10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

FORM 10-Q

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

For the quarterly period ended June 30, 2012

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 No.:  0-25244

TRANS WORLD CORPORATION

(Exact Name of Registrant as Specified in Its Charter)

Nevada (State or Other Jurisdiction of Incorporation or Organization)	13-3738518 (I.R.S. Employer Identification No.)
545 Fifth Avenue, Suite 940 New York, NY (Address of Principal Executive Offices)	10017 (Zip Code)

Registrant’s telephone number, including area code: (212) 983-3355

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of 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 Web site, 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 x  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 Rule12b-2 of the Exchange Act.  (Check one):

Large accelerated filer   o	Accelerated filer   o
Non-accelerated filer   o	Smaller reporting company   x

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

The number of outstanding shares of the registrant’s common stock as of August 6, 2012 was 8,871,635.

TRANS WORLD CORPORATION AND SUBSIDIARIES

FORM 10-Q

FOR THE QUARTER ENDED JUNE 30, 2012

INDEX

PART 1 — FINANCIAL INFORMATION

		Page
ITEM 1.	FINANCIAL STATEMENTS:
	Condensed Consolidated Balance Sheets as of June 30, 2012 (unaudited) and December 31, 2011	1
	Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the Six and Three Months Ended June 30, 2012 and 2011 (unaudited)	2
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2012 and 2011 (unaudited)	3
	Notes to Condensed Consolidated Interim Financial Statements (unaudited)	4
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	14
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	21
ITEM 4.	CONTROLS AND PROCEDURES	22
PART II — OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS	22
ITEM 1A.	RISK FACTORS	23
ITEM 5.	OTHER INFORMATION	23
ITEM 6.	EXHIBITS	23
	SIGNATURES	27

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ITEM 1.                FINANCIAL STATEMENTS

TRANS WORLD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

June 30, 2012 and December 31, 2011

(in thousands, except for share data)

	June 30, 2012			December 31, 2011
	(Unaudited)
ASSETS
CURRENT ASSETS:
Cash	$	5,003		$	5,636
Prepaid expenses	347			719
Notes receivable, current portion	923			413
Other current assets	304			284
Assets held for sale	838			900
Total current assets	7,415			7,952
PROPERTY AND EQUIPMENT, less accumulated depreciation of $11,100 and $11,108, respectively	31,205			33,068
OTHER ASSETS:
Goodwill	5,862			6,119
Notes receivable, less current portion				609
Deposits and other assets	2,624			2,723
Total other assets	8,486			9,451
	$	47,106		$	50,471
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Long-term debt, current maturities	$	3,348		$	3,490
Capital lease, current portion	54			37
Accounts payable	237			548
Interest payable	36			49
Czech tax accrual	2,800			3,905
Accrued expenses and other current liabilities	1,669			1,886
Liabilities related to assets held for sale	100			207
Total current liabilities	8,244			10,122
LONG-TERM LIABILITIES:
Long-term debt, less current maturities	2,107			3,065
Capital lease, less current portion	147			81
Total long-term liabilities	2,254			3,146
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY:
Preferred stock, $0.001 par value, 4,000,000 shares authorized, none issued
Common stock, $0.001 par value, 20,000,000 shares authorized, 8,871,635 shares in 2012 and 2011, issued and outstanding, respectively	9			9
Additional paid-in capital	52,473			52,141
Accumulated other comprehensive income	4,117			5,687
Accumulated deficit	(19,991		)	(20,634		)
Total stockholders’ equity	36,608			37,203
	$	47,106		$	50,471

See accompanying notes to condensed consolidated interim financial statements.

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TRANS WORLD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME (LOSS)

Six and Three Months Ended June 30, 2012 and 2011

(in thousands, except for share data)

	Six Months Ended June 30,						Three Months Ended June 30,
	2012			2011			2012			2011
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
REVENUES	$	17,432		$	17,621		$	8,271		$	9,290
COSTS AND EXPENSES:
Cost of revenues	9,982			9,377			4,789			4,911
Depreciation and amortization	879			1,127			435			578
Selling, general and administrative	4,994			5,570			2,424			2,803
	15,855			16,074			7,648			8,292
INCOME FROM CONTINUING OPERATIONS, before other expense and foreign income taxes	1,577			1,547			623			998
OTHER EXPENSE:
Interest expense, net	(144		)	(210		)	(68		)	(104		)
INCOME FROM CONTINUING OPERATIONS, before income taxes	1,433			1,337			555			894
FOREIGN INCOME TAXES	(684		)				(309		)
INCOME FROM CONTINUING OPERATIONS	749			1,337			246			894
DISCONTINUED OPERATIONS, gain (loss) from operation of discontinued Rozvadov Casino, net of tax	(106		)	(122		)	39			(51		)
NET INCOME	643			1,215			285			843
Other comprehensive income (loss), foreign currency translation adjustments, net of tax	(1,570		)	4,848			(4,208		)	1,355
TOTAL COMPREHENSIVE INCOME (LOSS)	$	(927	)	$	6,063		$	(3,923	)	$	2,198
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic	8,871,635			8,871,640			8,871,635			8,871,640
Diluted	9,031,327			8,923,178			9,031,327			8,923,178
EARNINGS PER COMMON SHARE:
From continuing operations:
Basic	$	0.08		$	0.15		$	0.03		$	0.10
Diluted	$	0.08		$	0.15		$	0.03		$	0.10
From discontinued operations:
Basic	$	(0.01	)	$	(0.01	)	$	0.00		$	(0.01	)
Diluted	$	(0.01	)	$	(0.01	)	$	0.00		$	(0.01	)

See accompanying notes to condensed consolidated interim financial statements.

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TRANS WORLD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended June 30, 2012 and 2011

(in thousands)

	Six Months Ended June 30,
	2012			2011
	(Unaudited)			(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	643		$	1,215
Adjustments to reconcile net income to net cash provided by operating activities:
Gain from assets disposal	(6		)
Depreciation and amortization	904			1,127
Stock options expense	67			70
Warrants issued for services				8
Deferred board fees	5			5
Changes in operating assets and liabilities:
Prepaid expenses and other current assets	334			354
Deposits and other assets	629			170
Accounts payable	(166		)	143
Interest payable	(12		)	(11		)
Czech tax accrual	(1,005		)	(1,397		)
Accrued expenses and other current liabilities	(548		)	27
NET CASH PROVIDED BY OPERATING ACTIVITIES	845			1,711
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment	(359		)	(463		)
Proceeds from assets disposal	24
Investment into Hotel Savannah and the Spa	(25		)	(44		)
Repayment on notes receivable	63
NET CASH USED IN INVESTING ACTIVITIES	(297		)	(507		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from credit facility	1,806			1,134
Principal payments of long-term debt	(2,173		)	(2,001		)
NET CASH USED IN FINANCING ACTIVITIES	(367		)	(867		)
EFFECT OF EXCHANGE RATE CHANGES ON CASH	(814		)	122
NET INCREASE (DECREASE) IN CASH	(633		)	459
CASH:
Beginning of period	5,636			2,621
End of period	$	5,003		$	3,080
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for interest	$	144		$	197
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Property and equipment acquired via accounts payable	$	8		$	83
Deferred compensation to be paid in common stock	$	260		$

See accompanying notes to condensed consolidated interim financial statements.

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TRANS WORLD CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

(UNAUDITED)

(all figures in thousands, except for exchange rate and share data)

1.Basis of Presentation and Consolidation.

The accompanying unaudited condensed consolidated interim financial statements of Trans World Corporation and Subsidiaries (collectively, the “Company,” “TWC,” “we,” “our” or “us”) as of June 30, 2012 and December 31, 2011 and for the six and three months ended June 30, 2012 and 2011 reflect all adjustments of a normal and recurring nature to fairly present the consolidated financial position, results of operations and cash flows for the interim periods. The financial statements of all foreign subsidiaries consolidated herein have been converted in accordance with accounting principles generally accepted in the United States of America (“US GAAP” or “GAAP”) for financial presentation purposes. All significant intercompany transactions and account balances have been eliminated in consolidation. These unaudited condensed consolidated interim financial statements have been prepared by the Company according to the instructions of Form 10-Q and pursuant to the U.S. Securities and Exchange Commission’s (“SEC”) accounting and reporting requirements under Regulations S-X and S-K. Pursuant to these instructions, certain financial information and footnote disclosures normally included in such consolidated financial statements have been condensed or omitted.

In management’s opinion, all adjustments considered necessary for fair presentation of financial position, results of operations and cash flows of the Company have been included. These unaudited condensed consolidated interim financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto, together with management’s discussion and analysis, contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011. The results of operations for the six and three months ended June 30, 2012 are not necessarily indicative of the results that may occur for the year ending December 31, 2012.

The condensed consolidated balance sheet as of December 31, 2011 was derived from the Company’s audited consolidated financial statements but does not include all disclosures required by US GAAP.  All monetary amounts set forth in these financial statements are in United States dollars (“USD” or “$”) unless otherwise stated herein.

2.Nature of Business.

Trans World Corporation, a Nevada corporation, and Subsidiaries are primarily engaged in the gaming and hotel business in the Czech Republic.

The Company owns and operates three casinos in the Czech Republic (“CZ”), and manages, under contract, one casino and nightclub in Croatia, all under the American Chance Casinos (“ACC”) brand. The Ceska casino (“Ceska”), located in the town of Ceska Kubice, in the western part of the CZ close to the German border, currently has 15 gaming tables and 80 slot machines.  The Route 55 casino (“Route 55”), located in Dolni Dvoriste, in the southern part of the CZ, close to the Austrian border, has 23 gaming tables and 124 slot machines. The Route 59 casino (“Route 59”), is located in Hate, near Znojmo, and currently has 23 gaming tables and 114 slot machines.  On March 31, 2012, TWC terminated the operation of its smallest casino, located in the town of Rozvadov (“Rozvadov”).  The casino facilities were subsequently leased to a local, third-party casino operator.  On July 11, 2012, the third-party operator exercised its buy-out option, as provided under the terms of the lease (see the following Note 3, “Discontinued Operations” below).

In addition to the above operations, TWC also owns and operates a 77-room, four-star deluxe hotel, the Hotel Savannah, which is physically connected to its Route 59 casino, and a full-service spa, the Spa at Savannah (the “Spa”), which is operated by an independent contractor and is attached to the hotel.  The hotel features eight banquet halls for meetings and special events as well as a full-service restaurant and bar.

The Company also manages, under a 10-year management contract expiring in 2017, the Grand Casino Lav and Nightclub (collectively known as the “Grand Casino Lav”), located in Podstrana, Croatia, near the resort city of Split. Currently, this casino operates under difficult conditions in a depressed regional economy.  The casino’s operations have been suspended by the owners, Grand Hotel Lav d.o.o., since January 1, 2012, pending the outcome of financing and their desire to restructure the casino, which may result in changes and/or termination of the management contract.

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3.Discontinued Operations.

The Company began terminating live games operation at Rozvadov at the end of January 2012, and continued running the unit as a slot-only operation until March 31, 2012, when all gaming operations were ceased.  Rozvadov’s net losses, shown as discontinued operations for the first six months of 2012 and 2011 were $106 and $122, respectively, net of rental income.  No write-downs of inventories or furniture, fixtures and equipment (“FF&E”) were incurred because its slot machines were leased, while the Company’s owned FF&E was subsequently rented out and remaining inventories were transferred to other operating units at an immaterial cost.  Employees at Rozvadov received cash severance benefits aggregating approximately $79.  In light of the lessee exercising its option to buy the Rozvadov property (as discussed below), the Rozvadov assets are classified as held for sale at June 30, 2012 and December 31, 2011, and the assets and liabilities are included in the respective current assets and liabilities sections of the Condensed Consolidated Balance Sheets. The following table provides a detail of the net assets held for sale:

	At		At
(amounts in thousands)	June 30, 2012		December 31, 2011
Assets:
Land	$	30	$	32
Building	792		839
FF&E	16		29
Total assets	838		900
Liabilities related to assets held for sale	100		207
Net assets held for sale	$	738	$	693

Effective March 1, 2012, pursuant to a five-year lease agreement, the Company leased the Rozvadov casino building and its staff housing facilities to a local Czech casino operator.  However, due to a gaming license delay by the lessee, TWC continued operating the unit through the end of March 2012.  The lessee commenced operations at that site on April 4, 2012.  The lease terms also gave the lessee the option to buy out the lease for €1,000, or approximately $1,300, anytime during the first year of the agreement.  On July 11, 2012, the lessee exercised its option to buy out the lease by making the full purchase payment of €1,000, or $1,300 to TWC.

4.Commitments and Contingencies.

Lease Obligations- The Company is obligated under one operating lease expiring in March 2015.  Future aggregate minimum annual rental payments under this lease for the next three years are as follows:

Twelve Months Ending June 30,
2013	$	86
2014	$	88
2015	$	22

Rent expense under this lease was approximately $43 and $62 for the six months ended June 30, 2012 and 2011, respectively. Rent expense for the prior year included the lease for the Ceska casino building, which ended when the Company purchased the building in November 2011.

The Company is also obligated under certain five-year, slot equipment operating leases expiring in 2012, the projected costs of which are not included in the table above due to fluctuating inventory.  The leases provide for a monthly fixed rental fee per slot machine, and an option for replacement to a different/newer machine during the term of the lease.  In the second quarter of 2012, the Company’s slot lease expenses were approximately $568 versus $670 in the comparable period in 2011, while for the first six months of 2012, they were $1,203 versus $1,304 for the comparable period in 2011.

Employment Agreements- The Company’s July 1, 2005 employment agreement with its Chief Executive Officer (“CEO”), Mr. Rami S. Ramadan, absent the intervention of either party by September 30th of each year, will renew automatically for another calendar year, currently ending December 31, 2012. In addition to a perpetually renewable, employment term of one year absent the intervention of either party, the agreement provides for annual compensation, plus participation in the Company’s benefits programs and equity incentive plans As of June 30, 2012, the Company is contractually obligated to pay approximately $225 of annual base compensation for the remainder of the year 2012.

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401(k) and Profit Sharing Plan- The Company maintains a contributory 401(k) plan and a profit sharing plan.  These plans are for the benefit of all eligible corporate employees, who may have up to 16.5% of their salary withheld, not to exceed the maximum federally allowed amount.  The Company makes an employer-matching contribution of 60 cents for each employee dollar contributed.

Notes Receivable-In connection with the TWC’s management of the Grand Casino Lav, on January 10, 2007, the Company extended three Euro-denominated loans totaling €967, or $1,200 at the June 30, 2012 exchange rate, to the Grand Hotel Lav, d.o.o. (“GHL”), the owner of the Grand Casino Lav and Nightclub.  At June 30, 2012, the balance of approximately €706, or $923, remains payable, as per the executed payment allocation and pledge of payment agreement related to the existing credit agreement and the 2006 Management Agreement.  GHL acknowledged the outstanding debt and committed to this revised payment schedule ending April 2013.  TWC still holds eight unexercised demand notes and believes the loan is fully collectible.

Advance Receivable-In August 2009, in pursuit of obtaining a gaming license in Hungary, TWC partnered with Vigotop Limited, a Cyprus-based company (“Vigotop”), to form a Hungarian company, KC Bidding Kft. (“KCB”), in which TWC became holder of a 25% equity interest. Subsequently, TWC extended a three-year, 1.0% interest per annum loan of approximately €930 (or about $1,300) to KCB to form a Hungarian license concession company, SDI Europe Kft. (“SDI”), for the purpose of eventually operating the Class I casino in Hungary. SDI is a wholly-owned subsidiary of KCB. Through SDI’s intermediary, IMT LLC, a Delaware limited liability company, American Chance Casinos (“ACC”), an operations subsidiary of TWC, received a three-year, 2.1505% interest per annum loan of approximately $1,200. TWC expects the full lump sum repayment of advance receivable, upon maturity, from KCB, to offset its outstanding loan with IMT LLC. TWC management believes the loan to KCB is fully collectible. In the event KCB defaults in its repayment obligation to TWC with respect to the above mentioned loan, IMT will cancel the loan obligation from ACC to IMT and ACC will no longer be obligated to pay off the loan balance of approximately €930, or $1,200. In November 2010, the loan agreement between ACC and KCB was amended to change the maturity date to January 31, 2016 from December 31, 2012 and to establish an interest rate of 1% from January 1, 2012 through the new maturity date of the loan. In March 2011, the loan agreement between IMT and ACC was amended to change the maturity date to February 21, 2016 from January 31, 2013, and to establish an interest rate of 1% from January 1, 2012 through the new maturity date of the loan.  As of June 30, 2012, the TWC loan to KCB was approximately $1,200 and was included in the Company’s deposits and other assets, while the IMT loan to TWC was approximately $1,150 and was included in the Company’s long-term debt.

On January 12, 2011, KCB received two letters from the Ministry for the National Economy of Hungary (the “MOE”). The first letter declared that the State of Hungary was terminating the concession contract that was concluded between the parties on October 9, 2009 for alleged breaches of the terms of the concession contract by the concession holder. Further, in this letter, the Hungarian government demanded payment of a cancelation penalty in the amount of 900,000 Hungarian Forint (“HUF”), approximately $4,500. The second letter was a demand for a penalty payment in the amount of HUF 864,500 plus interest in the amount of HUF 380,400, approximately $6,220 in aggregate, regarding an alleged claim of non-compliance with update reports on the progress of the King’s City Development project that were due in January 2010 and July 2010.

KCB has responded to the MOE, challenging the reasons provided by the MOE for the immediate cancellation of the concession contract and argued that the terms on which the cancellation was based were wrongful and disputed the MOE’s claim that such progress reports were due during 2010.

On April 26, 2011, KCB received a Hungarian court summons for a hearing, which was moved to January 10, 2012, pursuant to a counterplea by KCB on August 30, 2011. The hearing on January 10, 2012 was inconclusive, and another hearing, originally set for March 6, 2012 before the Metropolitan Court of Budapest, was thrice postponed, and is now set for August 22, 2012.  KCB is confident that it fully complied with all reporting requirements and believes that the court will ultimately render a favorable verdict. KCB’s attorneys believe that KCB has a strong legal case against the MOE.

In March 2011, KCB, as Plaintiff, filed a suit against the State of Hungary, represented by the MOE, as Defendant, regarding the declaration of the unlawfulness of the cancellation of the concession contract concluded by and between the parties on October 9, 2009. The MOE had informed KCB of the cancellation on January 12, 2011. The court case is pending before the Metropolitan Court of Budapest. Until now, only one hearing was held, on January 31, 2012, and it was inconclusive. On March 27, 2012, the court suspended the case, pending the outcome of the

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case brought by KCB against the MOE.  KCB is confident in its assertion that the government’s cancellation of the concession agreement was illegal and that the concession agreement will be reinstated by the court.

Notwithstanding the foregoing, litigation results are never predictable. Further, by virtue of an existing agreement between Vigotop and TWC, all costs associated with obtaining the casino license were and will be borne by Vigotop. In the opinion of TWC’s management, after consultation with legal counsel, the amount of ultimate liability with respect to both/all these actions, if adversely decided to KCB, will not materially affect the Company’s consolidated financial statements and/or results of operations.

