PlayAGS (AGS) 8-K/A Completion of Acquisition or Disposition of Assets

EXHIBIT 99.3

Cadillac Jack, Inc. and Subsidiaries

An Indirect Wholly Owned Subsidiary of Amaya Gaming Group Inc.

Consolidated Financial Statements as of March 31, 2015 and for the three-month periods ended March 31, 2015 and March 31, 2014 (Unaudited)

CADILLAC JACK, Inc. AND SUBSIDIARIES

(An Indirect Wholly Owned Subsidiary of Amaya Gaming Group Inc.)

TABLE OF CONTENTS
	Page
CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2015 AND MARCH 31, 2014 (UNAUDITED):
Balance Sheet	3
Statements of Income (Loss) and Comprehensive Income (Loss)	5
Statements of Stockholder’s Deficit	6
Statements of Cash Flows	7
Notes to Consolidated Financial Statements	8

CADILLAC JACK, INC. AND SUBSIDIARIES
(An Indirect Wholly Owned Subsidiary of Amaya Gaming Group Inc.)
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
AS OF MARCH 31, 2015 AND DECEMBER 31, 2014
	March 31,		December 31,
	2015		2014
ASSETS
CURRENT ASSETS:
Cash	$	5,358,416	$	7,585,794
Due from Amaya	720,000		—
Accounts receivable — net	13,019,827		13,744,808
Inventory — net	5,665,752		5,645,324
Other current receivables	1,277,514		1,499,756
Current portion of deferred costs	1,068,000		1,068,000
Prepaid expenses and other current assets	1,436,597		1,563,080
Current deferred tax assets	285,818		238,853
Total current assets	28,831,924		31,345,615
PROPERTY AND EQUIPMENT — Net	25,472,064		25,956,330
OTHER ASSETS:
Deferred financing costs	227,908		239,269
Intangible assets — net	11,258,894		10,965,433
Deferred costs	2,314,000		2,581,000
Other noncurrent assets	1,553,163		1,753,182
TOTAL ASSETS	$	69,657,953	$	72,840,829
LIABILITIES AND STOCKHOLDER’S DEFICIT
CURRENT LIABILITIES:
Accounts payable and accrued expenses	$	4,637,264	$	5,399,876
Accrued sales and value-added taxes	1,238,796		1,315,198
Income tax payable	50,145		—
Current portion of long-term debt	2,400,000		2,400,000
Current portion of obligations under capital lease	412,245		523,072
Total current liabilities	8,738,450		9,638,146
LONG-TERM LIABILITIES:
Long-term debt — net of current portion and discounts	327,545,412		325,997,834
Other long-term liabilities	2,491,021		2,567,264
Noncurrent deferred tax liabilities	285,823		238,853
Obligations under capital lease — net of current portion	240,051		315,650
Total liabilities	339,300,757		338,757,747

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COMMITMENTS AND CONTINGENCIES (Note 12)
STOCKHOLDER’S DEFICIT:
Common stock — voting; $0.01 par value — authorized, issued, and outstanding, 1,000 shares	10			10
Additional paid-in capital	—			—
Accumulated other comprehensive income (loss)	1,674,662			973,671
Accumulated deficit	(161,317,476		)	(156,890,599		)
Deemed distribution	(110,000,000		)	(110,000,000		)
Total stockholder’s deficit	(269,642,804		)	(265,916,918		)
TOTAL LIABILITIES AND STOCKHOLDER’S DEFICIT	$	69,657,953		$	72,840,829

See notes to consolidated financial statements.

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CADILLAC JACK, INC. AND SUBSIDIARIES
(An Indirect Wholly Owned Subsidiary of Amaya Gaming Group Inc.)
CONSOLIDATED STATEMENTS OF (LOSS)/INCOME AND COMPREHENSIVE (LOSS)/INCOME
(UNAUDITED)
	Three months ended March 31,
	2015	2014
NET SALES	$ 19,025,181	$ 21,298,618
SALES TO AMAYA	720,000
TOTAL NET SALES	19,745,181	21,298,618
COST OF GOODS AND SERVICES	6,197,860	6,623,249
SELLING, GENERAL, AND ADMINISTRATIVE	7,309,783	7,324,709
INCOME FROM OPERATIONS	6,237,538	7,350,660
OTHER INCOME (EXPENSE):
Interest expense	(9,413,249)	(3,346,330)
Gain/(Loss) on foreign currency transactions	(891,496)	58,842
Total other expense	(10,304,745)	(3,287,488)
NET (LOSS) INCOME BEFORE INCOME TAXES	(4,067,207)	4,063,172
INCOME TAX EXPENSE	(589,979)	(1,911,827)
NET (LOSS) INCOME	(4,657,186)	2,151,345
OTHER COMPREHENSIVE INCOME/(LOSS) — Foreign
currency translation	700,991	(3,493)
COMPREHENSIVE (LOSS) INCOME	$ (3,956,195)	$ 2,147,852

See notes to consolidated financial statements.

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CADILLAC JACK, INC. AND SUBSIDIARIES
(An Indirect Wholly Owned Subsidiary of Amaya Gaming Group Inc.)
CONSOLIDATED STATEMENTS OF STOCKHOLDER’S DEFICIT (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2015
	Common Stock Class A
	Shares	Amount		Additional Paid-In Capital	Accumulated Other Comprehensive Loss		Accumulated Deficit			Deemed Distribution			Total Stockholder’s Deficit
BALANCE — December 31, 2014	1,000	10		—	973,671		(156,890,599		)	(110,000,000		)	(265,916,918		)
Stock compensation expense	—	—		—	—		132,115			—			132,115
Excess tax benefit from stock compensation	—	—		—	—		98,194			—			98,194
Other comprehensive income	—	—		—	700,991					—			700,991
Net loss	—	—		—	—		(4,657,186		)	—			(4,657,186		)
BALANCE — March 31, 2015	1,000	$	10	—	$	1,674,662	$	(161,317,476	)	$	(110,000,000	)	$	(269,642,804	)

See notes to consolidated financial statements.

