through July 2003
by  PowerHouse  Studios,  Inc.  (and after May 19,  2003,  by the  Company)  the
opportunity to rescind the purchase of such shares (the "Rescission  Offer") for
either the cash  consideration paid for the shares,  with interest,  or Series A
Junior  Units,  consisting  of shares of Series A Junior  Convertible  Preferred
Stock (the "Junior A Preferred Stock") and warrants to purchase shares of Common
Stock (the "Junior A Preferred  Warrants").  The  Rescission  Offer was based on
certain  of the  matters  alleged  by the  Company  in the  Proctor  Litigation.
Stockholders  who accepted the  Rescission  Offer were  required to give general
waivers  and  releases  with  respect to certain  potential  claims  against the
Company.

In connection with the Rescission Offer, which was completed on June 4, 2004, 71
persons,  holding an aggregate of 1,082,026 shares of Common Stock, accepted the
Rescission  Offer  in  exchange  for  Series  A Junior  Units,  comprised  of an
aggregate of 1,082,026 shares of Junior A Preferred Stock and Junior A Preferred
Warrants to purchase  270,507  shares of Common  Stock;  11 persons,  holding an
aggregate of 45,500 shares of Common Stock accepted the Rescission  Offer for an
aggregate cash consideration of $227,500;  and 20 persons,  holding an aggregate
of 119,665 shares of Common Stock,  rejected the  Rescission  Offer and retained
their ownership of Common Stock as originally purchased.

The Rescission  Offer was inadequately  accounted for by the Company's  internal
staff because it lacked the necessary  knowledge and experience  with respect to
the proper  accounting  treatment  of  dividends  related to the issuance of the
Junior A Preferred Warrants and the required  disclosure of the transaction.  In
order to provide  the  proper  accounting  treatment  for the  transaction,  the
Company would have had to first value the Common Stock


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<PAGE>

being exchanged, and then record the correct allocation between the value of the
new  Junior A  Preferred  Stock  being  issued,  along with the  dividend  value
associated with the issuance of the Junior A Preferred Warrants.

Merger of First Person Software, Inc.

Effective June 18, 2004, the Company acquired approximately 51% of the shares of
outstanding  common stock of First Person  Software,  Inc.  ("First  Person") in
consideration of cash and shares of Common Stock of the Company, at an aggregate
of $2,500,000 (the "FPS Merger"). The consideration includes a certain amount of
cash that was held in escrow by an authorized  agent and that was  released,  on
August 27, 2004, upon the  satisfactory  review by the Company of First Person's
financial statements,  and further includes a certain number of shares of Common
Stock  that are  currently  being held in escrow by the same agent and that will
only be released  upon the  satisfactory  achievement  by the Company of certain
performance milestones within the applicable periods specified in the FPS Merger
Agreement.  Immediately prior to the FPS Merger, the Company owned approximately
49% of  the  outstanding  shares  of  First  Person  stock,  which  shares  were
originally purchased by the Company in November 2002. In connection with the FPS
Merger,  the Company  issued a total of 217,938 shares of Common Stock to former
stockholders of First Person. The shares were valued at $4.59 per share.

The FPS Merger  required the Company to properly  calculate the purchase  price,
properly  allocate  the  purchase  price  to the  acquired  assets  and  assumed
liabilities,  and  properly  disclose  such  determinations.  According  to  the
Company's management,  the Company did not properly calculate the purchase price
nor allocate the purchase  price,  and did not have the  requisite  knowledge to
disclose  the  accounting  of  the  transaction.  As  a  result,  the  Company's
management requested further backup detail to support the Company's findings.

Management  retained the services of an outside firm to assist in correcting the
accounting  deficiencies.  This  required  approximately  two  weeks  of work to
reallocate the prior  investment  made by the Company into the acquired  entity,
and conform the new  investment to the proper  accounting  for an acquisition in
accordance with FASB 141.

