Octavian Global Technologies, Inc. - FORM 10-K

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EX-21 - Octavian Global Technologies, Inc.	v179522_ex21.htm
EX-32.2 - Octavian Global Technologies, Inc.	v179522_ex32-2.htm
EX-31.1 - Octavian Global Technologies, Inc.	v179522_ex31-1.htm
EX-31.2 - Octavian Global Technologies, Inc.	v179522_ex31-2.htm
EX-32.1 - Octavian Global Technologies, Inc.	v179522_ex32-1.htm

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

(Mark One)

x ANNUAL REPORT UNDER SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2009

¨ TRANSITION REPORT UNDER SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________ to ______________

Commission File Number 333-146705

Octavian Global Technologies, Inc.

(Exact name of registrant as specified in its charter)

Nevada		01-895182
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

PMB #292, 502 E. John Street, Room E

Carson City, NV 89706

(Address of principal executive offices)

(44) 1483 543 543

Registrant’s telephone number, including area code:

Securities registered under Section 12(b) of the Exchange Act:

None.

Securities registered under Section 12(g) of the Exchange Act:

Common Stock, $0.001 par value per share

(Title of Class)

Check whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No x

Check whether the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. o No x

Check whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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 (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-K (§229.405 of this chapter) contained herein, and no disclosure will be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

Check whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer o		Accelerated Filer o

Non-accelerated Filer o		Smaller Reporting Company x
(Do not check if a smaller reporting company.)

Check whether the issuer is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

APPLICABLE ONLY TO CORPORATE REGISTRANTS

As of March 30, 2010, there were 10,751,378 shares of common stock, par value $.001, outstanding.

OCTAVIAN GLOBAL TECHNOLOGIES, INC.

FORM 10-K

FISCAL YEAR ENDED DECEMBER 31, 2009

Item Number in
Form 10-K		Page
	PART I
1	Business	1
1A.	Risk Factors	19
1B.	Unresolved Staff Comments	32
2.	Properties	32
3.	Legal Proceedings	33
4.	Submission of Matters to a Vote of Security Holders	33
	PART II
5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	33
6.	Selected Financial Data	36
7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	36
7A.	Quantitative and Qualitative Disclosure About Market Risk	49
8.	Financial Statements and Supplementary Data	49
9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	49
9A(T).	Controls and Procedures	49
9B.	Other Information	50
	PART III
10.	Directors, Executive Officers and Corporate Governance	50
11.	Executive Compensation	52
12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	54
13.	Certain Relationships and Related Transactions, and Director Independence	55
14.	Principal Accounting Fees and Services	61
	PART IV
15.	Exhibits, Financial Statement Schedules	61

THIS ANNUAL REPORT ON FORM 10-K CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934 AS AMENDED AND ARE SUBJECT TO RISKS, UNCERTAINTIES, AND OTHER FACTORS WHICH COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. SEE ITEM 1. "BUSINESS - A NOTE ABOUT FORWARD LOOKING STATEMENTS."

PART I

Item 1. Description of Business.

The following describes our business. Whenever the terms “our,” “we” and the “Company” are used in this Description of Business, they refer to one or more of the following: Octavian Global, Octavian International and all other direct and indirect subsidiaries of Octavian International identified in this annual report.

GENERAL

Background

The Company was incorporated in the State of Nevada on April 19, 2007 under the name House Fly Rentals, Inc. (“House Fly”), as a development stage company to create a web-based service that lists properties across multiple market areas that are available for rental. Immediately following the Share Exchange, as defined herein – “ Share Exchange and Related Transactions ,” House Fly purchased Octavian International Limited., a company incorporated in England and Wales and a wholly-owned subsidiary of House Fly, with House Fly being the parent corporation (the “Subsidiary Merger”). Immediately following the Subsidiary Merger, House Fly changed its name to Octavian Global Technologies, Inc. (“Octavian Global”).

