UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

X	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the fiscal year ended					~~December 31, 2008~~	December 31, 2009
	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the transition period from						to	to
		Commission file number					~~000-30375~~	000-30375
Las Vegas Gaming, Inc.
(Exact name of Registrant as specified in its charter)
Nevada						~~88-0392994~~	88-0392994
(State or other jurisdiction of incorporation or organization)						~~(I.R.S. Employer Identification No.)~~	(I.R.S. Employer Identification No.)
4000 West Ali Baba Lane, Suite D, Las Vegas, Nevada						89118
3980 Howard Hughes Parkway, Suite 450, Las Vegas, Nevada							89169
(Address of principal executive offices)						~~(Zip Code)~~	(Zip Code)
Registrant’s telephone number, including area code:			(702) 871-7111
Securities registered under Section 12(b) of the Act:
Title of each class				~~Name of each exchange on which registered~~	Name of each exchange on which registered
Securities registered under Section 12(g) of the Act:
Common Stock Series A, $.001 par value
(Title of each class)
(Title of each class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No x
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No x
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 o
Indicate by check mark if the disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained in herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. Large accelerated filer o Accelerated filer o Non-accelerated filer (do not check if smaller reporting company) o Smaller reporting company x
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. Large accelerated filer o Accelerated filer o Non-accelerated filer o (do not check if smaller reporting company) Smaller reporting company x
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No x

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State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter. $24,458,146.
State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter. $37,435,372
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.
Common Stock Series A, $.001 par value		14,~~849~~974,~~690~~149 shares as of December 31, ~~2008~~2009
Documents Incorporated By Reference: Portions of our Proxy Statement relating to the 2009 annual stockholders meeting are incorporated herein by reference in Part III. Such Proxy Statement will be filed with the Securities and Exchange Commission not later than 120 days after the conclusion of the registrant’s fiscal year ended December 31, 2008.
Documents Incorporated By Reference:

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TABLE OF CONTENTS

ITEM 1.	BUSINESS	1
ITEM 1A.	RISK FACTORS	17
ITEM 1B.	UNRESOLVED STAFF COMMENTS	17
ITEM 2.	PROPERTIES	17
ITEM 3.	LEGAL PROCEEDINGS	17
ITEM 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS	18
ITEM 5.	MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASERS OF EQUITY SECURITIES	19
ITEM 6.	SELECTED FINANCIAL DATA	2422
ITEM 7.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	2422
ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	3128
ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	3228
ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	5652
ITEM 9A(T).	CONTROLS AND PROCEDURES	56
ITEM 9A.	CONTROLS AND PROCEDURES	52
ITEM 9B.	OTHER INFORMATION	5653
ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	5754
ITEM 11.	EXECUTIVE COMPENSATION	5754
ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	5754
ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	5754
ITEM 14.	PRINCIPAL ACCOUNTING FEES AND SERVICES	5754
ITEM 15.	EXHIBITS, FINANCIAL STATEMENT SCHEDULES	5755

__________________________

PlayerVision, RoutePromo, NumberVision, WagerVision, AdVision, Nevada Numbers, The Million Dollar Ticket, and Nevada Keno are some of our trademarks. This Annual Report on Form 10-K contains trademarks and trade names of other parties, corporations and organizations.

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PART I

ITEM 1. BUSINESS.

Overview

During ~~2008~~2009 we continued to focus our development efforts on our proprietary application delivery system, known as PlayerVision. Through our PlayerVision system, we offer gaming operators the ability to increase the productivity of their existing gaming machines by delivering additional wagering opportunities, customer service enhancements, entertainment applications, games, and other content to their existing gaming machines, such as slot machines, poker machines, and video lottery terminals. Our PlayerVision system is flexible and compatible with virtually all gaming machines currently produced by all major manufacturers. As a result, we view every gaming machine as a revenue opportunity for our PlayerVision system. Since we plan to offer an option to acquire PlayerVision at little or no up front capital cost to casino operators in exchange for a recurring licensing fee, we expect to ~~provide~~ provide operators with an ability to increase significantly the earning power ~~and~~ and functionality of their gaming machines with little or no financial risk. In addition, we are currently a leading supplier of keno and bingo games, systems, and supplies.

The PlayerVision system consists of proprietary software that runs on our own hardware as well as other vendors’ server -based application delivery systems such as ~~IGT’s~~the sbX. Experience Management System from International Gaming Technology (“IGT”). Our ability to deliver applications through our own delivery system as well as that of other server -based gaming systems provides our customers with the ability to achieve 100% gaming floor coverage without the need to replace their existing machines. Our system gives ~~our~~ our customers a transition path from legacy machines to server -based gaming.

There are four delivery channels related to PlayerVision functionality: service, marketing, entertainment and gaming. Each application group addresses a specific cost reduction, revenue enhancing application set, player experience or operator control feature, including “Beverage-on-Demand”, NumberVision and WagerVision - turning each gaming machine into a multi-tasking touch-point for the customer who will see more, do more and - as a result - play more.

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In addition to the PlayerVision applications identified above, it is our mission to develop new applications that will position PlayerVision as a platform for a variety of new multimedia and gaming functions.

WeHistorically, we have ~~received~~ ~~final~~been ~~regulatory~~one ~~approval~~of ~~from~~the ~~Nevada~~leading suppliers of keno and ~~Gaming~~bingo ~~Laboratories International~~games, ~~(GLI)~~systems, anand supplies, ~~independent~~a ~~accredited~~relatively ~~testing~~small ~~laboratory,~~market ~~for~~associated ~~two applications~~with onnominal ~~our~~growth ~~PlayerVision~~and 2smaller companies. Our ~~platform;~~current ~~AdVision~~principal ~~and~~business ~~Live~~is ~~TV,~~the ondelivery ~~several~~of new, ~~different~~linked-progressive, ~~gaming~~mega ~~machine~~jackpot ~~platforms. We~~games ~~have~~to ~~also~~the ~~received~~worldwide ~~GLI~~gaming ~~approval~~industry. However, ~~for~~to ~~NumberVision~~date, onwe ~~our~~have ~~PlayerVision~~devoted 2a significant portion of ~~platform. PlayerVision~~our 3resources istoward the ~~next~~development, ~~generation~~regulatory approval, and marketing of our ~~PlayerVision~~ PlayerVision system. ItIn iscomparison ~~more~~to ~~robust~~the keno and ~~scalable~~bingo ~~than~~market, we believe that the potential market for our PlayerVision 2system, i.e., the gaming machine ~~platform~~market, ~~and~~is ~~has~~much ~~become~~larger ~~our~~and ~~go-to-market~~more ~~product~~dynamic. ~~The~~While ~~following~~we continue to provide ~~applications~~equipment, ~~will~~supplies beand ~~submitted~~games for ~~regulatory~~use ~~review~~by ~~and~~our ~~approval~~customers toin ~~Nevada~~the keno and bingo ~~GLI~~segments inof ~~April~~the ~~2009~~gaming inindustry, ~~regards~~subject to our ~~PlayerVision~~ability 3to ~~platform: Beverage on~~continue ~~Demand,~~as ~~ServiceVision,~~a ~~ValetVision~~going concern, ~~AdVision~~addressed below, ~~Live~~we ~~TV,~~expect ~~Casino~~these ~~Tunes,~~revenues ~~You~~will continue to decline as ~~Tube,~~we ~~and~~focus ~~VoyeurVision~~on the deployment of PlayerVision. ~~Because~~PlayerVision ~~these~~has ~~eight~~not ~~software~~had a ~~applications~~significant dorevenue effect on our financial statements to date. Due ~~not~~primarily ~~interface~~to ~~with~~our focus on the ~~slot~~development ~~accounting~~of our PlayerVision system and ~~the~~other factors, ~~regulators~~we have incurred expenses in excess of our revenue and have generated ~~are~~losses to date.

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~~familiar with~~In ~~the earlier PlayerVision 2 platform~~May 2009, we ~~expect~~received ~~a shorter~~ approval ~~time period~~for ~~from~~nine ~~the~~software ~~regulators. We~~applications ~~expect~~on ~~to submit~~our ~~WagerVision~~robust and ~~NumberVision~~scalable ~~for regulatory approval from Nevada and GLI on the~~ PlayerVision 3 platform ~~sometime~~from ~~between June and August 2009. Because~~ the ~~regulatory approval~~Nevada ofGaming ~~new gaming~~Control ~~applications is a complex process, we may experience~~Board ~~delays in developing and introducing the PlayerVision 3 applications~~laboratory. ~~Because~~These ofsoftware ~~the~~applications ~~substantial~~include ~~ongoing costs of the~~Beverage-on-Demand, ~~PlayerVision~~ServiceVision, ~~system~~VoyeurVision, weLive ~~will~~TV, ~~continue to require substantial third-party financing~~AdVision, ~~in addition to any funds from operations~~YouTube, ~~to pursue our business plan. During 2008 we raised over $14 million in private placements~~CasinoTunes, ValetVision, and ~~we estimate that we will need to raise at least another $10 million in 2009 in order to accomplish our 2009 plan~~BurstVision. We ~~expect~~will tosubmit ~~raise~~these ~~the~~same applications ~~additional~~for ~~funds~~Gaming ~~through~~Laboratories ~~one~~International ~~or more private placements and master lease equipment financings~~ (~~see~~GLI) ~~“Item~~approval, ~~7. Management’s~~an ~~Discussion~~independent ~~and~~accredited ~~Analysis~~testing oflaboratory, ~~Financial~~in ~~Condition~~the ~~and~~third ~~Results~~quarter of ~~Operations—Liquidity and Capital Resources”)~~2010. ~~No assurance can be given that we will be able to raise such additional funds or complete such private placements or equipment financings on terms acceptable to us, or at all.~~

Based on the foregoing, and other than the insignificant revenue realized from our early adoption agreements, and subject to economic uncertainties discussed herein, and our ability to continue as a going concern, as discussed below, we expect to begin to realize more significant revenue from our PlayerVision system during the third quarter of 2010. This would mark a significant shift in the type of revenue recognized by us. The anticipated revenue would be from the installation of our nine software applications on the PlayerVision 3 platform in the United States, primarily Nevada for now. No assurance can be given, however, that we will begin installing our PlayerVision 3 applications or begin realizing revenue from our PlayerVision system during the third quarter of 2010 or at all.

We expect to continue to incur losses for the remainder of 2010, and we expect to face competition from larger, more formidable competitors as we attempt to enter the gaming machine market. Due to continuing expenses related to our PlayerVision system, we plan to continue to rely on funds from third party financing sources, if available, in addition to funds from operations to sustain our operations in 2010.

We are presently unable to satisfy our obligations as they come due and do not have enough cash to sustain our anticipated working capital requirements for the remainder of 2010. Unless we obtain third-party financing or otherwise raise capital through the sale of assets or otherwise in the near future, we will be unable to continue as a going concern.

Industry Overview

The domestic and global gaming markets have grown rapidly and consistently over most of the last decade despite some slowdown in the past ~~year~~two years due to the macroeconomic recession. This growth has generally brought increased social and political acceptance of legalized gaming throughout many diverse societies. As a result, there is a rising public sector / municipal dependency on gaming ~~revenues~~ revenues for funding of programs and projects that would not otherwise exist. In the United States in 2007, the gaming industry iswas a $6092.~~3 billion~~2 billion business consisting of ~~860~~ casinos spread throughout 48 states. In addition, many jurisdictions are currently pushing for liberalization of existing gaming legislation and introduction of new regulations designed to augment sources of gaming tax revenue. Twelve states now allow commercial (non-tribal) gaming, compared to only two in 1980.

The conventional wisdom that the gaming industry is recession-proof has been challenged over the last 1224 months. However, recent economic pressures have prompted new efforts to legalize casino gaming and to liberalize gaming laws to fill fiscal gaps. Furthermore, in the current environment, operators are pressured to extract the most out of existing operations by enhancing the competitiveness of their slot machine floor at minimal investment rather than deploying cash into new or expanded equipment or facilities. While historical U.S. trends suggest a resilient recovery will eventually be at hand, through our PlayerVision product we expect to offer the casino operator a product that ~~will~~ will enhance the gaming machine’s productivity while simultaneously enhancing ~~the~~ the customer’s playing experience – all with little or no money up front.

PlayerVision can also be deployed outside the United States. Casinos in jurisdictions such as Macau, Western and Central Europe, South Korea, Singapore, Australia, Japan, Vietnam, Taiwan, and the Philippines should be attracted to our product. However, we will need to get approval from the relevant regulatory bodies prior to a roll out of PlayerVision in these jurisdictions.

1.7 million EGMs (Electronic Gaming Machines or slot machines as they are commonly referred to) were installed worldwide as of the end of 2007, with approximately 50% in North America. These machines represent the gaming industry's most resilient and predictable revenue stream and usually comprise well over 50% of total gaming revenue for the typical casino operator. The historical EGM average unit replacement cycle of 5-6 years will likely be stretched out over the next few years as the recession works its way out of the world economy. However, new technology may disrupt the normal replacement cycle. The last such technology was the "Ticket-In-Ticket-Out" revolution in 2000. We believe the next such revolution will be Server-Based Gaming, which allows operators to manage casino floors more effectively and efficiently. It will also usher into the gaming industry the art of multi-tasking as the EGM will now be able to provide the player several experiences concurrently with gambling on the next pull of the handle (or more typically, the next push of the button).

Increased popularity and social acceptance of gaming as a leisure activity is also fueling the growth of server-based gaming. According to the 2008 American Gaming Association Survey of Casino Entertainment, 84% of Americans believe that casino gaming is an acceptable activity for themselves or

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~~others,~~1.7 anmillion ~~increase~~EGMs (Electronic Gaming Machines or slot machines as they are commonly referred to) were installed worldwide as of 5the end of 2009, with approximately 50% ~~since~~in ~~2006~~North America. ~~The~~These ~~simplicity~~machines ~~and~~represent ~~instant~~the ~~appeal~~gaming ofindustry's ~~EGMs versus~~most ~~other~~resilient ~~gambling~~and ~~opportunities~~predictable ~~create~~revenue ~~familiarity~~stream and ~~adoption~~usually ~~across~~comprise well over 50% of total gaming revenue for the ~~board,~~typical casino operator. The historical EGM ~~characterized~~replacement bycycle ~~ease-~~of 5-~~use~~6 ~~and~~years ~~informality.~~will ~~EGMs~~likely ~~have~~be ~~demonstrated~~stretched ~~greater~~out over the next few ~~appeal~~years ~~than~~as ~~any~~the ~~other~~recession ~~gaming~~works ~~activity.~~its ~~Additionally~~way out of the world economy. However, new technology ~~has~~may ~~become~~disrupt athe normal replacement ~~significant~~cycle. The ~~part~~last ofsuch technology was the ~~gaming~~"Ticket-In-Ticket-Out" revolution ~~experience~~in 2000. We believe the next such revolution will be Server-Based Gaming, ~~allowing~~which ~~for~~allows operators to manage casino floors more ~~innovative~~effectively ~~content~~ and efficiently. It ~~customer~~will ~~convenience.~~also Ausher ~~new~~into ~~younger~~the ~~player~~gaming ~~demographic~~industry ~~translates~~the ~~into~~art aof multi-tasking ~~"user~~as ~~interface"~~the ~~that~~EGM ~~creates~~will ~~new~~now ~~revenue~~be able to provide the player several ~~opportunities~~experiences concurrently with gambling on the next pull of the handle (or more typically, the next push of the button).

WeIncreased ~~believe~~popularity ~~that~~and social acceptance of gaming as a leisure activity is also fueling the ~~global~~growth ~~casino~~of ~~and~~server-based gaming. ~~industry,~~According ~~over~~to ~~time~~the 2008 American Gaming Association Survey of Casino Entertainment, ~~will~~84% ~~grow~~of ~~due~~Americans tobelieve that casino ~~the~~gaming ~~increasing~~is ~~acceptance~~an acceptable activity for themselves or others, an increase of ~~gaming~~5% since as2006. aThe ~~form~~simplicity and instant appeal of ~~entertainment~~EGMs versus other gambling opportunities create familiarity and adoption across the ~~increasing~~ ~~need~~board, characterized by ease-of-use ~~various~~and ~~jurisdictions~~informality. ~~for~~EGMs ~~increased~~have ~~revenue~~demonstrated ~~from~~greater appeal than any ~~taxes~~other gaming activity. ~~EGM~~ ~~growth~~Additionally, istechnology ~~expected~~has tobecome ~~grow~~a ~~even~~significant ~~faster~~part ~~than~~of the ~~casino~~gaming ~~growth~~experience, allowing for more innovative content and customer asconvenience. A new younger player demographic translates into a ~~result~~multi-tasking "user ofinterface" ~~the~~that ~~following:~~creates new revenue opportunities.

· Simplicity and instant appeal of gaming machines versus other games. Characterized by simplicity and informality, gaming machines have greater appeal to all eligible demographic segments of the population than any other gaming activity.

· Continuing evolution of gaming machines. The launch of cashless technology (ticket-in/ticket-out versus coins or tokens) in 2000, the introduction of new and more sophisticated and interactive theme-based games and the increasing non-gaming functionality currently becoming available on the EGM platform.

As the gaming machine base continues to grow we believe that our target market will continue to expand. We believe that a consistent need for improvement in gaming activities and demand for greater entertainment value for players will give us the ability to market PlayerVision aggressively and to provide gaming operators with a single solution to introduce additional functionality without a wholesale replacement of their existing gaming machines.

Our Strategy

Our strategy is to provide the premier enhancement system for the installed base of gaming machines by delivering additional wagering opportunities, cost saving opportunities, promotions, games, and other content on existing gaming machines and delivering those same applications over the newer server -based deliver systems and gaming machines. No assurance can be given, however, that we will be successful. In order to achieve this objective, we are pursuing the following strategies:

Increased Revenue Potential for Operators. Our sales effort stresses the ability of our PlayerVision system to provide gaming operators with the opportunity to increase significantly the earning power and functionality of their gaming machines. Since our PlayerVision system directly interfaces with the existing video, audio, and printing functions of the machine, we are able to use the machine’s existing video screen (or attached alternatives) to deliver additional games, promotions, additional wagering opportunities, and other forms of entertainment. If desired by our customers, we have a kiosk driven ticket redemption system featuring its own accounting system separate and apart from the main slot accounting system. We can also provide alternative viewing options if the casino operator would prefer not to use the main screen.

Compelling Patron Experience. We expect to offer PlayerVision as a single multimedia delivery system for a wide range of content directly on the existing screens of gaming machines. By adding PlayerVision, a gaming machine is transformed from a single use, single wager option into a multimedia experience that can deliver to the player extra wagering opportunities and targeted, promotional content in addition to traditional slot play. Through PlayerVision, the operator will be able to enhance the functionality of its existing EGMs and deliver targeted gaming opportunities and promotional content to players. In exchange, the player will receive an enhanced playing experience, information about promotions, entertainment, and dining opportunities, and the opportunity to win jackpots and other prizes.

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·	Reduce operating costs. Through our Beverage on Demand feature, an operator may be able to cut its drink delivery costs approximately in half.

Low Operator Risk. As an alternative, we expect to offer the gaming operators the ability to substantially reduce operating cost, extend the replacement cycle and increase significantly the earning power and functionality of their existing gaming machines at little or no up front capital cost. This strategy involves installing PlayerVision at little or no up front capital cost to gaming operators in exchange for recurring software license fees.

New Applications. We plan to continue the development of innovative applications to be delivered through our PlayerVision system. To date, we have designed our PlayerVision system to deliver advertisements, multimedia content, casino services, promotional materials, and wagering opportunities. Since PlayerVision engages the existing video, audio and printing functions of the gaming machine, and since our kiosk driven ticket redemption system features its own path to the slot accounting system, we believe that our PlayerVision system can be used as a platform to deliver a wide array of casino services, multimedia or gaming content directly to patrons.

PlayerVision is a single, flexible, and dynamic platform that can be used to deliver casino services, multimedia or gaming content developed either by us or third parties. Because of the integration of PlayerVision with all of the functions of the gaming machine, we expect that PlayerVision can be used by gaming operators to control all aspects of their gaming machines. By establishing our PlayerVision system as the premier enhancement system for the installed base of gaming machines, we believe that we will be able to establish a significant barrier to entry for any potential competitors.

PlayerVision System

~~With~~Through ~~deployment of~~ PlayerVision, players will at once enjoy a multi-wagering/multi-tasking immersive experience that results in a substantial increase in percentage of wallet for the operator. A powerful retrofit solution, we expect that PlayerVision will enable operators to reduce operating costs and ~~increase~~ increase efficiencies for both new and legacy gaming floors, featuring;:

·	On-the-fly machine "customization" by casino and customer at minimal cost, using existing slot screens for a variety of innovative applications;

·	Increased time on device with added wagering and targeted marketing;

· Beverage-on-demand, allowing reduced head count with improved player experience; and

·	On-demand multimedia offering private access to shows, products and services.

We expect to offer PlayerVision at a little to no up front capital cost to the operator in exchange for recurring license fees, thereby increasing earning power and functionality of gaming machines without financial risk.

Slot operations serve as the primary source of revenue in almost any gaming operation. In need of sources of incremental revenue and cost savings, the industry is primed for a technology that utilizes the processing power now available through server-based environments. By installing off-the-shelf CPUs into any EGM (a 30-minute process), PlayerVision converts a single-use slot machine into a multi-dimensional revenue generator and cost container. We believe we are the developer/owner of some of the most significant ~~IP and~~intellectual property/technology in the industry related to deployment of server-based gaming applications. No assurances can be given that the deployment of server-based gaming applications will be successful or that our ~~IP and~~ intellectual property/technology will play a significant role in server-based gaming applications.

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Casino Games

We ~~operate~~ offer two keno games, Nevada Numbers and The Million Dollar Ticket, and collect royalties on several bingo style games. The revenue generated from our casino games is primarily based on collecting per ticket or per game fees from our various customers. On March 31, 2009, our contract with Treasure Island to maintain the $3.9 million base jackpot bankroll for Nevada Numbers and ~~The~~ The Million Dollar Ticket expired, and we shut down the games as a result. We expect to restart the games as soon as we find funding for the $3.9 million base jackpot.

Nevada Numbers

Nevada Numbers is a variation of classic keno, which isprior ~~currently~~to its shutdown noted above has been played in many casinos in Nevada. Keno is a game in which bets are made and recorded on a keno ticket. This ticket contains 80 numbered squares that correspond exactly to 80 numbered balls in a selection hopper. A player marks a ticket to play between two and 20 different numbers. The keno operator then draws 20 out of the 80 numbers and displays the results throughout the casino. The more numbers that match, the more money the player wins. Payout awards vary from casino to casino and depend on the amounts wagered.

Nevada Numbers differs from classic keno in that fewer numbers (five rather than 20) are drawn and a “linked’’ or “progressive’’ component has been added. We ~~have~~ linked together the play of Nevada Numbers at multiple casinos so that players at at several different locations all choose numbers that are matched to the same five-number draw. In addition, Nevada Numbers ~~features~~featured a starting jackpot of $5.0 million that iswas progressive, in that it ~~grows~~grew with the purchase of each Nevada Numbers ticket and ~~can~~could be won at each draw. Any winner of ~~the~~ the Nevada Numbers progressive jackpot will be paid the amount of the ~~progressive~~ progressive meter in equal installments over a period of 20 years. At our sole discretion, we may offer the winner an option to receive a discounted ~~value~~ value immediately. The process of linking games and creating a ~~progressive~~ progressive jackpot ~~provides~~provided an enticement to players because of the potential for a life-changing event.

Although Nevada Numbers has traditionally been limited to the keno lounges of casinos, we are taking measures to expand its visibility. First, we have incorporated Nevada Numbers as part of NumberVision. Through NumberVision, we propose to position Nevada Numbers as a dynamic game that will give players the opportunity to win a progressive jackpot of at least $5.0 million. Second, subject to regulatory approval of NumberVision, we will market the game to third-party race and sports books for use on their existing wagering terminals.

The Million Dollar Ticket

Based on the classic keno game, The Million Dollar Ticket offers the chance to win $1.0 million and a progressive jackpot. In order to win the $1.0 million and the progressive jackpot, the player must pick 10 numbers correctly out of 20 drawn from a pool of 80. As ~~Although~~stated ~~the~~previously, ~~distribution~~we ofshut ~~The~~down ~~Million~~this ~~Dollar~~game ~~Ticket is~~on ~~limited~~March 31, ~~we are anticipating growth in~~ 2009 byand ~~making~~will ~~the~~restart ~~game~~when ~~available~~we ~~in third-party~~receive ~~race~~funding ~~and~~for ~~sports book locations~~the jackpot.

Super Bingo Games

Super Bingo Games are odds-based bingo games with life-changing prizes that are offered as side bets to existing bingo games. We offer these games at various jackpot levels-as high as $~~500~~50,000 in some cases. We purchase insurance for the larger jackpots. Our Super Games are structured so that the bingo operator is guaranteed a profit for each wager made. We have placed Super Bingo Games in ~~seven~~four Nevada casinos and ~~eighteen~~ ~~non-Nevada locations. We expect to grow the Super Bingo~~ten ~~Games segment in both Nevada and~~ non-Nevada locations ~~throughout 2009~~.

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Keno and Bingo Systems and Supplies

The worldwide keno system market is limited and has been declining for several years. We are attempting to invigorate the market and gain an additional share of the market by enhancing our keno system through the addition of several new games and features to the platform.

Keno and bingo supplies sales contribute significantly to our revenue, but consist of low margin items, including crayons, various paper products, and ink.

Other Businesses

We also generate revenue through various keno participation agreements and the maintenance of our equipment under service contracts.

· Nevada Keno and Related Participation Agreements. Through agreements with participating casinos, we offer Nevada Keno, a “satellite-linked’’ traditional keno game played in multiple casinos. ~~Nevada Keno was temporarily discontinued on February 29, 2008, and then restarted in the fall of 2008.~~ We are currently operating Nevada Keno in ~~two~~three casinos. However, we believe we will soon be operating in 2-3 more. However, no assurances can be given that we will operate Nevada Keno in additional casinos. Additionally, principally in Nebraska, we provide equipment in return for a share in the revenue generated in various keno salons.

·	Service Contracts. Most of our customers that purchase keno and bingo equipment also purchase a service contract from us to provide routine maintenance for the equipment.

· RoutePromo. RoutePromo is designed to deliver promotional tickets or vouchers to players upon the occurrence of an event specified by the operator, such as hitting a four-of-a-kind or better on a video poker machine. The key feature of RoutePromo is its ability to recognize a specified event generated by the game and deliver the programmed response to the specified event.

RoutePromo is designed to deliver promotional tickets or vouchers to players upon the occurrence of an event specified by the operator, such as hitting a four-of-a-kind or better on a video poker machine. The key feature of RoutePromo is its ability to recognize a specified event generated by the game and deliver the programmed response to the specified event.

RoutePromo is designed to work as follows:

·	first, the operator specifies the events that will trigger RoutePromo, such as a four-of-a- kind or better on a video poker machine;

·	second, upon the occurrence of the specified event, RoutePromo is activated and a message is sent to the gaming machine to issue a promotional ticket or voucher;

·	third, the gaming machine alerts the player and prints the free promotional ticket or voucher; and

·	fourth, the gaming machine returns to its original state.

We currently charge a fixed monthly fee for the ability to offer RoutePromo.

Through our agreement with United Coin Machine Company, the largest slot route operator in Nevada, we developed a variation of our keno game called The Million Dollar Ticket, known as the Gamblers Bonus Million Dollar Ticket, to be used in conjunction with RoutePromo. Gamblers Bonus Million Dollar Ticket is a free promotional game that gives players the chance to win various prizes,

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~~including~~Through our agreement with United Coin Machine Company, the largest slot route operator in Nevada, we developed a variation of our keno game called The Million Dollar Ticket, known as the Gamblers Bonus Million Dollar Ticket, to be used in conjunction with RoutePromo. Gamblers Bonus Million Dollar Ticket is a free promotional game that gives players the chance to win various prizes, including a $1.0 million grand prize, by matching numbers on their promotional ~~tickets~~ tickets with numbers picked in a random weekly drawing. Under our agreement, we are obligated to provide software, hardware, and support to United Coin for the game. In addition, we are financially responsible for the payouts associated with the game. In return, United Coin is obligated to pay us $1.25 for each ticket distributed. During the second quarter of 2008, we rolled out Gamblers Bonus Million Dollar Ticket at approximately 100 United Coin route locations. On January 31, 2009, we closed down the game with United Coin because there was little interest among bar owners and convenience store owners to offer an expensive promotion in difficult economic times.

Manufacturing

We outsource the manufacturing of the various components of our PlayerVision 3 system to Apple, Hitachi, and various other key suppliers. Lead times for certain key components can be as long as eight weeks.

Marketing and Distribution

PlayerVision

As part of our objective to provide the leading single multimedia and game delivery system, we have started to implement a plan that will market our PlayerVision system to customers through direct and indirect channels. Our plan involves the following steps:

·	Direct Sales Efforts. Through the hiring of additional personnel to our sales and marketing staff, we will market PlayerVision to operators located primarily in North America and to Native American tribes. As part of our direct sales efforts, we attend trade shows, such as G2E in Las Vegas, Nevada.

Strategic Partnerships. We supplement our direct sales efforts by targeting third-party distributors and regional operators. IGT and Ebet are key examples of entities that we expect will be distributing our product. By forming strategic relationships with these parties, we hope to gain access to smaller and more fragmented markets around the globe and secure the broadest placement for PlayerVision.

We plan to conduct all of our sales and marketing efforts from our headquarters in Las Vegas, Nevada. Although we do not have any current plans to open any sales offices, we will review the need for such additional offices in response to the needs of our customers and our strategic partners.

Casino Games

We license our games directly to casinos. We make initial contacts through the mailing of marketing materials, referrals, or direct solicitation by our employees and marketing agents. We promote licensed games to the general public using various types of media, including billboards, newspapers, magazines, radio, and television. Advertising within a particular casino may include advertisement on strategically placed LCDs, table tents, flyers, signs on the tops of gaming machines, and show cards to stimulate curiosity and game play.

Keno and Bingo Systems and Supplies.

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~~for~~Keno bingo-related products. No assurance can be given that the market for bingo-related products will increase. Direct sales to the casino are the primary means of sale for these products. The marketplace for gaming supplies is large and ~~geographically~~Bingo ~~dispersed.~~Systems ~~Our primary marketing tool is a catalog that we periodically distribute to our customers~~ and ~~potential customers~~Supplies.

We are one of the world’s few keno equipment suppliers. Most sales in this area result from unsolicited inquiries or direct solicitation of customers by our sales staff. The marketplace for bingo equipment, electronic playing devices, and supplies in Nevada is relatively small, consisting of approximately 40 potential customers. However, we believe that the recent introduction of wireless gaming devices into the marketplace in Nevada and other jurisdictions may increase the potential market for bingo-related products. No assurance can be given that the market for bingo-related products will increase. Direct sales to the casino are the primary means of sale for these products. The marketplace for gaming supplies is large and geographically dispersed. Our primary marketing tool is a catalog that we periodically distribute to our customers and potential customers.

Competition

PlayerVision System

We encounter significant competition in the market for innovative gaming technologies that deliver interactive gaming, animated content, and cross-promotional opportunities to gaming operators. The key competitive factors are functionality, accuracy, reliability, and pricing. We believe that PlayerVision is a single, integrated solution because of the following:

·	PlayerVision uses the existing primary screen of the gaming machine or a smaller secondary video screen or a mounted side screen;

·	PlayerVision engages the existing video, audio and printing functions of the gaming machine regardless of the manufacturer;

·	PlayerVision involves little or no up front capital cost to gaming operators; and

·	PlayerVision delivers a broad range of functionalities.

We are unaware of any other product that delivers casino services, multimedia and gaming content through the existing various screens of gaming machines. Although we face competition from products that use smaller secondary video screens and cost thousands of dollars, such as iView developed by Bally Systems and NexGen developed by ~~International Game Technology~~IGT, we expect to be able to deliver content for little or no up front capital cost and deliver the content directly to the patron through all existing screens rather than just an auxiliary 2x6-inch screen. ~~In terms of deployment, we believe that there is no one else offering a content delivery system for existing gaming machines on the main screen.~~

Since we are able to use all existing screens of a gaming machine, as well as its existing video, audio and printing functions, we expect to offer to gaming operators a solution that requires little or no up front capital cost, involves minimal installation time, and interfaces with virtually all gaming machines. In addition, although there are products that deliver advertising or promotional content through secondary video screens installed onto gaming machines, we do not believe that there are currently any products that can deliver the additional wagering opportunities that PlayerVision can or any products that can provide an expandable platform for additional content on the existing screens of gaming machines.

Nevertheless, there is no guarantee that PlayerVision will be accepted in the marketplace. Many of our potential competitors possess substantially greater financial, technical, marketing, and other resources than we do, which affords them competitive advantages over us. As a result, our competitors may introduce products that have advantages over PlayerVision in terms of features, functionality, ease of use, and revenue producing potential. If we are unable to compete effectively, or incur any delays, either regulatory or otherwise, in our ability to fully introduce PlayerVision, our operations and financial condition may be adversely affected.

Keno and Bingo Systems and Supplies.

The keno and bingo systems and supplies industry is characterized by limited competition. We compete primarily with other companies that provide keno and bingo systems, including electronic systems, keno, bingo supplies, and related services. In addition, we compete with other similar forms of entertainment, including casino gaming, other forms of Class II gaming, and lotteries. Our key competitor is XpertX in the keno market. We compete by providing superior service, lower prices, innovative games, and a quality fully functional keno system.

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Keno and Bingo Systems and Supplies.

Research and Development

Our research and development efforts focus on developing new applications for our PlayerVision system and reducing its cost. During 2008 we considerably expanded our internal R&D effort by employing 5 new software engineers, one of which became our Chief Technical Officer in March 2008. InWe ~~addition~~layed tooff all of our software engineers in December 2009 in order to conserve cash. We ~~own~~will ~~research~~hire ~~and~~software ~~development~~engineers ~~staff,~~back to work when we raise significant capital. We plan to engage, from time to time, ~~independent~~ independent consultants and advisors to assist us.

Intellectual Property and Other Proprietary Rights

We hold several patents, including a patent related to Nevada Numbers. We have been recently issued a patent for “closed loop,” a key application in our PlayerVision technology. In addition, we have several more patents pending with respect to the PlayerVision system and certain of its various applications. We also hold several trademarks filed with the state of Nevada and the U.S. Patent and Trademark Office, including trademark rights to PlayerVision, Nevada Numbers and The Million Dollar Ticket, and other intellectual property that is protected by federal copyright and trade secret laws.

We rely on the proprietary nature of our intellectual property, primarily in the form of patent protection, for development of our products. We believe that our success depends in part on protecting our intellectual property. If we cannot protect our intellectual property against the unauthorized use by others, our competitive position could be harmed.

The risks associated with our intellectual property, include the following:

·	The inability of intellectual property laws to protect our intellectual property rights;

·	Attempts by third parties to challenge, invalidate, or circumvent our intellectual property rights;

·	The unauthorized use by third parties of information that we regard as proprietary despite our efforts to protect our proprietary rights;

· The independent development of similar technology; ~~and~~

· The inability to protect our intellectual property rights in foreign jurisdictions.; and

·	A lack of adequate capital to defend and protect our intellectual property.

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We may not be able to obtain effective patent, trademark, service mark, copyright, and trade secret protection in every country in which our products are used. We may find it necessary to take legal action to enforce or protect our intellectual property rights or to defend against claims of infringement, and such actions may be unsuccessful. In addition, we may not be able to obtain a favorable outcome in any intellectual property litigation. Significant amounts could be expended to defend and protect our intellectual property. Moreover, our competitors may develop products or technologies similar to ours without infringing on our intellectual property rights.

Government Regulation

We are subject to regulation by governmental authorities in most jurisdictions in which we operate. Gaming regulatory requirements vary from jurisdiction to jurisdiction, and obtaining licenses and findings of suitability for our officers, directors, and principal stockholders, registrations, and other required approvals with respect to us, our personnel, and our products are time consuming and expensive. Generally, gaming regulatory authorities have broad discretionary powers and may deny applications for or revoke approvals on any basis they deem reasonable. We have approvals that enable us to conduct our business in numerous jurisdictions, subject in each case to the conditions of the particular approvals. These conditions may include limitations as to the type of game or product we may sell or lease, as well as limitations on the type of facility, such as riverboats, and the territory within which we may operate, such as tribal nations.

-Jurisdictions in 10which we, and specific personnel, where required, have authorizations with respect to some or all of our products and activities include New Jersey, Nevada, Arizona, Nebraska, Oregon, Washington, and Montana. In addition to these jurisdictions, we have authorizations with respect to certain Native American tribes throughout the United States that have compacts with the states in which their tribal dominions are located or operate or propose to operate casinos. These tribes may require suppliers of gaming and gaming-related equipment to obtain authorizations.

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Jurisdictions in which we, and specific personnel, where required, have authorizations with respect to some or all of our products and activities include New Jersey, Nevada, Mississippi, Arizona, Nebraska, Oregon, Washington, Iowa, Minnesota and Montana. In addition to these jurisdictions, we have authorizations with respect to certain Native American tribes throughout the United States that have compacts with the states in which their tribal dominions are located or operate or propose to operate casinos. These tribes may require suppliers of gaming and gaming-related equipment to obtain authorizations.

Overview

Gaming Devices and Equipment. We sell or lease products that are considered to be “gaming devices’’ or “gaming equipment’’ in jurisdictions in which gaming has been legalized. Although regulations vary among jurisdictions, each jurisdiction requires various licenses, findings of suitability, registrations, approvals, or permits for companies and their key personnel in connection with the manufacture and distribution of gaming devices and equipment.

