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

Indicate by check mark whether the issuer (1) 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 issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the issuer has submitted electronically ~~and posted~~ on its corporate Web site, if any, every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company or an emerging growth company.

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period

for complying with any new or revised financial accounting standard provided pursuant to Section 13(a) of the Exchange Act. ☐

State the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: ~~39,565,591~~39,882,591 common shares as of November ~~8, 2017.~~12, 2018.

QUARTERLY REPORT ON FORM 10-Q FOR THE THREE MONTHS ENDED SEPTEMBER 30, ~~2017~~2018

	September 30,		December 31,		September 30,		December 31,
ASSETS	2017		2016		2018		2017
Current assets:	(Unaudited)				(Unaudited)
Cash and cash equivalents	$	3,161,666	$	2,304,761
Restricted cash		93,270		84,577
Accounts receivable, net of allowance for bad debts of $38,015 and $31,125, respectively		2,396,087		2,137,245
Cash, cash equivalents and restricted cash					$	5,246,345	$	3,581,209
Accounts receivable, net of allowance of $56,015 and $32,993, respectively						2,450,825		2,301,752
Inventory, net		525,543		427,105		694,670		524,126
Income tax receivable						106,178		—
Prepaid expense and other		307,157		194,747		450,788		363,102
Total current assets		6,483,723		5,148,435		8,948,806		6,770,189
Property and equipment, net		293,488		356,253		230,973		263,867
Products leased and held for lease, net		300,168		212,131
Assets deployed at client locations, net						375,665		373,650
Goodwill and other intangible assets, net		11,825,005		12,846,019		10,358,468		11,452,809
Deferred tax assets, net		367,057		367,057		230,648		230,648
Other assets, net		23,000		82,050		—		23,000
Total assets	$	19,292,441	$	19,011,945	$	20,144,560	$	19,114,163
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	329,193	$	461,913	$	510,880	$	1,035,383
Accrued expenses		1,722,039		1,109,428		1,223,634		887,796
Income taxes payable		662,159		786,430		—		519,610
Deferred revenue		1,050,416		1,014,731
Revenue contract liability						1,221,258		1,083,639
Deferred rent, current portion		21,494		14,938		21,038		23,679
Current portion of long-term debt and capital lease obligations		1,121,289		1,230,285		1,383,386		1,195,787
Other current liabilities		119,960		90,960		16,387		123,441
Total current liabilities		5,026,550		4,708,685		4,376,583		4,869,335
Deferred rent, net		21,037		37,704		—		14,025
Capital lease obligations, net		22,589		46,978		—		14,217
Long-term debt, net						8,993,771		7,420,385
Common stock warrant liability		1,333,333		923,616		—		1,333,333
Long-term debt, net		7,620,230		8,669,151
Interest rate swap liability						28,707		—
Total liabilities		14,023,739		14,386,134		13,399,061		13,651,295
Commitments and Contingencies (See Note 10)
Commitments and Contingencies (See Note 11)
Stockholders’ equity
Preferred stock, 10,000,000 shares authorized, $0.001 par value; 0 shares issued and outstanding, respectively		—		—		—		—
Common stock, 65,000,000 shares authorized; $0.001 par value; 39,565,591 and 39,315,591 shares issued and outstanding, respectively		39,566		39,316
Common stock, 65,000,000 shares authorized; $0.001 par value; 39,882,591 and 39,565,591 shares issued and outstanding, respectively						39,883		39,566
Additional paid-in capital		3,697,536		3,109,473		4,507,974		3,957,703
Accumulated earnings		1,531,600		1,477,022		2,197,642		1,465,599
Total stockholders’ equity		5,268,702		4,625,811		6,745,499		5,462,868
Total liabilities and stockholders’ equity	$	19,292,441	$	19,011,945	$	20,144,560	$	19,114,163

	Three Months Ended						Nine Months Ended						Three Months Ended						Nine Months Ended
	September 30, 2017			September 30, 2016			September 30, 2017			September 30, 2016			September 30, 2018			September 30, 2017			September 30, 2018			September 30, 2017
Revenue:				(Restated)						(Restated)
Product leases and royalties	$	3,830,351		$	3,190,823		$	10,955,055		$	9,229,815		$	4,775,754		$	3,830,351		$	13,672,459		$	10,955,055
Product sales and service		69			1,146			9,469			10,425			30			69			191			9,469
Total revenue		3,830,420			3,191,969			10,964,524			9,240,240			4,775,784			3,830,420			13,672,650			10,964,524
Costs and expenses:
Cost of ancillary products and assembled components		50,369			26,763			133,517			78,075			47,828			50,369			107,215			133,517
Selling, general and administrative		2,362,601			1,553,556			6,808,659			4,819,373			2,559,056			2,362,601			7,741,213			6,808,659
Research and development		139,185			89,513			403,618			270,734			373,456			139,185			816,657			403,618
Depreciation and amortization		440,130			419,540			1,323,772			1,252,860			462,402			440,130			1,372,752			1,323,772
Share-based compensation		384,925			41,075			553,313			91,006			192,998			384,925			550,588			553,313
Total costs and expenses		3,377,210			2,130,447			9,222,879			6,512,048			3,635,740			3,377,210			10,588,425			9,222,879
Income from operations		453,210			1,061,522			1,741,645			2,728,192			1,140,044			453,210			3,084,225			1,741,645
Other income (expense):
Settlement income		—			697,214			—			697,214
Interest expense		(432,466	)		(227,632	)		(1,316,045	)		(741,045	)		(206,425	)		(432,466	)		(819,837	)		(1,316,045	)
Foreign currency exchange (loss) gain														(22,095	)		59,624			(542	)		125,576
Change in estimated fair value of warrant liability														—			(86,308	)		—			(409,717	)
Change in estimated fair value of interest rate swap liability														48,528			—			(28,707	)		—
Loss on extinguishment of debt		—			(515,037	)		—			(515,037	)		(1,765	)		—			(1,349,271	)		—
Foreign currency exchange gains (losses)		59,624			(5,926	)		125,576			354,301
Change in estimated fair value of warrant liability		(86,308	)		2,933			(409,717	)		2,933
Interest income		—			56			—			202			343			—			974			—
Total other expense		(459,150	)		(48,392	)		(1,600,186	)		(201,432	)		(181,414	)		(459,150	)		(2,197,383	)		(1,600,186	)
(Loss) income before provision for income taxes		(5,940	)		1,013,130			141,459			2,526,760
Income (loss) before provision for income taxes														958,630			(5,940	)		886,842			141,459
Provision for income taxes		(21,990	)		(351,412	)		(86,881	)		(873,768	)		(166,662	)		(21,990	)		(154,799	)		(86,881	)
Net (loss) income	$	(27,930	)	$	661,718		$	54,578		$	1,652,992
Net (loss) income per share, basic and diluted	$	(0.00	)	$	0.02		$	0.00		$	0.04
Net income (loss)													$	791,968		$	(27,930	)	$	732,043		$	54,578
Net income (loss) per share, basic and diluted													$	0.02		$	(0.00	)	$	0.02		$	0.00
Weighted-average shares outstanding:
Basic		39,432,982			39,315,591			39,368,521			39,372,944			39,844,863			39,432,982			39,805,144			39,368,521
Diluted		39,432,982			39,465,676			41,216,750			39,559,494			41,184,368			39,432,982			41,059,384			41,216,750

	Nine Months Ended						Nine Months Ended
	September 30, 2017			September 30, 2016			September 30, 2018			September 30, 2017
Cash flows from operating activities:				(restated)
Net income	$	54,578		$	1,652,992		$	732,043		$	54,578
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		1,323,772			1,252,860			1,372,752			1,323,772
Amortization of debt issuance costs and debt discount		218,910			136,710			119,809			218,910
Bad debt expense		6,000			—			38,374			6,000
Loss on extinguishment of debt		—			515,037			1,349,271			—
Change in estimated fair value of warrant liability		409,717			(2,933	)		—			409,717
Change in estimated fair value of interest rate swap liability								28,707			—
Share-based compensation		553,313			91,006			550,588			553,313
Unrealized foreign exchange (gains) losses on cash and cash equivalents		(92,243	)		31,886
Unrealized foreign exchange gains on cash, cash equivalents and restricted cash								(24,601	)		(92,243	)
Changes in operating assets and liabilities:
Restricted cash		(8,693	)		10,009
Accounts receivable		(264,842	)		(108,674	)		(187,445	)		(264,842	)
Inventory		(271,149	)		(181,319	)		(317,978	)		(271,149	)
Prepaid expenses and other current assets		(112,410	)		8,922			(54,009	)		(112,410	)
Accounts payable		(132,720	)		(858,404	)		(524,503	)		(132,720	)
Income tax payable		(124,271	)		822,482
Income tax receivable/payable								(625,788	)		(124,271	)
Accrued expenses		612,611			152,871			335,838			612,611
Deferred revenue		35,685			152,938
Revenue contract liability								137,619			35,685
Other current liabilities		29,000			(15,069	)		(107,054	)		29,000
Deferred rent		(10,111	)		(3,555	)		(16,666	)		(10,111	)
Net cash provided by operating activities		2,227,147			3,657,759			2,806,957			2,235,840
Cash flows from investing activities:
Investment in intangible assets		(43,917	)		—			(33,048	)		(43,917	)
Acquisition of property and equipment		(52,352	)		(43,345	)		(67,050	)		(52,352	)
Net cash used in investing activities		(96,269	)		(43,345	)		(100,098	)		(96,269	)
Cash flows from financing activities:
Proceeds from debt issued								11,098,986			—
Proceeds from stock option exercises		35,000			—			—			35,000
Debt issuance costs		(17,091	)		—
Proceeds received from long-term debt		—			932,126
Payments of debt issuance costs								(136,162	)		(17,091	)
Payment of warrant liability								(1,333,333	)		—
Principal payments on capital lease obligations		(23,087	)		(51,698	)		(24,415	)		(23,087	)
Principal payments on long-term debt		(1,361,038	)		(3,209,922	)		(10,296,900	)		(1,361,038	)
Payments of long-term debt redemption premium								(374,500	)		—
Net cash used in financing activities		(1,366,216	)		(2,329,494	)		(1,066,324	)		(1,366,216	)
Effect of exchange rate changes on cash		92,243			(31,886	)		24,601			92,243
Net increase in cash and cash equivalents		856,905			1,253,034
Cash and cash equivalents – beginning of period		2,304,761			570,623
Cash and cash equivalents – end of period	$	3,161,666		$	1,823,657
Net increase in cash, cash equivalents and restricted cash								1,665,136			865,598
Cash, cash equivalents and restricted cash – beginning of period								3,581,209			2,389,338
Cash, cash equivalents and restricted cash – end of period							$	5,246,345		$	3,254,936
Supplemental cash flow information:
Cash paid for interest	$	1,099,738		$	753,250		$	700,027		$	1,099,738
Inventory transferred to assets held for lease	$	172,711		$	108,577
Inventory transferred to assets deployed at client locations							$	147,434		$	172,711
Cash paid for income taxes	$	150,000		$	35,000		$	795,818		$	150,000
Supplemental non-cash financing activities information:
Issuance of warrants in conjunction with term loan	$	—		$	809,631
Points paid on term loan	$	—		$	262,500

Unless the context indicates otherwise, references to “Galaxy Gaming, Inc.,” “we,” “us,” “our,” or the “Company,” refer to Galaxy Gaming, Inc., a ~~publicly reporting~~ Nevada corporation (“Galaxy Gaming”).

