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, 2003

                           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. Yes ( ) No (X)

      The small business issuer's revenues for its most recent fiscal year are
$7,235,667.

         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, 2003 was
$1,214,000.

        The number of shares of the issuer's common stock outstanding at
September 30, 2003 was 1,073,777.

Transitional Small Business Disclosure Format.   Yes       No X
                                                    ---      ---




<PAGE>



                                TABLE OF CONTENTS


                                     PART I
                                                                          Page
Item 1.         Description of Business                                     3

                Company Overview                                            3

                Casino Operations                                           4

                Sakhalin Project                                            5

                Lottery & Gaming System Investment                          6

                Employees                                                   7

Item 2.         Description of Property `                                   7

Item 3.         Legal Proceedings                                           8

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


                                     PART II

Item 5.         Market for Common Equity and Related
                Stockholder Matters                                         9

                Equity Compensation Plan
                Information                                                10

Item 6.         Management's Discussion and Analysis or
                Plan of Operations                                         10

                Results of Operations                                      12

                Liquidity and Capital Resources                            14

Item 7.         Financial Statements                                       17

Item 8.         Changes in and Disagreements with Accountants On           17
                Accounting and Financial Disclosure

Item 8A.        Controls and Procedures                                    17


                                    PART III

Item 9.         Directors and Executive Officers of the Registrant         17

Item 10.        Executive Compensation                                     19

                Summary Compensation Table                                 19

                Option Grants for the Twelve Months Ended                  20
                June 30, 2003

                Directors Compensation                                     21

Item 11.        Security Ownership of Certain Beneficial Owners and
                Management and Related Stockholder Matters                 21

Item 12.        Certain Relationships and Related Transactions             23

Item 13.        Exhibits and Reports on Form 8-K                           23

Item 14.        Principal Accountant Fees and Services                     25

                Signatures                                                 26




                                       2
<PAGE>
                           FORWARD LOOKING STATEMENTS

         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, uncertainties associated with the risks of ongoing
litigation in Suriname including the risk of the eviction of the Company's joint
venture entity from its premises in Suriname, and of the costs of relocating its
casino operations if necessary (See "Legal Proceedings"); the Company's working
capital deficit and accumulated deficit; 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 Company's
investment in an entity engaged in the development of the Vietnamese lottery;
possible change in control; political and economic factors; risks of foreign
legal systems; restrictions and controls on foreign investments and acquisitions
of majority interests; government regulation; 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 key
personnel; 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; limited public market and liquidity, and other
risks detailed in the Company's Securities and Exchange Commission filings.

Item 1.  Description of 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 the operation of a gaming casino in
Suriname 50% owned by the Company. The Company is also pursuing the sale of
property initially acquired by it for 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 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. In April 2003, the Company restructured its investment in
this project by exchanging its interests therein for shares of Pacific Lottery
Corporation ("PLC"), a Canadian company whose shares are traded on the Canadian
Venture Exchange, and which has undertaken to pursue the development of the
lottery system in Vietnam. 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,
and 50% owned by Parbhoe Handelmij NV ("Parbhoe") has been operating in
permanent quarters in the hotel where previously SLC maintained temporary
facilities for its casino operations. The Company's 100% owned Delaware
subsidiary, Dorsett Hotel & Resorts, Inc. ("Dorsett") manages the casino.

         On July 30, 2003, the Subdistrict Court of Suriname issued an order
evicting SLC from such quarters finding that Parbhoe, the lessor, did not have
the legal right to grant the lease under which SLC was occupying such premises.
The order of eviction has been appealed and is temporarily suspended until
November 8, 2003. As there is no assurance that the order of eviction will
ultimately be reversed or nullified, the Company is seeking an alternative
location in Paramaribo for the operation of a casino. See "Casino Operations"
and "Legal Proceedings".

         Despite numerous discussions and several agreements, the Company was
not able to obtain the necessary financing to develop the Sakhalin Project. The
Sakhalin Project involved plans to develop a hotel/casino complex on a ten-acre
site in the center of the City of Yuzhno-Sakhalinsk. In the fiscal year ended
June 30, 2000, the Company wrote down all but approximately $2,100,000 of
Sakhalin Project capitalized expenditures on the Company's accounts. In April,
2003, the Company transferred one half of its leasehold rights in the Sakhalin
Project to a third party for $1,300,000 (See "Sakhalin Project").

Recent Financial History

        During the years ended June 30, 2002 and June 30, 2003, the Company had
revenues of approximately $7,114,000 and $7,236,000 respectively, all from the
Suriname casino operations.

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

         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
thereof for periods prior to October, 2001 has 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.

                                       4
<PAGE>

         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
approximately 15 gaming tables, 181 slot machines and a 50-seat restaurant.
There are other casinos in Paramaribo, the capital city, and three compete with
the Company for the same local gaming clientele.

         The Suriname casino was constructed by the Company pursuant to an
agreement with 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
entered into a lease agreement for the casino premises from Parbhoe, which
represented to Dorsett that it was the hotel owner, for fifteen years beginning
February 1998 for $200,000 per year, subject to locally based escalation. As set
forth above, the Company is subject to an order of eviction from such premises
which has been temporarily suspended. Prior to the issuance of the eviction
order, the Company had been advised that the rent required by the lease exceeded
the lawful rent permitted under the rent control laws of Suriname by
approximately $13,500 per month and was seeking a refund of rent paid and a
limitation on future rent.

         Because of uncertainties caused by the order of eviction issued by the
Suriname Court, the Company is actively seeking to establish its own casino
operations at another location in Paramaribo. Through its subsidiaries the
Company has acquired a license to operate a casino in Suriname. (See "Legal
Proceedings").

         If the Company relocates the Suriname Casino to a different location,
it will have to design and set up infrastructure, incur additional relocation
costs associated with removal, transportation and installation of equipment,
leasehold improvements, advertising and all other costs associated with
relocation and statutory costs associated with the set up of operations at a new
location. The Company may also need to terminate the employment of some or all
of its existing staff and pay them compensation based upon the labor laws in
Suriname. In addition, there is the potential for a full or partial impairment,
depending on the outcome of the court proceedings, of the leasehold improvements
in SLC, which have a net book value of approximately $3,095,000 at June 30,
2003.

         The Company has approximately $3,500,000 in cash and cash equivalents
as of June 30, 2003, which includes approximately $1,500,000 held by LWSI in the
U.S. and approximately $2,000,000 held by SLC in Suriname. Management believes
that, if the Suriname eviction is upheld and SLC is required to relocate to a
new facility, the cash presently held by the Company could sufficiently finance
improvements required to outfit a new space for a casino.

         Until March 31, 2003, the Company's casino operations were managed by
David Hartley under a Consulting Agreement with Star Casinos Limited ("Star") as
consultant. Mr. David Hartley is an experienced casino consultant. The Company
engaged Star on a month-to-month basis to maintain Mr. Hartley's services, for
which the Company paid Star approximately $12,500 per month from July 1, 2002,
through March 31, 2003.

         The Company is investigating the desirability of participating in the
development and operation of a casino in Vietnam, approximately 80 miles from Ho
Chi Minh City, and is actively seeking a casino license to conduct such
operations. On September 16, 2003, the Company posted a refundable deposit of
$250,000 with an agency of the Vietnamese government as a demonstration of its
interest in negotiating an acceptable agreement for the casino license.

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



                                       5
<PAGE>

Company acquired 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 85% 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
Sakhalin Project, and a guarantee by the city of Yuzhno-Sakhalinsk (the "City")
to issue a gaming license to SCC.

         Pursuant to the Sakhalin Agreement, SCC was to develop, subject to
obtaining financing, a hotel/casino complex on a ten-acre site in the center of
the City of Yuzhno-Sakhalinsk. Because the Company has been unable to obtain
financing for this project, it has made efforts to sell its rights in the
Sakhalin Project or sub-lease all or a portion of the property, which it has
leased from the City for the Sakhalin Project.

         In April 2003, SGTI entered into a series of agreements (dated as of
March 20, 2003) under which it transferred one half of the leasehold rights held
by SCC to a third party in return for payment of $1,300,000. Under these
agreements, SCC transferred to the purchaser the sublease rights to
approximately five acres of the property, and one half of the shares of SCC
which it held. Consummation of the transactions were conditioned upon the
registration by the purchaser of the Sublease of such five acres from the City
of Yuzhno-Sakhalinsk which has now occurred. The purchaser has agreed to return
to SGTI, for nominal consideration, the shares of SCC if it acquires a direct
lease from the City for the portion of the property subject to the sublease.
SGTI has paid a fee of $200,000 to a consultant for assistance in connection
with matters related to this transaction.

         Approximately $1,000,000 expended in connection with obtaining the
original lease agreement and demolition costs remains on the Company's
consolidated balance sheet at June 30, 2003.

         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. 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.

         The Company is continuing to explore alternatives for the sale or other
disposition of its remaining interests in the Sakhalin Project.

Lottery & Gaming System Investment.

         In May 2001, the Company entered into a contract to acquire an entity
("EMSI") which held the exclusive right and obligation to supply an on-line
lottery and sports lottery system, and to operate it, in Ho Chi Minh City and
the Southern provinces of Vietnam. Certain conditions to that contract were not
fulfilled, and the Company subsequently determined that it was in its best
interests to assign its rights in the contract to a Canadian entity, Pacific
Lottery Corporation ("PLC"), and to restructure its cash investment in the

                                       6
<PAGE>

project into common shares of PLC. In a transaction which was consummated as of
April 7, 2003, the Company acquired from PLC 7,962,620 of its common shares in
satisfaction of indebtedness owed to the Company by PLC at a deemed purchase
price of $.30CDN per share. The transaction was part of a debt and equity
reorganization of PLC, and a private placement by PLC of its common shares and
warrants to a wholly owned subsidiary of Genting International ("Genting") for
$4.50 Million CDN. The funds from the private placement are to be exclusively
used in connection with the development of the online lottery program in Ho Chi
Minh City and the Southern provinces of Vietnam. Securities of PLC are traded on
the Canadian Venture Exchange under the symbol TSX-Venture: "LUK".

         The Company also received from PLC a "finders option" upon the closing
of the private placement to compensate the Company for assisting in bringing
about the private placement. The finders option consists of common stock
purchase warrants to purchase 1,400,000 additional common shares of PLC at
$.30CDN per share (exercisable for a twenty-four month period).

         The acquisition of these securities gives the Company current ownership
of approximately 19.7% of the common shares of PLC (or 13.6% of such common
shares following the conversion to common shares of the outstanding preferred
shares), or 11.9% of the common shares on a fully diluted basis.

         In the private placement, Genting acquired an approximate 30% equity
stake in PLC, assuming all the preferred shares are converted into common shares
of PLC, and potentially up to a 47% equity stake (fully diluted) assuming
Genting exercises all of the warrants it received. Genting is a diversified
investment company whose subsidiaries include investment holdings, property
development and provision of sales and marketing services to resort-related
businesses. Securities of Genting are listed on the Luxembourg Stock Exchange
and quoted on the Singapore Stock Exchange.

Employees
         As of June 30, 2003, the Company had 281 employees, including its 2
executive officers.

Item 2.  Description of Property

         The Company maintains its principal executive office at 8201 Peters
Road, Suite 1000, Ft. Lauderdale, Florida 33324. This office space encompasses
one executive suite, and is subject to a month-to-month lease, at a monthly
rental of approximately $1,300.

         The Company's Sakhalin Project is managed from a 450 square foot leased
office in Sakhalin City pursuant to a one-year renewable lease. 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, and "Legal Proceedings" for a description of issues
involving its lease agreement thereat.

         Subject to a favorable resolution of the eviction proceeding in
Suriname, the Company believes its existing facilities will be adequate to meet
current needs.


                                       7
<PAGE>

Item 3.  Legal Proceedings

         On July 30, 2003, the Subdistrict Court in Suriname issued an order
evicting SLC from the premises it occupies in the Plaza Hotel and from which it
conducts all of its casino operations. The Court ruled that Stichting Dim (Dim
Foundation), the plaintiff in the eviction proceeding which took title to the
Hotel through a mortgage foreclosure, was not bound by the 1998 casino lease
between SLC and Parbhoe, as Parbhoe did not hold registered title to the
premises. SLC is appealing such order, and in a separate proceeding has been
granted an order suspending its execution until at least November 8, 2003. If
the appeal has not been decided prior to November 8, 2003, SLC will request that
execution be suspended until a decision is reached in the appeal. According to
the attorneys for SLC, the chances in the appeal are reasonable. As there is no
assurance that an extension of the stay will be granted, or that the appeal will
be successful, the Company through its subsidiaries is seeking alternative
locations in Paramaribo to relocate its casino operations.

         On July 30, 2001, Parbhoe acting in the name of SLC, put a garnishment
on the bank accounts operated by Dorsett, the manager on behalf of SLC (SLC v.
Dorsett & Clague, A.R. 01/2894), claiming that Dorsett was transferring SLC's
money illegally, and that Clague was not authorized to act as General Manager.
Parbhoe claims that Dorsett and Clague owes to SLC US $4,152,254. The
garnishment was lifted in Summary proceedings (Clague & Dorsett v. SLC, A.R.
01/3005). The main proceeding is still pending. In this case, the B-directors
Dempster, Clague and Dorsett have petitioned to be admitted as parties in the
case, with the express purpose of objecting to the fact that Parbhoe started the
lawsuit on behalf of SLC, without permission of the Board of Directors. On
November 4, 2003, the judge is expected to render a decision in this matter.

