SWDocID34


                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

(Mark One)

[X]     QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
        ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2002.

[  ]    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
        EXCHANGE ACT OF 1934

For the transition period from _____________________ to________________________


                         Commission File Number: 0-24919

                             MDI ENTERTAINMENT, INC.
                             -----------------------
             (Exact name of Registrant as specified in its Charter)

                               Delaware 73-1515699
                              ---------- ----------
       (State or other jurisdiction of (I.R.S Employer Identification No.)
                         incorporation or organization)

                                 201 Ann Street
                           Hartford, Connecticut 06103
                           ---------------------------
                    (Address of principal executive offices)

                                 (860) 527-5359
                                 --------------
                         (Registrant's telephone number)

              (Former Name, Former Address and Former Fiscal Year,
                          if changed since last Report)

Check whether the registrant (1) has 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 __

As of November 19, 2002, 11,763,829 shares of the issuer's common stock were
outstanding.

Transitional Small Business Disclosure Format (check one): Yes __  No  X_


                                       1
<PAGE>


<TABLE>
<CAPTION>

                     MDI ENTERTAINMENT, INC. AND SUBSIDIARY
                                   FORM 10-QSB

                FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2002

                                      INDEX

                                                                                               Page
<S>                                                                                             <C>

PART I.  FINANCIAL INFORMATION

Item 1. Financial Statements.....................................................................3

     Condensed Consolidated Balance Sheets as of September 30, 2002 (unaudited)
     and December 31, 2001.......................................................................3

     Condensed Consolidated Statements of Operations for the nine months ended
     September 30, 2002 and 2001 (unaudited).....................................................5

     Condensed Consolidated Statements of Operations for the three months ended
     September 30, 2002 and 2001 (unaudited).....................................................6

     Condensed Consolidated Statement of Shareholders' Equity for the nine months
     Ended September 30, 2002 (unaudited)........................................................7

     Condensed Consolidated Statements of Cash Flows for the nine months ended
     September 30, 2002 and 2001 (unaudited).....................................................8

     Notes to Unaudited Condensed Consolidated Financial Statements.............................10

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations...14

Item 3. Controls and Procedures.................................................................25


PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K........................................................26

Signatures......................................................................................27

Certifications..................................................................................28

Exhibit 99.1............................................................................Attachment

</TABLE>


                                       2
<PAGE>



                                     PART I
                              FINANCIAL INFORMATION

Item 1.   Financial Statements

MDI Entertainment, Inc. and Subsidiary
Condensed Consolidated Balance Sheets


                                                      As of:           As of:
                                                  September 30,     December 31,
                                                      2002              2001
                                                  -------------     ------------
                          ASSETS                   (unaudited)


CURRENT ASSETS:
   Cash ........................................    $   871,437     $   251,578
   Accounts receivable .........................      1,696,031       2,709,543
   Inventory ...................................      1,062,242         690,429
   Deferred income taxes (Note 3) ..............      1,343,000       1,343,000
   Other current assets ........................        409,232         338,049
                                                    -----------     -----------

        Total current assets                          5,381,942       5,332,599
                                                    -----------     -----------

PROPERTY AND EQUIPMENT, AT COST:
   Equipment ...................................        288,299         305,312
   Furniture and fixtures ......................        163,879         120,361
   Leasehold improvements ......................          8,751           8,751
                                                    -----------     -----------

                                                        460,929         434,424
   Less:  Accumulated depreciation .............       (281,691)       (271,408)
                                                    -----------     -----------

   Property and equipment, net .................        179,238         163,016
                                                    -----------     -----------

OTHER ASSETS:
   Licensing costs, net ........................      1,137,796       1,485,827
   Deferred income taxes-long term (Note 3) ....        278,300            --
   Other .......................................         40,966          23,467
                                                    -----------     -----------

        Total other assets .....................      1,457,062       1,509,294
                                                    -----------     -----------

        Total assets ...........................    $ 7,018,242     $ 7,004,909
                                                    ===========     ===========


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






                                       3
<PAGE>







MDI Entertainment, Inc. and Subsidiary
Condensed Consolidated Balance Sheets (continued)

                                                        As of:         As of:
                                                    September 30,   December 31,
                                                         2002           2001
                                                    -------------   ------------
           LIABILITIES AND SHAREHOLDERS' EQUITY      (unaudited)


CURRENT LIABILITIES:
   Billings in excess of costs and estimated
     earnings on uncompleted contracts (Note 2)...   $ 2,411,485    $ 2,497,088
   Note payable to officer .......................          --          274,199
   Accounts payable ..............................       369,653      1,112,880
   Accrued expenses ..............................       994,017        734,302
                                                     -----------    -----------

        Total current liabilities ................     3,775,155      4,618,469
                                                     -----------    -----------




COMMITMENTS AND CONTINGENCIES (Notes 5 and 6)

SHAREHOLDERS' EQUITY:
   Common stock ..................................        11,764         11,639
   Additional paid-in capital ....................     5,603,941      5,609,657
   Accumulated deficit ...........................    (2,372,618)    (3,234,856)
                                                     -----------    -----------

       Total shareholders' equity ................     3,243,087      2,386,440
                                                     -----------    -----------

       Total liabilities and
          shareholders' equity ...................   $ 7,018,242    $ 7,004,909
                                                     ===========    ===========


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




                                       4
<PAGE>






MDI Entertainment, Inc. and Subsidiary
Condensed Consolidated Statements of Operations
<TABLE>
<CAPTION>

                                                               Nine months ended
                                                                 September 30,
                                                              2002            2001
                                                          ------------    ------------
                                                           (unaudited)     (unaudited)
<S>                                                       <C>             <C>

REVENUE ...............................................   $ 13,056,292    $ 10,687,122

COST OF REVENUES ......................................      8,034,062       6,000,472
                                                          ------------    ------------

    Gross profit ......................................      5,022,230       4,686,650

SELLING, GENERAL AND ADMINISTRATIVE
  EXPENSES ............................................      3,685,564       2,722,911
TERMINATED MERGER COSTS (Note 8) ......................        391,083            --
TERMINATED TRANSACTION COSTS (Note 9) .................         46,249            --
MERGER COSTS (Note 10) ................................        150,015            --
COST OF UNSUCCESSFUL FUNDING (Note 7) .................           --           188,742
                                                          ------------    ------------

     Operating profit .................................        749,319       1,774,997

INTEREST EXPENSE, net .................................         19,226         121,843
OTHER EXPENSE (INCOME) ................................         99,855        (110,166)
GAIN ON SALE OF INVESTMENTS, NET ......................           --           (12,669)
                                                          ------------    ------------

     Income before (benefit) provision for income taxes        630,238       1,775,989

(BENEFIT) PROVISION FOR INCOME TAXES (Note 3)
                                                              (232,000)         46,824
                                                          ------------    ------------

     Net income .......................................   $    862,238    $  1,729,165
                                                          ============    ============


Basic Earnings Per Common Share (Note 4) ..............   $       0.07    $       0.16
                                                          ============    ============

Diluted Earnings Per Common Share (Note 4) ............   $       0.07    $       0.14
                                                          ============    ============
</TABLE>


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




                                       5
<PAGE>






MDI Entertainment, Inc. and Subsidiary
Condensed Consolidated Statements of Operations

                                                  Three months ended
                                                     September 30,
                                                   2002         2001
                                               -----------   ----------

                                                (unaudited) (unaudited)

REVENUE .....................................   $4,894,021   $4,001,656

COST OF REVENUES ............................    2,837,239    2,276,367
                                                ----------   ----------

    Gross profit ............................    2,056,782    1,725,289

SELLING, GENERAL AND ADMINISTRATIVE
  EXPENSES ..................................    1,252,699      937,809
MERGER COSTS (Note 10) ......................      150,015         --
COST OF UNSUCCESSFUL FUNDING (Note 7) .......         --         99,109
                                                ----------   ----------

     Operating profit .......................      654,068      688,371

INTEREST EXPENSE, net .......................        7,275        1,872
                                                ----------   ----------

     Income before provision for income taxes      646,793      686,499


PROVISION FOR INCOME TAXES (Note 3) .........      500,108       34,789
                                                ----------   ----------

     Net income .............................   $  146,685   $  651,710
                                                ==========   ==========


Basic Earnings Per Common Share (Note 4) ....   $     0.01   $     0.06
                                                ==========   ==========

Diluted Earnings Per Common Share (Note 4) ..   $     0.01   $     0.05
                                                ==========   ==========


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






                                       6
<PAGE>





MDI Entertainment, Inc. and Subsidiary
Condensed Consolidated Statement of Changes in Shareholders' Equity
<TABLE>
<CAPTION>

                                                                        For the nine months ended September 30, 2002
                                                                                       (Unaudited)
                                                                        --------------------------------------------

                                                                              Shares                Amount
                                                                           ------------          ------------

