10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)
x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the Quarterly Period Ended: June 30, 2018
	OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

Commission file number: 0-23588

GAMING PARTNERS INTERNATIONAL CORPORATION

(Exact name of registrant as specified in its charter)

NEVADA	88-0310433
(State or other jurisdiction	(I.R.S. Employer Identification No.)
of incorporation or organization)
3945 West Cheyenne Avenue,
North Las Vegas, Nevada	89032
(Address of principal executive offices)	(Zip Code)

(702) 384-2425

(Registrant’s telephone number, including area code)

None

(Former name, former address, and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that registrant was required to submit and post such files).  Yes x  No ¨

Indicate by check mark whether the registrant is a large accelerated filer an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ¨	Accelerated filer ¨
Non-accelerated filer ¨	Smaller reporting company x
(Do not check if a smaller reporting company)
Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨  No x

The number of shares outstanding of each of the registrant’s classes of common stock as of August 2, 2018, the latest practicable date, was 7,954,523 shares of Common Stock.

GAMING PARTNERS INTERNATIONAL CORPORATION

QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 2018

TABLE OF CONTENTS

PART I.	FINANCIAL INFORMATION	1
ITEM 1.	FINANCIAL STATEMENTS	1
	CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)	1
	CONDENSED CONSOLIDATED INCOME STATEMENTS (unaudited)	2
	CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited)	3
	CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (unaudited)	4
	CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)	5
	NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)	6
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	16
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	24
ITEM 4.	CONTROLS AND PROCEDURES	24
PART II.	OTHER INFORMATION	25
ITEM 1.	LEGAL PROCEEDINGS	25
ITEM 1A.	RISK FACTORS	25
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	25
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	25
ITEM 4.	MINE SAFETY DISCLOSURES	25
ITEM 5.	OTHER INFORMATION	25
ITEM 6.	EXHIBITS	26
SIGNATURES		27

PART I. FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)

(in thousands, except share amounts and par value)

	June 30,			December 31,
	2018			2017
ASSETS
Current Assets:
Cash and cash equivalents	$	14,957		$	14,064
Accounts receivable, net		8,446			7,415
Inventories		14,340			15,118
Prepaid expenses		916			1,290
Other current assets		2,761			2,836
Total current assets		41,420			40,723
Property and equipment, net		23,038			24,933
Goodwill		10,292			10,292
Intangible assets, net		1,647			1,676
Investment		383			411
Deferred income tax assets		831			675
Inventories, non-current		2,044			2,453
Other assets, non-current		3,427			2,240
Total assets	$	83,082		$	83,403
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable	$	5,126		$	4,743
Accrued liabilities		5,003			6,779
Customer deposits and deferred revenue		5,122			3,020
Current portion of long-term debt		1,514			1,401
Income taxes payable		514			693
Total current liabilities		17,279			16,636
Long-term debt		2,466			5,265
Other liabilities, non-current		183			186
Total liabilities		19,928			22,087
Commitments and contingencies - see Note 10
Stockholders' Equity:
Preferred stock, authorized 10,000,000 shares, $0.01 par value, none issued and outstanding		-			-
Common stock, authorized 30,000,000 shares, $0.01 par value, 8,245,506 and 7,954,523 shares issued and outstanding, respectively, as of June 30, 2018, and 8,223,077 and 7,932,094 shares issued and outstanding, respectively, as of December 31, 2017		82			82
Additional paid-in capital		19,411			19,272
Treasury stock at cost: 290,983 shares		(2,263	)		(2,263	)
Retained earnings		46,816			44,718
Accumulated other comprehensive loss		(892	)		(493	)
Total stockholders' equity		63,154			61,316
Total liabilities and stockholders' equity	$	83,082		$	83,403

See notes to unaudited condensed consolidated financial statements.

1

CONDENSED CONSOLIDATED INCOME STATEMENTS

(unaudited)

(in thousands, except per share amounts)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2018		2017		2018			2017
Revenues	$	24,677	$	16,274	$	43,361		$	35,187
Cost of revenues		16,341		12,416		30,090			25,510
Gross profit		8,336		3,858		13,271			9,677
Marketing and sales		1,861		1,476		3,628			3,203
General and administrative		2,289		1,958		4,185			4,283
Research and development		1,040		348		2,043			658
Operating income		3,146		76		3,415			1,533
Other income (expense), net		104		9		(162	)		(83	)
Income before income taxes		3,250		85		3,253			1,450
Income tax expense		745		36		746			470
Net income	$	2,505	$	49	$	2,507		$	980
Earnings per share:
Basic	$	0.32	$	0.01	$	0.32		$	0.12
Diluted	$	0.31	$	0.01	$	0.31		$	0.12
Weighted-average shares of common stock outstanding:
Basic		7,949		7,929		7,941			7,929
Diluted		8,020		8,058		8,026			8,058

See notes to unaudited condensed consolidated financial statements.

2

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited)

(in thousands)

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2018			2017		2018			2017
Net income	$	2,505		$	49	$	2,507		$	980
Other comprehensive income:
Foreign currency translation adjustment, net of tax		(849	)		909		(399	)		1,116
Total comprehensive income	$	1,656		$	958	$	2,108		$	2,096

See notes to unaudited condensed consolidated financial statements.

3

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(unaudited)

(in thousands, except share amounts)

													Accumulated
	Common Stock				Additional								Other
					Paid-In		Treasury			Retained			Comprehensive
	Shares		Amount		Capital		Stock			Earnings			Loss			Total
Balance at January 1, 2017		7,928,594	$	82	$	20,031	$	(2,263	)	$	42,044		$	(2,361	)	$	57,533
Net income		-		-		-		-			980			-			980
Common stock options exercised		3,500		-		35		-			-			-			35
Stock compensation expense		-		-		56		-			-			-			56
Foreign currency translation adjustment, net of tax		-		-		-		-			-			1,116			1,116
Balance at June 30, 2017		7,932,094	$	82	$	20,122	$	(2,263	)	$	43,024		$	(1,245	)	$	59,720
Balance at January 1, 2018		7,932,094	$	82	$	19,272	$	(2,263	)	$	44,718		$	(493	)	$	61,316
Impact of change in accounting policy		-		-		-		-			(409	)		-			(409	)
Net income		-		-		-		-			2,507			-			2,507
Common stock options exercised		22,429		-		139		-			-			-			139
Foreign currency translation adjustment, net of tax		-		-		-		-			-			(399	)		(399	)
Balance at June 30, 2018		7,954,523	$	82	$	19,411	$	(2,263	)	$	46,816		$	(892	)	$	63,154

See notes to unaudited condensed consolidated financial statements.

4

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(in thousands)

	Six Months Ended
	June 30,
	2018			2017
Cash Flows from Operating Activities
Net income	$	2,507		$	980
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of property and equipment		2,336			1,886
Amortization of intangible assets		124			128
(Recovery) provision for bad debt		(70	)		(322	)
Deferred income taxes		76			(397	)
Share based compensation expense		-			56
Gain on disposal of property and equipment		-			(9	)
Equity loss in affiliate		28			-
Change in operating assets and liabilities:
Accounts receivable		(962	)		4,049
Inventories		1,054			(4,026	)
Prepaid expenses and other current assets		413			(467	)
Other assets, non-current		(1,862	)		447
Accounts payable		326			3,383
Accrued liabilities		(1,561	)		(2,164	)
Customer deposits and deferred revenue		2,108			1,731
Income taxes payable		(178	)		85
Net cash provided by operating activities		4,339			5,360
Cash Flows from Investing Activities
Proceeds from sale of property and equipment		-			9
Purchase of licensing rights		-			(100	)
Purchase of equity method investment		-			(451	)
Capital expenditures		(593	)		(1,798	)
Net cash used in investing activities		(593	)		(2,340	)
Cash Flows from Financing Activities
Principal payments on long-term debt		(2,686	)		(673	)
Proceeds from exercise of stock options		139			35
Cash paid for exercise of stock appreciation right		(170	)		-
Net cash used in financing activities		(2,717	)		(638	)
Effect of exchange rate changes on cash		(136	)		192
Net increase in cash and cash equivalents		893			2,574
Cash and cash equivalents, beginning of period		14,064			10,604
Cash and cash equivalents, end of period	$	14,957		$	13,178
Supplemental disclosures of cash flow information:
Cash paid for interest	$	125		$	122
Cash paid for income taxes, net of refunds	$	10		$	637
Supplemental disclosure of non-cash investing and financing activities:
Property and equipment acquired through accounts payable, accrued and non-current other liabilities	$	142		$	886

See notes to unaudited condensed consolidated financial statements.

5

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Note 1. Nature of Business and Significant Accounting Policies

Organization and Nature of Business

Gaming Partners International Corporation (GPIC or the Company) is headquartered in North Las Vegas, Nevada. Our business activities include the manufacture and sale of casino currencies, playing cards, table accessories, table layouts, dice, gaming furniture, roulette wheels, and radio frequency identification (RFID) readers and software, all of which are used with casino table games such as blackjack, poker, baccarat, craps, and roulette.

The Company has three operating subsidiaries: Gaming Partners International USA, Inc. (GPI USA) (including GPI Mexicana S.A. de C.V. (GPI Mexicana), our maquiladora manufacturing operation in Mexico, and GPI USA Blue Springs, our manufacturing facility in Missouri); Gaming Partners International SAS (GPI SAS); and Gaming Partners International Asia Limited (GPI Asia).  Our subsidiaries have the following distribution and product focus:

• GPI USA sells in the United States, Canada, the Caribbean, and Latin America. GPI USA sells our full product line, with most of the products manufactured in either San Luis Rio Colorado, Mexico, or Blue Springs, Missouri. The remainder is either manufactured in France or purchased from United States vendors. We warehouse inventory in San Luis, Arizona; Blue Springs, Missouri; and North Las Vegas, Nevada. We have sales offices in North Las Vegas, Nevada; Atlantic City, New Jersey; Gulfport, Mississippi; and Blue Springs, Missouri.

• GPI SAS sells primarily in Europe and Africa out of its office in Beaune, France. GPI SAS predominantly sells casino currencies, including both American-style, known as chips, and European-style, known as plaques and jetons. Most of the products sold by GPI SAS are manufactured in France, with the remainder manufactured in Mexico.

• GPI Asia, located in Macau S.A.R., China, distributes our full product line in the Asia-Pacific region. GPI Asia also sells table layouts that it manufactures in Macau S.A.R.

We are one of the gaming industry’s leading manufacturers and suppliers of casino table game equipment. We custom manufacture and supply casino currencies, playing cards, table layouts, gaming furniture, table accessories, dice, roulette wheels, and RFID readers and software, all of which are used with casino table games such as blackjack, poker, baccarat, craps, and roulette. Our products fall into two categories – non-consumable and consumable. Non-consumable products consist of casino currencies, gaming furniture, and RFID solutions. These products typically have a useful life of several years or longer. Sales of non-consumables are typically driven by casino openings, expansions, and rebranding, as well as replacements in the normal course of business. Consumable products consist of playing cards, table accessories, table layouts, and dice. These products each have a useful life that ranges from several hours for playing cards and dice to several months for layouts. Casinos tend to buy these products annually if not more frequently.

Significant Accounting Policies

Basis of Consolidation and Presentation. The accompanying unaudited condensed consolidated financial statements include the accounts of GPIC and its wholly-owned subsidiaries GPI SAS, GPI USA, and GPI Asia. All material intercompany balances and transactions have been eliminated in consolidation. We use the equity method to account for investments in companies if the investment provides the ability to exercise significant influence, but not control, over operating and financial policies of the investee. Our proportionate share of the net income or loss of these companies is included in consolidated net earnings. Judgment regarding the level of influence over each equity method investment includes considering key factors such as our ownership interest or participation in policy-making decisions and material intercompany transactions. In the event we no longer have the ability to exercise significant influence over an equity-method investee, we would discontinue accounting for the investment under the equity method.

The accompanying unaudited condensed consolidated financial statements of the Company and its subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) for interim financial information and in the form prescribed by the Securities and Exchange Commission (SEC), and do not include all of the information and notes required by U.S. GAAP for complete financial statements. These statements should be read in conjunction with our annual audited consolidated financial statements and related notes included in our most recent Annual Report on Form 10-K for the fiscal year ended December 31, 2017, filed with the SEC on March 23, 2018.

6

These unaudited condensed consolidated financial statements, in the opinion of management, reflect only normal and recurring adjustments necessary for a fair presentation of results and cash flows for the interim periods presented. The results of operations for an interim period are not necessarily indicative of the results for any other interim period or a full fiscal year.

Recently Issued Accounting Standards and Not Yet Adopted. In January 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. These amendments eliminate Step 2 from the goodwill impairment test. The amendments are effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. The Company does not expect the adoption of this guidance to significantly impact the consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), to increase transparency and comparability among organizations by reporting lease assets and lease liabilities, both finance (capital) and operating leases, on the balance sheet and disclosing key information about leasing arrangements. For public companies, the updated guidance is effective for the financial statements issued for fiscal years beginning after December 15, 2018 (including interim periods within those fiscal years). Early adoption is permitted. The Company is currently evaluating the impact of adoption and will consult with accounting experts as needed to assist with the implementation of this standard. While the Company continues to evaluate the impact of this new standard on its consolidated financial statements, the Company currently expects the primary impact will be to record right-of-use assets and lease liabilities for existing operating leases in the consolidated balance sheets. The Company currently has $3.8 million in operating lease commitments and does not currently expect the adoption of this new standard to have a material impact on its consolidated results of operations or cash flows.

Recently Adopted Accounting Standards. On December 22, 2017, the SEC staff issued Staff Accounting Bulletin 118 (“SAB 118”), which provides guidance on accounting for the tax effects of the Tax Cuts and Jobs Act (“Tax Act”). SAB 118 was added to the FASB codification in March 2018 with the issuance of ASU 2018-05, Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118.

In accordance with the SAB 118 guidance, some of the income tax effects recorded by the Company in 2017 are provisional, including the one-time transition tax and the re-measurement of our deferred tax assets and liabilities. In addition, we are still evaluating the global intangible low-taxed income (GILTI) provisions of the Tax Act and their impact, if any, on our consolidated financial statements. The accounting for these income tax effects may be adjusted during 2018 as a result of our continuing analysis of the Tax Act; additional implementation guidance from the IRS, state tax authorities, the SEC, the FASB, or the Joint Committee on Taxation; and new information from domestic or foreign equity affiliates. As of June 30, 2018, the Company had not finalized its accounting and was still in the measurement period.

In March 2017, the FASB issued ASU 2017-17, Compensation — Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The amendments require that an employer report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The amendments are effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods. In the first quarter of 2018 the Company adopted this guidance. It had no significant impact to the consolidated financial statements.

In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. These amendments clarify the definition of a business. The amendments affect all companies and other reporting organizations that must determine whether they have acquired or sold a business. The amendments are effective for public companies for annual periods beginning after December 15, 2017, including interim periods within those periods. In the first quarter of 2018 the Company adopted this guidance retrospectively. It had no significant impact to the consolidated financial statements.

7

In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory. These amendments require an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. This guidance indicates that the former exception to income tax accounting that requires companies to defer the income tax effects of certain intercompany transactions would apply only to intercompany inventory transactions. That is, the exception no longer applies to intercompany sales and transfers of other assets (e.g., property and equipment or intangible assets). Under the former exception, income tax expense associated with intra-entity profits in an intercompany sale or transfer of assets was eliminated from earnings. Instead, that cost was deferred and recorded on the balance sheet (e.g., as a prepaid asset) until the assets left the consolidated group. Similarly, the entity was prohibited from recognizing deferred tax assets for the increases in tax bases due to the intercompany sale or transfer. A modified retrospective basis of adoption was required for this guidance. As a result, a cumulative-effect adjustment of approximately $0.4 million has been recorded to accumulated deficit on January 1, 2018, in connection with this adoption. This cumulative-effect adjustment relates to the prepaid expense associated with intra-entity transfers of property and equipment included in prepaid expenses and other current assets in the accompanying condensed consolidated balance sheet at December 31, 2017.