         On May 10, 2002, Parbhoe undertook an identical action to block the
bank accounts of Dorsett (SLC v. Dorsett & Clague, A.R. no.01/3216). The
garnishment was also lifted (Clague & Dorsett v. SLC, A.R. 02/2012), but the
main case, with the same contents as the previous one, is also pending.

         SLC and Dorsett are engaged in other legal proceedings in Suriname in
which SLC 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. Parbhoe 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.

         On December 9, 2002, Dorsett commenced an action in Suriname, entitled
Dorsett v. Parbhoe, A.R. 02/1187, Article 12 of the Joint-Venture Agreement
(JVA) between Parbhoe and Dorsett stipulate that a party obtains an option to
buy the shares of the other party, if a change of control occurs within that
other party. Since Winod Parbhoe died on September 4, 2001, such change of
control occurred within Parbhoe's Handelmij NV. Dorsett seeks to enforce this
option to purchase Parbhoe's shares in SLC.

                                       8
<PAGE>

         All of the foregoing legal proceedings predate the finding of the
Suriname Court that Parbhoe did not have registered title to the premises at the
time it entered into the lease agreement. The Company is currently evaluating
the legal remedies available to it in the event this decision is sustained, both
to the extent they affect these pending legal proceedings, and to the extent
they give rise to other claims which the Company or its affiliates may assert in
the future.



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

         No matters were submitted during the forth quarter of the fiscal year
ended June 30, 2003, to a vote of the security holders of the Company.


                                    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, 2001 and ending June 30, 2003

                                         High                     Low
July 1-Sept. 30, 2001                   $4.20                    $2.00
Oct. 1-Dec. 31, 2001                     4.20                     2.05
Jan. 1-March 31, 2002                    2.25                     1.40
April 1-June 30, 2002                    1.50                      .75
July 1-Sept. 30, 2002                     .81                      .35
Oct. 1-Dec. 31, 2002                     1.00                      .15
Jan. 1, 2002-March 31, 2003              1.05                      .22
April 1-June 30, 2003                    1.35                      .61

         (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, 2003 the
Company had approximately 480 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.  Not Applicable

                                       9
<PAGE>

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:



                  Number of            Weighted-            Number of
                  Securties 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)
--------------------------------------------------------------------------
Equity
compensation
plans approved      198,125                 .73               2,801,875
by security
holders
--------------------------------------------------------------------------
Equity
compensation
plans not           114,583               $3.51                  _____
approved by
security holders
--------------------------------------------------------------------------
 Total              312,708               $1.74               2,801,875
--------------------------------------------------------------------------

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

RESULTS OF OPERATIONS FOR THE YEAR ENDED JUNE 30, 2003 AS COMPARED WITH THE
YEAR ENDED JUNE 30, 2002

         Net Income (Loss). The Company generated net income of $261,710 or $.22
per share for the year ended June 30, 2003 as compared to a loss of $604,511 or
$.61 per share during the year ended June 30, 2002. The loss during the prior
year was due to the reserve recorded on advances of $840,329 related to the
Vietnam lottery project. Excluding such reserve, the Company's net results
during the prior year generated net income of $235,818. During the current
year period, the $840,329 reserve was recovered resulting in net income of
$261,710. Excluding such recovery, current year results generated a net loss of
$578,619. The reduction in net income during the current year (excluding the
effects of the reserve and recovery of advances) resulted primarily from
increased operating expenses and foreign exchange fees as more fully described
below.

         Revenues. During the year ended June 30, 2003, the Company generated
revenues of $7,235,667 attributable to its casino operations in Suriname. For
the year ended June 30, 2002, the Company generated revenues of $7,113,988 from
its Suriname casino. Although revenues increased by approximately 1.5%, the
costs to generate such revenues increased substantially as more fully described
below.

         Marketing and Promotional Expenses. During the year ended June 30,
2003, marketing and promotional expenses were $400,500 as compared, with
$322,064 for the year ended June 30, 2002. The current years increase resulted
from programs designed to increase activity and wagering at the Suriname casino
in an effort to help offset declines in activity caused by Suriname currency
devaluations and the weak economy.

         General and Administrative Expenses. General and administrative
expenses were $6,016,104 for the year ended June 30, 2003 as compared to
$4,781,673 for the year ended June 30, 2002. Included in the current year's
expenses were $4,180,712 of operating expenses associated with the Company's


                                       10
<PAGE>

Suriname casino and $1,835,392 for general corporate overhead including
salaries, consulting, professional fees and travel. Included in the prior year's
expenses were $3,319,167 of operating expenses associated with the Company's
Suriname casino and $1,462,506 for general corporate overhead. The current
period's Suriname casino operating expenses increased by $861,544 or 26%
primarily due to (i) costs associated with various programs initiated by the
Company designed to increase activity and wagering at the Suriname casino in an
effort to help offset declines in activity caused by Suriname currency
devaluations and the weak economy, (ii) increased payroll and staff expenses
related to both a new bonus plan and the hiring of additional staff required for
the increased hours of operation of the Suriname casino's live gaming tables,
and (iii) the new casino tax assessed on gaming equipment which commenced
January 1, 2003 and amounted to $270,572 during the current year. General
corporate overhead increased during the current period by $372,886 primarily due
to (i) non-cash compensation charges of $112,500 related to a bonus paid during
the current period to the Company's Chief Executive Officer through the issuance
of 150,000 shares of common stock of the Company valued at $.75 per share, (ii)
franchise, dividend and other taxes of approximately $110,000, and (iii)
increased professional and consulting fees and other expenses incurred related
to the sublease of a portion of the Sakhalin property, and the restructuring of
the Company's investment in the Vietnamese lottery project.

         Interest Expense. For the year ended June 30, 2003, interest expense
amounted to $6,455 compared to $94,520 for the year ended June 30, 2002. The
decrease during the current period was attributable to the reduction in the
amount outstanding on loans made by the Company's Suriname joint venture partner
during 1998 and 1999 for the completion of the construction of the Suriname
casino.

         Reserve/Recovery on Advances to EMSI. As required by SFAS No. 114
regarding evaluation of assets for financial impairment, the Company charged to
operations during fiscal 2002, $840,329 of the amounts it had advanced in
connection with the Vietnam lottery project because of the then uncertainty that
(i) the EMSI Agreement would be consummated, and (ii) the Company would be able
to recover the amounts it advanced for the Vietnam project, whether or not the
EMSI Agreement was consummated. In April 2003, the Company restructured its
investment in EMSI, and exchanged its interests therein into shares of PLC, as
described above. As a result of this transaction, during the year ended June 30,
2003, the Company has recorded a recovery of the $840,329 reserve previously
charged to operations. The Company has recorded the recovery of this reserve
based upon the value of the PLC shares and warrants it received as payment on
its advances.

Foreign Exchange Fees. During the year ended June 30,2003, the Central bank in
Suriname in September 2002 set the legal exchange rate of 2,800 Suriname
Guilders to $1 U.S. dollar. As a result, revenues generated and expenses
incurred from Guilders after this date by the Suriname casino were recorded by
the Company in U.S. dollars based on this legal exchange rate. However, no
Suriname banks or government agencies maintain or supply U.S. dollars for
exchange and therefore the Suriname casino continues to exchange its Guilders
for U.S. dollars at the local cambios as it has done in the past. As a result of
the new legal limit placed on the exchange rate, cambios now charge fees to
exchange currency at this rate. These fees in effect, represent the difference
between the legal exchange rate and the actual market exchange rate. Such fees
amounted to $348,596 during the current year.

                                       11
<PAGE>

         Foreign Exchange Loss. During the year ended June 30,2003, the loss
from foreign exchange amounted to $41,174 as compared with $80,595 for the year
ended June 30, 2002. These losses resulted from fluctuations in the currency
translations experienced prior to the Central Bank in Suriname in September
2002, setting a legal exchange rate of 2,800 Guilders to $1 U.S. dollar.

         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 $700,173 and $880,133
respectively, representing 50% of the net pre-tax income generated by the
casino.

         Foreign Income Taxes. During the year ended June 30, 2003, SLC recorded
income tax expenses of $310,688 payable to the Suriname Government based on a
tax rate of 50% of the estimated net taxable income pursuant to the Suriname
Hazard Games Act of 1962. During the year ended June 30, 2002, SLC recorded
income tax expenses of $756,306 payable to the Suriname Government. The
reduction in the current year's tax expense resulted primarily from a reduction
of approximately $800,000 in the Suriname casino's pre-tax income during the
current year.


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 June 30, 2002
period was primarily due to the reserve on advances to EMSI of $840,329 related
to the Vietnam project as described above.

         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 June 30, 2002
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 Promotional Expenses. 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.


                                       12
<PAGE>

         General and Administrative Expenses. General and administrative
expenses were $4,781,673 for the year ended June 30, 2002 as compared to
$4,843,306 for the year ended June 30, 2001. Included in the June 30, 2002
expenses were $3,319,167 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 June 30,
2001 expenses were $3,324,286 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 June 30, 2002 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
June 30, 2002 expense is primarily attributable to interest on loans made to the
Suriname casino joint venture by the Company's joint venture partner. The June
30, 2001 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.

         Reserve for Advances to EMSI. During the year ended June 30, 2001, the
Company had no reserves. As required by SFAS No. 114 regarding evaluation of
assets for financial impairment, the Company has charged to operations during
fiscal 2002, $840,329 of the amounts advanced in connection with the Vietnam
project because of the uncertainty of consummation of the Exchange Agreement,
and because of the uncertainty of collection on the advances.

         Foreign Exchange Loss. During the year ended June 30,2002, the loss
from foreign exchange amounted to $80,595 as compared with $41,308 for the year
ended June 30, 2001. These losses resulted from fluctuations in the currency
translations experienced during the respective years.

         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.

         Foreign Income taxes. During the year ended June 30, 2002, SLC recorded
income tax expenses of $756,306 payable to the Suriname Government based on a
tax rate of 50% of the estimated net taxable income pursuant to the Suriname
Hazard Games Act of 1962. During the year ended June 30, 2001, SLC recorded
income tax expenses of $269,097 payable to the Suriname Government. The increase
in the June 30, 2002 tax expense resulted primarily from the significant
increase in revenues.

                                       13
<PAGE>

         Liquidity and Capital Resources. Since August 1999, the Company's
almost sole recurring source of cash, exclusive of loans and securities sales,
was the cash payments from SLC which is the joint venture entity that owns the
Suriname casino. Parbhoe is the Company's 50% joint venturer in SLC and is the
lessor of the premises where SLC conducts its operations. Dorsett, the Company's
100% owned Delaware subsidiary, manages SLC and the casino. Cash payments from
SLC to LWSI, Parbhoe or their affiliates are made by SLC, under the management
control of Dorsett, according to a cash allocation priority established under
the Joint Venture Agreement. Such payments were initially allocated to
management fees and the repayment of construction and other loans and interest.
As of June 2003, all loans have been repaid by SLC in full and all distributions
are currently first used to pay management fees to Dorsett and then are to be
distributed equally to the two venture partners. Significant disputes and
litigation have arisen between Parbhoe and the Company and its affiliates, and a
Suriname Court has held the lease agreement to be unenforceable by SLC, a
decision which SLC is currently appealing. (See "Litigation Proceedings").

         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 which
was reduced to $.50 per share in October, 2003. 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 225,000 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. During the past fiscal year, as part of the restructuring of its
interests in the Vietnamese project, the Company repurchased 300,000 of the
375,000 shares previously sold or issued for the aggregate price of $375,000.

                                       14
<PAGE>

         The Sakhalin Project has consistently generated cash losses for the
Company. Under an agreement entered into in April 2003, the Company transferred
one half of its leasehold rights to a third party, and is seeking to dispose of
its remaining interests in the Project (See "Sakhalin Project".)

         As of June 30, 2002, the Company had advanced $1,271,472 to EMSI to
develop the Lottery Gaming System Contract and to support its operations and
those of PLC in Vietnam in anticipation of the acquisition of EMSI by the
Company. As set forth above, the Company has converted its interests in EMSI
into common shares and warrants of PLC.

         On June 30, 2003, the Company had approximately $3,521,000 in cash or
cash equivalents on hand. The Company believes that it has adequate cash
reserves for its operations for the next twelve months.

         Off-Balance Sheet Arrangements. The Company has no off-balance sheet
arrangements that have or are reasonably likely to have a current or future
effect on the Company's financial condition, changes in financial condition,
revenues or expenses, results of operations, liquidity, capital expenditures or
capital resources that is material to investors.

         Recent Accounting Standards and Pronouncements

         In June 2001, the Financial Accounting Standards Board ("FASB") issued
Statements of Financial Accounting Standards ("SFAS") No. 143, "Accounting for
Asset Retirement Obligations". SFAS No. 143, 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. The Company's financial reporting and presentation has not been
materially affected by the adoption of this standard.