~~Nature of operations.~~ We are an established global gaming company specializing in the design, development, manufacturing, marketing and acquisition of proprietary casino table games and associated technology, platforms and systems for the casino gaming industry. ~~We are a leading supplier of gaming entertainment products worldwide and provide a diverse offering of quality~~Casinos use our proprietary products and services ~~at competitive prices designed~~ to enhance ~~the player experience.~~

~~Restatement.~~ ~~The financial statements as of~~their gaming floor operations and ~~for the three~~improve their profitability, productivity and ~~nine months ended September 30, 2016 have been restated to correct the following errors noted during the preparation of the financial statements for the year ended December 31, 2016: (i)~~ ~~the amortization of original issue discount related to~~ ~~notes payable to Prime~~ Table Games LLC and Prime Table Games UK (the “PTG Notes”) was not previously deducted from taxable income in our federal tax returns from 2011 through 2015 or to derive the income tax provision for the three and nine months ended September 30, 2016, which resulted in an understatement of deferred tax assets and an overstatement of the income tax provision in those periods; and (ii) foreign currency exchange gains and losses related to the PTG Notes were incorrectly reported as other comprehensive income instead of earnings (~~i.e., non-operating income).~~ ~~The restatements to reflect the correction of both errors are referred to herein collectively as the "Restatement."~~

The table below sets forth the amounts as originally reported for the categories presented in the condensed statements of operations that were affected by the Restatement, the effect of the Restatement and the restated amounts for the three and nine months ended September 30, 2016:

The table below sets forth the amounts as originally reported for the categories presented in the condensed statements of cash flows that were affected by the Restatement, the effect of the Restatement and the restated amounts for the nine months ended September 30, 2016:

Statement of Cash Flow

As originally
reported

Impact of
restatement

As restated

  Net income

$
1,577,867

$
75,125

$
1,652,992

  Loss on extinguishment of debt

87,578

427,459

515,037

  Deferred income tax provision

54,370

(54,370
)

—

  Unrealized foreign exchange losses on cash and cash equivalents

—

31,886

31,886

  Increase in accounts receivable

(107,969
)

(705
)

(108,674
)
  Decrease in other current assets

43,017

(43,017
)

—

  Decrease in prepaid expenses and other current assets

6,608

2,314

8,922

  Decrease in accounts payable

(858,954
)

550

(858,404
)
  Increase in income taxes payable

936,269

(113,787
)

822,482

  Increase in accrued expenses

141,841

11,030

152,871

  Net cash provided by operating activities

3,321,274

336,485

3,657,759

  Principal payments on notes payable

(2,873,437
)

(336,485
)

(3,209,922
)
  Net cash used in financing activities

(1,993,009
)

(336,485
)

(2,329,494
)

~~Resignation of Chairman, Chief Executive Officer (“CEO”) and President.~~ On July 24, 2017, Robert B. Saucier resigned from his positions as Chairman of the Board, CEO and President in order to aid us in our expanded regulatory jurisdictional ambitions. Concurrently with Mr. Saucier’s resignation, the Board of Directors (the “Board”) appointed Mr. Saucier to serve as Executive Vice President of Business Development and Chief Product Officer. In these new positions, he receives an annual salary of $225,000 and is eligible to receive performance-based bonuses and incentives,security, as well as ~~employee benefits~~to offer popular cutting-edge gaming entertainment content and ~~other perquisites. Mr. Saucier’s resignation was not~~technology to their players. We market our products and services to land-based, riverboat, cruise ship and internet gaming companies located in North America, the ~~result of any disagreements with~~Caribbean, Central America, the ~~Company,~~British Isles, Europe and ~~he remains a member of the Board.~~Africa and to cruise ships and internet gaming sites worldwide.

~~Appointment of new President and CEO.~~ ~~Effective~~July 24, 2017, the Board appointed Todd P. Cravens to serve as President and CEO. Mr. Cravens was previously serving as our Vice President of Business Development, a position he had held since January 1, 2017.

Mr. Cravens’ employment agreement related to his position as Vice President of Business Development was terminated and superseded with a new employment agreement to reflect his new positions and responsibilities.

Pursuant to the new employment agreement (the “Cravens Employment Agreement”), Mr. Cravens receives an annual base salary of $230,000, is eligible for bonuses if and as approved by the Compensation Committee of the Board and was granted options to purchase our common stock. See Note 14 for further detail on the options granted. The term of the Cravens Employment Agreement is through July 26, 2020. Mr. Cravens is entitled to certain severance payments in the event his employment with us is terminated by us without cause following a change of control, or following termination of the Cravens Employment Agreement by Mr. Cravens.

~~Appointment of new Director.~~ On July 26, 2017, the Board appointed Mark A. Lipparelli as a member of the Board to fill a newly-created board seat and elected Mr. Lipparelli to serve as Chairman of the Board. On August 31, 2017, we ~~entered into a Board of Directors Services Agreement (the “Lipparelli~~ ~~Agreement”), pursuant to which Mr. Lipparelli receives monthly compensation of $7,500 and all customary and usual fringe benefits generally available to non-employee directors of the Board, and was~~ ~~granted shares of restricted common stock of the Company~~. ~~See Note 12 for further detail on the restricted common stock granted.~~

~~Voting and dispositive control transfer agreements.~~ On September 22, 2017, the Nevada Gaming Commission (the “NGC”) granted us licensure as a manufacturer and distributor of gaming products, which approval triggered the effectiveness of five Voting and Dispositive Control Transfer Agreements (the “VDCTA Agreements”). The VDCTA Agreements collectively served to transfer voting and dispositive control of certain shares owned of record by Triangulum Partners, LLC, a New Mexico limited liability company (“Triangulum”) to named recipients (each a “Recipient” and collectively, the “Recipients”).

We and the Recipients (named below) previously entered into the VDCTA Agreements on August 18, 2017. However, the VDCTA Agreements did not become effective until September 22, 2017, concurrently with the NGC granting us a license as a manufacturer and distributor of gaming products in accordance with the stated terms of the VDCTA Agreements. The term of the VDCTA Agreements is while Mr. Saucier’s application for licensure with the NGC is pending.

The VDCTA Agreements were made and entered into by and among Triangulum, a limited liability company of which the managing member is Mr. Saucier, and each of the Recipients. Prior to the VDCTA Agreements, Triangulum owned and controlled shares equal to approximately 60.12% of our total issued and outstanding common stock.

~~The Recipients of the voting and dispositive control of the shares under the VDCTA Agreements are as follows:~~

* The percentages listed in the table are based on 39,365,591 total outstanding shares and do not include other shares held by such Recipients.

Messrs. Lipparelli, Waters, DesRosiers and Zender are members of our Board. During the term of the VDCTA Agreements, Triangulum granted an irrevocable proxy to each of the Recipients to vote the shares of our common stock covered by the VDCTA Agreements, and conveyed to each Recipient the right to “Transfer” the shares, defined as a “sale, transfer, tender, assignment, encumbrance, gift, pledge, hedge, swap, or other disposition, directly or indirectly” of the shares or any right or interest therein.

Basis of presentation. The accompanying condensed financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and the rules of the Securities and Exchange Commission (“SEC”). In the opinion of management, all adjustments necessary in order for the financial statements to be not misleading have been reflected herein. As permitted by the rules and regulations of the SEC, certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to those rules and regulations. The operating results for interim periods are not necessarily indicative of results that may be expected for any other interim period or for the full year.

In the opinion of management, the accompanying unaudited interim condensed financial statements contain all necessary adjustments, consisting only of those of a recurring nature, and disclosures to present fairly our financial position and the results of ~~its~~our operations and cash flows for the periods presented. These unaudited interim condensed financial statements should be read in conjunction with the financial statements and the related notes thereto included in our Form 10-K for the fiscal year ended December 31, ~~2016,~~2017, filed with the SEC on April ~~14, 2017~~2, 2018 (the ~~“2016~~“2017 10-K”).

Basis of accounting. The financial statements have been prepared on the accrual basis of accounting in conformity with U.S. GAAP. Revenues are recognized when earned and expenses (such as wages, consulting expenses, legal, regulatory and professional fees and rent)are recognized when they are incurred. We do not have significant categories of cost of revenue, as most of our revenue is derived from the licensing of intellectual ~~properties. As a result, we do not separately present cost of revenue and gross profit in our statements of operations.~~

~~Significant Accounting Policies.~~ S~~ee Note 2 in Item 8. “Financial Statements and Supplementary Data” included in our 2016 10-K.~~property.

Use of estimates and assumptions. We are required to make estimates, judgments and assumptions that we believe are reasonable based on our historical experience, contract terms, observance of known trends in our company and the industry as a whole, and information available from other outside sources. Our estimates affect reported amounts for assets, liabilities, revenues, expenses and related disclosures. Actual results may differ from initial estimates.

Reclassifications. Certain accounts and financial statement captions in the prior periods have been reclassified to conform to the current period financial statement ~~presentations.~~presentations, including the addition of restricted cash to cash and cash equivalents on the consolidated statements of cash flows as a result of the adoption of ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. See below for further detail.

Other Significant Accounting Policies. See Note 3 in Item 8. “Financial Statements and Supplementary Data” included in our 2017 10-K.

~~Inventory.~~Revenue Recognition. ~~In July 2015, the FASB issued ASU No. 2015-11,~~ ~~Inventory: Simplifying the Measurement of Inventory.~~ Inventory is now required to be measured at the lower of cost or net realizable value, while the concept of market value will be eliminated. The ASU defines net realizable value as the estimated selling process in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. We adopted ASU 2015-11 effectiveEffective January 1, ~~2017 using the required prospective adoption approach, which did not have~~2018, we adopted ~~a material effect on our financial condition, results of operations or cash flows.~~Accounting Standards Update (“

~~Stock-based compensation.~~ ~~In March 2016, the FASB issued~~ASU”) No. ~~ASU 2016-09,~~ ~~Compensation - Stock Compensation: Improvements to Employee Share-Based Payment Accounting.~~ ASU 2016-09 addresses several aspects of the accounting for share-based payment award transactions, including: (a) income tax consequences; (b) classification of awards as either equity or liabilities; and (c) classification on the statement of cash flows. We adopted ASU 2016-09 effective January 1, 2017 using the prospective adoption approach, which did not have a material impact on our ~~financial condition, results of operations or cash flows~~.

~~Revenue Recognition.~~ ~~In May 2014, the FASB issued ASU No.~~ 2014-09, ~~(Topic 606),~~ Revenue from Contracts with Customers (Topic 606) (“ASC 606”), which is a comprehensive new revenue recognition standard that ~~will supersede~~supersedes virtually all existing revenue guidance, including industry-specific guidance. Under the new standard, revenue ~~will be~~is recognized when control of the promised goods or services is transferred to customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods and services. The standard creates a five-step model that ~~will~~ generally ~~require~~requires companies to use more judgment and make more estimates than under ~~current~~the previous guidance when considering the terms of contracts along with all relevant facts and circumstances. These include the identification of customer contracts and separating performance obligations, the determination of transaction price that potentially includes an estimate of variable consideration, allocating the transaction price to each separate performance obligation, and recognizing revenue in line with the pattern of transfer.

~~In August 2015,~~ We adopted ASC 606 using the ~~FASB issued ASU No. 2015-14,~~ ~~Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date~~, which defers the effective date of ASU 2014-09 by one year to now be effective for fiscal years, and interim reporting periods within those years, beginning after December 15, 2017. Early adoption of the standard is permitted but not before the original effective date of December 15, 2016. The ASU may be adopted using a full retrospective approach or a modified retrospective approach (reporting the cumulative effect as of the date of ~~adoption.~~ adoption). See Note 3 for further detail.