<S>                                                                         <C>                 <C>

Common Stock, par value $.001 per share,
   authorized 25,000,000 shares
        Balance, December 31, 2001 .....................................     11,638,925          $     11,639
        Stock options exercised ........................................        124,904                   125
                                                                           ------------          ------------

        Balance, September 30, 2002 ....................................     11,763,829                11,764
                                                                           ------------          ------------

Additional Paid-in Capital:
        Balance, December 31, 2001 .....................................                            5,609,657
        Stock options exercised ........................................                               22,974
        Compensation attributable to employee stock options ............                              (28,690)
                                                                                                 ------------

        Balance, September 30, 2002 ....................................                            5,603,941
                                                                                                 ------------

Accumulated Deficit:
        Balance, December 31, 2001 .....................................                           (3,234,856)
        Net income .....................................................                              862,238
                                                                                                 ------------

        Balance, September 30, 2002 ....................................                           (2,372,618)
                                                                                                 ------------


Total Shareholders' Equity .............................................                         $  3,243,087

                                                                                                  ===========

</TABLE>

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





                                       7
<PAGE>




MDI Entertainment, Inc. and Subsidiary
Condensed Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>


                                                                               Nine months ended
                                                                                 September 30,
                                                                              2002           2001
                                                                           -----------    -----------
                                                                           (unaudited)    (unaudited)
<S>                                                                       <C>            <C>

CASH FLOWS FROM OPERATING ACTIVITIES:
     Net income ........................................................   $   862,238    $ 1,729,165
     Adjustments to reconcile net income to net
         cash provided by operating activities:
              Depreciation and amortization ............................     1,424,026        645,753
              Gain on sale of investments, net .........................            --        (12,669)
              Deferred income tax benefit                                     (278,300)            --
              Change in assets and liabilities:
                     Decrease (increase) in accounts receivable ........     1,013,512        (46,032)
                     Increase in inventory                                    (371,813)      (588,332)
                     Increase in licensing costs .......................    (1,030,646)      (705,603)
                     Increase in other assets ..........................       (71,183)       (75,604)
                     Decrease in accounts payable ......................      (743,228)      (467,637)
                     Increase in accrued expenses ......................       213,651        196,069
                     Decrease in billings in excess of costs
                         and estimated earnings on uncompleted contracts       (85,603)      (378,228)
                                                                            -----------    -----------

              Net cash provided by operating activities ................       932,654        296,882

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

CASH FLOWS FROM INVESTING ACTIVITIES:
    Purchase of property and equipment, net ............................       (61,570)       (36,684)
    Proceeds of sale of investments                                                 --        192,669
                                                                            -----------    -----------


              Net cash (used for) provided by investing activities .....       (61,570)       155,985
                                                                            -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Repayment of debt ..................................................      (274,199)      (652,691)
    Proceeds from exercise of common stock options .....................        22,974          6,600
                                                                            -----------    -----------
              Net cash used for financing activities
                                                                              (251,225)      (646,091)
                                                                            -----------    -----------

NET INCREASE (DECREASE) IN CASH ........................................       619,859       (193,224)

CASH, beginning of the period ..........................................       251,578        528,151

                                                                            -----------    -----------
CASH, end of the period ................................................   $   871,437    $   334,927
                                                                            ===========    ===========

</TABLE>


                                       8
<PAGE>




MDI Entertainment, Inc. and Subsidiary
Condensed Consolidated Statements of Cash Flows (continued)

<TABLE>
<CAPTION>

                                                                                Nine months ended
                                                                                  September 30,
                                                                               2002           2001
                                                                            -----------    -----------

                                                                            (unaudited)    (unaudited)

<S>                                                                         <C>            <C>

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

    Cash paid for:
         Interest ........................................................   $  25,735      $   57,708
         Income taxes ....................................................   $  48,761      $    2,588
    Non-cash investing and financing activities:
         Stock compensation ..............................................   $ (28,690)     $       --
         Imputed interest on subordinated convertible debenture ..........   $      --      $    5,625
         Conversion of subordinated debenture into common stock ..........   $      --      $  213,574
         Common stock issued for services ................................   $      --      $  269,025

</TABLE>



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





                                       9
<PAGE>
MDI ENTERTAINMENT, INC. AND SUBSIDIARY

Notes to Unaudited Condensed  Consolidated  Financial Statements as of September
30, 2002 and 2001


1.   PRESENTATION OF UNAUDITED INTERIM CONDENSED CONSOLIDATED
     FINANCIAL STATEMENTS

     Information in the accompanying  interim condensed  consolidated  financial
statements and notes to the condensed  consolidated financial statements for the
nine-month  periods  ended  September  30,  2002  and 2001  are  unaudited.  The
accompanying interim unaudited condensed  consolidated financial statements have
been prepared by us in accordance with accounting  principles generally accepted
in the United States and Regulation  S-B.  Accordingly,  they do not include all
the  information  and  footnotes  required by  accounting  principles  generally
accepted in the United States 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 nine-month  period ended  September 30, 2002 is not  necessarily
indicative of the results that may be expected for the year ending  December 31,
2002.  The  condensed  consolidated  financial  statements  should  be  read  in
conjunction  with the financial  statements  and notes  thereto  included in our
audited financial statements for the year ended December 31, 2001.


2.   REVENUE AND COST RECOGNITION

     Revenue is derived from various lottery game contracts (mainly with states)
between  MDI and the  lotteries.  MDI  provides  second  chance  prize  packages
consisting  of grand prizes and various  merchandise  prizes.  MDI also provides
marketing  support  related  to each of the games and  obtains  the  appropriate
licenses for the right to use these  properties.  Many of the lottery  contracts
require the  lotteries to pay MDI upon signing of the contract;  therefore,  MDI
defers  this  revenue and  recognizes  the revenue  based on the  percentage  of
completion method.

     Revenues  from the  lottery  games  are  recognized  on the  percentage  of
completion  method,  determined  by the  percentage  of cost incurred to date to
estimated total costs on a specific  contract basis. This method is utilized for
over 90% of MDI's revenue, as management  considers cost incurred to be the best
available  measure of progress on these  contracts.  Contract  costs include all
direct costs.  Merchandise  prize costs are considered  incurred when the prizes
are either  shipped to the lottery  game winner or, if a second  chance  lottery
drawing is  committed  to, when the  merchandise  prizes are in our  fulfillment
facility.  Should an event occur before these merchandise  prizes are shipped to
the lottery winner that would damage or destroy these  merchandise  prizes,  the
Company has both adequate  insurance and the procurement  sources to replace any
damaged or destroyed  merchandise prizes.  General and administrative  costs are
charged to expense as incurred.  Provisions for estimated  losses on uncompleted
contracts  are made in the period in which such  losses  are  determined.  As of
September 30, 2002, no losses were expected from existing contracts.

     In addition,  less than 10% of our revenue is  recognized  from  charging a
license  or  royalty  fee to the  lottery  for the  use of one of the  Company's
licensed  properties  (i.e.,  Harley-Davidson(R))  in connection  with a lottery
scratch off ticket  game,  or for the  services  of a celebrity  involved in the
occurrence  of a lottery  event or in the  making of a lottery  commercial.  The
revenue is recognized on the completed contract method once contract obligations
are complete. In this respect, the results of revenue recognition are similar to
those under the percentage of completion method. Such obligations are usually of
very short duration (e.g., within a month).

     The  liability  "billings  in  excess of costs and  estimated  earnings  on
uncompleted  contracts"  represents  billings in excess of revenues  recognized.
Additionally,  the  Company  has a  receivable  from  its  President  and CEO of
approximately $44,000 related to personal expenses incurred during the year that
will be settled by year end 2002.


3.   INCOME TAXES

     Under  accounting  principles  generally  accepted in the United States,  a
deferred tax asset is recognized  when it is more likely than not that a portion
or all of a deferred  tax asset will be  realized.  The Company has deferred tax
assets  related to net operating  losses that can be utilized to offset  taxable
income in future years. In 2001, the Company  determined that it was more likely
than not that a portion  of its  deferred  tax  assets  would be  utilized  and,
accordingly,  a $1.3 million deferred tax asset was recorded. During the quarter
ended March 31,  2002,  the Company  determined  that it is more likely than not
that the  remaining  net  operating  loss would be utilized in future years and,
therefore,  an  additional  deferred  tax asset of $732,100 was recorded for the
period then ended.
                                       10
<PAGE>

     For income tax  purposes,  the Company has a May 31 year end. In  addition,
while the Company  recognizes revenue on the percentage of completion method for
financial  statement  purposes,  it recognizes  revenue on a modified  completed
contract  basis  for tax  purposes.  Upon  the  preparation  of the  tax  return
extension for the tax year ended May 31, 2002 (which occurred during the quarter
and ended  September  30, 2002),  it was  determined  that book income  exceeded
taxable  income  by  approximately  $627,000,  mainly as a result of a number of
large  contracts that were not complete for tax purposes as of that date.  Based
on current information,  management  determined that a deferred tax liability of
$250,708 should be recorded to reflect this obligation.  This liability has been
recorded  as an  additional  reduction  in the  deferred  tax  asset  since  the
obligation will be offset by the Company's net operating loss carry-forward.

