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

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

                                   FORM 10-KSB

              ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                     For the Fiscal Year Ended June 30, 2002

                           COMMISSION FILE NO. 0-22191

                        LOTTERY & WAGERING SOLUTIONS INC.
                 (Name of Small Business Issuer in its Charter)

                           Delaware IRS NO. 65-0675901
              (State of Incorporation)(IRS Employer Identification)

           8201 PETERS ROAD, SUITE 1000, FT. LAUDERDALE, FLORIDA 33324
                    (Address of principal executive offices)

                                 (954) 916-2610
                (Company's telephone number, including area code)

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

       Securities registered under Section 12(b) of the Exchange Act: None
      Securities registered pursuant to Section 12(g) of the Act: Title of
                   each Class: Common Stock, $0.001 par value

         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

         Check if disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained herein, and will not be contained, to the best
of the registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. X

         The small business issuer's revenues for its most recent fiscal year
are $7,113,988.

         The aggregate market value of the issuer's common stock held by
non-affiliates computed by reference to the price at which the common equity was
sold, or the average bid and asked prices, as of September 30, 2002 was
$445,587.

        The number of shares of the issuer's common stock outstanding at
September 30, 2002 was 1,273,109.

Transitional Small Business Disclosure Format.   Yes __ No X



                                        1

<PAGE>

                                TABLE OF CONTENTS

                                     PART I

                                                                            Page

Item 1.         Business

                Company Overview                                               3

                Casino Operations                                              5

                Sakhalin Project                                               6

                Lottery & Gaming System Investment                             8

                Employees                                                      9

Item 2.         Properties                                                     9

Item 3.         Legal Proceedings                                              9

Item 4.         Submission of Matters to a Vote of Securities Holders          9

                                     PART II

Item 5.         Market for Common Equity and Related Stockholder Matters      10

Item 6.         Management's Discussion and Analysis or
                Plan of Operations                                            11

                Results of Operations                                         13

                Liquidity and Capital Resources                               14

Item 7.         Financial Statements                                          18

Item 8.         Changes in and Disagreements with Accountants On
                Accounting and Financial Disclosure                           18

                                    PART III

Item 9.         Directors, Executive Officers, Promoters and
                Control Persons of the Registrant; Compliance with Section
                16(a) of the Exchange Act                                     18


Item 10.        Executive Compensation                                        21

                Summary Compensation Table                                    22

                Option Grants for the Twelve Months Ended June 30, 2002       22

Item 11.        Security Ownership of Certain Beneficial Owners and
                Management and Related Stockholder Matters                    24

Item 12.        Certain Relationships and Related Transactions                26

Item 13.        Exhibits and Reports on Form 8-K                              27

                Signatures                                                    30

Item 14.        Controls and Procedures
                Certifications

                                        2

<PAGE>


         This Annual Report on Form 10-KSB contains "forward looking statements"
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. All statements
other than statements of historical fact included in this document regarding the
Company's strategies, plans, objectives, expectations, and future operating
results are forward-looking statements. Although the Company believes that the
expectations reflected in such forward-looking statements are reasonable at this
time, it can give no assurance that such expectations will prove to have been
correct. Actual results could differ materially based upon a number of factors
including but not limited to, the Company's working capital deficit and
accumulated deficit; significant capital requirements; need for additional
financing; risks associated with geographic expansion and new lines of business;
risks inherent in international businesses; risks relating to the Sakhalin
Project; risks relating to the possible development of the Vietnamese lottery;
possible change in control; political and economic factors; risks of foreign
legal systems; business infrastructure issues; potential conflicts with other
stockholders in the Company's projects; restrictions and controls on foreign
investments and acquisitions of majority interests; government regulation;
construction risks; nature of the gaming industry; dependence on successful
gaming operations; collectability of casino and lottery receivables; effects of
inflation and currency fluctuations; competition; reliance on advances and
dividends from subsidiaries; dependence on personnel associated with developing
the Vietnamese and the Sakhalin Projects; lack of key man insurance; volatility
of prices of shares; potential adverse impact on market price of shares, shares
eligible for future sale, and additional registered securities; potential
adverse effect of future issuances of authorized preferred stock; potential
adverse effect of Underwriter's Warrants and other Warrants; classified board of
directors; limited public market and liquidity, and other risks detailed in the
Company's Securities and Exchange Commission filings.

Item 1.  Business
                                COMPANY OVERVIEW

        Lottery & Wagering Solutions Inc. ("LWSI") was incorporated under the
laws of the State of Delaware on March 6, 1996 as Conserver Corporation of
America, changed its name on December 2, 1997 to CCA Companies Incorporated, and
on October 1, 2001 changed its name again. The current active business of LWSI
(with its subsidiaries, the "Company") is (i) operation of a gaming casino in
Suriname 50% owned by the Company, and (ii) pursuing the development of a casino
and hotel project in Sakhalin in the Russian Federation on an island north of
Japan (the "Sakhalin Project"). In addition, in May 2001, the Company entered
into a contract under which, subject to significant pre- acquisition conditions,
the Company was to acquire all of the stock of Emerging Market Solutions, Inc.,
("EMSI") the sole asset of which is a lottery gaming system contract (the
"Lottery Gaming System Contract") which grants to EMSI the exclusive right to
provide an on-line lottery and sports betting system in Ho Chi Minh City and the
Southern Provinces of Vietnam. The proposed acquisition was approved by the
stockholders of the Company on September 26, 2001, but was not consummated as
various preconditions to a Closing were not met. The Company has entered into
various agreements to restructure its investment in this project. See "Lottery
and Gaming System Investment" herein.

                                        3

<PAGE>

         Since March 1999 the Suriname casino, owned by Suriname Leisure Company
A.V.V. ("SLC"), an Aruba joint venture entity 50% owned by the Company, has been
operating in permanent quarters in the hotel where previously SLC maintained
temporary facilities for its casino operation. The Company's 100% owned Delaware
subsidiary, Dorsett Hotel & Resorts, Inc. ("Dorsett") manages the casino.

         The Sakhalin Project is still in development and requires the Company
to obtain substantial financing to progress further. Despite numerous
discussions and several agreements the Company has not yet been able to obtain
the necessary financing. The Company is continuing to seek financing. In the
fiscal year ended June 30, 2000, the Company wrote down approximately
$13,552,000 in capitalized expenditures and goodwill related to the Sakhalin
Project, leaving approximately $2,100,000 of Sakhalin Project capitalized
expenditures on the Company's accounts. The Sakhalin Project involves plans to
develop a hotel/casino complex on a ten-acre site in the center of the City of
Yuzhno- Sakhalinsk ("the City").

         On June 30, 2000 the Company charged off the full signing fee of
$250,000 that it had paid to participate in the development and management of a
casino to be constructed within the Palestinian National Authority. The Company
believes that current political conditions in the area will delay the
construction of the project indefinitely. During the fiscal year ended June 30,
2000 the Company took a charge of $305,000 representing all related capitalized
expenditures.

Former Food Preservation Technology and Hotel Businesses

         The Company's original principal business was food preservation
technology. In November 1999, the Company's Board of Directors determined to
discontinue operations in that business.

         After mid-1997 the Company entered into hotel management agreements to
obtain (over about two years) eight hotel management contracts, mostly for
hotels in Asia. All the agreements and contracts have now been terminated, and
all operations discontinued. Currently, the Company has no active hotel
management operations. The Company does not currently anticipate re-entry into
this business.

Recent Financial History

        During the years ended June 30, 2001, and June 30, 2002, the Company had
revenues of approximately $5,489,000, and approximately $7,114,000 respectively,
all from the Suriname casino operations.

         In August 1999, the Company began to receive cash payments from the
Suriname joint venture entity. Prior to August 1999, all cash from operating
profits of the casino had been used to first pay the remaining balance due on
the casino construction contract and to repay a $750,000 loan previously made by
the Company's joint venturer.

         Since August, 1999 the Company's primary recurring source of cash,
exclusive of certain loans and securities sales described herein, was the cash
payments from SLC which is the joint venture entity that owns the Suriname
casino.

                                        4

<PAGE>

         On November 16, 1999 the Company's Common Stock was delisted from the
Nasdaq SmallCap Market. The Company's Common Stock is now traded on the OTC
Bulletin Board.

        On October 1, 2001, all of the shares of the common stock of the Company
were consolidated by a twenty-into-one reverse split. Unless otherwise stated,
information concerning outstanding shares of common stock and prices therefor
for periods prior to October, 2001 have been adjusted to account for this share
consolidation.

Casino Operations

         Dorsett (the Company's 100% owned subsidiary) and SLC (the Company's
50% owned joint venture entity) are currently operating a casino in Suriname.
The Company anticipates eventually operating the casino in the Sakhalin Project,
if and when that project is built and licensed, and is also seeking to operate
or acquire interests in other casinos outside the U.S. The Company has
approximately 279 employees engaged directly in casino operations.

         The Company's Suriname casino, part of a joint venture, occupies two
leased floors totaling about 20,000 square feet in the Plaza Hotel, which is a
downtown hotel in the capital city of Paramaribo. The Company began operations
of its Suriname casino in October 1998 in temporary quarters. The permanent
casino was completed and became operational in March 1999. The casino has 20
gaming tables, 151 slot machines and a 50 seat restaurant. There are other
casinos in Paramaribo, the capital city, but only two compete with the Company
for the same local gaming clientele.

         The Suriname casino was constructed by the Company pursuant to an
agreement with Parbhoe Handelmij NV ("Parbhoe"), the local company that owned
the casino license and which became the 50% owner of the joint venture entity,
SLC. SLC entered into the Suriname Casino Management Agreement in April 1998 for
the Company, through Dorsett, to operate the Casino for fifteen years at a base
fee equal to 3% of gross revenues calculated on an annual basis and payable
monthly, plus an incentive fee of ten percent of gross operating profits,
payable monthly. SLC leased the casino premises from Parbhoe, the hotel owner,
for fifteen years beginning February 1998 for $200,000 per year, subject
to locally based escalation. The Company has been advised that the rent required
by the lease exceeds the lawful rent permitted under the rent control laws of
Suriname by approximately $13,500 per month. The Company is seeking a refund of
rent paid and a limitation on future rent.

         Until October 1999, the Company also operated the Orfeum Casino in
Budapest, Hungary.

         In August 1997, the Company had entered into a two-year Star Casino
Consulting Agreement with Star Casinos Limited ("Star") as consultant, primarily
to obtain the services of Mr. David Hartley who is an experienced casino
consultant. Star is owned and controlled by Mr. Hartley. The active term of the
agreement began in October 1997 and ended in December 1999. Pursuant to the
agreement the Company agreed to pay Star $250,000

                                       5
<PAGE>

per year. Mr. Hartley did not receive a direct salary from the Company during
that period. In October 1997, the Company had granted to Star three year plan
options to purchase 5,000 shares of Common Stock at a price of $130.00 per
share. (The exercise price was reduced to $30.00 per share in September 1998,
then to $5.00 per share in December 1999, then to $2.00 per share on October 18,
2000. The reductions were part of several more general and simultaneous
reductions in the exercise price of options held by directors, employees or
consultants.) The options vested and became exercisable in 2 equal installments,
on each succeeding October anniversary. The agreement imposed non-compete and
non-solicitation restrictions on Star for two years after the term. Upon the
expiration of the Star Casino Consulting Agreement in 1999 the Company issued
Star 12,500 shares of Stock as payment of a $250,000 cash bonus which Star was
entitled to receive under the terms of that agreement. The Company currently
continues to engage Star on a month-to-month basis to maintain Mr. Hartley's
services, for which the Company pays Star approximately $150,000 per year from
January 2002. Mr. Hartley still does not receive a direct salary from the
Company. On October 24, 2000, the Company issued 24,000 shares of Common Stock
to Star as payment for $120,000 which Star was entitled to receive as of June
30, 2000 under the terms of the Star Casino Consulting Agreement. The market
price of a share of the Company's Common Stock in June 2000 when the parties
agreed to the issuance of such shares was $3.00.

Sakhalin Project

         The Company entered into a stock purchase agreement on October 24,
1997, (the "Sakhalin Agreement") with Sakhalin General Trading Investments
Limited ("SGTI") and an assignment agreement with Sovereign Gaming and Leisure
Limited ("Sovereign") on December 12, 1997, each a limited liability company
organized under the laws of Cyprus. Pursuant to the Sakhalin Agreement, the
Company would acquire all of the outstanding shares of SGTI and SGTI's rights
and interest in a project to develop the Sakhalin Project, and SGTI's ownership
interest in 65% of Sakhalin City Center Ltd. ("SCC"). SCC is a closed joint
stock company incorporated under the laws of the Russian Federation that holds
certain rights, including a 101-year ground lease on the proposed site of the
Sakhalan Project, and a guarantee by the city of Yuzhno-Sakhalinsk (the "City")
to issue a gaming license to SCC. In addition, the assignment agreement covers
all rights and interest to or in the Sakhalin Project held by Sovereign,
including certain operating and project management agreements with respect to
the Sakhalin Project (collectively, the "Shares and Rights") which are to be
conveyed to the Company.

         On December 12, 1997, the Company completed the acquisition of 100% of
the shares of SGTI in exchange for 100,000 shares of the Company's common stock.
In addition the Company acquired all rights and interests of Sovereign in
exchange for 10,000 shares of common stock issued to the owners of Sovereign.
Two then-former directors of the Company were granted options to purchase 15,000
and 10,000 shares of common stock at an exercise price equal to $122.00 per
share in exchange for their services in connection with the acquisition of the
Sakhalin project ("Sakhalin Options"). The Sakhalin Options subsequently expired
without being exercised. The Company advanced $3 million to SGTI.

                                       6
<PAGE>

         Pursuant to the Sakhalin Agreement, SCC is to develop, subject to
obtaining financing, a hotel/casino complex on a ten-acre site in the center of
the City of Yuzhno-Sakhalinsk. The City will provide the land under a 101-year
lease, at no annual cost. Dorsett will manage both the hotel resort and the
casino for a management fee equal to 3% of turnover, as well as an incentive fee
of 10% of gross profits.

         Although, there are currently several small casinos operating on the
island, the City has committed contractually that it will not permit them to
increase their floor areas or extend the range of their operations without the
written approval of SCC. In addition, the Company will also have certain rights
to participate in the development and management of any future casinos within
the jurisdiction of the City of Yuzhno-Sakhalinsk.

         The Sakhalin Agreement provides that, upon request of the Company,
Sovereign agrees to become project manager during the construction phase of the
Sakhalin project, subject to an agreement on reasonable compensation for such
services, which shall not exceed the lesser of 5% of the construction cost of
the Sakhalin Project or $5,000,000. Subsequent to the Sakhalin Agreement, Mr.
Dallas Dempster, then a paid consultant to Sovereign was recruited to be the
President and CEO of LWSI. Accordingly it is the Company's current intent not to
employ Sovereign to manage the construction phase of the Sakhalin Project
directly.

        When the Company acquired the stock in SGTI, its 65% owned subsidiary
SCC, and Sovereign Gaming and Leisure Ltd., a Cyprus company, already had a 1994
Construction Management Agreement (for Sovereign to manage the construction of
the Sakhalin Project) and a 1994 Operation Management Agreement (for it to
operate the Project). As part of the SGTI transaction, Sovereign assigned both
agreements to the Company, along with Sovereign's other rights relating to the
Project, and received 10,000 shares of the Company's Common Stock. The Common
Stock was valued at $105.00 per share and thus the value attributed to the
shares was $1,050,000. Consequently, the Company is currently the holder of the
rights to manage the development and construction of the Sakhalin Project, and
upon its completion, to operate and manage it. Under the 1994 Construction
Management Agreement, SCC is to pay the Company a project management fee of 5%
of the estimated cost of the Project for its general office expenses and
management supervision, a significant portion of which fee may be paid to the
entity that ultimately constructs the Sakhalin Project.

         The Sakhalin Project (other than its financing) has been managed by SCC
in Sakhalin City, primarily by Mr. Valery Mozolevsky, who has had long-term
employment with SCC and is experienced in the Project. If the Sakhalin Project
substantially proceeds, SCC (and the Company) may have to substantially expand
relevant management and staff, and obtain consultants and contractors for
project design, construction and management. Mr. Dallas Dempster was, and still
is, one of two Executive Directors of SCC and is the General Director. Mr.
Valery Mozolevsky was, and still is, the other Executive Director.

                                       7
<PAGE>

         The casino and hotel project in Sakhalin requires the Company to get
substantial financing to progress further. The Company has continued to explore
various alternatives of financing, including discussions with numerous major
Russian companies, foreign and domestic financial and investment firms and Asian
contractors. To date, no definitive agreements have been reached.

        Lottery & Gaming System Investment.

     In May 2001, the Company entered into a contract (the "Purchase Contract")
with six entities (the "Vendors") collectively, to purchase from them all the
issued and outstanding common stock of EMSI (the "Stock in EMSI").EMSI has no
operating or "going business", and never had one, but is a party to the "Lottery
Gaming System Contract" between EMSI and Detetour, Corporation for Development
of New Technology and Tourism ("Detetour"), now NEWTATCO, an entity owned by the
sovereign Socialist Republic of Vietnam (the "State"). Detetour is an entity
with extensive operations in technology and tourism, and is a major State
instrumentality. The Lottery Gaming System Contract grants to EMSI the exclusive
right and the obligation to supply Detetour with an on-line lottery and sports
betting system, and to operate that system throughout a "Territory" that covers
the capital city (Ho Chi Minh City) and the "Southern Provinces". No on-line
lottery or sports betting operations have previously been conducted under State
authority within that Territory. Applied Gaming Systems of Canada, Inc. ("AGS"),
a separate corporation organized under the laws of Alberta, Canada, holds a
contract with Detetour to manage certain aspects of the existing "on- line"
lottery operations in Hanoi City.

     The Purchase Contract made the Vendors' obligation to sell (and the
Company's obligation to purchase) the Stock in EMSI conditional on significant
preconditions, including listing the Company's common stock on a reputable
"exchange", and funding EMSI with $3,000,000. The Company has not yet been able
to fulfill those conditions, and although the period within which to do so has
been extended until December 31, 2002, the Company has recently entered into an
agreement with AGS and the Vendors under which the Company has agreed to consent
to the purchase of EMSI by AGS. Under this agreement, (the "Exchange
Agreement"), AGS is to acquire EMSI and to become the sole operational entity
engaged in the operations of an online lottery system in Vietnam. The Company
would become an investor in AGS, (the stock of which is traded on the Canadian
Venture Exchange) by converting the amount it has advanced to EMSI (the
"Advances") which now totals approximately $1,500,000 into shares of common
stock of AGS. Under the Exchange Agreement,upon the acquisition of EMSI by AGS,
the Company will release EMSI from its obligations to repay the Advances
heretofore made to or on behalf of EMSI by the Company and AGS would issue to
the Company shares of its common stock at a rate of one share for each C$.30 of
Advances so released, provided the then average quoted bid and asked price per
AGS share is not less than C$.30. It is anticipated that upon completion of such
conversion the stockholders of the Company will indirectly hold approximately
the same percentage equity in the total lottery operation in Vietnam as they
would have held in EMSI under the EMSI Purchase Contract.

                                       8
<PAGE>

         Consummation of the Exchange Agreement is subject to the fulfillment of
various conditions, including the restructuring, prior to December 31, 2002, by
AGS of its capital stock and of its debt obligations with its creditors, the
obtaining of necessary regulatory and other approvals, and AGS demonstrating to
the reasonable satisfaction of the Company, its financial ability to continue
its operations and to provide financial support to EMSI. If the Exchange
Agreement is not consummated, the Company has agreed to defer recovery of its
advances from EMSI until December 31, 2004, and AGS has agreed to be jointly and
severally liable with EMSI for the payment and performance of the obligations of
EMSI. On July 25, 2002, the shareholders of AGS, in a special meeting, approved
a resolution to restructure AGS, which among other things, included the
acquisition of EMSI, share consolidation with a ten to one reverse split,
restructure of its debt obligations with its creditors, the assumption of the
Advances and the issuance of shares of AGS's common stock for the Advances
assumed. There is no assurance that the Exchange Agreement will be consummated.
Therefore, during the year ended June 30, 2002, approximately $840,000 of the
advances was charged to operations as a reserve for the impairment of amounts
advanced and approximately $268,000 of the advances were expensed as operating
costs in the consolidated statement of operations.


