10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

[x]           QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended October 31, 2012

[ ]           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:  0-10294

INTERNATIONAL LOTTERY & TOTALIZATOR SYSTEMS, INC.

(Exact name of registrant as specified in its charter)

California	95-3276269
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

2310 Cousteau Court Vista, California (Address of principal executive offices) 92081-8346 (Zip Code)

(760) 598-1655

(Registrant’s telephone number)

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  ý  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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     Yes  ý  No 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	o	Smaller reporting company	ý

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

The number of shares outstanding of the registrant’s Common Stock, no par value, as of December 13, 2012 was 12,962,999.  

[Missing Graphic Reference]

INDEX

PART I	FINANCIAL INFORMATION	PAGE
Item 1.	Financial Statements (Unaudited)		3-11
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations		12-17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		18
Item 4.	Controls and Procedures		18
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings		18
Item 1A.	Risk Factors		18
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		18
Item 3.	Defaults Upon Senior Securities		18
Item 4.	Mine Safety Disclosures		18
Item 5.	Other Information		18
Item 6.	Exhibits		19
	Signatures

EXHIBIT 31

EXHIBIT 32

2

PART I	FINANCIAL INFORMATION
ITEM 1.	FINANCIAL STATEMENTS

INTERNATIONAL LOTTERY & TOTALIZATOR SYSTEMS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(Amounts in thousands)
	October 31, 2012			April 30, 2012
ASSETS
Current assets:
Cash and cash equivalents	$	3,451		$	2,783
Certificates of deposit		-			250
Accounts receivable, net of allowance for doubtful accounts of $75		2,978			789
Costs and estimated earnings in excess of billings on uncompleted contracts		-			726
Deferred cost of revenue		14			6
Inventories		1,535			2,659
Other current assets		195			238
Total current assets		8,173			7,451
Equipment, furniture and fixtures, net		570			482
Other noncurrent assets		51			49
Total assets	$	8,794		$	7,982
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	163		$	1,070
Billings in excess of costs and estimated earnings on uncompleted contracts		453			-
Accrued payroll and related taxes		389			388
Warranty reserves		111			169
Payable to Parent		252			252
Other current liabilities		46			63
Deferred revenues		651			687
Total current liabilities		2,065			2,629
Long-term liabilities		-			12
Total liabilities		2,065			2,641
Commitments and contingencies
Shareholders’ equity:
Preferred shares, no par value; 20,000 shares authorized; no shares issued or outstanding		-			-
Common shares, no par value; 50,000 shares authorized; 12,963 shares issued and outstanding	56,370				56,370
Accumulated deficit		(49,641	)		(51,029	)
Total shareholders' equity		6,729			5,341
Total liabilities and shareholders' equity	$	8,794		$	7,982

See notes to condensed consolidated financial statements

3

INTERNATIONAL LOTTERY & TOTALIZATOR SYSTEMS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(Amounts in thousands, except per share amounts)

	Three Months Ended					Six Months Ended
	October 31,					October 31,
	2012		2011			2012		2011
Revenues:
Sales of products	$	2,047	$	1,693		$	5,060	$	2,014
Services		350		251			627		539
		2,397		1,944			5,687		2,553
Cost of sales:
Cost of product sales		1,133		1,314			2,850		1,971
Cost of services		128		63			203		155
		1,261		1,377			3,053		2,126
Gross profit		1,136		567			2,634		427
Research and development expenses		-		24			-		24
Selling, general and administrative expenses		644		689			1,223		1,299
Income (loss) from operations		492		(146	)		1,411		(896	)
Other income (expense):
Interest and dividend income		-		1			-		2
Other		-		2			-		(1	)
Income (loss) before provision for income taxes		492		(143	)		1,411		(895	)
Provision for income taxes		20		-			23		-
Net income (loss)	$	472	$	(143	)	$	1,388	$	(895	)
Net income (loss) per share:
Basic	$	0.04	$	(0.01	)	$	0.11	$	(0.07	)
Weighted average shares used in computation of net income (loss) per share:
Basic		12,963		12,963			12,963		12,963

See notes to condensed consolidated financial statements

4

INTERNATIONAL LOTTERY & TOTALIZATOR SYSTEMS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(Amounts in thousands)

	Six Months Ended October 31,
	2012			2011
Cash flows from operating activities:
Net income (loss)	$	1,388		$	(895	)
Adjustments to reconcile net income (loss) to net cash provided by (used in)
operating activities:
Depreciation and amortization		87			66
Warranty reserve expense		73			7
Changes in operating assets and liabilities:
Accounts receivable		(2,189	)		(821	)
Costs and estimated earnings in excess of billings on uncompleted contracts		726			32
Deferred cost of revenue		(8	)		(263	)
Inventories		1,124			(1,286	)
Other assets		41			(185	)
Accounts payable		(907	)		812
Billings in excess of costs and estimated earnings on uncompleted contracts		453			(142	)
Accrued payroll and related taxes		1			43
Warranty reserves		(131	)		(12	)
Payable to Parent		-			1
Other liabilities		(29	)		(17	)
Deferred revenues		(36	)		1,380
Net cash provided by (used in) operating activities		593			(1,280	)
Cash flows from investing activities:
Purchases of certificates of deposit		-			(500	)
Proceeds from redemption of certificates of deposit		250			499
Additions to equipment, furniture and fixtures		(175	)		(64	)
Net cash provided by (used in) investing activities		75			(65	)
Net increase (decrease) in cash and cash equivalents		668			(1,345	)
Cash and cash equivalents at beginning of period		2,783			3,881
Cash and cash equivalents at end of period	$	3,451		$	2,536
Supplemental cash flow information:
Cash paid for income taxes	$	37		$	-

See notes to condensed consolidated financial statements

5

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Description of the Business

International Lottery & Totalizator Systems, Inc. (“ILTS” or the “Company,” together with its subsidiary) designs, manufactures, sells, manages, supports and services computerized wagering systems and terminals for the global lottery and pari-mutuel racing industries.  The wagering system features include real-time, secure processing of data received from multiple locations, hardware redundancy and complete communications redundancy in order to provide the highest level of fault tolerant operation.  In addition, although the Company is not presently doing so, ILTS has demonstrated capability to provide full facilities management services to customer organizations authorized to conduct lotteries.  The Company is largely dependent upon significant contracts for its revenue, which typically include a deposit upon contract signing and up to six months lead time before delivery of hardware begins.

The Company, through its wholly-owned subsidiary, Unisyn Voting Solutions, Inc. (“Unisyn”), has devoted significant resources to developing federally certified end-to-end optical scan voting systems and a full-featured Election Management Software that provides precinct tabulation, ballot review and audio voting capability.  In addition to the InkaVote Plus Precinct Ballot Counter (“PBC”) system, certified to the National Association of State Election Directors (“NASED”) 2002 Voting System Standards (“VSS”), the Company received the 2005 Voluntary Voting System Guidelines (“VVSG”) certification from the United States Election Assistance Commission (“EAC”) for its OpenElect® digital optical scan election system – a digital scan voting system built with Java on a streamlined and hardened Linux platform.  As part of a jurisdiction’s procurement process, the Company will provide the OpenElect® products’ source code for independent review.

These efforts leverage the Company’s extensive experience to develop highly secure, mission-critical solutions that meet the NASED 2002 VSS and the EAC 2005 VVSG standards.  In addition, the Company’s voting systems offer the following features:

· High level of security and vote encryption to ensure integrity and voter privacy;

· Electronic and paper audit trails that offer added security and redundancy for recounts;

· Reduce the cost of ballot printing while offering operational efficiencies;

· Minimal training required for poll workers to set-up and operate; and

· Minimal voter re-education required.

Berjaya Lottery Management (H.K.) Ltd. (“BLM” or the “Parent”) owns 71.3% of the outstanding voting stock of ILTS.

Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of ILTS and its wholly-owned subsidiary, Unisyn.  All significant intercompany accounts and transactions are eliminated in consolidation.

Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) for interim financial information and with the Securities and Exchange Commission’s (“SEC”) instructions to Form 10-Q.  Accordingly, they do not include all of the information and notes required by US GAAP for complete financial statements.  In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation of financial position, results of operations and cash flows have been included.

The results of operations for the interim periods shown in this report are not necessarily indicative of the results to be expected for the full year.  The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended April 30, 2012 filed with the SEC on July 6, 2012.  The condensed consolidated balance sheet as of April 30, 2012 has been derived from the audited financial statements included in the Form 10-K for that year.