Taxing Jurisdiction-The Czech Republic currently has a number of laws related to various taxes imposed by governmental authorities.  Applicable taxes include corporate income tax, gaming tax, value-added tax (“VAT”), payroll (social) taxes and in 2011, (but not in 2012) charity taxes.  Tax declarations, together with other legal compliance areas (e.g. customs and currency control matters) are subject to review and investigation by a number of governmental authorities, which are enabled by law to impose fines, penalties and interest charges, and create tax risks in the Czech Republic.  Management believes that it has adequately provided for all of its Czech tax liabilities.

Effective January 1, 2012, charity taxes have been eliminated in lieu of a new overall flat gaming tax (the “New Gaming Tax”) of 20.0% on all live game and slot revenues, as well as an applicable 19% corporate income tax on adjusted net income.  Additionally, the administration tax and state supervision fee have been eliminated in lieu of minor license renewal fees.  The New Gaming Tax is payable at the end of each quarter, while the corporate income tax is payable by June of the subsequent year. (See also Note 6(k) “Czech Gaming Taxes” and Note 6(l) “Income Taxes” below).

Legal Proceedings-The Company is often subject to various contingencies, the resolutions of which, its management believes, will not have a material adverse effect on the Company’s consolidated financial position or results of operations.  TWC was not involved in any material litigation during the six months ended June 30, 2012, or through the date of this filing.

5.Liquidity.

As of June 30, 2012, the Company had a working capital deficit of $829, as compared to the working capital deficit of $2,170 at December 31, 2011.  Net cash provided by operations for the six months ended June 30, 2012 was $845 versus $1,711 for the same prior year period.

As of June 30, 2012, the Company had fully drawn down its credit facility’s limit of Czech Koruna (“CZK”) 35,000.  The credit line matures on November 4, 2012, while the amortized loan matures on November 4, 2013.  The Company expects to pay a quarterly payment of $378 each at the end of August and November of 2012 and February and May of 2013, to repay the amortized loan.  The Company expects to repay both loan and line of credit on or before their dates of maturity and was in full compliance with the credit facility’s financial covenants at June 30, 2012.

The Company’s management believes that its cash resources at June 30, 2012, in addition to the anticipated cash to be provided by existing operations, will be sufficient to satisfy its accounts payable and other current obligations and to fund its operating activities for the next twelve months.

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6.Summary of Selected Significant Accounting Policies.

(a)Revenue recognition-Casino revenue is defined as the net win from gaming activities, which is the difference between gaming wagers and the amount paid out to patrons, and is recognized on the day it is earned. Revenues generated from ancillary services, including lodging, sales of food, beverage, cigarettes, and casino logo merchandise are recognized at the time the related services are performed and represent, on an individual basis, less than three percent of total revenues.

(b)Earnings per share- Basic earnings per common share are computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per common share incorporate the dilutive effect of common stock equivalents on an average basis during the period. The Company’s common stock equivalents currently include stock options, warrants and deferred compensation stock. Thus, unexercised stock options to purchase up to 662,425 and 838,025 shares as of June 30, 2012 and June 30, 2011, respectively, were included in the computation of diluted earnings per common share, if such unexercised stock options were “in-the-money” and vested. Warrants to purchase up to 75,000 shares were also included, if they were “in-the-money” and vested. In addition, 149,654 and 51,538 issuable shares, as of June 30, 2012 and June 30, 2011, respectively, under the Company’s Deferred Compensation Plan were also included in the computation.

A table illustrating the impact of dilution on earnings per share, based on the treasury stock method, is presented below:

	(UNAUDITED)
	For the Six Months Ended				For the Three Months Ended
(amounts in thousands, except for	June 30,				June 30,
share information)	2012		2011		2012		2011
Basic Earnings Per Share:
Net earnings	$	749	$	1,337	$	246	$	894
Weighted average common shares	8,871,635		8,871,640		8,871,635		8,871,640
Basic earnings per share	$	0.08	$	0.15	$	0.03	$	0.10
Diluted Earnings Per Share:
Net earnings	$	749	$	1,337	$	246	$	894
Weighted average common shares	8,871,635		8,871,640		8,871,635		8,871,640
Addition due to the effect of dilutive securities:
Stock options and warrants (1)	10,038				10,038
Stock issuable under the Deferred Compensation Plan	149,654		51,538		149,654		51,538
Dilutive potential weighted average common shares	9,031,327		8,923,178		9,031,327		8,923,178
Diluted earnings per share	$	0.08	$	0.15	$	0.03	$	0.10

(1) Per the treasury stock method.

(c)Goodwill- Goodwill represents the excess of the cost of the Company’s Czech subsidiaries over the fair value of their net assets at the date of acquisition, which consisted of the Ceska and Rozvadov casinos and the land in Hate, which is currently, the Route 59 Casino. Goodwill is subject to at least an annual assessment for impairment, applying a fair-value based test. The Company has allocated the goodwill over two reporting units that are components of the operating segment “Czech subsidiaries” and are classified as the “German reporting unit” which consists of the Ceska and Rozvadov casinos, and the “Austrian reporting unit” which consists of the Route 55 and Route 59 casinos and the Hotel Savannah. Despite the sale of the Rozvadov property in July 2012, there was no impact on goodwill since goodwill associated with the German reporting unit was all assigned to Ceska.  The impairment assessment requires the Company to compare the fair value of its two reporting units to their respective carrying values to determine whether there is an indication that an impairment exists. The fair value of the two reporting units were determined through a combination of recent appraisals of the Company’s real property and a multiple of earnings before interest, taxes, depreciation and amortization (“EBITDA”), which was based on the Company’s experience and data from independent, third parties. As required, the Company performed its required annual fair-value based testing of the carrying value of goodwill related to its two reporting units at September 30, 2011, and determined that goodwill was not impaired. The Company will perform its required annual assessment of goodwill during the third quarter of 2012. There were no indicators of impairment present during the interim periods following the annual testing date, therefore the Company determined that there was no impairment of goodwill at June 30, 2012.

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(d)Discontinued Operations / Assets Held for Sale-The Company’s assets held for sale are reported separately on the condensed consolidated balance sheets by class of asset and/or liability, and these new line items are reclassified on the financial statements (Balance Sheets) for the prior year(s). The net income or loss from the operations of the assets held for sale are reported separately on the Income Statement, located below Income from Continuing Operations; and similar to the Balance Sheets presentation, the prior year(s) are also reclassified.

(e)Property and Equipment- Property and equipment is stated at cost less accumulated depreciation and amortization.  TWC capitalizes the cost of improvements that extend the life of the asset and expenses maintenance and repair costs as incurred.  The Company provides for depreciation and amortization using the straight-line method over the following estimated useful lives:

Asset	Estimated Useful Life
Building and improvements	5-50 years
Furniture, fixtures and other equipment	4-12 years

At June 30, 2012 and December 31, 2011, property and equipment consisted of the following:

	As of June 30, 2012			As of December 31, 2011
	(unaudited)
Land	$	2,467		$	2,498
Building and improvements	28,230			29,418
Furniture, fixtures and other equipment	11,608			12,260
	42,305			44,176
Less accumulated depreciation and amortization	(11,100		)	(11,108		)
	$	31,205		$	33,068

(f)Impairment for long-lived assets-The Company periodically evaluates whether current facts or circumstances indicate that the carrying value of its depreciable assets to be held and used are recoverable. If such circumstances are determined to exist, an estimate of undiscounted future cash flows produced by the long-lived assets, or the appropriate grouping of assets, is compared to the carrying value to determine whether an impairment exists. If an asset is determined to be impaired, the loss is measured based on the difference between the asset’s fair value and its carrying value. An estimate of the asset’s fair value is based on quoted market prices in active markets, if available. If quoted market prices are not available, the estimate of fair value is based on various valuation techniques, including a discounted value of estimated future cash flows. The Company reports an asset to be disposed of at the lower of its carrying value or its estimated net realizable market value. There were no impairment losses for long-lived assets recorded for the six months ended June 30, 2012.

(g)Foreign currency translation- Foreign subsidiaries whose functional currency is the local foreign currency, balance sheet accounts and cash flows are translated at exchange rates in effect at the end of each reporting period and resulting translation adjustments are included in “accumulated other comprehensive income (loss).” Statement of operations accounts are translated by applying the monthly averages of the daily exchange rates of one (1) USD dollar to one (1) CZK at the end of the respective month on the respective monthly local Czech statement of operations accounts for the period.

The impact of foreign currency translation on goodwill is presented below:

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	Applicable	Goodwill
	Foreign Exchange	German		Austrian
As of June 30, 2012 (in thousands, except FX)	Rate (“FX”) (2)	reporting unit		reporting unit		Total
Residual balance, as of January 1, 2003 (in USD) (1)		USD	3,042	USD	537	USD	3,579
USD residual balance, translated at June 30, 1998 (date of acquisition) FX rate of:	33.8830	CZK	103,077	CZK	18,190	CZK	121,267
2003 CZK balance, translated to USD, at June 30, 2012 FX of:	20.6857	USD	4,983	USD	879	USD	5,862
Net increase to Goodwill		USD	1,941	USD	342	USD	2,283

(1)   Goodwill was amortized over 15 years until the Company started to comply with revised GAAP requirements, as of January 1, 2002. This balance represents the remaining, unamortized goodwill, after an impairment charge taken prior to January 1, 2003.

(2)   FX (interbank) rates taken from www.Oanda.com.

(h)Stock-based compensation-The Company recognizes the fair value of stock-based compensation in the statement of operations. The fair value of the Company’s stock option awards are estimated using a Black-Scholes option valuation model. This model requires the input of highly subjective assumptions and elections including expected stock price volatility and the estimated life of each award.  In addition, the calculation of compensation costs requires that the Company estimate the number of awards that will be forfeited during the vesting period. The fair value of stock-based awards is amortized over the vesting period of the award.

(i)Comprehensive income (loss) — The Company’s change in the foreign currency translation adjustments is included in other comprehensive income (loss).

(j)Promotional allowances — Promotional allowances primarily consist of food and beverages (“F&B”) and, to certain of its valuable players, hotel accommodations, all of which are furnished gratuitously.  For the six months ended June 30, 2012 and 2011, revenues do not include the retail amount of F&B and hotel accommodations of $2,442 and $3,221, respectively, provided at no-charge to customers. The retail value of the F&B given away is determined by dividing the F&B costs charged to the gaming operation of $871 and $1,291, for the respective periods, by the average percentage of cost of F&B sold.  The cost of hotel accommodations is either the out-of-pocket expenses paid to other hotels or the retail charge of rooms at the Hotel Savannah. The promotional allowances are summarized below:

	(UNAUDITED)
	For the Six Months Ended						For the Three Months Ended
	June 30,						June 30,
(amounts in thousands)	2012			2011			2012			2011
Cost of gratuitous food and beverages (A)	$	871		$	1,291		$	284		$	624
Average cost of food and beverages sold (B)	35.9		%	40.2		%	38.3		%	38.9		%
Retail value of food and beverages (A/B)	$	2,426		$	3,211		$	742		$	1,604
Retail value of hotel accommodations	16			10			8			3
Total promotional allowances	$	2,442		$	3,221		$	750		$	1,607

(k)Czech gaming taxes — The majority of TWC’s revenues are derived from gaming operations in the Czech Republic, which were subject to, prior to January 1, 2012, only gaming taxes and charity taxes, while its non-gaming revenues, which were not material, were subject to correspondingly non-material corporate income tax liabilities under Czech law.

Gaming taxes were computed on gross gaming revenues, which were comprised of live (table) games and slot games revenues. For live game revenue, the applicable taxes and fees were: (i) a 10% administration tax; (ii) a 1% state supervision fee; and (iii) a charity “contribution” (i.e., a tax), herein referred to as the charity tax, for publicly beneficial, cultural, sporting and welfare purposes, according to a gross revenue formula specified by the Czech Ministry of Finance.

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Charity taxes were also computed on the reported slot revenues of each of our three former slot subsidiary companies, ACC Slot, s.r.o., Hollywood Spin s.r.o. and LMJ Slot s.r.o., net of gaming taxes and fees. Therefore, for all gaming revenue, net of applicable taxes and fees, of up to CZK 50,000 (or $2,800 at the annualized daily exchange rate for 2011), a 6% charity tax applies; of up to CZK 100,000 (or $5,700 at the same exchange rate), an 8% rate applies; of up to CZK 500,000 (or $28,300 at the same exchange rate), a 10% rate applies; and of above the CZK 500,000 gaming revenue threshold, a 15% rate applies. For slot game revenue, the applicable assessment is the charity tax, net of local (municipality) administration and slot state-licensing fees.

Effective January 1, 2012, TWC merged its three Czech slot subsidiary companies, ACC Slot, s.r.o., Hollywood Spin s.r.o. and LMJ Slot s.r.o. into its primary Czech operating entity company, American Chance Casinos a.s., in an effort to eliminate and/or reduce redundancy in operations, maintenance and operating costs.

Effective January 1, 2012, the charity taxes have been eliminated in lieu of the New Gaming Tax on all live game and slot revenues, as well as an applicable corporate income tax on adjusted Czech net income, net of exemptions.  Additionally, the administration tax and state supervision fee have been eliminated in lieu of minor license renewal fees. A summary of the changes is summarized in the following table:

		New Gaming Tax Law *
	Pre-2012 Gaming Tax Law	(effective January 1, 2012)
Live Games:	10% Gaming Tax from Win (administration fee); 1% Gaming Tax from Win (state supervision); 6-15% Charity Tax from Win, net of Gaming Taxes (the Charity Tax rate is based on tiered revenue thresholds).	20% Gaming Tax from Win (70% of receipt to state; 30% to municipal).
Slots:	16,000 CZK (or $800) License per machine, per every 6 months; 1,000 CZK (or $50) Municipality Fee per machine, per quarter; 6-15% Charity Tax from Win, net of License and Municipality fees (the Charity Tax rate is based on tiered revenue thresholds).	20% Gaming Tax from Win (20% of receipt to state; 80% to municipal); 55 CZK (or $3) Gaming Tax per Machine, per Day.
Net Income	No corporate income tax.	19% corporate income tax on adjusted net income, net of exemptions.

* The new Gaming Tax is to be paid quarterly, while corporate income tax obligation is to be paid in June of the subsequent year.

Gaming taxes payable for year 2011 were due and paid to the Czech Ministry of Finance in April 2012, while charity taxes payable, despite having no stated due dates, were paid as mutually agreed with the charities, customarily by May of the subsequent year. The Company was permitted to allocate this charity contribution to local schools, sports clubs, subsidized or volunteer organizations, or municipalities in which each of the Company’s casinos operate. The distribution was subject to the prior approval of the Czech Ministry of Finance. The New Gaming Tax is payable at the end of each quarter. The Company was in full compliance with all tax payment deadlines at June 30, 2012.

TWC’s gaming-related taxes and fees for the six and three months ended June 30, 2012 and 2011 are summarized in the following table:

	For the Six Months Ended						For the Three Months Ended
	June 30,						June 30,
(amounts in thousands)	2012			2011			2012			2011
Gaming revenues	$	16,044		$	16,613		$	7,481		$	8,731
Gaming taxes, live games and slots	3,342			783			1,578			401
Charity taxes (eliminated in 2012)				1,447						758
Licensing fees (eliminated in 2012) (1)	283			357			139			190
Total gaming taxes and fees	$	3,625		$	2,587		$	1,717		$	1,349
as % of gaming revenue (2)	22.6		%	15.6		%	23.0		%	15.4		%

(1) As the non-refundable, six-month licensing fees effective for January 2012 through June 2012 were paid in October 2011, prior to the passing of the New Gaming Tax laws in December 2011, the Company incurred additional fees for the first six months of 2012.  Excluding the non-recurring licensing fees, the gaming taxes for the three and six months of 2012 would have been 21.1% and 20.8% of gaming revenues, respectively.

(2) The tax percentages in 2012 vary slightly from the 20% flat rate, due to minor administrative fees.

In conformity with the European Union (“EU”) taxation legislation, when the Czech Republic joined the EU in 2004, its VAT increased from 5% to 22%, from January 2004 through December 2009, and ranged between 9% and 19% for all intra-EU generated purchases. Beginning January 1, 2010, VAT rates increased to between 10%

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and 20%. All non-EU generated purchases were impacted by identical VAT increases, beginning in May 2004. The Company pays its VAT directly to its vendors in connection with any purchases that are subject to this tax. Unlike in other industries, VATs are not recoverable for gaming operations. The recoverable VAT under the Hotel Savannah operation was non-material for the six and three months ended June 30, 2012 and 2011.

On February 28, 2012, TWC transferred the ownership of its fully-owned Czech subsidiary, Trans World Hotels, s.r.o., which owns the Hotel Savannah, to TWC’s primary Czech subsidiary, American Chance Casinos a.s., in an effort to consolidate and reduce redundancy and maintenance costs.

(l)Income taxes — Deferred income tax assets and liabilities are computed for differences between the financial statement and the tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income.  Valuation allowances are established, when necessary, to reduce deferred income tax assets to the amount expected to be realized.  Accounting for income taxes prescribes, among other things, a recognition threshold and measurement attributes for the financial statement recognition and measurement of uncertain tax positions taken or expected to be taken in a company’s income tax return. Accounting for income taxes utilizes a two-step approach for evaluating uncertain tax positions. Step One, or recognition, requires a company to determine if the weight of available evidence indicates a tax position is more likely than not to be sustained upon audit, including resolution of related appeals or litigation processes, if any. Step Two, or measurement, is based on the largest amount of benefit, which is more likely than not to be realized on settlement with the taxing authority. The Company is subject to income tax examinations by major taxing authorities for all tax years subsequent to 2008. The adoption of the provisions of the FASB standard, “Accounting for Income Taxes” did not have a material impact on the Company’s consolidated financial statements. However, management’s conclusions regarding this policy may be subject to review and adjustment at a later date based on factors including, but not limited to, on-going analyses of and changes to tax laws, regulation and interpretations, thereof.  During the six-month period ended June 30, 2012, the Company recognized no adjustments for uncertain tax positions.

Effective January 1, 2012, the Czech government instituted an effective corporate income tax, currently at 19.0%, on gaming revenues, which prior to the law changes were subject only to gaming taxes.  As a result of the new tax laws and due to the potential and material income tax liability, the Company accrued an estimated income tax liability of $309 and $684 for the three and six months ended June 30, 2012, respectively.  Corporate income tax is payable by June of the subsequent year.

(m)Recently issued and adopted accounting standards:

In September 2011, the FASB amended the authoritative guidance regarding the testing for Goodwill Impairment. Under the amendments, an entity has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of events or circumstances, an entity determines it is not more likely than not that the fair value reporting of a reporting unit is less than the carrying amount, then performing the two-step impairment test is unnecessary. The changes are effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011.  The adoption of this guidance on January 1, 2012 did not have a material effect on the Company’s consolidated financial statements.

