**UNITED
      STATES SECURITIES AND EXCHANGE COMMISSION**


Washington,
      D.C. 20549





**FORM
      10-QSB**


(Mark
      One)


x
            **QUARTERLY
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934**




For
                the quarterly period ended:
            March
                31, 2006




OR




o
            **TRANSITION
                REPORT PURSUANT SECTION 13 OR 15(d) OF THE EXCHANGE
                ACT**





For
                the transition period from:
            
            to





Commission
                file number:
            001-32161





VendingData
                Corporation(Exact
                name of small business issuer as specified in its
                charter)




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






6830
                Spencer Street, Las Vegas, Nevada 89119(Address
                of principal executive offices)(702)
                733-7195(Issuer’s
                telephone number)(Former
                name, former address and former fiscal year, if changed since last
                report)Indicate
                by check mark whether the issuer is a shell company (as defined in
                Rule
                12b-2 of the Exchange Act). Yes xNooCheck
                whether the issuer (1) filed all reports required to be filed by
                Section
                13 or 15(d) of the Exchange Act during the past 12 months (or for
                such
                shorter period that the registrant was required to file such reports),
                and
                (2) has been subject to such filing requirements for the past 90
                days.             
                  Yes x Noo**APPLICABLE
                ONLY TO CORPORATE ISSUERS**State
                the number of shares outstanding of each of the issuer’s classes of common
                equity, as of the latestpracticable
                date:
            23,468,284
                shares of common stock, $.001 par value, as ofMay
                12, 2006Transitional
                Small Business Disclosure Format (check one): Yes  o  Nox







**VENDINGDATA
      CORPORATION**





**FORM
      10-QSB**





**TABLE
      OF CONTENTS**




**Page****PART
                I - FINANCIAL INFORMATION**
            
            1Item
                1. Financial Statements
            
            1Balance
                Sheets
            
            1Statements
                of Operations and Deficit
            
            2Statements
                of Cash Flows
            
            3Item
                2. Management’s Discussion and Analysis or Plan ofOperations
            
            7Overview
            
            7Results
                of Operations
            
            8Liquidity
                and Capital Resources
            
            10Critical
                Accounting Policies and Estimates
            
            11Risk
                Factors
            
            13Item
                3.Controls
                and Procedures
            
            15**PART
                II - OTHER INFORMATION**
            
            17Item
                6. Exhibits
            
            17




-i-


**PART
      I - FINANCIAL INFORMATION**




**Item
      1. Financial Statements.**




**VENDINGDATA
      CORPORATION**


**Balance
      Sheets**




**March
                31, 2006**
            
            **December
                31,****2005****ASSETS**
            
            **(unaudited)****Current
                assets**:Cash
                and cash equivalents
            
            $
            210,709
            
            $
            935,243Current
                portion of accounts receivable, trade, net of allowance for uncollectibles
                of $376,211and $276,240
            
            
            1,451,840
            
            
            1,550,559Due
                from affiliate
            
            
            0
            
            
            4,098Inventories
            
            
            2,845,231
            
            
            3,045,334Prepaid
                expenses
            
            
            71,474
            
            
            113,5574,579,254
            
            
            5,648,791Equipment
                rented to customers, net of accumulated depreciation of $96,630 and
                $228,032
            
            
            173,198
            
            
            146,527Property
                and equipment, net of accumulated depreciation of $2,497,270 and
                $2,408,243
            
            
            474,306
            
            
            585,431Intangible
                assets, at cost, net of accumulated amortization of $356,616 and
                $836,281
            
            
            4,569,663
            
            
            1,862,268Accounts
                receivable, trade, net of current portion, less unamortized
                discount
            
            
            434,825
            
            
            600,430Deferred
                expenses
            
            
            708,914
            
            
            748,171Deposits
            
            
            448,407
            
            
            759,653$
            11,388,567
            
            $
            10,351,271**LIABILITIES
                AND STOCKHOLDERS' EQUITY****Current
                liabilities**:Current
                portion of leases payable
            
            $
            310,441
            
            $
            471,269Accounts
                payable
            
            
            1,396,160
            
            
            1,836,234Accrued
                expenses
            
            
            1,035,840
            
            
            794,203Deferred
                revenues, current portion
            
            
            15,651
            
            
            52,248Short-term
                debt
            
            
            5,050,000
            
            
            4,050,000Customer
                deposits
            
            
            78,869
            
            
            81,8587,886,961
            
            
            7,285,812Deferred
                revenues, net of current portion
            
            
            169,950
            
            
            161,335Notes
                payable, net of current portion
            
            
            11,225,000
            
            
            11,654,500Leases
                payable, net of current portion
            
            
            340,307
            
            
            421,97519,622,218
            
            
            19,523,622**Stockholders'
                equity**:Preferred
                stock, $.001 par value, 10,000,000 shares authorized, no shares issued
                and
                outstanding
            
            
            —
            
            
            —Common
                stock, $.001 par value, 25,000,000 shares authorized, 19,178,563
                shares
                and 17,740,451shares issued and outstanding
            
            
            19,540
            
            
            18,142Additional
                paid-in capital
            
            
            69,874,251
            
            
            66,763,192Treasury
                stock 448,053 shares at cost
            
            
            (846,820
            )
            
            (846,820
            )Deferred
                expense
            
            
            (2,837,945
            )
            
            (3,419,088
            )Deficit
            
            
            (74,442,676
            )
            
            (71,687,777
            )Total
                stockholders’ equity
            
            
            (8,233,650
            )
            
            (9,172,351
            )Total
                liabilities and stockholders’ equity
            
            $
            11,388,568
            
            $
            10,351,271




See
      accompanying notes to financial
      statements.




-1-




**VENDINGDATA
      CORPORATION**


**Statements
      of Operations** **and Deficit**




**(UNAUDITED)**




**Three
                Months Ended March 31,****2006**
            
            **2005****Revenues**:Sales
            
            $
            865,612
            
            $
            439,235Rental
            
            
            111,064
            
            
            121,340Other
            
            
            24,229
            
            
            29,3471,000,904
            
            
            589,922Less
                sales returns and allowances
            
            
            (288,404
            )
            
            0Net
                sales
            
            
            712,501
            
            
            589,922**Operating
                expenses:**Cost
                of sales
            
            
            714,802
            
            
            428,020Selling,
                general and administrative
            
            
            2,178,951
            
            
            2,378,986Research
                and development
            
            
            222,138
            
            
            190,0093,115,891
            
            
            2,997,015Loss
                from operations
            
            
            (2,403,391
            )
            
            (2,407,093
            )Interest
                expense
            
            
            351,507
            
            
            316,822Net
                loss
            
            
            (2,754,898
            )
            
            (2,723,915
            )Deficit
                (beginning balance)
            
            
            (71,687,777
            )
            
            (54,120,549
            )Deficit
                (ending balance)
            
            $
            (74,442,676
            )
            $
            (56,844,464
            )Basic
                loss per share
            
            $
            (0.16
            )
            $
            (0.16
            )Weighted
                average shares outstanding
            
            
            17,689,358
            
            
            17,199,558




See
      accompanying notes to financial
      statements.


