10-K

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, 2015

or

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

for the transition period from                          to                          .

Commission file number 000-55119

AP GAMING HOLDCO, INC.

(Exact name of registrant as specified in its charter)

Delaware	46-3698600
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

5475 S. Decatur Blvd., Ste #100

Las Vegas, NV 89118

(Address of principal executive offices) (Zip Code)

(702) 722-6700 

(Registrant’s telephone number, including area code)

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

Securities to be registered pursuant to Section 12(g) of the Act:

Common Stock, par value $0.01 per share

(Title of Class)

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

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  o  No  x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 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. Yes  x  No  o

Indicate by check 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). Yes  o  No  x*

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of 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. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  o Accelerated filer o Non-accelerated filer  x (Do not check if a smaller reporting company) Smaller reporting company  o

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

Neither the registrant’s voting common stock nor its non-voting common stock are publicly traded, and accordingly have no market value as of June 30, 2015, the last business day of the registrant’s most recently completed second fiscal quarter. As of February 27, 2016, there were 100 shares of the Registrant’s Class A common stock, $.01 par value per share, and 15,039,027 shares of the Registrant’s Class B common stock, $.01 par value per share, outstanding.

*The Company does not have any public stockholders. Accordingly, it does not maintain an investor relations website where Interactive Data Files would be posted.

TABLE OF CONTENTS

	FORWARD LOOKING STATEMENTS	1
	PART I
ITEM 1	BUSINESS	3
ITEM 1A	RISK FACTORS	12
ITEM 1B	UNRESOLVED STAFF COMMENTS	23
ITEM 2	PROPERTIES	23
ITEM 3	LEGAL PROCEEDINGS	24
ITEM 4	MINE SAFETY DISCLOSURES	24
	PART II
ITEM 5	MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERSAND ISSUER PURCHASES OF EQUITY SECURITIES	25
ITEM 6	SELECTED FINANCIAL DATA	25
ITEM 7	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION ANDRESULTS OF OPERATIONS	26
ITEM 7A	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	41
ITEM 8	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	43
ITEM 9	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING ANDFINANCIAL DISCLOSURE	43
ITEM 9A	CONTROLS AND PROCEDURE	43
ITEM 9B	OTHER INFORMATION	43
	PART III
ITEM 10	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	44
ITEM 11	EXECUTIVE COMPENSATION	45
ITEM 12	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	48
ITEM 13	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR	48
ITEM 14	PRINCIPAL ACCOUNTING FEES AND SERVICES	49
	PART IV
ITEM 15	EXHIBITS AND FINANCIAL STATEMENT SCHEDULE	50
	SIGNATURES	53

ii

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K contains “forward-looking statements.” Forward-looking statements include any statements that address future results or occurrences. In some cases you can identify forward-looking statements by terminology such as “may,” “might,” “will,” “would,” “should,” “could” or the negatives thereof. Generally, the words “anticipate,” “believe,” “continue,” “expect,” “intend,” “estimate,” “project,” “plan” and similar expressions identify forward-looking statements. In particular, statements about our expectations, beliefs, plans, objectives, assumptions or future events or performance contained in this Annual Report on Form 10-K in Item 1. “Business,” Item 1A. “Risk Factors” and Item 2. “Financial Information—Management’s Discussion and Analysis of Financial Condition and Results of Operations” are forward-looking statements. These forward-looking statements include statements that are not historical facts, including statements concerning our possible or assumed future actions and business strategies.

We have based these forward-looking statements on our current expectations, assumptions, estimates and projections. While we believe these expectations, assumptions, estimates and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks, uncertainties and other factors, many of which are outside of our control, which could cause our actual results, performance or achievements to differ materially from any results, performance or achievements expressed or implied by such forward-looking statements. These risks, uncertainties and other factors include, but are not limited to:

• our ability to develop and manage frequent introductions of innovative products;

• changing economic conditions and other factors that adversely affect the casino and gaming industry, the play levels of our participation games, product sales and our ability to collect outstanding receivables from our customers;

• the effect of our substantial indebtedness on our ability to raise additional capital to fund our operations, react to changes in the economy or our industry and make debt service payments;

• changes in player and operator preferences in participation games, which may adversely affect demand for our products;

• increased competition in the gaming industry;

• changing regulations, new interpretations of existing laws, or delays in obtaining or maintaining required licenses or approvals, which may affect our ability to operate in existing markets or expand into new jurisdictions;

• changes in the regulatory scheme governing tribal gaming impacting our games and Native American customers, which could adversely affect revenues;

• legal and regulatory uncertainties of gaming markets, including, without limitation, the ability to enforce contractual rights on Native American land;

• legislation in states and other jurisdictions which may amend or repeal existing gaming legislation;

• decreases in our revenue share percentage in our participation agreements with customers;

• slow growth in the establishment of new gaming jurisdictions, declines in the rate of replacement of existing gaming machines and ownership changes and consolidation in the casino industry;

• our ability to realize satisfactory returns on money lent to new and existing customers to develop or expand gaming facilities or to acquire gaming positions in gaming facilities;

• adverse local economic, regulatory or licensing changes in Oklahoma or Alabama, the states in which the majority of our revenue has been derived, or material decreases in our revenue with our two largest customers, which comprised approximately 30% of our gaming operations revenue for the year ended December 31, 2015;

• inability to protect or enforce our intellectual property;

• future claims of litigation or intellectual property infringement or invalidity, and adverse outcomes of those claims;

• failure to attract, retain and motivate key employees;

• the security and integrity of our systems and products;

• losses due to technical problems or fraudulent activities related to our gaming machines and online operations;

• product defects which could damage our reputation and our results of operations;

• quarterly fluctuation of our business;

• certain restrictive open source licenses requiring us to make the source code of some of our products available to third parties and potentially granting third parties certain rights to the software;

• recently introduced or proposed smoking bans on smoking at our facilities that may adversely affect our operations;

• AP Gaming VoteCo, LLC is the sole holder of our voting common stock, par value $0.01 per share (“Common Stock”) and may have conflicts of interest with us in the future or interests that differ from the interests of holders of our non-voting common stock;

• failure of our suppliers to meet our performance and quality standards or requirements could result in additional costs or loss of customers;

• risks related to casino operations which are conducted at the discretion of our customers;

• risks related to operations in foreign countries and outside of traditional U.S. jurisdictions; and

1

• the other factors discussed under Item 1A. “Risk Factors.”

Given these risks and uncertainties, you are cautioned not to place undue reliance on such forward-looking statements. These forward-looking statements are made only as of the date of this Annual Report. We do not undertake and specifically decline any obligation to update any such statements or to publicly announce the results of any revisions to any such statements to reflect future events or developments unless required by federal securities law. New factors emerge from time to time, and it is not possible for us to predict all such factors.

2

PART I

ITEM 1. BUSINESS

Unless the context indicates otherwise, or unless specifically stated otherwise, references to the “Company”, “AP Gaming”, “Successor”, “we,” “our” and “us” refer to AP Gaming Holdco Inc. and its consolidated subsidiaries, including AGS Capital, LLC (“AGS Capital”) and AGS, LLC.

Overview

AP Gaming Holdco, Inc. is a leading designer and supplier of gaming products and services for the gaming industry. The Company is a leader in the Class II Native American and Mexican gaming jurisdictions and has expanded its product lines to include Class III Native American, commercial and charity jurisdictions. We supply electronic gaming machines (“slot machines”), server-based systems and back-office systems that are used by casinos and various gaming locations. Over the past 18 months, the Company has significantly broadened and diversified its product portfolio through both organic development and strategic acquisitions. We launched a new table products division in mid-2014 to provide live felt table games to casino operators. Through the acquisition of Cadillac Jack (defined below) on May 29, 2015, we greatly expanded our games library and slot machine offerings. The Company also acquired online developer Gamingo Limited in June 2015, expanding its offerings to include interactive products such as social casino games, available on desktop and mobile devices.

We are a Delaware corporation that was formed in August 2013 to acquire, through an indirect wholly owned subsidiary of the Company, 100% of the equity in AGS Capital, LLC (“AGS Capital”, “Predecessor”) from AGS Holdings, LLC (“AGS Holdings”). AGS Capital was a supplier of slot machines primarily to Class II Native American gaming jurisdictions.

Impact of Current Year Acquisitions

On May 29, 2015, we acquired 100% of the equity of Amaya Americas Corporation (“Cadillac Jack”), a leading provider of Class II gaming machines for the North American tribal gaming market, with key regions of operation including Alabama, Mexico, and Wisconsin. Our consolidated results of operations include the impact of this acquisition and the related transaction costs, as well as the results of operations of Cadillac Jack, from the date of acquisition through December 31, 2015.

On June 15, 2015, the Company purchased 100% of Gamingo Limited (formerly known as “RocketPlay”, currently known as “AGSi”), a leading developer of social casino games for mobile devices. With primary offices in San Francisco and Tel Aviv, AGSi’s flagship product, Lucky Play Casino, gives players a casino-quality experience with slots, table games, tournaments, and live events. The results of operations from AGSi have been included in our consolidated results from the date of acquisition through December 31, 2015.

Business Strategy

We have invested and expect to continue to invest in new business strategies and services, and innovative products and technologies. We intend to pursue the following strategic initiatives as part of our overall business strategy:

1. Expand and Diversify Our Library of Content

We plan to continue to expand and diversify our library of proprietary content across all platforms - slots, tables and social casino. We will continue our focused efforts to develop games, both internally and through partnerships with third parties, tailored to our current and target markets. As of December 31, 2015, our Company had over 250 active slot machine titles and approximately 20 table game titles in our content library and we expect our current pool of development talent to create more than 40 titles on an annual basis.

2. Optimize Mix of Game Titles

We plan to improve yield by managing game title mix across our domestic installed base of participation slot machines. We believe that more effective management of the title mix represents an opportunity to generate incremental earnings growth without requiring growth in our installed base of participation gaming machines. In addition, we expect improved game performance will likely drive incremental slot machine placements within our customers’ facilities.

3

3. Expand Our Footprint Through Strategic Acquisitions

We are actively seeking acquisition opportunities that will: 1) have a positive effect on long-term earnings growth, 2) generate strong recurring revenue, 3) provide for expansion into new gaming jurisdictions, 4) bolster our library of proprietary content, and 5) diversify our existing product mix. Our acquisitions of Cadillac Jack and Rocketplay are great examples of this strategy.

4. Focus on Development of Unique Niche Products

With over 1,000 casino facilities throughout the United States as of December 31, 2015, and the slot machine replacement cycle at a cyclical low, we believe the market potential for unique new games and concepts is favorable. We will target the introduction of a small number of niche gaming products to a large number of casinos.

5. Build Momentum in Class III Markets and Pursue Class II Market Leadership

With the inclusion of Cadillac Jack units, we have a foothold of approximately 3,600 Class III placements in total, which represents approximately 1% of the total U.S. Class III market. We believe significant growth potential exists for our Company to further penetrate this market. Utilizing new, recently-issued gaming licenses, we expect to begin placing and selling Class III products in five new jurisdictions (Nevada, Mississippi, Louisiana, New Jersey and Connecticut) in 2016. We also anticipate growing our presence in Class III markets where we currently operate, such as Oklahoma, Florida and California, by placing additional content from our expanding library of games in these states. In addition, we believe that our existing core Class II product offering is among the strongest in the industry today. We expect to continue gaining market share in existing Class II jurisdictions and are focused on penetrating newly licensed jurisdictions.

6. Focus on Innovation and New Product Verticals For the Next Generation of Casino Players

In the third quarter of 2014, we began developing table games products through the acquisitions of War Blackjack and other related intellectual property. The extension of our business into table games, as well as our entry into the social casino space through our acquisition of Rocketplay, demonstrates our commitment to evolving our business to adapt to the preferences of the next-generation gambler. As of December 31, 2015, the Company had approximately 815 table game units under lease arrangements. We plan to continue expanding our table games offerings through acquisitions and internal development. We have already introduced our proven land-based casino content into online and mobile formats for social gaming. Our popular land-based slot machine games - such as So Hot, Colossal Diamonds, and Monkey in the Bank, to name a few - have been among the strongest performers in our social casino game catalog.

Apollo Overview

Founded in 1990, Apollo is a leading global alternative investment manager with offices in New York, Los Angeles, Houston, Bethesda, Chicago, Toronto, London, Frankfurt, Luxembourg, Singapore, Hong Kong, Shanghai and Mumbai. Apollo’s assets under management are invested in its private equity, credit, and real estate businesses.

Apollo has a long history of successfully investing funds it manages in leisure and site-based entertainment. Investments include resorts, cruise lines, gaming, theme parks, spas, golf and restaurants. Apollo has a deep understanding and significant experience in the development / construction, marketing and cross-selling activities for these assets, as well as a broad network of industry professionals.

Apollo is currently invested in Caesars Entertainment Corporation, the world’s largest and most diversified casino-entertainment provider and the most geographically diverse U.S. casino-entertainment company, Gala Coral Group, one of Europe’s pre-eminent betting and gaming businesses, and Norwegian Cruise Line Holdings Ltd., a leading cruise line operator with casinos across multiple ships.

4

Our Operations

Under our participation agreements, we provide customers with gaming machines, table games, ancillary table game equipment, systems software, computer hardware, signage and other equipment for operation within their gaming facilities. In return we receive either a share of the revenue generated by these products and systems, a flat monthly fee, or a daily fee. The determination of whether our agreement results in a revenue share, monthly fee, or daily fee arrangement is generally governed by local gaming jurisdictions. For our revenue share arrangements on slot machine products, we have historically shared between 15 - 20% of the revenues generated by the gaming machines. Under our participation agreements for slot machines, we participate in selecting the mix of titles, maintain and service the equipment and oversee certain promotional efforts. For licensed table games and related equipment, we typically receive monthly royalty payments. In support of our business and operations, we employ a professional staff including field service technicians, production, sales, account management, marketing, technology and game development, licensing and compliance and finance.

Our corporate headquarters are located in Las Vegas, which serves as the primarily location for the executive management and administrative functions such as finance, legal, licensing and compliance. Our licensing and compliance division oversees the application and renewal of our corporate gaming licenses, findings of suitability for key officers and directors and certification of our gaming equipment and systems for specific jurisdictions, human resources, as well as coordinating gaming equipment and software shipping and on-site and remote service of our equipment with gaming authorities.

Our field service technicians are responsible for installing, maintaining and servicing our gaming products and systems. Our field service operation including our call center, which operates 24 hours a day, seven days a week, is managed out of our Oklahoma facility. We can also access most of our gaming machines and systems remotely from approved remote locations to provide software updates and routine maintenance. In addition, our gaming machine and system production facilities are located in and managed out of Oklahoma, Atlanta, and Mexico City. Our table game service is primarily managed from Las Vegas.

Sales, product management and account management are managed through our various locations and are located throughout the jurisdictions in which we do business. Sales and account management oversee the customer relationship both at the individual location and corporate level and are responsible for developing new customer relationships. Account management is in charge of running on-site promotions and corporate sponsorship programs. In addition, our marketing team is in charge of general corporate marketing, including advertisements and participation at industry trade shows.

Our technology and game development division operates primarily out of our Atlanta location and to a lesser extent in Las Vegas, Nevada and Austin, Texas. Through the acquisition of AGSi we have a development team in Tel Aviv as well. We employ game developers, software and system programmers, project managers and other development and administrative staff that oversee our internal game development efforts and manage third party relationships.

Products

We provide our casino customers with gaming machines, table games, ancillary table game equipment, systems software, computer hardware, signage and other equipment for operation within their gaming facilities. We also offer social casino products directly to players.

Gaming Machine Platforms

Roadrunner Platform

We received regulatory approval for our proprietary Roadrunner (“Roadrunner”) platform in 2012. Roadrunner represented a substantial advancement from our legacy Encore platform, both in terms of user interface and platform architecture. We designed Roadrunner to be a leading Class II gaming platform with the capability to port Class III outcomes within a Class II construct with limited degradation in game play. Therefore, we are able to develop both Class II and Class III titles for Roadrunner and can also easily retrofit the platform to certain of our existing products.

Utilizing both in-house and third party providers, we created a portfolio of new titles for Roadrunner. The platform was designed with our revenue-share model in mind, and title conversions can be executed by loading software off of a USB drive. Roadrunner is also compatible with downloadable conversions, however, regulatory standards in most jurisdictions do not currently permit this technology.

5

Colossal Platform

In September 2012, we entered into an exclusive distribution agreement with C2 Gaming, LLC (“C2 Gaming”, “Colossal”) to distribute their Class II and Class III games in California, Florida, New York, Oklahoma, Texas and Washington. In May 2014, we acquired C2 Gaming which provided for the distribution of C2 Gaming’s platform and content to an increased number of markets in the United States (see “Acquisitions and Divestitures”). C2 Gaming’s products offer a unique selling proposition with creatively-designed oversized games. For example, the Colossal Diamonds cabinet (“Big Red”) is over eight feet wide and we believe it is one of the top performing games in every market in which it has been introduced.

Cadillac Jack Platform

We have strategically shifted our focus to create new internal content and leverage the newly acquired Cadillac Jack Platform (“CJ Platform”) as a conduit for our current and future products. We will continue porting our legacy games onto the CJ Platform in the upcoming year, enhancing both our Class II and III offerings. We expect internally-generated content to be a larger source of our installed base going forward.

Gaming Machine Titles

We categorize our gaming machine titles into two main groups: “Core” and “Premium and Specialty”. Our Core titles have a proven track record of success and are targeted at maintaining and growing our current installed base. Our Premium titles include unique and niche titles that provide a distinctive player experience and are targeted at increasing floor space in both existing and new jurisdictions. Specialty titles describe our jumbo games, such as Colossal Diamonds, and games made specifically for high-limit.

Our Atlanta game development studio is responsible for creating Core video slot content as well as new hardware designs and concepts. Our Las Vegas development team focuses primarily on premium and specialty games.

Core Titles

Historically, our Core titles primarily include Royal Reels, Cool Catz, and Liberty 7’s, which still continue to be some of the top-performing Class II games in the market today. As a result of the Cadillac Jack acquisition, we have enhanced our core library with titles such as; So Hot family titles, Star Phoenix, Monkey in the Bank, Geckos Gone Wild and Double the Devil. These titles have historically been the highest-gross earners in our product portfolio and as of December 31, 2015, represented the majority of our total revenue.

Premium and Specialty Titles

Our Premium and Specialty titles operate on both our Roadrunner and C2 Gaming platforms but we are in the process of integrating this content onto the CJ Platform. Some of the titles that operate on Roadrunner are presented in different formats, such as a mechanical wheel top box and a 42” vertical slant top, which is our Skytower cabinet. These self-merchandising cabinet formats are premium in nature in that they have more appealing features, such as vibrant lighting, enhanced sound quality, and attractive facades. The variety of formats allows for an appropriate level of unique selling propositions within our Premium portfolio.

We have licensing agreements in place with a number of popular brands, such as Ripley’s Believe it or Not! and Family Feud. These titles are part of our series of trivia-based games, which we market as the It Pays to Know series. These brands remained top performers for 2015.

Other Premium and Specialty titles operating on our C2 Gaming platform offer a unique selling proposition in that they are creatively-designed oversized games. For example, Colossal Diamonds is a simple and classic 3-reel, 1-line game that comes in the Big Red cabinet, which is over eight feet wide.

In total, our development teams are producing approximately 45 games per year. We believe this strategy of diversified content will allow us to both maintain and grow our market leadership within our current Class II base, as well as expand into Class III casinos in other key jurisdictions. Going forward into 2016, we expect to continue to penetrate domestic and foreign jurisdictions.

6

Table Games Products

Our table games products include live proprietary table games and side bets, as well as ancillary table game products. Products include both internally developed and acquired proprietary table games, side bets, and table technology related to blackjack, poker, baccarat, craps and roulette. We have acquired a number of popular brands, including In-Bet, Buster Blackjack, Double Draw Poker and Criss Cross Poker that are based on traditional well-known public domain games such as blackjack and poker; however, these proprietary games provide intriguing betting options that offer more excitement and greater volatility to the player, ultimately enhancing our casino customers’ profitability. Our Tornado product is unique in that it allows players to control the spin of the roulette ball by pressing a remote ball activation device. We believe this mechanism enhances player interaction without altering traditional roulette rules and procedures; similarly, our Double Ball Roulette game creates a unique game experience by allowing players to use two balls instead of one.

In September 2015, we announced the acquisition of critical card shuffler intellectual property and technology with the intention of entering into the card shuffler market in 2016.

Interactive Products

Our social gaming products are primarily delivered through our mobile apps, Lucky Play Casino and Vegas Fever. The apps contain several game titles available for consumers to play for fun and with coins that they purchase through the app. Some of our most popular social games include content that is also popular in land-based settings such as Colossal Diamonds, So Hot, and Monkey in the Bank.

Manufacturing

We have manufacturing agreements with Cole Kepro International, LLC (“Cole”), VSR Industries (“VSR”), Elite Manufacturing Technologies (“Elite”) and Trend Technologies, LLC (“Trend”) to build our gaming cabinets. We believe we have limited concentration risk with any one of these vendors, since we own the rights to our cabinet designs and thus have the ability to change manufacturers in the event of a dispute. Cole and VSR are based in Las Vegas, Nevada, while Elite and Trend are based in the Chicago area. Cole primarily manufactures our gaming cabinets for titles on our Roadrunner platform, while VSR primarily manufactures gaming cabinets for titles on our Colossal platform. Trend and Elite primarily manufacture gaming cabinets for the platforms we acquired in the Cadillac Jack acquisition. We believe any of these companies would be able to build our gaming cabinets for titles on any platform. As the supplier base is large, we are able to gain competitive pricing and delivery on any of our cabinets and have limited risk in supply disruptions.

Our primary gaming machine production facility is located in and managed out of Oklahoma. Production at this facility includes assembling and refurbishing gaming machines (excluding gaming cabinets), parts support and purchasing. System production is located in our Atlanta office which they share with the system design team and our research and development team. Field service technicians are located in various jurisdictions throughout the U.S. and are dispatched from a central call center located in our Oklahoma facility. They are responsible for installing, maintaining and servicing the gaming machines and systems.

Manufacturing commitments are generally based on projected quarterly orders from customers. Due to uneven order flow from customers, we bring the cabinets in with minimal components so that we can delay the cash outlay for the most costly components until closer to the point of sale.

Customers

We believe the quality and breadth of our customer base is a strong testament to the effectiveness and quality of our product offerings, technological innovation and customer service. At the core of our relationship with our customers is our participation model, which aligns our financial incentives with those of our customers through a shared dependence on the games’ performance. The combination of our customer-aligned participation model, quality customer service and strong game performance has allowed us to develop long-term relationships with our tribal and commercial casino customers. Our top ten participation customers have been with us for an average of over eight years, and we believe that we maintain long-term relationships with key customer decision-makers.

Oklahoma is our largest market and our participation gaming machines in the state accounted for approximately 40% of our total revenue for the year ended December 31, 2015. Our largest customer is the Chickasaw Nation, a Native American gaming operator in Oklahoma, which accounted for approximately 20% of our gaming operations revenue for the year ended December 31, 2015. The revenues we earn from the Chickasaw Nation are derived from numerous agreements, which are

7

scheduled to expire in 2019. We have historically offered select existing and prospective customers an upfront payment, or placement fee, in exchange for exclusive rights to a percentage of their floor space. To a lesser extent, we have offered financing for casino development and expansion projects. In addition to our long-term relationships and contractual arrangements, the consistent demand for our titles from the loyal, repeat players of our titles further ensures our strong presence on our customers’ casino floors.

Within the Native American market, we provide both Class II and Class III games. We also serve customers in commercial, video lottery terminal, charity bingo and route-based markets.

Customer Contracts

We derive the majority of our gaming revenues from participation agreements whereby we place gaming machines and systems, along with our proprietary and other licensed game content, at a customer’s facility in return for either a share of the revenues that these gaming machines and systems generate or a daily fee. For licensed table games and related equipment, we typically receive monthly royalty payments. We measure the performance of our domestic installed base of participation gaming machines on the net win per day per machine, often referred to as the win per day, or “WPD”. Under our participation agreements, we earn a percentage of the WPD of our domestic installed base of participation gaming machines.

Our standard contracts are one to three years in duration and may contain auto-renewal provisions for an additional term. Our contracts generally specify the number of gaming machines and other equipment to be provided, revenue share, daily fee or other pricing, provisions regarding installation, training, service and removal of the machines, and other terms and conditions standard in the industry. In some circumstances, we enter into trial agreements with customers that provide a free or fee-based trial period during which such customers may use our gaming machines or table game. Each trial agreement lays out the terms of payment should the customer decide to continue using our machines.

Our placement fee, development or similar agreements in the Native American and other markets have involved both a loan or advance of funds and a gaming equipment lease agreement. These agreements have typically been longer term contracts, ranging from four to ten years depending on the amount of financing provided, market and other factors. These contracts specified the amount and timing of the advances that we will be provided, the uses of those funds and target timing for the construction or remodeling of the gaming facility, if applicable. In addition, the contracts specified the repayment terms of the financing which vary by customer and agreement. Typical terms contained in these agreements included the percentage of the floor, minimum number of gaming machines, or percentage of the route operation allocated to us, the associated term or period of exclusivity for that allocation or number of gaming machines, minimum game performance thresholds, cure periods and resulting obligations, if any, and other general terms and conditions. Certain of these development agreements also contained a buyout option, which provides that upon written notice and payment of a buyout fee, the customer can terminate our floor space privileges.

We generally make efforts to obtain waivers of sovereign immunity in our contracts with Native American customers. However, we do not always obtain these provisions and where we do they can be limited in scope. There is no guarantee that we will continue or improve our ability to get this term in future contracts. While we have not had any experience with contract enforceability vis-à-vis our Native American customers, we are cognizant of recent cases involving other parties dealing with waivers of sovereign immunity. Those cases put into question how sovereign immunity may be viewed by courts in the future. In the event that we enter into contracts with Native American customers in the future that do not contain a waiver of sovereign immunity, such contracts may be practically unenforceable.

Our game sale contracts are typical of those in the industry. They specify the general terms and conditions of the sale, equipment and services to be provided, as well as pricing and payment terms. In some cases, we provide the central server that is used to operate the purchased equipment on a lease and charge a fee per day based on the number of gaming machines connected to the server.

Our interactive social gaming revenue is generated from a high volume of consumers’ purchases of virtual coins which are used to play the games.

8

Research and Development

We conduct research and development through an internal team to develop new gaming systems and gaming content. Research and development costs consist primarily of salaries and benefits, travel and expenses and other professional services. We employ approximately 150 game developers, software and system programmers, project managers and other development and administrative staff that oversee internal game development efforts and manage third party relationships. The technology and game development division operates primarily out of our Atlanta location as well as in Las Vegas.

Competition

We encounter intense competition from other designers, manufacturers and operators of electronic gaming machines, table products and social casino games. Our competitors range from small, localized companies to large, multi-national corporations, several of which have substantial resources and market share.

Our competitors for the live casino floor gaming machines include, but are not limited to, International Game Technologies (“IGT”), Scientific Games Corporation (“Scientific Games”), Aristocrat Technologies Inc. (“Aristocrat”), Everi Holdings Inc. (“Everi”), which was formerly Multimedia Games, Inc. and Global Cash Access Holdings, Inc., Konami Co. Ltd. (“Konami”), Ainsworth Game Technology Ltd., and Galaxy Gaming, Inc. Additionally, there are hundreds of non-gaming companies that design and develop social casino games and apps. Many of our competitors are large, well-established companies with substantially larger operating staffs and greater capital resources and have been engaged in the design, manufacture and operation of gaming products for many years. Some of these companies contain significant intellectual property including patents in gaming technology and hardware design, systems and game play and trademarks. In addition, the larger competitors contain significantly larger content portfolios and content development capability and resources, are licensed in markets throughout the United States, and have international distribution. Scientific Games, IGT, Konami, and Aristocrat all have a presence in the back-office accounting and player tracking business which expands their relationship with casino customers. Everi and Aristocrat are our primary competitors in the Class II market.

To compete effectively, we must, among other things, continue to develop high-performing, innovative games for the Class II and Class III markets, provide excellent service and support to our existing customers, effectively manage our installed base of participation gaming machines, expand our library of proprietary content, develop niche products with strong appeal to both local and next-generation players, be first to market in new non-traditional markets, implement effective marketing and sales functions, and offer competitive pricing and terms on our participation and sale agreements.

Intellectual Property

We have a combination of internally developed and third-party intellectual property, all of which we believe maintain and enhance our competitive position and protect our products. Such intellectual property includes owned or licensed patents, patent applications, trademarks and trademark applications in the United States, Mexico and Canada. In addition, pursuant to our license agreements with third-party game developers, we license and distribute gaming software.

Seasonality

We may experience fluctuations in revenues and cash flows from month to month, however, we do not believe that our business is materially impacted by seasonality.

Inflation

Our operations have not been, nor are they expected to be in the future, materially affected by inflation. However, our operational expansion is affected by the cost of hardware components, which are not considered to be inflation sensitive, but rather, sensitive to changes in technology and competition in the hardware markets. In addition, we expect to continue to incur increased legal and other similar costs associated with regulatory compliance requirements and the uncertainties present in the operating environment in which we conduct our business.

9

Employees

As of December 31, 2015, we had approximately 500 full-time equivalent employees, with approximately 115 employed internationally and 385 employed domestically.

We are not a party to any collective bargaining agreements in the U.S. and have not experienced any strikes or work stoppages in the past.

Regulation and Licensing

We operate in numerous gaming jurisdictions, and our business operations, which include the manufacture, sale, and distribution, of gaming devices and gaming related equipment and/or the provision of gaming related services, are subject to extensive federal, state, local, tribal and foreign government regulation as applicable in each of the gaming jurisdictions in which we operate. A significant portion of our operations take place at facilities conducting gaming activities on the tribal lands of Native American tribes resulting in our operations being subject to tribal and/or federal and sometimes state regulation depending on the classification of gaming being conducted in each such case as defined in the Indian Gaming Regulatory Act, or “IGRA”. In states where commercial gaming has been legalized, our operations are conducted subject to the applicable federal, state, and local government regulation.

While the specific regulatory requirements of the various jurisdictions vary, most require licenses, permits, findings of suitability and financial ability, and other forms of approval for our operational entities and, in some jurisdictions, the entities or individuals who hold some level of beneficial interest in Company or its affiliates as well our lenders and other individuals or entities affiliated with us (contractually or otherwise). Our officers, directors, managers and key employees who are actively engaged in the administration or supervision of our gaming related operations may also be required to file for licensure, findings of suitability or other approvals. Regulators may determine such a person is unsuitable to participate in the gaming industry in such jurisdiction, and could require us to limit, suspend, or terminate or our relationship with such a person. In addition, many jurisdictions require our products to be tested for compliance with the jurisdiction’s technical standards and regulations prior to our being permitted to distribute our products. The various jurisdictions’ gaming regulators typically have broad power over our business operations and may deny, revoke, suspend, condition, limit, or not renew our gaming or other licenses, permits or approvals, impose substantial fines and take other action, any one of which could adversely impact our business, financial condition and results of operation. We believe we and our officers, directors, managers, key employees and affiliates have obtained all required gaming related licenses, permits, findings of suitability and other forms of approvals necessary to carry on our business.

It is common for gaming regulators to monitor, or to require us to disclose, our activities and any disciplinary action against us in other gaming jurisdictions. Consequently, the business activities or disciplinary action taken against us in one jurisdiction could result in disciplinary action in other jurisdictions.

In most jurisdictions, even once licensed or approved, we remain under the on-going obligation to provide financial information and reports as well as to keep the applicable gaming regulators informed of any material changes in the information provided to regulators as part of the licensing and approval process. All licenses and approvals must be periodically renewed, in some cases as often as annually. In connection with any initial application or renewal of a gaming license or approval, we (and individuals or entities required to submit to background review or licensure in connection with our application or renewal) are typically required to make broad and comprehensive disclosures concerning our history, finances, ownership and corporate structure, operations, compliance controls and business relationships. We must regularly report changes in our officers, key employees and other licensed positions to applicable gaming regulators.

Certain gaming jurisdictions in which we are licensed may prohibit us from making a public offering of our securities without their prior approval. Similarly, changes in control of a licensee through merger, consolidation, acquisition of assets or stock, management or any form of takeover typically cannot occur without the prior approval of applicable gaming regulators. Such regulators may also require controlling beneficial owners, managers, officers, directors, and other persons or entities having a material relationship or involvement with the person proposing to acquire control, to be investigated, and licensed, found suitable or otherwise approved as part of the approval process relating to the transaction.

Gaming regulators often have the power to investigate the holders of our debt or equity securities. If any holder of our debt or equity securities is found unsuitable by any gaming regulator in a jurisdiction in which we conduct business, our licensure or approval to conduct business in such jurisdiction could be subject to non-renewal, suspension or revocation.

10

Most gaming jurisdictions impose fees and taxes that are payable by us in connection with our application, maintenance and renewal of our licensure or our approval to conduct business. Laws, regulations, and ordinances governing our gaming related activities and the obligations of gaming companies in any jurisdiction in which we have or in the future may have gaming operations are subject to change that could impose additional operating, financial, or other burdens on the our business.

Federal Registration

The Gambling Devices Act of 1962 makes it unlawful for a person to manufacture, transport, or receive gaming devices, or components across interstate lines unless that person has first registered with the Attorney General of the U.S. Department of Justice. This act also imposes gambling device identification and record keeping requirements. Violation of this act may result in seizure and forfeiture of the equipment, as well as other penalties. As an entity involved in the manufacture and transportation of gaming devices, we are required to register annually.

Native American Gaming

The rules for Native American gaming were established in 1988 under the IGRA. Under the IGRA, gaming activities conducted by federally recognized Native American tribes are segmented into three classes of gaming activities:

Class I. Class I gaming represents traditional forms of Native American gaming as part of, or in connection with, tribal ceremonies or celebrations (e.g., contests and games of skill) and social gaming for minimal prizes. Class I gaming is regulated only by individual Native American tribes. We do not participate in any Class I gaming activities.

Class II. Class II gaming involves the game of chance commonly known as bingo (whether or not electronic, computer, or other technological aids are used in connection therewith to facilitate play) and if played in the same location as the bingo, also includes pull tabs, punch board, tip jars, instant bingo, and other games similar to bingo. Class II gaming also includes non-banked card games, that is, games that are played exclusively against other players rather than against the house or a player acting as a bank. However, the definition of Class II gaming specifically excludes slot machines or electronic facsimiles of Class III games. Class II gaming is regulated by the National Indian Gaming Commission (the “NIGC”) and the laws of the Native American tribe conducting such gaming. Subject to the detailed requirements of the IGRA, including NIGC approval of such Native American tribe’s gaming ordinance, federally recognized Native American tribes are typically permitted to conduct Class II gaming on Indian lands pursuant to tribal ordinances approved by the NIGC.

Class III. Class III gaming includes all other forms of gaming that are neither Class I nor Class II and includes a broad range of traditional casino games such as slot machines, blackjack, craps and roulette, as well as wagering games and electronic facsimiles of any game of chance. The IGRA generally permits a Native American tribe to conduct Class III gaming activities on reservation lands subject to the detailed requirements of the IGRA and the entering into of a compact between such Native American tribe and the state in which the Native American tribe intends to conduct Class III gaming activities on its trust lands.

The IGRA is administered by the NIGC and the Secretary of the U.S. Department of the Interior. The NIGC has authority to issue regulations related to tribal gaming activities, approve tribal ordinances for regulating gaming, approve management agreements for gaming facilities, conduct investigations and monitor tribal gaming generally. The IGRA is subject to interpretation by the NIGC and may be subject to judicial and legislative clarification or amendment. The gaming ordinance of each Native American tribe conducting gaming under the IGRA and the terms of any applicable tribal/state compact establish the regulatory requirements under which we must conduct business on Native American tribal lands.

Under the IGRA, the NIGC’s authority to approve gaming-related contracts is limited to management contracts and collateral agreements related to management contracts. A “management contract” includes any agreement between a Native American tribe and a contractor if such contract or agreement provides for the management of all or part of a gaming operation. To the extent that any of our agreements with Native American tribes are deemed to be management contracts, such agreements would require the approval of the NIGC in order to be valid. To our knowledge, none of our current agreements with Native American tribes qualify as management contracts under the IGRA.

In addition, to the extent that any of our agreements with Native American tribes are deemed by the NIGC to create an impermissible proprietary interest, such agreements are void and unenforceable. To our knowledge, none of our current agreements with Native American tribes create an impermissible proprietary interest in Indian gaming.

International Regulation

11

Certain foreign countries permit the importation, sale, and operation of gaming equipment in casino and non-casino environments. Some countries prohibit or restrict the payout feature of the traditional slot machine or limit the operation and the number of slot machines to a controlled number of casinos or casino-like locations. Each gaming machine must comply with the individual country’s regulations. Certain jurisdictions do not require the licensing of gaming machine operators and manufacturers.

ITEM 1A. RISK FACTORS.

The following risk factors should be considered carefully in addition to the other information contained in this Annual Report on Form 10-K. This Annual Report on Form 10-K contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those contained in the forward-looking statements. Factors that may cause such differences include, but are not limited to, those discussed below as well as those discussed elsewhere in this Annual Report on Form 10-K. If any of the following risks actually occur, our business, financial condition and results of operations could be materially and adversely affected.

Our success in the competitive gaming industry depends in large part on our ability to develop and manage frequent introductions of innovative products. If we are unable to successfully and frequently introduce innovative products, we may be at a competitive disadvantage to our competitors, which could negatively impact our business.

The gaming industry is characterized by dynamic customer demand and technological advances. As a result, we must continually introduce and successfully market new themes and technologies in order to remain competitive and effectively stimulate customer demand.

There is no assurance that our investments in research and development will lead to successful new technologies or timely new products. We invest heavily in product development in various disciplines from hardware, software and firmware engineering to game design, video, multimedia, graphics and sound. Because our newer products are generally more technologically sophisticated than those we have produced in the past, we must continually refine our production capabilities to meet the needs of our product innovation. If we cannot efficiently adapt our manufacturing infrastructure to meet the needs of our product innovations, or if we are unable to make upgrades in our production capacity in a timely manner, our business could be negatively impacted.

Our customers will generally accept a new product if it is likely to increase operator profits. The amount of operator profits primarily depends on consumer play levels, which are influenced by player demand for our products. There is no assurance that our new products will attain this market acceptance or that our competitors will not more effectively anticipate or respond to changing customer preferences. In addition, any delays by us in introducing new products on schedule could negatively impact our operating results by providing an opportunity for our competitors to introduce new products and gain market share ahead of us.

Our business is vulnerable to changing economic conditions and to other factors that adversely affect the casino industry, which have negatively impacted and could continue to negatively impact the play levels of our participation games, our product sales and our ability to collect outstanding receivables from our customers.

Demand for our products and services depends largely upon favorable conditions in the casino industry, which is highly sensitive to casino patrons’ disposable incomes and gaming activities. Discretionary spending on entertainment activities could further decline for reasons beyond our control, such as continued negative economic conditions, natural disasters, acts of war, terrorism, transportation disruptions or the results of adverse weather conditions. Any prolonged or significant decrease in consumer spending on entertainment activities could result in reduced play levels on our participation games, causing our cash flows and revenues from a large share of our recurring revenue products to decline. Unfavorable economic conditions have also resulted in a tightening in the credit markets, decreased liquidity in many financial markets, and significant volatility in the credit and equity markets.

Furthermore, the extended economic downturn has impacted and could continue to impact the ability of our customers to purchase new gaming equipment or make timely payments to us. We have incurred, and may continue to incur, additional provisions for bad debt related to credit concerns on certain receivables.

We may not achieve the intended benefits of our recent acquisitions, or such acquisitions may disrupt our current plans and operations and we may no be able to realize the anticipated benefits and synergies of such acquisitions within the intended time frame, if at all.

12

We have devoted and will continue to devote significant management attention and resources to integrating the business practices and operations of Cadillac Jack and RocketPlay with AP Gaming. This integration may prove to be more difficult, costly and time-consuming than expected, which could cause us not to realize some or all of the anticipated benefits from these acquisitions. Potential difficulties we may encounter as part of the integration process include the following:

• any delay in the integration of strategies, operations, products and services;

• diversion of the attention of management of the Company as a result of the acquisitions;

• differences in business backgrounds, corporate cultures and management philosophies that may delay successful integration;

• the ability to retain key employees;

• the challenge of integrating complex systems, technology, networks and other assets of Cadillac Jack into those of the Company in a seamless manner that minimizes any adverse impact on customers, suppliers, employees and other constituencies of the acquired companies;

• potential unknown liabilities and unforeseen increased expenses or delays associated with the acquisitions, including costs to integrate beyond current estimates; and

• the disruption of, or the loss of momentum in, either the Company’s ongoing operations or inconsistencies in standards, controls, procedures and policies.

Any of these factors could adversely affect our ability to maintain relationships with our customers, suppliers, employees and other constituencies or our ability to achieve the anticipated benefits and synergies of the acquisition or could reduce our earnings or otherwise adversely affect our business and financial results and realizing their anticipated benefits after the acquisitions.

Our inability to complete future acquisitions and integrate those businesses successfully could limit our future growth.

From time to time, we pursue strategic acquisitions in support of our strategic goals. In connection with any such acquisitions, we could face significant challenges in managing and integrating our expanded or combined operations, including acquired assets, operations and personnel. There can be no assurance that acquisition opportunities will be available on acceptable terms or at all or that we will be able to obtain necessary financing or regulatory approvals to complete potential acquisitions. Our ability to succeed in implementing our strategy will depend to some degree upon the ability of our management to identify, complete and successfully integrate commercially viable acquisitions. Acquisition transactions may disrupt our ongoing business and distract management from other responsibilities.

In addition, there can be no assurance regarding when or the extent to which we will be able to realize any anticipated financial or operational benefits, synergies or cost savings from these acquisitions. We may also incur greater costs than estimated to achieve all of the synergies and other benefits from an acquisition. Integration may also be difficult, unpredictable and subject to delay because of possible company culture conflicts and different opinions on technical decisions and product roadmaps. We may be required to integrate or, in some cases, replace, numerous systems, such as those involving management information, purchasing, accounting and finance, sales, billing, employee benefits, payroll, data privacy and security and regulatory compliance.

Our substantial indebtedness could adversely affect our ability to raise additional capital to fund our operations, limit our ability to react to changes in the economy or our industry and prevent us from making debt service payments.

We have a significant amount of outstanding indebtedness. Our substantial indebtedness could have significant effects on our business. For example, it could:

• make it more difficult for us to satisfy our financial obligations, and any failure to comply with the obligations of any of our debt instruments, including restrictive covenants and borrowing conditions, could result in an event of default under the agreements governing our indebtedness;

• increase our vulnerability to general adverse economic, industry and competitive conditions;

• reduce the availability of our cash flow to fund working capital and capital expenditures, because we will be required to dedicate a substantial portion of our cash flow from operations to the payment of principal and interest on our indebtedness;

• limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;

• place us at a competitive disadvantage compared to our competitors that are less highly leveraged and that, therefore, may be able to take advantage of opportunities that our leverage prevents us from exploiting; and

• limit, along with the financial and other restrictive covenants in the agreements governing our indebtedness, among other things, our ability to borrow additional funds or dispose of assets.

13

Demand for our products and the level of play of our products could be adversely affected by changes in player and operator preferences.

As a supplier of gaming machines, we must offer themes and products that appeal to gaming operators and players. Our revenues are dependent on the earning power and life span of our games. We therefore face continuous pressure to design and deploy new and successful game themes and technologically innovative products to maintain our revenue and remain competitive. If we are unable to anticipate or react timely to any significant changes in player preferences, the demand for our gaming products and the level of play of our gaming products could decline. Further, our products could suffer a loss of floor space to table games or other more technologically advanced games, we could fail to meet certain minimum performance levels, or operators may reduce revenue sharing arrangements with us, each of which could negatively impact our sales and financial results. In addition, general changes in consumer behavior, such as reduced travel activity or redirection of entertainment dollars to other venues, could result in reduced demand and reduced play levels for our gaming products.

The gaming industry is intensely competitive. If we are unable to compete effectively, our business could be negatively impacted.

Competition among manufacturers of electronic gaming equipment and systems is intense. Competition in our industry is primarily based on the amount of profit our products generate for our customers, together with cost savings, convenience and other benefits. We compete through the appeal of game content and features to the end player, the features and functionality of our hardware and software products, and the service and support we provide. Our competitors range from small, localized companies to large, multi-national corporations. Many of our competitors are large, well-established companies with substantially larger operating staffs and greater capital resources and have been engaged in the design, manufacture and operation of electronic gaming equipment business for many years. Some of these companies own significant intellectual property, including patents in gaming technology and hardware design, systems and game play and trademarks. In addition, our larger competitors may have significantly larger content portfolios and content development capability and resources, are licensed in markets throughout the United States, and have international distribution.

Obtaining space and favorable placement on casino gaming floors is also a competitive factor in our industry. In addition, the level of competition among equipment providers has increased significantly due to, among other factors, cutbacks in capital spending by casino operators resulting from the economic downturn and decreased player spend. In select instances, we may pay for the right to place gaming machines on a casino’s floor and increased fee requirements from such casino operators may greatly reduce our profitability.

In addition, we face competition from other segments of the gaming industry, including internet gambling, and state lotteries. There can be no assurance that new technologies or markets, such as legalized internet gambling, will not emerge that will increase these competitive pressures.

Our ability to operate in our existing markets or expand into new jurisdictions could be adversely affected by changing regulations, new interpretations of existing laws, and difficulties or delays in obtaining or maintaining required licenses or approvals.

We operate only in jurisdictions where gaming is legal. The gaming industry is subject to extensive governmental regulation by U.S. federal, state and local governments, as well as Native American tribal governments, and foreign governments. While the regulatory requirements vary by jurisdiction, most require:

• licenses and/or permits;

• documentation of qualifications, including evidence of financial stability;

• other required approvals for companies who design, assemble, supply or distribute gaming equipment and services; and

• individual suitability of officers, directors, major stockholders, key employees and business partners.

Any license, permit, approval or finding of suitability may be revoked, suspended or conditioned at any time. We may not be able to obtain or maintain all necessary registrations, licenses, permits or approvals, or could experience delays related to the licensing process which could adversely affect our operations and our ability to retain key employees.

To expand into new jurisdictions, in most cases, we will need to be licensed, obtain approvals of our products and/or seek licensure of our officers, directors, major equity holders, key employees or business partners and potentially lenders. If we fail to obtain a license required in a particular jurisdiction for our games and gaming machines, hardware or software or have such

14

license revoked, we will not be able to expand into, or continue doing business in, such jurisdiction. Any delays in obtaining or difficulty in maintaining regulatory approvals needed for expansion within existing markets or into new jurisdictions can negatively affect our opportunities for growth. In addition, the failure of our officers, directors, key employees or business partners or lenders to obtain or receive licenses in one or more jurisdictions may require us to modify or terminate our relationship with such officers, directors, key employees or business partners or forego doing business in such jurisdiction.

Although we plan to maintain our compliance with applicable laws as they evolve, there can be no assurance that we will do so and that law enforcement or gaming regulatory authorities will not seek to restrict our business in their jurisdictions or institute enforcement proceedings if we are not compliant. Moreover, in addition to the risk of enforcement action, we are also at risk of loss of business reputation in the event of any potential legal or regulatory investigation whether or not we are ultimately accused of or found to have committed any violation. A negative regulatory finding or ruling in one jurisdiction could have adverse consequences in other jurisdictions, including with gaming regulators. Furthermore, the failure to become licensed, or the loss or conditioning of a license, in one market may have the adverse effect of preventing licensing in other markets or the revocation of licenses we already maintain.

Further, changes in existing gaming regulations or new interpretations of existing gaming laws may hinder or prevent us from continuing to operate in those jurisdictions where we currently do business, which would harm our operating results. In particular, the enactment of unfavorable legislation or government efforts affecting or directed at manufacturers or gaming operators, such as referendums to increase gaming taxes or requirements to use local distributors, would likely have a negative impact on our operations. Gaming regulations in Mexico have not been formalized and although we believe that we are compliant with the current informal regulations, if there are changes or new interpretations of the regulations in that jurisdiction we may be prevented or hindered from operating our business in Mexico. 

Many jurisdictions also require extensive personal and financial disclosure and background checks from persons and entities beneficially owning a specified percentage (typically 5% or more) of our equity securities and may require the same from our lenders. The failure of these beneficial owners or lenders to submit to such background checks and provide required disclosure could jeopardize our ability to obtain or maintain licensure in such jurisdictions.

Our revenues are vulnerable to the impact of changes to the Class II regulatory scheme.

Our Native American tribal customers that operate Class II games under the IGRA are subject to regulation by the NIGC. The NIGC is currently conducting consultations with industry participants regarding Native American gaming activities, including the clarification of regulations regarding Class II gaming machines. It is possible that any such changes in regulations, when finally enacted, could cause us to modify our Class II games to comply with the new regulations, which may result in our products becoming less competitive. Any required conversion of games pursuant to changing regulatory schemes could cause a disruption to our business. In addition, we could lose market share to competitors who offer games that do not appear to comply with published regulatory restrictions on Class II games and therefore offer features not available in our products.

Our ability to effectively compete in Native American gaming markets is vulnerable to legal and regulatory uncertainties, including the ability to enforce contractual rights on Native American land.

For the fiscal year ended December 31, 2015, we derived a significant amount of our revenue from participation agreements with Native American gaming operators. Because federally recognized Native American tribes are independent governments with sovereign powers, subject to the IGRA, Native American tribes can enact their own laws and regulate gaming operations and contracts. Native American tribes maintain their own governmental systems and often their own judicial systems and have the right to tax persons and enterprises conducting business on Native American lands. Native American tribes also often have the right to require licenses and to impose other forms of regulation and regulatory fees on persons and businesses operating on their lands. In the absence of a specific grant of authority by Congress, U.S. states may regulate activities taking place on Native American lands only if the Native American tribe has a specific agreement or compact with the state. Our contracts with Native American tribal customers normally provide that only certain provisions, if any, will be subject to the governing law of the state in which a Native American tribe is located. However, these choice-of-law clauses may not always be enforceable.

Further, Native American tribes generally enjoy sovereign immunity from lawsuits similar to that of the individual U.S. states and the United States. Before we can sue or enforce contract rights with a Native American tribe, or an agency or instrumentality of a Native American tribe (for example, to collect revenue pursuant to our participation agreements or foreclose on financed gaming machines), the Native American tribe must effectively waive its sovereign immunity with respect to the matter in dispute, which we are not always able to obtain. Without a limited waiver of sovereign immunity, or if such

15

waiver is held to be ineffective, we could be precluded from judicially enforcing any rights or remedies against a Native American tribe, including the right to enter Native American lands to retrieve our property in the event of a breach of contract by the tribe that is party to the disputed contract. Even if the waiver of sovereign immunity by a Native American tribe is deemed effective, there could be an issue as to the forum in which a lawsuit can be brought against the Native American tribe. Federal courts are courts of limited jurisdiction and generally do not have jurisdiction to hear civil cases relating to Native American tribes and we may be unable to enforce any arbitration decision effectively. In addition, courts have held that certain laws of general application, such as the United States patent, trademark and trade secret laws, are not binding on Native American tribes absent a binding waiver of sovereign immunity. While we have not had any experience with contract enforceability vis-à-vis our Native American customers, we are cognizant of recent cases involving other parties dealing with waivers of sovereign immunity. Those cases put into question how sovereign immunity may be viewed by courts in the future.

Our agreements with Native American tribes are often subject to review by regulatory authorities. For example, our development agreements may be subject to review by the NIGC and any such review could require substantial modifications to our agreements or result in the determination that we have a proprietary interest in a Native American tribe’s gaming activity, which could materially and adversely affect the terms on which we conduct our business. The NIGC may also reinterpret applicable laws and regulations, which could affect our agreements with Native American tribes.

Government enforcement, regulatory action, judicial decisions and proposed legislative action have in the past affected, and will likely continue to affect, our business, operating results and prospects. Regulatory action against our customers or equipment on Native American tribal lands or in other markets could result in machine seizures and significant revenue disruptions, among other adverse consequences. Moreover, Native American tribal policies and procedures, as well as tribal selection of gaming vendors, are subject to the political and governance environment within the Native American tribe. Changes in tribal leadership or tribal political pressure can affect our business relationships within Native American markets.

State compacts with our existing Native American tribal customers to allow Class III gaming could reduce demand for our Class II games and our entry into the Class III market may be difficult as we compete against larger companies in the tribal Class III market.

Certain of our Class II Native American tribal customers have entered into compacts with the states in which they operate to permit the operation of Class III games. While we seek to also provide Class III alternatives in these markets, we believe the number of our Class II game machine placements in those customers’ facilities could decline, and our operating results could be materially and adversely affected. As our Native American tribal customers continue to transition to gaming under compacts with the state, we continue to face significant uncertainty in the market that makes our business in these states difficult to manage and predict and we may be forced to compete with larger companies that specialize in Class III gaming. We believe the establishment of state compacts depends on a number of political, social, and economic factors that are inherently difficult to ascertain. Accordingly, although we attempt to closely monitor state legislative developments that could affect our business, we may not be able to timely predict if or when a compact could be entered into by one or more of our Native American tribal customers. For example, in Oklahoma, the continued introduction of Class III games since the passage of the tribal gaming compact in 2004 may put pressure our revenue and unit market share and our revenue share percentages and may result in a shift in the market from revenue share arrangements to a “for sale” model.

The percentage of gaming revenue we receive pursuant to our participation agreements with our Native American tribal customers has, on average, decreased in recent years and may continue to decrease in the future.

The percentage of gaming revenue we receive pursuant to our participation agreements, or our participation rates, with our Native American tribal customers has, on average, decreased in recent years, negatively affecting our profit margins. There can be no assurance that participation rates will not decrease further in the future. In addition, our Native American tribal customers may adopt policies or insist upon additional business terms during the renewal of our existing participation agreements that negatively affect the profitability of those relationships. In addition, any participation agreements we may enter into in the future with new customers or in new jurisdictions may not have terms as favorable as our existing participation agreements.

Slow growth in the development of new gaming jurisdictions or the number of new casinos, declines in the rate of replacement of existing gaming machines and ownership changes and consolidation in the casino industry could limit or reduce our future prospects.

Demand for our new participation gaming machine placements and game sales is partially driven by the development of new gaming jurisdictions, the addition of new casinos or expansion of existing casinos within existing gaming jurisdictions and the replacement of existing gaming machines. The establishment or expansion of gaming in any jurisdiction typically requires a

16

public referendum or other legislative action. As a result, gaming continues to be the subject of public debate, and there are numerous active organizations that oppose gaming. There can be no assurances that new gaming jurisdictions will be established in the future or that existing jurisdictions will expand gaming and, to the extent states such as Illinois delay, reverse or alter planned expansions in gaming, our growth strategy could be negatively impacted.

To the extent new gaming jurisdictions are established or expanded, we cannot guarantee we will be successful penetrating such new jurisdictions or expanding our business in line with the growth of existing jurisdictions. As we enter into new markets, we may encounter legal and regulatory challenges that are difficult or impossible to foresee and which could result in an unforeseen adverse impact on planned revenues or costs associated with the new market opportunity. If we are unable to effectively develop and operate within these new markets, then our business, operating results and financial condition would be impaired. Furthermore, as we attempt to generate new streams of revenue by placing our participation gaming machines with new customers we may have difficulty implementing an effective placement strategy for jurisdictional specific games. Our failure to successfully implement an effective placement strategy could cause our future operating results to vary materially from what management has forecast.

In addition, the construction of new casinos or expansion of existing casinos fluctuates with demand, general economic conditions and the availability of financing. The rate of gaming growth in North America has decelerated and machine replacements are at historically low levels. Slow growth in the establishment of new gaming jurisdictions or delays in the opening of new or expanded casinos and continued declines in, or low levels of demand for, machine replacements could reduce the demand for our products and our future profits. Our business could be negatively affected if one or more of our customers is sold to or merges with another entity that utilizes more of the products and services of one of our competitors or that reduces spending on our products or causes downward pricing pressures. Such consolidations could lead to order cancellations, a slowing in the rate of gaming machine replacements, or require our current customers to switch to our competitors’ products, any of which could negatively impact our results of operations.

We may not realize satisfactory returns on money lent to new and existing customers to develop or expand gaming facilities or to acquire gaming routes.

We enter into agreements to provide financing for construction, expansion, or remodeling of gaming facilities, primarily in the state of Oklahoma, and also have agreements in other jurisdictions, such as Illinois, where we provide loans and advances to route operators to acquire location contracts and fund working capital. Under these agreements, we secure long-term contracts for game placements under either a revenue share or daily fee basis in exchange for the loans and advances. We may not, however, realize the anticipated benefits of any of these strategic relationships or financings as our success in these ventures is dependent upon the timely completion of the gaming facility, the placement of our gaming machines, and a favorable regulatory environment.

These activities may result in unforeseen operating difficulties, financial risks, or required expenditures that could adversely affect our liquidity. In connection with one or more of these transactions, and to obtain the necessary funds to enter these agreements, we may need to extend secured and unsecured credit to potential or existing customers that may not be repaid, incur debt on terms unfavorable to us or that we are unable to repay, or incur other contingent liabilities.

The failure to maintain controls and processes related to billing and collecting accounts receivable or the deterioration of the financial condition of our customers could negatively impact our business. As a result of these agreements, the collection of notes receivable has become a matter of greater significance. While we believe the increased level of these specific receivables has allowed us to grow our business, it has also required direct, additional focus of and involvement by management. Further, and especially due to the current downturn in the economy, some of our customers may not pay the notes receivable when due.

For the year ended December 31, 2015, approximately 20% of our gaming revenue was derived from one customer and approximately 40% of our revenue was generated from gaming operations in the state of Oklahoma.

For the year ended December 31, 2015, approximately 40% of our total revenue was derived from gaming operations in Oklahoma, and approximately 20% of our total gaming revenue was from one Native American gaming tribe in that state. The significant concentration of our revenue in Oklahoma means that local economic, regulatory and licensing changes in Oklahoma may adversely affect our business disproportionately to changes in national economic conditions, including adverse economic declines or slower economic recovery from prior declines. While we continue to seek to diversify the markets in which we operate, changes to our business, operations, game performance and customer relationships in Oklahoma, due to changing gaming regulations or licensing requirements, higher taxes, increased competition, declines in market revenue share percentages or otherwise, could have a material and adverse effect on or financial condition and results of operations. In addition, changes in our relationship with our largest customer, including a decrease in revenue share, removal of gaming

17

machines or non-renewal of contracts, could have a material and adverse effect on our financial condition and results of operations.

Moreover, neighboring states such as Kansas, Texas and Arkansas have passed or could pass gaming legislation, which could take market share from Oklahoma gaming facilities or otherwise negatively impact the Oklahoma gaming market and, as a result, negatively impact our business.

We may be unable to protect or enforce our intellectual property.

Protection of our proprietary processes, methods and other technology is important to our business. We generally rely on the patent, trademark and trade secret laws of the United States and certain other countries in which our products are produced or sold, as well as licenses and nondisclosure and confidentiality agreements, to protect our intellectual property rights. The patent, trademark and trade secret laws of some countries may not protect our intellectual property rights to the same extent as the laws of the United States. At least one federal court has held that United States patent, trademark and trade secret laws of general application are not binding on Native American tribes absent a binding waiver of sovereign immunity.

A significant portion of our revenue is generated from products that use or incorporate certain intellectual property, and our operating results could be negatively impacted if we are unsuccessful in protecting these rights from infringement. In addition, some of our games and features are based on trademarks, patents and other intellectual property licensed from third parties. Our future success may depend upon our ability to develop, obtain, retain and/or expand licenses for popular products and underlying intellectual property rights on reasonable terms in a competitive market, which may not be available on terms acceptable to us, or may not be available at all. In the event that we cannot renew and/or expand existing licenses, we may be required to discontinue or limit our use of the games or gaming machines that use the licensed technology or bear the licensed marks.

Our success depends in part on our ability to obtain trademark protection for the names or symbols under which we market our products and to obtain patent protection for our proprietary content and technologies. We may not be able to build and maintain goodwill in our trademarks or obtain trademark or patent protection, and there can be no assurance that any trademark, copyright or issued patent will provide competitive advantages for us, or that our intellectual property will not be successfully challenged or circumvented by competitors. Additionally, any issued patents that cover our proprietary technology may not provide us with sufficient protection or be commercially beneficial to us. The issuance of a patent is not conclusive as to its validity or its enforceability. The U.S. federal courts or equivalent national courts or patent offices elsewhere may invalidate our patents or find them unenforceable. Competitors may also be able to design around our patents. If we are unable to protect our patented technologies, we may not be able to commercialize our technologies, products or services and our competitors could commercialize our technologies.