Restricted Cash. Effective January 1, 2018, we adopted ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. This ASU requires amounts generally described as restricted cash and cash equivalents be included with cash and cash equivalents when reconciling the total beginning and ending amounts for the periods shown on the statement of cash flows. We ~~continue~~adopted this guidance on a retrospective basis, which resulted in the inclusion of restricted cash within cash and cash equivalents on our balance sheets and statements of cash flows. Such restricted cash represents reserves set side in a restricted bank account in accordance with the requirements of gaming regulations to ~~assess~~be used for the ~~anticipated~~purpose of funding payments to winners of jackpots at one of our client locations and was $60,996 and $95,062 at September 30, 2018 and December 31, 2017, respectively. Cash flows from operating activities for the nine months ended September 30, 2017 increased by $8,693 as a result of the adoption of this guidance.

Compensation - Stock Compensation. Effective January 1, 2018, we adopted ASU No. 2017-09, Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting, which provides clarification on when modification accounting should be used for changes to the terms or conditions of a share-based payment award. The adoption did not have a material impact ~~of adopting ASC 606~~ on our financial statements. The primary impacts of the adoption of ASC 606 are expected to be the following: (a) we will recognize an asset that represents the incremental costs of obtaining and fulfilling the contracts in existence at December 31, 2017 under the caption of prepaid expense and other assets. Such costs will be amortized on a straight-line basis over the expected term of the underlying contracts; and (b) revenues generated by our European distributors (which sublicense our intellectual properties to gaming establishments in Europe in accordance with license agreements entered into between us and such distributors) will be presented as gross revenue under the caption “product leases and royalties” and fees earned by such distributors will be presented as selling, general and administrative expenses. Currently, revenues generated by our European distributors are presented net of fees earned under the caption “product leases and royalties.”

~~ASC 606 will significantly increase revenue disclosure requirements. We currently do~~New accounting standards not anticipate significant changes to our business processes and systems to support the adoption of ASC 606 and are currently assessing the impact on our internal controls. We will continue to monitor and assess the impact of any changes to ASC 606 and interpretations as they become available.yet adopted

Leases. In February 2016, the ~~FASB~~Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-02, Leases (Topic 842). The amended guidance is intended to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. ~~The adoption of this guidance is expected to result in a significant portion of our operating leases being recognized on our balance sheets.~~ The guidance requires lessees and lessors to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years with earlier adoption permitted. We ~~are currently evaluating~~will adopt the ~~impact~~new standard effective January 1, 2019 and expect to recognize a portion of ~~adopting this guidance.~~

~~Restricted Cash. In November 2016, the FASB issued ASU No. 2016-18,~~ ~~Statement of Cash Flows (Topic 230): Restricted Cash. This ASU requires amounts generally described~~our operating leases as ~~restricted cash~~right-of-use assets and cash equivalents be included with cash and cash equivalents when reconciling the total beginning and ending amounts for the periods shown on the statement of cash flows. This guidance is effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years with early adoption permitted. Upon the adoption of ASU 2016-08, restricted cash will be included within beginning and ending cash and cash equivalents amountsoperating lease liabilities on our ~~statements of cash flows,~~balance sheets upon adoption, which ~~we do not expect~~ will ~~have a material impact on~~increase our ~~financial statements.~~ total assets and liabilities.

Goodwill Impairment. In January 2017, the FASB issued ASU No. 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, which simplifies the current two-step goodwill impairment test by eliminating Step 2 of the test. This guidance requires a one-step impairment test in which an entity compares the fair value of a reporting unit with its carrying amount and recognizes an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, if any. This guidance is effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years, and should be applied on a prospective basis. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We are currently evaluating the impact of adopting this ~~guidance.~~guidance and will adopt this guidance for the annual test to be performed for the year ended December 31. 2018.

Fair Value Measurement. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement. ASU 2018-13 addresses the required disclosures around fair value measurement, removes certain disclosure requirements related to the fair value hierarchy, modifies existing disclosure requirements related to measurement uncertainty and adds new disclosure requirements. The new disclosure requirements include disclosing the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. The standard is effective for annual periods beginning after December 15, 2019, including interim periods within those annual periods. Early adoption is permitted. We do not believe the adoption of this guidance will have a material impact on our financial statements.

Internal-Use Software. In August 2018, the FASB issued ASU No. 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. ASU 2018-15. This new guidance aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The update is effective for annual periods beginning after December 15, 2019, including interim periods within those annual periods, with early adoption (including early adoption in any interim period) permitted. We do not believe the adoption of this guidance will have a material impact on our financial statements.

On January 1, 2018, we adopted ASC 606 and applied it to all contracts using the modified retrospective method. Results for reporting periods beginning after January 1, 2018 are presented under ASC 606, while prior period amounts have not and will not be adjusted and continue to be reported in accordance with our historical accounting treatment under Topic 605, Revenue Recognition.

The adoption of ASC 606 had the following impact on our balance sheet and statement of operations: (i) we reported higher product leases and royalty revenue and selling, general and administrative expense for the three and nine months ended September 30, 2018 as a result of the assessment of our distributor relationships. We have entered into agreements with certain distributors in Europe, which sublicense our intellectual property to gaming establishments in Europe. We have historically recorded net revenues (gross revenue generated minus distributor fees paid) as product leases and royalty revenue. However, after applying principal vs. agent considerations to these distributor relationships in accordance with ASC 606, we have determined that revenues earned from gaming establishments in Europe should now be recorded as gross revenue and fees earned by such distributors should be recorded as selling, general and administrative expenses as we had control of the sub-licensed intellectual property prior to the licensing of such intellectual property to the gaming establishments; and (ii) prepayments from customers in advance of the period that the revenue is recognized were historically recorded under the caption “deferred revenue” in the accompanying balance sheet. This caption has now been renamed “revenue contract liability” in accordance with the requirements of ASC 606.

For the three months ended September 30, 2018, the adoption of ASC 606 had the following impact on our statement of operations:

For the six months ended September 30, 2018, the adoption of ASC 606 had the following impact on our statement of operations:

We generate revenue primarily from the licensing of our intellectual property. We also, occasionally, receive a one-time sale of certain products and/or reimbursement of our manufactured equipment.

License Fees. We derive product lease and royalty revenue from negotiated recurring fee license agreements and the performance of our products. We account for these agreements as month-to-month contracts for the purposes of ASC 606 and recognize revenue each month as we satisfy our performance obligations by granting access to intellectual property to our clients. In addition, revenue associated with performance-based agreements is recognized during the month that the usage of the product or intellectual property occurs. We believe it is inappropriate to use the input method as the inputs do not correlate to the satisfaction of our performance obligations. Intellectual property requires significant upfront investment in the form of human resources required for their development and/or capital resources for acquisition from third parties. However, limited maintenance is required once the games have been placed on casino floors. The output method, on the other hand, recognizes revenue based on direct measurements of the value to our customers of the licensed intellectual property, which we believe is more appropriate. We have further applied the “as invoiced” practical expedient under the output method by recognizing product lease and royalty revenue in proportion to the amount for which we have the right to invoice.

Some of our intellectual property requires the installation of certain equipment and both the intellectual property and the related equipment are licensed in one bundled package. We have determined that the equipment is not distinct from the intellectual property and, therefore, we have only one performance obligation and, as a result, the allocation of the transaction price to different performance obligations is not necessary.

Product Sales. Occasionally, we sell certain incidental products or receive reimbursement of our manufactured equipment after the commencement of the new license agreement. Revenue from such sales is recognized as a separate performance obligation when we ship the items.

Disaggregation of Revenue. The following table disaggregates our revenue by major source for the three and six months ended September 30, 2018 and 2017:

The following table disaggregates our revenue by geographic location for the three and six months ended September 30, 2018 and 2017:

Revenue Contract Asset and Liability. Upon the adoption of ASC 606, we have applied the practical expedient of expensing incremental commissions paid to sales representatives directly related to the acquisition and fulfilment of new contracts, when the amortization period of the contract asset that we otherwise would have recognized is one year or less.

We invoice our clients monthly in advance for unlimited use of our intellectual property licenses. Upon the adoption of ASC 606, we recognized a revenue contract liability that represents such advanced billing to our clients for unsatisfied performance. We reduce the revenue contract liability and recognize revenue when we transfer those goods or services and, therefore, satisfy our performance obligation.

The table below summarizes changes in the revenue contract liability during the nine months ended September 30, 2018:

Revenue recognized during the nine months ended September 30, 2018 that was included in the beginning balance of revenue contract liability above was $1,083,639.

Inventory, net consisted of the following at September 30, ~~2017~~2018 and December 31, ~~2016:~~2017:

	2017			2016			2018			2017
Raw materials and component parts	$	270,863		$	171,478		$	333,068		$	235,673
Finished goods		96,834			128,956			391,602			318,453
Work-in-process		182,846			151,671
Inventory, gross		550,543			452,105			724,670			554,126
Less: inventory reserve		(25,000	)		(25,000	)		(30,000	)		(30,000	)
Inventory, net	$	525,543		$	427,105		$	694,670		$	524,126

Property and equipment, net consisted of the following at September 30, ~~2017~~2018 and December 31, ~~2016:~~2017:

	2017			2016			2018			2017
Furniture and fixtures	$	280,694		$	269,471		$	312,639		$	280,694
Automotive vehicles		215,127			202,143			215,127			215,127
Leasehold improvements		156,843			156,843			156,843			156,843
Computer equipment		117,645			105,114			157,096			121,992
Office equipment		53,483			37,871			53,485			53,483
Property and equipment, gross		823,792			771,442			895,190			828,139
Less: accumulated depreciation		(530,304	)		(415,189	)		(664,217	)		(564,272	)
Property and equipment, net	$	293,488		$	356,253		$	230,973		$	263,867

Property and equipment, net included $156,843 of leasehold improvements acquired under capital leases as of September 30, 2018 and December 31, 2017. Accumulated depreciation of leasehold improvements totaled $135,414 and $113,035 as of September 30, 2018 and December 31, 2017, respectively (Note 9).

For the nine months ended September 30, 2018 and 2017, depreciation expense related to property and equipment was $99,944 and $115,117, respectively.

Assets deployed at client locations, net consisted of the following at September 30, 2018 and December 31, 2017:

For the nine months ended September 30, ~~2017~~2018 and ~~2016,~~2017, depreciation expense related to ~~property~~assets deployed at client locations was $145,419 and ~~equipment of $115,117 and $97,326, respectively, is included in depreciation and amortization expense.~~

~~Accumulated depreciation of leasehold improvements totaled $105,322 and $82,183 as of September 30, 2017 and December 31, 2016,~~$84,674, respectively.

~~Products leased and held for lease, net consisted of the following at September 30, 2017 and December 31, 2016:~~

For the nine months ended September 30, 2017 and 2016, depreciation expense related to products leased and held for lease of $84,674 and $38,595, respectively, is included in depreciation and amortization expense.

Goodwill and finite-lived intangible assets, net consisted of the following at September 30, ~~2017~~2018 and December 31, ~~2016:~~2017:

	2017			2016			2018			2017
Goodwill	$	1,091,000		$	1,091,000		$	1,091,000		$	1,091,000
Finite-lived intangible assets:
Patents		13,615,967			13,615,967			13,475,000			13,475,000
Customer relationships		3,400,000			3,400,000			3,400,000			3,400,000
Trademarks		2,740,000			2,740,000			2,880,967			2,880,967
Non-compete agreements		660,000			660,000			660,000			660,000
Internally-developed software		102,968			—			136,015			102,968
Other intangible assets, gross		20,518,935			20,415,967			20,551,982			20,518,935
Less: accumulated amortization		(9,784,930	)		(8,660,948	)		(11,284,514	)		(10,157,126	)
Other intangible assets, net		10,734,005			11,755,019			9,267,468			10,361,809
Goodwill and other intangible assets, net	$	11,825,005		$	12,846,019		$	10,358,468		$	11,452,809

~~Included in amortization expense was $1,123,980 and $1,116,938 related to the above intangible assets for~~For the nine months ended September 30, 2018 and 2017 amortization expense related to the finite-lived intangible assets was $1,127,389 and ~~2016,~~$1,123,980, respectively.