     For the three  and nine  months  ended  September  30,  2002,  the  Company
recognized a tax provision  (benefit) of $500,108 and ($232,000),  respectively.
This was comprised of the following:

<TABLE>
<CAPTION>

                                                         THREE MONTHS ENDED     NINE MONTHS ENDED
                                                         SEPTEMBER 30, 2002     SEPTEMBER 30, 2002
                                                         ------------------     ------------------

<S>                                                           <C>                    <C>

Recognition of deferred tax asset ..............               $     --               $(732,108)

Deferred tax provision due to timing differences                250,708                 250,708

Current tax provision ..........................                249,400                 249,400
                                                               --------               ---------

Tax provision (benefit) ........................               $500,108               $(232,000)
                                                               ========               =========
</TABLE>


4.   EARNINGS PER SHARE

     Basic  earnings per common share are based on the average  number of common
shares outstanding  during the fiscal period.  Diluted earnings per common share
include,  in  addition  to the  above,  the  dilutive  effect  of  common  share
equivalents  during  the  period.  For the three and  nine-month  periods  ended
September 30, 2002 and 2001, common share equivalents represented dilutive stock
options and warrants using the treasury  method.  The income available to common
shareholders  and the number of shares used in the earnings per common share and
earnings per dilutive share computation for 2002 and 2001 was as follows:

<TABLE>
<CAPTION>
                                                               NINE MONTHS ENDED
                                                                  SEPTEMBER 30,
                                                            2002                2001
                                                            ----                ----
<S>                                                    <C>                  <C>

Net income applicable to common shareholders           $   862,238          $ 1,729,165
                                                       ===========          ===========

Basic:
  Average number of common shares outstanding           11,747,514           11,070,096

Dilutive:
  Dilutive effect of options and warrants ...            1,055,604            1,338,837
                                                       -----------          -----------

Average dilutive common shares outstanding ..           12,803,118           12,408,933
                                                       ===========          ===========

                                       11
<PAGE>

</TABLE>

<TABLE>
<CAPTION>


                                                               THREE MONTHS ENDED
                                                                  SEPTEMBER 30,
                                                            2002                2001
                                                            ----                ----

<S>                                                    <C>                  <C>

Net income applicable to common shareholders          $   146,685          $   651,710
                                                      ===========          ===========

Basic:
Average number of common shares outstanding            11,763,829           11,172,306

Dilutive:
Dilutive effect of options and warrants ....            1,055,604            1,338,837
                                                      -----------          -----------

Average dilutive common shares outstanding .           12,819,433           12,511,143
                                                      ===========          ===========
</TABLE>



5.   COMMITMENTS

     The  Company   obtains   licenses  for  both  cultural  and   entertainment
properties,  some of which have obligations  continuing  through the term of the
license.  It also leases  office  equipment  and office  space  under  long-term
leases,  which  expire  during the next one to four years.  The  following  is a
schedule  of both  continuing  non-cancelable  obligations  associated  with our
licensing  agreements,  future minimum rental payments  required under operating
leases and consulting  agreements that have initial or remaining  non-cancelable
lease terms in excess of one year as of September 30, 2002:


        3 months ending December 31, 2002 ...................... $   938,920
       12 months ending December 31, 2003 .......................  1,656,812
       12 months ending December 31, 2004 .......................    932,349
       12 months ending December 31, 2005 .......................    384,476
                                                                 -----------
       Total                                                     $ 3,912,557
                                                                 ===========


6.   LITIGATION

     On February 28, 2002, a class action suit on behalf of the Company's public
stockholders  (the  "Plaintiff") was filed in the Court of Chancery of the State
of Delaware  against the Company,  all of the members of the Company's  Board of
Directors and Scientific Games Corporation  ("Scientific  Games"), to enjoin the
proposed  business  combination  transaction  pursuant to which Scientific Games
would acquire the outstanding shares of the Company's common stock which it does
not already own. In its complaint,  the Plaintiff alleged that the consideration
offered to the Company's stockholders in the proposed acquisition was unfair and
inadequate  because  the  Plaintiff  believed  that the  intrinsic  value of the
Company's  common stock was  materially in excess of the amount  offered  giving
consideration to the Company's  growth and anticipated  operating  results,  net
asset value,  and future  profitability.  The  Plaintiff  requested the court to
preliminarily   and  permanently   enjoin  the  Company  from  proceeding  with,
consummating  or closing the proposed  transaction and in the event the proposed
transaction  is  consummated,  to rescind it and award  rescissory  damages.  In
addition,  the  Plaintiff  requested  that  the  court  award  to the  Plaintiff
compensatory damages.

     On May 6, 2002, a second  complaint was filed in the same Court  containing
nearly  identical  allegations.  On May 6,  2002,  lawyers  for  the  plaintiffs
requested an order  consolidating  the two cases. On June 19, 2002, all of these
stockholder  class  action  suits  relating  to the  proposed  transaction  with
Scientific  Games were  dismissed  without  prejudice.  (See Note 8 for  further
discussion.)

                                       12
<PAGE>

7.   COST OF UNSUCCESSFUL FUNDING

     The  Company  recorded  an expense of  $188,742  for costs  relating to the
placement and issuance of its Series C Preferred Stock to Oxford  International,
Inc. These costs include legal,  accounting and investment  banking fees paid or
accrued during the nine-month period ended September 30, 2001.

8.   TERMINATED MERGER WITH SCIENTIFIC GAMES CORPORATION

     On February 22, 2002, MDI Entertainment,  Inc. ("MDI") and Scientific Games
Corporation  ("Scientific  Games") entered into a Letter of Intent contemplating
the  acquisition  of MDI by  Scientific  Games at $2.10 per  share,  payable  in
Scientific  Games common stock.  On May 8, 2002, MDI announced  that  Scientific
Games and the Company had mutually and amicably agreed to terminate their merger
negotiations  in the wake of the  competing  offer the Company had received (see
ICP Proposal below).  The announcement  also indicated that Scientific Games and
the  Company  would  continue  their  strategic  alliance  (See  footnote 10 for
subsequent event).

     The Company has incurred certain legal,  accounting and investment  banking
fees relating to this proposed  merger.  These costs totaled $0 and $391,083 for
both the three months and the nine months ended September 30, 2002.

9.   ICP PROPOSAL

     By letters dated April 17, 2002 and April 30, 2002,  International  Capital
Partners, LLC ("ICP") expressed an intention to acquire approximately 50% of the
outstanding  shares of the  Company  which it did not  already own for $3.30 per
share in cash. ICP owned 1,022,019 shares of the Company at such time.

     On May 7, 2002,  ICP filed an amendment to Schedule 13D with the Securities
and Exchange Commission expressing its intention to increase its holdings in the
Company by  acquiring  50% of the  outstanding  shares of the Company it did not
currently  own for $3.30 per share.  According to the  Schedule  13D filing,  as
amended,  the source of funds for such  transaction  were to be investment funds
under the  direction and control of ICP. ICP  indicated  that it would  consider
extending  the  Company  a  line  of  credit  for  working  capital  and  add-on
acquisition purposes.

     On June 27, 2002, ICP and MDI announced  that they had mutually  terminated
their  discussions,  in  part  because  of the  advice  of the  Company's  Chief
Executive Officer and principal  stockholder,  Steven M. Saferin,  that he would
not  tender in the ICP  proposal.  The  costs  associated  with this  terminated
transaction  amounted to $0 and  $46,249 for both the three  months and the nine
months ended September 30, 2002.

10.  MERGER AGREEMENT WITH SCIENTIFIC GAMES

     On November 19,  2002,  the Company  entered into an Agreement  and Plan of
Merger (the "Merger Agreement"),  dated as of November 19,2002,  with Scientific
Games International,  Inc., a wholly owned subsidiary of Scientific Games, which
sets  forth the terms  and  conditions  of the  proposed  acquisition  of MDI by
Scientific Games.  Pursuant to the Merger Agreement,  a subsidiary of Scientific
Games will make a cash tender offer for all of the Company's  outstanding shares
at a  purchase  price of $1.60 per share,  net to the  seller in cash,  upon the
terms and subject to the conditions set forth in the Merger Agreement, including
the condition that 75% of MDI's outstanding shares (including the 708,833 shares
which are currently owned by Scientific  Games and the 3,795,169 shares owned by
Steven M. Saferin,  the Company's  Chief  Executive  Officer and  President) are
tendered in the offer.  Mr.  Saferin has agreed to sell his shares to Scientific
Games at a purchase price of $1.40 per share within five business days after the
close of the tender offer pursuant to a separate stock  purchase  agreement.  In
addition,  Mr.  Saferin and  Scientific  Games have  entered  into a  three-year
employment  agreement  which is effective  upon the closing of the tender offer.
This  transaction  is  expected  to close by early next year.  The  Company  has
incurred merger and transaction  costs of  approximately  $150,000 for the three
and nine months  ended  September  30,  2002  related to this  intended  merger.
Additional  costs will be incurred in the quarter  ending  December  31, 2002 to
finalize this transaction.


