UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB
                                  _____________

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

For the quarterly period ended December 31, 2004

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

For the transition period from __________ to __________

                           Commission File No. 0-22191

                        LOTTERY & WAGERING SOLUTIONS INC.
            --------------------------------------------------------
             (Exact Name of Registrant as specified in its Charter)

               DELAWARE                                  65-0675901
     -------------------------------               ----------------------
     (State or Other Jurisdiction of                  (I.R.S. Employer
      Incorporation or Organization)               Identification Number)

                               2250 NW 136 AVENUE
                                    SUITE 103
                            PEMBROKE PINES, FL 33028
                    ----------------------------------------
                    (Address of Principal Executive Offices)

                                 (954) 885-0560
                ------------------------------------------------
                (Issuer's Telephone Number, Including Area Code)

                                       N/A
              ----------------------------------------------------
              (Former Name, Former Address and Former Fiscal Year,
                          if changed Since Last Report)

         Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.

                                 Yes [ ] No [X]

         State the number of shares outstanding of the issuer's classes of
common equity, as of the latest practicable date.

                Class                         Outstanding at March 22, 2005
               -------                        ------------------------------
     Common Stock, $.001 par value                  879,996 shares


         Transitional Small Business Disclosure Format (check one):

                                Yes [ ] No [ X ]

<PAGE>

         This Quarterly Report on Form 10-QSB contains "forward looking
statements" within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All
statements other than statements of historical fact included in this document
regarding the Company's strategies, plans, objectives, expectations, and future
operating results are forward-looking statements. Although the Company believes
that the expectations reflected in such forward-looking statements are
reasonable at this time, it can give no assurance that such expectations will
prove to have been correct. Factors that impact such forward looking statements
include, among others, risk factors included in the Company's Annual Report on
Form 10-KSB for the year ended June 30, 2004 and other filings with the
Securities and Exchange Commission.
         FUTURE RESULTS ARE ANTICIPATED TO VARY MATERIALLY FROM THOSE DISCLOSED
HEREIN AS A RESULT OF THE EVICTION ON JANUARY 1, 2005 OF THE COMPANY'S JOINT
VENTURE SUBSIDIARY IN SURINAME FROM WHICH IT CONDUCTED SUBSTANTIALLY ALL OF ITS
CASINO OPERATIONS AND FROM WHICH THE COMPANY DERIVED SUBSTANTIALLY ALL OF ITS
CASH FLOW AND THE CONSEQUENT DECISION OF THE BOARD OF DIRECTORS TO TERMINATE ALL
OF THE COMPANY'S OPERATIONS IN SURINAME (SEE "NOTE B" TO THE FINANCIAL
STATEMENTS) AND THE UNCERTAINTY OF THE PENDING LITIGATION IN SURINAME.


                              INDEX TO FORM 10-QSB

PART I. FINANCIAL INFORMATION

Item 1.       Financial Statements

Condensed Consolidated Balance Sheets as of June 30, 2004
         and December 31, 2004 (unaudited)...................................1

Condensed Consolidated Statements of Operations for the Three
         Months ended December 31, 2004 (unaudited) and
         the Three Months ended December 31, 2003 (unaudited)................2

Condensed Consolidated Statements of Cash Flows for the Three
         Months ended December 31, 2004 (unaudited) and the Three
         Months ended December 31, 2003 (unaudited)..........................3

Notes to Condensed Consolidated Financial Statements.........................4

Item 2.       Management's Discussion and Analysis or Plan of Operation.....12

Item 3.       Controls and Procedures.......................................15

PART II. OTHER INFORMATION

Item 1.       Legal Proceedings.............................................16

Item 5.       Other Information ............................................16

Item 6.       Exhibits and Reports .........................................16

SIGNATURES .................................................................16


<PAGE>

                          PART I. FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                        LOTTERY & WAGERING SOLUTIONS INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                     December 31,            June 30,
ASSETS                                                                   2004                  2004
                                                                  -------------------    ------------------
                                                                     (Unaudited)
<S>                                                             <C>                 <C>
CURRENT ASSETS:
Cash and cash equivalents                                                $   783,431           $ 1,067,276
Prepaid and other current assets                                               1,354                 9,252
Assets of discontinued operations                                          2,453,983             1,860,006
                                                                  -------------------    ------------------
     Total current assets                                                  3,238,768             2,936,534

Sakhalin property held for sale                                              700,000               700,000
Investment in PLC                                                          1,271,472             1,271,472
Other assets                                                                   5,000                 5,000
Assets of discontinued operations                                            210,867             3,231,349
                                                                  -------------------    ------------------

     TOTAL                                                               $ 5,426,107           $ 8,144,355
                                                                  ===================    ==================

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Accounts payable and accrued expenses                                    $    98,922              $ 84,808
Liabilities of discontinued operations                                     4,843,331             3,445,720
                                                                  -------------------    ------------------
    Total current liabilities                                              4,942,253             3,530,529
                                                                  -------------------    ------------------

Minority interest in discontinued operations                               (750,849)             1,248,115


STOCKHOLDERS' EQUITY:
Preferred stock, par value $.01, 5,000,000 shares
     authorized, no shares issued and outstanding
Common stock, par value $.001; 50,000,000 shares
     authorized; 879,996 shares and 905,996 shares issued and
     outstanding at December 31, 2004 and June 30, 2004,
     respectively                                                                880                   906
Additional paid-in capital                                                48,112,920            48,112,920
Accumulated deficit                                                      (46,879,097)          (44,748,115)
                                                                  -------------------    ------------------
     Total stockholders' equity                                            1,234,703             3,365,711
                                                                  -------------------    ------------------

     TOTAL                                                               $ 5,426,107          $  8,144,355
                                                                  ===================    ==================

</TABLE>


See notes to condensed consolidated financial statements.