In December 2011, the FASB issued an update on comprehensive income, which pertains to the deferral of the effective date for amendments to the presentation of reclassification of items out of accumulated other comprehensive income in a previous accounting standard update that pertained to the presentation of comprehensive income. The update defers the presentation on the face of the financial statements the effects of reclassifications out of accumulated other comprehensive income on the components of net income and other comprehensive income for all periods. All other requirements of the previous accounting standard on the presentation of comprehensive income, issued in June 2011, are not affected. The previous presentation related to the comprehensive income standard required that entities report components of comprehensive income in either a continuous statement of comprehensive income or two separate but consecutive statements. Under the continuous statement approach, the statement would include the components and total of net income, the components and total of other comprehensive income and the total of comprehensive income. Under the two statement approach, the first statement would include the components and total of net income and the second

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statement would include the components and total of other comprehensive income and the total of comprehensive income. It does not change the items that must be reported in other comprehensive income and it is effective retrospectively for interim and annual periods beginning after December 15, 2011, with early adoption permitted. The Company adopted the update on January 1, 2012 resulting in no impact to the Company’s consolidated balance sheets, statements of income and cash flows.

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

Note on Forward-Looking Information

This Form 10-Q contains certain statements that may be deemed to be “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by the use in those statements of terminology such as “may,” “will,” “could,” “expect,” “plan,” “intend,” “anticipate,” “believe,” “estimate,” “project,” “predict,” “potential,” or “continue,” or the negative of such terms or other comparable terminology. The forward-looking statements included in this Form 10-Q address activities, events or developments that we expect or anticipate will or may occur in the future.

Although we believe the expectations expressed in the forward-looking statements included in this Form 10-Q are based on reasonable assumptions within the bounds of our knowledge of our business at the time the statements are made, a number of factors outside of our control could cause actual results to differ materially from those expressed in any of the forward-looking statements included in this Form 10-Q. Any one or a combination of these factors, or other factors not now known, could materially affect our financial performance, business strategy, business operations, plans, goals and objectives. These factors include but are not limited to:

·the market’s acceptance of our gaming offerings;

·the effect of competition in our markets;

·the political, legislative, and regulatory climates and changes upon our business;

·the impact of fluctuations of currencies on revenue we receive or expenses we incur;

·the weather conditions in the markets that we serve; and

·other factors described in our Form 10-K for the year ended December 31, 2011 under the headings “Risk Factors” and “Quantitative and Qualitative Disclosures About Market Risk.”

Forward-looking statements that we make or that are made by others on our behalf are based on a knowledge of our business and the environment in which we operate, but because of the factors listed above, actual results may differ significantly from those in forward-looking statements. Consequently, these cautionary statements qualify all of the forward-looking statements we make herein. The results or developments we anticipate may not be realized. Even if substantially realized, those results or developments may not result in the expected consequences for us or affect us, our business or our operations in the ways we expect. We caution readers not to place undue reliance on any of these forward-looking statements in this Form 10-Q, which speak only as of their dates. We assume no obligation to update any of the forward-looking statements.

Nature of Business and Competition

We are engaged in the acquisition, development and management of niche casino operations in Europe, which feature gaming tables and mechanized gaming devices, such as video slot machines, as well as the acquisition, development and the management of midsize hotels, which may include casino facilities.  Our expansion into the hotel industry was founded on management’s belief that hotels in the midsize class are complementary to our casino brand; that opportunities in one of these two industries often lead to, or are tied to, opportunities in the other industry; and that a more diversified portfolio of assets will give us greater stability and make us more attractive to potential investors.  Further, several of our top management executives have extensive experience in the hotel industry.  In this pursuit, we have developed our first hotel, Hotel Savannah, a 77-room, European four-star deluxe hotel, adjoining our Route 59 Casino, which primarily draws customers from the Vienna, Austria regional area.

Currently, we own and operate three casinos and a hotel in the Czech Republic (“CZ”), and manage, under a 10-year management contract expiring in 2017, a casino and nightclub in Croatia.  Our Ceska casino, located at Ceska Kubice, in the western part of the CZ close to the border of Germany, currently has four competitors.  The other two Czech casinos are located in the southern part of the CZ, close to the Austrian border.  The larger of these two, “Route

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55,” located in Dolni Dvoriste, has two competitors, and the other casino, “Route 59,” is located in Hate, near Znojmo, and currently has two competitors.  Our Hotel Savannah features eight banquet halls for meetings and special events as well as a full-service restaurant and bar, and is connected to our Route 59 casino with the joint facility’s main restaurant linking the two buildings.  Along with the hotel operation, we also launched a full-service spa operation, the Spa at Hotel Savannah (the “Spa”), the operations of which are outsourced to a private, independent contractor and are attached to Hotel Savannah.  The Spa, which features Ayurvedic massage therapies and an indoor pool, began operation in March 2009.  Hotel Savannah and the Spa has eight regional competitors, five of which are located in Austria.  The Croatian casino and adjoining nightclub (collectively known as the “Grand Casino Lav”), are located in the Grand Hotel Lav resort in the city of Podstrana, near Split, Croatia.  The Grand Casino Lav’s revenues and expenses are recognized on the owner’s books.  We derive only management fee income from the performance results of the Grand Casino Lav, which is recognized in our consolidated financial statements.  The Grand Casino Lav currently has two competitors.  On January 1, 2012, the owners of the Grand Casino Lav suspended all gaming operations pending the owners’ search for financing to relaunch the casino.  On March 31, 2012, due to the depressed economy in the region that it operated, we terminated gaming operations at our smallest casino, “Rozvadov,” located in the town of Rozvadov and leased the casino and staff housing facilities to a local, third-party casino operator under a five-year lease agreement.  On July 11, 2012, pursuant to the provisions of the lease agreement, the lessee exercised its option to buy out the lease for the sum of €1 million, or approximately $1.3 million.

Exchange Rates

Due to the fact that the Company’s operations are located in Europe and principally in the Czech Republic, TWC’s financial results are subject to the influence of fluctuations in foreign currency exchange rates.  The revenue generated by our Czech operations is generally denominated in EUR and the expenses incurred by these facilities are generally denominated in CZK.  As our primary reporting subsidiary, ACC, is a Czech entity, all revenues and expenses, regardless of sources of origin (e.g., Croatia), are recognized in the Czech currency and translated to USD for reporting purposes.  A substantial change in the value of either of these currencies in relation to the value of the USD would have an impact on the results from our operations when translated into USD.  We do not hedge our foreign currency holdings or transactions.

The actual 2012 and 2011 operating results in local currency for the Czech casino units were converted to USD using the average of the daily exchange rates of each month in the reporting periods.  As all of the Grand Casino Lav’s operating results, including revenues and expenses, are recognized on the owner’s books, the foreign currency exchange impact is limited to only our earned management fees income, which was not material for the periods reviewed.  The monthly average exchange rates for the CZK versus the USD and EUR, respectively, are presented in the following graphical chart.

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The consolidated balance sheet totals of the Company’s foreign subsidiaries at June 30, 2012 and December 31, 2011 were converted to USDs using the interbank exchange rates, as reported at www.oanda.com, which are depicted in the following table:

As of	USD	CZK	EUR
June 30, 2012	1.00	20.6857	0.7950
December 31, 2011	1.00	19.8191	0.7722

Critical Accounting Policies

The discussion and analysis of our consolidated financial condition and results of operations are based upon our condensed consolidated financial statements. These condensed financial statements have been prepared following the US GAAP and by Article 10 of Regulation S-X for interim periods and require us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities.  On an ongoing basis, we evaluate our estimates, including those related to potential impairment of goodwill and share-based compensation expense. As these are condensed consolidated financial statements, the reader should also review expanded information about our critical accounting policies and estimates provided in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” included in our Form 10-K for the year ended December 31, 2011. There have been no material changes to our critical accounting policies and estimates from the information provided in our Form 10-K for the year ended December 31, 2011.

RESULTS OF OPERATIONS

Performance Measures and Indicators

In discussing the consolidated results of operations, we may use or refer to performance measures and indicators that are common to the gaming industry, such as: (i) total (live game) drop, the dollar value of gaming chips purchased in a given period; (ii) (live game) drop per head (“DpH”), the per guest average dollar value of gaming chips purchased; (iii) daily income per (slot) machine; (iv) net win, the difference between live game wagers and the amount paid out to patrons; (v) win percentage (“WP”), the ratio of net win over total drop; and (vi) occupancy rate, the number of rooms sold divided by the number of rooms available.  These measures are “non-GAAP financial measures.”

Review of the Condensed Consolidated Interim Results of the Company:

Three Months Ended June 30, 2012 and 2011:

	Three Months Ended June 30,
(in thousands, except per share data)	2012			2011			Variance $		Variance %
	(unaudited)			(unaudited)
Total revenues, from continuing operations	$	8,271		$	9,290		(1,019	)	-11.0	%
Total operating costs and expenses	(7,716		)	(8,396		)	680		-8.1	%
Income from continuing operations, before income taxes	555			894			(339	)	-37.9	%
Foreign income taxes	(309		)	—			(309	)	100.0	%
Income from continuing operations	246			894			(648	)	-72.5	%
Discontinued operations, gain (loss) from operations	39			(51		)	90		-176.5	%
Net Income	$	285		$	843		(558	)	-66.2	%
Earnings per common share:
From continuing operations:
Basic	$	0.03		$	0.10
Diluted	$	0.03		$	0.10
From discontinued operations:
Basic	$	—		$	(0.01	)
Diluted	$	—		$	(0.01	)

For the quarter ended June 30, 2012, our total revenues declined 11.0%, to approximately $8.3 million, from approximately $9.3 million for the quarter ended June 30, 2011.  The $1.0 million decrease was primarily attributable to

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a combination of: (i) the 2012 UEFA European Football Championship (“Euro Cup”) matches that were held between June 8 to July 1, 2012; (ii) the success of the German team in reaching the semi-finals of the Euro Cup had a considerably negative impact on the overall business volume of our casinos during the period of the tournament, since Germany represents one of two major markets for our casinos; and (iii) the stronger competition experienced at our Ceska Casino.  Despite the 2.8% decline in live game attendance from the same quarter a year ago, WP rose 2.7 percentage points (“ppts”) in the same period comparison, but this improvement was insufficient to compensate, as DpH slid 14.8%, as a result of the above factors.

Operating costs and expenses decreased by $680,000, or 8.1%, from approximately $8.4 million for the quarter ended June 30, 2011 to $7.7 million for the quarter ended June 30, 2012, mainly due to lower volume-driven payroll, and to marketing and depreciation and amortization expenses.

Income from continuing operations decreased by $339,000, or 37.9%, from the second quarter in 2011, as a result of the above factors.

Pursuant to the new tax laws effective in 2012, the Company also incurred $309,000 for income taxes, which did not exist in the prior year.

Discontinued operations for the three months ended June 30, 2012 contributed a positive net gain of $39,000, thanks to three months of rental income, which largely offset the residual maintenance expenses, which compares favorably to the net loss of $51,000 incurred for the same quarter in 2011.

Consequently, net income for the three months ended June 30, 2012 fell to $285,000, or a decrease of 66.2% from $843,000, achieved for the three months ended June 30, 2011.

Costs and Expenses

Total costs and expenses for the three months ended June 30, 2012 and 2011 are presented below:

	For the Three Months Ended
	June 30,
(amounts in thousands)	2012		2011		Variance $			Variance %
Cost of revenues	$	4,789	$	4,911	$	(122	)	-2.5	%
Depreciation and amortization	435		578		(143		)	-24.7	%
Selling, general and administrative	2,424		2,803		(379		)	-13.5	%
Other expense	68		104		(36		)	-34.6	%
Total operating costs and expenses	$	7,716	$	8,396	$	(680	)	-8.1	%

Cost of revenues for the quarter ended June 30, 2012 decreased by $122,000, or 2.5%, primarily due to lower volume-driven payroll and lower in-house amenity expenses.  The complimentary F&B and hotel accommodations costs were recognized in the gaming departmental expenses, which totaled approximately $519,000 or 7.7% of gaming revenues for the three months ended June 30, 2012, compared with $719,000 or 7.8% of gaming revenues for the comparable quarter last year.  General gifts and giveaways represented $191,000 or 2.5% of gaming revenues, versus  $163,000 or 1.8% of gaming revenues in the same quarter of 2011.  These expenses were also recognized in the gaming departmental expenses.

Depreciation and amortization expense decreased by $143,000, or 24.7%, due to the end of life of certain depreciable assets.

Selling, general and administrative costs also decreased by $379,000, or 13.5%, due primarily to lowered external marketing expenses and decreased special promotions, which were partially offset by higher costs for legal and professional services related to the consolidation of legal entities, under the ACC entity.

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Six Months Ended June 30, 2012 and 2011:

	Six Months Ended June 30,
(in thousands, except per share data)	2012			2011			Variance $		Variance %
	(unaudited)			(unaudited)
Total revenues, from continuing operations	$	17,432		$	17,621		(189	)	-1.1	%
Total operating costs and expenses	(15,999		)	(16,284		)	285		-1.8	%
Income from continuing operations, before income taxes	1,433			1,337			96		7.2	%
Foreign income taxes	(684		)	—			(684	)	100.0	%
Income from continuing operations	749			1,337			(588	)	-44.0	%
Discontinued operations, loss from operations	(106		)	(122		)	16		-13.1	%
Net Income	$	643		$	1,215		(572	)	-47.1	%
Earnings per common share:
From continuing operations:
Basic	$	0.08		$	0.15
Diluted	$	0.08		$	0.15
From discontinued operations:
Basic	$	(0.01	)	$	(0.01	)
Diluted	$	(0.01	)	$	(0.01	)

For the six months ended June 30, 2012, our total revenues shrunk by $189,000, or 1.1%, to $17.4 million, from $17.6 million for the same period ended June 30, 2011, notably due to a 4.2% decrease in slot revenues, which was partially offset by a 5.7% increase in live game revenue, supported by a 3.7 ppt increase in WP and an 8.2% increase in room revenues at our Hotel Savannah.  The reduction in slot revenues resulted from the large jackpot payouts in the quarter.

Due largely to the negative factors highlighted in the quarter review, live game attendance fell 4.4%. However, slot game attendance rose 9.0%, when compared with the same six-month period a year ago, largely due to the increasing popularity and resiliency of slot games with our clientele, despite the competing Euro Cup sporting event.

Combined hotel rooms, restaurant and banquet operations, and spa revenues totaled 4.9% of the Company’s total consolidated revenue.

Total operating costs and expenses decreased by $285,000 or 1.8%, mainly due to the continuation of the Company’s lower-cost, player loyalty reward programs that have proven successful since implementation in the last quarter of 2011.  We have also increased expenditures in gifts and giveaways, as detailed below, to further enhance these player loyalty programs.  These loyalty programs have proven to be more cost-effective in drawing and keeping players in our casinos than broad, external, general marketing initiatives which are less effective, since we have an established name and reputation in our business markets.

As a result of the lower costs approach, income from continuing operations before income taxes has risen 7.2% or $96,000 from the first six months of 2011.

As a result of the changes in taxation in the Czech Republic for 2012 and forward, we have accrued a total of $684,000 for the payment of Czech corporate income taxes due by June of the following year, which essentially represenst nearly half of our earned income from continuing operations.

Thus, our income from continuing operations after taxes was $749,000 versus the prior year’s $1.3 million for the same six month period, which had only nominal corporate income tax liabilities on non-gaming income.  Loss from discontinued operations was $106,000, a $16,000 or 13.1% improvement from the prior year period, resulting from rental income for leased buildings, formerly of the Rozvadov casino.

Consequently, net income for the six months ended June 30, 2012 decreased by $572,000 or 47.1%, versus the same period a year ago.

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Costs and Expenses

Total costs and expenses for the six months ended June 30, 2012 and 2011 are presented below:

	For the Six Months Ended
	June 30,
(amounts in thousands)	2012		2011		Variance $			Variance %
Cost of revenues	$	9,982	$	9,377	$	605		6.5	%
Depreciation and amortization	879		1,127		(248		)	-22.0	%
Selling, general and administrative	4,994		5,570		(576		)	-10.3	%
Other expense	144		210		(66		)	-31.4	%
Total operating costs and expenses	$	15,999	$	16,284	$	(285	)	-1.8	%

Cost of revenues for the six months ended June 30, 2012 increased by $605,000, or 6.5%, primarily due to a 7.0 ppts increase in gaming taxes.  The 2012 gaming taxes are based on a flat 20% gaming tax rate, while the 2011 gaming taxes were based on a graduated tax scheme that resulted in an effective rate of 15.6% versus the 2012 comparable of 22.6%, as a percentage of gaming revenue. Excluding the prepaid licensing fees, which were eliminated in 2012, the effective gaming tax rate would have been 20.8%, rather than 22.6%. (See Financial Footnote 6(k), “Czech Gaming Taxes.”)

Complimentary F&B and hotel accommodations costs were recognized in gaming departmental expenses, which totaled $1.2 million or 7.3% of gaming revenues for the six months ended June 30, 2012, versus approximately $1.4 million or 8.1%  of gaming revenues for the comparable six-month period in 2011.  General gifts and giveaways, which were also recognized in gaming departmental expenses, represented $398,000 or 2.4% of gaming revenues for the same six months in 2012, compared with $338,000 or 1.9% of gaming revenues for the six months ended June 30, 2011, a comparable increase of $60,000 or 17.7%.

Depreciation and amortization expense decreased by $248,000, or 22.0%, largely due to the end of life of certain depreciable assets.

Selling, general and administrative costs of approximately $5.0 million for the six months ended June 30, 2012 decreased by $576,000 or 10.3% from the same period in 2011, principally due to substantially lower overall external marketing expenditures.

Other expense of $144,000 essentially represents interest paid on the Company’s Commerzbank credit facility, which benefited from lower interest rates and the amortization of the loan principal portion, when compared with the prior year period.

Our Facilities:

Each of our casinos offers a restaurant and a full bar, and in the larger units, lounge areas and multiple bars.  All of our casinos operate under the registered ACC brand.

Ceska

Ceska Casino, which has a 1920’s Chicago Prohibition Period theme, currently has 15 gaming tables, including eight card tables and seven roulette tables, and 80 video slot machines.

Route 59

Route 59 Casino, which has a 1920’s New Orleans theme, currently includes 23 gaming tables, which consist of 13 card tables, nine roulette tables, a Slingshot multi-win roulette, and 118 video slot machines.

Route 55

Route 55 Casino, our largest casino, features an early 1950’s Miami Beach theme.  The two-story casino offers 23 tables, including 12 card tables, 10 roulette tables, a Slingshot multi-win roulette, and 124 video slot machines.  On

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the mezzanine level, the casino offers a full-service Italian restaurant, an open buffet area, a VIP lounge, and a VIP gaming room equipped with four gaming tables, which are included in the 23 table count.

Grand Casino Lav

The Grand Casino Lav currently has 18 gaming tables, including six roulette tables, 12 card tables, two of which are in the VIP dedicated area, 60 video slot machines, a mezzanine bar with a panoramic view overlooking the gaming floor, and a full-service nightclub.  The unit has been closed since January 1, 2012 by the property owners pending a re-launch that has not yet been announced.

Hotel Savannah and the Spa at Hotel Savannah

The hotel, which is connected to our Route 59 casino, features banquet halls for conference meetings and special events as well as a restaurant and bar.  To complement the hotel, we also opened a luxury spa operation, the Spa, in April 2009, which is attached to our hotel. The Spa, which is operated by an independent contractor from which we receive revenue-based fees, features a large indoor pool and offers Ayurvedic therapies to all our hotel guests and outside visitors.

