UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, DC 20549Form 10-KSB/A
(Amendment No. 1)

|(Mark One)                                                                             |                                                                                   
|-------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------
|ý                                                                                      | ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934    
|For the fiscal year ended January 31, 2007                                            
|or                                                                                    
|o                                                                                      | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|For the transition period from fiscal year
ended                                    to

Commission file number 000-20685

American Wagering, Inc.(Name of small business issuer in its charter)

|Nevada(State or other jurisdiction of
incorporation or organization)   |  | 88-0344658(I.R.S. Employer Identification No.)
|---------------------------------------------------------------------- |  | ----------------------------------------------
|675 Grier Drive, Las Vegas, NV(Address of principal executive offices) |  | 89119(Zip Code)                               

Issuer's telephone number:(702) 735-0101

Securities registered under Section 12(b) of the Exchange Act:None

Title of each class

Name of each exchange on which registered


Securities
registered under Section 12(g) of the Exchange Act:

Common Stock, par value, $0.01 per share(Title of class)

Check
whether the issuer is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act.    o

NoteChecking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Exchange Act from their
obligations under those Sections.

Check
whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such filing requirements for the past
90 days.    Yes ý No o

Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB.    o

Indicate whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act).    Yes o No ý

State issuer's revenues for its most recent fiscal year. $19,370,393

State
the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity
was sold, or the average bid and asked price of such common equity, as of a specified date within the past 60 days. $6,050,599 as of April 27, 2007.

(ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)

Check
whether the issuer has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan
confirmed by a court.    Yes ý No o

(APPLICABLE ONLY TO CORPORATE REGISTRANTS)

State
the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date. 8,129,880 Common Shares as of May 10, 2007.

DOCUMENTS INCORPORATED BY REFERENCE: None.

Transitional
Small Business Disclosure Format (check
one):    Yes o No ý



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Explanatory Note

In response to comments received from the staff (the "Staff") of the Securities and Exchange Commission (the "SEC") in connection with the Staff's normal periodic
review of our filings, American Wagering, Inc. (the "Company") is filing this Amendment No. 1 on Form 10-KSB/A (this "Form 10-KSB/A") to amend and
restate financial information in Part II, Item 7 of the Company's Annual Report on Form 10-KSB for the year ended January 31, 2007 (the "Original
Form 10-KSB"). The portions of the Original Form 10-KSB that are amended and restated in this Form 10-KSB/A are:



In
accordance with Rule 12b-15 under the Securities Exchange Act of 1934, as amended, this Form 10-KSB/A amends and restates in its entirety
Part II, Item 7. In addition, for the convenience of the reader, this Form 10-KSB/A sets forth the complete text of the Original Form 10-KSB rather than
just the amended portions thereof. The Company has not modified or updated disclosures presented in the Original Form 10-KSB in this Form 10-KSB/A, except as
required to reflect the effects of the items discussed above. In addition, no attempt has been made in this Form 10-KSB/A to modify or update
disclosures that were included in the Original Form 10-KSB to reflect developments at the Company subsequent to the date of the filing of the Original
Form 10-KSB.

This
Form 10-KSB/A should be read in conjunction with the Company's filings made with the SEC subsequent to the filing of the Original Form 10-KSB,
including any amendments to those filings.

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TABLE OF CONTENTS



|PART I     |          | 1 
|---------- | -------- | --
|           | Item 1.  |   
|           | Item 2.  |   
|           | Item 3.  |   
|           | Item 4.  |   
|PART II    |          | 19
|           | Item 5.  |   
|           | Item 6.  |   
|           | Item 7.  |   
|           |          |   
|           |          |   
|           |          |   
|           |          |   
|           |          |   
|           |          |   
|           | Item 8.  |   
|           | Item 8A. |   
|           | Item 8B. |   
|PART III   |          | 55
|           | Item 9.  |   
|           | Item 10. |   
|           | Item 11. |   
|           | Item 12. |   
|           | Item 13. |   
|           | Item 14. |   
|SIGNATURES |          | 68

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PART I

Item 1.    Description of Business

Company History

Under Nevada gaming regulations, a publicly traded company is not eligible to hold a Nevada gaming license. Thus, American Wagering, Inc. ("AWI"), a Nevada
corporation, was formed to be the publicly traded holding company for Leroy's Horse & Sports Place, Inc. ("Leroy's"). Other operations have subsequently been added through internal
development and acquisition.

Race and Sports Wagering Revenue Segment

Leroy's.Leroy's owns and operates 59 satellite race and sports books in nonrestricted gaming
establishments throughout the State of Nevada. Every wager placed at any Leroy's race and sports book is processed through equipment and software of our subsidiary, Computerized Bookmaking
Systems, Inc. ("CBS"). We refer to that equipment and software collectively as the "CBS System." By leveraging the technology of the CBS System to process every wager taken at 59 race and
sports books, Leroy's enables a nonrestricted gaming operator to offer the race and sports book amenity to its patrons without the traditional and typical fixed costs and risk of financial loss
associated with operating a race and sports book. This structure also enables Leroy's to allocate its financial risk of loss more efficiently and to reduce and manage its fixed costs more effectively.

AWI International, Inc.AWI International, Inc. ("AWI Int'l") provides a myriad of
services to gaming suppliers and gaming operators in foreign jurisdictions where wagering on race and sporting events is licensed. Such services may include (1) providing remote oddsmaking and
posting of odds for an event whose popularity may be regional or cultural based (Australian-Rules Football, cricket, polo, etc.); (2) remote operation and management of the gaming supplier's or
operator's race and sports book system in the foreign jurisdiction; or by (3) providing wagering content to the gaming supplier or operator that is offered to the patron with the resulting
wagers having been processed by the gaming supplier's or operator's race and sports system.

Race and Sports Wagering Systems Segment

CBS.CBS is the leading race and sports equipment and software supplier in the State of Nevada.
Accordingly, CBS services the majority of race and sports books in Nevada.

AWI Manufacturing, Inc.AWI Manufacturing, Inc. ("AWIM") designs and leases
self-service race and sports wagering kiosks to CBS customers. The kiosks interface seamlessly with our customers' CBS Systems and they expand our customers' race and sports books' size
and hours of operation without increasing the labor cost.

Hotel/Casino Segment

AWI Gaming, Inc.AWI Gaming, Inc. ("AWIG") is the sole member of Sturgeons, LLC, which
owns and operates the Sturgeon's Inn & Casino. AWIG's purpose is to acquire other hotel/casino properties.

Sturgeons, LLC.Sturgeons, LLC d/b/a Sturgeon's Inn & Casino ("Sturgeon's") is a hotel, casino
and restaurant operation located at Lovelock, Nevada that we acquired on March 1, 2006.

Chapter 11 Filing

On July 25, 2003, AWI and Leroy's filed voluntary petitions for relief ("Chapter 11 Petitions") under Chapter 11 of the United States Bankruptcy Code
("Chapter 11") in the United States

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Bankruptcy
Court for the District of Nevada (the "Bankruptcy Court") On February 28, 2005, the Bankruptcy Court confirmed the Restated Amended Joint Plan of Reorganization (the "Plan") of AWI
and Leroy's. On March 11, 2005 (the "Effective Date"), AWI and Leroy's consummated the Plan and formally emerged from Chapter 11 proceedings after completing all required actions and all
remaining conditions.

On
September 26, 2005, the Bankruptcy Court issued an order closing the Chapter 11 cases of AWI and Leroy's. All required distributions have been made, except with respect to the
Racusin matter. Michael Racusin, d/b/a Racusin & Company ("Racusin"), appealed to the United States Court of Appeals for the Ninth Circuit (the "9th Circuit") the April 14, 2005 ruling
by the United States Bankruptcy Appellate Panel of the Ninth Circuit (the "BAP") in favor of AWI and Leroy's. On October 6, 2006, the 9th Circuit reversed the BAP and remanded a reinstatement
of the Bankruptcy Court's original decision in favor of Racusin. AWI and Leroy's have requested a 9th Circuit panel rehearing or rehearingen banc, and
Racusin has filed with the 9th Circuit a response to our request. The requested panel rehearing or rehearingen bancremains pending.

Recent Material Litigation and Related Business Activities

We have settled all previous litigation; we are not a party in any litigation and have no knowledge of any pending legal proceedings in any court or agency of
government or governmental authority with the exception of the appeal before the 9th Circuit in the Racusin matter as noted above. A discussion of the settlements and the Racusin matter is in the
"Legal Proceedings" section in Part I, Item 3 of this Form 10-KSB.

Sports Wagering

Wagering on sporting events is legal in the state of Nevada and in numerous foreign countries. Sports wagering at Nevada's race and sports books increased from
approximately $290 million in 1980 to $2.4 billion in 2006. During that same period, the number of licensed sports books in Nevada increased from 24 to 170. With the advent of cable and
satellite television, both commercially and privately,
viewing access to sporting events has increased significantly. When sporting events are televised, there is increased excitement, which, we believe, leads to more interest in sports betting.

A
sports wagering facility, or "sports book," is a gambling establishment that sets odds and point spreads and accepts bets on the outcome of sporting events such as football,
basketball, baseball, and hockey games. Sports books set odds and point spreads aiming not to reflect the final result, but to maintain a "balanced book" by offering odds or point spreads that will
attract equal amounts of bets on each side of a particular event. As a general matter, a patron's odds or point spread (the "line") are fixed at the time he or she makes his or her bet, regardless of
any subsequent movement in the line. Under this system, a sports book operator attracts bets by changing or "moving" the line up or down to encourage wagering on a specific team. To the extent that a
book on a particular event is not balanced, the bookmaking operation takes a risk on the outcome of the event. This is the fundamental difference from other forms of organized gambling where profits
result from patron play against a statistical advantage that the gambling operator (the "House") possesses, or in pari-mutuel wagering, used by major North American Horse Racing Tracks and
Jai-Alai establishments, where the House receives a guaranteed percentage for operating expenses, profit and taxes and the remainder is distributed to the winners.

This
fundamental difference is part of the appeal for many sports patrons, but it also creates risk for the sports book. A bookmaker operates in a system that is interrelated with
oddsmakers and patrons. Bookmakers collect bets, adjust odds to account for the preferences of their patrons, pay the winners, and if the book is balanced for each type of sports bet, the House then
has a "theoretical advantage." For example, for a straight football bet involving the outcome of one game, it is common

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practice
that the patron wagers $11 to win $10. Accordingly, by maintaining a balanced book, the sports book would earn $1 for each $22 wagered, or 4.55% (the winner would receive $21).

Oddsmakers
(whose services are purchased by the bookmakers) initially set betting lines with the goal of splitting the bets evenly between each of the betting sides. Patrons have
opinions concerning the odds and bet accordingly, which requires initial lines to be adjusted. As a result, in practice, a sports book is rarely perfectly balanced. The sports books' profit depends
upon the reliability of the oddsmaker and its own acumen at adjusting the odds when required. Because patrons are betting on propositions of uncertain probability and are paid according to the line at
which they make their bets rather than the closing odds (as in a pari-mutuel system), the sports book is not assured of either a constant profit over time or for a single event.

A
sports book also attempts to limit the potential risk by setting game limits and line movement. For example, the opening line for a football game ideally would split the bets from the
time it was posted until kick-off. However, the opening line generally is unbalanced. Because a sports book does not want to take the risk of accepting unlimited bets on one side of a
game, it creates a game limit, the maximum amount of money that will be accepted at the posted line. When the game limit is reached, the line is changed, or "moved," to attract action on the "other"
side.

The
game limit is established by the sports book based upon the "earn" in a sport, which is a function of the amount the sports book would earn if the odds guaranteed it a constant
commission regardless of the outcome (the "theoretical hold percentage"), the quality of the line, and the patron mix. For example, when the sports book anticipates that the majority of the bets will
come from sophisticated patrons who know as much as, or more than, the oddsmaker, the limit will be relatively low. We believe that events with the highest fan popularity and media coverage, such as
professional football, have a relatively small proportion of sophisticated patrons. Accordingly, the sports books' expected earn on such an event would be higher and would justify a higher game limit.

In
order to effectively balance its books, a bookmaking operation must take a sufficient volume of wagers to offset large wagers on any given event. While many of the consolidated casino
operators have sufficient patron traffic to underwrite the substantial risks inherent in a sports book, many single casino operators are typically more risk adverse. Through Leroy's, we offer casino
operators the amenity of having sports wagering books with no risk of financial loss or substantial operating, labor, or administrative costs. Under Nevada gaming law, Leroy's is permitted to own and
operate sports books located on the premises of other non-restricted gaming licensees.

When
Leroy's began operations in 1978, it was one of only seven sports and race books in Las Vegas. Currently, virtually every major casino in Nevada offers its patrons a sports and race
book. The typical sports book location leased by Leroy's encompasses approximately 300 square feet, contains a board displaying the odds, television monitors showing sporting events, betting stations,
ticket sellers and cashiers. Most leases are at fixed rates, are cancelable by either party on 30 to 90 days notice, and some have incentive (or participation) clauses. As a bet is placed, the
wagering data is entered into a computer terminal which is connected via a communications device to Leroy's centralized computer system which confirms the line, determines that the bet is within the
limits set for the particular event, records the information on a central database and issues a ticket evidencing the bet. The ticket is then distributed to the patron with Leroy's simultaneously
recording the wager. Personnel at Leroy's main office monitor all bets and adjust the odds as necessary to reflect the various bets throughout all of Leroy's locations.

We
believe that Leroy's has lower maximum betting limits than many sports books operated by the larger casinos. We established these lower limits in an effort to limit bets from the more
sophisticated patrons who often place larger bets. In addition, in order to limit the more sophisticated bettors from utilizing strategies that would provide an advantage, we set even lower limits for
bets placed over the telephone, which are currently accepted only from within Nevada and are limited to $2,200 per day per

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patron
(unless a higher limit for a specific patron is approved by the State Gaming Control Board). We believe that geographical dispersion across Nevada is more likely to attract bets from patrons
more evenly on both sides of a line, thereby further limiting its risk.

Professional
and college football games currently are the most popular sports wagered on, followed by professional and college basketball games, and finally professional baseball games;
comprising the majority of the total amount wagered at all of our Leroy's locations. Historically, our Leroy's business has been seasonal in nature, with more than half of its handle occurring between
the months of September and February.

Leroy's
does not offer horse race wagering at all its locations. It offers limited horse race wagering at most locations, and a full pari-mutuel race book at several of its
locations.

Leroy's
race books utilize the same personnel and facilities as its sports books, but Leroy's does not set its own odds for race wagering. Leroy's accepts wagers for races by offering
race patrons the same odds as the racetracks at which the races occur. At those locations with limited race, Leroy's pays full track odds up to the predetermined limit; at those locations with full
pari-mutuel race, Leroy's operates a daily race book with wagers merged into the on-track pari-mutuel pools.

With
the popularity and accessibility of personal computers, bettors now have an additional medium from which to wager on sporting events. While online sports betting has existed for
approximately 20 years, few people had access to a computer or the Internet. We believe that the dynamic growth in home computers combined with the convenience of betting online will enhance
the continued growth of the sports betting industry in general but may have an adverse impact upon our live wagering facilities in Nevada. At this time, we cannot predict what impact, if any, the
growth of online wagering may have on our overall handle (total amount wagered).

Pari-Mutuel Race Wagering

In December of 1997, Leroy's joined the Nevada Pari-mutuel Association to allow pari-mutuel race wagering at one or more of its licensed
locations. Leroy's, in association with a disseminator, offers pari-mutuel wagering on numerous events at racetracks throughout the country. As of January 31, 2007, Leroy's offers
pari-mutuel race wagering at seven of its licensed locations.

Competition

There is intense competition among companies in the gaming industry, most of which have significantly greater financial, marketing, technical and other resources
than we do.

Leroy's
faces competition from all other sports and race wagering operations throughout Nevada. There are currently 170 sports books in Nevada, of which we owned and operated 59 as of
January 31, 2007. Virtually all of the major casinos in Nevada have sports and race books, some of which are larger and offer more amenities than our locations and some casinos operate sports
books at other casinos.

AWI
Int'l competes with international race and sports service providers.

CBS
faces competition from the larger casinos that may develop their own race and sports wagering systems, as well as the challenge of keeping up with the rapid evolution in technology.
In addition, the CBS System competes directly with an over-the-counter system offered by another company with approximately 10% of the market.

AWIM
competes with other manufacturers of self-service wagering kiosks.

AWIG
faces competition from other hotel/casino operators who may be interested in acquiring the same properties that AWIG is interested in acquiring. Sturgeon's is the only hotel/casino
operation in Lovelock, Nevada and competes in the tourism market with casino facilities in the nearby cities of

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Sparks,
Fallon and Winnemucca. However, other hotel operations (without casino facilities) compete for the tourism market while other (smaller) casino facilities (without hotel operations) compete for
gaming patrons.

Intellectual Property

We regard our technology as proprietary and attempt to protect it by relying on patents, trademarks, service marks, copyrights and trade secret laws and
restrictions on disclosure and transferring title and other methods. We generally enter into confidentiality and/or license agreements with our employees and consultants, and generally control access
to and distribution of our documentation and other proprietary information. Despite these precautions, it may be possible for a third party to copy or otherwise obtain and use our proprietary
information without authorization or to develop similar technology independently.

Research and Development

We spent $1,131,265 in research and development in the fiscal year ending January 31, 2007, as compared to $1,020,051 in the fiscal year ending
January 31, 2006, all of which was expensed as incurred. We intend to conduct continuing development and innovation of our products in accordance with changing consumer preferences,
demographics, and the evolution of new technologies. Our development strategy is to leverage our proprietary technology and regulatory approvals to integrate third party developed solutions such as
age verification, biometrics, identification and security in order to provide fully-integrated applications that are competitive and innovative in the regulated gaming industry.

Proposed Government Regulation

In the past, the U.S. Congress has submitted bills that, if passed, would prohibit wagering on some, if not all, types sporting events. Passage of any such
legislation would have a significant negative impact on our operations.

Regulation and Licensing

The ownership and operation of gaming facilities in Nevada are subject to extensive state and local regulation. Our gaming operations are subject to the Nevada
Gaming Control Act and its regulations (hereinafter collectively referred to as the "Nevada Act") and various local regulations. Our gaming operations are also subject to the licensing and regulatory
control of the Nevada Gaming Commission (the "Commission"), the State Gaming Control Board (the "Board"), various county commissions (gaming, liquor, health, etc.), and other local jurisdictions.
These regulatory agencies are hereinafter collectively referred to as the "Nevada Gaming Authorities."

The
laws, regulations and supervisory procedures of the Nevada Gaming Authorities have their genesis in various declarations of public policy which are concerned with, among other
things: (i) the prevention of unsavory or unsuitable persons from having a direct or indirect involvement with gaming at any time or in any capacity; (ii) the establishment and
maintenance of responsible accounting practices and procedures; (iii) the maintenance of effective controls over the financial practices of licensees, including the establishment of minimum
procedures for internal fiscal affairs and the safeguarding of assets and revenues, providing reliable record keeping and requiring the filing of periodic reports with the Nevada Gaming Authorities;
(iv) the prevention of cheating and fraudulent practices; and (v) the creation of a source of state and local revenues though taxation and licensing fees. Changes in such laws,
regulations and procedures could have an adverse effect on our gaming operations.

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We
have been found suitable as the publicly traded parent of entities holding Nevada gaming licenses. Leroy's is licensed by the Nevada Gaming Authorities as the owner/operator of
nonrestricted race and/or sports book operations; AWIM is licensed by the Nevada Gaming Authorities as a Manufacturer and a Distributor; AWIG is licensed by the Nevada Gaming Authorities as the sole
member of Sturgeon's; Sturgeon's is licensed by the Nevada Gaming Authorities as the operator of nonrestricted gaming operations at Sturgeon's Inn & Casino; CBS is not required to maintain any
gaming-related licenses. Gaming licenses require the periodic payment of fees and taxes and periodic reviews by the gaming authorities. Furthermore, gaming licenses are not transferable.

We
are registered in Nevada as a publicly traded corporation and, as such, are required to submit, on a periodic basis, detailed financial and operating reports to the Commission.
Additionally, we may be required to furnish any other information requested by the Commission. No person may become a stockholder of, or receive any percentage of profits from Leroy's, AWIM, AWIG or
Sturgeon's (as non-public entities) without first obtaining licenses and approvals from the appropriate Nevada Gaming Authorities. We have received from the Nevada Gaming Authorities the
various registrations, approvals, permits and licenses required to engage in gaming activities in Nevada.

The
Nevada Gaming Authorities may investigate any individual who has a material relationship, or involvement with us in order to determine whether such individual is suitable or should
be licensed as a business associate of a gaming licensee. Officers, directors and certain key employees must file applications with the Nevada Gaming Authorities and may be required to be licensed or
found suitable by the Nevada Gaming Authorities. Our officers, directors and key employees who are actively and directly involved in the gaming activities may be required to be licensed or found
suitable by the Nevada Gaming Authorities. The Nevada Gaming Authorities may deny an application of licensing for any cause deemed reasonable. A finding of suitability is comparable to licensing, and
both require the submission of detailed personal and financial information followed by a thorough investigation. An applicant for licensing or a finding of suitability must pay all of the costs of the
investigation. Changes in licensed positions must be reported to the Nevada Gaming Authorities. In addition to their authority to deny an application for a finding of suitability or licensure, the
Nevada Gaming Authorities also have jurisdiction to disapprove a change in a corporate position. Our officers and directors and those of our subsidiaries have been or are in the process of being found
suitable by the Nevada Gaming Authorities.