Associated Equipment. Some of our products fall within the general classification of “associated equipment.’’ “Associated equipment’’ is equipment that is not classified as a “gaming device,’’ but which has an integral relationship to the conduct of licensed gaming. Regulatory authorities in some jurisdictions have the discretion to require manufacturers and distributors to meet licensing or suitability requirements prior to or concurrently with the use of associated equipment. In other jurisdictions, the regulatory authorities must approve associated equipment in advance of its use at licensed locations. We have obtained approval of our associated equipment in each jurisdiction that requires such approval and in which our products that are classified as associated equipment are sold or used.

Regulation of Officers, Directors, and Stockholders. In many jurisdictions, any officer or director is required to file an application for a license, finding of suitability, or other approval and, in the process, subject himself or herself to an investigation by those authorities. As for stockholders, any beneficial owner of our voting securities or other securities may, at the discretion of the gaming regulatory authorities, be required to file an application for a license, finding of suitability, or other approval and, in the process, subject himself or herself to an investigation by those authorities. The gaming laws and regulations of most jurisdictions require beneficial owners of more than 5% of our outstanding voting securities to file certain reports and may require our key employees or other affiliated persons to undergo investigation for licensing or findings of suitability.

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In the event a gaming jurisdiction determines that an officer, director, key employee, stockholder, or other personnel of our company is unsuitable to act in such a capacity, we will be required to terminate our relationship with such person or lose our rights and privileges in that jurisdiction. This may have a materially adverse effect on us. We may be unable to obtain all the necessary licenses and approvals or ensure that our officers, directors, key employees, affiliates, and certain other stockholders will satisfy the suitability requirements in each jurisdiction in which our products are sold or used. The failure to obtain such licenses and approvals in one jurisdiction may affect our licensure and approvals in other jurisdictions. In addition, a significant delay in obtaining such licenses and approvals could have a material adverse effect on our business prospects.

Regulation and Licensing – Nevada

The manufacture, sale, and distribution of gaming devices for use or play in Nevada or for distribution outside of Nevada, the manufacturing and distribution of associated equipment for use in Nevada, and the operation of gaming machine routes and inter-casino linked systems in Nevada are subject to the Nevada Gaming Control Act and the regulations promulgated thereunder and various local ordinances and regulations. These activities are subject to the licensing and regulatory control of various Nevada gaming authorities, including the Nevada Gaming Commission, the Nevada State Gaming Control Board, and various local, city, and county regulatory agencies, collectively referred to as the Nevada Gaming Authorities.

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The laws, regulations, and supervisory practices of the Nevada Gaming Authorities are based upon declarations of public policy with the following objectives:

·	preventing any direct or indirect involvement of any unsavory or unsuitable persons in gaming or the manufacture or distribution of gaming devices at any time or in any capacity;

·	strictly regulating all persons, locations, practices, and activities related to the operation of licensed gaming establishments and the manufacturing or distribution of gaming devices and equipment;

·	establishing and maintaining responsible accounting practices and procedures;

·	maintaining effective controls over the financial practices of licensees, including requirements covering minimum procedures for internal fiscal controls and safeguarding assets and revenue, reliable recordkeeping, and periodic reports to be filed with the Nevada Gaming Authorities;

·	preventing cheating and fraudulent practices; and

·	providing and monitoring sources of state and local revenue based on taxation and licensing fees.

Change in such laws, regulations, and procedures could have an adverse effect on our operations.

We are registered with the Nevada Gaming Commission as a publicly traded corporation, or a Registered Corporation. We are also licensed in Nevada as a manufacturer and distributor of gaming devices and as an operator of an inter-casino linked system. We have obtained from the Nevada Gaming Authorities the various authorizations they require to engage in manufacturing, distribution, and inter-casino linked system activities in Nevada. The regulatory requirements set forth below apply to us as a Registered Corporation and as a manufacturer, distributor, and operator of an inter-casino linked system. Our gaming approvals and licenses are also conditioned to allow the Chairman of the Nevada State Gaming Control Board or his designee to order us to cease any gaming activities if the Chairman determines that the minimum bankroll requirements set forth in the Nevada Gaming Control Act are not being met.

All gaming devices that are manufactured, sold, or distributed for use or play in Nevada, or for distribution outside of Nevada, must be manufactured by licensed manufacturers and distributed and sold by licensed distributors. The Nevada Gaming Commission must approve all gaming devices manufactured for use or play in Nevada before distribution or exposure for play. The Chairman of the Nevada State Gaming Control Board must administratively approve associated equipment before it is distributed for use in Nevada. Inter-casino linked systems must also be approved by the Nevada Gaming Commission. The approval process for an inter-casino linked system includes rigorous testing by the Nevada State Gaming Control Board, a field trial, and a determination as to whether the inter-casino linked system meets standards that are set forth in the regulations of the Nevada Gaming Commission. On November 19, 2001, we received the final approval of the Nevada Gaming Commission for our inter-casino linked system known as Nevada Numbers. In November 2007, we received final approval from Nevada for our AdVision and Live TV software applications on the PlayerVision 2 platform on IGT Game

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~~King~~All gaming devices that are manufactured, sold, or distributed for use or play in Nevada, or for distribution outside of Nevada, must be manufactured by licensed manufacturers and distributed and sold by licensed distributors. The Nevada Gaming Commission must approve all gaming devices manufactured for use or play in Nevada before distribution or exposure for play. The Chairman of the Nevada State Gaming Control Board must administratively approve associated equipment before it is distributed for use in Nevada. Inter-casino linked systems must also be approved by the Nevada Gaming Commission. The approval process for an inter-casino linked system includes rigorous testing by the Nevada State Gaming Control Board, a field trial, and a determination as to whether the inter-casino linked system meets standards that are set forth in the regulations of the Nevada Gaming Commission. On November 19, 2001, we received the final approval of the Nevada Gaming Commission for our inter-casino linked system known as Nevada Numbers. In November 2007, we received final approval from Nevada for our AdVision and Live TV software applications on the PlayerVision 2 platform on IGT Game King Machines only. In May 2009, we received approval for nine software applications on our PlayerVision 3 platform from the Nevada Gaming Control Board. These software applications include Beverage-on-Demand, ServiceVision, VoyeurVision, Live TV, AdVision, YouTube, CasinoTunes, ValetVision, and BurstVision. In addition, the Nevada Gaming Control Act requires any person, such as our company as an operator of an inter-casino linked system, that receives a share of gaming revenue from a gaming device operated on the premises of a licensee, to remit and be liable to the licensee for that person’s proportionate share of the license fees and tax paid by the licensee. The gross revenue fees for non-restricted locations are 6.75% of gross revenue, which is equal to the difference between amounts wagered by casino players and payments made to casino players. Significant increases in the fixed fees or taxes ~~currently~~ currently levied per machine or the fees currently levied on gross revenue could have a material adverse effect on our operations.

As a gaming licensee (a “Registered Corporation”), we are periodically required to submit detailed financial and operating reports to the Nevada Gaming Commission and furnish any other information the Nevada Gaming Commission may require. No person may receive any percentage of gaming revenue from us without first obtaining authorizations from the Nevada Gaming Authorities.

The Nevada Gaming Authorities may investigate any individual who has a material relationship to, or material involvement with, us in order to determine whether such individual is suitable or should be licensed as a business associate of a gaming licensee. Our officers, directors, and certain key employees are required to file applications with the Nevada Gaming Authorities and may be required to be licensed or found suitable by the Nevada Gaming Authorities. The Nevada Gaming Authorities may deny an application for licensing for any cause that they deem reasonable. A finding of suitability is comparable to licensing. Both require submission of detailed personal and financial information, which is followed by a thorough investigation. The applicant for licensing or a finding of suitability must pay all the costs of the investigation. Changes in licensed positions must be reported to the Nevada Gaming Authorities. In addition to their authority to deny an application for a finding of suitability or licensure, the Nevada Gaming Authorities have the power to disapprove a change in corporate position.

If the Nevada Gaming Authorities were to find an officer, director, or key employee unsuitable for licensing or unsuitable to continue having a relationship with us, we would have to sever all relationships with that person. In addition, the Nevada Gaming Commission may require us to terminate the employment of any person who refuses to file appropriate applications. Determinations of suitability or of questions pertaining to licensing are not subject to judicial review in Nevada.

We are required to submit detailed financial and operating reports to the Nevada Gaming Commission. In addition, we are required to report to or have approved by the Nevada Gaming Commission substantially all material loans, leases, sales of securities, and similar financing transactions.

Should we be found to have violated the Nevada Gaming Control Act, the licenses we hold could be limited, conditioned, suspended, or revoked. In addition, we and the persons involved could be required to pay substantial fines, at the discretion of the Nevada Gaming Commission, for each separate violation of the Nevada Gaming Control Act. The limitation, conditioning, or suspension of any of our licenses could, and revocation of any license would, materially adversely affect our manufacturing, distribution, and inter-casino linked system operations.

Regulation of Security Holders. Any beneficial holder of our voting securities, regardless of the number of shares owned, may be required to file an application, be investigated, and have his or her suitability as a beneficial holder of our voting securities determined if the Nevada Gaming Commission finds reason to believe that such ownership would otherwise be inconsistent with the declared policies of the state of Nevada. The applicant must pay all costs of investigation incurred by the Nevada Gaming Authorities in conducting any such investigation.

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~~Chairman~~Should we ofbe found to have violated the Nevada ~~State~~ Gaming Control ~~Board~~Act, ~~mails~~the alicenses ~~written~~we ~~notice requiring such~~hold ~~filing.~~could ~~Under~~be ~~certain~~limited, ~~circumstances~~conditioned, ~~an “institutional investor~~suspended,’’ asor ~~defined~~revoked. In inaddition, we and the ~~Nevada~~persons ~~Gaming~~involved ~~Control~~could ~~Act,~~be ~~which~~required ~~acquires~~to ~~more~~pay ~~than~~substantial ~~10%~~fines, ~~but~~at ~~not more than~~the ~~15%,~~discretion of the ~~Registered Corporation’s voting securities may apply to the~~ Nevada Gaming Commission, for aeach ~~waiver~~separate ofviolation ~~such finding~~ of ~~suitability if such~~the ~~institutional~~Nevada ~~investor~~Gaming ~~holds~~Control ~~the~~Act. The ~~voting~~limitation, ~~securities~~conditioning, ~~for investment purposes only.~~or Ansuspension ~~institutional~~of ~~investor~~any ~~that~~of ~~has~~our ~~obtained~~licenses ~~a waiver may~~could, inand ~~certain circumstances,~~revocation ~~hold up to 19%~~ of aany ~~Registered~~license ~~Corporation’s voting securities~~would, ~~for~~materially aadversely ~~limited~~affect ~~period~~our ofmanufacturing, ~~time~~distribution, and ~~maintain~~inter-casino linked ~~the~~system ~~waiver~~operations.

The Nevada Gaming Control Act requires any person that acquires beneficial ownership of more than 5% of a Registered Corporation’s voting securities to report the acquisition to the Nevada Gaming Commission. It also requires beneficial owners of more than 10% of a Registered Corporation’s voting securities to apply to the Nevada Gaming Commission for a finding of suitability within 30 days after the Chairman of the Nevada State Gaming Control Board mails a written notice requiring such filing. Under certain circumstances, an “institutional investor,’’ as defined in the Nevada Gaming Control Act, which acquires more than 10%, but not more than 25%, of the Registered Corporation’s voting securities may apply to the Nevada Gaming Commission for a waiver of such finding of suitability if such institutional investor holds the voting securities for investment purposes only. An institutional investor that has obtained a waiver may, in certain circumstances, own more than 25%, but not more than 29% of a Registered Corporation’s voting securities for a limited period of time and maintain the waiver.

An institutional investor is deemed to hold voting securities for investment purposes if the voting securities were acquired and are held in the ordinary course of its business as an institutional investor and were not acquired and are not held for the purpose of causing, directly or indirectly (1) the election of a majority of the members of the board of directors of the Registered Corporation; (2) any change in the Registered Corporation’s corporate charter, bylaws, management, policies, or operations or those of any of its gaming affiliates; or (3) any other action that the Nevada Gaming Commission finds to be inconsistent with holding the Registered Corporation’s voting securities for investment purposes only. Activities which are not deemed to be inconsistent with holding voting securities for investment purposes only include (a) voting on all matters voted on by stockholders; (b) making financial and other inquiries of management of the type normally made by securities analysts for informational purposes and not to cause a change in management, policies or operations; and (c) other activities the Nevada Gaming Commission may determine to be consistent with investment intent. If the beneficial holder of voting securities that must be found suitable is a corporation, partnership, or trust, it must submit detailed business and financial information, including a list of beneficial owners. The applicant is required to pay all costs of investigation.

Any person who fails or refuses to apply for a finding of suitability or a license within 30 days after being ordered to do so by the Nevada Gaming Commission or the Chairman of the Nevada State Gaming Control Board may be found unsuitable. The same restrictions apply to a record owner if the record owner, after request, fails to identify the beneficial owner. Any stockholder of a Registered Corporation found unsuitable and that holds, directly or indirectly, any beneficial ownership in the voting securities beyond such period of time as the Nevada Gaming Commission may specify for filing any required application may be guilty of a criminal offense. Moreover, the Registered Corporation will be subject to disciplinary action if, after it receives notice that a person is unsuitable to be a stockholder or to have any other relationship with the Registered Corporation, it (i) pays that person any dividend on its voting securities; (ii) allows that person to exercise, directly or indirectly, any voting right conferred through securities ownership; (iii) pays remuneration in any form to that person for services rendered or otherwise; or (iv) fails to pursue all lawful efforts (including, if necessary, the immediate purchase of said voting securities for cash at fair value) to require such unsuitable person to completely divest all voting securities held.

The Nevada Gaming Commission, in its discretion, may require the holder of any debt security of a Registered Corporation to file applications, be investigated, and be found suitable to own the debt security of a Registered Corporation if the Nevada Gaming Commission finds reason to believe that such ownership would otherwise be inconsistent with the declared policies of the state of Nevada. If the Nevada Gaming Commission determines that a person is unsuitable to own such security, it may sanction the Registered Corporation, which sanctions may include the loss of its approvals if, without the prior approval of the Nevada Gaming Commission, it: (i) pays to the unsuitable person any dividend, interest, or other distribution; (ii) recognizes any voting right of such unsuitable person in connection with such securities; (iii) pays the unsuitable person remuneration in any form; or (iv) makes any payment to the unsuitable person by way of principal, redemption, conversion, exchange, liquidation, or similar transaction.

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Regulation of Capital Stock. We are required to maintain current stock ledgers in Nevada that may be examined by the Nevada Gaming Authorities at any time. If any securities are held in trust by an agent or by a nominee, the record owner may be required to disclose the identity of the beneficial owner to the Nevada Gaming Authorities. A failure to make such disclosure may be grounds for finding the record owner unsuitable. We are also required to render maximum assistance in determining the identity of the beneficial owners of our securities. The Nevada Gaming Commission has the power to require us to imprint our stock certificates with a legend stating that the securities are subject to the Nevada Gaming Control Act. To date, the Nevada Gaming Commission has not imposed such a requirement on us.

We may not make a public offering of our securities without the prior approval of the Nevada Gaming Commission if the securities or proceeds are to be used to construct, acquire, or finance gaming facilities in Nevada or to retire or extend obligations incurred for such purposes. Such approval, if given, does not constitute a finding, recommendation, or approval by the Nevada Gaming Commission or the Nevada State Gaming Control Board as to the accuracy or adequacy of the prospectus or the investment merit of the offered securities, and any representation to the contrary is unlawful. Any offer by us to sell common stock will require the review of, and prior approval by, the Nevada Gaming Commission.

Changes in Control. Changes in control of a Registered Corporation through merger, consolidation, stock or asset acquisitions, management or consulting agreements, or any act or conduct, by which anyone obtains control, may not lawfully occur without the prior approval of the Nevada Gaming Commission. Entities seeking to acquire control of a Registered Corporation must meet the strict standards established by the Nevada State Gaming Control Board and the Nevada Gaming Commission prior to assuming control of a Registered Corporation. The Nevada Gaming Commission also may require persons that intend to become controlling stockholders, officers, or directors, and other persons who expect to have a material relationship or involvement with the acquired company, to be investigated and licensed as part of the approval process.

The Nevada legislature has declared that some corporate acquisitions opposed by management, repurchases of voting securities, and corporate defense tactics affecting Nevada corporate gaming licensees, and Registered Corporations that are affiliated with those operations, may be injurious to stable and productive corporate gaming. The Nevada Gaming Commission has established a regulatory scheme to minimize the potentially adverse effects of these business practices upon Nevada’s gaming industry and to further Nevada’s policy to:

·	assure the financial stability of corporate gaming licensees and their affiliates,

·	preserve the beneficial aspects of conducting business in the corporate form, and

·	promote a neutral environment for the orderly governance of corporate affairs.

In certain circumstances, approvals are required from the Nevada Gaming Commission before the Registered Corporation can make exceptional repurchases of voting securities above market price and before a corporate acquisition opposed by management can be consummated. The Nevada Gaming Control Act also requires prior approval of a plan of recapitalization proposed by the Registered Corporation’s board of directors in response to a tender offer made directly to the Registered Corporation’s stockholders for the purpose of acquiring control of the Registered Corporation.

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License Fees and Taxes. License fees and taxes, computed in various ways depending on the type of gaming or activity involved, must be paid to the state of Nevada and to the counties and cities in which gaming operations are conducted. These fees and taxes, depending upon their nature, are payable monthly, quarterly, or annually and are based upon either a percentage of the gross revenue received or the number of gaming devices operated. Annual fees are also payable to the state of Nevada for renewal of licenses as an operator of a gaming machine route, manufacturer, and/or distributor.

Any person who is licensed, required to be licensed, registered, required to be registered, or who is under common control with any such persons, collectively, “Licensees,’’ and who proposes to become involved in a gaming venture outside of Nevada, is required to deposit with the Nevada State Gaming Control Board, and thereafter maintain, a revolving fund in the amount of $10,000 to pay the expenses of investigation by the Nevada State Gaming Control Board of his or her participation outside of Nevada. The revolving fund is subject to increase or decrease at the discretion of the Nevada Gaming Commission. Thereafter, Licensees are required to comply with certain reporting requirements imposed by the Nevada Gaming Control Act. Licensees also are subject to disciplinary action by the Nevada Gaming Commission if they knowingly violate any laws of the foreign jurisdiction pertaining to the non-Nevada gaming operations, fail to conduct the foreign gaming operations in accordance with the standards of honesty and integrity required of Nevada gaming operations, engage in activities or enter into associations that are harmful to the state of Nevada or its ability to collect gaming taxes and fees, or employ, contract with, or associate with, a person in the non-Nevada operations who has been denied a license or finding of suitability in Nevada on the ground of unsuitability.

Other Jurisdictions

All other jurisdictions that have legalized gaming require various licenses, registrations, findings of suitability, permits, and approvals of manufacturers and distributors of gaming devices and equipment as well as licensure provisions related to changes in control. In general, such requirements involve restrictions similar to those of Nevada.

For gaming device and system approvals, most jurisdictions in the United States, including most Native American tribes and state regulatory agencies, accept testing results from GLI, a leading private gaming device and systems testing laboratory. GLI also provides testing services for over 400 gaming ~~regulatory~~ regulatory bodies worldwide. GLI has already approved NumberVision, AdVision and Live TV on our PlayerVision2 platform. We expect to submit for approval all of our software applications on the PlayerVision 3 platform to GLI sometime ~~between June~~during ~~and~~the ~~August~~third ~~2009~~quarter of 2010. If necessary, we also plan to apply directly for approvals from those jurisdictions that do not accept GLI testing results for certain devices and systems, such as New Jersey, Pennsylvania, and Montana.

Federal Regulation

The Federal Gambling Devices Act of 1962, or the Federal Act, makes it unlawful, in general, for any person to manufacture, transport, or receive gaming machines, gaming machine type devices, and components across state lines or to operate gaming machines unless that person has first registered with the Attorney General of the United States. We have registered and must renew our registration annually. In addition, the Federal Act imposes various record keeping and equipment identification requirements. Violation of the Federal Act may result in seizure and forfeiture of the equipment, as well as other penalties.

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Application of Future or Additional Regulatory Requirements

In the future, we intend to seek the necessary registrations, licenses, approvals, and findings of suitability for us, our products, and our personnel in other jurisdictions throughout the world where significant sales of our products are expected to be made. However, we may be unable to obtain these registrations, licenses, approvals, or findings of suitability, which if obtained may be revoked, suspended, or conditioned. In addition, we may be unable to obtain on a timely basis, or to obtain at all, the necessary approvals of our future products as they are developed, even in those jurisdictions in which we already have existing products licensed or approved. If a registration, license, approval or finding of suitability is required by a regulatory authority and we fail to seek or do not receive the necessary registration, license, approval or finding of suitability, we may be prohibited from selling our products for use in that jurisdiction or may be required to sell our products through other licensed entities at a reduced profit.

Employees

As of December 31, ~~2008~~2009, we had 4827 full-time employees, 2213 of whom were involved in keno and bingo operations, 81 of whom ~~were~~was involved in engineering and research and development, 54 of whom were involved in sales, and 139 of whom were involved in finance and administration. With the implementation of our new business focus on our PlayerVision system and upon receipt of sufficient funding, we anticipate an increase in employees dedicated to developing and growing this business in the third quarter of ~~2009~~ 2010. Our employees are not subject to any collective bargaining agreement with us. We have never experienced a work stoppage, and we believe our employee relations to be good.

Corporate History

We were incorporated in the State of Nevada on April 28, 1998.

ITEM 1A. RISK FACTORS.

Not required.

ITEM 1B. UNRESOLVED STAFF COMMENTS.

Not ~~required~~applicable.

ITEM 2. PROPERTIES.

Our corporate headquarters ~~are~~and ~~located~~our atPlayerVision ~~4000~~business ~~West~~is ~~Ali~~located ~~Baba~~at ~~Lane~~3980 Howard Hughes Parkway, Suite D450, Las Vegas, Nevada~~, 89118,~~ ~~which~~89169 isand comprised of approximately 8,~~200~~300 square feet of office space ~~and 10,000 square feet of warehouse space~~ under a ~~lease~~favorable sublease agreement ~~recently~~through ~~extended to~~July ~~May~~ 31, ~~2009~~2011. This space adequately meets our facility and capacity requirements;. Our ~~however,~~bingo weand keno headquarters are ~~currently~~located ~~evaluating~~at ~~our~~4000 ~~alternatives~~West asAli Baba, Suite D, Las Vegas, Nevada 89118, which is wecomprised ~~plan~~of toapproximately ~~move~~4,800 tosquare ~~another~~feet ~~location~~of office space and 5,700 square feet of warehouse space under a month-to-month sublease. We ~~also~~had ~~have~~ a Reno, Nevada office consisting of approximately 7,500 square feet ~~of space~~ under ~~a recently~~an executed lease that expires in ~~2012~~2013. Due to our poor financial condition, we have broken the lease and moved from the facility and are in final settlement negotiations with the landlord. We also lease an Omaha, Nebraska service office consisting of approximately ~~880~~900 square feet of space under a ~~lease~~month-to-month ~~expiring on November 30, 2010~~lease.

ITEM 3. LEGAL PROCEEDINGS

On September 1215, ~~2007~~2008, ~~IGT~~Steven Brandstetter and J & S Gaming filed a lawsuit against us, among other defendants, in Department 11 of the ~~United~~Nevada ~~States~~Eighth Judicial District Court ofcaptioned ~~Nevada~~Brandstetter, ~~captioned~~et ~~IGT~~al. v. ~~Las~~Bally ~~Vegas~~ Gaming, Inc., et al., case no. ~~3:07~~ 08-cvA-~~00415~~571641-~~BES-VPC~~C alleging ~~copyright~~against ~~infringement,~~us ~~trademark~~claims ~~infringement, trade dress infringement and false designation~~ of ~~origin~~breach ~~relating to the operation~~ of ~~our PlayerVision system on IGT’s Game King® gaming~~contract, ~~machines. IGT~~misrepresentation, ~~was~~breach ~~seeking~~of ~~injunctive~~fiduciary ~~and~~duty ~~monetary relief in the case, including treble damages~~ and ~~profits,~~unjust ~~claiming~~enrichment ~~that~~regarding ~~IGT would be irreparably~~a ~~harmed~~non-disclosure byagreement ~~LVGI~~executed ifin ~~LVGI’s~~May ~~PlayerVision~~2002 ~~were~~pertaining ~~deployed~~to in the plaintiffs’ ~~marketplace~~gaming concepts. OnIn ~~June~~August 122009, ~~2008, IGT and LVGI jointly filed~~ a ~~“stay”~~Motion of ~~the~~ ~~lawsuit~~Summary ~~and~~Judgment ~~began settlement negotiations. On October 14, 2008,~~was ~~pursuant~~granted toand the ~~settlement effective September 30, 2008, the~~ case was dismissed ~~with prejudice~~.

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On ~~September~~ 15August 26, ~~2008~~2009, ~~Steven~~a ~~Brandstetter~~lawsuit ~~and~~was Jfiled &by SAdline ~~Gaming~~Network ~~filed~~Holdings, LLC, a ~~lawsuit~~Georgia ~~against us~~Corporation, ~~among~~Adline ~~other~~Media ~~defendants~~LLC, ina ~~Department~~Georgia 11Limited ofliability ~~the~~company, ~~Nevada Eighth~~Adline ~~Judicial~~Network ~~District~~LLC, ~~Court~~a ~~captioned~~Georgia ~~Brandstetter,~~limited etliability ~~al.~~company, v.and ~~Bally~~Sam ~~Gaming~~Johnson, ~~Inc.,~~a etformer ~~al.,~~officer ~~case~~and ~~no.~~employee, ~~08-A-571641-C~~ alleging ~~against~~breach usof ~~claims~~an ofAcquisition Agreement, breach of ~~contract,~~a ~~misrepresentation~~Consulting Agreement, breach of ~~fiduciary~~a ~~duty~~covenant of good faith and ~~unjust~~fair ~~enrichment~~dealing, negligent ~~regarding~~misrepresentation, acommon law fraud (fraud in the ~~non~~inducement/fraudulent misrepresentation), 10b-~~disclosure~~5 ~~agreement~~securities ~~executed~~violations inand declaratory ~~May~~relief. In ~~2002~~response ~~pertaining~~to our Motion to Dismiss filed on October 16, 2009, the plaintiffs~~’ gaming~~ ~~concepts~~filed a first amended complaint. ~~The~~Since then, the plaintiffs ~~are~~have ~~seeking~~filed ~~monetary~~a ~~damages,~~second amended ~~including~~complaint ~~attorney’s~~with ~~fees~~essentially ~~and~~the ~~costs. We~~same ~~filed~~allegations, anbut ~~answer~~naming tothe Chairman of the ~~complaint~~Board, onthe ~~December~~Chief 8Executive Officer, ~~2008~~and ~~citing~~Chief ~~eighteen~~Financial ~~affirmative~~Officer individually in ~~defenses~~the lawsuit also. ~~Depositions~~We ~~have~~are ~~been~~unable ~~scheduled~~to ~~for~~estimate ~~some~~minimum ofcosts, ~~the~~if ~~executives~~any, to ofbe incurred by us upon the ~~larger~~ultimate ~~company~~disposition ~~defendants. No~~of ~~depositions~~this ~~have~~matter ~~been~~and, ~~requested~~accordingly, ofno ~~any~~provision ofhas ~~our~~been ~~executives~~made.

On December 22, 2009, a lawsuit was filed by Zak Khal, a former officer and employee of the Company alleging a severance benefit of $100,000 and unused vacation time of $29,135 are owed him and additional damages in excess of $10,000 to be specifically determined at trial. We are vigorously defending this lawsuit and are unable to estimate minimum costs, if any, to be incurred by us upon the ultimate disposition of this matter and, accordingly, no provision has been made.

On April 26, 2010, a lawsuit was filed by 990 Rock LLC, the landlord for our Reno office space for breaching the lease agreement which provided for a total monthly rent payment of $11,123 through April 30, 2013. The landlord alleges that they spent $335,735 on tenant improvements prior to our occupancy. The plaintiff is alleging damages in excess of $10,000. We are unable to estimate minimum costs to be incurred by us upon the ultimate disposition of this matter and, accordingly, no provision has been made.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

No matters were submitted to a vote of our security holders during the fourth quarter of the fiscal year ended December 31, ~~2008~~2009.

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PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER ~~MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.~~

MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Our authorized capital stock consists of 90,000,000 shares of common stock, par value $0.001 per share, and 10,000,000 shares of preferred stock, par value $0.001 per share, that may be issued in one or more series.

Common Stock

Our Board of Directors has designated two series of common stock, one referred to as “Common Stock’’ and the other referred to as “Common Stock Series A.’’” As of December 31, ~~2008~~2009, there were no shares of our Common Stock outstanding and 14,~~849~~974,~~690~~149 shares of our Common Stock Series A outstanding held of record by ~~575~~580 stockholders. There is no active market for our Common Stock or our Common Stock Series A.

Each share of Common Stock and Common Stock Series A has identical rights and privileges in every respect. Each holder of either Common Stock or Common Stock Series A has the right to cast one vote for each share held of record on all matters submitted to a vote of our holders of common stock. The holders of either series of common stock vote together as a single class except to the extent that voting as a separate class or series is required by law. The holders of both series of common stock are entitled to receive dividends on a pro rata basis, payable in cash, stock, or otherwise, as may be declared by our Board of Directors out of any funds legally available for the payment of dividends, subject to the rights of holders of any outstanding preferred stock. We did not declare any cash dividend on our Common Stock or Common Stock Series A in fiscal ~~2008~~ or2009 ~~2007~~or 2008. Upon our liquidation, dissolution or winding-up, the holders of both series of common stock will be entitled to receive after distribution in full of any preferential amounts owed to debt holders or holders of our preferred stock, all of the remaining assets available for distribution ratably in proportion to the number of shares of common stock held by them. Neither series of our common stock provides holders with preferences or any preemptive, conversion or exchange rights. There are no redemption or sinking ~~fund~~ fund provisions applicable to either series of common stock.

Preferred Stock

Our articles of incorporation authorize our Board of Directors, without further stockholder action, to issue up to 10,000,000 shares of preferred stock in one or more series and to fix the designations, powers, preferences, and privileges of the preferred stock, including dividend rights, conversion rights, voting rights, terms of redemption, liquidation preference, sinking fund terms, and number of shares constituting any series or the designation of any series. Our Board of Directors, without stockholder approval, has the authority to issue preferred stock with voting, conversion, or other rights that could adversely affect the voting power and other rights of the holders of common stock. Depending upon the terms of preferred stock established by our Board of Directors, any or all series of preferred stock could have preference over common stock with respect to dividends and other distributions and upon our liquidation, and could have the effect of delaying or preventing a change in control or making removal of management more difficult. If any shares of preferred stock are issued with voting powers, the voting power of the outstanding common stock would be diluted. Additionally, the issuance of preferred stock may have the effect of decreasing the market price of our common stock.

Our Board of Directors has designated the following six series of preferred stock, where the conversion ratio, the authorized number of shares and the outstanding number of shares for each series are provided:

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· “Series B Convertible Preferred Stock’’ – convertible into Common Stock Series A on a one-to-five basis, 76,750 shares authorized and 50,000 shares outstanding as of December 31, ~~2008;~~2009.

· “Series E Convertible Preferred Stock” – convertible into Common Stock Series A on a one-to-one basis, 810,800 shares authorized and ~~810,800 shares~~ outstanding as of December 31, ~~2008~~2009.

· “Series F Convertible Preferred Stock” – convertible into Common Stock Series A at the lower of $3.50 or 30% off the IPO price, where “IPO price” means the per share price to the public of any common shares offered by us that in the aggregate results in capital in excess of $10.0 million being raised and the shares of a class of our common stock being listed and traded on a national stock exchange. There are 200,000 shares authorized and ~~200,000~~0 shares outstanding as of December 31, ~~2008~~2009.

· “Series G Convertible Preferred Stock” – convertible into Common Stock Series A at the lower of $3.50 or 30% off the IPO price, where “IPO price” means the per share price to the public of any common shares offered by us that in the aggregate results in capital in excess of $10.0 million being raised and the shares of a class of our common stock being listed and traded on a national stock exchange. There are 150,000 shares authorized and ~~150,000 shares~~ outstanding as of December 31, ~~2008~~2009.

· “Series H Convertible Preferred Stock” – convertible into Common Stock Series A at the lower of $2.50 or 30% off the IPO price, where “IPO price” means the per share price to the public of any common shares offered by us that in the aggregate results in capital in excess of $10.0 million being raised and the shares of a class of our common stock being listed and traded on a national stock exchange. There are 98,500 shares authorized and ~~98,500 shares~~ outstanding as of December 31, ~~2008~~2009.

· “Series I Preferred Stock” – convertible into Common Stock Series A on a one-for-one basis. There are 4,693,878 shares authorized and ~~4,693,878 shares~~ outstanding as of December 31, ~~2008~~2009.

In October 2008, we filed Certificates of Withdrawal with the Nevada Secretary of State whereby we withdrew the designations of our Series A, Series C and Series D Convertible Preferred Stock, as no shares of these series were then outstanding. Except for Series F, G and I, none of our series of preferred stock have dividend rights. In 2009, we paid $32,877 in dividends to the holder of Series F and issued 7,156 shares of Common Stock Series in lieu of cash dividends and as a reimbursement of legal fees associated with the redemption of Series F Preferred Stock for $1,000,000. In 2008, we paid $97,233 in dividends to the holders of our Series F and G Convertible Preferred Stock. Except for Series I, Preferred Stock, none of our series of preferred stock have voting rights. With respect to the rights upon liquidation, dissolution, or winding up, our preferred stock ranks senior to both series of common stock, but junior to any existing or future indebtedness. Among the holders of our outstanding preferred stock, the following preferences upon liquidation, dissolution or winding up are applicable:

· first, holders of Series FI ~~Convertible~~ Preferred Stock are entitled to receive $52.0045 per share ~~before Series I, Series B, Series E, Series G and Series H Convertible Preferred Stock as to the $1,000,000 jackpot bankroll reserve for our Gamblers Bonus Million Dollar Ticket game~~;

· second, holders of Series IB Convertible Preferred Stock are entitled to receive $25.4500 per share;

· third, holders of Series BE and G Convertible Preferred Stock are entitled to receive $5.00 per share; and

·	fourth, holders of Series H convertible Preferred Stock are entitled to receive $5.00 per share.

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· fourth, holders of Series E and G Convertible Preferred Stock are entitled to receive $5.00 per share; and

· fifth, holders of Series H convertible Preferred Stock are entitled to receive $5.00 per share.

The liquidation preference for each series of preferred stock is equal to the original purchase price of the preferred stock.

On February 12, 2007, we issued notices to holders of our Series A Convertible Preferred Stock and holders of our Series B Convertible Preferred Stock as a result of an agreement with Treasure Island Las Vegas, a wholly-owned subsidiary of MGM Mirage, whereby Treasure Island agreed to maintain the required base jackpot bankroll of $2.9 million for our linked, progressive keno game, Nevada Numbers. Since the cash attributable to the Series A and Series B Convertible Preferred Stock was no longer required to bankroll Nevada Numbers, we provided notices to holders of our Series A Convertible Preferred Stock of our right to convert all of the outstanding shares of Series A Convertible Preferred Stock into shares of Common Stock Series A on a one-for-one basis and to holders of our Series B Convertible Preferred Stock of the opportunity to exchange one-half of their respective shares for either the return of their original investment or shares of Common Stock Series A.

The conversion date for the Series A Convertible Preferred Stock was March 15, 2007. Accordingly all 536,400 shares of Series A Convertible Preferred Stock were converted into 536,400 shares of Common Stock Series A. To holders of Series B Convertible Preferred Stock, we advised said holders of their right to exchange one-half of their respective shares of Series B Convertible Preferred Stock for either the return of their original investment (i.e., $5.00 per share) or five shares of Common Stock Series A for each share of Series B Convertible Preferred Stock. We have also notified holders of our Series B Convertible Preferred Stock that they may convert all of their shares into shares of Common Stock Series A on the same basis. The holders of our Series B Convertible Preferred Stock had until May 13, 2007 to make their decision. At December 31, 2007, holders of 179,890 shares of Series B Convertible Preferred Stock had converted their shares on a one-to-five basis for 899,450 shares of Common Stock Series A. We also redeemed 35,900 shares of Series B Convertible Preferred Stock at $5.00 per share for a total redemption of $179,500 during the year ended December 31, 2007. Late in 2007, pursuant to an agreement with Treasure Island Las Vegas, Treasure Island began maintaining the required base jackpot bankroll of $1 million for our Million Dollar Ticket game. We sent a letter dated January 28, 2008 to holders of our Series B Convertible Preferred Stock informing them that they had 90 days to exchange their shares on a one-to-five basis for Common Stock Series A or receive $5.00 in cash per share for their shares of Series B Convertible Preferred Stock. At December 31, 2008 only 50,000 Series B preferred shares remained outstanding.

During 2008, all shares of Series C and D Convertible Preferred Stock were converted to Common Stock Series A.

During the year ended December 31, 2008, holders of 52,850 shares of Series B Convertible Preferred Stock converted their shares on a one-to-five basis for 264,250 shares of Common Stock Series A. We also redeemed 27,500 shares of Series B Convertible Preferred Stock at $5 per share for a total redemption of $137,500 during the year ended December 31, 2008.