Sales and Marketing

We utilize a wide range of media marketing and promotional programs in an effort to secure and enhance our competitive position in the respective markets being served and to differentiate our product from our competitors.  With respect to our Czech casinos, we aggressively target key cities in our media campaigns, most notably Vienna and Linz in Austria, and Regensburg in Germany, as well as the areas surrounding these cities, all of which are within driving distance of our casinos.

LIQUIDITY AND CAPITAL RESOURCES

As of June 30, 2012, we had a working capital deficit of $829,000, a $1.3 million decrease in the deficit, compared to the working capital deficit of approximately $2.2 million at December 31, 2011.  This deficit reduction for the six months ended June 30, 2012 was primarily due to the positive net income earned during this period, and the reclassification of assets held for sale to current assets.

As of June 30, 2012, we had fully drawn down our credit facility’s limit of CZK 35.0 million, or approximately $1.7 million.  The credit line matures on November 4, 2012 and the amortized loan matures on November 4, 2013.  The Company expects to make quarterly payments of $378,000 each at the end of August 2012, November 2012, February 2013, and May 2013, to repay the amortized loan.  We expect to repay both loan and credit line on or before their dates of maturity and were in full compliance with the credit facility’s financial covenants, as of June 30, 2012.

We believe that our cash resources at June 30, 2012, in addition to the anticipated cash to be provided by existing operations, will be sufficient to satisfy our accounts payable and other current obligations and fund our operating activities for the next twelve months.

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We are obligated under various contractual commitments over the next five years.  We have no off-balance sheet arrangements.  The following is a five-year summary of our commitments as of June 30, 2012:

(in thousands)			Less than
Contractual Obligations	Total		1 Year		1-3 Years		3-5 Years		Thereafter
Long-term, unsecured debt, foreign (1)	$	1,146	$	—	$	—	$	1,146	$	—
Long-term, secured debt, foreign (2)	4,309		3,348		961
Operating and capital leases (3)	374		147		153		74
Employment agreement (4)	225		225
Total contractual obligations	$	6,054	$	3,720	$	1,114	$	1,220	$	—

(1)Represents the outstanding 6-year loan from IMT, maturing February 21, 2016.

(2)Includes the remaining balances of the Company’s credit facility with Commerzbank Aktiengesellschaft, pobocka Praha, which consists of a 4-year loan of CZK 125 million, or $6.0 million, maturing November 4, 2013; the fully drawn line of credit of CZK 35 million, or $1.7 million, maturing November 4, 2012; and the Ceska Municipal Loan, a 3-year, CZK 9.0 million, or $435,000, term loan maturing on November 23, 2014.

(3)Includes long-term lease for corporate office space, auto and financial leases.

(4)Represents remaining salary obligation for 2012 under Mr. Ramadan’s employment agreement.

PLAN OF OPERATIONS

We strive to develop and implement marketing and operational strategies that are designed to increase attendance and revenues at our existing locations in the Czech Republic, while striving to minimize costs, through cost-sharing alliances with non-competing businesses such as food and beverage vendors, where advantageous. We endeavor to find synergy of operations between our Route 59 Casino and our newest operating unit, Hotel Savannah to enhance revenues, while reducing operational redundancies.

Long Range Objective

Our operations are primarily in the gaming industry. Consequently, our senior corporate management, several of whom have extensive experience in the hotel industry, are exploring ways to diversify and expand the Company’s operations through the acquisition and/or development of new, complementary non-gaming business units, such as hotels, while continuing to grow the Company’s existing operations. We will also seek to manage or lease new business units that complement our existing operations. Acquisitions will be based on evaluations of the potential returns of projects that arise and, for certain projects, the availability of financing.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information in this section should be read in conjunction with information discussed in Item 2 “Management’s Discussion and Analysis of Financial Conditions and Results of Operations” above and in “Part II — Other Information, Item 1A. Risk Factors” in our Form 10-K for the year ended December 31, 2011.  Market risk is the risk of loss arising from adverse changes in market rates and prices, such as interest rates, foreign currency exchange rates and commodity prices. TWC does not maintain any instruments in a trading portfolio.

Interest Rate Risk

The interest rate on the majority portion of our debt, approximately $4.0 million at June 30, 2012, all from the Commerzbank credit facility, is subject to fluctuations of the Prague InterBank Offered Rate (“PRIBOR”) short-term interest rates. The credit facility was provided initially in two tranches: an amortized, four-year term loan of CZK 125 million (or approximately $6.0 million at the June 30, 2012 exchange rate), with interest based on the three-month PRIBOR plus 600 basis points, and a three-year, revolving credit line of CZK 35 million (or approximately $1.7 million at the same exchange rate), with interest based on, depending on each draw request, the one, two, three or six-month PRIBOR plus 500 basis points. Therefore, interest expense could increase or decrease as a result of this factor.  We have

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not in the past and do not currently engage in interest-rate swap agreements or other types of interest-rate hedging activities.  Accordingly, we are subject to interest rate risk with respect to these obligations.  Our Company’s management evaluates our exposure to market risk by monitoring interest rates in the marketplace to determine the best course of action, if needed.  We cannot assure you that our risk management strategies will have the desired effect, and interest rate fluctuations could have a negative impact on our results of operations or financial condition.

Foreign Currency Exchange Rate Risk

Due to the fact that the Company’s operations are all located overseas, the financial results of the Company are subject to the impact of fluctuations in certain foreign exchanges rates.  These fluctuations are unpredictable and uncontrollable and vary from period to period.  Our operations conduct business exclusively in EURs and CZKs for the Czech units and EURs and Croatian Kunas for the Croatian unit (when it is operational).  Payroll and most payable items are paid in the local currencies, while our revenues are largely and generally received in EURs.  As our primary reporting subsidiary, ACC, is a Czech entity, all revenues and expenses, regardless of sources of origin (e.g., Croatia), are recognized in the Czech currency and translated to USD for reporting purposes.   Accordingly, we are subject to foreign exchange risk with respect to these exchange rates.

In real world situations, the impact of the foreign currency exchange rates on our results of operation would be positive or negative, depending on the combination, the variability and intensity of the above probabilities, coupled with the strength of the correlation of the functional currencies to the USD, among other factors.  We have not in the past and do not currently hedge our currency holdings or transactions.

ITEM 4.  CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain a system of disclosure controls and procedures, as defined in the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and Exchange Act Rule 13a-15(e), which is designed to provide reasonable assurance that information, which is required to be disclosed in our reports filed pursuant to the Exchange Act, is accumulated and communicated to management in a timely manner. At the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including Mr. Ramadan, our CEO and Chief Financial Officer (“CFO”), of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(b). Based upon that evaluation, Mr. Ramadan concluded that, as of the date of such evaluation, our disclosure controls and procedures were effective, at the reasonable assurance level in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act and were effective in ensuring that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.  We made no changes in our internal controls over financial reporting during the second quarter of 2012 that materially affected, or are likely to materially affect, our internal controls over financial reporting.

PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

We are often subject to various contingencies, the resolutions of which, our management believes will not have a material adverse effect on our consolidated financial position or results of operations.  We were not involved in any material litigation during the quarter ended June 30, 2012, or through the date of this filing.

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ITEM 1A.               RISK FACTORS

Other than the interest rate and the foreign currency exchange rate risk factors discussed above in “Item 3. Quantitative And Qualitative Disclosures About Market Risk,” there have been no addition of risk factors from the information provided in our Form 10-K for the year ended December 31, 2011.

The risk factors highlighted in our Form 10-K for the year ended December 31, 2011 are not the only risks our Company is facing.  Additional risks and uncertainties not currently known to us or that we deem to be immaterial at this time also may materially adversely impact our business, financial condition and operational results in the future.

ITEM 5.  OTHER INFORMATION

We held our 2012 Annual Meeting of Stockholders on May 30, 2012 at the law offices of Elias, Matz, Tiernan & Herrick, L.L.P. in Washington D.C..  There were a total of 8,871,635 shares of common stock of the Company which could be voted and 7,096,038 shares were represented at the meeting by the holders thereof in person and by proxy, which constituted a quorum.  The votes were as follows:

1.Election of Directors, for One-year Term expiring in 2012:

	For	Withheld	Not Voted
Geoffrey B. Baker	6,854,325	14,792	226,921
Timothy G. Ewing	6,854,325	14,792	226,921
Julio E. Heurtematte, Jr.	6,854,325	14,792	226,921
Rami S. Ramadan	6,852,567	16,550	226,921
Malcolm M.B. Sterrett	6,858,667	10,450	226,921

2.Ratification of the appointment of Rothstein, Kass & Company, P.C. as the Company’s independent accountants for the fiscal year ending December 31, 2012:

For	Against	Abstain
7,070,290	21	25,727

As a result of such voting, all matters presented to the stockholders at the Annual Meeting were approved by the requisite vote.

ITEM 6.  EXHIBITS

Reference is made to the Exhibit Index hereinafter contained.

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TRANS WORLD CORPORATION
EXHIBIT INDEX TO QUARTERLY REPORT ON FORM 10-Q
FOR THE SIX MONTHS ENDED JUNE 30, 2012

Item No	Item	Method of Filing
3.1(a)	Articles of Incorporation	Incorporated by reference to Exhibit 3.1 contained in the registration statement on Form SB-2 (File No. 33-85446-A).
3.1(b)	Certificate of Amendment to Articles of Incorporation	Incorporated by reference to Exhibit 3.1 contained in the Form 10-KSB for the fiscal year ended December 31, 2000 (File No. 0-25244)
3.1 (c)	Certificate of Amendment to Articles of Incorporation	Incorporated by reference to Exhibit 3.1 contained in the Form 10-KSB for the fiscal year ended December 31, 2004 (File No. 0-25244)
3.2	Bylaws	Incorporated by reference to Exhibit 3.2 contained in the registration statement on Form SB-2 (File No. 33-85446-A).
4.1	Specimen Common Stock Certificate	Incorporated by reference to Exhibit 4.1 contained in the registration statement on Form SB-2 (File No. 33-85446-A).
4.2	Indenture dated March 31, 1998, as supplemented on October 29, 1998. October 15, 1999 and September 10, 2001, among the registrant, TWC International U.S. Corporation, TWC Finance Corp. and U.S. Trust Company of Texas, N.A.	Incorporated by reference to Exhibit 4(1) contained in the Form 8-K filed on April 14, 1998 (File No.0-25244).
4.3	Indenture dated March 31, 1998, as supplemented on October 29, 1998, October 15, 1999 and September 10, 2001, between TWC International U.S. Corporation and U.S. Trust Company of Texas, N.A.	Incorporated by reference to Exhibit 4(III) contained in the Form 8-K filed on April 14, 1998 (File No. 0-25244).
4.4	Series A Warrant to Purchase Common Stock dated March 31, 1998	Incorporated by reference to Exhibit 4(VI) contained in the Form 8-K filed on April 14, 1998 (File No. 0-25244)
4.5	Series B Warrant to Purchase Common Stock dated March 31, 1998	Incorporated by reference to Exhibit 4(VII) contained in the Form 8-K filed on April 14, 1998 (File No. 0-25244)
4.6	Series C Warrant to Purchase Common Stock dated March 31, 1998	Incorporated by reference to Exhibit 4(II) contained in the Form 8-K filed on April 14, 1998 (File No. 0-25244)
4.7	Series G Warrant to Purchase Common Stock dated March 31, 1999	Incorporated by reference to Exhibit 10.49 contained in the Form 10-KSB filed on May 30, 2000 (File No. 0-25244)

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4.8	Agreement to Amend Warrants dated March 31, 1998 among the Company and the named Holders	Incorporated by reference to Exhibit 4(VIII) contained in the Form 8-K filed on April 14, 1998 (File No. 0-25244)
10.1	1993 Incentive Stock Option Plan	Incorporated by reference to Exhibit 10.13 contained in the registration statement on Form SB-2 (File No. 33-85446-A).
10.2	Loan Agreement dated June 11, 1997 between the Company and Value Partners	Incorporated by reference to Exhibit 10.36 contained in the Form 8-K filed on June 17, 1997 (File No. 0-25244)
10.3	Loan Agreement dated October 27, 1997, between Value Partners, and the Company	Incorporated by reference to Exhibit 10.39 contained in the Form 10-QSB for the quarter ended September 30, 1997, filed on November 12, 1997 (File No. 0-25244)
10.4	Employment Agreement between the Company and Rami S. Ramadan dated July 12, 1999	Incorporated by reference to Exhibit 10.1 contained in the Form 8-K filed on July 13, 1999 (File No. 0-25244)
10.5	Amendment to Employment Agreement between the Company and Rami S. Ramadan dated July 1, 2002	Incorporated by reference to Exhibit 10.5 contained in the Registration Statement on Form S-4 (File No. 333-101028)
10.6	1998 Incentive Stock Option Plan	Incorporated by reference to Exhibit 10.46 contained in the Form 10-KSB filed on May 26, 2000 (File No. 0-25244)
10.7	1999 Non-Employee Director Stock Option Plan	Incorporated by reference to Exhibit 10.47 contained in the Form 10-KSB filed on May 26, 2000 (File No. 0-25244)
10.8	Form 12% Secured Senior Note due March 2005	Incorporated by reference to Exhibit 10.48 contained in the Form 10-KSB filed on May 26, 2000 (File No. 0-25244)
10.9	English Restatement of the Spanish Agreement of Sale of Casino de Zaragoza	Incorporated by reference to Exhibit 99.2 contained in the Form 8-K filed on January 9, 2002 (File No. 0-22544)
10.10	Form of Fourth Supplemental Trust Indenture by and among Trans World Corporation, TWG International U.S. Corp., TWG Finance Corp. and the Bank of New York Trust Company of Florida, N.A. (as Trustee)	Incorporated by reference to Exhibit 10.10 contained in the Registration Statement on Form S-4 (File No. 333-101028)
10.11	Waiver and Forbearance of Covenant Violations (Interest) — Primary Indenture	Incorporated by reference to Exhibit 10.11 contained in the Registration Statement on Form S-4 (File No. 333-101028)
10.12	Waiver and Forbearance of Covenant Violations (Interest) — Finance Indenture	Incorporated by reference to Exhibit 10.12 contained in the Registration Statement on Form S-4 (File No. 333-101028)

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10.13	Indemnification Agreement by and between Value Partners, Ltd., Trans World Corporation and TWG International U.S. Corporation dated February 12, 2003	Incorporated by reference to Exhibit 10.13 contained in the Registration Statement on Form S-4 (File No. 333-101028)
10.14	Agreement and Plan of Recapitalization dated June 25, 2003 between the Company and the named Holders	Incorporated by reference to Exhibit 4.9 contained in the Registration Statement on Form S-4 (File No. 333-101028)
10.15	Form of 8% Rate Promissory Note due 2006	Incorporated by reference to Exhibit 4.10 contained in the Registration Statement on Form S-4 (File No. 333-101028)
10.16	Form of Variable Rate Promissory Note due 2010	Incorporated by reference to Exhibit 4.11 contained in the Registration Statement on Form S-4 (File No. 333-101028)
10.17	2004 Equity Incentive Plan, as amended	Incorporated by reference to Appendix E contained in the Proxy Statement for the 2004 Annual Meeting, and from the discussion contained at page 12-14 of the proxy statement for the 2005 Annual Meeting, at page 14-15 of the Proxy Statement for the 2006 Annual Meeting, at page 14-15 of the Proxy Statement for the 2007 Annual Meeting, and at page 15 of the Proxy Statement for the 2009 Annual Meeting (File No. 0-25244)
10.18	Renewal and Amendment of Employment Agreement between the Company and Rami S. Ramadan, Effective as of July 1, 2005	Incorporated by reference to Exhibit 10.18 contained in the Form 10-KSB filed on March 17, 2006 (File No. 0-25244)
31.0	Section 302 Certification of Chief Executive Officer and Chief Financial Officer	Filed herewith
32.0	Section 906 Certification of Chief Executive Officer and Chief Financial Officer	Filed herewith

(101) The following financial information from Trans World Corporation’s Quarterly Report on Form 10-Q for the period ended June 30, 2012, filed with the SEC on August 8, 2012, formatted in Extensible Business Reporting Language (XBRL): (i) the Condensed Consolidated Statement of Operations and Comprehensive Income (Loss) for the six and three-month periods ended June 30, 2012 and 2011 (unaudited), (ii) the Condensed Consolidated Balance Sheets at June 30, 2012 (unaudited) and December 31, 2011, (iii) the Condensed Consolidated Statement of Cash Flows for the six-month periods ended June 30, 2012 and 2011 (unaudited), and (iv) Notes to Condensed Consolidated Interim Financial Statements (unaudited).*

*Pursuant to Rule 406T of Regulation S-T, the XBRL related information in Exhibit 101 to this Quarterly Report on Form 10-Q shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be deemed part of a registration statement, prospectus or other document filed under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such filings.

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SIGNATURES

In accordance with the requirements of the Exchange Act, the Registrant has caused this report on Form 10-Q to be signed on its behalf by the undersigned, thereunto duly authorized.

	TRANS WORLD CORPORATION
Date: August 8, 2012	By:	/s/ Rami S. Ramadan
		President, Chief Executive Officer and
		Chief Financial Officer
		(Principal Executive and Financial Officer)

27

EX-31.0

EXHIBIT 31.0

RULE 13a-14a/15d-14(a) CERTIFICATION OF THE

CHIEF EXECUTIVE OFFICER/CHIEF FINANCIAL OFFICER

I, Rami S. Ramadan, the Chief Executive Officer/Chief Financial Officer of Trans World Corporation, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Trans World Corporation;

2. Based on my knowledge, this quarterly 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 quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly 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 quarterly 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 the registrant and I 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 the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this quarterly 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 the registrant’s disclosure controls and procedures and presented in this quarterly report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this quarterly report based on such evaluation; and

d) disclosed in this quarterly report any material changes in the registrant’s internal control over financial reporting that occurred during  the registrant’s most recent fiscal quarter (the registrant’s second fiscal quarter in the case of this quarterly report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of 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: August 8, 2012	By:	/s/ Rami S. Ramadan
		Chief Executive Officer/Chief Financial Officer

EX-32.0

Exhibit 32.0

CERTIFICATION OF

CHIEF EXECUTIVE OFFICER/CHIEF FINANCIAL OFFICER

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)

The undersigned executive officer of Trans World Corporation (the “Registrant”) hereby certifies that the Registrant’s Form 10-Q for the quarter ended June 30, 2012 fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and that the information contained therein fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

Date: August 8, 2012	By:	/s/ Rami S. Ramadan
		Rami S. Ramadan
		President, Chief Executive Officer, and
		Chief Financial Officer

This certification is being furnished to the Securities and Exchange Commission as an exhibit to the Form 10-Q and shall not be deemed filed by the Company for purposes of §18 of the Securities Exchange Act of 1934, as amended.

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 Trans World Corporation and will be retained by the Registrant and furnished to the Securities and Exchange Commission or its staff upon request.