If
the Nevada Gaming Authorities were to find an officer, director or key employee unsuitable for licensing or unsuitable to continue having a relationship with us, we would be required
to sever all relationships with such a person. Additionally, the Commission may require us to terminate the employment of any person who refuses to file appropriate applications. Determinations of
suitability or questions pertaining to licensing are not subject to judicial review in Nevada.

If
it were determined that we or our subsidiaries violated the Nevada Act, the gaming licenses or registration held by us could be limited, conditioned, suspended or revoked. At the
discretion of the Commission, we and any person involved could be subject to substantial fines for each separate violation of the Nevada Act. Furthermore, a supervisor could be appointed by the
Commission to operate our gaming properties and, under certain circumstances, earnings generated during the supervisor's appointment (except for the reasonable rental value of our gaming properties)
could be forfeited to the State of Nevada. Limitation, conditioning or suspension of any gaming license or the appointment of a supervisor could, and certainly the revocation of any gaming license
would, materially adversely affect the results of our operations.

A
beneficial holder of our voting securities, regardless of the number of shares owned, may be required to file an application, be investigated, and have his or her suitability as a
beneficial holder of our voting securities be determined if the Commission has reason to believe that such ownership would otherwise be inconsistent with the declared policies of the State of Nevada.
The applicant must pay all

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costs
of the investigation incurred by the Nevada Gaming Authorities in conducting such an investigation. In addition, the Clark County Liquor Gaming Licensing Board has taken the position that it has
the authority to approve all persons owning or controlling the stock of any corporation controlling a gaming license.

The
Nevada Act requires any person who acquires more than 5% of our voting securities to report the acquisition to the Commission. The Nevada Act requires that beneficial owners of more
than 10.00% of our voting securities apply to the Commission for a finding of suitability within 30 days after the Chairman of the Board mails written notice requiring such a filing. Under
certain circumstances, an "institutional investor," as defined in the Nevada Act, which acquires more than 10.00%, but not more than 15.00%, of our voting securities may apply to the Commission for a
waiver of such a finding of suitability if such institutional investor holds the voting securities for investment purposes only. An institutional investor shall not be deemed to hold the voting
securities for investment purposes only unless the voting securities were acquired and are held in the ordinary course of business as an institutional investor and not for the purpose of causing,
directly or indirectly, the election of a majority of the members of our board of directors, any change in our corporate charter, bylaws, management, policies or operations, or any of our gaming
affiliates, or any other action which the Commission finds to be inconsistent with holding our voting securities for investment purposes only. Activities which are not deemed inconsistent with holding
voting securities for investment purposes only include: (i) voting on all matters voted on by stockholders; (ii) making financial and other inquiries of management of the type normally
made by securities analysts for informational purposes and not to cause a change in its
management, policies or operations; and (iii) such other activities as the Commission may determine to be consistent with such investment intent. If the Commission grants a waiver to an
"institutional investor," the waiver does not include a waiver or exemption from the requirement for prior approval to "acquire control" of a registered corporation. If the beneficial holder of voting
securities who must be found suitable is a corporation, partnership or trust, it must submit detailed business and financial information, including a list of its beneficial owners. The applicant is
required to pay all costs of investigation.

Any
person who fails or refuses to apply for a finding of suitability or a license within 30 days after being ordered to do so by the Commission, or the Chairman of the Board, may
be found unsuitable. The same restrictions apply to a record owner if the record owner, after request, fails to identify the beneficial owners. Any stockholder found unsuitable and who holds, directly
or indirectly, any beneficial ownership of the common stock of a registered corporation beyond such period of time as may be prescribed by the Commission may be guilty of a criminal offense. We would
be subject to disciplinary action if, after we receive notice that a person is unsuitable to be a stockholder or to have any other relationship with us or our subsidiaries, we (i) pay that
person any dividend or interest on our voting securities; (ii) allow that person to exercise, directly or indirectly, any voting right conferred through securities held by that person;
(iii) pay remuneration in any form to that person for services rendered or otherwise; or (iv) fail to pursue all lawful efforts to require such unsuitable person to relinquish his voting
securities for cash at fair market value. Any person required by the Commission to be found suitable but who is found unsuitable shall be guilty of a criminal offense if he holds, directly or
indirectly, the beneficial ownership of the voting or debt securities beyond the time prescribed by the Commission.

We
are required to maintain a current stock ledger in Nevada, which may be examined by the Nevada Gaming Authorities at any time. If any securities are held in trust by an agent or by a
nominee, the record holder may be required to disclose the identity of the beneficial owner to the Nevada Gaming Authorities. A failure to make such a disclosure may be grounds for finding the record
holder unsuitable. We are also required to render maximum assistance in determining the identity of the beneficial owner. The Commission has the power to require our stock certificates to bear a
legend

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indicating
that the securities are subject to the Nevada Act. However, to date, the Commission has not imposed such a requirement on us.

Changes
in control of AWI through merger, consolidation, stock or asset acquisitions, management or consulting agreements, or any act or conduct by a person whereby he or she obtains
control, may not occur without the prior approval of the Commission. Entities seeking to acquire control of a registered corporation must satisfy the Board and the Commission under a variety of
stringent standards prior to assuming control of such registered corporation. The Commission may also require controlling stockholders, officers, directors and other persons having a material
relationship or involvement with the entity that proposes to acquire control, to be investigated and licensed as part of the approval process related to the transaction.

The
Nevada legislature has declared that some corporate acquisitions opposed by management, repurchases of voting securities and corporate defensive tactics affecting Nevada gaming
licenses and registered corporations that are affiliated with those operations, may be injurious to stable and productive corporate gaming. The Commission has established a regulatory scheme to
ameliorate the potentially adverse effects of these business practices upon Nevada's gaming industry and to further Nevada's policy to: (i) assure the financial stability of corporate gaming
operators and their affiliates; (ii) preserve the beneficial aspects of conducting business in the corporate form; and (iii) promote a neutral environment for the orderly governance of
corporate affairs. Approvals are, in certain circumstances, required from the Commission before we can make exceptional repurchases of voting securities above the current market price thereof and
before a corporate acquisition opposed by our management can be consummated. The Nevada Act also requires prior approval of a plan of recapitalization proposed by a registered company's board of
directors in response to a tender offer made directly to the registered company's stockholders for the purposes of acquiring control of the registered company.

License
fees and taxes, computed in various ways depending upon the type of gaming activity involved, are payable to the State of Nevada and to the counties and cities in which the
Nevada licensees' respective operations are conducted. Depending upon the particular fee or tax involved, these fees and taxes are payable either monthly, quarterly, semi-annually or
annually and are based upon either: (i) a percentage of gross revenues received; (ii) the number of gaming devices operated; or (iii) the number of games operated. Nevada
licensees that hold a license as an operator of a slot route, or a manufacturers or distributors license, also pay certain fees and taxes to the State of Nevada.

Any
person who is licensed, required to be licensed, registered, or required to be registered, or is under common control with such person (hereinafter collectively referred to as
"licensees") and who proposes to become involved in a gaming venture outside the State of Nevada is required to deposit with the Board, and thereafter maintain, a revolving fund to pay the expenses of
investigation by the Board of his or her participation in such foreign gaming. We have filed the appropriate foreign gaming reports and have established the required revolving fund. The revolving fund
is subject to increase or decrease in the discretion of the Commission. Thereafter, such licensees are required to comply with certain reporting requirements imposed by the Nevada Act. Licensees are
also subject to disciplinary action by the Commission if they knowingly violate any laws of the foreign jurisdiction pertaining to the foreign gaming operation, fail to conduct the foreign gaming
operation in accordance with the standards of honesty and integrity required of Nevada gaming operations, engage in activities that are harmful to the State of Nevada or its ability to collect gaming
taxes and fees, or employ a person in the foreign operation who has been denied a license or finding of suitability in Nevada on the basis of personal unsuitability. Recent changes in the Nevada
Gaming Control Act would allow us to seek a determination of suitability of any associate or activity associated with the foreign gaming opportunity prior to engaging in that activity.

8

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Pursuant
to the Professional and Amateur Sports Protection Act (the "Sports Protection Act"), which became effective January 1, 1993, the proliferation of legalized sports books
and wagering was
significantly curtailed. Although the Sports Protection Act generally prohibits sports wagering in every jurisdiction, including those jurisdictions subject to the Indian Gaming Regulatory Act, the
Sports Protection Act does permit sports wagering in those jurisdictions that authorized sports wagering prior to January 1, 1993. Thus, sports books and wagering are permitted to continue to
operate in Nevada provided the wager originates in Nevada and is received by a licensed sports book in Nevada. Moreover, the Interstate Wire Act also prohibits those in the business of betting and
wagering from utilizing a wire communication facility for the transmission in interstate or foreign commerce any bets, wagers or information assisting in the placing of such bets and wagers on any
sporting event or contest unless such betting or wagering activity is specifically authorized in each jurisdiction involved.

Leroy's
may not accept bets received by use of wire communications facilities, including telephones and computers, unless such bets originated in jurisdictions where such betting or
wagering is legal. Nevada has amended the Nevada Gaming Control Act to allow licensed race and sports books in Nevada to accept interstate pari-mutuel, wagers, from other jurisdictions in
which pari-mutuel wagering is legal.

The
U.S. Congress has proposed several bills that would prohibit any person from engaging in the business of betting or wagering via electronic communication facilities, including the
Internet, if the transmission is not legal in the state or foreign country in which the transmission either originates or is received. If any such bill were to become law, our ability to take
advantage of interstate pari-mutuel wagering opportunities would be adversely impacted.

Employees

We had approximately 224 employees at January 31, 2007, of which 190 were full time. None of our employees are represented by a labor union. We do not know
whether or to what extent, if any, our employees will, in the future, be governed by collective bargaining agreements. At this time, we believe our employee relations are good.

Cautionary Statements Regarding Future Results, Forward-Looking Statements and Other Important Factors

Throughout this report we make statements regarding our business, expectations and prospects, such as projections of future performance, statements of our plans
and objectives, forecasts of market trends, and other matters that are "forward-looking statements" as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Statements containing words or phrases such as "will likely result," "are expected to," "will continue," "is anticipated,"
"estimates," "projects," "believes," "expects," "anticipates," "intends," "target," "goal," "plans," "objective," "might," "may," "could," "will," "should," or similar expressions, or the negative
thereof, constitute forward-looking statements. Although we believe that
our plans, objectives and expectations reflected in, or suggested by, such forward-looking statements are reasonable at the present time, we might not achieve them or we may modify them from time to
time. You should read this report thoroughly and with the understanding that actual future results may be materially different from what we expect. We do not plan to update forward-looking statements
even though our situation or plans may change in the future, unless applicable law requires us to do so.

In
addition to other matters identified or described by us from time to time in this report or in our other filings with the Securities and Exchange Commission (the "SEC"), there are
several important factors that could cause our future results to differ materially from historical results or trends, results anticipated or planned, or results that are reflected from time to time in
any forward-looking statement

9

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that
may be made by us or on our behalf. Some of these important factors, but not necessarily all important factors, include the following:

We Are Subject to Intense Competition

There is intense competition among companies in the gaming industry, along with dynamic customer demand and rapid technological advances; and most of our
competitors have significantly greater financial, marketing, technical and other resources than we do. Significant competition that we encounter may have a materially adverse effect on us. There can
be no assurance that we will be able to compete successfully against current and future competitors.

We Are Subject to Strict Regulation by Gaming Authorities

The ownership and operation of gaming licensees in Nevada are subject to strict regulation under various state, county and municipal laws. We and our required
officers and certain shareholders have received the necessary licenses, permits and authorizations required to own and operate one or more gaming licensees. Failure by us or any of our key personnel
to obtain or maintain the requisite licenses, permits and authorizations would have a materially adverse effect on us. Expansion of our activities could be hindered by delays in obtaining requisite
state licenses or the inability to obtain such licenses. No assurance can be given as to the term for which our licenses will be renewed in a particular jurisdiction or as to what license conditions,
if any, may be imposed by such jurisdiction in connection with any future renewals. We cannot predict the effects that adoption of and changes in gaming laws, rules and regulations might have on our
future operations.

Because of Our SEC Filing Delinquencies, Our Stock Could Be Removed From Quotation on the OTC Bulletin Board ("OTCBB")

We were late in the filing of our last Form 10-QSB and this Form 10-KSB. Consequently, the OTCBB has notified us that if we
are late with the filing of another Exchange Act report between now and the due date for our October 31, 2008 Form 10-QSB, our common stock will be removed from quotation on
the OTCBB for at least one year. Such removal could have a materially adverse effect on the marketability and trading price of our stock, as well as on our ability to raise additional equity capital,
(if we seek to do so).

Demand for Our Products and Services is Subject to Consumer Demand

We believe our ability to increase revenues, cash flow, and profitability will depend, in part, upon continued market acceptance of our products and services.
There can be no assurance that the market acceptance of our products and services will continue. Changes in market conditions in the gaming industry, the general and gaming industry economic
conditions, and the financial condition of host locations or patrons could limit or diminish market acceptance of these products and services. Any interruption in professional or college football or
professional or college basketball games would adversely affect us.

The Gaming Industry may be Adversely Affected by Federal Legislation

The U.S. Congress has proposed several bills that would prohibit any person from engaging in the business of betting or wagering via electronic communication
facilities if the transmission is not legal in the state in which the transmission either originates or is received. In addition, the U.S. Congress has proposed several bills that would prohibit any
person from accepting wagers on amateur sporting events including high school, college and Olympic events. There is no guarantee that Congress will not pass a bill which would adversely affect our
operations. Additionally, federal and state tax legislation and

10

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matters,
including changes to current law, or new assessments by taxing authorities could also negatively impact our results of operations or financial position.

We Are Largely Dependent on Current Management

Our success is largely dependent on the efforts of Victor Salerno, our Chief Executive Officer ("CEO") and Chief Operating Officer ("COO") who is currently also
serving as our Interim Principal Financial Officer. Although we maintain a "key person" life insurance policy and have an employment agreement with Mr. Salerno, the loss of Mr. Salerno's
services could have a materially adverse effect on our business.

We Are Subject to Potential Fluctuations in Results

Our quarterly results have fluctuated primarily due to outside factors such as professional and college sports seasons and timing of sales and installation for
CBS equipment. Thus the results of any quarter are not necessarily indicative of the results that may be expected for any other interim period. In addition, we take risks by accepting wagers on the
outcome of various sporting events. While we have instituted measures to lessen the risk, there is no assurance that we will be able to win more of the wagers than we lose.

Prior to Fiscal Year Ended January 31, 2007, We Had a History of Losses and We May Incur Additional Losses in the Future

From our inception of revenue producing operations through the current fiscal year, we have incurred an accumulated deficit. While we have implemented strategies
to improve future operations including, but not limited to, discontinuing unprofitable business segments such as keno and pari-mutuel sports, investing in additional research and
development aimed at new markets, and settling litigation matters, there is no assurance that such strategies will be successful. Higher than expected administrative, research and development, and/or
distribution costs, could also negatively impact our financial results. Changes in our business systems or technologies affecting our products could also negatively impact our financial results. In
order for us to maintain profitability, we need to generate and sustain additional revenues while maintaining reasonable cost and expense levels.

An Adverse Decision by the 9th Circuit in the Racusin Matter, Could Adversely Affect Our Liquidity and Operating Performance

We are involved in court proceedings with Racusin to determine the form of payment on his claim on our Chapter 11 proceedings. In accordance with the decision of
the BAP, we issued Racusin 250,000 shares of common stock in payment of his claim. Racusin appealed the BAP decision to the 9th
Circuit, requesting a cash payment of approximately $2.8 million. On October 6, 2006, the 9th Circuit reversed the BAP decision. We have requested a panel rehearing or rehearing en banc.Racusin has filed a response to our request. The outcome of our request for a panel rehearing or rehearingen
banccannot be predicted at this time. If the 9th Circuit declines to rehear the matter or does rehear the matter and again reverses the BAP, our liquidity and future results
could be adversely affected.

We Need Additional Capital to Achieve Our Goals, But We Do Not Have Any Commitments to Obtain Such Capital and Can Not Give Assurance that We Will be Able to Obtain Capital as
and When Required

We believe that we have sufficient working capital as of the date of this report to satisfy estimated working capital requirements for the foreseeable future in
regards to current operations. In order for us to achieve our goals and grow the revenue stream, however, we will require additional capital to fund the operations of AWIG and AWIM. At the present
time, we do not have any commitments to

11

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obtain
additional capital and there can be no guarantees that such funds will be available on commercially reasonable terms, if at all.

An Adverse Change Affecting the Gaming Industry, Such as a Change in Gaming Regulations or a Decrease in the Rate of Growth and Popularity of Casino Gaming, Will Negatively
Impact Our Profitability and Our Potential for Growth

Our ability to grow and operate profitably is substantially dependent upon the expansion of the Nevada gaming industry and other factors that are beyond our
control. These factors include, among others, the pace of development, changes in gaming regulations, the continued popularity of casino gaming, particularly race and sports wagering, as a leisure
activity, etc. An adverse change in any of these political, legal or other factors may negatively impact our results of operations. Additionally, consolidation of existing gaming operations could
negatively impact our pricing structure and revenue.

Failure to Obtain or Retain Required Gaming Licenses Could Prevent Expansion of Our Market and/or Prohibit the Generation of Revenue

The operation of a race and sports related business is subject to numerous federal, state, and local regulations. In particular, the Leroy's, AWIM, AWIG and
Sturgeon's subsidiaries are licensed by the Commission and are subject to extensive regulation. Together with key personnel, we undergo extensive
investigation before each new gaming license is issued, and the products of CBS and AWIM are subjected to testing and evaluation prior to approval and use. Generally, gaming authorities have broad
discretion when granting, renewing or revoking these approvals and licenses. If we fail to obtain or retain a required license or approval, it would decrease our share in the marketplace and put us at
a disadvantage with our competitors. Consequently, the market price of our common stock may suffer.

Future Revenue Growth Depends on Our Ability to Improve the Effectiveness and Breadth of Our Sales Organization

In order to achieve our goals for growth, particularly with the AWIG and AWIM subsidiaries, we need to improve the effectiveness and breadth of our sales
operations nationally and internationally in order to increase market awareness and sales. Our gaming products require sophisticated sales efforts targeted at selected people within the gaming
industry. Competition for qualified sales personnel is intense, and we may not be able to hire the kind and number of sales personnel required. In addition, we will need to effectively train and
educate the sales force in order to be successful in selling into the market. Reliance upon our current strategic relationships with our customers and our vendors could also subject us to increased
risk if we are unable to positively and successfully maintain or create those relationships.

Sports Wagering is Illegal Throughout Most of the United States

Although legal in Nevada, wagering on sporting events is illegal throughout most of the United States due to the provisions of the Interstate Wire Act and is not
likely to become legal due to the provisions of the Sports Protection Act. Consequently, the potential for growth of the Leroy's, CBS, and AWIM subsidiaries in the United States is limited.

12

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We May Not be Able to Protect Our Proprietary Rights and May Incur Significant Costs Attempting to do So

Our success and ability to compete are dependent to a significant degree on our proprietary technology. We rely on a combination of patent, copyright, trade
secret and trademark laws, as well as confidentiality and licensing agreements to protect these proprietary rights. However, it may be possible for a third party to copy or otherwise obtain and use
our software or other proprietary information without authorization or to develop similar software independently. In addition, litigation may be necessary in the future to enforce our intellectual
property rights, to protect trade secrets, to determine the validity and scope of the proprietary rights of others, or to defend against claims of infringement or invalidity. Such litigation, whether
successful or not, could result in substantial costs and diversions of resources, either of which could have a material adverse affect on our financial condition or operating results.

The Market for Our Common Stock is Limited

Our common stock is thinly-traded and any recently reported sales price may not be a true market-based valuation of our common stock. There can be no assurance
that an active market for our common stock will develop. In addition, the stock market in general has experienced extreme price and volume fluctuations that have often been unrelated or
disproportionate to operating performance.

Our Common Stock is Considered a "Penny Stock" and, as Such, the Market for Our Common Stock May be Further Limited by Certain SEC Rules

As long as the price of our common stock remains below $5.00 per share, the stock is likely to be subject to certain "penny stock" rules promulgated by the SEC.
Those rules impose certain sales practice requirements on brokers who sell penny stock to persons other than established customers and accredited investors (generally institutions with assets in
excess of $5,000,000 or individuals with net worth in excess of $1,000,000). For transactions covered by the penny stock rules, the broker must make a special suitability determination for the
purchaser and receive the purchaser's written consent to the transaction prior to the sale. Furthermore, the penny stock rules generally require, among other things, that brokers engaged in secondary
trading of penny stocks provide customers with written disclosure documents, monthly statements of the market value of penny stocks, disclosure of the bid
and ask prices, disclosure of the compensation to the brokerage firm, and disclosure of the sales person working for the brokerage firm. These rules and regulations adversely affect the ability of
brokers to sell our common stock and limit the liquidity of our securities.

