UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-K

(Mark One)

x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended December 31, 2017
¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
	EXCHANGE ACT OF 1934 for the transition period from to

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

~~Commission~~For ~~file~~the ~~number~~fiscal ~~0-23588~~year ended December 31, 2018

~~GAMING~~¨ ~~PARTNERS~~TRANSITION ~~INTERNATIONAL~~REPORT ~~CORPORATION~~PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the transition period from to

Commission file number 0-23588 GAMING PARTNERS INTERNATIONAL CORPORATION (Exact name of registrant as specified in its charter)

NEVADA		88-0310433
(State of incorporation)		(I.R.S. Employer Identification No.)

3945 West Cheyenne Avenue, North Las Vegas, Nevada 89032 (Address of principal executive offices) Registrant's telephone number, including area code: (702) 384-2425 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Common Stock, par value $0.01 per share

(Address of principal executive offices)

Registrant's telephone number, including area code: (702) 384-2425

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: Common Stock, par value $0.01 per share

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ¨ Yes x No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15 (d) of the Act. ¨ Yes x No

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

Indicate by check ~~mark~~ mark whether the registrant has submitted electronically ~~and posted on its corporate website, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). x Yes ¨ No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨

Indicate by check ~~mark~~ mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ¨ Accelerated filer ¨ Non-accelerated filer ¨x Smaller reporting company x Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). ¨ Yes x No

The aggregate market ~~value~~ value of the Common Stock held by non-affiliates of the registrant as of June 3029, ~~2017~~2018 (the last business day of the most recently ~~completed~~ completed second fiscal quarter) based on the closing price as reported on the NASDAQ Global Market of $118.9356 per share: $4733,~~024~~266,~~195~~702.

As of March 1514, ~~2018~~2019, there were 78,~~932~~091,~~794~~694 shares of the registrant’s Common Stock, par value $0.01 per share, outstanding.

Documents Incorporated by Reference:

Portions of our definitive Proxy Statement relating to our 2018 annual stockholders’ meeting are incorporated herein by reference in Part III of this Annual Report on Form 10-K. Such Proxy Statement will be filed with the Securities and Exchange Commission no later than 120 days after conclusion of the registrant’s year ended December 31, 2017.None

TABLE OF CONTENTS

PART I		1
Item 1.	Business	1
	Item 1. Business	1
Item 1A.	Risk Factors	7
	Item 1A. Risk Factors	8
Item 1B.	Unresolved Staff Comments	11
	Item 1B. Unresolved Staff Comments	12
Item 2.	Properties	11
	Item 2. Properties	13
Item 3.	Legal Proceedings	12
	Item 3. Legal Proceedings	13
Item 4.	Mine Safety Disclosures	12
	Item 4. Mine Safety Disclosures	13
PART II		13
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities	13
	Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities	14
Item 6.	Selected Financial Data	14
	Item 6. Selected Financial Data	15
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	16
	Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	25
	Item 7A. Quantitative and Qualitative Disclosures About Market Risk	25
Item 8.	Financial Statements and Supplementary Data	25
	Item 8. Financial Statements and Supplementary Data	25
	Report of Independent Registered Public Accounting Firm	2726
	Consolidated Balance Sheets	28
	CONSOLIDATED BALANCE SHEETS	27
	Consolidated Statements of Income	29
	CONSOLIDATED STATEMENTS OF INCOME	28
	Consolidated Statements of Comprehensive Income	30
	CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME	29
	Consolidated Statements of Stockholders’ Equity	31
	CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY	30
	Consolidated Statements of Cash Flows	32
	CONSOLIDATED STATEMENTS OF CASH FLOWS	31
	Notes to Consolidated Financial Statements	33
	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS	32
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	50
	Item 9A. Controls and Procedures	50
Item 9A.	Controls and Procedures	50
	Item 9B. Other Information	51
Item 9B.	Other Information	51
PART III		51
Item 10.	Directors, Executive Officers, and Corporate Governance	51
	Item 10. Directors, Executive Officers, and Corporate Governance	51
Item 11.	Executive Compensation	51
	Item 11. Executive Compensation	55
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	51
	Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	61
Item 13.	Certain Relationships and Related Transactions, and Director Independence	51
	Item 13. Certain Relationships and Related Transactions and Director Independence	63
Item 14.	Principal Accounting Fees and Services	51
	Item 14. Principal Accounting Fees and Services	63
PART IV		5265
Item 15.	Exhibits, Financial Statement Schedules	52
	Item 15. Exhibits, Financial Statement Schedules	65
Item 16.	Form 10-K Summary	53
	Item 16. Form 10-K Summary	67

PART I

Statement Regarding Forward-Looking Statements

This report on Form 10-K contains forward-looking statements regarding future events or our future financial and operational performance. Forward-looking statements include statements regarding markets for our products; trends in net sales, gross profits and estimated expense levels; liquidity and anticipated cash needs and availability; and any statement that contains the words “anticipate,” “believe,” “plan,” “forecast,” “foresee,” “estimate,” “project,” “expect,” “seek,” “target,” “intend,” “goal” and other similar expressions. The forward-looking statements included in this report reflect our current expectations and beliefs, and we do not undertake publicly to update or revise these statements, even if experience or future changes make it clear that any projected results expressed in this annual report or future quarterly reports to stockholders, press releases or company statements will not be realized. In addition, the inclusion of any statement in this report does not constitute an admission by us that the events or circumstances described in such statement are material. Furthermore, we wish to caution and advise readers that these statements are based on assumptions that may not materialize and may involve risks and uncertainties, many of which are beyond our control, that could cause actual events or performance to differ materially from those contained or implied in these forward-looking statements. These risks and uncertainties include the business and economic risks described in Item 1A. Risk Factors.

Unless otherwise indicated or unless the context requires otherwise, all references in this document to “GPIC,” “our company,” “we,” “us,” “our,” “the Company,” and similar names refer to Gaming Partners International Corporation and its subsidiaries.

Item 1.

Business

Company Overview

Gaming Partners International Corporation, a Nevada corporation, is headquartered in North Las Vegas, Nevada. The Company was formed in 2002 through a reverse merger between Paul-Son Gaming and Bourgogne et Grasset. GPIC has three operating subsidiaries: Gaming Partners International USA, Inc. (GPI USA) (including GPI Mexicana S.A. de C.V. (GPI Mexicana), our maquiladora manufacturing operation in Mexico, and GPI USA Blue Springs, our manufacturing facility in Missouri); Gaming Partners International SAS (GPI SAS); and Gaming Partners International Asia Limited (GPI Asia). Our subsidiaries have the following distribution and product focus:

•

GPI USA sells in the United States, Canada, the Caribbean, and Latin America. GPI USA sells our full product line, with most of the products manufactured in either San Luis Rio Colorado, Mexico, or Blue Springs, Missouri. The remainder is either manufactured in France or purchased from United States vendors. We warehouse inventory in San Luis, Arizona; Blue Springs, Missouri; and North Las Vegas, Nevada. We have sales offices in North Las Vegas, Nevada; Atlantic City, New Jersey; Gulfport, Mississippi; and Blue Springs, Missouri.

•

GPI SAS sells primarily in Europe and Africa out of its office in Beaune, France. GPI SAS predominantly sells casino currencies, including both American-style, known as chips, and European-style, known as plaques and jetons. Most of the products sold by GPI SAS are manufactured in France, with the remainder manufactured in Mexico.

•

GPI Asia, located in Macau S.A.R., China, distributes our full product line in the Asia-Pacific region. GPI Asia also sells table layouts that it manufactures in Macau S.A.R.

We are one of the gaming industry’s leading manufacturers and suppliers of casino table game equipment. We custom manufacture and supply casino currency, with multiple security and design options, playing cards, table layouts, gaming furniture, table accessories, dice, and roulette wheels. We ~~also~~ also provide multiple radio frequency identification (RFID) technologies including low- and high-frequency RFID casino currency, ~~RFID~~ RFID solutions for casino currency (consisting of low- and high-frequency RFID casino currency readers, antennas, casino currency ~~authentication~~ authentication software, casino currency inventory software applications, and software maintenance services). Our products and services are used with casino table games such as blackjack, poker, baccarat, craps, and roulette. Our products fall into two categories – non-consumable and consumable. Non-consumable products consist of casino currencies, gaming furniture, and RFID solutions. These products typically have a useful life of several years or longer. Sales of non-consumables are typically driven by casino openings, expansions, and re-brandings, as well as replacement in the normal course of business. Consumable products consist of playing cards, table layouts, dice, and table accessories. These products each have a useful life that ranges from several hours for playing cards and dice to several months for layouts. Casinos tend to buy these products annually, if not more frequently.

The majority of our products are specifically designed and produced to meet our customers’ requirements, whether they are related to use, branding, aesthetic appeal, security, or anti-counterfeiting features. We believe our ability to produce products with a variety of styles and features, in combination with years of reliable delivery, enhance our competitive position. Our strategy is to be the exclusive supplier of table game products for every new casino. Through this strategy, revenues are generated both from the initial sale and replenishment of consumable products.

Merger Agreement

On November 27, 2018, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Angel Holdings Godo Kaisha, a company organized under the laws of Japan (“Angel”), and AGL Nevada Corporation, a Nevada corporation and wholly-owned subsidiary of Angel (“Merger Sub”), pursuant to which Angel will acquire the Company in exchange for cash. The Merger Agreement was unanimously adopted by the Special Transaction Committee of independent directors of the Board of Directors of the Company as well as the full Board.

Pursuant to the terms of the Merger Agreement, Merger Sub will merge with and into the Company (the “Merger”), the separate existence of Merger Sub will cease, and the Company will continue as the surviving corporation, which will be a wholly owned subsidiary of Angel. The surviving corporation shall succeed to and assume all of the rights and obligations of Merger Sub and the Company. At the effective time of the Merger (the “Effective Time”), by virtue of the Merger and without any further action on the part of Angel, Merger Sub, the Company or the holders of any capital stock or other securities of the Company: (i) any shares owned immediately prior to the Effective Time by the Company (or held in the Company’s treasury), Angel or Merger Sub or any of their respective direct or indirect wholly owned subsidiaries (the “Excluded Shares”) shall be cancelled and retired and shall cease to exist; (ii) except for Excluded Shares, each share of our common stock outstanding immediately prior to the Effective Time will be automatically converted into the right to receive $13.75 in cash (the “Merger Consideration”); and (iii) each share of common stock of Merger Sub, $0.01 par value per share, outstanding immediately prior to the Effective Time shall be converted into one share of common stock of the surviving corporation.

Each of Angel, Merger Sub and the Company has made customary representations and warranties and agreed to customary covenants in the Merger Agreement. The Merger is subject to various closing conditions, including but not limited to (i) approval of the Merger Agreement by the holders of a majority of the outstanding shares of our common stock, (ii) receipt by Angel of certain specified gaming licenses, (iii) if required, the expiration of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and (iv) the absence of any law, order or injunction prohibiting the Merger. Each party’s obligation to consummate the Merger is also subject to certain additional customary conditions, including (A) subject to certain exceptions and generally subject to certain materiality qualifiers, the accuracy of the representations and warranties of the other party and (B) performance in all material respects by the other party of its obligations under the Merger Agreement.

On March 12, 2019, our stockholders approved the Merger Agreement. The parties currently anticipate that the Merger Agreement will be consummated by December 1, 2019.

Product Segment

We operate in one operating segment – casino table game products. See Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 1312. Geographic and Product Line Information, for information concerning our product lines.

Products

The following table describes our products by product line and sales (dollars in thousands) for the years ended December 31:

	2017				2016				Year-to-Year Change
	2018				2017				Year-to-Year Change
Casino currency without RFID	$	1420,~~754~~867	1824.31	%	$	1514,~~698~~754	1918.13	%	$	~~(944~~6,113	)	(641.04	)%
Casino currency with RFID		1817,~~041~~520	2220.41	%		1618,~~123~~041	1922.64	%		~~1,918~~(521	)	11(2.9	)%
Total casino currency		3238,~~795~~387	4044.72	%		3132,~~821~~795	3840.7	%		~~974~~5,592		317.1	%
Playing cards		2423,~~864~~466	3027.80	%		2624,~~708~~864	3230.58	%		(1,~~844~~398	)	(65.96	)%
Table accessories and other products		6,~~802~~996	8.40	%		6,~~639~~802	8.14	%		~~163~~194		2.59	%
Table layouts		5,~~315~~753	6.6	%		5,~~259~~315	6.46	%		56438		18.12	%
Gaming furniture		3,~~126~~404	3.9	%		23,~~645~~255	34.20	%		~~481~~149		184.26	%
Dice		2,~~791~~999	3.54	%		2,~~859~~791	3.5	%		~~(68~~208	)	(27.45	)%
RFID solutions		12,~~623~~521	2.09	%		31,~~000~~623	32.70	%		~~(1,377~~898	)	~~(45~~55.93	)%
Shipping		3,~~286~~483	4.10	%		3,~~208~~157	34.90	%		78326		210.43	%
Total	$	8087,~~602~~009	100.0	%	$	8280,~~139~~602	100.0	%	$	(16,~~537~~407	)	(17.9	)%

Casino Currency

Casino currency, used at table games, can be divided into two basic styles: American-style, known as chips, and European-style, known as plaques and jetons. Our broad range of currency products enables us to meet our customers’ preferences and specifications, including branding, aesthetic, security, and anti-counterfeiting features. Because casino currency, like real currency, is subject to counterfeiting, we incorporate a variety of custom security and anti-counterfeit features, such as ultra-violet (UV) pigments, UV inks, four-color process UV markings, infrared pigments, DNA type taggants, gold lace materials, alpha dots, customized rings, number serializations, security films, holograms, and micro-text. Manufacturing techniques used to thwart counterfeiting include creation of intricate multi-shot molds and complex currency designs to increase replication difficulty. Our most sophisticated anti-counterfeiting feature is an RFID device, based on a microchip that can be embedded in our casino currency making it counterfeit resistant when combined with our chip inventory, validation and tracking system (CIS).

Typically, a casino will order all of its casino currency, including replacement currency, from a single supplier. Accordingly, we strive to become the original casino currency supplier to a casino upon its opening, thereby enhancing our opportunity to receive additional sales when the casino places replacement orders or grows. A new casino order will typically include at least five to seven distinct currency denominations, colors, and styles, ranging in denominations from $0.50 to in excess of $1 million. Our selling price depends on customization, quantities, design, and security features. We hold the leading worldwide market share in casino currency.

2American-style Casino Currency. American-style casino currency, commonly known as chips, is used worldwide. There are currently four main manufacturing technologies used to produce this type of currency: injection molding, thermo-compression molding, laser cut-thermo-compression, and sublimation. We produce casino currency using all four of these methods. We sell American-style casino currency under the Paulson®, Bud Jones®, Blue Chip® (BC®), Dolphin® and Bourgogne et Grasset® (BG®) brand names.

American style Casino Currency. American-style casino currency, commonly known as chips, is used worldwide. There are currently four main manufacturing technologies used to produce this type of currency: injection molding, thermo-compression molding, laser cut-thermo-compression, and sublimation. We produce casino currency using all four of these methods. We sell American-style casino currency under the Paulson®, Bud Jones®, Blue Chip® (BC®), Dolphin® and Bourgogne et Grasset® (BG®) brand names.

•

Injection-molded Currency. Our BG^®, Dolphin^®and Bud Jones^® Plastic injection-molded casino currencies are made with several injection-molded colors, typically with a central metal piece for added weight, and printed decals. There are several standard diameters and a wide range of design and color combinations. Various security features are used to make the currencies counterfeit resistant, including using various UV, 3-in-1 UV and infra-red pigments, and other ELP pigments, specialty inks, security taggants, holograms, 4C-UV, security film, serialization, Datatrace, DNA security powders (that can be read with specialized equipment), electromagnetic (EM) detection and RFID technology. Under our BG^® brand, our Premium Chip allows for the design and full customization of the chip mold. Our new BG^® V-Series chip line was developed using an exclusive and highly durable injection material formula. The V-Series utilizes a proprietary and interchangeable mold system that offers customers a broader range of mold designs and the option to select between two decal sizes. All V-Series chips come standard with ChipShield, an anti-fungal agent that keeps chips cleaner. All four color shot V-Series chips come standard with an exclusive state-of-the-art hidden infra-red security feature.

•

Thermo-compression Molded Currency. Our Paulson^®and Blue Chip^® (BC^®) thermo-compression molded casino currencies are manufactured using a proprietary formulation. Printed decals or “inlays” are incorporated in the product during the compression steps. Customized designs, security, and identifying features can be incorporated into the currencies. These casino currencies have a unique feel when stacked and are commonly referred to as “clay chips.” Various security features are used to make this currency counterfeit resistant, including UV and infra-red pigments, UV and 4C-UV inks, alphadots, custom molds, serialization, EM detection and RFID technology. Our Paulson^® Premium Chip has an outer décor ring made from the same materials used in our European-style plaques and jetons. The addition of the décor ring gives customers the option of adding additional security features.

•

Laser CutThermo-compression Currency. Our BG^®J3 jeton is a laser cut, thermo-compression casino currency that features intricate edge insert designs, two decal size options and the most advanced technology in security features. The J3 is referred to as a hybrid chip as it combines European-style plaque and jeton materials and aesthetic features with the feel and handling properties of American-style casino currency. Security features such as RFID technology, EM detection, microdots, gold lace, serialization, 4C-UV, UV Electro Luminescent and infra-red pigments, holograms and security film can be added to make the currency more counterfeit resistant.

•

Sublimation Currency. Sublimation currency, manufactured under the BG^® brand, is made from an injection-molded white disc. Currency designs are transferred to the disc using a technology called “pad printing.” This technology permits simultaneous printing of the face and the edge of the chip. We refer to this casino currency style as “Full Face.” The security feature available is infra-red pigments.

European-style Casino Currency. Plaques and jetons are European-style casino currency. Plaques can be rectangular, square, oval, or custom-shaped and are available in various sizes. Jetons are circular with multiple diameters. Plaques and jetons are made of laminated cellulose acetate with a large range of colors, shapes, security, and anti-counterfeit components such as UV pigment, number serialization, laser pigment, gold lace material, EM detection, and RFID technology. We offer a number of standard designs as well as highly customized designs. GPI SAS created its original product line in 1925 and has held the leading position in this market since that time.

RFID Casino Currency. Since 1996, we have been at the forefront of applying RFID technology to casino currency. Our RFID products include RFID-embedded currency and readers and antennas for the cage, gaming tables, and chip vaults. All of these RFID products can be integrated with our CIS software to provide authentication and inventory management across multiple locations within a casino. RFID enables quick and accurate accounting and verification of casino currency, either one at a time or in larger quantities, whether in stacks, racks, chip trays, or cabinets. When integrated with CIS, casino management can access, in real-time, a number of custom reports.

Use of RFID in gaming started with our low-frequency (125 KHz) devices used primarily for security. In 2006, we developed and introduced a faster, high-frequency (13.56 MHz) line of RFID products which offered a higher level of security and had much faster reading speeds, allowing tracking of currency movements within a casino. In 2015, after three years of research and development, we introduced SMART, a proprietary, high-performance RFID technology. Using a new generation of RFID tags and antennas, SMART operates at even faster chip-reading speeds. The SMART reader generates less heat and requires a smaller footprint.

RFID Solutions. RFID Solutions are customized applications running on CIS which integrate into a casino’s system to authenticate and track casino currency. We also provide associated hardware support and maintenance services.

Playing Cards

We manufacture and sell two brands (Paulson^®and Gemaco^®) of paper casino playing cards in single, multi-deck, and pre-shuffled packages. In addition, we offer plastic cards under our Gemaco^® brand. Based on casino controls and practices, playing cards are typically replaced at least every 24 hours, excluding plastic cards which are used for longer periods. A casino typically enters into a one- or two-year purchase commitment with a supplier to supply its playing cards at regular intervals, generally monthly or quarterly. Our playing cards are compatible with all types of playing card shufflers.

Table Layouts

All live gaming tables are covered with a layout printed with artwork particular to each specific game and casino preference. To give our customers maximum design flexibility, we have developed an extensive range of layouts using wool, polyester, and our proprietary Paulson^®FX material. Printing processes include screen printing, custom hand painting, and full graphic sublimation. All graphic designs are developed in house by our art department.

Dice

We manufacture and sell various brands of dice. We offer a variety of options, including size, finish type, customer logo, color, serialization, and security features. In a busy casino, a stick of dice (two and one-half pair) does not generally remain in play for more than one day.

Gaming Furniture

We sell a complete line of table gaming furniture, including tables, bases, and pit podiums. Our hand-crafted gaming furniture is custom built based on a casino’s designs and specifications. Our tables can be designed to incorporate all of our accessories and RFID systems as well as all third-party products, such as playing card shufflers, playing card readers, monitors, and bill validators. Table gaming furniture is typically sold in combination with table layouts and table accessories.

Table Accessories and Other Products

We offer a full line of table game accessories, including table displays, roulette reader boards, foot rails, chip trays, drop boxes, shoes, cut cards, dice sticks, lammers, markers and buttons. We manufacture many of these products and have aligned with a number of third-party vendors, such as TECHART, to provide products that we don’t manufacture. We are a licensed manufacturer of roulette wheels and sell them worldwide.

Backlog

At December 31, ~~2017~~2018, our backlog of signed orders to be delivered during ~~2018~~2019 was $2132.09 million, consisting of $1617.65 million for GPI ~~USA~~Asia, $315.81 million for GPI ~~Asia~~USA, and $0.6 3 million for GPI SAS. At December 31, ~~2016~~2017, our backlog of signed orders to be delivered in ~~2017~~2018 was $1721.40 million, consisting of of $93.08 million for GPI ~~USA~~Asia, $816.16 million for GPI ~~Asia~~USA, and $0.36 million for GPI SAS.

Sales, Advertising, and Promotion

We maintain a global sales network. In the Americas, we primarily sell through our U.S.-based sales force. In Europe and Africa, we primarily sell through our Beaune, France-based sales force. In the Asia-Pacific region, we distribute products through our Macau S.A.R., China-based sales force. In a few cases, when direct selling was not feasible because of local conditions, we have entered into agreements with carefully selected local sales agents or distributors. However, we always maintain direct contact with the customer to ensure that our brand integrity is not compromised.

We have product design teams in the United States, Mexico, France, and Asia to support our sales staff to develop artwork for custom products and to assist our manufacturing operations.

We actively promote our product lines, service capabilities, and product quality in a variety of traditional and emerging media. We place advertising in trade publications, support frequent editorial inquiries, and participate in major casino industry trade shows, including the Global Gaming Expo (G2E) events in Las Vegas, Nevada, and Macau S.A.R., China, the International Casino Exhibition (ICE) show in London, England, and the National Indian Gaming Association (NIGA) show held in various cities in the United States. We also promote our products through periodic direct-to-customer print and e-mail campaigns and maintain a website dedicated to providing our customers with an easy-to-use product information resource.

We also market casino-specific themed products in certain gaming jurisdictions, including casino currency, table layouts, playing cards, and dice. These themed products are used by our customers to promote special events, including sporting events, conventions, holidays, casino anniversaries, and premier entertainment events.

Competition

We compete in all of our product lines with several table game equipment suppliers. Competitive advantages include our reputation, manufacturing capability, sales staff experience, distribution channels, regulatory and jurisdictional licenses, financial strength, and being one of the few companies to provide a complete line of casino table game products.

Casino Currency. Major competitors in casino currency are ICON Poker, Inc., based in the United States; Abbiati Casino Equipment Snc., based in Italy; and Matsui Gaming Machine Co., Ltd., based in Japan. Competitive advantages are region-specific products, reputation, quality, widespread jurisdictional licensing, emphasis on and the range of available currency lines and currency security features and configurable custom design options, understanding of players’ and dealers’ preferences, and value.

RFID Solutions. Primary competitive advantages for RFID solutions sales are experience with tracking of the complete supply chain of our RFID currency, exclusive licenses and patents, CIS software, product quality, security, service, and value.

Playing Cards. Major competitors in playing cards are The United States Playing Card Company based in the United States, and ~~the~~ Angel Playing Cards Co., Ltd, an affiliate of Angel based in Japan. Competitive advantages are card characteristics such as finish, weight of paper, and snap memory, as well as manufacturing capacity, multiple brands, jurisdictional licensing, security, quality control, delivery reliability and value.

Table Layouts. Primary competitors in table layouts are Midwest Game Supply Co., and Rye Park Gaming LLC, both based in the United States, TCS/John Huxley based in the United Kingdom, and Matsui Gaming Machine Co., Ltd., and Colorway, based in Asia. In addition, there are numerous small, regional competitors. Competitive advantages are variety of layout materials offered, fabric quality and durability, quick delivery, printing processes, and value.

Table Gaming Furniture. Principal competitors in table gaming furniture are USA Gaming Supply Inc., Avalon Gaming Inc., and MSC Gaming Inc., all based in the United States, TCS/John Huxley, based in the United Kingdom, Abbiati Casino Equipment Snc., based in Italy, and regional wood shops. Primary competitive advantages are the ability to design and produce a wide range of gaming furniture, short production lead times, craftsmanship, jurisdictional approvals, and value.

Table Accessories and Other Products. Principal competitors in table accessories and other products are small local distributors. Key competitive advantages are the ability to be a single-source supplier of all table game products, service, and product quality.

Dice. Our primary competitor in dice is Midwest Game Supply Co., based in the United States. Primary competitive advantages are brand recognition, product quality, manufacturing capacity, multiple brands, product options, service, and value.

Materials and Supplies

Where possible, we diversify our supplier base to avoid a disruption of supply. Most of our raw materials are staple goods such as plastic, wood, felt, and synthetic fabric, which are readily available from several suppliers. We believe the availability of these materials is adequate to meet our ongoing manufacturing needs. However, some key components or raw materials, such as RFID tags or paper, have unique suppliers. For these critical supplies, we inventory, when possible, additional quantities.

Manufacturing

Most of our products are produced based on discrete orders. We manufacture few products to inventory. Our manufacturing facilities are in Beaune, France; San Luis Rio Colorado, Mexico; Blue Springs, Missouri; and Macau S.A.R., China. In France we produce our Bourgogne et Grasset^® American-style casino chips, as well as plaques and jetons. In Mexico, we produce Paulson^®, Bud Jones^®, Dolphin^®, and Bourgogne et Grasset^® American-style casino chips, as well as table layouts, gaming furniture, table accessories, and dice. In Blue Springs, we produce Paulson^® and Gemaco^® playing cards, and table layouts. In Macau S.A.R., we manufacture table layouts. We have the facilities, equipment, and personnel necessary to meet expected customer demand.

Research and Development

We continually invest in developing or acquiring new or improved products. We release new updates to our Chip Inventory System (CIS), we develop new security features for our casino currency products and develop new manufacturing processes to improve the quality of our products. In ~~2017~~ 2018, we ~~released~~entered ~~our~~into ~~Smart~~global strategic agreements for development and licensing with both BrainChip ~~Checkpoint~~Holdings ~~which~~Limited ~~provides~~(ASX: ~~the~~BRN), ~~ability~~a toleading ~~authenticate~~developer ~~the~~of ~~RFID~~software ~~currency~~and ~~directly~~hardware ataccelerated ~~the~~solutions ~~table~~for advanced artificial intelligence and machine learning applications, and Xuvi, LLC, a developer of an immersive data analytics and automation platform. For information regarding the amounts spent during ~~2017~~2018 and ~~2016~~2017 on research and development activities, see Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Intellectual Property

We own numerous United States and internationally-protected patents, trademarks and logos. Our trademarks, logos, and patent rights are valuable to our operations and are an important part of our marketing strategy. Our policy is to actively pursue and maintain registration of our patents, trade secrets, trademarks and logos, where needed, and to vigorously defend against any infringement or dilution.

Environmental Matters

Our operations are in compliance with international, federal, state, and local environmental laws and regulations. Liability for environmental remediation is accrued if considered probable and costs can be reasonably estimated.

Employees

At December 31, ~~2017~~2018, we employed ~~709~~ 719 full-time employees, consisting of ~~340~~344 employees in Mexico, ~~230~~236 in the United States, ~~112~~110 in France, and 2729 in Macau S.A.R. ~~None~~ None of our employees are covered by collective bargaining agreements and we believe that our relations with our employees are good.

Regulation and Licensing

The gaming operations of each of our subsidiaries, as well as the operations of casinos, are subject to extensive regulation by over 200 state, federal, tribal, and international agencies, with the majority of oversight by individual state gaming control boards and tribal gaming agencies. We have never been denied a gaming-related license.

While the regulatory requirements vary from jurisdiction to jurisdiction, most require licenses, permits, findings of suitability, documentation of qualification including evidence of financial stability and/or other required approvals for companies who manufacture and distribute gaming equipment, as well as the individual suitability of officers, directors, major stockholders, and key employees. Under the various gaming regulations, key personnel generally include the current and/or proposed corporate officers and directors of a corporation and its subsidiaries. Laws of the various gaming regulatory agencies are generally intended to protect the public and ensure that gaming-related activity is conducted honestly and competitively and is free of corruption.

Certain regulators not only govern the activities within their jurisdiction, but also oversee activities that occur in other jurisdictions to ensure that we comply with local standards on a worldwide basis. As a Nevada corporation, state regulatory authorities require us to maintain, at a minimum, Nevada gaming standards for all operations worldwide. Violations of laws in one jurisdiction could result in disciplinary action in other jurisdictions. A more detailed description of the regulations to which we are subject is provided in Exhibit 99.01 of this annual report on Form 10-K.

In August 2012, the Securities and Exchange Commission (SEC) adopted the conflict mineral rules requiring issuers that manufacture products that contain certain minerals and metals, known as conflict minerals, to perform due diligence and to report annually to the SEC whether such minerals originated in the Democratic Republic of Congo or an adjoining country. The implementation of these new requirements could adversely affect the sourcing, availability, and pricing of minerals that we use in the manufacture of our products. In addition, we have incurred and will incur additional costs to comply with these disclosure requirements, including costs related to determining the source of any of the relevant minerals used in our products. A report is due annually on May 31 for the previous calendar year.

Dependence on One or a Few Major Customers

At December 31, 2018 and 2017, no casino ~~customer~~ customer accounted for 10% or more of our accounts receivable balance. ~~At December 31, 2016, one casino customer accounted for 25% of our accounts receivable balance.~~

Because of large orders for casino openings or expansions, it is not unusual to have temporary concentrations of our accounts receivable balance related to one or a few customers.

Financial Information about Geographic Areas

See Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 1312. Geographic and Product Line Information, for financial information by geographic area.

Available Information

Our principal executive office is located at 3945 West Cheyenne Avenue, North Las Vegas, Nevada 89032. Our telephone number is (702) 384-2425. Our website is www.gpigaming.com. Our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and, if applicable, any amendments to those reports, are available on our website free of charge as soon as reasonably practicable after we electronically file, or furnish, them to the SEC. The information found on our website is not incorporated or part of this annual report on Form 10-K or any other report we file or furnish to the SEC. Copies are also available free of charge by (i) telephonic request to our Investor Relations Department at (702) 384-2425, or (ii) written request to Gaming Partners International Corporation, Attn: Investor Relations, 3945 West Cheyenne Avenue, Suite 208, North Las Vegas, Nevada 89032.

Item 1A.

Risk Factors

An investment in our common stock involves a high degree of risk. You should carefully consider the factors described below, in addition to those discussed elsewhere in this report, in analyzing an investment in our common stock. If any of the events described below occurs, our business, financial condition, and results of operations would likely suffer, the trading price of our common stock could fall, and you could lose all or part of the money you paid for our common stock. The risk factors described below are not the only ones we face. Risks and uncertainties not known to us currently, or that may appear immaterial, also may have a material adverse effect on our business, financial condition, and results of operations.

In addition, the following risk factors and uncertainties could cause our actual results to differ materially from those projected in our forward-looking statements, whether made in this annual report or future quarterly reports to stockholders, press releases, or oral statements, whether in presentations, responses to questions, or otherwise. We urge you to carefully review the following discussion of the specific risks and uncertainties that affect our business, any of which could have an adverse effect on our financial condition and results of operations. These include, but are not limited to, the following:

Demand for our products could be adversely affected by:

•

a significant shift in player preferences away from live table games to electronic, mobile, or online gaming, including the further legalization, expansion, and popularity of electronic, mobile, and online gaming;

•

slow growth rate of new and existing land-based casinos and markets;

•

delays of scheduled openings of newly constructed or planned land-based casinos;

•

a decline in the rate of replacement of existing products;

•

a decline in the public acceptance of gaming;

•

a decline in the popularity of the types of games with which our products are used;

•

a decline in the perceived usefulness and necessity of counterfeit security features in our products;

•

an increase in the popularity of competitors’ products;

•

a shift in customer preference between American-style casino chips and European-style plaques and jetons; and

•

an increase in the number of competitors in the casino currency market or an inability to compete effectively with existing or new competitors.

Our success in the gaming industry depends in part on our ability to develop and introduce innovative products and could be adversely affected by:

•

any defects in our RFID casino currencies or related products, or a failure of such products containing new innovative technology to perform as contemplated, which could result in the rejection or return of our products, damage to our reputation, lost revenues, increased service costs, warranty claims, and litigation;

•

a lack of success in integrating our RFID technology with other technology for table game products, such as player tracking systems;

•

the inability of us or another company to develop, sell, and support RFID-related applications requested by our customers, thereby making our RFID casino currencies less attractive;

•

any delay by us in introducing new products on schedule;

•

the development of competing new technologies, making our technology obsolete or undesirable; and

•

a lack of success in developing or adequately servicing new products, in particular our products with security features.

Our intellectual property rights are subject to risks, including:

•

approval of competitors’ patent applications that may restrict our ability to compete effectively;

•

competitors’ infringement upon our existing trademarks, patents, trade secrets, and copyrights;

•

expiration of our patents and licenses;

•

inability to obtain, maintain, and defend patents, trademarks, copyrights, and trade secrets to protect our products and technology;

•

costs in defending our intellectual property rights, including indirect costs related to the diversion of management’s time and attention away from the operation of our business;

•

successful challenge of our patents regarding our RFID embedded casino currencies; and

•

ineffective or lack of enforcement of patents by our licensors.

Our business is vulnerable to changing economic conditions, including:

•

uncertainties related to changing economic conditions, including those that affect the health of the gaming industry;

•

declines in discretionary spending on entertainment activities, including gaming, for reasons beyond our control such as continued negative economic conditions, travel or tourism declines, natural disasters, acts of war or terrorism, transportation disruptions and other travel limitations, or health epidemics;

•

consolidations within the gaming industry;

•

higher than anticipated manufacturing, selling, administrative, legal, and/or distribution costs;

•

changes in interest rates resulting in changes in the fair market value of our financial instruments or increased interest expense;

•

changes in interest rates causing a reduction of investment income or in the value of market-rate-sensitive instruments;

•

a tightening of the availability of capital so that loans to us or to our customers would only be available at cost-prohibitive terms and conditions; and

•

unfavorable changes in federal, state, or foreign taxation laws or application of such laws that could reduce our profitability.

We operate in a number of tribal jurisdictions with sovereign immunity, which presents risks we generally do not encounter in United States jurisdictions. We also operate in many countries outside of the United States which subjects us to certain inherent risks, including:

•

social, political, or economic instability in international markets, particularly those where we have higher sales concentrations and growth;

•

tariffs, other trade barriers, and import or export licensing requirements;

•

fluctuations in foreign exchange rates or an inability to effectively hedge our foreign currency exposures;

•

expropriation, nationalization, and restrictions on repatriation of funds or assets;

•

additional costs of compliance with international laws or unexpected changes in regulatory requirements, including those related to post-employment benefits;

•

adverse changes in the creditworthiness of parties with whom we have significant receivables or forward currency exchange contracts;

•

difficulty protecting our intellectual property;

•

recessions in foreign economies;

•

difficulties in maintaining foreign operations, including labor regulations, staffing, and management of widespread operations;

•

changes in consumer tastes and trends;

•

acts of war or terrorism; and

•

U.S. government requirements for import and export.

We operate in a highly regulated industry and our ability to sell our products in existing jurisdictions or expand into new jurisdictions could be adversely affected by:

•

changes in existing gaming laws and regulations or new interpretations of existing laws and regulations that hinder or prevent us from continuing to operate in the jurisdictions where we currently do business or where we intend to do business;

•

unfavorable public referendums or anti-gaming legislation affecting or directed at gaming manufacturers or gaming operators;

•

findings of non-compliance with applicable laws or regulations which could lead to a limitation, conditioning, suspension, or revocation of any of our gaming licenses;

•

delays in obtaining or maintaining licenses or approvals from regulatory agencies;

•

limited technological expertise by regulatory agencies causing restrictions or burdensome conditions on approvals;

•

unfavorable determinations or challenges of suitability by gaming regulatory authorities with respect to our company, business, principal stockholders, officers, directors, or key employees; and

•

excessive costs related to obtaining the necessary regulatory approvals.

We are subject to risk related to litigation and claims asserted against us, including:

•

adverse material effects on our financial condition due to asserting or defending claims;

•

the discovery of facts with respect to legal actions pending against us, but not presently known to us;

•

agreements with casinos in Native American jurisdictions which may subject us to sovereign immunity risk; and

•

a diversion of management’s attention from our business.

We have a stockholder with effective control of the Company, which means:

•

it can control all matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions;

•

it can delay or prevent a change in control of the Company, even when such change in control is in the best interests of other stockholders; and

•

its ownership might adversely affect the market price of our common stock.