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Summary of Selected Significant Accounting Policies. (Details 3) In Thousands, unless otherwise specified	1 Months Ended	3 Months Ended		6 Months Ended		72 Months Ended	6 Months Ended		72 Months Ended	6 Months Ended	72 Months Ended		6 Months Ended			6 Months Ended			6 Months Ended			6 Months Ended			6 Months Ended					6 Months Ended
	Jan. 31, 2004	Jun. 30, 2012 USD ($)	Jun. 30, 2011 USD ($)	Jun. 30, 2012 USD ($) company	Jun. 30, 2011 USD ($)	Dec. 31, 2009	Jun. 30, 2012 New Gaming Tax Law (effective January 1, 2012)	Jun. 30, 2012 Minimum	Dec. 31, 2009 Minimum	Jun. 30, 2012 Maximum	Dec. 31, 2009 Maximum	Jun. 30, 2012 Gaming revenue up to CZK 50,000	Jun. 30, 2012 Gaming revenue up to CZK 50,000 Maximum USD ($)	Jun. 30, 2012 Gaming revenue up to CZK 50,000 Maximum CZK	Jun. 30, 2012 Gaming revenue up to CZK 100,000	Jun. 30, 2012 Gaming revenue up to CZK 100,000 Maximum USD ($)	Jun. 30, 2012 Gaming revenue up to CZK 100,000 Maximum CZK	Jun. 30, 2012 Gaming revenue up to CZK 500,000	Jun. 30, 2012 Gaming revenue up to CZK 500,000 Maximum USD ($)	Jun. 30, 2012 Gaming revenue up to CZK 500,000 Maximum CZK	Jun. 30, 2012 Gaming revenue above CZK 500,000	Jun. 30, 2012 Gaming revenue above CZK 500,000 Minimum CZK	Jun. 30, 2012 Live games revenues	Jun. 30, 2012 Live games revenues Pre-2012 Gaming Tax Law	Jun. 30, 2012 Live games revenues New Gaming Tax Law (effective January 1, 2012)	Jun. 30, 2012 Live games revenues Minimum Pre-2012 Gaming Tax Law	Jun. 30, 2012 Live games revenues Maximum Pre-2012 Gaming Tax Law	Jun. 30, 2012 Slot games revenues Pre-2012 Gaming Tax Law USD ($)	Jun. 30, 2012 Slot games revenues Pre-2012 Gaming Tax Law CZK	Jun. 30, 2012 Slot games revenues New Gaming Tax Law (effective January 1, 2012) USD ($)	Jun. 30, 2012 Slot games revenues New Gaming Tax Law (effective January 1, 2012) CZK	Jun. 30, 2012 Slot games revenues Minimum Pre-2012 Gaming Tax Law	Jun. 30, 2012 Slot games revenues Maximum Pre-2012 Gaming Tax Law
Summary of Selected Significant Accounting Policies
Administration tax (as a percent)																							10.00%	10.00%
State supervision fee (as a percent)																							1.00%	1.00%
Number of former slot subsidiary companies				3
Gaming revenue tax threshold													$ 2,800	50,000		$ 5,700	100,000		$ 28,300	500,000		500,000
Charity tax (as a percent)												6.00%			8.00%			10.00%			15.00%					6.00%	15.00%					6.00%	15.00%
Tax law change comparisons
Gaming Tax from Win (as a percent)																									20.00%					20.00%	20.00%
Percentage of gaming tax receipt payable to state																									70.00%					20.00%	20.00%
Percentage of gaming tax receipt payable to municipal authorities																									30.00%					80.00%	80.00%
License fee per machine per every six month																												800	16,000
Municipality fee per machine per quarter																												50	1,000
Gaming Tax per Machine, per Day																														3	55
Corporate income tax on adjusted net income (as a percent)							19.00%
Gaming-related taxes and fees
Gaming revenues		7,481	8,731	16,044	16,613
Gaming taxes, live games and slots		1,578	401	3,342	783
Charity taxes (eliminated in 2012)			758		1,447
Licensing fees (eliminated in 2012)		139	190	283	357
Total gaming taxes and fees		1,717	1,349	3,625	2,587
Total gaming taxes and fees as % of gaming revenue		23.00%	15.40%	22.60%	15.60%
Total gaming taxes excluding non-recurring licensing fees as % of gaming revenue		21.10%		20.80%
Flat tax rate (as a percent)				20.00%
VAT before joining EU (as a percent)	5.00%
VAT after joining EU (as a percent)						22.00%
VAT for all intra-EU generated purchases (as a percent)								10.00%	9.00%	20.00%	19.00%
Income taxes
Provision for income tax		$ 309		$ 684

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Commitments and Contingencies.

6 Months Ended

Jun. 30, 2012

Commitments and Contingencies.

Commitments and Contingencies.

4.Commitments and Contingencies.

Lease Obligations- The Company is obligated under one operating lease expiring in March 2015.  Future aggregate minimum annual rental payments under this lease for the next three years are as follows:

Twelve Months Ending June 30,
2013	$	86
2014	$	88
2015	$	22

Rent expense under this lease was approximately $43 and $62 for the six months ended June 30, 2012 and 2011, respectively. Rent expense for the prior year included the lease for the Ceska casino building, which ended when the Company purchased the building in November 2011.

The Company is also obligated under certain five-year, slot equipment operating leases expiring in 2012, the projected costs of which are not included in the table above due to fluctuating inventory.  The leases provide for a monthly fixed rental fee per slot machine, and an option for replacement to a different/newer machine during the term of the lease.  In the second quarter of 2012, the Company’s slot lease expenses were approximately $568 versus $670 in the comparable period in 2011, while for the first six months of 2012, they were $1,203 versus $1,304 for the comparable period in 2011.

Employment Agreements- The Company’s July 1, 2005 employment agreement with its Chief Executive Officer (“CEO”), Mr. Rami S. Ramadan, absent the intervention of either party by September 30th of each year, will renew automatically for another calendar year, currently ending December 31, 2012. In addition to a perpetually renewable, employment term of one year absent the intervention of either party, the agreement provides for annual compensation, plus participation in the Company’s benefits programs and equity incentive plans As of June 30, 2012, the Company is contractually obligated to pay approximately $225 of annual base compensation for the remainder of the year 2012.

401(k) and Profit Sharing Plan- The Company maintains a contributory 401(k) plan and a profit sharing plan.  These plans are for the benefit of all eligible corporate employees, who may have up to 16.5% of their salary withheld, not to exceed the maximum federally allowed amount.  The Company makes an employer-matching contribution of 60 cents for each employee dollar contributed.

Notes Receivable-In connection with the TWC’s management of the Grand Casino Lav, on January 10, 2007, the Company extended three Euro-denominated loans totaling €967, or $1,200 at the June 30, 2012 exchange rate, to the Grand Hotel Lav, d.o.o. (“GHL”), the owner of the Grand Casino Lav and Nightclub.  At June 30, 2012, the balance of approximately €706, or $923, remains payable, as per the executed payment allocation and pledge of payment agreement related to the existing credit agreement and the 2006 Management Agreement.  GHL acknowledged the outstanding debt and committed to this revised payment schedule ending April 2013.  TWC still holds eight unexercised demand notes and believes the loan is fully collectible.

Advance Receivable-In August 2009, in pursuit of obtaining a gaming license in Hungary, TWC partnered with Vigotop Limited, a Cyprus-based company (“Vigotop”), to form a Hungarian company, KC Bidding Kft. (“KCB”), in which TWC became holder of a 25% equity interest. Subsequently, TWC extended a three-year, 1.0% interest per annum loan of approximately €930 (or about $1,300) to KCB to form a Hungarian license concession company, SDI Europe Kft. (“SDI”), for the purpose of eventually operating the Class I casino in Hungary. SDI is a wholly-owned subsidiary of KCB. Through SDI’s intermediary, IMT LLC, a Delaware limited liability company, American Chance Casinos (“ACC”), an operations subsidiary of TWC, received a three-year, 2.1505% interest per annum loan of approximately $1,200. TWC expects the full lump sum repayment of advance receivable, upon maturity, from KCB, to offset its outstanding loan with IMT LLC. TWC management believes the loan to KCB is fully collectible. In the event KCB defaults in its repayment obligation to TWC with respect to the above mentioned loan, IMT will cancel the loan obligation from ACC to IMT and ACC will no longer be obligated to pay off the loan balance of approximately €930, or $1,200. In November 2010, the loan agreement between ACC and KCB was amended to change the maturity date to January 31, 2016 from December 31, 2012 and to establish an interest rate of 1% from January 1, 2012 through the new maturity date of the loan. In March 2011, the loan agreement between IMT and ACC was amended to change the maturity date to February 21, 2016 from January 31, 2013, and to establish an interest rate of 1% from January 1, 2012 through the new maturity date of the loan.  As of June 30, 2012, the TWC loan to KCB was approximately $1,200 and was included in the Company’s deposits and other assets, while the IMT loan to TWC was approximately $1,150 and was included in the Company’s long-term debt.

On January 12, 2011, KCB received two letters from the Ministry for the National Economy of Hungary (the “MOE”). The first letter declared that the State of Hungary was terminating the concession contract that was concluded between the parties on October 9, 2009 for alleged breaches of the terms of the concession contract by the concession holder. Further, in this letter, the Hungarian government demanded payment of a cancelation penalty in the amount of 900,000 Hungarian Forint (“HUF”), approximately $4,500. The second letter was a demand for a penalty payment in the amount of HUF 864,500 plus interest in the amount of HUF 380,400, approximately $6,220 in aggregate, regarding an alleged claim of non-compliance with update reports on the progress of the King’s City Development project that were due in January 2010 and July 2010.

KCB has responded to the MOE, challenging the reasons provided by the MOE for the immediate cancellation of the concession contract and argued that the terms on which the cancellation was based were wrongful and disputed the MOE’s claim that such progress reports were due during 2010.

On April 26, 2011, KCB received a Hungarian court summons for a hearing, which was moved to January 10, 2012, pursuant to a counterplea by KCB on August 30, 2011. The hearing on January 10, 2012 was inconclusive, and another hearing, originally set for March 6, 2012 before the Metropolitan Court of Budapest, was thrice postponed, and is now set for August 22, 2012.  KCB is confident that it fully complied with all reporting requirements and believes that the court will ultimately render a favorable verdict. KCB’s attorneys believe that KCB has a strong legal case against the MOE.

In March 2011, KCB, as Plaintiff, filed a suit against the State of Hungary, represented by the MOE, as Defendant, regarding the declaration of the unlawfulness of the cancellation of the concession contract concluded by and between the parties on October 9, 2009. The MOE had informed KCB of the cancellation on January 12, 2011. The court case is pending before the Metropolitan Court of Budapest. Until now, only one hearing was held, on January 31, 2012, and it was inconclusive. On March 27, 2012, the court suspended the case, pending the outcome of the case brought by KCB against the MOE.  KCB is confident in its assertion that the government’s cancellation of the concession agreement was illegal and that the concession agreement will be reinstated by the court.

Notwithstanding the foregoing, litigation results are never predictable. Further, by virtue of an existing agreement between Vigotop and TWC, all costs associated with obtaining the casino license were and will be borne by Vigotop. In the opinion of TWC’s management, after consultation with legal counsel, the amount of ultimate liability with respect to both/all these actions, if adversely decided to KCB, will not materially affect the Company’s consolidated financial statements and/or results of operations.

Taxing Jurisdiction-The Czech Republic currently has a number of laws related to various taxes imposed by governmental authorities.  Applicable taxes include corporate income tax, gaming tax, value-added tax (“VAT”), payroll (social) taxes and in 2011, (but not in 2012) charity taxes.  Tax declarations, together with other legal compliance areas (e.g. customs and currency control matters) are subject to review and investigation by a number of governmental authorities, which are enabled by law to impose fines, penalties and interest charges, and create tax risks in the Czech Republic.  Management believes that it has adequately provided for all of its Czech tax liabilities.

Effective January 1, 2012, charity taxes have been eliminated in lieu of a new overall flat gaming tax (the “New Gaming Tax”) of 20.0% on all live game and slot revenues, as well as an applicable 19% corporate income tax on adjusted net income.  Additionally, the administration tax and state supervision fee have been eliminated in lieu of minor license renewal fees.  The New Gaming Tax is payable at the end of each quarter, while the corporate income tax is payable by June of the subsequent year. (See also Note 6(k) “Czech Gaming Taxes” and Note 6(l) “Income Taxes” below).

Legal Proceedings-The Company is often subject to various contingencies, the resolutions of which, its management believes, will not have a material adverse effect on the Company’s consolidated financial position or results of operations.  TWC was not involved in any material litigation during the six months ended June 30, 2012, or through the date of this filing.

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Discontinued Operations.

6 Months Ended

Jun. 30, 2012

Discontinued Operations.

Discontinued Operations.

3.Discontinued Operations.

The Company began terminating live games operation at Rozvadov at the end of January 2012, and continued running the unit as a slot-only operation until March 31, 2012, when all gaming operations were ceased.  Rozvadov’s net losses, shown as discontinued operations for the first six months of 2012 and 2011 were $106 and $122, respectively, net of rental income.  No write-downs of inventories or furniture, fixtures and equipment (“FF&E”) were incurred because its slot machines were leased, while the Company’s owned FF&E was subsequently rented out and remaining inventories were transferred to other operating units at an immaterial cost.  Employees at Rozvadov received cash severance benefits aggregating approximately $79.  In light of the lessee exercising its option to buy the Rozvadov property (as discussed below), the Rozvadov assets are classified as held for sale at June 30, 2012 and December 31, 2011, and the assets and liabilities are included in the respective current assets and liabilities sections of the Condensed Consolidated Balance Sheets. The following table provides a detail of the net assets held for sale:

	At		At
(amounts in thousands)	June 30, 2012		December 31, 2011
Assets:
Land	$	30	$	32
Building	792		839
FF&E	16		29
Total assets	838		900
Liabilities related to assets held for sale	100		207
Net assets held for sale	$	738	$	693

Effective March 1, 2012, pursuant to a five-year lease agreement, the Company leased the Rozvadov casino building and its staff housing facilities to a local Czech casino operator.  However, due to a gaming license delay by the lessee, TWC continued operating the unit through the end of March 2012.  The lessee commenced operations at that site on April 4, 2012.  The lease terms also gave the lessee the option to buy out the lease for €1,000, or approximately $1,300, anytime during the first year of the agreement.  On July 11, 2012, the lessee exercised its option to buy out the lease by making the full purchase payment of €1,000, or $1,300 to TWC.

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CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
CURRENT ASSETS:
Cash	$ 5,003	$ 5,636
Prepaid expenses	347	719
Notes receivable, current portion	923	413
Other current assets	304	284
Assets held for sale	838	900
Total current assets	7,415	7,952
PROPERTY AND EQUIPMENT, less accumulated depreciation of $11,100 and $11,108, respectively	31,205	33,068
OTHER ASSETS:
Goodwill	5,862	6,119
Notes receivable, less current portion		609
Deposits and other assets	2,624	2,723
Total other assets	8,486	9,451
TOTAL ASSETS	47,106	50,471
CURRENT LIABILITIES:
Long-term debt, current maturities	3,348	3,490
Capital lease, current portion	54	37
Accounts payable	237	548
Interest payable	36	49
Czech tax accrual	2,800	3,905
Accrued expenses and other current liabilities	1,669	1,886
Liabilities related to assets held for sale	100	207
Total current liabilities	8,244	10,122
LONG-TERM LIABILITIES:
Long-term debt, less current maturities	2,107	3,065
Capital lease, less current portion	147	81
Total long-term liabilities	2,254	3,146
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $0.001 par value, 4,000,000 shares authorized, none issued
Common stock, $0.001 par value, 20,000,000 shares authorized, 8,871,635 shares in 2012 and 2011, issued and outstanding, respectively	9	9
Additional paid-in capital	52,473	52,141
Accumulated other comprehensive income	4,117	5,687
Accumulated deficit	(19,991)	(20,634)
Total stockholders' equity	36,608	37,203
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 47,106	$ 50,471

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Basis of Presentation and Consolidation.

6 Months Ended

Jun. 30, 2012

Basis of Presentation and Consolidation.

Basis of Presentation and Consolidation.

1.Basis of Presentation and Consolidation.

The accompanying unaudited condensed consolidated interim financial statements of Trans World Corporation and Subsidiaries (collectively, the “Company,” “TWC,” “we,” “our” or “us”) as of June 30, 2012 and December 31, 2011 and for the six and three months ended June 30, 2012 and 2011 reflect all adjustments of a normal and recurring nature to fairly present the consolidated financial position, results of operations and cash flows for the interim periods. The financial statements of all foreign subsidiaries consolidated herein have been converted in accordance with accounting principles generally accepted in the United States of America (“US GAAP” or “GAAP”) for financial presentation purposes. All significant intercompany transactions and account balances have been eliminated in consolidation. These unaudited condensed consolidated interim financial statements have been prepared by the Company according to the instructions of Form 10-Q and pursuant to the U.S. Securities and Exchange Commission’s (“SEC”) accounting and reporting requirements under Regulations S-X and S-K. Pursuant to these instructions, certain financial information and footnote disclosures normally included in such consolidated financial statements have been condensed or omitted.

In management’s opinion, all adjustments considered necessary for fair presentation of financial position, results of operations and cash flows of the Company have been included. These unaudited condensed consolidated interim financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto, together with management’s discussion and analysis, contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011. The results of operations for the six and three months ended June 30, 2012 are not necessarily indicative of the results that may occur for the year ending December 31, 2012.

The condensed consolidated balance sheet as of December 31, 2011 was derived from the Company’s audited consolidated financial statements but does not include all disclosures required by US GAAP.  All monetary amounts set forth in these financial statements are in United States dollars (“USD” or “$”) unless otherwise stated herein.

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Liquidity. (Details) In Thousands, unless otherwise specified	6 Months Ended				6 Months Ended
	Jun. 30, 2012 USD ($)	Jun. 30, 2011 USD ($)	Dec. 31, 2011 USD ($)	Jun. 30, 2012 Credit facility CZK	Jun. 30, 2012 Amortized loan August 2012 USD ($)	Jun. 30, 2012 Amortized loan November 2012 USD ($)	Jun. 30, 2012 Amortized loan February 2013 USD ($)	Jun. 30, 2012 Amortized loan May 2013 USD ($)
Liquidity
Working capital deficit	$ (829)		$ (2,170)
Net cash provided by operations	845	1,711
Amount drawn down on credit facility				35,000
Expected quarterly payments					$ 378	$ 378	$ 378	$ 378

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Summary of Selected Significant Accounting Policies. (Details 2) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended			6 Months Ended			6 Months Ended			6 Months Ended
	Jun. 30, 2012 USD ($)	Jun. 30, 2011 USD ($)	Jun. 30, 2012 USD ($)	Jun. 30, 2011 USD ($)	Jun. 30, 1998	Jun. 30, 2012 USD USD ($)	Dec. 31, 2002 USD USD ($)	Jun. 30, 1998 CZK	Jun. 30, 2012 German reporting unit USD USD ($)	Dec. 31, 2002 German reporting unit USD USD ($)	Jun. 30, 1998 German reporting unit CZK	Jun. 30, 2012 Austrian reporting unit USD USD ($)	Dec. 31, 2002 Austrian reporting unit USD USD ($)	Jun. 30, 1998 Austrian reporting unit CZK
Impact of foreign currency translation on goodwill
Applicable Foreign Exchange Rate ("FX")	20.6857		20.6857		33.8830
Residual balance							$ 3,579	121,267		$ 3,042	103,077		$ 537	18,190
Net increase to Goodwill						2,283			1,941			342
Residual balance						5,862	3,579	121,267	4,983	3,042	103,077	879	537	18,190
Period over which goodwill was amortized			15 years
Promotional allowances
Cost of gratuitous food and beverages	284	624	871	1,291
Average cost of food and beverages sold (as a percent)	38.30%	38.90%	35.90%	40.20%
Retail value of food and beverages	742	1,604	2,426	3,211
Retail value of hotel accommodations	8	3	16	10
Total promotional allowances	$ 750	$ 1,607	$ 2,442	$ 3,221

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Nature of Business.

