SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

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

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

For the quarterly period ended December 31, 2001

[  ]     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)

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

                             9130 S. Dadeland Blvd.
                                   Suite 1602
                                 Miami, FL 33156
                             ----------------------
                    (Address of Principal Executive Offices)

                                 (305) 670-3838
                                ----------------
              (Registrant's Telephone Number, Including Area Code)

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

     Check whether the registrant (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.

                             Yes [X]       No. [ ]

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

              Class                          Outstanding at February 7, 2002
          --------------                     -------------------------------
   Common Stock, $.001 par value                      888,106 shares



<PAGE>

                        LOTTERY & WAGERING SOLUTIONS INC.

                               INDEX TO FORM 10-Q

PART I.       FINANCIAL INFORMATION

Item 1.       Financial Statements

Condensed Consolidated Balance Sheets as of June 30, 2001
         and December 31, 2001 (unaudited)....................................1

Condensed Consolidated Statements of Operations for the Three and Six Months
         ended December 31, 2001 (unaudited) and the Three and
         Six Months ended December 31, 2000 (unaudited).......................2

Condensed Consolidated Statements of Cash Flows for the Three and Six Months
         ended December 31, 2001 (unaudited) and the Three and
         Six Months ended December 31, 2000 (unaudited).......................3

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

Item 2.       Management's Discussion and Analysis of
              Financial Conditions and Results of Operations..................9

PART II. OTHER INFORMATION

Item 2.       Changes in Securities and Use of Proceeds......................15

Item 3.       Quantitative and Qualitative Disclosure about Market Risk......15

Item 6.       Exhibits and Reports on Form 8-K...............................15

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



                                       i

<PAGE>
                          PART I. FINANCIAL INFORMATION

Item 1.       Financial Statements

                        LOTTERY & WAGERING SOLUTIONS INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                          June 30,            December 31,
ASSETS                                                                      2001                  2001
------                                                                 --------------      ----------------
                                                                                             (Unaudited)
<S>                                                                    <C>                  <C>
CURRENT ASSETS:
Cash and cash equivalents                                                 $  701,873           $ 1,028,152
Prepaid and other current assets                                              76,362               136,495
Notes receivable - EMSI                                                      342,000               573,750
                                                                       --------------      ----------------
     Total current assets                                                  1,120,235             1,738,397

Sakhalin development costs                                                 2,100,000             2,100,000
Property, equipment and leasehold improvements, net                        4,745,197             4,378,664
Other assets                                                                  39,447                68,675
                                                                       --------------      ----------------
     TOTAL                                                                $8,004,879           $ 8,285,736
                                                                       ==============      ================

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Accounts payable and accrued expenses                                     $  838,324            $  793,317
Income tax payable                                                           162,000               417,000
Notes and loans payable - current                                            130,800                13,500
Investor deposits and other                                                  330,000               480,000
                                                                       --------------      ----------------
    Total current liabilities                                              1,461,124             1,703,817
                                                                       --------------      ----------------

Notes payable - long term                                                    515,900               515,900
                                                                       --------------      ----------------
Deferred income taxes                                                        287,884               131,119
                                                                       --------------      ----------------
Minority interest in consolidated subsidiary                                 984,429             1,296,286
                                                                       --------------      ----------------
Commitments and contingencies

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; 907,000 shares and
     888,106 shares issued and
     outstanding at June 30, 2001 and December 31, 2001,
     respectively                                                                907                   888
Additional paid-in capital                                                47,697,910            47,679,027
Accumulated deficit                                                      (42,943,275)          (43,041,300)
                                                                       --------------      ----------------
     Total stockholders' equity                                            4,755,542             4,638,615
                                                                       --------------      ----------------
     TOTAL                                                                $8,004,879            $8,285,736
                                                                       ==============      ================
</TABLE>

See notes to condensed consolidated financial statements.


<PAGE>

                        LOTTERY & WAGERING SOLUTIONS INC.