In May 2014, the FASB issued ASU 2014-09, Revenues from Contracts with Customers (Topic 606). This guidance applies to any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards. This guidance supersedes existing revenue recognition guidance, including most industry-specific guidance, as well as certain related guidance on accounting for contract costs. To further assist with adoption and implementation of ASU 2014-09, the FASB issued the following ASUs:

•ASU 2016-08 (Issued March 2016) - Principal versus Agent Consideration (Reporting Revenue Gross versus Net)

•ASU 2016-10 (Issued April 2016) - Identifying Performance Obligations and Licensing

•ASU 2016-12 (Issued May 2016) - Narrow-Scope Improvements and Practical Expedients

•ASU 2016-20 (Issued December 2016) - Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers

The guidance provides for a five-step model to determine the revenue recognized for the transfer of goods or services to customers that reflects the expected entitled consideration in exchange for those goods or services. It also provides clarification for principal versus agent considerations and identifying performance obligations. In addition, the FASB introduced practical expedients related to disclosures of remaining performance obligations, as well as other amendments to guidance on collectability, non-cash consideration and the presentation of sales and other similar taxes. Financial statement disclosures required under the guidance will enable users to understand the nature, amount, timing, judgments, and uncertainty of revenue and cash flows relating to customer contracts. The two permitted transition methods under the guidance are the full retrospective approach or a cumulative effect adjustment to the opening retained earnings in the year of adoption (cumulative effect approach). In the first quarter of 2018, we adopted this guidance using a modified retrospective method. It had no significant impact to the consolidated financial statements. Regarding the contract acquisition cost component of the guidance, the Company’s analysis supports use of the practical expedient when recognizing expense related to incremental costs incurred to acquire a contract, as the recovery of such costs is completed in less than one year’s time. Additionally, incremental costs to obtain contracts have been immaterial to date. Accordingly, the Company does not expect any material changes to the timing of when it recognizes expenses related to contract acquisition costs.

Note 2. Revenue Recognition

The majority of our revenue is derived from selling and distributing manufactured table game equipment to the casino industry. We recognize revenue after we have completed all of the following steps:

- Identification of the contract, or contracts, with a customer

- Identification of the performance obligations in the contract

- Determination of the transaction price

- Allocation of the transaction price to the performance obligations in the contract

- Recognition of revenue when, or as, the Company satisfies a performance obligation

Determining whether these steps have been met may require us to make assumptions and exercise judgment that could significantly impact the timing and amount of revenue reported each period.

The majority of our contracts have a similar performance obligation which is the transfer of the individual goods ordered. The Company typically invoices the customer upon shipment. Depending on the size of the customer order we may require deposits that range from 30% to 100% of the total order.

On occasion, we may recognize revenue under a bill and hold arrangement. The transfer of ownership, and revenue recognition, occurs at the point the items are ready for physical delivery and the customer is notified – i.e. when the product is manufactured, completed, invoiced, and segregated from our other inventory so that it is not subject to being used to fill other orders. The customer must request a bill and hold arrangement, preferably in writing, and must commit to the purchase.

8

Under the RFID solutions product line, we may recognize revenue from entering into new arrangements which include software and/or multiple elements or deliverables, which include RFID equipment, embedded software licenses, and software maintenance services. In such cases, the Company accounts for individual performance obligations separately if they are distinct. The transaction price is allocated to the separate performance obligations on a relative standalone selling price basis. The Company determines the standalone selling prices based on the Company's overall pricing objectives, taking into consideration historical selling prices, market conditions, costs to provide certain services and other factors.

A portion of our revenue under RFID solutions is generated by new or existing software and hardware maintenance arrangements. Under these arrangements, customers pay in advance for the maintenance of the hardware or the software. As of June 30, 2018, the Company had contracts with unsatisfied performance obligations extending throughout 2020. Most of our contracts are for one year and renew on March 1^st of every year. The Company recognizes as revenue the amount billed over the length of the arrangement. The unrecognized portion of the amount billed is accounted for as deferred revenue. At June 30, 2018 and December 31, 2017, these amounts were $0.4 million and $0.1 million, respectively. For the three months ended on each of June 30, 2018 and 2017, we recognized $150,000 of revenue for software and hardware maintenance contracts. In each of the first six months of 2018 and 2017, we recognized $300,000 of revenue for software and hardware maintenance contracts.

The application of our revenue recognition policies and changes in our assumptions or judgments affect the timing and amounts of our revenues and costs, as well as deferred revenue.

Note 3. Cash and Cash Equivalents

We hold our cash and cash equivalents in various financial institutions in the countries shown below. Substantially all accounts have balances in excess of government-insured limits. The following table summarizes our holdings (in thousands):

	June 30, 2018		December 31, 2017
Macau S.A.R., China	$	6,101	$	2,517
United States (including Mexico)		5,839		4,936
France		3,017		6,611
Total	$	14,957	$	14,064

Note 4. Accounts Receivable

At June 30, 2018, and December 31, 2017, no casino customer accounted for 10% or more of our accounts receivable balance.

Note 5. Inventories

Inventories consisted of the following (in thousands):

	June 30, 2018		December 31, 2017
Raw materials	$	10,752	$	11,637
Work in progress		1,350		2,432
Finished goods		4,282		3,502
Total inventories	$	16,384	$	17,571

We classified a portion of our inventories as non-current because we do not expect this portion to be used within one year. The classification of our inventories on our unaudited condensed consolidated balance sheets was as follows (in thousands):

9

	June 30, 2018		December 31, 2017
Current	$	14,340	$	15,118
Non-current		2,044		2,453
Total inventories	$	16,384	$	17,571

Note 6. Property and Equipment

Property and equipment consisted of the following (in thousands):

	June 30, 2018			December 31, 2017
Land	$	669		$	669
Buildings and improvements		11,204			11,196
Equipment and furniture		40,696			40,714
Vehicles		407			408
Construction in progress		192			529
		53,168			53,516
Less accumulated depreciation		(30,130	)		(28,583	)
Property and equipment, net	$	23,038		$	24,933

Depreciation expense for the three months ended June 30, 2018 and 2017 was $1.3 million and $1.0 million, respectively. Depreciation expense for the six months ended June 30, 2018 and 2017 was $2.3 million and $1.9 million, respectively.

Note 7. Goodwill and Intangible Assets

We had goodwill of $10.3 million as of both June 30, 2018 and December 31, 2017.

Intangible assets consisted of the following (in thousands):

	June 30, 2018							December 31, 2017
	Gross Carrying Amount		Accum Amort			Net  Carrying Amount		Gross  Carrying  Amount		Accum  Amort			Net  Carrying  Amount		Estimated  Useful Life (Years)
Trademarks	$	1,711	$	(761	)	$	950	$	1,711	$	(700	)	$	1,011	10-15
Customer list		1,101		(508	)		593		897		(353	)		544	10-15
Patents		542		(537	)		5		542		(534	)		8	13-14
Other intangible assets		472		(373	)		99		472		(359	)		113	3-10
Total intangible assets	$	3,826	$	(2,179	)	$	1,647	$	3,622	$	(1,946	)	$	1,676

Amortization expense for intangible assets for the three months ended June 30, 2018 and 2017 was $62,000 and $65,000, respectively. Amortization expense for intangible assets for the six months ended June 30, 2018 and 2017 was $124,000 and $128,000, respectively. The increase in the gross carrying value of the customer list is a result of ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory. See Note 1 for more details.

Note 8. Debt

On June 26, 2015, the Company entered into a Credit Agreement with Nevada State Bank to borrow a combined $15.0 million, consisting of a $10.0 million seven-year term loan and a $5.0 million five-year revolving loan. The Company borrowed the full amount under the term loan and has not drawn on funds under the revolving loan. The term loan will mature on June 26, 2022, and the revolving loan will mature on June 26, 2020. The Credit Agreement contains customary representations, warranties, and events of default, and affirmative, negative and financial covenants. The covenants contain, among other things, limitations on the Company's and its subsidiaries' ability to merge, consolidate, dispose of assets, or incur liens or certain indebtedness. The Company is required to maintain a fixed charge coverage ratio greater than 1.15 to 1.00 and leverage ratio less than 3.00 to 1.00. The Company was in compliance with all financial covenants as of June 30, 2018.

10

Interest on funds borrowed under the term loan and the revolving loan are charged at a rate per annum equal to LIBOR, 2.1% at June 30, 2018, plus 2.25%. The term loan has a straight-line seven-year amortization schedule.

In June 2018, we made a $2.0 million early principal repayment against the outstanding term loan.

At June 30, 2018, estimated repayment obligations for the principal balance of long-term debt were as follows (in thousands):

Years Ending December 31,	Outstanding Debt
2018 (6 months)	$	749
2019		1,546
2020		1,613
2021		72
	$	3,980

Note 9. Stock Appreciation Rights Liability

At June 30, 2018 and at December 31, 2017 the stock appreciation rights liability was $0.6 million and $1.2 million, respectively. The $0.6 million decrease is due to the period change in the fair value of the outstanding rights for $0.4 million and the payment of $0.2 million of stock appreciation rights, offset by $40,000 for additional stock appreciation rights granted in 2018.

Note 10. Commitments and Contingencies

On January 26, 2018, the Company entered into global strategic agreements for development, licensing, and revenue sharing with both BrainChip Holdings Limited (ASX: BRN), a leading developer of software and hardware accelerated solutions for advanced artificial intelligence and machine learning applications, and Xuvi, LLC, developers of an immersive data analytics and automation platform. The companies plan to jointly develop products for worldwide deployment in casino currency security, table game operations, and player behavior applications. The terms require payments to BrainChip Holdings Limited and Xuvi, LLC of approximately $0.6 million and $0.7 million, respectively, and are contingent upon completion of project phases. GPI paid $1.0 million during the six months ended June 30, 2018.

Operating Lease Commitments

The Company has various operating leases that are used in the normal course of business. The operating leases consist of buildings and equipment that expire on various dates through 2023.

At June 30, 2018, minimum lease payment obligations were as follows (in thousands):

	Minimum
	Lease
Years Ending December 31,	Payments
2018 (6 months)	$	609
2019		944
2020		670
2021		634
2022		567
Thereafter		339
Total	$	3,763

Legal Proceedings and Contingencies

From time to time we are engaged in disputes and claims that arise in the normal course of business. We believe that the ultimate outcome of these proceedings will not have a material adverse impact on our condensed consolidated financial position or results of operations, but the outcome of these actions is inherently difficult to predict. There can be no assurance that we will prevail in any such litigation. Liabilities for material claims against us are accrued when a loss is considered probable and can be reasonably estimated. Legal costs associated with claims are expensed as incurred.

11

Note 11. Geographic and Product Line Information

We manufacture and sell casino table game equipment in one operating segment - casino table game products. Although the Company derives its revenues from a number of different product lines, the Company neither allocates resources based on the operating results from the individual product lines, nor manages each individual product line as a separate business unit. Our chief operating decision maker is our Chief Executive Officer (CEO). The CEO manages our operations on a consolidated basis to make decisions about overall corporate resource allocation and to assess overall corporate profitability. Our CEO is also the chief operating manager for each of our entities in the United States, France, and Macau S.A.R.; that is, the individual locations do not have “segment,” or “product line,” managers who report to our CEO.

The following tables present our revenue by geographic area (dollars in thousands):

	Three Months Ended
	June 30,
	2018				2017
Revenues
The Americas	$	16,940	68.6	%	$	13,560	83.3	%
Asia-Pacific		6,759	27.4	%		2,087	12.8	%
Europe and Africa		978	4.0	%		627	3.9	%
Total	$	24,677	100.0	%	$	16,274	100.0	%

	Six Months Ended
	June 30,
	2018				2017
Revenues
The Americas	$	30,807	71.0	%	$	27,823	79.1	%
Asia-Pacific		10,821	25.0	%		6,208	17.6	%
Europe and Africa		1,733	4.0	%		1,156	3.3	%
Total	$	43,361	100.0	%	$	35,187	100.0	%

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The following tables present our revenue by product line (dollars in thousands):

	Three Months Ended
	June 30,
	2018				2017
Casino currency without RFID	$	5,671	23.0	%	$	3,498	21.5	%
Casino currency with RFID		5,542	22.5	%		1,204	7.4	%
Total casino currency		11,213	45.5	%		4,702	28.9	%
Playing cards		6,084	24.6	%		6,181	38.0	%
Table accessories and other products		2,147	8.7	%		1,591	9.8	%
Table layouts		1,522	6.2	%		1,246	7.7	%
Gaming furniture		1,384	5.6	%		790	4.9	%
Dice		756	3.1	%		723	4.4	%
RFID solutions		506	2.0	%		317	1.9	%
Shipping		1,065	4.3	%		724	4.4	%
Total	$	24,677	100.0	%	$	16,274	100.0	%

	Six Months Ended
	June 30,
	2018				2017
Casino currency without RFID	$	9,518	22.0	%	$	7,393	21.0	%
Casino currency with RFID		9,318	21.5	%		3,962	11.3	%
Total casino currency		18,836	43.5	%		11,355	32.3	%
Playing cards		11,840	27.3	%		12,516	35.6	%
Table accessories and other products		3,611	8.3	%		3,484	9.9	%
Table layouts		2,971	6.9	%		2,548	7.2	%
Gaming furniture		1,869	4.3	%		1,542	4.4	%
Dice		1,441	3.3	%		1,424	4.0	%
RFID solutions		961	2.2	%		689	2.0	%
Shipping		1,832	4.2	%		1,629	4.6	%
Total	$	43,361	100.0	%	$	35,187	100.0	%

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For the six months ended June 30, 2018 and 2017, no customer accounted for 10% or more of revenues.

The following table presents our property and equipment by geographic area (in thousands):

Property and equipment, net:	June 30, 2018		December 31, 2017
United States	$	12,917	$	13,708
Mexico		5,678		6,851
France		3,999		3,936
Macau S.A.R., China		444		438
Total	$	23,038	$	24,933

The following table presents our intangible assets by geographic area (in thousands):

Intangible assets, net:	June 30, 2018		December 31, 2017
United States	$	1,522	$	1,634
Asia		125		42
Total	$	1,647	$	1,676

Note 12. Earnings Per Share

The weighted-average number of common shares outstanding used in the computation of basic and diluted earnings per share was as follows (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2018		2017		2018		2017
Weighted-average number of common shares outstanding - basic		7,949		7,929		7,941		7,929
Potential dilution from equity grants		71		129		85		129
Weighted-average number of common shares outstanding - diluted		8,020		8,058		8,026		8,058

At June 30, 2018, we had certain outstanding stock options to purchase common stock which had exercise prices greater than the average market price. These anti-dilutive options have been excluded from the computation of diluted earnings per share (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2018		2017		2018		2017
Outstanding anti-dilutive options		85		20		58		16

Note 13. Income Taxes

The Tax Cuts and Jobs Act (Tax Act) was enacted on December 22, 2017 and reduces the U.S. statutory federal corporate tax rate from 34% to 21%. The effective date of the tax rate change was January 1, 2018. As a result, we adjusted our annual effective tax rate for the three and six months ended June 30, 2018, as well as adjusted our U.S. net deferred tax asset balance at the lower rates. In the first six months of 2018, the Company did not record an expense or benefit related to the Tax Act.

We are subject to taxation in the U.S. and various states and foreign jurisdictions. With few exceptions, the tax years 2014 through 2017 remain open to examination under the statute of limitations by the U.S. Internal Revenue Service (IRS) and various states for GPIC and GPI USA and by the Government of the Macau Special Administrative Region - Financial Services Bureau for GPI Asia. Only tax years 2015 to 2017 remain open to examination under the statute of limitations by the French Tax Administration (FTA) for GPI SAS.

In 2015, the FTA started an examination of GPI SAS for tax years 2013 and 2012 that is on-going. In the first quarter of 2018, in connection with the FTA’s examination of GPI SAS for tax years 2013 and 2012, GPI paid €1.4 million to the FTA. While we were legally obligated to pay this amount, which represents the FTA’s calculation of the taxes owed, this payment does not represent a settlement nor the end of the examination and we are actively disputing the findings of the FTA.

