Document:

ex10-1.htm

    NINTH AMENDMENT
TO

    AMENDED AND RESTATED CREDIT
AGREEMENT

    

    THIS
NINTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT ("Ninth Amendment") is
made and entered into as of the 21st day
July, 2008, by and among WMCK VENTURE CORP., a Delaware corporation, CENTURY
CASINOS CRIPPLE CREEK, INC., a Colorado corporation and WMCK ACQUISITION CORP.,
a Delaware corporation (collectively the "Borrowers"), CENTURY CASINOS, INC., a
Delaware corporation (the "Guarantor") and WELLS FARGO BANK, National
Association, as Lender and L/C Issuer and as the administrative and collateral
agent for the Lenders and L/C Issuer (herein in such capacity called the "Agent
Bank" and, together with the Lenders and L/C Issuer, collectively referred to as
the "Banks").

    

    R_E_C_I_T_A_L_S:

    WHEREAS:

     

    A.           Borrowers,
Guarantor and Banks entered into an Amended and Restated Credit Agreement dated
as of April 21, 2000, as amended by First Amendment to Amended and Restated
Credit Agreement dated as of August 22, 2001, by Second Amendment to
Amended and Restated Credit Agreement dated as of August 28, 2002, by Third
Amendment to Amended and Restated Credit Agreement dated as of October 27, 2004,
by Fourth Amendment to Amended and Restated Credit Agreement dated as of
September 23, 2005, by Fifth Amendment to Amended and Restated Credit dated
as of December 6, 2005, by Sixth Amendment to Amended and Restated Credit
Agreement dated as of October 31, 2006, by Seventh Amendment to Amended and
Restated Credit Agreement dated as of February 28, 2007, and by Eighth
Amendment to Amended and Restated Credit Agreement dated as of April 11,
2008 (collectively, the "Existing Credit Agreement").

     

    B.           For
the purpose of this Ninth Amendment, all capitalized words and terms not
otherwise defined herein shall have the respective meanings and be construed
herein as provided in Section 1.01 of the Existing Credit Agreement and any
reference to a provision of the Existing Credit Agreement shall be deemed to
incorporate that provision as a part hereof, in the same manner and with the
same effect as if the same were fully set forth herein.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    C.           Borrowers
and Guarantor desire to further amend the Existing Credit Agreement for the
following purposes:

     

    (i)           decreasing
the Aggregate Commitment and Maximum Permitted Balance from its present level of
Ten Million Dollars ($10,000,000.00) to Five Million Dollars
($5,000,000.00);

     

    (ii)           amending
the definition of EBITDA;

     

    (iii)           deleting
the Interest Expense Coverage Ratio requirement effective as of the Fiscal
Quarter ended June 30, 2008 (Section 6.02);

     

    (iv)           restating
Subsection 6.05(d) for the purpose of removing the aggregate limitation of
Five Hundred Thousand Dollars ($500,000.00) of Indebtedness owing by Borrowers
to Guarantor or any Subsidiary or Affiliate of Guarantor; and

     

    (v)           restating
the Restriction on Distributions Covenant (Section 6.10) for the purpose of
providing that on and after the Ninth Amendment Effective Date no further
Distributions or Management Fees may be made in Cash or otherwise actually
paid.

     

    D.           Lender
is willing to amend the Existing Credit Agreement for the purposes described
hereinabove, subject to the terms and conditions which are hereinafter set
forth.

     

     

    NOW,
THEREFORE, in consideration of the foregoing and other good and valuable
considerations, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto do agree to the amendments and modifications to the Existing
Credit Agreement in each instance effective as of the Ninth Amendment Effective
Date, as specifically hereinafter provided as follows:

     

    1.           Definitions.  Section 1.01
of the Existing Credit Agreement entitled "Definitions" shall be and is hereby
amended to include the following definitions.  Those terms which are
currently defined by Section 1.01 of the Existing Credit Agreement and
which are also defined below shall be superseded and restated by the applicable
definition set forth below:

     

    "Aggregate
Commitment" shall mean, as of the Ninth Amendment Effective Date, reference to
the aggregate amount committed by Lender for advance to or on behalf of the
Borrower as Borrowings under the Credit Facility up to the maximum principal
amount of Five Million Dollars ($5,000,000.00), as may be reduced from time to
time by (i) Voluntary Permanent Reductions and/or (ii) Mandatory
Commitment Reductions.

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

    "Aggregate
Commitment Reduction Schedule" shall mean the Aggregate Commitment Reduction
Schedule marked "Schedule 2.01(c)", affixed to the Ninth Amendment and by this
reference incorporated herein and made a part hereof, which revised
Schedule 2.01(c) shall fully supersede and restate Schedule 2.01(c)
attached to the Existing Credit Agreement.

     

    
      "Compliance
Certificate" shall mean a compliance certificate as described in
Section 5.08, the form of which is more particularly described on
"Exhibit F", affixed to the Ninth Amendment and by this reference
incorporated herein and made a part hereof, which revised Exhibit F shall
fully supersede and restate Exhibit F attached to the Existing Credit
Agreement.

    

     

    "Credit
Agreement" shall mean the Existing Credit Agreement as amended by the Ninth
Amendment, together with all Schedules, Exhibits and other attachments thereto,
as it may be further amended, modified, extended, renewed or restated from time
to time.

     

    "EBITDA"
shall mean with reference to any Person, for any Fiscal Period under review, the
sum of (i) Net Income for that period, plus (ii) Interest Expense
(expensed and capitalized) for that period, plus (iii) the aggregate amount of
federal and state taxes on or measured by income for that period (whether or not
payable during that period), plus (iv) depreciation, amortization and all
other non-cash expenses for that period, plus (v) unpaid accrued Management
Fees, in each case determined in accordance with GAAP, less (vi) all cash
and non-cash income (including, but not limited to, interest income), transfers,
loans and advances from CCI or any of its Subsidiaries that are not members of
the Borrower Consolidation, less (vii) all other non-cash income from any
source not specified in (vi) above, and, in the case of items (ii), (iii), (iv)
and (v), only to the extent deducted in the determination of Net Income for that
period and in the case of items (vi) and (vii) only to the extent included in
the determination of Net Income for that period.

     

    "Existing
Credit Agreement" shall have the meaning set forth in Recital Paragraph A
of the Ninth Amendment.

     

    "Maximum
Scheduled Balance" shall mean the maximum amount of scheduled principal which
may be outstanding on the Credit Facility from time to time in the amount of
Five Million Dollars ($5,000,000.00) as of the Ninth Amendment Effective
Date.

     

    "Ninth
Amendment" shall mean the Ninth Amendment to Amended and Restated Credit
Agreement.

    

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

       

      "Ninth
Amendment Effective Date" shall mean July 23, 2008, subject to the
occurrence of each of the conditions precedent set forth in Paragraph 7 of
the Ninth Amendment.

    

     

    2.           Commitment
Decrease.  From and after the Ninth Amendment Effective Date,
the Aggregate Commitment shall be and is hereby reduced to Five Million Dollars
($5,000,000.00).

     

     

    3.           Restated
Definitions.  On and after the Ninth Amendment Effective
Date:

     

     

    a.           The
definitions of "Aggregate Commitment", "Aggregate Commitment Reduction
Schedule", and "EBITDA" shall be deemed fully amended and restated by the
definitions set forth in the Ninth Amendment; and

     

    b.           The
definition of "Interest Expense Coverage Ratio" shall be and is hereby deleted
in its entirety from the Credit Agreement, effective retroactively to the Fiscal
Quarter ended June 30, 2008.

     

    4.           Elimination of Interest
Expense Coverage Ratio Covenant.  As of the Ninth Amendment
Effective Date, Section 6.02 of the Existing Credit Agreement entitled "Interest
Expense Coverage" shall be and is hereby deleted in its entirety, effective
retroactively to the Fiscal Quarter ended June 30, 2008.

     

     

    5.           Restatement of
Subsection 6.05(d) of the Total Indebtedness Covenant.  As
of the Ninth Amendment Effective Date, Section 6.05(d) of the Existing Credit
Agreement shall be restated in its entirety as follows:

     

    
      	
               
      

            	
              "d.  Indebtedness
      to Guarantor or any Subsidiary or Affiliate of Guarantor which is not a
      member of the Borrower
Consolidation."

            

    

     

    6.           Restatement of Covenant
Restricting Distributions.  As of the Ninth Amendment Effective
Date, Section 6.10 of the Existing Credit Agreement entitled "Restriction on
Distributions" shall be restated in its entirety as follows:

     

    
      	
               
      

            	
              "Section
      6.10.  Restriction on
      Distributions.  Commencing as of July 1, 2008 and
      continuing until Credit Facility Termination, the Borrower Consolidation
      shall not pay in Cash or otherwise actually pay in any manner any
      Distributions (including, without limitation, Designated CCI Distribution
      Carve-Outs), Management Fees or interest on Subordinated
      Debt.  Provided, however, for the avoidance of doubt, the
      parties understand and agree that Borrowers may reimburse Guarantor and/or
      Affiliates for actual operating expenses incurred in the ordinary course
      of business (such as employee salaries, insurance premiums and other
      shared expenses) that are actually paid on behalf of any Borrower by
      Guarantor and/or such Affiliate."

            

    

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

       

      7.           Conditions Precedent to
Ninth Amendment Effective Date.  The occurrence of the Ninth
Amendment Effective Date is subject to Agent Bank having received the following
documents and payments, in each case in a form and substance reasonably
satisfactory to Agent Bank, and the occurrence of each other condition precedent
set forth below on or before July 23, 2008:

    

     

    a.           Due
execution by Borrowers, Guarantor and Banks of three (3) duplicate
originals of this Ninth Amendment;

     

    b.           Corporate
resolutions or other evidence of requisite authority of Borrowers and Guarantor,
as applicable, to execute the Ninth Amendment;

     

    c.           Reimbursement
to Agent Bank by Borrowers for all reasonable fees and out-of-pocket expenses
incurred by Agent Bank in connection with the Ninth Amendment, including, but
not limited to, reasonable attorneys' fees of Henderson & Morgan, LLC and
all other like expenses remaining unpaid as of the Ninth Amendment Effective
Date; and

     

    d.           Such
other documents, instruments or conditions as may be reasonably required by
Lenders.