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                   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,
                                                       2000                2001                2000                2001
                                                  ----------------    ----------------    ----------------    ----------------
<S>                                               <C>                 <C>                 <C>                 <C>
REVENUES                                           $  1,270,884         $ 1,827,505        $   2,703,047         $3,348,445

OPERATING EXPENSES:
Marketing, General and administrative                 1,270,393           1,247,693            2,613,897          2,527,247
                                                  ----------------    ----------------    ----------------    ----------------

INCOME FROM OPERATIONS                                      491             579,812               89,150            821,198

OTHER INCOME (EXPENSE):
Interest expense                                        (54,914)            (66,255)            (114,021)           (97,056)
                                                  ----------------    ----------------    ----------------    ----------------
    Total other income (expense)                        (54,914)            (66,255)            (114,021)           (97,056)
                                                  ----------------    ----------------    ----------------    ----------------

Foreign income tax                                      (20,672)           (284,762)             (89,724)          (510,311)
                                                  ----------------    ----------------    ----------------    ----------------

NET INCOME (LOSS) BEFORE                                (75,095)            228,795             (114,595)           213,831
    MINORITY INTEREST

Minority interest                                       (51,640)           (199,652)            (132,711)          (311,857)
                                                  ----------------    ----------------    ----------------    ----------------

NET INCOME (LOSS)                                    $ (126,735)        $    29,143            $(247,306)       $   (98,025)
                                                  ================    ================    ================    ================

NET INCOME (LOSS) PER SHARE OF COMMON STOCK:
          Basic                                      $    (0.15)        $      0.03            $   (0.30)       $     (0.11)
                                                  ================    ================    ================    ================
          Diluted                                    $    (0.15)        $      0.03            $   (0.30)       $     (0.11)
                                                  ================    ================    ================    ================

WEIGHTED AVERAGE NUMBER OF COMMON SHARES AND
    COMMON SHARE EQUIVALENTS OUTSTANDING
          Basic                                         834,072             888,106              825,203            889,133
                                                  ================    ================    ================    ================
          Diluted                                       834,072             958,777              825,203            889,133
                                                  ================    ================    ================    ================
</TABLE>

See notes to condensed financial statements.

                                       2
<PAGE>


                        LOTTERY & WAGERING SOLUTIONS INC.

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                        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,
                                                            2000              2001              2000             2001
                                                       ----------------  ----------------  ---------------  ---------------
<S>                                                    <C>                <C>                <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss)                                        ($126,735)         $  29,143          ($247,306)      $  (98,025)
Adjustments:
  Compensation expense in connection with issuance of
         options and warrants                               13,000                                13,000
  Depreciation and amortization                            193,080            192,777            385,424          385,695
  Consulting services provided for common stock             72,000                                72,000
  Minority interest                                         51,640            199,652            132,711          311,857
  Deferred income taxes                                     23,000           (179,265)            46,500         (156,765)
  Gain on common stock redemption                                                                                 (18,900)
  Changes in current assets and current liabilities:
     Prepaid expenses and other current assets              25,155             40,983             22,003          (60,133)
     Accounts payable and accrued expenses                 (52,910)            74,516            (23,547)         209,990
                                                        -----------    ---------------    ---------------    --------------
Net cash provided by operating activities                  182,894            357,806            382,449          573,719
                                                        -----------    ---------------    ---------------    --------------

CASH FLOWS FROM INVESTING ACTIVITIES:
Property, equipment and leasehold improvements              (1,419)            (5,263)           (31,782)         (19,162)
Funds used for other assets                                                    (9,998)                            (29,228)
Funds used for notes receivable                                               (99,500)                           (231,750)
                                                        -----------    ---------------    --------------    ---------------
Net cash used by investing activities                       (1,419)          (114,761)           (31,782)        (280,140)
                                                        -----------    ---------------    --------------    ---------------

CASH FLOWS FROM FINANCING ACTIVITIES:
Investor deposits                                                                                                 150,000
Repayments of notes payable                                (89,683)           (54,540)          (183,733)        (117,300)
                                                        -----------    ---------------    --------------    ---------------
Net cash provided (used) by financing activities           (89,683)           (54,540)          (183,733)          32,700
                                                        -----------    ---------------    --------------    ---------------