Estimated future amortization expense ~~to be recorded for the twelve months ending September 30, 2018 through 2022 and thereafter~~ is as follows:

September 30,	Total
2018	$	1,498,873
Twelve months Ending September 30,			Total
2019		1,498,873	$	1,508,864
2020		1,481,712		1,491,702
2021		1,391,218		1,401,025
2022		1,390,676		1,392,984
2023				253,507
Thereafter		3,472,653		3,219,386
Total amortization	$	10,734,005	$	9,267,468

Accrued expenses consisted of the following at September 30, ~~2017~~2018 and December 31, ~~2016:~~2017:

	2017		2016		2018		2017
TableMAX license fee	$	736,428	$	470,512
Payroll and related		664,140		405,553	$	1,077,907	$	712,584
Commissions and royalties						77,768		65,380
Professional fees		152,962		59,567		19,426		63,488
Commissions and royalties		110,353		54,551
Other		58,156		119,245		48,533		46,344
Total accrued expenses	$	1,722,039	$	1,109,428	$	1,223,634	$	887,796

~~TableMAX license fee~~.Under the terms of a five-year licensing agreement (the “TMAX Agreement”) with TableMAX Corporation (“TMAX”), a provider of electronic table games and platforms headquartered in Las Vegas, Nevada, we previously had 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. The TMAX Agreement expired during 2016, and we are currently negotiating the licensing fee that is payable to TMAX.

Capital lease obligations consisted of the following at September 30, ~~2017~~2018 and December 31, ~~2016:~~2017:

	2017			2016			2018			2017
Capital lease obligation – leasehold improvements	$	54,921		$	78,008
Capital lease obligation							$	22,563		$	47,002
Less: Current portion		(32,332	)		(31,030	)		(22,563	)		(32,785	)
Total capital lease obligations – long-term	$	22,589		$	46,978		$	—		$	14,217

~~For the years ending September 30, future annual payments for~~The capital leases ~~obligations are as follows:~~consist of improvements located at our corporate headquarters in Las Vegas, Nevada.

Long-term debt consisted of the following at September 30, ~~2017~~2018 and December 31, ~~2016:~~2017:

	2017			2016			2018			2017
Term loan	$	9,712,500		$	10,500,000
Notes payable, related party		—			509,135
Nevada State Bank Term Loan and Revolver							$	10,361,600		$	—
Breakaway Term Loan								—			9,450,000
Equipment notes payable		133,935			162,274			94,977			124,311
Insurance notes payable		—			36,063			—			73,734
Notes payable, gross		9,846,435			11,207,472			10,456,577			9,648,045
Less:
Unamortized debt issuance costs		(513,151	)		(595,462	)		(101,983	)		(480,397	)
Warrants issued		(624,097	)		(743,604	)		—			(584,261	)
Notes payable, net		8,709,187			9,868,406			10,354,594			8,583,387
Less: Current portion		(1,088,957	)		(1,199,255	)		(1,360,823	)		(1,163,002	)
Long-term debt, net	$	7,620,230		$	8,669,151		$	8,993,771		$	7,420,385

Nevada State Bank Credit Agreement. On April 24, 2018, we entered into a credit agreement with ZB, N.A. dba Nevada State Bank (“NSB” and the “NSB Credit Agreement”), which provides for a $11.0 million five-year term loan (the “NSB Term Loan”) and a $1.0 million one-year revolving credit facility (the “NSB Revolver”).

Outstanding balances under the NSB Term Loan and the NSB Revolver accrue interest based on one-month US dollar London interbank offered rate (“LIBOR”) plus an Applicable Margin of 3.50%, or 4.00%, depending on our Leverage Ratio (as defined in the NSB Credit Agreement).

We are required to make monthly principal and interest payments, both of which are calculated over a seven-year term, with a balloon payment due on April 24, 2023. Borrowings under the NSB Credit Agreement are secured by a lien on substantially all of our assets.

Effective May 1, 2018, we entered into an interest rate swap agreement with an affiliate of NSB (the “Swap Agreement”) to fix the interest rate on the NSB Term Loan at 6.43% (assuming a Leverage Ratio less than 2.0) for three years. The notional amount of the Swap Agreement is initially $10.9 million but will decrease over time as a result of the anticipated principal paydowns.

The NSB Credit Agreement contains affirmative and negative financial covenants and other restrictions customary for borrowings of this nature. In particular, we are required to maintain a minimum trailing-four-quarters Fixed Charge Coverage Ratio (as defined in the NSB Credit Agreement) of 1.25 and a maximum Leverage Ratio of 3.00. The NSB Credit Agreement allows us to make share repurchases and to incur up to an additional $1.0 million of unsecured indebtedness provided that we are in compliance with the covenants in the NSB Credit Agreement on a pro forma basis. We were in compliance with the financial covenants of the NSB Credit Agreement as of September 30, 2018.

Upon execution of the NSB Credit Agreement, we borrowed $11.0 million under the NSB Term Loan and $0.1 million under the NSB Revolver. Borrowings under the NSB Revolver were repaid in full in July 2018 and $1.0 million was available at September 30, 2018 and the filing date of this Quarterly Report on Form 10-Q.

Breakaway Term loan. In August 2016, we entered into a term loan agreement (the ~~“Term~~“Breakaway Term Loan Agreement”) for an aggregate principal amount of $10,500,000 (the ~~"Term~~"Breakaway Term Loan"). Proceeds of the Term Loan were primarily used to prepay in full the outstanding notes payable to unrelated parties. The remainder of the proceeds from the Term Loan was used for general corporate purposes and working capital needs. The Term Loan is secured by a senior lien on substantially all of our assets. In conjunction with the Breakaway Term Loan, we also entered into a warrant agreement (the “Warrant Agreement”), pursuant to which we issued the lenders a six-year warrant to purchase 1,965,780 shares of our common stock (the “Warrants”). See Note 14. The estimated fair value of the Warrants on the grant date was determined to be $809,632 using the Black-Scholes option pricing model, and was recorded as a reduction of the related debt. The estimated fair value of the Warrants on the grant date is being amortized ratably over the term of the Warrants to interest expense.

Under the Term Loan, we are subject to quarterly financial covenants that, among other things, limit our annual capital expenditures (as defined in the Term Loan Agreement), and require us to maintain a specified leverage ratio and minimum EBITDA amounts, each of which are defined in the Term Loan agreement. We were in compliance with the financial covenants of the Term Loan Agreement as of September 30, 2017.

~~During the initial twelve-month period of the Term Loan, the~~The outstanding principal ~~will accrue~~initially accrued interest at the rate of 14.0% per ~~annum. Thereafter, the outstanding principal will accrue interest at the lesser of 14.0% per~~ annum, orwhich decreased to 12.5% per annum for any quarterly period in which we ~~achieve~~achieved a specified leverage ratio. Beginning October 1, 2017, the interest rate per annum decreased to 12.5% due to the achievement of such ratio.

~~The Term Loan required quarterly interest-only payments through December 31, 2016, after which~~On April 24, 2018, we are required to make quarterly principal payments of $262,500 plus accrued interest. The remaining principal and any unpaid interest will be payable in full on August 29, 2021. Voluntary prepayments of the Term Loan, in full or in part, are permitted after the first anniversary of the Term Loan, subject to certain premiums. The Term Loan also requires certain mandatory prepayments in the amount of 100% of the proceeds from certain asset dispositions (other than in the ordinary course of business) and certain other extraordinary events, and 25% ofused the proceeds from the ~~sale and issuance of capital stock.~~

~~The foregoing summary of the~~NSB Term Loan ~~Agreement~~ and the ~~Warrant Agreement is qualified in its entirety by reference~~NSB Revolver to ~~the respective agreements, which are found as Exhibits 99.1 and 99.2, respectively, to our Form 8-K filed with the SEC on August 29, 2016.~~

~~Notes payable, related party~~. In connection with an asset purchase agreement executed in December 2007, we executed a note payable to an entity owned and controlled by Mr. Saucier (the “Related Party Note Payable”). The Related Party Note Payable required annual principal and interest payments of $109,908, at a fixed interest rate of 7.3% through December 2018, at which time there was a balloon payment due of $354,480. On August 11, 2017, we repaidrepay in full the ~~then-outstanding~~remaining principal ~~balance along~~amount under the Breakaway Term Loan, together with accrued ~~and~~but unpaid interest, ~~(in~~an early redemption premium and associated legal fees. In addition, we redeemed the ~~aggregate amount~~Warrants at $1,333,333. The early redemption of ~~$459,683) on~~ the ~~Related Party Note Payable. This payment constituted a Restricted Payment as defined in our~~Breakaway Term Loan ~~and we received a waiver with respect to the payment from the administrative agent for the Term Loan.~~resulted in approximately $1.3 million of loss on extinguishment of debt.

As of September 30, ~~2017,~~2018, future maturities of our long-term debt obligations are as follows:

September 30,	Total
2018	$	1,088,957
Twelve months Ending September				Total
2019		1,090,223		$	1,360,823
2020		1,076,750			1,437,950
2021		6,584,849			1,530,149
2022		5,656			1,616,655
Thereafter					4,511,000
Total notes payable		9,846,435			10,456,577
Less:
Unamortized debt issuance costs		(513,151	)		(101,983	)
Warrants issued		(624,097	)
Notes payable, net	$	8,709,187		$	10,354,594

Concentration of risk. We are exposed to risks associated with a client who represent a significant portion of total revenues. For the nine months ended September 30, ~~2017~~2018 and ~~2016,~~2017, respectively, we had the following client revenue concentration:

We are also exposed to risks associated with the expiration of our patents. In 2015, domestic and international patents for two of our products expired, which accounted for approximately $6,484,265 or 47.4% of our revenue for the nine months ended September 30, 2018, as compared to $5,370,094 or 49.0% of our revenue for the nine months ended September 30, ~~2017, as compared to $4,299,637 or 46.5% of our revenue for the nine months ended September 30, 2016.~~2017. We continue to generate higher revenue from these products despite the expiration of the underlying patents and, accordingly, we do not expect the expiration of these patents to have a significant adverse impact on our future financial statements.

Operating lease. In February 2014, we entered into a lease (the “Spencer Lease”) for a new corporate office with an unrelated third party. The five-year Spencer Lease is for an approximately 24,000 square foot space, which is comprised of approximately 16,000 square feet of office space and 8,000 square feet of warehouse space. The property is located in Las Vegas, Nevada.

The initial term of the Spencer Lease commenced on April 1, 2014 and expires on June 30, 2019. We were obligated to pay approximately $153,000 in annual base rent in the first year, and the annual base rent is scheduled to increase by approximately 4% each year. We are also obligated to pay real estate taxes and other building operating costs. Subject to certain conditions, we have certain rights under the Spencer Lease, including rights of first offer to purchase the premises if the landlord elects to sell. We also have an option to extend the term of the Spencer Lease for two consecutive terms of three years each, at the then current fair market value rental rate determined in accordance with the terms of the Spencer Lease.

In connection with the ~~commencement of the~~ Spencer Lease, the landlord agreed to finance tenant improvements of $150,000 (“TI Allowance”) ~~of $150,000.~~. The base rent is increased by an amount sufficient to fully amortize the TI Allowance through the initial Spencer Lease term upon equal monthly payments of principal and interest, with interest imputed on the outstanding principal balance at the rate of 5.5% per annum. The TI Allowance has been classified as a capital lease on the condensed balance ~~sheet.~~sheet (Note 9).

