4. 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 or product sales, including hotel lodging, sales of food, beverage, cigarettes, and casino logo merchandise are recognized at the time the related services are performed or the products are sold and represent, on an aggregate basis, less than ten 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, restricted stock, and deferred compensation stock. Thus, unexercised stock options to purchase up to 522,325 and 660,325 shares as of June 30, 2014 and June 30, 2013, respectively, were included in the computation of diluted earnings per common share, if such unexercised stock options were “in-the-money” and vested. Warrants and restricted stock to purchase up to an aggregate of 150,000 shares were also included, if they were “in-the-money” and vested. In addition, 310,740 and 224,762 issuable shares, as of June 30, 2014 and June 30, 2013, 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)	2014		2013		2014		2013
Basic Earnings Per Share:
Net income	$	1,133	$	673	$	647	$	405

Weighted average common shares	8,809,663		8,826,904		8,809,435		8,825,343

Basic earnings per share	$	0.13	$	0.08	$	0.07	$	0.05

Diluted Earnings Per Share:
Net income	$	1,133	$	673	$	647	$	405

Weighted average common shares	8,809,663		8,826,904		8,809,435		8,825,343

Addition due to the effect of dilutive securities:
Stock options, warrants and restricted stock (1)	6,923		18		6,923		18
Stock issuable under the Deferred Compensation Plan	310,740		224,762		310,740		224,762

Dilutive potential common shares	9,127,326		9,051,684		9,127,098		9,050,123

Diluted earnings per share	$	0.12	$	0.07	$	0.07	$	0.04

(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 casino and a parcel of land in Hate (upon a portion of which the Route 59 Casino and Hotel Savannah and the Spa are situated). Goodwill is subject to at least an annual assessment for impairment, applying a fair-value based test. Goodwill impairment tests require the Company to first assess qualitative factors, which include macroeconomic conditions, financial performance, and industry and market considerations, to determine whether it is necessary to perform a two-step quantitative goodwill impairment test. TWC assesses the potential impairment of goodwill annually (as of September 30th) and on an interim basis whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Upon completion of such review, if impairment is found to have occurred, a corresponding charge will be recorded. TWC has allocated the goodwill over two geographical reporting units that are components of the operating segment “Czech subsidiaries” and are classified as the “German reporting unit” which consists of the Ceska casino and the “Austrian reporting unit” which consists of the land in Hate. There were no indicators of impairment present during the second quarter of 2014; therefore TWC determined that there was no impairment of goodwill at June 30, 2014. The Company expects to perform its next required annual assessment of goodwill during the third quarter of 2014. Changes to goodwill during the periods presented are strictly related to the fluctuation in foreign currency exchange rates.

(d) 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, 2014 and December 31, 2013, property and equipment consisted of the following:

	As of June 30, 2014			As of December 31, 2013
	(unaudited)
Land	$	2,687		$	2,714
Building and improvements	31,651			31,663
Furniture, fixtures and other equipment	11,468			11,333

	45,806			45,710
Less accumulated depreciation and amortization	(12,823		)	(12,246		)

	$	32,983		$	33,464

(e) Impairment of 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 may be 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. 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 ending June 30, 2014 and 2013.

(f) Foreign currency translation - The functional currency of foreign subsidiaries is the local foreign currency. Accordingly, balance sheet accounts are translated at exchange rates in effect at the end of each reporting period (with the exception of stockholders’ equity) and resulting translation adjustments are included in “accumulated other comprehensive income.” Income statement accounts are translated by applying the monthly averages of the daily exchange rates of one (1) US dollar (“USD”) to the Czech Koruna (“CZK”) on the respective monthly local Czech income statement 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, 2014 (in thousands, except FX)

Rate (“FX”) (2)

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

103,072

CZK

18,195

CZK

121,267

2003 CZK balance, translated to USD, at June 30, 2014 FX rate of:

20.1100

USD

5,125

USD

905

USD

6,030

Net cumulative change to goodwill due to foreign currency translation

USD

2,083

USD

368

USD

2,451

(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.

(g) Stock-based compensation - The Company recognizes the fair value of stock-based compensation in the condensed consolidated income statements. 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. There were no award expenses for the six months ended June 30, 2014 and 2013, respectively.

(h) Stock repurchase program - On November 12, 2013, TWC’s board of directors renewed the Company’s stock repurchase program (the “program”), in accordance with the retirement method, authorizing the repurchase of up to 500,000 shares of the Company’s Common Stock, over a 12-month period ending November 12, 2014. The program does not obligate the Company to acquire any particular amount of common stock, and it could be modified, extended, suspended or discontinued at any time.

The repurchase transactions for the six months ended June 30, 2014 are listed in the table below:

ISSUER PURCHASES OF EQUITY SECURITIES

Date	Total Number of Shares Purchased	Average Price Paid per Share		Cumulative Total of Number of Shares Purchased as Part of Publicly Announced Plan	Maximum Number of Shares That May Yet Be Purchased Under the Plan or Program
As of 12/31/2013		$	2.80	61,500	438,500
01/09/2014	100	$	2.55	61,600	438,400
03/07/2014	300	$	3.01	61,900	438,100
03/12/2014	300	$	3.03	62,200	437,800

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

(j) Promotional allowances — Promotional allowances primarily consist of food and beverages (“F&B”) furnished gratuitously.