     

    8.           Representations of
Borrowers.  Borrowers hereby represent to the Banks
that:

     

    a.           The
representations and warranties contained in Article IV of the Existing Credit
Agreement and contained in each of the other Loan Documents (other than
representations and warranties which expressly speak only as of a different
date, which shall be true and correct in all material respects as of such date)
are true and correct on and as of the Ninth Amendment Effective Date in all
material respects as though such representations and warranties had been made on
and as of the Ninth Amendment Effective Date, except to the extent that such
representations and warranties are not true and correct as a result of a change
which is permitted by the Credit Agreement or by any other Loan Document or
which has been otherwise consented to by Agent Bank;

     

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

     

    b.           Since
the date of the most recent financial statements referred to in Section 5.08 of
the Existing Credit Agreement, no Material Adverse Change has occurred and no
event or circumstance which could reasonably be expected to result in a Material
Adverse Change or Material Adverse Effect has occurred;

     

    c.           No
event has occurred and is continuing which constitutes a Default or Event of
Default under the terms of the Credit Agreement; and

     

    d.           The
execution, delivery and performance of this Ninth Amendment has been duly
authorized by all necessary action of Borrowers and Guarantor and this Ninth
Amendment constitutes a valid, binding and enforceable obligation of Borrowers
and Guarantor.

     

    9.           Consent to Ninth Amendment
and Affirmation and Ratification of Guaranty.  Guarantor joins
in the execution of this Ninth Amendment for the purpose of evidencing its
consent to the terms, covenants, provisions and conditions herein contained and
contained in the Existing Credit Agreement.  Guarantor further joins
in the execution of this Ninth Amendment for the purpose of ratifying and
affirming its obligations under the Continuing Guaranty for the guaranty of the
full and prompt payment and performance of all Indebtedness and Obligations
under the Credit Facility, as modified and amended under this Ninth
Amendment.

     

     

    10.           Incorporation by
Reference.  This Ninth Amendment shall be and is hereby
incorporated in and forms a part of the Existing Credit Agreement.

     

     

    11.           Governing
Law.  This Ninth Amendment to Credit Agreement shall be
governed by the internal laws of the State of Nevada without reference to
conflicts of laws principles.

     

     

    12.           Counterparts.  This
Ninth Amendment may be executed in any number of separate counterparts with the
same effect as if the signatures hereto and hereby were upon the same
instrument.  All such counterparts shall together constitute one and
the same document.

     

     

    13.           Continuance of Terms and
Provisions.  All of the terms and provisions of the Existing
Credit Agreement shall remain unchanged except as specifically modified
herein.

     

     

    14.           Replacement Schedule
Attached.  The following replacement Schedule is attached
hereto and incorporated herein and made a part of the Credit Agreement as
follows:

     

    
       
Schedule
2.01(c) - Aggregate
Commitment Reduction Schedule

    

     

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

       

      15.           Replacement Exhibit
Attached.  The following replacement Exhibit is attached hereto
and incorporated herein and made a part of the Credit Agreement as
follows:

    

     

    Exhibit F
-                                Compliance
Certificate - Form

    

    IN WITNESS WHEREOF, the parties hereto
have executed this Ninth Amendment as of the day and year first above
written.

    

    
      	 
      	
              BORROWERS:

              WMCK
      VENTURE CORP.,

              a
      Delaware corporation

               

              By
      /s/ Larry
      Hannappel

                   Larry
      Hannappel,

                   President

            
	 
      	
               

              CENTURY
      CASINOS CRIPPLE CREEK,
      INC.,

              a
      Colorado corporation

               

              By
      /s/ Larry
      Hannappel

                   Larry
      Hannappel,

                   President

               

            
	 
      	
              WMCK
      ACQUISITIONCORP.,
      

              a
      Delaware corporation

               

              By /s/ Larry
      Hannappel

                   Larry
      Hannappel,

                   President

               

            

    

     

     

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

     

    
      	 
      	
              GUARANTOR:

               

              CENTURY
      CASINOS, INC.,

              a
      Delaware corporation

               

              By
      /s/ Larry
      Hannappel

                   Larry
      Hannappel,

                   Senior
      Vice President

               

            
	 
      	
              BANKS:

               

              WELLS
      FARGO BANK,

              National
      Association,

              Agent
      Bank, Lender and L/C
      Issuer

               

              By
      /s/ Ryan
      Edde

                   Ryan
      Edde,

                   Vice
      President

            

    

    

    
      
         

      

      
        -8-

        
          

        

      

      
         

      

    

    Schedule
2.01(c)

    To

    Ninth Amendment to Credit Agreement

     

    AGGREGATE
COMMITMENT REDUCTION SCHEDULE

    (As
of Ninth Amendment Effective Date)

     

     

    
      	
              REDUCTION
      DATE

            	
              SCHEDULED
      REDUCTION

            
	
              Ninth
      Amendment Effective Date

            	
              -0-

            
	
              December
      31, 2009

              (Maturity
      Date)

            	
              Entire
      unpaid principal balance

            

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      EXHIBIT
F

      TO

      NINTH AMENDMENT
TO CREDIT AGREEMENT

    

    

    COMPLIANCE
CERTIFICATE

    (Revised
- Ninth Amendment - Form)

    

    

    
      	
              TO:

            	
              WELLS
      FARGO BANK, National Association, as Agent
Bank

            

    

     

    Reference
is made to that certain Amended and Restated Credit Agreement, dated as of April
21, 2000, as amended by First Amendment to Amended and Restated Credit Agreement
dated as of August 22, 2001, by Second Amendment to Amended and Restated
Credit Agreement dated as of August 28, 2002, by Third Amendment to Amended and
Restated Credit Agreement dated as of October 27, 2004, by Fourth Amendment to
Amended and Restated Credit Agreement dated as of September 23, 2005, by Fifth
Amendment to Amended and Restated Credit Agreement dated as of December 6, 2005,
by Sixth Amendment to Amended and Restated Credit Agreement dated as of
October 31, 2006, by Seventh Amendment to Amended and Restated Credit
Agreement dated as of February 28, 2007, by Eighth Amendment to Amended and
Restated Credit Agreement dated April 11, 2008 and by Ninth Amendment
to Amended and Restated Credit Agreement dated as of July 21, 2008 (as may
be further amended, supplemented or otherwise modified from time to time,
collectively the "Credit Agreement"), by and among WMCK VENTURE CORP., a
Delaware corporation, CENTURY CASINOS CRIPPLE CREEK, INC., a Colorado
corporation and WMCK ACQUISITION CORP., a Delaware corporation (collectively the
"Borrowers"), CENTURY CASINOS, INC., a Delaware corporation (the "Guarantor"),
the Lenders therein named (each, together with their respective successors and
assigns, individually being referred to as a "Lender" and collectively as the
"Lenders"), the L/C Issuer therein named and WELLS FARGO BANK, National
Association, as administrative and collateral agent for the Lenders and L/C
Issuer (herein, in such capacity, called the "Agent Bank" and, together with the
Lenders, collectively referred to as the "Banks").  Terms defined in
the Credit Agreement and not otherwise defined in this Compliance Certificate
("Certificate") shall have the meanings defined and described in the Credit
Agreement.  This Certificate is delivered in accordance with
Section 5.08(f) of the Credit Agreement.

    

    
      The
period under review is the Fiscal Quarter ended       [Insert
Date]       together with, unless
otherwise indicated, the three (3) immediately preceding Fiscal Quarters on a
rolling four (4) Fiscal Quarter basis.

    

    

    I.

    

    COMPLIANCE WITH AFFIRMATIVE
COVENANTS

    
      	
              A.    FF&E
      (Section 5.01): Amount of Capital Proceeds from FF&E sold or disposed
      which exceeds One Hundred Fifty Thousand Dollars ($150,000.00) in the
      aggregate during the term of the Credit Facility, in each instance which
      are not replaced by FF&E of equivalent value and
    utility.

            	
               

               

               

               

               

               

              $______________

            
	
              B.    Compliance with
      Payment Subordination Agreement (Section 5.03): Report the
      amount of any payments made on the Subordinated Debt:

            	 
      
	
                  Interest

            	
              $______________

            
	
                  Principal

            	
              $______________

            
	
              C.    Liens Filed (Section
      5.04):  Report any liens filed against the Real Property and the
      amount claimed in such liens.  Describe actions being taken with
      respect thereto.

            	
               

               

               

              _______________

            
	
              D.    Acquisition of Additional
      Property (Section 5.06(b)):

            	 
      
	
              a.    Other
      than the Real Property presently encumbered by the Security Documentation,
      attach a legal description and describe the use of any other real property
      or rights to the use of real property which is used in any material manner
      in connection with the Casino Facilities.  Attach evidence that
      such real property or rights to the use of such real property has been
      added as Collateral under the Security Documentation.

            	
               

               

               

              ______________

            
	
                  b.    Has the
      T-Shirt Shop been acquired by any Borrower or the
    Guarantor?

            	
               

                       (yes/no) 
               

            

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              E.    Permitted
      Encumbrances (Section 5.11): Describe any mortgage, deed of trust,
      pledge, lien, security interest, encumbrance, attachment, levy, distraint
      or other judicial process or burden affecting the Collateral other than
      the Permitted Encumbrances.  Describe any matters being
      contested in the manner described in Sections 5.04 and 5.10 of the
      Credit Agreement.

            	
               

               

               

               ______________

            
	
              F.    Suits or
      Actions (Section 5.16):  Describe on a separate sheet any
      matters requiring advice to Agent Bank under Section 5.16.

            	
               

               

               ______________

            
	
              G.    Tradenames, Trademarks
      and Servicemarks (Section 5.19):  Describe on a
      separate sheet any matters requiring advice to Agent Bank under Section
      5.19.

            	
               

               

               ______________

            
	
              H.    Notice of Hazardous
      Materials (Section 5.20): State whether or not to your
      knowledge there are any matters of which Banks should be advised under
      Section 5.20.  If so, attach a detailed summary of such
      matter(s).

            	
               

               

               ______________

            
	
              I.    Golden Horseshoe
      Lease (Section 5.23):

            	 
      
	
               

                  a.    
      Describe all defaults, if any, which occurred during the period under
      review under the Golden Horseshoe Lease.  Describe any
      modifications or amendments to the Golden Horseshoe
      Lease.  State whether or not such modifications or amendments
      have been consented to by Agent Bank as required under Section 5.23
      of the Credit Agreement.

            	
               

               

               

               

               _____________

            
	
              b.    Have
      the Borrowers given Teller Realty Inc. written notice of intent to
      exercise the purchase option?

            	
               

                          yes/no        

            
	
              If so, attach a copy of such
      written notice.

            	 
      
	
              Required:  On or before
      June 30, 2003.

            	 
      

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              c.    Have
      Borrowers purchased the Golden Horseshoe Property?

            	
               

                          yes/no         

            
	
              d.    Have
      Borrowers extended the term of the Golden Horseshoe Lease to at least
      June 30, 2010?

            	
               

                          yes/no        

            
	
              Requirement:  b, c or d
      must occur on or before June 30, 2003.