6

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions.  Actual results could differ from those estimates.  Estimates may affect the reported amounts of assets and liabilities and revenues and expenses, and the disclosure of contingent assets and liabilities.

Deferred Revenues

Deferred revenues of approximately $651,000 as of October 31, 2012 represent prepayments for products and services related to the use of the OpenElect® and PBC voting systems, and other software and technical support services.  The Company will recognize the revenues upon the fulfillment of the prescribed criteria for revenue recognition.

Warranty Reserves

Estimated warranty costs are accrued as revenues are recognized.  Included in the warranty cost accruals are costs for basic warranties on products sold.  A summary of product warranty reserve activity for the six months ended October 31, 2012 is as follows:

(Amounts in thousands)
Balance at May 1, 2012	$	169
Additional reserves		104
Warranty reserve expense adjustments		(31	)
Charges incurred		(131	)
Balance at October 31, 2012	$	111

Income Taxes

The Company uses the asset and liability method for financial reporting of income taxes.  Deferred tax assets and liabilities are determined based on temporary differences between financial reporting and the tax basis of assets and liabilities, and are measured by applying enacted rates and laws to taxable years in which such differences are expected to be recovered or settled.  Any changes in tax rates or laws are recognized in the period when such changes are enacted.  Valuation allowances have been established when necessary to reduce deferred tax assets to the amount expected to be realized.  The Company records a valuation allowance to reduce its deferred tax assets when uncertainty exists regarding the realizability of the deferred tax assets.

The provision for income taxes was $23,000 for the six months ended October 31, 2012.  The effective tax rate differed from the statutory tax rate primarily due to valuation allowances and net operating loss carry forwards.  

Segment Information

The Company reports segment information based on the “management” approach.  Under this approach, operating segments are identified in substantially the same manner as they are reported internally and used by the Company’s chief operating decision maker for purposes of evaluating performance and allocating resources.

The Company divides its operations into two operating segments: the gaming business and the voting business.  The gaming segment designs and develops computerized wagering systems and terminals for the lottery and pari-mutuel racing industries worldwide.  Presently the voting segment generates revenues from the sales of the voting systems and hardware, software licensing, product servicing and software support services.

7

The Company’s segment information is presented below (in thousands):

	As of and for the Three Months Ended October 31, 2012
	Gaming Business			Voting Business				Totals
Total revenues		$	1,145		$	1,252			$	2,397
Income from operations			214			278				492
Depreciation and amortization			29			17				46
Segment assets			6,830			1,964				8,794
	As of and for the Three Months Ended October 31, 2011
	Gaming Business			Voting Business				Totals
Total revenues		$	1,510		$	434			$	1,944
Income (loss) from operations			149			(295	)			(146	)
Depreciation and amortization			21			13				34
Segment assets			4,733			2,237				6,970

	As of and for the Six Months Ended October 31, 2012
	Gaming Business				Voting Business				Totals
Total revenues		$	3,632			$	2,055			$	5,687
Income from operations			1,165				246				1,411
Depreciation and amortization			56				31				87
Segment assets			6,830				1,964				8,794
	As of and for the Six Months Ended October 31, 2011
	Gaming Business				Voting Business				Totals
Total revenues		$	1,848			$	705			$	2,553
Loss from operations			(360	)			(536	)			(896	)
Depreciation and amortization			41				25				66
Segment assets			4,733				2,237				6,970

8

Inventories

Inventories are stated at the lower of cost or the current estimated market values.  Cost is determined using the first-in, first-out method.  

Inventories consisted of the following:

	October 31,		April 30,
	2012		2012
(Amounts in thousands)
Raw materials and subassemblies	$	1,230	$	1,775
Work-in-process		-		63
Finished goods		305		821
	$	1,535	$	2,659

Equipment, Furniture and Fixtures

Net equipment, furniture and fixtures consisted of the following:	October 31,			April 30,
	2012			2012
(Amounts in thousands)
Plant and machinery	$	724		$	724
Computer equipment		1,646			1,482
Leasehold improvement		201			190
Furniture, fixtures and equipment		91			91
		2,662			2,487
Accumulated depreciation and amortization		(2,092	)		(2,005	)
Net equipment, furniture and fixtures	$	570		$	482

Net Income (Loss) per Share

Basic net income (loss) per share is based on the weighted average number of shares outstanding during the periods.  

Major Customers

The following table summarizes major customers who individually accounted for more than 10% of revenues for the periods presented:

	Three Months Ended October 31,		Six Months Ended October 31,
	2012	2011	2012	2011
Revenue:
From unrelated customers	One customer from the voting segment accounted for 41% of total revenue and one customer from the gaming segment accounted for 10% of total revenue	No individual customer accounted for more than 10% of total revenue	One customer from the voting segment accounted for 28% of total revenue and one  customer from the gaming segment accounted for 10% of total revenue	No individual customer accounted for more than 10% of total revenue
From related customers	One customer from the gaming segment accounted for 36% of total revenue	One customer from the gaming segment accounted for 61% of total revenue	Two customers from the gaming segment accounted for 53% of total revenue	One customer from the gaming segment accounted for 50% of total revenue

9

Related Party Transactions

During the three months ended October 31, 2012 and 2011, revenues from all related party transactions for the sales of products and services totaled approximately $909,000 (38% of total revenue) and $1.3 million (66% of total revenue), respectively.  Related party revenues for the six months ended October 31, 2012 and 2011 were approximately $3.1 million (54% of total revenue) and $1.5 million (59% of total revenue), respectively.  Included in accounts receivable at October 31, 2012 was approximately $2.6 million from these customers.  Descriptions of the transactions with the Company’s related parties in the three and six months ended October 31, 2012 and 2011 are presented below.

Berjaya Lottery Management (H.K.) Ltd.

In 1996, the Company entered into an agreement to purchase specific inventory on behalf of Berjaya Lottery Management (H.K.) Ltd. ("BLM"), the owner of 71.3% of ILTS’s outstanding voting stock as of October 31, 2012.  

Over time, the Company has sold or used portions of the BLM inventory in unrelated third party transactions.  The sale or use of the inventory resulted in a liability to BLM for the cost of the items utilized.

The financial activities and balances related to BLM were as follows:

·   There were no related party sales to BLM in the three and six months ended October 31, 2012 and 2011;

· There were no accounts receivable balances from BLM as of October 31, 2012 and April 30, 2012;

· Liabilities to BLM arising from the sale or use of the BLM inventory, recorded as “Payable to Parent,” were $252,000 as of October 31, 2012 and April 30, 2012; and

· There were no inventory balances held for BLM as of October 31, 2012 and April 30, 2012.

Philippine Gaming Management Corporation

On December 20, 2011, the Company received from Philippine Gaming Management Corporation (“PGMC”), a related party and a subsidiary of BLM, an order valued at approximately $1.1 million for lottery products.  Shipments of these products were completed in the first quarter of fiscal 2013, and the related revenue was recognized.

In addition, the Company provides PGMC with terminal spare parts on an ongoing basis and support services on an as-needed basis.

The financial activities and balances related to transactions with PGMC were as follows:

· Revenues recognized on the sale of lottery products during the three and six months ended October 31, 2012 totaled approximately $3,000 and $1.1 million, respectively.  Revenues of $1.2 million and $1.3 million were recognized on the sale of lottery products and support services during the three and six months ended October 2011, respectively; 

· There was no deferred revenue balance as of October 31, 2012.  Deferred revenue balance in connection with the lottery product order dated December 20, 2011 mentioned above totaled approximately $264,000 as of April 30, 2012; and

·   The accounts receivable balance from the sale of lottery products totaled $53,000 as of October 31, 2012, compared to $189,000 as of April 30, 2012.

10

Sports Toto Malaysia Sdn. Bhd.

The Company provides lottery products, software development and software support services to Sports Toto Malaysia (“STM”), an affiliate of BLM and a related party.  

On December 21, 2011, the Company signed a contract with STM for a complete DataTrakII lottery system valued at approximately $4.3 million.  This contract is scheduled to be completed by the fourth quarter of fiscal 2013.

The financial activities and balances related to transactions with STM were as follows:

· Revenues of $871,000 and $1.9 million were recognized on the performance of contract deliverables and support services during the three and six months ended October, 31, 2012, respectively.  Revenues of $77,000 and $155,000 were recognized on the sale of support services during the three and six months ended October 31, 2011, respectively;

· Net billings in excess of costs and estimated earnings relating to the abovementioned contract dated December 21, 2011 totaled approximately $453,000 as of October 31, 2012, compared to net costs and estimated earnings in excess of billings of approximately $726,000 as of April 30, 2012;

· There were deferred revenues of $9,000 on software support services as of October 31, 2012 and April 30, 2012; and

·   Accounts receivable from STM totaled approximately $2.6 million as of October 31, 2012.  There was no accounts receivable balance as of April 30, 2012.