NET INCREASE IN CASH
    AND CASH EQUIVALENTS                                    91,792            188,505            166,934          326,279

CASH AND CASH EQUIVALENTS,
    BEGINNING OF PERIOD                                    290,701            839,647            215,559          701,873
                                                        -----------    ---------------    ---------------    --------------

CASH AND CASH EQUIVALENTS,
    END OF PERIOD                                         $382,493        $ 1,028,152           $382,493      $ 1,028,152
                                                        ===========    ===============    ==============    ===============
</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 AND THE COMPANY:

         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 consolidated financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q. Accordingly, they do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for fair presentation have been included. Operating results for the
three and six-month periods ended December 31, 2001 are not necessarily
indicative of the results that may be expected for any interim period or the
year ending June 30, 2002.

         The balance sheet at June 30, 2001 has been derived from the audited
financial statements at that date, but does not include all the information and
footnotes required by generally accepted accounting principles for complete
financial statements. For further information, refer to the audited financial
statements and footnotes thereto included in the Form 10-K for the year ended
June 30, 2001 filed by the Company.

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


(NOTE B) THE COMPANY:

          LWSI was incorporated under the laws of the State of Delaware on March
6, 1996 as Conserver Corporation of America and changed its name on December 2,
1997 to CCA Companies Incorporated. Subsequently, on October 1, 2001, the
Company changed its name to Lottery & Wagering Solutions Inc. The current active
business of the Company is (i) operation of a gaming casino in Suriname 50%
owned by the Company, and (ii) pursuing 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 will acquire all of the stock of Emerging Market Solutions, Inc.,
("EMSI") the primary 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.
Completion of such an acquisition would result in the stockholders of EMSI

                                       4

<PAGE>

initially owning more than seventy percent of the outstanding common stock of
the Company. Authorization for the Company to pursue the transaction and
purchase the stock of EMSI was received at a Special Meeting of Stockholders
held on September 26, 2001.

       Since March 1999 the Suriname casino, owned by Suriname Leisure Company
A.V.V. ("SLC"), an Aruba joint venture entity 50% owned by the Company, has been
operating in permanent quarters in the hotel where previously SLC maintained
temporary facilities for its casino operation. The Company's 100% owned Delaware
subsidiary, Dorsett Hotel & Resorts, Inc. ("Dorsett") manages the casino.

         The Sakhalin Project is currently in development and requires the
Company to obtain substantial financing to progress further. Despite numerous
discussions and several agreements the Company has not yet been able to obtain
the necessary financing. The Company is continuing to seek financing. The
Sakhalin Project involves plans to develop a $140 million dollar 450- room
hotel/casino complex on a ten-acre site in the center of the City of
Yuzhno-Sakhalinsk with further development proposed at a nearby ski mountain.
The related casino as planned would initially have 70 tables and 350 slot
machines.

         The Company has entered into a nonbinding letter of intent to acquire
certain assets of Applied Gaming Solutions of Canada Inc. ("AGS"), for cash and
shares of the Company. AGS operates an on-line lottery in Hanoi, Vietnam, and
the acquisition of such assets is intended to provide a strategic advantage for
the Company in marketing the on-line system to be developed by EMSI.

(NOTE C) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

         [1]  Principles of consolidation

          The accompanying consolidated financial statements include the
accounts of LWSI and its subsidiaries (collectively, the "Company").
Inter-company transactions and balances have been eliminated in consolidation.

          SCC is currently generating losses. Accordingly, the minority interest
held is not reflected in the financial statements. The minority shareholders are
not obligated to fund SCC's losses.


         [2]  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 expenses during the
reporting period. Actual results could differ from those estimates.

                                       5

<PAGE>

         [3]  Impairment of Long-Lived Assets

         The Company adopted the Statement of Financial Accounting Standards
(SFAS) No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed of." 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 Company evaluates the recoverability of long-lived assets by
measuring the carrying amount of the assets against the estimated undiscounted
future cash flows associated with them. At the time such evaluations indicate
that the future undiscounted cash flows of certain long-lived assets are not
sufficient to recover the carrying value of such assets, the assets are adjusted
to their fair values.