                                       13
<PAGE>


THIS QUARTERLY REPORT ON FORM 10-QSB CONTAINS FORWARD LOOKING STATEMENTS THAT
INVOLVE CERTAIN RISKS AND UNCERTAINTIES. OUR ACTUAL RESULTS COULD DIFFER
MATERIALLY FROM THE RESULTS DISCUSSED IN THE FORWARD LOOKING STATEMENTS.

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

     DESCRIPTION OF BUSINESS

     The following  discussion and analysis  should be read in conjunction  with
our Condensed  Consolidated Financial Statements and the notes thereto appearing
elsewhere  in this Form 10-QSB.  All  statements  contained  herein that are not
historical facts, including but not limited to, statements regarding our current
business strategy and our plans for future development and operations, are based
upon current  expectations.  These statements are  forward-looking in nature and
involve a number of risks and uncertainties. Generally, the words "anticipates,"
"believes,"  "estimates," "expects" and similar expressions as they relate to us
and our management are intended to identify forward looking  statements.  Actual
results may differ materially. Among the factors that could cause actual results
to differ  materially  are those set forth in our Annual  Report on Form  10-KSB
under the caption  "Description  of  Business-Risk  Factors." We wish to caution
readers not to place  undue  reliance  on any such  forward-looking  statements,
which statements speak only as of the date made.

     Our  principal  business  has  been  the  scratch  ticket  segment  of  the
government lottery industry.  We are a leader in designing and marketing instant
scratch ticket games based on licensed brand names and entertainment  properties
and our lottery  promotions  feature  such  properties  licensed  by us.  Prizes
awarded in such promotions  typically include a number of "second chance" prizes
related to the licensed property, including collectible logo bearing merchandise
such as T-shirts and caps, and other related merchandise such as posters,  money
clips,  telephones,  playing cards,  stadium blankets,  carryall bags,  jackets,
electronic games, video and music  collections,  watches,  clocks,  credit cards
with   prepaid   credit,   trips  and,   in  the  case  of   Harley-Davidson(R),
Harley-Davidson 1200 Sportster motorcycles.

     We developed  our strategy of  identifying  such  properties in early 1996.
Prior to that  time,  we had  developed  a series of  promotions  that  utilized
popular  videotapes,  compact discs and  audiocassettes as second chance lottery
prizes.  Those  promotions  enabled us to develop an  expertise  in sourcing and
distributing  products  as  second  chance  lottery  prizes  and  to  develop  a
reputation  with  lottery  personnel as a reliable  organization  attuned to the
special needs of lotteries and their players.

     We derive  approximately  ninety-eight  percent  (98%) of our revenues from
lotteries in two distinct ways.

     Our first source of lottery revenue is the sale of logo bearing merchandise
to the lottery as  second-chance  prizes.  In  merchandise-based  lottery games,
between 5% to 10% of a lottery's  prize fund is typically  used for the purchase
of merchandise related to the property the lottery is utilizing.  Typically,  we
purchase  merchandise  from  other  licensees  of the  property  and  resell the
merchandise  to the  lottery at a price  that is  designed  to include  overhead
costs,  profit,  shipping and handling and any marketing  support we provide the
lottery such as brochures,  posters or other  advertising  assistance  for which
there are no separate  charges.  Revenue from these  merchandise  based  lottery
games generally represents over ninety percent (90%) of our revenue.

     Secondly,  we may charge a lottery a license  or  royalty  fee to utilize a
particular  licensed  property  for a lottery  game.  License  fees may be fixed
assessments while royalties are a percentage of the printing cost of the tickets
or a percentage of the sales of the ticket.  Contracts  for licensed  properties
typically  include an up-front license fee or a royalty based on the price point
and quantity of tickets printed.  Ticket quantities range from about one million
to as many as 60 million with an average  quantity of about five million.  Price
points  range from  $1.00 to $20.00  per  ticket  with most games sold at $2.00.
Revenue  from these fee only  games  generally  represents  less than 10% of our
revenues.

     Our success is  dependent  on our ability to maintain  and secure  licensed
properties,  market these  properties  to lotteries and the  performance  of the
properties once they are introduced as lottery games to players. We believe that
revenues will fluctuate as individual  license-based promotions commence or wind
down and terminate.  In addition, our licenses (which are generally for 1.5 to 3
years)  terminate at various times over the next several  years.  Moreover,  the
useful  life of a license is  generally  relatively  short as the novelty of the
game or the  popularity of the licensed  material wanes over time. The timing of
agreements with the lotteries to run promotions, the acquisition of new licenses
and  the   commencement  of  new  promotions  is   unpredictable.   Accordingly,
period-to-period comparisons may not be indicative of future results.

                                       14
<PAGE>
     We are in continuous  negotiations to obtain additional licensed properties
and extend some existing  licenses.  We expect to reach several  agreements over
the next six to 12  months;  however we cannot  assure you that such  agreements
will actually be reached.  Some of these agreements may require the expenditures
of significant up-front advances.

     RECENT DEVELOPMENTS

     MERGER AGREEMENT WITH SCIENTIFIC GAMES

     On November 19,  2002,  the Company  entered into an Agreement  and Plan of
Merger (the "Merger Agreement"),  dated as of November 19,2002,  with Scientific
Games International,  Inc., a wholly owned subsidiary of Scientific Games, which
sets  forth  the terms  and  conditions  of the  proposed  acquisition  of us by
Scientific Games.  Pursuant to the Merger Agreement,  a subsidiary of Scientific
Games  will  make a cash  tender  offer for all of our  outstanding  shares at a
purchase price of $1.60 per share, net to the seller in cash, upon the terms and
subject to the  conditions  set forth in the  Merger  Agreement,  including  the
condition  that 75% of MDI's  outstanding  shares  (including the 708,833 shares
which are currently owned by Scientific  Games and the 3,795,169 shares owned by
Steven M. Saferin,  the Company's  Chief  Executive  Officer and  President) are
tendered in the offer.  Mr.  Saferin has agreed to sell his shares to Scientific
Games at a purchase price of $1.40 per share within five business days after the
closing of the tender offer pursuant to a separate stock purchase agreement.  In
addition,  Mr.  Saferin and  Scientific  Games have  entered  into a  three-year
employment  agreement  which is effective  upon the closing of the tender offer.
This transaction is expected to close by early next year.

     The  merger  and  transaction  costs  incurred  during  the  quarter  ended
September  30,  2002,  were  approximately  $150,000.  Additional  costs will be
incurred in the quarter ending December 31, 2002 to finalize this transaction.

     GAME INTRODUCTIONS

     During  the  quarter  ended  September  30,  2002,  nine new MDI games were
introduced by lottery jurisdictions, bringing the total number of games that are
currently  being offered in North  America,  Europe and Asia to 47 for the year.
The launches represented seven different MDI licensed lottery brands.

     Milestones during the quarter included the following:

1.   First MDI licensed game  business in Ireland.  At the peak of the worldwide
     25th Anniversary  observance of Elvis Presley's death, the An Post National
     Lottery  of  Ireland  launched  a 2 Euro  Elvis(R)  lottery  scratch  game,
     featuring five different images of The King of Rock and Roll.

2.   First MDI licensed game business in Vermont. The Vermont Lottery became the
     thirteenth U.S.  lottery to launch an  MDI-licensed  instant game featuring
     the likenesses, race cars and facsimile signatures of NASCAR(R) Winston Cup
     Series  drivers.  The Vermont game  highlights  Dale  Earnhardt,  Jr., Bill
     Elliott, Matt Kenseth and Mark Martin.

3.   First  100th  Anniversary  Harley-Davidson(R)  lottery  scratch  game.  The
     Illinois  Lottery  launched its second  Harley-Davidson(R)  instant scratch
     game,  getting an early start on the  Centennial  Anniversary of the famous
     motorcycle  brand that will be observed  through  Summer 2003. The Illinois
     game is one of eight Harley-Davidson(R)  lottery games currently on sale in
     North America. At least 13 additional "Anniversary Edition" games are being
     planned in the months ahead.

4.   First 20th Anniversary Wheel of Fortune(R)  licensed lottery game.  Another
     special  anniversary game debut is credited to the Illinois Lottery,  which
     launched the latest Wheel of  Fortune(R)  licensed  instant game in August.
     Wheel of Fortune(R) is celebrating its 20th season in syndication.