The promotional allowances for the three and six months ended June 30, 2014 and 2013 are summarized below:

	(UNAUDITED)
	For the Six Months Ended						For the Three Months Ended
	June 30,						June 30,
(amounts in thousands)	2014			2013			2014			2013

Cost of gratuitous F&B (A)	$	1,173		$	1,146		$	592		$	575
Average cost of F&B sold (B)	30.0		%	36.3		%	33.8		%	36.0		%

Retail value of F&B (A/B)	$	3,910		$	3,157		$	1,751		$	1,597

(k) Czech gaming taxes — The Gaming Tax Law is summarized in the following table:

Basis		Gaming Tax Law *

Live Games		20% Gaming Tax from live game revenue (70% of tax paid to the federal government; 30% paid to the local municipality).

Slots		20% Gaming Tax from slot revenue (20% of tax paid to the federal government; 80% paid to the local municipality);
		Fifty-five Korunas (or approximately three U.S. dollars) Gaming Tax per Slot Machine, per Day (paid to the federal government).

Net Income		19% corporate income tax on net income earned in the CZ, net of exemptions, as defined by CZ tax authorities (paid to the federal government).

* Gaming taxes are paid quarterly, by the 25th day following the end of a quarter, while estimated quarterly income tax payments were required commencing at the beginning of the third quarter of 2013, with the 2013 corporate income tax obligation paid by June 30, 2014. The Company currently pays estimated quarterly income taxes with its annual taxes due by June 30th of the next year.

TWC’s gaming-related taxes for the six and three months ended June 30, 2014 and 2013 are summarized in the following table:

	(UNAUDITED)
	For the Six Months Ended						For the Three Months Ended
(amounts in thousands)	2014			2013			2014			2013

Gaming revenues (live-game and slot only)	$	16,853		$	15,710		$	8,539		$	8,253

Gaming taxes on live games and slots	$	3,545		$	3,305		$	1,795		$	1,732
Gaming taxes as % of gaming revenue	21.0		%	21.0		%	21.0		%	21.0		%

In conformity with the European Union (“EU”) taxation legislation, VAT rates were 15% and 21%, depending on the product or services sold and/or received. 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 on expenses under the Hotel Savannah operation was non-material for the six and three months ended June 30, 2014 and 2013, respectively.

(l) Income taxes — The Company complies with accounting and reporting requirements with respect to accounting for U.S. federal and foreign income taxes, which require an asset and liability approach to financial accounting and reporting for 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. In accordance with GAAP, the Company is required to determine whether a tax position of the Company is more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The tax benefit to be recognized is measured as the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. De-recognition of a tax benefit previously recognized could result in the Company recording a tax liability that would reduce net assets. This policy also provides guidance on thresholds, measurement, de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition that is intended to provide better financial statement comparability among different entities. The Company recognizes interest and penalties related to unrecognized tax benefits in interest expense and other expenses, respectively. 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, regulations and interpretations thereof. No interest expense or penalties have been recognized as of and for the six months ended June 30, 2014 and 2013, respectively. The Company is subject to income tax examinations by major taxing authorities for all tax years since 2011.

The Czech government instituted an effective corporate income tax of 19% on income derived from 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 material income tax liability, the Company incurred an estimated foreign income tax expense of $498 and $355 for the six months ended June 30, 2014 and 2013, respectively. Corporate income tax is payable by the end of June of the subsequent year. Effective since September 2013, the Company began making estimated quarterly corporate income tax payments.

(m) Recently issued and adopted accounting standards:

In March 2013, the FASB issued guidance on a parent’s accounting for the cumulative translation adjustment upon derecognition of a subsidiary or group of assets within a foreign entity. The guidance requires that the parent release any related cumulative translation adjustment into net income only if the sale or transfer results in the complete or substantially complete liquidation of the foreign entity in which the subsidiary or group of assets had resided. This guidance was effective prospectively for fiscal years beginning on or after December 15, 2013, and for interim periods within those fiscal years. The Company adopted the guidance on January 1, 2014, as required. There was no material impact on its consolidated financial statements resulting from the adoption.

In July 2013, the FASB issued guidance on the presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists, which requires that an unrecognized tax benefit, or portion of an unrecognized tax benefit, be presented as a reduction of a deferred tax asset for a net operating loss carryforward, a similar tax loss or a tax credit carryforward. If an applicable deferred tax asset is not available or a company does not expect to use the applicable deferred tax asset, the unrecognized tax benefit should be presented as a liability in the financial statements and should not be combined with an unrelated deferred tax asset. This guidance was effective for annual reporting periods, and interim periods within those years, beginning after December 15, 2013. This guidance should be applied prospectively to all unrecognized tax benefits that exist at the effective date; however retrospective application is permitted. The Company adopted the guidance on January 1, 2014, as required. There was no material impact on its consolidated financial statements resulting from the adoption.