##### Table of Contents









SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549





Form 10-K


|  |  |                                                                                          |  | 
|- |  | ---------------------------------------------------------------------------------------- |  | 
|þ |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934 |  | 
|  |  | For the fiscal year ended October 31, 2004                                               |  | 

Commission file number 000-23401





GameTech International, Inc.


(Exact name of registrant as specified in its charter)


|                                                                   |  |                                         
|------------------------------------------------------------------ |  | ----------------------------------------
|Delaware                                                           |  | 33-0612983                              
|(State or other jurisdiction of
    incorporation or organization) |  | (I.R.S. Employer
    Identification No.)

900 Sandhill Road


Reno, Nevada 89521


(775) 850-6000


(Address, including zip code, and telephone number, including
area code of principal executive offices)


Securities registered pursuant to Section 12(b) of the
Act:


|                    |  |                                          
|------------------- |  | -----------------------------------------
|Title of Each Class |  | Name of Each Exchange on Which Registered
|                    |  |                                          
|None                |  | Not applicable                           

Securities registered pursuant to Section 12(g) of the
Act:


Common Stock, par value $.001 per share


Rights to Purchase Series A Junior Participating
Preferred Stock


(Title of class)


þ o


o


o þ






Documents Incorporated By Reference












---










GAMETECH INTERNATIONAL, INC.


ANNUAL REPORT ON FORM 10-K


FISCAL YEAR ENDED OCTOBER 31, 2004


TABLE OF CONTENTS


|                                               |  |                                                                                                                       |     |      |    | 
|---------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------- | --- | ---- | -- | 
|                                               |  |                                                                                                                       |     | Page |   
|                                               |  |                                                                                                                       |     |      |   
|PART I                                        
|Item 1.                                        |  | Business                                                                                                              |     |      | 1  | 
|Item 2.                                        |  | Properties                                                                                                            |     |      | 16 | 
|Item 3.                                        |  | Legal Proceedings                                                                                                     |     |      | 16 | 
|Item 4.                                        |  | Submission of Matters to a Vote of
    Security Holders                                                               |     |      | 18 | 
|Item 5.                                        |  | Market for Registrants Common
    Equity, Related Stockholder Matters, and Issuer Purchases of
    Equity Securities |     |      | 18 | 
|Item 6.                                        |  | Selected Financial Data                                                                                               |     |      | 20 | 
|Item 7.                                        |  | Managements Discussion and
    Analysis of Financial Condition and Results of Operations                             |     |      | 21 | 
|Item 7A.                                       |  | Quantitative and Qualitative Disclosures
    About Market Risk                                                        |     |      | 28 | 
|Item 8.                                        |  | Financial Statements and Supplementary
    Data                                                                       |     |      | 29 | 
|Item 9.                                        |  | Changes in and Disagreements with
    Accountants on Accounting and Financial Disclosure                              |     |      | 29 | 
|Item 9A.                                       |  | Controls and Procedures                                                                                               |     |      | 29 | 
|Item 9B.                                       |  | Other Information                                                                                                     |     |      | 29 | 
|Item 10.                                       |  | Directors and Executive Officers of the
    Registrant                                                                |     |      | 30 | 
|Item 11.                                       |  | Executive Compensation                                                                                                |     |      | 33 | 
|Item 12.                                       |  | Security Ownership of Certain Beneficial
    Owners and Management and Related Stockholder Matters                    |     |      | 39 | 
|Item 13.                                       |  | Certain Relationships and Related
    Transactions                                                                    |     |      | 40 | 
|Item 14.                                       |  | Principal Accountant Fees and
    Services                                                                            |     |      | 41 | 
|Item 15.                                       |  | Exhibits and Financial Statement
    Schedules                                                                        |     |      | 42 | 
|SIGNATURES                                     |  |                                                                                                                       | 44  |     
|INDEX TO CONSOLIDATED FINANCIAL
    STATEMENTS |  |                                                                                                                       | F-1 |     
|EX-23.1                                       
|Exhibit 31.1                                  
|Exhibit 31.2                                  
|Exhibit 32.1                                  
|Exhibit 32.2                                  



Statement Regarding Forward-Looking Statements


The statements contained in this report on Form 10-K
that are not purely historical are forward-looking statements
within the meaning of applicable securities laws.
Forward-looking statements include statements regarding our
expectations, anticipation,
intentions, beliefs, or
strategies regarding the future. Forward-looking
statements also include statements regarding revenue, margins,
expenses, and earnings analysis for fiscal 2005 and thereafter;
expansion of products or product development; expansion into new
domestic and international markets; potential acquisitions or
strategic alliances; and liquidity and anticipated cash needs
and availability. All forward-looking statements included in
this report are based on information available to us as of the
filing date of this report, and we assume no obligation to
update any such forward-looking statements. Our actual results
could differ materially from the forward-looking statements.
Among the factors that could cause actual results to differ
materially are the factors discussed in Item 1,
Business  Risk Factors.






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PART I







|        |         
|------- | --------
|Item 1. | Business

General








www.gametech-inc.com.


Business Strategy






| |                                    
| | -----------------------------------
| | Emphasize Superior Customer Service





| |                         
| | ------------------------
| | Expand Product Offerings



1



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| |                                           
| | ------------------------------------------
| | Increase Player Usage of Bingo Electronics





| |                                 
| | --------------------------------
| | Expand into New Domestic Markets





| |                       
| | ----------------------
| | Expand Internationally





| |                         
| | ------------------------
| | Develop New Applications



tm tm tm






2



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| |                                                                 
| | ----------------------------------------------------------------
| | Develop Strategic Alliances/ Acquire Complementary
    Companies



Products


tm








| |   |                                                                                                                                                                                 
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the ability to play up to 600 electronic bingo card images
    during one bingo game, significantly more than can be played on
    paper;                                       
|
| |  | the ability to electronically and simultaneously mark the called
    numbers on all cards being played, thereby reducing player error
    in missing or mismarking a number; and
|
| |  | the ability to alert the player upon attaining a
    BINGO, thereby reducing the chance a player misses
    winning a prize.                                                  







| |                       
| | ----------------------
| | Portable Bingo Systems





| |   |                                                                           
| | - | --------------------------------------------------------------------------
| |  | the
    TED2Ctm
    terminal, our top of the line color portable terminal;
|
| |  | the Traveler terminal, our state-of-the-art color portable
    terminal;  

3



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| |   |                                                                                        
| | - | ---------------------------------------------------------------------------------------
| |  | the Palm Top terminal, which is our high-end black and white
    portable terminal; and
|
| |  | the TED® terminal, which is our lower-cost black and white
    portable terminal.      

2


2 2










| |                         
| | ------------------------
| | Fixed-Base Bingo Systems



File Server.


Caller Unit.


4



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Sales Unit.


Players Terminal.


Product and System Software Development








2






Sales, Marketing, and Distribution




5



---



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| |   |                                                         
| | - | --------------------------------------------------------
| |  | installation by us at no cost to the bingo operator;    
|
| |  | training sessions for the bingo staff;                  
|
| |  | promotional sessions to introduce players to the system;
|
| |  | advertising package and point-of-sale materials; and    
|
| |  | an ongoing service and maintenance program.             



| |               
| | --------------
| | Target Markets





Materials and Supplies


2 2




Intellectual Property


2


6



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2


Competition




Government Regulation




7



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| |                  
| | -----------------
| | Nevada Regulation





| |                           
| | --------------------------
| | Native American Regulation







| |                   
| | ------------------
| | Federal Regulation



8



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| |                                       
| | --------------------------------------
| | Regulation of Electronic Bingo Systems







| |                              
| | -----------------------------
| | Systems Security Requirements





| |                                                                
| | ---------------------------------------------------------------
| | Application of Future or Additional Regulatory
    Requirements



Employees




Risk Factors






| |                                                          
| | ---------------------------------------------------------
| | We depend on the bingo and electronic bingo
    industry.



9



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| |                                                                                                    
| | ---------------------------------------------------------------------------------------------------
| | Our success depends on our ability to respond to rapid
    market changes and product enhancements.





| |                                                                                       
| | --------------------------------------------------------------------------------------
| | Some of our customers may terminate agreements with us on
    relatively short notice.





| |                                                                                                                                
| | -------------------------------------------------------------------------------------------------------------------------------
| | Our compliance with several governmental and other
    regulations is costly and subjects our company to significant
    risks.





| |                                                                                                                                                               
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We may need additional cash resources to support our
    existing operations and execute our growth strategy and such
    cash resources may not be available.





10



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| |   |                                                     
| | - | ----------------------------------------------------
| |  | maintain, develop, or enhance our product offerings;
|
| |  | take advantage of future opportunities;             
|
| |  | respond to competitive pressures;                   
|
| |  | expand operations; or                               
|
| |  | execute our growth strategy.                        





| |                                                               
| | --------------------------------------------------------------
| | We depend on third-party suppliers for portable
    terminals.

2 2




| |                                                          
| | ---------------------------------------------------------
| | We depend on our relationships with our
    distributors.





| |                                                                                     
| | ------------------------------------------------------------------------------------
| | We depend on Native American laws in the operation of a
    portion of our business.



11



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| |                                                                                                                                                                                                                                                               
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | If our games were classified as Class III games under
    the Indian Gaming Regulatory Act, we may not be able to obtain
    the necessary approvals to operate our business, or we may have
    to modify our systems to be classified as Class II
    games.





| |                  
| | -----------------
| | Nevada Regulation





| |                                                                          
| | -------------------------------------------------------------------------
| | We rely on the Texas market for a significant portion of
    our revenue.





| |                                                            
| | -----------------------------------------------------------
| | The electronic bingo industry is extremely
    competitive.



12



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| |                                                                                                                         
| | ------------------------------------------------------------------------------------------------------------------------
| | Investors may not be able to exercise control over our
    company as a result of principal stockholders
    ownership.





| |                                                             
| | ------------------------------------------------------------
| | We must be able to attract and retain skilled
    employees.





| |                                                                                                                                                                         
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Acquisitions could divert managements time and
    attention, dilute the voting power of existing stockholders, and
    have a material adverse effect on our business.





| |   |                                                                                                                                                           
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | difficulties integrating the products, operations, and personnel
    of acquired companies;                                                               
|
| |  | the additional financial resources required to fund the
    operations of acquired companies;                                                             
|
| |  | the potential disruption of our business;                                                                                                                 
|
| |  | our ability to maximize our financial and strategic position by
    the incorporation of acquired technology or businesses with our
    product offerings;
|
| |  | the difficulty of maintaining uniform standards, controls,
    procedures, and policies;                                                                  
|
| |  | the potential loss of key employees of acquired companies;                                                                                                
|
| |  | the impairment of employee and customer relationships as a
    result of changes in management;                                                           
|
| |  | significant expenditures to consummate acquisitions; and                                                                                                  
|
| |  | difficulties in meeting applicable regulatory requirements.                                                                                               



13



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| |                                                                            
| | ---------------------------------------------------------------------------
| | Our failure to manage effectively our growth could impair
    our business.





| |   |                                                                                                                
| | - | ---------------------------------------------------------------------------------------------------------------
| |  | expand our facilities and equipment and further enhance our
    operational, financial, and management systems;
|
| |  | design, develop, produce, and receive products from third-party
    suppliers on a timely basis;               
|
| |  | develop new and maintain existing distribution channels in order
    to maximize revenue and profit margins;   
|
| |  | effectively manage regulatory risks in various jurisdictions;                                                  
|
| |  | successfully hire, train, retain, and motivate additional
    employees; and                                   
|
| |  | integrate successfully the operations of any acquired businesses
    with our operations.                      





| |                                                                                                                                                             
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Sales of additional shares of common stock, or the
    potential for such sales, could have a depressive effect on the
    market price of our common stock.





| |                                                             
| | ------------------------------------------------------------
| | We have limited protection of our intellectual
    property.



14



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| |                                                                              
| | -----------------------------------------------------------------------------
| | Our stockholders rights plan may adversely affect
    existing stockholders.







| |                                                                                                                                                                                                       
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Failure to achieve and maintain effective internal
    controls in accordance with Section 404 of the
    Sarbanes-Oxley Act could have a material adverse effect on our
    business and stock price.







| |                                                                                                               
| | --------------------------------------------------------------------------------------------------------------
| | Our operating results could differ materially from the
    forward-looking statements included in this report.



15



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|        |           
|------- | ----------
|Item 2. | Properties








|        |                  
|------- | -----------------
|Item 3. | Legal Proceedings



16



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17



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



|                   |  |                |            |  |          |  |         | 
|------------------ |  | -------------- | ---------- |  | -------- |  | ------- | 
|Nominee            |  | Votes in Favor |            |  | Withheld | 
|                   |  |                |            |  |          | 
|Richard T. Fedor   |  |                | 10,441,797 |  |          |  | 591,108 | 
|Vern D. Blanchard  |  |                | 10,402,482 |  |          |  | 630,423 | 
|Donald K. Whitaker |  |                | 11,022,505 |  |          |  | 10,400  | 
|John B. Furman     |  |                | 11,006,505 |  |          |  | 26,400  | 



| |                                                                                                                                                                               
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Although Clarence H. Thiesen was named as a director nominee in
    our prior statement, Mr. Thiesen resigned as a member of
    our Board of Directors on September 13, 2004.





| |                                                                                                                                                                  
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Proposal to ratify the appointment of Ernst & Young LLP
    as our independent registered public accounting firm for the
    fiscal year ending October 31, 2004.

|               |  |         |       |  |           |  |     |                 |  |  |   | 
|-------------- |  | ------- | ----- |  | --------- |  | --- | --------------- |  |  | - | 
|Votes in Favor |  | Opposed |       |  | Abstained |  |     | Broker Non-Vote | 
|               |  |         |       |  |           |  |     |                 | 
|11,029,458     |  |         | 3,247 |  |           |  | 200 |                 |  |  | 0 | 

18



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PART II







|        |                                                                                                                      
|------- | ---------------------------------------------------------------------------------------------------------------------
|Item 5. | Market for Registrants Common Equity, Related
    Stockholder Matters, and Issuer Purchases of Equity
    Securities



|                                   |                                          |      |   |      |     |  |   |      | 
|---------------------------------- | ---------------------------------------- | ---- | - | ---- | --- |  | - | ---- | 
|                                   |                                          | High |   |      | Low | 
|                                   |                                          |      |   |      |     | 
|Fiscal Year Ended October 31, 2003 |                                          |      |   |      |     |  |   |     
|                                   | First Quarter                            |      | $ | 5.25 |     |  | $ | 3.05 | 
|                                   | Second Quarter                           |      | $ | 3.45 |     |  | $ | 2.41 | 
|                                   | Third Quarter                            |      | $ | 3.96 |     |  | $ | 2.76 | 
|                                   | Fourth Quarter                           |      | $ | 3.69 |     |  | $ | 2.97 | 
|Fiscal Year Ended October 31, 2004 |                                          |      |   |      |     |  |   |     
|                                   | First Quarter                            |      | $ | 4.70 |     |  | $ | 3.09 | 
|                                   | Second Quarter                           |      | $ | 4.55 |     |  | $ | 3.58 | 
|                                   | Third Quarter                            |      | $ | 6.05 |     |  | $ | 3.66 | 
|                                   | Fourth Quarter                           |      | $ | 5.47 |     |  | $ | 3.80 | 
|Fiscal Year Ended October 31, 2005 |                                          |      |   |      |     |  |   |     
|                                   | First Quarter (through January 13, 2005) |      | $ | 5.15 |     |  | $ | 3.46 | 