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CADILLAC JACK, INC. AND SUBSIDIARIES
(An Indirect Wholly Owned Subsidiary of Amaya Gaming Group Inc.)
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
	Three months ended March 31,
	2015			2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income	$	(4,657,189	)	$	2,151,345
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation of property and equipment	2,748,228			2,589,102
Amortization of intangible assets	1,245,857			1,133,592
Deferred taxes	98,197			1,464,105
Share-based compensation	132,115			186,278
Excess tax benefits from share-based compensation	(98,194		)	(10,089		)
Amortization of deferred financing costs and discounts	329,550			100,775
Unrealized Loss / (Gain) on currency conversion	891,496			(58,842)
Loss on sale of property, equipment and intangibles	24,548			18,368
Write-off of licenses and software	14,910			61,481
Costs related to sales of previously leased gaming machines and third-party licenses	155,584			196,333
Costs related to sales of gaming machines under capital lease	0			202,527
Provision for doubtful accounts	283,669			81,491
Inventory write-down	21,138			(38,280)
Interest paid in kind	1,829,389			0
Changes in assets and liabilities:
Accounts receivable	331,891			(1,502,027)
Inventory	(445,598		)	(1,013,133		)
Other current receivables	175,464			99,289
Prepaid expenses and other current assets	121,759			331,919
Other noncurrent assets	193,626			(603,328)
Accounts payable and accrued expenses	(818,714		)	(589,232		)
Accrued sales and valued-added taxes	51,011			19,035
Other long-term liabilities	(13,557		)	7,603
Due to / from Amaya	(720,000		)	332,918
Net cash provided by operating activities	1,895,180			5,161,230
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to gaming operation equipment and other property and equipment	(2,121,112		)	(1,298,167		)
Payments to acquire or license intangible assets	(1,258,259		)	(1,091,287		)
Release of restricted cash	0			5,000,000
Net cash (used in) provided by investing activities	(3,379,371		)	2,610,546
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on long-term debt	(600,000		)	(590,247		)
Payment of restricted cash to Amaya	0			(5,000,000)
Excess tax benefits from share-based compensation	98,194			10,089
Payments of obligations under capital leases	(186,426		)	(229,989		)
Net cash used in financing activities	(688,232		)	(5,810,147		)
NET INCREASE IN CASH	(2,172,423		)	1,961,629
EFFECT OF EXCHANGE RATES ON CASH	(54,955		)	14,183
CASH — Beginning of period	7,585,794			14,252,639
CASH — End of period	5,358,416			16,228,451
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for interest	7,296,262			3,229,550
Cash paid during the year for income taxes	387,674			451,232

See notes to consolidated financial statements.

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CADILLAC JACK, INC. AND SUBSIDIARIES

(An Indirect Wholly Owned Subsidiary of Amaya Gaming Group Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

1. The Company

Cadillac Jack, Inc. and subsidiaries (the “Company”), an indirect wholly owned subsidiary of Amaya Gaming Group Inc. (“Amaya”), is a diversified gaming company that specializes in the design, manufacturing, operation, sales, and servicing of gaming technologies for the global gaming marketplace. The Company’s sales and marketing efforts focus on Native American Class II and Class III commercial gaming markets. The Company markets throughout the United States and international gaming markets, primarily Mexico.

The Company was acquired by Amaya, a publicly listed corporation incorporated in Quebec, Canada, by way of a merger with Odyssey Acquisition Corporation (an indirect subsidiary of Amaya). The effective date of the acquisition was November 5, 2012. Amaya’s common shares are listed on the Toronto Stock Exchange under the symbol “AYA.”

On March 30, 2015 Amaya entered into an agreement with AGS, LLC (“AGS”, doing business as American Gaming Systems and an affiliate of funds managed by Apollo Global Management) to sell Company’s indirect parent company Amaya Americas Corporation to AGS. The transaction is expected to close in 2015, subject to receipt of gaming regulatory and antitrust approvals, and other customary closing conditions. As a result of the transaction the Company will become an indirect wholly owned subsidiary of AGS.

2. Summary of Significant Accounting Policies

Principles of Presentation and Consolidation - The accompanying consolidated financial statements include the accounts of Cadillac Jack, Inc., and the following wholly owned subsidiaries: Comercializadora de Juegos Cadillac Jack de Mexico, Servicios Administrativos CJ de Mexico, and Equipos y Soluciones Tecnologicas. The accompanying consolidated financial statements have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, certain disclosures required by generally accepted accounting principles (“GAAP”) are omitted or condensed in these consolidated financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) that are necessary to present fairly the Company's financial position, results of operations and cash flows for the interim periods have been made. The interim results reflected in these consolidated financial statements are not necessarily indicative of results to be expected for the full fiscal year.

All intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates - The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reported period. Estimates are used for, but not limited to, the accounting for doubtful accounts, allowance for obsolete inventory, lease receivables, sales tax accrual, revenue recognition, warrants, stock options, deferred taxes, contingencies, and useful lives of property and equipment and intangible assets in determining depreciation and amortization, respectively. Actual results could differ from those estimates.

Revenue Recognition - The Company recognizes revenue when all of the following have been satisfied:

• Persuasive evidence of an arrangement exists.

• The price to the customer is fixed and determinable.

• Delivery has occurred.

• Collection is reasonably assured.

Gaming Operations Revenue - Gaming operations revenue consists of the operation of linked progressive systems and the rental of gaming devices, game content, and the related systems placed with customers. Fees under these arrangements are earned and recognized based on a share of money wagered, a share of the net winnings, or on a fixed daily rate. The daily fee entitles the customer to full use of the gaming device and includes maintenance, licensing of the

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game content software, and connection to a linked progressive system, where applicable. In certain markets, the Company also charges a daily system connection fee for the customer to connect to a central determination system and/or back-office system. The Company does not consider these arrangements to have multiple revenue-generating activities as the services offered are a comprehensive solution in exchange for a daily fee. All of the products and services delivered simultaneously provide the customer with rights to use tangible gaming devices and software that is essential to the functionality of the gaming devices. Gaming operations revenue is recognized under general revenue recognition guidance as the services are delivered.

Wide Area Progressive (WAP) - WAP systems consist of linked slot machines located in multiple casino properties, which connect to the Company’s central computer system. WAP games differ from stand‑alone units in that a progressive jackpot increases with every wager until a player wins the top award. Revenues are recognized for each gaming machine based upon a percentage of amounts wagered on the gaming machine. Revenues are recognized as earned and when collectability is reasonably assured. Jackpots are payable immediately at the time the prize is awarded to the player and recorded as costs of goods sold.

The Company’s product sales revenues are generated from the sale of gaming machines and parts. Product sales are recognized upon delivery.