         [4]  Foreign currency translation

         The functional currency for the Company's subsidiaries, SGTI and SLC,
is the United States dollar. All assets and liabilities, materially all
contracts, transactions and normal business activities have been transacted,
conducted, negotiated and recorded in U.S. dollars. It is the Company's position
that the operations of the Company are not integrally connected to the
currencies of Cyprus and Suriname.

         Pursuant to Financial Accounting Standards Board Statement No. 52,
"Foreign Currency Translation" (FAS 52), the Company's Russian subsidiary is
situated in a highly inflationary economy. Accordingly, the Company's Russian
subsidiary's functional currency will be the U.S. dollar.

         The financial statements for the Company's subsidiaries outside the
U.S. have been translated to U.S. Dollars using a methodology consistent with
Statement of Financial Accounting Standards (SFAS) No. 52, Foreign Currency
Translation. Assets and liabilities are translated to United States Dollars at
the rates prevailing on the balance sheet dates and the statements of operations
have been translated from the functional currencies to U.S. Dollars using
average exchange rates for the applicable years.


         [5]  Property, Equipment and Leasehold Improvements

         Property and equipment is recorded at cost. Depreciation and
amortization is computed by the straight line method based on the estimated
useful lives (3-5 years) of the related assets. Leasehold improvements are
amortized over the shorter of the life of the asset or the lease.

         [6]  Income Taxes

         For the purpose of these 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.

                                       6

<PAGE>

         Until June 30, 1998 the Company, for tax purposes, did not have any
operations and therefore no net operating loss. All of the expenses incurred to
that date were pre-operating and accordingly were capitalized. Subsequent to the
commencement of operations capitalized expenses are being amortized over sixty
months.

         [7]  Earnings Per Share

         Effective December 31, 1997, the Company adopted Financial Accounting
Standards (SFAS) No. 128, "Earnings Per Share," which simplifies the computation
of earnings per share requiring the restatement of all prior periods.

         Net loss per share of common stock is based on the weighted average
number of common shares outstanding during each period. Diluted loss per share
of common stock is computed on the basis of the weighted average number of
common shares and diluted securities outstanding. Dilutive securities having an
anti-dilutive effect are excluded from the calculation.

          [8]  Stock Based Compensation

         In October 1995, FASB issued SFAS No. 123, "Accounting for Stock Based
Compensation." SFAS No. 123 establishes a fair value method for accounting for
stock-based compensation plans either through recognition or disclosure. The
Company did not adopt the fair value based method for employees but instead
discloses the pro forma effects of the calculation required by the statement.

         [9]  Recent Accounting Standards and Pronouncements

         In September 2000, the FASB issued SFAS No. 140, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities -
A Replacement of FASB No. 125". This statement provides accounting and reporting
standards for transfers and servicing of financial assets and extinguishments of
liabilities. Under these standards, after a transfer of financial assets, an
entity recognizes the financial and servicing assets it controls and the
liabilities it has incurred, derecognizes financial assets when control has been
surrendered, and derecognizes liabilities when extinguished. This statement
provides consistent standards for distinguishing transfers of financial assets
that are sales from transfers that are secured borrowings. This statement is
effective for transfers and servicing of financial assets and extinguishments of
liabilities occurring after March 31, 2001. The Company does not expect that the
adoption of SFAS No. 140 will have a material impact on its results of
operations, financial position or cash flows.

         In June 2001, the FASB issued SFAS No. 141, SFAS No. 142 and SFAS No.
143. SFAS No. 141, "Business Combinations" is effective for all business
combinations initiated after June 30, 2001 and addresses the financial
accounting and reporting for business combinations. SFAS 141 supersedes APB
Opinion No. 16, Business Combinations, and FASB Statement No. 38 Accounting for
Preacquisition Contingencies of Purchased Enterprises. The Company's financial
reporting or presentation is not materially affected by the adoption of SFAS
141.

                                       7

<PAGE>

         SFAS No 142, "Goodwill and Other Intangible Assets" addresses the
financial accounting and reporting for acquired goodwill and other intangible
assets and supersedes APB Opinion No. 17, Intangible Assets SFAS No. 142 and is
required to be applied for fiscal years beginning after December 15, 2001.