Dividend Policy




19



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|        |                        
|------- | -----------------------
|Item 6. | Selected Financial Data



|                                                                          |                            |                                                             |         |        |        |   |        |        |        |   |        |        |        |      |        |        |        |   |        |        |        | 
|------------------------------------------------------------------------- | -------------------------- | ----------------------------------------------------------- | ------- | ------ | ------ | - | ------ | ------ | ------ | - | ------ | ------ | ------ | ---- | ------ | ------ | ------ | - | ------ | ------ | ------ | 
|                                                                          |                            | Years Ended October 31,                                     |        
|                                                                          |                            |                                                             |        
|                                                                          |                            | 2004                                                        |         |        | 2003   |   |        | 2002   |        |   | 2001   |        |        | 2000 |       
|                                                                          |                            |                                                             |         |        |        |   |        |        |        |   |        |        |        |      |       
|                                                                          |                            | (Dollars and shares in thousands, except per share amounts) |        
|Statement of Operations Data:                                             |                            |                                                             |         |        |        |   |        |        |        |   |        |        |        |      |        |        |        |   |        |       
|Revenue                                                                   |                            | $                                                           | 51,490  |        |        | $ | 52,329 |        |        | $ | 48,861 |        |        | $    | 48,536 |        |        | $ | 49,695 |       
|Cost of revenue                                                           |                            |                                                             | 24,027  |        |        |   | 21,775 |        |        |   | 18,982 |        |        |      | 22,185 |        |        |   | 16,011 |       
|                                                                          |                            |                                                             |         |        |        |   |        |        |        |   |        |        |        |      |       
|Gross profit                                                              |                            |                                                             | 27,463  |        |        |   | 30,554 |        |        |   | 29,879 |        |        |      | 26,351 |        |        |   | 33,684 |       
|Operating expenses:                                                       |                            |                                                             |         |        |        |   |        |        |        |   |        |        |        |      |        |        |        |   |        |       
|                                                                          | General and administrative |                                                             |         | 11,154 |        |   |        | 11,426 |        |   |        | 9,535  |        |      |        | 14,995 |        |   |        | 12,223 |       
|                                                                          | Sales and marketing        |                                                             |         | 12,561 |        |   |        | 12,323 |        |   |        | 13,245 |        |      |        | 14,400 |        |   |        | 12,680 |       
|                                                                          | Research and development   |                                                             |         | 5,179  |        |   |        | 4,692  |        |   |        | 2,671  |        |      |        | 2,780  |        |   |        | 1,938  |       
|                                                                          | Loss contingency           |                                                             |         | 3,628  |        |   |        |       |        |   |        |       |        |      |        |       |        |   |        |       |       
|                                                                          | Impairment of goodwill     |                                                             |         | 6,625  |        |   |        |       |        |   |        |       |        |      |        |       |        |   |        |       |       
|                                                                          |                            |                                                             |         |        |        |   |        |        |        |   |        |        |        |      |       
|                                                                          |                            | Total operating expenses                                    |         |        | 39,147 |   |        |        | 28,441 |   |        |        | 25,451 |      |        |        | 32,175 |   |        |        | 26,841 | 
|                                                                          |                            |                                                             |         |        |        |   |        |        |        |   |        |        |        |      |       
|Income (loss) from operations                                             |                            |                                                             | (11,684 | )      |        |   | 2,113  |        |        |   | 4,428  |        |        |      | (5,824 | )      |        |   | 6,843  |       
|Interest and other income (expense), net                                  |                            |                                                             | 58      |        |        |   | 3      |        |        |   | (7     | )      |        |      | 144    |        |        |   | 326    |       
|Income (loss) before provision for (benefit from) income taxes            |                            |                                                             | (11,626 | )      |        |   | 2,116  |        |        |   | 4,421  |        |        |      | (5,680 | )      |        |   | 7,169  |       
|Provision for (benefit from) income taxes                                 |                            |                                                             | (1,720  | )      |        |   | 925    |        |        |   | 1,688  |        |        |      | (1,285 | )      |        |   | 3,513  |       
|                                                                          |                            |                                                             |         |        |        |   |        |        |        |   |        |        |        |      |       
|Net income (loss)                                                         |                            | $                                                           | (9,906  | )      |        | $ | 1,191  |        |        | $ | 2,733  |        |        | $    | (4,395 | )      |        | $ | 3,656  |       
|                                                                          |                            |                                                             |         |        |        |   |        |        |        |   |        |        |        |      |       
|Diluted net income (loss) per share                                       |                            | $                                                           | (0.84   | )      |        | $ | 0.10   |        |        | $ | 0.23   |        |        | $    | (0.41  | )      |        | $ | 0.30   |       
|                                                                          |                            |                                                             |         |        |        |   |        |        |        |   |        |        |        |      |       
|Shares used in the calculation of diluted net income (loss) per
    share |                            |                                                             | 11,775  |        |        |   | 11,818 |        |        |   | 11,945 |        |        |      | 10,623 |        |        |   | 12,064 |       
|                                                                          |                            |                                                             |         |        |        |   |        |        |        |   |        |        |        |      |       
|Cash dividends per common share                                           |                            | $                                                           | 0.21    |        |        |   |       |        |        |   |       |        |        |      |       |        |        |   |       |       
|                                                                          |                            |                                                             |         |        |        |   |        |        |        |   |        |        |        |      |       

|                                                   |  |                                                             |        |  |      |   |        |      |  |   |        |  |  |      |        |  |  |   |        | 
|-------------------------------------------------- |  | ----------------------------------------------------------- | ------ |  | ---- | - | ------ | ---- |  | - | ------ |  |  | ---- | ------ |  |  | - | ------ | 
|                                                   |  | Years Ended October 31,                                     |       
|                                                   |  |                                                             |       
|                                                   |  | 2004                                                        |        |  | 2003 |   |        | 2002 |  |   | 2001   |  |  | 2000 |       
|                                                   |  |                                                             |        |  |      |   |        |      |  |   |        |  |  |      |       
|                                                   |  | (Dollars and shares in thousands, except per share amounts) |       
|Balance Sheet Data:                                |  |                                                             |        |  |      |   |        |      |  |   |        |  |  |      |        |  |  |   |        | 
|Cash, cash equivalents, and short term investments |  | $                                                           | 8,706  |  |      | $ | 11,952 |      |  | $ | 9,278  |  |  | $    | 12,955 |  |  | $ | 7,890  | 
|Working capital                                    |  |                                                             | 5,209  |  |      |   | 14,806 |      |  |   | 16,562 |  |  |      | 16,464 |  |  |   | 10,701 | 
|Total assets                                       |  |                                                             | 51,679 |  |      |   | 60,175 |      |  |   | 58,101 |  |  |      | 55,676 |  |  |   | 59,324 | 
|Total debt                                         |  |                                                             |       |  |      |   | 275    |      |  |   | 13     |  |  |      | 2,395  |  |  |   | 3,584  | 
|Total stockholders equity                         |  |                                                             | 40,670 |  |      |   | 52,621 |      |  |   | 50,490 |  |  |      | 46,584 |  |  |   | 50,030 | 

20



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|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 7. | Managements Discussion and Analysis of Financial
    Condition and Results of Operations

The following discussion should be read in conjunction with
our financial statements and notes thereto included elsewhere in
this report. The following discussion contains certain
forward-looking statements that involve risks and uncertainties.
Our actual results could differ materially from the results
anticipated in these forward-looking statements as a result of
the factors set forth in this report, including those set forth
under Item 1, Business  Risk
Factors.


Overview
















21



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2




Application of Critical Accounting Policies and Estimates




22



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| |                    
| | -------------------
| | Revenue Recognition





| |                                
| | -------------------------------
| | Allowance for Doubtful Accounts





| |                                        
| | ---------------------------------------
| | Reserve for Bingo Terminal Obsolescence





| |                                    
| | -----------------------------------
| | Software Development Capitalization

Accounting for the Costs of Computer
Software to Be Sold, Leased, or Otherwise Marketed.


23



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| |                                             
| | --------------------------------------------
| | Impairment of Goodwill and Intangible Assets







| |   |                                                                                                                                                                                                                               
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | a significant change in the manner of our use of the acquired
    assets or the strategy for our overall business;                                                                                                            
|
| |  | a significant decrease in the market price of an asset;                                                                                                                                                                       
|
| |  | a significant adverse change in legal factors or in the business
    climate that could affect the value of an asset, including an
    adverse action or assessment by a regulator;                                           
|
| |  | a current period operating or cash flow loss combined with a
    history of operating or cash flow losses or a projection or
    forecast that demonstrates reduced profitability associated with
    the use of an asset; and
|
| |  | a current expectation that, more likely than not, an asset will
    be sold or otherwise disposed of significantly before the end of
    its previously estimated useful life.                                                





| |                    
| | -------------------
| | Legal Contingencies



24



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##### Table of Contents



Results of Operations




|                                                               |                            |                          |       |      |      |  |       |      |      |  |       |      |      | 
|-------------------------------------------------------------- | -------------------------- | ------------------------ | ----- | ---- | ---- |  | ----- | ---- | ---- |  | ----- | ---- | ---- | 
|                                                               |                            | Years Ended October 31,  |      
|                                                               |                            |                          |      
|                                                               |                            | 2004                     |       |      | 2003 |  |       | 2002 |     
|                                                               |                            |                          |       |      |      |  |       |      |     
|Statement of Operations Data:                                  |                            |                          |       |      |      |  |       |      |      |  |       |     
|Revenue                                                        |                            |                          | 100.0 | %    |      |  | 100.0 | %    |      |  | 100.0 | %   
|Cost of revenue                                                |                            |                          | 46.7  |      |      |  | 41.6  |      |      |  | 38.8  |     
|                                                               |                            |                          |       |      |      |  |       |      |     
|Gross profit                                                   |                            |                          | 53.3  |      |      |  | 58.4  |      |      |  | 61.2  |     
|Operating expenses:                                            |                            |                          |       |      |      |  |       |      |      |  |       |     
|                                                               | General and administrative |                          |       | 21.7 |      |  |       | 21.8 |      |  |       | 19.5 |     
|                                                               | Sales and marketing        |                          |       | 24.4 |      |  |       | 23.6 |      |  |       | 27.1 |     
|                                                               | Research and development   |                          |       | 10.0 |      |  |       | 9.0  |      |  |       | 5.5  |     
|                                                               | Loss contingency           |                          |       | 7.0  |      |  |       |     |      |  |       |     |     
|                                                               | Impairment of goodwill     |                          |       | 12.9 |      |  |       |     |      |  |       |     |     
|                                                               |                            |                          |       |      |      |  |       |      |     
|                                                               |                            | Total operating expenses |       |      | 76.0 |  |       |      | 54.4 |  |       |      | 52.1 | 
|Income (loss) from operations                                  |                            |                          | (22.7 | )    |      |  | 4.0   |      |      |  | 9.1   |     
|Interest and other income, net                                 |                            |                          | 0.1   |      |      |  | 0.0   |      |      |  | 0.0   |     
|                                                               |                            |                          |       |      |      |  |       |      |     
|Income (loss) before provision for (benefit from) income taxes |                            |                          | (22.6 | )    |      |  | 4.0   |      |      |  | 9.1   |     
|Provision for (benefit from) income taxes                      |                            |                          | (3.3  | )    |      |  | 1.7   |      |      |  | 3.5   |     
|                                                               |                            |                          |       |      |      |  |       |      |     
|Net income (loss)                                              |                            |                          | (19.3 | )%   |      |  | 2.3   | %    |      |  | 5.6   | %   
|                                                               |                            |                          |       |      |      |  |       |      |     

Year Ended October 31, 2004 Compared with Year Ended
October 31, 2003


Revenue.


Cost of Revenue. 2


General and Administrative.


25



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##### Table of Contents





Sales and Marketing.


Research and Development.




Provision for (Benefit from) Income Taxes.


Year Ended October 31, 2003 Compared with Year Ended
October 31, 2002


Revenue. 2


Cost of Revenue. 2


General and Administrative.


26



---



##### Table of Contents





Sales and Marketing.


Research and Development.


Provision for (Benefit from) Income Taxes.


Liquidity and Capital Resources










27



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##### Table of Contents





Contractual Obligations




|                                   |  |                        |           |           |        |   |         |           |           |   |           |  |  |         |           |  |  |   |         | 
|---------------------------------- |  | ---------------------- | --------- | --------- | ------ | - | ------- | --------- | --------- | - | --------- |  |  | ------- | --------- |  |  | - | ------- | 
|                                   |  | Payments Due by Period |          
|                                   |  |                        |          
|                                   |  |                        |           | Less Than |        |   |         |           | More Than |  
|                                   |  | Total                  |           |           | 1 Year |   |         | 1-3 Years |           |   | 3-5 Years |  |  | 5 Years |          
|                                   |  |                        |           |           |        |   |         |           |           |   |           |  |  |         |          
|Operating Leases                   |  | $                      | 3,513,000 |           |        | $ | 704,000 |           |           | $ | 1,203,000 |  |  | $       | 1,097,000 |  |  | $ | 509,000 | 
|Other Long Term Obligations        |  |                        | 219,000   |           |        |   | 18,000  |           |           |   | 41,000    |  |  |         | 45,000    |  |  |   | 115,000 | 
|                                   |  |                        |           |           |        |   |         |           |           |   |           |  |  |         |          
|Total Contractual Cash Obligations |  | $                      | 3,732,000 |           |        | $ | 722,000 |           |           | $ | 1,244,000 |  |  | $       | 1,142,000 |  |  | $ | 624,000 | 
|                                   |  |                        |           |           |        |   |         |           |           |   |           |  |  |         |          

Purchase Commitments




Inflation and General Economic Condition









|         |                                                               
|-------- | --------------------------------------------------------------
|Item 7A. | Quantitative and Qualitative Disclosures About Market
    Risk





28



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##### Table of Contents







Sensitivity Analysis.







|        |                                            
|------- | -------------------------------------------
|Item 8. | Financial Statements and Supplementary Data








|        |                                                                                         
|------- | ----------------------------------------------------------------------------------------
|Item 9. | Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure





|         |                        
|-------- | -----------------------
|Item 9A. | Controls and Procedures










|         |                  
|-------- | -----------------
|Item 9B. | Other Information



29



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##### Table of Contents



PART III







|         |                                                   
|-------- | --------------------------------------------------
|Item 10. | Directors and Executive Officers of the Registrant



|                    |  |     |    |  |          |                                                     
|------------------- |  | --- | -- |  | -------- | ----------------------------------------------------
|Name                |  | Age |    |  | Position
|                    |  |     |    |  |         
|Richard T. Fedor    |  |     | 59 |  |          | Chairman                                            
|John B. Furman      |  |     | 60 |  |          | Chief Executive Officer and Director                
|Vern D. Blanchard   |  |     | 49 |  |          | Director(1)(2)(3)                                   
|Scott H. Shackelton |  |     | 55 |  |          | Director(1)(2)(3)                                   
|Donald Whitaker     |  |     | 62 |  |          | Director(1)(2)(3)                                   
|Cornelius T. Klerk  |  |     | 51 |  |          | Chief Financial Officer/Treasurer                   
|Andrejs K. Bunkse   |  |     | 35 |  |          | Vice President & General Counsel/Corporate Secretary






|    |                                     
|--- | ------------------------------------
|(1) | Member of the Audit Committee       
|   
|(2) | Member of the Compensation Committee
|   
|(3) | Member of the Nominating Committee  