            	 
      
	
               

              J.     Compliance with
      Management Agreement (Section 5.27):

            	 
      
	
              a.     Has a
      Management Agreement been executed in compliance with the requirements of
      Section 5.27?

            	
               

                 
                  yes/no       

            
	
              If so:

            	   
      _____________
	
              b.    
      Describe all defaults, if any, which occurred during the period under
      review under the Management Agreement.

            	
                  _____________

            
	
              c.    
      Describe any modifications or amendments to the Management
      Agreement.

            	
                 ____________

            
	
               d.    State whether
      or not such modifications or amendments have been consented to by Agent
      Bank as required under Section 5.27 of the Credit
    Agreement.

            	
                

            
	
               e.     Have any
      Management Fees been paid?

            	
                          
      yes/no        
    

            
	
              f.     
      Has the Borrower Consolidation realized a Leverage Ratio less than 2.00 to
      1.00 as of the end of a Fiscal Quarter occurring prior to such
      payment?

            	
               

                           yes/no        
      

            

    

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    II.

    

    FINANCIAL
COVENANTS

    

    
      	
              A.   Leverage
      Ratio (Section 6.01):

            	 
      
	
               

              Funded
      Debt.  To be calculated with reference to the
      Borrower Consolidation as of the last day of the Fiscal Quarter set forth
      above:

            	 
      
	
                  a.     Daily
      average of the Aggregate Funded Outstanding on the Credit Facility during
      the last month of the Fiscal Quarter under review

            	
               

                 $_____________

            
	
              b.     Plus
      the daily average during the last month of the Fiscal Quarter under
      review, of both the long-term and the current portions (without
      duplication) of all other interest bearing Indebtedness

            	
               

                 
      + $_____________

            
	
              c.     Plus
      the daily average during the last month of the Fiscal Quarter under
      review, of both the long-term and current portion (without duplication) of
      all Capitalized Lease Liabilities

            	
               

              +
      $_____________

            
	
              d.    Plus
      the amount of all other Contingent Liabilities as of the last day of such
      period

            	
               

              +
      $_____________

            
	
              e.    Less
      the amount of all Subordinated Debt as of the last day of such period to
      the extent included in (b) above

            	
               

              -
      $_____________

            
	
              f.    TOTAL FUNDED
      DEBT

              (a + b + c + d +
    e)

            	
               

                $_____________

            
	
              Divided
      (/) by:

            	
               

            
	
               

              EBITDA

            	 
      
	
               

              To
      be calculated with reference to the Borrower Consolidation on a cumulative
      basis with respect to the Fiscal Quarter under review and the most
      recently ended three (3) immediately preceding Fiscal Quarters on a four
      (4) Fiscal Quarter basis

               

            	 
      
	
              g.    Net
      income

            	
                 $_____________

            
	
              h.    Plus
      Interest Expense (expensed and capitalized) to the extent deducted in the
      determination of Net Income

            	
                 
      + $_____________

            
	
              i.     Plus
      the aggregate amount of Federal and state taxes on or measured by income
      (whether or not payable during the period under review) to the extent
      deducted in the determination of Net Income

            	
               

              +
      $_____________

            
	
              j.     Plus
      depreciation, amortization and all other non-cash expenses to the extent
      deducted in the determination of Net Income

            	
               

              +
      $_____________

            
	
              k.    Plus
      unpaid accrued Management Fees to the extent deducted in the determination
      of Net Income

            	   
      + $_____________
	
              l.     Less
      all cash and non-cash income (including, but not limited to, interest
      income), transfers, loans and advances from CCI or any of its Subsidiaries
      that are not members of the Borrower Consolidation to the extent included
      in the determination of Net Income.

            	
               

               

              -  $                                

            
	
              m.     Less
      all other non-cash income from any source not specified in (l) above to
      the extent included in the determination of Net Income.

            	
               

              -  $                                

            
	
              n.    TOTAL
EBITDA

              (g
      + h + i + j – k – l – m)

            	
               

                 $_____________

            
	
              Leverage Ratio (f
      / n)

            	
                                :1             

            

    

     

    Maximum Permitted Leverage Ratio: 2.00 to 1.00

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              B.    Interest Expense
      Coverage Ratio (Section 6.02):   Eliminated in its
      entirety.

            	 
      

    

     

    
      	
              C.       
      Minimum Make-Well
      Adjusted Quarterly EBITDA (Section 6.03):  To be
      calculated with respect to the Borrower Consolidation with respect to each
      Fiscal Quarter commencing as of the Fiscal Quarter ending June 30,
      2008 and continuing as of each Fiscal Quarter until the occurrence of Bank
      Facility Termination:

            	 
      
	
               

              MAKE-WELL ADJUSTED
      QUARTERLY EBITDA

            	 
      
	
              a.  EBITDA for such Fiscal
      Quarter

            	 
      
	
              (i)
        Net
      income

            	
                 $_____________

            
	
              (ii)
       Plus Interest
      Expense (expensed and capitalized) to the extent deducted in the
      determination of Net Income

            	
               

              +
      $_____________

            
	
              (iii) Plus the aggregate amount
      of Federal and state taxes on or measured by income (whether or not
      payable during the Fiscal Quarter under review) to the extent deducted in
      the determination of Net Income

            	
               

              +
      $_____________

            
	
              (iv)
      Plus depreciation, amortization and all other non-cash expenses to the
      extent deducted in the determination of Net Income

            	
               

              +
      $_____________

            
	
              (v) 
      Plus unpaid accrued Management Fees to the extent deducted in the
      determination of Net Income

            	   
      + $_____________        
	
              (vi)  Less all cash and
      non-cash income (including, but not limited to, interest income),
      transfers, loans and advances from CCI or any of its Subsidiaries that are
      not members of the Borrower Consolidation to the extent included in the
      determination of Net Income.

            	
               

                 
      -  $_____________                                

            
	
              (vii) Less
      all other non-cash income from any source not specified in (v) above to
      the extent included in the determination of Net Income.

            	
               

              -  $_____________                                

            
	
              b.
      TOTAL QUARTERLY
      EBITDA

              [(i)
      + (ii) + (iii) + (iv) + (v) - (vi) - (vii)]

            	
               

                 $  
                                  

            
	
              c.
      Plus the difference, if any, of the following calculation:

            	
               

              +
      $____________

            
	
              (i)
      Set forth the aggregate amount of Make Well Contributions received in Cash
      by Borrower during the Fiscal Quarter under review or within 40 days
      following the end of the Fiscal Quarter under review which were designated
      as applicable to such Fiscal Quarter.

            	
               

                   
        $____________

            
	
              (ii)
      Set forth the aggregate amount of Distributions (exclusive of Management
      Fees to the extent deducted in the determination of Net Income) paid in
      Cash by the Borrower Consolidation during the Fiscal Quarter under
      review.

            	
               

                
      $____________

            
	
              d.
      Amount of net Make Well Contributions

              [(i) less
(ii)]

            	
                $____________

            
	
              e.
      Make-Well Adjusted
      Quarterly EBITDA

              (b + d)

            	
               

                $____________

            
	
               

              Minimum
      Make-Well Adjusted Quarterly EBITDA

            	 
      
	
               

              Fiscal
      Quarter Ended

            	
              Minimum
      Make-Well Adjusted

              Quarterly
      EBITDA for such Quarter

            	 
      
	
              3/31/2008

            	
              N/A

            	 
      
	
              6/30/2008

            	
              $1,410,000.00

            	 
      
	
              9/30/2008

            	
              $1,130,000.00

            	 
      
	
              12/31/2008

            	
              $   753,000.00

            	 
      
	
              3/31/2009

            	
              $   899,000.00

            	 
      
	
              6/30/2009

            	
              $   902,000.00

            	 
      
	
              9/30/2009

            	
              $1,425,000.00

            	 
      
	
              12/31/2009

            	
              Maturity

            	 
      

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              D.    No Transfer of Ownership
      (Section 6.04): On a separate sheet describe in detail any transfers or
      hypothecations of Guarantor ownership interest in WMCKVC or WMCKVC
      ownership interests in CCCC or WMCKAC not permitted under Section
      6.04

            	
               

               

                 ____________

            
	
               

              E.    Total Indebtedness
      (Section 6.05)  With respect to the Borrower
      Consolidation:

            	 
      
	
              a. Set forth the aggregate amount
      of outstanding Secured Interest Rate Hedges

            	
                  
        $_____________

            
	
              Maximum Permitted

            	
                 $18,000,000.00

            
	
               

              b.
      Set forth the aggregate amount of secured purchase money Indebtedness and
      Capital Lease Liabilities

            	
               

                $_____________

            
	
              Maximum Permitted

            	
                $       250,000.00

            
	
               

              c.
      Set forth aggregate amount of Indebtedness to Guarantor or any Subsidiary
      or Affiliate of Guarantor which is not a member of the Borrower
      Consolidation

            	
               

               

                $_____________

            
	
               

              d.
      Set forth the cumulative aggregate of all Subordinated
Debt

            	
               

                $_____________

            
	
              Did Agent Bank give prior written
      consent to the incurrence of all Subordinated Debt set forth
      above

            	
                         yes/no           

            
	
              Does the interest rate accrued
      under the terms of any Subordinated Debt exceed six percent (6%) per
      annum?

            	
                         yes/no           

            
	
               

              F.    Capital Expenditures (Section
      6.06):  Set forth for the Fiscal Year period in which the Fiscal
      Quarter under review occurs, the cumulative aggregate amount of Capital
      Expenditures made to the Casino Facilities as of the end of the Fiscal
      Quarter under review, as follows:

            	 
      
	
              a. Aggregate amount of
      Non-Financed Capital Expenditures

            	
                 
        $_____________

            
	
              b. Aggregate amount of Financed
      Capital Expenditures

            	
                 
        $_____________

            
	
              c. Total Capital
      Expenditures (a + b)

            	
                $_____________

            
	
              Minimum Total Capital
      Expenditures Required:  $250,000.00

            	 
      
	
              Maximum Non-Financed Capital
      Expenditures Permitted:  $500,000.00

            	 
      

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              G.    Other Liens
      (Section 6.07):  On a separate sheet describe in detail any and
      all liens, encumbrances and/or negative pledges not permitted under
      Section 6.07

            	
               

                ______________

            
	
               

              H.    No Merger (Section
      6.08):  On a separate sheet describe any and all mergers,
      consolidations and/or asset sales not permitted under Section
      6.08

            	
               

                ______________

            
	
               

              I.     Restriction on
      Investments (Section 6.09): Describe any Investments made which are
      not permitted under Section 6.09

            	
               

                 
        ______________

            
	
               

              J.     Restrictions on
      Distributions (Section 6.10):

            	 
      
	
              a. Set forth the amount of the
      Designated CCI Capital Contribution.