Convertible Note / Bridge Financing and Senior A Units Offering

In October  2003,  the Company  offered up to  $10,000,000  principal  amount of
secured convertible notes,  bearing 10% interest per annum with a maturity of 10
years (the  "Convertible  Notes"),  which were  secured by all of the  Company's
intellectual  property and tangible assets,  current and future.  The holders of
the Convertible  Notes, at its option, may convert the principal and interest of
the  Convertible  Notes into Common  Stock at any time at an initial  conversion
price of  $4.00  per  share.  As of March  31,  2004,  the  Company  had  issued
approximately $444,000 of Convertible Notes

In March 2004 and in conjunction with the commencement of the Company's Senior A
Units  Offering,  the Company issued  Secured  Convertible  Promissory  Notes to
certain investors (the "Bridge Notes", and the transaction contemplated thereby,
the "Bridge  Financing") to secure  immediate  funding of up to  $1,250,000.  By
their  terms,  the  Bridge  Notes  bore  interest  at the rate of 10% per annum,
commencing  90 days from the date of their  issuance  and were secured by all of
the Company's assets pursuant to the Security Agreement.  In connection with the
Bridge Financing, the Company and the holders of the Convertible Notes agreed to
exchange the  Convertible  Notes for Bridge  Notes.  As of March 31,  2004,  the
Company had received $1,240,000 under the Bridge Financing.

On June 14, 2004,  the Company  closed upon the first  tranche of the  Company's
Senior A Units Offering,  which consisted of  approximately  $8,722,605 in total
consideration  from the sale of approximately  784,500 Senior A Units to certain
institutional  investors.  The amount included approximately $2,125,000 received
under  the  previously  closed  Bridge  Financing  and  approximately   $539,000
principal  amount  of  previously  issued  Convertible   Notes,   following  the
conversion of the Convertible  Notes into shares of Series A Senior  Convertible
Preferred Stock (the "Senior A Preferred Stock").  In connection with the Senior
A Units  Offering,  the Company  issued  3,137,997  shares of Senior A Preferred
Stock. The Company also issued five-year warrants exercisable at $2.29 per share
to  purchase  287,473  shares  of the  Company's  Common  Stock  related  to the
convertible and bridge financing, and warrants to purchase 784,500 shares of the
Company's Common Stock (the "Senior A Preferred Warrants") related to the Senior
A Units Offering.


                                      -4-
<PAGE>

On August 13,  2004,  the Company  issued  588,686  shares of Senior A Preferred
Stock upon the  closing  of the  second and final  tranche of the Senior A Units
Offering.  The second  closing offer  consisted of  approximately  $1,788,048 in
funding of Senior A Units with  certain  institutional  investors.  The Senior A
Units Offering was terminated  upon  completion of the second and final closing.
In  connection  with  the  Senior  A  Units  Offering,  the  Company  closed  on
approximately $10,510,653 in funding.

With  respect to the above set of  transactions,  the  Company  did not have the
necessary  resources,  including the lack of adequate internal staff and lack of
accounting  knowledge,  to properly  account  and  disclose  such  transactions.
Specifically, the issuance of the Senior A Units required the proper calculation
of beneficial conversion features of the Senior A Preferred Stock and the Senior
A Preferred  Warrants.  As well,  since in some  instances  the  issuance of the
Senior A Units was based upon the  conversion  of  Convertible  Notes and Bridge
Notes that were previously issued, the Company was required to properly allocate
the proceeds of the prior loans in connection with the issuance of such Senior A
Units.

Accounting  guidelines  determine  that a beneficial  conversion  feature exists
whenever the non-detachable features are in the money at the commitment date. At
June 14, 2004, it was determined that the feature was in the money and, as such,
the  beneficial  conversion  feature  needed to be accounted for  separately and
charged when issued.  It took the Company  approximately  three weeks,  with the
assistance of outside  support,  for the Company to properly  determine the fair
value of the various components and then account for these items.

On September 13, 2004, the Company filed the June 30th Quarterly  Report,  which
was required to be filed by August 13, 2004. The financial  statements  included
in the June 30th  Quarterly  Report  properly  reflect  the  three  transactions
mentioned above.

Changes in Internal Control Over Financial Reporting

During the quarter ended September 30, 2004, the Company made certain changes in
its internal  controls and procedures over financial  reporting.  After reaching
the conclusions  referred to above,  management took steps it believed necessary
and appropriate to correct the weaknesses in the Company's  internal  accounting
procedures and controls that had been found.  These steps included expanding the
Company's internal  accounting staff and engaging  consultants with considerable
accounting  experience,  and  developing  a set of  accounting  procedures  that
mandate  expert  review  promptly  of all  transactions  in order  that  they be
properly recorded at the earliest  possible time,  expert review  immediately of
the  appropriate  accounting  principles  to be  applied  to  each  transaction,
immediate  closing of the Company's  books of account at the end of each quarter
or other  appropriate  accounting  period  and the prompt  preparation  of draft
financial  statements in order that the review and final preparation process can
proceed  efficiently  to enable  the  timely  filing of  accurate  and  complete
financial statements.