30



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##### Table of Contents













Compliance with Section 16(a) of the Securities Exchange
Act of 1934






Code of Ethics and Committee Charters




31



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##### Table of Contents





Information Relating to our Audit Committee of the Board of
Directors






32



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##### Table of Contents








|         |                       
|-------- | ----------------------
|Item 11. | Executive Compensation

Summary of Cash and Other Compensation




SUMMARY COMPENSATION TABLE


|                    |                                          |        |      |      |           |                     |         |         |              |              |              |            |  |            |           |     |                 |  |         |        |  |   |        |        | 
|------------------- | ---------------------------------------- | ------ | ---- | ---- | --------- | ------------------- | ------- | ------- | ------------ | ------------ | ------------ | ---------- |  | ---------- | --------- | --- | --------------- |  | ------- | ------ |  | - | ------ | ------ | 
|                    |                                          |        |      |      |           |                     |         |         |              | Long-        |              |            | 
|                    |                                          |        |      |      |           |                     |         |         |              | Term         |              |            | 
|                    |                                          |        |      |      |           |                     |         |         |              | Compensation |              |            | 
|                    |                                          |        |      |      |           |                     |         | Awards  |              |              |             
|                    |                                          |        |      |      |           | Annual Compensation |         |         |              |              |              |           
|                    |                                          |        |      |      |           |                     |         |         | Securities   |              |              |           
|                    |                                          | Fiscal |      |      |           |                     |         |         | Other Annual |              |              | Underlying |  |            | All Other |    
|                    |                                          | Year   |      |      | Salary(1) |                     |         | Bonus   |              |              | Compensation |            |  | Options(2) |           |     | Compensation(3) | 
|                    |                                          |        |      |      |           |                     |         |         |              |              |              |            |  |            |           |     |                 | 
|Richard T. Fedor    |                                          |        | 2004 |      |           | $                   | 93,925  | (4)     |              |              |             |            |  | $          | 63,795    | (5) |                 |  | 10,000  |        |  | $ | 1,323  |       
|                    | Chairman of the Board(4)                 |        |      |      |           |                     |         |         |              |              |              |            |  |            |           |     |                 |  |         |        |  |   |        |        | 
|John B. Furman      |                                          |        | 2004 |      |           | $                   | 42,308  | (6)     |              |              |             |            |  |            |          |     |                 |  | 220,000 | (7)    |  |   |       |       
|                    | President and Chief Executive Officer(6) |        |      |      |           |                     |         |         |              |              |              |            |  |            |           |     |                 |  |         |        |  |   |        |        | 
|Andrejs K. Bunkse   |                                          |        | 2004 |      |           | $                   | 170,000 |         |              |              |             |            |  |            |          |     |                 |  | 10,000  |        |  | $ | 15,319 |       
|                    | Vice President General                   |        |      | 2003 |           |                     | $       | 160,000 |              |              |              |           |  |            |           |    |                 |  |         | 10,000 |  |   | $      | 12,221 | 
|                    | Counsel/Corporate Secretary              |        |      | 2002 |           |                     | $       | 155,324 |              |              | $            | 30,000     |  |            |           |    |                 |  |         |       |  |   | $      | 13,479 | 
|Clarence H. Thiesen |                                          |        | 2004 |      |           | $                   | 169,487 | (8)     |              |              |             |            |  |            |          |     |                 |  | 20,000  |        |  | $ | 28,888 | (8)   
|                    | Former Chief Executive                   |        |      | 2003 |           |                     | $       | 200,000 |              |              |              |           |  |            |           |    |                 |  |         | 10,000 |  |   | $      | 221    | 
|                    | Officer                                  |        |      | 2002 |           |                     | $       | 200,000 |              |              | $            | 45,000     |  |            |           |    |                 |  |         | 10,000 |  |   | $      | 2,003  | 
|John P. Hewitt      |                                          |        | 2004 |      |           | $                   | 104,905 | (9)     |              |              |             |            |  |            |          |     |                 |  | 10,000  |        |  | $ | 2,198  |       
|                    | Former Chief Financial                   |        |      | 2003 |           |                     | $       | 145,833 |              |              |              |           |  |            |           |    |                 |  |         | 10,000 |  |   | $      | 221    | 
|                    | Officer and Treasurer(9)                 |        |      | 2002 |           |                     | $       | 9,603   |              |              |              |           |  |            |           |    |                 |  |         | 10,000 |  |   | $      | 29     | 






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                          
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Except as otherwise indicated, the officers listed received
    certain perquisites, none of which exceeded the lesser of
    $50,000 or 10% of the total salary and bonus for the respective
    officer.                                                                                                                                                                                                                               
|   
|(2) | The exercise price of all options listed was equal to the fair
    market value of our common stock on the date of grant.                                                                                                                                                                                                                                                                                                                
|   
|(3) | Unless otherwise indicated, amounts include car allowances,
    401(k) matching contributions, and profit sharing compensation
    for the respective officers.                                                                                                                                                                                                                                                                          
|   
|(4) | Mr. Fedor, our Chairman, became an employee director
    effective April 1, 2004. Our Chairman, in recognition for
    the time and effort committed to our company, receives monthly
    compensation of $8,000. The table above reflects receipt of this
    compensation from December 2003 through October 2004, together
    with amounts earned by Mr. Fedor as a director of our
    company prior to his serving as our Chairman.
|   
|(5) | During fiscal 2004, we paid Mr. Fedor $59,250 in vacation
    pay that was earned during Mr. Fedors tenure as our
    Chief Executive Officer. The amount listed as Other Annual
    Compensation includes $4,545 of expenses we paid on
    Mr. Fedors behalf in connection with remote commuting
    between our offices and his home office.                                                                                      
|   
|(6) | Mr. Furman became our President and Chief Executive Officer
    effective September 2, 2004. The table above reflects
    compensation for two months in fiscal 2004 at an annual rate of
    $262,000.                                                                                                                                                                                                                                  
|   
|(7) | Mr. Furman received 10,000 of these options in capacity as
    a non-employee director of our company prior to his serving as
    our Chief Executive Officer.                                                                                                                                                                                                                                                                           

33



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|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(8) | Mr. Thiesen retired as our Chief Executive Officer
    effective September 1, 2004. Amount listed as salary above
    reflects compensation through the date of
    Mr. Thiesens retirement at an annual rate of
    $200,000. Amounts listed as All Other Compensation
    includes (a) $27,877 of severance payments made to
    Mr. Thiesen; and (b) amounts paid to Mr. Thiesen
    for car allowances and profit sharing compensation during fiscal
    2004.
|   
|(9) | Mr. Hewitt retired as our Chief Financial Officer effective
    June 26, 2004. Amount listed as salary above reflects
    compensation through the date of Mr. Hewitts
    retirement at an annual rate of $157,500.                                                                                                                                                                                                                                                

Option Grants




OPTION GRANTS IN LAST FISCAL YEAR


|                    |  |                 |         |     |                  |  |       |          |  |                             |            |                          |  |    |          |  |     |   |         |  |  |   |           | 
|------------------- |  | --------------- | ------- | --- | ---------------- |  | ----- | -------- |  | --------------------------- | ---------- | ------------------------ |  | -- | -------- |  | --- | - | ------- |  |  | - | --------- | 
|                    |  |                 |         |     |                  |  |       |          |  | Potential Realized Value at |           
|                    |  |                 |         |     |                  |  |       |          |  | Assumed Annual Rates of     |           
|                    |  | Number of       |         |     | Percent of Total |  |       |          |  |                             |            | Stock Price Appreciation | 
|                    |  | Securities      |         |     | Options Granted  |  |       |          |  |                             |            | for Option Term(1)       | 
|                    |  | Underlying      |         |     | to Employees in  |  |       | Exercise |  |                             | Expiration |                          |  |    |         
|Name                |  | Options Granted |         |     | Fiscal Year      |  |       | Price    |  |                             | Date       |                          |  | 5% |          |  | 10% |  
|                    |  |                 |         |     |                  |  |       |          |  |                             |            |                          |  |    |          |  |     |  
|Richard T. Fedor    |  |                 | 10,000  | (2) |                  |  | 2.2%  |          |  | $                           | 4.29       |                          |  |    | 03-09-14 |  |     | $ | 26,980  |  |  | $ | 68,372    | 
|John B. Furman      |  |                 | 10,000  | (3) |                  |  | 2.2%  |          |  | $                           | 4.29       |                          |  |    | 03-09-14 |  |     | $ | 26,980  |  |  | $ | 68,372    | 
|                    |  |                 | 210,000 | (4) |                  |  | 46.3% |          |  | $                           | 5.20       |                          |  |    | 09-02-14 |  |     | $ | 686,753 |  |  | $ | 1,740,367 | 
|Andrejs K. Bunkse   |  |                 | 10,000  | (5) |                  |  | 2.2%  |          |  | $                           | 3.62       |                          |  |    | 11-25-13 |  |     | $ | 22,766  |  |  | $ | 57,693    | 
|Clarence H. Thiesen |  |                 | 20,000  | (5) |                  |  | 4.4%  |          |  | $                           | 3.62       |                          |  |    | 11-25-13 |  |     | $ | 45,532  |  |  | $ | 115,387   | 
|John P. Hewitt      |  |                 | 10,000  | (5) |                  |  | 2.2%  |          |  | $                           | 3.62       |                          |  |    | 11-25-13 |  |     | $ | 22,766  |  |  | $ | 57,693    | 






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Hypothetical gains that could be achieved for the respective
    options if exercised at the end of the option term. The assumed
    5% and 10% rates of stock price appreciation are provided in
    accordance with SEC rules and do not represent our estimate or
    projection of the future price of our common stock. Actual
    gains, if any, on stock option exercises will depend upon the
    future market prices of our common stock.
|   
|(2) | Represents options granted to Mr. Fedor in his capacity as
    an employee director. The options were vested and exercisable
    upon grant.                                                                                                                                                                                                                                                                                                       
|   
|(3) | Represents options granted to Mr. Furman in his capacity as
    a non-employee director of our company prior to his employment
    as our Chief Executive Officer. The options were vested and
    exercisable upon grant.                                                                                                                                                                                                                         
|   
|(4) | The options vest as follows: (a) 100,000 of such options
    were vested on the date of grant; (b) 100,000 of such
    options shall vest in 25,000 share increments on each
    six-month anniversary following the date of grant; and
    (c) 10,000 of such options shall vest on September 2,
    2005.                                                                                                                                        
|   
|(5) | The options vest and become exercisable quarterly over a
    four-year period.                                                                                                                                                                                                                                                                                                                                                                     

34



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##### Table of Contents



Fiscal 2004 Option Exercises and Year-End Option Values




AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND


FISCAL YEAR-END OPTION VALUES


|                    |  |             |        |  |          |                        |                 |             |                         |                    |               |  |  |             |         |  |               |   |        |  |  |   |       | 
|------------------- |  | ----------- | ------ |  | -------- | ---------------------- | --------------- | ----------- | ----------------------- | ------------------ | ------------- |  |  | ----------- | ------- |  | ------------- | - | ------ |  |  | - | ----- | 
|                    |  |             |        |  |          | Number of Securities   |                 |             |                        
|                    |  |             |        |  |          | Underlying Unexercised |                 |             | Value of Unexercised    |                   
|                    |  |             |        |  |          | Options at             |                 |             | In-the-Money Options at |                   
|                    |  | Shares      |        |  |          |                        | Fiscal Year-End |             |                         | Fiscal Year-End(1) |              
|                    |  | Acquired on |        |  | Value    |                        |                 |             |                         |                    |               | 
|                    |  | Exercised   |        |  | Realized |                        |                 | Exercisable |                         |                    | Unexercisable |  |  | Exercisable |         |  | Unexercisable |  
|                    |  |             |        |  |          |                        |                 |             |                         |                    |               |  |  |             |         |  |               |  
|Richard T. Fedor    |  |             |       |  |          |                        |                |             |                         |                    | 24,000        |  |  |             |        |  |               | $ | 12,140 |  |  |   |      | 
|John B. Furman      |  |             |       |  |          |                        |                |             |                         |                    | 120,000       |  |  |             | 110,000 |  |               | $ | 11,100 |  |  |   |      | 
|Andrejs K. Bunkse   |  |             |       |  |          |                        |                |             |                         |                    | 48,750        |  |  |             | 17,500  |  |               | $ | 15,175 |  |  | $ | 3,775 | 
|Clarence H. Thiesen |  |             | 48,000 |  |          | $                      | 67,400          |             |                         |                    |              |  |  |             |        |  |               |   |       |  |  |   |      | 
|John P. Hewitt      |  |             | 5,000  |  |          | $                      | 9,125           |             |                         |                    |              |  |  |             |        |  |               |   |       |  |  |   |      | 






|    |                                                                                                                                                                                                                                                                                           
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Calculated based upon the closing price of our common stock as
    reported on the Nasdaq National Market on October 31, 2004
    of $3.99 per share. The exercise prices of certain options
    held by our executive officers on October 31, 2004 were
    greater than $3.99 per share.