The Trading Price of Our Common Stock is Volatile and Could Decline Substantially

The trading price of our common stock is volatile and is likely to continue to be volatile. Our stock price could be subject to wide fluctuations in response to a
variety of issues, including broad market factors that may have a material adverse impact on our stock price, regardless of our actual performance. The factors include, but are not limited to, the
following:



13

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We Have the Ability to Issue Additional Equity Securities, Which Would Lead to Dilution of Our Issued and Outstanding Common Stock

The issuance of additional equity securities or securities convertible into equity securities would result in dilution of our existing stockholders' equity
interests in us. Our Board of Directors has the authority to issue, without vote or action of stockholders, preferred stock in one or more series, and has the ability to fix the rights, preferences,
privileges and restrictions of any such series. Any such series of preferred stock could contain dividend rights, conversion rights, voting rights, terms of redemption, redemption prices, liquidation
preferences or other rights superior to the rights of holders of our common stock. If we issue convertible preferred stock, a subsequent conversion may dilute the current common stockholders'
interest. In addition, as of January 31, 2007, we were authorized to issue, without stockholder approval, up to 16,878,120 shares of common stock. Of that amount, 368,200 shares of our common
stock were issuable upon the exercise of vested options.

We do not Intend to Pay Cash Dividends. As a Result, Stockholders will Benefit From an Investment in Our Common Stock Only if it Appreciates in Value

We have never paid a cash dividend on our common stock, and we do not plan to pay any cash dividends on our common stock in the foreseeable future. We currently
intend to retain any future earnings to finance our operations and further expansion and growth of our business, including acquisitions. As a result, the success of an investment in our common stock
will depend upon any future appreciation in its value. We cannot guarantee that our common stock will appreciate in value or even maintain the price at which stockholders have purchased their shares.

We Face Considerable Risk in Successfully Implementing Acquisitions

As part of our business strategy, we acquired Surgeon's in fiscal 2006 and we may acquire other businesses in the future. Acquisitions could result in potential
dilution of the value of our common stock, cash expenditures, increased debt, increased system costs related to integration, and greater potential risk for contingent liabilities. We cannot be assured
that we will successfully complete any future acquisitions due to various constraints, such as our need for funding, increased competition, cost constraints, legal, compliance and regulatory issues.

Our
acquisition of Sturgeon's in March 2006, and any future acquisitions, may not produce the revenues, earnings or savings in business synergies that were anticipated for such
reasons or constraints below:



14

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Risks Including Political, Economic and Others Related to Our International Subsidiary, AWI Int'l that Could Adversely Affect Our Financial Results

Our subsidiary, AWI Int'l, provides services to licensed non-U.S. jurisdictions and therefore is subject to risks associated with doing business
internationally. AWI Int'l provides sports gaming services and equipment depending on the needs of the gaming operator or a third party gaming
supplier (vendor); including the following: remote wagering management; equipment and kiosk sales or leases; setting of the odds and/or the lines; uploading games; and software installation. Our sales
to customers outside the United States are currently to licensed jurisdictions in the Caribbean, but we could potentially expand to other foreign jurisdictions that are licensed for sports gaming.
Accordingly, our future results could be harmed by a variety of factors, including:



Our
international operations are affected by global economic and political conditions. Changes in economic or political conditions in any of the countries in which we operate could
result in new or changed restrictions being imposed on our operations.

We May Not be Able to Complete Our Assessment and/or We May Not Receive an Unqualified Opinion From Our Auditors With Respect to the Assessment of Our Internal Controls Over
Financial Reporting That is Required by Section 404 of the Sarbanes-Oxley Act Of 2002, and We Will Incur Additional Costs in That Process

We believe that effective internal controls are necessary for us to provide reasonable assurance with respect to our financial reports. We may be required to
spend a substantial amount of management time and resources and significant expenses in order to comply with laws, regulations and standards relating to corporate governance and public disclosure,
including the Sarbanes-Oxley Act of 2002. In particular, Section 404 of the Sarbanes-Oxley Act of 2002 requires our management's annual review and evaluation of our internal control systems,
commencing with our Annual Report on Form 10-KSB for fiscal year ended January 31, 2008 and attestations as to the effectiveness of these systems by our independent public
accounting firm commencing with the annual report for the following fiscal year.

We
will incur significant increased costs in implementing and responding to these requirements due to the complexities of Section 404 that require significant documentation,
testing and, if necessary, remediation. Our process of reviewing, documenting and testing our internal controls over financial reporting may cause a significant strain on our management, diverting
them from their daily business focus; and strain on our information systems and other resources. We likely will be required to hire additional personnel and to use outside legal, accounting and
advisory services and software to assist us in compliance efforts. In addition, we will incur additional fees from our auditors as they perform the added review work necessary for them to provide
their attestation. Even with those expenditures, we may not be able to complete our assessment or we may not be able to obtain an unqualified attestation report on such assessment.

15

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Also,
partly in response to Section 404, we will begin a significant redesign and upgrade of our financial reporting software, systems and procedures. This redesign and upgrade
will be undertaken in hopes of strengthening our internal control over financial reporting, improving our ability to plan and analyze our business and reducing the work burden on our finance and
accounting staff. We estimate that we will fully implement our new financial reporting software by the end of fiscal 2007.

Further,
we or our auditors may identify significant deficiencies or more material weaknesses in our internal control over financial reporting, as we have done this year. If we fail to
maintain the adequacy of our internal controls, we may not be able to conclude on an ongoing basis that we have effective internal controls over financial reporting. Additionally, internal control
over financial reporting may not prevent or detect misstatements because of its inherent limitations, including the possibility of human error, the circumvention or overriding of controls, or fraud.
Therefore, even effective internal controls can provide only reasonable assurance with respect to the preparation and fair presentation of financial statements. In addition, projections of any
evaluation of effectiveness of internal control over financial
reporting to future periods are subject to the risk that the control may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.

If
we fail to maintain the adequacy of our internal controls, including any failure to implement the required new or improved controls, this could have a material adverse effect on our
business, financial position and results of operations.

Our
new and limited staff in finance and accounting has faced an increased workload due to the lack of a permanent replacement Chief Financial Officer ("CFO"); the upcoming requirements
of Section 404 and the turnover that has taken place in that department. We have experienced an extremely high level of turnover of seasoned staff, which has compounded the workload for the
finance and accounting department from fiscal 2005 through fiscal 2007. This has also caused us to have positions open, numerous training challenges, and overburdened personnel, for extended periods
of time; at a time when we need more resources available. As of the fiscal year ended January 31, 2007, the finance and accounting department has a limited but fully-staffed department, with
the exception of a CFO.

The
combination of the delays in hiring a permanent CFO and the staffing shortages and turnover in finance and accounting have led to significant deficiencies and material weaknesses in
our internal control over financial reporting, as reported in Item 8A of this Form 10-KSB, and have significantly increased the risk of a significant deficiency or material weakness
in our internal control over financial reporting next year. Such a deficiency or weakness could cause us to again fail to meet our Exchange Act reporting obligations, cause the OTCBB to remove our
stock from quotation and cause investors to lose confidence in our reported financial information, all of which could lead to a decline in the price of our common stock.

Litigation May Subject Us to Significant Expenses and Liability

From time to time in the course of our business, we may be subject to litigation claims or other legal disputes, which may not be covered under our insurance
policies or as to which our insurance carriers may seek to deny coverage. Consequently, we might incur adverse judgments, costly settlements or significant legal fees, any or all of which might have a
material adverse effect on us.

Item 2.    Description of Property

Our corporate office is located in a 29,250 square foot building at 675 Grier Drive, Las Vegas, Nevada. On January 7, 2005, we completed a sale and
leaseback of the property. Prior to the sale, the building was owned by our CBS subsidiary. We realized a gain of $1,638,000 on the sale of the building. However, pursuant to Statement of Financial
Accounting Standards ("SFAS") No. 28,Accounting for

16

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Sales with Lease-backs, only a portion of the gain has been recognized. The gain has been deferred and will be amortized against the lease payments over the initial lease term
(5 years). CBS leases the building from the new owner for a rent of $30,750 per month (triple net). The lease has an initial term expiring February 1, 2010 with options for two
additional five-year terms. CBS, in turn, sublets a portion of the building to AWI (2,830 square feet; $5,236 per month), Leroy's (6,769 square feet; $11,014 per month) and the remainder
of the space is rented to unaffiliated parties at various amounts. In addition, CBS leases 1,847 square feet of office/warehouse space in Reno, Nevada to provide 24/7 maintenance service to our
Northern Nevada customers. This space is located at 960 Matley Lane, Suite 21, Reno, Nevada. On September 1, 2006, a new lease became effective, whereby CBS pays $676, $703 and $731 per month,
for each twelve month period ending September 30, 2007, 2008 and 2009, respectively. The lease expires on September 30, 2009.

Leroy's
operates race and/or sports books subject to lease agreements with the host casino operators. The average book occupies approximately 300 square feet and ranges from 80 to 10,000
square feet.

Sturgeon's
is located at 1420 Cornell Avenue in Lovelock, Nevada. The facility contains over 65,000 square feet.

The
properties owned by us are adequately insured. We believe that the existing facilities in Las Vegas and Reno satisfy our present and foreseeable needs and we do not anticipate any
changes.

Item 3.    Legal Proceedings

In accordance with SFAS No. 5,Accounting for Contingencies, we will not accrue for a loss contingency
relating to a matter if we believe that (1) the matter has been fully resolved to the satisfaction of both parties; or (2) although an unfavorable outcome in the proceeding may be
possible, we do not consider
it to be probable or reasonably estimable. Consistent with our accounting policy, we will record legal defense costs when incurred, or accrue them, depending on the conditions in SFAS No. 5
above.

Racusin

On October 6, 2006, the 9th Circuit reversed the decision of the BAP which previously ruled in our favor that the bankruptcy claim of Racusin was subject
to subordination under Section 510(b) of the U.S. Bankruptcy Code. In reversing the BAP's ruling, the 9th Circuit ruled that Racusin's claim was not subject to subordination and remanded the
case for further proceedings.

On
October 20, 2006, we petitioned the 9th Circuit for a panel rehearing or, in the alternative, a rehearingen banc. On
December 15, 2006, Racusin filed a response to our petition at the 9th Circuit's request.

The
manner in which Racusin's claim is ultimately resolved will be based on the 9th Circuit's decision and a September 3, 2004 Settlement Agreement among AWI, Leroy's and Racusin
(the "Settlement Agreement"), which is described further and appears in Exhibit 99.1 in the Form 8-K that we filed on September 7, 2004.

If
the 9th Circuit rehears the case and affirms the BAP's ruling, then Racusin's claim will be resolved by the issuance of 250,000 shares of AWI common stock to Racusin, in accordance
with the Settlement Agreement. Those shares were issued in Racusin's name on July 27, 2005 pursuant to the BAP's ruling and are currently held in trust by the Bankruptcy Court pending a
resolution of this matter.

If
the 9th Circuit declines to rehear the case or if it rehears the case and reverses the BAP's ruling, then the 250,000 shares that we issued in Racusin's name will be cancelled and
Racusin's claim

17

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will
be resolved by a series of cash payments by us to (or for the benefit of) Racusin, in accordance with the Settlement Agreement, expected to begin within 30 days after the 9th Circuit's
decision, in the aggregate amount of $2,682,374 plus interest at 8% per annum.

Pending
the outcome of our petition for a rehearing, we have taken the following actions:



In
the event we are unsuccessful in our efforts for a favorable ruling by a rehearing, we will be obligated to make payments pursuant to the Settlement Agreement, approximately as
follows, plus interest at 8.00% per annum on the unpaid balance as follows:

First 12 months

$
1,502,374Second 12 months


300,000Third 12 months


300,000Fourth 12 months


300,000Fifth 12 months


280,000Total

$
2,682,374


If
the 9th Circuit grants our petition, we anticipate that the rehearing would occur 12 to 18 months later. If our petition is denied, we anticipate that our payments to (or for
the benefit of) Racusin will begin within 30 days after the denial.

Other

We are not a party to any other material pending legal proceeding nor, to our knowledge, is any other material legal proceeding threatened against us or any of
our subsidiaries. We maintain insurance coverage, including property, workers compensation and general liability insurance, which we consider adequate for our size and the nature of our business.
Except as otherwise noted, we do not believe the outcome of the above-described proceedings will have a material adverse effect on our financial position or results of operations.

Item 4.    Submission of Matters to a Vote of Security Holders

None.

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PART II

Item 5.    Market for Common Equity, Related Stockholder Matters and Small Business Issuer Purchases of Equity Stock

(a)Market information.Our common stock is traded on the OTC Bulletin Board ("OTCBB") under the symbol
"BETM.OB." The following table sets forth the range of high and low closing sale prices for our common stock for each of the periods indicated as reported by the OTCBB. These quotations reflect
inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.

BETM.OBFiscal Year Ending January 31, 2007Quarter Ended

High $

Low $April 30, 2006

1.83

1.30July 31, 2006

1.54

0.98October 31, 2006

1.60

0.97January 31, 2007

1.45

1.04BETM.OBFiscal Year Ending January 31, 2006Quarter Ended

High $

Low $April 30, 2005

2.50

0.55July 31, 2005

2.01

1.46October 31, 2005

1.80

1.21January 31, 2006

1.83

1.25


We
consider our common stock to be thinly traded and, accordingly, reported sales prices or quotations may not be a true market-based valuation of our common stock.

(b)Holders.As of January 31, 2007, there were 59 record holders of our common stock. We believe there
are more owners of our common stock whose shares are held by nominees or in street name.

(c)Dividends.Holders of our common stock are entitled to receive dividends, as and when declared by our Board
of Directors, out of funds legally available therefore, subject to the dividend and liquidation rights of preferred stock issued and outstanding. We have never declared or paid any dividends on our
common stock, nor do we anticipate paying any cash dividends on our common stock in the foreseeable future.

(d)Securities authorized for issuance under equity compensation plans.The following table provides information
regarding the securities underlying outstanding options and securities remaining available for issuance under our equity compensation plans as of January 31, 2007.

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Equity
Compensation Plans Approved by Security Holders:

|                                                           |  | (a)     |  | (b) |      | (c)
|---------------------------------------------------------- |  | ------- |  | --- | ---- | ---
|
|Equity compensation plans approved by security holders:    |  |         |  |     |      |    
|2001 Stock Option Plan                                     |  | 737,749 |  | $   | 1.89 |    
|Directors Stock Option Plan                                |  | 20,000  |  |     | 1.30 |    
|Equity compensation plans not approved by security holders |  | None    |  |     | None |    
|                                                           |  |         |  |     |      |    
|Total                                                      |  | 757,749 |  | $   | 1.87 |    
|                                                           |  |         |  |     |      |    

Item 6.    Management's Discussion and Analysis or Plan of Operation

Overview

Our primary operating strategies for the foreseeable future are to focus on our core businesses relating to the race and sports industry, the operation of
Sturgeon's and the acquisition of additional hotel/casino operations through AWIG. Concerning Leroy's, we intend to continue operating existing sports books, adding new books where and when
appropriate, and continue to become more efficient in order to reduce expenses. Regarding CBS, we intend to continue developing, selling and maintaining computerized race and sports wagering systems
for the gaming industry. As to AWIM, we intend to continue developing the self-service wagering kiosk, installing the kiosk in Leroy's locations to assist in controlling escalating
personnel costs, and marketing the kiosk to non-Leroy's locations. With regard to AWI Int'l, we intend to seek strategic alliances with third party gaming suppliers and/or gaming operators
that desire to utilize our expertise in the race and sports industry to gain a competitive advantage by offering the gaming operator and/or the betting patron a well-rounded gaming
experience. Regarding AWIG, we intend to seek additional hotel/casino acquisitions that meet our established criteria. As to Sturgeon's, we intend to continue to operate the facility, change the slot
mix where and when appropriate, and modify existing procedures to increase efficiency and reduce expenses. We have implemented, and are continuing to initiate, other cost cutting measures.

Where
appropriate, we will continue to explore possible new locations for our products, including foreign jurisdictions. We will also continue our review of existing Leroy's locations in
order to close those locations that are not operating efficiently. Based on our strategy, the number of race and sports books operated by Leroy's may increase or decrease in the future, due to the
closure of unprofitable locations or host properties, closures due to other factors beyond our control and/or the possible opening of new locations with greater potential for profitability. There is
no assurance that Leroy's will be able to add new locations and/or that any new locations so added will be profitable.

Liquidity and Capital Resources

In 2003, AWI and Leroy's filed Chapter 11 Petitions. On February 28, 2005, the Bankruptcy Court confirmed the Plan of AWI and Leroy's. On March 11,
2005, AWI and Leroy's consummated the Plan and formally emerged from Chapter 11 proceedings after completing all required actions and all remaining conditions. On September 26, 2005, the
Bankruptcy Court issued an order closing the Chapter 11 cases of AWI and Leroy's. All required distributions have been made, subject to the following discussion about Racusin. On April 14,
2005, the BAP ruled in favor of AWI and Leroy's

20

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relating
to the treatment of Racusin's claim. Racusin appealed to the 9th Circuit, and on October 6, 2006, the 9th Circuit reversed the BAP. AWI and Leroy's requested a panel rehearing or
rehearingen banc, and Racusin has filed a response to our request. The requested panel rehearing or rehearingen
bancremains pending, We cannot predict whether the panel rehearing or rehearingen bancwill be granted nor can we predict the
outcome if such rehearing is granted. However, an unfavorable ruling by the 9th Circuit could have an adverse affect on our liquidity and future results.

Nevada
Gaming Commission Regulation 22.040 ("Regulation 22.040") requires us to maintain reserves (cash, surety bonds, irrevocable standby letter of credit, etc.)
sufficient to cover any outstanding wagering liability including unpaid winning tickets, future tickets and telephone account deposits; since September 1, 2005 to August 2006, we
maintained a Regulation 22.040 reserve in the amount of $2.4 million; which was increased to $3.0 million in August 2006 in the form of a surety bond issued by Fidelity and
Deposit Company of Maryland (a subsidiary of Zurich American Insurance) ("Fidelity"). This $3.0 million surety bond is secured by a $1.0 million cash deposit, in the form of certificates
of deposit at Great Basin Bank of Nevada ("Great Basin Bank").

If
we are required to increase the Regulation 22.040 reserve and are unable to do so, it would have an adverse impact on us including, but not limited to, requiring a significant
reduction in the number of race/sports locations operated by Leroy's, an elimination or reduction of telephone wagering accounts, and a reduction in handle (total amount wagered).

In
conjunction with the acquisition of Sturgeon's on March 1, 2006, we entered into two financing agreements as follows:

|                    |  | (1) Great Basin Bank                                                                                                           |  | (2) Victor and Terina Salerno
|------------------- |  | ------------------------------------------------------------------------------------------------------------------------------ |  | -----------------------------
|Date:               |  | February 21, 2006                                                                                                              |  | February 16, 2006            
|Lender:             |  | Great Basin Bank of Nevada                                                                                                     |  | Victor and Terina Salerno    
|Borrower:           |  | AWIG                                                                                                                           |  | AWI                          
|Guarantor #1:       |  | AWI                                                                                                                            |  | Victor and Terina Salerno    
|Guarantor #2:       |  | Sturgeon's                                                                                                                     |  | N/A                          
|Facility:           |  | Commercial loan                                                                                                                |  | Guaranty Agreement           
|Amount:             |  | $1,500,000                                                                                                                     |  | not to exceed $500,000       
|Rate:               |  | Wall Street Journalprime +2%                                                                                                  |  | 10% per annum                
|Maturity Date:      |  | March 1, 2008 (interest only is payable prior to maturity)                                                                     |  | February 21, 2011            
|Collateral:         |  | 1st deed of trust on Sturgeon's Inn & Casino and a security interest in Sturgeon's Inn & Casino personal property and fixtures |  | None                         
|Prepayment Penalty: |  | None                                                                                                                           |  | None                         

Negative Covenants(for Great Basin Bank only)

AWIG may not do any of the following (unless the bank consents):



21

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Closing Costs (for Great Basin Bank only)

Normal closing costs plus a loan origination fee of 2%

We
believe we will continue to successfully meet our long-term obligations. The following table summarizes our cash payment obligations for the next five fiscal years:

|                 |  | 2008 |           | 2009 |   | 2010      |  | 2011 |         | 2012
|---------------- |  | ---- | --------- | ---- | - | --------- |  | ---- | ------- | ----
|Sturgeon's       |  | $    | 135,487   |      | $ | 1,650,209 |  | $    | 50,198  |     
|Other debt       |  |      | 56,700    |      |   | 35,981    |  |      | 33,123  |     
|Kiosks           |  |      | 186,056   |      |   | 208,978   |  |      | 133,600 |     
|Racusin          |  |      | 1,502,374 |      |   | 300,000   |  |      | 300,000 |     
|Operating leases |  |      | 541,704   |      |   | 483,999   |  |      | 423,824 |     
|                 |  |      |           |      |   |           |  |      |         |     
|                 |  | $    | 2,422,321 |      | $ | 2,679,167 |  | $    | 940,745 |     
|                 |  |      |           |      |   |           |  |      |         |     

Long-term
debt includes loans for the service automobiles utilized in the Leroy's and CBS operations, and the loans from Great Basin Bank. We have no indebtedness under the
Guaranty Agreement with Victor and Terina Salerno The loan from Great Basin Bank is due in one payment on March 1, 2008. Our Guaranty Agreement indebtedness, if any, has no fixed maturity date.
Interest on
the loan from Great Basin Bank is at a variable annual rate equal to the Wall Street Journal-listed prime rate plus 2.0% (as of January 31, 2007 our rate was 10.25%) and is due monthly;
interest on our Guaranty Agreement indebtedness, if any, is at an annual rate of 10.00% and is due monthly. Included in the operating leases are rents payable at the Leroy's operating locations, an
automobile, and copy machines. Rent at the Leroy's locations includes the base rent due per the contract terms. The rental leases also include three locations in which the rent is calculated based on
a formula relating to the activity of the location. The rent to be paid for that location was estimated for the purpose of this schedule.

