##### Table of Contents



UNITED
    STATES SECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
    20549
 Form 10-KSB
  þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    December 31, 2006o

TRANSITION REPORT UNDER SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission file number
    000-25855
  VendingData
    Corporation
 (Name of small business issuer
    in its charter)
  Nevada(State or other
    jurisdiction of
    incorporation or organization)

91-1696010(I.R.S. Employer
    Identification No.)  1120 Town Center Dr, Ste 260
 Las Vegas, Nevada 89144
 (Address of principal executive
    offices, including zip code)
  Issuers telephone number:
    (702) 733-7195
  Securities registered under Section 12(b) of the
    Exchange Act:
  Title of Each Class

Name of Each Exchange on Which RegisteredCommon Stock, $.001 par value

American Stock Exchange   Securities registered under Section 12(g) of the
    Exchange Act:
  Common Stock, $.001 par value
 (Title of each class)
  o
  þ o
  Regulation S-B Form 10-KSB Form 10-KSB. þ
  Rule 12b-2 o þ
        o þ




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##### 



TABLE OF
    CONTENTS
  
  PagePART I


3Item 1.


Description of
    Business


3Item 1A.


Risk
    Factors


15Item 2.


Description of
    Property


18Item 3.


Legal
    Proceedings


19Item 4.


Submission of
    Matters to a Vote of Security Holders


19PART II


20Item 5.


Market for
    Common Equity and Related Stockholder Matters


20Item 6.


Managements Discussion and Analysis or Plan of
    Operation


21Item 7.


Financial
    Statements


28Item 8.


Changes in and
    Disagreements with Accountants on Accounting and Financial
    Disclosure


46Item 8A.


Controls and
    Procedures


46Item 8B.


Other
    Information


46PART III


47Item 9.


Directors,
    Executive Officers, Promoters and Control Persons; Compliance
    with Section 16(a) of the Exchange Act


47Item 10.


Executive
    Compensation


49Item 11.


Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters


52Item 12.


Certain
    Relationships and Related Transactions


54Item 13.


Exhibits


56Item 14.


Principal
    Accountant Fees and Services


57EXHIBIT 3.3EXHIBIT 3.4EXHIBIT 10.3EXHIBIT 10.18EXHIBIT 23.1EXHIBIT 23.2EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1   2




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##### Table of Contents



PART I  ITEM 1.
    DESCRIPTION
    OF BUSINESS  GENERAL
    
    The Deck Checker, a card security device that scans decks of
    playing cards to ensure an accurate count and verify that all of
    the cards are present.
    The Random Plus Shuffler, the next generation of shuffling
    device that is an updated version of our previously offered
    Random Ejection Shuffler. The Random Plus Shuffler is capable of
    shuffling up to eight decks of cards at once.
    The ShufflePro shuffler, a high-speed card-shuffler designed for
    use with two deck specialty variation games such as poker and
    baccarat.
    Casino Chips:  
    The high frequency RFID casino chip, a traditional casino chip
    imbedded with a RFID tag that allows casinos to identify
    counterfeit casino chips and assists casinos in tracking table
    play.
    Traditional casino chips sold to casinos for table games.  
    The ChipWasher, a product that washes and sanitizes gaming
    chips. The ergonomically designed product is intended to provide
    casinos with ease of operation inside the cage, while being
    cost-effective, high-speed, environmentally friendly and
    hygienic.  TM
  Automotive
  
    Automotive components manufactured by Dolphin for both internal
    and external applications as well as safety products. The
    internal/external classification is split to differentiate
    purchasing departments and the required testing specifications
    are different for external parts being exposed to harsh
    atmospheric conditions when compared to the internal parts. An
    example of internal part is the inner remote door handle and an
    external part is the wheel nut caps.
    Dolphin supplies major automotive companies such as General
    Motors Holden and Toyota.
    Dolphin also supplies parts to automotive component
    manufacturers such as, Johnson Controls, Autoliv Australia Pty
    Ltd, Bridgestone Australia Ltd, and Futuris Automotive.
    Automotive components consist of inner remote door handles, fuel
    filler hinge assembly, module brackets, steering wheel spoke
    covers, speaker grills, fasteners, safety products, and cosmetic
    components.  Medical
  
    Dolphin Medical is a world-class manufacturer of medical devices
    and is geared to meeting the exacting standards of the global
    healthcare industry.
    Medical devices are manufactured, assembled and packaged in a
    TGA certified US Class 10,000 clean room (Australia
    class  Grade C). 3




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##### Table of Contents




    Dolphin Medical supplies parts to a number of government and
    commercial research and development organizations.
    Dolphins customers include Vivus and Acrux.
    Medical devices include: MDTS Applicators (Estradiol and
    Testosterone products), UDTS applicators, protein separation
    cartridges, allergy test kits, haemostatic dressing containers
    and radio frequency identification devices.    (702) 733-7195 (702) 733-7197, www.vendingdata.com
  VendingData tm Deck
    Checker tm Random
    Ejection tm Random
    Plus tm PokerOne tm ChipWasher tm ShufflePro tm DeckSetter ® Dolphin tm .
  RECENT
    DEVELOPMENTS
    Bricoleur Financing. Form 8-K
  Dolphin Acquisition. Form 8-K
  Elixir Strategic Alliance. Form 8-K
 4




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##### Table of Contents



Corporate Restructuring.
  
    transferring of all research and development efforts to our
    newly created R&D Center located in Zhuhai, China. The
    relocation of the engineering division to the Zhuahi office is a
    strategic step in continuing the forward movement and
    integration of our engineering division in Zhuhai with
    Elixirs newly established gaming research and development
    center in Macau, as contemplated by our October 2006 Alliance
    Agreement with Elixir.
    contracting out US sales and service to a third party that has
    in place extensive sales and technical service teams throughout
    the US in order to support the anticipated growth of the
    companys domestic business from new product line
    introductions. Discussions are ongoing and are expected to be
    concluded by the end of the second quarter.
    effective February 4, 2007, we relocated our US Corporate
    offices to 1120 Town Center Drive, Suite 260, Las Vegas,
    Nevada, 89144, pursuant to lease arrangements that will reduce
    our overall lease expense in the US by approximately
    $30,000 per month.
    the recently completed sale of intellectual property related to
    the discontinued SecureDrop product line for $500,000. This sale
    was another step of the plan to redeploy our resources to new
    product line introductions as well as capitalize on the
    opportunities in Macau and other growing markets.  Further Expansion of Elixir Alliance.
  GLG Financing
  BUSINESS
    STRATEGY
    
    Development of product lines with limited
    competition.  We intend to focus on the
    development or acquisition of new products, such as the high
    frequency RFID casino chip and the ChipWasher, which have the
    potential to provide us with product lines with limited or no
    competition.
    Expansion into additional domestic and international gaming
    markets for our products.  The worldwide expansion
    of gaming should provide new markets for our products, and we
    intend to target sales opportunities in these new markets in
    addition to our traditional established gaming markets. To help
    address these markets we continue to look at various
    distribution channels both in the US and internationally.
    Implementation of cost reduction initiatives to increase
    gross margins.  We intend to pursue the
    implementation of cost reduction initiatives with the goal
    increasing the gross margins on our products 5




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##### Table of Contents



over time. We continuously strive to reduce the cost of
    production and our component parts through the use of production
    facilities in China.  TABLE
    GAME SUPPORT PRODUCTS
  Shuffler
    Product Line
      RandomPlus Shuffler.
  PokerOne Shuffler. tm tm
  
    shuffle and prepare the cards into the individual packets
    required for the specialty poker game;
    provide sufficient speed to maintain the pace of the game even
    if just a single player is playing;
    verify the overall quantity of the cards shuffled and the number
    of cards in each packet; and
    verify the actual cards dealt to each player.  ShufflePro state-of-the-art
  
    Verifies card count on each shuffle
    Has indicator lights signaling extra or missing cards
    Produces shuffles that are unpredictable, and non-trackable  easy-to-read
 6




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##### Table of Contents



Shuffler Market.
    