-2-




**VENDINGDATA
      CORPORATION**


**Statements
      of Cash Flows**




**(UNAUDITED)**


**Three
                  Months Ended March 31,****2006**
              
              **2005**
 Net
                    Loss
                
                $
                (2,754,898
                )
                $
                (2,723,915
                )Adjustments
                    to reconcile net income (loss) to net cashprovided by operating activities:Depreciation
                
                
                119,517
                
                
                166,296Amortization
                    of deferred interest
                
                
                16,561
                
                
                60,093Non-cash
                    compensation expense
                
                
                497,755
                
                
                92,077Gain/Loss
                    on disposition of assets
                
                
                (32,805
                )
                
                1,900Write
                    down of Inventory
                
                
                23,153
                
                
                -Increase
                    in operating (assets) liabilities:Trade
                    accounts receivable
                
                
                264,324
                
                
                326,247Other
                    receivables
                
                
                (4,251
                )
                
                (12,039
                )Inventory
                
                
                176,949
                
                
                (406,669
                )Prepaid
                    expenses
                
                
                50,432
                
                
                (55,758
                )Deferred
                    Financing and Interest expenses
                
                
                122,644
                
                
                (316,375
                )Deposits
                    with vendors
                
                
                311,246
                
                
                (223,443
                )Accounts
                    payable
                
                
                (440,074
                )
                
                338,035Accrued
                    expenses
                
                
                241,637
                
                
                179,435Deferred
                    revenues
                
                
                (27,982
                )
                
                (10,480
                )Customer
                    deposits
                
                
                (2,989
                )
                
                (1,375
                )Total
                    adjustments
                
                
                1,316,118
                
                
                137,944
 Net
                  cash used in operating activities
              
              $
              (1,438,781
              )
              $
              (2,585,971
              )Cash
                  flows from investing activities:Acquisition
                  of intangibles
              
              
              (2,709,653
              )
              
              —Disposition
                  of equipment produced for rental
              
              
              —
              
              
              1,350Proceeds
                  from sale of equipment
              
              
              —
              
              
              4,700Net
                  cash used in investing activities
              
              
              (2,709,653
              )
              
              6,050Cash
                  flows from financing activities:Repayment
                  of leases payable
              
              
              (259,057
              )
              
              (577,908
              )Proceeds
                  from sale of stock
              
              
              3,112,457
              
              
              —Proceeds
                  from issuing convertible debt
              
              
              1,000,000
              
              
              8,750,000Repayment
                  of convertible debt
              
              
              (429,500
              )
              
              —Net
                  cash provided by (used in) financing activities
              
              
              3,423,900
              
              
              8,172,092Increase
                  (decrease) in cash and cash equivalents
              
              
              (724,534
              )
              
              5,592,171Cash
                  and cash equivalents at beginning of period
              
              
              935,243
              
              
              924,804Cash
                  and cash equivalents at end of period
              
              $
              210,709
              
              $
              6,516,975




See
      accompanying notes to financial
      statements.




-3-




**VENDINGDATA
      CORPORATION AND SUBSIDIARIES**


**NOTES
      TO FINANCIAL STATEMENTS (UNAUDITED)**




**Note 1—Basis
      of Presentation**




The
      accompanying unaudited interim financial statements of VendingData Corporation
      (the "Company") have been prepared in accordance with generally accepted
      accounting principles for interim financial information and with the applicable
      instructions incorporated in Regulation S-B of the Securities and Exchange
      Commission (SEC). Accordingly, they do not include all of the information and
      note disclosures required by generally accepted accounting principles for
      complete financial statements. In the opinion of management, all adjustments
      considered necessary for a fair presentation have been included.




The
      results of operations for the current period presented are not necessarily
      indicative of the results to be expected for the full year. The accompanying
      financial statements should be read in conjunction with the Company's audited
      financial statements for the year ended December 31, 2005, as included in
      the Company's Annual Report on Form 10-KSB as filed with the SEC from which
      the accompanying balance sheet information as of that date was derived. Certain
      minor reclassifications have been made to amounts presented in prior periods
      for
      comparability to the current period presentation.




**Note 2—Segments**




The
      segments identified for geographic region-based enterprise-wide data are as
      follows:




**Three
                Months Ended**
              **March 31,****2006**
            
            **2005**United
                States
            
            $
            272,500
            
            $
            515,672Asia
            
            
            440,000
            
            
            —Europe
            
            
            —
            
            
            49,500South
                America
            
            
            —
            
            
            24,750712,500
            
            
            589,922




-4-




The
      Company's revenues, depreciation and operating income distributed by product
      are
      as follows:






**Three
                Months Ended**


**March
                  31,**
                **2006**
              
              **March
                  31,**
                **2005**RevenuesSecure
                  Drop®
              
              $
              —
              
              $
              11,248Shuffler
              
              
              331,742
              
              
              326,049Deck
                  CheckerTM
              
              
              644,934
              
              
              223,278Other
              
              
              24,228
              
              
              29,3471,000,904
              
              
              589,922Sales
                  Returns & Allowances
              
              
              (288,404
              )
              
              —$
              712,500
              
              $
              589,922Depreciation
                  and amortizationSecure
                  Drop®
              
              $
              —
              
              $
              —Shuffler
              
              
              10,045
              
              
              49,969Deck
                  CheckerTM
              
              
              4,764
              
              
              9,229Unallocated
              
              
              104,708
              
              
              107,098$
              119,517
              
              $
              166,296Operating
                  income (loss)Secure
                  Drop® gross margin
              
              $
              —
              
              $
              9,729Shuffler
                  gross margin
              
              
              147,142
              
              
              226,342Deck
                  CheckerTMgross margin
              
              
              507,483
              
              
              188,669Other
                  cost of goods sold
              
              
              (629,169
              )
              
              (262,838
              )Selling,
                  general and administrative
              
              
              (2,178,951
              )
              
              (2,378,986
              )Research
                  and development
              
              
              (222,138
              )
              
              (190,009
              )Inventory
                  adjustment
              
              
              (23,153
              )
              
              —$
              (2,403,391
              )
              $
              (2,407,093
              )




**Note 3—Loss
      per Share**




The
      basic
      loss per share is computed by dividing the net loss for the period by the
      weighted average number of common shares outstanding for the period. Loss per
      share is unchanged on a diluted basis since the assumed exercise of common
      stock
      equivalents would have an anti-dilutive effect because of losses.