In the first quarter of 2009, we closed the Gamblers Bonus Million Dollar game due to a lack of ticket sales. Accordingly, we redeemed the $1,000,000 of Series F Preferred Stock from our investor. We closed our Million Dollar Ticket Game as well for the same reason. We also temporarily suspended our Nevada Numbers game to change the draw to hourly rather than daily. We restarted the Nevada Numbers game on March 1, 2009 but again suspended it on March 31, 2009 due to a lack of funds to meet our Nevada Gaming bankroll requirements. This suspension resulted from the change in ownership at Treasure Island and the new ownership’s decision to not continue bankrolling our game. The game will remain suspended until we can find approximately $3.9 million for the bankroll. When we restarted Nevada Numbers on March 1, 2009, we restored Series F Convertible Preferred Stock for $1,000,000 to be used as additional bankroll needed for Nevada Numbers. Due to the March 31, 2009 shutdown, the Nevada Numbers bankroll funds associated with Series F Convertible Preferred Stock were no longer needed. Therefore, in April 2009, we again redeemed the Series F Convertible Preferred Stock and the $1,000,000 was returned to the investor.

Options

As of December 31, ~~2008~~2009, we had outstanding options to purchase an aggregate of 2,~~645~~452,~~900~~142 of our Common Stock Series A at exercise prices ranging from $12.00 to $5.00 per share, with a weighted average exercise price of $3.3627 per share.

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Warrants

As of December 31, ~~2008~~2009, we had outstanding warrants to purchase an aggregate of 65,~~010~~658,~~309~~476 shares of our Common Stock Series A at exercise prices ranging from $1.00 to $5.00 per share with a weighted average exercise price of $2.0812 per share.

Unregistered Sales of Equity Securities

During the ~~year~~quarter ended ~~December~~March 31, ~~2008~~2009, ~~holders~~we ofissued 52225,~~850~~000 shares of Common Stock Series BA at $2.50 per share for a total investment of $562,500 to the holder of our Series F and G Convertible Preferred Stock. During ~~converted~~the ~~their~~quarter ended ~~shares~~June on30, a2009, ~~one-to-five~~we ~~basis~~issued ~~for 264~~7,~~250~~156 shares of Common Stock Series A~~. This~~ ~~issuance~~to ~~was~~our Series ~~deemed~~F ~~to be~~Convertible ~~exempt~~Preferred ~~from~~Stock ~~registration~~investor ~~under~~in lieu of legal fees incurred by him for the ~~Securities~~restoration ~~Act~~of inSeries ~~reliance~~F onConvertible ~~Section~~Preferred ~~4(2)~~stock and for cash ofdividends ~~the~~on ~~Securities~~Series ~~Act~~F inConvertible ~~that~~Preferred ~~the~~Stock ~~issuance~~when ~~did~~it ~~not~~was ~~involve~~redeemed ain ~~public~~April ~~offering~~2009. WeIn ~~also~~October ~~redeemed~~2009, 27we sold 40,~~500~~000 shares of ~~Series~~Common BStock ~~Convertible~~Series A ~~Preferred~~for ~~Stock~~$100,000. atThese $5issuances ~~per~~were ~~share~~deemed ~~for~~to abe ~~total~~exempt ~~redemption~~from registration under the Securities Act in reliance on Section 4(2) of ~~$137,500~~the ~~during~~Securities Act in that the ~~year~~issuance ~~ended~~did ~~December~~not ~~31,~~involve ~~2008~~a public offering.

During the year ended December 31, ~~2008~~2009, ~~holders~~we issued options and warrants to purchase a total of 351,~~000~~122,440 shares of Common Stock Series CA to our employees and members ~~Convertible~~of ~~Preferred~~our ~~Stock~~board ~~converted~~of ~~their~~directors, ~~shares~~all onwith aan ~~one-to-five~~exercise ~~basis~~price ~~for 175~~of $2.50 per share,~~000~~ primarily ~~shares~~with ofa ~~Common~~four-year ~~Stock~~vesting ~~Series~~schedule Aand a five-year life. ~~This~~These ~~issuance~~issuances ~~was~~were deemed to be exempt from registration under the Securities Act in reliance on Section 4(2) of the Securities Act in that the issuance did not involve a public offering.

~~During the year ended December 31, 2008, holders of 125,000 shares of Series D Convertible Preferred Stock converted their shares on a one~~-~~to-one~~ ~~basis for~~21 125,000 shares of Common Stock Series A. This issuance was deemed to be exempt from registration under the Securities Act in reliance on Section 4(2) of the Securities Act in that the issuance did not involve a public offering.-

During the year ended December 31, 2008, we issued 67,000 shares of our Series E Convertible Preferred Stock raising $335,000. In February 2008, we closed our Series E Convertible Preferred Stock offering with a total of 810,800 shares issued and $4,054,000 raised. During the year ended December 31, 2007, we issued 392,800 shares of Series E Convertible Preferred Stock and raised $1,964,000.

The holder of Series F Convertible Preferred Stock is entitled to receive $5 per share as a liquidation preference after payment of all existing and future indebtedness and before Series I, Series B, Series E, Series G and Series H Convertible Preferred Stock as to the $1,000,000 jackpot bankroll reserve for our Gamblers Bonus Million Dollar Ticket game. On May 9, 2008, we issued 200,000 shares of Series F Convertible Preferred Stock which carries a 12% dividend rate which is cumulative and payable on January 1, 2010 immediately after paying IGT their 6.5% dividend on Series I Preferred Stock. Series F Convertible Preferred Stock is convertible into Common Stock Series A at the lower of $3.50 or 30% off of the IPO price, where “IPO price” means the per share price to the public of any common shares offered by us that in the aggregate results in capital in excess of $10.0 million being raised and the shares of a class of our common stock being listed and traded on a national stock exchange. On January 31, 2009, we discontinued the Gamblers Bonus Million Dollar Ticket game and the jackpot bankroll reserve of $1,000,000 was transferred to our Nevada Numbers game.

The holder of Series G Convertible Preferred Stock is entitled to receive $5 per share as a liquidation preference pari passu with the liquidation preference of Series E Convertible Preferred Stock and after payment of all existing and future indebtedness and the liquidation preference of Series F, I, and B Convertible Preferred Stock. On May 9, 2008, we issued 150,000 shares of Series G Convertible Preferred Stock which carries a 12% dividend rate which is cumulative and payable on January 1, 2010 immediately after paying IGT their 6.5% dividend on Series I Preferred Stock. Series G Convertible Preferred stock is convertible into Common Stock Series A at the lower of $3.50 or 30% off of the IPO price, where “IPO price” means the per share price to the public of any common shares offered by us that in the aggregate results in capital in excess of $10.0 million being raised and the shares of a class of our common stock being listed and traded on a national stock exchange.

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~~The~~Related ~~holders~~party of Series H Convertible Preferred Stock are entitled to receive $5 per share as a liquidation preference after payment of all existing and future indebtedness and the liquidation preference of Series F, Series I, Series B, Series E and Series G Convertible Preferred Stock. During the year ended December 31, 2008, we issued 98,500 shares of Series H Convertible Preferred Stock at a price of $5 per share for a total capital raise of $492,500. The Series H Convertible Preferred offering closed June 21, 2008. Series H Convertible Preferred stock is convertible into Common Stock Series A at the lower of $2.50 or 30% off of the IPO price, where “IPO price” means the per share price to the public of any common shares offered by us that in the aggregate results in capital in excess of $10.0 million being raised and the shares of a class of our common stock being listed and traded on a national stock exchange.transactions:

~~On October~~Our 1,Board ~~2008,~~Chairman ~~we acquired the tangible~~ and ~~intangible assets of AdLine Network Holdings Inc. (AdLine)~~CFO, ~~AdLine~~were ~~Media LLC, AdLine Network LLC and~~each ~~Freeview~~granted ~~Network LLC for 750~~30,000 ~~shares~~stock ofoptions ~~our~~respectively ~~Common~~for ~~Stock~~personal ~~Series A. The~~guarantees ~~intent~~ of ~~the transaction was to reacquire and consolidate all~~stockholder ofadvances ~~the rights associated with various technologies~~ and ~~intellectual~~personal ~~property licenses~~loans ~~held~~made ~~by AdLine, including the license previously granted~~ to ~~AdLine. The~~ ~~transaction was structured as an asset purchase to ensure~~ the ~~complete~~Company ~~reacquisition~~during ~~of the licenses and technologies~~2009. ~~Any~~They ~~other assets acquired~~ were ~~immaterial~~also ~~and~~granted ~~incidental. The purchase price of $1~~30,~~500,~~000 ~~was~~and ~~allocated as follows: $80~~35,000 tostock ~~fixed assets~~options, $4respectively,~~117~~ tofor ~~miscellaneous~~personal guarantees ~~expense~~of ~~and~~stockholder $1advances,~~415,883~~ toand ~~goodwill. In addition, one of~~ the ~~owners~~CFO ofwas ~~AdLine~~granted ~~received~~5,000 ashares ~~one-year~~for advances ~~consulting~~personally ~~agreement~~made ~~with~~to ~~LVGI for~~the ~~$15,000~~Company ~~per~~during ~~month~~2008.

On October 1, 2008, IGT signed an investment agreement as of September 30, 2008, with us for 4,693,878 shares of our Series I Preferred Stock at $2.45 per share, or a total investment of $11.5 million. The Series I Preferred Stock is convertible on a one-for-one basis into shares of our Common Stock Series A. The transaction closed on October 24, 2008. IGT had previously advanced $1.5 million of this total investment pursuant to an agreement dated July 17, 2008, as amended, so the net proceeds received by the Company on October 24, 2008 was $10 million. IGT also received a warrant to purchase 1.5 million shares of our Common Stock Series A at an exercise price of $2.45 per share. The warrants have a three-year term and are fully vested. The shares of Series I Preferred Stock carry a dividend rate of 6.5% payable initially on January 1, 2010 and vote on an as converted basis, on all matters submitted to the Company’s stockholders. Based on the fully diluted outstanding shares of the Company, IGT is entitled to one seat on the Company’s Board of Directors, which to date they have not chosen to activate. In addition, IGT forgave a receivable from the Company from a prior legal settlement for $614,027 (see Note 6). Also on October 1, 2008, we signed three agreements with IGT which became part of the legal settlement with IGT: 1) the Retrofit License Agreement, 2) the License and Application Support Agreement and 3) the Intellectual Property Access Agreement. On October 14, 2008, the legal case with IGT was dismissed by the Court with prejudice.

During the year ended December 31, 2008, 1,510,917 shares of Common Stock Series A were issued pursuant to the following: 1) 750,000 shares for the purchase of the remaining assets of Adline Network Holdings LLC (AdLine), AdLine Media LLC, AdLine Network LLC, and Freeview Network LLC, which allowed us to reacquire and consolidate all the rights associated with various technologies and intellectual property licenses held by AdLine, including the license previously granted to AdLine; 2) 500,000 shares as an incentive for the Preferred Series F and G transactions; and 3) 260,917 shares as payment for employee, consultant and board services. We also issued 53,750 shares of Common Stock Series A to retire $107,500 of long-term debt. In addition, we issued 55,361 shares of Common Stock Series A to employees in lieu of salary and sold 10,100 shares to present stockholders. These transactions were deemed to be exempt from registration under the Securities Act in reliance on Section 4(2) of the Securities Act in that the issuances did not involve any public offerings.

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ITEM 6. SELECTED FINANCIAL DATA.

Not required.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND ~~RESULTS OF OPERATIONS.~~

RESULTS OF OPERATIONS.

The following discussion of our financial condition and results of operations should be read together with the consolidated financial statements and the related notes included in this report. This discussion contains, in addition to historical information, forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from the results discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below as well as those discussed elsewhere in this report. We disclaim any obligation to update information contained in any forward-looking statement.

Overview

Our current principal business is the delivery of new, linked-progressive, mega jackpot games to the worldwide gaming industry. Our offering of these types of games includes Nevada Numbers, Super Bonanza Bingo, and Million Dollar Ticket. On March 31, 2009, because of the expiration of our contract with Treasure Island ~~whereby~~ whereby Treasure Island had agreed to maintain the $3.9 million base jackpot bankroll, we shut down Nevada Numbers and Million Dollar Ticket. We we expect to restart the games as soon as we find funding for the $3.9 million ~~base~~ base jackpot. During the second quarter of 2008, we launched Gamblers Bonus Million Dollar Ticket in cooperation with one of the larger slot route operators in Nevada. We subsequently shut this game down on January 31, 2009. Although we have recently focused our business on the development of our proprietary multimedia delivery system, known as PlayerVision, we have not generated significant revenues to date. We continue to provide equipment, supplies and casino games for use by our customers in the keno and bingo segments of the gaming industry. Due to our focus on the development of our PlayerVision system, we have incurred expenses in excess of our revenue and have generated losses for ~~2007~~2008 and ~~2008~~ 2009.

We have received regulatory approval from Nevada with respect to RoutePromo, and we have received regulatory approval from Nevada and GLI for AdVision and Live TV on IGT Game King, WMS, and Aristocrat machines on our PlayerVision 2 platform. We have also received approval from GLI with respect to NumberVision on our PlayerVision 2 platform. PlayerVision 3 is the next generation of our PlayerVision system. We ~~expect~~received ~~that the following applications will be submitted for~~ regulatory review and approval tofrom Nevada ~~and GLI~~ in ~~early April,~~May 2009, with respect to our PlayerVision 3 platform: Beverage -on -Demand, ServiceVision, ValetVision, AdVision, Live TV, ~~Casino Tunes~~CasinoTunes, ~~You Tube~~YouTube, ~~and~~BurstVision and VoyeurVision. ~~Because~~We ~~these~~expect ~~eight~~to ~~software~~submit ~~applications~~these dosame ~~not interface~~nine ~~with the slot accounting system and because the regulators are~~software ~~familiar~~applications ~~with~~for ~~the~~GLI ~~earlier PlayerVision 2 platform, we expect a shorter~~ approval ~~time~~ ~~period from~~in ~~the regulators~~2010. We expect to submit WagerVision and NumberVision for regulatory review and approval on the PlayerVision 3 platform in Nevada and GLI sometime ~~between~~in ~~June~~the ~~and~~fourth ~~August~~quarter of ~~2009~~2010. Because the regulatory approval of new gaming applications is a complex process, we may experience delays in developing and introducing the PlayerVision 3 applications.

We will continue for ~~the~~2010 ~~first three quarters of 2009~~ to incur expenses related to the development and regulatory approval for the remaining PlayerVision modules, and we will face competition from larger, more formidable competitors as we enter the gaming machine market. Due to continuing expenses related to our PlayerVision system without substantial generation of revenues during this time, we will be using cash, and we will require funds from third party financing sources, in addition to funds from operations, to sustain our operations in ~~2009~~ 2010. ~~See~~As ~~discussion~~discussed inbelow under “Liquidity – Outlook,” ~~below~~our ability to continue our operations as a going concern may be in doubt.

~~Critical~~- ~~Accounting Policies and~~22 ~~Estimates~~-

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~~We base~~Critical ~~our~~Accounting ~~estimates~~Policies ~~on historical experience~~ and on various other assumptions that we believe to be reasonable under the circumstances. These estimates and assumptions provide a 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, and these differences may be material.Estimates

The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue, and expenses and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. These estimates and assumptions provide a 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, and these differences may be material.

We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements.

Revenue Recognition

PlayerVision. The revenue from Player Vision will result from installation fees, activation fees, fees for services, and revenue sharing arrangements. We will recognize installation and activation fees for PlayerVision upon installation and recognize the costs associated with the installation (labor and supplies) at that time. We will recognize revenue from the revenue sharing arrangements as earned and recognize maintenance expenses as incurred against the corresponding revenue. Manufacturing costs will be capitalized and depreciated over the life of the asset.

Casino Games. As wagers are made within our inter-linked systems, we recognize our share of each wager made as revenue. Based on the revenue proceeds, we purchase insurance to fund the base jackpot. We also estimate the cost for any uninsured base jackpot and the expense for any progressive jackpot and, accordingly, establish a liability on our balance sheet as a progressive jackpot liability. For our other casino games, we recognize our share of revenue upon the sale of each ticket. We have the discretion to purchase insurance to fund jackpots. We recognize costs associated with uninsured jackpots as each ticket is sold based on mathematical probabilities dictated by the odds of the game.

Products. We generally recognize sales of bingo and keno equipment when installed and sales of supplies when the products are shipped. We recognize distribution royalties from the placement of electronic bingo devices over time, based on customer usage. Warranty costs and related liabilities associated with product sales have not been material. We recognize fees from equipment maintenance contracts sold separately (with no bundled deliverables) evenly over the term of the contract. Prior to shipment, we include equipment and supplies in inventories and stated at the lower of cost, as determined on a “first-in first-out’’ basis, or market.

Other. We include keno revenue from the operation of a keno route subject to multiple participation agreements in other revenue in an amount equal to the net win from such gaming activities, which is the difference between gaming wins and losses. We reflect amounts due to the owners of the facilities in which the keno games are conducted (effectively contingent rent) as an expense.

~~Goodwill and other~~ Intangible Assets

We review goodwill and other intangible assets for impairment annually, and whenever events or circumstances indicate the carrying value may not be recoverable or warrant a revision to the estimated remaining useful life~~, in accordance with SFAS 144, Accounting for the Impairment or Disposal of Long-Lived Assets, and SFAS 142, Goodwill and Other Intangible Assets~~.

~~Our~~- ~~forecasted future cash flows used~~23 to test the recoverability or determine the fair value of intangibles are based on assumptions that are consistent with plans used to manage the underlying business. Factors used in our evaluations of potential impairment and fair value require significant judgments about respective estimated useful lives, risk rates, forecasted growth rates, brand history, expected market growth, competitive environment, market share, future business prospects and success of our products. Changes in these estimates and assumptions could materially affect the determination of recoverability or fair value. While we believe that our estimates of future revenues and cash flows are-

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~~reasonable~~Our forecasted future cash flows used to test the recoverability or determine the fair value of intangibles are based on assumptions that are consistent with plans used to manage the underlying business. Factors used in our evaluations of potential impairment and fair value require significant judgments about respective estimated useful lives, risk rates, forecasted growth rates, brand history, expected market growth, competitive environment, market share, future business prospects and success of our products. Changes in these estimates and assumptions could materially affect the determination of recoverability or fair value. While we believe that our estimates of future revenues and cash flows are reasonable, different assumptions could materially affect our assessment of useful lives, recoverability and fair values. Application of the goodwill impairment test requires judgment, including the identification of reporting units, allocation of related goodwill, assignment of corporate shared assets and liabilities to reporting units, and determination of the fair value of each reporting unit. We determine the fair value of our reporting units using the discounted cash flow method, and compare the implied valuation multiples to a group of guideline public companies under the Market approach to test the reasonableness of the discounted cash flow results.

Our intangible assets consist of key patents and technology rights with a five year life related to PlayerVision which went to market for the first time during the fourth quarter of 2007. We recorded an ~~intangibles~~intangible impairment charge of $606,667 during the year ended December 31, 2008, as we have abandoned our plans to develop and market “at home” wagering. In addition, since our keno business is now incurring monthly losses and since our keno liabilities far exceed our keno assets and since we recently sold this business for $100,000 (Note 13), we recorded an impairment charge for our keno business goodwill of $326,942 during the year ended December 31, 2009.

Income Taxes

We have effectively provided a ~~full~~ full valuation allowance for the tax effects of our net operating losses at ~~December~~ December 31, ~~2007~~2008 and ~~2008~~2009 to offset the deferred tax asset that might otherwise ~~have~~ have been recognized as a result of operating losses in the current period and ~~prior~~ prior periods since, because of our history of operating losses, management is ~~unable~~ unable to conclude at this time that realization of such benefit is currently ~~more~~ more likely than not. Although Financial Accounting Standards Board (FASB) Interpretation No. 48 (FIN 48), Accounting for Uncertainty in Income Taxes - An Interpretation of FASB Statement No. 109, became effective in 2007, based on its evaluation, management determined that FIN 48 did not have a material effect on either our net operating loss carryforwards, the related deferred tax assets or valuation allowance, or our deficit at January 1, 2007.

Recent Accounting Pronouncements

~~In December~~Casino ~~2007,~~Jackpot the FASB issued SFAS 141R, Business Combinations, which will significantly change the accounting for business combinations and certain other covered transactions. Also, in April of 2008, the FASB issued FSP SFAS 141R-1, Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies, to address some of the application issues under SFAS 141R. FSP SFAS 141R-1 deals with the initial recognition and measurement of an asset acquired or a liability assumed in a business combination that arises from a contingency (provided the fair value on the date of acquisition of the related asset or liability can be determined). Both SFAS 141R and FSP SFAS 141R-1 will be applicable for us prospectively only to business combinations and other covered transactions for which the acquisition date is during or after 2009. Because we are not now contemplating any covered transactions after their effective date, we currently do not expect either SFAS 141R or FSP SFAS 141R-1 to have a material effect on our future financial position, results of operations, and operating cash flows.

~~In December~~On ~~2007~~March 18, ~~the FASB issued SFAS 160~~2010, ~~Noncontrolling~~the ~~Interests in~~Financial ~~Consolidated~~Accounting ~~Financial~~Standards ~~Statements-An~~Board ~~Amendment~~(FASB) ofissued ~~ARB~~FASB ~~No.~~Accounting ~~51,~~Standards ~~which~~Codification ~~establishes~~924-405, ~~new~~Casino ~~accounting for the noncontrolling interest in a subsidiary or~~Jackpot ~~consolidated~~Liabilities, ~~variable~~which ~~interest~~states ~~entity~~that ~~and~~jackpots ~~requires~~on ~~that~~which athe ~~parent~~Company ~~recognize~~can aavoid ~~gain~~payment ordo ~~loss~~not ~~when~~meet ~~a subsidiary is deconsolidated and measured using~~ the ~~fair value~~definition of ~~the~~a ~~noncontrolling~~liability ~~equity~~until ~~investment on~~ the ~~deconsolidation~~jackpot is ~~date~~won. ~~SFAS~~This ~~160~~is ~~will be~~ effective for ~~2009,~~years ~~and~~beginning ~~earlier~~on ~~adoption~~or ~~is prohibited. Since~~after weDecember do15, 2010 ~~not~~and ~~now~~may have ~~and~~a dosignificant ~~not~~effect ~~contemplate~~on ~~acquiring any~~the ~~interest~~financial instatements ~~subsidiaries~~of ~~or consolidated variable interest entities with~~the ~~noncontrollling~~Company ~~interest,~~which wehas ~~currently expect that SFAS 160 will~~ not ~~have~~yet ~~an impact~~been ~~on or future financial position, results of operations and operating cash flow~~determined.

InThere ~~March~~are ~~2008,~~no ~~the~~more ~~FASB~~recent ~~issued SFAS~~accounting ~~161,~~pronouncements ~~Disclosures~~that ~~about Derivative~~would ~~Instruments~~have ~~and~~a ~~Hedging~~significant ~~Activities~~effect ~~- an Amendment of SFAS 133. SFAS 161, which will require enhanced disclosures regarding the impact~~ on ~~financial~~our ~~position,~~future financial ~~performance, and cash~~ ~~flows~~position, ~~will~~results beof ~~effective~~operations ~~for us beginning on January 1, 2009,~~ and ~~the~~operating ~~effect,~~cash ~~if any, on our financial statements will be limited to requiring certain additional limited disclosures~~flows.

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Results of Operations

Year Ended December 31, ~~2008~~2009 Compared with Year Ended December 31, ~~2007~~2008

Revenue. Casino ~~games~~ games revenue for the year ended December 31, ~~2008~~2009, ~~increased~~decreased $~~667~~778,000 or 3530.98%~~, to~~ to $21,~~526~~748,000 from $12,~~859~~526,000 for the year ended December 31, ~~2007~~ 2008. The ~~higher~~ lower casino games revenue principally resulted from ~~higher~~a reduction of $328,000 of revenue ~~from~~for ~~Super~~Gamblers Bonus Million Dollar Ticket which ~~Coverall~~was ~~Bingo~~not in existence for eleven months of ~~$512,000~~2009 ~~offset~~but bywas abeing ~~decline~~played infor ~~Nevada~~nine months ~~Numbers~~of 2008, a reduction of $~~182~~289,000 ~~and a~~of ~~decline~~revenue infor Nevada Numbers and Million Dollar Ticket ~~revenue~~due to the discontinuance of ~~$8,000. In~~the ~~addition~~game weon March 31, 2009, ~~launched~~and ~~our~~a ~~Gamblers~~reduction ~~Bonus~~of ~~Million~~$159,000 ~~Dollar~~of ~~Ticket~~revenue infrom ~~April~~Super ~~2008~~Coverall Bingo, ~~which~~offset ~~generated~~by a $~~332~~50,000 license fee received from the buyer of ~~new~~our ~~revenue~~bingo business for a license to distribute Nevada Numbers.

~~Product~~- ~~sales for the year ended~~24 December 31, 2008 decreased by $565,000 to $1,255,000 or 31.0% from $1,820,000 for the year ended December 31, 2007. Keno equipment sales amounted to $225,000 for the year ended December 31, 2008 compared to $647,000 during the year ended December 31, 2007, as new system purchases are being deferred into 2009. Bingo equipment and supplies also decreased by $197,000 from $702,000 during the year ended December 31, 2007 to $505,000 during the year ended December 31, 2008 as we continue to lose market share due to the loss of our bingo electronics business in February 2007.-

Other revenue for the year ended December 31, 2008, declined by $386,000 or 27.9%, to $998,000 from $1,384,000 for the year ended December 31, 2007. Bingo electronics revenue decreased from $70,000 for the year ended December 31, 2007 to $0 for the year ended December 31, 2008, as we lost our bingo electronics distributor agreement early in 2007. Revenue from Keno route and participation agreements decreased from $655,000 for the year ended December 31, 2007 to $360,000 for the year ended December 31, 2008 as we closed our Keno route business on February 29, 2008 due to renovation at one of our key customers locations and reopened at two locations in September 2008.

Costs and Expenses. Cost and expenses of casino games for the year ended December 31, 2008, increased by $2,091,000 or 242.3%, to $2,954,000 from $863,000 for year ended December 31, 2007. The increase resulted primarily from the decrease in jackpot expense during the year ended December 31, 2007, as the Nevada Numbers jackpot was won for the first time in the history of the game, and we were able to discount the jackpot payment at the prime rate rather than the 20-year Treasury bond rate as had previously been applied in calculating our progressive jackpot liability. Accordingly, the decrease includes a $780,000 credit for this change. Inclusive of the credit, our games jackpot expense increased by $1,639,000 during the year ended December 31, 2008 due to the accumulation of interest rates declines and its effects on our jackpot liability account.

In addition, games salaries increased by $173,000 for the year ended December 31, 2008 compared to December 31, 2007 as we hired a business unit leader for bingo in February 2008. Our jackpot expense for Super Coverall Bingo increased by $286,000 for the year ended December 31, 2008 compared to the same period in 2007 consistent with our increase in this game’s revenue.

Product costs and expenses for the year ended December 31, 2008, increased $254,000 or 24.1% to $1,307,000 from $1,054,000 for the year ended December 31, 2007 as we had a market write-down of our PlayerVision 2 inventory of $678,000 for obsolescence as it has been replaced by a more robust PlayerVision 3 platform which is the product we are now taking to market.

Other cost and expenses for the year ended December 31, 2008, decreased $113,000 or 8.4% to $1,232,000 from $1,344,000 for the year ended December 31, 2007 consistent with the decline in other revenues. Gross margin also decreased to (23.4)% for the year ended December 31, 2008 compared to 2.9% for the year ended December 31, 2007 due to lost profits from the bingo electronic distribution agreement being canceled, and additional salaries of $23,000.

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~~Other~~Product ~~Operating~~sales ~~Expenses. Selling, general and administrative expenses~~ for the year ended December 31, ~~2008~~ 2009, decreased by $49247,000 or 019.76% to $61,~~647~~008,000 from $61,~~696~~255,000 for ~~compared~~the toyear ~~the~~ended ~~same period~~December in31, ~~2007~~2008. We ~~have~~Keno ~~decreased~~equipment ~~our~~sales ~~administrative~~amounted ~~infrastructure through~~to ~~salary reductions of~~ $~~370~~178,000 for ~~during~~ the year ended December 31, ~~2008~~ 2009 compared to ~~the year ended December 31, 2007. In addition, consulting and professional fees have increased by~~ $~~371~~225,000 during the year ended ~~December~~ December 31, 2008. ~~compared~~This todecrease ~~the same period~~ in ~~2007. The~~Keno ~~increase~~equipment ~~in consulting~~sales ~~and~~was ~~professional~~due ~~fees is primarily related~~ to ~~consulting~~a ~~costs~~delay ~~for~~by ~~capital~~customers ~~raising~~to ~~and~~buy ~~legal~~new ~~fees~~keno ~~incurred~~systems indue ~~defending~~to ~~and negotiating~~ the ~~settlement~~ state of the ~~IGT lawsuit~~ economy. ~~Advertising~~Bingo and ~~promotion~~keno ~~has decreased~~supplies sales also declined by $~~145~~173,000 ~~as we reduced advertising costs to promote PlayerVision~~ during the year ended December 31, ~~2008~~2009 ~~compared~~versus to the same period in the prior year~~. Our software and additional maintenance costs have~~ ~~increased~~due byto ~~$74,000~~loss ~~during~~of ~~the~~market ~~year ended December 31, 2008, as we are using third-party software as our primary data management tool~~share.

~~Research~~Other ~~and~~revenue ~~development costs~~ for the year ended December 31, ~~2008~~2009, ~~have~~ increased by $~~369~~66,000 or ~~39.~~6.5% to $1,~~407~~063,000 from $1998,~~038~~000 for the year ended December 31, 2008. Revenue from Keno route and participation agreements increased $165,000 for the year ended December 31, 2009, ~~2007~~compared to the year ended December 31, 2008, due to the ~~addition~~opening of three new ~~engineers~~route tolocations, ~~our~~two ~~staff~~in Nevada, for the entire year ended December 31, 2009 and one in Oklahoma for seven months for the year ended December 31, 2009, versus the two new Nevada locations being opened for seven months during the year ended December 31, 2008. Our bingo and keno parts and service business declined by $99,000 in the year ended December 31, 2009 versus the same period in the prior year.

~~Depreciation~~Cost and Expenses. Cost ~~amortization~~and expenses of casino games for the year ended December 31, ~~2008~~2009, ~~increased~~decreased by $~~590~~1,495,000 or 6950.06%, to $1,~~445~~459,000 from $~~855~~2,954,000 for the year ended December 31, ~~2007,~~2008. The asdecrease resulted aprimarily ~~result~~from of the ~~write~~lower ~~off~~costs ~~of the~~and ~~technology~~expenses ~~rights~~ associated with ~~“at~~the discontinuance ~~home”~~of ~~wagering~~the asNevada ~~this~~Number, ~~intangible asset~~Million isDollar noTicket, ~~longer~~and ~~part~~Super ofCoverall Bingo ~~our~~games ~~strategic~~as ~~product~~previously ~~plan in the future~~discussed.

~~Finance~~Product ~~Costs. Finance~~cost ~~costs~~ and expenses for the year ended December 31, ~~2008~~2009, ~~increased~~decreased $~~822~~697,000 or 5153.72% to $2611,~~413,~~000 from $1,~~591~~307,000 for the year ended December 31, ~~2007~~2008. This ~~The~~decrease ~~increased finance~~resulted ~~costs~~primarily ~~related~~from tothe decline in Keno equipment sales and the ~~recording~~$678,000 writedown of our ~~the~~PlayerVision ~~fair~~2 ~~market~~inventory ~~value~~for ofobsolescence ~~the~~in ~~derivative~~2008. The writedown ~~liability~~was ~~and~~due to the ~~increased~~replacement ~~finance~~of ~~costs~~PlayerVision ~~from~~2 with the ~~debt~~more ~~modifications~~robust toPlayerVision ~~the~~3 ~~CAMOFI~~platform, ~~note~~which inis ~~2007~~the ~~and~~product ~~May~~we ~~2008~~are ~~and~~taking ~~the~~to ~~loss~~market. Gross margin on ~~the~~product ~~extinguishment~~sales ofhas ~~the CAMOFI~~declined ~~debt~~from 49.9% to 39.5% (exclusive of the $~~641~~678,000 writedown in ~~October,~~ 2008 noted above) as we have had to do more discounting on Keno equipment sales.

~~Interest and~~ Other ~~Income. Interest~~ cost and ~~other~~expenses ~~income~~ for the year ended December 31, ~~2008~~ 2009, decreased by $~~235~~356,000 or ~~202~~28.79%, to $~~(119~~875,000) from $~~116~~1,232,000 for the year ended December 31, ~~2007~~2008 as we reduced salary expenses by $371,000 through headcount reductions in our Keno service staff. Our ~~The~~keno route ~~decrease~~jackpot ~~was~~expense aand ~~result~~participation offees ~~lower~~increased ~~cash~~by ~~balances~~$42,000 during the ~~outstanding~~year ended December 31, ~~and~~2009 versus the ~~loss~~same period in ~~fair~~the ~~value~~prior ~~incurred~~year onconsistent with ~~our~~the ~~marketable~~increase in keno route and participation revenue mentioned ~~securities~~previously.

Other Operating Expenses. Selling, general and administrative expenses for the year ended December 31, 2009, decreased by $2,320,000 or 34.9% to $4,327,000 from $6,647,000 for the year ended December 31, 2008, as legal, auditing and consulting fees decreased by $1,132,000 during the year ended December 31, 2009, compared to the same period in 2008. These fees decreased primarily as a result of a reduction in legal fees resulting from settlement of the IGT lawsuit in October 2008. In addition, the following items contributed to the decrease in operating expenses: (1) Board of Directors fees were reduced by $38,000 versus the prior year as we have not had the cash available to compensate our Board; (2) salaries were reduced by $499,000 versus the prior year due to the furlough of eight PlayerVision administrative employees on August 1, 2009; (3) travel and entertainment costs were reduced by $245,000 versus the prior year as part of our cost reduction measures; and (4) marketing and promotions expense were reduced by $388,000 versus the prior year as part of our cost reduction measures.

Research and development cost for the year ended December 31, 2009, have decreased by $1,021,000 or 72.5% to $386,000 from $1,407,000 for the year ended December 31, 2008, due to the furlough of seven engineering employees on August 1, 2009 and due to the capitalization of internal and external engineering costs during the period of January 1, 2009 through June 30, 2009 of $709,000 as we had proven technological feasibility of PlayerVision 3 late in the fourth quarter of 2008. We stopped capitalizing these costs on July 1, 2009 when we began our attempt to deploy our product to the gaming marketplace.

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Depreciation and amortization for the year ended December 31, 2009, decreased $548,000 or 37.9% to $897,000 from $1,445,000 for the year ended December 31, 2008, because more of our aging asset base has been fully depreciated and because our asset base has decreased due to the sale of our bingo business on August 19, 2009.

Finance Costs. Finance costs for the year ended December 31, 2009, decreased $2,294,000 or 95.0% to $119,000 from $2,413,000 for the year ended December 31, 2008, due to the elimination of certain costs previously paid to our primary lender, CAMOFI, who was paid in full in October 2008 with proceeds from equity capital invested by IGT.

Interest and Other Income. Interest and other income for the year ended December 31, 2009, increased by $88,000 to $(31,000) from $(119,000) from the year ended December 31, 2008. The increase was primarily due to the decline in fair value on our marketable securities of $78,000 during the year ended December 31, 2008, offset by a decrease in the loss on the sale of assets of $44,000 during the year ended December 31, 2009 versus the same period in the prior year.

Liquidity and Capital Resources

~~Cash Flows~~Outlook

~~Cash used in operating activities~~The ~~decreased~~United byStates ~~$149,000~~has ~~for~~been ~~the~~experiencing ~~year~~a ~~ended~~widespread ~~December 31, 2008 primarily because of the foregoing revenue decreases~~ and ~~expense~~severe ~~increases.~~economic ~~Investing activities~~recession ~~consisted~~that, ~~principally~~among ofother ~~cash~~things, ~~out~~has ~~ﬂows~~curtailed incasino ~~connection~~gaming ~~with $327~~development,~~000~~ ofactivity ~~capital expenditures~~ and ~~$955~~ profitability,~~000~~ ~~increase~~both innationwide ~~jackpot~~and ~~reserve~~particularly ~~deposits,~~in ~~most of which covered~~ our ~~new~~local $1market,~~000,000~~ ~~Gamblers~~and ~~Bonus Million Dollar Ticket game~~has ~~bankroll. Our~~resulted ~~cash ﬂows from ﬁnancing activities~~ in ~~the~~highly ~~year~~reduced ~~ended December~~availability ~~31, 2008 consisted principally~~ of incredit ~~ﬂows~~and ofcapital ~~$335,000~~financing ~~of new capital~~and ~~from~~heightened ~~the~~economic ~~sale~~risks. We ofhave ~~Series~~been Egrossly ~~Convertible~~undercapitalized ~~Preferred Stock, $112,000 for exercise of~~in ~~options~~2009 and ~~warrants~~unable to ~~purchase~~deploy ~~shares~~PlayerVision ofgiven ~~Common~~our ~~Stock~~severe ~~Series~~lack ~~A, $111,000 for the sale~~ of ~~Common~~cash ~~Stock Series A to employees~~resources, ~~$1,500,000~~ ~~from~~an ~~the~~inability ~~sale~~to ofraise ~~Series~~a Fsignificant ~~and~~amount ~~G Convertible Preferred Stock, $492,500 from the sale~~ of ~~Series H Convertible Preferred Stock~~capital, ~~$11,500,000~~and ~~from~~ the ~~sale~~lower ~~of Series I Preferred Stock~~ and anmore restrictive ~~advance~~capital ~~from~~expenditure abudgets ~~shareholder~~exhibited ~~of $600,000 offset~~ by a ~~cash outﬂow of $137,500 to redeem~~ our ~~Series~~potential ~~B Convertible Preferred Stock,~~gaming ~~the~~operator ~~repayment~~customers ~~of debt~~in ofthis ~~$6,122,539~~very ~~(primarily~~difficult ~~CAMOFI),~~economic ~~and the payment of dividends to the holders of our Series F and G Convertible Preferred Stock of $97,233~~climate.