Employees

         As of June 30, 2002 the Company had 281 employees, including its 2
executive officers.


Item 2.  Properties

         The Company maintains its principal executive offices at 8201 Peters
Road, Suite 1000, Ft. Lauderdale, Florida 33324. This office space encompasses
one executive suite , and is subject to a 1-year lease, at a monthly rental of
approximately $1,100.

        The Company's Sakhalin Project is managed from a 450 square foot leased
office in Sakhalin City pursuant to one-year renewable leases. The monthly
rental for the office is approximately $1,100.

         See "Casino Operations" above for a description of the Company's leased
premises in Suriname.

         The Company believes its existing facilities are adequate to meet
current needs.

Item 3.  Legal Proceedings

         SLC is engaged in legal proceedings in Suriname in which it seeks to
recover approximately $315,000 in rental payments which were made to Parbhoe,
its Landlord. According to a decision of the district commissioner such payments
were in excess of the maximum rentals permitted by law. The landlord has
counterclaimed in the proceeding seeking dissolution of the lease and alleging
it is due payment of back rent in the amount of $484,000. After consultation
with its Suriname attorneys, management of the Company is of the opinion that
such counterclaim will not be sustained.

         Parbhoe has made a demand on SLC for the repayment in full of a
$600,000 loan it made to LWSI on September 3, 1998, and it has refused to accept
any interim payments on the loan. SLC has set aside the payments required to be
made based on the terms of the loan. This matter is being rigorously defended in
the Suriname Courts on the basis that, among other defenses, the loan is not
repayable on demand but on a pro- rata basis along with existing and new loans
that are outstanding to LWSI, and additionally, that the loan is owed by LWSI
and not SLC. Suriname Counsel has advised the Company that this claim was
"denied" to Parbhoe.

Item 4. Submission of Matters to a Vote of Securties Holders

        No matters were submitted to a vote of securtity holders by the Company
during the fourth quarter of the last fiscal year.

                                       9
<PAGE>

                                                 PART II

Item 5.  Market for Common Equity and Related Stockholder Matters

         Price Range of Common Stock. The Company's Common Stock is
traded on the OTC Bulletin Board or Pink Sheets of the National
Quotation Service.

         The following sets forth, for the quarterly periods indicated, high and
low per share closing price information for the Common Stock as reported on the
OTC Bulletin Board, or pink sheets:

For the Quarterly Periods Beginning July 1, 2000 and ending June 30,
2002

                                                       High         Low
      July 1-Sept. 30, 2000.........................  $15.00       $1.20
      Oct. 1-Dec. 31, 2000..........................    1.20         .20
      Jan. 1-March 31, 2001.........................    2.60         .80
      April 1-June 30, 2001.........................    3.40         .40
      July 1-Sept. 30, 2001.........................    4.20        2.00
      Oct. 1-Dec. 31, 2001..........................    4.20        2.05
      Jan. 1, 2002-March 31, 2002...................    2.25        1.40
      April 1-June 30, 2002.........................    1.50         .75

         (The above prices reflect inter-dealer prices, without retail mark-up,
markdown or commission, and may not represent actual transactions).

         Approximate Number of Security Holders. As of August 31, 2002 the
Company had approximately 500 registered holders of record of its Common Stock.

         Dividend Information. The Company has not paid any cash dividends to
date and does not anticipate or contemplate paying dividends in the foreseeable
future. It is the present intention of management to utilize all available funds
and profits, if any, in the development of the Company's business.

         Sales of Unregistered Securities. Information required by Item 701 of
Regulation S-K (as to unregistered equity securities sold during fiscal 2002),
was previously reported in the Company's Quarterly Reports on Form 10-Q for the
quarterly periods ended September 30, 2001, December 31, 2001 and March 31,
2002.

Equity Compensation Plan Information.

         The following table indicates certain information with respect to
compensation plans (including individual compensation arrangements) under which
equity securities of the Company are authorized for issuance:

                                       10

<PAGE>


<TABLE>
<CAPTION>
                                   Equity Compensation Plan Information
--------------------------------------------------------------------------------------------------------
                            Number of                   Weighted-                  Number of
                            Securities to be            average                    securities
                            issued upon                 exercise price             remaining
                            exercise of                 of outstanding             available for
                            outstanding                 options,                   future issuance
                            options,                    warrants and               under equity
                            warrants and                rights                     compensation
                            rights                                                 plans (excluding
                                                                                   securities
                                                                                   reflected in
                                                                                   column (a)
--------------------------------------------------------------------------------------------------------
                                     (a)                         (b)                        (c)
--------------------------------------------------------------------------------------------------------
<S>                        <C>                         <C>                        <C>
Equity
compensation
plans approved                       142,125                     $5.56                      2,857,875
by security
holders
--------------------------------------------------------------------------------------------------------
Equity
compensation
plans not                            235,416                     $11.97                     _____
approved by
security holders
--------------------------------------------------------------------------------------------------------
Total                                377,541                      $9.55                     2,857,875
--------------------------------------------------------------------------------------------------------
</TABLE>

Item 6.  Management's Discussion and Analysis or Plan of Operation

RESULTS OF OPERATIONS FOR THE YEAR ENDED JUNE 30, 2002 AS COMPARED WITH THE YEAR
ENDED JUNE 30, 2001

         Net Loss. The Company generated a net loss of $604,511 or $.61 per
share for the year ended June 30, 2002 as compared to a loss of $519,665 or $.60
per share during the year ended June 30, 2001.The loss during the current period
was primarily due to the asset write-down of $840,329 related to the Vietnam
project as described below.

         Revenues. During the year ended June 30, 2002, the Company generated
revenues of $7,113,988 attributable to its casino operations in Suriname. For
the year ended June 30, 2001, the Company generated revenues of $5,489,191 from
its Suriname casino. The 30% increase in revenues during the current period
resulted from both slightly improved economic conditions in Suriname coupled
with new marketing programs initiated by the Company designed to increase
activity and wagering at the casino.

         Marketing and Promotion. During the years ended June 30, 2002 and 2001,
marketing and promotional expenses were held in line, and the Company incurred
$322,064 and $332,730 in such expenses, respectively, in connection with its
casino operations.

                                       11

<PAGE>



         General and Administrative Expenses. General and administrative
expenses were $4,862,268 for the year ended June 30, 2002 as compared to
$4,884,614 for the year ended June 30, 2001. Included in the current year's
expenses were $3,399,762 of operating expenses associated with the Company's
Suriname casino and $1,462,506 for general corporate overhead including
salaries, consulting, professional fees and travel. Included in the prior year's
expenses were $3,365,594 of operating expenses associated with the Company's
Suriname casino and $1,519,020 for general corporate overhead. Despite the 30%
increase in casino revenues, both general corporate overhead expenses and casino
operating expenses during the current year were held in line with prior year
expenses.

         Compensation Charges. For the year ended June 30, 2001, non-cash
compensation charges were $13,000 related to the reduction in exercise prices of
certain stock options and warrants previously issued to non- employee directors.

         Interest Expense. For the year ended June 30, 2002, interest expense
amounted to $94,520 compared to $198,330 for the year ended June 30, 2001. The
current year's expense is primarily attributable to interest on loans made to
the Suriname casino joint venture by the Company's joint venture partner. The
prior year's expense included approximately $164,000 attributable to interest on
loans made to the Suriname casino joint venture by the Company's joint venture
partner and $34,000 of interest on loans made to the Company for general working
capital purposes.

         Write-down of Assets. During the year ended June 30, 2001, the Company
had no write-offs. As required by SFAS No. 144 regarding evaluation of assets
for financial impairment, the Company has charged to operations during fiscal
2002, $840,329 of the amounts capitalized in connection with the Vietnam project
because of the uncertainty of consummation of the Exchange Agreement, and
because of the uncertainty of the Company being able to recover its investment
whether or not the Exchange Agreement is consummated.

         Minority Interest. The Company's Suriname casino joint venture began
operations during the 1999 fiscal year. The Company controls the management of
the joint venture company and has a 50% equity interest. The casino's operations
are consolidated with those of the Company and a minority interest has been
recorded for the current and prior fiscal year of $880,133 and $312,947,
respectively, representing 50% of the net income generated by the casino.

         Income taxes. The corporate income tax assessed on Suriname casino
operations has historically approximated 30% of the casino's net income. The
Company recorded foreign income taxes in the amount of $756,306 related to the
Suriname casino for the year ended June 30, 2002 and $269,097 for the year ended
June 30, 2001.


                                       12

<PAGE>


RESULTS OF OPERATIONS FOR THE YEAR ENDED JUNE 30, 2001 AS COMPARED WITH
THE YEAR ENDED JUNE 30, 2000.

         Loss from Continued Operations. The Company incurred a loss from its
continuing operations of $519,665 or $.60 per share during the year ended June
30, 2001 as compared to a loss of $15,187,187 or $20.20 per share for the year
ended June 30, 2000. The significantly larger loss during the prior year
resulted primarily from the write-off of assets totaling $13,857,000 including
goodwill and construction in progress of approximately $13,552,000 related to
the Sakhalin project.

         Revenues. During the year ended June 30, 2001, the Company generated
revenues of $5,489,191 from its Suriname casino. For the year ended June 30,
2000, the Company generated revenues of $6,981,758 attributable to its casino
operations in Suriname. During the current year, the casino's revenues were
adversely affected by increased local competition from other casinos, by a
declining local economy and by a worsening conversion value of the local
currency.

         Marketing and Promotion. During the years ended June 30, 2001 and 2000,
the Company incurred $332,730 and $333,500, respectively, in marketing and
promotional expenses in connection with its casino operations.

         General and Administrative Expenses. General and administrative
expenses were $4,884,614 for the year ended June 30, 2001 as compared to
$6,415,452 for the year ended June 30, 2000. Included in the current year's
expenses were $3,365,594 of operating expenses associated with the Company's
Suriname casino and $1,519,020 for general corporate overhead including
salaries, consulting, professional fees and travel. Included in the prior year's
expenses were $3,659,145 of operating expenses associated with the Company's
casino operations and $2,756,307 for general corporate overhead. The $1,237,287
or 45% reduction in general corporate overhead during the current year was
primarily attributable to reductions in consulting, travel, legal and
professional, insurance and telephone expenses. Casino operating costs were also
reduced as a result of the decline in business and revenues experienced in the
current year as described above.

         Compensation Charges. For the years ended June 30, 2001 and 2000,
non-cash compensation charges were $13,000 and $10,000, respectively, related to
the reduction in exercise price of certain stock options and warrants previously
issued to non-employee directors.

         Write-down of Assets. Since 1997, the Company has entered into numerous
discussions and several agreements in attempts to raise capital to finance the
Sakhalin Project without success. During the year ended June 30, 2000, due to
the Company's failure to proceed and based on its evaluation of assets for
financial impairment as required by SFAS No. 121, certain capitalized
expenditures and goodwill, totaling approximately $13,552,000 were written down.
Additionally during 2000, as a result of the unstable political conditions in
the Palestinian West Bank of the Middle East, the Company wrote off its
investment of

                                       13

<PAGE>



$305,000 for a casino operating management agreement entered into for a casino
project to be constructed in Ramallah.

         Interest Expense. For the year ended June 30, 2001, interest expense
amounted to $198,330 compared to $423,630 for the year ended June 30, 2000. The
current year's expense includes approximately $164,000 attributable to interest
on loans made to the Suriname casino joint venture by the Company's joint
venture partner and $34,000 of interest on loans made to the Company for general
working capital purposes. The prior year's expense included approximately
$245,000 attributable to interest on loans made to the Suriname casino joint
venture by the Company's joint venture partner and $179,000 of expense on loans
made to the Company for general working capital purposes ($145,000 of which
related to the amortization of debt discount recorded for the value of Common
Stock warrants issued to debenture holders).

         Minority Interest. The Company's Suriname casino joint venture began
operations during the 1999 fiscal year. The Company controls the management of
the joint venture company and has a 50% equity interest. The casino's operations
are consolidated with those of the Company and a minority interest has been
recorded for the current and prior fiscal year of $312,947 and $582,204,
respectively, representing 50% of the net income generated by the casino.

         Loss from Discontinued Operations of Food Division. In November 1999
the Company's Board of Directors determined that it would discontinue all
activities and efforts with respect to the Company's food preservation business
since the Company could not effectively develop a sufficient market with the
Company's food preservation technology. During the year ended June 30, 2000, the
Company had no revenues from its food division operations while expenses related
to efforts to sell or joint venture the food division were $64,500. There were
no food division related expenses incurred during the current year.

         Gain (Loss) from Discontinued Operations of Hotel Management. During
the year ended June 30, 2000, the Company incurred final expenses of $87,623
related to legal fees and settlement arrangements with a former officer of the
Company's hotel management operation which was terminated during the 1999 fiscal
year. There were no hotel management related expenses incurred during the
current year.

         Income taxes. The corporate income tax in Suriname assessed on casino
operations is 50% of net taxable income. The Company recorded foreign income
taxes in the amount of $269,097 related to the Suriname casino for the year
ended June 30, 2001 and $552,625 for the year ended June 30, 2000. These amounts
include deferred tax liability for 2001 of $95,000 and $192,884.

Liquidity and Capital Resources.

         On November 16, 1999 the Company's Common Stock was delisted
from the Nasdaq SmallCap Market. The Company's Common Stock is now
traded on the OTC Bulletin Board.

                                       14

<PAGE>




         On January 18, 2000, Mr. James V. Stanton, Vice-Chairman of the
Company, provided a $300,000 loan to the Company with interest at the bank prime
rate. The loan was due in full on December 31, 2000. As part of the
consideration for providing the loan Mr. Stanton was granted warrants to
purchase 25,000 shares of the Company's Common Stock at an exercise price of
$5.00 per share which was later reduced to $2.00 per share on October 18, 2000.
The loan maturity was extended and the balance was paid in full as of January
2002.

         On March 1, 2000, Galileo Capital LLC ("Galileo") provided a $150,000
convertible loan to the Company with interest at 10% per annum. The loan was due
on October 31, 2000. As part of the consideration for providing the loan Galileo
was granted warrants to purchase 7,500 shares of the Company's Common Stock at
an exercise price of $5.00 per share. Further, the loan was convertible into
shares of the Company's Common Stock, at $5.00 per share at any time during the
term of the loan. In February, 2001 the loan and interest was paid in full.

         In January 2001 a private investor purchased 66,667 shares of Common
Stock at $1.50 per share. The proceeds were used for general working capital.

         In the period May 1, 2001 through July 31, 2001, the Company received
advances of approximately $480,000 from certain persons who subscribed to
purchase common stock of the Company. Such funds were used to make advances to
EMSI. In March 2002, $450,000 of such advances were converted to shares at a
price of $2.00 per share, and $30,000 of such advances was repaid in September
2002. The Company issued 50,000 shares of its common stock to Australasian
Capital Holdings Pty Limited ("ACH") and its nominees, and paid it $50,000 for
its services in connection with this private placement. The Company also issued
100,000 shares of common stock to ACH during 2002 to compensate it for
consulting services in connection with the EMSI and Vietnamese lottery projects.

         Since August 1999, the Company's almost sole recurring source of cash,
exclusive of the loans and securities sales described above, was the cash
payments from SLC which is the joint venture entity that owns the Suriname
casino. Parbhoe owns the hotel where the casino has its leased premises, and is
the Company's 50% joint venturer in SLC. Dorsett, the Company's 100% owned
Delaware subsidiary, manages SLC and the casino. Cash payments from SLC to CCA,
Parbhoe or their affiliates are made by SLC, under the management control of
Dorsett, according to a cash allocation priority established under the Suriname
Casino Agreement. That priority is roughly described below. From the monthly
cash profits generated by the casino, payments were initially made for certain
construction loans from Parbhoe and for the balance of costs of the casino
construction, all of which, were fully paid by August 1999. After August 1999
payments of net cash flow were made to Dorsett for the accrued management fees
owed, and thereafter for interest and some principal on the Company's loans net
of amounts which the Company directed SLC to pay to Parbhoe on account of



                                       15

<PAGE>


loans which Parbhoe had made to the Company. After all such total loans are
repaid, cash is to be distributed according to the 50%- 50% ownership interests
of the joint venturers. There have been no such distributions and none are
expected until the loans due to the joint venturers are repaid. Loans to SLC
(and interest thereon) from the Company at June 30, 2002 were approximately
$1,061,000, and the Company owed to Parbhoe approximately $516,000. Since
January 2000 about 15% of the distributable cash flow of the casino has been
paid to Parbhoe (as directed on behalf of the Company) or set aside for payment,
and 85% to the Company and Dorsett. The Company believes that payments were and
are in accordance with the Suriname Casino Agreement, Parbhoe loan agreement and
applicable law.

         Suriname has price controls on rents. The Company has been advised that
the rent for the casino required by the lease exceeds the lawful rent by
approximately $14,000 per month. SLC has sued Parbhoe in Suriname to recover
approximately $314,000 in past overpayments. The Company is unable to predict
the outcome of that suit, but has been advised by counsel that SLC's position
has substantial merit. Any cash recovery or reduction in rent would be subject
to the cash payment priorities described above.

         The Sakhalin Project is currently generating cash losses for the
Company. Any future development of that project will require substantial
financing. Despite numerous discussions and several agreements the Company has
not yet been able to obtain the necessary financing. The Company is currently
able to provide only what it believes is the minimum cash funding required to
maintain the prospects of the project. The other shareholders in SCC are not
required either to fund SCC's losses, the continued prospects of the project, or
the development of the project. If financing is not obtained, the Company might
be forced to abandon the project and to sell its rights for whatever price or
other recovery that could be obtained. The Company is not able to quantify what
price or recoveries might be obtained. If the Company obtains financing and
proceeds with the Sakhalin Project it will have to plan and establish an
organization and infrastructure that is not currently in place, and will have to
hire other specialists.

         As of June 30, 2002, the Company had advanced $866,000 to EMSI to
develop the Lottery Gaming System Contract and to support its operations and
those of AGS in Vietnam and had incured costs and expenses related to the
Vietnam project of an additional $492,000, all in anticipation of the
acquisition of EMSI by the Company. Such advances were funded by the sale of
$450,000 of common stock to certain private investors, and the balance was
provided from operating funds available to the Company. The Company has
continued to make advances of approximately $35,000 per month, but anticipates
that advances to EMSI will be discontinued not later than December 31, 2002.

         On June 30, 2002 the Company had approximately $1,965,000 in cash or
cash equivalents on hand. The Company believes that the distribution of profits
from the Suriname casino will provide adequate cash flow to maintain the
Company's current operations for the next 12 months.


                                       16

<PAGE>

Recent Accounting Standards and Pronouncements


         In June 2001, the FASB issued SFAS No. 141, SFAS No. 142 and SFAS
No. 143.  SFAS No. 141, "Business Combinations" is effective for all
business combinations initiated after June 30, 2001 and addresses the
financial accounting and reporting for business combinations.  SFAS 141
supersedes APB Opinion No. 16, Business Combinations, and FASB Statement
No. 38 Accounting for Reacquisition Contingencies of Purchased
Enterprises. The Company's financial reporting or presentation is not
materially affected by the adoption of SFAS 141.

         SFAS No 142, "Goodwill and Other Intangible Assets" addresses the
financial accounting and reporting for acquired goodwill and other intangible
assets and supersedes APB Opinion No. 17, Intangible Assets. SFAS No. 142 was
required to be applied for fiscal years beginning after December 15, 2001.


         SFAS No. 143, "Accounting for Asset Retirement Obligations"
addresses the financial accounting and reporting for obligations
associated with the retirement of tangible long-lived assets and the
associated asset retirement costs.  SFAS No. 143 was  effective for
financial statements issued for fiscal years beginning after June 15, 2002.

                                       17

<PAGE>


         The Company's financial reporting and presentation is not expected
to be materially affected by the adoption of SFAS No. 142 and 143.