We also rely on trade secrets and proprietary know-how to protect certain proprietary knowledge and we generally enter into confidentiality agreements with certain of our employees and independent contractors regarding our trade secrets and proprietary information. However, there can be no guarantees that every employee and consultant will execute these agreements or that our employees and consultants will not breach these agreements. If these agreements are breached, it is unlikely that the remedies available to us will be sufficient to compensate us for the damages suffered. Additionally, despite various confidentiality agreements and other trade secret protections, our trade secrets and proprietary know-how could become known to, or independently developed by, competitors. Moreover, if our competitors independently develop equivalent knowledge, methods or know-how, it will be more difficult for us to enforce our rights and our business could be harmed.

We have a limited ability to prevent others from creating materially similar products. Despite our efforts to protect these proprietary rights, unauthorized parties may try to copy our gaming products, business models or systems, use certain of our confidential information to develop competing products, or develop independently or otherwise obtain and use our gaming products or technology, any of which could have a material adverse effect on our business.

We may be subject to claims of intellectual property infringement or invalidity and adverse outcomes of litigation could adversely affect our operating results.

Competitors and others may infringe on our intellectual property rights, or may allege that we have infringed on their intellectual property rights. Monitoring infringement and misappropriation of intellectual property can be difficult and expensive, and we may not be able to detect infringement or misappropriation of our proprietary rights. We may also incur significant litigation expenses protecting our intellectual property or defending third-party intellectual property claims. These expenses could have an adverse effect on our future cash flows and results of operations. Although we carry general liability insurance, our insurance does not cover potential claims of this type. If we are found to infringe on the rights of others we could

18

be required to re-design or discontinue offering certain products or systems, to pay damages or to purchase a license to use the intellectual property in question from its owner, which may not be available on reasonable terms, or at all. Litigation can also distract management from the day-to-day operations of our business. There can be no assurances that certain of our products will not be determined to have infringed upon a third-party patent.

In addition, any of our current or future patents or patent applications, or those of our licensors, could face other challenges, such as interference proceedings, opposition proceedings and re-examination proceedings. Any such challenge, if successful, could result in the invalidation of, or in a narrowing of the scope of, any such current or future patents or patent applications. Any such challenges, regardless of their success, would likely be time-consuming and expensive to defend and resolve, and would divert management time and attention.

Failure to attract, retain and motivate key employees may adversely affect our ability to compete.

Our success depends largely on recruiting and retaining talented employees. The market for qualified, licensable executives and highly skilled, technical workers, such as content developers, is intensely competitive. The loss of key employees or an inability to hire a sufficient number of technical workers could limit our ability to develop successful products, cause delays in getting new products to market, cause disruptions to our customer relationships or otherwise adversely affect our business.

States and other jurisdictions may amend or repeal gaming enabling legislation which could materially impact our business.

States and other jurisdictions may amend or repeal gaming enabling legislation which could materially impact our business. Changes to gaming enabling legislation could increase our operating expenses and compliance costs or decrease the profitability of our operations. Repeal of gaming enabling legislation could result in losses of capital investments and revenue and limit future growth opportunities. For example, recently, charity gaming facilities in Alabama were forced to close due to regulatory uncertainties in the market pertaining to the legality of electronic bingo games which negatively impact our revenue and ability to collect on receivables. If any jurisdiction in which we operate were to repeal gaming enabling legislation, there could be no assurance that we could sufficiently increase our revenue in other markets to maintain operations or service our existing indebtedness.

Our business competes on the basis of the security and integrity of our systems and products.

We believe that our success depends, in part, on providing secure products and systems to our vendors and customers. Attempts to penetrate security measures may come from various combinations of customers, retailers, vendors, employees and others. Our ability to monitor and ensure the quality of our products is periodically reviewed and enhanced. Similarly, we assess the adequacy of our security systems to protect against any material loss to any of our customers and the integrity of the product to end-users. There can be no assurance that our business will not be affected by a security breach or lapse, which could have a material adverse impact on our results of operations, business or prospects.

Our information technology and other systems are subject to cyber security risk including misappropriation of customer information or other breaches of information security.

We rely on information technology and other systems to maintain and transmit customer financial information. Our information and processes are exposed to the ever-changing threat of compromised security, in the form of a risk of potential breach, system failure, computer virus, or unauthorized or fraudulent use by customers, company employees, or employees of third party vendors. The steps we take to deter and mitigate these risks may not be successful, and any resulting compromise or loss of data or systems could adversely impact, operations or regulatory compliance and could result in remedial expenses, fines, litigation, and loss of reputation, potentially impacting our financial results.

Our gaming machines may experience losses due to technical problems or fraudulent activities.

Our success depends on our ability to avoid, detect, replicate and correct software and hardware anomalies and fraudulent manipulation of our gaming machines. We incorporate security features into the design of our gaming machines and other systems, which are designed to prevent us, our customers and patrons of our gaming machines from being defrauded. We also monitor our software and hardware to avoid, detect and correct any technical errors. However, there can be no guarantee that our security features or technical efforts will continue to be effective in the future. If our security systems fail to prevent fraud or if we experience any significant technical difficulties, our operating results could be adversely affected. Additionally, if third parties breach our security systems and defraud patrons of our gaming machines, or if our hardware or software experiences

19

any technical anomalies, our customers and the public may lose confidence in our gaming machines and operations, or we could become subject to legal claims by our customers or to investigation by gaming authorities.

Our gaming machines have experienced anomalies and fraudulent manipulation in the past. Games and gaming machines may be replaced by casinos and other gaming machine operators if they do not perform according to expectations, or may be shut down by regulators. The occurrence of anomalies in, or fraudulent manipulation of, our gaming machines may give rise to claims for lost revenues and related litigation by our customers and may subject us to investigation or other action by gaming regulatory authorities, including suspension or revocation of our gaming licenses or other disciplinary action.

Although our network is private, it is susceptible to outages due to fire, floods, power loss, break-ins, cyberattacks and similar events. We have multiple site back-up for our services in the event of any such occurrence. Despite our implementation of network security measures, our servers are vulnerable to computer viruses and break-ins. Similar disruptions from unauthorized tampering with our computer systems in any such event could have a material adverse effect on our business, operating results and financial condition. Adverse weather conditions, particularly flooding, tornadoes, heavy snowfall and other extreme weather conditions often deter our customer’s end users from traveling, or make it difficult for them to frequent the sites where our games are installed. If any of those sites experienced prolonged adverse weather conditions, or if the sites in Oklahoma, where a significant number of our games are installed, simultaneously experienced adverse weather conditions, our results of operations and financial condition would be materially and adversely affected.

We could face risks associated with, or arising out of, environmental, health and safety laws and regulations.

We are subject to various federal, state and local laws and regulations that (i) regulate certain activities and operations that may have environmental or health and safety effects, such as the use of regulated materials in the manufacture of our products by third parties or our disposal of materials, substances or wastes, (ii) impose liability for costs of cleaning up, and damages to natural resources from, past spills, waste disposals on and off-site, or other releases of hazardous materials or regulated substances, and (iii) regulate workplace safety. Compliance with these laws and regulations could increase our and our third-party manufacturers’ costs and impact the availability of components required to manufacture our products. Violation of these laws may subject us to significant fines, penalties or disposal costs, which could negatively impact our results of operations, financial position or cash flows. We could be responsible for the investigation and remediation of environmental conditions at currently or formerly operated or leased sites, as well as for associated liabilities, including liabilities for natural resource damages, third party property damage or personal injury resulting from lawsuits that could be brought by the government or private litigants, relating to our operations, the operations of facilities or the land on which our facilities are located. We may be subject to these liabilities regardless of whether we lease or own the facility, and regardless of whether such environmental conditions were created by us or by a prior owner or tenant, or by a third party or a neighboring facility whose operations may have affected such facility or land. That is because liability for contamination under certain environmental laws can be imposed on current or past owners or operators of a site without regard to fault. We cannot assure you that environmental conditions relating to our prior, existing or future sites or those of predecessor companies whose liabilities we may have assumed or acquired will not have a material adverse effect on our business.

If our products contain defects, our reputation could be harmed and our results of operations adversely affected.

Some of our products are complex and may contain undetected defects. The occurrence of defects or malfunctions in one or more of our products could result in financial losses for our customers and in turn termination of leases, cancellation of orders, product returns and diversion of our resources. Any of these occurrences could also result in the loss of or delay in market acceptance of our products and loss of revenue.

Our business is subject to quarterly fluctuation.

Historically, our operating results have been highest during the first quarter and lowest in our third and fourth quarters, primarily due to the seasonality of player demand. Our quarterly operating results may vary based on the timing of the opening of new gaming jurisdictions, the opening or closing of casinos, the expansion or contraction of existing casinos, approval or denial of our products and corporate licenses under gaming regulations, the introduction of new products, the seasonality of customer capital budgets, the mix of domestic versus international sales and the mix of lease and royalty revenue versus sales and service revenue. As a result, our operating results could be volatile, particularly on a quarterly basis.

20

Some of our products contain open source software which may be subject to restrictive open source licenses, requiring us to make our source code available to third parties and potentially granting third parties certain rights to the software.

Some of our products contain open source software which may be subject to restrictive open source licenses. Some of these licenses may require that we make our source code governed by the open source software licenses available to third parties and/or license such software under the terms of a particular open source license, potentially granting third parties certain rights to our software. We may incur legal expenses in defending against claims that we did not abide by such licenses. If our defenses are unsuccessful, we may be enjoined from distributing products containing such open source software, be required to make the relevant source code available to third parties, be required to grant third parties certain rights to the software, be subject to potential damages or be required to remove the open source software from our products. Any of these outcomes could disrupt our distribution and sale of related products and adversely affect our business.

Recently introduced or proposed smoking bans at customer facilities may adversely impact our revenues.

Some U.S. jurisdictions have recently introduced or proposed smoking bans in public venues, including casinos, which may reduce player traffic in the facilities of our current and prospective customers, which may reduce revenues on our participation gaming machines or impair our future growth prospects and therefore may adversely impact our revenues in those jurisdictions. Other participants in the gaming industry have reported declines in gaming revenues following the introduction of a smoking ban in jurisdictions in which they operate and we cannot predict the magnitude or timing of any decrease in revenues resulting from the introduction of a smoking ban in any jurisdiction in which we operate.

We are controlled by AP Gaming VoteCo, LLC, which may have conflicts of interest with us in the future and may have interests that differ from the interests of holders of our common stock.

Currently, all of our outstanding shares of common stock are owned by Apollo Gaming Holdings, L.P. Since our initial issuance of shares of our common stock to Apollo Gaming Holdings, L.P., we restructured our common stock into two classes: class A voting common stock (“Class A Shares”) and class B non-voting common stock (“Class B Shares”). On April 28, 2014, upon receipt of all required governmental regulatory approvals, Apollo Gaming Holdings, L.P. exchanged its 10,000,000 Class A Shares for 10,000,000 Class B Shares, and the Company issued 100 Class A Shares to AP Gaming VoteCo, LLC. The 100 Class A Shares issued to AP Gaming VoteCo, LLC, represent 100% of our voting interests. AP Gaming VoteCo, LLC is an entity owned and controlled by Marc Rowan and David Sambur. Messrs. Rowan and Sambur have the power to control our affairs and policies, the election of our board of directors, the appointment of management, the entering into of mergers, sales of substantially all of our assets and other material transactions.

So long as Messrs. Rowan and Sambur continue to control our Class A Shares and control the election of our board of directors, which currently consists of Mr. Sambur, they have the authority, subject to the terms of the agreements that govern our outstanding debt, to issue additional shares of stock, implement share repurchase programs, declare dividends, pay advisory fees and make other decisions, and they may have an interest in our doing so. Their interests could conflict with the interests of holders of our Class B Shares in material respects. Furthermore, Mr. Rowan is affiliated with Apollo, which is in the business of making investments in companies and may from time to time acquire and hold interests in businesses that compete directly or indirectly with us, as well as businesses that represent major customers of our businesses. Accordingly, so long as Mr. Rowan continues to control our outstanding Class A Shares, Apollo’s interests could also conflict with our interests or the interests of holders of our Class B Shares in material respects.

We are dependent on our suppliers and any failure of these parties to meet our performance and quality standards or requirements could cause us to incur additional costs or lose customers.

The manufacturing, assembling and designing of our electronic gaming machines depends upon a continuous supply of raw materials, such as source cabinets, which we currently source primarily from a limited number of suppliers. If our current suppliers are unable to deliver these items in the quantity required or in accordance with our standards of quality and we are unable to find an alternative supplier in a timely fashion or on reasonable terms, we may not be able to meet the demands of our customers or our contractual obligations, which would adversely affect our results of operations and business.

Continued operation and our ability to service several of our installed gaming machines depends upon our relationships with service providers, and changes in those relationships could negatively impact our business.

We operate several gaming machines that utilize third party software for which we do not own or control the underlying software code.  Further, we enter into arrangements with third party vendors, from time to time, for the provision of services related to development and operation of our products. Consequently, our operations, growth prospects and future revenues

21

could be dependent on our continued relationships with third party vendors. While we have historically maintained good relationships with third party vendors, our business would suffer if we are unable to continue these relationships in the future.  Our third party vendors may have economic or business interests or goals that are inconsistent with our interests and goals, take actions contrary to our objectives or policies, undergo a change of control, experience financial and other difficulties or be unable or unwilling to fulfill their obligations under our arrangements.  The failure to avoid or mitigate the risks described above or other risks associated with such arrangements could have a material adverse effect on our results of operations, cash flows and financial condition.

Casino operations are conducted at the discretion of our customers.

Our casino customers are responsible for the operations of their facilities and are not required to consult us or take our advice on their operations, marketing, facility layout, gaming floor configuration, or promotional initiatives. Further, our customers’ are solely responsible for safety and security at their facilities. Our customers have in the past, and will in the future, remodel and expand their facilities. Our operating and financial results could suffer if our machines are not a part of an optimized facility layout or gaming floor configuration, are not supported by effective marketing or promotional initiatives or are scheduled to be out of service during a facility remodeling, or our customers’ facilities are closed or not visited because of end-users concern for safety, a lack of amenities, or other factors.

The risks related to operations in foreign countries and outside of traditional U.S jurisdictions could negatively affect our results.

We operate in jurisdictions outside of the United States, principally in Mexico and on tribal lands of Native American tribes. The developments noted below, among others, could adversely affect our financial condition and results of operations:

• social, political or economic instability;

• additional costs of compliance with international laws or unexpected changes in regulatory requirements;

• tariffs and other trade barriers;

• fluctuations in foreign exchange rates outside the United States;

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

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

• difficulty protecting our intellectual property;

• recessions in foreign economies;

• difficulties in maintaining foreign operations;

• changes in consumer tastes and trends;

• acts of war or terrorism; and

• U.S. government requirements for export.

We are continuing to improve our internal controls over financial reporting.

Our independent registered public accounting firm is not required to audit the effectiveness of our internal control over financial reporting until after we are no longer an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). At such time, our independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which our internal control over financial reporting is documented, designed or operating.

22

We are an emerging growth company, and any decision on our part to comply only with certain reduced reporting and disclosure requirements applicable to emerging growth companies could make our common stock less attractive to investors.

We are an emerging growth company, and, for as long as we continue to be an emerging growth company, we may choose to take advantage of exemptions from various reporting requirements applicable to other public companies but not to “emerging growth companies,” including, but not limited to, not being required to have our independent registered public accounting firm audit our internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. We could be an emerging growth company for up to five years following the effectiveness of our registration statement on Form 10. We will cease to be an emerging growth company upon the earliest of: (i) the end of the fiscal year following the fifth anniversary of the effectiveness of our registration statement on Form 10, (ii) the first fiscal year after our annual gross revenues are $1.0 billion or more, (iii) the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt securities or (iv) the end of any fiscal year in which the market value of our common stock held by non-affiliates exceeded $700 million as of the end of the second quarter of that fiscal year. We cannot predict if investors will find our common stock less attractive if we choose to rely on these exemptions. If some investors find our common stock less attractive as a result of any choices to reduce future disclosure, there may be a less active trading market for our common stock and the price of our common stock may be more volatile.

Under the JOBS Act, emerging growth companies can also delay adopting new or revised accounting standards until such time as those standards apply to private companies. We have irrevocably elected not to avail ourselves of this accommodation allowing for delayed adoption of new or revised accounting standards, and, therefore, we will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.

We intend to continue to improve our internal controls over financial reporting and ensure we are able to produce accurate and timely financial statements. However, no assurance can be given that our actions will be successful.

ITEM 1B. UNRESOLVED STAFF COMMENTS.

None.

ITEM 2. PROPERTIES.

We currently lease the following properties:

Location	Purpose	Square footage
5475 S. Decatur Blvd. #100, Las Vegas, NV.	Corporate headquarters, manufacturing and warehousing	42,964
308 Anthony Ave., Oklahoma City, OK.	Administrative offices, manufacturing and warehousing	66,661
1840 Industrial Dr., Suite 180, Libertyville, IL.	Administrative offices and warehousing	1,250
1531 Imhoff Drive, Lake in the Hills, IL.	Administrative offices and warehousing	2,400
2450 Satellite Boulevard, Duluth, GA.	Administrative offices, research and development manufacturing and warehousing	102,862
11401 Century Oaks Terrace, Austin, TX.	Administrative offices and warehousing	2,951
433 Airport Blvd. #323, Burlingame, CA.	Administrative offices	1,960
Kiryat Atidim Building 7 Tel Aviv, ISR	Administrative offices	1,884
Jaime Balmes No. 8, office no. 204, Colonia Los Morales Polanco, Mexico City, MEX	Administrative offices and warehousing	8,154

In addition to those listed above, we lease a number of additional properties in the U.S. and internationally that support our operations.

23

ITEM 3. LEGAL PROCEEDINGS.

We are party to various claims and legal actions that arise in the ordinary course of business. We do not believe the outcome of such disputes or legal actions will have a material adverse effect on our financial condition, results of operations, liquidity or capital resources.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

24

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Market Information

There is currently no established public trading market for our Common Stock or our non-voting common stock, and there are no plans, proposals, arrangements or understandings with any person with regard to the development of a trading market in our Common Stock or our non-voting common stock.

Holders

Please see Item 12. “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” for disclosure regarding the holders of our Common Stock and our non-voting common stock.

Recent Sales of Unregistered Securities

On August 30, 2013, in anticipation of our acquisition of AGS Capital, we issued 100 shares of our initial common stock to Apollo Gaming Holdings, L.P. See Item 7. “Acquisitions and Divestitures.” 10,000,000 Class A Shares were subsequently issued to Apollo Gaming Holdings L.P. These transactions were exempt from registration pursuant to Section 4(2) of the Securities Act, as they were transactions by an issuer that did not involve a public offering of securities. On April 28, 2014, upon receipt of all required governmental regulatory approvals, we exchanged the 10,000,000 Class A Shares held by Apollo Gaming Holdings, L.P. for 10,000,000 Class B Shares, and we issued all 100 of our Class A Shares to AP Gaming VoteCo, LLC. On May 29, 2015, we issued an additional 4,931,529 Class B Shares to our controlling stockholder for total proceeds of $77.4 million.

ITEM 6. SELECTED FINANCIAL DATA.

The Company, along with its subsidiaries shown in Exhibit 21.1, were formed for the purpose of acquiring 100% of the equity interests of AGS Capital, LLC. The selected financial data presented below has been derived from the audited financial statements for the years ended December 31, 2015 and 2014, the period from December 21, 2013 through December 31, 2013 (the “Successor Period”), and the period from January 1, 2013 to December 21, 2013 (the “Predecessor Period”).

The selected financial data set forth below is qualified in its entirety by, and should be read in conjunction with, “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the audited financial statements, the notes thereto and other financial and statistical information included elsewhere in this Annual Report on Form 10-K. The historical results set forth below do not indicate results expected for any future periods. Our future results of operations will be subject to significant business, economic, regulatory and competitive uncertainties and contingencies, some of which are beyond our control (amounts in thousands, except per share data):

25

	Successor									Predecessor
	Year ended December 31, 2015			Year ended December 31, 2014			Period December 21, 2013 through December 31, 2013			Period January 1, 2013 through December 20, 2013
Consolidated Statement of Operations Data:
Revenues	$	123,292		$	72,140		$	1,953		$	56,461
Loss from operations	(29,439		)	(8,421		)	(7,623		)	(11,804		)
Net loss	(38,545		)	(28,376		)	(8,156		)	(42,176		)
Total comprehensive loss	(40,644		)	(28,087		)	(8,157		)	(42,144		)
Basic and diluted loss per common share:
Basic	$	(2.98	)	$	(2.84	)	$	(0.82	)	—
Diluted	$	(2.98	)	$	(2.84	)	$	(0.82	)	—

	Successor
	As of December 31,
	2015		2014		2013
Consolidated Balance Sheet Data:
Total assets	$	718,977	$	256,152	$	253,828
Total liabilities	618,440		192,396		161,985
Total stockholders’ equity/member’s deficit	100,537		63,756		91,843

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Overview

We are a leading designer and supplier of gaming products and services for the gaming industry. The Company is a leader in the Class II Native American and Mexican gaming jurisdictions and has expanded its product lines to include Class III Native American, commercial and charity jurisdictions. We supply electronic gaming machines (“slot machines”), server-based systems and back-office systems that are used by casinos and various gaming locations. Over the past 18 months, the Company has significantly broadened and diversified its product portfolio through both organic development and strategic acquisitions. We launched a new table products division in mid-2014 to provide live felt table games to casino operators. Through the acquisition of Cadillac Jack (defined below in “Acquisitions and Divestitures”) in May 2015, we greatly expanded our games library and slot machine offerings. The Company also acquired online developer Gamingo Limited (defined below in “Acquisitions and Divestitures”) in June 2015, expanding its offerings to include interactive products such as social casino games, available to play on desktop and mobile devices.

As of December 31, 2015, we had approximately 19,250 slot machine units installed under revenue sharing or fee per day agreements, approximately 10,500 of which are attributable to the inclusion of Cadillac Jack. The majority of our systems are used by Native American gaming operators in both Class II and Class III jurisdictions as well as commercial casinos in Mexico. We currently derive a substantial portion of our gaming revenues from lease agreements whereby we place slot machines and systems at a customer’s facility in return for either a share of the revenues that these machines and systems generate or a daily fee, which we collectively refer to as “participation agreements” and as our “participation model.”

Business Outlook

During 2008 and 2009, and into 2010, the poor macro-economic environment had a negative impact on consumer discretionary spending. As a result, the U.S. gaming industry experienced its first ever year-over-year declines in gross gaming revenue in 2008 and 2009. While the recessionary pressures were felt in most markets, the core destination markets of the Las Vegas Strip and Atlantic City were among the hardest hit due to the negative effects of both the recession and increased regional competition, while other commercial markets and the Native American markets were not as adversely impacted. During 2010, we began to see improvements in regional commercial gaming jurisdictions, which have continued through 2015.

26

We believe the current economic environment presents multiple opportunities for our business. We believe the improving economy should lead to increases in consumer discretionary spending, which should in turn drive higher revenues in existing gaming locations. In addition, state budget deficits have ballooned and many states with fiscal difficulties are turning to gaming as a source of revenue enhancement, which we believe presents us with continued long-term growth opportunities.

We believe our participation model offers an attractive value proposition to casino and other facility operators; especially in the current economic environment. By leasing our gaming machines to customers, we enable our customers to introduce new games in their facilities with minimal cost and financial risk. In addition, our selective use of development agreements to secure incremental game placements under long-term contracts provides customers with additional capital to help expand their operations.

Key Drivers of Our Business

Our revenues are impacted by the following key factors:

• the amount of money spent by consumers on our domestic revenue share installed base;

• the amount of the daily fee on our participation gaming machines;

• the selling price of our machines;

• our revenue share percentage with customers;

• the capital budgets of our customers;

• the level of replacement of existing electronic gaming machines in existing casinos;

• expansion of existing casinos;

• development of new casinos;

• opening of new gaming jurisdictions both in the United States and internationally;

• our ability to obtain and maintain gaming licenses in various jurisdictions;

• the relative competitiveness and popularity of our electronic gaming machines compared to competitive products offered in the same facilities; and

• general macro-economic factors, including levels of and changes to consumer disposable income and personal consumption spending.

Our expenses are impacted by the following key factors:

• fluctuations in the cost of labor relating to productivity;

• overtime and training;

• fluctuations in the price of components for gaming equipment;

• fluctuations in energy prices;

• changes in the cost of obtaining and maintaining gaming licenses; and

• fluctuations in the level of maintenance expense required on gaming equipment.

Variations in our selling, general and administrative expenses, or SG&A, and research and development, or R&D are primarily due to changes in employment and salaries and related fringe benefits.

Basis of Presentation

References to “Successor” refer to the Company on or after December 21, 2013. References to “Predecessor” refer to AGS Capital, LLC on or before December 20, 2013. The accompanying consolidated statements of operations and comprehensive loss, changes in stockholders’ equity/member’s deficit and cash flows for the year ended December 31, 2013 are presented for two periods: the Predecessor Period and the Successor Period for the Company. The Predecessor Period reflects the historical accounting basis in the Predecessor’s assets and liabilities, while the Successor Period reflects assets and liabilities at fair value by allocating the Company’s enterprise value to its assets and liabilities pursuant to accounting guidance related to business combinations.

We refer to the year ended December 31, 2013 results as the “2013 Combined Period,” derived from the summation of the results of AP Gaming for the Successor Period and AGS Capital for the Predecessor Period. The discussion of our results of operations contains a comparison of our results for the year ended December 31, 2015 and 2014, and the results of the 2013 Combined Period. The application of accounting guidance related to business combinations did not materially affect the Company’s continuing operations; however the years ended December 31, 2015, 2014 and the 2013 Combined Period may yield results that are not fully comparable on a period-by-period basis, particularly with respect to depreciation, amortization, interest income and interest expense. The combined presentation does not comply with generally accepted accounting

27

principles in the United States (“GAAP”) or with the rules of the SEC for pro forma presentation; however, it is presented because we believe it is the most meaningful comparison of our results between periods.    

Acquisitions and Divestitures

Acquisition by AP Gaming Acquisition, LLC (Successor)

On September 16, 2013, we entered into an Equity Purchase Agreement (as subsequently amended and restated on December 3, 2013, the “Acquisition Agreement”) with AP Gaming Acquisition, LLC (“AP Gaming Acquisition”), an affiliate of Apollo, for approximately $220.5 million. The Acquisition Agreement provided for the acquisition of 100% of the equity of AGS Capital, LLC from AGS Holdings, LLC by funds affiliated with Apollo. The acquisition was consummated on December 20, 2013.

C2 Gaming, LLC acquisition

On May 6, 2014, a wholly owned subsidiary of the Company entered into an agreement to purchase 100% of the equity of C2 Gaming, LLC (“C2 Gaming”) for $23.3 million in cash, subject to terms outlined in the Equity Purchase Agreement dated May 6, 2014 (“C2 Acquisition Agreement”). The acquisition was funded by an initial cash payment and an agreement to pay the sellers $9.0 million on the one-year anniversary of the closing of the acquisition, which was paid during the quarter ended June 30, 2015. The acquisition also included an amount of contingent consideration of $3.0 million that was payable upon the satisfaction of certain milestones, including the submission and approval of video slot platforms to various jurisdictions as outlined in the C2 Acquisition Agreement. During the year ended December 31, 2014, the Company paid $0.5 million of the contingent consideration. In May 2015, the C2 Acquisition Agreement was amended to reduce the remaining contingent consideration liability of $2.5 million to $2.1 million and to acknowledge that the milestones of the C2 Acquisition Agreement were satisfied. In July 2015, the Company paid $1.0 million of the contingent consideration, reducing the balance to $1.1 million, which was paid in January 2016.

Casino War Blackjack, Inc. acquisition

On July 1, 2014, a wholly owned subsidiary of the Company entered into an agreement to purchase 100% of the equity of War Blackjack for approximately $1.3 million in cash, subject to terms outlined in the Stock Purchase Agreement, dated July 1, 2014 (“War Blackjack Acquisition Agreement”). The acquisition closed on July 18, 2014 and was funded by available cash on hand. War Blackjack is an innovative manufacturer and developer of table and electronic games based in Las Vegas, Nevada.

Cadillac Jack

On May 29, 2015, the Company acquired 100% of the equity of Amaya Americas Corporation (“Cadillac Jack”), a leading provider of Class II gaming machines for the North American tribal gaming market, with key regions of operation within Alabama, Mexico, and Wisconsin. This acquisition is expected to create growth opportunities in Class II and Class III jurisdictions and expands the Company’s geographic footprint. The combined management teams are complementary and possess years of combined experience that is expected to allow us to effectively grow and improve our business.

The acquisition was funded primarily from cash proceeds of incremental borrowings on our existing term loans, the issuance of senior secured PIK notes, as described in Note 6, and the issuance of additional common stock, as described in Note 7. The consideration also included a promissory note to the seller, Amaya Inc., for $12.0 million, as described in Note 6, as well as a contingent receivable that was recorded at its estimated fair value on the date of the acquisition. The contingent receivable is related to a clause in the stock purchase agreement allowing for a refund of up to $25.0 million if certain deactivated gaming machines in Mexico are not in operation by November 29, 2016.

Gamingo Limited

On June 15, 2015, the Company purchased 100% of the equity of Gamingo Limited (formerly known as “RocketPlay”, currently known as “AGSi”), a leading gaming company developing social casino titles for mobile devices. With primary offices in San Francisco and Tel Aviv, AGSi’s flagship product, Lucky Play Casino, gives players a casino-quality experience with slots, table games, tournaments, and live events. The total consideration of $8.8 million includes an estimated $5.0 million of contingent consideration that is payable based on the operating results of AGSi during a twelve-month measurement period that will end no later than December 2016. The amount of the contingent consideration recorded was

28

estimated at the purchase date and is subject to change based on changes in the estimated operating results of AGSi and has been recorded in other long-term liabilities in the consolidated balance sheet.

Intellectual Property Acquisitions

During the quarter ended September 30, 2015, the Company acquired certain intangible assets related to the purchase of table games and table game related intellectual property. Some of the acquisitions were accounted for as an acquisition of a business and the assets acquired and liabilities assumed were measured based on our preliminary estimates of their fair values at the acquisition dates. The estimated fair values of assets acquired and liabilities assumed and resulting goodwill are subject to adjustment as we finalize our fair value analysis. The total consideration of $10.0 million includes an estimated $1.5 million of contingent consideration that is payable periodically based on a percentage of product revenue earned on the related table games. The amount of the contingent consideration recorded was estimated at the purchase date and is subject to change based on changes in the estimated product revenue and has been recorded in other long-term liabilities in the consolidated balance sheet.

29

Results of Operations

Year Ended December 31, 2015 compared to the Year Ended December 31, 2014

The following tables set forth certain selected audited consolidated financial data for the periods indicated (in thousands, except key performance indicators):

	Year ended December 31,						$			%
	2015			2014			Change			Change
Consolidated Statements of Operations:
Gaming operations	$	117,013		$	68,981		48,032			69.6	%
Equipment sales	6,279			3,159			3,120			98.8	%
Total revenues	123,292			72,140			51,152			70.9	%
Operating expenses
Cost of gaming operations	23,291			14,169			9,122			64.4	%
Cost of equipment sales	1,548			1,607			(59		)	(3.7	)%
Selling, general and administrative	40,088			19,456			20,632			106.0	%
Research and development	14,376			4,856			9,520			196.0	%
Write downs and other charges	11,766			7,068			4,698			66.5	%
Depreciation and amortization	61,662			33,405			28,257			84.6	%
Total operating expenses	152,731			80,561			72,170			89.6	%
Loss from operations	(29,439		)	(8,421		)	(21,018		)	249.6	%
Interest expense	41,642			17,235			24,407			141.6	%
Interest income	(82		)	(42		)	(40		)	95.2	%
Other expense	3,635			573			3,062			534.4	%
Loss before income taxes	(74,634		)	(26,187		)	(48,447		)	185.0	%
Income tax benefit (expense)	36,089			(2,189		)	38,278			(1,748.7	)%
Net loss	$	(38,545	)	$	(28,376	)	(10,169		)	35.8	%
Key Performance Indicators:
Slot install base	19,251			8,735			10,516			120.4	%
Slot revenue per day	$	20.93		$	21.23		$	(0.30	)	(1.4	)%
Slot units sold	203			255			(52		)	(20.4	)%

Total Revenues

The inclusion of revenue from Cadillac Jack and AGSi increased total revenues by $46.1 million and $2.0 million, respectively, for the year ended December 31, 2015, compared to the prior year period. The increase in the slot install base was primarily due to the inclusion of Cadillac Jack, which accounted for approximately 10,500 units. The remaining increase in revenues was driven by improved game performance and a 150% increase in the install base of our Big Red slot machine that runs on our Colossal platform, which have historically been our best performing games. Slot revenue per day decreased in total, which is primarily attributable to the inclusion of the Cadillac Jack’s Mexico install base at lower revenues per day than the Company’s historical install base has returned.

Operating Expenses

Cost of gaming operations. The inclusion of Cadillac Jack and AGSi increased the cost of gaming operations expenses by $8.5 million and $0.6 million, respectively, for the year ended December 31, 2015, compared to the prior year period.

Selling, general and administrative. The inclusion of Cadillac Jack and AGSi increased selling, general and administrative expenses by $9.3 million and $3.1 million, respectively, for the year ended December 31, 2015, compared to the prior year period. The remaining increase is primarily due to increases in professional fees of $3.7 million. The increase is also attributable to payroll and related expenses of $2.2 million driven by increased headcount for corporate operations and our new

30

table games division, trade shows and marketing expenses increased $1.0 million driven by our new table games division and increases in rent expense of $0.6 million related to our new corporate headquarters in Las Vegas and our new facility in Oklahoma City.

Research and development. The increase in research and development costs was primarily due to the inclusion of Cadillac Jack and AGSi, which accounted for $8.9 million and $0.8 million of the increase, respectively, for the year ended December 31, 2015, compared to the prior year period, offset by decreased headcount.

Write downs and other charges. During the year ended December 31, 2015, the Company recognized $11.8 million in write-downs and other charges primarily related to acquisition charges of $8.2 million. The Company also recognized an impairment to intangible assets of $3.4 million related to game titles and write-offs related to prepaid royalties of $1.3 million, losses from the disposal of assets of $1.3 million and the impairment of long-lived assets of $0.2 million, partially offset by net write downs of primarily contingent consideration $2.7 million that is described in Note 2 of our consolidated financial statements.

During the year ended December 31, 2014, the Company recognized $7.1 million in write-downs and other charges primarily related to acquisition charges of $2.8 million, losses from the disposal of assets of $1.9 million, an impairment to intangible assets of $1.4 million and the impairment of long-lived assets of $0.8 million.

Depreciation and amortization. The increase in depreciation and amortization was primarily due to the inclusion of Cadillac Jack and AGSi, which accounted for $26.7 million and $1.0 million, respectively, for the year ended December 31, 2015, compared to the prior year period. The remaining increase was due to an increase in capital expenditures during 2014.

Other Expense (Income), net

Interest expense. The increase is primarily attributed to the increase in the principal amounts outstanding under the senior secured credit facilities and the issuance ofsenior secured PIK notes during the year ended December 31, 2015, compared to the prior year period. The proceeds of the incremental term loans and PIK notes were used primarily to pay the consideration for the Cadillac Jack acquisition.

Other expense. The increase in other expense was primarily due to the inclusion of Cadillac Jack, which accounted for $2.8 million for the year ended December 31, 2015, compared to the prior year period. The remaining increase was due to unfavorable changes in foreign currency exchange rates.

Income Taxes

The Company's effective income tax rate for the year ended December 31, 2015, was a benefit of 48.4%. The difference between the federal statutory rate of 35% and the Company's effective tax rate for the year ended December 31, 2015, was primarily due to the income tax benefit recorded from the reversal of our valuation allowance on deferred tax assets as a result of the net deferred tax liabilities assumed in the Cadillac Jack acquisition. The Company's effective income tax rate for the year ended December 31, 2014 was an expense of 8.4%. The difference between the federal statutory rate of 35% and the Company's effective tax rate for the year ended December 31, 2014 was primarily due to valuation allowance considerations and amortization of indefinite life intangibles.

31

Year Ended December 31, 2014 compared to the Combined Year Ended December 31, 2013

The following tables set forth certain selected audited consolidated financial data for the periods indicated (in thousands, except key performance indicators):

	Year ended December 31,						$			%
	2014			2013			Change			Change
Consolidated Statements of Operations:
Gaming operations	$	68,981		$	56,856		12,125			21.3	%
Equipment sales	3,159			1,558			1,601			102.8	%
Total revenues	72,140			58,414			13,726			23.5	%
Operating expenses
Cost of gaming operations	14,169			12,321			1,848			15.0	%
Cost of equipment sales	1,607			893			714			80.0	%
Selling, general and administrative	19,456			15,150			4,306			28.4	%
Research and development	4,856			3,092			1,764			57.1	%
Write downs and other charges	7,068			17,795			(10,727		)	(60.3	)%
Depreciation and amortization	33,405			28,590			4,815			16.8	%
Total operating expenses	80,561			77,841			2,720			3.5	%
Loss from operations	(8,421		)	(19,427		)	11,006			(56.7	)%
Interest expense	17,235			17,601			(366		)	(2.1	)%
Interest income	(42		)	(1,410		)	1,368			(97.0	)%
Loss on debt retirement	—			14,661			(14,661		)	(100.0	)%
Other expense (income)	573			(1		)	574			(57,400.0	)%
Loss before income taxes	(26,187		)	(50,278		)	24,091			(47.9	)%
Income tax benefit (expense)	(2,189		)	(54		)	(2,135		)	3,953.7	%
Net loss	$	(28,376	)	$	(50,332	)	21,956			(43.6	)%
Key Performance Indicators:
Slot install base	8,735			5,137			3,598			70.0	%
Slot revenue per day	$	21.23		$	20.36		$	0.87		4.3	%
Slot units sold	255			123			132			107.3	%

Total Revenues

The increase in total revenue in 2014 compared to 2013 is due to increases in gaming operations revenue and equipment sales. The increase in gaming revenue was partially a result of increased distribution of C2 Gaming platform and content after the acquisition of C2 Gaming, expansion of our operations into the Illinois market and a $3.8 million decrease in the accretion of lease incentives that were recorded as contra revenue for the 2013 Combined Period. The lease incentives were written off in the AGS Capital Acquisition. Equipment sales increased due to an additional 132 units sold in 2014 compared to the prior year period.

Operating Expenses

Gaming operating expenses. The increase in gaming operating expenses is commensurate with the increase in gaming operations revenue. Gaming operating expenses as a percentage of gaming operations revenue was 20.5% for the year ended December 31, 2014 compared to 21.7% for the 2013 Combined Period.

Selling, general and administrative. The increase is primarily due to a $2.4 million increase in payroll and related expenses, $2.0 million increase in legal and professional fees, $0.2 million increase in property taxes, $0.2 million increase in rent expense offset by a $0.6 million reduction of bad debt expense.

32

Research and development. Increase was driven by increased severance costs and fees related to the closing of our Toronto operations.

Write down and other charges. During the year ended December 31, 2014, the Company recognized $7.1 million in write-downs and other charges primarily related to acquisition charges of $2.8 million, losses from the disposal of assets of $1.9 million, an impairment to intangible assets of $1.4 million and the impairment of long-lived assets of $0.8 million.

For the Successor Period ending December 31, 2013, the Company recognized $7.5 million in write-downs and other charges for fees related to the AGS Capital Acquisition. For the Predecessor Period, the Company recognized $10.3 million in write downs and other charges that primarily consisted of $3.9 million in fees related to the AGS Capital Acquisition, $3.3 million related to the impairment of long-lived assets, $1.7 million related to the impairment of intangible assets, $0.5 million related to the write-down of phantom unit compensation and $0.3 million for consulting fees paid to a related party.

Depreciation and amortization. The increase is primarily due to the step-up in fair value attributed to the tangible and intangible assets recognized in connection with the AGS Capital Acquisition and a significant increase in intangible assets and gaming equipment as a result of the acquisition of C2 Gaming in May 2014.

Other Expense (Income), net

Interest expense. The decrease is primarily attributed to the decreased interest rate associated with the term loan facility versus the debt of the Predecessor, partially offset by an increase in the outstanding principal balance at December 31, 2014, under our term loan and revolving facilities.

Interest income. The decrease in interest income was the result of notes receivable being retained by the Predecessor in connection with the AGS Capital Acquisition.

Income Taxes

The Company's effective income tax rate for the year ended December 31, 2014, was an expense of 8.4%. The difference between the federal statutory rate of 35% and the Company's effective tax rate for the year ended December 31, 2014, was primarily due to valuation allowance considerations and amortization of indefinite life intangibles. The Company's effective income tax rate for the year ended December 31, 2013 was an expense of 0.7%. The difference between the federal statutory rate of 35% and the Company's effective tax rate for the year ended December 31, 2013 was primarily due to valuation allowance considerations and amortization of indefinite life intangibles.

LIQUIDITY AND CAPITAL RESOURCES

We expect that primary ongoing liquidity requirements for the year ended December 31,2016 will be for operating capital expenditures of between $20 million and $30 million, working capital, debt servicing, game development and other customer acquisition activities. We expect to finance these liquidity requirements through a combination of cash on hand and cash flows from operating activities.

Part of our overall strategy includes consideration of expansion opportunities and acquisition and other strategic opportunities that may arise periodically. We may require additional funds in order to execute on such strategic growth, and may incur additional debt or issue additional equity to finance any such transactions. We cannot assure you that we will be able to obtain such debt or issue any such additional equity on acceptable terms or at all.

As of December 31, 2015, we had $35.7 million in cash and cash equivalents and $40.0 million available under our revolving credit facility. Based on our current business plan, we believe that our existing cash balances, cash generated from operations and availability under the revolving credit facility will be sufficient to meet our anticipated cash needs for at least the next twelve months. As of December 31, 2015, we are in compliance with the the required covenants of our debt instruments, including the maximum net first lien leverage ratio. However, our future cash requirements could be higher than we currently expect as a result of various factors. Our ability to meet our liquidity needs could be adversely affected if we suffer adverse results of operations, or if we violate the covenants and restrictions to which we are subject under our debt instruments. Additionally, our ability to generate sufficient cash from our operating activities is subject to general economic, political, regulatory, financial, competitive and other factors beyond our control. Our business may not generate sufficient cash flow from operations, and future borrowings may not be available to us under our existing credit facility in an amount sufficient to enable us to pay our service or repay our indebtedness or to fund our other liquidity needs, and we may be required to seek

33

additional financing through credit facilities with other lenders or institutions or seek additional capital through private placements or public offerings of equity or debt securities.

Indebtedness

Senior Secured Credit Facilities

On December 20, 2013, the Company entered into our senior secured credit facilities, which consisted of $155.0 million in term loans and a $25.0 million revolving credit facility. On May 29, 2015, the Company entered into incremental facilities for $265.0 million in term loans and on June 1, 2015, the Company entered into an incremental agreement for an additional $15.0 million of incremental revolving commitments. The proceeds of the incremental term loans were used primarily to pay the consideration for the Cadillac Jack acquisition.

The term loans will mature on December 20, 2020, and the revolving credit facility will mature on December 20, 2018. The term loans require scheduled quarterly payments in amounts equal to 0.25% of the original aggregate principal amount of the term loans, with the balance due at maturity. Borrowings under the term loans bear interest at a rate equal to, at the Company’s option, either LIBOR or the base rate, subject to an interest rate floor plus an applicable margin rate. Borrowings under the revolving credit facility bear interest at a rate equal to, at the Company’s option, either LIBOR or the base rate plus an applicable margin rate. In addition, on a quarterly basis, the Company is required to pay each lender under the revolving credit facility a commitment fee in respect of any unused commitments thereunder at a rate of 0.50% per annum.

The senior secured credit facilities are guaranteed by AP Gaming Holdings, LLC, the AP Gaming I, LLC’s (the “Borrower”) material, wholly owned domestic subsidiaries (subject to certain exceptions), and are secured by a pledge by AP Gaming Holdings, LLC of the Borrower’s equity interest directly held by AP Gaming Holdings, LLC and a pledge of substantially all of the existing and future property and assets of the Borrower and the subsidiary guarantors, subject to certain exceptions. The senior secured credit facilities require that the Borrower maintain a maximum net first lien leverage ratio set at a maximum of 5.5 to 1 beginning with the first quarter ending June 30, 2014. The senior secured credit facilities contain limitations on additional indebtedness, guarantees, incurrence of liens, investments and distributions, as defined. The senior secured credit facilities also contain customary events of default included in similar financing transactions, including, among others, failure to make payments when due, default under other material indebtedness, breach of covenants, breach of representations and warranties, involuntary or voluntary bankruptcy, and material judgments. The Company was in compliance with the covenants of the senior secured credit facilities at December 31, 2015.

Senior secured PIK notes

On May 29, 2015, the Company entered into a note purchase agreement with AP Gaming Holdings, LLC, as subsidiary guarantor (the “Subsidiary Guarantor”), Deutsche Bank AG, London Branch, as purchaser (the “Purchaser”), and Deutsche Bank Trust Company Americas, as collateral agent.  Pursuant to the agreement, the Company issued $115.0 million of its 11.25% senior secured PIK notes due 2021 (the “Notes”) at an issue price of 97% of the principal amount thereof to the Purchaser in a private placement exempt from registration under the Securities Act of 1933, as amended.  The Notes are secured by the Company’s equity in its subsidiary AP Gaming, Inc., subject to certain limitations including those imposed by gaming laws, and are unconditionally guaranteed by the Subsidiary Guarantor.

Interest on the Notes will accrue at a rate of 11.25% per annum. The Company may elect to pay interest due on the Notes in cash, by increasing the principal of the outstanding Notes or by issuing new Notes (“PIK interest”) for the entire amount of the interest payment or by paying interest partially in cash and partially in PIK interest. Interest on the Notes will accrue from the date of issuance and will be payable on the dates described in more detail in the agreement.  The Notes will mature on May 28, 2021.  The net proceeds of the Notes were used primarily to finance the acquisition of Cadillac Jack.

The Notes contain limitations on additional indebtedness, guarantees, incurrence of liens, investments and distributions, as defined. The Notes also contains customary events of default included in similar transactions, including, among others, failure to make payments when due, acceleration of other material indebtedness, breach of covenants, breach of representations and warranties, involuntary or voluntary bankruptcy, and material judgments. At December 31, 2015, the Notes totaled $119.3 million, which includes capitalized interest of $7.6 million.

Seller notes

On December 20, 2013, the Company issued two promissory notes (the “AGS Seller Notes”) to AGS Holdings, LLC, in the amounts of $2.2 million and $3.3 million, to satisfy the conditions set forth in the Acquisition Agreement. At December 31,

34

2015, notes payable related to the AGS Seller Notes totaled $6.5 million, which includes capitalized interest of $1.0 million. The AGS Seller Notes accrue interest on the unpaid principal balance at 8.5% per annum and shall be payable semi-annually in arrears on June 30 and December 31, commencing on June 30, 2014. Any interest accrued and payable on any interest payment date will be paid by capitalizing such interest and adding it to (and thereby increasing) the outstanding principal amount of this AGS Seller Notes. All principal and interest under the AGS Seller Notes is due and payable on June 18, 2021, the maturity date. The Company may prepay from time to time all or any portion of the outstanding principal balance due under the AGS Seller Notes.

On May 29, 2015, the Company issued a promissory note to Amaya Inc. (the “Amaya Seller Note”) with an initial principal amount of $12.0 million to satisfy the conditions set forth in the stock purchase agreement for the Cadillac Jack Acquisition. The Amaya Seller Note accrues interest on the unpaid principal amount at 5.0% per annum and is payable semi-annually on June 30 and December 31 (and on May 29, 2023, the maturity date of the note), commencing on June 30, 2015. All interest accrued and payable on any interest payment date will be paid by capitalizing such interest and adding it to (and thereby increasing) the outstanding principal amount of the Amaya Seller Note. All principal under the note is due and payable on May 29, 2023.  The Amaya Seller Note is required to be prepaid under certain circumstances described in more detail in the note agreement. The Company may prepay from time to time all or any portion of the outstanding principal balance due under the Amaya Seller Note.  The Amaya Seller Note includes certain covenants and events of default that are customary for instruments of this type. At December 31, 2015, the Amaya Seller Note totaled $12.4 million, which includes capitalized interest of $0.4 million.

Equipment Long Term Note Payable and Capital Leases

The Company has entered into a financing agreement to purchase certain gaming devices, systems and related equipment and has entered into leases for servers and equipment that are accounted for as capital leases.

The following table summarizes our historical cash flows (in thousands):

	Year ended December 31,
	2015			2014			2013(1)
Cash Flow Information:
Net cash provided by operating activities	$	9,403		$	12,482		$	388
Net cash used in investing activities	(401,850		)	(33,922		)	(243,320		)
Net cash provided by financing activities	417,547			9,860			257,771
Effect of exchange rates on cash and cash equivalents	(58		)	518			358
Increase (decrease) in cash and cash equivalents	$	25,042		$	(11,062	)	$	15,197

(1) 2013 balances represent the Combined period ended December 31, 2013.

Operating activities

The Company has historically produced a loss from operations, which is primarily due to the capital nature of the business and the resulting depreciation and amortization expense. For the year ended December 31, 2015, net cash provided by operating activities was $9.4 million compared to $12.5 million for the year ended ended December 31, 2014, representing a decrease of $3.1 million. The decrease is primarily due to an $18.5 million decrease in income from operating activities excluding non-cash expenses, partially offset by an increase in net working capital fluctuations. The increased use of cash for operating activities in the period is primarily related to the transaction related expenses for the Cadillac Jack and AGSi acquisitions.

Net cash provided by operating activities increased $12.1 million for the year ended ended December 31, 2014 compared to the Combined Period. The increase was due to a decrease of $8.1 million in loss from operations excluding non-cash expenses and an increase of $4.0 million as a result of changes in net working capital.

Investing activities

Net cash used in investing activities for the year ended December 31, 2015, was $401.9 million compared to $33.9 million for the year ended December 31, 2014, representing an increase of $367.9 million. The increase was primarily due to

35

the acquisition of Cadillac Jack, AGSi and table games related IP for $374.3 million, net of cash acquired. Purchases of property and equipment increased by $5.5 million, which was partially offset by a decrease in the purchase of intangible assets of $3.2 million.

Net cash used in investing activities decreased $209.4 million for the year ended ended December 31, 2014 compared to the Combined Period. The decrease was primarily due to $215.0 million in cash paid for the AGS Capital Acquisition in the Successor Period and a decrease of $11.7 million in purchases of gaming equipment, vehicles and other equipment, partially offset by $11.8 million in cash paid for the C2 Gaming acquisition in 2014 and an increase of $4.9 million in purchases of intangible assets.

Financing activities

Net cash provided by financing activities for the year ended December 31, 2015 increased $407.7 million to $417.5 million compared to $9.9 million for the same period in 2014. The increase was primarily due to the increase in the senior secured credit facilities of $265.0 million in incremental term loans entered into on May 29, 2015, the issuances of $115.0 million in senior secured PIK notes, cash provided by the issuance of common stock of $77.4 million, partially offset by a net pay down of the revolving credit facility of $10.0 million, payments for previous acquisition obligations of $10.0 million, $3.8 million paid in deferred financing costs associated with the issuance of new debt and payments on debt of $4.7 million.

Net cash provided by financing activities decreased $247.9 million for the year ended December 31, 2014 compared to the Combined Period. The decrease was primarily due to a decrease of $146.9 million in borrowings, a decrease of $244.1 million in capital contributions from the issuance of common stock, partially offset by a decrease in debt payments of $134.9 million and a decrease in payments of deferred loan costs of $6.2 million.

Off-Balance Sheet Arrangements

We do not maintain any off-balance sheet transactions, arrangements, obligations or other relationships with unconsolidated entities or others that 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.

Significant Accounting Policies and Critical Estimates

Our consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America. Accordingly, we are required to make estimates incorporating judgments and assumptions we believe are reasonable based on our historical experience, contract terms, trends in our company and the industry as a whole, as well as information available from other outside sources. Our estimates affect amounts recorded in our consolidated financial statements and there can be no assurance that actual results will not differ from initial estimates. Changes in future economic conditions or other business circumstances may affect the outcomes of our estimates and assumptions. Our accounting policies are more fully described in Note 1 to the consolidated financial statements, Description of Business and Summary of Significant Accounting Policies.

We consider the following accounting policies to be the most important to understanding and evaluating our financial results. These policies require management to make subjective and complex judgments that are inherently uncertain or variable.

Management considers an accounting estimate to be critical if:

• It requires assumptions to be made that were uncertain at the time the estimate was made, and

• Changes in the estimate or different estimates that could have been selected could have a material impact on our consolidated results of operation or financial condition.

Business Combinations

We apply the provisions of ASC 805, Business Combinations, in the accounting for acquisitions. It requires that we recognize separately from goodwill the assets acquired and the liabilities assumed, at their acquisition date fair values. Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net of the acquisition date fair values of the assets acquired and the liabilities assumed. Significant estimates and assumptions are required to value assets acquired and liabilities assumed at the acquisition date as well as contingent consideration, where applicable. These estimates are inherently uncertain and subject to refinement and typically include the calculation of an appropriate discount rate (Assumption #1) and projection of the cash flows (Assumption #2) associated with each acquired asset. As a result, during the

36

measurement period, which may be up to one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. In addition, deferred tax assets, deferred tax liabilities, uncertain tax positions and tax related valuation allowances assumed in connection with a business combination are initially estimated as of the acquisition date. We reevaluate these items quarterly based upon facts and circumstances that existed as of the acquisition date and any adjustments to its preliminary estimates are recorded to goodwill if identified within the measurement period. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to the consolidated statements of operations.

Assumptions/Approach used for Assumption #1: Fair value of identifiable tangible and intangible assets is based upon forecasted revenues and cash flows as well as the selected discount rate. In determining the appropriate discount rate, we incorporate assumptions regarding capital structure and return on equity and debt capital consistent with peer and industry companies.

Effect if Different Assumptions used for Assumption #1: Valuation of identifiable tangible and intangible assets requires judgment, including the selection of an appropriate discount rate. While we believe our estimates used to select an appropriate discount rate, different assumptions could materially affect the measurement of fair value. If the selected discount rates are inaccurate for individual assets, the allocation of the purchase price, including the excess purchase price allocated to goodwill, may be inaccurate.

Assumptions/Approach used for Assumption #2: Fair value of identifiable tangible and intangible assets is based upon forecasted revenues and cash flows. In developing estimated cash flows, we incorporate assumptions regarding future performance, including estimations of revenues, costs, and capital expenditures.

Effect if Different Assumptions used for Assumption #2: Valuation of identifiable tangible and intangible assets requires judgment, including estimations of cash flows, and determinations of fair value. While we believe our estimates of future cash flows are reasonable, different assumptions could materially affect the measurement of fair value. If the estimated cash flows are inaccurate for individual assets, the allocation of the purchase price, including the excess purchase price allocated to goodwill, may be inaccurate.

Revenue Recognition

We evaluate the recognition of revenue based on the criteria set forth in the accounting guidance as more fully described in Note 1 to the consolidated financial statements, which contains a description of our revenue recognition policy for our revenue streams.

Judgment is often required to determine whether an arrangement consists of multiple deliverables, whether the delivered item has value to the customer on a standalone basis and, if applicable, management’s estimated selling price used to allocate the arrangement fee to each deliverable. The fair value of the undelivered elements is deferred and the remaining portion is allocated to the delivered item and is recognized as revenue. Such determination affects the timing of revenue recognition. We evaluate the primary use and functionality of each deliverable in determining whether a delivered item has standalone value and qualifies as a separate unit of accounting.

Judgment is required to determine whether there is sufficient history to prove assurance of collectability and whether pricing is fixed or determinable. Other factors considered include the nature of our customers, our historical collection experience with the specific customer, the terms of the arrangement and the nature of the product being sold. Our product sales contracts do not include specific performance, cancellation, termination or refund-type provisions.

Determining whether certain of our products are within the scope of software revenue recognition and whether the software and non-software elements of these products function together to deliver the essential functionality can require judgment. Our determination dictates whether general revenue recognition guidance or software revenue recognition guidance applies and could impact the timing of revenue recognition.

Allowance for Doubtful Accounts

We maintain an allowance for doubtful accounts related to our accounts and notes receivable deemed to have a high risk of collectability. We review our receivables on a monthly basis to determine if any receivables will potentially be uncollectible. We analyze historical collection trends and changes in our customers’ payment patterns, customer concentration and credit worthiness when evaluating the adequacy of our allowance for doubtful accounts (Assumption #1). A large percentage of

37

receivables are with Native American tribes that have their reservations and gaming operations in the state of Oklahoma, and we have concentrations of credit risk with several tribes. We include any receivable balances that are determined to be uncollectible in our overall allowance for doubtful accounts. Changes in our assumptions or estimates reflecting the collectability of certain accounts could materially affect our allowance for both trade and notes receivable.

Assumptions/Approach used for Assumption #1: We estimate our allowance for doubtful accounts based on historical collection trends, changes in our customers’ payment patterns, customer concentration and credit worthiness.

Effect if Different Assumptions used for Assumption #1: Recording an allowance for doubtful accounts requires judgment. While we believe our estimates are reasonable, if actual cash collections fall below our expectations, we may need to record additional bad debt expense.

Inventories

Inventories consist primarily of parts and supplies that are used to repair and maintain machinery and equipment. Inventories are stated at the lower of cost or market. Cost of inventories is determined using the first-in, first-out (“FIFO”) method for all components of inventory. We regularly review inventory quantities and update estimates for the net realizable value of inventories. This process includes examining the carrying values of parts and ancillary equipment in comparison to the current fair market values for such equipment (less costs to sell or dispose). Some of the factors involved in this analysis include the overall levels of the inventories, the current and projected sales levels for such products (Assumption #1), the projected markets for such products and the costs required to sell the products, including refurbishment costs. Changes in the assumptions or estimation could materially affect the inventory carrying value.

Assumptions/Approach used for Assumption #1: Our estimates of net realizable value of inventory take into account projected usage including lease and sales levels that will utilize the existing inventory to assist in determining the net realizable value of the inventory at a balance sheet date. If inventory has no projected usage, it is written down to current market values (less costs to sell and dispose).

Effect if Different Assumptions used for Assumption #1: Although we believe our estimate of inventory usage are reasonable, different assumptions could materially affect the inventories net realizable value. If actual inventory usage is lower than our projections, additional inventory write-downs may be required.

Property and Equipment

The cost of property and equipment, consisting of gaming machines, file servers and other support equipment as well as leasehold improvements, office and other equipment, is depreciated over their estimated useful lives, using the straight-line method. Repairs and maintenance costs are expensed as incurred. We routinely evaluate the estimated lives used to depreciate assets (Assumption #1). Upon the occurrence of a triggering event, we measure recoverability of assets to be held and used by comparing the carrying amount of an asset to future cash flows expected to be generated by the asset (Assumption #2). Our policy is to impair, when necessary, excess or obsolete gaming terminals on hand that we do not expect to be used. Impairment is based upon several factors, including estimated forecast of gaming terminal demand for placement into casinos.

Assumptions/Approach used for Assumption #1: The carrying value of the asset is determined based upon management’s assumptions as to the useful life of the asset, where the assets are depreciated over the estimated life on a straight line basis.

Effect if different assumptions used for Assumption #1: While we believe the useful lives that we use are reasonable, different assumptions could materially affect the carrying value of the assets, as well as the depreciation expense recorded.

Assumptions/Approach used for Assumption #2: When we identify a triggering event, we estimate cash flows directly associated with the use of the gaming equipment to test recoverability and remaining useful lives based upon forecasted product revenues and cash flows. In developing estimated cash flows, we incorporate assumptions regarding future performance, including estimations of win per day and estimated units. When the carrying amount exceeds the undiscounted cash flows expected to result from the use and eventual disposition of the asset, we then compare the carrying amount to its current fair value. We recognize an impairment loss if the carrying amount of the asset exceeds its fair value.

Effect if Different Assumptions used for Assumption #2: Impairment testing requires judgment, including estimates of cash flows, and determinations of fair value. While we believe our estimates of future revenues and cash flows are reasonable, different assumptions could materially affect the measurement of useful lives, recoverability and fair value. If actual cash flows fall below initial forecasts, we may need to record additional amortization and/or impairment charges.

38

Valuation of Intangible Assets and Goodwill

We group our intangible assets at the lowest level for which there are identifiable cash flows The nature of our intangible assets is primarily described as follows:

• Trade and brand names - intangible assets related to business and corporate trade names that were purchase in business acquisitions as well as the brand names of product franchise titles. This category includes both definite- and indefinite-lived intangible assets.

• Customer relationships – intangible assets that represent primarily the value that has been assigned to customer relationships as a result of business acquisitions.

• Contract rights under development and placement fees - intangible assets that relate to payments made to customers to secure floor space under lease agreements for out gaming machines and to a lesser extent we record intangible assets from the discounts on development notes receivable loans that have been extended to customers at interest rates that are deemed below market in exchange for a fixed number of gaming terminal placements in the customer’s facility.

