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

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FORM 10-Q

|(Mark One)                                    |                                                                                         
|--------------------------------------------- | ----------------------------------------------------------------------------------------
|ý                                             | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
|FOR THE QUARTERLY PERIOD ENDED APRIL 30, 2002
|OR                                           
|o                                             | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM  TO

Commission
File Number000-23401

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

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

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

Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past
90 days    Yes ý    No o

On
June 11, 2002, the registrant had 11,202,939 outstanding shares of its Common Stock, par value $0.001 per share.

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GAMETECH INTERNATIONAL, INC.  QUARTERLY REPORT ON FORM 10-Q  FOR THE QUARTERLY PERIOD ENDED APRIL 30, 2002  INDEX

|                               |  |                                                                                               |  |                                                                                                           |  | Page
No.
|------------------------------ |  | --------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------- |  | --------
|Part I. Financial Information: |  |                                                                                              
|                               |  | Item 1. Financial Statements (Unaudited)                                                      |  |                                                                                                          
|                               |  |                                                                                               |  | Condensed Consolidated Balance Sheets
April 30, 2002 and October 31, 2001                                 |  | 3       
|                               |  |                                                                                               |  | Condensed Consolidated Statements of Operations
Three Months and Six Months Ended April 30, 2002 and 2001 |  | 4       
|                               |  |                                                                                               |  | Condensed Consolidated Statements of Cash Flows
Six Months Ended April 30, 2002 and 2001                  |  | 5       
|                               |  |                                                                                               |  | Notes to Condensed Consolidated Financial Statements                                                      |  | 6       
|                               |  | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations |  | 7                                                                                                        
|                               |  | Item 3. Quantitative and Qualitative Disclosures about Market Risk                            |  | 12                                                                                                       
|Part II. Other Information     |  |                                                                                              
|                               |  | Item 1. Legal Proceedings                                                                     |  | 13                                                                                                       
|                               |  | Item 2. Changes in Securities and Use of Proceeds                                             |  | 14                                                                                                       
|                               |  | Item 3. Defaults Upon Senior Securities                                                       |  | 14                                                                                                       
|                               |  | Item 4. Submission of Matters to a Vote of Security Holders                                   |  | 14                                                                                                       
|                               |  | Item 5. Other Information                                                                     |  | 14                                                                                                       
|                               |  | Item 6. Exhibits and Reports on Form 8-K                                                      |  | 14                                                                                                       
|Signatures                     |  | 15                                                                                           