1997 Incentive Stock Plan








| |   |                                                                                                               
| | - | --------------------------------------------------------------------------------------------------------------
| |  | on the date that is the earliest of 30 days after the
    holders termination of employment with our company;
|
| |  | one year after the holders death; or                                                                         
|
| |  | 10 years after the date of grant.                                                                             



35



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Employment Contracts and Severance Agreements








36



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##### Table of Contents







Indemnification of Directors, Officers, Employees, and
Agents




Compensation of Directors




Compensation Committee Interlocks and Insider
Participation




37



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38



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|         |                                                                                                   
|-------- | --------------------------------------------------------------------------------------------------
|Item 12. | Security Ownership of Certain Beneficial Owners and
    Management and Related Stockholder Matters



|                                  |                                |                                                             |  |           |           |  |  |      |      |  
|--------------------------------- | ------------------------------ | ----------------------------------------------------------- |  | --------- | --------- |  |  | ---- | ---- | -
|                                  |                                | Number of Shares                                            |  |           |          
|Name of Beneficial Owner(1)       |                                | Beneficially Owned(2)(3)                                    |  |           | Percent   | 
|                                  |                                |                                                             |  |           |           | 
|Directors and Executive Officers: |                                |                                                             |  |           |           |  |  |     
|                                  | Richard T. Fedor               |                                                             |  | 3,010,836 | (4)       |  |  | 25.5 | %   
|                                  | John B. Furman                 |                                                             |  | 145,000   | (5)       |  |  | 1.2  | %   
|                                  | Andrejs K. Bunkse              |                                                             |  | 53,750    | (6)       |  |  | *    |     
|                                  | Clarence H. Thiesen            |                                                             |  | 483,000   |           |  |  | 4.1  | %   
|                                  | John P. Hewitt                 |                                                             |  |          |           |  |  |     |     
|                                  | Vern D. Blanchard              |                                                             |  | 1,069,355 | (7)       |  |  | 9.0  | %   
|                                  | Scott H. Shackelton            |                                                             |  | 10,000    | (8)       |  |  | *    |     
|                                  | Donald K. Whitaker             |                                                             |  | 10,000    | (8)       |  |  | *    |     
|                                  |                                | All directors and executive officers as a group (9 persons) |  |           | 4,800,691 |  |  |      | 39.6 | %
|5% Stockholders:                  |                                |                                                             |  |           |           |  |  |     
|                                  | Delta Partners, LLC            |                                                             |  | 988,375   | (9)       |  |  | 8.4  | %   
|                                  | Keane Capital Management, Inc. |                                                             |  | 612,280   | (10)      |  |  | 5.2  | %   






| |   |             
| | - | ------------
| | * | Less than 1%



| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) | Unless otherwise indicated, all persons listed can be reached at
    our company offices at 900 Sandhill Road, Reno, Nevada 89521.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| | (2) | Except as indicated, and subject to community property laws when
    applicable, the persons named in the table above have sole
    voting power and investment power with respect to all shares of
    common stock shown as beneficially owned by them.                                                                                                                                                                                                                                                                                                                                                                           
|
| | (3) | The percentages shown are calculated based upon
    11,845,014 shares of our common stock outstanding on
    January 13, 2005. The percentages shown include the shares
    of common stock that each named stockholder has the right to
    acquire within 60 days of January 13, 2005. In
    calculating the percentage of ownership, such shares are deemed
    to be outstanding for the purpose of computing the percentage of
    shares of common stock owned by such person, but not deemed to
    be outstanding for the purpose of computing the percentage of
    shares of common stock owned by any other stockholder.
|
| | (4) | Includes (i) 24,000 shares of common stock issuable
    upon the exercise of stock options, and
    (ii) 1,021,255 shares owned of record by
    Mr. Fedors wife and minor children, of which
    Mr. Fedor disclaims beneficial ownership of 900 shares
    of common stock owned by Mrs. Fedor and has shared
    dispositive power with Mrs. Fedor for the
    1,020,325 shares held by their minor children.                                                                                                                                                                                                                   
|
| | (5) | Represents 145,000 shares of common stock issuable upon the
    exercise of stock options.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| | (6) | Represents 53,750 shares of common stock issuable upon the
    exercise of stock options.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| | (7) | Includes (i) 28,000 shares of common stock issuable
    upon the exercise of stock options held by Mr. Blanchard,
    (ii) 1,035,875 shares of our stock held by the CJB
    Family Trust, and (iii) 13,480 shares of our stock
    held by Mr. Blanchard. Mr. Blanchard is the sole
    trustee of the CJB Family Trust and has sole voting power and
    dispositive power with respect to the common stock held by the
    trust.                                                                                                                                                                                                
|
| | (8) | Represents 10,000 shares of common stock issuable upon the
    exercise of stock options.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| | (9) | Represents 988,375 shares of common stock beneficially
    owned by various entities under common control of Delta
    Partners, LLC. Delta Partners, LLC has shared voting and
    dispositive power over all                                                                                                                                                                                                                                                                                                                                                                                                                      

39



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##### Table of Contents



| |  |                                                                                                                                                                                                                                                                             
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | such shares. The address of Delta Partners, LLC is One Financial
    Center, Suite 1600, Boston, Massachusetts 02116. Beneficial
    ownership information is based upon a Schedule 13G/ A filed
    with the Securities and Exchange Commission as of
    January 31, 2004.



|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(10) | Represents 612,280 shares of common stock beneficially
    owned by various entities under common control of Keane Capital
    Management, Inc. Keane Capital has sole voting and dispositive
    power over all such shares. The address of Keane Capital
    Management, Inc. is 3420 Toringdon Way, Suite 350,
    Charlotte, North Carolina 28277. Beneficial ownership
    information is based upon a Schedule 13G filed with the
    Securities and Exchange Commission as of February 14, 2004.

Equity Compensation Plan Information




|                                                       |  |                    |         |  |                    |           |                     |                      |  |  |           |    
|------------------------------------------------------ |  | ------------------ | ------- |  | ------------------ | --------- | ------------------- | -------------------- |  |  | --------- | ---
|                                                       |  |                    |         |  |                    | (c)       |                    
|                                                       |  |                    |         |  |                    | Number of |                    
|                                                       |  | (a)                |         |  |                    |           | Securities          |                     
|                                                       |  | Number of          |         |  |                    |           | Remaining Available |                     
|                                                       |  | Securities to be   |         |  | (b)                |           |                     | for Future Issuance  | 
|                                                       |  | Issued Upon        |         |  | Weighted Average   |           |                     | Under Equity         | 
|                                                       |  | Exercise of        |         |  | Exercise Price of  |           |                     | Compensation Plans   | 
|                                                       |  | Outstanding        |         |  | Outstanding        |           |                     | (Excluding           | 
|                                                       |  | Options, Warrants, |         |  | Options, Warrants, |           |                     | Securities Reflected | 
|Plan Category                                          |  | and Rights         |         |  | and Rights         |           |                     | in Column (a))       | 
|                                                       |  |                    |         |  |                    |           |                     |                      | 
|Equity-Compensation Plans Approved by Stockholders     |  |                    | 970,125 |  |                    | $         | 4.25                |                      |  |  | 1,291,600 |    
|Equity-Compensation Plans Not Approved by Stockholders |  |                    |        |  |                    |           |                    |                      |  |  | 31,100    | (1)
|                                                       |  |                    |         |  |                    |           |                     |                      | 
|Total                                                  |  |                    | 970,125 |  |                    |           |                     |                      |  |  | 1,322,700 |    
|                                                       |  |                    |         |  |                    |           |                     |                      | 






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Represents shares of restricted common stock that may be granted
    pursuant to our 2001 Restricted Stock Plan to our employees,
    consultants, or independent contractors who are not directors,
    officers, or 10% stockholders of our company. Under the plan, we
    have reserved for issuance 50,000 shares of restricted
    common stock and during 2002 and 2003 we issued 400 shares
    and 18,500 shares, respectively of restricted common stock.






|         |                                               
|-------- | ----------------------------------------------
|Item 13. | Certain Relationships and Related Transactions





40



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##### Table of Contents








|         |                                       
|-------- | --------------------------------------
|Item 14. | Principal Accountant Fees and Services

Audit Fees




Audit-Related Fees




Tax Fees




All Other Fees




Audit Committee Pre-Approval Policies










41



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##### Table of Contents



PART IV







|         |                                           
|-------- | ------------------------------------------
|Item 15. | Exhibits and Financial Statement Schedules

Financial Statements and Financial Statement
Schedules




| |                                       
| | --------------------------------------
| | (1) Consolidated Financial Statements.



| |                                                                                                                                   
| | ----------------------------------------------------------------------------------------------------------------------------------
| | Consolidated Financial Statements are listed in the Index to
    Consolidated Financial Statements on page F-1 of this
    report.



| |                                                
| | -----------------------------------------------
| | (2) Consolidated Financial Statement Schedules.



| |                                                                                                                                                                                                           
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | No financial statement schedules are included because they are
    not applicable, are not required, or because required
    information is included in the financial statements or the notes
    thereto.

Exhibits


|        |    |                        |  |                                                                                                                                                                                                                                                                                    
|------- | -- | ---------------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |                       
|Number  |    | Description of Exhibit
|        |    |                       
|        | 3  | .1                     |  | Certificate of Incorporation of the Registrant, as amended(1)                                                                                                                                                                                                                      
|        | 3  | .3                     |  | Certificate of Designation of Series A Junior Participating
    Preferred Stock of the Registrant(7)                                                                                                                                                                               
|        | 3  | .4                     |  | Second Amended and Restated Bylaws of the Registrant(2)                                                                                                                                                                                                                            
|        | 4  | .1                     |  | GameTech International, Inc. Registration Rights Agreement(3)                                                                                                                                                                                                                      
|        | 4  | .3                     |  | Rights Agreement, dated as of March 7, 2003, between
    GameTech International, Inc. and Mellon Investor Services, LLC,
    as rights agent(8)                                                                                                                                    
|        | 4  | .4                     |  | Specimen Common Stock Certificate(7)                                                                                                                                                                                                                                               
|        | 10 | .1                     |  | GameTech International, Inc. 1997 Incentive Stock Plan(1)                                                                                                                                                                                                                          
|        | 10 | .15                    |  | GameTech International, Inc. 2001 Restricted Stock Plan(5)                                                                                                                                                                                                                         
|        | 10 | .16                    |  | Lease Agreement dated November 18, 1999 between the
    Registrant and Cypress Corporate Services, including addendum to
    lease and first amendment dated April 17, 2000(4)                                                                                                     
|        | 10 | .17                    |  | Revolving Line of Credit dated August 19, 1998 between the
    Registrant and Wells Fargo Bank, N.A.(4)                                                                                                                                                                            
|        | 10 | .18                    |  | Letter Amendment to Revolving Line of Credit dated April 1,
    2000 by and among the Registrant, Bingo Technologies
    Corporation, and Wells Fargo Bank, N.A.(4)                                                                                                                
|        | 10 | .19                    |  | Letter Amendment to Revolving Line of Credit dated April 2,
    2001 by and among the Registrant, Bingo Technologies
    Corporation, and Wells Fargo Bank, N.A.(4)                                                                                                                
|        | 10 | .22                    |  | Employment Agreement dated October 1, 1997 between the
    Registrant and Andrejs K. Bunkse(4)                                                                                                                                                                                     
|        | 10 | .23                    |  | Letter Amendment dated April 2, 2002 between Wells Fargo
    Bank, N.A., the Registrant, and Bingo Technologies Corporation
    amending the letter agreement between the parties dated
    August 19, 1998, together with Revolving Line of Credit
    Note dated April 2, 2002(6)
|        | 10 | .24                    |  | Letter Amendment dated April 2, 2003 between Wells Fargo
    Bank, N.A., and the Registrant, amending the letter agreement
    between the parties dated August 19, 1998, together with
    the Revolving Line of Credit Note dated April 2, 2003(9)                               
|        | 10 | .25                    |  | Employment Agreement dated September 2, 2004, between the
    Registrant and John B. Furman(10)                                                                                                                                                                                    
|        | 10 | .26                    |  | Employment Agreement effective February 1, 2005, between
    the Registrant and Cornelius T. Klerk(11)                                                                                                                                                                             
|        | 21 |                        |  | List of Subsidiaries(6)                                                                                                                                                                                                                                                            
|        | 23 | .1                     |  | Consent of Independent Registered Public Accounting Firm                                                                                                                                                                                                                           
|        | 31 | .1                     |  | Certification of Chief Executive Officer pursuant to Rule
    13a-14(a) and Rule 15d-14(a), promulgated by the Securities
    Exchange Act of 1934, as amended                                                                                                                     

42



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##### Table of Contents



|        |    |    |                        |                                                                                                                                                               
|------- | -- | -- | ---------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |    |                       
|Number  |    |    | Description of Exhibit
|        |    |    |                       
|        | 31 | .2 |                        | Certification of Chief Financial Officer pursuant to Rule
    13a-14(a) and Rule 15d-14(a), promulgated by the Securities
    Exchange Act of 1934, as amended
|        | 32 | .1 |                        | Certification of Chief Executive Officer pursuant to
    18 U.S.C. Section 1350, as adopted pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002     
|        | 32 | .2 |                        | Certification of Chief Financial Officer pursuant to
    18 U.S.C. Section 1350, as adopted pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002     






| |     |                                                                                                                                                                                                        
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) | Incorporated by reference to the Registrants Registration
    Statement on Form S-1 (Registration No. 333-34967) as
    filed with the Commission on or about September 4, 1997.                      
|
| | (2) | Incorporated by reference to the Registrants Quarterly
    Report on Form 10-Q for the quarterly period ended
    January 31, 2004, as filed with the Commission on or about
    March 16, 2004.      
|
| | (3) | Incorporated by reference to Amendment No. 1 to the
    Registrants Registration Statement on Form S-1
    (Registration No. 333-34967) as filed with the Commission
    on or about October 17, 1997.
|
| | (4) | Incorporated by reference to the Registrants Annual Report
    on Form 10-K for the fiscal year ended October 31,
    2001 as filed with the Commission on or about January 29,
    2002.             
|
| | (5) | Incorporated by reference to the Registrants Registration
    Statement on Form S-8 (Registration No. 333-72886) as
    filed with the Commission on or about November 7, 2001.                       
|
| | (6) | Incorporated by reference to the Registrants Annual Report
    on Form 10-K for the fiscal year ended October 31,
    2002 as filed with the Commission on or about January 29,
    2003.             
|
| | (7) | Incorporated by reference to the Registrants Quarterly
    Report on Form 10-Q for the quarterly period ended
    January 31, 2003 as filed with the Commission on or about
    March 17, 2003.       
|
| | (8) | Incorporated by reference to the Registrants Current
    Report on Form 8-K dated March 7, 2003 as filed with
    the Commission on or about March 10, 2003.                                          
|
| | (9) | Incorporated by reference to the Registrants Quarterly
    Report on Form 10-Q for the quarterly period ended
    April 30, 2003 as filed with the Commission on or about
    June 16, 2003.          



|     |                                                                                                                                                                                                  
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(10) | Incorporated by reference to the Registrants Current
    Report on Form 8-K dated September 2, 2004 as filed
    with the Commission on or about September 9, 2004.                             
|    
|(11) | Incorporated by reference to the Registrants Quarterly
    Report on Form 10-Q for the quarterly period ended
    July 31, 2004 as filed with the Commission on or about
    September 14, 2004.

43



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SIGNATURES






| |                                 
| | --------------------------------
| | Gametech International,
    inc.



| |     |                   
| | --- | ------------------
| | By: | /s/ John B. Furman

| |                                                 
| | ------------------------------------------------
| |                                                 
| | John B. Furman                                  
| | President, Chief Executive Officer, and Director
| | (Principal Executive Officer)                   





|                                               |  |                                                                                    |  |                   |  | 
|---------------------------------------------- |  | ---------------------------------------------------------------------------------- |  | ----------------- |  | 
|Signature                                      |  | Title                                                                              |  | Date             
|                                               |  |                                                                                    |  |                  
|                                              
|/s/ Richard T. FedorRichard
    T. Fedor       |  | Chairman of the Board of Directors                                                 |  | February 14, 2005
|                                              
|/s/ John B. FurmanJohn
    B. Furman           |  | President, Chief Executive Officer, and Director
    (Principal Executive Officer) |  | February 14, 2005
|                                              
|/s/ Cornelius T. KlerkCornelius
    T. Klerk   |  | Chief Financial Officer
    (Principal Financial Officer)                          |  | February 14, 2005
|                                              
|/s/ Ann D. McKenzieAnn
    D. McKenzie         |  | Corporate Controller
    (Principal Accounting Officer)                            |  | February 14, 2005
|                                              
|/s/ Donald K. WhitakerDonald
    K. Whitaker   |  | Director                                                                           |  | February 14, 2005
|                                              
|/s/ Vern D. BlanchardVern
    D. Blanchard     |  | Director                                                                           |  | February 14, 2005
|                                              
|/s/ Scott H. ShackeltonScott
    H. Shackelton |  | Director                                                                           |  | February 14, 2005

44



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##### Table of Contents



GameTech International, Inc.


Index to Consolidated Financial Statements


|                                                                               |  |  |     | 
|------------------------------------------------------------------------------ |  |  | --- | 
|Report of Ernst & Young LLP, Independent Registered
    Public Accounting Firm |  |  | F-2 | 
|Financial Statements                                                           |  |  |     | 
|Consolidated Balance Sheets                                                    |  |  | F-3 | 
|Consolidated Statements of Operations                                          |  |  | F-4 | 
|Consolidated Statements of Stockholders Equity                                |  |  | F-5 | 
|Consolidated Statements of Cash Flows                                          |  |  | F-6 | 
|Notes to Consolidated Financial Statements                                     |  |  | F-7 | 

F-1



---



##### Table of Contents



Report of Ernst & Young LLP, Independent Registered
Public Accounting Firm


















F-2



---



##### Table of Contents



GAMETECH INTERNATIONAL, INC.