• Gaming software and technology platforms – these intangible assets represent software development costs that are capitalized once technological feasibility has been established and are amortized when the software is placed into service. Any subsequent software maintenance costs, such as bug fixes and subsequent testing, are expensed as incurred. Discontinued software development costs are expensed when the determination to discontinue is made. This category also includes the game content libraries and technology platforms that were purchased as part of business acquisitions.

• Intellectual property – these intangible assets represent the platform and titles acquired through business acquisitions and stand alone purchases of patents and related technology.

Definite-lived Intangible Asset Impairment

The Company reviews its definite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. These indicators can include the loss of a key customer or jurisdiction or cancellation of a specific product line where there is no alternative future use for the intangible asset.

When the estimated undiscounted cash flows are not sufficient to recover the intangible asset’s carrying amount, an impairment loss is measured to the extent the fair value of the asset is less than its carrying amount.

Indefinite-lived Intangible Asset Impairment

The “American Gaming Systems” trade name has an indefinite useful life. We do not amortize the indefinite lived trade name, but instead test for possible impairment at least annually or when circumstances warrant. For the trade name and any other indefinite-lived intangible asset we can perform a qualitative assessment to determine if it is more likely than not that the fair value of the asset is less than its carrying amount. If we believe, as a result of our qualitative assessment, that it is more likely than not that the fair value of the asset is less than its carrying amount, a quantitative impairment test is required. The quantitative test compares the fair value of the asset to its carrying amount and any excess carrying amount over the fair value is recorded as an impairment loss.

Costs of Capitalized Computer Software

Internally developed gaming software represents our internal costs to develop gaming titles to utilize on our gaming terminals. Internally developed gaming software is stated at cost, which is amortized over the estimated useful lives of the software, using the straight-line method. Software development costs are capitalized once technological feasibility has been established and are amortized when the software is placed into service. Generally, the computer software we develop reaches technological feasibility when a working model of the computer software is available. After the product is complete and commercialized, any software maintenance costs, such as bug fixes and subsequent testing, are expensed as incurred. Discontinued software development costs are expensed when the determination to discontinue is made. Software developments costs are amortized over the expected life of the title or group of titles, if applicable, to amortization expense.

39

On a quarterly basis, or more frequently if circumstances warrant, we compare the net book value of our internally developed computer software to the net realizable value on a title or group of titles basis. The net realizable value is determined based upon certain assumptions, including the expected future revenues and net cash flows of the gaming titles or group of gaming titles utilizing that software, if applicable (Assumption #1).

Assumptions/Approach used for Assumption #1: We estimate the revenues and net cash flows from our internally developed software intangible on a product by product basis to compare net book value to net realizable value. In developing estimated revenues and cash flows, we incorporate assumptions regarding future performance, including estimations of win per day and estimated units. When the carrying amount exceeds the net realizable value, the excess is written off.

Effect if Different Assumptions used for Assumption #1: Determining net realizable value requires judgment, including estimations of forecasted revenue and cash flows. While we believe our estimates of future revenues and cash flows are reasonable, different assumptions could materially affect the measurement of net realizable value.

Goodwill

The excess of the purchase price of entities that are considered to be purchases of businesses over the estimated fair value of the assets acquired and the liabilities assumed is recorded as goodwill. Goodwill is reviewed for possible impairment annually on October 1 or more frequently if events or changes in circumstances indicate that the carrying value may not be recoverable (Assumption #1). The Company has the option to begin with a qualitative assessment, commonly referred to as Step 0, to determine whether it is more-likely-than-not that the reporting units fair value is less than its carrying value. This qualitative assessment may include, but is not limited to, reviewing factors such as the general economic environment, industry and market conditions, changes in key assumptions used since the most recently performed valuation and overall financial performance of the reporting units. If the Company determines the reporting unit is not at risk of failing the qualitative assessment no impairment testing is required. If the Company determines that it is at risk of failing the qualitative assessment, the Company is required to perform an annual goodwill impairment test, and depending upon the results of that measurement, the recorded goodwill may be written down and charged to results from operations when its carrying amount exceeds its estimated fair value.

Assumptions/Approach used for Assumption #1: In the first step of the goodwill impairment test, we estimate the fair value of our reporting units and compare that to the carrying value. Fair value is based upon forecasted product revenues and cash flows. In developing estimated cash flows, we incorporate assumptions regarding future performance, including estimations of revenues, costs, and capital expenditures. When the carrying amount exceeds fair value, we then compare the carrying amount of goodwill to the implied fair value of goodwill. We recognize an impairment loss if the carrying amount exceeds the implied fair value.

Effect if Different Assumptions used for Assumption #1: Impairment testing requires judgment, including estimations of cash flows, and determinations of fair value. While we believe our estimates of future cash flows are reasonable, different assumptions could materially affect the measurement of fair value. If actual cash flows fall below initial forecasts, we may need to record additional impairment charges.

Income Taxes

We conduct business globally and are subject to income taxes in U.S. federal, state, local, and foreign jurisdictions. Determination of the appropriate amount and classification of income taxes depends on several factors, including estimates of the timing and probability of realization of deferred income taxes, reserves for uncertain income tax positions and income tax payment timing.

We account for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date. Taxes on income of our foreign subsidiaries are provided at the tax rates applicable to the tax jurisdictions in which they are located. Future tax benefits are recognized to the extent that realization of those benefits is considered more likely than not and a valuation allowance is established for deferred tax assets which do not meet this threshold.

The recoverability of certain deferred tax assets is based in part on estimates of future income and the timing of temporary differences, and the failure to fully realize such deferred tax assets could result in a higher tax provision in future periods.

40

We apply the accounting guidance to our uncertain tax positions and under the guidance, we may recognize a tax benefit from an uncertain position only if it is more likely than not that the position will be sustained upon examination by taxing authorities based on the technical merits of the issue. The amount recognized in the financial statements is the largest benefit that we believe has greater than a 50% likelihood of being realized upon settlement.

We are required to make significant judgments when evaluating our uncertain tax positions and the related tax benefits. We believe our assumptions are reasonable; however, there is no guarantee that the final outcome of the related matters will not differ from the amounts reflected in our income tax provisions and accruals. We adjust our liability for uncertain tax positions based on changes in facts and circumstances such as the closing of a tax audit or changes in estimates. Our income tax provision may be impacted to the extent that the final outcome of these tax positions is different than the amounts recorded.

Contingencies

We assess our exposures to loss contingencies, including claims and legal proceedings, and accrue a liability if a potential loss is considered probable and the amount can be estimated. Significant judgment is required in both the determination of probability and the determination as to whether an exposure is reasonably estimable. Because of uncertainties related to these matters, if the actual loss from a contingency differs from our estimate, there could be a material impact on our results of operations or financial position. Operating expenses, including legal fees, associated with contingencies are expensed when incurred.

Recently adopted accounting pronouncements

For a description of recently adopted accounting pronouncements, see Note 1 to the consolidated financial statements, Summary of Significant Accounting Policies.

Recently issued accounting pronouncements not yet adopted

For a description of recently issued accounting pronouncements not yet adopted, see Note 1 to the consolidated financial statements, Summary of Significant Accounting Policies.

Contractual Obligations

The following table contains information on our contractual obligations and commitments as of December 31, 2015 (in thousands):

			Payments Due by Period
	Total		Less than 1 year		2-3 years		4-5 years		More than 5 years
Long term debt	$	562,235	$	6,919	$	11,608	$	402,187	$	141,521
Interest payments	291,964		39,773		76,931		73,575		101,685
Operating leases	7,594		1,693		2,938		2,157		806
Other 1	16,153		3,750		7,641		1,697		3,065
Total	$	877,946	$	52,135	$	99,118	$	479,616	$	247,077

¹ “Other” includes Wide Area Progressive jackpot liabilities, employee severances, contingent consideration to business combinations and placement fees payable described in the footnotes below.

$29.5 million of unrecognized tax benefits as of December 31, 2015 were not included in the table above. Due to the inherent uncertainty of the underlying tax positions, it is not practicable to assign this liability to any particular year.

Estimated interest payments on our debt as of December 31, 2015 are based on principal amounts outstanding, the stated interest rate as of December 31, 2015 and required principal payments through the maturity of the debt.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

41

We are subject to certain market risks and uncertainties inherent in our operations. These market risks generally arise from transactions in the normal course of business. Our primary market risk exposures relate to interest rate risk and foreign currency exchange risks.

Interest Rates

Our primary exposure to market risk is interest rate risk associated with our long-term debt, which accrues interest at variable rates. Certain of our debt instruments accrue interest at LIBOR or the base rate, at our election, subject to an interest rate floor plus an applicable margin rate. In the normal course of business, we are exposed to fluctuations in interest rates as we seek debt and equity capital to sustain our operations. All of our interest rate sensitive financial instruments are held for purposes other than trading purposes. As of December 31, 2015, approximately 25% of our debt were fixed-rate instruments. As of December 31, 2015, the three month LIBOR rate was 0.61%, with our term loans having a LIBOR floor of 1%, our variable debt is essentially at a fixed rate until the LIBOR rate exceeds 1%.

Foreign Currency Risk

We are also exposed to fluctuations in foreign currency exchange rates from our international transactions and because the financial results of our foreign subsidiaries are translated into U.S. dollars in consolidation. Assets and liabilities outside the United States are primarily located in Mexico. Our investments in foreign subsidiaries with a functional currency other than the U.S. dollar are generally considered long-term investments. In addition, a significant portion of the cost attributable to our international operations is incurred in local currencies.

We derived approximately 10% of our revenue from sales to customers outside of the U.S. in 2015. To date, we have not engaged in hedging activities intended to protect against foreign currency risk.

42

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The information required by this item is contained in the financial statements listed in Item 15. “Exhibits and Financial Statement Schedules” of this Annual Report on Form 10-K.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

None.

ITEM 9A. CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures

Under the supervision and with the participation of our Chief Executive Officer (“CEO”) and Chief Financial Officer(“CFO”), management has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) of the Exchange Act) as of December 31, 2015. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, our disclosure controls and procedures are effective to ensure information is recorded, processed, summarized and reported within the periods specified in the Securities and Exchange Commission’s rules and forms and is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Controls

There were no changes in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the period covered by this Annual Report on Form 10-K that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Management’s Annual Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting and for an assessment of the effectiveness of internal control over financial reporting; as such items are defined in Rule 13a-15(f) under the Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance that our financial reporting and preparation of financial statements is reliable and in accordance with generally accepted accounting principles.

Our policies and procedures are designed to provide reasonable assurance that transactions are recorded and records maintained in reasonable detail as necessary to accurately and fairly reflect transactions and that all transactions are properly authorized by management in order to prevent or timely detect unauthorized transactions or misappropriation of assets that could have a material effect on our financial statements. Management is required to base its assessment on the effectiveness of our internal control over financial reporting on a suitable, recognized control framework. Management has utilized the criteria established in the 2013 Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) to evaluate the effectiveness of internal control over financial reporting.

Our management has performed an assessment according to the 2013 Internal Control-Integrated Framework established by COSO. Based on the assessment, management has concluded that our system of internal control over financial reporting, as of December 31, 2015, is effective. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

An attestation report of the Company’s internal control over financial reporting by our independent registered public accounting firm is not included as non-accelerated filers are exempt from the auditor attestation requirement of Section 404(b) of the Sarbanes-Oxley Act of 2002.

ITEM 9B. OTHER INFORMATION.

None.

43

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

Set forth below are the names, ages, positions, and biographical information of the executive officers of AGS Capital and the executive officers and director of the Company at December 31, 2015.

AGS Capital

Name	Age	Position
David Lopez	41	Chief Executive Officer
Kimo Akiona	42	Chief Financial Officer
Mauro Franic(1)	44	Chief Operating Officer
Victor Gallo	49	General Counsel, Compliance Officer and Vice President, Regulatory Affairs
Sigmund Lee	45	Chief Technology Officer
Julia Boguslawski	36	Chief Marketing Officer

⁽¹⁾ Mr. Franic resigned as the Company’s Chief Operating Officer effective January 22, 2016.

AP Gaming

Name	Age	Position
David Lopez	41	Chief Executive Officer, President and Secretary
Kimo Akiona	42	Treasurer
David Sambur	35	Director

The following are brief biographies describing the backgrounds of the executive officers of AGS Capital and the executive officers and director of the Company.

David Lopez. Mr. Lopez has served as the Chief Executive Officer of AGS Capital and Chief Executive Officer, President and Secretary of AP Gaming since February 3, 2014. Mr. Lopez most recently served as President and Chief Executive Officer of Global Cash Access, Inc., which he joined in May 2012. Prior to his role at Global Cash Access, Inc., Mr. Lopez served as Chief Operating Officer of Shuffle Master Inc. from November 2010 until May 2012. Mr. Lopez joined Shuffle Master Inc. in February 1998 and held various positions within the organization during his 14-year tenure, including Interim CEO, Executive Vice President, President of the Americas, Vice President of Product Management, as well as serving as a member of its Board of Directors from November 2010 until May 2012. Mr. Lopez is a graduate of the University of Nevada, Las Vegas with a B.S. in Business Administration.

Kimo Akiona. Mr. Akiona was appointed to serve as Treasurer of AP Gaming and Chief Financial Officer of the Company’s primary operating entity, AGS, LLC, on February 23, 2015. Mr. Akiona, most recently served as Senior Vice President and Corporate Controller of SHFL entertainment Inc. / Bally Technologies, Inc. Mr. Akiona joined SHFL entertainment Inc. in December 2005 and held various positions within the organization's finance and accounting department during his tenure, including Vice President and Corporate Controller and Director of SEC Reporting. Mr. Akiona is a graduate of University of Nevada, Las Vegas with a B.S. in Business Administration with a concentration in accounting.

Mauro Franic. Mr. Franic served as Chief Operating Officer of the Company’s primary operating entity, AGS, LLC, from July 1, 2015 to January 22, 2016. Mr. Franic most recently served as Chief Operating Officer of Cadillac Jack. Mr. Franic joined Cadillac Jack in September 2006 and held various positions within the organization during his tenure, including Chief Operating Officer and Director of Product Management. Mr. Franic is a graduate of the Instituto Tecnologico de Buenos Aires with a B.A. and Masters in Industrial Engineering and University of Rochester with a Masters in Business Administration with a concentration in finance.

Victor Gallo. Mr. Gallo joined us in February 2010 as Vice President, Licensing and Compliance and Compliance Officer and currently serves as our General Counsel, Compliance Officer and Vice President, Regulatory Affairs. Previously, Mr. Gallo was General Counsel and Vice President of Business Development for Youbet.com, and Vice President of Legal and Compliance and Corporate Counsel for Konami Gaming. Mr. Gallo has also worked as an attorney in private practice, and as

44

an active duty captain in the Air Force Judge Advocate General Corps. Mr. Gallo received his Bachelor of Science degree in Aerospace Engineering from the University of Southern California and a Juris Doctor from the University of the Pacific.

Sigmund Lee. Mr. Lee was appointed to serve as Chief Technology Officer of the Company’s primary operating entity, AGS, LLC, on July 1, 2015. Mr. Lee most recently served as Chief Technology Officer of Cadillac Jack. Mr. Lee joined Cadillac Jack in 2006 and served as their Chief Technology Officer during his tenure. Prior to his role at Cadillac Jack, Mr. Lee served as the Vice President of Engineering for Bally Technologies. Mr. Lee is a graduate of Georgia State University

Julia Boguslawski. Ms. Boguslawski was appointed to serve as Chief Marketing Officer of the Company’s primary operating entity, AGS, LLC, on September 7, 2015. Ms. Boguslawski most recently served as Chief of Staff at Scientific Games, Vice President of Global Marketing at Bally Technologies, Inc. and Vice President of Investor Relations and Corporate Communications at SHFL entertainment, Inc. Julia holds both a bachelor of arts from Rollins College and a Master’s in Business Administration with a concentration in Marketing and International Business.

David Sambur. Mr. Sambur has served as a member of the Board of AP Gaming since November 2013. Mr. Sambur is a Partner of Apollo, having joined in 2004. Mr. Sambur has experience in financing, analyzing, investing in and/or advising public and private companies and their board of directors. Prior to joining Apollo, Mr. Sambur was a member of the Leveraged Finance Group of Salomon Smith Barney Inc. from 2002 to 2004. Mr. Sambur serves on the board of directors of Caesars Entertainment, Caesars Acquisition Company, Verso Paper Corp., Momentive Performance Materials Holdings LLC, Momentive Performance Materials Inc. and Momentive Specialty Chemicals Inc. Mr. Sambur graduated summa cum laude and Phi Beta Kappa from Emory University with a BA in Economics. Mr. Sambur’s executive leadership experience, including his service on the board of several companies, and financial expertise is a valuable asset to the Board.

ITEM 11. EXECUTIVE COMPENSATION.

Executive Summary

The Company's goal for its executive compensation program is to utilize a pay-for-performance compensation program that is directly related to achievement of the Company's financial and strategic objectives. The primary elements of the program, which are discussed in greater detail below, include base salary, annual cash bonus incentives based on performance and long-term equity incentives in the form of stock-based compensation. These elements are designed to: (i) provide compensation opportunities that will allow the Company to attract and retain talented executive officers who are essential to the Company's success; (ii) provide compensation that rewards both individual and corporate performance and motivates the executive officers to achieve corporate strategic objectives; (iii) reward superior financial and operational performance in a given year, over a sustained period and expectations for the future; (iv) place compensation at risk if performance goals are not achieved; and (v) align the interests of executive officers with the long-term interests of stockholders through stock-based awards.

Summary Compensation Table

The following table discloses compensation for our fiscal years ending December 31, 2015 and 2014 received by Messrs. Lopez, Franic, and Lee, each of whom was a “named executive officer” during Fiscal 2015.

Name and Principal Position	Year	Salary  ($)	Bonus  ($)	Stock Awards ($)(4)	Option Awards ($)(4)	Non-Equity Incentive Plan Compensation ($)	All Other Compensation ($)(5)	Total ($)
David Lopez President, Chief Executive Officer and Secretary (1)	2015	500,000	—	—	—	425,000	2,770	$	927,770
	2014	446,154	—	500,000	1,359,899	438,909	13,849	$	2,758,811
Mauro Franic, Chief Operating Officer (2)	2015	163,217	200,000	—	801,287	80,000	6,718	$	1,251,222
Sigmund Lee, Chief Technology Officer (3)	2015	163,217	200,000	—	801,287	95,625	13,973	$	1,274,102

(1) Mr. Lopez was appointed as our President, Chief Executive Officer and Secretary on February 14, 2014.

(2) Mr. Franic was appointed as our Chief Operating Officer on July 1, 2015. Mr. Franic resigned as the Company’s Chief Operating Officer effective January 22, 2016.

(3) Mr. Lee was appointed as our Chief Technology Officer on July 1, 2015.

45

(4) These columns reflect the aggregate grant date fair value of the awards computed in accordance with FASB Accounting Standards Codification (“ASC”) Topic 718 (disregarding any risk of forfeiture assumptions). For a discussion of the relevant valuation assumptions, See Note 11 to the Consolidated Financial Statements included in this Form10-K.

(5) Amounts represent the Company’s matching under our 401(k) Plan and various fringe benefits.

Employment Agreements with Named Executive Officers

David Lopez

On April 28, 2014, the Company entered into an employment agreement with David Lopez to serve as President and Chief Executive Officer of AGS Capital, LLC, a subsidiary of the Company, effective as of February 3, 2014. The agreement extends for an initial term of three years, until the third anniversary of February 3, 2014, and shall thereafter be automatically extended for successive one-year periods, unless either party provides written notice of non-renewal at least 90 days prior to the expiration of the initial term or any extended term. Pursuant to the employment agreement, Mr. Lopez’s annual base salary shall be no less than $500,000 and Mr. Lopez shall be eligible to receive an annual performance-based bonus, with an annual target bonus opportunity of $500,000.

Mauro Franic

On July 1, 2015, we entered into an employment agreement with Mauro Franic to serve as Chief Operating Officer of AGS Capital, LLC, a subsidiary of the Company, effective as of July 1, 2015. The agreement with the Company is "at-will," meaning that either Mr. Franic or the Company may terminate the employment relationship at any time and for any reason, either with or without cause. Pursuant to the employment agreement, Mr. Franic’s annual base salary shall be $300,000 and he shall be eligible to receive an annual performance-based bonus, with an annual target bonus opportunity equal to 75% of his base salary. Actual annual bonus amounts payable shall be determined by the Company based on the attainment of financial results and earnings targets. Pursuant to the employment agreement, Mr. Franic is also eligible for a cash retention bonus of $300,000 of which $75,000 is payable on December 31, 2015, $150,000 payable on December 31, 2016 and $75,000 is payable on July 1, 2017, provided in each case that Mr. Franic remains continuously employed with the Company or its affiliates through the payment date.

Sigmund Lee

On July 1, 2015, we entered into an employment agreement with Sigmund Lee to serve as Chief Technology Officer of AGS Capital, LLC, a subsidiary of the Company, effective as of July 1, 2015. The agreement with the Company is "at-will," meaning that either Mr. Lee or the Company may terminate the employment relationship at any time and for any reason, either with or without cause. Pursuant to the employment agreement, Mr. Lee’s annual base salary shall be $300,000 and he shall be eligible to receive an annual performance-based bonus, with an annual target bonus opportunity equal to 75% of his base salary. Actual annual bonus amounts payable shall be determined by the Company based on the attainment of financial results and earnings targets. Pursuant to the employment agreement, Mr. Lee is also eligible for a cash retention bonus of $300,000 of which $75,000 is payable on December 31, 2015, $150,000 payable on December 31, 2016 and $75,000 is payable on July 1, 2017, provided in each case that Mr. Lee remains continuously employed with the Company or its affiliates through the payment date.

Cash Bonuses

We maintain a bonus plan to which employees are eligible to earn annual cash bonuses based on our attainment of financial results and earnings targets. The following chart illustrates the target bonuses payable to our named executive officers year ending December 31, 2015. For actual bonus amounts earned, which were paid in March 2016, refer to the Summary Compensation Table above in the column titled “Non-Equity Incentive Plan Compensation.”

	Target ($)
David Lopez	$500,000
Mauro Franic	$225,000
Sigmund Lee	$225,000

46

Equity Awards

The following table reflects the equity awards granted in Fiscal 2015 to our named executive officers:

Name	Grant Date	Options granted (#)	All other Stock Awards: Number of Shares or Units (#)	Exercise or Base Price of Options Awards ($)
Mauro Franic	7/17/2015	Time based - 75,000 (1)	—	$15.70
		Performance based - 20,000 (2)
Sigmund Lee	7/17/2015	Time based - 75,000 (1)	—	$15.70
		Performance based - 20,000 (2)

(1) Represents options to purchase Class B Shares granted pursuant to the Company’s form option award agreement. Time based options shall generally vest in equal installments of 25% on each of the first four anniversaries of the date of the grant, subject to continued employment with the Company or its subsidiaries. In the event of a termination of employment without cause or as a result of death or disability (each, a “Good Leaver Termination”), any Time based options which would have vested on the next applicable vesting date shall become vested, and the remaining Time based options shall be forfeited. In addition, upon a Change in Control, subject to continued employment through the date of the Change in Control, all outstanding unvested Time based options shall immediately vest.

(2) Represents options to purchase Class B Shares granted pursuant to the Company’s form option award agreement. Performance based options shall generally vest, subject to continued employment with the Company or its subsidiaries, upon the Boards determination, made in its sole discretion, that the Company’s EBITDA for fiscal 2017 has reached the targets set forth in the agreement. In the event a change in control occurs prior to the Board’s determination of the Company’s EBITDA for fiscal year 2017, subject to the Optionee’s continued employment through the date of change in control, the option shall immediately vest and become exercisable upon the closing date if and only the Board determines, in its sole discretion, that the Company’s EBITDA for the twelve-month period preceding the closing date is at least equal to the target set forth in the agreement.

Outstanding equity awards as of the year ended December 31, 2015:

	Options				Stock Awards
Name	Number of Securities Underlying Unexercised Options (#) Exercisable	Number of Securities Underlying Unexercised Options That Are Not Exercisable (#)	Option Exercise or Base Price ($)	Option Expiration Date	Number of Shares or Units of Stock That Have Not Yet Vested (#)	Market Value of Shares or Units of Stock That Have Not Yet Vested
David Lopez	45,000	210,000	$10.00	4/28/2024	40,000	$628,000
Mauro Franic	—	95,000	$15.70	7/15/2025	—	—
Sigmund Lee	—	95,000	$15.70	7/15/2025	—	—

Pension Benefits

We do not maintain any defined benefit pension plan for the benefit of our named executive officers.

Nonqualified Deferred Compensation

We do not maintain any nonqualified deferred compensation plan for the benefit of our named executive officers.

Payments Upon Termination and Change of Control

Pursuant to each named executive officer’s employment agreement, upon the termination of his or her employment by the Company without “Cause,” (or “Good Reason” for Mr. Lopez) the Company would provide base salary continuation (24 months base salary for Mr. Lopez, 18 months base salary for Mr. Franic and 18 months base salary for Mr. Lee). Mr. Lopez would also be eligible to receive continued health benefits at no greater cost than would apply if he were an active employee, for 18 months post termination, or if earlier, until he commences employment with a subsequent employer. All severance payments are subject to the execution of a release of claims. Messrs. Lopez, Franic, and Lee are also subject to post termination non-solicitation and non-competition covenants for twenty-four months, respectively, following termination of employment.

47

“Cause” in the employment agreements includes (i) failure to correct underperformance after written notification from, in the case of Mr. Lopez, the Chairman of the Board or his designee, or, in the case of Franic and Lee, the CEO or the Board, (ii) illegal fraudulent conduct, (iii) conviction of a felony, (iv) a determination that such named executive officer’s involvement with the Company would have a negative impact on our ability to receive or retain any licenses, (v) willful or material misrepresentation to the Company, CEO or Board relating to the business, assets, prospects or operation of the Company, or (vi) refusal to take any action as reasonably directed by the Board or any individual acting on behalf or at the direction of the Board.

For Mr. Lopez only, “Good Reason” in his employment agreement means his voluntary resignation after any of the following actions are taken by the Company or any of its subsidiaries without his consent: (i) removal from the office of President and Chief Executive Officer of the Company or a change in reporting lines such that Mr. Lopez no longer reports to the Board, (ii) a requirement that Mr. Lopez be based anywhere other than within 35 miles of Las Vegas, Nevada, or (iii) a notice from the Company to Mr. Lopez of non-extension of the employment term; provided, however, that a termination will not be for “Good Reason” unless Mr. Lopez shall have provided written notice to the Company of the existence of one of the above conditions within 30 days following the initial existence of such condition, specifying in reasonable detail such condition, the Company shall have had 30 days following receipt of such written notice to remedy the condition, the Company shall have failed to remedy the condition during the applicable cure period, Mr. Lopez shall have thereafter and prior to the provided a notice of termination to the Company, and Mr. Lopez’s date of termination shall have occurred within 30 days following expiration of the cure period.

For the treatment of equity upon termination of employment, please see the section titled “Equity Awards”. In addition, Class B Shares and options to purchase Class B Shares that are held by named executive officers are subject to repurchase rights (the “Repurchase Rights”) which enable the Company to recover the Class B Shares without transferring any appreciation of the fair value of the stock upon certain terminations prior to a “Qualified Public Offering”. If employment is terminated by the Company prior to the consummation of a Qualified Public Offering for “Cause”, as defined in the Securityholders Agreement, or is terminated by such named executive officer without “Good Reason”, as defined in the Securityholders Agreement, then the Company shall have the right to repurchase all or any portion of the Class B Shares held by such named executive officer for the lesser of original cost and fair market value.

Director Compensation

David Sambur is the sole member of our Board of Directors and does not receive any compensation from the Company for his services on the Board.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

As of February 27, 2016, we had 14,931,529 Class B Shares issued to Apollo Gaming Holdings, LP. and 100 Class A Shares, which have no economic rights, issued to AP Gaming VoteCo, LLC. The address of Apollo Gaming Holdings, L.P. is Apollo Management, L.P., 9 West 57th Street, 43rd Floor, New York, NY, 10019, and the address of AP Gaming VoteCo, LLC is 5475 S. Decatur Blvd, Las Vegas, NV 89118. The members of AP Gaming VoteCo, LLC are Marc Rowan, who is an affiliate of Apollo, and David Sambur. Apollo Gaming Holdings, L.P. is an affiliate of Apollo Management, L.P.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

Related Transactions

None.

Policies and Procedures for Related Person Transactions

Although we do not yet have any policies or procedures for the review, approval or ratification of transactions with related persons, we intend to implement such policies and procedures.

Director Independence

We currently do not have, nor are we required to have, a majority of independent directors. Should we decide to list our Common Stock on a securities exchange, we will be required to adhere to the independence requirements of that exchange.

48

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

As the Company had no operations prior to its formation, we have included the principal accounting fees and services disclosure for our Predecessors. The following table summarizes the aggregate fees paid or accrued by the Company and AGS Capital to Ernst & Young LLP, its independent registered public accounting firm, during the years presented:

Category	2015		2014
Audit fees	$	1,268,902	$	593,425
Tax fees	289,785		142,650
Total	$	1,558,687	$	736,075

Audit fees consisted of the aggregate fees paid or accrued for professional services rendered for the annual audit of the Company’s financial statements including services related to SEC registration statement filings, SEC comment letters and reviews of the quarterly financial statements. In 2015, audit fees also includes fees related to the purchase of Cadillac Jack and related audit procedures.

Tax fees include the aggregate fees paid during the respective years for tax compliance and tax advisory services.

The Board of Directors of the Company has each adopted a policy that requires advance approval of all audit, audit-related, tax and other services performed by the independent auditors. The policy provides for pre-approval by the Board of Directors of specifically defined audit and non-audit services. Unless the specific service has been previously pre-approved with respect to that year, the Board of Directors must approve the permitted service before the independent auditor is engaged to perform it. All of the fees described in the table above were pre-approved the Board of Directors.

49

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a)(1). Financial Statements.

Included in Part II of this Annual Report on Form 10-K:

Report of Independent Registered Public Accounting Firm	F-1
Consolidated Balance Sheets	F-2
Consolidated Statements of Operations and Comprehensive Loss	F-3
Consolidated Statements of Changes in Stockholders’ Equity/Member’s Deficit	F-4
Consolidated Statements of Cash Flows	F-5
Notes to Consolidated Financial Statements	F-6

(a)(2). Financial Statement Schedules.

We have omitted certain financial statement schedules because they are not required or are not applicable, or the required information is shown in the financial statements or notes to the financial statements.

(a)(3). Exhibits.

			Incorporated by Reference
Exhibit Number	Exhibit Description	Filed Herewith	Form	Period Ending	Exhibit	Filing Date
2.1	Amended and Restated Equity Purchase Agreement by and among AGS Capital, LLC, AGS Holdings, LLC and AP Gaming Acquisition, LLC, dated December 3, 2013.	—	10	—	2.1	12/16/2013
2.2	Stock Purchase Agreement, dated as of March 30, 2015, by and among AGS, LLC, Amaya Inc. and Cadillac Jack, Inc.	—	8-K	—	2.1	4/1/2015
3.1	Third Amended and Restated Certificate of Incorporation of AP Gaming Holdco, Inc.	—	10/A	—	3.1	2/10/2014
3.2	Bylaws of AP Gaming Holdco, Inc.	—	10	—	3.2	12/16/2013
4.1	Note Purchase Agreement, dated as of May 29, 2015, by and among AP Gaming Holdco, Inc., AP Gaming Holdings, LLC, Deutsche Bank AG, London Branch, as purchaser and Deutsche Bank Trust Company Americas, as collateral agent.	—	8-K	—	4.1	6/3/2015
4.2	PIK Promissory Note, dated as of May 29, 2015, by and between AP Gaming Holdco, Inc. and Amaya Inc.	—	8-K	—	4.2	6/3/2015
10.1	2014 Managerial Incentive Plan.	—	10	—	10.1	3/31/2015
10.2	First Lien Credit Agreement dated as of December 20, 2013, among AP Gaming Holdings, LLC, as Holdings, AP Gaming I, LLC, as Borrower, the lenders party thereto, Citicorp North America, Inc., as Administrative Agent, Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc. and Nomura Securities International, Inc., as Joint Lead Arrangers and Joint Bookrunners, Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc. and Nomura Securities International, Inc., as Co-Syndication Agents, and Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc. and Nomura Securities International, Inc., as Co-Documentation Agents.	—	10/A	—	10.18	2/10/2014
10.3	Collateral Agreement dated and effective as of December 20, 2013, among AP Gaming I, LLC, each Subsidiary Party party thereto and Citicorp North America, Inc., as Collateral Agent.	—	10/A	—	10.19	2/10/2014

50

10.4	Subsidiary Guarantee dated and effective as of December 20, 2013, by and among each Subsidiary party thereto and Citicorp North America, Inc., as Collateral Agent.	—	10/A	—	10.20	2/10/2014
10.5	Holdings Guarantee and Pledge Agreement dated and effective as of December 20, 2013, between AP Gaming Holdings, LLC, as Holdings and Citicorp North America, Inc., as Agent.	—	10/A	—	10.21	2/10/2014
10.6	Securityholders Agreement, dated April 28, 2014, by and between AP Gaming Holdco, Inc., Apollo Gaming Holdings, L.P. and David Lopez.	—	8-K	—	10.1	05/02/2014
10.7	AP Gaming Holdco, Inc. 2014 Long-Term Incentive Plan.	—	8-K	—	10.2	5/2/2014
10.8	Form of Option Agreement.	—	8-K	—	10.3	5/2/2014
10.9	Form of Subscription Agreement.	—	8-K	—	10.4	5/2/2014
10.10	Incremental Assumption Agreement, dated as of May 29, 2015, by and among AP Gaming Holdings, LLC, AP Gaming I, LLC, each subsidiary loan party listed on the signature pages thereof, Citicorp North America, Inc. and the lenders from time to time party thereto.	—	8-K	—	10.1	6/3/2015
10.11	Incremental Assumption Agreement, dated as of June 1, 2015, by and among AP Gaming Holdings, LLC, AP Gaming I, LLC, each subsidiary loan party listed on the signature pages thereof, Citicorp North America, Inc. and the lenders from time to time party thereto.	—	8-K	—	10.2	6/3/2015
10.12	Subscription Agreement Between Apollo Gaming Holdings, L.P. and AP Gaming Holdco, Inc.	—	10-Q	—	10.1	8/14/2015
10.13	Employment Agreement, dated April 28, 2014, by and between David Lopez and AP Gaming Holdco, Inc.	—	8-K	—	10.5	5/2/2014
10.14	Nonqualified Stock Option Agreement, dated April 28, 2014, by and between AP Gaming Holdco, Inc. and David Lopez.	—	8-K	—	10.6	5/2/2014
10.15	Restricted Stock Agreement, dated April 28, 2014, by and between AP Gaming Holdco, Inc. and David Lopez.	—	8-K	—	10.7	5/2/2014
10.16	Employment Agreement, dated as of July 1, 2015, by and between AGS, LLC and Mauro Franic.	—	10-Q	—	10.2	11/16/2016
10.17	Nonqualified Performance-Based Stock Option Agreement, dated July 17, 2015, by and between AP Gaming Holdco, Inc. and Mauro Franic.	X	—	—	—	—
10.18	Nonqualified Time-Based Stock Option Agreement, dated July 17, 2015, by and between AP Gaming Holdco, Inc. and Mauro Franic.	X	—	—	—	—
10.19	Employment Agreement, dated as of July 1, 2015, by and between AGS, LLC and Sigmund Lee.	X	—	—	—	—
10.20	Nonqualified Time-Based Stock Option Agreement, dated July 17, 2015, by and between AP Gaming Holdco, Inc. and Sigmund Lee.	X	—	—	—	—
10.21	Nonqualified Performance-Based Stock Option Agreement, dated July 17, 2015, by and between AP Gaming Holdco, Inc. and Sigmund Lee.	X	—	—	—	—
21.1	Subsidiaries of AP Gaming Holdco, Inc.	X	—	—	—	—
31.1	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	X	—	—	—	—
31.2	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	X	—	—	—	—

51

32	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	X	—	—	—	—
101.IN	XBRL Instance Document	X	—	—	—	—
101.SCH	XBRL Taxonomy Extension Schema Document	X	—	—	—	—
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document	X	—	—	—	—
101.LAB	XBRL Taxonomy Extension Label Linkbase Document	X	—	—	—	—
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document	X	—	—	—	—
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document	X	—	—	—	—

52

SIGNATURES

Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		AP GAMING HOLDCO, INC.
Date:	March 9, 2016	By:	/s/ KIMO AKIONA
		Name:	Kimo Akiona
		Title:	Treasurer (Principal Financial and Accounting Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ DAVID LOPEZ	President and Chief Executive Officer (Principal Executive Officer)	March 9, 2016
David Lopez
/s/ KIMO AKIONA	Treasurer (Principal Financial and Accounting Officer)	March 9, 2016
Kimo Akiona
/s/ DAVID SAMBUR	Director	March 9, 2016
David Sambur

53

ITEM 1. FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of

AP Gaming Holdco, Inc.

We have audited the accompanying consolidated balance sheets of AP Gaming Holdco, Inc. (the Company) as of December 31, 2015 and 2014, and the related consolidated statements of operations and comprehensive loss, changes in stockholders’ equity and cash flows for the years ended December 31, 2015 and 2014 and the period December 21, 2013 through December 31, 2013 (Successor), and the consolidated statements of operations and comprehensive loss, changes in member’s deficit and cash flows of AGS Capital, LLC for the period January 1, 2013 through December 20, 2013 (Predecessor). Our audits also included the financial statement schedule listed in the Index at item 15(a)2. These financial statements and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, 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. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of AP Gaming Holdco, Inc. as of December 31, 2015 and 2014, and the consolidated results of its operations and its cash flows for the years ended December 31, 2015 and 2014 and the period December 21, 2013 through December 31, 2013 (Successor), and the consolidated results of the operations and cash flows for the period January 1, 2013 through December 20, 2013 of AGS Capital, LLC (Predecessor), in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

/s/ Ernst & Young LLP

Las Vegas, Nevada

March 9, 2016

F-1

AP GAMING HOLDCO, INC.

CONSOLIDATED BALANCE SHEETS

(amounts in thousands, except share and per share data)

	Successor
	December 31, 2015			December 31, 2014
Assets
Current assets
Cash and cash equivalents	$	35,722		$	10,680
Restricted cash	100			100
Accounts receivable, net of allowance of $113 and $29, respectively	23,653			9,140
Inventories	7,087			3,175
Prepaid expenses	4,642			2,091
Deposits and other	2,440			2,007
Total current assets	73,644			27,193
Property and equipment, net	66,699			40,769
Goodwill	253,851			77,617
Deferred loan costs, net	8,144			5,343
Deferred tax asset	37			—
Intangible assets	290,356			101,885
Other assets	26,246			3,345
Total assets	$	718,977		$	256,152
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable and accrued liabilities	$	23,030		$	23,316
Current maturities of long-term debt	6,919			2,495
Deferred tax liability	—			528
Total current liabilities	29,949			26,339
Long-term debt	541,120			164,194
Deferred tax liability - noncurrent	15,347			1,863
Other long-term liabilities	32,024			—
Total liabilities	618,440			192,396
Commitments and contingencies (Note 14)
Stockholders' equity
Preferred stock at $0.01 par value; 100,000 shares authorized, no shares issued and outstanding	—			—
Common stock at $0.01 par value; 30,000,100 shares authorized; 100 Class A Shares issued and outstanding at December 31, 2015 and 2014, and 14,931,529 and 10,000,000 Class B Shares issued and outstanding at December 31, 2015 and 2014, respectively.	149			100
Additional paid-in capital	177,276			99,900
Accumulated deficit	(75,077		)	(36,532		)
Accumulated other comprehensive (loss) income	(1,811		)	288
Total stockholders’ equity	100,537			63,756
Total liabilities and stockholders’ equity	$	718,977		$	256,152

The accompanying notes are an integral part of these consolidated financial statements.

F-2

AP GAMING HOLDCO, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(amounts in thousands, except per share data)

	Successor									Predecessor
	Year ended December 31, 2015			Year ended December 31, 2014			Period December 21, 2013 through December 31, 2013			Period January 1, 2013 through December 20, 2013
Revenues
Gaming operations	$	117,013		$	68,981		$	1,953		$	54,903
Equipment sales	6,279			3,159			—			1,558
Total revenues	123,292			72,140			1,953			56,461
Operating expenses
Cost of gaming operations1	23,291			14,169			320			12,001
Cost of equipment sales1	1,548			1,607			—			893
Selling, general and administrative	40,088			19,456			807			14,343
Research and development	14,376			4,856			50			3,042
Write downs and other charges	11,766			7,068			7,469			10,326
Depreciation and amortization	61,662			33,405			930			27,660
Total operating expenses	152,731			80,561			9,576			68,265
Loss from operations	(29,439		)	(8,421		)	(7,623		)	(11,804		)
Other expense (income)
Interest expense	41,642			17,235			485			17,116
Interest income	(82		)	(42		)	—			(1,410		)
Loss on debt retirement	—			—			—			14,661
Other expense (income)	3,635			573			(6		)	5
Loss before income taxes	(74,634		)	(26,187		)	(8,102		)	(42,176		)
Income tax benefit (expense)	36,089			(2,189		)	(54		)	—
Net loss	(38,545		)	(28,376		)	(8,156		)	(42,176		)
Foreign currency translation adjustment	(2,099		)	289			(1		)	32
Total comprehensive loss	$	(40,644	)	$	(28,087	)	$	(8,157	)	$	(42,144	)
Basic and diluted loss per common share:
Basic	$	(2.98	)	$	(2.84	)	$	(0.82	)	—
Diluted	$	(2.98	)	$	(2.84	)	$	(0.82	)	—
Weighted average common shares outstanding:
Basic	12,918			10,000			10,000			—
Diluted	12,918			10,000			10,000			—

(1) exclusive of depreciation and amortization

The accompanying notes are an integral part of these consolidated financial statements.

F-3

AP GAMING HOLDCO INC.

CONSOLIDATED STATEMENTS OF CHANGES IN

STOCKHOLDERS’ EQUITY/MEMBER’S DEFICIT

(in thousands)

	AP Gaming
	Common Stock		Additional Paid-in Capital		Member’s Capital			Accumulated Deficit			Accumulated Other Comprehensive Income (loss)			Total Member’s Deficit/Stockholders’ Equity
Balance at December 31, 2012 (Predecessor)	$	—	$	—	$	136,673		$	(140,125	)	$	524		$	(2,928	)
Capital contributions	—		—		144,066			—			—			144,066
Net loss	—		—		—			(42,176		)	—			(42,176		)
Foreign currency translation adjustment	—		—		—			—			32			32
Elimination of Predecessor equity	—		—		(280,739		)	182,301			(556		)	(98,994		)
Balance at December 20, 2013 (Predecessor)	$	—	$	—	$	—		$	—		$	—		$	—
Issuance of common stock in connection with the acquisition	$	100	$	99,900	$	—		$	—		$	—		$	100,000
Balance at December 20, 2013 (Successor)	100		99,900		—			—			—			100,000
Net loss	—		—		—			(8,156		)	—			(8,156		)
Foreign currency translation adjustment	—		—		—			—			(1		)	(1		)
Balance at December 31, 2013 (Successor)	100		99,900		—			(8,156		)	(1		)	91,843
Net loss	—		—		—			(28,376		)	—			(28,376		)
Foreign currency translation adjustment	—		—		—			—			289			289
Balance at December 31, 2014 (Successor)	100		99,900		—			(36,532		)	288			63,756
Net loss	—		—		—			(38,545		)	—			(38,545		)
Foreign currency translation adjustment	—		—		—			—			(2,099		)	(2,099		)
Issuance of common stock	49		77,376		—			—			—			77,425
Balance at December 31, 2015 (Successor)	$	149	$	177,276	$	—		$	(75,077	)	$	(1,811	)	$	100,537

The accompanying notes are an integral part of these consolidated financial statements.

F-4

AP GAMING HOLDCO, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)

	Successor									Predecessor
	Year ended December 31, 2015			Year ended December 31, 2014			Period December 21, 2013 through December 31, 2013			Period January 1, 2013 through December 20, 2013
Cash flows from operating activities
Net loss	$	(38,545	)	$	(28,376	)	$	(8,156	)	(42,176		)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	61,662			33,405			930			27,660
Accretion of contract rights under development agreements and placement fees	496			58			—			3,856
Amortization of deferred loan costs and discount	2,446			1,242			35			2,454
Provision (benefit) for bad debts	106			(450		)	9			266
Imputed and non-cash interest income	(18		)	(36		)	—			(645		)
Loss on disposition of assets	1,439			1,936			—			395
Impairment of assets	4,989			2,475			—			5,010
(Benefit) provision of deferred income tax	(38,645		)	2,189			54			—
Loss on debt retirement	—			—			—			14,661
Changes in assets and liabilities that relate to operations:
Accounts receivable	(342		)	(973		)	(1,220		)	868
Inventories	1,144			806			348			1,138
Prepaid expenses	(1,466		)	(1,349		)	(60		)	(572		)
Deposits and other	11,531			(241		)	(247		)	(1,361		)
Other assets, non-current	869			(1,476		)	—			(670		)
Accounts payable and accrued liabilities	3,737			3,272			(319		)	(1,870		)
Net cash provided by (used in) operating activities	9,403			12,482			(8,626		)	9,014
Cash flows from investing activities
Business acquisitions, net of cash acquired	(374,347		)	(10,345		)	(214,960		)	—
Collection of notes receivable	323			205			—			4,367
Advances under notes receivable and other	—			—			—			(1,520		)
Change in Canadian tax receivable	—			(154		)	(26		)	(855		)
Purchase of intangible assets	(6,102		)	(9,259		)	—			(4,364		)
Software development and other expenditures	(6,476		)	(5,127		)	(82		)	(4,583		)
Proceeds from disposition of assets	29			569			—			215
Purchases of property and equipment	(15,277		)	(9,811		)	(1,234		)	(20,278		)
Net cash used in investing activities	(401,850		)	(33,922		)	(216,302		)	(27,018		)
Cash flows from financing activities
Borrowings under the revolving facility	11,500			10,000			149,382			7,500
Repayments under the revolving facility	(21,500		)	—			—			—
Proceeds from issuance of debt	369,400			—			—			—
Payments on debt	(4,743		)	(2,036		)	—			(136,901		)
Payment of previous acquisition obligation	(10,000		)	—			—			—
Repurchase of shares issued to management	(1,277		)	—			—			—
Proceeds from issuance of common stock	77,425			—			100,000			144,066
Proceeds from employees in advance of common stock issuance	579			1,969			—			—
Payment of deferred loan costs	(3,837		)	(73		)	(5,934		)	(342		)
Net cash provided by financing activities	417,547			9,860			243,448			14,323
Effect of exchange rates on cash and cash equivalents	(58		)	518			(49		)	407
Increase (decrease) in cash and cash equivalents	25,042			(11,062		)	18,471			(3,274		)
Cash and cash equivalents, beginning of period	10,680			21,742			3,271			6,545
Cash and cash equivalents, end of period	$	35,722		$	10,680		$	21,742		$	3,271
Supplemental cash flow information:
Cash paid during the period for interest	$	30,203		$	15,315		$	—		$	15,111
Cash paid during the period for taxes	840			$	—		$	—		$	—
Non-cash investing and financing activities:
Non-cash consideration given in business acquisitions	$	17,233		$	11,500		$	5,531		$	—
Financed placement fees	12,391			—			—			—
Capital expenditures funded by settlement of customer receivable	—			—			—			844
Lease incentive intangible related to discounted notes receivable	—			—			—			132
Interest payable added to debt principal	8,507			481			—			—
Financed purchase property and equipment	5,800			2,717			—			—

The accompanying notes are an integral part of these consolidated financial statements.

F-5

AP GAMING HOLDCO INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. DESCRIPTION OF THE BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Business

AP Gaming Holdco, Inc. (the “Company,” “AP Gaming,” “we,” “us,” or “our”) is a leading designer and supplier of gaming products and services for the gaming industry. The Company is a leader in the Class II Native American and Mexican gaming jurisdictions and has expanded its product lines to include Class III Native American, commercial and charity jurisdictions. We supply electronic gaming machines (“slot machines”), server-based systems and back-office systems that are used by casinos and various gaming locations. Over the past 18 months, the Company has significantly broadened and diversified its product portfolio through both organic development and strategic acquisitions. We launched a new table products division in mid-2014 to provide live felt table games to casino operators. Through the acquisition of Cadillac Jack (defined in Note 2) on May 29, 2015, we greatly expanded our games library and slot machine offerings. The Company also acquired online developer Gamingo Limited in June 2015, expanding its offerings to include interactive products such as social casino games, available to play on desktop and mobile devices.

Basis of presentation

References to “Successor” refer to the Company on or after December 21, 2013. References to “Predecessor” refer to the period prior to December 21, 2013. The accompanying consolidated statements of operations, changes in stockholders’ equity/member’s deficit and cash flows for the year ended December 31, 2013 are presented for two periods: January 1, 2013 through December 20, 2013 (the “Predecessor Period”) and December 21, 2013 through December 31, 2013 (the “Successor Period”).

Principles of Consolidation

The accompanying consolidated financial statements include the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Certain amounts in the consolidated financial statements for the previous years have been reclassified to be consistent with the current year presentation. These reclassifications had no effect on the previously reported net loss.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires the Company to make decisions based upon estimates, assumptions, and factors considered relevant to the circumstances. Such decisions include the selection of applicable accounting principles and the use of judgment in their application, the results of which impact reported amounts and disclosures. Changes in future economic conditions or other business circumstances may affect the outcomes of the estimates and assumptions. Accordingly, actual results could differ materially from those anticipated.

Revenue Recognition

Gaming Operations

Gaming operations revenue is earned by providing customers with gaming machines, gaming machine content licenses, back-office equipment and linked progressive systems, which are collectively referred to as gaming equipment, under participation arrangements. The participation arrangements convey the right to use the equipment (i.e. gaming machines and related integral software) for a stated period of time and are accounted for as operating leases. Under these arrangements, the Company retains ownership of the gaming equipment installed at customer facilities and receives either revenue based on a percentage of the win per day generated by the gaming equipment or a daily fee. The majority of the Company’s leases require the Company to provide maintenance throughout the entire term of the lease. In some cases, a performance guarantee exists that, if not met, requires the Company to replace or remove the gaming machines from the customer’s floor. Whether contractually required or not, the Company develops and provides new gaming titles throughout the life of the lease. Certain arrangements require a portion of the facility’s win per day to be set aside to be used to fund facility-specific marketing, advertising, promotions and service. These amounts are offset against gaming revenue. Gaming operations revenue is also earned from the licensing of table game content and is earned and recognized on a fixed monthly rate. Our social gaming

F-6

products earn revenue from the sale of virtual coins or chips, which is recorded when the purchased coins or chips are used by the customer.

Equipment Sales

Revenues from the stand-alone product sales or separate accounting units are recorded when:

• Pervasive evidence of an arrangement exists;

• The sales price is fixed and determinable;

• Delivery has occurred and services have been rendered; and

• Collectability is reasonably assured.

Equipment sales are generated from the sale of gaming machines and licensing rights to game content software that is installed in the gaming machine, parts, and other ancillary equipment. Also included within the deliverables are delivery, installation and training, all of which occur within a few days of arriving at the customer location. Gaming equipment sales do not include maintenance beyond a standard warranty period. The recognition of revenue from the sale of gaming devices occurs as title and risk of loss have passed to the customer and all other revenue recognition criteria have been satisfied. As the combination of game content software and the tangible gaming device function together to deliver the product’s essential functionality, revenue from the sale of gaming devices is recognized under general revenue recognition guidance.

Cash and Cash Equivalents

Cash and cash equivalents consist primarily of deposits held at major banks and other marketable securities with original maturities of 90 days or less.

Restricted Cash

Restricted cash amounts represent funds held in escrow as collateral for the Company’s surety bonds for various gaming authorities and funds held to ensure the availability of funds to pay wide-area progressive jackpot awards.

Receivables, Allowance for Doubtful Accounts

Accounts receivable are stated at face value less an allowance for doubtful accounts. The Company maintains an allowance for doubtful accounts related to accounts receivable and notes receivable, which are non-interest bearing, deemed to have a high risk of collectability. The Company reviews the accounts receivable and notes receivable on a monthly basis to determine if any receivables will potentially be uncollectible. The Company analyzes historical collection trends and changes in the customers’ payment patterns, customer concentration, and credit worthiness when evaluating the adequacy of the allowance for doubtful accounts. A large percentage of receivables are with Native American tribes and the Company has concentrations of credit risk with several tribes. The Company includes any receivable balances that are determined to be uncollectible in the overall allowance for doubtful accounts. Changes in the assumptions or estimates reflecting the collectability of certain accounts could materially affect the allowance for both accounts and notes receivable.

F-7

The following provides financial information concerning the change in our allowance for doubtful accounts (in thousands):

	Successor
	Allowance for Accounts Receivables Year ended December 31, 2015
	Beginning Balance		Charge-offs			Recoveries		Provision		Ending Balance
Accounts receivable, current	$	29	$	(22	)	$	—	$	106	$	113

	Successor
	Allowance for Accounts Receivables Year ended December 31, 2014
	Beginning Balance		Charge-offs			Recoveries		Provision		Ending Balance
Accounts receivable, current	$	9	$	(36	)	$	—	$	56	$	29

	Successor
	Allowance for Accounts Receivables Period from December 21, 2013 through December 31, 2013
	Beginning Balance		Charge-offs		Recoveries		Provision		Ending Balance
Accounts receivable, current	$	—	$	—	$	—	$	9	$	9

	Predecessor
	Allowance for Accounts Receivables Period from January 1, 2013 through December 20, 2013
	Beginning Balance		Charge-offs			Recoveries		Provision		Ending Balance
Accounts receivable, current	$	491	$	(80	)	$	—	$	139	$	550

Inventories

Inventories consist primarily of parts and supplies that are used to repair and maintain machinery and equipment. Inventories are stated at the lower of cost or market. Cost of inventories is determined using the first-in, first-out (“FIFO”) method for all components of inventory. The Company regularly reviews inventory quantities and updates estimates for the net realizable value of inventories. This process includes examining the carrying values of parts and ancillary equipment in comparison to the current fair market values for such equipment (less costs to sell or dispose). Some of the factors involved in this analysis include the overall levels of the inventories, the current and projected sales levels for such products, the projected markets for such products and the costs required to sell the products, including refurbishment costs. Changes in the assumptions or estimates could materially affect the inventory carrying value.

Property and Equipment

The cost of gaming equipment, consisting of fixed-base player terminals, file servers and other support equipment as well as other property and equipment, is depreciated over their estimated useful lives, using the straight-line method for financial reporting. Repairs and maintenance costs are expensed as incurred. The Company routinely evaluates the estimated lives used to depreciate assets. The estimated useful lives are as follows:

Gaming equipment	3 to 6 years
Other property and equipment	3 to 6 years

The Company reviews its property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. Impairment losses are estimated when indicators of impairment are present and the estimated undiscounted cash flows are not sufficient to recover the assets’ carrying amount.

When the estimated undiscounted cash flows are not sufficient to recover the asset’s carrying amount, an impairment loss is measured to the extent the fair value of the asset is less than its carrying amount.

F-8

The Company measures recoverability of assets to be held and used by comparing the carrying amount of an asset to future cash flows expected to be generated by the asset. The Company’s policy is to impair, when necessary, excess or obsolete gaming machines on hand that it does not expect to be used. Impairment is based upon several factors, including estimated forecast of gaming machine demand for placement into casinos. While the Company believes that the estimates and assumptions used in evaluating the carrying amount of these assets are reasonable, different assumptions could affect either the carrying amount or the estimated useful lives of the assets, which could have a significant impact on the results of operations and financial condition.

Intangible Assets

The Company reviews its identifiable intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Impairment losses are recognized for identifiable intangibles, other than goodwill, when indicators of impairment are present and the estimated undiscounted cash flows are not sufficient to recover the assets’ carrying amount.

When the estimated undiscounted cash flows are not sufficient to recover the intangible asset’s carrying amount, an impairment loss is measured to the extent the fair value of the asset is less than its carrying amount.

Certain trade names have an indefinite useful life and the Company tests these trade names for possible impairment at least annually, on October 1, or whenever events or changes in circumstances indicate that the carrying value may be impaired. We perform a qualitative assessment to determine if it is more likely than not that the fair value of the asset is less than its carrying amount. If we believe, as a result of our qualitative assessment, that it is more likely than not that the fair value of the asset is less than its carrying amount, the quantitative impairment test is required.

Costs of Computer Software

Internally developed gaming software represents the Company’s internal costs to develop gaming titles to utilize on the Company’s gaming machines. Internally developed gaming software is stated at cost and amortized over the estimated useful lives of the software, using the straight-line method. Software development costs are capitalized once technological feasibility has been established and are amortized when the software is placed into service. The computer software we develop reaches technological feasibility when a working model of the computer software is available. Any subsequent software maintenance costs, such as bug fixes and subsequent testing, are expensed as incurred. Discontinued software development costs are expensed when the determination to discontinue is made. Software development costs are amortized over the expected life of the title or group of titles, if applicable, to amortization expense.

On a quarterly basis, or more frequently if circumstances warrant, the Company compares the net book value of its internally developed computer software to the net realizable value on a title or group of title basis. The net realizable value is determined based upon certain assumptions, including the expected future revenues and net cash flows of the gaming titles or group of gaming titles utilizing that software, if applicable.

Goodwill

The excess of the purchase price of an acquired business over the estimated fair value of the assets acquired and the liabilities assumed is recorded as goodwill. The Company tests for possible impairment of goodwill at least annually, on October 1, or when circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. The Company has the option to begin with a qualitative assessment, commonly referred to as “Step 0”, to determine whether it is more likely than not that the reporting unit’s fair value of goodwill is less than its carrying value. This qualitative assessment may include, but is not limited to, reviewing factors such as the general economic environment, industry and market conditions, changes in key assumptions used since the most recently performed valuation and overall financial performance of the reporting units. If the Company determines that it is more likely than not that a reporting unit’s fair value is less than its carrying value, the Company performs a quantitative goodwill impairment analysis, and depending upon the results of that measurement, the recorded goodwill may be written down and charged to income from operations when its carrying amount exceeds its estimated fair value.

F-9

Deferred Loan Costs

Deferred loan costs consist of various debt issuance costs and are being amortized using the effective-interest method over the life of the related loans. The Company recognized amortization expense related to loan costs of $1.4 million and $0.6 million for the years ended December 31, 2015 and 2014, respectively. The Company recognized amortization expense related to loan costs of $21,000 and $1.2 million for the Successor Period and Predecessor Period, respectively. Amortization of deferred loan costs was included in interest expense in the accompanying consolidated statements of operations and comprehensive loss.

Acquisition Accounting

The Company applies the provisions of ASC 805, “Business Combinations” (ASC 805), in accounting for business acquisitions. It requires us to recognize separately from goodwill the fair value of assets acquired and liabilities assumed on the acquisition date. Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net of the acquisition date fair values of the assets acquired and the liabilities assumed. Significant estimates and assumptions are required to value assets acquired and liabilities assumed at the acquisition date as well as contingent consideration, where applicable. These estimates are inherently uncertain and subject to refinement and typically include the calculation of an appropriate discount rate and projection of the cash flows associated with each acquired asset. As a result, during the measurement period, which may be up to one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the fair value of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to the consolidated statements of operations.

Fair Value of Financial Instruments

The Company applies the provisions of ASC 820, “Fair Value Measurements” (ASC 820) to its financial assets and liabilities. Fair value is defined as a market-based measurement intended to estimate the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions. ASC 820 also established a fair value hierarchy, which requires an entity to maximize the use of observable inputs when measuring fair value. These inputs are categorized as follows:

• Level 1 - quoted prices in an active market for identical assets or liabilities;

• Level 2 - quoted prices in an active market for similar assets or liabilities, inputs other than quoted prices that are observable for similar assets or liabilities, inputs derived principally from or corroborated by observable market data by correlation or other means; and

• Level 3 - valuation methodology with unobservable inputs that are significant to the fair value measurement.

The carrying values of the Company’s cash and cash equivalents, restricted cash, receivables and accounts payable approximate fair value because of the short term maturities of these instruments. The fair value of our long-term debt is based on the quoted market prices for similar issues (Level 2 inputs). The estimated fair value of our long-term debt was $529.2 million and $170.0 million as of December 31, 2015 and 2014, respectively.

Accounting for Income Taxes

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that included the enactment date. Future tax benefits are recognized to the extent that realization of those benefits is considered more likely than not, and a valuation allowance is established for deferred tax assets which do not meet this threshold.