2

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

|                                                                                          |                                                                                                                                                            | October 31,
2001                  |        | April 30,
2002 |      
|----------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------- | ------ | -------------- | -----
|
|Assets:                                                                                   |                                                                                                                                                            |                                   |        |                |      
|Current assets:                                                                           |                                                                                                                                                            |                                   |        |                |      
|                                                                                          | Cash and cash equivalents                                                                                                                                  |                                   | $      | 10,131         |      
|                                                                                          | Short-term investments                                                                                                                                     |                                   |        | 2,824          |      
|                                                                                          | Accounts receivable, net                                                                                                                                   |                                   |        | 4,079          |      
|                                                                                          | Deposits                                                                                                                                                   |                                   |        | 610            |      
|                                                                                          | Prepaid income taxes                                                                                                                                       |                                   |        | 1,198          |      
|                                                                                          | Prepaid expenses and other current assets                                                                                                                  |                                   |        | 749            |      
|                                                                                          | Deferred income taxes                                                                                                                                      |                                   |        | 3,308          |      
|                                                                                          |                                                                                                                                                            |                                   |        |                |      
|Total current assets                                                                      |                                                                                                                                                            |                                   | 22,899 |                |      
|Bingo units, furniture and equipment, net                                                 |                                                                                                                                                            |                                   | 15,913 |                |      
|Intangible and other assets, net                                                          |                                                                                                                                                            |                                   | 1,427  |                |      
|Goodwill                                                                                  |                                                                                                                                                            |                                   | 15,437 |                |      
|                                                                                          |                                                                                                                                                            |                                   |        |                |      
|Total assets                                                                              |                                                                                                                                                            | $                                 | 55,676 |                | $    
|                                                                                          |                                                                                                                                                            |                                   |        |                |      
|Liabilities and stockholders' equity:                                                     |                                                                                                                                                            |                                   |        |                |      
|Current liabilities:                                                                      |                                                                                                                                                            |                                   |        |                |      
|                                                                                          | Accounts payable                                                                                                                                           |                                   | $      | 674            |      
|                                                                                          | Accrued payroll and related obligations                                                                                                                    |                                   |        | 2,129          |      
|                                                                                          | Acquisition related accrued liabilities                                                                                                                    |                                   |        | 200            |      
|                                                                                          | Other accrued liabilities                                                                                                                                  |                                   |        | 2,398          |      
|                                                                                          |                                                                                                                                                            | Current portion of long-term debt |        |                | 1,034
|                                                                                          |                                                                                                                                                            |                                   |        |                |      
|Total current liabilities                                                                 |                                                                                                                                                            |                                   | 6,435  |                |      
|Long-term debt                                                                            |                                                                                                                                                            |                                   | 1,361  |                |      
|Non-current employment obligations                                                        |                                                                                                                                                            |                                   | 370    |                |      
|Deferred income taxes                                                                     |                                                                                                                                                            |                                   | 926    |                |      
|Commitments and contingencies                                                             |                                                                                                                                                            |                                   |        |                |      
|Stockholders' equity:                                                                     |                                                                                                                                                            |                                   |        |                |      
|                                                                                          | Common stock, $.001 par value: 40,000,000 shares authorized; 13,053,964 shares issued and outstanding at April 30, 2002 and 12,701,839 at October 31, 2001 |                                   |        | 13             |      
|Capital in excess of par value                                                            |                                                                                                                                                            |                                   | 44,543 |                |      
|Retained earnings                                                                         |                                                                                                                                                            |                                   | 10,124 |                |      
|Less: Treasury stock, 1,855,325 shares at April 30, 2002 and at October 31, 2001, at cost |                                                                                                                                                            |                                   | (8,096 | )              |      
|                                                                                          |                                                                                                                                                            |                                   |        |                |      
|Total stockholders' equity                                                                |                                                                                                                                                            |                                   | 46,584 |                |      
|                                                                                          |                                                                                                                                                            |                                   |        |                |      
|Total liabilities and stockholders' equity                                                |                                                                                                                                                            | $                                 | 55,676 |                | $    
|                                                                                          |                                                                                                                                                            |                                   |        |                |      

3

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See
notes to financial statements

4

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

|                                                        |                            | Three Months Ended
April 30, |        | Six Months Ended
April 30,
|------------------------------------------------------- | -------------------------- | ---------------------------- | ------ | --------------------------
|
|
|Revenue                                                 |                            | $                            | 12,813 |                           
|Cost of revenue                                         |                            |                              | 4,098  |                           
|                                                        |                            |                              |        |                           
|Gross profit                                            |                            |                              | 8,715  |                           
|Operating expenses:                                     |                            |                              |        |                           
|                                                        | General and administrative |                              |        | 2,810                     
|                                                        | Sales and marketing        |                              |        | 3,489                     
|                                                        | Research and development   |                              |        | 456                       
|                                                        |                            |                              |        |                           
|Total operating expenses                                |                            |                              | 6,755  |                           
|                                                        |                            |                              |        |                           
|Income from operations                                  |                            |                              | 1,960  |                           
|Interest income and other, net                          |                            |                              | 31     |                           
|                                                        |                            |                              |        |                           
|Income before provision for income taxes                |                            |                              | 1,991  |                           
|Provision for income taxes                              |                            |                              | 961    |                           
|                                                        |                            |                              |        |                           
|Net income                                              |                            | $                            | 1,030  |                           
|                                                        |                            |                              |        |                           
|Basic net income per share                              |                            | $                            | 0.10   |                           
|                                                        |                            |                              |        |                           
|Diluted net income per share                            |                            | $                            | 0.09   |                           
|                                                        |                            |                              |        |                           
|Shares used in the calculation of net income
per share: |                            |                              |        |                           
|                                                        | Basic                      |                              |        | 10,515,898                
|                                                        |                            |                              |        |                           
|                                                        | Diluted                    |                              |        | 11,181,804                
|                                                        |                            |                              |        |                           

See
notes to financial statements.