                                       1

<PAGE>

                        LOTTERY & WAGERING SOLUTIONS INC.

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                   For the Three       For the Three          For the               For
                                                      Months              Months            Six Months              the
                                                       Ended               Ended               Ended            Six Months
                                                   December 31,        December 31,        December 31,       Ended December
                                                       2004                2003                2004              31, 2003
                                                  ----------------    ----------------    ----------------    ----------------

<S>                                              <C>                    <C>               <C>                    <C>
REVENUES                                           $          -        $          -           $         -     $           -

OPERATING EXPENSES:
  General and administrative                            189,130             190,375               393,711           469,018
  Salaries and bonuses                                  142,330             151,384               287,796           286,148
                                                  ----------------    ----------------    ----------------    ----------------

LOSS FROM CONTINUING OPERATIONS                        (331,460)           (341,759)             (681,507)         (755,166)

INCOME (LOSS) FROM DISCONTINUED OPERATIONS:          (1,704,277)            104,404            (1,417,003)           28,321
                                                  ----------------    ----------------    ----------------    ----------------

NET LOSS                                            $(2,035,737)         $ (237,355)          $(2,098,510)      $  (726,845)
                                                  ================    ================    ================    ================

LOSS PER SHARE OF COMMON STOCK:
     Basic and diluted
       Loss from continuing operations             $       (.38)           $   (.33)              $  (.77)      $      (.71)
       Income (loss) from discontinued
         operations                                       (1.93)                .10                 (1.61)              .03
                                                  ----------------    ----------------    ----------------    ----------------
NET LOSS PER SHARE                                  $     (2.31)         $    (0.23)             $  (2.38)      $     (0.68)
                                                  ================    ================    ================    ================

WEIGHTED AVERAGE NUMBER OF COMMON SHARES AND
    COMMON SHARE EQUIVALENTS OUTSTANDING
          Basic and diluted                             879,996           1,046,965               883,105         1,061,958
                                                  ================    ================    ================    ================

</TABLE>


See notes to condensed consolidated financial statements.

                                       2

<PAGE>

<TABLE>
<CAPTION>
                                                   LOTTERY & WAGERING SOLUTIONS INC.

                                            CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                              (UNAUDITED)


                                                            For the Three      For the Three         For the           For the
                                                                Months            Months           Six Months         Six Months
                                                                Ended              Ended              Ended              Ended
                                                             December 31,      December 31,       December 31,        December 31,
                                                                 2004              2003               2004                2003
                                                            ---------------   ----------------    --------------    --------------

<S>                                                           <C>                 <C>               <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss                                                      $ (2,035,737)       $  (237,355)      $(2,098,510)     $   (726,845)
 Adjustments:
  Loss (income) from discontinued operations                     1,704,277           (104,404)        1,417,003           (28,321)
  Changes in current assets and current liabilities:
     Prepaid and other current assets                               15,250            (16,000)            7,898           (16,000)
     Accounts payable and accrued expenses                          29,889            (18,449)           14,114           (18,225)
                                                            ---------------   ----------------    --------------    --------------
       Net cash used by continuing operations                     (286,321)          (376,208)         (659,495)         (789,391)

       Net cash provided by discontinued operations                153,334            369,715           493,840           797,028
                                                            ---------------   ----------------    --------------    --------------
Net cash provided by (used in) operating activities               (132,987)            (6,493)         (165,655)            7,637
                                                            ---------------   ----------------    --------------    --------------

CASH FLOWS FROM INVESTING ACTIVITIES:
Project development costs and other assets                                            (25,000)                            (25,000)
Deposit on Vietnam gaming license                                                                                        (250,000)
                                                            ---------------   ----------------    --------------    --------------
       Net cash used by continuing operations                            -            (25,000)                -          (275,000)

       Net cash used by discontinued operations                     (5,184)              (715)          (85,690)          (22,070)
                                                            ---------------   ----------------    --------------    --------------
Net cash used in investing activities                               (5,184)           (25,715)          (85,690)         (297,070)
                                                            ---------------   ----------------    --------------    --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repurchase of common stock                                               -            (80,000)          (32,500)         (116,500)
                                                            ---------------   ----------------    --------------    --------------
Net cash used in financing activities                                    -            (80,000)          (32,500)         (116,500)
                                                            ---------------   ----------------    --------------    --------------
NET INCREASE (DECREASE) IN CASH
    AND CASH EQUIVALENTS                                          (138,171)          (112,208)         (283,845)         (405,933)
CASH AND CASH EQUIVALENTS,
    BEGINNING OF PERIOD                                            921,602          1,210,119         1,067,276         1,503,844
                                                             --------------    ---------------    --------------    --------------
CASH AND CASH EQUIVALENTS,
    END OF PERIOD                                                $ 783,431       $  1,097,911         $ 783,431       $ 1,097,911
                                                            ===============   ================    ==============    ==============

</TABLE>

See notes to condensed consolidated financial statements.