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In addition to the on-going FTA examination of GPI SAS for tax years 2013 and 2012, the Company received notification in August 2017 of a federal income tax examination by the IRS for the 2015 tax year. The examination is substantially completed and as a result, at the end of June 30, 2018, we accrued $0.1 million of additional tax expense.

As of June 30, 2018, there was no change to the $0.3 million unrecognized tax benefits reported at December 31, 2017. The $0.1 million accrual in relation to the FTA examination is in addition to the unrecognized tax benefit amount.

Note 14. Subsequent Event

On August 1, 2018, the Company issued an 8-K announcing Gregory Gronau’s resignation as Chief Executive Officer, President, Director, Secretary, and Treasurer, effective September 21, 2018. Mr. Gronau’s resignation is for personal reasons, and not a result of any disagreement with the Company or its management. The Company and Mr. Gronau also entered in a consulting agreement pursuant to which Mr. Gronau will provide part-time consulting services to the Company following his date of departure until December 31, 2018 in exchange for payments of $10,000 per month.

To ensure continuity going forward, Chief Financial Officer and Chairman of the Board Alain M. Thieffry, age 62, will act as the Company’s Chief Executive Officer, President, Secretary, and Treasurer beginning September 21, 2018, until a successor is appointed.

The Company will begin an executive search for a new CEO and no changes in its goals or objectives are planned.

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

The following discussion is intended to assist in the understanding of our consolidated results of operations and our present financial condition and should be read in conjunction with our unaudited condensed consolidated financial statements and related notes and the other financial information included in this Quarterly Report on Form 10-Q. The unaudited condensed consolidated financial statements and the accompanying notes contain additional detailed information that should be referred to when reviewing this material. Statements in this discussion may be forward-looking. Such forward-looking statements involve risks and uncertainties that could cause actual results to differ significantly from those expressed. See Item 1A. “Risk Factors,” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2017, filed with the SEC on March 23, 2018.

For a more extensive overview and information on our products, as well as general information, see Item 1. “Business” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2017, filed with the SEC on March 23, 2018.

Overview of Our Business

Gaming Partners International Corporation, a Nevada corporation, is headquartered in North Las Vegas, Nevada. The Company was formed in 2002 through a reverse merger between Paul-Son Gaming and Bourgogne et Grasset. GPIC has three operating subsidiaries: Gaming Partners International USA, Inc. (GPI USA) (including GPI Mexicana S.A. de C.V. (GPI Mexicana), our maquiladora manufacturing operation in Mexico, and GPI USA Blue Springs, our manufacturing facility in Missouri); Gaming Partners International SAS (GPI SAS); and Gaming Partners International Asia Limited (GPI Asia).  Our subsidiaries have the following distribution and product focus:

• GPI USA sells in the United States, Canada, the Caribbean, and Latin America. GPI USA sells our full product line, with most of the products manufactured in either San Luis Rio Colorado, Mexico, or Blue Springs, Missouri. The remainder is either manufactured in France or purchased from United States vendors. We warehouse inventory in San Luis, Arizona; Blue Springs, Missouri; and North Las Vegas, Nevada. We have sales offices in North Las Vegas, Nevada; Atlantic City, New Jersey; Gulfport, Mississippi; and Blue Springs, Missouri.

• GPI SAS sells primarily in Europe and Africa out of its office in Beaune, France. GPI SAS predominantly sells casino currencies, including both American-style, known as chips, and European-style, known as plaques and jetons. Most of the products sold by GPI SAS are manufactured in France, with the remainder manufactured in Mexico.

• GPI Asia, located in Macau S.A.R., China, distributes our full product line in the Asia-Pacific region. GPI Asia also sells table layouts that it manufactures in Macau S.A.R.

We are one of the gaming industry’s leading manufacturers and suppliers of casino table game equipment. We custom manufacture and supply casino currency, with multiple security and design options, playing cards, table layouts, gaming furniture, table accessories, dice, and roulette wheels. We also provide multiple radio frequency identification (RFID) technologies including low- and high-frequency RFID casino currency, RFID solutions for casino currency (consisting of low- and high-frequency RFID casino currency readers, antennas, casino currency authentication software, casino currency inventory software applications, and software maintenance services). Our products and services are used with casino table games such as blackjack, poker, baccarat, craps, and roulette. Our products fall into two categories – non-consumable and consumable. Non-consumable products consist of casino currencies, gaming furniture, and RFID solutions. These products typically have a useful life of several years or longer. Sales of non-consumables are typically driven by casino openings, expansions, and re-brandings, as well as replacement in the normal course of business. Consumable products consist of playing cards, table layouts, dice, and table accessories. These products each have a useful life that ranges from several hours for playing cards and dice to several months for layouts. Casinos tend to buy these products annually if not more frequently.

The majority of our products are specifically designed and produced to meet our customers’ requirements, whether they are related to use, branding, aesthetic appeal, security, or anti-counterfeiting features. We believe our ability to produce products with a variety of styles and features, in combination with years of reliable delivery, enhance our competitive position. Our strategy is to be the exclusive supplier of table game products for every new casino. Through this strategy, revenues are generated both from the initial sale and replenishment of consumable products.

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Historically, we have experienced significant fluctuations in quarterly results primarily due to large, discrete currency orders as a result of casino openings, casino expansions, or large replacement orders.

Our backlog, which reflects signed orders scheduled to be delivered over the following twelve months, was as follows at June 30, 2018 and 2017 (in millions):

	GPI USA			GPI Asia			GPI SAS			Total
June 30, 2018	$	14.2	million	$	6.9	million	$	0.4	million	$	21.5	million
June 30, 2017	$	11.5	million	$	14.4	million	$	0.3	million	$	26.2	million

Outlook

Our backlog of signed orders through June 30, 2019 was $21.5 million. The decrease in backlog is primarily due to the timing of receiving confirmed orders in Asia. We anticipate winning additional business, particularly in the Asia market due to the number of planned casino openings and expansions in the region. However, there is always uncertainty surrounding the timing of casino openings and the number of tables to be allotted to each new casino, which will impact both the amount of revenue we recognize and the timing of revenue recognition.

As previously disclosed in a Form 8-K filed with the SEC on January 31, 2018, we entered into global licensing and development agreements with BrainChip Holdings Limited and Xuvi, LLC. We plan to jointly develop products to provide a table management solution that would combine visioning technology and immersive data analytics with our RFID technology to better secure table currency, increase fraud protection, improve table productivity, and provide data for player behavior applications. GPI’s initial commitment to BrainChip Holdings Limited and Xuvi, LLC totals $1.3 million. Due to positive customer response, we plan to commit a minimum of $0.5 million in the second half of the year to develop product enhancements and speed up product development.

In prior quarters we reported we had made progress in resolving difficulties arising from the rapid expansion of our playing cards manufacturing facility in Blue Springs, MO. It was our belief margins had stabilized and would improve over time. However, the first six months of 2018 were disappointing, as lower revenue and higher fixed costs reduced margins and profitability. We continue to work diligently to remedy the issues at the facility. However, it may be several quarters before we return to acceptable levels of performance and profitability.

Financial and Operational Highlights

For the second quarter of 2018, our revenues were $24.7 million, an increase of $8.4 million, or 51.6%, compared to revenues of $16.3 million for the same period of 2017. For the second quarter of 2018, our net income was $2.5 million, an increase of $2.5 million compared to net income of $49,000 for the same period in 2017.

For the first six months of 2018, our revenues were $43.4 million, an increase of $8.2 million or 23.2%, compared to revenues of $35.2 million for the same period of 2017. For the first six months of 2018, our net income was $2.5 million, an increase of $1.5 million, or 155.8%, compared to net income of $1.0 million for the same period of 2017.

The increase in our revenues and net income for the three months ended June 30, 2018 was primarily due to an increase in casino currency sales, table accessories and furniture, partially offset by an increase in research and development expenses. The increase in our revenues and net income for the six months ended June 30, 2018 was primarily due to an increase in casino currency sales, partially offset by an increase in research and development expenses.

Other Matters

See the discussion under “Contractual Obligations and Commercial Commitments” in Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Quarterly Report on Form 10-Q.

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CRITICAL ACCOUNTING ESTIMATES

Our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q, while unaudited, have been prepared in accordance with U.S. GAAP. Financial statement preparation requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and disclosure of contingent assets and liabilities. The accompanying unaudited condensed consolidated financial statements are prepared using the same critical accounting estimates discussed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017, filed with the SEC on March 23, 2018. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

RESULTS OF OPERATIONS

The following tables summarize selected items from our unaudited condensed consolidated income statements (dollars in thousands) and as a percentage of revenues:

	Three Months Ended
	June 30,								Period-to-Period
	2018				2017				Change
Revenues	$	24,677	100.0	%	$	16,274	100.0	%	$	8,403	51.6	%
Cost of revenues		16,341	66.2	%		12,416	76.3	%		3,925	31.6	%
Gross profit		8,336	33.8	%		3,858	23.7	%		4,478	116.1	%
Selling, administrative, and research and development		5,190	21.0	%		3,782	23.2	%		1,408	37.2	%
Operating income		3,146	12.8	%		76	0.5	%		3,070	4039.5	%
Other income, net		104	0.4	%		9	0.1	%		95	1055.6	%
Income before income taxes		3,250	13.2	%		85	0.6	%		3,165	3723.5	%
Income tax expense		745	3.0	%		36	0.2	%		709	1969.4	%
Net income	$	2,505	10.2	%	$	49	0.4	%	$	2,456	5012.2	%

	Six Months Ended
	June 30,										Period-to-Period
	2018					2017					Change
Revenues	$	43,361		100.0	%	$	35,187		100.0	%	$	8,174		23.2	%
Cost of revenues		30,090		69.4	%		25,510		72.5	%		4,580		18.0	%
Gross profit		13,271		30.6	%		9,677		27.5	%		3,594		37.1	%
Selling, administrative, and research and development		9,856		22.7	%		8,144		23.1	%		1,712		21.0	%
Operating income		3,415		7.9	%		1,533		4.4	%		1,882		122.8	%
Other expense, net		(162	)	(0.4	)%		(83	)	(0.2	)%		(79	)	95.2	%
Income before income taxes		3,253		7.5	%		1,450		4.2	%		1,803		124.3	%
Income tax expense		746		1.7	%		470		1.3	%		276		58.7	%
Net income	$	2,507		5.8	%	$	980		2.9	%	$	1,527		155.8	%

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The following tables present certain data by geographic area (dollars in thousands) and as a percentage of revenues:

	Three Months Ended
	June 30,								Period-to-Period
	2018				2017				Change
Revenues
The Americas	$	16,940	68.6	%	$	13,560	83.3	%	$	3,380	24.9	%
Asia-Pacific		6,759	27.4	%		2,087	12.8	%		4,672	223.9	%
Europe and Africa		978	4.0	%		627	3.9	%		351	56.0	%
Total	$	24,677	100.0	%	$	16,274	100.0	%	$	8,403	51.6	%

	Six Months Ended
	June 30,								Period-to-Period
	2018				2017				Change
Revenues
The Americas	$	30,807	71.0	%	$	27,823	79.1	%	$	2,984	10.7	%
Asia-Pacific		10,821	25.0	%		6,208	17.6	%		4,613	74.3	%
Europe and Africa		1,733	4.0	%		1,156	3.3	%		577	49.9	%
Total	$	43,361	100.0	%	$	35,187	100.0	%	$	8,174	23.2	%

The following tables present our revenues by product line (dollars in thousands) and as a percentage of revenues:

	Three Months Ended
	June 30,								Period-to-Period
	2018				2017				Change
Casino currency without RFID	$	5,671	23.0	%	$	3,498	21.5	%	$	2,173		62.1	%
Casino currency with RFID		5,542	22.5	%		1,204	7.4	%		4,338		360.3	%
Total casino currency		11,213	45.5	%		4,702	28.9	%		6,511		138.5	%
Playing cards		6,084	24.6	%		6,181	38.0	%		(97	)	(1.6	)%
Table accessories and other products		2,147	8.7	%		1,591	9.8	%		556		34.9	%
Table layouts		1,522	6.2	%		1,246	7.7	%		276		22.2	%
Gaming furniture		1,384	5.6	%		790	4.9	%		594		75.2	%
Dice		756	3.1	%		723	4.4	%		33		4.6	%
RFID solutions		506	2.0	%		317	1.9	%		189		59.6	%
Shipping		1,065	4.3	%		724	4.4	%		341		47.1	%
Total	$	24,677	100.0	%	$	16,274	100.0	%	$	8,403		51.6	%

	Six Months Ended
	June 30,								Period-to-Period
	2018				2017				Change
Casino currency without RFID	$	9,518	22.0	%	$	7,393	21.0	%	$	2,125		28.7	%
Casino currency with RFID		9,318	21.5	%		3,962	11.3	%		5,356		135.2	%
Total casino currency		18,836	43.5	%		11,355	32.3	%		7,481		65.9	%
Playing cards		11,840	27.3	%		12,516	35.6	%		(676	)	(5.4	)%
Table accessories and other products		3,611	8.3	%		3,484	9.9	%		127		3.6	%
Table layouts		2,971	6.9	%		2,548	7.2	%		423		16.6	%
Gaming furniture		1,869	4.3	%		1,542	4.4	%		327		21.2	%
Dice		1,441	3.3	%		1,424	4.0	%		17		1.2	%
RFID solutions		961	2.2	%		689	2.0	%		272		39.5	%
Shipping		1,832	4.2	%		1,629	4.6	%		203		12.5	%
Total	$	43,361	100.0	%	$	35,187	100.0	%	$	8,174		23.2	%

Comparison of Operations for the Three and Six Months Ended June 30, 2018 and 2017

Revenues. For the three months ended June 30, 2018, our revenues were $24.7 million, an increase of $8.4 million, or 51.6%, compared to revenues of $16.3 million for the same period of 2017. The increase in revenues was primarily attributable to an increase in casino currency sales, table accessories and gaming furniture.

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For the six months ended June 30, 2018, our revenues were $43.4 million, an increase of $8.2 million, or 23.2%, compared to revenues of $35.2 million for the same period of 2017. The increase in revenues was primarily attributable to an increase in sales of all product lines, especially casino currency, partially offset by a decrease in playing card sales.

Cost of Revenues. For the three months ended June 30, 2018, cost of revenues was $16.3 million, an increase of $3.9 million, or 31.6%, compared to cost of revenues of $12.4 million for the same period in 2017. As a percentage of revenues, our cost of revenues decreased to 66.2% in 2018 compared to 76.3% in 2017.

For the six months ended June 30, 2018, cost of revenues was $30.1 million, an increase of $4.6 million, or 18.0%, compared to cost of revenues of $25.5 million for the same period in 2017. As a percentage of revenues, our cost of revenues decreased to 69.4% in 2018 compared to 72.5% in 2017.

The increase in cost of revenues as a percentage of revenues was driven by the same factors described under Revenues above and Gross Profit below.

Gross Profit. For the three months ended June 30, 2018, gross profit was $8.3 million, an increase of $4.5 million, or 116.1%, compared to gross profit of $3.9 million for the same period in 2017. As a percentage of revenues, our gross profit increased to 33.8% from 23.7%. The increase in gross profit was mainly due to an increase in casino currency sales, table accessories and furniture.

For the six months ended June 30, 2018, gross profit was $13.3 million, an increase of $3.6 million, or 37.1%, compared to gross profit of $9.7 million for the same period in 2017. As a percentage of revenues, our gross profit increased to 30.6% from 27.5%. The increase in gross profit was mainly due to an increase in casino currency sales.