-The continuing 28effects and duration of these developments and related uncertainties -on the Company’s future operations and cash flows cannot be estimated at this time but likely will be significant, and in its audit report on our consolidated financial statements, our independent registered accounting firm has expressed substantial doubt as to our ability to continue as a going concern (see Note 8 to our consolidated financial statements).

We presently are unable to satisfy our obligations as they come due and do not have enough cash, inclusive of the sale of our bingo and keno businesses, to sustain our anticipated working capital requirements and our business expansion plans for the remainder of 2010. Subject to unforeseen effects of the economic risks and uncertainties discussed in the foregoing paragraph and to our ability to raise working capital, we expect to continue for the remainder of the calendar year 2010 to incur expenses related to the development and regulatory approval for the remaining PlayerVision modules and additional modules presently in development. The further delay of the rollout of our PlayerVision system and/or the failure to obtain additional third-party financing, will have material adverse effects on our cash flow, results of operations and financial condition including significant uncertainty as to our ability to continue as a going concern. No assurance can be given that we will be able to secure any third party financing or that such financing will be available to us on acceptable terms.

Given the current financial market disruptions, credit crisis and economic recession, including the current downturn in the gaming industry and our current default on our $1.5 million note with IGT and our dividends in arrears to our Series I and Series G shareholders totaling $995,000, it is difficult at this time to obtain any third-party financing on acceptable terms, whether public or private equity or debt, strategic relationships, capital leases or other arrangements. In addition, we have significant restrictive covenants under our recent financing with IGT that may prohibit us, in certain circumstances, from obtaining third party financing without IGT’s prior written consent. Furthermore, any additional equity financing may be dilutive to stockholders, and debt financing, if available, may involve restrictive covenants. Strategic arrangements, if necessary to raise additional funds, may require that we relinquish rights to certain of our technologies or products or agree to other material obligations and covenants.

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Although casino gaming development, activity and profitability for 2009 were down and are expected to remain down for 2010, we believe that if our PlayerVision system is placed in casinos, such casinos will generate additional revenue and possibly achieve cost savings. Because of the selling points, we believe that our product has appeal even in the current depressed gaming environment. Other than the insignificant revenue realized from our early adoption agreements, we do not expect to begin to realize revenue from our PlayerVision system until the third quarter of 2010, though we cannot provide assurance that the market will ever accept our PlayerVision system. Any failure by us to install our PlayerVision system within our expected schedule or on terms acceptable to us will likely have a material adverse impact on our cash flow, results of operations and financial condition. In addition, we expect to face competition from larger, more formidable competitors as we enter the gaming machine market. A lack of market acceptance of our PlayerVision system, failure to obtain additional financing, or unforeseen adverse competitive, economic, or other factors may adversely impact our cash position, and thereby materially adversely affect our financial condition and business operations.

Cash Flows

Cash used in operating activities decreased by $3,994,000 for the year ended December 31, 2009, versus the same period in the prior year primarily because of our reduction in net loss of $7,859,000 offset by a reduction in noncash charges of $2,761,000, a decrease in accounts receivable of $143,000, and an increase in accounts payable and accrued expenses of $1,036,000. Our cash provided by investing activities consisted principally of net cash inflows in connection with the reduction in the jackpot reserve deposits of $1,012,000 because of the discontinuance of the Gamblers Bonus Million Dollar Ticket game in January 2009 and $931,000 for the sale of our bingo assets offset by cash outflows for capital expenditures of $825,000. Our cash inflows from financing activities of $1,076,000 in the year ended December 31, 2009, consisted principally of $662,500 of new capital from the sale of Common Stock Series A, advances from the buyer of our bingo business assets of $494,000, a borrowing from IGT for $1,500,000 advances from stockholders of $300,000 offset by the net redemption of Series F Convertible Preferred Stock for $1,000,000 following the shutdown of the Nevada Numbers game and the repayment of shareholder advances of $845,000.

Capital Expenditures

Capital expenditures ~~decreased~~increased by $73384,000 which includes a decrease in capital expenditures of $248,000 for the year ended December 31, ~~2008~~2009, compared to the same period in the prior year offset ~~due~~by tocapitalizing $632,000 of our ~~present~~PlayerVision ~~cost~~3 ~~reduction~~engineering ~~program~~costs in 2009 prior to the projected rollout to the marketplace of nine new software applications. For ~~2009~~ 2010, other than our obligation to pay any jackpots that may be won, we anticipate that our most significant capital resource requirement will relate to the purchase of approximately $710 million of PlayerVision ~~platforms~~control units for the rollout of our PlayerVision System.

WeThe foregoing ~~believe~~notwithstanding, ~~that~~due ~~we will be able~~ to ~~pay for~~uncertainties ~~these~~about ~~capital expenditures from~~ our ~~existing~~ability ~~cash~~to ~~balances,~~continue ~~from funds~~as ~~advanced~~a bygoing ~~IGT~~concern inand ~~our~~general ~~Series~~economic ~~J Convertible Preferred Stock~~conditions, ~~from~~no ~~funds generated~~assurance ~~from~~can ~~future~~be ~~operations,~~given ~~and~~that we ~~from~~will ~~funds~~be ~~generated~~able bypurchase ~~additional third-party~~sufficient ~~financings,~~control ~~including~~units ~~the~~or ~~establishment~~that ofsuch acontrol ~~master equipment lease~~units ~~agreement~~will ~~with~~be ~~financing~~available ~~sources~~at ~~that~~an weacceptable ~~have~~price, ~~used~~or inat ~~the past~~all. No assurance can be given, ~~however,~~ that we will be able to secure any third-party financing or that such financing will be available to us on acceptable terms.

Sources of Capital

We have traditionally relied on various forms of third- party financing toin order to sustain our operations. InOn ~~2008~~February 13, ~~we raised $2~~2009,~~577,500~~ ~~from~~we ~~our~~signed ~~private~~a ~~placement~~binding term ofsheet ~~Series~~with E,IGT F,whereby GIGT ~~and~~advanced ~~H Convertible Preferred Stock. Additionally, we raised~~ $111.5 million ~~from~~to ~~IGT~~us. On ~~through~~September ~~the~~4, ~~sale~~2009 of(effective 4June 1,~~693~~ 2009),~~878~~ ~~shares~~we ofsigned ~~our~~a ~~Series~~Secured IPromissory ~~Preferred Stock and~~Note ~~$112,000~~for ~~from~~ the ~~exercise~~advance ofin ~~options~~favor ~~and~~of ~~warrants. In~~IGT ~~2007,~~which ~~we raised~~carries ~~$1,964,000~~an ~~from~~interest ~~our~~rate ~~private~~of ~~placement~~10% ofper ~~Series~~annum and Eis ~~Convertible~~due ~~Preferred Stock~~January 29, ~~and $1~~2010,~~182,000~~ ~~from~~which ~~the~~we ~~exercise~~are ofpresently ~~options~~in ~~and~~default ~~warrants~~on. InWe ~~addition,~~sold ~~Treasure~~our ~~Island~~bingo ~~Hotel~~business ~~and~~on ~~Casino~~August ~~was~~19, ~~maintaining the~~2009 ~~required base~~and ~~jackpot~~received ~~bankroll~~proceeds ~~requirements in the aggregate~~ of $31.9 1 million. We ~~for~~agreed ~~our Nevada~~to ~~Numbers~~sell ~~and~~our ~~Million~~keno ~~Dollar~~business ~~Ticket~~on ~~games. Our~~November ~~contract~~4, ~~with~~2009, ~~Treasure~~for ~~Island~~$100,000, towhich ~~maintain~~we ~~the~~have received $~~3.9~~52,000 ~~million~~to ~~base~~date ~~jackpot~~as ~~bankroll for~~a ~~Nevada Numbers~~loan ~~and~~in ~~Million~~late ~~Dollar~~January, ~~Ticket~~2010 and ~~expired~~pending onregulatory ~~March 31~~approval, ~~2009, and~~ we ~~shut~~will ~~down~~ receive the ~~games~~remaining as$48,000 ain ~~result~~the future. We During ~~expect~~the toyear ~~restart~~ended ~~the~~December ~~games~~31, as2009, ~~soon~~we assold we$662,500 ~~find~~of ~~funding~~Common ~~for~~Stock ~~the~~Series $3A.~~9 million base jackpot.~~

In- ~~2008, with the proceeds from our~~27 Series I Preferred Stock, we paid off our senior secured convertible promissory note in favor of CAMOFI Master LDC (CAMOFI) in the principal amount of $6,051,250. All that remains of the transaction with CAMOFI are warrants to purchase 2,675,000 shares of our Common Stock Series A at an exercise price of $1.48, most of which will expire in April 2011. Additionally, CAMOFI holds 300,000 shares of our Common Stock Series A.-

We closed the offering for our Series E Convertible Preferred Stock on February 24, 2008, having raised $335,000 in 2008 for operating purposes. We closed our offerings for Series F and G Convertible Preferred Stock on May 9, 2008. These offerings were for 350,000 shares at $5.00 per share and will be convertible at the lower of $3.50 per share or a 30% discount from initial public offering price. The net proceeds from these offerings were used for two purposes: (i) $1,000,000 to fund the jackpot bankroll for Gamblers Bonus Million Dollar Ticket, and (ii) $750,000 for operating expenses. We closed our offering for Series H Convertible Preferred Stock on June 9, 2008. This offering was for 98,500 shares at $5.00 per share and will be convertible at the lower of $3.50 per share or a 30% discount from the initial public offering price. We closed our offering for Series I Preferred Stock on October 24, 2008. This offering was for 4,696,878 shares at $2.45 per share and included a warrant to purchase 1,500,000 shares of our Common Stock Series A at an exercise price of $2.45 and life of 3 years.

Outlook

The United States is currently experiencing a recession accompanied by weakness in the commercial and investment banking systems resulting in reduced credit and capital financing availability. Lack of credit and reduced availability of funds have resulted in curtailed gaming and reduction of recreational activities and general discretionary consumer spending. These conditions are likely to continue to have far-reaching effects on economic conditions in the country for an indeterminate period. The effects and duration of these developments and related risks and uncertainties on our future operations and cash flows, including our access to capital or credit financing, cannot be estimated at this time but may likely be significant.

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We will continue, for the foreseeable future, to incur significant expenses related to the development and regulatory approval for various PlayerVision modules. Accordingly, we will continue to rely on funds from third-party financing sources, in addition to funds from operations, to sustain our operations in 2009. We believe that our existing cash balances, proceeds from third-party financings, master lease equipment financings, and the exercise of options and warrants, together with funds from operations, will be sufficient to fund our anticipated working capital requirements and our 2009 business expansion plans. If we fail to complete or obtain additional third-party financing, or we are unable to establish a master equipment lease agreement, this would have a material adverse effect on our cash flow, results of operations and financial condition. No assurance can be given, however, that we will be able to secure any third-party financing or that such financing will be available to us on acceptable terms. Given the current financial market disruptions, credit crisis and state of the economy, including the current downturn in the gaming industry, it may be particularly difficult at this time to obtain any third-party financing on acceptable terms, whether public or private equity or debt, strategic relationships, capital leases or other arrangements. There is also no assurance that if we secure such third-party financing, that such financing will be sufficient to permit us to operate profitably. In addition, we have significant restrictive covenants under our recent financing with IGT that may prohibit us in certain circumstances from obtaining third-party financing without IGT’s prior written consent. These restrictive covenants include a right of first negotiation granted to IGT regarding any transaction pursuant to which we or any of our subsidiaries considers to (i) offer or sell any debt securities or any rights with respect to any debt securities of ours or any of our subsidiaries, (ii) enter into any merger, consolidation, share exchange, business combination, or similar transaction, including an acquisition of assets (including pursuant to a license), in which we will issue, sell, transfer or otherwise convey 30% or more of our issued and outstanding capital stock, or (iii) enter into any sale, lease, exchange, mortgage, pledge, transfer or other disposition of 15% or more of our issued and outstanding capital stock or assets as part of a capital raising transaction (each, a “Material Transaction”). Prior to entering into a Material Transaction, we will provide IGT with notice of the proposed terms of such transaction. IGT will have 10 days to exercise its right of first negotiation after which time we and IGT will then have another 10 days to engage in good faith negotiations and execute a definitive agreement related to such proposed transaction, and if no agreement is reached during that negotiation period, we will be free to pursue the Material Transaction with a third party. IGT’s right of first negotiation expires on April 24, 2010. Also, as long as IGT or its affiliates hold or have the right to acquire the Minimum Investment (as defined in the Investment Agreement dated September 1, 2008 between us and IGT, or the “Investment Agreement”), then we shall not, except with IGT’s consent, sell, convey or otherwise issue, directly or indirectly, any shares of capital stock, any rights to acquire capital stock, or any documents or instruments convertible, exercisable or exchangeable for any shares of capital stock (regardless of whether such rights are then exercisable or whether such documents or instruments may be then convertible, exercisable or exchangeable for any such capital stock) to a Competitor (as defined in the Investment Agreement) or an affiliate of a Competitor. We have also agreed not to create or issue capital stock unless the same ranks junior to the Series I Preferred Stock with respect to the distribution of assets upon our liquidation, dissolution or winding up, the payment of dividends and rights of redemption.

We expect that 2009 will be the first year of significant placement of our PlayerVision system. We expect the first significant placement (on approximately 2,700 slot machines) of our system to occur at two casinos on the Las Vegas Strip in the second and third quarters of 2009. No assurance can be given, however, that we will be successful in placing our PlayerVision system at two Las Vegas Strip casinos or in any additional locations.

While we do not believe we have any direct competitors at the present time, we will face competition from larger, more formidable competitors as we capture more and more of the retrofit gaming machine market. An unexpected lack of market acceptance of our PlayerVision system, a failure of our early installations to perform as expected, the failure to obtain additional financing, a sudden increase in product demand requiring a significant increase in manufacturing capability, or unforeseen adverse competitive, economic, or other factors may adversely impact our cash position and thereby adversely affect our financial condition and business operations.

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In addition, on February 13, 2009, we signed a binding term sheet (“Term Sheet”) with IGT whereby IGT advanced $1.5 million (“Advance”) to the Company. If the Company and IGT do not execute an investment agreement (“Second Investment Agreement”) on or before August 15, 2009, IGT will have the option of (i) converting the Advance into shares of preferred stock of the Company, or (ii) having the Company repay the Advance. If IGT elects to convert the Advance into preferred stock, the Advance shall be converted into shares of the same series of the Company’s preferred stock as is being offered in the Company’s private placement (the “Private Placement”) as previously disclosed in the Company’s Form 8-K dated January 16, 2009. The number of shares to be issued shall be based on the closing price of the Private Placement, or $3.25 per share if the Private Placement is not completed. If the Private Placement is not completed prior to August 15, 2009, the Advance shall become immediately due and payable to IGT. The Company granted a security interest in all of its present and future assets as security for such obligation.

Pursuant to the Term Sheet, the Company and IGT shall endeavor to enter into the Second Investment Agreement for a total investment in the Company of $3.0 million inclusive of the Advance (the “$3.0 Million Investment”). In consideration of the $3.0 Million Investment, the Company intends to issue to IGT a new series of preferred stock convertible into shares of the Company’s Common Stock Series A at the price of the Private Placement, or, if the Private Placement does not close, $3.25 per share. The preferred stock will be entitled to a mandatory annual 5% cash dividend. The annual dividend will be personally guaranteed by our chairman and chief financial officer. The Company and IGT also agreed to amend the License and Application Support Agreement dated September 30, 2008 between the Company and IGT, and the Intellectual Property Access Agreement dated September 30, 2008 between the Company and IGT.

In 2009, we believe that we will be required to raise approximately $10.0 million in additional funds through public or private financing, strategic relationships, master lease equipment financings or other arrangements to implement our 2009 plan. We may be unable to secure such funding, if needed and such financing may not be available on terms acceptable to us, or at all. Furthermore, any additional equity financing may be dilutive to stockholders, and debt financing, if available, may involve restrictive covenants. Strategic arrangements, if necessary to raise additional funds, may require that we relinquish rights to certain of our technologies or products or agree to other material obligations and covenants. Failure to generate sufficient revenue or to raise capital when needed could have an adverse impact on our business, operating results, and financial condition, as well as our ability to achieve intended business objectives.

We presently do not use any derivative financial instruments to hedge our exposure to adverse fluctuations in interest rates, foreign exchange rates, fluctuations in commodity prices, or other market risks, nor do we invest in speculative financial instruments.

Off Balance Sheet Financing Arrangements and Contractual Obligations

~~We have~~At ~~operating~~December ~~leases totaling $874~~31,~~808~~ ~~that have the following payment schedule: $323,827 in~~ 2009, ~~$190,686~~we inhad ~~2010,~~total ~~$162,597~~payments indue ~~2011,~~under ~~$147,804~~our invarious ~~2012 and~~contractual ~~$49,894~~obligations inas ~~2013~~follows.

			Less than
Type of Obligation	Total		one year		1-3 years		3-5 years		Longer
Notes Payable		1,522,977		1,506,711		16,266
Operating lease obligations
Real estate		789,052		341,122		447,930
Other		114,169		55,972		54,357		3,840
Total		2,426,198		1,903,805		518,553		3,840

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not required.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

INDEX TO FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm 33

Report of Independent Registered Public Accounting Firm	29
Consolidated Balance Sheets	30
Consolidated Statements of Operations	31
Consolidated Statements of Stockholders' Equity	32
Consolidated Statements of Cash Flows	34
Notes to Consolidated Financial Statements	35

~~Consolidated~~- 28 Balance Sheets 34-

Consolidated Statements of Operations 35

Consolidated Statements of Stockholders' Equity 36

Consolidated Statements of Cash Flows 38

Notes to Consolidated Financial Statements 39

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

~~Shareholders and~~ Board of Directors

Las Vegas Gaming, Inc.

Las Vegas, Nevada

We have audited the accompanying consolidated balance sheets of Las Vegas Gaming, Inc. and subsidiaries as of December 31, ~~2007~~2008 and ~~2008~~2009, and the related consolidated statements of operations, stockholders’ equity and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Las Vegas Gaming, Inc. and Subsidiaries as of December 31, ~~2007~~2008 and ~~2008~~2009, and the results of their operations and cash flows for the years then ended in conformity with accounting principles generally accepted in the United States.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 8 to the financial statements, the Company has suffered recurring losses from operations and has a net capital deficiency that raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 8. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ PIERCY BOWLER TAYLOR & KERN

PIERCY BOWLER TAYLOR & KERN,

Certified Public Accountants & Business Advisors

A Professional Corporation

~~April 7~~May 12, ~~2009~~ 2010

LAS VEGAS, NEVADA

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LAS VEGAS GAMING, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	December 31,
ASSETS	~~2007~~2008			~~2008~~2009
Current assets
Cash and cash equivalents	$	~~489~~497,~~262~~529		$	~~497~~5,~~529~~293
Investment in marketable securities		875,~~881~~068			~~5,068~~-
Accounts receivable, net of allowance of $708 and $578		567,186			576,847
Accounts receivable, net of allowance of $578 and $1,762		576,847			336,352
Inventories		1454,~~161,707~~026			~~454~~223,~~026~~287
Prepaid expenses, deposits and other		~~149~~79,~~596~~881			7934,~~881~~311
Jackpot reserve deposits		~~276~~1,~~012~~230,761			1218,~~230,761~~628
		2,731,644			2,844,112
		2,844,112			817,871
Equipment, net of accumulated depreciation of $1,246,825 and $1,238,739		929,524			924,256
Equipment, net of accumulated depreciation of $1,238,738 and $978,785		924,256			505,486
Other assets
Goodwill		~~955~~2,~~277~~371,178			21,~~371~~413,~~178~~901
Trademarks, copyrights, patents and other identifiable intangibles, net of accumulated amortization of $1,417,602 and $1,165,742		1,421,194			278,330
Patents and other intangibles, net of accumulated amortization of $1,165,742 and $1,415,905		278,330			757,267
Other long term assets		884,350			56,451
Other		56,451			42,212
	$	6,~~921~~474,~~989~~327		$	63,~~474~~536,~~327~~737
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
Current liabilities
Advances from stockholders		-		$	600,000
Note payable	$	-		$	1,500,000
Accounts payable and accrued expenses	$	1,453,525			1,624,740
Advances from buyer of bingo business		-			494,342
Current portion of long-term debt		787,550			11,957
Advances from stockholders		600,000			55,000
Current portion of progressive jackpot liability		375,508			1,555,360
Accounts payable		1,227,430			1,017,375
		2,616,583			3,792,057
Accrued salaries		22,458			391,122
Long-term debt		5,940,925			23,119
Accrued dividends		178,959			994,607
Other payables and accrued expenses		195,893			189,574
Current portion of long-term debt		11,957			6,711
Deferred gain on the sale of bingo business		-			68,991
Progressive jackpot liability		1,555,360			1,612,946
		3,792,057			6,330,668
Long-term debt, net of current portion		23,119			16,266
Conditionally redeemable equity
Series B Convertible Preferred Stock, $.001 par value, 130,350 and 50,000 shares issued and outstanding		~~651~~250,~~750~~000			250,000
		651,750			250,000
Stockholders' equity (deficiency)
Stockholders' equity
Convertible Preferred Stock, $.001 par, 10,000,000 shares authorized:
Series A: 2,000,000 shares authorized, 0 and 0 shares issued and outstanding		-			-
Series E: 810,800 shares authorized, 810,800 and 810,800 shares issued and outstanding		811			811
Series C : 76,000 shares authorized, 35,000 and 0 shares issued and outstanding		35			-
Series F: 200,000 shares authorized, 200,000 and 0 shares issued and outstanding		200			-
Series D: 125,000 shares authorized, 125,000 and 0 shares issued and outstanding		125			-
Series G: 150,000 shares authorized, 150,000 shares issued and outstanding		150			150
Series E: 810,800 shares authorized, 743,800 and 810,800 shares issued and outstanding		744			811
Series F: 200,000 shares authorized, 200,000 shares issued and outstanding		-			200
Series G: 150,000 shares authorized, 150,000 shares issued and outstanding		-			150
Series H: 98,500 shares authorized, 98,500 shares issued and outstanding		-			99
Series I: 4,693,878 shares authorized, 4,693,878 shares issued and outstanding		-			4,694
Common Stock, $.001 par value, 90,000,000 shares authorized:
Common Stock Series A: 25,000,000 shares authorized, 12,562,653 and 14,849,690 shares issued and outstanding		12,563			14,850
Common Stock: 65,000,000 shares authorized, no shares issued or outstanding		-			-
Additional paid-in capital		26,497,097			44,160,702
Less due from officers and stockholders		(235,414	)		(188,245	)
Deficit		(28,562,419	)		(41,584,110	)
		(2,287,269	)		2,409,151
	$	6,921,989		$	6,474,327

Series H: 98,500 shares authorized, 98,500 shares issued and outstanding		99			99
Series I: 4,693,878 shares authorized, 4,693,878 shares issued and outstanding		4,694			4,694
Common Stock, $.001 par value, 90,000,000 shares authorized:
Common Stock Series A: 25,000,000 shares authorized, 14,849,690 and 14,974,149 shares issued and outstanding		14,850			14,974
Common Stock: 65,000,000 shares authorized, no shares issued or outstanding		-			-
Additional paid-in capital		44,160,702			44,245,949
Less stock subscriptions receivable		(188,245	)		-
Deficit		(41,584,110	)		(47,326,874	)
		2,409,151			(3,060,197	)
	$	6,474,327		$	3,536,737

The accompanying notes are an integral part of these financial statements.

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LAS VEGAS GAMING, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

YEARS ENDED DECEMBER 31, ~~2007~~2008 AND ~~2008~~2009

	2007			2008
	2008			2009
Revenues
Casino games	$	12,~~859~~525,~~165~~884		$	21,~~525~~747,~~884~~571
Product sales		1,~~820~~255,~~375~~428			1,~~255~~008,~~428~~202
Other		1997,~~383,869~~680			~~997~~1,~~680~~063,481
		5,063,409			4,778,992
		4,778,992			3,819,254
Costs and expenses
Casino games		~~862~~2,~~817~~953,973			21,~~953~~459,~~973~~236
Product costs		1,~~053~~307,~~650~~205			1610,~~307,205~~611
Other		1,~~344~~231,~~328~~820			1875,~~231,820~~371
		3,260,795			5,492,998
		5,492,998			2,945,218
Gross operating income		1,802,614			(714,006	)
Gross operating income (loss)		(714,006	)		874,036
Other operating expenses
Selling, general, and administrative		6,~~696~~646,~~336~~859			64,~~646~~326,~~859~~765
Research and development		1,~~038~~407,~~032~~308			1386,~~407,308~~337
Depreciation and amortization		~~855~~1,~~111~~445,129			1897,~~445,129~~362
		8,589,479			9,499,296
		9,499,296			5,610,464
Operating loss		(610,~~786~~213,~~865~~302	)		(104,~~213~~736,~~302~~428	)
Other income and expense
Finance costs		(12,~~590~~413,~~691~~102	)		(2119,~~413,102~~136	)
Interest income and other		~~116~~(119,~~015~~095	)		(~~119~~30,~~095~~785	)
Net loss		(812,~~261~~745,~~541~~499	)		(124,~~745~~886,~~499~~349	)
Preferred stock dividends		-(276,192	)		(~~276~~856,~~192~~415	)
Net loss attributed to common stockholders	$	(813,~~261~~021,~~541~~691	)	$	(135,~~021~~742,~~691~~764	)
Net loss per share attributed to common stockholders	$	(0.72	)	$	(0.96	)
Net loss per common share	$	(0.96	)	$	(0.38	)
Weighted average shares outstanding		1113,~~443~~611,~~117~~837			1315,~~611~~064,~~837~~821

The accompanying notes are an integral part of these financial statements.

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LAS VEGAS GAMING, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

YEARS ENDED DECEMBER 31, ~~2007~~2008 AND ~~2008~~2009

	~~Series A Convertible Preferred Stock~~	Series A Convertible Preferred Stock		~~Series C Convertible Preferred Stock~~		Series C Convertible Preferred Stock	~~Series D Convertible Preferred Stock~~		Series ED Convertible Preferred Stock			~~Series F Convertible Preferred Stock~~	Series E Convertible Preferred Stock		~~Series G Convertible Preferred Stock~~		Series F Convertible Preferred Stock	~~Series H Convertible Preferred Stock~~		Series IG Convertible Preferred Stock		~~Common Stock (Including Series A)~~	Series H Convertible Preferred Stock		~~Additional Paid-In Capital~~	Series I Preferred Stock		~~Less Due From Officers and Stockholders~~		Common Stock (Including Series A)	~~Deficit~~			Additional Paid-In Capital			Less Due From Officers and Stockholders			Deficit
Balances, January 1, 2007 (restated)	$	536		$	50		$	125	$	351			-			-			-		-	$	9,820		$	21,263,775		$	-		$	(20,300,878	)
Balances, January 1, 2008			-			$	35		$	125			$	744				-			-			-			-			$	12,563			$	26,497,097		$	(235,414	)	$	(28,562,419	)
Net loss																																~~(8,261,541~~	)								(12,745,499	)
Exercise of warrants and options																							831			1,181,544			(235,414	)
Dividends payable Series F and Series G Convertible Preferred Stock																																									(276,192	)
Issuance of warrants																										216,293
Exercise of warrants and options																															103				118,696			(16,831	)
Other Stock-based compensation																										169,789
Issuance of warrants for services																																			356,109
Issuance of Common Stock Series A to officer and board member																							102			203,898
Other Stock based compensation																															1,065				2,128,269			52,000
Issuance of Common Stock Series A for debt modification																							300			599,700
Cash received from employees and stockholders																																						12,000
Conversion of Series A Convertible Preferred Stock to Common Stock Series A		(536	)																				536
Conversion of Series B Convertible Preferred Stock to Common Stock Series A																															264				263,986
Conversion of Series B Convertible Preferred Stock to Common Stock Series A																							899			898,551
Conversion of Series C Convertible Preferred Stock to Common Stock Series A							(35	)																							175				(140	)
Conversion of Series C Convertible Preferred Stock to Common Stock Series A					(15	)																	75			(60	)
Conversion of Series D Convertible Preferred Stock to Common Stock Series A										(125	)																				125
Sale of Series E Convertible Preferred Stock										~~393~~				67												~~1,963,607~~									334,933
Balances, December 31, 2007	$	-		$	35		$	125	$	744		$	-		$	-		$	-	$	-	$	12,563		$	26,497,097		$	(235,414	)	$	(28,562,419	)
Sale of Series F Convertible Preferred Stock																		200																	639,872
Sale of Series G Convertible Preferred Stock																					150														479,904
Sale of Series H Convertible Preferred Stock																								99											492,402
Sale of Series I Preferred Stock																											4,694								11,290,207
Issuance of warrants to IGT																																			819,126
Sale of Common Stock Series A to Employees																															55				110,667
Sale of Common Stock Series A																															500				629,574
Balances, December 31, 2008		$	-			$	-		$	-			$	811			$	200		$	150		$	99		$	4,694			$	14,850			$	44,160,702		$	(188,245	)	$	(41,584,110	)

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	~~Series A Convertible Preferred Stock~~	Series A Convertible Preferred Stock		~~Series C Convertible Preferred Stock~~		Series C Convertible Preferred Stock	~~Series D Convertible Preferred Stock~~			Series ED Convertible Preferred Stock		~~Series F Convertible Preferred Stock~~	Series E Convertible Preferred Stock		~~Series G Convertible Preferred Stock~~		Series F Convertible Preferred Stock	~~Series H Convertible Preferred Stock~~		Series IG Convertible Preferred Stock		~~Common Stock (Including Series A)~~	Series H Convertible Preferred Stock		~~Additional Paid-In Capital~~		Series I Preferred Stock	~~Less Due From Officers and Stockholders~~			~~Deficit~~Common Stock (Including Series A)			Additional Paid-In Capital			Less Due From Officers and Stockholders			Deficit
Balances, January 1, 2008		-		$	35		$	125		$	744		-			-			-		-	$	12,563		$	26,497,097		$	(235,414	)	$	(28,562,419	)
Balances, January 1, 2009		$	-			$	-			$	-		$	811			$	200		$	150		$	99			$	4,694			$	14,850		$	44,160,702		$	(188,245	)	$	(41,584,110	)
Net loss																																~~(12,745,499~~	)								(4,886,349	)
Dividends payable Series F and Series G Convertible Preferred Stock																																(276,192	)
Dividends Payable to Series F and Series G Convertible Preferred Stock and Series I Preferred Stock																																									(856,415	)
Exercise of warrants and options																							103			118,696			(16,831	)
Issuance of stock options and warrants for services																																			574,693
Issuance of warrants for services																										356,109
Issuance of Common Stock Series A to reimburse for legal expenses																																27			17,863
Other Stock based compensation																							1,065			2,128,269			52,000
Cancellation of Common Stock Series A																																(168	)		(169,744	)		182,245
Repayments of amounts due from officers and stockholders																													12,000
Cancellation of Series F Convertible Preferred Stock																		(400	)																(1,999,600	)
Conversion of Series B Convertible Preferred Stock to Common Stock Series A																							264			263,986
Re-issuance of Series F Convertible Preferred Stock																		200																	999,800
Conversion of Series C Convertible Preferred Stock to Common Stock Series A					(35	)																	175			(140	)
Cash received from employees and stockholders																																						6,000
Conversion of Series D Convertible Preferred Stock to Common Stock Series A								(125	)														125
Sale of Common Stock Series A																																265			662,235
Sale of Series E Convertible Preferred Stock											67															334,933
Balances, December 31, 2009		$	-			$	-			$	-		$	811			$	-		$	150		$	99			$	4,694			$	14,974		$	44,245,949		$	(-	)	$	(47,326,874	)
Sale of Series F Convertible Preferred Stock													200													639,872
Sale of Series G Convertible Preferred Stock																150										479,904
Sale of Series H Convertible Preferred Stock																			99							492,402
Sale of Series I Preferred Stock																					4,694					11,290,207
Issuance of warrants to IGT																										819,126
Sale of Common Stock Series A to Employees																							55			110,667
Sale of Common Stock Series A																							500			629,574
Balances, December 31, 2008	$	-		$	-		$	-		$	811	$	200		$	150		$	99	$	4,694	$	14,850		$	44,160,702		$	(188,245	)	$	(41,584,110	)

The accompanying notes are an integral part of these consolidated financial statements.

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LAS VEGAS GAMING, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOW

YEARS ENDED DECEMBER 31, ~~2007~~2008 AND ~~2008~~2009

	2007			2008
	2008			2009
Operating activities
Net loss	$	(812,~~261~~745,~~541~~499	)	$	(124,~~745~~886,~~499~~349	)
Write off of loan costs and costs of warrants with debt extinguishment		-			(569,368	)
Adjustments to reconcile net loss to net cash used in operating activities:
Marketable security received for licensing fee		62,925			82,814
Write off of debt issuance costs and costs of warrants associated with extinguished debt		(569,368	)		-
Depreciation and amortization of equipment and software		372,415			355,404
Marketable security received for licensing fee		82,814			5,068
Market write down of inventory for obsolescence		-			678,175
Depreciation and amortization of equipment and software		355,404			267,707
Loss on disposal of assets		-			72,040
Market write down of inventory for obsolescence		678,175			64,761
Amortization of debt issuance costs and intangibles		1,324,379			1,866,432
Loss on disposal of assets		72,040			29,360
Impairment of intangibles		-			606,667
Bad Debt Expense		10,697			51,720
Fair market value adjustment of debt derivative liability		(63,181	)		(168,449	)
Impairment of keno equipment		-			50,000
Stock-based compensation to employees and consultants		386,082			823,450
Capitalization of engineering costs		-			(631,899	)
Other		105,463			(2,604	)
Amortization of debt issuance costs		1,287,804			-
Amortization of intangibles		578,628			250,161
Impairment of intangibles		606,667			324,942
Fair value adjustment of debt derivative liability		(168,449	)		-
Stock-based compensation		823,450			584,693
Other		(2,604	)		22,015
Changes in operating assets and liabilities
Accounts receivable		(~~100~~20,~~964~~358	)		(9123,~~661~~365	)
Inventories		~~(646~~46,~~735~~907	)		4657,~~907~~145
Prepaid expenses, deposits and other		~~431~~124,~~113~~415			~~124~~45,~~415~~569
Accounts payable and accrued expenses		470,028			340,956
Accounts payable		135,312			(171,506	)
Progressive jackpot liability		(1,249,543	)		1,179,852
Accrued salaries		22,458			368,664
Net cash used in operating activities		(7,169,559	)		(7,318,459	)
Other payables and accrued expenses		183,196			(6,320	)
Progressive jackpot liability		1,179,852			57,586
Deferred gain on the sale of bingo business		-			68,991
Net cash used in operating activities		(7,318,459	)		(3,324,327	)
Investing activities
Purchase of property and equipment		(~~400~~327,~~509~~303	)		(~~327~~193,~~303~~566	)
Proceeds from sale of equipment		-55,250			556,~~250~~950
Decrease (increase) in jackpot reserve deposits		3,878,178			(954,749	)
Proceeds from sale of bingo business		-			930,927
Net cash provided by (used in) investing activities		3,477,669			(1,226,802	)
Decrease in jackpot reserve deposits		1,096,468			1,240,319
Increase in jackpot reserve deposits		(2,051,217	)		(228,186	)
Net cash provided by (used in) investing activities		(1,226,802	)		1,756,444
Financing activities
Dividends paid on Series F Convertible Preferred Stock		-(97,233	)		(9732,~~233~~877	)
Proceeds from litigation settlements		43,096			-
Redemption of Series F Convertible Preferred Stock		-			(2,000,000	)
Repayment of debt		(26,241	)		(6,122,539	)
Re-issuance of Series F Convertible Preferred Stock		-			1,000,000
Sale of Series E Convertible Preferred Stock		1,964,000			335,000
Redemption of Series B Convertible Preferred Stock		(137,500	)		-
Sale of Series F Convertible Preferred Stock		-			640,072
Repayment of debt		(6,122,549	)		(9,318	)
Sale of Series G Convertible Preferred Stock		-			480,054
Sale of Series E Convertible Preferred Stock		335,000			-
Sale of Series H Convertible Preferred Stock		-			492,501
Sale of Series F Convertible Preferred Stock		640,072			-
Sale of Series I Preferred Stock		-			11,500,000
Sale of Series G Convertible Preferred Stock		480,054			-
Redemption of Series B Convertible Preferred Stock		(179,500	)		(137,500	)
Sale of Series H Convertible Preferred Stock		492,501			-
Advances from stockholders		-			2,435,000
Sale of Series I Preferred Stock		11,500,000			-
Repayment of advances from stockholders		-			(1,835,000	)
Advances from stockholders		2,435,000			300,000
Exercise of warrants and options for common stock		573,623			110,387
Repayment of advances from stockholders		(1,835,000	)		(845,000	)
Collection of stock subscriptions receivable		130,586			12,000
Increase in notes payable		-			1,500,000
Sale of common stock					740,796
Advances from buyer of bingo business assets		-			494,342
Net cash provided by financing activities		2,505,564			8,553,528
Exercise of warrants and options for Common Stock Series A		110,387			-
Net increase (decrease) in cash and cash equivalents		(1,186,326	)		8,267
Collection of stock subscriptions receivable		12,000			6,000
Cash and cash equivalents, beginning of period		1,675,588			489,262
Sale of Common Stock Series A		740,796			662,500
Cash and cash equivalents, end of period	$	489,262		$	497,529
Net cash provided by financing activities		8,553,528			1,075,647
Net increase (decrease) in cash and cash equivalents		8,267			(492,236	)
Cash and cash equivalents, beginning of period		489,262			497,529
Cash and cash equivalents, end of period	$	497,529		$	5,293
Non-cash investing and financing activities
Conversion of Series B Convertible Preferred Stock to Common Stock Series A	$	~~899~~264,~~450~~250		$	~~264,250~~-
Exercise of stock warrants and options increasing subscriptions receivable		~~366~~8,~~000~~412			~~8,412~~-
Conversion of Series C Convertible Preferred Stock to Common Stock Series A		7535			35-
Conversion of Series D Convertible Preferred Stock to Common Stock Series A		125			~~125~~-
Exercise of warrants in settlement of accounts payable		257,750
Equipment acquired directly with proceeds of borrowing		34,025			-
Costs of warrants for debt modification		255,273
Debt retired through issuance of Common Stock Series A		107,500			-
Equipment acquired directly with proceeds of new borrowing		87,419			34,025
Prepayment of lease costs with Common Stock Series A		106,000			-
Debt retired through issuance of Common Stock Series A					107,500
Accrued and prepaid interest added to face amount of note due to debt modification		801,250			-
Prepayment of lease costs with Common Stock Series A		600,000			106,000
Unpaid dividends declared on Series F, and Series G Convertible Preferred Stock and I Preferred Stock		276,192			856,415
Accrued and prepaid interest added to face amount of note due to debt modification		250,000			801,250
Forgiveness of debt and related issuance of warrant		614,027			-
Dividends declared on Series F, G and I Preferred Stock					276,192
Acquisition of business for common stock Series A		1,495,882			-
Forgiveness of debt in connection with the IGT investment and issuance of warrant					614,027
Exchange of automobile for notes receivable					16,500
Acquisition of business for common stock					1,495,882
Write-off of subscriptions receivable due to non-collectability					169,912
Dividends paid on Series F Preferred Stock through issuance of Common Stock Series A					7,890

The accompanying notes are an integral part of these financial statements.