                                       3


<PAGE>

                        LOTTERY & WAGERING SOLUTIONS INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

(NOTE A) BASIS OF PRESENTATION:

         Lottery & Wagering Solutions Inc. ("LWSI") was incorporated on March 6,
1996 and has adopted a fiscal year ending June 30. The accompanying unaudited
condensed consolidated financial statements include the accounts of LWSI, its
subsidiaries and joint venture (collectively, the "Company"). Intercompany
transactions and balances have been eliminated in consolidation. The condensed
consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in the United States of America for
interim financial information and with the instructions to Form 10-QSB.
Accordingly, they do not include all of the information and footnotes required
by accounting principles generally accepted in the United States of America. In
the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for fair presentation have been included.
Operating results for the three and six month periods ended December 31, 2004
are not necessarily indicative of the results that may be expected for any
future interim periods or the year ending June 30, 2005.

         The balance sheet at June 30, 2004 has been derived from the audited
consolidated financial statements at that date, but does not include all the
information and footnotes required by accounting principles generally accepted
in the United States of America. For further information, refer to the audited
consolidated financial statements and footnotes thereto included in the Form
10-KSB for the year ended June 30, 2004 filed by the Company.

         The subsidiaries Sakhalin General Trading and Investments Ltd.
("SGTI"), Sakhalin City Center Ltd. ("SCC"), The Golden Tulip Leisure A.V.V.
("GTL") and joint venture Suriname Leisure Company A.V.V. ("SLC") are based in
Cyprus, the Russian Federation, Suriname and Suriname, respectively. The
statutory currencies in the countries of incorporation are respectively the
Cyprus Pound, the Russian Rouble and the Suriname Dollar. The reporting currency
is the U.S. Dollar.


(NOTE B) THE COMPANY:

         Lottery & Wagering Solutions Inc. ("LWSI") was incorporated under the
laws of the State of Delaware on March 6, 1996 as Conserver Corporation of
America, changed its name on December 2, 1997 to CCA Companies Incorporated, and
on October 1, 2001 changed its name again. Through December 31, 2004, the active
business of LWSI (with its subsidiaries, the "Company") was the operation of two
gaming casinos in Suriname, one wholly owned and one 50% owned by the Company.
On January 1, 2005, SLC, an Aruba corporation fifty percent owned by the
Company, was evicted from the premises which it leased and operated a casino in
the Plaza Hotel in Paramaribo, Suriname. Additionally, the Company entered into
a Stock Purchase and Sale Agreement dated February 21, 2005, for the sale of all
of the shares of capital stock owned by the Company in GTL, an Aruba corporation
which leased and operated a casino in the Golden Tulip Casino Hotel, Conference
and Leisure Center in Paramaribo, Suriname.

                                       4

<PAGE>

         The Company is also pursuing the sale of property initially acquired by
it for the development of a casino and hotel project in Sakhalin in the Russian
Federation on an island north of Japan (the "Sakhalin Project"). In addition, in
May 2001, the Company entered into a contract under which, subject to
significant pre-acquisition conditions, the Company was to acquire all of the
stock of Emerging Market Solutions, Inc., ("EMSI") the sole asset of which is a
lottery gaming system contract which grants to EMSI the exclusive right to
provide an on-line lottery and sports betting system in Ho Chi Minh City and the
Southern Provinces of Vietnam. The proposed acquisition was approved by the
stockholders of the Company on September 26, 2001, but was not consummated as
various preconditions to a closing were not met. In April 2003, the Company
restructured its investment in this project by exchanging its interests therein
for shares of Pacific Lottery Corporation ("PLC"), a Canadian company whose
shares are traded on the Canadian Venture Exchange, and which has undertaken to
pursue the development of the lottery system in Vietnam.

          Since 1998, the Suriname Palace casino, owned by SLC, an Aruba joint
venture 50% owned by the Company, had been operating in the Plaza Hotel located
in Paramaribo, the capital of Suriname. The Company's 100% owned Delaware
subsidiary, Dorsett Hotels & Resorts, Inc. ("Dorsett") had managed the casino.
The Suriname casino occupied two leased floors totaling approximately 20,000
square feet in the Plaza Hotel, which is in the center of Paramaribo, and had
operated a casino with approximately 15 gaming tables, 174 slot machines and a
50-seat restaurant.

         The Suriname casino was constructed by the Company pursuant to an
agreement with Parbhoe Handelmij NV ("Parbhoe"), the local company that owned
the casino license and which became the 50% owner of the joint venture entity,
SLC. In April 1998, SLC entered into a Suriname Casino Management Agreement with
Dorsett for fifteen years at a base fee equal to 3% of gross revenues calculated
on an annual basis and payable monthly, plus an incentive fee of ten percent of
gross operating profits, payable monthly. SLC entered into a Lease Agreement for
the casino premises with Parbhoe, which represented to Dorsett that it was the
hotel owner, for fifteen years beginning in February 1998 (the "Lease"). Through
December 31, 2004, the operations of this casino, including the management fees
paid to Dorsett, have generated substantially all of the cash flow of the
Company. On January 1, 2005, SLC was evicted from the premises which it leased
from Parbhoe in the Plaza Hotel under the Lease Agreement.

