<PAGE> 1
                    SECURITIES AND EXCHANGE COMMISSION
                           Washington D.C.  20549

                                 FORM 10-QSB


[X]     Quarterly Report Under Section 13 or 15(d) of the Securities Exchange
Act of 1934

     For the Quarter Ended:   September 30, 2001

[ ]     Transition Report Under Section 13 or 15(d) of the Securities Exchange
Act of 1934

        For the Transition Period from _____________ to ____________

                    Commission File Number   0-25873
                                             -------

                       POWERBALL INTERNATIONAL, INC.
               ----------------------------------------------
               (Name of Small Business Issuer in its charter)

          Utah                                                 84-1431425
-------------------------------                    --------------------------
(State or other jurisdiction of                    (I.R.S. Employer I.D. No.)
 incorporation or organization)

                2095 West 2200 South, West Valley City, Utah 84119
         ---------------------------------------------------------------
              (Address of principal executive offices and Zip Code)

                                 (801) 974-9120
              ----------------------------------------------------
              (Registrant's telephone number, including area code)


     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.

(1)  Yes X    No     (2)  Yes X     No
        ---     ---          ---      ---

     Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.

Common Stock, Par Value $0.001                         3,300,250
--------------------------------                ----------------------------
       Title of Class                           Number of Shares Outstanding
                                                as of September 30, 2001

<PAGE> 2
                         PART I FINANCIAL INFORMATION

                        ITEM 1.  FINANCIAL STATEMENTS

                   POWERBALL INTERNATIONAL, INC. & SUBSIDIARY
                          (Formerly NATEX CORPORATION)

                            FINANCIAL STATEMENTS
                                (UNAUDITED)


     The financial statements included herein have been prepared by the
Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission.  Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted.
However, in the opinion of management, all adjustments (which include only
normal recurring accruals) necessary to present fairly the financial position
and results of operations for the periods presented have been made.  These
financial statements should be read in conjunction with the accompanying
notes, and with the historical financial information of the Company.

<PAGE>
<PAGE> 3

POWERBALL INTERNATIONAL, INC. AND SUBSIDIARY
(Development Stage Companies)
(Formerly Natex Corporation)
CONSOLIDATED BALANCE SHEETS

ASSETS                                        September 30,     December 31,
                                                   2001             2000
                                               -----------      ------------
CURRENT ASSETS
     Cash in bank                              $    82,173      $    298,069
     Due from stockholder                            6,294             6,294
     Supplies                                        1,043             1,043
                                               -----------      ------------
          Total Current Assets                      89,510           305,406
                                               -----------      ------------
PROPERTY AND EQUIPMENT
     Equipment                                       7,770             7,770
     Leasehold improvements                         28,092            20,596
                                               -----------      ------------
                                                    35,862            28,366
     Less accumulated depreciation                 (13,305)          (11,157)
                                               -----------      ------------
                                                    22,557            17,209
                                               -----------      ------------
OTHER ASSETS
     Patents and assigned technology, net of
      amortization of $5,368 and $3,904             34,019            21,128
                                               -----------      ------------
          Total Other Assets                        34,019            21,128
                                               -----------      ------------
TOTAL ASSETS                                   $   146,086      $    343,743
                                               ===========      ============
LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
     Accounts payable                          $     3,345      $     19,724
     Accrued and deferred liabilities                1,574            11,964
     Deferred equity                               200,000              -
                                               -----------      ------------
          Total Current Liabilities                204,919            31,688
                                               -----------      ------------

STOCKHOLDERS' EQUITY
     Common stock; $.001 par value, 25,000,000 shares
      authorized, 3,300,250, and 3,276,500 shares
      issued and outstanding respectively            3,300             3,276
     Capital in excess of par value              1,343,994         1,284,018
     Earnings (deficit) accumulated during
      the development stage                     (1,406,127)         (975,239)
                                               -----------      ------------
          Total Stockholders' Equity               (58,883)          312,055
                                               -----------      ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY     $   146,086      $    343,743
                                               ===========      ============