         SFAS No. 143, "Accounting for Asset Retirement Obligations" addresses
the financial accounting and reporting for obligations associated with the
retirement of tangible long-lived assets and the associated asset retirement
costs. SFAS No. 143 is effective for financial statements issued for fiscal
years beginning after June 15, 2002.

         The Company's financial reporting and presentation is not expected to
be materially affected by the adoption of SFAS No. 142 and 143.


(NOTE D)  SLC INCOME TAXES AND IMPORT DUTIES:

         In 1999, SLC requested that the Government of Suriname (the
"Government") grant it certain concessions regarding the imposition of taxes and
import duties under the Suriname Investment Act. To date the Government has not
granted the Company any relief. The Company is continuing to pursue the
concessions but feels that at this time, the chance of a favorable ruling is
remote.

         In June 2000, SLC provided for income taxes payable to the Government
based on a tax rate of 50% of the net taxable income since inception based on
the Suriname Hazard Games Act 1962. The Company made no provisions for income
tax or duties prior to this date based on opinions from Counsel regarding the
tax concessions that they believe should have been granted.

         The Ministry of Finance is trying to impose value added tax ("VAT") tax
on slot machines. According to the Company's legal counsel, they have not
completed their study and deliberations prior to reporting to parliament on the
issue. At this time the Company cannot quantify the amount payable, if any, for
VAT on slot machines.


(NOTE E)  COMMITMENTS AND CONTINGENCIES:

Rental Commitments

         Through the year ended June 30, 2000, SLC paid a base rent of $16,667
per month, before any escalations, as required by its original lease on the
premises which the Suriname casino operates. Suriname law regulates the maximum
amount of rent that a landlord can charge and in July 2000, the Company
determined that it was being charged in excess of fair rental value. Based on a
Government validated valuation of the maximum rent chargeable under Suriname law
on the space occupied by the casino, the Company commenced paying a reduced
rental of approximately $3,200 per month and is currently attempting to recover
through litigation the excess rent previously charged of approximately $315,000.
The landlord is contesting the valuation and the amount of the requested refund.

                                       8

<PAGE>

LITIGATION AND ARBITRATION

         The Company anticipates that it will be subjected to various lawsuits,
claims and proceedings of a nature considered normal to its business.

MARITIME SERVICES CORPORATION ("MSC")

         In September 2000, MSC brought an action in the United States District
Court of Oregon seeking damages in the amount of $200,250 plus interest. MSC
claims that the Company issued shares of its Common Stock in 1998 having a value
of $200,250 as partial payment for construction work performed and that the
Company was obligated to buy the shares back for the same value.

         The Company has denied all material allegations of the complaint and
believes that it has no liability for the claim.

LONG-TERM NOTE PAYABLE

         Parbhoe, the Company's joint venture partner in SLC, has made a demand
on SLC for the repayment in full of the remaining balance of the $600,000 loan
it made to LWSI on September 3, 1998. This is being rigorously defended in the
Suriname Courts on the basis that, among other defenses, based on the loan's
terms, the loan is not repayable on demand but on a pro-rata basis along with
loans that are outstanding to LWSI and additionally, the loan is owed by LWSI
and not SLC.


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

         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, 2001
                     to Three Months Ended December 31, 2000

         Net Income (Loss). The Company generated net income of $29,143, or
$0.03 per share, for the three months ended December 31, 2001, as compared to a
loss of $126,735, or $0.15 per share, for the three months ended December 31,
2000. The better results were primarily due to the increase in revenue and
profits generated by the Suriname casino.

                                       9

<PAGE>

         Revenues. During the three months ended December 31, 2000, the Company
had revenues of $1,270,884 generated from its Suriname casino operations. For
the three months ended December 31, 2001, the Company recorded revenues of
$1,827,505 from the Suriname casino. The 44% increase in revenues during the
current period resulted from both improved economic conditions in Suriname
coupled with marketing programs initiated by the Company designed to increase
activity and wagering at the casino.