Total rent expense was ~~$217,650~~$222,296 and ~~$208,961~~$217,650 for the nine months ended September 30, ~~2017~~2018 and ~~2016,~~2017, respectively.

~~There are currently no~~Estimated future minimum operating lease ~~commitments that extend beyond April 1, 2020. As of~~payment obligations total $179,190, which are all due within the twelve months ending September 30, ~~2017, the amounts shown in the accompanying table reflect our estimates of annual future minimum lease obligations:~~2019.

Legal proceedings. In the ordinary course of conducting our business, we are, from time to time, involved in various legal ~~proceedings,~~and administrative proceedings, regulatory government investigations and other matters, including those in which we are a plaintiff or defendant, that are complex in nature and have outcomes that are difficult to predict. We record accruals for such contingencies to the extent we conclude that it is probable that a liability will be incurred and the amount of the related loss can be

reasonably estimated. Our assessment of each matter may change based on future unexpected events. An unexpected adverse judgment in any pending litigation could cause a material impact on our business operations, intellectual property, results of operations or financial position. Unless otherwise expressly stated, we believe costs associated with litigation will not have a material impact on our financial position or liquidity, but may be material to the results of operations in any given period. We assume no obligation to update the status of pending litigation, except as may be required by U.S. GAAP, applicable law, statue or regulation. For a complete description of the facts and circumstances surrounding material litigation to which we are a party, see Note 1211 in Item 8. “Financial Statements and Supplementary Data” included in our ~~2016~~2017 10-K.

In September 2018, we were served with a complaint by TableMax Gaming, Inc. (“TMax”) regarding an Operation and License Agreement executed between TMax and us in February 2011 (the “TMAX Agreement”). The complaint, filed in the Eighth Judicial District Court in Clark County, Nevada, alleges that we breached the TMAX Agreement, among other allegations. We filed an answer denying the allegations and counterclaimed for breach of contract, Abuse of Process and Fraud in the Inducement, among other counterclaims. We believe the TMax complaint lacks any merit and intend to aggressively pursue dismissal of the complaint while pursuing our counterclaims.

~~In February 2017, a former employee forfeited 100,000 shares of unvested restricted stock and paid us $35,000 in connection with the exercise of 150,000 fully-vested stock options.~~

On ~~August~~March 31, ~~2017, in accordance with the~~ ~~Lipparelli~~ ~~Agreement, the Board authorized the issuance of 800,000~~2018, we issued 13,000 restricted shares of our common stock ~~which~~valued at $13,520, to each of Messrs. Norm DesRosiers, Bryan Waters and William Zender, who are members of our Board of Directors (the “Board”), in consideration of their service on the Board during the three months ended March 31, 2018. These shares ~~vest~~vested immediately on the grant date.

On June 30, 2018, we issued 13,000 restricted shares of our common stock valued at $15,600, to each of Messrs. DesRosiers, Waters and Zender, in consideration of their service on the Board during the three months ended June 30, 2018. These shares vested immediately on the grant date.

On September 30, 2018, we issued 13,000 restricted shares of our common stock valued at $16,770, to each of Messrs. DesRosiers, Waters and Zender, in consideration of their service on the Board during the three months ended September 30, 2018. These shares vested immediately on the grant date.

On April 24, 2018, our Board authorized the repurchase of shares of our common stock in an amount not to exceed $1.0 million. Such repurchases may be made from time to time based on market conditions and may be completed in the open market or in privately-negotiated transactions. Repurchase transactions will be executed only when we believe that we will remain in compliance with the covenants of the NSB Credit Agreement. Finally, execution of share repurchases may require regulatory approval in one or more jurisdictions. We have not repurchased any of our common stock as ~~follows: (i) as to the first 200,000 shares, on August 31, 2017, (ii) as to the next 200,000 shares, on January 2, 2018, and (iii) as to the next 400,000 shares, on January 2, 2019.~~of September 30, 2018.

Our forecasted annual effective tax rate at September 30, ~~2017~~2018 was ~~56.6%~~17.5%, as compared to ~~34.2%~~56.6% at September 30, ~~2016.~~2017. For the nine months ended September 30, ~~2017~~2018 and ~~2016,~~2017, our effective tax rate was ~~51.4%~~17.5% and ~~34.3%~~61.4%, respectively. The ~~increase~~decrease in ~~the effective tax rate~~both rates was primarily due to ~~the permanent book-to-tax difference generated by changes~~a reduction in the ~~estimated fair value~~federal statutory rate as a result of the Tax Cuts and Jobs Act signed in December 2017 (the “Tax Act”). As of September 30, 2018, we had completed our preliminary assessment for the tax effects resulting from the enactment of the ~~warrant liability~~Tax Act and made a reasonable estimate of the effect on our annual effective tax rate and existing deferred tax balances. We will continue to make and refine our calculations as additional analysis is completed. In addition, our estimates may also be affected as we gain a more thorough understanding of ~~and for~~ the ~~nine months ended September 30, 2017.~~Tax Act.

On May 10, 2018, the Board ratified and confirmed the 2014 Equity Incentive Plan (the “2014 Plan”). The 2014 Plan is a broad-based plan under which 5,550,750 shares of our common stock are authorized for issuance for awards, including stock options, stock appreciation rights, restricted stock, and cash incentive awards to members of our Board, executive officers, employees and independent contractors. As of September 30, 2018, 689,000 shares remained available for issuance as new awards under the 2014 Plan.

Stock options. During the nine months ended September 30, ~~2017~~2018 and ~~2016,~~2017, we issued ~~1,390,000~~270,000 and ~~427,500~~1,390,000 options to purchase our common stock, respectively, to members of our Board, ~~independent contractors,~~ executive officers, employees and ~~employees.~~independent contractors.

On May 1, 2017, we entered into an employment agreement (the “Hagerty Employment Agreement”) with Harry C. Hagerty, pursuant to which Mr. Hagerty serves as our Secretary, Treasurer and Chief Financial Officer for a term that extends through April 30, 2020. Pursuant to the Hagerty Employment Agreement, Mr. Hagerty receives a base salary of $120,000 per annum and is eligible for bonuses if and as approved by the Compensation Committee of the Board. In addition, Mr. Hagerty has been granted options to purchase 400,000 shares of our Common Stock at an exercise price per share of $0.60, subject to vesting and other conditions.

On July 26, 2017, in connection with the Cravens Employment Agreement, Mr. Cravens was granted options to purchase up to 450,000 shares of our common stock, which vest as follows: (i) as to the first 150,000 shares of stock, on July 26, 2017, (ii) as to the next 150,000 shares of stock, on August 1, 2018, and (iii) as to the next 150,000 shares of stock, on August 1, 2019, all pursuant to the terms of a stock option grant agreement by and between us and Mr. Cravens. Provided that Mr. Cravens is a full-time employee on August 1, 2020, we agreed to grant to Mr. Cravens an option to purchase an additional 150,000 shares of our common stock with a strike price equal to the price per share of our common stock as reported on OTC Markets on August 1, 2020 (or the nearest trading date thereafter), which option will vest on August 1, 2020 (or the nearest trading date thereafter).

The fair value of all stock options granted for the nine months ended September 30, ~~2017~~2018 and ~~2016~~2017 was determined to be ~~$652,895~~$169,807 and ~~$96,137,~~$652,895, respectively, using the Black-Scholes option pricing model with the following assumptions:

	Nine months ended September 30, 2017		Nine months ended September 30, 2016		Nine Months Ended September 30, 2018		Nine Months Ended September 30, 2017
Dividend yield		0%		0%		0%		0%
Expected volatility	80% - 87%		89% - 90%		78%		80 - 87%
Risk free interest rate	1.73% - 1.94%		1.01% - 1.22%		2.46% - 2.73%		1.73 - 1.94%
Expected life (years)		5.00		5.00		5.00		5.00

	Common stock options			Weighted- average exercise price		Aggregate intrinsic value		Weighted-average remaining contractual term (years)		Common stock options		Weighted- average exercise price		Aggregate intrinsic value		Weighted-average remaining contractual term (years)
Outstanding – December 31, 2016		1,496,250		$	0.32	$	385,017		3.57
Outstanding – December 31, 2017											2,811,250	$	0.54	$	1,849,517		3.65
Issued		1,390,000			0.71		—		—		270,000		0.98		—		—
Exercised		(150,000	)		0.23		—		—		—		—		—		—
Expired		—			—		—		—		—		—		—		—
Outstanding – September 30, 2017		2,736,250		$	0.52	$	1,767,429		3.87
Exercisable – September 30, 2017		1,822,359		$	0.46	$	1,289,100		3.53
Outstanding – September 30, 2018											3,081,250	$	0.58	$	2,186,179		3.05
Exercisable – September 30, 2018											2,317,916	$	0.52	$	1,775,996		2.78

	Common stock options			Weighted-average exercise price		Aggregate intrinsic value		Weighted-average remaining contractual term (years)		Common stock options			Weighted-average exercise price		Aggregate intrinsic value		Weighted-average remaining contractual term (years)
Unvested – December 31, 2016		128,889		$	0.34	$	30,933		3.99
Unvested – December 31, 2017											825,557		$	0.63	$	467,379		4.27
Granted		1,390,000			0.71		—		—		270,000			0.98		—		—
Vested		(604,998	)		0.73		—		—		(332,223	)		0.64		—		—
Forfeited or expired		—			—		—		—		—			—		—		—
Unvested – September 30, 2017		913,891		$	0.65	$	478,329		4.54
Unvested – September 30, 2018											763,334		$	0.75	$	410,184		3.82

As of September 30, ~~2017,~~2018, our unrecognized stock-based compensation expense associated with the stock options issued was ~~$333,888,~~$299,788, which will be amortized over a weighted-average of ~~1.96~~1.81 years.

Warrants. On August 29, 2016, in connection with the Breakaway Term Loan Agreement, we issued the lenders the Warrants to purchase 1,965,780 shares of our common stock at an initial exercise price of $0.30 per share. ~~The number of shares of common stock issuable~~On April 24, 2018, we paid $1,333,333 to redeem the Warrants in full upon ~~exercise~~extinguishment of the Warrants, and/or the exercise price of such shares, is subject to standard anti-dilution adjustments in the event of stock splits, reorganizations, stock dividends, and similar events. As of the date of the Warrant Agreement, the shares of common stock issuable upon a full exercise of the Warrants represented 5.0% of the total issued and outstanding shares of our common stock. The lenders were also granted the right, but not the obligation, to purchase up to 5.0% of the total number of new securities that we may, from time to time, sell and issue.

~~The Warrants expire on August 29, 2022, and may not be exercised prior to the earliest of (a) the fifth anniversary of the~~Breakaway Term Loan Agreement, (b) the date on which the obligations described in the Term Loan Agreement are satisfied in full, or (c) the date on which the lenders declare all or any portion of the outstanding amount of the Term Loan to be due and payable under the terms of the Term Loan Agreement (collectively, the "Trigger Date")(Note 10). ~~Exercise of the Warrants requires a sixty (60) day prior written notice, during which time we may exercise our Call Right described below.~~

The Warrant Agreement includes a call right (the "Call Right") whereby we can purchase the Warrants for a fixed sum of $1,333,333 upon providing the Warrant holders with a thirty (30) day prior written notice. Furthermore, the Warrant Agreement also includes a put right (the "Put Right") whereby the lenders may require us to purchase from the lenders all or any portion of the Warrants at a purchase price equal to the lesser of (a) the fair market value of the underlying shares of common stock as of the date of exercise of the Put Right, or (b) $1,333,333. The Put Right may not be exercised prior to the Trigger Date (as defined above), and the Put Right expires on August 29, 2022. The foregoing summary of the Term Loan Agreement and the Warrant Agreement is qualified in its entirety by reference to the respective agreements, which are found as Exhibits 99.1 and 99.2, respectively, to our Form 8-K filed with the SEC on August 29, 2016.

