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**UNITEDSTATES**

**SECURITIESAND EXCHANGE COMMISSION**

# **Washington, D.C. 20549**

** **

**FORM 10-K/A**

 

| **x**                                                | **ANNUAL REPORT PURSUANT TO  SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |
|------------------------------------------------------|-----------------------------------------------------------------------------------------------------|
| ** **                                           |
| **For the fiscal year ended December 31, 2008** |
| ** **                                           |
| **or**                                               |
| ** **                                           |
| **o**                                                | **TRANSITION REPORT UNDER SECTION 13 OR  15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**   |

 

**For the transition period from                  to                 **

** **

**Commission file number: 000-25855**

** **

**ElixirGaming Technologies, Inc.**

(Nameof registrant as specified in its charter)

 

| **Nevada**                       | ** ** | **91-1696010**       |
|----------------------------------|------------|----------------------|
| (State  or other jurisdiction of |       | (I.R.S.  Employer    |
| incorporation  or organization)  |       | Identification  No.) |

 

**6650 Via Austi Parkway, Suite 170,Las Vegas, Nevada 89119**

(Addressof principal executive offices, including zip code)

** **

Registrant’s telephone number, including area code: ** (702) 733-7195**

** **

Securities to be registered underSection 12(b) of the Act:

** **

| **Title  of each class to be so registered** | ** ** | **Name of  each exchange on which registered** |
|----------------------------------------------|------------|------------------------------------------------|
| Common Stock                                 |       | NYSE Amex                                      |

 

Securities to be registered underSection 12(g) of the Act:

** **

**None**

 

Indicate by check mark if the registrant is awell-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes o  No x

 

Indicate by check mark if the registrant isnot required to file reports pursuant to Section 13 or 15(d) of theExchange Act.

Yes o  No x

 

Indicate by check mark whether the registrant(1) has filed all reports required to be filed by Section 13 or 15(d) ofthe Securities Exchange Act of 1934 during the past 12 months (or for suchshorter period that the registrant was required to file such reports), and (2) hasbeen subject to such filing requirements for the past 90 days.  Yes x  No o

 

Indicate by check mark whether the registranthas submitted electronically and posted on its corporate Web site, if any,every Interactive Data File required to be submitted and posted pursuant to Rule 405of Regulation S-T  (§ 229.405 of thischapter) during the preceding 12 months (or for such shorter period that theregistrant was required to submit and post such files).  Yes x  No o

 

Indicate by check mark if disclosure ofdelinquent filers in response to Item 405 of Regulation S-K is not containedherein, and will not be contained, to the best of the registrant’s knowledge,in definitive proxy or information statements incorporated by reference in Part IIIof this Form 10-K or any amendment to this Form 10-K.  o

 

Indicateby check mark whether the registrant is a large accelerated filer, anaccelerated filer, a non-accelerated filer or a smaller reporting company (asdefined in Rule 12b-2 of the Act): 

 

| Large  accelerated filer  ̈                                              |   | Accelerated  filer  ̈    |
|------------------------------------------------------------------------------|--------|------------------------------|
|                                                                         |   |                         |
| Non-accelerated  filer  ̈  (Do not check if a smaller reporting company) |   | Smaller  reporting company x |

 

Indicate by check markwhether the registrant is a shell company (as defined in Rule 12b-2 of theExchange Act)

Yes o  No x

 

State the aggregate market value of votingand non-voting common equity held by non-affiliates computed by reference tothe price at which the common equity was last sold, or the average bid andasked price of such common equity, as of the last business day of theregistrant’s most recently completed second fiscal quarter:  $63,790,168

 

State the number of shares outstanding of each of the registrant’sclasses of common stock, as of the latest practicable date: 114,956,667 sharesas of March 23, 2009.

 

DOCUMENTS INCORPORATED BY REFERENCE

 

None.

 

 

 

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**EXPLANATORY NOTE**

 

Elixir Gaming Technologies, Inc. a Nevada corporation,is amending its Annual Report on Form 10-K, as originally filed with theSecurities and Exchange Commission on March 30, 2009, for purposes ofproviding the information required by Part III of Form 10-K, as suchinformation will not be incorporated by reference to a proxy statement for thecompany’s 2009 Annual Meeting of Stockholders filed with the Securities andExchange Commission within 120 days after December 31, 2008.  This amendment does not include items fromthe original Form 10-K that are not being hereby amended.

 

**Tableof Contents**

 
| ** **   | **PART III**                                                                                 | ** ** |
|--------------|---------------------------------------------------------------------------------------------------|------------|
| ** **   | ** **                                                                                        | ** ** |
| **Item 10**  | **Directors, Executive  Officers and Corporate Governance**                                       | **1**      |
| ** **   | ** **                                                                                        | ** ** |
| **Item 11.** | **Executive Compensation**                                                                        | **4**      |
| ** **   | ** **                                                                                        | ** ** |
| **Item 12.** | **Security  Ownership of Certain Beneficial Owners and Manager and Related Stockholder  Matters** | **11**     |
| ** **   | ** **                                                                                        | ** ** |
| **Item 13.** | **Certain  Relationships and Related Transactions, and Director Independence**                    | **14**     |
| ** **   | ** **                                                                                        | ** ** |
| **Item 14.** | **Principal  Accountant Fees and Services**                                                       | **18**     |
| ** **   | ** **                                                                                        | ** ** |
| ** **   | **PART IV**                                                                                  | ** ** |
| ** **   | ** **                                                                                        | ** ** |
| **Item 15.** | **Exhibits  and Financial Statement Schedules**                                                   | **19**     |

 

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# **PART III**

 

**Item 10.****                                                   ****Directors, Executive Officers andCorporate Governance**

 

The names of ourexecutive officers and directors and their ages, titles and biographies as of April 24,2009 are set forth below:

 
| **Name**                      | ** ** | **Age** | ** ** | **Position**                                                               |
|-------------------------------|------------|---------|------------|----------------------------------------------------------------------------|
| Clarence (Yuk Man) Chung      |       | 46      |       | Chairman of the Board of  Directors, Presidentand  Chief Executive Officer |
| Andy (Kin Ming) Tsui          |       | 38      |       | Chief Accounting Officer                                                   |
| Lorna Patajo-Kapunan          |       | 56      |       | Director                                                                   |
| Maj. Gen. Paul A. Harvey      |       | 71      |       | Director                                                                   |
| Vincent L. DiVito             |       | 49      |       | Director                                                                   |
| John W. Crawford, J.P.        |       | 66      |       | Director                                                                   |
| Samuel (Yuen Wai) Tsang       |       | 54      |       | Director                                                                   |
| Ted (Ying Tat) Chan           |       | 37      |       | Director                                                                   |
| Anthony (Kanhee) Tyen,  Ph.D. |       | 53      |       | Director                                                                   |
| Daniel (Sui Leung) Sham       |       | 53      |       | Director                                                                   |

 

Our executive officers are appointed by, andserve at the discretion of, our board of directors. Each executive officer is afull-time employee. There is no family relationship between any of ourexecutive officers or directors.

 

Clarence (Yuk Man) Chung joined our board in October 2007and has served as chief executive officer since October 2008. Mr. Chunghas been the executive director of Melco International Development Limitedsince May 2006 and the chief operating officer since July 2006. Mr. Chungjoined Melco in December 2003 and assumed the role of the chief financialofficer. Prior to joining Melco, he had been the director and chief financialofficer with Megavillage Group, a vice-president at Lazard Asia managing anAsian buy-out fund, and a vice-president at Pacific Century RegionalDevelopment Limited, a Singapore listed company with businesses ininfrastructure, financial services and technology. Mr. Chung holds aMaster of Business Administration degree from Kellogg School of Management ofNorthwestern University and is a qualified accountant in the United Kingdom andHong Kong.

 

Andy (Kin Ming) Tsui was appointed to serveas our chief accounting officer on April 1, 2009 and prior to that servedas our vice president of finance since July. Prior to joining our company, Mr. Tsuihad been the regional finance controller-Asia for Minteq International Inc., awholly owned subsidiary of Minerals Technologies Inc. (NYSE: MTX) based inShanghai since June 2005. From March 2003 to May 2005, Mr. Tsuiserved as manager of financial analysis at the corporate office of MinteqInternational Inc. in New York. Mr. Tsui holds a Master of BusinessAdministration degree from Baruch College, City University of New York and is acertified public accountant in the United States.

 

Lorna Patajo-Kapunan joined our board in September 2007and she chairs our Nominating Committee. Ms. Patajo-Kapunan has served asa senior partner of Kapunan Lotilla Flores Garcia & Castillo LawOffices, a law firm located in Manila, Philippines, since October 2006.From October 2001 to September 2006, Ms. Patajo-Kapunan servedas a partner of Roco Kapunan Migallos & Luna Law Offices, also aManila based law firm.

 

Major General Paul Harvey joined our board inOctober 2005 and he chairs our Conflicts and Compensation Committees. Since November 2007, General Harvey has served as presidentand chief executive officer of the Pearl River Resort, the largest gaming and resort property in the State ofMississippi.  General Harvey spent 32years on active duty in the United States Air Force where he held numerouscommand positions throughout the United States, Europe, Africa and the MiddleEast. Following retirement, he was the executive director of the MississippiGaming Commission from 1993

 

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through 1998. General Harvey serves on theboards of directors of Riviera Holdings Corporation and Cadillac Jack, Inc.

 

Vincent DiVito joined our board in October 2005and he chairs our Audit Committee. Mr. DiVito has served as chief financialofficer and treasurer of Lonza America, Inc.,a global life sciences chemicalbusiness headquartered in Allendale, New Jersey, since September 2000 andas president of Lonza America, Inc.since January 2008.  Lonza America, Inc.is part of Lonza Group, whose stock is traded on the Swiss Stock Exchange.  From 1990 to September 2000, Mr. DiVitowas employed by Algroup Wheaton, a global pharmaceutical and cosmeticspackaging company, first as its Director of Business Development and later asits vice president and chief financial officer. Mr. DiVito is a certifiedpublic accountant and certified management accountant. Mr. DiVito is amember of the board of directors of Riviera Holdings Corporation, a publiclyheld company.

 

John Crawford joined our board in November 2007.  Mr. Crawford has been the chairman ofInternational Quality Education Limited since February 2002.  Since 1997, Mr. Crawford has been themanaging director of Crawford Consultants Limited, a company he founded whichhelps companies in the identification of acquisition opportunities and providessupport assistance in that regard.  Priorto that, Mr. Crawford was a founding partner of the Hong Kong office ofErnst & Young where he acted as engagement or review partner for manypublic companies and banks before he retired from practice in 1997.  Mr. Crawford is a member of the HongKong Institute of Certified Public Accountants, a member and honorary presidentof the Macau Society of Certified Practicing Accountants, and a member of theCanadian Institute of Chartered Accountants. Mr. Crawford also serves on the boards of directors and is chairmanof the audit committees of e-Kong Group Limited and Titan Petrochemicals GroupLimited, both of which are listed onthe Hong Kong Stock Exchange.  He is alsoon the board of directors and chairman of the audit committee of RegalPortfolio Management Limited, which managesthe Regal Real Estate InvestmentTrust, the units of which are listed on the Hong Kong Stock Exchange.