         On July 30, 2003, the Cantonal Court in Suriname had issued an order
evicting SLC from the premises it occupies in the Plaza Hotel. The Court ruled
that Stichting Dim (Dim Foundation) ("Dim") the plaintiff in the eviction
proceeding which took title to the Hotel through a mortgage foreclosure, was not
bound by the Lease, as Parbhoe did not hold registered title to the premises.
SLC appealed the decision, and on July 6, 2004, the High Court of Justice in
Suriname denied Dim's request and "annulled" the order of eviction. The High
Court of Justice determined that the Cantonal Court could not properly issue
such an eviction order in a summary or "Kort Geding" proceeding because the
consequences thereof could not be adequately considered by such Court, and that
a full proceeding was necessary to properly determine the rights and interests
of the parties. In August 2004, Dim commenced a new summary proceeding in the
Subdistrict Court again seeking eviction of SLC from the Plaza Hotel. Dim
claimed that a regulation requiring all holders of gaming licenses to start
operations in six months, which became effective on August 20, 2004, justified
consideration of such a summary proceeding because Dim claimed it may lose its
license if it did not urgently obtain the whole building. On November 11, 2004,
the Subdistrict Court issued a new order evicting SLC from its premises at the
Plaza Hotel by January 1, 2005. Although SLC immediately appealed this judgment,
and sought a provisional remedy to stay its enforcement until the appeal could
be heard, through a series of procedural motions, the plaintiffs delayed any
rulings by the appellate court on the stay application, and the eviction took
place. The Company has removed from the Hotel and placed in storage its movable
equipment, including kitchen equipment, slot machines and other gambling
equipment and gaming tables.

                                       5

<PAGE>

         On September 7, 2004, GTL entered into a five year agreement with N.V.
Trade Centre Suriname ("TCS"), granting GTL the right to use and occupy the
existing restaurant, casino and certain office facilities located on several
floors of The Golden Tulip Casino, Hotel, Conference and Leisure Center in
downtown Paramaribo Suriname. The agreement also gives GTL the exclusive use of
the Full Gaming License and Food and Beverage License on behalf of TCS, as well
as the right to use the 173 slot machines, 7 gaming tables, and related
paraphernalia located on the premises. GTL is required to make monthly payments
to TCS of US$40,000 for the lease of the facilities and the use of the licenses
and equipment. The agreement may be extended for an additional five year term at
the option of GTL. LWSL is not a party to the agreement with TCS, and has not
guaranteed the performance or any of the obligations of GTL. GTL commenced
operations of its slot machines on September 7, 2004.

         In February 2005, the Board of Directors adopted a resolution
committing the Company to terminate its operations in Suriname, and to formulate
a plan for the orderly disposition of its assets involved in such operations.
Such action was taken primarily as a result of an evaluation of various
consequences arising out of the eviction of SLC on January 1, 2005. Although an
appeal of the eviction is still pending, which if successful could result in
indemnification to SLC for its losses, the Board concluded that termination of
operations was in the Company's best interests because of the lack of success of
the Company's extensive efforts to identify and obtain a suitable alternative
site in Suriname, the physical safety of the executives and staff, the
uncertainties of the litigation process in Suriname, as well as other factors.
Consistent with the Board's decision to terminate the Suriname operations, the
Company entered into a Stock Purchase and Sale Agreement dated February 21,
2005, with a local Surinamese businessman for the sale of all of its shares of
capital stock in GTL for $500,000.

         As a result of the Board's decision to terminate all operations in
Suriname, and hence all of the Company's current casino operations, the
financial statements of the Company reflect all assets, liabilities and results
of operations of SLC and GTL as discontinued operations. All assets of SLC which
have become impaired as a result of the eviction have been reserved for at
December 31st, 2004 including approximately $2,600,000 of leasehold improvements
and $500,000 of property and other assets. The Company has also set up a reserve
for estimated future expenditures of $1,200,000.

         The Company entered into a stock purchase agreement on October 24,
1997, (the "Sakhalin Agreement") with Sakhalin General Trading Investments
Limited ("SGTI") and an assignment agreement with Sovereign Gaming and Leisure
Limited ("Sovereign") on December 12, 1997, each a limited liability company
organized under the laws of Cyprus. Pursuant to the Sakhalin Agreement, the
Company acquired all of the outstanding shares of SGTI and SGTI's rights and
interest in a project to develop the Sakhalin Project, and SGTI's ownership
interest in 85% of Sakhalin City Center Ltd. ("SCC"). SCC is a closed joint
stock company incorporated under the laws of the Russian Federation that holds
certain rights, including a 101-year ground lease on the proposed site of the
Sakhalin Project, and a guarantee by the city of Yuzhno-Sakhalinsk (the "City")
to issue a gaming license to SCC.

                                       6

<PAGE>

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

         In April 2003, SGTI entered into a series of agreements (dated as of
March 20, 2003) under which it transferred one half of the leasehold rights held
by SCC to a third party in return for net proceeds of $1,100,000. Under these
agreements, SCC transferred to the purchaser the sublease rights to
approximately five acres of the property, and one half of the shares of SCC
which it held. The purchaser has agreed to return to SGTI, for nominal
consideration, the shares of SCC if it acquires a direct lease from the City for
the portion of the property subject to the sublease.

         Currently $700,000 expended in connection with obtaining the original
lease agreement and demolition costs remains on the Company's consolidated
balance sheet at December 31, 2004. The Company is continuing to explore
alternatives for the sale or other disposition of its remaining interests in the
Sakhalin Project.

         In May 2001, the Company entered into a contract to acquire an entity
("EMSI") which held the exclusive right and obligation to supply an on-line
lottery and sports lottery system, and to operate it, in Ho Chi Minh City and
the Southern provinces of Vietnam. Certain conditions to that contract were not
fulfilled, and the Company subsequently determined that it was in its best
interests to assign its rights in the contract to a Canadian entity, Pacific
Lottery Corporation ("PLC"), and to restructure its investment in the project
into common shares of PLC. In a transaction which was consummated as of April 7,
2003, the Company acquired from PLC 7,962,620 of its common shares in
satisfaction of indebtedness owed to the Company by PLC at a deemed purchase
price of $.30CDN per share. The transaction was part of a debt and equity
reorganization of PLC, and a private placement by PLC of its common shares and
warrants to a wholly owned subsidiary of Genting International ("Genting") for
$4.50 Million CDN. The funds from the private placement are to be exclusively
used in connection with the development of the online lottery program in Ho Chi
Minh City and the Southern provinces of Vietnam. Securities of PLC are traded on
the Canadian Venture Exchange under the symbol TSX-Venture: "LUK".