Other Debt

Various automobile loans, totaling $110,843 as January 31, 2007 are also included in Long-term Debt with various maturities ranging from one to
five years and interest rates ranging from 11.5% to 12.0%.

Racusin

As of January 31, 2007, $2,682,374 of long-term debt was outstanding for the Racusin case in the event that we do not prevail in this
litigation.

During
the fiscal year ended January 31, 2007, we spent $1,163,462, primarily for the purchase of upgraded computers and networks, leasehold improvements, new kiosk locations and
other furniture and equipment. In addition, we acquired Sturgeon's, resulting in total acquisitions for the year of $3,218,466.

We
believe that we will be able to satisfy our operating cash requirements for at least the next 12 months from existing cash balances and anticipated cash flows. We plan to
accumulate cash liquidity during the current fiscal year (ending January 31, 2008) to help us fund the possible acquisition of additional hotel/casino operations, purchase of kiosks,
seasonality of sports betting, timing of system sales, Section 404 of the Sarbanes-Oxley Act of 2002 compliance and the possible effects of legislation to ban wagering on amateur athletic
events.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet financing arrangements or liabilities.

22

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Results of Operations

We report our results of operations through three operating segments: Wagering (Leroy's, and AWI), Hotel/Casino (AWIG and Sturgeon's) and Systems (CBS and AWIM
for fiscal 2007). Although numerous factors are taken into consideration, the operating income (loss) of the segment represents a significant profitability measure used by us in allocating resources
and assessing performance of the segments.

Summary

The increase in revenues for the year ending January 31, 2007 is attributed to an increase in wagering segment revenues of $2,368,280 (+31.50%) and
increase in Hotel/Casino revenue of $2,844,326 (+100.00%), and an increase in systems segment revenues of $1,631,618 (+32.57%).

The
increase in costs and expenses for the year ending January 31, 2007 is attributed to an increase in direct wagering segment costs and expenses of $870,077 (+14.24%), an
increase in direct Hotel/Casino costs and expenses of $2,570,895 (+100.00%), partially offset by a decrease in direct systems segment costs and expenses of $63,120 (-2.73%).

The
decrease in other income (expense) for the year ending January 31, 2007 is due, in part, to the following factors: Interest income increased $46,356 (+80.97%); interest
expense increased $177,032 (+673.61%); reorganization expense decreased $43,493 (-100.00%); litigation expense increased $715,322, (+217.67%); and other income decreased $37,711
(-24.59%).

Please
refer to the discussions below ("Wagering Segment," "Hotel/Casino Segment," "Systems Segment," and "Other Income and Expense") for additional information, discussion and analysis.

Wagering Segment

The Wagering Segment is comprised of the operating results of Leroy's and the allocation from AWI. For fiscal 2006, AWIM and AWIG were also part of the Wagering
Segment as AWIG reflected pre-acquisition costs for Sturgeon's, which was not yet acquired. For fiscal 2007, AWIG and Sturgeon's are part of the Hotel/Casino Segment and AWIM is now
reported in the Systems Segment.

Wagering
Segment revenues for the year ended January 31, 2007 increased $2,368,280(+31.50%) over the year ended January 31, 2006. We attribute this increase to the
following factors:

Sports
handle (the total amount wagered) experienced an increase of (+3.48%) over the prior fiscal year as a result of additional wagering locations, physical improvements to existing
locations and continued marketing; the payouts associated with that handle increased (+1.37%); which resulted in a higher hold percentage (win divided by handle) of 8.9% compared to last year's sports
hold percentage of 6.25%. Actual Race and Pari-Mutuel win revenue increased by 3.87%, due to additional handle volume and increased win percentage.

Wagering
Segment total costs and expenses for fiscal year 2007 increased $726,289 (+9.45%) over fiscal year 2006. This increase may be attributed to the following factors:

Direct
costs increased by $870,077 (+14.24%) primarily attributable to increased wages due to additional personnel and increases in rent paid to our Leroy's customers.

Selling,
General and Administrative Costs: Selling, general and administrative costs decreased by $84,197 (-6.39%); primarily due to our prior year presentation, which
included costs from our AWIG and AWIM subsidiaries.

Depreciation
and Amortization: Depreciation and amortization expense decreased by $59,590 (-25.30%) over the prior fiscal year primarily due to our prior year presentation,
which included costs from our AWIG and AWIM subsidiaries.

23

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Note
that an increase or decrease in handle is not necessarily indicative of an increase or decrease in revenues or profits. Elimination of unprofitable locations, closure of host
properties, changes in state and/or federal regulations, and other factors beyond our control may result in declines in handle.

We
intend to continue to open new locations that we expect to operate profitably and to continue our review of existing locations in order to close those locations that are not operating
efficiently. There is no assurance that the number of race and sports books operated by us will not decrease in the future due to elimination of unprofitable locations, closure of host properties, and
other factors beyond our control, that we will be able to add new locations, and/or that any new locations so added will be profitable.

Hotel/Casino Segment

The Hotel/Casino Segment is comprised of the operating results of AWIG and Sturgeon's for fiscal 2007. AWIG's results for 2006 reflected only the
pre-acquisition costs for Sturgeon's and was categorized as part of the Wagering Segment. Accordingly, there was not a reportable Hotel/Casino Segment for fiscal 2006.

The
increase in Hotel/Casino revenue, expenses and resulting operating loss, is due to the acquisition and commencement of operations of Sturgeon's on March 1, 2006.

Systems Segment

The Systems Segment is comprised of the operating results of CBS and AWIM for fiscal 2007 and CBS and Contest Sports Systems, Inc. ("CSS") in fiscal 2006.
CSS was dissolved in fiscal 2007. AWIM was included in the Wagering Segment in fiscal 2006.

Systems
Segment revenues for fiscal year 2007 increased $1,633,347 (+32.62%) over fiscal year 2006. This increase may be attributed to the following factors:

System
sales increased $1,073,736 (+40.91%) over the prior fiscal year due to increased sales, installations and upgrades of wagering terminals and related fees to customers.

Revenues
from maintenance contracts increased by $464,364 (+19.84%) over the prior fiscal year. This increase is attributable to the addition of the number of new customers and the
higher fees charged to customers.

Other
systems revenues decreased by $25,521 (-60.56%) over the prior fiscal year. Other revenues primarily consist of party rentals and other special events. We consider this
revenue immaterial to our overall operation and we do not expect it to have a significant impact on our future operations.

Systems
Segment total costs and expenses for fiscal year 2007 increased $776,252 (+15.92%) over fiscal year 2006. We attribute this increase to the following factors:

Direct
costs for systems decreased by $63,120 (-2.73%) over the prior fiscal year primarily due to decreased wages and benefits resulting from a reduction and realignment of
personnel, improving our operational efficiencies.

Research
and development costs increased by $111,214 (+10.90%) from the prior fiscal year primarily due to higher costs for technical support and personnel.

Selling,
general and administrative costs increased by $553,474 (+39.91%) over the prior fiscal year primarily due to costs related to the recognition of stock-based compensation expense
in fiscal 2007.

Depreciation
and amortization increased by $174,683 (+113.09%) from the prior fiscal year due primarily to the acquisition and upgrades to our networks.

24

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Other Income and (Expenses)

The other income and (expenses) categories are primarily administrative in nature and, as such, are not directly attributable to any operating segment.
Accordingly, these items are generally not taken into consideration by us when we allocate resources to the segments or assess the performance of the segments.

Interest Income

The majority of interest income is attributable to interest earned on restricted cash deposits required for the Regulation 22.040 reserve. (Refer to the
discussion regarding this matter located at "Liquidity and Capital Resources" above.) The remainder of the interest income is attributable to interest earned on interest-bearing checking accounts. The
increase in interest income of $46,356 (+80.97%) is primarily due to our increased cash balances from 2006 to 2007.

Interest Expense

The increase in interest expense is primarily due to our financing of Sturgeon's. (Refer to the discussion regarding the Sturgeon's acquisition financing located
in "Liquidity and Capital Resources" above.)

Reorganization Expense

No such costs were incurred in fiscal 2007. Reorganization expense includes all fees and charges paid (or accrued) by us in regards to the Chapter 11 proceedings
of AWI and Leroy's; these fees and charges include fees to the U.S. Trustees' Office, fees for our legal counsel, fees for the creditors'/equity holders' legal counsel, financial advisors fee, etc.
incurred in fiscal 2006.

Litigation Judgment

The litigation judgment amount for fiscal year 2007 is attributable to the recognition of a judgment related to Racusin, which was a reversal of the prior year's
income amount recognized due to the prior ruling on this case. Please refer to Part I, Item 3 ("Legal Proceedings") for additional information.

Critical Accounting Estimates and Policies

Although our financial statements necessarily make use of certain accounting estimates by our management, we believe that, except as discussed below, we do not
employ any critical accounting policies or estimates that are either selected from among available alternatives, or require the exercise of significant management judgment to apply, or that if changed
are likely to affect future periods. The following summarizes our critical estimates and policies.

Wagering

We record wagering revenues in compliance with Nevada law and the regulations of the Nevada gaming regulators. For sports and non pari-mutuel race, we
use an accrual method wherein the handle (total amount wagered) is recognized on the day the event occurs (rather than the day the wager is accepted) decreased by the total amount owed to patrons with
winning wagers. This gross calculation (handle less payouts) is then adjusted upward to account for any winning wagers that were not redeemed (cashed) within the specified time period. For
pari-mutuel race, commission and breakage revenues are recorded when the wagers are settled, typically the same day as the wager. Other sources of revenue are relatively insignificant.

25

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Hotel/Casino Revenue

We report the wagering revenues of Sturgeon's, which is primarily comprised of slot revenue, hotel room revenue and food and beverage revenue, in compliance with
Nevada law and the regulations of the Nevada gaming regulators. These revenues are generally in the form of cash, personal checks, credit cards, or gaming chips and tokens, which do not require
estimates. We do estimate certain liabilities with payment periods that extend for longer than several months. We believe these estimates are reasonable based on our assumptions related to possible
outcomes in the future. Future actual results might differ materially from these estimates. Slot revenue is the drop (the total amount removed from the machine) less the fills and the payouts. Bingo
revenue is calculated as the total handle (the amount wagered) less the payouts. For non-gaming revenues, such as food and beverage, hotel, etc., we record revenues in compliance with
generally accepted accounting principles, recognizing revenue when it is earned. The Sturgeon's acquisition was completed on March 1, 2006 and wagering revenues for the Sturgeon's operation are
being reported for the first time in the fiscal year ended January 31, 2007.

SystemSoftware

We recognize software revenue in accordance with the provisions of Statement of Position ("SOP") 97-2,Software Revenue
Recognition, as amended by SOP 98-9,Software Revenue Recognition, With Respect to Certain Transactions. Software
license fees represent revenues related to licenses for race/sports software delivered to customers for in-house use. Revenues from software license agreements (including any related
training revenue) are recognized upon installation of the software.

SystemHardware

We recognize hardware revenue (including any related installation revenue) upon installation of the hardware.

SystemMaintenance

We negotiate maintenance agreements with each of our customers to provide for the long-term care of the software and hardware. Pursuant to the terms
of the various maintenance agreements, a fixed sum is due at the beginning of each month regardless of whether the customer requires service during that month. We recognize maintenance revenue on the
first day of each month for which the maintenance agreement is in place; we maintain an allowance for doubtful accounts in the event that any such revenue recorded is not realized.

Accounting for Long-Lived Assets

Owned property and equipment are recorded at cost and depreciated to residual values over the estimated useful lives using the straight-line method.
Leasehold improvements on operating leases are amortized over the life of the lease or the life of the asset, whichever is shorter. The useful life, currently estimated, of our equipment generally
ranges from 3 to 10 years. We test for impairment losses on long-lived assets used in operations when events and circumstances indicate that the assets might be impaired, under the
standards of SFAS No. 144,Accounting for the Impairment or Disposal of Long-Lived Assets. An impairment loss is recognized if the
carrying amount of the asset is not recoverable from its undiscounted cash flows and is measured as the difference between the carrying amount and fair value of the asset.

Accounting for Income Taxes

In assessing when to realize deferred tax assets, we consider whether it is more likely than not that some or all of the deferred tax assets will not be realized
in accordance with SFAS No. 109,Accounting for Income Taxes. We believe that we will continue to be profitable at least for the
short-term future

26

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and,
therefore, it is more likely than not that the recorded net deferred tax asset of $440,481, which resulted primarily from net operating loss carry-forwards and unrealized losses, will be
realized. We have assessed a need for a valuation allowance against the remainder of the deferred tax asset primarily due to our previous history of losses and we continue to reevaluate this asset
periodically. (See Recent Accounting Pronouncements below.)

Stock-Based Compensation

On February 1, 2006, as required, we adopted SFAS No. 123R,Share-Based Payment, using the modified
prospective method. Fair values of stock options are estimated using the Black-Scholes method based on assumptions that we consider reasonable and that we disclose in our financial statements.
Previously, we used Accounting Principles Board Opinion No. 25,Stock-Based Compensation, to account for employee stock options.

Accounting for Contingencies

Contingent liabilities are provided for in accordance with SFAS No. 5,Accounting for Contingencies.According to SFAS No. 5, an estimated loss from a loss contingency is charged to income if: (a) it is probable that an asset has been impaired or a liability has been incurred at the
date of the financial statements; and (b) the amount of the loss can reasonably be estimated. Disclosure in the notes to the financial statements is required for loss contingencies not meeting
both conditions if there is a reasonable possibility that a loss may have been incurred. We record legal defense costs as period costs when the related services are provided. Gain contingencies are
not recorded until realized.

Recent Accounting Pronouncements

In February 2006, the Financial Accounting Standards Board ("FASB") issued SFAS No. 155,Accounting for Certain Hybrid
Financial Instruments, which amends SFAS No. 133,Accounting for Derivative Instruments and Hedging Activities, and SFAS
No. 140,Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilitiesa replacement of FASB Statement
No. 125. SFAS No. 155 will be effective for all financial instruments issued or acquired beginning in the first interim period of a fiscal year that begins after
September 15, 2006. We do not expect to issue or acquire any financial instruments likely to be affected by SFAS No. 155 in the foreseeable future.

In
June 2006, the FASB issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109, Accounting for
Income Taxes ("FIN 48"), effective for us beginning on February 1, 2007. FIN 48 clarifies the recognition threshold a tax position is required to meet before being recognized in the financial
statements. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosures, and transition of tax positions. Accordingly, tax
positions are analyzed to determine whether it is more likely than not they will be sustained when examined by the appropriate tax authority. Positions that meet the
more-likely-than-not criteria are measured to determine the amount of benefit to be recognized, whereas those positions that do not meet the
more-likely-than-not criteria are derecognized in the financial statements. FIN 48 is effective for fiscal years beginning after December 15, 2006. We
adopted FIN 48 on February 1, 2007. We have reviewed the net loss operating carryforwards available to reduce current and future tax obligations in the aggregate amount $2,960,650 as of
January 31, 2006. We have assessed the valuation allowance against the remainder of the deferred tax assets in our calculations to estimate the effective tax rate for fiscal 2007, and we
believe that more likely than not there is sufficient loss carryforward to offset the current year's net income of $1,830,700. We have considered and evaluated the components of the tax calculations
and are satisfied as to realization and probability of the permanent and temporary differences. We additionally believe that we will continue to be profitable, for at least the short-term
future, and it is therefore more likely than not that our net deferred tax asset of $440,481, which resulted primarily from net loss carryforwards, will be fully

27

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realized.
Based on our evaluation, management believes that adopting FIN 48 did not have a material effect on our net operating loss carryforwards or the related deferred tax assets or the valuation
allowance.

In
September 2006, the FASB issued SFAS No. 157,Fair Value Measurements("SFAS No. 157"), which defines fair value,
establishes a framework for measuring fair value and expands disclosures about fair value measurements. In February 2007, the FASB issued SFAS No. 159,The Fair
Value Option for Financial Assets and Financial LiabilitiesIncluding an Amendment of SFAS No 115, which will permit the option of choosing to measure certain
eligible items at fair value at specified election dates and report unrealized gains and losses in earnings. SFAS Nos. 157 and 159 will become
effective for us for financial statements issued for the fiscal year ending January 31, 2009. We are currently evaluating the likely impact of this standard on our future consolidated financial
statements.

Item 7.    Financial Statements

Audited Financial Statements for Years Ended January 31, 2007 and 2006, including:



28

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board
of Directors
American Wagering, Inc.

We
have audited the accompanying consolidated balance sheet of American Wagering, Inc. and Subsidiaries (collectively, the "Company") as of January 31, 2007, and the
related consolidated statements of operations, stockholders' equity and cash flows for the years ended January 31, 2007 and 2006. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We
conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In
our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of January 31, 2007, and the results
of its operations and cash flows for the years ended January 31, 2007 and 2006 in conformity with accounting principles generally accepted in the United States.

PIERCY
BOWLER TAYLOR & KERN

/s/
Piercy Bowler Taylor & Kern

Certified
Public Accountants & Business Advisors
A Professional Corporation
Las Vegas, Nevada
May 29, 2007

29

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AMERICAN WAGERING, INC. AND SUBSIDIARIES        CONSOLIDATED BALANCE SHEET        JANUARY 31, 2007

|                                                                                                                                |  | January 31,
2007 |            
|------------------------------------------------------------------------------------------------------------------------------- |  | ---------------- | -----------
|ASSETS                                                                                                                          |  |                  |            
|CURRENT ASSETS                                                                                                                  |  |                  |            
|Cash and Cash Equivalents                                                                                                       |  | $                | 4,537,424  
|Restricted Cash                                                                                                                 |  |                  | 1,113,656  
|Accounts Receivable, net of allowance for doubtful accounts of $0                                                               |  |                  | 719,855    
|Inventories                                                                                                                     |  |                  | 357,330    
|Deferred Tax Assets, net of allowance                                                                                           |  |                  | 440,481    
|Prepaid Expenses and Other Current Assets                                                                                       |  |                  | 573,750    
|                                                                                                                                |  |                  |            
|                                                                                                                                |  |                  | 7,742,496  
|Property and Equipment, net of depreciation and amortization                                                                    |  |                  | 4,461,665  
|Goodwill                                                                                                                        |  |                  | 103,725    
|Other Assets                                                                                                                    |  |                  | 864,391    
|                                                                                                                                |  |                  |            
|                                                                                                                                |  | $                | 13,172,277 
|                                                                                                                                |  |                  |            
|LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                            |  |                  |            
|CURRENT LIABILITIES                                                                                                             |  |                  |            
|Current Portion of Long-Term Debt                                                                                               |  | $                | 1,880,617  
|Accounts Payable                                                                                                                |  |                  | 788,729    
|Accrued Expenses                                                                                                                |  |                  | 1,337,934  
|Unpaid Winning Tickets                                                                                                          |  |                  | 1,198,373  
|Customer Deposits and Other Current Liabilities                                                                                 |  |                  | 1,331,271  
|                                                                                                                                |  |                  |            
|                                                                                                                                |  |                  | 6,536,924  
|                                                                                                                                |  |                  |            
|Long-Term Debt, less current portion                                                                                            |  |                  | 3,305,029  
|Other Long-Term Liabilities                                                                                                     |  |                  | 988,292    
|                                                                                                                                |  |                  |            
|                                                                                                                                |  |                  | 4,293,321  
|                                                                                                                                |  |                  |            
|Redeemable Series A Preferred Stock (3,238 Shares)                                                                              |  |                  | 323,800    
|                                                                                                                                |  |                  |            
|                                                                                                                                |  |                  | 11,154,045 
|                                                                                                                                |  |                  |            
|STOCKHOLDERS' EQUITY                                                                                                            |  |                  |            
|Series A Preferred Stock10% cumulative; $100.00 par and liquidation value; 18,924 shares authorized; 10,924 shares outstanding |  |                  | 1,092,400  
|Common Stock$0.01 par value; 25,000,000 shares authorized; 8,129,880 shares issued and outstanding                             |  |                  | 81,299     
|Additional Paid-In Capital                                                                                                      |  |                  | 12,121,822 
|Deficit                                                                                                                         |  |                  | (10,949,796
|Treasury Stock, at cost (61,100 shares)                                                                                         |  |                  | (327,493   
|                                                                                                                                |  |                  |            
|                                                                                                                                |  |                  | 2,018,232  
|                                                                                                                                |  |                  |            
|                                                                                                                                |  | $                | 13,172,277 
|                                                                                                                                |  |                  |            

See
notes to consolidated financial statements.