 

Samuel (Yuen Wai) Tsang joined our board in September 2008.  Mr. Tsang is a solicitor admitted inHong Kong, England and Australia.  AsGroup Legal Counsel and Corporate Secretary of Melco International DevelopmentLimited since 2001, Mr. Tsang oversees the legal, corporate and compliancematters of Melco Group, which holds significant interests in a total of sixlisted companies in Hong Kong, the USA and Canada.  Mr. Tsang has worked as a lawyer withmajor law firms and listed conglomerates in Hong Kong for over 20 years.  He holds a master of laws degree fromUniversity of Hong Kong and a master of business administration degree from theAustralian Graduate School of Management. He is director of Melco China Resorts (Holding) Limited, a companylisted on the TSX Venture Exchange of Canada.

 

Ted (Ying Tat) Chan joined our board in September 2008.  Since November 2008, Mr. Chan has served as president ofAltira Macau (previously know as Crown Macau), which is one of the casino hotel complexes owned and operated by MelcoCrown Entertainment Limited, a Nasdaq listed gaming and entertainment companyapproximately 38% owned by Melco International Development Limited. Prior tothat, he was the chief executive officer of Amax Entertainment HoldingsLimited, an investment holding and gaming and entertainment business company,from December 2007 to November 2008. From August 2007 to December 2007, Mr. Chan was head ofspecial projects in the office of the chairman and chief executive officer ofMelco Crown Entertainment Limited.  From November 2006to August 2007, Mr. Chan served as chief executive officer of MochaClubs, an electronic gaming machines division of Melco CrownEntertainment.  From June 2002 to October 2006,Mr. Chan served as assistant to the group managing director of Melco InternationalDevelopment Limited.

 

Anthony (Kanhee) Tyen, Ph.D. joined our boardin September 2008.  Dr. Tyenhas been in the past five years the proprietor of his own accountancy andconsulting practice, Anthony Tyen & Co., which he founded in 1985. Dr. Tyenis a certified public accountant in Hong Kong and has over 30 years’ experiencein auditing, accounting, management and company secretarial practice.  He holds a doctoral degree in philosophy anda master degree in business administration, both from the Chinese University of

 

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Hong Kong. He is an associate member of theHong Kong Institute of Certified Public Accountants, a fellow member of boththe Association of Chartered Certified Accountants and the Institute ofChartered Secretaries and Administrators, and a member of the Chinese Instituteof Certified Public Accountants. Dr. Tyen is an independent non-executivedirector and member of the audit committee of Recruit Holdings Limited andValue Convergence Holdings Limited, both of whose securities are listed on theHong Kong Stock Exchange.

 

Daniel (Sui Leung) Sham joined our board in September 2008.  Mr. Sham is a chartered accountant inEngland and Wales, and worked as a certified public accountant in Hong Kong forover 20 years.  He was a partner ofMoores Rowland Mazars for 14 years until he retired on December 31,2003.  After his retirement, he rejoinedMoores Rowland Mazars as a consultant in late 2004 and worked in that capacityuntil March 2006.  Moreover, he isan independent non-executive director and member of audit committee of ValueConvergence Holdings Limited and AEON Stores (Hong Kong) Co. Limited, both ofwhose securities are listed on the Hong Kong Exchange, since 2004.  Mr. Sham graduated with a bachelor ofarts in economics at University of Leeds. He was a member of the AuditingStandard Committee, the Expert Panel on Listing and the Expert Panel onSecurities and the Accountants’ Report Task Force of the Hong Kong Institute ofCertified Public Accountants. He was also a member of the Disciplinary Panel ofHong Kong Institute of Certified Public Accountants.  Mr. Sham is also an independent non-executivedirector and member of audit committee of Melco.

 

**AdditionalInformation About our Board and its Committees**

 

We continue to monitor the rules andregulations of the Securities and Exchange Commission (“SEC”) and the NYSE Amexto ensure that a majority of our board remains composed of “independent”directors. All of our directors except Clarence Chung, Samuel Tsang and TedChan are considered by our board of directors to be “independent” as defined inSection 803(A)(2) of the NYSE Amex Company Guide.  Our board of directors has formed an auditcommittee, a nominating committee, and a compensation committee, all of whichoperate under written charters.  Each ofthe members of these board committees are considered by our board of directorsto be “independent” as defined in Section 803(A)(2) of the NYSE AmexCompany Guide.

 

There has been no change to the procedure bywhich our securities holders may recommend nominees to our board of directorsfrom the procedures last announced in our proxy statement filed with theSecurities and Exchange Commission on August 20, 2008.

 

***Audit Committee***

 

During fiscal 2008, our audit committee wasinitially comprised of Vincent DiVito, Maj. Gen. Paul Harvey and JohnCrawford.  In November 2008, Mr. Shamwas added to the audit committee.  Mr. DiVitoserves as the audit committee chair.  Ouraudit committee has the responsibility of selecting the firm that will serve asour independent public accountants, approving and reviewing the scope andresults of the audit and any non-audit services provided by the independentpublic accountants and meeting with our financial staff to review internalcontrol, procedures and policies.

 

We have identified Mr. DiVito as theaudit committee financial expert. Mr. DiVito is the chief financialofficer of Lonza America and he is also a certified public accountant and acertified management accountant. All members of our audit committee areindependent, as independence for audit committee members is defined in Section 803(A)(2) ofthe NYSE Amex Company Guide. In addition, Mr. Sham, General Harvey and Mr. Crawfordeach meet the definition of “financially sophisticated” as defined in Section 803(B)(2) ofthe NYSE Amex Company Guide.

 

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***Compensation Committee***

 

During fiscal 2008, our compensationcommittee was initially comprised of Maj. Gen. Paul Harvey, Vincent DiVito, andRobert Miodunski.  Mr. Miodunski servedas compensation committee chair until his resignation from the board in May 2008.  Major General Harvey was selected to be thechair in August 2008.  In November 2008,Dr. Tyen was added to the compensation committee.  Our compensation committee has theresponsibility of setting executive compensation guidelines, administering ourstock incentive plans and approving compensation of our executive officers andmembers of the board of directors.  Indetermining the compensation to be paid to our executive officers, ourcompensation committee took into consideration the recommendations of PureCompensation LLC, an independent compensation consulting firm retained directlyby the compensation committee.

 

***Compensation Committee Interlocks and Insider Participation***

 

No member of our current board of directorsis employed by us or our subsidiaries except for Clarence Chung, who ispresently employed as our chief executive officer.  None of our executive officers serve on theboard of directors of another entity, one of whose executive officers serves onthe compensation committee of our board of directors.

 

*****Code of Ethics*****

 

We have adopted a Code of Ethics that appliesto our directors and employees (including our principal executive officer,principal financial officer, principal accounting officer or controller, orpersons performing similar functions), and have posted the text of the policyon our website (www.elixirgaming.com). If we make any substantive amendments to our Code of Ethics or grant anywaivers, including any implicitwaiver, from a provision of the code to our chief executive officer, chieffinancial officer, chief accounting officer or corporate controller, we willdisclose the nature of such amendmentsor waivers on our website or ina current report on Form 8-K.

 

**Item11.****Executive Compensation**

 

**SummaryCompensation Table**

 

The following table sets forth thecompensation awarded to, earned by or paid to, our current chief executiveofficer and our former chief executive officer during the fiscal year ended December 31,2008 and our other two then highest paid executive officers earning in excessof $100,000 for services rendered in all capacities at the end of the fiscalyear ended December 31, 2008.  Mr. Chunghas served as our chief executive officer since October 1, 2008. Mr. Yuenserved as our chief executive officer from September 2007 to October 1,2008.  Mr. Pisano served as ourexecutive vice president from September 2007 to March 31, 2009.  Mr. Reberger served as our chieffinancial officer from September 2007 to August 15, 2008.

 
| **Name and Principal  Position(a)** | ** ** | **Year  (b)** | ** ** | **Salary  (c)** | ** ** | **Bonus  (d)** | ** ** | **Option  Awards  (e)** | ** ** | **All Other  Compensation  (f)** | ** ** | **Total  (g)** | ** ** |
|-----------------------------------------------|------------|---------------|------------|-----------------|------------|----------------|------------|-------------------------|------------|---------------------------------------|------------|----------------|------------|
| Clarence Chung, CEO                           |       | 2008          |       | $               | —     |           | $          | —                  |       | $                                     | 254,901    |           | $          | — |   | $ | 254,901 |   |
|                                          |       | 2007          |       | $               | —     |           | $          | —                  |       | $                                     | 2,202      |           | $          | — |   | $ | 2,202 |   |
| Gordon Yuen, CEO***(former)*                  |       | 2008          |       | $               | 318,750    |           | $          | —                  |       | $                                     | 310,307    |           | $          | 378,142 |   | $ | 1,007,199 |   |
|                                          |       | 2007          |       | $               | 115,032    |           | $          | 350,000                 |       | $                                     | 194,013    |           | $          | 18,500 |   | $ | 677,545 |   |
| Joe Pisano, Executive VP                      |       | 2008          |       | $               | 295,000    |           | $          | —                  |       | $                                     | 970,442    |           | $          | 119,750 |   | $ | 1,385,192 |   |
|                                          |       | 2007          |       | $               | 89,855     |           | $          | 195,000                 |       | $                                     | 87,306     |           | $          | 27,056 |   | $ | 399,217 |   |
| David Reberger, CFO***(former)*               |       | 2008          |       | $               | 170,766    |           | $          | —                  |       | $                                     | —     |           | $          | 131,317 |   | $ | 302,083 |   |
|                                          |       | 2007          |       | $               | 84,792     |           | $          | 195,000                 |       | $                                     | 32,335     |           | $          | 18,500 |   | $ | 330,627 |   |

 

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The dollar amounts in column (e) reflectthe dollar amounts recognized for financial statement reporting purposes forthe fiscal years ended December 31, 2008 and 2007 in accordance with FAS123(R).  Assumptions used in thecalculation of these amounts are included in footnote (1) to our auditedfinancial statements for the fiscal year ended December 31, 2008 includedin our annual report on Form 10-K for the year ended December 31,2008 filed with the SEC on March 30, 2009.