         In August 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets." This statement supersedes SFAS No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed of." The statement retains the previously existing
accounting requirements related to the recognition and measurement of the
impairment of long-lived assets to be held and used while expanding the
measurement requirements of long-lived assets to be disposed of by sale to
include discontinued operations. It also expands the previously existing
reporting requirements for discontinued operations to include a component of an
entity that either has been disposed of or is classified as held for sale. The
Company implemented SFAS No. 144 on January 1, 2002. Management does not expect
this statement to have a material impact on Company's consolidated financial
position or results of operations.

Item 7.  Financial Statements

         See pages F-1 through F-39 contained herein as part of this Form 10-KSB
annual report.

Item 8.  Changes in and Disagreements with Accountants on
         Accounting and Financial Disclosure

         N/A

                                    PART III

Item 9.  Directors and Executive Officers, Promoters and Control
         Persons of the Registrant; Compliance with Section 16(a) of
         the Exchange Act

         The Board of Directors is divided into three classes. The terms of each
class expire successively over a three-year period. At each annual meeting of
stockholders, successors to directors whose terms expire at that meeting are to
be elected for three-year terms. The directors and officers of the Company on
June 30, 2002 are as follows:

     Name                      Age            Position and Office Held

Dallas Dempster            60(1)....... President, Chief Executive Officer and
                                        Director
James V. Stanton           70(1)(2).....Vice Chairman of the Board of Directors
Miles R. Greenberg         45...........Chief Financial Officer, Secretary and
                                        Director



                                       18

<PAGE>



Class A Director

         DALLAS DEMPSTER was elected to the Board and also elected President and
Chief Executive Officer on July 20, 1998. Since its inception he has been one of
the two executive directors of the entity developing the Sakhalin Project, and
is a founder of that project. From 1985 to 1991 Mr. Dempster was the Chairman
and Managing Director of Burswood Resort Complex, of which he was the founder.
Burswood is the largest tourist destination resort development in Western
Australia, costing A$320 million, employing over 2,700 employees, and with
revenues in excess of A$400 million. Between 1983 and 1990 he was Chairman of
the Rottenest Island Authority on behalf of the Western Australia government.
Mr. Dempster was principal project director and/or owner of substantial other
property development projects in Sydney and Perth, a member of the Airline
Deregulation Committee, and a member of the Board of the Aboriginal Enterprise
Company Limited. Mr. Dempster worked as an independent consultant since 1991
until joining the Company in July 1998.

Class B Directors

         JAMES V. STANTON has been a director of the Company since its inception
and Vice Chairman of the Company since 1998. Mr. Stanton has his own law and
lobbying firm, Stanton & Associates, in Washington, D.C. From 1971 to 1978, Mr.
Stanton represented the 20th Congressional District of Ohio in the United States
House of Representatives. While in Congress Mr. Stanton served on the Select
Committee on Intelligence, the Government Operations Committee, and the Public
Works and Transportation Committee. Mr. Stanton has held a wide variety of
public service positions, including service as the youngest City Council
President in the history of Cleveland, Ohio and membership on the Board of
Regents of the Catholic University of America in Washington, D.C. Mr. Stanton is
also former Executive Vice President of Delaware North, a privately held
international company which, during Mr. Stanton's tenure, had annual sales of
over $1 billion and became the leading pari-mutual wagering company in the
United States, with worldwide operations including horse racing, harness racing,
dog racing, and Jai-Lai. Delaware North also owned the Boston Garden and the
Boston Bruins hockey team. From 1985 to 1994 Mr. Stanton was a principal and
co-founder of Western Entertainment Corporation, which pioneered one of the
first Indian gaming operations in the United States, a 90,000 square foot bingo
and casino gaming operation located on the San Manuel Indian Reservation in
California, which generated annual revenues in excess of $50 million. Mr.
Stanton also serves on the boards of MTR Gaming Group, Inc. and Saf T Lok, Inc.

         MILES R. GREENBERG was appointed Vice President and Chief Financial
Officer upon joining the Company in September 1996 and appointed Senior Vice
President on January 18, 1997. He was elected a director in September, 2001 by
the Board of Directors to fill a vacancy on the Board at that time. From 1994
until joining the Company, Mr. Greenberg served as Vice President and Chief
Financial Officer of F3 Software Corporation ("F3"), a developer and marketer of
electronic

                                       19

<PAGE>



forms composition and automation software. From 1992 until assuming his
positions at F3, he served as Controller of BLOC Development Corporation
(former parent company of F3), a publicly held entity primarily engaged
in the development, publishing and direct marketing of computer software
and hardware products. From 1985 to 1992, Mr. Greenberg served as Vice
President and Chief Financial Officer of The Levenshon Companies, Inc.
and its affiliates, a diversified financial services company. Mr.
Greenberg is a Certified Public Accountant formerly with KPMG Peat
Marwick.

Classified Directorships

         The Company currently has authorized five directorships, two of which
are currently vacant. In 1997, the Company amended its Certificate of
Incorporation to provide for a classified Board of Directors. The Company's
Board of Directors is divided into three classes. Class A has two directorships,
of which one is held by Mr. Dempster and one of which is vacant and previously
held by Mr. Haft. Mr. Dempster was elected a director in July 1998 by the Board
of Directors, to replace a director who had resigned. Class B has two
directorships, one of which is now held by Mr. Stanton and the other of which is
held by Mr. Greenberg. Class C consists of one directorship, and that
directorship is vacant. At each annual stockholder meeting commencing with the
1998 annual meeting, the successors to directors whose terms then expire are to
be elected to serve from the time of election and qualification until the third
annual meeting following election and until their successors have been duly
elected and qualified but no directors have been nominated or elected at any
subsequent annual meeting. Any additional directorships resulting from an
increase in the number of directors are to be distributed among the three
classes so that, as nearly as possible, such class will consist of an equal
number of directors. All stockholders of the Company's Common Stock are entitled
to vote in elections for the directors of each Class.


Section 16(a) Beneficial Ownership Reporting Compliance

         Under the provisions of Section 16(a) of the Exchange Act, the
Company's officers, directors and 10% beneficial stockholders are required to
file reports of their transactions in the Company's securities with the
Commission. The Company believes that as of June 30, 2002, all of its executive
officers were in compliance with all filing requirements applicable to them
during the fiscal year ending June 30, 2002. The Company is unaware of the
filing requirements, if any, applicable to Janese Investment Pty Ltd.

                                       20

<PAGE>


Item 10.  Executive Compensation

         The following table sets forth the compensation awarded to,
paid to, or earned by Mr. Dempster, the Company's President, and Chief
Executive Officer and two others (all, "Named Executive Officers") during the
period July 1, 1999 to June 30, 2002. No other executive officer of the Company
serving as an executive officer on June 30, 2002, or since that date, received a
total salary and bonus of $100,000 for the periods specified.


                                       21

<PAGE>


<TABLE>
<CAPTION>

                                        SUMMARY COMPENSATION TABLE


                                                                     Long Term Compensation
                                           Annual Compensation                         Awards       Payouts           All Other
                                                                                                                      Compensation
                                                                                       ------       -------           ------------
Principal Position     Fiscal Year       Salary  Bonus    Other         Securities     Restricted   Securities         LTP
                                                          Annual        Underlying     Stock        Underlying         Awards
                                                          Compensation  Options (#)    Awards       Options/SAR's(3)

<S>                    <C>                <C>             <C>           <C>            <C>          <C>                <C>
Dallas Dempster        July 1, 2001 to
President, Chief       June 30, 2002       $300,000
Executive Officer and  July 1, 2000 to                                                 50,000(1)(2)
Director               June 30, 2001       $300,000
                       July 1, 1999 to
                       June 30, 2000       $300,000                                    50,000(1)(2)

Miles R. Greenberg     July 1, 2001 to
Chief financial        June 30, 2002       $140,000
Officer and            July 1, 2000 to
Secretary              June 30, 2001       $140,000                                    25,000
                       July 1, 1999 to
                       June 30, 2000       $125,000                                     3,750(1)

David Hartley          July 1, 2001 to
President Casino       June 30, 2002       $200,000
Division(3)            July 1, 2000 to
                       June 30, 2001       $250,000
                       July 1, 1998 to
                       June 30, 2000       $210,000

         * Less than $100,000
</TABLE>


         (1) Adjusted to reflect the twenty-into-one share consolidation in
October, 2001. Reflects shares underlying options that were repriced in December
1999 (to $5.00 per share) and in October 2000 (to $2.00 per share).

         (2) Held in the name of Tilden Park Limited, for the benefit of Mr.
Dempster's family.

         (3) Reflects amounts paid to Star Casinos Limited for the personal
services of Mr. Hartley provided by such entity. Beginning January 1, 2002, Mr.
Hartley resigned his post as President of the Casino Division, but continues to
act as a consultant to the Company. Pursuant to an agreement made in June, 2000,
Mr. Hartley received in October, 2000, 24,000 shares of common stock of the
Company in lieu of $72,000 owed to him in salary for the fiscal year ended June
30, 2000.

         The Company has no defined benefit plan, actuarial plan, pension plan
or long- term incentive plan.


OPTION GRANTS

         In September 1998 the Board of Directors: (i) reduced the exercise
price of all Plan and non-Plan Options (and any warrants) previously granted any
then officer, director, employee and certain consultants to the then market
price of $30.00 (which was subsequently reduced to $5.00 per share in December
1999); and (ii) granted seven persons and entities new Plan and non-Plan options
to purchase 75,000 shares at an exercise price of $30.00 per share (which was
subsequently reduced to $5.00 per share in December 1999). On October 18, 2000
the Board of Directors again reduced the exercise price of all Plan and non-Plan
options (and warrants) previously granted to any then officer, director,
employee or consultant to a price of $2.00.

                                       22

<PAGE>



         No options were granted to any of the Named Executive Officers under
the 1996 Stock Option Plan, or otherwise granted to any such officer during the
year ended June 30, 2002, and no options were exercised by any of them during
that period.

             AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
                          FISCAL YEAR END OPTION VALUES

         The following table sets forth information about the number and value
of options held as of June 30, 2002 by each of the Company's executive officers
named in the Summary Compensation Table, adjusted to reflect the twenty-into-one
share consolidation in fiscal 2002.

<TABLE>
<CAPTION>

                             Options at Fiscal Year End
                             --------------------------
                               Shares                            Number of Securities
                             Acquired on       Value             Value of Unexercised
                            Exercise (#)     Realized($)       Options at Year End($)(1)        In-the-Money
                            -------------   ------------    ------------      -------------     ------------
                            Unexercisable   Exercisable      Unexercisable      Exercisable     Exercisable

<S>                        <C>              <C>           <C>               <C>                 <C>
Dallas Dempster                   0               -       $   100,000              0                 0    -
Miles R. Greenberg                0               -            28,750              0                 0    -
David Hartley                     0               -             5,000              0                 0    -

</TABLE>

(1) Based on the closing price of the Company's Common Stock of $.81 on June 30,
2002, as reported on the OTC Bulletin Board.

         The Company's outstanding options at June 30, 2002 totaled 192,125. The
Company uses the Black-Scholes option-pricing model to value options issued to
non-employee directors and consultants. Other options issued are valued using
APB 25 and FASB Interpretation 44. See Note 10 to the Consolidated Financial
Statements included in this 10-KSB.

Directors Compensation

         Since August 1998, non-employee directors have waived all fee
compensation. No other compensation was paid to non-employee directors in the
twelve months ended June 30, 2002. Beginning in August, 2002, the Company agreed
to retain Mr. Stanton as a consultant on a month to month basis for a fee of
$5,000 per month. Directors who are employees of the Company receive no
additional compensation for their services rendered as directors. All directors
are reimbursed for reasonable expenses incurred in connection with their
services rendered as directors.

         In June 1997, the Board voted to form an executive compensation
committee (the "Committee") which is authorized to review all compensation
matters involving directors and executive officers and Committee approval is
required for any compensation to be paid to executive officers or directors who
are employees of the Company. As a matter of policy and to assure compliance
with Rule 16b-3(d)(1) of the Securities Exchange Act of 1934, the decisions of
the Compensation Committee are subject to ratification by a majority of the
Board.

Indemnification of Directors and Officers and Related Matters

         The Company's Certificate of Incorporation limits, to the maximum
extent permitted by the Delaware General Corporation Law ("DGCL"), the personal
liability of directors and officers for monetary damages for breach of their
fiduciary duties as

                                       23

<PAGE>



directors and officers (other than liabilities arising from acts or omissions
which involve intentional misconduct, fraud or knowing violations of law or the
payment of distributions in violation of the DGCL). The Certificate of
Incorporation provides further that the Company shall indemnify to the fullest
extent permitted by the DGCL any person made a party to an action or proceeding
by reason of the fact that such person was a director, officer, employee or
agent of the Company. Subject to the Company's Certificate of Incorporation, the
By-laws provide that the Company shall indemnify directors and officers for all
costs reasonably incurred in connection with any action, suit or proceeding in
which such director or officer is made a party by virtue of his being an officer
or director of the Company, except where such director or officer is finally
adjudged to have been derelict in the performance of his duties as such a
director or officer.

         There is no pending litigation or proceeding involving any director,
officer, employee or agent of the Company where indemnification will be required
or permitted. The Company is not aware of any threatened litigation or
proceeding which may result in a claim for such indemnification.

Item 11.  Security Ownership of Certain Beneficial Owners and Management and
          Related Stockholder Matters

         The following table sets forth information as of September 30, 2002, to
the best of the Company's knowledge, about (i) each person (including any
"group" as that term is used in Section 13(d)(3) of the Securities Exchange Act
of 1934) known to the Company to be the beneficial owner of more than 5% of the
Company's Common Stock, and (ii) as to each class of equity securities owned by
the directors and named executive officers of the Company, and the directors and
executive officers of the Company as a group. The percentage of shares
outstanding is based on the Company's shares of Common Stock outstanding as of
June 30, 2002, as adjusted in each case pursuant to Rule 13-3(d)1 under the
Securities and Exchange Act of 1934. As of September 30, 2002, there were
1,273,109 shares of Common Stock outstanding.


                                       24

<PAGE>



<TABLE>
<CAPTION>

                                                                     Total Number of Shares         Percentage of
Name and Address of Stockholder                                        Beneficially Owned          Voting Shares*


<S>                                                                    <C>                       <C>
James V. Stanton (1) Vice Chairman, Director                                   65,160                    4.9%

Dallas Dempster (2)(3) President, Director                                    100,000                    7.3%

Peter Janssen (3) c/o Janssen Partners
  1345 Old Northern Blvd. Roslyn, N.Y. 11576                                  105,150                    7.9%

Miles R. Greenberg-Senior Vice President-Finance,
Treasurer and Chief Financial Officer, Director (4)                            28,750                    2.2%

Auschina Investment Co. Limited
4002A Central Pty Ltd
18 Harbour Road, Wanchai, Hong Kong                                            75,000                    5.9%

Janase Investment Pty Ltd
1 Milner Street
Mosman, NSW, 2088, Australia                                                  149,000                   11.7%

Danville Investment Pty Ltd
30 Irvine Street
Peppermint Grove, Western Australia                                            74,053                    5.8%

Richard DeVries Professional Corp.
171, 5005 Dalhousie Drive NW
Calgary, Alberta                                                               66,667                   5.2%

All executive officers and directors  as a group
  (3 persons)                                                                 193,910                   13.3%

</TABLE>

----------
(1) Includes 1,000 shares of Common Stock which are held by Mr. Stanton, a
Director of the Company, as joint tenant with his wife, Margaret M. Stanton,
currently exercisable warrants to purchase 32,500 shares of Common Stock at a
price equal to $2.00 per share, and currently exercisable options to purchase
25,000 shares of Common Stock at $2.00 per share. Does not include shares of
Common Stock owned by Michael J. Stanton, Bridget M. Stanton, Richard P. Stanton
and Joseph M. Stanton each of whom are adult children of Mr. James Stanton and
each of whom own 1,000 shares of Common Stock. Mr. Stanton denies beneficial
ownership of such 4,000 shares.

(2) Represents currently exercisable non-Plan options granted in September 1998
to purchase 50,000 shares at $2.00 and Plan options granted in December 1999 to
purchase 50,000 shares at $2.00 in the name of Tilden Park Limited for the
benefit of Mr. Dempster's family.

(3) Includes currently exercisable warrants to purchase 33,333 shares at $1.00
per share; and warrants to purchase 22,500 shares at $10.00 per share.

(4) Represents currently exercisable options to purchase 28,750 shares of Common
Stock at $2.00 per share.

                                       25

<PAGE>

         As used in the table above, "beneficial ownership" means the sole or
shared power to vote or direct the voting or to dispose, or direct the
disposition of any security. A person is deemed to have "beneficial ownership"
of any security that such person has a right to acquire within 60 days of the
date of the above table. Any security that any person named above has the right
to acquire within 60 days is deemed to be outstanding for purposes of
calculating the ownership of such person but is not deemed to be outstanding for
purposes of calculating the ownership percentage of any other person. Unless
otherwise noted, each person listed is believed by the Company to have the sole
power to vote, or direct the voting of, and power to dispose, or direct the
disposition of all such shares. The amount of outstanding shares of Common Stock
is the amount actually outstanding plus shares deemed outstanding pursuant to
Rule 13d-3(d)(1) under the Securities and Exchange Act of 1934.

         In acquiring Sakhalin General Trading and Investments Limited ("SGTI")
the Company issued 100,000 shares to the former stockholders in SGTI. The
Company does not know the ultimate beneficial ownership of these shares.

Item 12. Certain Relationships and Related Transactions

         Mr. David Hartley controls Star and holds a substantial interest in it.
Star was a party with the Company to the Star Casino Consulting Agreement, and
was granted options in October 1997 to purchase shares of the Company's Common
Stock. These options were repriced three times in connection with the general
repricings of options and warrants held by officers, directors, employees and
consultants of the Company. The Company issued 12,500 shares of Common Stock to
Star in December 1999 in lieu of a cash bonus payment which Star was entitled to
receive pursuant to The Star Consulting Agreement. On October 24, 2000 the
Company issued Star 24,000 shares of Common Stock as payment for $120,000 Star
was entitled to receive as of June 30, 2000.

         In January 2000, Mr. Stanton provided a loan to the Company of
$300,000, which the Company used to repay past due obligations. The loan bears
interest at the bank prime rate to be calculated and billed monthly by the
National City Bank of Cleveland, Ohio. The loan was to be repaid on December 31,
2000. Mr. Stanton also received warrants to purchase 25,000 shares of Common
Stock at an exercise price of $5.00 per share exercisable on or before January
18, 2004. On October 18, 2000 the exercise price was reduced to $2.00 per share.
After December, the due date of the loan was extended and balance of the loan
was paid off in January 2002. On January 25, 1999 Mr. Stanton converted all
$75,000 principal and $1,600 of accrued unpaid interest on a $75,000 loan he had
made to the Company in October 1998 into 153,200 shares at a conversion price of
$10.00 per share. Since August, 2002 Mr. Stanton has acted as a consultant to
the Company on a month to month basis for which he receives a fee of $5,000 per
month.