Service revenues include support and maintenance on machines, engineering services, installation, and management services. Services are recognized as they are provided.

Software License Fees - The Company also earns license fees from customers. License fees are generally billed at fixed monthly amounts per machine and recognized over the license period.

Multiple-Element Arrangements - The Company enters into revenue arrangements that may consist of multiple deliverables of its products and services. For example, customers may enter into arrangements with the Company for the implementation of systems software and the sale of gaming devices. Arrangements for the implementation of systems software will generally include a combination of systems software licenses, systems-based hardware products, maintenance and product support fees, and professional services. Certain gaming equipment arrangements may also include the sale of gaming devices. For sales arrangements with multiple deliverables, the Company divides deliverables into separate units of accounting, if:

• The delivered items have stand‑alone value to the customer. The items have value on a stand-alone basis if they are sold separately by any vendor or the customer could resell the delivered items on a stand-alone basis.

• Delivery of any undelivered item is considered probable and substantially in the Company’s control.

The arrangement price is allocated to each of the elements based on the estimated selling prices of each element. Estimated selling prices are the Company’s best estimates of the prices that would be charged to customers if the stand-alone elements were separately sold and include considerations of prices charged by the Company for similar deliverables. The revenue related to the gaming machines and license fees and related costs are recognized upon delivery. Revenue related to revenue share is recognized over the estimated life of the arrangement as the service is performed, which ranges from one to five years.

For arrangements that do not qualify for separate units of accounting, the up-front fees paid are recorded as deferred revenue and the up-front expenses incurred are capitalized as deferred costs. Revenue and costs are amortized over the estimated life of the arrangement.

In certain operating lease arrangements, the Company makes payments to customers early in the lease term as an incentive. These payments are accounted for as lease incentives and accordingly deferred and recognized ratably over the lease term as a reduction of revenue. There are no lease incentive payments contractually required to be made in 2015.

Customer Financing - Contracts with customers for gaming machine purchases include extended terms of three to five years. These agreements are secured by the related products sold. The contracts are individually reviewed for impairment and any allowance is based on a probability of collection analysis.

Restricted Cash - Restricted cash is the contractual amount held by a financial institutions pursuant to the term loans (see Note 11).

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Allowance for Doubtful Accounts - The allowance for doubtful accounts represents the Company’s best estimate of probable future losses in the accounts receivable balance. This estimate is based on historical experience and other currently available evidence.

Inventory - Inventory is stated at the lower of cost or market using standard costs, which approximates the weighted-average method of valuing inventory. Inventory specifically allocated to manufacture gaming machines to be placed under revenue-sharing arrangements is reclassed to gaming machines under construction, included in property and equipment.

Inventory at March 31, 2015 and December 31, 2014 is composed of the following categories:

	3/31/2015	12/31/2014
Manufactured finished goods and work in process	$ 825,348	$1,020,452
Raw materials and parts inventory	4,977,934	4,741,688
Less allowance for obsolete inventory	(137,529)	(116,816)
Total inventory — net	$5,665,753	$5,645,324

Property and Equipment - The Company has property and equipment located throughout the United States and Mexico that are carried at cost. Expenditures for maintenance and repairs are expensed, while costs incurred for renewals and refurbishments that materially extend the life of the property and equipment are capitalized. Upon the sale, retirement or disposal of property and equipment, the asset cost and accumulated depreciation is eliminated from the financial statements. Any resulting gain or loss is included in operations. Sales of used games previously classified as gaming machinery and equipment are included in net sales, and the related net book value is included in cost of goods and services in the consolidated statements of (loss) income and comprehensive (loss) income.

Long‑lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the assets to their estimated future undiscounted cash flows. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount that the carrying amount of the assets exceeds the fair value of the assets. The Company recorded no impairment charges for the three-month periods ended March 31, 2015 and March 31, 2014, respectively.

Depreciation is provided using the straight-line method over the estimated useful lives of the assets, which are as follows:

Computer equipment and software	3–5 years
Leasehold improvements	Shorter of lease term or useful life
Machinery and equipment	5–7 years
Gaming machines and equipment	5 years
Office furniture and fixtures	7–10 years
Vehicles	5 years

Gaming machines under construction and completed games not yet shipped are included in property and equipment if specifically allocated to a revenue-sharing arrangement.

Shipping and Handling Costs - The Company classifies shipping and handling amounts billed to customers as net sales and shipping and handling costs incurred as a component of cost of goods and services.

Advertising - Advertising is expensed as incurred. Advertising costs were approximately $119,000 and $321,000 for the three-month periods ended March 31, 2015 and 2014, respectively.

Stock Compensation - The Company accounts for new and modified share‑based payment transactions with employees, such as stock options and restricted stock awards, based on their fair values. Compensation expense is recognized over the vesting period (see Note 9).

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Income Taxes - The Company accounts for income taxes using the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences of differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates scheduled to be in effect when temporary differences are expected to be recovered or settled. The effect of a change in enacted tax rates on the deferred tax assets and liabilities is recognized in income in the financial statement period when the new tax rates are enacted. The Company assesses the realizability of its deferred tax assets annually and records a valuation allowance when it is determined that it is more likely than not that a deferred tax asset will not be realized.

The Company recognizes uncertain tax positions taken or expected to be taken in a tax return when they are “more likely than not” to be sustained upon examination. A recognized tax position is recorded in the consolidated financial statements at the largest amount of benefit that has a greater than 50% likelihood of being realized upon settlement. Differences between the estimated liabilities and the amounts paid upon ultimate resolution with the taxing authorities are reflected as increases or decreases to income tax expense in the period in which they are determined.

The Company recognizes interest and penalties related to uncertain tax positions. Interest is included within interest expense.

Deferred Financing Costs and Debt Discounts - Deferred financing costs and debt discounts, including common stock warrants (Note 11), are amortized using the effective interest method over the term of the loan to which they relate. Amortization expense is estimated to be approximately $1,164,000 for nine months ending December 31, 2015, $1,967,000, $2,523,000, $3,197,000, $3,668,000 and $1,525,000 for the years ending December 31, 2016, 2017, 2018, 2019 and 2020, respectively.

Research and Development and Software Development Costs - Capitalization of software development costs begins upon the establishment of technological feasibility of the product. The establishment of technological feasibility and the ongoing assessment of the recoverability of these costs requires considerable judgment by management with respect to certain external factors, including, but not limited to, anticipated future gross product revenue, estimated economic life, and changes in software and hardware technology.