 

**NarrativeDisclosure to Summary Compensation Table**

 

***Clarence Chung***

 

The options awardedto Mr. Chung, our current chief executive officer, during 2008 include2,130,000 options to purchase shares of our common stock as set forth in thetable, “Outstanding Equity Awards at Fiscal Year-End,” below.  In March 2009, the compensation committee of our board ofdirectors approved the following compensation for Mr. Chung, the terms ofwhich were included in a written employment agreement entered into between us and Mr. Chung on April 20,2009:

 
| · | a term commencing from October 1, 2008 to December 31, 2009  and may be renewed thereafter subject to further agreement between the  parties;                                                                                                                                               |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                  |
| · | an annual salary of $1; and                                                                                                                                                                                                                                                                           |
|   |                                                                                                                                                                                                                                                                                                  |
| · | a discretionary performance bonus of such amount and form (whether in  cash or in kind) to be determined by our compensation committee payable upon  achievement of certain objectives set by our compensation committee and at  such time as may be deemed appropriate by our compensation committee |

 

***Gordon Yuen***

 

The options awardedto Mr. Yuen, our former chief executive officer, during 2008 includeoptions to purchase 1,872,269 shares of our common stock as set forth in thetable, “Outstanding Equity Awards at Fiscal Year-End,” below.  In January 2008, the compensation committee of our board ofdirectors approved the following compensation for Mr. Yuen, the terms ofwhich were included in a written employment agreement entered into between us and Mr. Yuen:

 
| · | an annual salary of $425,000;                                                                                                                                                                                  |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                           |
| · | an annual cash bonus of up to $150,000 payable upon the achievement  of certain objectives set by our compensation committee;                                                                                  |
|   |                                                                                                                                                                                                           |
| · | a housing allowance of $5,000 per month for so long as Mr. Yuen  maintains a home in Hong Kong;                                                                                                           |
|   |                                                                                                                                                                                                           |
| · | options to purchase up to 672,269 shares at an exercise price of $4.59  which vest in three equal annual installments commencing on November 14,  2008; and                                               |
|   |                                                                                                                                                                                                           |
| · | options to purchase up to 1.2 million shares of common stock at  exercise prices ranging from  $3.50 to $7.50 per share and  vesting in three equal annual installments commencing on February 12,  2009. |

 

Pursuant to a severance agreement dated November 11,2008, Mr. Yuen has agreed that all rights and compensation under hisemployment agreement with us, other than obligations of confidentiality and thelike, will expire. According to the terms of the employment agreement, we wererequired to pay Mr. Yuen $425,000. Nevertheless, according to theseverance agreement, Mr. Yuen accepted a lesser amount of $318,750 fromus.  Also, we agreed to waive all vestingand early termination provisions of Mr. Yuen’s option to purchase1,200,000 shares of our common stock at an exercise price of $2.90 per share.According to the severance agreement, all such options are exercisable andexpire on December 31, 2010 and all other options previously granted by usto him expired on January 1, 2009.

 

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***Joe Pisano***

 

The options awardedto Mr. Pisano, ourformer executive vice president, during2008 include options to purchase 1,436,135 shares of our common stock as setforth in the table, “Outstanding Equity Awards at Fiscal Year-End,” below.  In January 2008, the compensationcommittee of our board of directors approved the following compensation for Mr. Pisano,the terms of which were included in a written employment agreement entered into between us and Mr. Pisano:

 
| · | an annual salary of $300,000;                                                                                                                                                                                         |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                  |
| · | an annual cash bonus of up to $87,500 payable upon the achievement of  certain objectives set by our compensation committee;                                                                                          |
|   |                                                                                                                                                                                                                  |
| · | a housing allowance of $5,000 per month for so long as  Mr. Pisano maintains a home in the Philippines and an education  allowance of $2,500 per child for up to two children until the child reaches  grade 12; |
|   |                                                                                                                                                                                                                  |
| · | options to purchase up to 336,135 shares at an exercise price of  $4.59 which vest in three equal annual installments commencing on  November 14, 2008; and                                                      |
|   |                                                                                                                                                                                                                  |
| · | options to purchase up to one million shares of common stock at  exercise prices ranging from  $3.50 to $7.50 per share and vesting in three equal  annual installments commencing on February 12, 2009.         |

 

Pursuant to a severance agreement dated March 31,2009, Mr. Pisano has agreed that all rights and compensation under hisemployment agreement with us, other than obligations of confidentiality and thelike, will expire. According to the terms of the employment agreement, we werecontractually obliged to pay Mr. Pisano a payment in lieu of notice of$300,000. Also, we agreed to waive the vesting requirements and an extension ofthe termination date to January 1, 2011 with respect to 100,000 optionsgranted to Mr. Pisano on December 12, 2008 and 50,000 options grantedto Mr. Pisano on February 12, 2009 (with all other options previouslygranted to Mr. Pisano to expire on June 1, 2009).

 

***David Reberger***

 

The options awardedto Mr. Reberger, our former chief financial officer, during 2008 includeoptions to purchase 1,336,135 shares of our common stock as set forth in thetable, “Outstanding Equity Awards at Fiscal Year-End,” below.  In January 2008, the compensation committee of our board ofdirectors approved the following compensation for Mr. Reberger, the termsof which were included in a written employment agreement entered into between us and Mr. Reberger:

 
| · | an annual salary of $275,000;                                                                                                                                                                                |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                         |
| · | a discretionary annual cash bonus of up to $87,500 payable upon the  achievement of certain objectives set by our compensation committee;                                                                    |
|   |                                                                                                                                                                                                         |
| · | a housing allowance of $5,000 per month for so long as  Mr. Reberger maintains a home in Australia;                                                                                                     |
|   |                                                                                                                                                                                                         |
| · | options to purchase up to 336,135 shares at an exercise price of  $4.59 which vest in three equal annual installments commencing on  November 14, 2008; and                                             |
|   |                                                                                                                                                                                                         |
| · | options to purchase up to one million shares of common stock at  exercise prices ranging from $3.50 to $7.50 per share and vesting in three equal  annual installments commencing on February 12, 2009. |

 

Mr. Reberger resigned as our chieffinancial officer on August 13, 2008. Pursuant to a severance agreementdated August 15, 2008, Mr. Reberger has agreed that all rights andcompensation under his employment agreement with us (other than obligations ofconfidentiality and the like) will expire. However, Mr. Reberger alsoagreed that after termination of the employment, he would serve as a consultantto us through December 31, 2008. Pursuant to the severance agreement, we had paid Mr. Reberger from August 13,2008 onwards, a consulting fee of $22,920 per month and a housing subsidy of$5,000 per month, or ratable portion thereof for periods of less than onemonth, through December 31, 

 

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2008.  During the term of theconsultancy, we continued to provide Mr. Reberger, at our expense, withthe same health insurance provided to him while he was chief financial officer.We have agreed to waive all vesting and early termination provisions of Mr. Reberger’soption to purchase 200,000 shares of our common stock at an exercise price of$2.90 per share.  According to theseverance agreement, all such options are exercisable and expire on December 31,2010 and all other options previously granted by us to him expired on January 1,2009.

 

**OutstandingEquity Awards at Fiscal Year-End 2008**

 

**Option Awards**

 
| **Name (a)**  | ** ** | **Number of  Securities  Underlying  Unexercised  Options (#)  Exercisable  (b)** | ** ** | **Number of  Securities  Underlying  Unexercised  Options (#)  Unexercisable  (c)** | ** ** | **Equity  Incentive  Plan  Awards:  Number of  Securities  Underlying  Unexercised  Unearned  Options (#)  (d)** | ** ** | **Option  Exercise  Price (e)** | ** ** | **Option  Expiration  Date  (mm/dd/yyyy)  (f)** | ** ** |
|--------------------|------------|---------------------------------------------------------------------------------------------|------------|-----------------------------------------------------------------------------------------------|------------|----------------------------------------------------------------------------------------------------------------------------|------------|--------------------------------------|------------|-------------------------------------------------|------------|
| ** **         |       |                                                                                        |       |                                                                                          |       |                                                                                                                       |       |                                 |       |                                            |       |
| **Clarence Chung** |       | 66,666                                                                                      | (1)        | 133,334                                                                                       | (1)        | —                                                                                                                     |       | $                                    | 2.90       |                                            | 05/17/2012 |   |
|               |       | 30,000                                                                                      | (2)        | —                                                                                        |       | —                                                                                                                     |       | $                                    | 3.62       |                                            | 01/22/2018 |   |
|               |       | 100,000                                                                                     | (3)        | —                                                                                        |       | —                                                                                                                     |       | $                                    | 4.59       |                                            | 11/14/2017 |   |
|               |       | —                                                                                      |       | 2,000,000                                                                                     | (4)        | —                                                                                                                     |       | $                                    | 0.17       |                                            | 12/29/2013 |   |
| ** **         |       |                                                                                        |       |                                                                                          |       |                                                                                                                       |       |                                 |       |                                            |       |
| **Gordon Yuen**    |       | 400,000                                                                                     | (5)        | 800,000                                                                                       | (5)        | —                                                                                                                     |       | $                                    | 2.90       |                                            | 01/01/2011 |   |
|               |       | —                                                                                      |       | 400,000                                                                                       | (6)        | —                                                                                                                     |       | $                                    | 3.50       |                                            | 01/01/2009 |   |
|               |       | —                                                                                      |       | 200,000                                                                                       | (6)        | —                                                                                                                     |       | $                                    | 4.50       |                                            | 01/01/2009 |   |
|               |       | —                                                                                      |       | 200,000                                                                                       | (6)        | —                                                                                                                     |       | $                                    | 5.50       |                                            | 01/01/2009 |   |
|               |       | —                                                                                      |       | 200,000                                                                                       | (6)        | —                                                                                                                     |       | $                                    | 6.50       |                                            | 01/01/2009 |   |
|               |       | —                                                                                      |       | 200,000                                                                                       | (6)        | —                                                                                                                     |       | $                                    | 7.50       |                                            | 01/01/2009 |   |
|               |       | —                                                                                      |       | 672,269                                                                                       | (7)        | —                                                                                                                     |       | $                                    | 4.59       |                                            | 01/01/2009 |   |
| ** **         |       |                                                                                        |       |                                                                                          |       |                                                                                                                       |       |                                 |       |                                            |       |
| **Joe Pisano**     |       | 180,000                                                                                     | (8)        | 360,000                                                                                       | (8)        | —                                                                                                                     |       | $                                    | 2.90       |                                            | 06/01/2009 |   |
|               |       | —                                                                                      |       | 200,000                                                                                       | (9)        | —                                                                                                                     |       | $                                    | 3.50       |                                            | 06/01/2009 |   |
|               |       | —                                                                                      |       | 200,000                                                                                       | (9)        | —                                                                                                                     |       | $                                    | 4.50       |                                            | 06/01/2009 |   |
|               |       | —                                                                                      |       | 200,000                                                                                       | (9)        | —                                                                                                                     |       | $                                    | 5.50       |                                            | 06/01/2009 |   |
|               |       | —                                                                                      |       | 200,000                                                                                       | (9)        | —                                                                                                                     |       | $                                    | 6.50       |                                            | 06/01/2009 |   |
|               |       | —                                                                                      |       | 200,000                                                                                       | (9)        | —                                                                                                                     |       | $                                    | 7.50       |                                            | 06/01/2009 |   |
|               |       | 112,045                                                                                     | (10)       | 224,090                                                                                       | (10)       | —                                                                                                                     |       | $                                    | 4.59       |                                            | 06/01/2009 |   |
|               |       | —                                                                                      |       | 100,000                                                                                       | (11)       | —                                                                                                                     |       | $                                    | 0.08       |                                            | 01/01/2011 |   |
| ** **         |       |                                                                                        |       |                                                                                          |       |                                                                                                                       |       |                                 |       |                                            |       |
| **David Reberger** |       | 66,666                                                                                      | (12)       | 133,334                                                                                       | (12)       | —                                                                                                                     |       | $                                    | 2.90       |                                            | 01/01/2011 |   |
|               |       | —                                                                                      |       | 200,000                                                                                       | (13)       | —                                                                                                                     |       | $                                    | 3.50       |                                            | 01/01/2009 |   |
|               |       | —                                                                                      |       | 200,000                                                                                       | (13)       | —                                                                                                                     |       | $                                    | 4.50       |                                            | 01/01/2009 |   |
|               |       | —                                                                                      |       | 200,000                                                                                       | (13)       | —                                                                                                                     |       | $                                    | 5.50       |                                            | 01/01/2009 |   |
|               |       | —                                                                                      |       | 200,000                                                                                       | (13)       | —                                                                                                                     |       | $                                    | 6.50       |                                            | 01/01/2009 |   |
|               |       | —                                                                                      |       | 200,000                                                                                       | (13)       | —                                                                                                                     |       | $                                    | 7.50       |                                            | 01/01/2009 |   |
|               |       | 112,045                                                                                     | (14)       | 224,090                                                                                       | (14)       | —                                                                                                                     |       | $                                    | 4.59       |                                            | 01/01/2009 |   |