            	
                
        $14,500,000.00

            
	
              b.
      Set forth the amount(s) of and describe on a separate sheet, all
      Distributions (other than the Designated CCI Distribution Carve-Outs) made
      prior to July 1, 2008, if any, during the Fiscal Year in which the Fiscal
      Quarter under review occurs.

            	
               

                $ _____________                             

            
	
              c.
      Set forth the amount(s) of and describe on a separate sheet, all
      Management Fees paid during the Fiscal Year in which the Fiscal Quarter
      under review occurs.

            	
               

                $ _____________                     

            
	
              d.
      Set forth the dates paid and amount of each Designated CCI Distribution
      Carve-Out made through the end of the Fiscal Quarter under
      review.

            	
               

                $ _____________                             

            
	
              e. Please set forth the portion,
      if any, of the Management Fees set forth in (c) that are included in
      (d).

            	 
      
	
              Requirements:

            	 
      
	
              (i)
      Prior to July 1, 2008, may not exceed $1,600,000.00 in the aggregate
      during any Fiscal Year (other than the Designated CCI Distribution
      Carve-Out)

            	 
      
	
              (ii)
      Prior to July 1, 2008, the aggregate of the Designated CCI Distribution
      Carve-Outs may not exceed the Designated CCI Capital
      Contribution.

            	 
      
	
              (iii)
      commencing July 1, 2008 and continuing until Credit Facility Termination,
      no Distributions (including, without limitation, the Designated CCI
      Distribution Carve-Outs) Management Fees or interest on Subordinated Debt
      may be paid in Cash or otherwise paid in any manner. Provided, however,
      for the avoidance of doubt, the parties understand and agree that
      Borrowers may reimburse Guarantor and/or Affiliates for actual operating
      expenses incurred in the ordinary course of business (such as employee
      salaries, insurance premiums and other shared expenses) that are actually
      paid on behalf of any Borrower by Guarantor and/or such
      Affiliate.

            	 

    

     

    
      	
              K.    Contingent Liabilities
      (Section 6.11):  Describe any Contingent Liabilities incurred by
      Borrowers which are not permitted by Section 6.11

            	
               

                 _____________

            
	
               

              L.    ERISA (Section 6.12):
      Describe on a separate sheet any matters requiring advice to Banks under
      Section 6.12.

            	
               

                 _____________

            
	
              M.   Margin
      Regulations (Section 6.13): Set forth the amount(s) of and describe
      on a separate sheet of paper any proceeds of a Borrowing used by any
      Borrower to purchase or carry any Margin Stock or to extend credit to
      others for the purpose of purchasing or carrying any Margin
      Stock.

            	
               

               

                 $_____________

            
	
              N.    No Subsidiaries
      (Section 6.14):  On a separate sheet, describe any
      Subsidiaries created by any Borrower subsequent to the Closing
      Date.  State whether or not the creation of such Subsidiaries
      has been consented to by the Agent Bank as required under Section 6.14 of
      the Credit Agreement.

            	
               

               

                        yes/no         

            
	
              O.    Transactions with
      Affiliates (Section 6.15): Describe
      on a separate sheet any matters requiring advice to Banks under
      Section 6.15.

            	
               

               

                _____________

            

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    III.

    NONUSAGE FEE
CALCULATION

    

    
      	
              (Section
      2.09(b)): to be calculated with respect to each Fiscal Quarter under
      review following the first annual anniversary of the Closing
      Date:

            	 
      
	
               

              a. As of the end of such
      Fiscal Quarter, the daily average during such Fiscal Quarter of the
      Maximum Permitted Balance (without regard to any Availability
      Limit)

            	
               

               

               

                $_____________

            
	
              b. Less daily average during such
      Fiscal Quarter of the Funded Outstandings

            	
               

              -
      $_____________

            
	
              c. Amount of
Nonusage

              (a minus b)

            	
                $_____________

            
	
              d. Nonusage Percentage based on
      Leverage Ratio

                      See
      Table Two in definition of Applicable Margin.

            	
               

                  _____________

            
	
              e. Gross Nonusage
Fee

              (c times d)

            	
                $_____________

            
	
              f. Number of days in Fiscal
      Quarter under review

            	
               

                 _____________

            
	
              g. Nonusage Fee for Fiscal
      Quarter under review

              (e/360 x f)

            	
               

                $_____________

            

    

     

    IV.

    

    AVAILABILITY
LIMIT

    

    
      	
              Availability
      Limit: For the Fiscal Quarter under review, set
    forth:

            	 
      
	
              a.
      EBITDA (enter IIA(n) above)

            	
                $                                

            
	
              b.
      Multiplied by the Maximum Permitted Leverage Ratio as of such Fiscal
      Quarter end

            	
                
      x                                

            
	
              Total

            	
               $                                 

            
	
              c.  Less Total Funded Debt
      (exclusive of the Aggregate Outstandings) See: A(f) less
    A(a).

            	
                 -
      $_____________                                

            
	
              d.Availability
      Limit

            	
                $                                

            

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    V.

    

    PERFORMANCE OF
OBLIGATIONS

     

    A review
of the activities of the Borrower Consolidation and Guarantor during the fiscal
period covered by the attached financial statements has been made under my
supervision with a view to determining whether during such fiscal period the
Borrower Consolidation and Guarantor performed and observed all of their
obligations under the Loan Documents.  The undersigned is not aware of
any facts or circumstances which would make any of the calculations set forth
above or attached hereto materially incorrect.  On the basis of the
foregoing, the undersigned certifies that the calculations made and the
information contained herein are derived from the books and records of the
Borrower Consolidation and the Guarantor and that each and every matter
contained herein correctly reflects those books and records.  Except
as described in an attached document or in an earlier Certificate, to the best
of my knowledge, as of the date of this Certificate there is no Default or Event
of Default has occurred or remains continuing.

    

    VI.

    

    NO MATERIAL ADVERSE
CHANGE

     

    To the
best of my knowledge, except as described in an attached document or in an
earlier Certificate, no Material Adverse Change has occurred since the date of
the most recent Certificate delivered to the Banks.

     

    DATED
this ____ day of _____________, 200___.

    

    
      	 
      	
              BORROWERS:

              WMCK
      VENTURE CORP., a Delaware corporation, 

              CENTURY
      CASINOS CRIPPLE CREEK,
      INC., a Colorado corporation and

              WMCK
      ACQUISITION CORP., a Delaware
      corporation

               

              By________________________

              Title:
      Authorized Officer

              Print
      Name______________________

            
	 
      	
               

              GUARANTOR:

              CENTURY
      CASINOS, INC.,

              a
      Delaware corporation

               

              By_________________________

              Name______________________

              Title________________________ex10-23.htm

    Exhibit
10.23

    

    

    

    

    

    

    

    

     

    

    

    

    
      	 
      
	 
      
	
              QUALYTEXTIL
      S.A.

            
	 
      
	
              Independent
      Auditors’ Report

            
	 
      
	
              Financial
      Statements

            
	
              as
      of April 30, 2008 and December 31, 2007

            
	
              (Prepared
      in accordance with the requirements of

            
	
               General
      Accepted Accounting Principles in Brazil)

            
	 
      
	 
      

    

    
 

     

    

      
        
           

        

        
           

          
            

          

        

        
           

          
            QUALYTÊXTIL
S.A.

            A
free translation of the original in Portuguese relating to the Financial
Statements prepared in
accordance with the requirements of General Accepted
Accounting Principles in Brazil

            Independent
Auditors’ Report

            as of
April 30, 2008 and December 31st,
2007
1 

              
                

              

            

          

        

      

      
 

      

      INDEPENDENT
AUDITORS’ REPORT

      

      

      

      

      

      To the Shareholders and Board of
Directors of 

      QUALYTÊXTIL
S.A.

      

      

      1.           We
have audited the balance sheets of QUALYTEXTIL S.A., as of April
30, 2008 and December 31, 2007, and the related statements of profit & loss,
changes in shareholders’equity and changes in sources and uses of funds for
the period and year then ended.  These financial statements are the
responsibility of the Company’s management. Our responsibility is to express an
opinion on these financial statements based on our audits.

      

      2.           We
conducted our audits in accordance with generally accepted auditing standards in
Brazil. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. The audits include examining, on a test basis, evidence supporting
the amounts and disclosures on the financial statements. The audits also include
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statements presentation.
We believe that our audits provide a reasonable basis for our
opinion.

      

      3.           In
our opinion, the financial statements referred to first paragraph present
fairly, in all material respects, the financial position of QUALYTÊXTIL S.A., as of April 30, 2008 and
December 31, 2007, and the results of its operations, changes in its
shareholders’equity and changes in its sources and uses of funds for the period
and year then ended, in conformity with generally accepted accounting principles
adopted in Brazil.

      

      4.           We
conducted our audits with the objective to express an opinion on the financial
statements referred to first paragraph. The statement of cash flow, presented in
order to offer supplementary information about QUALYTÊXTIL S.A., is not
required as part of the mandatory financial statements by the accounting
procedures adopted in Brazil. The statement of cash flow regarding April 30,
2008 and December 31, 2007 was examined under the same auditing procedures
described on the second paragraph, and in our opinion this supplementary
statement is adequately presented in all its relevant aspects to the overall
financial statements regarding April 30, 2008 and December 31,
2007.

      

      
        
           

        

        
           

          
            

          

        

        
           

          
            QUALYTÊXTIL
S.A.

            A
free translation of the original in Portuguese relating to the Financial
Statements prepared in 
accordance with the requirements of General Accepted
Accounting Principles in Brazil

            Independent
Auditors’ Report

            as of
April 30, 2008 and December 31st,
2007
2 

              
                

              
 

          

        

      

       

      

      5.           As
described on note no. 6, the Company based on their legal advisors and
accounting experts, initiate at 2006 a judicial demand against tax authorities,
aiming the recoverance of PIS and Cofins (Social contributions) paid over ICMS
(Value Added Tax) from 2002 to 2006.  Based on this understanding, the
Company accounted for, at December 31, 2006,  tax recoverable as
long-term assets, of amount of R$ 688,145.  The related credit entries
were accounted for as other operational revenues (Statement of loss – current
year) on amount of R$ 47,338 and on Shareholders’ equity on amount of R$329,811
as prior year adjustments.  These credits are net of the judicial
demands fees.  Consequently, the result and Shareholders’ equity of
the period and year ended as of April 2008 and December 31, 2007, were increased
of R$46,086 (R$150,811 at 2007) and R$526,708 (R$480,622 at 2007),
respectively.