The Company expenses all research and development costs associated with the establishment of technological feasibility for its software products to research and development costs. From the time of establishing technological feasibility through general release of the product, the Company capitalizes software development costs and reports them in the consolidated balance sheets as a component of capitalized software at the lower of unamortized cost or net realizable value. The Company amortizes capitalized software development costs upon general release of the product to customers and computes amortization on the greater of the amounts computed using the ratio of current gross revenues the product bears to the total of current and anticipated future gross revenues or the straight-line method over the estimated economic life of the product, generally three years.

The Company expensed research and development costs of approximately $3,174,000 and $3,070,000, included in selling, general, and administrative expense, for the three-month periods ended March 31, 2015 and 2014, respectively. The Company capitalized costs related to game certification of approximately $875,000 and $415,000 for the three-month periods ended March 31, 2015 and 2014, respectively. The Company also capitalized license fees paid to third parties of approximately $260,000 and $464,000 for the three-month periods ended March 31, 2015 and 2014, respectively.

Foreign Currency Translation and Transactions - The Mexican peso is used as the functional currency for the Company’s subsidiaries located in Mexico. Assets and liabilities denominated in the foreign currency are translated into U.S. dollars using the exchange rate in effect at the consolidated balance sheet dates. Revenues, expenses, and cash flows are translated at the average exchange rate in effect during the year. The foreign currency loss of $891,496 and income of $58,841 for the three-month periods ended March 31, 2015 and 2014, respectively, included in net (loss) income primarily relates to the effects of foreign exchange rate changes between the Mexican Peso and short-term intercompany loans denominated in the U.S. dollar.

Fair Value of Financial Instruments - The Company’s financial instruments, including cash, accounts receivable, accounts payable, and accrued expenses, are carried at cost, which approximates their fair value due to short maturities. The carrying value of long-term debt approximates its fair value.

Subsequent Events - The Company evaluated subsequent events through May 15, 2015, the date on which these consolidated financial statements were issued.

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Recently Issued Accounting Guidance - In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which changes the accounting guidance related to revenue recognition. The updated accounting guidance provides a single, contract-based revenue recognition model to help improve financial reporting by providing clearer guidance on when an entity should recognize revenue, and by reducing the number of standards to which entities have to refer. The guidance also expands the required disclosures related to revenue recognition. This guidance is effective on January 1, 2018, and early adoption is permitted. The updated accounting guidance allows for either a full retrospective adoption or modified retrospective adoption. The Company is currently evaluating the impact and method of adoption of ASU No. 2014-09 on its consolidated financial statements.

In July 2013, the FASB issued ASU 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists, that requires companies to present unrecognized tax benefits as a reduction to deferred tax assets when a net operating loss (NOL) carryforward, a similar tax loss or a tax credit carryforward exists, with limited exceptions. The amendments in guidance are effective for fiscal years, and interim periods within those years, beginning after December 15, 2014. The Company adopted early with no material impact on the consolidated financial statements.

3. Accounts Receivable

The Company extends credit to customers located throughout North America and Latin America based on the size of the company, its payment history, and other factors. The Company does not require collateral for its accounts receivable. The amount of accounting loss due to credit risk the Company would incur if the parties to the accounts receivable failed to perform according to the terms of the agreement would be the balance of the accounts receivable - net of the allowance for doubtful accounts. Accounts receivable at March 31, 2015 and December 31, 2014, consisted of the following:

	3/31/2015		12/31/2014
Trade receivable	$	11,978,693	$	12,330,566
Unbilled receivable	2,340,582		2,265,441
Less allowance for doubtful accounts	(1,299,448)		(851,199		)
Accounts receivable — net	$	13,019,827	$	13,744,808

In 2013, the Company entered into certain sales-type lease arrangements. The components of the net investment in sales-type leases as of March 31, 2015 and December 31, 2014 are as follows:

	3/31/2015	12/31/2014
Total minimum lease payments receivable	$ 1,262,947	$ 1,562,493
Less: unearned income	(101,556)	(212,045)
Net investment in sales-type leases	$ 1,161,391	$ 1,350,448

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The current maturity of net investment in sales-type leases is included in trade accounts receivable. The noncurrent maturity of net investment in sales-type leases is included in other noncurrent assets. The present value of minimum lease payments receivable, unearned finance income, and future minimum lease payment receivable are as follows:

	Present Value of Minimum Lease Payments Receivable	Unearned Finance Income	Future Minimum Lease Payments Receivable
2015	$ 583,087	$ 77,307	$ 660,394
2016	556,515	23,448	$ 579,963
2017	21,789	801	22,590
Net investment in sales-type leases	$ 1,161,391	$ 101,556	$ 1,262,947

4. Property and Equipment

For the three-month period ended March 31, 2015, the Company sold previously leased gaming machines and third-party licenses with a net book value of approximately $156,000 for $341,000. For the three-month period ended March 31, 2014, the Company sold previously leased gaming machines and third-party licenses with a net book value of approximately $198,000 for $351,000. For the three-month periods ended March 31, 2015 and 2014, the Company recorded no impairment of idle gaming equipment.

Property and equipment at March 31, 2015 and December 31, 2014 consisted of the following:

At Cost	3/31/2015	12/31/2014
Computer equipment and software	$ 4,376,378	$ 4,099,754
Leasehold improvements	831,682	837,772
Machinery and equipment	308,795	220,637
Gaming machines and equipment	70,781,285	72,028,634
Gaming machines under construction	606,342	250,518
Office furniture and fixtures	1,672,369	1,417,553
Vehicles	—	—
	78,576,851	78,854,868
Less accumulated depreciation	(53,104,787)	(52,898,538)
Property and equipment — net	$ 25,472,064	$ 25,956,330

5. Intangible Assets

Third-party licenses consist of license fees for game titles developed by third parties and license fees to third parties for using certain technologies. Capitalized certification costs are related to certifying games for play in certain jurisdictions. Patents include third-party costs associated with filing applications and defending patents.