    Security.  We believe that our combination of
    patented computer and mechanical technology safeguards against
    cheating schemes. The random ejection technology used in all of
    our shuffler products produces a computer-generated, random and
    untrackable shuffle, and the continuous random ejection shuffler
    technology eliminates advantages achieved by knowledgeable
    players, as each card is available for the next round of play by
    producing full decks of continuously shuffled random
    cards. This has the added benefit of giving the casino a higher
    hold from the gaming table since the shuffler preserves the
    original odds of each game, which favor the casino.
    Reliability/Productivity.  Given the paper
    handling demands placed on card shufflers, shufflers are prone
    to jamming and breakdown. We have designed our shufflers to be
    easily accessed by dealers so they can hand-deal cards until the
    unit can be put back in service and prevent a table from
    shutting down. In addition, the dealer, with little
    interruption, can easily put the unit back into play in most
    cases.
    Player Confidence.  To reduce cheating schemes,
    many existing shufflers completely cover or shield from players
    the deck(s) being shuffled, thereby reducing player confidence
    in a fair game. The design of our shufflers allows players to
    see the cards being ejected and re-stacked through a frosted
    cover without compromising security, which we believe will gain
    better player acceptance.  Shuffler Installations.
  Competition  Shufflers.
  The
    DeckChecker
   7




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start-of-the-day end-of-the-day
  Market and Distribution of the DeckChecker.
  Competition  DeckChecker.
  High
    Frequency RFID Casino Chip
    High frequency RFID Market.
  Competition  High frequency RFID
    Market.
  ChipWasher
  build-up
    
    Ease of operation inside the cage
    Cost-effectiveness
    Labor-savings
    Greater speed
    Environmentally friendly 8




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##### Table of Contents




    Enables greater surveillance identification
    Hygienic
    Ergonomically designed  ChipWasher Market.
  Competition  ChipWasher.
  Dolphin
    Automotive
  e.g.,
  Automotive Components Market.
  Competition  Automotive Components
  Dolphin
    Medical
    Medical Devices Market.
  Competition  Medical Devices
  RESEARCH
    AND DEVELOPMENT
   9




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GAMING
    REGULATION AND LICENSING
  Overview
  and/or
        Associated
    Equipment
    Gaming
    Devices and Equipment
  and/or
 10




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Regulation
    of Stockholders
    Regulation
    and licensing  Nevada
      and/or
    Other
    Jurisdictions
    Mississippi.
 11




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##### Table of Contents



New Jersey.
  Louisiana.
  Indiana.
  Rincon Tribal Gaming Commission,
    California.
  United
    States  Federal
    Application
    of Future or Additional Regulatory Requirements
    CUSTOMER
    SERVICE
  back-up
 12




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MARKETING
    AND DISTRIBUTION
          
    Distributors have the authority to operate in the respective
    market and are able to address and resolve regulatory compliance
    issues that may arise in a timely manner; and
    Distributors have the internal infrastructure and superior
    contacts necessary to effectively sell and service our products
    in certain markets.    CUSTOMERS
   13




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COMPETITION
      PRODUCT
    DEVELOPMENT, MANUFACTURING AND ASSEMBLY
  state-of-the-art
  state-of-the-art
    SUPPLIERS
    INTELLECTUAL
    PROPERTY
       14




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EMPLOYEES
    ITEM 1A.
    RISK
    FACTORS   15




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We may require additional funding in the future to continue
    to operate our business.
  
    the percentage ownership of our existing stockholders may be
    reduced;
    our stockholders may experience additional dilution in net book
    value per share; or
    the new equity securities may have rights, preferences or
    privileges senior to those of the holders of our common stock.  We have a history of significant operating losses and
    anticipate continued operating losses, and we may be unable to
    achieve profitability.
  Our leased shufflers are more susceptible to replacement by
    customers.
 16




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We may be unable to adequately protect our intellectual
    property rights.
  
    contractual arrangements providing for non-disclosure and
    prohibitions on use;
    patents and pending patent applications;
    trade secret, copyright and trademark laws; and
    certain built-in technical product features.    Adverse results in current litigation could result in
    substantial monetary damages and adversely impact on the
    manufacture and sale of certain of our shuffler
    products.
  It is possible that our future products will be the subject
    of future patent litigation if the products are sold and
    installed in the United States and, if commenced, could subject
    us to continuing litigation costs and risks.
      
    consuming substantial time and financial resources required to
    defend against them;
    diverting the attention of management from growing our business
    and managing operations;
    resulting in costly litigation; and
    disrupting product sales and shipments.   17




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We rely on distributors in international markets, and our
    limited sales experience in foreign countries could cause us to
    lose sales.
  Our management holds a controlling interest in our common
    stock, giving our management the power to significantly
    influence all matters submitted to our
    stockholders.
  Our board of directors may issue blank check preferred stock,
    which may affect the voting rights of our holders and could
    deter or delay an attempt to obtain control of
    us.
  ITEM 2.
    DESCRIPTION
    OF PROPERTY       18




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ITEM 3.
    LEGAL
    PROCEEDINGS  No. CV-S-04-1373-JCM-LRL)
  ITEM 4.
    SUBMISSION
    OF MATTERS TO A VOTE OF SECURITY HOLDERS      Shares voted for


20,132,714Shares against


727,725Shares abstaining


14,100     Shares voted for


20,830,934Shares against


328,505Shares abstaining


14,100     Shares voted for


19,334,499Shares against


1,526,940Shares abstaining


13,100     Shares voted for


20,830,714Shares against


30,225Shares abstaining


13,600  19




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##### Table of Contents



Shares voted for


25,801,596Shares against


182,083Shares abstaining


15,282     Shares voted for


25,924,825Shares against


68,536Shares abstaining


5,600     Shares voted for


19,625,369Shares against


1,152,370Shares abstaining


96,800  PART II  ITEM 5.
    MARKET
    FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS  Market
    Information
      2006

Low


HighFourth Quarter

$
1.97


$
2.70Third Quarter

$
1.98


$
2.62Second Quarter

$
2.00


$
2.96First Quarter

$
2.20


$
3.80   2005

Low


HighFourth Quarter

$
2.29


$
3.70Third Quarter

$
1.34


$
2.25Second Quarter

$
1.80


$
2.15First Quarter

$
1.49


$
2.22   Shareholders
    Dividend
    Policy
   20




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Recent
    Sales of Unregistered Securities
  Forms 8-K 10-QSB
  ITEM 6.
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS  OVERVIEW
    RESULTS
    OF OPERATIONS  YEARS ENDED DECEMBER 31, 2006 AND
    2005
        SecureDrop Sales.
  Shuffler Sales.
  Shuffler Rentals.
 21




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DeckChecker Sales.
  DeckChecker Rentals.
  Casino Chips.
  Non-gaming product.
  Other Income.
  Selling,
    General and Administrative Expense
    Research
    and Development Expenses
   22




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Interest
    Expense
    FINANCIAL
    CONDITION
    Liquidity and Capital Resources
  Liquidity
    and Capital Resources
  Sources
    of Capital
         23




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
    Transferring of all research and development efforts to our
    newly created R&D Center located in Zhuhai, China. The
    relocation of the engineering division to the Zhuahi office is a
    strategic step in continuing the forward movement and
    integration of our engineering division in Zhuhai with
    Elixirs newly established gaming research and development
    center in Macau, as per the Alliance Agreement completed on
    January 18, 2007.
    Transferring the responsibility for US sales and service to
    another party that has in place extensive sales and technical
    service teams throughout the US in order to support the
    anticipated growth of the companys domestic business from
    new product line introductions. Discussions were ongoing and are
    expected to be concluded by the end of the first quarter.
    Relocating the Companys US Corporate offices to 1120 Town
    Center Drive, Suite 260, Las Vegas, Nevada, 89144.
    The recently completed sale of intellectual property related to
    the discontinued SecureDrop product line. The proceeds of the
    transaction totaled $500,000. This sale was another step of the
    plan to redeploy our resources to new product line introductions
    as well as capitalize on the opportunities in Macau and other
    growing markets.     24




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##### Table of Contents



medium-to-long
  Contractual
    Cash Obligations and Off Balance Sheet Arrangements.
    Payments due by PeriodAfter 5Contractual Obligations

Total


1 Year


2-3 Years


4-5 Years


YearsDebt Agreements

$
22,269,618


$
2,476,093


$
3,392,225


$
3,444,215


$
12,957,085Capital Leases


709,991



440,719



269,272



0



0Operating Leases


















TOTAL

$
22,979,609


$
2,916,812


$
3,661,497


$
3,444,215


$
12,957,085   CRITICAL
    ACCOUNTING POLICIES AND ESTIMATES
    Allowance
    for Doubtful Accounts.
    Revenue
    Recognition.
     25




