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 $16.4 million and $12.8 million for the three months ended October 31, 2012 and October 31, 2011, respectively.

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

- 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

- Severance accruals for Houston office employees based on the announced closure of the Houston office.

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

Net revenues. Net revenues increased 27.7%, to $16.4 million from $12.8 million, for the three month period ended October 31, 2012, compared to the same period ended October 31, 2011. Casino revenues increased 31.1%, or $3.4 million, with the addition of the Washington III mini-casino and operations of South Dakota Gold. Other revenues increased 18.9%, or $0.1 million, mainly as a result of additional commission revenue for ATMs, check cashing, vending as well as retail, pull tabs, and other revenues. Food and beverage revenues decreased 9.6%, or $0.3 million, mainly as a result of the Washington properties no longer recording complimentary revenue for soft drinks. As a result of this, our promotional allowances also decreased $0.3 million for the three month period ended October 31, 2012, compared to the same period ended October 31, 2011.

Total operating expenses. Total operating expenses increased 8.8%, to $16.7 million from $15.3 million, for the three month period ended October 31, 2012, compared to the same period ended October 31, 2011. Casino expenses increased 44%, or $2.5 million, with the addition of South Dakota Gold and the Washington III mini-casino. Marketing and administrative remained consistent. Food and beverage expenses increased $0.1 million and depreciation and amortization increased $0.1 million with the additional assets of the Washington III mini-casino and South Dakota Gold. Corporate expenses increased $0.6 million, or 63%, as a result of recording $0.7 million of severance accruals for the former CEO and other Houston employees. This was offset by a reduction of write-offs and impairments from $2.3 million for the vacant land in Colorado in the prior year to $0.3 million write off of capitalized development projects in the period ending October 31, 2012.

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 3.6 %, or $14,000, for the three month period ended October 31, 2012, compared to the three month period ended October 31, 2011. The increase is due to the addition of debt related to South Dakota Gold, offset by repayments of $2.7 million of debt since the start of the fiscal year. A decrease in interest income of $42,000 for the three month period ended October 31, 2012, compared to the three month period ended October 31, 2011, was related to the impairment of the BVD/BVO receivable (See Note 4 of our Consolidated Financial Statements). Amortization of loan issue cost was $85,082 and $33,336 for the three month periods ended October 31, 2012 and October 31, 2011, respectively. This increased amortization is due to refinancing our long-term debt. Also, in the period ending October 31, 2011 we recorded a $0.2 million loss on extinguishment of debt related to our refinancing of long term debt.

Income Taxes. The effective tax benefit rate for the three month period ended October 31, 2012 was 13.74%. The rate for this period was lower than the federal statutory rate of 34% primarily due to the write-off of deferred tax assets that corresponded to stock options that expired or were forfeited.

Net loss. Net loss from continuing operations was $0.7 million compared to $2.0 million loss for the three month periods ended October 31, 2012 and October 31, 2011, respectively. The improvement is primarily a result of the $1.5 million after tax impairment of the vacant Colorado land recorded in the period ending October 31, 2011.

COMPARISON OF THE SIX MONTHS ENDED OCTOBER 31, 2012 AND OCTOBER 31, 2011

Net revenues. Net revenues increased 29.8%, to $33.2 million from $25.6 million, for the six month period ended October 31, 2012 compared to the six month period ended October 31, 2011. Casino revenues increased 33.2%, or $7.2 million, with the addition of the Washington III mini-casino and operations of South Dakota Gold, while other revenues increased $0.3 million due to the addition of the Washington III mini-casino and operations of South Dakota Gold. Food and beverage revenues decreased $0.3 million, due to the Washington properties no longer recording comp revenue for soft drinks. As a result of this, promotional allowances decreased $0.4 million in relation to the decreased beverage revenues.

Total operating expenses. Total operating expenses increased 17% to $32.8 million from $28 million, for the six month period ended October 31, 2012, compared to the six month period ended October 31, 2011. During the six months ended October 31, 2011, we recorded the $2.3 million impairment of the Colorado land. Also within the six months ended October 31, 2012, casino, food and beverage, marketing and administrative and facilities operating expenses increased $6.2 million due to the addition of the Washington III mini-casino and the South Dakota slot operation. Corporate expenses increased $0.4 million as a result of recording $0.7 million of severance accruals for the former CEO and other Houston office employees.

Interest expense, net. Interest 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. Interest expense increased 2.6 %, or $19,000, for the six month period ended October 31, 2012 compared to the six month period ended October 31, 2011. The increase is primarily due to increased debt related to South Dakota Gold, net of repayments. Amortization of loan issue costs was $163,000 and $44,500 for the six month periods ended October 31, 2012 and October 31, 2011, respectively. This increase is due to increased deferred loan issue costs related to refinancing of our long-term debt. We had a loss on extinguishment of debt of $154,000 related to repayment of a portion of our long-term debt in the period ending October 31, 2011.

Income Taxes. The effective tax benefit rate for the six months period ended October 31, 2012 was 3.70%. The rate for this period was lower than the federal statutory rate of 34% primarily due to the write-off of deferred tax assets that corresponded to stock options that expired or were forfeited.