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Intangible assets at March 31, 2015 and December 31, 2014, consist of the following:

	Gross		Accumulated Amortization			Net		Life
3/31/2015
Third-party licenses	$	15,108,115	$	(9,679,156	)	$	5,428,959	3–5 years
Capitalized certification costs	13,904,830		(9,131,667		)	4,773,163		3 years
Patents	1,071,362		(14,591)			1,056,771		10 years
Total	30,084,307		(18,825,414)			11,258,893
Less items not in service	(3,788,674)					(3,788,674)
Total costs subject to amortization	$ 26,295,633		$(18,825,414)			$ 7,470,219
12/31/2014
Third-party licenses	$ 15,236,214		$ (9,588,952)			$ 5,647,262		3–5 years
Capitalized certification costs	13,030,282		(8,619,924)			4,410,358		3 years
Patents	918,405		(10,592)			907,813		10 years
Total	29,184,901		(18,219,468)			10,965,433
Less items not in service	(3,505,886)					(3,505,886)
Total costs subject to amortization	$ 25,679,015		$(18,219,468)			$ 7,459,547

Amortization expense for the next nine months and the next four years and thereafter for items in service at March 31, 2015, is estimated to be as follows:

Nine months ending December 31, 2015	$ 2,726,266
Years ending December 31:
2016	2,513,344
2017	1,478,418
2018	476,539
2019 and thereafter	275,652
	$ 7,470,219

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6. Deferred costs

Deferred costs consist of amounts paid or payable to lessees of the Company’s gaming machines to secure new lease arrangements. The costs are deferred and recognized ratably over the minimum lease term as a reduction to revenue. Deferred costs at March 31, 2015 and 2014, consisted of the following:

	3/31/2015	12/31/2014
Paid to lessees	$ 5,340,000	$ 5,340,000
Payable to lessees	—	—
Total	5,340,000	5,340,000
Less accumulated amortization	(1,958,000)	(1,691,000)
Total	3,382,000	3,649,000
Less current portion	(1,068,000)	(1,068,000)
Noncurrent portion	$ 2,314,000	$ 2,581,000

Future amortization of deferred costs as of March 31, 2015, will be as follows:

Nine months ending December 31, 2015	$ 801,000
Years ending December 31:
2016	1,068,000
2017	1,068,000
2018	445,000
	$3,382,000

7. Related-Party Transactions

During the three-month periods ended March 31, 2015 and 2014, Amaya purchased 6 game licenses and zero game licenses from the Company for $720,000 and $0 respectively. During the three-month period ended March 31, 2014, the Company distributed $5,000,000 to Amaya as agreed to in 2013 related to the fulfilment of certain conditions under the acquisition and merger agreement (see Note 11).

8. Employee Benefit Plan

The Cadillac Jack, Inc. 401(k) Plan (“the Plan”) provides retirement benefits for its employees. As allowed under Section 401(k) of the Internal Revenue Code, the Plan provides tax-deferred salary deductions for eligible employees. Employees may contribute up to the maximum contributions as set periodically by the Internal Revenue Service. The Company may make a discretionary contribution to the Plan, not to exceed 15% of the total compensation of all participants as allowed under Section 401(k) of the Internal Revenue Code. The Company elected to make matching contributions of approximately $118,000 and $94,000 for the three-month periods ended March 31, 2015 and 2014, respectively.

9. Share-Based Awards and Options

The purpose of the Amaya stock option plan is to attract, retain, and motivate employees and officers of the Company, and to promote the interests of the Company. The stock option plan permits the Board of Directors to grant either incentive stock options or nonqualified stock options to purchase shares of Amaya’s common stock. Amaya’s stock option

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plan authorized the issuance of options to purchase up to an aggregate of 13,284,434 shares of Amaya’s common stock, provided that the Board shall have the right, from time to time, to increase such number, subject to applicable laws. Certain options can become exercisable upon death or disability.

The activity in the Amaya stock option plan for the three-month period ended March 31, 2015 is summarized as follows:

	Options	Weighted-Average Exercise Price Canadian $
Options outstanding at December 31, 2014	1,038,714	4.37
Granted	0
Exercised	(20,645)	5.44
Forfeited	(69,876)	4.24
Options outstanding at March 31, 2015	948,193	4.34

A summary of stock options outstanding at March 31, 2015 and December 31, 2014, is as follows:

	3/31/2015
Canadian $ Exercise Prices	Number of Options Outstanding	Weighted- Average Remaining Contractual Life (Years)	Number of Options Vested and Exercisable
$ 4.24	916,318	2.67	261,268
6.00	9,375	3.16
7.55	22,500	3.72
	948,193		261,268
	12/31/2014
Canadian $ Exercise Prices	Number of Options Outstanding	Weighted- Average Remaining Contractual Life (Years)	Number of Options Vested and Exercisable
$ 4.24	999,339	2.92	274,413
6.00	9,375	3.41
7.55	30,000	3.97	7,500
	1,038,714		281,913

During the three-month periods ended March 31, 2015 and 2014, Amaya did not grant or modify any options to employees of the Company.

Stock compensation expense related to the Amaya stock option plan of approximately $132,000 and $176,000 was recorded for the three-month periods ended March 31, 2015 and 2014, respectively.

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There were 948,193 options available for future grants under the Amaya stock option plan at March 31, 2015. The unrecognized compensation cost expected to be recognized over the next three years is approximately $1,235,000.

10. Income Taxes

The provision for income taxes for the three-month periods ended March 31, 2015 and 2014, consisted of the following:

	3/31/2015	3/31/2014
Current tax expense (benefit):
Federal	—	—
State	104,108	7,335
Foreign (including withholding taxes)	387,675	430,299
Total current tax expense	491,783	437,634
Deferred tax (benefit) expense:
Federal	(510,001)	1,320,682
State	(102,570)	153,511
Foreign	(515,232)	(300,481)
Increase in valuation allowance	1,226,001	300,481
Total deferred tax expense	98,198	1,474,193
Total income tax expense	$ 589,981	$ 1,911,827

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The income tax provision differs from the expense that would result from applying federal statutory rates to income before income taxes due to state income taxes, permanent book/tax differences, changes in estimates for uncertain tax positions, changes in valuation allowance against deferred tax assets, and also due to federal and state research and development tax credits available. The Company has recorded a full valuation allowance against deferred tax assets in Mexico and all U.S. jurisdictions due to the negative evidence outweighing the positive evidence related to the realization of these deferred tax assets. The valuation allowance against these deferred tax assets has been allocated pro rata between current and noncurrent deferred tax assets on a jurisdictional basis. The tax effects of temporary differences that give rise to significant portions of the current and noncurrent deferred tax assets and liabilities at March 31, 2015 and December 31, 2014 are presented as follows:

	3/31/2015	12/31/2014
Current — deferred tax asset:
Allowance for doubtful accounts	$ 397,976	$ 254,047
Allowance for inventory obsolescence	45,303	37,677
Inventory book tax differences	8,546	7,381
Accrued expenses	1,879,850	1,675,426
Net operating loss carryforward	346,456	402,621
Total current deferred tax asset	2,678,131	2,377,152
Less valuation allowance	(2,392,308)	(2,138,299)
Net current deferred tax asset	$ 285,823	$ 238,853
Noncurrent — deferred tax asset (liability):
Accrued expenses	$ 7,633,902	$ 5,775,331
Depreciation and amortization	(1,675,326)	(1,887,191)
Other temporary differences	427,993	444,459
Foreign tax credit carryforward	11,539,798	12,052,141
Other tax credit carryforward	2,140,399	2,382,172
Stock compensation expense	233,694	197,046
Net operating loss carryforward	3,649,119	3,625,345
Total noncurrent deferred tax asset	23,949,579	22,589,303
Less valuation allowance	(24,235,402)	(22,828,156)
Net noncurrent deferred tax (liability) asset	$ (285,823)	$ (238,853)

The Company’s Mexican customers are required under the U.S.‑Mexico tax treaty to withhold 10% of their payments due to the Company for license fees, which can be used as tax credits on the Company’s U.S. federal income tax return. The tax credits are not refundable, but can be carried forward for 10 years to offset future tax liability. The credits begin to expire starting in 2016. The Company’s other tax credits relate to research and development activities and begin to expire in 2024. The Company also has NOL carryforwards for in Mexico of approximately $2,157,000 and various U.S. states of approximately $11,854,000. The Mexican NOL carryforwards begin to expire in 2021, and the state NOL carryforwards begin to expire in 2022.

The utilization of the NOL carryforwards and tax credits is limited in the future in accordance with Section 382 and Section 383 of the Internal Revenue Code based on a change in control that occurred in 2012. A subsequent change in control could be caused by a share repurchase program, additional issuances of common stock by the Company, and acquisitions or sales of shares by certain holders of the Company’s shares, including persons who have held, currently hold, or may accumulate in the future 5% or more of the Company’s outstanding common stock. Management assesses

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the available positive and negative evidence to estimate if sufficient future taxable income will be generated to utilize the existing deferred tax assets on a jurisdictional basis. Based on this evaluation, the Company has provided a full valuation allowance of approximately $21,516,000 on its deferred tax assets in the U.S. The Company also has approximately $5,112,000 of NOL carryforwards and other temporary differences in Mexico, which have a full valuation allowance. The determination that a valuation allowance is needed was made after weighing the positive and negative evidence related to Cadillac Jack’s ability to realize the deferred tax assets, and more weight was given to objectively verifiable evidence, such as recent operating results, and contractual obligations. The amount of the deferred tax asset considered realizable, however, could change as we will continue to evaluate our assumptions each year regarding the need for a valuation allowance and will make appropriate adjustments as necessary.

Approximately $596,000 in penalties were recorded on uncertain tax positions during the year and remained accrued as of March 31, 2015. No interest was recorded on uncertain tax positions since no tax would be due as of march 31, 2015. While not anticipated, the amount of unrecognized tax benefits may change for various reasons in the next 12 months; however, the Company does not expect that change to have a material impact on its consolidated financial position or results of operation. The Company is subject to taxation in the U.S. federal, various U.S. states, and Mexico jurisdictions. As of March 31, 2015, the Company’s tax years for 2002-2013 are subject to examination by taxing authorities. As of March 31, 2015, the Company is no longer subject to U.S. federal, state, local, or foreign examinations by tax authorities for years before 2002.

The Company is permanently reinvested with respect to its investment in its foreign subsidiaries. Accordingly, no deferred income tax liability related to its foreign subsidiaries’ unremitted earnings has been included in the Company’s provision for income taxes. Upon distribution of those earnings in the form of dividends or, otherwise, the Company would be subject to income taxes and withholding taxes payable, which could potentially be offset by foreign tax credits. Determination of the amount of unrecognized deferred income tax liability is not practicable because of the complexities associated with the hypothetical calculation.

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11. Notes Payable and Long-Term Debt

Long-Term Debt - Long-term debt at March 31, 2015 and December 31, 2014 consisted of the following:

	3/31/2015	12/31/2014
Note payable to various lenders. Wilmington Trust as administrative and collateral
agent. The term loans may be eurodollar loans or base rate loans as determined by
the Company. When electing to use the eurodollar option, the loan bears
an 9.5% interest rate, which assumes a London InterBank Offered Rate (LIBOR)
floor of 1.0%, plus 8.5%. Interest is paid quarterly. The loan to each lender matures in
quarterly payments. The remaining balance is due in 2019. The loans are secured by
all the Company's assets. The loans are guaranteed by Amaya.	$ 237,400,000	$ 238,000,000
Mezzanine note payable to various lenders. Wilmington Trust as administrative and
collateral agent. The loan bears interest at a 13.0% interest rate per annum, which
assumes cash interest of 6.0% per annum and paid in kind interest of 7.0% per annum.
Cash interest is paid quarterly. At the election of the Company, paid in kind interest
is paid in cash or compounds to principal quarterly. The loan to each lender is due in
full in 2020. The loans are guaranteed by Amaya.	$ 106,365,900	$ 104,536,511
Total long-term debt	343,765,900	342,536,511
Less current portion of long-term debt	(2,400,000)	(2,400,000)
Long-term debt - net of current portion	341,365,900	340,136,511
Less unamortized discounts	(13,820,488)	(14,138,677)
Long-term debt - net of current portion and discounts	$ 327,545,412	$ 325,997,834

Maturities of long-term debt for the next five years and thereafter are summarized as follows:

Nine months ending December 31, 2015	$ 1,800,000
Year ending December 31:
2016	2,400,000
2017	2,400,000
2018	2,400,000
2019 and thereafter	334,165,900
	$ 343,165,900

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In connection with the Amaya acquisition of the Company on November 5, 2012, the Company’s direct parent, Amaya Holdings Corporation (an indirect wholly owned subsidiary of Amaya) entered into a credit agreement with a syndicate of financial institutions for $110,000,000 of term loans. The term loans were used by Amaya to finance the acquisition, pay off the Company’s existing debt and fund the Company’s ongoing working capital needs. Amaya pledged its equity interests in the Company and its subsidiaries as a guarantee and as collateral. This agreement was canceled and paid in full with proceeds from new debt described below on December 20, 2013. The agreement required the Company to maintain a holdback account control agreement funded with $5,000,000 from proceeds of the term loans, which is required until the additional consideration is paid according to the acquisition and merger agreement on the second anniversary of the closing date (November 5, 2014). Early release of this provision of the acquisition and merger agreement was executed on November 11, 2013. However, the $5,000,000 holdback amount continued to be held by the financial institutions and restricted from use by the Company as of December 31, 2013. In January 2014, the proceeds were released to the Company, and the Company subsequently transferred these proceeds to Amaya.