Selling, Administrative, and Research and Development Expenses. The following table presents the selling, administrative, and research and development expenses (dollars in thousands) and as a percentage of revenues:

	Three Months Ended
	June 30,								Period-to-Period
	2018				2017				Change
Marketing and sales	$	1,861	7.5	%	$	1,476	9.1	%	$	385	26.1	%
General and administrative		2,289	9.3	%		1,958	12.0	%		331	16.9	%
Research and development		1,040	4.2	%		348	2.1	%		692	198.9	%
Total selling, administrative, and research and development	$	5,190	21.0	%	$	3,782	23.2	%	$	1,408	37.2	%

For the three months ended June 30, 2018, selling, administrative, and research and development expenses were $5.2 million, an increase of $1.4 million, or 37.2%, compared to selling, administrative, and research and development expenses of $3.8 million during the same period in 2017.

Marketing and sales expenses increased by $0.4 million, or 26.1%, during the second quarter of 2018 compared to the same period in 2017, primarily related to an increase in number of employees and compensation-related expenses.

General and administrative expenses increased by $0.3 million, or 16.9%, during the second quarter of 2018, compared to the same period in 2017. This is mainly due to increases of $0.2 million in compensation-related expenses for the increased number of employees and $0.3 million in bad debt accrual expenses, partially offset by a $0.2 million decrease in stock compensation-related expenses.

Research and development expenses for the three months ended June 30, 2018 increased by $0.7 million, or 198.9% compared to the same period in 2017. The increase is mainly due to payments made to BrainChip Holdings Limited and Xuvi, LLC for achieving certain milestones in our global licensing and development agreements described at “Outlook” in Part I, Item 2—“Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Quarterly Report on Form 10-Q.

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	Six Months Ended
	June 30,								Period-to-Period
	2018				2017				Change
Marketing and sales	$	3,628	8.4	%	$	3,203	9.1	%	$	425		13.3	%
General and administrative		4,185	9.6	%		4,283	12.1	%		(98	)	(2.3	)%
Research and development		2,043	4.7	%		658	1.9	%		1,385		210.5	%
Total selling, administrative, and research and development	$	9,856	22.7	%	$	8,144	23.1	%	$	1,712		21.0	%

For the six months ended June 30, 2018, selling, administrative, and research and development expenses were $9.9 million, an increase of $1.7 million, or 21.0% compared to selling, administrative, and research and development expenses of $8.1 million during the same period in 2017.

Marketing and sales expenses increased by $0.4 million, or 13.3%, during the first six months of 2018 compared to the same period in 2017, primarily due to an increase in number of employees and compensation-related expenses.

General and administrative expenses remained relatively unchanged during the first six months of 2018 compared to the same period in 2017. However, a $0.5 million decrease in stock compensation related expenses was partially offset by increases of $0.2 million in compensation-related expenses for the increased number of employees, $0.1 million in bad debt accrual expenses and $0.1 million in gaming license expenses.

Research and development expenses increased $1.4 million, or 210.5%, during the first six months of 2018 compared to the same period in 2017. The increase is mainly due to payments made to BrainChip Holdings Limited and Xuvi, LLC for achieving certain milestones in our global licensing and development agreements described at “Outlook” in Part I, Item 2—“Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Quarterly Report on Form 10-Q.

Other Income (Expense), net. The following tables present other income (expense) net, (dollars in thousands) and as a percentage of revenues:

	Three Months Ended
	June 30,										Period-to-Period
	2018					2017					Change
Interest income	$	22		0.1	%	$	-		0.0	%	$	22	.0	%
Interest expense		(62	)	(0.3	)%		(63	)	(0.4	)%		1	(1.6	)%
Gain on foreign currency transactions		94		0.4	%		74		0.5	%		20	27.0	%
Other income (expense), net		50		0.2	%		(2	)	0.0	%		52	(2600.0	)%
Total other (expense) income, net	$	104		0.4	%	$	9		0.1	%	$	95	1055.6	%

	Six Months Ended
	June 30,										Period-to-Period
	2018					2017					Change
Interest income	$	22		0.1	%	$	-		0.0	%	$	22		.0	%
Interest expense		(125	)	(0.3	)%		(122	)	(0.3	)%		(3	)	2.5	%
(Loss) Gain on foreign currency transactions		(99	)	(0.2	)%		23		0.1	%		(122	)	(530.4	)%
Other income, net		40		0.1	%		16		0.0	%		24		150.0	%
Total other (expense) income, net	$	(162	)	(0.4	)%	$	(83	)	(0.2	)%	$	(79	)	95.2	%

GPI SAS uses the euro as its functional currency. At June 30, 2018 and December 31, 2017, the U.S. dollar to euro exchange rates were $1.17 and $1.20, respectively, which represents a 2.5% stronger dollar compared to the euro. The average exchange rates for the six months ended June 30, 2018 and 2017 was $1.21 and $1.08, respectively, which represents a 11.9% weaker dollar compared to the euro.

GPI Mexicana uses the U.S. dollar as its functional currency. At June 30, 2018 and December 31, 2017, the Mexican peso to U.S. dollar exchange rates were 19.94 pesos and 19.69 pesos, respectively, which represents a 1.3% stronger dollar compared to the Mexican peso. The average exchange rates for the six months ended June 30, 2018 and 2017 was 19.07 pesos and 19.44 pesos, respectively, which represents a 1.9% weaker dollar compared to the Mexican peso.

21

GPI Asia uses the U.S. dollar as its functional currency. At June 30, 2018 and December 31, 2017, the Macau pataca to U.S. dollar exchange rates were 8.08 patacas and 8.05 patacas, respectively, which represents a 0.4% stronger dollar compared to the Macau pataca. The average exchange rates for the six months ended June 30, 2018 and 2017 was 8.07 patacas and 8.18 patacas, respectively, which represents a 1.3% weaker dollar compared to the Macau pataca.

Income Taxes. The Tax Act reduces the U.S. statutory federal corporate tax rate from 34% to 21%. The effective date of the tax rate change was January 1, 2018. As a result, we adjusted our annual effective tax rate for the three and six months ended June 30, 2018, and our U.S. net deferred tax asset balance at the lower rates. This had a favorable impact on both the three and six months effective income tax rates.

Our effective income tax rate for the three months ended June 30, 2018 and 2017 was 22.9% and 42.4%, respectively. Our effective tax rate for the three months ended June 30, 2018 was unfavorably affected by our Subpart F income adjustment and tax liability from the IRS audit of the 2015 tax year, partially offset by the foreign rate differential on the income from our Macau S.A.R. subsidiary, GPI Asia, and the benefit from research tax credits from GPI USA and our French subsidiary, GPI SAS. Our effective tax rate for the three months ended June 30, 2017 was unfavorably affected by our Subpart F income adjustment and non-statutory stock options that expired during 2017, partially offset by the foreign rate differential on the income from GPI Asia and the benefit from research and low wage tax credits from GPI SAS.

Our effective income tax rate for the six months ended June 30, 2018 and 2017 was 22.9% and 32.4%, respectively. Our effective tax rate for the six months ended June 30, 2018 was unfavorably affected by our Subpart F income adjustment and tax liability from the IRS audit of the 2015 tax year, partially offset by the foreign rate differential on income from GPI Asia and the benefit from research tax credits from GPI USA and GPI SAS. Our effective tax rate for the six months ended June 30, 2017 was favorably affected by the foreign rate differential on income from GPI Asia and the benefit from research and low wage tax credits from GPI SAS, partially offset by our Subpart F income adjustment and non-statutory stock options that expired during 2017.

We account for uncertain tax positions in accordance with applicable accounting guidance. At December 31, 2017, we reported unrecognized tax benefits related to the FTA’s on-going examination of GPI SAS for tax years 2013 and 2012. In the first quarter of 2018, in connection with this examination, GPI paid €1.4 million to the FTA. While we were legally obligated to pay this amount, which represents the FTA’s calculation of the taxes owed, this payment does not represent a settlement nor the end of the examination and we are actively disputing the findings of the FTA. At this time, an estimate of the range of the reasonably possible outcomes cannot be made. We do not expect the examination to be completed within the next twelve months. It is reasonably possible that the amount of the unrecognized benefit with respect to our unrecognized tax position could change within the next twelve months. This change may be the result of settlement of the ongoing audit or competent authority proceedings.

In addition to the on-going FTA examination of GPI SAS for tax years 2013 and 2012, the Company received notification in August 2017, of a federal income tax examination by the IRS for the 2015 tax year. The examination is substantially completed and as a result, at the end of June 30, 2018, we accrued $0.1 million of additional tax expense.

As of June 30, 2018, there was no change to the unrecognized tax benefits reported at December 31, 2017.

Liquidity and Capital Resources

Sources of Liquidity and Capital Resources. Historically, our primary source of liquidity and capital has been cash from operations. On June 26, 2015, the Company entered into a Credit Agreement with Nevada State Bank for a combined $15.0 million credit facility, consisting of a $10.0 million seven-year term loan and a $5.0 million five-year revolving loan. The Company borrowed the full amount under the term loan and has not drawn any funds under the revolving loan. Additional information can be found at Note 8 to the unaudited condensed consolidated financial statements included in Part I, Item 1, of this Quarterly Report on Form 10-Q. This description of the material terms and conditions of the Credit Agreement does not purport to be complete and is qualified in its entirety by reference to the full texts of the Credit Agreement, the Pledge and Security Agreement and Irrevocable Proxy, and the Guaranty, which were filed as Exhibits 10.1, 10.2 and 10.3 to the Form 8-K filed with the SEC on July 2, 2015.

22

Other potential sources of capital include, but are not limited to, additional bank credit facilities and the sale of stock. We believe that we have the resources to satisfy our operating needs for working capital, capital expenditures, purchases of common stock under our stock repurchase program, litigation, dividends or acquisitions for our operations for a minimum of the next twelve months.

At June 30, 2018, we had $15.0 million in cash and cash equivalents. Of this amount, $6.1 million was held by GPI Asia, $5.8 million was held by GPI USA and $3.0 million was held by GPI SAS. As a consequence of the Tax Act, we would not be subject to further taxation if we were to repatriate those amounts held outside of the United States, except for potential minimal withholding taxes.

Working Capital. The following table summarizes our cash and cash equivalents, and working capital (dollars in thousands), and our current ratio:

	June 30,		December 31,		Period-to-Period
	2018		2017		Change
Cash and cash equivalents	$	14,957	$	14,064	$	893	6.3	%
Working capital	$	24,141	$	24,087	$	54	0.2	%
Current ratio		2.4		2.4

Cash Flows. The following table summarizes our cash flows (dollars in thousands):

	Six Months Ended
	June 30,						Period-to-Period
	2018			2017			Change
Operating activities	$	4,339		$	5,360		$	(1,021	)	(19.0	)%
Investing activities		(593	)		(2,340	)		1,747		(74.7	)%
Financing activities		(2,717	)		(638	)		(2,079	)	325.9	%
Effect of exchange rates		(136	)		192			(328	)	(170.8	)%
Net change	$	893		$	2,574		$	(1,681	)	(65.3	)%

The decrease in cash flows provided by operating activities was primarily caused by a negative impact in the change of liabilities for $1.9 million and in the change of assets for $1.4 million, partially offset by an increase in net income of $1.5 million and an increase in non-cash items of $0.7 million.

The decrease in cash flows used by investing activities was primarily due to a decrease in capital expenditures and purchase of equity method investments.

The increase in cash flows used in financing activities was primarily due to a $2.0 million principal payment on our term loan.

Capital Expenditures. In the first six months of 2018 we purchased $0.6 million of property, plant and equipment. We currently intend to purchase approximately $1.5 million in property and equipment during the remainder of 2018.

Cash Dividend. Our Board of Directors has no current plans to pay a regular dividend on our common stock, but may evaluate the merit of paying a special dividend from time to time.

Backlog. At June 30, 2018, our backlog of signed orders for the following twelve months was $21.5 million, consisting of $14.2 million for GPI USA, $6.9 million for GPI ASIA, and $0.4 million for GPI SAS. At June 30, 2017, our backlog of signed orders for the following twelve months was $26.2 million, consisting of $14.4 million for GPI ASIA, $11.5 million for GPI USA, and $0.3 million for GPI SAS.

23

Contractual Obligations and Commercial Commitments

On June 26, 2015, we entered into a Credit Agreement with Nevada State Bank for a combined $15.0 million, consisting of a $10.0 million seven-year term loan and a $5.0 million five-year revolving loan described under “Liquidity and Capital Resources” in Part I, Item 2— “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Quarterly Report on Form 10-Q.

On January 26, 2018, we entered into global licensing and development agreements with BrainChip Holdings Ltd. and Xuvi, LLC described under “Outlook” in Part I, Item 2— “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Quarterly Report on Form 10-Q.

Forward-Looking Information Statements and Risk Factors

Throughout this Quarterly Report on Form 10-Q, we make some forward-looking statements which do not relate to historical or current facts, but are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements relate to analyses and other information based on forecasts of future results and estimates of amounts not yet determinable that, while considered reasonable by us, are inherently subject to significant business, economic, and competitive risks and uncertainties, many of which are beyond our control and are subject to change. The statements also relate to our future prospects and anticipated performance, development, and business strategies such as statements relating to anticipated future sales or the timing thereof, potential acquisitions, the long-term growth and prospects of our business or any jurisdiction, the duration or effects of unfavorable economic conditions which may reduce our product sales, and the long-term potential of the RFID gaming chips market and our ability to capitalize on any such growth opportunities. These statements are identified by their use of terms and phrases such as anticipate, believe, could, would, estimate, expect, intend, may, plan, predict, project, pursue, will, continue, feel, or the negative or other variations thereof, and other similar terms and phrases, including references to assumptions.

Although we believe that the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ materially from those expressed or implied. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and to inherent known and unknown risks and uncertainties such as those identified in Part I, Item 1A—“Risk Factors,” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2017, filed with the SEC on March 23, 2018. We do not intend, and undertake no obligation, to update our forward-looking statements to reflect future events or circumstances.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not required for a smaller reporting company.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, including our Chief Executive Officer and Chief Financial Officer, has conducted an evaluation of the effectiveness of our disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act") as of June 30, 2018. Based upon this evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that, as of June 30, 2018, the end of the period covered by this Quarterly Report on Form 10-Q, our disclosure controls and procedures were effective at a reasonable assurance level to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act was (i) recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms, and (ii) was accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

Effective January 1, 2018, we adopted the new revenue guidance under ASC Topic 606, Revenue from Contracts with Customers. The adoption of this guidance requires the implementation of new accounting policies and processes which changed the Company’s internal controls over financial reporting for revenue recognition and related disclosures. Other than this change, there was no change in our internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) during the quarter ended June 30, 2018, that materially affected, or was reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None.

ITEM 1A. RISK FACTORS

Not required for a smaller reporting company.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(a)      Not applicable.

(b)      Not applicable.

(c)      As previously disclosed in a Form 8-K filed with the SEC on March 28, 2018, the Company adopted a stock repurchase plan to repurchase up to 100,000 shares of its common stock as part of the formal stock repurchase program adopted in November 2011. No common shares were repurchased by the Company in the second quarter of 2018.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

(a)      Not applicable.

(b)      Not applicable.

25

ITEM 6. EXHIBITS

Exhibit
Number	Description
3.1	Registrant’s Amended and Restated Articles of Incorporation (incorporated by reference to Exhibit 3.01 to the Registrant’s Form 10-K filed with the SEC on March 24, 2016)
3.2	Registrant’s Amended and Restated Bylaws (incorporated by reference to Exhibit 3.02 to the Registrant’s Form 8-K filed with the SEC on December 28, 2007)
4.1	Specimen Stock Certificate for Registrant’s Common Stock (incorporated by reference to Exhibit 4.01 to the Registrant’s Form 10-K filed with the SEC on May 15, 2007)
10.1	Consulting Agreement between the Company and Mr. Gronau dated July 31, 2018 (incorporated by reference to Exhibit 10.1 to the Registrant’s Form 8-K filed with the SEC on August 1, 2018)

31.1	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Principal Financial and Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance
101.SCH	XBRL Taxonomy Extension Schema
101.CAL	XBRL Taxonomy Extension Calculation
101.DEF	XBRL Taxonomy Extension Definition
101.LAB	XBRL Taxonomy Extension Labels
101.PRE	XBRL Taxonomy Extension Presentation

*This exhibit is intended to be furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise.