      

      

      

      Rio de
Janeiro, May 05, 2008.

      

      

      ACAL CONSULTORIA E AUDITORIA
S/S

      CRC
- RJ – 1144

      

      

      Gelson
José Amaro - Partner in Charge

      CRC-RJ -
049.669/O-4 – Accountant

       

       

      
 

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

    
      
        	 
      	 	 	 	 	 	 	 	
                QUALYTÊXTIL
      S.A.

              
	 
      	 	 	 	 	 	 	 	
                A
      free translation of the original in Portuguese relating to the Financial
      Statements

              
	 
      	 	 	 	 	 	 	 	
                prepared
      in accordance with the requirements of General Accepted Accounting
      Principles in Brazil

              
	 
      	 	 	 	 	 	 	 	
                Balance
      Sheets

              
	 
      	 	 	 	 	 	 	 	
                as
      of April 30, 2008 and December 31, 2007

              
	 
      	 	 	 	 	 	 	 	
                (stated
      in Brazilian Reais - R$)

              

      

       

      
        
          	
                  ASSETS

                	 	
                  Notes

                	 	
                  2008

                	 	 	
                  2007

                	 
	 
      	 	 	 	 	 	 	 	 	 
	
                  Current
      assets

                	 	 	 	 	 	 	 	 	 
	
                  Cash
      and cash equivalents

                	 	 	3	 	 	 	57,244	 	 	 	872,077	 
	
                  Clients

                	 	 	4	 	 	 	2,023,192	 	 	 	3,553,693	 
	
                  Inventories

                	 	 	5	 	 	 	3,653,348	 	 	 	2,688,740	 
	
                  Taxes
      recoverable

                	 	 	 	 	 	 	202,570	 	 	 	150,800	 
	
                  Prepaid
      expenses

                	 	 	 	 	 	 	130,013	 	 	 	41,206	 
	
                  Short-term
      investments

                	 	 	 	 	 	 	-	 	 	 	41,355	 
	
                  Other
      receivables

                	 	 	 	 	 	 	232,612	 	 	 	261,645	 
	 
      	 	 	 	 	 	 	6,298,979	 	 	 	7,609,516	 
	 
      	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Long
      term assets

                	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Taxes
      recoverable

                	 	 	6	 	 	 	796,325	 	 	 	769,220	 
	
                  Judicial
      deposits

                	 	 	6	 	 	 	197,925	 	 	 	155,203	 
	
                  Prepaid
      expenses

                	 	 	 	 	 	 	-	 	 	 	112,013	 
	
                  Long-term
      investments

                	 	 	 	 	 	 	-	 	 	 	8,687	 
	
                  Other
      receivables

                	 	 	 	 	 	 	27,401	 	 	 	198,068	 
	 
      	 	 	 	 	 	 	1,021,651	 	 	 	1,243,191	 
	 
      	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Permanent
      assets - net

                	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Fixed
      assets

                	 	 	7	 	 	 	2,189,117	 	 	 	2,176,031	 
	 
      	 	 	 	 	 	 	2,189,117	 	 	 	2,176,031	 
	 
      	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Total
      Assets

                	 	 	 	 	 	 	9,509,747	 	 	 	11,028,738	 
	 
      	 	 	 	 	 	 	 	 	 	 	 	 

        

         

        
          	
                  LIABILITIES
      AND SHAREHOLDERS' EQUITY

                	 	
                  2008

                	 	 	
                  2007

                	 
	 
      	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Current
      liabilities

                	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Suppliers

                	 	 	8	 	 	 	1,327,681	 	 	 	1,875,727	 
	
                  Loans
      and financing

                	 	 	9	 	 	 	1,040,087	 	 	 	1,751,756	 
	
                  Debentures
      bonds

                	 	 	10	 	 	 	4,177,976	 	 	 	1,300,908	 
	
                  Taxes
      and contribution

                	 	 	11	 	 	 	1,190,582	 	 	 	346,097	 
	
                  Salaries
      and social charges

                	 	 	 	 	 	 	328,644	 	 	 	159,814	 
	
                  Other
      debts

                	 	 	 	 	 	 	304,929	 	 	 	63,360	 
	 
      	 	 	 	 	 	 	8,369,899	 	 	 	5,497,662	 
	 
      	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Long
      term liabilities

                	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Debentures/bonds

                	 	 	10	 	 	 	-	 	 	 	2,601,816	 
	
                  Taxes
      and contribution

                	 	 	11	 	 	 	-	 	 	 	1,127,117	 
	
                  Tax
      incentive

                	 	 	 	 	 	 	-	 	 	 	643,115	 
	
                  Other
      debts

                	 	 	6	 	 	 	138,663	 	 	 	138,664	 
	 
      	 	 	 	 	 	 	138,663	 	 	 	4,510,712	 
	 
      	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Shareholders'
      equity

                	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Paid
      in Capital

                	 	 	12	 	 	 	1,507,701	 	 	 	1,507,701	 
	
                  Capital
      reserves

                	 	 	12	 	 	 	712,909	 	 	 	712,909	 
	
                  Revaluation
      reserve

                	 	 	 	 	 	 	1	 	 	 	1	 
	
                  Accumulated
      losses

                	 	 	 	 	 	 	(1,219,426	)	 	 	(1,200,247	)
	 
      	 	 	 	 	 	 	1,001,185	 	 	 	1,020,364	 
	 
      	 	 	 	 	 	 	 	 	 	 	 	 
	
                   
      Total
      Liabilities and Shareholders` Equity

                	 	 	9,509,747	 	 	 	11,028,738	 

        

         

        
          	 
      	 	 	 	 	 	 	 	 	 	 	 	 
	
                  See
      accompanying notes to financial statements.

                	 	 	 	 	 	 	 	 	 

        

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      
        	 
      	 
      	 
      	 
      	
                QUALYTÊXTIL
      S.A.

              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	
                A
      free translation of the original in Portuguese relating to the Financial
      Statements

              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	
                prepared
      in accordance with the requirements of General Accepted Accounting
      Principles in Brazil

              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	
                Statements
      of Profit & Loss

              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	
                for
      the period and year ended on April 30, 2008 and December 31,
      2007

              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	
                (stated
      in Brazilian reais - R$)

              

      

       

      
        	 
      	 	 	 	 	 	 
	 
      	 	
                (04
      months)

              	 	 	
                (12
      months)

              	 
	 
      	 	
                2008

              	 	 	
                2007

              	 
	 
      	 	 	 	 	 	 
	
                Gross
      Income

              	 	 	 	 	 	 
	 
      	 	 	 	 	 	 
	
                Gross
      sales

              	 	 	6,890,423	 	 	 	22,104,656	 
	
                Cancellation
      and taxes on sales

              	 	 	(1,992,659	)	 	 	(5,517,669	)
	
                Net
      sales

              	 	 	4,897,764	 	 	 	16,586,987	 
	 
      	 	 	 	 	 	 	 	 
	
                Cost
      of sales

              	 	 	(2,622,240	)	 	 	(8,750,612	)
	 
      	 	 	 	 	 	 	 	 
	
                Gross
      profit

              	 	 	2,275,524	 	 	 	7,836,375	 
	 
      	 	 	 	 	 	 	 	 
	
                Operating
      (expenses) income

              	 	 	 	 	 	 	 	 
	
                General
      and administrative expenses

              	 	 	(1,719,147	)	 	 	(2,193,850	)
	
                Selling
      expenses

              	 	 	(180,255	)	 	 	(2,785,569	)
	
                Net
      financial

              	 	 	(248,512	)	 	 	(667,297	)
	
                Depreciation

              	 	 	(45,535	)	 	 	(117,405	)
	
                Other
      income (expense)

              	 	 	(94,952	)	 	 	(27,344	)
	 
      	 	 
      	  	 	 	 
      	  	 
	
                Operating
      result

              	 	 	(12,877	)	 	 	2,044,910	 
	 
      	 	 	 	 	 	 	 	 
	
                Non
      operating result

              	 	 	(6,302	)	 	 	27,564	 
	 
      	 	 
      	  	 	 	 
      	  	 
	
                Profit
      (loss) for the period/year before income tax and social
      contribution

              	 	 	(19,179	)	 	 	2,072,474	 
	 
      	 	 	 	 	 	 	 	 
	
                Provision
      for income tax and social contribution

              	 	 	-	 	 	 	(470,417	)
	 
      	 	 
      	  	 	 	 
      	  	 
	
                Profit
      (loss) for the period/year

              	 	 	(19,179	)	 	 	1,602,057	 
	 
      	 	 	 	 	 	 	 	 
	 
      	 	 	 	 	 	 	 	 
	
                Shares
      quantity of paid in capital at the period/year end

              	 	 	1,507,701	 	 	 	1,507,701	 
	 
      	 	 	 	 	 	 	 	 
	
                Profit
      (loss) per share

              	 	 	(0.01	)	 	 	1.37	 
	 
      	 	 	 	 	 	 	 	 
	 
      	 	 	 	 	 	 	 	 
	 
      	 	 	 	 	 	 	 	 
	
                See
      accompanying notes to financial statements.

              	 	 	 	 	 	 	 	 

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      
        	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	
                QUALYTÊXTIL
      S.A.

              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	
                A
      free translation of the original in Portuguese relating to the Financial
      Statements

              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	
                prepared
      in accordance with the requirements of General Accepted Accounting
      Principles in Brazil

              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	
                Statement
      of Changes in Shareholder's Equity

              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	
                for
      the period and year ended on April 30, 2008 and December 31,
      2007

              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	
                (stated
      in Brazilian reais - R$)

              

      

       

      
        	 
      	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
      	 	 	 	 	 	 	 	 	 	 	
                Total
      of

              	 	 	 	 	 	 	 	 	 	 
	 
      	 	 	 	 	
                Capital
      Reserves

              	 	 	
                Capital

              	 	 	
                Revaluation

              	 	 	
                Accumulated

              	 	 	 	 
	
                Events

              	 	
                Capital

              	 	 	
                Tax
      incentive

              	 	 	
                Shares
      premium

              	 	 	
                Reserves

              	 	 	
                Reserve

              	 	 	
                Losses

              	 	 	
                Total

              	 
	 
      	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                Balance
      at December 31, 2006

              	 	 	1,507,701	 	 	 	316,172	 	 	 	84,923	 	 	 	401,095	 	 	 	1	 	 	 	(2,802,304	)	 	 	(893,507	)
	 
      	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                Tax
      incentive reserves

              	 	 	-	 	 	 	311,814	 	 	 	-	 	 	 	311,814	 	 	 	-	 	 	 	-	 	 	 	311,814	 
	 
      	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                Profit
      for the year

              	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	1,602,057	 	 	 	1,602,057	 
	 
      	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                Balance
      at December 31, 2007

              	 	 	1,507,701	 	 	 	627,986	 	 	 	84,923	 	 	 	712,909	 	 	 	1	 	 	 	(1,200,247	)	 	 	1,020,364	 
	 
      	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                Loss
      for the period

              	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	(19,179	)	 	 	(19,179	)
	 
      	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                Balance
      at April 30, 2008

              	 	 	1,507,701	 	 	 	627,986	 	 	 	84,923	 	 	 	712,909	 	 	 	1	 	 	 	(1,219,426	)	 	 	1,001,185	 
	 
      	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
      	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
      	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                See
      accompanying notes to financial statements.