Natural Avenue Sdn. Bhd.

The Company provides Natural Avenue Sdn. Bhd. (“Natural Avenue”), an affiliate of BLM and a related party, with lottery products and support services.  

The financial activities and balances related to transactions with Natural Avenue were as follows:

· Revenues of $35,000 and $70,000 were recognized on the sale of support services and licensing during the three and six months ended October 31, 2012, respectively.  Revenues of $32,000 and $83,000 were recognized on the performance of contract deliverables, sale of support services and licensing during the three and six months ended October 31, 2011, respectively;

· There was deferred revenue of $11,000 on lottery product licensing as of October 31, 2012, compared to $4,000 as of April 30, 2012; and

· There were no accounts receivable balances from Natural Avenue as of October 31, 2012 and April 30, 2012.

Sports Toto Computers Sdn. Bhd.

The Company engages Sports Toto Computers Sdn. Bhd. (“STC”), a related party, to provide consulting, programming and other related services to the Company.

During the three and six months ended October 31, 2012, the Company incurred services of approximately $40,000 and $80,000, respectively, which are shown as part of cost of sales.  During the three and six months ended October 31, 2011, the Company incurred approximately $50,000 and $101,000, respectively, which are shown as part of cost of sales.

Fair Value of Financial Instruments

The Company’s material financial instruments consist of its cash and cash equivalents, certificates of deposit, accounts receivable, accounts payable and related party payables.  The carrying amounts of the Company’s financial instruments generally approximated their fair values as of October 31, 2012 and April 30, 2012 due to the short-term maturity of the instruments.

11

 ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

NOTE REGARDING FORWARD-LOOKING STATEMENTS

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

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

You should be aware that our actual results could differ materially from those contained in the forward-looking statements due to a number of factors, including, such factors, among others, as market acceptance and market demand for our products and services, pricing, the changing regulatory environment, the effect of our accounting policies, potential seasonality, industry trends, adequacy of our financial resources to execute our business plan, our ability to attract, retain and motivate key technical, marketing and management personnel, and other risks described from time to time in periodic and current reports we file with the United States Securities and Exchange Commission, or the "SEC."  You should consider carefully the statements under "Item 1A. Risk Factors" and other sections of this report, which address additional factors that could cause our actual results to differ from those set forth in the forward-looking statements and could materially and adversely affect our business, operating results and financial condition.  All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the applicable cautionary statements.

CRITICAL ACCOUNTING POLICIES

Use of Estimates

Our condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States.  Accordingly, we are required to make estimates, judgments and assumptions that we believe are reasonable. We base our estimates on historical experience, contract terms, observance of known trends in our company and the industry as a whole, and information available from other outside sources.  Estimates affect the reported amounts and related disclosures. Actual results may differ from initial estimates.  There have been no material changes to the critical accounting policies outlined in the Company’s annual report on form 10-K for the fiscal year ended April 30, 2012.

12

Revenue Recognition

Our revenues are derived primarily from the sales of complete wagering systems, lottery terminals, the OpenElect® and PBC voting systems, other software and software support services.  We recognize revenue when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable, and collection is probable.  Product is considered delivered to the customer once it has been shipped and the title and risk of loss have been transferred.  Service revenues are recognized as the services are rendered, and the related costs of services are recognized on a time and materials basis.

Revenue Recognition for Arrangements with Multiple Deliverables

For multi-element arrangements that include hardware products containing software essential to the hardware product’s functionality, undelivered software elements that relate to the hardware product’s essential software, and undelivered non-software services, we allocate revenue to all deliverables based on their relative selling prices.  In such circumstances, we use a hierarchy to determine the selling price to be used for allocating revenue to deliverables: (i) vendor-specific objective evidence of fair value (“VSOE”), (ii) third-party evidence of selling price (“TPE”) and (iii) best estimate of the selling price (“ESP”).  VSOE generally exists only when we sell the deliverable separately and VSOE is the price actually charged for that deliverable.  TPE is determined based on competitor prices for similar deliverables when sold separately.  ESPs reflect our best estimates of what the selling prices of elements would be if they were sold regularly on a standalone basis.  

For sales of hardware products, we provide various hardware components containing software essential to the hardware product’s functionality, and other components depending on the customers’ needs.  We allocate revenue to these deliverables using the relative selling price method.  Because we have not established VSOE or TPE for the hardware, revenue is allocated based on ESPs.  Determining ESPs requires management’s judgment.  Revenue is recognized upon shipment of the hardware and the related essential software, provided the other conditions for revenue recognition have been met.  We also provide software support and product support services on a standalone basis from the sales of the hardware.  Amounts allocated to software support and product support services are based on VSOE using hourly or daily billing rates.  Revenue is deferred until the services are performed.  For annual software licenses, we use VSOE.  Amounts allocated to annual software licenses are deferred and recognized on a straight-line basis over the service period, which is typically one year.

We consider multiple factors depending on the unique facts and circumstances related to each deliverable when determining ESPs for deliverables without VSOE or TPE.  Key factors considered by the management in developing the ESPs for the hardware include the costs of manufacture and what a customer would reasonably pay based on the features being offered, trends in the market, size of the territory, and competitive prices.  If the facts and circumstances underlying the factors change, including the estimated or actual costs incurred to provide the hardware with the essential software, or should future facts and circumstances lead the management to consider additional factors, our ESP for the hardware with essential software related to future sales could change.

Revenue Recognition for Percentage-of-Completion Method

For our complete wagering and lottery systems, we recognize revenue by using the percentage-of-completion method when the contracts for complete systems fulfill the following criteria:

1.	Contract performance extends over long periods of time;
2.	The software portion involves significant production, modification or customization;
3.	Reasonably dependable estimates can be made on the progress towards completion, contract revenues and contract costs; and
4.	Each element is essential to the functionality of the other elements of the contracts.

Under the percentage-of-completion method, sales and estimated gross profits are recognized as work progresses.  Progress toward completion is measured by the ratio of costs incurred to total estimated costs.  Revenue and gross profit may be adjusted prospectively for revisions in estimated total contract costs.  If the current estimates of total contract revenue and contract cost indicate a loss, a provision for the entire loss on the contract is recorded in the period in which it becomes evident.  The total estimated loss includes all costs allocable to the specific contract.

13

RESULTS OF OPERATIONS

Revenue Analysis	Three Months Ended						Six Months Ended
(Amounts in thousands)	October 31,						October 31,
Revenues	2012		2011		Change		2012		2011		Change
Products:
Contracts	$	1,695	$	1,451	$	244	$	4,357	$	1,618	$	2,739
Spares		174		169		5		476		283		193
Licensing		178		73		105		227		113		114
Total Products		2,047		1,693		354		5,060		2,014		3,046
Services:
Software Support		198		191		7		399		383		16
Product Servicing and Support		152		60		92		228		156		72
Total Services		350		251		99		627		539		88
	$	2,397	$	1,944	$	453	$	5,687	$	2,553	$	3,134

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

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

Contract revenue for the three months ended October 31, 2012 was approximately $1.7 million, compared to $1.5 million for the corresponding period in 2011.  The increase was primarily due to the increased contract activities for the gaming and voting segments, partially offset by the absence of turnkey lottery system sales compared to the corresponding period in 2011.  For the six months ended October 31, 2012, contract revenue was approximately $4.4 million, compared to $1.6 million for the corresponding period in 2011.  The significant increase in contract revenue was primarily due to the increased contract activities for the gaming and voting segments.

Spares revenue for the three months ended October 31, 2012 remained relatively constant at $174,000, compared to $169,000 for the same period in 2011.  Spares revenue for the six months ended October 31, 2012 was $476,000, compared to $283,000 for the corresponding period in 2011.  The increase was primarily due to higher demand for spare parts from unrelated customers in the gaming and voting segments.  Customers’ demand for spare parts fluctuates from period to period.

Licensing revenue for the three months ended October 31, 2012 was $178,000, compared to $73,000 in 2011.  For the six months ended October 31, 2012, licensing revenue was $227,000, compared to $113,000 for the corresponding period in 2011.  The higher licensing revenues were primarily due to the additional executed contracts related to the voting segment.  We derive licensing revenue from voting and lottery contracts.