         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's adoption of SFAS No. 144 did not have a material effect on the
Company's financial statements.

         In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB
Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical
Corrections". Among other provisions, SFAS No. 145 rescinds SFAS No. 4,
"Reporting Gains and Losses from Extinguishment of Debt". Accordingly, gains or
losses from extinguishment of debt shall not be reported as extraordinary items
unless the extinguishment qualifies as an extraordinary item under the criteria

                                       15
<PAGE>

of Accounting Principles Board ("APB") Opinion No. 30, "Reporting the Results of
Operations - Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and Transactions".
Gains or losses from extinguishment of debt that do not meet the criteria of APB
No. 30 should be reclassified to income from continuing operations in all prior
periods presented. The Company's adoption of SFAS No. 145 did not have a
material effect on the Company's financial statements.

         In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities" which is effective for exit or
disposal activities that are initiated after December 31, 2002. This statement
requires that a liability for a cost associated with an exit or disposal
activity be recognized when the liability is incurred. SFAS No. 146 also
establishes that fair value is the objective for initial measurement of the
liability. There was no material impact on the Company's financial statements as
a result of adopting SFAS No. 146. On November 25, 2002, the FASB issued FASB
Interpretation No. 45 ("FIN 45"), "Guarantor's Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of
Others, an interpretation of FASB Statements No. 5, 57 and 107 and Rescission of
FASB Interpretation No. 34." FIN 45 clarifies the requirements of FASB Statement
No. 5, "Accounting for Contingencies", relating to the guarantor's accounting
for, and disclosure of, the issuance of certain types of guarantees. The
disclosure requirements of FIN 45 are effective for financial statements of
interim or annual periods that end after December 15, 2002. The disclosure
provisions have been implemented and no disclosures were required at June 30,
2003. The provisions for initial recognition and measurement are effective on a
prospective basis for guarantees that are issued or modified after December 31,
2002, irrespective of the guarantor's year-end. FIN 45 requires that upon
issuance of a guarantee, the entity must recognize a liability for the fair
value of the obligation it assumes under that guarantee. The Company's adoption
of FIN 45 in 2003 has not and is not expected to have a material effect on the
Company's financial statements.

         On November 25, 2002, the FASB issued FASB Interpretation No. 45 ("FIN
45"), "Guarantor's Accounting and Disclosure Requirements for Guarantees,
Including Indirect Guarantees of Indebtedness of Others, an interpretation of
FASB Statements No. 5, 57 and 107 and Rescission of FASB Interpretation No. 34."
FIN 45 clarifies the requirements of FASB Statement No. 5, "Accounting for
Contingencies", relating to the guarantor's accounting for, and disclosure of,
the issuance of certain types of guarantees. The disclosure requirements of FIN
45 are effective for financial statements of interim or annual periods that end
after December 15, 2002. The disclosure provisions have been implemented and no
disclosures were required at June 30, 2003. The provisions for initial
recognition and measurement are effective on a prospective basis for guarantees
that are issued or modified after December 31, 2002, irrespective of the
guarantor's year-end. FIN 45 requires that upon issuance of a guarantee, the
entity must recognize a liability for the fair value of the obligation it
assumes under that guarantee. The Company's adoption of FIN 45 in 2003 has not
and is not expected to have a material effect on the Company's financial
statements.

         In December 2002, the FASB issued SFAS No. 148, "Accounting for
Stock-Based Compensation, Transition and Disclosure". SFAS No. 148 provides
alternative methods of transition for a voluntary change to the fair value based
method of accounting for stock-based employee compensation. SFAS No. 148 also
requires that disclosures of the pro forma effect of using the fair value method
of accounting for stock-based employee compensation be displayed more
prominently and in a tabular format. Additionally, SFAS No. 148 requires
disclosure of the pro forma effect in interim financial statements. The
transition and annual disclosure requirements of SFAS No. 148 are effective for
the Company's June 30, 2003 financial statements. The Company's adoption of SFAS
No. 148 did not have a material effect on its financial statements.

         In January 2003, the FASB issued FIN 46, "Consolidation of Variable
Interest Entities - an interpretation of ARB No. 51", which addresses
consolidation of variable interest entities. FIN 46 expands the criteria for
consideration in determining whether a variable interest entity should be
consolidated by a business entity, and requires existing unconsolidated variable
interest entities (which include, but are not limited to, Special Purpose

                                       16
<PAGE>

Entities, or SPEs) to be consolidated by their primary beneficiaries if the
entities do not effectively disperse risks among parties involved. This
interpretation applies immediately to variable interest entities created after
January 31, 2003, and to variable interest entities in which an enterprise
obtains an interest after that date. It applies in the first fiscal year or
interim period beginning after June 15, 2003, to variable interest entities in
which an enterprise holds a variable interest that it acquired before February
1, 2003. The adoption of FIN 46 is not expected to have a material effect on the
Company's financial statements.

         Reclassifications - Certain prior year balances have been reclassified
to conform to the 2003 presentation.


Item 7.  Financial Statements

         See pages F-1 through F-41 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

Item 8A. Controls and Procedures.

The management of the Company with the participation of the principal executive
and financial officers of the Company have evaluated the disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) or 15d-15(e)) of the
Company as at June 30, 2003, and concluded that they are adequate.


                                    PART III

Item 9. Directors and Executive Officers of Registrant

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, 2003 are as follows:

 Name                   Age         Position and Office Held
-----                   ---         ------------------------

Dallas Dempster         61(1)       President, Chief Executive Officer
                                    and Director


James V. Stanton        71(1)(2)    Vice Chairman of the Board of Directors


Miles R. Greenberg      46          Chief Financial Officer, Senior Vice
                                    President, Secretary and Director


                                       17
<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 board of Mountaineer Gaming Group, 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 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.

                                       18
<PAGE>

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, 2003, all of its directors and executive
officers, were in compliance with all filing requirements applicable to them
during the fiscal year ending June 30, 2003.

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, 2000 to June
30, 2003. No other executive officer of the Company serving as an executive
officer on June 30, 2003, or since that date, received a total salary and bonus
of $100,000 for the periods specified.

<TABLE>
<CAPTION>
                                        SUMMARY COMPENSATION TABLE


                                                                               Long Term Compensation
                                                                                     Awards                Payouts
                                                                        Other      Restricted    Securities    LTIP     All other
Name and                               Annual Compensation              Annual        Stock      Underlying    Payouts  Compensation
Principal Position           Year            Salary       Bonus      Compensation  Compensation Options/SAR's
                                              ($)          ($)            ($)          ($)           ($)         ($)        ($)
<S>                      <C>               <C>          <C>          <C>           <C>          <C>            <C>      <C>
Dallas Dempster          July 1, 2002 to
President, Chief         June 30, 2003     $300,000     $112,500(1)
Executive Officer and    July 1, 2000 to
Director                 June 30, 2002     $300,000
                         June 30, 2001     $300,000

Miles R. Greenberg       July 1, 2002 to
Chief Financial          June 30, 2003     $150,000                                                 25,000
Officer, Senior Vice     July 1, 2001 to
President, Secretary     June 30, 2002     $140,000                                                 25,000
and Director             June 1, 2000 to
                         This year         $140,000

David Hartley            July 1, 2002 to
President Casino         March 31, 2003    $112,500
Division (2)             July 1, 2001 to
                         June 30, 2002     $200,000
                         July 1, 2000 to
                         June 30, 2001     $250,000
</TABLE>

                                       19
<PAGE>

     All figures are adjusted to reflect the twenty-into-one share consolidation
in October 2001.

(1) A grant of 150,000 shares of common stock priced at $.75 per share was
awarded to Dallas Dempster as a bonus during the year ended June 30, 2003. Held
in the name of Tilden Park Limited, for the benefit of Mr. Dempster's family.

(2) Reflects amounts paid to Star Casinos Limited for the personal services of
Mr. Hartley provided by such entity. Beginning July 1, 2002, Mr. Hartley
resigned his post as President of the Casino Division, but continued to act as a
consultant to the Company until March 2003.

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


Option Grants for the Twelve Months Ended June 30, 2003

On October 16, 2002 the Board of Directors reduced the exercise price of all
Plan and non-Plan options (and warrants) previously granted to any then officer
or director, to a price of $.50.

Options to purchase 25,000 shares of common stock at an exercise price of $.50
per share were granted to Miles Greenberg during the year ended June 30, 2003.
Options to purchase 50,000 shares of common stock at an exercise price of $.50
per share were also granted to James Stanton, a director and consultant to the
Company during such year. No options were exercised by any officer 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, 2003 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>
                                                               Number of Securities              Value of Unexercised
                                                               Underlying Unexercised                In-the-Money
                                                             Options at Fiscal Year End        Options at Year End($)(1)
                               Shares
                             Acquired on        Value      ------------      -------------     ------------     -------------
                            Exercise (#)    Realized ($)    Exercisable      Unexercisable      Exercisable     Unexercisable

<S>                               <C>                     <C>                                     <C>
Dallas Dempster                   0               -       $   100,000                             $96,000
Miles R. Greenberg                0               -            53,750                              51,000
</TABLE>

(1) Based on the per share closing price of the Company's Common Stock of $1.35
on June 30, 2003, as reported on the OTC Bulletin Board.



                                       20
<PAGE>

The Company's outstanding options at June 30, 2003 totaled 248,125. 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 1 to the Consolidated Financial
Statements included in this Form 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. Directors who are employees of the Company receive no additional
compensation for their services rendered as directors. Mr. Stanton acts as a
consultant to the Company for which he receives a fee of $5000 per month. In
fiscal year 2003, Mr. Stanton also received a grant of options to purchase
50,000 shares of common stock at an exercise price of $.50 per share. All
directors are reimbursed for reasonable expenses incurred in connection with
their services rendered as directors.

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 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 20, 2003, 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
September 30, 2003, as adjusted in each case pursuant to Rule 13-3(d)1 under the
Securities and Exchange Act of 1934. As of September 30, 2003, there were
1,073,777 shares of Common Stock outstanding.

                                       21
<PAGE>

<TABLE>
<CAPTION>
                                                   Total Number of Shares     Percentage of
Name and Address of Stockholder                      Beneficially Owned      Voting Shares*
<S>                                                  <C>                  <C>

Dallas Dempster (1)  President, Director                     267,418              22.8%

James V. Stanton (2) Vice Chairman, Director                 115,160               9.7%

Miles R. Greenberg-Senior Vice President-Finance,
Treasurer and Chief Financial Officer, Director (3)           53,750               4.8%

Auschina Investment Co. Limited
4002A Central Pty Ltd
18 Harbour Road, Wanchai, Hong Kong                          75,000                7.0%

Danville Investment Pty Ltd
30 Irvine Street
Peppermint Grove, Western Australia                          74,053                6.9%

Richard DeVries Professional Corp.
171, 5005 Dalhousie Drive NW
Calgary, Alberta                                             66,667                6.2%

All executive officers and directors
  as a group (3 persons)                                    436,329               32.7%
</TABLE>

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

(2) 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 $.50 per share, and currently exercisable options to purchase
75,000 shares of Common Stock at $.50 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.

(3) Represents currently exercisable options to purchase 53,750 shares of Common
Stock at $.50 per share.


         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.



                                       22
<PAGE>

Item 12. Certain Relationships and Related Transactions

         The Company believes 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 July
2003, the Company repurchased all 36,500 shares from Star at a price of $1.00
per share for a total of $36,500.

         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
and further reduced to $.50 on October 16, 2002 and the option exercise dated
was extended to January 18, 2006. 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. Stanto 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.

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

         (a)      See list of Exhibits below.

         (b)      During the forth quarter of the fiscal year ended June 30,
                  2003, the Company filed on April 10, 2003 a Current Report on
                  Form 8-K, concerning events relating to the acquisition of
                  shares by the Company in PLC.

Exhibit No.
----------

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))



                                       23
<PAGE>

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)

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)

                                       24
<PAGE>

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)

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 betwee
         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)

10.16 Agreement of Ownership Structure in the Sakhali
         Palace Resort Project dated as of June 25, 1999 between the Company,
         Arter Capital Ltd. And Valmet S.A. (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

31.1 Certification of principal executive officer pursuant to
         Rule 15d-14.*

31.2 Certification of principal financial officer pursuant to Rule 15d-14.*

32.1 Certification of Chief Executive Officer pursuant to 18 U.S.C Section
         1350.*

32.2 Certification of Chief Financial Officer pursuant to 18 U.S.C. Section
         1350.*

* Filed herewith

Item 14. Principal Accountant Fees and Services

N/A





                                       25
<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 14, 2003

    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 14, 2003

James V. Stanton        Vice Chairman and Director        October 14, 2003

Miles R. Greenberg      Chief Financial Officer and
                        Director (Principal Financial
                        Officer Chief Accounting
                        Officer)                          October 14, 2003






                                       26
<PAGE>

               LOTTERY & WAGERING SOLUTIONS, INC. AND SUBSIDIARIES

                        F/K/A CCA COMPANIES INCORPORATED

                                    CONTENTS





                                                                           PAGE

Independent Auditors' Report............................................... F-2

Consolidated Balance Sheets as of June 30, 2003 and 2002................... F-3

Consolidated Statements of Operations for the years ended June 30, 2003,
 2002 and 2001............................................................. F-4

Consolidated Statements of Stockholders' Equity for the years ended
 June 30, 2003, 2002 and 2001.............................................. F-5

Consolidated Statements of Cash Flows for the years ended
 June 30, 2003, 2002 and 2001.............................................. F-8

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




                                      F-1

<PAGE>


                          INDEPENDENT AUDITORS' REPORT
                          ----------------------------

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

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, 2003 and 2002, and the
related consolidated statements of operations, stockholders' equity, and cash
flows for each of the years ended June 30, 2003, 2002 and 2001. 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, 2003 and 2002, and the results of their operations and their cash flows for
each of the years ended June 30, 2003, 2002 and 2001 in conformity with
accounting principles generally accepted in the United States of America.