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

                                       7
<PAGE>

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

(NOTE C) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

         Principles of Consolidation - The accompanying consolidated financial
statements include the accounts of LWSI and its subsidiaries. Inter-company
transactions and balances have been eliminated in consolidation.

         Minority Interest - SCC is currently generating losses and the minority
shareholders are not obligated to fund these losses. Accordingly, the minority
interest held in SCC is not reflected in the consolidated financial statements.

         The Company's Suriname casino joint venture began operations during the
1999 fiscal year. The Company controls the management of the joint venture
company and has a 50% equity interest. The casino's operations are consolidated
with those of the Company and a minority interest is recorded representing 50%
of the accumulated net income generated by the casino which is attributable to
the minority interest. This amount is included in discontinued operations.

         Cash and Cash Equivalents - The Company considers investments with
original maturities of three months or less at the time of purchase to be cash
equivalents. At times, cash balances in the Company's bank accounts in the
United States may exceed federally insured limits. Uninsured amounts in cash at
December 31, 2004 includes $753,000 deposited in a U.S. bank investment account
under a repurchase agreement fully collateralized by highly rated securities
held by the bank.

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

         Financial Instruments - The carrying amounts of financial instruments
including accounts payable, accrued expenses and notes payable approximate fair
value.

         Property, Equipment and Leasehold Improvements - Property and equipment
are recorded at cost. Depreciation and amortization is computed by the
straight-line method based on the estimated useful lives (2 - 5 years) of the
related assets. Leasehold improvements are amortized over the shorter of the
life of the asset or the lease term.

                                       8

<PAGE>

         Investments - The Company accounts for its investment in the common
stock of Pacific Lottery ("PLC") at lower of cost or market. PLC is a
development stage company that is traded on the Canadian Venture Exchange.

         Income Taxes - For the purpose of these consolidated financial
statements, the Company has adopted the provisions of Statement of Financial
Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes" for all
periods presented. Under the asset and liability method of SFAS 109, deferred
taxes are recognized for differences between financial statement and income tax
bases of assets and liabilities.

         Stock Based Compensation - The Company accounts for stock options
issued to employees in accordance with SFAS No. 123, "Accounting for Stock-Based
Compensation," as amended by SFAS No. 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure," which permits entities to continue to
apply the provisions of Accounting Principles Board ("APB") Opinion No. 25,
"Accounting for Stock Issued to Employees," and provide pro forma disclosures of
the effect on net income (loss) and net earnings (loss) per share for employee
stock option grants as if the fair value based method, as defined in SFAS No.
123 and 148 in its annual consolidated financial statements, has been applied.
The Company has elected to apply the provisions of APB Opinion No. 25 and
provide the pro forma disclosures required by SFAS No. 123 and 148. Under APB
Opinion No. 25, the Company recognizes no compensation expense related to
employee stock options, as no options are granted at a price below the fair
market value on the day of grant.

         Impairment of Long-Lived Assets - The Company utilizes SFAS No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets". Under the
provisions of this statement, the Company has evaluated its long-lived assets
for financial impairment and will continue to evaluate them as events or changes
in circumstances indicate that the carrying amount of such assets may not be
fully recoverable. The Sakhalin property held for sale is recorded at $700,000,
which is the lower of cost or fair value, less cost to sell. The fair value of
the asset has been determined to be $800,000, and the cost to sell was estimated
at $100,000.

         Foreign Currency Translation - The statutory currencies in the
countries in which the Company's subsidiaries are based are the Cyprus Pound,
the Russian Rouble, the United States Dollar and the Suriname Dollar. The
reporting currency is the United States Dollar.

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

(NOTE D)  COMMITMENTS AND CONTINGENCIES:

         On July 30, 2003, the Cantonal Court in Suriname issued an order
evicting SLC from the premises it occupies in the Plaza Hotel. The Court ruled
that Stichting Dim (Dim Foundation) ("Dim") the plaintiff in the eviction
proceeding which took title to the Hotel through a mortgage foreclosure, was not
bound by the Lease, as Parbhoe did not hold registered title to the premises.

                                       9
<PAGE>

SLC appealed the decision, and on July 6, 2004, the High Court of Justice in
Suriname denied Dim's request and "annulled" the order of eviction. The High
Court of Justice determined that the Cantonal Court could not properly issue
such an eviction order in a summary or "Kort Geding" proceeding because the
consequences thereof could not be adequately considered by such Court, and that
a full proceeding was necessary to properly determine the rights and interests
of the parties. In August 2004, Dim commenced a new summary proceeding in the
Subdistrict Court again seeking eviction of SLC from the Plaza Hotel. Dim
claimed that a regulation requiring all holders of gaming licenses to start
operations in six months, which became effective on August 20, 2004, justified
consideration of such a summary proceeding because Dim claimed it may lose its
license if it did not urgently obtain the whole building. On November 11, 2004,
the Subdistrict Court issued a new order evicting SLC from its premises at the
Plaza Hotel by January 1, 2005. Although SLC immediately appealed this judgment,
and sought a provisional remedy to stay its enforcement until the appeal could
be heard, through a series of procedural motions, the plaintiffs delayed any
rulings by the appellate court on the stay application, and the eviction took
place. The Company has removed from the Hotel and placed in storage its movable
equipment, including kitchen equipment, slot machines and other gambling
equipment and gaming tables. Although an appeal of the eviction is still
pending, which if successful could result in indemnification to SLC for its
losses, the Board concluded that termination of operations was in the Company's
best interests because of the lack of success of the Company's extensive efforts
to identify and obtain a suitable alternative site in Suriname, the physical
safety of the executives and staff, the uncertainties of the litigation process
in Suriname, as well as other factors.