 

----

| (1)    |   | We granted Mr. Chung  200,000 options as of September 10, 2007. Such options vest and become  exercisable as follows: 66,666 options vest on May 17, 2008; 66,666  options vest on May 17, 2009; and the final 66,668 options vest on  May 17, 2010. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                          |
| (2)    |   | We granted Mr. Chung  30,000 options as of January 22, 2008. Such options vested and became  exercisable on July 23, 2008.                                                                                                                                     |
|   |   |                                                                                                                                                                                                                                                                          |
| (3)    |   | We granted Mr. Chung  100,000 options as of February 12, 2008. Such options vested and became  exercisable on May 15, 2008.                                                                                                                                    |
|   |   |                                                                                                                                                                                                                                                                          |
| (4)    |   | We granted Mr. Chung  2,000,000 options as of December 29, 2008. Such options vest and become  exercisable on December 29, 2009.                                                                                                                               |

 

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| (5)    |   | We granted Mr. Yuen  1,200,000 options as of September 10, 2007. Such options vest and become  exercisable in 400,000 share installments over three years starting on  May 17, 2008. Pursuant to the severance agreement with Mr. Yuen  entered into in November 2008, we have agreed to waive all vesting  conditions and early termination provisions relating to these options. All  options are exercisable and expire on December 31, 2010.                                                                               |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| (6)    |   | We granted Mr. Yuen  1,200,000 options as of February 12, 2008. Such options vest and become  exercisable as follows: 399,997 options vest on February 12, 2009;  400,001 options vest on February 12, 2010; and 400,002 options vest on  February 12, 2010. Pursuant to the severance agreement with  Mr. Yuen entered into in October 2008, all such options were  exercisable until December 31, 2008 and expired on January 1, 2009.                                                                        |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| (7)    |   | We granted Mr. Yuen  672,269 options as of February 12, 2008. Such options vest and become  exercisable as follows: 224,089 options vest on November 14, 2008;  224,089 options vest on November 14, 2009; and 224,091 options vest on  November 14, 2010. Pursuant to the severance agreement with  Mr. Yuen entered into in October 2008, all such options were  exercisable until December 31, 2008 and expired on January 1, 2009.                                                                          |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| (8)    |   | We granted Mr. Pisano  540,000 options as of September 10, 2007. Such options vest and become  exercisable in 180,000 share installments over three years starting on  May 17, 2008. Pursuant to the severance agreement with Mr. Pisano  entered into in March 2009, all such options shall be exercisable until  May 31, 2009 and will expire on June 1, 2009.                                                                                                                                                          |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| (9)    |   | We granted Mr. Pisano  1,000,000 options as of February 12, 2008. Such options vest and become  exercisable as follows: 333,330 options vest on February 12, 2009;  333,335 options vest on February 12, 2010; and 333,335 options vest on  February 12, 2010. Pursuant to the severance agreement with  Mr. Pisano entered into in March 2009, all such options shall be  exercisable until May 31, 2009 and will expire on June 1, 2009.                                                                      |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| (10)   |   | We granted Mr. Pisano  336,135 options as of February 12, 2008. Such options vest and become  exercisable in 112,045 share installments over three years starting on  November 14, 2008. Pursuant to the severance agreement with  Mr. Pisano entered into in March 2009, all such options shall be  exercisable until May 31, 2009 and will expire on June 1, 2009.                                                                                                                                                      |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| (11)   |   | We granted Mr. Pisano  100,000 options as of December 11, 2008. Such options vest and become  exercisable as follows: 33,333 options vest on December 11, 2009; 33,333  options vest on December 11, 2010; and 33,334 options vest on December 11,  2011. Pursuant to the severance agreement with Mr. Pisano entered into  in March 2009, we have agreed to waive all vesting conditions and early  termination provisions relating to these options. All options are exercisable  and expire on December 31, 2010. |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| (12)   |   | We granted  Mr. Reberger 200,000 options as of September 10, 2007. Such options  vest and become exercisable as follows: 66,666 options vest on May 17,  2008; 66,666 options vest on May 17, 2009; and 66,668 options vest on  May 17, 2010. Pursuant to the severance agreement with Mr. Reberger  entered into in August 2008, we have agreed to waive all vesting  conditions and early termination provisions relating to these options. All  options are exercisable and expire on December 31, 2010.          |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| (13)   |   | We granted  Mr. Reberger 1,000,000 options as of February 12, 2008. Such  options vest and become exercisable as follows: 333,330 options vest on  February 12, 2009; 333,335 options vest on February 12, 2010; and  333,335 options vest on February 12, 2010. Pursuant to the severance agreement  with Mr. Reberger entered into in August 2008, all such options  were exercisable until December 31, 2008 and expired on January 1,  2009.                                                                |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| (14)   |   | We granted  Mr. Reberger 336,135 options as of February 12, 2008. Such options  vest and become exercisable in 112,045 share installments over three years  starting on November 14, 2008. Pursuant to the severance agreement with  Mr. Reberger entered into in August 2008, all such options were  exercisable until December 31, 2008 and expired on January 1, 2009.                                                                                                                                                 |

 

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**2008Director Compensation Table**

 
| **Name**             | ** ** | **Fees Earned  or Paid  in Cash  (b)** | ** ** | **Stock  Awards  (c)** | ** ** | **Option  Awards  (d)(1)** | ** ** | **Non-Equity  Incentive Plan  Compensation  (e)** | ** ** | **Change in  Pension  Value and  Nonqualified  Deferred  Compensation  Earnings  (f)** | ** ** | **All Other  Compensation  (g)** | ** ** | **Total  (h)** | ** ** |
|----------------------|------------|-------------------------------------------------------|------------|------------------------|------------|----------------------------|------------|--------------------------------------------------------|------------|--------------------------------------------------------------------------------------------------|------------|---------------------------------------|------------|----------------|------------|
| Vincent DiVito       |       | $                                                     | 90,000     |                   | $          | —                     |       | $                                                      | 54,279     |                                                                                             | $          | —                                |       | $              | —     |   | $ | — |   | $ | 144,279 |   |
| Paul Harvey          |       | $                                                     | 60,000     |                   | $          | —                     |       | $                                                      | 54,279     |                                                                                             | $          | —                                |       | $              | —     |   | $ | — |   | $ | 114,279 |   |
| Lorna Patajo-Kapunan |       | $                                                     | 60,000     |                   | $          | —                     |       | $                                                      | 252,815    |                                                                                             | $          | —                                |       | $              | —     |   | $ | — |   | $ | 312,815 |   |
| John Crawford        |       | $                                                     | 60,000     |                   | $          | —                     |       | $                                                      | 245,469    |                                                                                             | $          | —                                |       | $              | —     |   | $ | — |   | $ | 305,469 |   |
| Ted Chan             |       | $                                                     | 15,000     |                   | $          | —                     |       | $                                                      | 503        |                                                                                             | $          | —                                |       | $              | —     |   | $ | — |   | $ | 15,503 |   |
| Daniel Sham          |       | $                                                     | 15,000     |                   | $          | —                     |       | $                                                      | 503        |                                                                                             | $          | —                                |       | $              | —     |   | $ | — |   | $ | 15,503 |   |
| Anthony Tyen         |       | $                                                     | 15,000     |                   | $          | —                     |       | $                                                      | 503        |                                                                                             | $          | —                                |       | $              | —     |   | $ | — |   | $ | 15,503 |   |
| Samuel Tsang         |       | $                                                     | —     |                   | $          | —                     |       | $                                                      | 29,231     |                                                                                             | $          | —                                |       | $              | —     |   | $ | — |   | $ | 29,231 |   |

 

The dollar amounts in column (d) reflectthe dollar amount recognized for financial statement reporting purposes for thefiscal year ended December 31, 2008, in accordance with FAS 123(R).Assumptions used in the calculation of these amounts are included in footnote (1) toour audited financial statements for the fiscal year ended December 31,2008 included in our annual report on Form 10-K for the year ended December 31,2008 filed with the SEC on March 30, 2009.

 

Non-employee members of our board ofdirectors received an initial grant of 100,000 options and, effective as of December 2008,an annual grant of 50,000 options. The exercise price of such options is themarket price of our common stock on the date of grant. Our directors arereimbursed for their out-of-pocket expenses related to their services asdirectors or meeting attendances. Commencing November 2007, members of ourboard of directors that are not employees receive a quarterly fee of $15,000.The chairman of our audit committee receives an additional $7,500 per quarter. Inaddition, upon joining the board, Messrs. DiVito and Harvey each receivedoptions to purchase 100,000 shares of common stock at an exercise price of$1.34 per share over a three year term pursuant to our Amended and Restated1999 Stock Option Plan; and each received a grant of 50,000 shares of commonstock which accrued in increments of 10,000 shares over the five fiscalquarters beginning in September 2005.

 

Since Mr. Samuel Tsang also serves as anemployee of MelcoInternational Development Limited and according to Melco’s latest policy, hehas unconditionally waived all his entitlements to the aforesaid quarterly fee.Based on the same reason, Mr. Clarence Chung has unconditionally waivedall his entitlements to the relevant quarterly fee which he was otherwiseentitled prior to his appointment as our chief executive officer in October 2008.

 

**SEC Position on Certain****Indemnification****Arrangements**

 

Our articles of incorporation obligate us toindemnify our directors and officers to the fullest extent permitted underNevada law. Chapter 78 of the Nevada Revised Statutes provides forindemnification by a corporation of costs incurred by directors, employees, andagents in connection with an action, suit, or proceeding brought by reason oftheir position as a director, employee, or agent. The person being indemnifiedmust have acted in good faith and in a manner he reasonably believed to be inor not opposed to the best interests of the corporation.