Software support revenue for the three months ended October 31, 2012 was $198,000, compared to $191,000 for the same period in 2011.  For the six months ended October 31, 2012, software support revenue was $399,000, compared to $383,000 in the same period in 2011.  The slight increase was primarily due to higher fees charged to customers.

14

Product servicing and support revenue for the three months ended October 31, 2012 was $152,000, compared to $60,000 for the corresponding period in 2011.  For the six months ended October 31, 2012, product servicing and support revenue was $228,000, compared to $156,000 for the same period in the prior year.  The increases were primarily due to higher demand for support services from an unrelated customer in the gaming segment, partially offset by lower demand for support services from unrelated customers in the voting segment.

Related party revenue of approximately $909,000 accounted for 38% of total revenue in the three months ended October 31, 2012, compared to $1.3 million or 66% of total revenue in the corresponding period in 2011.  For the six months ended October 31, 2012, related party revenue of approximately $3.1 million accounted for 54% of total revenue, compared to $1.5 million or 59% of total revenue in the corresponding period in 2011.

Cost of Sales and Gross Profit Analysis

The following table summarizes the cost of sales and gross profit margins as a percentage of total revenues for each of the periods shown:

	Three Months Ended October 31,								Six Months Ended October 31,
(Amounts in thousands)	2012				2011				2012				2011
Revenues:
Products	$	2,047	85	%	$	1,693	87	%	$	5,060	89	%	$	2,014	79	%
Services		350	15	%		251	13	%		627	11	%		539	21	%
Total revenues	$	2,397	100	%	$	1,944	100	%	$	5,687	100	%	$	2,553	100	%
Cost of sales:
Products	$	1,133	47	%	$	1,314	68	%	$	2,850	50	%	$	1,971	77	%
Services		128	6	%		63	3	%		203	4	%		155	6	%
Total costs of sales	$	1,261	53	%	$	1,377	71	%	$	3,053	54	%	$	2,126	83	%
Gross profit:
Products	$	914	38	%	$	379	19	%	$	2,210	39	%	$	43	2	%
Services		222	9	%		188	10	%		424	7	%		384	15	%
Total gross profit	$	1,136	47	%	$	567	29	%	$	2,634	46	%	$	427	17	%

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

Overall gross profit margin was 47% for the three months ended October 31, 2012, compared to 29% for the corresponding period in 2011.  For the six months ended October 31, 2012, overall gross profit margin was 46% compared to 17% for the corresponding period in 2011.  Significantly higher gross profit margins were primarily due to increased contract activities and lower production overhead costs, partially offset by slightly higher support service costs. 

Research and Development Expenses

We did not incur any research and development expenses ("R&D") for the three and six months ended October 31, 2012.  For the three and six months ended October 31, 2011, R&D expenses were $24,000.  While we continue to enhance our products, we anticipate that R&D expenses will be very minimal, if any, in the remaining quarters of fiscal 2013 as we dedicate our efforts to the marketing and sale of new voting systems.

15

Selling, General and Administrative

Selling, general and administrative ("SG&A") expenses for the three months ended October 31, 2012 were $644,000, compared to $689,000 in the same period in 2011.  For the six months ended October 31, 2012, SG&A expenses were $1.2 million, compared to $1.3 million for the corresponding period in 2011.  The slight decreases in SG&A expenses were primarily related to lower expenses incurred in proposal activities for the voting segment, partially offset by higher personnel costs associated with increased headcount and higher expenses incurred in marketing activities for the voting and gaming segments.  We anticipate that SG&A expense will remain relatively constant in the remaining quarters of fiscal 2013.

Other Income

Other income in the three and six months ended October 31, 2012 and 2011 remained relatively insignificant.

Income Tax Provision

The provision for income taxes was $23,000 for the six months ended October 31, 2012.  The effective tax rate differed from the statutory tax rate primarily due to valuation allowances and net operating loss carry forwards.  

LIQUIDITY AND CAPITAL RESOURCES

Liquidity

Our net working capital as of October 31, 2012 was approximately $6.1 million.

Contract backlog as of October 31, 2012 was approximately $2.2 million.  Of this amount, approximately $863,000 will be derived from a gaming contract executed with a related customer.  The remaining contract backlog amount of approximately $1.3 million is related to the gaming and voting contracts with unrelated customers.

Additional sources of cash through October 31, 2013 are expected to be derived from spares, software and technical support and licensing revenues.  Uses of cash are expected to be for normal operating expenses and costs associated with contract deliverables.

While we anticipate that we will be successful in obtaining additional product or service contracts to enable us to continue normal operations through October 31, 2013, there can be no assurance that we will be able to acquire new contracts.

In the highly competitive industry in which we operate, operating results may fluctuate significantly from period to period.  We anticipate that our cash flows from operations, expected contract payments and available cash will be sufficient to enable us to meet our liquidity needs through at least October 31, 2013.  Although we are not aware of any particular trends, in the event that we are unable to secure new business, we may experience reduced liquidity or insufficient cash flows.

The following table summarizes our cash flow activities:

	Six Months Ended October 31,
	2012		2011			Increase
(Amounts in thousands)
Condensed cash flow comparative:
Operating activities	$	593	$	(1,280	)	$	1,873
Investing activities		75		(65	)		140
Net increase (decrease) in cash and cash equivalents	$	668	$	(1,345	)	$	2,013

16

Cash Flow Analysis

Our operating cash flow primarily depends on the timing and amount of cash receipts from our customers, inventory purchases and payments for operating expenses.

Our net cash provided by operating activities was approximately $593,000 for the six months ended October 31, 2012, compared to the net cash used in operating activities of approximately $1.3 million for the same period in 2011.  The primary factors contributing to the variability in the reported cash flow amounts relate to the net income of approximately $1.4 million in 2012 compared to the net loss of $895,000 in 2011.  In addition, the timing of customer contract performance and the related milestone invoicing impacted the accounts receivable balance, the cost and earnings in excess of billings and billings in excess of costs and estimated earnings on uncompleted contracts, and settlement of vendor invoices related to inventory purchases attributed to the variability in the reported cash flow amounts.  Furthermore, the change in inventories contributed to the variability in the reported cash flow amounts.

Net cash provided by investing activities was $75,000 for the six months ended October 31, 2012, compared to the net cash used in investing activities of $65,000 in 2011.  The higher net cash provided by investing activities in the six months ended October 31, 2012 was primarily due to the redemption of a certificate of deposit, partially offset by an increase in capital expenditures compared to the same period in 2011.  Higher capital expenditures in 2012 were related to the purchase of voting rental and computer equipment.

There were no financing activities during the six months ended October 31, 2012 or 2011.

Capital Resources

As of October 31, 2012, we did not have outstanding credit facilities.

17

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable

ITEM 4. CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

Under the supervision and with the participation of our management, including our Principal Executive Officer, who is also our Principal Financial Officer, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in SEC Rule 13a-15(e) and 15d-15 (e)) as of the end of the period covered by this report.  Based on the foregoing, our Principal Executive Officer (and Principal Financial Officer) concluded that our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act (i) is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms, and (ii) accumulated and communicated to management, including the Principal Executive Officer (and Principal Financial Officer), as appropriate, to allow timely decisions regarding required disclosure.

CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING

There have not been any changes in the Company’s internal control over financial reporting during the quarter ended October 31, 2012 that have materially affected, or are reasonably likely to materially affect the Company’s internal control over financial reporting.

PART II	OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS

The Company is currently not a party to any pending legal proceedings, and no such action by or, to the best of its knowledge, against the Company has been threatened as of the date of this report.

ITEM 1A. RISK FACTORS

There have been no material changes to the risk factors relating to our business as disclosed in our Form 10-K for the fiscal year ended April 30, 2012 filed with the SEC on July 6, 2012.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Not applicable  

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable

ITEM 5. OTHER INFORMATION

Not applicable

18

ITEM 6. EXHIBITS

A.          Exhibits

Exhibit Number		Document Description
	31	Certification of the Principal Executive Officer and Principal Financial Officer of the Company pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	32	Certification Pursuant to 18 United States Code Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
	101.INS	XBRL Instance Document
	101.SCH	XBRL Taxonomy Extension Schema Document
	101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
	101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
	101.LAB	XBRL Taxonomy Extension Label Linkbase Document
	101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

19

SIGNATURES

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

Dated: December 13, 2012 /s/ Jeffrey M. Johnson Jeffrey M. Johnson President (Principal Executive Officer) and Acting Chief Financial Officer (Principal Financial Officer)

EX-31

EXHIBIT 31

Certification requirements set forth in Section 302 of the Sarbanes-Oxley Act.