On December 20, 2013, the Company entered into a credit agreement with a different syndicate of financial institutions for $160,000,000 of term loans. This arrangement replaced the existing credit facility. The proceeds were also used to make a distribution to the Company’s direct parent and fund the ongoing working capital needs of the Company. Amaya pledged its equity interest in the Company and its subsidiaries as a guarantee and as collateral. This credit agreement was amended in 2014, as discussed below, in a transaction accounted for as a debt extinguishment, resulting in a loss on extinguishment of approximately $1,715,000.

On May 15, 2014, the Company amended the existing credit agreement dated as of December 20, 2013 with an extended syndicate of financial institutions for additional $80,000,000 of term loans. Also on May 15, 2014, the company entered into a credit agreement with a syndicate of financial institutions for $100,000,000 of mezzanine subordinate term loans. The proceeds from both agreements were directed to the Company’s direct parent. Amaya pledged its equity interest in the Company and its subsidiaries as a guarantee and as collateral.

These agreements include covenants covering financial condition (consolidated total leverage ratio, fixed‑charge coverage ratio, and earnings before interest, taxes, depreciation, and amortization (EBITDA)) and limitations on capital expenditure. The leverage ratio of consolidated total debt to consolidated EBITDA cannot be higher than the following amounts in the table below for each period‑end. Consolidated EBITDA as defined in the agreement is consolidated net income (loss), plus income tax expense; interest expense; amortization of debt issuance costs; depreciation; amortization; extraordinary expenses or losses; transaction expenses; other noncash charges fees losses or expenses; any fees or expenses paid in connection with any investment permitted by the agreement; fees and expenses paid to any agent under any loan document; cash payment for resolution of the IGT, Inc. (IGT), settlement minus interest income; extraordinary income or gains; and other noncash gain or income. Minimum EBITDA requirements are shown in the table below for each period-end. The fixed-charge coverage ratio of consolidated EBITDA minus income taxes paid, maintenance capital expenditures, and restricted payments as definedin the agreement divided by consolidated cash interest expense and scheduled debt payments cannot be lower than the following amounts in the tables below for each period‑end.

The following information relates to the amended credit agreement:

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Period-End	Consolidated Total Leverage Ratio	Fixed-Charge Coverage Ratio	Consolidated EBITDA
June 30, 2015	8.75	1.05	38,010,000
September 30, 2015	8.50	1.05	39,260,000
December 31, 2015	8.25	1.05	40,580,000
March 31, 2016	8.00	1.05	41,990,000
June 30, 2016	7.75	1.05	43,500,000
September 30, 2016	7.50	1.10	45,110,000
December 31, 2016	7.25	1.10	46,830,000
March 31, 2017	7.00	1.15	48,680,000
June 30, 2017	7.00	1.15	48,870,000
September 30, 2017	6.75	1.15	50,870,000
December 31, 2017	6.75	1.20	51,070,000
March 31, 2018	6.75	1.20	51,270,000
June 30, 2018	6.50	1.20	53,460,000
September 30, 2018	6.50	1.25	53,460,000
December 31, 2018	6.50	1.25	53,460,000
March 31, 2019, and thereafter	6.00	1.25	53,460,000

Capital expenditures cannot exceed $37,360,000, $38,100,000, $38,870,000, and $38,870,000 for the years ending December 31, 2015, 2016, 2017, and 2018, respectively. The Company may carry over to a subsequent year half of the amount of capital expenditures not expended in the preceding year. The Company was in compliance with its covenants for the three-month period ended March 31, 2015.

The following information relates to the Mezzanine agreement:

Period-End	Ratio	Ratio	EBITDA
June 30, 2015	9.00	1.00	30,408,000
September 30, 2015	8.75	1.00	31,408,000
December 31, 2015	8.50	1.00	32,464,000
March 31, 2016	8.25	1.00	33,592,000
June 30, 2016	8.00	1.00	34,800,000
September 30, 2016	7.75	1.00	36,088,000
December 31, 2016	7.50	1.00	37,464,000
March 31, 2017	7.25	1.05	38,944,000
June 30, 2017	7.25	1.05	39,096,000
September 30, 2017	7.00	1.05	40,696,000
December 31, 2017	7.00	1.10	40,856,000
March 31, 2018	7.00	1.10	41,016,000
June 30, 2018	6.75	1.10	42,768,000
September 30, 2018	6.75	1.15	42,768,000
December 31, 2018	6.75	1.15	42,768,000
March 31, 2019, and thereafter	6.25	1.15	42,768,000

Capital expenditures cannot exceed $44,832,000, $45,720,000, $46,644,000, and $46,644,000 for the years ending December 31, 2015, 2016, 2017, and 2018, respectively. The Company may carry over to a subsequent year half of the

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amount of capital expenditures not expended in the preceding year. The Company was in compliance with its covenants for the three-month period ended March 31, 2015.

Common Stock Warrants - In connection with the Mezzanine Credit Agreement entered into on May 15, 2014, Amaya issued 4,000,000 common stock warrants as compensation, on behalf of the Company, to certain of the lenders involved.

Each warrant entitles the holder to purchase one share of Amaya common stock for an exercise price of $19.17 CAD. The warrants may be exercised by the holder at any time until the date of expiration, which is May 15, 2024 (10 years after the date of issuance). Upon issuance, the Company recorded a discount to the carrying value of the mezzanine loan and an associated increase to additional paid in capital for the estimated fair value of the warrants. The fair value of the warrants at issuance of approximately $10,400,000 USD was calculated using the Black-Scholes-Merton option-pricing model with the following assumptions: 10 year contractual term; annual risk-free interest rate of 2.29%; 46% volatility; and 0% dividend rate. The discount will be amortized to interest expense using the effective interest rate method over the six year term of the loan, and the interest charge for the three-month period ended March 31, 2015 totaled approximately $190,000.

