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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 10-Q

|(Mark One)                                    |                                                                                         
|--------------------------------------------- | ----------------------------------------------------------------------------------------
|ý                                             | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
|FOR THE QUARTER PERIOD ENDED JANUARY 31, 2002
|Or                                           
|o                                             | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM  TO

COMMISSION
FILE NUMBER000-23401

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GAMETECH INTERNATIONAL, INC.(Exact name of registrant as specified in its charter)

|DELAWARE(State of other jurisdiction
of incorporation or organization)                   |  | 33-0612983(I.R.S. Employer Identification No.)
|---------------------------------------------------------------------------------------- |  | ----------------------------------------------
|900 SANDHILL ROAD, RENO, NEVADA
89511(Address of principal executive offices)
(Zip code)

Registrant's telephone number, including area code:(775) 850-6000

Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 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 / /

On
March 13, 2002, the registrant had 11,198,539 outstanding shares of its Common Stock, par value $0.001 per share.

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GAMETECH INTERNATIONAL, INC.    INDEX

|                               |  |                                                                                               |  |                                                                                              |  | Page
No.
|------------------------------ |  | --------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------- |  | --------
|Part I. Financial Information: |  |                                                                                              
|                               |  | Item 1. Financial Statements (Unaudited)                                                      |  |                                                                                             
|                               |  |                                                                                               |  | Condensed Consolidated Balance Sheets
January 31, 2002 and October 31, 2001                  |  | 3       
|                               |  |                                                                                               |  | Condensed Consolidated Statements of Operations
Three Months Ended January 31, 2002 and 2001 |  | 4       
|                               |  |                                                                                               |  | Condensed Consolidated Statements of Cash Flows
Three Months Ended January 31, 2002 and 2001 |  | 5       
|                               |  |                                                                                               |  | Notes to Condensed Consolidated Financial Statements                                         |  | 6       
|                               |  | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations |  | 7                                                                                           
|                               |  | Item 3. Quantitative and Qualitative Disclosures about Market Risk                            |  | 10                                                                                          
|Part II. Other Information     |  |                                                                                              
|                               |  | Item 1. Legal Proceedings                                                                     |  | 11                                                                                          
|                               |  | Item 2. Changes in Securities and Use of Proceeds                                             |  | 12                                                                                          
|                               |  | Item 6. Exhibits and Reports on Form 8-K                                                      |  | 12                                                                                          
|Signatures                     |  | 13                                                                                           

2

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GAMETECH INTERNATIONAL, INC.  CONDENSED CONSOLIDATED BALANCE SHEETS  (In thousands, except share and per share amounts)

