OVERVIEW

During the second quarter of 2004, we continued to operate the Skill Poker system and launched a new product, a horse racing prediction software known as DailyHorse.com.

We continued to operate our business through our three subsidiary companies:
Casino Marketing S.A., a Costa Rican registered company which performs technical management for our licensees; 564448 BC Ltd., a British Columbia registered company which performs administrative management services to LegalPlay Entertainment Inc , Casino Marketing; and Skill Poker.com Inc., a Washington state registered company incorporated January 29, 2003, through which the patent pending Skill Poker system was developed and through which the Skill Poker system is operated.

In the past three months, we focused our resources on our patent pending technology in relation to the game of Skill Poker and the development of the DailyHorse product. We have been operating the two sites and will continue in our efforts to market the systems.

In the first quarter, we announced a potential transaction involving the acquisition of a Nevada based corporation known as GamblingVision Group Inc. GamblingVision owns a worldwide license to a UK based technology which permits the manipulation of digital video to become fully interactive online. On April 1, 2004, we announced we would not be proceeding with the transaction.

Given the nature of the legislative climate in the United States with respect to the regulation or prohibition of online gaming through such potential laws as the Kyl Bill and the Bacchus Bill, management has been of the opinion that skill based gaming has the potential to become a significant market to online gaming. During the course of the second quarter, it became apparent that regulation of online gaming is something which may be difficult to achieve and little progress has been made with respect to banning offshore operators from accepting citizens of the U.S. as customers. This has negatively impacted our business model to the extent that during the second quarter we began reevaluating our business and announced on May 31, 2004 that we would be considering other business opportunities such as precious metals exploration and will be seeking potential purchasers of the Skill Poker system which would include the intellectual property, software licenses and trademarks related to Skill Poker. There can be no assurance we will be successful at identifying a mining property or other opportunity suitable for our business nor can there be assurances that we will conclude a transaction relating to the sale of the Skill Poker subsidiary and related assets.

During the second quarter, we also announced that our common shares have been listed on the Berlin Stock Exchange.

The litigation in relation to the domain name dispute relating to Poker.com continued during the second quarter.

Our future revenues are dependent on concluding a transaction suitable for us to continue as a going concern and which brings an immediate source of working capital through debt, equity or a combination thereof.

Our mandate for the foreseeable future is to find a suitable opportunity for us to continue as a viable business and to identify suitable candidates for the acquisition of our Skill Poker subsidiary.

We are in immediate need of further working capital and are considering options with respect to financing in the form of debt, equity or a combination thereof, and may also consider disposing of assets as a method through which to raise additional working capital.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

We have adopted various accounting policies that govern the application of accounting principles generally accepted in the United States of America in the preparation of our financial statements. Our significant accounting policies are described in the footnotes to our financial statements at December 31, 2003.
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes.

Although these estimates are based on our knowledge of current events and actions it may undertake in the future, they may ultimately differ from actual results. Certain accounting policies involve significant judgments and assumptions by us which have a material impact on our financial condition and results. Management believes its critical accounting policies reflect its most significant estimates and assumptions used in the presentation of our financial statements. Our critical accounting policies include revenue recognition, accounting for stock based compensation and the evaluation of the recoverability of long lived and intangible assets. We do not have off-balance sheet arrangements, financings, or other relationships with unconsolidated entities or other persons, also known as "special purpose entities".

SIX-MONTH PERIOD ENDED JUNE 30, 2004

RESULTS OF CONTINUING OPERATIONS


The following table sets forth for the periods indicated selected information
from LegalPlay Entertainment Inc.'s consolidated financial statements of
operations:


                                    Three Months         Three Months           Six Months             Six Months
                                   Ended June 30        Ended June  30        Ended June  30         Ended June 30
                                        2004                 2003                  2004                   2003

Tournament Income               $              2,000 $                   - $              6,352 $                      -
Expenses                                     107,131               250,430              254,457                  474,240
Income (Loss) before                       (117,530)             (250,430)            (292,189)                (474,240)
 discontinued operations
Income (Loss) from discontinued                    -               377,080                    -                  672,485
operations

Net Income (loss) during the $ (117,530) $ 126,650 $ (292,189) $ 198,245 period

RESULTS OF CONTINUING OPERATIONS

NET SALES. Net sales for the six months ended June 30, 2004 were $6,352 compared to $0 for the six months ended June 30, 2003. This results from tournament fees which became activities in fourth quarter of 2003.

We expect to enhance our revenues through the consideration of other business opportunities. There can be no assurances we will be able to identify any business opportunities which will benefit us. These are forward-looking statements, particularly as related to our business plans of the company, within the meaning of Section 27A of the Securities Act of 1933 and Sections 21E of the Securities Exchange Act of 1934 and are subject to the safe harbor created by these sections. Actual results may differ materially from our expectations and estimates.

EXPENSES. Operating expenses for the six months ended June 30, 2004 were $254,457 compared to $474,240 at June 30, 2003. The major expense items for the six months ended June 30, 2004 were for wages for $82,556, as compared to $84,247 for the six months ended June 30, 2003.

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PROVISION FOR INCOME TAXES. No tax provision was made for the three and six months ended June 30, 2004.

FINANCIAL CONDITION AND LIQUIDITY

On June 30, 2004, our net working capital deficit was $78,974 compared to a net working capital of $154,841 at December 31, 2003. At June 30, 2004 the Company had cash and cash equivalents totaling $5,174 compared to $209,517 at December 31, 2003. We are in immediate need of further working capital and are considering options with respect to financing in the form of debt, equity or a combination thereof, and may also consider disposing of assets as a method through which to raise additional working capital.

Net cash used for operating activities for the six months ended June 30, 2004 was $204,993. The decrease in cash was mainly due to developing and marketing the Skill Poker system, legal fees relating to the URL dispute and general office operations.

Net cash used for investing activities for the six months ended June 30, 2004 was $350 for the acquisition of the computer and disposition of assets for the Skill Poker.

Net cash provided by financing activities for six months ended June 30, 2004 was $1,000. The increase resulted from stock options exercised.