5

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GAMETECH INTERNATIONAL, INC.  CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  FOR THE SIX MONTHS ENDED APRIL 30, 2002 AND 2001  (Dollars in thousands)

|                                                                                  |                                              | 2001                      |        | 2002  |     
|--------------------------------------------------------------------------------- | -------------------------------------------- | ------------------------- | ------ | ----- | ----
|
|Cash flows from operating activities:                                             |                                              |                           |        |       |     
|Net income                                                                        |                                              | $                         | 245    |       | $   
|Adjustments to reconcile net income to net cash provided by operating activities: |                                              |                           |        |       |     
|                                                                                  | Depreciation, amortization and obsolescence  |                           |        | 5,591 |     
|                                                                                  | Changes in operating assets and liabilities: |                           |        |       |     
|                                                                                  |                                              | Accounts receivable, net  |        |       | (326
|                                                                                  |                                              | Prepaid income taxes      |        |       | 451 
|                                                                                  |                                              | Other current assets      |        |       | (47 
|                                                                                  |                                              | Accounts payable          |        |       | (834
|                                                                                  |                                              | Other accrued liabilities |        |       | (454
|                                                                                  |                                              |                           |        |       |     
|Net cash provided by operating activities                                         |                                              |                           | 4,626  |       |     
|Cash flows from investing activities:                                             |                                              |                           |        |       |     
|Decrease (increase) in short-term investments                                     |                                              |                           | 1,193  |       |     
|Capital expenditures for bingo units, furniture and equipment                     |                                              |                           | (3,324 | )     |     
|Purchase of intangible and other assets                                           |                                              |                           |       |       |     
|                                                                                  |                                              |                           |        |       |     
|Net cash used in investing activities                                             |                                              |                           | (2,131 | )     |     
|Cash flows from financing activities:                                             |                                              |                           |        |       |     
|Proceeds from short-term borrowings from bank                                     |                                              |                           | 2,327  |       |     
|Payments on short-term borrowings from bank                                       |                                              |                           | (2,327 | )     |     
|Payments on long-term debt                                                        |                                              |                           | (779   | )     |     
|Payments for buy out of distributorship agreement                                 |                                              |                           | (170   | )     |     
|Proceeds from exercise of stock options                                           |                                              |                           |       |       |     
|Payments for repurchase of common stock for treasury                              |                                              |                           | (54    | )     |     
|                                                                                  |                                              |                           |        |       |     
|Net cash provided by (used in) financing activities                               |                                              |                           | (1,003 | )     |     
|                                                                                  |                                              |                           |        |       |     
|Net (decrease) increase in cash and cash equivalents                              |                                              |                           | 1,492  |       |     
|Cash and cash equivalents at beginning of period                                  |                                              |                           | 4,129  |       |     
|                                                                                  |                                              |                           |        |       |     
|Cash and cash equivalents at end of period                                        |                                              | $                         | 5,621  |       | $   
|                                                                                  |                                              |                           |        |       |     

See
notes to financial statements.

6

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GAMETECH INTERNATIONAL, INC.  NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  APRIL 30, 2002  (UNAUDITED)

NOTES TO FINANCIAL STATEMENTS

NOTE A. BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements as of April 30, 2002 have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all
of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of the Company, all adjustments (consisting of normal recurring
adjustments) considered necessary for a fair presentation have been included. Operating results for the three- and six-month periods ended April 30, 2002 are not necessarily
indicative of the results that may be expected for the year ending October 31, 2002.

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

NOTE B. SIGNIFICANT ACCOUNTING POLICIES

REVENUE RECOGNITION

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

ALLOWANCE FOR DOUBTFUL ACCOUNTS

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

BINGO UNIT DEPRECIATION AND OBSOLESCENCE RESERVES

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

NOTE C. GOODWILL AMORTIZATION

In June 2001, the FASB issued Statement of Financial Accounting Standards (SFAS) No. 142, "Goodwill and Other Intangible Assets," effective for
fiscal years beginning after December 15, 2001. Under the new rules, goodwill will no longer be systematically amortized, but will be reviewed for impairment each year and, depending upon the
results of that measurement, the recorded goodwill may be written down and charged to income from operations when its carrying amount exceeds its estimated fair value. Amortization is still required
for identifiable intangible assets with finite lives. We have elected to early-adopt the statement at the beginning of fiscal 2002, discontinuing amortization of goodwill. With the assistance of
valuation consultants, we have completed the initial assessment of goodwill related to the Bingo Technologies Corporation acquisition and concluded there was no goodwill impairment.