CONSOLIDATED BALANCE SHEETS


|                                                                                    |                                                                                                                               |                       |        |        |      |   |        |        |  
|----------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------- | --------------------- | ------ | ------ | ---- | - | ------ | ------ | -
|                                                                                    |                                                                                                                               | October 31,           |       
|                                                                                    |                                                                                                                               |                       |       
|                                                                                    |                                                                                                                               | 2004                  |        |        | 2003 |  
|                                                                                    |                                                                                                                               |                       |        |        |      |  
|                                                                                    |                                                                                                                               | (In thousands, except |       
|                                                                                    |                                                                                                                               | share and per share   |       
|                                                                                    |                                                                                                                               | amounts)              |       
|ASSETS:                                                                            
|Current assets:                                                                     |                                                                                                                               |                       |        |        |      |   |        |       
|                                                                                    | Cash and cash equivalents                                                                                                     |                       | $      | 6,101  |      |   | $      | 10,202 |  
|                                                                                    | Short-term investments                                                                                                        |                       |        | 2,605  |      |   |        | 1,750  |  
|                                                                                    | Accounts receivable, less allowance for doubtful accounts of
    $2,454 in 2004 and $2,287 in 2003                            |                       |        | 3,484  |      |   |        | 3,624  |  
|                                                                                    | Deposits                                                                                                                      |                       |        | 29     |      |   |        | 28     |  
|                                                                                    | Refundable income taxes                                                                                                       |                       |        | 100    |      |   |        | 231    |  
|                                                                                    | Prepaid expenses and other current assets                                                                                     |                       |        | 650    |      |   |        | 341    |  
|                                                                                    | Deferred income taxes                                                                                                         |                       |        | 2,358  |      |   |        | 2,185  |  
|                                                                                    |                                                                                                                               |                       |        |        |      |  
|Total current assets                                                                |                                                                                                                               |                       | 15,327 |        |      |   | 18,361 |       
|Bingo equipment, furniture and other equipment, net                                 |                                                                                                                               |                       | 23,952 |        |      |   | 22,319 |       
|Goodwill, net                                                                       |                                                                                                                               |                       | 10,184 |        |      |   | 16,809 |       
|Intangibles, less accumulated amortization of $3,614 in 2004 and
    $2,089 in 2003 |                                                                                                                               |                       | 1,766  |        |      |   | 2,236  |       
|Restricted cash                                                                     |                                                                                                                               |                       | 450    |        |      |   | 450    |       
|                                                                                    |                                                                                                                               |                       |        |        |      |  
|Total assets                                                                        |                                                                                                                               | $                     | 51,679 |        |      | $ | 60,175 |       
|                                                                                    |                                                                                                                               |                       |        |        |      |  
|                                                                                   
|LIABILITIES AND STOCKHOLDERS EQUITY:                                              
|Current liabilities:                                                                |                                                                                                                               |                       |        |        |      |   |        |       
|                                                                                    | Accounts payable                                                                                                              |                       | $      | 1,343  |      |   | $      | 783    |  
|                                                                                    | Accrued payroll and related obligations                                                                                       |                       |        | 1,541  |      |   |        | 754    |  
|                                                                                    | Accrued loss contingency                                                                                                      |                       |        | 3,628  |      |   |        |       |  
|                                                                                    | Income taxes payable                                                                                                          |                       |        | 1,214  |      |   |        |       |  
|                                                                                    | Other accrued liabilities                                                                                                     |                       |        | 2,392  |      |   |        | 1,743  |  
|                                                                                    | Note payable                                                                                                                  |                       |        |       |      |   |        | 275    |  
|                                                                                    |                                                                                                                               |                       |        |        |      |  
|Total current liabilities                                                           |                                                                                                                               |                       | 10,118 |        |      |   | 3,555  |       
|Non-current employment obligations                                                  |                                                                                                                               |                       | 202    |        |      |   | 448    |       
|Deferred income taxes                                                               |                                                                                                                               |                       | 689    |        |      |   | 3,551  |       
|Commitments and contingencies                                                       |                                                                                                                               |                       |       |        |      |   |       |       
|Stockholders equity:                                                               |                                                                                                                               |                       |        |        |      |   |        |       
|                                                                                    | Common stock: $0.001 par value; 40,000,000 shares
    authorized; 13,700,339 shares issued in 2004 and 13,592,764
    in 2003 |                       |        | 14     |      |   |        | 14     |  
|                                                                                    | Capital in excess of par value                                                                                                |                       |        | 47,081 |      |   |        | 46,655 |  
|                                                                                    | Retained earnings                                                                                                             |                       |        | 1,671  |      |   |        | 14,048 |  
|                                                                                    | Less: treasury stock, at cost: 1,855,325 shares in 2004 and
    2003                                                          |                       |        | (8,096 | )    |   |        | (8,096 | )
|                                                                                    |                                                                                                                               |                       |        |        |      |  
|Total stockholders equity                                                          |                                                                                                                               |                       | 40,670 |        |      |   | 52,621 |       
|                                                                                    |                                                                                                                               |                       |        |        |      |  
|Total liabilities and stockholders equity                                          |                                                                                                                               | $                     | 51,679 |        |      | $ | 60,175 |       
|                                                                                    |                                                                                                                               |                       |        |        |      |  



F-3



---



##### Table of Contents



GAMETECH INTERNATIONAL, INC.


CONSOLIDATED STATEMENTS OF OPERATIONS


|                                                               |                            |                                           |         |            |        |   |        |            |        |   |        |            |        | 
|-------------------------------------------------------------- | -------------------------- | ----------------------------------------- | ------- | ---------- | ------ | - | ------ | ---------- | ------ | - | ------ | ---------- | ------ | 
|                                                               |                            | Year Ended October 31,                    |        
|                                                               |                            |                                           |        
|                                                               |                            | 2004                                      |         |            | 2003   |   |        | 2002       |       
|                                                               |                            |                                           |         |            |        |   |        |            |       
|                                                               |                            | (In thousands, except share and per share |        
|                                                               |                            | amounts)                                  |        
|Revenue                                                        |                            | $                                         | 51,490  |            |        | $ | 52,329 |            |        | $ | 48,861 |           
|Cost of revenue                                                |                            |                                           | 24,027  |            |        |   | 21,775 |            |        |   | 18,982 |           
|                                                               |                            |                                           |         |            |        |   |        |            |       
|Gross profit                                                   |                            |                                           | 27,463  |            |        |   | 30,554 |            |        |   | 29,879 |           
|Operating expenses:                                            |                            |                                           |         |            |        |   |        |            |        |   |        |           
|                                                               | General and administrative |                                           |         | 11,154     |        |   |        | 11,426     |        |   |        | 9,535      |       
|                                                               | Sales and marketing        |                                           |         | 12,561     |        |   |        | 12,323     |        |   |        | 13,245     |       
|                                                               | Research and development   |                                           |         | 5,179      |        |   |        | 4,692      |        |   |        | 2,671      |       
|                                                               | Loss contingency           |                                           |         | 3,628      |        |   |        |           |        |   |        |           |       
|                                                               | Impairment of goodwill     |                                           |         | 6,625      |        |   |        |           |        |   |        |           |       
|                                                               |                            |                                           |         |            |        |   |        |            |       
|                                                               |                            | Total operating expenses                  |         |            | 39,147 |   |        |            | 28,441 |   |        |            | 25,451 | 
|                                                               |                            |                                           |         |            |        |   |        |            |       
|Income (loss) from operations                                  |                            |                                           | (11,684 | )          |        |   | 2,113  |            |        |   | 4,428  |           
|Interest and other income (expense), net                       |                            |                                           | 58      |            |        |   | 3      |            |        |   | (7     | )         
|                                                               |                            |                                           |         |            |        |   |        |            |       
|Income (loss) before provision for (benefit from) income taxes |                            |                                           | (11,626 | )          |        |   | 2,116  |            |        |   | 4,421  |           
|Provision for (benefit from) income taxes                      |                            |                                           | (1,720  | )          |        |   | 925    |            |        |   | 1,688  |           
|                                                               |                            |                                           |         |            |        |   |        |            |       
|Net income (loss)                                              |                            | $                                         | (9,906  | )          |        | $ | 1,191  |            |        | $ | 2,733  |           
|                                                               |                            |                                           |         |            |        |   |        |            |       
|Basic net income (loss) per share                              |                            | $                                         | (0.84   | )          |        | $ | 0.10   |            |        | $ | 0.25   |           
|                                                               |                            |                                           |         |            |        |   |        |            |       
|Diluted net income (loss) per share                            |                            | $                                         | (0.84   | )          |        | $ | 0.10   |            |        | $ | 0.23   |           
|                                                               |                            |                                           |         |            |        |   |        |            |       
|Shares used in the calculation of net income (loss) per share: |                            |                                           |         |            |        |   |        |            |        |   |        |           
|                                                               | Basic                      |                                           |         | 11,774,795 |        |   |        | 11,696,118 |        |   |        | 11,150,064 |       
|                                                               |                            |                                           |         |            |        |   |        |            |       
|                                                               | Diluted                    |                                           |         | 11,774,795 |        |   |        | 11,817,781 |        |   |        | 11,945,393 |       
|                                                               |                            |                                           |         |            |        |   |        |            |       
|Cash dividends per common share                                |                            | $                                         | 0.21    |            |        | $ |       |            |        | $ |       |           
|                                                               |                            |                                           |         |            |        |   |        |            |       



F-4



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##### Table of Contents



GAMETECH INTERNATIONAL, INC.


CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY


|                                                        |  |                                      |            |  |            |   |    |           |  |                |          |  |  |        |        |   |        |  |           |       |  |   |        |   |  |   |        |  
|------------------------------------------------------- |  | ------------------------------------ | ---------- |  | ---------- | - | -- | --------- |  | -------------- | -------- |  |  | ------ | ------ | - | ------ |  | --------- | ----- |  | - | ------ | - |  | - | ------ | -
|                                                        |  | Common Stock                         |            |  | Capital in |   |    |           |  | Treasury Stock |          |  | 
|                                                        |  |                                      |            |  | Excess of  |   |    | Retained  |  |                |          |  |  |       
|                                                        |  | Shares                               |            |  | Amount     |   |    | Par Value |  |                | Earnings |  |  | Shares |        |   | Amount |  |           | Total | 
|                                                        |  |                                      |            |  |            |   |    |           |  |                |          |  |  |        |        |   |        |  |           |       | 
|                                                        |  | (In thousands, except share amounts) |            |  |            |   |   
|Balances at October 31, 2001                            |  |                                      | 12,701,839 |  |            | $ | 13 |           |  | $              | 44,543   |  |  | $      | 10,124 |   |        |  | 1,855,325 |       |  | $ | (8,096 | ) |  | $ | 46,584 |  
|Issuance of common stock upon exercise of stock options |  |                                      | 388,525    |  |            |   |   |           |  |                | 1,172    |  |  |        |       |   |        |  |          |       |  |   |       |   |  |   | 1,172  |  
|Restricted stock issued to employees                    |  |                                      | 400        |  |            |   |   |           |  |                | 1        |  |  |        |       |   |        |  |          |       |  |   |       |   |  |   | 1      |  
|Net income                                              |  |                                      |           |  |            |   |   |           |  |                |         |  |  |        | 2,733  |   |        |  |          |       |  |   |       |   |  |   | 2,733  |  
|                                                        |  |                                      |            |  |            |   |    |           |  |                |          |  |  |        |        |   |        |  |           |       | 
|Balances at October 31, 2002                            |  |                                      | 13,090,764 |  |            |   | 13 |           |  |                | 45,716   |  |  |        | 12,857 |   |        |  | 1,855,325 |       |  |   | (8,096 | ) |  |   | 50,490 |  
|Issuance of common stock upon exercise of stock options |  |                                      | 502,000    |  |            |   | 1  |           |  |                | 529      |  |  |        |       |   |        |  |          |       |  |   |       |   |  |   | 530    |  
|Tax benefit from stock option exercises                 |  |                                      |           |  |            |   |   |           |  |                | 410      |  |  |        |       |   |        |  |          |       |  |   |       |   |  |   | 410    |  
|Net income                                              |  |                                      |           |  |            |   |   |           |  |                |         |  |  |        | 1,191  |   |        |  |          |       |  |   |       |   |  |   | 1,191  |  
|                                                        |  |                                      |            |  |            |   |    |           |  |                |          |  |  |        |        |   |        |  |           |       | 
|Balances at October 31, 2003                            |  |                                      | 13,592,764 |  |            |   | 14 |           |  |                | 46,655   |  |  |        | 14,048 |   |        |  | 1,855,325 |       |  |   | (8,096 | ) |  |   | 52,621 |  
|Issuance of common stock upon exercise of stock options |  |                                      | 107,575    |  |            |   |   |           |  |                | 415      |  |  |        |       |   |        |  |          |       |  |   |       |   |  |   | 415    |  
|Tax benefit from stock option exercises                 |  |                                      |           |  |            |   |   |           |  |                | 11       |  |  |        |       |   |        |  |          |       |  |   |       |   |  |   | 11     |  
|Net loss                                                |  |                                      |           |  |            |   |   |           |  |                |         |  |  |        | (9,906 | ) |        |  |          |       |  |   |       |   |  |   | (9,906 | )
|Dividends                                               |  |                                      |           |  |            |   |   |           |  |                |         |  |  |        | (2,471 | ) |        |  |          |       |  |   |       |   |  |   | (2,471 | )
|                                                        |  |                                      |            |  |            |   |    |           |  |                |          |  |  |        |        |   |        |  |           |       | 
|Balances at October 31, 2004                            |  |                                      | 13,700,339 |  |            | $ | 14 |           |  | $              | 47,081   |  |  | $      | 1,671  |   |        |  | 1,855,325 |       |  | $ | (8,096 | ) |  | $ | 40,670 |  
|                                                        |  |                                      |            |  |            |   |    |           |  |                |          |  |  |        |        |   |        |  |           |       | 



F-5



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##### Table of Contents



GAMETECH INTERNATIONAL, INC.