5.   First Betty Boop(TM) Bingo licensed  lottery game. An adaptation of lottery
     instant bingo, one of the most popular play styles of the last decade,  the
     branded Betty Boop(TM) Bingo made its first market  appearance in September
     at Connecticut Lottery retail locations.

6.   First  Lionel(R)  licensed  lottery game. In September  2002 the New Jersey
     Lottery  debuted  the first  lottery  scratch  game based on the  nostalgic
     Lionel(R)  train.  Lionel(R) Cash Express  includes rail pass grand prizes,
     model train sets and an assortment of other officially  licensed  Lionel(R)
     merchandise as other prizes.

7.   First  Universal   Studios   Monsters(TM)   licensed   lottery  game.  Rich
     illustrations and official movie logos of six classic Universal  Studios(R)
     movie monsters are highlighted in the Virginia Lottery's Monster Money game
     that went on sale in September 2002.
                                       15
<PAGE>

     NEW GAMES

     In  October,  the New  Jersey  Lottery  became  the first  lottery in North
America  to  launch a game  tied to  MDI's  NBA  license.  The  Company  expects
additional  NBA games to launch  in the  District  of  Columbia  this  month and
Wisconsin, Indiana and California in the first quarter of 2003.

     NEW CUSTOMERS

     During  November,  the Company will launch its first licensed game with the
Washington  State Lottery when it  introduces  its $3  Harley-Davidson  game. In
October,  the  Company  executed  a  multi-year,  multi-game  contract  with the
Minnesota State Lottery. Under the terms of the agreement, the Minnesota Lottery
has committed to MDI Licensed games with a total face value of $25,000,000  over
the  two-year  term of the  agreement.  This week,  the Company  has  executed a
five-year agreement with the Florida Lottery. Under the terms of this agreement,
the  Lottery  will  print  MDI  licensed  games  with  a  total  face  value  of
$200,000,000 during the term of the agreement.

     LICENSED PROPERTIES

     MDI has reached  agreement  for the renewal of Roush  Racing,  Inc. for the
continued  licensing  of  Roush's  NASCAR(R)  Winston  Cup race  drivers  in the
upcoming 2003 racing season.

     During the quarter  ended  September  30, 2002,  MDI finalized and executed
contracts for new licensed  properties,  including X-Men 2, Daredevil,  TV Guide
Crossword, Othello and The Honeymooners.

     Through an  agreement  with 20th  Century  Fox,  MDI will  offer  lotteries
licensed  instant games tied to two major motion  pictures that will premiere in
2003. Both Daredevil (February 2003) and X-Men 2 (May 2003) are based on classic
Marvel Comics  superheroes.  The Company earlier  announced a similar  agreement
with Universal  Studios for the lottery rights to the motion picture,  The Hulk,
which premieres in June 2003.

     TV Guide Crossword  provides the lottery  industry with a famous  trademark
brand for an already popular  lottery  scratch game category - crossword  puzzle
games.

     Othello(R) is the classic board game marketed by Mattel.

     Like its previously  announced license for I Love Lucy, MDI's agreement for
The  Honeymooners  enables  lotteries to introduce  Honeymooners  scratch  games
featuring  the  images of Jackie  Gleason  as Ralph  Kramden,  Art  Carney as Ed
Norton,  Audrey  Meadows as Alice Kramden and Joyce Randolph as Trixie Norton in
some of the most famous scenes from the 1950s-era TV sitcom.

     NEW BRANDS

     We have reached  agreements for several new brands which we expect to begin
marketing  shortly.  Among  those are  Corvette,  Ford and Mercury and the Palms
Hotel and Casino. We continue to discuss additional  opportunities with property
owners throughout North America and around the world.

     INTERNET PLATFORMS

     MDI continues to develop  Internet  applications  for its licensed  lottery
promotions,  providing lottery customers with custom-designed Internet web sites
that enable  consumers to enter second  chance  drawings over the Internet as an
alternative  to sending  entries  through the mail.  The web sites are  marketed
under the trade names Lottery Bonus Zone(TM) and Second Chance Bonus Zone(TM).

     During the quarter  ended  September 30, 2002,  Lottery Bonus  Zone(TM) web
sites were  provided  for  second  chance  promotions  related to the New Jersey
Lottery's  Heroes Of  Space(TM),  TABASCO(R)  Hot  Cash(TM) and  Lionel(R)  Cash
Express games.

     The Company also  launched a Second  Chance Bonus  Zone(TM) web site during
the quarter in support of the Virginia Lottery's Universal Studios  Monsters(TM)
Monster Money game.

                                       16
<PAGE>

     NEW TECHNOLOGIES

     MDI has reached an agreement in principle with Ingenio,  the Montreal-based
subsidiary  of the  provincial  lottery  organization,  Loto-Quebec,  to develop
CD-Rom  playable  versions  of  instant  lottery  scratch  games  based on MDI's
licensed properties.

     Targeted to the  ever-expanding  market of  consumers  with  personal  home
computers,  Ingenio  games  integrate  traditional  instant  scratch  games with
personal computer game technology,  adding drama, rich  illustrations,  detailed
animation,  music and  sound  effects  to the  experience  of  playing a lottery
scratch ticket.

     MDI believes that  applying  Ingenio's  technology to MDI licensed  lottery
games can expand the appeal of instant win lotteries to attractive  new consumer
demographic segments.

     EXPANSION INTO INTERNATIONAL MARKETS

     We hired Ms.  Evelyn  Yenson as our Senior  Vice  President,  International
Sales and Marketing, to focus on international  development in September,  2001.
Ms. Yenson brings  outstanding  credentials to the position,  having established
herself in the  international  lottery  arena as the director of the  Washington
State Lottery and as the first U.S.  delegate to the World  Lottery  Association
Executive Committee.  She later served as the corporate  communications  officer
for the instant ticket printing industry leader,  Scientific Games.  Through Ms.
Yenson's efforts and relationships, our products are now being actively marketed
on every continent where there are lottery jurisdictions. These efforts resulted
in our first time  contracts in France and China,  which  launched our 2002 FIFA
World Cup Japan/Korea(TM)  license game,  discussed below. We have also retained
several consultants with off-shore lottery experience to assist in our marketing
efforts.

     In late 2001, we established a valuable "calling card" in the International
lottery arena by acquiring the exclusive  worldwide  lottery licensing rights to
the 2002 FIFA World Cup  Korea/Japan(TM)  soccer finals. We are finding that, as
expected,  owning rights to the 2002 FIFA World Cup Japan/Korea(TM) has given us
substantial access into some of the world's largest lottery  organizations,  and
has created  prospects  for business that go well beyond the 2002 FIFA World Cup
Japan/Korea(TM) event.

     Reacting to the expressed  interest of lotteries  outside of North America,
we have also  recently  negotiated  an expansion of our North  American  lottery
rights from  domestic to  worldwide  for MGM's Pink  Panther(TM).  To the extent
practicable,  we are seeking international rights for other existing properties,
as we also seek to identify  viable  consumer  icons that have  strong  regional
appeal in foreign lottery markets.

     For the first time,  MDI will exhibit and be a sponsor of the World Lottery
Association  conference  which will be held later this month in Adelaide,  South
Australia. To help bolster our presence at the conference,  the Company has sold
to the South  Australia  Lottery our Hollywood  Sign and Walk of Fame game which
will be on sale during the conference. This marks our second sale to the lottery
in  Australia.  Previously,  the New South Wales  Lottery ran our Elvis  Presley
game.



                                       17
<PAGE>

<TABLE>
<CAPTION>

NINE MONTHS ENDED SEPTEMBER 30, 2002 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 2001


                                                                          Nine months ended September 30,
                                                                ---------------------------------------------------

                                                                     2002           %             2001           %
                                                                     ----           -             ----           -
                                                                 (Unaudited)                  (Unaudited)

<S>                                                             <C>            <C>          <C>             <C>
Revenue ...................................................     $13,056,292     100.0%      $ 10,687,122     100.0%

Cost of revenues ..........................................       8,034,062      61.5%         6,000,472      56.1%
                                                                ---------------------------------------------------

   Gross profit ...........................................       5,022,230      38.5%         4,686,650      43.9%

Selling, general and administrative expenses ..............       3,685,564      28.2%         2,722,911      25.5%
Terminated merger costs ...................................         391,083       3.0%                --         -%
Terminated transaction costs ..............................          46,249       0.4%                --         -%
Merger costs ..............................................         150,015       1.2%                --         -%
Cost of unsuccessful funding ..............................              --         -%           188,742       1.8%
                                                                ---------------------------------------------------

   Operating profit .......................................         749,319       5.7%         1,774,997      16.6%


Interest expense ..........................................          25,735       0.2%           136,739       1.3%
Interest income ...........................................          (6,509)     (0.1%)          (14,896)     (0.1%)
Other expense (income) ....................................          99,855       0.8%          (110,166)     (1.0%)
Gain on sale of investments, net ..........................              --         -%           (12,669)     (0.1%)
                                                                ---------------------------------------------------

   Income before (benefit) provision for income taxes .....         630,238       4.8%         1,775,989      16.5%

(Benefit) provision for income taxes ......................        (232,000)     (1.8%)           46,824       0.4%
                                                                ---------------------------------------------------

   Net income .............................................     $   862,238       6.6%      $  1,729,165      16.1%
                                                                 ===================================================
</TABLE>

     REVENUE

     Revenue  sources are from both  merchandise  based lottery  promotions  and
promotions  that generate  license or royalty fees only.  License or royalty fee
revenue  represented 6% of our total revenue for the nine months ended September
30,  2002,  whereas  approximately  94% of our revenue for the nine months ended
September 30, 2002 was derived  primarily  from  merchandise  based  promotions.
Prizes awarded in such promotions  typically include a number of "second chance"
prizes  related to the  licensed  property,  such as  collectible  logo  bearing
merchandise  associated  with the  licensed  property.  These prizes are usually
awarded on predetermined  dates,  which allow us to purchase and inventory these
items in our outsourced fulfillment facility prior to these award-drawing dates.
However,  procurement  opportunities  or  contract  terms  may  require  all the
merchandise  for a particular  promotion to be procured  prior to even the first
drawing.