Contingencies

The Company assesses its exposures to loss contingencies including claims and legal proceedings and accrues a liability if a potential loss is considered probable and the amount can be estimated. Significant judgment is required in both the determination of probability and the determination as to whether an exposure is reasonably estimable. Because of uncertainties related to these matters, if the actual loss from a contingency differs from management’s estimate, there could be a material

F-10

impact on the results of operations or financial position. Operating expenses, including legal fees, associated with contingencies are expensed when incurred.

Concentrations of Credit Risk

Financial instruments, which potentially subject the Company to concentration of credit risk, consist primarily of cash and cash equivalents and accounts receivable, net. Cash equivalents are investment-grade, short-term debt instruments consisting of treasury bills which are maintained with high credit quality financial institutions under repurchase agreements. Cash and cash equivalents are in excess of Federal Deposit Insurance Corporation (“FDIC”) insurance limits. As of December 31, 2015 and 2014, the Company did not have cash equivalents.

Revenue from gaming operations is concentrated in the Class II gaming and casino industry, primarily located in Oklahoma. For the years ended December 31, 2015, 2014 and the combined Successor and Predecessor periods of 2013, approximately 20%, 30% and 35% percent of our gaming revenue was derived from one customer, respectively. The Company had one customer with accounts receivable, net equaling 10% of total outstanding accounts receivable, net at December 31, 2013 and none at December 31, 2015 and 2014.

The following provides financial information concerning our operations by geographic area for the years ended December 31 (in thousands):

	Successor						Predecessor
Revenue:	Year ended December 31, 2015		Year ended December 31, 2014		Period December 21, 2013 through December 31, 2013		Period January 1, 2013 through December 20, 2013
United States	$	110,392	$	72,140	$	1,953	$	56,461
Other	12,900		—		—		—
	$	123,292	$	72,140	$	1,953	$	56,461
			Successor
Long-lived assets, end of year:			2015		2014		2013
United States			$	63,858	$	44,045	$	50,997
Other			6,909		69		210
			$	70,767	$	44,114	$	51,207

Foreign Currency Translation

The financial statements of the Company’s foreign subsidiaries are translated into U.S. dollars at the period end rate of exchange for asset and liability accounts and the weighted average rate of exchange for income statement accounts. The effects of these translations are recorded as a component of accumulated other comprehensive (loss) income in stockholders’ equity.

Advertising Costs

Advertising costs are expensed as incurred. Advertising costs for the year ended December 31, 2015 and 2014 were $0.2 million and $0.3 million, respectively. During the Successor Period and Predecessor Period, the Company recognized advertising costs of $2,000 and $0.2 million, respectively.

Recently Issued Accounting Pronouncements

In May 2014, the FASB issued an accounting standards update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606), which clarifies the principles for recognizing revenue from contracts with customers. The amendment outlines a single comprehensive model for entities to depict the transfer of goods or services to customers in amounts that reflect the payment to which a company expects to be entitled in exchange for those goods or services. The amendment also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, which deferred the effective date of ASU 2014-09 to annual periods, and interim reporting

F-11

periods within those annual periods, beginning after December 15, 2017. The ASU may be adopted using either a full retrospective transition method or a modified retrospective transition method and will be adopted by the Company on January 1, 2018. The Company is currently evaluating the provisions of the amendments and the impact on its future consolidated financial statements.

In June 2014, the FASB issued ASU No. 2014-12, Compensation—Stock Compensation (Topic 718):Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved After the Requisite Service Period. The amendments clarify the proper method of accounting for share-based payments when the terms of an award provide that a performance target could be achieved after the requisite service period. This ASU requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. The performance target should not be reflected in estimating the grant-date fair value of the award. Compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. The amendments in this ASU will be adopted by the Company beginning on January 1, 2016. We do not expect the ASU to have a material effect on our financial condition, results of operations or cash flows.

In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements - Going Concern: Disclosure of Uncertainties About an Entity's Ability to Continue as a Going Concern. The ASU requires management to assess an entity’s ability to continue as a going concern and to provide related footnote disclosures in certain circumstances. Substantial doubt about an entity's ability to continue as a going concern exists when relevant conditions and events, consolidated in the aggregate, indicate that it is probable that an entity will be unable to meet its obligations as they become due within one year after the date that the financial statements are issued. Currently, there is no guidance in U.S. GAAP for management's responsibility to perform an evaluation. Under the update, management's evaluation is to be performed when preparing financial statements for each annual and interim reporting period and based on relevant conditions and events that are known and reasonably knowable at the date that the financial statements are issued. The Company will adopt this standard effective January 1, 2017 and we do not expect it to have a material effect on our financial position, results of operations or cash flows.

In January 2015, the FASB issued ASU No. 2015-01, Income Statement-Extraordinary and Unusual Items: Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items. ASU 2015-01 eliminates from GAAP the concept of extraordinary items. The presentation and disclosure guidance for items that are unusual in nature or occur infrequently will be retained and will be expanded to include items that were previously classified as extraordinary. ASU 2015-01 is effective for the Company on January 1, 2016, with earlier adoption permitted using either a prospective or retrospective method. We do not expect the ASU to have a material effect on our financial condition, results of operations or cash flows.

In April 2015, the FASB issued ASU No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. ASU 2015-03 intends to simplify the presentation of debt issuance costs by requiring that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this ASU.  In August 2015, the FASB issued ASU 2015-15 which clarifies that the guidance issued in April 2015 does not apply to line-of-credit arrangements. According to ASU 2015-15, line-of-credit arrangements will continue to present debt issuance costs as an asset and subsequently amortize the deferred debt issuance costs ratably over the term of the arrangement. The ASU will be effective for the Company beginning on January 1, 2016. We do not expect the ASU to have a material effect on our financial condition, results of operations or cash flows.

In July 2015, the FASB issued ASU No. 2015-11, Inventory: Simplifying the Measurement of Inventory. ASU 2015-11 changes the criteria for measuring inventory within the scope of the ASU. Inventory will now be measured at the lower of cost and net realizable value, while the concept of market value will be eliminated. The ASU defines net realizable value as the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The ASU will be effective for the Company beginning on January 1, 2017. The Company does not expect the provisions of the ASU to have a material effect on our financial condition, results of operations or cash flows.

In September 2015, the FASB issued ASU 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments. ASU 2015-16 eliminates the requirement to retrospectively apply adjustments made to provisional amounts recognized in a business combination. It requires that an acquirer recognize and disclose adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined, which should be calculated as if the accounting had been completed at the acquisition date. The ASU will be effective for the Company beginning on January 1, 2016. The amendments in this ASU will be applied prospectively to adjustments to provisional amounts that occur after the effective date of this ASU with earlier application permitted for

F-12

financial statements that have not been issued. We do not expect this guidance to have a material effect on our financial position, results of operations or cash flows.

In November 2015, the FASB issued ASU 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes. ASU 2015-17 requires that all deferred tax assets and liabilities, along with any related valuation allowance, be classified as noncurrent on the balance sheet. As a result, each jurisdiction will now only have one net noncurrent deferred tax asset or liability. The ASU does not change the existing requirement that only permits offsetting within a jurisdiction – that is, companies are still prohibited from offsetting deferred tax liabilities from one jurisdiction against deferred tax assets of another jurisdiction. We adopted the ASU effective December 31, 2015 and applied the provisions prospectively, for all deferred tax assets and liabilities.

NOTE 2. ACQUISITIONS

Cadillac Jack

On May 29, 2015, the Company acquired 100% of the equity of Amaya Americas Corporation (“Cadillac Jack”), a leading provider of Class II gaming machines for the North American tribal gaming market, with key regions of operation within Alabama, Mexico, and Wisconsin. This acquisition is expected to create growth opportunities in Class II and Class III jurisdictions and expands the Company’s geographic footprint. The combined management teams are complementary and possess years of combined experience that is expected to allow us to effectively grow and improve our business.

The acquisition was funded primarily from cash proceeds of incremental borrowings on our existing term loans, the issuance of senior secured PIK notes, as described in Note 6, and the issuance of additional common stock, as described in Note 7. The consideration also included a promissory note to the seller, Amaya Inc., for $12.0 million, as described in Note 6, as well as a contingent receivable that was recorded at its estimated fair value on the date of the acquisition. The contingent receivable is related to a clause in the stock purchase agreement allowing for a refund of up to $25.0 million if certain deactivated gaming machines in Mexico are not in operation by November 29, 2016.

The following summarizes the consideration paid for Cadillac Jack (in thousands):

Contractual cash purchase price adjusted for working capital	$	369,760
Seller note	12,000
Contingent receivable	(1,300		)
Total consideration	$	380,460

We have recorded Cadillac Jack’s assets acquired and liabilities assumed based on our preliminary estimates of their fair values at the acquisition date. The determination of the fair values of the assets acquired and liabilities assumed (and the related determination of estimated lives of depreciable and amortizable tangible and identifiable intangible assets) requires significant judgment and estimates. The estimates and assumptions used include the projected timing and amount of future cash flows and discount rates that reflect risk inherent in the future cash flows. The estimated fair values of Cadillac Jack’s assets acquired and liabilities assumed and resulting goodwill are subject to adjustment as we finalize our fair value analysis. The significant items for which a final fair value has not been determined as of the filing of this report on Form 10-Q include accrued liabilities, deferred income taxes and other long-term liabilities. During the quarter ended September 30, 2015, we determined the final net working capital adjustment with the seller and recorded a $1.2 million adjustment to goodwill for the amount that we received from the seller. We expect to complete our fair value determinations no later than the second quarter of 2016. We do not currently expect our fair value determinations to change; however, there may be differences compared to those amounts reflected in our consolidated financial statements at December 31, 2015, as we finalize our fair value analysis and such changes could be material.

F-13

AP GAMING HOLDCO INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

The preliminary allocation of the purchase price to the estimated fair values of the assets acquired and the liabilities assumed was as follows (in thousands):

	At May 29, 2015
Currents assets(1)	$	34,871
Property and equipment	29,634
Goodwill	171,497
Intangible assets	199,752
Other long-term assets	23,828
Total assets	459,582
Current liabilities	8,636
Deferred tax liability non-current	51,486
Other long-term liabilities	19,000
Total equity purchase price	$	380,460

⁽¹⁾Current assets includes $4.2 million of cash acquired.

Based on our preliminary estimates, the total consideration exceeded the aggregate estimated fair value of the acquired assets and assumed liabilities at the acquisition date and has been recorded as goodwill. We attribute this goodwill to our enhanced financial scale and geographic diversification, opportunities for synergies, assembled workforce and other strategic benefits. None of the goodwill associated with the acquisition is deductible for income tax purposes and, as such, no deferred taxes have been recorded related to goodwill.

We included an estimated value of $8.3 million in current assets above and in deposits and other in the consolidated balance sheet related to the value of stock options held by employees of Cadillac Jack. The stock options entitle the holder to purchase shares of Amaya Inc., the former global parent of Cadillac Jack, based on the holder’s continued employment at Cadillac Jack through the vesting date.

Our preliminary estimates of the fair values of depreciable tangible assets are as follows (in thousands):

	Fair values at May 29, 2015		Average remaining useful life (in years)
Gaming equipment	$	23,065	1 - 5
Other property and equipment	6,569		2 - 3
Total property and equipment	$	29,634

Our preliminary estimates of the fair values of identifiable intangible assets are as follows (in thousands):

	Fair values at May 29, 2015		Average remaining useful life (in years)
Trade names	$	3,000	5
Brand names	10,600		3 - 5
Customer relationships	107,000		5 - 12
Gaming software and technology platforms	79,152		2 - 7
Total intangible assets	$	199,752

The fair value of gaming equipment and other personal property assets as well as the fair value of gaming content software was primarily determined using cost approaches in which we determined an estimated reproduction or replacement cost, as applicable.

The estimated fair values of acquired trade names, brand names and gaming technology platforms was primarily determined using the royalty savings method, which is a risk-adjusted discounted cash flow approach. The gaming technology

F-14

AP GAMING HOLDCO INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

platforms include $30.0 million of in-process research and development. The royalty savings method values an intangible asset by estimating the royalties saved through ownership of the asset. The royalty savings method requires identifying the future revenue that would be impacted by the trade name or intellectual property (or royalty-free rights to the assets), multiplying it by a royalty rate deemed to be avoided through ownership of the asset and discounting the projected royalty savings amounts back to the acquisition date.  The royalty rate used in such valuation was based on a consideration of market rates for similar categories of assets.

The estimated fair values of customer relationships was determined using the excess earnings method, which is a risk-adjusted discounted cash flow approach that determines the value of an intangible asset as the present value of the cash flows attributable to such asset after excluding the proportion of the cash flows that are attributable to other assets. The contribution to the cash flows that are made by other assets - such as fixed assets, working capital, workforce and other intangible assets - was estimated through contributory asset capital charges. The value of the acquired customer relationship asset is the present value of the attributed post-tax cash flows, net of the post-tax return on fair value attributed to the other assets.

The estimated fair value of deferred income taxes was determined by applying the appropriate enacted statutory tax rate to the temporary differences that arose on the differences between the financial reporting value and tax basis of the assets acquired and liabilities assumed. We recorded liabilities for estimated uncertain tax positions in other long-term liabilities and a related indemnification receivable in other long-term assets.

The revenue and net loss of Cadillac Jack from the acquisition date through December 31, 2015, are presented below and are included in our consolidated statements of operations and comprehensive loss. These amounts are not necessarily indicative of the results of operations that Cadillac Jack would have realized if it had continued to operate as a stand-alone company during the period presented, primarily due to the elimination of certain headcount and administrative costs since the acquisition date resulting from integration activities or due to costs that are now reflected in our unallocated corporate costs and not allocated to Cadillac Jack.

	From May 29, 2015 through December 31, 2015
Revenue	$	46,075
Net loss	$	17,133

The following unaudited pro forma statements of operations give effect to the Cadillac Jack acquisition as if it had been completed on January 1, 2014. The unaudited pro forma financial information is presented for illustrative purposes only and is not necessarily indicative of what the operating results actually would have been during the periods presented had the acquisition been completed on January 1, 2014. In addition, the unaudited pro forma financial information does not purport to project future operating results. This information is preliminary in nature and subject to change based on final purchase price adjustments. The pro forma statements of operations do not reflect: (1) any anticipated synergies (or costs to achieve synergies) or (2) the impact of non-recurring items directly related to the Cadillac Jack acquisition.

	Year ended December 31,
	2015		2014
Revenue	$	156,110	$	160,341
Net loss	$	54,682	$	83,709

Gamingo Limited

On June 15, 2015, the Company purchased 100% of the equity of Gamingo Limited (formerly known as “RocketPlay”, currently known as “AGSi”), a leading gaming company developing social casino titles for mobile devices. With primary offices in San Francisco and Tel Aviv, AGSi’s flagship product, Lucky Play Casino, gives players a casino-quality experience with slots, table games, tournaments, and live events. The total consideration of $8.8 million includes an estimated $5.0 million of contingent consideration that is payable based on the operating results of AGSi during a twelve-month measurement period that will end on December 31, 2016. The amount of the contingent consideration recorded was estimated at the purchase date and is subject to change based on changes in the estimated operating results of AGSi and has been recorded in other long-term

F-15

AP GAMING HOLDCO INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

liabilities in the consolidated balance sheet. As of December 31, 2015 the recorded value of the contingent consideration was written off in full to write downs and other charges based on the estimated fair value on that date.

We have recorded AGSi’s assets acquired and liabilities assumed based on our preliminary estimates of their fair values at the acquisition date. The estimated fair values of assets acquired and liabilities assumed and resulting goodwill are subject to adjustment as we finalize our fair value analysis. The allocation of the consideration given was allocated to the estimated fair values of the assets acquired and the liabilities assumed, which primarily included $4.9 million of goodwill and $4.2 million of identifiable intangible assets to be amortized over a weighted average period of 3 years.

Intellectual Property Acquisitions

During the quarter ended September 30, 2015, the Company acquired certain intangible assets related to the purchase of table games and table game related intellectual property.  Some of the acquisitions were accounted for as an acquisition of a business and the assets acquired and liabilities assumed were measured based on our preliminary estimates of their fair values at the acquisition dates. The estimated fair values of assets acquired and liabilities assumed and resulting goodwill are subject to adjustment as we finalize our fair value analysis. The total consideration of $10.0 million includes an estimated $1.5 million of contingent consideration that is payable periodically based on a percentage of product revenue earned on the related table games.  The amount of the contingent consideration recorded was estimated at the purchase date and is subject to change based on changes in the estimated product revenue and has been recorded in other long-term liabilities in the consolidated balance sheet.  The consideration was allocated primarily to goodwill for $2.6 million and intangible assets for $6.5 million, which will be amortized over a weighted average period of 8.5 years.

Prior Years’ Acquisitions

On May 6, 2014, the Company purchased100%of the equity of C2 Gaming, LLC (“C2 Gaming”) for $23.3 million in cash, subject to terms outlined in the equity purchase agreement (the “C2 Acquisition Agreement”). C2 Gaming is an innovative manufacturer and developer of slot machines based in Las Vegas, Nevada. The purchase was expected to provide for the distribution of C2 Gaming’s platform and content to an increased number of markets in the United States. The acquisition was funded by an initial cash payment and an agreement to pay the sellers $9.0 million on the one-year anniversary of the closing of the acquisition, which was paid during the quarter ended June 30, 2015. The acquisition also included an amount of contingent consideration of $3.0 million that was payable upon the satisfaction of certain milestones, including the submission and approval of video slot platforms to various jurisdictions as outlined in the C2 Acquisition Agreement.

The following summarizes the consideration paid for C2 Gaming (in thousands):

Paid at close	$	11,000
One-year payment	9,000
Contingent consideration	3,000
Working capital adjustment	273
Total consideration	$	23,273

During the year ended December 31, 2014, the Company paid $0.5 million of the contingent consideration. In May 2015, the C2 Acquisition Agreement was amended to reduce the remaining contingent consideration liability of $2.5 million to $2.1 million and to acknowledge that the milestones of the C2 Acquisition Agreement were satisfied. In July 2015, the Company paid $1.0 million of the contingent consideration, reducing the balance to $1.1 million, which was paid in January 2016.

The allocation of the purchase price to the estimated fair values of the assets acquired and the liabilities assumed was as follows (in thousands):

At May 6, 2014
Current assets	$	545
Property and equipment	534
Goodwill	13,744
Intangible assets	8,722
Total assets	23,545
Total liabilities	272
Total equity purchase price	$	23,273

F-16

AP GAMING HOLDCO INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

Our estimates of the fair values of depreciable tangible assets were as follows (in thousands):

	Fair values at May 6, 2014		Average remaining useful life (in years)
Property and equipment	$	534	1 - 5

Our estimates of the fair values of identifiable intangible assets were as follows (in thousands):

	Fair values at May 6, 2014		Average remaining useful life (in years)
Gaming software and technology platforms	$	3,685	3 - 5
Customer relationships	5,037		7
Total intangible assets	$	8,722

The fair value of property and equipment as well as the fair value of gaming content software was determined using cost approaches in which we determined an estimated reproduction or replacement cost, as applicable.

The estimate of the fair value of the acquired gaming software and technology platforms was determined using the relief from royalty method under the income approach, which is a risk-adjusted discounted cash flow approach. The relief from royalty method values an intangible asset by estimating the royalties saved through ownership of the asset.

The estimate of the fair value of the acquired customer relationships was determined using the excess earnings method, which is a risk-adjusted discounted cash flow approach that determines the value of an intangible asset as the present value of the cash flows attributable to such asset after excluding the proportion of the cash flows that are attributable to other assets.

The goodwill recorded as a results of the acquisition is deductible for tax purposes and is attributed to enhanced financial scale, expanded video slot platforms and other strategic benefits. Some of the values and amounts used in the initial application of purchase accounting for our consolidated balance sheet were based on estimates and assumptions.

On September 16, 2013, AGS Holdings, LLC (“AGS Holdings”), AGS Capital, LLC (“AGS Capital”) and AP Gaming Acquisition, LLC (“AP Gaming Acquisition”), an indirect wholly owned subsidiary of the Company and an affiliate of Apollo Global Management, LLC (“Apollo”), entered into an equity purchase agreement (as subsequently amended and restated on December 3, 2013, the “Acquisition Agreement”). The Acquisition Agreement provided for the purchase of 100% of the equity of AGS Capital from AGS Holdings, LLC (the “AGS Capital Acquisition”) by AP Gaming Acquisition for an aggregate purchase price of approximately $220.5 million. The AGS Capital Acquisition was consummated on December 20, 2013.

The AGS Capital Acquisition was financed in part by the senior secured credit facilities (as described in Note 6) and from the issuance of 10,000,000 Class A shares of common stock at $0.01 par value to Apollo Gaming Holdings, L.P. for a total cost to acquire all the outstanding shares was $100,000,000. The source of the funds for the acquisition of the Company was provided by committed equity capital contributed by certain equity funds managed by Apollo.

The following summarizes the consideration paid for the AGS Capital Acquisition (in thousands):

Contractual cash purchase price	$	220,300
Seller notes	5,531
Working capital adjustment	(5,340		)
Total consideration	$	220,491

F-17

AP GAMING HOLDCO INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

The allocation of the purchase price to the estimated fair values of the assets acquired and the liabilities assumed was as follows (in thousands):

At December 20, 2013
Currents assets	$	17,858
Property and equipment	46,734
Goodwill	63,873
Intangible assets	97,512
Other long-term assets	1,616
Total assets	227,593
Total liabilities	7,102
Total equity purchase price	$	220,491

Our estimates of the fair values of depreciable tangible assets were as follows (in thousands):

	Fair values at December 20, 2013		Average remaining useful life (in years)
Property and equipment	$	46,734	1 - 5

Our estimates of the fair values of identifiable intangible assets were as follows (in thousands):

	Fair values at December 20, 2013		Average remaining useful life (in years)
Indefinite lived trade names	$	12,126	Indefinite
Trade and brand names	809		7
Customer relationships	60,112		7
Gaming software and technology platforms	24,465		1 - 5
Total intangible assets	$	97,512

The fair value of acquired property and equipment was determined using cost approaches in which we determined an estimated reproduction or replacement cost, as applicable.

The fair values of acquired finite- and indefinite-lived trade names, gaming software and technology platforms was determined using the relief from royalty method under the income approach, which is a risk-adjusted discounted cash flow approach. The relief from royalty method values an intangible asset by estimating the royalties saved through ownership of the asset. The relief from royalty method requires identifying the future revenue that would be impacted by the trade name, multiplying it by a royalty rate deemed to be avoided through ownership of the asset and discounting the projected royalty savings amounts back to the acquisition date. The royalty rate used in such valuation was based on a consideration of market rates for similar categories of assets.

The fair value of the acquired customer relationships was determined using the excess earnings method, which is a risk-adjusted discounted cash flow approach that determines the value of an intangible asset as the present value of the cash flows attributable to such asset after excluding the proportion of the cash flows that are attributable to other assets. The contribution to the cash flows that are made by other assets - such as fixed assets, working capital, workforce and other intangible assets, including trade names and internally developed gaming software and third party licenses - was estimated through contributory asset capital charges. The value of the acquired customer relationship asset is the present value of the attributed post-tax cash flows, net of the post-tax return on fair value attributed to the other assets.

As a result of the AGS Capital Acquisition, the Company recognized goodwill, which is deductible for tax purposes and is primarily attributed to enhanced financial scale, opportunities for synergies and opportunities with other Apollo related companies and other strategic benefits.

F-18

NOTE 3. PROPERTY AND EQUIPMENT

Property and equipment, net consist of the following (in thousands):

	December 31, 2015			December 31, 2014
Gaming equipment	$	89,361		$	53,295
Other property and equipment(1)	14,976			3,902
Less: Accumulated depreciation	(37,638		)	(16,428		)
Total property and equipment, net	$	66,699		$	40,769

⁽¹⁾$2.8 million included in other property and equipment as of December 31, 2014 has been reclassified to gaming equipment to be consistent with the current year presentation.

Gaming equipment and other property and equipment are depreciated over the respective useful lives of the assets ranging from three to six years. Depreciation expense was $23.4 million and $16.8 million for the year ended December 31, 2015 and 2014, respectively. Depreciation expense was $0.5 million and $14.7 million for the Successor Period and Predecessor Period, respectively.

NOTE 4. GOODWILL AND INTANGIBLES

There were no accumulated impairments of goodwill as of December 31, 2015. Changes in the carrying amount of goodwill are as follows (in thousands):

	Gross Carrying Amount
Balance at December 31, 2014	$	77,617
Acquisition - Cadillac Jack	171,497
Acquisition - AGSi	4,855
Acquisition - Intellectual Property	2,600
Foreign currency adjustments	(2,282		)
Other	(436		)
Balance at December 31, 2015	$	253,851

Intangible assets consist of the following (in thousands):

		December 31, 2015							December 31, 2014
	Useful Life (years)	Gross Value		Accumulated Amortization			Net Carrying Value		Gross Value		Accumulated Amortization			Net Carrying Value
Indefinite lived trade names	Indefinite	$	12,126	$	—		$	12,126	$	12,126	$	—		$	12,126
Trade and brand names	7	13,600		(1,721		)	11,879		809		(119		)	690
Customer relationships	7	170,927		(26,676		)	144,251		65,159		(9,313		)	55,846
Contract rights under development and placement fees	1 - 7	16,311		(548		)	15,763		678		(58		)	620
Gaming software and technology platforms	1 - 5	116,930		(23,735		)	93,195		32,564		(7,108		)	25,456
Intellectual property	10 - 20	14,030		(888		)	13,142		7,279		(132		)	7,147
		$	343,924	$	(53,568	)	$	290,356	$	118,615	$	(16,730	)	$	101,885

Intangible assets are amortized over their respective estimated useful lives ranging from one to twenty years. Amortization expense related to intangible assets was $38.3 million and $16.6 million for the year ended December 31, 2015 and 2014, respectively, and $0.4 million and $13.0 million for the Successor Period and Predecessor Period, respectively.

Management reviews intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. For the year ended December 31, 2015 and 2014, the Company recognized an impairment charge of $3.4 million and $1.4 million, respectively, related to internally developed gaming titles that were

F-19

AP GAMING HOLDCO INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

discontinued. During the Predecessor Period, the Company recognized an impairment charge of $1.7 million related to lease incentives paid to a customer.

The Company enters into development agreements and placement fee agreements with certain customers to secure floor space under lease agreements for its gaming machines. Amounts paid in connection with the development agreements are repaid to the Company in accordance with the terms of the agreement, whereas placements fees are not reimbursed. For development agreements in the form of a loan, interest income is recognized on the repayment of the notes based on the stated rate or, if not stated explicitly in the development agreement, on an imputed interest rate. If the stated interest rate is deemed to be other than a market rate or zero, a discount is recorded on the note receivable as a result of the difference between the stated and market rate and a corresponding intangible asset is recorded. The intangible asset is recognized in the financial statements as a contract right under development agreement and amortized as a reduction in revenue over the term of the agreement. Placement fees can be in the form of cash paid upfront or free lease periods and are accreted over the life of the contract and the expense is recorded as a reduction of revenue. We recorded a reduction of gaming operations revenue from the accretion of contract rights under development agreements and placement fees of $0.5 million for the year ended December 31, 2015. The amounts amortized in 2014 and the Successor Period were nominal. We recorded a reduction of gaming operations revenue from the accretion of contract rights under development agreements and placement fees of $3.9 million for the Predecessor Period.

The estimated amortization expense of definite-lived intangible assets as well as the accretion of contract rights under development and placement fees, for each of the next five years and thereafter is as follows (in thousands):

	Amortization Expense		Placement Fee Accretion
For the year ended December 31,
2016	$	52,113	$	4,663
2017	48,047		4,537
2018	40,805		3,795
2019	33,706		2,609
2020	26,943		57
Thereafter	60,853		102

NOTE 5. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts payable and accrued liabilities consist of the following (in thousands):

	December 31, 2015		December 31, 2014
Trade accounts payable	$	4,776	$	1,517
Salary and payroll tax accrual	5,851		3,002
Taxes payable	2,440		566
Accrued interest	8		499
C2 Gaming one-year payout (see Note 2)	—		9,000
C2 Gaming contingent consideration (see Note 2)	1,125		2,500
Proceeds from employees in advance of common stock issuance	—		1,969
Placement fees payable	4,525		—
Accrued other	4,305		4,263
Total accounts payable and accrued liabilities	$	23,030	$	23,316

F-20

AP GAMING HOLDCO INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE 6. LONG-TERM DEBT

Long-term debt consists of the following (in thousands):

	December 31, 2015			December 31, 2014
Senior secured credit facilities:
Term loans, interest at LIBOR or base rate plus 8.25% (9.25% at December 31, 2015), net of unamortized discount of $10.9 million and $5.0 million at December 31, 2015 and December 31, 2014, respectively.	$	404,019		$	148,447
$40 million revolving credit facility, interest at LIBOR or base rate plus 8.25%	—			10,000
Senior secured PIK notes, net of unamortized discount of $3.3 million at December 31, 2015	119,292			—
Seller notes	18,902			6,012
Equipment long-term note payable and capital leases	5,826			2,230
Total debt	548,039			166,689
Less: Current portion	(6,919		)	(2,495		)
Long-term debt	$	541,120		$	164,194

Senior Secured Credit Facilities

On December 20, 2013, the Company entered into our senior secured credit facilities, which consisted of $155.0 million in term loans and a $25.0 million revolving credit facility. On May 29, 2015, the Company entered into incremental facilities for $265.0 million in term loans and on June 1, 2015, the Company entered into an incremental agreement for an additional $15.0 million of incremental revolving commitments. The proceeds of the incremental term loans were used primarily to pay the consideration for the Cadillac Jack acquisition.

The term loans will mature on December 20, 2020, and the revolving credit facility will mature on December 20, 2018. The term loans require scheduled quarterly payments in amounts equal to 0.25% of the original aggregate principal amount of the term loans, with the balance due at maturity. Borrowings under the term loans bear interest at a rate equal to, at the Company’s option, either LIBOR or the base rate, subject to an interest rate floor plus an applicable margin rate. Borrowings under the revolving credit facility bear interest at a rate equal to, at the Company’s option, either LIBOR or the base rate plus an applicable margin rate. In addition, on a quarterly basis, the Company is required to pay each lender under the revolving credit facility a commitment fee in respect of any unused commitments thereunder at a rate of 0.50% per annum.

The senior secured credit facilities are guaranteed by AP Gaming Holdings, LLC, the AP Gaming I, LLC’s (the “Borrower”) material, wholly owned domestic subsidiaries (subject to certain exceptions), and are secured by a pledge by AP Gaming Holdings, LLC of the Borrower’s equity interest directly held by AP Gaming Holdings, LLC and a pledge of substantially all of the existing and future property and assets of the Borrower and the subsidiary guarantors, subject to certain exceptions. The senior secured credit facilities require that the Borrower maintain a maximum net first lien leverage ratio set at a maximum of 5.5 to 1 beginning with the first quarter ending June 30, 2014. The senior secured credit facilities contain limitations on additional indebtedness, guarantees, incurrence of liens, investments and distributions, as defined. The senior secured credit facilities also contain customary events of default included in similar financing transactions, including, among others, failure to make payments when due, default under other material indebtedness, breach of covenants, breach of representations and warranties, involuntary or voluntary bankruptcy, and material judgments. The Company was in compliance with the covenants of the senior secured credit facilities at December 31, 2015.

Senior secured PIK notes

On May 29, 2015, the Company entered into a note purchase agreement with AP Gaming Holdings, LLC, as subsidiary guarantor (the “Subsidiary Guarantor”), Deutsche Bank AG, London Branch, as purchaser (the “Purchaser”), and Deutsche Bank Trust Company Americas, as collateral agent.  Pursuant to the agreement, the Company issued $115.0 million of its 11.25% senior secured PIK notes due 2021 (the “Notes”) at an issue price of 97% of the principal amount thereof to the Purchaser in a private placement exempt from registration under the Securities Act of 1933, as amended.  The Notes are secured

F-21

AP GAMING HOLDCO INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

by the Company’s equity in its subsidiary AP Gaming, Inc., subject to certain limitations including those imposed by gaming laws, and are unconditionally guaranteed by the Subsidiary Guarantor.

Interest on the Notes will accrue at a rate of 11.25% per annum. The Company may elect to pay interest due on the Notes in cash, by increasing the principal of the outstanding Notes or by issuing new Notes (“PIK interest”) for the entire amount of the interest payment or by paying interest partially in cash and partially in PIK interest. Interest on the Notes will accrue from the date of issuance and will be payable on the dates described in more detail in the agreement.  The Notes will mature on May 28, 2021.  The net proceeds of the Notes were used primarily to finance the Cadillac Jack acquisition.

The Notes contain limitations on additional indebtedness, guarantees, incurrence of liens, investments and distributions, as defined. The Notes also contains customary events of default included in similar transactions, including, among others, failure to make payments when due, acceleration of other material indebtedness, breach of covenants, breach of representations and warranties, involuntary or voluntary bankruptcy, and material judgments. At December 31, 2015, the Notes totaled $119.3 million, which includes capitalized interest of $7.6 million.

Seller notes

On December 20, 2013, the Company issued two promissory notes (the “AGS Seller Notes”) to AGS Holdings, LLC, in the amounts of $2.2 million and $3.3 million, to satisfy the conditions set forth in the Acquisition Agreement. At December 31, 2015, notes payable related to the AGS Seller Notes totaled $6.5 million, which includes capitalized interest of $1.0 million. The AGS Seller Notes accrue interest on the unpaid principal balance at 8.5% per annum and shall be payable semi-annually in arrears on June 30 and December 31, commencing on June 30, 2014. Any interest accrued and payable on any interest payment date will be paid by capitalizing such interest and adding it to (and thereby increasing) the outstanding principal amount of this AGS Seller Notes. All principal and interest under the AGS Seller Notes is due and payable on June 18, 2021, the maturity date. The Company may prepay from time to time all or any portion of the outstanding principal balance due under the AGS Seller Notes.

On May 29, 2015, the Company issued a promissory note to Amaya Inc. (the “Amaya Seller Note”) with an initial principal amount of $12.0 million to satisfy the conditions set forth in the stock purchase agreement for the Cadillac Jack Acquisition. The Amaya Seller Note accrues interest on the unpaid principal amount at 5.0% per annum and is payable semi-annually on June 30 and December 31 (and on May 29, 2023, the maturity date of the note), commencing on June 30, 2015. All interest accrued and payable on any interest payment date will be paid by capitalizing such interest and adding it to (and thereby increasing) the outstanding principal amount of the Amaya Seller Note. All principal under the note is due and payable on May 29, 2023.  The Amaya Seller Note is required to be prepaid under certain circumstances described in more detail in the note agreement. The Company may prepay from time to time all or any portion of the outstanding principal balance due under the Amaya Seller Note.  The Amaya Seller Note includes certain covenants and events of default that are customary for instruments of this type. At December 31, 2015, the Amaya Seller Note totaled $12.4 million, which includes capitalized interest of $0.4 million.

Equipment Long Term Note Payable and Capital Leases

The Company has entered into a financing agreement to purchase certain gaming devices, systems and related equipment and has entered into leases for servers and equipment that are accounted for as capital leases.

Scheduled Maturities of Long-Term Debt

Aggregate contractual future principal payments (excluding the effects of repayments for excess cash flow) of long-term debt for the years following December 31, 2015, are as follows (in thousands):

F-22

AP GAMING HOLDCO INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

Years ending December 31,	Successor
2016	$	6,919
2017	6,325
2018	5,283
2019	4,234
2020	397,953
Thereafter	141,521
Total scheduled maturities	562,235
Unamortized debt discount	(14,196		)
Total long-term debt	$	548,039

NOTE 7. STOCKHOLDERS’ EQUITY

Common Stock

The Company’s common stock consists of two classes: class A voting common stock (“Class A Shares”) and class B non-voting common stock (“Class B Shares”). The holders of the Class A Shares are entitled to one vote per share on all matters to be voted on by the stockholders of the Company. The holders of the Class A Shares have no economic rights or privileges, including rights in liquidation, and have no right to receive dividends or any other distributions. The holders of the Class B Shares have no right to vote on any matter to be voted on by the stockholders of the Company. Each holder of Class B Shares is entitled to share equally, share for share, dividends declared, as well as any distributions to the stockholders, and in the event of the Company’s liquidation, dissolution or winding up, is entitled to share ratably in any remaining assets after payment of or provision for liabilities and the liquidation on preferred stock, if any.

On April 28, 2014, our controlling stockholder exchanged its 10,000,000 Class A Shares for 10,000,000 Class B Shares. On May 29, 2015, we issued an additional 4,931,529 Class B Shares to our controlling stockholder for total proceeds of $77.4 million. The funds received from the May 2015 issuance of Class B Shares were used, in addition to proceeds from the issuance of long-term debt, to fund the acquisition of Cadillac Jack.

As of December 31, 2015, 107,498 Class B Shares issued to “Management Holder,” as defined in the Securityholders Agreement dated April 28, 2014 (the “Securityholders Agreement”) were outstanding. The Class B Shares issued to Management Holder’s are not considered issued for accounting purposes as they contain a substantive performance condition that must be met for the Management Holder to benefit from the ownership of the shares. As a result, shares issued to Management Holder’s are not considered issued for accounting purposes until such time that the performance condition is met.

Class B Shares that are held by a Management Holder are subject to repurchase rights (the “Repurchase Rights”), as outlined in Section 6 of the Securityholders Agreement, that are contingent on the Management Holder’s termination. The Repurchase Rights enable the Company to recover the Class B Shares issued to a Management Holder without transferring any appreciation of the fair value of the stock to the Management Holder upon certain terminations of the Management Holder’s employment prior to a “Qualified Public Offering”, as defined in the Securityholders Agreement. If a Management Holder’s employment is terminated by the Company prior to the consummation of a Qualified Public Offering for “Cause”, as defined in the Securityholders Agreement, or is terminated by such Management Holder without “Good Reason”, as defined in the Securityholders Agreement, then the Company shall have the right to repurchase all or any portion of the Class B Shares held by such Management Holder for the lesser of original cost and fair market value. If a Management Holder’s employment is terminated by the Company prior to the consummation of a Qualified Public Offering other than as described above and in the Securityholders Agreement, then the Company shall have the right to repurchase all or any portion of the Class B Shares held by such Management Holder for fair market value.

NOTE 8. WRITE DOWNS AND OTHER CHARGES

The consolidated statements of operation and comprehensive loss include various non-routine transactions and related consulting fees. For the year ended December 31, 2015, the Company recognized $11.8 million in write-downs and other charges primarily related to acquisition related charges of $8.2 million. The Company also recognized an impairment to intangible assets of $3.4 million related to game titles, write offs related to prepaid royalties of $1.3 million, losses from the disposal of assets of $1.3 million and the impairment of long-lived assets of $0.2 million, partially offset by net write downs of primarily contingent consideration of $2.7 million that is described in Note 2.

F-23

For the year ended December 31, 2014, the Company recognized $7.1 million in write-downs and other charges primarily related to acquisition charges of $2.8 million, losses from the disposal of assets of $1.9 million, an impairment to intangible assets of $1.4 million and an impairment of long-lived assets of $0.8 million.

For the Successor Period ending December 31, 2013, the Company recognized $7.5 million in write-downs and other charges for fees related to the AGS Capital Acquisition. For the Predecessor Period, the Company recognized $10.3 million in write downs and other charges that primarily consisted of $3.9 million in fees related to the AGS Capital Acquisition, $3.3 million related to the impairment of long-lived assets, $1.7 million related to the impairment of intangible assets, $0.5 million related to the write-down of phantom unit compensation and $0.3 million for consulting fees paid to a related party.

NOTE 9. BASIC AND DILUTED LOSS PER SHARE

The Company computes net income (loss) per share in accordance with accounting guidance that requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the consolidated statement of operations and comprehensive income (loss). Basic EPS is computed by dividing net income (loss) for the period by the weighted average number of shares outstanding during the period. Basic EPS excludes Class B Shares issued to Management Holders until the performance condition or termination event is considered probable (see Note 7). Until such time, the Class B Shares issued to Management Holders will be included in the calculation of diluted EPS using the treasury stock method and are treated as stock options. Diluted EPS is computed by dividing net income (loss) for the period by the weighted average number of common shares outstanding during the period, increased by potentially dilutive common shares that were outstanding during the period. Diluted EPS excludes all potential dilutive shares if their effect is anti-dilutive. Potentially dilutive common shares include stock options and restricted stock (see Note 11).

There were no potentially dilutive securities for the year ended December 31, 2015.

Excluded from the calculation of diluted EPS for the year ended December 31, 2015, are 50,000 restricted shares and 0.3 million stock options, as such securities were anti-dilutive.

NOTE 10. BENEFIT PLANS

The Predecessor implemented the AGS Holdings Inc. Phantom Units Plan (the “Plan”) which was intended to reinforce and encourage the continued attention and dedication of certain Covered Executives (as defined) to their assigned duties to the Predecessor until a Change in Control (as defined) occurred. Units of the Plan were issued as a percentage and in terms of number of units within the Plan at a strike price of $56.0 million and vested over a period of up to four years. The value of the units was determined as the product of the percentage held in the Plan and the summation of the enterprise value of the Company less the net debt of the Company less the strike price. During 2013, $2.1 million was paid out under the terms of the Plan. During the second quarter of 2014, the Plan was finalized and settled resulting in a payment of approximately $22,000 to Plan unit holders.

The Company has established a 401(k) defined contribution plan (the “401(k) Plan”) for its employees. The 401(k) Plan allows employees to contribute up to 15% of their pretax earnings, and the Company may match a percentage of the contributions on a discretionary basis. The expense associated with the 401(k) Plan for the year ended December 31, 2015, December 31, 2014, the Successor Period and the Predecessor Period was $0.6 million, $0.3 million, $7,000 and $0.2 million, respectively. The increase in the expense associated with the 401(k) Plan compared to the prior year was due to the inclusion of Cadillac Jack, which accounted for $0.2 million of the expense for the year ended December 31, 2015.

On April 28, 2014, the Board of Directors of the Company approved the 2014 Long-Term Incentive Plan (“LTIP”). Under the LTIP, the Company is authorized to grant nonqualified stock options, rights to purchase Class B Shares, restricted stock, restricted stock units and other awards to be settled in, or based upon, Class B Shares to persons who are directors and employees of and consultants to the Company or any of its subsidiaries on the date of the grant. The LTIP will terminate ten years after approval by the Board. Subject to adjustments in connection with certain changes in capitalization, the maximum number of Class B Shares that may be delivered pursuant to awards under the LTIP is 1,250,000.

F-24

AP GAMING HOLDCO INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE 11. SHARE-BASED COMPENSATION

Stock Options

The Company has granted stock awards to eligible participants under the LTIP. The stock awards include options to purchase the Company’s Class B Shares. These stock options include a combination of service and market conditions, as further described below. In addition, these stock options include a performance vesting condition, a Qualified Public Offering (see Note 7), which is not considered to be probable as of December 31, 2015. As a result, no share-based compensation expense for stock options has been recognized and none will be recognized for these stock awards until the performance condition is considered to be probable. When the performance condition is considered probable, the stock awards will vest in accordance with the underlying service and market conditions.

The Company calculated the grant date fair value of stock options that vest over a service period using the Black Scholes model. For stock options that contain a market condition related to the return on investment that the Company’s stockholders achieve, the options were valued using a lattice-based option valuation model. The assumptions used in these calculations are noted in the following table. Expected volatilities are based on implied volatilities from comparable companies. The expected time to liquidity is based on management’s estimate. The risk-free rate is based on the U.S. Treasury yield curve for a term equivalent to the estimated time to liquidity. The expected dividend yield is 0% for all stock awards.

	Year Ended December 31,
	2015	2014	2013
Option valuation assumptions:
Expected dividend yield	—%	—%	—%
Expected volatility	55%	73%	—%
Risk-free interest rate	1.69%	1.63%	—%
Expected term (in years)	6.4	5.0	0

A summary of the changes in stock options outstanding during the year ended December 31, 2015, is as follows:

	Number of Options		Weighted Average Exercise Price		Weighted Average Remaining Contract Term (years)	Aggregate Intrinsic Value
Options outstanding as of December 31, 2014	576,250		$	10.00
Granted	347,875		$	15.41
Canceled	(158,750	)	$	10.00
Options outstanding as of December 31, 2015	765,375		$	12.46	8.6	$	2,481,113
Exercisable as of December 31, 2015	55,833		$	10.00	8.4	$	117,169

No options expired or were forfeited for the year ended December 31, 2015.

Restricted awards

A summary of the changes in restricted stock awards outstanding during the year ended December 31, 2015, is as follows:

	Shares	Weighted Average Grant Date Fair Value
Nonvested at January 1, 2015	50,000	$	10.00
Vested	10,000	10.00
Nonvested at December 31, 2015	40,000	10.00

No restricted awards were granted or forfeited during the year ended December 31, 2015.

F-25

AP GAMING HOLDCO INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following is provided for the share award vesting from the plans (in thousands, except weighted average grant date fair value):

	Year Ended December 31,
	2015		2014		2013
Weighted average grant date fair value	$	—	$	10.00	$	—

No restricted stock was granted, canceled or forfeited during the year ended December 31, 2015. During the year ended December 31, 2014, the Company granted 50,000 restricted Class B Shares that vest in five equal installments on each of the first five anniversaries of the grant date. This restricted stock includes a service condition and a performance vesting condition (a Qualified Public Offering), which was not considered to be probable of occurring as of December 31, 2015. As a result, no share-based compensation expense was recognized for the years ended December 31, 2015 and 2014, and none will be recognized for restricted stock until the performance condition is considered to be probable. When the performance condition is considered probable, the stock awards will vest in accordance with the underlying service condition.

NOTE 12. RESTRUCTURING

We recorded employee termination and restructuring costs of $1.4 million and $1.2 million during the years ended December 31, 2015 and 2014, respectively. We do not anticipate additional costs associated with the following plans in excess of amounts accrued below. Employee termination and restructuring costs are classified in selling, general and administrative as well as research and development expense and have been recorded for the following restructuring plans.

Toronto Restructuring Plan

In June 2014, we took steps to reduce current and future expenses by reducing staff in our technology and game development division that operated primarily out of our Toronto location. The Company has also entered into retention agreements with certain employees that will be paid upon the completion of their service period.

Cadillac Jack Integration Plan

In June 2015, we took actions to reduce the staff in all of our locations and to streamline our operations and cost structure. The Company has also entered into retention agreements with certain employees that will be paid upon the completion of their service period.

The following table summarizes the change in our restructuring accruals for the year ended December 31, 2015 (in thousands), which is included in accounts payable and accrued liabilities in the consolidated balance sheets:

	December 31, 2014		Charge to expense		Cash paid		December 31, 2015
Accrued severance	$	127	$	935	$	1,025	$	37
Accrued retention bonuses	216		437		653		—
Property costs	—		25		25		—
Total	$	343	$	1,397	$	1,703	$	37

NOTE 13. INCOME TAXES

The components of loss before provision for income taxes are as follows (in thousands):

	Successor									Predecessor
	Year Ended December 31, 2015			Year ended December 31, 2014			Period December 21 through December 31, 2013			Period January 1, 2013 through December 20, 2013
Domestic	$	(66,728	)	$	(26,187	)	$	(8,102	)	$	(42,176	)
Foreign	(7,906		)	—			—			—
Loss before provision for income taxes	$	(74,634	)	$	(26,187	)	$	(8,102	)	$	(42,176	)

F-26

AP GAMING HOLDCO INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

The income tax (benefit) expense is as follows (in thousands):

	Successor							Predecessor
	Year to date December 31, 2015			Year ended December 31, 2014		Period December 21 through December 31, 2013		Period January 1, 2013 through December 20, 2013
Current:
Federal	$	932		$	—	$	—	$	—
State	(10		)	7		—		—
Foreign	1,424			—		—		—
Total current income tax expense	2,346			7		—		—
Deferred:
Federal	(34,589		)	2,005		50		—
State	(2,506		)	177		4		—
Foreign	(1,340		)	—		—		—
Total deferred income (benefit) expense	(38,435		)	2,182		54		—
Total income tax (benefit) expense	$	(36,089	)	$	2,189	$	54	$	—

The reconciliation of income tax at the federal statutory rate to the actual effective income tax rate (benefit) is as follows:

	Successor						Predecessor
	Year to date December 31, 2015		Year ended December 31, 2014		Period December 21 through December 31, 2013		Period January 1, 2013 through December 20, 2013
Federal statutory rate	(35.0	)%	(34.0	)%	(34.0	)%	(34.0	)%
Non-taxable entities	—	%	—	%	—	%	32.7	%
Foreign rate differential	0.7	%	—	%	—	%	(0.5	)%
State income taxes, net of federal benefit	(2.5	)%	(0.8	)%	(3.1	)%	—	%
Nondeductible loan costs	1.5	%	—	%	—	%	—	%
Nondeductible transaction costs	1.6	%	—	%	—	%	—	%
Other permanent differences	(0.3	)%	0.2	%	—	%	—	%
Other differences	0.5	%	0.4	%	—	%	—	%
Uncertain tax positions	0.3	%	—	%	—	%	—	%
Valuation allowance	(15.2	)%	42.6	%	37.8	%	1.8	%
	(48.4	)%	8.4	%	0.7	%	—	%

The components of the net deferred tax liability consist of the following (in thousands):

F-27

AP GAMING HOLDCO INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

	Successor
	December 31, 2015			December 31, 2014
Deferred tax assets:
Accrued expenses	$	608		$	845
Allowance for bad debt	1,176			3
Payroll accruals	2,085			—
Foreign tax credits	8,834			—
Net operating loss carryforwards	35,862			8,156
Intangible assets	—			7,368
Research and development credits	1,569			—
Loan costs and interest	3,519			—
Other	2,017			166
Total deferred tax assets	55,670			16,538
Valuation allowance	(8,274		)	(14,260		)
Deferred tax assets, net of valuation allowance	$	47,396		$	2,278
Deferred tax liabilities:
Prepaid expenses and other	$	(1,033	)	$	(800	)
Intangible assets	(60,309		)	(2,236		)
Property and equipment, net	(1,364		)	(1,633		)
Deferred tax liabilities	(62,706		)	(4,669		)
Net deferred tax liabilities	$	(15,310	)	$	(2,391	)

In general, it is the practice and intention of the Company to reinvest the earnings of its non-U.S. subsidiaries in those operations. Due to cumulative foreign losses, there is no deferred tax liability recorded for unremitted foreign earnings.

The Company’s Mexican customers are required under the U.S.-Mexico tax treaty to withhold 10% of their payments due to the Company for license fees, which can be used as foreign tax credits on the Company’s U.S. federal income tax return. The foreign tax credits are not refundable, but can be carried forward for 10 years to offset future tax liability. Of the Company’s $8.8 million in foreign tax credits, approximately $4.0 million begin to expire starting in 2016. A full valuation allowance has been recorded on the credits which are expected to expire. In addition, the Company has $1.6 million of research and development credits which begin to expire in 2030.

The Company has net operating loss (“NOL”) carryforwards for U.S. federal purposes of $86.4 million, in foreign jurisdictions of $16.9 million and various U.S. states of $63.4 million. The U.S. federal NOL carryforwards begin to expire in 2031, the Mexican NOL carryforwards begin to expire in 2021, and the U.S. state NOL carryforwards begin to expire in 2018.

The Company has uncertain tax positions with respect to prior tax filings. The uncertain tax positions, if asserted by taxing authorities, would result in utilization of the Company’s tax credit and operating loss carryovers. The credit and operating loss carryovers presented as deferred tax assets are reflected net of these unrecognized tax benefits.

The Company assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to realize the existing deferred tax assets. Taxable temporary differences recorded in connection with the acquisition of Cadillac Jack represent sources of future taxable income to support the realization of AP Gaming’s legacy deferred tax assets. As a result of the net deferred tax liabilities recorded in connection with the acquisition of Cadillac Jack, the Company recorded a tax provision benefit of $14.3 million as a result of the reduction of its valuation allowance. In addition, during the year ended December 31, 2015 the Company recorded a $5.7 million increase to its valuation allowance for tax credits and operating loss carryovers acquired in connection with business combinations. The valuation allowances on acquired credits and operating loss carryovers resulted in an increase to acquired goodwill of $5.7 million. The remaining $2.6 million valuation allowance relates to foreign tax credits which are expected to expire and foreign losses incurred in 2015 which are not expected to be realized.

F-28

AP GAMING HOLDCO INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

The Company applies a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Company recognizes the impact of a tax position in the financial statements when the position is more likely than not of being sustained on audit based on the technical merits of the position.

The total amount of unrecognized tax benefits as of December 31, 2015 was $29.5 million. Of this amount, $26.9 million, if recognized, would be included in our Consolidated Statements of Operations and Comprehensive Loss and have an impact on our effective tax rate. The Company does not anticipate a material reduction of its liability for unrecognized tax benefits before December 31, 2016.

The Company recognizes interest and penalties accrued for unrecognized tax benefits in income tax expense. Related to the unrecognized tax benefits noted above, the Company accrued penalties and interest of $0.9 million during 2015 and in total, as of December 31, 2015, has recognized a liability for penalties and interest of $8.0 million.

The Company entered into an indemnification agreement with the prior owners of Cadillac Jack whereby the prior owners have agreed to indemnify the Company for changes in tax positions by taxing authorities for periods prior to the transaction. As of December 31, 2015, an indemnification receivable of $21.9 million has been recorded in the financial statements. This amount includes the indemnification of the original pre-acquisition tax positions along with any related accrued interest and penalties. If the related unrecognized tax benefits are subsequently recognized, a corresponding charge to relieve the associated indemnification receivables would be recognized in our Consolidated Statements of Operations and Comprehensive Loss and have an impact on operating income.

The Company had the following activity for unrecognized tax benefits in 2015. The Company had no unrecognized tax benefits prior to 2015. (amounts in thousands):

	December 31, 2015
Balance-beginning of year	$	—
Current year acquisitions	29,701
Increases based on tax positions of the current year	795
Currency translation adjustments	(973		)
Balance-end of year	$	29,523

NOTE 14. COMMITMENTS AND CONTINGENCIES

Leases

The Company leases administrative and warehouse facilities and certain equipment under non-cancelable operating leases. Rent expense was $2.0 million, $0.8 million, $22,000 and $0.6 million for the year ended December 31, 2015, December 31, 2014, the Successor Period and the Predecessor Period, respectively.

Future minimum lease payments under these leases in excess of one year as of December 31, 2015 are as follows (in thousands):

For the year ended December 31,	Successor
2016	$	1,693
2017	1,752
2018	1,186
2019	1,065
2020	1,092
Thereafter	806
Total	$	7,594

F-29

Other commitments and contingencies

The Company is subject to federal, state and Native American laws and regulations that affect both its general commercial relationships with its Native American tribal customers, as well as the products and services provided to them. Periodically, the Company reviews the status of each significant matter and assesses the potential financial exposure. If the potential loss from any claim or legal proceeding is considered probable and the amount can be estimated, the Company accrues a liability for the estimated loss. If a potential loss from any claim or legal proceeding is considered reasonably possible, the Company discloses an estimate of the possible loss or range of possible loss, or a statement that such an estimate cannot be made. Significant judgment is required in both the determination of probability and the determination as to whether an exposure is reasonably estimable. Because of uncertainties related to these matters, accruals are based only on the best information available at the time. As additional information becomes available, the Company reassesses the potential liability related to their pending claims and litigation and may revise its estimates. Such revisions in the estimates of the potential liabilities could have a material impact on the results of operations and financial condition.

NOTE 15. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

The following tables present selected quarterly financial information for 2015 and 2014, as previously reported (in thousands).

	Year ended December 31, 2015
	Quarter ended March 31, 2015			Quarter ended June 30, 2015			Quarter ended September 30, 2015			Quarter ended December 31, 2015
Consolidated Income Statement Data:
Revenues	$	18,795		$	26,296		$	38,105		$	40,096
Loss from operations	(3,736		)	(11,339		)	(13,017		)	(1,347		)
Net (loss) income	(9,235		)	2,849			(23,279		)	(8,880		)

	Year ended December 31, 2014
	Quarter ended March 31, 2014			Quarter ended June 30, 2014			Quarter ended September 30, 2014			Quarter ended December 31, 2014
Consolidated Income Statement Data:
Revenues	$	17,158		$	17,428		$	18,836		$	18,718
Income (loss) from operations	695			(1,468		)	(3,432		)	(4,216		)
Net loss	(4,249		)	(6,203		)	(8,674		)	(9,250		)

F-30

AP GAMING HOLDCO INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

ITEM 15(a)(2). FINANCIAL STATEMENT SCHEDULES

SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT

AP GAMING HOLDCO, INC.

(PARENT COMPANY ONLY)

CONDENSED BALANCE SHEETS

(in thousands, except share data)

	Successor
	December 31, 2015			December 31, 2014
Assets
Current assets
Cash and cash equivalents	$	25,972		$	8,513
Prepaid expenses	63			69
Total current assets	26,035			8,582
Deferred tax asset	3,528			—
Deferred loan costs, net	528			—
Investment in subsidiaries	203,390			57,622
Total assets	$	233,481		$	66,204
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable and accrued liabilities	$	—		$	1,993
Intercompany payables	20			455
Total current liabilities	20			2,448
Long-term debt	131,653			—
Other long-term liabilities	1,271			—
Total liabilities	132,944			2,448
Stockholders’ equity:
Common stock	149			100
Additional paid-in capital	177,276			99,900
Retained earnings	(75,077		)	(36,532		)
Accumulated other comprehensive (loss) income	(1,811		)	288
Total stockholders’ equity	100,537			63,756
Total liabilities and stockholders’ equity	$	233,481		$	66,204

F-31

AP GAMING HOLDCO INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

AP GAMING HOLDCO, INC.

(PARENT COMPANY ONLY)

CONDENSED STATEMENTS OF OPERATIONS

(in thousands)

	Successor
	Year ended December 31, 2015			Year ended December 31, 2014			Period December 21, 2013 through December 31, 2013
Operating expenses
Selling, general and administrative	$	546		$	1,512		$	—
Total operating expenses	546			1,512			—
Loss from operations	(546		)	(1,512		)	—
Other expense (income)
Equity in net loss of subsidiaries	33,405			26,870			8,156
Interest expense	8,123			—			—
Interest income	(1		)	(6		)	—
Loss before income taxes	(42,073		)	(28,376		)	(8,156		)
Income tax benefit (expense)	3,528			—			—
Net loss	(38,545		)	(28,376		)	(8,156		)
Foreign currency translation adjustment	(2,099		)	289			(1		)
Total comprehensive loss	$	(40,644	)	$	(28,087	)	$	(8,157	)

F-32

AP GAMING HOLDCO INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

AP GAMING HOLDCO, INC.

(PARENT COMPANY ONLY)

CONDENSED STATEMENTS OF CASH FLOWS

(in thousands, except per share data)

	Successor
	Year ended December 31, 2015			Year ended December 31, 2014			Period December 21, 2013 through December 31, 2013
Cash flows from operating activities
Net loss	$	(38,545	)	$	(28,376	)	$	(8,156	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Amortization of deferred loan costs and discount	143			—			—
Equity in net loss of subsidiaries	33,405			26,870			8,156
(Benefit) provision of deferred income tax	(3,528		)	—			—
Changes in assets and liabilities that relate to operations:
Prepaid expenses	6			(69		)	—
Intercompany payable/receivable	455			455			—
Accounts payable and accrued liabilities	7,956			24			—
Net cash (used in) provided by operating activities	(108		)	(1,096		)	—
Cash flows from investing activities
Investment in subsidiaries	(172,484		)	(11,635		)	(83,462		)
Distributions received from subsidiaries	1,322			2,737			—
Net cash used in investing activities	(171,162		)	(8,898		)	(83,462		)
Cash flows from financing activities
Proceeds from issuance of debt	111,550			—			—
Proceeds from issuance of common stock	77,425			—			100,000
Proceeds from employees in advance of common stock issuance	579			1,969			—
Repurchase of shares issued to management	(277		)	—			—
Payment of deferred loan costs	(548		)	—			—
Net cash provided by financing activities	188,729			1,969			100,000
Increase (decrease) in cash and cash equivalents	17,459			(8,025		)	16,538
Cash and cash equivalents, beginning of period	8,513			16,538			—
Cash and cash equivalents, end of period	$	25,972		$	8,513		$	16,538
Non-cash investing and financing activities:
Subsidiary payment for share repurchase on Company’s behalf	$	1,000		$	—		$	—
Intercompany payable settled as distribution	$	890		$	—		$	—
Incurrence of Amaya Seller Note	$	12,000		$	—		$	—
Interest payable added to debt principal	$	7,980		$	—		$	—

F-33

AP GAMING HOLDCO INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

AP GAMING HOLDCO, INC.