CONSOLIDATED STATEMENTS OF CASH FLOWS


|                                                                                                                                 |                                                            |                                           |         |        |       |   |         |        |       |   |         |       |        |  
|-------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------- | ----------------------------------------- | ------- | ------ | ----- | - | ------- | ------ | ----- | - | ------- | ----- | ------ | -
|                                                                                                                                 |                                                            | Year Ended October 31,                    |        
|                                                                                                                                 |                                                            |                                           |        
|                                                                                                                                 |                                                            | 2004                                      |         |        | 2003  |   |         | 2002   |      
|                                                                                                                                 |                                                            |                                           |         |        |       |   |         |        |      
|                                                                                                                                 |                                                            | (In thousands)                            |        
|Cash flows from operating activities:                                                                                            |                                                            |                                           |         |        |       |   |         |        |       |   |         |      
|Net income (loss)                                                                                                                |                                                            | $                                         | (9,906  | )      |       | $ | 1,191   |        |       | $ | 2,733   |      
|Adjustments to reconcile net income (loss) to net cash provided
    by operating activities net of effects of acquired business: |                                                            |                                           |         |        |       |   |         |        |       |   |         |      
|                                                                                                                                 | Depreciation, amortization and obsolescence                |                                           |         | 13,427 |       |   |         | 10,737 |       |   |         | 8,922 |       
|                                                                                                                                 | Impairment of goodwill                                     |                                           |         | 6,625  |       |   |         |       |       |   |         |      |       
|                                                                                                                                 | Loss on disposals of furniture and other equipment         |                                           |         | 83     |       |   |         | 68     |       |   |         | 160   |       
|                                                                                                                                 | Employee share grant                                       |                                           |         |       |       |   |         |       |       |   |         | 1     |       
|                                                                                                                                 | Deferred income taxes                                      |                                           |         | (3,024 | )     |   |         | 706    |       |   |         | 3,452 |       
|                                                                                                                                 | Loss contingency                                           |                                           |         | 3,628  |       |   |         |       |       |   |         |      |       
|                                                                                                                                 | Changes in operating assets and liabilities:               |                                           |         |        |       |   |         |        |       |   |         |       |       
|                                                                                                                                 |                                                            | Accounts receivable, net                  |         |        | 140   |   |         |        | 282   |   |         |       | 173    |  
|                                                                                                                                 |                                                            | Deposits                                  |         |        | (1    | ) |         |        | 582   |   |         |       | (509   | )
|                                                                                                                                 |                                                            | Refundable income taxes                   |         |        | 131   |   |         |        | 3,657 |   |         |       | (2,690 | )
|                                                                                                                                 |                                                            | Prepaid expenses and other current assets |         |        | (309  | ) |         |        | 92    |   |         |       | 61     |  
|                                                                                                                                 |                                                            | Restricted cash                           |         |        |      |   |         |        |      |   |         |       | (450   | )
|                                                                                                                                 |                                                            | Accounts payable                          |         |        | 560   |   |         |        | (131  | ) |         |       | 240    |  
|                                                                                                                                 |                                                            | Accrued payroll and related obligations   |         |        | 787   |   |         |        | (51   | ) |         |       | (1,324 | )
|                                                                                                                                 |                                                            | Other accrued liabilities                 |         |        | 649   |   |         |        | (356  | ) |         |       | (499   | )
|                                                                                                                                 |                                                            | Income taxes payable                      |         |        | 1,214 |   |         |        |      |   |         |       |       |  
|                                                                                                                                 |                                                            | Non-current employment obligations        |         |        | (246  | ) |         |        | 16    |   |         |       | 62     |  
|                                                                                                                                 |                                                            |                                           |         |        |       |   |         |        |      
|Net cash provided by operating activities                                                                                        |                                                            |                                           | 13,758  |        |       |   | 16,793  |        |       |   | 10,332  |      
|Cash flows from investing activities:                                                                                            |                                                            |                                           |         |        |       |   |         |        |       |   |         |      
|Proceeds from sale of short-term investments                                                                                     |                                                            |                                           | 2,250   |        |       |   | 4,687   |        |       |   | 1,857   |      
|Payments for purchase of short-term investments                                                                                  |                                                            |                                           | (3,105  | )      |       |   | (1,392  | )      |       |   | (4,078  | )    
|Capital expenditures for bingo equipment, furniture and other
    equipment                                                      |                                                            |                                           | (13,619 | )      |       |   | (9,506  | )      |       |   | (12,942 | )    
|Payment for the acquisition of International Gaming Systems,
    Inc.                                                            |                                                            |                                           |        |        |       |   | (3,469  | )      |       |   |        |      
|Proceeds from Bingo Technologies Corporation escrow account                                                                      |                                                            |                                           |        |        |       |   |        |        |       |   | 477     |      
|Payments for buy out of distributorship agreements                                                                               |                                                            |                                           |        |        |       |   | (1,006  | )      |       |   |        |      
|Payments for acquisitions of intangible assets                                                                                   |                                                            |                                           | (1,054  | )      |       |   | (392    | )      |       |   | (334    | )    
|                                                                                                                                 |                                                            |                                           |         |        |       |   |         |        |      
|Net cash used in investing activities                                                                                            |                                                            |                                           | (15,528 | )      |       |   | (11,078 | )      |       |   | (15,020 | )    
|Cash flows from financing activities:                                                                                            |                                                            |                                           |         |        |       |   |         |        |       |   |         |      
|Payments on long-term debt/note payable and other obligations                                                                    |                                                            |                                           | (275    | )      |       |   | (276    | )      |       |   | (2,382  | )    
|Payment of dividends                                                                                                             |                                                            |                                           | (2,471  | )      |       |   |        |        |       |   |        |      
|Proceeds from sales of common stock                                                                                              |                                                            |                                           | 415     |        |       |   | 530     |        |       |   | 1,172   |      
|                                                                                                                                 |                                                            |                                           |         |        |       |   |         |        |      
|Net cash (used in) provided by financing activities                                                                              |                                                            |                                           | (2,331  | )      |       |   | 254     |        |       |   | (1,210  | )    
|                                                                                                                                 |                                                            |                                           |         |        |       |   |         |        |      
|Net increase (decrease) in cash and cash equivalents                                                                             |                                                            |                                           | (4,101  | )      |       |   | 5,969   |        |       |   | (5,898  | )    
|Cash and cash equivalents at beginning of year                                                                                   |                                                            |                                           | 10,202  |        |       |   | 4,233   |        |       |   | 10,131  |      
|                                                                                                                                 |                                                            |                                           |         |        |       |   |         |        |      
|Cash and cash equivalents at end of year                                                                                         |                                                            | $                                         | 6,101   |        |       | $ | 10,202  |        |       | $ | 4,233   |      
|                                                                                                                                 |                                                            |                                           |         |        |       |   |         |        |      
|Supplemental disclosure of cash flow information:                                                                                |                                                            |                                           |         |        |       |   |         |        |       |   |         |      
|Cash paid for interest                                                                                                           |                                                            | $                                         | 31      |        |       | $ | 45      |        |       | $ | 120     |      
|                                                                                                                                 |                                                            |                                           |         |        |       |   |         |        |      
|Cash paid for income taxes                                                                                                       |                                                            | $                                         | 61      |        |       | $ | 71      |        |       | $ | 1,358   |      
|                                                                                                                                 |                                                            |                                           |         |        |       |   |         |        |      
|Supplemental schedule of non-cash transactions:                                                                                  |                                                            |                                           |         |        |       |   |         |        |       |   |         |      
|                                                                                                                                 | Purchase of intangible assets through the issuance of debt |                                           | $       |       |       |   | $       | 538    |       |   | $       |      |       
|                                                                                                                                 |                                                            |                                           |         |        |       |   |         |        |      



F-6



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##### Table of Contents



GAMETECH INTERNATIONAL, INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


October 31, 2004, 2003 and 2002




|   |                                                        
|-- | -------------------------------------------------------
|1. | Business and Summary of Significant Accounting Policies

Description of Business




Consolidation Principles




Use of Estimates




Cash and Cash Equivalents




Short-Term Investments




Bingo Equipment, Furniture, and Other Equipment




|                               |  |          
|------------------------------ |  | ---------
|Bingo equipment                |  | 3-5 years
|Office furniture and equipment |  | 3-7 years
|Leasehold improvements         |  | 10 years 



F-7



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##### Table of Contents



GAMETECH INTERNATIONAL, INC.


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)


Supplier Dependence


2 2


Software Development Capitalization


Accounting for the Costs of Computer
Software to Be Sold, Leased, or Otherwise Marketed.




Goodwill




Long-Lived Assets


Accounting for the Impairment or
Disposal of Long-Lived Assets.


Revenue Recognition




F-8



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##### Table of Contents



GAMETECH INTERNATIONAL, INC.


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)




Accounts Receivable and Allowance for Doubtful Accounts






Legal Contingencies






Advertising Costs




Stock Based Compensation


Accounting for
Stock-Based Compensation, Accounting for Stock-Based Compensation-Transition and
Disclosure


F-9



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##### Table of Contents



GAMETECH INTERNATIONAL, INC.


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)


Accounting for Stock
Issued to Employees.






|                                                                                                        |                       |                        |             |       |      |   |           |      |  |   |           |      | 
|------------------------------------------------------------------------------------------------------- | --------------------- | ---------------------- | ----------- | ----- | ---- | - | --------- | ---- |  | - | --------- | ---- | 
|                                                                                                        |                       | Year Ended October 31, |            
|                                                                                                        |                       |                        |            
|                                                                                                        |                       | 2004                   |             |       | 2003 |   |           | 2002 | 
|                                                                                                        |                       |                        |             |       |      |   |           |      | 
|Reported net income (loss)                                                                              |                       | $                      | (9,906,000  | )     |      | $ | 1,191,000 |      |  | $ | 2,733,000 |     
|Deduct: stock-based employee compensation expense determined
    under fair value method for all awards |                       |                        | (475,000    | )     |      |   | (425,000  | )    |  |   | (596,000  | )   
|                                                                                                        |                       |                        |             |       |      |   |           |      | 
|Pro forma net income (loss)                                                                             |                       | $                      | (10,381,000 | )     |      | $ | 766,000   |      |  | $ | 2,137,000 |     
|                                                                                                        |                       |                        |             |       |      |   |           |      | 
|Net Income (loss) per share                                                                             |                       |                        |             |       |      |   |           |      |  |   |           |     
|                                                                                                        | Basic  as reported   |                        | $           | (0.84 | )    |   | $         | 0.10 |  |   | $         | 0.25 | 
|                                                                                                        | Basic  pro forma     |                        | $           | (0.88 | )    |   | $         | 0.07 |  |   | $         | 0.19 | 
|                                                                                                        | Diluted  as reported |                        | $           | (0.84 | )    |   | $         | 0.10 |  |   | $         | 0.23 | 
|                                                                                                        | Diluted  pro forma   |                        | $           | (0.88 | )    |   | $         | 0.06 |  |   | $         | 0.18 | 



|                        |  |                        |  |         |  |        
|----------------------- |  | ---------------------- |  | ------- |  | -------
|                        |  | Year Ended October 31,
|                        |  |                       
|                        |  | 2004                   |  | 2003    |  | 2002   
|                        |  |                        |  |         |  |        
|Risk-free interest rate |  | 3.76%                  |  | 4.41%   |  | 4.10%  
|Dividend yield          |  | 2.63%                  |  | 0%      |  | 0%     
|Expected volatility     |  | 66.2%                  |  | 70.3%   |  | 71.2%  
|Expected life           |  | 8 years                |  | 8 years |  | 8 years

Net Income (Loss) Per Share


Earnings per Share,


F-10



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##### Table of Contents



GAMETECH INTERNATIONAL, INC.


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)


Concentrations of Credit Risk






Fair Values of Financial Instruments




Reclassifications




New Accounting Pronouncements


Guarantors Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness of
Others


Multiple-Deliverable Revenue Arrangements Accounting Changes.


F-11



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##### Table of Contents



GAMETECH INTERNATIONAL, INC.


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)


Consolidation of Variable Interest Entities  an
Interpretation of ARB No. 51 Accounting for Transfers and Servicing of Financial Assets
and Extinguishments of Liabilities,


Inventory Costs  an amendment of ARB No. 43,
Chapter 4.


Share-Based
Payment Accounting for Stock-Based Compensation. Accounting for Stock Issued to Employees, Statement of Cash Flows.






| |                                                                                                                                                                                                                                                                                                                                                                                                                          
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1. A modified prospective method in which
    compensation cost is recognized beginning with the effective
    date (a) based on the requirements of SFAS 123(R) for
    all share-based payments granted after the effective date and
    (b) based on the requirements of SFAS 123 for all
    awards granted to employees prior to the effective date of
    SFAS 123(R) that remain unvested on the effective date.
|
| | 2. A modified retrospective method which
    includes the requirements of the modified prospective method
    described above, but also permits entities to restate based on
    the amounts previously recognized under SFAS 123 for
    purposes of pro forma disclosures either (a) all prior
    periods presented or (b) prior interim periods of the year
    of adoption.                                       





F-12



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##### Table of Contents



GAMETECH INTERNATIONAL, INC.


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)






|   |                      
|-- | ---------------------
|2. | Acquisition of Assets

Business Combinations,




|                 |                       |   |           |           | 
|---------------- | --------------------- | - | --------- | --------- | 
|Acquired assets: |                       |   |           |          
|                 | Bingo equipment       |   | $         | 582,000   | 
|                 | Intellectual property |   |           | 750,000   | 
|                 | Distributor contracts |   |           | 260,000   | 
|                 | Trademarks            |   |           | 28,000    | 
|                 | Goodwill              |   |           | 1,849,000 | 
|                 |                       |   |          
|                 |                       | $ | 3,469,000 |          
|                 |                       |   |          





|   |                         
|-- | ------------------------
|3. | Goodwill and Intangibles

,
Goodwill and Other Intangible Assets,




F-13



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##### Table of Contents



GAMETECH INTERNATIONAL, INC.


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)










|                                 |  |             |       |             |              |   |              |                  |  |                     |          |  |  |  |     | 
|-------------------------------- |  | ----------- | ----- | ----------- | ------------ | - | ------------ | ---------------- |  | ------------------- | -------- |  |  |  | --- | 
|                                 |  |             |       |             |              |   |              | Weighted Average | 
|                                 |  |             |       | Accumulated |              |   | Net Carrying |                  |  | Amortization Period |         
|                                 |  | Gross Value |       |             | Amortization |   |              | Value            |  |                     | in Years | 
|                                 |  |             |       |             |              |   |              |                  |  |                     |          | 
|Intellectual Property (software) |  | $           | 3,268 |             |              | $ | (1,866       | )                |  | $                   | 1,402    |  |  |  | 3.1 | 
|Copyrights/trademarks            |  |             | 312   |             |              |   | (275         | )                |  |                     | 37       |  |  |  | 4.6 | 
|Distributor buyouts              |  |             | 1,800 |             |              |   | (1,473       | )                |  |                     | 327      |  |  |  | 2.3 | 
|                                 |  |             |       |             |              |   |              |                  |  |                     |          | 
|                                 |  | $           | 5,380 |             |              | $ | (3,614       | )                |  | $                   | 1,766    |  |  |  |     | 
|                                 |  |             |       |             |              |   |              |                  |  |                     |          | 







|     |  |   |       | 
|---- |  | - | ----- | 
|2005 |  | $ | 710   | 
|2006 |  |   | 468   | 
|2007 |  |   | 430   | 
|2008 |  |   | 140   | 
|2009 |  |   | 18    | 
|     |  |   |      
|     |  | $ | 1,766 | 
|     |  |   |      

F-14



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##### Table of Contents



GAMETECH INTERNATIONAL, INC.