**Note 4—Change
      in Accounting for Employee Options**




The
      Company was required to adopt Financial Accounting Standards Board Statement
      No.
      123R, *Share-Based
      Payment* ,
      to
      account for its employee stock-based compensation beginning January 1, 2006,
      and
      elected the modified prospective method of transition. However, the adoption
      of
      SFAS No. 123R did not have any effect on the Company’s results of
      operations for the current quarter.




**Note 5—Contingencies**




The
      Company is a party to certain claims, legal actions, and complaints, including
      a
      patent infringement action between the Company and one of its main competitors
      and the sales tax dispute discussed in the following paragraph. The Company
      cannot predict or estimate the likely outcome of any such litigation or other
      disputes or whether any such matters would have a material adverse effect on
      its
      business as presently conducted or as anticipated, and accordingly, no provision
      has been made for any minimum estimated losses with regard to such matters.




-5-




In
      early
      February 2004, the State of Nevada initiated a sales/use tax audit of the
      Company’s, equipment lessors. As of this filing the State of Nevada has not made
      a determination if there has been a shortfall in the payment of the sales/use
      tax. The Company has sold and leased back shufflers and Deck Checkers over
      the
      last five years. The auditor for the State of Nevada is trying to determine
      at
      what level a sales/use tax needs to be collected. The Company now collects from
      our customers in Nevada and remits payments to the State of Nevada. If the
      State
      of Nevada determines that the sales of the products to the leasing companies
      is
      the level at which sales/use tax should have been collected, liability of the
      leasing companies would be passed to the Company. The amount of this potential
      liability could range from a refund of $144,000 to the payment of sales/use
      tax
      with interest and penalties of up to $500,000. The Company intends to defend
      its
      position in this matter.




**Note 6—Subsequent
      Events**




On
      April
      18, 2006, the Company entered into a binding Letter of Intent (the “Letter of
      Intent”) with, an Australian corporation (“the “Seller”), pursuant to which the
      Company has agreed to purchase, and the Sellers have agreed to sell to the
      Company, all of the capital stock of Dolphin Advanced Technologies Pty Ltd.
      and
      its wholly-owned subsidiaries (collectively, “Dolphin”). Upon execution of the
      Letter of Intent, the Company became obligated to immediately pay to the Seller
      a non-refundable deposit consisting of $750,000 of cash and 1,000,000 shares
      of
      the Company’s common stock. Upon the closing of the transaction, the Company
      will issue 3,285,715 shares of its common stock (the “Consideration Shares”) to
      the Seller. For a period of two years from the closing of the transaction,
      if
      the Sellers sell any Consideration Shares in a public transaction for a price
      of
      less than $3.50 per share, the Company will deliver to the Sellers cash, or
      shares of its common stock, equal to difference between the sale price and
      $3.50
      per share. If the sales price is more than $5.00 per share, the Sellers will
      return to the Company cash, or Consideration Shares valued at the then-current
      market price, equal to the
      difference between the sale price and $5.00. In addition, we have a right of
      first refusal with respect to sales of all Consideration Shares.




On
      May 3,
      2006, the Company closed on an $18 million financing transaction with four
      investment funds. The $18 million financing consists of $13 million of 8% senior
      secured promissory notes and a $5 million equity put agreement that can be
      exercised from time to time at the Company’s option. Concurrent with closing of
      the financing, the holders of the Company’s outstanding 10% Senior Notes
      converted approximately $5.2 million of the principal under those notes to
      common shares of the Company as provided for under the terms of the 10% Senior
      Notes. The Company used the proceeds of the financing to retire the balance
      of
      the 10% Senior notes and the $5 million 9% line of credit acquired by the
      Company in October 2005. The senior debt placement includes detachable warrants
      to purchase 3.2 million shares at $2.50 per share, some of which are recallable
      based on early retirement of $6 million of the debt portion of the transaction.
      Principal payments of $1.5 million are due on the anniversary of the transaction
      for the first four years with the balance due in March 2011. Under the terms
      of
      the transaction, fifty percent of proceeds from the sale of any assets received
      by the Company will be applied to the outstanding principal of the loan. In
      addition, if the Company reduces the debt to under $7 million within one year
      of
      the transaction 800,000 warrants will be cancelled, within two years 600,000
      will be cancelled and within three years 200,000 will be cancelled. The
      transaction also includes a $5 million equity put agreement for its common
      stock, at a discount of 20% to the market at the date of execution of the put
      as
      determined by the Company.





-6-


**Item
      2. Management’s Discussion and Analysis or Plan of
      Operations.** ****




**CAUTIONARY
      STATEMENT**




You
      should read the following discussion and analysis in conjunction with our
      unaudited condensed consolidated financial statements and the related notes
      thereto contained elsewhere in this report. The information contained in this
      quarterly report on form 10-QSB is not a complete description of our
      business or the risks associated with an investment in our common stock. We
      urge
      you to carefully review and consider the various disclosures made by us in
      this
      report and in our other reports filed with the Securities and Exchange
      Commission, or SEC, including our annual report on form 10-KSB for the year
      ended December 31, 2005 and subsequent reports on Form 8-K, which discuss
      our business in greater detail.




In
      this
      report we make, and from time to time we otherwise make, written and oral
      statements regarding our business and prospects, such as projections of future
      performance, statements of management’s plans and objectives, forecasts of
      market trends, and other matters that are forward-looking statements within
      the
      meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
      Securities Exchange Act of 1934. Statements containing the words or phrases
      “will likely result,” “are expected to,” “will continue,” “is anticipated,”
“estimates,” “projects,” “believes,” “expects,” “anticipates,” “intends,”
“target,” “goal,” “plans,” “objective,” “should” or similar expressions identify
      forward-looking statements, which may appear in documents, reports, filings
      with
      the Securities and Exchange Commission, news releases, written or oral
      presentations made by officers or other representatives made by us to analysts,
      stockholders, investors, news organizations and others, and discussions with
      management and other of our representatives. For such statements, we claim
      the
      protection of the safe harbor for forward-looking statements contained in the
      Private Securities Litigation Reform Act of 1995.