              	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

      

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      
        	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	
                QUALYTÊXTIL
      S.A.

              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	
                A
      free translation of the original in Portuguese relating to the Financial
      Statements

              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	
                prepared
      in accordance with the requirements of General Accepted Accounting
      Principles in Brazil

              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	
                Statement
      of Changes in Sources and Uses of Funds

              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	
                for
      the period and year ended on April 30, 2008 and December 31,
      2007

              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	
                (stated
      in Brazilian reais - R$)

              

      

       

      
        	 
      	 	 	 	 	 	 
	 
      	 	
                (04
      months)

              	 	 	
                (12
      months)

              	 
	 
      	 	
                2008

              	 	 	
                2007

              	 
	 
      	 	 	 	 	 	 
	
                Sources
      of funds

              	 	 	 	 	 	 
	
                Profit
      of the year

              	 	 	-	 	 	 	1,602,057	 
	
                Items
      that do not affect the net working capital

              	 	 	 	 	 	 	-	 
	
                Depreciation
      of the year

              	 	 	-	 	 	 	176,362	 
	
                Fixed
      asset write-off/sale

              	 	 	4,784	 	 	 	37,797	 
	
                Tax
      incentive reserve

              	 	 	-	 	 	 	311,814	 
	
                Decrease
      on long-term assets

              	 	 	221,540	 	 	 	-	 
	 
      	 	 
      	  	 	 	 
      	  	 
	
                Total
      of sources

              	 	 	226,324	 	 	 	2,128,030	 
	 
      	 	 	 	 	 	 	 	 
	
                Uses
      of funds

              	 	 	 	 	 	 	 	 
	
                Loss
      for the period

              	 	 	(19,179	)	 	 	-	 
	
                Depreciation
      of the period

              	 	 	90,734	 	 	 	-	 
	 
      	 	 	 	 	 	 	 	 
	
                Fixed
      assets acquisitions

              	 	 	(108,604	)	 	 	(660,234	)
	
                Increase
      on long term assets

              	 	 	-	 	 	 	(471,155	)
	
                Decrease
      on long term liabilities

              	 	 	(4,372,049	)	 	 	(697,862	)
	 
      	 	 
      	  	 	 	 
      	  	 
	
                Total
      of investments

              	 	 	(4,409,098	)	 	 	(1,829,251	)
	 
      	 	 	 	 	 	 	 	 
	 
      	 	 	 	 	 	 	 	 
	
                Increase
      (Decrease) in working capital

              	 	 	(4,182,774	)	 	 	298,779	 
	 
      	 	 	 	 	 	 	 	 
	
                Change
      in net working capital

              	 	 	 	 	 	 	 	 
	
                Current
      assets

              	 	 	 	 	 	 	 	 
	
                At
      the beginning of period/year

              	 	 	7,609,516	 	 	 	6,539,000	 
	
                At
      the end of period/year

              	 	 	6,298,979	 	 	 	7,609,516	 
	 
      	 	 	(1,310,537	)	 	 	1,070,516	 
	
                Current
      liabilities

              	 	 	 	 	 	 	 	 
	
                At
      the beginning of period/year

              	 	 	5,497,662	 	 	 	4,725,925	 
	
                At
      the end of period/year

              	 	 	8,369,899	 	 	 	5,497,662	 
	 
      	 	 	2,872,237	 	 	 	771,737	 
	 
      	 	 	 	 	 	 	 	 
	
                Increase
      (Decrease) in working capital

              	 	 	(4,182,774	)	 	 	298,779	 

      

       

      
        	 
      	 	 	 	 	 	 	 	 
	
                See
      accompanying notes to financial statements.

              	 	 	 	 	 	 	 	 

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      
        	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	
                QUALYTÊXTIL
      S.A.

              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	
                A
      free translation of the original in Portuguese relating to the Financial
      Statements

              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	
                prepared
      in accordance with the requirements of General Accepted Accounting
      Principles in Brazil

              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	
                Statements
      of Cash Flows

              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	
                for
      the period and year ended on April 30, 2008 and December 31,
      2007

              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	
                (stated
      in Brazilian reais - R$)

              

      

      
        	 
      	 	 	 	 	 	 
	 
      	 	
                (04
      months)

              	 	 	
                (12
      months)

              	 
	 
      	 	
                2008

              	 	 	
                2007

              	 
	 
      	 	 	 	 	 	 
	
                Operating
      Activities

              	 	 	 	 	 	 
	
                Profit
      (Loss) for the period/year

              	 	 	(19,179	)	 	 	1,602,057	 
	
                Adjustments
      to reconcile loss to net cash provided

              	 	 	 	 	 	 	 	 
	
                by
      operating activities:

              	 	 	 	 	 	 	 	 
	
                Depreciation
      and amortization

              	 	 	90,734	 	 	 	176,362	 
	
                (Increase)
      decrease in current assets

              	 	 	 	 	 	 	 	 
	
                Clients

              	 	 	1,530,501	 	 	 	(1,197,844	)
	
                Inventories

              	 	 	(964,608	)	 	 	(463,884	)
	
                Tax
      recoverable

              	 	 	(51,770	)	 	 	(25,401	)
	
                Prepaid
      expenses

              	 	 	(88,807	)	 	 	27,673	 
	
                Short-term
      investments

              	 	 	41,355	 	 	 	(27,524	)
	
                Other
      receivables

              	 	 	29,033	 	 	 	(66,626	)
	
                Increase
      (decrease) in current liabilities

              	 	 	 	 	 	 	 	 
	
                Suppliers

              	 	 	(548,046	)	 	 	1,470,582	 
	
                Loans
      and financing

              	 	 	(711,669	)	 	 	(737,692	)
	
                Debentures

              	 	 	2,877,068	 	 	 	222,526	 
	
                Taxes
      and contributions

              	 	 	844,485	 	 	 	(253,862	)
	
                Salaries
      and social charges

              	 	 	168,830	 	 	 	65,458	 
	
                Other
      debts

              	 	 	241,569	 	 	 	4,725	 
	
                Net
      Cash Provided by Operating Activities

              	 	 	3,439,496	 	 	 	796,550	 
	 
      	 	 	 	 	 	 	 	 
	
                Investments
      activities

              	 	 	 	 	 	 	 	 
	
                Fixed
      assets acquisitions

              	 	 	(108,604	)	 	 	(660,234	)
	
                Fixed
      asset write-off/sale

              	 	 	4,784	 	 	 	37,797	 
	
                Net
      Cash Consumed by Investments Activities

              	 	 	(103,820	)	 	 	(622,437	)
	 
      	 	 	 	 	 	 	 	 
	
                Financing
      activities

              	 	 	 	 	 	 	 	 
	
                (Increase)
      decrease in long-term assets

              	 	 	 	 	 	 	 	 
	
                Taxes
      recoverable

              	 	 	(27,105	)	 	 	(81,075	)
	
                Judicial
      deposits

              	 	 	(42,722	)	 	 	(147,426	)
	
                Prepaid
      expenses

              	 	 	112,013	 	 	 	(57,412	)
	
                Long-term
      investments

              	 	 	8,687	 	 	 	12,826	 
	
                Other
      receivables

              	 	 	170,667	 	 	 	(198,068	)
	
                Increase
      (decrease) in long-term liabilities

              	 	 	 	 	 	 	 	 
	
                Loans
      and financing

              	 	 	-	 	 	 	(227,069	)
	
                Debentures/bonds

              	 	 	(2,601,816	)	 	 	(633,330	)
	
                Taxes
      and contribution

              	 	 	(1,127,117	)	 	 	(40,199	)
	
                Tax
      incentive

              	 	 	(643,115	)	 	 	168,460	 
	
                Other
      debts

              	 	 	(1	)	 	 	34,276	 
	
                Share
      premium

              	 	 	-	 	 	 	311,814	 
	
                Net
      Cash Consumed by Financing Activities

              	 	 	(4,150,509	)	 	 	(857,203	)
	 
      	 	 	 	 	 	 	 	 
	
                Increase
      (decrease) in cash and cash equivalents

              	 	 	(814,833	)	 	 	(683,090	)
	 
      	 	 	 	 	 	 	 	 
	
                Represented
      by:

              	 	 	 	 	 	 	 	 
	
                Cash
      and equivalents at beginning of period/year

              	 	 	872,077	 	 	 	1,555,167	 
	
                Cash
      and equivalents at end of period/year

              	 	 	57,244	 	 	 	872,077	 
	 
      	 	 
      	  	 	 	 
      	  	 
	
                Increase
      (decrease) in cash and cash equivalents

              	 	 	(814,833	)	 	 	(683,090	)

      

       

      
        	 
      	 
      	 
      	 
      	 
      	 
      
	
                See
      accompanying notes to financial statements.

              	 
      	 
      	 
      	 
      

      

    

    

      
        
           

        

        
           

          
            

          

        

        
           

          
            QUALYTÊXTIL
S.A.

            A
free translation of the original in Portuguese relating to the Financial
Statements prepared in 
accordance with the requirements of General Accepted
Accounting Principles in Brazil

            Notes to
the Financial Statements

                             April
30, 2008 and December 31, 2007

                                   (Stated
in Brazilian Reais - R$)

              1

            

          

        

        
          

        

      

       

      1
– Operating context

      

      The Company was incorporated on July
2000 as a limited liability company named Vieira, Bastos & Antunes
Ltda., and later been
changed to Qualytêxtil S.A., registered at Bahia state’s board of trade on May
2005.

      

      The
Company’s principal activity is to manufacture, commercialize and rent outfit,
uniforms and accessories to personal and industrial safety. The headquarter is
based at Salvador-BA, having branches based at Rio de Janeiro, to storage and
distribution and a trade representation office based at São Paulo.

      

      On
September 23, 2005, after an auditing process accomplished by BVQI do Brasil
Sociedade Certificadora Ltda, the Company was certified to ISO 9001/2000,
maintaining this status up to now.