Pursuing or implementing acquisitions and mergers could have a material adverse effect on our business, financial condition, and results of operations, including:

• significant expenses related to due diligence efforts in connection with potential acquisitions and mergers, and diversion of management’s attention away from our existing business;

•

the issuance of potentially dilutive equity securities, significant expenditures of cash, the incurrence of debt and contingent liabilities, or an increase in amortization expenses; and

• the failure to successfully consummate an acquisition or merger on favorable terms or at all. When the Merger Agreement with Angel was announced on November 27, 2018, our stock price increased significantly.

Any acquisition we consummate may fail to produce the revenues, earnings, or business synergies we anticipate for a variety of reasons, including:

•

the inability to integrate operations, financial reporting, internal controls, technologies, products, and personnel, including issues raised by national, geographic, and cultural differences;

•

potential impairments in acquired assets;

•

a less-than-successful entry into markets or acquisition of products or technologies in which we have limited or no prior experience;

•

expenses associated with any unknown or potential legal liabilities;

•

changes in or uncertainties of application of laws or regulations;

•

failures to identify or uncover material risks in due diligence;

•

management of worldwide operations; and

•

the inability to exploit acquired intellectual property or the development, sale, or lease of acquired products, or unanticipated increases in manufacturing expenses.

If the Merger contemplated by the Merger Agreement is not consummated, our business could suffer materially and our stock price could decline.

The consummation of the Merger is subject to a number of closing conditions, including the approval by our stockholders and certain regulatory approvals. If the Merger is not consummated, we may be subject to a number of material risks, and our business and stock price could be adversely affected, as follows:

•

we have incurred and expect to continue to incur significant expenses related to the Merger even if the Merger is not consummated;

•

our prospective collaborators and other business partners and investors in general may view the failure to consummate the Merger as a poor reflection on its business or prospects.

•

some of our suppliers, distributors, collaborators and other business partners may seek to change or terminate their relationships with us as a result of the Merger;

•

as a result of the Merger, current and prospective employees could experience uncertainty about their future roles within the combined company. This uncertainty may adversely affect our ability to retain our key employees, who may seek other employment opportunities;

•

if the Merger is not consummated, the Company may be required, in certain circumstances set forth in the Merger Agreement, to pay a termination fee equal to $4 million or, in certain circumstances, up to $15 million;

•

our management team may be distracted from operations as a result of the Merger; and

•

if the Merger is terminated and our Board of Directors determines to seek another business combination, it may not be able to find a third party willing to provide equivalent or more attractive consideration than the consideration to be provided by Angel in the Merger.

The Company could be subject to litigation initiated in connection with the Merger, which could be time consuming and divert the resources and the attention of management.

•

The defense of any such lawsuits relating to the Merger Agreement and the proposed Merger, may be expensive and may divert management's attention and resources, which could adversely affect the Company's business results of operations and financial condition.

Our business operations are subject to other risks, including:

•

the loss of key employees, sales personnel, and technical staff or an inability to hire a sufficient number of such persons;

•

limited or unique suppliers for certain key raw materials for significant products;

•

possibility of failure of components purchased from suppliers;

•

the presence of lead in older versions of Paulson^®brand casino chips, which could lead to unanticipated costs;

•

increased costs due to reliance on third-party suppliers and contract manufacturers or a disruption in our manufacturing processes;

•

increased costs due to compliance with the conflict mineral rules adopted under the Dodd-Frank Act, including costs related to determining the source of any of the relevant minerals and metals used in our products and any potential reputational harm if we are unable to sufficiently verify the origins for the minerals and metals;

•

adverse changes in the creditworthiness of parties with whom we have receivables;

•

casualty, theft, or loss of our casino currencies prior to delivery to casinos or the counterfeiting of our casino currencies;

•

security breaches and other disruptions could compromise our information technology systems and expose us to a liability, which could have a material adverse effect on our business, results of operations and our reputation;

•

the possibility of failure of our security systems, or a breakdown in casino procedures designed to prevent the manipulation of our products, to prevent fraud, both against us and our customers, or the experience of any technical difficulties which may cause the public and/or our customers to lose confidence in our products or operations and/or subject us to legal claims by our customers or to investigation by gaming authorities; and

•

any failures or difficulties in maintaining our computer information systems, including as a result of cyber-attacks, breaches of our computer systems, and other security vulnerabilities, could result in disruption of operations, loss of information, litigation, and unanticipated increases in costs.

Item 1B.

Unresolved Staff Comments

None.

Item 2.

Properties

Our headquarters is located in a 15,000 square-foot facility that we lease in North Las Vegas, Nevada. We manufacture and store our primary products at facilities in San Luis Rio Colorado, Mexico; San Luis, Arizona; Blue Springs, Missouri; Beaune, France; and Macau S.A.R., China. We also lease sales offices in Atlantic City, New Jersey; Gulfport, Mississippi; and Macau S.A.R.

North Las Vegas, Nevada. Our headquarters is located at 3945 West Cheyenne Avenue, North Las Vegas, Nevada. We are leasing approximately 15,000 square feet for a term of seven years commencing on January 1, 2016.

San Luis Rio Colorado, Mexico. We manufacture casino currencies, table accessories, table layouts, dice, and gaming furniture at three facilities in San Luis Rio Colorado, Mexico. These facilities include 80,000 square feet of leased facilities, and a 70,000 square-foot facility, which we own.

San Luis, Arizona. We warehouse inventory in an 8,000 square-foot leased facility in San Luis, Arizona, across the border from our Mexican manufacturing facility.

Blue Springs, Missouri. We manufacture playing cards ~~and table layouts~~ at a facility in Blue Springs, Missouri, which we own. This facility includes 65,000 square- feet of manufacturing, office, and sales administration space. In addition, we store raw materials inat ana ~~underground~~leased storage facility ~~occupying~~in 20Parkville,~~000~~ Missouri. ~~square~~The ~~feet~~lease ofends ~~warehouse~~February ~~space~~2020 inand ~~Independence,~~storage ~~Missouri.~~space ~~This~~may ~~lease~~vary ~~terminates~~based inon ~~May~~our ~~2018~~needs, ~~and~~but weit ~~are~~averages ~~currently~~25,000 ~~evaluating~~square ~~other warehouse spaces~~feet.

Beaune, France. We manufacture casino currency and table layouts at a facility in Beaune, France. This facility includes 34,000 square feet of manufacturing, office and sales administration space, which we own. In addition, we own a 15,000 square-foot administrative building. We also lease a 5,000 square-foot building, which houses our mold-making operations.

Macau S.A.R., China. We distribute our full product line in a leased 4,000 square -foot sales office in Macau S.A.R., China. In addition, we manufacture and warehouse table layouts in two additional leased facilities in Macau S.A.R., with a total of 6,700 square feet.

11Facility Capacity. With a total of approximately 327,700 square feet of manufacturing, warehouse, and administrative facilities as of December 31, 2018, we believe that we have sufficient production capacity to meet anticipated demand for all of our products.

Facility Capacity. With a total of approximately 322,700 square feet of manufacturing, warehouse, and administrative facilities as of December 31, 2017, we believe that we have sufficient production capacity to meet anticipated demand for all of our products.

Item 3.

Legal Proceedings

We are not a party to any material pending legal proceeding. We are not aware of any pending legal proceeding to which any of our officers, directors, or any beneficial holders of 5% or more of our voting securities are adverse to us or have a material interest adverse to us.

There can be no assurance that we will ~~prevail~~ prevail in any litigation. Liability for material claims are accrued when a loss is considered probable and can be reasonably estimated. Legal costs associated with claims are expensed as incurred. See Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 1211. Commitments and Contingencies, for information regarding legal ~~proceedings~~ proceedings and contingencies.

Item 4.

Mine Safety Disclosures

Not applicable.

1213

PART II

Item 5.

Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities

Market Information

Our common stock is traded on the NASDAQ Global Market under the symbol GPIC. The following table sets forth the quarterly high and low prices for trades of our common stock as reported on the NASDAQ Global Market during the periods indicated. All stock prices reflect a fiscal year ending December 31. On March 15, 2018, the closing price was $9.69 per share.

	Fiscal Year 2017				Fiscal Year 2016
	High		Low		High		Low
First Quarter	$	12.00	$	9.66	$	10.33	$	8.51
Second Quarter		12.50		9.13		9.98		8.55
Third Quarter		12.12		9.65		12.34		9.12
Fourth Quarter		11.50		10.35		11.95		10.27

Holders

There were 70 holders of record of our ~~common~~ common stock as of March 1514, ~~2018~~2019.

Dividend Policy

Our Board of Directors has no plans to pay a regular dividend on our common stock, but intends to evaluate from time to time the merit of paying a dividend. In both December 2017 and 2016, we paid a cash dividend of $0.12 per issued and outstanding common share, resulting in aggregate dividends of $952,000 and $951,000, respectively.

Transfer Agent

Our stock transfer agent and registrar is Broadridge Corporate Issuer Solutions, P.O. Box 1342, Brentwood, NY 11717. Their telephone number is 1-877-830-4936.

Purchases of Equity Securities by the Issuer

The Company’s common stock repurchase ~~program~~ program adopted on December 1, 2011, remains in effect. AsThe following table shows as of December 31, ~~2017~~2018, ~~215,590~~the ~~shares~~Company’s repurchases ~~remain~~of ~~authorized for repurchase. No~~ common ~~shares~~ ~~were~~stock ~~repurchased~~ during ~~2017 or 2016, and there is no assurance that we will repurchase any additional shares under~~ the ~~repurchase~~ ~~program.~~fourth ~~See~~quarter ~~Item~~of ~~8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 15. Stockholders’ Equity.~~2018:

Period	Total number of shares purchased		Average price paid per share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximumn Number of Shares That May Yet Be Purchased Under The Plans Or Programs
Oct. 1-31, 2018		—				—		215,590
Nov. 1-30, 2018		400	$	8.00		400		215,190
Dec. 1-31, 2018		—				—		215,190

~~Amendments~~See toalso ~~the~~Item ~~1994~~8. ~~Directors’~~Financial ~~Stock~~Statements ~~Option~~and ~~Plan~~Supplementary Data ~~(Directors~~– Notes to Consolidated Financial Statements – Note 14. Stockholders’ ~~Plan)~~Equity.

OnEquity ~~December~~Compensation ~~26, 2017, the Board of Directors adopted amendments to the Directors’~~ Plan to extend the term of the plan from January 31, 2019 to January 31, 2022 and allow for the grant of stock appreciation rights to non-employee directors in addition to grants of stock options. Stock appreciation rights entitle non-employee directors to surrender a vested option and receive in exchange a cash payment. Non-employee directors currently hold outstanding stock options which will expire beginning in 2018 unless exercised. However, exercise of these options and the potential resulting sale of the common stock received upon exercise of the stock options could have a significant impact on the price of the Company’s common stock due to its low trading volume. The Board of Directors believes that the low trading volume of the Company’s stock would be unable to support the influx of directors selling shares received upon the exercise of stock options granted under the Directors’ Plan without a corresponding decrease in the Company’s stock price. Therefore, the Board of Directors adopted amendments to the Directors’ Plan to allow for the grant of stock appreciation rights which would entitle the non-employee director to receive the amount by which the fair market value of a share of common stock immediately prior to exercise exceeds the related stock option exercise price. The Board of Directors believes that the grant of stock appreciation rights continues to promote the underlying goals of the Directors’ Plan to encourage directors to take a long-term view of the Company’s affairs and to reward directors for their service to the Company, without directly affecting the Company’s stock price. The amendments to the Directors’ Plan are being submitted to the Company’s stockholders for approval at the annual meeting in May 2018.Information

OnThe ~~December~~following ~~26,~~table ~~2017,~~sets ~~the~~forth ~~Board of Directors,~~certain ~~upon~~information, ~~the~~as ~~recommendation~~ of ~~the~~December ~~Compensation Committee~~31, ~~granted stock appreciation rights to the Company’s non-employee directors relating to outstanding stock options for an aggregate 262~~2018,~~750~~ ~~shares~~about ofour ~~common~~equity ~~stock~~compensation ~~previously~~plans ~~granted to them~~ under ~~the Directors’ Plan~~ which ~~expire after December 26, 2017. These grants of stock appreciation rights to~~ our ~~non-employee~~equity ~~directors~~securities are ~~being~~authorized ~~submitted to the Company’s stockholders~~ for ~~ratification at the annual meeting in May 2018. For more information see Item 8. Financial~~ ~~Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 16. Stock Option Programs and Share-based Compensation Expense.~~issuance:

Item 6. Selected Financial Data

Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights			Weighted-average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
Equity compensation plans approved by security holders		230,250	⁽¹⁾	$	8.35		211,250	⁽²⁾
Equity compensation plans not approved by security holders		None			None		None
Total		230,250		$	8.35		211,250

~~The~~(1) ~~selected~~Reflects ~~consolidated~~outstanding ~~financial~~stock ~~data included~~options into ~~the~~purchase ~~following tables should be read in conjunction with Item 8. Financial Statements and Supplementary Data and Item~~230,250 7.shares ~~Management’s Discussion and Analysis~~ of ~~Financial~~common ~~Condition~~stock ~~and~~granted ~~Results~~under ~~of Operations. The selected consolidated financial data for the years ended December 31, 2017 and 2016 have been derived from~~ our ~~audited~~1994 ~~consolidated~~Directors’ ~~financial~~Stock ~~statements~~Option ~~included at Item 8. Financial Statements and Supplementary Data. The selected consolidated financial data for the years ended December 31~~Plan, ~~2015,~~ ~~2014,~~as ~~and 2013 have been derived from our audited consolidated financial statements not included herein~~amended.

(2) These shares were available for future issuance under our 1994 Directors’ Stock Option Plan, as amended.

	Years Ended December 31,
	2017			2016			2015			2014			2013
	(in thousands, except per-share amounts)
STATEMENT OF INCOME DATA:
Revenues	$	80,602		$	82,139		$	78,238		$	60,972		$	56,173
Cost of revenues		57,924			56,803			51,403			42,657			38,584
Gross profit		22,678			25,336			26,835			18,315			17,589
Selling, administrative, and research and development		17,152			17,776			16,926			16,127			16,970
Operating income		5,526			7,560			9,909			2,188			619
Other expense, net		(85	)		(34	)		(173	)		227			4
Income before income taxes		5,441			7,526			9,736			2,415			623
Income tax provision		1,815			2,343			2,805			(261	)		(543	)
Net income	$	3,626		$	5,183		$	6,931		$	2,676		$	1,166
Earnings per share:
Basic	$	0.46		$	0.65		$	0.87		$	0.34		$	0.15
Diluted	$	0.45		$	0.64		$	0.86		$	0.33		$	0.15
Weighted-average shares of common stock outstanding:
Basic		7,930			7,929			7,926			7,916			7,942
Diluted		8,045			8,042			8,040			8,015			8,029
BALANCE SHEET DATA:
Cash and cash equivalents	$	14,064		$	10,604		$	17,788		$	8,969		$	14,492
Marketable securities		-			-			3,503			3,597			5,724
Working capital		24,087			24,496			31,129			16,195			32,069
Property and equipment, net		24,933			24,310			14,102			15,087			10,996
Total assets		83,403			79,999			77,244			68,394			55,449
Current liabilities		16,636			14,596			15,201			19,794			6,106
Long-term debt		5,265			6,649			8,002			-			-
Total stockholders' equity (1)		61,316			57,533			53,788			48,265			47,473

Item 6.

Selected Financial Data

~~(1)~~The ~~Cash~~selected ~~dividends~~consolidated financial data included in the following tables should be read in conjunction with Item 8. Financial Statements and Supplementary Data and Item 7. Management’s Discussion and Analysis of ~~$952,000~~Financial Condition and ~~$951,000~~Results ~~were~~of ~~paid~~Operations. inThe selected consolidated financial data for the years ended December 31, 2018, and 2017 have been derived from our audited consolidated financial statements included at Item 8. Financial Statements and ~~2016,~~Supplementary ~~respectively~~Data. NoThe ~~cash~~selected ~~dividends~~consolidated ~~were~~financial ~~paid~~data infor ~~2015~~the years ended December 31, 2016, 2015 and 2014 orhave ~~2013~~been derived from our audited consolidated financial statements not included herein.

	Years Ended December 31,
	2018			2017			2016			2015			2014
	(in thousands, except per share amounts)
STATEMENT OF INCOME DATA:
Revenues	$	87,009		$	80,602		$	82,139		$	78,238		$	60,972
Cost of revenues		59,974			57,924			56,803			51,403			42,657
Gross profit		27,035			22,678			25,336			26,835			18,315
Selling, administrative, and research and development		22,215			17,152			17,776			16,926			16,127
Operating income		4,820			5,526			7,560			9,909			2,188
Other expense, net		(215	)		(85	)		(34	)		(173	)		227
Income before income taxes		4,605			5,441			7,526			9,736			2,415
Income tax provision		888			1,815			2,343			2,805			(261	)
Net income	$	3,717		$	3,626		$	5,183		$	6,931		$	2,676

Earnings per share:
Basic	$	0.47		$	0.46		$	0.65		$	0.87		$	0.34
Diluted	$	0.46		$	0.45		$	0.64		$	0.86		$	0.33
Weighted-average shares of common stock outstanding:
Basic		7,970			7,930			7,929			7,926			7,916
Diluted		8,051			8,045			8,042			8,040			8,015

BALANCE SHEET DATA:
Cash and cash equivalents	$	12,100		$	14,064		$	10,604		$	17,788		$	8,969
Marketable securities		-			-			-			3,503			3,597
Working capital		24,305			24,381			24,496			31,129			16,195
Property and equipment, net		22,547			24,933			24,310			14,102			15,087
Total assets		79,627			83,276			79,999			77,244			68,394
Current liabilities		14,805			16,215			14,596			15,201			19,794
Long-term debt		-			5,265			6,649			8,002			-
Total stockholders' equity ⁽¹⁾		63,790			61,316			57,533			53,788			48,265

⁽¹⁾

Cash dividends of $970,000, $952,000 and $951,000 were paid in 2018, 2017 and 2016, respectively. No cash dividends were paid in 2015 and 2014.

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion is intended to assist in the understanding of our results of operations and our present financial condition for the year ended December 31, ~~2017~~2018. When reviewing this material, you should refer to the additional detailed information in our consolidated financial statements and the accompanying notes at Item 8. Financial Statements and Supplementary Data. Except for historical information contained herein, statements in the following discussion may be forward-looking. Such forward-looking statements involve known and unknown risks and uncertainties and other factors that could cause actual results to differ significantly from those expressed. We discuss such risks, uncertainties and other factors throughout this report and specifically under Item 1A. Risk Factors.

For an overview of our business and information on our products, as well as other general information, see Item 1. “Business.”

Historically, we have experienced significant fluctuations in quarterly results primarily due to large, discrete currency orders as a result of casino openings, casino expansions, or large replacement orders.

Our backlog, which reflects signed orders to be delivered over the following twelve months, was as follows at December 31, ~~2017~~2018 and December 31, ~~2016~~2017:

GPI USA

GPI Asia

GPI SAS

Total

GPI Asia

GPI USA

GPI SAS

Total

December 31, 2017

16.6 million

3.8 million

0.6 million

21.0 million

December 31, 2018

17.5 million

15.1 million

0.3 million

32.9 million

December 31, 2016

9.0 million

8.1 million

0.3 million

17.4 million

December 31, 2017

3.8 million

16.6 million

0.6 million

21.0 million

Outlook

~~During~~Although ~~the~~all ~~second~~requisite ~~half~~conditions ofto ~~2017, we made~~consummating ~~significant~~the ~~progress~~Merger inare ~~addressing~~not ~~expansion related issues impacting operations and margins at our Blue Springs facility. These efforts have resulted~~ in ~~improved margins in~~ our ~~card~~direct ~~business. In addition~~control, we ~~added~~anticipate ~~sales and marketing staff to enhance development of a retail card business. We do not expect material retail revenue in~~ the ~~short~~Merger ~~term, as it~~ will ~~take~~be ~~time~~effectuated tobefore ~~build~~December ~~relationships and a significant customer base. While extremely difficult to accurately predict casino opening dates~~1, ~~we currently expect 2018 sales in our Asian markets to be similar to 2017~~2019.

AsDue ~~previously~~to ~~disclosed~~scheduled incasino ~~the~~openings ~~8-K filed~~in ~~January 31st~~Asia, ~~2018~~ we ~~entered~~have ~~into~~an aexceptionally ~~joint~~high ~~development~~backlog ~~agreement~~for to2019 ~~provide~~as adescribed ~~table~~in ~~management~~the ~~solution~~table ~~that~~above. ~~would~~Orders ~~combine visioning~~are ~~technology~~expected ~~and immersive data analytics with our RFID technology~~ to ~~better~~ship ~~secure~~throughout 2019. ~~table~~The ~~currency,~~inherent ~~increase~~uncertainties ~~fraud~~associated ~~protection, improve~~with ~~table~~construction ~~productivity,~~delays and ~~provide~~regulatory ~~data~~decisions ~~for~~regarding ~~player~~table ~~behavior~~allotments ~~applications.~~will impact Weboth ~~hope~~the toamount ~~introduce~~of ~~this~~revenue ~~table~~we ~~management~~recognize ~~solution at~~and the ~~end~~timing of ~~2018~~revenue ~~or early 2019~~recognition.

~~Financial~~As previously disclosed, we are developing a table management solution that would combine visioning technology and ~~Operational~~immersive ~~Highlights~~ data analytics with our RFID technology to better secure table currency, increase fraud protection, improve table productivity, and provide data for player behavior applications. We are currently testing this system in a casino and aim at commercializing it in the next year.

~~For~~Performance ~~the~~at ~~fourth~~our ~~quarter~~Blue ~~of 2017~~Springs, ~~our revenues~~Missouri ~~were~~facility ~~$20.8~~continues ~~million,~~to alag ~~decrease~~with oflower ~~$2.3~~revenue ~~million,~~and orhigher ~~10.2%,~~fixed ~~compared~~costs toreducing ~~revenues~~margins ofand ~~$23~~profitability.1 ~~million~~We incontinue ~~the~~to ~~fourth~~work ~~quarter of 2016. For~~to remedy the ~~fourth~~issues ~~quarter~~at ofthe ~~2017, our net income was $0~~facility.4 ~~million~~However, ait ~~decrease~~will ofbe ~~$0.3~~several ~~million,~~quarters orbefore ~~40.5%,~~we ~~compared~~return to ~~net~~acceptable ~~income of~~levels ~~$0.7 million in the fourth quarter~~ of ~~2016~~performance and profitability.

~~For~~Financial ~~the~~and ~~year~~Operational ended December 31, 2017, our revenues were $80.6 million, a decrease of $1.5 million, or 1.9%, compared to revenues of $82.1 million in 2016. Our net income for 2017 was $3.6 million, a decrease of $1.6 million, or 30.0%, compared to net income of $5.2 million for 2016.Highlights

~~GPI~~For ~~SAS uses~~ the ~~euro as~~fourth ~~its~~quarter ~~functional~~of ~~currency.~~2018 ~~At December 31, 2017~~ and ~~2016~~2017, our ~~the~~revenues ~~U.S. dollar to euro exchange rates~~ were 1.$20 ~~and 1~~.~~05,~~8 ~~respectively, which represents a 13~~million.9% For ~~stronger dollar compared to~~ the ~~euro.~~fourth ~~The~~quarter ~~average~~of ~~exchange~~2018, ~~rates~~our ~~for~~net ~~the~~loss was ~~years~~$0.3 ~~ended December 31~~million, ~~2017 and~~a ~~2016~~decrease ~~was~~of $10.137 ~~and $1.11~~million, or ~~respectively~~158%, ~~which~~compared ~~represents~~to anet ~~2.1%~~income ~~stronger~~of ~~dollar~~$0.4 ~~compared~~million toin the ~~euro~~fourth quarter of 2017.

~~Our~~For ~~Mexican manufacturing plant uses~~ the ~~U.S.~~year ~~dollar~~ended ~~as its functional currency. At~~ December 31, ~~2017 and 2016~~2018, ~~the~~our revenues ~~Mexican~~were ~~peso to U~~$87.S.0 ~~dollar~~million, ~~exchange rates~~an ~~were~~increase ~~19.69~~of ~~and 20~~$6.~~75,~~4 ~~respectively~~million, ~~which~~or ~~represents a 5~~7.19%, ~~weaker dollar~~ compared to ~~the~~revenues ~~peso~~of $80.6 ~~The~~million ~~average~~in ~~exchange~~2017. Our ~~rates~~net income for ~~the~~2018 ~~years~~was ~~ended~~$3.7 ~~December 31~~million, ~~2017~~an ~~and~~increase ~~2016~~of ~~were 18~~$0.921 ~~and~~million, 18or 2.725%, ~~pesos~~compared to ~~the~~net ~~U.S.~~income ~~dollar,~~of ~~respectively, which represents a 1~~$3.1%6 ~~stronger~~million ~~dollar~~for ~~compared to the Mexican peso~~2017.

~~GPI~~The ~~Asia~~following ~~uses~~table ~~the~~details ~~U.S. dollar as its functional currency. At December 31, 2017 and December 31, 2016,~~ the ~~Macau pataca to U.S. dollar~~ exchange ~~rates were 8.05 patacas and 8.20~~ ~~patacas, respectively, which represents a 1.8% weaker dollar compared to the Macau pataca. The Macau pataca to U.S. dollar average exchange~~ rates ~~for~~at ~~the years ended~~ December 31, ~~2017~~2018 and ~~2016 were 8.13 patacas and 8.17 patacas, respectively, which represents a 0.5% weaker dollar compared to the Macau pataca.~~2017:

Results of Operations

	December 31, 2018		December 31, 2017		Year-to-Year Change
USD to Euro		1.14		1.20		4.5	%
Peso to USD		19.66		19.69		(0.2	)%
MOP to USD		8.07		8.05		0.2	%

The following table ~~summarizes~~details ~~selected~~the average ~~items~~exchange ~~from~~rates ~~our consolidated statements of income (dollars in thousands) and as a percentage of revenues~~ for the years ended December 31:

	2017						2016					Year-to-Year Change
	2018			2017			Year-to-Year Change
Revenues	$	80,602			100.0	%	$	82,139		100.0	%	$	(1,537	)	(1.9	)%
USD to Euro		1.18			1.13			(4.6	)%
Cost of revenues		57,924			71.9	%		56,803		69.2	%		1,121		2.0	%
Peso to USD		19.24			18.92			1.7	%
Gross profit		22,678			28.1	%		25,336		30.8	%		(2,658	)	(10.5	)%
MOP to USD		8.07			8.13			(0.7	)%
Selling, administrative, and research and development		17,152			21.3	%		17,776		21.6	%		(624	)	(3.5	)%
Operating income		5,526			6.9	%		7,560		9.2	%		(2,034	)	(26.9	)%
Other expense, net		(85	)		(0.1	)%		(34	)	(0.0	)%		(51	)	150.0	%
Income before income taxes		5,441			6.8	%		7,526		9.3	%		(2,085	)	(27.7	)%
Income tax provision (benefit)		1,815			2.3	%		2,343		2.9	%		(528	)	(22.5	)%
Net income	$	3,626			4.5	%	$	5,183		6.3	%	$	(1,557	)	(30.0	)%

~~The~~Results ~~following table presents certain data by geographic location (dollars in thousands) and as a percentage~~ of ~~revenues for the years ended December 31:~~ Operations

	2017				2016				Year-to-Year Change
Revenues
The Americas	$	54,638	67.8	%	$	56,247	68.5	%	$	(1,609	)	(2.9	)%
Asia-Pacific		23,200	28.8	%		22,080	26.9	%		1,120		5.1	%
Europe and Africa		2,764	3.4	%		3,812	4.6	%		(1,048	)	(27.5	)%
Total	$	80,602	100.0	%	$	82,139	100.0	%	$	(1,537	)	(1.9	)%

The following table summarizes selected items from our consolidated statements of income (dollars in thousands) and as a percentage of revenues for the years ended December 31:

	2018					2017					Year-to-Year Change
Revenues	$	87,009		100.0	%	$	80,602		100.0	%	$	6,407		7.9	%
Cost of revenues		59,974		68.9	%		57,924		71.9	%		2,050		3.5	%
Gross profit		27,035		31.1	%		22,678		28.1	%		4,357		19.2	%
Selling, administrative, and research and development		22,215		25.5	%		17,152		21.3	%		5,063		29.5	%
Operating income		4,820		5.5	%		5,526		6.9	%		(706	)	(12.8	)%
Other expense, net		(215	)	(0.2	)%		(85	)	(0.1	)%		(130	)	152.9	%
Income before income taxes		4,605		5.3	%		5,441		6.8	%		(836	)	(15.4	)%
Income tax provision (benefit)		888		1.0	%		1,815		2.3	%		(927	)	(51.1	)%
Net income	$	3,717		4.3	%	$	3,626		4.5	%	$	91		2.5	%

The following table ~~details~~presents ~~our~~certain ~~revenues~~data by ~~product~~geographic ~~line~~location (dollars in thousands) and as a percentage of revenues for the years ended December 31:

	2017				2016				Year-to-Year Change
	2018				2017				Year-to-Year Change
Casino currency without RFID	$	14,754	18.3	%	$	15,698	19.1	%	$	(944	)	(6.0	)%
Revenues
Casino currency with RFID		18,041	22.4	%		16,123	19.6	%		1,918		11.9	%
The Americas	$	57,868	66.5	%	$	54,638	67.8	%	$	3,230		5.9	%
Total casino currency		32,795	40.7	%		31,821	38.7	%		974		3.1	%
Asia-Pacific		26,098	30.0	%		23,200	28.8	%		2,898		12.5	%
Playing cards		24,864	30.8	%		26,708	32.5	%		(1,844	)	(6.9	)%
Europe and Africa		3,043	3.5	%		2,764	3.4	%		279		10.1	%
Table accessories and other products		6,802	8.4	%		6,639	8.1	%		163		2.5	%
Total	$	87,009	100.0	%	$	80,602	100.0	%	$	6,407		7.9	%
Table layouts		5,315	6.6	%		5,259	6.4	%		56		1.1	%
Gaming furniture		3,126	3.9	%		2,645	3.2	%		481		18.2	%
Dice		2,791	3.5	%		2,859	3.5	%		(68	)	(2.4	)%
RFID solutions		1,623	2.0	%		3,000	3.7	%		(1,377	)	(45.9	)%
Shipping		3,286	4.1	%		3,208	3.9	%		78		2.4	%
Total	$	80,602	100.0	%	$	82,139	100.0	%	$	(1,537	)	(1.9	)%

~~Comparison of Operations for the Years Ended December 31, 2017 and 2016~~17

~~Revenues.~~The ~~For~~following ~~the~~table ~~year~~details ~~ended December 31, 2017,~~ our revenues by ~~were~~product ~~$80.6~~line ~~million,~~(dollars ain ~~decrease~~thousands) ofand ~~$1.5~~as ~~million,~~a orpercentage ~~1.9%, compared to revenues~~ of ~~$82.1 million in 2016. The decrease in~~ revenues isfor ~~primarily due to a decrease in playing cards sales and~~ the ~~RFID~~years ~~solutions~~ended ~~product lines, offset by an increase in casino currency.~~December 31:

Cost of Revenues. For the year ended December 31, 2017, our cost of revenues was $57.9 million, an increase of $1.1 million, or 2.0%, compared to cost of revenues of $56.8 million for 2016. As a percentage of revenues, our cost of revenues increased to 71.9% in 2017 compared to 69.2% in 2016. The increased cost of revenues was driven by the same factors described under Revenues above and Gross Profit below.

	2018				2017				Year-to-Year Change

Casino currency without RFID	$	20,867	24.1	%	$	14,754	18.3	%	$	6,113		41.4	%
Casino currency with RFID		17,520	20.1	%		18,041	22.4	%		(521	)	(2.9	%)
Total casino currency		38,387	44.2	%		32,795	40.7	%		5,592		17.1	%

Playing cards		23,466	27.0	%		24,864	30.8	%		(1,398	)	(5.6	%)
Table accessories and other products		6,996	8.0	%		6,802	8.4	%		194		2.9	%
Table layouts		5,753	6.6	%		5,315	6.6	%		438		8.2	%
Gaming furniture		3,404	3.9	%		3,255	4.0	%		149		4.6	%
Dice		2,999	3.4	%		2,791	3.5	%		208		7.5	%
RFID solutions		2,521	2.9	%		1,623	2.0	%		898		55.3	%
Shipping		3,483	4.0	%		3,157	4.0	%		326		10.3	%
Total	$	87,009	100.0	%	$	80,602	100.0	%	$	6,407		7.9	%

~~Gross~~Comparison ~~Profit. For the year ended December 31, 2017, gross profit was $22.7 million, a decrease~~ of ~~$2.6 million,~~Operations ~~or 10.5%, compared to gross profit of $25.3 million~~ for 2016. As a percentage of revenues, our gross profit decreased to 28.1% in 2017 compared to 30.8% in 2016. This decrease in gross profit was primarily related to a decrease in RFID solutions sales, a decrease in playing cards sales, an exceptional write-down of $0.8 million on slow-moving casino currency inventory items, and an increase in our depreciation of $1.2 million. This increase in depreciation is a result of the ~~expansion~~Years atEnded ~~our Blue Springs~~December 31, ~~Missouri, location and the 2016 Dolphin~~ ~~asset~~2018 ~~acquisition described at Item 8. Financial Statements~~ and ~~Supplementary Data – Notes to Consolidated Financial Statements – Note 2. Dolphin Asset Acquisition..~~2017

~~Selling,~~Revenues. For the year ended December ~~Administrative~~31, ~~and~~2018, ~~Research~~our ~~and~~revenues ~~Development~~were ~~Expenses~~$87.0 ~~The~~million, ~~following~~an ~~table~~increase ~~details~~of ~~the~~$6.4 ~~selling~~million, ~~administrative~~or 7.9%, ~~and~~compared ~~research~~to revenues of $80.6 million in 2017. The ~~and~~increase ~~development~~in ~~expenses~~revenues ~~(dollars~~is primarily due to an increase in ~~thousands)~~casino ~~and~~currency assales awhich ~~percentage~~was ofgenerated ~~revenues~~by ~~for~~casino ~~the~~openings, ~~years~~partially ~~ended~~offset ~~December 31:~~by a decrease in playing cards sales.

	2017				2016				Year-to-Year Change
Marketing and sales	$	6,619	8.2	%	$	6,407	7.8	%	$	212		3.3	%
General and administrative		9,016	11.1	%		10,181	12.3	%		(1,165	)	(11.4	)%
Research and development		1,517	1.9	%		1,188	1.4	%		329		27.7	%
Total selling, administrative, and research and development	$	17,152	21.3	%	$	17,776	21.6	%	$	(624	)	(3.5	)%

Cost of Revenues. For the year ended December 31, 2018, our cost of revenues was $60.0 million, an increase of $2.1 million, or 3.5%, compared to cost of revenues of $57.9 million for 2017. As a percentage of revenues, our cost of revenues decreased to 68.9% in 2018 compared to 71.9% in 2017. The decreased cost of revenues was driven by the same factors described under Revenues above and Gross Profit below.

Gross Profit. For the year ended December 31, ~~2017,~~ ~~selling~~2018, ~~administrative,~~gross ~~and~~profit ~~research~~was ~~and development expenses were~~ $1727.20 million, aan ~~decrease~~increase of $04.6 3 million, or 319.52%, compared to gross ~~selling,~~profit ~~administrative, and research and development expenses~~ of $1722.87 million infor ~~2016~~2017. As a ~~percent~~percentage of ~~revenue~~revenues, ~~selling, administrative,~~our ~~and~~gross ~~research~~profit ~~and~~increased ~~development~~to ~~expenses~~31.1% ~~remained~~in ~~relatively~~2018 ~~unchanged~~compared to 28.1% in 2017. ~~compared~~This increase in gross profit was primarily related to ~~2016~~an increase in profit on our higher margin currency product lines with higher sales volumes covering fixed costs.

~~Marketing~~Selling, Administrative, and ~~sales expenses~~Research ~~increased~~and $0Development Expenses.2 ~~million~~The tofollowing ~~$6.6~~table ~~million~~details inthe ~~2017~~selling, ~~compared~~administrative, toand ~~$6.4~~research and ~~million~~development expenses (dollars in ~~2016.~~thousands) ~~This~~and isas ~~primarily~~a ~~due~~percentage toof ~~increased~~revenues ~~compensation and~~for ~~related~~the ~~costs.~~years ended December 31:

	2018				2017				Year-to-Year Change
Marketing and sales	$	7,469	8.6	%	$	6,619	8.2	%	$	850	12.8	%
General and administrative		10,750	12.4	%		9,016	11.1	%		1,734	19.2	%
Research and development		3,996	4.6	%		1,517	1.9	%		2,479	163.4	%
Total selling, administrative, and research and development	$	22,215	25.5	%	$	17,152	21.3	%	$	5,063	29.5	%

~~General~~For ~~and~~the ~~administrative expenses~~year ~~decreased~~ended ~~$1.2~~December 31, 2018, ~~million~~selling, toadministrative, ~~$9.0~~and ~~million~~research inand ~~2017~~development ~~compared~~expenses towere $1022.2 million, inan ~~2016.~~increase ~~This is primarily due to a decreases in bad debt expense~~ of $0.5 .1 million, ~~in intangible asset impairment loss of $0~~or 29.~~4 million~~5%, incompared ~~legal~~to ~~fees~~selling, ~~of $0.2 million~~administrative, and ~~in gaming~~research ~~license~~and ~~costs~~development ~~for~~expenses ~~$0.2 million, partially offset by an increase~~ of $017.32 million in ~~stock compensation related costs~~2017.

~~Research~~Marketing and ~~development~~sales expenses increased $0.39 million to $17.5 million in ~~2017~~2018 compared to $16.26 million in ~~2016~~2017. This is primarily due to anincreased ~~increase~~compensation ~~in headcount~~ and anrelated ~~increase in subcontracting cost~~costs.