30

---





AMERICAN WAGERING, INC. AND SUBSIDIARIES        CONSOLIDATED STATEMENTS OF OPERATIONS        FOR THE YEARS ENDED JANUARY 31, 2007 AND 2006

|                                          |  | 2007 |            | 2006 |  
|----------------------------------------- |  | ---- | ---------- | ---- | -
|REVENUES:                                 |  |      |            |      |  
|Wagering                                  |  | $    | 9,885,568  |      | $
|Hotel/Casino                              |  |      | 2,844,326  |      |  
|Systems                                   |  |      | 6,640,499  |      |  
|                                          |  |      |            |      |  
|                                          |  |      | 19,370,393 |      |  
|                                          |  |      |            |      |  
|OPERATING COSTS AND EXPENSES:             |  |      |            |      |  
|Direct Costs:                             |  |      |            |      |  
|Wagering                                  |  |      | 6,978,652  |      |  
|Hotel/Casino                              |  |      | 2,570,895  |      |  
|Systems                                   |  |      | 2,251,270  |      |  
|                                          |  |      |            |      |  
|                                          |  |      | 11,800,817 |      |  
|                                          |  |      |            |      |  
|Research and Development                  |  |      | 1,131,265  |      |  
|Selling, General and Administrative       |  |      | 3,499,623  |      |  
|Depreciation and Amortization             |  |      | 737,224    |      |  
|                                          |  |      |            |      |  
|                                          |  |      | 5,368,112  |      |  
|                                          |  |      |            |      |  
|                                          |  |      | 17,168,929 |      |  
|                                          |  |      |            |      |  
|OPERATING INCOME (LOSS)                   |  |      | 2,201,464  |      |  
|                                          |  |      |            |      |  
|OTHER INCOME (EXPENSE):                   |  |      |            |      |  
|Interest Income                           |  |      | 103,605    |      |  
|Interest Expense                          |  |      | (203,313   | )    |  
|Reorganization Expense                    |  |      |           |      |  
|Litigation Judgment (Expense) Benefit     |  |      | (386,698   | )    |  
|Other, net                                |  |      | 115,642    |      |  
|                                          |  |      |            |      |  
|                                          |  |      | (370,764   | )    |  
|                                          |  |      |            |      |  
|INCOME BEFORE INCOME TAXES                |  |      | 1,830,700  |      |  
|PROVISION FOR INCOME TAXES                |  |      |           |      |  
|                                          |  |      |            |      |  
|NET INCOME                                |  | $    | 1,830,700  |      | $
|                                          |  |      |            |      |  
|BASIC AND DILUTED INCOME PER COMMON SHARE |  | $    | 0.21       |      | $
|                                          |  |      |            |      |  

See
notes to consolidated financial statements.

31

---





AMERICAN WAGERING, INC. AND SUBSIDIARIES        CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY        FOR THE YEARS ENDED JANUARY 31, 2007 AND 2006

|                                 |  | Preferred Stock |  | Common Stock |           | Treasury Stock |           |   |   |        |   |        | 
|-------------------------------- |  | --------------- |  | ------------ | --------- | -------------- | --------- | - | - | ------ | - | ------ | 
|
|
|Balances, February 1, 2005       |  | 10,924          |  | $            | 1,092,400 |                | 7,897,946 |   | $ | 78,979 |   | 61,100 | 
|Preferred Stock Dividends        |  |                 |  |              |           |                |           |   |   |        |   |        | 
|Net Income                       |  |                 |  |              |           |                |           |   |   |        |   |        | 
|Racusin Settlement               |  |                 |  |              |           |                | 250,000   |   |   | 2,500  |   |        | 
|Stock options exercised          |  |                 |  |              |           |                | 100,918   |   |   | 1,009  |   |        | 
|                                 |  |                 |  |              |           |                |           |   |   |        |   |        | 
|Balances, January 31, 2006       |  | 10,924          |  |              | 1,092,400 |                | 8,248,864 |   |   | 82,488 |   | 61,100 | 
|Preferred Stock Dividends        |  |                 |  |              |           |                |           |   |   |        |   |        | 
|Net Income                       |  |                 |  |              |           |                |           |   |   |        |   |        | 
|Racusin Settlement
Reversed      |  |                 |  |              |           |                | (250,000  | ) |   | (2,500 | ) |        | 
|Stock options exercised          |  |                 |  |              |           |                | 131,016   |   |   | 1,311  |   |        | 
|Stock based compensation expense |  |                 |  |              |           |                |           |   |   |        |   |        | 
|                                 |  |                 |  |              |           |                |           |   |   |        |   |        | 
|Balances, January 31, 2007       |  | 10,924          |  | $            | 1,092,400 |                | 8,129,880 |   | $ | 81,299 |   | 61,100 | 
|                                 |  |                 |  |              |           |                |           |   |   |        |   |        | 

See notes to consolidated financial statements.

32

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AMERICAN WAGERING, INC. AND SUBSIDIARIES        CONSOLIDATED STATEMENTS OF CASH FLOWS        FOR THE YEARS ENDED JANUARY 31, 2007 AND 2006

|                                                     |  | 2007 |            | 2006 |  
|---------------------------------------------------- |  | ---- | ---------- | ---- | -
|CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD     |  | $    | 2,221,445  |      | $
|                                                     |  |      |            |      |  
|Net cash provided by (used in) operating activities  |  |      | 3,038,802  |      |  
|INVESTING ACTIVITIES                                 |  |      |            |      |  
|Increases in restricted cash                         |  |      | (2,280,869 | )    |  
|Withdrawals from restricted cash                     |  |      | 2,463,417  |      |  
|Proceeds from the sale of property and equipment     |  |      | 68,033     |      |  
|Purchase of property and equipment                   |  |      | (1,163,462 | )    |  
|                                                     |  |      |            |      |  
|Net cash used in investing activities                |  |      | (912,881   | )    |  
|                                                     |  |      |            |      |  
|FINANCING ACTIVITIES                                 |  |      |            |      |  
|Proceeds from borrowings                             |  |      | 900,000    |      |  
|Repayment of borrowings                              |  |      | (650,807   | )    |  
|Current dividends on preferred stock                 |  |      | (141,620   | )    |  
|Payment of preferred stock dividends in arrears      |  |      |           |      |  
|Stock options exercised                              |  |      | 82,485     |      |  
|                                                     |  |      |            |      |  
|Net cash provided by (used in) financing activities  |  |      | 190,058    |      |  
|                                                     |  |      |            |      |  
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS |  |      | 2,315,979  |      |  
|                                                     |  |      |            |      |  
|CASH AND CASH EQUIVALENTS AT END OF PERIOD           |  | $    | 4,537,424  |      | $
|                                                     |  |      |            |      |  

See
notes to consolidated financial statements.

33

---





AMERICAN WAGERING, INC. AND SUBSIDIARIES        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS        JANUARY 31, 2007

1. Nature of Operations and Background Information

Organization and Business

American Wagering, Inc. ("AWI") was incorporated in the state of Nevada in August of 1995. AWI is a publicly traded holding company that earns its revenues
through the consolidated operations of its wholly owned subsidiaries. Leroy's Horse & Sports Place, Inc. ("Leroy's") owns and operates 59 (as of April 27, 2007) race and sports
wagering locations ("books") in leased space within nonrestricted casinos throughout the state of Nevada. Computerized Bookmaking Systems, Inc. ("CBS") designs, sells, installs, and maintains
computerized race and sports wagering systems. AWI Manufacturing, Inc. ("AWIM") develops and leases self-service race and sports wagering kiosks to the gaming industry. Contest
Sports Systems, Inc. ("CSS"), formerly a wholly owned subsidiary of CBS, was dissolved effective January 29, 2007 due to inactivity. CSS had no significant income or expenses in fiscal
2007 or 2006. AWI Gaming, Inc. ("AWIG") was formed in June 2005 for the purpose of acquiring hotel/casino operations, which it did through Sturgeons, LLC, a wholly owned subsidiary of
AWIG, formed in July 2005 for the purpose of owning and operating Sturgeon's Inn & Casino in Lovelock, Nevada ("Sturgeon's"). The acquisition of Sturgeon's was completed on
March 1, 2006. AWI International, Inc. ("AWI Int'l") was formed in fiscal 2007 and provides a myriad of services to gaming suppliers and gaming operators in foreign jurisdictions where
wagering on race and sporting events is licensed.

Basis of Presentation

The consolidated financial statements include the accounts of AWI and all of its subsidiaries for applicable periods, (collectively referred to hereafter as the
"Company"). With the exception of Sturgeon's (which is a wholly owned subsidiary of AWIG), all subsidiaries are wholly owned by AWI. All significant inter-company accounts and transactions have been
eliminated in the consolidation.

Concentrations

Because the Company operates primarily in the larger metropolitan areas of Nevada in the highly regulated gaming industry, realization of its receivables and its
future operations could be affected by adverse economic conditions in Nevada and its key feeder markets in the western United States, and by possible future anti-wagering legislation and
regulatory limitations on the scope of wagering. 99% of the Company's wagering revenue comes from its Nevada race and sports books and more than one-fourth of that is derived from
professional football events. If the professional football season were to be interrupted, this could have significant adverse impact on future operations. Management also estimates that a significant
amount of the Company's Nevada noncasino wagering relates to college sports and, therefore, the passage of amateur sports anti-wagering legislation could have a material adverse impact
upon future operations. In addition, because the Company generates substantial revenue from system sales to a relatively small population of potential customers, a decline in the size or number of
these contracts could also adversely affect future operations.

The
Company manages its concentrations of credit risk by evaluating the creditworthiness of systems customers before extending credit and by perfecting and using, when necessary,
security interests in the hardware and software. In establishing an allowance for doubtful collection, if any, the Company considers the customer, the relative strength of the Company's legal
position, the related cost of any proceedings, and general economic conditions. The maximum losses that the Company would incur if a customer failed to pay would be limited to the amount due after any
allowances provided.

34

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Use of Estimates

Timely preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make
estimates and assumptions that affect reported amounts, which estimates may require revision in future periods. Settings and adjustments of betting lines on sporting events that have not yet taken
place as of the most recent balance sheet date, valuation of deferred tax assets, and estimated costs of litigation, claims and assessments are subject to change materially within one year.

Cash and Cash Equivalents

Cash equivalents include highly liquid investments with initial maturities of three months or less. Excluded from cash and cash equivalents, but included in
current assets, are restricted amounts primarily required to be maintained on deposit with a bank under Nevada Gaming Commission Regulation 22 to fund gaming losses.

Inventories

Inventories consisting primarily of systems components and replacement parts are stated at the lower of cost (based on the first-in,
first-out method) or market.

Property and Equipment

Property and equipment (Note 2) is stated at cost, net of accumulated depreciation and amortization, computed using the straight-line method
over the estimated useful lives of the assets (generally 3 to 10 years for equipment, furniture and fixtures, and 40 years for building improvements, but limited to the lease term for
leasehold improvements).

Goodwill

As of the most recent balance sheet date, goodwill primarily consists of the excess of the purchase price over fair value of net assets acquired in connection
with the acquisition of CBS, the subsidiary that designs, sells, installs, and maintains the Company's primary computerized race and sports book systems product. Goodwill is evaluated periodically for
impairment as events or circumstances warrant. Such evaluations include, among other analysis, cash flow and profitability projections, including the impact on other operations of the Company. There
were no impairment provisions taken for the fiscal year ended January 31, 2007.

Revenue Recognition

Service revenues are principally recognized as services are provided to customers; the Company does not bill in advance.

Wagering

The Company records wagering revenues in compliance with Nevada law and with the regulations of the Nevada gaming regulators. For sports and non
pari-mutuel race wagering, the Company uses an

35

---



accrual
method wherein the handle (total amount wagered) is recognized on the day the event occurs (rather than the day the wager is accepted) and is decreased by the total amount owed to patrons with
winning wagers. This gross calculation (handle less payouts) is then adjusted upward to account for any winning wagers that were not redeemed (cashed) within the specified time period. For
pari-mutuel race, commission and breakage revenues are recorded when the wagers are settled, typically the same day as the wager.

Hotel/Casino

Revenues of Sturgeon's (Note 11), consist primarily of slot revenue, recorded in compliance with Nevada gaming law and regulations, hotel room and food and
beverage revenue. Casino revenue, being
reported for the first time for fiscal year ended January 31, 2007, is the aggregate net difference between gaming wins and losses. Food and beverage and other operating revenues are recognized
as services are performed. Advance deposits are recorded as deferred revenue until services are provided to the customer. Sturgeon's casino gaming, food and beverage and other operating revenues are
included in hotel/casino revenue. Casino revenues are recognized net of certain sales incentives in accordance with Emerging Issues Task Force Issue No. 01-9 Accounting for Consideration Given by a Vendor to a Customer
(Including a Reseller of the Vendor's Products).Accordingly, cash incentives to patrons
for gambling, which are not material, have been recognized as a direct reduction of casino revenue. Revenue does not include the retail value of food and beverage, and other services gratuitously
furnished to patrons, which are not material. The estimated cost of providing such gratuities is included in wagering direct expenses.

SystemSoftware

The Company recognizes software development revenue in accordance with the provisions of Statement of Position ("SOP") 97-2, Software Revenue
Recognition, as amended by SOP 98-9,Software Revenue Recognition, With Respect to Certain
Transactions. Software license fees represent revenues related to licenses for race/sports software delivered to customers for in-house use. Revenues from software
license agreements (including any related training revenue) are recognized upon installation of the software.

SystemHardware

The Company recognizes revenue from the sale of hardware (and any related installation revenue) upon installation of the hardware.

SystemMaintenance

The Company negotiates maintenance agreements with each of its customers to provide for the long-term care of the software and hardware. Pursuant to
the terms of the various maintenance agreements, a fixed sum is due at the beginning of each month regardless of whether the customer requires service during that month. The Company recognizes
maintenance revenue on the first day of each month for which the maintenance agreement is in place.

36

---



Advertising

The Company expenses all advertising costs as incurred. Advertising expense was $395,091 and $240,448 for the fiscal years ended January 31, 2007 and 2006,
respectively.

Stock-Based Compensation

On February 1, 2006, the Company adopted the Financial Accounting Standards Board ("FASB") SFAS No. 123(R),Share Based
Payment("SFAS No. 123(R)"), as interpreted by SEC Staff Accounting Bulletin No. 107,Share-Based Payment("SAB
No. 107").

Prior
to February 1, 2006, the Company accounted for stock-based employee compensation (Note 5) using the intrinsic value method in APB Opinion No. 25, Accounting for Stock Issued to Employees,as permitted by SFAS No. 148,Accounting for Stock-Based
CompensationTransition and Disclosure, an amendment of FASB Statement No. 123.

The
adoption of SFAS No. 123(R) resulted in incremental stock-based compensation expense for the year ended January 31, 2007, that caused income before and after income tax
provision to decrease by $278,462 ($0.03 per share, basic and diluted). In addition, SFAS No. 123(R) requires the excess tax benefits from stock option exercises, tax deductions in excess of
the tax benefits recorded for compensation cost recognized, to be classified as a financing activity. There were no excess tax benefits recognized in fiscal 2007 because of the utilization of our net
operating loss carryforward.

The
following table illustrates the effect on the net income if the Company had applied the alternative "fair-value" approach recognition provisions of SFAS No. 123 to
the options granted to our employees and recorded the compensation expense, for the fiscal year ended January 31, 2006:

Net income, as reported

$
419,229Less: total stock-based compensation determined under fair-value based method


399Pro forma net income

$
418,830Basic and diluted income per share:As reported

$
0.03Pro forma

$
0.03


The
estimated per share weighted-average fair value of stock options granted during fiscal 2007 and 2006, was $1.09 and $4.27, respectively. Stock options expected to be exercised
currently and in future periods are measured at estimated fair value with the expense associated with these awards being recognized on a straight-line basis over the award's vesting
period. We have estimated the fair

37

---



value
of options granted at the date of grant using the Black-Scholes Multiple Option pricing model with the following weighted-average assumptions in the fiscal years ended January 31:

2007

2006Risk-free interest rate

4.0
%
4.0
%Expected life of options (in years)

6.23

6.15Expected volatility of stock price

75.41
%
120.0
%Expected dividend yield

0.0
%
0.0
%


The
expected life (estimated period of time outstanding) of options granted was estimated using the expected exercise behavior of employees. The risk-free rate used was based
on the U.S. Treasury yield curve in effect at the time of grant. The expected volatility was based on historical volatility for the Company over the past year. The expected dividend yield is based on
historical information, that the Company did not have dividends in prior years.

The
Company granted stock options for 40,000 shares of common stock to employees and non-employee directors in fiscal 2007.

Legal Defense Costs

The Company does not accrue for estimated future legal and related defense costs, if any, to be incurred in connection with outstanding or threatened litigation
and other disputed matters but rather, records such as period costs when the services are rendered.

Net income Per Common Share

Basic net income per common share is calculated based on the weighted average number of shares of common stock outstanding during the reporting period. Diluted
net income per common share is calculated giving effect to all potentially dilutive common shares, assuming such shares were outstanding during the reporting period. Diluted income per common share
considers potentially dilutive securities consisting solely of stock options of 112,400 and 240,398 at January 31, 2007 and 2006, respectively.

38

---



The
following is a reconciliation of the numerators and denominators of the net income per common share computations for the periods presented.

|                                        |  | Net
Income
(numerator) |           | Weighted Average
Common Shares
(denominator) |           | Per
Share
Amount
|--------------------------------------- |  | ---------------------- | --------- | -------------------------------------------- | --------- | ----------------
|2007                                    |  |                        |           |                                              |           |                 
|Net income                              |  | $                      | 1,830,700 |                                              |           |                 
|Less preferred stock dividends (Note 4) |  |                        | (141,620  | )                                            |           |                 
|                                        |  |                        |           |                                              |           |                 
|Basic net income per common share       |  |                        |           |                                              |           |                 
|Net income available to common shares   |  |                        | 1,689,080 |                                              | 8,178,991 |                 
|                                        |  |                        |           |                                              |           |                 
|Effect of dilutive stock options        |  |                        |           |                                              | 10,518    |                 
|                                        |  |                        |           |                                              |           |                 
|Diluted net income per common share     |  |                        |           |                                              |           |                 
|Net income available to common shares   |  | $                      | 1,689,080 |                                              | 8,189,509 |                 
|                                        |  |                        |           |                                              |           |                 
|2006                                    |  |                        |           |                                              |           |                 
|Net income                              |  | $                      | 419,229   |                                              |           |                 
|Less preferred stock dividends (Note 4) |  |                        | (141,620  | )                                            |           |                 
|                                        |  |                        |           |                                              |           |                 
|Basic net income per common share       |  |                        |           |                                              |           |                 
|Net income available to common shares   |  |                        | 277,609   |                                              | 8,062,098 |                 
|                                        |  |                        |           |                                              |           |                 
|Effect of dilutive stock options        |  |                        |           |                                              | 6,637     |                 
|                                        |  |                        |           |                                              |           |                 
|Diluted net income per common share     |  |                        |           |                                              |           |                 
|Net income available to common shares   |  | $                      | 277,609   |                                              | 8,068,735 |                 
|                                        |  |                        |           |                                              |           |                 

2. Property and Equipment

Prior to the year ended January 31, 2006, the Company completed a sale and leaseback of a building with an unrelated party. The Company realized a gain of
$1,638,000 on the sale of the building. However, pursuant to SFAS No. 28,Accounting for Sales with Lease-backs, only a portion of the gain was
recognized in the fiscal years ended January 31, 2007 and 2006. The remainder of the gain has been deferred and will be amortized against the lease payments over the initial lease term (ending
in January 2010); the deferred gain balance is carried on the consolidated balance sheet as "Other Long-Term Liabilities."

39

---



Property
and equipment consists of the following as of January 31, 2007 and 2006:

2007

2006Land

$
505,558

$
Building and building improvements


813,824


2,892Leasehold improvements


147,207


34,300Equipment, furniture and fixtures


6,122,131


4,440,6087,588,720


4,477,800Less accumulated depreciation and amortization


3,127,055


2,429,960$
4,461,665

$
2,047,840


Depreciation
expense for the fiscal years ended January 31, 2007 and 2006 was $736,608 and $408,025, respectively.