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In
accordance with SFAS No. 142, the current year results reflect no amortization of goodwill. A reconciliation of previously reported income and earnings per share for the
comparative periods adjusted for the exclusion of goodwill amortization is as follows (in thousands, except share and per share amounts):

|                                  |  | Three Months
Ended April 30, |       | Six Months
Ended April 30,
|--------------------------------- |  | ---------------------------- | ----- | --------------------------
|
|Reported net income               |  | $                            | 1,030 |                           
|Add back: Goodwill amortization   |  |                              | 438   |                           
|                                  |  |                              |       |                           
|Adjusted net income               |  | $                            | 1,468 |                           
|                                  |  |                              |       |                           
|Basic earnings per share:         |  |                              |       |                           
|Reported net income               |  | $                            | 0.10  |                           
|Add back: Goodwill amortization   |  |                              | 0.04  |                           
|                                  |  |                              |       |                           
|Adjusted basic earnings per share |  | $                            | 0.14  |                           
|                                  |  |                              |       |                           
|Diluted earnings per share:       |  |                              |       |                           
|Reported net income               |  | $                            | 0.09  |                           
|Add back: Goodwill amortization   |  |                              | 0.04  |                           
|                                  |  |                              |       |                           
|Adjusted basic earnings per share |  | $                            | 0.13  |                           
|                                  |  |                              |       |                           

NOTE D. NET INCOME PER SHARE OF COMMON STOCK

Net income per share of common stock is computed in accordance with SFAS No. 128 "Earnings per Share." The calculation of the basic and diluted earnings
per share is the same except for the dilutive effect of outstanding stock options. The dilution is 489,757 shares and 665,906 for the three months ended April 30, 2002 and 2001, respectively.
The dilution is 553,909 shares and 530,907 for the six months ended April 30, 2002 and 2001, respectively.

NOTE E. LITIGATION

We are involved in various legal proceedings arising out of our operations in the ordinary course of business, including various complaints that have been filed
alleging breach of distributor agreements and other matters. At October 31, 2001 and April 30, 2002, we have recorded $1.1 million in current liabilities for the estimated
settlement of specific lawsuits. However, if settlement is not reached and the lawsuits proceed to trial, unfavorable outcomes could have a material adverse effect on our financial position and
results of operations.

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

The following discussion should be read in conjunction with the condensed consolidated financial statements and notes thereto included elsewhere in this report,
as well as our audited consolidated financial statements for the fiscal year ended October 31, 2001 contained in our annual report on Form 10-K.

OVERVIEW

We design, develop, and market interactive electronic bingo systems. We currently market a fixed-base system with light pen- or touch
screen-activated monitors and portable hand-held systems that can be
played anywhere within a bingo hall. As of April 30, 2002, we had systems in service in over 25 of the more than 30 states that allow electronic bingo systems for use with charitable and

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commercial organizations. Under the Indian Gaming Regulatory Act, or IGRA, electronic bingo may be played on tribal Native American lands in the 46 states where bingo is legal. We estimate that bingo
currently is played on tribal Native American lands in 30 states and, at April 30, 2002, we had bingo units in operation in Native American bingo halls in almost half of those states.
Collectively, at April 30, 2002, we had products in more than 30 states, four countries outside of the United States, and Guam.

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

Our
expenses consist primarily of (a) cost of revenue; expenses associated with technical and operational support of the bingo systems within bingo halls, depreciation of bingo
units, repair and refurbishment of bingo units, and obsolescence reserve; (b) general and administrative, consisting of activities associated with management of our company and related support,
which includes finance and accounting, legal, compliance, information systems, human resources, accounts receivable reserve, and goodwill amortization (prior to fiscal year 2002, see accounting change
for goodwill below); (c) sales and marketing, consisting primarily of commissions paid to distributors for promoting and supporting our products and an internal sales force with a focus upon
generating new customers and upgrades for existing customers; (d) research and development (R&D), consisting of company sponsored R&D activities to provide players with exciting and unique
products.