         Marketing, General and Administrative Expenses. Marketing, General and
administrative expenses were $1,270,393 for the three months ended December 31,
2000 consisting primarily of $921,342 related to operating expenses of the
Suriname casino and $349,051 for general corporate overhead. For the three
months ended December 31, 2001, marketing, general and administrative expenses
were $1,247,693 of which $905,082 related to operating expenses of the Suriname
casino and $342,611 for general corporate overhead. The current period's
Suriname casino operating expenses decreased by $16,260 or 2% as the Company was
able to hold expenses in line with last year even though revenues increased by
44% over the prior year's period as a result of the casino's increased activity.
This was made possible due to the cost cutting measures implemented by
management during the current period in an effort to increase profitability
which were partially offset by certain increased expenses incurred as a result
of the casino's increased activity. General corporate overhead was held in line
with the prior year's period.

         Interest Expense. For the three months ended December 31, 2000, net
interest expense was $54,914 and was $66,255 for the three months ended December
31, 2001. The interest expense during the current and prior periods is primarily
attributable to loans made by the Company's Suriname joint venture partner
during 1998 and 1999 for the completion of the Suriname casino construction.

         Minority Interest. The Company has management control of the Suriname
casino joint venture company in which it owns a 50% equity interest. As such,
the 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. During the three months ended December 31, 2000, the joint
venture company generated net after tax income of $103,280 after deduction for
management fees and interest expenses earned by the Company and eliminated in
consolidation. As a result, a minority interest equal to 50% of such amount or
$51,640 was recorded by the Company. For the three months ended December 31,
2001, the joint venture company generated net after tax income of $399,304 after
deduction for management fees and interest expenses earned by the Company and
the Company recorded a minority interest equal to 50% of such amount, or
$199,652.

         Income Taxes. During the three months ended December 31, 2000, SLC
accrued for income taxes of $20,672 payable to the Suriname Government based on
a tax rate of 50% of the net taxable income pursuant to the Suriname Hazard
Games Act 1962. During the three months ended December 31, 2001, SLC accrued for
income taxes of $228,795 payable to the Suriname Government. The increased tax
in the current year is primarily attributable to the higher revenues experienced
by the Suriname casino resulting in an increased taxable income.


                                       10

<PAGE>
                Comparison of Six Months Ended December 31, 2001
                      to Six Months Ended December 31, 2000

         Net Loss. The Company incurred a loss of $247,306, or $0.30 per share,
for the six months ended December 31, 2000, as compared to a loss of $98,025, or
$0.11 per share, for the six months ended December 31, 2001. The decrease in
loss during the current period was primarily due to the increase in revenue and
profits generated by the Suriname casino.

         Revenues. For the six months ended December 31, 2000, the Company had
revenues of $2,703,047 from the operations of the Suriname casino compared with
$3,348,445 for the six months ended December 31, 2001. The 24% increase in
revenues during the current period resulted from both improved economic
conditions in Suriname coupled with marketing programs initiated by the Company
designed to increase activity and wagering at the casino.

         Marketing, General and Administrative Expenses. Marketing, General and
administrative expenses were $2,613,897 for the six months ended December 31,
2000 consisting of $1,876,956 related to operating expenses of the Suriname
casino and $736,941 for general corporate overhead. For the six months ended
December 31, 2001, marketing, general and administrative expenses were
$2,527,247 of which $1,755,374 related to operating expenses of the Suriname
casino and $771,873 for general corporate overhead. The current period's
Suriname casino operating expenses decreased by 6% as a result of cost cutting
measures implemented by management in an effort to increase profitability. These
cost reductions were partially offset by certain increased expenses incurred as
a result of the casino's increased activity. General corporate overhead was held
in line with the prior year's period with only a slight 5% increase.

          Interest Expense. For the six months ended December 31, 2000, net
interest expense was $114,021 compared to $97,056 for the six months ended
December 31, 2001. The decrease during the current period was attributable to
the reduction in the balance remaining on certain short-term loans. The interest
expense during the current and prior periods is primarily attributable to loans
made by the Company's Suriname joint venture partner during 1998 and 1999 for
the completion of the Suriname casino construction.