|                                           |                                                                                                                                      | January 31,
2002                          |        | October 31,
2001 |       
|------------------------------------------ | ------------------------------------------------------------------------------------------------------------------------------------ | ----------------------------------------- | ------ | ---------------- | ------
|
|Assets:                                    |                                                                                                                                      |                                           |        |                  |       
|Current assets:                            |                                                                                                                                      |                                           |        |                  |       
|                                           |                                                                                                                                      | Cash and cash equivalents                 |        | $                | 11,916
|                                           |                                                                                                                                      | Short-term investments                    |        |                  | 3,144 
|                                           |                                                                                                                                      | Accounts receivable, net                  |        |                  | 3,916 
|                                           |                                                                                                                                      | Deposits                                  |        |                  | 247   
|                                           |                                                                                                                                      | Prepaid income taxes                      |        |                  | 623   
|                                           |                                                                                                                                      | Prepaid expenses and other current assets |        |                  | 1,038 
|                                           |                                                                                                                                      | Deferred income taxes                     |        |                  | 3,308 
|                                           |                                                                                                                                      |                                           |        |                  |       
|Total current assets                       |                                                                                                                                      |                                           | 24,192 |                  |       
|Bingo units, furniture and equipment, net  |                                                                                                                                      |                                           | 16,609 |                  |       
|Intangible assets, net                     |                                                                                                                                      |                                           | 1,250  |                  |       
|Goodwill                                   |                                                                                                                                      |                                           | 15,437 |                  |       
|                                           |                                                                                                                                      |                                           |        |                  |       
|Total assets                               |                                                                                                                                      | $                                         | 57,488 |                  | $     
|                                           |                                                                                                                                      |                                           |        |                  |       
|Liabilities and stockholders' equity:      |                                                                                                                                      |                                           |        |                  |       
|Current liabilities:                       |                                                                                                                                      |                                           |        |                  |       
|                                           |                                                                                                                                      | Accounts payable                          |        | $                | 1,381 
|                                           |                                                                                                                                      | Accrued payroll and related obligations   |        |                  | 1,477 
|                                           |                                                                                                                                      | Acquisition related accrued liabilities   |        |                  | 138   
|                                           |                                                                                                                                      | Other accrued liabilities                 |        |                  | 2,667 
|                                           |                                                                                                                                      | Current portion of long-term debt         |        |                  | 1,016 
|                                           |                                                                                                                                      |                                           |        |                  |       
|Total current liabilities                  |                                                                                                                                      |                                           | 6,679  |                  |       
|Long-term debt                             |                                                                                                                                      |                                           | 1,134  |                  |       
|Non-current employment obligations         |                                                                                                                                      |                                           | 370    |                  |       
|Deferred income taxes                      |                                                                                                                                      |                                           | 926    |                  |       
|Commitments and contingencies              |                                                                                                                                      |                                           |        |                  |       
|Stockholders' equity:                      |                                                                                                                                      |                                           |        |                  |       
|                                           | Common stock, $.001 par value: 40,000,000 shares authorized; 13,008,389 shares issued and outstanding in 2002 and 12,701,839 in 2001 |                                           |        | 13               |       
|                                           | Capital in excess of par value                                                                                                       |                                           |        | 45,425           |       
|                                           | Retained earnings                                                                                                                    |                                           |        | 11,037           |       
|                                           | Less: Treasury stock, 1,855,325 shares in 2002 and 2001, at cost                                                                     |                                           |        | (8,096           | )     
|                                           |                                                                                                                                      |                                           |        |                  |       
|Total stockholders' equity                 |                                                                                                                                      |                                           | 48,379 |                  |       
|                                           |                                                                                                                                      |                                           |        |                  |       
|Total liabilities and stockholders' equity |                                                                                                                                      | $                                         | 57,488 |                  | $     
|                                           |                                                                                                                                      |                                           |        |                  |       

See
notes to financial statements

3

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GAMETECH INTERNATIONAL, INC.  CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  (In thousands, except share and per share amounts)

|                                                               |                            | Three Months Ended
January 31, |       
|-------------------------------------------------------------- | -------------------------- | ------------------------------ | ------
|
|
|Revenues                                                       |                            | $                              | 11,851
|Operating expenses:                                            |                            |                                |       
|                                                               | Cost of revenues           |                                |       
|                                                               | General and administrative |                                |       
|                                                               | Sales and marketing        |                                |       
|                                                               | Research and development   |                                |       
|                                                               |                            |                                |       
|                                                               |                            |                                | 10,382
|                                                               |                            |                                |       
|Income (loss) from operations                                  |                            |                                | 1,469 
|Interest income and other, net                                 |                            |                                | 9     
|                                                               |                            |                                |       
|Income (loss) before provision for income taxes                |                            |                                | 1,478 
|Provision (benefit) for income taxes                           |                            |                                | 565   
|                                                               |                            |                                |       
|Net income (loss)                                              |                            | $                              | 913   
|                                                               |                            |                                |       
|Basic net income (loss) per share                              |                            | $                              | 0.08  
|                                                               |                            |                                |       
|Diluted net income (loss) per share                            |                            | $                              | 0.08  
|                                                               |                            |                                |       
|Shares used in the calculation of net income (loss) per share: |                            |                                |       
|                                                               | Basic                      |                                |       
|                                                               |                            |                                |       
|                                                               | Diluted                    |                                |       
|                                                               |                            |                                |       

See
notes to financial statements.