We
typically install our electronic bingo systems at no charge to our customers and capitalize the costs. During the first six-month period of fiscal 2002, our capital
expenditures were approximately $5.4 million, $5.0 million of which represented investments in bingo and related support equipment. We record depreciation of bingo equipment over their
estimated useful lives, ranging from three to five years, using the straight-line method of depreciation and provide reserves for bingo units not expected to be reused.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Management's Discussion and Analysis of Financial Condition and Results of Operations discusses our consolidated financial statements, which have been prepared in
accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported
amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the balance sheet date and reported amounts of revenue and expenses during the reporting period. On an
ongoing basis, we evaluate our estimates and
judgments, including those related to revenue recognition, bad debts, bingo unit depreciation, and contingencies and litigation. We base our estimates and judgments on historical experience and on
various other factors that are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily
apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

We
believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements.

REVENUE RECOGNITION

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

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generated by each unit. Our revenue recognition is a key component of our results of operations, and determines the timing of certain expenses, such as commissions and royalties. We recognize revenue
in accordance with generally accepted accounting principles when all of the following factors exist (1) evidence of an arrangement with the customer; (2) play or availability of the
bingo units; (3) a determinable fee; and (4) collectibility is reasonably assured. Determination of criteria (3) and (4) are based upon our judgment regarding the nature of
the fee charged for service and use rendered and the collectibility of the fees. Should changes in conditions cause us to determine these criteria are not met for future transactions, revenue
recognized for future reporting periods could be adversely affected.

ALLOWANCE FOR DOUBTFUL ACCOUNTS

We must estimate the possible losses resulting from non-payment of outstanding accounts receivable. We perform ongoing evaluations of our customers
and distributors for credit worthiness, economic trends, changes in our customer payment terms, and historical collection experience when evaluating the adequacy of our allowance for doubtful
accounts. We also provide a reserve percentage of our accounts recoverability by aging category. In determining these percentages, we review historical write-offs of our receivables,
payment trends and other available information. While such estimates are within our expectations and the provisions established, we cannot guarantee that we will continue to experience the same credit
loss rates.

RESERVE FOR BINGO UNIT OBSOLESCENCE

We provide reserves for excess or obsolete bingo units on hand that we do not expect to be reused. Our reserves are based upon several factors, including our
estimated forecast of bingo unit demand for placement into halls. Our estimates of future bingo unit demand may prove to be inaccurate, in which case we may have understated or overstated the
provision required for excess and obsolete bingo units. Although we attempt to assure the accuracy of our estimated forecasts, any significant unanticipated changes in demand or technological
developments could have a significant impact on the value of our bingo units and our reported operating results.

IMPAIRMENT ANALYSIS OF GOODWILL

In accordance with SFAS No. 142, "Goodwill and Other Intangible Assets," we have elected to early-adopt the statement during our fiscal year ending
October 31, 2002 and have discontinued amortization of our goodwill as of November 1, 2001. We completed the required measurement test as of that date, and determined there was no
impairment of goodwill upon adoption of SFAS No. 142. This measurement included market multiple methodology, comparable transaction methodology and a discounted cash flow methodology.

We
assess the impairment of all long-lived assets and goodwill whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors we consider
important that could trigger an impairment review include the following:



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In
addition, we are also required to perform an annual goodwill impairment review. Any resulting impairment loss could have a material adverse impact on our financial condition and
results of operations.

RESULTS OF OPERATIONS

Three Months Ended April 30, 2002 Compared with Three Months Ended April 30, 2001

REVENUE. We generated revenue of $12.1 million for the three months ended April 30, 2002 compared to $12.8 million for the comparable
prior-year period. The $707,000, or 5.5%, net decline in revenue from the second quarter of fiscal 2001 was primarily in the Northeastern Region and the Southern Region due to competitive
pricing pressures, and changes in the composition of usage and pricing of halls and routes. Revenue increased approximately $255,000, or 2.2%, over the first quarter of fiscal 2002, primarily in the
Northeastern Region and the International Region.

COST
OF REVENUE. Cost of revenue increased $438,000, or 10.7%, to $4.5 million for the three months ended April 30, 2002 from $4.1 million for the comparable
prior-year period.    Cost of revenue as a percent of revenue for the current three-month period was 37.5% compared to 32.0% for the three months ended April 30, 2001.
The increase in cost of revenue was primarily due to scrapped bingo units, refurbishment expenses, and the write-off of a capitalized development project.