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)




|   |                                               
|-- | ----------------------------------------------
|4. | Bingo Equipment, Furniture and Other Equipment



|                                               |  |             |        |  |      |   |        | 
|---------------------------------------------- |  | ----------- | ------ |  | ---- | - | ------ | 
|                                               |  | October 31, |       
|                                               |  |             |       
|                                               |  | 2004        |        |  | 2003 |  
|                                               |  |             |        |  |      |  
|Bingo equipment                                |  | $           | 51,039 |  |      | $ | 44,032 | 
|Component parts                                |  |             | 2,208  |  |      |   | 1,278  | 
|Office furniture and equipment                 |  |             | 4,515  |  |      |   | 3,638  | 
|Leasehold improvements                         |  |             | 747    |  |      |   | 700    | 
|                                               |  |             |        |  |      |  
|                                               |  |             | 58,509 |  |      |   | 49,648 | 
|Less accumulated depreciation and amortization |  |             | 31,173 |  |      |   | 24,157 | 
|Less reserve for excess or obsolete terminals  |  |             | 3,384  |  |      |   | 3,172  | 
|                                               |  |             |        |  |      |  
|                                               |  | $           | 23,952 |  |      | $ | 22,319 | 
|                                               |  |             |        |  |      |  







|   |                  
|-- | -----------------
|5. | Credit Agreements



F-15



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##### Table of Contents



GAMETECH INTERNATIONAL, INC.


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)




|   |             
|-- | ------------
|6. | Note payable



|                                                                                                                                                                 |  |             |   |      |  |   |     | 
|---------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------- | - | ---- |  | - | --- | 
|                                                                                                                                                                 |  | October 31, |  
|                                                                                                                                                                 |  |             |  
|                                                                                                                                                                 |  | 2004        |   | 2003 | 
|                                                                                                                                                                 |  |             |   |      | 
|$561,000 zero interest note payable to a former distributor,
    discounted at 5.0 percent per annum with monthly principal
    and interest payments of $28,000 |  | $           |  |      |  | $ | 275 | 
|                                                                                                                                                                 |  |             |   |      |  |  
|                                                                                                                                                                 |  |             |  |      |  |   | 275 | 
|                                                                                                                                                                 |  |             |   |      |  |  
|Less amounts due within one year                                                                                                                                 |  |             |  |      |  |   | 275 | 
|                                                                                                                                                                 |  |             |   |      |  |  
|                                                                                                                                                                 |  | $           |  |      |  | $ |    | 
|                                                                                                                                                                 |  |             |   |      |  |  



|   |                              
|-- | -----------------------------
|7. | Commitments and Contingencies

Leases






|           |  |   |           | 
|---------- |  | - | --------- | 
|2005       |  | $ | 704,000   | 
|2006       |  |   | 655,000   | 
|2007       |  |   | 548,000   | 
|2008       |  |   | 541,000   | 
|2009       |  |   | 556,000   | 
|Thereafter |  |   | 509,000   | 
|           |  |   |          
|           |  | $ | 3,513,000 | 
|           |  |   |          

Purchase Commitments




Litigation




F-16



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##### Table of Contents



GAMETECH INTERNATIONAL, INC.


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)










F-17



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##### Table of Contents



GAMETECH INTERNATIONAL, INC.


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)








|   |                     
|-- | --------------------
|8. | Stockholders Equity

Stock Options






|                                                                              |  |                        |          |           |          |   |      |           |           |  |           |   |  |           |      |  |          |  |           |   |  |   |      | 
|----------------------------------------------------------------------------- |  | ---------------------- | -------- | --------- | -------- | - | ---- | --------- | --------- |  | --------- | - |  | --------- | ---- |  | -------- |  | --------- | - |  | - | ---- | 
|                                                                              |  | Year Ended October 31, |         
|                                                                              |  |                        |         
|                                                                              |  | 2004                   |          |           | 2003     |   |      | 2002      |          
|                                                                              |  |                        |          |           |          |   |      |           |          
|                                                                              |  |                        |          | Weighted- |          |   |      |           | Weighted- |  |           |   |  | Weighted- |     
|                                                                              |  | Number of              |          |           | Average  |   |      | Number of |           |  | Average   |   |  | Number of |      |  | Average  | 
|                                                                              |  | Shares                 |          |           | Exercise |   |      | Shares    |           |  | Exercise  |   |  | Shares    |      |  | Exercise | 
|                                                                              |  | (Options)              |          |           | Price    |   |      | (Options) |           |  | Price     |   |  | (Options) |      |  | Price    | 
|                                                                              |  |                        |          |           |          |   |      |           |           |  |           |   |  |           |      |  |          | 
|Outstanding at beginning of year                                              |  |                        | 698,575  |           |          | $ | 3.80 |           |           |  | 1,254,360 |   |  | $         | 3.24 |  |          |  | 1,938,160 |   |  | $ | 3.34 | 
|Granted                                                                       |  |                        | 473,600  |           |          | $ | 4.66 |           |           |  | 293,000   |   |  | $         | 3.63 |  |          |  | 212,500   |   |  | $ | 3.98 | 
|Forfeited                                                                     |  |                        | (94,475  | )         |          | $ | 3.84 |           |           |  | (346,785  | ) |  | $         | 5.61 |  |          |  | (507,775  | ) |  | $ | 4.09 | 
|Exercised                                                                     |  |                        | (107,575 | )         |          | $ | 3.47 |           |           |  | (502,000  | ) |  | $         | 1.06 |  |          |  | (388,525  | ) |  | $ | 3.02 | 
|                                                                              |  |                        |          |           |          |   |      |           |           |  |           |   |  |           |      |  |          | 
|Outstanding at end of year                                                    |  |                        | 970,125  |           |          | $ | 4.25 |           |           |  | 698,575   |   |  | $         | 3.80 |  |          |  | 1,254,360 |   |  | $ | 3.24 | 
|                                                                              |  |                        |          |           |          |   |      |           |           |  |           |   |  |           |      |  |          | 
|Exercisable at end of year                                                    |  |                        | 499,900  |           |          | $ | 4.20 |           |           |  | 335,450   |   |  | $         | 3.69 |  |          |  | 1,012,940 |   |  | $ | 3.08 | 
|                                                                              |  |                        |          |           |          |   |      |           |           |  |           |   |  |           |      |  |          | 
|Weighted average grant-date fair value of options granted during
    the year |  |                        |          |           |          | $ | 2.51 |           |           |  |           |   |  | $         | 2.66 |  |          |  |           |   |  | $ | 3.03 | 
|                                                                              |  |                        |          |           |          |   |      |           |           |  |           |   |  |           |      |  |          | 

F-18



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##### Table of Contents



GAMETECH INTERNATIONAL, INC.


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)




|                         |  |        |         |                     |                  |  |                     |                |  |   |        |                  |  |                |         |  |  |   |      | 
|------------------------ |  | ------ | ------- | ------------------- | ---------------- |  | ------------------- | -------------- |  | - | ------ | ---------------- |  | -------------- | ------- |  |  | - | ---- | 
|                         |  |        |         | Options Outstanding |                  |  | Options Exercisable |               
|                         |  |        |         |                     |                  |  |                     |               
|                         |  |        |         | Weighted-Average    |                  |  |                     |                | 
|                         |  |        |         | Remaining           |                  |  | Weighted-Average    |                |  |   |        | Weighted-Average | 
|Range of Exercise Prices |  | Number |         |                     | Contractual Life |  |                     | Exercise Price |  |   | Number |                  |  | Exercise Price |        
|                         |  |        |         |                     |                  |  |                     |                |  |   |        |                  |  |                |        
|$2.88 - $3.51            |  |        | 121,500 |                     |                  |  | 6.64                |                |  | $ | 3.12   |                  |  |                | 94,625  |  |  | $ | 3.12 | 
|$3.62 - $3.63            |  |        | 154,250 |                     |                  |  | 8.04                |                |  | $ | 3.62   |                  |  |                | 37,775  |  |  | $ | 3.63 | 
|$3.81 - $3.98            |  |        | 204,625 |                     |                  |  | 7.57                |                |  | $ | 3.95   |                  |  |                | 82,875  |  |  | $ | 3.93 | 
|$4.00 - $4.18            |  |        | 74,250  |                     |                  |  | 6.21                |                |  | $ | 4.08   |                  |  |                | 53,500  |  |  | $ | 4.07 | 
|$4.29 - $5.29            |  |        | 415,500 |                     |                  |  | 9.11                |                |  | $ | 5.00   |                  |  |                | 231,125 |  |  | $ | 4.87 | 
|                         |  |        |         |                     |                  |  |                     |                |  |   |        |                  |  |                |        
|                         |  |        | 970,125 |                     |                  |  | 8.08                |                |  | $ | 4.25   |                  |  |                | 499,900 |  |  | $ | 4.20 | 
|                         |  |        |         |                     |                  |  |                     |                |  |   |        |                  |  |                |        

Restricted Stock Plan




Stockholder Rights Agreement






F-19



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##### Table of Contents



GAMETECH INTERNATIONAL, INC.


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)




|   |             
|-- | ------------
|9. | Income Taxes



|          |         |                        |        |        |      |   |     |      |  |   |       |        |  
|--------- | ------- | ---------------------- | ------ | ------ | ---- | - | --- | ---- |  | - | ----- | ------ | -
|          |         | Year Ended October 31, |       
|          |         |                        |       
|          |         | 2004                   |        |        | 2003 |   |     | 2002 | 
|          |         |                        |        |        |      |   |     |      | 
|Current:  |         |                        |        |        |      |   |     |      |  |   |       |       
|          | Federal |                        | $      |       |      |   | $   | 146  |  |   | $     | (1,731 | )
|          | State   |                        |        | 90     |      |   |     | 73   |  |   |       | (33    | )
|Deferred: |         |                        |        |        |      |   |     |      |  |   |       |       
|          | Federal |                        |        | (1,526 | )    |   |     | 698  |  |   |       | 3,234  |  
|          | State   |                        |        | (284   | )    |   |     | 8    |  |   |       | 218    |  
|          |         |                        |        |        |      |   |     |      | 
|          |         | $                      | (1,720 | )      |      | $ | 925 |      |  | $ | 1,688 |       
|          |         |                        |        |        |      |   |     |      | 



|                                 |                                           |                  |       |        |             |  |       |        |  
|-------------------------------- | ----------------------------------------- | ---------------- | ----- | ------ | ----------- |  | ----- | ------ | -
|                                 |                                           | October 31, 2004 |      
|                                 |                                           |                  |      
|                                 |                                           | Current          |       |        | Non-Current | 
|                                 |                                           |                  |       |        |             | 
|Deferred income tax assets:      |                                           |                  |       |        |             |  |       |       
|                                 | Amortization of intangible assets         |                  | $     |       |             |  | $     | 1,454  |  
|                                 | Allowance for doubtful accounts           |                  |       | 920    |             |  |       |       |  
|                                 | Reserve for excess or obsolete terminals  |                  |       | 1,269  |             |  |       |       |  
|                                 | Loss contingency                          |                  |       | 1,361  |             |  |       |       |  
|                                 | Accrued vacation                          |                  |       | 177    |             |  |       |       |  
|                                 | Various accruals                          |                  |       | 103    |             |  |       | 224    |  
|                                 |                                           |                  |       |        |             | 
|Total deferred income tax assets |                                           |                  | 3,830 |        |             |  | 1,678 |       
|Deferred income tax liability:   |                                           |                  |       |        |             |  |       |       
|                                 | Depreciation                              |                  |       | (1,472 | )           |  |       | (2,367 | )
|                                 |                                           |                  |       |        |             | 
|                                 | Net deferred income tax asset (liability) |                  | $     | 2,358  |             |  | $     | (689   | )
|                                 |                                           |                  |       |        |             | 

|                                          |                                          |                  |       |       |             |   |        |        |  
|----------------------------------------- | ---------------------------------------- | ---------------- | ----- | ----- | ----------- | - | ------ | ------ | -
|                                          |                                          | October 31, 2003 |      
|                                          |                                          |                  |      
|                                          |                                          | Current          |       |       | Non-Current |  
|                                          |                                          |                  |       |       |             |  
|Deferred income tax assets:               |                                          |                  |       |       |             |   |        |       
|                                          | Amortization of intangible assets        |                  | $     |      |             |   | $      | 1,115  |  
|                                          | Allowance for doubtful accounts          |                  |       | 858   |             |   |        |       |  
|                                          | Reserve for excess or obsolete terminals |                  |       | 1,190 |             |   |        |       |  
|                                          | Net operating loss carryforward          |                  |       |      |             |   |        | 827    |  
|                                          | Various accruals                         |                  |       | 137   |             |   |        | 261    |  
|                                          |                                          |                  |       |       |             |  
|Total deferred income tax assets          |                                          |                  | 2,185 |       |             |   | 2,203  |       
|Deferred income tax liability:            |                                          |                  |       |       |             |   |        |       
|                                          | Depreciation                             |                  |       |      |             |   |        | (5,754 | )
|                                          |                                          |                  |       |       |             |  
|Net deferred income tax asset (liability) |                                          | $                | 2,185 |       |             | $ | (3,551 | )     
|                                          |                                          |                  |       |       |             |  

F-20



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##### Table of Contents



GAMETECH INTERNATIONAL, INC.


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)




|                                           |  |                        |       |    |      |  |      |      |  |  |      |  
|------------------------------------------ |  | ---------------------- | ----- | -- | ---- |  | ---- | ---- |  |  | ---- | -
|                                           |  | Year Ended October 31, |      
|                                           |  |                        |      
|                                           |  | 2004                   |       |    | 2003 |  |      | 2002 | 
|                                           |  |                        |       |    |      |  |      |      | 
|Income tax provision at the statutory rate |  |                        | (34.0 | )% |      |  | 34.0 | %    |  |  | 34.0 | %
|State income taxes, net of federal benefit |  |                        | (1.1  | )  |      |  | 2.4  |      |  |  | 2.3  |  
|Meals and entertainment                    |  |                        | 0.3   |    |      |  | 2.0  |      |  |  | 0.8  |  
|Non deductible lobbying expenses           |  |                        | 0.8   |    |      |  | 3.5  |      |  |  | 1.1  |  
|Impairment of goodwill                     |  |                        | 19.4  |    |      |  |     |      |  |  |     |  
|Other, net                                 |  |                        | (0.2  | )  |      |  | 1.8  |      |  |  |     |  
|                                           |  |                        |       |    |      |  |      |      | 
|                                           |  |                        | (14.8 | )% |      |  | 43.7 | %    |  |  | 38.2 | %
|                                           |  |                        |       |    |      |  |      |      | 



|    |                       
|--- | ----------------------
|10. | Short Term Investments





|                                    |  |             |       |  |      |   |       | 
|----------------------------------- |  | ----------- | ----- |  | ---- | - | ----- | 
|                                    |  | October 31, |      
|                                    |  |             |      
|                                    |  | 2004        |       |  | 2003 |  
|                                    |  |             |       |  |      |  
|U.S. Treasury and agency securities |  | $           | 2,605 |  |      | $ | 1,399 | 
|Unsecured corporate notes           |  |             |      |  |      |   | 351   | 
|                                    |  |             |       |  |      |  
|                                    |  | $           | 2,605 |  |      | $ | 1,750 | 
|                                    |  |             |       |  |      |  



|    |                          
|--- | -------------------------
|11. | Other Accrued Liabilities



|                                |  |             |       |  |      |   |       | 
|------------------------------- |  | ----------- | ----- |  | ---- | - | ----- | 
|                                |  | October 31, |      
|                                |  |             |      
|                                |  | 2004        |       |  | 2003 |  
|                                |  |             |       |  |      |  
|Accrued professional fees       |  | $           | 1,401 |  |      | $ | 700   | 
|Accrued distributor commissions |  |             | 486   |  |      |   | 497   | 
|Deferred revenue                |  |             | 82    |  |      |   | 145   | 
|Other                           |  |             | 423   |  |      |   | 401   | 
|                                |  |             |       |  |      |  
|                                |  | $           | 2,392 |  |      | $ | 1,743 | 
|                                |  |             |       |  |      |  

F-21



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##### Table of Contents



GAMETECH INTERNATIONAL, INC.