We estimate fair value for financial assets and liabilities in accordance with Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurement (“ASC 820”). ASC 820 defines fair value, provides guidance for measuring fair value, requires certain disclosures and discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow) and the cost approach (cost to replace the service capacity of an asset or replacement cost). ASC 820 utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels:

The estimated fair value of cash equivalents, restricted cash, accounts receivable and accounts payable approximates their carrying amount due to their short-term nature. The estimated fair value of our long-term debt and capital lease obligations approximates their carrying value based upon our expected borrowing rate for debt with similar remaining maturities and comparable risk. As of September 30, ~~2017,~~2018, the ~~Warrants were~~interest rate swap agreement was the only financial instrument measured at estimated fair value on a recurring basis based on valuation reports provided by counterparties, which are classified as level 2 inputs.

~~We evaluated subsequent events through~~On October 12, 2018, we granted the ~~date~~following stock options to purchase our restricted common stock: (i) 250,000 to Todd Cravens, our President and Chief Executive Officer; (ii) 180,000 to Harry Hagerty, our Chief Financial Officer; and (iii) 45,000 to our general counsel. The stock options were issued with a strike price of ~~issuance~~$1.187, have a contractual term of five years, contain customary change-of-control provisions, and vest in equal installments on each of the ~~financial statements. There~~first three anniversaries from the grant date.

On November 5, 2018, we issued a press release and filed a related Form 8-K announcing that (i) Robert B. Saucier submitted his resignation as a member of our Board effective immediately and his resignation as Executive Vice President of Business Development effective on December 31, 2018; and (ii) that we have ~~been no subsequent events that occurred during such period that would require adjustment~~ retained Macquarie Capital (USA) Inc. to ~~or disclosure~~assist it in evaluating strategic alternatives, including the ~~financial statements as~~potential sale of ~~and for~~ the ~~three and nine months ended September 30, 2017.~~shares of our common stock held by Triangulum Partners LLC, an entity controlled by Mr. Saucier.

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

The following discussion of the financial condition and results of operations of the Company should be read in conjunction with the condensed consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q. This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Section 27A of the Securities Act, and is subject to the safe harbors created by those sections. Words such as “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “may,” “will” and variations of these words or similar expressions are intended to identify forward-looking statements. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions that are difficult to predict. Therefore, our actual results could differ materially and adversely from those expressed in any forward-looking statements as a result of various factors. Such forward-looking statements speak only as of the date of this report; we undertake no obligation to revise or publicly release the results of any revisions to these forward-looking statements. Readers are urged to carefully review and consider the various disclosures made by us in this report, as well as the disclosures made in the Galaxy Gaming, Inc. Annual Report on Form 10-K for the year ended December 31, ~~2016~~2017 filed on April ~~14, 2017~~2, 2018 (the ~~“2016~~“2017 10-K”), and other filings we make with the Securities and Exchange Commission, which attempt to advise interested parties of the risks, uncertainties, and other factors that affect our business, operating results, financial condition and stock price.

Due to possible uncertainties and risks, readers are cautioned not to place undue reliance on the forward-looking statements contained in this Quarterly Report, which speak only as of the date of this Quarterly Report, or to make predictions about future performance based solely on historical financial performance. We disclaim any obligation to update forward-looking statements contained in this Quarterly Report.

We develop, acquire, manufacture and market technology and entertainment-based products and services for the gaming industry for placement on the casino floor. Our products and services primarily relate to licensed casino operators’ table games activities and focus on either increasing their profitability, productivity and security or expanding their gaming entertainment offerings in the form of proprietary table games, electronically enhanced table game platforms, fully-automated electronic tables and other ancillary equipment. Our products and services are offered in highly regulated markets throughout the world. Our products and services are manufactured at our headquarters and manufacturing facility in Las Vegas, Nevada, as well as outsourced for certain sub-assemblies in the United States.

Additional information regarding our products and product categories may be found in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our ~~2016~~2017 10-K and on our web site, www.galaxygaming.com. Information found on the web site should not be considered part of this report.

As discussed in Note 1 to our condensed financial statements included in Item 1 of this report, financial statements for the three and nine months ended September 30, 2016 have been restated to correct certain errors noted during the preparation of the financial statements for the year ended ~~December 31, 2016~~. The restatements to reflect the correction of these errors are referred to herein collectively as the "Restatement." For further information regarding the Restatement, see our Current Report on Form 8-K filed with the SEC on April 3, 2017.

Results of operations for the three months ended September 30, 2018 and 2017. For the three months ended September 30, ~~2017, our continuing operations~~2018, we generated gross revenues of ~~$3,830,420~~$4,775,784 compared to gross revenues of ~~$3,191,969~~$3,830,420 for the comparable prior-year period, representing an increase of ~~638,451,~~945,364, or ~~20.0%~~24.7%. This increase was primarily attributable to ~~our focus on Premium~~higher revenue from: (i) Bonus Jackpot System due to additional game placements; (ii) internet-based gaming activities; and (iii) premium Games such as ~~High Card Flush,~~ Heads Up Hold ’em, High Card Flush and ~~and~~ Player’s Edge, which command a higher price point per ~~unit, and~~unit. In addition, the ~~improved performance~~adoption of ~~side bet games such as~~ASC 606 resulted in $230,842 of higher revenue reported for the three months ended September 30, 2018. Since we elected to adopt ASC 606 using the ~~21+3~~modified retrospective approach, no changes were made to our previously issued financial statements, including the statement of operations for the three months ended September 30, 2017. Excluding the impact of the adoption of ASC 606, gross revenue for the ~~and~~three months ended September 30, 2018 ~~Bonus Craps~~would have been $4,544,942, an increase of 18.7% over the comparable prior period..

Selling, general and administrative expenses for the three months ended September 30, ~~2017~~2018 were ~~$2,362,601~~$2,559,056 compared to ~~$1,553,556~~$2,362,601 for the comparable prior period, representing an increase of ~~$809,045,~~$196,455, or ~~52.1%~~8.3%. ~~Significant quarter-over-quarter changes in~~ Excluding the impact of the adoption of ASC 606, selling, general and administrative expenses ~~consisted~~ for the three months ended September 30, 2018 would have been $2,328,214, a decrease of 0.9% over the ~~following categories:~~comparable prior period.

Employee compensation and related expenses increased as a result of our investments in personnel as we continue to grow and attract new talent, as well as higher sales commissions due to increased revenues in 2017. Professional and compliance fees have increased due to on-going regulatory applications in various jurisdictions.

Research and development expenses for the three months ended September 30, ~~2017~~2018 were ~~$139,185,~~$373,456, compared to ~~$89,513~~$139,185 for the comparable prior-year period, representing an increase of ~~$49,672,~~$234,271, or ~~55.5%~~168.3%. This increase was primarily due to increased costs associated with testing our products currently in development.

Stock-based compensation expenses for the three months ended September 30, 2018 was $192,998, as compared to $384,925 for the comparable prior-year period, representing a decrease of $191,927, or 49.9%. During the three months ended September 30, 2017, we issued stock options and restricted shares of common stock to our President and Chief Executive Officer and Chairman of the Board, a portion of which was vested immediately and thus expensed during the quarter.

Income from operations increased $686,834 or 151.5% to $1,140,044 for the three months ended September 30, 2018, compared to $453,210 for the comparable prior-year period. This increase was primarily attributable to higher revenue and lower share-based compensation expenses, partially offset by higher selling, general and administrative and research and development expenses.

Total interest expense decreased $226,041, or 52.3%, to $206,425 for the three months ended September 30, 2018, compared to $432,466 for the comparable prior-year period. The decrease was mainly attributable to lower interest rate on the NSB Term Loan and the NSB Revolver as compared to the Breakaway Term Loan.

There was no change in estimated fair value of warrants issued in connection with the Breakaway Term Loan for the three months ended September 30, 2018, compared to other expense of $86,308 for the comparable prior-year period. The Warrants were paid off on April 24, 2018 in connection with the payoff of the Breakaway Term Loan.

Income tax provision was $166,662 for the three months ended September 30, 2018, compared to a provision of $21,990 for the comparable prior-year period. This increase was primarily attributable to the increase in income before provision for income taxes, partially offset by a reduction in the federal statutory rate as a result of the Tax Cuts and Jobs Act signed in December 2017.

Results of operations for the nine months ended September 30, 2018 and 2017. For the nine months ended September 30, 2018, we generated gross revenues of $13,672,650 compared to gross revenues of $10,964,524 for the comparable prior-year period, representing an increase of $2,708,126, or 24.7%. This increase was primarily attributable to higher revenue from: (i) Bonus Jackpot System due to additional game placements; (ii) internet-based gaming activities; and (iii) premium Games such as Heads Up Hold ’em, High Card Flush and Player’s Edge, which command a higher price point per unit. In addition, the adoption of ASC 606 resulted in $703,611 of higher revenue reported for the nine months ended September 30, 2018. Since we elected to adopt ASC 606 using the modified retrospective approach, no changes were made to our previously issued financial statements, including the statement of operations for the nine months ended September 30, 2017. Excluding the impact of the adoption of ASC 606, gross revenue for the nine months ended September 30, 2018 would have been $12,969,039, an increase of 18.3% over the comparable prior period.

Selling, general and administrative expenses for the nine months ended September 30, 2018 were $7,741,213 compared to $6,808,659 for the comparable prior period, representing an increase of $932,554, or 13.7%. The increase was primarily due to higher compensation and related expense as we continue to invest in personnel and attract new talent. Excluding the impact of the adoption of ASC 606, selling, general and administrative expenses for the nine months ended September 30, 2018 would have been $7,037,603, an increase of 6.0% over the comparable prior period.

Research and development expenses for the nine months ended September 30, 2018 were $816,657, compared to $403,618 for the comparable prior-year period, representing an increase of $413,039, or 102.3%. This increase was primarily due to increased costs associated with testing our products currently in development.

Stock-based compensation expenses for the ~~three~~nine months ended September 30, ~~2017 were $384,925,~~2018 was $550,588, as compared to ~~$41,075~~$553,313 for the comparable prior-year period, representing ~~an increase~~a decrease of ~~$343,850,~~$2,725, or ~~837.1%~~0.5%. ~~The increase was primarily due to stock options and restricted shares of common stock issued in 2017 to executive officers, board members and independent contractors.~~

Income from operations ~~decreased $608,312~~increased $1,342,580 or ~~57.3%~~77.1% to ~~$453,210~~$3,084,225 for the ~~three~~nine months ended September 30, ~~2017,~~2018, compared to ~~$1,061,522~~$1,741,645 for the comparable prior-year period. This ~~decrease~~increase was primarily attributable to higher revenue, partially offset by higher selling, general and administrative and ~~share-based compensation~~research and development expenses.

~~During~~Total interest expense decreased $496,208, or 37.7%, to $819,837 for the ~~three~~nine months ended September 30, 2016, we entered into a settlement agreement with Red Card Gaming, Inc. and AGS, LLC to settle all claims and counter-claims related to contract dispute litigation. As a result of the settlement agreement, we recognized settlement income of $697,214, which includes a $350,000 payment from AGS and a release of $347,214 in accrued contingent consideration owed to AGS.