GENERAL
AND ADMINISTRATIVE. General and administrative costs decreased approximately $680,000, or 24.2%, to $2.1 million for the three months ended April 30, 2002 from
$2.8 million for the comparable prior-year period.    General and administrative costs as a percent of revenue for the current three-month period was 17.6% compared to
21.9% for the three months ended April 30, 2001. The decrease was primarily attributable to (1) a lower provision for bad debt reserve of approximately $537,000 in the second quarter of
fiscal 2002 principally due to improved collections on aged receivables, improved systems, and improved controls; (2) no goodwill amortization expense in the quarter ended April 30, 2002
due to an early election to adopt the provision of SFAS No. 142 compared to amortization expense in the second quarter of fiscal year 2001 of approximately $438,000; and (3) partially
offset with an increase in legal expenses of $275,000.

SALES
AND MARKETING. Sales, marketing, and commission expenses decreased approximately $374,000, or 10.7%, to $3.1 million for the three months ended April 30, 2002 from
$3.5 million for the comparable prior-year period.    Sales, marketing, and commission expenses as a percent of revenue for
the current three-month period was 25.7% compared to 27.2% for the three months ended April 30, 2001. Distributor commissions decreased $244,000 to $2.1 million for the three months
ended April 30, 2002 primarily due to the changes in mix of revenue generated by distributors and those customers served directly by us. As a percentage of revenue for the quarter ended
April 30, 2002, commission expenses decreased to 17.5% from 18.4% in the comparable prior-year period.

RESEARCH
AND DEVELOPMENT. Research and development costs increased approximately $99,000, or 21.7%, to $555,000 for the three months ended April 30, 2002 from $456,000 for the
comparable prior-year period. Research and development costs as a percent of revenue for the current three-month period was 4.6% compared to 3.6% for the three months ended
April 30, 2001. The increase was primarily related to projects designed to enhance products for improved player appeal and the development of new products.

PROVISION
FOR INCOME TAXES. Our income tax provision is recorded at an effective rate of 38.2% for the quarter ended April 30, 2002 compared to 48.3% in the prior-year
period. The higher rate in the preceding year related to the effect of nondeductible goodwill amortization.

11

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Six Months Ended April 30, 2002 Compared with Six Months Ended April 30, 2001

REVENUE. We generated revenue of $24.0 million for the six months ended April 30, 2002 compared to $24.8 million during the comparable
prior-year period. The decrease of approximately $838,000, or 3.4%, was primarily in the Northeast and Southern Regions, principally due to competitive pricing pressures, and changes in
the composition of usage and pricing of halls and routes, most notably in Texas and Ohio. This decrease was partially offset by increased revenue, primarily in the existing market of the Western
Region and Canada.

COST
OF REVENUE. Net cost of revenue increased approximately $127,000, or 1.4%, to $9.5 million for the six months ended April 30, 2002 from $9.4 million for the
comparable prior-year period.    Cost of revenue as a percent of revenue for the current six-month period was 39.7% compared to 37.8% for the six months ended
April 30, 2001. The increase in cost of revenue was primarily due to an increase of approximately $410,000 related to scrapped bingo units, refurbishment expenses, and the write-off
of a capitalized development project. In addition, a reduction in bingo unit depreciation expenses of $355,000, primarily due to uninstalled bingo units reserved as of fiscal year-end,
partially offset by a net operational and service costs increase of $102,000 primarily due to an increase in personnel related costs.

GENERAL
AND ADMINISTRATIVE. General and administrative costs decreased $2.5 million, or 37.7%, to $4.1 million for the six months ended April 30, 2002 from
$6.6 million for the comparable
prior-year period. General and administrative costs as a percent of revenue for the current six-month period was 17.2% compared to 26.7% for the six months ended
April 30, 2001. The decrease was primarily attributable to (1) a decrease in bad debt expense of approximately $1.7 million, due to improved controls and collections systems in
fiscal 2002 and an adjustment in the first quarter of 2001 for settlement of disputed account balances of $650,000; and (2) an $876,000 decrease in amortization of goodwill due to our early
election to adopt the provisions of SFAS No. 142, which eliminated the amortization of goodwill. These decreases were partially offset by an increase in legal expenses of approximately
$308,000.