                                       26

<PAGE>

Item 13. Exhibits, and Reports on Form 8-K



                  Report of Independent Certified Public Accountants (f-2)

                  Consolidated Balance Sheets as of June 30, 2002 and June 30,
                  2001 (F-3)

                  Consolidated Statements of Operations for the years ended June
                  30, 2002, June 30, 2001 and June 30, 2000 (F-4)

                  Consolidated Statements of Stockholders' Equity for the years
                  ended June 30, 2002, June 30, 2001 and June 30, 2000 (F-5)

                  Consolidated Statements of Cash Flows for the years ended June
                  30, 2002, June 30, 2001 and June 30, 2000 (F-8)

                  Notes to Consolidated Financial Statements (F-11)


Exhibit No.                       Item Title
----------                        ----------


2.1      Contract on the Extension of the Concession Period for the Operation of
         a Casino dated 21 July 1997 issued by the Minister of Finance in favor
         of Roulette; Loan Agreement dated 9 April 1998 between Roulette and
         Dorsett providing for a US $420,000 loan to Roulette; Amendment No.1
         dated 5 June 1998 to the Agreement dated 3 April 1998 between CBC,
         Juste and Dorsett (incorporated by reference to the Company's Form 10-Q
         for the period ended September 30, 1998)

3.1      Certificate of Incorporation and amendments thereto (incorporated
         herein by reference to the Company's Registration Statement on Form S-1
         (File No. 333-16571))

3.2      Amendment to Company's Certificate of Incorporation (incorporated
         herein by reference to the Company's Registration Statement on Form S-1
         (File No. 333-16571), Amendment No. 5)

3.3      Amendment to Company's Certificate of Incorporation (incorporated
         herein by reference to the Company's Proxy Statement dated November 27,
         1997)

3.4      By-law of Company (incorporated herein by reference to the Company's
         Registration Statement on Form S-1 (File No. 333-16571)

4.2      Form of certificate evidencing shares of Common Stock (incorporated
         herein by reference to the Company's Registration Statement on Form S-1
         (File No. 333-16571), Amendment No. 2)

4.3      Form of Underwriter's Warrant Agreement between Company and the
         Underwriter Janssen-Meyers Associates L.P. (including form of
         Underwriter's Warrant) (incorporated herein by reference to the
         Company's Registration Statement on Form S-1 (File No. 333-16571),
         Amendment No. 5)

                                       27
<PAGE>

4.5      Amendatory Agreement dated November 6, 1996 between the Company and the
         SES Family Investment and Trading Partnership, L.P. (incorporated
         herein by reference to the Company's Registration Statement on Form S-1
         (File No. 333-16571))

4.6      Form of 10% Debenture dated September 1996 (incorporated herein by
         reference to the Company's Registration Statement on Form S-1 (File No.
         333-16571))

4.7      Form of 10% Convertible Debenture dated November 1996 (incorporated
         herein by reference to the Company's Registration Statement on Form S-1
         (File No. 333-16571))

10.1     1996 Stock Option Plan, as amended and restated (incorporated herein by
         reference to the Company's Registration Statement on Form S-1 (File No.
         333-16571))

10.2     Form of Stock Option Agreement (incorporated herein by reference to the
         Company's Registration Statement on Form S-1 (File No. 333-16571))

10.3     Distribution Agreement dated October 9, 1996 between Company and
         Agrotech 2000, S.L. (incorporated herein by reference to the Company's
         Registration Statement on Form S-1 (File No. 333-16571), Amendment No.
         4)

10.4     Employment Agreement between Charles H. Stein and the Company,
         effective as of June 13, 1997

10.5     Form of $5.00 Warrant Agreement dated August 1996 (incorporated herein
         by reference to the Company's Registration Statement on Form S-1 (File
         No. 333-16571))

10.6     Loan Agreement dated October 9, 1996 between Company and Conserver
         Purchasing Corporation ("CPU"), as amended by Letter Agreement dated
         December 31, 1996 between Company and CPC (incorporated herein by
         reference to the Company's Registration Statement on Form S-1 (File No.
         333-16571), Amendment No. 2)

10.7     Form of Financial Consulting Agreement between Company and Underwriter
         (incorporated herein by reference to the Company's Registration
         Statement on Form S-1 (File No. 333-16571), Amendment No. 5)

10.8     Agreement dated as of August 12, 1997 by and among the Company,
         Sakhalin Trading and Investments Limited ("SGTI") and Sovereign Gaming
         and Leisure Limited ("Sovereign") (incorporated herein by reference to
         Exhibit 10.8 to the Company's Form 10-K for the fiscal year ended June
         30, 1997)

10.9     Amendment dated as of August 12, 1997 by and among the Company, SGTI
         and Sovereign (incorporated herein by reference to Exhibit 10.9 to the
         Company's Form 10-K for the fiscal year ended June 30, 1997)

10.10    Development Services Agreement dated as of October 2, 1997 between the
         Company and Dato David Chiu (incorporated herein by reference to
         Exhibit 10.10 to the Company's Form 10-K for the fiscal year ended June
         30, 1997)

10.11    Consulting Agreement effective as of August 14, 1997 between the
         Company and Star Casino Limited (incorporated herein by reference to
         Exhibit 10.11 to the Company's Form 10-K for the fiscal year ended June
         30, 1997)

                                       28
<PAGE>

10.12    Proposed form Pledge Agreement by and among the Company, Brian J.
         Bryce, Jasmine Trustees, Ltd., Jay M. Haft and James V. Stanton
         (incorporated herein by reference to Exhibit 10.12 to the Company's
         Form 10-K for the fiscal year ended June 30, 1997)

10.13    Hotel Management Agreement dated as of October 2, 1997 between the
         Company and Dorsett Hotels and Resorts International Ltd. (incorporated
         herein by reference to Exhibit 10.13 to the Company's Form 10-K for the
         fiscal year ended June 30, 1997)

10.15    Heads of Agreement dated October 3, 1997 between the Company and
         Parbhoe's Handelmij N.V. (incorporated herein by reference to Exhibit
         10.15 to the Company's Form 10-K for the fiscal year ended June 30,
         1997)

10.17    Letter agreement dated October 10, 2002 among Richard W. DeVries
         Professional Corporation, as agent; Lottery & Wagering Solutions Inc.;
         and Applied Gaming Systems of Canada Inc. (filed herewith)

16.1     Letter regarding change in certifying accountant (incorporated herein
         by reference to the Company's Form 8-K dated December 18, 1997 and Form
         8-K dated June 16, 1998)

16.2     Letter regarding change in certifying accountant (incorporated herein
         by reference to the Company's Form 8-K dated July 23, 1999 and Form 8-K
         dated October 13, 1999



                                       29

<PAGE>

                                   SIGNATURES

     In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.


                                               LOTTERY & WAGERING SOLUTIONS INC.

                                                 /s/  Miles R. Greenberg
                                               -----------------------------
                                                     Miles R. Greenberg

Date: October 11, 2002

    In accordance with the Exchange Act, this report has been signed by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.

Signature                           Title                             Date
---------                          -------                           -----
Dallas R. Dempster          Chief Executive Officer,
                            Chief Operating Officer
                            and President (Principal
                            Executive Officer), Director        October 11, 2002

James V. Stanton            Vice Chairman and Director          October 11, 2002

Miles R. Greenberg          Chief Financial Officer and
                            Director (Principal Financial
                            Officer Chief Accounting
                            Officer)                            October 11, 2002

Item 14. Controls and Procedures.

                                 CERTIFICATIONS

I, Dallas R. Dempster, certify that:

1.       I have reviewed this annual report on Form 10-KSB of Lottery & Wagering
         Solutions Inc.;

2.       Based on my knowledge, this annual report does not contain any untrue
         statement of a material fact or omit to state a material fact necessary
         to make the statements made, in light of the circumstances under which
         such statements were made, not misleading with respect to the period
         covered by this annual report;

3.       Based on my knowledge, the financial statements, and other financial
         information included in this annual report, fairly present in all
         material respects the financial condition, results of operations and
         cash flows of the registrant as of, and for, the periods presented in
         this annual report;

4.       The registrant's other certifying officers and I are responsible for
         establishing and maintaining disclosure controls and procedures (as
         defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
         we have:

                                       30

<PAGE>




          a.   designed such disclosure controls and procedures to ensure that
               material information relating to the registrant, including its
               consolidated subsidiaries, is made known to us by others within
               those entities, particularly during the period in which this
               annual report is being prepared;

          b.   evaluated the effectiveness of the registrant's disclosure
               controls and procedures as of a date within 90 days prior to the
               filing date of this annual report (the "Evaluation Date"); and

          c.   presented in this annual report our conclusions about the
               effectiveness of the disclosure controls and procedures based on
               our evaluation as of the Evaluation Date;

5.       The registrant's other certifying officers and I have disclosed, based
         on our most recent evaluation, to the registrant's auditors and the
         audit committee of registrant's board of directors (or persons
         performing the equivalent function):

          a.   all significant deficiencies in the design or operation of
               internal controls which could adversely affect the registrant's
               ability to record, process, summarize and report financial data
               and have identified for the registrant's auditors any material
               weaknesses in internal controls; and

          b.   any fraud, whether or not material, that involves management or
               other employees who have a significant role in the registrant's
               internal controls; and

6.       The registrant's other certifying officers and I have indicated in this
         annual report whether or not there were significant changes in internal
         controls or in other factors that could significantly affect internal
         controls subsequent to the date of our most recent evaluation,
         including any corrective actions with regard to significant
         deficiencies and material weaknesses.


Date:    October 11, 2002


                                          S/Dallas R. Dempster
                                          ---------------------------
                                          Dallas R. Dempster
                                          Chairman and Chief Executive Officer




                                       31

<PAGE>



                                 CERTIFICATIONS


I, Miles Greenberg, certify that:

7.       I have reviewed this annual report on Form 10-KSB of Lottery & Wagering
         Solutions Inc.;

8.       Based on my knowledge, this annual report does not contain any untrue
         statement of a material fact or omit to state a material fact necessary
         to make the statements made, in light of the circumstances under which
         such statements were made, not misleading with respect to the period
         covered by this annual report;

9.       Based on my knowledge, the financial statements, and other financial
         information included in this annual report, fairly present in all
         material respects the financial condition, results of operations and
         cash flows of the registrant as of, and for, the periods presented in
         this annual report;

10.      The registrant's other certifying officers and I are responsible for
         establishing and maintaining disclosure controls and procedures (as
         defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
         we have:

          a.   designed such disclosure controls and procedures to ensure that
               material information relating to the registrant, including its
               consolidated subsidiaries, is made known to us by others within
               those entities, particularly during the period in which this
               annual report is being prepared;

          b.   evaluated the effectiveness of the registrant's disclosure
               controls and procedures as of a date within 90 days prior to the
               filing date of this annual report (the "Evaluation Date"); and

          c.   presented in this annual report our conclusions about the
               effectiveness of the disclosure controls and procedures based on
               our evaluation as of the Evaluation Date;

11.      The registrant's other certifying officers and I have disclosed, based
         on our most recent evaluation, to the registrant's auditors and the
         audit committee of registrant's board of directors (or persons
         performing the equivalent function):

          a.   all significant deficiencies in the design or operation of
               internal controls which could adversely affect the registrant's
               ability to record, process, summarize and report financial data
               and have identified for the registrant's auditors any material
               weaknesses in internal controls; and

          b.   any fraud, whether or not material, that involves management or
               other employees who have a significant role in the registrant's
               internal controls; and

12.      The registrant's other certifying officers and I have indicated in
         this annual report whether  or not there were significant changes in
         internal controls or in

                                       32

<PAGE>


         other factors that could significantly affect internal controls
         subsequent to the date of our most recent evaluation, including any
         corrective actions with regard to significant deficiencies and material
         weaknesses.



Date:    October 11, 2002


                                          S/ Miles Greenberg
                                          --------------------------------------
                                          Miles Greenberg
                                          Chief Financial Officer and Secretary




                                       33


<PAGE>

               LOTTERY & WAGERING SOLUTIONS, INC. AND SUBSIDIARIES
                        F/K/A CCA COMPANIES INCORPORATED
                                    CONTENTS

<TABLE>
<CAPTION>
                                                                                                        PAGE

<S>                                                                                                    <C>
Independent Auditors' Report...................................................................          F-2

Consolidated Balance Sheets as of June 30, 2002 and 2001.......................................          F-3

Consolidated Statements of Operations for the years ended June 30, 2002,
 2001 and 2000.................................................................................          F-4

Consolidated Statements of Stockholders' Equity for the years ended
 June 30, 2002, 2001 and 2000..................................................................          F-5

Consolidated Statements of Cash Flows for the years ended
 June 30, 2002, 2001 and 2000..................................................................          F-8

Notes to Consolidated Financial Statements.....................................................         F-10


</TABLE>




<PAGE>


                          INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders
of Lottery & Wagering Solutions, Inc. and Subsidiaries
F/K/A CCA Companies Incorporated

We have audited the accompanying consolidated balance sheets of Lottery &
Wagering Solutions, Inc. and Subsidiaries, F/K/A CCA Companies Incorporated (a
Delaware corporation) (the "Company") as of June 30, 2002 and 2001, and the
related consolidated statements of operations, stockholders' equity, and cash
flows for each of the years ended June 30, 2002, 2001 and 2000. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the consolidated financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Lottery & Wagering
Solutions, Inc. and Subsidiaries, F/K/A CCA Companies Incorporated as of June
30, 2002 and 2001, and the results of their operations and their cash flows for
each of the years ended June 30, 2002, 2001 and 2000 in conformity with
accounting principles generally accepted in the United States of America.

SPEAR SAFER HARMON & CO.

Miami, Florida
October 4,  2002


                                      F-2

<PAGE>



<TABLE>
<CAPTION>


                                           LOTTERY & WAGERING SOLUTIONS, INC. AND SUBSIDIARIES
                                                   F/K/A CCA COMPANIES INCORPORATED

                                                      Consolidated Balance Sheets
                                                        June 30, 2002 and 2001


                                                              A S S E T S

                                                                                2002                        2001
                                                                         ------------------          -----------------
<S>                                                                      <C>                         <C>
Current Assets:
   Cash and cash equivalents                                             $        1,965,062          $         701,873
   Prepaid and other current assets                                                 151,322                     76,362
   Notes receivable - EMSI                                                               -                     342,000
   Advances to EMSI, net                                                            250,000                         -
                                                                         ------------------          -----------------

         Total Current Assets                                                     2,366,384                  1,120,235

Property, equipment and leasehold improvements, net                               3,993,221                  4,745,197
Sakhalin development costs                                                        2,100,000                  2,100,000
Other assets                                                                         20,300                     39,447
                                                                         ------------------          -----------------

                                                                         $        8,479,905          $       8,004,879
                                                                         ==================          =================


                                                 LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
   Accounts payable                                                      $           92,832          $         218,533
   Accrued expenses                                                                 713,486                    582,791
   Income tax payable                                                               598,996                    162,000
   Notes payable                                                                    515,900                    646,700
   Investor deposits and other                                                       30,000                    367,000
                                                                         ------------------          -----------------

         Total Current Liabilities                                                1,951,214                  1,977,024
                                                                         ------------------          -----------------
Deferred Income Taxes                                                                    -                     287,884
                                                                         ------------------          -----------------
Minority interest in consolidated subsidiary                                      1,864,562                    984,429
                                                                         ------------------          -----------------

Stockholders' Equity:
   Preferred stock                                                                       -                          -
   Common stock                                                                       1,273                        907
   Additional paid-in capital                                                    48,210,642                 47,697,910
   Accumulated deficit                                                          (43,547,786)               (42,943,275)
                                                                         ------------------          -----------------

         Total Stockholders' Equity                                               4,664,129                  4,755,542
                                                                         ------------------          -----------------

                                                                         $        8,479,905          $       8,004,879
                                                                         ==================          =================

</TABLE>



See accompanying notes to consolidated financial statements.

                                      F-3
<PAGE>


<TABLE>
<CAPTION>

                                           LOTTERY & WAGERING SOLUTIONS, INC. AND SUBSIDIARIES
                                                   F/K/A CCA COMPANIES INCORPORATED

                                                 Consolidated Statements of Operations
                                               Years Ended June 30, 2002, 2001 and 2000


                                                                    2002                    2001                     2000
                                                               ---------------         ---------------         ---------------

<S>                                                            <C>                     <C>                     <C>
Casino Revenues                                                $     7,113,988         $     5,489,191         $     6,981,758
                                                               ---------------         ---------------         ---------------

Operating Expenses:
   Marketing and promotional                                           322,064                 332,730                 333,500
   General and administrative                                        4,862,268               4,884,614               6,415,452
   Compensation paid by the issuance of
    stock options and warrants                                              -                   13,000                  10,000
                                                               ---------------         ---------------         ---------------
         Total Operating Expenses                                    5,184,332               5,230,344               6,758,952
                                                               ---------------         ---------------         ---------------

Income from Operations                                               1,929,656                 258,847                 222,806
                                                               ---------------         ---------------         ---------------

Other Income (Expense):
   Write-down of assets                                               (840,329)                     -              (13,857,192)
   Interest income                                                      37,121                   1,862                   5,658
   Interest expense                                                    (94,520)               (198,330)               (423,630)
                                                               ---------------         ---------------         ---------------
         Total Other Expense                                          (897,728)               (196,468)            (14,275,164)
                                                               ---------------         ---------------         ---------------

Income Tax Provision                                                  (756,306)               (269,097)               (552,625)
                                                               ---------------         ---------------         ---------------

Income (Loss) from Continuing Operations Before
  Minority Interest                                                    275,622                (206,718)            (14,604,983)

Minority Interest                                                     (880,133)               (312,947)               (582,204)
                                                               --------------          ---------------         ---------------

Loss from Continued Operations                                        (604,511)               (519,665)            (15,187,187)
                                                               ---------------         ---------------         ---------------

Loss from Discontinued Operations:
   Food Preservation, net                                                   -                       -                  (64,500)
   Hotel Management, net                                                    -                       -                  (87,623)
                                                               ---------------         ---------------         ---------------
                                                                            -                       -                 (152,123)
                                                               ---------------         ---------------         ---------------

Net Loss                                                       $      (604,511)        $      (519,665)           $(15,339,310)
                                                               ===============         ===============            ============

Loss per Share of Common Stock:
   Basic and Diluted:
     Loss from continuing operations                           $         (0.61)        $         (0.60)        $        (19.94)
     Loss from discontinued operations                                      -                       -                    (0.20)
                                                               ---------------         ---------------         ---------------

Loss per share                                                 $         (0.61)        $         (0.60)        $        (20.14)
                                                               ===============         ===============         ===============

Weighted Average Number of Common
   Shares Outstanding                                                  985,664                 863,026                 761,721
                                                               ===============         ===============         ===============
</TABLE>

See accompanying notes to consolidated financial statements.




                                      F-4
<PAGE>
<TABLE>
<CAPTION>
                                          LOTTERY & WAGERING SOLUTIONS, INC. AND SUBSIDIARIES

                                                   F/K/A CCA COMPANIES INCORPORATED

                                            Consolidated Statements of Stockholders' Equity



                                         Common Stock
                                        Par Value $.001
                                   -----------------------    Additional
                                                                Paid-In     Accumulated
                                      Shares       Amount       Capital       Deficit          Total
                                   ----------   ----------   -----------   -----------     -----------

<S>                                 <C>         <C>          <C>           <C>             <C>
Balance - June 30, 1999               700,748   $      701   $46,906,216   $(27,084,300)   $19,822,617

Issuance of common stock to
   consultant
   as bonus per contract               12,500           12        24,988            -           25,000
Issuance of shares upon
   conversion of
   principal and interest of loan
   from Danville                       74,053           74       195,426            -          195,500
Issuance of shares in
   consideration for
   legal services                       7,500            8        19,992            -           20,000
Issuance of shares to consultant
   for services                        13,200           13        65,987            -           66,000
Sale of common stock at $1.50 per
   share                                8,334            8       124,992            -          125,000
Repricing of warrants and options          -            -         20,000            -           20,000
Warrants issued in connection
   with debt                               -            -        155,400            -          155,400

Net loss for 2000                          -            -             -    (15,339,310)    (15,339,310)
                                   ----------   ----------   -----------   -----------     -----------
Balance - June 30, 2000               816,335   $      816   $47,513,001  $(42,423,610)    $ 5,090,207
                                   ==========   ==========   ===========   ===========     ===========
</TABLE>
See accompanying notes to consolidated financial statements.

