FORWARD LOOKING STATEMENTS

SAFE HARBOR STATEMENT PURSUANT TO SECTION 21E OF THE SECURITIES EXCHANGE ACT OF
1934

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, or the "Securities Act," and Section 21E of the Securities Exchange Act of 1934 or the "Exchange Act." These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or anticipated results, including those set forth under the heading "Risk Factors" and elsewhere in, or incorporated by reference into, this report. In some cases, you can identify forward looking statements by terms such as "may," "intend," "might," "will," "should," "could," "would," "expect," "believe," "anticipate," "estimate," "predict," "potential," or the negative of these terms. These terms and similar expressions are intended to identify forward-looking statements. Such statements are subject to certain risks and uncertainties, which could cause actual results to differ materially from those projected. The forward-looking statements in this report are based upon management's current expectations and belief, which management believes are reasonable. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor or combination of factors, or factors we are aware of, may cause actual results to differ materially from those contained in any forward looking statements. You are cautioned not to place undue reliance on any forward-looking statements. These statements represent our estimates and assumptions only as of the date of this report. Except to the extent required by federal securities laws, we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

You should be aware that our actual results could differ materially from those contained in the forward-looking statements due to a number of factors, including, such factors, among others, as dependence on business from foreign customers sometimes located and operated in politically unstable regions, political and governmental decisions as to the establishment of lottery and other wagering industries in which our products are marketed, fluctuations in quarter-by-quarter operating results, market acceptance and market demand for our products and services, pricing, the changing regulatory environment, the effect of our accounting policies, potential seasonality, industry trends, adequacy of our financial resources to execute our business plan, our ability to attract, retain and motivate key technical, marketing and management personnel, and other risks described from time to time in periodic and current reports we file with the United States Securities and Exchange Commission, or the "SEC." You should consider carefully the statements under "Item 1A. Risk Factors" described in our Annual Report on Form 10-K for the year ended April 30, 2009, which address additional factors that could cause our actual results to differ from those set forth in the forward-looking statements and could materially and adversely affect our business, operating results and financial condition. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the applicable cautionary statements.

CRITICAL ACCOUNTING POLICIES

Use of Estimates

Our condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States. Accordingly, we are required to make estimates, judgments and assumptions that we believe are reasonable. We base our estimates on historical experience, contract terms, observance of known trends in our company and the industry as a whole, and information available from other outside sources. Estimates affect the reported amounts and related disclosures. Actual results may differ from initial estimates. The areas most sensitive to estimation are revenue recognition, warranty reserves, inventory valuation, the allowance for doubtful accounts and the deferred tax valuation allowance.

RESULTS OF OPERATIONS

Revenue Analysis
                                      Three Months Ended
(Amounts in thousands)                     July 31,
Revenues                         2009        2008       Change
Products:
Contracts                       $   964     $   941     $    23
Spares                              310         445       (135)
Total Products                    1,274       1,386       (112)
Services:
Software Support                    168          81          87
Product Servicing and Support        24          20           4
Total Services                      192         101          91
                                $ 1,466     $ 1,487     $  (21)

Significant fluctuations in period-to-period contract revenue are expected in both gaming and voting industries since individual contracts are generally considerable in value, and the timing of contracts does not occur in a predictable trend. Contracts from the same customer generally may not recur or generally do not recur in the short-term. Accordingly, comparative results between quarters may not be indicative of trends in contract revenue.

The current domestic and global economic slowdown and tightening of the credit markets may adversely affect our business and financial condition in ways that we cannot reasonably predict. For the lottery segment, due to the tightening of the credit markets, our potential and existing customers may not be able to secure financing for lottery projects which will effectively impact our revenue potential. For the voting segment, various government entities and jurisdictions have experienced severe budget constraints which could compel them to delay or cancel their purchasing decisions, and hence, impact our ability to generate revenue.

Contract revenue for the three months ended July 31, 2009 was $964,000, compared to $941,000 in the same period in 2008. Revenue for 2009 was derived from the shipment of lottery products to two customers while revenue for 2008 was primarily related to one contract.

Spares revenue for the three months ended July 31, 2009 was $310,000, compared to $445,000 for the corresponding period in 2008. Higher spares revenue in 2008 was attributable to higher demand for spare parts from the same pool of customers. We derived spares revenue from various customers on the shipment of spares orders. Customer demand for spare parts fluctuates from period to period.

Software support revenues totaled $168,000 and $81,000 for the three months ended July 31, 2009 and 2008, respectively. The increase in 2009 is due to one additional software support agreement.

Product servicing and support revenue for the period ended July 31, 2009 remained relatively insignificant and constant as compared to that of the same period in 2008.

Related party revenue of approximately $1.2 million accounted for 82% of total revenue in the three months ended July 31, 2009, compared to $305,000 or 21% of total revenue in the corresponding period in 2008.