4

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GAMETECH INTERNATIONAL, INC.  CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  FOR THE THREE MONTHS ENDED JANUARY 31, 2002 AND 2001  (Dollars in thousands)

|                                                                                         |                                              | 2001                      |        | 2002  |     
|---------------------------------------------------------------------------------------- | -------------------------------------------- | ------------------------- | ------ | ----- | ----
|
|Cash flows from operating activities:                                                    |                                              |                           |        |       |     
|Net income (loss)                                                                        |                                              | $                         | 913    |       | $   
|Adjustments to reconcile net income (loss) to net cash provided by operating activities: |                                              |                           |        |       |     
|                                                                                         | Depreciation, amortization and obsolescence  |                           |        | 1,804 |     
|                                                                                         | Changes in operating assets and liabilities: |                           |        |       |     
|                                                                                         |                                              | Accounts receivable, net  |        |       | 163 
|                                                                                         |                                              | Prepaid income taxes      |        |       | 575 
|                                                                                         |                                              | Other current assets      |        |       | (301
|                                                                                         |                                              | Accounts payable          |        |       | 707 
|                                                                                         |                                              | Other accrued liabilities |        |       | (445
|                                                                                         |                                              |                           |        |       |     
|Net cash provided by operating activities                                                |                                              |                           | 3,416  |       |     
|Cash flows from investing activities:                                                    |                                              |                           |        |       |     
|Decrease (increase) in short-term investments                                            |                                              |                           | (320   | )     |     
|Capital expenditures for bingo units, furniture and equipment                            |                                              |                           | (1,948 | )     |     
|                                                                                         |                                              |                           |        |       |     
|Net cash used in investing activities                                                    |                                              |                           | (2,268 | )     |     
|Cash flows from financing activities:                                                    |                                              |                           |        |       |     
|Proceeds from short-term borrowings from bank                                            |                                              |                           |       |       |     
|Payments on short-term borrowings from bank                                              |                                              |                           |       |       |     
|Payments on long-term debt                                                               |                                              |                           | (245   | )     |     
|Payments for buy out of distributorship agreement                                        |                                              |                           |       |       |     
|Proceeds from exercise of stock options                                                  |                                              |                           | 882    |       |     
|Payments for repurchase of common stock for treasury                                     |                                              |                           |       |       |     
|                                                                                         |                                              |                           |        |       |     
|Net cash provided by financing activities                                                |                                              |                           | 637    |       |     
|                                                                                         |                                              |                           |        |       |     
|Net increase in cash and equivalents                                                     |                                              |                           | 1,785  |       |     
|Cash and equivalents at beginning of period                                              |                                              |                           | 10,131 |       |     
|                                                                                         |                                              |                           |        |       |     
|Cash and equivalents at end of period                                                    |                                              | $                         | 11,916 |       | $   
|                                                                                         |                                              |                           |        |       |     

See
notes to financial statements.

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GAMETECH INTERNATIONAL, INC.  NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS    JANUARY 31, 2002  (UNAUDITED)

NOTES TO FINANCIAL STATEMENTS

NOTE A. BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements as of January 31, 2002 have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all
of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included. Operating results for the three-month period ended January 31, 2002 are not necessarily indicative of the results that
may be expected for the year ending October 31, 2002.

The
balance sheet at October 31, 2001 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by
generally accepted accounting principles for complete financial statements. For further information, refer to the financial statements and footnotes thereto included in the Company's annual report on
Form 10-K for the year ended October 31, 2001.

NOTE B. SIGNIFICANT ACCOUNTING POLICIES

Revenue Recognition

Revenue is recognized as bingo units are placed in bingo halls under contracts based on: (a) a fixed fee per use per session, (b) a fixed weekly fee
per unit, or (c) a percentage of the revenue generated by each unit.

ALLOWANCE FOR DOUBTFUL ACCOUNTS

The Company performs ongoing credit evaluations of its customers and distributors and maintains allowances for possible losses resulting from
non-payment of outstanding accounts receivable.

BINGO UNIT DEPRECIATION AND OBSOLESCENCE RESERVES

Bingo units are depreciated over their estimated useful lives, primarily five years. Units on hand that are not expected to be reused are reserved for as excess
or obsolete.

NOTE C. GOODWILL AMORTIZATION

In June 2001, the FASB issued SFAS No. 142, Goodwill and Other Intangible Assets, effective for fiscal years beginning after December 15,
2001. Under the new rules, goodwill will no longer be amortized but will be subject to annual impairment tests in accordance with the statement. Other intangible assets will continue to be amortized
over their useful lives. The Company will be required to measure its goodwill for impairment and, depending on the result of that measurement, the recorded goodwill may be required to be written down.
The Company has elected to early-adopt the statement during the fiscal quarter ending January 31, 2002, has discontinued amortization of its goodwill, and is currently completing the first step
of the transitional goodwill impairment test. The Company will be unable to determine if a reduction in goodwill is required until completion of the impairment test, which is expected to be completed
during its fiscal quarter ending April 30, 2002.