~~Other (Expense)~~General and ~~Income,~~administrative expenses ~~net~~increased $1.7 ~~The~~million ~~following~~to ~~table~~$10.7 ~~details~~million ~~other~~in ~~(expense)~~2018 compared to $9.0 million in 2017. This is primarily due to $1.3 million of non-recurring expenses related to the Merger and ~~income~~an ~~items~~expense ~~(dollars~~of $0.3 million to increase the stock appreciation right liability. In relation to the Merger, we incurred $0.5 million in additional legal fees, $0.4 million in investment banking fees, $0.2 million ~~thousands)~~to compensate members of the Special Transaction Committee and as$0.1 million in fees to issue a ~~percentage~~$4.0 million letter of ~~revenues~~credit ~~for~~to Angel as part of the ~~years~~Merger ~~ended~~Agreement. ~~December 31:~~The increase in the stock appreciation right liability is a direct consequence of the increase in stock price in 2018. See Item 1. Business – Merger Agreement.

	2017					2016					Year-to-Year Change
Interest income	$	1		0.0	%	$	23		0.0	%	$	(22	)	(95.7	)%
Interest expense		(249	)	(0.3	)%		(242	)	(0.2	)%		(7	)	2.9	%
Gain on foreign currency transactions		182		0.2	%		187		0.2	%		(5	)	(2.7	)%
Other expense, net		(19	)	(0.0	)%		(2	)	(0.0	)%		(17	)	850.0	%
Total other expense, net	$	(85	)	(0.1	)%	$	(34	)	(0.0	)%	$	(51	)	150.0	%

~~Other~~Research ~~expense~~and ~~remained~~development ~~relatively~~expenses ~~unchanged~~increased $2.5 million to $4.0 million in ~~2017~~2018 compared to ~~2016~~$1.5 million in 2017. This is primarily due to payments made to BrainChip Holdings Limited and Xuvi, LLC for achieving certain milestones in our global licensing and development agreements.

~~Income~~Other ~~Taxes. During the year ended December 31~~Expenses, ~~2017, our effective tax rate was 33~~net.~~4%, compared to an effective tax rate of 31.1% for the year ended December 31,~~ ~~2016.~~The ~~Our~~following ~~effective~~table ~~tax~~details ~~rate~~other ~~for~~(expense) ~~the~~and ~~year ended December 31, 2017 was favorably affected by the foreign rate differential on the~~ income ~~from~~items ~~our~~(dollars ~~Macau~~in ~~subsidiary,~~thousands) ~~GPI Asia,~~ and ~~the~~as ~~benefit~~a ~~from~~percentage ~~research and low wage tax credits primarily from our French subsidiary, GPI SAS; partially offset by our Subpart F income adjustment and by the impact~~ of ~~the~~revenues ~~2017 Tax Cuts and Jobs Act. Our effective tax rate~~ for the years ~~year~~ ended December 31, 2016 differed from the statutory rate primarily because of the foreign rate differential on the income from our Macau subsidiary, GPI Asia, and the benefit from research and low wage tax credits from our French subsidiary, GPI SAS, partially offset by our Subpart F income adjustment.:

Pre-tax income (loss) by taxing jurisdictions for the years ended December 31 (in thousands) was as follows:

	2018					2017					Year-to-Year Change
Interest income	$	79		0.1	%	$	1		0.0	%	$	78		7,800.0	%
Interest expense		(176	)	(0.2	)%		(249	)	(0.3	)%		73		(29.3	)%
(Loss)/gain on foreign currency transactions		(188	)	(0.2	)%		182		0.2	%		(370	)	(203.3	)%
Other (expenses)/income, net		70		0.1	%		(19	)	(0.0	)%		89		(468.4	)%
Total other expense, net	$	(215	)	(0.2	)%	$	(85	)	(0.1	)%	$	(130	)	152.9	%

	2017		2016
Macau S.A.R., China	$	3,620	$	4,672
France		1,021		(477	)
Mexico		544		337
United States		256		2,994
Total pre-tax income	$	5,441	$	7,526

Other expense remained relatively unchanged in 2018 compared to 2017.

~~Our~~Income Taxes. The Tax Cuts and Jobs Act (Tax Act) was enacted on December 22, 2017 and reduced the U.S. statutory federal corporate tax rate isfrom ~~calculated~~34% ~~on a~~to ~~consolidated basis~~21%. ~~Included~~The effective indate of the ~~United~~tax ~~States~~rate ~~numbers~~change ~~are~~was January 1, 2018. During the ~~costs~~year ofended ~~GPIC~~December 31, ~~which~~2018, ~~include~~our ~~such~~effective ~~items~~tax asrate ~~regulatory~~was 19.3%, ~~fees~~compared to an effective tax rate of 33.4% for the year ended December 31, 2017. Our effective tax rate for the year ended ~~board~~December 31, 2018 was favorably affected by the impact of ~~director~~the ~~expenses,~~Tax ~~investor~~Act ~~relations~~on ~~expenses~~our 2017 tax return true-ups, ~~auditing~~and the benefit from research and ~~review~~low ~~fees,~~wage tax credits from GPI SAS and ~~corporate~~GPI ~~legal~~USA; ~~expenses.~~partially Weoffset doby ~~not~~our ~~allocate~~Subpart F income adjustment and tax liability from ~~these~~the ~~costs~~Internal toRevenue ~~our~~Service ~~subsidiaries.~~(IRS) ~~These~~audit ~~expenses~~of ~~totaled~~the ~~approximately~~2015 $1tax year.2 ~~million~~Our ~~and~~effective ~~$1.0~~tax ~~million~~rate for the year ended December 31, 2017 was favorably affected by the foreign rate differential on the income from our Macau subsidiary, GPI Asia, and ~~2016~~the benefit from research and low wage tax credits primarily from our French subsidiary, ~~respectively~~GPI SAS; partially offset by our Subpart F income adjustment and by the impact of the 2017 Tax Cuts and Jobs Act on deferred income taxes.

~~We account for uncertain~~ Pre-tax ~~positions in~~income ~~accordance with applicable accounting guidance. At December 31, 2017, we reported unrecognized tax benefits related to the on-going French Tax Administration’s~~ (~~FTA~~loss) ~~examination~~by oftaxing ~~GPI SAS~~ jurisdictions for ~~tax~~the years ~~2013~~ended ~~and~~December ~~2012.~~31 ~~In the first quarter of 2018,~~ (in ~~connection~~thousands) ~~with~~was ~~this~~as examination, GPI paid €1.4 million to the FTA. While we were legally obligated to pay this amount, which represents the FTA’s calculation of the taxes owed, this payment does not represent a settlement nor the end of the examination and we are actively disputing the findings of the FTA. At this time, an estimate of the range of the reasonably possible outcomes cannot be made. We do not expect the examination to be completed within the next twelve months. It is reasonably possible that the amount of the unrecognized benefit with respect to our unrecognized tax position could change within the next 12 months. This change may be the result of settlement of the ongoing audit or competent authority proceedings. follows:

In addition to the on-going French Tax Administration examination of GPI SAS for tax years 2013 and 2012, the Company received notification in August 2017, of a federal income tax examination by the Internal Revenue Service for the 2015 tax year. We expect this audit to be finalized in 2018.

	2018			2017
Macau S.A.R., China	$	3,317		$	3,620
France		851			1,021
Mexico		645			544
United States		(208	)		256
Total pre-tax income	$	4,605		$	5,441

19Our corporate tax rate is calculated on a consolidated basis. Included in the United States numbers are the costs of GPIC, which include such items as regulatory fees, board of director expenses, investor relations expenses, auditing and review fees, and corporate legal expenses. We do not allocate these costs to our subsidiaries. These expenses totaled approximately $1.2 million for both 2018 and 2017.

~~Impact~~We account for uncertain tax positions in accordance with applicable accounting guidance. At December 31, 2018, we reported unrecognized tax benefits related to the on-going French Tax Administration’s (FTA) examination of ~~Inflation~~GPI SAS for tax years 2013 and 2012. ToIn ~~date~~the first quarter of 2018, in ~~inflation~~connection with this examination, GPI paid 1.4 million euros to the FTA. While we were legally obligated to pay this amount, ~~has~~which represents the FTA’s calculation of the taxes owed, this payment does not ~~had~~represent a ~~material~~settlement, ~~effect~~nor onthe end of the examination and we are actively disputing the findings of the FTA. At this time, an estimate of the range of the reasonably possible outcomes cannot be made. We do not expect the examination to be completed within the next twelve months. It is reasonably possible that the amount of the unrecognized benefit with respect to our ~~operations~~unrecognized tax position could change within the next 12 months. This change may be the result of settlement of the ongoing audit or competent authority proceedings.

~~Liquidity~~The Company received notification in August 2017, of a federal income tax examination by the IRS for the 2015 tax year. The examination was completed in the third quarter of 2018 and ~~Capital~~as ~~Resources~~a result we paid an audit adjustment of $0.1 million.

Sources of Liquidity and Capital Resources. Historically, our primary source of liquidity and capital has been cash from operations. On June 26, 2015, we entered into a Credit Agreement with Nevada State Bank for a combined $15.0 million credit facility, consisting of a $10.0 million seven-year term loan and a $5.0 million five-year revolving loan. We borrowed the full amount under the term loan which will mature on June 26, 2022, and have not drawn any funds under the revolving loan. For additional information, see Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 11. Debt.19

~~Other~~As ~~potential sources~~ of ~~capital~~December ~~include~~31, ~~but~~ ~~are not limited to~~2018, ~~additional~~there ~~bank~~was ~~credit~~no ~~facilities~~change to ~~and~~ the ~~sale~~unrecognized oftax ~~stock.~~benefits Wereported ~~believe~~at ~~that~~December ~~we have the resources to satisfy our operating needs for working capital~~31, ~~capital expenditures, purchases of common stock under our stock repurchase program, litigation, dividends or acquisitions for our operations for a minimum of the next twelve months~~2017.

AtImpact ~~December~~of ~~31, 2017, we had $14~~Inflation.~~1 million in~~ ~~cash~~To ~~and cash equivalents. Of this amount~~date, ~~$6.6 million is held by GPI SAS, $4.9 million is held by GPI USA, and $2.6 million~~inflation ishas ~~held~~not byhad ~~GPI Asia. As~~ a ~~consequence~~material ofeffect ~~the Tax Cuts and Jobs Act (the “Tax Act”), enacted~~ on ~~December~~our 22, 2017, of those amounts held outside of the United States, we would not be subject to further taxation if we were to repatriate those amounts, except for potential minimal withholding taxes. Unrepatriated earnings were approximately $6.2 million as of December 31, 2017. Except for the $2.0 million earnings from GPI SAS, these unrepatriated earnings are considered permanently reinvested, since it is management’s intention to reinvest these foreign earnings in future operations. We project that we will have sufficient cash flow in the U.S. and will not need to repatriate the foreign earnings from GPI Asia to finance U.S. operations. Except for the deemed dividends under Section 956 in 2015 and under Subpart F, we continue to assert that earnings from GPI Asia will be permanently reinvested.

~~Working Capital.~~Liquidity ~~The following table summarizes our cash~~ and ~~cash~~Capital ~~equivalents, working capital, and current ratio for the years ended December 31 (dollars in thousands):~~Resources

	2017		2016		Year-to-Year Change
Cash and cash equivalents	$	14,064	$	10,604	$	3,460		32.6	%
Working capital		24,087		24,496		(409	)	(1.7	)%
Current ratio		2.4		2.7

Sources of Liquidity and Capital Resources. Historically, our primary source of liquidity and capital has been cash from operations. On June 26, 2015, we entered into a Credit Agreement with Nevada State Bank for a combined $15.0 million credit facility, consisting of a $10.0 million seven-year term loan and a $5.0 million five-year revolving loan. On October 26, 2018, we paid the full amount outstanding under the term loan which had a maturity date of June 26, 2022. On January 3^rd, 2019, as part of the Merger Agreement, Nevada State Bank issued a $4.0 million letter of credit to us for the benefit of Angel. This letter of credit reduced our available balance on the revolving loan to $1.0 million. For additional information, see Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 10. Debt.

~~The~~Other ~~decrease~~potential insources ~~working~~of capital ~~is mostly~~include, ~~due~~but toare anot ~~decrease~~limited ofto, ~~$3.7~~additional ~~million~~bank incredit ~~accounts~~facilities. ~~receivable,~~We anbelieve ~~increase~~that ofwe ~~$1.3~~have ~~million~~the inresources ~~accounts~~to ~~payable,~~satisfy ~~and~~our ofoperating ~~$1.1 million~~needs infor ~~accrued~~working ~~liabilities~~capital, ~~offset~~capital ~~by an increase of $3.5 million in cash and cash equivalents~~expenditures, ~~$1.2~~Merger-related ~~million in other current assets~~expenses, ~~$0.5~~ ~~million in inventories~~litigation, ~~$0.5~~dividends ~~million~~or inacquisitions ~~prepaid~~for ~~expenses~~our ~~and~~operations for a ~~decrease~~minimum of ~~$0.7~~the ~~million~~next intwelve ~~customer deposits and deferred revenue~~months. ~~For additional information see Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 10. Accrued Liabilities.~~

~~Cash~~At ~~Flows.~~December ~~The~~31, ~~following~~2018, ~~table~~we ~~summarizes~~had $12.1 million ~~our~~in cash ~~flow~~and ~~(dollars~~cash inequivalents. ~~thousands)~~Of ~~for~~this amount, $4.5 million is held by GPI USA, $3.9 million is held by GPI SAS, and $3.7 million is held by GPI Asia. Because of the ~~years~~Tax ~~ended~~Act, ~~December 31:~~we would not be subject to further taxation if we were to repatriate those amounts held outside of the United States, except for potential minimal withholding taxes.

	2017			2016			Year-to-Year Change
Operating activities	$	10,140		$	3,547		$	6,593		185.9	%
Investing activities		(4,925	)		(8,319	)		3,394		40.8	%
Financing activities		(2,308	)		(2,281	)		(27	)	1.2	%
Effect of exchange rates		553			(131	)		684		522.1	%
Net change	$	3,460		$	(7,184	)	$	10,644		148.2	%

Working Capital. The following table summarizes our cash and cash equivalents, working capital, and current ratio for the years ended December 31 (dollars in thousands):

The increase in cash flows provided by operating activities was primarily caused by an increase of $6.3 million in the change in operating assets and liabilities, and an increase of $0.3 million in net income and the adjustments to reconcile net income to net cash. The change in operating assets and liabilities is mostly due to the timing of sales and manufacturing. The increase in the adjustments to reconcile net income to net cash is mostly due to increases of $1.0 million in depreciation, $0.8 million in inventory write-down, $0.3 million in deferred income taxes, $0.3 million in stock compensation expense, offset by an increase in recovery of bad debt of $0.4 million and a decrease of $0.4 million in impairment of intangible assets.

	2018		2017		Year-to-Year Change
Cash and cash equivalents	$	12,100	$	14,064	$	(1,964	)	(14.0	)%
Working capital		24,305		24,381		(76	)	(0.3	)%
Current ratio		2.6		2.5

20The increase in working capital is mostly due to a decrease of $2.0 million in cash and cash equivalents, a decrease of $1.2 million in inventories and an increase of $1.9 million in customer deposits, offset by a decrease of $1.2 million in accounts payable and an increase of $0.6 million in accounts receivable. For additional information see Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 9. Accrued Liabilities.

~~The~~Cash ~~decrease~~Flows. inThe ~~cash~~following ~~flows used in investing~~table ~~activities~~summarizes ~~was~~our ~~primarily~~cash ~~due~~flow to(dollars ~~a decrease of $7.5 million~~ in ~~capital~~thousands) ~~expenditures~~for ~~partially~~the ~~offset~~years byended ~~a decrease of $3.6 million in sale of marketable securities.~~December 31:

Cash flows used in financing activities remained relatively unchanged in 2017 compared to 2016.

	2018			2017			Year-to-Year Change

Operating activities	$	7,392		$	10,140		$	(2,748	)	(27.1	%)
Investing activities		(2,334	)		(4,925	)		2,591		52.6	%
Financing activities		(6,860	)		(2,308	)		(4,552	)	197.2	%
Effect of exchange rates		(162	)		553			(715	)	129.3	%
Net change	$	(1,964	)	$	3,460		$	(5,424	)	156.8	%

The ~~increase~~decrease ~~from~~in cash flows provided by operating activities was primarily caused by a negative impact in the ~~effect~~change of ~~exchange~~assets of $2.9 million and a decrease in non-cash ~~rates~~items isof ~~mostly~~$0.3 ~~due~~million, topartially ~~the~~offset ~~Euro~~by ~~strengthening~~a ~~compared~~positive toimpact in the ~~USD~~change of liabilities of $0.3 million and an increase in ~~2017~~net income of $0.1 million.

~~Facilities~~The decrease in cash flows used in investing activities was primarily due to a decrease of $1.9 ~~Our~~million in capital expenditures a decrease of $0.3 million in the purchase ~~facilities~~of ~~are~~equity ~~described~~method atinvestments, ~~Item~~and 2partially offset by an increase of $0.3 ~~Properties~~million in insurance proceeds from property and equipment.

Capital Expenditures. In 2018 we currently plan to purchase approximately $5.0 million in property, plant, and equipment, composed mainly of machinery and equipment for our Blue Springs, Missouri, facility. In 2017, we purchased $4.4 million of property, plant, and equipment primarily due to capital investments at our Blue Springs, Missouri facility.20

21The increase in cash flows used in financing activities was primarily caused by an increase of $5.3 million of principal payments on debt, partially offset by an increase of $0.9 million in stock appreciation rights exercised.

~~Selected~~The ~~Quarterly~~decrease ~~Financial~~from ~~Information~~the effect of exchange rates is mostly due to the fluctuations of the euro compared to the U.S. dollar in 2018.

	Year Ended December 31, 2017
	First			Second		Third		Fourth			Total
	(in thousands, except per-share data)
Revenues	$	18,913		$	16,274	$	24,635	$	20,780		$	80,602
Cost of revenues		13,093			12,416		17,455		14,960			57,924
Gross profit		5,820			3,858		7,180		5,820			22,678
Selling, administrative, and research and development expenses		4,361			3,782		4,127		4,882			17,152
Operating income		1,459			76		3,053		938			5,526
Other (expense) income, net		(93	)		9		32		(33	)		(85	)
Income before income taxes		1,366			85		3,085		905			5,441
Income tax provision		434			36		880		465			1,815
Net income	$	932		$	49	$	2,205	$	440		$	3,626
Net earnings per share:
Basic	$	0.12		$	0.01	$	0.28	$	0.06		$	0.47
Diluted	$	0.12		$	0.01	$	0.27	$	0.05		$	0.45

Facilities. Our facilities are described at Item 2. Properties.

	Year Ended December 31, 2016
	First			Second		Third		Fourth			Total
	(in thousands, except per-share data)
Revenues	$	16,093		$	20,344	$	22,559	$	23,143		$	82,139
Cost of revenues		12,125			13,027		15,036		16,615			56,803
Gross profit		3,968			7,317		7,523		6,528			25,336
Selling, administrative, and research and development expenses		4,005			4,444		4,039		5,288			17,776
Operating (loss) income		(37	)		2,873		3,484		1,240			7,560
Other (expense) income, net		(82	)		7		43		(2	)		(34	)
(Loss) income before income taxes		(119	)		2,880		3,527		1,238			7,526
Income tax (benefit) provision		(39	)		803		1,080		499			2,343
Net (loss) income	$	(80	)	$	2,077	$	2,447	$	739		$	5,183
Net (loss) earnings per share:
Basic	$	(0.01	)	$	0.26	$	0.31	$	0.09		$	0.65
Diluted	$	(0.01	)	$	0.26	$	0.30	$	0.09		$	0.64

Capital Expenditures. In 2019, we plan to purchase approximately $3.0 million in property, plant, and equipment, composed mainly of machinery and equipment for our Blue Springs, Missouri, facility. In 2018, we purchased $2.5 million of property, plant, and equipment primarily for capital investments at our Blue Springs, Missouri and San Luis, Mexico facilities.

~~Contractual~~Selected ~~Obligations~~Quarterly ~~and~~Financial ~~Commercial Commitments~~Information

On May 11, 2016, we purchased certain assets dedicated to the design and manufacture of chips and plaques for gaming tables from Dolphin Products Limited (Dolphin) as described at Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 2. Dolphin Asset Acquisition. At December 31, 2017, $1.1 million remained to be paid and is included as part of our commitment obligations in the table below.

	Year Ended December 31, 2018
	First			Second		Third			Fourth			Total
	(in thousands, except per share data)
Revenues	$	18,683		$	24,677	$	22,887		$	20,762		$	87,009
Cost of revenues		13,747			16,341		15,696			14,190			59,974
Gross profit		4,936			8,336		7,191			6,572			27,035
Selling, administrative, and research and development expenses		4,666			5,190		5,052			7,307			22,215
Operating income (loss)		270			3,146		2,139			(735	)		4,820
Other (expense) income, net		(266	)		104		(114	)		61			(215	)
Income (loss) before income taxes		4			3,250		2,025			(674	)		4,605
Income tax expense		1			745		559			(417	)		888
Net income (loss)	$	3		$	2,505	$	1,466		$	(257	)	$	3,717
Net earnings (loss) per share:
Basic	$	-		$	0.32	$	0.18		$	(0.03	)	$	0.47
Diluted	$	-		$	0.31	$	0.18		$	(0.03	)	$	0.46

On June 26, 2015, we entered into a Credit Agreement with Nevada State Bank for a combined $15.0 million, consisting of a $10.0 million seven-year term loan and a $5.0 million five-year revolving loan described at Item 8. Financial Statements and Supplementary Date – Notes to Consolidated Financial Statements – Note 11. Debt.

	Year Ended December 31, 2017
	First			Second		Third		Fourth			Total
	(in thousands, except per share data)
Revenues	$	18,913		$	16,274	$	24,635	$	20,780		$	80,602
Cost of revenues		13,093			12,416		17,455		14,960			57,924
Gross profit		5,820			3,858		7,180		5,820			22,678
Selling, administrative, and research and development expenses		4,361			3,782		4,127		4,882			17,152
Operating income		1,459			76		3,053		938			5,526
Other (expense) income, net		(93	)		9		32		(33	)		(85	)
Income before income taxes		1,366			85		3,085		905			5,441
Income tax provision		434			36		880		465			1,815
Net income	$	932		$	49	$	2,205	$	440		$	3,626
Net earnings per share:
Basic	$	0.12		$	0.01	$	0.28	$	0.05		$	0.46
Diluted	$	0.12		$	0.01	$	0.27	$	0.05		$	0.45

~~The~~Contractual ~~following~~Obligations ~~table presents the impact that our contractual obligations~~ and ~~commercial~~Commercial commitments at December 31, 2017 are anticipated to have on our liquidity and cash flow in future periods. Operating leases and contracts that are on a month-to-month basis are not included. For additional information, see Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 12. Commitments ~~and Contingencies.~~

22On January 3, 2019, as part of the Merger Agreement, the Company provided Angel with a $4.0 million letter of credit issued by the Nevada State Bank described at Item 8. Financial Statements and Supplementary Date – Notes to Consolidated Financial Statements – Note 10. Debt.

	Payments Due by Period
	(in thousands)
Contractual Obligations	Total		0 - 1 years		2 - 3 years		4 - 5 years		Thereafter
Debt	$	6,666	$	1,401	$	2,959	$	2,306	$	-
Purchase and other commitment obligations (1)		8,345		8,345		-		-		-
Operating leases		3,783		899		1,357		1,189		338
Interest on debt		566		217		278		65		6
Total contractual cash obligations	$	19,360	$	10,862	$	4,594	$	3,560	$	344

~~(1)~~On ~~Amounts~~November ~~represent~~27, ~~agreements~~2018, tothe ~~purchase~~Company ~~goods~~entered into orthe ~~services~~Merger Agreement with Angel and ~~exclude~~the ~~any~~Merger ~~agreements~~Sub, ~~that~~pursuant ~~are~~to ~~cancelable~~which ~~without~~Angel ~~penalty~~will acquire the Company in exchange for cash. See Item 1. Business – Merger Agreement.

AsOn ~~part~~June of26, ~~our~~2015, ~~commitment~~the ~~obligations~~Company entered into a Credit Agreement with Nevada State Bank for a combined $15.0 million, weconsisting ~~included~~of a $110.30 million ~~related~~ toseven-year ~~the~~term ~~research~~loan and a ~~development~~$5.0 ~~agreements~~million five-year revolving loan described at Item 8. Financial Statements and Supplementary ~~Data~~Date – Notes to Consolidated Financial Statements – Note 2110. ~~Subsequent~~Debt. ~~events~~On October 26, 2018, the Company paid the full amount outstanding under the term loan.

~~Off~~The following table presents the impact that our contractual obligations and commercial commitments at December 31, 2018 are anticipated to have on our liquidity and cash flow in future periods. Operating leases and contracts that are on a month-~~Balance~~to-month ~~Sheet~~basis ~~Arrangements~~are not included. For additional information, see Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 11. Commitments and Contingencies.

We have no consolidated off-balance sheet arrangements that have, or are reasonably likely to have, a material current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

	Payments Due by Period
	(in thousands)
Contractual Obligations	Total		0 - 1 years		2 - 3 years		4 - 5 years		Thereafter
Purchase and other commitment obligations ⁽¹⁾	$	8,489	$	8,489	$	-	$	-	$	-
Operating leases		3,363		1,057		1,327		979		-
Total contractual cash obligations	$	11,852	$	9,546	$	1,327	$	979	$	-

~~Critical~~(1) ~~Accounting~~Amounts ~~Policies~~represent agreements to purchase goods or services and ~~Estimates~~exclude any agreements that are cancelable without penalty.

Our consolidated financial statements included at Item 8. Financial Statements and Supplementary Data have been prepared in conformity with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amount of assets, liabilities, net sales and expenses, and related disclosure of contingent assets and liabilities. Certain of our accounting estimates, including revenue recognition; the allowance for doubtful accounts; writeOff-~~downs~~Balance ofSheet obsolete, excess, or slow-moving inventories; goodwill; the valuation and amortizable lives of intangible assets; debt; and the recoverability of deferred tax assets require that we apply significant subjective judgment in defining the appropriate assumptions for calculating financial estimates. By their nature, these judgments are subject to an inherent degree of uncertainty. Our judgments are based on our historical experience, our observance of industry trends, information provided by or gathered from our customers, and information available from other outside sources, as appropriate. There can be no assurance that actual results will not differ from our estimates. The estimates discussed below are considered by management to be those in which our estimates and judgments have a significant impact on issues that are inherently uncertain. To provide a further understanding of the methodology we apply, our significant accounting estimates are discussed below and at Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements.Arrangements

~~Revenue~~We ~~Recognition~~have no consolidated off-balance sheet arrangements that have, or are reasonably likely to have, a material current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

WeCritical ~~receive~~Accounting ~~revenues~~Policies ~~from the sales of our gaming products, as well as licensing~~ and ~~services. Revenues are recognized when all of the following have been satisfied:~~Estimates

•Our ~~The~~consolidated ~~parties~~financial statements included at Item 8. Financial Statements and Supplementary Data have ~~approved~~been prepared in conformity with accounting principles generally accepted in the ~~contract~~United States. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amount of assets, liabilities, net sales and expenses, and related disclosure of contingent assets and liabilities. Certain of our accounting estimates, including revenue recognition; the allowance for doubtful accounts; write-downs of obsolete, excess, or slow-moving inventories; goodwill; the valuation and amortizable lives of intangible assets; debt; and the recoverability of deferred tax assets require that we apply significant subjective judgment in defining the appropriate assumptions for calculating financial estimates. By their nature, these judgments are ~~committed~~subject to ~~performing~~an ~~their~~inherent ~~respective~~degree ~~obligations~~of uncertainty. Our judgments are based on our historical experience, our observance of industry trends, information provided by or gathered from our customers, and information available from other outside sources, as appropriate. There can be no assurance that actual results will not differ from our estimates. The estimates discussed below are considered by management to be those in which our estimates and judgments have a significant impact on issues that are inherently uncertain. To provide a further understanding of the methodology we apply, our significant accounting estimates are discussed below and at Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements.

•Revenue ~~Each party’s rights regarding the goods or services to be transferred can be identified.~~Recognition

• The ~~payment~~majority ~~terms~~of ~~are~~our ~~identifiable,~~revenue is derived from selling and ~~it’s~~distributing ~~probable~~manufactured ~~the~~table ~~entity~~game ~~will~~equipment ~~collect~~to the ~~consideration~~casino toindustry. ~~which~~We ~~it’s~~recognize ~~entitled~~revenue inafter ~~exchange~~we ~~for~~have ~~the~~completed all ~~goods~~of orthe ~~services~~following steps:

•- ~~The~~Identification of the contract, ~~has~~or ~~commercial~~contracts, ~~substance.~~with a customer

~~Determining~~- ~~whether~~Identification ~~these~~of ~~requirements have been met may require us to make assumptions and exercise judgment that could significantly impact~~ the ~~timing~~performance ~~and~~obligations ~~amount~~in of revenue reported each period. In addition, we may enter into arrangements which include software and/or multiple elements or deliverables, such as RFID solutions, which include RFID equipment, embedded software licenses, and software maintenance services. In such cases, additional judgments and estimates are necessary to ensure the ~~appropriate amounts of revenue are recorded for a given period.~~contract

23- Determination of the transaction price

On- ~~occasion,~~Allocation weof ~~may recognize revenue under a bill and hold arrangement. Under a bill and hold arrangement revenue is recognized when~~ the ~~product~~transaction isprice ~~manufactured, completed, invoiced, and segregated from the seller’s other inventory so that it is not subjected~~ to ~~being used to fill other orders. Upon invoicing under this arrangement, ownership has passed to~~ the ~~buyer~~performance ~~with~~obligations ~~no residual warranty obligation or right of return such that the earnings process is complete. The customer must request a bill and hold arrangement, preferably~~ in ~~writing, must commit to~~ the ~~purchase, and the delivery date must be fixed.~~contract

~~The~~- ~~application~~Recognition of ~~our~~ revenue ~~recognition policies~~when, ~~and changes in our assumptions~~ or ~~judgments~~as, ~~affect~~ the ~~timing~~Company ~~and~~satisfies ~~amounts~~a ofperformance ~~our revenues and costs, as well as deferred revenue.~~obligation

~~Allowance for Doubtful Accounts~~22

WeDetermining ~~estimate~~whether anthese ~~allowance~~steps ~~for~~have ~~doubtful accounts~~been ~~receivable~~met ~~based~~may onrequire aus ~~variety~~to ofmake ~~factors,~~assumptions ~~including the length of time the receivables are past due, economic conditions~~ and ~~trends, significant~~exercise one-time events, and historical experience. Additional amounts are recorded in the allowance based on our awareness of a particular customer’s ability to meet its financial obligations. A change in our estimates of the allowance for doubtful accounts could have a material adverse effect on our consolidated results of operations.judgment

~~Inventories~~that could significantly impact the timing and amount of revenue reported each period.

~~Inventories~~The ~~are~~majority ~~stated~~of atour ~~the~~contracts ~~lower~~have ofa ~~cost~~similar orperformance anobligation ~~estimate~~which ofis ~~net~~the ~~realizable~~transfer ~~value.~~of ~~The~~the ~~analysis~~individual ofgoods ~~net~~ordered. ~~realizable~~The ~~value~~Company ~~includes~~typically ~~reviewing~~invoices ~~overall~~the ~~inventory~~customer ~~levels, historical~~upon ~~and~~shipment. ~~projected~~Depending ~~sales~~on orthe ~~usage~~size of ~~these items,~~ the ~~projected~~customer ~~markets~~order ~~for~~we ~~our~~may ~~products,~~require ~~and~~deposits ~~selling costs. Inventory~~ that werange ~~estimate will~~from ~~not~~30% beto ~~used~~100% ~~within~~of the ~~next~~total ~~year is considered non-current inventory~~order. ~~Inventory that we estimate will not be used within the~~ ~~next~~We ~~three~~generally ~~years~~warrant ~~is written down. A change in~~ our ~~inventory~~products ~~estimates~~from ~~could~~defects ~~have~~of a material ~~adverse~~and ~~effect~~workmanship onfor ~~our~~a ~~consolidated results~~period of ~~operations~~ninety days.

~~Goodwill~~On occasion, we may recognize revenue under a bill and hold arrangement. The transfer of ownership, and revenue recognition, occurs at the point the items are ready for physical delivery and the customer is notified – i.e. when the product is manufactured, completed, invoiced, and segregated from our other inventory so that it is not subject to being used to fill other orders. The customer must request a bill and hold arrangement, preferably in writing, and must commit to the purchase.

~~Goodwill~~Under isthe ~~recorded~~RFID ~~when~~solutions ~~the~~product ~~consideration~~line, ~~paid~~we ~~for~~may anrecognize ~~acquisition~~revenue ~~exceeds~~from ~~the~~entering ~~fair~~into ~~value~~new ofarrangements ~~net~~which ~~tangible~~include ~~and~~software ~~intangible assets acquired. Goodwill is measured~~ and/or ~~tested for~~multiple ~~impairment~~elements ~~on an annual basis~~ or ~~more frequently if we believe indicators of impairment exist. We test goodwill for impairment~~deliverables, ~~using~~which ~~qualitative~~include ~~factors~~RFID toequipment, ~~determine~~embedded ~~whether~~software itlicenses, isand ~~more~~software ~~likely~~maintenance ~~than~~services. ~~not~~In ~~that~~such ~~the fair value of a reporting unit is less than its carrying amount~~cases, ~~including goodwill. If it is not more likely than not that~~ the ~~fair~~Company ~~value~~accounts for ofindividual ~~the~~performance ~~reporting~~obligations ~~unit~~separately isif ~~less~~they ~~than its~~are ~~carrying~~distinct. ~~amount,~~The notransaction ~~further~~price ~~testing~~ is ~~performed.~~allocated Ifto ~~it is more likely than not that~~ the ~~fair~~separate ~~value of the reporting unit is~~performance ~~less~~obligations ~~than~~on ~~its carrying amount, we perform~~ a ~~quantitative~~relative ~~two-step~~standalone ~~impairment~~selling ~~test~~price basis. The ~~first~~Company ~~step~~determines ~~compares~~ the ~~fair~~standalone ~~value~~selling ofprices ~~the reporting~~based ~~unit~~on ~~with~~the ~~its~~Company's overall ~~carrying~~pricing ~~amount~~objectives, ~~including~~taking ~~goodwill.~~into Ifconsideration ~~the~~historical ~~carrying~~selling ~~amount~~prices, ~~exceeds~~market ~~fair value~~conditions, ~~then~~costs ~~the~~to ~~second~~provide ~~step~~certain isservices ~~used~~and toother ~~measure the amount of impairment loss~~factors.

~~Long-lived~~A portion of our revenue under RFID solutions is generated by new or existing software and ~~Intangible~~hardware ~~Assets~~maintenance arrangements. Under these arrangements, customers pay in advance for the maintenance of the hardware or the software. As of December 31, 2018, the Company had contracts with unsatisfied performance obligations extending throughout 2020. Most of our contracts are for one year and renew on March 1st of every year. The Company recognizes as revenue the amount billed over the length of the arrangement. The unrecognized portion of the amount billed is accounted for as deferred revenue. At December 31, 2018 and December 31, 2017, these amounts were $0.2 million and $0.1 million, respectively. For the years ended on December 31, 2018 and 2017, we recognized $0.7 million and $0.6 million, respectively, of revenue for software and hardware maintenance contracts.

~~Long-lived~~The ~~assets,~~application ~~including~~of ~~property~~our ~~and equipment~~revenue ~~and intangible assets, are amortized on a straight-line basis over their economic lives. Judgments are made in determining~~recognition ~~the~~policies ~~estimated useful lives of long-lived assets~~ and ifchanges ~~or when an asset has been impaired. These estimates affect the amount of amortization expense recognized~~ in ~~the financial results. We assign lives to~~ our ~~assets~~assumptions ~~based on specific legal and economic characteristics. We evaluate these assets with definite lives for potential impairment whenever events~~ or ~~changes~~judgments inaffect ~~circumstances indicate~~ the ~~carrying~~ ~~value~~timing ~~may not be recoverable,~~ and weamounts ~~record an impairment charge when the carrying amount~~ of ~~the~~our ~~long-lived~~revenues ~~asset is not recoverable~~ and ~~the~~costs, ~~carrying~~as ~~amount~~well ~~exceeds~~as ~~the estimated fair value. This impairment charge could have a material adverse effect~~deferred ~~on our consolidated results of operations~~revenue.

~~Deferred~~Allowance ~~Taxes~~for Doubtful Accounts

We ~~record~~estimate aan ~~valuation~~ allowance tofor ~~reduce~~doubtful accounts ~~our~~receivable ~~deferred~~based ~~tax~~on ~~assets~~a tovariety ~~the~~of ~~amount~~factors, ~~that~~including isthe ~~more~~length ~~likely~~of ~~than~~time ~~not~~the toreceivables beare ~~realized.~~past Wedue, ~~have~~economic ~~considered~~conditions ~~estimated~~and ~~future taxable~~trends, ~~income~~significant ~~and~~one-time ~~ongoing~~events, ~~tax~~and ~~planning~~historical ~~strategies~~experience. inAdditional ~~assessing~~amounts ~~the~~are ~~amount~~recorded ~~needed~~in ~~for~~ the ~~valuation~~ allowance. ~~Additionally,~~based weon ~~look~~our toawareness ~~the~~of ~~future~~a ~~reversal~~particular ofcustomer’s ~~existing~~ability ~~taxable~~to ~~temporary~~meet ~~differences,~~its ~~taxable~~financial ~~income~~obligations. inA ~~prior~~change ~~carry-back~~in ~~years,~~our ~~the~~estimates ~~feasibility~~ of ~~tax planning~~the ~~strategies, and estimated future taxable income. The valuation~~ allowance ~~can~~for bedoubtful accounts ~~affected~~could byhave ~~changes~~a tomaterial ~~global~~adverse ~~tax~~effect ~~laws, statutory~~on ~~tax~~our ~~rates,~~consolidated ~~and~~results ~~future~~of ~~taxable income estimates~~operations.