6 Months Ended

Jun. 30, 2012

Nature of Business.

Nature of Business.

2.Nature of Business.

Trans World Corporation, a Nevada corporation, and Subsidiaries are primarily engaged in the gaming and hotel business in the Czech Republic.

The Company owns and operates three casinos in the Czech Republic (“CZ”), and manages, under contract, one casino and nightclub in Croatia, all under the American Chance Casinos (“ACC”) brand. The Ceska casino (“Ceska”), located in the town of Ceska Kubice, in the western part of the CZ close to the German border, currently has 15 gaming tables and 80 slot machines.  The Route 55 casino (“Route 55”), located in Dolni Dvoriste, in the southern part of the CZ, close to the Austrian border, has 23 gaming tables and 124 slot machines. The Route 59 casino (“Route 59”), is located in Hate, near Znojmo, and currently has 23 gaming tables and 114 slot machines.  On March 31, 2012, TWC terminated the operation of its smallest casino, located in the town of Rozvadov (“Rozvadov”).  The casino facilities were subsequently leased to a local, third-party casino operator.  On July 11, 2012, the third-party operator exercised its buy-out option, as provided under the terms of the lease (see the following Note 3, “Discontinued Operations” below).

In addition to the above operations, TWC also owns and operates a 77-room, four-star deluxe hotel, the Hotel Savannah, which is physically connected to its Route 59 casino, and a full-service spa, the Spa at Savannah (the “Spa”), which is operated by an independent contractor and is attached to the hotel.  The hotel features eight banquet halls for meetings and special events as well as a full-service restaurant and bar.

The Company also manages, under a 10-year management contract expiring in 2017, the Grand Casino Lav and Nightclub (collectively known as the “Grand Casino Lav”), located in Podstrana, Croatia, near the resort city of Split. Currently, this casino operates under difficult conditions in a depressed regional economy.  The casino’s operations have been suspended by the owners, Grand Hotel Lav d.o.o., since January 1, 2012, pending the outcome of financing and their desire to restructure the casino, which may result in changes and/or termination of the management contract.

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CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
CONDENSED CONSOLIDATED BALANCE SHEETS
PROPERTY AND EQUIPMENT, accumulated depreciation (in dollars)	$ 11,100	$ 11,108
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized	4,000,000	4,000,000
Preferred stock, shares issued	0	0
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	20,000,000	20,000,000
Common stock, shares issued	8,871,635	8,871,635
Common stock, shares outstanding	8,871,635	8,871,635

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Discontinued Operations (Details) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended			1 Months Ended	6 Months Ended
	Jun. 30, 2012 USD ($)	Jun. 30, 2011 USD ($)	Jun. 30, 2012 USD ($)	Jun. 30, 2011 USD ($)	Dec. 31, 2011 USD ($)	Mar. 31, 2012 Rozvadov	Jun. 30, 2012 Rozvadov USD ($)	Jun. 30, 2012 Rozvadov EUR (€)	Jun. 30, 2011 Rozvadov USD ($)	Dec. 31, 2011 Rozvadov USD ($)	Jun. 30, 2012 Rozvadov Land USD ($)	Dec. 31, 2011 Rozvadov Land USD ($)	Jun. 30, 2012 Rozvadov Building USD ($)	Dec. 31, 2011 Rozvadov Building USD ($)	Jun. 30, 2012 Rozvadov FF&E USD ($)	Dec. 31, 2011 Rozvadov FF&E USD ($)
Discontinued Operations
Net losses of discontinued operation, net of rental income	$ (39)	$ 51	$ 106	$ 122			$ 106		$ 122
Cash severance benefits received by employees							79
Net assets held for sale
Assets							838			900	30	32	792	839	16	29
Liabilities related to assets held for sale	100		100		207		100			207
Net assets held for sale							738			693
Lease agreement term (in years)						5 years
Purchase price under lease buy out option during the first year of the agreement							1,300	1,000
Full purchase payment by under lessee under buy out option							$ 1,300	€ 1,000

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Document and Entity Information	6 Months Ended
	Jun. 30, 2012	Aug. 06, 2012
Document and Entity Information
Entity Registrant Name	TRANS WORLD CORP
Entity Central Index Key	0000914577
Document Type	10-Q
Document Period End Date	Jun. 30, 2012
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		8,871,635
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q2

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Commitments and Contingencies. (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Commitments and Contingencies.
Number of operating leases under which the Company is obligated			1
Operating leases other than slot equipment
Future aggregate minimum annual rental payments under this lease for the next three years
2013	$ 86		$ 86
2014	88		88
2015	22		22
Operating lease other disclosures
Rent expense			43	62
Slot Equipment
Operating lease other disclosures
Rent expense	$ 568	$ 670	$ 1,203	$ 1,304
Lease term			5 years

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
REVENUES	$ 8,271	$ 9,290	$ 17,432	$ 17,621
COSTS AND EXPENSES:
Cost of revenues	4,789	4,911	9,982	9,377
Depreciation and amortization	435	578	879	1,127
Selling, general and administrative	2,424	2,803	4,994	5,570
TOTAL COSTS AND EXPENSES	7,648	8,292	15,855	16,074
INCOME FROM CONTINUING OPERATIONS, before other expense and foreign income taxes	623	998	1,577	1,547
OTHER EXPENSE:
Interest expense, net	(68)	(104)	(144)	(210)
INCOME FROM CONTINUING OPERATIONS, before income taxes	555	894	1,433	1,337
FOREIGN INCOME TAXES	(309)		(684)
INCOME FROM CONTINUING OPERATIONS	246	894	749	1,337
DISCONTINUED OPERATIONS, gain (loss) from operation of discontinued Rozvadov Casino, net of tax	39	(51)	(106)	(122)
NET INCOME	285	843	643	1,215
Other comprehensive income (loss), foreign currency translation adjustments, net of tax	(4,208)	1,355	(1,570)	4,848
TOTAL COMPREHENSIVE INCOME (LOSS)	$ (3,923)	$ 2,198	$ (927)	$ 6,063
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic (in shares)	8,871,635	8,871,640	8,871,635	8,871,640
Diluted (in shares)	9,031,327	8,923,178	9,031,327	8,923,178
From continuing operations:
Basic (in dollars per share)	$ 0.03	$ 0.10	$ 0.08	$ 0.15
Diluted (in dollars per share)	$ 0.03	$ 0.10	$ 0.08	$ 0.15
From discontinued operations:
Basic (in dollars per share)	$ 0.00	$ (0.01)	$ (0.01)	$ (0.01)
Diluted (in dollars per share)	$ 0.00	$ (0.01)	$ (0.01)	$ (0.01)

XML

Summary of Selected Significant Accounting Policies. (Policies)

6 Months Ended

Jun. 30, 2012

Summary of Selected Significant Accounting Policies.

Revenue recognition

Revenue recognition-Casino revenue is defined as the net win from gaming activities, which is the difference between gaming wagers and the amount paid out to patrons, and is recognized on the day it is earned. Revenues generated from ancillary services, including lodging, sales of food, beverage, cigarettes, and casino logo merchandise are recognized at the time the related services are performed and represent, on an individual basis, less than three percent of total revenues.

Earnings per share

Earnings per share- Basic earnings per common share are computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per common share incorporate the dilutive effect of common stock equivalents on an average basis during the period. The Company’s common stock equivalents currently include stock options, warrants and deferred compensation stock. Thus, unexercised stock options to purchase up to 662,425 and 838,025 shares as of June 30, 2012 and June 30, 2011, respectively, were included in the computation of diluted earnings per common share, if such unexercised stock options were “in-the-money” and vested. Warrants to purchase up to 75,000 shares were also included, if they were “in-the-money” and vested. In addition, 149,654 and 51,538 issuable shares, as of June 30, 2012 and June 30, 2011, respectively, under the Company’s Deferred Compensation Plan were also included in the computation.

A table illustrating the impact of dilution on earnings per share, based on the treasury stock method, is presented below:

	(UNAUDITED)
	For the Six Months Ended				For the Three Months Ended
(amounts in thousands, except for	June 30,				June 30,
share information)	2012		2011		2012		2011
Basic Earnings Per Share:
Net earnings	$	749	$	1,337	$	246	$	894
Weighted average common shares	8,871,635		8,871,640		8,871,635		8,871,640
Basic earnings per share	$	0.08	$	0.15	$	0.03	$	0.10
Diluted Earnings Per Share:
Net earnings	$	749	$	1,337	$	246	$	894
Weighted average common shares	8,871,635		8,871,640		8,871,635		8,871,640
Addition due to the effect of dilutive securities:
Stock options and warrants (1)	10,038				10,038
Stock issuable under the Deferred Compensation Plan	149,654		51,538		149,654		51,538
Dilutive potential weighted average common shares	9,031,327		8,923,178		9,031,327		8,923,178
Diluted earnings per share	$	0.08	$	0.15	$	0.03	$	0.10

(1) Per the treasury stock method.

Goodwill

Goodwill- Goodwill represents the excess of the cost of the Company’s Czech subsidiaries over the fair value of their net assets at the date of acquisition, which consisted of the Ceska and Rozvadov casinos and the land in Hate, which is currently, the Route 59 Casino. Goodwill is subject to at least an annual assessment for impairment, applying a fair-value based test. The Company has allocated the goodwill over two reporting units that are components of the operating segment “Czech subsidiaries” and are classified as the “German reporting unit” which consists of the Ceska and Rozvadov casinos, and the “Austrian reporting unit” which consists of the Route 55 and Route 59 casinos and the Hotel Savannah. Despite the sale of the Rozvadov property in July 2012, there was no impact on goodwill since goodwill associated with the German reporting unit was all assigned to Ceska.  The impairment assessment requires the Company to compare the fair value of its two reporting units to their respective carrying values to determine whether there is an indication that an impairment exists. The fair value of the two reporting units were determined through a combination of recent appraisals of the Company’s real property and a multiple of earnings before interest, taxes, depreciation and amortization (“EBITDA”), which was based on the Company’s experience and data from independent, third parties. As required, the Company performed its required annual fair-value based testing of the carrying value of goodwill related to its two reporting units at September 30, 2011, and determined that goodwill was not impaired. The Company will perform its required annual assessment of goodwill during the third quarter of 2012. There were no indicators of impairment present during the interim periods following the annual testing date, therefore the Company determined that there was no impairment of goodwill at June 30, 2012.

Discontinued Operations / Assets Held for Sale

Discontinued Operations / Assets Held for Sale-The Company’s assets held for sale are reported separately on the condensed consolidated balance sheets by class of asset and/or liability, and these new line items are reclassified on the financial statements (Balance Sheets) for the prior year(s). The net income or loss from the operations of the assets held for sale are reported separately on the Income Statement, located below Income from Continuing Operations; and similar to the Balance Sheets presentation, the prior year(s) are also reclassified.

Property and Equipment

Property and Equipment- Property and equipment is stated at cost less accumulated depreciation and amortization.  TWC capitalizes the cost of improvements that extend the life of the asset and expenses maintenance and repair costs as incurred.  The Company provides for depreciation and amortization using the straight-line method over the following estimated useful lives:

Asset	Estimated Useful Life
Building and improvements	5-50 years
Furniture, fixtures and other equipment	4-12 years

At June 30, 2012 and December 31, 2011, property and equipment consisted of the following:

	As of June 30, 2012			As of December 31, 2011
	(unaudited)
Land	$	2,467		$	2,498
Building and improvements	28,230			29,418
Furniture, fixtures and other equipment	11,608			12,260
	42,305			44,176
Less accumulated depreciation and amortization	(11,100		)	(11,108		)
	$	31,205		$	33,068

Impairment for long-lived assets

Impairment for long-lived assets-The Company periodically evaluates whether current facts or circumstances indicate that the carrying value of its depreciable assets to be held and used are recoverable. If such circumstances are determined to exist, an estimate of undiscounted future cash flows produced by the long-lived assets, or the appropriate grouping of assets, is compared to the carrying value to determine whether an impairment exists. If an asset is determined to be impaired, the loss is measured based on the difference between the asset’s fair value and its carrying value. An estimate of the asset’s fair value is based on quoted market prices in active markets, if available. If quoted market prices are not available, the estimate of fair value is based on various valuation techniques, including a discounted value of estimated future cash flows. The Company reports an asset to be disposed of at the lower of its carrying value or its estimated net realizable market value. There were no impairment losses for long-lived assets recorded for the six months ended June 30, 2012.

Foreign currency translation

Foreign currency translation- Foreign subsidiaries whose functional currency is the local foreign currency, balance sheet accounts and cash flows are translated at exchange rates in effect at the end of each reporting period and resulting translation adjustments are included in “accumulated other comprehensive income (loss).” Statement of operations accounts are translated by applying the monthly averages of the daily exchange rates of one (1) USD dollar to one (1) CZK at the end of the respective month on the respective monthly local Czech statement of operations accounts for the period.

The impact of foreign currency translation on goodwill is presented below:

	Applicable	Goodwill
	Foreign Exchange	German		Austrian
As of June 30, 2012 (in thousands, except FX)	Rate (“FX”) (2)	reporting unit		reporting unit		Total
Residual balance, as of January 1, 2003 (in USD) (1)		USD	3,042	USD	537	USD	3,579
USD residual balance, translated at June 30, 1998 (date of acquisition) FX rate of:	33.8830	CZK	103,077	CZK	18,190	CZK	121,267
2003 CZK balance, translated to USD, at June 30, 2012 FX of:	20.6857	USD	4,983	USD	879	USD	5,862
Net increase to Goodwill		USD	1,941	USD	342	USD	2,283

(1)   Goodwill was amortized over 15 years until the Company started to comply with revised GAAP requirements, as of January 1, 2002. This balance represents the remaining, unamortized goodwill, after an impairment charge taken prior to January 1, 2003.

(2)   FX (interbank) rates taken from www.Oanda.com.

Stock-based compensation

Stock-based compensation-The Company recognizes the fair value of stock-based compensation in the statement of operations. The fair value of the Company’s stock option awards are estimated using a Black-Scholes option valuation model. This model requires the input of highly subjective assumptions and elections including expected stock price volatility and the estimated life of each award.  In addition, the calculation of compensation costs requires that the Company estimate the number of awards that will be forfeited during the vesting period. The fair value of stock-based awards is amortized over the vesting period of the award.

Comprehensive income (loss)

Comprehensive income (loss) — The Company’s change in the foreign currency translation adjustments is included in other comprehensive income (loss).

Promotional allowances

Promotional allowances — Promotional allowances primarily consist of food and beverages (“F&B”) and, to certain of its valuable players, hotel accommodations, all of which are furnished gratuitously.  For the six months ended June 30, 2012 and 2011, revenues do not include the retail amount of F&B and hotel accommodations of $2,442 and $3,221, respectively, provided at no-charge to customers. The retail value of the F&B given away is determined by dividing the F&B costs charged to the gaming operation of $871 and $1,291, for the respective periods, by the average percentage of cost of F&B sold.  The cost of hotel accommodations is either the out-of-pocket expenses paid to other hotels or the retail charge of rooms at the Hotel Savannah. The promotional allowances are summarized below:

	(UNAUDITED)
	For the Six Months Ended						For the Three Months Ended
	June 30,						June 30,
(amounts in thousands)	2012			2011			2012			2011
Cost of gratuitous food and beverages (A)	$	871		$	1,291		$	284		$	624
Average cost of food and beverages sold (B)	35.9		%	40.2		%	38.3		%	38.9		%
Retail value of food and beverages (A/B)	$	2,426		$	3,211		$	742		$	1,604
Retail value of hotel accommodations	16			10			8			3
Total promotional allowances	$	2,442		$	3,221		$	750		$	1,607

Czech taxes

Czech gaming taxes — The majority of TWC’s revenues are derived from gaming operations in the Czech Republic, which were subject to, prior to January 1, 2012, only gaming taxes and charity taxes, while its non-gaming revenues, which were not material, were subject to correspondingly non-material corporate income tax liabilities under Czech law.

Gaming taxes were computed on gross gaming revenues, which were comprised of live (table) games and slot games revenues. For live game revenue, the applicable taxes and fees were: (i) a 10% administration tax; (ii) a 1% state supervision fee; and (iii) a charity “contribution” (i.e., a tax), herein referred to as the charity tax, for publicly beneficial, cultural, sporting and welfare purposes, according to a gross revenue formula specified by the Czech Ministry of Finance.

Charity taxes were also computed on the reported slot revenues of each of our three former slot subsidiary companies, ACC Slot, s.r.o., Hollywood Spin s.r.o. and LMJ Slot s.r.o., net of gaming taxes and fees. Therefore, for all gaming revenue, net of applicable taxes and fees, of up to CZK 50,000 (or $2,800 at the annualized daily exchange rate for 2011), a 6% charity tax applies; of up to CZK 100,000 (or $5,700 at the same exchange rate), an 8% rate applies; of up to CZK 500,000 (or $28,300 at the same exchange rate), a 10% rate applies; and of above the CZK 500,000 gaming revenue threshold, a 15% rate applies. For slot game revenue, the applicable assessment is the charity tax, net of local (municipality) administration and slot state-licensing fees.

Effective January 1, 2012, TWC merged its three Czech slot subsidiary companies, ACC Slot, s.r.o., Hollywood Spin s.r.o. and LMJ Slot s.r.o. into its primary Czech operating entity company, American Chance Casinos a.s., in an effort to eliminate and/or reduce redundancy in operations, maintenance and operating costs.

Effective January 1, 2012, the charity taxes have been eliminated in lieu of the New Gaming Tax on all live game and slot revenues, as well as an applicable corporate income tax on adjusted Czech net income, net of exemptions.  Additionally, the administration tax and state supervision fee have been eliminated in lieu of minor license renewal fees. A summary of the changes is summarized in the following table:

		New Gaming Tax Law *
	Pre-2012 Gaming Tax Law	(effective January 1, 2012)
Live Games:	10% Gaming Tax from Win (administration fee); 1% Gaming Tax from Win (state supervision); 6-15% Charity Tax from Win, net of Gaming Taxes (the Charity Tax rate is based on tiered revenue thresholds).	20% Gaming Tax from Win (70% of receipt to state; 30% to municipal).
Slots:	16,000 CZK (or $800) License per machine, per every 6 months; 1,000 CZK (or $50) Municipality Fee per machine, per quarter; 6-15% Charity Tax from Win, net of License and Municipality fees (the Charity Tax rate is based on tiered revenue thresholds).	20% Gaming Tax from Win (20% of receipt to state; 80% to municipal); 55 CZK (or $3) Gaming Tax per Machine, per Day.
Net Income	No corporate income tax.	19% corporate income tax on adjusted net income, net of exemptions.