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

<PAGE>
<PAGE> 4

POWERBALL INTERNATIONAL, INC. AND SUBSIDIARY
(Development Stage Companies)
((Formerly Natex Corporation)
CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                      For the     For the     For the     For the     (Deficit)
                                                     3 months    3 months    9 months    9 months    Accumulated
                                                      Ended       Ended       Ended       Ended       During the
                                                      Sep 30,     Sep 30,     Sep 30,     Sep 30,    Development
                                                       2001        2000        2001        2000          Stage
                                                    ----------  ----------  ----------  ----------  ------------
<S>                                               <C>         <C>         <C>         <C>         <C>
REVENUE                                             $     -     $     -     $     -     $     -     $      -
                                                    ----------  ----------  ----------  ----------  -----------
EXPENSES
  Equity in loss from limited liability company           -           -           -         56,384      446,549
  General and administrative                             8,090      20,258      33,193      41,701      126,074
  Professional fees                                     15,047      16,660      28,964      39,576      175,712
  Depreciation and amortization expense                  1,204        -          3,612       2,975       13,892
  Research and development                             122,114      89,913     367,781     152,390      641,850
                                                    ----------  ----------  ----------  ----------  -----------
                                                       146,455     126,831     433,550     293,026    1,404,077
                                                    ----------  ----------  ----------  ----------  -----------
OPERATING LOSS                                        (146,455)   (126,831)   (433,550)   (293,026)  (1,404,077)
                                                    ----------  ----------  ----------  ----------  -----------
OTHER INCOME AND EXPENSE
  Interest income                                         -          3,171       2,762       3,444       12,573
  Limited sales of tanks, net of direct
   production costs of $1,046                             -             48        -          3,002       13,003
                                                    ----------  ----------  ----------  ----------  -----------
INCOME (LOSS) BEFORE INCOME TAXES                     (146,455)   (123,612)   (430,788)   (286,580)  (1,378,501)
  Minimum State franchise tax                             -           -            100         100          400
                                                    ----------  ----------  ----------  ----------  -----------
NET INCOME (LOSS) BEFORE CUMULATIVE
EFFECT OF ACCOUNTING CHANGE                           (146,455)   (123,612)   (430,888)   (286,680)  (1,378,901)

  Cumulative effect of accounting change for
   organization costs                                     -           -           -           -         (27,226)
                                                    ----------  ----------  ----------  ----------  -----------
NET INCOME (LOSS)                                   $ (146,455) $ (123,612) $ (430,888) $ (286,680) $(1,406,127)
                                                    ==========  ==========  ==========  ==========  ===========
EARNINGS (LOSS) PER SHARE BEFORE
ACCOUNTING CHANGE                                   $    (0.04) $    (0.04) $    (0.13) $    (0.13) $     (0.87)
                                                    ==========  ==========  ==========  ==========  ===========
CUMULATIVE EFFECT OF ACCOUNTING CHANGE              $    (0.00) $    (0.00) $    (0.00) $    (0.00) $     (0.02)
                                                    ==========  ==========  ==========  ==========  ===========
EARNINGS (LOSS) PER SHARE                           $    (0.04) $    (0.04) $    (0.13) $    (0.13) $     (0.89)
                                                    ==========  ==========  ==========  ==========  ===========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES             3,300,250   3,086,337   3,304,307   2,127,193    1,580,701
                                                    ==========  ==========  ==========  ==========  ===========

</TABLE>


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

<PAGE>
<PAGE> 5

POWERBALL INTERNATIONAL, INC. AND SUBSIDIARY
(Development Stage Companies)
(Formerly Natex Corporation)
CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>