The amount of income taxes we pay is subject to audits by federal, state, and foreign tax authorities, which may result in tax assessments. Our estimate for the potential outcome for any uncertain tax issue may be highly subjective and judgmental. We believe that we have adequately provided for any reasonably foreseeable outcome related to these tax issues. However, our future results may include favorable or unfavorable adjustments to our estimated tax liabilities due to closure of income tax audits, new regulatory or judicial pronouncements, or other relevant events. As a result, our effective tax rate may fluctuate significantly on a quarterly basis.Inventories

24Inventories are stated at the lower of cost or an estimate of net realizable value. The analysis of net realizable value includes reviewing overall inventory levels, historical and projected sales or usage of these items, the projected markets for our products, and selling costs. Inventory that we estimate will not be used within the next year is considered non-current inventory. Inventory that we estimate will not be used within the next three years is written down. A change in our inventory estimates could have a material adverse effect on our consolidated results of operations.

The Tax Act made significant changes to federal tax law, including a reduction in the federal income tax rate from 35% to 21% effective January 1, 2018, and a one-time transition tax on previously deferred earnings of certain foreign subsidiaries. Given the significance of the legislation, the SEC staff issued Staff Accounting Bulletin No. 118 (SAB 118), which allows registrants to record provisional amounts during a one year “measurement period” similar to that used when accounting for business combinations. However, the measurement period is deemed to have ended earlier when the registrant has obtained, prepared and analyzed the information necessary to finalize its accounting. During the measurement period, impacts of the law are expected to be recorded at the time a reasonable estimate for all or a portion of the effects can be made, and provisional amounts can be recognized and adjusted as information becomes available, prepared or analyzed.Goodwill

~~SAB~~Goodwill ~~118~~is ~~summarizes~~recorded awhen ~~three-step~~the ~~process~~consideration topaid befor ~~applied~~an atacquisition ~~each~~exceeds ~~reporting~~the ~~period~~fair tovalue ~~account~~of ~~for~~net tangible and ~~qualitatively~~intangible ~~disclose:~~assets ~~(1)~~acquired. ~~the~~Goodwill ~~effects~~is measured and tested for impairment on an annual basis or more frequently if we believe indicators of ~~the~~impairment ~~change~~exist. inWe ~~tax~~test ~~law~~goodwill for impairment ~~which~~using ~~accounting~~qualitative isfactors ~~complete;~~to ~~(2)~~determine ~~provisional~~whether ~~amounts~~it ~~(or~~is ~~adjustments~~more tolikely ~~provisional~~than ~~amounts)~~not ~~for~~that the ~~effects~~fair value of ~~the~~a ~~tax~~reporting ~~law~~unit ~~where~~is less than ~~accounting~~its carrying amount, including goodwill. If it is not ~~complete~~more likely than not that the fair value of the reporting unit is less than its carrying amount, ~~but~~no further testing is performed. If it is more likely than not that athe ~~reasonable~~fair ~~estimate~~value ~~has~~of ~~been~~the ~~determined;~~reporting ~~and~~unit is ~~(3)~~less than its carrying amount, we perform a ~~reasonable~~quantitative ~~estimate~~two-step ~~cannot~~impairment ~~yet~~test. beThe ~~made and~~first ~~therefore~~step ~~taxes~~compares ~~are~~the ~~reflected~~fair invalue ~~accordance~~of the reporting unit with ~~law~~its ~~prior~~carrying toamount, including goodwill. If the ~~enactment~~carrying ofamount exceeds fair value, then the ~~Tax~~second ~~Cuts~~step is ~~and~~used ~~Jobs~~to ~~Act~~measure the amount of impairment loss.

We review all of our uncertain tax positions and make a determination as to whether our position is more likely than not to be sustained upon audit by taxing authorities. If a tax position meets this more-likely-than-not threshold, then the related tax benefit is measured based on a cumulative probability analysis of the amount that is more likely than not to be realized upon ultimate settlement or disposition of the underlying tax issue.23

IfLong-lived ~~actual results differ unfavorably from estimates used, we may not be able to realize all or part of our net deferred tax assets~~ and ~~additional~~Intangible valuation allowances may be required. Deferred tax assets and liabilities are determined based on temporary differences between the financial reporting and tax basis of assets and liabilities, applying enacted tax rates expected to be in effect for the year in which the differences are expected to reverse. We periodically assess the likelihood that we will be able to recover our deferred tax assets and reflect any changes in our estimates in the valuation allowance, with a corresponding adjustment to earnings or equity, as appropriate.Assets

~~Recently~~Long-lived ~~Issued~~assets, ~~Accounting~~including ~~Standards~~property and equipment and intangible assets, are amortized on a straight-line basis over their economic lives. Judgments are made in determining the estimated useful lives of long-lived assets and if or when an asset has been impaired. These estimates affect the amount of amortization expense recognized in the financial results. We assign lives to our assets based on specific legal and economic characteristics. We evaluate these assets with definite lives for potential impairment whenever events or changes in circumstances indicate the carrying value may not be recoverable, and we record an impairment charge when the carrying amount of the long-lived asset is not recoverable and the carrying amount exceeds the estimated fair value. This impairment charge could have a material adverse effect on our consolidated results of operations.

~~Recently~~Deferred Issued Accounting Standards are described at Item 8. Financial Statements and Supplementary Data- Notes to Consolidated Financial Statements – Note 1. Nature of Business and Significant Accounting Policies.Taxes

~~Item 7A~~We record a valuation allowance to reduce our deferred tax assets to the amount that is more likely than not to be realized. ~~Quantitative~~ We have considered estimated future taxable income and ~~Qualitative~~ongoing ~~Disclosures~~tax ~~About~~planning ~~Market~~strategies ~~Risk~~in assessing the amount needed for the valuation allowance. Additionally, we look to the future reversal of existing taxable temporary differences, taxable income in prior carry-back years, the feasibility of tax planning strategies, and estimated future taxable income. The valuation allowance can be affected by changes to global tax laws, statutory tax rates, and future taxable income estimates.

~~Not~~The ~~required~~amount of income taxes we pay is subject to audits by federal, state, and foreign tax authorities, which may result in tax assessments. Our estimate for the potential outcome for any uncertain tax issue may be highly subjective and judgmental. We believe that we have adequately provided for any reasonably foreseeable outcome related to these tax issues. However, our future results may include favorable or unfavorable adjustments to our estimated tax liabilities due to closure of income tax audits, new regulatory or judicial pronouncements, or other relevant events. As a result, our effective tax rate may fluctuate significantly on a quarterly basis.

~~Item 8~~The Tax Act made significant changes to federal tax law, including a reduction in the federal income tax rate from 34% to 21% effective January 1, 2018, and a one-time transition tax on previously deferred earnings of certain foreign subsidiaries. ~~Financial~~ Given the significance of the legislation, the ~~Statements~~SEC staff issued Staff Accounting Bulletin No. 118 (SAB 118), which allows registrants to record provisional amounts during a one year “measurement period” similar to that used when accounting for business combinations. However, the measurement period is deemed to have ended earlier when the registrant has obtained, prepared and ~~Supplementary~~analyzed ~~Data~~the information necessary to finalize its accounting. During the measurement period, impacts of the law are expected to be recorded at the time a reasonable estimate for all or a portion of the effects can be made, and provisional amounts can be recognized and adjusted as information becomes available, prepared or analyzed.

~~Report~~SAB of118 ~~Independent~~summarizes ~~Registered~~a ~~Public~~three-step ~~Accounting~~process to ~~Firm~~be ~~Consolidated~~applied ~~Balance~~at ~~Sheets~~each atreporting ~~December~~period ~~31,~~to ~~2017~~account for and ~~2016~~qualitatively ~~Consolidated~~disclose: ~~Statements~~(1) ofthe ~~Income~~effects ~~for~~of the ~~Years~~change ~~Ended~~in ~~December~~tax ~~31,~~law ~~2017~~for which ~~and~~accounting ~~2016~~is ~~Consolidated~~complete; ~~Statements~~(2) ofprovisional ~~Comprehensive~~amounts ~~Income~~(or adjustments to provisional amounts) for the ~~Years~~effects ~~Ended~~of ~~December~~the 31tax law where accounting is not complete, ~~2017~~but ~~and~~that ~~2016~~a ~~Consolidated~~reasonable ~~Statements~~estimate ofhas ~~Stockholders’~~been ~~Equity~~determined; ~~for~~and ~~the~~(3) ~~Years~~a ~~Ended~~reasonable ~~December~~estimate ~~31,~~cannot ~~2017~~yet be made and ~~2016~~therefore ~~Consolidated~~taxes ~~Statements~~are ofreflected ~~Cash~~in ~~Flows~~accordance ~~for~~with ~~the~~law ~~Years~~prior ~~Ended~~to ~~December~~the ~~31,~~enactment ~~2017~~of ~~and~~the ~~2016~~Tax ~~Notes~~Cuts toand ~~Consolidated~~Jobs ~~Financial Statements~~Act.

25We review all of our uncertain tax positions and make a determination as to whether our position is more likely than not to be sustained upon audit by taxing authorities. If a tax position meets this more-likely-than-not threshold, then the related tax benefit is measured based on a cumulative probability analysis of the amount that is more likely than not to be realized upon ultimate settlement or disposition of the underlying tax issue.

~~GAMING~~If ~~PARTNERS~~actual ~~INTERNATIONAL~~results ~~CORPORATION~~differ unfavorably from estimates used, we may not be able to realize all or part of our net deferred tax assets and additional valuation allowances may be required. Deferred tax assets and liabilities are determined based on temporary differences between the financial reporting and tax basis of assets and liabilities, applying enacted tax rates expected to be in effect for the year in which the differences are expected to reverse. We periodically assess the likelihood that we will be able to recover our deferred tax assets and reflect any changes in our estimates in the valuation allowance, with a corresponding adjustment to earnings or equity, as appropriate.

~~AND~~Recently ~~SUBSIDIARIES~~Issued Accounting Standards

~~CONSOLIDATED~~Recently ~~FINANCIAL~~Issued ~~STATEMENTS~~Accounting Standards are described at Item 8. Financial Statements and Supplementary Data- Notes to Consolidated Financial Statements – Note 1. Nature of Business and Significant Accounting Policies.

2624

~~Report~~Item of7A. ~~Independent~~Quantitative ~~Registered~~and ~~Public~~Qualitative ~~Accounting~~Disclosures ~~Firm~~About Market Risk

ToNot ~~the Stockholders and Board of Directors of~~required.

~~Gaming~~Item ~~Partners~~8. ~~International~~Financial ~~Corporation~~Statements and ~~Subsidiaries~~Supplementary Data

Opinion on the Financial Statements

Report of Independent Registered Public Accounting Firm	26

Consolidated Balance Sheets at December 31, 2018 and 2017	27

Consolidated Statements of Income for the Years Ended December 31, 2018 and 2017	28

Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2018 and 2017	29

Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2018 and 2017	30

Consolidated Statements of Cash Flows for the Years Ended December 31, 2018 and 2017	31

Notes to Consolidated Financial Statements	32

We have audited the accompanying consolidated balance sheets of Gaming Partners International Corporation and Subsidiaries (the “Company”) as of December 31, 2017 and 2016, the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows for the years then ended, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2017 and 2016, and the consolidated results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.25

~~Basis~~Report of ~~for~~Independent ~~Opinion~~Registered Public Accounting Firm

~~These~~To ~~consolidated financial statements are~~ the ~~responsibility of~~Stockholders ~~the~~and Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board ~~(United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations~~ of ~~the~~Directors ~~Securities and Exchange Commission and the PCAOB.~~of

WeGaming ~~conducted~~Partners ~~our~~International ~~audits~~Corporation ~~in accordance with the standards of the PCAOB. Those standards require that we plan~~ and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.Subsidiaries

~~Our~~Opinion audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures to respond to those risks. Such procedures included examining, on ~~a test basis, evidence regarding~~ the ~~amounts~~Financial and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.Statements

~~/s/~~We ~~Moss~~have ~~Adams~~audited ~~LLP~~the ~~San~~accompanying ~~Diego~~consolidated balance sheets of Gaming Partners International Corporation and Subsidiaries (the “Company”) as of December 31, ~~California~~2018 ~~March~~and 232017, the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows for the years then ended, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2018 and 2017, and the consolidated results of their operations and their cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

WeChange ~~have~~in ~~served~~Accounting ~~as the Company’s auditor since 2006.~~Principle

27As discussed in Note 1 to the consolidated financial statements, the Company changed its method of recognizing revenue in 2018 due to the adoption of Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606), as amended.

~~GAMING~~As ~~PARTNERS~~discussed ~~INTERNATIONAL~~in ~~CORPORATION~~Note 1 to the consolidated financial statements, ~~AND~~the ~~SUBSIDIARIES~~Company changed its method of recognizing income tax consequences of intra-entity transfers of assets other than inventory due to the adoption of Accounting Standards Update No. 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory.

~~CONSOLIDATED~~Basis ~~BALANCE~~for ~~SHEETS~~Opinion

~~December 31,~~These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

(We conducted our audits in ~~thousands,~~accordance ~~except~~with ~~share~~the ~~amounts~~standards of the PCAOB. Those standards require that we plan and ~~par~~perform the audit to obtain reasonable assurance about whether the consolidated ~~value)~~financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

	2017			2016
ASSETS
Current Assets:
Cash and cash equivalents	$	14,064		$	10,604
Accounts receivable, net		7,415			11,069
Inventories		15,118			14,987
Prepaid expenses		1,290			812
Other current assets		2,836			1,620
Total current assets		40,723			39,092
Property and equipment, net		24,933			24,310
Goodwill		10,292			10,292
Intangible assets, net		1,676			1,818
Investment		411			-
Deferred income tax assets		675			1,579
Inventories, non-current		2,453			598
Other assets, non-current		2,240			2,310
Total assets	$	83,403		$	79,999
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable	$	4,743		$	3,466
Accrued liabilities		6,779			5,553
Customer deposits and deferred revenue		3,020			3,679
Current portion of long-term debt		1,401			1,367
Income taxes payable		693			531
Total current liabilities		16,636			14,596
Long-term debt		5,265			6,649
Other liabilities, non-current		186			1,221
Total liabilities		22,087			22,466
Commitments and contingencies (Note 12)
Stockholders' Equity:
Preferred stock, authorized 10,000,000 shares, $0.01 par value, none issued and outstanding		-			-
Common stock, authorized 30,000,000 shares, $0.01 par value, 8,223,077 and 7,932,094 shares issued and outstanding, respectively, as of December 31, 2017, and 8,219,577 and 7,928,594 shares issued and outstanding, respectively, as of December 31, 2016		82			82
Additional paid-in capital		19,272			20,031
Treasury stock at cost: 290,983 shares		(2,263	)		(2,263	)
Retained earnings		44,718			42,044
Accumulated other comprehensive loss		(493	)		(2,361	)
Total stockholders' equity		61,316			57,533
Total liabilities and stockholders' equity	$	83,403		$	79,999

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures to respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

~~See~~/s/ ~~Notes~~Moss toAdams ~~Consolidated Financial Statements~~LLP

28San Diego, California

~~GAMING~~March ~~PARTNERS~~26, ~~INTERNATIONAL CORPORATION AND SUBSIDIARIES~~2019

~~CONSOLIDATED~~We ~~STATEMENTS~~have OFserved ~~INCOME~~as the Company’s auditor since 2006.

~~Years Ended December 31,~~26

~~(in~~GAMING ~~thousands,~~PARTNERS INTERNATIONAL ~~except~~CORPORATION ~~earnings~~AND ~~per share)~~SUBSIDIARIES

	2017			2016
Revenues	$	80,602		$	82,139
Cost of revenues		57,924			56,803
Gross profit		22,678			25,336
Marketing and sales		6,619			6,407
General and administrative		9,016			10,181
Research and development		1,517			1,188
Operating income		5,526			7,560
Other expense, net		(85	)		(34	)
Income before income taxes		5,441			7,526
Income tax provision		1,815			2,343
Net income	$	3,626		$	5,183
Earnings per share:
Basic	$	0.46		$	0.65
Diluted	$	0.45		$	0.64
Weighted-average shares of common stock outstanding:
Basic		7,930			7,929
Diluted		8,045			8,042

CONSOLIDATED BALANCE SHEETS

~~See Notes to Consolidated Financial Statements~~December 31,

29(in thousands, except share amounts and par value)

GAMING PARTNERS INTERNATIONAL CORPORATION AND SUBSIDIARIES

	2018			2017
ASSETS
Current Assets:
Cash and cash equivalents	$	12,100		$	14,064
Accounts receivable, net		8,006			7,415
Inventories		13,885			15,118
Prepaid expenses		1,075			1,163
Other current assets		4,044			2,836
Total current assets		39,110			40,596
Property and equipment, net		22,547			24,933
Goodwill		10,292			10,292
Intangible assets, net		1,523			1,676
Investment		560			411
Deferred income tax assets		320			675
Inventories, non-current		2,219			2,453
Other assets, non-current		3,056			2,240
Total assets Total assets	$	79,627		$	83,276

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable	$	3,410		$	4,616
Accrued liabilities		6,157			6,485
Customer deposits and deferred revenue		4,873			3,020
Current portion of long-term debt		-			1,401
Income taxes payable		365			693
Total current liabilities		14,805			16,215
Long-term debt		-			5,265
Deferred income tax liabilities		412			-
Other liabilities, non-current		620			480
Total liabilities Total liabilities		15,837			21,960
Commitments and contingencies (Note 11)
Stockholders' Equity:
Preferred stock, authorized 10,000,000 shares, $0.01 par value, none issued and outstanding		-			-
Common stock, authorized 30,000,000 shares, $0.01 par value, 8,376,577 and 8,085,194 shares issued and outstanding, respectively, as of December 31, 2018, and 8,223,077 and 7,932,094 shares issued and outstanding, respectively, as of December 31, 2017		84			82
Additional paid-in capital		20,219			19,272
Treasury stock at cost: 291,383 shares as of December 31, 2018 and 290,983 shares as of December 31, 2017		(2,266	)		(2,263	)
Retained earnings		47,055			44,718
Accumulated other comprehensive loss		(1,302	)		(493	)
Total stockholders' equity		63,790			61,316
Total liabilities and stockholders' equity	$	79,627		$	83,276

~~CONSOLIDATED~~See ~~STATEMENTS~~Notes OFto ~~COMPREHENSIVE INCOME~~Consolidated Financial Statements

~~Years Ended December 31,~~27

~~(in~~GAMING ~~thousands)~~PARTNERS INTERNATIONAL CORPORATION AND SUBSIDIARIES

	2017		2016
Net income	$	3,626	$	5,183
Other comprehensive income (loss):
Foreign currency translation adjustment, net of tax		1,868		(485	)
Total comprehensive income	$	5,494	$	4,698

CONSOLIDATED STATEMENTS OF INCOME

~~See~~Years ~~Notes~~Ended ~~to Consolidated Financial Statements~~December 31,

30(in thousands, except earnings per share)

GAMING PARTNERS INTERNATIONAL CORPORATION AND SUBSIDIARIES

	2018			2017
Revenues	$	87,009		$	80,602
Cost of revenues		59,974			57,924
Gross profit		27,035			22,678

Marketing and sales		7,469			6,619
General and administrative		10,750			9,016
Research and development		3,996			1,517
Operating income		4,820			5,526
Other expense, net		(215	)		(85	)
Income before income taxes		4,605			5,441
Income tax provision		888			1,815
Net income	$	3,717		$	3,626

Earnings per share:
Basic	$	0.47		$	0.46
Diluted	$	0.46		$	0.45
Weighted-average shares of common stock outstanding:
Basic		7,970			7,930
Diluted		8,051			8,045

~~CONSOLIDATED~~See ~~STATEMENTS~~Notes OFto ~~STOCKHOLDERS’ EQUITY~~Consolidated Financial Statements

~~Years Ended December 31, 2017 and 2016~~28

~~(in~~GAMING ~~thousands,~~PARTNERS INTERNATIONAL ~~except~~CORPORATION ~~share~~AND ~~amounts)~~SUBSIDIARIES

														Accumulated
	Common Stock				Additional									Other
					Paid-In			Treasury			Retained			Comprehensive
	Shares		Amount		Capital			Stock			Earnings			Loss			Total
Balance, January 1, 2016		7,928,594	$	82	$	20,033		$	(2,263	)	$	37,812		$	(1,876	)	$	53,788
Net income		-		-		-			-			5,183			-			5,183
Stock compensation expense		-		-		86			-			-			-			86
Tax impacts of stock options		-		-		(88	)		-			-			-			(88	)
Dividend paid to shareholders		-		-		-			-			(951	)		-			(951	)
Foreign currency translation adjustment		-		-		-			-			-			(485	)		(485	)
Balance, December 31, 2016		7,928,594	$	82	$	20,031		$	(2,263	)	$	42,044		$	(2,361	)	$	57,533
Net income		-		-		-			-			3,626			-			3,626
Common stock options exercised		3,500		-		35			-			-			-			35
Stock compensation expense		-		-		104			-			-			-			104
Stock appreciation rights reclassification		-		-		(898	)		-			-			-			(898	)
Dividend paid to shareholders		-		-		-			-			(952	)		-			(952	)
Foreign currency translation adjustment		-		-		-			-			-			1,868			1,868
Balance, December 31, 2017		7,932,094	$	82	$	19,272		$	(2,263	)	$	44,718		$	(493	)	$	61,316

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

~~See~~Years ~~Notes~~Ended ~~to Consolidated Financial Statements~~December 31,

31(in thousands)

GAMING PARTNERS INTERNATIONAL CORPORATION AND SUBSIDIARIES

	2018			2017
Net income	$	3,717		$	3,626
Other comprehensive (loss) income:
Minimum pension liability adjustment, net of tax		(79	)		-
Foreign currency translation adjustment, net of tax		(730	)		1,868
Other comprehensive (loss) income, net of tax		(809	)		1,868
Total comprehensive income	$	2,908		$	5,494

~~CONSOLIDATED~~See ~~STATEMENTS~~Notes OFto ~~CASH~~Consolidated ~~FLOWS~~Financial Statements

~~Years Ended December 31,~~29

~~(in~~GAMING ~~thousands)~~PARTNERS INTERNATIONAL CORPORATION AND SUBSIDIARIES

	2017			2016
Cash Flows from Operating Activities
Net income	$	3,626		$	5,183
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of property and equipment		4,359			3,319
Amortization of intangible assets		242			273
Recovery of bad debt		(498	)		(102	)
Inventory write-down		847			-
Deferred income taxes		922			592
Stock compensation expense		400			86
Tax benefit on exercise or forfeiture of stock options		-			(88	)
Loss on sale or disposal of property and equipment		87			7
(Gain) on sale of marketable securities		-			(1	)
Impairment of intangibles assets		-			414
Loss in equity investment		40			-
Change in operating assets and liabilities:
Accounts receivable		4,175			(293	)
Inventories		(2,227	)		(4,909	)
Prepaid expenses and other current assets		(1,589	)		96
Non-current other assets		290			234
Accounts payable		1,185			(1,047	)
Accrued liabilities and non current other liabilities		(1,198	)		(1,525	)
Customer deposits and deferred revenue		(683	)		1,601
Income taxes payable		162			(293	)
Net cash provided by operating activities		10,140			3,547
Cash Flows from Investing Activities
Proceeds from sale of marketable securities		-			3,556
Purchase of equity method investment		(451	)		-
Purchase of licensing rights		(100	)		-
Capital expenditures		(4,374	)		(11,875	)
Net cash used in investing activities		(4,925	)		(8,319	)
Cash Flows from Financing Activities
Principal payments on long-term debt		(1,349	)		(1,330	)
Dividends paid		(952	)		(951	)
Proceeds from exercise of stock options		35			-
Cash paid for exercise of stock appreciation rights		(42	)		-
Net cash used in financing activities		(2,308	)		(2,281	)
Effect of exchange rate changes on cash		553			(131	)
Net increase (decrease) in cash and cash equivalents		3,460			(7,184	)
Cash and cash equivalents, beginning of period		10,604			17,788
Cash and cash equivalents, end of period	$	14,064		$	10,604
Supplemental disclosures of cash flow information:
Cash paid for interest	$	249		$	242
Cash paid, net of refunds received, for income taxes	$	1,229		$	2,126
Supplemental disclosure of non-cash investing and financing activities
Stock appreciation rights liability, classified under accrued liabilities	$	1,153		$	-
Property, plant and equipment acquired through accounts payable, accrued and non-current other liabilities	$	62		$	1,849

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

~~See~~Years ~~Notes~~Ended toDecember 31, ~~Consolidated~~2018 ~~Financial Statements~~and 2017

32(in thousands, except share amounts)

GAMING PARTNERS INTERNATIONAL CORPORATION AND SUBSIDIARIES

															Accumulated
	Common Stock					Additional									Other
						Paid-In			Treasury			Retained			Comprehensive
	Shares			Amount		Capital			Stock			Earnings			Loss			Total

Balance, January 1, 2017		7,928,594		$	82	$	20,031		$	(2,263	)	$	42,044		$	(2,361	)	$	57,533
Net income		-			-		-			-			3,626			-			3,626
Common stock options exercised		3,500			-		35			-			-			-			35
Stock compensation expense		-			-		104			-			-			-			104
Stock appreciation rights reclassification		-			-		(898	)		-			-			-			(898	)
Dividend paid to shareholders		-			-		-			-			(952	)		-			(952	)
Foreign currency translation adjustment		-			-		-			-			-			1,868			1,868
Balance, December 31, 2017		7,932,094			82		19,272			(2,263	)		44,718			(493	)		61,316
Cummulative effect of change in accounting principle		-			-		-			-			(410	)		-			(410	)
Net income		-			-		-			-			3,717			-			3,717
Common stock options exercised		153,500			2		947			-			-			-			949
Repurchase of common stock		(400	)		-		-			(3	)		-			-			(3	)
Dividend paid to shareholders		-			-		-			-			(970	)		-			(970	)
Pension and other post retirement plans		-			-		-			-			-			(79	)		(79	)
Foreign currency translation adjustment		-			-		-			-			-			(730	)		(730	)
Balance, December 31, 2018		8,085,194		$	84	$	20,219		$	(2,266	)	$	47,055		$	(1,302	)	$	63,790

~~NOTES~~See TONotes ~~CONSOLIDATED~~to ~~FINANCIAL~~Consolidated ~~STATEMENTS~~Financial Statements

~~Note 1. Nature of Business and Significant Accounting Policies~~30

~~Organization~~GAMING ~~and~~PARTNERS INTERNATIONAL ~~Nature~~CORPORATION ofAND ~~Business~~SUBSIDIARIES

~~Gaming~~CONSOLIDATED ~~Partners~~STATEMENTS ~~International~~OF ~~Corporation~~CASH (GPIC, Our or the Company) is headquartered in North Las Vegas, Nevada. Our business activities include the manufacture and sale of casino currencies, playing cards, table accessories, table layouts, dice, gaming furniture, roulette wheels, and RFID readers and software, all of which are used with casino table games such as blackjack, poker, baccarat, craps, and roulette.FLOWS

WeYears ~~have~~Ended ~~three operating subsidiaries: Gaming Partners International USA,~~December ~~Inc. (GPI USA) (including GPI Mexicana S.A. de C.V. (GPI Mexicana)~~31, our maquiladora manufacturing operation in Mexico, and GPI USA Blue Springs, our manufacturing facility in Missouri); Gaming Partners International SAS (GPI SAS); and Gaming Partners International Asia Limited (GPI Asia). Our subsidiaries have the following distribution and product focus:

~~• GPI USA sells~~ (in the United States, Canada, the Caribbean, and Latin America. GPI USA sells our full product line, with most of the products manufactured in either San Luis Rio Colorado, Mexico, or Blue Springs, Missouri. The remainder is either manufactured in France or purchased from United States vendors. We warehouse inventory in San Luis, Arizona; Blue Springs, Missouri; and North Las Vegas, Nevada. We have sales offices in North Las Vegas, Nevada; Atlantic City, New Jersey; Gulfport, Mississippi; and Blue Springs, Missouri.thousands)

• GPI SAS sells primarily in Europe and Africa out of its office in Beaune, France. GPI SAS predominantly sells casino currencies, including both American-style, known as chips, and European-style, known as plaques and jetons. Most of the products sold by GPI SAS are manufactured in France, with the remainder manufactured in Mexico.

	2018			2017

Cash Flows from Operating Activities
Net income	$	3,717		$	3,626
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of property and equipment		4,485			4,359
Amortization of intangible assets		248			242
Recovery of bad debt		(120	)		(498	)
Change in fair value of stock appreciation rights		261			296
Inventory write-down		-			847
Deferred income taxes		948			922
Loss on sale or disposal of property and equipment		151			87
Loss in equity investment		-			40
Change in operating assets and liabilities:
Accounts receivable		(483	)		4,175
Inventories		1,217			(2,227	)
Prepaid expenses and other current assets		(1,376	)		(1,462	)
Non-current other assets		(1,445	)		290
Accounts payable		(1,309	)		1,058
Accrued liabilities and non current other liabilities		(435	)		(1,094	)
Customer deposits and deferred revenue		1,861			(683	)
Income taxes payable		(328	)		162
Net cash provided by operating activities		7,392			10,140

Cash Flows from Investing Activities
Proceeds from sale of property and equipment		25			-
Insurance proceeds from damaged property and equipment		296			-
Purchase of equity method investment		(150	)		(451	)
Purchase of licensing rights		-			(100	)
Capital expenditures		(2,505	)		(4,374	)
Net cash used in investing activities		(2,334	)		(4,925	)

Cash Flows from Financing Activities
Repurchase of common stock		(3	)		-
Principal payments on long-term debt		(6,666	)		(1,349	)
Dividends paid		(970	)		(952	)
Proceeds from exercise of stock options		949			35
Cash paid for exercise of stock appreciation rights		(170	)		(42	)
Net cash used in financing activities		(6,860	)		(2,308	)
Effect of exchange rate changes on cash		(162	)		553
Net (decrease) increase in cash and cash equivalents		(1,964	)		3,460
Cash and cash equivalents, beginning of period		14,064			10,604
Cash and cash equivalents, end of period	$	12,100		$	14,064

Supplemental disclosures of cash flow information:
Cash paid for interest	$	176		$	249
Cash paid, net of refunds received, for income taxes	$	831		$	1,229

Supplemental disclosure of non-cash investing and financing activities
Stock appreciation rights liability, classified under accrued liabilities	$	-		$	898
Property, plant and equipment acquired through accounts payable, accrued and non-current other liabilities	$	63		$	62

•See ~~GPI~~Notes ~~Asia,~~to ~~located~~Consolidated inFinancial ~~Macau S.A.R., China, distributes our full product line in the Asia-Pacific region. GPI Asia also sells table layouts that it manufactures in Macau S.A.R.~~Statements

We are one of the gaming industry’s leading manufacturers and suppliers of casino table game equipment. We custom manufacture and supply casino currencies, playing cards, table layouts, gaming furniture, table accessories, dice, roulette wheels, and RFID readers and software, all of which are used with casino table games such as blackjack, poker, baccarat, craps, and roulette. Our products fall into two categories – non-consumable and consumable. Non-consumable products consist of casino currencies, gaming furniture, and RFID solutions. These products typically have a useful life of several years or longer. Sales of non-consumables are typically driven by casino openings, expansions, and rebranding, as well as replacements in the normal course of business. Consumable products consist of playing cards, table accessories, table layouts, and dice. These products each have a useful life that ranges from several hours for playing cards and dice to several months for layouts. Casinos tend to buy these products annually if not more frequently.31

~~Significant~~GAMING ~~Accounting~~PARTNERS INTERNATIONAL ~~Policies~~CORPORATION AND SUBSIDIARIES

~~Basis~~NOTES ofTO ~~Consolidation~~CONSOLIDATED ~~and~~FINANCIAL Presentation. The consolidated financial statements include the accounts of GPIC and its wholly-owned subsidiaries GPI USA, GPI SAS, GPI Asia and GPI Mexicana. We also include the income or loss earned on our equity method investments, based on our share of the Company’s assets. All material intercompany balances and transactions have been eliminated in consolidation. The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States. Certain amounts reported in prior years' consolidated financial statements have been reclassified to conform to the current presentation.STATEMENTS

~~Cash and Cash Equivalents~~Note 1. WeNature ~~consider all highly-liquid investments with original maturities~~ of ~~three~~Business ~~months or less to be cash~~ and ~~cash~~Significant ~~equivalents. We maintain cash and cash equivalents~~Accounting ~~in various United States banks. Several accounts are in excess of the federally-insured limit of $250,000. We also maintain cash and cash equivalents in foreign banks that are not insured.~~Policies

33Organization and Nature of Business

~~Fair~~Gaming ~~Value~~Partners ofInternational ~~Financial~~Corporation (GPIC, ~~Instruments.~~Our ~~The~~or ~~fair~~the ~~value of~~Company) ~~cash~~is ~~and~~headquartered ~~cash~~in ~~equivalents,~~North ~~marketable~~Las ~~securities~~Vegas, ~~accounts~~Nevada. ~~receivable,~~Our ~~accounts~~business ~~payable~~activities ~~and~~include the ~~current~~manufacture ~~portion~~and sale of ~~long-term debt~~casino ~~approximates~~currencies, ~~the~~playing ~~carrying~~cards, ~~amount~~table ofaccessories, ~~these~~table ~~financial~~layouts, ~~instruments~~dice, ~~due~~gaming tofurniture, ~~their~~roulette ~~short-term~~wheels, ~~nature.~~and ~~The~~RFID ~~carrying values of the~~readers ~~Company's~~and ~~long-term~~software, ~~debt~~all ~~instruments~~of which are ~~considered~~used towith ~~approximate~~casino ~~their~~table ~~fair~~games ~~values~~such ~~because~~as ~~the~~blackjack, ~~interest~~poker, ~~rates~~baccarat, ofcraps, ~~these~~and ~~instruments are variable or comparable to current rates available to the Company~~roulette.

~~Marketable~~We ~~Securities~~have three operating subsidiaries: Gaming Partners International USA, Inc. We(GPI ~~account~~USA) ~~for~~(including ~~our~~GPI ~~investments in~~Mexicana ~~marketable~~S.A. ~~securities~~de asC.V. ~~available-for-sale~~(GPI ~~and~~Mexicana), asour ~~such~~maquiladora manufacturing operation in Mexico, ~~they~~and ~~are~~GPI ~~recorded~~USA onBlue Springs, our ~~consolidated~~manufacturing ~~balance~~facility ~~sheets~~in atMissouri); ~~estimated fair~~Gaming ~~value.~~Partners ~~Unrealized~~International ~~holding~~SAS ~~gains~~(GPI SAS); and ~~losses~~Gaming ~~are~~Partners ~~excluded~~International ~~from~~Asia ~~earnings~~Limited ~~and~~(GPI ~~are,~~Asia). Our ~~instead,~~subsidiaries ~~reported~~have ~~within~~the ~~accumulated~~following ~~other~~distribution and ~~comprehensive~~product ~~loss.~~focus:

~~Accounts~~• ~~Receivables~~GPI ~~and~~USA ~~Customer~~sells ~~Deposits.~~in Wethe ~~perform ongoing~~United ~~credit~~States, ~~evaluations~~Canada, ofthe ~~our~~Caribbean, ~~customers~~ and ~~for~~Latin ~~casino~~America. ~~currency~~GPI ~~and~~USA ~~most~~sells ~~significant~~our ~~orders,~~full ~~such~~product ~~as those orders for casino openings~~line, ~~generally~~with ~~require~~most aof ~~deposit~~the ~~prior~~products tomanufactured ~~commencing~~in ~~work~~either onSan aLuis ~~customer~~Rio ~~order.~~Colorado, ~~These~~Mexico, ~~customer~~or ~~deposits~~Blue ~~are~~Springs, ~~classified as a current liability on the consolidated balance sheets~~Missouri. WeThe ~~also~~remainder ~~maintain~~is aneither ~~allowance~~manufactured ~~for~~in ~~doubtful~~France ~~accounts~~or topurchased ~~state~~from ~~trade~~United ~~receivables at~~States ~~their estimated realizable value~~vendors. ~~This~~We ~~allowance~~warehouse ~~applies~~inventory toin ~~all~~San ~~customers and is estimated based on a variety of factors~~Luis, ~~including the~~Arizona; ~~length~~Blue ~~of time the receivables are past due~~Springs, ~~economic~~Missouri; ~~conditions~~ and ~~trends,~~North ~~significant~~Las ~~one-time events~~Vegas, ~~and historical experience~~Nevada. ~~Changes~~ ~~are~~We ~~made~~have tosales ~~the~~offices ~~allowance~~in ~~based~~North onLas ~~our~~Vegas, ~~awareness~~Nevada; ofAtlantic aCity, ~~particular~~New ~~customer’s~~Jersey; ~~ability~~Gulfport, toMississippi; ~~meet~~and ~~its~~Blue ~~financial~~Springs, ~~obligations~~Missouri. ~~Receivables are written-off when management determines that collectability is remote.~~

~~Inventories.~~• ~~Inventories are stated at the lower of cost or an estimate of net realizable value. Cost is determined using a weighted-average method for~~ GPI SAS ~~and~~sells aprimarily ~~first-~~in~~, first-out~~ ~~method~~Europe ~~for GPI USA~~ and ~~GPI~~Africa ~~Asia.~~out ~~Market~~of ~~value~~its isoffice ~~determined~~in byBeaune, ~~comparing inventory item carrying values to estimates of net realizable value~~France. ~~The~~GPI ~~analysis~~SAS ofpredominantly ~~net~~sells ~~realizable~~casino ~~value~~currencies, ~~includes~~including ~~reviewing~~both ~~overall inventory levels~~American-style, ~~historical~~known ~~and~~as ~~projected sales~~chips, ~~usage~~and ~~of these items~~European-style, ~~the~~known ~~projected~~as ~~markets~~plaques ~~for our products,~~ and ~~selling costs~~jetons. ~~Inventory~~Most ~~that~~of wethe ~~estimate~~products ~~will~~sold ~~not~~by ~~be used~~GPI ~~within~~SAS ~~one~~are ~~year~~manufactured isin ~~considered~~France, ~~non-current~~with ~~inventory. Inventory that we estimate will not be used within~~ the ~~next~~remainder ~~three~~manufactured ~~years is~~in ~~written down~~Mexico.

