The following discussion and analysis ("MD&A") should be read in conjunction with our Consolidated Financial Statements and Notes thereto included in Item 1 of this Quarterly Report and with Management's Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report for the year ended April 30, 2012, filed on Form 10-K with the SEC on July 27, 2012.

Critical Accounting Policies

Our discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements. We prepare these financial statements in conformity with GAAP. As such, we are required to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the periods presented. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments. On an on-going basis, we evaluate our estimates; however, actual results may differ from these estimates under different assumptions or conditions. There have been no material changes or developments in our evaluation of the accounting estimates and the underlying assumptions or methodologies that we believe to be Critical Accounting Policies and Estimates as disclosed in our Annual Report for the year ended April 30, 2012, filed on Form 10-K with the SEC on July 27, 2012.

Executive Overview

We were formed in 1977 and, since 1994, have primarily been a gaming company involved in financing, developing, owning and operating gaming properties. Our gaming facility operations are located in the United States of America ("U.S."), specifically in the states of Washington and South Dakota. Our business strategy will continue to focus on owning and operating gaming establishments. If we are successful, our future revenues, costs and profitability can be expected to increase. However, there is no guarantee that we will be successful in implementing our business strategy in the future and, as such, no guarantee that our future revenues, costs and profitability will increase. Our net revenues were $16.8 million and $12.8 million for the three months ended July 31, 2012 and July 31, 2011, respectively.

When compared to the three months ended July 31, 2011, the three month period ended July 31, 2012 was impacted by the following items:

- Addition of one mini-casino in Washington State, effective July 18, 2011;

- Addition of a slot route operation in South Dakota, effective January 27, 2012;

- Increased drop at our Washington properties;

- A reduction of our table games hold percentage;

- Refinancing of our long-term debt on October 7, 2011; and

- Increased net interest expense.

COMPARISON OF THE THREE MONTHS ENDED JULY 31, 2012 AND JULY 31, 2011

Net revenues. Net revenues increased 31.84%, to $16.8 million from $12.8 million, for the three-month period ended July 31, 2012, compared to the same period ended July 31, 2011. Casino revenues increased 35.2%, or $3.8 million, with the addition of the Washington III mini-casino and operations of South Dakota Gold. Food and beverage revenues remained consistent, and other revenues increased 29.7%, or $0.2 million, mainly as a result of additional commission revenue for ATMs, check cashing, vending as well as retail, pull tabs, and other revenues. Our promotional allowances decreased $0.1 million for the three month period ended July 31, 2012, compared to the same period ended July 31, 2011 as the Washington properties no longer charge complimentary revenue for soft drinks.

Total operating expenses. Total operating expenses increased 26.96%, to $16.1 million from $12.7 million, for the three-month period ended July 31, 2012, compared to the same period ended July 31, 2011. Casino expenses increased 51.5%, or $2.7 million, with the addition of South Dakota Gold and an entire quarter of activity in the Washington III mini-casino compared to thirteen days in the prior year. Marketing and administrative increased 11.9%, or $0.5 million, with the additions of the Washington III mini-casino, South Dakota Gold, and increased marketing expenses in proportion to the increased revenue. Food and beverage expenses increased $0.2 million and depreciation and amortization increased $0.1 million with the additional assets of the Washington III mini-casino and South Dakota Gold, offset by decreased corporate expenses of $0.2 million related to the decrease in stock option expense amortization.

Interest income (expense), net.Interest income (expense), net, consists of a net balance of interest expense, amortization of loan issue cost, and loss on extinguishment of debt, offset by interest income from our various notes receivable. Interest expense increased 1.5%, or $6,000, for the three month period ended July 31, 2012, compared to the three month period ended July 31, 2011. The increase is due to the 0.5% higher interest rate on the $4.0 million note, which resulted from refinancing our long-term debt. A decrease in interest income of $42,000 for the three month period ended July 31, 2012, compared to the three-month period ended July 31, 2011, was related to the impairment of the BVD/BVO receivable (See Note 4). Amortization of loan issue cost was $77,543 and $11,250 for the three-month periods ended July 31, 2012 and July 31, 2011, respectively. This increased amortization is due to refinancing our long-term debt.

Income Taxes. Our consolidated tax rate for the periods ending July 31, 2012 and July 31, 2011 were a 34.5% expense and a 33.8% benefit, respectively. For the period ended July 31, 2011, the 104.8%, or $283,927, reported tax rate shown for continuing operations is the result of a reclassification of $186,193 tax expense between operations held for sale and continuing operations due to reclassification of deferred tax assets related to the sale of the Colorado Grande Casino. The blended rate for the period ended July 31, 2011 is a 33.8% benefit.