      

      The sales increase recorded on 2007,
due in part to the regulation of the use of equipment to protect the individual
worker, which established new procedures specifically as a security uniform
anti-flame, to workers who perform activities of electrician workers in a
situation of medium and low voltage.

      

      The
manufacturing productivity has improved during the year due to investments in
new cutting and sewing equipments, as well as better qualified and appropriate
labor recruitment to the industrial process.

      

      

      2
– Summary of significant accounting and valuation policies

      

      The
Company maintains its records in accordance with generally accepted accounting
principles adopted in Brazil, based on the Corporation Law, and the accounting
procedures issued by  CVM – Comissão de Valores Mobiliários (Brazilian
Exchange Comission) and IBRACON – Instituto dos Auditores Independentes do
Brasil (the Brazilian Independent Auditors Institute).

      

      On
December 28, 2007 was enacted the Law 11,638/07 which changed several gadgets of
Law 6,404 (Publicity Traded Company) from year on 2008, in order to adjust
accounting practices adopted  in Brazil to the International Financial
Reporting  Standards (IFRS). The Company is currently evaluating the
impacts of this Law.

      

      
        	
                (a)

              	
                Cash and cash equivalents -
      represented mainly by the banks current accounts and short-term
      marketable securities, plus income earned through the balance sheet
      date.

              

      

      

      
        	
                (b)

              	
                Inventories - are
      stated at average cost of acquisition or production, which is lower than
      market value.

              

      

      

      
        
           

        

        
           

          
            

          

        

        
           

          
            QUALYTÊXTIL
S.A.

            A
free translation of the original in Portuguese relating to the Financial
Statements prepared in 
accordance with the requirements of General Accepted
Accounting Principles in Brazil

            Notes to
the Financial Statements

                             April
30, 2008 and December 31, 2007

                                   (Stated
in Brazilian Reais - R$)
2

          

        

        
          

        

      

       

      
        	
                (c)

              	
                Fixed assets - are
      stated by the cost of acquisition. Depreciation is provided for by using
      the straight-line method in accordance with the annual rates as mentioned
      in Note 7.

              

      

      

      
        	
                (d)

              	
                Allowance for doubtful
      accounts - is set up, when necessary, in an amount considered
      sufficient to cover potential losses on uncollectible
      accounts.

              

      

      

      
        	
                (e)

              	
                Indexed liabilities -
      liabilities subject to exchange variation are stated at their
      adjusted values on the balance sheet date, based on the dollar prevailing
      on April 30, 2008 – US$1.00=R$1,6872 (US$1.00=R$1,7713 on December 31,
      2007).

              

      

      

      
        	
                (f)

              	
                Assets
      and liabilities with maturity date within the next 12 months are accounted
      as current assets and current liabilities, respectively. As mentioned at
      Note 14 – Subsequent events the new shareholder to intend prepay the
      mainly liabilities, because of that related long term liabilities were
      reclassified as current liabilities at April 30,
  2008.

              

      

      

      
        	
                (g)

              	
                Profit
      and loss are determined on accrual
basis.

              

      

      

      
        	
                (h)

              	
                Assets
      and liabilities are registered at their net realizable and due value,
      respectively, considering monetary and exchange variations, as well as
      incomes and charges earned or incurred until the balance sheet date,
      accrued on a “pro rata temporis” basis. When applicable, are established
      accruals to decrease asset to market
value.

              

      

      

      
        	
                (i)

              	
                Supplementary
      information – Aiming to allow additional financial analysis, the
      Company presents as supplementary information, a statement of cash flow.
      This statement was elaborated in accordance to NPC-20 of IBRACON –
      Instituto dos Auditores Independentes do Brasil (the Brazilian Auditors
      Institute), considering the main operations which had influence on cash
      and cash equivalent and marketable securities of the Company. This
      statement is divided in operational activities, investment activities and
      financial activities in order to help the understanding of overall
      financial statements.

              

      

      

      
        	
                (j)

              	
                The
      profit or loss per share is calculated based on the quantity of shares at
      the year end.

              

      

      

      

      3
– Cash and cash equivalent

      

      
        	 
      	 	 	 	 	 	 
	 
      	 	
                04/30/2008

              	 	 	
                12/31/2007

              	 
	 
      	 	 	 	 	 	 
	
                Cash

              	 	 	3,000	 	 	 	3,000	 
	
                Banks

              	 	 	54,244	 	 	 	869,077	 
	
                Total

              	 	 	57,244	 	 	 	872,077	 

      

      

      
        
           

        

        
           

          
            

          

        

        
           

          
            QUALYTÊXTIL
S.A.

            A
free translation of the original in Portuguese relating to the Financial
Statements prepared in 
accordance with the requirements of General Accepted
Accounting Principles in Brazil

            Notes to
the Financial Statements

                             April
30, 2008 and December 31, 2007

                                   (Stated
in Brazilian Reais - R$)
3

          

        

        
          

        

      

      4
– Clients

      

      
        	 
      	 	 	 	 	 	 
	 
      	 	
                04/30/2008

              	 	 	
                12/31/2007

              	 
	 
      	 	 	 	 	 	 
	
                Domestic
      clients

              	 	 	2,054,707	 	 	 	3,575,820	 
	
                Allowance
      for doubtful accounts

              	 	 	(31,515	)	 	 	(22,127	)
	
                Total

              	 	 	2,023,192	 	 	 	3,553,693	 

      

      

      

      5
– Inventories

      

      

      
        	 
      	 	 	 	 	 	 
	 
      	 	
                04/30/2008

              	 	 	
                12/31/2007

              	 
	 
      	 	 	 	 	 	 
	
                Goods
      for sale

              	 	 	656,339	 	 	 	309,685	 
	
                Goods
      in process

              	 	 	456,199	 	 	 	-	 
	
                Goods
      for re-sale

              	 	 	357,910	 	 	 	360,482	 
	
                Raw
      material

              	 	 	2,090,955	 	 	 	1,940,206	 
	
                Imports
      in process

              	 	 	-	 	 	 	59,248	 
	
                Others

              	 	 	177,508	 	 	 	19,119	 
	
                Provision
      for loss on sales

              	 	 	(85,563	)	 	 	-	 
	
                Total

              	 	 	3,653,348	 	 	 	2,688,740	 

      

      

      

      6
– Tax recoverable and judicial deposits

      

                 At
2006, the Company accounted for on the long-term assets, the recoverable tax
related to PIS and Cofins computed and paid considering the ICMS in its own
computation base  on the period from 2002 to 2006 on the total amount
of R$ 688,145.  The amount paid on 2006, R$71,125 were accounted for
against the result of the year and the remaining balance, which amounts to R$
499,714, was accounted for against accumulated results. On December 31, 2007,
these figure, accrued by Brazilian Central Bank interest rate (Selic), amounts
to R$ 769,220. The company’s lawyers and accountant experts consider that is
almost guaranteed the success on such demand.  From November 2006 on,
the Company is making judicial deposits, which amounts R$197,925 on April 30,
2008 (R$ 155,203 on December 31, 2007).  In addition,, on April 30,
2008, the recoverable value regarding PIS and COFINS paid over ICMS, restated by
Brazilian Central Bank interest rate (Selic), amounts R$ 799,325 (R$769,220 on
December 31, 2007).

      

                The
lawyers’ fees regarding the judicial demand are accrued as long-term
liabilities.

      

      
        
           

        

        
           

          
            

          

        

        
           

          
            QUALYTÊXTIL
S.A.

            A
free translation of the original in Portuguese relating to the Financial
Statements prepared in 
accordance with the requirements of General Accepted
Accounting Principles in Brazil

            Notes to
the Financial Statements

                             April
30, 2008 and December 31, 2007

                                   (Stated
in Brazilian Reais - R$)
4

          

        

        
          

        

      

      7
– Fixed assets

      

      
        	 
      	 	 	 	 	 	 	 	 
	 
      	 	
                
                

                Annual
      rate

              	 	
                
                

                04/30/2008

              	 	 	
                
                

                12/31/2007

              	 
	 
      	 	 	 	 	 	 	 	 	 
	
                Buildings

              	 	 	4	%	 	 	451,875	 	 	 	451,875	 
	
                Buildings
      (Revaluation)

              	 	 	4	%	 	 	789,538	 	 	 	789,538	 
	
                Software

              	 	 	20	%	 	 	476,975	 	 	 	388,498	 
	
                Machinery
      & Equipments

              	 	 	10	%	 	 	774,246	 	 	 	787,497	 
	
                Vehicles

              	 	 	20	%	 	 	21,993	 	 	 	21,993	 
	
                Trade
      marks and patents

              	 	 	20	%	 	 	102,217	 	 	 	102,217	 
	
                Hardware

              	 	 	20	%	 	 	119,705	 	 	 	117,588	 
	
                Fixtures

              	 	 	10	%	 	 	195,033	 	 	 	193,084	 
	
                Furniture

              	 	 	10	%	 	 	113,376	 	 	 	98,550	 
	
                Subtotal

              	 	 	 	 	 	 	3,044,958	 	 	 	2,950,840	 
	
                (-)
      Accumulated depreciation

              	 	 	 	 	 	 	(855,841	)	 	 	(774,809	)
	
                Total

              	 	 	 	 	 	 	2,189,117	 	 	 	2,176,031	 

      

      

      

      8
– Suppliers

      

      
        	 
      	 	 	 	 	 	 
	 
      	 	
                04/30/2008

              	 	 	
                12/31/2007

              	 
	 
      	 	 	 	 	 	 
	
                Domestic
      suppliers

              	 	 	866,383	 	 	 	1,439,947	 
	
                Foreign
      suppliers

              	 	 	461,298	 	 	 	435,780	 
	
                Total

              	 	 	1,327,681	 	 	 	1,875,727	 

      

      

      

       

      

      

      
        
           

        

        
           

          
            

          

        

        
           

          
            QUALYTÊXTIL
S.A.

            A
free translation of the original in Portuguese relating to the Financial
Statements prepared in 
accordance with the requirements of General Accepted
Accounting Principles in Brazil

            Notes to
the Financial Statements

                             April
30, 2008 and December 31, 2007

                                   (Stated
in Brazilian Reais - R$)
5

          

        

        
          

        

      

      9
– Loans and financing

      
        	 
      	 	 	 	 	 	 
	 
      	 	
                04/30/2008

              	 	 	
                12/31/2007

              	 
	 
      	 	
                Short

                 term

              	 	 	
                Long
 term

              	 	 	
                Short
 term

              	 	 	
                Long 
term

              	 
	 
      	 	 	 	 	 	 	 	 	 	 	 	 
	
                Secured
      account

              	 	 	 	 	 	 	 	 	 	 	 	 
	
                Banco
      Itaú S/A ( 2% p.m.)