                                                                         For the       For the      Cumulative
                                                                         9 Months      9 Months     During the
                                                                       September 30, September 30,  Development
                                                                           2001          2000           Stage
                                                                       -----------   -----------   ------------
                                                                       (Unaudited)   (Unaudited)
<S>                                                                  <C>           <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES
     Net (loss)                                                        $  (430,888)  $  (286,680)  $ (1,406,127)
     Adjustments to reconcile net (loss) to net cash provided
     by operating activities
     Cumulative change in accounting principle                                -             -            27,226
     Stock issued for services                                                -             -            75,000
     Decrease in investment in limited liability company                      -           56,384        446,548
     Depreciation and amortization                                           3,612         2,408         13,892
     Changes in assets and liabilities
          Decrease in supplies                                                -           (1,547)           (71)
          Increase in organization costs                                      -             -           (28,465)
          Increase in accounts payable                                     (16,378)         (807)       (18,572)
          Decrease in accrued expenses                                     (10,391)       (5,910)        (8,616)
                                                                       -----------   -----------   ------------
          Net cash (used) by operating activities                         (454,045)     (236,152)      (899,185)
                                                                       -----------   -----------   ------------
CASH FLOWS FROM INVESTING ACTIVITIES
     Acquisition of joint venture partner - net of cash                       -          (71,826)        17,016
     Related party loans                                                      -           50,000       (509,000)
     Investment in limited liability company                                  -             -          (250,000)
     Purchase of equipment and leaseholds improvements                      (7,497)         -            (9,740)
     Additional patent costs                                               (14,354)         -           (19,870)
                                                                       -----------   -----------   ------------
          Net cash provided (used) by investing activities                 (21,851)      (22,884)      (771,594)
                                                                       -----------   -----------   ------------
CASH FLOWS FROM FINANCING ACTIVITIES
     Sale of common stock                                                  260,000       607,500      1,797,500
     Direct costs of stock sale                                               -             -           (44,548)
                                                                       -----------   -----------   ------------
          Net Cash Provided By Financing Activities                        260,000       607,500      1,752,952
                                                                       -----------   -----------   ------------
NET INCREASE (DECREASE) IN CASH                                           (215,896)      348,464         82,173

CASH - BEGINNING OF PERIOD                                                 298,069        79,190           -
                                                                       -----------   -----------   ------------
CASH - END OF PERIOD                                                   $    82,173   $   427,654   $     82,173
                                                                       ===========   ===========   ============
SUPPLEMENTAL INFORMATION
     Interest paid during the period                                   $      -      $      -      $       -
                                                                       ===========   ===========   ============
     Income taxes paid during the period                               $       100   $       100   $        400
                                                                       ===========   ===========   ============
     Stock issued to pay royalties and expenses of related entity      $      -      $      -      $     97,000
                                                                       ===========   ===========   ============
     Stock issued to pay finders fee                                   $     5,000   $      -      $     55,000
                                                                       ===========   ===========   ============
     Stock issued to acquire Powerball Industries, Inc.                $      -      $      -      $   (370,658)
                                                                       ===========   ===========   ============

</TABLE>

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

<PAGE>
<PAGE> 6

POWERBALL INTERNATIONAL, INC. AND SUBSIDIARY
 (Development Stage Companies)
(Formerly Natex Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization  -  The Company was incorporated on July 9, 1997 under the laws
of the State of Utah. At the present time, the Company and its subsidiary are
in the development stage. The Company was formed for the purpose of raising
capital to invest in a joint venture which acquired a license to certain
technology relating to the production of hydrogen, to generate hydrogen for
sale, and to market hydrogen generating equipment and products. During the
beginning of the second quarter ended June 30, 2000, the Company acquired the
remaining 50% interest in Powerball Technologies, LLC ("Tech"), for 1,500,000
shares of the Company's common which was issued to the other joint interest
member. At that time, Tech became a wholly owned subsidiary of the Company.
The Company, through its  wholly owned subsidiary and prior to the year 2000
its joint venture, is involved in research and development efforts of
commercializing the Technology.

Consolidation policy  -  Prior to the acquisition, the Company accounted for
its investment in Tech using the equity method of accounting.  The acquisition
has been accounted for using the purchase method of accounting.  The
consolidated balance sheet, statement of operation, and statement of cash
flows at September 30, 2001 and December 31, 2000, include the accounts of
Powerball International, Inc. (Company) and its wholly-owned operating
subsidiary, Tech.  The consolidated statement of operation and statement of
cash flows at June 30, 2000, excludes the Tech's financial information from
the first quarter ending March 31, 2000, because the acquisition was
consummated in the second quarter of 2000.  Intercompany transactions and
balances have been eliminated in consolidation.