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)




|    |                            
|--- | ---------------------------
|12. | Net Income (Loss) Per Share



|                                          |               |                        |            |   |      |  |            |         |  |  |            |         | 
|----------------------------------------- | ------------- | ---------------------- | ---------- | - | ---- |  | ---------- | ------- |  |  | ---------- | ------- | 
|                                          |               | Year Ended October 31, |           
|                                          |               |                        |           
|                                          |               | 2004                   |            |   | 2003 |  |            | 2002    | 
|                                          |               |                        |            |   |      |  |            |         | 
|Basic weighted average shares outstanding |               |                        | 11,774,795 |   |      |  | 11,696,118 |         |  |  | 11,150,064 |        
|Effect of dilutive securities:            |               |                        |            |   |      |  |            |         |  |  |            |        
|                                          | Stock options |                        |            |  |      |  |            | 121,663 |  |  |            | 795,329 | 
|                                          |               |                        |            |   |      |  |            |         | 
|Diluted                                   |               |                        | 11,774,795 |   |      |  | 11,817,781 |         |  |  | 11,945,393 |        
|                                          |               |                        |            |   |      |  |            |         | 





|    |                                                 
|--- | ------------------------------------------------
|13. | Valuation and Qualifying Accounts (in thousands)

|                             |                                 |              |   |           |            |  |            |              |  |  |                |        |   |  |   |       | 
|---------------------------- | ------------------------------- | ------------ | - | --------- | ---------- |  | ---------- | ------------ |  |  | -------------- | ------ | - |  | - | ----- | 
|                             |                                 |              |   | Additions |            |  | Deductions |              |  | 
|                             |                                 | Balance at   |   |           | Charged to |  |            | (Write-offs, |  |  |               
|                             |                                 | Beginning of |   |           | Costs and  |  |            | Net of       |  |  | Balance at End |       
|Description                  |                                 | Period       |   |           | Expenses   |  |            | Collections) |  |  | of Period      |       
|                             |                                 |              |   |           |            |  |            |              |  |  |                |       
|Year ended October 31, 2002: |                                 |              |   |           |            |  |            |              |  |  |                |        |   |  |   |      
|                             | Deducted from asset accounts:   |              |   |           |            |  |            |              |  |  |                |        |   |  |   |       | 
|                             | Allowance for doubtful accounts |              | $ | 2,772     |            |  | $          | 654          |  |  | $              | (1,084 | ) |  | $ | 2,342 | 
|Year ended October 31, 2003: |                                 |              |   |           |            |  |            |              |  |  |                |        |   |  |   |      
|                             | Deducted from asset accounts:   |              |   |           |            |  |            |              |  |  |                |        |   |  |   |       | 
|                             | Allowance for doubtful accounts |              | $ | 2,342     |            |  | $          | 234          |  |  | $              | (289   | ) |  | $ | 2,287 | 
|Year ended October 31, 2004: |                                 |              |   |           |            |  |            |              |  |  |                |        |   |  |   |      
|                             | Deducted from asset accounts:   |              |   |           |            |  |            |              |  |  |                |        |   |  |   |       | 
|                             | Allowance for doubtful accounts |              | $ | 2,287     |            |  | $          | 281          |  |  | $              | (114   | ) |  | $ | 2,454 | 

|                             |                                           |              |   |           |            |  |   |              |  |  |                |      |   |  |   |       | 
|---------------------------- | ----------------------------------------- | ------------ | - | --------- | ---------- |  | - | ------------ |  |  | -------------- | ---- | - |  | - | ----- | 
|                             |                                           |              |   | Additions |            |  |   |              | 
|                             |                                           | Balance at   |   |           | Charged to |  |   | Deductions   |  |  |               
|                             |                                           | Beginning of |   |           | Costs and  |  |   | (Disposal of |  |  | Balance at End |     
|Description                  |                                           | Period       |   |           | Expenses   |  |   | Assets)      |  |  | of Period      |     
|                             |                                           |              |   |           |            |  |   |              |  |  |                |     
|Year ended October 31, 2002: |                                           |              |   |           |            |  |   |              |  |  |                |      |   |  |   |      
|                             | Deducted from asset accounts:             |              |   |           |            |  |   |              |  |  |                |      |   |  |   |       | 
|                             | Allowance for bingo terminal obsolescence |              | $ | 3,966     |            |  | $ |             |  |  | $              | (534 | ) |  | $ | 3,432 | 
|Year ended October 31, 2003: |                                           |              |   |           |            |  |   |              |  |  |                |      |   |  |   |      
|                             | Deducted from asset accounts:             |              |   |           |            |  |   |              |  |  |                |      |   |  |   |       | 
|                             | Allowance for bingo terminal obsolescence |              | $ | 3,432     |            |  | $ | 50           |  |  | $              | (310 | ) |  | $ | 3,172 | 
|Year ended October 31, 2004: |                                           |              |   |           |            |  |   |              |  |  |                |      |   |  |   |      
|                             | Deducted from asset accounts:             |              |   |           |            |  |   |              |  |  |                |      |   |  |   |       | 
|                             | Allowance for bingo terminal obsolescence |              | $ | 3,172     |            |  | $ | 355          |  |  | $              | (143 | ) |  | $ | 3,384 | 

F-22



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##### Table of Contents



GAMETECH INTERNATIONAL, INC.


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)




|    |                             
|--- | ----------------------------
|14. | Subsequent Event (Unaudited)







|    |                                            
|--- | -------------------------------------------
|15. | Quarterly Financial Information (Unaudited)



|                                    |  |                  |        |   |             |   |        |             |  |   |             |  |  |   |         |  
|----------------------------------- |  | ---------------- | ------ | - | ----------- | - | ------ | ----------- |  | - | ----------- |  |  | - | ------- | -
|                                    |  | Fiscal Year 2004 |       
|                                    |  |                  |       
|                                    |  | 1st Quarter      |        |   | 2nd Quarter |   |        | 3rd Quarter |  |   | 4th Quarter | 
|                                    |  |                  |        |   |             |   |        |             |  |   |             | 
|Revenue                             |  | $                | 12,615 |   |             | $ | 13,359 |             |  | $ | 12,916      |  |  | $ | 12,600  |  
|Gross profit                        |  | $                | 6,905  |   |             | $ | 7,744  |             |  | $ | 6,807       |  |  | $ | 6,007   |  
|Income (loss) from operations       |  | $                | (31    | ) |             | $ | 127    |             |  | $ | 168         |  |  | $ | (11,948 | )
|Net income (loss)                   |  | $                | (15    | ) |             | $ | 58     |             |  | $ | 33          |  |  | $ | (9,982  | )
|Basic net income (loss) per share   |  | $                | 0.00   |   |             | $ | 0.00   |             |  | $ | 0.00        |  |  | $ | (0.84   | )
|Diluted net income (loss) per share |  | $                | 0.00   |   |             | $ | 0.00   |             |  | $ | 0.00        |  |  | $ | (0.84   | )





| |   |                                                                                                                                                                                                                                                                                       
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | $3,628,000 was charged to general and administrative expenses as
    the estimated legal award to a terminated distributor.                                                                                                                                                           
|
| |  | Severance costs for involuntary terminations of personnel and
    management resignations amounting to $813,000, of which
    $157,000, $153,000 and $503,000 was charged to cost of revenue,
    research and development, and general and administrative
    expenses, respectively.
|
| |  | Impairment charge for capitalized software amounting to
    $173,000, primarily recorded in research and development
    expenses.                                                                                                                                                    
|
| |  | An impairment charge of $6,625,000 related to goodwill. The
    charge was recorded in operating expenses.                                                                                                                                                                            

|                             |  |                  |        |  |             |   |        |             |  |   |             |  |  |   |        | 
|---------------------------- |  | ---------------- | ------ |  | ----------- | - | ------ | ----------- |  | - | ----------- |  |  | - | ------ | 
|                             |  | Fiscal Year 2003 |       
|                             |  |                  |       
|                             |  | 1st Quarter      |        |  | 2nd Quarter |   |        | 3rd Quarter |  |   | 4th Quarter | 
|                             |  |                  |        |  |             |   |        |             |  |   |             | 
|Revenue                      |  | $                | 13,198 |  |             | $ | 13,322 |             |  | $ | 12,776      |  |  | $ | 13,033 | 
|Gross profit                 |  | $                | 8,073  |  |             | $ | 7,924  |             |  | $ | 7,144       |  |  | $ | 7,413  | 
|Income from operations       |  | $                | 843    |  |             | $ | 541    |             |  | $ | 318         |  |  | $ | 411    | 
|Net income                   |  | $                | 522    |  |             | $ | 226    |             |  | $ | 252         |  |  | $ | 191    | 
|Basic net income per share   |  | $                | 0.05   |  |             | $ | 0.02   |             |  | $ | 0.02        |  |  | $ | 0.02   | 
|Diluted net income per share |  | $                | 0.04   |  |             | $ | 0.02   |             |  | $ | 0.02        |  |  | $ | 0.02   | 

F-23



---



##### Table of Contents



EXHIBIT INDEX


|        |    |                        |  |                                                                                                                                                                                                                                                                                    
|------- | -- | ---------------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |                       
|Number  |    | Description of Exhibit
|        |    |                       
|        | 3  | .1                     |  | Certificate of Incorporation of the Registrant, as amended(1)                                                                                                                                                                                                                      
|        | 3  | .3                     |  | Certificate of Designation of Series A Junior Participating
    Preferred Stock of the Registrant(7)                                                                                                                                                                               
|        | 3  | .4                     |  | Second Amended and Restated Bylaws of the Registrant(2)                                                                                                                                                                                                                            
|        | 4  | .1                     |  | GameTech International, Inc. Registration Rights Agreement(3)                                                                                                                                                                                                                      
|        | 4  | .3                     |  | Rights Agreement, dated as of March 7, 2003, between
    GameTech International, Inc. and Mellon Investor Services, LLC,
    as rights agent(8)                                                                                                                                    
|        | 4  | .4                     |  | Specimen Common Stock Certificate(7)                                                                                                                                                                                                                                               
|        | 10 | .1                     |  | GameTech International, Inc. 1997 Incentive Stock Plan(1)                                                                                                                                                                                                                          
|        | 10 | .15                    |  | GameTech International, Inc. 2001 Restricted Stock Plan(5)                                                                                                                                                                                                                         
|        | 10 | .16                    |  | Lease Agreement dated November 18, 1999 between the
    Registrant and Cypress Corporate Services, including addendum to
    lease and first amendment dated April 17, 2000(4)                                                                                                     
|        | 10 | .17                    |  | Revolving Line of Credit dated August 19, 1998 between the
    Registrant and Wells Fargo Bank, N.A.(4)                                                                                                                                                                            
|        | 10 | .18                    |  | Letter Amendment to Revolving Line of Credit dated April 1,
    2000 by and among the Registrant, Bingo Technologies
    Corporation, and Wells Fargo Bank, N.A.(4)                                                                                                                
|        | 10 | .19                    |  | Letter Amendment to Revolving Line of Credit dated April 2,
    2001 by and among the Registrant, Bingo Technologies
    Corporation, and Wells Fargo Bank, N.A.(4)                                                                                                                
|        | 10 | .22                    |  | Employment Agreement dated October 1, 1997 between the
    Registrant and Andrejs K. Bunkse(4)                                                                                                                                                                                     
|        | 10 | .23                    |  | Letter Amendment dated April 2, 2002 between Wells Fargo
    Bank, N.A., the Registrant, and Bingo Technologies Corporation
    amending the letter agreement between the parties dated
    August 19, 1998, together with Revolving Line of Credit
    Note dated April 2, 2002(6)
|        | 10 | .24                    |  | Letter Amendment dated April 2, 2003 between Wells Fargo
    Bank, N.A., and the Registrant, amending the letter agreement
    between the parties dated August 19, 1998, together with
    the Revolving Line of Credit Note dated April 2, 2003(9)                               
|        | 10 | .25                    |  | Employment Agreement dated September 2, 2004, between the
    Registrant and John B. Furman(10)                                                                                                                                                                                    
|        | 10 | .26                    |  | Employment Agreement effective February 1, 2005, between
    the Registrant and Cornelius T. Klerk(11)                                                                                                                                                                             
|        | 21 |                        |  | List of Subsidiaries(6)                                                                                                                                                                                                                                                            
|        | 23 | .1                     |  | Consent of Independent Registered Public Accounting Firm                                                                                                                                                                                                                           
|        | 31 | .1                     |  | Certification of Chief Executive Officer pursuant to Rule
    13a-14(a) and Rule 15d-14(a), promulgated by the Securities
    Exchange Act of 1934, as amended                                                                                                                     
|        | 31 | .2                     |  | Certification of Chief Financial Officer pursuant to Rule
    13a-14(a) and Rule 15d-14(a), promulgated by the Securities
    Exchange Act of 1934, as amended                                                                                                                     
|        | 32 | .1                     |  | Certification of Chief Executive Officer pursuant to
    18 U.S.C. Section 1350, as adopted pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                          
|        | 32 | .2                     |  | Certification of Chief Financial Officer pursuant to
    18 U.S.C. Section 1350, as adopted pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                          






| |     |                                                                                                                                                                                                        
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) | Incorporated by reference to the Registrants Registration
    Statement on Form S-1 (Registration No. 333-34967) as
    filed with the Commission on or about September 4, 1997.                      
|
| | (2) | Incorporated by reference to the Registrants Quarterly
    Report on Form 10-Q for the quarterly period ended
    January 31, 2004, as filed with the Commission on or about
    March 16, 2004.      
|
| | (3) | Incorporated by reference to Amendment No. 1 to the
    Registrants Registration Statement on Form S-1
    (Registration No. 333-34967) as filed with the Commission
    on or about October 17, 1997.
|
| | (4) | Incorporated by reference to the Registrants Annual Report
    on Form 10-K for the fiscal year ended October 31,
    2001 as filed with the Commission on or about January 29,
    2002.             



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##### Table of Contents





| |     |                                                                                                                                                                                                 
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (5) | Incorporated by reference to the Registrants Registration
    Statement on Form S-8 (Registration No. 333-72886) as
    filed with the Commission on or about November 7, 2001.                
|
| | (6) | Incorporated by reference to the Registrants Annual Report
    on Form 10-K for the fiscal year ended October 31,
    2002 as filed with the Commission on or about January 29,
    2003.      
|
| | (7) | Incorporated by reference to the Registrants Quarterly
    Report on Form 10-Q for the quarterly period ended
    January 31, 2003 as filed with the Commission on or about
    March 17, 2003.
|
| | (8) | Incorporated by reference to the Registrants Current
    Report on Form 8-K dated March 7, 2003 as filed with
    the Commission on or about March 10, 2003.                                   
|
| | (9) | Incorporated by reference to the Registrants Quarterly
    Report on Form 10-Q for the quarterly period ended
    April 30, 2003 as filed with the Commission on or about
    June 16, 2003.   



|     |                                                                                                                                                                                                  
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(10) | Incorporated by reference to the Registrants Current
    Report on Form 8-K dated September 2, 2004 as filed
    with the Commission on or about September 9, 2004.                             
|    
|(11) | Incorporated by reference to the Registrants Quarterly
    Report on Form 10-Q for the quarterly period ended
    July 31, 2004 as filed with the Commission on or about
    September 14, 2004.