         In October 2004, Parbhoe instituted a new proceeding in Suriname
against SLC, Dorsett, Jeffrey Clague and the Company. Parbhoe alleged that it
was owed US$ 8,039,588 in damages as a result of the alleged failure of the
defendants to pay dividends, management and incentive fees, interest, rent and
certain profits under the Casino Management Agreement and the Joint Venture
Agreement; the wrongful payment of certain management and incentive fees to
Dorsett; and for damages alleged to be due as a result of delays in opening the
casino in 1999. At the inception of the lawsuit Parbhoe petitioned the court for
a garnishee order and obtained from Judge Veldema of the Subdistrict Court an ex
parte order pursuant to which certain bank accounts totaling approximately
$742,000 were frozen and the movable assets of the defendants were inventoried.
The court Bailiff also seized approximately $42,000 from the cash desk of the
casino which has been placed into the protection of the court. The defendants
responded to Parbhoe's claims and asked the court to rule on an expedited basis
to lift its garnishee order due to the imposition of the garnishments, to which
the court ruled in the defendants favor and lifted the garnishments. The Company
believes these claims are without foundation, duplicative of claims made by
Parbhoe in other pending litigation, and in any event, subject to arbitration
pursuant to the joint venture agreement entered into between the Company and
Parbhoe. The Company intends to vigorously defend this lawsuit.

         As there was no assurance that the appeal in the first summary
proceeding case brought by DIM would be successful, the Company through its
subsidiaries sought alternative locations in Paramaribo to relocate its casino
operations. SLC filed an action against Parbhoe seeking damages of US $694,000,
incurred as a result of the eviction proceeding and related matters.


                                       10

<PAGE>

         In a series of cases in Suriname commencing in July 2001, Parbhoe
initiated garnishment and other proceedings in the name of SLC against Dorsett
and Mr. Clague, the General Manager, claiming that Dorsett was transferring
SLC's money illegally, that Clague was not authorized to act as General Manager,
and that Dorsett and Clague owe to SLC US $4,152,254. The garnishments were
lifted in summary proceedings which are currently on appeal. The Company
believes there is no substance to the claims. The Suriname attorneys for the
Company are of the opinion that because Parbhoe was not authorized to initiate
legal action in the name of SLC, SLC was not legally authorized to commence
these proceedings, and that the cases are likely to be dismissed.

         SLC is engaged in other legal proceedings in Suriname in which SLC
seeks to recover approximately $315,000 in rental payments which were made to
Parbhoe. According to a decision of the district commissioner, rendered July 28,
2000, such payments were in excess of the maximum rentals permitted by law. In
conformity with this decision, SLC thereafter paid Parbhoe a monthly rental of
$3,200 rather than $17,000, the rent stipulated in the lease. SLC is also a
party to a lawsuit against Parbhoe seeking from Parbhoe approximately $360,000
which SLC advanced for facilities and improvements to the hotel where the casino
operates which were contractually the responsibility of Parbhoe. Parbhoe has
counterclaimed in each of these proceedings seeking dissolution of the lease and
alleging it is due payment of back rent in the amount of $484,000. Management of
the Company is vigorously contesting these counterclaims.

         SLC is also involved in other routine litigation currently pending in
Suriname. The Company does not believe that such litigation will have a
significant impact on its results of operations and liquidity or on its
financial statements taken as a whole.

(NOTE E)  DISCONTINUED OPERATIONS:

         As a result of the Board's decision to terminate all operations in
Suriname, and hence all of the Company's current casino operations, the
financial statements of the Company reflect all assets, liabilities and results
of operations of SLC and GTL as discontinued operations. The table below
represents the breakdown of the income (loss) from discontinued operations. For
an explanation and description of the items listed in the table, please see
"Results of Operations" in "Item 2, Managements Discussion and Analysis or Plan
of Operation" contained herein below.

<TABLE>
<CAPTION>


                                                   For the Three       For the Three          For the               For
                                                      Months              Months            Six Months              the
                                                       Ended               Ended               Ended            Six Months
                                                   December 31,        December 31,        December 31,       Ended December
                                                       2004                2003                2004              31, 2003
                                                  ----------------    ----------------    ----------------    ----------------
<S>                                             <C>                   <C>                 <C>                  <C>
INCOME (LOSS) FROM DISCONTINUED OPERATIONS:
  Income (loss) from operating activities               673,688             130,775            1,136,934            (65,986)
  Reserve for impairment of assets                   (3,098,442)                  -           (3,098,442)                 -
  Reserve for estimated future expenses              (1,200,000)                  -           (1,200,000)                 -
  Minority interest                                   1,920,477             (26,371)           1,744,505             94,307
                                                  ----------------    ----------------    ----------------    ----------------
                                                     (1,704,277)            104,404           (1,417,003)            28,321

</TABLE>

                                       11

<PAGE>

ITEM 2.       MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

         The following discussion and analysis of significant factors affecting
the Company's operating results and liquidity and capital resources should be
read in conjunction with the accompanying financial statement and related notes.