Amortization of Organization Costs  -  The Company was amortizing its
organization costs over a  sixty (60) month period using the straight-line
method.  In 1998, the Accounting Standards Executive Committee (AcSEC) of the
American Institute of Certified Public Accountants issued Statement of
Position (SOP) 98-5. "Reporting on the Costs of Start-up Activities."  The SOP
requires costs of start-up activities and organization costs to be expensed as
incurred.  During 1999, the Company adopted the SOP and recognized a charge
for the cumulative effect of accounting change of $27,226.

Intangible Asset - At the time of the acquisition, the patent technology held
by the joint venture was assigned to the Company and was recorded at the
historical cost as recorded on the books of Tech. This cost plus additional
costs related to the Technology obtained is being amortized over ten years on
a straight-line basis.

Income Taxes  -  The Company provides for income taxes based on the liability
method, which required recognition of deferred tax assets and liabilities
based on differences between financial reporting and tax bases of assets and
liabilities measured using enacted tax rates and laws that are expected to be
in effect when the differences are expected to reverse.

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

<PAGE>
<PAGE> 7

POWERBALL INTERNATIONAL, INC. AND SUBSIDIARY
 (Development Stage Companies)
(Formerly Natex Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Cash and Cash Equivalents  -  For purposes of the statement of cash flows, the
Company considers all investment instruments purchased with a maturity of
three months or less to be cash equivalents.  The Company had no noncash
financing activities for the nine months ended September 30, 2001 and the year
ended December 31, 2000.

Net Income (Loss) Per Common Share - Basic earnings (loss) per common share
(EPS) is calculated by  dividing net income (loss) for the period by the
weighted average number of the Company's common shares outstanding and, if
applicable, EPS is computed by dividing net income by diluted common
equivalent shares from stock options and warrants, as calculated using the
treasury stock method.

Fully diluted earnings per common share reflect the calculation of the number
of common equivalent shares based on the stock price at the end of the period.
Fully diluted per common share amounts are not reported because the Company
has had losses for every period since inception and thus a diluted earnings
per share computation would be antidilutive for September 30, 2001 and
December 31, 2000.  Per Financial Accounting Statement No. 128 if there is a
loss from continuing operations, diluted EPS is the same as basic EPS.

Issuance of Shares for Services and Other Expenses  -  Valuation of shares
issued for royalties, services and expenses of the Company and in behalf of
its joint venture partner, prior to its acquisition,  were based on the fair
market value of the above items at the time of issuance.

Research and Development Costs  -  Research and Development costs to both
future and present products are charged to operations as incurred.

NOTE 2  -  RECEIVABLE - RELATED PARTY

The receivable from related party was an unsecured non-interest bearing loan,
which had no repayment terms.   The Company now accounts for the related party
loan as an intercompany transfer and is eliminated in consolidation.  The
receivable was due from Tech.   Powerball International, Inc. was a 50% owner
of Tech, until the second quarter 2000 merger.

NOTE  3  -  BUSINESS COMBINATION

The Company in the second quarter ended June 30, 2000 completed its plan of
merger with Powerball Industries, Inc. (PIC) in a business combination
accounted for as a purchase.  The Company acquired the net assets of PIC for
1,500,000 shares of the Company's common stock.  PIC's only business activity
was its joint interest investment in Tech.   The merger caused Tech to become
a wholly-owned subsidiary of the Company.  The results of operations of Tech
is included in the financial statements since the first day of the quarter
ended June 30, 2000.  The merger was recorded at historical cost values and
thus there is no amortization of the cost of the merger over the fair value of
the net assets of PIC.

<PAGE>
<PAGE> 8

POWERBALL INTERNATIONAL, INC. AND SUBSIDIARY
 (Development Stage Companies)
(Formerly Natex Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE   4  -  INVESTMENT IN LIMITED LIABILITY COMPANY

The Company and PIC, formed Tech to license the Technology; to further develop
the Technology; to build a sodium hydride pellet recycling plant; to
manufacture tanks in which hydrogen is generated; to demonstrate the
commercial viability of the Technology; and to commercialize the Technology.
PIC assigned the Technology License to the Tech for a 50% ownership interest
in Tech. The Company invested $250,000 in Tech for a 50% ownership interest.
Tech is a development stage company.  For the quarter ended March 31, 2000,
equity in the loss of Tech was recognized in the Company's financial
statements.