                                      F-5

<PAGE>


<TABLE>
<CAPTION>
                                          LOTTERY & WAGERING SOLUTIONS, INC. AND SUBSIDIARIES

                                                   F/K/A CCA COMPANIES INCORPORATED

                                      Consolidated Statements of Stockholders' Equity (Continued)


                                         Common Stock
                                        Par Value $.001
                                   -----------------------    Additional
                                                                Paid-In      Accumulated
                                      Shares       Amount       Capital        Deficit          Total
                                   ----------   ----------   -----------    -----------     -----------

<S>                                  <C>       <C>          <C>            <C>            <C>
Balance - June 30, 2000               816,335   $      816   $47,513,001    $(42,423,610)  $ 5,090,207

Issuance of shares to consultant
  for services                         24,000           24        71,976             -          72,000

Sale of common stock at $15  per       66,667           67        99,933             -        100,000
share

Repricing of warrants and options          -            -         13,000             -         13,000

Net loss for 2001                          -            -             -        (519,665)     (519,665)
                                   ----------   ----------   ----------     -----------   -----------

Balance - June 30, 2001               907,002   $      907   $47,697,910   $(42,943,275)  $ 4,755,542
                                   ==========   ==========   ===========    ============  ===========


</TABLE>

See accompanying notes to consolidated financial statements.




                                      F-6


<PAGE>


<TABLE>
<CAPTION>
                                         LOTTERY & WAGERING SOLUTIONS, INC. AND SUBSIDIARIES

                                                   F/K/A CCA COMPANIES INCORPORATED

                                      Consolidated Statements of Stockholders' Equity (Continued)


                                         Common Stock
                                        Par Value $.001
                                   -----------------------    Additional
                                                                Paid-In      Accumulated
                                      Shares       Amount       Capital        Deficit          Total
                                   ----------   ----------   -----------    -----------     -----------
<S>                               <C>          <C>          <C>            <C>            <C>
Balance - June 30, 2001               907,002   $      907   $47,697,910    $(42,943,275)  $ 4,755,542

Cancellation of shares due to
non-performance
of obligation under the contract     (18,893)          (19)          19              -              -
with FEC & EA

Gain on cancellation of shares
issued to FEC & EA                        -             -       (18,900)             -         (18,900)

Sale of common stock at $2.00 per     225,000          225      327,046              -         327,271
share

Issuance of shares for private         50,000           50       72,677              -          72,727
placement services

Issuance of shares for services       100,000          100      119,900              -         120,000
at $1.20 per share

Issuance of shares to consultants      10,000           10       11,990              -          12,000
for services

Net loss for 2002                          -            -            -         (604,511)      (604,511)
                                   ----------   ----------   ----------     -----------    -----------

Balance - June 30, 2002             1,273,109   $    1,273   $48,210,642   $(43,547,786)   $ 4,664,129
                                   ==========   ==========   ===========   ============    ===========


</TABLE>

See accompanying notes to consolidated financial statements.

                                      F-7



<PAGE>


<TABLE>
<CAPTION>
                                          LOTTERY & WAGERING SOLUTIONS, INC. AND SUBSIDIARIES
                                                   F/K/A CCA COMPANIES INCORPORATED

                                                 Consolidated Statements of Cash Flows
                                               Years Ended June 30, 2002, 2001 and 2000



                                                                    2002                    2001                     2000
                                                              ----------------         ---------------         ---------------
<S>                                                           <C>                      <C>                     <C>
Cash Flows form Operating Activities:
   Net loss                                                   $       (604,511)        $      (519,665)        $   (15,339,310)
                                                              ----------------         ---------------         ---------------
   Adjustments to reconcile net loss to net cash
     provided by operating activities
     Loss from discontinued operations                                      -                       -                  152,123
     Minority interest                                                 880,133                 312,947                 582,204
     Compensation paid by the issuance of
      stock options and warrants                                            -                   13,000                  20,000
     Gain on cancellation of shares                                  (18,900)                     -                       -
     Reserve for/write-down of assets                                  840,329                      -               13,857,192
     Depreciation and amortization                                     755,562                 770,478                 784,462
     Loss on sale/disposal of assets                                    35,461                      -                       -
     Interest accrued treated as contribution to capital                    -                       -                   10,500
     Legal services provided by stockholder                                 -                       -                   20,000
     Consulting services provided for common stock                     132,000                  72,000                  91,000
     Amortization of goodwill                                               -                       -                  351,475
     Income taxes                                                      436,996                  17,349                 144,650
     Deferred income taxes                                            (287,884)                 95,000                 192,884
     Changes in current assets and liabilities:
       Accounts receivable                                                  -                       -                   18,000
       Prepaid expenses and other current assets                       (81,607)                (10,574)                 99,474
       Accounts payable and accrued  expenses                            4,994                 (45,478)               (577,117)
                                                              ----------------         ---------------         ---------------

         Total Adjustments                                           2,699,084               1,224,722              15,746,847
                                                              ----------------         ---------------         ---------------

Net Cash Provided by Continuing Operations                           2,092,573                 705,057                 407,537
Net Cash Used in Discontinued Operations                               (37,000)                (57,000)               (261,396)
                                                              ----------------         ---------------         ---------------

Net Cash Provided by Operating Activities                            2,055,573                 648,057                 146,141
                                                              ----------------         ---------------         ---------------

Cash Flows form Investing Activities:
   Additions to property and equipment                                 (40,409)                (26,396)               (142,602)
   Proceeds from sale of equipment                                       1,360                      -                       -
   Deposits on assets                                                       -                       -                 (115,208)
   Project development costs and other                                      -                       -                 (305,000)
   Construction finance costs and other                                     -                  (19,347)                 (9,734)
   Costs incurred for and funds advanced to EMSI                      (722,535)               (342,000)                     -
                                                              ----------------         ---------------         --------------

Net Cash Used in Investing Activities                                 (761,584)               (387,543)               (572,544)
                                                              ----------------         ---------------         ---------------

</TABLE>

See accompanying notes to consolidated financial statements.

                                      F-8


<PAGE>


<TABLE>
<CAPTION>
                                          LOTTERY & WAGERING SOLUTIONS, INC. AND SUBSIDIARIES
                                                   F/K/A CCA COMPANIES INCORPORATED

                                           Consolidated Statements of Cash Flows (Continued)
                                               Years Ended June 30, 2002, 2001 and 2000





                                                                    2002                    2001                     2000
                                                               ---------------         ---------------         ---------------
<S>                                                            <C>                     <C>                  <C>
Cash Flows fron Financing Activities:
   Warrants issued for debt                                    $            -          $            -       $          155,400
   Investor deposits                                                        -                  330,000                       -
   Proceeds from sale of common stock                                  150,000                 100,000                 310,000
   Cash repayment by Suriname Casino                                        -                       -                  (50,000)
   Private placement fees                                              (50,000)                     -                       -
   Borrowings                                                               -                  142,767                 800,000
   Repayments of notes payable                                        (130,800)               (346,967)               (999,100)
                                                               ---------------         ---------------         ---------------

Net Cash (Used in) Provided by Financing Activities                    (30,800)                225,800                 216,300
                                                               ---------------         ---------------         ---------------

Net Increase (Decrease) in Cash and

 Cash Equivalents                                                    1,263,189                 486,314                (210,103)

Cash and Cash Equivalents, Beginning of Year                           701,873                 215,559                 425,662
                                                               ---------------         ---------------         ---------------

Cash and Cash Equivalents, End of Year                         $     1,965,062         $       701,873         $       215,559
                                                               ===============         ===============         ===============
Supplemental Disclosures of Cash Flow
  Information:

     Cash paid during the period for:
       Interest                                               $         7,014           $       34,546          $       375,817
       Foreign income tax                                             607,194                  156,748                  200,384
     Non-cash transactions:
       Issuance of common stock to consultants
           for services                                                12,000                   72,000                   91,000
       Shares from debt conversion                                         -                        -                   195,500
       Compensation charges incurred on reducing
        exercise price of options and warrants
        granted to directors and others                                    -                    13,000                   20,000
       Issuance of shares in consideration for
       legal services                                                      -                        -                    20,000
       Issuance of common stock for services                          120,000                       -                        -
       Issuance of common stock for private
       placement fees                                                  72,727                       -                        -
          Issuance of common stock against
          Investors' deposit                                          300,000                       -                        -
      Gain on cancellation of shares issued to FEL and EA              18,900                       -                        -

</TABLE>


See accompanying notes to consolidated financial statements.


                                      F-9

<PAGE>


            LOTTERY & WAGERING SOLUTIONS, INC. AND SUBSIDIARIES

                        F/K/A CCA COMPANIES INCORPORATED

                  Notes to Consolidated Financial Statements

                   Years Ended June 30 2002, 2001 and 2000





NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         Lottery & Wagering Solutions, Inc., ("LWSI") was incorporated under
         the laws of the State of Delaware on March 6, 1996 as Conserver
         Corporation of America and changed its name on December 2, 1997 to CCA
         Companies Incorporated. Subsequently, on October 1, 2001, the Company
         changed its name from "CCA Companies Incorporated" to "Lottery &
         Wagering Solutions Inc.". The Company believes that the new name will
         result in a more distinct and recognizable corporate identity that
         better reflects the Company's current and future plans.

         Subsidiaries - The consolidated financial statements include the
         accounts of LWSI and its subsidiaries (collectively, the "Company").
         The active subsidiaries are Suriname Leisure Company A.V.V. ("SLC")
         based and operating in Suriname and Dorsett Hotel & Resorts Inc.
         ("Dorsett") based and operating in the United States. Sakhalin General
         Trading and Investments Ltd. ("SGTI"), based in Cyprus, and Sakhalin
         City Center Ltd. ("SCC"), based in the Russian Federation, are
         relatively dormant and will only commence significant activities upon
         attaining adequate financing.

         Nature of Operations - The Company's principal line of operation is to
         provide gaming services through the ownership and management of a
         Casino in Suriname. The Company presently relies entirely (except for
         occasional debt and equity offerings) on the working capital generated
         in Suriname to finance its activities.

         In addition, the Company is in the planning and design stage relating
         to a Casino and mountain resort project on Sakhalin Island (see Note 2)
         and has entered into various agreements for equity participation in an
         on-line lottery and sports betting operation in Vietnam (see Note 12).

         Principles of Consolidation - The accompanying consolidated financial
         statements include the accounts of LWSI and its subsidiaries.
         Inter-company transactions and balances have been eliminated in
         consolidation.

         SCC is currently generating losses and the minority shareholders are
         not obligated to fund these losses. Accordingly, the minority interest
         held in SCC is not reflected in the consolidated financial statements.

         Casino Revenue - Casino revenue is the net win from gaming activities,
         which is the difference between gaming wins and losses.

                                      F-10

<PAGE>

             LOTTERY & WAGERING SOLUTIONS, INC. AND SUBSIDIARIES

                        F/K/A CCA COMPANIES INCORPORATED

              Notes to Consolidated Financial Statement (Continued)



NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         Cash and Cash Equivalents - The Company considers investments with
         original maturities of three months or less at the time of purchase to
         be cash equivalents. At times, cash balances in the Company's bank
         accounts in the United States may exceed federally insured limits. The
         Company is required contractually to set aside 2% of the annual
         revenues of SLC in a segregated bank account to fund the cost of future
         tangible property replacements. At June 30, 2002, cash set aside for
         replacements net of expenditures amounted to approximately $206,000.

         Use of Estimates in the Preparation of Financial Statements - The
         preparation of financial statements in conformity with generally
         accepted accounting principles requires management to make estimates
         and assumptions that affect the reported amounts of assets and
         liabilities and disclosure of contingent assets and liabilities at the
         date of the financial statements and the reported amounts of revenues
         and expenses during the reporting period. Actual results could differ
         from those estimates.

         Financial Instruments - The carrying amounts of financial instruments
         including notes receivable, accounts payable and notes payable
         approximate fair value.

         Property, Equipment and Leasehold Improvements - Property and equipment
         are recorded at cost. Depreciation and amortization is computed by the
         straight-line method based on the estimated useful lives (2 - 5 years)
         of the related assets. Leasehold improvements are amortized over the
         shorter of the life of the asset or the lease term.

         Advertising Costs - Costs incurred to produce marketing material or
         advertise are generally expensed when incurred.

         Income Taxes - For the purpose of these consolidated financial
         statements, the Company has adopted the provisions of SFAS No. 109,
         "Accounting for Income Taxes" for all periods presented. Under the
         asset and liability method of SFAS 109, deferred taxes are recognized
         for differences between financial statement and income tax bases of
         assets and liabilities.

         Reverse Split - In an attempt to meet certain listing requirements on
         recognized securities markets, on September 26, 2001, the Company
         approved a resolution in a special meeting of stockholders of a
         twenty-into-one reverse split of all the Company's outstanding shares
         of common stock ("Share Consolidation"). The Company effectuated the
         reverse split in order to help increase the Company's per share market
         price of its common stock and to comply with certain other listing
         requirements. The Share Consolidation was also a condition precedent of
         the contract to purchase EMSI (see Notes 4 and 12).



                                      F-11
<PAGE>
              LOTTERY & WAGERING SOLUTIONS, INC. AND SUBSIDIARIES

                        F/K/A CCA COMPANIES INCORPORATED

              Notes to Consolidated Financial Statement (Continued)




NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         Stockholders' Equity - The stockholders' equity consists of accumulated
         deficit, additional paid-in capital, preferred stock and common stock.
         In 2002 and 2001, the Company was authorized to issue 5,000,000 shares
         of preferred stock with a par value of $.01. Specific powers,
         preferences, rights, qualifications, limitations and restrictions are
         to be designated by the Company's Board of Directors at the time of
         issuance. At 2002 and 2001, there were no shares of preferred stock
         issued. In 2002 and 2001, the Company was authorized to issue
         50,000,000 shares of common stock with a par value of $.001. As of June
         30, 2002, after giving effect to the Share Consolidation, there were
         1,273,109 common shares issued and as of June 30, 2001, there were
         907,002 common shares issued.

         The number of common shares, warrants and options for all periods are
         presented retroactively and reflects stock splits and reverse splits
         effected by the Company.

         Stock Based Compensation - SFAS No. 123, "Accounting for Stock Based
         Compensation" establishes a fair value method for accounting for
         stock-based compensation plans either through recognition or
         disclosure. The Company did not adopt the fair value based method for
         employees but instead discloses the pro forma effects of the
         calculation required by the statement (see Note 10).

         On September 26, 2001, the Company approved a resolution, in a special
         meeting of stockholders, to increase the number of shares of common
         stock available for grant under the 1996 Stock Option Plan of the
         Company. After giving effect to the Share Consolidation pursuant to the
         reverse split, the number of shares available was increased from
         250,000 shares to 3,000,000 shares.

         Impairment of Long-Lived Assets - The Company reviews the
         recoverability of the excess cost over the fair value of assets
         acquired on an on going basis. Accordingly, the Company determined in
         the fiscal year 2000 that recoverability of goodwill associated with
         the SGTI assets acquired was doubtful and accordingly, the unamortized
         balance was written off (see Note 2).

         The Company utilizes SFAS No. 144, "Accounting for the Impairment or
         Disposal of Long-Lived Assets". Under the provisions of this statement,
         the Company has evaluated its long-lived assets for financial
         impairment and will continue to evaluate them as events or changes in
         circumstances indicate that the carrying amount of such assets may not
         be fully recoverable.



                                      F-12
<PAGE>
              LOTTERY & WAGERING SOLUTIONS, INC. AND SUBSIDIARIES

                        F/K/A CCA COMPANIES INCORPORATED

              Notes to Consolidated Financial Statement (Continued)




NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         The Company evaluates the recoverability of long-lived assets by
         measuring the carrying amount of the assets against the estimated
         undiscounted future cash flows associated with them. At the time such
         evaluations indicate that the future undiscounted cash flows of the
         long-lived assets are not sufficient to recover the carrying value of
         such assets, the assets are adjusted to their fair values.

         For the year ended June 30, 2000, the Company recorded charges of
         $305,000 for costs of a management contract for the Ramallah Project
         (See Note 2) and approximately $13,552,000 relating to SGTI and SCC
         (See Note 2) as a result of a financial impairment of several of its
         long-lived assets. For the year ended June 30, 2002, the Company
         recorded charges for approximately $840,000 representing impairment of
         certain development costs incurred with respect to the advances made
         to EMSI and as a result of the limited market that AGS securities
         currently trades within (see Note 2). The Company expenses costs as
         incurred on the Sakhalin project for routine operational expenses. The
         total expenditure recorded for the year ended June 30, 2002 was
         $208,500.

         Earnings Per Share - Basic net loss per share of common stock is based
         on the weighted average number of common shares outstanding during each
         period. Diluted loss per share of common stock is computed on the basis
         of the weighted average number of common shares and common shares
         equivalent securities outstanding. All warrants and options have
         exercise prices greater than the existing market value of the Company's
         stock and, therefore, are deemed anti-dilutive and are not components
         of earnings per share.

         The weighted average number of common shares outstanding for all
         periods presented retroactively reflects stock splits and reverse stock
         splits effected by the Company.

         Options amounting to 192,125 for the year ended June 30, 2002, 192,625
         for the year ended June 30, 2001, and 246,731 for the year ended June
         30, 2000 and warrants amounting to 185,416 for the year ended June 30,
         2002, 231,201 for the year ended June 30, 2001, and 268,451 for the
         year ended June 30, 2000 have not been included in the computation of
         net loss per common stock-diluted because of their anti-dilutive
         effect.

         Foreign Currency Translation - The statutory currencies in the
         countries in which the Company's subsidiaries are based are the Cyprus
         Pound, the Russian Rouble, the United States Dollar and the Suriname
         Guilder. The reporting currency is the United States Dollar.



                                      F-13
<PAGE>
              LOTTERY & WAGERING SOLUTIONS, INC. AND SUBSIDIARIES

                        F/K/A CCA COMPANIES INCORPORATED

              Notes to Consolidated Financial Statement (Continued)



NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         The functional currency for the Company's subsidiaries, SGTI and SLC,
         is the United States Dollar. All assets and liabilities, materially all
         contracts, transactions and normal business activities have been
         transacted, conducted, negotiated and recorded in United States
         Dollars. It is the Company's position that the operations of the
         Company are not integrally connected to the currencies of Cyprus and
         Suriname. Pursuant to Financial Accounting Standards Board Statement
         No. 52, "Foreign Currency Translation", the Company's Russian
         subsidiary, SCC, is situated in a highly inflationary economy.
         Accordingly, SCC's functional currency will be the United States
         Dollar.

         RECENT PRONOUNCEMENTS

         In June 2001,  the FASB issued  SFAS No.  141,  SFAS No. 142 and SFAS
         No. 143. SFAS No. 141,  "Business  Combinations" is effective for all
         business  combinations  initiated  after June 30,  2001 and addresses
         the financial  accounting  and  reporting for business  combinations.
         SFAS 141 supersedes APB Opinion No. 16,  Business  Combinations,  and
         FASB Statement No. 38 Accounting for Preacquisition  Contingencies of
         Purchased   Enterprises.   The  Company's   financial   reporting  or
         presentation is not materially affected by the adoption of SFAS 141.

         SFAS No 142, "Goodwill and Other Intangible Assets" addresses the
         financial accounting and reporting for acquired goodwill and other
         intangible assets and supersedes APB Opinion No. 17, Intangible Assets.
         SFAS No. 142 was required to be applied for fiscal years beginning
         after December 15, 2001.

         SFAS No. 143, "Accounting for Asset Retirement Obligations" addresses
         the financial accounting and reporting for obligations associated with
         the retirement of tangible long-lived assets and the associated asset
         retirement costs. SFAS No. 143 was effective for financial statements
         issued for fiscal years beginning after June 15, 2002.

         In August 2001, the FASB issued SFAS No. 144, "Accounting for the
         Impairment or Disposal of Long-Lived Assets." This statement supersedes
         SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and
         for Long-Lived Assets to Be Disposed of." The statement retains the
         previously existing accounting requirements related to the recognition
         and measurement of the impairment of long-lived assets to be held and
         used while expanding the measurement requirements of long-lived assets
         to be disposed of by sale to include discontinued operations. It also
         expands the previously existing reporting requirements for discontinued
         operations to include a component of an entity that either has been
         disposed of or is classified as held for sale. The Company implemented
         SFAS No. 144 on January 1, 2002.

         The Company's  financial  reporting and  presentation is not expected
         to be materially affected by the adoption of SFAS No. 142, 143 and 144.


                                      F-14
<PAGE>
              LOTTERY & WAGERING SOLUTIONS, INC. AND SUBSIDIARIES

                        F/K/A CCA COMPANIES INCORPORATED

              Notes to Consolidated Financial Statement (Continued)


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         Reclassifications - Certain prior year balances have been reclassified
         to conform to the 2002 presentation.