Our
      future results, including results related to forward-looking statements, involve
      a number of risks and uncertainties. No assurance can be given that the results
      reflected in any forward-looking statements will be achieved. Any
      forward-looking statement speaks only as of the date on which such statement
      is
      made. Our forward-looking statements are based upon assumptions that are
      sometimes based upon estimates, data, communications and other information
      from
      suppliers, government agencies and other sources that may be subject to
      revision. Except as required by law, we do not undertake any obligation to
      update or keep current either (i) any forward-looking statement to reflect
      events or circumstances arising after the date of such statement, or (ii) the
      important factors that could cause our future results to differ materially
      from
      historical results or trends, results anticipated or planned by us, or which
      are
      reflected from time to time in any forward-looking statement.




In
      addition to other matters identified or described by us from time to time in
      filings with the SEC, there are several important factors that could cause
      our
      future results to differ materially from historical results or trends, results
      anticipated or planned by us, or results that are reflected from time to time
      in
      any forward-looking statement. Some of these important factors, but not
      necessarily all important factors, include those matters included in the section
      “Risk Factors” further below.




**Overview**




Our
      strategy is to develop cost-effective niche products for the global gaming
      industry. We focus on products that increase the security, productivity and
      profitability of casino operations. Our strategy involves marketing certain
      of
      our products for sale or lease, depending on the product, the geographic
      location of the customer and other factors. We rely on our internal sales staff
      and distributor relationships for the sale and rental of our products. Although
      we anticipate significant sales development and revenue growth, there is no
      assurance that we will generate sufficient revenue, cash flow or profit to
      sustain our operations.




-7-




**Results
      of Operations** **** ****




***Comparison
      of Three Months Ended*** **March
      31, 2006 and 2005**




For
      the
      three months ended March 31, 2006, we generated gross revenues of $1,000,904
      or
      70% more than the three months ended March 31, 2005 primarily as a result of
      DeckChecker sales to Macau casinos. Gross revenue was offset by sales returns
      and allowances of $288,404 as a result of returns of earlier versions of our
      shuffler products - which have since been upgraded. Specific product line
      results for the three months ended March 31, 2006 compared to the three months
      ended March 31, 2005 are provided below.




For
      the
      three months ended March 31, 2006, our cost of sales was $691,649, or 62% more
      than the three months ended March 31, 2005, excluding an inventory write-down
      of
      $23,153 in 2006. T he
      increase was primarily due to the
      rollout of RandomPlus Ô machines
      in Washington and upgrading the existing RandomPlus Ô units
      from version 3 software to version 4 .
      The
      rollout incurred significantly higher service costs than those incurred in
      the
      three months ended March 31, 2005. This was offset by a decrease in costs for
      shuffler rental depreciation as units were converted to sales or cancelled.
      The
      gross margin on revenue for the three months ended March 31, 2006, was $20,852
      or 87% less than the three months ended March 31, 2005, excluding the 2006
      inventory writedown, again attributable to higher service costs.





Three
                months ended
              March
                31, 2006
            
            Three
                months ended
              March
                31, 2005
            
            Percentage
              change**Secure
                Drop**Revenue
            
            
            —
            
            
            11,248
            
            
            (100
            %)Cost
                of Sales
            
            
            —
            
            
            1,519
            
            
            (100
            %)Gross
                Margin
            
            
            —
            
            
            9,729
            
            
            (100
            %)**Shuffler
                Sales**Revenue
            
            
            259,609
            
            
            269,944
            
            
            (4
            %)Cost
                of Sales
            
            
            174,556
            
            
            43,755
            
            
            299
            %Gross
                Margin
            
            
            85,053
            
            
            226,189
            
            
            (62
            %)**Shuffler
                Rentals**Revenue
            
            
            72,134
            
            
            56,105
            
            
            29
            %Cost
                of Sales
            
            
            10,045
            
            
            55,952
            
            
            (82
            %)Gross
                Margin
            
            
            62,089
            
            
            153
            
            
            (40,481
            %)**DeckChecker
                Sales**Revenue
            
            
            606,003
            
            
            158,043
            
            
            283
            %Cost
                of Sales
            
            
            132,686
            
            
            25,380
            
            
            423
            %Gross
                Margin
            
            
            473,317
            
            
            132,663
            
            
            257
            %**DeckChecker
                Rentals**Revenue
            
            
            38,930
            
            
            65,235
            
            
            (40
            %)Cost
                of Sales
            
            
            4,764
            
            
            9,229
            
            
            (48
            %)Gross
                Margin
            
            
            34,166
            
            
            56,006
            
            
            (39
            %)**Other**Revenue
            
            
            (264,175
            )
            
            29,347
            
            
            (1,000
            %)Cost
                of Sales2
            
            
            392,751
            
            
            292,185
            
            
            34
            %Gross
                Margin
            
            
            (656,926
            )
            
            (262,838
            )
            
            150
            %





1 Cost of
      Sales includes manufacturing costs including labor and overhead and does not
      include the $23,153 of inventory write down.


2 Includes
      cost to service and install machines, warranty costs and miscellaneous other
      costs. New shuffler installations incur a higher cost of sales during the first
      year of introduction.




-8-




**SecureDrop®
      Sales.** There
      were no system sales generated in the three months ended March 31, 2006, due
      to
      the Company’s decision to discontinue this product line.




**Shuffler
      Sales.** Revenue
      was flat although more units were placed with customers - approximately 100
      RandomPlus Ô units
      were sold at a discounted upgrade price instead of the list price during the
      three months ended March 31, 2006. The
      increase in the cost of shuffler sales revenue was due to the costs associated
      with upgrading RandomPlus Ô to
      version 3.




**Shuffler
      Rentals.** The 29%
      increase in shuffler rental revenue was a result of customers choosing
      RandomPlus Ô rentals
      in lieu of trials. Our cost of sales for the three months ended March 31, 2006
      included cost of shuffler rental depreciation of $10,045 compared to $50,000
      during the same period of the prior year. The additional decrease is in cost
      of
      sales is due to parts used in servicing the RES units in the first quarter
      of
      2005.




**DeckChecker** **TM** **Sales.** The
      increase in Deck Checker TM sales
      resulted from increased international sales through our distributor in Asia.
      The
      decrease in gross margin percentage resulted from the price reduction due to
      distributor discount.  Our
      Deck
      Checker TM cost of
      sales for the three months ended March 31, 2006 included costs of freight and
      parts totaling $132,686 compared to $25,380 during the same period of the prior
      year.