NOTE   5  -  STOCK OFFERINGS AND COMMON STOCK TRANSACTIONS

On December 31, 1997, the Company successfully completed a public offering of
400,000 shares of its $.001 par value common stock for $400,000 less offering
costs of $40,000.

During March and April 1999, the Company completed a private placement of
400,000 Units consisting of one share of restricted Common Stock at $.50 per
share and 1 Warrant for 1 share of restricted Common Stock exercisable at
$1.00 per share.  The Warrants expire March and April of 2002. Direct costs of
the offering were $1,638.  During December 1999, the Company completed a
second private placement of 120,000 Units consisting of one share of
restricted Common Stock at $1.00 per share and 1 Warrant for 1 share of
restricted Common Stock exercisable at $1.00 per share.  The Warrants expire
December 2001.  The Units were sold to Officers and Directors of the Company.
At December 31, 1999, of the above Warrants 100,000 had been exercised.
Subsequent to year end an additional 80,000 shares have been exercised.

Also during 1999, the Company issued a total of 14,000 shares of its common
stock to a vendor to pay for services rendered at a value of $52,000 and
15,000 common shares to pay for royalties owed by the LLC which were valued at
$45,000.  The Company had a Stock Subscription receivable of $50,000 connected
with the private placement of its Common Stock in December 1999.  During the
year ended December 31, 2000, the $50,000 was received and the subscription
receivable was satisfied

In July 2000, the Company successfully completed a private placement offering
of 110,000 units at $4.00 per unit, consisting of one common share and one
common share warrant, (exercise price $6.00 and expire July 11, 2002), of its
$.001 par value common stock for $440,000. less offering costs of $42,030, for
a net of $397,970.  From February to November 2000, warrants for 267,500
shares of common stock were exercised at $1.00 per share for a total amount of
$267,500. Costs of exercising the warrants was $880.

On January 22, 2001, the Company completed a subscription agreement for a
private placement of 150,000 units at $4.00 per unit, each unit consisting of
1 unit of common stock and 1 warrant to purchase 1 share of stock at an
exercise price of $6.00, exercisable for two years from the date of issuance.
The total subscription price was $600,000 and was paid by the issuance of a
promissory note for the same amount.  The note is to be paid in monthly
installments of $50,000, $50,000, $50,000, $100,000, $150,000 and $200,000 at

<PAGE>
<PAGE> 9

POWERBALL INTERNATIONAL, INC. AND SUBSIDIARY
 (Development Stage Companies)
(Formerly Natex Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE   5  -  STOCK OFFERINGS AND COMMON STOCK TRANSACTIONS (Continued)

the end each month starting with February 2001.   The note is unsecured,
carries no interest and is subject to prepayment.  The shares under this
subscription will be held in escrow until the note is satisfied.   As of March
31, 2001 the subscription receivable had a balance of $550,000.  In connection
with the private placement, the Company was to pay a finder's fee to an
individual consisting of 15,000 shares of restricted common stock and a
warrant to purchase up to 15,000 shares of common stock on the same terms as
the above private placement warrants.  This fee was treated as a direct cost
of the private placement.  In June 2001, the Company cancelled the
subscription agreement for nonpayment in the amount of $550,000.  A total of
13,750 shares were issued under agreement for payments prior to the
cancellation, 1,250 of the shares issued represented the finder's fee.

In August 2001, the Board of Directors approved, but never consummated a
private placement offering of up to 100,000 shares of the Company's restricted
common stock at a price of $2.50 per share.  Subsequently in October 2001, the
Board approved amending the private placement due to market conditions for up
to 400,000 shares at a price of $1.00 per share.

From January to September 2001, warrants for 10,000 shares of common stock
were exercised at $1.00 per share for a total amount of $10,000.

NOTE   6 -  INCOME TAXES

Due to losses at December 31, 2000 and 1999, the Company had no income tax
liability and thus no provision for taxes was recorded.  The Company had a
deferred tax benefit of $3,368 derived from the amortizing of organization
costs for tax reporting and expensing of organization costs for financial
reporting purposes.  At December 31, 2000, the Company has a net operating
loss carryforward of approximately $965,332 which will expire between the
years 2012 and 2020.  A valuation allowance of $331,581 has been established
for those tax credits which are not expected to be realized.  The change in
the valuation allowances for 2000 was $134,406.