NOTE 2 - LINES OF BUSINESS

         THE SURINAME CASINO AND THE CASINO LEASE

         The Company is a party to an agreement (the "Suriname Casino
         Agreement") with Parbhoe Handelmij NV (Parbhoe), a Suriname limited
         liability company. Under the agreement, the parties formed and each
         acquired a 50% interest in SLC, an Aruban limited liability company,
         to develop a casino project (the "Suriname Casino") in Paramaribo, the
         capital city of Suriname.

         Pursuant to the Suriname Casino Agreement, the Company's wholly owned
         subsidiary Dorsett, entered into the "Suriname Casino Management
         Agreement" with SLC to manage the Suriname Casino. As of June 30, 1999,
         the Company had advanced approximately 4.6 million dollars to SLC for
         this project, of which approximately 4.0 million dollars was spent for
         property, equipment and leasehold improvements. The Company retains a
         lien and security interest in the property and equipment until the
         advance is paid back by SLC. Repayment is subject to certain
         restrictions based upon an obligation to repay a loan received from
         Parbhoe (see Note 7). As of June 30, 2002, the amount due from SLC
         towards the loan balance and interest costs approximated $1,063,000 all
         of which is eliminated in consolidation.

         The Suriname Casino Management Agreement provides for fifteen years
         exclusive operating rights of the Suriname Casino for a base fee equal
         to three percent of revenues, as defined, plus an incentive fee of ten
         percent of gross profits, as defined.

         The Suriname Casino currently occupies two leased floors, totaling
         approximately 20,000 square feet, in the Plaza Hotel, which is in
         downtown Paramaribo. The casino has approximately 20 gaming tables, 151
         slot machines and a 50-seat restaurant. The Company leases the Casino
         premises from Parbhoe (see Note 9).

         SAKHALIN ISLAND (RUSSIAN FEDERATION) CASINO AND RESORT

         The Company currently owns rights and has secured property under a
         101-year lease, at no annual cost, on a ten acre site to build and
         operate a hotel/casino resort. The site is located in the center of the
         City of Yuzhno-Sakhalinsk ("City") on Sakhalin Island (the "Sakhalin
         Project"). Sakhalin Island is a Russian territory located just north of
         Japan. This proposed hotel/casino, if built, would be easily accessible
         for gaming activities from Japan, China, Korea, and the Russian
         mainland. If built, the Company would manage both the hotel resort and
         the casino for a management fee equal to three percent of revenues, as
         defined, as well as an incentive fee of ten percent of gross profits,
         as defined.



                                      F-15
<PAGE>
               LOTTERY & WAGERING SOLUTIONS, INC. AND SUBSIDIARIES

                        F/K/A CCA COMPANIES INCORPORATED

              Notes to Consolidated Financial Statement (Continued)



NOTE 2 - LINES OF BUSINESS (CONTINUED)

         The Company has entered into numerous discussions and several
         agreements in attempts to raise capital to finance the Sakhalin Project
         without success. In 2000, due to the Company's failure to proceed and
         based on its evaluation of assets for financial impairment as required
         by SFAS No. 121, certain capitalized expenditures and goodwill (the
         excess of the aggregate purchase price over the fair market value of
         net assets acquired), net of amortization, totaling approximately
         $13,552,000 were charged to operations (see Note 1).

         The Company has made numerous efforts to sub-lease a portion of the
         property for the Sakhalin Project, without success. The Company, based
         on an independent appraisal dated July 1, 2002, believes that the costs
         capitalized to secure the lease with the City for the land and an
         existing ski resort, the money expended principally for demolition and
         the relocation of the residents living on the site, has not been
         financially impaired. Accordingly, approximately $2,100,000 expended in
         connection with obtaining the lease agreement and demolition costs
         remains on the Company's consolidated balance sheet (see Note 1).

         In addition to granting the lease, the City has committed contractually
         that it will not permit the several small existing casinos to increase
         their floor areas or extend the range of their operations without the
         written approval of SCC. The Company will also have certain rights to
         participate in the development and management of any future casinos
         within the jurisdiction of the City.

         The Company, in October 1997, entered into a stock purchase agreement
         (the "Sakhalin Agreement") with SGTI and in December 1997 executed an
         assignment agreement with Sovereign Gaming and Leisure Limited
         ("Sovereign").

         The Sakhalin Agreement provides that, upon request of the Company,
         Sovereign may agree to become project manager during the construction
         phase of the Sakhalin project, subject to reasonable compensation for
         such services, which shall not exceed the lesser of 5% of the
         construction cost of the Sakhalin Project or $5,000,000. Subsequent to
         the Sakhalin agreement, Mr. Dallas Dempster ("Dempster"), a paid
         consultant to Sovereign, was recruited to be the President and Chief
         Executive Officer ("CEO") of LWSI. Accordingly, it is the Company's
         current intent not to employ Sovereign and to manage the construction
         phase of the Sakhalin project directly.

         In June 1999, the Company entered into an agreement ("Financing
         Agreement") with the Arter Group Limited ("Arter") and Valmet S.A.
         ("Valmet"). According to the agreement, Arter and Valmet was to
         negotiate on the Company's behalf to acquire financing of 70% of the
         Sakhalin Project's total estimated cost. In March 2001, as permitted by
         agreement, the Company notified Arter and Valmet that, effective May
         2001, it was electing to cancel the Financing Agreement.



                                      F-16
<PAGE>
              LOTTERY & WAGERING SOLUTIONS, INC. AND SUBSIDIARIES

                        F/K/A CCA COMPANIES INCORPORATED

              Notes to Consolidated Financial Statement (Continued)




NOTE 2 - LINES OF BUSINESS (CONTINUED)

         The Sakhalin Project requires substantial financing to progress
         further. If financing is not obtained, the Company may be forced to
         abandon the project. If the Company is forced to abandon the project,
         the Company will attempt to market the plans, licenses and rights in
         order to recover the historic expenditures. The Company is unable at
         this time to quantify what recoveries it will eventually attain.
         However, based upon the above mentioned independent appraisal, the
         Company believes it can recover the current capitalized costs. The
         Company continues to explore additional possibilities to protect its
         investment but has, to date, found no viable answer.

         If the Company is successful in financing the Sakhalin Project, the
         Company will have to design and set up infrastructure that is not
         currently in place. In addition, the Company will have to employ a
         significant number of people and retain consultants and contractors to
         manage, design and construct the property, which will require
         significant financial resources.

         HOTEL MANAGEMENT AGREEMENTS

         Under certain agreements with Dorsett Hotels and Resorts International
         Ltd. ("DHR") and Far East Consortium International Ltd. ("FEC"), the
         Company acquired the right to manage and operate three hotels that were
         in service and the right to manage and operate five other hotels that
         were scheduled to open in the future.

         There was a breach of contract and as a result of the failure to comply
         with the terms of the agreements, the parties reached a settlement in
         November 1998 to terminate the agreements and exchange mutual releases.
         According to the terms of the settlement, LWSI received $450,000 in
         cash, the return of 47,500 shares of previously issued stock (with the
         obligation to reissue 12,500 shares to FEC) and retained management
         fees earned. In addition, the Company's indebtedness of one million
         dollars borrowed from FEC in July 1998 was canceled. In 2002, the
         12,500 shares were cancelled due to non-performance of FEC's
         obligations under the contract (see Notes 3, 4 and 9).

         RAMALLAH CASINO

         On March 24, 2000, Dorsett entered into a Casino Management Agreement
         (the "Ramallah Casino Agreement") with the Ramallah Hotel and Casino
         Company Ltd. to provide technical advice, developmental services and to
         manage a Casino in Ramallah on the West Bank. Subsequently, acts of
         war, insurrection and riots have occurred on the West Bank and in
         Israel. As provided by the contracts, all obligations to proceed under
         the contract have been suspended while the disturbances exist. The
         Company incurred approximately $305,000 in costs associated with
         entering the Ramallah Casino Agreement that, based upon the
         circumstances, have been written-off during the year ended June 30,
         2000 (see Note 1).



                                      F-17
<PAGE>
              LOTTERY & WAGERING SOLUTIONS, INC. AND SUBSIDIARIES

                        F/K/A CCA COMPANIES INCORPORATED

              Notes to Consolidated Financial Statement (Continued)



NOTE 2 - LINES OF BUSINESS (CONTINUED)

         LOTTERY AND GAMING

         In May 2001, the Company entered into a formal, written contract (the
         "Purchase Contract"), to purchase all of the issued and outstanding
         common stock of Emerging Market Solutions International, Inc. ("EMSI").
         EMSI holds an exclusive contract (the "Lottery Gaming System Contract")
         to supply an on-line lottery and sports betting system in Ho Chi Minh
         City and the southern provinces of Vietnam (the "Territory"). The
         contract provided for a closing date on or before September 28, 2001;
         however, the contract was not consummated as various pre-conditions to
         a closing were not met.

         In 2002, the Company determined, based upon its evaluation of assets
         for financial impairment as required by SFAS No. 144, that the
         development costs capitalized with respect to the advances made to EMSI
         had been financially impaired. Accordingly, approximately
         $840,000 has been charged to operations as a reserve for the impairment
         of the advances made to EMSI (see Note 1).

         The Company believes that the costs of acquisition of the Lottery
         Gaming System Contract of approximately $250,000 has not been
         financially impaired based upon the estimated fair value of the
         contract and also that the cost capitalized in the balance sheet will
         be adequate to represent the fair value of equity in AGS upon
         consummation of the Exchange Agreement (see Note 12).

         Presently, LWSI has entered into various agreements to restructure its
         investment in the Vietnam project (see Note 12).

         BUSINESS, POLITICAL AND ECONOMIC CONDITIONS

         The Company's operating activities are taking place principally in
         Suriname. Suriname experienced within the last three years significant
         devaluation of its currency. The volatility in both the economic and
         political environment is different than that of the United States.
         Therefore, the Company's results of operations and financial position
         could be materially affected by sudden changes in Suriname's business
         and political environment.

         CURRENCY EXCHANGE CONTROLS

         With regard to the activities taking place in Suriname, it is
         management's belief that it will be able to repatriate earnings without
         official impediments.



                                      F-18
<PAGE>
             LOTTERY & WAGERING SOLUTIONS, INC. AND SUBSIDIARIES

                        F/K/A CCA COMPANIES INCORPORATED

              Notes to Consolidated Financial Statement (Continued)




NOTE 3 - DISCONTINUED OPERATIONS

         FOOD PRESERVATION TECHNOLOGY

         In November 1999, the Company officially abandoned its food
         preservation business and, accordingly, has reflected all losses
         attributable to such business as discontinued operations. The assets of
         the food preservation business consisted principally of fully reserved
         loans to two companies, Agrotech, SA and Conserver Purchasing
         Corporation. In addition, the Company does not plan to exercise its
         option to acquire a controlling equity interest in entities that
         possess other food preservation technologies.

         The results of operations of the food preservation business through
         June 30, 2000 that have been classified as a loss from discontinued
         operations are as follows:
                                                 Year Ended
                                                June 30, 2000
                                                -------------
         Revenues                                $        -
         Costs and expenses                           64,500
                                                 -----------

         Loss from Discontinued Operations       $   (64,500)
                                                 ===========


         All activities connected to the food preservation business ceased in
         2000.

         HOTEL MANAGEMENT

         As a result of the termination of the Hotel Management Agreements in
         November 1998 and the subsequent dismissal of the hotel management
         employees in April 1999, the Company had no active hotel management
         operating business. The Company discontinued this line of business and
         reflected the related income, assets and liabilities as discontinued
         operations.

         The results of operations of the hotel management business through June
         30, 2000 that have been classified as a loss from discontinued
         operations are as follows:

                                                 Year Ended
                                                June 30, 2000
                                                -------------
         Revenues                                $        -
         Costs and expenses                           87,623
                                                 -----------

         Loss from Discontinued Operations       $   (87,623)
                                                 ===========





                                      F-19
<PAGE>
              LOTTERY & WAGERING SOLUTIONS, INC. AND SUBSIDIARIES

                        F/K/A CCA COMPANIES INCORPORATED

              Notes to Consolidated Financial Statement (Continued)



NOTE 3 - DISCONTINUED OPERATIONS (CONTINUED)

                  Unforeseen litigation relating to discontinued operations
                  occurred and required expenditures during the year ending June
                  30, 2000. The Company currently does not anticipate any
                  further activity connected with discontinued operations. No
                  tax benefit due to the loss from discontinued operations has
                  been recorded due to the Company's uncertainty regarding
                  future earnings to apply against these losses (see Notes 2, 4
                  and 9).



NOTE 4 - CAPITAL STRUCTURE, PUBLIC OFFERINGS AND PRIVATE PLACEMENTS

                  All of the following disclosures of issuances of the Company's
                  stock have been adjusted for the reverse stock split (see Note
                  1).

                  In September 1998, the Company issued 4,450 shares of common
                  stock to Maritime Services Corporation ("MSC"), the building
                  contractor for the Suriname casino. These shares were issued
                  at a price of $45.00 per share or $200,250, which MSC agreed
                  to accept as consideration and payment towards its
                  construction contract with SLC.

                  In March 2002, the Company agreed to pay MSC $30,000 in agreed
                  installments and to buy back 4,450 shares of the Company's
                  common stock held by MSC for an amount of $9,345 after the
                  last installment is paid. As of June 30, 2002, $5,000 was
                  payable to MSC, which has been paid subsequently. In September
                  2002, the shares that the Company bought back were cancelled
                  (see Note 9).

                  In July and August 1999, the Company received $125,000 from
                  two investors for the purchase of 8,333 shares of the
                  Company's common stock at market value ($15.00 per share). In
                  addition, the Company agreed to issue warrants to purchase
                  4,167 shares of the Company's common stock at $20.00 per share
                  to these investors. The warrants expired without being
                  exercised (see Note 10).

                  In October 1999, the Company obtained financing through a
                  convertible note of $350,000 from Danville Investments Pty.
                  Ltd., Australia ("Danville"). During the term of the note or
                  until the full amount of the loan had been repaid, Danville
                  had the option to convert the outstanding principal plus the
                  then accrued interest due on the loan into shares of common
                  stock of the Company. Such conversion would be at a price
                  equal to the five-day average market closing price ending on
                  the day prior to the day of conversion. Danville, in December
                  1999, exercised its option to convert $185,000 of the
                  principal of the loan plus accrued interest of $10,500 into
                  74,053 shares of the Company's stock based on the five-day
                  average stock price of $2.64 per share (see Notes 7 and 10).





                                      F-20
<PAGE>
            LOTTERY & WAGERING SOLUTIONS, INC. AND SUBSIDIARIES

                        F/K/A CCA COMPANIES INCORPORATED

              Notes to Consolidated Financial Statement (Continued)




NOTE 4 - CAPITAL STRUCTURE, PUBLIC OFFERINGS AND PRIVATE PLACEMENTS (CONTINUED)

                  In November 1999, the Company, at its annual meeting of the
                  stockholders, granted the Board of Directors the authority to
                  effect a 1 for 10 reverse split of its common stock on or
                  before March 28, 2000. The Board elected not to exercise its
                  authority to effect the reverse split and the expiration date
                  for the action passed.

                  The Casino Consulting Agreement provided that, at the end of
                  the term of the agreement, the Casino Consultant was entitled
                  to receive a $250,000 bonus. Prior to that time, the Casino
                  Consultant agreed to accept 12,500 shares of the Company's
                  common stock instead of the $250,000 bonus due him. In
                  December 1999, when the consulting contract expired, the stock
                  was delivered (market price per share - $2.60) (see Note 8).

                  In January 2000, the Company's board of directors agreed to
                  issue 7,500 shares of the Company's common stock at $2.60 per
                  share to one of its legal counsel for services rendered to the
                  Company.

                  In March 2000, the Company issued 13,200 shares of its common
                  stock at $5.00 per share to a consultant, Michael Davis, in
                  settlement for consulting fees and reimbursable business
                  expenses.

                  In October 2000, the board of directors issued 24,000 shares
                  to a consultant at a market price of $3.00 as a final
                  settlement of consulting fees of $120,000 accrued but not
                  paid. The difference was credited to consulting fees during
                  the year June 30, 2000 (see Note 8).

                  In January 2001, the Company issued 66,667 shares of common
                  stock to Richard W. Devries, Professional Corporation, the
                  attorney for EMSI, at a purchase price of $1.50 per share.

                  In July 2001, the Company cancelled all 12,500 shares
                  previously issued but not delivered to FEC due to the
                  non-performance of its obligations under its agreement with
                  the Company (see Notes 2, 3 and 9).

                  In July 2001, the Company cancelled 6,394 shares previously
                  issued but not delivered to Etablissement Asteiss ("EA") due
                  to the non-performance of its obligations under a contract to
                  perform services.

                  As a result of the aforementioned cancelled shares previously
                  issued to FEC and EA, a gain of $18,900 has been included in
                  the consolidated statement of operations for the year ended
                  June 30, 2002 (fair value - $1.00 per share) and additional
                  paid-in capital and common stock have been reduced by $18,881
                  and $19, respectively, during the year ended June 30, 2002.



                                      F-21
<PAGE>
            LOTTERY & WAGERING SOLUTIONS, INC. AND SUBSIDIARIES

                        F/K/A CCA COMPANIES INCORPORATED

              Notes to Consolidated Financial Statement (Continued)


NOTE 4 - CAPITAL STRUCTURE, PUBLIC OFFERINGS AND PRIVATE PLACEMENTS (CONTINUED)

                  In September 2001, the Company, at a special meeting of the
                  stockholders, authorized the board of directors to affect a 1
                  for 20 reverse split of its common stock. The Company affected
                  the transaction on October 1, 2001. On the date of affecting
                  the reverse split, the common shares outstanding were
                  consolidated from 17,762,130 shares to 888,107 and the paid-in
                  capital was increased by $16,875 with a corresponding
                  reduction in the common stock value (see Notes 2 and 12).

                  During the year ended June 30, 2002, the Company sold 225,000
                  shares of its common stock to five private investors at $2.00
                  per share. In consideration for acting as a placement agent
                  for the aforementioned sale of 225,000 shares, the Company
                  paid $50,000 and issued 50,000 shares of its common stock in
                  March 2002, to Australasian Capital Holdings Pty Limited
                  ("ACH") and its nominees as private placement fees.

                  In March 2002, the Company issued 100,000 shares of its common
                  stock valued at $1.20 per share to ACH as compensation for
                  consulting services provided by it to the Company relating to
                  the EMSI and the Vietnam lottery project. The related $120,000
                  was capitalized as EMSI development costs, which was
                  subsequently charged to operations during the year ended June
                  30, 2002 (see Note 1).

                  In April 2002, the Company issued 10,000 shares of its common
                  stock valued at $1.20 per share to a consultant, Michael
                  Davis, for consulting services provided during the year.

                  THE NASDAQ SMALL CAP MARKET DELISTING

                  In November 1999, the securities of the Company were delisted
                  from The NASDAQ Small Cap Market. The delisting occurred due
                  to the Company's failure to comply with certain NASDAQ
                  Marketplace Rules relating to the bid price and filing
                  requirements. NASDAQ was of the opinion that the Company
                  failed to present a definitive plan that would enable it to
                  attain compliance within a reasonable period of time and then
                  to sustain the compliance. The panel also determined that it
                  was unable to evaluate the true extent of the Company's
                  compliance with NASDAQ's continued listing standards in the
                  absence of accurate, complete and publicly filed audited
                  financial statements. The Company's common stock is now traded
                  on the OTC Bulletin Board.