26

SIGNATURES

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

	GAMING PARTNERS INTERNATIONAL CORPORATION
Date: August 10, 2018	By:	/s/ Gregory S. Gronau
		Gregory S. Gronau
		President and Chief Executive Officer
Date: August 10, 2018	By:	/s/ Alain Thieffry
		Alain Thieffry
		Chief Financial Officer, and Chairperson of the Board

27

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

Section 302 Certification

I, Gregory S. Gronau, certify that:

1.           I have reviewed this quarterly report on Form 10-Q for the quarter ended June 30, 2018 of Gaming Partners International Corporation;

2.           Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.           Based on my knowledge, the financial statements and other financial information included in this report fairly present, in all material respects, the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this report;

4.           The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)           Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)           Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)           Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)           Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.           The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)           All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

b)           Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 10, 2018	By:	/s/ Gregory S. Gronau
		Gregory S. Gronau President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER

Section 302 Certification

I, Alain Thieffry, certify that:

1.           I have reviewed this quarterly report on Form 10-Q for the quarter ended June 30, 2018 of Gaming Partners International Corporation;

2.           Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.           Based on my knowledge, the financial statements and other financial information included in this report fairly present, in all material respects, the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this report;

4.           The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)           Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)           Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)           Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)           Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.           The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)           All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

b)           Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 10, 2018	By:	/s/ Alain Thieffry
		Alain Thieffry Chief Financial Officer, and Chairperson of the Board

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Gaming Partners International Corporation (the Company), for the quarter ended June 30, 2018, as filed with the Securities and Exchange Commission on the date hereof (the Report), Gregory S. Gronau, as Chief Executive Officer of the Company, and Alain Thieffry, as Chief Financial Officer of the Company, each hereby certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

	GAMING PARTNERS INTERNATIONAL CORPORATION
Date: August 10, 2018	By:	/s/ Gregory S. Gronau
		Gregory S. Gronau
		President and Chief Executive Officer
Date: August 10, 2018	By:	/s/ Alain Thieffry
		Alain Thieffry
		Chief Financial Officer, and Chairperson of the Board

XML

Document And Entity Information - shares	6 Months Ended
	Jun. 30, 2018	Aug. 02, 2018
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q2
Entity Registrant Name	Gaming Partners International CORP
Entity Central Index Key	0000918580
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Trading Symbol	GPIC
Entity Common Stock, Shares Outstanding		7,954,523

XML

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Current Assets:
Cash and cash equivalents	$ 14,957	$ 14,064
Accounts receivable, net	8,446	7,415
Inventories	14,340	15,118
Prepaid expenses	916	1,290
Other current assets	2,761	2,836
Total current assets	41,420	40,723
Property and equipment, net	23,038	24,933
Goodwill	10,292	10,292
Intangible assets, net	1,647	1,676
Investment	383	411
Deferred income tax assets	831	675
Inventories, non-current	2,044	2,453
Other assets, non-current	3,427	2,240
Total assets	83,082	83,403
Current Liabilities:
Accounts payable	5,126	4,743
Accrued liabilities	5,003	6,779
Customer deposits and deferred revenue	5,122	3,020
Current portion of long-term debt	1,514	1,401
Income taxes payable	514	693
Total current liabilities	17,279	16,636
Long-term debt	2,466	5,265
Other liabilities, non-current	183	186
Total liabilities	19,928	22,087
Commitments and contingencies - see Note 10
Stockholders' Equity:
Preferred stock, authorized 10,000,000 shares, $0.01 par value, none issued and outstanding	0	0
Common stock, authorized 30,000,000 shares, $0.01 par value, 8,245,506 and 7,954,523 shares issued and outstanding, respectively, as of June 30, 2018, and 8,223,077 and 7,932,094 shares issued and outstanding, respectively, as of December 31, 2017	82	82
Additional paid-in capital	19,411	19,272
Treasury stock at cost: 290,983 shares	(2,263)	(2,263)
Retained earnings	46,816	44,718
Accumulated other comprehensive loss	(892)	(493)
Total stockholders' equity	63,154	61,316
Total liabilities and stockholders' equity	$ 83,082	$ 83,403

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CONDENSED CONSOLIDATED BALANCE SHEETS [Parenthetical] - $ / shares	Jun. 30, 2018	Dec. 31, 2017
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, shares authorized	30,000,000	30,000,000
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares issued	8,245,506	8,223,077
Common stock, shares outstanding	7,954,523	7,932,094
Treasury stock, shares	290,983	290,983

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CONDENSED CONSOLIDATED INCOME STATEMENTS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Revenues	$ 24,677	$ 16,274	$ 43,361	$ 35,187
Cost of revenues	16,341	12,416	30,090	25,510
Gross profit	8,336	3,858	13,271	9,677
Marketing and sales	1,861	1,476	3,628	3,203
General and administrative	2,289	1,958	4,185	4,283
Research and development	1,040	348	2,043	658
Operating income	3,146	76	3,415	1,533
Other income (expense), net	104	9	(162)	(83)
Income before income taxes	3,250	85	3,253	1,450
Income tax expense	745	36	746	470
Net income	$ 2,505	$ 49	$ 2,507	$ 980
Earnings per share:
Basic	$ 0.32	$ 0.01	$ 0.32	$ 0.12
Diluted	$ 0.31	$ 0.01	$ 0.31	$ 0.12
Weighted-average shares of common stock outstanding:
Basic	7,949	7,929	7,941	7,929
Diluted	8,020	8,058	8,026	8,058

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Net income	$ 2,505	$ 49	$ 2,507	$ 980
Other comprehensive income:
Foreign currency translation adjustment, net of tax	(849)	909	(399)	1,116
Total comprehensive income	$ 1,656	$ 958	$ 2,108	$ 2,096

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CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands	Total	Common Stock [Member]	Additional Paid-in Capital [Member]	Treasury Stock [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Loss [Member]
Balance at Dec. 31, 2016	$ 57,533	$ 82	$ 20,031	$ (2,263)	$ 42,044	$ (2,361)
Balance (in shares) at Dec. 31, 2016		7,928,594
Net income	980	$ 0	0	0	980	0
Common stock options exercised	35	$ 0	35	0	0	0
Common stock options exercised (in shares)		3,500
Stock compensation expense	56	$ 0	56	0	0	0
Foreign currency translation adjustment, net of tax	1,116	0	0	0	0	1,116
Balance at Jun. 30, 2017	59,720	$ 82	20,122	(2,263)	43,024	(1,245)
Balance (in shares) at Jun. 30, 2017		7,932,094
Balance at Dec. 31, 2017	61,316	$ 82	19,272	(2,263)	44,718	(493)
Balance (in shares) at Dec. 31, 2017		7,932,094
Impact of change in accounting policy at Dec. 31, 2017	(409)	$ 0	0	0	(409)	0
Net income	2,507	0	0	0	2,507	0
Common stock options exercised	139	$ 0	139	0	0	0
Common stock options exercised (in shares)		22,429
Foreign currency translation adjustment, net of tax	(399)	$ 0	0	0	0	(399)
Balance at Jun. 30, 2018	$ 63,154	$ 82	$ 19,411	$ (2,263)	$ 46,816	$ (892)
Balance (in shares) at Jun. 30, 2018		7,954,523

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Cash Flows from Operating Activities
Net income	$ 2,507	$ 980
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of property and equipment	2,336	1,886
Amortization of intangible assets	124	128
(Recovery) provision for bad debt	(70)	(322)
Deferred income taxes	76	(397)
Share based compensation expense	0	56
Gain on disposal of property and equipment	0	(9)
Equity loss in affiliate	28	0
Change in operating assets and liabilities:
Accounts receivable	(962)	4,049
Inventories	1,054	(4,026)
Prepaid expenses and other current assets	413	(467)
Other assets, non-current	(1,862)	447
Accounts payable	326	3,383
Accrued liabilities	(1,561)	(2,164)
Customer deposits and deferred revenue	2,108	1,731
Income taxes payable	(178)	85
Net cash provided by operating activities	4,339	5,360
Cash Flows from Investing Activities
Proceeds from sale of property and equipment	0	9
Purchase of licensing rights	0	(100)
Purchase of equity method investment	0	(451)
Capital expenditures	(593)	(1,798)
Net cash used in investing activities	(593)	(2,340)
Cash Flows from Financing Activities
Principal payments on long-term debt	(2,686)	(673)
Proceeds from exercise of stock options	139	35
Cash paid for exercise of stock appreciation right	(170)	0
Net cash used in financing activities	(2,717)	(638)
Effect of exchange rate changes on cash	(136)	192
Net increase in cash and cash equivalents	893	2,574
Cash and cash equivalents, beginning of period	14,064	10,604
Cash and cash equivalents, end of period	14,957	13,178
Supplemental disclosures of cash flow information:
Cash paid for interest	125	122
Cash paid for income taxes, net of refunds	10	637
Supplemental disclosure of non-cash investing and financing activities:
Property and equipment acquired through accounts payable, accrued and non-current other liabilities	$ 142	$ 886

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Nature of Business and Significant Accounting Policies

6 Months Ended

Jun. 30, 2018

Accounting Policies [Abstract]

Business Description and Accounting Policies [Text Block]

Note 1. Nature of Business and Significant Accounting Policies

Organization and Nature of Business

Gaming Partners International Corporation (GPIC or the Company) is headquartered in North Las Vegas, Nevada. Our business activities include the manufacture and sale of casino currencies, playing cards, table accessories, table layouts, dice, gaming furniture, roulette wheels, and radio frequency identification (RFID) readers and software, all of which are used with casino table games such as blackjack, poker, baccarat, craps, and roulette.

The Company has three operating subsidiaries: Gaming Partners International USA, Inc. (GPI USA) (including GPI Mexicana S.A. de C.V. (GPI Mexicana), our maquiladora manufacturing operation in Mexico, and GPI USA Blue Springs, our manufacturing facility in Missouri); Gaming Partners International SAS (GPI SAS); and Gaming Partners International Asia Limited (GPI Asia).  Our subsidiaries have the following distribution and product focus:

• GPI USA sells in the United States, Canada, the Caribbean, and Latin America. GPI USA sells our full product line, with most of the products manufactured in either San Luis Rio Colorado, Mexico, or Blue Springs, Missouri. The remainder is either manufactured in France or purchased from United States vendors. We warehouse inventory in San Luis, Arizona; Blue Springs, Missouri; and North Las Vegas, Nevada. We have sales offices in North Las Vegas, Nevada; Atlantic City, New Jersey; Gulfport, Mississippi; and Blue Springs, Missouri.

• GPI SAS sells primarily in Europe and Africa out of its office in Beaune, France. GPI SAS predominantly sells casino currencies, including both American-style, known as chips, and European-style, known as plaques and jetons. Most of the products sold by GPI SAS are manufactured in France, with the remainder manufactured in Mexico.

• GPI Asia, located in Macau S.A.R., China, distributes our full product line in the Asia-Pacific region. GPI Asia also sells table layouts that it manufactures in Macau S.A.R.

We are one of the gaming industry’s leading manufacturers and suppliers of casino table game equipment. We custom manufacture and supply casino currencies, playing cards, table layouts, gaming furniture, table accessories, dice, roulette wheels, and RFID readers and software, all of which are used with casino table games such as blackjack, poker, baccarat, craps, and roulette. Our products fall into two categories – non-consumable and consumable. Non-consumable products consist of casino currencies, gaming furniture, and RFID solutions. These products typically have a useful life of several years or longer. Sales of non-consumables are typically driven by casino openings, expansions, and rebranding, as well as replacements in the normal course of business. Consumable products consist of playing cards, table accessories, table layouts, and dice. These products each have a useful life that ranges from several hours for playing cards and dice to several months for layouts. Casinos tend to buy these products annually if not more frequently.

Significant Accounting Policies

Basis of Consolidation and Presentation. The accompanying unaudited condensed consolidated financial statements include the accounts of GPIC and its wholly-owned subsidiaries GPI SAS, GPI USA, and GPI Asia. All material intercompany balances and transactions have been eliminated in consolidation. We use the equity method to account for investments in companies if the investment provides the ability to exercise significant influence, but not control, over operating and financial policies of the investee. Our proportionate share of the net income or loss of these companies is included in consolidated net earnings. Judgment regarding the level of influence over each equity method investment includes considering key factors such as our ownership interest or participation in policy-making decisions and material intercompany transactions. In the event we no longer have the ability to exercise significant influence over an equity-method investee, we would discontinue accounting for the investment under the equity method.

The accompanying unaudited condensed consolidated financial statements of the Company and its subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) for interim financial information and in the form prescribed by the Securities and Exchange Commission (SEC), and do not include all of the information and notes required by U.S. GAAP for complete financial statements. These statements should be read in conjunction with our annual audited consolidated financial statements and related notes included in our most recent Annual Report on Form 10-K for the fiscal year ended December 31, 2017, filed with the SEC on March 23, 2018.

These unaudited condensed consolidated financial statements, in the opinion of management, reflect only normal and recurring adjustments necessary for a fair presentation of results and cash flows for the interim periods presented. The results of operations for an interim period are not necessarily indicative of the results for any other interim period or a full fiscal year.

Recently Issued Accounting Standards and Not Yet Adopted. In January 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. These amendments eliminate Step 2 from the goodwill impairment test. The amendments are effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. The Company does not expect the adoption of this guidance to significantly impact the consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), to increase transparency and comparability among organizations by reporting lease assets and lease liabilities, both finance (capital) and operating leases, on the balance sheet and disclosing key information about leasing arrangements. For public companies, the updated guidance is effective for the financial statements issued for fiscal years beginning after December 15, 2018 (including interim periods within those fiscal years). Early adoption is permitted. The Company is currently evaluating the impact of adoption and will consult with accounting experts as needed to assist with the implementation of this standard. While the Company continues to evaluate the impact of this new standard on its consolidated financial statements, the Company currently expects the primary impact will be to record right-of-use assets and lease liabilities for existing operating leases in the consolidated balance sheets. The Company currently has $3.8 million in operating lease commitments and does not currently expect the adoption of this new standard to have a material impact on its consolidated results of operations or cash flows.

Recently Adopted Accounting Standards. On December 22, 2017, the SEC staff issued Staff Accounting Bulletin 118 (“SAB 118”), which provides guidance on accounting for the tax effects of the Tax Cuts and Jobs Act (“Tax Act”). SAB 118 was added to the FASB codification in March 2018 with the issuance of ASU 2018-05, Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118.

In accordance with the SAB 118 guidance, some of the income tax effects recorded by the Company in 2017 are provisional, including the one-time transition tax and the re-measurement of our deferred tax assets and liabilities. In addition, we are still evaluating the global intangible low-taxed income (GILTI) provisions of the Tax Act and their impact, if any, on our consolidated financial statements. The accounting for these income tax effects may be adjusted during 2018 as a result of our continuing analysis of the Tax Act; additional implementation guidance from the IRS, state tax authorities, the SEC, the FASB, or the Joint Committee on Taxation; and new information from domestic or foreign equity affiliates. As of June 30, 2018, the Company had not finalized its accounting and was still in the measurement period.

In March 2017, the FASB issued ASU 2017-17, Compensation — Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The amendments require that an employer report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The amendments are effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods. In the first quarter of 2018 the Company adopted this guidance. It had no significant impact to the consolidated financial statements.

In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. These amendments clarify the definition of a business. The amendments affect all companies and other reporting organizations that must determine whether they have acquired or sold a business. The amendments are effective for public companies for annual periods beginning after December 15, 2017, including interim periods within those periods. In the first quarter of 2018 the Company adopted this guidance retrospectively. It had no significant impact to the consolidated financial statements.