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##### Table of Contents



30-day
  90-day No. 00-21, Revenue Arrangements with Multiple Deliverables.
      bill-and-hold
  Intangible
    Assets.
    Legal
    defense costs
    Recent
    Accounting Pronouncements
  Accounting for Certain Hybrid Financial
    Instruments Accounting for
    Derivative Instruments and Hedging Activities Accounting for Transfers and Servicing of
    Financial Assets and Extinguishments of Liabilities FASB Statement
    No. 125.
  Accounting for Uncertainty in Income
    Taxes, an Interpretation of FASB Statement
    No. 109
 26




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The Fair Value Option for Financial
    Assets and Financial Liabilities  Including an
    Amendment of SFAS No. 115,
 27




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##### Table of Contents



ITEM 7.
    FINANCIAL
    STATEMENTS  INDEX TO
    FINANCIAL STATEMENT
  Report of
    Independent Registered Public Accounting Firm


29Balance Sheets at
    December 31, 2006 and 2005


31Statements of
    Operations for the Years Ended December 31, 2006 and
    2005


32Statements of
    Changes in Stockholders Equity for the Years Ended
    December 31, 2006 and 2005


33Statements of Cash
    Flows for the Years Ended December 31, 2006 and
    2005


34Notes to Financial
    Statements


35  28




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##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM           
       29




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##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
                30




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##### Table of Contents



VENDINGDATA
    CORPORATION AND SUBSIDIARIES



Consolidated
    Balance Sheets

December 31,
    2006 and 2005  2006


2005ASSETSCurrent assets:Cash and cash equivalents

$
333,888


$
935,243Current portion of accounts
    receivable, trade net of allowance for uncollectibles of
    $267,154 and 276,420


1,856,898



1,550,559Other receivables


2,650,000



0Due from employee


138,181



4,098Prepaid expenses and other
    receivables


46,494



113,557Inventories


3,407,361



3,045,3348,432,822



5,648,791Accounts receivable, trade, net of
    current portion, less unamortized discount


358,841



600,430Equipment rented to customers, net
    of accumulated depreciation of $67,673 and $228,032


94,777



146,527Property and equipment, at cost,
    net of accumulated depreciation of $2,472,897, and $2,408,234


3,493,817



585,431Intangible assets, at cost, net of
    accumulated amortization of $654,369 and $836,281


4,801,945



1,862,268Goodwill


13,429,199



Deferred costs


613,974



748,171Deposits and other assets


305,282



759,653$
31,530,657


$
10,351,271LIABILITIES AND
    STOCKHOLDERS EQUITY (DEFICIENCY)Current liabilities:Capital leases payable, current
    portion

$
440,719


$
471,269Accounts payable


2,354,163



1,836,234Accrued expenses


3,122,792



794,203Deferred revenues, current portion


43,599



52,248Short-term debt


676,600



4,050,000Current portion of long-term debt


1,799,494



Customer deposits


14,257



81,8588,451,624



7,285,812Deferred revenues, net of current
    portion


43,199



161,335Notes payable, net of current
    portion


19,793,524



11,654,500Capital leases payable, net of
    current portion


269,272



421,97528,557,619



19,523,622Stockholders equity
    (deficiency):Common stock, $.001 par value,
    70,000,000 shares authorized 30,015,099 and 18,141,950
    share issued (or issuable)


30,016



18,142Additional paid-in capital


104,676,021



66,763,192Treasury stock,
    448,053 shares at cost


(846,820
)


(846,820
)Deferred expense


(15,463,683
)


(3,419,088
)Deficit


(85,422,496
)


(71,687,777
)2,973,038



(9,172,351
)$
31,530,657


$
10,351,271    31




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VENDINGDATA
    CORPORATION AND SUBSIDIARIES



Consolidated
    Statements of Operations

Years
    Ended December 31, 2006 and 2005  2006


2005RevenuesSales

$
3,637,753


$
2,302,484Rental


338,058



519,635Non-gaming revenue


3,780,430Service


230,178Other


264,359



278,6198,250,778



3,100,738Less sales returns and allowances


(383,122
)


(739,263
)7,867,656



2,361,475Operating costs and
    expenses:Cost of sales, including an
    inventory writedown of $3,068,846 in 2005


8,901,524



7,736,066Selling, general and administrative


9,323,468



9,220,636Research and development


1,555,882



1,394,00619,780,874



18,350,708Loss from operations


(11,913,218
)


(15,989,233
)Interest expense, including
    $15,063 and $31,974 to related parties


1,821,501



1,577,997Net loss

$
(13,734,719
)

$
(17,567,230
)Basic loss per share

$
(0.57
)

$
(1.03
)Weighted average number of shares
    outstanding


24,270,827



17,050,398    32




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VENDINGDATA
    CORPORATION AND SUBSIDIARIES



Consolidated
    Statements of Changes in Stockholders Equity

Years
    Ended December 31, 2006 and 2005  AdditionalCommon Stock


Paid-In


Treasury


DeferredShares


Dollars


Capital


Stock


Expense


Deficit


TotalBalances, January 1,
    2005


17,199,558


$
17,200


$
59,843,273










$
(54,120,547
)

$
5,739,926Options issued for employee
    compensation










4,129,903
(1)





$
(3,419,088
)






710,815Exercise of employee options


70,000



70



130,080















130,150Stock issued for conversion of debt


209,393



209



345,290















345,499Exchange of warrants for stock










1,143,570


$
(846,820
)










296,750Exercise of warrants


162,500



163



418,576















418,739Stock issued for services


100,000



100



152,900















153,000Sale of shares


400,000



400
(2)


599,600















600,000Net loss






















(17,567,230
)


(17,567,230
)Balances, December 31,
    2005


18,141,451



18,142



66,763,192



(846,820
)


(3,419,088
)


(71,687,777
)


(9,172,351
)Options issued for employee
    compensation










3,454,056







(3,454,056
)Exercise of employee options


632,164



632



1,504,496















2,774,025Amortization of deferred
    compensation expense


















1,268,896







1,268,896Warrants issued for financing










9,865,686







(9,859,435
)






6,250Stock issued for conversion of debt


5,279,246



5,280



9,149,220















9,154,500Stock issued for acquisition of
    Dolphin


2,462,238



2,462



7,815,371















7,817,833Stock issued to distributor through
    subscription receivable


1,000,000



1,000



2,649,000















2,650,000Exercise of warrants


1,500,000



1,500



1,648,500















1,650,000Stock issued for acquisition
    of technology


1,000,000



1,000



1,826,500















1,827,500Net loss






















(13,734,719
)


(13,734,719
)Balances, December 31,
    2006


30,015,099


$
30,016


$
104,676,021


$
(846,820
)

$
(15,463,683
)

$
(85,422,496
)

$
2,973,038     (1)
    
    Includes 75,000 stock options at $126,000 that were issued and
    subsequently cancelled within the year 2005. A total of
    1,419,590 stock options were cancelled during 2005.(2)
    
    Proceeds from the sale of 400,000 shares sold were received
    in 2005 but shares were issued in 2006.   33




---



##### Table of Contents



VENDINGDATA
    CORPORATION AND SUBSIDIARIES



Consolidated
    Statements of Cash Flows

Years
    Ended December 31, 2006 and 2005  2006


2005Cash flows from operating
    activities:Net loss

$
(13,734,719
)

$
(17,567,230
)Adjustments to reconcile net loss
    to net cash used in operating activities:Depreciation and amortization of
    property and equipment


462,274



1,031,968Amortization of intangible assets


348,823



154,281Amortization of deferred financing
    costs


134,197



188,213Stock based compensation expense


1,268,896



3,516,852Increase in operating (assets)
    liabilities:Trade accounts receivable


945,405



709,942Inventory


1,143,122



9,992Prepaid expenses and other assets


67,063



148,114Deferred financing costs






(3,855,138
)Deposits with vendors


454,372



220,563Accounts payable


(730,349
)


595,558Accrued expenses


2,026,329



367,004Deferred revenues


(126,785
)


(224,682
)Customer deposits


(67,600
)


(111,759
)Net cash used in operating
    activities


(7,808,972
)


(14,816,322
)Cash flows from investing
    activities:Cash for business combination, net
    of cash obtained of $174,139


(1,425,861
)Acquisition of technology


(104,959
)Acquisition of plant and equipment


(548,425
)


(1,312,937
)Acquisition of equipment for rental


(217,524
)


(42,138
)Proceeds from the disposition of
    plant and equipment






21,200Payments received on notes
    receivable


484,833Net cash used in investing
    activities


(1,811,936
)