As discussed in Note 9, the Company's consolidated subsidiary, Suriname Leisure
Company, received an order evicting them from the premises they occupy in
Suriname where all casino operations are conducted. This casino provides the
Company with the majority of its working capital. The Company is presently
appealing the order and seeking an extension of a previously granted stay of the
order of eviction. However, there is no assurance that an extension of the stay
will be granted or that the appeal will be successful. The Company's plans are
discussed in Note 9 should they be unsucessful in the appeal process. The
consolidated financial statements do not include any adjustments to reflect the
possible future effects on the recoverability and classification of assets or
the amounts and classification of liabilities that may result from the outcome
of this uncertainty.

SPEAR, SAFER, HARMON & CO.

Miami, Florida
October 3, 2003

                                      F-2
<PAGE>


<TABLE>
<CAPTION>


                             LOTTERY & WAGERING SOLUTIONS, INC. AND SUBSIDIARIES
                                     F/K/A CCA COMPANIES INCORPORATED
                                       Consolidated Balance Sheets
                                          June 30, 2003 and 2002


                                              A S S E T S

                                                                    2003                        2002

                                                             ----------------------------------------------
<S>                                                        <C>                         <C>
Current Assets:
   Cash and cash equivalents                                 $       3,521,418           $        1,965,062
   Prepaid and other current assets                                     67,554                      151,322
   Advances to EMSI, net                                                    -                       250,000
                                                             -----------------           ------------------

         Total Current Assets                                        3,588,972                    2,366,384

Property, equipment and leasehold improvements, net                  3,429,045                    3,993,221
Sakhalin development costs                                           1,000,000                    2,100,000
Investment in PLC                                                    1,271,472                           -
Gaming license - Suriname                                              200,000                           -
Other assets                                                            20,300                       20,300
                                                             -----------------           ------------------

                                                             $       9,509,789           $        8,479,905
                                                             =================           ==================

<CAPTION>

                                                LIABILITIES AND STOCKHOLDERS' EQUITY

<S>                                                        <C>                         <C>
Current Liabilities:
   Accounts payable                                          $          51,475           $           92,832
   Accrued expenses                                                    881,137                      515,998
   Interest payable                                                    291,448                      197,488
   Income tax payable                                                  556,884                      598,996
   Note payable                                                        515,900                      515,900
   Dividend payable                                                    753,173                           -
   Investor deposits and other                                              -                        30,000
                                                             -----------------           ------------------

         Total Current Liabilities                                   3,050,017                    1,951,214
                                                             -----------------           ------------------

Minority interest in consolidated subsidiary                         2,564,734                    1,864,562
                                                             -----------------           ------------------

Stockholders' Equity:
   Preferred stock                                                          -                            -
   Common stock                                                          1,110                        1,273
   Additional paid-in capital                                       47,933,177                   48,210,642
   Accumulated deficit                                             (44,039,249)                 (43,547,786)
                                                             -----------------           ------------------

         Total Stockholders' Equity                                  3,895,038                    4,664,129
                                                             -----------------           ------------------

                                                             $       9,509,789           $        8,479,905
                                                             =================           ==================

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

</TABLE>

                                      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, 2003, 2002 and 2001



                                                              2003                    2002                     2001
-------------------------------------------------------------------------------------------------------------------------
<S>                                                    <C>                      <C>                      <C>
Casino Revenues                                         $     7,235,667          $    7,113,988           $    5,489,191
                                                        ---------------          --------------           --------------

Operating Expenses:
   Marketing and promotional                                    400,500                 322,064                  332,730
   General and administrative                                 6,016,104               4,781,673                4,843,306
   Compensation paid by the issuance of
    stock options and warrants                                       -                       -                    13,000
                                                        ---------------          --------------           --------------

         Total Operating Expenses                             6,416,604               5,103,737                5,189,036
                                                        ---------------          --------------           --------------

Income from Operations                                          819,063               2,010,251                  300,155
                                                        ---------------          --------------           --------------

Other Income (Expense):
   Recovery of reserve for Advances to EMSI                     840,329                      -                        -
   Reserve for impairment of Advances to EMSI                        -                 (840,329)                      -
   Interest income                                                9,404                  37,121                    1,862
   Interest expense                                              (6,455)                (94,520)                (198,330)
   Foreign exchange losses                                      (41,174)                (80,595)                 (41,308)
   Foreign exchange fees                                       (348,596)                     -                        -
                                                        ---------------          --------------           -------------

         Total Other Income (Expense)                           453,508                (978,323)                (237,776)
                                                        ---------------          --------------           --------------

Income Tax Provision                                           (310,688)               (756,306)                (269,097)
                                                        ---------------          --------------           --------------

Income (Loss) from Operations Before
  Minority Interest                                             961,883                 275,622                 (206,718)

Minority Interest                                              (700,173)               (880,133)                (312,947)
                                                        ---------------          --------------           --------------

Net Income (Loss)                                       $       261,710          $     (604,511)          $     (519,665)
                                                        ===============          ==============           ==============

Basic Earnings (Loss) Per Share                         $          0.22          $        (0.61)          $        (0.60)
                                                        ===============          ==============           ==============

Diluted Earnings (Loss) Per Share                       $          0.18          $        (0.61)          $        (0.60)
                                                        ===============          ==============           ==============

Weighted Average Number of Common
   Shares Outstanding                                         1,189,872                 985,664                  863,026
                                                        ===============          ==============           ==============

Weighted Average Number of Common
   Shares Outstanding - Assuming Dilution                     1,461,122                 985,664                  863,026
                                                        ===============          ==============           ==============

</TABLE>


The accompanying notes are an integral part of these 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       Accumulated
                                                  Shares          Amount      Paid-In 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 share               66,667              67           99,933                -           100,000

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>


The accompanying notes are an integral part of these 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         Accumulated
                                                       Shares          Amount      Paid-In 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 with FEC & EA          (18,893)             (19)               19               -               -

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

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

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

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

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

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>

The accompanying notes are an integral part of these 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         Accumulated
                                                    Shares           Amount      Paid-In Capital        Deficit            Total
                                                 ------------   --------------   ---------------   -------------------------------
<S>                                                <C>         <C>              <C>               <C>               <C>
Balance - June 30, 2002                             1,273,109   $        1,273   $    48,210,642   $  (43,547,786)   $   4,664,129

Issuance of common stock to Dempster's nominee
   as bonus at $0.75 per share                        150,000              150           112,350               -           112,500
Repurchase of shares from MSC                          (4,450)              (5)           (9,340)              -            (9,345)
Repurchase of shares from the four
  private investors                                  (300,000)            (300)         (374,700)              -          (375,000)
Repurchase of shares from other investors              (8,382)              (8)           (5,775)              -            (5,783)
Dividends declared                                         -                -                 -          (753,173)        (753,173)

Net income for 2003                                        -                -                 -           261,710          261,710
                                                 ------------   --------------   ---------------   --------------    -------------

Balance - June 30, 2003                             1,110,277   $        1,110   $    47,933,177   $  (44,039,249)   $   3,895,038
                                                 ============   ==============   ===============   ==============    =============
</TABLE>

The accompanying notes are an integral part of these 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, 2003, 2002 and 2001



                                                                    2003                    2002                     2001

                                                             ------------------------------------------------------------------
<S>                                                           <C>                     <C>                       <C>
Cash Flows from Operating Activities:
   Net income (loss)                                          $       261,710         $       (604,511)         $      (519,665)
                                                              ---------------         ----------------          ---------------
   Adjustments to reconcile net income (loss) to
       net cash provided by operating activities:
     Minority interest                                                700,173                  880,133                  312,947
     Compensation paid by the issuance of
      stock options and warrants                                           -                        -                    13,000
     Gain on cancellation of shares                                        -                   (18,900)                      -
     Recovery of reserve for Advances to EMSI                        (840,329)                      -                        -
     Reserve for impairment of Advances to EMSI                            -                   840,329                       -
     Depreciation and amortization                                    755,476                  755,562                  770,478
     Loss on sale/disposal of assets                                    5,174                   35,461                       -
     Bonus paid to Dempster by the issuance of
       common stock to Dempster's nominee                             112,500                       -                        -
     Consulting services provided for common stock                         -                   132,000                   72,000
     Deferred income taxes                                                 -                  (287,884)                  95,000
     Changes in current assets and liabilities:
       Prepaid expenses and other current assets                       83,768                  (81,607)                 (10,574)
       Accounts payable, accrued expenses and
        interest payable                                              277,742                    4,994                  (45,478)
       Income taxes payable                                           (42,112)                 436,996                   17,349
                                                              ---------------         ----------------          ---------------

         Total Adjustments                                          1,052,392                2,697,084                1,224,722
                                                              ---------------         ----------------          ---------------

Net Cash Provided by Continuing Operations                          1,314,102                2,092,573                  705,057
Net Cash Used in Discontinued Operations                                   -                   (37,000)                 (57,000)
                                                              ---------------         ----------------          ---------------

Net Cash Provided by Operating Activities                           1,314,102                2,055,573                  648,057
                                                              ---------------         ----------------          ---------------

Cash Flows from Investing Activities:
   Additions to property and equipment                               (196,475)                 (40,409)                 (26,396)
   Proceeds from sale of equipment                                         -                     1,360                       -
   Proceeds from sale of rights to one half
     of the Sakhalin Project                                        1,300,000                       -                        -
   Commissions paid on sale of rights to
    one half of the Sakhalin Project                                 (200,000)                      -                        -
   Project development costs and other                                     -                        -                   (19,147)
   Payment for gaming license - Suriname                              (60,000)                      -                        -
   Costs incurred on behalf of and funds advanced to EMSI            (181,143)                (722,535)                (342,000)
                                                              ---------------         ----------------          ---------------

Net Cash Provided by (Used in) Investing Activities                   662,382                 (761,584)                (387,543)
                                                              ---------------         ----------------          ---------------

</TABLE>

The accompanying notes are an integral part of these 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, 2003, 2002 and 2001



                                                                    2003                    2002                     2001
                                                             -------------------------------------------------------------------
<S>                                                          <C>                      <C>                      <C>
Cash Flows from Financing Activities:
   Investor deposits (refunded) received                      $       (30,000)         $            -           $       330,000
   Proceeds from sale of common stock                                      -                   150,000                  100,000
   Repurchase of shares from Four Private Investors                  (375,000)                      -                        -
   Repurchase of shares from other investors                           (5,783)                      -                        -
   Repurchase of MSC shares                                            (9,345)                      -                        -
   Private placement fees                                                  -                   (50,000)                      -
   Borrowings                                                              -                        -                   142,767
   Repayments of notes payable                                             -                  (130,800)                (346,967)
                                                              ---------------          ---------------          ---------------

Net Cash (Used in) Provided by Financing Activities                  (420,128)                 (30,800)                 225,800
                                                              ---------------          ---------------          ---------------

Net Increase in Cash and Cash Equivalents                           1,556,356                1,263,189                  486,314

Cash and Cash Equivalents, Beginning of Year                        1,965,062                  701,873                  215,559
                                                              ---------------          ---------------          ---------------

Cash and Cash Equivalents, End of Year                        $     3,521,418          $     1,965,062          $       701,873
                                                              ===============          ===============          ===============


Supplemental Disclosures of Cash Flow
  Information:
     Cash paid during the years for:
       Interest                                                $            -         $         7,014            $       34,546
       Foreign income taxes                                            352,800                607,194                   156,748
     Non-cash transactions:
       Conversion of the advances to EMSI
        into investment in PLC                                       1,271,472                     -                         -
       Purchase of gaming licence                                      200,000                     -                         -
       Portion of gaming licence deferred                             (140,000)                    -                         -
       Dividend declared, but not paid to
        minority interest partner                                      753,173                     -                         -
       Issuance of common stock to consultants
        for services                                                        -                  12,000                    72,000
       Compensation charges incurred on reducing
        exercise price of options and warrants
        granted to directors and others                                     -                      -                     13,000
       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 cancellations of shares issued to
         FEC and EA                                                         -                  18,900                        -



</TABLE>


The accompanying notes are an integral part of these 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, 2003, 2002 and 2001



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 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") is
              based in Cyprus and Sakhalin City Center Ltd. ("SCC") is based in
              the Russian Federation.