**Deck
      Checker** **TM** **Rentals.** The
      decrease in Deck Checker TM rental
      revenue was a result of contract cancellations in California in for the three
      months ended March 31, 2006 compared to the same period last year. Our cost
      of
      sales included Deck Checker TM rental
      depreciation of $4,764 during the first quarter of 2006 a reduction from $9,229
      for the same period of the prior year.




**Other
      Income.** The
      decrease in other revenues was due to an increase of sales returns and
      allowances accounting for $288,404 for the quarter ended March 31, 2006,
      compared to $0 during the same period of the prior year as a result of returns
      of earlier versions of our shuffler products - which have since been upgraded.
      Service costs increased 53% due to the rollout of RandomPlus Ô software
      version 4.




**General
      and Administrative Expense**




For
      the
      three months ended March 31, 2006, our general and administrative expenses
      were
      $2,178,951, or 8% less than the three months ended March 31, 2005. The decrease
      in general and administrative expenses related primarily to a $398,100 reduction
      in legal costs, $138,300 reduction in consulting, $80,700 in China
      administrative costs and $71,100 reduction in travel costs for executives,
      offset by a $300,000 increase in option expense, $90,000 in additional salaries,
      $60,000 in the sale of China assets and $40,000 in increased insurance costs.




**Research
      and Development Expense**




For
      the
      three months ended March 31, 2006, research and development expenses were
      $222,000, or 17% more than the period ended March 31, 2005. The increase in
      research and development expenses was due to expenses related to the development
      of our ChipWasher product.




**Interest
      Expense**




For
      the
      three months ended March 31, 2006, we incurred interest expenses of $351,507,
      or
      11% more than the three months ended March 31, 2005. This increase was
      attributable to the additional debt service related to our outstanding 9% senior
      secured notes and 10% senior secured convertible notes issued in the first
      quarter of 2005 and our $5 million credit agreement entered into in October
      2005. The approximately $11.2 million of 9% and 10% senior secured notes were
      converted into common shares or repaid, as was our $5 million credit facility,
      as part of the $18 million financing completed in May 2006.




-9-




**Liquidity
      and Capital Resources** ****




As
      a
      result of our operating loss, our working capital has decreased from
      $(1,637,021) at December 31, 2005 to $(3,307,707) at March 31, 2006. To fund
      our
      continuing operating cash flow deficits, on May 3, 2006, the Company closed
      on
      an $18 million financing transaction with four investment funds managed by
      Bricoleur. The $18 million financing consists of $13 million of 8% senior
      secured promissory notes. The senior debt placement includes detachable warrants
      to purchase 3.2 million shares at $2.50 per share, some of which are recallable
      based on early retirement of $6 million of the debt portion of the transaction.
      In connection with this debt financing, we also entered into a definitive
      agreement with the purchasers of our notes whereby we may, at our sole option,
      require them to purchase up to $5 million of our common stock. This
      agreement has a term of five years and grants us a binding “put” right to sell
      our shares at a 20% discount to the volume weighted average price of our shares
      on the day of a drawdown, subject to a ceiling price of $3.50 per share.




In
      connection with the Bricoleur financing, we conducted the concurrent pay off
      or
      conversion into common stock of all of our outstanding senior secured
      convertible promissory notes. Prior to the Bricoleur financing, we had
      approximately $11.2 million principal amount of senior secured convertible
      promissory notes outstanding. Of this amount, the holders of these notes
      converted approximately $5.2 million in principal and interest into shares
      of
      our common stock and we have paid off the remaining $6.0 million outstanding
      balance with a portion of the proceeds from the Bricoleur financing described
      above.




In
      addition to retiring our preexisting notes, we used approximately $5 million
      of
      the proceeds from the Bricoleur financing described above to retire our existing
      line of credit. The balance of the proceeds is available to us for general
      working capital purposes.




Net
      Cash
      Used In Investing Activities. The net cash used in investing activities reported
      for the three months ended March 31, 2006 consisted primarily of $(2,709,653)
      from the acquisition of intangible assets.




Net
      Cash
      Provided By Financing Activities. Net cash provided by financing activities
      reported for the three months ended March 31, 2006 consisted primarily of
      $1,000,000 provided by the use of our line of credit, $3,112,457 in proceeds
      from the sale of stock, offset by $259,057 repayment of leases and $429,500
      in
      repayment of notes.




During
      the periods ended in 2005 and 2004, our sources of capital included a public
      stock offering; equipment financing from a third party, short-term notes from
      stockholders, convertible debentures and other private sources of
      capital.




With
      respect to our equipment financing where we have sold and leased back most
      of
      our furniture, equipment, tooling and shufflers held for rent, we have repaid
      $577,908 for the three months ended March 31, 2005 and repaid $259,057 for
      the
      three months ended March 31, 2006. As of March 31, 2006, we had outstanding
      equipment financing of $650,748. These operating equipment leases have terms
      of
      11 to 21 months and were not recorded as sales because each of the leases
      included a mandatory buy-back provision.




During
      the three months ended March 31, 2006, we borrowed $1,000,000 under the $5
      million line of credit we negotiated in October 2005 and bearing 9% interest.




On
      May 3,
      2006, the Company closed on an $18 million financing transaction with four
      investment funds managed by Bricoleur Capital Management (“Bricoleur”). The $18
      million financing consists of $13 million of 8% senior secured promissory notes
      and a $5 million equity put agreement that can be exercised from time to time
      at
      the Company’s option. Concurrent with closing of the financing, the holders of
      the Company’s outstanding 10% Senior Notes converted approximately $5.2 million
      of the principal under those notes to common shares of the Company as provided
      for under the terms of the 10% Senior Notes. The Company used the proceeds
      of
      the financing to retire the balance of the 10% Senior notes and the $5 million
      9% line of credit acquired by the Company in October 2005. The senior debt
      placement includes detachable warrants to purchase 3.2 million shares at $2.50
      per share, some of which are recallable based on early retirement of $6 million
      of the debt portion of the transaction. Principal payments of $1.5 million
      are
      due on the anniversary of the transaction for the first four years with the
      balance due in March 2011. Under the terms of the transaction, fifty percent
      of
      proceeds from the sale of any assets received by the Company will be applied
      to
      the outstanding principal of the loan. In addition, if the Company reduces
      the
      debt to under $7 million within one year of the transaction 800,000 warrants
      will be cancelled, within two years 600,000 will be cancelled and within three
      years 200,000 will be cancelled. The transaction also includes a $5 million
      equity put agreement for its common stock, at a discount of 20% to the market
      at
      the date of execution of the put as determined by the Company.