(1,333,875
)Cash flows from financing
    activities:Proceeds from sale of stock,
    warrants and options


3,155,129



5,728,545Repayment of notes payable and
    leases


(12,998,011
)


(2,317,907
)Proceeds from notes payable,
    leases and short term debt


18,862,435



12,750,000Net cash provided by financing
    activities


9,019,553



16,160,638Increase (decrease) in cash and
    cash equivalents


(601,355
)


10,441Cash and cash equivalents,
    beginning of year


935,243



924,802Cash and cash equivalents, end of
    year

$
333,888


$
935,243Supplemental cash flow
    information:Cash paid for interest

$
1,681,097


$
664,342Non-cash investing and financing
    activities:Loans converted into common stock
    (February 2005 and March 2005 convertible notes)


9,154,500



345,500Acquisition of technology with
    stock prior to business combination


1,827,500Stock issued for business
    combination


7,817,833Short term note issued in
    connection business combination


5,782,168Stock subscribed


2,650,000Loan refinanced






2,904,500Stock converted to warrants






846,820    34




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS  Note 1.
    Description
    of business and significant accounting policies      Principles
    of consolidation
    Cash
    equivalents
    Estimates
    Inventory
  first-in,
  Property
    and equipment
    Intangible
    assets
    Revenue
    recognition
     35




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##### Table of Contents



VENDINGDATA
    CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   30-day
  90-day No. 00-21, Revenue Arrangements with Multiple Deliverables.
      bill-and-hold
  Advertising
    Stock-based
    compensation
  Share-Based Payment
      2006

2005Market value

$1.34 - $3.03

$1.34 - $3.01Expected life in years

3 to 6

3 to 6Interest rate

4.76%

1.95%Volatility

10% - 70%

10% - 70%Dividend yield

0.00%

0.00%  36




---



##### Table of Contents



VENDINGDATA
    CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Legal
    defense costs
    Loss
    per share
    Warranties
      Year Ended December 31,2006


2005Opening balance

$
5,867


$
8,792Accruals


17,650



2,600Charges


(23,517
)


(5,525
)Balance at end of year

$
0


$
5,867   Rental payment commitments
    Translation of foreign currencies
    Note 2.
    Dolphin acquisition
       37




---



##### Table of Contents



VENDINGDATA
    CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Cash(a)

$
1,350,0002,462,238 shares of the
    Companys common stock at $3.50 per share(b)


7,817,833Secured convertible promissory
    notes(c)


5,782,168Purchase price


14,950,001Acquisition costs


250,000Adjusted purchase

$
15,200,001     (a)
    
    Includes $750,000 paid as a non-refundable deposit in April 2006,(b)
    
    Includes 1,000,000 shares issued as part of the
    non-refundable deposit; and(c)
    
    Subsequently converted in December 2006 into
    1,652,048 shares of common stock.    Cash

$
174,139Receivables


1,010,155Shareholder receivable


618,916Inventories


1,262,451Property, plant, equipment


2,567,090Intangible assets and other


1,584,610Accounts payable


(1,248,278
)Accrued expenses


(302,260
)Provision for dividends payable


(1,995,088
)Contingent purchase price liability


(233,846
)Debt and capital lease
    obligation  current


(749,245
)Capital lease
    obligation  noncurrent


(917,843
)1,770,801Less adjusted purchase price


15,200,001Goodwill

$
13,429,199      38




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##### Table of Contents



VENDINGDATA
    CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2006


2005Net revenue

$
10,068,815


$
7,924,534Operating expenses


22,642,274



23,781,902Loss from operations


(12,573,459
)


(15,857,368
)Interest expense


1,761,970



1,794,916Income taxes


(58,992
)


(25,516
)Net loss


(14,276,437
)


(17,626,768
)Basic and weighted loss per share

($
0.59
)

($
0.90
)Weighted average number of shares


24,270,827



17,050,398   Note 3
    Fair
    value of financial instruments    Note 4.
    Segments    Year Ended


Year EndedDecember 31, 2006


December 31, 2005Long-lived





Long-livedRevenue


Assets


Revenue


AssetsGaming:North America

$
1,074,116


$
20,288,176


$
2,590,904


$
2,236,355Asia


3,473,950



1,531,561







357,871Europe










501,584



South America










8,250



Non gaming:Asia


3,702,713Total Revenue

$
8,250,779


$
21,819,737


$
3,100,738


$
2,594,226     Year Ended


Year EndedDecember 31, 2006


December 31, 2005Casino


Deck








DeckShufflers


Chips


Checkers


Non-gaming


Shufflers


Checkers


SecureDrop$
921,935


$
1,876,598


$
1,485,174


$
3,702,713


$
1,589,932


$
1,101,852


$
130,335   non-gaming
  Note 5.
    Inventory   39




---



##### Table of Contents



VENDINGDATA
    CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   December 31,


December 31,2006


2005Raw materials

$
633,185


$
824,759Work in progress


121,977



66,024Finished goods


2,652,199



2,154,551$
3,407,361


$
3,045,334   Note 6.
    Property
    and equipment    December 31,


December 31,2006


2005Equipment and vehicles, furniture
    and fixtures

$
2,837,925


$
1,924,475Tooling


2,632,687



665,411Leasehold improvements


496,101



500,0935,966,713



3,089,979Less accumulated depreciation and
    amortization


2,472,897



2,504,548$
3,493,817


$
585,431     Note 7.
    Intangible
    assets    Note 8.
    Short-term
    credit   40




---



##### Table of Contents



VENDINGDATA
    CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 9.
    Convertible
    debt with warrants and capital leases payable    December 31,


December 31,2006


200510% notes, secured by trade
    receivables and inventory. The notes are convertible at
    $1.65 per share of common stock for 50% of the note
    principal amount





$
11,654,5008% senior secured promissory
    notes included detachable warrants to purchase 3.2 million
    shares at $2.50 per share, some of which are recallable
    based on early retirement of $6 million of the debt portion
    of the transaction. In September 2006, the amount of detachable
    warrants were reduced to 2.6 million shares at
    $2.00 per share, some of which are recallable based on
    early retirement of $6 million of the debt portion of the
    transaction. Interest at 8% is due semi-annually on July 1,
    and December 1, each year until repayment

$
13,000,000Short-term convertible notes
    classifies as long-term (Note 13)


7,282,168Note payable to an Australian bank
    at various interest rates collateralized by equipment


1,310,85321,593,020



11,654,500Capitalized lease obligations for
    furniture, tooling and equipment*


709,991



893,24422,303,011



12,547,744Less current portion


(2,240,215
)


(471,269
)Long-term portion

$
20,062,797


$
12,076,475     *
    
    In a prior year, the Company entered into certain sale-leaseback
    transactions primarily for assets rented to, or intended to be
    rented to, customers, under operating leases. Since the leases
    contained effective mandatory buyback provisions resulting in
    the Company retaining rights to use these assets in its business
    for their remaining useful lives, no gain or loss was recognized
    on the sale-leaseback transactions pursuant to paragraph 17
    of Statement of Financial Accounting Standards
    (SFAS) No. 28 Accounting for Sales with
    Leasebacks. The amortization of the assets recorded as
    capital leases is included with depreciation. The effective
    annual interest rates implicit in the capital leases range from
    25% to 28%. The leases expire between March 2007 and April 2009. 41




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##### Table of Contents



VENDINGDATA
    CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     CapitalLeases


Other Debt


Total2007

$
816,798


$
2,476,093


$
3,292,8912008


197,820



1,696,113



1,893,9332009


85,440



1,696,112



1,781,5522010






1,722,108



1,722,1082011






1,722,107



1,722,107Beyond 2011 or converted to equity
    (Note 13)






12,957,084



12,957,084Minimum future lease payments


1,100,058



22,269,618



23,369,676Less interest component


(13,988
)






(13,988
)1,086,070



22,269,618



23,355,688Current portion


(816,798
)


(2,476,093
)


(3,292,891
)Long-term portion

$
269,272


$
19,793,524



20,062,797   Note 10.
    Stockholders
    equity  Stock
    options.
        Weighted AverageRemaining ContractualNumber of





Life of Shares





WeightedRange of Exercise

Options


Weighted Average


Outstanding


Number


AveragePrice

Outstanding


Exercisable Price


(Years)


Exercisable


Exercisable$1.34 - $ 1.50


525,000
(1)