 

Insofar as indemnification for liabilitiesarising under the Securities Act may be permitted to our directors, officers orpersons controlling us pursuant to the provisions contained in our amended andrestated articles of incorporation, our amended and restated bylaws, Nevada lawor otherwise, we have been informed that, in the opinion of the SEC, suchindemnification is against public policy as expressed

 

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in the Securities Act and is thereforeunenforceable. If a claim for indemnification against such liabilities, otherthan the payment by us of expenses incurred or paid by one of our directors,officers or controlling persons in the successful defense of any action, suit,or proceeding, is asserted by such director, officer or controlling person, wewill, unless in the opinion of our counsel the matter has been settled bycontrolling precedent, submit to a court of appropriate jurisdiction thequestion whether such indemnification by us is against public policy asexpressed in the Securities Act and will be governed by the final adjudicationof this issue.

 

**IndemnificationAgreements**

 

We have entered into indemnificationagreements with members of our board of directors and certain other employeesin which we agreed to hold harmless and indemnify such directors, officers andemployees to the fullest extent authorized under Nevada law, and to pay any andall related expenses reasonably incurred by the indemnitee. The relevant membersof our board of directors are Mr. Clarence Chung, Ms. LornaPatajo-Kapunan, Mr. Vincent L. DiVito, Major General Paul A. Harvey, Mr. JohnCrawford, Mr. SamuelTsang, Mr. Ted Chan, Dr. Anthony Tyen and Mr. Daniel Sham.

 

**Section 16(A) BeneficialOwnership Reporting Compliance**

 

Rules adopted by the SEC under Section 16(a) ofthe Securities Exchange Act of 1934, or the Exchange Act, require our officersand directors, and persons who own more than 10% of the issued and outstandingshares of our equity securities, to file reports of their ownership, andchanges in ownership, of such securities with the SEC on Forms 3, 4 or 5, asappropriate. Such persons are required by the regulations of the SEC to furnishus with copies of all forms they file pursuant to Section 16(a).

 

Based solely upon a review of Forms 3, 4 and5 and amendments thereto furnished to us during our most recent fiscal year,and any written representations provided to us, we believe that all of theofficers, directors, and owners of more than ten percent of the outstandingshares of our common stock complied with Section 16(a) of theExchange Act for the year ended December 31, 2008, except as follows:

 
| · |   | Lorna Patajo-Kapunan, a  member of our board of directors, conducted a late filing of Form 4 to  report the grant of options;                        |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                      |
| · |   | Ted (Ying Tat) Chan, a member of our board of directors, conducted a  late filing of Form 3 to report his election to our board of directors;        |
|   |   |                                                                                                                                                      |
| · |   | Ted (Ying Tat) Chan, a member of our board of directors, conducted a  late filing of Form 4 to report the grant of options;                          |
|   |   |                                                                                                                                                      |
| · |   | Daniel (Sui Leung) Sham, a member of our board of directors,  conducted a late filing of Form 3 to report his election to our board of  directors;   |
|   |   |                                                                                                                                                      |
| · |   | Anthony (Kanhee) Tyen, a member of our board of directors, conducted  a late filing of Form 3 to report his election to our board of  directors; and |
|   |   |                                                                                                                                                      |
| · |   | Samuel (Yuen Wai) Tsang, a member of our board of directors,  conducted a late filing of Form 3 to report his election to our board of  directors.   |

 

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**Item12.****Security Ownership of CertainBeneficial Owners and Management and Related Stockholder Matters**

 

The table below sets forth the beneficialownership of our common stock, as of April 24, 2009, by:

 
| · | All of our current directors and executive officers, individually;                         |
|--------|--------------------------------------------------------------------------------------------|
|   |                                                                                       |
| · | All of our current directors and executive officers, as a group; and                       |
|   |                                                                                       |
| · | All persons known to us to beneficially own more than 5% of our  outstanding common stock. |

 

The beneficial ownership of each person wascalculated based on 114,956,667 shares of our common stock outstanding as of April 24,2009, according to the record ownership listings as of that date, thebeneficial ownership reports filed by 5% beneficial owners with the SEC and theverifications we solicited and received from each director and executiveofficer. The SEC has defined “beneficial ownership” to mean more than ownershipin the usual sense. For example, a person has beneficial ownership of a sharenot only if he owns it in the usual sense, but also if he has the power tovote, sell or otherwise dispose of the share. Beneficial ownership alsoincludes the number of shares that a person has the right to acquire within 60days of April 24, 2009, pursuant to the exercise of options or warrants orthe conversion of notes, debentures or other indebtedness, but excludes stockappreciation rights. Two or more persons might count as beneficial owners ofthe same share. Unless otherwise noted, the address of the following personslisted below is c/o Elixir Gaming Technologies, Inc., 6650 Via AustiParkway, Suite 170, Las Vegas, Nevada 89119.

 
| **Name of Director, Executive Officer or Nominee** | ** ** | **Shares (1)** | ** ** | **Percentage** | ** ** |
|----------------------------------------------------------------------------------|------------|---------------------|------------|----------------|------------|
| Clarence (Yuk Man) Chung                                                         |       | 263,332             | (2)        | *              |       |
| Andy (Kin Ming) Tsui                                                             |       | —              |       |           |       |
| Paul A. Harvey                                                                   |       | 195,000             | (3)        | *              |       |
| Vincent L. DiVito                                                                |       | 195,000             | (3)        | *              |       |
| Lorna Patajo-Kapunan                                                             |       | 145,000             | (2)        | *              |       |
| John Crawford                                                                    |       | 130,000             | (2)        | *              |       |
| Anthony (Kanhee) Tyen                                                            |       | 100,000             | (2)        | *              |       |
| Daniel (Sui Leung) Sham                                                          |       | 100,000             | (2)        | *              |       |
| Ted (Ying Tat) Chan                                                              |       | 100,000             | (2)        | *              |       |
| Samuel (Yuen Wai) Tsang                                                          |       | 566,666             | (2)        | *              |       |
|                                                                             |       |                |       |           |       |
| All directors and executive officers as a  group (10 persons)                    |       |                |       | 1.6            | %          |

 
| **Name and Address of 5% Holder**                       | ** ** | ** ** | ** ** | ** ** | ** ** |
|----------------------------------------------------------------------------------|------------|------------|------------|------------|------------|
| Elixir Group  Limited  38/F, The Centrium  60 Wyndham Street  Central, Hong Kong |       | 55,800,000 | (4)        | 48.5       | %          |
|                                                                             |       |       |       |       |       |
| James E.  Crabbe  Portland, Oregon                                               |       | 8,528,600  | (5)        | 7.4        | %          |

 

----

| (1)    |   | Unless otherwise noted,  the persons identified in this table have sole voting and sole investment  power with regard to the shares beneficially owned by them. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                            |
| (2)    |   | Represents common shares  issuable upon the exercise of stock options.                                                                                          |
|   |   |                                                                                                                                                            |
| (3)    |   | Includes 50,000 shares  held directly and 145,000 shares issuable upon the exercise of stock options.                                                           |

 

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| (4)    |   | Includes 10 million shares  underlying vested and immediately exercisable warrants. The shares are owned  directly by Elixir Group, which  is the indirect wholly-owned subsidiary of Melco International Development  Limited. Melco is the indirect beneficial owner of the reported securities. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                               |
| (5)    |   | Includes 6,027,593 shares  held directly by Mr. Crabbe, 40,600 shares issuable upon the exercise of  stock options and 2,460,407 shares held by Mr. Crabbe, as Trustee of the  James E. Crabbe Revocable Trust.                                                                          |

 

**Change inControl**

 

On September 10, 2007, we underwent achange in control and a resultant change in our business model pursuant to aSecurities Purchase and Product Participation Agreement (“Product ParticipationAgreement”) dated June 12, 2007 between us and Elixir Group.  At the initial closing, we issued to ElixirGroup 25 million shares of our common stock and warrants to purchase anadditional 88 million shares of our common stock. On September 13, 2007,we issued an additional 15 million shares of our common stock to Elixir Grouppursuant to the Product Participation Agreement based on Elixir Group’splacement of additional electronic gaming machines. Based on the aforementionedissuances, as of September 13, 2007, we had 77,552,301 shares of ourcommon stock issued and outstanding, of which 41 million (or 52.9%) were heldby Elixir Group.  The transactions underthe Product Participation Agreement were approved by our stockholders at aspecial meeting of stockholders held on September 10, 2007.

 

In conjunction with our October 2007private placement of common shares, in October 2007 we entered into aSecurities Amendment and Exchange Agreement (the “Exchange Agreement”) withElixir Group, pursuant to which we agreed to issue to Elixir Group up to 31.2million shares of our common stock in exchange for Elixir Group’s cancellationof up to 78 million of the 88 million warrants it received under theabove-described Participation Agreement. At our annual meeting of shareholders held on December 17, 2007, amajority of our voting shares (excluding shares held by Elixir Group) voted toapprove the Exchange Agreement and our issuance of common shares to ElixirGroup in exchange for its cancellation of warrants.

 

The initial closing under the ExchangeAgreement occurred on December 17, 2007, at which time we issued 4.8million shares of our common stock to Elixir Group in exchange for itscancellation of 12 million warrants that had vested and were exercisable.  The remaining 66 million warrants subject tothe Exchange Agreement are unvested as of the date of this report and theirexercise is subject to the achievement of certain performance milestones withrespect to the placement of electronic gaming machines pursuant to the ProductParticipation Agreement.  Pursuant to theExchange Agreement, Elixir Group will cancel the remaining 66 million warrants,subject to their vesting, in return for our issuance of common shares at therate of one common share for every 2.5 warrants cancelled, or a total of 26.4million common shares if all of the 66 million warrants vest. The 66 millionwarrants were subsequently cancelled pursuant to the termination of the ProductParticipation Agreement on November 6, 2008 as mentioned below.

 

Immediately following the initial closing ofthe transactions under the Product Participation Agreement, Elixir Groupcontrolled a majority of our outstanding capital stock.  After giving effect to our sale of 31 millionshares of common stock in private placements conducted in October and December 2007and the initial closing under the Exchange Agreement, Elixir Group’s percentageownership of our company as of the date of this report has decreased to 44.7%of our outstanding capital stock, however Elixir Group remains a principal stockholder of our companyand retains the power to significantly influence all matters requiring approvalby our stockholders, including the election of directors and approval ofmergers and other significant corporate transactions.

 

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Pursuant to the Product ParticipationAgreement, Elixir Group was entitled to appoint to our board no less than threedirectors as of the initial closing under the Product Participation Agreement. The Product Participation Agreement furtherprovides that Elixir Group will at all times be entitled to appoint to ourboard of directors a pro rata share of the authorized members of our boardbased on Elixir Group’s percentage ownership of our outstanding common shares. At least one Elixir Group nominee is entitled to serve on eachcommittee of our board, provided, such Elixir Group nominee satisfies theapplicable independence requirements. At the September 10, 2007 specialmeeting of stockholders, our stockholders voted to approve the election to ourboard of directors the following nominees of Elixir Group: Mr. GordonYuen, Mr. Joe Pisano, and Ms. Lorna Patajo-Kapunan.  Ms. Kapunan was also appointed to thecompensation and nominating committees of our board of directors, and serves aschairperson of our nominating committee. In October 2007, Elixir Group nominated to our board of directors Mr. ClarenceChung pursuant to its nominating rights set forth in the Product ParticipationAgreement. Mr. Gordon Yuen and Mr. Joe Pisano resigned from theirrespective directorships with effect on October 1, 2008 and April 1,2009, respectively.