-10-




As
      a
      result, we will continue to incur significant interest expense in the future,
      however at a reduced rate as a result of the lower principal amount of aggregate
      indebtedness and an overall lower rate of interest. ****




**Critical
      Accounting Policies and Estimates**




The
      following is a summary of what our management believes are the critical
      accounting policies related to our operations. The application of these
      policies, in some cases, requires management to make subjective judgments and
      estimates regarding the effect of matters that are inherently uncertain. See
      Note 1, "Description of Business and Significant Accounting Policies," to
      financial statements included in our annual report on Form 10KSB for a more
      complete list of our significant accounting policies. Except as described below,
      we do not employ any critical accounting policies selected from among available
      alternatives or that require the exercise of significant management judgment
      to
      apply, and we believe none of our estimates are so highly uncertain or
      susceptible to change as to present a significant risk of a material impact
      on
      our financial condition or operating performance, except for the deferred tax
      asset valuation allowance.




***Allowance
      for Doubtful Accounts.***




In
      connection with the preparation of our financial statements, management reviews
      and evaluates the collectibility of our trade receivables and adjusts our
      allowance for estimated uncollectible accounts as deemed necessary in the
      circumstances. These estimates have the potential for critically affecting
      the
      determination of results of operations for any given period. Factors considered
      by management in making such estimates and adjustments include any
      concentrations among customers, changes in our relationships therewith, payment
      history and the apparent financial condition thereof.




***Revenue
      Recognition.***




We
      recognize revenue from the sale of our shuffler and Deck CheckerTM products upon
      shipment against valid customer contracts or purchase orders. Sales are
      recognized immediately when shufflers that are rented are converted to purchases
      depending on the creditworthiness and payment history of the casino company
      since payment terms are from 20 to 48 months. We recognize revenue from our
      sales to independent distributors at the time that the distributor takes
      possession of our product and title transfers to the buyer. The extended
      warranty and maintenance components that are part of long term sales contracts
      are unbundled and recognized as deferred revenue amortized over the remaining
      life of the sales agreement after the initial 90−day warranty as required by the
      Emerging Issues Task Force Issue No. 00−21, *Revenue
      Arrangements with Multiple Deliverables* .
      The
      useful life of our shufflers and Deck CheckersTM is five years with proper
      maintenance; the life can be extended with the replacement of component parts.
      If the customer does not possess the required creditworthiness or an established
      payment history with us, we would then book the revenue as an installment sale
      and recognize it over time as payments are received. Revenue from shuffler
      rentals is recorded at the first of each month in accordance with rental
      contract terms. All rental contracts are cancelable upon 30−day written notice
      by the customer. Maintenance expense for rental units is recorded in the period
      it is incurred. Although sales are made with a right to return, returns are
      subject to a claim of unacceptable performance. Sales returns and allowances
      are
      recorded after returned goods are received and inspected. We provide currently
      for estimated warranty repair costs associated with sales contracts. Although
      there are no extended warranties offered for our products, we do provide for
      maintenance contracts that are billed and recognized on a monthly
      basis.




-11-
  ***Intangible
        Assets.***




We
      amortize our intangible assets (patent and technology rights) on a straight-line
      basis over currently estimated useful lives of 10 years. Based on its assessment
      of the potential for product obsolescence and other impairment factors, we
      believe that the full term of the patent fairly represents our best estimate
      at
      this time of the useful life of our patents and technology rights.




***Legal
      defense costs***




We
      do not
      accrue for future litigation defense costs, if any, to be incurred by us in
      connection with outstanding litigation and other disputed matters but, instead,
      record such costs as the related legal and other services are
      rendered.




***Income
      taxes***




Based
      on
      the Company’s operating history to date, management does not believe realization
      of its deferred tax assets, principally the tax benefit of a net operating
      loss
      carry forward, can yet be considered more likely than not and, accordingly,
      has
      effectively provided a 100% valuation allowance.




***Options***




The
      Company was required to adopt Financial Accounting Standards Board (FASB)
      Statement (SFAS) No. 123R and elected the modified prospective method of
      transition. However, the adoption of SFAS No. 123R did not have any effect
      on the Company’s results of operations for the current quarter.




We
      elected to continue to value our share-based payment awards options granted
      beginning in fiscal year 2006 using the Black-Scholes option-pricing model,
      which we previously did under SFAS 123. We believe this commonly-used method,
      despite its relative simplicity, is sufficiently reliable for the purpose
      of valuing employee stock options. The determination of fair value of
      share-based payment awards on the date of grant using the Black-Scholes model
      is
      affected by the Company's stock price as well as the input of other subjective
      assumptions selected judgmentally by management as most appropriate for the
      circumstances, following the guidance in SFAS 123R. These assumptions include,
      but are not limited to, the expected term of stock options and the Company's
      expected stock price volatility over the term of the awards, which are the
      ones
      that, depending on management's judgments, have significant potential
      effect on recorded expense.




***Recent
      Accounting Pronouncements***




In
      May
      2005, the FASB issued Statement of Financial Accounting Standards (SFAS) 154, *Accounting
      Changes and Error Corrections* .
      This
      new standard replaces APB Opinion No. 20, *Accounting
      Changes, and FASB Statement No. 3, Reporting Accounting Changes in Interim
      Financial Statements.* ,
      Among
      other changes, SFAS 154 requires that a voluntary change in accounting principle
      be applied retrospectively with all prior period financial statements presented
      on the new accounting principle, unless the new standard being adopted requires
      otherwise or it is impracticable to do so. SFAS is effective for fiscal years
      beginning after December 15, 2005. Management has no present expectation of
      adopting any accounting changes to be affected by SFAS 154 in the foreseeable
      future.




In
      February 2006, the FASB issued SFAS 155, Accounting for Certain Hybrid Financial
      Instruments, which amends SFAS 133, Accounting for Derivative Instruments and
      Hedging Activities, and SFAS 140, Accounting for Transfers and Servicing of
      Financial Assets and Extinguishments of Liabilities—a replacement of FASB
      Statement No. 125. SFAS 155 will be effective for all financial instruments
      issued or acquired after the beginning of an entity's first fiscal year that
      begins after September 15, 2006. Management has not yet evaluated or determined
      the likely effect of SFAS 155 on its future financial statements.