$
1.43



6.7



108,400


$
1.48$1.51 - $ 1.75


249,952



1.67



2.5



113,552



1.69$1.75 - $ 2.00


969,733



1.85



3.1



389,098



1.85$2.00 - $13.00


1,859,727



2.62



4.9



354,727



2.923,604,412     (1)
    
    1,050,000 options are exercisable at $1.34 in the event of a
    change of control. 42




---



##### Table of Contents



VENDINGDATA
    CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Range ofShares


Exercise Prices

Average PriceBalance, January 1, 2005


2,188,426


$1.69 - $15.00

$
4.97Granted


3,279,686


$1.34 - $3.01

$
1.89Cancelled


1,444,640


$1.66 - $15.00

$
5.73Exercised


70,000


$1.75 - $2.50

$
2.13Balance, December 31, 2005


3,953,472


$1.34 - $15.00

$
3.55Granted


1,605,000


$1.34 - $3.03

$
2.53Cancelled


499,060


$1.69 - $13.00

$
7.83Exercised


405,000


$1.75 - $2.50

$
2.00Balance, December 31, 2006


4,654,412


$1.34 - $13.00

$
1.99     Warrants.
  Warrants


Exercise Price


Expiration Date1,500,000


$
1.25



October 2011840,000



1.50



December 200750,000



2.55



April 2011375,000



2.25



December 200775,000



2.25



June 2008275,000



2.25



July 200875,000



2.25



September 2008200,000



2.25



November 20082,600,000



2.00



November 2011448,053



0.01



April 2010     *
    
    excluding warrants issuable described in Note 13  Note 11.
    Income taxes
   43




---



##### Table of Contents



VENDINGDATA
    CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2006





2005Tax


%





Tax


%Income tax benefit at U.S.
    statutory rate

$
4,684,467



34
%





$
5,972,858



34
%Australian tax benefit


6,097



0
%Effect of permanent differences


(22,029
)


0
%






(24,254
)Valuation allowance


(4,668,535
)


34
%






(5,948,604
)


34
%Actual

$
0










$
     December 31,2006


2005Net operating loss carryforwards,
    including $73,000 Australian

$
28,303,000


$
24,328,000Accrued vacation


38,000



26,000Deferred rent


1,000



12,000Allowance for uncollectibles


91,000



99,000Depreciation






(312,000
)Less valuation allowance


(28,433,000
)


(24,153,000
)$



$
   Note 12.
    Commitments
    and contingencies  Leases.
    2007

$
825,6002008


858,6242009


581,4682010


604,7262011


628,915     Legal matters.
  Sales tax
 44




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##### Table of Contents



VENDINGDATA
    CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Note 13
    . Subsequent events
    Warrants

Price6,000,000

$
2.654,000,000

$
3.002,000,000

$
3.501,000,000

$
4.001,000,000

$
4.501,000,000

$
5.001,000,000

$
5.50   Classification of Short-Term
    Obligations Expected to Be Refinanced
     45




---



##### Table of Contents



ITEM 8.
    CHANGES
    IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
    FINANCIAL DISCLOSURE   ITEM 8A.  CONTROLS
    AND PROCEDURES  Evaluation of Disclosure
    Controls.
      Changes in internal control over financial
    reporting.
 ITEM 8B.  OTHER
    INFORMATION   46




---



##### Table of Contents



PART III  ITEM 9.
    DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
    COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE
    ACT    Executive
    Officers and Directors
  Name

Age

PositionMark R. Newburg


52


President, Chief Executive Officer
    and DirectorArnaldo F. Galassi


50


Vice President and Chief Financial
    OfficerPeter Zee


60


Vice President of Engineering and
    ManufacturingWalter B. Stowe, Jr.


58


Vice President of Legal &
    Compliance, General CounselJames E. Crabbe


61


Chairman of the Board of DirectorsMaj. Gen. Paul A. Harvey


69


DirectorVincent L. DiVito


47


DirectorRobert L. Miodunski


56


Director   Mark R. Newburg start-up
  Arnaldo F. Galassi start-up
  Peter Zee
 47




---



##### Table of Contents



Walter B. Stowe, Jr,
  James E. Crabbe
  Major General Paul A. Harvey
  Vincent L. DiVito
  Robert L. Miodunski
  Audit
    Committee
      Section 16(a)
    Beneficial Ownership Reporting Compliance
   48




---



##### Table of Contents



Code of
    Ethics
    ITEM 10.
    EXECUTIVE
    COMPENSATION  Summary
    Compensation Table
    Non-Equity


NonqualifiedIncentive


DeferredStock


Option


Plan


CompensationSalary


Bonus


Awards


Awards


Compensation


Earnings


All OtherName and Principal Position

Year


($)


($)


($)


($)


($)


($)


Compensation


Total(a)

(b)


(c)


(d)


(e)


(f)


(g)


(h)


(i)


(j)Mark Newburg, CEO


2006



286,538



150,000







282,976











33,571



753,085Arnaldo Galassi, CFO


2006



186,539



50,000







90,354











12,634



339,527Peter Zee, VP Engineering


2006



193,269



60,000







90,354











16,725



360,348     Narrative
    disclosure to Summary Compensation Table
  Mark Newburg
  
    an annual salary of $250,000,
    a signing bonus of $75,000 split in two equal payments to be
    made on the signing of the employment agreement and on
    December 15, 2005,
    750,000 stock options priced at $1.34 which shall vest and first
    become exercisable upon a change of control*,
    in the event of a change of control, a payment equal to
    12 months base salary in effect on the date of the change
    of control and an amount equal to 50% of his annual base pay,
    and,
    annual bonuses of up to 50% of his salary provided certain
    performance milestones are met.   49




---



##### Table of Contents



Perquisites
    
    ability to participate in, at the Companys expense,
    whatever employee benefit plans (medical, dental, vision) the
    Company maintains. Additionally, the Company reimburses
    Mr. Newburg for all
    out-of-pocket
    medical, dental and vision expenses not paid under the benefit
    plans. In 2006, these health benefits amounted to $15,304 and
    are included in Column I above.  Arnaldo Galassi
  
    an annual salary of $150,000,
    150,000 stock options priced at $1.34 which shall vest and first
    become exercisable upon a change of control*,
    in the event of a change of control, a payment equal to
    12 months base salary in effect on the date of the change
    of control and an amount equal to 50% of his annual base pay,
    and,
    annual bonuses of up to 50% of his salary provided certain
    performance milestones are met.    Perquisites
    
    ability to participate in, at the Companys expense,
    whatever employee benefit plans (medical, dental, vision) the
    Company maintains. In 2006, these health benefits amounted to
    $13,892 and are included in Column I above.  Peter Zee
  
    an annual salary of $175,000.
    150,000 stock options priced at $1.34 which shall vest and first
    become exercisable upon a change of control*,  
    in the event of a change of control, a payment equal to
    12 months base salary in effect on the date of the change
    of control and an amount equal to 50% of his annual base pay,
    and,  
    annual bonuses of up to 50% of his salary provided certain
    performance milestones are met.       50




---



##### Table of Contents



Perquisites
    
    ability to participate in, at the Companys expense,
    whatever employee benefit plans (medical, dental, vision) the
    Company maintains. In 2006, these health benefits amounted to
    $12,634 and are included in Column I above.  Outstanding
    Equity Awards at Fiscal Year-End Table
  Stock AwardsEquityOption Awards








Equity


IncentiveMarket


Incentive


PlanEquity











Value of


Plan


Awards:Incentive











Shares


Awards:


Market orPlan








Number of


or


Number of


Payout ValeAwards:








Shares or


Units of


Unearned


of UnearnedNumber of


Number of


Number of








Units of


Stock


Shares,


Shares UnitsSecurities


Securities


Securities








Stock


That


Units or


or OtherUnderlying


Underlying


Underlying


Option





That


Have


Other


Rights ThatUnexercised


Unexercised


Unexercised


Exercise


Option


Have


Not


Rights That


Have NotOptions (#)


Options (#)


Unearned


Price


Expiration


Not


Vested


Have Not


VestedName

Exercisable


Unexercisable


Option (#)


($)


Date


Vested (#)


($)


Vested (#)


($)(a)

(b)


(c)


(d)


(e)


(f)


(g)


(h)


(i)


(j)Mark Newburg


191,666(1
)


108,334
(1)





$
1.49



1/31/1567,000(2
)










1.85



4/28/0867,000
(2)