The Subsidiary which is a Limited Liability Company is not a tax paying entity
for Federal or State income tax purposes and, thus, no income tax expense has
been recorded. Instead, its earnings and losses since the merger are included
in the Parent's income tax return.

NOTE  7  -  RELATED PARTY TRANSACTIONS

At December 31, 2000, and September 31, 2001, a stockholder owed the Company
$6,294 on a non-interest and non-secured short-term advance.

NOTE 8 - SUBSEQUENT EVENTS

On October 4, 2001, due to market conditions, the Company's Board of Directors
amended its previously authorized but unfulfilled August 2001 private
placement, to permit the sale of up to 400,000 shares at a price of $1.00 per
share.  As of September 30, 2001, $200,000 had been received from the private
placement by the Company and recorded as a deferred liability because the
stock was not issued until October 2001.

<PAGE>
<PAGE> 10

POWERBALL INTERNATIONAL, INC. AND SUBSIDIARY
 (Development Stage Companies)
(Formerly Natex Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8 - SUBSEQUENT EVENTS (Continued)

On October 5, 2001, the Board of Directors granted a total of 25,000 stock
options to two employees of the Company under the Company's Stock Option and
Award Plan with an exercise price of $1.50 per share, the closing price of the
Company's common stock on that date.  Also, the Board approved the issuance of
100,000 shares of the Company's restricted common stock to Robert Ipson, CEO,
for services rendered to the Company, and credited Phillip McStotts, Board
member and consultant to the Company, with $20,000 toward the exercise of his
outstanding $1.00 warrants for purchase of the Company's common stock.

On October 11, 2001, the Board of Directors approved the payment of $35,000
cash and the issuance of 100,000 shares of the Company's restricted common
stock to The Investor Online for services to be rendered by The Investor
Online to the Company, to increase the Company's visibility in the financial
and investment marketplace.




<PAGE>
<PAGE> 11

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

Cautionary Statement Regarding Forward-looking Statements
---------------------------------------------------------
This report may contain "forward-looking" statements.  Examples of forward-
looking statements include, but are not limited to: (a) projections of
revenues, capital expenditures, growth, prospects, dividends, capital
structure and other financial matters; (b) statements of plans and objectives
of the Company or its management or Board of Directors; (c) statements of
future economic performance; (d) statements of assumptions underlying other
statements and statements about the Company and its business relating to the
future; and (e) any statements using the words "anticipate," "expect," "may,"
"project," "intend" or similar expressions.

General
-------
Powerball has completed the construction of its pilot sodium plant in Salt
Lake City, Utah.  The pilot plant has successfully produced small quantities
of metallic sodium.  Operational procedures have been developed that produce
consistent and repeatable sodium production yields.  Powerball intends to
retain the services of a professional chemical and mechanical engineering firm
to scale up the methodologies in the pilot plant to achieve results that
management hopes will yield commercially useful hourly sodium production
quantities.

Powerball is currently in discussions and working out specifics for a number
of demonstration projects for its Hydrogen On Demand generators.  These
projects include powering an environmental research submarine focused on
global warming research and building a demonstration hydrogen refueling
station for fuel cell vehicles in California.  Powerball is also engaged in
discussions with a fuel cell manufacturer regarding a possible joint venture
arrangement.  However, no agreements have been finalized or entered into as of
the date of this filing.

Results of Operations
---------------------
Three and Nine Months Ended September 30, 2001 compared with
September 30, 2000
------------------------------------------------------------
Revenues.  Powerball expects that initial revenues will be generated primarily
through the production of sodium.  The pilot sodium plant in Salt Lake City is
currently finished and in daily operation. The pilot plant is not intended to
produce commercial quantities of sodium. The purpose of this facility is to
physically demonstrate the ability to produce a quality product on
a continuous basis. When certain milestones have been reached in the pilot
plant, a much larger facility will be constructed in a location that is closer
to the raw materials that we use.  Powerball has engaged in considerable due
diligence and discussions concerning possible locations of our first
commercial operation.