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The
following table shows the effect of excluding goodwill amortization expense on the prior year's quarter ended January 31, 2001.

For the Three Months Ended January 31,2002

2001Reported net income (loss)

$
913

$
(785
)Add back: Goodwill amortization





438Adjusted net income (loss)

$
913

($
347
)Basic earnings (loss) per shareReported net income (loss)

$
0.08

$
(0.07
)Add back: Goodwill amortization





0.04Adjusted basic earnings (loss) per share

$
0.08

$
(0.03
)Diluted earnings (loss) per shareReported net income (loss)

$
0.08

$
(0.07
)Add back: Goodwill amortization





0.04Adjusted basic earnings (loss) per share

$
0.08

$
(0.03
)


NOTE D. NET INCOME (LOSS) PER SHARE OF COMMON STOCK

Net income (loss) per share of common stock is computed in accordance with Statement of Financial Accounting Standards (SFAS) No. 128 "Earnings per Share."
The calculation of the basic and diluted earnings per share is the same except for the dilutive effect of outstanding stock options. The dilution is 915,601 shares for the three months ended
January 31, 2002. There is no effect of outstanding stock
options on the calculation of diluted earnings per share for the three months ended January 31, 2001 because their effect would be anti-dilutive.

NOTE E. LITIGATION

The Company is involved in various legal proceedings arising out of its operations in the ordinary course of its business, including various complaints that have
been filed alleging patent infringement and other matters. The Company does not believe that any of these proceedings will have a material adverse effect on its business, financial condition, or
results of operations beyond the amounts recorded in the accompanying financial statements. At October 31, 2001 and January 31, 2002 the Company had recorded $1.1 million in
current liabilities for the estimated settlement of specific lawsuits. However, if settlement is not reached and the lawsuits proceed to trial, an unfavorable outcome could have a material adverse
effect on the Company's financial position and results of operations.

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

The following discussion should be read in conjunction with the condensed consolidated financial statements and notes thereto included elsewhere in this
Form 10-Q.

OVERVIEW

We design, develop, and market interactive electronic bingo systems. We currently market a fixed-base system with light pen- or touch
screen-activated monitors and portable hand-held systems that can be played anywhere within a bingo hall. As of March 3, 2002, we had systems in service in 24

7

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states of the more than 30 states that allow electronic bingo systems for use with charitable and commercial organizations. Under the Indian Gaming Regulatory Act, or IGRA, electronic bingo may be
played on tribal Native American lands in the 46 states where bingo is legal. We estimate that bingo currently is played on tribal Native American lands in 30 states. As of March 3, 2002, we
had units in operation in Native American bingo halls in 13 of those states. Collectively, as of March 3, 2002, we had products in 31 states and in 4 countries outside of the United States.

We
generate revenue by placing electronic bingo systems in bingo halls under contracts based on: (a) a fixed fee per use per session; (b) a fixed weekly fee per unit; or
(c) a percentage of the sales generated by each unit. Revenue growth is affected by player acceptance of electronic bingo as an addition or an alternative to paper bingo, and our ability to
expand operations into new markets. Fixed-base bingo
units generate greater revenue per unit than portable bingo units, but also require a greater initial capital investment.

We
typically install our electronic bingo systems at no charge to our customers and capitalize the costs. During the first three-month period of fiscal 2002, the Company's capital
expenditures were approximately $1.9 million, $1.6 million of which represented investments in bingo and related support equipment. The Company's cost of revenues consists primarily of
the expense of providing customer service including labor, service-related overhead, and depreciation of the bingo systems. The Company records depreciation of bingo equipment over its estimated
useful life, primarily five years, using the straight-line method of depreciation and reserves for units not expected to be reused.