1.85



4/28/0966,000
(2)






1.85



4/28/10750,000
(3)






1.34




(3)200,000
(4)






2.48



4/7/12200,000
(5)






2.40



3/7/13Arnaldo Galassi


34,000(6
)










1.92



3/1/0833,000
(6)






1.92



3/1/0933,000
(6)






1.92



3/1/10150,000
(3)






1.34




(3)100,000
(4)






2.48



4/7/1250,000
(5)






2.40



3/7/13Peter Zee


34,000(6
)










1.92



3/1/0833,000
(6)






1.92



3/1/0933,000
(6)






1.92



3/1/10150,000
(3)






1.34




(3)100,000
(4)






2.48



4/7/1260,000
(5)






2.40



3/7/13     (1)
    
    300,000 options granted as consultant on
    1/31/05.
    Options vest monthly over three years starting on
    1/31/06.(2)
    
    200,000 options granted on
    4/28/05. One
    third of options vest every year.(3)
    
    Options vest and first become exercisable upon a change of
    control of the Company.(4)
    
    Options granted on
    4/7/06. One
    third of options vest every year.(5)
    
    Options granted on
    3/7/07. One
    third of options vest every year(6)
    
    Options granted as consultant on
    3/1/05.
    Options vest annually over three years starting on
    3/1/06 51




---



##### Table of Contents



Director
    Compensation Table
  Change inPensionValue andNonqualifiedFees Earned








Non-Equity


Deferredor Paid


Stock


Option


Incentive Plan


Compensation


All Otherin Cash


Awards


Awards


Compensation


Earnings


Compensation


TotalName

($)


($)


($)


($)


($)


($)


($)(a)

(b)


(c)


(d)(1)


(e)


(f)


(g)


(h)James Crabbe










8,000











8,000Vincent DiVitoPaul HarveyRobert MiodunskiWilliam PurtonRon Keil










21,152











21,152Robert Smith










21,152











21,152     out-of-pocket 3-year
    ITEM 11.
    SECURITY
    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
    RELATED STOCKHOLDER MATTERS  Security
    Ownership of Certain Beneficial Owners and Management
    
    All of our directors and executive officers, individually;
    All of our directors and executive officers, as a group; and
    All persons who beneficially owned more than 5% of our
    outstanding common stock.   52




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##### Table of Contents



Name of Director or Executive Officer

Shares(1)


PercentageJames E. Crabbe


7,115,073
(2)


21.89
%Paul A. Harvey


84,000
(3)


0.26
%Vincent L. DiVito


84,000
(3)


0.26
%Robert L. Miodunski


84,000
(3)


0.26
%Mark R. Newburg


3,250,460
(4)


10.0
%Arnaldo F. Galassi


100,000
(5)


0.31
%Peter Zee


100,000
(6)


0.31
%Walter B. Stowe, Jr.


33,333
(7)


0.10
%All directors and executive
    officers as a group (8 persons)


10,850,866
(8)


33.38
%Name and Address of 5%
    HolderWilliam W. Purton


3,114,286
(9)


9.58
%99 Hotham StreetEast Melbourne, Victoria 3002AustraliaLC Capital Master Fund LP


2,844,848
(10)


8.75
%c/o Lampe Conway & Co.,
    LLC680 5th Avenue,
    Suite 1201New York, NY 10019Leonid Frenkel


2,824,794
(11)


8.69
%c/o Triage Capital LF Group, LLC401 City Ave, Suite 800Bala Cynwyd, PA 19004Bricoleur Capital Management LLC


5,194,325
(12)


15.98
%12230 El Camino Real #100San Diego, CA 92130     (1)
    
    Unless otherwise noted, the persons identified in this table
    have sole voting and sole investment power with regard to the
    shares beneficially owned by them.(2)
    
    Includes 4,574,066 shares held directly by Mr. Crabbe,
    80,600 shares issuable upon the exercise of stock options
    and 2,460,407 shares held by Mr. Crabbe, as Trustee of
    the James E. Crabbe Revocable Trust. Mr. Crabbe disclaims
    any ownership of any shares of common stock beneficially owned
    by Phileo Foundation, a charitable foundation of which
    Mr. Crabbe is a trustee and president, or by Yvonne M.
    Huson, or her related trusts, for which Mr. Crabbe formerly
    held voting power.(3)
    
    Includes 50,000 shares held directly and 34,000 shares
    issuable upon the exercise of stock options.(4)
    
    Includes 425,666 shares issuable upon the exercise of stock
    options and 2,824,794 shares over which Mr. Newburg
    exercises sole voting control pursuant to a Voting
    Trust Agreement dated August 28, 2006, by and among
    Mr. Newburg and the Triage entities.(5)
    
    Includes 1,000 shares held directly by Mr. Galassi and
    100,000 shares issuable upon the exercise of stock options.(6)
    
    Includes 100,000 shares issuable upon the exercise of stock
    options.(7)
    
    Includes 33,333 shares issuable upon the exercise of stock
    options.(8)
    
    Includes 9,013,059 shares issued directly,
    841,599 shares issuable upon the exercise of stock options.(9)
    
    Includes 1,807,143 shares held directly by Mr. Purton
    and 1,307,143 shares held directly by Synwood Trust which
    is controlled by Mr. Purton. 53




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##### Table of Contents



(10)
    
    Includes 2,484,848 shares held by LC Capital Master Fund,
    Ltd.: and share beneficially owned by LC Capital Master Fund,
    Ltd. upon the exercise of 360,000 warrant shares.(11)
    
    Includes 550,984 shares held by Triage Capital Management
    LP; 175,757 shares held by Periscope Partners LP; shares
    beneficially owned by Triage Capital Management LP upon the
    conversion of 1,277,865 warrant shares; shares beneficially
    owned by Triage Capital Management B LP upon the conversion of
    784,688 warrant shares; shares beneficially owned by Periscope
    Partners LP upon conversion of 10,000 warrant shares; and shares
    beneficially owned by Leonid Frenkel upon the conversion of
    25,500 warrant shares. Mr. Newburg exercises sole voting
    control pursuant to a Voting Trust Agreement dated
    August 28, 2006, by and among Mr. Newburg and the
    Triage entities.(12)
    
    Includes 104,432 shares held by Bric 6 LP;
    553,204 shares held by Bricoleur Enhanced LP;
    742,468 shares held by Bricoleur Offshore Ltd.;
    1,194,221 shares held by Bricoleur Partners LP; shares
    beneficially owned by Bricoleur Enhanced LP issuable upon the
    exercise of 1,200,000 common stock purchase warrants; and shares
    beneficially owned by Bricoleur Offshore Ltd issuable upon the
    exercise of 1,400,000 common stock purchase warrants.  Equity
    Compensation Plan Information
      (a)


(b)


(c)Number of Securities


Weighed-Average


Number of Securitiesto be Issued Upon


Exercise Price of


Remaining Available forExercise of


Outstanding


Future Issuance UnderOutstanding


Options,


Equity Compensation PlansOptions, Warrants


Warrants and


(Excluding SecuritiesPlan Category

and Rights


Notes Rights


Reflected In Column (A))Equity compensation plans approved
    by security holders


11,192,465


$
1.79



1,495,588Equity compensation plans not
    approved by security holders










Total


11,192,465


$
1.79



1,495,588      ITEM 12.  CERTAIN
    RELATIONSHIPS AND RELATED TRANSACTIONS  Transaction
    Review
   54




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##### Table of Contents




    The fact of such common directorship or financial interest is
    disclosed or known by our board or committee and noted in the
    minutes, and our board or committee authorizes, approves or
    ratifies the contract or transaction in good faith by a vote for
    that purpose without counting the vote or votes of such
    interested directors; or
    The fact of such common directorship or financial interest is
    disclosed to or known by the stockholders entitled to vote, and
    they approve or ratify the contract or transaction in good faith
    by a majority vote or written consent of stockholders holding a
    majority of the shares of common stock entitled to vote (the
    votes of the interested directors or officers shall be counted
    in any such vote of stockholders); or
    The contract or transaction is fair and reasonable to us at the
    time it is authorized or approved.      Securities
    and Exchange Commission Position on Certain
    Indemnification
      Indemnification
    Agreements
   55




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##### Table of Contents



ITEM 13.  EXHIBITS  Form 10-KSB Form 10-KSB.
  Number

Exhibit Description3
.1

Amended and Restated Articles of
    Incorporation dated June 7, 2003 (Incorporated by reference
    from the Registrants
    Form 8-K,
    filed on June 18, 2003).3
.2