 I, Jeffrey M. Johnson, certify that:

1.    I have reviewed this quarterly report on Form 10-Q of International Lottery & Totalizator Systems, Inc. (“ILTS”);

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 ILTS as of, and for, the periods presented in this report;

4.    I am 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 ILTS and have:

(a)   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to ILTS, including its consolidated subsidiaries, is made known to me 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 my 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 ILTS’s disclosure controls and procedures and presented in this report my 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 ILTS's internal control over financial reporting that occurred during ILTS’s most recent fiscal quarter (ILTS's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, ILTS's internal control over financial reporting.

5.    I have disclosed, based on my most recent evaluation of internal control over financial reporting, to ILTS’s auditors and the audit committee of ILTS’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 ILTS’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 ILTS's internal control over financial reporting.

Dated: December 13, 2012 /s/ Jeffrey M. Johnson Jeffrey M. Johnson President (Principal Executive Officer) and Acting Chief Financial Officer (Principal Financial Officer)

EX-32

EXHIBIT 32

Certification Pursuant To Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report on Form 10-Q for the period ended October 31, 2012 and pursuant to 18 U.S.C. § 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of International Lottery & Totalizator Systems, Inc. (the “Company”) hereby certifies that:

(i)   the Quarterly Report on Form 10-Q of the Company for the period ended October 31, 2012 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

(ii)  the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: December 13, 2012 /s/ Jeffrey M. Johnson Jeffrey M. Johnson President (Principal Executive Officer) and Acting Chief Financial Officer (Principal Financial Officer)

XML

Related Party Transactions (Details) (USD $)	3 Months Ended		6 Months Ended						3 Months Ended		6 Months Ended		3 Months Ended		6 Months Ended						3 Months Ended		6 Months Ended								3 Months Ended		6 Months Ended		3 Months Ended		6 Months Ended
	Oct. 31, 2012	Oct. 31, 2011	Oct. 31, 2012	Oct. 31, 2011	Apr. 30, 2012	Oct. 31, 2012 PGMC [Member] Lottery products [Member]	Apr. 30, 2012 PGMC [Member] Lottery products [Member]	Dec. 20, 2011 PGMC [Member] Lottery products [Member] Order One [Member]	Oct. 31, 2012 PGMC [Member] Lottery products and support services [Member]	Oct. 31, 2011 PGMC [Member] Lottery products and support services [Member]	Oct. 31, 2012 PGMC [Member] Lottery products and support services [Member]	Oct. 31, 2011 PGMC [Member] Lottery products and support services [Member]	Oct. 31, 2012 BLM [Member]	Oct. 31, 2011 BLM [Member]	Oct. 31, 2012 BLM [Member]	Oct. 31, 2011 BLM [Member]	Apr. 30, 2012 BLM [Member]	Oct. 31, 2012 Sports Toto Malaysia Sdn. Bhd. [Member]	Apr. 30, 2012 Sports Toto Malaysia Sdn. Bhd. [Member]	Dec. 21, 2011 Sports Toto Malaysia Sdn. Bhd. [Member]	Oct. 31, 2012 Sports Toto Malaysia Sdn. Bhd. [Member] Contract deliverables and sale of support services [Member]	Oct. 31, 2011 Sports Toto Malaysia Sdn. Bhd. [Member] Contract deliverables and sale of support services [Member]	Oct. 31, 2012 Sports Toto Malaysia Sdn. Bhd. [Member] Contract deliverables and sale of support services [Member]	Oct. 31, 2011 Sports Toto Malaysia Sdn. Bhd. [Member] Contract deliverables and sale of support services [Member]	Oct. 31, 2012 Sports Toto Malaysia Sdn. Bhd. [Member] Software support services [Member]	Apr. 30, 2012 Sports Toto Malaysia Sdn. Bhd. [Member] Software support services [Member]	Oct. 31, 2012 Natural Avenue Sdn. Bhd. [Member]	Apr. 30, 2012 Natural Avenue Sdn. Bhd. [Member]	Oct. 31, 2012 Natural Avenue Sdn. Bhd. [Member] Lottery product licensing [Member]	Apr. 30, 2012 Natural Avenue Sdn. Bhd. [Member] Lottery product licensing [Member]	Oct. 31, 2012 Natural Avenue Sdn. Bhd. [Member] Support Services and Licensing [Member]	Oct. 31, 2011 Natural Avenue Sdn. Bhd. [Member] Support Services and Licensing [Member]	Oct. 31, 2012 Natural Avenue Sdn. Bhd. [Member] Support Services and Licensing [Member]	Oct. 31, 2011 Natural Avenue Sdn. Bhd. [Member] Support Services and Licensing [Member]	Oct. 31, 2012 Sports Toto Computers Sdn. Bhd. [Member]	Oct. 31, 2011 Sports Toto Computers Sdn. Bhd. [Member]	Oct. 31, 2012 Sports Toto Computers Sdn. Bhd. [Member]	Oct. 31, 2011 Sports Toto Computers Sdn. Bhd. [Member]
Related Party Transaction [Line Items]
Revenue from related party	$ 909,000	$ 1,300,000	$ 3,100,000	$ 1,500,000					$ 3,000	$ 1,200,000	$ 1,100,000	$ 1,300,000	$ 0	$ 0	$ 0	$ 0					$ 871,000	$ 77,000	$ 1,900,000	$ 155,000							$ 35,000	$ 32,000	$ 70,000	$ 83,000
Sales revenue, related party, percentage (in hundredths)	38.00%	66.00%	54.00%	59.00%
Accounts receivable from related parties		2,600,000		2,600,000		53,000	189,000						0		0		0	2,600,000	0								0	0
Outstanding voting stock held by Berjaya Lottery Management (H.K.) Ltd. (in hundredths)	71.30%		71.30%
Payable to parent	252,000		252,000		252,000
Deferred revenues	651,000		651,000		687,000	0	264,000	1,100,000												4,300,000					9,000	9,000			11,000	4,000
Net cost and estimated earnings in excess of billings	0		0		726,000														726,000	453,000
Services incurred																																			$ 40,000	$ 50,000	$ 80,000	$ 101,000

XML

Description of the Business (Details)	6 Months Ended
	Oct. 31, 2012
Description of the Business [Abstract]
Lead time of deposit upon contract signing before delivery of hardware begins, maximum	6 months
Outstanding voting stock held by Berjaya Lottery Management (H.K.) Ltd. (in hundredths)	71.30%

XML

Use of Estimates

6 Months Ended

Oct. 31, 2012

Use of Estimates [Abstract]

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions.  Actual results could differ from those estimates.  Estimates may affect the reported amounts of assets and liabilities and revenues and expenses, and the disclosure of contingent assets and liabilities.

XML

Segment Information (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Oct. 31, 2012	Oct. 31, 2011	Oct. 31, 2012	Oct. 31, 2011	Apr. 30, 2012
Segment Information [Abstract]
Number of operating segments			2
Segment Reporting Information [Line Items]
Total revenues	$ 2,397	$ 1,944	$ 5,687	$ 2,553
Income (loss) from operations	492	(146)	1,411	(896)
Depreciation and amortization	46	34	87	66
Segment assets	8,794	6,970	8,794	6,970	7,982
Gaming Business [Member]
Segment Reporting Information [Line Items]
Total revenues	1,145	1,510	3,632	1,848
Income (loss) from operations	214	149	1,165	(360)
Depreciation and amortization	29	21	56	41
Segment assets	6,830	4,733	6,830	4,733
Voting Business [Member]
Segment Reporting Information [Line Items]
Total revenues	1,252	434	2,055	705
Income (loss) from operations	278	(295)	246	(536)
Depreciation and amortization	17	13	31	25
Segment assets	$ 1,964	$ 2,237	$ 1,964	$ 2,237

XML

Income Taxes (Details) (USD $)	Oct. 31, 2012
Income Taxes [Abstract]
Provision for income taxes	$ 23,000

XML

Inventories (Details) (USD $) In Thousands, unless otherwise specified	Oct. 31, 2012	Apr. 30, 2012
Inventories [Abstract]
Raw materials and subassemblies	$ 1,230	$ 1,775
Work-in-process	0	63
Finished Goods	305	821
Total	$ 1,535	$ 2,659

XML

Equipment, Furniture and Fixtures (Details) (USD $) In Thousands, unless otherwise specified	Oct. 31, 2012	Apr. 30, 2012
Property, Plant and Equipment [Line Items]
Gross equipment, furniture and fixtures	$ 2,662	$ 2,487
Accumulated depreciation and amortization	(2,092)	(2,005)
Net equipment, furniture and fixtures	570	482
Plant and machinery [Member]
Property, Plant and Equipment [Line Items]
Gross equipment, furniture and fixtures	724	724
Computer equipment [Member]
Property, Plant and Equipment [Line Items]
Gross equipment, furniture and fixtures	1,646	1,482
Leasehold improvement [Member]
Property, Plant and Equipment [Line Items]
Gross equipment, furniture and fixtures	201	190
Furniture, fixtures and equipment [Member]
Property, Plant and Equipment [Line Items]
Gross equipment, furniture and fixtures	$ 91	$ 91

XML

Basis of Presentation

6 Months Ended

Oct. 31, 2012

Basis of Presentation [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("US GAAP") for interim financial information and with the Securities and Exchange Commission's ("SEC") instructions to Form 10-Q.  Accordingly, they do not include all of the information and notes required by US GAAP for complete financial statements.  In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation of financial position, results of operations and cash flows have been included.