~~Total interest expense increased $204,834, or 90.0%, to $432,466 for the three months ended September 30, 2017,~~2018, compared to ~~$227,632~~$1,316,045 for the comparable prior-year period. The ~~increase~~decrease was mainly attributable to lower interest rate on the NSB Term Loan and the NSB Revolver as compared to the Breakaway Term Loan and a reduction in interest ~~expense was primarily~~rate on the Breakaway Term Loan beginning October 1, 2017 due to ~~the Term Loan refinance transaction completed in August 2016.~~achievement of a specified leverage ratio.

~~During the three months ended September 30, 2016, we repaid in full the PTG Notes and wrote off the related unamortized debt discounts, which resulted in a loss of extinguishment of debt of $515,037.~~

~~The~~There was no change in estimated fair value of warrants issued in connection with the Breakaway Term Loan ~~resulted in other expense of $86,308~~ for the ~~three~~nine months ended September 30, ~~2017,~~2018, compared to other ~~income~~expense of ~~$2,933~~$409,717 for the comparable prior-year period. The Warrants were paid off on April 24, 2018 in connection with the payoff of the Breakaway Term Loan.

Loss on extinguishment of debt was $1,349,271 as a result of an early redemption premium paid in connection with the payoff of the Breakaway Term Loan and the write-off of unamortized debt issuance costs and estimated grant-date fair value ~~is determined using~~of the ~~Black-Scholes pricing model.~~Warrants.

Income tax provision was ~~$21,990~~$154,799 for the ~~three~~nine months ended September 30, ~~2017,~~2018, compared to ~~$351,412~~$86,881 for the comparable prior-year period. This change was primarily attributable to the ~~decrease~~increase in income before provision for income taxes, ~~and~~ ~~the permanent book-to-tax difference generated~~partially offset by ~~changes~~a reduction in the ~~estimated fair value of the warrant liability as of and for the~~ ~~three months ended September 30, 2017.~~

~~Results of operations for the~~ ~~nine months ended September 30, 2017~~. ~~For the~~ ~~nine months ended September 30, 2017~~, our continuing operations generated gross revenues of $10,964,524 compared to gross revenues of $9,240,240 for the comparable prior-year period, representing an increase of $1,724,284, or 18.7%. This increase was primarily attributable to our focus on Premium Games such as ~~High Card Flush~~, ~~Heads Up Hold ’em~~ ~~and~~ ~~Player’s Edge, which command a higher price point per unit, and the improved performance of side bet games such as~~ ~~21+3~~ ~~and~~ ~~Bonus Craps. Selling, general and administrative expenses were $6,808,659 for the~~ ~~nine months ended September 30, 2017,~~ ~~compared to $4,819,373 for the~~ ~~comparable prior period, representing an increase of $1,989,286, or 41.3%. Significant year-over-year changes in selling, general and administrative expenses consisted of the following categories:~~

~~Employee compensation and related expenses increased~~federal statutory rate as a result of ~~our investments~~the Tax Cuts and Jobs Act signed in ~~personnel as we continue to grow and attract new talent, as well as higher sales commissions due to increased revenues in~~December 2017. ~~Professional and compliance fees have increased due to on-going regulatory applications in various jurisdictions.~~

~~Research and development expenses for the~~ ~~nine months ended September 30, 2017~~ were $403,618, compared to $270,734 for the comparable prior-year period, representing an increase of $132,884, or 49.1%. This increase was primarily due to increased costs associated with testing our products currently in development.

~~Stock-based compensation expenses for the~~ ~~nine months ended September 30, 2017~~ were $553,313, as compared to $91,006 for the comparable prior-year period, representing an increase of $462,307, or 508.0%. The increase was primarily due to stock options and restricted shares of common stock issued in 2017 to executive officers, board members and independent contractors.

~~Income from operations decreased $986,547, or 36.2%, to $1,741,645 for the~~ ~~nine months ended September 30, 2017, compared to $2,728,192 for the comparable prior-year period. This decrease was primarily attributable to higher selling, general and administrative and share-based compensation expenses.~~

During the nine months ended September 30, 2016, we entered into a settlement agreement with Red Card Gaming, Inc. and AGS, LLC to settle all claims and counter-claims related to contract dispute litigation. As a result of the settlement agreement, we recognized settlement income of $697,214, which includes a $350,000 payment from AGS and a release of $347,214 in accrued contingent consideration owed to AGS.

~~Total interest expense increased $575,000, or 77.6%, to $1,316,045 for the~~ ~~nine months ended September 30, 2017, compared to $741,045 for the comparable prior-year period. The increase in interest expense was primarily due to the Term Loan refinance transaction completed in August 2016.~~

~~During the nine months ended September 30, 2016, we repaid in full the PTG Notes and wrote off the related unamortized debt discounts, which resulted in a loss of extinguishment of debt of $515,037.~~

~~The change in estimated fair value of warrants issued in connection with the Term Loan resulted in other expense of $409,717 for the~~ ~~nine months ended September 30, 2017, compared to other income of $2,933 for the comparable prior-year period. The estimated fair value is determined using the Black-Scholes pricing model.~~

~~Income tax provision was $86,881 for the~~ ~~nine months ended September 30, 2017, compared to $873,768 for the comparable prior-year period. This change was attributable to the decrease in income before provision for income taxes and the permanent book-to-tax difference generated by changes in the estimated fair value of the warrant liability as of and for the nine months ended September 30, 2017~~.

Adjusted EBITDA. Adjusted EBITDA includes ~~adjustment~~adjustments to net income to exclude interest, taxes, depreciation, amortization, share based compensation, loss on extinguishment of debt, foreign currency exchange gains, change in estimated fair value of warrant liability, and settlement income. Adjusted EBITDA is not a measure of performance defined in accordance with U.S. generally accepted accounting principles ("U.S. GAAP"). However, Adjusted EBITDA is used by management to evaluate our operating performance. Management believes that disclosure of the Adjusted EBITDA metric offers investors, regulators and other stakeholders a view of our operations in the same manner management evaluates our performance. When combined with U.S. GAAP results, management believes Adjusted EBITDA provides a comprehensive understanding of our financial results. Adjusted EBITDA should not be considered as an alternative to net income or to net cash provided by operating activities as a measure of operating results or of liquidity. It may not be comparable to similarly titled measures used by other companies, and it excludes financial information that some may consider important in evaluating our performance. A reconciliation of U.S. GAAP net income from operations to Adjusted EBITDA is as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
Adjusted EBITDA Reconciliation:	2017			2016			2017			2016			2018			2017			2018			2017
				(Restated)						(Restated)
Net (loss) income	$	(27,930	)	$	661,718		$	54,578		$	1,652,992
Interest income		—			(56	)		—			(202	)
Net income (loss)													$	791,968		$	(27,930	)	$	732,043		$	54,578
Interest expense		432,466			227,632			1,316,045			741,045			206,425			432,466			819,837			1,316,045
Foreign currency exchange loss (gain)														22,095			(59,624	)		542			(125,576	)
Change in estimated fair value of warrant liability														—			86,308			—			409,717
Change in estimated fair value of interest rate swap liability														(48,528	)		—			28,707			—
Loss on extinguishment of debt														1,765			—			1,349,271			—
Income tax provision		21,990			351,412			86,881			873,768			166,662			21,990			154,799			86,881
Depreciation and amortization		440,130			419,540			1,323,772			1,252,860			462,402			440,130			1,372,752			1,323,772
Loss on extinguishment of debt		—			515,037			—			515,037
Share based compensation expense		384,925			41,075			553,313			91,006			192,998			384,925			550,588			553,313
Foreign currency exchange gains		(59,624	)		5,926			(125,576	)		(354,301	)
Change in estimated fair value of warrant liability		86,308			(2,933	)		409,717			(2,933	)
Settlement income		—			(697,214	)		—			(697,214	)
Interest income														(343	)		—			(974	)		—
Adjusted EBITDA	$	1,278,265		$	1,522,137		$	3,618,730		$	4,072,058		$	1,795,444		$	1,278,265		$	5,007,565		$	3,618,730

Liquidity and capital resources.We expect that we will be able meet our operating, investing and financing needs for liquidity through cash on hand and anticipated positive cash flows from operations. In addition, as part of the refinancing transactions completed in April 2018, we have access to a revolving line of credit (borrowings on which may be restricted under certain circumstances). See Note 10 to our condensed financial statements included in Item 1 of this report. However, our expectations may not be realized, and the issuance of additional debt or equity financing may be required. There can be no assurance that we will be successful in raising additional funding, if necessary; and even if we are successful, it may not be on advantageous terms to us. If we are not able to secure additional funding, the implementation of our business plan could be impaired. Several unforeseen circumstances may affect our belief that our cash on hand and cash flows from operations will be adequate for our needs. For example, we may incur higher capital expenditures than anticipated to expand our operations. We may from time to time acquire products and businesses complementary to our business. We may also incur higher-than-expected expenses when applying for new licenses or in complying with current jurisdictional requirements.

As of September 30, ~~2017,~~2018, we had total current assets of ~~$6,483,723~~$8,948,806 and total assets of ~~$19,292,441.~~$20,144,560. This compares to ~~$5,148,435~~$6,770,189 and ~~$19,011,945,~~$19,114,163, respectively, as of December 31, ~~2016.~~2017. The increase in current assets as of September 30, ~~2017~~2018 was primarily ~~impacted by~~due to an increase in cash, ~~and~~ cash equivalents and accounts receivable. Cash increased significantly due to reduced principal payments on the Term Loan as compared to the PTG Notes, partially offset by cash used to pay off the Related Party Note Payable in August 2017.restricted cash. Our total current liabilities as of September 30, ~~2017~~2018 were ~~$5,026,550~~$4,376,583 and ~~$4,708,685~~$4,869,335 as of December 31, ~~2016.~~2017. This ~~increase~~decrease was primarily driven by ~~the increase~~a decrease in ~~accrued expenses (primarily~~accounts payable (mainly due to a January 2018 payment of $774,645 for license fees previously accrued at December 31, 2017) and income taxes payable (principally due to tax payments made during the ~~increase in TableMAX license fee accrual and payroll and related accruals)~~nine months ended September 30, 2018). ~~Our business model continues to be highly profitable and we have several options to ensure we are able to meet our short-term and long-term obligations.~~

We have undertaken certain growth initiatives to expand our recurring revenue base. As such we have made investments in personnel and research related to the development of our enhanced table systems. Additionally, we increased our sales and marketing budget and spent ~~monies~~funds on regulatory efforts for the purpose of expanding ~~our distribution network.~~the jurisdictions in which we can operate in. We ~~are also subject to~~have filed applications for new or enhanced licenses in several ~~regulatory investigations and proceedings~~jurisdictions, which may result in significant future legal and regulatory expenses. A significant increase in such expenses may require us to postpone growth initiatives or investments in personnel, inventory and research and development of our products. It is our intention to continue such initiatives and investments. However, to the extent we are not able to achieve our growth objectives or raise additional capital, we will need to evaluate the reduction of operating expenses.

At September 30, ~~2017,~~2018, we do not have any available third-party lines or letters of credit or any written or oral commitments from officers or shareholders to provide us with loans or advances to support our operations or fund potential acquisitions. In April 2018, we completed a refinancing transaction which provided us with a $1.0 million line of credit (borrowings on which may be restricted under certain circumstances). See Note 10 to our condensed financial statements included in Item 1 of this report.

Our operating activities provided ~~$2,227,147~~$2,806,957 in cash ~~for the~~ ~~nine months ended September 30, 2017, compared to $3,657,759~~ for the nine months ended September 30, ~~2016.~~2018, compared to $2,235,840 for the three months ended September 30, 2017. The ~~decrease~~increase in operating cash flow was primarily due to the ~~decreases~~increase in net income, income tax payable and loss on extinguishment of debt recorded in 2016, partially offset by changes in estimated fair value of warrant liability, share-based compensation and increases in accounts payable and accrued expenses.income.

