NOTE 8. ACCRUED EXPENSES

Accrued expenses consisted of the following at December 31, 2017 and 2016:

TableMAX license fee. Under the terms of the TMAX Agreement, we hold exclusive worldwide rights (excluding one international territory and two U.S. states) to the TMAX electronic gaming platform and certain related game titles.  Pursuant to the terms of the TMAX Agreement, the licensee fee payable to TMAX is dependent upon our generating profitable operating results specifically from the use of TMAX products.  To the extent there are net profits (as defined in the TMAX Agreement), a percentage of such net profits is payable to TMAX depending on the number of TMAX product installations.  Effective December 29, 2017, we entered into the First Amendment to the TMAX Agreement with TMAX to, among other things, allow us to retain all net profits generated after the date of the First Amendment and terminate the TMAX Agreement effective upon the earliest of (1) December 31, 2019; (2) termination of game placements at the remaining TableMAX clients; or (3) regulatory approval received by TMAX to service the remaining clients independently. In January 2018, in connection with the First Amendment and the Settlement and Release Agreement, we paid the previously accrued amount of $774,645 to an assignee of TMAX. As such, the liability was reclassified to accounts payable from accrued expenses as of December 31, 2017.