RESULTS OF OPERATIONS

               Comparison of Three Months Ended December 31, 2004
                     to Three Months Ended December 31, 2003

         Net Loss. The Company generated a net loss of $2,035,737, or $2.31 per
share, for the three months ended December 31, 2004, as compared to a net loss
of $237,355, or $0.23 per share, for the three months ended December 31, 2003.
The greater loss during the current year's period resulted primarily from (i)
the recording of a reserve for the impairment of Suriname casino assets caused
by the eviction of SLC from the premises where it operated and (ii) the reserve
for estimated future expenditures recorded by the Company as a result of the
Board's decision to terminate all operations in Suriname and account for such
results as discontinued operations.

         General and Administrative Expenses. For the three months ended
December 31, 2004, general and administrative expenses were $189,130
representing general corporate overhead. General and administrative expenses
remained relatively constant and were $190,375 for the three months ended
December 31, 2003.

         Salaries and Bonuses. Salaries and bonuses remained relatively constant
and were $142,330 for the three months ended December 31, 2004 as compared to
$151,384 for the three months ended December 31, 2003.

         Income (Loss) from Discontinued Operations. The Company generated a net
loss from discontinued operations of $1,704,277, or $1.93 per share, for the
three months ended December 31, 2004, as compared to a net income of $104,404,
or $0.10 per share, for the three months ended December 31, 2003. As a result of
the Board's decision in February 2005 to terminate all operations in Suriname,
and hence all of the Company's current casino operations, the financial
statements of the Company reflect all results of operations of SLC and GTL as
discontinued operations. The loss from discontinued operations during the
current year's period resulted primarily from (i) the recording of a reserve of
approximately $3,100,000 for the impairment of Suriname casino assets, including
approximately $2,600,000 of unamortized leasehold improvements, caused by the
eviction of SLC from the premises where it operated and (ii) a $1,200,000
reserve for estimated future expenditures recorded by the Company which includes
approximately $900,000 related to contractual obligations and other costs of
termination and $100,000 related to moving, storage and security costs. The
actual income from operating activities, excluding reserves, of the Company's
two casinos in Suriname during the three months ended December 31, 2004 was
$673,688 as compared to $130,775 for the three months ended December 31, 2003.
The better results during the current period were primarily due to (i) increased
revenues of approximately $467,000 at the Suriname Palace casino during the
current period, (ii) a reduction in depreciation expense of approximately
$120,000 as a result of 5-year assets which became fully depreciated prior to
the current period, and (iii) net operating income of approximately $90,000
generated at the newly operated Golden Tulip casino. The current years loss from
discontinued operations also includes a reduction in minority interest of
$1,920,477 representing 50% of the $3,840,954 net loss generated by SLC which
includes the approximate $4,300,000 reserves recorded by SLC. The Company has
management control of the Suriname Palace casino joint venture company in which
it owns a 50% equity interest. As such, the Suriname Palace casino's operations
are consolidated with those of the Company and a minority interest is recorded
for the 50% interest held by the Company's joint venture partner. For the three
months ended December 31, 2003, the joint venture company generated net after
tax income of $52,742 and the Company recorded a minority interest equal to 50%
of such amount, or $26,371.


                                       12
<PAGE>

                Comparison of Six Months Ended December 31, 2004
                      to Six Months Ended December 31, 2003

         Net Loss. The Company generated a net loss of $2,098,510, or $2.38 per
share, for the six months ended December 31, 2004, as compared to a net loss of
$726,845, or $0.68 per share, for the six months ended December 31, 2003. The
greater loss during the current year's period resulted primarily from (i) the
recording of a reserve for the impairment of Suriname casino assets caused by
the eviction of SLC from the premises where it operated and (ii) the reserve for
estimated future expenditures recorded by the Company as a result of the Board's
decision to terminate all operations in Suriname and account for such results as
discontinued operations.


          General and Administrative Expenses. For the six months ended December
31, 2004, general and administrative expenses were $393,711 representing general
corporate overhead. General and administrative expenses were $469,018 for the
six months ended December 31, 2003. The reduction in the current year expenses
of approximately $75,000 or 16% is primarily attributable to lower consulting
and legal and professional fees.

         Salaries and Bonuses. Salaries and bonuses remained relatively constant
and were $287,796 for the six months ended December 31, 2004 as compared to
$286,148 for the six months ended December 31, 2003

         Income (Loss) from Discontinued Operations. The Company generated a net
loss from discontinued operations of $1,417,003, or $1.61 per share, for the six
months ended December 31, 2004, as compared to a net income of $28,321, or $0.03
per share, for the six months ended December 31, 2003. As a result of the
Board's decision in February 2005 to terminate all operations in Suriname, and
hence all of the Company's current casino operations, the financial statements
of the Company reflect all results of operations of SLC and GTL as discontinued
operations. The loss from discontinued operations during the current year's
period resulted primarily from (i) the recording of a reserve of approximately
$3,100,000 for the impairment of Suriname casino assets, including approximately
$2,600,000 of unamortized leasehold improvements, caused by the eviction of SLC
from the premises where it operated and (ii) a $1,200,000 reserve for estimated
future expenditures recorded by the Company which includes approximately
$900,000 related to contractual obligations and other costs of termination and
$100,000 related to moving, storage and security costs. The actual income from
operating activities, excluding reserves, of the Company's two casinos in
Suriname during the six months ended December 31, 2004 was $1,136,934. Operating
activities for the six months ended December 31, 2003 produced a loss of
$65,986. The better results during the current period were primarily due to (i)
increased revenues of approximately $900,000 at the Suriname Palace casino
during the current period, (ii) a reduction in depreciation expense of
approximately $190,000 as a result of 5-year assets which became fully
depreciated prior to the current period, and (iii) net operating income of
approximately $90,000 generated at the newly operated Golden Tulip casino. The
current years loss from discontinued operations also includes a reduction in
minority interest of $1,744,505 representing 50% of the $3,489,010 net loss
generated by SLC which includes the approximate $4,300,000 reserves recorded by
SLC. The Company has management control of the Suriname Palace casino joint
venture company in which it owns a 50% equity interest. As such, the Suriname
Palace casino's operations are consolidated with those of the Company and a
minority interest is recorded for the 50% interest held by the Company's joint
venture partner. For the six months ended December 31, 2003, the joint venture
company generated a net loss of $188,614 and the Company recorded a reduction to
minority interest equal to 50% of such amount, or $94,307.