Net income (loss). Net income was $0.2 million compared to $0.2 million loss for the three month periods ended July 31, 2012 and July 31, 2011, respectively. The increase is primarily due to the $4.0 million increased revenues compared to the same period ended July 31, 2011. Operating income increased $0.6 million, to $0.7 million from $0.1 million. We had a $0.0 million loss from discontinued operations for the quarter ended July 31, 2012 compared to a $0.2 million loss from discontinued operations in July 2011.

Non-GAAP Financial Measures

The term "adjusted EBITDA" is used by us in presentations, quarterly earnings calls, and other instances as appropriate. Adjusted EBITDA is defined as net income before interest, income taxes, depreciation and amortization, non-cash goodwill and other long-lived asset impairment charges, write-offs of project development costs, litigation charges, non-cash foreign currency transaction gains and losses, non-cash stock option grants, exclusion of net income or loss from operations held for sale, and net losses/gains from asset dispositions. Adjusted EBITDA excludes the impact of slot and table games hold percentages compared to the prior year. Adjusted EBITDA is presented because it is a required component of financial ratios reported by us to our lenders, and it is also frequently used by securities analysts, investors, and other interested parties, in addition to and not in lieu of GAAP results to compare to the performance of other companies who also publicize this information.

Adjusted EBITDA is not a measurement of financial performance under GAAP and should not be considered as an alternative to net income as an indicator of our operating performance or any other measure of performance derived in accordance with GAAP.

The following table shows adjusted EBITDA by segment for the three months ended July 31, 2012 and July 31, 2011:

                                                           For the three months ended July 31, 2012
                                                                                                          Total
                                                                  South Dakota        Corporate -       Continuing
                                            Washington Gold           Gold              Other           Operations
Revenues:
Gross revenues                             $      15,028,422     $    2,959,137     $            -     $ 17,987,559
Less promotional allowances                       (1,166,741 )          (10,115 )                -       (1,176,856 )
Net revenues                                      13,861,681          2,949,022                  -       16,810,703

Expenses:
Total operating expenses
(excludes depreciation, amortization,
write downs, acquisition costs, stock
option grants,deferred rent, and
impairments)                                      12,079,602          2,535,849            912,636       15,528,087

Adjusted EBITDA                            $       1,782,079     $      413,173     $     (912,636 )   $  1,282,616




                                                           For the three months ended July 31, 2011
                                                                                                           Total
                                                                   South Dakota       Corporate -       Continuing
                                            Washington Gold          Gold                Other         Operations
Revenues:
Gross revenues                             $      14,029,543     $             -     $           -     $  14,029,543
Less promotional allowances                       (1,279,073 )                 -                 -        (1,279,073 )
Net revenues                                      12,750,470                   -                 -        12,750,470
Expenses:
Total operating expenses
(excludes depreciation, amortization,
write downs, acquisition costs, stock
option grants, deferred rent, and
impairments)                                      11,092,746                   -           799,859        11,892,605

Adjusted EBITDA                            $       1,657,724     $             -     $    (799,859 )   $     857,865

The following table reconciles adjusted EBITDA to net income (loss) for the three months ended July 31, 2012 and July 31, 2011:

Adjusted EBITDA reconciliation to net income (loss):

                                        For the three months ended
                                    July 31, 2012        July 31, 2011

Net income (loss)                  $       168,125      $      (191,859 )
Add:
Income tax expense (benefit)                88,689             (283,927 )
Net interest expense                       462,144              348,050
Loss on sale of assets                       1,245                  314
Depreciation and amortization              538,981              438,663
Deferred rent                               19,034                    -
Stock option and ESPP grants                 4,077              289,838
Loss on operations held for sale               321              204,841
Acquisition expenses                             -               51,945
Adjusted EBITDA                    $     1,282,616      $       857,865

Liquidity and Capital Resources



Historical Cash Flows



The following table sets forth our consolidated net cash provided by (used in)
operating, investing and financing activities for the three-month periods ended
July 31, 2012 and July 31, 2011:



                                               July 31,         July 31,
                                                 2012             2011
           Net cash provided by (used in):
           Operating activities              $  2,183,525     $    808,558
           Investing activities                   538,005       (1,060,989 )
           Financing activities                (1,656,582 )        (50,059 )

Operating activities. Net cash provided by operating activities during the three-month period ended July 31, 2012 increased by $1.4 million over the comparable period in the prior fiscal year. This increase mainly resulted from continued strong operating results in Washington State and the addition of South Dakota Gold.