 

Pursuant to the Product ParticipationAgreement, Elixir Group has agreed that until the second anniversary of theclosing, the pre-closing shareholders of our company will be entitled to thebenefit of continued representation on our board of directors of at least twoof the three independent directors serving on the board prior to the closing.The three independent directors serving on our board prior to the closing were Mr. VincentDiVito, Mr. Robert Miodunski and Maj. Gen. Paul Harvey. Save for Mr. RobertMiodunski, who resigned from the board in May 2008, Mr. VincentDiVito and Maj. Gen. Paul Harvey continue to serve on our board as of the dateof this report.  In the event of theresignation, termination or death of any two pre-closing independent directors,the remaining pre-closing independent director shall be entitled to name areplacement.  At least one of thepre-closing independent directors shall be entitled to serve on each committeeof our board of directors, provided such director satisfies the applicableindependence requirements.

 

Having said the above, however, the ProductParticipation Agreement was subsequently terminated pursuant a letter ofagreement entered into between Elixir Group and us on November 6, 2008(the “Termination Agreement”). Details of the Termination Agreement are setforth in the section headed “Certain Relationships and Related Transactions,and Director Independence” below and in Note 15 to the financial statements ofour annual report on Form 10-K filed on March 30, 2009.

 

**EquityCompensation Plan Information**

 

At our annual shareholders meeting on September 8,2008, a new stock option plan, the “2008 Stock Incentive Plan” (the “2008 Plan”),was voted on and became effective on January 1, 2009, which replaced twoprevious plans, the Amended and Restated 1999 Stock Option Plan and the Amendedand Restated 1999 Directors’ Stock Option Plan (the “Stock Option Plans”),thereby expiring both of the Stock Option Plans on December 31, 2008.

 

The 2008 Plan allows for incentive awards toeligible recipients consisting of:

 
| · | Options to purchase shares  of common stock, that qualify as incentive stock options within the meaning  of the Internal Revenue Code; |
|--------|----------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                   |
| · | Non-statutory stock  options that do not qualify as incentive options;                                                                 |
|   |                                                                                                                                   |
| · | Restricted stock awards;  and                                                                                                          |
|   |                                                                                                                                   |
| · | Performance stock awards,  which are subject to future achievement of performance criteria or be free of  any performance or vesting.  |

 

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The maximum number of shares reserved forissuance under the 2008 Plan is 5,000,000, the exercise price shall not be lessthan 100% of the fair market value of one share of common stock on the date ofgrant, unless the participant owns more than 10% of the total combined votingpower of all classes of our stock or any parent or subsidiary corporation ofours, in which case the exercise price shall then be 110% of the fair marketvalue.

 

However, all options previously granted underour expired Stock Option Plans remain outstanding.  Pursuant to the Stock Option Plans, as of December 31,2008, there were options outstanding to purchase 15,246,267 shares of ourcommon stock with a weighted average exercise price per share of $2.28 andoptions available for future issuance to purchase 5,000,000 shares of ourcommon stock.  In September 2007,our stockholders approved the issuance of options to purchase five million sharesof our common stock pursuant to the initial closing of the transactions underthe Securities Purchase and Product Participation Agreement dated June 12,2007 between us and Elixir Group to certain employees and non-employees. Eachoption had an exercise price of $2.90 per share and will vest over a three-yearperiod and have a five-year term (save and except for certain modificationsmade pursuant to the severance agreements of certain of our former officers orformer employees).

 

The following table sets forth certaininformation as of December 31, 2008 about our Stock Option Plans underwhich our equity securities are authorized for issuance.

 
| **Plan Category**                                      | ** ** | **(a)  Number of Securities  to be Issued Upon  Exercise of  Outstanding  Options, Warrants  and Rights** | ** ** | **(b)  Weighted-Average  Exercise Price of  Outstanding  Options,  Warrants and  Notes Rights** | ** ** | **(c)  Number of Securities  Remaining Available for  Future Issuance Under  Equity Compensation  Plans  (Excluding Securities  Reflected In Column (A))** | ** ** |
|-------------------------------------------------------------|------------|---------------------------------------------------------------------------------------------------------------------------------------------------|------------|---------------------------------------------------------------------------------------------------------------------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|
| Equity  compensation plans approved by security holders     |       | 15,246,267                                                                                                                                        |       | $                                                                                                                   | 2.28       |                                                                                                                                                                                                              | 5,000,000  |   |
| Equity  compensation plans not approved by security holders |       | —                                                                                                                                            |       | —                                                                                                              |       | —                                                                                                                                                                                                            |       |
| Total                                                       |       | 15,246,267                                                                                                                                        |       | $                                                                                                                   | 2.28       |                                                                                                                                                                                                              | 5,000,000  |   |

 

The first column reflects outstanding stockoptions to purchase (i) 10,201,667 shares of common stock pursuant to ourAmended and Restated 1999 Stock Option Plan, (ii) 144,600 shares of commonstock pursuant to our Amended and Restated 1999 Directors’ Stock Option Plan, (iii) 4,900,000shares of common stock pursuant to the options approved by our stockholders in September 2007and (iv) nil shares of common stock pursuant to our 2008 Stock IncentivePlan.

 

The third column reflects 5,000,000 sharesremaining for issuance under our 2008 Stock Incentive Plan.

 

**Item13.****   ****Certain Relationships and Related Transactions****, and Director Independence**

 

**TransactionReview**

 

We have adopted a policy that anytransactions with directors, officers or entities of which they are alsoofficers or directors or in which they have a financial interest, will only beon terms consistent with industry standards and approved by a majority of thedisinterested directors of our board. Our bylaws provide that no suchtransactions by us shall be either void or voidable solely because of suchrelationship or interest of directors or officers or solely because suchdirectors are present at the meeting of our board 

 

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or a committee thereof which approves suchtransactions, or solely because their votes are counted for such purpose if:

 

·      The fact of such common directorship or financial interest is disclosedor known by our board or committee and noted in the minutes, and our board orcommittee authorizes, approves or ratifies the contract or transaction in goodfaith by a vote for that purpose without counting the vote or votes of suchinterested directors; or

 

·      The fact of such common directorship or financial interest is disclosedto or known by the stockholders entitled to vote, and they approve or ratifythe contract or transaction in good faith by a majority vote or written consentof stockholders holding a majority of the shares of common stock entitled tovote (the votes of the interested directors or officers shall be counted in anysuch vote of stockholders); or

 

·      The contract or transaction is fair and reasonable to us at the time itis authorized or approved.

 

In addition, interested directors may becounted in determining the presence of a quorum at a meeting of our board or acommittee thereof that approves such transactions. If there are nodisinterested directors, we shall obtain a majority vote of the stockholdersapproving the transaction.

 

With regard to transactions between us andour principal stockholder, Elixir Group, pursuant to the Product ParticipationAgreement, our board of directors has established a committee of the board,known as the conflicts and compliance committee, made up exclusively of atleast three members of our board who satisfy the independence requirements of Section 803(A)(2) ofthe NYSE Amex Company Guide and meet the criteria for independence as set forthin Rule 10A-3(b)(1) under the Exchange Act, and who are not then, andduring the two years prior to their appointment or election have not been, anofficer, director, employee of or consultant or advisor to Elixir Group or anyaffiliate of Elixir Group. Elixir Group has the right to appoint at least onerepresentative to the conflicts and compliance committee if that personsatisfies the foregoing criteria. The conflicts and compliance committeeoperates under a charter that has been approved by our board of directors.While the original conflicts and compliance charter empowered the conflicts andcompliance committee to veto any agreement or transaction between us and ElixirGroup or any of its affiliates involving an aggregate amount in excess of$200,000, in November 2008, following the recommendation by all members ofthe conflicts and compliance committee, the board approved a revision of thecharter requiring the conflicts and compliance committee to review and approve allmaterial agreements ortransactions, if any, between us and Elixir Group or its affiliates. TheCompany has filed with the SEC a current report on Form 8-K regarding suchrevision on April 27, 2009 and the revised charter will take effect on May 5,2009.

 

The conflicts and compliance committeecharter shall not be amended or modified unless (i) such amendment ormodification has been approved and recommended by a majority of the members ofthe conflicts and compliance committee and (ii) at least five businessdays preceding the effective date of such amendment or modification we havefiled with the SEC a current report on Form 8-K that accurately and fullydiscloses the proposed amendment or modification and the basis for theconflicts and compliance committee’s recommendations.

 

**Elixir Group Transactions**

 

***Product Participation Agreementand Exchange Agreement***

 

On September 10, 2007 we underwent achange in control and a resultant change in our business model pursuant to aSecurities Purchase and Product Participation Agreement dated June 12,2007, as amended by a Securities Amendment and Exchange Agreement dated October 2007(the “Product Participation 

 

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Agreement”) between us and Elixir GroupLimited.  Pursuant to the ProductParticipation Agreement, we agreed to issue to Elixir Group a controlling blockof our common shares and grant Elixir Group the right to nominate a certainnumbers of directors to our board of directors.

 

In conjunction with our October 2007private placement of common shares, in October 2007 we entered into aSecurities Amendment and Exchange Agreement (the “Exchange Agreement”) withElixir Group, pursuant to which we agreed to issue to Elixir Group up to 31.2million shares of our common stock in exchange for Elixir Group’s cancellationof up to 78 million of the 88 million warrants it received under the ProductParticipation Agreement.  The initial closing under the Exchange Agreementoccurred on December 17, 2007, at which time we issued 4.8 million sharesof our common stock to Elixir Group in exchange for its cancellation of 12million warrants that had vested and were exercisable.

 

On November 6, 2008, weentered into a letter of agreement terminating the Product ParticipationAgreement (the “Termination Agreement”). Pursuant to the Termination Agreement,Elixir Group and we agreed to terminate, with immediate effect, the ProductParticipation Agreement save and except for certain provisions thereinregarding board representation, which includes but is not limited to, thecontinued presence until September 10, 2009 of at least two independentdirectors who served on the board since prior to the September 2007 closeof the Product Participation Agreement. With such termination, Elixir Groupceases to have rights to identify suitable gaming venues for us and exclusiverights to supply electronic gaming machines and related equipment and systemsfor our participation business and, as a result, Elixir Group will no longer beentitled to earn an aggregate of 41.4 million additional shares of our commonstock under the Product Participation Agreement. In addition, on November 6,2008, Elixir Group agreed to cancel warrants to purchase 66 million shares ofour common stock, representing all of the outstanding warrants issued toElixir Group pursuant to the Product Participation Agreement, which weresubject to the Exchange Agreement.