     Results for the nine  months  ended  September  30,  2002,  reflect a 22.2%
increase in revenue.  Revenue for the nine months ended  September  30, 2002 was
$13,056,300  compared to  $10,687,100  for the nine months ended  September  30,
2001.  Overall revenue  increased as a result of the increased game launches for
the nine  months  ended  September  30, 2002  compared to the nine months  ended
September 30, 2001.  Harley-Davidson  accounted for 35.4% of our revenue for the
nine months ended September 30, 2002. Elvis Presley(R) and NASCAR(R),  accounted
for 27.4% and 9.8%,  respectively,  of our  revenue  for the nine  months  ended
September 30, 2002. The remaining 27.4% of our revenue for the nine months ended
September 30, 2002 was derived from 16 other  licensed  properties.  We recently
entered into an agreement to extend our agreement with Harley  Davidson(R) which
will  allow us to  provide  Harley  Davidson(R)  lottery  games to the  industry
through  the end of  calendar  year 2005.  In  addition,  we entered  into a new
agreement  with  Roush  Racing,  Inc.  for the  continued  licensing  of Roush's
NASCAR(R)  Winston Cup race drivers in the upcoming 2003 racing season.  Through
an agreement with 20th Century Fox, MDI will offer  lotteries  licensed  instant
games tied to two major motion  pictures  that will  premiere in  2003:Daredevil
(February  2003) and X-Men 2 (May 2003),  which are both based on classic Marvel
Comics superheroes.

                                       18
<PAGE>
     COST OF REVENUES

     Cost of revenue,  as a  percentage  of revenue,  increased to 61.5% for the
nine months  ended  September  30, 2002  compared to 56.1%,  for the nine months
ended  September 30, 2001.  This increase in the cost ratio reflects much higher
licensing and  merchandising  costs  associated with the Elvis  Presley(R) games
launched and running  during the nine months  ended  September  30, 2002,  which
represented 27.4% of our revenue. Elvis Presley(R) games, during the nine months
ended September 30, 2001,  represented only 13.5% of our total revenue. Our cost
of sales includes merchandise from other licensees of the property, shipping and
handling and any  marketing  support we provide the lottery  such as  brochures,
posters or other  advertising  assistance.  Costs also include trips  associated
with  our  licensed  properties.   Additionally,   another  major  cost  is  the
amortization of our licensing costs over the term of the various licenses.

     GROSS PROFIT

     The gross profit  increased in the nine months ended  September 30, 2002 to
$5,022,200  (38.5% of revenue) compared to $4,686,650 (43.9% of revenue) for the
nine months ended September 30, 2001. As mentioned above, this significant ratio
of Elvis  Presley(R)  games during this  nine-month  period made it difficult to
achieve our target gross profit of 40% for the nine months ended  September  30,
2002.  Without the Elvis Presley(R)  games, our gross profit would have exceeded
40% for the nine months ended September 30, 2002.

     SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

     Selling,  general,  and  administrative  expenses were $3,685,600 (28.2% of
revenue) for the nine months ended  September  30, 2002  compared to  $2,722,900
(25.5% of revenue) for the nine months ended  September  30, 2001.  Salaries and
employee benefits increased  approximately $355,100 during the nine-month period
ending September 30, 2002 due to increased sales and marketing personnel for our
international sales effort and a new Vice President of Creative Development, who
was  hired to  support  our  lottery  customers  in  innovative  game  promotion
concepts.

     Marketing,  promotional and related travel expenses  increased by $212,500,
for a total of $681,300,  for the nine months ended September 30, 2002. Expenses
in this area have increased  significantly  due to  international  marketing and
promotional  costs which  resulted in contracts in both France and China for our
2002 FIFA World Cup  Korea/Japan(TM)  licensed game.  This license has generated
license or royalty fee  revenue of  approximately  $148,000  for the nine months
ended September 30, 2002.

     Costs related to both public reporting and investor relations  increased to
$478,200 for the nine months ended  September  30, 2002 compared to $390,600 for
the nine months ended  September  30, 2001.  This  increase is due to a $110,000
increase in financial  consulting  expenses as compared to the nine month period
ended September 30, 2001. Part of this increase is a result of a credit recorded
during the nine-month  period ended  September 30, 2001 of $50,000  related to a
settlement of previously  recorded consulting fees.  Additionally,  beginning in
2002, we have resolved to provide cash compensation to our outside directors for
their work as members of our Board.  For the nine  months  ended  September  30,
2002, this total  compensation  was $48,000.  Operational  expenses for our Fort
Worth,  Texas  office  totaled  approximately  $51,000 in the nine months  ended
September 30, 2002 compared to $0 for the nine months ended September 30, 2001.

     TERMINATED MERGER AND TRANSACTION COSTS

     We have incurred  certain legal,  accounting  and  investment  banking fees
related to the  previous  proposed  merger with  Scientific  Games.  These costs
totaled $391,100 for the nine months ended September 30, 2002. Additionally,  we
incurred  $46,200  in  the   unsuccessful   completion  of  a  transaction  with
International  Capital  Partners,  LLC  ("ICP") in its  proposal  to  purchase a
majority of the outstanding common stock of our Company.

     MERGER COSTS

     In connection with the Merger Agreement with Scientific  Games, we incurred
merger and transaction  costs of  approximately  $150,000 for the three and nine
months ended September 30, 2002.

                                       19
<PAGE>
     OPERATING PROFIT

     The  operating  profit was  $749,300  (5.7% of revenue) for the nine months
ended September 30, 2002 compared to an operating profit of $1,775,000 (16.6% of
revenue)  for the nine  months  ended  September  30,  2001.  This  decrease  in
operating  profitability is due to the factors described above, and particularly
the costs related to the proposed merger with Scientific Games, the unsuccessful
transaction  with  ICP and  the  ongoing  merger  discussions  with a  potential
acquirer. Without the costs related to these proposed transactions,  there would
have been  operating  profit for the nine months ended  September  30, 2002,  of
$1,336,600 (10.2% of revenue).

     INTEREST EXPENSE

     Interest  expense was $25,700 for the nine months ended  September 30, 2002
compared  to  $136,700  for the nine  months  ended  September  30,  2001.  This
reduction in interest expense is related to the reduction of our short-term debt
from  $274,200 at September  30, 2001 to $0 at September  30, 2002. In addition,
the results for the nine months  ended  September  30, 2001  reflected  interest
expense related to a Subordinated  Convertible  Debenture which was converted to
equity prior to 2002.

     OTHER EXPENSE

     Other  expense was $99,900 for the nine  months  ended  September  30, 2002
compared to other  income of $110,200 for the nine months  ended  September  30,
2001. This net expense of $99,900 is primarily due to the write-off of the total
$100,000  promissory  note we received as settlement for the lawsuit with Oxford
International, Inc., settled on December 31, 2001. We were to receive $10,000 on
February 15, 2002. As of the date of this filing,  we have not received  payment
and the ultimate collection of this note is in doubt. We will evaluate the merit
of pursuing this matter  further.  The $110,200 in the  comparable  period ended
September 30, 2001 was attributable to the favorable exchange of stock for legal
services that was negotiated in the first quarter of 2001.

     GAIN ON SALES OF SECURITIES

     The $12,700 gain on securities for the nine months ended September 30, 2001
was attributable to the sale of shares of eLot stock held for investment.

     NET INCOME

     For the reasons set forth above, we had income before taxes of $630,200 for
the nine months  ended  September  30, 2002  compared to income  before taxes of
$1,776,000  for the nine months ended  September  30, 2001.  Excluding  expenses
incurred  in  connection  with  the  potential  merger  and  investment  related
transactions,  our net income before taxes for the nine months ending  September
30, 2002 would have been $1,217,500 (9.3% of revenue).