Additionally, investing activities used cash of ~~$96,269~~$100,098 for the nine months ended September 30, ~~2017. The cash flows from investing activities are~~2018, which was due to the acquisition of ~~software and~~ property and equipment. Cash used in financing activities during the nine months ended September 30, ~~2017~~2018 was ~~$1,366,216,~~$1,066,324, which was primarily due to refinancing activities occurred on April 24, 2018 and principal payments towards long-term debt and capital leases.

We intend to fund our continuing operations through increased sales and cash flow. However, the issuance of debt or equity financing arrangements may be required to fund expenditures or other cash requirements. There can be no assurance that we will be successful in raising additional funding, if necessary, and even if we are successful, it may not be on advantageous terms to us. If we are not able to

secure additional funding, the implementation of our business plan could be impaired. In addition, we may incur higher capital expenditures in the future to expand our operations. We may from time to time acquire products and businesses complementary to our business. We may also incur significant expenses when applying for new licenses or in complying with current jurisdictional requirements. As a public entity, we may issue shares of our common stock and preferred stock in private or public offerings to obtain financing, capital or to acquire other businesses that can improve our performance and growth. To the extent that we seek to acquire other businesses in exchange for our common stock, fluctuations in our stock price could have a material adverse effect on our ability to complete acquisitions.

Critical accounting policies. The discussion of our financial condition and results of operations is based upon our financial statements, which have been prepared in accordance with U.S. GAAP. Critical accounting policies are those policies that, in management's view, are most important in the portrayal of our financial condition and results of operations. See Note 23 of our financial statements included in Item 8. “Financial Statements and Supplementary Data” of our ~~2016~~2017 10-K for further detail on these critical accounting policies.

Off balance sheet arrangements. As of September 30, ~~2017,~~2018, there were no off balance sheet arrangements.

Recently issued accounting pronouncements. We do not expect the adoption of recently issued accounting pronouncements to have a significant impact on our results of operations, financial position or cash flow.

A smaller reporting company is not required to provide the information required by this Item.

~~We carried out an evaluation of the effectiveness of the design~~Disclosure Controls and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this Quarterly Report. This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer and our Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, 2017 our disclosure controls and procedures were effective.Procedures

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act are recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

We carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this Quarterly Report. This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer and our Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, 2018 our disclosure controls and procedures were effective.

No change in our internal control over financial reporting occurred during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will necessarily prevent all fraud and material error. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving our objectives and our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective at that reasonable assurance level. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the internal control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.

In the ordinary course of conducting our business, we are, from time to time, involved in various legal proceedings, administrative proceedings, regulatory government investigations and other matters, including those in which we are a plaintiff, that are complex in nature and have outcomes that are difficult to predict. In accordance with topic ASC Topic 450,Contingencies, we record accruals for such contingencies to the extent that we conclude that it is probable that a liability will be incurred and the amount of the related loss can be reasonably estimated. Our assessment of each matter may change based on future unexpected events. An unexpected adverse judgment in any pending litigation could cause a material impact on our business operations, intellectual property, results of operations or financial position. Unless otherwise expressly stated, we believe costs associated with litigation will not have a material impact on our financial position or liquidity, but may be material to the results of operations in any given period. We assume no obligation to update the status of pending litigation, except as may be required by GAAP, applicable law, statute or regulation. For a complete description of the facts and circumstances surrounding material litigation to which we are a party, ~~see~~See Note 1211 in Item 8. “Financial Statements and Supplementary Data” included in our S~~ee Note 2 in Item 8. “Financial Statements and Supplementary Data” included in our 2016~~2017 10-K. There are no material updates to matters previously reported on our ~~2016~~2017 10-K.

In September 2018, we were served with a complaint by TMax regarding the TMAX Agreement. The complaint, filed in the Eighth Judicial District Court in Clark County, Nevada, alleges that we breached the TMAX Agreement, among other allegations. We filed an answer denying the allegations and counterclaimed for breach of contract, Abuse of Process and Fraud in the Inducement, among other counterclaims. We believe the TMax complaint lacks any merit and intend to aggressively pursue dismissal of the complaint while pursuing our counterclaims.

On ~~July 26, 2017, in connection with the Cravens Employment Agreement, Mr. Cravens was granted options to purchase up to 450,000~~September 28, 2018, we issued 13,000 shares of our restricted common stock ~~which vest as follows: (i) as~~ valued at $16,770 to ~~the first 150,000 shares~~each of ~~stock, on July 26, 2017, (ii) as to the next 150,000 shares of stock, on August 1, 2018,~~Messrs. Norm DesRosiers, Bryan Waters and (iii) as to the next 150,000 shares of stock, on August 1, 2019, all pursuant to the terms of a Stock Option Grant Agreement by and between us and Mr. Cravens. Provided that Mr. Cravens is a full-time employee on August 1, 2020, we agreed to grant to Mr. Cravens an option to purchase an additional 150,000 shares of our common stock with a strike price equal to the price per share of our common stock as reported on OTC Markets on August 1, 2020 (or the nearest trading date thereafter), which option will vest on August 1, 2020 (or the nearest trading date thereafter).

~~On September 30, 2017, we issued options to purchase up to 75,000 shares of our common stock to four~~William Zender, who are members of our Board, in consideration of their service on the Board ~~at an exercise price of $1.17 per share. Each of~~during the aforementioned options to purchase common stock was exercisable as of the date of grant. The options must be exercised within five years from the date of grant or 90 days from the date of the recipient’s departure from the Board.three months ended September 30, 2018. In each of the transactions listed above, the securities were issued pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended, (the “Securities Act”) and rules and regulations promulgated thereunder.

Our reliance upon Section 4(a)(2) of the Securities Act in granting the aforementioned options to purchase shares of our common stock was based in part upon the following factors: (a) each of the issuances of the securities was in connection with an isolated private transaction which did not involve any public offering; (b) there were a limited number of offerees; (c) there were no subsequent or contemporaneous public offerings of the securities by us; and (d) the negotiations for the issuance of the securities took place directly between the offeree and us.

* In accordance with Item 601(b)(32)(ii) of Regulation S-K, this exhibit shall not be deemed “filed” for the purposes of Section 18 of the Securities and Exchange Act of 1934 or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.

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

Nevada		20-8143439
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

6767 Spencer Street, Las Vegas, NV 89119
(Address of principal executive offices)

(702) 939-3254
(Issuer’s telephone number)

		Page
	PART I – FINANCIAL INFORMATION
Item 1:	Financial Statements (unaudited)	3
Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1816
Item 3:	Quantitative and Qualitative Disclosures About Market Risk	2120
Item 4:	Controls and Procedures	2120
	PART II – OTHER INFORMATION
Item 1:	Legal Proceedings	2321
Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds	2321
Item 6:	Exhibits	2321

Condensed Balance Sheets as of September 30, ~~2017~~2018 (unaudited) and December 31, ~~2016~~2017	4
Condensed Statements of Operations for the three and nine months ended September 30, 2018 and 2017 ~~and 2016 (unaudited and restated)~~(unaudited)	5
Condensed Statements of Cash Flows for the nine months ended September 30, 2018 and 2017 ~~and 2016 (unaudited and restated)~~(unaudited)	6
Notes to Condensed Financial Statements ~~(unaudited and restated)~~(unaudited)	7

~~Name~~	~~Number of shares~~	Percentage of total outstanding*
~~Mark Lipparelli~~	~~1,269,161 shares~~		~~3.22%~~
~~Bryan Waters~~	~~1,269,161 shares~~		~~3.22%~~
~~Norm DesRosiers~~	~~1,269,161 shares~~		~~3.22%~~
~~William Zender~~	~~1,269,161 shares~~		~~3.22%~~
~~John Connelly~~	~~1,269,161 shares~~		~~3.22%~~
~~Total~~	~~6,345,805 shares~~		~~16.12%~~

	Revenue Contract liability
Beginning balance – January 1, 2018	$	1,083,639
Increase (advanced billings)		10,234,834
Decrease (revenue recognition)		(10,097,215	)
Ending balance – September 30, 2018	$	1,221,258

	Three Months Ended September 30, 2016									Nine Months Ended September 30, 2016
Statements of Income	As originally reported			Impact of restatement			As restated			As originally reported			Impact of restatement			As restated
Selling, general and administrative	$	1,576,480		$	(22,924	)	$	1,553,556		$	4,850,785		$	(31,412	)	$	4,819,373
Provision for income taxes		(602,619	)		251,207			(351,412	)		(990,639	)		116,871			(873,768	)
Foreign currency exchange (losses) gains		—			(5,926	)		(5,926	)		—			354,301			354,301
Loss on extinguishment of debt		(87,578	)		(427,459	)		(515,037	)		(87,578	)		(427,459	)		(515,037	)
Net income		820,972			(159,254	)		661,718			1,577,867			75,125			1,652,992

Statement of Cash Flow	As originally reported			Impact of restatement			As restated
Net income	$	1,577,867		$	75,125		$	1,652,992
Loss on extinguishment of debt		87,578			427,459			515,037
Deferred income tax provision		54,370			(54,370	)		—
Unrealized foreign exchange losses on cash and cash equivalents		—			31,886			31,886
Increase in accounts receivable		(107,969	)		(705	)		(108,674	)
Decrease in other current assets		43,017			(43,017	)		—
Decrease in prepaid expenses and other current assets		6,608			2,314			8,922
Decrease in accounts payable		(858,954	)		550			(858,404	)
Increase in income taxes payable		936,269			(113,787	)		822,482
Increase in accrued expenses		141,841			11,030			152,871
Net cash provided by operating activities		3,321,274			336,485			3,657,759
Principal payments on notes payable		(2,873,437	)		(336,485	)		(3,209,922	)
Net cash used in financing activities		(1,993,009	)		(336,485	)		(2,329,494	)

	Three Months Ended September 30, 2018
	As reported		Balance without the adoption of ASC 606		Impact of the adoption
Product leases and royalties	$	4,775,754	$	4,544,912	$	230,842
Selling, general and administrative expense	$	2,559,056	$	2,328,214	$	230,842

	2018			2017
Enhanced table systems	$	806,955		$	638,981
Less: accumulated depreciation		(431,290	)		(265,331	)
Assets deployed at client locations, net	$	375,665		$	373,650

September 30,	Annual obligation
2018	$	232,368
2019		179,190
Total obligations	$	411,558

~~Exhibit Number~~		~~Description of Exhibit~~

~~10.1~~		Board of director service agreement of Mark A Lipparelli, dated August 31, 2017 (incorporated by reference to the Form 8-K, filed by the Company with the Securities and Exchange Commission on August 31, 2017).
~~10.2~~		~~Form of voting and dispositive control transfer agreement (incorporated by reference to the Form 8-K, filed by the Company with the Securities and Exchange Commission on September 27, 2017).~~
~~31.1~~		~~Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002~~
~~31.2~~		~~Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002~~
~~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*
~~101~~		~~Financials in XBRL format~~

Exhibit Number	Description	Form	File No.	Exhibit	Filing Date	Filed Herewith
10.1	Credit Agreement with ZB, N.A. dba Nevada State Bank, dated April 24, 2018	8-K	000-30653	10.1	April 27, 2018
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					X
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					X
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					X
101	Financials in XBRL format					X

	Galaxy Gaming, Inc.

Date:	November 14, ~~2017~~2018

	By:	/s/ TODD P. CRAVENS
		Todd P. Cravens
		President and Chief Executive Officer (Principal Executive Officer)

	Galaxy Gaming, Inc.

Date:	November 14, ~~2017~~2018

	By:	/s/ HARRY C. HAGERTY
		Harry C. Hagerty
		Chief Financial Officer (Principal Accounting Officer)

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company