In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory. These amendments require an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. This guidance indicates that the former exception to income tax accounting that requires companies to defer the income tax effects of certain intercompany transactions would apply only to intercompany inventory transactions. That is, the exception no longer applies to intercompany sales and transfers of other assets (e.g., property and equipment or intangible assets). Under the former exception, income tax expense associated with intra-entity profits in an intercompany sale or transfer of assets was eliminated from earnings. Instead, that cost was deferred and recorded on the balance sheet (e.g., as a prepaid asset) until the assets left the consolidated group. Similarly, the entity was prohibited from recognizing deferred tax assets for the increases in tax bases due to the intercompany sale or transfer. A modified retrospective basis of adoption was required for this guidance. As a result, a cumulative-effect adjustment of approximately $0.4 million has been recorded to accumulated deficit on January 1, 2018, in connection with this adoption. This cumulative-effect adjustment relates to the prepaid expense associated with intra-entity transfers of property and equipment included in prepaid expenses and other current assets in the accompanying condensed consolidated balance sheet at December 31, 2017.

In May 2014, the FASB issued ASU 2014-09, Revenues from Contracts with Customers (Topic 606). This guidance applies to any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards. This guidance supersedes existing revenue recognition guidance, including most industry-specific guidance, as well as certain related guidance on accounting for contract costs. To further assist with adoption and implementation of ASU 2014-09, the FASB issued the following ASUs:

•ASU 2016-08 (Issued March 2016) - Principal versus Agent Consideration (Reporting Revenue Gross versus Net)

•ASU 2016-10 (Issued April 2016) - Identifying Performance Obligations and Licensing

•ASU 2016-12 (Issued May 2016) - Narrow-Scope Improvements and Practical Expedients

•ASU 2016-20 (Issued December 2016) - Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers

The guidance provides for a five-step model to determine the revenue recognized for the transfer of goods or services to customers that reflects the expected entitled consideration in exchange for those goods or services. It also provides clarification for principal versus agent considerations and identifying performance obligations. In addition, the FASB introduced practical expedients related to disclosures of remaining performance obligations, as well as other amendments to guidance on collectability, non-cash consideration and the presentation of sales and other similar taxes. Financial statement disclosures required under the guidance will enable users to understand the nature, amount, timing, judgments, and uncertainty of revenue and cash flows relating to customer contracts. The two permitted transition methods under the guidance are the full retrospective approach or a cumulative effect adjustment to the opening retained earnings in the year of adoption (cumulative effect approach). In the first quarter of 2018, we adopted this guidance using a modified retrospective method. It had no significant impact to the consolidated financial statements. Regarding the contract acquisition cost component of the guidance, the Company’s analysis supports use of the practical expedient when recognizing expense related to incremental costs incurred to acquire a contract, as the recovery of such costs is completed in less than one year’s time. Additionally, incremental costs to obtain contracts have been immaterial to date. Accordingly, the Company does not expect any material changes to the timing of when it recognizes expenses related to contract acquisition costs.

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Revenue Recognition

6 Months Ended

Jun. 30, 2018

Revenue from Contract with Customer [Abstract]

Revenue from Contract with Customer [Text Block]

Note 2. Revenue Recognition

The majority of our revenue is derived from selling and distributing manufactured table game equipment to the casino industry. We recognize revenue after we have completed all of the following steps:

-     Identification of the contract, or contracts, with a customer

-     Identification of the performance obligations in the contract

-     Determination of the transaction price

-     Allocation of the transaction price to the performance obligations in the contract

-     Recognition of revenue when, or as, the Company satisfies a performance obligation

Determining whether these steps have been met may require us to make assumptions and exercise judgment

that could significantly impact the timing and amount of revenue reported each period.

The majority of our contracts have a similar performance obligation which is the transfer of the individual goods ordered. The Company typically invoices the customer upon shipment. Depending on the size of the customer order we may require deposits that range from 30% to 100% of the total order.

On occasion, we may recognize revenue under a bill and hold arrangement. The transfer of ownership, and revenue recognition, occurs at the point the items are ready for physical delivery and the customer is notified – i.e. when the product is manufactured, completed, invoiced, and segregated from our other inventory so that it is not subject to being used to fill other orders. The customer must request a bill and hold arrangement, preferably in writing, and must commit to the purchase.

Under the RFID solutions product line, we may recognize revenue from entering into new arrangements which include software and/or multiple elements or deliverables, which include RFID equipment, embedded software licenses, and software maintenance services. In such cases, the Company accounts for individual performance obligations separately if they are distinct. The transaction price is allocated to the separate performance obligations on a relative standalone selling price basis. The Company determines the standalone selling prices based on the Company's overall pricing objectives, taking into consideration historical selling prices, market conditions, costs to provide certain services and other factors.

A portion of our revenue under RFID solutions is generated by new or existing software and hardware maintenance arrangements. Under these arrangements, customers pay in advance for the maintenance of the hardware or the software. As of June 30, 2018, the Company had contracts with unsatisfied performance obligations extending throughout 2020. Most of our contracts are for one year and renew on March 1st of every year. The Company recognizes as revenue the amount billed over the length of the arrangement. The unrecognized portion of the amount billed is accounted for as deferred revenue. At June 30, 2018 and December 31, 2017, these amounts were $0.4 million and $0.1 million, respectively. For the three months ended on each of June 30, 2018 and 2017, we recognized $150,000 of revenue for software and hardware maintenance contracts. In each of the first six months of 2018 and 2017, we recognized $300,000 of revenue for software and hardware maintenance contracts.

The application of our revenue recognition policies and changes in our assumptions or judgments affect the timing and amounts of our revenues and costs, as well as deferred revenue.

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Cash and Cash Equivalents

6 Months Ended

Jun. 30, 2018

Cash and Cash Equivalents [Abstract]

Cash, Cash Equivalents, and Marketable Securities [Text Block]

Note 3. Cash and Cash Equivalents

We hold our cash and cash equivalents in various financial institutions in the countries shown below. Substantially all accounts have balances in excess of government-insured limits. The following table summarizes our holdings (in thousands):

	June 30, 2018		December 31, 2017
Macau S.A.R., China	$	6,101	$	2,517
United States (including Mexico)		5,839		4,936
France		3,017		6,611
Total	$	14,957	$	14,064

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Accounts Receivable

6 Months Ended

Jun. 30, 2018

Valuation and Qualifying Accounts [Abstract]

Schedule of Valuation and Qualifying Accounts Disclosure [Text Block]

Note 4. Accounts Receivable

At June 30, 2018, and December 31, 2017, no casino customer accounted for 10% or more of our accounts receivable balance.

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Inventories

6 Months Ended

Jun. 30, 2018

Inventory Disclosure [Abstract]

Inventory Disclosure [Text Block]

Note 5. Inventories

Inventories consisted of the following (in thousands):

	June 30, 2018		December 31, 2017
Raw materials	$	10,752	$	11,637
Work in progress		1,350		2,432
Finished goods		4,282		3,502
Total inventories	$	16,384	$	17,571

We classified a portion of our inventories as non-current because we do not expect this portion to be used within one year. The classification of our inventories on our unaudited condensed consolidated balance sheets was as follows (in thousands):

	June 30, 2018		December 31, 2017
Current	$	14,340	$	15,118
Non-current		2,044		2,453
Total inventories	$	16,384	$	17,571

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Property and Equipment

6 Months Ended

Jun. 30, 2018

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment Disclosure [Text Block]

Note 6. Property and Equipment

Property and equipment consisted of the following (in thousands):

	June 30, 2018			December 31, 2017
Land	$	669		$	669
Buildings and improvements		11,204			11,196
Equipment and furniture		40,696			40,714
Vehicles		407			408
Construction in progress		192			529
		53,168			53,516
Less accumulated depreciation		(30,130	)		(28,583	)
Property and equipment, net	$	23,038		$	24,933

Depreciation expense for the three months ended June 30, 2018 and 2017 was $1.3 million and $1.0 million, respectively. Depreciation expense for the six months ended June 30, 2018 and 2017 was $2.3 million and $1.9 million, respectively.

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Goodwill and Intangible Assets

6 Months Ended

Jun. 30, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets Disclosure [Text Block]

Note 7. Goodwill and Intangible Assets

We had goodwill of $10.3 million as of both June 30, 2018 and December 31, 2017.

Intangible assets consisted of the following (in thousands):

	June 30, 2018							December 31, 2017
	Gross Carrying ‎Amount		Accum ‎Amort			Net Carrying ‎Amount		Gross Carrying ‎Amount		Accum ‎Amort			Net Carrying ‎Amount		Estimated Useful Life ‎(Years)
Trademarks	$	1,711	$	(761	)	$	950	$	1,711	$	(700	)	$	1,011	10-15
Customer list		1,101		(508	)		593		897		(353	)		544	10-15
Patents		542		(537	)		5		542		(534	)		8	13-14
Other intangible assets		472		(373	)		99		472		(359	)		113	3-10
Total intangible assets	$	3,826	$	(2,179	)	$	1,647	$	3,622	$	(1,946	)	$	1,676

Amortization expense for intangible assets for the three months ended June 30, 2018 and 2017 was $62,000 and $65,000, respectively. Amortization expense for intangible assets for the six months ended June 30, 2018 and 2017 was $124,000 and $128,000, respectively. The increase in the gross carrying value of the customer list is a result of ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory. See Note 1 for more details.

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Debt

6 Months Ended

Jun. 30, 2018

Debt Disclosure [Abstract]

Debt Disclosure [Text Block]

Note 8. Debt

On June 26, 2015, the Company entered into a Credit Agreement with Nevada State Bank to borrow a combined $15.0 million, consisting of a $10.0 million seven-year term loan and a $5.0 million five-year revolving loan. The Company borrowed the full amount under the term loan and has not drawn on funds under the revolving loan. The term loan will mature on June 26, 2022, and the revolving loan will mature on June 26, 2020. The Credit Agreement contains customary representations, warranties, and events of default, and affirmative, negative and financial covenants. The covenants contain, among other things, limitations on the Company's and its subsidiaries' ability to merge, consolidate, dispose of assets, or incur liens or certain indebtedness. The Company is required to maintain a fixed charge coverage ratio greater than 1.15 to 1.00 and leverage ratio less than 3.00 to 1.00. The Company was in compliance with all financial covenants as of June 30, 2018.

Interest on funds borrowed under the term loan and the revolving loan are charged at a rate per annum equal to LIBOR, 2.1% at June 30, 2018, plus 2.25%. The term loan has a straight-line seven-year amortization schedule.

In June 2018, we made a $2.0 million early principal repayment against the outstanding term loan.

At June 30, 2018, estimated repayment obligations for the principal balance of long-term debt were as follows (in thousands):

Years Ending December 31,	Outstanding ‎Debt
2018 (6 months)	$	749
2019		1,546
2020		1,613
2021		72
	$	3,980

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Stock Appreciation Rights Liability

6 Months Ended

Jun. 30, 2018

Stock Appreciation Rights Liability [Abstract]

Stock appreciation rights liability [Text Block]

Note 9. Stock Appreciation Rights Liability

At June 30, 2018 and at December 31, 2017 the stock appreciation rights liability was $0.6 million and $1.2 million, respectively. The $0.6 million decrease is due to the period change in the fair value of the outstanding rights for $0.4 million and the payment of $0.2 million of stock appreciation rights, offset by $40,000 for additional stock appreciation rights granted in 2018.

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2018

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies Disclosure [Text Block]

Note 10. Commitments and Contingencies

On January 26, 2018, the Company entered into global strategic agreements for development, licensing, and revenue sharing with both BrainChip Holdings Limited (ASX: BRN), a leading developer of software and hardware accelerated solutions for advanced artificial intelligence and machine learning applications, and Xuvi, LLC, developers of an immersive data analytics and automation platform. The companies plan to jointly develop products for worldwide deployment in casino currency security, table game operations, and player behavior applications. The terms require payments to BrainChip Holdings Limited and Xuvi, LLC of approximately $0.6 million and $0.7 million, respectively, and are contingent upon completion of project phases. GPI paid $1.0 million during the six months ended June 30, 2018.

Operating Lease Commitments

The Company has various operating leases that are used in the normal course of business. The operating leases consist of buildings and equipment that expire on various dates through 2023.

At June 30, 2018, minimum lease payment obligations were as follows (in thousands):

	Minimum
	Lease
Years Ending December 31,	Payments
2018 (6 months)	$	609
2019		944
2020		670
2021		634
2022		567
Thereafter		339
Total	$	3,763

Legal Proceedings and Contingencies

From time to time we are engaged in disputes and claims that arise in the normal course of business. We believe that the ultimate outcome of these proceedings will not have a material adverse impact on our condensed consolidated financial position or results of operations, but the outcome of these actions is inherently difficult to predict. There can be no assurance that we will prevail in any such litigation. Liabilities for material claims against us are accrued when a loss is considered probable and can be reasonably estimated. Legal costs associated with claims are expensed as incurred.

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Geographic and Product Line Information

6 Months Ended

Jun. 30, 2018

Segment Reporting [Abstract]

Segment Reporting Disclosure [Text Block]

Note 11. Geographic and Product Line Information

We manufacture and sell casino table game equipment in one operating segment - casino table game products. Although the Company derives its revenues from a number of different product lines, the Company neither allocates resources based on the operating results from the individual product lines, nor manages each individual product line as a separate business unit. Our chief operating decision maker is our Chief Executive Officer (CEO). The CEO manages our operations on a consolidated basis to make decisions about overall corporate resource allocation and to assess overall corporate profitability. Our CEO is also the chief operating manager for each of our entities in the United States, France, and Macau S.A.R.; that is, the individual locations do not have “segment,” or “product line,” managers who report to our CEO.

The following tables present our revenue by geographic area (dollars in thousands):

	Three Months Ended
	June 30,
	2018				2017
Revenues
The Americas	$	16,940	68.6	%	$	13,560	83.3	%
Asia-Pacific		6,759	27.4	%		2,087	12.8	%
Europe and Africa		978	4.0	%		627	3.9	%
Total	$	24,677	100.0	%	$	16,274	100.0	%

	Six Months Ended
	June 30,
	2018				2017
Revenues
The Americas	$	30,807	71.0	%	$	27,823	79.1	%
Asia-Pacific		10,821	25.0	%		6,208	17.6	%
Europe and Africa		1,733	4.0	%		1,156	3.3	%
Total	$	43,361	100.0	%	$	35,187	100.0	%

The following tables present our revenue by product line (dollars in thousands):

	Three Months Ended
	June 30,
	2018				2017
Casino currency without RFID	$	5,671	23.0	%	$	3,498	21.5	%
Casino currency with RFID		5,542	22.5	%		1,204	7.4	%
Total casino currency		11,213	45.5	%		4,702	28.9	%
Playing cards		6,084	24.6	%		6,181	38.0	%
Table accessories and other products		2,147	8.7	%		1,591	9.8	%
Table layouts		1,522	6.2	%		1,246	7.7	%
Gaming furniture		1,384	5.6	%		790	4.9	%
Dice		756	3.1	%		723	4.4	%
RFID solutions		506	2.0	%		317	1.9	%
Shipping		1,065	4.3	%		724	4.4	%
Total	$	24,677	100.0	%	$	16,274	100.0	%

	Six Months Ended
	June 30,
	2018				2017
Casino currency without RFID	$	9,518	22.0	%	$	7,393	21.0	%
Casino currency with RFID		9,318	21.5	%		3,962	11.3	%
Total casino currency		18,836	43.5	%		11,355	32.3	%
Playing cards		11,840	27.3	%		12,516	35.6	%
Table accessories and other products		3,611	8.3	%		3,484	9.9	%
Table layouts		2,971	6.9	%		2,548	7.2	%
Gaming furniture		1,869	4.3	%		1,542	4.4	%
Dice		1,441	3.3	%		1,424	4.0	%
RFID solutions		961	2.2	%		689	2.0	%
Shipping		1,832	4.2	%		1,629	4.6	%
Total	$	43,361	100.0	%	$	35,187	100.0	%

The following table presents our property and equipment by geographic area (in thousands):

Property and equipment, net:	June 30, 2018		December 31, 2017
United States	$	12,917	$	13,708
Mexico		5,678		6,851
France		3,999		3,936
Macau S.A.R., China		444		438
Total	$	23,038	$	24,933

The following table presents our intangible assets by geographic area (in thousands):

Intangible assets, net:	June 30, 2018		December 31, 2017
United States	$	1,522	$	1,634
Asia		125		42
Total	$	1,647	$	1,676

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Earnings Per Share

6 Months Ended

Jun. 30, 2018

Earnings Per Share [Abstract]

Earnings Per Share [Text Block]

Note 12. Earnings Per Share

The weighted-average number of common shares outstanding used in the computation of basic and diluted earnings per share was as follows (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2018		2017		2018		2017
Weighted-average number of common shares outstanding - basic		7,949		7,929		7,941		7,929
Potential dilution from equity grants		71		129		85		129
Weighted-average number of common shares outstanding - diluted		8,020		8,058		8,026		8,058

At June 30, 2018, we had certain outstanding stock options to purchase common stock which had exercise prices greater than the average market price. These anti-dilutive options have been excluded from the computation of diluted earnings per share (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2018		2017		2018		2017
Outstanding anti-dilutive options		85		20		58		16

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Income Taxes

6 Months Ended

Jun. 30, 2018

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

Note 13. Income Taxes

The Tax Cuts and Jobs Act (Tax Act) was enacted on December 22, 2017 and reduces the U.S. statutory federal corporate tax rate from 34% to 21%. The effective date of the tax rate change was January 1, 2018. As a result, we adjusted our annual effective tax rate for the three and six months ended June 30, 2018, as well as adjusted our U.S. net deferred tax asset balance at the lower rates. In the first six months of 2018, the Company did not record an expense or benefit related to the Tax Act.