Additional revenues may be derived from the licensing of the Technology and/or
manufacturing and sale of hydrogen generation systems. Powerball had no
revenues for the three and nine months ended September 30, 2001 and 2000,
respectively, and has had no revenues since July 9, 1997 ("Inception").

Operating Expenses.  For the three and nine months ended September 30, 2001,
Powerball had total operating expenses of $146,455 and $433,550, respectively,
compared to $126,831 and $293,026 For the three and nine month period ended
September 30, 2000.  The increase in operating expenses is attributable
primarily to a substantial increase in research and development costs of

<PAGE> 12

$32,201 and $215,391, respectively, offset by small decreases in general and
administrative expenses ($8,070 and $8,508, respectively) and professional
fees ($1,613 and $10,612, respectively).  The increase in research and
development costs reflects the Company's acquisition of 100% ownership of
Powerball Technologies, LLC ("Tech") in the second quarter of fiscal 2000, and
consequent responsibility for all the research costs associated with Tech.

Other Income.  Other income for the three and nine months ended September 30,
2001 was -0- and $2,762, consisting of interest income.  Other income for the
three and nine month period ended September 30, 2000 consisted of $3,171 and
$3,444 of interest income and $48 and $3,002 (net)from limited sales of tanks.

The net loss for the three and nine months ended September 30, 2001 was
$146,455 and $430,888 compared to a net loss of $123,612 and $286,680 for the
three and nine month period ended September 30, 2000.  The Company's net loss
since inception has been $1,406,127.

The net loss per share for the three and nine month period ended September 30,
2001 was $0.04 and $0.13, based on the weighted average number of shares
outstanding of 3,300,250 and 3,304,307 shares.  The net loss per share for the
three and nine month period ended September 30, 2000 was $0.04 and $0.13,
based on the weighted average number of shares outstanding of 3,086,337 and
2,127,193 shares. The net loss per share since Inception has been $0.89, based
on the weighted average number of shares outstanding of 1,580,701.

Liquidity and Capital Resources
-------------------------------
In connection with the Company's organization the founding shareholders
acquired 200,000 shares of the Company's common stock for $40,000 cash.
Thereafter, in December 1997, the Company completed a public offering of
400,000 shares of common stock at a price of $1.00 per share for aggregate
offering proceeds of $400,000.  In April 1999, the Company successfully
completed a private placement offering of 400,000 shares of its $.001 par
value common stock for $200,000.  In December 1999, the Company successfully
completed a private placement offering of 120,000 shares of its $.001 par
value common stock for $120,000.

In June 2000, in order to raise funds for operations of its subsidiary,
management determined that the best source for raising immediate capital was
to approach certain warrant holders regarding the exercise of outstanding
warrants.  In order to induce such warrant holders to exercise the warrants,
the Company offered a like number of warrants with an exercise price of $5.00
per share (the then-current market price for the Company's common stock) to
each holder exercising previously issued warrants.  Accordingly, the Company
issued 167,500 shares for aggregate proceeds of $167,500 for the exercise of
outstanding warrants and issued 167,500 replacement warrants at $5.00 per
share, exercisable beginning June 26, 2000 for a period of two years.

In July 2000, the Company successfully completed a private placement offering
of 110,000 units consisting of one common share and one common share warrant
of its $.001 par value common stock for $440,000, less offering costs of
$40,000, for a net of $400,000.

In January 2001, the Company completed a private placement offering of 165,000
Units (each Unit consisting of one share of common stock and one common stock
purchase warrant exercisable at $6.00 per share) for aggregate proceeds of
$600,000, payable in installments through July 31, 2001. In June 2001, the
Company canceled the subscription for nonpayment of the balance of $550,000
due on the installment payments.  A total of $50,000 was received prior to the
cancellation for which 13,750 Units were issued, including 1,250 Units to a
finder.

<PAGE>
<PAGE> 13

In August 2001, the Company initiated a private placement of its restricted
common stock to certain existing shareholders.  The original private placement
was intended to raise a maximum of $200,000 through the sale of 80,000 shares
at a price of $2.50 per share.  However, prior to the fulfillment of the
private placement, due to market conditions and the need for additional
capital, in October 2001, the Company's Board of Directors amended the private
placement, to permit the sale of up to 400,000 shares at a price of $1.00 per
share.  As of September 30, 2001, $200,000 had been received from the private
placement by the Company and recorded as a deferred liability because the
stock was not issued until October 2001.