 

***Purchase and Sale of Gaming Machines***

 

During the year ended December 31, 2007, we purchased $39.8 millionof electronic gaming machines and systems from Elixir Group, at cost plusfifteen percent (15%).  At December 31, 2007, we had accounts payableof $29.6 million due to Elixir Group for these purchases.  The payableshad cash terms of fifty percent (50%) due upon placement and the balance 45days thereafter with no required interest payments.  We recorded sales of$193,700 to Elixir Group after becoming related parties.

 

During 2008, we purchased $32.6 million ofelectronic gaming machines, casino management systems and other peripheralsfrom Elixir International Limited, the wholly-owned subsidiary of Elixir Group.

 

On November 6, 2008, and in connectionwith the termination Agreement described above and the Facility AmendmentAgreement described below, we entered into a Machines Disposal Agreement (the “DisposalAgreement”) with Elixir International.

 

Pursuant to the Disposal Agreement, we agreedto return 715 electronic gaming machines to Elixir Group, which asconsideration for such sale and return, agreed to extinguish our existingcurrent trade payable of approximately $13.9 million to Elixir International.

 

After the return of $13.9 million ofelectronic gaming machines, we had a receivable balance of $0.5 million and anote payable of $12.1 million as of December 31, 2008.  In addition,at December 31, 2008, we had deposits on orders with Elixir Internationaltotaling $348,232 for gaming machines, which were subsequently delivered inearly 2009.

 

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***Elixir Trade Credit Facility***

 

On April 21, 2008, we entered into aTrade Credit Facility Agreement (the “Facility Agreement”) with ElixirInternational.  Pursuant to the FacilityAgreement, Elixir International provided trade credits to us for our purchaseof electronic gaming machines from Elixir International in exchange for ourissuance of unsecured notes to Elixir International bearing interest at a fixedrate of eight percent (8.0%) per annum. Title of any gaming machines offered in exchange for the notes passed tous upon issuance of the notes.

 

Upon entering into the Facility Agreement, weimmediately issued the first note pursuant to the terms of the FacilityAgreement in the principal amount of $15 million (the “Initial Advance”), therebyextinguishing the payable of an equivalent amount to Elixir International inrespect to gaming machines previously acquired. We were obligated to repay the principal, plus any accrued interestthereon, of the Initial Advance in 24 equal monthly installments.  The Initial Advance was subject to demand byElixir International for immediate payment only if there was either an event ofdefault or a change of control as defined in the Facility Agreement.

 

An “event of default” occurs pursuant to theFacility Agreement if, among other things, we default in the payment when dueof any principal or interest on any note issued pursuant to the FacilityAgreement; or we become insolvent or generally fail to pay or admit in writingour inability to pay our debts as they become due; or we apply for, consent to,or acquiesce in the appointment of a trustee, receiver or other custodian forour self or any of our property, or make a general assignment for the benefitof our creditors; or a trustee, receiver or other custodian will otherwise beappointed for us or any of our assets and not be discharged within 30 days; orany bankruptcy, reorganization, debt arrangement, or other case or proceedingunder any bankruptcy or insolvency law, or any dissolutionor liquidation proceeding is commenced by or against us and be consented to oracquiesced in by us or remains undismissed for 30 days; or we take anycorporate action to authorize, or in furtherance of, any of the foregoing; orany judgments, writs, warrants of attachment, executions or similar process(not undisputedly covered by insurance) in an aggregate amount in excess of$100,000 is issued or levied against us or any of our assets and will not bereleased, vacated or fully bonded prior to any sale and in any event within 30days after its issue or levy; or we become subject to pending or threatenedlitigation, arbitration or a governmental litigation or proceeding, notpreviously disclosed to Elixir International, and such action could have amaterial adverse affect on our operations or financial condition.

 

A “change of control” occurs pursuant to theFacility Agreement if, among other things, after April 21, 2008: (i) anyperson or two or more persons acting in concert (other than ElixirInternational or its affiliates) acquire beneficial ownership (within the meaningof Rule 13d-3 under the Securities Exchange Act of 1934), directly orindirectly, of securities of our company representing 50% or more (on afully-diluted basis) of the combined voting power of all our securities (otherthan securities owned by Elixir Group or its affiliates) entitled to vote inthe election of directors; or (ii) our sale of substantially all of ourassets; or (iii) any sale of our securities by Elixir Group or itsaffiliates or any issuance of new securities by us resulting in the combinedvoting power of all our securities (on a fully-diluted basis) owned by ElixirGroup or its affiliates falls below 30%.

 

On November 6, 2008, and in connectionwith the Termination Agreement and Disposal Agreement described above, weentered into an Amendment of the Trade Credit Facility Agreement and RelatedNote with Elixir International (the “Facility Amendment Agreement”). Pursuantto the Facility Amendment Agreement, Elixir International surrendered to us the$15 promissory note representing the Initial Advance to us in exchange for theissuance of a new promissory note for $12.1 million (the “Outstanding Principal”),the outstanding principal at the time of the exchange, with the following newrepayment terms: (a) the New Note and the interest accrued thereon shallbe repaid in 24 equal monthly installments reset from January 1, 2009; (b) interestshall be accrued on the Outstanding Principal at the rate of five percent(5.0%) (instead of 8.0%) per annum starting from January 1, 2009; and nomonthly 

 

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repayment under the Initial Advance wasrequired for the months of October, November and December 2008. Savefor the said new repayment terms, all other terms under the Facility Agreement,including the “event of default” and “change of control” provisions remainunchanged.

 

Neither the Facility Agreement nor theFacility Amendment Agreement includes a commitment on the part of ElixirInternational for granting any further credit or facility to us. We do notexpect to receive any further amount of credit or facility obtainable by theCompany under the Facility Agreement as amended by the Facility Amendment Agreement.

 

**Office Equipment and OfficeSharing**

 

On June 1, 2008, we purchased certainoffice equipment, furniture and other assets from Elixir International for useat our offices in the Philippines.  Thetotal value of such assets, which were acquired at net book value with nomark-up, was approximately $352,084.

 

During the period from January 1, 2008until early December 2008 when we reallocated our staff in Macau to ourHong Kong office, we shared our office premises in both Hong Kong and Macauwith Elixir Group Limited and Elixir International Limited, respectively.  Since the leases of such office premises wereentered into by the respective Elixir Group companies, we paid our share ofrentals and management fees in proportion to the areas that we actuallyoccupied to Elixir Group companies without any mark up. The total amount ofsuch rentals and management fees paid by us to Elixir Group companies for theyear ended December 31, 2008 was $205,553, for the year ended December 31,2007 was nil.

 

**Item 14.****                                                   ****Principal Accountant Fees andServices**

 

The following table sets forth the aggregatefees billed to us for services rendered to us for the years ended December 31,2008 and 2007 by our independent registered public accounting firms for suchyears, Ernst & Young (Hong Kong) and Ernst & Young LLP(United States), respectively, for the audit of our consolidated financialstatements for the years ended December 31, 2008 and 2007, and assistancewith the reporting requirements thereof, the review of our condensedconsolidated financial statements included in our quarterly reports on Form 10-Q,and accounting and auditing assistance relative to acquisition accounting andreporting.

 
| ** **         | ** ** | **2008** | ** ** | **2007** | ** ** |
|--------------------|------------|----------|------------|----------|------------|
| Audit Fees         |       | $        | 485,346    |     | $          | 606,577 |   |
| Audit-Related Fees |       | 41,234   |       | 10,864   |       |
| Tax Fees           |       | —   |       | 13,168   |       |
|               |       | $        | 526,580    |     | $          | 630,609 |   |

 

**Audit Committee Pre-ApprovalPolicies**

 

Our audit committee approves all audit fees,audit-related fees, tax fees and special engagement fees.  The audit committee approved 100% of suchfees for the year ended December 31, 2008.

 

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**PART IV**

 

**Item 15          Exhibits andFinancial Statement Schedules**

 

**(a) Financial statements**

 

Reference is made to the Index and FinancialStatements under Item 8. in Part II of our annual report on Form 10-Kfiled on March 30, 2009, where these documents are listed.

 

**(b) Financial statementschedules**

 

Financial statement schedules are either notrequired or the required information is included in the consolidated financialstatements or notes thereto filed under Item 8 in Part II of our annualreport on Form 10-K filed on March 30, 2009.

 

**(c) ****Exhibits**

 

The exhibits to this Amendment No. 1 toAnnual Report on Form 10-K are set forth below. The exhibit indexindicates each management contract or compensatory plan or arrangement requiredto be filed as an exhibit.

 

**Exhibit Index**

 
| **Number** | ** ** | **Exhibit Description**                                                                                                                                                                                                                                                                                        |
|------------|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.1        |       | Amended and Restated  Articles of Incorporation dated June 7, 2003. (Incorporated by reference  from the registrant’s current report on Form 8-K filed on June 18,  2003.)                                                                                                                      |
|       |       |                                                                                                                                                                                                                                                                                                                |
| 3.2        |       | Amended and Restated  Bylaws of the registrant dated November 13, 2002. (Incorporated by  reference from the registrant’s current report on Form 8-K filed on  January 8, 2003.)                                                                                                                |
|       |       |                                                                                                                                                                                                                                                                                                                |
| 3.3        |       | Certificate of Amendment  to Articles of Incorporation dated August 23, 2005. (Incorporated by  reference from the registrant’s annual report on Form 10-KSB filed on  April 13, 2007.)                                                                                                         |
|       |       |                                                                                                                                                                                                                                                                                                                |
| 3.4        |       | Certificate of Amendment  to Articles of Incorporation dated January 9, 2007. (Incorporated by  reference from the registrant’s annual report on Form 10-KSB filed on  April 13, 2007.)                                                                                                         |
|       |       |                                                                                                                                                                                                                                                                                                                |
| 3.5        |       | Certificate of Amendment  to Articles of Incorporation dated September 10, 2007. (Incorporated by  reference from the registrant’s quarterly report on Form 10-QSB filed on  November 14, 2007.)                                                                                                |
|       |       |                                                                                                                                                                                                                                                                                                                |
| 10.3       |       | Lease Agreement dated  December 29, 2006, by and between the registrant and Howard Hughes  Properties, Limited Partnership. (Incorporated by reference from the  registrant’s annual report on Form 10-KSB/A filed on November 13,  2007.)                                                      |
|       |       |                                                                                                                                                                                                                                                                                                                |
| 10.4       |       | Form of  Indemnification Agreement, incorporated by reference from the registrant’s  quarterly report on 10-QSB/A filed on August 19, 2003.                                                                                                                                                          |
|       |       |                                                                                                                                                                                                                                                                                                                |
| 10.5       |       | Amended and Restated 1999  Stock Option Plan.* (Incorporated by reference from the registrant’s  quarterly report on 10-QSB/A filed on August 19, 2003.)                                                                                                                                                  |
|       |       |                                                                                                                                                                                                                                                                                                                |
| 10.14      |       | Patent Purchase Agreement  dated October 1, 2005 among registrant, William Westmore Purton, Dolphin  Products Pty Ltd. and Dolphin Advanced Technologies Pty Ltd. (Incorporated by  reference to Exhibit 10.27 to the registrant’s annual report on  Form 10-KSB filed on March 31, 2006.) |

 