NOTE 5  - PROPERTY, EQUIPMENT  AND LEASEHOLD IMPROVEMENTS

                  At June 30, property, equipment and leasehold improvements
                  consist of the following:

                                                 2002           2001
                                            -----------     -----------
         Office equipment and other assets  $   322,474     $   369,136
         Casino and restaurant equipment      1,844,565       1,941,754
         Leasehold improvements               4,458,152       4,458,152
         Sakhalin project site costs          2,100,000       2,100,000
                                            -----------     -----------

                                              8,725,191       8,869,042
         Less:  Accumulated depreciation     (2,631,970)     (2,023,845)
                                            -----------     -----------

                                            $ 6,093,221     $ 6,845,197
                                            ===========     ===========



                                      F-22
<PAGE>
              LOTTERY & WAGERING SOLUTIONS, INC. AND SUBSIDIARIES

                        F/K/A CCA COMPANIES INCORPORATED

              Notes to Consolidated Financial Statement (Continued)


NOTE 5 - PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS (CONTINUED)

         Depreciation expense was $755,562 for the year ended June 30, 2002,
         $770,478 for the year ended June 30, 2001, and $784,462 for the year
         ended June 30, 2000.

NOTE 6 - INCOME TAXES

         LWSI AND DORSETT

         At June 30, 2002, LWSI and Dorsett had United States net operating loss
         carryforwards ("NOL") of approximately $8,296,000 that expire at
         various dates through 2022. In the event of a change in ownership of
         the Company, the utilization of the NOL will be subject to limitation
         under certain provisions of the United States Internal Revenue Code. In
         addition, at June 30, 2002, LWSI and Dorsett had capital loss
         carryovers of approximately $5,595,000 which generally can only be used
         to offset capital gains. Unused capital losses are carried forward
         indefinitely until they can be used against future capital gains.

         LWSI and Dorsett will be subject to corporate income tax rates as high
         as 39% if they produce a profit in the United States.

         SCC

         At June 30, 2002, the SCC had net operating loss carryforwards ("NOL")
         of approximately $4,159,000 that expire through 2008. NOLS are limited
         to 20% of the loss per year for five consecutive years after they are
         incurred.

         SCC will be subject to Russian Corporate tax on taxable profits and
         gambling tax once the Sakhalin Project commences operations. Currently,
         the Federal profit tax is 11% and the regional tax can be as high as
         19%. In addition, gambling tax is levied based on fixed rates per
         gambling table, betting booking office and slot machines.

         Repatriation of profits generated by SCC in the Russian Federation by
         LWSI may be highly regulated by the Russian Central Bank and the Taxing
         Authority. Any transfers of funds to entities outside the Russian
         Federation require special authorization from the Central Bank and the
         payment of dividends are subject to heavy double taxation laws. The
         Company believes that once the Sakhalin Project commences operations,
         the Russian Central Bank and the Taxing Authority will make profit
         repatriation concessions available.

         SGTI

         SGTI, which holds the Company's investment in SCC, is incorporated in
         Cyprus. Companies that are registered in Cyprus but are managed and
         controlled outside of Cyprus are not liable for tax on income
         occurring, derived and received outside of the country.



                                      F-23
<PAGE>
              LOTTERY & WAGERING SOLUTIONS, INC. AND SUBSIDIARIES

                        F/K/A CCA COMPANIES INCORPORATED

              Notes to Consolidated Financial Statement (Continued)




NOTE 6 - INCOME TAXES (CONTINUED)

         SURINAME CASINO

         In June 2000, the Suriname Government (the "Government") arbitrarily
         assessed and demanded that SLC pay $161,765 for the calendar year 1998
         and $42,600 for the calendar year 1999 against tax and penalties that
         may be owed. Subsequently, the Government arbitrarily assessed an
         additional tax of $110,000 for the calendar year 2000.

         In 2002, SLC, based upon an agreement with the Government, settled and
         paid an additional amount of approximately $363,000 as full and final
         payment towards the income tax for calendar years 1998 to 2000.

         For calendar year 2001, SLC, based on an agreement with the Government,
         settled and paid tax of approximately $450,000. Of this amount,
         $250,000 was paid prior to June 30, 2002 and the balance of
         approximately $200,000 was paid in August 2002.

         Though the Suriname Hazard Games Act of 1962 stipulates that income
         taxes are payable at a rate of 50% of the net taxable income, for the
         period January 1, 2002 to June 2002, SLC has provided income tax at a
         rate of 33% of the proceeds based upon past experience when settling
         its tax obligations with the Government. SLC pays taxes, on an
         estimated basis, in quarterly installments. As at June 30, 2002, SLC
         has paid approximately $57,500 toward estimated tax for the first
         quarter of 2002.

         Further, in order to augment the tax revenues from the gaming sector,
         the Government for some time has considered applying value added tax
         ("VAT") on slot machines. This received much attention and reviews, but
         was never instituted. This initiative was replaced by the new efforts
         to initiate a fixed monthly fee on cash slot machines and gaming
         tables and the reduction of the 50% corporate tax on casino operations.
         This is in the discussion process and, as yet, no formal proposal
         has been sent into the legislative system. At this time, the Company
         cannot quantify the amount payable, if any, for VAT on slot machines
         and gaming tables.

         Subsequent to June 2000, the Government of Suriname imposed import
         duties on the SLC's operating assets. SLC accrued and capitalized the
         amount assessed as of June 30, 2000 and is amortizing the balance over
         five years commencing retroactively as of April 1, 1999.



                                      F-24
<PAGE>
               LOTTERY & WAGERING SOLUTIONS, INC. AND SUBSIDIARIES

                        F/K/A CCA COMPANIES INCORPORATED

              Notes to Consolidated Financial Statement (Continued)



NOTE 6 - INCOME TAXES (CONTINUED)

         INCOME TAX PROVISION

         The income tax provision as of June 30, 2002 consists of the following:

                                                  Year Ended
                                                 June 30, 2002
                                                 -------------
          Current:
             U.S. Federal                         $        -
             State and local                               -
             International                            756,306
                                                  -----------

          Total current tax provision                 756,306
                                                  -----------

          Deferred:
             U.S. Federal                                  -
             State and local                               -
             International                                 -
                                                  -----------

          Total provision for income taxes        $   756,306
                                                  ===========



         Items that give rise to deferred tax accounts as of June 30, 2002 are
         as follows:

                                                  Year Ended
                                                 June 30, 2002
                                                 -------------
          Deferred tax assets:
             U.S. loss carryforwards              $ 4,024,000
             International (Russian)
                loss carryforwards                  1,247,700
                                                  -----------


          Net deferred tax asset before
            valuation allowances                    5,271,700
          Deferred tax asset
             valuation allowance                    5,271,700
                                                  -----------

          Net deferred tax                        $        -
                                                  ===========


         Realization of any portion of the Company's deferred tax asset at June
         30, 2002 is dependent upon future earnings and capital gains. Due to
         the uncertainty of future earnings and capital gains, a full valuation
         allowance has been provided.



                                      F-25
<PAGE>
               LOTTERY & WAGERING SOLUTIONS, INC. AND SUBSIDIARIES

                        F/K/A CCA COMPANIES INCORPORATED

              Notes to Consolidated Financial Statement (Continued)



NOTE 6 - INCOME TAXES (CONTINUED)

         Cumulative undistributed earnings of foreign subsidiaries at June 30,
         2002 and 2001 of $1,844,000 and 964,000, respectively, are considered
         to be permanently reinvested and are not expected to be remitted to the
         Company. Accordingly, no United States Federal income or deferred taxes
         have been provided on such earnings.

NOTE 7 - NOTES PAYABLE

         In December 1998, the Company arranged to borrow 1.0 million dollars
         from Parbhoe. Ultimately, only $750,000 was advanced, which SLC used to
         complete the construction of the casino. The loan was subject to a 4%
         monthly interest rate and was payable within six months of the
         disbursement. The loan was paid off in full in August of 1999.

         In October 1999, the Company obtained financing through a convertible
         note of $350,000 from Danville Investments Pty. Ltd., Australia
         ("Danville"). The Company recorded the loan for $215,000 that was net
         of a $135,000 discount, which was recorded as deferred interest
         expense. The deferred interest expense was amortized and expensed over
         the life of the loan. The loan was subject to interest at the rate of
         15% per annum, payable in full at the maturity of the loan in April
         2000. The Company was obligated to deposit, on a monthly basis, no less
         than $30,000 in a separate bank account towards payment of the loan. In
         addition, Danville was issued warrants to purchase the Company's common
         stock. The Company pledged all principal payments, interest and
         management fees due to the Company from Suriname Leisure Company as
         security against the loan. Danville, in December 1999, exercised its
         option to convert $185,000 of the principal of the loan plus accrued
         interest of $10,500 into shares of the Company's stock. The Company
         paid off the remaining balance of $165,000 plus interest in April 2000
         (see Notes 4 and 10).

         In January 2000, the Company borrowed $300,000 from Stanton. The
         Company recorded the loan for $283,000 that was net of a $17,000
         discount, which was recorded as deferred interest expense. The deferred
         interest expense was amortized and expensed over the life of the loan.
         Interest on the loan was calculated at the Wall Street Journal prime
         rate, payable on a monthly basis. The terms of the promissory note
         required that the Company repay the loan in four monthly installments
         of $15,000 commencing February 2000, seven monthly installments of
         $30,000 commencing June 2000, and a final payment of $30,000 on or
         before December 31, 2000. The Company granted Stanton a security
         interest, subordinated to Danville's interest, in all principal
         payments, interest and management fees due to the Company from Suriname
         Leisure Company and issued Stanton warrants to purchase shares of the
         Company's common stock. The Company was unable to meet the original
         repayment schedule on the Stanton debt and had made payments based on
         the availability of funds. The Company paid off the remaining balance
         of $75,000 plus interest in January 2002 (see Notes 8 and 10).



                                      F-26
<PAGE>
               LOTTERY & WAGERING SOLUTIONS, INC. AND SUBSIDIARIES

                        F/K/A CCA COMPANIES INCORPORATED

              Notes to Consolidated Financial Statement (Continued)



NOTE 7 - NOTES PAYABLE  (CONTINUED)

         In March 2000, the Company borrowed $150,000 from Galileo Capital LLC
         ("Galileo") utilizing convertible debt. The Company recorded the loan
         for $146,600 that was net of a $3,400 discount, which was recorded as
         deferred interest expense. The deferred interest expense was amortized
         and expensed over the life of the loan. The loan was subject to
         interest at the rate of 10% per annum, payable in full at the maturity
         of the loan in October 2000. The Company was required to pay six equal
         monthly installments of $25,000 commencing May 2000. As additional
         consideration for the loan, the Company issued 7,500 warrants to
         Galileo to purchase shares of the Company's common stock. The warrants
         are exercisable at $5.00 per share and expire in two years from the
         date that underlying shares are registered. The Company was unable to
         meet the original repayment schedule and repaid the loan in full in
         February 2001 (see Note 10).

         In September 1998, LWSI borrowed $600,000 from its 50% co-owner in SLC,
         Parbhoe, for the construction of its permanent casino facilities.
         Interest on the loan is calculated using an interest rate of 3% per
         month (see Note 9).

         The outstanding balance of loans owing to Parbhoe by LWSI is to be paid
         out of the excess cash flow generated by the operations of SLC.
         Principal payments of approximately $0.15 of every $1.00 of the excess
         cash flow are being set aside to pay back the advances owed to Parbhoe
         (see Notes 2 and 9).

NOTE 8 - RELATED PARTY TRANSACTIONS

         LEGAL

         The Company incurred legal fees of approximately $10,000 for the year
         ended June 30, 2000 to legal counsel owning securities in the Company
         ("Related Counsel"). Related Counsel provided no legal services in 2001
         and 2002.

         The Company repriced the exercise price of options and warrants
         previously granted to Related Counsel during the year ending June 30,
         2000 and expensed approximately $2,000 (see Note 10).

         The Company also issued to Related Counsel additional warrants and
         expensed approximately $8,000 in June 30, 2000 (see Note 10).



                                      F-27
<PAGE>
               LOTTERY & WAGERING SOLUTIONS, INC. AND SUBSIDIARIES

                        F/K/A CCA COMPANIES INCORPORATED

              Notes to Consolidated Financial Statement (Continued)




NOTE 8 - RELATED PARTY TRANSACTIONS (CONTINUED)

         CONSULTANTS

         The Company was a party to an agreement (the "Casino Consulting
         Agreement") with Star Casinos Limited, (the "Casino Consultant") which
         expired in December 1999. Under the Casino Consulting Agreement, the
         Casino Consultant agreed to provide consulting and technical services
         to the Company and any affiliated entities for a period of two years.
         David Hartley, who subsequently became the president of the Casino
         Division of the Company, owned the Casino Consultant. Under the terms
         of the Casino Consulting Agreement, the Casino Consultant received
         $250,000 annually plus reimbursement of reasonable expenses. At the end
         of the term of the agreement, the Casino Consultant was also entitled
         to receive a $250,000 bonus. At that time, the Casino Consultant agreed
         to accept the Company's common stock in place of the $250,000 bonus due
         to him. The agreement also binds the Casino Consultant to a two-year
         non-compete, non-solicitation provision after termination of the
         agreement (see Note 4).

         After the Casino Consulting Agreement concluded, the Casino Consultant
         agreed to continue providing the consulting services on a
         month-to-month basis at an annualized rate of $250,000, until December
         2001. Commencing January 2002, David Hartley is no longer the president
         of the Casino Division of the Company, but remains as a consultant.
         Also commencing January 2002, the Casino Consultant agreed to provide
         consultant services on a month to month basis at a reduced annualized
         rate of $150,000.

         The Company paid the Casino Consultant $130,000 during the year ended
         June 30, 2000, $225,000 during the year ended June 30, 2001 and
         $200,000 for the year ended June 30, 2002. In addition, the Company
         accrued additional consulting fees of $72,000 for the year ended June
         30, 2000 (see Note 4) and $25,000 for the year ended June 30, 2001 plus
         the reimbursement of reasonable expenses. The Casino Consultant was
         paid in full during the year ended June 30, 2002.

         DIRECTORS

         The Company  borrowed  from Stanton & Associates  $300,000 in January
         2000.  Mr. James  Stanton,  the owner of Stanton &  Associates,  is a
         director of the Company (see Notes 7 and 10).

         PRESIDENT, CEO, DIRECTOR

         In December 1999, Dempster's nominees were granted plan options in
         consideration for services performed (see Note 10).



                                      F-28
<PAGE>
               LOTTERY & WAGERING SOLUTIONS, INC. AND SUBSIDIARIES

                        F/K/A CCA COMPANIES INCORPORATED

              Notes to Consolidated Financial Statement (Continued)



NOTE 9 - COMMITMENTS AND CONTINGENCIES

         RENTAL COMMITMENTS

         The Company rents office space and facilities in the United States
         under non-cancelable leases through September 2002. In May 2002, the
         Company entered into an agreement to rent new office space in the
         United States for thirteen months starting July 1, 2002, at an average
         monthly rate of approximately $1,100. The minimum future rental
         commitment for leases in effect at June 30, 2002 approximates the
         following:

                        Years Ended
                          June 30
                        -----------
                           2003                $  16,183
                           2004                    1,100
                                               ---------
                                               $  17,283

         The Suriname casino currently occupies two leased floors, totaling
         approximately 20,000 square feet, in the Plaza Hotel, which is in
         downtown Paramaribo. The Company leased the casino premises from
         Parbhoe, a 50% shareholder in SLC, for fifteen years ending in February
         2013, for a yearly base rent of $200,000, subject to future increases
         based on the Suriname Consumer Price Index.

         The Company continued to pay rent at the same rate from the beginning
         of the lease to June 2000 without providing for any increase in rent.
         Suriname law regulates the maximum amount of rent that a landlord can
         charge. In July 2000, the Company determined, based on the maximum rent
         that can be charged under Suriname law, that it had been overcharged.
         The Company is currently attempting to recover the excess rent charged
         of approximately $315,000 in the Courts based on a Government validated
         valuation of the maximum rent permissible under Suriname law. In July
         2000, the Company commenced paying, and subsequently, when it was
         unable to pay rent due to a lien on Parbhoe's assets by Surinaamsche
         Bank, set aside a reduced rental of approximately $3,200 per month
         based on the valuation and a decision of the District Commissioner.
         Only once the litigation is settled will the Company be able to predict
         the future rental expense in Suriname. For the year ended June 30,
         2002, the Company has provided a reserve of $24,000 to provide for any
         contingencies relating to rent (see Note 2).



                                      F-29
<PAGE>
               LOTTERY & WAGERING SOLUTIONS, INC. AND SUBSIDIARIES

                        F/K/A CCA COMPANIES INCORPORATED

              Notes to Consolidated Financial Statement (Continued)


NOTE 9 - COMMITMENTS AND CONTINGENCIES (CONTINUED)

         Rent expense was $93,883 for the year ended June 30, 2002, $82,176 for
         the year ended June 30, 2001, and $256,698 for the year ended June 30,
         2000.

         Parbhoe has made a counterclaim of approximately $484,000 for rent in
         arrears and has asked for the dissolution of the lease agreement and
         payment of back rent. Management through consultation with legal
         counsel is of the opinion that this case would not hold up due to the
         reasons mentioned in the preceding paragraphs as well as other legal
         arguments.

         LITIGATION AND ARBITRATION

         The Company anticipates that it will be subjected to various lawsuits,
         claims and proceedings of a nature considered normal to its business.

         KAI MICHAELSEN ("MICHAELSEN") AND ZAMORA INVESTMENTS PTE LTD.
         ("ZAMORA")

         As a result of the termination of the Hotel Management Agreements in
         November 1998 (see Notes 2 and 3), FEC assumed any and all financial
         obligations with respect to the employment of the President,
         Michaelsen, of the Company's hotel management subsidiary, DHRI. After a
         thorough independent review of Michaelsen's performance including an
         extensive investigation into allegations made by FEC regarding
         Michaelsen's operating decisions, Michaelsen's employment was
         officially terminated in April 1999. In April 1999, Michaelsen filed a
         claim against LWSI for a lump sum payment of approximately $240,000 for
         past and future services under his employment and consulting agreements
         and requested an arbitration hearing with the American Arbitration
         Association.

         The Company obtained a temporary restraining order staying the
         arbitration and petitioned the New York Supreme Court for a permanent
         stay of the hearing. It was the Company's contention that there was no
         arbitration agreement between Michaelsen and LWSI. On March 31, 2000,
         the Court granted the Company's petition to permanently stay the
         arbitration. Subsequent to the order of stay, Michaelsen's Company,
         Zamora, filed a claim against Dorsett for $80,000 in a new arbitration
         claim. In September 2000, the Company settled the matter with
         Michaelsen and Zamora and paid $40,000 in exchange for complete
         releases.



                                      F-30
<PAGE>
               LOTTERY & WAGERING SOLUTIONS, INC. AND SUBSIDIARIES

                        F/K/A CCA COMPANIES INCORPORATED

              Notes to Consolidated Financial Statement (Continued)


NOTE 9 - COMMITMENTS AND CONTINGENCIES (CONTINUED)

         At June 30, 2001, the Company held 12,500 shares that were issued but
         never delivered to FEC pursuant to the November 1998 termination
         agreement. It was the Company's position that the settlement of $40,000
         plus legal fees of $47,000 incurred by the Company must be repaid by
         FEC for the Company to deliver the shares. On July 11, 2001, the
         Company cancelled the shares due to FEC's failure to fulfill its
         obligations under the terms of the agreement (see Notes 2, 3 and 4).

         FOX HAVEN CAPITAL CORPORATION AND UNITED RESOURCES PARTNERS
         (COLLECTIVELY "FOX HAVEN")

         During 1998, the Company utilized unsuccessfully the services of Fox
         Haven to secure financing. In August of 1999, Fox Haven filed a Demand
         for Arbitration before the American Arbitration Association demanding a
         payment of $250,000 from the Company as liquidated damages. Fox Haven
         alleged that the Company breached the letter of agreement by failing to
         secure adequate collateral for the proposed loan according to the terms
         of the letter agreement. The Company denied all material allegations of
         the claim and filed counterclaims alleging Fox Haven breached its
         obligations to the Company by misrepresenting its abilities to secure
         capital financing.

         On August 22, 2000, all of Fox Haven's claims were denied and the
         Company was awarded $106,289 representing a full refund of the $25,000
         paid to Fox Haven by the Company plus the Company's attorney's fees and
         costs. To date, the Company has not been paid any amount against the
         award and the Company's ability to collect the judgment is considered
         remote.