* The new Gaming Tax is to be paid quarterly, while corporate income tax obligation is to be paid in June of the subsequent year.

Gaming taxes payable for year 2011 were due and paid to the Czech Ministry of Finance in April 2012, while charity taxes payable, despite having no stated due dates, were paid as mutually agreed with the charities, customarily by May of the subsequent year. The Company was permitted to allocate this charity contribution to local schools, sports clubs, subsidized or volunteer organizations, or municipalities in which each of the Company’s casinos operate. The distribution was subject to the prior approval of the Czech Ministry of Finance. The New Gaming Tax is payable at the end of each quarter. The Company was in full compliance with all tax payment deadlines at June 30, 2012.

TWC’s gaming-related taxes and fees for the six and three months ended June 30, 2012 and 2011 are summarized in the following table:

	For the Six Months Ended						For the Three Months Ended
	June 30,						June 30,
(amounts in thousands)	2012			2011			2012			2011
Gaming revenues	$	16,044		$	16,613		$	7,481		$	8,731
Gaming taxes, live games and slots	3,342			783			1,578			401
Charity taxes (eliminated in 2012)				1,447						758
Licensing fees (eliminated in 2012) (1)	283			357			139			190
Total gaming taxes and fees	$	3,625		$	2,587		$	1,717		$	1,349
as % of gaming revenue (2)	22.6		%	15.6		%	23.0		%	15.4		%

(1) As the non-refundable, six-month licensing fees effective for January 2012 through June 2012 were paid in October 2011, prior to the passing of the New Gaming Tax laws in December 2011, the Company incurred additional fees for the first six months of 2012.  Excluding the non-recurring licensing fees, the gaming taxes for the three and six months of 2012 would have been 21.1% and 20.8% of gaming revenues, respectively.

(2) The tax percentages in 2012 vary slightly from the 20% flat rate, due to minor administrative fees.

In conformity with the European Union (“EU”) taxation legislation, when the Czech Republic joined the EU in 2004, its VAT increased from 5% to 22%, from January 2004 through December 2009, and ranged between 9% and 19% for all intra-EU generated purchases. Beginning January 1, 2010, VAT rates increased to between 10% and 20%. All non-EU generated purchases were impacted by identical VAT increases, beginning in May 2004. The Company pays its VAT directly to its vendors in connection with any purchases that are subject to this tax. Unlike in other industries, VATs are not recoverable for gaming operations. The recoverable VAT under the Hotel Savannah operation was non-material for the six and three months ended June 30, 2012 and 2011.

On February 28, 2012, TWC transferred the ownership of its fully-owned Czech subsidiary, Trans World Hotels, s.r.o., which owns the Hotel Savannah, to TWC’s primary Czech subsidiary, American Chance Casinos a.s., in an effort to consolidate and reduce redundancy and maintenance costs.

Income taxes

Income taxes — Deferred income tax assets and liabilities are computed for differences between the financial statement and the tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income.  Valuation allowances are established, when necessary, to reduce deferred income tax assets to the amount expected to be realized.  Accounting for income taxes prescribes, among other things, a recognition threshold and measurement attributes for the financial statement recognition and measurement of uncertain tax positions taken or expected to be taken in a company’s income tax return. Accounting for income taxes utilizes a two-step approach for evaluating uncertain tax positions. Step One, or recognition, requires a company to determine if the weight of available evidence indicates a tax position is more likely than not to be sustained upon audit, including resolution of related appeals or litigation processes, if any. Step Two, or measurement, is based on the largest amount of benefit, which is more likely than not to be realized on settlement with the taxing authority. The Company is subject to income tax examinations by major taxing authorities for all tax years subsequent to 2008. The adoption of the provisions of the FASB standard, “Accounting for Income Taxes” did not have a material impact on the Company’s consolidated financial statements. However, management’s conclusions regarding this policy may be subject to review and adjustment at a later date based on factors including, but not limited to, on-going analyses of and changes to tax laws, regulation and interpretations, thereof.  During the six-month period ended June 30, 2012, the Company recognized no adjustments for uncertain tax positions.

Effective January 1, 2012, the Czech government instituted an effective corporate income tax, currently at 19.0%, on gaming revenues, which prior to the law changes were subject only to gaming taxes.  As a result of the new tax laws and due to the potential and material income tax liability, the Company accrued an estimated income tax liability of $309 and $684 for the three and six months ended June 30, 2012, respectively.  Corporate income tax is payable by June of the subsequent year.

Recently issued and adopted accounting standards

Recently issued and adopted accounting standards:

In September 2011, the FASB amended the authoritative guidance regarding the testing for Goodwill Impairment. Under the amendments, an entity has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of events or circumstances, an entity determines it is not more likely than not that the fair value reporting of a reporting unit is less than the carrying amount, then performing the two-step impairment test is unnecessary. The changes are effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011.  The adoption of this guidance on January 1, 2012 did not have a material effect on the Company’s consolidated financial statements.

In December 2011, the FASB issued an update on comprehensive income, which pertains to the deferral of the effective date for amendments to the presentation of reclassification of items out of accumulated other comprehensive income in a previous accounting standard update that pertained to the presentation of comprehensive income. The update defers the presentation on the face of the financial statements the effects of reclassifications out of accumulated other comprehensive income on the components of net income and other comprehensive income for all periods. All other requirements of the previous accounting standard on the presentation of comprehensive income, issued in June 2011, are not affected. The previous presentation related to the comprehensive income standard required that entities report components of comprehensive income in either a continuous statement of comprehensive income or two separate but consecutive statements. Under the continuous statement approach, the statement would include the components and total of net income, the components and total of other comprehensive income and the total of comprehensive income. Under the two statement approach, the first statement would include the components and total of net income and the second statement would include the components and total of other comprehensive income and the total of comprehensive income. It does not change the items that must be reported in other comprehensive income and it is effective retrospectively for interim and annual periods beginning after December 15, 2011, with early adoption permitted. The Company adopted the update on January 1, 2012 resulting in no impact to the Company’s consolidated balance sheets, statements of income and cash flows.

XML

Summary of Selected Significant Accounting Policies.

6 Months Ended

Jun. 30, 2012

Summary of Selected Significant Accounting Policies.

Summary of Selected Significant Accounting Policies.

6.Summary of Selected Significant Accounting Policies.

(a)Revenue recognition-Casino revenue is defined as the net win from gaming activities, which is the difference between gaming wagers and the amount paid out to patrons, and is recognized on the day it is earned. Revenues generated from ancillary services, including lodging, sales of food, beverage, cigarettes, and casino logo merchandise are recognized at the time the related services are performed and represent, on an individual basis, less than three percent of total revenues.

(b)Earnings per share- Basic earnings per common share are computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per common share incorporate the dilutive effect of common stock equivalents on an average basis during the period. The Company’s common stock equivalents currently include stock options, warrants and deferred compensation stock. Thus, unexercised stock options to purchase up to 662,425 and 838,025 shares as of June 30, 2012 and June 30, 2011, respectively, were included in the computation of diluted earnings per common share, if such unexercised stock options were “in-the-money” and vested. Warrants to purchase up to 75,000 shares were also included, if they were “in-the-money” and vested. In addition, 149,654 and 51,538 issuable shares, as of June 30, 2012 and June 30, 2011, respectively, under the Company’s Deferred Compensation Plan were also included in the computation.

A table illustrating the impact of dilution on earnings per share, based on the treasury stock method, is presented below:

	(UNAUDITED)
	For the Six Months Ended				For the Three Months Ended
(amounts in thousands, except for	June 30,				June 30,
share information)	2012		2011		2012		2011
Basic Earnings Per Share:
Net earnings	$	749	$	1,337	$	246	$	894
Weighted average common shares	8,871,635		8,871,640		8,871,635		8,871,640
Basic earnings per share	$	0.08	$	0.15	$	0.03	$	0.10
Diluted Earnings Per Share:
Net earnings	$	749	$	1,337	$	246	$	894
Weighted average common shares	8,871,635		8,871,640		8,871,635		8,871,640
Addition due to the effect of dilutive securities:
Stock options and warrants (1)	10,038				10,038
Stock issuable under the Deferred Compensation Plan	149,654		51,538		149,654		51,538
Dilutive potential weighted average common shares	9,031,327		8,923,178		9,031,327		8,923,178
Diluted earnings per share	$	0.08	$	0.15	$	0.03	$	0.10

(1) Per the treasury stock method.

(c)Goodwill- Goodwill represents the excess of the cost of the Company’s Czech subsidiaries over the fair value of their net assets at the date of acquisition, which consisted of the Ceska and Rozvadov casinos and the land in Hate, which is currently, the Route 59 Casino. Goodwill is subject to at least an annual assessment for impairment, applying a fair-value based test. The Company has allocated the goodwill over two reporting units that are components of the operating segment “Czech subsidiaries” and are classified as the “German reporting unit” which consists of the Ceska and Rozvadov casinos, and the “Austrian reporting unit” which consists of the Route 55 and Route 59 casinos and the Hotel Savannah. Despite the sale of the Rozvadov property in July 2012, there was no impact on goodwill since goodwill associated with the German reporting unit was all assigned to Ceska.  The impairment assessment requires the Company to compare the fair value of its two reporting units to their respective carrying values to determine whether there is an indication that an impairment exists. The fair value of the two reporting units were determined through a combination of recent appraisals of the Company’s real property and a multiple of earnings before interest, taxes, depreciation and amortization (“EBITDA”), which was based on the Company’s experience and data from independent, third parties. As required, the Company performed its required annual fair-value based testing of the carrying value of goodwill related to its two reporting units at September 30, 2011, and determined that goodwill was not impaired. The Company will perform its required annual assessment of goodwill during the third quarter of 2012. There were no indicators of impairment present during the interim periods following the annual testing date, therefore the Company determined that there was no impairment of goodwill at June 30, 2012.

(d)Discontinued Operations / Assets Held for Sale-The Company’s assets held for sale are reported separately on the condensed consolidated balance sheets by class of asset and/or liability, and these new line items are reclassified on the financial statements (Balance Sheets) for the prior year(s). The net income or loss from the operations of the assets held for sale are reported separately on the Income Statement, located below Income from Continuing Operations; and similar to the Balance Sheets presentation, the prior year(s) are also reclassified.

(e)Property and Equipment- Property and equipment is stated at cost less accumulated depreciation and amortization.  TWC capitalizes the cost of improvements that extend the life of the asset and expenses maintenance and repair costs as incurred.  The Company provides for depreciation and amortization using the straight-line method over the following estimated useful lives:

Asset	Estimated Useful Life
Building and improvements	5-50 years
Furniture, fixtures and other equipment	4-12 years

At June 30, 2012 and December 31, 2011, property and equipment consisted of the following:

	As of June 30, 2012			As of December 31, 2011
	(unaudited)
Land	$	2,467		$	2,498
Building and improvements	28,230			29,418
Furniture, fixtures and other equipment	11,608			12,260
	42,305			44,176
Less accumulated depreciation and amortization	(11,100		)	(11,108		)
	$	31,205		$	33,068

(f)Impairment for long-lived assets-The Company periodically evaluates whether current facts or circumstances indicate that the carrying value of its depreciable assets to be held and used are recoverable. If such circumstances are determined to exist, an estimate of undiscounted future cash flows produced by the long-lived assets, or the appropriate grouping of assets, is compared to the carrying value to determine whether an impairment exists. If an asset is determined to be impaired, the loss is measured based on the difference between the asset’s fair value and its carrying value. An estimate of the asset’s fair value is based on quoted market prices in active markets, if available. If quoted market prices are not available, the estimate of fair value is based on various valuation techniques, including a discounted value of estimated future cash flows. The Company reports an asset to be disposed of at the lower of its carrying value or its estimated net realizable market value. There were no impairment losses for long-lived assets recorded for the six months ended June 30, 2012.

(g)Foreign currency translation- Foreign subsidiaries whose functional currency is the local foreign currency, balance sheet accounts and cash flows are translated at exchange rates in effect at the end of each reporting period and resulting translation adjustments are included in “accumulated other comprehensive income (loss).” Statement of operations accounts are translated by applying the monthly averages of the daily exchange rates of one (1) USD dollar to one (1) CZK at the end of the respective month on the respective monthly local Czech statement of operations accounts for the period.

The impact of foreign currency translation on goodwill is presented below:

	Applicable	Goodwill
	Foreign Exchange	German		Austrian
As of June 30, 2012 (in thousands, except FX)	Rate (“FX”) (2)	reporting unit		reporting unit		Total
Residual balance, as of January 1, 2003 (in USD) (1)		USD	3,042	USD	537	USD	3,579
USD residual balance, translated at June 30, 1998 (date of acquisition) FX rate of:	33.8830	CZK	103,077	CZK	18,190	CZK	121,267
2003 CZK balance, translated to USD, at June 30, 2012 FX of:	20.6857	USD	4,983	USD	879	USD	5,862
Net increase to Goodwill		USD	1,941	USD	342	USD	2,283

(1)   Goodwill was amortized over 15 years until the Company started to comply with revised GAAP requirements, as of January 1, 2002. This balance represents the remaining, unamortized goodwill, after an impairment charge taken prior to January 1, 2003.

(2)   FX (interbank) rates taken from www.Oanda.com.

(h)Stock-based compensation-The Company recognizes the fair value of stock-based compensation in the statement of operations. The fair value of the Company’s stock option awards are estimated using a Black-Scholes option valuation model. This model requires the input of highly subjective assumptions and elections including expected stock price volatility and the estimated life of each award.  In addition, the calculation of compensation costs requires that the Company estimate the number of awards that will be forfeited during the vesting period. The fair value of stock-based awards is amortized over the vesting period of the award.

(i)Comprehensive income (loss) — The Company’s change in the foreign currency translation adjustments is included in other comprehensive income (loss).

(j)Promotional allowances — Promotional allowances primarily consist of food and beverages (“F&B”) and, to certain of its valuable players, hotel accommodations, all of which are furnished gratuitously.  For the six months ended June 30, 2012 and 2011, revenues do not include the retail amount of F&B and hotel accommodations of $2,442 and $3,221, respectively, provided at no-charge to customers. The retail value of the F&B given away is determined by dividing the F&B costs charged to the gaming operation of $871 and $1,291, for the respective periods, by the average percentage of cost of F&B sold.  The cost of hotel accommodations is either the out-of-pocket expenses paid to other hotels or the retail charge of rooms at the Hotel Savannah. The promotional allowances are summarized below:

	(UNAUDITED)
	For the Six Months Ended						For the Three Months Ended
	June 30,						June 30,
(amounts in thousands)	2012			2011			2012			2011
Cost of gratuitous food and beverages (A)	$	871		$	1,291		$	284		$	624
Average cost of food and beverages sold (B)	35.9		%	40.2		%	38.3		%	38.9		%
Retail value of food and beverages (A/B)	$	2,426		$	3,211		$	742		$	1,604
Retail value of hotel accommodations	16			10			8			3
Total promotional allowances	$	2,442		$	3,221		$	750		$	1,607

(k)Czech gaming taxes — The majority of TWC’s revenues are derived from gaming operations in the Czech Republic, which were subject to, prior to January 1, 2012, only gaming taxes and charity taxes, while its non-gaming revenues, which were not material, were subject to correspondingly non-material corporate income tax liabilities under Czech law.

Gaming taxes were computed on gross gaming revenues, which were comprised of live (table) games and slot games revenues. For live game revenue, the applicable taxes and fees were: (i) a 10% administration tax; (ii) a 1% state supervision fee; and (iii) a charity “contribution” (i.e., a tax), herein referred to as the charity tax, for publicly beneficial, cultural, sporting and welfare purposes, according to a gross revenue formula specified by the Czech Ministry of Finance.

Charity taxes were also computed on the reported slot revenues of each of our three former slot subsidiary companies, ACC Slot, s.r.o., Hollywood Spin s.r.o. and LMJ Slot s.r.o., net of gaming taxes and fees. Therefore, for all gaming revenue, net of applicable taxes and fees, of up to CZK 50,000 (or $2,800 at the annualized daily exchange rate for 2011), a 6% charity tax applies; of up to CZK 100,000 (or $5,700 at the same exchange rate), an 8% rate applies; of up to CZK 500,000 (or $28,300 at the same exchange rate), a 10% rate applies; and of above the CZK 500,000 gaming revenue threshold, a 15% rate applies. For slot game revenue, the applicable assessment is the charity tax, net of local (municipality) administration and slot state-licensing fees.

Effective January 1, 2012, TWC merged its three Czech slot subsidiary companies, ACC Slot, s.r.o., Hollywood Spin s.r.o. and LMJ Slot s.r.o. into its primary Czech operating entity company, American Chance Casinos a.s., in an effort to eliminate and/or reduce redundancy in operations, maintenance and operating costs.

Effective January 1, 2012, the charity taxes have been eliminated in lieu of the New Gaming Tax on all live game and slot revenues, as well as an applicable corporate income tax on adjusted Czech net income, net of exemptions.  Additionally, the administration tax and state supervision fee have been eliminated in lieu of minor license renewal fees. A summary of the changes is summarized in the following table:

		New Gaming Tax Law *
	Pre-2012 Gaming Tax Law	(effective January 1, 2012)
Live Games:	10% Gaming Tax from Win (administration fee); 1% Gaming Tax from Win (state supervision); 6-15% Charity Tax from Win, net of Gaming Taxes (the Charity Tax rate is based on tiered revenue thresholds).	20% Gaming Tax from Win (70% of receipt to state; 30% to municipal).
Slots:	16,000 CZK (or $800) License per machine, per every 6 months; 1,000 CZK (or $50) Municipality Fee per machine, per quarter; 6-15% Charity Tax from Win, net of License and Municipality fees (the Charity Tax rate is based on tiered revenue thresholds).	20% Gaming Tax from Win (20% of receipt to state; 80% to municipal); 55 CZK (or $3) Gaming Tax per Machine, per Day.
Net Income	No corporate income tax.	19% corporate income tax on adjusted net income, net of exemptions.

* The new Gaming Tax is to be paid quarterly, while corporate income tax obligation is to be paid in June of the subsequent year.

Gaming taxes payable for year 2011 were due and paid to the Czech Ministry of Finance in April 2012, while charity taxes payable, despite having no stated due dates, were paid as mutually agreed with the charities, customarily by May of the subsequent year. The Company was permitted to allocate this charity contribution to local schools, sports clubs, subsidized or volunteer organizations, or municipalities in which each of the Company’s casinos operate. The distribution was subject to the prior approval of the Czech Ministry of Finance. The New Gaming Tax is payable at the end of each quarter. The Company was in full compliance with all tax payment deadlines at June 30, 2012.