The results of operations for the interim periods shown in this report are not necessarily indicative of the results to be expected for the full year.  The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended April 30, 2012 filed with the SEC on July 6, 2012.  The condensed consolidated balance sheet as of April 30, 2012 has been derived from the audited financial statements included in the Form 10-K for that year.

XML

Major Customers (Details) (Revenue [Member], Customer Concentration Risk [Member])	3 Months Ended		6 Months Ended
	Oct. 31, 2012	Oct. 31, 2011	Oct. 31, 2012	Oct. 31, 2011
From unrelated customers [Member] | Gaming Business [Member]
Concentration Risk [Line Items]
Concentration risk, percentage (in hundredths)	10.00%		10.00%
Number of major customers	1		1
From unrelated customers [Member] | No individual customer [Member]
Concentration Risk [Line Items]
Concentration risk, percentage (in hundredths)		10.00%		10.00%
Number of major customers		0		0
From unrelated customers [Member] | Voting Business [Member]
Concentration Risk [Line Items]
Concentration risk, percentage (in hundredths)	41.00%		28.00%
Number of major customers	1		1
From related customers [Member] | Gaming Business [Member]
Concentration Risk [Line Items]
Concentration risk, percentage (in hundredths)	36.00%	61.00%	53.00%	50.00%
Number of major customers	1	1	2	1

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (USD $) In Thousands, unless otherwise specified	Oct. 31, 2012	Apr. 30, 2012
Current assets:
Cash and cash equivalents	$ 3,451	$ 2,783
Certificates of deposit	0	250
Accounts receivable, net of allowance for doubtful accounts of $75	2,978	789
Costs and estimated earnings in excess of billings on uncompleted contracts	0	726
Deferred cost of revenue	14	6
Inventories	1,535	2,659
Other current assets	195	238
Total current assets	8,173	7,451
Equipment, furniture and fixtures, net	570	482
Other noncurrent assets	51	49
Total assets	8,794	7,982
Current liabilities:
Accounts payable	163	1,070
Billings in excess of costs and estimated earnings on uncompleted contracts	453	0
Accrued payroll and related taxes	389	388
Warranty reserves	111	169
Payable to Parent	252	252
Other current liabilities	46	63
Deferred revenues	651	687
Total current liabilities	2,065	2,629
Long-term liabilities	0	12
Total liabilities	2,065	2,641
Commitments and contingencies
Shareholders' equity:
Preferred shares, no par value; 20,000 shares authorized; no shares issued or outstanding	0	0
Common shares, no par value; 50,000 shares authorized; 12,963 shares issued and outstanding	56,370	56,370
Accumulated deficit	(49,641)	(51,029)
Total shareholders' equity	6,729	5,341
Total liabilities and shareholders' equity	$ 8,794	$ 7,982

XML

Description of the Business

6 Months Ended

Oct. 31, 2012

Description of the Business [Abstract]

Description of the Business

Description of the Business

International Lottery & Totalizator Systems, Inc. ("ILTS" or the "Company," together with its subsidiary) designs, manufactures, sells, manages, supports and services computerized wagering systems and terminals for the global lottery and pari-mutuel racing industries.  The wagering system features include real-time, secure processing of data received from multiple locations, hardware redundancy and complete communications redundancy in order to provide the highest level of fault tolerant operation.  In addition, although the Company is not presently doing so, ILTS has demonstrated capability to provide full facilities management services to customer organizations authorized to conduct lotteries.  The Company is largely dependent upon significant contracts for its revenue, which typically include a deposit upon contract signing and up to six months lead time before delivery of hardware begins.

The Company, through its wholly-owned subsidiary, Unisyn Voting Solutions, Inc. ("Unisyn"), has devoted significant resources to developing federally certified end-to-end optical scan voting systems and a full-featured Election Management Software that provides precinct tabulation, ballot review and audio voting capability.  In addition to the InkaVote Plus Precinct Ballot Counter ("PBC") system, certified to the National Association of State Election Directors ("NASED") 2002 Voting System Standards ("VSS"), the Company received the 2005 Voluntary Voting System Guidelines ("VVSG") certification from the United States Election Assistance Commission ("EAC") for its OpenElect® digital optical scan election system – a digital scan voting system built with Java on a streamlined and hardened Linux platform.  As part of a jurisdiction's procurement process, the Company will provide the OpenElect® products' source code for independent review.

These efforts leverage the Company's extensive experience to develop highly secure, mission-critical solutions that meet the NASED 2002 VSS and the EAC 2005 VVSG standards.  In addition, the Company's voting systems offer the following features:

· High level of security and vote encryption to ensure integrity and voter privacy;

· Electronic and paper audit trails that offer added security and redundancy for recounts;

· Reduce the cost of ballot printing while offering operational efficiencies;

· Minimal training required for poll workers to set-up and operate; and

· Minimal voter re-education required.

Berjaya Lottery Management (H.K.) Ltd. ("BLM" or the "Parent") owns 71.3% of the outstanding voting stock of ILTS.

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Inventories (Tables)

6 Months Ended

Oct. 31, 2012

Inventories [Abstract]

Inventories

Inventories consisted of the following:

	October 31,		April 30,
	2012		2012
(Amounts in thousands)
Raw materials and subassemblies	$	1,230	$	1,775
Work-in-process		-		63
Finished goods		305		821
	$	1,535	$	2,659

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Major Customers (Tables)

6 Months Ended

Oct. 31, 2012

Major Customers [Abstract]

Major Customers

The following table summarizes major customers who individually accounted for more than 10% of revenues for the periods presented:

	Three Months Ended October 31,		Six Months Ended October 31,
	2012	2011	2012	2011
Revenue:
From unrelated customers	One customer from the voting segment accounted for 41% of total revenue and one customer from the gaming segment accounted for 10% of total revenue	No individual customer accounted for more than 10% of total revenue	One customer from the voting segment accounted for 28% of total revenue and one  customer from the gaming segment accounted for 10% of total revenue	No individual customer accounted for more than 10% of total revenue
From related customers	One customer from the gaming segment accounted for 36% of total revenue	One customer from the gaming segment accounted for 61% of total revenue	Two customers from the gaming segment accounted for 53% of total revenue	One customer from the gaming segment accounted for 50% of total revenue

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Principles of Consolidation

6 Months Ended

Oct. 31, 2012

Principles of Consolidation [Abstract]

Principles of Consolidation

Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of ILTS and its wholly-owned subsidiary, Unisyn.  All significant intercompany accounts and transactions are eliminated in consolidation.