The issuances of common stock have been utilized for working capital, payment
of professional services, the initial capital investment in Tech; the loan of
additional working capital to Tech, and for the continued development
activities of the Company.  Because of the merger with PIC, the Company's
balance sheet at September 30, 2001 no longer reflects the loans to Tech as a
receivable because the loans are now treated as an intercompany transaction
and consolidated.  All funds loaned to Tech were obtained by the Company
through the sale of its equity securities.

As of September 30, 2001, the Company had current assets of $89,510,
consisting primarily of cash of $82,173, and current liabilities of $204,919,
for a working capital deficit of $115,400.  The current liabilities consist
primarily of deferred equity of $200,000 for cash received for private
placement subscriptions for which shares were not issued until October 2001,
subsequent to the date of the financial statements (See NOTE 8 - SUBSEQUENT
EVENTS to the financial statements).  At September 30, 2001, the Company had
assets of $56,576, consisting of fixed assets, net of depreciation, of $22,557
and other assets consisting of patents and assigned technology, net of
amortization, of $34,019.

Cash used in operations for the nine month period ended September 30, 2001 was
$454,045 compared to $236,152 for the period ended September 30, 2000.  Since
inception the Company's operations been funded primarily by cash received from
capital contributions and the issuance of common stock for cash.

The Company expects that it will continue to incur operational losses for the
next twelve months, primarily as a result of expenditures related to the
operation of the Plant and the general overhead thereto.  Although the Plant
is completed, such operating expenses are expected to increase.  The Company
hopes that the Plant may begin to generate some operating revenues during the
next twelve months, but cannot determine when it will receive revenues or the
amount of such potential revenues, if any, at this time.

The Company anticipates that within the next year additional funds may be
needed to allow the Company to continue its operations and to enter into other
markets for hydrogen technology.  If necessary, the Company will most likely
first seek additional debt and equity funding through its existing
shareholders, but the Company has no agreements for such funding in place and
there can be no assurance that such funding will be available to the Company
on acceptable terms.  There can be no assurance that any additional funding,
if required, will be available to the Company.

                          PART II - OTHER INFORMATION

                          ITEM 1.  LEGAL PROCEEDINGS
     None.

                        ITEM 2.  CHANGES IN SECURITIES

     None.

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<PAGE> 14

                   ITEM 3.  DEFAULTS UPON SENIOR SECURITIES
     None.

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

     None.
                           ITEM 5.  OTHER INFORMATION

On October 4, 2001, Jed Checketts, the Company's President, resigned as an
officer and director of the Company.  Matthew Fisher was appointed as a
director to fill the resulting vacancy.

On October 5, 2001, the Board of Directors granted a total of 25,000 stock
options to two employees of the Company under the Company's Stock Option and
Award Plan with an exercise price of $1.50 per share, the closing price of the
Company's common stock on that date.  Also, the Board approved the issuance of
100,000 shares of the Company's restricted common stock to Robert Ipson, CEO,
for services rendered to the Company, and credited Phillip McStotts, Board
member and consultant to the Company, with $20,000 toward the exercise of his
outstanding $1.00 warrants for purchase of the Company's common stock.

On October 11, 2001, the Board of Directors approved the payment of $35,000
cash and the issuance of 100,000 shares of the Company's restricted common
stock to TheInvestorOnline, an investor research service, for research and
information dissemination services to be rendered by TheInvestorOnline to the
Company, to increase the Company's visibility in the financial and investment
marketplace.

               ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)     Exhibits.
        ---------

     None.


(b)     Reports on Form 8-K.
        --------------------
The Company filed a Current Report on Form 8-K on July 18, 2001, reporting the
cancellation of the balance of the January 2001 private placement subscription
described above.  See PART I, ITEM 2, MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS.




                                  SIGNATURES

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

                                     POWERBALL INTERNATIONAL, INC.


Dated: November 12, 2001             By/S/Robert K. Ipson, Chairman and
                                     Chief Financial Officer