~~Property~~• ~~and~~GPI ~~Equipment.~~Asia, ~~Property~~located ~~and~~in ~~equipment~~Macau ~~are stated~~S.A.R., ~~at cost~~China, ~~net~~distributes ofour ~~accumulated~~full ~~depreciation.~~product ~~Depreciation~~line isin ~~computed using~~ the ~~straight~~Asia-~~line~~Pacific ~~method~~region. ~~for~~GPI ~~financial~~Asia ~~reporting purposes~~also ~~over~~sells ~~the~~table ~~following~~layouts ~~estimated~~that ~~useful~~it ~~lives:~~manufactures in Macau S.A.R.

	Years
Buildings and Improvements	3 - 40
Equipment and Furniture	2 - 15
Vehicles	5 - 7

~~Goodwill.~~Merger Goodwill is recorded when the consideration paid for an acquisition exceeds the fair value of net tangible and intangible assets acquired. Goodwill is measured and tested for impairment on an annual basis or more frequently if we believe indicators of impairment exist. We test goodwill for impairment using qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill. If it is not more likely than not that the fair value of the reporting unit is less than its carrying amount, no further testing is performed. If it is more likely than not that the fair value of the reporting unit is less than its carrying amount, we perform a quantitative two-step impairment test. The first step compares the fair value of the reporting unit with its carrying amount, including goodwill. If the carrying amount exceeds fair value, then the second step is used to measure the amount of impairment loss.Agreement

~~Long-Lived~~On ~~and~~November ~~Intangible~~27, ~~Assets.~~2018, Wewe ~~evaluate~~entered into the ~~carrying~~Merger ~~value~~Agreement ofwith ~~long-lived~~Angel ~~assets (including property~~ and ~~equipment~~Merger ~~and~~Sub, ~~intangible~~pursuant ~~assets)~~to ~~for~~which ~~possible~~Angel ~~impairment~~will ~~when~~acquire ~~events or~~the ~~change~~Company in ~~circumstances~~exchange ~~indicate~~for ~~that the carrying value of an asset may not be recoverable~~cash. InThe ~~general, we will identify a~~Merger ~~potential~~Agreement ~~impairment~~was ~~loss~~unanimously ~~when~~adopted ~~the~~by ~~sum of undiscounted expected cash flows from~~ the ~~asset~~Special isTransaction ~~less~~Committee ~~than~~of ~~the~~independent ~~carrying~~directors ~~amount~~ of ~~such asset. We record an impairment loss when~~ the ~~carrying~~Board ~~amount~~ of ~~the~~Directors ~~long-lived~~of ~~asset is not recoverable and~~ the ~~carrying amount~~ ~~exceeds~~Company ~~the~~as ~~estimated~~well ~~fair value. Intangible assets, such~~ as ~~patents and trademarks, are amortized using~~ the ~~straight-line~~full ~~method over their economic lives~~Board.

~~Revenue~~Pursuant ~~Recognition.~~to ~~For~~the ~~casino~~terms ~~table~~of ~~game~~the ~~product sales~~Merger Agreement, Merger weSub ~~record~~will ~~revenue~~merge with and into the Company (the “Merger”), ~~net~~the separate existence of ~~excise~~Merger ~~and~~Sub ~~sales~~will ~~taxes~~cease, ~~when~~and the itCompany iswill ~~realized,~~continue oras ~~realizable~~the surviving corporation, which will be a wholly owned subsidiary of Angel. The surviving corporation shall succeed to and ~~earned~~assume all of the rights and obligations of Merger Sub and the Company. WeAt ~~consider~~the ~~these~~Effective ~~criteria~~Time , by virtue ~~met~~of ~~when~~the ~~persuasive~~Merger ~~evidence~~and without any further action on the part of anAngel, ~~arrangement~~Merger ~~exists~~Sub, ~~delivery~~the ~~has~~Company ~~occurred~~or the holders of any capital stock or ~~services~~other ~~have~~securities ~~been~~of ~~rendered,~~the Company: (i) any shares owned immediately prior to the ~~sales~~Effective ~~price~~Time ~~is fixed~~by the Company (or ~~determinable~~held in the Company’s treasury), ~~collectability~~Angel isor ~~reasonably~~Merger ~~assured~~Sub ~~and,~~or ifany ~~required,~~of ~~acceptance~~their isrespective ~~received~~direct ~~from~~or ~~the~~indirect ~~customer.~~wholly ~~Shipping~~owned subsidiaries (the “Excluded ~~costs~~Shares”) ~~billed~~will be cancelled and retired and shall cease to ~~our~~exist; ~~customers~~(ii) ~~are~~except ~~reflected~~for inExcluded ~~revenues~~Shares, ~~with~~each share of our common stock outstanding immediately prior to the ~~related~~Effective ~~expense~~Time ~~included~~will be automatically converted into the Merger Consideration of $13.75 in ~~cost~~cash; and (iii) each share of ~~revenues~~common stock of Merger Sub, $0.01 ~~Sales~~par ~~tax~~value ~~collected~~per share, outstanding immediately prior to the Effective ~~from~~Time ~~customers~~will isbe ~~excluded~~converted ~~from~~into ~~revenue~~one ~~and~~share ~~included~~of incommon ~~accrued~~stock ~~expenses~~of the surviving corporation.

3432

WeEach ~~occasionally~~of ~~enter~~Angel, ~~into~~Merger ~~multiple-element~~Sub and the Company ~~arrangements~~has ~~with~~made ~~our~~customary ~~customers~~representations toand ~~provide~~warranties ~~RFID~~and ~~solutions.~~agreed ~~Such~~to ~~transactions~~customary ~~may~~covenants ~~include~~in ~~deliverables~~the ~~such~~Merger asAgreement. ~~RFID~~The ~~equipment,~~Merger ~~installation~~is subject ~~and~~to ~~training~~various ~~services~~closing conditions, ~~embedded~~including ~~RFID~~but ~~software~~not ~~licenses,~~limited ~~and~~to ~~limited~~(i) ~~software~~approval ~~support~~of ~~services.~~the InMerger ~~such~~Agreement ~~arrangements,~~by ~~RFID~~the ~~equipment and~~holders ~~embedded~~of ~~RFID~~a ~~software~~majority of ~~work~~the ~~together~~outstanding toshares ~~deliver~~of ~~the~~our ~~functionality~~common ~~purchased~~stock, (ii) receipt by ~~our~~Angel ~~customer. Therefore~~of certain specified gaming licenses, we(iii) ~~apply~~if required, the ~~provisions~~ expiration of ~~multiple-element~~the ~~accounting~~applicable towaiting ~~separate~~period under the ~~deliverables~~Hart-Scott-Rodino ~~and~~Antitrust ~~allocate~~Improvements Act of 1976, as amended, and (iv) the ~~total~~absence ~~arrangement~~of ~~consideration~~any ~~based~~law, ~~upon~~order ~~relative estimated~~or ~~selling~~injunction ~~prices~~prohibiting the Merger. Each ~~unit~~party’s ofobligation ~~accounting~~to consummate the Merger is ~~then~~also ~~accounted~~subject ~~for~~to ~~under~~certain ~~the~~additional ~~applicable~~customary ~~revenue~~conditions, ~~recognition~~including ~~guidance.~~(A) ~~For RFID~~subject ~~equipment~~to certain exceptions and ~~related~~generally ~~services,~~subject to ~~revenue~~certain ~~generally~~materiality isqualifiers, ~~recorded~~the ~~when~~accuracy ~~all~~of ~~customer-defined~~the ~~acceptance~~representations ~~criteria~~and ~~are~~warranties ~~satisfied. For~~of ~~RFID~~the ~~software~~other ~~support~~party ~~services,~~and ~~revenue~~(B) ~~generally~~performance isin all ~~amortized~~material ~~over~~respects by the ~~term~~other party of its obligations under the ~~support~~Merger ~~contract~~Agreement.

On ~~occasion,~~March ~~we may recognize revenue under a bill and hold arrangement. Under a bill and hold arrangement~~12, ~~revenue is recognized when the product is manufactured~~2019, ~~completed, invoiced,~~our ~~and~~shareholders ~~segregated from~~ approved the ~~seller’s~~Merger ~~other inventory so that it is not subjected to being used to fill other orders~~Agreement. ~~Upon~~ ~~invoicing~~The ~~under~~parties ~~this~~currently ~~arrangement,~~anticipate ~~ownership has passed to the buyer with no residual warranty obligation or right of return such~~ that the ~~earnings~~Merger ~~process~~Agreement iswill ~~complete.~~be ~~The~~consummated ~~customer~~by ~~must~~December ~~request a bill and hold arrangement~~1, ~~preferably in writing, must commit to the purchase, and the delivery date must be fixed~~2019.

~~Research~~Significant ~~and~~Accounting Development. Research and development costs are the costs related to developing new and improved products and manufacturing processes, including staff compensation and related expenses, subcontract costs, materials, and supplies. Such costs are charged to expense when incurred and are included in our consolidated statements of income.Policies

~~Income~~Basis ~~Taxes~~of Consolidation and Presentation. WeThe consolidated ~~recognize~~financial astatements ~~current~~include ~~tax~~the ~~liability~~accounts of GPIC and its wholly-owned subsidiaries GPI USA, GPI SAS, GPI orAsia ~~asset~~and ~~for~~GPI ~~estimated~~Mexicana. ~~taxes~~We ~~payable~~also include the income or ~~refundable~~loss earned on ~~tax~~our ~~returns~~equity ~~for~~method investments, based on our share of the ~~current~~Company’s assets. ~~year~~All material intercompany balances and atransactions ~~deferred~~have ~~non-current~~been ~~tax~~eliminated ~~liability~~in consolidation. The consolidated financial orstatements ~~asset~~have ~~for~~been ~~estimated~~prepared ~~future~~in ~~tax~~accordance ~~effects,~~with ~~attributable~~accounting principles generally accepted in the United States. Certain amounts reported in prior years' consolidated financial statements have been reclassified to ~~temporary~~conform ~~differences~~to ~~and~~the ~~carryforwards~~current presentation. These reclassifications had no impact on net revenues or net income.

~~The~~Cash ~~Tax~~and ~~Act~~Cash ~~made~~Equivalents. ~~significant~~We ~~changes~~consider toall ~~federal tax law, including a reduction in the federal income tax rate from 35% to 21% effective January 1, 2018, and a one~~highly-~~time transition~~liquid ~~tax~~investments onwith ~~previously~~original ~~deferred~~maturities ~~earnings~~ of ~~certain~~three ~~foreign~~months ~~subsidiaries.~~or ~~Given~~less ~~the significance of the legislation, the SEC staff issued Staff Accounting Bulletin No. 118 (SAB 118), which allows registrants~~ to ~~record~~be ~~provisional~~cash ~~amounts~~and ~~during~~cash ~~a one year “measurement period” similar to that used when accounting for business combinations~~equivalents. ~~However,~~We ~~the~~maintain ~~measurement~~cash ~~period~~and iscash ~~deemed to have~~equivalents ~~ended~~in ~~earlier~~various ~~when~~United ~~the~~States ~~registrant has obtained, prepared and analyzed the information necessary to finalize its accounting~~banks. ~~During the~~Several ~~measurement~~accounts ~~period, impacts of the law~~ are ~~expected~~in toexcess beof ~~recorded at~~ the ~~time~~federally-insured alimit ~~reasonable estimate for all or a portion~~ of ~~the~~ ~~effects can be made~~$250,000. ~~and~~We ~~provisional~~also ~~amounts~~maintain ~~can be recognized~~ cash and ~~adjusted~~cash asequivalents ~~information~~in ~~becomes~~foreign ~~available,~~banks ~~prepared~~that orare ~~analyzed~~not insured.

~~SAB~~Fair ~~118~~Value ~~summarizes~~of aFinancial ~~three-step~~Instruments. ~~process~~The ~~to be~~fair ~~applied~~value atof ~~each~~cash ~~reporting~~and ~~period~~cash toequivalents, ~~account~~accounts ~~for~~receivable, ~~and~~accounts ~~qualitatively~~payable ~~disclose:~~and ~~(1)~~ the ~~effects~~current portion of ~~the~~long-term ~~change~~debt ~~in tax law for which~~approximates ~~accounting~~the iscarrying ~~complete;~~amount ~~(2)~~of ~~provisional~~these ~~amounts~~financial ~~(or~~instruments ~~adjustments~~due to ~~provisional~~their ~~amounts)~~short-term ~~for~~nature. ~~the~~The ~~effects~~carrying values of the ~~tax~~Company's ~~law where accounting~~long-term isdebt ~~not~~instruments ~~complete,~~are ~~but~~considered ~~that~~to aapproximate ~~reasonable~~their ~~estimate~~fair ~~has~~values ~~been~~because ~~determined;~~the ~~and~~interest ~~(3)~~rates aof ~~reasonable~~these ~~estimate~~instruments ~~cannot~~are ~~yet be made and therefore~~variable ~~taxes~~or ~~are~~comparable ~~reflected~~to incurrent ~~accordance~~rates ~~with~~available ~~law prior~~ to the ~~enactment of the Tax Cuts and Jobs Act~~Company.

~~GPIC~~Accounts Receivables and ~~its~~Customer ~~subsidiaries~~Deposits. ~~file~~We perform ~~separate~~ongoing ~~income tax~~credit ~~returns~~evaluations inof ~~their~~our ~~respective~~customers ~~jurisdictions.~~and ~~Income~~for ~~taxes~~casino ~~are~~currency ~~provided~~and ~~for~~most ~~the~~significant ~~tax~~orders, ~~effects~~such ofas ~~transactions~~those ~~reported~~orders for incasino ~~the~~openings, ~~consolidated financial~~generally ~~statements~~require ~~and~~a ~~consist~~deposit ofprior ~~taxes~~to ~~currently~~commencing ~~due~~work ~~plus~~on ~~deferred~~a ~~taxes~~customer ~~related~~order. ~~primarily~~These tocustomer ~~differences~~deposits ~~between~~are classified as a current liability on the ~~basis of~~consolidated ~~assets~~balance ~~and~~sheets. ~~liabilities~~We also maintain an allowance for ~~financial~~doubtful ~~and~~accounts ~~income~~to ~~tax~~state ~~reporting~~trade receivables at their estimated realizable value. ~~The~~This ~~deferred~~allowance ~~tax~~applies ~~assets~~to all customers and ~~liabilities~~is ~~represent~~estimated ~~the~~based ~~future tax~~on ~~consequences~~a variety of factors, ~~those~~including ~~differences,~~the ~~which~~length ~~will~~of ~~either~~time bethe ~~taxable~~receivables orare ~~deductible~~past ~~when~~due, ~~the~~economic ~~assets~~conditions and ~~liabilities~~trends, ~~are~~significant ~~recovered~~one-time events, orand ~~settled~~historical experience. ~~Deferred~~Changes ~~taxes~~are ~~also~~made ~~are~~to ~~recognized~~the ~~for~~allowance ~~operating~~based ~~losses~~on ~~that~~our ~~are~~awareness ~~available~~of a particular customer’s ability to meet ~~offset~~its ~~future~~financial ~~income~~obligations. ~~taxes~~Receivables are written-off when management determines that collectability is remote.

We review all of our tax positions and make a determination as to whether our position is more likely than not to be sustained upon examination by tax authorities. If a tax position meets the more-likely-than-not standard, then the related tax benefit is measured based on the cumulative probability that the amount is more likely than not to be realized upon ultimate settlement or disposition of the underlying issue. We recognize interest and penalties related to unrecognized tax positions in the provision for income taxes on our consolidated statements of income.33

~~Foreign~~Inventories. ~~Currency~~Inventories ~~Transactions.~~are ~~The~~stated ~~financial~~at the lower ~~statements~~of cost or an estimate of net realizable value. Cost is determined using a weighted-average method for GPI SAS ~~are~~and ~~measured~~a ~~using~~first-in, first-out ~~the~~method ~~euro~~for GPI asUSA ~~the~~and ~~functional~~GPI ~~currency~~Asia. ~~Assets~~Market ~~and~~value ~~liabilities~~is ~~of GPI~~determined ~~SAS~~by ~~are~~comparing ~~translated~~inventory item carrying values to estimates ~~into~~of ~~the~~net Urealizable value.S. ~~dollar~~The atanalysis ~~exchange~~of ~~rates~~net atrealizable ~~the~~value ~~balance~~includes ~~sheet~~reviewing ~~date.~~overall ~~Revenues~~inventory levels, historical and ~~expenses~~projected sales, ~~are~~usage ~~translated~~of ~~into~~these items, the Uprojected markets for our products, and selling costs.S. ~~dollar~~Inventory ~~at average~~that ~~rates~~we ofestimate ~~exchange~~will innot ~~effect~~be used ~~during~~within ~~the~~one year is considered non-current inventory. ~~The~~Inventory ~~resulting~~that ~~cumulative~~we ~~translation~~estimate ~~adjustments~~will ~~are~~not ~~recorded~~be used within ~~accumulated~~the next three years ~~other~~is ~~comprehensive~~written ~~loss~~down.

~~The~~Property ~~financial statements of GPI Asia~~ and ~~GPI~~ ~~Mexicana are measured using the U~~Equipment.S. ~~dollar~~Property ~~as the functional currency. Non-monetary assets~~ and ~~liabilities~~ equipment are ~~translated~~ stated at ~~historical exchange rates~~cost, ~~and~~net ~~monetary~~of ~~assets~~accumulated depreciation and ~~liabilities are translated at current exchange rates~~amortization. ~~Exchange~~Depreciation ~~gains~~ and ~~losses~~ ~~arising~~amortization ~~from~~is ~~translation~~computed ~~are~~using ~~included~~the instraight-line method ~~other~~for ~~income~~financial ~~and~~reporting ~~expense~~purposes inover the ~~consolidated~~following ~~statements~~estimated ofuseful ~~income.~~lives:

		Years
Buildings and Improvements		3 - 40
Equipment and Furniture		2 - 15
Vehicles		5 - 7

~~Transaction~~Goodwill. Goodwill ~~gains~~is recorded when the consideration paid for an acquisition exceeds the fair value of net tangible and ~~losses~~intangible ~~that~~assets ~~arise~~acquired. ~~from exchange~~Goodwill ~~rate~~is ~~fluctuations~~measured and tested for impairment on ~~transactions~~an ~~with~~annual ~~third~~basis ~~parties~~or ~~denominated~~more infrequently if we believe indicators of impairment exist. We test goodwill for impairment using qualitative factors to determine whether it is more likely than not that the fair value of a ~~currency~~reporting ~~other~~unit is less than its carrying amount, including goodwill. If it is not more likely than not that the ~~functional~~fair ~~currency~~value ~~are~~of the reporting unit is less than ~~included~~its incarrying amount, no further testing is performed. If it is more likely than not that the ~~results~~fair value of ~~operations~~the asreporting ~~incurred~~unit is less than its carrying amount, we perform a quantitative two-step impairment test. The first step compares the fair value of the reporting unit with its carrying amount, including goodwill. If the carrying amount exceeds fair value, then the second step is used to measure the amount of impairment loss.

~~Other~~Long-Lived ~~Comprehensive~~and ~~Loss~~Intangible Assets. ~~Comprehensive~~We evaluate the carrying value of long-lived assets (including property and equipment and intangible assets) for possible impairment when events or change in circumstances indicate that the carrying value of an asset may not be recoverable. In general, we will identify a potential impairment loss ~~includes~~when the sum of undiscounted expected cash flows from the asset is less than the carrying amount of ~~net~~such ~~income~~asset. We record an impairment loss when the carrying amount of the long-lived asset is not recoverable and ~~foreign~~the ~~currency~~carrying amount ~~translation~~exceeds ~~adjustments~~the estimated fair value. Intangible assets, such as patents and trademarks, are amortized using the straight-line method over their economic lives.

~~Estimates~~Revenue Recognition. The ~~preparation~~majority of ~~consolidated~~our ~~financial~~revenue ~~statements~~is inderived ~~conformity~~from ~~with~~selling ~~U.S.~~and ~~generally~~distributing ~~accepted~~manufactured ~~accounting~~table ~~principles~~game ~~requires~~equipment ~~management~~ to ~~make estimates and assumptions that affect~~ the ~~reported~~casino ~~amounts~~industry. ofWe ~~assets~~recognize ~~and~~revenue ~~liabilities, disclosure of contingent assets and liabilities at the date of the~~after ~~consolidated~~we ~~financial statements, and the reported amounts of revenues and expenses during the reporting period. Estimates and assumptions~~ have ~~been~~completed ~~made~~all ~~in determining the allowance for doubtful accounts receivable; write-downs~~ of ~~slow moving, excess, and obsolete inventories;~~ the ~~depreciable~~following lives of fixed and intangible assets; estimates for the recoverability of long-lived assets, including intangible assets; the recoverability of deferred tax assets; and potential exposures relating to litigation, claims, and assessments. Actual results could differ from those estimates and assumptions.steps:

~~Recently Issued Accounting Standards. In March 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2017~~-~~17, Compensation~~ ~~— Retirement~~Identification ~~Benefits (Topic 715): Improving the Presentation~~ of ~~Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The amendments require that an employer report~~ the ~~service~~contract, ~~cost component in the same line item~~ or ~~items as other compensation costs arising from services rendered by the pertinent employees during the period. The amendments are effective for annual periods beginning after December 15~~contracts, ~~2017,~~with ~~including~~a ~~interim periods within those annual periods. The Company does not expect the adoption of this guidance to significantly impact the consolidated financial statements.~~customer

~~In January 2017, the FASB issued ASU 2017~~-~~04, Intangibles -~~ ~~Goodwill~~Identification ~~and~~of ~~Other (Topic 350): Simplifying~~ the ~~Test~~performance ~~for~~obligations ~~Goodwill Impairment. These amendments eliminate Step 2 from the goodwill impairment test. The amendments are effective for annual or any interim goodwill impairment tests~~ in ~~fiscal years beginning after December 15, 2019. The Company does not expect~~ the ~~adoption of this guidance to significantly impact the consolidated financial statements.~~contract

~~In January 2017, the FASB issued ASU 2017~~-~~01, Business Combinations~~ ~~(Topic~~Determination ~~805): Clarifying the Definition~~ of ~~a Business. These amendments clarify~~ the ~~definition~~transaction of a business. The amendments affect all companies and other reporting organizations that must determine whether they have acquired or sold a business. The amendments are effective for public companies for annual periods beginning after December 15, 2017, including interim periods within those periods. The Company does not expect the adoption of this guidance to significantly impact the consolidated financial statements.price

~~In October 2016, the FASB issued ASU 2016~~-~~16, Income Taxes~~ ~~(Topic~~Allocation ~~740): Intra-Entity Transfers~~ of ~~Assets Other Than Inventory. These amendments require an entity to recognize~~ the ~~income~~ ~~tax~~transaction ~~consequences~~price of an intra-entity transfer of an asset other than inventory when the transfer occurs. The amendments eliminate the tax exception for an intra-entity transfer of an asset other than inventory. The ASU becomes effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within those annual reporting periods. Entities are required to ~~adopt~~ the ~~ASU~~performance ~~using~~obligations ~~a modified retrospective approach with a cumulative adjustment to retained earnings for previously unrecognized income tax expense. The Company anticipates a decrease~~ in ~~retained earnings of $0.4 million upon adoption related to~~ the ~~unrecognized income tax effects of asset transfers that occurred prior to adoption.~~contract

~~In February 2016, the FASB issued ASU 2016~~-~~02, Leases (Topic~~ ~~842),~~Recognition toof ~~increase~~revenue ~~transparency and comparability among organizations by reporting lease assets and lease liabilities~~when, ~~both~~ ~~finance~~or ~~(capital) and operating leases~~as, on the balance sheet and disclosing key information about leasing arrangements. For public companies, the updated guidance is effective for the financial statements issued for fiscal years beginning after December 15, 2018 (including interim periods within those fiscal years). Early adoption is permitted. The Company issatisfies ~~currently~~a ~~evaluating the~~performance ~~impact of adoption and will consult with accounting experts as needed to assist with the implementation of this standard.~~obligation

InDetermining ~~May~~whether ~~2014,~~these ~~the~~steps ~~FASB issued ASU 2014-09, Revenues~~have ~~from~~been ~~Contracts~~met ~~with~~may ~~Customers~~require ~~(Topic~~us ~~606).~~to ~~This~~make ~~guidance~~assumptions ~~applies~~and toexercise ~~any~~judgment ~~entity~~ that ~~either~~could ~~enters~~significantly ~~into~~impact ~~contracts with customers to transfer goods or services or enters into contracts for~~ the ~~transfer~~timing ofand ~~nonfinancial~~amount ~~assets unless those contracts are within the scope~~ of ~~other standards. This guidance supersedes existing~~ revenue ~~recognition~~reported ~~guidance,~~each ~~including most industry-specific guidance, as well as certain related guidance on accounting for contract costs~~period. ~~To further assist with adoption and implementation of ASU 2014-09, the FASB issued the following ASUs:~~

~~•ASU~~The ~~2016-08~~majority ~~(Issued~~of ~~March~~our ~~2016)~~contracts ~~- Principal~~have a similar ~~versus~~performance ~~Agent~~obligation ~~Consideration~~which ~~(Reporting~~is ~~Revenue~~the ~~Gross~~transfer ~~versus~~of ~~Net)~~the individual goods ordered. The Company typically invoices the customer upon shipment. Depending on the size of the customer order we may require deposits that range from 30% to 100% of the total order. We generally warrant our products from defects of material and workmanship for a period of ninety days.

~~•ASU~~On ~~2016-10~~occasion, ~~(Issued~~we ~~April~~may ~~2016)~~recognize ~~- Identifying~~revenue under ~~Performance~~a ~~Obligations~~bill and ~~Licensing~~hold arrangement. The transfer of ownership, and revenue recognition, occurs at the point the items are ready for physical delivery and the customer is notified – i.e. when the product is manufactured, completed, invoiced, and segregated from our other inventory so that it is not subject to being used to fill other orders. The customer must request a bill and hold arrangement, preferably in writing, and must commit to the purchase.

~~•ASU~~Under ~~2016-12~~the ~~(Issued~~RFID ~~May~~solutions ~~2016)~~product ~~- Narrow-Scope~~line, ~~Improvements~~we may recognize revenue from entering into new arrangements which include software and/or ~~Practical~~multiple ~~Expedients~~elements or deliverables, which include RFID equipment, embedded software licenses, and software maintenance services. In such cases, the Company accounts for individual performance obligations separately if they are distinct. The transaction price is allocated to the separate performance obligations on a relative standalone selling price basis. The Company determines the standalone selling prices based on the Company's overall pricing objectives, taking into consideration historical selling prices, market conditions, costs to provide certain services and other factors.

3634

~~•ASU~~A ~~2016-20~~portion ~~(Issued~~of ~~December~~our ~~2016)~~revenue ~~- Technical~~under RFID solutions ~~Corrections~~is generated by new or existing software and ~~Improvements~~hardware tomaintenance ~~Topic~~arrangements. ~~606~~Under these arrangements, ~~Revenue~~customers ~~from~~pay ~~Contracts~~in advance for the maintenance of hardware or software. As of December 31, 2018, the Company had contracts with ~~Customers~~unsatisfied performance obligations extending throughout 2020. Most of our contracts are for one year and renew on March 1 of every year. The Company recognizes as revenue the amount billed over the length of the arrangement. The unrecognized portion of the amount billed is accounted for as deferred revenue. At December 31, 2018 and December 31, 2017, these amounts were $0.1 million and $0.1 million, respectively. For the years ended on December 31, 2018 and 2017, we recognized $0.7 million and $0.6 million, respectively, of revenue for software and hardware maintenance contracts.

The ~~guidance~~application ~~provides~~of ~~for~~our arevenue ~~five-step model~~recognition topolicies ~~determine~~and ~~the~~changes ~~revenue~~in ~~recognized~~our ~~for~~assumptions ~~the transfer of goods~~ or ~~services~~judgments toaffect ~~customers that reflects~~ the ~~expected~~timing ~~entitled~~and ~~consideration in~~amounts ~~exchange~~of ~~for~~our ~~those~~revenues ~~goods or services. It also provides clarification for principal versus agent considerations~~ and ~~identifying performance obligations. In addition~~costs, ~~the FASB introduced practical expedients related to disclosures of remaining performance obligations,~~ as well as ~~other amendments to guidance on collectability, non-cash consideration and the presentation of sales and~~deferred ~~other similar taxes. Financial statement disclosures required under the guidance will enable users to understand the nature, amount, timing, judgments, and uncertainty of~~ revenue ~~and cash flows relating to customer contracts~~. The two permitted transition methods under the guidance are the full retrospective approach or a cumulative effect adjustment to the opening retained earnings in the year of adoption (cumulative effect approach). The guidance is effective in 2018. The Company will adopt it in the first quarter of 2018 under the modified retrospective method.

~~Through~~Research ~~our~~and ~~comprehensive~~Development. ~~approach~~Research weand ~~concluded~~development ~~that~~costs ~~this~~are ~~new~~the ~~guidance~~costs ~~will~~related ~~not~~to ~~have~~developing anew ~~material~~and ~~impact,~~improved onproducts ~~our~~and ~~consolidated~~manufacturing ~~financial~~processes, ~~statements.~~including Westaff ~~did~~compensation and ~~not~~related ~~need~~expenses, tosubcontract ~~significantly change~~costs, ~~our~~materials, ~~business~~and ~~processes,~~supplies. ~~systems~~Such ~~and~~costs ~~controls~~are charged to ~~support~~expense ~~recognition~~when incurred and ~~disclosure~~are ~~under~~included in ~~the~~our ~~new~~consolidated ~~guidance~~statements of income.

~~Recently~~Income ~~Adopted Accounting Standards~~Taxes. In ~~March~~We ~~2016,~~recognize ~~the~~a ~~FASB~~current ~~issued~~tax ~~ASU 2016-09, Compensation – Stock Compensation (Topic 718), to simplify~~liability ~~several~~or ~~aspects~~asset ~~of the accounting~~ for ~~share-based~~estimated ~~payment~~taxes ~~award~~payable ~~transactions~~or ~~including:~~refundable ~~income~~on tax ~~consequences;~~returns ~~classification of~~for ~~awards~~the ascurrent ~~either~~year ~~equity or liabilities;~~ and ~~classification~~a ondeferred ~~the~~non-current ~~statement~~tax ~~of cash flows. The amendments are effective for~~liability ~~public~~or ~~companies~~asset for ~~annual~~estimated ~~periods~~future ~~beginning~~tax ~~after December 15~~effects, ~~2016,~~attributable ~~and~~to ~~interim~~temporary ~~periods~~differences ~~within~~and ~~those annual periods~~carryforwards. ~~During the first quarter of 2017, the Company adopted this guidance on a prospective basis. The adoption of this guidance did not have a significant impact on the consolidated financial statements.~~

InThe ~~July~~Tax ~~2015~~Act made significant changes to federal tax law, including a reduction in the ~~FASB~~federal ~~issued~~income ~~ASU~~tax ~~2015-11~~rate from 34% to 21% effective January 1, ~~Inventory~~ 2018, a 100% bonus depreciation for qualified assets placed in service after September 27, 2017, and certain additional provisions including the global intangible low-taxed income (~~Topic~~GILTI) ~~330~~inclusion and base erosion anti-avoidance tax (BEAT):. ~~Simplifying~~Given the ~~Measurement~~significance of ~~Inventory.~~the legislation, ~~The~~the ~~guidance~~SEC ~~applies~~staff toissued ~~any~~Staff ~~entity~~Accounting ~~measuring~~Bulletin ~~inventory~~No. ~~using~~118 ~~first-in~~(SAB 118), which allows registrants to record provisional ~~first-out~~amounts orduring ~~average~~a ~~cost~~one year “measurement period” similar to that used when accounting for business combinations. ~~The~~As a ~~main~~result ~~provision~~of our initial analysis of ~~this~~the Tax Act and existing implementation guidance, ~~requires~~we anreported ~~entity~~$0.3 tomillion ~~measure~~of ~~inventory~~deferred ~~within~~tax expense due to the ~~scope~~remeasurement of ~~this ASU~~deferred tax assets at the ~~lower~~21% tax rate, and $1.4 million of ~~cost~~additional tax expense related to a one-time transition tax which is completely offset by associated deferred tax assets for foreign tax credits. As of December 22, 2018, we completed our accounting for the Tax Act. As such, we finalized our measurement period adjustments in relation to SAB 118 and recognized measurement period adjustments related to our net ~~realizable~~deferred ~~value~~tax revaluation and deemed repatriation tax. This ~~During~~resulted ~~the~~in ~~first~~a ~~quarter~~net income tax benefit of ~~2017,~~$0.4 million primarily due to the ~~Company~~acceleration ~~adopted~~of ~~this~~deductions ~~guidance~~on ~~prospectively~~our 2017 tax return. ~~The~~We ~~adoption~~have ofnot ~~this~~changed ~~guidance~~our ~~had~~indefinite noreinvestment assertion, and we have elected to account for the impact of GILTI and BEAT based on the ~~consolidated~~period ~~statements~~cost ofmethod. ~~income~~While we consider our accounting for the Tax Act to be complete, we continue to evaluate new guidance and ~~comprehensive~~legislation ~~income~~as it is issued.

~~Note~~GPIC 2and its subsidiaries file separate income tax returns in their respective jurisdictions. ~~Dolphin~~Income ~~Asset~~taxes ~~Acquisition~~are provided for the tax effects of transactions reported in the consolidated financial statements and consist of taxes currently due plus deferred taxes related primarily to differences between the basis of assets and liabilities for financial and income tax reporting. The deferred tax assets and liabilities represent the future tax consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Deferred taxes also are recognized for operating losses that are available to offset future income taxes.

OnWe ~~May~~review ~~11,~~all ~~2016,~~of ~~the~~our ~~Company~~tax ~~entered~~positions ~~into~~ and ~~closed~~make ana ~~Asset~~determination ~~Purchase~~as ~~Agreement~~ to ~~purchase~~whether ~~certain~~our ~~assets~~position ~~used~~is inmore ~~the~~likely ~~design~~than ~~and~~not ~~manufacture~~to ofbe ~~casino~~sustained ~~currency~~upon ~~from~~examination ~~Dolphin Products~~by ~~Limited~~tax ~~(Dolphin),~~authorities. If a ~~wholly~~tax ~~owned~~position ~~subsidiary~~meets ofthe ~~Entertainment~~more-likely-than-not ~~Gaming~~standard, ~~Asia~~then ~~Inc.~~the ~~(EGT).~~related ~~The~~tax ~~purchased~~benefit ~~assets~~is ~~were~~measured ~~primarily~~based on the cumulative probability ~~equipment~~that ~~and~~the ~~inventory~~amount ~~with~~is ~~allocated~~more ~~costs~~likely than not to be realized upon ultimate settlement or disposition of $5the underlying issue.7 ~~million~~We recognize interest and ~~$1.6~~penalties ~~million,~~related ~~respectively~~to unrecognized tax positions in the provision for income taxes on our consolidated statements of income.

Foreign Currency Transactions. The ~~acquisition~~financial statements ~~was~~of GPI ~~treated~~SAS are measured using the euro as anthe ~~asset~~functional ~~acquisition~~currency. ~~The~~ ~~total~~Assets ~~cost~~and liabilities of GPI ~~the~~SAS ~~acquisition~~are translated ~~was~~into $7the U.3S. ~~million,~~dollar ~~with~~at $5exchange rates at the balance sheet date.1 ~~million~~Revenues ~~paid~~and inexpenses ~~2016,~~are $1translated into the U.1S. dollar ~~million~~at ~~paid~~average rates of exchange in ~~2017~~effect ~~and~~during $1the year.1 ~~million, included~~The inresulting ~~accrued~~cumulative ~~liabilities,~~translation toadjustments beare ~~paid~~recorded inwithin accumulated ~~May~~other ~~2018~~comprehensive loss.

~~Note~~The 3financial statements of GPI Asia and GPI Mexicana are measured using the U. ~~Cash~~S. dollar as the functional currency. Non-monetary assets and ~~Cash~~liabilities ~~Equivalents~~are translated at historical exchange rates, and monetary assets and liabilities are translated at current exchange rates. Exchange gains and losses arising from translation are included in other income and expense in the consolidated statements of income.