Cost of Sales and Gross Profit Analysis

                                   Three Months Ended
                             July 31,              July 31,
(Amounts in thousands)         2009                  2008
Revenues:
Products                 $ 1,274        87 %   $ 1,386        93 %
Services                     192        13 %       101         7 %
  Total revenues         $ 1,466       100 %   $ 1,487       100 %

Cost of sales:
Products                 $   993        68 %   $   854        57 %
Services                      35         2 %        28         2 %
  Total costs of sales   $ 1,028        70 %   $   882        59 %

Gross profit:
Products                 $   281        19 %   $   532        36 %
Services                     157        11 %        73         5 %
  Total gross profit     $   438        30 %   $   605        41 %

Individual contracts are generally significant in value and are awarded in a highly competitive bidding process. The gross profit margin varies from one contract to another, depending on the size of the contract and the competitiveness of market conditions. Accordingly, comparative results between quarters may not be indicative of trends in gross profit margin.

Overall gross profit margins were at 30% for the three months ended July 31, 2009, compared to 41% for the corresponding period in 2008. The reduction in gross profit margins for 2009 is principally due to substantially higher unabsorbed production overhead costs resulting from lower utilization of production labor resources as less research and development efforts were expended.

Research and Development Expenses ("R&D")

For the three months ended July 31, 2009, R&D expenses were $477,000, compared to $559,000 in the same period in 2008. We attribute the decrease to the gradual completion of the development phase of new voting system products. We anticipate that R&D expenses will continue to decrease moderately in coming quarters as we complete development of new voting system products.

Selling, General and Administrative ("SG&A")

SG&A expenses for the three months ended July 31, 2009 were $503,000, compared to $449,000 in the same period in 2008. The increase of $54,000 in SG&A expenses is primarily related to higher personnel costs, increased sales and marketing related expenses and costs associated with the Sarbanes-Oxley compliance efforts. We anticipate that SG&A expense will remain relatively constant for the remaining quarters of fiscal 2010.

Other Income

Other income in the three months ended July 31, 2009 and 2008 consisted of interest and dividend income. We derived interest and dividend income from certificates of deposit and cash and cash equivalent balances during the periods ended July 31, 2009 and 2008. The significant reduction in interest and dividend income is due primarily to lower yield and return on investments as a result of the financial market conditions.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity

Our net working capital at July 31, 2009 was $4.6 million.

Contract backlog at July 31, 2009 was approximately $1.1 million. Of this amount, approximately $881,000 will be derived from shipment of lottery products to a related customer. The remaining contract backlog amount of approximately $212,000 relates to an executed voting contract with an unrelated customer.

Additional sources of cash through July 31, 2010 are expected to be derived from spares and software support revenues. Uses of cash are expected to be for normal operating expenses and costs associated with contract execution.

While we anticipate that we will be successful in obtaining additional product or service contracts to enable us to continue normal operations through July 31, 2010, there can be no assurance that we will be able to acquire new contracts.

In the highly competitive industry in which we operate, operating results may fluctuate significantly from period to period. We anticipate that our cash flows from operations, expected contract payments and available cash will be sufficient to enable us to meet our liquidity needs through at least July 31, 2010. Although we are not aware of any particular trends, in the event that we are unable to secure new business, we may experience reduced liquidity or insufficient cash flows.

The following table summarizes our cash flow activities:

                                                                  Three Months Ended
                                                       July 31,       July 31,        Increase
                                                         2009           2008         (Decrease)
(Amounts in thousands)
Condensed cash flow comparative:
Operating activities                                   $ (1,199)     $      246     $    (1,445)
Investing activities                                         885             69              816
Net increase (decrease) in cash and cash equivalents   $   (314)     $      315     $      (629)

Cash Flow Analysis

Net cash used in operating activities was $1.2 million for the three months ended July 31, 2009, compared to net cash provided by operating activities of $246,000 for the same period in 2008. The primary factors contributing to the variability in the reported cash flow amounts relate to the timing of contract milestone invoicing, receipt of payments and recognition of contract revenue in 2009, which effectively reduced the total billings in excess of costs and estimated earnings on uncompleted contracts. In addition, the net loss incurred in 2009 was $167,000 higher than that of 2008.

Net cash provided by investing activities was $885,000 for the three months ended July 31, 2009, compared to $69,000 in 2008. Net cash provided by investing activities in the three months ended July 31, 2009 resulted primarily from the redemption of matured certificates of deposits. Capital expenditures amounted to $30,000 in the three months ended July 31, 2009, compared to $121,000 in 2008. Higher capital expenditures in 2008 were related to the purchase of test equipment and tooling equipment.

There were no financing activities for the three months ended in July 31, 2009 or 2008.

Capital Resources

As of July 31, 2009, there were no unused credit facilities.