3. Long-term Debt

Long-term debt on the consolidated balance sheet as of January 31, 2007 was $5,185,646 and comprised of the following:

|           |  | 2008(1) |           | 2009 |   | 2010      |  | 2011 |         | 2012 |   | Total  
|---------- |  | ------- | --------- | ---- | - | --------- |  | ---- | ------- | ---- | - | -------
|Sturgeon's |  | $       | 135,487   |      | $ | 1,650,509 |  | $    | 50,198  |      | $ |       
|Kiosks     |  |         | 186,056   |      |   | 208,978   |  |      | 133,600 |      |   |       
|Racusin    |  |         | 1,502,374 |      |   | 300,000   |  |      | 300,000 |      |   | 300,000
|Other      |  |         | 56,700    |      |   | 35,981    |  |      | 33,123  |      |   | 11,092 
|           |  |         |           |      |   |           |  |      |         |      |   |        
|Total      |  | $       | 1,880,617 |      | $ | 2,195,468 |  | $    | 516,921 |      | $ | 311,092
|           |  |         |           |      |   |           |  |      |         |      |   |        

---

Sturgeon's

On March 1, 2006, AWIG acquired Sturgeon's for $1,800,000, which included a loan of $1,500,000 from a bank, collateralized by a 1st deed of trust on the
Sturgeon's real estate and a security interest in the personal property and fixtures of Sturgeon's and a loan for $300,000 from Victor Salerno, AWI's CEO, and his wife, AWI's General Counsel, which
was repaid prior to January 31, 2007. Interest on the bank loan is payable monthly at the Wall Street Journal-listed prime rate plus 2.00% and the principal is due in a single payment on
March 1, 2008. Subsequent to the acquisition, AWI entered into two contracts payable with International Game Technology ("IGT"), of which terms are similar in nature,

40

---



maturing
in March and May of 2009, with fixed interest rates of 10.50% and 10.75% per annum for casino equipment with a total balance outstanding of $336,194 at January 31, 2007. See table
below.

Bank Loan

$
1,500,000IGT equipment loans, of which $135,487 represents the current portion


336,194Total Sturgeon's long-term debt

$
1,836,194


Kiosks

On August 8, 2006, the Company entered into a sale/lease-back transaction with a finance company involving 75 race/sports kiosks for a sale
price of $600,000 (less a $2,500 documentation fee and a 5% closing fee). Lease payments are $238,032 per year for 3 years. At the conclusion of the lease term, the Company may exercise a
bargain re-purchase option for $1. Accordingly, the Company has accounted for this transaction as a capital lease. The outstanding balance as of January 31, 2007 was $528,634.

Racusin

The total amount of Racusin long-term debt was $2,682,374 outstanding at January 31, 2007, bearing interest at a rate of 8.0% per annum. The
current portion of $1,502,374 was outstanding for the Racusin case in the event that the Company does not prevail in this litigation.

Other

Primarily various automobile loans, with a total outstanding balance of $138,444 at January 31, 2007 are also included in long-term debt with
various maturities ranging from one to five years and interest rates ranging from 11.5% to 12.0%.

4. Series A Preferred Stock

The Series A Preferred Stock is held by two persons. One shareholder is an officer and director of the Company (the "Officer/Director Shareholder"); this
related party owns a total of 8,900 shares (5,662 regular shares and 3,238 redeemable shares). The other shareholder is a director of the Company (the "Director Shareholder"); this related party owns
a total of 5,262 shares (all regular shares).

Holders
of the Series A Preferred Stock are entitled to receive, upon declaration by the Board of Directors, cumulative cash dividends monthly at the annual rate of 10% per share.
Interest at the rate of 10%, compounded annually, accrues on Series A Preferred Stock dividends that have accumulated but have not been paid. The Series A Preferred Stock is not
convertible but is callable, in whole or (on a pro rata basis) in part, at any time at the option of the Company. There were no shares called during the fiscal years ending January 31, 2007 or
2006. The holders of Series A Preferred Stock are not entitled to vote (on a cumulative basis or otherwise) as a class or with AWI's common stock (the "Common Stock") upon any matters submitted
to shareholders for a vote, except as mandated under Nevada law. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the

41

---



Company,
the holders of the Series A Preferred Stock shall be entitled to receive, prior and in preference to any distribution of any assets or surplus funds, an amount equal to $100 per share
plus all accumulated and unpaid dividends thereon and any unpaid interest due.

Over
the years, the Officer/Director Shareholder has forgone his right to have shares redeemed in accordance with the pro-rata provision applicable when shares were called,
and accordingly, the affected 3,238 shares have been reclassified as "Redeemable Series A Preferred Stock" (in the liabilities section); these may be put to the Company for redemption at any
time.

Upon
their emergence from bankruptcy on March 11, 2005, and pursuant to the terms and conditions of AWI's and Leroy's Restated Amended Joint Plan of Reorganization, all accrued
Series A Preferred Stock dividends, unpaid during the Chapter 11 process, plus interest at the Federal Judgment Rate (1.13%) were paid.

5. Capital Stock and Stock Options

Stock Repurchase

In 1999, the Board of Directors approved a program to repurchase up to 250,000 shares of the Company's publicly held Common Stock from time to time in the open
market. As of January 31, 2007, 61,100 shares had been repurchased and are held by the Company as treasury stock, and accordingly are non-voting. The timing and amount of future
share repurchases, if any, will depend on various factors, including market conditions, available alternative investments and the Company's financial position.

2001 Stock Option Plan

In general, AWI may, upon approval from the Board of Directors, award options to any employee at any time excepting that no employee may receive in excess of
250,000 options per year and the 2001 Plan may not grant more than 1,150,000 options in total. The 2001 Plan does not require any specific vesting schedule and/or term; as such, vesting and term is
left to the discretion of AWI, as approved by the Board of Directors. It is scheduled to terminate on August 8, 2011.

42

---



Pursuant
to the terms of the 2001 Plan, the exercise price of options must be equal to or greater than the market value of the Common Stock on the date of the grant. The following tables
summarize the current status of the 2001 Plan:

|                                        |  | 2007     |   | 2006
|--------------------------------------- |  | -------- | - | ----
|
|Outstanding at Beginning of Fiscal Year |  | 887,998  |   | $   
|Granted Price > or = Market Price       |  | 30,000   |   |     
|Exercised                               |  | (131,016 | ) |     
|Cancelled                               |  | (49,233  | ) |     
|                                        |  |          |   |     
|Outstanding at End of Fiscal Year       |  | 737,749  |   |     
|                                        |  |          |   |     
|Exercisable at End of Fiscal Year       |  | 362,000  |   |     
|                                        |  |          |   |     

Outstanding
and Exercisable by Price Range as of January 31, 2007

|                    |  | Options Outstanding |  | Options Exercisable
|------------------- |  | ------------------- |  | -------------------
|
|$1.25               |  | 100,000             |  | 6.87               
|$1.50               |  | 30,000              |  | 5.34               
|$1.80               |  | 250,000             |  | 8.36               
|$2.00               |  | 357,749             |  | 4.58               
|                    |  |                     |  |                    
|                    |  | 737,749             |  | 6.23               
|                    |  |                     |  |                    
|Available For Grant |  | 180,317             |  |                    
|                    |  |                     |  |                    

Vesting
Schedule

Vested at January 31, 2007

362,000Vesting, fiscal year ending January 31, 2008

145,749Vesting, fiscal year ending January 31, 2009

80,000Vesting, fiscal year ending January 31, 2010

80,000Vesting, fiscal year ending January 31, 2011

70,000Number of Options Outstanding at January 31, 2007

737,749


Directors Stock Option Plan

In 1996, the Company adopted the "Directors Stock Option Plan" (the "Directors Plan"). The Directors Plan was extended in August 2006 to terminate on
April 30, 2011.Each non-employee

43

---



director
of the Company is awarded options for 400 shares of stock on the last day of each fiscal year unless another amount/date is approved by the Board of Directors; these grants do not require any
additional approval from the Board of Directors. No more than 20,000 options may be granted pursuant to the Directors Plan. The Directors Plan provides that options will vest 100% after one year of
service and will expire 10 years from the grant date. Pursuant to the terms of the Directors Plan, the exercise price of options must be equal to the market value of the Company's common stock
on the date of the grant. The following tables summarize the current status of the Directors Plan:

|                                  |  | 2007   |  | 2006
|--------------------------------- |  | ------ |  | ----
|
|Outstanding at Beginning of Year  |  | 10,000 |  | $   
|Granted Price > or = Market Price |  | 10,000 |  |     
|                                  |  |        |  |     
|Outstanding at End of Year        |  | 20,000 |  |     
|                                  |  |        |  |     
|Exercisable at End of Year        |  | 6,200  |  |     
|                                  |  |        |  |     

Outstanding
and Exercisable by Price Range as of January 31, 2007

|                    |  | Options Outstanding |  | Options Exercisable
|------------------- |  | ------------------- |  | -------------------
|
|$0.12               |  | 400                 |  | 6.00               
|$0.15               |  | 800                 |  | 7.00               
|$0.35               |  | 400                 |  | 5.00               
|$0.55               |  | 800                 |  | 8.00               
|$1.00               |  | 10,000              |  | 9.52               
|$2.00               |  | 7,600               |  | 8.58               
|                    |  |                     |  |                    
|01-31-2007          |  | 20,000              |  | 9.16               
|                    |  |                     |  |                    
|Available For Grant |  |                    |  |                    
|                    |  |                     |  |                    

Vesting
Schedule

Vested at January 31, 2007

6,200Vesting, fiscal year ending January 31, 2008

8,800Vesting, fiscal year ending January 31, 2009

5,000Number of Options Outstanding at January 31, 2007

20,000


44

---



6. Commitments and Contingencies

Gaming Reserve Requirement

Pursuant to NGC Regulation 22.040, Leroy's is required to maintain a reserve to cover any outstanding wagering liability such as unpaid winning tickets,
future tickets and telephone account deposits. Prior to September 1, 2006, the amount in this reserve was $2,400,000. Due to increased wagering activity, the Company increased this reserve to
$3,000,000 as of September 1, 2006. The Company has met this requirement by the purchase of a surety bond issued from Fidelity and Deposit Company of Maryland (a subsidiary of Zurich American
Insurance) ("Fidelity"). The surety bond is secured by a $1,000,000 Irrevocable Letter of Credit ("ILOC") issued to the benefit of Fidelity by Great Basin Bank of Nevada ("Great Basin Bank"). The ILOC
is secured by a certificate of deposit for $1,000,000 held by Great Basin Bank. We believe the current surety bond will be sufficient to satisfy our NGC Regulation 22.040 reserve requirement
for the next 12 months. An inability to maintain or increase the reserve as necessary would have an adverse impact upon the Company including, but not limited to, requiring a significant
reduction in the number of locations operated by Leroy's and/or requiring a significant reduction in the handle (total amount wagered).

Litigation Judgments and Settlements

The Company has settled all previous litigation, except for the "Racusin" matter discussed below. Currently, the Company is not a party in any litigation and has
no knowledge of any pending legal proceedings in any court or agency of government or governmental authority, except as noted below. In accordance with an interpretation of SFAS No. 5, Accounting for
Contingencies, the Company has recorded allowances for probable losses equal to the lower end of the estimated probable loss range for
the following matters and periodically revises these estimates as known facts and circumstances change.

Racusin

On October 6, 2006, the United States Court of Appeals for the Ninth Circuit (the "9th Circuit") reversed the decision of the Appellate Panel of the Ninth
Circuit (the "BAP"), which previously ruled in our favor that the bankruptcy claim of Michael Racusin, d/b/a M. Racusin & Company ("Racusin"), was subject to subordination under
Section 510(b) of the U.S. Bankruptcy Code. In reversing the BAP's ruling, the 9th Circuit ruled that Racusin's claim was not subject to subordination and remanded the case for further
proceedings.

On
October 20, 2006, we petitioned the 9th Circuit for a panel rehearing or, in the alternative, a rehearingen banc.

The
manner in which Racusin's claim is ultimately resolved will be based on the 9th Circuit's decision and a September 3, 2004 Settlement Agreement among AWI, Leroy's and Racusin
(the "Settlement Agreement"), which is described further and appears in Exhibit 99.1 in the Form 8-K that we filed on September 7, 2004.

If
the 9th Circuit rehears the case and affirms the BAP's ruling, then Racusin's claim will be resolved by the issuance of 250,000 shares of Common Stock to Racusin, in accordance with
the Settlement Agreement. Those shares were issued in Racusin's name on July 27, 2005 pursuant to the BAP's ruling and are currently held in trust by the United States Bankruptcy Court for the
District of Nevada pending a resolution of this matter.

45

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If
the 9th Circuit declines to rehear the case or if it rehears the case and reverses the BAP's ruling, then the 250,000 shares that we issued in Racusin's name will be cancelled and
Racusin's claim will be resolved by a series of cash payments by us to (or for the benefit of) Racusin, in accordance with the Settlement Agreement, in the aggregate amount of $2,682,374 plus interest
at 8% per annum.

If
the 9th Circuit grants our petition for rehearing, we anticipate that the rehearing would occur 12 to 18 months later. If our petition is denied, we anticipate that our
payments to (or for the benefit of) Racusin will begin within 30 days after the denial.

Operating Leases

The Company has operating lease commitments for the majority of its race and sports book locations and for leased office equipment. Future minimum lease payments
under non-cancelable operating leases total $541,704, $483,999, $423,824, $318,434 and $87,795, respectively for each of the five succeeding fiscal years. Rent expense for all operating
leases was approximately $631,500 and $482,421 during the fiscal years ended January 31, 2007 and 2006, respectively.

Long-term Employment Commitments

The Company has employment agreements with the following executive officers:

Victor Salerno:The initial term of Mr. Salerno's employment agreement expires on
January 31, 2008; the employment agreement will automatically renew for additional 5-year terms unless either party gives the other party 180-days written notice to
terminate. During the initial term, Mr. Salerno can resign without cause upon 30 days written notice to AWI. Mr. Salerno's current annual base salary is $240,000, which is subject
to annual review. In addition, Mr. Salerno is entitled to a performance bonus each year equal to 5% of our pre-tax earnings (as defined in the agreement) for the prior fiscal year,
employer contributions to a profit-sharing or retirement plan of not less than 4% of his base salary, health and life insurance coverage, and use of an automobile that we provide for him.

Bruce Dewing:The initial term of Mr. Dewing's employment agreement expires on
January 31, 2008; the employment agreement will automatically renew for additional 3-year terms unless either party gives the other party 180-days written notice to
terminate. During the initial term, Mr. Dewing can resign without cause upon 30 days written notice to us. Mr. Dewing's current annual base salary is $180,000, which is subject to
annual review. In addition, Mr. Dewing is entitled to a performance bonus each year equal to 2% of our pre-tax earnings (as defined in the agreement) for the prior fiscal year,
employer contributions to a profit-sharing or retirement plan of not less than 4% of his base salary, health insurance coverage for him and his wife, use of an automobile that we provide for him, and
stock options to purchase 250,000 shares of our Common Stock under a five year vesting schedule.

The
following table summarizes our long-term employment commitments through the existing terms of the agreements. This table considers only base salary and retirement plan
contributions; it does not consider automatic renewals, annual increases in base salary, value of health and/or life insurance, value of automobile allowance or performance bonus payments as such
factors are variable from year-to-year.

Fiscal Year Ending January 31,

Base Salary

Retirement Plan

Total2007

$
420,000

$
16,800

$
436,8002008

$
420,000

$
16,800

$
436,800


46

---





7. Related Party Transactions

The Company has engaged in the following related-party transactions during the years ended January 31, 2007 and 2006:

In
return for personally guaranteeing certain irrevocable letters of credit ("ILOCs") obtained by the Company to satisfy the NGC Regulation 22.040 reserve requirement, Victor
Salerno was paid $8,750 by the Company on June 30, 2005 and $52,500 on June 30, 2004. Effective September 1, 2006, the ILOCs were replaced with a surety bond from Fidelity which
is now collateralized by a $1.0 million cash deposit, held at Great Basin Bank.

See
Note 11 for details of related party transactions relative to financing the acquisition of Sturgeon's.

8. Income Taxes

The tax effect of significant temporary differences representing deferred tax assets and liabilities for the Company is as of January 31, 2007, follows:

Deferred tax assets:Net operating loss carryforward

$
1,601,889Depreciation and amortization


88,797Deferred gain on sale of asset


320,678Accrued liabilities


353,575Customer deposits


53,958Other


29,2052,448,102Valuation allowance


(1,891,407
)556,695Deferred tax liabilities:Advance payments


(116,214
)Net deferred tax assets

$
440,481


The
difference between the normal federal statutory tax rate of 34.00% applied to income from continuing operations before income taxes and the Company's effective tax rate is:

2007

2006Income taxes at federal statutory rate

$
622,438

$
164,781Non-deductible expenses


92,321


8,497CSS dissolution


(1,106,283
)

Benefit of Net Operating Loss carryforwards


593,603


(674,150
)Other temporary differences


(483,053
)

(346,726
)Decrease in deferred tax valuation allowances


280,974


864,197$


$
16,599


47

---



At
January 31, 2007, the Company had federal tax net operating loss ("NOL") carryforwards available to potentially reduce future tax obligations in the aggregate
amount of $2,960,653; of which $1,856,102 is expected to expire in 2019. In assessing the realizability of deferred tax assets, the Company considers whether it is more likely than not that some
portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which
those temporary differences become deductible. Management believes that the Company will continue to be profitable for at least the short-term future and that it is therefore more likely
than not that our net deferred tax asset of $440,481, which resulted primarily from NOLs, will be fully realized. The determination of profitability in the future is partially based on the market
penetration of our kiosks and systems sales; our sports betting volumes and other factors.

In
June 2006, the FASB issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109, Accounting for
Income Taxes ("FIN 48"), effective for us beginning on February 1, 2007. FIN 48 clarifies the recognition threshold a tax position is required to meet before being recognized in the financial
statements. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosures, and transition of tax positions. Accordingly, tax
positions are analyzed to determine whether it is more likely than not they will be sustained when examined by the appropriate tax authority. Positions that meet the
more-likely-than-not criteria are measured to determine the amount of benefit to be recognized, whereas those positions that do not meet the
more-likely-than-not criteria are derecognized in the financial statements. FIN 48 will be effective for us for periods beginning on February 1, 2007. Based
on its evaluation, management believes that adopting FIN 48 will not have a material effect on the Company's net NOL carryforwards or the related deferred tax assets or the valuation allowance.

Management
has assessed the valuation allowance against the remainder of the deferred tax assets and continues to reevaluate this asset periodically. The change in the deferred tax asset
valuation allowance for the years ended January 31, 2007 and 2006, based on these estimates, created an income tax expense
(benefit) of approximately $500,000 and $350,000, respectively, which offset the current income tax expense (benefit) for the year ended January 31, 2007.

9. Business Segments

We report our results of operations through three operating segments: Wagering, Hotel/Casino, and Systems.

Wagering Segment

The Wagering Segment is comprised of the operating results of Leroy's and the allocation from AWI. For fiscal 2006, AWIM and AWIG were also part of the Wagering
Segment as AWIG reflected start-up costs for Sturgeon's, which was not yet acquired at the time. For fiscal 2007, AWIG and Sturgeon's are excluded from the Wagering Segment and included in
the Hotel/Casino Segment and

48

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AWIM
is now reported in the Systems Segment. The following table indicates the primary components of revenue and operating costs resulting in this segment's operating income (loss).

Year Ended January 31,2007

2006Revenue

$
9,885,568

$
7,517,288Direct Costs


6,978,652


6,108,575Selling, General and Administrative


1,233,791


1,317,988Depreciation and Amortization


196,185


255,7758,408,628


7,682,338Operating Income (Loss)

$
1,476,940

$
(165,050
)


Hotel/Casino Segment

The Hotel/Casino Segment is comprised of the operating results of AWIG and Sturgeon's for fiscal 2007 (Note 11). AWIG's results for 2006 reflected only the
pre-acquisition costs for Sturgeon's and was categorized as part of the Wagering Segment. Accordingly, there is no reportable Hotel/Casino Segment for 2006. The following table indicates
the primary components of revenue and operating costs resulting in this segment's operating loss.

Year Ended
January 31, 2007Revenue:Casino

$
1,447,918Hotel


550,391Food/Beverage


966,927Less: Casino Cash Incentives and Other Promotional Allowances


(120,910
)2,844,326Direct Costs and Expenses:Casino


660,643Hotel


221,226Food/Beverage


1,009,135Unallocated


679,8912,570,895Selling, General and Administrative


352,661Depreciation and Amortization


184,7683,108,324Operating Loss

$
(263,998
)


49

---



Systems Segment

The Systems Segment is comprised of the operating results of CBS and AWIM for fiscal 2007 and CBS and CSS in fiscal 2006. CSS was dissolved in fiscal 2007. AWIM
was included in the Wagering Segment in fiscal 2006. The following table indicates the primary components of revenue and operating costs resulting in this segment's operating income.

Year Ended January 31,2007

2006Revenue

$
6,640,499

$
5,007,152Direct Costs


2,251,270


2,314,390Research and Development


1,131,265


1,020,051Selling, General and Administrative


1,940,300


1,386,826Depreciation and Amortization


329,142


154,4595,651,977


4,875,726Operating Income (Loss)

$
988,522

$
131,426


Operating Income (Loss) to Income Before Taxes

The following table reconciles the operating income (loss) from each segment to income before taxes.

Year Ended January 31,2007

2006Operating Income (Loss)Wagering

$
1,476,940

$
(165,050
)Hotel/Casino


(263,998
)

Systems


988,522


131,4262,201,464


(33,624
)Other Income (Expenses)Interest Income


103,605


57,249Interest Expense


(203,313
)

(26,281
)Reorganization Expense





(43,493
)Litigation Expense


(386,698
)

328,624Other, net


115,642


153,353(370,764
)

469,452Income Before Income Taxes

$
1,830,700

$
435,828


50

---



Other Information

Other information regarding the Wagering Segment, Hotel/Casino Segment, and Systems Segment and certain other unallocated items are set forth below.