         BREACH OF SLC LEASE

         SLC's landlord, Parbhoe, by contract, is required to provide air
         conditioning for the areas leased. Due to Parbhoe's failure to perform
         timely, SLC paid $201,000 to have air conditioning equipment installed
         in order to get the leased area ready for occupancy more quickly.
         Litigation is anticipated to recover the expenditure. Parbhoe by
         contract, is also required to provide water and electricity for the
         casino. SLC had to incur further expenditure of approximately $158,000
         towards expansion of water and electricity installations to adequately
         service the leased area. SLC has filed a claim to recover the amount.
         SLC has also filed a claim of approximately $87,000 for costs incurred
         to renovate the Plaza Hotel building owned by Parbhoe.

         MARITIME SERVICES CORPORATION ("MSC")

         In September 2000, MSC brought an action in the United States District
         Court of Oregon seeking damages in the amount of $200,250 plus
         interest. MSC claimed that the Company issued its own shares in 1998 as
         partial payment for construction work performed and that the Company
         was obligated to buy the shares back for the amount claimed as damages.
         In March 2002, the Company and MSC entered into a settlement agreement
         (see Note 4).



                                      F-31
<PAGE>
               LOTTERY & WAGERING SOLUTIONS, INC. AND SUBSIDIARIES

                        F/K/A CCA COMPANIES INCORPORATED

              Notes to Consolidated Financial Statement (Continued)



NOTE 9 - COMMITMENTS AND CONTINGENCIES (CONTINUED)

         NOTE PAYABLE

         Parbhoe has made a demand on SLC for the repayment in full of the
         $600,000 loan it made to LWSI on September 3, 1998. At that time,
         Parbhoe refused to accept any interim payments on the loan. SLC has set
         aside the payments required to be made based on the terms of the loan
         (see Note 7).

         This matter is being rigorously defended in the Suriname Courts on the
         basis that, among other defenses, based on the loan's terms, the loan
         is not repayable on demand but on a pro-rata basis along with existing
         and new loans that are outstanding to LWSI and additionally, the loan
         is owed by LWSI and not SLC.

         This claim was denied to Parbhoe. SLC is unable to make payments to
         Parbhoe due to controversy connected with certain liens filed against
         Parbhoe's estate.

         SLC JOINT VENTURE AGREEMENT

         The joint venture agreement between Parbhoe and Dorsett stipulates that
         one party obtains an option to buy the shares of the other party, if "a
         change of control" occurs within that other party. As one partner of
         Parbhoe passed away in September 2001, such a change of control
         occurred. Dorsett therefore seeks to exercise this option to purchase
         Parbhoe's shares in SLC.

NOTE 10 - STOCK OPTIONS AND WARRANTS

         The Company applies FASB Interpretation 44, Accounting For Certain
         Transactions Involving Stock Compensation - An interpretation of APB
         25. In addition, the Company applies APB Opinion 25, Accounting for
         Stock Issued to Employees, and related interpretations in accounting
         for employee stock options. Under FASB Interpretation 44 and APB
         Opinion 25, because the exercise price of the Company's employee stock
         options equals or exceeds the market price of the underlying stock on
         the date of grant, no compensation cost is recognized.

         SFAS No. 123, Accounting for Stock Based Compensation allows the
         continued application of APB 25 for financial reporting provided that
         the Company discloses in the notes the pro forma effects of the fair
         value based method.

         Options that have been granted are exercisable either one-third
         annually at each anniversary date from the date of grant or they are
         exercisable immediately. In addition, they have maximum terms of not
         more than four years and they are not transferable. The Company has
         extended the terms of 41,875 warrants and options for two years.



                                      F-32
<PAGE>
               LOTTERY & WAGERING SOLUTIONS, INC. AND SUBSIDIARIES

                        F/K/A CCA COMPANIES INCORPORATED

              Notes to Consolidated Financial Statement (Continued)



NOTE 10 - STOCK OPTIONS AND WARRANTS (CONTINUED)

         The Company estimates the fair value of each stock option or warrant at
         the grant date by using the Black-Scholes option-pricing model.

         PLAN OPTIONS

         The Company's 1996 Stock Option Plan (the "Plan") was adopted in
         November 1996, and amended in December 1996, April 1997, December 1997
         and September 2001. The Plan provides for adjustments in the number and
         type of shares covered by the Plan and options granted in the event of
         any reorganization, merger, re-capitalization or certain other
         transactions involving the Company. Accordingly, in September 2001, the
         Plan was amended to increase the number of shares available for grant
         (after giving effect to the Share Consolidation) from 250,000 shares to
         3,000,000 shares. Under the Plan, which authorizes the granting of
         incentive stock options or non-incentive stock options the maximum
         number of shares of common stock for which options may be granted is
         3,000,000 shares. As of June 30, 2002, 142,125 options to purchase
         shares of common stock had been granted under the Plan.

         The Company has set aside 2,857,875 shares of common stock for future
         options that may be granted under the Plan.

         The Company granted a total of 50,000 fully vested options, valid for
         four years, to Tilden Park Ltd., a nominee of Dempster, the President
         and the CEO and a Director of the Company in December 1999 (see Note
         8). The options are exercisable at $2.00 per share.

         In October 2000, the Company granted fully vested four-year options to
         purchase 25,000 shares to Miles Greenberg, the Chief Financial Officer
         and director (effective from September 26, 2001) of the Company, at an
         exercise price of $2.00 per share.

         In 2002, 1,750 options were forfeited.

         NON PLAN OPTIONS

         In addition to the options granted under the Plan, the Company has
         issued an additional 94,856 non-plan options. Of the 94,856 options
         issued, there were 94,506 non plan options outstanding as of July 1,
         1999. In 2001, 38,106 options were forfeited and in 2000, 6,400 options
         were forfeited. No options were forfeited in 2002. No options were
         exercised during the years 2000, 2001 and 2002.

         FASB Statement 123, "Accounting for Stock-Based Compensation," requires
         the Company to provide pro forma information regarding net income
         (loss) and net income (loss) per share as if compensation cost for the
         Company's employee stock options had been determined in accordance with
         the fair value based method prescribed in FASB Statement 123.



                                      F-33
<PAGE>
               LOTTERY & WAGERING SOLUTIONS, INC. AND SUBSIDIARIES

                        F/K/A CCA COMPANIES INCORPORATED

              Notes to Consolidated Financial Statement (Continued)




NOTE 10 - STOCK OPTIONS AND WARRANTS (CONTINUED)

         The Company utilized the following weighted-average assumptions to
         determine fair value:

                                             Year Ended June 30,
                                ----------------------------------------------
                                     2002            2001           2000
                                ----------------------------------------------
         Risk free interest rate       6%              6%             6%
         Expected life              4 years        4 years         4 years
         Expected volatility          0.5            0.5             0.5
         Dividend yield               0.0            0.0             0.0



         Under the accounting provisions of FASB Statement 123, the Company's
         pro forma net loss and loss per share would have been as follows:

                                              Year Ended June 30,
                                ----------------------------------------------
                                     2002            2001            2000
                                ----------------------------------------------
         Net loss:
           As reported             $(604,511)      $(519,665)    $(15,339,310)
                                   =========       =========     ============

           Pro forma               $(604,511)      $(552,665)    $(15,399,672)
                                   =========       =========     ============


         Net loss per common
          share basic and
            diluted:
           As reported             $   (0.61)      $    (.60)    $    (20.14)
                                   =========       =========     ===========

           Pro forma               $   (0.61)      $   (0.64)    $    (20.22)
                                   =========       =========     ===========




                                      F-34

<PAGE>
               LOTTERY & WAGERING SOLUTIONS, INC. AND SUBSIDIARIES

                        F/K/A CCA COMPANIES INCORPORATED

              Notes to Consolidated Financial Statement (Continued)


NOTE 10 - STOCK OPTIONS AND WARRANTS (CONTINUED)

         A summary of the status of the Company's fixed stock option plan and
         non plan options as of June 30, 2002, 2001 and 2000 and changes during
         the years then ended is presented below:

<TABLE>
<CAPTION>
                               June 30, 2002        June 30, 2001       June 30, 2000
                            --------------------  ------------------  -------------------
                                       Weighted            Weighted            Weighted
                                        Average             Average             Average
                                       Exercise            Exercise            Exercise
                              Shares     Price    Shares     Price    Shares     Price
                              ------   --------  -------   ---------  ------   ---------
<S>                          <C>       <C>       <C>       <C>       <C>       <C>
          Options
           outstanding
           at beginning
            of year          192,625      5.40   246,731    $22.00   203,131    $39.80
          Granted              1,250      5.00    25,000      2.00    50,000      5.00
          Exercised                -         -         -         -         -         -
          Forfeited           (1,750)   (93.43)  (79,106)   (52.80)   (6,400)   (15.40)
                              ------    ------   -------   -------   -------   -------

          Options
           outstanding
           at end of year    192,125      4.64   192,625     $5.40   246,731    $22.00
                             =======   =======   =======   =======   =======   =======

          Options
           exercisable
           at end of year    191,125      4.63   191,625     $5.40   239,481    $21.80
                             =======   =======   =======   =======   =======   =======

          Weighted-average
           fair value of
           options granted
           during the year               $0.13              $ 0.40              $ 0.40
                                         =====              ======              ======

</TABLE>



         The following table presents information relating to stock options
         outstanding at June 30, 2002:

                            OPTIONS OUTSTANDING           OPTIONS EXERCISABLE
                      ---------------------------------------------------------
                                 Weighted     Average                Weighted
                                  Average    Remaining                Average
          Exercise               Exercise     Life in                 Exercise
           Price      Shares       Price       Years      Shares       Price
         ---------  ---------    --------    ---------    -------    ---------
         $2.00        158,750      $  2.00       1.07     158,750      $ 2.00
         $5.00         17,125        5.00        0.95      16,125        5.00
         $30.00        16,250       30.00        0.44      16,250       30.00
                    ---------      ------      ------     -------      ------

                      192,125      $ 4.64        1.00     191,125      $ 4.63
                    =========      ======      ======     =======      ======


         No options have been exercised in 2001 and 2002.



                                      F-35
<PAGE>
               LOTTERY & WAGERING SOLUTIONS, INC. AND SUBSIDIARIES

                        F/K/A CCA COMPANIES INCORPORATED

              Notes to Consolidated Financial Statement (Continued)



NOTE 10 - STOCK OPTIONS AND WARRANTS (CONTINUED)

         WARRANTS

         In July and August 1999, the Company agreed to issue warrants to
         purchase 4,167 shares of the Company's common stock, at $20.00 per
         share to two investors. The warrants expired without being exercised
         (see Note 4).

         In connection with the acquisition of financing, the Company issued
         35,000 warrants to Danville in October 1999 (see Notes 4 and 7), 25,000
         warrants to Stanton in January 2000 (see Notes 7 and 8) and 7,500 to
         Galileo Capital, LLC in March 2000 to purchase the Company's common
         stock at $5.00 per share (see Note 7). The Galileo warrants expire in
         two years from the date the Company files a new registration, the
         Danville warrants expire three years from the date of grant and the
         Stanton warrants expire four years from the date of grant. The warrants
         were valued at $155,400.

         In December 1999, the Company issued warrants to an investor and past
         underwriter to acquire 22,500 shares of common stock for past services
         rendered at a price of $10.00 per share.

         In January 2000, the Company issued warrants to Related Counsel for
         services rendered to acquire 11,250 shares of the Company's common
         stock at a price of $5.00 per share and expensed $8,000 in June 30,
         2000 (see Note 8).

         At June 30, 2002, the Company had warrants amounting to 185,416
         outstanding. No warrants have been exercised. All warrants were
         exercisable on the day of grant. During 2002, no warrants were granted
         and 45,784 warrants expired.

         REPRICING OF OPTIONS AND WARRANTS

         In December 1999, the Company's Board of Directors agreed to reprice
         the exercise price of 96,000 stock options previously granted to
         directors, officers and employees from $30.00 to an exercise price of
         $5.00.

         In 2000, the Company recorded a charge of approximately $10,000 for the
         repricing of 30,000 options and 7,500 warrants from $30.00 to $5.00
         previously granted to directors and recorded a charge of $2,000 for
         repricing 10,625 options and 1,250 warrants from $30.00 to $5.00
         previously granted to Related Counsel (see Note 8).

         In October 2000, the Company repriced 111,500 options issued to
         officers and employees from $5.00 to $2.00. In addition, options of
         25,000 and warrants of 32,500 issued to Stanton, a related party, were
         also repriced from $5.00 to $2.00 and the Company recorded a charge of
         approximately $13,000 for the repricing.



                                      F-36
<PAGE>
               LOTTERY & WAGERING SOLUTIONS, INC. AND SUBSIDIARIES

                        F/K/A CCA COMPANIES INCORPORATED

              Notes to Consolidated Financial Statement (Continued)


NOTE 10 - STOCK OPTIONS AND WARRANTS (CONTINUED)

         COMMON STOCK SET ASIDE

         Currently, the Company has reserved 377,541 shares of common stock for
         exercise of options and warrants.

NOTE 11 - NON-BINDING WRITTEN LETTER OF INTENT

         In February 2001, the Company entered into a non-binding written letter
         of intent with Applied Gaming Solutions of Canada, Inc., a corporation
         organized under the laws of Alberta, Canada ("AGS"). The terms of the
         letter of intent contemplate that the Company would purchase certain
         AGS assets which include its operating contract with the Construction
         Lottery of the Capital Hanoi ("CCC"), equipment, infrastructure, retail
         sales outlets and organization and personnel relations and for cash and
         shares of common stock in the Company. Since approximately August 1999,
         AGS has marketed and to some extent operated CCC's on-line lottery
         business in Vietnam in and around Hanoi City. Under the letter of
         intent, the Company was to pay a total of $1,250,000 in cash and to
         issue 1,000,000 shares of common stock at the closing (the "AGS
         Closing"). This agreement has since been terminated.

         During 2002, a new agreement has been entered into between LWSI and AGS
         (see Note 12 for a further description of the agreement).

NOTE 12 - PURCHASE CONTRACT (See Notes 2,4 and 11)

         In May 2001, the Company entered into a formal, written contract (the
         "Purchase Contract") with six entities (collectively, the "Vendors") to
         purchase all of the issued and outstanding common stock of Emerging
         Market Solutions International, Inc. ("EMSI") for 5,500,000 shares of
         the Company's stock. The Purchase Contract was approved by the
         shareholders in September 2001. The Purchase Contract provided for a
         closing date on or before September 28, 2001, but was subsequently
         deferred to December 2002.

         EMSI holds an exclusive contract (the "Lottery Gaming System Contract")
         to supply on-line lottery and sports betting systems in Ho Chi Minh
         City and the Southern provinces of Vietnam (the "Territory"). The
         Lottery Gaming System Contract is between EMSI and Detetour,
         Corporation for Development of New Technology and Tourism ("Detetour"),
         now known as NEWTATCO, an entity owned by the Sovereign Socialist
         Republic of Vietnam and extends ten years from the date that the first
         on-line sales begin on the on-line lottery gaming system. The deadline
         to implement the Lottery Gaming System Contract has been extended to
         November 2002. NEWTATCO is an entity owned by the sovereign Socialist
         Republic of Vietnam and controlled by the National Centre of Natural
         Science and Technology. The laws of the Socialist Republic of Vietnam,
         for the most part, govern the Lottery Gaming System Contract. No
         on-line lottery or sports betting operations have previously been
         conducted under Vietnamese authority within the Territory. EMSI has no
         other assets, liabilities or obligations and no formal operations have
         commenced as of June 30, 2002.



                                      F-37
<PAGE>
               LOTTERY & WAGERING SOLUTIONS, INC. AND SUBSIDIARIES

                        F/K/A CCA COMPANIES INCORPORATED

              Notes to Consolidated Financial Statement (Continued)



NOTE 12 - PURCHASE CONTRACT (CONTINUED)

         The obligations under the Purchase Contract were conditioned on the
         Company affecting a reverse split, securing a listing of the Company's
         common stock on a reputable "exchange" and funding EMSI with
         $3,000,000. The Company was required by the Purchase Contract to use
         its best efforts to fulfill these conditions.

         The Company planned to fund EMSI by selling up to 1,500,000 additional
         shares of its common stock (the "Funding Shares") (measured after the
         Share Consolidation) for not less than $2.00 per share. The Company or
         the Vendors could cancel the Purchase Contract if the Funding Shares
         were not sold prior to September 28, 2001. If, despite its best
         efforts, the Company was unable to fulfill any of the conditions
         described above by the closing date, either the Vendors or the Company
         could declare the Purchase Contract terminated and of no effect.

         The Company to date advanced and incurred expenditures relating to the
         EMSI project of EMSI approximately $1,500,000 (the "Advances"). As of
         June 30, 2002, approximately $1,090,000 was capitalized as advances to
         EMSI and approximately $268,000 was charged to operations. These
         Advances were funded by sale of common stock to certain private
         investors for $450,000 and the balance was funded from operating funds
         available to the Company. The Advances are not secured and there is no
         assurance that the Advances will be repaid to the Company.

         The Company has not been able to fulfill all the conditions and,
         although the period within which to do so has been extended until
         December 31, 2002, the Company, in October 2002, has entered into an
         agreement AGS and the Vendors. AGS holds a contract with NEWTATCO to
         manage certain aspects of the existing on-line lottery operations in
         Hanoi City. Under the terms of the agreement (the "Exchange
         Agreement"), among other conditions, AGS is to acquire EMSI, affect a
         share consolidation with a ten to one reverse split and convert the
         Advances into shares of common stock of AGS, (the stock of which is
         traded on the Canadian Venture Exchange) after the share consolidation.
         Under the Exchange Agreement, the Company would release EMSI from its
         obligations to repay the Advances owed to the Company and AGS would
         issue shares of its common stock at a rate of one share for each C$.30
         of the Advances released provided that the then average quoted bid and
         asked price per AGS share is not less than C$.30. It is anticipated
         that, upon conversion pursuant to the Exchange Agreement, the
         stockholders of the Company will indirectly hold approximately the same
         percentage of equity in the total lottery operation in the Territory as
         they held in EMSI under the Purchase Contract. In the event that the
         Exchange Agreement is not consummated, EMSI acknowledges to treat the
         Advances as unsecured loans due to be paid by EMSI on or before
         December 31, 2004 and AGS agreed to guarantee repayment by EMSI by that
         date.



                                      F-38
<PAGE>
               LOTTERY & WAGERING SOLUTIONS, INC. AND SUBSIDIARIES

                        F/K/A CCA COMPANIES INCORPORATED

              Notes to Consolidated Financial Statement (Continued)



NOTE 12 - PURCHASE CONTRACT (CONTINUED)

         Consummation of the Exchange Agreement is subject to the fulfillment of
         various conditions, including the restructuring, prior to December 31,
         2002, by AGS of its capital stock and its debt obligations with its
         creditors, obtaining the necessary regulatory and other approvals, AGS
         demonstrating, to the reasonable satisfaction of the Company, its
         financial ability to continue its operations and developing lottery
         operations in Ho Chi Minh City.

         In anticipation of the Exchange Agreement being fulfilled, on July 25,
         2002, the shareholders of AGS, in a special meeting, approved a
         resolution to restructure AGS, which among other things, included the
         acquisition of EMSI, share consolidation with a ten to one reverse
         split, restructure of its debt obligations with its creditors, the
         assumption of the Advances and the issuance shares of AGS's common
         stock for the Advances assumed. AGS has approved issuance of 6,500,000
         common shares at a deemed issue price of C$.30 per post consolidated
         common share in lieu of C$1,950,000 (approximately $1,284,000) advanced
         by LWSI to EMSI as of May 31, 2002. AGS has further agreed to issue
         additional shares of its common stock for further advances made to EMSI
         by the Company after May 2002. There is no assurance that the Exchange
         Agreement will be consummated. Therefore, during the year ended June
         30, 2002, approximately $840,000 of the advances was charged to
         operations as a reserve for the impairment of amounts advanced (see
         Note 2) and approximately $268,000 of the advances were expensed as
         operating costs in the consolidated statement of operations.



                                      F-39