As of March 31, 2015, all 4,000,000 warrants remained outstanding. These were the only warrants issued by Amaya on behalf of the Company.

12. Commitments and Contingencies

Litigation -In 2012, the Company and the founder of the Company (the “Founder”) entered into a settlement agreement and mutual release that terminated a lawsuit filed by the Founder against the Company and a former officer and director of the Company. The Founder asserted that the former director authorized improper related-party transactions that caused the value of the Founder shares in the Company to decline, that the Company failed to reimburse the Founder for various expenses, and that the Company breached the employment contract with the Founder. The Company denied all claims of wrongdoing and filed a counterclaim against the Founder for breach of contract, breach of fiduciary duty, breach of duties of good faith, and loyalty and fraud. In a separate action that was settled in 2010, the Founder also alleged that the Company conspired to cause an event of default on certain loans related to real estate owned by the Founder. In connection with the 2012 settlement, the Company agreed to pay the Founder $1,500,000, which was recorded in selling, general, and administrative expense, in semiannual payments, plus 6% interest. The first payment was made on September 24, 2012, for $750,000. During 2013, two payments of approximately $202,000 each were made. During 2014, the remaining balance was paid in two equal payments of approximately $202,000 each.

The Company previously leased its office and operating facilities from the Founder. The lease term commenced in October 2004 and expired in October 2009. The Company continued to lease the building on a month-to-month basis through July 2010. Rent expense to the Founder for the year ended December 31, 2010, was approximately $359,000. The Founder also had litigation with the Company related to the lease on the building. During 2010, the Company settled the litigation related to the lease on the building and another lawsuit related to the purchase and sale agreement related to the Founder’s shares and paid the Founder $150,000. The Company is currently a guarantor on one loan with an estimated balance of $1.037M as of December 31, 2014, related to the building the Company was leasing from the Founder. As part of the settlement of the lease litigation, the Company deposited $1,000,000 of the purchase price of the Founder’s shares into an escrow account, and if the Company is required to pay under the guarantee agreement related to the building, it can offset the amount paid in escrow and seek recovery of the remainder from the Founder.

The Company is subject to other lawsuits, claims, and other complaints arising out of the ordinary conduct of business. While the ultimate results and outcomes from these matters cannot be determined precisely, management, based in part upon the advice of legal counsel, believes that all matters are without merit or are of such amounts that would not have a material adverse effect on the Company’s consolidated financial position, operating results, or cash flows.

Capitalized Lease Obligations - The Company leases property and equipment under capital leases. Amortization associated with assets under capital leases is included in depreciation expense. The leases outstanding as of March 31, 2015 and December 31, 2014, require monthly payments ranging from $1,041 to $14,246 and $1,041 to $14,246, respectively, at interest rates ranging from 3.98% to 10.09% and 3.98% to 13.56%, respectively. The leases expire at various times through June 2017. The leases are secured by the related property and equipment.

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A summary of property and equipment held under capital leases at March 31, 2015 and December 31, 2014, is as follows:

	3/31/2015	12/31/2014
Cost of equipment held under capital leases	$ 1,959,535	$1,959,535
Less accumulated amortization	(1,340,744)	(1,279,748)
Net equipment held under capital leases	$ 618,791	$ 679,787

The future minimum lease payments required under the capital leases and the present value of the net minimum lease payments at March 31, 2015, are as follows:

Nine month period ending December 31, 2015	$	357,720
Years ending December 31:
2016	208,861
2017	98,248
2018	24,380
Total minimum lease payments	689,209
Less amount representing interest	(36,914)
Total present value of minimum lease payments	652,295
Less current portion	(412,245)
Noncurrent portion	$	240,050

Operating Leases - The Company leases its office and operating facilities and certain equipment under operating lease agreements expiring on various dates through November 2017. Rent expense under the agreements was approximately $172,000 and $152,000 for the periods ended March 31, 2015 and 2014, respectively.

Future minimum lease payments under noncancelable operating leases at March 31, 2015, are as follows:

Nine month period ending December 31, 2015	$ 508,070
Years ending December 31:
2016	678,066
2017	688,376
2018	78,598
	$ 1,953,110

Sales Tax Liability - The Company has operations in various states and counties in which they have not filed sales tax returns. The Company has accrued approximately $127,000 as of March 31, 2015, which is the Company’s best estimate of its sales tax liabilities. The Company’s accounting policy is to include penalties and interest related to taxes in interest expense. Actual amounts could differ from estimates.

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13. Net sales and cost of goods and services

The following is a summary of the components of net sales and cost of goods and services for the three month periods ended March 31, 2015 and 2014:

	2015	2014
Gaming operations services	$18,572,815	$ 19,798,915
Sales of equipment	452,366	1,499,703
Net sales	$19,025,181	$ 21,298,618
Cost of gaming operations services	5,988,239	5,971,282
Cost of equipment sales	209,621	651,967
Cost of goods and services	$ 6,197,860	$ 6,623,249

14. Concentrations

Significant Customer - Revenues from one major customer totaled approximately $3,938,000 and $3,936,000 and composed 19% and 18% of the revenues generated for the three-month period ending March 31, 2015 and 2104 respectively. The outstanding receivables related to this customer were approximately $424,000 and $624,000 at March 31, 2015 and 2014 respectively. There were no other customers for which revenues composed more than 10% of total revenue during the three month periods ended March 31, 2015 or 2014.

15. Foreign Operations

The Company has a significant portion of its operations located in Mexico. Revenues related to Mexican operations were approximately $5,838,000 and $7,200,000 for the three-month periods ending March 31, 2015 and 2104 respectively. The net book value of property and equipment located in Mexico was approximately $7,201,000 and $7,790,000 at March 31, 2015 and December 31, 2014 respectively. These operations are subject to risks of currency fluctuations and changes in laws and regulations.

16. Supplemental Disclosures of Noncash Investing and financial Activities

Significant noncash activities for the three month periods ended March 31, 2015 and 2014, are as follows:

	3/31/2015	3/31/2014
Acquisition of property and equipment and prepaid
maintenance contracts under capital leases	—	421,514
Accrued capital expenditures	377,523	174,301

******

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