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CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) (USD $) In Thousands, except Per Share data, unless otherwise specified	Oct. 31, 2012	Apr. 30, 2012
Current assets:
Accounts receivable, allowance for doubtful accounts	$ 75	$ 75
Shareholders' equity:
Preferred shares, par value (in dollars per share)	$ 0	$ 0
Preferred shares, shares authorized (in shares)	20,000	20,000
Preferred shares, shares issued (in shares)	0	0
Preferred shares, shares outstanding (in shares)	0	0
Common shares, par value (in dollars per share)	$ 0	$ 0
Common shares, shares authorized (in shares)	50,000	50,000
Common shares, shares issued (in shares)	12,963	12,963
Common shares, shares outstanding (in shares)	12,963	12,963

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Major Customers

6 Months Ended

Oct. 31, 2012

Major Customers [Abstract]

Major Customers

Major Customers

The following table summarizes major customers who individually accounted for more than 10% of revenues for the periods presented:

	Three Months Ended October 31,		Six Months Ended October 31,
	2012	2011	2012	2011
Revenue:
From unrelated customers	One customer from the voting segment accounted for 41% of total revenue and one customer from the gaming segment accounted for 10% of total revenue	No individual customer accounted for more than 10% of total revenue	One customer from the voting segment accounted for 28% of total revenue and one  customer from the gaming segment accounted for 10% of total revenue	No individual customer accounted for more than 10% of total revenue
From related customers	One customer from the gaming segment accounted for 36% of total revenue	One customer from the gaming segment accounted for 61% of total revenue	Two customers from the gaming segment accounted for 53% of total revenue	One customer from the gaming segment accounted for 50% of total revenue

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Document and Entity Information	6 Months Ended
	Oct. 31, 2012	Dec. 13, 2012
Document and Entity Information [Abstract]
Entity Registrant Name	INTERNATIONAL LOTTERY & TOTALIZATOR SYSTEMS INC
Entity Central Index Key	0000354813
Current Fiscal Year End Date	--04-30
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		12,962,999
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q2
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Oct. 31, 2012

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Related Party Transactions

6 Months Ended

Oct. 31, 2012

Related Party Transactions [Abstract]

Related Party Transactions

Related Party Transactions

During the three months ended October 31, 2012 and 2011, revenues from all related party transactions for the sales of products and services totaled approximately $909,000 (38% of total revenue) and $1.3 million (66% of total revenue), respectively.  Related party revenues for the six months ended October 31, 2012 and 2011 were approximately $3.1 million (54% of total revenue) and $1.5 million (59% of total revenue), respectively.  Included in accounts receivable at October 31, 2012 was approximately $2.6 million from these customers.  Descriptions of the transactions with the Company's related parties in the three and six months ended October 31, 2012 and 2011 are presented below.

Berjaya Lottery Management (H.K.) Ltd.

In 1996, the Company entered into an agreement to purchase specific inventory on behalf of Berjaya Lottery Management (H.K.) Ltd. ("BLM"), the owner of 71.3% of ILTS's outstanding voting stock as of October 31, 2012.  

Over time, the Company has sold or used portions of the BLM inventory in unrelated third party transactions.  The sale or use of the inventory resulted in a liability to BLM for the cost of the items utilized.

The financial activities and balances related to BLM were as follows:

· There were no related party sales to BLM in the three and six months ended October 31, 2012 and 2011;

· There were no accounts receivable balances from BLM as of October 31, 2012 and April 30, 2012;

·  Liabilities to BLM arising from the sale or use of the BLM inventory, recorded as "Payable to Parent," were $252,000 as of October 31, 2012 and April 30, 2012; and

· There were no inventory balances held for BLM as of October 31, 2012 and April 30, 2012.

Philippine Gaming Management Corporation

On December 20, 2011, the Company received from Philippine Gaming Management Corporation ("PGMC"), a related party and a subsidiary of BLM, an order valued at approximately $1.1 million for lottery products.  Shipments of these products were completed in the first quarter of fiscal 2013, and the related revenue was recognized.

In addition, the Company provides PGMC with terminal spare parts on an ongoing basis and support services on an as-needed basis.

The financial activities and balances related to transactions with PGMC were as follows:

· Revenues recognized on the sale of lottery products during the three and six months ended October 31, 2012 totaled approximately $3,000 and $1.1 million, respectively.  Revenues of $1.2 million and $1.3 million were recognized on the sale of lottery products and support services during the three and six months ended October 2011, respectively; 

· There was no deferred revenue balance as of October 31, 2012.  Deferred revenue balance in connection with the lottery product order dated December 20, 2011 mentioned above totaled approximately $264,000 as of April 30, 2012; and

· The accounts receivable balance from the sale of lottery products totaled $53,000 as of October 31, 2012, compared to $189,000 as of April 30, 2012.

Sports Toto Malaysia Sdn. Bhd.

The Company provides lottery products, software development and software support services to Sports Toto Malaysia ("STM"), an affiliate of BLM and a related party.  

On December 21, 2011, the Company signed a contract with STM for a complete DataTrakII lottery system valued at approximately $4.3 million.  This contract is scheduled to be completed by the fourth quarter of fiscal 2013.

The financial activities and balances related to transactions with STM were as follows:

· Revenues of $871,000 and $1.9 million were recognized on the performance of contract deliverables and support services during the three and six months ended October, 31, 2012, respectively.  Revenues of $77,000 and $155,000 were recognized on the sale of support services during the three and six months ended October 31, 2011, respectively;

· Net billings in excess of costs and estimated earnings relating to the abovementioned contract dated December 21, 2011 totaled approximately $453,000 as of October 31, 2012, compared to net costs and estimated earnings in excess of billings of approximately $726,000 as of April 30, 2012;

· There were deferred revenues of $9,000 on software support services as of October 31, 2012 and April 30, 2012; and

· Accounts receivable from STM totaled approximately $2.6 million as of October 31, 2012.  There was no accounts receivable balance as of April 30, 2012.

Natural Avenue Sdn. Bhd.

The Company provides Natural Avenue Sdn. Bhd. ("Natural Avenue"), an affiliate of BLM and a related party, with lottery products and support services.  

The financial activities and balances related to transactions with Natural Avenue were as follows:

· Revenues of $35,000 and $70,000 were recognized on the sale of support services and licensing during the three and six months ended October 31, 2012, respectively.  Revenues of $32,000 and $83,000 were recognized on the performance of contract deliverables, sale of support services and licensing during the three and six months ended October 31, 2011, respectively;

· There was deferred revenue of $11,000 on lottery product licensing as of October 31, 2012, compared to $4,000 as of April 30, 2012; and

· There were no accounts receivable balances from Natural Avenue as of October 31, 2012 and April 30, 2012.

Sports Toto Computers Sdn. Bhd.

The Company engages Sports Toto Computers Sdn. Bhd. ("STC"), a related party, to provide consulting, programming and other related services to the Company.

During the three and six months ended October 31, 2012, the Company incurred services of approximately $40,000 and $80,000, respectively, which are shown as part of cost of sales.  During the three and six months ended October 31, 2011, the Company incurred approximately $50,000 and $101,000, respectively, which are shown as part of cost of sales.

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Oct. 31, 2012	Oct. 31, 2011	Oct. 31, 2012	Oct. 31, 2011
Revenues:
Sales of products	$ 2,047	$ 1,693	$ 5,060	$ 2,014
Services	350	251	627	539
Total Revenues	2,397	1,944	5,687	2,553
Cost of sales:
Cost of product sales	1,133	1,314	2,850	1,971
Cost of services	128	63	203	155
Total cost of sales	1,261	1,377	3,053	2,126
Gross profit	1,136	567	2,634	427
Research and development expenses	0	24	0	24
Selling, general and administrative expenses	644	689	1,223	1,299
Income (loss) from operations	492	(146)	1,411	(896)
Other income (expense):
Interest and dividend income	0	1	0	2
Other	0	2	0	(1)
Income (loss) before provision for income taxes	492	(143)	1,411	(895)
Provision for income taxes	20	0	23	0
Net income (loss)	$ 472	$ (143)	$ 1,388	$ (895)
Net income (loss) per share:
Basic (in dollars per share)	$ 0.04	$ (0.01)	$ 0.11	$ (0.07)
Weighted average shares used in computation of net income (loss) per share:
Basic (in shares)	12,963	12,963	12,963	12,963

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Income Taxes

6 Months Ended

Oct. 31, 2012

Income Taxes [Abstract]

Income Taxes

Income Taxes

The Company uses the asset and liability method for financial reporting of income taxes.  Deferred tax assets and liabilities are determined based on temporary differences between financial reporting and the tax basis of assets and liabilities, and are measured by applying enacted rates and laws to taxable years in which such differences are expected to be recovered or settled.  Any changes in tax rates or laws are recognized in the period when such changes are enacted.  Valuation allowances have been established when necessary to reduce deferred tax assets to the amount expected to be realized.  The Company records a valuation allowance to reduce its deferred tax assets when uncertainty exists regarding the realizability of the deferred tax assets.

The provision for income taxes was $23,000 for the six months ended October 31, 2012.  The effective tax rate differed from the statutory tax rate primarily due to valuation allowances and net operating loss carry forwards.  