     Net income  decreased to $862,200 for the nine months ended  September  30,
2002  compared to  $1,729,200  for the nine months  ended  September  30,  2001.
Contributing  to the net income of $862,200 for the nine months ended  September
30, 2002 was the  decrease  in the income tax  benefit in the nine months  ended
September  30, 2002,  which is  attributable  to the  reversal of  approximately
$732,100 of a deferred tax asset  valuation  allowance  that was  recognized  at
March 31, 2002. Under  accounting  principles  generally  accepted in the United
States,  a valuation  allowance is  established  when it is more likely than not
that a portion or all of a deferred  tax asset  will not be  realized.  Prior to
December  31, 2001, a valuation  allowance  was recorded for these  deferred tax
assets.  In 2001, we determined  that,  more likely than not, a portion of these
deferred  tax assets  would be utilized  and,  accordingly,  $1.3 million of the
valuation allowance was reversed.

     Reducing  this tax benefit is the current tax provision for the nine months
ended  September 30, 2002 of $249,400.  Also,  upon the  preparation  of the tax
return  extension for the tax year ended May 31, 2002 (which occurred during the
quarter ended  September 30, 2002),  it was determined that book income exceeded
taxable  income  by  approximately  $627,000,  mainly as a result of a number of
large  contracts that were not complete for tax purposes as of that date.  Based
on current information,  management  determined that a deferred tax liability of
approximately  $250,700  should be recorded  to reflect  this  obligation.  This
liability has been recorded as an additional reduction in the deferred tax asset
since  the  obligation  will be  offset  by the  Company's  net  operating  loss
carry-forward.

     Basic earnings per share and fully diluted earnings per share were $.07 for
the nine months ended September 30, 2002 compared to basic earnings per share of
$.16 and fully  diluted  earnings  per share of $.14 for the nine  months  ended
September 30, 2001.
                                       20
<PAGE>


<TABLE>
<CAPTION>

THREE MONTHS ENDED SEPTEMBER 30, 2002 COMPARED TO THREE MONTHS ENDED SEPTEMBER 30, 2001


                                                                          Three months ended September 30,
                                                                ---------------------------------------------------

                                                                     2002         %             2001           %
                                                                     ----         -             ----           -
                                                                 (Unaudited)                  (Unaudited)

<S>                                                             <C>            <C>          <C>            <C>
Revenue ....................................................    $ 4,894,021     100.0%      $ 4,001,656     100.0%

Cost of revenues ...........................................      2,837,239      58.0%        2,276,367      56.9%
                                                                ---------------------------------------------------

   Gross profit ............................................      2,056,782      42.0%        1,725,289      43.1%

Selling, general and administrative expenses ...............      1,252,699      25.6%          937,809      23.4%
Merger costs ...............................................        150,015       3.1%               --         -%
Cost of unsuccessful funding ...............................             --         -%           99,109       2.5%
                                                                ---------------------------------------------------

   Operating profit ........................................        654,068      13.3%          688,371      17.2%

Interest expense ...........................................          8,752       0.2%            7,995       0.2%
Interest income ............................................         (1,477)        -%           (6,123)     (0.2%)

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

   Income before provision for income taxes ................        646,793      13.1%          686,499      17.2%

Provision for income taxes .................................        500,108      10.2%           34,789       0.9%
                                                                ---------------------------------------------------

   Net income ..............................................    $   146,685       2.9%      $   651,710      16.3%
                                                                ===================================================


</TABLE>

     REVENUE

     Revenue  sources are from both  merchandise  based lottery  promotions  and
promotions  that generate  license or royalty fees only.  License or royalty fee
revenue was minimal this quarter.  Therefore,  approximately 100% of our revenue
for the three  months  ended  September  30,  2002 was  derived  primarily  from
merchandise  based  promotions.  Prizes  awarded  in such  promotions  typically
include a number of "second  chance"  prizes  related to the licensed  property,
such as  collectible  logo  bearing  merchandise  associated  with the  licensed
property.  These prizes are usually awarded on predetermined  dates, which allow
us to purchase and inventory these items in our outsourced  fulfillment facility
prior  to these  award-drawing  dates.  However,  procurement  opportunities  or
contract terms may require all the merchandise for a particular  promotion to be
procured prior to even the first drawing.

     Results for the three  months  ended  September  30,  2002  reflect a 22.3%
increase in revenue.  Revenue for the three months ended  September 30, 2002 was
$4,894,000 compared to $4,001,700 for the three months ended September 30, 2001.
Overall  revenue  increased as a result of the  increased  game launches for the
three  months  ended  September  30,  2002  compared to the three  months  ended
September  30, 2001.  Harley-Davidson(R)  accounted for 41.1% of our revenue for
the three months ended September 30, 2002. Elvis Presley(R) and NASCAR accounted
for 20.8% and 7.7%,  respectively,  of our  revenue,  for the three months ended
September 30, 2002. The remaining 30.4% of the revenue was derived from 13 other
licenses for the three months ended  September  30, 2002,  compared to 20.8% for
the three months ended September 30, 2001. We recently entered into an agreement
to extend our agreement with Harley  Davidson(R)  which will allow us to provide
Harley  Davidson(R)  lottery  games to the industry  through the end of calendar
year 2005.  In addition,  we have entered into an agreement  with Roush  Racing,
Inc. for the continued  licensing of Roush's  NASCAR(R) Winston Cup race drivers
in the upcoming 2003 racing season.  Through an agreement with 20th Century Fox,
MDI will  offer  lotteries  licensed  instant  games  tied to two  major  motion
pictures that will premiere in 2003:  Daredevil (February 2003) and X-Men 2 (May
2003), which are both based on classic Marvel Comics superheroes.

                                       21
<PAGE>
     COST OF REVENUES

     Cost of revenues as a percentage of revenue increased slightly to 58.0% for
the three months ended September 30, 2002 compared to 56.9% for the three months
ended  September  30,  2001.  This  increase in the cost ratio  reflects  higher
licensing and  merchandising  costs  associated with the Elvis  Presley(R) games
launched  and running  this  quarter  which  represented  20.8% of our  revenue,
compared to 10.8% of our revenue for the comparable  period in 2001. Our cost of
sales includes  merchandise  from other licensees of the property,  shipping and
handling and any  marketing  support we provide the lottery  such as  brochures,
posters or other  advertising  assistance.  Costs also include trips  associated
with  our  licenses  properties.   Additionally,   another  major  cost  is  the
amortization of our licensing costs over the term of the various licenses.

     GROSS PROFIT

     The gross profit  increased in the three months ended September 30, 2002 to
$2,056,800  (42.0% of revenue) compared to $1,725,300 (43.1% of revenue) for the
three months ended September 30, 2001. As mentioned  above,  the increased ratio
of Elvis Presley(R) games in the quarter lowered our gross profit percentage for
the quarter as  compared to the same  quarter  last year.  However,  we now have
improved our gross profit percentage to above our target of 40%.

     SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

     Selling,  general and  administrative  expenses were  $1,252,700  (25.6% of
revenue)  for the three  months ended  September  30, 2002  compared to $937,800
(23.4% of revenue) for the three months ended  September 30, 2001.  Salaries and
employee benefits increased approximately $100,900 this quarter due to increased
sales and marketing personnel for our international sales efforts and a new Vice
President of Creative Development who was hired to support our lottery customers
in innovative game promotion concepts.

     Marketing,  promotional and related travel  expenses  increased by $140,900
for a total of $291,800 for the three months ended September 30, 2002. More than
half of  this  increase  was  due to  international  marketing  and  promotions.
Lobbying expenses increased by $84,500 for a total of $135,600. Costs related to
both public reporting and investor relations decreased by approximately  $23,000
for the three months ended September 30, 2002 compared to the three months ended
September 30, 2001.

     MERGER COSTS

     In connection with the Merger Agreement with Scientific  Games, we incurred
merger and  transaction  costs of  approximately  $150,000  for the three months
ended September 30, 2002.

     OPERATING PROFIT

     The operating  profit was $654,000  (13.4% of revenue) for the three months
ended  September30,  2002 compared to an operating  profit of $688,400 (17.2% of
revenue)  for the three months ended  September  30, 2001.  The decrease in both
operating  profit and its lower  percentage  of sales for the three months ended
September  30,  2002 is  directly  related to  increased  selling,  general  and
administrative expenses and on going merger costs discussed above.

     NET INCOME

     We had income before taxes of $646,800 for the three months ended September
30, 2002  compared to income before taxes of $686,500 for the three months ended
September  30, 2001.  This decrease in income before taxes is due to the factors
described   above,  but  particularly  the  costs  related  to  the  new  merger
discussions. Excluding these costs, there would have been income before taxes of
$796,800  (16.3% of revenue) for the three months ended  September 30, 2002. For
the three  months  ended  September  30,  2002,  we had  income  after  taxes of
$146,000,  compared to income after taxes of $651,700 for the three months ended
September 30, 2001.