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LAS VEGAS GAMING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Nature of operations:

Our current principal business is the delivery of new, linked-progressive, mega jackpot games to the worldwide gaming industry. Our offering of these types of games includes Nevada Numbers, Super Bonanza Bingo, and Million Dollar Ticket. On March 31, 2009, because of the expiration of our contract with Treasure Island whereby Treasure Island had agreed to maintain the $3.9 million base jackpot bankroll, we shut down Nevada Numbers and Million Dollar Ticket. We expect to ~~(Note 13)~~restart the games as soon as we find funding for the $3.9 million base jackpot. During the second quarter of 2008, we launched ~~Gamblers~~ Gamblers Bonus Million Dollar Ticket in cooperation with one of the larger slot ~~route~~ route operators in Nevada~~. We~~, which was subsequently shut ~~this game~~ down on January 31, 2009. Although we have recently focused our business on ~~the~~ the development of our proprietary multimedia delivery system, known as PlayerVision, ~~PlayerVision~~we ~~has~~have not ~~had~~generated a significant ~~revenue~~revenues ~~effect on our financial statements~~ to date. We continue to provide equipment, supplies and casino games for use by our customers in the keno and bingo segments of the gaming industry. In large part because of our focus on the development of our PlayerVision system, in addition to recent economic developments, we have incurred expenses in excess of our revenue and have generated losses for 2008 and 2009 (Note 6).

2. Summary of significant accounting policies:

Principles of consolidation and basis of accounting. The consolidated financial statements include the accounts of the parent company, Las Vegas Gaming, Inc. (“LVGI ~~or the parent company~~”), Imagineering Gaming, Inc. and Las Vegas Gaming Acquisition Corp., our wholly owned subsidiaries, and Las Vegas Keno Incorporated, an inactive 85%-owned subsidiary (collectively, the “Company” or “we”). All significant intercompany transactions and balances have been eliminated in consolidation.

The Company has ~~not~~ elected not to adopt the ~~option~~fair ~~available~~value ~~under Financial Accounting Standards Board (FASB) No. 159, The Fair Value Option for Financial Assets and Financial Liabilities,~~ to measure any of its eligible financial instruments or other items. Accordingly, it continues to measure all of its assets and liabilities on the historical cost basis of accounting except as required by generally accepted accounting principles and otherwise disclosed herein.

Revenue and cost recognition.

Casino Games. As wagers are made within our inter-linked systems, we recognize our share of each wager made as revenue. Based on the revenue proceeds, we purchase insurance to fund the base jackpot. We also estimate the cost for any uninsured base jackpot and the expense for any progressive jackpot and, accordingly, establish a liability on our balance sheet as a progressive jackpot liability (Note 3). For our other casino games, we recognize our share of revenue upon the sale of each ticket. We have the discretion to purchase insurance to fund jackpots. We recognize costs associated with uninsured jackpots as each ticket is sold based on mathematical probabilities dictated by the odds of the game.

Winners of the Nevada Numbers progressive jackpot are to be paid the amount of the progressive meter in equal installments over 20 years (Notes 3 and 8). However, we may, at our discretion, offer the winner an option to receive a discounted value immediately using a designated prime rate of interest as a discount rate. Once an inter-linked progressive jackpot is won ~~(one as of December 31~~, ~~2008),~~ in the event a discounted value is not paid immediately at the option of the winner, management would become obligated to purchase discounted U.S. Treasury securities to meet the obligation for the annual payments. We expect to classify these investments as “held-to-maturity”,” toincluded beas ~~stated~~noncurrent assets initially at cost and adjusted over the term of the security for the amortization or accretion of any premiums or discounts ~~over the term of the security~~ using the interest method.

Products. We generally recognize sales of bingo and keno equipment when installed and sales of supplies when the products are shipped. Title to the goods has passed when they leave our shipping dock. Sales and similar revenue-~~based~~ ~~taxes~~35 collected from customers are excluded from revenue but rather are recorded as a liability payable to the appropriate taxing authority and included in accrued expenses. Shipping and handling charges to customers and related costs are included respectively in-

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~~sales revenues~~On ~~and~~March ~~cost~~18, ~~of sales. For keno system installations~~2010, wethe ~~require~~Financial aAccounting ~~50%~~Standards ~~deposit~~Board in(FASB) ~~advance~~issued asFASB aAccounting ~~good~~Standards ~~faith down payment for the system~~Codification ~~installation. We~~924-405, ~~have~~Casino ~~customer acceptance provisions in our keno~~Jackpot ~~system sales contract and~~Liabilities, ~~therefore,~~which westates dothat ~~not~~jackpots ~~recognize~~on ~~revenue~~which ~~until~~ the ~~system~~ isCompany ~~installed~~can ~~and performing properly. Warranty costs and~~avoid ~~related~~payment ~~liabilities~~do ~~associated with product sales have~~ not ~~been material. We~~meet ~~recognize~~the ~~fees~~definition ~~from~~of ~~equipment~~a ~~maintenance~~liability ~~contracts~~until ~~sold separately (rather than as bundled deliverables) evenly over~~ the ~~term~~jackpot ofis ~~the contract~~won. ~~Prior~~This tois ~~shipment,~~effective wefor ~~include~~years ~~equipment~~beginning ~~and~~on ~~supplies~~or ~~in inventories~~after ~~stated~~December ~~at the lower of cost~~15, ~~as determined on a “first-in-first-out”~~ ~~basis,~~2010 orand ~~market. We~~may ~~had~~have a ~~market~~significant ~~write-down~~effect ofon ~~our~~the ~~PlayerVision~~financial ~~2 inventory~~statements of ~~$678,000 for obsolescence as it has been replaced by a more robust~~the ~~PlayerVision~~Company ~~3 platform~~ which ishas ~~the~~not ~~product~~yet webeen ~~are now taking to market~~determined.

Products. We generally recognize sales of bingo and keno equipment when installed (since we are responsible for installation) and sales of supplies when the products are shipped since title to the products has passed when they leave our shipping dock. Sales and similar revenue-based taxes collected from customers are excluded from revenue but rather are recorded as a liability payable to the appropriate taxing authority and included in accrued expenses. Shipping and handling charges to customers and related costs are included respectively in sales revenues and cost of sales. For keno system installations, we require a 50% deposit in advance as a good faith down payment for, and recorded as a liability until completion and customer acceptance of, the system installation. Warranty costs and related liabilities associated with product sales have not been material. We recognize fees from equipment maintenance contracts sold separately (rather than as bundled deliverables) evenly over the term of the contract. Prior to shipment, we include equipment and supplies in inventories (see below). We had a market write-down of our PlayerVision 2 inventory of $678,000 for obsolescence in 2008 as it has been replaced by a more robust PlayerVision 3 platform, which is the product we will soon offer.

Cash and cash equivalents and jackpot ~~reserve~~ reserve deposits. We consider all highly liquid investments with an original maturity of three months or less at the date of purchase to be cash equivalents. For financial statement purposes, jackpot reserve deposits (~~Note~~Notes 3 and 8), a form of restricted cash, is excluded from cash and cash equivalents. Changes in the funds set aside for such purposes are treated as investing activities and reported net in the statement of cash flows. We classify these funds as current assets because we use these restricted funds to support current operations.

~~Inventories~~Receivables. ~~Inventories~~We consist primarily of bingo and keno finished goods and keno equipment and spare parts and are stated at the lower of cost or market, with cost determined using the first-in, first-out (“FIFO”) cost method. Appriopriate write ~~offs are~~off ~~made to~~accounts ~~reduce~~receivables ~~the~~after ~~cost~~all ofreasonable ~~excess~~collection ~~and~~efforts ~~obsolete~~have ~~inventories to their~~been ~~estimated net realizable value~~exhausted.

~~Other intangible assets~~Inventories. ~~Other intangible assets~~ Inventories consist primarily of ~~the~~bingo ~~costs of~~and ~~trademarks,~~keno ~~copyrights~~finished goods, ~~and~~including ~~patents~~keno ~~(some~~equipment ~~of which are~~and ~~pending). Other~~spare ~~intangible~~parts, ~~assets~~and are ~~amortized~~stated onat athe ~~straight~~lower ~~line basis~~of ~~over~~cost ~~the~~or ~~estimated~~market, ~~economic~~with ~~life~~cost ofdetermined using the ~~asset~~first-in, ~~usually~~first-out ~~less~~(“FIFO”) ~~than~~cost ~~10 years~~method. Appropriate Wemarkdowns ~~review goodwill and other intangible assets for impairment annually and whenever events or circumstances indicate the carrying values~~ are ~~not~~made ~~likely~~when ~~to be~~necessary ~~recoverable or warrant a revision~~ to ~~the~~reduce ~~estimated remaining useful life, in accordance with~~ the ~~Statement~~cost of ~~Financial~~excess ~~Accounting~~and ~~Standards (SFAS) 144,~~obsolete ~~Accounting~~inventories ~~for~~to ~~the~~their ~~Impairment or~~estimated ~~Disposal~~net ofrealizable ~~Long-Lived Assets, and SFAS 142, Goodwill and Other Intangible Assets~~value.

~~Our~~Intangible assets. Intangible ~~forecasted~~assets ~~future~~other ~~cash~~than ~~flow~~goodwill ~~used to~~consist ~~test~~primarily ~~the recoverability or determine the fair value~~ of ~~intangibles are based on assumptions that are objective and consistent with our best estimates and~~ the ~~plan~~ ~~used~~costs ~~to manage the underlying business. Factors used in the evaluations~~ of ~~potential~~ ~~impairment and fair value estimates require significant judgments and respective estimated useful lives~~patents, ~~risk~~(some ~~rates, expected market growth rates, brand history, competitive environment, market share, future business prospects and success~~ of ~~our~~which ~~products.~~are ~~Changes~~pending ~~in these expectations and related estimates and assumptions, for example, resulting from the economic conditions and uncertainties discussed in~~ (Note ~~8, could materially affect the estimated~~ ~~recoverability and/or fair value~~5)). Other ~~While~~intangible weassets ~~believe that our estimates of future revenues and cash flows~~ are ~~reasonable,~~amortized ~~different~~on ~~assumptions~~a ~~could~~straight ~~materially affect~~line ~~our assessments of useful lives, recoverability and fair values.~~basis ~~Application~~over of the ~~goodwill~~estimated ~~impairment~~economic ~~test~~life ~~also~~of ~~requires judgment regarding such factors as~~ the ~~identification of reporting units~~asset, ~~allocation~~usually ofless ~~related goodwill,~~than ~~assignment of corporate shared assets and liabilities to reporting~~10 ~~units, and determination of estimated fair value of each reporting unit~~years. We ~~estimate~~ ~~the~~review ~~fair~~goodwill ~~value~~and ofother ~~our~~intangible ~~operating~~assets ~~components~~for ~~using the discounted cash~~impairment ~~flow~~annually ~~method,~~ and ~~compare~~whenever ~~the~~events ~~implied~~or ~~valuation~~circumstances ~~multiples~~indicate ~~to guidelines for public companies under~~ the ~~market~~carrying ~~approach~~values ~~to test the reasonableness of the~~are ~~discounted~~not ~~cash~~likely ~~flow results. Our recorded goodwill relates~~ to ~~our~~be ~~bingo~~recoverable ~~and keno~~or ~~product~~warrant ~~sales~~a ~~business~~revision ~~component and~~ to ~~our recent acquisition of Adline Network Holdings, Inc. (Note 7). Losses during 2007 and 2008 resulted from significant cash resources expensed on~~ the ~~development,~~estimated ~~regulatory~~remaining ~~approval,~~useful ~~administrative infrastructure, and marketing of PlayerVision~~life.

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Use of estimates. The preparation of these financial statements requires the use of estimates and judgments and the reported actual results may differ from these estimates under different assumptions or conditions, and these differences may be material. Management’s estimates related to the recoverability of the carrying values of the intangible assets and goodwill are particularly vulnerable to material changes in the next year.

~~Marketable~~- ~~securities. Securities classified~~36 ~~as “trading securities” are carried in the financial statements at fair value. Unrealized and realized gains and losses are included in earnings currently.~~-

~~Equipment~~Table and depreciation. Equipment is stated at cost. Expenditures for maintenance and repairs are expensed as incurred. When equipment is sold, the cost and the related accumulated depreciation are removed from the respective accounts and the resulting gains or losses are reflected in income. Depreciation is provided using the straight-line method over the useful lives of ~~the assets (three to ten years).~~Contents

~~Certain~~Our ~~issuances~~forecasted future cash flow used to test the recoverability or estimate the fair value of ~~our~~intangibles ~~Common~~are ~~Stock~~based ~~Series~~on ~~A. Our~~assumptions ~~Common~~that ~~Stock~~we ~~Series~~believe Aare ~~does~~objective ~~not~~and ~~trade~~consistent inwith our expectations and the ~~market~~plan ~~and,~~used to manage the underlying business (primarily level 3 inputs as ~~therefore,~~defined ~~quoted~~in ~~stock~~U.S. ~~prices~~generally ~~are~~accepted ~~not~~accounting ~~available~~principles). InFactors used ~~November~~in ~~2005~~the weevaluations of potential impairment and fair value estimates require ~~raised~~significant ~~$250~~judgments and respective estimated useful lives,~~000~~ byrisk ~~issuing~~rates, expected ~~common~~market ~~stock~~growth atrates, $2brand ~~per~~history, competitive environment, market share., Afuture ~~limited~~business ~~number~~prospects and success of our products. Changes ~~sales~~in ~~between~~these ~~shareholders~~expectations and ~~third~~related ~~parties~~estimates ~~interested~~and inassumptions, ~~buying~~for ~~our Common~~example, ~~Stock~~resulting ~~Series~~from Athe ~~have~~economic ~~predominately~~conditions ~~occurred~~and atuncertainties ~~$2.00~~such ~~per~~as ~~share~~those discussed in ~~2007~~Note 8, could materially affect the estimated recoverability and/or estimated ~~2008~~fair value. We ~~used~~While ~~this~~we ~~price~~believe asthat ~~the~~our ~~best~~estimates ~~indication~~of future revenues and cash flows are reasonable, different assumptions could materially affect our assessments of ~~the~~useful lives, recoverability and fair ~~value~~values. Application of the ~~Common~~goodwill ~~Stock~~impairment ~~Series~~test Aalso ~~until~~requires judgment regarding such factors as the identification ~~IGT~~of ~~investment~~reporting ~~transaction~~units, onallocation ~~October~~of 24related goodwill, ~~2008~~assignment of atcorporate ~~which~~shared ~~time~~assets weand ~~performed~~liabilities ato ~~reevaluation~~reporting units, and determination of estimated ~~the~~fair ~~price~~value ~~given~~of each reporting unit. We estimate the ~~strategic~~fair ~~nature~~value of ~~IGT’s~~our ~~investment~~operating components using the discounted cash flow method, and compare ~~established~~the aimplied ~~new~~valuation ~~fair~~multiples ~~value~~to guidelines for public companies under the market approach to test the reasonableness of ~~$2.50~~the ~~per~~discounted cash flow ~~share~~results. In ~~January~~addition, ~~2009~~since our keno business is now incurring monthly losses, ~~this~~since ~~price~~our ~~was~~keno ~~further~~liabilities ~~validated~~far asexceed ~~the~~our ~~fair value~~keno asassets, and we recently ~~raised~~agreed to sell this business for $~~562~~100,~~500~~000 by(Note ~~selling~~13), ~~225~~we recorded an impairment charge for our keno business goodwill of $327,000 ~~shares~~during ofthe ~~Common~~year ended ~~Stock~~December ~~Series~~31, A2009. Our recorded goodwill relates to our atunallocated sales omponent $2and to our recent acquisition of Adline Network Holdings, Inc.50 ~~per~~(Note ~~share~~7). Losses during 2008 and 2009 resulted from significant cash resources expensed on the development, regulatory approval, administrative infrastructure, and marketing of PlayerVision.

~~Net~~Based ~~loss~~on ~~per~~the circumstances and the ~~share. Basic~~related ~~net~~uncertainties ~~loss~~as ~~per~~to ~~share~~the issuccess ~~computed~~of bymanagement’s ~~dividing~~plans ~~net loss~~to bycontinue ~~the~~as ~~weighted~~a going ~~average~~concern, ~~number~~as of ~~common~~December ~~shares~~31, ~~outstanding~~2009, ~~during~~described ~~the~~in Note 8, impairment ~~year. Potentially~~evaluations ~~dilutive~~relative ~~securities~~to ~~such~~these asassets ~~convertible~~were ~~preferred~~based on our expectation of ~~stock,~~recoverability ~~options~~of ~~and~~at ~~warrants~~least ~~were~~their ~~not~~carrying ~~considered~~values ~~outstanding~~through ~~because~~a possible sale thereof using fair value estimates based on level 3 inputs. It is possible based on future developments, even in the ~~effect~~near term, that asset impairment ~~would~~writedowns ~~have~~may ~~been~~become ~~anti-dilutive~~necessary and that they may be significant.

~~Stock-based compensation~~Marketable securities. ~~Effective~~ Investments ~~January~~in marketable 1,securities ~~2006~~are weclassified ~~adopted~~as ~~SFAS~~“trading ~~No. 123R,~~securities” ~~Share~~and ~~Based Payment,~~carried ~~using~~in the ~~modified-prospective-transition method, which requires~~ nofinancial ~~retroactive~~statements ~~adjustments.~~as ~~Prior~~current toassets ~~January~~valued 1,at ~~2006,~~fair wevalue ~~had~~based ~~been~~on ~~utilizing SFAS~~current ~~No.~~market ~~123,~~quotes ~~Accounting~~(level ~~for Stock-based~~1 ~~Compensation,~~inputs). Unrealized ~~for~~and ~~valuing~~realized ~~employee~~gains and ~~other compensatory~~ ~~stock~~losses ~~and~~are ~~option~~included ~~awards~~in ~~(Note~~earnings 7)currently.

WeEquipment ~~use the Black-Scholes option pricing model to estimate the fair value of options~~ and ~~warrants and the amounts to be~~ ~~expensed~~depreciation. Equipment asis itstated ~~relates~~at ~~to employee and non-employee stock-based compensation~~cost. InDepreciation is provided using the ~~Black~~straight-~~Scholes~~line ~~option-pricing~~method ~~model,~~over the ~~principal~~useful ~~assumptions~~lives ~~selected to~~of ~~value~~ the ~~options and warrants for calculating the “minimum value,” included~~assets a(three ~~“risk-free” interest rate of approximately 2%, expected option life of four~~ to 10 ~~years,~~ten ~~volatility of 30% and no expected dividends~~years).

~~Advertising~~Certain issuances of our Common Stock Series A. ~~Advertising~~Our Common Stock Series A does not trade in the ~~costs~~market and, therefore, quoted stock prices are ~~expensed~~not asavailable. A limited ~~incurred~~number of sales between stockholders and ~~totaled~~third parties interested in buying our Common Stock Series A have predominately occurred at $~~229~~2.00 per share in 2008. We used this price as the best indication of the fair value of Common Stock Series A until the International Game Technology (“IGT”) investment transaction on October 24,~~100~~ 2008, at which time we performed a reevaluation of the price given the strategic nature of IGT’s investment and established a new fair value of $832.50 per share. In January 2009,~~770~~ this ~~for~~price ~~2007~~was ~~and~~further validated as the fair value as we raised $562,500 by ~~2008~~selling ~~respectively~~225,000 shares of Common Stock Series A at $2.50 per share. We also sold 40,000 shares at $2.50 per share in early October 2009.

Net loss per share. Basic net loss per share is computed by dividing net loss by the weighted average number of common shares outstanding during the year. Potentially dilutive securities such as convertible preferred stock, options and warrants for a total of 29,250,730 shares were not considered outstanding because the effect would have been anti-dilutive.

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Stock-based compensation. We use the Black-Scholes option pricing model to estimate the fair value of options and warrants and the amounts to be expensed as it relates to employee and non-employee stock-based compensation. In using the Black-Scholes option-pricing model, the principal assumptions selected to value the options and warrants for calculating the “minimum value,” included a “risk-free” interest rate of approximately 2%, expected option life of four to 10 years, estimated volatility of 30% and no expected dividends.

Advertising. Advertising costs are expensed as incurred and totaled $83,770 and $20,528 for 2008 and 2009, respectively.

Income taxes. Our policy is to treat any income tax-related interest or penalties as a component of income tax expense (benefit).

Reclassifications. Certain minor reclassifications to previously reported amounts have been made to conform to the current year presentation.

~~- 41~~3. Jackpot -reserve deposits and related obligations:

~~Table~~At December 31, 2008 and 2009, as required by gaming regulators, we held aside cash on deposit of ~~Contents~~$1,230,761 and $218,628, respectively, that is restricted for funding our various regulatory obligations for jackpot-oriented games (Note 8).

3On March 18, 2010, the Financial Accounting Standards Board (FASB) issued FASB Accounting Standards Codification 924-405, Casino Jackpot Liabilities, which states that jackpots on which the Company can avoid payment do not meet the definition of a liability until the jackpot is won. ~~Jackpot~~This is ~~Reserve~~effective ~~Deposits:~~for years beginning on or after December 15, 2010 and will have a significant effect on the financial statements of the Company.

At December 31, 2007 and 2008, as required by gaming regulators, we held aside cash on deposit of $276,012 and $1,230,761, respectively, that are restricted for funding our various jackpot-oriented games. (Note 8).

4. Equipment:

Equipment consists of the following:

	December 31, 2007		December 31, 2008
	December 31, 2008		December 31, 2009
Production equipment	$	1,~~669~~561,~~461~~513	$	1,~~561~~166,~~513~~383
Other equipment, furniture, and fixtures		463,261		557,855
Office equipment, furniture, and fixtures		557,855		317,888
Leasehold improvements		43,627		~~43,627~~-
		2,176,349		2,162,995
		2,162,995		1,484,271
Less accumulated depreciation and amortization		1,~~246~~238,~~825~~739		1978,~~238,739~~785
	$	~~929~~924,~~524~~256	$	~~924~~505,~~256~~486

As previously mentioned in Note 2, since our keno business is now incurring monthly losses, our keno liabilities far exceed our keno assets, and we recently agreed to sell this business for $100,000 (Note 13), we recorded an impairment charge for our keno production equipment of $50,000 during the year ended December 31, 2009.

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5. Other intangible assets:

~~Trademarks,~~Patents ~~copyrights, patents~~ and ~~technology~~ ~~rights, and~~ other intangible assets consist of the following:

	December 31, 2007		December 31, 2008
	December 31, 2008		December 31, 2009
PlayerVision technology rights	$	1,016,236	$	1,016,236
PlayerVision technology patents	$	1,016,236	$	1,016,236
Software		~~422~~427,~~560~~836		~~427~~432,~~836~~775
PlayerVision technology rights for “at home” wagering		1,400,000
Capitalized engineering costs		-		724,160
		2,838,796		1,444,072
		1,444,072		2,173,171
Less accumulated amortization		1,~~417~~165,~~602~~742		1,~~165~~415,~~742~~904
	$	1278,~~421,194~~330	$	~~278~~757,~~330~~267

~~The~~Intangible ~~intangible~~ assets are amortized ~~over~~ over their estimated useful lives, which are currently 5 years. Total amortization for other intangible assets amounted to $~~550~~541,~~140~~474 and $~~541~~250,~~474~~161 for the years ended December 31, ~~2007~~2008 and ~~2008~~2009, respectively. ~~In addition,~~Since we are not proceeding with “at home” wagering as part of our strategic product plan in the future, ~~and~~we ~~have~~ expensed $606,667 of then remaining unamortized asset value in the fourth quarter of 2008, which ~~has~~was ~~been~~ included in depreciation and amortization in ~~the~~our ~~Consolidated~~consolidated ~~Statement~~statement of ~~Operations~~ operations. ~~The~~Estimated ~~estimated~~ aggregate future amortization assuming we begin amortizing PlayerVision engineering costs in July 2010 is as follows:

2009	$	249,726
2010	$	148,260
2010		25,369
2011		246,266
2011		3,235
2012		242,048
	$	278,330
2013		120,693
	$	757,267

6. Debt:

On May 1, 2008, we amended our financing with CAMOFI Master LOC (“CAMOFI”) and entered into an Amended and Restated Senior Secured Convertible Note due January 1, 2010 (the “CAMOFI Note”), and an Amended and Restated Registration Rights Agreement (the “Registration Rights Agreement”) with CAMOFI. The commitment fees due under the original CAMOFI note on April 1, 2008, July 1, 2008, October 1, 2008, and January 1, 2009 of $131,250 and prior accrued commitment fees were added to the face amount of the CAMOFI Note which increased from $5,250,000 to $6,051,250. We were also to pay commitment fees of $403,417 on January 1, 2009, and $302,563 on July 1, 2009 and January 1, 2010. The Registration Rights Agreement required us to file a registration statement with the Securities and Exchange Commission on the earlier of the closing of a Qualified Financing (as defined in the Registration Rights Agreement) or April 30, 2009 with the effectiveness date remaining 120 calendar days after the filing date. The maturity date of the CAMOFI Note was changed from January 1, 2009 to January 1, 2010.

Because of the Registration Rights Agreement with CAMOFI, the registration of CAMOFI’s converted shares and warrants were outside of our control. The Registration Rights Agreement with CAMOFI stated that if 125% of the registered securities for CAMOFI were not effective by the 120th calendar day following the filing date of September 30, 2008, we would have to pay cash liquidating damages equal to 1.5% of the outstanding principal of the bridge financing and an additional 1.5% for any subsequent 30-day period thereafter. If we failed to pay any partial liquidating damages within seven days from the date payable, we were to accrue 20% annual interest on any amount in arrears. Settlement of the warrants with unregistered shares and the payment of a penalty would have been an uneconomic settlement alternative and thereby would not have been considered a realistic alternative for us. Consequently, the initial value of the warrants was recorded as a derivative liability and changes to the fair value of those warrants were included in the statement of operations.

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On October 24, 2008, the CAMOFI note for $6,051,250, a prepayment penalty of $1,210,250 and accrued interest of $357,022 were paid off with the proceeds of the IGT investment (Note 7). This early extinguishment of debt resulted in a loss of $640,882. After the payoff, CAMOFI has 2,675,000 warrants at $1.48 and incidental registration rights which allows CAMOFI to join a registration statement after the Company’s and IGT’s shares have been registered if there is availability in any future registration statement.

Long term debt at December 31, is as follows:

	2008		2009
Notes payable	$	35,076	$	22,977
Less amounts due within one year		11,957		6,711
	$	23,119	$	16,266

Scheduled debt maturities are as follows:

2010	$	6,711
2011		7,417
2012		8,196
2013		653
	$	22,977

During 2008, we received five stockholder advances totaling $2,435,000 and paid back all but $600,000 of those advances by December 31, 2008, and $600,000 in January 2009. During 2009, an additional $300,000 was advanced from three principal stockholders. Of this amount, $245,000 has been paid back as of December 31, 2009. The buyer of our bingo business assets advanced us $494,342 for working capital purposes (Note 12).

We have received all monies due from a settlement with a customer of our wholly-owned subsidiary, Imagineering, and have distributed all monies due except for $107,500 which is due to the prior owners of Imagineering who agreed to convert their debt into Common Stock Series A at $2.00 per share or 53,750 shares in March 2008. As part of the IGT investment on October 24, 2008 (Note 7), the $614,027 due IGT above under settlement was forgiven and has been included, along with the $11,500,000 cash investment by IGT, in the allocation between the Series I Preferred Stock (valued at $11,294,901) and the 1,500,000 warrant (valued at $819,126).

On February 13, 2009, we signed a binding term sheet with IGT whereby IGT advanced $1.5 million to the Company. We signed a note effective June 1, 2009, for this advance, which carries an interest rate of 10% per annum and is due on January 29, 2010. We granted a security interest in all of our present and future assets as security for such obligation (Note 14).

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The Company and IGT amended the License and Application Support Agreement dated September 30, 2008 between the Company and IGT (the “LASA”), and the Intellectual Property Access Agreement dated September 30, 2008 between the Company and IGT (the “IPAA”). The amendments to the LASA include: (1) a requirement that the Company use its best efforts to utilize IGT’s sb (server-based) Media Manager as the default infrastructure for the delivery of the Company’s PlayerVision applications, where feasible, (2) a requirement that the Company provide development support for IGT sb (server-based) applications requested by IGT, (3) an amendment to the amount of distribution fees, (4) a granting to IGT of a “most favored distributor” status so that IGT is granted the most favorable terms on the Company’s software distributor rates for its server-based applications, and (5) a requirement that the Company escrow the source code for the applications that connect to IGT systems. IGT will have the right to access the source code only if the Company becomes insolvent, and IGT’s rights to utilize such software (if released) will be unlimited. The amendments to the IPAA include the Company’s agreement that IGT will have the right to initiate, coordinate, finance and assist in the prosecution, defense and enforcement of all Company owned intellectual property to which the Company has granted a right of first refusal to IGT.

7. Stockholders' equity:

From time to time, we issue shares of common stock and preferred stock through transactions that are exempt from registration under the Securities Act of 1933 (the “Securities Act”), or pursuant to Section 4(2) of the Securities Act and Rule 506 of Regulation D.

During the year ended December 31, 2008, we issued 260,917 shares of Common Stock Series A for salaries, bonuses, consulting services, and board of directors fees, 500,000 shares of Common Stock Series A as an incentive for our sale of Series F and Series G Convertible Preferred Stock, and 102,659 shares of Common Stock Series A pursuant to the exercise of options and warrants. Additionally, if our Common Stock Series A, as a result of a qualified financing, commences trading at less than $5 per share, the holders of our Series F and G Convertible Preferred Stock will also receive additional shares of Common Stock Series A prorated for the percentage shortfall from $5 per share measured against the 500,000 shares, where a “qualified financing” is a capital raise of $10 million or more or a transaction at less than $5 per share resulting in a change in control of the Company. We also issued 53,750 shares of Common Stock Series A to retire $107,500 of long-term debt. In addition, we sold 55,361 shares of Common Stock Series A to employees and 10,100 shares to present stockholders. On October 24, 2008, we declared a cash dividend of $97,233 on our Series F and G Convertible Preferred Stock in total.

On October 1, 2008, we acquired the tangible and intangible assets of AdLine Network Holdings Inc. (“AdLine”), AdLine Media LLC, AdLine Network LLC and Freeview Network LLC for 750,000 shares of our Common Stock Series A. The intent of the transaction was to reacquire and consolidate all of the rights associated with various technologies and intellectual property licenses held by AdLine, including the license previously granted to AdLine. The transaction was structured as an asset purchase to ensure the complete reacquisition of the licenses and technologies. Any other assets acquired were immaterial and incidental. The purchase price of $1,500,000 was allocated as follows: $80,000 to fixed assets, $4,117 to miscellaneous expense and $1,415,883 to goodwill. In addition, one of the owners of AdLine received a one-year consulting agreement with LVGI for $17,200 per month.

Also on October 1, 2008 (effective as of September 30, 2008), IGT signed an investment agreement with us to purchase 4,693,878 shares of our Series I Preferred Stock at $2.45 per share, or a total investment of $11.5 million. (The transaction closed on October 24, 2008.) The Series I Preferred Stock is convertible into shares of Common Stock Series A on a one-for-one basis. IGT had previously advanced $1.5 million of this total investment pursuant to an agreement dated July 17, 2008, as amended, so the net proceeds received by the Company on October 24, 2008 was $10 million. IGT also received a warrant to purchase 1.5 million shares of Common Stock Series A at an exercise price of $2.45 per share. The warrant has a three-year term and is fully vested. The shares of Series I Preferred Stock carry a dividend rate of 6.5% that was payable initially on January 1, 2010, and the right to vote on an as converted basis, on all matters submitted to the Company’s stockholders. Based on what amounts to pro forma fully diluted outstanding shares of the Company, IGT is entitled to one seat on the Company’s Board of Directors, which to date they have not chosen to fill. In addition, in connection with this investment agreement, IGT forgave a receivable due from the Company from a prior legal settlement for $614,027 (Note 6). Also on October 1, 2008, we signed three agreements with IGT, which became part of the legal settlement with IGT called: (1) the Retrofit License Agreement; (2) the LASA; and (3) the IPAA. On October 14, 2008, the legal case with IGT was dismissed by the Court with prejudice.

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With the additional $10 million of funding from IGT, we paid in full the CAMOFI note for $6,051,250, together with accrued interest and a payment penalty amounting to $1,567,272. We were released from any and all liens and claims that CAMOFI may have had against us and a related registration rights agreement was terminated. CAMOFI now has 2,675,000 warrants, with “piggy back” registration rights for its 300,000 shares of our common stock and underlying shares of common stock underlying its warrants, which registration rights are junior to the registration rights granted to IGT as part of the Series I Convertible Preferred Stock transaction.

In connection with the foregoing IGT transaction, we filed Amended and Restated Certificates of Designation with Nevada Secretary of State with respect to our Series B, Series E, Series F, Series G and Series H Convertible Preferred Stock on October 22, 2008. We also filed Certificates of Withdrawal of Certificate of Designation with the Nevada Secretary of State with respect to our Series A, Series C, and Series D Convertible Preferred Stock on October 3, 2008, as no shares of such series were then issued or outstanding.

During 2009, we issued 272,156 shares of Common Stock Series A to two investors in return for cash of $662,500 used for working capital and for payment of Series F dividends in lieu of cash and reimbursement of legal fees (one of these investors who purchased 232,156 of these shares is the same investor who invested $1,000,000 in Series E Convertible Preferred Stock, $1,000,000 in Series F Convertible Preferred Stock, and $750,000 in Series G Convertible Preferred Stock).

In 2009, we closed the Gamblers Bonus Million Dollar game as a result of a lack of ticket sales. Accordingly, we redeemed the $1,000,000 of Series F Convertible Preferred Stock from our investor. We also closed our Million Dollar Ticket Game for the same reason and temporarily suspended our Nevada Numbers game to change the draw to hourly rather than daily. We restarted the Nevada Numbers game on March 1, 2009 but again suspended it on March 31, 2009 due to a lack of funds to meet our Nevada Gaming bankroll requirements. This suspension resulted from the change in ownership at Treasure Island Casino (in Las Vegas) and the new ownership’s decision to not continue bankrolling our game. The game will remain suspended until we can find approximately $4 million for the bankroll. When we restarted Nevada Numbers on March 1, 2009, we restored Series F Convertible Preferred Stock for $1,000,000 to be used as additional bankroll needed for Nevada Numbers. Due to the March 31 shutdown, the Nevada Numbers bankroll funds associated with Series F Convertible Preferred Stock were no longer needed. Therefore, in April 2009, we again redeemed the Series F Convertible Preferred Stock and the $1,000,000 was returned to the investor. In addition, in April 2009, the investor received another 7,156 shares of Common Stock Series A. These shares were awarded in lieu of cash dividends and as a reimbursement of legal fees for the restoration of Series F Convertible Preferred Stock for $1,000,000 to support the restarting of Nevada Numbers.

Series B Convertible Preferred Stock. Each share of Series B Convertible Preferred Stock is convertible at any time into Common Stock Series A at the election of the holders of the Series B Convertible Preferred Stock on a one-to-five basis. Holders of Series B Convertible Preferred Stock have a liquidation preference of $5 per share. The Series B liquidation preference is over holders of Series E, Series G, and Series H Convertible Preferred Stock.

On January 28, 2008, because Treasure Island Casino (in Las Vegas) had begun maintaining the required base jackpot bankroll for Million Dollar Ticket, the holders of Series B Convertible Preferred Stock were notified pursuant to the terms and conditions of our Series B Convertible Preferred Stock of the ability to exchange their shares of Series B Convertible Preferred Stock for either (1) their original investment in the shares exchanged, i.e., $5 per share, or (2) shares of Common Stock Series A at the rate of five shares of Common Stock Series A for each share of Series B Convertible Preferred Stock. The holders of Series B Convertible Preferred Stock had until April 28, 2008 to make their decision. At December 31, 2008 holders of 52,850 shares of Series B Convertible Preferred Stock had converted their shares on a one-to-five basis for 264,250 shares of Common Stock Series A. We also redeemed 27,500 shares of Series B Convertible Preferred Stock at $5 per share for a total redemption of $137,500 during the year ended December 31, 2008.