In this regard, the Company has hired an additional  full-time  accounting staff
member  at the  Manager  level  and has  retained  Hood &  Strong  LLP  ("Hood &
Strong"),  an  accounting  consultancy  firm that the Company  believes  has the
requisite  skill and  experience  to assure that the  weaknesses in its internal
controls and  procedures  will be cured.  Hood & Strong is  registered  with the
PCAOB and has extensive  current and prior experience  providing both attest and
non-attest   services  to  publicly  listed  companies.   While  developing  the
foregoing,  the Company also  retained a part-time  consultant to assist it with
certain specific tasks. The Company continues to retain Hood & Strong.

Specifically, Hood & Strong assists management with respect to accounting issues
related to the Company's monthly internal  closings.  Hood & Strong also reviews
the Company's financial  statements,  supporting  documentation,  conclusions on
treatment for complicated  transactions,  and the Company's Quarterly Reports on
Form 10-QSB, prior to submission to our auditors.  Hood & Strong will also begin
assisting  the Company with its Sarbanes  Oxley Section 404  implementation  and
compliance.

The Audit  Committee of the  Company's  Board of Directors  participated  in the
foregoing by reviewing  developments and proposed  solutions with the accounting
staff and management and has approved the procedures referred to above.


                                      -5-
<PAGE>

The correction of the Company's internal  accounting  procedures and controls to
the point where they can be deemed to be effective has been an ongoing  process.
The  procedures  were not effective by the time the Company was required to file
this Quarterly Report,  and the Company was required to file for an extension in
connection  with this  filing.  This was due solely to an  administrative  issue
because the Company had changed firms to perform the edgarization  service.  The
new firm had not properly  tested the filing codes,  and as a result the Company
missed the filing  deadline.  Management  believed  that good  progress had been
made, however,  and that its solutions would work.  Management continues to hold
that view and,  based on its  observation  of steps  already  being taken by the
accounting  staff regarding the early review of  transactions  and arranging for
the early closing of the accounting books and commencement of preparation of the
filing,  expects that the Company's  Quarterly  Report on Form 10-QSB Report for
the quarter ending December 31, 2004, will be timely and accurately filed.

ITEM 6. EXHIBITS

Exhibit 31.1.  Certification of Chief Executive  Officer pursuant to Section 302
               of the Sarbanes-Oxley Act of 2002.

Exhibit 31.2.  Certification of Chief Financial  Officer pursuant to Section 302
               of the Sarbanes-Oxley Act of 2002.

Exhibit 32.1.  Certification of Chief Executive  Officer pursuant to Section 906
               of the Sarbanes-Oxley Act of 2002.

Exhibit 32.2.  Certification of Chief Financial  Officer pursuant to Section 906
               of the Sarbanes-Oxley Act of 2002.


                                      -6-
<PAGE>

                                   SIGNATURES

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.

                                    POWERHOUSE TECHNOLOGIES GROUP, INC.


Date: December 22, 2004    By: /s/ Jay Elliot
                               --------------------------------------
                               Jay Elliot
                               Chairman of the Board and Chief Executive Officer
                               (Principal Executive Officer)


Date: December 22, 2004    By: /s/ David R. Wells
                               --------------------------------------
                               David R. Wells
                               Vice President Finance Operations
                               (Principal Financial and Accounting Officer)


                                      -7-
<PAGE>

EXHIBIT INDEX:

Exhibit       Description Number
-------       ------------------
31.1          Certification of Chief Executive Officer pursuant to Section 302
              of the Sarbanes-Oxley Act of 2002.

31.2          Certification of Chief Financial Officer pursuant to Section 302
              of the Sarbanes-Oxley Act of 2002.

32.1          Certification of Chief Executive Officer pursuant to Section 906
              of the Sarbanes-Oxley Act of 2002, 18 U.S.C. 1350.

32.2          Certification of Chief Financial Officer pursuant to Section 906
              of the Sarbanes-Oxley Act of 2002, 18 U.S.C. 1350.


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