Investing activities. Net cash provided by investing activities during the three-month period ended July 31, 2012 increased to $0.5 million compared to net cash used of $1.1 million for the comparable period in the prior fiscal year. The increase of funds provided is primarily due to the $0.8 million proceeds from the Colorado Grande Casino sale and no acquisitions in this fiscal year compared to the acquisition of the Washington III mini-casino in July of 2011.

Financing activities. Net cash used in financing activities during the three-month period ended July 31, 2012 increased $1.6 million from the comparable period in the prior fiscal year. The increase is attributable to the $1.7 million repayment of debt, which includes a $0.8 million repayment on the $4 million note.

Future Sources and Uses of Cash

We expect that our future liquidity and capital requirements will be affected by:

- capital requirements related to future acquisitions;

- cash flow from acquisitions;

- new management contracts;

- working capital requirements;

- obtaining funds via long-term debt instruments;

- debt service requirements; and

- disposition of non-gaming related assets.

At July 31, 2012, outstanding indebtedness was $16.6 million, of which $2.5 million is due by July 31, 2013. On October 7, 2011, we closed on an $11.0 million loan with Wells Fargo Gaming Capital, LLC. The proceeds were used to refinance debt and pay fees associated with the loan.

The 268 acres in Black Hawk, Colorado is currently held for sale. If the acreage is sold, we will use the proceeds to reduce debt. On October 31, 2011, we took an impairment charge of $2.3 million on this land thereby writing it down to the estimated value of $1.1 million.

On July 31, 2012, excluding restricted cash of $2.0 million, we had cash and cash equivalents of $6.3 million. The restricted cash consists of approximately $2.0 million of player supported jackpots.

Our Consolidated Financial Statements have been prepared assuming that we will have adequate availability of cash resources to satisfy our liabilities in the normal course of business. We have made, and are in the process of making, arrangements to ensure that we have sufficient working capital to fund our obligations as they come due. These potential funding transactions include divesting of non-core assets and obtaining long-term financing. We believe that some or all of these sources of funds will be funded in a timely manner and will provide sufficient working capital for us to meet our obligations as they come due; however, there can be no assurance that we will be successful in divesting of the non-core assets or achieving the desired level of working capital at terms that are favorable to us. Should cash resources not be sufficient to meet our current obligations as they come due, repay or refinance our long-term debt, and acquire operations that generate positive cash flow, we would be required to curtail our activities and grow at a pace that cash resources could support which may require a restructuring of our debt or selling core assets.

Liquidity

The current ratio is an indication of a company's market liquidity and ability to meet creditor's demands. Acceptable current ratios vary from industry to industry and are generally between 1.25 and 3.0 for healthy businesses. If a company's current ratio is in this range, then it generally indicates good short-term financial strength. If current liabilities exceed current assets (the current ratio is below 1), then the company may have problems meeting its short-term obligations. If the current ratio is too high, then the company may not be efficiently using its current assets or its short-term financing facilities. This may also indicate problems in working capital management. The table below shows that, as of July 31, 2012, we have a 1.4 ratio, which is sufficient to service debt and maintain operations.

Current Ratio as of 7/31/2012 Current Ratio Current Assets $ 11,149,305 1.4 Current Liabilities $ 7,897,144

South Dakota Gold - Stock Purchase Agreement

On January 27, 2012, we closed the purchase of all of the shares of South Dakota Gold for $5.1 million. South Dakota Gold is a slot route operator in Deadwood, South Dakota that has been in business since gaming was legalized in South Dakota in 1989. South Dakota Gold currently operates over 900 slot machines at approximately 20 locations which represent approximately 24% of the slots in Deadwood. The transaction was financed by cash on hand generated from our registered direct offering (See Note 17), stock, and seller paper. We have imputed 6% interest on two of these notes that had a stated 0% interest rate.

Off-Balance Sheet Arrangements

None.

Subsequent Events

Effective as of September 6, 2012, Robert B. Sturges resigned as our Chief Executive Officer and a member of our Board of Directors for personal reasons. Mr. Sturges decision to resign from his position on our Board of Directors or from his position as an officer of the Company was not the result of any disagreement with the Company on any matters relating to our operations, policies or practices, or the result of any disagreement with our Board of Directors, management or our auditors.

Our Board of Directors has named Ernest E. East, former Senior Vice President and General Counsel, and a long-time counselor to our Board of Directors, as interim President. Mr. East will report to an oversight committee of our Board of Directors while we search for a permanent Chief Executive Officer.

On September 7, 2012, we filed a Form 8-K with the SEC which provides details regarding these events.