(PARENT COMPANY ONLY)

NOTES TO CONDENSED FINANCIAL STATEMENTS

NOTE 1 - BASIS OF PRESENTATION

The accompanying condensed financial statements include only the accounts of AP Gaming Holdco, Inc. (the “Company”). Investments in the Company’s subsidiaries are accounted for under the equity method.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted since this information is included in the Company’s consolidated financial statements included elsewhere in this Form 10-K.

NOTE 2 - COMMITEMENTS AND CONTINGENCIES

The Company is a holding company and, as a result, its ability to pay dividends is dependent on its subsidiaries’ ability to obtain funds and its subsidiaries' ability to provide funds to it. Restrictions are imposed by its subsidiaries' debt instruments, which significantly restrict certain key subsidiaries holding a majority of its assets from making dividends or distributions to the Company. These restrictions are subject to certain exceptions for affiliated overhead expenses as defined in the agreements governing the debt instruments, unless certain financial and non-financial criteria have been satisfied.

Long-term debt of the Company consists of the senior secured PIK notes and the Amaya Seller Note that are described in Note 6 to the consolidated financial statements.

F-34

EX-10.17

Exhibit 10.17

NONQUALIFIED STOCK OPTION AGREEMENT (this “Agreement”) dated as of July 17, 2015, between AP GAMING HOLDCO, INC., a Delaware corporation (the “Company”), and the Optionee set forth on the signature page to this Agreement (the “Optionee”).

WHEREAS, the Company, acting through the Company’s Board of Directors (the “Board”) has agreed to grant to the Optionee, effective on the date hereof (the “Grant Date”), an option under the AP Gaming Holdco, Inc. 2014 Long-Term Incentive Plan (the “Plan”) (capitalized terms used herein and not otherwise defined herein shall have the respective meanings ascribed thereto in the Plan or the Securityholders Agreement (as defined in the Plan), as the case may be) to purchase a number of shares of Common Stock (“Shares”) on the terms and subject to the conditions set forth in this Agreement and the Plan; and

WHEREAS, future securities in the Company (including those being acquired pursuant to this Agreement) owned by the Optionee shall be subject to the terms of the Securityholders Agreement.

NOW, THEREFORE, in consideration of the promises and of the mutual agreements contained in this Agreement, the parties hereto hereby agree as follows:

Section 1.The Plan. The terms and provisions of the Plan are hereby incorporated into this Agreement as if set forth herein in their entirety. In the event of a conflict between any provision of this Agreement and the Plan, the provisions of the Plan shall control. A copy of the Plan may be obtained from the Company by the Optionee upon request.

Section 2.Option; Option Price. Effective on the Grant Date, on the terms and subject to the conditions of the Plan and this Agreement, the Company hereby grants to the Optionee the option (the “Option”) to purchase Shares at the price per Share (the “Option Price”) and in the amount set forth on the signature page hereto. To the extent permitted by the Board, payment of the Option Price may be made in any manner specified by Section 5.6 of the Plan. The Option is not intended to qualify for federal income tax purposes as an “incentive stock option” within the meaning of Section 422 of the Code.

Section 3.Term. The term of the Option shall commence on the Grant Date and expire on the tenth anniversary of the Grant Date, unless the Option shall have sooner been terminated in accordance with the terms of the Plan or this Agreement.

Section 4.Vesting. Subject to the Optionee’s not having a Termination of Service prior to the applicable vesting date and except as otherwise set forth in Section 7, the Option shall become vested and exercisable only upon the Board’s determination, made in its sole discretion, that the Company’s EBITDA (calculated for all purposes under this Agreement in a manner consistent with that set forth in the First Lien Credit Agreement, dated as of December 20, 2013, by and between AP Gaming Holdings, LLC, AP Gaming I, LLC, Citicorp North America, Inc. and the other parties thereto) for fiscal year 2017 is at least $140,000,000. In the event a Change in Control occurs prior to the Board’s determination of the Company’s EBITDA for fiscal year 2017, subject to the Optionee’s continued employment through the date of the Change in Control (the “Closing Date”), the Option shall immediately vest and become exercisable upon the Closing Date if and only if the Board determines, in its sole discretion, that the Company’s EBITDA for the twelve-month period preceding the Closing Date is at

least $140,000,000. All decisions by the Board with respect to any calculations pursuant to this Section 4 (absent manifest error), including determination of EBITDA, shall be final and binding on the Optionee.

Section 5.Restriction on Transfer/Securityholders Agreement. The Option may not be transferred, pledged, assigned, hypothecated or otherwise disposed of in any way by the Optionee, except (i) if permitted by the Board, (ii) by will or the laws of descent and distribution or (iii) pursuant to beneficiary designation procedures approved by the Company. The Option shall not be subject to execution, attachment or similar process. Shares of Common Stock acquired pursuant to the exercise of the Option hereunder will be subject to the Securityholders Agreement. Any attempted assignment, transfer, pledge, hypothecation or other disposition of the Option contrary to the provisions of this Agreement or the Securityholders Agreement shall be null and void and without effect.

Section 6.Optionee’s Employment. Nothing in this Agreement or in the Option shall confer upon the Optionee any right to continue in the employ of the Company or any of its Subsidiaries or interfere in any way with the right of the Company or its Subsidiaries, as the case may be, in its sole discretion, to terminate the Optionee’s employment or to increase or decrease the Optionee’s compensation at any time.

Section 7.Termination.

(a)The Option shall automatically terminate and shall become null and void, be unexercisable and be of no further force and effect upon the earliest of:

(i)the tenth anniversary of the Grant Date;

(ii)the 180th day following the Termination of Service in the case of a Termination of Service due to the Optionee’s death or Disability;

(iii)the 90th day following the Termination of Service in the case of a Termination of Service due to a termination by the Optionee or due to a termination by the Company without Cause; and

(iv)the date of the Termination of Service in the case of a Termination of Service for Cause.

(b)Except as otherwise provided in Section 4 of this Agreement, upon a Termination of Service for any reason, the unvested portion of the Option shall terminate on the date the Termination of Service occurs.

Section 8.Securities Law Representations. The Optionee acknowledges that the Option and the Shares are not being registered under the Securities Act of 1933, as amended (the “Securities Act”), based, in part, on either (i) reliance upon an exemption from registration under Securities and Exchange Commission Rule 701 promulgated under the Securities Act or (ii) the fact that the Optionee is an “accredited investor” (as defined under the Securities Act and the rules and regulations promulgated thereunder), and, in each of clauses (i) and (ii) above, a comparable exemption from qualification under applicable state securities laws, as each may be amended from time to time. The Optionee, by executing this Agreement, hereby makes the following representations to the Company and acknowledges that the Company’s reliance on federal and state securities law exemptions from registration and qualification is predicated, in substantial part, upon the accuracy of these representations:

(a)The Optionee is an “accredited investor” within the meaning of Rule 501(a)(4), (5) or (6) of the Securities Act.

(b)The Optionee is acquiring the Option and, if and when he exercises the Option, will acquire the Shares solely for the Optionee’s own account, for investment purposes only, and not with a view to or an intent to sell, or to offer for resale in connection with any unregistered distribution, all or

any portion of the Shares or Option within the meaning of the Securities Act and/or any applicable state securities laws.

(c)The Optionee acknowledges that he has not acquired the Option or the Shares as a result of any general solicitation or general advertising in the United States, including any meeting whose attendees have been invited by general solicitation or general advertising.

(d)The Optionee has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the Option and the restrictions imposed on any Shares purchased upon exercise of the Option. The Optionee has been furnished with, and/or has access to, such information as he considers necessary or appropriate for deciding whether to exercise the Option and purchase the Shares. However, in evaluating the merits and risks of an investment in the Shares, the Optionee has and will rely only upon the advice of his own legal counsel, tax advisors, and/or investment advisors.

(e)The Optionee is aware that the Option may be of no practical value, that any value it may have depends on its vesting and exercisability as well as an increase in the Fair Market Value of the underlying Shares to an amount in excess of the Option Price, and that any investment in common shares of a closely held corporation such as the Company is non-marketable, non-transferable and could require capital to be invested for an indefinite period of time, possibly without return, and at substantial risk of loss.

(f)The Optionee understands that the Option and the Shares are being offered in an acquisition not involving any public offering within the United States within the meaning of the Securities Act and that the Option and the Shares have not been and will not be registered under the Securities Act, and that the Option and the Shares are “restricted securities” as defined by Rule 144(a)(3) under the Securities Act, and that, under such laws and applicable regulations, such securities may be resold without registration under the Securities Act only in certain limited circumstances, including in accordance with the conditions of Rule 144 promulgated under the Securities Act or in an offshore acquisition meeting the requirements of Rule 903 or 904 of Regulation S under the Securities Act, each as presently in effect. The Optionee acknowledges reviewing a copy of Rule 144 promulgated under the Securities Act and Regulation S under the Securities Act, as presently in effect, and represents that he is familiar with such rule, and understands the resale limitations imposed thereby and by the Securities Act and the applicable state securities law.

(g)The Optionee agrees that he will comply with all applicable laws and regulations in effect in any jurisdiction in which he sells any of the securities or otherwise transfers any interest therein.

(h)The Optionee has read and understands the restrictions and limitations set forth in the Securityholders Agreement, the Plan and this Agreement.

(i)The Optionee understands and acknowledges that, if and when he exercises the Option, (i) any certificate evidencing the Shares (or evidencing any other securities issued with respect thereto pursuant to any stock split, stock dividend, merger or other form of reorganization or recapitalization) when issued shall bear any legends which may be required by applicable federal and state securities laws, and (ii) except as otherwise provided under the Securityholders Agreement, the Company has no obligation to register the Shares or file any registration statement under federal or state securities laws.

Section 9.Designation of Beneficiary. The Optionee may appoint any individual or legal entity in writing as his beneficiary to receive any Option (to the extent not previously terminated or forfeited) under this Agreement upon the Optionee’s death or Disability. The Optionee may revoke his designation of a beneficiary at any time and appoint a new beneficiary in writing. To be effective, the Optionee must complete the designation of a beneficiary or revocation of a beneficiary by written notice to the Company under Section 10 of this Agreement before the date of the Optionee’s death. In the

absence of a beneficiary designation, the legal representative of the Optionee’s estate shall be deemed the beneficiary.

Section 10.Notices. All notices, claims, certifications, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given and delivered if personally delivered or if sent by nationally-recognized overnight courier, by telecopy, or by registered or certified mail, return receipt requested and postage prepaid, addressed as follows:

If to the Company, to:

AP Gaming Holdco, Inc.

5475 South Decatur Blvd., Suite 100

Las Vegas, NV 89118

Facsimile: (702) 722-6705

Attention: Vic Gallo

with a copy (which shall not constitute notice) to:

Apollo Management, L.P.

9 West 57th Street

43rd Floor

New York, New York 10019

Facsimile: (646) 350-1501

Attention: David Sambur

If to the Optionee, at the last address in the records of the Company; or, in all cases, to such other address as the party to whom notice is to be given may have furnished to the other party in writing in accordance herewith.

Any such notice or other communication shall be deemed to have been received (a) in the case of personal delivery, on the date of such delivery (or if such date is not a business day, on the next business day after the date of delivery), (b) in the case of nationally-recognized overnight courier, on the next business day after the date sent, (c) in the case of telecopy transmission, when received (or if not sent on a business day, on the next business day after the date sent), and (d) in the case of mailing, on the third business day following that on which the piece of mail containing such communication is posted.

Section 11.Waiver of Breach. The waiver by either party of a breach of any provision of this Agreement must be in writing and shall not operate or be construed as a waiver of any other or subsequent breach.

Section 12.Optionee’s Undertaking. The Optionee hereby agrees to take whatever additional actions and execute whatever additional documents the Company may in its reasonable judgment deem necessary or advisable in order to carry out or effect one or more of the obligations or restrictions imposed on the Optionee pursuant to the express provisions of this Agreement and the Plan; provided, however, that such additional actions and documents are consistent with the terms of this Agreement.

Section 13.Modification of Rights. The rights of the Optionee are subject to modification and termination in certain events as provided in this Agreement and the Plan (with respect to

the Option granted hereby). Notwithstanding the foregoing, the Optionee’s rights under this Agreement and the Plan may not be materially impaired without the Optionee’s prior written consent.

Section 14.Governing Law. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE OF DELAWARE OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE TO BE APPLIED. IN FURTHERANCE OF THE FOREGOING, THE INTERNAL LAW OF THE STATE OF DELAWARE WILL CONTROL THE INTERPRETATION AND CONSTRUCTION OF THIS AGREEMENT, EVEN IF UNDER SUCH JURISDICTION’S CHOICE OF LAW OR CONFLICT OF LAW ANALYSIS, THE SUBSTANTIVE LAW OF ANOTHER JURISDICTION WOULD ORDINARILY APPLY.

Section 15.Restrictive Covenants. The grant, vesting and exercise of the Option pursuant to this Agreement shall be subject to the Optionee’s continued compliance with the restrictive covenants in Section 9 of the Securityholders Agreement and the restrictive covenants set forth in any individual agreement between the Optionee and the Company (or one of its Affiliates).

Section 16.Withholding. As a condition to exercising this Option in whole or in part, the Optionee will pay, or make provisions satisfactory to the Company for payment of, any federal, state and local taxes required to be withheld in connection with such exercise.

Section 17.Counterparts. This Agreement may be executed in one or more counterparts, and each such counterpart shall be deemed to be an original, but all such counterparts together shall constitute but one agreement.

Section 18.Entire Agreement. This Agreement and the Plan (and the other writings referred to herein) constitute the entire agreement between the parties with respect to the subject matter hereof and thereof and supersede all prior written or oral negotiations, commitments, representations and agreements with respect thereto.

Section 19.Severability. It is the desire and intent of the parties hereto that the provisions of this Agreement be enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. Accordingly, if any particular provision of this Agreement shall be adjudicated by a court of competent jurisdiction to be invalid, prohibited or unenforceable for any reason, such provision, as to such jurisdiction, shall be ineffective, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction. Notwithstanding the foregoing, if such provision could be more narrowly drawn so as not to be invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.

Section 20.Waiver of Jury Trial. Each party hereto hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, trial by jury in any suit, action or proceeding arising hereunder.

[Signature Page Follows]

IN WITNESS WHEREOF, the parties hereto have executed this Nonqualified Stock Option Agreement as of the date first written above.

AP GAMING HOLDCO, INC.
By:	/s/ David Lopez
Name:	David Lopez
Title:	CEO, President & Secretary
OPTIONEE
	/s/ Mauro Franic
Name:	Mauro Franic

Number of Shares of Common Stock

subject to the Option:20,000

Option Price:$15.70 each

[Signature Page to Option Agreement]

EX-10.18

Exhibit 10.18

NONQUALIFIED STOCK OPTION AGREEMENT (this “Agreement”) dated as of July 17, 2015, between AP GAMING HOLDCO, INC., a Delaware corporation (the “Company”), and the Optionee set forth on the signature page to this Agreement (the “Optionee”).

WHEREAS, the Company, acting through the Company’s Board of Directors (the “Board”) has agreed to grant to the Optionee, effective on the date hereof (the “Grant Date”), an option under the AP Gaming Holdco, Inc. 2014 Long-Term Incentive Plan (the “Plan”) (capitalized terms used herein and not otherwise defined herein shall have the respective meanings ascribed thereto in the Plan or the Securityholders Agreement (as defined in the Plan), as the case may be) to purchase a number of shares of Common Stock (“Shares”) on the terms and subject to the conditions set forth in this Agreement and the Plan; and

WHEREAS, future securities in the Company (including those being acquired pursuant to this Agreement) owned by the Optionee shall be subject to the terms of the Securityholders Agreement.

NOW, THEREFORE, in consideration of the promises and of the mutual agreements contained in this Agreement, the parties hereto hereby agree as follows:

Section 1.The Plan. The terms and provisions of the Plan are hereby incorporated into this Agreement as if set forth herein in their entirety. In the event of a conflict between any provision of this Agreement and the Plan, the provisions of the Plan shall control. A copy of the Plan may be obtained from the Company by the Optionee upon request.

Section 2.Option; Option Price. Effective on the Grant Date, on the terms and subject to the conditions of the Plan and this Agreement, the Company hereby grants to the Optionee the option (the “Option”) to purchase Shares at the price per Share (the “Option Price”) and in the amount set forth on the signature page hereto. To the extent permitted by the Board, payment of the Option Price may be made in any manner specified by Section 5.6 of the Plan. The Option is not intended to qualify for federal income tax purposes as an “incentive stock option” within the meaning of Section 422 of the Code.

Section 3.Term. The term of the Option shall commence on the Grant Date and expire on the tenth anniversary of the Grant Date, unless the Option shall have sooner been terminated in accordance with the terms of the Plan or this Agreement.

Section 4.Vesting. Subject to the Optionee’s not having a Termination of Service prior to the applicable vesting date and except as otherwise set forth in Section 7, twenty-five percent (25%) of the Option shall become vested and exercisable on each of the first four anniversaries of the Grant Date. In the event of a Termination of Service by the Company or its Subsidiaries without Cause or as a result of the Optionee’s death or Disability (each, a “Good Leaver Termination”), any portion of the Option which would have vested on the next applicable vesting date shall immediately vest and become exercisable, and any portion of the Option which remains unvested immediately after such accelerated vesting shall be forfeited. In addition, upon a Change in Control, subject to Optionee’s continued employment through the date of the Change in Control, any outstanding unvested portion of the Option shall immediately vest and become exercisable.

Section 5.Restriction on Transfer/Securityholders Agreement. The Option may not be transferred, pledged, assigned, hypothecated or otherwise disposed of in any way by the Optionee, except (i) if permitted by the Board, (ii) by will or the laws of descent and distribution or (iii) pursuant to beneficiary designation procedures approved by the Company. The Option shall not be subject to execution, attachment or similar process. Shares of Common Stock acquired pursuant to the exercise of the Option hereunder will be subject to the Securityholders Agreement. Any attempted assignment, transfer, pledge, hypothecation or other disposition of the Option contrary to the provisions of this Agreement or the Securityholders Agreement shall be null and void and without effect.

Section 6.Optionee’s Employment. Nothing in this Agreement or in the Option shall confer upon the Optionee any right to continue in the employ of the Company or any of its Subsidiaries or interfere in any way with the right of the Company or its Subsidiaries, as the case may be, in its sole discretion, to terminate the Optionee’s employment or to increase or decrease the Optionee’s compensation at any time.

Section 7.Termination.

(a)The Option shall automatically terminate and shall become null and void, be unexercisable and be of no further force and effect upon the earliest of:

(i)the tenth anniversary of the Grant Date;

(ii)the 180th day following the Termination of Service in the case of a Termination of Service due to the Optionee’s death or Disability;

(iii)the 90th day following the Termination of Service in the case of a Termination of Service due to a termination by the Optionee or due to a termination by the Company without Cause; and

(iv)the date of the Termination of Service in the case of a Termination of Service for Cause.

(b)Except as otherwise provided in Section 4 of this Agreement, upon a Termination of Service for any reason, the unvested portion of the Option shall terminate on the date the Termination of Service occurs.

Section 8.Securities Law Representations. The Optionee acknowledges that the Option and the Shares are not being registered under the Securities Act of 1933, as amended (the “Securities Act”), based, in part, on either (i) reliance upon an exemption from registration under Securities and Exchange Commission Rule 701 promulgated under the Securities Act or (ii) the fact that the Optionee is an “accredited investor” (as defined under the Securities Act and the rules and regulations promulgated thereunder), and, in each of clauses (i) and (ii) above, a comparable exemption from qualification under applicable state securities laws, as each may be amended from time to time. The Optionee, by executing this Agreement, hereby makes the following representations to the Company and acknowledges that the Company’s reliance on federal and state securities law exemptions from registration and qualification is predicated, in substantial part, upon the accuracy of these representations:

(a)The Optionee is an “accredited investor” within the meaning of Rule 501(a)(4), (5) or (6) of the Securities Act.

(b)The Optionee is acquiring the Option and, if and when he exercises the Option, will acquire the Shares solely for the Optionee’s own account, for investment purposes only, and not with a view to or an intent to sell, or to offer for resale in connection with any unregistered distribution, all or any portion of the Shares or Option within the meaning of the Securities Act and/or any applicable state securities laws.

(c)The Optionee acknowledges that he has not acquired the Option or the Shares as a result of any general solicitation or general advertising in the United States, including any meeting whose attendees have been invited by general solicitation or general advertising.

(d)The Optionee has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the Option and the restrictions imposed on any Shares purchased upon exercise of the Option. The Optionee has been furnished with, and/or has access to, such information as he considers necessary or appropriate for deciding whether to exercise the Option and purchase the Shares. However, in evaluating the merits and risks of an investment in the Shares, the Optionee has and will rely only upon the advice of his own legal counsel, tax advisors, and/or investment advisors.

(e)The Optionee is aware that the Option may be of no practical value, that any value it may have depends on its vesting and exercisability as well as an increase in the Fair Market Value of the underlying Shares to an amount in excess of the Option Price, and that any investment in common shares of a closely held corporation such as the Company is non-marketable, non-transferable and could require capital to be invested for an indefinite period of time, possibly without return, and at substantial risk of loss.

(f)The Optionee understands that the Option and the Shares are being offered in an acquisition not involving any public offering within the United States within the meaning of the Securities Act and that the Option and the Shares have not been and will not be registered under the Securities Act, and that the Option and the Shares are “restricted securities” as defined by Rule 144(a)(3) under the Securities Act, and that, under such laws and applicable regulations, such securities may be resold without registration under the Securities Act only in certain limited circumstances, including in accordance with the conditions of Rule 144 promulgated under the Securities Act or in an offshore acquisition meeting the requirements of Rule 903 or 904 of Regulation S under the Securities Act, each as presently in effect. The Optionee acknowledges reviewing a copy of Rule 144 promulgated under the Securities Act and Regulation S under the Securities Act, as presently in effect, and represents that he is familiar with such rule, and understands the resale limitations imposed thereby and by the Securities Act and the applicable state securities law.

(g)The Optionee agrees that he will comply with all applicable laws and regulations in effect in any jurisdiction in which he sells any of the securities or otherwise transfers any interest therein.

(h)The Optionee has read and understands the restrictions and limitations set forth in the Securityholders Agreement, the Plan and this Agreement.

(i)The Optionee understands and acknowledges that, if and when he exercises the Option, (i) any certificate evidencing the Shares (or evidencing any other securities issued with respect thereto pursuant to any stock split, stock dividend, merger or other form of reorganization or recapitalization) when issued shall bear any legends which may be required by applicable federal and state securities laws, and (ii) except as otherwise provided under the Securityholders Agreement, the Company has no obligation to register the Shares or file any registration statement under federal or state securities laws.

Section 9.Designation of Beneficiary. The Optionee may appoint any individual or legal entity in writing as his beneficiary to receive any Option (to the extent not previously terminated or forfeited) under this Agreement upon the Optionee’s death or Disability. The Optionee may revoke his designation of a beneficiary at any time and appoint a new beneficiary in writing. To be effective, the Optionee must complete the designation of a beneficiary or revocation of a beneficiary by written notice to the Company under Section 10 of this Agreement before the date of the Optionee’s death. In the absence of a beneficiary designation, the legal representative of the Optionee’s estate shall be deemed the beneficiary.

Section 10.Notices. All notices, claims, certifications, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given and delivered if personally delivered or if sent by nationally-recognized overnight courier, by telecopy, or by registered or certified mail, return receipt requested and postage prepaid, addressed as follows:

If to the Company, to:

AP Gaming Holdco, Inc.

5475 South Decatur Blvd., Suite 100

Las Vegas, NV 89118

Facsimile: (702) 722-6705

Attention: Vic Gallo

with a copy (which shall not constitute notice) to:

Apollo Management, L.P.

9 West 57th Street

43rd Floor

New York, New York 10019

Facsimile: (646) 350-1501

Attention: David Sambur

If to the Optionee, at the last address in the records of the Company; or, in all cases, to such other address as the party to whom notice is to be given may have furnished to the other party in writing in accordance herewith.

Any such notice or other communication shall be deemed to have been received (a) in the case of personal delivery, on the date of such delivery (or if such date is not a business day, on the next business day after the date of delivery), (b) in the case of nationally-recognized overnight courier, on the next business day after the date sent, (c) in the case of telecopy transmission, when received (or if not sent on a business day, on the next business day after the date sent), and (d) in the case of mailing, on the third business day following that on which the piece of mail containing such communication is posted.

Section 11.Waiver of Breach. The waiver by either party of a breach of any provision of this Agreement must be in writing and shall not operate or be construed as a waiver of any other or subsequent breach.

Section 12.Optionee’s Undertaking. The Optionee hereby agrees to take whatever additional actions and execute whatever additional documents the Company may in its reasonable judgment deem necessary or advisable in order to carry out or effect one or more of the obligations or restrictions imposed on the Optionee pursuant to the express provisions of this Agreement and the Plan; provided, however, that such additional actions and documents are consistent with the terms of this Agreement.

Section 13.Modification of Rights. The rights of the Optionee are subject to modification and termination in certain events as provided in this Agreement and the Plan (with respect to the Option granted hereby). Notwithstanding the foregoing, the Optionee’s rights under this Agreement and the Plan may not be materially impaired without the Optionee’s prior written consent.

Section 14.Governing Law. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE (WHETHER

OF THE STATE OF DELAWARE OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE TO BE APPLIED. IN FURTHERANCE OF THE FOREGOING, THE INTERNAL LAW OF THE STATE OF DELAWARE WILL CONTROL THE INTERPRETATION AND CONSTRUCTION OF THIS AGREEMENT, EVEN IF UNDER SUCH JURISDICTION’S CHOICE OF LAW OR CONFLICT OF LAW ANALYSIS, THE SUBSTANTIVE LAW OF ANOTHER JURISDICTION WOULD ORDINARILY APPLY.

Section 15.Restrictive Covenants. The grant, vesting and exercise of the Option pursuant to this Agreement shall be subject to the Optionee’s continued compliance with the restrictive covenants in Section 9 of the Securityholders Agreement and the restrictive covenants set forth in any individual agreement between the Optionee and the Company (or one of its Affiliates).

Section 16.Withholding. As a condition to exercising this Option in whole or in part, the Optionee will pay, or make provisions satisfactory to the Company for payment of, any federal, state and local taxes required to be withheld in connection with such exercise.

Section 17.Counterparts. This Agreement may be executed in one or more counterparts, and each such counterpart shall be deemed to be an original, but all such counterparts together shall constitute but one agreement.

Section 18.Entire Agreement. This Agreement and the Plan (and the other writings referred to herein) constitute the entire agreement between the parties with respect to the subject matter hereof and thereof and supersede all prior written or oral negotiations, commitments, representations and agreements with respect thereto.

Section 19.Severability. It is the desire and intent of the parties hereto that the provisions of this Agreement be enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. Accordingly, if any particular provision of this Agreement shall be adjudicated by a court of competent jurisdiction to be invalid, prohibited or unenforceable for any reason, such provision, as to such jurisdiction, shall be ineffective, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction. Notwithstanding the foregoing, if such provision could be more narrowly drawn so as not to be invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.

Section 20.Waiver of Jury Trial. Each party hereto hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, trial by jury in any suit, action or proceeding arising hereunder.

[Signature Page Follows]

IN WITNESS WHEREOF, the parties hereto have executed this Nonqualified Stock Option Agreement as of the date first written above.

AP GAMING HOLDCO, INC.
By:	/s/ David Lopez
Name:	David Lopez
Title:	CEO, President & Secretary
OPTIONEE
	/s/ Mauro Franic
Name:	Mauro Franic

Number of Shares of Common Stock

subject to the Option:75,000

Option Price:$15.70 each

[Signature Page to Option Agreement]

EX-10.19

Exhibit 10.19

Employment Agreement

THIS EMPLOYMENT AGREEMENT (this “Agreement”) is entered into as of July 1st, 2015 (the “Effective Date”) by and between AGS, LLC, a Delaware limited liability company (the “Company”), and Sigmund Lee (“Executive”).

WHEREAS, the Company desires to employ Executive as its Chief Technology Officer pursuant to the terms of this Agreement; and

WHEREAS, Executive desires to serve in such position.

NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1.Nature of Employment Relationship. Executive’s employment with the Company will be “at-will,” meaning that either Executive or the Company may terminate the employment relationship at any time and for any reason, either with or without cause. The “at-will” nature of Executive’s employment may only be changed in an express written agreement signed by both Executive and a duly authorized officer of the Company.

2.Terms of Employment.

(a)Position; Location. During his employment with the Company, Executive shall serve as Chief Technology Officer of the Company. During his employment, and excluding any periods of vacation and sick leave to which Executive may be entitled, Executive agrees to devote all of his business attention and time to the business and affairs of the Company and, to the extent necessary to discharge the responsibilities assigned to Executive hereunder, to use his reasonable best efforts to perform faithfully and efficiently such responsibilities. Executive agrees that he will not engage in any other gainful employment, business or activity without the written consent of the Company. Executive’s services shall be performed in the Atlanta, Georgia area, subject to reasonable business travel at the Company’s request.

(b)Compensation and Employee Benefits.

(i)Base Salary. Executive shall receive an annual base salary (“Base Salary”) of $300,000, payable in 26 installments in accordance with the Company’s regular payroll practices for salaried employees. The Base Salary and payment schedule are subject to adjustment at the sole discretion of the Company. If the Base Salary is adjusted at the discretion of the Company, the term “Base Salary” shall refer to such adjusted amount.

(ii)Annual Bonus. Executive shall be eligible to receive an annual performance-based bonus pursuant to an annual managerial bonus plan to be established by the Company, with an annual target bonus equal to 75% of Executive’s Base Salary. Actual annual bonus amounts payable under this Section 2(b)(ii) shall be determined by the Company in its sole discretion based on the attainment of financial results and earnings targets for the fiscal year in question. Notwithstanding the preceding provisions of this Section 2(b)(ii), Executive’s annual bonus in respect of (x) the first half of fiscal year 2015 shall be $125,000 (paid no later than the second payroll date following the execution of this Agreement); provided, that if the Executive’s employment with the Company and its affiliates is terminated for any reason other than (A) by

the Company without “cause” (as defined below) or (B) due to Executive’s death or becoming Disabled (as defined below), in either case, prior to the date on which annual bonuses for fiscal year 2015 are paid to other senior executives of the Company in the ordinary course of business, Executive will repay to the Company the after-tax portion of such half-year bonus (i.e, $125,000 less Executive’s income taxes and payroll taxes, as calculated by the Company) within 15 days of such termination, and (y) the second half of fiscal year 2015 shall be determined under the Company’s annual managerial bonus plan as described in the preceding provisions of this Section 2(b)(ii).

(iii)Retention Bonus. The Company shall pay to Executive lump-sum cash retention bonuses of (x) $75,000 on December 31^st, 2015, (y) $150,000 on December 31^st, 2016 and (z) $75,000 on July 1, 2017, provided in each case that executive remains continuously employed with the Company or its affiliates through such dates. The retention bonuses may be paid within five business days of the dates indicated in the previous sentence if necessary for administrative convenience.

(iv)Equity. As soon as reasonably practicable following the Effective Date, Executive shall be granted (a) an option (the “Time-Based Option”) to purchase 75,000 shares of class B non-voting common stock of AP Gaming Holdco, Inc. (“Holdco”) under the AP Gaming Holdco, Inc. 2014 Long-Term Incentive Plan (the “Plan”), subject to Executive’s execution of a nonqualified stock option agreement (the “Time-Based Option Agreement”) and the terms and conditions contained therein and in the Plan, and (b) an option (the “Performance-Based Option”) to purchase 20,000 shares of class B non-voting common stock of Holdco under the Plan, subject to Executive’s execution of a nonqualified stock option agreement (the “Performance-Based Option Agreement”) and the terms and conditions contained therein and in the Plan. Subject to Executive’s continuous employment with the Company or its affiliates, (x) the Time-Based Option shall vest in equal annual installments on each of the first four anniversaries of the Effective Date and (y) the Performance-Based Option shall cliff vest only upon the Board’s determination, made in its sole discretion, that Holdco’s EBITDA for fiscal year 2017 was at least $140,000,000.

(v)Employee Benefit Plans and Vacation. Executive shall be entitled to participate in the employee health benefits plan provided by the Company for employees and eligible family. Executive will also be eligible for participation in the Company’s 401k plan. Executive shall be entitled to four (4) weeks paid vacation annually. Vacation will accrue on a monthly basis. Eligibility for participation in these benefits will be determined by the requirements of the plan(s) in effect at the time Executive commences employment and is subject to adjustment pursuant to the Company’s policies and plans in effect, which may change from time to time. Executive shall also be entitled to participate in employee benefit plans, long term incentive plans, practices, policies and programs generally applicable to employees of the Company on the same terms applicable to similarly situated senior executives of the company.

(vi)Expenses. Executive shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by Executive in accordance with the Company’s policies.

3.Termination of Employment Due to Death or Disability. Executive’s employment shall terminate automatically upon Executive’s death. If the Company determines in good faith that the Executive becomes Disabled during the Employment Period (pursuant to the definition of Disabled set forth below), it may give to Executive written notice in accordance with Section 7(b) of this Agreement of its intention to terminate Executive’s employment. In such event, Executive’s employment with the Company shall terminate effective on the 30th day after receipt of such notice by Executive (the “Disability Effective Date”) unless, within the 30 days after such receipt, Executive returns to full-time performance of Executive’s duties. For purposes of this Agreement, “Disabled” shall mean the absence of Executive from Executive’s duties with

the Company on a full-time basis for 90 business days within a one-year period as a result of incapacity due to mental or physical illness that is determined to be permanent by a physician selected by the Company or its insurers and reasonably acceptable to Executive or Executive’s legal representative.

4.Severance. In the event Executive is terminated by the Company without cause, the Company will pay to Executive severance in an aggregate amount equal to eighteen (18) months of Executive’s Base Salary (as in effect on the date of termination of employment). For purposes of this section, “cause” includes failure to correct underperformance after written notification from the CEO or Board of Directors of the Company (the “Board”), illegal and/or fraudulent conduct, conviction of a felony, a determination that Executive’s involvement with the Company would have a negative impact on the Company’s ability to receive or retain any necessary licenses, willful or material misrepresentation to the Company, or refusal to take any action as reasonably directed by the Board or any individual acting on behalf of or at the direction of the Board. The determination of whether cause exists shall be made by the Board in its sole discretion. Payment of severance pursuant to this section is conditioned and contingent upon (i) the execution and delivery, within 60 days of Executive’s termination of employment, by Executive of a waiver and general release in form and substance reasonably satisfactory to the Company that has become irrevocable in accordance with its terms and (ii) Executive’s continued compliance with the terms of this Agreement. Severance payments will be made in substantially equal installments consistent with the Company’s payroll practices during the twelve-month period following termination of employment, provided that no payments shall be made until the first payroll date following the effective date of such waiver and general release.

5.Restrictive Covenants.

(a)Confidentiality; Work Product. During Executive’s employment with the Company and its subsidiaries and thereafter, Executive will not divulge, transmit or otherwise disclose (except as legally compelled by court order), directly or indirectly, any confidential knowledge or information with respect to the operations, finances, organization or employees of the Company or its affiliates or with respect to trade secret, intellectual property, confidential processes, services, techniques, customers or plans with respect to the Company and its affiliates, and Executive will not use, directly or indirectly, any confidential or trade secret information of the Company and its affiliates for the benefit of anyone other than the Company or its affiliates; provided, however, that Executive’s employment by a subsequent employer while Executive still has knowledge of any such confidential or trade secret information shall not constitute a breach of this provision so long as Executive does not disclose the same to any third party. All new processes, techniques, know-how, inventions, plans, products, patents and devices developed, made or invented by Executive, alone or with others, while an employee of the Company and its subsidiaries that are related to the business of the Company or its affiliates shall be and become the sole property of the Company, and Executive hereby assigns any and all rights therein or thereto to the Company. All files, records, correspondence, memoranda, notes or other documents (including, without limitation, those in computer-readable form) or property relating or belonging to the Company and its affiliates, whether prepared by Executive or otherwise coming into his possession in the course of the performance of his services, shall be the exclusive property of the Company and shall be delivered to the Company and not retained by Executive (including, without limitation, any copies thereof) upon termination of employment for any reason whatsoever.

(b)Noncompetition. While employed by the Company and its subsidiaries and for a period of twenty-four (24) months thereafter (the “Restricted Period”), Executive shall not directly or indirectly, own, manage, operate, control, consult with, be employed by, participate in the ownership, management, operation or control of, or otherwise render services to or engage in, any business that engages in any line of business conducted by the Company and its subsidiaries during the Covered Period (defined below) within

any jurisdiction or marketing area in which the Company or any of its subsidiaries is doing business or has invested and established good will in demonstrating an intent to do business during the Covered Period (a “Competitive Business”); provided that Executive’s ownership of securities of 2% or less of any publicly traded class of securities of a public company shall not violate this Section 5(b). The “Covered Period” shall mean the period beginning as of the Effective Date and ending as of the end of the sixth month following the termination of the Executive’s employment for any reason.

(c)Nonsolicitation. During the Restricted Period, Executive shall not, directly or indirectly, (i) solicit for employment any individual who is then an employee of the Company or its subsidiaries or who was an employee of the Company or its subsidiaries within the 12 months prior to the termination of Executive’s employment (a “Covered Employee”), or (ii) contract for, hire or employ any Covered Employee earning at least $100,000 in annualized base compensation as of the Covered Employee’s most recent date of employment with the Company. During the Restricted Period, the Executive shall also not take any action that could reasonably be expected to have the effect of encouraging or inducing any employee, representative, officer or director of the Company or any of its subsidiaries to cease his or her relationship with the Company or any of its subsidiaries for any reason. In addition, during the Restricted Period, the Executive shall not, with respect to providing services in a Competitive Business, solicit for business or accept the business of, any person or entity who is, or was at any time within the 12 months prior to the termination of Executive’s employment, a customer of the business conducted by the Company (or potential customer with whom the Company had initiated contact) or its affiliates.

(d)Nondisparagement. At all times during Executive’s employment and thereafter, Executive shall refrain from all conduct, verbal or otherwise, that disparages or damages the reputation, goodwill, or standing in the community of Apollo Management VIII, LP (“Apollo”), the Company or any of their respective affiliates; and at all times during Executive’s employment and thereafter, the Company and its subsidiaries will, subject to requirements of law, refrain from all conduct, verbal or otherwise, that disparages or damages the reputation, goodwill, or standing in the community of Executive.

(e)Representations. Executive represents to the Company and its affiliates that, in fulfilling his duties or responsibilities to the Company and its affiliates or for any other reason, he will not disclose or disseminate any information from any of his former employers that would be considered by such former employers to be confidential information. In addition, he represents that, except as previously disclosed to AGS in writing, he is not subject to any covenant not to compete that would limit his ability to fulfill his duties and responsibilities hereunder.

(f)Remedies. The parties agree that the provisions of Sections 5(a), 5(b), 5(c) and 5(d) (the “Covenants”) have been specifically negotiated by sophisticated commercial parties and agree that all such provisions are reasonable under the circumstances of the activities contemplated by this Agreement. Executive acknowledges and agrees that the Covenants are reasonable in light of all of the circumstances, are sufficiently limited to protect the legitimate interests of the Company and its affiliates, impose no undue hardship on Executive, and are not injurious to the public, and further acknowledges and agrees that Executive’s breach of the Covenants will cause the Company irreparable harm, which cannot be adequately compensated by money damages, and that if the Company elects to prevent Executive from breaching such provisions by obtaining an injunction against Executive, there is a reasonable probability of the Company’s eventual success on the merits. Accordingly, notwithstanding Section 7(a) of this Agreement, Executive consents and agrees that if the Executive commits any such breach or threatens to commit any breach, the Company shall be entitled to temporary and permanent injunctive relief from a court of competent jurisdiction, without posting any bond or other security and without the necessity of proof of actual damage, in addition to, and not in lieu of, such other remedies as may be available to the Company for such breach, including

the recovery of money damages. In the event that the Covenants shall be determined by any court of competent jurisdiction to be unenforceable by reason of their extending for too great a period of time or over too great a geographical area or by reason of their being too extensive in any other respect, they shall be interpreted to extend only over the maximum period of time for which they may be enforceable and/or over the maximum geographical area as to which they may be enforceable and/or to the maximum extent in all other respects as to which they may be enforceable, all as determined by such court in such action.

(g)Survival. The provisions of this Section 5 shall survive termination of employment for any reason.

6.Successors. This Agreement is personal to Executive and without the prior written consent of the Company shall not be assignable by Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by Executive’s legal representatives. This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns. The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, “Company” shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid that assumes and agrees to perform this Agreement by operation of law, or otherwise.

7.Miscellaneous.

(a)Governing Law and Dispute Resolution. This Agreement shall be governed by and construed in accordance with the laws of the State of Nevada, without reference to principles of conflict of laws. Subject to Section 5(f) of this Agreement, Executive specifically agrees and consents that any controversy or claim arising out of or relating to this Agreement shall be settled by final, binding and nonappealable arbitration in Las Vegas, Nevada. Subject to the following provisions, any such arbitration shall be conducted in accordance with the rules of the American Arbitration Association then in effect. Any award entered by the arbitrators shall be final, binding and nonappealable and judgment may be entered thereon by either party in accordance with applicable law in any court of competent jurisdiction. This arbitration provision shall be specifically enforceable. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement.

(b)Notices. All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, or by electronic mail addressed as follows:

If to the Executive: To the most recent address on file with the Company.

If to the Company, to:

AGS, LLC

ATTN: LEGAL DEPARTMENT

5475 S. Decatur Blvd. Ste. 100

Las Vegas, NV 89118

Email: legal@playags.com

Attention: Vic Gallo

or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notice and communications shall be effective when actually received by the addressee.

(c)Tax Withholding. The Company may withhold from any amounts payable under this Agreement such Federal, state, local or foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation.

(d)Section 409A. It is intended that payments and benefits made or provided under this Agreement shall comply with Section 409A or an exemption thereto. For purposes of the limitations on nonqualified deferred compensation under Section 409A, each payment of compensation under this Agreement shall be treated as a separate payment of compensation for purposes of applying the exclusion under Section 409A for short-term deferral amounts, the separation pay exception or any other exception or exclusion under Section 409A. All payments to be made upon a termination of employment under this Agreement may only be made upon a “separation from service” under Section 409A to the extent necessary in order to avoid the imposition of penalty taxes on the Executive pursuant to Section 409A. In no event may the Executive, directly or indirectly, designate the calendar year of any payment under this Agreement. Notwithstanding anything to the contrary in this Agreement, all reimbursements and in-kind benefits provided under this Agreement that are subject to Section 409A shall be made in accordance with the requirements of Section 409A, including, where applicable, the requirement that (i) any reimbursement is for expenses incurred during the Executive’s lifetime (or during a shorter period of time specified in this Agreement); (ii) the amount of expenses eligible for reimbursement, or in-kind benefits provided, during a calendar year may not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other calendar year; (iii) the reimbursement of an eligible expense will be made no later than the last day of the calendar year following the year in which the expense is incurred; and (iv) the right to reimbursement or in-kind benefits is not subject to liquidation or exchange for another benefit. Without limiting the generality of the foregoing, to the extent required in order to comply with Section 409A, amounts and benefits to be paid or provided under Section 4 of this Agreement during the period between the Executive’s termination of service with the Company and the six-month anniversary thereof, shall be paid or provided to the Executive on the first business day after the date that is six months following the date of such termination.

(e)Entire Agreement; Amendment. This Agreement constitutes the entire agreement and understanding between the Company and Executive with respect to the subject matter hereof and supersedes all prior agreements and understandings (whether written or oral), between Executive and the Company or its affiliates, relating to such subject matter (including, without limitation, Executive's prior employment agreement dated as of November 6, 2012). This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives.

[Signature Page Follows]

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

AGS, LLC

By: AGS Capital, LLC

its Sole Member and Manager

By:	/s/ David Lopez
Name:	David Lopez
Title:	Chief Executive officer

EXECUTIVE

/s/ Sigmund Lee

Sigmund Lee

EX-10.20

Exhibit 10.20

NONQUALIFIED STOCK OPTION AGREEMENT (this “Agreement”) dated as of July 17, 2015, between AP GAMING HOLDCO, INC., a Delaware corporation (the “Company”), and the Optionee set forth on the signature page to this Agreement (the “Optionee”).

WHEREAS, the Company, acting through the Company’s Board of Directors (the “Board”) has agreed to grant to the Optionee, effective on the date hereof (the “Grant Date”), an option under the AP Gaming Holdco, Inc. 2014 Long-Term Incentive Plan (the “Plan”) (capitalized terms used herein and not otherwise defined herein shall have the respective meanings ascribed thereto in the Plan or the Securityholders Agreement (as defined in the Plan), as the case may be) to purchase a number of shares of Common Stock (“Shares”) on the terms and subject to the conditions set forth in this Agreement and the Plan; and

WHEREAS, future securities in the Company (including those being acquired pursuant to this Agreement) owned by the Optionee shall be subject to the terms of the Securityholders Agreement.

NOW, THEREFORE, in consideration of the promises and of the mutual agreements contained in this Agreement, the parties hereto hereby agree as follows:

Section 1.The Plan. The terms and provisions of the Plan are hereby incorporated into this Agreement as if set forth herein in their entirety. In the event of a conflict between any provision of this Agreement and the Plan, the provisions of the Plan shall control. A copy of the Plan may be obtained from the Company by the Optionee upon request.

Section 2.Option; Option Price. Effective on the Grant Date, on the terms and subject to the conditions of the Plan and this Agreement, the Company hereby grants to the Optionee the option (the “Option”) to purchase Shares at the price per Share (the “Option Price”) and in the amount set forth on the signature page hereto. To the extent permitted by the Board, payment of the Option Price may be made in any manner specified by Section 5.6 of the Plan. The Option is not intended to qualify for federal income tax purposes as an “incentive stock option” within the meaning of Section 422 of the Code.

Section 3.Term. The term of the Option shall commence on the Grant Date and expire on the tenth anniversary of the Grant Date, unless the Option shall have sooner been terminated in accordance with the terms of the Plan or this Agreement.

Section 4.Vesting. Subject to the Optionee’s not having a Termination of Service prior to the applicable vesting date and except as otherwise set forth in Section 7, twenty-five percent (25%) of the Option shall become vested and exercisable on each of the first four anniversaries of the Grant Date. In the event of a Termination of Service by the Company or its Subsidiaries without Cause or as a result of the Optionee’s death or Disability (each, a “Good Leaver Termination”), any portion of the Option which would have vested on the next applicable vesting date shall immediately vest and become exercisable, and any portion of the Option which remains unvested immediately after such accelerated vesting shall be forfeited. In addition, upon a Change in Control, subject to Optionee’s continued employment through the date of the Change in Control, any outstanding unvested portion of the Option shall immediately vest and become exercisable.

Section 5.Restriction on Transfer/Securityholders Agreement. The Option may not be transferred, pledged, assigned, hypothecated or otherwise disposed of in any way by the Optionee, except (i) if permitted by the Board, (ii) by will or the laws of descent and distribution or (iii) pursuant to beneficiary designation procedures approved by the Company. The Option shall not be subject to execution, attachment or similar process. Shares of Common Stock acquired pursuant to the exercise of the Option hereunder will be subject to the Securityholders Agreement. Any attempted assignment, transfer, pledge, hypothecation or other disposition of the Option contrary to the provisions of this Agreement or the Securityholders Agreement shall be null and void and without effect.

Section 6.Optionee’s Employment. Nothing in this Agreement or in the Option shall confer upon the Optionee any right to continue in the employ of the Company or any of its Subsidiaries or interfere in any way with the right of the Company or its Subsidiaries, as the case may be, in its sole discretion, to terminate the Optionee’s employment or to increase or decrease the Optionee’s compensation at any time.

Section 7.Termination.

(a)The Option shall automatically terminate and shall become null and void, be unexercisable and be of no further force and effect upon the earliest of:

(i)the tenth anniversary of the Grant Date;

(ii)the 180th day following the Termination of Service in the case of a Termination of Service due to the Optionee’s death or Disability;

(iii)the 90th day following the Termination of Service in the case of a Termination of Service due to a termination by the Optionee or due to a termination by the Company without Cause; and

(iv)the date of the Termination of Service in the case of a Termination of Service for Cause.

(b)Except as otherwise provided in Section 4 of this Agreement, upon a Termination of Service for any reason, the unvested portion of the Option shall terminate on the date the Termination of Service occurs.

Section 8.Securities Law Representations. The Optionee acknowledges that the Option and the Shares are not being registered under the Securities Act of 1933, as amended (the “Securities Act”), based, in part, on either (i) reliance upon an exemption from registration under Securities and Exchange Commission Rule 701 promulgated under the Securities Act or (ii) the fact that the Optionee is an “accredited investor” (as defined under the Securities Act and the rules and regulations promulgated thereunder), and, in each of clauses (i) and (ii) above, a comparable exemption from qualification under applicable state securities laws, as each may be amended from time to time. The Optionee, by executing this Agreement, hereby makes the following representations to the Company and acknowledges that the Company’s reliance on federal and state securities law exemptions from registration and qualification is predicated, in substantial part, upon the accuracy of these representations:

(a)The Optionee is an “accredited investor” within the meaning of Rule 501(a)(4), (5) or (6) of the Securities Act.

(b)The Optionee is acquiring the Option and, if and when he exercises the Option, will acquire the Shares solely for the Optionee’s own account, for investment purposes only, and not with a view to or an intent to sell, or to offer for resale in connection with any unregistered distribution, all or any portion of the Shares or Option within the meaning of the Securities Act and/or any applicable state securities laws.

(c)The Optionee acknowledges that he has not acquired the Option or the Shares as a result of any general solicitation or general advertising in the United States, including any meeting whose attendees have been invited by general solicitation or general advertising.

(d)The Optionee has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the Option and the restrictions imposed on any Shares purchased upon exercise of the Option. The Optionee has been furnished with, and/or has access to, such information as he considers necessary or appropriate for deciding whether to exercise the Option and purchase the Shares. However, in evaluating the merits and risks of an investment in the Shares, the Optionee has and will rely only upon the advice of his own legal counsel, tax advisors, and/or investment advisors.

(e)The Optionee is aware that the Option may be of no practical value, that any value it may have depends on its vesting and exercisability as well as an increase in the Fair Market Value of the underlying Shares to an amount in excess of the Option Price, and that any investment in common shares of a closely held corporation such as the Company is non-marketable, non-transferable and could require capital to be invested for an indefinite period of time, possibly without return, and at substantial risk of loss.

(f)The Optionee understands that the Option and the Shares are being offered in an acquisition not involving any public offering within the United States within the meaning of the Securities Act and that the Option and the Shares have not been and will not be registered under the Securities Act, and that the Option and the Shares are “restricted securities” as defined by Rule 144(a)(3) under the Securities Act, and that, under such laws and applicable regulations, such securities may be resold without registration under the Securities Act only in certain limited circumstances, including in accordance with the conditions of Rule 144 promulgated under the Securities Act or in an offshore acquisition meeting the requirements of Rule 903 or 904 of Regulation S under the Securities Act, each as presently in effect. The Optionee acknowledges reviewing a copy of Rule 144 promulgated under the Securities Act and Regulation S under the Securities Act, as presently in effect, and represents that he is familiar with such rule, and understands the resale limitations imposed thereby and by the Securities Act and the applicable state securities law.

(g)The Optionee agrees that he will comply with all applicable laws and regulations in effect in any jurisdiction in which he sells any of the securities or otherwise transfers any interest therein.

(h)The Optionee has read and understands the restrictions and limitations set forth in the Securityholders Agreement, the Plan and this Agreement.

(i)The Optionee understands and acknowledges that, if and when he exercises the Option, (i) any certificate evidencing the Shares (or evidencing any other securities issued with respect thereto pursuant to any stock split, stock dividend, merger or other form of reorganization or recapitalization) when issued shall bear any legends which may be required by applicable federal and state securities laws, and (ii) except as otherwise provided under the Securityholders Agreement, the Company has no obligation to register the Shares or file any registration statement under federal or state securities laws.

Section 9.Designation of Beneficiary. The Optionee may appoint any individual or legal entity in writing as his beneficiary to receive any Option (to the extent not previously terminated or forfeited) under this Agreement upon the Optionee’s death or Disability. The Optionee may revoke his designation of a beneficiary at any time and appoint a new beneficiary in writing. To be effective, the Optionee must complete the designation of a beneficiary or revocation of a beneficiary by written notice to the Company under Section 10 of this Agreement before the date of the Optionee’s death. In the absence of a beneficiary designation, the legal representative of the Optionee’s estate shall be deemed the beneficiary.

Section 10.Notices. All notices, claims, certifications, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given and delivered if personally delivered or if sent by nationally-recognized overnight courier, by telecopy, or by registered or certified mail, return receipt requested and postage prepaid, addressed as follows:

If to the Company, to:

AP Gaming Holdco, Inc.

5475 South Decatur Blvd., Suite 100

Las Vegas, NV 89118

Facsimile: (702) 722-6705

Attention: Vic Gallo

with a copy (which shall not constitute notice) to:

Apollo Management, L.P.

9 West 57th Street

43rd Floor

New York, New York 10019

Facsimile: (646) 350-1501

Attention: David Sambur

If to the Optionee, at the last address in the records of the Company; or, in all cases, to such other address as the party to whom notice is to be given may have furnished to the other party in writing in accordance herewith.

Any such notice or other communication shall be deemed to have been received (a) in the case of personal delivery, on the date of such delivery (or if such date is not a business day, on the next business day after the date of delivery), (b) in the case of nationally-recognized overnight courier, on the next business day after the date sent, (c) in the case of telecopy transmission, when received (or if not sent on a business day, on the next business day after the date sent), and (d) in the case of mailing, on the third business day following that on which the piece of mail containing such communication is posted.

Section 11.Waiver of Breach. The waiver by either party of a breach of any provision of this Agreement must be in writing and shall not operate or be construed as a waiver of any other or subsequent breach.

Section 12.Optionee’s Undertaking. The Optionee hereby agrees to take whatever additional actions and execute whatever additional documents the Company may in its reasonable judgment deem necessary or advisable in order to carry out or effect one or more of the obligations or restrictions imposed on the Optionee pursuant to the express provisions of this Agreement and the Plan; provided, however, that such additional actions and documents are consistent with the terms of this Agreement.

Section 13.Modification of Rights. The rights of the Optionee are subject to modification and termination in certain events as provided in this Agreement and the Plan (with respect to the Option granted hereby). Notwithstanding the foregoing, the Optionee’s rights under this Agreement and the Plan may not be materially impaired without the Optionee’s prior written consent.

Section 14.Governing Law. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE (WHETHER

OF THE STATE OF DELAWARE OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE TO BE APPLIED. IN FURTHERANCE OF THE FOREGOING, THE INTERNAL LAW OF THE STATE OF DELAWARE WILL CONTROL THE INTERPRETATION AND CONSTRUCTION OF THIS AGREEMENT, EVEN IF UNDER SUCH JURISDICTION’S CHOICE OF LAW OR CONFLICT OF LAW ANALYSIS, THE SUBSTANTIVE LAW OF ANOTHER JURISDICTION WOULD ORDINARILY APPLY.

Section 15.Restrictive Covenants. The grant, vesting and exercise of the Option pursuant to this Agreement shall be subject to the Optionee’s continued compliance with the restrictive covenants in Section 9 of the Securityholders Agreement and the restrictive covenants set forth in any individual agreement between the Optionee and the Company (or one of its Affiliates).

Section 16.Withholding. As a condition to exercising this Option in whole or in part, the Optionee will pay, or make provisions satisfactory to the Company for payment of, any federal, state and local taxes required to be withheld in connection with such exercise.

Section 17.Counterparts. This Agreement may be executed in one or more counterparts, and each such counterpart shall be deemed to be an original, but all such counterparts together shall constitute but one agreement.

Section 18.Entire Agreement. This Agreement and the Plan (and the other writings referred to herein) constitute the entire agreement between the parties with respect to the subject matter hereof and thereof and supersede all prior written or oral negotiations, commitments, representations and agreements with respect thereto.

Section 19.Severability. It is the desire and intent of the parties hereto that the provisions of this Agreement be enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. Accordingly, if any particular provision of this Agreement shall be adjudicated by a court of competent jurisdiction to be invalid, prohibited or unenforceable for any reason, such provision, as to such jurisdiction, shall be ineffective, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction. Notwithstanding the foregoing, if such provision could be more narrowly drawn so as not to be invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.

Section 20.Waiver of Jury Trial. Each party hereto hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, trial by jury in any suit, action or proceeding arising hereunder.

[Signature Page Follows]

IN WITNESS WHEREOF, the parties hereto have executed this Nonqualified Stock Option Agreement as of the date first written above.

AP GAMING HOLDCO, INC.
By:	/s/ David Lopez
Name:	David Lopez
Title:	CEO, President & Secretary
OPTIONEE
	/s/ Sigmund Lee
Name:	Sigmund Lee

Number of Shares of Common Stock

subject to the Option:75,000

Option Price:$15.70 each

[Signature Page to Option Agreement]

EX-10.21

Exhibit 10.21

NONQUALIFIED STOCK OPTION AGREEMENT (this “Agreement”) dated as of July 17, 2015, between AP GAMING HOLDCO, INC., a Delaware corporation (the “Company”), and the Optionee set forth on the signature page to this Agreement (the “Optionee”).

WHEREAS, the Company, acting through the Company’s Board of Directors (the “Board”) has agreed to grant to the Optionee, effective on the date hereof (the “Grant Date”), an option under the AP Gaming Holdco, Inc. 2014 Long-Term Incentive Plan (the “Plan”) (capitalized terms used herein and not otherwise defined herein shall have the respective meanings ascribed thereto in the Plan or the Securityholders Agreement (as defined in the Plan), as the case may be) to purchase a number of shares of Common Stock (“Shares”) on the terms and subject to the conditions set forth in this Agreement and the Plan; and

WHEREAS, future securities in the Company (including those being acquired pursuant to this Agreement) owned by the Optionee shall be subject to the terms of the Securityholders Agreement.

NOW, THEREFORE, in consideration of the promises and of the mutual agreements contained in this Agreement, the parties hereto hereby agree as follows:

Section 1.The Plan. The terms and provisions of the Plan are hereby incorporated into this Agreement as if set forth herein in their entirety. In the event of a conflict between any provision of this Agreement and the Plan, the provisions of the Plan shall control. A copy of the Plan may be obtained from the Company by the Optionee upon request.

Section 2.Option; Option Price. Effective on the Grant Date, on the terms and subject to the conditions of the Plan and this Agreement, the Company hereby grants to the Optionee the option (the “Option”) to purchase Shares at the price per Share (the “Option Price”) and in the amount set forth on the signature page hereto. To the extent permitted by the Board, payment of the Option Price may be made in any manner specified by Section 5.6 of the Plan. The Option is not intended to qualify for federal income tax purposes as an “incentive stock option” within the meaning of Section 422 of the Code.

Section 3.Term. The term of the Option shall commence on the Grant Date and expire on the tenth anniversary of the Grant Date, unless the Option shall have sooner been terminated in accordance with the terms of the Plan or this Agreement.

Section 4.Vesting. Subject to the Optionee’s not having a Termination of Service prior to the applicable vesting date and except as otherwise set forth in Section 7, the Option shall become vested and exercisable only upon the Board’s determination, made in its sole discretion, that the Company’s EBITDA (calculated for all purposes under this Agreement in a manner consistent with that set forth in the First Lien Credit Agreement, dated as of December 20, 2013, by and between AP Gaming Holdings, LLC, AP Gaming I, LLC, Citicorp North America, Inc. and the other parties thereto) for fiscal year 2017 is at least $140,000,000. In the event a Change in Control occurs prior to the Board’s determination of the Company’s EBITDA for fiscal year 2017, subject to the Optionee’s continued employment through the date of the Change in Control (the “Closing Date”), the Option shall immediately vest and become exercisable upon the Closing Date if and only if the Board determines, in its sole discretion, that the Company’s EBITDA for the twelve-month period preceding the Closing Date is at least $140,000,000. All

decisions by the Board with respect to any calculations pursuant to this Section 4 (absent manifest error), including determination of EBITDA, shall be final and binding on the Optionee.

Section 5.Restriction on Transfer/Securityholders Agreement. The Option may not be transferred, pledged, assigned, hypothecated or otherwise disposed of in any way by the Optionee, except (i) if permitted by the Board, (ii) by will or the laws of descent and distribution or (iii) pursuant to beneficiary designation procedures approved by the Company. The Option shall not be subject to execution, attachment or similar process. Shares of Common Stock acquired pursuant to the exercise of the Option hereunder will be subject to the Securityholders Agreement. Any attempted assignment, transfer, pledge, hypothecation or other disposition of the Option contrary to the provisions of this Agreement or the Securityholders Agreement shall be null and void and without effect.

Section 6.Optionee’s Employment. Nothing in this Agreement or in the Option shall confer upon the Optionee any right to continue in the employ of the Company or any of its Subsidiaries or interfere in any way with the right of the Company or its Subsidiaries, as the case may be, in its sole discretion, to terminate the Optionee’s employment or to increase or decrease the Optionee’s compensation at any time.