2007

2006Capital ExpendituresWagering

$
438,223

$
538,021Hotel/Casino


2,402,840


Systems


356,515


208,785Unallocated


20,888


33,456$
3,218,466

$
780,262Identifiable PropertyWagering

$
3,780,425

$
3,162,048Hotel/Casino


2,458,162


Systems


4,716,170


2,583,178Unallocated


2,217,520


2,104,273$
13,172,277

$
7,849,499


Goodwill,
in the amount of $103,725, for the fiscal years ended January 31, 2007 and 2006, is related to the Systems Segment.

51

---



10. Supplementary Cash Flow Information

Reconciliation of net income to net cash provided by (used in) operating activities.

2007

2006Net income

$
1,830,700

$
419,229Depreciation and amortization


737,224


410,234Deferred gain realized


(327,600
)

(327,601
)SFAS 123(R) stock based compensation


278,462


Non-cash litigation judgments


302,374


(342,245
)Decrease (increase) in operating assets:Accounts receivable


(385,705
)

(211,530
)Inventories


206,513


(362,336
)Prepaid expenses


(166,054
)

(102,702
)Other


(569,640
)

22,362Increase (decrease) in operating liabilities:Accounts payable


304,877


(192,379
)Accrued expenses


453,737


(151,553
)Unpaid winning tickets


459,299


(62,000
)Customer deposits and other


(85,385
)

379,978Net cash provided by (used in) operating activities

$
3,038,802

$
(520,543
)Cash paid for interest

$
203,313

$
26,281


11. Acquisition of Sturgeon's

On March 1, 2006, AWIG acquired Sturgeon's for $1,800,000 and separately purchased on-hand inventories totaling $148,075. The purpose of the
acquisition of Sturgeon's was to diversify and strengthen our cash flows and broaden our revenue base by operating this small casino.
In connection with the acquisition, AWIG incurred indebtedness of $1,800,000, which included a loan of $1,500,000 from a bank, collateralized by a 1st deed of trust on the Sturgeon's real estate and a
security interest in the personal property and fixtures of Sturgeon's. Interest is payable monthly at the Wall Street Journal-listed prime rate plus 2% and the principal is due in a single payment on
March 1, 2008. An additional $300,000 was advanced by Victor Salerno, AWI's CEO, and his wife, AWI's General Counsel, under an agreement with AWI that expires in 2011 and which provides for
guarantees of Company indebtedness and advances not to exceed $500,000 in the aggregate. Under the agreement monthly interest payments at 10.00% per annum were made by AWI to Mr. and
Mrs. Salerno on the balance outstanding, which amount ($300,000) has been fully repaid. In addition, the Company agreed to reimburse Mr. and Mrs. Salerno for finance charges, fees
and other expenses they incur under a $500,000 personal revolving line of credit with their bank, to the extent the line of credit was or will be used to provide funding for the Company.

In
accordance with SFAS No. 141,Business Combinations, the Company performed a valuation to determine, among other things, the
cost of the acquired entity and to assign that cost to the assets acquired on the basis of their fair values. Based upon this valuation process, the Company determined an overall asset value for
Sturgeon's of $2,091,570, which amount exceeded the purchase price of

52

---



$1,800,000
and resulted in tentative negative goodwill in the amount of $291,570. Pursuant to paragraphs 44 and 45 of SFAS No. 141, the negative goodwill was apportioned to all of the acquired
assets on a pro rata basis, subject to the applicable exceptions listed in paragraph 44.

Sturgeon's Inn & Casino

Purchase Price
AllocationLand

$
505,558Buildings


795,618Other


498,824Total Purchase Price

$
1,800,000


The
following unaudited pro forma consolidated financial information has been prepared assuming that the acquisition of Sturgeon's had occurred on February 1, 2005, the beginning
of fiscal year 2006.

Fiscal Years Ended January 31,2007

2006Revenues

$
19,554,416

$
14,708,463Operating Expenses


17,428,299


13,907,194Operating Income


2,126,117


801,269Other Expense


(356,432
)

(455,120
)Income Before Income Taxes


1,769,685


346,149Income Tax Provision





17,000Net Income

$
1,769,685

$
329,149Basic Income Per Share

$
0.21

$
0.16Diluted Income Per Share

$
0.21

$
0.15


These
unaudited pro forma results are presented for comparative purposes only. The pro forma results are not necessarily indicative of what our actual results would have been had the
acquisition been completed as of the beginning of each fiscal year, or of future results.

12. Financial Instruments

The Company's financial instruments consist of cash and cash equivalents, restricted cash, accounts and notes receivable, accounts payable, accrued expenses,
unpaid winning tickets, advance deposits, and long-term debt. The Company's cash equivalents are diversified among security types and issuers, and approximate fair value. The fair values
of other financial instruments that are short-term or that have little or no risk are considered to have a fair value equal to book value. Assets and liabilities that are included in this
category are cash, accounts receivable, accounts payable, accrued expenses, unpaid winning tickets and advance deposits. The Company believes the fair values of notes receivable and
long-term liabilities are also not materially different from their carrying values due to the instruments' interest rates approximating market rates for similar borrowings at
January 31, 2007 and 2006.

53

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Item 8.    Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

None.

Item 8A.    Controls and Procedures

We carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in
Rules 13a-15(e) and 15d-15(e) under the Exchange Act as of January 31, 2007. This evaluation was carried out under the supervision and with the participation of
our management, including our CEO, and Interim Principal Financial Officer, Mr. Victor Salerno. Based upon that evaluation, our CEO, who is also the Interim Principal Financial Officer,
concluded that our disclosure controls and procedures are not effective. There were no changes in our internal control over financial reporting that occurred during our fourth fiscal quarter that has
materially affected, or is reasonably likely to materially affect, our internal control over financial reporting except as reported below.

Our
former CFO gave us 30 days written notice of termination of his employment on November 17, 2006. Since then, we have appointed persons to assist in the preparation of
our quarterly and annual reports on Forms 10-QSB and 10-KSB, respectively, and we have continued to seek personnel on both a full-time and part-time
basis for our accounting department. Thus far, we have not found a suitable permanent replacement to fill the CFO position nor have we hired enough other accounting staff. That situation, together
with our relatively small accounting staff, coupled with a concurrent three-year routine gaming audit, created the need for additional time to complete our Form 10-KSB
and thus was not timely. As such we believe we have a material weakness due to this issue. We are making efforts to find a suitable replacement CFO and train our new staff.

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 is 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 or submitted under the Exchange Act is accumulated and communicated to management, including our CEO
and Interim Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

It
should be noted that any system of controls, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system are met. In
addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events. Because of these and other inherent limitations of control systems, there
can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Item 8B.    Other Information

None.

54

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PART III

Item 9.    Directors, Executive Officers, Promoters and Control Persons and Corporate Governance; Compliance with Section 16(a) of the  Exchange Act

Our directors and executive officers are as follows:

|Name                 |  | Age |  | Position                                                                          
|-------------------- |  | --- |  | ----------------------------------------------------------------------------------
|Victor J. Salerno    |  | 63  |  | President, CEO, COO, Chairman of the Board and Interim Principal Financial Officer
|Robert R. Barengo    |  | 65  |  | Director                                                                          
|W. Larry Swecker     |  | 62  |  | Director                                                                          
|Judith L. Zimbelmann |  | 55  |  | Director                                                                          
|Bruce Dewing         |  | 57  |  | Director and President of AWIG                                                    

Victor
J. Salerno has been our President, CEO, COO, and Chairman of the Board since our inception. On December 18, 2006, Mr. Salerno was appointed as our Interim Principal
Financial Officer, due to the resignation of the former CFO. Mr. Salerno has been the President, CEO and a Director of Leroy's since September, 1979. Mr. Salerno served as an Executive
Vice-President and Director of Autotote CBS Corporation (subsequently purchased by us and renamed Computerized Bookmaking Systems, Inc.). He is a past President of the Nevada
Association of Race and Sports Operators

Robert
R. Barengo became a Director on July 1, 2005 and previously served on our Board of Directors from 1992 to 2000. Mr. Barengo has owned and operated his own law
practice for over 30 years during which he has handled, among other matters, general business, municipal finance, bonding, investment banking, government and administration law, and gaming law.
Mr. Barengo has extensive elected office and legislative experience as a Nevada Assemblyman (1972-1982) where he served on various committees including Interim Finance, Ways and
Means, Commerce and Judiciary; Chairman of the Judiciary Committee (1973-1979); Speaker Pro Tempore (1978-1981); Chairman of the Legislative Commission (1981-1983);
Speaker of the Assembly (1981-1983); and Judge Pro-Tem for the City of Sparks Municipal Court and the City of Reno Municipal Court (1976-1995). Mr. Barengo
also served on the Board of Directors of Riviera Holdings Corporation, a publicly reporting company, from 1992 to April 2005 and also served as that company's Director of Government and Public
Affairs from January 2001 to April 2005. Mr. Barengo serves as Chairman of the Audit Committee.

W.
Larry Swecker became a Director in April, 2000. Mr. Swecker, a Certified Public Accountant, has been President of Swecker & Company, Ltd., Certified Public
Accountants, since January 1979. Prior to that, he was a partner in the firm of Keltner Milam & Company, Certified Public Accountants, from 1975 to 1979. Mr. Swecker was employed
as a revenue agent with the Internal Revenue Service from 1972 to 1975. He has a Bachelor of Science in Business Administration from the University of Nevada Reno. Mr. Swecker is a member of
the Audit Committee, serving as our Financial Expert; and is Chairman of the Compensation Committee the Board of Directors.

Judith
L. Zimbelmann became a Director in January, 2001 and serves on the Audit Committee and the Compensation Committee Ms. Zimbelmann is the daughter of Leroy Merillat, the
founder of Leroy's Horse & Sports Place, and was formerly married to Victor Salerno. Ms. Zimbelmann is a private investor with numerous holdings and is a member and officer of UV Doctor,
LLC (which provides ultra-violet lighting for sterilization).

Bruce
Dewing became a Director in July, 2003 and President of AWIG in July, 2005. Mr. Dewing has over thirty years of progressive experience in hotel/casino senior level
management positions. Mr. Dewing was formerly the President of the Holder Hospitality Group, Inc. where he oversaw the daily operations of five casinos, an AM radio station, a statewide
(Nevada) slot route, several event

55

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companies
and over 1,500 executives and employees. Mr. Dewing is a founding member of the Air Service Task Force for Washoe County (Nevada) Airport Authority, a member of the Advisory Board to
Washoe Airport Authority, a Board member of the Reno Air Race Association, and a Board member of the Nevada Hotel and Lodging Association.

Licensing

Pursuant to Nevada gaming regulations/statutes and the status of Leroy's, AWIM, AWIG and Sturgeon's as gaming licensees, officers and directors of Leroy's, AWIM,
AWIG and Sturgeon's must be investigated and licensed by the Commission, a process that may be both lengthy and expensive. Mr. Salerno is licensed by the Commission to be an officer and
director of Leroy's, AWIM and AWIG. In addition, Mr. Dewing is licensed by the Commission to be an officer and director of AWIG. Judith Zimbelmann is licensed by the Commission to be an officer
and director of Leroy's, AWIM and AWIG.

Involvement in Certain Legal Proceedings

To the best of our knowledge, during the past five years, none of the following occurred with respect to our directors or executive officers: (1) any
bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time (with
the exception of the Chapter 11 proceedings for AWI and Leroy's, during which Mr. Salerno held his positions with us); (2) any conviction in a criminal proceeding or being subject to a
pending criminal proceeding (excluding traffic violations and other minor offenses); (3) being subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any
court of any competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his or her involvement in any type of business, securities or banking activities;
and (4) being found by a court of competent jurisdiction (in a civil action), the SEC or the Commodities Futures Trading Commission to have violated a federal or state securities or commodities
law, and the judgment has not been reversed, suspended or vacated.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires our directors and executive officers and persons who beneficially own more than 10% of our common stock to file
with the SEC certain reports regarding their stock ownership ("Section 16(a) Reports"). Such persons are required to furnish us with copies of all Section 16(a) Reports they file. Based
solely on our review of such reports (and amendments thereto) that were furnished to us and written representations made to us by reporting persons in connection with certain of these reporting
requirements, we believe that all the reporting persons met their Section 16(a) reporting obligations on a timely basis during our last fiscal year, except as follows: Robert Barengo made a
late Form 4 filing to report stock options that we granted to him on August 7, 2006 and Judith Zimbelmann made a late Form 4 filing to report her exercise of stock options on
August 3, 2006. We have also determined that on July 2006, there was a late filing of a Form 4 by W. Larry Swecker to report his purchase of shares on October 31, 2001.

Code of Ethics Disclosure Compliance

We have adopted, and have filed with the SEC, a Code of Ethics for Financial Executives, which include our principal executive officer, principal financial
officer, principal accounting officer or controller, or persons performing similar functions.

56

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Item 10.    Executive Compensation

The following table summarizes the compensation of our executive officers, including one who left employment, and remuneration paid or accrued by the Company for
the last two fiscal years to our named executive officers.

Summary Compensation Table

|Name and principal position(a)                                              |  | Year
Ended
01/31
(b) |  | Salary
(c) |                 | Bonus
(d) |     | Stock
Awards
(e) |     | Option
Awards(5)
(f) |   | Non-equity
incentive
plan
compensation(7)
(g) |     | Nonqualified
deferred
compensation
earnings
(h) |               | All other
compensation(3)
(i) |     | Total
(j)
|--------------------------------------------------------------------------- |  | -------------------- |  | ---------- | --------------- | --------- | --- | ---------------- | --- | -------------------- | - | --------------------------------------------- | --- | ----------------------------------------------- | ------------- | ----------------------------- | --- | ---------
|Victor Salerno
CEO, COO, President, and Interim Principal Financial Officer |  | 2007
2006            |  | $$         | 240,000
240,000 |           | 
 |                  | 
 |                      | $ | 30,104
                                      |     | $$                                              | 21,791
21,791 |                               | 
 |          
|Timothy F. Lockinger
Former CFO, Secretary, Treasurer and Director          |  | 2007
2006            |  | $$         | 144,231
150,000 | (2)       | 
 |                  | 
 |                      | $ | 30,104
                                      | (6) | $$                                              | 8,717
8,717   |                               | 
 |          
|Bruce Dewing
Director of AWI and President of AWIG                          |  | 2007
2006            |  | $$         | 180,000
89,077  | (1)(1)    | 
 |                  | 
 |                      | $ | 109,139
                                     |     | $$                                              | 8,717
8,717   |                               | 
 |          

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Employment Agreements

We have the following employment agreements with the following executive officers;

Victor Salerno:Mr. Salerno's employment agreement became effective on July 1, 2002 and
the initial term expires on January 31, 2008. The employment agreement will automatically renew for successive five-year terms unless either party gives the other party
180-days written notice to terminate. During the initial term, Mr. Salerno can resign without cause upon 30 days' written notice to us. Mr. Salerno's current annual
base salary is $240,000, which is subject to annual review. In addition,

57

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Mr. Salerno
is entitled to an annual performance bonus equal to 5% of our pre-tax earnings (as defined in his agreement) for the prior fiscal year, employer contributions to a
profit-sharing or retirement plan of not less than 4% of his base salary, health and life insurance coverage, and use of an automobile that we provide for him. Mr. Salerno is also entitled to
participate in our benefit plans available to our officers and employees generally. Mr. Salerno's agreement also entitles him to certain benefits if his employment terminates within
24 months after a change in control of AWI, as described below under "Payments in the Event of a Change in Control."

Bruce Dewing:Mr. Dewing's employment agreement became effective on July 1, 2005 and
the initial term expires on January 31, 2008. The employment agreement will automatically renew for successive three-year terms unless either party gives the other party
180-days written notice to terminate. During the initial term, Mr. Dewing can resign without cause upon 30 days' written notice to us. Mr. Dewing's current annual base
salary is $180,000, which is subject to annual review. In addition, Mr. Dewing is entitled to a performance bonus each year equal to 2% of our pre-tax earnings (as defined in his
agreement) for the prior fiscal year, employer contributions to a profit-sharing or retirement plan of not less than 4% of his base salary, health insurance coverage for him and his wife, use of an
automobile that we provide for him, and options to purchase 250,000 shares of our common stock under a five-year vesting schedule. Mr. Dewing is also entitled to participate in our
benefit plans available to our officers and employees generally. Mr. Dewing's agreement also entitles him to certain benefits if his employment terminates within 24 months after a change
in control of AWI, as described below under "Payments in the Event of a Change in Control."

For
two years following the termination of Mr. Salerno's or Mr. Dewing's employment with us, he is restricted from (1) contacting, soliciting or accepting business
from any of our customers with whom he had business contact on our behalf or (2) soliciting our employees or prospective employees to leave their employment with us.

The
following table provides information concerning executive officers' unexercised stock options as of January 31, 2007.

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

|Name(a)           |  | Option awards
Number of
securities
underlying
unexercised
options
# exercisable
(1)
(b) |  | Number of
securities
underlying
unexercised
options
# unexercisable
(1)
(c) |  | Equity
incentive plan
awards:
Number of
securities
underlying
unearned
options
#
(d) |  | Option
exercise
price
$
(e) |      | Option
expiration
date
(f)
|----------------- |  | --------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------ |  | --------------------------- | ---- | --------------------------
|Victor J. Salerno |  | 25,000                                                                                  |  |                                                                             |  |                                                                                     |  | $                           | 2.00 |                           
|Timothy Lockinger |  |                                                                                        |  |                                                                             |  |                                                                                     |  | $                           | 2.00 |                           
|Bruce Dewing      |  | 50,000                                                                                  |  |                                                                             |  |                                                                                     |  | $                           | 1.80 |                           
|Bruce Dewing      |  | 400                                                                                     |  |                                                                             |  |                                                                                     |  | $                           | 0.15 |                           
|Bruce Dewing      |  | 400                                                                                     |  |                                                                             |  |                                                                                     |  | $                           | 0.55 |                           

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58

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Payments in the Event of a Change in Control

Our employment agreements with Mr. Salerno and Mr. Dewing, which are described above following the Summary Compensation Table, provide for certain
payments to each of them in connection with a termination of their employment within 24 months after a change in control of AWI.

Mr. Salerno's
agreement provides that if his employment terminates for any reason (other than death, disability or his resignation without cause during the initial term of his
agreement, which ends on January 31, 2008) within 24 months after a change in control of AWI, then we will pay, as termination benefits to Mr. Salerno, an amount equal to five
times his base salary then in effect and we will continue his coverage under our health and welfare benefit plans for five years. Also in the event of a change in control of AWI, all of his stock
options and any other stock-based awards will become exercisable or non-forfeitable.

Mr. Dewing's
agreement provides that if his employment terminates for any reason (other than death, disability or his resignation without cause during the initial term of his
agreement, which ends on January 31, 2008) within 24 months after a change in control of AWI, then we will pay, as termination benefits to Mr. Dewing, an amount equal to three
times his base salary then in effect and we will continue his coverage under our health and welfare benefit plans for 30 months. Also in the event of a change in control of AWI, all of his
stock options and any other stock-based awards will become exercisable or non-forfeitable.

Compensation of Directors

Directors who are not our employees or consultants receive a fee of $1,000 per month plus travel expenses. In addition, each Committee Chairman (audit committee,
compensation committee, etc.) receives an additional $1,000 per month for each committee chaired. The following table summarizes Director compensation for the fiscal year ended January 31,
2007.