Net income (loss). Net loss from continuing operations was $0.5 million and $2.0 million for the six month periods ended October 31, 2012 and October 31, 2011, respectively. The increase of $1.5 million is primarily due to the $1.5 million after tax impairment of the vacant Colorado land recorded in the period ended October 31, 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, severance expense, 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 October 31, 2012 and October 31, 2011:

                                                         For the three months ended October 31, 2012
                                                                                                         Total
                                                                  South Dakota       Corporate -       Continuing
                                            Washington Gold           Gold              Other          Operations
Revenues:
Gross revenues                             $      14,107,533     $    3,349,941     $           -     $ 17,457,474
Less promotional allowances                       (1,068,596 )           (5,190 )               -       (1,073,786 )
Net revenues                                      13,038,937          3,344,751                 -       16,383,688

Expenses:
Total operating expenses(excludes
depreciation, amortization, write downs,
acquisition costs, stock option
grants,severance expense, deferred rent,
and impairments)                                  11,556,859          2,827,264           701,752       15,085,875

Adjusted EBITDA                            $       1,482,078     $      517,487     $    (701,752 )   $  1,297,813




                                                         For the three months ended October 31, 2011
                                                                                                         Total
                                                                  South Dakota       Corporate -       Continuing
                                            Washington Gold           Gold              Other          Operations
Revenues:
Gross revenues                             $      14,225,197     $            -     $           -     $ 14,225,197
Less promotional allowances                       (1,392,611 )                -                 -       (1,392,611 )
Net revenues                                      12,832,586                  -                 -       12,832,586
Expenses:
Total operating expenses (excludes
depreciation, amortization, write downs,
acquisition costs, stock option grants,
severance expense, deferred rent, and
impairments)                                      11,733,176                  -           842,827       12,576,003

Adjusted EBITDA                            $       1,099,410     $            -     $    (842,827 )   $    256,583

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

For the six months ended October 31, 2012:

                                                                                                        Total
                                                                  South Dakota      Corporate -       Continuing
                                            Washignton Gold           Gold             Other          Operations
Revenues:
Gross revenues                             $      29,135,955     $    6,309,078     $          -       35,445,033
Less promotional allowances                       (2,235,337 )          (15,305 )              -     $ (2,250,642 )
Net revenues                                      26,900,618          6,293,773                -       33,194,391

Expenses:
Total operating expenses (excludes
depreciation, amortization, write downs,
acquisition costs, stock option grants,
severance expense, deferred rent, and
impairments)                                      23,650,464          5,353,008        1,610,491       30,613,963

Adjusted EBITDA                            $       3,250,154     $      940,765     $ (1,610,491 )   $  2,580,428

For the six months ended October 31, 2011:

                                                                                                        Total
                                                                  South Dakota      Corporate -       Continuing
                                            Washignton Gold           Gold             Other          Operations
Revenues:
Gross revenues                             $      28,254,740     $            -     $          -     $ 28,254,740
Less promotional allowances                       (2,671,683 )                -                -       (2,671,683 )
Net revenues                                      25,583,057                  -                -       25,583,057
 Expenses:
Total operating expenses (excludes
depreciation, amortization, write downs,
acquisition costs, stock option grants,
severance expense, deferred rent, and
impairments)                                      22,874,618                  -        1,588,214       24,462,832

Adjusted EBITDA                            $       2,708,439     $            -     $ (1,588,214 )   $  1,120,225

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

Adjusted EBITDA reconciliation to net loss:

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

Net loss                           $         (819,008 )   $       (2,120,606 )
Add:
Income tax benefit                           (108,375 )           (1,040,324 )
Net interest expense                          478,146                369,971
Loss on extinguishment of debt                      -                154,270
Impairments/Write offs                        257,733              2,273,966
Loss on sale of assets                          1,718                 22,340
Depreciation and amortization                 538,534                464,541
Deferred rent                                  19,034                      -
Stock option and ESPP grants                   65,682                 20,780
Severance expense                             725,877                      -
Loss on operations held for sale              138,472                 97,924
Acquisition expenses                                -                 13,721
Adjusted EBITDA                    $        1,297,813     $          256,583

The following table reconciles adjusted EBITDA to net loss for the six months ended October 31, 2012 and October 31, 2011:

Adjusted EBITDA reconciliation to net loss:

                                           For the six months ended
                                    October 31, 2012       October 31, 2011

Net loss                           $         (650,883 )   $       (2,312,466 )
Add:
Income tax benefit                            (19,686 )           (1,324,251 )
Net interest expense                          940,290                718,021
Loss on extinguishment of debt                      -                154,270
Impairments/Write offs                        257,733              2,273,966
Loss on sale of assets                          2,963                 22,654
Depreciation and amortization               1,077,515                903,204
Deferred rent                                  38,067                      -
Stock option and ESPP grants                   69,759                316,396
Severance expense                             725,877
Loss on operations held for sale              138,793                302,765
Acquisition expenses                                -                 65,666
Adjusted EBITDA                    $        2,580,428     $        1,120,225

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 six month periods ended
October 31, 2012 and October 31, 2011:



                                                   Six Months Ended
                                             October 31,      October 31,
                                                 2012             2011
           Net cash provided by (used in):
           Operating activities              $  3,087,476     $    459,654
           Investing activities                   170,754       (1,322,577 )
           Financing activities                (2,589,643 )     (1,049,753 )

Operating activities. Net cash provided by operating activities during the six month period ended October 31, 2012 increased by $2.6 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 six month period ended October 31, 2012 increased to $0.2 million compared to net cash used of $1.3 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 October of 2011.

Financing activities. Net cash used in financing activities during the six month period ended October 31, 2012 increased $1.5 million from the comparable period in the prior fiscal year. The increase is attributable to the $2.7 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 October 31, 2012, outstanding indebtedness was $15.6 million, of which $1.9 million is due by October 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 of vacant land 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 October 31, 2012, excluding restricted cash of $2.0 million, we had cash and cash equivalents of $5.9 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 October 31, 2012, we have a 1.4 ratio, which is sufficient to service debt and maintain operations.

Current Ratio as of October 31, 2012 Current Ratio Current Assets $ 10,079,834 1.4 Current Liabilities $ 7,280,853

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 approximately 950 slot machines at 20 locations which represent approximately 25% of the slots in Deadwood. The transaction was financed by cash on hand generated from our registered direct offering (See Note 16), 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.