Section 7.Termination.

(a)The Option shall automatically terminate and shall become null and void, be unexercisable and be of no further force and effect upon the earliest of:

(i)the tenth anniversary of the Grant Date;

(ii)the 180th day following the Termination of Service in the case of a Termination of Service due to the Optionee’s death or Disability;

(iii)the 90th day following the Termination of Service in the case of a Termination of Service due to a termination by the Optionee or due to a termination by the Company without Cause; and

(iv)the date of the Termination of Service in the case of a Termination of Service for Cause.

(b)Except as otherwise provided in Section 4 of this Agreement, upon a Termination of Service for any reason, the unvested portion of the Option shall terminate on the date the Termination of Service occurs.

Section 8.Securities Law Representations. The Optionee acknowledges that the Option and the Shares are not being registered under the Securities Act of 1933, as amended (the “Securities Act”), based, in part, on either (i) reliance upon an exemption from registration under Securities and Exchange Commission Rule 701 promulgated under the Securities Act or (ii) the fact that the Optionee is an “accredited investor” (as defined under the Securities Act and the rules and regulations promulgated thereunder), and, in each of clauses (i) and (ii) above, a comparable exemption from qualification under applicable state securities laws, as each may be amended from time to time. The Optionee, by executing this Agreement, hereby makes the following representations to the Company and acknowledges that the Company’s reliance on federal and state securities law exemptions from registration and qualification is predicated, in substantial part, upon the accuracy of these representations:

(a)The Optionee is an “accredited investor” within the meaning of Rule 501(a)(4), (5) or (6) of the Securities Act.

(b)The Optionee is acquiring the Option and, if and when he exercises the Option, will acquire the Shares solely for the Optionee’s own account, for investment purposes only, and not with a view to or an intent to sell, or to offer for resale in connection with any unregistered distribution, all or

any portion of the Shares or Option within the meaning of the Securities Act and/or any applicable state securities laws.

(c)The Optionee acknowledges that he has not acquired the Option or the Shares as a result of any general solicitation or general advertising in the United States, including any meeting whose attendees have been invited by general solicitation or general advertising.

(d)The Optionee has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the Option and the restrictions imposed on any Shares purchased upon exercise of the Option. The Optionee has been furnished with, and/or has access to, such information as he considers necessary or appropriate for deciding whether to exercise the Option and purchase the Shares. However, in evaluating the merits and risks of an investment in the Shares, the Optionee has and will rely only upon the advice of his own legal counsel, tax advisors, and/or investment advisors.

(e)The Optionee is aware that the Option may be of no practical value, that any value it may have depends on its vesting and exercisability as well as an increase in the Fair Market Value of the underlying Shares to an amount in excess of the Option Price, and that any investment in common shares of a closely held corporation such as the Company is non-marketable, non-transferable and could require capital to be invested for an indefinite period of time, possibly without return, and at substantial risk of loss.

(f)The Optionee understands that the Option and the Shares are being offered in an acquisition not involving any public offering within the United States within the meaning of the Securities Act and that the Option and the Shares have not been and will not be registered under the Securities Act, and that the Option and the Shares are “restricted securities” as defined by Rule 144(a)(3) under the Securities Act, and that, under such laws and applicable regulations, such securities may be resold without registration under the Securities Act only in certain limited circumstances, including in accordance with the conditions of Rule 144 promulgated under the Securities Act or in an offshore acquisition meeting the requirements of Rule 903 or 904 of Regulation S under the Securities Act, each as presently in effect. The Optionee acknowledges reviewing a copy of Rule 144 promulgated under the Securities Act and Regulation S under the Securities Act, as presently in effect, and represents that he is familiar with such rule, and understands the resale limitations imposed thereby and by the Securities Act and the applicable state securities law.

(g)The Optionee agrees that he will comply with all applicable laws and regulations in effect in any jurisdiction in which he sells any of the securities or otherwise transfers any interest therein.

(h)The Optionee has read and understands the restrictions and limitations set forth in the Securityholders Agreement, the Plan and this Agreement.

(i)The Optionee understands and acknowledges that, if and when he exercises the Option, (i) any certificate evidencing the Shares (or evidencing any other securities issued with respect thereto pursuant to any stock split, stock dividend, merger or other form of reorganization or recapitalization) when issued shall bear any legends which may be required by applicable federal and state securities laws, and (ii) except as otherwise provided under the Securityholders Agreement, the Company has no obligation to register the Shares or file any registration statement under federal or state securities laws.

Section 9.Designation of Beneficiary. The Optionee may appoint any individual or legal entity in writing as his beneficiary to receive any Option (to the extent not previously terminated or forfeited) under this Agreement upon the Optionee’s death or Disability. The Optionee may revoke his designation of a beneficiary at any time and appoint a new beneficiary in writing. To be effective, the Optionee must complete the designation of a beneficiary or revocation of a beneficiary by written notice to the Company under Section 10 of this Agreement before the date of the Optionee’s death. In the

absence of a beneficiary designation, the legal representative of the Optionee’s estate shall be deemed the beneficiary.

Section 10.Notices. All notices, claims, certifications, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given and delivered if personally delivered or if sent by nationally-recognized overnight courier, by telecopy, or by registered or certified mail, return receipt requested and postage prepaid, addressed as follows:

If to the Company, to:

AP Gaming Holdco, Inc.

5475 South Decatur Blvd., Suite 100

Las Vegas, NV 89118

Facsimile: (702) 722-6705

Attention: Vic Gallo

with a copy (which shall not constitute notice) to:

Apollo Management, L.P.

9 West 57th Street

43rd Floor

New York, New York 10019

Facsimile: (646) 350-1501

Attention: David Sambur

If to the Optionee, at the last address in the records of the Company; or, in all cases, to such other address as the party to whom notice is to be given may have furnished to the other party in writing in accordance herewith.

Any such notice or other communication shall be deemed to have been received (a) in the case of personal delivery, on the date of such delivery (or if such date is not a business day, on the next business day after the date of delivery), (b) in the case of nationally-recognized overnight courier, on the next business day after the date sent, (c) in the case of telecopy transmission, when received (or if not sent on a business day, on the next business day after the date sent), and (d) in the case of mailing, on the third business day following that on which the piece of mail containing such communication is posted.

Section 11.Waiver of Breach. The waiver by either party of a breach of any provision of this Agreement must be in writing and shall not operate or be construed as a waiver of any other or subsequent breach.

Section 12.Optionee’s Undertaking. The Optionee hereby agrees to take whatever additional actions and execute whatever additional documents the Company may in its reasonable judgment deem necessary or advisable in order to carry out or effect one or more of the obligations or restrictions imposed on the Optionee pursuant to the express provisions of this Agreement and the Plan; provided, however, that such additional actions and documents are consistent with the terms of this Agreement.

Section 13.Modification of Rights. The rights of the Optionee are subject to modification and termination in certain events as provided in this Agreement and the Plan (with respect to the Option granted hereby). Notwithstanding the foregoing, the Optionee’s rights under this Agreement and the Plan may not be materially impaired without the Optionee’s prior written consent.

Section 14.Governing Law. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE OF DELAWARE OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE TO BE APPLIED. IN FURTHERANCE OF THE FOREGOING, THE INTERNAL LAW OF THE STATE OF DELAWARE WILL CONTROL THE INTERPRETATION AND CONSTRUCTION OF THIS AGREEMENT, EVEN IF UNDER SUCH JURISDICTION’S CHOICE OF LAW OR CONFLICT OF LAW ANALYSIS, THE SUBSTANTIVE LAW OF ANOTHER JURISDICTION WOULD ORDINARILY APPLY.

Section 15.Restrictive Covenants. The grant, vesting and exercise of the Option pursuant to this Agreement shall be subject to the Optionee’s continued compliance with the restrictive covenants in Section 9 of the Securityholders Agreement and the restrictive covenants set forth in any individual agreement between the Optionee and the Company (or one of its Affiliates).

Section 16.Withholding. As a condition to exercising this Option in whole or in part, the Optionee will pay, or make provisions satisfactory to the Company for payment of, any federal, state and local taxes required to be withheld in connection with such exercise.

Section 17.Counterparts. This Agreement may be executed in one or more counterparts, and each such counterpart shall be deemed to be an original, but all such counterparts together shall constitute but one agreement.

Section 18.Entire Agreement. This Agreement and the Plan (and the other writings referred to herein) constitute the entire agreement between the parties with respect to the subject matter hereof and thereof and supersede all prior written or oral negotiations, commitments, representations and agreements with respect thereto.

Section 19.Severability. It is the desire and intent of the parties hereto that the provisions of this Agreement be enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. Accordingly, if any particular provision of this Agreement shall be adjudicated by a court of competent jurisdiction to be invalid, prohibited or unenforceable for any reason, such provision, as to such jurisdiction, shall be ineffective, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction. Notwithstanding the foregoing, if such provision could be more narrowly drawn so as not to be invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.

Section 20.Waiver of Jury Trial. Each party hereto hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, trial by jury in any suit, action or proceeding arising hereunder.

[Signature Page Follows]

IN WITNESS WHEREOF, the parties hereto have executed this Nonqualified Stock Option Agreement as of the date first written above.

AP GAMING HOLDCO, INC.
By:	/s/ David Lopez
Name:	David Lopez
Title:	CEO, President & Secretary
OPTIONEE
	/s/ Sigmund Lee
Name:	Sigmund Lee

Number of Shares of Common Stock

subject to the Option:20,000

Option Price:$15.70 each

[Signature Page to Option Agreement]

EX-21.1

Exhibit 21.1

SUBSIDIARIES OF AP GAMING HOLDCO, INC.

As of December 31, 2015

Name	Jurisdiction of Incorporation
AP Gaming, Inc.	Delaware
AP Gaming Holdings, LLC	Delaware
AP Gaming I, LLC	Delaware
AP Gaming II, Inc.	Delaware
APGam Canada ULC	British Columbia
AP Gaming Acquisition, LLC	Delaware
AGS Capital, LLC	Delaware
AGS LLC	Delaware
AGS Partners, LLC	Delaware
AGS Illinois, LLLP	Illinois
AGS CJ Corporation	Delaware
AGS CJ Holdings Corporation	Delaware
Cadillac Jack, Inc.	Georgia
Equipos y Soluciones Tecnologicas Cadillac Jack de Mexico, S. De R.L. De C.V.	Mexico
Operadora de Juegos Cadillac Jack de Mexico, S. De R.L. De C.V.	Mexico
Servicios Administrativos Cadillac Jack de Mexico, S. De R.L. De C.V.	Mexico
Comercializadora de Juegos Cadillac Jack de Mexico S. De R.L. De C.V.	Mexico
PLAYAGS UK Limited	England and Wales
Gamingo Limited	England and Wales
GAMINGO (ISREAL), LTD.	Isreal
AGS Interactive US, INC.	California

EX-31.1

Exhibit 31.1

Certification of Principal Executive Officer

of Periodic Report Pursuant to Rule 13a-14(a) and Rule 15d-14(a)

I, David Lopez, certify that:

1.     I have reviewed this Annual Report on Form 10-K of AP Gaming Holdco, Inc.;

2.     Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.     Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.     The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)   Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

(c)   Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)   Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.     The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)   Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: March 9, 2016

/s/ DAVID LOPEZ

David Lopez

President and Chief Executive Officer

(Principal Executive Officer)

EX-31.2

Exhibit 31.2

Certification of Principal Financial Officer

of Periodic Report Pursuant to Rule 13a-14(a) and Rule 15d-14(a)

I, Kimo Akiona, certify that:

1.     I have reviewed this Annual Report on Form 10-K of AP Gaming Holdco, Inc.;

2.     Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.     Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.     The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)   Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

(c)   Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)   Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.     The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)   Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: March 9, 2016

/s/ KIMO AKIONA

Kimo Akiona

Treasurer

(Principal Financial Officer and Principal Accounting Officer)

EX-32

Exhibit 32

Certification of Principal Executive Officer and Principal Financial Officer

Pursuant to 18 U.S.C. Section 1350

In connection with the Annual Report on Form 10-K of AP Gaming Holdco, Inc. (the "Company") for the year ended December 31, 2015 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), David Lopez, as Chief Executive Officer of the Company, and Kimo Akiona, as Treasurer of the Company, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge:

1.     The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and

2.     The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: March 9, 2016

/s/ DAVID LOPEZ

David Lopez

President and Chief Executive Officer

(Principal Executive Officer)

Date: March 9, 2016

/s/ KIMO AKIONA

Kimo Akiona

Treasurer

(Principal Financial Officer and Principal Accounting Officer)

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to AP Gaming Holdco, Inc. and will be retained by AP Gaming Holdco, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document and Entity Information - USD ($)	12 Months Ended
	Dec. 31, 2015	Feb. 27, 2016	Jun. 30, 2015
Document and Entity Information [Abstract]
Entity Registrant Name	AP Gaming Holdco, Inc.
Entity Central Index Key	0001593548
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Document Type	10-K
Document Period End Date	Dec. 31, 2015
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	FY
Amendment Flag	false
Entity Common Stock, Shares Outstanding		15,039,127
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Public Float			$ 0

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Current assets
Property and equipment, net	$ 66,699	$ 40,769
Goodwill	253,851	77,617
Intangible assets	290,356	101,885
Current liabilities
Accounts payable and accrued liabilities	23,030	23,316
Current maturities of long-term debt	6,919	2,495
Long-term debt	541,120	164,194
Successor [Member]
Current assets
Cash and cash equivalents	35,722	10,680
Restricted cash	100	100
Accounts receivable, net of allowance of $113 and $29, respectively	23,653	9,140
Inventories	7,087	3,175
Prepaid expenses	4,642	2,091
Deposits and other	2,440	2,007
Total current assets	73,644	27,193
Property and equipment, net	66,699	40,769
Deferred loan costs, net	8,144	5,343
Deferred Tax Assets, Net, Noncurrent	37
Goodwill	253,851	77,617
Intangible assets	290,356	101,885
Other assets	26,246	3,345
Total assets	718,977	256,152
Current liabilities
Accounts payable and accrued liabilities	23,030	23,316
Current maturities of long-term debt	6,919	2,495
Deferred tax liability	0	528
Total current liabilities	29,949	26,339
Long-term debt	541,120	164,194
Deferred tax liability - noncurrent	15,347	1,863
Other long-term liabilities	32,024	0
Total liabilities	618,440	192,396
Stockholders’ equity:
Preferred stock at $0.01 par value; 100,000 shares authorized, no shares issued and outstanding	0	0
Common stock at $0.01 par value; 30,000,100 shares authorized; 100 Class A Shares issued and outstanding at December 31, 2015 and 2014, and 14,931,529 and 10,000,000 Class B Shares issued and outstanding at December 31, 2015 and 2014, respectively.	149	100
Additional paid-in capital	177,276	99,900
Accumulated deficit	(75,077)	(36,532)
Accumulated other comprehensive (loss) income	(1,811)	288
Total stockholders’ equity	100,537	63,756
Total liabilities and stockholders’ equity	$ 718,977	$ 256,152

XML

Consolidated Balance Sheets (Parenthetical) - USD ($)	Dec. 31, 2015	Dec. 31, 2014
Successor [Member]
Allowance for trade accounts	$ 113,000	$ 29,000
Preferred stock, par value (in usd per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)	100,000	100,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in usd per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	30,000,100	30,000,100
Successor [Member] | Common Class A [Member]
Common stock, shares issued (in shares)	100	100
Common stock, shares outstanding (in shares)	100	100
Successor [Member] | Common Class B [Member]
Common stock, shares issued (in shares)	14,931,529	10,000,000
Common stock, shares outstanding (in shares)	14,931,529	10,000,000

XML

Consolidated Statements of Operations and Comprehensive Loss - USD ($) shares in Thousands		12 Months Ended
	Dec. 31, 2013	Dec. 31, 2015	Dec. 31, 2014	Dec. 20, 2013
Successor [Member]
Revenues
Gaming operations	$ 1,953,000	$ 117,013,000	$ 68,981,000
Equipment sales	0	6,279,000	3,159,000
Total revenues	1,953,000	123,292,000	72,140,000
Operating expenses
Cost of gaming operations1	320,000	23,291,000	14,169,000
Cost of equipment sales1	0	1,548,000	1,607,000
Selling, general and administrative	807,000	40,088,000	19,456,000
Research and development	50,000	14,376,000	4,856,000
Write downs and other charges	7,469,000	11,766,000	7,068,000
Depreciation and amortization	930,000	61,662,000	33,405,000
Total operating expenses	9,576,000	152,731,000	80,561,000
Loss from operations	(7,623,000)	(29,439,000)	(8,421,000)
Other expense (income)
Interest expense	485,000	41,642,000	17,235,000
Interest income	0	(82,000)	(42,000)
Loss on debt retirement	0	0	0
Other expense (income)	(6,000)	3,635,000	573,000
Loss before income taxes	(8,102,000)	(74,634,000)	(26,187,000)
Income tax benefit (expense)	54,000	(36,089,000)	2,189,000
Net Income (Loss) Attributable to Parent	(8,156,000)	(38,545,000)	(28,376,000)
Foreign currency translation adjustment	(1,000)	(2,099,000)	289,000
Total comprehensive loss	$ (8,157,000)	$ (40,644,000)	$ (28,087,000)
Basic and diluted loss per common share:
Basic (in usd per share)	$ (0.82)	$ (2.98)	$ (2.84)
Diluted (in usd per share)	$ (0.82)	$ (2.98)	$ (2.84)
Weighted average common shares outstanding:
Basic (in shares)	10,000	12,918	10,000
Diluted (in shares)	10,000	12,918	10,000
Predecessor [Member]
Revenues
Gaming operations				$ 54,903,000
Equipment sales				1,558,000
Total revenues				56,461,000
Operating expenses
Cost of gaming operations1				12,001,000
Cost of equipment sales1				893,000
Selling, general and administrative				14,343,000
Research and development				3,042,000
Write downs and other charges				10,326,000
Depreciation and amortization				27,660,000
Total operating expenses				68,265,000
Loss from operations				(11,804,000)
Other expense (income)
Interest expense				17,116,000
Interest income				(1,410,000)
Loss on debt retirement				14,661,000
Other expense (income)				5,000
Loss before income taxes				(42,176,000)
Income tax benefit (expense)				0
Net Income (Loss) Attributable to Parent				(42,176,000)
Foreign currency translation adjustment				32,000
Total comprehensive loss				$ (42,144,000)

XML

Consolidated Statements of Changes in Stockholders’ Equity/Member’s Deficit Statement - USD ($) $ in Thousands	Total	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Members Capital [Member]	Common Stock [Member]
Beginning balance (Predecessor [Member]) at Dec. 31, 2012	$ (2,928)		$ (140,125)	$ 524	$ 136,673
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock in connection with the acquisition, Common Stock, (in shares) | Successor [Member]						100,000
Issuance of common stock in connection with the acquisition | Successor [Member]	100,000	$ 99,900
Capital contributions | Predecessor [Member]	144,066				144,066
Net loss | Predecessor [Member]	(42,176)		(42,176)
Foreign currency translation adjustment | Predecessor [Member]	32			32
Elimination of Predecessor equity | Predecessor [Member]	(98,994)		182,301	(556)	(280,739)
Ending balance (in shares) (Successor [Member]) at Dec. 20, 2013						100,000
Ending balance (Successor [Member]) at Dec. 20, 2013	100,000	99,900
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss | Successor [Member]	(8,156)		(8,156)
Foreign currency translation adjustment | Successor [Member]	(1)			(1)
Ending balance (in shares) (Successor [Member]) at Dec. 31, 2013						100,000
Ending balance (Successor [Member]) at Dec. 31, 2013	91,843	99,900	(8,156)	(1)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss | Successor [Member]	(28,376)		(28,376)
Foreign currency translation adjustment | Successor [Member]	289			289
Ending balance (in shares) (Successor [Member]) at Dec. 31, 2014						100,000
Ending balance (Successor [Member]) at Dec. 31, 2014	63,756	99,900	(36,532)	288
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss | Successor [Member]	(38,545)		(38,545)
Foreign currency translation adjustment | Successor [Member]	(2,099)			(2,099)
Issuance of common stock (in shares) | Successor [Member]						49,000
Issuance of common stock | Successor [Member]	77,425	77,376
Ending balance (in shares) (Successor [Member]) at Dec. 31, 2015						149,000
Ending balance (Successor [Member]) at Dec. 31, 2015	$ 100,537	$ 177,276	$ (75,077)	$ (1,811)	$ 0

XML

Consolidated Statements of Cash Flows - USD ($) $ in Thousands		12 Months Ended
	Dec. 31, 2013	Dec. 31, 2015	Dec. 31, 2014	Dec. 20, 2013
Successor [Member]
Notes Payable, Capitalized Interest	$ 0	$ 8,507	$ 481
Cash flows from operating activities
Net loss	(8,156)	(38,545)	(28,376)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	930	61,662	33,405
Accretion of contract rights under development agreements and placement fees	0	496	58
Amortization of deferred loan costs and discount	35	2,446	1,242
Provision for doubtful accounts1	9	106	(450)
Imputed and non-cash interest income	0	(18)	(36)
Loss on disposition of assets	0	1,439	1,936
Impairment of assets	0	4,989	2,475
Increase (Decrease) in Deferred Income Taxes	54	(38,645)	2,189
Loss on debt retirement	0	0	0
Changes in assets and liabilities that relate to operations:
Accounts receivable	(1,220)	(342)	(973)
Inventories	348	1,144	806
Prepaid expenses	(60)	(1,466)	(1,349)
Deposits and other	(247)	11,531	(241)
Other assets, non-current	0	869	(1,476)
Accounts payable and accrued liabilities	(319)	3,737	3,272
Net cash provided by (used in) operating activities	(8,626)	9,403	12,482
Cash flows from investing activities
Business acquisitions, net of cash acquired	(214,960)	(374,347)	(10,345)
Collection of notes receivable	0	323	205
Advances under notes receivable and other	0	0	0
Change in Canadian tax receivable	(26)	0	(154)
Purchase of intangible assets		(6,102)	(9,259)
Software development and other expenditures	(82)	(6,476)	(5,127)
Proceeds from disposition of assets	0	29	569
Payments to Acquire Property, Plant, and Equipment	1,234	15,277	9,811
Net cash used in investing activities	(216,302)	(401,850)	(33,922)
Cash flows from financing activities
Borrowings under the revolving facility	149,382	11,500	10,000
Repayments under the revolving facility	0	(21,500)	0
Proceeds from issuance of debt	0	369,400	0
Payments on debt	0	(4,743)	(2,036)
Payment of previous acquisition obligation	0	(10,000)	0
Repurchase of shares issued to management	0	(1,277)	0
Proceeds from issuance of common stock	100,000	77,425	0
Proceeds from employees in advance of common stock issuance	0	579	1,969
Payment of deferred loan costs	(5,934)	(3,837)	(73)
Net cash provided by financing activities	243,448	417,547	9,860
Effect of exchange rates on cash and cash equivalents	(49)	(58)	518
Increase (decrease) in cash and cash equivalents	18,471	25,042	(11,062)
Cash and cash equivalents, beginning of period		10,680	21,742
Cash and cash equivalents, end of period	21,742	35,722	10,680
Supplemental cash flow information:
Cash paid during the period for interest	0	30,203	15,315
Cash paid during the period for taxes	0	840	0
Non-cash investing and financing activities:
Non-cash consideration given in business acquisitions	5,531	17,233	11,500
Non-cash financed placement fees	0	12,391	0
Capital expenditures funded by settlement of customer receivable	0	0	0
Lease incentive intangible related to discounted notes receivable	0	0	0
Capital Expenditures Incurred but Not yet Paid	0	$ 5,800	$ 2,717
Predecessor [Member]
Notes Payable, Capitalized Interest				$ 0
Cash flows from operating activities
Net loss				(42,176)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization				27,660
Accretion of contract rights under development agreements and placement fees				3,856
Amortization of deferred loan costs and discount				2,454
Provision for doubtful accounts1				266
Imputed and non-cash interest income				(645)
Loss on disposition of assets				395
Impairment of assets				5,010
Increase (Decrease) in Deferred Income Taxes				0
Loss on debt retirement				14,661
Changes in assets and liabilities that relate to operations:
Accounts receivable				868
Inventories				1,138
Prepaid expenses				(572)
Deposits and other				(1,361)
Other assets, non-current				(670)
Accounts payable and accrued liabilities				(1,870)
Net cash provided by (used in) operating activities				9,014
Cash flows from investing activities
Business acquisitions, net of cash acquired				0
Collection of notes receivable				4,367
Advances under notes receivable and other				(1,520)
Change in Canadian tax receivable				(855)
Purchase of intangible assets				(4,364)
Software development and other expenditures				(4,583)
Proceeds from disposition of assets				215
Payments to Acquire Property, Plant, and Equipment				20,278
Net cash used in investing activities				(27,018)
Cash flows from financing activities
Borrowings under the revolving facility				7,500
Repayments under the revolving facility				0
Proceeds from issuance of debt				0
Payments on debt				(136,901)
Payment of previous acquisition obligation				0
Repurchase of shares issued to management				0
Proceeds from issuance of common stock				144,066
Proceeds from employees in advance of common stock issuance				0
Payment of deferred loan costs				(342)
Net cash provided by financing activities				14,323
Effect of exchange rates on cash and cash equivalents				407
Increase (decrease) in cash and cash equivalents				(3,274)
Cash and cash equivalents, beginning of period	$ 3,271			6,545
Cash and cash equivalents, end of period				3,271
Supplemental cash flow information:
Cash paid during the period for interest				15,111
Cash paid during the period for taxes				0
Non-cash investing and financing activities:
Non-cash consideration given in business acquisitions				0
Non-cash financed placement fees				0
Capital expenditures funded by settlement of customer receivable				844
Lease incentive intangible related to discounted notes receivable				132
Capital Expenditures Incurred but Not yet Paid				$ 0

XML

Description of the Business And Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2015

Accounting Policies [Abstract]

Description of the Business And Summary of Significant Accounting Policies

DESCRIPTION OF THE BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Business

AP Gaming Holdco, Inc. (the “Company,” “AP Gaming,” “we,” “us,” or “our”) is a leading designer and supplier of gaming products and services for the gaming industry. The Company is a leader in the Class II Native American and Mexican gaming jurisdictions and has expanded its product lines to include Class III Native American, commercial and charity jurisdictions. We supply electronic gaming machines (“slot machines”), server-based systems and back-office systems that are used by casinos and various gaming locations. Over the past 18 months, the Company has significantly broadened and diversified its product portfolio through both organic development and strategic acquisitions. We launched a new table products division in mid-2014 to provide live felt table games to casino operators. Through the acquisition of Cadillac Jack (defined in Note 2) on May 29, 2015, we greatly expanded our games library and slot machine offerings. The Company also acquired online developer Gamingo Limited in June 2015, expanding its offerings to include interactive products such as social casino games, available to play on desktop and mobile devices.

Basis of presentation

References to “Successor” refer to the Company on or after December 21, 2013. References to “Predecessor” refer to the period prior to December 21, 2013. The accompanying consolidated statements of operations, changes in stockholders’ equity/member’s deficit and cash flows for the year ended December 31, 2013 are presented for two periods: January 1, 2013 through December 20, 2013 (the “Predecessor Period”) and December 21, 2013 through December 31, 2013 (the “Successor Period”).

Principles of Consolidation

The accompanying consolidated financial statements include the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Certain amounts in the consolidated financial statements for the previous years have been reclassified to be consistent with the current year presentation. These reclassifications had no effect on the previously reported net loss.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires the Company to make decisions based upon estimates, assumptions, and factors considered relevant to the circumstances. Such decisions include the selection of applicable accounting principles and the use of judgment in their application, the results of which impact reported amounts and disclosures. Changes in future economic conditions or other business circumstances may affect the outcomes of the estimates and assumptions. Accordingly, actual results could differ materially from those anticipated.

Revenue Recognition

Gaming Operations

Gaming operations revenue is earned by providing customers with gaming machines, gaming machine content licenses, back-office equipment and linked progressive systems, which are collectively referred to as gaming equipment, under participation arrangements. The participation arrangements convey the right to use the equipment (i.e. gaming machines and related integral software) for a stated period of time and are accounted for as operating leases. Under these arrangements, the Company retains ownership of the gaming equipment installed at customer facilities and receives either revenue based on a percentage of the win per day generated by the gaming equipment or a daily fee. The majority of the Company’s leases require the Company to provide maintenance throughout the entire term of the lease. In some cases, a performance guarantee exists that, if not met, requires the Company to replace or remove the gaming machines from the customer’s floor. Whether contractually required or not, the Company develops and provides new gaming titles throughout the life of the lease. Certain arrangements require a portion of the facility’s win per day to be set aside to be used to fund facility-specific marketing, advertising, promotions and service. These amounts are offset against gaming revenue. Gaming operations revenue is also earned from the licensing of table game content and is earned and recognized on a fixed monthly rate. Our social gaming products earn revenue from the sale of virtual coins or chips, which is recorded when the purchased coins or chips are used by the customer.

Equipment Sales

Revenues from the stand-alone product sales or separate accounting units are recorded when:

• Pervasive evidence of an arrangement exists;

• The sales price is fixed and determinable;

• Delivery has occurred and services have been rendered; and

• Collectability is reasonably assured.

Equipment sales are generated from the sale of gaming machines and licensing rights to game content software that is installed in the gaming machine, parts, and other ancillary equipment. Also included within the deliverables are delivery, installation and training, all of which occur within a few days of arriving at the customer location. Gaming equipment sales do not include maintenance beyond a standard warranty period. The recognition of revenue from the sale of gaming devices occurs as title and risk of loss have passed to the customer and all other revenue recognition criteria have been satisfied. As the combination of game content software and the tangible gaming device function together to deliver the product’s essential functionality, revenue from the sale of gaming devices is recognized under general revenue recognition guidance.

Cash and Cash Equivalents

Cash and cash equivalents consist primarily of deposits held at major banks and other marketable securities with original maturities of 90 days or less.

Restricted Cash

Restricted cash amounts represent funds held in escrow as collateral for the Company’s surety bonds for various gaming authorities and funds held to ensure the availability of funds to pay wide-area progressive jackpot awards.

Receivables, Allowance for Doubtful Accounts

Accounts receivable are stated at face value less an allowance for doubtful accounts. The Company maintains an allowance for doubtful accounts related to accounts receivable and notes receivable, which are non-interest bearing, deemed to have a high risk of collectability. The Company reviews the accounts receivable and notes receivable on a monthly basis to determine if any receivables will potentially be uncollectible. The Company analyzes historical collection trends and changes in the customers’ payment patterns, customer concentration, and credit worthiness when evaluating the adequacy of the allowance for doubtful accounts. A large percentage of receivables are with Native American tribes and the Company has concentrations of credit risk with several tribes. The Company includes any receivable balances that are determined to be uncollectible in the overall allowance for doubtful accounts. Changes in the assumptions or estimates reflecting the collectability of certain accounts could materially affect the allowance for both accounts and notes receivable.

The following provides financial information concerning the change in our allowance for doubtful accounts (in thousands):

	Successor
	Allowance for Accounts Receivables Year ended December 31, 2015
	Beginning Balance		Charge-offs			Recoveries		Provision		Ending Balance
Accounts receivable, current	$	29	$	(22	)	$	—	$	106	$	113

	Successor
	Allowance for Accounts Receivables Year ended December 31, 2014
	Beginning Balance		Charge-offs			Recoveries		Provision		Ending Balance
Accounts receivable, current	$	9	$	(36	)	$	—	$	56	$	29

	Successor
	Allowance for Accounts Receivables Period from December 21, 2013 through December 31, 2013
	Beginning Balance		Charge-offs		Recoveries		Provision		Ending Balance
Accounts receivable, current	$	—	$	—	$	—	$	9	$	9

	Predecessor
	Allowance for Accounts Receivables Period from January 1, 2013 through December 20, 2013
	Beginning Balance		Charge-offs			Recoveries		Provision		Ending Balance
Accounts receivable, current	$	491	$	(80	)	$	—	$	139	$	550

Inventories

Inventories consist primarily of parts and supplies that are used to repair and maintain machinery and equipment. Inventories are stated at the lower of cost or market. Cost of inventories is determined using the first-in, first-out (“FIFO”) method for all components of inventory. The Company regularly reviews inventory quantities and updates estimates for the net realizable value of inventories. This process includes examining the carrying values of parts and ancillary equipment in comparison to the current fair market values for such equipment (less costs to sell or dispose). Some of the factors involved in this analysis include the overall levels of the inventories, the current and projected sales levels for such products, the projected markets for such products and the costs required to sell the products, including refurbishment costs. Changes in the assumptions or estimates could materially affect the inventory carrying value.

Property and Equipment

The cost of gaming equipment, consisting of fixed-base player terminals, file servers and other support equipment as well as other property and equipment, is depreciated over their estimated useful lives, using the straight-line method for financial reporting. Repairs and maintenance costs are expensed as incurred. The Company routinely evaluates the estimated lives used to depreciate assets. The estimated useful lives are as follows:

Gaming equipment	3 to 6 years
Other property and equipment	3 to 6 years

The Company reviews its property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. Impairment losses are estimated when indicators of impairment are present and the estimated undiscounted cash flows are not sufficient to recover the assets’ carrying amount.

When the estimated undiscounted cash flows are not sufficient to recover the asset’s carrying amount, an impairment loss is measured to the extent the fair value of the asset is less than its carrying amount.

The Company measures recoverability of assets to be held and used by comparing the carrying amount of an asset to future cash flows expected to be generated by the asset. The Company’s policy is to impair, when necessary, excess or obsolete gaming machines on hand that it does not expect to be used. Impairment is based upon several factors, including estimated forecast of gaming machine demand for placement into casinos. While the Company believes that the estimates and assumptions used in evaluating the carrying amount of these assets are reasonable, different assumptions could affect either the carrying amount or the estimated useful lives of the assets, which could have a significant impact on the results of operations and financial condition.

Intangible Assets

The Company reviews its identifiable intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Impairment losses are recognized for identifiable intangibles, other than goodwill, when indicators of impairment are present and the estimated undiscounted cash flows are not sufficient to recover the assets’ carrying amount.

When the estimated undiscounted cash flows are not sufficient to recover the intangible asset’s carrying amount, an impairment loss is measured to the extent the fair value of the asset is less than its carrying amount.

Certain trade names have an indefinite useful life and the Company tests these trade names for possible impairment at least annually, on October 1, or whenever events or changes in circumstances indicate that the carrying value may be impaired. We perform a qualitative assessment to determine if it is more likely than not that the fair value of the asset is less than its carrying amount. If we believe, as a result of our qualitative assessment, that it is more likely than not that the fair value of the asset is less than its carrying amount, the quantitative impairment test is required.

Costs of Computer Software

Internally developed gaming software represents the Company’s internal costs to develop gaming titles to utilize on the Company’s gaming machines. Internally developed gaming software is stated at cost and amortized over the estimated useful lives of the software, using the straight-line method. Software development costs are capitalized once technological feasibility has been established and are amortized when the software is placed into service. The computer software we develop reaches technological feasibility when a working model of the computer software is available. Any subsequent software maintenance costs, such as bug fixes and subsequent testing, are expensed as incurred. Discontinued software development costs are expensed when the determination to discontinue is made. Software development costs are amortized over the expected life of the title or group of titles, if applicable, to amortization expense.

On a quarterly basis, or more frequently if circumstances warrant, the Company compares the net book value of its internally developed computer software to the net realizable value on a title or group of title basis. The net realizable value is determined based upon certain assumptions, including the expected future revenues and net cash flows of the gaming titles or group of gaming titles utilizing that software, if applicable.

Goodwill

The excess of the purchase price of an acquired business over the estimated fair value of the assets acquired and the liabilities assumed is recorded as goodwill. The Company tests for possible impairment of goodwill at least annually, on October 1, or when circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. The Company has the option to begin with a qualitative assessment, commonly referred to as “Step 0”, to determine whether it is more likely than not that the reporting unit’s fair value of goodwill is less than its carrying value. This qualitative assessment may include, but is not limited to, reviewing factors such as the general economic environment, industry and market conditions, changes in key assumptions used since the most recently performed valuation and overall financial performance of the reporting units. If the Company determines that it is more likely than not that a reporting unit’s fair value is less than its carrying value, the Company performs a quantitative goodwill impairment analysis, and depending upon the results of that measurement, the recorded goodwill may be written down and charged to income from operations when its carrying amount exceeds its estimated fair value.

Deferred Loan Costs

Deferred loan costs consist of various debt issuance costs and are being amortized using the effective-interest method over the life of the related loans. The Company recognized amortization expense related to loan costs of $1.4 million and $0.6 million for the years ended December 31, 2015 and 2014, respectively. The Company recognized amortization expense related to loan costs of $21,000 and $1.2 million for the Successor Period and Predecessor Period, respectively. Amortization of deferred loan costs was included in interest expense in the accompanying consolidated statements of operations and comprehensive loss.

Acquisition Accounting

The Company applies the provisions of ASC 805, “Business Combinations” (ASC 805), in accounting for business acquisitions. It requires us to recognize separately from goodwill the fair value of assets acquired and liabilities assumed on the acquisition date. Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net of the acquisition date fair values of the assets acquired and the liabilities assumed. Significant estimates and assumptions are required to value assets acquired and liabilities assumed at the acquisition date as well as contingent consideration, where applicable. These estimates are inherently uncertain and subject to refinement and typically include the calculation of an appropriate discount rate and projection of the cash flows associated with each acquired asset. As a result, during the measurement period, which may be up to one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the fair value of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to the consolidated statements of operations.

Fair Value of Financial Instruments

The Company applies the provisions of ASC 820, “Fair Value Measurements” (ASC 820) to its financial assets and liabilities. Fair value is defined as a market-based measurement intended to estimate the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions. ASC 820 also established a fair value hierarchy, which requires an entity to maximize the use of observable inputs when measuring fair value. These inputs are categorized as follows:

• Level 1 - quoted prices in an active market for identical assets or liabilities;

• Level 2 - quoted prices in an active market for similar assets or liabilities, inputs other than quoted prices that are observable for similar assets or liabilities, inputs derived principally from or corroborated by observable market data by correlation or other means; and

• Level 3 - valuation methodology with unobservable inputs that are significant to the fair value measurement.

The carrying values of the Company’s cash and cash equivalents, restricted cash, receivables and accounts payable approximate fair value because of the short term maturities of these instruments. The fair value of our long-term debt is based on the quoted market prices for similar issues (Level 2 inputs). The estimated fair value of our long-term debt was $529.2 million and $170.0 million as of December 31, 2015 and 2014, respectively.

Accounting for Income Taxes

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that included the enactment date. Future tax benefits are recognized to the extent that realization of those benefits is considered more likely than not, and a valuation allowance is established for deferred tax assets which do not meet this threshold.

Contingencies

The Company assesses its exposures to loss contingencies including claims and legal proceedings and accrues a liability if a potential loss is considered probable and the amount can be estimated. Significant judgment is required in both the determination of probability and the determination as to whether an exposure is reasonably estimable. Because of uncertainties related to these matters, if the actual loss from a contingency differs from management’s estimate, there could be a material impact on the results of operations or financial position. Operating expenses, including legal fees, associated with contingencies are expensed when incurred.

Concentrations of Credit Risk

Financial instruments, which potentially subject the Company to concentration of credit risk, consist primarily of cash and cash equivalents and accounts receivable, net. Cash equivalents are investment-grade, short-term debt instruments consisting of treasury bills which are maintained with high credit quality financial institutions under repurchase agreements. Cash and cash equivalents are in excess of Federal Deposit Insurance Corporation (“FDIC”) insurance limits. As of December 31, 2015 and 2014, the Company did not have cash equivalents.

Revenue from gaming operations is concentrated in the Class II gaming and casino industry, primarily located in Oklahoma. For the years ended December 31, 2015, 2014 and the combined Successor and Predecessor periods of 2013, approximately 20%, 30% and 35% percent of our gaming revenue was derived from one customer, respectively. The Company had one customer with accounts receivable, net equaling 10% of total outstanding accounts receivable, net at December 31, 2013 and none at December 31, 2015 and 2014.

The following provides financial information concerning our operations by geographic area for the years ended December 31 (in thousands):

	Successor						Predecessor
Revenue:	Year ended December 31, 2015		Year ended December 31, 2014		Period December 21, 2013 through December 31, 2013		Period January 1, 2013 through December 20, 2013
United States	$	110,392	$	72,140	$	1,953	$	56,461
Other	12,900		—		—		—
	$	123,292	$	72,140	$	1,953	$	56,461
			Successor
Long-lived assets, end of year:			2015		2014		2013
United States			$	63,858	$	44,045	$	50,997
Other			6,909		69		210
			$	70,767	$	44,114	$	51,207

Foreign Currency Translation

The financial statements of the Company’s foreign subsidiaries are translated into U.S. dollars at the period end rate of exchange for asset and liability accounts and the weighted average rate of exchange for income statement accounts. The effects of these translations are recorded as a component of accumulated other comprehensive (loss) income in stockholders’ equity.

Advertising Costs

Advertising costs are expensed as incurred. Advertising costs for the year ended December 31, 2015 and 2014 were $0.2 million and $0.3 million, respectively. During the Successor Period and Predecessor Period, the Company recognized advertising costs of $2,000 and $0.2 million, respectively.

Recently Issued Accounting Pronouncements

In May 2014, the FASB issued an accounting standards update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606), which clarifies the principles for recognizing revenue from contracts with customers. The amendment outlines a single comprehensive model for entities to depict the transfer of goods or services to customers in amounts that reflect the payment to which a company expects to be entitled in exchange for those goods or services. The amendment also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, which deferred the effective date of ASU 2014-09 to annual periods, and interim reporting periods within those annual periods, beginning after December 15, 2017. The ASU may be adopted using either a full retrospective transition method or a modified retrospective transition method and will be adopted by the Company on January 1, 2018. The Company is currently evaluating the provisions of the amendments and the impact on its future consolidated financial statements.

In June 2014, the FASB issued ASU No. 2014-12, Compensation—Stock Compensation (Topic 718):Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved After the Requisite Service Period. The amendments clarify the proper method of accounting for share-based payments when the terms of an award provide that a performance target could be achieved after the requisite service period. This ASU requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. The performance target should not be reflected in estimating the grant-date fair value of the award. Compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. The amendments in this ASU will be adopted by the Company beginning on January 1, 2016. We do not expect the ASU to have a material effect on our financial condition, results of operations or cash flows.

In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements - Going Concern: Disclosure of Uncertainties About an Entity's Ability to Continue as a Going Concern. The ASU requires management to assess an entity’s ability to continue as a going concern and to provide related footnote disclosures in certain circumstances. Substantial doubt about an entity's ability to continue as a going concern exists when relevant conditions and events, consolidated in the aggregate, indicate that it is probable that an entity will be unable to meet its obligations as they become due within one year after the date that the financial statements are issued. Currently, there is no guidance in U.S. GAAP for management's responsibility to perform an evaluation. Under the update, management's evaluation is to be performed when preparing financial statements for each annual and interim reporting period and based on relevant conditions and events that are known and reasonably knowable at the date that the financial statements are issued. The Company will adopt this standard effective January 1, 2017 and we do not expect it to have a material effect on our financial position, results of operations or cash flows.

In January 2015, the FASB issued ASU No. 2015-01, Income Statement-Extraordinary and Unusual Items: Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items. ASU 2015-01 eliminates from GAAP the concept of extraordinary items. The presentation and disclosure guidance for items that are unusual in nature or occur infrequently will be retained and will be expanded to include items that were previously classified as extraordinary. ASU 2015-01 is effective for the Company on January 1, 2016, with earlier adoption permitted using either a prospective or retrospective method. We do not expect the ASU to have a material effect on our financial condition, results of operations or cash flows.

In April 2015, the FASB issued ASU No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. ASU 2015-03 intends to simplify the presentation of debt issuance costs by requiring that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this ASU.  In August 2015, the FASB issued ASU 2015-15 which clarifies that the guidance issued in April 2015 does not apply to line-of-credit arrangements. According to ASU 2015-15, line-of-credit arrangements will continue to present debt issuance costs as an asset and subsequently amortize the deferred debt issuance costs ratably over the term of the arrangement. The ASU will be effective for the Company beginning on January 1, 2016. We do not expect the ASU to have a material effect on our financial condition, results of operations or cash flows.

In July 2015, the FASB issued ASU No. 2015-11, Inventory: Simplifying the Measurement of Inventory. ASU 2015-11 changes the criteria for measuring inventory within the scope of the ASU. Inventory will now be measured at the lower of cost and net realizable value, while the concept of market value will be eliminated. The ASU defines net realizable value as the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The ASU will be effective for the Company beginning on January 1, 2017. The Company does not expect the provisions of the ASU to have a material effect on our financial condition, results of operations or cash flows.

In September 2015, the FASB issued ASU 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments. ASU 2015-16 eliminates the requirement to retrospectively apply adjustments made to provisional amounts recognized in a business combination. It requires that an acquirer recognize and disclose adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined, which should be calculated as if the accounting had been completed at the acquisition date. The ASU will be effective for the Company beginning on January 1, 2016. The amendments in this ASU will be applied prospectively to adjustments to provisional amounts that occur after the effective date of this ASU with earlier application permitted for financial statements that have not been issued. We do not expect this guidance to have a material effect on our financial position, results of operations or cash flows.

In November 2015, the FASB issued ASU 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes. ASU 2015-17 requires that all deferred tax assets and liabilities, along with any related valuation allowance, be classified as noncurrent on the balance sheet. As a result, each jurisdiction will now only have one net noncurrent deferred tax asset or liability. The ASU does not change the existing requirement that only permits offsetting within a jurisdiction – that is, companies are still prohibited from offsetting deferred tax liabilities from one jurisdiction against deferred tax assets of another jurisdiction. We adopted the ASU effective December 31, 2015 and applied the provisions prospectively, for all deferred tax assets and liabilities.

XML

Acquisitions

12 Months Ended

Dec. 31, 2015

Business Combinations [Abstract]

Acquisitions

ACQUISITIONS

Cadillac Jack

On May 29, 2015, the Company acquired 100% of the equity of Amaya Americas Corporation (“Cadillac Jack”), a leading provider of Class II gaming machines for the North American tribal gaming market, with key regions of operation within Alabama, Mexico, and Wisconsin. This acquisition is expected to create growth opportunities in Class II and Class III jurisdictions and expands the Company’s geographic footprint. The combined management teams are complementary and possess years of combined experience that is expected to allow us to effectively grow and improve our business.

The acquisition was funded primarily from cash proceeds of incremental borrowings on our existing term loans, the issuance of senior secured PIK notes, as described in Note 6, and the issuance of additional common stock, as described in Note 7. The consideration also included a promissory note to the seller, Amaya Inc., for $12.0 million, as described in Note 6, as well as a contingent receivable that was recorded at its estimated fair value on the date of the acquisition. The contingent receivable is related to a clause in the stock purchase agreement allowing for a refund of up to $25.0 million if certain deactivated gaming machines in Mexico are not in operation by November 29, 2016.

The following summarizes the consideration paid for Cadillac Jack (in thousands):

Contractual cash purchase price adjusted for working capital	$	369,760
Seller note	12,000
Contingent receivable	(1,300		)
Total consideration	$	380,460

We have recorded Cadillac Jack’s assets acquired and liabilities assumed based on our preliminary estimates of their fair values at the acquisition date. The determination of the fair values of the assets acquired and liabilities assumed (and the related determination of estimated lives of depreciable and amortizable tangible and identifiable intangible assets) requires significant judgment and estimates. The estimates and assumptions used include the projected timing and amount of future cash flows and discount rates that reflect risk inherent in the future cash flows. The estimated fair values of Cadillac Jack’s assets acquired and liabilities assumed and resulting goodwill are subject to adjustment as we finalize our fair value analysis. The significant items for which a final fair value has not been determined as of the filing of this report on Form 10-Q include accrued liabilities, deferred income taxes and other long-term liabilities. During the quarter ended September 30, 2015, we determined the final net working capital adjustment with the seller and recorded a $1.2 million adjustment to goodwill for the amount that we received from the seller. We expect to complete our fair value determinations no later than the second quarter of 2016. We do not currently expect our fair value determinations to change; however, there may be differences compared to those amounts reflected in our consolidated financial statements at December 31, 2015, as we finalize our fair value analysis and such changes could be material.

The preliminary allocation of the purchase price to the estimated fair values of the assets acquired and the liabilities assumed was as follows (in thousands):

	At May 29, 2015
Currents assets(1)	$	34,871
Property and equipment	29,634
Goodwill	171,497
Intangible assets	199,752
Other long-term assets	23,828
Total assets	459,582
Current liabilities	8,636
Deferred tax liability non-current	51,486
Other long-term liabilities	19,000
Total equity purchase price	$	380,460

⁽¹⁾Current assets includes $4.2 million of cash acquired.

Based on our preliminary estimates, the total consideration exceeded the aggregate estimated fair value of the acquired assets and assumed liabilities at the acquisition date and has been recorded as goodwill. We attribute this goodwill to our enhanced financial scale and geographic diversification, opportunities for synergies, assembled workforce and other strategic benefits. None of the goodwill associated with the acquisition is deductible for income tax purposes and, as such, no deferred taxes have been recorded related to goodwill.

We included an estimated value of $8.3 million in current assets above and in deposits and other in the consolidated balance sheet related to the value of stock options held by employees of Cadillac Jack. The stock options entitle the holder to purchase shares of Amaya Inc., the former global parent of Cadillac Jack, based on the holder’s continued employment at Cadillac Jack through the vesting date.

Our preliminary estimates of the fair values of depreciable tangible assets are as follows (in thousands):

	Fair values at May 29, 2015		Average remaining useful life (in years)
Gaming equipment	$	23,065	1 - 5
Other property and equipment	6,569		2 - 3
Total property and equipment	$	29,634

Our preliminary estimates of the fair values of identifiable intangible assets are as follows (in thousands):

	Fair values at May 29, 2015		Average remaining useful life (in years)
Trade names	$	3,000	5
Brand names	10,600		3 - 5
Customer relationships	107,000		5 - 12
Gaming software and technology platforms	79,152		2 - 7
Total intangible assets	$	199,752

The fair value of gaming equipment and other personal property assets as well as the fair value of gaming content software was primarily determined using cost approaches in which we determined an estimated reproduction or replacement cost, as applicable.

The estimated fair values of acquired trade names, brand names and gaming technology platforms was primarily determined using the royalty savings method, which is a risk-adjusted discounted cash flow approach. The gaming technology platforms include $30.0 million of in-process research and development. The royalty savings method values an intangible asset by estimating the royalties saved through ownership of the asset. The royalty savings method requires identifying the future revenue that would be impacted by the trade name or intellectual property (or royalty-free rights to the assets), multiplying it by a royalty rate deemed to be avoided through ownership of the asset and discounting the projected royalty savings amounts back to the acquisition date.  The royalty rate used in such valuation was based on a consideration of market rates for similar categories of assets.

The estimated fair values of customer relationships was determined using the excess earnings method, which is a risk-adjusted discounted cash flow approach that determines the value of an intangible asset as the present value of the cash flows attributable to such asset after excluding the proportion of the cash flows that are attributable to other assets. The contribution to the cash flows that are made by other assets - such as fixed assets, working capital, workforce and other intangible assets - was estimated through contributory asset capital charges. The value of the acquired customer relationship asset is the present value of the attributed post-tax cash flows, net of the post-tax return on fair value attributed to the other assets.

The estimated fair value of deferred income taxes was determined by applying the appropriate enacted statutory tax rate to the temporary differences that arose on the differences between the financial reporting value and tax basis of the assets acquired and liabilities assumed. We recorded liabilities for estimated uncertain tax positions in other long-term liabilities and a related indemnification receivable in other long-term assets.

The revenue and net loss of Cadillac Jack from the acquisition date through December 31, 2015, are presented below and are included in our consolidated statements of operations and comprehensive loss. These amounts are not necessarily indicative of the results of operations that Cadillac Jack would have realized if it had continued to operate as a stand-alone company during the period presented, primarily due to the elimination of certain headcount and administrative costs since the acquisition date resulting from integration activities or due to costs that are now reflected in our unallocated corporate costs and not allocated to Cadillac Jack.

	From May 29, 2015 through December 31, 2015
Revenue	$	46,075
Net loss	$	17,133

The following unaudited pro forma statements of operations give effect to the Cadillac Jack acquisition as if it had been completed on January 1, 2014. The unaudited pro forma financial information is presented for illustrative purposes only and is not necessarily indicative of what the operating results actually would have been during the periods presented had the acquisition been completed on January 1, 2014. In addition, the unaudited pro forma financial information does not purport to project future operating results. This information is preliminary in nature and subject to change based on final purchase price adjustments. The pro forma statements of operations do not reflect: (1) any anticipated synergies (or costs to achieve synergies) or (2) the impact of non-recurring items directly related to the Cadillac Jack acquisition.

	Year ended December 31,
	2015		2014
Revenue	$	156,110	$	160,341
Net loss	$	54,682	$	83,709

Gamingo Limited

On June 15, 2015, the Company purchased 100% of the equity of Gamingo Limited (formerly known as “RocketPlay”, currently known as “AGSi”), a leading gaming company developing social casino titles for mobile devices. With primary offices in San Francisco and Tel Aviv, AGSi’s flagship product, Lucky Play Casino, gives players a casino-quality experience with slots, table games, tournaments, and live events. The total consideration of $8.8 million includes an estimated $5.0 million of contingent consideration that is payable based on the operating results of AGSi during a twelve-month measurement period that will end on December 31, 2016. The amount of the contingent consideration recorded was estimated at the purchase date and is subject to change based on changes in the estimated operating results of AGSi and has been recorded in other long-term liabilities in the consolidated balance sheet. As of December 31, 2015 the recorded value of the contingent consideration was written off in full to write downs and other charges based on the estimated fair value on that date.

We have recorded AGSi’s assets acquired and liabilities assumed based on our preliminary estimates of their fair values at the acquisition date. The estimated fair values of assets acquired and liabilities assumed and resulting goodwill are subject to adjustment as we finalize our fair value analysis. The allocation of the consideration given was allocated to the estimated fair values of the assets acquired and the liabilities assumed, which primarily included $4.9 million of goodwill and $4.2 million of identifiable intangible assets to be amortized over a weighted average period of 3 years.

Intellectual Property Acquisitions

During the quarter ended September 30, 2015, the Company acquired certain intangible assets related to the purchase of table games and table game related intellectual property.  Some of the acquisitions were accounted for as an acquisition of a business and the assets acquired and liabilities assumed were measured based on our preliminary estimates of their fair values at the acquisition dates. The estimated fair values of assets acquired and liabilities assumed and resulting goodwill are subject to adjustment as we finalize our fair value analysis. The total consideration of $10.0 million includes an estimated $1.5 million of contingent consideration that is payable periodically based on a percentage of product revenue earned on the related table games.  The amount of the contingent consideration recorded was estimated at the purchase date and is subject to change based on changes in the estimated product revenue and has been recorded in other long-term liabilities in the consolidated balance sheet.  The consideration was allocated primarily to goodwill for $2.6 million and intangible assets for $6.5 million, which will be amortized over a weighted average period of 8.5 years.

Prior Years’ Acquisitions

On May 6, 2014, the Company purchased100%of the equity of C2 Gaming, LLC (“C2 Gaming”) for $23.3 million in cash, subject to terms outlined in the equity purchase agreement (the “C2 Acquisition Agreement”). C2 Gaming is an innovative manufacturer and developer of slot machines based in Las Vegas, Nevada. The purchase was expected to provide for the distribution of C2 Gaming’s platform and content to an increased number of markets in the United States. The acquisition was funded by an initial cash payment and an agreement to pay the sellers $9.0 million on the one-year anniversary of the closing of the acquisition, which was paid during the quarter ended June 30, 2015. The acquisition also included an amount of contingent consideration of $3.0 million that was payable upon the satisfaction of certain milestones, including the submission and approval of video slot platforms to various jurisdictions as outlined in the C2 Acquisition Agreement.

The following summarizes the consideration paid for C2 Gaming (in thousands):

Paid at close	$	11,000
One-year payment	9,000
Contingent consideration	3,000
Working capital adjustment	273
Total consideration	$	23,273

During the year ended December 31, 2014, the Company paid $0.5 million of the contingent consideration. In May 2015, the C2 Acquisition Agreement was amended to reduce the remaining contingent consideration liability of $2.5 million to $2.1 million and to acknowledge that the milestones of the C2 Acquisition Agreement were satisfied. In July 2015, the Company paid $1.0 million of the contingent consideration, reducing the balance to $1.1 million, which was paid in January 2016.

The allocation of the purchase price to the estimated fair values of the assets acquired and the liabilities assumed was as follows (in thousands):

At May 6, 2014
Current assets	$	545
Property and equipment	534
Goodwill	13,744
Intangible assets	8,722
Total assets	23,545
Total liabilities	272
Total equity purchase price	$	23,273

Our estimates of the fair values of depreciable tangible assets were as follows (in thousands):

	Fair values at May 6, 2014		Average remaining useful life (in years)
Property and equipment	$	534	1 - 5

Our estimates of the fair values of identifiable intangible assets were as follows (in thousands):

	Fair values at May 6, 2014		Average remaining useful life (in years)
Gaming software and technology platforms	$	3,685	3 - 5
Customer relationships	5,037		7
Total intangible assets	$	8,722

The fair value of property and equipment as well as the fair value of gaming content software was determined using cost approaches in which we determined an estimated reproduction or replacement cost, as applicable.

The estimate of the fair value of the acquired gaming software and technology platforms was determined using the relief from royalty method under the income approach, which is a risk-adjusted discounted cash flow approach. The relief from royalty method values an intangible asset by estimating the royalties saved through ownership of the asset.

The estimate of the fair value of the acquired customer relationships was determined using the excess earnings method, which is a risk-adjusted discounted cash flow approach that determines the value of an intangible asset as the present value of the cash flows attributable to such asset after excluding the proportion of the cash flows that are attributable to other assets.

The goodwill recorded as a results of the acquisition is deductible for tax purposes and is attributed to enhanced financial scale, expanded video slot platforms and other strategic benefits. Some of the values and amounts used in the initial application of purchase accounting for our consolidated balance sheet were based on estimates and assumptions.

On September 16, 2013, AGS Holdings, LLC (“AGS Holdings”), AGS Capital, LLC (“AGS Capital”) and AP Gaming Acquisition, LLC (“AP Gaming Acquisition”), an indirect wholly owned subsidiary of the Company and an affiliate of Apollo Global Management, LLC (“Apollo”), entered into an equity purchase agreement (as subsequently amended and restated on December 3, 2013, the “Acquisition Agreement”). The Acquisition Agreement provided for the purchase of 100% of the equity of AGS Capital from AGS Holdings, LLC (the “AGS Capital Acquisition”) by AP Gaming Acquisition for an aggregate purchase price of approximately $220.5 million. The AGS Capital Acquisition was consummated on December 20, 2013.

The AGS Capital Acquisition was financed in part by the senior secured credit facilities (as described in Note 6) and from the issuance of 10,000,000 Class A shares of common stock at $0.01 par value to Apollo Gaming Holdings, L.P. for a total cost to acquire all the outstanding shares was $100,000,000. The source of the funds for the acquisition of the Company was provided by committed equity capital contributed by certain equity funds managed by Apollo.

The following summarizes the consideration paid for the AGS Capital Acquisition (in thousands):

Contractual cash purchase price	$	220,300
Seller notes	5,531
Working capital adjustment	(5,340		)
Total consideration	$	220,491

The allocation of the purchase price to the estimated fair values of the assets acquired and the liabilities assumed was as follows (in thousands):

At December 20, 2013
Currents assets	$	17,858
Property and equipment	46,734
Goodwill	63,873
Intangible assets	97,512
Other long-term assets	1,616
Total assets	227,593
Total liabilities	7,102
Total equity purchase price	$	220,491

Our estimates of the fair values of depreciable tangible assets were as follows (in thousands):

	Fair values at December 20, 2013		Average remaining useful life (in years)
Property and equipment	$	46,734	1 - 5

Our estimates of the fair values of identifiable intangible assets were as follows (in thousands):

	Fair values at December 20, 2013		Average remaining useful life (in years)
Indefinite lived trade names	$	12,126	Indefinite
Trade and brand names	809		7
Customer relationships	60,112		7
Gaming software and technology platforms	24,465		1 - 5
Total intangible assets	$	97,512

The fair value of acquired property and equipment was determined using cost approaches in which we determined an estimated reproduction or replacement cost, as applicable.

The fair values of acquired finite- and indefinite-lived trade names, gaming software and technology platforms was determined using the relief from royalty method under the income approach, which is a risk-adjusted discounted cash flow approach. The relief from royalty method values an intangible asset by estimating the royalties saved through ownership of the asset. The relief from royalty method requires identifying the future revenue that would be impacted by the trade name, multiplying it by a royalty rate deemed to be avoided through ownership of the asset and discounting the projected royalty savings amounts back to the acquisition date. The royalty rate used in such valuation was based on a consideration of market rates for similar categories of assets.