We hold our cash and cash equivalents in various financial institutions in the countries shown below. Substantially all accounts have balances in excess of government-insured limits. The following table summarizes our holdings at December 31 (in thousands):35

	2017		2016
France	$	6,611	$	3,263
United States (including Mexico)		4,936		3,237
Macau S.A.R., China		2,517		4,104
Total	$	14,064	$	10,604

Transaction gains and losses that arise from exchange rate fluctuations on transactions with third parties denominated in a currency other than the functional currency are included in the results of operations as incurred.

~~Note 4~~Other Comprehensive Income (Loss). ~~Accounts~~Comprehensive Income ~~Receivable~~(Loss) includes net income and ~~Allowance~~foreign ~~for~~currency ~~Doubtful~~translation ~~Accounts~~adjustments.

AtEstimates. ~~December~~The ~~31,~~preparation ~~2017~~of consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, nodisclosure ~~casino~~of ~~customer~~contingent ~~accounted~~assets and liabilities at the date of the ~~for~~consolidated ~~10%~~financial orstatements, ~~more~~and the reported amounts of ~~our~~revenues and expenses during the reporting period. Estimates and assumptions have been made in determining the allowance for doubtful accounts receivable; ~~balance.~~write-downs Atof ~~December~~slow 31moving, ~~2016~~excess, and ~~one~~obsolete ~~casino~~inventories; ~~customer~~the ~~accounted~~depreciable lives of fixed and intangible assets; estimates for ~~25%~~the recoverability of ~~our~~long-lived assets, ~~accounts~~including intangible assets; the recoverability of deferred tax assets; and potential exposures relating to litigation, ~~receivable~~claims, ~~balance~~and assessments. Actual results could differ from those estimates and assumptions.

37Recently Issued Accounting Standards and Not Yet Adopted. In August 2018, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2018-14, Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20): Disclosure Framework. These amendments modify the disclosure requirements for defined benefit plans. The amendments are effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2019. The Company does not expect the adoption of this guidance to significantly impact the consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. These amendments eliminate Step 2 from the goodwill impairment test. The ~~allowance~~amendments are effective for ~~doubtful~~annual ~~accounts~~or ~~consists~~any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. The Company does not expect the adoption of this guidance to significantly impact the ~~following~~consolidated ~~(in~~financial ~~thousands):~~statements.

	Balance at Beginning of Year		Reduction of provision			Write-offs, Net of Recoveries			Exchange Rate Effect		Balance at End of Period
2017	$	804	$	(498	)	$	-		$	1	$	307
2016	$	990	$	(102	)	$	(84	)	$	-	$	804

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), to increase transparency and comparability among organizations by reporting lease assets and lease liabilities, both finance (capital) and operating leases, on the balance sheet and disclosing key information about leasing arrangements. For public companies, the updated guidance is effective for the financial statements issued for fiscal years beginning after December 15, 2018 (including interim periods within those fiscal years). Early adoption is permitted. We adopted the new standard effective January 1, 2019, on a modified retrospective basis. Among the practical expedients permitted under the transition guidance, we will elect to apply to the new lease standard using the effective date option, which allows the Company to apply ASU 2016-02 at the effective date of January 1, 2019, not record leases with an initial term of 12 months or less on the balance sheet, not reassess (1) the definition of a lease, (2) lease classification, and (3) initial direct costs for existing leases during transition and not separate non-lease components of leases from the lease components. We estimate approximately $3.4 million would be recognized as total right of use assets and operating lease liabilities on our consolidated balance sheet as of January 1, 2019. Other than as disclosed we do not expect the new standard to have a material impact on our remaining consolidated financial statements.

~~Note~~Recently Adopted Accounting Standards. In March 2017, the FASB issued ASU 2017-17, 5Compensation — Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. ~~Inventories~~The amendments require that an employer report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The amendments are effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods. In the first quarter of 2018, the Company adopted this guidance. It had no significant impact on the consolidated financial statements.

~~Inventories~~In ~~consist~~January of2017, the ~~following~~FASB atissued ~~December~~ASU 2017-01, 31Business Combinations (inTopic ~~thousands~~805): Clarifying the Definition of a Business. These amendments clarify the definition of a business. The amendments affect all companies and other reporting organizations that must determine whether they have acquired or sold a business. The amendments are effective for public companies for annual periods beginning after December 15, 2017, including interim periods within those periods. In the first quarter of 2018, the Company adopted this guidance prospectively. It had no significant impact on the consolidated financial statements.

	2017		2016
Raw materials	$	11,637	$	11,129
Work in progress		2,432		1,137
Finished goods		3,502		3,319
Total inventories	$	17,571	$	15,585

WeIn ~~booked~~October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory. These amendments require an ~~exceptional~~entity $0to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs.8 ~~million~~This guidance indicates that the former exception to income tax accounting that requires companies to defer the income tax effects of certain intercompany transactions would apply only to intercompany inventory transactions. That is, the exception no longer applies to ~~write~~intercompany sales and transfers of other assets (e.g., property and equipment or intangible assets). Under the former exception, income tax expense associated with intra-~~down~~entity ~~for~~profits ~~Dolphin~~in ~~related~~an ~~raw~~intercompany ~~materials~~sale ~~acquired~~or transfer of assets was eliminated from earnings. Instead, that cost was deferred and recorded on the balance sheet (e.g., as a prepaid asset) until the assets left the consolidated group. Similarly, the entity was prohibited from recognizing deferred tax assets for the increases in ~~2016~~tax bases due to the intercompany sale or transfer. WeA ~~estimate~~modified retrospective basis of adoption was required for this ~~inventory~~guidance. ~~will~~As ~~not~~a beresult, ~~used~~a ~~within~~cumulative-effect adjustment of approximately $0.4 million has been recorded to retained earnings on January 1, 2018, in connection with this adoption. This cumulative-effect adjustment relates to the ~~next~~prepaid ~~three~~expense associated with intra-entity transfers of intangible property ~~years~~included in prepaid expenses and other current assets in the accompanying consolidated balance sheet at December 31, 2017.

WeIn ~~classified~~May a2014, ~~portion~~the ofFASB ~~our~~issued ~~inventories~~ASU ~~as non~~2014-~~current~~09, Revenues from ~~because~~Contracts wewith ~~currently~~Customers do(Topic ~~not~~606). ~~expect~~This ~~this~~guidance ~~portion~~applies to beany ~~used~~entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the ~~one~~scope ~~year~~of other standards. ~~The~~ ~~classification~~This ofguidance ~~our~~supersedes ~~inventories~~existing revenue recognition guidance, including most industry-specific guidance, as well as certain related guidance on ~~our~~accounting ~~consolidated~~for ~~balance~~contract ~~sheets~~costs. isTo asfurther ~~follows~~assist atwith ~~December~~adoption 31and ~~(in~~implementation of ~~thousands)~~ASU 2014-09, the FASB issued the following ASUs:

	2017		2016
Current	$	15,118	$	14,987
Non-current		2,453		598
Total inventories	$	17,571	$	15,585

·ASU 2016-08 (Issued March 2016) - Principal versus Agent Consideration (Reporting Revenue Gross versus Net)

~~The increase of $1.9 million in non~~·ASU 2016-~~current~~10 ~~inventory~~(Issued isApril ~~mainly due to $0.9 million of bulk purchases of various raw materials. In addition, $0.6 million of Dolphin related raw materials acquired in~~ 2016) ~~was moved to non~~-~~current inventory~~ Identifying inPerformance ~~accordance~~Obligations ~~with~~and ~~our accounting policies. We currently believe this inventory will be used within three years.~~Licensing

38·ASU 2016-12 (Issued May 2016) - Narrow-Scope Improvements and Practical Expedients

~~Note~~·ASU 2016-20 (Issued December 2016) - 6.Technical ~~Other~~Corrections ~~Current~~and ~~Assets~~Improvements to Topic 606, Revenue from Contracts with Customers

~~Other~~The ~~current~~guidance ~~assets~~provides ~~consist~~for a five-step model to determine the revenue recognized for the transfer of goods or services to customers that reflects the ~~following~~expected entitled consideration atin ~~December 31~~exchange (for those goods or services. It also provides clarification for principal versus agent considerations and identifying performance obligations. In addition, the FASB introduced practical expedients related to disclosures of remaining performance obligations, as well as other amendments to guidance on collectability, non-cash consideration and the presentation of sales and other similar taxes. Financial statement disclosures required under the guidance will enable users to understand the nature, amount, timing, judgments, and uncertainty of revenue and cash flows relating to customer contracts. The two permitted transition methods under the guidance are the full retrospective approach or a cumulative effect adjustment to the opening retained earnings in ~~thousands~~the year of adoption (cumulative effect approach):. In the first quarter of 2018, we adopted this guidance using a modified retrospective method. It had no significant impact on the consolidated financial statements. Regarding the contract acquisition cost component of the guidance, the Company’s analysis supports use of the practical expedient when recognizing expense related to incremental costs incurred to acquire a contract, as the recovery of such costs is completed in less than one year’s time. Additionally, incremental costs to obtain contracts have been immaterial to date. Accordingly, the Company did not experience any material changes to the timing of when it recognizes expenses related to contract acquisition costs.

	2017		2016
Income tax-related assets	$	1,435	$	722
Refundable value-added tax		996		516
Deposits		327		328
Other, net		78		54
Total other current assets	$	2,836	$	1,620

Note 2. Cash and Cash Equivalents

~~Note 7.~~We ~~Property~~hold our cash and ~~Equipment~~cash equivalents in various financial institutions in the countries shown below. Substantially all accounts have balances in excess of government-insured limits. The following table summarizes our holdings at December 31 (in thousands):

Property and equipment consist of the following at December 31 (in thousands):

	2018		2017
United States (including Mexico)	$	4,510	$	4,936
France		3,854		6,611
Macau S.A.R., China		3,736		2,517
Total	$	12,100	$	14,064

	2017			2016
Land	$	669		$	636
Buildings and improvements		11,196			10,280
Equipment and furniture		40,714			35,618
Vehicles		408			379
Construction in progress		529			1,327
		53,516			48,240
Less accumulated depreciation		(28,583	)		(23,930	)
Property and equipment, net	$	24,933		$	24,310

Note 3. Accounts Receivable and Allowance for Doubtful Accounts

~~Depreciation~~At ~~expense for the years ended~~ December 31, ~~2017~~ ~~and~~2018 ~~2016 was $4.4 million~~ and ~~$3.3 million~~2017, ~~respectively.~~no ~~At December 31, 2017 the $0.5 million of construction in progress~~casino ~~was~~customer ~~primarily~~accounted ~~related~~for to10% ~~various~~or ~~equipment.~~more ~~At December 31, 2016 the $1.3 million~~ of ~~construction in progress was primarily related to Dolphin assets waiting to be placed in service and the building expansion at~~ our ~~Blue~~accounts ~~Springs,~~receivable ~~Missouri facility~~balance.

~~Note 8. Goodwill and Intangible Assets~~37

WeThe ~~have~~allowance ~~goodwill~~for ofdoubtful ~~$10.3~~accounts ~~million~~consists as of ~~December 31, 2017 arising from~~ the ~~GemGroup~~following ~~acquisition~~ (in ~~2014.~~thousands):

Intangible assets consist of the following at December 31 (dollars in thousands):

	Balance at Beginning of Year		Reduction of provision			Exchange Rate Effect		Balance at End of Period
2018	$	307	$	(120	)	$	-	$	187
2017	$	804	$	(498	)	$	1	$	307

	2017							2016
	Gross Carrying Amount		Accum Amort			Net Carrying Amount		Gross Carrying Amount		Accum Amort			Net Carrying Amount		Estimated Useful Life (Years)
Trademarks	$	1,711	$	(700	)	$	1,011	$	1,711	$	(579	)	$	1,132	10-15
Customer list		897		(353	)		544		897		(278	)		619	10-15
Patents		542		(534	)		8		542		(527	)		15	14
Other intangible assets		472		(359	)		113		372		(320	)		52	3-10
Total intangible assets	$	3,622	$	(1,946	)	$	1,676	$	3,522	$	(1,704	)	$	1,818

Note 4. Inventories

~~Amortization~~Inventories ~~expense~~consist ~~for~~of ~~intangible assets for~~ the ~~years~~following ~~ended~~ at December 31, ~~2017~~(in ~~and 2016 was $242,000 and $273,000, respectively.~~thousands):

In 2016, a $414,000 impairment loss for a decrease in fair value of a trademark and a customer list was recorded under general and administrative expenses. The decrease in fair value was the result of the loss of two customers.

	2018		2017
Raw materials	$	9,800	$	11,637
Work in progress		2,787		2,432
Finished goods		3,517		3,502
Total inventories	$	16,104	$	17,571

39We classified a portion of our inventories as non-current because we currently do not expect this portion to be used within one year. The classification of our inventories on our consolidated balance sheets is as follows at December 31 (in thousands):

The following table provides estimated amortization expense for the years ending December 31 (in thousands):

	2018		2017
Current	$	13,885	$	15,118
Non-current		2,219		2,453
Total inventories	$	16,104	$	17,571

	Amortization
Year	Expense
2018	$	229
2019		223
2020		222
2021		213
2022		155
Thereafter		634
Total	$	1,676

Note 5. Other Current Assets

~~Note 9.~~Other ~~Equity~~current ~~Method~~assets ~~Investment~~consist of the following at December 31 (in thousands):

On May 31, 2017, GPIC acquired 20% of the outstanding shares of Onlive Gaming SAS for $451,000. Onlive Gaming SAS is a company dedicated to the development of electronic products using the RFID technology. The Company used the equity method to account for this investment because of its ability to exercise significant influence, but not control, over the operating and financial policies of Onlive Gaming SAS. Since the acquisition, we reduced the book value of the investment by $40,000, which represents our percentage of the net loss.

	2018		2017
Income tax-related assets	$	2,650	$	1,435
Deposits		775		327
Refundable value-added tax		591		996
Other, net		28		78
Total other current assets	$	4,044	$	2,836

Note 106. ~~Accrued~~Property ~~Liabilities~~and Equipment

~~Accrued~~Property ~~liabilities~~and equipment consist of the following at December 31 (in thousands):

	2017			2016
	2018			2017
Accrued salaries, wages, and related costs	$	1,359		$	1,037
Land	$	657		$	669
Stock appreciation rights liability		1,153			-
Buildings and improvements		11,306			11,196
Accrued fixed asset acquisition liability		1,076			1,076
Equipment and furniture		40,841			40,714
Accrued vacation		964			894
Vehicles		405			408
Accrued bonuses and commissions		953			1,221
Construction in progress		412			529
Miscellaneous taxes		560			578
		53,621			53,516
Other		714			747
Less accumulated depreciation		(31,074	)		(28,583	)
Total accrued liabilities	$	6,779		$	5,553
Property and equipment, net	$	22,547		$	24,933

~~The~~Depreciation ~~Stock~~expense ~~appreciation rights~~for ~~liability is~~ the ~~result~~years ofended December 31, ~~the~~2018 ~~Board~~and of2017 ~~Director’s~~was ~~decision~~$4.5 tomillion ~~grant~~and ~~stock~~$4.4 ~~appreciation~~million, ~~rights to certain non-employee directors (Note 16)~~respectively.

~~The accrued fixed asset acquisition liability is the balance owed to EGT and resulting from the Dolphin acquisition (Note 2).~~38

Note 117. ~~Debt~~Goodwill and Intangible Assets

OnWe ~~June~~have ~~26,~~goodwill ~~2015, the Company entered into a Credit Agreement with Nevada State Bank to borrow up to a combined $15.0 million, consisting~~ of a $10.03 million ~~seven-year~~as ~~term~~of ~~loan~~December ~~and a $5.0 million five-year revolving loan. The Company borrowed the full amount under the term loan and has not drawn on funds under the revolving loan. The term loan will mature on June 26~~31, ~~2022,~~2018 and ~~the~~2017 ~~revolving~~arising ~~loan~~from will mature on June 26, 2020. The Credit Agreement contains customary representations, warranties, and events of default, and affirmative, negative and financial covenants. The covenants contain, among other things, limitations on the ~~Company's~~GemGroup ~~and~~acquisition its subsidiaries' ability to merge, consolidate, dispose of assets, or incur liens or certain indebtedness. The Company is required to maintain a fixed charge coverage ratio greater than 1.15 to 1.00 and a leverage ratio less than 3.00 to 1.00. The Company is in ~~compliance with all financial covenants as of December 31, 2017~~2014.

~~Interest~~Intangible onassets ~~funds borrowed~~consist ~~under~~of the ~~term~~following ~~loan and the revolving loan are charged~~ at aDecember ~~rate~~31 ~~per~~(dollars ~~annum~~in ~~equal to LIBOR plus 2.25%. The term loan has a straight-line seven year amortization schedule.~~thousands):

	2018							2017
	Gross Carrying Amount		Accum Amort			Net Carrying Amount		Gross Carrying Amount		Accum Amort			Net Carrying Amount		Estimated Useful Life (Years)
Trademarks	$	1,711	$	(821	)	$	890	$	1,711	$	(700	)	$	1,011		10-15
Customer list		1,101		(557	)		544		897		(353	)		544		10-15
Patents		542		(541	)		1		542		(534	)		8		14
Other intangible assets		472		(384	)		88		472		(359	)		113		3-10
Total intangible assets	$	3,826	$	(2,303	)	$	1,523	$	3,622	$	(1,946	)	$	1,676

AtAmortization ~~December~~expense for intangible assets for the years ended December 31, 2018 and 2017 was $248, ~~estimated~~000 ~~repayment~~and ~~obligations~~$242,000, ~~for~~respectively. The increase in the ~~principal~~gross ~~balance~~carrying value of ~~long-term~~the ~~debt~~customer ~~are~~list asis ~~follows~~a result of ASU 2016-16, Income Taxes (inTopic ~~thousands~~740): Intra-Entity Transfers of Assets Other Than Inventory. See Note 1 – Nature of Business and Significant Accounting Policies for more details.

Year	Long Term Debt
2018	$	1,401
2019		1,453
2020		1,506
2021		1,561
2022		745
	$	6,666

The following table provides estimated amortization expense for the years ending December 31 (in thousands):

Note 12. Commitments and Contingencies

	Amortization
Year	Expense
2019	$	243
2020		241
2021		233
2022		169
2023		119
Thereafter		518
Total	$	1,523

~~Operating Lease Commitments~~Note 8. ~~The~~Equity ~~Company~~Method ~~has various operating leases that are used in the normal course of business. The operating leases consist of buildings and equipment that expire at various points through 2023.~~Investment

~~Operating~~ On May ~~lease~~31, ~~expense~~2017, ~~for~~GPIC acquired 20% of the ~~years~~outstanding ~~ended December 31,~~shares ~~2017~~of ~~and~~Onlive ~~2016~~Gaming ~~was~~SAS for $1451,000.0 ~~million~~In ~~and~~November $12018, GPIC acquired 6.75% of ~~million~~the outstanding shares of Onlive Gaming SAS for $150,000 ~~respectively~~for an aggregate ownership of 26.5%. Onlive Gaming SAS is a company dedicated to the development of electronic products using the RFID technology. The Company’s used the equity method to account for this investment because of its ability to exercise significant influence, but not control, over the operating ~~lease~~and ~~expenses~~financial ~~are~~policies ~~recognized~~of onOnlive aGaming ~~straight-line~~SAS. ~~basis~~Since the acquisition in 2017, we reduced the book value of the investment by $40,000, which represents our percentage of the accumulated net loss.

The following schedule reflects our future minimum lease payments under operating leases, including related-party payments described at Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements - Note 20. Related-Party Transactions for the years ending December 31 (in thousands):39

	Minimum
	Lease
Year	Payments
2018	$	899
2019		737
2020		620
2021		625
2022		564
Thereafter		338
Total	$	3,783

Note 9. Accrued Liabilities

~~Legal~~Accrued ~~Proceedings~~liabilities ~~and~~consist ~~Contingencies.~~ of ~~Liabilities for material claims against~~ the ~~Company are accrued when a loss is considered probable and can be reasonably~~following ~~estimated.~~at ~~Legal~~December 31 ~~costs~~(in ~~associated with claims are expensed as incurred.~~thousands):

From time to time we are engaged in disputes and claims that arise in the normal course of business. We believe that the ultimate outcome of these proceedings will not have a material adverse impact on our consolidated financial position or results of operations, but the outcome of these actions is inherently difficult to predict. There can be no assurance that we will prevail in any such litigation. Liabilities for material claims against us are accrued when a loss is considered probable and can be reasonably estimated. Legal costs associated with claims are expensed as incurred.

	2018		2017
Accrued bonuses and commissions	$	1,381	$	953
Accrued salaries, wages, and related costs		1,331		1,359
Stock appreciation rights liability		1,244		1,153
Accrued vacation		942		964
Miscellaneous taxes		475		560
Legal and bank fees		309		52
Accrued fixed asset acquisition liability		-		1,076
Other		475		368
Total accrued liabilities	$	6,157	$	6,485

~~Employment Agreements.~~ The ~~Company~~ ~~has~~stock ~~employment~~appreciation rights ~~agreements~~liability ~~with~~is ~~key~~the ~~employees~~result ~~which~~of ~~include~~the ~~severance~~Board ~~commitments~~of inDirector’s ~~the~~decision ~~event~~to ~~the~~grant ~~Company~~stock ~~terminates~~appreciation ~~the employee~~rights ~~without~~to ~~cause~~certain non-employee directors. ~~Total~~See ~~commitments~~Note ~~under~~15 ~~the~~– ~~agreements~~Stock ~~aggregate~~Option ~~approximately~~Programs ~~$0.6~~and ~~million~~Share-based asCompensation ~~of December 31, 2017~~Expense.

Note 1310. ~~Geographic and Product Line Information~~Debt

WeOn ~~manufacture~~June ~~and~~26, ~~sell~~2015, the ~~casino~~Company ~~table~~entered ~~game equipment~~into ina ~~one~~Credit ~~operating~~Agreement ~~segment~~with -Nevada ~~casino~~State ~~table~~Bank ~~game~~to ~~products~~borrow up to a combined $15.0 ~~Although~~million, ~~the~~consisting ~~Company~~of ~~derives~~a ~~its~~$10.0 million ~~revenues~~seven-year ~~from~~term loan and a ~~number~~$5.0 ofmillion ~~different product~~five-year ~~lines,~~revolving ~~the~~loan. The Company ~~neither~~borrowed ~~allocates~~the ~~resources~~full ~~based~~amount onunder the ~~operating~~term loan ~~results~~and ~~from~~has not drawn on funds under the ~~individual~~revolving ~~product~~loan. ~~lines~~The term loan would have matured on June 26, ~~nor~~2022, ~~manages~~and the revolving ~~each~~loan ~~individual~~will ~~product~~mature ~~line~~on June 26, 2020. On October 26, 2018, we paid the full amount outstanding under the term loan. On January 3, 2019, as apart ~~separate~~of ~~business~~the ~~unit~~Merger Agreement, Nevada State Bank issued a $4.0 ~~Our~~million ~~chief~~letter ~~operating~~of ~~decision~~credit ~~maker~~to isus ~~our~~for ~~Chief~~the ~~Executive~~benefit ~~Officer~~of ~~(CEO)~~Angel. ~~The~~This ~~CEO~~letter ~~manages~~of credit reduced our ~~operations~~available balance on athe ~~consolidated~~revolving ~~basis~~loan to ~~make~~$1.0 ~~decisions~~million. ~~about~~The ~~overall~~Credit ~~corporate~~Agreement ~~resource~~contains ~~allocation~~customary representations, warranties, and toevents ~~assess overall~~of ~~corporate~~default, ~~profitability.~~and ~~Our~~affirmative, ~~CEO~~negative isand ~~also~~financial ~~the~~covenants. ~~chief~~The ~~operating~~covenants ~~manager~~contain, among ~~for~~other ~~each~~things, oflimitations ~~our~~on ~~entities~~the inCompany's ~~the~~and ~~United~~its ~~States~~subsidiaries' ability to merge, ~~France~~consolidate, dispose of assets, or incur ~~and~~liens ~~Macau~~or Scertain indebtedness.~~A.R.;~~ ~~that~~The Company is, ~~the~~required ~~individual~~to ~~locations~~maintain doa ~~not~~fixed ~~have~~charge ~~“segment,”~~coverage orratio ~~“product~~greater ~~line,”~~than ~~managers~~1.15 to 1.00 and ~~who~~a ~~report~~leverage ratio less than 3.00 to ~~our~~1.00. ~~CEO~~The Company was in compliance with all financial covenants as of December 31, 2018.

41Interest on funds borrowed under the term loan and the revolving loan are charged at a rate per annum equal to LIBOR plus 2.25%. The term loan had a straight-line seven-year amortization schedule.

~~The following table presents certain data by geographic area for the years ended December~~Note 3111. ~~(dollars~~Commitments inand ~~thousands):~~Contingencies

	2017				2016
Revenues
The Americas	$	54,638	67.8	%	$	56,247	68.5	%
Asia-Pacific		23,200	28.8	%		22,080	26.9	%
Europe and Africa		2,764	3.4	%		3,812	4.6	%
Total	$	80,602	100.0	%	$	82,139	100.0	%

Operating Lease Commitments. The Company has various operating leases that are used in the normal course of business. The operating leases consist of buildings and equipment that expire at various points through 2023.

~~The~~Operating ~~following~~lease ~~table~~expense ~~presents~~for ~~our~~the ~~net~~years ~~sales~~ended byDecember 31, ~~product~~2018 ~~line~~and ~~for~~2017 ~~the~~was ~~years~~$1.2 ~~ended~~million ~~December~~and 31$1.0 ~~(dollars~~million, inrespectively. ~~thousands):~~The Company’s operating lease expenses are recognized on a straight-line basis.

	2017				2016
Casino currency without RFID	$	14,754	18.3	%	$	15,698	19.1	%
Casino currency with RFID		18,041	22.4	%		16,123	19.6	%
Total casino currency		32,795	40.7	%		31,821	38.7	%
Playing cards		24,864	30.8	%		26,708	32.5	%
Table accessories and other products		6,802	8.4	%		6,639	8.1	%
Table layouts		5,315	6.6	%		5,259	6.4	%
Gaming furniture		3,126	3.9	%		2,645	3.2	%
Dice		2,791	3.5	%		2,859	3.5	%
RFID solutions		1,623	2.0	%		3,000	3.7	%
Shipping		3,286	4.1	%		3,208	3.9	%
Total	$	80,602	100.0	%	$	82,139	100.0	%

The following schedule reflects our future minimum lease payments under operating leases, including related-party payments described at Note 20. Related-Party Transactions for the years ending December 31 (in thousands):

In 2017 and 2016, we had no casino customer that accounted for 10% or more of revenues.

	Minimum
	Lease
Year	Payments
2019	$	1,057
2020		683
2021		644
2022		641
2023		338
Total	$	3,363

~~The~~Legal ~~following~~Proceedings ~~table~~and ~~presents~~Contingencies. ~~our~~Liabilities ~~property~~ for material claims against the Company are accrued when a loss is considered probable and ~~equipment,~~can ~~net~~be byreasonably estimated. ~~geographic~~Legal ~~area~~costs atassociated ~~December 31~~with ~~(in~~claims ~~thousands):~~are expensed as incurred.

	2017		2016
United States	$	13,708	$	13,242
Mexico		6,851		6,142
France		3,936		4,614
Macau S.A.R., China		438		312
Total	$	24,933	$	24,310

42From time to time we are engaged in disputes and claims that arise in the normal course of business. We believe that the ultimate outcome of these proceedings will not have a material adverse impact on our consolidated financial position or results of operations, but the outcome of these actions is inherently difficult to predict. There can be no assurance that we will prevail in any such litigation. Liabilities for material claims against us are accrued when a loss is considered probable and can be reasonably estimated. Legal costs associated with claims are expensed as incurred.

Employment Agreements. The Company ~~following~~has ~~table~~employment ~~presents~~agreements ~~our~~with ~~intangible~~key employees which include severance commitments in the event the Company terminates the ~~assets,~~employee ~~net~~without bycause. ~~geographic~~Total ~~area~~commitments atunder the agreements aggregate approximately $1.4 million as of December 31, ~~(in thousands):~~2018.

	2017		2016
United States	$	1,634	$	1,772
Macau S.A.R., China		42		46
Total	$	1,676	$	1,818

Note 12. Geographic and Product Line Information

~~Note 14~~We manufacture and sell casino table game equipment in one operating segment - casino table game products. ~~Pension~~Although ~~Plans~~the Company derives its revenues from a number of different product lines, the Company neither allocates resources based on the operating results from the individual product lines, nor manages each individual product line as a separate business unit. Our chief operating decision maker is our Chief Executive Officer (CEO). The CEO manages our operations on a consolidated basis to make decisions about overall corporate resource allocation and to assess overall corporate profitability. Our CEO is also the chief operating manager for each of our entities in the United States, France, and Macau S.A.R.; that is, the individual locations do not have “segment,” or “product line,” managers who report to our CEO.

~~For~~The ~~employees~~following oftable ~~GPI~~presents ~~SAS,~~certain ~~we sponsor a non-contributory,~~data ~~defined-benefit~~by ~~pension~~geographic ~~plan~~area (for the ~~Pension Plan) which funds a mandatory payment when employees retire at age 65. The lump-sum benefit amount is based on~~ years ofended ~~service, job classification, and compensation in the 12 months prior to retirement. The following amounts relate to the Pension Plan at~~ December 31 (dollars in thousands):

	2017			2016
	2018						2017
Change in benefit obligation:
Revenues
Benefit obligation at beginning of year	$	497		$	458
The Americas	$	57,868			66.5	%	$	54,638	67.8	%
Service cost		31			28
Asia-Pacific		26,098			30.0	%		23,200	28.8	%
Interest cost		8			10
Europe and Africa		3,043			3.5	%		2,764	3.4	%
Actuarial loss		29			38
Total	$	87,009			100.0	%	$	80,602	100.0	%
Benefits paid		(8	)		(18	)
Effect of foreign exchange rate changes		73			(19	)
Benefit obligation at end of year	$	630		$	497
Change in plan assets:
Fair value of plan assets at beginning of year	$	317		$	362
Actual (loss) return on plan assets		8			(34	)
Effect of foreign exchange rate changes		45			(11	)
Fair value of plan assets at end of year		370			317
Funded status and accrued benefit cost	$	(260	)	$	(180	)

AtThe ~~December~~following ~~31,~~table ~~2017~~presents ~~and~~our ~~2016,~~net ~~the accrued~~sales ~~benefit~~by ~~cost~~product ofline ~~$0.3~~for ~~million~~the ~~and~~years ~~$0.2~~ended ~~million,~~December ~~respectively,~~31 ~~was~~(dollars ~~recognized~~ in ~~the consolidated balance sheet in other accrued liabilities.~~thousands):

Pension Plan assets are measured using a Level 1 valuation methodology and consist of the following asset funds at December 31 (in thousands):

	2018				2017

Casino currency without RFID	$	20,867	24.1	%	$	14,754	18.3	%
Casino currency with RFID		17,520	20.1	%		18,041	22.4	%
Total casino currency		38,387	44.2	%		32,795	40.7	%

Playing cards		23,466	27.0	%		24,864	30.8	%
Table accessories and other products		6,996	8.0	%		6,802	8.4	%
Table layouts		5,753	6.6	%		5,315	6.6	%
Gaming furniture		3,404	3.9	%		3,255	4.0	%
Dice		2,999	3.4	%		2,791	3.5	%
RFID solutions		2,521	2.9	%		1,623	2.0	%
Shipping		3,483	4.0	%		3,157	4.0	%
Total	$	87,009	100.0	%	$	80,602	100.0	%

	2017		2016
Worldwide bond fund	$	179	$	158
Guaranteed equity fund		34		31
European equity fund		157		128
Fair value of plan assets at end of year	$	370	$	317

In 2018 and 2017, we had no casino customer that accounted for 10% or more of revenues.

~~We did not make any contribution to the Pension Plan in either 2017 or 2016.~~41

The ~~weighted-average~~following ~~assumptions~~table ~~used~~presents inour property ~~measuring~~and ~~the~~equipment, net ~~periodic~~by ~~benefit~~geographic ~~cost~~area ~~and~~at ~~Pension Plan obligations as of~~ December 31 ~~are~~(in thousands):

	2017			2016
	2018			2017
Net periodic benefit cost:
United States	$	12,561		$	13,708
Discount rate		1.30	%		1.50	%
Mexico		6,011			6,851
Pension Plan obligations:
France		3,581			3,936
Discount rate		1.30	%		1.50	%
Macau S.A.R., China		394			438
Rate of compensation increase		2.00	%		2.00	%
Total	$	22,547		$	24,933

43The following table presents our intangible assets, net by geographic area at December 31 (in thousands):

The accumulated benefit obligation was $0.5 million and $0.4 million as of December 31, 2017 and 2016, respectively.

	2018		2017
United States	$	1,409	$	1,634
Macau S.A.R., China		114		42
Total	$	1,523	$	1,676

~~Net pension expense consisted of the following for the years ended December~~Note 3113. ~~(in~~Pension ~~thousands):~~Plans

	2017			2016
Service-cost benefits earned during the period	$	31		$	28
Interest expense on benefit obligation		8			10
Actual (return) loss on plan assets		(8	)		34
Actuarial loss		29			38
Net pension expense	$	60		$	110

For employees of GPI SAS, we sponsor a non-contributory, defined-benefit pension plan (the Pension Plan) which funds a mandatory payment when employees retire at age 65. The lump-sum benefit amount is based on years of service, job classification, and compensation in the 12 months prior to retirement. The following amounts relate to the Pension Plan at December 31 (in thousands):

Projected benefit payments from the Pension Plan as of December 31, 2017 are estimated at $8,000 for 2018 through 2021, and an aggregate of $0.2 million for 2022 through 2025.

	2018			2017
Change in benefit obligation:
Benefit obligation at beginning of year	$	630		$	497
Service cost		36			31
Interest cost		8			8
Actuarial loss		23			29
Benefits paid		(20	)		(8	)
Effect of foreign exchange rate changes		(30	)		73
Benefit obligation at end of year	$	647		$	630

Change in plan assets:
Fair value of plan assets at beginning of year	$	370		$	317
Actual (loss) return on plan assets		(40	)		8
Effect of foreign exchange rate changes		(16	)		45
Fair value of plan assets at end of year		314			370
Funded status and accrued benefit cost	$	(333	)	$	(260	)

WeAt ~~also~~both ~~sponsor~~December a31, ~~401(k)~~2018 ~~plan for employees in the United States (the 401K Plan) who have worked for us for longer than six months~~ and ~~are~~2017, ~~21 years of age or older. Our contributions to~~ the ~~401K Plan are based on the amounts contributed by eligible employees. Eligible employees can elect to contribute~~ ~~into~~accrued ~~the~~benefit ~~401K~~cost ~~Plan up to the lesser~~ of ~~the Internal Revenue Service annual limit or 75 percent of their earnings. We contribute~~ $0.503 ~~for~~million ~~each~~was ~~$1.00~~recognized ~~contributed by a participant~~ in the ~~401K~~consolidated ~~Plan~~balance upsheet toin 4other ~~percent~~accrued ~~of the participant’s wages~~liabilities. ~~Our contributions to the 401K Plan for each of the years ended December 31, 2017 and 2016 was $0.1 million.~~

~~Note 15. Stockholders’ Equity~~42

OnPension ~~December~~Plan 1,assets ~~2011,~~are ~~the~~measured ~~Board of Directors~~using ~~approved~~ a ~~stock~~Level ~~repurchase~~1 ~~program~~valuation ~~which~~methodology ~~authorized~~and ~~the~~consist ~~repurchase~~ of ~~up to 5%, or 409,951 shares, of our common stock. On November 30, 2012,~~ the ~~Board~~following ofasset ~~Directors~~funds increased the number of shares available for repurchase to 498,512 shares. From the program’s inception through December 31, 2017, we have repurchased an aggregate of 282,922 shares of our common stock at a cost of $2.1 million, or a weighted-average price of $7.30 per share. No shares were repurchased during 2017 or 2016, and there is no assurance that we will repurchase any additional shares under the repurchase program. As of December 31, ~~2017,~~(in ~~there remained 215,590 shares authorized for repurchase. Repurchases are subject to market conditions, share price, and other factors, as well as periodic review by the Board of Directors.~~thousands):

In each of December 2017 and December 2016 we paid a cash dividend of $0.12 per issued and outstanding common share for an aggregate dividend of $1.0 million in each year.

	2018		2017
Worldwide bond fund	$	167	$	179
Guaranteed equity fund		17		34
European equity fund		130		157
Fair value of plan assets at end of year	$	314	$	370

~~Note 16.~~We ~~Stock~~did ~~Option~~not ~~Programs~~make ~~and~~any ~~Share-based~~contribution ~~Compensation~~to the ~~Expense~~Pension Plan in either 2018 or 2017.

WeThe ~~have~~weighted-average ~~one~~assumptions ~~active~~used ~~stock option plan which~~in ismeasuring the ~~1994~~net ~~Directors’~~periodic ~~Stock~~benefit ~~Option~~cost ~~Plan, as amended~~ and ~~extended~~Pension ~~(the Directors’~~ Plan). Weobligations ~~are~~as also party to a stock option agreement (the Gronau Agreement) with our CEO, Gregory S. Gronau. The Directors’ Plan and the Gronau Agreement were both approved by our stockholders, except for the most recent amendments to the Directors’ Plan adopted by the Board of ~~Directors on~~ December ~~26,~~31 ~~2017, described below, which~~ are ~~being submitted to the stockholders for approval in May 2018.~~:

The Directors’ Plan provides that each non-employee director, upon joining the Board of Directors, will receive an initial option to purchase 6,000 shares of common stock. The initial option grant vests over a three-year period, with one-third of the option grant vesting at the end of each year. At the beginning of the fourth year of service on the Board of Directors, and each year thereafter, each non-employee director receives an annual grant to purchase 2,000 shares of common stock. In addition, each non-employee director annually receives options to purchase 1,500 shares of common stock for serving on certain committees of the Board of Directors. Options granted after the initial option grant vest immediately and are exercisable after six months.