              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 (except for
              occasional debt and equity offerings) on the working capital
              generated in Suriname to finance substantially all of its
              activities (see Notes 2 and 9).

              In addition, the Company during 2003 transferred one half of its
              rights in the land lease and is attempting to sell its remaining
              rights in the land lease it acquired for developing and operating
              a casino and mountain resort project on Sakhalin Island (see Note
              2). In addition, the Company 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.

              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 (See Note 3 regarding risks in Suriname). 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, 2003, cash set
              aside for replacements net of expenditures amounted to
              approximately $101,000.


                                      F-10
<PAGE>
               LOTTERY & WAGERING SOLUTIONS, INC. AND SUBSIDIARIES

                        F/K/A CCA COMPANIES INCORPORATED


             Notes to Consolidated Financial Statements (Continued)


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

              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 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.

              Investments - The Company accounts for its investment in the
              common stock of Pacific Lottery Corporation ("PLC") at cost. PLC
              is traded on the Canadian Venture Exchange and, therefore, does
              not meet the criteria for reporting at fair value pursuant to FAS
              115, "Accounting for Certain Investments in Debt and Equity
              Securities."

              Foreign Exchange Fees - During the year ended June 30, 2003, the
              Central bank in Suriname in September 2002 set the legal exchange
              rate of 2800 Suriname Guilders to $1 U.S. dollar. As a result,
              revenues generated and expenses incurred from Guilders after this
              date by the Suriname Casino were recorded by the Company in U.S.
              dollars based on this legal exchange rate. However, no Suriname
              banks or government agencies maintain or supply U.S. dollars for
              exchange and therefore the Suriname Casino continues to exchange
              its Guilders for U.S. dollars at the local cambios as it has done
              in the past. As a result of the legal limit placed on the exchange
              rate, cambios now charge fees to exchange currency at the new
              legal exchange rate which in effect, represent the difference
              between the legal exchange rate and the actual market exchange
              rate. Such fees have amounted to approximately $349,000 during the
              current year.

              Advertising Costs - Costs incurred to produce marketing material
              or advertise are generally expensed when incurred. Advertising
              costs for the years ended June 30, 2003, 2002 and 2001 were
              approximately $24,000, $12,800 and $8,600, respectively.

              Income Taxes - For the purpose of these consolidated financial
              statements, the Company has adopted the provisions of Statement of
              Financial Accounting Standards ("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.


                                      F-11

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

                        F/K/A CCA COMPANIES INCORPORATED


             Notes to Consolidated Financial Statements (Continued)



NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

              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 3 and 12).

              Stockholders' Equity - The stockholders' equity consists of
              accumulated deficit, additional paid-in capital, preferred stock
              and common stock. In 2003 and 2002, the Company was authorized to
              issue 5,000,000 shares of preferred stock with a par value of $.01
              per share. Specific powers, preferences, rights, qualifications,
              limitations and restrictions are to be designated by the Company's
              Board of Directors at the time of issuance. In 2003 and 2002,
              there were no shares of preferred stock issued. In 2003 and 2002,
              the Company was authorized to issue 50,000,000 shares of common
              stock with a par value of $.001 per share of common stock. As of
              June 30, 2003, after giving effect to the Share Consolidation,
              there were 1,110,277 common shares issued and as of June 30, 2002,
              there were 1,273,109 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 - The Company accounts for stock options
              issued to employees in accordance with SFAS No. 123, "Accounting
              for Stock-Based Compensation," as amended by SFAS No. 148,
              "Accounting for Stock-Based Compensation - Transition and
              Disclosure," which permits entities to continue to apply the
              provisions of Accounting Principles Board ("APB") Opinion No. 25,
              "Accounting for Stock Issued to Employees," and provide pro forma
              disclosures of the effect on net income (loss) and net earnings
              (loss) per share for employee stock option grants as if the fair
              value based method, as defined in SFAS No. 123 and 148 in its
              annual consolidated financial statements, has been applied. The
              Company has elected to apply the provisions of APB Opinion No. 25
              and provide the pro forma disclosures required by SFAS No. 123 and
              148. Under APB Opinion No. 25, the Company recognizes no
              compensation expense related to employee stock options, as no
              options are granted at a price below the fair market value on the
              day of grant (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.


                                      F-12

<PAGE>

               LOTTERY & WAGERING SOLUTIONS, INC. AND SUBSIDIARIES

                        F/K/A CCA COMPANIES INCORPORATED


             Notes to Consolidated Financial Statements (Continued)


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

              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.

              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 impairment may exist, the assets
              are adjusted to their fair values.

              For the year ended June 30, 2000, the Company recorded charges of
              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. The Company expenses costs as incurred on the Sakhalin
              project for routine operational expenses. The total expenditure
              recorded for the years ended June 30, 2003 and 2002 was
              approximately $306,000 and $208,500, respectively.

              Impairment of Loans and Advances - The Company utilizes SFAS No.
              114, "Accounting by Creditors for Impairment of a Loan". Under the
              provisions of this statement, the Company recorded a charge during
              the year ended June 30, 2002 for approximately $840,000
              representing an impairment reserve on certain advances. The
              advances were not secured and there was no assurance that the
              advances would be repaid to the Company as of June 30, 2002.

              During April 2003, the Company received shares of common stock of
              Pacific Lottery Corporation in full payment of the Advances.
              Accordingly, the Company during the year ended June 30, 2003,
              reversed the impairment reserve of approximately $840,000 (see
              Notes 2 and 12).

              Earnings Per Share - Basic net earnings (loss) per share of common
              stock is based on the weighted average number of common shares
              outstanding during each period. Diluted earnings (loss) per share
              of common stock are computed on the basis of the weighted average
              number of common shares and common shares equivalent securities
              outstanding. Diluted earnings per share reflects the potential
              dilution that could occur if securities or other contracts were
              exercised or converted into common stock. During the years ended
              June 30, 2002 and 2001, all warrants and options had exercise
              prices greater than the existing market value of the Company's
              stock and, therefore, are deemed anti-dilutive and are not
              components of diluted earnings per share.


                                      F-13
<PAGE>

               LOTTERY & WAGERING SOLUTIONS, INC. AND SUBSIDIARIES

                        F/K/A CCA COMPANIES INCORPORATED


             Notes to Consolidated Financial Statements (Continued)


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

              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 9,375 for the year ended June 30, 2003,
              192,125 for the year ended June 30, 2002, and 192,625 for the year
              ended June 30, 2001 and warrants amounting to 32,083 for the year
              ended June 30, 2003, 185,416 for the year ended June 30, 2002, and
              231,201 for the year ended June 30, 2001 have not been included in
              the computation of diluted earnings (loss) per share 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.

              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. 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 Financial Accounting Standards Board ("FASB")
              issued Statements of Financial Accounting Standards ("SFAS") No.
              143, "Accounting for Asset Retirement Obligations". SFAS No. 143,
              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. The Company's financial reporting and presentation
              has not been materially affected by the adoption of this standard.

              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's adoption of SFAS No. 144 did not have a material effect
              on the Company's financial statements.

                                      F-14


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

                        F/K/A CCA COMPANIES INCORPORATED


             Notes to Consolidated Financial Statements (Continued)


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

              In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB
              Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13,
              and Technical Corrections". Among other provisions, SFAS No. 145
              rescinds SFAS No. 4, "Reporting Gains and Losses from
              Extinguishment of Debt". Accordingly, gains or losses from
              extinguishment of debt shall not be reported as extraordinary
              items unless the extinguishment qualifies as an extraordinary item
              under the criteria of Accounting Principles Board ("APB") Opinion
              No. 30, "Reporting the Results of Operations - Reporting the
              Effects of Disposal of a Segment of a Business, and Extraordinary,
              Unusual and Infrequently Occurring Events and Transactions". Gains
              or losses from extinguishment of debt that do not meet the
              criteria of APB No. 30 should be reclassified to income from
              continuing operations in all prior periods presented. The
              Company's adoption of SFAS No. 145 did not have a material effect
              on the Company's financial statements.

              In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
              Associated with Exit or Disposal Activities" which is effective
              for exit or disposal activities that are initiated after December
              31, 2002. This statement requires that a liability for a cost
              associated with an exit or disposal activity be recognized when
              the liability is incurred. SFAS No. 146 also establishes that fair
              value is the objective for initial measurement of the liability.
              There was no material impact on the Company's financial statements
              as a result of adopting SFAS No. 146.

              On November 25, 2002, the FASB issued FASB Interpretation No. 45
              ("FIN 45"), "Guarantor's Accounting and Disclosure Requirements
              for Guarantees, Including Indirect Guarantees of Indebtedness of
              Others, an interpretation of FASB Statements No. 5, 57 and 107 and
              Rescission of FASB Interpretation No. 34." FIN 45 clarifies the
              requirements of FASB Statement No. 5, "Accounting for
              Contingencies", relating to the guarantor's accounting for, and
              disclosure of, the issuance of certain types of guarantees. The
              disclosure requirements of FIN 45 are effective for financial
              statements of interim or annual periods that end after December
              15, 2002. The disclosure provisions have been implemented and no
              disclosures were required at June 30, 2003. The provisions for
              initial recognition and measurement are effective on a prospective
              basis for guarantees that are issued or modified after December
              31, 2002, irrespective of the guarantor's year-end. FIN 45
              requires that upon issuance of a guarantee, the entity must
              recognize a liability for the fair value of the obligation it
              assumes under that guarantee. The Company's adoption of FIN 45 in
              2003 has not and is not expected to have a material effect on the
              Company's financial statements.

              In December 2002, the FASB issued SFAS No. 148, "Accounting for
              Stock-Based Compensation - Transition and Disclosure". SFAS No.
              148 provides alternative methods of transition for a voluntary
              change to the fair value based method of accounting for
              stock-based employee compensation. SFAS No. 148 also requires that
              disclosures of the pro forma effect of using the fair value method
              of accounting for stock-based employee compensation be displayed
              more prominently and in a tabular format. Additionally, SFAS No.
              148 requires disclosure of the pro forma effect in interim
              financial statements. The transition and annual disclosure
              requirements of SFAS No. 148 are effective for the Company's June
              30, 2003 financial statements. The Company's adoption of SFAS No.
              148 did not have a material effect on its financial statements.


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

                        F/K/A CCA COMPANIES INCORPORATED


             Notes to Consolidated Financial Statements (Continued)



NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

              In January 2003, the FASB issued FIN 46, "Consolidation of
              Variable Interest Entities - an interpretation of ARB No. 51",
              which addresses consolidation of variable interest entities. FIN
              46 expands the criteria for consideration in determining whether a
              variable interest entity should be consolidated by a business
              entity, and requires existing unconsolidated variable interest
              entities (which include, but are not limited to, Special Purpose
              Entities, or SPEs) to be consolidated by their primary
              beneficiaries if the entities do not effectively disperse risks
              among parties involved. This interpretation applies immediately to
              variable interest entities created after January 31, 2003, and to
              variable interest entities in which an enterprise obtains an
              interest after that date. It applies in the first fiscal year or
              interim period beginning after June 15, 2003, to variable interest
              entities in which an enterprise holds a variable interest that it
              acquired before February 1, 2003. The adoption of FIN 46 is not
              expected to have a material effect on the Company's financial
              statements.

              Reclassifications - Certain prior year balances have been
              reclassified to conform to the 2003 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 retained a lien and security
              interest in the property and equipment until the advance was paid
              back by SLC. Repayment was subject to certain restrictions based
              upon an obligation to repay a loan received from Parbhoe (see Note
              6). 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. In 2003, SLC repaid the balance of
              the loan and interest due to the Company.

              Based upon the terms in the Suriname Casino Agreement, in 1998,
              Parbhoe and SLC entered into a lease agreement (the "Casino
              Lease"). Pursuant to the Casino Lease, Parbhoe leased two floors
              to SLC for 15 years ending February 2013 (see Notes 1 and 8).

                                      F-16

<PAGE>

               LOTTERY & WAGERING SOLUTIONS, INC. AND SUBSIDIARIES

                        F/K/A CCA COMPANIES INCORPORATED


             Notes to Consolidated Financial Statements (Continued)



NOTE 2 - LINES OF BUSINESS (CONTINUED)

              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 the two leased floors,
              totaling approximately 20,000 square feet, in the Plaza Hotel,
              which is in downtown Paramaribo. The Suriname Casino has
              approximately 15 gaming tables, 181 slot machines and a 50-seat
              restaurant.

              The Company is currently contesting the sub-district court's order
              to evict SLC from the Plaza Hotel in Suriname (see Note 9).

              SAKHALIN ISLAND (RUSSIAN FEDERATION) CASINO AND RESORT

              The Company acquired rights and had 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.

              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, based on an independent appraisal dated July 1, 2002,
              believed that the net remaining costs (after the above mentioned
              impairment charge) capitalized to secure the lease with the City
              for the land and an existing ski resort, the costs expended
              principally for demolition and the relocation of the residents
              living on the site, had not been financially impaired.
              Accordingly, approximately $2,100,000 expended in connection with
              obtaining the lease agreement and demolition costs remained on the
              Company's consolidated balance sheet.