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| 10.19  |   | Senior Secured Note  Purchase Agreement dated May 2, 2006 among registrant and the Bricoleur  Funds. (Incorporated by reference to Exhibit 10.1 to the registrant’s  Current Report on Form 8-K dated May 2, 2006.)                                               |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                       |
| 10.20  |   | Securities Put Agreement  dated May 2, 2006 among registrant and the Bricoleur Funds.  (Incorporated by reference to Exhibit 10.2 to the registrant’s Current  Report on Form 8-K dated May 2, 2006.)                                                             |
|   |   |                                                                                                                                                                                                                                                                                       |
| 10.21  |   | Security Agreement dated  May 2, 2006 among registrant and the Bricoleur Funds. (Incorporated by  reference to Exhibit 10.3 to the registrant’s Current Report on  Form 8-K dated May 2, 2006.)                                                                   |
|   |   |                                                                                                                                                                                                                                                                                       |
| 10.22  |   | Registration Rights  Agreement dated May 2, 2006 among registrant and the Bricoleur Funds.  (Incorporated by reference to Exhibit 10.3 to the registrant’s Current  Report on Form 8-K dated May 2, 2006.)                                                        |
|   |   |                                                                                                                                                                                                                                                                                       |
| 10.23  |   | Share Sale Agreement dated  July 5, 2006 among registrant and William Westmore Purton, and Synwood  Pty Ltd. (Incorporated by reference to Exhibit 10.8 to the registrant’s  Quarterly Report on Form 10-QSB filed on August 14, 2006.)                           |
|   |   |                                                                                                                                                                                                                                                                                       |
| 10.24  |   | Registration Rights  Agreement dated July 11, 2006 among registrant and William Westmore  Purton, and Synwood Pty Ltd. (Incorporated by reference to Exhibit 10.8  to the registrant’s Quarterly Report on Form 10-QSB filed on  August 14, 2006.)                |
|   |   |                                                                                                                                                                                                                                                                                       |
| 10.25  |   | Alliance Agreement dated  October 11, 2006 between registrant and Elixir Group Limited. (Incorporated  by reference to Exhibit 10.1 to the registrant’s Quarterly Report on  Form 10-QSB filed on November 14, 2006.)                                             |
|   |   |                                                                                                                                                                                                                                                                                       |
| 10.26  |   | Amended and Restated Sales  Representative Agreement dated October 11, 2006 between registrant and  Elixir Group Limited. (Incorporated by reference to Exhibit 10.2 to the  registrant’s Quarterly Report on Form 10-QSB filed on November 14,  2006.)           |
|   |   |                                                                                                                                                                                                                                                                                       |
| 10.27  |   | Securities Purchase  Agreement dated October 11, 2006 between registrant and Elixir Group  Limited. (Incorporated by reference to Exhibit 10.3 to the registrant’s  quarterly report on Form 10-QSB filed on November 14, 2006.)                                  |
|   |   |                                                                                                                                                                                                                                                                                       |
| 10.29  |   | Securities Purchase  Agreement dated March 27, 2007. (Incorporated by reference from the  registrant’s current report on Form 8-K filed on March 30, 2007.)                                                                                                            |
|   |   |                                                                                                                                                                                                                                                                                       |
| 10.30  |   | Registration Rights  Agreement dated March 28, 2007. (Incorporated by reference from the  registrant’s current report on Form 8-K filed on March 30, 2007.)                                                                                                            |
|   |   |                                                                                                                                                                                                                                                                                       |
| 10.31  |   | Common Stock Purchase  Warrant dated March 28, 2007. (Incorporated by reference from the  registrant’s current report on Form 8-K filed on March 30, 2007.)                                                                                                            |
|   |   |                                                                                                                                                                                                                                                                                       |
| 10.32  |   | Securities Purchase  Agreement dated May 3, 2007. (Incorporated by reference from the  registrant’s quarterly report on Form 10-QSB filed on May 15,  2007.)                                                                                                           |
|   |   |                                                                                                                                                                                                                                                                                       |
| 10.33  |   | Registration Rights  Agreement dated May 3, 2007. (Incorporated by reference from the  registrant’s quarterly report on Form 10-QSB filed on May 15,  2007.)                                                                                                           |
|   |   |                                                                                                                                                                                                                                                                                       |
| 10.34  |   | Securities Purchase and  Product Participation Agreement dated June 12, 2007 between registrant  and Elixir Group Limited. (Incorporated by reference from the registrant’s  current report on Form 8-K filed on June 13, 2007.)                                       |
|   |   |                                                                                                                                                                                                                                                                                       |
| 10.35  |   | Securities Purchase  Agreement by and among the registrant and the purchasers identified on the  signature pages thereto, dated as of October 19, 2007.  (Incorporated by reference from the registrant’s current report on  Form 8-K filed on October 23, 2007.) |

 

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| 10.36  |   | Registration Rights  Agreement by and among the registrant and the purchasers identified on the  signature pages thereto, dated as of October 19, 2007.  (Incorporated by reference from the registrant’s current report on  Form 8-K filed on October 23, 2007.)                    |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                          |
| 10.38  |   | Waiver and Amendment to  Warrants dated September 7, 2007. (Incorporated by reference from the  registrant’s quarterly report on Form 10-QSB filed on November 14,  2007.)                                                                                                                |
|   |   |                                                                                                                                                                                                                                                                                                          |
| 10.39  |   | Warrant Purchase Agreement  by and among, Elixir Group Ltd, the registrant and the purchasers identified  on the signature pages thereto, dated as of December 11, 2007.  (Incorporated by reference from the registrant’s current report on  Form 8-K filed on December 11, 2007.)  |
|   |   |                                                                                                                                                                                                                                                                                                          |
| 10.40  |   | Registration Rights  Agreement by and among the registrant and the purchasers identified on the  signature pages thereto, dated as of December 11, 2007.  (Incorporated by reference from the registrant’s current report on  Form 8-K filed on December 11, 2007.)                  |
|   |   |                                                                                                                                                                                                                                                                                                          |
| 10.41  |   | Distribution, Service and  Support Agreement dated June 4, 2007 between registrant and Suzo Happ  Group. (Incorporated by reference from the registrant’s annual report on From  10-K filed on March 31, 2008.)                                                                                |
|   |   |                                                                                                                                                                                                                                                                                                          |
| 10.42  |   | Trade Credit Facility  Agreement between registrant and Elixir International Limited dated as of  April 21, 2008. (Incorporated by reference from the registrant’s annual  report on From 10-K filed on April 29, 2008.)                                                                       |
|   |   |                                                                                                                                                                                                                                                                                                          |
| 10.43  |   | Separation Agreement  between Gordon Yuen and registrant.* (Incorporated by reference from the  registrant’s current report on From 8-K filed on November 14, 2008.)                                                                                                                                |
|   |   |                                                                                                                                                                                                                                                                                                          |
| 10.44  |   | Letter of agreement  between registrant and Elixir Group Ltd dated as of November 6, 2008  terminating the Securities Purchase and Product Participation Agreement.  (Incorporated by reference from the registrant’s current report on From 8-K  filed on November 14, 2008.)                 |
|   |   |                                                                                                                                                                                                                                                                                                          |
| 10.45  |   | Machines Disposal  Agreement between registrant and Elixir International Limited dated as of  November 6, 2008. (Incorporated by reference from the registrant’s  current report on From 8-K filed on November 14, 2008.)                                                                      |
|   |   |                                                                                                                                                                                                                                                                                                          |
| 10.46  |   | Amendment of the Trade  Credit Facility Agreement and Related Note between registrant and Elixir  International Limited dated as of November 6, 2008. (Incorporated by  reference from the registrant’s current report on From 8-K filed on  November 14, 2008.)                               |
|   |   |                                                                                                                                                                                                                                                                                                          |
| 10.47  |   | Purchase and Settlement  Agreement between registrant and Shuffle Master, Inc. dated as of  March 16, 2009. (Incorporated by reference from the registrant’s annual  report on Form 10-K filed on March 30, 2009.)                                                                   |
|   |   |                                                                                                                                                                                                                                                                                                          |
| 10.48  |   | Termination Agreement  between registrant and Happ Controls, Inc. (Suzo Happ) dated as of  March 13, 2009. (Incorporated by reference from the registrant’s annual  report on Form 10-K filed on March 30, 2009.)                                                                    |
|   |   |                                                                                                                                                                                                                                                                                                          |
| 10.49  |   | Machines Operation and  Participation Agreement by and among the registrant, Elixir Gaming  Technologies (Hong Kong) Limited and NagaWorld Limited dated as of  December 13, 2008. (Incorporated by reference from the registrant’s  annual report on Form 10-K filed on March 30, 2009.) |
|   |   |                                                                                                                                                                                                                                                                                                          |
| 10.50  |   | Heads of Terms for Supply  of Gaming Terminals between Elixir Gaming Technologies (Hong Kong) Limited  and Scientific Games World Limited dated as of November 19, 2008.  (Incorporated by reference from the registrant’s annual report on  Form 10-K filed on March 30, 2009.)          |

 

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| 10.51  |   | Separation Agreement  between Joe Pisano and registrant.* (Incorporated by reference from the  registrant’s current report on From 8-K filed on April 1, 2009.)                  |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                       |
| 10.52  |   | Executive Employment  Agreement between Clarence Chung and registrant.* (Incorporated by reference  from registrant’s current report on Form 8-K filed on April 22,  2009.) |
|   |   |                                                                                                                                                                                       |
| 21.1   |   | List of subsidiaries of  registrant (Incorporated by reference from the registrant’s annual report on  Form 10-K filed on March 30, 2009.)                                  |
|   |   |                                                                                                                                                                                       |
| 23.1   |   | Consent of Ernst &  Young. (Incorporated by reference from the registrant’s annual report on  Form 10-K filed on March 30, 2009.)                                  |
|   |   |                                                                                                                                                                                       |
| 23.2   |   | Consent of  Ernst & Young, LLP. (Incorporated by reference from the registrant’s  annual report on Form 10-K filed on March 30, 2009.)                             |
|   |   |                                                                                                                                                                                       |
| 31.1   |   | Certification under  Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                   |
|   |   |                                                                                                                                                                                       |
| 31.2   |   | Certification under  Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                   |
|   |   |                                                                                                                                                                                       |
| 32.1   |   | Certifications Pursuant to  Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.                                                                               |

 

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* Indicates management compensatory plan,contract or arrangement.

 

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**SIGNATURES**

** **

Pursuant to the requirements of Section 13 or15(d) of the Securities Exchange Act of 1934, the Registrant has dulycaused this Amendment No. 1 to Annual Report on Form 10-K to besigned on its behalf by the undersigned, thereunto duly authorized.

 
| ** **                | ** ** | ** ELIXIR  GAMING TECHNOLOGIES, INC.**                                                               |
|---------------------------|------------|-----------------------------------------------------------------------------------------------------------|
|                      |       |
|                      |       |
| Date: April 29, 2009 | By:        | * /s/ Clarence Chung*                                                                                |
|                      |       |  Clarence Chung                                                                                      |
|                      |       |  Chairman of the  Board of Directors, President and Chief     Executive  Officer |

 

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