         Minority Interest. The Company has management control of the Suriname
casino joint venture company in which it owns a 50% equity interest. As such,
the 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. During the six months ended December 31, 2000, the joint
venture company generated net after tax income of $265,422 after deduction for
management fees and interest expenses earned by the Company and eliminated in
consolidation. As a result, a minority interest equal to 50% of such amount or
$132,711 was recorded by the Company. For the six months ended December 31,
2001, the joint venture company generated net after tax income of $623,714 after
deduction for management fees and interest expenses earned by the Company and
the Company recorded a minority interest equal to 50% of such amount, or
$311,857.

         Income Taxes. During the six months ended December 31, 2000, SLC
accrued for income taxes of $89,724 payable to the Suriname Government based on
a tax rate of 50% of the net taxable income pursuant to the Suriname Hazard
Games Act 1962. During the six months ended December 31, 2001, SLC accrued for

                                       11

<PAGE>

income taxes of $510,311 payable to the Suriname Government. The increased tax
in the current year's period is attributable to the higher revenues experienced
by the Suriname casino during the current period coupled with an adjusted method
for computing taxable income as provided by the Suriname tax authority both
resulting in an increased taxable income.

LIQUIDITY AND CAPITAL RESOURCES

         Since August, 1999 LWSI'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. Parbhoe owns the hotel
where the casino has its leased premises, and is the Company's 50% joint
venturer in SLC. Dorsett, the Company's 100% owned Delaware subsidiary, manages
SLC and the casino. Cash payments from SLC to LWSI, Parbhoe or their affiliates
are made by SLC, under the management control of Dorsett, according to a cash
allocation priority established under the Suriname Casino Agreement. That
priority is roughly described below. From the monthly cash profits generated by
the casino, payments were initially made for certain construction loans from
Parbhoe and for the balance of costs of the casino construction, all of which,
were fully paid by August 1999. After August 1999 payments of net cash flow were
made to Dorsett for the accrued management fees owed, and thereafter for
interest and some principal on the Company's loans net of amounts which the
Company directed SLC to pay to Parbhoe on account of loans which Parbhoe had
made to the Company. After all such total loans are repaid, cash is to be
distributed according to the 50% - 50% ownership interests of the joint
venturers. There have been no such distributions and none are expected until the
substantial amounts of loans due to the joint venturers are repaid. Loans to SLC
(and interest thereon) from the Company at September 30, 2001 were approximately
$1,738,000, and the Company owed to Parbhoe approximately $516,000. Since
January 2000 about 15% of the distributable cash flow of the casino has been
paid to Parbhoe (as directed on behalf of the Company) or set aside for payment,
and 85% to the Company and Dorsett. The Company believes that payments were and
are in accordance with the Suriname Casino Agreement, Parbhoe loan agreement and
applicable law.

         Beginning in June 2000 the casino's revenues were adversely affected by
increased local competition from other casinos, by a declining local economy and
by worsening conversion value of the local currency. The total paid to the
Company was approximately $300,000 per month from September 1999 through May
2000. However, during the fifteen months from June 2000 to August 2001 revenues
had declined by approximately 25% to 30% from the fifteen month period ending
May 2000, and for this and other reasons payments to the Company had declined to
about $150,000 per month. During the past six months, the economy in Suriname
has started to improve and revenues have begun to increase. Since August 2001,
payments to the Company have increased to approximately $185,000 per month.

         Suriname has price controls on rents. The Company has been advised that
the rent for the casino required by the lease exceeds the lawful rent by
approximately $14,000 per month. SLC has sued Parbhoe in Suriname to recover

                                       12

<PAGE>

approximately $314,000 in past overpayments. The Company is unable to predict
the outcome of that suit, but has been advised by counsel that SLC's position
has substantial merit. Any cash recovery or reduction in rent would be subject
to the cash payment priorities described above.

