California administrative licensing action update – On July 11, 2013 we received notice that the California Gambling Control Commission (“Commission”) denied the applications of our CEO Robert Saucier and related party Galaxy Gaming of California, LLC (“GGCA”) for a finding of suitability (the “Finding”). The Commission’s decision related to Mr. Saucier personally, and GGCA, which is a predecessor entity to our Company. The Commission confirmed in a letter dated July 25, 2013 that it would not issue a stay or reconsider the matter further.

As a result of this decision, the Department of Justice of the State of California, on August 1, 2013, issued a letter returning our application for a Finding of Suitability, declining to process our corporate application in California as well.

On August 9, 2013, GGCA and Mr. Saucier filed and served a petition for writ of mandate with the Sacramento County Superior Court, asking the Court to issue a writ directing the Commission to find GGCA and Mr. Saucier suitable. There can be no assurances that the judicial review will be successful or that our CEO will be found suitable. The Finding against Mr. Saucier, as demonstrated by the return of our application by the Department of Justice of the State of California, has and will subject us to certain increased, material, known and unknown risks and uncertainties of materially adverse effects on our business and/or prospects, including possible restrictions against us from doing business in California (and possibly other states). We are currently having discussions with various regulators as to the options available to us.

In accordance with ASC 855-10, we have analyzed our operations subsequent to June 30, 2013 to the date these financial statements were issued, and have determined that we do not have any material subsequent events to disclose in these financial statements, other than the events discussed above.