     The tax provision is made up of two  components.  The current tax provision
for the three months ended  September 30, 2002 is $249,400.  Additionally,  upon
the preparation of the tax return  extension for the tax year ended May 31, 2002
(which  occurred  during the  quarter  and ended  September  30,  2002),  it was
determined that book income exceeded taxable income by  approximately  $627,000,
mainly as a result of a number of large contracts that were not complete for tax
purposes as of that date. Based on current  information,  management  determined
that a deferred tax liability of  approximately  $250,700  should be recorded to
reflect this  obligation.  This  liability  has been  recorded as an  additional
reduction in the deferred tax asset since the  obligation  will be offset by our
net operating loss carry-forward.
                                       22
<PAGE>

     Earnings  per share  was $.01 per  share on both a basic and fully  diluted
basis for the three months ended  September 30, 2002 compared to basic  earnings
per share of $.06 and  fully  diluted  earnings  per share of $.05 for the three
months ended September 30, 2001.

     LIQUIDITY AND CAPITAL RESERVES

     As of September 30, 2002,  we had cash of $871,437  compared to $251,600 as
of December 31, 2001. This significantly increased cash position was in part due
to the  collection of  receivables  for games  launched  this quarter.  Accounts
receivable  decreased  to  $1,696,031  as of  September  30,  2002  compared  to
$2,709,500  as of December  31, 2001.  On balance,  it would appear we have less
liquid assets at September 31, 2002, however it should be noted we paid down the
remaining  loan balance to our President  and CEO of $110,000 and  significantly
reduced our trade payables at September 30, 2002 to $369,700 from  $1,112,900 at
December 31, 2001.

     As of September 30, 2002, we had positive  working  capital of  $1,606,700.
Included in current  assets is  $1,343,000  in deferred  tax assets,  a non-cash
asset.  Also within current  liabilities is $2,411,500 of "Billings in excess of
cost and estimated earnings on uncompleted contracts" representing  unrecognized
revenue (i.e.,  amounts  invoiced to, or received from our customers,  but which
may not be  recognized  as revenue  until we  purchase  the  related  contracted
merchandise).  Accordingly,  such liability will not adversely impact cash flow,
except to the extent that we need to purchase  merchandise and incur  subsequent
fulfillment costs relating to this revenue,  which typically approximates 50% of
the related  revenue.  Without these two items,  working capital would have been
$1,469,500.

     We had no indebtedness as of September 30, 2002.

     Our  obligations  and  commitments to make future  payments under licensing
agreements,  lease and  consulting  agreements  is  summarized  in the following
table:

                                                Payments Due by Period
                                                ----------------------

CONTRACTUAL OBLIGATIONS                  Total         1-3 years      4-5 years
-----------------------                ----------      ----------     ---------
License obligations ...............    $2,962,502      $2,868,752       $93,750

Operating leases &
   consulting agreements ..........       950,055         947,686         2,369
                                       ----------      ----------     ---------

Total contractual
   obligations ....................    $3,912,557      $3,816,438       $96,119
                                       ==========      ==========     =========

     Notwithstanding  those amounts presented in the above table, we do not have
any material  capital  commitments  and do not currently  anticipate  making any
substantial  expenditures  other than in the normal course of business.  We have
undertaken  an aggressive  program of acquiring new licenses,  some of which may
require  substantial  up-front  payments.  Increasing  competition  of licenses,
including  the  relatively  recent  entrance  to the  field as a  competitor  by
Scientific Games and other lottery ticket printers, may adversely impact license
fees, which, in addition to the impact on liquidity, could also adversely impact
our operations.

     As a result of our relatively low working capital position and inconsistent
cash flow,  our  President and Chief  Executive  Officer has, from time to time,
loaned money to us and personally  guaranteed  bonds to lotteries on our behalf.
Mr. Saferin is not obligated to extend such loans or make such guarantees and if
he does not do so in the future it could  adversely  affect us. In addition,  we
currently have a $500,000 line of credit with a bank.

     In light of the fact that our games  represent a substantial  amount of the
themed or branded  type of lottery  games  offered  in the  United  States,  our
ability to expand revenue above that achieved in 2001 will depend on our ability
to expand internationally or develop new products. We cannot assure you that our
strategies to so expand or develop new products will be successful.


                                       23
<PAGE>


     SEASONALITY AND REVENUE FLUCTUATIONS

     Our  business  is not  seasonal.  However,  our  revenues  are  expected to
fluctuate  as  individual  license-based  promotions  commence  or wind down and
terminate.  The useful life of a promotion is generally  relatively short as the
novelty of the game or the popularity of the licensed  material wanes over time.
In addition,  our licenses (which are generally for 1.5 to 3 years) terminate at
various  times over the next several  years.  The life span of a promotion,  the
timing of agreements  with the lotteries to run  promotions,  the acquisition of
new licenses and the  commencement  of new promotions are  unpredictable.  Also,
since most lotteries are government  agencies with lottery executives  appointed
by the  state's  governor  or other  high  ranking  official,  opportunities  or
projects in progress can be slowed after an election if the  incumbent  governor
is  not  re-elected.  Accordingly,   period-to-period  comparisons  may  not  be
indicative of future results.



                                       24
<PAGE>



ITEM 3.  CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures.

     Our principal  executive  officer and principal  financial  officer,  after
evaluating  the  effectiveness  of our  disclosure  controls and  procedures (as
defined in Exchange Act Rules  13a-14(c)  and  15d-14(c))  on November 19, 2002,
have concluded  that,  based on such  evaluation,  our  disclosure  controls and
procedures  were  adequate  and  effective to ensure that  material  information
relating to us was made known to them by others within MDI,  particularly during
the period in which this Quarterly Report on Form 10-QSB was being prepared.

(b)  Changes in Internal Controls.

     There were no  significant  changes in our  internal  controls  or in other
factors that could significantly affect these controls subsequent to the date of
their  evaluation,  nor were  there any  significant  deficiencies  or  material
weaknesses in our internal  controls.  Accordingly,  no corrective  actions were
required or undertaken.



                                       25
<PAGE>


                                     PART II
                                OTHER INFORMATION



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

(a) Exhibits


    Exhibit 99.1                Certification pursuant to section 906 of the
                                Sarbanes-Oxley Act of 2002 (subsections (a)
                                and (b) of section 1350, chapter 63 of title
                                18, United States Code).

(b) Reports on Form 8-K         Filed on July 16, 2002 (Item 5: Other Events -
                                Stockholder class action suit relating to the
                                proposed transaction with Scientific Games
                                Corporation had been dismissed - Date of Report
                                June 19, 2002).

                                Filed on August 16, 2002(Item 4: Changes to
                                Registrant's Certifying Accountants -
                                Determination to engage Scillia, Dowling &
                                Natarellli, LLC to serve as MDI's
                                independent accountants).




                                       26
<PAGE>



                                 SIGNATURE PAGE


In accordance with the requirements of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

Dated November 19, 2002

                                 MDI ENTERTAINMENT, INC.
                                               (Registrant)

                                 By: /s/Steven M. Saferin
                                     --------------------
                                       Steven M. Saferin
                                       President and Chief Executive Officer
                                       and Director
                                       (Principal Executive Officer)

                                 By: /s/Kenneth M. Przysiecki
                                     ------------------------
                                       Kenneth M. Przysiecki
                                       Senior Vice President Accounting and
                                       Administration, Secretary and Director
                                       (Principal Financial and Accounting
                                        Officer)



                                       27
<PAGE>



                  CERTIFICATION BY PRINCIPAL EXECUTIVE OFFICER

I, Steven M. Saferin, certify that:

1. I have reviewed this Quarterly Report on Form 10-QSB of MDI Entertainment,
Inc.;

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

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

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

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

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

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

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

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

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

6. The registrant's other certifying officers and I have indicated in this
quarterly report whether there were significant changes in internal controls or
in other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Date: November 19, 2002         /s/ Steven M. Saferin
                               ----------------------
                               Name:   Steven M. Saferin
                               Title:  President and Chief Executive Officer




                                       28
<PAGE>


                  CERTIFICATION BY PRINCIPAL FINANCIAL OFFICER

I, Kenneth M. Przysiecki, certify that:

1. I have reviewed this Quarterly Report on Form 10-QSB of MDI Entertainment,
Inc.;

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

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

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

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

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

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

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

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

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

6. The registrant's other certifying officers and I have indicated in this
quarterly report whether there were significant changes in internal controls or
in other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Date: November 19, 2002           /s/ Kenneth M. Przysiecki
                                 --------------------------
                                 Name:   Kenneth M. Przysiecki
                                 Title:  Senior Vice President, Accounting and
                                         Administration and Corporate Secretary

                                       29
<PAGE>