Commitments and Contingencies

12 Months Ended

Dec. 31, 2012

Commitments and Contingencies.

Commitments and Contingencies

NOTE 6 - Commitments and Contingencies

Lease Obligations- The Company is obligated under several financial leases expiring through 2017.  Future aggregate minimum annual rental payments under all of these leases for the lesser of five years or until their expiration dates are as follows:

Year ending December 31, (amounts in thousands)
2013	$	149
2014	129
2015	58
2016	34
2017	34

Rent expense under operating leases was approximately $87 and $121 for the years ended December 31, 2012 and 2011, respectively.

The Company’s slot machines are subject to operating leases, which range from 5 years to indefinite terms, depending on the vendors, and all include a free annual replacement per machine, if requested.

Employment Agreements- The Company’s July 1, 2005 employment agreement with its Chief Executive Officer (“CEO”), Mr. Rami S. Ramadan, absent the intervention of either party by September 30th of each year, renewed automatically for another calendar year ending December 31, 2013.  In addition to a perpetually renewable employment term of one year absent the intervention of either party, the agreement provides for annual compensation, plus participation in the Company’s benefits programs and equity incentive plans.  Annual compensation of $450 will be paid in 2013, pursuant to the evergreen renewal terms of said employment agreement, excluding any bonus awards that may be or have been granted in 2012 at the discretion of the Board of Directors.

Pursuant to the renewal of the employment agreement with Mr. Ramadan in July 2005, Mr. Ramadan was also granted seven-year options to purchase 175,000 shares of Common Stock, all of which have expired in July 2012.  Also, pursuant to this July 2005 employment agreement, upon reaching designated earnings per share targets, Mr. Ramadan will be granted 75,000 restricted shares of the Company’s Common Stock in 25,000 share allotments.  None of the restricted shares have been vested to date.

On February 4, 2007, Mr. Ramadan was granted seven year options to purchase 50,000 shares of Common Stock.  As of December 31, 2012 and 2011, all options have vested.  The exercise price of these options was set at $3.75 per share, the closing price on the date of grant.

Further, on October 23, 2007, pursuant to the Company’s 2004 Equity Incentive Plan, Mr. Ramadan was granted seven year options to purchase 125,000 shares of Common Stock.  As of December 31, 2012 and 2011, these options have all been vested.  The exercise price of all these options is set at $4.85 per share, the closing stock price on October 23, 2007, and escalated to $5.05 on its first anniversary.  On May 26, 2009, the Company’s Board of Directors froze the exercise price at $5.05 for the entire grant.

The weighted average exercise price of all of Mr. Ramadan’s vested options was $4.68 and $4.34 at December 31, 2012 and 2011, respectively.  No vested options have been exercised by Mr. Ramadan as of December 31, 2012.

401 (k) and Profit Sharing Plan - The Company maintains a contributory 401(k) plan and a profit sharing plan.  These plans are for the benefit of all eligible U.S. corporate employees, who may have up to 17% of their salary withheld, not to exceed the maximum federally allowed amount.  The Company makes a voluntary employer-matching contribution of 60 cents for each employee dollar contributed, which totaled $44 and $43 for the year 2012 and 2011, respectively.

Taxing Jurisdiction-The Czech Republic currently has a number of laws related to various taxes imposed by governmental authorities.  Beginning in 2012, applicable taxes include gaming tax, VAT, and payroll (social) taxes and corporate income tax.  In December 2011, the Czech parliament passed sweeping gaming tax legislation, which was signed by the Czech President into law.  The new gaming tax law took effect beginning January 1, 2012.  Tax declarations, together with other legal compliance areas (for example, customs and currency control matters) are subject to review and investigation by a number of authorities, which are enabled by law to impose fines, penalties and interest charges, and, ultimately, create tax risks in the Czech Republic.  Management believes that it has adequately provided for its Czech tax liabilities.

Legal Matters-The Company may be, from time to time, a party to various legal proceedings and administrative actions, all arising from the ordinary course of business (see also Note 9, “Advance Receivable” below, regarding the Hungarian proceedings.  The Company is not currently involved in any material legal proceeding nor was it involved in any material litigation during the year ended December 31, 2012.