Amended and Restated Bylaws of the
    registrant dated November 13, 2002, incorporated by
    reference from the registrants Current Report on
    Form 8-K
    filed on January 8, 2003.3
.3

Certificate of Amendment to
    Articles of Incorporation dated August 23, 2005.3
.4

Certificate of Amendment to
    Articles of Incorporation dated January 9, 2007.10
.1

Shareholder Agreement dated
    December 14, 1998, by and between VendingData Corporation
    and Richard Huson, Bob Smith and Ron Keil, incorporated by
    reference from the registrants Annual Report on
    Form 10-KSB
    filed on March 26, 1999.10
.2

Form of Warrant Associated with
    9.5% Convertible Note Due 2004, incorporated by
    reference from the registrants Quarterly Report on
    Form 10-QSB
    filed on May 17, 1999.10
.3

Lease Agreement dated
    December 29, 2006, by and between the registrant and Howard
    Hughes Properties, Limited Partnership, for 1120 Town Center
    Dr. Suite 260.10
.4

Form of Indemnification Agreement,
    incorporated by reference from the registrants quarterly
    report
    on 10-QSB/A
    filed on August 19, 2003.10
.5

Amended and Restated 1999 Stock
    Option Plan, incorporated by reference from the
    registrants quarterly report
    on 10-QSB/A
    filed on August 19, 2003.*10
.6

Philadelphia Brokerage Corporation
    Warrant to Purchase 25,000 Shares of Common Stock,
    incorporated by reference from the registrants quarterly
    report
    on 10-QSB/A
    filed on August 19, 2003.10
.7

Triage Capital Management LP
    Warrant to Purchase 50,000 Shares of Common Stock,
    incorporated by reference from the registrants quarterly
    report
    on 10-QSB/A
    filed on August 19, 2003.10
.8

Mellon HBV SBV, LLC Warrant to
    Purchase Shares of Common Stock, incorporated by reference from
    the registrants quarterly report
    on 10-QSB/A
    filed on August 19, 2003.10
.9

Amended and Restated
    1999 Directors Stock Option Plan, incorporated by
    reference from the registrants registration statement on
    Form S-8
    filed on September 10, 2003.*10
.10

Philadelphia Brokerage Corporation
    warrant to Purchase 75,000 Shares of Common Stock,
    incorporated by reference from the registrants
    registration statement on
    Form SB-2
    filed on September 25, 2003.10
.11

Distribution Agreement by and
    between the registrant and TCS Aces Pty Limited, incorporated by
    reference from the registrants registration statement on
    Form SB-2/A
    filed on December 10, 2003.10
.12

Distribution Agreement by and
    between the registrant and Technical Casino Supplies Ltd,
    incorporated by reference from the registrants Current
    Report on
    Form 8-K
    filed on February 15, 2005.10
.13

License and Manufacturing
    Agreement dated February 27, 2006, between VendingData
    Corporation and Dolphin Products Pty Limited (incorporated by
    reference to Exhibit 10.26 to the registrants Annual
    Report on form 10-K filed on March 31, 2006).10
.14

Patent Purchase Agreement dated
    October 1, 2005 among VendingData Corporation, William
    Westmore Purton, Dolphin Products Pty Ltd. and Dolphin Advanced
    Technologies Pty Ltd. (incorporated by reference to
    Exhibit 10.27 to the registrants Annual Report on
    Form 10-K filed on March 31, 2006).10
.15

Form of Warrant (incorporated by
    reference to Exhibit 10.3 to the registrants
    Quarterly Report on
    Form 10-QSB
    filed on November 14, 2005).10
.16

Employment Agreement dated
    September 29, 2005 between VendingData Corporation and Mark
    Newburg (incorporated by reference to Exhibit 10.4 to the
    registrants Quarterly Report on
    Form 10-QSB
    filed on November 14, 2005).*10
.17

Employment Agreement dated
    September 29, 2005 between VendingData Corporation and
    Arnaldo Galassi (incorporated by reference to Exhibit 10.5
    to the registrants Quarterly Report on
    Form 10-QSB
    filed on November 14, 2005).* 56




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##### Table of Contents



Number

Exhibit Description10
.18

Employment Agreement dated
    October 3, 2005 between VendingData Corporation and Peter
    Zee.*10
.19

Senior Secured Note Purchase
    Agreement dated May 2, 2006 among VendingData Corporation
    and the Bricoleur Funds (incorporated by reference to Exhibit
    10.1 to the registrants Current Report on
    Form 8-K
    dated May 2, 2006)10
.20

Securities Put Agreement dated
    May 2, 2006 among VendingData Corporation and the Bricoleur
    Funds (incorporated by reference to Exhibit 10.2 to the
    registrants Current Report on
    Form 8-K
    dated May 2, 2006)10
.21

Security Agreement dated
    May 2, 2006 among VendingData Corporation and the Bricoleur
    Funds (incorporated by reference to Exhibit 10.3 to the
    registrants Current Report on
    Form 8-K
    dated May 2, 2006)10
.22

Registration Rights Agreement
    dated May 2, 2006 among VendingData Corporation and the
    Bricoleur Funds (incorporated by reference to Exhibit 10.3 to
    the registrants Current Report on
    Form 8-K
    dated May 2, 2006)10
.23

Share Sale Agreement dated
    July 5, 2006 among VendingData Corporation and William
    Westmore Purton, and Synwood Pty Ltd  (incorporated by reference
    to Exhibit 10.8 to the registrants Quarterly Report
    on
    Form 10-QSB
    filed on August 14, 2006)10
.24

Registration Rights Agreement
    dated July 11, 2006 among VendingData Corporation and
    William Westmore Purton, and Synwood Pty Ltd. (incorporated by
    reference to Exhibit 10.8 to the registrants
    Quarterly Report on
    Form 10-QSB
    filed on August 14, 2006)10
.25

Alliance Agreement dated
    October 11, 2006 between VendingData Corporation and Elixir
    Group Limited (incorporated by reference to Exhibit 10.1 to
    the registrants Quarterly Report on
    Form 10-QSB
    filed on November 14, 2006)10
.26

Amended and Restated Sales
    Representative Agreement dated October 11, 2006 between
    VendingData Corporation and Elixir Group Limited (incorporated
    by reference to Exhibit 10.2 to the registrants
    Quarterly Report on
    Form 10-QSB
    filed on November 14, 2006)10
.27

Securities Purchase Agreement
    dated October 11, 2006 between VendingData Corporation and
    Elixir Group Limited (incorporated by reference to Exhibit 10.3
    to the registrants Quarterly Report on
    Form 10-QSB
    filed on November 14, 2006)10
.29

Securities Purchase Agreement
    dated March 27, 2007, incorporated by reference from the
    registrants Current Report on
    Form 8-K
    filed on March 30, 200710
.30

Registration Rights Agreement
    dated March 28, 2007, incorporated by reference from the
    registrants Current Report on
    Form 8-K
    filed on March 30, 200710
.31

Warrant dated March 28, 2007,
    incorporated by reference from the registrants Current
    Report on
    Form 8-K
    filed on March 30, 200714
.1

Code of Ethics, incorporated by
    reference from the registrants annual report
    on 10-KSB
    filed March 30, 2004.23
.1

Consent of Piercy Bowler Taylor
    and Kern23
.2

Consent of BDO Kendalls Audit
    & Assurance (vic) (formerly Horwath Melbourne)31
.1

Certification under
    Section 302 of the Sarbanes-Oxley Act of 2002.31
.2

Certification under
    Section 302 of the Sarbanes-Oxley Act of 2002.32
.1

Certifications Pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002,
    18 U.S.C. Section 1350.     *
    
    Management contract or compensatory plan or arrangement  ITEM 14.
    PRINCIPAL
    ACCOUNTING FEES AND SERVICES     57




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##### Table of Contents



2006


2005Audit fees

$
218,600


$
140,387Audit-related fees


4,708



5,280Tax fees


20,000



13,970$
243,308


$
159,637   Form 10-KSBs, Form 10-QSBs
     58




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##### Table of Contents



SIGNATURES
    VENDINGDATA CORPORATION
  By:
    /s/  Mark
    R. Newburg,  
      Signature

Title

Date/s/  Mark
    R. NewburgMark
    R. Newburg

Executive Director (Chief
    Executive Officer)

