www.gametechsummit.com

www.ascendgaming.com

October 19, 2006

The new license, which must go before the Nevada Gaming Commission for final approval, would allow GameTech to manufacture and distribute machines, including wireless gambling systems. President and Chief Executive Jay Meilstrup said the license was a step up from the company’s previous one, and would allow GameTech to fulfill its growth goals.

Board members questioned company executives, however, about turnover and minor conflicts with regulators, “some which resulted in fines,” in Washington, Texas, Missouri and Mississippi. According to the Reno Gazette-Journal, the board also asked about a class-action suit which GameTech settled for $3.35 million.

“There seems to be a common theme with lack of compliance,” said Bobby Siller, who ultimately voted for license approval. “There seems to be commerce before compliance.”

A.J. “Bud” Hicks, a GameTech lawyer, said the company has stabilized and given more attention to regulation. “They’re refining this company and bringing more of a compliance component to it,” he said.

Board Chairman Dennis Neilander voted for license approval, suggesting that GameTech seems to have good intentions. “It doesn’t appear any of the violations were intentional,” Neilander said. “The company does appear to me to have stabilized.”

Even though limiting conditions were attached to the new license, board member Mark Clayton cast a dissenting vote. “The company has been subject to gaming laws in three different states and has not been able to comply with gaming laws in three different states,” Clayton said. “To me, it is still a work in progress. I would feel better if we had a solid track record in front of us.”

Meilstrup asserted that the company was no longer interested in being acquired by another company, and was now instead looking for acquisition targets. In August GameTech announced the buyout of Montana-based Summit Amusement & Distributing for $37 million in cash.

GameTech was also focused on growing into the slot machine market, Meilstrup said, and wants to develop a wireless gambling system that could use games developed by other manufacturers. The new license would enable those goals.

In addition to the license, the board discussed GameTech’s withdrawn application for James Charles Wilson to serve as secretary, treasurer and chief financial officer for the company. Wilson had left the company, and Neilander said he had asked him to appear before the board, but Wilson declined.

The board voted unanimously for the withdrawal “with prejudice” because of “colossal” tax matters revealed during the investigation. Neilander said Wilson “maintained this practice of essentially taking (tax) deductions he was not entitled to,” and shouldn’t be in the gaming industry.

—Darby Harris