         In June 2000 the Suriname government asserted that an exemption from
its 50% tax on local corporate income provided for by the Investment Tax Act did
not apply to casino income. As a consequence it assessed what the Company
believed were arbitrarily determined amounts of tax. In June 2000 the Company
paid an initial assessment of $200,000 against past tax and penalties for
calendar years ended 1998 and 1999 and subsequently paid an additional $110,000
as tax for calendar year 2000. In April 2001, SLC together with its Suriname
accountants submitted tax reports to the Suriname government for the calendar
years ended 1998, 1999 and 2000. The aggregate amount of tax expense calculated
was approximately $375,000 payable for periods from inception through December
31, 2000. In December 2001, the government made a determination that the
aggregate tax expense for the three calendar years of 1998, 1999 and 2000 would
be $715,000. At December 31, 2001, after making a partial payment to the
government in December, the balance owed by SLC for this three year period was
140,000.

         The Sakhalin Project is currently generating cash losses for the
Company. Any future development of that project will require substantial
financing. Despite numerous discussions and several agreements the Company has
not yet been able to obtain the necessary financing. The Company is currently
able to provide only what it believes is the minimum cash funding required to
maintain the prospects of the project. The other shareholders in SCC are not
required either to fund SCC's losses, the continued prospects of the project, or
the development of the project. If financing is not obtained, the Company might
be forced to abandon the project and to sell its rights for whatever price or
other recovery that could be obtained. The Company is not able to quantify what
price or recoveries might be obtained. If the Company obtains financing and
proceeds with the Sakhalin Project it will have to plan and establish an
organization and infrastructure that is not currently in place, and will have to
hire other specialists.

         In the period May 1, 2001 through July 31, 2001, the Company received
advances of approximately $480,000 from certain persons who have agreed to
subscribe to purchase common stock of the Company. Such funds were used to make
advances to EMSI. The acquisition of EMSI described above, and the
implementation of the on-line lottery and sports betting system, will require
significant funding by the Company which is not currently available. The Company
is actively seeking investors to purchase common stock or other securities of
the Company in order to provide the funds for these projects.

         On September 30, 2001 the Company had $1,028,000 in cash or cash
equivalents on hand. The Company believes that the distribution of profits from
the Suriname casino will provide adequate cash flow to maintain the Company's
current operations for the next 12 months.

                                       13
<PAGE>

SUBSEQUENT EVENTS






OTHER

         Certain statements in this Quarterly Report on Form 10-Q are "forward
looking statements" within the meaning of the Private Securities Litigation
Reform Act of 1995 and involve known and unknown risks, uncertainties and other
factors that may cause the Company's actual results, performance or achievements
to be materially different form the results, performance or achievements
expressed or implied by the forward looking statement. Factors that impact such
forward looking statements include, among others, risk factors included in the
Company's Annual Report on Form 10-K for the year ended June 30, 2001 and other
filings with the Securities and Exchange Commission.




                                       14

<PAGE>

                           PART II. OTHER INFORMATION


ITEM 2.       CHANGES IN SECURITIES AND USE OF PROCEEDS

         On October 1, 2001, the Company effected a twenty into one reverse
split of all of its outstanding shares of Common Stock, par value $.001 per
share.

          The following information is furnished pursuant to Item 701(a)-(c) of
Regulation S-K in connection with unregistered securities sold or issued by the
Company:

                 N/A


ITEM 3.      QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

The Company held no material market risk sensitive financial instruments or
interest therein, and held none at December 31, 2001. The Company's loans,
payables, or receivables to or from others (including loans, payables or
receivables to or from its subsidiaries or joint ventures) and the interest
thereon, are all expressed as dollar obligations and payable in dollars.

However, the Company's routine daily foreign operations are usually conducted in
local foreign currencies. The Company is exposed to foreign currency exchange
rate risk between the time foreign gaming revenue or other revenues are received
and the time they are converted into dollars. The Company has not entered into
any exchange rate protection arrangements.


ITEM 6.           EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits

                   N/A

(b)      Reports on Form 8-K

                   N/A



                                       15

<PAGE>

                                   SIGNATURES

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


                                 LOTTERY & WAGERING SOLUTIONS INC.



Dated:  February 7, 2002         By:  /s/ Dallas Dempster
                                     ------------------------------------------
                                          Dallas Dempster
                                          Chief Executive Officer and President


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


                                       16