The fair value of the acquired customer relationships was determined using the excess earnings method, which is a risk-adjusted discounted cash flow approach that determines the value of an intangible asset as the present value of the cash flows attributable to such asset after excluding the proportion of the cash flows that are attributable to other assets. The contribution to the cash flows that are made by other assets - such as fixed assets, working capital, workforce and other intangible assets, including trade names and internally developed gaming software and third party licenses - was estimated through contributory asset capital charges. The value of the acquired customer relationship asset is the present value of the attributed post-tax cash flows, net of the post-tax return on fair value attributed to the other assets.

As a result of the AGS Capital Acquisition, the Company recognized goodwill, which is deductible for tax purposes and is primarily attributed to enhanced financial scale, opportunities for synergies and opportunities with other Apollo related companies and other strategic benefits.

XML

Property and Equipment

12 Months Ended

Dec. 31, 2015

Property, Plant and Equipment [Abstract]

Property and Equipment

PROPERTY AND EQUIPMENT

Property and equipment, net consist of the following (in thousands):

	December 31, 2015			December 31, 2014
Gaming equipment	$	89,361		$	53,295
Other property and equipment(1)	14,976			3,902
Less: Accumulated depreciation	(37,638		)	(16,428		)
Total property and equipment, net	$	66,699		$	40,769

⁽¹⁾$2.8 million included in other property and equipment as of December 31, 2014 has been reclassified to gaming equipment to be consistent with the current year presentation.

Gaming equipment and other property and equipment are depreciated over the respective useful lives of the assets ranging from three to six years. Depreciation expense was $23.4 million and $16.8 million for the year ended December 31, 2015 and 2014, respectively. Depreciation expense was $0.5 million and $14.7 million for the Successor Period and Predecessor Period, respectively.

XML

Goodwill and Intangibles

12 Months Ended

Dec. 31, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangibles

GOODWILL AND INTANGIBLES

There were no accumulated impairments of goodwill as of December 31, 2015. Changes in the carrying amount of goodwill are as follows (in thousands):

	Gross Carrying Amount
Balance at December 31, 2014	$	77,617
Acquisition - Cadillac Jack	171,497
Acquisition - AGSi	4,855
Acquisition - Intellectual Property	2,600
Foreign currency adjustments	(2,282		)
Other	(436		)
Balance at December 31, 2015	$	253,851

Intangible assets consist of the following (in thousands):

		December 31, 2015							December 31, 2014
	Useful Life (years)	Gross Value		Accumulated Amortization			Net Carrying Value		Gross Value		Accumulated Amortization			Net Carrying Value
Indefinite lived trade names	Indefinite	$	12,126	$	—		$	12,126	$	12,126	$	—		$	12,126
Trade and brand names	7	13,600		(1,721		)	11,879		809		(119		)	690
Customer relationships	7	170,927		(26,676		)	144,251		65,159		(9,313		)	55,846
Contract rights under development and placement fees	1 - 7	16,311		(548		)	15,763		678		(58		)	620
Gaming software and technology platforms	1 - 5	116,930		(23,735		)	93,195		32,564		(7,108		)	25,456
Intellectual property	10 - 20	14,030		(888		)	13,142		7,279		(132		)	7,147
		$	343,924	$	(53,568	)	$	290,356	$	118,615	$	(16,730	)	$	101,885

Intangible assets are amortized over their respective estimated useful lives ranging from one to twenty years. Amortization expense related to intangible assets was $38.3 million and $16.6 million for the year ended December 31, 2015 and 2014, respectively, and $0.4 million and $13.0 million for the Successor Period and Predecessor Period, respectively.

Management reviews intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. For the year ended December 31, 2015 and 2014, the Company recognized an impairment charge of $3.4 million and $1.4 million, respectively, related to internally developed gaming titles that were discontinued. During the Predecessor Period, the Company recognized an impairment charge of $1.7 million related to lease incentives paid to a customer.

The Company enters into development agreements and placement fee agreements with certain customers to secure floor space under lease agreements for its gaming machines. Amounts paid in connection with the development agreements are repaid to the Company in accordance with the terms of the agreement, whereas placements fees are not reimbursed. For development agreements in the form of a loan, interest income is recognized on the repayment of the notes based on the stated rate or, if not stated explicitly in the development agreement, on an imputed interest rate. If the stated interest rate is deemed to be other than a market rate or zero, a discount is recorded on the note receivable as a result of the difference between the stated and market rate and a corresponding intangible asset is recorded. The intangible asset is recognized in the financial statements as a contract right under development agreement and amortized as a reduction in revenue over the term of the agreement. Placement fees can be in the form of cash paid upfront or free lease periods and are accreted over the life of the contract and the expense is recorded as a reduction of revenue. We recorded a reduction of gaming operations revenue from the accretion of contract rights under development agreements and placement fees of $0.5 million for the year ended December 31, 2015. The amounts amortized in 2014 and the Successor Period were nominal. We recorded a reduction of gaming operations revenue from the accretion of contract rights under development agreements and placement fees of $3.9 million for the Predecessor Period.

The estimated amortization expense of definite-lived intangible assets as well as the accretion of contract rights under development and placement fees, for each of the next five years and thereafter is as follows (in thousands):

	Amortization Expense		Placement Fee Accretion
For the year ended December 31,
2016	$	52,113	$	4,663
2017	48,047		4,537
2018	40,805		3,795
2019	33,706		2,609
2020	26,943		57
Thereafter	60,853		102

XML

Accounts Payable and Accrued Liabilities

12 Months Ended

Dec. 31, 2015

Payables and Accruals [Abstract]

Accounts Payable and Accrued Liabilities

ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts payable and accrued liabilities consist of the following (in thousands):

	December 31, 2015		December 31, 2014
Trade accounts payable	$	4,776	$	1,517
Salary and payroll tax accrual	5,851		3,002
Taxes payable	2,440		566
Accrued interest	8		499
C2 Gaming one-year payout (see Note 2)	—		9,000
C2 Gaming contingent consideration (see Note 2)	1,125		2,500
Proceeds from employees in advance of common stock issuance	—		1,969
Placement fees payable	4,525		—
Accrued other	4,305		4,263
Total accounts payable and accrued liabilities	$	23,030	$	23,316

XML

Long-Term Debt

12 Months Ended

Dec. 31, 2015

Debt Disclosure [Abstract]

Long-Term Debt

LONG-TERM DEBT

Long-term debt consists of the following (in thousands):

	December 31, 2015			December 31, 2014
Senior secured credit facilities:
Term loans, interest at LIBOR or base rate plus 8.25% (9.25% at December 31, 2015), net of unamortized discount of $10.9 million and $5.0 million at December 31, 2015 and December 31, 2014, respectively.	$	404,019		$	148,447
$40 million revolving credit facility, interest at LIBOR or base rate plus 8.25%	—			10,000
Senior secured PIK notes, net of unamortized discount of $3.3 million at December 31, 2015	119,292			—
Seller notes	18,902			6,012
Equipment long-term note payable and capital leases	5,826			2,230
Total debt	548,039			166,689
Less: Current portion	(6,919		)	(2,495		)
Long-term debt	$	541,120		$	164,194

Senior Secured Credit Facilities

On December 20, 2013, the Company entered into our senior secured credit facilities, which consisted of $155.0 million in term loans and a $25.0 million revolving credit facility. On May 29, 2015, the Company entered into incremental facilities for $265.0 million in term loans and on June 1, 2015, the Company entered into an incremental agreement for an additional $15.0 million of incremental revolving commitments. The proceeds of the incremental term loans were used primarily to pay the consideration for the Cadillac Jack acquisition.

The term loans will mature on December 20, 2020, and the revolving credit facility will mature on December 20, 2018. The term loans require scheduled quarterly payments in amounts equal to 0.25% of the original aggregate principal amount of the term loans, with the balance due at maturity. Borrowings under the term loans bear interest at a rate equal to, at the Company’s option, either LIBOR or the base rate, subject to an interest rate floor plus an applicable margin rate. Borrowings under the revolving credit facility bear interest at a rate equal to, at the Company’s option, either LIBOR or the base rate plus an applicable margin rate. In addition, on a quarterly basis, the Company is required to pay each lender under the revolving credit facility a commitment fee in respect of any unused commitments thereunder at a rate of 0.50% per annum.

The senior secured credit facilities are guaranteed by AP Gaming Holdings, LLC, the AP Gaming I, LLC’s (the “Borrower”) material, wholly owned domestic subsidiaries (subject to certain exceptions), and are secured by a pledge by AP Gaming Holdings, LLC of the Borrower’s equity interest directly held by AP Gaming Holdings, LLC and a pledge of substantially all of the existing and future property and assets of the Borrower and the subsidiary guarantors, subject to certain exceptions. The senior secured credit facilities require that the Borrower maintain a maximum net first lien leverage ratio set at a maximum of 5.5 to 1 beginning with the first quarter ending June 30, 2014. The senior secured credit facilities contain limitations on additional indebtedness, guarantees, incurrence of liens, investments and distributions, as defined. The senior secured credit facilities also contain customary events of default included in similar financing transactions, including, among others, failure to make payments when due, default under other material indebtedness, breach of covenants, breach of representations and warranties, involuntary or voluntary bankruptcy, and material judgments. The Company was in compliance with the covenants of the senior secured credit facilities at December 31, 2015.

Senior secured PIK notes

On May 29, 2015, the Company entered into a note purchase agreement with AP Gaming Holdings, LLC, as subsidiary guarantor (the “Subsidiary Guarantor”), Deutsche Bank AG, London Branch, as purchaser (the “Purchaser”), and Deutsche Bank Trust Company Americas, as collateral agent.  Pursuant to the agreement, the Company issued $115.0 million of its 11.25% senior secured PIK notes due 2021 (the “Notes”) at an issue price of 97% of the principal amount thereof to the Purchaser in a private placement exempt from registration under the Securities Act of 1933, as amended.  The Notes are secured by the Company’s equity in its subsidiary AP Gaming, Inc., subject to certain limitations including those imposed by gaming laws, and are unconditionally guaranteed by the Subsidiary Guarantor.

Interest on the Notes will accrue at a rate of 11.25% per annum. The Company may elect to pay interest due on the Notes in cash, by increasing the principal of the outstanding Notes or by issuing new Notes (“PIK interest”) for the entire amount of the interest payment or by paying interest partially in cash and partially in PIK interest. Interest on the Notes will accrue from the date of issuance and will be payable on the dates described in more detail in the agreement.  The Notes will mature on May 28, 2021.  The net proceeds of the Notes were used primarily to finance the Cadillac Jack acquisition.

The Notes contain limitations on additional indebtedness, guarantees, incurrence of liens, investments and distributions, as defined. The Notes also contains customary events of default included in similar transactions, including, among others, failure to make payments when due, acceleration of other material indebtedness, breach of covenants, breach of representations and warranties, involuntary or voluntary bankruptcy, and material judgments. At December 31, 2015, the Notes totaled $119.3 million, which includes capitalized interest of $7.6 million.

Seller notes

On December 20, 2013, the Company issued two promissory notes (the “AGS Seller Notes”) to AGS Holdings, LLC, in the amounts of $2.2 million and $3.3 million, to satisfy the conditions set forth in the Acquisition Agreement. At December 31, 2015, notes payable related to the AGS Seller Notes totaled $6.5 million, which includes capitalized interest of $1.0 million. The AGS Seller Notes accrue interest on the unpaid principal balance at 8.5% per annum and shall be payable semi-annually in arrears on June 30 and December 31, commencing on June 30, 2014. Any interest accrued and payable on any interest payment date will be paid by capitalizing such interest and adding it to (and thereby increasing) the outstanding principal amount of this AGS Seller Notes. All principal and interest under the AGS Seller Notes is due and payable on June 18, 2021, the maturity date. The Company may prepay from time to time all or any portion of the outstanding principal balance due under the AGS Seller Notes.

On May 29, 2015, the Company issued a promissory note to Amaya Inc. (the “Amaya Seller Note”) with an initial principal amount of $12.0 million to satisfy the conditions set forth in the stock purchase agreement for the Cadillac Jack Acquisition. The Amaya Seller Note accrues interest on the unpaid principal amount at 5.0% per annum and is payable semi-annually on June 30 and December 31 (and on May 29, 2023, the maturity date of the note), commencing on June 30, 2015. All interest accrued and payable on any interest payment date will be paid by capitalizing such interest and adding it to (and thereby increasing) the outstanding principal amount of the Amaya Seller Note. All principal under the note is due and payable on May 29, 2023.  The Amaya Seller Note is required to be prepaid under certain circumstances described in more detail in the note agreement. The Company may prepay from time to time all or any portion of the outstanding principal balance due under the Amaya Seller Note.  The Amaya Seller Note includes certain covenants and events of default that are customary for instruments of this type. At December 31, 2015, the Amaya Seller Note totaled $12.4 million, which includes capitalized interest of $0.4 million.

Equipment Long Term Note Payable and Capital Leases

The Company has entered into a financing agreement to purchase certain gaming devices, systems and related equipment and has entered into leases for servers and equipment that are accounted for as capital leases.

Scheduled Maturities of Long-Term Debt

Aggregate contractual future principal payments (excluding the effects of repayments for excess cash flow) of long-term debt for the years following December 31, 2015, are as follows (in thousands):

Years ending December 31,	Successor
2016	$	6,919
2017	6,325
2018	5,283
2019	4,234
2020	397,953
Thereafter	141,521
Total scheduled maturities	562,235
Unamortized debt discount	(14,196		)
Total long-term debt	$	548,039

XML

Stockholders' Equity

12 Months Ended

Dec. 31, 2015

Equity [Abstract]

Stockholders' Equity

STOCKHOLDERS’ EQUITY

Common Stock

The Company’s common stock consists of two classes: class A voting common stock (“Class A Shares”) and class B non-voting common stock (“Class B Shares”). The holders of the Class A Shares are entitled to one vote per share on all matters to be voted on by the stockholders of the Company. The holders of the Class A Shares have no economic rights or privileges, including rights in liquidation, and have no right to receive dividends or any other distributions. The holders of the Class B Shares have no right to vote on any matter to be voted on by the stockholders of the Company. Each holder of Class B Shares is entitled to share equally, share for share, dividends declared, as well as any distributions to the stockholders, and in the event of the Company’s liquidation, dissolution or winding up, is entitled to share ratably in any remaining assets after payment of or provision for liabilities and the liquidation on preferred stock, if any.

On April 28, 2014, our controlling stockholder exchanged its 10,000,000 Class A Shares for 10,000,000 Class B Shares. On May 29, 2015, we issued an additional 4,931,529 Class B Shares to our controlling stockholder for total proceeds of $77.4 million. The funds received from the May 2015 issuance of Class B Shares were used, in addition to proceeds from the issuance of long-term debt, to fund the acquisition of Cadillac Jack.

As of December 31, 2015, 107,498 Class B Shares issued to “Management Holder,” as defined in the Securityholders Agreement dated April 28, 2014 (the “Securityholders Agreement”) were outstanding. The Class B Shares issued to Management Holder’s are not considered issued for accounting purposes as they contain a substantive performance condition that must be met for the Management Holder to benefit from the ownership of the shares. As a result, shares issued to Management Holder’s are not considered issued for accounting purposes until such time that the performance condition is met.

Class B Shares that are held by a Management Holder are subject to repurchase rights (the “Repurchase Rights”), as outlined in Section 6 of the Securityholders Agreement, that are contingent on the Management Holder’s termination. The Repurchase Rights enable the Company to recover the Class B Shares issued to a Management Holder without transferring any appreciation of the fair value of the stock to the Management Holder upon certain terminations of the Management Holder’s employment prior to a “Qualified Public Offering”, as defined in the Securityholders Agreement. If a Management Holder’s employment is terminated by the Company prior to the consummation of a Qualified Public Offering for “Cause”, as defined in the Securityholders Agreement, or is terminated by such Management Holder without “Good Reason”, as defined in the Securityholders Agreement, then the Company shall have the right to repurchase all or any portion of the Class B Shares held by such Management Holder for the lesser of original cost and fair market value. If a Management Holder’s employment is terminated by the Company prior to the consummation of a Qualified Public Offering other than as described above and in the Securityholders Agreement, then the Company shall have the right to repurchase all or any portion of the Class B Shares held by such Management Holder for fair market value.

XML

Write Downs and Other Charges

12 Months Ended

Dec. 31, 2015

Write Downs And Other Charges [Abstract]

Write Downs and Other Charges

WRITE DOWNS AND OTHER CHARGES

The consolidated statements of operation and comprehensive loss include various non-routine transactions and related consulting fees. For the year ended December 31, 2015, the Company recognized $11.8 million in write-downs and other charges primarily related to acquisition related charges of $8.2 million. The Company also recognized an impairment to intangible assets of $3.4 million related to game titles, write offs related to prepaid royalties of $1.3 million, losses from the disposal of assets of $1.3 million and the impairment of long-lived assets of $0.2 million, partially offset by net write downs of primarily contingent consideration of $2.7 million that is described in Note 2.

For the year ended December 31, 2014, the Company recognized $7.1 million in write-downs and other charges primarily related to acquisition charges of $2.8 million, losses from the disposal of assets of $1.9 million, an impairment to intangible assets of $1.4 million and an impairment of long-lived assets of $0.8 million.

For the Successor Period ending December 31, 2013, the Company recognized $7.5 million in write-downs and other charges for fees related to the AGS Capital Acquisition. For the Predecessor Period, the Company recognized $10.3 million in write downs and other charges that primarily consisted of $3.9 million in fees related to the AGS Capital Acquisition, $3.3 million related to the impairment of long-lived assets, $1.7 million related to the impairment of intangible assets, $0.5 million related to the write-down of phantom unit compensation and $0.3 million for consulting fees paid to a related party.

XML

Basic and Diluted Loss Per Share

12 Months Ended

Dec. 31, 2015

Earnings Per Share [Abstract]

Basic and Diluted Loss Per Share

BASIC AND DILUTED LOSS PER SHARE

The Company computes net income (loss) per share in accordance with accounting guidance that requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the consolidated statement of operations and comprehensive income (loss). Basic EPS is computed by dividing net income (loss) for the period by the weighted average number of shares outstanding during the period. Basic EPS excludes Class B Shares issued to Management Holders until the performance condition or termination event is considered probable (see Note 7). Until such time, the Class B Shares issued to Management Holders will be included in the calculation of diluted EPS using the treasury stock method and are treated as stock options. Diluted EPS is computed by dividing net income (loss) for the period by the weighted average number of common shares outstanding during the period, increased by potentially dilutive common shares that were outstanding during the period. Diluted EPS excludes all potential dilutive shares if their effect is anti-dilutive. Potentially dilutive common shares include stock options and restricted stock (see Note 11).

There were no potentially dilutive securities for the year ended December 31, 2015.

Excluded from the calculation of diluted EPS for the year ended December 31, 2015, are 50,000 restricted shares and 0.3 million stock options, as such securities were anti-dilutive.

XML

Benefit Plans

12 Months Ended

Dec. 31, 2015

Compensation and Retirement Disclosure [Abstract]

Benefit Plans

BENEFIT PLANS

The Predecessor implemented the AGS Holdings Inc. Phantom Units Plan (the “Plan”) which was intended to reinforce and encourage the continued attention and dedication of certain Covered Executives (as defined) to their assigned duties to the Predecessor until a Change in Control (as defined) occurred. Units of the Plan were issued as a percentage and in terms of number of units within the Plan at a strike price of $56.0 million and vested over a period of up to four years. The value of the units was determined as the product of the percentage held in the Plan and the summation of the enterprise value of the Company less the net debt of the Company less the strike price. During 2013, $2.1 million was paid out under the terms of the Plan. During the second quarter of 2014, the Plan was finalized and settled resulting in a payment of approximately $22,000 to Plan unit holders.

The Company has established a 401(k) defined contribution plan (the “401(k) Plan”) for its employees. The 401(k) Plan allows employees to contribute up to 15% of their pretax earnings, and the Company may match a percentage of the contributions on a discretionary basis. The expense associated with the 401(k) Plan for the year ended December 31, 2015, December 31, 2014, the Successor Period and the Predecessor Period was $0.6 million, $0.3 million, $7,000 and $0.2 million, respectively. The increase in the expense associated with the 401(k) Plan compared to the prior year was due to the inclusion of Cadillac Jack, which accounted for $0.2 million of the expense for the year ended December 31, 2015.

On April 28, 2014, the Board of Directors of the Company approved the 2014 Long-Term Incentive Plan (“LTIP”). Under the LTIP, the Company is authorized to grant nonqualified stock options, rights to purchase Class B Shares, restricted stock, restricted stock units and other awards to be settled in, or based upon, Class B Shares to persons who are directors and employees of and consultants to the Company or any of its subsidiaries on the date of the grant. The LTIP will terminate ten years after approval by the Board. Subject to adjustments in connection with certain changes in capitalization, the maximum number of Class B Shares that may be delivered pursuant to awards under the LTIP is 1,250,000.

XML

Share-Based Compensation

12 Months Ended

Dec. 31, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Share-Based Compensation

SHARE-BASED COMPENSATION

Stock Options

The Company has granted stock awards to eligible participants under the LTIP. The stock awards include options to purchase the Company’s Class B Shares. These stock options include a combination of service and market conditions, as further described below. In addition, these stock options include a performance vesting condition, a Qualified Public Offering (see Note 7), which is not considered to be probable as of December 31, 2015. As a result, no share-based compensation expense for stock options has been recognized and none will be recognized for these stock awards until the performance condition is considered to be probable. When the performance condition is considered probable, the stock awards will vest in accordance with the underlying service and market conditions.

The Company calculated the grant date fair value of stock options that vest over a service period using the Black Scholes model. For stock options that contain a market condition related to the return on investment that the Company’s stockholders achieve, the options were valued using a lattice-based option valuation model. The assumptions used in these calculations are noted in the following table. Expected volatilities are based on implied volatilities from comparable companies. The expected time to liquidity is based on management’s estimate. The risk-free rate is based on the U.S. Treasury yield curve for a term equivalent to the estimated time to liquidity. The expected dividend yield is 0% for all stock awards.

	Year Ended December 31,
	2015	2014	2013
Option valuation assumptions:
Expected dividend yield	—%	—%	—%
Expected volatility	55%	73%	—%
Risk-free interest rate	1.69%	1.63%	—%
Expected term (in years)	6.4	5.0	0

A summary of the changes in stock options outstanding during the year ended December 31, 2015, is as follows:

	Number of Options		Weighted Average Exercise Price		Weighted Average Remaining Contract Term (years)	Aggregate Intrinsic Value
Options outstanding as of December 31, 2014	576,250		$	10.00
Granted	347,875		$	15.41
Canceled	(158,750	)	$	10.00
Options outstanding as of December 31, 2015	765,375		$	12.46	8.6	$	2,481,113
Exercisable as of December 31, 2015	55,833		$	10.00	8.4	$	117,169

No options expired or were forfeited for the year ended December 31, 2015.

Restricted awards

A summary of the changes in restricted stock awards outstanding during the year ended December 31, 2015, is as follows:

	Shares	Weighted Average Grant Date Fair Value
Nonvested at January 1, 2015	50,000	$	10.00
Vested	10,000	10.00
Nonvested at December 31, 2015	40,000	10.00

No restricted awards were granted or forfeited during the year ended December 31, 2015.

The following is provided for the share award vesting from the plans (in thousands, except weighted average grant date fair value):

	Year Ended December 31,
	2015		2014		2013
Weighted average grant date fair value	$	—	$	10.00	$	—

No restricted stock was granted, canceled or forfeited during the year ended December 31, 2015. During the year ended December 31, 2014, the Company granted 50,000 restricted Class B Shares that vest in five equal installments on each of the first five anniversaries of the grant date. This restricted stock includes a service condition and a performance vesting condition (a Qualified Public Offering), which was not considered to be probable of occurring as of December 31, 2015. As a result, no share-based compensation expense was recognized for the years ended December 31, 2015 and 2014, and none will be recognized for restricted stock until the performance condition is considered to be probable. When the performance condition is considered probable, the stock awards will vest in accordance with the underlying service condition.

XML

Restructuring

12 Months Ended

Dec. 31, 2015

Restructuring and Related Activities [Abstract]

Restructuring

RESTRUCTURING

We recorded employee termination and restructuring costs of $1.4 million and $1.2 million during the years ended December 31, 2015 and 2014, respectively. We do not anticipate additional costs associated with the following plans in excess of amounts accrued below. Employee termination and restructuring costs are classified in selling, general and administrative as well as research and development expense and have been recorded for the following restructuring plans.

Toronto Restructuring Plan

In June 2014, we took steps to reduce current and future expenses by reducing staff in our technology and game development division that operated primarily out of our Toronto location. The Company has also entered into retention agreements with certain employees that will be paid upon the completion of their service period.

Cadillac Jack Integration Plan

In June 2015, we took actions to reduce the staff in all of our locations and to streamline our operations and cost structure. The Company has also entered into retention agreements with certain employees that will be paid upon the completion of their service period.

The following table summarizes the change in our restructuring accruals for the year ended December 31, 2015 (in thousands), which is included in accounts payable and accrued liabilities in the consolidated balance sheets:

	December 31, 2014		Charge to expense		Cash paid		December 31, 2015
Accrued severance	$	127	$	935	$	1,025	$	37
Accrued retention bonuses	216		437		653		—
Property costs	—		25		25		—
Total	$	343	$	1,397	$	1,703	$	37

XML

Income Taxes

12 Months Ended

Dec. 31, 2015

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

The components of loss before provision for income taxes are as follows (in thousands):

	Successor									Predecessor
	Year Ended December 31, 2015			Year ended December 31, 2014			Period December 21 through December 31, 2013			Period January 1, 2013 through December 20, 2013
Domestic	$	(66,728	)	$	(26,187	)	$	(8,102	)	$	(42,176	)
Foreign	(7,906		)	—			—			—
Loss before provision for income taxes	$	(74,634	)	$	(26,187	)	$	(8,102	)	$	(42,176	)

The income tax (benefit) expense is as follows (in thousands):

	Successor							Predecessor
	Year to date December 31, 2015			Year ended December 31, 2014		Period December 21 through December 31, 2013		Period January 1, 2013 through December 20, 2013
Current:
Federal	$	932		$	—	$	—	$	—
State	(10		)	7		—		—
Foreign	1,424			—		—		—
Total current income tax expense	2,346			7		—		—
Deferred:
Federal	(34,589		)	2,005		50		—
State	(2,506		)	177		4		—
Foreign	(1,340		)	—		—		—
Total deferred income (benefit) expense	(38,435		)	2,182		54		—
Total income tax (benefit) expense	$	(36,089	)	$	2,189	$	54	$	—

The reconciliation of income tax at the federal statutory rate to the actual effective income tax rate (benefit) is as follows:

	Successor						Predecessor
	Year to date December 31, 2015		Year ended December 31, 2014		Period December 21 through December 31, 2013		Period January 1, 2013 through December 20, 2013
Federal statutory rate	(35.0	)%	(34.0	)%	(34.0	)%	(34.0	)%
Non-taxable entities	—	%	—	%	—	%	32.7	%
Foreign rate differential	0.7	%	—	%	—	%	(0.5	)%
State income taxes, net of federal benefit	(2.5	)%	(0.8	)%	(3.1	)%	—	%
Nondeductible loan costs	1.5	%	—	%	—	%	—	%
Nondeductible transaction costs	1.6	%	—	%	—	%	—	%
Other permanent differences	(0.3	)%	0.2	%	—	%	—	%
Other differences	0.5	%	0.4	%	—	%	—	%
Uncertain tax positions	0.3	%	—	%	—	%	—	%
Valuation allowance	(15.2	)%	42.6	%	37.8	%	1.8	%
	(48.4	)%	8.4	%	0.7	%	—	%

The components of the net deferred tax liability consist of the following (in thousands):

	Successor
	December 31, 2015			December 31, 2014
Deferred tax assets:
Accrued expenses	$	608		$	845
Allowance for bad debt	1,176			3
Payroll accruals	2,085			—
Foreign tax credits	8,834			—
Net operating loss carryforwards	35,862			8,156
Intangible assets	—			7,368
Research and development credits	1,569			—
Loan costs and interest	3,519			—
Other	2,017			166
Total deferred tax assets	55,670			16,538
Valuation allowance	(8,274		)	(14,260		)
Deferred tax assets, net of valuation allowance	$	47,396		$	2,278
Deferred tax liabilities:
Prepaid expenses and other	$	(1,033	)	$	(800	)
Intangible assets	(60,309		)	(2,236		)
Property and equipment, net	(1,364		)	(1,633		)
Deferred tax liabilities	(62,706		)	(4,669		)
Net deferred tax liabilities	$	(15,310	)	$	(2,391	)

In general, it is the practice and intention of the Company to reinvest the earnings of its non-U.S. subsidiaries in those operations. Due to cumulative foreign losses, there is no deferred tax liability recorded for unremitted foreign earnings.

The Company’s Mexican customers are required under the U.S.-Mexico tax treaty to withhold 10% of their payments due to the Company for license fees, which can be used as foreign tax credits on the Company’s U.S. federal income tax return. The foreign tax credits are not refundable, but can be carried forward for 10 years to offset future tax liability. Of the Company’s $8.8 million in foreign tax credits, approximately $4.0 million begin to expire starting in 2016. A full valuation allowance has been recorded on the credits which are expected to expire. In addition, the Company has $1.6 million of research and development credits which begin to expire in 2030.

The Company has net operating loss (“NOL”) carryforwards for U.S. federal purposes of $86.4 million, in foreign jurisdictions of $16.9 million and various U.S. states of $63.4 million. The U.S. federal NOL carryforwards begin to expire in 2031, the Mexican NOL carryforwards begin to expire in 2021, and the U.S. state NOL carryforwards begin to expire in 2018.

The Company has uncertain tax positions with respect to prior tax filings. The uncertain tax positions, if asserted by taxing authorities, would result in utilization of the Company’s tax credit and operating loss carryovers. The credit and operating loss carryovers presented as deferred tax assets are reflected net of these unrecognized tax benefits.

The Company assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to realize the existing deferred tax assets. Taxable temporary differences recorded in connection with the acquisition of Cadillac Jack represent sources of future taxable income to support the realization of AP Gaming’s legacy deferred tax assets. As a result of the net deferred tax liabilities recorded in connection with the acquisition of Cadillac Jack, the Company recorded a tax provision benefit of $14.3 million as a result of the reduction of its valuation allowance. In addition, during the year ended December 31, 2015 the Company recorded a $5.7 million increase to its valuation allowance for tax credits and operating loss carryovers acquired in connection with business combinations. The valuation allowances on acquired credits and operating loss carryovers resulted in an increase to acquired goodwill of $5.7 million. The remaining $2.6 million valuation allowance relates to foreign tax credits which are expected to expire and foreign losses incurred in 2015 which are not expected to be realized.

The Company applies a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Company recognizes the impact of a tax position in the financial statements when the position is more likely than not of being sustained on audit based on the technical merits of the position.

The total amount of unrecognized tax benefits as of December 31, 2015 was $29.5 million. Of this amount, $26.9 million, if recognized, would be included in our Consolidated Statements of Operations and Comprehensive Loss and have an impact on our effective tax rate. The Company does not anticipate a material reduction of its liability for unrecognized tax benefits before December 31, 2016.

The Company recognizes interest and penalties accrued for unrecognized tax benefits in income tax expense. Related to the unrecognized tax benefits noted above, the Company accrued penalties and interest of $0.9 million during 2015 and in total, as of December 31, 2015, has recognized a liability for penalties and interest of $8.0 million.

The Company entered into an indemnification agreement with the prior owners of Cadillac Jack whereby the prior owners have agreed to indemnify the Company for changes in tax positions by taxing authorities for periods prior to the transaction. As of December 31, 2015, an indemnification receivable of $21.9 million has been recorded in the financial statements. This amount includes the indemnification of the original pre-acquisition tax positions along with any related accrued interest and penalties. If the related unrecognized tax benefits are subsequently recognized, a corresponding charge to relieve the associated indemnification receivables would be recognized in our Consolidated Statements of Operations and Comprehensive Loss and have an impact on operating income.

The Company had the following activity for unrecognized tax benefits in 2015. The Company had no unrecognized tax benefits prior to 2015. (amounts in thousands):

	December 31, 2015
Balance-beginning of year	$	—
Current year acquisitions	29,701
Increases based on tax positions of the current year	795
Currency translation adjustments	(973		)
Balance-end of year	$	29,523

XML

Commitments and Contingencies

12 Months Ended

Dec. 31, 2015

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

COMMITMENTS AND CONTINGENCIES

Leases

The Company leases administrative and warehouse facilities and certain equipment under non-cancelable operating leases. Rent expense was $2.0 million, $0.8 million, $22,000 and $0.6 million for the year ended December 31, 2015, December 31, 2014, the Successor Period and the Predecessor Period, respectively.

Future minimum lease payments under these leases in excess of one year as of December 31, 2015 are as follows (in thousands):

For the year ended December 31,	Successor
2016	$	1,693
2017	1,752
2018	1,186
2019	1,065
2020	1,092
Thereafter	806
Total	$	7,594

Other commitments and contingencies

The Company is subject to federal, state and Native American laws and regulations that affect both its general commercial relationships with its Native American tribal customers, as well as the products and services provided to them. Periodically, the Company reviews the status of each significant matter and assesses the potential financial exposure. If the potential loss from any claim or legal proceeding is considered probable and the amount can be estimated, the Company accrues a liability for the estimated loss. If a potential loss from any claim or legal proceeding is considered reasonably possible, the Company discloses an estimate of the possible loss or range of possible loss, or a statement that such an estimate cannot be made. Significant judgment is required in both the determination of probability and the determination as to whether an exposure is reasonably estimable. Because of uncertainties related to these matters, accruals are based only on the best information available at the time. As additional information becomes available, the Company reassesses the potential liability related to their pending claims and litigation and may revise its estimates. Such revisions in the estimates of the potential liabilities could have a material impact on the results of operations and financial condition.

XML

Selected Quarterly Financial Data (Unaudited)

12 Months Ended

Dec. 31, 2015

Quarterly Financial Information Disclosure [Abstract]

Selected Quarterly Financial Data (Unaudited)

SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

The following tables present selected quarterly financial information for 2015 and 2014, as previously reported (in thousands).

	Year ended December 31, 2015
	Quarter ended March 31, 2015			Quarter ended June 30, 2015			Quarter ended September 30, 2015			Quarter ended December 31, 2015
Consolidated Income Statement Data:
Revenues	$	18,795		$	26,296		$	38,105		$	40,096
Loss from operations	(3,736		)	(11,339		)	(13,017		)	(1,347		)
Net (loss) income	(9,235		)	2,849			(23,279		)	(8,880		)

	Year ended December 31, 2014
	Quarter ended March 31, 2014			Quarter ended June 30, 2014			Quarter ended September 30, 2014			Quarter ended December 31, 2014
Consolidated Income Statement Data:
Revenues	$	17,158		$	17,428		$	18,836		$	18,718
Income (loss) from operations	695			(1,468		)	(3,432		)	(4,216		)
Net loss	(4,249		)	(6,203		)	(8,674		)	(9,250		)

XML

Schedule I

12 Months Ended

Dec. 31, 2015

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

Schedule I

CONDENSED BALANCE SHEETS

(in thousands, except share data)

	Successor
	December 31, 2015			December 31, 2014
Assets
Current assets
Cash and cash equivalents	$	25,972		$	8,513
Prepaid expenses	63			69
Total current assets	26,035			8,582
Deferred tax asset	3,528			—
Deferred loan costs, net	528			—
Investment in subsidiaries	203,390			57,622
Total assets	$	233,481		$	66,204
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable and accrued liabilities	$	—		$	1,993
Intercompany payables	20			455
Total current liabilities	20			2,448
Long-term debt	131,653			—
Other long-term liabilities	1,271			—
Total liabilities	132,944			2,448
Stockholders’ equity:
Common stock	149			100
Additional paid-in capital	177,276			99,900
Retained earnings	(75,077		)	(36,532		)
Accumulated other comprehensive (loss) income	(1,811		)	288
Total stockholders’ equity	100,537			63,756
Total liabilities and stockholders’ equity	$	233,481		$	66,204

AP GAMING HOLDCO, INC.

(PARENT COMPANY ONLY)

CONDENSED STATEMENTS OF OPERATIONS

(in thousands)

	Successor
	Year ended December 31, 2015			Year ended December 31, 2014			Period December 21, 2013 through December 31, 2013
Operating expenses
Selling, general and administrative	$	546		$	1,512		$	—
Total operating expenses	546			1,512			—
Loss from operations	(546		)	(1,512		)	—
Other expense (income)
Equity in net loss of subsidiaries	33,405			26,870			8,156
Interest expense	8,123			—			—
Interest income	(1		)	(6		)	—
Loss before income taxes	(42,073		)	(28,376		)	(8,156		)
Income tax benefit (expense)	3,528			—			—
Net loss	(38,545		)	(28,376		)	(8,156		)
Foreign currency translation adjustment	(2,099		)	289			(1		)
Total comprehensive loss	$	(40,644	)	$	(28,087	)	$	(8,157	)

AP GAMING HOLDCO, INC.

(PARENT COMPANY ONLY)

CONDENSED STATEMENTS OF CASH FLOWS

(in thousands, except per share data)

	Successor
	Year ended December 31, 2015			Year ended December 31, 2014			Period December 21, 2013 through December 31, 2013
Cash flows from operating activities
Net loss	$	(38,545	)	$	(28,376	)	$	(8,156	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Amortization of deferred loan costs and discount	143			—			—
Equity in net loss of subsidiaries	33,405			26,870			8,156
(Benefit) provision of deferred income tax	(3,528		)	—			—
Changes in assets and liabilities that relate to operations:
Prepaid expenses	6			(69		)	—
Intercompany payable/receivable	455			455			—
Accounts payable and accrued liabilities	7,956			24			—
Net cash (used in) provided by operating activities	(108		)	(1,096		)	—
Cash flows from investing activities
Investment in subsidiaries	(172,484		)	(11,635		)	(83,462		)
Distributions received from subsidiaries	1,322			2,737			—
Net cash used in investing activities	(171,162		)	(8,898		)	(83,462		)
Cash flows from financing activities
Proceeds from issuance of debt	111,550			—			—
Proceeds from issuance of common stock	77,425			—			100,000
Proceeds from employees in advance of common stock issuance	579			1,969			—
Repurchase of shares issued to management	(277		)	—			—
Payment of deferred loan costs	(548		)	—			—
Net cash provided by financing activities	188,729			1,969			100,000
Increase (decrease) in cash and cash equivalents	17,459			(8,025		)	16,538
Cash and cash equivalents, beginning of period	8,513			16,538			—
Cash and cash equivalents, end of period	$	25,972		$	8,513		$	16,538
Non-cash investing and financing activities:
Subsidiary payment for share repurchase on Company’s behalf	$	1,000		$	—		$	—
Intercompany payable settled as distribution	$	890		$	—		$	—
Incurrence of Amaya Seller Note	$	12,000		$	—		$	—
Interest payable added to debt principal	$	7,980		$	—		$	—

AP GAMING HOLDCO, INC.

(PARENT COMPANY ONLY)

NOTES TO CONDENSED FINANCIAL STATEMENTS

NOTE 1 - BASIS OF PRESENTATION

The accompanying condensed financial statements include only the accounts of AP Gaming Holdco, Inc. (the “Company”). Investments in the Company’s subsidiaries are accounted for under the equity method.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted since this information is included in the Company’s consolidated financial statements included elsewhere in this Form 10-K.

NOTE 2 - COMMITEMENTS AND CONTINGENCIES

The Company is a holding company and, as a result, its ability to pay dividends is dependent on its subsidiaries’ ability to obtain funds and its subsidiaries' ability to provide funds to it. Restrictions are imposed by its subsidiaries' debt instruments, which significantly restrict certain key subsidiaries holding a majority of its assets from making dividends or distributions to the Company. These restrictions are subject to certain exceptions for affiliated overhead expenses as defined in the agreements governing the debt instruments, unless certain financial and non-financial criteria have been satisfied.

Long-term debt of the Company consists of the senior secured PIK notes and the Amaya Seller Note that are described in Note 6 to the consolidated financial statements.

XML

Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2015

Accounting Policies [Abstract]

Basis of presentation

Basis of presentation

References to “Successor” refer to the Company on or after December 21, 2013. References to “Predecessor” refer to the period prior to December 21, 2013. The accompanying consolidated statements of operations, changes in stockholders’ equity/member’s deficit and cash flows for the year ended December 31, 2013 are presented for two periods: January 1, 2013 through December 20, 2013 (the “Predecessor Period”) and December 21, 2013 through December 31, 2013 (the “Successor Period”).

Principles of Consolidation

Principles of Consolidation

The accompanying consolidated financial statements include the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Certain amounts in the consolidated financial statements for the previous years have been reclassified to be consistent with the current year presentation. These reclassifications had no effect on the previously reported net loss.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with GAAP requires the Company to make decisions based upon estimates, assumptions, and factors considered relevant to the circumstances. Such decisions include the selection of applicable accounting principles and the use of judgment in their application, the results of which impact reported amounts and disclosures. Changes in future economic conditions or other business circumstances may affect the outcomes of the estimates and assumptions. Accordingly, actual results could differ materially from those anticipated.

Revenue Recognition

Revenue Recognition

Gaming Operations

Gaming operations revenue is earned by providing customers with gaming machines, gaming machine content licenses, back-office equipment and linked progressive systems, which are collectively referred to as gaming equipment, under participation arrangements. The participation arrangements convey the right to use the equipment (i.e. gaming machines and related integral software) for a stated period of time and are accounted for as operating leases. Under these arrangements, the Company retains ownership of the gaming equipment installed at customer facilities and receives either revenue based on a percentage of the win per day generated by the gaming equipment or a daily fee. The majority of the Company’s leases require the Company to provide maintenance throughout the entire term of the lease. In some cases, a performance guarantee exists that, if not met, requires the Company to replace or remove the gaming machines from the customer’s floor. Whether contractually required or not, the Company develops and provides new gaming titles throughout the life of the lease. Certain arrangements require a portion of the facility’s win per day to be set aside to be used to fund facility-specific marketing, advertising, promotions and service. These amounts are offset against gaming revenue. Gaming operations revenue is also earned from the licensing of table game content and is earned and recognized on a fixed monthly rate. Our social gaming products earn revenue from the sale of virtual coins or chips, which is recorded when the purchased coins or chips are used by the customer.

Equipment Sales

Revenues from the stand-alone product sales or separate accounting units are recorded when:

• Pervasive evidence of an arrangement exists;

• The sales price is fixed and determinable;

• Delivery has occurred and services have been rendered; and

• Collectability is reasonably assured.

Equipment sales are generated from the sale of gaming machines and licensing rights to game content software that is installed in the gaming machine, parts, and other ancillary equipment. Also included within the deliverables are delivery, installation and training, all of which occur within a few days of arriving at the customer location. Gaming equipment sales do not include maintenance beyond a standard warranty period. The recognition of revenue from the sale of gaming devices occurs as title and risk of loss have passed to the customer and all other revenue recognition criteria have been satisfied. As the combination of game content software and the tangible gaming device function together to deliver the product’s essential functionality, revenue from the sale of gaming devices is recognized under general revenue recognition guidance.

Cash and Cash Equivalents

Cash and Cash Equivalents

Cash and cash equivalents consist primarily of deposits held at major banks and other marketable securities with original maturities of 90 days or less.

Restricted Cash

Restricted Cash

Restricted cash amounts represent funds held in escrow as collateral for the Company’s surety bonds for various gaming authorities and funds held to ensure the availability of funds to pay wide-area progressive jackpot awards.

Allowance for Doubtful Accounts

Allowance for Doubtful Accounts

Accounts receivable are stated at face value less an allowance for doubtful accounts. The Company maintains an allowance for doubtful accounts related to accounts receivable and notes receivable, which are non-interest bearing, deemed to have a high risk of collectability. The Company reviews the accounts receivable and notes receivable on a monthly basis to determine if any receivables will potentially be uncollectible. The Company analyzes historical collection trends and changes in the customers’ payment patterns, customer concentration, and credit worthiness when evaluating the adequacy of the allowance for doubtful accounts. A large percentage of receivables are with Native American tribes and the Company has concentrations of credit risk with several tribes. The Company includes any receivable balances that are determined to be uncollectible in the overall allowance for doubtful accounts. Changes in the assumptions or estimates reflecting the collectability of certain accounts could materially affect the allowance for both accounts and notes receivable.

Inventories

Inventories

Inventories consist primarily of parts and supplies that are used to repair and maintain machinery and equipment. Inventories are stated at the lower of cost or market. Cost of inventories is determined using the first-in, first-out (“FIFO”) method for all components of inventory. The Company regularly reviews inventory quantities and updates estimates for the net realizable value of inventories. This process includes examining the carrying values of parts and ancillary equipment in comparison to the current fair market values for such equipment (less costs to sell or dispose). Some of the factors involved in this analysis include the overall levels of the inventories, the current and projected sales levels for such products, the projected markets for such products and the costs required to sell the products, including refurbishment costs. Changes in the assumptions or estimates could materially affect the inventory carrying value.

Property and Equipment

Property and Equipment

The cost of gaming equipment, consisting of fixed-base player terminals, file servers and other support equipment as well as other property and equipment, is depreciated over their estimated useful lives, using the straight-line method for financial reporting. Repairs and maintenance costs are expensed as incurred. The Company routinely evaluates the estimated lives used to depreciate assets. The estimated useful lives are as follows:

Gaming equipment	3 to 6 years
Other property and equipment	3 to 6 years

The Company reviews its property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. Impairment losses are estimated when indicators of impairment are present and the estimated undiscounted cash flows are not sufficient to recover the assets’ carrying amount.

When the estimated undiscounted cash flows are not sufficient to recover the asset’s carrying amount, an impairment loss is measured to the extent the fair value of the asset is less than its carrying amount.

The Company measures recoverability of assets to be held and used by comparing the carrying amount of an asset to future cash flows expected to be generated by the asset. The Company’s policy is to impair, when necessary, excess or obsolete gaming machines on hand that it does not expect to be used. Impairment is based upon several factors, including estimated forecast of gaming machine demand for placement into casinos. While the Company believes that the estimates and assumptions used in evaluating the carrying amount of these assets are reasonable, different assumptions could affect either the carrying amount or the estimated useful lives of the assets, which could have a significant impact on the results of operations and financial condition.

Intangible Assets

Intangible Assets

The Company reviews its identifiable intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Impairment losses are recognized for identifiable intangibles, other than goodwill, when indicators of impairment are present and the estimated undiscounted cash flows are not sufficient to recover the assets’ carrying amount.

When the estimated undiscounted cash flows are not sufficient to recover the intangible asset’s carrying amount, an impairment loss is measured to the extent the fair value of the asset is less than its carrying amount.

Certain trade names have an indefinite useful life and the Company tests these trade names for possible impairment at least annually, on October 1, or whenever events or changes in circumstances indicate that the carrying value may be impaired. We perform a qualitative assessment to determine if it is more likely than not that the fair value of the asset is less than its carrying amount. If we believe, as a result of our qualitative assessment, that it is more likely than not that the fair value of the asset is less than its carrying amount, the quantitative impairment test is required.

Costs of Computer Software

Costs of Computer Software

Internally developed gaming software represents the Company’s internal costs to develop gaming titles to utilize on the Company’s gaming machines. Internally developed gaming software is stated at cost and amortized over the estimated useful lives of the software, using the straight-line method. Software development costs are capitalized once technological feasibility has been established and are amortized when the software is placed into service. The computer software we develop reaches technological feasibility when a working model of the computer software is available. Any subsequent software maintenance costs, such as bug fixes and subsequent testing, are expensed as incurred. Discontinued software development costs are expensed when the determination to discontinue is made. Software development costs are amortized over the expected life of the title or group of titles, if applicable, to amortization expense.

On a quarterly basis, or more frequently if circumstances warrant, the Company compares the net book value of its internally developed computer software to the net realizable value on a title or group of title basis. The net realizable value is determined based upon certain assumptions, including the expected future revenues and net cash flows of the gaming titles or group of gaming titles utilizing that software, if applicable.

Goodwill

Goodwill

The excess of the purchase price of an acquired business over the estimated fair value of the assets acquired and the liabilities assumed is recorded as goodwill. The Company tests for possible impairment of goodwill at least annually, on October 1, or when circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. The Company has the option to begin with a qualitative assessment, commonly referred to as “Step 0”, to determine whether it is more likely than not that the reporting unit’s fair value of goodwill is less than its carrying value. This qualitative assessment may include, but is not limited to, reviewing factors such as the general economic environment, industry and market conditions, changes in key assumptions used since the most recently performed valuation and overall financial performance of the reporting units. If the Company determines that it is more likely than not that a reporting unit’s fair value is less than its carrying value, the Company performs a quantitative goodwill impairment analysis, and depending upon the results of that measurement, the recorded goodwill may be written down and charged to income from operations when its carrying amount exceeds its estimated fair value.

Deferred Loan Costs

Deferred Loan Costs

Deferred loan costs consist of various debt issuance costs and are being amortized using the effective-interest method over the life of the related loans.

Acquisition Accounting

Acquisition Accounting

The Company applies the provisions of ASC 805, “Business Combinations” (ASC 805), in accounting for business acquisitions. It requires us to recognize separately from goodwill the fair value of assets acquired and liabilities assumed on the acquisition date. Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net of the acquisition date fair values of the assets acquired and the liabilities assumed. Significant estimates and assumptions are required to value assets acquired and liabilities assumed at the acquisition date as well as contingent consideration, where applicable. These estimates are inherently uncertain and subject to refinement and typically include the calculation of an appropriate discount rate and projection of the cash flows associated with each acquired asset. As a result, during the measurement period, which may be up to one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the fair value of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to the consolidated statements of operations.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

The Company applies the provisions of ASC 820, “Fair Value Measurements” (ASC 820) to its financial assets and liabilities. Fair value is defined as a market-based measurement intended to estimate the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions. ASC 820 also established a fair value hierarchy, which requires an entity to maximize the use of observable inputs when measuring fair value. These inputs are categorized as follows:

• Level 1 - quoted prices in an active market for identical assets or liabilities;

• Level 2 - quoted prices in an active market for similar assets or liabilities, inputs other than quoted prices that are observable for similar assets or liabilities, inputs derived principally from or corroborated by observable market data by correlation or other means; and

• Level 3 - valuation methodology with unobservable inputs that are significant to the fair value measurement.

The carrying values of the Company’s cash and cash equivalents, restricted cash, receivables and accounts payable approximate fair value because of the short term maturities of these instruments. The fair value of our long-term debt is based on the quoted market prices for similar issues (Level 2 inputs).

Accounting for Income Taxes

Accounting for Income Taxes

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that included the enactment date. Future tax benefits are recognized to the extent that realization of those benefits is considered more likely than not, and a valuation allowance is established for deferred tax assets which do not meet this threshold.

Contingencies

Contingencies

The Company assesses its exposures to loss contingencies including claims and legal proceedings and accrues a liability if a potential loss is considered probable and the amount can be estimated. Significant judgment is required in both the determination of probability and the determination as to whether an exposure is reasonably estimable. Because of uncertainties related to these matters, if the actual loss from a contingency differs from management’s estimate, there could be a material impact on the results of operations or financial position. Operating expenses, including legal fees, associated with contingencies are expensed when incurred.

Concentration of Credit Risk

Concentrations of Credit Risk

Financial instruments, which potentially subject the Company to concentration of credit risk, consist primarily of cash and cash equivalents and accounts receivable, net. Cash equivalents are investment-grade, short-term debt instruments consisting of treasury bills which are maintained with high credit quality financial institutions under repurchase agreements. Cash and cash equivalents are in excess of Federal Deposit Insurance Corporation (“FDIC”) insurance limits. As of December 31, 2015 and 2014, the Company did not have cash equivalents.

Foreign Currency Translation

Foreign Currency Translation

The financial statements of the Company’s foreign subsidiaries are translated into U.S. dollars at the period end rate of exchange for asset and liability accounts and the weighted average rate of exchange for income statement accounts. The effects of these translations are recorded as a component of accumulated other comprehensive (loss) income in stockholders’ equity.

Advertising Costs

Advertising Costs

Advertising costs are expensed as incurred.

Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements

In May 2014, the FASB issued an accounting standards update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606), which clarifies the principles for recognizing revenue from contracts with customers. The amendment outlines a single comprehensive model for entities to depict the transfer of goods or services to customers in amounts that reflect the payment to which a company expects to be entitled in exchange for those goods or services. The amendment also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, which deferred the effective date of ASU 2014-09 to annual periods, and interim reporting periods within those annual periods, beginning after December 15, 2017. The ASU may be adopted using either a full retrospective transition method or a modified retrospective transition method and will be adopted by the Company on January 1, 2018. The Company is currently evaluating the provisions of the amendments and the impact on its future consolidated financial statements.

In June 2014, the FASB issued ASU No. 2014-12, Compensation—Stock Compensation (Topic 718):Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved After the Requisite Service Period. The amendments clarify the proper method of accounting for share-based payments when the terms of an award provide that a performance target could be achieved after the requisite service period. This ASU requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. The performance target should not be reflected in estimating the grant-date fair value of the award. Compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. The amendments in this ASU will be adopted by the Company beginning on January 1, 2016. We do not expect the ASU to have a material effect on our financial condition, results of operations or cash flows.

In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements - Going Concern: Disclosure of Uncertainties About an Entity's Ability to Continue as a Going Concern. The ASU requires management to assess an entity’s ability to continue as a going concern and to provide related footnote disclosures in certain circumstances. Substantial doubt about an entity's ability to continue as a going concern exists when relevant conditions and events, consolidated in the aggregate, indicate that it is probable that an entity will be unable to meet its obligations as they become due within one year after the date that the financial statements are issued. Currently, there is no guidance in U.S. GAAP for management's responsibility to perform an evaluation. Under the update, management's evaluation is to be performed when preparing financial statements for each annual and interim reporting period and based on relevant conditions and events that are known and reasonably knowable at the date that the financial statements are issued. The Company will adopt this standard effective January 1, 2017 and we do not expect it to have a material effect on our financial position, results of operations or cash flows.

In January 2015, the FASB issued ASU No. 2015-01, Income Statement-Extraordinary and Unusual Items: Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items. ASU 2015-01 eliminates from GAAP the concept of extraordinary items. The presentation and disclosure guidance for items that are unusual in nature or occur infrequently will be retained and will be expanded to include items that were previously classified as extraordinary. ASU 2015-01 is effective for the Company on January 1, 2016, with earlier adoption permitted using either a prospective or retrospective method. We do not expect the ASU to have a material effect on our financial condition, results of operations or cash flows.

In April 2015, the FASB issued ASU No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. ASU 2015-03 intends to simplify the presentation of debt issuance costs by requiring that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this ASU.  In August 2015, the FASB issued ASU 2015-15 which clarifies that the guidance issued in April 2015 does not apply to line-of-credit arrangements. According to ASU 2015-15, line-of-credit arrangements will continue to present debt issuance costs as an asset and subsequently amortize the deferred debt issuance costs ratably over the term of the arrangement. The ASU will be effective for the Company beginning on January 1, 2016. We do not expect the ASU to have a material effect on our financial condition, results of operations or cash flows.

In July 2015, the FASB issued ASU No. 2015-11, Inventory: Simplifying the Measurement of Inventory. ASU 2015-11 changes the criteria for measuring inventory within the scope of the ASU. Inventory will now be measured at the lower of cost and net realizable value, while the concept of market value will be eliminated. The ASU defines net realizable value as the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The ASU will be effective for the Company beginning on January 1, 2017. The Company does not expect the provisions of the ASU to have a material effect on our financial condition, results of operations or cash flows.

In September 2015, the FASB issued ASU 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments. ASU 2015-16 eliminates the requirement to retrospectively apply adjustments made to provisional amounts recognized in a business combination. It requires that an acquirer recognize and disclose adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined, which should be calculated as if the accounting had been completed at the acquisition date. The ASU will be effective for the Company beginning on January 1, 2016. The amendments in this ASU will be applied prospectively to adjustments to provisional amounts that occur after the effective date of this ASU with earlier application permitted for financial statements that have not been issued. We do not expect this guidance to have a material effect on our financial position, results of operations or cash flows.

In November 2015, the FASB issued ASU 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes. ASU 2015-17 requires that all deferred tax assets and liabilities, along with any related valuation allowance, be classified as noncurrent on the balance sheet. As a result, each jurisdiction will now only have one net noncurrent deferred tax asset or liability. The ASU does not change the existing requirement that only permits offsetting within a jurisdiction – that is, companies are still prohibited from offsetting deferred tax liabilities from one jurisdiction against deferred tax assets of another jurisdiction. We adopted the ASU effective December 31, 2015 and applied the provisions prospectively, for all deferred tax assets and liabilities.

XML

Description of the Business And Summary of Significant Accounting Policies Description of the Business And Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of Revenue from External Customers and Long-Lived Assets, by Geographical Areas [Table Text Block]

The following provides financial information concerning our operations by geographic area for the years ended December 31 (in thousands):

	Successor						Predecessor
Revenue:	Year ended December 31, 2015		Year ended December 31, 2014		Period December 21, 2013 through December 31, 2013		Period January 1, 2013 through December 20, 2013
United States	$	110,392	$	72,140	$	1,953	$	56,461
Other	12,900		—		—		—
	$	123,292	$	72,140	$	1,953	$	56,461
			Successor
Long-lived assets, end of year:			2015		2014		2013
United States			$	63,858	$	44,045	$	50,997
Other			6,909		69		210
			$	70,767	$	44,114	$	51,207

Summary of allowance for trade accounts receivable

Changes in the assumptions or estimates reflecting the collectability of certain accounts could materially affect the allowance for both accounts and notes receivable.

The following provides financial information concerning the change in our allowance for doubtful accounts (in thousands):

	Successor
	Allowance for Accounts Receivables Year ended December 31, 2015
	Beginning Balance		Charge-offs			Recoveries		Provision		Ending Balance
Accounts receivable, current	$	29	$	(22	)	$	—	$	106	$	113

	Successor
	Allowance for Accounts Receivables Year ended December 31, 2014
	Beginning Balance		Charge-offs			Recoveries		Provision		Ending Balance
Accounts receivable, current	$	9	$	(36	)	$	—	$	56	$	29

	Successor
	Allowance for Accounts Receivables Period from December 21, 2013 through December 31, 2013
	Beginning Balance		Charge-offs		Recoveries		Provision		Ending Balance
Accounts receivable, current	$	—	$	—	$	—	$	9	$	9

	Predecessor
	Allowance for Accounts Receivables Period from January 1, 2013 through December 20, 2013
	Beginning Balance		Charge-offs			Recoveries		Provision		Ending Balance
Accounts receivable, current	$	491	$	(80	)	$	—	$	139	$	550

Summary of equipment estimated useful lives

The estimated useful lives are as follows:

Gaming equipment	3 to 6 years
Other property and equipment	3 to 6 years

Property and equipment, net consist of the following (in thousands):

	December 31, 2015			December 31, 2014
Gaming equipment	$	89,361		$	53,295
Other property and equipment(1)	14,976			3,902
Less: Accumulated depreciation	(37,638		)	(16,428		)
Total property and equipment, net	$	66,699		$	40,769

⁽¹⁾$2.8 million included in other property and equipment as of December 31, 2014 has been reclassified to gaming equipment to be consistent with the current year presentation.

XML

Acquisitions (Tables)

12 Months Ended

Dec. 31, 2015

AGS Capital, LLC [Member]

Business Acquisition [Line Items]

Summary of consideration paid for the Acquisition

The following summarizes the consideration paid for the AGS Capital Acquisition (in thousands):

Contractual cash purchase price	$	220,300
Seller notes	5,531
Working capital adjustment	(5,340		)
Total consideration	$	220,491

Summary of purchase price allocation to the estimated fair values of the assets acquired and liabilities assumed

The allocation of the purchase price to the estimated fair values of the assets acquired and the liabilities assumed was as follows (in thousands):

At December 20, 2013
Currents assets	$	17,858
Property and equipment	46,734
Goodwill	63,873
Intangible assets	97,512
Other long-term assets	1,616
Total assets	227,593
Total liabilities	7,102
Total equity purchase price	$	220,491

Our estimates of the fair values of depreciable tangible assets were as follows (in thousands):

	Fair values at December 20, 2013		Average remaining useful life (in years)
Property and equipment	$	46,734	1 - 5

Estimates of the fair values of identifiable intangible assets acquired

Our estimates of the fair values of identifiable intangible assets were as follows (in thousands):

	Fair values at December 20, 2013		Average remaining useful life (in years)
Indefinite lived trade names	$	12,126	Indefinite
Trade and brand names	809		7
Customer relationships	60,112		7
Gaming software and technology platforms	24,465		1 - 5
Total intangible assets	$	97,512

Cadillac Jack [Member]

Business Acquisition [Line Items]

Summary of consideration paid for the Acquisition

The following summarizes the consideration paid for Cadillac Jack (in thousands):

Contractual cash purchase price adjusted for working capital	$	369,760
Seller note	12,000
Contingent receivable	(1,300		)
Total consideration	$	380,460

Summary of purchase price allocation to the estimated fair values of the assets acquired and liabilities assumed

The preliminary allocation of the purchase price to the estimated fair values of the assets acquired and the liabilities assumed was as follows (in thousands):

	At May 29, 2015
Currents assets(1)	$	34,871
Property and equipment	29,634
Goodwill	171,497
Intangible assets	199,752
Other long-term assets	23,828
Total assets	459,582
Current liabilities	8,636
Deferred tax liability non-current	51,486
Other long-term liabilities	19,000
Total equity purchase price	$	380,460

⁽¹⁾Current assets includes $4.2 million of cash acquired.