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6Series E Convertible Preferred Stock. ~~Debt:~~Holders of Series E Convertible Preferred Stock are entitled to receive $5 per share as a liquidation preference after payment of all existing and future indebtedness and the liquidation preference of Series F, I, and B Convertible Preferred Stock. Series E and Series G Convertible Preferred Stock are pari passu in liquidation preference. Series E Convertible Preferred Stock has a liquidation preference over Series H Convertible Preferred Stock. During the year ended December 31, 2008, we issued 67,000 shares of our Series E Convertible Preferred Stock raising $335,000. In February 2008, we closed our Series E Convertible Preferred Stock offering with a total of 810,800 shares issued and $4,054,000 raised. During the year ended December 31, 2007, we issued 392,800 shares of Series E Convertible Preferred Stock and raised $1,964,000.

InSeries ~~April~~F ~~2006,~~Convertible ~~we refinanced and~~Preferred ~~increased~~Stock. The ~~the~~holder ~~amount~~ of ~~our~~Series ~~bridge~~F ~~financing~~Convertible ~~from~~Preferred ~~$3,000,000~~Stock is entitled to receive $5~~,000,000~~ ~~with CAMOFI~~per ~~Master~~share ~~LDC,~~as ora ~~CAMOFI.~~liquidation Wepreference ~~replaced~~after ~~our~~payment ~~previously~~of all ~~issued~~existing ~~warrant~~and ~~to purchase~~future 1indebtedness and before Series I,~~050~~ Series B,~~000~~ ~~shares~~Series ofE, Series ~~Common~~G ~~Stock~~and Series AH ~~with~~Convertible aPreferred ~~warrant~~Stock as to ~~purchase 2~~the $1,~~500~~000,000 ~~shares~~jackpot bankroll ofreserve ~~Common~~for ~~Stock~~our ~~Series~~Gamblers A.Bonus ~~Under~~Million ~~the~~Dollar ~~2006~~Ticket game. On ~~financing~~January ~~arrangement~~31, 2009, we ~~were~~discontinued ~~obligated~~the toGamblers ~~make~~Bonus ~~monthly~~Million Dollar ~~principal~~Ticket ~~payments~~game ~~beginning~~and inthe ~~April~~jackpot ~~2007~~bankroll reserve of $~~208~~1,~~333~~000,000 ~~(plus~~was transferred ~~additional~~to ~~amounts~~our ~~that~~Nevada ~~would~~Numbers ~~have~~game. On ~~become~~May ~~due~~9, ~~upon~~2008, ~~certain~~we issued ~~contingencies~~200,000 ~~such~~shares asof ~~our~~Series ~~raising~~F ofConvertible ~~equity~~Preferred ~~financing)~~Stock ~~with~~which carries a cumulative ~~balloon~~12% ~~payment of~~dividend ~~$3,125,003~~rate ~~due~~payable inon January ~~2008~~1, ~~and~~2010 ~~quarterly~~immediately ~~payments~~after ~~of $125,000 in~~paying ~~financing~~IGT ~~costs~~their to6.5% bedividend ~~recognized~~on ~~appropriately~~Series asI ~~expense~~Preferred ~~over~~Stock. Series ~~the loan period~~F ~~beginning~~Convertible ~~July~~Preferred 1,Stock ~~2006,~~is ~~until~~convertible ~~paid~~into orCommon ~~converted~~Stock asSeries ~~described~~A ~~below.~~at ~~Under~~ the ~~terms~~lower of ~~the~~$3.50 ~~note agreement,~~or ~~all~~30% off of ~~our~~the ~~assets~~IPO ~~were~~price, ~~pledged~~where as“IPO ~~collateral (except~~price” ~~those~~means ~~subject~~the per share price to ~~operating~~the ~~leases~~public ~~and~~of ~~the~~any ~~cash~~common ~~attributable~~shares tooffered ~~Series~~by ~~A and~~us ~~Series~~that Bin ~~Convertible~~the aggregate ~~Preferred~~results ~~Stock;~~in ~~and~~capital ~~the~~in ~~sale~~excess of ~~Common~~$10.0 ~~Stock~~million ~~Series~~being Araised and the byshares ~~our~~of ~~Chairman~~a class of ~~the~~our ~~Board~~common ~~were~~stock tobeing belisted ~~restricted~~and ~~for~~traded on a ~~period of~~national ~~time)~~stock exchange.

Series G Convertible Preferred Stock. The ~~note~~holder ~~was~~of ~~convertible~~Series ~~into~~G ~~shares~~Convertible ofPreferred Stock is ~~our~~entitled ~~Common~~to ~~Stock~~receive ~~Series~~$5 Aper atshare as a liquidation preference pari passu with the liquidation ~~option~~preference of Series E Convertible Preferred Stock and after payment of all existing and future indebtedness and the ~~note~~liquidation ~~holder~~preference of Series F, inI, ~~whole~~and orB inConvertible ~~part,~~Preferred Stock. Series G Convertible atPreferred ~~any~~Stock ~~time~~has ata ~~$1.345,~~liquidation ~~subject~~preference toover ~~certain~~Series ~~limitations~~H Convertible Preferred Stock. On InMay ~~addition~~9, 2008, we ~~were~~ issued 150,000 shares of Series G ~~obligated~~Convertible ~~under~~Preferred Stock, which carries a ~~related~~cumulative ~~agreement~~12% todividend ~~register~~rate payable ~~with~~on ~~the~~January ~~SEC~~1, by2010 aimmediately ~~specified~~after paying IGT their 6.5% dividend on ~~date,~~Series ~~shares~~I ofPreferred Stock. Series G Convertible Preferred stock is convertible into Common Stock Series A ~~issuable~~at ~~under~~the lower of $3.50 or 30% off of the IPO ~~conversion~~price, ~~and~~where ~~other~~“IPO price” means the per share price to the public of any ~~features~~common shares offered by us that in the aggregate results in capital in excess of $10.0 million being raised and the ~~note~~shares ~~agreement~~of a class of our common stock being listed and traded on a national stock exchange.

~~The~~Series ~~terms~~H ~~and~~Convertible ~~conditions~~Preferred Stock. The holders of ~~our~~Series H Convertible Preferred ~~financing~~Stock ~~from~~are ~~CAMOFI~~entitled ~~were~~to ~~further~~receive ~~amended~~$5 onper ~~March~~share ~~22,~~as ~~2007~~a toliquidation ~~extend~~preference ~~the~~after ~~maturity~~payment ~~date~~ of ~~the~~all ~~CAMOFI~~existing ~~Note,~~and ~~delay~~future indebtedness and the ~~start~~liquidation preference of ~~the~~Series ~~monthly~~F, ~~principal payments~~Series ~~and~~I, ~~delay~~Series ~~the~~B, ~~registration~~Series ~~rights~~E, ~~obligations~~and ~~owed~~Series toG ~~CAMOFI.~~Convertible AsPreferred ~~consideration~~Stock. During ~~for~~the ~~these~~year ~~amendments~~ended December 31, 2008, we issued to98,500 shares ~~CAMOFI~~of ~~warrants~~Series toH ~~purchase~~Convertible Preferred Stock at a price of $5 per share for a ~~175,000 shares~~total capital raise of $492,500. The Series H Convertible Preferred offering closed June 21, 2008. Series H Convertible Preferred stock is convertible into Common Stock Series A at anthe ~~exercise~~lower of $2.50 or 30% off of the IPO price, where “IPO price” means the per share price to the public of any common shares offered by us that in the aggregate results in capital in excess of $110.480 million being raised and the shares of a ~~payment~~class of ~~$25,000~~our common stock being listed and traded on a national stock exchange.

~~The~~Series ~~terms~~I ~~and~~Preferred Stock. On ~~conditions~~October of1, ~~our financing~~2008, ~~from~~IGT ~~CAMOFI~~signed ~~were~~an ~~further~~investment ~~amended~~agreement as onof September 2830, ~~2007~~2008, aswith ~~the quarterly~~us ~~commitment~~for ~~fee~~4,693,878 ~~payment~~shares of ~~$125,000~~our ~~due~~Series onI ~~October~~Preferred Stock 1,at ~~2007~~$2.45 ~~pursuant~~per ~~to the~~share, ~~notes~~or ~~was~~a ~~deferred~~total ~~until~~investment ~~January~~of 1,$11.5 ~~2008~~million. The Series atI ~~which~~Preferred ~~time~~Stock itis ~~was~~convertible tointo beshares ~~due~~of ~~and payable~~Common ~~along~~Stock ~~with~~Series ~~the~~A ~~additional~~on a ~~$125,000~~one-for-one ~~quarterly~~basis. ~~commitment~~The ~~fees~~transaction ~~due~~closed aton ~~the time~~October ~~for~~24, a2008. IGT had ~~total~~previously ofadvanced $~~250,000~~1. ~~The~~5 ~~monthly~~million ~~redemption~~of ~~amount~~this oftotal investment pursuant to an ~~$208,333~~agreement ~~due~~dated onJuly ~~October~~17, 12008, ~~November~~as 1amended, ~~and~~so ~~December~~the 1,net ~~2007~~proceeds ~~were~~received ~~each~~by ~~deferred~~the toCompany ~~April~~on 1October 24, 2008~~. The~~ ~~monthly~~was ~~redemption~~$10 ~~amount~~million. IGT ofalso ~~$208,333~~received ~~payable~~a onwarrant ~~April~~to purchase 1,.5 ~~2008~~million ~~remained~~shares ~~due~~of ~~and~~Common ~~payable~~Stock onSeries ~~that~~A ~~date,~~at soan exercise price of $~~833,332~~2.45 inper ~~total~~share. The ~~was due~~warrant ~~and~~has ~~payable~~a onthree-year ~~that~~term ~~date~~and is fully vested. The ~~aggregate~~shares ~~redemption~~of ~~amount~~Series ~~was~~I ~~due~~Preferred Stock carry a dividend rate of 6.5% payable initially on January 1, ~~2009. The~~2010 ~~filing date~~ and ~~effectiveness~~vote ~~date~~on an as ~~such~~converted ~~terms~~basis, ~~are~~on ~~defined~~all inmatters ~~the~~submitted ~~Registration~~to ~~Rights~~the ~~Agreement~~Company’s ~~were~~stockholders. Based on ~~amended~~the tofully ~~be February~~diluted ~~28,~~outstanding ~~and~~shares ~~June~~of ~~30,~~the ~~2008~~Company, ~~respectively.~~IGT ~~For~~is ~~these~~entitled ~~concessions,~~to two seats on the ~~note was~~Company’s ~~increased~~Board ~~from~~of $5Directors,~~000,000~~ which to ~~$5,250,000.~~date Wethey ~~further~~have ~~agreed~~not chosen to fill. In ~~give~~addition, ~~CAMOFI~~IGT ~~at least~~forgave ~~ten~~a ~~business~~receivable ~~day’s~~from ~~notice~~the Company from a prior tolegal ~~any~~settlement ~~prepayments~~for ~~and~~$614,027. Also ~~repayments~~on ~~pursuant to~~October ~~the~~1, ~~note~~2008, ~~during~~we signed three agreements with IGT which ~~time~~became ~~CAMOFI~~part ~~had~~of the ~~right~~legal tosettlement ~~convert~~with IGT: ~~any~~1) ~~portion~~the ofRetrofit License Agreement, 2) the License and Application Support ~~its~~Agreement ~~note~~and ~~into~~3) ~~common~~the ~~stock~~Intellectual Property Access Agreement. WeOn October ~~also~~14, ~~agreed~~2008, tothe ~~reduce~~legal ~~our~~case ~~recurring cash~~with ~~burn~~IGT towas nodismissed ~~more~~by ~~than~~the ~~$460,000~~Court ~~per month~~with prejudice.

On December 21, 2007, we further amended our financing with CAMOFI whereby the commitment fees due on January 1, 2008 of $256,250 as well as the commitment fees of $131,250 due each on April 1, 2008 and July 1, 2008 were to be payable on July 1, 2008. In addition monthly redemption payments of $208,333 which were to begin January 1, 2008 were deferred to the maturity date of the note, January 1, 2009, when the entire amount of the note or $5,250,000 was due and payable. The prepayment for early payoff of the Note was raised to 120% and the filing date and the effectiveness date of the Registrations Rights Agreement were changed to September 30, 2008 and January 31, 2009, respectively. We issued CAMOFI 300,000 shares of Common Stock Series A at $2.00 per share and have accounted for this transaction as a debt modification. The revised commitment fee was 23.2 % (including the effects of the debt modifications on March 22 and September 28, 2007) as compared to 10% previously.

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OnWith ~~May~~the 1,additional ~~2008,~~$10 wemillion ~~amended our~~of ~~financing~~funding ~~with~~from ~~CAMOFI Master LOC (CAMOFI) and entered into an Amended and Restated Senior Secured Convertible Note due January 1~~IGT, ~~2010,~~we orpaid ~~Note,~~in ~~and~~full ~~an Amended and Restated Registration Rights Agreement, or Registration Rights Agreement, with CAMOFI. The commitment fees due under~~ the ~~original~~ CAMOFI note onfor ~~April 1~~$6, ~~2008~~051, ~~July 1~~250, ~~2008,~~together ~~October 1, 2008, and January 1, 2009~~with ofaccrued ~~$131,250~~interest and ~~prior~~a ~~accrued~~payment ~~commitment~~penalty ~~fees~~amounting ~~were added~~ to ~~the face amount of the Note which increased from~~ $51,~~250~~567,~~000 to $6,051,250~~272. We were ~~also to~~released ~~pay~~from ~~commitment~~any ~~fees~~and ofall ~~$403,417~~liens onand ~~January~~claims 1,that ~~2009,~~CAMOFI ~~and~~may ~~$302,563~~have onagainst ~~July 1,~~us ~~2009~~ and ~~January~~the ~~1, 2010. The~~ Registration Rights Agreement ~~required us~~was toterminated. CAMOFI ~~file~~has 2,675,000 awarrants, ~~registration statement~~ with ~~the~~“piggy ~~Securities~~back” ~~and~~registration ~~Exchange~~rights ~~Commission on~~for ~~the~~its ~~earlier~~300,000 shares of ~~the~~our ~~closing~~common ofstock aand ~~Qualified~~underlying ~~Financing,~~shares asof ~~defined~~common instock ~~the~~underlying its ~~Registration~~warrants, ~~Rights~~which ~~Agreement~~registration orrights ~~April~~are ~~30,~~junior ~~2009~~to ~~with~~ the ~~effectiveness~~registration ~~date~~rights ~~remaining~~granted ~~120~~to ~~calendar~~IGT ~~days~~as ~~after~~part ~~the filing date. The maturity date~~ of the ~~Note~~Series ~~was~~I ~~changed~~Preferred ~~from~~Stock ~~January 1, 2009 to January 1, 2010~~transaction.

~~Because~~In ofconnection ~~the Registration Rights Agreement~~ with ~~CAMOFI,~~ the ~~registration~~IGT oftransaction, we ~~CAMOFI’s~~filed ~~converted~~Amended ~~shares~~ and ~~warrants~~ ~~were~~Restated ~~outside~~Certificates of ~~our~~Designation ~~control. The Registration Rights Agreement~~ with ~~CAMOFI stated that if 125 % of~~ the ~~registered securities for~~Nevada ~~CAMOFI~~Secretary ~~were not~~of ~~effective~~State bywith ~~the~~respect ~~120th~~to ~~calendar~~our ~~day~~Series ~~following~~B, ~~the~~Series ~~filing date~~E, ofSeries ~~September 30~~F, ~~2008,~~Series ~~we would have to pay cash liquidating damages~~G ~~equal~~and toSeries ~~1.5~~H %Convertible ofPreferred ~~the~~Stock ~~outstanding~~on ~~principal~~October of22, ~~the bridge financing and an additional 1~~2008.~~5% for any subsequent 30-day period thereafter.~~ IfWe wealso ~~failed~~filed toCertificates ~~pay~~of ~~any~~Withdrawal ~~partial~~of ~~liquidating~~Certificate ~~damages~~of ~~within~~Designation ~~seven~~with ~~days from~~ the ~~date~~Nevada ~~payable,~~Secretary ~~we were to accrue 20% annual interest on any amount in arrears. Settlement~~ of ~~the~~State ~~warrants~~ with ~~unregistered~~respect ~~shares~~to ~~and~~our ~~the payment~~Series ofA, aSeries ~~penalty~~C, ~~would~~and ~~have~~Series ~~been an uneconomic settlement alternative and~~D ~~thereby~~Convertible ~~would~~Preferred ~~not~~Stock ~~have~~on ~~been considered~~October a3, ~~realistic alternative for us. Consequently~~2008, ~~the initial value of the warrants was recorded~~ as ~~a derivative~~no ~~liability~~shares ~~and changes to the fair value~~ of ~~those~~such ~~warrants~~series were ~~included~~then inissued ~~the~~or ~~statement of operations~~outstanding.

OnStock ~~October~~Warrants ~~24,~~and Options. We ~~2008,~~have ~~the~~both ~~CAMOFI~~a ~~note for~~qualified ~~$6,051,250,~~and a ~~prepayment~~non-qualified ~~penalty~~stock option ~~of,~~plan. There $are 1,~~210~~810,~~250~~642 ~~and~~qualified ~~accrued~~options ~~interest of~~presently ~~$357,022~~outstanding ~~were~~under ~~paid~~the ~~off~~qualified plan, with ~~the~~another ~~proceeds~~641,500 ofnon-qualified ~~the~~options also ~~IGT~~outstanding. The ~~investment~~exercise ~~(Note~~price ~~7).~~of ~~This~~options issued pursuant to ~~early~~either ~~extinguishment~~plan ofcannot ~~debt~~be ~~resulted~~less inthan athe ~~loss~~fair market value at the time of ~~$640,882. After~~the grant and vesting is at the ~~payoff,~~discretion ~~CAMOFI~~of ~~has~~the 2Stock Option Committee,~~675,000~~ ~~warrants~~though atlimited to $1ten years.48 Only employees and ~~incidental~~consultants ~~registration~~are able to receive ~~rights~~qualified ~~which~~options. The ~~allows~~stock ~~them~~subject to ~~join~~the a2009 ~~registration~~Stock ~~statement~~Option ~~after~~Plan is limited to 20% of the ~~company~~issued and ~~IGT~~ outstanding shares ~~have~~of ~~been~~Common ~~registered~~Stock ifSeries ~~there~~A isat the ~~availability~~beginning inof ~~any~~the ~~future registration~~most ~~statement~~recent quarter.

~~Long~~ We ~~term~~have, ~~debt~~from istime to time, granted common stock, warrants to others in addition to options granted to employees as employment incentives, in return for successful capital-raising ~~follows:~~efforts or as an inducement to invest in our common or preferred securities, in return for other services, and in conjunction with the initial capitalization of our company and business acquisitions. Warrants and options to purchase 960,000 and 566,367 shares of Common Stock Series A were issued to officers and directors during the years ended December 31, 2008 and 2009, respectively. Total compensation cost recognized in operations from grants of options and warrants amounted to $742,398 and $574,693 for the years ended December 31, 2008 and 2009, respectively. Unrecognized costs related to employee stock options and warrants outstanding at December 31, 2009 totaled $389,897 and are expected to be amortized over a weighted average period of 33 months.

	December 31, 2007		December 31, 2008
Debt derivative liability	$	1,592,263
Bridge financing		4,342,345
Settlement		614,027
Other notes payable		179,840	$	35,076
		6,728,475		35,076
Less amounts due within one year		787,550		11,957
	$	5,940,925	$	23,119

The weighted average exercise price of our outstanding options and warrants at December 31, 2009, was $2.46. The following table summarizes our stock option and warrant activity followed by the applicable weighted average prices during the year ended December 31, 2009:

Scheduled debt maturities are $11,957 in 2009 and $23,119 in 2010.

	Options/Warrants			Weighted Average Price
Balance, January 1, 2009		8,656,209		$	2.46
Granted		1,122,440			2.50
Forfeited		(1,668,031	)		(2.50	)
Balance, December 31, 2009		8,110,618			2.46

During the year ended December 31, 2008, we received five stockholder advances totaling $2,435,000 and paid back all but $600,000 of those advances at December 31, 2008. The last $600,000 advance was paid back in January 2009.

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7As of December 31, 2009, 737,858 options and warrants are outstanding, but have not vested. ~~Stockholders'~~ The aggregate estimated intrinsic value of options and warrants at ~~equity:~~December 31, 2009, is $389,897.

From time to time, we issue shares of common stock and preferred stock through transactions that are exempt from registration under the Securities Act of 1933 (Securities Act), or pursuant to Section 4(2) of the Securities Act and Rule 506 of Regulation D. In March 2007, an officer and a board member were each awarded 50,000 shares of Common Stock Series A for their respective promotions. In September 2007, we awarded 2,000 shares of Common Stock Series A to a consultant for engineering services rendered. For the year ended December 31, 2007, we issued 830,123 shares of Common Stock Series A pursuant to the exercise of options and warrants. For the year ended December 31, 2008, we issued 102,659 shares of Common Stock Series A pursuant to the exercise of options and warrants.

	Non-vested Options			Weighted Average Price
Balance, January 1, 2009		1,393,210		$	3.45
Granted		650,080			2.50
Vested/Forfeited		(1,320,932	)		(3.22	)
Balance, December 31, 2009		722,358			3.02
	Non-vested Warrants			Weighted Average Price
Balance, January 1, 2009		110,417		$	2.52
Granted		15,500			2.50
Vested		(110,417	)		(2.52	)
Balance, December 31, 2009		15,500			2.50

~~During the year ended December 31,~~The ~~2008,~~following wetable ~~issued~~summarizes ~~260,917~~stock ~~shares~~options ~~of Common Stock Series A for salaries, bonuses, consulting services,~~ and ~~board~~warrants ofoutstanding ~~directors~~at ~~fees and 500,000 shares of Common~~December ~~Stock Series A as an incentive for our sale of series F and Series G Preferred Stock. Additionally~~31, ~~if our Common Stock Series A~~2009, as a result of a qualified financing, commences trading at less than $5 per share, our Series F and G shareholder will also receive additional shares of Common Stock Series A prorated for the percentage shortfall from $5 per share measured against the 500,000 shares, where a “qualified financing” is a capital raise of $10 million or more or a transaction at less than $5 per share resulting in a change in control of the Company. We also issued 53,750 shares to ~~retire $107,500~~number ofexercisable ~~long-term debt. In addition, we sold 55,361 shares of Common Stock Series A to employees~~ and ~~10,100~~average ~~shares~~remaining tolife ~~present shareholders. On October 24, 2008, we declared a cash dividend of $97,233 on our Series F and G Convertible Preferred Stock~~ in ~~total.~~ years:

On October 1, 2008, we acquired the tangible and intangible assets of AdLine Network Holdings Inc. (AdLine), AdLine Media LLC, AdLine Network LLC and Freeview Network LLC for 750,000 shares of our Common Stock Series A. The intent of the transaction was to reacquire and consolidate all of the rights associated with various technologies and intellectual property licenses held by AdLine, including the license previously granted to AdLine. The transaction was structured as an asset purchase to ensure the complete reacquisition of the licenses and technologies. Any other assets acquired were immaterial and incidental. The purchase price of $1,500,000 was allocated as follows: $80,000 to fixed assets, $4,117 to miscellaneous expense and $1,415,883 to goodwill. In addition, one of the owners of AdLine received a one-year consulting agreement with LVGI for $15,000 per month.

	Exercise Price		Number Outstanding		Weighted Average Remaining Life in years		Number Exercisable		Weighted Average Remaining Life in years
Options	$	2.00		310,000		3.3		310,000		3.3
	$	2.50		1,290,642		4.0		718,284		4.0
	$	3.00		46,500		.3		46,500		.3
	$	5.00		805,000		2.6		655,000		2.7

Warrants	$	1.00		110,000		2.5		110,000		2.5
	$	1.48		2,675,000		1.3		2,675,000		1.3
	$	1.50		30,000		3.3		30,000		3.3
	$	2.00		185,000		.6		185,000		.6
	$	2.10		23,809		.9		23,809		.9
	$	2.45		1,500,000		1.8		1,500,000		1.8
	$	2.50		30,667		4.4		15,167		4.3
	$	3.00		854,000		1.1		854,000		1.1
	$	4.00		100,000		.1		100,000		.1
	$	5.00		150,000		1.3		150,000		1.3
				8,110,618		2.0		7,372,760		1.8

OnThere ~~October 1, 2008, IGT signed an~~are ~~investment agreement as of September 30~~737,858 ~~2008,~~options ~~with~~and uswarrants ~~for~~that ~~4,693,878~~have ~~shares~~been ~~of our~~issued ~~Series~~but Ihave ~~Preferred Stock at $2.45 per share, or a total investment of $11.5~~not million. The Series I Preferred Stock is convertible into shares of Common Stock Series A on a one-for-one basis. The transaction closed on October 24, 2008. IGT had previously advanced $1.5 million of this total investment pursuant to an agreement dated July 17, 2008, as amended, so the net proceeds received by the Company on October 24, 2008 was $10 million. IGT also received a warrant to purchase 1.5 million shares of Common Stock Series A at an exercise price of $2.45 per share. The warrant has a three-year term and is fully vested. ~~The~~Of ~~shares~~these ~~of Series~~options ~~I Preferred Stock carry a dividend rate of 6.5% payable initially on January 1, 2010~~ and ~~vote~~warrants ~~on an as converted basis~~371,869 onwill ~~all~~vest ~~matters~~in ~~submitted to the Company’s stockholders. Based on the fully diluted outstanding shares of the Company~~2010, ~~IGT is entitled to one seat on the Company’s Board of~~ ~~Directors~~261,869 ~~which~~in ~~to date they have not chosen to fill. In addition~~2011, ~~IGT~~ forgave a receivable from the Company from a prior legal settlement for $614,027 (see Note 6). Also on October 1, 2008, we signed three agreements with IGT which became part of the legal settlement with IGT: 1) the Retrofit License Agreement, 2) the License and ~~Application~~ ~~Support Agreement and 3) the Intellectual Property Access Agreement. On October 14~~104,120 ~~2008,~~in ~~the legal case with IGT was dismissed by the Court with prejudice~~2012.

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~~With the additional $10 million of funding from IGT, we paid in full the CAMOFI note for $6,051,250, together with accrued interest and a payment penalty amounting to $1,567,272~~8. WeConcentrations, ~~were released from any and all liens and claims that CAMOFI may have against us and the Registration Rights Agreement was terminated. CAMOFI has 2~~commitments,~~675,000~~ ~~warrants,~~economic ~~with “piggy back” registration rights for its 300~~risks,~~000~~ ~~shares of~~uncertainties ~~our common stock~~ and underlying shares of common stock underlying its warrants, which registration rights are junior to the registration rights granted to IGT as part of the Series I Convertible Preferred Stock transaction.contingencies:

InWe ~~connection~~often ~~with~~carry ~~the~~cash ~~IGT~~and ~~transaction,~~cash weequivalents, ~~filed Amended~~ and ~~Restated~~restricted ~~Certificates~~jackpot ofreserves ~~Designation~~on deposit with ~~Nevada Secretary~~financial ofinstitutions ~~State~~substantially ~~with~~in ~~respect~~excess toof ~~our~~federally-insured ~~Series B~~limits, ~~Series~~and E,the ~~Series~~risk of F,losses ~~Series~~related Gto ~~and~~such ~~Series~~concentrations ~~H Convertible~~may ~~Preferred~~be ~~Stock~~increasing onas ~~October~~a ~~22,~~result ~~2008. We~~of ~~also filed~~recent ~~Certificates~~economic ofdevelopments ~~Withdrawal~~and ofuncertainties ~~Certificate~~discussed ofin ~~Designation with~~ the ~~Nevada~~foregoing ~~Secretary~~paragraph. The extent of ~~State~~a ~~with~~future ~~respect~~loss toas ~~our~~a ~~Series~~result A,of ~~Series~~uninsured deposits C,in ~~and~~the ~~Series~~event ~~D Convertible~~of ~~Preferred~~a ~~Stock~~future onfailure ~~October~~of 3,a ~~2008~~bank or other financial institution, asif noany, ~~shares~~is ofnot ~~such~~subject ~~series~~to ~~were then~~estimation ~~issued~~at orthis ~~outstanding~~time.

~~Series~~There Aare ~~Convertible~~no ~~Preferred~~significant concentrations ~~Stock~~of credit risk among our receivables. OnOur ~~March~~receivables ~~15,~~are uncollaterized. The ~~2007,~~maximum ~~pursuant~~losses tothat ~~the~~we ~~terms~~would ~~and~~incur ~~conditions~~if a customer ofor ~~our~~customers ~~Series~~failed Ato ~~Convertible~~pay ~~Preferred~~would ~~Stock,~~be welimited ~~exercised~~to ~~our~~the ~~right~~amount todue ~~convert~~after any ~~all~~allowances ~~shares~~provided. In ofmanaging ~~Series~~credit Arisk ~~Convertible~~and ~~Preferred~~establishing ~~Stock~~any allowance ~~into~~necessary ~~shares~~for ofdoubtful ~~Common~~collection, ~~Stock Series~~we Aconsider onthe acustomer’s ~~one-for-one~~credit history ~~basis. Accordingly,~~and ~~all~~our ~~536~~relationship,~~400~~ ~~shares~~the relative strength of ~~Series~~ Aour ~~Convertible~~legal ~~Preferred~~position, ~~Stock~~the related ~~were~~cost ~~converted~~of ~~into~~any ~~536~~proceedings,~~400~~ ~~shares~~and ofgeneral economic ~~Common~~conditions. Historically, ~~Stock~~we ~~Series~~have ~~A. In~~depended ~~October~~on ~~2008~~relatively few suppliers for components and programming for certain of our games. However, we ~~filed~~believe athat ~~Certificate~~other ofsuppliers are sufficiently ~~Withdrawal~~available ~~with~~so ~~the~~that ~~Nevada~~any ~~Secretary~~disruption of ~~State~~service ~~whereby~~would webe ~~withdrew~~brief ~~the designation~~and ofnot ~~our~~have ~~Series~~a material Aadverse ~~Convertible~~effect ~~Preferred~~on ~~Stock~~our business, asfinancial nocondition, ~~shares~~cash offlows ~~this~~or ~~series~~results ~~were~~of ~~outstanding~~operations.

~~Series~~The BUnited ~~Convertible~~States ~~Preferred~~is currently ~~Stock. Each~~experiencing ~~share~~a ofsevere ~~Series~~and Bwidespread ~~Convertible~~recession ~~Preferred~~accompanied ~~Stock~~by, isamong other ~~convertible~~things, atweakness ~~any~~in ~~time~~the ~~into~~commercial ~~Common~~and ~~Stock~~investment ~~Series~~banking Asystems atresulting ~~the~~in reduced ~~election~~credit ofand ~~the holders~~capital offinancing ~~the~~availability, ~~Series~~and Bhighly ~~Convertible~~curtailed ~~Preferred~~gaming, other ~~Stock~~recreational onactivities aand ~~one-to-five~~general discretionary consumer spending, and ~~basis. Holders~~is also engaged in war, all of ~~Series~~which Bare ~~Convertible~~likely ~~Preferred~~to ~~Stock~~continue to have afar-reaching ~~liquidation~~effects ~~preference~~on ofeconomic $5conditions ~~per~~in ~~share~~the country for an indeterminate period. The ~~Series~~effects Band ~~liquidation~~duration of these developments and related ~~preference~~risks isand ~~over~~uncertainties ~~holders~~on ofour ~~Series~~future E,operations ~~Series~~collections G,and other and ~~Series~~cash flows, Hincluding ~~Convertible~~our access to capital or credit financing, cannot be estimated ~~Preferred~~at ~~Stock~~this time but may likely be significant.

OnWe ~~February~~are ~~12,~~presently ~~2007,~~unable ~~because~~to ~~Treasure~~satisfy our ~~Island,~~obligations ~~LLC,~~as ~~dba~~they ~~Treasure~~come ~~Island~~due ~~Hotel~~ and ~~Casino~~do ~~(Treasure~~not ~~Island),~~have ~~had~~enough ~~begun maintaining~~cash ~~the required base jackpot bankroll for Nevada Numbers, the holders of Series B Convertible Preferred Stock were notified pursuant~~ to ~~the~~sustain ~~terms and conditions of~~ our ~~Series B Convertible Preferred Stock of the ability to:~~expected ~~exchange~~working ~~one-half~~capital ofrequirements ~~their shares of Series B Convertible Preferred Stock~~ for ~~either~~ ~~(a) their original investment in~~ the ~~shares~~remainder ~~exchanged,~~of i2010.e. Accordingly, ~~$5.00 per~~ ~~share,~~unless orwe ~~(b)~~obtain ~~shares~~third-party ofdebt ~~Common~~or ~~Stock~~equity ~~Series~~financing Aor atotherwise ~~the rate of five shares of~~raise ~~Common~~capital, ~~Stock Series A~~ for ~~each~~example, ~~share~~through ofthe ~~Series~~possible Bsale ~~Convertible Preferred Stock; or to exchange all~~ of ~~their~~assets, ~~shares~~in ofthe ~~Series~~near ~~B Convertible Preferred Stock for~~future, ~~shares~~we ofwill ~~Common~~not ~~Stock~~be ~~Series~~able Ato atcontinue ~~the~~as ~~rate~~a ofgoing ~~five~~concern. We ~~shares~~are ~~of Common Stock~~presently ~~Series~~negotiating Aterm ~~for~~sheets ~~each~~with ~~share~~several ofpossible ~~Series B Convertible Preferred Stock~~investors. ~~The holders~~We ofare ~~Series~~also in Bnegotiations ~~Convertible~~with ~~Preferred Stock~~several ~~had~~casinos ~~until~~to ~~May~~deploy ~~13,~~our ~~2007~~technology ~~to make~~(see ~~their decision~~next paragraph). AsIn ~~of December 31~~addition, ~~2007,~~our ~~holders~~plan ofis ~~179,890 shares~~to oframp ~~Series~~up Bour ~~Convertible~~PlayerVision ~~Preferred~~3 sales ~~Stock~~using ~~had~~the ~~converted~~new ~~their~~capital ~~shares~~invested onand ~~a one-to-five~~be ~~basis~~profitable ~~for~~by ~~899,450~~the ~~shares~~end of ~~Common~~the calendar ~~Stock~~year ~~Series~~2010 ~~A. We also~~through ~~redeemed~~PlayerVision ~~35,900~~revenue ~~shares~~growth ofand ~~Series~~by Bkeeping ~~Convertible~~our ~~Preferred~~fixed costs ~~Stock~~low atso $5we ~~per share~~may ~~for~~begin ato ~~total~~significantly ~~redemption~~expand ofour ~~$179,500~~operations ~~during~~and ~~the~~experience positive ~~year~~net ~~ended~~cash ~~December~~flows ~~31, 2007~~and profits.

OnTo ~~January~~address ~~28, 2008, because Treasure Island had begun maintaining~~ the ~~required~~going ~~base jackpot bankroll for Million~~concern ~~Dollar Ticket~~uncertainty, ~~the~~we ~~holders~~have ofalso ~~Series~~engaged Ban ~~Convertible~~investment ~~Preferred~~banking ~~Stock~~firm ~~were~~to ~~notified pursuant~~assist tous ~~the~~in raising ~~terms~~capital and ~~conditions~~are ofpresently ~~our~~in ~~Series~~discussion Bwith ~~Convertible~~possible ~~Preferred~~strategic ~~Stock~~partners ofin the ~~ability~~gaming ~~to:~~industry ~~exchange~~for ~~their~~an ~~shares~~equity ofinvestment. We ~~Series~~are Balso ~~Convertible Preferred Stock~~creating ~~for either (~~a) ~~their~~sales ~~original~~deployment ~~investment~~pipeline inwhich ~~the~~should ~~shares~~provide ~~exchanged,~~momentum ~~i.e.,~~to $5our ~~per~~capital raising ~~share,~~efforts. orWe ~~(b)~~have ~~shares~~initiated ofsome ~~Common~~major ~~Stock~~cost ~~Series~~cutting Ameasurements atand ~~the~~have ~~rate of five shares of~~sold ~~Common~~our ~~Stock~~bingo ~~Series~~and Akeno ~~for each share of Series B Convertible Preferred Stock~~businesses. ~~The~~ (See ~~holders~~Note ~~of Series B~~12)

Severance arrangements. We have agreed to severance arrangements with all executive officers that provide for the payment of thirty-five months of base salary (except one year for our CEO) following termination of employment for other than cause, for an aggregate $1,553,333 of contingent financial commitment. These employment agreements include covenants not to compete.

Gaming regulations and licensing. We are licensed with the State of Nevada as an operator of inter-casino-linked systems, supplier and distributor of keno and bingo products, parts, and service, and as a keno route operator. From time to time, we seek licensure in other gaming jurisdictions so that we may similarly participate in the gaming revenue produced by customers for our products in those jurisdictions. Failure to retain our Nevada licenses or to obtain and retain the necessary licenses in other jurisdictions would likely have a material adverse effect on us.