              The Sakhalin Project requires substantial financing to progress
              further. The Company is making efforts to market the plans,
              licenses and rights in order to recover the historic expenditures.
              In April 2003, SGTI entered into a series of agreements (dated as
              of March 20, 2003) under which it transferred one half of its
              leasehold rights in the Sakhalin Project to a third party for
              $1,300,000 (see Note 1). Under these agreements, SCC has subleased
              rights to approximately five acres of the property, and one half
              of the the shares of SCC which it held. The purchaser has agreed
              to return to SGTI, for nominal consideration, the shares of SCC if
              it acquires a direct lease from the City for the portion of the
              property subject to the sublease. SGTI has paid a fee of $200,000
              to a consulant in connection with this transaction (See Note 7).
              The Company is unable, at this time, to quantify what additional
              recoveries it will eventually attain. However, based upon the
              above mentioned independent appraisal, the Company believes it can
              recover the remaining balance of the Sakhalin development costs.


                                      F-17

<PAGE>

               LOTTERY & WAGERING SOLUTIONS, INC. AND SUBSIDIARIES

                        F/K/A CCA COMPANIES INCORPORATED

             Notes to Consolidated Financial Statements (Continued)


NOTE 2 - LINES OF BUSINESS (CONTINUED)

              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 and 8).

              LOTTERY AND GAMING

              In May 2001, the Company entered into a contract to acquire an
              entity Emerging Market Solutions International, Inc. ("EMSI")
              which held the exclusive right and obligation to supply an on-line
              lottery and sports lottery system, and to operate it, in Ho Chi
              Minh City and the Southern provinces of Vietnam. Certain
              conditions to that contract were not fulfilled, and the Company
              subsequently determined that it was in its best interests to
              assign its rights in that contract to a Canadian entity, Pacific
              Lottery Corporation ("PLC"), formerly known as Applied Gaming
              Solutions of Canada, Inc. ("AGS"), and to restructure its cash
              investment in the project into common shares of PLC. In a
              transaction which was consummated as of April 7, 2003, the Company
              acquired from PLC 7,962,620 of its common shares in satisfaction
              of indebtedness owed to the Company by PLC at a deemed purchase
              price of $.30 CDN per share. The transaction was part of a debt
              and equity reorganization of PLC, and a private placement by PLC
              of its common shares and warrants to a wholly-owned subsidiary of
              Genting International PLC ("Genting") for $4.5 Million CDN. The
              funds from the private placement are to be exclusively used in
              connection with the development of the online lottery program in
              Ho Chi Minh City and the Southern provinces of Vietnam. Securities
              of PLC are traded on the Canadian Venture Exchange under the
              symbol TSX-Venture: "LUK" (see Notes 1 and 12).

              The Company also received from PLC a "finders option" upon the
              closing of the private placement to compensate the Company for
              assisting in bringing about the private placement. The finders
              option consists of common stock purchase warrants to purchase
              1,400,000 additional common shares of PLC at $.30 CDN per share
              (exercisable over a twenty-four month period).


                                      F-18


<PAGE>

               LOTTERY & WAGERING SOLUTIONS, INC. AND SUBSIDIARIES

                        F/K/A CCA COMPANIES INCORPORATED

             Notes to Consolidated Financial Statements (Continued)


NOTE 2 - LINES OF BUSINESS (CONTINUED)

              The acquisition of these securities gives the Company current
              ownership of approximately 19.7% of the common shares of PLC (or
              13.6% of such common shares following the conversion to common
              shares of the outstanding preferred shares), or 11.9% of the
              common shares on a fully diluted basis.

              In the private placement, Genting acquired an approximate 30%
              equity stake in PLC, assuming all the preferred shares are
              converted into common shares of PLC, and potentially up to a 47%
              equity stake (fully diluted) assuming Genting exercises all of the
              warrants it received. Genting is a diversified investment company
              whose subsidiaries include investment holdings, property
              development and provision of sales and marketing services to
              resort-related businesses. Securities of Genting are listed on the
              Luxembourg Stock Exchange and quoted on the Singapore Stock
              Exchange.

              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.


NOTE 3 - 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 was paid. As of June 30, 2002, $5,000 was payable to
              MSC, which has been paid in 2003. In September 2002, the shares
              that the Company bought back were cancelled (see Note 8).


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

                        F/K/A CCA COMPANIES INCORPORATED

             Notes to Consolidated Financial Statements (Continued)



NOTE 3 - CAPITAL STRUCTURE, PUBLIC OFFERINGS AND PRIVATE PLACEMENTS
              (CONTINUED)


              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 and
              8).

              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 and additional paid-in
              capital and common stock have been reduced by $18,881 and $19,
              respectively, for the year ended June 30, 2002 (fair value - $1.00
              per share).

              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. As a result, the common shares
              outstanding were consolidated from 17,762,130 shares to 888,109
              and the paid-in capital was increased by $16,875 with a
              corresponding reduction in the common stock value (see Note 1).

              During the year ended June 30, 2002, the Company sold 150,000
              shares of its common stock to four private investors (the "Four
              Private Investors") and another 75,000 shares to an unrelated
              private investor 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
              treated as part of the Advances to EMSI, which was subsequently
              charged to operations during the year ended June 30, 2002 (see
              Notes 1 and 12).

              In April 2002, based upon the written instructions received from
              Mr. Frank Favretto ("Favretto"), a director of ACH, the Company
              allotted the 50,000 shares issued to ACH in March 2002 for acting
              as placement agent, and the 100,000 shares issued to ACH in March
              2002 as compensation for consulting services relating to the EMSI
              and Vietnam Lottery project, to the Four Private Investors.

                                      F-20

<PAGE>

               LOTTERY & WAGERING SOLUTIONS, INC. AND SUBSIDIARIES

                        F/K/A CCA COMPANIES INCORPORATED

             Notes to Consolidated Financial Statements (Continued)


NOTE 3 - CAPITAL STRUCTURE, PUBLIC OFFERINGS AND PRIVATE PLACEMENTS
              (CONTINUED)

              In December 2002, the Company repurchased the 300,000 shares of
              its common stock issued and allotted to the Four Private Investors
              at $1.25 per share (fair market value - $0.36 per share).

              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.

              In November 2002, the Company issued 150,000 shares of its common
              stock valued at $0.75 per share to Mr. Dallas Dempster's
              ("Dempster") nominee, as a bonus for his past services and future
              commitments as Chief Executive Officer ("CEO"), President and
              Director of the Company. The related expense of $112,500 has been
              recorded as salary (see Note 7). (fair market value - $0.75 per
              share.)

              In December 2002, the Company repurchased 3,408 shares of its
              common stock valued at $0.69 per share from Oscar fund (fair
              market value - $0.67 per share).

              In January 2003, the Company repurchased 3,855 shares of its
              common stock valued at $0.69 per share from TM Services (fair
              market value - $0.61 per share).

              In January 2003, the Company repurchased 1,119 shares of its
              common stock valued at $0.69 per share from TM Pension (fair
              market value - $0.61 per share).

              LISTING OF COMMON STOCK

              The Company's common stock is currently traded on the OTC Bulletin
              Board.


NOTE 4 - PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS

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


<TABLE>
<CAPTION>

                                                          2003                     2002

<S>                                                 <C>                      <C>
              Office equipment and other
                fixed assets                        $       337,779          $       322,474
              Casino and restaurant equipment             1,854,345                1,844,565
              Leasehold improvements                      4,472,898                4,458,152
                                                    ---------------          ---------------


                                                          6,665,022                6,625,191

              Less:  Accumulated depreciation
                and amortization                         (3,235,977)              (2,631,970)
                                                    ---------------          ---------------


                                                    $     3,429,045          $     3,993,221
                                                    ===============          ===============

</TABLE>



                                      F-21
<PAGE>

               LOTTERY & WAGERING SOLUTIONS, INC. AND SUBSIDIARIES

                        F/K/A CCA COMPANIES INCORPORATED

             Notes to Consolidated Financial Statements (Continued)


NOTE 4 - PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS (CONTINUED)

              Depreciation expense was $755,476 for the year ended June 30,
              2003, $755,562 for the year ended June 30, 2002, and $770,478 for
              the year ended June 30, 2001.

NOTE 5 - INCOME TAXES

              LWSI AND DORSETT

              At June 30, 2003, LWSI and Dorsett had United States net operating
              loss carryforwards ("NOL") of approximately $9,086,000 that expire
              at various dates through 2023. 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, 2003, 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 38% if they produce a profit in the United States in
              excess of the NOL.

              SCC

              At June 30, 2003, SCC had an NOL of approximately $3,372,000 that
              expire through 2009. NOL's 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 a 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, a 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
              Russian 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.



                                      F-22

<PAGE>


               LOTTERY & WAGERING SOLUTIONS, INC. AND SUBSIDIARIES

                        F/K/A CCA COMPANIES INCORPORATED

             Notes to Consolidated Financial Statements (Continued)


NOTE 5 - INCOME TAXES (CONTINUED)

              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.

              SURINAME CASINO

              For calendar year 2001, SLC, based on an agreement with the
              Suriname Government (the "Government"), settled and paid taxes of
              approximately $455,000. Of this amount, $250,000 was paid prior to
              June 30, 2002 and the balance of approximately $205,000 was paid
              in 2003.

              Corporate income taxes are paid by SLC in accordance with the
              Suriname Hazard Games Act of 1962 which stipulates that income
              taxes are payable at a rate of 50% of net taxable income as
              determined under Suriname tax law. Additionally, efforts by the
              Suriname legislature to initiate a fixed monthly fee on cash slot
              machines and gaming tables used in casino operations have resulted
              in the recent passing of a new tax law requiring the collection of
              such fees effective January 2003. The monthly fees based on the
              current exchange rate (2,800 Guilders = US$1.00) are approximately
              $143 per slot machine and between $1,071 and $1,429 per gaming
              table. The fees are deductible in computing the net taxable income
              of the Suriname Casino. The monthly fees will be subject to change
              as the exchange rate fluctuates and as additions or reductions in
              the numbers of slot machines and gaming tables being operated by
              the Suriname Casino occur. In the six months ended June 30, 2003,
              SLC paid approximately $271,000 towards these fees.

              SLC pays taxes, on an estimated basis in quarterly installments.
              For 2002, SLC has paid approximately $57,500 towards estimated tax
              for the first quarter of 2002, and approximately $140,000 for the
              remaining three quarters of 2002. For 2003, SLC has paid
              approximately $7,700 towards estimated tax for the first quarter
              of 2003. SLC has paid approximately $15,500 towards estimated
              taxes for the second and third quarters of 2003 after June 30,
              2003. As of June 30, 2003, SLC has accrued for approximately
              $557,000 towards the income taxes payable.

              Subsequent to June 2000, the Government 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-23

<PAGE>


               LOTTERY & WAGERING SOLUTIONS, INC. AND SUBSIDIARIES

                        F/K/A CCA COMPANIES INCORPORATED

             Notes to Consolidated Financial Statements (Continued)


NOTE 5 - INCOME TAXES (CONTINUED)

              INCOME TAX PROVISION

              The income tax provision as of June 30, 2003 consists of the
              following:

                                                          Year Ended
                                                    ------------------------
                                                        June 30, 2003

               Current:
                  U.S. Federal                          $            -
                  State and local                                    -
                  International                                 310,688
                                                        ---------------

               Total current tax provision                      310,688
                                                        ---------------

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

               Total provision for income taxes         $       310,688
                                                        ===============


              Items that give rise to deferred tax accounts as of June 30, 2003
              are as follows:

                                                           Year Ended
                                                    -------------------------
                                                         June 30, 2003

               Deferred tax assets:
                  U.S. loss carryforwards               $     4,299,000
                  International (Russian) loss
                      carryforwards                           1,011,700
                                                         --------------

               Net deferred tax asset before valuation
                 allowances                                   5,310,700
               Deferred tax asset valuation allowance         5,310,700
                                                        ---------------

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


              Realization of any portion of the Company's deferred tax asset at
              June 30, 2003 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-24
<PAGE>

               LOTTERY & WAGERING SOLUTIONS, INC. AND SUBSIDIARIES

                        F/K/A CCA COMPANIES INCORPORATED

             Notes to Consolidated Financial Statements (Continued)


NOTE 5 - INCOME TAXES (CONTINUED)

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

              Cumulative undistributed earnings of foreign subsidiaries at June
              30, 2003, were approximately $2,544,000. Although approximately
              $753,000 was repatriated from the foreign subsidiary in 2003, by
              way of dividends, the Company has sufficient NOL's to offset any
              potential income tax liability from receipts of dividends.

NOTE 6 - NOTES PAYABLE

              In January 2000, the Company borrowed $300,000 from Stanton &
              Associates ("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 interest on a convertible note of
              $350,000 from Danville Investments Pty. Ltd., Australia
              ("Danville") obtained by the Company in October 1999, in all
              principal payments, interest and management fees due to the
              Company from SLC 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 7 and 10).

              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 were exercisable at $5.00 per
              share and expired in two years from the date the underlying shares
              were registered. The Company was unable to meet the original
              repayment schedule and repaid the loan in full in February 2001
              (see Note 10).