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Warranty Reserves

6 Months Ended

Oct. 31, 2012

Warranty Reserves [Abstract]

Warranty Reserves

Warranty Reserves

Estimated warranty costs are accrued as revenues are recognized.  Included in the warranty cost accruals are costs for basic warranties on products sold.  A summary of product warranty reserve activity for the six months ended October 31, 2012 is as follows:

(Amounts in thousands)
Balance at May 1, 2012	$	169
Additional reserves		104
Warranty reserve expense adjustments		(31	)
Charges incurred		(131	)
Balance at October 31, 2012	$	111

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Equipment, Furniture and Fixtures (Tables)

6 Months Ended

Oct. 31, 2012

Equipment, Furniture and Fixtures [Abstract]

Net equipment, furniture and fixtures

Net equipment, furniture and fixtures consisted of the following:	October 31,			April 30,
	2012			2012
(Amounts in thousands)
Plant and machinery	$	724		$	724
Computer equipment		1,646			1,482
Leasehold improvement		201			190
Furniture, fixtures and equipment		91			91
		2,662			2,487
Accumulated depreciation and amortization		(2,092	)		(2,005	)
Net equipment, furniture and fixtures	$	570		$	482

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Fair Value of Financial Instruments

6 Months Ended

Oct. 31, 2012

Fair Value of Financial Instruments [Abstract]

Fair Value of Financial Instruments

Fair Value of Financial Instruments

The Company's material financial instruments consist of its cash and cash equivalents, certificates of deposit, accounts receivable, accounts payable and related party payables.  The carrying amounts of the Company's financial instruments generally approximated their fair values as of October 31, 2012 and April 30, 2012 due to the short-term maturity of the instruments.

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Equipment, Furniture and Fixtures

6 Months Ended

Oct. 31, 2012

Equipment, Furniture and Fixtures [Abstract]

Equipment, Furniture and Fixtures

Equipment, Furniture and Fixtures

Net equipment, furniture and fixtures consisted of the following:	October 31,			April 30,
	2012			2012
(Amounts in thousands)
Plant and machinery	$	724		$	724
Computer equipment		1,646			1,482
Leasehold improvement		201			190
Furniture, fixtures and equipment		91			91
		2,662			2,487
Accumulated depreciation and amortization		(2,092	)		(2,005	)
Net equipment, furniture and fixtures	$	570		$	482

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Segment Information

6 Months Ended

Oct. 31, 2012

Segment Information [Abstract]

Segment Information

Segment Information

The Company reports segment information based on the "management" approach.  Under this approach, operating segments are identified in substantially the same manner as they are reported internally and used by the Company's chief operating decision maker for purposes of evaluating performance and allocating resources.

The Company divides its operations into two operating segments: the gaming business and the voting business.  The gaming segment designs and develops computerized wagering systems and terminals for the lottery and pari-mutuel racing industries worldwide.  Presently the voting segment generates revenues from the sales of the voting systems and hardware, software licensing, product servicing and software support services.

The Company's segment information is presented below (in thousands):

	As of and for the Three Months Ended October 31, 2012
	Gaming Business			Voting Business				Totals
Total revenues		$	1,145		$	1,252			$	2,397
Income from operations			214			278				492
Depreciation and amortization			29			17				46
Segment assets			6,830			1,964				8,794
	As of and for the Three Months Ended October 31, 2011
	Gaming Business			Voting Business				Totals
Total revenues		$	1,510		$	434			$	1,944
Income (loss) from operations			149			(295	)			(146	)
Depreciation and amortization			21			13				34
Segment assets			4,733			2,237				6,970

	As of and for the Six Months Ended October 31, 2012
	Gaming Business				Voting Business				Totals
Total revenues		$	3,632			$	2,055			$	5,687
Income from operations			1,165				246				1,411
Depreciation and amortization			56				31				87
Segment assets			6,830				1,964				8,794
	As of and for the Six Months Ended October 31, 2011
	Gaming Business				Voting Business				Totals
Total revenues		$	1,848			$	705			$	2,553
Loss from operations			(360	)			(536	)			(896	)
Depreciation and amortization			41				25				66
Segment assets			4,733				2,237				6,970

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Inventories

6 Months Ended

Oct. 31, 2012

Inventories [Abstract]

Inventories

Inventories

Inventories are stated at the lower of cost or the current estimated market values.  Cost is determined using the first-in, first-out method.  

Inventories consisted of the following:

	October 31,		April 30,
	2012		2012
(Amounts in thousands)
Raw materials and subassemblies	$	1,230	$	1,775
Work-in-process		-		63
Finished goods		305		821
	$	1,535	$	2,659

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Net Income (Loss) per Share

6 Months Ended

Oct. 31, 2012

Net Income (Loss) per Share [Abstract]

Net Income (Loss) per Share

Net Income (Loss) per Share

Basic net income (loss) per share is based on the weighted average number of shares outstanding during the periods.  

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Segment Information (Tables)

6 Months Ended

Oct. 31, 2012

Segment Information [Abstract]

Segment information

The Company's segment information is presented below (in thousands):

	As of and for the Three Months Ended October 31, 2012
	Gaming Business			Voting Business				Totals
Total revenues		$	1,145		$	1,252			$	2,397
Income from operations			214			278				492
Depreciation and amortization			29			17				46
Segment assets			6,830			1,964				8,794
	As of and for the Three Months Ended October 31, 2011
	Gaming Business			Voting Business				Totals
Total revenues		$	1,510		$	434			$	1,944
Income (loss) from operations			149			(295	)			(146	)
Depreciation and amortization			21			13				34
Segment assets			4,733			2,237				6,970

	As of and for the Six Months Ended October 31, 2012
	Gaming Business				Voting Business				Totals
Total revenues		$	3,632			$	2,055			$	5,687
Income from operations			1,165				246				1,411
Depreciation and amortization			56				31				87
Segment assets			6,830				1,964				8,794
	As of and for the Six Months Ended October 31, 2011
	Gaming Business				Voting Business				Totals
Total revenues		$	1,848			$	705			$	2,553
Loss from operations			(360	)			(536	)			(896	)
Depreciation and amortization			41				25				66
Segment assets			4,733				2,237				6,970

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Deferred Revenues (Details) (USD $) In Thousands, unless otherwise specified	Oct. 31, 2012	Apr. 30, 2012
Deferred Revenues [Abstract]
Deferred revenues	$ 651	$ 687

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Oct. 31, 2012	Oct. 31, 2011
Cash flows from operating activities:
Net income (loss)	$ 1,388	$ (895)
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:
Depreciation and amortization	87	66
Warranty reserve expense	73	7
Changes in operating assets and liabilities:
Accounts receivable	(2,189)	(821)
Costs and estimated earnings in excess of billings on uncompleted contracts	726	32
Deferred cost of revenue	(8)	(263)
Inventories	1,124	(1,286)
Other assets	41	(185)
Accounts payable	(907)	812
Billings in excess of costs and estimated earnings on uncompleted contracts	453	(142)
Accrued payroll and related taxes	1	43
Warranty reserves	(131)	(12)
Payable to Parent	0	1
Other liabilities	(29)	(17)
Deferred revenues	(36)	1,380
Net cash provided by (used in) operating activities	593	(1,280)
Cash flows from investing activities:
Purchases of certificates of deposit	0	(500)
Proceeds from redemption of certificates of deposit	250	499
Additions to equipment, furniture and fixtures	(175)	(64)
Net cash provided by (used in) investing activities	75	(65)
Net increase (decrease) in cash and cash equivalents	668	(1,345)
Cash and cash equivalents at beginning of period	2,783	3,881
Cash and cash equivalents at end of period	3,451	2,536
Supplemental cash flow information:
Cash paid for income taxes	$ 37	$ 0

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Deferred Revenues

6 Months Ended

Oct. 31, 2012

Deferred Revenues [Abstract]

Deferred Revenues and Deferred Cost of Revenues

Deferred Revenues

Deferred revenues of approximately $651,000 as of October 31, 2012 represent prepayments for products and services related to the use of the OpenElect® and PBC voting systems, and other software and technical support services.  The Company will recognize the revenues upon the fulfillment of the prescribed criteria for revenue recognition.

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Warranty Reserves (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Oct. 31, 2012
Product warranty reserve activity [Roll Forward]
Balance, beginning of period	$ 169
Additional reserves	104
Warranty reserve expense adjustments	(31)
Charges incurred	(131)
Balance, end of period	$ 111

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Warranty Reserves (Tables)

6 Months Ended

Oct. 31, 2012

Warranty Reserves [Abstract]

Product warranty reserve activity

Estimated warranty costs are accrued as revenues are recognized.  Included in the warranty cost accruals are costs for basic warranties on products sold.  A summary of product warranty reserve activity for the six months ended October 31, 2012 is as follows:

(Amounts in thousands)
Balance at May 1, 2012	$	169
Additional reserves		104
Warranty reserve expense adjustments		(31	)
Charges incurred		(131	)
Balance at October 31, 2012	$	111