ACCOUNTING CHANGE FOR GOODWILL

In June 2001, the FASB issued SFAS No. 142, Goodwill and Other Intangible Assets, effective for fiscal years beginning after December 15,
2001. Under the new rules, goodwill will no longer be amortized but will be subject to annual impairment tests in accordance with the statement. Other intangible assets will continue to be amortized
over their useful lives. We will be required to measure our goodwill for impairment, and depending on the result of that measurement, the recorded goodwill may be required to be written down. We have
elected to early-adopt the statement during our fiscal year ending October 31, 2002 and have discontinued amortization of our goodwill as of November 1, 2001. We will be unable to
determine if a reduction in goodwill is required until completion of the impairment test expected to be completed during the fiscal quarter ending April 30, 2002.

RESULTS OF OPERATIONS

Three Months Ended January 31, 2002 Compared to Three Months Ended January 31, 2001

REVENUES. Revenues generated were $11.9 million for the quarter ended January 31, 2002 compared to $12.0 million for the same period last
year. The $130,000, or 1.1%, net decline in revenue from the first quarter of fiscal 2001 was primarily in the Northeastern Region due to pricing pressure, and hall and route changes, partially offset
with increases in the Western and International Regions.

COST
OF REVENUES. Cost of revenues decreased approximately $311,000, or 5.9%, to $5.0 million for the three months ended January 31, 2002 from $5.3 million for the
comparable prior year period. Cost of revenue as a percent of revenue for the three months ended January 31, 2002 was 41.9% compared to 44.0% for the three months ended January 31, 2001.
The decrease in cost of revenues was primarily due to a decrease in bingo unit depreciation expense of approximately $313,000 related to
uninstalled bingo units reserved at October 31, 2001. Increases in service and operations costs of approximately $169,000, due to increases in personnel and benefit costs, were offset by
reductions in bingo unit maintenance, repair, and refurbishment expenses.

GENERAL
AND ADMINISTRATIVE. General and administrative costs decreased $1.8 million to $2.0 million for the three months ended January 31, 2002, or from 31.8% to
16.8% of revenue

8

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compared to the prior year period. The decrease was primarily attributable to: (1) a lower provision for bad debt reserve of $1.2 million in the first quarter of fiscal 2002 due to
improved collections and fiscal 2001 having $650,000 of expense associated with the settlement of disputed account balances; (2) a decrease in personnel related expenses of $303,000; and
(3) no goodwill amortization expense in the quarter ended January 31, 2002 due to an early election of FASB Statement 142 compared to first quarter fiscal year 2001 of $438,000.

SALES
AND MARKETING. Sales, marketing, and commission expenses decreased $984,000, or 24.7%, to $3.0 million for the three months ended January 31, 2002 from
$4.0 million for the prior year period. Distributor commissions decreased $919,000 to $2.0 million for the three months ended January 31, 2002 primarily due to adjustments in the
first quarter of fiscal year 2001, including a settlement of a distributor issue. As a percentage of revenues for the quarter ended January 31, 2002, commission expenses decreased to 17.0% from
24.5% in the comparable prior year period.

RESEARCH
AND DEVELOPMENT. Research and development costs decreased approximately $41,000 to $419,000 for the three months ended January 31, 2002 compared to $460,000 for the
comparable prior year period, or 3.5% from 3.8% of revenue. The decrease was partially attributable to the closure of the Colorado office and decreased personnel expenses.

PROVISION
FOR INCOME TAXES. Our income tax provision of $565,000 is recorded at an effective rate of 38.2% for the quarter ended January 31, 2002. For the comparable prior year
period, we incurred a pre-tax loss and recorded a tax benefit estimated at 47.0% due to the effect of state income taxes and nondeductible expenses.

LIQUIDITY AND CAPITAL RESOURCES

Operating activities provided $3.4 million of cash for the three months ended January 31, 2002 compared to $1.6 million for the three months
ended January 31, 2001. In 2002, the $3.4 million was provided by net income of $913,000, $1.8 million of depreciation, amortization, and obsolescence expense, and net changes to
operating assets and liabilities of $700,000. In 2001, the $1.6 million provided by operating activities consisted primarily of $3.7 million in depreciation, amortization, and
obsolescence expense, offset by a net loss of $785,000, and net changes to operating assets and liabilities of $1.4 million.