              	 	 	460,000	 	 	 	-	 	 	 	200,000	 	 	 	-	 
	
                Banco
      Real S/A ( 7.05% p.m.)

              	 	 	-	 	 	 	-	 	 	 	746	 	 	 	-	 
	
                Banco
      do Nordeste S/A (2.0% p.m.)

              	 	 	578,753	 	 	 	-	 	 	 	-	 	 	 	-	 
	
                Subtotal

              	 	 	1,038,753	 	 	 	-	 	 	 	200,746	 	 	 	-	 
	 
      	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                Working
      capital

              	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
      	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                Banco
      Safra S/A (CDI+ 0.6% p.m.)

              	 	 	-	 	 	 	-	 	 	 	382,315	 	 	 	-	 
	
                Banco
      Itaú S/A ( Variação Cambial 8% p.y.)

              	 	 	-	 	 	 	-	 	 	 	53,661	 	 	 	-	 
	
                Banco
      Itaú S/A (1.80% p.y.)

              	 	 	-	 	 	 	-	 	 	 	23,279	 	 	 	-	 
	
                Banco
      Real S/A (2.311% p.m.)

              	 	 	-	 	 	 	-	 	 	 	69,872	 	 	 	-	 
	
                Banco
      Safra S/A (credit limit)

              	 	 	32	 	 	 	-	 	 	 	-	 	 	 	-	 
	
                Bradesco
      do Nordeste S/A (10%/12% p.y.)

              	 	 	-	 	 	 	-	 	 	 	758,109	 	 	 	-	 
	
                Subtotal

              	 	 	32	 	 	 	-	 	 	 	1,287,236	 	 	 	-	 
	 
      	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                Financing
      of fixed assets

              	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                Cia.
      Itauleasing Arrendamento Mercantil

              	 	 	4,649	 	 	 	-	 	 	 	9,298	 	 	 	-	 
	 
      	 	 	4,649	 	 	 	-	 	 	 	9,298	 	 	 	-	 
	 
      	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                Financing
      of imports

              	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                Banco
      do Brasil S/A (Libor + 0.582%)

              	 	 	-	 	 	 	-	 	 	 	254,476	 	 	 	-	 
	
                Subtotal

              	 	 	-	 	 	 	-	 	 	 	254,476	 	 	 	-	 
	 
      	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                Prepaid
      expenses

              	 	 	(3,347	)	 	 	-	 	 	 	-	 	 	 	-	 
	 
      	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                Total

              	 	 	1,040,087	 	 	 	-	 	 	 	1,751,756	 	 	 	-	 

      

      

      

      10–
Debentures

      

      On May
18, 2005, the Company issued, in favor of Nordeste Empreendedor – Fundo Mútuo de
Investimento em Empresas Emergentes, 358,012 nominative and book entry
debentures, convertible in preferred capital stock Class A, with unit nominal
value of R$ 9.7762, amounting a total of R$ 3,500,000. The debentures issued
will be indexed by IGP-M variation, with amortization in four equal annual
installments beginning on May 18, 2007.

      

      As
mentioned at Note 14 – Subsequent event the new shareholder to intend prepay the
mainly liabilities, because of that related long term liabilities of debentures
were reclassified as current liabilities at April 30, 2008.

      

      

      
        
           

        

        
           

          
            

          

        

        
           

          
            QUALYTÊXTIL
S.A.

            A
free translation of the original in Portuguese relating to the Financial
Statements prepared in 
accordance with the requirements of General Accepted
Accounting Principles in Brazil

            Notes to
the Financial Statements

                             April
30, 2008 and December 31, 2007

                                   (Stated
in Brazilian Reais - R$)
6

          

        

        
          

        

      

      The
updated value of debentures on April 30, 2008, the amount of R$ 4,177,976,
accounted for as current liabilities (On December 31, 2007, R$ 3,902,724, being
R$1,300,908 accounted for as current liabilities and R$ 2,601,816 as long-term
liability), were prepay on May 13, 2008 in the amount of R$
4,183,838.

      

      

      11
– Taxes and contribution

      

      
        	 
      	 	 	 	 	 	 
	 
      	 	
                04/30/2008

              	 	 	
                12/31/2007

              	 
	 
      	 	
                Short
term

              	 	 	
                Long

                term

              	 	 	
                Short

                 term

              	 	 	
                Long

                term

              	 
	 
      	 	 	 	 	 	 	 	 	 	 	 	 
	
                State
      tax - VAT

              	 	 	26,920	 	 	 	-	 	 	 	68,554	 	 	 	-	 
	
                Cofins
      payable

              	 	 	-	 	 	 	-	 	 	 	45,677	 	 	 	-	 
	
                PIS
      payable

              	 	 	-	 	 	 	-	 	 	 	12,218	 	 	 	-	 
	
                Pis/Cofins/CSLL/IRRF
      withholding

              	 	 	290	 	 	 	-	 	 	 	14,803	 	 	 	-	 
	
                Income
      tax withholding – third parties

              	 	 	1,587	 	 	 	-	 	 	 	5,958	 	 	 	-	 
	
                Municipal
      service tax

              	 	 	631	 	 	 	-	 	 	 	210	 	 	 	-	 
	
                State
      tax - VAT - installments

              	 	 	104,125	 	 	 	-	 	 	 	25,185	 	 	 	88,034	 
	
                PAEX/PAES

              	 	 	851,652	 	 	 	-	 	 	 	101,297	 	 	 	852,580	 
	
                Pis
      - installments

              	 	 	39,549	 	 	 	-	 	 	 	13,896	 	 	 	35,898	 
	
                Cofins
      - installments

              	 	 	165,828	 	 	 	-	 	 	 	58,299	 	 	 	150,605	 
	
                Total

              	 	 	1,190,582	 	 	 	-	 	 	 	346,097	 	 	 	1,127,117	 

      

      

      The State
tax – VAT installments balance refers to 02 (two) debt installments of Company’s
Macaé branch.

      

      On August
2006, the Company gave up from PAES installment debts regarding federal taxes
debts, and request for a new installment program (PAEX).  On April 30,
2008 the total debt amounts R$ 851,652 (R$ 953,877 on December 31,
2007).

      

      As
mentioned at Note 14 – Subsequent event the new shareholder to intend prepay the
mainly liabilities, because of that related long term of Taxes and contribution
were reclassified as current liabilities at April 30, 2008. So the liabilities
balance with maturity date within next 12 month, are accounted for as current
liabilities.

      

       

      

      
        
           

        

        
           

          
            

          

        

        
           

          
            QUALYTÊXTIL
S.A.

            A
free translation of the original in Portuguese relating to the Financial
Statements prepared in 
accordance with the requirements of General Accepted
Accounting Principles in Brazil

            Notes to
the Financial Statements

                             April
30, 2008 and December 31, 2007

                                   (Stated
in Brazilian Reais - R$)
7

          

        

        
          

        

      

      12–
Shareholders’ equity

      

      
        	
                 

              	
                      
                  a)
      Capital

                

              

      

      

      On April
30, 2008 and December 31, 2007, Company’s paid in capital is comprised of
1,507,701 shares (1,492,624 common nominative shares and 15,077 preferred Class
A shares), distributed as follow:

      

      

      
        	
                 

                Shareholders

              	 	
                Quantity
      of Shares

              	 	
                 

                Type

              	 	
                
                

                Value
      in R$

              	 
	
                VBA
      Participações Ltda.

              	 	 	1,492,624	 	
                Common
      nominatives

              	 	 	1,492,624	 
	
                Nordeste
      Empreendedor – F.M.I.E.E.

              	 	 	15,077	 	
                Preferred
      Class A

              	 	 	15,077	 
	
                Total

              	 	 	1,507,701	 	 
      	 	 	1,507,701	 

      

      

      
        	
                 
      

              	
                 b)
      Capital reserves

              

      

      

                 On
2007 was formed a tax incentive reserve in the amount of R$ 311,814 relating to
exploitation profit.

      

      

      13 - Contingencies

      

      13.1 – Tax contingencies

      

      On June
21, 2007, the Company was fined by the State Tax Authority (AI 10895.0002/07-5
on the total amount of R$ 2,276,420.83 (updated amount until the date of the
fine), basically referring to non compliance with due dates requested by a tax
incentive program granted by the State Tax Authority). On August 01, 2007,
the Company joined with defense administrative through their legal advisers.
According to them, the Company will be successful in this litigation, and the
process in the initial stage of administrative trial, leaving even multiple
instances to use in case of not obtaining success in the first trial, being
taken for granted the success in the judicial sphere.

      

      The legal
fees due regarding success, in the amount of R$ 90,000 (ninety thousand
reais) was not accounted for, as well as any value regarding a remote
liability.

      

      
         

        

        
          
             

          

          
             

            
              

            

          

          
             

            
              QUALYTÊXTIL
S.A.

              A
free translation of the original in Portuguese relating to the Financial
Statements prepared in 
accordance with the requirements of General Accepted
Accounting Principles in Brazil

              Notes to
the Financial Statements

                               April
30, 2008 and December 31, 2007

                                     (Stated
in Brazilian Reais - R$)
8

            

          

          
            

          

        

      

       

      13.2
– Labor contingencies

      

      According
to the legal advisers of the Company, there are ongoing labor complaints, as
described below:

      

      
        	
                Process

              	 	 	
                Value

              	 	
                Chance
      of loss

              
	 	 	 	 	 	 
      
	
                 00181.2005.032.02.00-0

              	 	 	 	10,000	 	
                Probable
      loss

              
	
                 879660-9/2005

              	 	 	 	7,157	 	
                Possible
      loss

              
	
                 880259-4/2005

              	 	 	 	7,640	 	
                Remote
      loss

              
	 	 	 	 	24,797	 	 
      

      

      

      For all
the demands mentioned above, there is no final definition by the Court and does
not have accounting provision for eventual losses.

      

      

      14
– Subsequent events

      

      On May
09, 2008, Lakeland do Brasil Empreendimentos e Participações Ltda., became a
shareholder of the Company.

      

      On May
13, 2008, the main shareholder Lakeland do Brasil Empreendimentos e
Participações Ltda. paid in capital on amount of R$ 6,337,838, accounted for as
advance for future capital increase.

      

      

      On May
16, 2008, Lakeland Industries Inc. (main shareholder of Lakeland do Brasil
Empreendimentos e Participações Ltda.) borrowed US$ 650,000 with annual interest
of 8% plus exchange variation with maturity date 91 days.

      

      The new
shareholder to intend prepay the mainly liabilities, so related long term
liabilities were reclassified as current liabilities at April 30,
2008.

       

      

       

      

      * * * *
*

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00145-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00145-of-00352.parquet"}]]