	2018			2017
Net periodic benefit cost:
Discount rate		1.60	%		1.30	%

Pension Plan obligations:
Discount rate		1.60	%		1.30	%
Rate of compensation increase		2.00	%		2.00	%

The ~~Board~~accumulated ofbenefit ~~Directors~~obligation ~~may grant discretionary~~was ~~stock options covering up to 100,000 shares to non-employee directors~~$0.6 ~~Discretionary~~million ~~stock options vest immediately~~ and ~~are exercisable after six months~~$0.5 ~~There~~million ~~were~~as noof ~~discretionary~~December ~~stock~~31, ~~option~~2018 ~~grants~~and in 2017 ~~or 2016. A maximum of 450~~,~~000~~ ~~shares of common stock may be issued pursuant to options granted under the Directors’ Plan~~respectively.

44Net pension expense consisted of the following for the years ended December 31 (in thousands):

On December 26, 2017, the Board of Directors adopted amendments to the Directors’ Plan to extend the term of the plan from January 31, 2019 to January 31, 2022 and allow for the grant of stock appreciation rights to non-employee directors in addition to grants of stock options. Each stock appreciation right shall entitle a non-employee director to surrender to GPIC a vested option and to receive from GPIC in exchange a cash payment. Non-employee directors currently hold outstanding stock options which will expire beginning in 2018, unless exercised. The Board of Directors adopted amendments to the Directors’ Plan to allow for the grant of stock appreciation rights which would entitle the non-employee director to receive the amount by which the fair market value of a share of common stock immediately prior to exercise exceeds the related stock option exercise price. The amendments to the Directors’ Plan are being submitted to the Company’s stockholders for approval at the annual meeting in May 2018.

	2018		2017
Service-cost benefits earned during the period	$	36	$	31
Interest expense on benefit obligation		8		8
Actual (return) loss on plan assets		40		(8	)
Actuarial loss		23		29
Net pension expense	$	107	$	60

OnProjected ~~December~~benefit ~~26,~~payments ~~2017,~~from the ~~Board of Directors, upon the recommendation of our Compensation Committee, granted~~Pension ~~stock~~Plan ~~appreciation~~as ~~rights to our non-employee directors relating to outstanding stock options for an aggregate 262,750 shares~~ of ~~common stock previously granted to them under the Directors’ Plan which expire after~~ December 26 31, ~~2017.~~2018 Asare aestimated ~~result~~at ~~of this decision we modified the accounting treatment of the outstanding stock options. We accounted for a~~ $10.21 million ~~current~~for ~~liability~~2019 ~~which~~through ~~was~~2022, ~~generated~~and byan aaggregate ~~$0.3~~of ~~million stock compensation expense and a~~ $0.92 million ~~reclassification~~for ~~from additional paid in capital. This liability represents the fair value of all outstanding~~2023 ~~options~~through ~~as of December 31, 2017~~2027. ~~These grants of stock appreciation rights to our non-employee directors are being submitted to the Company’s stockholders for ratification at the annual meeting in May 2018.~~

~~Mr. Gronau,~~We ~~was~~also ~~granted~~sponsor ana ~~option~~401(k) toplan for employees ~~purchase~~in ~~150,000~~the ~~shares~~United ofStates ~~our~~(the ~~common~~401K ~~stock~~Plan) inwho ~~2009~~have ~~pursuant~~worked tofor ~~the~~us ~~Gronau~~for ~~Agreement.~~longer ~~The~~than ~~stock~~six ~~option~~months ~~has~~and aare ~~ten-year~~21 years ~~term~~of ~~and vested~~age ~~over~~or aolder. Our ~~five-year~~contributions ~~period~~to asthe ~~follows:~~401K ~~20,000~~Plan ~~shares~~are based on the ~~first~~amounts ~~anniversary~~contributed ofby eligible employees. Eligible employees can elect to contribute into the ~~date~~401K Plan up to the lesser of the ~~grant;~~IRS ~~30,000~~annual ~~shares~~limit onor ~~each~~ 75 percent of ~~the~~their ~~second,~~earnings. ~~third,~~We ~~and~~contribute ~~fourth~~$0.50 ~~anniversaries;~~for each ~~and~~$1.00 ~~40,000~~contributed ~~shares~~by ona participant in the ~~fifth~~401K ~~anniversary~~Plan up to 4 percent of the ~~date~~participant’s wages. Our contributions to the 401K Plan for each of ~~grant~~the years ended December 31, 2018 and 2017 was $0.1 million.

~~The~~For ~~following~~employees ~~table~~of ~~summarizes~~GPI ~~stock~~Mexicana, ~~option~~there is ~~activity~~a ~~for~~legal ~~the~~obligation to compensate departing employees after fifteen years ~~ended~~of ~~December~~services. ~~31,~~In 2017, our accrual and ~~2016:~~estimate of the present benefit obligation was $0.2 million. In 2018, we increased the liability to $0.3 million. The increase was mainly recorded in stockholder’s equity.

	Options			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value (in thousands)
Outstanding at January 1, 2016		392,750		$	7.65		4.3	$	782
Granted		25,500			9.83
Expired		(15,500	)		19.40
Outstanding at December 31, 2016		402,750			7.34		3.9	$	1,855
Granted		25,500			10.97
Expired		(12,000	)		10.72
Exercised		(49,500	)		7.07
Outstanding at December 31, 2017		366,750		$	7.35		3.8	$	1,431
Exercisable at December 31, 2017		354,750		$	7.24		3.6	$	1,425

Note 14. Stockholders’ Equity

OfOn ~~the~~December 491,~~500~~ ~~options~~2011, ~~exercised~~the inBoard ~~2017,~~of ~~46,000~~Directors approved ~~were~~a ~~surrendered~~stock inrepurchase ~~connection~~program ~~with~~which authorized the ~~exercise~~repurchase of up to 5%, or 409,951 shares, of our common stock. On November ~~appreciation~~30, ~~rights~~2012, ~~subject~~the toBoard ~~stockholder~~of ~~approval~~Directors atincreased the ~~annual~~number ~~meeting~~of inshares ~~May~~available ~~2018~~for repurchase to 498,512 shares. AtFrom the program’s inception through December 31, ~~2017~~2018, 36we have repurchased an aggregate of 283,~~000~~322 shares of our common stock ~~appreciation~~at a cost of $2.1 million, ~~rights~~or ~~remained~~a toweighted-average beprice ~~paid~~of $7.30 ~~The~~per ~~liability~~share. ~~related~~During toNovember ~~the~~2018, ~~surrender~~we repurchased 400 shares at $8.00 per share. No shares were repurchased in 2017. As of ~~those~~December ~~options~~31, ~~was~~2018, ~~accrued~~215,190 ~~under~~shares ~~accrued~~remained ~~liabilities~~authorized for repurchase.

~~For the year ended December 31, 2017, the total intrinsic value of options exercised was $0.2 million. For the year ended December 31, 2016, there were no options exercised.~~43

WeIn ~~estimate~~each ~~the fair value~~ of ~~each~~December ~~stock option~~2018 ~~award on the grant date,~~ and atDecember ~~each subsequent remeasurement~~2017, ~~using the Black-Scholes valuation model. Dividends and expected~~ ~~volatility~~we ~~are~~paid ~~based~~a oncash ~~historical~~dividend ~~factors~~of ~~related to our common stock~~$0.12 ~~The~~per ~~risk-free~~issued ~~rate~~and isoutstanding ~~based~~common onshare ~~United States Treasury rates appropriate~~ for ~~the~~an ~~expected~~aggregate ~~term,~~dividend ~~which is based on the contractual term~~ of ~~the~~$1.0 ~~options,~~million asin ~~well~~each ~~as historical exercise and termination behavior~~year.

45Note 15. Stock Option Programs and Share-based Compensation Expense

~~The~~We ~~following~~have ~~table~~one ~~summarizes~~active ~~the~~stock ~~weighted-average~~option plan which ~~assumptions~~is ~~used~~the 1994 Directors’ Stock Option Plan, as amended and ~~related~~extended ~~information~~(the Directors’ Plan). Until September 21, ~~for~~2018, we were also party to a stock option ~~activity~~agreement ~~for~~(the Gronau Agreement) with our former CEO, Gregory S. Gronau. The Directors’ Plan and the ~~years~~Gronau ~~indicated~~Agreement were both approved by our stockholders.

	2017			2016
Option valuation assumptions:
Dividend yield		1.1	%		0.0	%
Expected volatility		36.5	%		34.1	%
Risk-free interest rate		1.91	%		1.36	%
Expected term of options		5.6 yrs			5.6 yrs
Weighted-average fair value of options granted during the period	$	4.05		$	3.35

The ~~following~~Board ~~table~~of ~~summarizes~~Directors ~~our~~may ~~reported~~grant discretionary stock ~~compensation~~options ~~expense~~covering up to 100,000 ~~which~~shares isto ~~included~~non-employee indirectors. ~~general~~Discretionary stock options vest immediately and ~~administrative~~are ~~expenses~~exercisable after six months. There were no discretionary stock option grants in ~~our~~2018 ~~consolidated~~or ~~statements~~2017. A maximum of ~~income~~450,000 as shares of common stock may be issued pursuant to options granted under the Directors’ Plan. At December 31, ~~(in~~2018, ~~thousands):~~there were 211,250 options available for future issuance.

	2017			2016
Stock compensation	$	400		$	86
Estimated tax benefit		(144	)		(31	)
Total stock compensation, net of tax benefit	$	256		$	55

The Directors’ Plan allows for the grant of stock appreciation rights to non-employee directors in addition to grants of stock options. Each stock appreciation right entitles a non-employee director to surrender to the Company a vested option and to receive from the Company in exchange a cash payment equal to an amount by which the fair market value of a share of common stock immediately prior to exercise exceeds the related stock option exercise price.

~~Note 17~~On December 26, 2017, the Board of Directors granted stock appreciation rights to our non-employee directors relating to outstanding stock options for an aggregate 262,750 shares of common stock previously granted to them under the Directors’ Plan which grant was ratified by our stockholders. ~~Other~~As ~~Income~~a result, we modified the accounting treatment of the outstanding stock options. On December 31, 2017, we accounted for a $1.2 million current liability, which represents the fair value of all outstanding options, generated by a $0.3 million stock compensation expense and ~~Expense~~a $0.9 million reclassification from additional paid in capital. On December 31, 2018, this liability was $1.2 million.

~~Other~~Mr. Gronau, ~~income~~was ~~and~~granted ~~expense~~options ~~consist~~to purchase 150,000 shares of our common stock in 2009 pursuant to the Gronau Agreement. The stock options had a ten-year term and ~~following~~vested ~~for~~over ~~the~~a ~~years~~five-year ~~ended~~period, between 2009 and 2014. All options were exercised prior to December 31 ~~(in~~21, ~~thousands):~~2018.

	2017			2016
Interest income	$	1		$	23
Interest expense		(249	)		(242	)
Gain on foreign currency transactions		182			187
Other expense, net		(19	)		(2	)
Total other expense, net	$	(85	)	$	(34	)

~~Note 18.~~The ~~Income~~following ~~Taxes~~table summarizes stock option activity for the years ended December 31, 2018 and 2017:

New tax legislation, commonly referred to as the Tax Cuts and Jobs Act, was enacted on December 22, 2017. ASC 740, Accounting for Income Taxes, requires companies to recognize the effect of tax law changes in the period of enactment even though the effective date for most provisions is for tax years beginning after December 31, 2017, or in the case of certain other provisions, January 1, 2018. As such, January 1, 2018 would be the first day of the taxable year for purposes of applying the effective date of the new tax legislation for provisions which are applicable to tax years beginning after December 31, 2017. New tax legislation provisions that are applicable for the tax year ended December 31, 2017 have been accounted for within the current period ended December 31, 2017.

	Options			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value (in thousands)
Outstanding at January 1, 2017		402,750		$	7.34		3.9	$	1,855
Granted		25,500			10.97
Expired		(12,000	)		10.72
Exercised		(49,500	)		7.07
Outstanding at December 31, 2017		366,750			7.35		3.8	$	1,431
Granted		22,000			8.88
Expired		(2,000	)		5.80
Exercised		(156,500	)		6.13
Outstanding at December 31, 2018		230,250		$	8.35		5.1	$	1,072
Exercisable at December 31, 2018		221,750		$	8.35		5.1	$	1,047

~~Given~~Of the ~~significance of~~options ~~the~~for ~~legislation~~156,500 ~~the~~shares ~~SEC~~of ~~staff~~common stock ~~issued~~exercised ~~Staff~~in ~~Accounting Bulletin No. 118 (SAB 118)~~2018, ~~which~~options ~~allows registrants to record provisional amounts during a one year “measurement period” similar to that used when accounting~~ for ~~business combinations. However~~3, ~~the~~000 ~~measurement~~shares ~~period~~were issurrendered ~~deemed~~in toconnection ~~have~~with ~~ended earlier when~~ the ~~registrant~~exercise ~~has obtained, prepared and analyzed the information necessary to finalize its accounting. During the measurement period, impacts~~ of ~~the~~stock ~~law~~appreciation are expected to be recorded at the time a reasonable estimate for all or a portion of the effects can be made, and provisional amounts can be recognized and adjusted as information becomes available, prepared or analyzedrights.

~~SAB~~Of ~~118~~the ~~summarizes~~49,500 aoptions ~~three-step process~~exercised toin be2017, 46,000 ~~applied~~were atsurrendered ~~each~~in ~~reporting~~connection ~~period~~with ~~to account for and qualitatively disclose: (1)~~ the ~~effects~~exercise of ~~the~~stock ~~change~~appreciation inrights, ~~tax law~~subject ~~for which accounting is complete; (2) provisional amounts (or adjustments~~ to ~~provisional~~stockholder ~~amounts)~~approval ~~for~~at the ~~effects~~annual meeting ofin ~~the~~May ~~tax law~~2018. ~~where~~At ~~accounting~~December is31, ~~not~~2017, ~~complete~~36,000 ~~but~~stock ~~that~~appreciation arights ~~reasonable~~remained ~~estimate~~to ~~has been determined; and (3) a reasonable estimate cannot yet~~ be ~~made~~paid. ~~and~~The ~~therefore~~liability ~~taxes~~related ~~are reflected in accordance with law prior~~ to the surrender ~~enactment~~ of ~~the~~those ~~Tax~~options ~~Cuts~~was ~~and~~accrued ~~Jobs~~under ~~Act~~accrued liabilities.

~~The~~For ~~Company has determined a reasonable estimate related to~~ the ~~reduction~~year inended ~~the~~December ~~U.S.~~31, ~~corporate income tax rate to 21%~~2018, ~~which resulted in~~ the ~~Company reporting~~ ~~additional~~total ~~income~~intrinsic ~~tax~~value ~~expense~~ of ~~$0.3~~options ~~million~~exercised aswas ~~a result of the Tax Act. This increase in tax expense is comprised of~~ $~~0.3 million of deferred tax expense due to the remeasurement of deferred tax assets at the 21% tax rate, and $~~1.45 million ~~of additional tax expense related to a one-time transition tax which is completely offset by associated deferred tax assets for foreign tax credits~~. ~~The~~ ~~provisional~~For ~~amount could be impacted by~~ the ~~Company’s~~year ~~assessment~~ended ofDecember ~~100% bonus depreciation for qualified assets placed in service after September 27~~31, 2017., ~~A reasonable estimate cannot yet be made with respect to~~ the ~~global~~total ~~intangible~~intrinsic ~~low-taxed~~value ~~income~~of ~~(“GILTI”) in~~options ~~accordance~~exercised ~~with~~was ~~the enactment of the Tax Act~~$0.2 ~~The Company requires additional time to analyze the impacts of the legislative change~~million.

46We estimate the fair value of each stock option award on the grant date, and at each subsequent remeasurement, using the Black-Scholes valuation model. Dividends and expected volatility are based on historical factors related to our common stock. The risk-free rate is based on United States Treasury rates appropriate for the expected term, which is based on the contractual term of the options, as well as historical exercise and termination behavior.

The following table ~~provides~~summarizes anthe ~~analysis~~weighted-average ofassumptions ~~our~~used, ~~provision~~and related information, for ~~income~~option ~~taxes~~activity for the years ~~ended December 31 (in thousands):~~indicated.

	2017			2016
Option valuation assumptions:	2018			2017
Current:
Dividend yield		1.1	%		1.1	%
U.S. Federal	$	(47	)	$	1,035
Expected volatility		37.9	%		36.5	%
U.S. State		182			43
Risk-free interest rate		2.64	%		1.91	%
Foreign		494			619
Expected term of options		5.6 yrs			5.6 yrs
Total Current		629			1,697
Weighted-average fair value of options granted during the period	$	3.06		$	4.05
Deferred:
U.S. Federal		759			666
U.S. State		48			59
Foreign		379			(79	)
Total Deferred		1,186			646
Income tax provision (benefit)	$	1,815		$	2,343

~~Income~~The ~~before~~following ~~income~~table ~~taxes~~summarizes ~~consisted~~our ofreported ~~the~~stock ~~following~~compensation ~~for~~expense, ~~the~~which ~~years~~is ~~ended~~included in general and administrative expenses in our consolidated statements of income as of December 31 (in thousands):

	2017			2016
	2018			2017
Foreign	$	5,185		$	4,532
Stock appreciation right expense	$	261		$	296
United States		256			2,994
Estimated tax benefit		(55	)		(144	)
Income before income taxes	$	5,441		$	7,526
Total stock compensation, net of tax benefit	$	206		$	152

A reconciliation of our income tax expense as compared to the tax expense calculated by applying the statutory federal tax rate to income before income taxes for the years ended December 31 is as follows:45

	2017			2016
Computed expected income tax expense		34.0	%		34.0	%
State income taxes, net of federal benefits		1.2	%		1.0	%
Subpart F income adjustment		7.4	%		8.6	%
Foreign rate differential (excluding research credit)		(13.3	)%		(10.2	)%
Impact of the Tax Act		5.2	%		-
French research and low wage credit		(4.3	)%		(3.0	)%
Other, net		3.1	%		0.7	%
Income tax expense		33.4	%		31.1	%

Note 16. Other Income and Expense

47Other income and expense consist of the following for the years ended December 31 (in thousands):

The primary components of net deferred income tax assets at December 31 are as follows (in thousands):

	2018			2017
Interest income	$	79		$	1
Interest expense		(176	)		(249	)
(Loss) gain on foreign currency transactions		(188	)		182
Other income (expense), net		70			(19	)
Total other expense, net	$	(215	)	$	(85	)

	2017		2016
Deferred tax assets:
Tax credits	$	2	$	1,549
Property and equipment		-		357
Stock compensation		371		557
French deferred assets		367		410
Bad debt reserves and inventory		608		774
Accrued Expenses		188		321
Operating loss carry forwards		-		7
Other		6		16
Total deferred tax assets		1,542		3,991
Deferred tax liabilities:
Excess book basis in shares of GPI-SAS	$	-	$	1,547
French deferred liabilities		246		262
Property and equipment		80		-
Intangible assets		541		603
Total deferred tax liabilities		867		2,412
Deferred tax assets, net	$	675	$	1,579

Note 17. Income Taxes

WeThe ~~adopted~~Tax ~~FASB~~Act ~~ASU No.~~was ~~2016-09,~~enacted ~~regarding~~on ~~several~~December 22, ~~aspects~~2017. ofASC ~~the~~740, ~~accounting~~Accounting for ~~share-based~~Income ~~payment transactions~~Taxes, ~~including~~requires companies to recognize the ~~accounting~~effect ~~for~~of ~~income taxes,~~tax law changes in the ~~current~~ period of onenactment aeven ~~prospective~~though ~~basis.~~the Aseffective adate ~~result~~for ofmost ~~the~~provisions ~~Company’s~~is ~~application~~for oftax ~~ASU~~years ~~No.~~beginning ~~2016-09,~~after ~~certain excess~~December ~~tax~~31, ~~benefits~~2017, ator in the case ~~time~~ of ~~exercise~~certain ~~are~~other ~~recognized~~provisions, asJanuary ~~income~~1, ~~tax~~2018. ~~benefits~~As such, ~~while~~January ~~tax~~1, ~~deficiencies~~2018 ofwould anbe ~~option~~the atfirst day of the ~~time~~taxable year for purposes of ~~exercise~~applying orthe ~~expiring~~effective ~~unexercised~~date ~~are~~of ~~recognized~~the asnew ~~income~~ tax ~~expense~~legislation infor ~~the~~provisions ~~statement~~which ofare ~~income.~~applicable Asto oftax years beginning after December 31, 2017,. New tax legislation provisions that were applicable for the ~~adoption~~ oftax ~~ASU~~year ~~No.~~ended ~~2016-09~~December ~~has~~31, ~~not~~2017 ~~materially~~were accounted ~~impacted~~for ~~our~~within ~~consolidated~~the ~~financial~~period ~~statements~~ended December 31, 2017.

~~Unrepatriated~~The ~~earnings~~Tax Act made significant changes to ~~were~~federal ~~approximately~~tax ~~$6.2~~law, ~~million~~including asa ofreduction ~~December~~in 31the federal income tax rate from 34% to 21% effective January 1, 2018, a 100% bonus depreciation for qualified assets placed in service after September 27, 2017, and certain additional provisions including the global intangible low-taxed income (GILTI) inclusion and base erosion anti-avoidance tax (BEAT). ~~Except~~As ~~for~~a result of our initial analysis of the Tax Act and existing implementation guidance, we reported $2.0.3 million ~~earnings~~of ~~from~~deferred ~~GPI~~tax ~~SAS,~~expense ~~these~~due ~~unrepatriated~~to the remeasurement ~~earnings~~of ~~are~~deferred ~~considered~~tax ~~permanently~~assets ~~reinvested~~at the 21% tax rate, ~~since~~and it$1.4 ismillion ~~management’s~~of ~~intention~~additional tax expense related to ~~reinvest~~a ~~these~~one-time ~~foreign~~transition ~~earnings~~tax inwhich ~~future~~was ~~operations~~completely offset by associated deferred tax assets for foreign tax credits. WeAs ~~project~~of ~~that~~December 22, 2018, we ~~will~~completed ~~have~~our ~~sufficient~~accounting for ~~cash~~the ~~flow~~Tax Act. As such, we finalized our measurement period adjustments in ~~the~~relation ~~U.S.~~to SAB 118 and ~~will~~recognized ~~not~~measurement ~~need~~period adjustments related to ~~repatriate~~our ~~the~~net ~~foreign~~deferred ~~earnings from~~tax ~~GPI~~revaluation ~~Asia~~and todeemed ~~finance~~repatriation Utax.S This resulted in a net income tax benefit of $0.4 ~~operations~~million primarily due to the acceleration of deductions on our 2017 tax return. ~~Except~~We have not changed our indefinite reinvestment assertion, and we have elected to account for the ~~deemed~~impact ~~dividends~~of ~~under~~GILTI ~~Section~~and ~~956~~BEAT inbased ~~2015~~on ~~and~~the ~~under~~period ~~Subpart~~cost F,method. While we ~~continue~~consider our accounting for the Tax Act to ~~assert~~be ~~that~~complete, ~~earnings~~we ~~from~~continue ~~GPI~~to ~~Asia~~evaluate ~~will~~new beguidance ~~permanently~~and ~~reinvested~~legislation as it is issued.

WeThe ~~are~~following ~~subject~~table toprovides taxation in the U.S. and various states and foreign jurisdictions. With few exceptions, the tax years 2014 through 2017 remain open to examination under the statute of limitations by the U.S. Internal Revenue Service and various states for GPIC and GPI USA, by the French Tax Administration for GPI SAS, and by the Government of the Macau Special Administrative Region - Financial Services Bureau for GPI Asia. In 2015, the French Tax Administration started an ~~examination of~~analysis ~~GPI SAS for tax years 2013 and 2012 that is on-going. In the first quarter~~ of ~~2018,~~our inprovision ~~connection with the FTA’s examination of GPI SAS~~ for ~~tax~~income ~~years 2013 and 2012, GPI paid €1.4 million to the FTA. While we were legally obligated to pay this amount, which represents the FTA’s calculation of the~~ taxes ~~owed,~~ ~~this~~for ~~payment does not represent a settlement nor~~ the ~~end of the examination and we are actively disputing the findings of the FTA. In addition to the on-going French Tax Administration examination of GPI SAS for tax~~ years ~~2013~~ended ~~and~~December 31 ~~2012, the Company received notification~~ (in ~~August 2017, of a federal income tax examination by the Internal Revenue Service for the 2015 tax year.~~ thousands):

	2018			2017
Current:
U.S. Federal	$	(845	)	$	(47	)
U.S. State		(15	)		182
Foreign		712			494
Total Current		(148	)		629

Deferred:
U.S. Federal		921			759
U.S. State		133			48
Foreign		(18	)		379
Total Deferred		1,036			1,186
Income tax provision	$	888		$	1,815

AIncome ~~reconciliation~~before ofincome ~~the~~taxes ~~beginning~~consisted ~~and ending~~of ~~amounts~~the offollowing ~~unrecognized~~for ~~tax~~the ~~benefits,~~years ~~including~~ended ~~estimated~~December 31 ~~interest and penalties, is as follows~~ (in thousands):

	2017		2016
Balance at beginning of year	$	258	$	241
Foreign currency translation		36		17
Balance at end of year	$	294	$	258

All of the liability as of December 31, 2017 would affect our effective tax rate if recognized and amounts of interest and penalties are not expected to be significant. We anticipate that the balance of the unrecognized tax benefits will be eliminated within the next twelve months.

	2018			2017
Foreign	$	4,813		$	5,185
United States		(208	)		256
Income before income taxes	$	4,605		$	5,441

~~Note~~A reconciliation of our income tax expense as compared to the tax expense calculated by applying the statutory federal tax rate to income before income taxes for the years ended December ~~19.~~31 ~~Earnings~~is ~~per~~as ~~Share~~follows:

The weighted-average number of common shares outstanding used in the computation of basic and diluted earnings per share is as follows (in thousands):

	2018			2017
Computed expected income tax expense		21.0	%		34.0	%
State income taxes, net of federal benefits		1.7	%		1.2	%
Subpart F income adjustment		4.1	%		7.4	%
Foreign rate differential (excluding research credit)		(1.2	)%		(13.3	)%
Impact of the Tax Act		(7.9	)%		5.2	%
Impact of GILTI		3.2	%		-
French research and low wage credit		(6.8	)%		(4.3	)%
Impact of tax-return true-ups		4.7	%		1.0	%
Other, net		0.5	%		2.2	%
Income tax expense		19.3	%		33.4	%

	2017		2016
Weighted-average number of common shares outstanding - basic		7,930		7,929
Potential dilution from equity grants		115		113
Weighted-average number of common shares outstanding - diluted		8,045		8,042

The primary components of net deferred income tax assets (liabilities) at December 31 are as follows (in thousands):

At December 31, 2017 we have certain outstanding stock options to purchase common stock which have exercise prices greater than the average market price. These anti-dilutive options have been excluded from the computation of diluted net income per share. Outstanding anti-dilutive options for the years ended December 31, 2017 and 2016 totaled to 13,018 and 38,077, respectively.

	2018			2017
Deferred tax assets:
Tax credits	$	44		$	2
Stock compensation		223			371
Macau intangible assets		186			-
Other - France		323			367
Bad debt reserves and inventory		461			608
Accrued expenses		249			188
Other		29			6
Total deferred tax assets		1,515			1,542

Deferred tax liabilities:
Other - France	$	190		$	246
Property and equipment		722			80
Intangible assets		695			541
Total deferred tax liabilities		1,607			867
Deferred tax (liabilities) assets, net	$	(92	)	$	675

~~Note 20~~Unrepatriated earnings were approximately $6.3 ~~Related-Party~~million ~~Transactions~~as of December 31, 2018. Except for the $2.9 million earnings from GPI SAS, these unrepatriated earnings are considered permanently reinvested, since it is management’s intention to reinvest these foreign earnings in future operations. We project that we will have sufficient cash flow in the U.S. and will not need to repatriate the foreign earnings from GPI Asia to finance U.S. operations. Except for the deemed dividends under Section 956 in 2015 and under Subpart F, we continue to assert that earnings from GPI Asia will be permanently reinvested. Due to the Tax Act, there is no U.S. federal tax on cash repatriation from foreign subsidiaries but it could be subject to foreign withholding tax and U.S. state income taxes.

We ~~lease~~are ~~two~~subject ~~manufacturing~~to taxation ~~facilities~~in ~~totaling approximately~~the ~~80,000~~U.S. ~~square~~and ~~feet~~various ~~located~~states inand ~~San~~foreign ~~Luis~~jurisdictions. ~~Rio~~With ~~Colorado,~~few ~~Mexico~~exceptions, ~~from~~the antax ~~entity~~years ~~controlled~~2015 bythrough 2018 remain open to examination under the ~~family~~statute of ~~Frank~~limitations ~~Moreno,~~ by the ~~General~~IRS ~~Manager~~and various states for GPIC and GPI USA and by the Government of the Macau Special Administrative Region - Financial Services Bureau for GPI ~~Mexicana~~Asia. ~~The~~Tax ~~facilities~~years ~~are~~2016 ~~leased~~ through ~~December~~2018 ~~2023~~remain atopen ato ~~monthly~~examination ~~rent~~under ~~amount~~the statute of $0limitations by the French Tax Administration (FTA) for GPI SAS.31 ~~per~~In ~~square~~2015, the FTA started an examination of GPI SAS for tax years 2013 and 2012 that is ~~foot~~on-going. In the first quarter of 2018, orin ~~approximately~~connection ~~$28~~with the FTA’s examination of GPI SAS for tax years 2013 and 2012,~~000~~ GPI paid 1.4 Wemillion ~~also~~euros ~~have~~to anthe ~~immaterial~~FTA. While we were legally obligated to pay this amount, which represents the ~~service~~FTA’s ~~agreement~~calculation ~~with~~of athe ~~company~~taxes ~~owned~~owed, bythis payment does not represent a ~~relative~~settlement nor the end of the ~~General~~examination ~~Manager~~and we are actively disputing the findings of the FTA. The Company received notification in August 2017, of a federal income tax examination by the IRS for the 2015 tax year. The examination was completed in the third quarter of 2018 and as a result we paid an audit adjustment of $0.1 million.

In 2016, Alexandre Thieffry became our Executive Vice President of Finance. Mr. Alexandre Thieffry is the son of Alain Thieffry, our Chief Financial Officer and Chairperson of the Board. Mr. Alexandre Thieffry served as our Controller from 2011 through 2015.47

~~Neither~~A ~~Mr.~~reconciliation ~~Moreno~~of ~~nor~~the ~~Alexandre~~beginning ~~Thieffry~~and ending ~~are~~amounts ~~directors or executive officers~~ of ~~the~~unrecognized ~~Company.~~tax ~~Mr.~~benefits, ~~Alain~~including ~~Thieffry~~estimated isinterest ~~a director~~ and ~~executive~~penalties, ~~officer~~related ofto the ~~Company.~~FTA ~~Our~~ audit, ~~committee~~is ~~reviews~~as ~~any~~follows ~~related party transactions involving our directors and executive officers.~~(in thousands):

Note 21. Subsequent event

	2018			2017

Balance at beginning of year	$	294		$	258
Foreign currency translation		(14	)		36
Balance at end of year	$	280		$	294

OnAll ~~January~~of ~~26, 2018,~~ the ~~Company~~ ~~entered~~liability ~~into~~as ~~global~~of ~~strategic~~December ~~agreements for development~~31, ~~licensing, and revenue sharing with both BrainChip Holdings Limited~~ ~~(ASX:~~2018 ~~BRN),~~would aaffect ~~leading~~our ~~developer~~effective oftax ~~software~~rate ~~and~~if ~~hardware~~recognized ~~accelerated solutions for advanced artificial intelligence~~ and ~~machine learning~~amounts ~~applications, and Xuvi, LLC, developers~~ of aninterest ~~immersive data analytics~~ and ~~automation~~penalties ~~platform.~~are ~~The~~not ~~companies~~expected ~~plan~~ to ~~jointly~~ ~~develop~~be ~~products for worldwide deployment in casino currency security, table game operations, and player behavior applications~~significant. ~~The~~We ~~terms~~do ~~require~~not ~~payments~~anticipate tothat ~~BrainChip~~the ~~Holdings~~balance ~~Limited and Xuvi, LLC~~ of ~~approximately~~the ~~$0.6~~unrecognized ~~million~~tax ~~and~~benefits ~~$0.7~~will ~~million,~~be ~~respectively, and~~eliminated ~~are~~within ~~contingent~~the ~~upon~~next ~~completion~~twelve ~~of project phases~~months.

49Note 18. Accumulated Other Comprehensive Loss

~~Item~~Accumulated 9.other ~~Changes~~comprehensive loss inconsists ~~and~~of ~~Disagreements~~the ~~with~~following ~~Accountants~~at onDecember ~~Accounting~~31 ~~and~~(in ~~Financial Disclosure~~thousands):

None.

	2018			2017
Foreign currency translation	$	(1,223	)	$	(493	)
Minimum pension liability adjustment, net of tax		(79	)		-
Total accumulated other comprehensive loss	$	(1,302	)	$	(493	)

~~Item~~Note 9A19. ~~Controls and~~ ~~Procedures~~Earnings per Share

~~Effectiveness~~The weighted-average number of ~~Disclosure~~common ~~Controls~~shares outstanding used in the computation of basic and ~~Procedures~~diluted earnings per share is as follows (in thousands):

Our management, including our Chief Executive Officer (CEO) and Chief Financial Officer (CFO), has conducted an evaluation of the effectiveness of our disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (Exchange Act), as of December 31, 2017. Based upon this evaluation, our CEO and CFO have concluded that, as of December 31, 2017, the end of the period covered by this annual report on Form 10-K, our disclosure controls and procedures are effective to provide reasonable assurance that information we are required to disclose in reports under the Exchange Act is (a) recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and (b) accumulated and communicated to our management, including the CEO and CFO, to allow timely decisions regarding required disclosure.

	2018		2017
Weighted-average number of common shares outstanding - basic		7,970		7,930
Potential dilution from equity grants		81		115
Weighted-average number of common shares outstanding - diluted		8,051		8,045

~~Inherent~~At ~~Limitations~~December on31, ~~Effectiveness~~2017, we have certain outstanding stock options to purchase common stock which have exercise prices greater than the average market price. These anti-dilutive options have been excluded from the computation of ~~Controls~~diluted net income per share. There were 13,018 outstanding anti-dilutive options for the year ended December 31, 2017 and none at December 31, 2018.

There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the unintended or intended circumvention or overriding of the controls and proceduresNote 20. ~~The~~Related-Party design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies or procedures may deteriorate. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives.Transactions

~~Changes~~We lease two manufacturing facilities totaling approximately 80,000 square feet located in ~~Internal~~San ~~Control~~Luis ~~over~~Rio ~~Financial~~Colorado, ~~Reporting~~Mexico, from an entity controlled by the family of Frank Moreno, the General Manager of GPI Mexicana. The facilities are leased through December 2023 at a monthly rent amount of $0.31 per square foot, or approximately $28,000. We also have an immaterial service agreement with a company owned by a relative of the General Manager.

Management has determined that there was no change in our internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) during the quarter ended December 31, 2017 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.48

~~Beginning~~In ~~January 1~~2016, ~~2018,~~Alexandre weThieffry ~~implemented~~became our ~~internal~~Executive ~~controls~~Vice toPresident ~~ensure~~of weFinance. ~~have~~Mr. ~~adequately~~Alexandre ~~evaluated~~Thieffry ~~our~~is ~~contracts and properly assessed~~ the ~~impact~~son of ~~the~~Alain ~~new~~Thieffry, ~~accounting~~our ~~standards related~~Chief toFinancial ~~revenue~~Officer, ~~recognition~~President, Secretary, toTreasurer ~~facilitate~~and ~~adoption~~Chairperson onof ~~that~~the ~~date~~Board. WeMr. doAlexandre ~~not~~Thieffry ~~expect~~served ~~significant~~as ~~changes to~~ our ~~internal~~Controller ~~control over~~from ~~financial~~2011 ~~reporting~~through ~~due to the adoption of the new standard~~2015.

~~Management’s~~Neither ~~Annual~~Mr. ~~Report~~Moreno onnor ~~Internal~~Alexandre ~~Control~~Thieffry are ~~over~~directors or executive officers of the Company. Mr. Alain Thieffry is a director and executive officer of the Company. Our ~~Financial~~audit ~~Reporting~~committee reviews any related party transactions involving our directors and executive officers.

~~Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange Act Rules~~Note ~~13a-15(f) and 15d-15(f)~~21. ~~Our~~ ~~internal~~Subsequent control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that:Events

~~(1)~~On ~~pertain~~January to3, ~~the~~2019, ~~maintenance~~as part of ~~records~~the ~~that~~Merger Agreement, inNevada ~~reasonable~~State ~~detail,~~Bank ~~accurately~~issued ~~and~~to ~~fairly~~us ~~reflect~~a ~~the~~$4.0 ~~transactions~~million ~~and~~letter ~~dispositions~~of credit for the benefit of ~~our~~Angel. ~~assets;~~See Note 10. Debt.

~~(2)~~On ~~provide~~March ~~reasonable~~12, ~~assurance~~2019, ~~that~~the ~~transactions~~Company’s ~~are~~stockholders approved ~~recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in~~ the ~~United~~Merger ~~States of America,~~Agreement.