SALES
AND MARKETING. Sales, marketing, and commission expenses decreased approximately $1.4 million, or 18.2%, to $6.1 million for the six months ended April 30,
2002 from $7.5 million for the comparable prior-year period.    Sales, marketing, and commission expenses as a percent of revenue for the current six-month
period was 25.5% compared to 30.1% for the six months ended April 30, 2001. The decrease was primarily due to a decrease of approximately $1.2 million in distributor commissions. This
decrease was primarily due to adjustments for additional distributor commissions in the first quarter of 2001, including a settlement of a distributor issue. As a percentage of revenue for the six
months ended April 30, 2002, commission expenses decreased to 17.2% from 21.3% in the comparable prior-year period. Sales and marketing decreased $195,000, primarily due to a
reduction in personnel related costs and travel expenses.

RESEARCH
AND DEVELOPMENT. Research and development costs increased $58,000, or 6.3%, to $974,000 for the six months ended April 30, 2002 from $916,000 for the comparable
prior-year period. Research and development costs as a percent of revenue for the current six-month period was 4.1% compared to 3.7% for the six months ended April 30,
2001. The increase was primarily related to projects designed to enhance products for improved player appeal and the development of new products.

PROVISION
FOR INCOME TAXES. Our effective income tax rate was approximately 38.2% and 52.0% for the six months ended April 30, 2002 and 2001, respectively. The higher rate in the
preceding year related to the effect of nondeductible goodwill amortization.

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LIQUIDITY AND CAPITAL RESOURCES

As of April 30, 2002, we had cash and cash equivalents and short-term investments totaling $14.2 million.

Operating
activities provided approximately $6.5 million of cash for the six months ended April 30, 2002 compared to $4.6 million for the six months ended
April 30, 2001. In 2002, the $6.5 million was provided by net income of $2.0 million, $3.9 million of depreciation, amortization, and obsolescence expense, and
net changes to operating assets and liabilities of $592,000. In 2001, the $4.6 million provided by operating activities consisted primarily of $5.6 million in depreciation, amortization,
and obsolescence expense, and net income of $245,000, offset by net changes to operating assets and liabilities of $1.2 million.

Investing
activities used approximately $8.5 million of cash in the six months ended April 30, 2002 compared to use of cash of $2.1 million for the six months ended
April 30, 2001. In 2002, the $8.5 million used consisted of a $2.8 million increase in short-term investments, capital expenditures of $5.4 million, primarily
for bingo units, and $279,000 for proprietary technology purchases. In 2001, the $2.1 million consisted of capital expenditures of $3.3 million, primarily for bingo unit equipment,
offset by a decrease in short-term investments of $1.2 million.

Financing
activities provided cash of $338,000 for the six months ended April 30, 2002 compared to $1.0 million used for the six months ended April 30, 2001. In
2002, the $338,000 consisted primarily of proceeds from exercise of stock options of $1.1 million, offset by $714,000 of payments on long-term debt. In 2001, the $1.0 million
used by financing activities consisted of $779,000 in payments on long-term debt, a distributor agreement buy out of $170,000, and $54,000 to repurchase treasury stock.

We
have a $10.0 million line of credit, which is tied to an interest rate based on the prime rate or LIBOR plus 2.0%, at our option, on which there was no outstanding balance at
April 30, 2002. The credit facility expires on April 2, 2003. We believe that cash flow from operations and the $14.2 million in cash, cash equivalents, and short-term
investments at April 30, 2002, together with funds available under the revolving credit facility, will be sufficient to support our operations, budgeted capital expenditures, and liquidity
requirements through fiscal 2002. Our long-term liquidity requirements will depend on many factors, including the rate at which we expand our business, whether internally, through
acquisitions, or otherwise.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our revolving credit facility with Wells Fargo is a $10.0 million line of credit with an interest rate based on the prime rate or LIBOR plus 2.0%, at our
option. The line of credit will expire on April 2, 2003.

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

Sensitivity Analysis.Assuming we had a $2 million balance outstanding at April 30, 2002, the rate of interest
calculated using the prime rate option would be 4.75%. Our monthly interest payment, if the
rate stayed constant, would be $7,917. If the prime rate rose to 12%, which assumes an unusually large increase, our monthly payment would be $20,000. A more likely increase of 1% or 2%, given the
recent trend of decreasing or relatively low interest rates, would result in a monthly payment of $9,583 or $11,250, respectively.    We do not believe the risk resulting from such
fluctuations is material or that the payment required would have a material effect on cash flow.