Director Compensation

|Name(a)           |  | Fees
Earned or
Paid in
Cash
$
(b) |        | Stock
Awards
$
(c) |   | Option
Awards
$
(d) |   | Non-Equity
Incentive Plan
Compensation
$
(e) |  | Nonqualified
Deferred
Compensation
Earnings
$
(f) |  | All Other
Compensation
$
(g) |  | Total
$
Sum (b-g)
|----------------- |  | --------------------------------- | ------ | ------------------ | - | ------------------- | - | -------------------------------------------- |  | ------------------------------------------------- |  | ---------------------------- |  | -----------------
|W. Larry Swecker  |  | $                                 | 24,000 |                    |  |                     | $ | 4,108                                        |  |                                                  |  |                             |  |                 
|Robert R. Barengo |  | $                                 | 18,000 |                    |  |                     | $ | 4,108                                        |  |                                                  |  |                             |  |                 

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We
have granted the following stock options to our Directors (excluding terminated options):

|Date       |  | Granted to           |  | Number of
Shares |     | Terms                                                                                                                                                                                                 
|---------- |  | -------------------- |  | ---------------- | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|08/09/2001 |  | Victor J. Salerno    |  | 30,000           | (1) | $0.70 exercise price per share; became fully exercisable on August 9, 2001; exercised on August 8, 2006                                                                                               
|08/09/2001 |  | Timothy F. Lockinger |  | 15,000           | (1) | $0.70 exercise price per share; exercised on December 21, 2005                                                                                                                                        
|08/09/2001 |  | Judith L. Zimbelmann |  | 1,200            | (1) | $0.60 exercise price per share; became fully exercisable on August 9, 2001; exercised on August 3, 2006                                                                                               
|01/31/2002 |  | W. Larry Swecker     |  | 400              | (2) | $0.35 exercise price per share; became fully exercisable on January 31, 2003; expires on January 31, 2012                                                                                             
|01/31/2003 |  | W. Larry Swecker     |  | 400              | (2) | $0.12 exercise price per share; became fully exercisable on January 31, 2004; expires on January 31, 2013                                                                                             
|01/31/2004 |  | W. Larry Swecker     |  | 400              | (2) | $0.15 exercise price per share; became fully exercisable January 31, 2005; expires on January 31, 2014                                                                                                
|01/31/2004 |  | Bruce Dewing         |  | 400              | (2) | $0.15 exercise price per share; became fully exercisable on January 31, 2005; expires on January 31, 2014                                                                                             
|01/31/2005 |  | W. Larry Swecker     |  | 400              | (2) | $0.55 exercise price per share; became fully exercisable on January 31, 2006; expires on January 31, 2015                                                                                             
|01/31/2005 |  | Bruce Dewing         |  | 400              | (2) | $0.55 exercise price per share; became fully exercisable on January 31, 2006; expires on January 31, 2015                                                                                             
|07/11/2005 |  | Bruce Dewing         |  | 250,000          | (1) | $1.80 exercise price per share; fully exercisable over a 5-year vesting schedule (20% per year commencing June 10, 2006); expires on June 10, 2015                                                    
|08/31/2005 |  | Robert R. Barengo    |  | 3,800            | (2) | $2.00 exercise price per share; fully exercisable over a 2-year vesting schedule (50% per year commencing August 31, 2006); expires on August 31, 2015                                                
|08/31/2005 |  | Timothy F. Lockinger |  | 50,000           | (1) | $2.00 exercise price per share; fully exercisable over a 2-year vesting schedule (50% per year commencing August 31, 2006); expires on August 31, 2012; 25,000 options terminated on December 14, 2006
|           |  |                      |  |                  |     |                                                                                                                                                                                                       

60

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|08/31/2005 |  | Victor J. Salerno |  | 50,000 | (1) | $2.00 exercise price per share; fully exercisable over a 2-year vesting schedule (50% per year commencing August 31, 2006); expires on August 31, 2012
|---------- |  | ----------------- |  | ------ | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------
|08/31/2005 |  | W. Larry Swecker  |  | 3,800  | (2) | $2.00 exercise price per share; fully exercisable over a 2-year vesting schedule (50% per year commencing August 31, 2006); expires on August 31, 2015
|08/31/2005 |  | Judith Zimbelmann |  | 3,000  | (1) | $2.00 exercise price per share; fully exercisable over a 2-year vesting schedule (50% per year commencing August 31, 2006); expires on August 31, 2012
|08/07/2006 |  | Robert R. Barengo |  | 5,000  | (2) | $1.50 exercise price per share; fully exercisable over a 2-year vesting schedule (50% per year commencing August 7, 2007); expires on August 7, 2011  
|08/07/2006 |  | W. Larry Swecker  |  | 5,000  | (2) | $1.50 exercise price per share; fully exercisable over a 2-year vesting schedule (50% per year commencing August 7, 2007); expires on August 7, 2011  

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Item 11.    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The following table sets forth, as of May 27, 2007, the number and percentage of outstanding shares of our common stock, which, according to information
supplied to us, are beneficially owned by: (i) each person who is a beneficial owner of more than 5.00% of our outstanding common stock; (ii) each of our directors, and named executive
officers individually; and (iii) all of our current directors and executive officers as a group. Under SEC rules, a person is deemed a beneficial owner of our common stock with respect to which
he or she has or shares voting power (which includes the power to vote or to direct the voting of the security), or investment power (which includes the power to dispose of, or to direct the
disposition of, the security).

A
person is also deemed the beneficial owner of shares with respect to which he or she could obtain voting or investment power within 60 days of May 27, 2007 (such as upon
the exercise of options or warrants). The percentage of outstanding common stock represented by each named person's stock ownership assumes the exercise by that person of all stock options that are
exercisable within 60 days of May 27, 2007 but does not assume the exercise of stock options by any other persons. The percentage of outstanding common stock represented by the stock
ownership of all directors and executive officers as a group assumes the exercise by all members of that group of their respective stock options that are exercisable within 60 days of
May 27, 2007, but does not assume the exercise of options by any persons outside of that group.

61

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Except
as otherwise indicated below, the persons named in the table have sole voting and investment power with respect to all shares of our common stock held by them. The address of each
person named in the table is c/o American Wagering, Inc., 675 Grier Drive, Las Vegas, Nevada 89119.

Name

Number of Shares

Percentage of
Outstanding SharesVictor J. Salerno(1)

2,463,054

29.99
%Timothy Lockinger(2)

61,685

0.75
%Judy Zimbelmann(3)

1,002,700

12.21
%Robert R. Barengo(4)

526,900

6.42
%W. Larry Swecker(5)

23,500

0.29
%Bruce Dewing(6)

95,600

1.16
%All directors and executive officers as a group(7)

4,111,754

50.07
%


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For
more information regarding common stock authorized for issuance under our equity compensation plans, please read Part II, Item 5 of this Form 10-KSB.

Item 12.    Certain Relationships and Related Transactions

Other than as set forth below, there have been no transactions during our last two fiscal years, nor are there any proposed transactions, to which we were or are
to be a party, in which any of the following persons had or is to have a direct or indirect material interest:



62

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Our
policy regarding related transactions requires that any director or executive officer who has an interest in any transaction disclose the presence and the nature of the interest to
our Board of Directors prior to any approval of the transaction by our Board of Directors. The transaction may then be approved by a majority of our disinterested directors, provided that an
interested director may be counted in determining the presence of a quorum at the meeting of our Board of Directors to approve the transaction. Our policy regarding compensation for directors and
executive officers is that our Board of Directors may, without regard to personal interest, establish the compensation of directors for services in any capacity.

Victor
J. Salerno (our President, CEO, COO and Chairman of the Board of Directors) owns 8,900 shares of Series A Preferred Stock (5,662 regular shares and 3,238 redeemable
shares). Judith Zimbelmann (one of our directors) owns 5,262 shares of Series A Preferred Stock (all regular shares).

Holders
of the Series A Preferred Stock are entitled to receive, upon declaration by our Board of Directors, cumulative cash dividends monthly at the annual rate of 10% per share.
Interest at the annual rate of 10%, compounded annually, accrues on Series A Preferred Stock dividends that have accumulated but have not been paid. The Series A Preferred Stock is not
convertible but is callable, in whole or (on a pro rata basis) in part, at any time at our option. There were no shares called during the fiscal years ending January 31, 2007 or 2006. The
holders of Series A Preferred Stock are not entitled to vote (on a cumulative basis or otherwise) as a class or with our common stock upon any matters submitted to shareholders for a vote,
except as mandated under Nevada law.

In
prior years, Mr. Salerno forwent his right to have his shares redeemed when we made partial, pro rata calls of Series A Preferred Stock for redemption. Those affected
shares have been classified as "Redeemable Series A Preferred Stock" in the liabilities section of our Consolidated Balance Sheet, and may be put to us by Mr. Salerno for redemption at
any time. As of January 31, 2007, the amount of Series A Preferred Stock that may be put to us by Mr. Salerno for immediate redemption (without prior approval by our Board of
Directors) is $323,800 (3,238 shares). When we and Leroy's filed Chapter 11 Petitions, this Redeemable Series A Preferred Stock became subject to compromise under the Bankruptcy Code. (Under
the Bankruptcy Code, the ordinary Series A Preferred Stock, which is classified in the equity section of our Consolidated Balance Sheet, was not designated as subject to compromise.) Pursuant
to the Plan that we and Leroy's consummated on March 11, 2005 (the "Effective Date"), the Redeemable Series A Preferred Stock is no longer considered subject to compromise, and we will
pay the redemption price in the ordinary course of business.

From
the filing of the Chapter 11 Petitions on July 25, 2003 through the Effective Date (March 11, 2005), dividends were accrued but not paid on the Series A
Preferred Stock. The following table indicates the accruals and payments to the preferred shareholders through the Effective Date:

Paid

Accrued

Unpaid02/2003 through 07/2003

$72,195

$0

$008/2003 through 01/2004

$0

$71,392

$71,39202/2004 through 01/2005

$0

$142,008

$213,40002/2005

$0

$10,864

$224,26403/11/2005

$226,241

$0

$003/12/2005 through 01/31/2006

$141,620

$0

$0Fiscal 2007

$141,620

$0

$0


The
payment on March 11, 2005 includes $1,977 of interest at the Federal Judgment Rate.

In
return for Mr. Salerno's personal guarantees of certain irrevocable letters of credit ("ILOCs") that we obtained to meet the Regulation 22.040 reserve requirement, we
paid Mr. Salerno $8,750 on June 30, 2005. Those ILOCs have been replaced with a surety bond and we do not anticipate that

63

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personal
guarantees from Mr. Salerno in regard to the reserve requirement will be required in the future.

AWIG's
acquisition of Sturgeon's was financed, in part, through a $300,000 loan from Victor and Terina Salerno under their Guaranty Agreement with AWI. The Guaranty Agreement provides
for AWI to pay the Salernos interest at the rate of 10% per annum (payable monthly) on the outstanding portion of the loan and to reimburse them for finance charges, fees and other expenses they incur
under a personal revolving line of credit with their bank that they used to provide the funding. The personal line of credit is secured by the Salernos' residence and pro-vides for an
interest rate of 0.5% below the prime rate published by The Wall Street Journal, adjusted annually. Terina Salerno is the spouse of Victor Salerno as well as General Counsel of AWI. Since
May 1, 2006, the outstanding balance of the loan from the Salernos has been zero. During fiscal 2007, we paid the
Salernos a total of $2,055 of interest under the Guaranty Agreement in addition to the $300,000 loan principal amount repayment.

We
employ on a full-time basis Terina Salerno, the wife of Victor Salerno, as our General Counsel. For our fiscal years ended January 31, 2007 and 2006, her total
annual compensation was $108,160 and $81,120, respectively.

We
employ on a full-time basis John Salerno, the son of Victor Salerno and Judith Zimbelmann, as a Vice President and gaming analyst of Leroy's. For our fiscal years ended
January 31, 2007 and 2006 his total annual compensation was $45,200 and $44,000, respectively.

Director Independence

We follow the director independence standards prescribed by NASDAQ. As such, the members of our Board of Directors who are considered independent are Robert
Barengo and W. Larry Swecker.

Under
the audit committee independence standards prescribed by NASDAQ, two of our three Audit Committee members, namely Robert Barengo (Chairman) and W. Larry Swecker are independent and
Judith Zimbelmann is not.

Under
the director independence standards prescribed by NASDAQ, one of our two Compensation Committee members, namely W. Larry Swecker, is independent and Judith Zimbelmann is not.

Our
entire Board of Directors serves as our Nominating Committee.

Audit Committee Financial Expert

Our Board of Directors has determined that a member of our Audit Committee, W. Larry Swecker, who meets the audit committee independence criteria prescribed by
NASDAQ, qualifies as an audit committee financial expert under the applicable rules of the SEC. Mr. Swecker's qualifications include, among other things, his practice as a certified public
accountant for the past 30 years.

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Item 13.    Exhibits

|Exhibit
Number |  | Description                                                                                                                                                                                                                                                             
|-------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.1*           |  | Restated Amended Joint Plan of Reorganization of American Wagering Inc. and Leroy's Horse & Sports Place, Inc. (see Exhibit 2.1 to Form 10-KSB filed May 1, 2006, SEC File No. 000-20685)                                                                               
|3.1*           |  | By-Laws of American Wagering, Inc. (see Exhibit 3.1 to Form 8-K filed August 31, 2005, SEC File No. 000-20685)                                                                                                                                                          
|3.2*           |  | Amended and Restated Articles of Incorporation of American Wagering, Inc. (see Exhibit 3.1 to Registration Statement on Form SB-2 filed December 13, 1995, SEC File No. 33-80431)                                                                                       
|3.3*           |  | Certificate of Designations, Preferences and Rights of Series A Preferred Stock of American Wagering, Inc. (see Exhibit 3.1.1 to Form 8-K filed December 10, 1998, SEC File No. 000-20685)                                                                              
|10.1*(A)       |  | American Wagering, Inc. 2001 Stock Option Plan (see Exhibit 99 to our Definitive Schedule 14A filed October 16, 2001, SEC File No. 000-20685)                                                                                                                           
|10.2*          |  | Amended and Restated Guaranty Agreement dated June 8, 2006, between American Wagering, Inc. and Victor and Terina Salerno (see Exhibit 10.1 to Form 10-QSB filed June 14, 2006, SEC File No. 000-20685)                                                                 
|10.3*          |  | Purchase and Sale Agreement for the acquisition of Sturgeon's Inn & Casino (see Exhibit 10.1 to Form 8-K filed June 21, 2005, SEC File No. 000-20685)                                                                                                                   
|10.4*          |  | Lease Schedule No. 1 (with Options), dated July 14, 2006 by and between AWI Manufacturing Inc., American Wagering, Inc. and PDS Gaming Corporation-Nevada, and Master Lease Agreement. (see Exhibit 10.2 to Form 10-QSB filed December 26,
2006, SEC File No. 000-20685)
|10.5*(A)       |  | Executive Employment Agreement between American Wagering, Inc. and Victor J. Salerno dated June 28, 2002 (see Exhibit 10.1 to Form 10-QSB filed September 14, 2005, SEC File No. 000-20685)                                                                             
|10.6*(A)       |  | Severance Agreement between American Wagering, Inc. and Timothy F. Lockinger dated February 9, 2007 (see Exhibit 10.6 to Form 10-KSB filed May 31, 2007, SEC File No. 000-20685)                                                                                        
|10.7*(A)       |  | Executive Employment Agreement between American Wagering, Inc. and Bruce Dewing dated June 14, 2005 (see Exhibit 99.1 to Form 8-K filed June 15, 2005, SEC File No. 000-20685)                                                                                          
|10.8*(A)       |  | Form of stock option agreement under American Wagering, Inc. 2001 Stock Option Plan (see Exhibit 10.6 to Form 10-KSB filed May 1, 2006, SEC File No. 000-20685)                                                                                                         
|10.9*(A)       |  | American Wagering, Inc. Directors Stock Option Plan and form of stock option agreement (see Exhibit 10.7 to Form 10-KSB filed May 1, 2006, SEC File No. 000-20685)                                                                                                      
|10.10*(A)      |  | Compensation terms for American Wagering, Inc. directors (see Exhibit 10.8 to Form 10-KSB filed May 1, 2006, SEC File No. 000-20685)                                                                                                                                    
|10.11*(A)      |  | Amendment/Extension of Directors Stock Option Plan, dated August 1, 2006 (see Exhibit 10.1 to Form 10-QSB filed December 26, 2006, SEC File No. 000-20685)                                                                                                              
|               |  |                                                                                                                                                                                                                                                                         

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|10.12* |  | Commercial Loan Agreement, dated February 21, 2006, between AWI Gaming, Inc. and Great Basin Bank of Nevada (see Exhibit 10.12 to Form 10-KSB filed May 31, 2007, SEC File No. 000-20685)                                             
|------ |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.13* |  | Promissory Note, dated February 21, 2006, executed by AWI Gaming, Inc. in favor of Great Basin Bank of Nevada (see Exhibit 10.13 to Form 10-KSB filed May 31, 2007, SEC File No. 000-20685)                                           
|10.14* |  | Commercial Guaranty, dated February 21, 2006, executed by American Wagering, Inc. in favor of Great Basin Bank of Nevada (see Exhibit 10.14 to Form 10-KSB filed May 31, 2007, SEC File No. 000-20685)                                
|10.15* |  | Commercial Guaranty, dated February 21, 2006, executed by Sturgeons, LLC in favor of Great Basin Bank of Nevada (see Exhibit 10.15 to Form 10-KSB filed May 31, 2007, SEC File No. 000-20685)                                         
|10.16* |  | Commercial Security Agreement, dated February 21, 2006, executed by AWI Gaming, Inc. in favor of Great Basin Bank of Nevada (see Exhibit 10.16 to Form 10-KSB filed May 31, 2007, SEC File No. 000-20685)                             
|10.17* |  | Deed of Trust, dated February 21, 2006, among AWI Gaming, Inc., Great Basin Bank of Nevada and Western Title Company Inc. (see Exhibit 10.17 to Form 10-KSB filed May 31, 2007, SEC File No. 000-20685)                               
|10.18* |  | Settlement Agreement by American Wagering, Inc., Leroy's Horse & Sports Place, Inc. and Michael Racusin d/b/a M. Racusin & Co., dated September 3, 2004 (see Exhibit 99.1 to Form 8-K filed September 7, 2004, SEC File
No. 000-20685)
|14.1*  |  | Code of Business Conduct and Ethics (see Exhibit 14.1 to Form 10-QSB filed June 14, 2005, SEC File No. 000-20685)                                                                                                                     
|21.1*  |  | Subsidiaries of American Wagering, Inc. (see Exhibit 21.1 to Form 10-KSB filed May 31, 2007, SEC File No. 000-20685)                                                                                                                  
|23.1   |  | Consent of Independent Registered Public Accounting Firm                                                                                                                                                                              
|31.1   |  | Certification of Principal Executive Officer pursuant to Exchange Act Rule 13a-14(a)                                                                                                                                                  
|31.2   |  | Certification of Principal Financial Officer pursuant to Exchange Act Rule 13a-14(a)                                                                                                                                                  
|32.1   |  | Certification of Chief Executive Officer and Chief Financial Officer pursuant to Exchange Act Rule 13a-14(b) and 18 U.S.C. Section 1350                                                                                               

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Item 14.    Principal Accountant Fees and Services

Our Audit Committee selected and our Board of Directors approved the firm of Piercy Bowler Taylor & Kern ("PBTK") as our independent registered accounting
firm to audit our annual consolidated financial statements and perform quarterly financial statement review services for the fiscal year ended January 31, 2007. PBTK previously performed
similar audit and review services for the years ended January 31, 2006, 2005, 2004, 2003, 2002 and 2001. PBTK's primary offices are located at 6100 Elton Avenue, Suite 1000, Las Vegas, Nevada,
89107.

Audit Committee's Pre-Approval of Engagement

Our policy is that before we engage our principal accountants annually to render audit or non-audit services, the engagement is reviewed and approved
by our Audit Committee. All of our principal accountants' services for which we paid tax-related fees or other non-audit fees for our last two fiscal years, as described below,
were within the scope of the engagement that our Audit Committee approved before we entered into the engagement.

Total
fees. Total fees paid and accrued to PBTK are as follows:

Year Ending January 31,Service Provided2007

2006Audit Service Fees

$
95,432

$
68,616Tax Service Fees


22,648


16,140Other Fees


15,434


12,179Total

$
133,514

$
96,935


Audit Service Fees

The aggregate fees for audit services were for the audits of our annual consolidated financial statements and review of our quarterly consolidated financial
statements. There were no Audit Related Services.

Tax Fees

The aggregate fees for tax services were for professional services relating to tax compliance, tax advice, and tax planning.

Other Fees

The aggregate Other Fees were for audits of our 401(k) plan and all gaming compliance audit services.

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SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

| |  | AMERICAN WAGERING, INC.
| |  | -----------------------
| |  | By:                    

In
accordance with the Exchange Act, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

|Signature                             |  | Title                                                                                                     |  | Date             
|------------------------------------- |  | --------------------------------------------------------------------------------------------------------- |  | -----------------
|                                      |  |                                                                                                           |  |                  
|/s/VICTOR SALERNOVictor Salerno       |  | President and Chief Executive Officer (Principal Executive Officer)                                       |  | November 26, 2007
|/s/MELODY SULLIVANMelody Sullivan     |  | Chief Financial Officer and Treasurer (Principal Financing and Accounting Officer)
(hired August 6, 2007) |  | November 26, 2007
|/s/ROBERT R. BARENGORobert R. Barengo |  | Director                                                                                                  |  | November 26, 2007
|/s/W. LARRY SWECKERW. Larry Swecker   |  | Director                                                                                                  |  | November 26, 2007
|/s/JUDITH ZIMBELMANNJudith Zimbelmann |  | Director                                                                                                  |  | November 26, 2007
|/s/BRUCE DEWINGBruce Dewing           |  | Director                                                                                                  |  | November 26, 2007

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EXHIBIT INDEX

|Number |  | Description                                                                                                                            
|------ |  | ---------------------------------------------------------------------------------------------------------------------------------------
|23.1   |  | Consent of Independent Registered Public Accounting Firm                                                                               
|31.1   |  | Certification of Principal Executive Officer pursuant to Exchange Act Rule 13a-14(a)                                                   
|31.2   |  | Certification of Principal Financial Officer pursuant to Exchange Act Rule 13a-14(a)                                                   
|32.1   |  | Certification of Chief Executive Officer and Chief Financial Officer pursuant to Exchange Act Rule 13a-14(b) and 18 U.S.C. Section 1350

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