-12-




**Risk
      Factors**




***We
      may*** ***require*** ***additional funding in the future to continue to operate our business.*** We
      had
      working capital deficit of $(3,307,707) as of March 31, 2006, and our working
      capital continues  to
      deteriorate due to  ongoing
      losses. In May 2006, we entered into an agreement to provide us with $18 million
      additional debt and equity financing, and believe that this financing, in
      addition to our existing cash and cash equivalents together with expected cash
      generated by operations, will meet our working capital needs, capital
      expenditures, and commitments for at the next 12 months. In the event it is
      not
      sufficient, we will endeavor to raise additional required funds through various
      financing sources, including the sale of our equity and debt securities and
      the
      procurement of commercial debt financing. However, as result of our present
      level of debt and certain restrictions on our ability to incur additional
      indebtedness under our agreement, it is unlikely we will be able to obtain
      additional debt-based capital, unless a significant portion of the proceeds
      are
      used to retire existing debt. There can be no guarantees that such funds will
      be
      available on commercially reasonable terms, if at all. If such financing is
      not
      available on satisfactory terms, we may be unable to expand or continue our
      business as desired and operating results may be adversely affected. Any debt
      financing will increase expenses and must be repaid regardless of operating
      results and may involve restrictions limiting our operating flexibility. If
      we
      issue equity securities to raise additional funds, the following results may
      occur:




·
            the
                percentage ownership of our existing stockholders will be reduced;




·
            our
                stockholders may experience additional dilution in net book value
                per
                share; or




·
            the
                new equity securities may have rights, preferences or privileges
                senior to
                those of the holders of our common stock.




***We
      have a history of significant operating losses and anticipate continued
      operating losses for at least the near term.*** For
      the
      three months ended March 31, 2006 and the years ended December 31, 2005 and
      2004, we have incurred net losses of $2,754,898, $17,567,230 and $9,538,200,
      respectively, and our operations have used $2,751,957, $14,816,322 and
      $10,660,133 of cash, respectively. As of March 31, 2006, December 31, 2005
      and December 31, 2004, we had accumulated deficits of $74,442,676, $71,687,777
      and $53,743,174, respectively. Based on our presently known commitments and
      plans, we believe that we have sufficient funding through the end of 2006.
      If we
      are unable to generate additional funds from operational cash flow, we will
      be
      required to locate additional sources of capital from private or public
      placements of debt or equity, or from institutional or other lending sources.
      If
      our revenues do not increase very substantially, or if our spending levels
      exceed our expectations, we will not become profitable. Revenues may not grow
      in
      the future, and we may not generate sufficient revenues for profitability.
      If we
      become profitable, we may not be able to sustain profitable operations.




***We
      are continuing to develop customer acceptance of our products and until such
      time as our products are widely accepted in the marketplace we do not expect
      to
      achieve a profitable level of operations.*** We
      may be
      unable to generate sufficient demand for our products. If we fail to generate
      sufficient demand for our products, we may be unable to sustain operations
      or
      generate a return to investors. Until January 2000, we were in the development
      stage and derived minimal revenues from our products. Currently we are an
      operating company that continues to develop new products. Since January 2000,
      our activities have been limited to analyzing and consulting with persons in
      the
      gaming industry, developing and manufacturing new products, establishing
      distribution networks for our products, marketing our products to the gaming
      industry, and commencing product sales. During such time, we have derived only
      limited revenues, which have been insufficient to sustain our operations. We
      may
      not generate sufficient revenue to sustain our operations. No independent
      organization has conducted market research providing management with independent
      assurance from which to estimate potential demand for our products. The overall
      market may not be receptive to our products, and we may not successfully compete
      in the target market for our products.




-13-




***Our
      leased shufflers are more susceptible to replacement by
      customers.*** All of
      our leased shufflers are placed with customers under short-term lease
      arrangements, which, unlike long-term leases or permanent sales of our products,
      can easily be terminated by a customer. The manner in which such short-term
      leases are structured puts our shufflers at greater risk of replacement due
      to
      pressure from competitors, changes in economic conditions, obsolescence and
      declining popularity. Casino operators may terminate the use of our products,
      and we may not be able to maintain and expand the number of installed shufflers
      through enhancement of existing shufflers, introduction of new shufflers,
      customer service or otherwise.




***We
      may be unable to adequately protect our intellectual property
      right*** .
      Our
      success depends upon maintaining the confidentiality and proprietary nature
      of
      our intellectual property rights. Our ability to compete may be damaged, and
      our
      revenues may be reduced if we are unable to protect our intellectual property
      rights adequately. To protect these rights, we rely principally on a combination
      of:




·
            contractual
                arrangements providing for non-disclosure and prohibitions on
                use;




·
            patents
                and pending patent applications;




·
            trade
                secret, copyright and trademark laws;
                and




·
            certain
                built-in technical product
                features.




Patent,
      trade secret, copyright and trademark laws provide limited protection. The
      protections provided by laws governing intellectual property rights do not
      prevent our competitors from developing, independently, products similar or
      superior to our products and technologies. In addition, effective protection
      of
      copyrights, trade secrets, trademarks, and other proprietary rights may be
      unavailable or limited in certain foreign countries. We may be unaware of
      certain non-publicly available patent applications, which, if issued as patents,
      could relate to our services and products as currently designed or as we may
      modify them in the future. Legal or regulatory proceedings to enforce our
      patents, trademarks or copyrights could be costly, time consuming, and could
      divert the attention of management and technical personnel.




***Adverse
      results in current litigation could result in substantial monetary damages
      and
      impacts on the manufacture and sale of certain of our shuffler
      products.***  Shuffle
      Master, our principal competitor in the shuffler market, has one lawsuit against
      us for patent infringement. We believe our position to be meritorious and we
      have reasonable defenses to Shuffle Master’s claims. However, we cannot
      determine whether we will ultimately prevail in the lawsuit, nor whether
      damages, if awarded, would significantly impact our ability to continue to
      manufacture and sell particular products within the United States and its
      territories. If we do not prevail, we will be unable to sell the PokerOne
      shuffler products in the United States unless we change certain components
      used
      in the shuffler or obtain appropriate licenses from Shuffle Master to use the
      playing card shuffler apparatus .




***It
      is possible that our future products will be the subject of future patent
      litigation if the products are sold and installed in the United States and,
      if
      commenced, could subject us to continuing litigation costs and risks.*** Other
      than the allegations made by Shuffle Master discussed above, we are not aware
      of
      any claims or basis for our current products infringing on the proprietary
      rights of third parties. To the extent that we introduce new products that
      incorporate the same or similar technology, it is likely that Shuffle Master
      will bring one or more claims against us seeking damages, injunctive or other
      equitable relief, or both. We cannot predict the outcome of any present or
      future litigation that may occur.




-14-




If
      our
      future products incorporate technology that infringes the proprietary rights
      of
      third parties and we do not secure licenses from them, we could be liable for
      substantial damages that would cause a material reduction in revenues and impair
      our prospects for achieving growth and profitability.