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~~Convertible~~We ~~Preferred~~purchase ~~Stock~~insurance ~~had~~to ~~until~~fund ~~April~~the 28base progressive jackpots for Nevada Numbers, Super ~~2008~~Bonanza toBingo ~~make~~(in ~~their~~some ~~decision~~circumstances), and The Million Dollar Ticket. AtNevada Numbers and the Million Dollar Ticket were suspended ~~December~~on March 31, ~~2008~~2009 ~~holders~~and ofreplaced ~~52,850~~by ~~shares~~Nevada ofNumbers ~~Series~~Lite, Ba ~~Convertible~~nine ~~Preferred~~spot keno game ~~Stock~~which ~~had~~began ~~converted~~with ~~their~~the ~~shares~~progressive onjackpots aof ~~one-to-five~~Nevada ~~basis~~Numbers ~~for~~and ~~264,250~~the ~~shares~~Million Dollar Ticket of ~~Common~~ ~~Stock~~$218,000 ~~Series~~in AOctober, 2009. We ~~also~~fund ~~redeemed~~any ~~27,500~~uninsured portion ~~shares~~plus ofincreases ~~Series~~to ~~B Convertible~~the ~~Preferred~~progressive ~~Stock~~jackpot atthrough operations. We $5are ~~per~~ultimately ~~share~~liable for athe ~~total~~entire jackpot. The ~~redemption~~following oftables ~~$137,500 during~~illustrate ~~the~~our ~~year~~liability ~~ended~~for progressive jackpots at December 31, ~~2008.~~and related assumptions:

Series C Convertible Preferred Stock. In January 2007, holders of our Series C Convertible Preferred Stock converted 3,000 shares of Series C Convertible Preferred Stock on a one-to-five basis for 15,000 shares of Common Stock Series A. In September 2007, holder of our Series C Convertible Preferred Stock converted 8,000 shares of Series C Convertible Preferred Stock on a one-to-five-basis for 40,000 shares of Common Stock Series A. In August 2008, the remaining holders of 35,000 shares of Series C Convertible Preferred Stock converted their shares on a one-to-five basis into 175,000 shares of Common Stock Series A. In October 2008, we filed a Certificate of Withdrawal with the Nevada Secretary of State whereby we withdrew the designation of our Series C Convertible Preferred Stock, as no shares of this series were outstanding.

Progressive jackpot liability:	2008		2009
Nevada Numbers	$	932,467	$	852,969
Nevada Numbers Lite		0		219,005
Million Dollar Ticket		151,263		50,000
Super Bonanza		471,630		490,972
	$	1,555,360	$	1,612,946

~~Series~~Noncompliance. Regulation D5.115 ~~Convertible~~of ~~Preferred~~the ~~Stock. In~~Nevada ~~November~~Gaming ~~2005~~Commission, weas ~~issued~~amended ~~125~~on November 18,~~000~~ ~~shares~~1999, ofallows ~~Series~~licensees Dto ~~Convertible~~use ~~Preferred~~the ~~Stock~~“reserve atmethod” $2to ~~per~~fund ~~share. In~~periodic ~~August,~~payments ~~2008~~of any game, ~~the~~including a race ~~holder~~book ofor ~~125~~sports pool,~~000~~ ~~shares~~tournament, ofcontest, ~~Series~~or Dpromotional ~~Convertible~~activity ~~Preferred~~provided ~~Stock~~that the ~~converted~~licensee ~~his shares~~complies onwith acertain ~~one-to-one~~financial ~~basis~~monitoring ~~into~~and ~~125,000~~reporting requirements ~~shares~~as follows: (1) current ratio of ~~Common~~2:1 ~~Stock~~and ~~Series~~(2) interest coverage Aratio of 3:1. InWe ~~October~~have ~~2008~~frequently found it impossible, weprimarily ~~filed~~due to athe ~~Certificate~~absence of ~~Withdrawal~~earnings, to be in compliance with these ratios and in the past have been successful in presenting an alternative plan acceptable to the Nevada ~~Secretary~~Gaming Commission to satisfactorily meet the objectives of ~~State~~the ~~whereby~~Regulation if wenot ~~withdrew~~cure the ~~designation~~situation prospectively through expected future raises of capital. In our ~~Series~~ten-year Dhistory, all of our jackpot liabilities have ~~Convertible~~been ~~Preferred~~paid ~~Stock~~by us or through insurance coverage, asand we have no ~~shares~~reason to believe that it will not continue to be the case in the future. The Nevada Gaming Commission has the right to demand that a one-year letter of ~~this~~credit ~~series~~be posted ~~were~~when a company is not in compliance with the foregoing financial ratios ~~outstanding~~but has not made any such demand to date.

~~Series E Convertible Preferred~~The ~~Stock. Holders~~forgoing ofnotwithstanding, ~~Series~~in EJuly ~~Convertible~~2008, ~~Preferred~~we ~~Stock~~received ~~are entitled~~two “Orders to ~~receive~~Show $5Cause” from ~~per~~the ~~share~~Nevada asGaming aControl ~~liquidation~~Board ~~preference~~(NGCB). One ~~after~~order ~~payment~~dealt ofwith ~~all~~deficiencies ~~existing~~in ~~and~~meeting ~~future~~the ~~indebtedness~~financial ~~and~~requirements ~~the~~of ~~liquidation~~Regulation ~~preference~~5.115 ofas ~~Series~~to F,(1) I,resources ~~and~~in Brestricted ~~Convertible~~accounts; ~~Preferred~~(2) ~~Stock.~~current ~~Series~~ratio Eor ~~and~~working ~~Series~~capital; ~~G Convertible~~(3) ~~Preferred~~interest ~~Stock~~coverage ~~are~~ratio ~~pari~~or ~~passu~~debt into ~~liquidation~~EBITDA ~~preference.~~ratio; ~~Series~~and ~~E Convertible~~(4) ~~Preferred~~bankroll. For ~~Stock~~this ~~has~~matter awe ~~liquidation~~paid ~~preference~~a ~~over~~fine ~~Series~~of H$10,000 ~~Convertible~~in ~~Preferred~~full ~~Stock. During~~settlement ~~the~~and ~~year~~satisfaction ~~ended~~of ~~December~~the 31allegations. However, ~~2008,~~ we ~~issued~~can ~~67,000~~give ~~shares~~no ofassurance ~~our~~that ~~Series~~we Ewill ~~Convertible~~be ~~Preferred~~in ~~Stock~~compliance ~~raising~~with these financial requirements in ~~$335,000~~the future. InThe ~~February~~second ~~2008,~~order wedealt ~~closed~~with ~~our~~deficiencies ~~Series~~in Efiling ~~Convertible~~timely ~~Preferred~~reports ~~Stock offering~~ with athe ~~total~~NGCB ofas ~~810,800~~to ~~shares~~new ~~issued~~hires and ~~$4,054,000~~termination of ~~raised~~personnel. ~~During~~Our ~~the~~response ~~year~~set ~~ended~~forth ~~December~~some ~~31,~~remedial ~~2007,~~action wetaken ~~issued~~by ~~392~~us,~~800~~ ~~shares~~which ofwas ~~Series~~deemed Eadequate and ~~raised~~no ~~$1,964,000~~further disciplinary action was taken in such regard.

~~Series~~Lease ~~F Convertible Preferred Stock~~commitments. ~~The~~ We ~~holder~~lease ofoffice ~~Series F Convertible Preferred Stock is entitled to receive $5 per share as a liquidation preference after payment of all existing~~ and ~~future indebtedness and before Series I, Series B, Series E,~~ ~~Series~~warehouse Gspace ~~and~~under ~~Series~~various Hnon-cancellable ~~Convertible~~operating ~~Preferred~~leases ~~Stock~~expiring ~~as to the $1,000,000 jackpot~~through ~~bankroll reserve for our Gamblers Bonus Million Dollar Ticket game~~2014. OnThe ~~January~~lease ~~31,~~agreements ~~2009,~~require weus ~~discontinued the Gamblers Bonus Million Dollar Ticket game and the jackpot bankroll reserve of $1,000,000 was transferred~~ to ~~our~~pay ~~Nevada~~fixed ~~Numbers~~monthly ~~game. On~~base ~~May 9, 2008, we issued 200,000~~rent ~~shares~~plus ofvariable ~~Series~~common Farea ~~Convertible~~maintenance ~~Preferred Stock which carries a cumulative 12% dividend rate payable on January 1, 2010 immediately after paying IGT their 6~~charges.~~5% dividend on Series I Preferred Stock.~~ ~~Series~~Future Fminimum ~~Convertible Preferred~~lease ~~Stock~~payments isunder ~~convertible into Common Stock Series A at~~ the ~~lower~~leases of $3.50 or 30% off of the IPO price, where “IPO price” means the per share price to the public of any common shares offered by us that in the aggregate results in capital in excess of $10.0 million being raised and the shares of a class of our common stock being listed and traded on a national stock exchange.are:

Series G Convertible Preferred Stock. The holder of Series G Convertible Preferred Stock is entitled to receive $5 per share as a liquidation preference pari passu with the liquidation preference of Series E Convertible Preferred Stock and after payment of all existing and future indebtedness and the liquidation preference of Series F, I, and B Convertible Preferred Stock. Series G Convertible Preferred Stock has a liquidation preferences over Series H Convertible Preferred Stock. On May 9, 2008, we issued 150,000

2010	$	397,094
2011		287,954
2012		154,677
2013		59,656
2014		3,840
	$	903,221

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~~shares of~~Rent ~~Series~~expense ~~G Convertible Preferred Stock which carries a cumulative 12% dividend rate payable~~ on ~~January~~all 1,operating ~~2010~~leases ~~immediately~~for ~~after~~2008 ~~paying~~and ~~IGT~~2009 ~~their~~was ~~6.5% dividend on Series I Preferred Stock. Series G Convertible Preferred stock is convertible into Common Stock Series A at the lower of~~ $~~3.50 or 30% off of the IPO price~~419,650 ~~where “IPO price” means the per share price to the public of any common shares offered by us that in the aggregate results in capital in excess of $10.0 million being raised~~ and ~~the shares of a class of our~~$512,117 ~~common stock being listed and traded on a national stock exchange~~respectively.

~~Series~~Legal ~~H Convertible Preferred Stock~~matters. ~~The~~On September ~~holders of~~12, ~~Series~~2007, HIGT ~~Convertible~~filed ~~Preferred Stock~~a ~~are~~lawsuit ~~entitled~~against tous ~~receive~~alleging $5copyright infringement, ~~per~~trademark ~~share~~infringement, astrade adress ~~liquidation~~infringement ~~preference~~and ~~after~~false ~~payment~~designation of ~~all~~origin ~~existing~~relating ~~and~~to ~~future indebtedness and~~ the ~~liquidation~~operation ~~preference~~ of ~~Series~~our F,PlayerVision ~~Series~~system I,on IGT’s ~~Series~~Game B,King® ~~Series~~gaming E,machines. IGT ~~and~~was ~~Series~~seeking Ginjunctive ~~Convertible Preferred~~and ~~Stock. During~~monetary ~~the~~relief ~~year~~in ~~ended~~the ~~December 31~~case, ~~2008,~~including wetreble ~~issued~~damages 98and profits,~~500 shares~~ ofclaiming ~~Series~~that IGT Hwould ~~Convertible~~be ~~Preferred~~irreparably ~~Stock~~harmed atby aus ~~price~~if ofour $5PlayerVision ~~per~~system ~~share~~was ~~for~~deployed ain ~~total~~the ~~capital raise of $492,500~~marketplace. ~~The~~On ~~Series H Convertible Preferred offering closed~~ June 2112, 2008~~. Series~~, HIGT ~~Convertible~~and ~~Preferred~~LVGI ~~stock is~~jointly ~~convertible~~filed ~~into Common Stock Series A at the lower of $2.50 or 30% off of~~a ~~the IPO price, where~~ “~~IPO price~~stay” ~~means~~of the ~~per~~lawsuit ~~share~~and ~~price~~began tosettlement ~~the~~negotiations. On ~~public of any~~October ~~common~~14, ~~shares~~2008, ~~offered~~pursuant byto ~~us that in~~ the ~~aggregate~~settlement ~~results~~effective inSeptember ~~capital~~30, in2008 ~~excess of~~(Note ~~$10.0~~7), ~~million being raised and~~ the ~~shares of a class of our common stock~~ ~~being~~case ~~listed~~was ~~and~~dismissed ~~traded~~with ~~on a national stock exchange~~prejudice.

~~Stock Warrants and~~On ~~Options. We~~September ~~have~~15, ~~both~~2008, a ~~qualified~~lawsuit ~~and~~was afiled ~~non-qualified~~against ~~stock option plan. There are 1~~us,~~995,900~~ ~~qualified~~among ~~options~~other ~~presently outstanding under~~defendants ~~the~~regarding ~~qualified~~a ~~plan, with another 650,000~~ non-~~qualified~~disclosure ~~options~~agreement ~~also~~executed ~~outstanding. The~~in ~~exercise~~2002 ~~price~~pertaining ~~of options issued pursuant~~ to ~~either plan cannot be less than~~ the plaintiffs’ ~~fair~~gaming ~~market~~concepts. In ~~value~~August, at2009, ~~the~~a ~~time~~Motion of ~~the grant and vesting is at the discretion~~Summary ofJudgment ~~the~~was ~~Compensation~~granted and ~~Stock Option Committee, though limited to ten years. Only employees and board members are qualified to receive options. The stock subject to~~ the ~~qualified~~case ~~plan~~was ~~is limited to 2,500,000 shares of Common Stock Series A~~dismissed.

WeOn ~~have~~August 26, ~~from~~2009, ~~time~~a tolawsuit ~~time~~was filed by Adline Network Holdings, ~~granted~~ ~~common~~LLC, ~~stock~~a Georgia Corporation, ~~warrants~~Adline ~~and~~Media ~~options~~LLC, toa ~~employees~~Georgia ~~and~~Limited ~~others~~liability ascompany, ~~employment~~Adline ~~incentives~~Network LLC, ina ~~return~~Georgia ~~for~~limited ~~successful~~liability ~~capital-raising~~company, ~~efforts~~and orSam asJohnson, ana ~~inducement~~former toofficer ~~invest~~and inemployee, ~~our~~alleging ~~common~~breach orof ~~preferred~~an ~~securities~~Acquisition Agreement, inbreach ~~return~~of ~~for~~a Consulting ~~other services~~Agreement, ~~and~~ inbreach ~~conjunction~~of ~~with~~a ~~the~~covenant ~~initial capitalization~~ of ~~our~~good ~~company~~faith and ~~business~~fair dealing, ~~acquisitions. Warrants~~negligent ~~and~~misrepresentation, ~~options~~common tolaw ~~purchase~~fraud ~~630,000~~(fraud ~~and~~in ~~960,000~~the ~~shares~~inducement/fraudulent ofmisrepresentation), ~~Common~~10b-5 ~~Stock~~securities ~~Series~~violations Aand declaratory ~~were~~relief. In ~~issued~~response to ~~officers~~our ~~and~~Motion ~~directors~~to ~~during~~Dismiss ~~the~~on October ~~years~~16, ~~ended~~2009, ~~December~~the ~~31,~~plaintiffs ~~2007~~filed ~~and~~a ~~2008,~~first ~~respectively~~amended complaint. ~~Total~~Since then, ~~compensation~~then ~~cost~~plaintiffs ~~recognized~~have infiled ~~operations~~a ~~from~~second ~~grants~~amended ofcomplaint ~~options~~with ~~and~~essentially ~~warrants~~the same ~~amounted~~allegations toas ~~$483,994~~the ~~and~~first ~~$742~~amended complaint,~~398~~ ~~for~~but naming the ~~years~~Chairman ~~ended~~of ~~December 31~~the Board, ~~2007~~the ~~and 2008~~Chief Executive Officer, ~~respectively. Unrecognized~~and ~~costs~~Chief ~~related~~Financial toOfficer ~~employee~~individually ~~stock~~in ~~options~~the ~~and~~lawsuit ~~warrants~~also. We ~~outstanding~~are atunable ~~December~~to ~~31,~~estimate ~~2008~~minimum ~~totaled $556~~costs,~~327~~ ~~and~~if ~~are expected~~any, to be ~~amortized~~incurred ~~over~~by aus ~~weighted~~upon ~~average~~the ~~period~~ultimate disposition of ~~three~~this ~~years.~~matter and, accordingly, no provision has been made.

~~The~~On December ~~weighted~~22, ~~average~~2009, ~~exercise~~a ~~price~~lawsuit was filed by a former officer and employee of the ~~our~~Company ~~outstanding~~alleging ~~options~~a severance benefit of $100,000 and ~~warrants~~unused atvacation ~~December~~time 31of $29,135 ~~2008,~~are ~~was~~owed him and damages in excess of $~~2.46.~~10,000 ~~The~~to be specifically ~~following~~determined ~~table~~at ~~summarizes~~trial. We ~~our~~are ~~stock~~vigorously ~~option~~defending this lawsuit and ~~warrant~~are unable ~~activity~~to ~~followed~~estimate minimum costs, if any, to be incurred by us upon the ultimate ~~applicable~~disposition ~~weighted~~of ~~average~~this ~~prices~~matter ~~during~~and, ~~the~~accordingly, ~~year~~no ~~ended~~provision ~~December~~has ~~31,~~been ~~2008:~~made.

	Options/Warrants			Weighted Average Price
Balance, January 1, 2008		6,174,862		$	2.33
Granted		3,192,000			2.72
Exercised		(102,659	)		1.17
Forfeited		(607,994	)		2.68
Balance, December 31, 2008		8,656,209		$	2.46

9. Income taxes:

As of December 31, 2009, net operating loss carryovers for federal income tax reporting purposes were approximately $40 million and expire between 2013 and 2027. However, because we have not achieved a satisfactory level of operations, realization of any future income tax benefit of the net operating loss carryovers accumulated to date is not yet viewed by management at this time as more likely than not. Therefore, the related deferred tax asset of $14 million has been effectively reduced by a 100% valuation allowance. In addition, we could be limited in our ability to utilize our net operating loss carryforwards and realize any benefit therefrom in the event of any of certain ownership changes described in Internal Revenue Code Section 382. Tax years that are still subject to IRS examination are 2006 through 2008.

10. Financial instruments:

Our financial instruments consist of cash, accounts receivable and debt. The estimated fair values of these financial instruments (based on level 2 inputs) are approximately equal to book value because of their short-term nature and/or interest rates approximating current market interest rates.

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~~As of December 31, 2008, 1,503,627 options and warrants are outstanding, but have not vested~~11. ~~The aggregate intrinsic value of options and warrants at December 31,~~ ~~2008,~~Segment ~~is $560,531.~~information:

	Non-vested Options			Weighted Average Price
Balance, January 1, 2008		515,610		$	5.00
Granted		1,064,250			2.97
Vested		(186,650	)		5.00
Balance, December 31, 2008		1,393,210		$	3.45

We conduct our operations in three primary business segments: “Casino Games,” Products” and “Other.” The “Casino Games” segment generates income from four games which are played in 11 casinos and 100 bars and convenience stores in Nevada and another 10 casinos outside Nevada.

	Non-vested Warrants			Weighted Average Price
Balance, January 1, 2008		270,333		$	2.85
Granted		93,750			2.50
Vested		(253,666	)		2.86
Balance, December 31, 2008		110,417		$	2.52

Our Casino Games activities consist of keno style games (Nevada Numbers and The Million Dollar Ticket), and Super Bonanza, a bingo style game and Gamblers Bonus Million Dollar Ticket, a promotional sweepstakes game, which was launched on April 14, 2008 and discontinued on January 31, 2009. The composition of our casino games revenue was approximately 69.6% bingo, 16.7% keno and 13.7% promotional sweepstakes during the year ended December 31, 2008 and approximately 91.4% bingo, 7.6% keno and 1% promotional sweepstakes for 2009.

The “Products” segment generates ~~following~~revenue ~~table~~essentially ~~summarizes~~through ~~stock~~the ~~options~~sale of keno and ~~warrants~~bingo ~~outstanding~~supplies atand ~~December~~keno 31equipment. Supplies include paper products, ~~2008~~inside/outside tickets, promotional asitems toand ~~number~~ink ~~exercisable~~for bingo daubers. Supplies accounted for 73% and ~~average~~89% ~~remaining~~of ~~life~~our inproducts sales during 2008 and 2009, ~~years:~~respectively. Keno system sales accounted for 27% and 18% of products sales for 2008 and 2009, respectively.

	Exercise Price		Number Outstanding		Weighted Average Remaining Life in years		Number Exercisable		Weighted Average Remaining Life in years
Options	$	1.00		270,000		1.0		270,000		1.0
	$	2.00		460,000		4.3		158,500		1.5
	$	2.50		667,000		4.6		166,750		1.2
	$	3.00		100,900		1.2		100,900		1.2
	$	4.55		25,000		1.0		25,000		1.0
	$	5.00		1,123,000		3.7		531,540		1.7
Warrants	$	1.00		367,500		1.3		357,500		1.1
	$	1.48		2,675,000		2.3		2,675,000		2.3
	$	1.50		30,000		4.3		30,000		4.3
	$	2.00		185,000		1.7		185,000		1.7
	$	2.10		23,809		1.9		23,809		1.9
	$	2.45		1,500,000		2.8		1,500,000		2.8
	$	2.50		125,000		4.6		31,250		4.6
	$	3.00		854,000		2.1		854,000		2.1
	$	4.00		100,000		1.1		100,000		1.1
	$	5.00		150,000		2.3		143,333		2.1
				8,656,209		2.7		7,152,582		2.1

The “Other” segment includes revenue from equipment maintenance contracts which accounted for 64% and 51% of other revenue during the 2008 and 2009, respectively; operation of a keno route (16% and 29% for the 2008 and 2009, respectively), and keno route participation agreements (20% and 18% for 2008 and 2009, respectively).

~~There~~Operating ~~are 1~~results,~~503,627~~ ~~options~~certain ~~and warrants that have been issued but have not~~unallocated ~~vested. Of~~expenditures, ~~these options~~ and ~~warrants~~identifiable ~~628,801~~assets ~~will~~for ~~vest~~these insegments ~~2009, 584,819~~are inset ~~2010, and 290,007 in 2011~~forth below.

	2008			2009
Revenue
Casino Games	$	2,525,884		$	1,747,571
Product Sales		1,255,428			1,008,202
Other		997,680			1,063,481
	$	4,778,992		$	3,819,254

Operating income (loss)
Casino Games	$	(428,089	)	$	288,335
Product Sales		(51,777	)		397,591
Other		(234,140	)		188,110
Unallocated		(9,499,296	)		(5,610,464	)
	$	(10,213,302	)	$	(4,736,428	)

Identifiable assets
Casino Games	$	2,668,200		$	1,422,438
Product Sales		381,176			265,833
Other		386,004			201,321
Unallocated		3,038,947			1,647,145
	$	6,474,327		$	3,536,737

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~~8. Concentrations~~Identifiable assets of $6,474,327 and $3,536,737 at December 31, 2008 and 2009, respectively, ~~commitments~~included recorded goodwill of $2,371,178 and ~~contingencies:~~$1,413,901 at December 31, 2008 and 2009, respectively, that relates to the Unallocated Sales segment.

Concentrations. There are no significant concentrations of credit risk among our receivables. Our receivables are uncollaterized. The maximum losses that we would incur if a customer or customers failed to pay would be limited to the amount due after any allowances provided. In managing credit risk and establishing any allowance necessary for doubtful collection, we consider the customer’s credit history and our relationship, the relative strength of our legal position, the related cost of any proceedings, and general economic conditions. Historically, we have depended on relatively few suppliers for components and programming for certain of our games. However, this dependence has been substantially mitigated as a result of acquisitions, mostly in 2003, and we believe that such other suppliers are sufficiently available so that any disruption of service would be brief and not have a material adverse effect on our business financial condition, or results of operations.

Capital expenditures	2008		2009
Casino Games	$	197,790	$	15,053
Product Sales		-		-
Other		109,034		43,823
Unallocated		134,504		35,474
	$	441,328	$	94,350

The United States is currently experiencing a recession accompanied by, among other things, weakness in the commercial and investment banking systems resulting in reduced credit and capital financing availability, and highly curtailed gaming, other recreational activities and general discretionary consumer spending, and is also engaged in war, all of which are likely to continue to have far-reaching effects on economic conditions in the country for an indeterminate period12. ~~The~~ ~~effects~~Related ~~and~~party duration of these developments and related risks and uncertainties on our future operations and cash flows, including our access to capital or credit financing, cannot be estimated at this time but may likely be significant.transactions:

WeOur ~~often~~Board ~~carry~~Chairman ~~cash~~ and ~~cash equivalents~~CFO, ~~including~~were ~~jackpot~~each granted ~~reserves~~30,000 onstock ~~deposit~~options ~~with~~respectively ~~financial~~for ~~institutions substantially~~personal inguarantees ~~excess~~ of ~~federally-insured~~stockholder advances ~~limits,~~ and ~~the~~personal ~~risk~~loans ofmade ~~losses related~~ to ~~such~~the ~~concentrations~~Company ~~may~~during ~~be increasing as a result of recent economic developments and uncertainties discussed in the foregoing paragraph~~2009. ~~The~~They were ~~extent~~also ofgranted a30,000 ~~future~~and ~~loss~~35,000 asstock aoptions, ~~result~~respectively, offor ~~uninsured~~personal ~~deposits~~guarantees ~~in the event~~ of astockholder ~~future~~advances, ~~failure~~and ofthe aCFO ~~bank~~was orgranted ~~other financial institution~~5,000 ifshares ~~any,~~for advances ispersonally ~~not~~made ~~subject~~ to ~~estimation~~the atCompany ~~this~~during ~~time~~2008.

~~Severance~~13. ~~We have~~Sale ~~agreed to severance arrangements with all executive officers that provide for the payment~~ of six months (12 months for our CEO) of base salary following termination of employment for other than cause which amounts to $692,000 of financial commitment. We are presently working on employment agreements with our CEO, CFO and CTO. These employment agreements will include covenants not to compete. Presently, all employees except the CEO, CTO and two engineers have signed covenants not to compete.assets

~~Gaming~~We completed the ~~Regulations~~sale ~~and~~of our ~~Licensing.~~bingo Webusiness, ~~are~~keno ~~licensed~~intellectual ~~with~~property, ~~the~~and ~~State~~our ofroute ~~Nevada~~promo asbusiness anassets with ~~operator~~United ~~of inter-casino-linked~~Coin ~~systems~~to Gaming Arts, ~~supplier~~LLC ~~and~~(GA) ~~distributor~~on ofAugust ~~keno~~19, ~~and~~2009, ~~bingo~~for ~~products~~$1,050,000. GA ~~parts~~also executed a Nevada Numbers License Agreement for $50,000 ~~and~~for ~~service~~an exclusive license to operate, grant sublicenses and asenforce athe Nevada ~~keno~~Numbers ~~route~~intellectual ~~operator~~property in any non-slot application. ~~From time~~In addition, GA received a non-exclusive license to ~~time~~operate, wegrant ~~seek~~one ~~licensure~~sublicense, and enforce the Nevada Numbers intellectual property in ~~other~~any ~~gaming~~slot ~~jurisdictions~~machine application sofor ~~that~~50% weof ~~may~~the net profits after GA or its sub-licensee receives the ~~similarly~~first ~~participate~~$100,000 in net profits. However, since GA has not received the necessary regulatory approval to be a gaming ~~revenue~~operator, ~~produced~~the byCompany ~~customers~~continues to maintain control of these assets and manage them on a day-to-day basis for ~~our~~an ~~products~~indefinite inperiod ~~those~~pending ~~jurisdictions~~such approvals. ~~Failure~~ The gain on the sale of these assets has been deferred pending such approvals. As a result of significant uncertainty as to ~~retain~~the achievement and ~~our~~timing ~~Nevada~~of such ~~licenses~~regulatory orapprovals, we are unable to ~~obtain~~conclude that the disposition of these business assets and ~~retain~~activities ~~the~~within ~~necessary~~one ~~licenses~~year inis probable. Therefore, ~~other~~pursuant ~~jurisdictions~~to accounting principles generally ~~would~~accepted in the United States, we have anot ~~material~~classified ~~adverse~~the ~~effect~~related onassets usas held for sale nor the operations of these businesses as discontinued.

We also ~~purchase~~executed ~~insurance~~an toagreement ~~fund~~for the ~~base~~sale ~~progressive~~of ~~jackpots~~our ~~for~~keno ~~Nevada~~business ~~Numbers, Super~~to ~~Bonanza~~Session ~~Bingo (in some circumstances)~~Gaming, ~~and The Million Dollar Ticket~~Inc. We ~~fund~~for ~~any~~$100,000 ~~uninsured~~on ~~portion~~November ~~plus~~4, ~~increases~~2009. This totransaction ~~the~~likewise ~~progressive~~will ~~jackpot through~~not ~~operations.~~close Weuntil ~~are~~Session ~~ultimately~~Gaming, ~~liable~~LLC, ~~for~~has ~~the~~been ~~entire~~approved ~~jackpot. The following tables illustrate our liability~~ for ~~progressive~~licensing ~~jackpots~~by ~~at December 31, 2007~~the ~~and~~appropriate ~~2008,~~gaming ~~and~~authorities ~~related~~in ~~assumptions:~~various jurisdictions.

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	December 31, 2007
Present value of Nevada Numbers $5.0 million base progressive jackpot, payable in 20 equal annual installments using a 7.25% discount rate, the prevailing prime rate	$	2,786,153
Present value at 7.25% of the progressive jackpot meter for Nevada Numbers		13,446
Less portion insured through conventional insurers		(2,900,000	)
Other Games		475,909
	$	375,508

14. Subsequent events:

	December 31, 2008
Present value of Nevada Numbers $5.0 million base progressive jackpot, payable in 20 equal annual installments using a 3.25% discount rate, the prevailing prime rate	$	3,752,968
Present value at 3.25% of the progressive jackpot meter for Nevada Numbers		79,499
Less portion insured through conventional insurers		(2,900,000	)
Other Games		622,893
	$	1,555,360

On January 29, 2010, the Company defaulted on its $1.5 million note payable due to IGT, its largest stockholder, which is carried among current liabilities. The default totaled $1,587,945 including accrued interest since June 1, 2009. Thus far, IGT has cooperated with the Company and not foreclosed on the note due to potential funding sources the Company is in discussions with to pay off the defaulted amount owed IGT and to inject new working capital into the Company. Due to the default, the interest rate increased to 18% on January 30, 2010.

~~Lease~~The ~~commitments. We~~Company ~~lease~~is ~~office~~also in default on dividends payable to IGT of $886,760 which is included in accounts payable and ~~warehouse~~accrued ~~space~~expenses ~~under~~on ~~various~~its ~~non-cancellable~~Series ~~operating~~I ~~leases~~Preferred ~~expiring~~Stock ~~through~~and is in default with Triangle ~~2013~~Holdings VI LLC (Triangle), a shareholder who has invested in Series E Preferred Stock and Common Stock, on its Series G Convertible Preferred Stock of $107,847 at December 31, 2009. The ~~lease~~Company ~~agreements~~executed ~~require~~a usStock toRepurchase Agreement ~~pay~~with ~~fixed~~Triangle ~~monthly~~Holdings ~~base~~VI ~~rent~~LLC on March 23, 2010, for its $750,000 of ~~plus~~Series ~~variable~~G ~~common~~Preferred ~~area~~Stock ~~maintenance~~and ~~charges~~its $107,847 of accrued dividends. ~~Future~~Triangle ~~minimum~~Holdings ~~lease~~VI LLC also loaned the Company $150,000 ~~payments~~for ~~under~~current working capital purposes and the ~~leases~~Company ~~are:~~committted to a $100,000 loan fee for the loan. To securitize the stock redemption, the accrued dividends, the loan and the loan fee, the Company signed a Secured Second Position Promissory Note for $1,107,847 with Triangle, which will be due if IGT is paid off their defaulted note, interest, and dividends.

2009	$	323,827
2010		190,686
2011		162,597
2012		147,804
2013		49,894
	$	874,808

The above represents all subsequent events necessary for disclosure through the date of our filing our annual form 10-K which is May 12, 2010.

Rent expense on all operating leases for 2007 and 2008 was $345,072 and $419,650 respectively.

Legal Matter. On September 12, 2007, International Game Technology (IGT) filed a lawsuit against us alleging copyright infringement, trademark infringement, trade dress infringement and false designation of origin relating to the operation of our PlayerVision system on IGT’s Game King® gaming machines. IGT was seeking injunctive and monetary relief in the case, including treble damages and profits, claiming that IGT would be irreparably harmed by us if our PlayerVision system was deployed in the marketplace. On June 12, 2008, IGT and LVGI jointly filed a “stay” of the lawsuit and began settlement negotiations. On October 14, 2008, pursuant to the settlement effective September 30, 2008 (Note 7), the case was dismissed with prejudice.

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On September 15, 2008, a lawsuit was filed against LVGI and certain other defendants concerning their provisional patent for “slot lottery”. We are unable to estimate minimum costs to be incurred by LVGI, if any, upon the ultimate disposition of this matter and, accordingly, no provision has been made, but we believe the case is without merit and will vigorously defend ourselves.

Noncompliance with Gaming Regulation. Regulation 5.115 of the Nevada Gaming Commission, as amended on November 18, 1999, allows licensees to use the “reserve method” to fund periodic payments of any game, including a race book or sports pool, tournament, contest, or promotional activity provided that the licensee complies with certain financial monitoring and reporting requirements as follows: 1) current ratio of 2:1 and 2) interest coverage ratio of 3:1. We have frequently found it impossible, primarily due to the absence of earnings, to be in compliance with these ratios and in the past have been successful in presenting an alternative plan acceptable to the Nevada Gaming Commission to satisfactorily meet the objectives of the Regulation if not cure the situation prospectively through expected future raises of capital. In our ten-year history, all of our jackpot liabilities have been paid by us or through insurance coverage, and we have no reason to believe that it will not continue to be the case in the future. The Nevada Gaming Commission has the right to demand that a one-year letter of credit be posted when a company is not in compliance with the foregoing financial ratios but has not made any such demand to date.

The forgoing notwithstanding, in July 2008, we received two “Orders to Show Cause” from the Nevada Gaming Control Board (NGCB). One order dealt with deficiencies in meeting the financial requirements of Regulation 5.115 as to 1) resources in restricted accounts; 2) current ratio or working capital; 3) interest coverage ratio or debt to EBITDA ratio; and 4) bankroll. For this matter we have agreed to pay a fine of $10,000 in full settlement and satisfaction of the allegations. However, we can give no assurance that we will be in compliance with these financial requirements in the future. The second order dealt with deficiencies in filing timely reports with the NGCB as to new hires and termination of personnel. Our response set forth some remedial action taken by us, which was deemed adequate and no further disciplinary action was taken.

9. Income taxes:

As of December 31, 2008, net operating loss carryovers for federal income tax reporting purposes were approximately $38.0 million and expire between 2013 and 2027. However, because we have not achieved a satisfactory level of operations, realization of any future income tax benefit of the net operating loss carryovers accumulated to date is not yet viewed by management at this time as more likely than not. Therefore, the related deferred tax asset of $13.3 million has been effectively reduced by a 100% valuation allowance. In addition, we may be limited in our ability to utilize our net operating loss carryforwards and realize any benefit therefrom in the event of any of certain ownership changes described in Internal Revenue Code Section 382.

In 2007, the Company adopted FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes - An Interpretation of FASB Statement No. 109, (FIN 48). The adoption of FIN 48 did not have a material impact on our financial statements, net operating loss carryovers or related deferred tax assets or valuation allowances.

10. Financial Instruments:

Our financial instruments consist of cash, jackpot reserve deposits, accounts receivable, accounts payable, and progressive jackpot liability, other accrued expenses, and debt. The estimated fair values of these financial instruments are approximately equal to book value because of their short-term nature and/or interest rates approximating current market interest rates.

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11. Segment Information:

We conduct our operations in three primary business segments: “Casino Games,” Products” and “Other.” The “Casino Games” segment generates income from four games which are played in 7 casinos and 100 bars and convenience stores in Nevada and another 18 casinos outside Nevada.

Our games consist of keno style games (Nevada Numbers and The Million Dollar Ticket), and Super Bonanza, a bingo style game and Gamblers Bonus Million Dollar Ticket, a promotional sweepstakes game, which was launched on April 14, 2008 and discontinued on January 31, 2009. The composition of our casino games revenue was approximately 67% bingo and 33% keno for the year ended December 31, 2007 and 69.6% bingo, 16.7% keno and 13.7% promotional sweepstakes during the year ended December 31, 2008.

The “Products” segment generates revenue essentially through the sale of keno and bingo supplies and keno equipment. Supplies include paper products, inside/outside tickets, promotional items and ink for bingo daubers. Supplies accounted for 65% and 73% of our products sales during the years ended December 31, 2007 and 2008, respectively. Keno system sales accounted for 35% and 27% of products sales for the years ended December 31, 2007 and 2008, respectively.

The “Other” segment includes revenue from equipment maintenance contracts which accounted for 47% and 64% of other revenue during the years ended December 31, 2007 and 2008, respectively; operation of a keno route (34% and 16% for the year ended December 31, 2007 and 2008 respectively), the distribution of “hand-held” bingo electronics (5% and 0% for the year ended December 31, 2007 and 2008, respectively) and keno route participation agreements (14% and 20% for the years ended December 31, 2007 and 2008, respectively).

Operating results, certain unallocated expenditures, and identifiable assets for these segments are set forth below.

	2007			2008
Revenue
Casino Games	$	1,859,165		$	2,525,884
Product Sales		1,820,375			1,255,428
Other		1,383,869			997,680
	$	5,063,409		$	4,778,992
Operating income (loss)
Casino Games	$	996,348		$	(428,089	)
Product Sales		766,725			(51,777	)
Other		39,541			(234,140	)
Unallocated		(8,589,479	)		(9,499,296	)
	$	(6,786,865	)	$	(10,213,302	)
Identifiable assets
Casino Games	$	3,504,892		$	2,668,200
Product Sales		368,219			381,176
Other		416,890			386,004
Unallocated		2,631,988			3,038,947
	$	6,921,989		$	6,474,327

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Identifiable assets of $6,921,989 and $6,474,326 at December 31, 2007 and 2008, respectively, included recorded goodwill of $2,371,178 that relates to the Product Sales segment from prior acquisitions and the recent acquisition of Adline Network Holdings, Inc.