                                      F-25

<PAGE>


               LOTTERY & WAGERING SOLUTIONS, INC. AND SUBSIDIARIES

                        F/K/A CCA COMPANIES INCORPORATED

             Notes to Consolidated Financial Statements (Continued)


NOTE 6 - NOTES PAYABLE (CONTINUED)

              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. The outstanding balance of loans owing to
              Parbhoe by LWSI has been 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 have
              been set aside to pay back the advances owed to Parbhoe (see Notes
              2 and 8).

NOTE 7 - RELATED PARTY TRANSACTIONS

              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. The agreement also binds the Casino Consultant to a
              two-year non-compete, non-solicitation provision after termination
              of the agreement.

              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 was no
              longer the president of the Casino Division of the Company, but
              continued 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
              Casino consultant provided consulting services up to March 2003.

              The Company paid the Casino Consultant $112,500 during the year
              ended June 30, 2003, $200,000 during the year ended June 30, 2002
              and $225,000 for the year ended June 30, 2001. In addition, the
              Company accrued additional consulting fees of $25,000 for the year
              ended June 30, 2001 plus the reimbursement of reasonable expenses.
              The Casino Consultant was paid in full during the years ended June
              30, 2002 and 2003.



                                      F-26

<PAGE>


               LOTTERY & WAGERING SOLUTIONS, INC. AND SUBSIDIARIES

                        F/K/A CCA COMPANIES INCORPORATED

             Notes to Consolidated Financial Statements (Continued)


NOTE 7 - RELATED PARTY TRANSACTIONS (CONTINUED)

              The Sakhalin Project (other than its financing) has been managed
              by SCC in Sakhalin City, primarily by Mr. Valery Mozolevsky
              ("Mozolevsky"), who has had long-term employment with SCC.
              Dempster was, and still is, one of two Executive Directors of SCC
              and is the General Director. Mozolevsky was, and still is, the
              other Executive Director. Consulting fees paid to Mozolevsky for
              the years 2003, 2002 and 2001 were $75,000, $75,500 and $48,500,
              respectively.

              SGTI paid a fee of $200,000 to the son of Mozolevsky for
              assistance in connection with matters relating to the sale of one
              half of the leasehold rights in the Sakhalin Project (See Note 2).

              DIRECTORS

              The Company borrowed from Stanton $300,000 in January 2000. Mr.
              James Stanton, the owner of Stanton, is a director of the Company.
              During 2002, the Company paid off the remaining balance of this
              note (see Notes 6 and 10).

              Commencing September 2002, the Company paid Stanton consulting
              fees of $5,000 per month. Options and warrants granted to Stanton
              were extended and repriced in 2003. Stanton was also granted
              50,000 options during 2003 (see Note 10).

              The Company granted 25,000 options during the year ended June
              30, 2001 and another 25,000 option during the year ended June 30,
              2003 to Mr. Miles Greenberg ("Greenberg"), the Chief Financial
              Officer and Director (effective from September 26, 2001) of the
              Company (See Note 10).

              The Company granted 10,000 options during the year ended June 30,
              2003 to Mr. Jeffrey Clague ("Clague") general manager and
              director of SLC (effective from May 8, 2003)(See Note 10).

              PRESIDENT, CEO, DIRECTOR

              In November 2002, Dempster's nominees were issued 150,000 shares
              of the Company's common stock as bonus in consideration for his
              past services and future commitments as chief executive officer,
              president and director of the Company (see Note 3).

              The total number of unexpired options and warrants granted to
              directors, including nominees, and chief executive officers of the
              Company as at June 30, 2003, were 231,250 and 32,500,
              respectively. All options and warrants, except 10,000 options
              issued to Clague (exercise price of $0.75 per share), have an
              exercise price of $0.50 per share.


                                      F-27

<PAGE>

               LOTTERY & WAGERING SOLUTIONS, INC. AND SUBSIDIARIES

                        F/K/A CCA COMPANIES INCORPORATED

             Notes to Consolidated Financial Statements (Continued)


NOTE 8 - COMMITMENTS AND CONTINGENCIES

              RENTAL COMMITMENTS

              The Company rented 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 a new office
              space in the United States for thirteen months starting July 1,
              2002, at an average monthly rate of approximately $1,100.
              Thereafter, the Company leases the office space on a month to
              month basis at an average monthly rate of approximately $1,300.
              The Company also leases office space on a one-year renewable lease
              in Sakhalin City with monthly rentals of approximately $1,100. The
              minimum future rental commitment for leases in effect at June 30,
              2003 approximates the following:


                           Year Ended
                        -----------------
                            June 30

                             2004                        $       1,100
                                                         =============



              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 Suriname 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 as stipulated in the Casino Lease.

              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 pursuant to a lien placed 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 years ended June 30, 2002 and 2003,
              the Company has provided a reserve of $24,000 and $60,000,
              respectively, for any contingencies relating to the Suriname
              Casino rent and is included in accrued expenses in the
              consolidated balance sheet (see Note 2).


                                      F-28

<PAGE>

               LOTTERY & WAGERING SOLUTIONS, INC. AND SUBSIDIARIES

                        F/K/A CCA COMPANIES INCORPORATED

             Notes to Consolidated Financial Statements (Continued)



NOTE 8 - COMMITMENTS AND CONTINGENCIES (CONTINUED)

              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.

              Rent expense was $87,140 for the year ended June 30, 2003, $93,883
              for the year ended June 30, 2002, and $82,176 for the year ended
              June 30, 2001.

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

              As a result of the termination of the Hotel Management Agreements
              in November 1998 (see Note 2), 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.

              Michaelsen's Company, Zamora, filed a claim against Dorsett for
              $80,000 in an arbitration claim. In September 2000, the Company
              settled the matter with Michaelsen and Zamora and paid $40,000 in
              exchange for complete releases.

              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 and 3).



                                      F-29

<PAGE>

               LOTTERY & WAGERING SOLUTIONS, INC. AND SUBSIDIARIES

                        F/K/A CCA COMPANIES INCORPORATED

             Notes to Consolidated Financial Statements (Continued)


NOTE 8 - COMMITMENTS AND CONTINGENCIES (CONTINUED)

              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 approximately $201,000 to have air
              conditioning equipment installed to ready the leased area for
              occupancy more quickly. Litigation is pending to recover the
              expenditure. Parbhoe by contract, is also required to provide
              water and electricity for the Suriname 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 3).



                                      F-30

<PAGE>

               LOTTERY & WAGERING SOLUTIONS, INC. AND SUBSIDIARIES

                        F/K/A CCA COMPANIES INCORPORATED

             Notes to Consolidated Financial Statements (Continued)



NOTE 8 - 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 6).

              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.

              FREEZING BANK ACCOUNTS

              On July 30, 2001, Parbhoe acting in the name of SLC, put a
              freeze on the bank accounts operated by Dorsett, the manager
              on behalf of SLC (SLC vs. Dorsett & Clague, A.R. 01-2894),
              claiming that Dorsett was transferring SLC's money illegally, and
              that Clague was not authorized to act as general manager for SLC.
              Parbhoe claims that Dorsett and Clague owe SLC $4,152,254. The
              garnishment was lifted in Summary proceedings (Clague & Dorsett
              vs. SLC, A.R. 01/3005). The main proceeding, is still pending. In
              this case, the B-directors Dempster and Dorsett have petitioned to
              be admitted as parties in the case, with the express purpose of
              objecting to the fact that Parbhoe commenced the lawsuit on behalf
              of SLC, without permission of the Board of Directors. On November
              4, 2003, a judge is expected to render a decision in this
              matter.

              On May 10, 2002, Parbhoe undertook an identical action to freeze
              the bank accounts of Dorsett (SLC vs. Dorsett & Clague, A.R. No.
              01/3216). This garnishment was also lifted (Clague & Dorsett vs.
              SLC, A.R. No. 02/2012), however, the decision in this and the
              previous matter is still pending.



                                      F-31
<PAGE>

               LOTTERY & WAGERING SOLUTIONS, INC. AND SUBSIDIARIES

                        F/K/A CCA COMPANIES INCORPORATED

             Notes to Consolidated Financial Statements (Continued)


NOTE 8 - COMMITMENTS AND CONTINGENCIES (CONTINUED)

              SLC has also initiated legal proceedings against the attorney who
              represented himself as SLC's lawyer in the cases of garnishment of
              bank accounts while actually working on behalf of Parbhoe. The
              lawsuit is aimed at declaring null and void all actions undertaken
              by the attorney on behalf of SLC. A decision in this matter is
              still pending.

              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.


NOTE 9 - SIGNIFICANT UNCERTAINTY

              On July 30, 2003, the Sub-district Court in Suriname issued an
              order evicting SLC from the premises it occupies in the Plaza
              Hotel and from which it conducts all of its casino operations. The
              court ruled that Stichting Dim (Dim Foundation), the plaintiff in
              the eviction proceeding which took title to the Plaza Hotel
              through a mortgage foreclosure, was not bound by the Casino Lease
              between SLC and Parbhoe, as Parbhoe did not hold registered title
              to the premises. On August 5, 2003, SLC filed an appeal
              challenging the order of eviction. On September 29, 2003, the
              Sub-district court judge granted a suspension of the order of
              eviction until November 8, 2003. In addition, on October 3, 2003,
              SLC filed a request to the acting President of the Court of
              Justice for a speedy trial. The Company's management believes that
              its chances in the appeal are reasonable. However, as there is no
              assurance that an extension of the stay will be granted, or that
              the appeal will be successful, the Company, through its
              subsidiaries, is seeking alternative locations in Paramaribo to
              relocate its casino operations (see Notes 1, 2 and 13).

              If the Company relocates the Suriname Casino to a different
              location, it will have to design and set up infrastructure, incur
              additional relocation costs associated with removal,
              transportation and installation of equipment, leasehold
              improvements, advertising and all other costs associated with
              relocation and statutory costs associated with the set up of
              operations at a new location. The Company may also need to
              terminate the employment of some or all of its existing staff and
              pay them compensation based upon the labor laws in Suriname. In
              addition, there is the potential for a full or partial impairment,
              depending on the outcome of the court proceedings, of the
              leasehold improvements in SLC, which have a net book value of
              approximately $3,095,000 at June 30, 2003.

              The Company has approximately $3,500,000 in cash and cash
              equivalents as of June 30, 2003, which includes approximately
              $1,500,000 held by LWSI in the U.S. and approximately $2,000,000
              held by SLC in Suriname. Management believes that, if the Suriname
              eviction is upheld and SLC is required to relocate to a new
              facility, the cash presently held by the Company could
              sufficiently finance improvements required to outfit a new space
              for a casino.

              The consolidated financial statements do not include any
              adjustments to reflect the possible future effects on the
              recoverability and classification of assets or the amounts and
              classification of liabilities that may result from the outcome of
              this uncertainty.



                                      F-32

<PAGE>

               LOTTERY & WAGERING SOLUTIONS, INC. AND SUBSIDIARIES

                        F/K/A CCA COMPANIES INCORPORATED

             Notes to Consolidated Financial Statements (Continued)



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," as
              amended by SFAS No. 148, "Accounting for Stock-Based
              Compensation-Transition and Disclosure," 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. In
              October 2002, the Company extended the terms of 186,250 warrants
              and options previously granted to current directors and executive
              officers through 2006 with the month and day of their original
              expiration date remaining unchanged.

              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, 2003, 198,125 options to purchase shares of common stock
              had been granted under the Plan.


              The Company has set aside 2,801,875 shares of common stock for
              future options that may be granted under the Plan.

                                      F-33

<PAGE>


               LOTTERY & WAGERING SOLUTIONS, INC. AND SUBSIDIARIES

                        F/K/A CCA COMPANIES INCORPORATED

             Notes to Consolidated Financial Statements (Continued)


NOTE 10 - STOCK OPTIONS AND WARRANTS (CONTINUED)

              In October 2000, the Company granted fully vested four-year
              options to purchase 25,000 shares to Greenberg, the Chief
              Financial Officer and a member of the Company's board of directors
              (effective from September 26, 2001), at an exercise price of $2.00
              per share. The options were repriced at $0.50 per share in October
              2002.

              In October 2002, the Company granted fully vested four-year
              options to purchase 25,000 shares of the Company to Greenberg, at
              an exercise price of $0.50 per share. In October 2002, the Company
              granted fully vested four-year options to purchase 50,000 shares
              of the Company to Stanton, at an exercise price of $0.50 per share
              (see Note 7).

              In April 2003, the Company granted fully vested four year options
              to purchase 10,000 shares of the Company to Clague at an exercise
              price of $0.75 per share.

              In 2003 and 2002, 29,000 and 1,750 options were forfeited,
              respectively.

              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 88,106 non-plan options outstanding as
              of July 1, 2000. In 2001, 38,106 options were forfeited. No
              options were forfeited in 2002 and 2003. No options were exercised
              during the years 2001, 2002 and 2003.

              FASB Statement 123, "Accounting for Stock-Based Compensation," as
              amended by SFAS No. 148, "Accounting for Stock-Based
              Compensation-Transition and Disclosure," requires the Company to
              provide pro forma information regarding net income (loss) and net
              earnings (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
              and 148.