Our preliminary estimates of the fair values of depreciable tangible assets are as follows (in thousands):

	Fair values at May 29, 2015		Average remaining useful life (in years)
Gaming equipment	$	23,065	1 - 5
Other property and equipment	6,569		2 - 3
Total property and equipment	$	29,634

Estimates of the fair values of identifiable intangible assets acquired

Our preliminary estimates of the fair values of identifiable intangible assets are as follows (in thousands):

	Fair values at May 29, 2015		Average remaining useful life (in years)
Trade names	$	3,000	5
Brand names	10,600		3 - 5
Customer relationships	107,000		5 - 12
Gaming software and technology platforms	79,152		2 - 7
Total intangible assets	$	199,752

Business Combination, Pro Forma Information, Actual Since Acquisition

The revenue and net loss of Cadillac Jack from the acquisition date through December 31, 2015, are presented below and are included in our consolidated statements of operations and comprehensive loss. These amounts are not necessarily indicative of the results of operations that Cadillac Jack would have realized if it had continued to operate as a stand-alone company during the period presented, primarily due to the elimination of certain headcount and administrative costs since the acquisition date resulting from integration activities or due to costs that are now reflected in our unallocated corporate costs and not allocated to Cadillac Jack.

	From May 29, 2015 through December 31, 2015
Revenue	$	46,075
Net loss	$	17,133

Business Acquisition, Pro Forma Information

The following unaudited pro forma statements of operations give effect to the Cadillac Jack acquisition as if it had been completed on January 1, 2014. The unaudited pro forma financial information is presented for illustrative purposes only and is not necessarily indicative of what the operating results actually would have been during the periods presented had the acquisition been completed on January 1, 2014. In addition, the unaudited pro forma financial information does not purport to project future operating results. This information is preliminary in nature and subject to change based on final purchase price adjustments. The pro forma statements of operations do not reflect: (1) any anticipated synergies (or costs to achieve synergies) or (2) the impact of non-recurring items directly related to the Cadillac Jack acquisition.

	Year ended December 31,
	2015		2014
Revenue	$	156,110	$	160,341
Net loss	$	54,682	$	83,709

C2 Gaming, LLC [Member]

Business Acquisition [Line Items]

Summary of consideration paid for the Acquisition

The following summarizes the consideration paid for C2 Gaming (in thousands):

Paid at close	$	11,000
One-year payment	9,000
Contingent consideration	3,000
Working capital adjustment	273
Total consideration	$	23,273

Summary of purchase price allocation to the estimated fair values of the assets acquired and liabilities assumed

Our estimates of the fair values of depreciable tangible assets were as follows (in thousands):

	Fair values at May 6, 2014		Average remaining useful life (in years)
Property and equipment	$	534	1 - 5

The allocation of the purchase price to the estimated fair values of the assets acquired and the liabilities assumed was as follows (in thousands):

At May 6, 2014
Current assets	$	545
Property and equipment	534
Goodwill	13,744
Intangible assets	8,722
Total assets	23,545
Total liabilities	272
Total equity purchase price	$	23,273

Estimates of the fair values of identifiable intangible assets acquired

Our estimates of the fair values of identifiable intangible assets were as follows (in thousands):

	Fair values at May 6, 2014		Average remaining useful life (in years)
Gaming software and technology platforms	$	3,685	3 - 5
Customer relationships	5,037		7
Total intangible assets	$	8,722

XML

Property and Equipment (Tables)

12 Months Ended

Dec. 31, 2015

Property, Plant and Equipment [Abstract]

Summary of gaming equipment, vehicles and other equipment

The estimated useful lives are as follows:

Gaming equipment	3 to 6 years
Other property and equipment	3 to 6 years

Property and equipment, net consist of the following (in thousands):

	December 31, 2015			December 31, 2014
Gaming equipment	$	89,361		$	53,295
Other property and equipment(1)	14,976			3,902
Less: Accumulated depreciation	(37,638		)	(16,428		)
Total property and equipment, net	$	66,699		$	40,769

⁽¹⁾$2.8 million included in other property and equipment as of December 31, 2014 has been reclassified to gaming equipment to be consistent with the current year presentation.

XML

Goodwill and Intangibles (Tables)

12 Months Ended

Dec. 31, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

Changes in the carrying amount of goodwill

There were no accumulated impairments of goodwill as of December 31, 2015. Changes in the carrying amount of goodwill are as follows (in thousands):

	Gross Carrying Amount
Balance at December 31, 2014	$	77,617
Acquisition - Cadillac Jack	171,497
Acquisition - AGSi	4,855
Acquisition - Intellectual Property	2,600
Foreign currency adjustments	(2,282		)
Other	(436		)
Balance at December 31, 2015	$	253,851

Schedule of Intangible Assets and Goodwill

Intangible assets consist of the following (in thousands):

		December 31, 2015							December 31, 2014
	Useful Life (years)	Gross Value		Accumulated Amortization			Net Carrying Value		Gross Value		Accumulated Amortization			Net Carrying Value
Indefinite lived trade names	Indefinite	$	12,126	$	—		$	12,126	$	12,126	$	—		$	12,126
Trade and brand names	7	13,600		(1,721		)	11,879		809		(119		)	690
Customer relationships	7	170,927		(26,676		)	144,251		65,159		(9,313		)	55,846
Contract rights under development and placement fees	1 - 7	16,311		(548		)	15,763		678		(58		)	620
Gaming software and technology platforms	1 - 5	116,930		(23,735		)	93,195		32,564		(7,108		)	25,456
Intellectual property	10 - 20	14,030		(888		)	13,142		7,279		(132		)	7,147
		$	343,924	$	(53,568	)	$	290,356	$	118,615	$	(16,730	)	$	101,885

Schedule of estimated amortization expense on software development

The estimated amortization expense of definite-lived intangible assets as well as the accretion of contract rights under development and placement fees, for each of the next five years and thereafter is as follows (in thousands):

	Amortization Expense		Placement Fee Accretion
For the year ended December 31,
2016	$	52,113	$	4,663
2017	48,047		4,537
2018	40,805		3,795
2019	33,706		2,609
2020	26,943		57
Thereafter	60,853		102

XML

Accounts Payable and Accrued Liabilities (Tables)

12 Months Ended

Dec. 31, 2015

Payables and Accruals [Abstract]

Schedule of accounts payable and accrued liabilities

Accounts payable and accrued liabilities consist of the following (in thousands):

	December 31, 2015		December 31, 2014
Trade accounts payable	$	4,776	$	1,517
Salary and payroll tax accrual	5,851		3,002
Taxes payable	2,440		566
Accrued interest	8		499
C2 Gaming one-year payout (see Note 2)	—		9,000
C2 Gaming contingent consideration (see Note 2)	1,125		2,500
Proceeds from employees in advance of common stock issuance	—		1,969
Placement fees payable	4,525		—
Accrued other	4,305		4,263
Total accounts payable and accrued liabilities	$	23,030	$	23,316

XML

Long-Term Debt (Tables)

12 Months Ended

Dec. 31, 2015

Debt Disclosure [Abstract]

Schedule of long-term debt

Long-term debt consists of the following (in thousands):

	December 31, 2015			December 31, 2014
Senior secured credit facilities:
Term loans, interest at LIBOR or base rate plus 8.25% (9.25% at December 31, 2015), net of unamortized discount of $10.9 million and $5.0 million at December 31, 2015 and December 31, 2014, respectively.	$	404,019		$	148,447
$40 million revolving credit facility, interest at LIBOR or base rate plus 8.25%	—			10,000
Senior secured PIK notes, net of unamortized discount of $3.3 million at December 31, 2015	119,292			—
Seller notes	18,902			6,012
Equipment long-term note payable and capital leases	5,826			2,230
Total debt	548,039			166,689
Less: Current portion	(6,919		)	(2,495		)
Long-term debt	$	541,120		$	164,194

Schedule of aggregate contractual future principal payments

Aggregate contractual future principal payments (excluding the effects of repayments for excess cash flow) of long-term debt for the years following December 31, 2015, are as follows (in thousands):

Years ending December 31,	Successor
2016	$	6,919
2017	6,325
2018	5,283
2019	4,234
2020	397,953
Thereafter	141,521
Total scheduled maturities	562,235
Unamortized debt discount	(14,196		)
Total long-term debt	$	548,039

XML

Share-Based Compensation (Tables)

12 Months Ended

Dec. 31, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of grant date fair value and related assumptions of Options granted

The expected dividend yield is 0% for all stock awards.

	Year Ended December 31,
	2015	2014	2013
Option valuation assumptions:
Expected dividend yield	—%	—%	—%
Expected volatility	55%	73%	—%
Risk-free interest rate	1.69%	1.63%	—%
Expected term (in years)	6.4	5.0	0

Schedule of Share-based Compensation, Stock Options, Activity

A summary of the changes in stock options outstanding during the year ended December 31, 2015, is as follows:

	Number of Options		Weighted Average Exercise Price		Weighted Average Remaining Contract Term (years)	Aggregate Intrinsic Value
Options outstanding as of December 31, 2014	576,250		$	10.00
Granted	347,875		$	15.41
Canceled	(158,750	)	$	10.00
Options outstanding as of December 31, 2015	765,375		$	12.46	8.6	$	2,481,113
Exercisable as of December 31, 2015	55,833		$	10.00	8.4	$	117,169

Schedule of Share-based Compensation, Restricted Stock Units Award Activity

A summary of the changes in restricted stock awards outstanding during the year ended December 31, 2015, is as follows:

	Shares	Weighted Average Grant Date Fair Value
Nonvested at January 1, 2015	50,000	$	10.00
Vested	10,000	10.00
Nonvested at December 31, 2015	40,000	10.00

Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value

The following is provided for the share award vesting from the plans (in thousands, except weighted average grant date fair value):

	Year Ended December 31,
	2015		2014		2013
Weighted average grant date fair value	$	—	$	10.00	$	—

XML

Restructuring (Tables)

12 Months Ended

Dec. 31, 2015

Restructuring and Related Activities [Abstract]

Schedule of restructuring liabilities

The following table summarizes the change in our restructuring accruals for the year ended December 31, 2015 (in thousands), which is included in accounts payable and accrued liabilities in the consolidated balance sheets:

	December 31, 2014		Charge to expense		Cash paid		December 31, 2015
Accrued severance	$	127	$	935	$	1,025	$	37
Accrued retention bonuses	216		437		653		—
Property costs	—		25		25		—
Total	$	343	$	1,397	$	1,703	$	37

XML

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2015

Income Tax Disclosure [Abstract]

Schedule of Income before Income Tax, Domestic and Foreign

The components of loss before provision for income taxes are as follows (in thousands):

	Successor									Predecessor
	Year Ended December 31, 2015			Year ended December 31, 2014			Period December 21 through December 31, 2013			Period January 1, 2013 through December 20, 2013
Domestic	$	(66,728	)	$	(26,187	)	$	(8,102	)	$	(42,176	)
Foreign	(7,906		)	—			—			—
Loss before provision for income taxes	$	(74,634	)	$	(26,187	)	$	(8,102	)	$	(42,176	)

Schedule of provision for income tax expense

The income tax (benefit) expense is as follows (in thousands):

	Successor							Predecessor
	Year to date December 31, 2015			Year ended December 31, 2014		Period December 21 through December 31, 2013		Period January 1, 2013 through December 20, 2013
Current:
Federal	$	932		$	—	$	—	$	—
State	(10		)	7		—		—
Foreign	1,424			—		—		—
Total current income tax expense	2,346			7		—		—
Deferred:
Federal	(34,589		)	2,005		50		—
State	(2,506		)	177		4		—
Foreign	(1,340		)	—		—		—
Total deferred income (benefit) expense	(38,435		)	2,182		54		—
Total income tax (benefit) expense	$	(36,089	)	$	2,189	$	54	$	—

Schedule of reconciliation of income tax at the federal statutory rate to the actual effective income tax rate

The reconciliation of income tax at the federal statutory rate to the actual effective income tax rate (benefit) is as follows:

	Successor						Predecessor
	Year to date December 31, 2015		Year ended December 31, 2014		Period December 21 through December 31, 2013		Period January 1, 2013 through December 20, 2013
Federal statutory rate	(35.0	)%	(34.0	)%	(34.0	)%	(34.0	)%
Non-taxable entities	—	%	—	%	—	%	32.7	%
Foreign rate differential	0.7	%	—	%	—	%	(0.5	)%
State income taxes, net of federal benefit	(2.5	)%	(0.8	)%	(3.1	)%	—	%
Nondeductible loan costs	1.5	%	—	%	—	%	—	%
Nondeductible transaction costs	1.6	%	—	%	—	%	—	%
Other permanent differences	(0.3	)%	0.2	%	—	%	—	%
Other differences	0.5	%	0.4	%	—	%	—	%
Uncertain tax positions	0.3	%	—	%	—	%	—	%
Valuation allowance	(15.2	)%	42.6	%	37.8	%	1.8	%
	(48.4	)%	8.4	%	0.7	%	—	%

Schedule of deferred tax liability

The components of the net deferred tax liability consist of the following (in thousands):

	Successor
	December 31, 2015			December 31, 2014
Deferred tax assets:
Accrued expenses	$	608		$	845
Allowance for bad debt	1,176			3
Payroll accruals	2,085			—
Foreign tax credits	8,834			—
Net operating loss carryforwards	35,862			8,156
Intangible assets	—			7,368
Research and development credits	1,569			—
Loan costs and interest	3,519			—
Other	2,017			166
Total deferred tax assets	55,670			16,538
Valuation allowance	(8,274		)	(14,260		)
Deferred tax assets, net of valuation allowance	$	47,396		$	2,278
Deferred tax liabilities:
Prepaid expenses and other	$	(1,033	)	$	(800	)
Intangible assets	(60,309		)	(2,236		)
Property and equipment, net	(1,364		)	(1,633		)
Deferred tax liabilities	(62,706		)	(4,669		)
Net deferred tax liabilities	$	(15,310	)	$	(2,391	)

Summary of Income Tax Contingencies

The Company had the following activity for unrecognized tax benefits in 2015. The Company had no unrecognized tax benefits prior to 2015. (amounts in thousands):

	December 31, 2015
Balance-beginning of year	$	—
Current year acquisitions	29,701
Increases based on tax positions of the current year	795
Currency translation adjustments	(973		)
Balance-end of year	$	29,523

XML

Commitments and Contingencies (Tables)

12 Months Ended

Dec. 31, 2015

Commitments and Contingencies Disclosure [Abstract]

Schedule of future minimum lease payments

Future minimum lease payments under these leases in excess of one year as of December 31, 2015 are as follows (in thousands):

For the year ended December 31,	Successor
2016	$	1,693
2017	1,752
2018	1,186
2019	1,065
2020	1,092
Thereafter	806
Total	$	7,594

XML

Selected Quarterly Financial Data (Unaudited) (Tables)

12 Months Ended

Dec. 31, 2015

Quarterly Financial Information Disclosure [Abstract]

Schedule of quarterly financial information

	Year ended December 31, 2015
	Quarter ended March 31, 2015			Quarter ended June 30, 2015			Quarter ended September 30, 2015			Quarter ended December 31, 2015
Consolidated Income Statement Data:
Revenues	$	18,795		$	26,296		$	38,105		$	40,096
Loss from operations	(3,736		)	(11,339		)	(13,017		)	(1,347		)
Net (loss) income	(9,235		)	2,849			(23,279		)	(8,880		)

	Year ended December 31, 2014
	Quarter ended March 31, 2014			Quarter ended June 30, 2014			Quarter ended September 30, 2014			Quarter ended December 31, 2014
Consolidated Income Statement Data:
Revenues	$	17,158		$	17,428		$	18,836		$	18,718
Income (loss) from operations	695			(1,468		)	(3,432		)	(4,216		)
Net loss	(4,249		)	(6,203		)	(8,674		)	(9,250		)

XML

Description of the Business And Summary of Significant Accounting Policies - Allowance for Doubtful Accounts (Details) - USD ($) $ in Thousands		12 Months Ended
	Dec. 31, 2013	Dec. 31, 2015	Dec. 31, 2014	Dec. 20, 2013
Successor [Member]
Allowance for Doubtful Accounts Receivable [Roll Forward]
Allowance for Accounts Receivables, Beginning Balance	$ 0	$ 29	$ 9
Charge-offs	0	(22)	(36)
Recoveries	0	0	0
Provision (benefit) for bad debts	9	106	56
Allowance for Accounts Receivables, Ending Balance	9	$ 113	$ 29	$ 0
Predecessor [Member]
Allowance for Doubtful Accounts Receivable [Roll Forward]
Allowance for Accounts Receivables, Beginning Balance	$ 550			491
Charge-offs				(80)
Recoveries				0
Provision (benefit) for bad debts				139
Allowance for Accounts Receivables, Ending Balance				$ 550

XML

Description of the Business And Summary of Significant Accounting Policies - Narrative (Details) - USD ($) $ in Thousands			12 Months Ended
	Dec. 31, 2013	Dec. 31, 2013	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013	Dec. 20, 2013
Description of Business [Line Items]
Fair value of long-term debt			$ 529,200	$ 170,000
Successor [Member]
Description of Business [Line Items]
Advertising costs		$ 2	200	300
Predecessor [Member]
Description of Business [Line Items]
Advertising costs						$ 200
Interest Expense [Member] | Successor [Member]
Description of Business [Line Items]
Amortization expense		$ 21	$ 1,400	$ 600
Interest Expense [Member] | Predecessor [Member]
Description of Business [Line Items]
Amortization expense						$ 1,200
Sales Revenue, Net [Member]
Description of Business [Line Items]
Concentration Risk, Percentage			20.00%	30.00%	35.00%
Credit Concentration Risk [Member]
Description of Business [Line Items]
Concentration Risk, Percentage	10.00%
Gaming equipment [Member] | Minimum [Member]
Description of Business [Line Items]
Estimated useful life (in years)			3 years
Gaming equipment [Member] | Maximum [Member]
Description of Business [Line Items]
Estimated useful life (in years)			6 years
Other property and equipment [Member] | Minimum [Member]
Description of Business [Line Items]
Estimated useful life (in years)			3 years
Other property and equipment [Member] | Maximum [Member]
Description of Business [Line Items]
Estimated useful life (in years)			6 years

XML

Description of the Business And summary of Significant Accounting Policies - Schedule of Revenues and Long-Lived Assets (Details) - USD ($)		3 Months Ended								12 Months Ended
	Dec. 31, 2013	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2015	Dec. 31, 2014	Dec. 20, 2013
Successor [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	$ 1,953,000	$ 40,096,000	$ 38,105,000	$ 26,296,000	$ 18,795,000	$ 18,718,000	$ 18,836,000	$ 17,428,000	$ 17,158,000	$ 123,292,000	$ 72,140,000
Long-Lived Assets	51,207,000	70,767,000				44,114,000				70,767,000	44,114,000
Successor [Member] | UNITED STATES
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	1,953,000									110,392,000	72,140,000
Long-Lived Assets	50,997,000	63,858,000				44,045,000				63,858,000	44,045,000
Successor [Member] | Non-US [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	0									12,900,000	0
Long-Lived Assets	$ 210,000	$ 6,909,000				$ 69,000				$ 6,909,000	$ 69,000
Predecessor [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues												$ 56,461,000
Predecessor [Member] | UNITED STATES
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues												56,461,000
Predecessor [Member] | Non-US [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues												$ 0

XML

Acquisitions - Narrative (Details) - USD ($)						3 Months Ended	12 Months Ended
	Jul. 15, 2015	Jun. 15, 2015	May. 29, 2015	May. 06, 2014	Dec. 20, 2013	Sep. 30, 2015	Dec. 31, 2015	Dec. 31, 2014	May. 31, 2015	May. 06, 2015	Sep. 16, 2013
Business Acquisition [Line Items]
Goodwill							$ 253,851,000	$ 77,617,000
Gamingo [Member]
Business Acquisition [Line Items]
Business acquisition, percentage of equity interests acquired		100.00%
Aggregate purchase price		$ 8,800,000
Business Combination, Contingent Consideration, Liability, Noncurrent		5,000,000
Goodwill		4,940,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill		$ 4,150,000
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life		3 years
Intellectual Property Acquisitions [Member]
Business Acquisition [Line Items]
Aggregate purchase price							10,000,000
Business Combination, Contingent Consideration, Liability, Noncurrent							1,500,000
Goodwill							2,600,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill							$ 6,500,000
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life							8 years 6 months
Cadillac Jack [Member]
Business Acquisition [Line Items]
Business Combination, Working Capital Increase (Decrease)						$ 1,200,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Cash and Equivalents			$ 4,200,000
Business acquisition, percentage of equity interests acquired			100.00%
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Assets			$ 8,300,000
Aggregate purchase price			380,460,000
Research and Development in Process			30,000,000
Goodwill			171,497,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill			199,752,000
Business Combination, Deferred Tax Liabilities Noncurrent			51,486,000
Contingent consideration			(1,300,000)
Cadillac Jack [Member] | Notes Payable [Member] | Promissory Note 12.0 Million Amaya [Member]
Business Acquisition [Line Items]
Seller note			12,000,000
C2 Gaming, LLC [Member]
Business Acquisition [Line Items]
Business Combination, Working Capital Increase (Decrease)				$ 273,000
Business acquisition, percentage of equity interests acquired				100.00%
Aggregate purchase price				$ 23,273,000
Goodwill				13,744,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill				8,722,000
One-year payment				9,000,000
Contingent consideration				$ 3,000,000
Payments for Previous Acquisition	$ 1,000,000							$ 500,000
Business Combination, Contingent Consideration, Liability									$ 2,100,000	$ 2,500,000
Business Combination, Contingent Consideration, Liability, Value After Reduction	$ 1,100,000
AGS Capital, LLC [Member]
Business Acquisition [Line Items]
Business Combination, Working Capital Increase (Decrease)					$ (5,340,000)
Business acquisition, percentage of equity interests acquired											100.00%
Seller note					5,531,000
Aggregate purchase price					220,491,000
Goodwill					63,873,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill					$ 97,512,000
Maximum [Member] | Cadillac Jack [Member]
Business Acquisition [Line Items]
Contingent consideration			$ 25,000,000
Common Class A [Member] | AGS Capital, LLC [Member]
Business Acquisition [Line Items]
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares					10,000,000
Business Acquisition, Share Price					$ 0.01
Business Combination, Consideration Transferred, Equity Interests Issued and Issuable					$ 100,000,000

XML

Acquisitions - Consideration Paid (Details) - USD ($) $ in Thousands				3 Months Ended
	May. 29, 2015	May. 06, 2014	Dec. 20, 2013	Sep. 30, 2015
Cadillac Jack [Member]
Business Acquisition [Line Items]
Business Combination, Working Capital Increase (Decrease)				$ 1,200
Contractual cash purchase price adjusted for working capital	$ 369,760
Contingent consideration	(1,300)
Total consideration	380,460
AGS Capital, LLC [Member]
Business Acquisition [Line Items]
Business Combination, Working Capital Increase (Decrease)			$ (5,340)
Contractual cash purchase price adjusted for working capital			220,300
Seller note			5,531
Total consideration			$ 220,491
C2 Gaming, LLC [Member]
Business Acquisition [Line Items]
Business Combination, Working Capital Increase (Decrease)		$ 273
Contractual cash purchase price adjusted for working capital		11,000
One-year payment		9,000
Contingent consideration		3,000
Total consideration		$ 23,273
Promissory Note 12.0 Million Amaya [Member] | Notes Payable, Other Payables [Member] | Cadillac Jack [Member]
Business Acquisition [Line Items]
Seller note	$ 12,000

XML

Acquisitions - Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands	Dec. 31, 2015	May. 29, 2015	Dec. 31, 2014	May. 06, 2014	Dec. 20, 2013
Allocation of purchase price to the estimated fair values of the assets acquired and liabilities assumed
Goodwill	$ 253,851		$ 77,617
AGS Capital, LLC [Member]
Allocation of purchase price to the estimated fair values of the assets acquired and liabilities assumed
Business Combination, Current Assets					$ 17,858
Property and equipment					46,734
Goodwill					63,873
Intangible assets					97,512
Other long-term assets					1,616
Total assets					227,593
Total liabilities					7,102
Total equity purchase price					$ 220,491
C2 Gaming, LLC [Member]
Allocation of purchase price to the estimated fair values of the assets acquired and liabilities assumed
Business Combination, Current Assets				$ 545
Property and equipment				534
Goodwill				13,744
Intangible assets				8,722
Total assets				23,545
Current liabilities				272
Total equity purchase price				$ 23,273
Cadillac Jack [Member]
Allocation of purchase price to the estimated fair values of the assets acquired and liabilities assumed
Business Combination, Current Assets		$ 34,871
Property and equipment		29,634
Goodwill		171,497
Intangible assets		199,752
Other long-term assets		23,828
Total assets		459,582
Current liabilities		8,636
Business Combination, Deferred Tax Liabilities Noncurrent		51,486
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Noncurrent Liabilities, Other		19,000
Total equity purchase price		$ 380,460

XML

Acquisitions - Tangible Assets (Details) - USD ($) $ in Thousands				12 Months Ended
	May. 29, 2015	May. 06, 2014	Dec. 20, 2013	Dec. 31, 2015
Minimum [Member] | Gaming equipment [Member]
Business Acquisition [Line Items]
Estimated useful life (in years)				3 years
Maximum [Member] | Gaming equipment [Member]
Business Acquisition [Line Items]
Estimated useful life (in years)				6 years
AGS Capital, LLC [Member]
Business Acquisition [Line Items]
Gaming equipment			$ 46,734
AGS Capital, LLC [Member] | Minimum [Member]
Business Acquisition [Line Items]
Estimated useful life (in years)			1 year
AGS Capital, LLC [Member] | Maximum [Member]
Business Acquisition [Line Items]
Estimated useful life (in years)			5 years
Cadillac Jack [Member]
Business Acquisition [Line Items]
Gaming equipment	$ 29,634
Cadillac Jack [Member] | Gaming equipment [Member]
Business Acquisition [Line Items]
Gaming equipment	23,065
Cadillac Jack [Member] | Other Machinery and Equipment [Member]
Business Acquisition [Line Items]
Gaming equipment	$ 6,569
Cadillac Jack [Member] | Minimum [Member] | Gaming equipment [Member]
Business Acquisition [Line Items]
Estimated useful life (in years)	1 year
Cadillac Jack [Member] | Minimum [Member] | Other Machinery and Equipment [Member]
Business Acquisition [Line Items]
Estimated useful life (in years)	2 years
Cadillac Jack [Member] | Maximum [Member] | Gaming equipment [Member]
Business Acquisition [Line Items]
Estimated useful life (in years)	5 years
Cadillac Jack [Member] | Maximum [Member] | Other Machinery and Equipment [Member]
Business Acquisition [Line Items]
Estimated useful life (in years)	3 years
C2 Gaming, LLC [Member]
Business Acquisition [Line Items]
Gaming equipment		$ 534
C2 Gaming, LLC [Member] | Minimum [Member]
Business Acquisition [Line Items]
Estimated useful life (in years)		1 year
C2 Gaming, LLC [Member] | Maximum [Member]
Business Acquisition [Line Items]
Estimated useful life (in years)		5 years

XML

Acquisitions - Acquired Intangible Assets (Details) - USD ($) $ in Thousands	May. 29, 2015	May. 06, 2014	Dec. 20, 2013
C2 Gaming, LLC [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill		$ 8,722
Cadillac Jack [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill	$ 199,752
AGS Capital, LLC [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill			$ 97,512
Gaming Software And Technology Platforms [Member] | C2 Gaming, LLC [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Finite-lived Intangible Assets Acquired		$ 3,685
Gaming Software And Technology Platforms [Member] | C2 Gaming, LLC [Member] | Maximum [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life		5 years
Gaming Software And Technology Platforms [Member] | C2 Gaming, LLC [Member] | Minimum [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life		3 years
Gaming Software And Technology Platforms [Member] | AGS Capital, LLC [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Finite-lived Intangible Assets Acquired			$ 24,465
Gaming Software And Technology Platforms [Member] | AGS Capital, LLC [Member] | Maximum [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life			5 years
Gaming Software And Technology Platforms [Member] | AGS Capital, LLC [Member] | Minimum [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life			1 year
Trade Names [Member] | Cadillac Jack [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life	5 years
Trademarks and Trade Names [Member] | Cadillac Jack [Member] | Maximum [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life	5 years
Trademarks and Trade Names [Member] | Cadillac Jack [Member] | Minimum [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life	3 years
Trademarks and Trade Names [Member] | AGS Capital, LLC [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Finite-lived Intangible Assets Acquired			$ 809
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life			7 years
Customer Relationships [Member] | C2 Gaming, LLC [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Finite-lived Intangible Assets Acquired		$ 5,037
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life		7 years
Customer Relationships [Member] | Cadillac Jack [Member] | Maximum [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life	12 years
Customer Relationships [Member] | Cadillac Jack [Member] | Minimum [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life	5 years
Customer Relationships [Member] | AGS Capital, LLC [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Finite-lived Intangible Assets Acquired			$ 60,112
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life			7 years
Developed Technology Rights [Member] | Cadillac Jack [Member] | Maximum [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life	7 years
Developed Technology Rights [Member] | Cadillac Jack [Member] | Minimum [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life	2 years
Developed Technology Rights [Member] | Cadillac Jack [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Finite-lived Intangible Assets Acquired	$ 79,152
Customer Relationships [Member] | Cadillac Jack [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Finite-lived Intangible Assets Acquired	107,000
Trademarks and Trade Names [Member] | Cadillac Jack [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Finite-lived Intangible Assets Acquired	10,600
Trade Names [Member] | Cadillac Jack [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Finite-lived Intangible Assets Acquired	$ 3,000
Trade Names [Member] | AGS Capital, LLC [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Indefinite-lived Intangible Assets Acquired			$ 12,126

XML

Acquisitions Revenue since business combination (Details) - Cadillac Jack [Member] $ in Thousands	7 Months Ended
	Dec. 31, 2015 USD ($)
Business Acquisition [Line Items]
Business Combination, Pro Forma Information, Revenue of Acquiree since Acquisition Date, Actual	$ 46,075
Business Combination, Pro Forma Information, Earnings or Loss of Acquiree since Acquisition Date, Actual	$ 17,133

XML

Acquisitions Pro Forma Results (Details) - Cadillac Jack [Member] - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Business Acquisition [Line Items]
Business Acquisition, Pro Forma Revenue	$ 156,110	$ 160,341
Business Acquisition, Pro Forma Net Income (Loss)	$ 54,682	$ 83,709

XML

Property and Equipment Property and Equipment (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Property, Plant and Equipment [Line Items]
Less: Accumulated depreciation	$ (37,638)	$ (16,428)
Total property and equipment, net	66,699	40,769
Gaming equipment [Member]
Property, Plant and Equipment [Line Items]
Gaming equipment, other property and equipment, gross	89,361	53,295
Other property and equipment [Member]
Property, Plant and Equipment [Line Items]
Gaming equipment, other property and equipment, gross	$ 14,976	$ 3,902

XML

Property and Equipment Property and Equipment - Narrative (Details) - USD ($) $ in Millions		12 Months Ended
	Dec. 31, 2013	Dec. 31, 2015	Dec. 31, 2014	Dec. 20, 2013
Property, Plant and Equipment [Line Items]
Depreciation expense		$ 23.4	$ 16.8
Successor [Member]
Property, Plant and Equipment [Line Items]
Depreciation expense	$ 0.5
Predecessor [Member]
Property, Plant and Equipment [Line Items]
Depreciation expense				$ 14.7
Gaming equipment [Member]
Property, Plant and Equipment [Line Items]
PP&E reclassification		$ 2.8

XML

Goodwill and Intangibles - Changes in Carrying Amount of Goodwill (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Jun. 15, 2015	May. 29, 2015	Dec. 31, 2014
Changes in carrying amount of goodwill
Goodwill, Translation Adjustments	$ (2,282)
Goodwill, Other Changes	(436)
Goodwill	253,851			$ 77,617
Cadillac Jack [Member]
Changes in carrying amount of goodwill
Goodwill, Acquired During Period	171,497
Goodwill			$ 171,497
Intellectual Property Acquisitions [Member]
Changes in carrying amount of goodwill
Goodwill, Acquired During Period	2,600
Goodwill	2,600
Gamingo [Member]
Changes in carrying amount of goodwill
Goodwill, Acquired During Period	$ 4,855
Goodwill		$ 4,940

XML

Goodwill and Intangibles - Schedule of Intangibles Assets (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, accumulated amortization	$ (53,568)	$ (16,730)
Intangible assets, gross value	343,924	118,615
Intangible assets, net carrying value	$ 290,356	101,885
Minimum [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, useful life (years)	1 year
Maximum [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, useful life (years)	20 years
Trade Names [Member]
Indefinite-lived Intangible Assets [Line Items]
Indefinite-lived intangible assets	$ 12,126	12,126
Trade Names [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, useful life (years)	7 years
Finite-lived intangible assets, gross value	$ 13,600	809
Finite-lived intangible assets, accumulated amortization	(1,721)	(119)
Finite-lived intangible assets, net carrying value	$ 11,879	690
Customer Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, useful life (years)	7 years
Finite-lived intangible assets, gross value	$ 170,927	65,159
Finite-lived intangible assets, accumulated amortization	(26,676)	(9,313)
Finite-lived intangible assets, net carrying value	144,251	55,846
Customer agreements [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, gross value	16,311	678
Finite-lived intangible assets, accumulated amortization	(548)	(58)
Finite-lived intangible assets, net carrying value	$ 15,763	620
Customer agreements [Member] | Minimum [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, useful life (years)	1 year
Customer agreements [Member] | Maximum [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, useful life (years)	7 years
Internally Developed Gaming Software [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, gross value	$ 116,930	32,564
Finite-lived intangible assets, accumulated amortization	(23,735)	(7,108)
Finite-lived intangible assets, net carrying value	$ 93,195	25,456
Internally Developed Gaming Software [Member] | Minimum [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, useful life (years)	1 year
Internally Developed Gaming Software [Member] | Maximum [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, useful life (years)	5 years
Intellectual Property [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, gross value	$ 14,030	7,279
Finite-lived intangible assets, accumulated amortization	(888)	(132)
Finite-lived intangible assets, net carrying value	$ 13,142	$ 7,147
Intellectual Property [Member] | Minimum [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, useful life (years)	10 years
Intellectual Property [Member] | Maximum [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, useful life (years)	20 years

XML

Goodwill and Intangibles - Narrative (Details) - USD ($) $ in Thousands		12 Months Ended
	Dec. 31, 2013	Dec. 31, 2015	Dec. 31, 2014	Dec. 20, 2013
Minimum [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, useful life (years)		1 year
Maximum [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, useful life (years)		20 years
Predecessor [Member]
Finite-Lived Intangible Assets [Line Items]
Impairment of Intangible Assets, Finite-lived				$ 1,721
Amortization expense related to intangible assets				13,000
Accretion of contract rights under development agreements and placement fees				$ 3,856
Successor [Member]
Finite-Lived Intangible Assets [Line Items]
Impairment of Intangible Assets, Finite-lived		$ 3,425	$ 1,384
Amortization expense related to intangible assets	$ 400	38,300	16,600
Impairment of Intangible Assets, Indefinite-lived (Excluding Goodwill)		3,400	1,400
Accretion of contract rights under development agreements and placement fees	$ 0	$ 496	$ 58

XML

Goodwill and Intangibles - Finite-Lived Intangible Assets, Future Amortization Expense (Details) - Software and Software Development Costs [Member] $ in Thousands	Dec. 31, 2015 USD ($)
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract]
2016	$ 52,113
Placement fee accretion year 1	4,663
2017	48,047
Placement fee accretion year 2	4,537
2018	40,805
Placement fee accretion year 3	3,795
2019	33,706
Placement fee accretion year 4	2,609
2020	26,943
Placement fee accretion year 5	57
Thereafter	60,853
Placement fee accretion after year 5	$ 102

XML

Accounts Payable and Accrued Liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Schedule of accounts payable and accrued liabilities
Trade accounts payable	$ 4,776	$ 1,517
Salary and payroll tax accrual	5,851	3,002
Taxes payable	2,440	566
Accrued interest	8	499
C2 Gaming one-year payout (see Note 2)	0	9,000
C2 Gaming contingent consideration (see Note 2)	1,125	2,500
Proceeds from employees in advance of common stock issuance	0	1,969
Placementfeespayables	4,525	0
Accrued other	4,305	4,263
Total accounts payable and accrued liabilities	$ 23,030	$ 23,316

XML

Long-Term Debt - Schedule of Long-Term Debt (Details) - USD ($) $ in Thousands	Dec. 31, 2015	May. 29, 2015	Dec. 31, 2014	Dec. 20, 2013
Debt Instrument [Line Items]
Debt, Long-term	$ 548,039		$ 166,689
Less—Amounts due within one year	(6,919)		(2,495)
Long-term debt	541,120		164,194
Payment in Kind (PIK) Note [Member]
Debt Instrument [Line Items]
Debt, Long-term	119,292	$ 115,000
Debt instrument, stated interest rate		11.25%
Unamortized discount	3,300
Equipment, Long-Term Notes Payable [Member]
Debt Instrument [Line Items]
Debt, Long-term	5,826		2,230
Notes Payable [Member]
Debt Instrument [Line Items]
Debt instrument, stated interest rate				8.50%
Term Facility [Member]
Debt Instrument [Line Items]
Debt, Long-term	$ 404,019		148,447
Term Facility [Member] | Subsidiary [Member]
Debt Instrument [Line Items]
Debt instrument, stated interest rate	9.25%
Unamortized discount	$ 10,900		5,000
Revolving Facility [Member]
Debt Instrument [Line Items]
Debt, Long-term	0		10,000
Seller Notes [Member] | Notes Payable [Member]
Debt Instrument [Line Items]
Debt, Long-term	$ 18,902		$ 6,012

XML

Long-Term Debt - Aggregate Contractual Future Principal Payments (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Debt Disclosure [Abstract]
2016	$ 6,919
2017	6,325
2018	5,283
2019	4,234
2020	397,953
Thereafter	141,521
Total scheduled maturities	562,235
Unamortized debt discount	(14,196)
Debt, Long-term	$ 548,039	$ 166,689

XML

Long-Term Debt - Senior Secured Credit Facilities Narrative (Details)	12 Months Ended
	Dec. 31, 2015 USD ($)	May. 29, 2015 USD ($)	Dec. 31, 2014 USD ($)	Dec. 20, 2013 USD ($) note
Senior Secured Credit Facilities [Line Items]
Debt, Long-term	$ 548,039,000		$ 166,689,000
Term Facility [Member]
Senior Secured Credit Facilities [Line Items]
Debt, Long-term	404,019,000		148,447,000
Term Facility [Member] | Subsidiary [Member]
Senior Secured Credit Facilities [Line Items]
Senior secured credit facilities	$ 420,000,000		155,000,000
Debt Instrument Periodic Payment Percent Of Outstanding Principal Balance	0.25%
Debt instrument, stated interest rate	9.25%
Financing agreement amount		$ 265,000,000		$ 155,000,000
Senior Secured Credit [Member] | Subsidiary [Member]
Senior Secured Credit Facilities [Line Items]
Line Of Credit Facility, Maximum Net First Lien Leverage Ratio	5.50%
Revolving Facility [Member]
Senior Secured Credit Facilities [Line Items]
Debt, Long-term	$ 0		10,000,000
Revolving Facility [Member] | Subsidiary [Member]
Senior Secured Credit Facilities [Line Items]
Revolving Facility, interest above LIBOR or base rate	8.25%
Senior secured credit facilities		15,000,000		$ 25,000,000
Commitment fee percentage	0.50%
Payment in Kind (PIK) Note [Member]
Senior Secured Credit Facilities [Line Items]
Debt, Long-term	$ 119,292,000	$ 115,000,000
Interest Costs Capitalized	7,619,000
Debt instrument, stated interest rate		11.25%
Debt Instrument, Issue Price Percentage Of Principle Amount		97.00%
Notes Payable [Member]
Senior Secured Credit Facilities [Line Items]
Debt instrument, stated interest rate				8.50%
Equipment, Long-Term Notes Payable [Member]
Senior Secured Credit Facilities [Line Items]
Debt, Long-term	5,826,000		2,230,000
AGS Seller Notes [Domain] | Notes Payable [Member]
Senior Secured Credit Facilities [Line Items]
Promissory notes issued | note				2
Debt, Long-term	6,500,000
Interest Costs Capitalized	1,000,000
Seller Notes [Member] | Notes Payable [Member]
Senior Secured Credit Facilities [Line Items]
Debt, Long-term	18,902,000		$ 6,012,000
Promissory Note 2.2 Million [Member] | Notes Payable [Member]
Senior Secured Credit Facilities [Line Items]
Debt, Long-term				$ 2,200,000
Promissory Note 3.3 Million [Member] | Notes Payable [Member]
Senior Secured Credit Facilities [Line Items]
Debt, Long-term				$ 3,300,000
Promissory Note 12.0 Million Amaya [Member] | Notes Payable [Member]
Senior Secured Credit Facilities [Line Items]
Debt, Long-term	12,400,000	$ 12,000,000
Interest Costs Capitalized	$ 400,000
Debt instrument, stated interest rate		5.00%

XML

Stockholders' Equity (Details) $ in Thousands	May. 29, 2015 USD ($) shares	Apr. 28, 2014 shares	Dec. 31, 2015 vote class shares
Conversion of Stock [Line Items]
Proceeds from issuance of common stock | $	$ 77,425
Number of classes of common stock | class			2
Number of votes per share of common stock | vote			1
Common Class A [Member]
Conversion of Stock [Line Items]
Number of shares converted (in shares)		10,000,000
Common Class B [Member]
Conversion of Stock [Line Items]
Common stock, shares issued (in shares)	4,931,529
Number of shares converted (in shares)		10,000,000
Class B common stock issued to management holders [Member]
Conversion of Stock [Line Items]
Common stock, shares issued (in shares)			107,498

XML

Write Downs and Other Charges (Details) - USD ($) $ in Thousands		12 Months Ended
	Dec. 31, 2013	Dec. 31, 2015	Dec. 31, 2014	Dec. 20, 2013
Successor [Member]
Write Downs And Other Charges [Line Items]
Write downs and other charges	$ 7,469	$ 11,766	$ 7,068
Fees related to acquisition		8,168	2,805
Impairment of Intangible Assets, Finite-lived		3,425	1,384
write-off of prepaids		1,342
Gain (loss) on sale of assets		1,273	1,936
Impairment of long-lived assets		225	$ 775
Change in amount of contingent consideration		$ (2,667)
Predecessor [Member]
Write Downs And Other Charges [Line Items]
Write downs and other charges				$ 10,326
Fees related to acquisition				3,875
Expenses incurred from related party transaction				300
Impairment of Intangible Assets, Finite-lived				1,721
Share-based Compensation				500
Impairment of long-lived assets				$ 3,289

XML

Basic and Diluted Loss Per Share (Details)	12 Months Ended
	Dec. 31, 2015 USD ($) shares
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Dilutive securities | $	$ 0
Restricted Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of EPS	50,000
Employee Stock Option [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of EPS	325,000

XML

Benefit Plans (Details) - USD ($) $ in Thousands			3 Months Ended	12 Months Ended
	Apr. 28, 2014	Dec. 31, 2013	Jun. 30, 2014	Dec. 31, 2015	Dec. 31, 2014	Dec. 20, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Maximum percentage of pretax earnings employee is eligible to contribute under defined contribution plan				15.00%
Predecessor [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Payment on phantom unit plan						$ 2,103
401(k) defined contribution plan expense						200
Successor [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Payment on phantom unit plan			$ 22
401(k) defined contribution plan expense		$ 7		$ 600	$ 300
Phantom Share Units [Member] | Predecessor [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Plan strike price value						$ 56,000
Vesting period						4 years
Long-Term Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Incentive plan period	10 years
Long-Term Incentive Plan [Member] | Common Class B [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized under incentive plan (in shares)	1,250,000
Cadillac Jack [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
401(k) defined contribution plan expense				$ 200

XML

Share-Based Compensation - Narrative (Details)	12 Months Ended
	Dec. 31, 2015 USD ($) shares	Dec. 31, 2014 installment anniversary shares	Dec. 31, 2013
Employee Stock Option [Member] | Class B common stock issued to management holders [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Dividend Yield	0.00%	0.00%	0.00%
Restricted Stock Units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock options canceled or forfeited during period (in shares)	0
Shares issued in period (in shares)		50,000
Stock options granted, number of exercisable installments | installment		5
Stock options granted, number of exercisable anniversaries | anniversary		5
Long-Term Incentive Plan [Member] | Employee Stock Option [Member] | Common Class B [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Allocated Share-based Compensation Expense | $	$ 0

XML

Share-Based Compensation - Assumptions (Details) - Class B common stock issued to management holders [Member] - Employee Stock Option [Member]	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Dividend Yield	0.00%	0.00%	0.00%
Risk free interest rate	1.69%	1.63%	0.00%
Expected term	6 years 5 months	5 years	0 years
Expected volatility	55.00%	73.00%	0.00%

XML

Share-Based Compensation Summary of Changes in Stock Options Outstanding (Details)	12 Months Ended
	Dec. 31, 2015 USD ($) $ / shares shares
Options Rollforward
Outstanding beginning balance (in shares) | shares	576,250
Number of Options, Granted (in shares) | shares	347,875
Number of Options, Canceled (in shares) | shares	(158,750)
Outstanding ending balance (in shares) | shares	765,375
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Number | shares	55,833
Weighted Average Exercise Price [Abstract]
Weighted Average Exercise Price, beginning balance (in usd per share) | $ / shares	$ 10.00
Options granted, exercise price (in dollars per share) | $ / shares	15.41
Options canceled, exercise price (in dollars per share) | $ / shares	10.00
Weighted Average Exercise Price, ending balance (in usd per share) | $ / shares	12.46
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Exercise Price | $ / shares	$ 10.00
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Remaining Contractual Term	8 years 5 months
Intrinsic Value, Outstanding Shares | $	$ 2,481,113
Intrinsic Value, Exercisable Shares | $	$ 117,169
Employee Stock Option [Member] | Class B common stock issued to management holders [Member] | Tranche B [Member]
Weighted Average Exercise Price [Abstract]
Weighted Average Remaining Contract Term (years)	8 years 7 months

XML

Share-Based Compensation Summary of the changes in restricted stock awards outstanding (Details) - Restricted Stock [Member] - $ / shares	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price		$ 10.00
Restricted Stock [Roll Forward]
Nonvested at January 1, 2015	50,000
Vested	10,000
Nonvested at December 31, 2015	40,000	50,000
Granted	0
Forfeited	0
Restricted Stock [Abstract]
Nonvested at January 1, 2015	$ 10.00
Vested	10.00
Nonvested at December 31, 2015	$ 10.00	$ 10.00

XML

Restructuring - Narrative (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Restructuring Cost and Reserve [Line Items]
Restructuring Charges	$ 1,397
Restructuring Costs		$ 1,200

XML

Restructuring (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2015 USD ($)
Restructuring Reserve [Roll Forward]
December 31, 2014	$ 343
Charge to expense	1,397
Cash paid	1,703
December 31, 2015	37
Accrued Severance [Member]
Restructuring Reserve [Roll Forward]
December 31, 2014	127
Charge to expense	935
Cash paid	1,025
December 31, 2015	37
Accrued Retention Bonus [Member]
Restructuring Reserve [Roll Forward]
December 31, 2014	216
Charge to expense	437
Cash paid	653
December 31, 2015	0
Facility Closing [Member]
Restructuring Reserve [Roll Forward]
December 31, 2014	0
Charge to expense	25
Cash paid	25
December 31, 2015	$ 0

XML

Income Taxes - Provision for income tax expense (Details) - USD ($)		12 Months Ended
	Dec. 31, 2013	Dec. 31, 2015	Dec. 31, 2014	Dec. 20, 2013
Successor [Member]
Income Tax Examination [Line Items]
Income (Loss) from Continuing Operations before Income Taxes, Domestic	$ (8,102,000)	$ (66,728,000)	$ (26,187,000)
Income (Loss) from Continuing Operations before Income Taxes, Foreign	0	(7,906,000)	0
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Extraordinary Items, Noncontrolling Interest	$ (8,102,000)	$ (74,634,000)	$ (26,187,000)
Predecessor [Member]
Income Tax Examination [Line Items]
Income (Loss) from Continuing Operations before Income Taxes, Domestic				$ (42,176,000)
Income (Loss) from Continuing Operations before Income Taxes, Foreign				0
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Extraordinary Items, Noncontrolling Interest				$ (42,176,000)

XML

Income Taxes - Income tax (benefit) expense (Details) - USD ($) $ in Thousands		12 Months Ended
	Dec. 31, 2013	Dec. 31, 2015	Dec. 31, 2014	Dec. 20, 2013
Successor [Member]
Current:
Federal	$ 0	$ 932	$ 0
State	0	(10)	7
Foreign	0	1,424	0
Total current income tax expense	0	2,346	7
Deferred:
Federal	50	(34,589)	2,005
State	4	(2,506)	177
Foreign	0	(1,340)	0
Deferred Income Tax Expense (Benefit)	54	(38,435)	2,182
Total income tax (benefit) expense	$ 54	$ (36,089)	$ 2,189
Predecessor [Member]
Current:
Federal				$ 0
State				0
Foreign				0
Total current income tax expense				0
Deferred:
Federal				0
State				0
Foreign				0
Deferred Income Tax Expense (Benefit)				0
Total income tax (benefit) expense				$ 0

XML

Income Taxes - Reconciliation of income tax at the federal statutory rate to the actual effective income tax rate (benefit) (Details)		12 Months Ended
	Dec. 31, 2013	Dec. 31, 2015	Dec. 31, 2014	Dec. 20, 2013
Successor [Member]
Income Tax Examination [Line Items]
Federal statutory rate	(34.00%)	(35.00%)	(34.00%)
Non-taxable entities	0.00%	0.00%	0.00%
Foreign rate differential	0.00%	0.70%	0.00%
State income taxes, net of federal benefit	(3.10%)	(2.50%)	(0.80%)
Nondeductible loan costs	0.00%	1.50%	0.00%
Nondeductible transaction costs	0.00%	1.60%	0.00%
Effective Income Tax Rate Reconciliation Other Permanent Differences	0.00%	(0.30%)	0.20%
Other differences	0.00%	0.50%	0.40%
Uncertain tax positions	0.00%	0.30%	0.00%
Valuation allowance	37.80%	(15.20%)	42.60%
Effective income tax rate	0.70%	(48.40%)	8.40%
Predecessor [Member]
Income Tax Examination [Line Items]
Federal statutory rate				(34.00%)
Non-taxable entities				32.70%
Foreign rate differential				(0.50%)
State income taxes, net of federal benefit				0.00%
Nondeductible loan costs				0.00%
Nondeductible transaction costs				0.00%
Effective Income Tax Rate Reconciliation Other Permanent Differences				0.00%
Other differences				0.00%
Uncertain tax positions				0.00%
Valuation allowance				1.80%
Effective income tax rate				0.00%

XML

Income Taxes - Components of net deferred tax liability (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Components of Deferred Tax Assets and Liabilities [Abstract]
Foreign tax credits	$ 8,800
Deferred Tax Assets, Tax Credit Carryforwards, Research	1,600
Successor [Member]
Components of Deferred Tax Assets and Liabilities [Abstract]
Accrued expenses	608	$ 845
Allowance for bad debt	1,176	3
Payroll accruals	2,085	0
Foreign tax credits	8,834	0
Deferred Tax Assets, Operating Loss Carryforwards	35,862	8,156
Intangibles	0	7,368
Deferred Tax Assets, Tax Credit Carryforwards, Research	1,569	0
Loan costs and interest	3,519	0
Other	2,017	166
Total deferred tax assets	55,670	16,538
Valuation allowance	(8,274)	(14,260)
Deferred tax assets, net of valuation allowance	47,396	2,278
Deferred tax liabilities:
Prepaid expenses and other	(1,033)	(800)
Intangibles	(60,309)	(2,236)
Fixed assets	(1,364)	(1,633)
Deferred tax liabilities	(62,706)	(4,669)
Net deferred tax liabilities	$ (15,310)	$ (2,391)

XML

Income Taxes - Unrecognized tax benefits activity (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2015 USD ($)
Reconciliation of Unrecognized Tax Benefits [Roll Forward]
Balance-beginning of year	$ 0
Current year acquisitions	29,701
Increases based on tax positions of the current year	795
Currency translation adjustments	(973)
Balance-end of year	$ 29,523

XML

Income Taxes - Narrative (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Operating Loss Carryforwards [Line Items]
Mexico foreign tax credit from customer withholdings	10.00%
Tax Credit Carryforward Period	10 years
Tax Credit Carryforward, Amount	$ 8,800
Foreign tax credits expiring	4,000
Deferred Tax Assets, Tax Credit Carryforwards, Research	1,600
Deferred Tax Assets, Operating Loss Carryforwards, Domestic	86,400
Deferred Tax Assets, Operating Loss Carryforwards, Foreign	16,900
Deferred Tax Assets, Operating Loss Carryforwards, State and Local	63,400
Tax Adjustments, Settlements, and Unusual Provisions	14,300
Valuation Allowance, Deferred Tax Asset, Increase (Decrease), Amount	5,700
Goodwill, Purchase Accounting Adjustments	5,700
valuation allowance from foreign losses	2,600
Unrecognized Tax Benefits	29,523	$ 0
Unrecognized Tax Benefits that Would Impact Effective Tax Rate	26,900
Unrecognized Tax Benefits, Income Tax Penalties Accrued	900
Unrecognized Tax Benefits, Income Tax Penalties and Interest Accrued	8,000
Cadillac Jack [Member]
Operating Loss Carryforwards [Line Items]
Business Combination, Indemnification Assets	$ 21,900

XML

Commitments and Contingencies (Details) - USD ($) $ in Thousands		12 Months Ended
	Dec. 31, 2013	Dec. 31, 2015	Dec. 31, 2014	Dec. 20, 2013
Successor [Member]
Other Commitments [Line Items]
Rent expense	$ 22	$ 2,000	$ 800
Predecessor [Member]
Other Commitments [Line Items]
Rent expense				$ 600

XML

Commitments and Contingencies - Future minimum lease payments (Details) - Successor [Member] $ in Thousands	Dec. 31, 2015 USD ($)
Future Minimum Lease Payments
2016	$ 1,693
2017	1,752
2018	1,186
2019	1,065
2020	1,092
Thereafter	806
Total	$ 7,594

XML

Selected Quarterly Financial Data (Unaudited) (Details) - Successor [Member] - USD ($) $ in Thousands		3 Months Ended								12 Months Ended
	Dec. 31, 2013	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2015	Dec. 31, 2014
Selected Quarterly Financial Data
Revenues	$ 1,953	$ 40,096	$ 38,105	$ 26,296	$ 18,795	$ 18,718	$ 18,836	$ 17,428	$ 17,158	$ 123,292	$ 72,140
Income (loss) from operations	(7,623)	(1,347)	(13,017)	(11,339)	(3,736)	(4,216)	(3,432)	(1,468)	695	(29,439)	(8,421)
Net loss	$ (8,156)	$ (8,880)	$ (23,279)	$ 2,849	$ (9,235)	$ (9,250)	$ (8,674)	$ (6,203)	$ (4,249)	$ (38,545)	$ (28,376)

XML

Schedule I - Balance Sheet (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013	Dec. 20, 2013
Liabilities and Stockholders’ Equity
Accounts Payable and Accrued Liabilities, Current	$ 23,030	$ 23,316
Long-term Debt, Excluding Current Maturities	541,120	164,194
Parent Company [Member]
Current assets
Cash and cash equivalents	25,972	8,513	$ 16,538	$ 0
Prepaid expenses	63	69
Cash and cash equivalents	25,972	8,513	$ 16,538	$ 0
Prepaid expenses	63	69
Total current assets	26,035	8,582
Deferred Tax Assets, Net, Noncurrent	3,528	0
Deferred loan costs, net	528	0
Investments in and Advance to Affiliates, Subsidiaries, Associates, and Joint Ventures	203,390	57,622
Total assets	233,481	66,204
Liabilities and Stockholders’ Equity
Accounts Payable and Accrued Liabilities, Current	0	1,993
Due to Affiliate, Current	20	455
Total current liabilities	20	2,448
Long-term Debt, Excluding Current Maturities	131,653	0
Other long-term liabilities	1,271	0
Liabilities	132,944	2,448
Common stock	149	100
Additional paid-in capital	177,276	99,900
Retained Earnings (Accumulated Deficit)	(75,077)	(36,532)
Accumulated other comprehensive (loss) income	(1,811)	288
Stockholders' Equity Attributable to Parent	100,537	63,756
Liabilities and Equity	$ 233,481	$ 66,204

XML

Schedule I - Income Statement (Details) - Parent Company [Member] - USD ($) $ in Thousands		12 Months Ended
	Dec. 31, 2013	Dec. 31, 2015	Dec. 31, 2014
Condensed Financial Statements, Captions [Line Items]
Selling, general and administrative	$ 0	$ 546	$ 1,512
Total operating expenses	0	546	1,512
Loss from operations	0	(546)	(1,512)
Income (Loss) from Equity Method Investments	8,156	33,405	26,870
Interest expense	0	8,123	0
Interest income	0	(1)	(6)
Loss before income taxes	(8,156)	(42,073)	(28,376)
Income Tax Expense (Benefit)	0	3,528	0
Net Income (Loss) Attributable to Parent	(8,156)	(38,545)	(28,376)
Foreign currency translation adjustment	(1)	(2,099)	289
Total comprehensive loss	$ (8,157)	$ (40,644)	$ (28,087)

XML

Schedule I Schedule I - Cash Flow (Details) - USD ($) $ in Thousands			12 Months Ended
	May. 29, 2015	Dec. 31, 2013	Dec. 31, 2015	Dec. 31, 2014
Cash flows from financing activities
Proceeds from Issuance of Common Stock	$ 77,425
Parent Company [Member]
Condensed Financial Statements, Captions [Line Items]
Net Income (Loss) Attributable to Parent		$ (8,156)	$ (38,545)	$ (28,376)
Adjustments to reconcile net loss to net cash provided by operating activities:
Amortization of deferred loan costs and discount		0	143	0
Income (Loss) from Equity Method Investments		8,156	33,405	26,870
(Benefit) Provision for deferred income tax		0	(3,528)	0
Increase (Decrease) in Prepaid Expense		0	(6)	69
Changes in assets and liabilities that relate to operations:
Increase (Decrease) in Due to Affiliates		0	455	455
Accounts payable and accrued liabilities		0	7,956	24
Net cash provided by (used in) operating activities		0	(108)	(1,096)
Cash flows from investing activities
Income (Loss) from Subsidiaries, Net of Tax		(83,462)	(172,484)	(11,635)
Proceeds from Equity Method Investment, Dividends or Distributions		0	1,322	2,737
Net cash used in investing activities		(83,462)	(171,162)	(8,898)
Cash flows from financing activities
Proceeds from issuance of debt		0	111,550	0
Proceeds from Issuance of Common Stock		100,000	77,425	0
Proceeds from employees in advance of common stock issuance		0	579	1,969
Repurchase of shares issued to management		0	(277)	0
Payment of deferred loan costs		0	(548)	0
Net cash provided by financing activities		100,000	188,729	1,969
Increase (decrease) in cash and cash equivalents		16,538	17,459	(8,025)
Cash and cash equivalents, beginning of period		0	8,513	16,538
Cash and cash equivalents, end of period		16,538	25,972	8,513
Non-cash investing and financing activities:
Subsidiary payment for share repurchase on Company’s behalf		0	1,000	0
Intercompany payable settled as distribution		0	890	0
Incurrance of Amaya Seller Note		0	12,000	0
Notes Payable, Capitalized Interest		$ 0	$ 7,980	$ 0