Capital expenditures	2007		2008
Casino Games	$	325,438	$	197,790
Product Sales		1,509		-
Other		36,327		109,034
Unallocated		124,655		134,504
	$	487,928	$	441,328

12. Related Party Transactions:

Agreements for Services

In 2006, we entered into a consulting agreement with JMC Investments, L.L.C., an entity managed and owned by Stephen A. Crystal, then a director of our company. During the 90-day term of the consulting agreement, JMC Investments, L.L.C. was to assist in designing, developing, and implementing our sales efforts and in fulfilling our funding needs. In exchange, we agreed to pay JMC Investments, L.L.C. compensation of $10,000 per month and a one-time grant of 60,000 shares of Common Stock Series A. On June 15, 2006, Mr. Crystal accepted our offer of employment as our President and Chief Marketing Officer and agreed to terminate any further obligation under the consulting agreement. As an employee, Mr. Crystal was issued a warrant to purchase 250,000 shares of Common Stock Series A with an exercise price of $3.00 per share. On March 16, 2007, Mr. Crystal was re-appointed to our Board of Directors and concurrently resigned as our President and Chief Marketing Officer. As part of his severance package, Mr. Crystal received $30,000 and 10,000 shares of Common Stock Series A. Mr. Crystal subsequently resigned from our Board of Directors on February 4, 2008.

PlayerVision Contract

We entered into a contract dated December 13, 2007 with the Four Queens Hotel and Casino, a hotel casino controlled by Terry L. Caudill, a director of our company, and installed AdVision on 52 slot machines for $1.00 per machine per day. The contract was cancelable after the first 60 days but remains in force today.

Board Service

Russell R. Roth, Chairman of the Board, and Jon D. Berkley, CEO, were each granted 10,000 stock options for Board of Directors service in 2008. Each of Mr. Roth and Mr. Berkley receive salaries from us unrelated to their service on our Board of Directors.

Guarantees

Russell R. Roth, Chairman of the Board, and Bruce A. Shepard, CFO, were each granted 30,000 stock options for personal guarantees of shareholder advances and Mr. Shepard was granted 5,000 shares for personal advances made to us during the year ended December 31, 2008.

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13. Subsequent Events:

In January 2009, we raised $562,500 from our Series F and G Preferred shareholder by selling him 225,000 shares of Common Stock Series A at $2.50 per share. In addition, On February 13, 2009, we signed a binding term sheet (“Term Sheet”) with IGT whereby IGT advanced $1.5 million (“Advance”) to the Company. If the Company and IGT do not execute an investment agreement (“Second Investment Agreement”) on or before August 15, 2009, IGT will have the option of (i) converting the Advance into shares of preferred stock of the Company, or (ii) having the Company repay the Advance. If IGT elects to convert the Advance into preferred stock, the Advance shall be converted into shares of the same series of the Company’s preferred stock as is being offered in the Company’s private placement (the “Private Placement”) as previously disclosed in the Company’s Form 8-K dated January 16, 2009. The number of shares to be issued shall be based on the closing price of the Private Placement, or $3.25 per share if the Private Placement is not completed. If the Private Placement is not completed prior to August 15, 2009, the Advance shall become immediately due and payable to IGT. The Company granted a security interest in all of its present and future assets as security for such obligation.

Pursuant to the Term Sheet, the Company and IGT shall endeavor to enter into the Second Investment Agreement for a total investment in the Company of $3.0 million inclusive of the Advance (the “$3.0 Million Investment”). In consideration of the $3.0 Million Investment, the Company intends to issue to IGT a new series of preferred stock convertible into shares of the Company’s Common Stock Series A at the price of the Private Placement, or, if the Private Placement does not close, $3.25 per share. The preferred stock will be entitled to a mandatory annual 5% cash dividend. The annual dividend will be personally guaranteed by our chairman and chief financial officer. The Company and IGT also agreed to amend the License and Application Support Agreement dated September 30, 2008 between the Company and IGT (the “LASA”), and the Intellectual Property Access Agreement dated September 30, 2008 between the Company and IGT (the “IPAA”).

The amendments to the LASA include: (i) a requirement that the Company use its best efforts to utilize IGT’s sb (server based) Media Manager as the default infrastructure for the delivery of the Company’s PlayerVision® applications, where feasible, (ii) a requirement that the Company provide development support for IGT sb (server based) applications requested by IGT, (iii) an amendment to the amount of distribution fees, (iv) a granting to IGT of a “most favored distributor” status so that IGT is granted the most favorable terms on the Company’s software distributor rates for its server-based applications, and (v) a requirement that the Company escrow the source code for the applications that connect to IGT systems. IGT will have the right to access the source code only if the Company becomes insolvent, and IGT’s rights to utilize such software (if released) will be unlimited. The amendments to the IPAA include the Company’s agreement that IGT will have the right to initiate, coordinate, finance and assist in the prosecution, defense and enforcement of all Company owned intellectual property to which the Company has granted a right of first refusal to IGT.

In January 2009, our Board of Directors adopted the 2009 Stock Option Plan, subject to approval at the 2009 Annual Meeting of Stockholders. The maximum number of shares of the Company’s common stock that can be optioned and sold under the 2009 Stock Option Plan is 20% of the issued and outstanding shares of common stock. The maximum number of shares for which a stock option may be may be granted to any optionee during any calendar year shall not exceed 3% of the issued and outstanding common stock. The purchase price for the shares subject to any stock option shall be determined at the time of the grant by the administrator of the 2009 Stock Option Plan, but shall not be less than 85% of the fair market value per share.

Our contract with Treasure Island for the $3.9 million base jackpot bankroll for Nevada Numbers and Million Dollar Ticket expired on March 31, 2009, and we shut down the games as a result. We expect to restart the games as soon as we find funding for the $3.9 million base jackpot.

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

Not applicable.

ITEM 9A~~(T)~~. CONTROLS AND PROCEDURES.

We maintain disclosure controls and procedures that are ~~designed~~ intended to ensure ~~that~~ that information required to be disclosed in our reports under the Securities Exchange Act of 1934, as amended (Exchange Act) is recorded, processed, summarized and reported within the time period specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including the Chief Executive Officer and the Chief Financial Officer.

Our management, including the Chief Executive Officer and the Chief Financial Officer, has conducted an evaluation of the effectiveness of disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(c) as of December 31, ~~2008~~2009. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that the disclosure controls and procedures ~~are~~were not effective ingiven ~~ensuring~~the ~~that all~~ material ~~information~~weakness ~~required~~in ~~to be filed with~~ the ~~Securities~~internal ~~and~~control ~~Exchange~~over financial ~~Commission~~reporting ~~has~~discussed ~~been made known to them in a timely fashion~~below.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control system was ~~designed~~intended to provide reasonable assurance to our management and board of directors regarding the preparation and fair presentation of published financial statements.

Management ~~assessed~~and the ~~effectiveness~~Company’s ofindependent ~~our~~registered ~~internal~~accounting ~~control~~firm ~~over~~have ~~financial~~identified ~~reporting~~a ~~(as~~group ~~defined in the Securities Exchange Act~~ of ~~1934~~control ~~Rules~~deficiencies ~~13a-15(f)~~with ~~and~~regard ~~15d-15(f))~~to ~~as of~~key ~~December~~business 31processes, ~~2008.~~which Inwe ~~making this assessment~~believe, ~~it used the criteria set forth~~ byin the ~~Committee~~aggregate, ofrepresents ~~Sponsoring~~a ~~Organizations~~material ofweakness ~~the Treadway Commission (COSO)~~ in ~~Internal Control—Integrated Framework. Based on~~ the ~~assessment performed~~Company’s ~~on the effectiveness of our~~ internal control ~~controls,~~over ~~management~~financial ~~believes that,~~reporting as of December 31, ~~2008, our internal controls were effective based on the above criteria~~2009.

Among the most significant of these deficiencies were inadequate segregation of duties, including the need for a corporate controller and additional accounting personnel. Many of these deficiencies had the effect of causing undetected material misstatements in financial reporting to occur that required correction with significant audit adjustments. In addition, such deficiencies had the potential for causing further misstatements to occur and not be detected by the Company’s internal control.

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Management assessed the effectiveness of our internal control over financial reporting (as defined in the Securities Exchange Act of 1934 Rules 13a-15(f) and 15d-15(f)) as of December 31, 2009. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework. Based on the assessment performed on the effectiveness of our internal controls, management believes that, as of December 31, 2009, our internal controls were not effective based on the above criteria.

This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report.

Changes in Internal Control over Financial Reporting

Management believes that ~~we have addressed prior material weaknesses in internal control over financial reporting with respect to future periods by requiring~~ the ~~completion~~ hiring of a ~~detailed~~controller ~~SEC~~ and ~~GAAP~~additional ~~disclosure~~accounting ~~checklist in connection with~~personnel ~~our~~will ~~financial~~properly ~~closing~~address ~~process~~segregation ~~at the end~~ of ~~each~~duties ~~quarter~~issues and atsignificant ~~the end of the~~deficiencies ~~year,~~in byits ~~having~~internal aaccounting ~~detailed~~control ~~cold~~system. We ~~review~~will ofhire ~~our~~these ~~financial statements and notes~~key ~~thereto performed by another independent~~ accounting ~~firm~~personnel ~~prior to each annual and quarterly report being filed~~ with the ~~SEC~~next ~~and~~round ~~reporting the results~~ of capital that ~~cold~~ ~~review~~is toraised ~~the audit committee,~~ by ~~subscribing to an online accounting~~ reference service, and by assigning responsibility for regular reconciliation of our equity shares to the transfer agent ledger to a full-time accounting staff person, all of which procedures were implemented prior to the filing of this reportus.

ITEM 9B. OTHER INFORMATION.

None.

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PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

~~The~~Code ~~information required by this Item is incorporated by reference to the definitive proxy statement for our 2009 Annual Meeting~~ of ~~Stockholders to be filed with the SEC within 120 days after the end of our 2008 fiscal year (the “2009 Proxy Statement”).~~Ethics

Our Board of Directors has adopted a code of conduct and ethics applicable to each of our directors, officers and employees. The full text of the code of conduct and ethics and the code of ethics are available at our website at www.lvgi.com.

Audit Committee

The Company has an Audit Committee consisting of two members, Harlen Braaten and Rich Irvine. The Board determined that Harlan Braaten and Rich Irvine are “independent directors” as that term is defined in NASDAQ National Stock Market rules and Rule 10A-3 of the Securities Exchange Act of 1934 and that Mr. Braaten is an “audit committee financial expert” as that term is defined in Item 407 of Regulation S-B promulgated by the SEC. Mr. Braaten is the chair of the Audit Committee. The Board has also adopted an audit committee charter.

The remaining information required by this Item will be filed with the SEC either through an amendment to this Report (the “Amendment”) or through the definitive proxy statement for our 2010 Annual Meeting of Stockholders to be filed with the SEC (the “2010 Proxy Statement”).

ITEM 11. EXECUTIVE COMPENSATION.

The information required by this Item iswill ~~incorporated~~be byfiled ~~reference~~through toeither the ~~2009~~Amendment ~~Proxy~~or the 2010 Proxy Statement.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

The information required by this Item iswill ~~incorporated~~be byfiled ~~reference~~through toeither the ~~2009~~Amendment ~~Proxy~~or the 2010 Proxy Statement.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

The information required by this Item iswill ~~incorporated~~be byfiled ~~reference~~through toeither the ~~2009~~Amendment ~~Proxy~~or the 2010 Proxy Statement.

ITEM 14. PRINCIPAL ~~ACCOUNTING~~ACCOUNTANTS’ FEES AND SERVICES.

The information required by this Item iswill ~~incorporated~~be byfiled ~~reference~~through toeither the ~~2009~~Amendment ~~Proxy~~or the 2010 Proxy Statement.

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PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

(a)~~(1) Financial~~ Documents ~~Statements~~Filed as Part of this Report:

(1) Financial Statements

Included in Part II of this report:

Consolidated Balance Sheets at December 31, 2008 and ~~2007~~2009.

Consolidated Statements of Operations for the Years Ended December 31, 2008 and ~~2007~~2009.

Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2008 and ~~2007~~2009.

Consolidated Statements of Cash Flow for the Years Ended December 31, 2008 and ~~2007~~2009.

Notes to Consolidated Financial Statements

(~~a)(~~2) Financial Statement Schedules

Not required.

(~~a)(~~3) ~~and (c)~~ Exhibits

See response to (b) below

(b) Exhibits

Included as Exhibits are the items listed in the Exhibit Index.

~~- 57~~(c) Financial -Statement Schedules:

Not required

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SIGNATURES

InPursuant ~~accordance~~to ~~with~~the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Las Vegas Gaming, Inc. (Registrant)
By:	/s/ Jon D. Berkley
	Jon D. Berkley President and Chief Executive Officer (Principal Executive Officer)
Date:	~~April~~May 712, ~~2009~~2010

InPursuant ~~accordance~~to ~~with~~the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Jon D. Berkley	Director, President and Chief Executive	~~April~~May 712, ~~2009~~2010
Jon D. Berkley	Officer (Principal Executive Officer)
/s/ Bruce A. Shepard	Chief Financial Officer and	~~April~~May 712, ~~2009~~2010
Bruce A. Shepard	Treasurer (Principal Financial and Accounting Officer)
/s/ Russell R. Roth	Director	~~April~~May 712, ~~2009~~2010
Russell R. Roth
/s/ Harlan D. Braaten	Director	~~April~~May 712, ~~2009~~2010
Harlan D. Braaten
/s/ Kyleen E. Cane	Director	April 7, 2009
/s/ Richard H. Irvine	Director	May 12, 2010
Kyleen E. Cane
/s/ Terry L. Caudill	Director	April 7, 2009
Terry L. Caudill
/s/ Richard H. Irvine	Director	April 7, 2009
Richard H. Irvine
/s/ Robert M. McMonigle	Director	April 7, 2009
Robert M. McMonigle

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EXHIBIT INDEX

Exhibit		Document Description
2.1		Stock Purchase Agreement dated June 30, 2002, by and among registrant, Imagineering Systems, Inc., Ron Mach, and Alicia Mach and Bill Williams, incorporated by reference to registrant’s Annual Report, as amended, on Form 10-KSB/A, as filed with the SEC on July 19, 2006.
2.2		Agreement and Plan of Merger dated April 30, 2003 among registrant, Las Vegas Twin, Inc., Triple Win in Nevada, Inc. and Robert G. Ducaj, II, John Mulligan, Leta K. Mulligan, and Michael Cassidy, incorporated by reference to registrant’s Quarterly Report on Form 10-QSB, as filed with the SEC on May 20, 2003.
2.3		Closing Agreement for Stock Purchase dated July 1, 2003 by and among the registrant, Imagineering Systems, Inc., Ron Mach and Alicia Mach and Bill Williams, incorporated by reference to registrant’s Quarterly Report on Form 10-QSB, as filed with the SEC on August 9, 2003.
2.4		Agreement and Plan of Merger dated January 14, 2005, among the registrant, AdLine Gaming, Inc. and AdLine Network, LLC, incorporated by reference to registrant’s Current Report on Form 8-K, as filed with the SEC on January 24, 2005.
3.1		Articles of Incorporation, as filed with the Nevada Secretary of State on April 28, 1998, incorporated by reference to registrant’s Registration Statement on Form 10-SB12G/A, as filed with the SEC on June 19, 2000.
3.2		Certificate of Amendment to Articles of Incorporation, as filed with the Nevada Secretary of State on June 7, 2000, incorporated by reference to registrant’s Annual Report of Form 10-KSB, as filed with the SEC on April 12, 2001.
3.3		Certificate of Amendment to Articles of Incorporation, as filed with the Nevada Secretary of State on December 8, 2005, incorporated by reference to registrant’s Annual Report, as amended, on Form 10-KSB/A, as filed with the SEC on July 19, 2006.
3.4		Certificate of Correction, as filed with the Nevada Secretary of State on July 14, 2006, incorporated by reference to registrant’s Current Report on Form 8-K, as filed with the SEC on July 19, 2006.
3.5		Certificate of Designation for Common Stock, as filed with the Nevada Secretary of State on July 17, 2006, incorporated by reference to registrant’s Current Report on Form 8-K, as filed with the SEC on July 19, 2006.
3.6		Certificate of Withdrawal of Certificate of Designation for Series A Convertible Preferred Stock, as filed with the Nevada Secretary of State on October 3, 2008, incorporated by reference to registrant’s Current Report on Form 8-K, as filed with the SEC on October 7, 2008.
3.7		Certificate of Withdrawal of Certificate of Designation for Series C Convertible Preferred Stock, as filed with the Nevada Secretary of State on October 3, 2008, incorporated by reference to registrant’s Current Report on Form 8-K, as filed with the SEC on October 7, 2008.
3.8		Certificate of Withdrawal of Certificate of Designation for Series D Convertible Preferred Stock, as filed with the Nevada Secretary of State on October 3, 2008, incorporated by reference to registrant’s Current Report on Form 8-K, as filed with the SEC on October 7, 2008.
3.9		Amended and Restated Certificate of Designation for Series B Convertible Preferred Stock, as filed with the Nevada Secretary of State on October 22, 2008, incorporated by reference to registrant’s Current Report on Form 8-K, as filed with the SEC on October 28, 2008.
3.10		Amended and Restated Certificate of Designation for Series E Convertible Preferred Stock, as filed with the Nevada Secretary of State on October 22, 2008, incorporated by reference to registrant’s Current Report on Form 8-K, as filed with the SEC on October 28, 2008.

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Exhibit		Document Description
3.11		Amended and Restated Certificate of Designation for Series F Convertible Preferred Stock, as filed with the Nevada Secretary of State on October 22, 2008, incorporated by reference to registrant’s Current Report on Form 8-K, as filed with the SEC on October 28, 2008.
3.12		Amended and Restated Certificate of Designation for Series G Convertible Preferred Stock, as filed with the Nevada Secretary of State on October 22, 2008, incorporated by reference to registrant’s Current Report on Form 8-K, as filed with the SEC on October 28, 2008.
3.13		Amended and Restated Certificate of Designation for Series H Convertible Preferred Stock, as filed with the Nevada Secretary of State on October 22, 2008, incorporated by reference to registrant’s Current Report on Form 8-K, as filed with the SEC on October 28, 2008.
3.14		Certificate of Designation for Series I Preferred Stock, as filed with the Nevada Secretary of State on October 22, 2008, incorporated by reference to registrant’s Current Report on Form 8-K, as filed with the SEC on October 28, 2008.
3.15		Restated Bylaws of registrant, incorporated by reference to registrant’s Registration Statement on Form 8-A12G, as filed with the SEC on January 26, 2009.
3.16		First Amendment to Restated Bylaws, incorporated by reference to registrant’s Current Report on Form 8-K, as filed with the SEC on April 24, 2009.
10.1		Stock Option Plan (2000), incorporated by reference to Appendix A of registrant’s definitive proxy statement dated October 29, 2007, as filed with the SEC on October 29, 2007.(1)
10.2		First Amendment to the Stock Option Plan (2000), incorporated by reference to Appendix B of registrant’s definitive proxy statement dated October 29, 2007, as filed with the SEC on October 29, 2007.(1)
10.3		Consulting Agreement dated March 31, 2005 by and between registrant and Michael Shillan/Shillan Co., LLC, incorporated by reference to registrant’s Annual Report, as amended, on Form 10-KSB/A, as filed with the SEC on July 19, 2006.
10.4		Gamblers Bonus Sweepstakes Agreement dated March 31, 2005 between registrant and United Coin Machine Company, incorporated by reference to registrant’s Annual Report, as amended, on Form 10-KSB/A, as filed with the SEC on July 19, 2006.
10.5		License Agreement dated July 8, 2005 between registrant and Leroy’s Sports and Horse Place, incorporated by reference to registrant’s Annual Report, as amended, on Form 10-KSB/A, as filed with the SEC on July 19, 2006.
10.6		License Agreement dated July 11, 2005 between registrant and Leroy’s Sports and Horse Place, incorporated by reference to registrant’s Annual Report, as amended, on Form 10-KSB/A, as filed with the SEC on July 19, 2006.
10.7		Memorandum of Understanding for the Use of PortalVision for Account Wagering between registrant and Computerized Bookmaking Systems, Inc., incorporated by reference to registrant’s Annual Report, as amended, on Form 10-KSB/A, as filed with the SEC on July 19, 2006.
10.8		Waiver and Release Agreement dated February 1, 2006 between registrant and AdLine Network, LLC incorporated by reference to registrant’s Annual Report on Form 10-KSB, as filed with the SEC on April 17, 2006.
10.9		Assignment Agreement dated February 1, 2006 between registrant and AdLine Network, LLC, incorporated by reference to registrant’s Annual Report, as amended, on Form 10-KSB/A, as filed with the SEC on July 19, 2006.
10.10		Securities Purchase Agreement dated March 31, 2006 between registrant and CAMOFI Master LDC, incorporated by reference to registrant’s Current Report on Form 8-K, as filed with the SEC on April 7, 2006.

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Exhibit		Document Description
10.11		Amended and Restated Senior Secured Convertible Note with Original Issue Date of March 31, 2006 in favor of CAMOFI Master LDC, incorporated by reference to registrant’s Quarterly Report on Form 10-Q, as filed with the SEC on August 19, 2008.
10.12		Amended and Restated Registration Rights Agreement dated April 30, 2008 between registrant and CAMOFI Master LDC, incorporated by reference to registrant’s Quarterly Report on Form 10-Q, as filed with the SEC on August 19, 2008.
10.13		Warrant Agreement dated March 31, 2006 between registrant and CAMOFI Master LDC, incorporated by reference to registrant’s Annual Report, as amended, on Form 10-KSB/A, as filed with the SEC on July 19, 2006.
10.14		Security Agreement dated March 31, 2006 between registrant and CAMOFI Master LDC, incorporated by reference to registrant’s Annual Report, as amended, on Form 10-KSB/A, as filed with the SEC on July 19, 2006.
10.15		First Amendment to Security Agreement dated April 30, 2008, incorporated by reference to registrant’s Quarterly Report on Form 10-Q, as filed with the SEC on August 19, 2008
10.16		Subsidiary Guarantee dated March 31, 2006 between registrant and CAMOFI Master LDC, incorporated by reference to registrant’s Annual Report, as amended, on Form 10-KSB/A, as filed with the SEC on July 19, 2006.
10.17		First Amendment to Subsidiary Guarantee dated April 30, 2008, incorporated by reference to registrant’s Quarterly Report on Form 10-Q, as filed with the SEC on August 19, 2008.
10.18		Consulting Agreement dated April 1, 2006 between registrant and JMC Investments, L.L.C., incorporated by reference to registrant’s Annual Report, as amended, on Form 10-KSB/A, as filed with the SEC on July 19, 2006.
10.19		Subcontractor Purchase Agreement dated May 20, 2006 between registrant and Spectral Response, Inc, incorporated by reference to registrant’s Current Report on Form 8-K, as filed with the SEC on July 28, 2006.
10.20		Form Offer of Employment, incorporated by reference to registrant’s Annual Report, as amended, on Form 10-KSB/A, as filed with the SEC on July 19, 2006.
10.21		Executive Employment Agreement of Jon D. Berkley dated May 15, 2007, incorporated by reference to registrant’s Quarterly Report on Form 10-QSB, as filed with the SEC on August 14, 2007.(1)
10.22		Form of Non-Qualified Stock Option Agreement, incorporated by reference to registrant’s Quarterly Report on Form 10-QSB, as filed with the SEC on November 19, 2007.
10.23		Form of Warrant Agreement, incorporated by reference to registrant’s Quarterly Report on Form 10-QSB, as filed with the SEC on November 19, 2007.
10.24		Asset Acquisition Agreement between registrant, Las Vegas Gaming Acquisition Corp., Adline Network Holdings, Inc., Adline Media, LLC, Adline Network, LLC, Freeview Network, LLC, Sam Johnson and Larry L. Enterline dated September 29, 2008 , incorporated by reference to registrant’s Current Report on Form 8-K, as filed with the SEC on October 3, 2008.
10.25		Investment Agreement between registrant and IGT dated September 30, 2008, incorporated by reference to registrant’s Current Report on Form 8-K, as filed with the SEC on October 7, 2008.
10.26		Form of Warrant to purchase Common Stock and Common Stock Series A issuable to IGT, incorporated by reference to registrant’s Current Report on Form 8-K, as filed with the SEC on October 7, 2008.

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Exhibit		Document Description
3.10		Amended and Restated Certificate of Designation for Series E Convertible Preferred Stock, as filed with the Nevada Secretary of State on October 22, 2008, incorporated by reference to registrant’s Current Report on Form 8-K, as filed with the SEC on October 28, 2008.
10.27		Satisfaction and Termination Agreement between registrant, Imagineering Gaming, Inc., Las Vegas Keno, Inc. and CAMOFI Master LDC dated October 24, 2008, incorporated by reference to registrant’s Current Report on Form 8-K, as filed with the SEC on October 28, 2008.
3.11		Amended and Restated Certificate of Designation for Series F Convertible Preferred Stock, as filed with the Nevada Secretary of State on October 22, 2008, incorporated by reference to registrant’s Current Report on Form 8-K, as filed with the SEC on October 28, 2008.
10.28		First Amendment to Warrants between registrant and CAMOFI Master LDC dated October 24, 2008, incorporated by reference to registrant’s Current Report on Form 8-K, as filed with the SEC on October 28, 2008.
3.12		Amended and Restated Certificate of Designation for Series G Convertible Preferred Stock, as filed with the Nevada Secretary of State on October 22, 2008, incorporated by reference to registrant’s Current Report on Form 8-K, as filed with the SEC on October 28, 2008.
10.29		License Application and Support Agreement between registrant and IGT dated September 30, 2008, incorporated by reference to registrant’s Quarterly Report on Form 10-Q, as filed with the SEC on November 19, 2008.(2)
3.13		Amended and Restated Certificate of Designation for Series H Convertible Preferred Stock, as filed with the Nevada Secretary of State on October 22, 2008, incorporated by reference to registrant’s Current Report on Form 8-K, as filed with the SEC on October 28, 2008.
10.30		Intellectual Property Access Agreement between registrant and IGT dated September 30, 2008, incorporated by reference to registrant’s Quarterly Report on Form 10-Q, as filed with the SEC on November 19, 2008.
3.14		Certificate of Designation for Series I Preferred Stock, as filed with the Nevada Secretary of State on October 22, 2008, incorporated by reference to registrant’s Current Report on Form 8-K, as filed with the SEC on October 28, 2008.
10.31		Retrofit License Agreement between registrant and IGT dated September 30, 2008, incorporated by reference to registrant’s Quarterly Report on Form 10-Q, as filed with the SEC on November 19, 2008.(2)
3.15		Restated Bylaws of registrant, incorporated by reference to registrant’s Registration Statement on Form 8-A12G, as filed with the SEC on January 26, 2009.
10.32		Binding Term Sheet between registrant and IGT dated February 13, 2009, incorporated by reference to registrant’s Annual Report on Form 10-K, as filed with the SEC on April 8, 2009.(3)
10.1		Stock Option Plan (2000), incorporated by reference to Appendix A of registrant’s definitive proxy statement dated October 29, 2007, as filed with the SEC on October 29, 2007.(1)
10.33		(*) Security Agreement dated May 22, 2009 between registrant and IGT.
10.2		First Amendment to the Stock Option Plan (2000), incorporated by reference to Appendix B of registrant’s definitive proxy statement dated October 29, 2007, as filed with the SEC on October 29, 2007.(1)
10.34		(*) Patent Security Agreement dated May 22, 2009 between registrant and IGT.
10.3		Consulting Agreement dated March 31, 2005 by and between registrant and Michael Shillan/Shillan Co., LLC, incorporated by reference to registrant’s Annual Report, as amended, on Form 10-KSB/A, as filed with the SEC on July 19, 2006.
10.35		(*) Trademark Security Agreement dated May 22, 2009 between registrant and IGT.
10.4		Gamblers Bonus Sweepstakes Agreement dated March 31, 2005 between registrant and United Coin Machine Company, incorporated by reference to registrant’s Annual Report, as amended, on Form 10-KSB/A, as filed with the SEC on July 19, 2006.
10.36		Technology Royalty Agreement dated August 6, 2009 between registrant and Perfect Storm Software, LLC, incorporated by reference to registrant’s Quarterly Report on Form 10-Q, as filed with the SEC on August 19, 2009.
10.5		License Agreement dated July 8, 2005 between registrant and Leroy’s Sports and Horse Place, incorporated by reference to registrant’s Annual Report, as amended, on Form 10-KSB/A, as filed with the SEC on July 19, 2006.
10.37		Asset Purchase Agreement dated August 19, 2009 between registrant and Gaming Arts, LLC, incorporated by reference to registrant’s Current Report on Form 8-K/A, as filed with the SEC on August 27, 2009.
10.6		License Agreement dated July 11, 2005 between registrant and Leroy’s Sports and Horse Place, incorporated by reference to registrant’s Annual Report, as amended, on Form 10-KSB/A, as filed with the SEC on July 19, 2006.
10.38		(*) Amended Security Agreement dated September 2, 2009 between registrant and Gaming Arts, LLC.
10.7		Memorandum of Understanding for the Use of PortalVision for Account Wagering between registrant and Computerized Bookmaking Systems, Inc., incorporated by reference to registrant’s Annual Report, as amended, on Form 10-KSB/A, as filed with the SEC on July 19, 2006.
10.39		Asset Purchase Agreement dated November 4, 2009 between registrant and Session Gaming, LLC, incorporated by reference to registrant’s Current Report on Form 8-K, as filed with the SEC on November 20, 2009.
10.8		Waiver and Release Agreement dated February 1, 2006 between registrant and AdLine Network, LLC incorporated by reference to registrant’s Annual Report on Form 10-KSB, as filed with the SEC on April 17, 2006.
10.40		Secured Promissory Note dated June 1, 2009 in favor of IGT, incorporated by reference to registrant’s Quarterly Report on Form 10-Q, as filed with the SEC on November 23, 2009.
10.9		Assignment Agreement dated February 1, 2006 between registrant and AdLine Network, LLC, incorporated by reference to registrant’s Annual Report, as amended, on Form 10-KSB/A, as filed with the SEC on July 19, 2006.
10.41		First Addendum to Intellectual Property Access Agreement between registrant and IGT dated September 4, 2009 (to be effective June 1, 2009), incorporated by reference to registrant’s Quarterly Report on Form 10-Q, as filed with the SEC on November 23, 2009.
10.42		First Addendum to License and Application Support Agreement between registrant and IGT dated September 4, 2009 (to be effective June 1, 2009), incorporated by reference to registrant’s Quarterly Report on Form 10-Q, as filed with the SEC on November 23, 2009.(4)
10.43		(*) Security Agreement dated November 5, 2009 between registrant and Gaming Arts, LLC.
10.44		(*) Security Agreement dated December 18, 2009 between registrant and Gaming Arts, LLC.
10.45		(*) Security Agreement dated December 30, 2009 between registrant and Gaming Arts, LLC.
10.46		(*) Security Agreement dated March 11, 2010 between registrant and Gaming Arts, LLC.

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Exhibit		Document Description
10.10		Securities Purchase Agreement dated March 31, 2006 between registrant and CAMOFI Master LDC, incorporated by reference to registrant’s Current Report on Form 8-K, as filed with the SEC on April 7, 2006.
10.47		(*) Stock Repurchase Agreement entered into as of January 1, 2010 between registrant and Triangle Holdings VI LLC.
10.11		Amended and Restated Senior Secured Convertible Note with Original Issue Date of March 31, 2006 in favor of CAMOFI Master LDC, incorporated by reference to registrant’s Quarterly Report on Form 10-Q, as filed with the SEC on August 19, 2008.
21.1		(*) List of Subsidiaries of Registrant.
10.12		Amended and Restated Registration Rights Agreement dated April 30, 2008 between registrant and CAMOFI Master LDC, incorporated by reference to registrant’s Quarterly Report on Form 10-Q, as filed with the SEC on August 19, 2008.
31.1		(*) Certification of Chief Executive Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
10.13		Warrant Agreement dated March 31, 2006 between registrant and CAMOFI Master LDC, incorporated by reference to registrant’s Annual Report, as amended, on Form 10-KSB/A, as filed with the SEC on July 19, 2006.
31.2		(*) Certification of Chief Financial Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
10.14		Security Agreement dated March 31, 2006 between registrant and CAMOFI Master LDC, incorporated by reference to registrant’s Annual Report, as amended, on Form 10-KSB/A, as filed with the SEC on July 19, 2006.
32.1		(*) Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
10.15		First Amendment to Security Agreement dated April 30, 2008, incorporated by reference to registrant’s Quarterly Report on Form 10-Q, as filed with the SEC on August 19, 2008
(*)		Filed herewith.
10.16		Subsidiary Guarantee dated March 31, 2006 between registrant and CAMOFI Master LDC, incorporated by reference to registrant’s Annual Report, as amended, on Form 10-KSB/A, as filed with the SEC on July 19, 2006.
(1)		Management contracts or compensatory plans or arrangements that were previously filed as exhibits pursuant to Item 601(b)(10)(iii) of Regulation S-K.
10.17		First Amendment to Subsidiary Guarantee dated April 30, 2008, incorporated by reference to registrant’s Quarterly Report on Form 10-Q, as filed with the SEC on August 19, 2008.
(2)		Confidential treatment has been granted by the SEC for portions of this exhibit. These portions have been omitted from the exhibit as filed with the registrant’s Quarterly Report on Form 10-Q, as filed with the SEC on November 19, 2008.
10.18		Satisfaction and Termination Agreement between registrant, Imagineering Gaming, Inc., Las Vegas Keno, Inc. and CAMOFI Master LDC dated October 24, 2008, incorporated by reference to registrant’s Current Report on Form 8-K, as filed with the SEC on November 19, 2008.
(3)		Confidential treatment has been granted for portions of this exhibit. These portions have been omitted from the exhibit as filed with the registrant’s Annual Report on Form 10-K, as filed with the SEC on April 8, 2009.
10.19		First Amendment to Warrants between registrant and CAMOFI Master LDC dated October 24, 2008, incorporated by reference to registrant’s Current Report on Form 8-K, as filed with the SEC on November 19, 2008.
(4)		Confidential treatment has been requested by the SEC for portions of this exhibit. These portions have been omitted from the exhibit as filed with the registrant’s Quarterly Report on Form 10-Q, as filed with the SEC on November 23, 2009.
10.20		Investment Agreement between registrant and IGT dated September 30, 2008, incorporated by reference to registrant’s Current Report on Form 8-K, as filed with the SEC on November 19, 2008.
10.21		Form of Warrant to purchase Common Stock and Common Stock Series A issuable to IGT, incorporated by reference to registrant’s Current Report on Form 8-K, as filed with the SEC on November 19, 2008.
10.22		License Application and Support Agreement between registrant and IGT dated September 30, 2008, incorporated by reference to registrant’s Quarterly Report on Form 10-Q, as filed with the SEC on November 19, 2008.(2)
10.23		Intellectual Property Access Agreement between registrant and IGT dated September 30, 2008, incorporated by reference to registrant’s Quarterly Report on Form 10-Q, as filed with the SEC on November 19, 2008.
10.24		Retrofit License Agreement between registrant and IGT dated September 30, 2008, incorporated by reference to registrant’s Quarterly Report on Form 10-Q, as filed with the SEC on November 19, 2008.(2)

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Exhibit		Document Description
10.25		Binding Term Sheet between registrant and IGT dated February 13, 2009, filed herewith.(3)
10.26		Consulting Agreement dated April 1, 2006 between registrant and JMC Investments, L.L.C., incorporated by reference to registrant’s Annual Report, as amended, on Form 10-KSB/A, as filed with the SEC on July 19, 2006.
10.27		Subcontractor Purchase Agreement dated May 20, 2006 between registrant and Spectral Response, Inc, incorporated by reference to registrant’s Current Report on Form 8-K, as filed with the SEC on July 28, 2006.
10.28		Asset Acquisition Agreement between registrant, Las Vegas Gaming Acquisition Corp., Adline Network Holdings, Inc., Adline Media, LLC, Adline Network, LLC, Freeview Network, LLC, Sam Johnson and Larry L. Enterline dated September 29, 2008 , incorporated by reference to registrant’s Current Report on Form 8-K, as filed with the SEC on November 19, 2008.
10.29		Form Offer of Employment, incorporated by reference to registrant’s Annual Report, as amended, on Form 10-KSB/A, as filed with the SEC on July 19, 2006.
10.30		Executive Employment Agreement of Jon D. Berkley dated May 15, 2007, incorporated by reference to registrant’s Quarterly Report on Form 10-QSB, as filed with the SEC on August 14, 2007.(1)
10.31		Form of Non-Qualified Stock Option Agreement, incorporated by reference to registrant’s Quarterly Report on Form 10-QSB, as filed with the SEC on November 19, 2007.
10.32		Form of Warrant Agreement, incorporated by reference to registrant’s Quarterly Report on Form 10-QSB, as filed with the SEC on November 19, 2007.
21.1		List of Subsidiaries of Registrant, filed herewith.
31.1		Certification of Chief Executive Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.
31.2		Certification of Chief Financial Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.
32.1		Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.
(1)		Management contracts or compensatory plans or arrangements that were previously filed as exhibits pursuant to Item 601(b)(10)(iii) of Regulation S-K.
(2)		Confidential treatment has been granted by the SEC for portions of this exhibit. These portions have been omitted from the exhibit as filed with the registrant’s Quarterly Report on Form 10-Q, as filed with the SEC on November 19, 2008.
(3)		Confidential treatment has been requested for portions of this exhibit. These portions have been omitted from the exhibit filed with this Annual Report on Form 10-K and have been filed separately with the SEC.

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