                                       13

<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

         Since August 1999, the Company's almost sole recurring source of cash,
exclusive of loans and securities sales, was the cash payments from SLC which is
the joint venture entity that owns the Suriname casino. Cash payments from SLC
to LWSI, Parbhoe or their affiliates have been made by SLC, under the management
control of Dorsett, the Company's subsidiary, according to a cash allocation
priority established under the parties' Joint Venture Agreement. Such payments
were initially allocated to management fees and the repayment of construction
costs and other loans and interest. As of December 31, 2004, all loans had been
repaid by SLC in full and all distributions were currently first used to pay
management fees to Dorsett and then allocated equally to the two venture
partners. Significant disputes and litigation have arisen between Parbhoe and
the Company and its affiliates, and a Suriname Court has held the lease
agreement to be unenforceable by SLC, a decision which was annulled on appeal,
but after a new legal proceeding commenced by Dim in August 2004, on November
11, 2004 the lower court issued a new order of eviction of SLC from its premises
at the Plaza Hotel which took place on January 1, 2005. As such, no additional
cash distributions from the operations of SLC are expected.

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

         On December 31, 2004, the Company had a working capital deficit of
approximately $1,700,000. Included in this working capital deficit is
approximately $2,776,000 of liabilities relating to amounts recorded as payable
to Parbhoe, its joint venture partner in SLC. The Company believes that the
likelihood of being held responsible for making payment on any liabilities
currently recorded as due to Parbhoe are remote. This is because the Suriname
Court found that Parbhoe, which leased the casino premises to SLC from which it
was evicted, did not have title to the hotel and therefore the lease was
unenforceable. The Company believes that if the appeal of the eviction is
unsuccessful, the amounts owed by Parbhoe to SLC, Dorsett and LWSI for damages
will be in excess of any amounts claimed by Parbhoe to be due to it. The Company
is investigating what legal actions it will take with respect to its claims
against Parbhoe. There is no assurance that the Company will be successful in
its efforts to recover from Parbhoe the losses it has suffered as a result of
the eviction nor to offset against Parbhoe's claims the amount of such losses.

                                       14

<PAGE>

         The Company entered into a Stock Purchase and Sale Agreement dated
February 21, 2005, with a local Surinamese businessman for the sale of all of
its shares of capital stock in GTL for $500,000. The Company has received
$200,000 of such purchase price to date and has been informed by the buyer that
the remaining balance will be paid within the next 2 weeks.

         The Company believes that its current cash available on December 31,
2004 together with the proceeds it has and expects to receive from the sale of
GTL stock and the Sakhalin property will provide sufficient cash to continue in
business and to seek new opportunities in the gaming industry for at least the
next 12 months.

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

ITEM 3.      CONTROLS AND PROCEDURES

         An evaluation of the Company's disclosure controls and procedures (as
defined in Exchange Act Rules 13(a) - 15(e) and 15(d) - 15(e)) as at the end of
the fiscal quarter on December 31, 2004, show such controls and procedures to be
adequate. As a result of the termination of operations in Suriname, the
consequent reduction in personnel and the relocation of its management and
administrative staff, the Company is currently reevaluating the controls and
procedures of its discontinued operations.

                                       15
<PAGE>

PART II.  OTHER INFORMATION

ITEM 1.       LEGAL PROCEEDINGS

         See (Note D) "Commitments and contingencies" to the financial
statements included herein for a description of litigation pending in Suriname.

ITEM 5.       OTHER INFORMATION

         In connection with the preparation of this Form 10-QSB, the Company has
determined estimates of the charges that it will incur in connection with the
termination of its operations in Suriname as described in the report on Form 8-K
filed February 25, 2005. As set forth in "Note E" to the financial statements
and as described in Item 2, Management's Discussion and Analysis, the Company
has set forth herein an estimate of the amount or range of amounts of the
charges that will result from future expenditures related to its exit plan from
Suriname and the impairment of the assets involved in the Suriname operation.

ITEM 6.       EXHIBITS AND REPORTS

         (a)      Exhibits:

         31.1     Certification of principal executive officer pursuant to Rule
                  15d-14(a).*
         31.2     Certification of principal financial officer pursuant to Rule
                  15d-14(a).*
         32.1     Certification of Chief Executive Officer pursuant to 18 U.S.C
                  Section 1350.*
         32.2     Certification of Chief Financial Officer pursuant to 18 U.S.C.
                  Section 1350.*

         * Filed herewith

                                   SIGNATURES

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


                                  LOTTERY & WAGERING SOLUTIONS INC.
                                           (Registrant)



Date:  March 24, 2005             By:  /s/ Dallas R. Dempster
                                      ------------------------------------------
                                           Chief Executive Officer and President


                                  By:  /s/ Miles R. Greenberg
                                      ------------------------------------------
                                           Chief Financial Officer