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

This document includes various "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Sections 21E
of the Securities Exchange Act of 1934, as amended, which represent our expectations or beliefs concerning future events. Statements containing expressions, such as "believes," "anticipates," or
"expects," used in our press releases and periodic reports on Forms 10-K and 10-Q filed with the Commission, are intended to identify forward-looking statements. All
forward-looking statements involve risks and uncertainties. Although we believe our expectations are based upon reasonable assumptions within the bounds of our knowledge of our business and
operations, there can be no assurances that actual results will not materially differ from expected results. We caution that these and similar statements included in this report are further qualified
by important factors that could cause actual results to differ materially from those in the forward-looking statements. Such factors include those discussed in our annual report on
Form 10-K for the year ended October 31, 2001. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date thereof. We
undertake no obligation to publicly release any revisions to such forward-looking statements to reflect events or circumstances after the date hereof.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

During February 1999, we acquired from BTC's stockholders all of the capital stock of BTC pursuant to a stock purchase agreement. In connection with the
acquisition, BTC's stockholders made certain representations and warranties, and a portion of the purchase price was placed into escrow as security for the breach of any of these representations and
warranties. During February 2000, we notified BTC's stockholders that we had certain claims for indemnification against them for breaches of representations and warranties from the acquisition.
We estimated that our claims exceeded the amounts held in escrow, and we requested that no amounts in escrow be released pending a final determination of our claims. The escrow fund consists of
373,387 shares of our common stock and approximately $2.0 million cash. BTC's stockholders delivered their objections to the escrow on
February 24, 2000, objecting to all of our indemnification claims. The parties have reached agreement in principle to settle the claims, which will result in payment to us from the escrow
account. In a separate agreement, we have agreed to prepay certain note obligations to BTC's stockholders at a 9% discount rate.

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

The
Texas Lottery Commission, or TLC, the agency that regulates bingo in the state of Texas, informed us that it intends to seek administrative penalties against us based on certain
provisions of

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one of our Texas distributor agreements. The TLC alleges that certain provisions of the agreement violate the Texas Bingo Enabling Act. The penalties sought by the TLC could involve suspension and/or
revocation of our Texas manufacturing license. An evidentiary hearing occurred before the administrative body during January 2002. On May 10, 2002, the Administrative Law Judge made a
proposal for decision concluding that we were not in violation of any provisions of the Texas Bingo Enabling Act and recommended dismissal of all charges against us. On June 10, 2002 the TLC
signed an order adopting the recommendation of the Administrative Law Judge thereby dismissing all charges against us.

The
Washington Gambling Commission, or WGC, the agency that regulates bingo in the state of Washington, informed us that it intends to seek administrative penalties against us for a
variety of alleged violations. The penalties sought by the WGC could involve suspension and/or revocation of our Washington manufacturer's license. We have requested an evidentiary administrative
hearing. A hearing date has been set for July 18, 2002. We intend to defend vigorously our company through the hearing process. However, we cannot provide assurance that we will obtain a
favorable outcome. An unfavorable outcome could have a material adverse effect on our business, financial position, and results of operations.

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

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.

Not Applicable

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not Applicable

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

We held our 2002 Annual Meeting of Stockholders on April 16, 2002. The following nominees were re-elected as Class III directors to our
Board of Directors to serve for three-year terms expiring in 2005, until their respective successors have been elected or qualified, or until their earlier resignation or removal:

Nominee

Votes in Favor

WithheldRichard T. Fedor

11,381,381

34,156Gerald R. Novotny, Sr.

7,521,718

3,893,819Vern D. Blanchard

11,384,558

30,979


The
term of office of each of the following directors continued after the meeting: Frederick C. Lane, Clarence H. Thiesen, Douglas M. Hayes, Gary R. Held, Jon L. Whipple,
and Charles W. Scharer

ITEM 5. OTHER INFORMATION

Not Applicable

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K



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SIGNATURES

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

|Signature                                 |  | Title                                                  |  | Date         
|----------------------------------------- |  | ------------------------------------------------------ |  | -------------
|                                          |  |                                                        |  |              
|/s/CLARENCE H. THIESENClarence H. Thiesen |  | Chief Executive Officer
(Principal Executive Officer)  |  | June 14, 2002
|/s/RICHARD M. KELLEYRichard M. Kelley     |  | Chief Financial Officer,
(Principal Financial Officer) |  | June 14, 2002
|/s/ANN D. MCKENZIEAnn D. McKenzie         |  | Corporate Controller,
(Principal Accounting Officer)   |  | June 14, 2002

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