Investing
activities used $2.3 million of cash in the three months ended January 31, 2002 compared to use of cash of $655,000 for the three months ended January 31,
2001. In 2002, the $2.3 million used consisted of a $320,000 increase in short-term investments and capital expenditures of $1.9 million, primarily for bingo units. In 2001,
the $655,000 consisted of a decrease in short-term investments of $1.4 million offset by capital expenditures of $2.1 million.

Financing
activities provided cash of $637,000 for the quarter ended January 31, 2002 compared to $46,000 provided for the quarter ended January 31, 2001. In 2002, the
$637,000 consisted primarily of $245,000 in long-term debt repayment and proceeds from exercise of stock options of $882,000. In 2001, the $46,000 provided by financing activities
consisted of net proceeds from borrowings and repayments of $536,000, $426,000 in payments on long-term debt, and $64,000 to repurchase treasury stock.

At
January 31, 2002, we had cash and equivalents and short-term investments totaling $15.1 million. We also have a $10.0 million line of credit (the
"Revolving Credit Facility") with Wells Fargo Bank, N.A. ("Wells Fargo"), which is tied to an interest rate based on the prime rate or LIBOR plus 2.0%, at the Company's option, on which there was no
outstanding balance at January 31, 2002. The Revolving Credit Facility expires on April 2, 2002. We expect to renew the revolving credit facility on similar terms. We believe that cash
flow from operations and the $15.1 million in cash, cash equivalents and short-term investments at January 31, 2002, together with funds available under the

9

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revolving credit facility, will be sufficient to support our operations, budgeted capital expenditures, and liquidity requirements through fiscal 2002. Our long-term liquidity
requirements will depend on many factors, including the rate at which we expand our business, whether internally or through acquisitions. In addition, strategic opportunities we may pursue could
require us to fund our portion of the operating expenses of such ventures and could further require us to advance additional amounts should any partners in such ventures be unable to meet
unanticipated capital calls or similar funding events. To the extent that the funds generated from the sources described above are insufficient to fund our activities in the long term, we will be
required to raise additional funds through public or private financing. No assurance can be given that additional financing will be available or, if it is available, that it will be on terms
acceptable to us.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our revolving credit facility with Wells Fargo is a $10.0 million line of credit with an interest rate based on the prime rate or LIBOR plus 2.0%, at the
Company's option. The line of credit will expire on April 2, 2002. The Company expects to renew the Revolving Credit Facility on substantially comparable terms.

Because
the interest rate on the revolving credit facility is variable, our cash flow may be affected by increases in interest rates, in that we would be required to pay more interest in
the event that both the
prime and LIBOR interest rates increase. We do not believe, however, that any risk inherent in the variable-rate nature of the loan is likely to have a material effect on our interest
expense or available cash.

Sensitivity Analysis.Assuming we had a $2 million balance outstanding at January 31, 2002, the rate of
interest calculated using the prime rate option would be 4.75%. Our monthly interest payment, if the rate stayed constant, would be $7,917. If the prime rate rose to 12%, which assumes an unusually
large increase, our monthly payment would be $20,000. A more likely increase of 1% or 2%, given the recent trend of decreasing or relatively low interest rates, would result in a monthly payment of
$9,583 or $11,250, respectively.    We do not believe the risk resulting from such fluctuations is material or that the payment required would have a material effect on cash flow.

CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

This document includes various "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Sections 21E
of the Securities Exchange Act of 1934, as amended, which represent our expectations or beliefs concerning future events. Statements containing expressions, such as "believes," "anticipates," or
"expects," used in our press releases and periodic reports on Forms 10-K and 10-Q filed with the Commission, are intended to identify forward-looking statements. All
forward-looking statements involve risks and uncertainties. Although we believe our expectations are based upon reasonable assumptions within the bounds of our knowledge of our business and
operations, there can be no assurances that actual results will not materially differ from expected results. We caution that these and similar statements included in this report are further qualified
by important factors that could cause actual results to differ materially from those in the forward-looking statements. Such factors could include, without limitation, the following: increased
competition in existing markets; a decline in the public participation in bingo; the limitation, conditioning, or suspension of any of the Company's bingo permits or licenses; increases in or new
taxes imposed on bingo revenues or bingo devices; a finding of unsuitability by regulatory officers with respect to the Company's officers, directors, or key employees; loss or retirement of key
executives; adverse economic or regulatory conditions in our key markets; and adverse results of significant litigation matters. Readers are cautioned not to place undue reliance on forward-looking
statements,