April 12, 2007/s/  Arnaldo
    F. GalassiArnaldo
    F. Galassi

Chief Financial Officer (Principal
    Financial and Accounting Officer)

April 12, 2007/s/  James
    E. CrabbeJames
    E. Crabbe

Chairman of the Board

April 12, 2007/s/  Paul
    HaveyPaul
    Harvey

Director

April 12, 2007/s/  Vincent
    DiVitoVincent
    DiVito

Director

April 12, 2007/s/  Robert
    MiodunskiRobert
    Miodunski

Director

April 12, 2007  59




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##### Table of Contents



EXHIBIT INDEX
  Number

Exhibit Description3
.1

Amended and Restated Articles of
    Incorporation dated June 7, 2003 (Incorporated by reference
    from the Registrants
    Form 8-K,
    filed on June 18, 2003).3
.2

Amended and Restated Bylaws of the
    registrant dated November 13, 2002, incorporated by
    reference from the registrants Current Report on
    Form 8-K
    filed on January 8, 2003.3
.3

Certificate of Amendment to
    Articles of Incorporation dated August 23, 20053
.4

Certificate of Amendment to
    Articles of Incorporation dated January 9, 200710
.1

Shareholder Agreement dated
    December 14, 1998, by and between VendingData Corporation
    and Richard Huson, Bob Smith and Ron Keil, incorporated by
    reference from the registrants Annual Report on
    Form 10-KSB
    filed on March 26, 1999.10
.2

Form of Warrant Associated with
    9.5% Convertible Note Due 2004, incorporated by
    reference from the registrants Quarterly Report on
    Form 10-QSB
    filed on May 17, 1999.10
.3

Lease Agreement dated
    December 29, 2006, by and between the registrant and Howard
    Hughes Properties, Limited Partnership, for 1120 Town Center
    Dr. Suite 260.10
.4

Form of Indemnification Agreement,
    incorporated by reference from the registrants quarterly
    report
    on 10-QSB/A
    filed on August 19, 2003.10
.5

Amended and Restated 1999 Stock
    Option Plan, incorporated by reference from the
    registrants quarterly report
    on 10-QSB/A
    filed on August 19, 2003.*10
.6

Philadelphia Brokerage Corporation
    Warrant to Purchase 25,000 Shares of Common Stock,
    incorporated by reference from the registrants quarterly
    report
    on 10-QSB/A
    filed on August 19, 2003.10
.7

Triage Capital Management LP
    Warrant to Purchase 50,000 Shares of Common Stock,
    incorporated by reference from the registrants quarterly
    report
    on 10-QSB/A
    filed on August 19, 2003.10
.8

Mellon HBV SBV, LLC Warrant to
    Purchase Shares of Common Stock, incorporated by reference from
    the registrants quarterly report
    on 10-QSB/A
    filed on August 19, 2003.10
.9

Amended and Restated
    1999 Directors Stock Option Plan, incorporated by
    reference from the registrants registration statement on
    Form S-8
    filed on September 10, 2003.*10
.10

Philadelphia Brokerage Corporation
    warrant to Purchase 75,000 Shares of Common Stock,
    incorporated by reference from the registrants
    registration statement on
    Form SB-2
    filed on September 25, 2003.10
.11

Distribution Agreement by and
    between the registrant and TCS Aces Pty Limited, incorporated by
    reference from the registrants registration statement on
    Form SB-2/A
    filed on December 10, 2003.10
.12

Distribution Agreement by and
    between the registrant and Technical Casino Supplies Ltd,
    incorporated by reference from the registrants Current
    Report on
    Form 8-K
    filed on February 15, 2005.10
.13

License and Manufacturing
    Agreement dated February 27, 2006, between VendingData
    Corporation and Dolphin Products Pty Limited (incorporated by
    reference to Exhibit 10.26 to the registrants Annual
    Report of Form 10-K filed on March 31, 2006).10
.14

Patent Purchase Agreement dated
    October 1, 2005 among VendingData Corporation, William
    Westmore Purton, Dolphin Products Pty Ltd. and Dolphin Advanced
    Technologies Pty Ltd. (incorporated by reference to
    Exhibit 10.27 to the registrants Annual Report on
    Form 10-K filed on March 31, 2006).10
.15

Form of Warrant (incorporated by
    reference to Exhibit 10.3 to the registrants
    Quarterly Report on
    Form 10-QSB
    filed on November 14, 2005).10
.16

Employment Agreement dated
    September 29, 2005 between VendingData Corporation and Mark
    Newburg (incorporated by reference to Exhibit 10.4 to the
    registrants Quarterly Report on
    Form 10-QSB
    filed on November 14, 2005).*10
.17

Employment Agreement dated
    September 29, 2005 between VendingData Corporation and
    Arnaldo Galassi (incorporated by reference to Exhibit 10.5
    to the registrants Quarterly Report on
    Form 10-QSB
    filed on November 14, 2005).*10
.18

Employment Agreement dated
    September 29, 2005 between VendingData Corporation and
    Peter Zee10
.19

Senior Secured Note Purchase
    Agreement dated May 2, 2006 among VendingData Corporation
    and the Bricoleur Funds (incorporated by reference to Exhibit
    10.1 to the registrants Current Report on
    Form 8-K
    dated May 2, 2006)




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##### Table of Contents



Number

Exhibit Description10
.20

Securities Put Agreement dated
    May 2, 2006 among VendingData Corporation and the Bricoleur
    Funds (incorporated by reference to Exhibit 10.2 to the
    registrants Current Report on
    Form 8-K
    dated May 2, 2006)10
.21

Security Agreement dated
    May 2, 2006 among VendingData Corporation and the Bricoleur
    Funds (incorporated by reference to Exhibit 10.3 to the
    registrants Current Report on
    Form 8-K
    dated May 2, 2006)10
.22

Registration Rights Agreement
    dated May 2, 2006 among VendingData Corporation and the
    Bricoleur Funds (incorporated by reference to Exhibit 10.3 to
    the registrants Current Report on
    Form 8-K
    dated May 2, 2006)10
.23

Share Sale Agreement dated
    July 5, 2006 among VendingData Corporation and William
    Westmore Purton, and Synwood Pty Ltd  (incorporated by reference
    to Exhibit 10.8 to the registrants Quarterly Report
    on
    Form 10-QSB
    filed on August 14, 2006)10
.24

Registration Rights Agreement
    dated July 11, 2006 among VendingData Corporation and
    William Westmore Purton, and Synwood Pty Ltd. (incorporated by
    reference to Exhibit 10.8 to the registrants
    Quarterly Report on
    Form 10-QSB
    filed on August 14, 2006)10
.25

Alliance Agreement dated
    October 11, 2006 between VendingData Corporation and Elixir
    Group Limited (incorporated by reference to Exhibit 10.1 to
    the registrants Quarterly Report on
    Form 10-QSB
    filed on November 14, 2006)10
.26

Amended and Restated Sales
    Representative Agreement dated October 11, 2006 between
    VendingData Corporation and Elixir Group Limited (incorporated
    by reference to Exhibit 10.2 to the registrants
    Quarterly Report on
    Form 10-QSB
    filed on November 14, 2006)10
.27

Securities Purchase Agreement
    dated October 11, 2006 between VendingData Corporation and
    Elixir Group Limited (incorporated by reference to Exhibit 10.3
    to the registrants Quarterly Report on
    Form 10-QSB
    filed on November 14, 2006)10
.29

Securities Purchase Agreement
    dated March 27, 2007, incorporated by reference from the
    registrants Current Report on
    Form 8-K
    filed on March 30, 200710
.30

Registration Rights Agreement
    dated March 28, 2007, incorporated by reference from the
    registrants Current Report on
    Form 8-K
    filed on March 30, 200710
.31

Warrant dated March 28, 2007,
    incorporated by reference from the registrants Current
    Report on
    Form 8-K
    filed on March 30, 200714
.1

Code of Ethics, incorporated by
    reference from the registrants annual report
    on 10-KSB
    filed March 30, 2004.23
.1

Consent of Piercy Bowler Taylor
    and Kern23
.2

Consent of BDO Kendalls Audit
    & Assurance (vic) (formerly Horwath Melbourne)31
.1

Certification under
    Section 302 of the Sarbanes-Oxley Act of 2002.31
.2

Certification under
    Section 302 of the Sarbanes-Oxley Act of 2002.32
.1

Certifications Pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002,
    18 U.S.C. Section 1350.     *
    
    Management contract or compensatory plan or arrangement.