We are subject to taxation in the U.S. and various states and foreign jurisdictions. With few exceptions, the tax years 2014 through 2017 remain open to examination under the statute of limitations by the U.S. Internal Revenue Service (IRS) and various states for GPIC and GPI USA and by the Government of the Macau Special Administrative Region - Financial Services Bureau for GPI Asia. Only tax years 2015 to 2017 remain open to examination under the statute of limitations by the French Tax Administration (FTA) for GPI SAS.

In 2015, the FTA started an examination of GPI SAS for tax years 2013 and 2012 that is on-going. In the first quarter of 2018, in connection with the FTA’s examination of GPI SAS for tax years 2013 and 2012, GPI paid €1.4 million to the FTA. While we were legally obligated to pay this amount, which represents the FTA’s calculation of the taxes owed, this payment does not represent a settlement nor the end of the examination and we are actively disputing the findings of the FTA.

In addition to the on-going FTA examination of GPI SAS for tax years 2013 and 2012, the Company received notification in August 2017 of a federal income tax examination by the IRS for the 2015 tax year. The examination is substantially completed and as a result, at the end of June 30, 2018, we accrued $0.1 million of additional tax expense.

As of June 30, 2018, there was no change to the $0.3 million unrecognized tax benefits reported at December 31, 2017. The $0.1 million accrual in relation to the FTA examination is in addition to the unrecognized tax benefit amount.

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Subsequent Event

6 Months Ended

Jun. 30, 2018

Subsequent Events [Abstract]

Subsequent Events [Text Block]

Note 14. Subsequent Event

On August 1, 2018, the Company issued an 8-K announcing Gregory Gronau’s resignation as Chief Executive Officer, President, Director, Secretary, and Treasurer, effective September 21, 2018. Mr. Gronau’s resignation is for personal reasons, and not a result of any disagreement with the Company or its management. The Company and Mr. Gronau also entered in a consulting agreement pursuant to which Mr. Gronau will provide part-time consulting services to the Company following his date of departure until December 31, 2018 in exchange for payments of $10,000 per month.

To ensure continuity going forward, Chief Financial Officer and Chairman of the Board Alain M. Thieffry, age 62, will act as the Company’s Chief Executive Officer, President, Secretary, and Treasurer beginning September 21, 2018, until a successor is appointed.

The Company will begin an executive search for a new CEO and no changes in its goals or objectives are planned.

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Nature of Business and Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2018

Accounting Policies [Abstract]

Consolidation, Policy [Policy Text Block]

Basis of Consolidation and Presentation. The accompanying unaudited condensed consolidated financial statements include the accounts of GPIC and its wholly-owned subsidiaries GPI SAS, GPI USA, and GPI Asia. All material intercompany balances and transactions have been eliminated in consolidation. We use the equity method to account for investments in companies if the investment provides the ability to exercise significant influence, but not control, over operating and financial policies of the investee. Our proportionate share of the net income or loss of these companies is included in consolidated net earnings. Judgment regarding the level of influence over each equity method investment includes considering key factors such as our ownership interest or participation in policy-making decisions and material intercompany transactions. In the event we no longer have the ability to exercise significant influence over an equity-method investee, we would discontinue accounting for the investment under the equity method.

The accompanying unaudited condensed consolidated financial statements of the Company and its subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) for interim financial information and in the form prescribed by the Securities and Exchange Commission (SEC), and do not include all of the information and notes required by U.S. GAAP for complete financial statements. These statements should be read in conjunction with our annual audited consolidated financial statements and related notes included in our most recent Annual Report on Form 10-K for the fiscal year ended December 31, 2017, filed with the SEC on March 23, 2018.

These unaudited condensed consolidated financial statements, in the opinion of management, reflect only normal and recurring adjustments necessary for a fair presentation of results and cash flows for the interim periods presented. The results of operations for an interim period are not necessarily indicative of the results for any other interim period or a full fiscal year.

New Accounting Pronouncements, Policy [Policy Text Block]

Recently Issued Accounting Standards and Not Yet Adopted. In January 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. These amendments eliminate Step 2 from the goodwill impairment test. The amendments are effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. The Company does not expect the adoption of this guidance to significantly impact the consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), to increase transparency and comparability among organizations by reporting lease assets and lease liabilities, both finance (capital) and operating leases, on the balance sheet and disclosing key information about leasing arrangements. For public companies, the updated guidance is effective for the financial statements issued for fiscal years beginning after December 15, 2018 (including interim periods within those fiscal years). Early adoption is permitted. The Company is currently evaluating the impact of adoption and will consult with accounting experts as needed to assist with the implementation of this standard. While the Company continues to evaluate the impact of this new standard on its consolidated financial statements, the Company currently expects the primary impact will be to record right-of-use assets and lease liabilities for existing operating leases in the consolidated balance sheets. The Company currently has $3.8 million in operating lease commitments and does not currently expect the adoption of this new standard to have a material impact on its consolidated results of operations or cash flows.

Recently Adopted Accounting Standards. On December 22, 2017, the SEC staff issued Staff Accounting Bulletin 118 (“SAB 118”), which provides guidance on accounting for the tax effects of the Tax Cuts and Jobs Act (“Tax Act”). SAB 118 was added to the FASB codification in March 2018 with the issuance of ASU 2018-05, Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118.

In accordance with the SAB 118 guidance, some of the income tax effects recorded by the Company in 2017 are provisional, including the one-time transition tax and the re-measurement of our deferred tax assets and liabilities. In addition, we are still evaluating the global intangible low-taxed income (GILTI) provisions of the Tax Act and their impact, if any, on our consolidated financial statements. The accounting for these income tax effects may be adjusted during 2018 as a result of our continuing analysis of the Tax Act; additional implementation guidance from the IRS, state tax authorities, the SEC, the FASB, or the Joint Committee on Taxation; and new information from domestic or foreign equity affiliates. As of June 30, 2018, the Company had not finalized its accounting and was still in the measurement period.

In March 2017, the FASB issued ASU 2017-17, Compensation — Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The amendments require that an employer report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The amendments are effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods. In the first quarter of 2018 the Company adopted this guidance. It had no significant impact to the consolidated financial statements.

In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. These amendments clarify the definition of a business. The amendments affect all companies and other reporting organizations that must determine whether they have acquired or sold a business. The amendments are effective for public companies for annual periods beginning after December 15, 2017, including interim periods within those periods. In the first quarter of 2018 the Company adopted this guidance retrospectively. It had no significant impact to the consolidated financial statements.

In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory. These amendments require an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. This guidance indicates that the former exception to income tax accounting that requires companies to defer the income tax effects of certain intercompany transactions would apply only to intercompany inventory transactions. That is, the exception no longer applies to intercompany sales and transfers of other assets (e.g., property and equipment or intangible assets). Under the former exception, income tax expense associated with intra-entity profits in an intercompany sale or transfer of assets was eliminated from earnings. Instead, that cost was deferred and recorded on the balance sheet (e.g., as a prepaid asset) until the assets left the consolidated group. Similarly, the entity was prohibited from recognizing deferred tax assets for the increases in tax bases due to the intercompany sale or transfer. A modified retrospective basis of adoption was required for this guidance. As a result, a cumulative-effect adjustment of approximately $0.4 million has been recorded to accumulated deficit on January 1, 2018, in connection with this adoption. This cumulative-effect adjustment relates to the prepaid expense associated with intra-entity transfers of property and equipment included in prepaid expenses and other current assets in the accompanying condensed consolidated balance sheet at December 31, 2017.

In May 2014, the FASB issued ASU 2014-09, Revenues from Contracts with Customers (Topic 606). This guidance applies to any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards. This guidance supersedes existing revenue recognition guidance, including most industry-specific guidance, as well as certain related guidance on accounting for contract costs. To further assist with adoption and implementation of ASU 2014-09, the FASB issued the following ASUs:

•ASU 2016-08 (Issued March 2016) - Principal versus Agent Consideration (Reporting Revenue Gross versus Net)

•ASU 2016-10 (Issued April 2016) - Identifying Performance Obligations and Licensing

•ASU 2016-12 (Issued May 2016) - Narrow-Scope Improvements and Practical Expedients

•ASU 2016-20 (Issued December 2016) - Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers

The guidance provides for a five-step model to determine the revenue recognized for the transfer of goods or services to customers that reflects the expected entitled consideration in exchange for those goods or services. It also provides clarification for principal versus agent considerations and identifying performance obligations. In addition, the FASB introduced practical expedients related to disclosures of remaining performance obligations, as well as other amendments to guidance on collectability, non-cash consideration and the presentation of sales and other similar taxes. Financial statement disclosures required under the guidance will enable users to understand the nature, amount, timing, judgments, and uncertainty of revenue and cash flows relating to customer contracts. The two permitted transition methods under the guidance are the full retrospective approach or a cumulative effect adjustment to the opening retained earnings in the year of adoption (cumulative effect approach). In the first quarter of 2018, we adopted this guidance using a modified retrospective method. It had no significant impact to the consolidated financial statements. Regarding the contract acquisition cost component of the guidance, the Company’s analysis supports use of the practical expedient when recognizing expense related to incremental costs incurred to acquire a contract, as the recovery of such costs is completed in less than one year’s time. Additionally, incremental costs to obtain contracts have been immaterial to date. Accordingly, the Company does not expect any material changes to the timing of when it recognizes expenses related to contract acquisition costs.

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Cash and Cash Equivalents (Tables)

6 Months Ended

Jun. 30, 2018

Cash and Cash Equivalents [Abstract]

Cash and Cash Equivalents [Table Text Block]

The following table summarizes our holdings (in thousands):

	June 30, 2018		December 31, 2017
Macau S.A.R., China	$	6,101	$	2,517
United States (including Mexico)		5,839		4,936
France		3,017		6,611
Total	$	14,957	$	14,064

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Inventories (Tables)

6 Months Ended

Jun. 30, 2018

Inventory Disclosure [Abstract]

Schedule of Inventory, Current [Table Text Block]

Inventories consisted of the following (in thousands):

	June 30, 2018		December 31, 2017
Raw materials	$	10,752	$	11,637
Work in progress		1,350		2,432
Finished goods		4,282		3,502
Total inventories	$	16,384	$	17,571

Schedule of Inventory [Table Text Block]

We classified a portion of our inventories as non-current because we do not expect this portion to be used within one year. The classification of our inventories on our unaudited condensed consolidated balance sheets was as follows (in thousands):

	June 30, 2018		December 31, 2017
Current	$	14,340	$	15,118
Non-current		2,044		2,453
Total inventories	$	16,384	$	17,571

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Property and Equipment (Tables)

6 Months Ended

Jun. 30, 2018

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment [Table Text Block]

Property and equipment consisted of the following (in thousands):

	June 30, 2018			December 31, 2017
Land	$	669		$	669
Buildings and improvements		11,204			11,196
Equipment and furniture		40,696			40,714
Vehicles		407			408
Construction in progress		192			529
		53,168			53,516
Less accumulated depreciation		(30,130	)		(28,583	)
Property and equipment, net	$	23,038		$	24,933

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Goodwill and Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Finite-Lived Intangible Assets [Table Text Block]

Intangible assets consisted of the following (in thousands):

	June 30, 2018							December 31, 2017
	Gross Carrying ‎Amount		Accum ‎Amort			Net Carrying ‎Amount		Gross Carrying ‎Amount		Accum ‎Amort			Net Carrying ‎Amount		Estimated Useful Life ‎(Years)
Trademarks	$	1,711	$	(761	)	$	950	$	1,711	$	(700	)	$	1,011	10-15
Customer list		1,101		(508	)		593		897		(353	)		544	10-15
Patents		542		(537	)		5		542		(534	)		8	13-14
Other intangible assets		472		(373	)		99		472		(359	)		113	3-10
Total intangible assets	$	3,826	$	(2,179	)	$	1,647	$	3,622	$	(1,946	)	$	1,676

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Debt (Tables)

6 Months Ended

Jun. 30, 2018

Debt Disclosure [Abstract]

Schedule of Maturities of Long-term Debt [Table Text Block]

At June 30, 2018, estimated repayment obligations for the principal balance of long-term debt were as follows (in thousands):

Years Ending December 31,	Outstanding ‎Debt
2018 (6 months)	$	749
2019		1,546
2020		1,613
2021		72
	$	3,980

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Commitments and Contingencies (Tables)

6 Months Ended

Jun. 30, 2018

Commitments and Contingencies Disclosure [Abstract]

Contractual Obligation, Fiscal Year Maturity Schedule [Table Text Block]

At June 30, 2018, minimum lease payment obligations were as follows (in thousands):

	Minimum
	Lease
Years Ending December 31,	Payments
2018 (6 months)	$	609
2019		944
2020		670
2021		634
2022		567
Thereafter		339
Total	$	3,763

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Geographic and Product Line Information (Tables)

6 Months Ended

Jun. 30, 2018

Segment Reporting [Abstract]

Schedule of Revenue from Foreign Countries by Geographic Area [Table Text Block]

The following tables present our revenue by geographic area (dollars in thousands):

	Three Months Ended
	June 30,
	2018				2017
Revenues
The Americas	$	16,940	68.6	%	$	13,560	83.3	%
Asia-Pacific		6,759	27.4	%		2,087	12.8	%
Europe and Africa		978	4.0	%		627	3.9	%
Total	$	24,677	100.0	%	$	16,274	100.0	%

	Six Months Ended
	June 30,
	2018				2017
Revenues
The Americas	$	30,807	71.0	%	$	27,823	79.1	%
Asia-Pacific		10,821	25.0	%		6,208	17.6	%
Europe and Africa		1,733	4.0	%		1,156	3.3	%
Total	$	43,361	100.0	%	$	35,187	100.0	%

Schedule of Product Revenue [Table Text Block]

The following tables present our revenue by product line (dollars in thousands):

	Three Months Ended
	June 30,
	2018				2017
Casino currency without RFID	$	5,671	23.0	%	$	3,498	21.5	%
Casino currency with RFID		5,542	22.5	%		1,204	7.4	%
Total casino currency		11,213	45.5	%		4,702	28.9	%
Playing cards		6,084	24.6	%		6,181	38.0	%
Table accessories and other products		2,147	8.7	%		1,591	9.8	%
Table layouts		1,522	6.2	%		1,246	7.7	%
Gaming furniture		1,384	5.6	%		790	4.9	%
Dice		756	3.1	%		723	4.4	%
RFID solutions		506	2.0	%		317	1.9	%
Shipping		1,065	4.3	%		724	4.4	%
Total	$	24,677	100.0	%	$	16,274	100.0	%