10

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which speak only as of the date thereof. We undertake no obligation to publicly release any revisions to such forward-looking statements to reflect events or circumstances after the date hereof.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

During February 1999, we acquired from BTC's stockholders all of the capital stock of BTC pursuant to a stock purchase agreement. In connection with the
acquisition, BTC's stockholders made certain representations and warranties, and a portion of the purchase price was placed into escrow as security for the breach of any of these representations and
warranties. During February 2000, we notified BTC's stockholders that we had certain claims for indemnification against them for breaches of representations and warranties from the acquisition.
We estimate that our claims exceed the amounts held in escrow, and we have requested that no amounts in escrow be released pending a final determination of our claims. The escrow fund consists of
373,387 shares of our common stock and approximately $2.0 million cash. BTC's stockholders delivered their objections to the escrow on February 24, 2000, objecting to all of our
indemnification claims. The parties must make a good faith effort to reach agreement upon the rights of the parties with respect to each claim. The matter is currently scheduled for arbitration on
March 25, 2002.

On
March 22, 2001, we filed a claim in the United States District Court, District of Arizona, GAMETECH INTERNATIONAL, INC. V. TREND GAMING SYSTEMS, LLC, CV
01-540 PHX PGR, seeking a declaratory judgment that we are not in material breach of our November 1, 1999 distribution agreement with Trend, and seeking damages for past due
payments and wrongful withholdings by Trend. Trend has counterclaimed, alleging that its payments are in compliance with its contractual obligations and that it is entitled to withhold certain monies.
Trend also contends that we are in breach of certain of our contractual obligations to Trend or its customers. No trial date has been set. We have denied the allegations and intend to vigorously
pursue and defend this matter. However, we cannot provide assurance that we will obtain a favorable outcome. An unfavorable outcome could have a material adverse effect on our business, financial
position, and results of operations.

The
Texas Lottery Commission, or TLC, the agency that regulates bingo in the state of Texas, informed us that it intends to seek administrative penalties against us based on certain
provisions of one of our Texas distributor agreements. The TLC alleges that certain provisions of the agreement violate the Texas Bingo Enabling Act. The penalties sought by the TLC could involve
suspension and/or revocation of our Texas manufacturing license. An evidentiary hearing occurred before the administrative body during January 2002. We expect the governing body to recommend a
course of action on or before May 15, 2002. We expect that the TLC will act on any such proposal for decision during the summer of 2002. We do not believe that our distributor agreement or our
conduct violate the Bingo Enabling Act, and intend to contest vigorously the allegations and to defend our company through the hearing process. However, we cannot provide assurance that we will obtain
a favorable outcome. An unfavorable outcome could have a material adverse effect on our business, financial position, and results of operations.

The
Washington Gambling Commission, or WGC, the agency that regulates bingo in the state of Washington, informed us that it intends to seek administrative penalties against us for a
variety of alleged violations. The penalties sought by the WGC could involve suspension and/or revocation of our Washington manufacturer's license. We have requested an evidentiary administrative
hearing. No hearing date has been set. We intend to vigorously defend our company through the hearing process. However, we cannot provide assurance that we will obtain a favorable outcome. An
unfavorable
outcome could have a material adverse effect on our business, financial position, and results of operations.

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We
are involved in various other legal proceedings arising out of the ordinary course of our business. We do not believe that any of those proceedings will have a material adverse effect
on our business, financial position, or results of operations.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.

Not Applicable

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not Applicable

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

Not Applicable

ITEM 5. OTHER INFORMATION

Not Applicable

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K



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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in
the capacities and on the dates indicated.

|Signature                                 |  | Title                              |  | Date          
|----------------------------------------- |  | ---------------------------------- |  | --------------
|                                          |  |                                    |  |               
|/s/CLARENCE H. THIESENClarence H. Thiesen |  | Chief Executive Officer            |  | March 15, 2002
|/s/RICHARD M. KELLEYRichard M. Kelley     |  | Chief Financial Officer, Treasurer |  | March 15, 2002

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