              The fair value of stock options or warrants granted was estimated
              at the date of grant using the Black-Scholes option pricing model.
              The Black-Scholes model was developed for use in estimating the
              fair value of traded options which have no vesting restrictions
              and are fully transferable. In addition, option valuation models
              require several inputs, including the expected stock price
              volatility. The model may not necessarily provide a reliable
              single measure of the fair value of employee and director stock
              options or warrants. The Company's employee and director stock
              options or warrants have characteristics significantly different
              from those of traded options or warrants and changes in input
              assumptions can materially affect the fair value estimates.

                                      F-34

<PAGE>


               LOTTERY & WAGERING SOLUTIONS, INC. AND SUBSIDIARIES

                        F/K/A CCA COMPANIES INCORPORATED

             Notes to Consolidated Financial Statements (Continued)


NOTE 10 - STOCK OPTIONS AND WARRANTS (CONTINUED)

              The fair value of the options and warrants granted was estimated
              using an option valuation model with the following
              weighted-average assumptions:

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


<TABLE>
<CAPTION>
                                                                       Year Ended June 30,
                                                --------------------------------------------------------------
                                                       2002                   2001                   2000
                                                --------------------------------------------------------------
<S>                                                 <C>                     <C>                    <C>
              Risk-free interest rate                  4.7%                    6%                     6%
              Expected life                           4 years                4 years                4 years
              Expected volatility factors               0.5                    0.5                    0.5
              Expected dividend yield                   0.0                    0.0                    0.0



              Under the accounting provisions of FASB Statement 123 and 148, the
              Company's pro forma net income (loss) and earnings (loss) per
              share would have been as follows:

<CAPTION>

                                                                        Year Ended June 30,
                                                -------------------------------------------------------------------
                                                       2003                   2002                    2001
                                                -------------------------------------------------------------------
<S>                                               <C>                     <C>                    <C>
              Net income (loss):

                As reported                       $       261,710         $     (604,511)        $     (519,665)
                                                  ===============         ==============         ==============

                Pro forma                         $       241,086         $     (604,511)        $     (552,665)
                                                  ===============         ==============         ==============


              Net earnings (loss) per common
                share basic and diluted:
                 As reported                      $          0.18         $        (0.61)        $         (.60)
                                                  ===============         ==============         ==============

                Pro forma                         $          0.17         $        (0.61)        $         (.64)
                                                  ===============         ==============         ==============



</TABLE>

                                      F-35

<PAGE>

               LOTTERY & WAGERING SOLUTIONS, INC. AND SUBSIDIARIES

                        F/K/A CCA COMPANIES INCORPORATED

             Notes to Consolidated Financial Statements (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, 2003, 2002 and 2001 and
              changes during the years then ended is presented below:
<TABLE>
<CAPTION>

                                               June 30, 2003                June 30, 2002            June 30, 2001
                                        ---------------------------  -------------------------   ---------------------
                                                         Weighted                   Weighted                   Weighted
                                                         Average                    Average                    Average
                                                         Exercise                   Exercise        Shares     Exercise
                                             Shares       Price         Shares       Price                      Price
                                         -----------    ---------    -----------   ---------     -----------  ----------


<S>                                      <C>           <C>           <C>            <C>          <C>          <C>
              Options outstanding
               at beginning of year          192,125       $4.64         192,625        5.40         246,731      $22.00
              Granted                         85,000        0.53           1,250        5.00          25,000        2.00
              Exercised                            -           -               -           -             -           -
              Forfeited                      (29,000)     (18.49)         (1,750)     (93.43)        (79,106)     (52.80)
                                         -----------  ----------          ------      ------     -----------  ----------


              Options outstanding
               at end of year                248,125       $0.68         192,125        4.64         192,625       $5.40
                                         ===========  ==========         =======    ========     ===========  ==========


              Options exercisable
               at end of year                248,125       $0.68         191,125        4.63         191,625       $5.40
                                         ===========  ==========         =======    ========     ===========  ==========


              Weighted-average
               fair value of options
               granted during the year         $0.08                                   $0.13                      $ 0.40
                                               =====                                   =====                      ======



              The following table presents information relating to stock options
              outstanding at June 30, 2003:
<CAPTION>

                                             OPTIONS OUTSTANDING                         OPTIONS EXERCISABLE
                              ---------------------------------------------------   -------------------------------
                                                   Weighted                                             Weighted
                                                    Average            Average                           Average
                 Exercise                            Exercise         Remaining                         Exercise
                  Price           Shares             Price          Life in Years     Shares              Price
                 --------     -------------         --------        -------------   -----------         ---------
<S>           <C>              <C>                 <C>               <C>           <C>                 <C>
              $0.50                 228,750         $   0.50              3.28          228,750         $    0.50
              $0.75                  10,000             0.75              3.79           10,000              0.75
              $5.00                   9,375             5.00              0.41            9,375              5.00
                              -------------         --------          --------      -----------         ---------

                                    248,125         $   0.68              3.19          248,125         $    0.68
                              =============         ========          ========      ===========         =========


</TABLE>

         No options have been exercised in 2003, 2002 and 2001.

                                      F-36

<PAGE>

               LOTTERY & WAGERING SOLUTIONS, INC. AND SUBSIDIARIES

                        F/K/A CCA COMPANIES INCORPORATED

             Notes to Consolidated Financial Statements (Continued)


NOTE 10 - STOCK OPTIONS AND WARRANTS (CONTINUED)

              WARRANTS

              In connection with certain acquisitions, the Company issued 35,000
              warrants to Danville in October 1999, 25,000 warrants to Stanton
              in January 2000 (see Notes 6 and 7) and 7,500 warrants to Galileo
              Capital, LLC in March 2000 to purchase the Company's common stock
              at $5.00 per share (see Note 6). The warrants issued to Galileo
              and Danville expired without being exercised. The warrants issued
              to Stanton expire six years from the date of grant (after
              extension - see Note below). The warrants were valued at $155,400.

              At June 30, 2003, the Company had warrants amounting to 64,583
              outstanding. No warrants have been exercised. All warrants were
              exercisable on the day of grant. During 2003, no warrants were
              granted and 120,833 warrants expired.

              REPRICING OF OPTIONS AND WARRANTS

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

              In October 2002, the Company repriced and extended the option and
              warrants issued to current directors and executive officers, from
              $2.00 to $0.50. These included 25,000 options and 32,500 warrants
              issued to Stanton (see Note 7).

              COMMON STOCK SET ASIDE

              Currently, the Company has reserved 312,708 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. Pursuant to the
              terms of 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.


                                      F-37

<PAGE>

               LOTTERY & WAGERING SOLUTIONS, INC. AND SUBSIDIARIES

                        F/K/A CCA COMPANIES INCORPORATED

             Notes to Consolidated Financial Statements (Continued)



NOTE 11 - NON-BINDING WRITTEN LETTER OF INTENT (CONTINUED)

              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 - INVESTMENT IN PLC (SEE NOTES 1, 2, 3, 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 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 extended 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 had been extended to November 2002.
              NEWTATCO is 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
              had no other assets, liabilities or obligations and formal
              operations had not commenced as of June 30, 2002.

              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.

                                      F-38

<PAGE>

               LOTTERY & WAGERING SOLUTIONS, INC. AND SUBSIDIARIES

                        F/K/A CCA COMPANIES INCORPORATED


             Notes to Consolidated Financial Statements (Continued)



NOTE 12 - INVESTMENT IN PLC (CONTINUED)

              The Company advanced and incurred expenditures relating to
              the EMSI project of approximately $1,540,000 by October of 2002
              (the "Advances"). As of June 30, 2003, approximately $1,090,000
              was advanced to EMSI and approximately $268,000 was charged to
              operations. The 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 were
              not secured and there was no assurance that the Advances would be
              repaid to the Company (See impairment reserve provided below).

              The Company had not been able to fulfill all the conditions and,
              although the period within which to do so had been extended until
              December 31, 2002, the Company, in October 2002, had entered into
              an agreement with 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 agreed 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 $.30 CDN of
              the Advances released provided that the then average quoted bid
              and asked price per AGS share was not less than $.30 CDN. It was
              anticipated that, upon conversion pursuant to the Exchange
              Agreement, the stockholders of the Company would 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 was not
              consummated, EMSI acknowledged 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.

              Consummation of the Exchange Agreement was 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, and 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.

                                      F-39

<PAGE>

               LOTTERY & WAGERING SOLUTIONS, INC. AND SUBSIDIARIES

                        F/K/A CCA COMPANIES INCORPORATED


             Notes to Consolidated Financial Statements (Continued)


NOTE 12 - INVESTMENT IN PLC (CONTINUED)

              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, effectuating a 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 had approved issuance of 6,500,000 common
              shares at a deemed issue price of $.30 CDN per post
              consolidated common share in lieu of $1,950,000 CDN (approximately
              $1,284,000) advanced by LWSI to EMSI as of May 31, 2002. AGS had
              further agreed to issue additional shares of its common stock for
              further advances made to EMSI by the Company after May 2002. There
              was no assurance that the Exchange Agreement would 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.

              Certain conditions to the Purchase Contract were not fulfilled,
              and the Company subsequently determined that it was in its best
              interests to assign its rights in that contract to a Canadian
              entity, Pacific Lottery Corporation ("PLC"), and to restructure
              its cash investment in the project into common shares of PLC. In a
              transaction which was consummated as of April 7, 2003, the Company
              received from PLC cash of $69,500 and 7,962,620 of PLC's common
              shares in satisfaction of indebtedness owed (the Advances) to the
              Company by PLC at a deemed purchase price of $.30 CDN per share.
              The transaction was part of a debt and equity reorganization of
              PLC, and a private placement by PLC of its common shares and
              warrants to a wholly owned subsidiary of Genting International PLC
              ("Genting") for $4.5 Million CDN. The funds from the private
              placement are to be exclusively used in connection with the
              development of the online lottery program in Ho Chi Minh City and
              the Southern provinces of Vietnam. Securities of PLC are traded on
              the Canadian Venture Exchange under the symbol TSX-Venture: "LUK".

              The Company received the above-mentioned shares of PLC in full
              satisfaction of the Advances. Therefore, based upon the adequacy
              of the consideration received and change in circumstances
              described above, the Company was able to reverse the valuation
              reserve of approximately $840,000 in April 2003 pursuant to SFAS
              No. 114.

              The Company also received from PLC a "finders option" upon the
              closing of the private placement as compensation for assisting in
              consummating the private placement. The finders option consists of
              common stock purchase warrants to purchase 1,400,000 additional
              common shares of PLC at $.30 CDN per share (exercisable for a
              twenty-four month period).

              The acquisition of these securities gives the Company current
              ownership of approximately 19.7% of the common shares of PLC (or
              13.6% of such common shares following the conversion to common
              shares of the outstanding preferred shares), or 11.9% of the
              common shares on a fully diluted basis.


                                      F-40

<PAGE>

               LOTTERY & WAGERING SOLUTIONS, INC. AND SUBSIDIARIES

                        F/K/A CCA COMPANIES INCORPORATED


             Notes to Consolidated Financial Statements (Continued)



NOTE 12 - INVESTMENT IN PLC (CONTINUED)

              In the private placement, Genting acquired an approximate 30%
              equity stake in PLC, assuming all the preferred shares are
              converted into common shares of PLC, and potentially up to a 47%
              equity stake (fully diluted) assuming Genting exercises all of the
              warrants it received. Genting is a diversified investment company
              whose subsidiaries include investment holdings, property
              development and provision of sales and marketing services to
              resort-related businesses. Securities of Genting are listed on the
              Luxembourg Stock Exchange and quoted on the Singapore Stock
              Exchange.


NOTE 13 - NEW GAMING LICENSES

              Because of uncertainties caused by the order of eviction issued by
              the Suriname Court, the Company is actively seeking to establish
              its own casino operations at another location in Paramaribo, the
              capital city of Suriname (see Note 9). Through its subsidiaries,
              the Company has acquired a license (the "Gaming License -
              Suriname") to operate a casino in Suriname. The Gaming License -
              Suriname is valid for 15 years from August 1, 2000 (original date
              on which the license was granted) and is renewable every five,
              years at the Company's request. Pursuant to the terms
              of the Gaming License - Suriname, the license holder is required
              to operate a casino in a hotel to be run by the license holder and
              to comply with certain other procedures.

              The Company has capitalized the cost of $200,000 to acquire the
              Gaming License - Suriname and has paid $60,000 during the year
              ending June 30, 2003. The balance amount of $140,000 has been paid
              subsequent to June 30, 2003.

              The Company is also investigating the desirability of
              participating in the development and operation of a casino in
              Vietnam, approximately 80 miles from Ho Chi Minh City, and is
              actively seeking a casino license (the "Gaming License - Vietnam")
              to conduct such operations. The Company has posted a refundable
              deposit in September 2003 for $250,000 with an agency of the
              Vietnamese government as a demonstration of its interest in
              negotiating an acceptable agreement for the casino license. During
              the year ended June 30, 2003, the Company expensed $50,000
              incurred in connection with the costs associated with obtaining
              the Gaming License - Vietnam.

                                      F-41