	Six Months Ended
	June 30,
	2018				2017
Casino currency without RFID	$	9,518	22.0	%	$	7,393	21.0	%
Casino currency with RFID		9,318	21.5	%		3,962	11.3	%
Total casino currency		18,836	43.5	%		11,355	32.3	%
Playing cards		11,840	27.3	%		12,516	35.6	%
Table accessories and other products		3,611	8.3	%		3,484	9.9	%
Table layouts		2,971	6.9	%		2,548	7.2	%
Gaming furniture		1,869	4.3	%		1,542	4.4	%
Dice		1,441	3.3	%		1,424	4.0	%
RFID solutions		961	2.2	%		689	2.0	%
Shipping		1,832	4.2	%		1,629	4.6	%
Total	$	43,361	100.0	%	$	35,187	100.0	%

Schedule of Property Plant and Equipment by Geographic Area [Table Text Block]

The following table presents our property and equipment by geographic area (in thousands):

Property and equipment, net:	June 30, 2018		December 31, 2017
United States	$	12,917	$	13,708
Mexico		5,678		6,851
France		3,999		3,936
Macau S.A.R., China		444		438
Total	$	23,038	$	24,933

Schedule of Intangible Assets and Goodwill [Table Text Block]

The following table presents our intangible assets by geographic area (in thousands):

Intangible assets, net:	June 30, 2018		December 31, 2017
United States	$	1,522	$	1,634
Asia		125		42
Total	$	1,647	$	1,676

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Earnings Per Share (Tables)

6 Months Ended

Jun. 30, 2018

Earnings Per Share [Abstract]

Schedule of Weighted Average Number of Shares [Table Text Block]

The weighted-average number of common shares outstanding used in the computation of basic and diluted earnings per share was as follows (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2018		2017		2018		2017
Weighted-average number of common shares outstanding - basic		7,949		7,929		7,941		7,929
Potential dilution from equity grants		71		129		85		129
Weighted-average number of common shares outstanding - diluted		8,020		8,058		8,026		8,058

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share [Table Text Block]

These anti-dilutive options have been excluded from the computation of diluted earnings per share (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2018		2017		2018		2017
Outstanding anti-dilutive options		85		20		58		16

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Nature of Business and Significant Accounting Policies (Details Textual) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
New Accounting Pronouncement or Change in Accounting Principle, Cumulative Effect of Change on Equity or Net Assets	$ (400)	$ (409)
Operating Leases, Future Minimum Payments Due	$ 3,763

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Revenue Recognition (Details Textual) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Deferred Revenue, Current	$ 400		$ 400		$ 100
Revenue from Contract with Customer, Including Assessed Tax	24,677	$ 16,274	43,361	$ 35,187
Software And Hardware Maintenance Contracts Revenue [Member]
Revenue from Contract with Customer, Including Assessed Tax	$ 150	$ 150	$ 300	$ 300

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Cash and Cash Equivalents (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017	Jun. 30, 2017	Dec. 31, 2016
Cash and Cash Equivalents [Line Items]
Cash and Cash Equivalents	$ 14,957	$ 14,064	$ 13,178	$ 10,604
United States (including Mexico) [Member]
Cash and Cash Equivalents [Line Items]
Cash and Cash Equivalents	5,839	4,936
Macau S.A.R., China [Member]
Cash and Cash Equivalents [Line Items]
Cash and Cash Equivalents	6,101	2,517
France [Member]
Cash and Cash Equivalents [Line Items]
Cash and Cash Equivalents	$ 3,017	$ 6,611

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Inventories (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Inventory [Line Items]
Raw materials	$ 10,752	$ 11,637
Work in progress	1,350	2,432
Finished goods	4,282	3,502
Total inventories	$ 16,384	$ 17,571

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Inventories (Details 1) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Inventory [Line Items]
Current	$ 14,340	$ 15,118
Non-current	2,044	2,453
Total inventories	$ 16,384	$ 17,571

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Property and Equipment (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Property, Plant and Equipment [Line Items]
Land	$ 669	$ 669
Buildings and improvements	11,204	11,196
Equipment and furniture	40,696	40,714
Vehicles	407	408
Construction in progress	192	529
Property, Plant and Equipment, Gross	53,168	53,516
Less accumulated depreciation	(30,130)	(28,583)
Property and equipment, net	$ 23,038	$ 24,933

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Property and Equipment (Details Textual) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Property, Plant and Equipment [Line Items]
Depreciation	$ 1,300	$ 1,000	$ 2,336	$ 1,886

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Goodwill and Intangible Assets (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2018	Dec. 31, 2017
Finite-Lived Intangible Assets [Line Items]
Intangible assets, Gross Carrying Amount	$ 3,826	$ 3,622
Intangible assets, Accumulated Amortization	(2,179)	(1,946)
Intangible assets, Net Carrying Amount	1,647	1,676
Trademarks [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets, Gross Carrying Amount	1,711	1,711
Intangible assets, Accumulated Amortization	(761)	(700)
Intangible assets, Net Carrying Amount	$ 950	1,011
Trademarks [Member] | Minimum [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets, Estimated Useful Life (Years)	10 years
Trademarks [Member] | Maximum [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets, Estimated Useful Life (Years)	15 years
Customer List [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets, Gross Carrying Amount	$ 1,101	897
Intangible assets, Accumulated Amortization	(508)	(353)
Intangible assets, Net Carrying Amount	$ 593	544
Customer List [Member] | Minimum [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets, Estimated Useful Life (Years)	10 years
Customer List [Member] | Maximum [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets, Estimated Useful Life (Years)	15 years
Patents [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets, Gross Carrying Amount	$ 542	542
Intangible assets, Accumulated Amortization	(537)	(534)
Intangible assets, Net Carrying Amount	$ 5	8
Patents [Member] | Minimum [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets, Estimated Useful Life (Years)	13 years
Patents [Member] | Maximum [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets, Estimated Useful Life (Years)	14 years
Other Intangible Assets [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets, Gross Carrying Amount	$ 472	472
Intangible assets, Accumulated Amortization	(373)	(359)
Intangible assets, Net Carrying Amount	$ 99	$ 113
Other Intangible Assets [Member] | Minimum [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets, Estimated Useful Life (Years)	3 years
Other Intangible Assets [Member] | Maximum [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets, Estimated Useful Life (Years)	10 years

XML

Goodwill and Intangible Assets (Details Textual) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Finite-Lived Intangible Assets [Line Items]
Amortization Of Intangible Assets	$ 62	$ 65	$ 124	$ 128
Goodwill	$ 10,292		$ 10,292		$ 10,292

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Debt (Details) $ in Thousands	Jun. 30, 2018 USD ($)
Principal Balance
2018 (6 months)	$ 749
2019	1,546
2020	1,613
2021	72
Total	$ 3,980

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Debt (Details Textual) - USD ($) $ in Millions	1 Months Ended	6 Months Ended
	Jun. 26, 2015	Jun. 30, 2018
Line of Credit Facility [Line Items]
Line of Credit Facility, Interest Rate Description	a rate per annum equal to LIBOR, 2.1% at June 30, 2018, plus 2.25%
Payments for Early Reimbursement Against Outstanding Term Loan		$ 2.0
London Interbank Offered Rate (LIBOR) [Member]
Line of Credit Facility [Line Items]
Debt Instrument, Interest Rate, Stated Percentage		2.10%
Nevada State Bank [Member]
Line of Credit Facility [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity	$ 15.0
Long-term Debt [Member]
Line of Credit Facility [Line Items]
Line of Credit Facility, Expiration Date		Jun. 26, 2022
Long-term Debt [Member] | Nevada State Bank [Member]
Line of Credit Facility [Line Items]
Long-term Line of Credit	10.0
Revolving Credit Facility [Member]
Line of Credit Facility [Line Items]
Line of Credit Facility, Expiration Date		Jun. 26, 2020
Revolving Credit Facility [Member] | Nevada State Bank [Member]
Line of Credit Facility [Line Items]
Line of Credit Facility, Remaining Borrowing Capacity	$ 5.0

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Stock Appreciation Rights Liability (Details Textual) - USD ($)	6 Months Ended
	Jun. 30, 2018	Dec. 31, 2017
Stock appreciation rights liabilities	$ 600,000	$ 1,200,000
Decrease in Stock Appreciation Liability	600,000
Stock Appreciation Rights Exercised	200,000
Fair Value of Stock Appreciation Rights	400,000
Additional Stock Appreciation Rights Expense	$ 40,000

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Commitments and Contingencies (Details) $ in Thousands	Jun. 30, 2018 USD ($)
Operating Leases, Future Minimum Payments
2018 (6 months)	$ 609
2019	944
2020	670
2021	634
2022	567
Thereafter	339
Total	$ 3,763

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Commitments and Contingencies (Details Textual) $ in Millions	6 Months Ended
	Jun. 30, 2018 USD ($)
Payments to Develop Software	$ 1.0
Brainchip Holdings Limited [Member]
Commitments Made For Software Development	0.6
Xuvi Llc [Member]
Commitments Made For Software Development	$ 0.7

XML

Geographic and Product Line Information (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Segment Reporting Information [Line Items]
Revenues	$ 24,677	$ 16,274	$ 43,361	$ 35,187
Sales Revenue, Net [Member]
Segment Reporting Information [Line Items]
Revenues, Percentage	100.00%	100.00%	100.00%	100.00%
The Americas [Member]
Segment Reporting Information [Line Items]
Revenues	$ 16,940	$ 13,560	$ 30,807	$ 27,823
The Americas [Member] | Sales Revenue, Net [Member]
Segment Reporting Information [Line Items]
Revenues, Percentage	68.60%	83.30%	71.00%	79.10%
Asia-Pacific [Member]
Segment Reporting Information [Line Items]
Revenues	$ 6,759	$ 2,087	$ 10,821	$ 6,208
Asia-Pacific [Member] | Sales Revenue, Net [Member]
Segment Reporting Information [Line Items]
Revenues, Percentage	27.40%	12.80%	25.00%	17.60%
Europe and Africa [Member]
Segment Reporting Information [Line Items]
Revenues	$ 978	$ 627	$ 1,733	$ 1,156
Europe and Africa [Member] | Sales Revenue, Net [Member]
Segment Reporting Information [Line Items]
Revenues, Percentage	4.00%	3.90%	4.00%	3.30%

XML

Geographic and Product Line Information (Details 1) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Segment Reporting Information [Line Items]
Revenues	$ 24,677	$ 16,274	$ 43,361	$ 35,187
Sales Revenue, Net [Member]
Segment Reporting Information [Line Items]
Revenues, Percentage	100.00%	100.00%	100.00%	100.00%
Casino currency without RFID [Member]
Segment Reporting Information [Line Items]
Revenues	$ 5,671	$ 3,498	$ 9,518	$ 7,393
Casino currency without RFID [Member] | Sales Revenue, Net [Member]
Segment Reporting Information [Line Items]
Revenues, Percentage	23.00%	21.50%	22.00%	21.00%
Casino currency with RFID [Member]
Segment Reporting Information [Line Items]
Revenues	$ 5,542	$ 1,204	$ 9,318	$ 3,962
Casino currency with RFID [Member] | Sales Revenue, Net [Member]
Segment Reporting Information [Line Items]
Revenues, Percentage	22.50%	7.40%	21.50%	11.30%
Total casino currency [Member]
Segment Reporting Information [Line Items]
Revenues	$ 11,213	$ 4,702	$ 18,836	$ 11,355
Total casino currency [Member] | Sales Revenue, Net [Member]
Segment Reporting Information [Line Items]
Revenues, Percentage	45.50%	28.90%	43.50%	32.30%
Playing Cards [Member]
Segment Reporting Information [Line Items]
Revenues	$ 6,084	$ 6,181	$ 11,840	$ 12,516
Playing Cards [Member] | Sales Revenue, Net [Member]
Segment Reporting Information [Line Items]
Revenues, Percentage	24.60%	38.00%	27.30%	35.60%
Table accessories and other products [Member]
Segment Reporting Information [Line Items]
Revenues	$ 2,147	$ 1,591	$ 3,611	$ 3,484
Table accessories and other products [Member] | Sales Revenue, Net [Member]
Segment Reporting Information [Line Items]
Revenues, Percentage	8.70%	9.80%	8.30%	9.90%
Table layouts [Member]
Segment Reporting Information [Line Items]
Revenues	$ 1,522	$ 1,246	$ 2,971	$ 2,548
Table layouts [Member] | Sales Revenue, Net [Member]
Segment Reporting Information [Line Items]
Revenues, Percentage	6.20%	7.70%	6.90%	7.20%
Dice [Member]
Segment Reporting Information [Line Items]
Revenues	$ 756	$ 723	$ 1,441	$ 1,424
Dice [Member] | Sales Revenue, Net [Member]
Segment Reporting Information [Line Items]
Revenues, Percentage	3.10%	4.40%	3.30%	4.00%
RFID solutions [Member]
Segment Reporting Information [Line Items]
Revenues	$ 506	$ 317	$ 961	$ 689
RFID solutions [Member] | Sales Revenue, Net [Member]
Segment Reporting Information [Line Items]
Revenues, Percentage	2.00%	1.90%	2.20%	2.00%
Gaming furniture [Member]
Segment Reporting Information [Line Items]
Revenues	$ 1,384	$ 790	$ 1,869	$ 1,542
Gaming furniture [Member] | Sales Revenue, Net [Member]
Segment Reporting Information [Line Items]
Revenues, Percentage	5.60%	4.90%	4.30%	4.40%
Shipping [Member]
Segment Reporting Information [Line Items]
Revenues	$ 1,065	$ 724	$ 1,832	$ 1,629
Shipping [Member] | Sales Revenue, Net [Member]
Segment Reporting Information [Line Items]
Revenues, Percentage	4.30%	4.40%	4.20%	4.60%

XML

Geographic and Product Line Information (Details 2) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Segment Reporting Information [Line Items]
Property and equipment, net	$ 23,038	$ 24,933
United States [Member]
Segment Reporting Information [Line Items]
Property and equipment, net	12,917	13,708
Mexico [Member]
Segment Reporting Information [Line Items]
Property and equipment, net	5,678	6,851
France [Member]
Segment Reporting Information [Line Items]
Property and equipment, net	3,999	3,936
Macau S.A.R., China [Member]
Segment Reporting Information [Line Items]
Property and equipment, net	$ 444	$ 438

XML

Geographic and Product Line Information (Details 3) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Segment Reporting Information [Line Items]
Intangible assets, net	$ 1,647	$ 1,676
United States [Member]
Segment Reporting Information [Line Items]
Intangible assets, net	1,522	1,634
Asia [Member]
Segment Reporting Information [Line Items]
Intangible assets, net	$ 125	$ 42

XML

Geographic and Product Line Information (Details Textual)	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Sales Revenue, Net [Member]
Segment Reporting Information [Line Items]
Revenues, Percentage	100.00%	100.00%	100.00%	100.00%

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Earnings Per Share (Details) - shares shares in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Basic and Diluted Earnings Per Share [Line Items]
Weighted-average number of common shares outstanding - basic	7,949	7,929	7,941	7,929
Potential dilution from equity grants	71	129	85	129
Weighted-average number of common shares outstanding - diluted	8,020	8,058	8,026	8,058

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Earnings Per Share (Details 1) - shares shares in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	85	20	58	16

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Income Taxes (Details Textual) € in Millions, $ in Millions	6 Months Ended	12 Months Ended
	Jun. 30, 2018 EUR (€)	Dec. 31, 2018	Dec. 31, 2017 USD ($)	Jun. 30, 2018 USD ($)
Income Taxes Paid | €	€ 1.4
Additional Accrued Income Taxes				$ 0.1
Unrecognized Tax Benefits			$ 0.3	0.3
Income Tax Examination, Penalties and Interest Accrued				$ 0.1
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent			34.00%
Scenario, Plan [Member]
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent		21.00%

XML

Subsequent Event (Details Textual) - Subsequent Event [Member]	Aug. 01, 2018 USD ($)
Effective Date Of Consulting Agreement	Sep. 21, 2018
Consulting Services Monthly Fees To Be Paid	$ 10,000