In
      furtherance of the development of our services or products, we may need to
      acquire licenses for intellectual property to avoid infringement of third party
      rights or claims of infringement. These licenses may not be available on
      commercially reasonable terms, if at all. Claims for infringement, if made,
      could damage our business prospects, our results of operations and financial
      condition, whether or not the claims have merit, by:




·
            consuming
                substantial time and financial resources required to defend against
                them;




·
            diverting
                the attention of management from growing our business and managing
                operations;




·
            resulting
                in costly litigation; and




·
            disrupting
                product sales and shipments.




If
      any
      third party prevails in an action against us for infringement of its proprietary
      rights, we could be required to pay damages and either enter into costly
      licensing arrangements or redesign our products so as to exclude the infringing
      technology. As a result, we would incur substantial costs and delays in product
      development, sales and shipments, our revenues may decline substantially and
      we
      may not be able to achieve the growth required for us to achieve profitability




***We
      rely*** ***on
      distributors in international markets, and our limited sales experience in
      foreign countries could cause us to lose sales*.** Substantially
      all sales of our products outside the U.S. are achieved through distributor
      relationships. We believe the distributors that we have engaged are experienced
      and reputable; however, if we are unable to manage these relationships, our
      ability to generate revenue and profits in the non-U.S. market may be adversely
      affected. To the extent that we engage in direct sales outside the U.S., we
      have
      limited sales experience and history in foreign markets.




***Our
      management holds a controlling interest in our common stock, giving our
      management significant power to control matters submitted to our stockholders.*** As
      of May
      12, 2006, our executive officers and members of our board beneficially own
      approximately 8,440,014 shares of common stock, or approximately 35.9% of the
      outstanding shares of our common stock. Accordingly, these stockholders have
      significant power to control matters requiring approval by our stockholders,
      including the election of directors and approval of mergers and other
      significant corporate transactions. This concentration of ownership may make
      it
      more difficult for non management stockholders to effect substantial changes
      in
      our company, and also has the effect of delaying, preventing or expediting,
      as
      the case may be, a change in control of our company.




**Item
                3.**
            **Controls
                and Procedures******




(a)  *Evaluation
      of Disclosure Controls.*  Our
      Chief
      Executive Officer and Chief Financial Officer have evaluated the effectiveness
      of our disclosure controls and procedures as of March 31, 2006. Disclosure
      controls and procedures are controls and other procedures that are designed
      to
      ensure that information required to be disclosed by us in the reports that
      we
      file or submit under the Exchange Act is recorded, processed, summarized and
      reported within the time periods specified in the SEC’s rules and forms.
      Disclosure controls and procedures include, without limitation, controls and
      procedures designed to ensure that information required to be disclosed by
      us in
      the reports that we file under the Exchange Act is accumulated and communicated
      to our management, as appropriate to allow timely decisions regarding required
      disclosure. Based on their evaluation, our Chief Executive Officer and Chief
      Financial Officer have concluded that our disclosure controls and procedures
      were effective as of March 31, 2006.




-15-




(b)  *Changes
      in Disclosure Controls and Procedures.* Since
      joining VendingData in the fourth quarter of 2005, our current financial
      management team has and is continuing to implement improvements to our internal
      controls and procedures to address weaknesses and deficiencies identified by
      current senior management. Specifically, we have modified, or are in the process
      improving, our procedures for reconciling intercompany accounts, posting
      accounts receivable in our accounting system, communicating between sales and
      accounting personnel, reviewing journal entries, authorizing purchase orders
      and
      integrating our financial reporting databases. On March 27, 2006, our
      independent registered public accounting firm notified our Audit Committee
      that,
      during the course of performing its audit of our 2005 financial statements,
      it
      had identified one material weakness concerning the proper dating of payments
      received, which affects the aging of accounts receivable, and a significant
      deficiency regarding our internal controls over our financial reporting
      concerning the reconciliation of the separate databases used by us in our
      financial reporting and inventory tracking. The material weakness and
      significant deficiency related to processes in place when our current financial
      management joined our company in the fourth quarter of 2005. We have already
      addressed and resolved the material weakness concerning the proper dating of
      payments received. We are in the process of addressing and resolving the
      significant deficiency concerning the reconciliation of the separate databases
      and expect that it will be corrected by the end of the second quarter of 2006.




While
      we
      are in the process of taking the foregoing steps and developing and implementing
      a formal set of internal controls and procedures for financial reporting as
      required by the Sarbanes-Oxley Act of 2002, the efficacy of the steps we have
      taken to date and steps we are still in the process of completing is subject
      to
      continued management review supported by confirmation and testing by management
      and by our auditors. As a result, we anticipate that additional changes
      will be made to our internal controls and procedures. Other than the
      foregoing initiatives, no change in our internal control over financial
      reporting occurred during the three months ended March 31, 2006 that has
      materially affected, or is reasonably likely to affect, our internal control
      over financial reporting.




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




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**PART
      II - OTHER INFORMATION**




**Item
      6. Exhibits.**




(a)
              Exhibits.10.1
              8%
                  Senior Secured Note Purchase Agreement110.2
              Amended
                  and Restated Securities Put Agreement110.3
              Security
                  Agreement110.4
              Registration
                  Rights Agreement110.5
              Form
                  of 8% Note110.6
              Form
                  of Warrant110.7
              Form
                  of Put Note110.8
              Letter
                  of Intent between VendingData Corporation and William Westmore
                  Purton and
                  Synwood Pty Ltd.31.1
              Certifications
                  Pursuant to Section 302 of the Sarbanes-Oxley Act of
                  2002.31.2
              Certifications
                  Pursuant to Section 302 of the Sarbanes-Oxley Act of
                  2002.32.1
              Certification
                  of Principal Executive Officer and Principal Financial Officer
                  pursuant to
                  Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section
                  1350).
  1
              Filed
                as an exhibit to the Company's Current Report on Form 8-K filed with
                the
                Securities and Exchange Commission on May 5,
                2006.




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**SIGNATURE**




In
      accordance with the requirements of the Exchange Act, the registrant caused
      this
      report to be signed on its behalf by the undersigned, thereunto duly
      authorized.




**VendingData
                Corporation**
              (Registrant)Date: May
              15, 2006
            By:
            /s/
                Mark R. NewburgMark
                  R. NewburgPresident,
                Chief Executive Officer and Treasurer
              (Principal
                Executive Officer)






****Date: May
              15, 2006
            By:
            /s/
                Arnaldo F. GalassiArnaldo
                F. GalassiIts:
            Chief
                Financial Officer and Secretary
              (Principal
                Financial Officer)




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