~~(3) provide reasonable assurance that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and~~49

~~(4)~~Item ~~provide~~9. ~~reasonable~~Changes ~~assurance~~in ~~regarding~~and ~~prevention~~Disagreements orwith ~~timely~~Accountants ~~detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect~~ on ~~our~~Accounting ~~financial~~and ~~statements.~~Financial Disclosure

50None.

~~Under~~Item ~~the~~9A. ~~supervision~~Controls ~~of our CEO~~ and CFO, our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2017 based on the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework (2013). Based on this assessment, management concluded that, as of December 31, 2017, our internal control over financial reporting is effective. Management reviewed this assessment with the Audit Committee of our Board of Directors.Procedures

~~Item 9B. Other Information~~Effectiveness of Disclosure Controls and Procedures

~~None~~Our management, including our Chief Executive Officer (CEO)/ Chief Financial Officer (CFO), has conducted an evaluation of the effectiveness of our disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (Exchange Act), as of December 31, 2018. Based upon this evaluation, our CEO/ CFO has concluded that, as of December 31, 2018, the end of the period covered by this annual report on Form 10-K, our disclosure controls and procedures are effective to provide reasonable assurance that information we are required to disclose in reports under the Exchange Act is (a) recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and (b) accumulated and communicated to our management, including the CEO/ CFO, to allow timely decisions regarding required disclosure.

~~PART~~Inherent ~~III~~Limitations on Effectiveness of Controls

~~This~~There ~~Part~~are ~~III~~inherent ~~incorporates~~limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the unintended or intended circumvention or overriding of the controls and procedures. The design of any system of controls is based in part on certain ~~information~~assumptions about ~~from~~the ~~our~~likelihood ~~definitive~~of ~~proxy~~future ~~statement~~events, ~~for~~and ~~our~~there ~~2018~~can ~~annual~~be ~~meeting~~no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of ~~stockholders~~any ~~(Proxy~~evaluation ~~Statement)~~of controls effectiveness to befuture ~~filed~~periods ~~with~~are ~~the~~subject ~~SEC~~to ~~not~~risks ~~later~~that ~~than~~controls ~~120~~may ~~days~~become ~~after~~inadequate because of changes in conditions, or that the ~~end~~degree of ~~our~~compliance ~~fiscal~~with ~~year~~policies ~~covered~~or byprocedures may ~~this~~deteriorate. ~~annual~~Accordingly, ~~report~~even oneffective ~~Form~~disclosure ~~10-K~~controls and procedures can only provide reasonable assurance of achieving their control objectives.

~~Item 10. Directors, Executive~~Changes ~~Officers,~~in ~~and~~Internal ~~Corporate~~Control ~~Governance~~over Financial Reporting

~~The~~Management ~~information~~has ~~required~~determined bythat ~~this~~there ~~Item is~~was ~~incorporated~~no bychange ~~reference~~in toour ~~the~~internal ~~Proxy~~control ~~Statement~~over ~~including~~financial ~~the~~reporting ~~sections~~(as ~~entitled~~defined ~~“Nominees~~in ~~for~~Exchange ~~Election~~Act ofRules 13a-15(f) and ~~Directors,”~~15d-15(f)) ~~“Board~~during ofthe ~~Directors~~quarter ~~and~~ended ~~Committees~~December of31, ~~the~~2018 ~~Board~~that materially affected,” ~~“Section~~or ~~16(a)~~are ~~Beneficial~~reasonably ~~Ownership~~likely ~~Reporting~~to ~~Compliance~~materially affect,” our internal ~~and~~control ~~“Executive~~over ~~Officers~~financial reporting.”

~~Item 11~~Beginning January 1, 2018, we implemented internal controls to ensure we have adequately evaluated our contracts and properly assessed the impact of the new accounting standards related to revenue recognition to facilitate adoption on that date. ~~Executive~~ We did not expect significant changes to our internal ~~Compensation~~control over financial reporting due to the adoption of the new standard.

~~The~~Management’s ~~information~~Annual ~~required~~Report byon ~~this~~Internal ~~Item~~Control isover ~~incorporated~~Financial by reference to the Proxy Statement including the sections entitled “Executive Compensation,” “Director Compensation Table,” “Non-Employee Director Stock Options,” and “Non-Employee Director Cash Compensation.”Reporting

~~Item~~Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange Act Rules 1213a-15(f) and 15d-15(f). ~~Security~~Our ~~Ownership~~internal ofcontrol ~~Certain~~over ~~Beneficial~~financial ~~Owners~~reporting ~~and~~is ~~Management~~designed to provide reasonable assurance regarding the reliability of financial reporting and ~~Related~~the ~~Stockholder~~preparation ~~Matters~~of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that:

~~The~~(1) ~~information~~pertain ~~required by this Item is incorporated by reference~~ to the ~~Proxy~~maintenance ~~Statement~~of ~~including~~records ~~the~~that, ~~section~~in ~~entitled~~reasonable ~~“Security~~detail, ~~Ownership~~accurately ofand ~~Management~~fairly ~~and~~reflect ~~Other Beneficial~~the ~~Owners”~~transactions and ~~“Equity~~dispositions ~~Compensation~~of ~~Plan~~our ~~Information.”~~assets;

~~Item 13. Certain Relationships~~(2) ~~and~~provide ~~Related~~reasonable ~~Transactions~~assurance ~~and~~that ~~Director~~transactions ~~Independence~~are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America,

~~The~~(3) ~~information~~provide ~~required~~reasonable byassurance ~~this~~that ~~Item~~our ~~is incorporated~~receipts byand ~~reference~~expenditures toare ~~the~~being ~~Proxy~~made ~~Statement~~only ~~including~~in ~~the~~accordance ~~sections~~with ~~entitled~~authorizations ~~“Board~~ of ~~Directors~~our management and ~~Committees~~directors; ~~of the Board.”~~and

~~Item 14. Principal Accounting~~(4) ~~Fees~~provide ~~and~~reasonable ~~Services~~assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on our financial statements.

The information required by this Item is incorporated by reference to the Proxy Statement including the sections entitled “Fees Paid to Independent Public Accounting Firm” and “Pre-Approval Policies and Procedures.”50

51Under the supervision of our CEO/ CFO, our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2018 based on the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework (2013). Based on this assessment, management concluded that, as of December 31, 2018, our internal control over financial reporting is effective. Management reviewed this assessment with the Audit Committee of our Board of Directors.

~~PART~~Item IV9B. Other Information

~~Item 15~~None. ~~Exhibits, Financial Statement Schedules~~

~~(a)(1)~~PART ~~Financial Statements~~III

~~Included at~~ Item 810. ~~Financial~~Directors, ~~Statements~~Executive Officers, and ~~Supplementary Data~~Corporate ~~of this report:~~Governance

~~Consolidated~~Directors ~~Balance Sheets at December 31, 2017~~ and ~~2016~~Executive Consolidated Statements of Income for the Years Ended December 31, 2017 and 2016 Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2017 and 2016 Consolidated Statements of Stockholders’ Equity for the Years ended December 31, 2017 and 2016 Consolidated Statements of Cash Flows for the Years Ended December 31, 2017 and 2016 Notes to Consolidated Financial StatementsOfficers

(All of our directors were elected at the Annual Meeting of Shareholders in May 2018 for one-year terms expiring at the 2019 Annual Meeting and when their respective successors have been duly elected and qualified. Our Board of Directors consists of a~~)(2)~~ diverse group of leaders in the fields of gaming, business strategy, technology and ~~(c)~~accounting. Many of the current directors have senior leadership experience at major domestic and international companies. In these positions, they have also gained significant and diverse management experience, including strategic and financial planning, public company financial reporting, compliance, risk management and leadership development. The biographies below describe the skills, qualities, attributes and experiences of each of the directors and executive officers. Currently, our only executive officer is Alain Thieffry who serves as our Chief Executive Officer, Chief Financial ~~Statement~~Officer, ~~Schedules~~President, Secretary, Treasurer and Chairperson of the Board.

~~All~~Martin ~~required~~A. ~~schedules~~Berkowitz, 70, ~~are~~has ~~omitted~~been ~~because~~a director since 2007 and for a brief period in 2013 he served as our interim Chief Administrative Officer. He currently serves as a member of ~~the~~our ~~absence~~Audit Committee, Compensation Committee, Nominating and Governance Committee and Special Transaction Committee. Mr. Berkowitz is an independent consultant and corporate director and advisor. Until November 2017, he served as the part-time Chief Financial Officer of ~~conditions~~Netswitch, ~~under~~Inc., a provider of internet security services, for which ~~they~~he ~~are~~received ~~required~~no orcash compensation. ~~because~~Until April 2014, Mr. Berkowitz served on the ~~required~~Board ~~information~~of isDirectors, ~~given~~and was Chairman of the Audit Committee, of Ready One Industries, a 501(c)(3) corporation. From 2008 to 2011, Mr. Berkowitz served as the Chief Financial Officer of Virtual Coaching, LLC, a technology-enabled service company based in New York City. From 1975 to 2008, Mr. Berkowitz served as an executive, Comptroller and Chief Financial Officer for several companies, including more than twenty-five years with Prudential Financial. Mr. Berkowitz earned his Bachelor of Business Administration in Accounting from the ~~consolidated~~University ~~financial~~of ~~statements~~Massachusetts, Amherst, in 1970 and his Master orof ~~notes~~Business ~~thereto~~Administration ~~included~~from St. John’s University in 1975. He has attended executive programs at ~~Item~~the 8University of Michigan, Stanford University and Harvard University. ~~Financial~~Among ~~Statements~~other qualifications, Mr. Berkowitz brings to the Board of Directors a track record of success in financial and ~~Supplementary~~operating ~~Data~~management in both the private and public sectors. His experience as a financial executive contributes particularly to the Board of Directors’ oversight of the Company’s financial matters.

(Eric P. Endy, 64, has been a~~)(3)~~ director since 1993 and ~~(b)~~currently ~~Exhibits~~serves as a member of our Compliance Committee. Mr. Endy has served as a consultant to, and officer of, the Company for the following periods: consultant from 2003 to 2007, Executive Vice President from 2002 to 2003, Secretary from 1984 to 2003, Chairman of the board and Chief Executive Officer from 1998 to 2002, President from 1994 to 2002, Treasurer from 2001 to 2002 and also for three months in 1998, and Chief Operating Officer from 1994 to 1995. Mr. Endy was an executive of the former Paul-Son Gaming Supplies, Inc., a provider of gaming supplies, from 1990 to 2002. He received a Master of Arts from California State University-Los Angeles in 1981 and a Master of Business Administration from the University of Nevada-Las Vegas in 2007. Among other qualifications, Mr. Endy’s experience in the gaming industry and knowledge of our products assists the Board of Directors with strategic planning for the Company.

~~The exhibits listed in the Index of Exhibits are filed with, or incorporated by reference in, this annual report:~~51

52Charles R. Henry, 81, has been a director since 2006 and currently serves as a member of our Compensation Committee and Compliance Committee. Mr. Henry is a retired two-star general, with 41 years of leadership experience, a distinguished military career and an advanced law degree. He is currently the President of CRH, Inc., a consulting firm specializing in defense acquisition issues. Mr. Henry served as Chairman of the Board of Imperatis, Inc., which specialized in providing mission-critical national security solutions to the U.S. armed forces, intelligence communities and federal civilian agencies, from 2013 to 2015. He served as a director of Molycorp, Inc., an American mining corporation, from 2009 to 2016. From 2005 to 2007, he was the Chief Operating Officer of CEG Company in Rico Rica, Arizona, a leading producer of wiring harnesses for military vehicles, also serving as a director from 1994 to 2007. Prior to that, he was a consultant in Washington, D.C. for various companies on defense issues. In 2001, he was also appointed Chief Executive Officer and President of the National Veterans Business Development Corporation. From 1997 to 2001, Mr. Henry served as President of LFR Levine Fricke, an environmental management and consulting firm, which is an affiliate of Holding Wilson, S.A., our principal stockholder. Mr. Henry holds an undergraduate degree in economics from Middle Tennessee State University. He is a graduate of the United States Army War College and the United States Army Command and General Staff College and holds a J.D. and a L.L.M. degree from Woodrow Wilson Law School. Among other qualifications, Mr. Henry brings to the Board of Directors vast leadership experience within the Executive Branch of the Federal Government and as a senior executive working in the civilian industry. He has hands-on experience and demonstrated ability in program development and resource management. His background and insights are of great assistance to the Board of Directors in matters of successful management in an organization which is facing change and growth.

~~Index~~Robert J. Kelly, 63, has been a director since 2006 and currently serves as Chairman of ~~Exhibits~~our Audit Committee, Compliance Committee and Nominating and Governance Committee and as a member of our Compensation Committee. From August 2014 through January 2015, he served as a consultant to the Company to assist with the integration of Gemaco. Since 2000, Mr. Kelly has been the founder, patent holder, and primary stockholder of EarthSource Inc., a waste-water treatment plant. He is also a civil engineer and responsible for designing the EarthSource process and managing its operations. From 1994 to 2000, Mr. Kelly worked with LFR, Inc., an environmental engineering company and affiliate of Holding Wilson, S.A., our principal stockholder. Prior to 1994, Mr. Kelly served in management positions for two publicly-traded companies providing environmental engineering services. Mr. Kelly received a Master in Business Administration from Harvard University in 1986 and an engineering degree from Princeton University in 1977. Among other qualifications, Mr. Kelly brings to the Board of Directors significant experience and leadership in business development and operational and financial analysis.

		Incorporated by Reference To
No.	Exhibit Description	Filed with this 10-K	Form	File No.	Date Filed
2.01*	Agreement and Plan of Exchange and Stock Purchase Agreement, dated April 11, 2002, between Registrant and Etablissements Bourgogne et Grasset SA, as amended by the First Amendment thereto, dated May 13, 2002		DEF 14A	000-23588	8/09/2002
2.02*	Stock Purchase Agreement, dated April 11, 2002, among Eric P. Endy, The Paul S. Endy, Jr. Living Trust, the other Endy family trusts listed on the signature pages thereto, and the stockholders of Etablissements Bourgogne et Grasset SA listed on the signature pages thereto		DEF 14A	000-23588	8/09/2002
2.03*	Asset Purchase Agreement, dated July 1, 2014, among Registrant and GemGroup Inc., Gemaco Inc., GemAsia LLC, GemTech LLC, the shareholders of GemGroup Inc., and Danny R. Carpenter, as Agent		8-K	000-23588	7/07/2014
2.04*	Asset Purchase Agreement, dated May 11, 2016, among Registrant, Entertainment Gaming Asia Inc. and Dolphin Products Limited		10-Q	000-23588	8/11/2016
3.01	Registrant's Amended and Restated Articles of Incorporation		10-K	000-23588	3/24/2016
3.02	Registrant's Amended and Restated Bylaws		8-K	000-23588	12/28/2007
4.01	Specimen Certificate for Registrant's Common Stock		10-K	000-23588	5/15/2007
10.01+	Registrant's 1994 Directors’ Stock Option Plan, as adopted by the Board of Directors on December 26, 2017, subject to stockholder approval	X
10.02+	Employment Agreement, dated October 28, 2008, between Gregory Gronau and Registrant		8-K	000-23588	10/28/2008
10.03+	Employment Agreement Amendment of 2017 dated March 22, 2017, between Gregory Gronau and Registrant		10-K	000-23588	03/24/2017
10.04+	Stock Option Agreement, dated May 6, 2009, between Gregory S. Gronau and Registrant		DEF 14A	000-23588	4/6/2009
10.05	Demand Line of Credit Agreement, dated June 26, 2014, between Gaming Partners International USA, Inc. and HSBC Bank USA, National Association		8-K	000-23588	7/07/2014
10.06	Demand Note, dated June 26, 2014, by Gaming Partners International USA, Inc. payable to the order of HSBC Bank USA, National Association		8-K	000-23588	7/07/2014
10.07	Security Agreement, dated June 26, 2014, between Gaming Partners International USA, Inc. and HSBC Bank USA, National Association		8-K	000-23588	7/07/2014
10.08	Unlimited Guaranty, dated June 26, 2014 by Registrant for the benefit of HSBC Bank USA, National Association		8-K	000-23588	7/07/2014
10.09	Credit Agreement, dated June 26, 2015, between Registrant and Nevada State Bank		8-K	000-23588	7/02/2015
10.10	Pledge and Security Agreement and Irrevocable Proxy, dated June 26, 2015, among Registrant, Gaming Partners International USA, Inc. and Nevada State Bank		8-K	000-23588	7/02/2015
10.11	Guaranty, dated June 26, 2015, by Gaming Partners International USA, Inc. and Gaming Partners International Asia Limited in favor of Nevada State Bank		8-K	000-23588	7/02/2015
10.12	Lease Agreement dated March 5, 2018, between Copropiedad Arte Y Diseno, as lessor, and GPI Mexicana, S.A. de C.V., as lessee	X
21.01	List of Subsidiaries		10-K	000-23588	3/29/2011
23.01	Consent of Moss Adams LLP	X
31.01	Certification of Registrant's Chief Executive Officer, as required by Section 302 of the Sarbanes-Oxley Act of 2002	X
31.02	Certification of Registrant's Chief Financial Officer, as required by Section 302 of the Sarbanes-Oxley Act of 2002	X
32.01**	Certification of Registrant's Chief Executive Officer and Chief Financial Officer, as required by Section 906 of the Sarbanes-Oxley Act of 2002	X
99.01	Government Gaming Regulation	X
101.INS	XBRL Instance	X
101.SCH	XBRL Taxonomy Extension Schema	X
101.CAL	XBRL Taxonomy Extension Calculation	X
101.DEF	XBRL Taxonomy Extension Definition	X
101.LAB	XBRL Taxonomy Extension Labels	X
101.PRE	XBRL Taxonomy Extension Presentation	X

Jean-Francois Lendais, 55, has been a director since 2010 and currently serves as a member our Compensation Committee. Mr. Lendais is currently the President and CEO of CJS-PLV, a French company which designs and manufactures displays, shop fittings, and digital entertainment for point of sale. From 2000 through 2010, Mr. Lendais served as a Vice President of Capgemini Consulting France, and from 2003 through 2010 served as a member of its Executive Committee and as the head of its Operational Transformation practice. Prior to 2000, Mr. Lendais worked in various capacities with Bossard Consultants and Gemini Consulting. He has served on the Supervisory Board of Holding Wilson, S.A., our principal stockholder, since 2004. Among other qualifications, Mr. Lendais has served as a business transformation consultant and has experience in major transformations involving several countries with different languages, cultures and management styles. As the Company continues to integrate operations in the U.S., France, Mexico and Asia, Mr. Lendais’ background and insights are of great value to the Board of Directors.

+Alain ~~Management~~Thieffry, 63, ~~contract~~has orbeen ~~compensatory~~a ~~plan~~director orsince ~~arrangement~~2002, Chairman of the Board since 2010, Chief Financial Officer since 2016, and Chief Executive Officer, President, Secretary and Treasurer since September 21, 2018. He served as the Company’s Interim Chief Financial Officer from July 2014 to January 2016. He currently serves as Chairman of our Compensation Committee. He has served as President of the Executive Board of Holding Wilson, S.A., our principal stockholder, since 2002 and as an executive officer since 1984. Since 2003, Mr. Thieffry has also served as Chief Executive Officer of DeRoche, S.A., a distributor of food products. Mr. Thieffry holds Masters of Law and Business Administration and the equivalent of a CPA license in France. Among other qualifications, Mr. Thieffry brings to the Board of Directors significant experience in mergers and acquisitions, international business practices and business structuring. Mr. Thieffry’s son, Alexandre Thieffry, serves as our Executive Vice President - Finance.

*There ~~The~~are ~~schedules~~no ~~and~~arrangements ~~exhibits to this document have been omitted from this filing~~ pursuant to ~~Item 601(b)(2) of Regulation S-K. Registrant will furnish copies of~~ which any ~~annexes~~director or ~~schedules~~executive toofficer ~~the~~is ~~Securities~~selected ~~and~~as ~~Exchange Commission upon request~~such.

**Board ~~This~~of ~~exhibit~~Directors ~~is intended to be furnished~~ and ~~shall~~Committees ~~not be deemed “filed” for purposes~~ of ~~Section 18 of~~ the ~~Securities Exchange Act of 1934, as amended, or otherwise.~~Board

~~Item 16~~Our business affairs are conducted under the direction of our Board of Directors. ~~Form~~ The role of our Board of Directors is to effectively govern our affairs ~~10-K~~for ~~Summary~~the benefit of our stockholders and, to the extent appropriate under governing law, of other constituencies, which include our employees, customers, suppliers and creditors. Our Board of Directors strives to ensure the success and continuity of our business through the selection of a qualified management team. It is also responsible for ensuring that our activities are conducted in a responsible and ethical manner. During 2018, our Board of Directors held ten meetings. Each director attended at least 75% of the board meetings and committee meetings during the period he served as a member. Our independent directors held one formal executive sessions to discuss various matters. We encourage our directors to attend our annual meetings of stockholders. All of our current directors attended our 2018 annual meeting of stockholders.

~~Not required.~~52

53Our Board of Directors has five standing committees: the Audit Committee, the Compensation Committee, the Compliance Committee, the Nominating and Governance Committee and the Special Transaction Committee. The charter for each committee other than the Compliance Committee and the Special Transaction Committee, as well as our as well as our Code of Ethics and Code of Conduct, are available on our website at www.gpigaming.com. These documents are also available in print, free of charge, to any stockholder upon request. We may revise these policies from time to time and will promptly post revisions on our website. No charter has been adopted for our Compliance Committee or our Special Transaction Committee.

~~SIGNATURES~~The Audit Committee, a separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934 (Exchange Act), assists our Board of Directors in overseeing:

~~Pursuant~~· to the ~~requirements~~accounting ofand ~~Section 13 or~~financial ~~15(d)~~reporting processes of the ~~Securities~~Company ~~Exchange~~and ~~Act~~audits of ~~1934,~~our ~~the~~financial ~~registrant~~statements, ~~has~~including ~~duly~~the ~~caused~~integrity ~~this~~of ~~report~~our tofinancial ~~be signed on its behalf by the undersigned thereunto duly authorized.~~statements,

	GAMING PARTNERS INTERNATIONAL CORPORATION
Date: March 23, 2018	By:	/s/ Gregory S. Gronau Gregory S. Gronau President and Chief Executive Officer

compliance with legal and regulatory requirements,

~~Pursuant~~· toour ~~the~~independent ~~requirements~~public ofaccountants’ ~~the~~qualifications, ~~Securities Exchange Act of 1934~~appointment, ~~this~~compensation ~~report has been signed below by the following persons on behalf of the registrant~~ and ~~in the capacities and on the dates indicated.~~independence,

Date: March 23, 2018	By:	/s/ Gregory S. Gronau Gregory S. Gronau President, Chief Executive Officer, and Director (Principal Executive Officer)
Date: March 23, 2018	By:	/s/ Alain Thieffry Alain Thieffry Chief Financial Officer, and Chairperson of the Board (Principal Financial Officer and Principal Accounting Officer)
Date: March 23, 2018	By:	/s/ Eric P. Endy Eric P. Endy Director
Date: March 23, 2018	By:	/s/ Martin A. Berkowitz Martin A. Berkowitz Director
Date: March 23, 2018	By:	/s/ Charles R. Henry Charles R. Henry Director
Date: March 23, 2018	By:	/s/ Robert J. Kelly Robert J. Kelly Director
Date: March 23, 2018	By:	/s/ Jean-Francois Lendais Jean-Francois Lendais Director

the performance of our internal audit function and independent public accountants, and

54· such other duties as may be directed by our Board of Directors.

The Audit Committee Charter requires that the Audit Committee consist of three or more board members who satisfy the “independence” requirements of the SEC and NASDAQ for audit committee members. The current members of the Audit Committee are Mr. Kelly, who is the committee chairman, Mr. Henry and Mr. Berkowitz.

The Board of Directors has determined that each of the current members of the Audit Committee satisfies the above-referenced independence requirements. Our Board of Directors believes that each member of the Audit Committee can read and understand financial statements and that at least one of the members has past employment experience or background which results in his financial sophistication. The Board of Directors believes that Mr. Berkowitz qualifies as an audit committee financial expert as defined in Item 407(d)(5)(ii) of SEC Regulation S-K. Our Audit Committee met four times in 2018. The Audit Committee’s charter is available on the Company’s website at: http://gpigaming.investorroom.com/index.php?s=115&item=1.

The Compensation Committee discharges the responsibilities of our Board of Directors relating to compensation of the Company’s executive officers and non-employee directors. The Compensation Committee’s responsibilities include:

establishing and reviewing the overall corporate policies, goals and objectives for the compensation of the Company’s Chief Executive Officer and other executive officers, including a review of the relationship of executive compensation to corporate performance and relative stockholder return, compensation at comparable companies, past years’ compensation to executives, tax and accounting treatment and other relevant factors,

evaluating the performance of the Company’s Chief Executive Officer and other executive officers in light of the corporate goals and objectives and, based on that evaluation, determining the compensation of the Chief Executive Officer and other executives officers, including the individual elements of salary, bonus, supplemental retirement, incentive and equity compensation, and determining the appropriate allocation among individual elements in light of the corporate goals and the performance evaluation, and

making recommendations to the Company’s Board of Directors regarding the salaries, benefits and other compensation of the Company’s non-employee directors, committee chairmen and committee members.

The Compensation Committee administers the 1994 Directors’ Stock Option Plan, as amended, but it has no discretion to determine or vary any matters which are fixed under the terms of the plan. All actions and decisions of the Compensation Committee under such plan (other than grants of non-discretionary options) are subject to approval by our Board of Directors. The current members of the Compensation Committee are Mr. Thieffry, who is the committee chairman, Mr. Kelly, Mr. Berkowitz and Mr. Lendais. No interlocking relationship exists, or in the past has existed, between any member of our Compensation Committee and any member of any other company’s Board of Directors or compensation committee. The Company did not engage compensation consultants in 2018. Our Compensation Committee met once in 2018. Because we are a "controlled-company," we are not subject to certain of the restrictions imposed by NASDAQ rules on Compensation Committee composition. The Compensation Committee’s charter is available on the Company’s website at: http://gpigaming.investorroom.com/index.php?s=115&item=5.

The Compliance Committee is responsible for identifying and evaluating any situations involving us or our affiliates which may have a negative effect upon the objectives of gaming control. The Compliance Committee currently consists of Mr. Kelly, who is the committee chairman, Mr. Endy and Benjamin Comin, our Corporate Counsel. The Compliance Committee reports to our Board of Directors and advises our Board of Directors, after investigation, of activities that might be inappropriate. Among other things, Mr. Comin determines that all transactions involving gaming supplies and gaming equipment are with appropriately licensed casinos, distributors and vendors and reports to the committee regarding matters which may include, but are not limited to, material litigation, material loans or extensions of credit, transactions meeting certain thresholds, and material loans made by us or our affiliates other than for our or the affiliate’s benefits. Additionally, the committee requires that appropriate background checks be conducted on several categories of persons, including, but not limited to, stockholders holding a 5% or more beneficial ownership interest, officers, directors, lenders, vendors, customers, partners, joint ventures and lobbyists. The committee reviews political contributions as to compliance with law, annually reviews the list of our stockholders and may require review of foreign entities with which we do business. The Compliance Committee met four times in 2018.

The Nominating and Governance Committee, which currently consists of Mr. Kelly, who is the committee chairman, Mr. Henry and Mr. Berkowitz, is responsible for:

identifying qualified candidates to be presented to our Board of Directors for nomination as directors,

selecting, or recommending that the Board of Directors select, director nominees for the next annual meeting, and

assisting our Board of Directors in carrying out its responsibilities relating to our corporate governance practices.

Each of the current members of the Nominating and Governance Committee qualifies as an “independent” director as defined in Rule 5605(a)(2) of the NASDAQ corporate governance requirements. Our Nominating and Governance Committee met once in 2018. The Nominating and Governance Committee’s charter is available on the Company’s website at: http://gpigaming.investorroom.com/index.php?s=115&item=9.

The Nominating and Governance Committee considers nominees for our Board of Directors recommended by stockholders. Notice of proposed stockholder nominations for directors must be delivered not less than 90 days or more than 120 days prior to the first anniversary of the date of the prior year’s annual meeting of stockholders. Nominations shall set forth (i) the name and address of the stockholder and/or beneficial owner proposing the nomination, (ii) the class and number of shares of stock held of record and beneficially by such stockholder, (iii) a representation that the stockholder is a beneficial or record owner of our stock entitled to vote at the meeting and intends to appear in person or by proxy at the meeting to propose such nomination, (iv) the written consent of the proposed nominee to be named as a nominee and to serve as a director if elected, (v) a brief description of the proposed nominee’s business experience for the previous five years and all other information regarding such proposed nominee that would be required to be set forth in a definitive proxy statement filed with the SEC pursuant to Section 14 of the Exchange Act, and (vi) all other information that would be required to be filed with the SEC if the person proposing such nomination were a participant in a solicitation subject to Section 14 of the Exchange Act. Nominations should be delivered to the Nominating and Governance Committee at the following address:

Gaming Partners International Corporation

c/o Corporate Secretary

3945 W. Cheyenne Avenue, Suite 208

North Las Vegas, Nevada 89032

In considering possible candidates for election as a director, the Nominating and Governance Committee will consider such factors as overall business experience, experience in technology, finance, marketing, international business, financial reporting and other areas that are expected to contribute to an effective Board of Directors, as well as a candidate’s integrity, commitment, diligence, conflicts of interest and the ability to act in the interests of all stockholders. While the Committee seeks a diversity of experience, viewpoints and backgrounds on the Board of Directors, it has not established a formal policy regarding diversity in identifying director nominees.

The Nominating and Governance Committee will review the qualifications and backgrounds of directors and nominees, as well as the overall composition of the Board of Directors, and recommend the slate of directors to be nominated for election. We do not currently employ or pay a fee to any third party to identify or evaluate, or assist in identifying or evaluating, potential director nominees.

The Special Transaction Committee, which currently consists of Mr. Berkowitz and Mr. Kelly, monitored the negotiation of, and carefully reviewed and considered the terms and conditions of, the Merger Agreement between the Company and Angel, and the transactions contemplated by the Merger Agreement. The Special Transaction Committee met four times in 2018. The Special Transaction Committee unanimously determined, among other things, that the Merger Agreement and the transactions contemplated thereby, including the Merger, were advisable and fair to and in the best interests of the Company and its stockholders. The Special Transaction Committee also recommended that our Board of Directors approve and declare the advisability of the Merger Agreement and the transactions contemplated by the Merger Agreement, and recommended that our stockholders adopt the Merger Agreement.

We have a Code of Ethics, which applies to our Chief Executive Officer, Chief Financial Officer and Controller, and a Code of Conduct, which applies to all of our directors and employees, to the fullest extent permitted under the applicable laws of the country where such employees are domiciled. If we make any amendments to the Code of Conduct or Code of Ethics or grant any waiver, including any implicit waiver, from a provision of the code to our directors or executive officers, we will disclose the nature of such amendment or waiver on our website at www.gpigaming.com.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 requires our directors and executive officers, and persons who own more than ten percent of a registered class of our equity securities, to file with the SEC initial reports of ownership and reports of changes in ownership of common stock and our other equity securities. Officers, directors, and stockholders holding more than ten percent of the class of stock are required by SEC regulation to furnish us with copies of all Section 16(a) forms they file. To our knowledge, based solely on a review of the copies of such reports furnished to us and written representations that no other reports were required, during the year ended December 31, 2018, all reports required under Section 16(a) filing requirements were filed as required, except that the following reports were inadvertently filed late: one report filed on January 30, 2018 by Mr. Gronau for a transaction that occurred on January 22, 2018.

Item 11.

Executive Compensation

Executive Officer Compensation

The following table presents information concerning compensation earned for services rendered to the Company by our Chief Executive Officer and Chief Financial Officer, Alain Thieffry, and our former Chief Executive Officer, Greg Gronau. Mr. Gronau served as our President and Chief Executive Officer from 2009 until September 21, 2018, and as our Secretary and Treasurer from 2014 until September 21, 2018.

Name	Year		Salary/ Fees			Bonus		Option Awards			All Other Compensation			Total
Alain Thieffry		2018	$	26,496	⁽¹⁾	$	-	$	11,022	⁽²⁾	$	45,000	⁽³⁾	$	82,518
Chief Executive Officer, Chief Financial Officer, President, Treasurer and Secretary		2017	$	25,500	⁽¹⁾	$	-	$	13,073	⁽²⁾	$	0		$	38,573
Gregory Gronau		2018	$	280,033		$	60,000	$	-		$	42,903	⁽⁴⁾	$	382,936
Former Chief Executive Officer, President, Treasurer and Secretary		2017	$	350,000		$	200,000	$	-		$	24,837	⁽⁵⁾	$	574,837

(1) Reflects directors’ fees. Mr. Thieffry did not receive compensation for his services as Chief Financial Officer.

(2) Reflects the grant of stock options to purchase 3,500 shares of our common stock.

(3) Reflects monthly consulting fees of $15,000 starting October 1, 2018, which the Board approved on November 27, 2018, to compensate Mr. Thieffry for his services as President, Chief Executive Officer, Secretary and Treasurer of the Company.

(4) Reflects $30,000 in consulting fees earned between September 22, 2018 and December 31, 2018, $5,263 in automobile expense allowance and $7,640 of medical insurance (health, dental, vision and life).

(5) Reflects $7,200 in automobile expense allowance and $17,644 of medical insurance (health, dental, vision and life).

Annual Bonus Programs

The Merger Agreement permits the Company to determine the amount of the 2018 fiscal year annual cash bonuses in the ordinary course of business for participants in the Company’s 2018 fiscal year annual cash bonus plans, including the executive officers of the Company, based on actual performance in accordance with the terms of the Company’s 2018 fiscal year annual cash bonus plans, provided that the aggregate amount of 2018 fiscal year annual cash bonuses may not exceed $1,000,000 exclusive of the value of any applicable payroll tax withholdings.

Outstanding Equity Awards at December 31, 2018

The following table presents information regarding outstanding equity awards held by our named executive officers as of December 31, 2018:

Name	Number of Securities Underlying Unexercised Options / Exercisable		Number of Securities Underlying Unexercised Options / Unexercisable		Option Exercise Price		Option Expiration Date
Alain Thieffry		3,500		-	$	6.04	September 12, 2019
Alain Thieffry		3,500		-	$	6.19	September 11, 2020
Alain Thieffry		3,500		-	$	7.18	September 11, 2021
Alain Thieffry		3,500		-	$	6.26	September 12, 2022
Alain Thieffry		3,500		-	$	8.04	September 12, 2023
Alain Thieffry		3,500		-	$	8.32	September 11, 2024
Alain Thieffry		3,500		-	$	9.77	September 11, 2025
Alain Thieffry		3,500		-	$	10.54	September 12, 2026
Alain Thieffry		3,500		-	$	10.10	September 12, 2027
Alain Thieffry		3,500		-	$	8.73	September 11, 2028
Gregory Gronau		-		-		NA	NA

Quantification of Potential Payments to Named Executive Officers in Connection with the Merger Agreement

The Company has only one “named executive officer”: Alain Thieffry (Chief Executive Officer, Chief Financial Officer, President, Secretary, Treasurer and Chairperson of the Board). Although Mr. Gronau, our former Chief Executive Officer, is considered an executive officer for purposes of the SEC’s disclosure rules, Mr. Gronau ceased his employment with the Company effective September 21, 2018. The Company and Mr. Gronau also entered into a consulting agreement pursuant to which Mr. Gronau provided part-time consulting services to the Company following his date of departure until December 31, 2018, as described above. As a result, Mr. Gronau has no interest in the Merger (except insofar as he is required to be paid under his consulting agreement), or any rights to compensation that are based on or otherwise related to the Merger, and is therefore not included in the disclosure that follows.

In accordance with the Nevada Revised Statutes, our articles of incorporation and bylaws provide for mandatory indemnification of any person, including directors and officers, made a party to a proceeding by reason of such person’s former or current official capacity under certain circumstances. In addition, pursuant to the terms of the Merger Agreement, our directors and officers have rights to indemnification and directors’ and officers’ liability insurance that will survive completion of the Merger.

Executive Officer Severance and Employment Arrangements

We do not have any arrangements with any of our executive officers pursuant to which we are required to make severance payments. The employment arrangements with Gregory Gronau, our former Chief Executive Officer who resigned from his position as President and Chief Executive Officer of the Company effective September 21, 2018, have each terminated.

Employment Agreement with Gregory Gronau

On October 28, 2008, we entered into an employment agreement with Mr. Gronau for his appointment as our Executive Vice President and Chief Operating Officer. The employment agreement provided for a three-year term of employment expiring on October 28, 2011, with automatic renewals for additional one-year periods unless either party provides written notice that the agreement will not be extended. Therefore, the employment agreement was automatically renewed until October 28, 2018. On September 12, 2009, as contemplated in his employment agreement, Mr. Gronau was appointed as our President and Chief Executive Officer. Under the terms of his employment agreement, in connection with his appointment as President and Chief Executive Officer, and as amended since that time by our Board of Directors, Mr. Gronau was entitled to:

an annual salary of $350,000;

a bonus as determined by our Board of Directors in its sole discretion based on Mr. Gronau’s achieving annual objectives specified by the Board of Directors after consultation with Mr. Gronau;

a stock option to purchase 150,000 shares of our common stock at an exercise price equal to the last sale price of our common stock on the NASDAQ on the date of grant, which stock option was granted on May 6, 2009. The stock option vested over a five-year period and expired on December 21, 2019;

an automobile allowance of $600 per month and reimbursement of certain related expenses;

participation in all medical, retirement, pension, or other benefit plans made available to our employees; and

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