TWC’s gaming-related taxes and fees for the six and three months ended June 30, 2012 and 2011 are summarized in the following table:

	For the Six Months Ended						For the Three Months Ended
	June 30,						June 30,
(amounts in thousands)	2012			2011			2012			2011
Gaming revenues	$	16,044		$	16,613		$	7,481		$	8,731
Gaming taxes, live games and slots	3,342			783			1,578			401
Charity taxes (eliminated in 2012)				1,447						758
Licensing fees (eliminated in 2012) (1)	283			357			139			190
Total gaming taxes and fees	$	3,625		$	2,587		$	1,717		$	1,349
as % of gaming revenue (2)	22.6		%	15.6		%	23.0		%	15.4		%

(1) As the non-refundable, six-month licensing fees effective for January 2012 through June 2012 were paid in October 2011, prior to the passing of the New Gaming Tax laws in December 2011, the Company incurred additional fees for the first six months of 2012.  Excluding the non-recurring licensing fees, the gaming taxes for the three and six months of 2012 would have been 21.1% and 20.8% of gaming revenues, respectively.

(2) The tax percentages in 2012 vary slightly from the 20% flat rate, due to minor administrative fees.

In conformity with the European Union (“EU”) taxation legislation, when the Czech Republic joined the EU in 2004, its VAT increased from 5% to 22%, from January 2004 through December 2009, and ranged between 9% and 19% for all intra-EU generated purchases. Beginning January 1, 2010, VAT rates increased to between 10% and 20%. All non-EU generated purchases were impacted by identical VAT increases, beginning in May 2004. The Company pays its VAT directly to its vendors in connection with any purchases that are subject to this tax. Unlike in other industries, VATs are not recoverable for gaming operations. The recoverable VAT under the Hotel Savannah operation was non-material for the six and three months ended June 30, 2012 and 2011.

On February 28, 2012, TWC transferred the ownership of its fully-owned Czech subsidiary, Trans World Hotels, s.r.o., which owns the Hotel Savannah, to TWC’s primary Czech subsidiary, American Chance Casinos a.s., in an effort to consolidate and reduce redundancy and maintenance costs.

(l)Income taxes — Deferred income tax assets and liabilities are computed for differences between the financial statement and the tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income.  Valuation allowances are established, when necessary, to reduce deferred income tax assets to the amount expected to be realized.  Accounting for income taxes prescribes, among other things, a recognition threshold and measurement attributes for the financial statement recognition and measurement of uncertain tax positions taken or expected to be taken in a company’s income tax return. Accounting for income taxes utilizes a two-step approach for evaluating uncertain tax positions. Step One, or recognition, requires a company to determine if the weight of available evidence indicates a tax position is more likely than not to be sustained upon audit, including resolution of related appeals or litigation processes, if any. Step Two, or measurement, is based on the largest amount of benefit, which is more likely than not to be realized on settlement with the taxing authority. The Company is subject to income tax examinations by major taxing authorities for all tax years subsequent to 2008. The adoption of the provisions of the FASB standard, “Accounting for Income Taxes” did not have a material impact on the Company’s consolidated financial statements. However, management’s conclusions regarding this policy may be subject to review and adjustment at a later date based on factors including, but not limited to, on-going analyses of and changes to tax laws, regulation and interpretations, thereof.  During the six-month period ended June 30, 2012, the Company recognized no adjustments for uncertain tax positions.

Effective January 1, 2012, the Czech government instituted an effective corporate income tax, currently at 19.0%, on gaming revenues, which prior to the law changes were subject only to gaming taxes.  As a result of the new tax laws and due to the potential and material income tax liability, the Company accrued an estimated income tax liability of $309 and $684 for the three and six months ended June 30, 2012, respectively.  Corporate income tax is payable by June of the subsequent year.

(m)Recently issued and adopted accounting standards:

In September 2011, the FASB amended the authoritative guidance regarding the testing for Goodwill Impairment. Under the amendments, an entity has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of events or circumstances, an entity determines it is not more likely than not that the fair value reporting of a reporting unit is less than the carrying amount, then performing the two-step impairment test is unnecessary. The changes are effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011.  The adoption of this guidance on January 1, 2012 did not have a material effect on the Company’s consolidated financial statements.

In December 2011, the FASB issued an update on comprehensive income, which pertains to the deferral of the effective date for amendments to the presentation of reclassification of items out of accumulated other comprehensive income in a previous accounting standard update that pertained to the presentation of comprehensive income. The update defers the presentation on the face of the financial statements the effects of reclassifications out of accumulated other comprehensive income on the components of net income and other comprehensive income for all periods. All other requirements of the previous accounting standard on the presentation of comprehensive income, issued in June 2011, are not affected. The previous presentation related to the comprehensive income standard required that entities report components of comprehensive income in either a continuous statement of comprehensive income or two separate but consecutive statements. Under the continuous statement approach, the statement would include the components and total of net income, the components and total of other comprehensive income and the total of comprehensive income. Under the two statement approach, the first statement would include the components and total of net income and the second statement would include the components and total of other comprehensive income and the total of comprehensive income. It does not change the items that must be reported in other comprehensive income and it is effective retrospectively for interim and annual periods beginning after December 15, 2011, with early adoption permitted. The Company adopted the update on January 1, 2012 resulting in no impact to the Company’s consolidated balance sheets, statements of income and cash flows.

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Summary of Selected Significant Accounting Policies. (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012 item	Jun. 30, 2011	Jun. 30, 2012 item	Jun. 30, 2011	Dec. 31, 2011
Revenue recognition
Maximum revenues generated from ancillary services as a percentage of total revenues			3.00%
Earnings per share
Outstanding share-based options which could be included in diluted EPS (in shares)	662,425	838,025	662,425	838,025
Outstanding warrants which could be included in diluted EPS (in shares)			75,000	75,000
Basic Earnings Per Share:
Net earnings	$ 246	$ 894	$ 749	$ 1,337
Weighted average common shares	8,871,635	8,871,640	8,871,635	8,871,640
Basic earnings per share (in dollars per share)	$ 0.03	$ 0.10	$ 0.08	$ 0.15
Diluted Earnings Per Share:
Net earnings	246	894	749	1,337
Weighted average common shares	8,871,635	8,871,640	8,871,635	8,871,640
Addition due to the effect of dilutive securities:
Stock options and warrants (in shares)	10,038		10,038
Stock issuable under the Deferred Compensation Plan (in shares)	149,654	51,538	149,654	51,538
Dilutive potential weighted average common shares	9,031,327	8,923,178	9,031,327	8,923,178
Diluted earnings per share (in dollars per share)	$ 0.03	$ 0.10	$ 0.08	$ 0.15
Goodwill
Number of reporting units over which goodwill has been allocated	2		2
Property and Equipment
Property and equipment, gross	42,305		42,305		44,176
Less accumulated depreciation and amortization	(11,100)		(11,100)		(11,108)
Property and equipment, net	31,205		31,205		33,068
Land
Property and Equipment
Property and equipment, gross	2,467		2,467		2,498
Building and improvements
Property and Equipment
Property and equipment, gross	28,230		28,230		29,418
Building and improvements | Minimum
Property and Equipment
Estimated Useful Life			5 years
Building and improvements | Maximum
Property and Equipment
Estimated Useful Life			50 years
Furniture, fixtures and other equipment
Property and Equipment
Property and equipment, gross	$ 11,608		$ 11,608		$ 12,260
Furniture, fixtures and other equipment | Minimum
Property and Equipment
Estimated Useful Life			4 years
Furniture, fixtures and other equipment | Maximum
Property and Equipment
Estimated Useful Life			12 years

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Commitments and Contingencies. (Details 2) (USD $)	6 Months Ended
	Jun. 30, 2012
401(k) and Profit Sharing Plan
401(k) Employee contribution, maximum (as a percent)	16.50%
401(k) Employer match	$ 0.60
Mr. Rami S. Ramadan
Commitments and Contingencies
Perpetually renewable employment term	1 year
Annual base compensation payable for the remainder of the year 2012	$ 225,000

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Summary of Selected Significant Accounting Policies. (Tables)

6 Months Ended

Jun. 30, 2012

Summary of Selected Significant Accounting Policies.

Schedule of impact of dilution on earnings per share, based on the treasury stock method

	(UNAUDITED)
	For the Six Months Ended				For the Three Months Ended
(amounts in thousands, except for	June 30,				June 30,
share information)	2012		2011		2012		2011
Basic Earnings Per Share:
Net earnings	$	749	$	1,337	$	246	$	894
Weighted average common shares	8,871,635		8,871,640		8,871,635		8,871,640
Basic earnings per share	$	0.08	$	0.15	$	0.03	$	0.10
Diluted Earnings Per Share:
Net earnings	$	749	$	1,337	$	246	$	894
Weighted average common shares	8,871,635		8,871,640		8,871,635		8,871,640
Addition due to the effect of dilutive securities:
Stock options and warrants (1)	10,038				10,038
Stock issuable under the Deferred Compensation Plan	149,654		51,538		149,654		51,538
Dilutive potential weighted average common shares	9,031,327		8,923,178		9,031,327		8,923,178
Diluted earnings per share	$	0.08	$	0.15	$	0.03	$	0.10

(1) Per the treasury stock method.

Schedule of estimated useful lives of property and equipment

Asset	Estimated Useful Life
Building and improvements	5-50 years
Furniture, fixtures and other equipment	4-12 years

Schedule of property and equipment

	As of June 30, 2012			As of December 31, 2011
	(unaudited)
Land	$	2,467		$	2,498
Building and improvements	28,230			29,418
Furniture, fixtures and other equipment	11,608			12,260
	42,305			44,176
Less accumulated depreciation and amortization	(11,100		)	(11,108		)
	$	31,205		$	33,068

Schedule of impact of foreign currency translation on goodwill

	Applicable	Goodwill
	Foreign Exchange	German		Austrian
As of June 30, 2012 (in thousands, except FX)	Rate (“FX”) (2)	reporting unit		reporting unit		Total
Residual balance, as of January 1, 2003 (in USD) (1)		USD	3,042	USD	537	USD	3,579
USD residual balance, translated at June 30, 1998 (date of acquisition) FX rate of:	33.8830	CZK	103,077	CZK	18,190	CZK	121,267
2003 CZK balance, translated to USD, at June 30, 2012 FX of:	20.6857	USD	4,983	USD	879	USD	5,862
Net increase to Goodwill		USD	1,941	USD	342	USD	2,283

(1)   Goodwill was amortized over 15 years until the Company started to comply with revised GAAP requirements, as of January 1, 2002. This balance represents the remaining, unamortized goodwill, after an impairment charge taken prior to January 1, 2003.

(2)   FX (interbank) rates taken from www.Oanda.com.

Promotional allowances

	(UNAUDITED)
	For the Six Months Ended						For the Three Months Ended
	June 30,						June 30,
(amounts in thousands)	2012			2011			2012			2011
Cost of gratuitous food and beverages (A)	$	871		$	1,291		$	284		$	624
Average cost of food and beverages sold (B)	35.9		%	40.2		%	38.3		%	38.9		%
Retail value of food and beverages (A/B)	$	2,426		$	3,211		$	742		$	1,604
Retail value of hotel accommodations	16			10			8			3
Total promotional allowances	$	2,442		$	3,221		$	750		$	1,607

Summary of changes in gaming tax law

		New Gaming Tax Law *
	Pre-2012 Gaming Tax Law	(effective January 1, 2012)
Live Games:	10% Gaming Tax from Win (administration fee); 1% Gaming Tax from Win (state supervision); 6-15% Charity Tax from Win, net of Gaming Taxes (the Charity Tax rate is based on tiered revenue thresholds).	20% Gaming Tax from Win (70% of receipt to state; 30% to municipal).
Slots:	16,000 CZK (or $800) License per machine, per every 6 months; 1,000 CZK (or $50) Municipality Fee per machine, per quarter; 6-15% Charity Tax from Win, net of License and Municipality fees (the Charity Tax rate is based on tiered revenue thresholds).	20% Gaming Tax from Win (20% of receipt to state; 80% to municipal); 55 CZK (or $3) Gaming Tax per Machine, per Day.
Net Income	No corporate income tax.	19% corporate income tax on adjusted net income, net of exemptions.

* The new Gaming Tax is to be paid quarterly, while corporate income tax obligation is to be paid in June of the subsequent year.

Schedule of gaming-related taxes and fees

	For the Six Months Ended						For the Three Months Ended
	June 30,						June 30,
(amounts in thousands)	2012			2011			2012			2011
Gaming revenues	$	16,044		$	16,613		$	7,481		$	8,731
Gaming taxes, live games and slots	3,342			783			1,578			401
Charity taxes (eliminated in 2012)				1,447						758
Licensing fees (eliminated in 2012) (1)	283			357			139			190
Total gaming taxes and fees	$	3,625		$	2,587		$	1,717		$	1,349
as % of gaming revenue (2)	22.6		%	15.6		%	23.0		%	15.4		%

(1) As the non-refundable, six-month licensing fees effective for January 2012 through June 2012 were paid in October 2011, prior to the passing of the New Gaming Tax laws in December 2011, the Company incurred additional fees for the first six months of 2012.  Excluding the non-recurring licensing fees, the gaming taxes for the three and six months of 2012 would have been 21.1% and 20.8% of gaming revenues, respectively.

(2) The tax percentages in 2012 vary slightly from the 20% flat rate, due to minor administrative fees. 

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Discontinued Operations (Tables)

6 Months Ended

Jun. 30, 2012

Discontinued Operations.

Schedule of detail of the net assets held for sale

	At		At
(amounts in thousands)	June 30, 2012		December 31, 2011
Assets:
Land	$	30	$	32
Building	792		839
FF&E	16		29
Total assets	838		900
Liabilities related to assets held for sale	100		207
Net assets held for sale	$	738	$	693

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Commitments and Contingencies. (Tables)

6 Months Ended

Jun. 30, 2012

Commitments and Contingencies.

Schedule of future aggregate minimum annual rental payments for the next three years

Twelve Months Ending June 30,
2013	$	86
2014	$	88
2015	$	22

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Nature of Business (Details)	6 Months Ended
	Jun. 30, 2012
Nature of Business
Number of casinos owned and operated	3
Number of casinos and nightclubs managed under contract	1
Ceska
Nature of Business
Number of gaming tables	15
Number of slot machines	80
Route 55
Nature of Business
Number of gaming tables	23
Number of slot machines	124
Route 59
Nature of Business
Number of gaming tables	23
Number of slot machines	114
Hotel Savannah
Nature of Business
Number of rooms	77
Number of banquet halls	8
Grand Casino Lav
Nature of Business
Management contract term	10 years

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Commitments and Contingencies. (Details 4) In Thousands, unless otherwise specified	6 Months Ended		1 Months Ended
	Jun. 30, 2012 State of Hungary	Jun. 30, 2012 KCB State of Hungary hearing	Jan. 31, 2011 KCB Alleged breach of contract USD ($)	Jan. 31, 2011 KCB Alleged breach of contract HUF	Jan. 31, 2011 KCB Alleged claim of non-compliance USD ($)	Jan. 31, 2011 KCB Alleged claim of non-compliance HUF
Commitments and Contingencies
Penalty demanded			$ 4,500	900,000		864,500
Interest demanded						380,400
Aggregate penalty and interest demanded					$ 6,220
Number of hearings held for suit filed against the State of Hungary, represented by the MOE		1
Taxing Jurisdiction
Gaming tax applicable on all live game and slot revenues (as a percent)	20.00%
Corporate income tax on adjusted net income (as a percent)	19.00%

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 643	$ 1,215
Adjustments to reconcile net income to net cash provided by operating activities:
Gain from assets disposal	(6)
Depreciation and amortization	904	1,127
Stock options expense	67	70
Warrants issued for services		8
Deferred board fees	5	5
Changes in operating assets and liabilities:
Prepaid expenses and other current assets	334	354
Deposits and other assets	629	170
Accounts payable	(166)	143
Interest payable	(12)	(11)
Czech tax accrual	(1,005)	(1,397)
Accrued expenses and other current liabilities	(548)	27
NET CASH PROVIDED BY OPERATING ACTIVITIES	845	1,711
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment	(359)	(463)
Proceeds from assets disposal	24
Investment into Hotel Savannah and the Spa	(25)	(44)
Repayment on notes receivable	63
NET CASH USED IN INVESTING ACTIVITIES	(297)	(507)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from credit facility	1,806	1,134
Principal payments of long-term debt	(2,173)	(2,001)
NET CASH USED IN FINANCING ACTIVITIES	(367)	(867)
EFFECT OF EXCHANGE RATE CHANGES ON CASH	(814)	122
NET INCREASE (DECREASE) IN CASH	(633)	459
CASH:
Beginning of period	5,636	2,621
End of period	5,003	3,080
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for interest	144	197
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Property and equipment acquired via accounts payable	8	83
Deferred compensation to be paid in common stock	$ 260

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Liquidity.

6 Months Ended

Jun. 30, 2012

Liquidity.

Liquidity.

5.Liquidity.

As of June 30, 2012, the Company had a working capital deficit of $829, as compared to the working capital deficit of $2,170 at December 31, 2011.  Net cash provided by operations for the six months ended June 30, 2012 was $845 versus $1,711 for the same prior year period.

As of June 30, 2012, the Company had fully drawn down its credit facility’s limit of Czech Koruna (“CZK”) 35,000.  The credit line matures on November 4, 2012, while the amortized loan matures on November 4, 2013.  The Company expects to pay a quarterly payment of $378 each at the end of August and November of 2012 and February and May of 2013, to repay the amortized loan.  The Company expects to repay both loan and line of credit on or before their dates of maturity and was in full compliance with the credit facility’s financial covenants at June 30, 2012.

The Company’s management believes that its cash resources at June 30, 2012, in addition to the anticipated cash to be provided by existing operations, will be sufficient to satisfy its accounts payable and other current obligations and to fund its operating activities for the next twelve months.

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Commitments and Contingencies. (Details 3) In Thousands, unless otherwise specified			1 Months Ended			1 Months Ended				1 Months Ended				6 Months Ended
	Jun. 30, 2012 USD ($)	Dec. 31, 2011 USD ($)	Aug. 31, 2009 IMT ACC USD ($)	Jun. 30, 2012 IMT ACC USD ($)	Mar. 31, 2011 IMT ACC As adjusted	Jan. 31, 2007 GHL USD ($) eurodenominatedloan	Jan. 31, 2007 GHL EUR (€)	Jun. 30, 2012 GHL USD ($) demandnote	Jun. 30, 2012 GHL EUR (€)	Aug. 31, 2009 KCB USD ($)	Aug. 31, 2009 KCB EUR (€)	Jun. 30, 2012 KCB ACC USD ($)	Nov. 30, 2010 KCB ACC As adjusted	Jun. 30, 2012 KCB IMT ACC USD ($)	Jun. 30, 2012 KCB IMT ACC EUR (€)
Notes receivable
Number of Euro-denominated loans						3	3
Notes receivable						$ 1,200	€ 967
Amount of notes receivable from the related party	923	413						923	706
Number of unexercised demand notes								8	8
Equity interest (as a percent)										25.00%	25.00%
Term of loans receivable										3 years	3 years
Loans receivable interest rate (as a percent)										1.00%	1.00%
Advance receivable										1,300	930	1,200
Debt instrument term			3 years
Loans payable interest rate (as a percent)			2.1505%		1.00%								1.00%
Loan payable			1,200	1,150
Loan payable, amount cancelled in the event of related party default														$ 1,200	€ 930