Octavian International Limited

Octavian International Limited (“Octavian International”), our wholly-owned subsidiary, was incorporated in England and Wales on March 23, 2001 under the name Eachway Limited. On April 4, 2001, Octavian International’s name was changed to Octavian Projects Overseas Limited and then to its current name, Octavian International Limited, on May 11, 2001. Octavian International currently has the following directly or indirectly wholly-owned or controlled and consolidated operating subsidiaries:

Octavian de Argentina S.A. (formerly Argelink SA), a corporation formed under the laws of Argentina;

Casino Amusement Technology Supplies Limited (“CATS”), a corporation formed under the laws of England and Wales;

Octavian International (Europe) Limited, a corporation formed under the laws of England and Wales;

Octavian International (Latin America) Limited, a corporation formed under the laws of England and Wales;

Octavian Latin America SAS, a corporation formed under the laws of Colombia;

Octavian SPb Limited Partnership, a partnership formed under the laws of Russia;

Atlantis Limited Company, a limited company formed under the laws of Russia;

Octavian Rwanda Ltd., a company incorporated under the laws of the Republic of Rwanda.

Octavian Italy Srl, a company formed under the laws of Italy (50% owned);

Octavian Germany Limited, a corporation formed under the laws of England and Wales (51% owned); and

Octavian Germany GmbH, a wholly-owned subsidiary of Octavian Germany Limited and a corporation formed under the laws of Germany (51% owned).

Share Exchange and Related Transactions

On October 30, 2008, House Fly consummated a share exchange agreement by and among Octavian International, House Fly, Robert McCall and the shareholders of Octavian International (the “Share Exchange”). Prior to the Share Exchange, Robert McCall was the Company’s President, Chief Executive Officer, Chief Financial Officer, Secretary, Treasurer and sole Director; and Mr. McCall owned 44.4 percent of its issued and outstanding securities.

Pursuant to the terms of a repurchase agreement we entered into on October 30, 2008 (the “Repurchase Agreement”), House Fly repurchased all of Mr. McCall’s shares of our Company’s common stock, par value $0.001 per share (the “Common Stock”) for a total repurchase price of US$300,000. Immediately after the repurchase of these shares and pursuant to the terms of the Share Exchange: (1) the former shareholders of Octavian International received shares of our Common Stock in exchange for all of their Ordinary Shares of Octavian International, (2) Mr. McCall appointed Mr. Harmen Brenninkmeijer as a director of Octavian Global and (3) Mr. McCall resigned from his House Fly officer positions and from the House Fly board of directors. Immediately thereafter, Mr. Brenninkmeijer appointed Peter Moffitt and Peter Brenninkmeijer to the Company’s board and also appointed all of our current officers.

As a result of the Share Exchange, the Company experienced a change in control and ceased to be a shell company, Octavian International became its wholly-owned subsidiary, and the former shareholders of Octavian International became the owners of approximately 89 percent of the Company’s issued and outstanding shares of our Common Stock (prior to giving effect to the Private Placement, defined herein).

Concurrent with the closing of the Share Exchange, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with certain accredited investors and closed a private placement offering pursuant to which it raised gross proceeds of $13 million and, among other things, issued and sold convertible debentures (“Debentures”) with an aggregate principal amount of US$14,285,700 convertible into shares of the Company’s Common Stock (“Conversion Shares”) at an initial conversion price of US$3.10, subject to adjustment other than for the reverse stock split discussed below (the “Private Placement”). Additionally, investors in the Private Placement received Common Stock purchase warrants to purchase up to an aggregate of 4,193,548 shares of Common Stock (2,096,774 shares at an initial exercise price of $3.10 per share for 5 years and 2,096,774 shares at an initial exercise price of $4.65 per share for 7 years, which exercise prices and the number of shares exercisable thereunder are subject to adjustment other than for the Reverse Stock Split discussed below (the “Warrants”)) and an aggregate of 4,624,327 shares of Common Stock (the “Shares”, together with the Debentures and Warrants, are sometimes referred to hereafter as the “Private Placement Securities”). Austrian Gaming Industries GmbH (“AGI”), Octavian’s principal supplier of casino gaming machines and a holder of 35 percent of Octavian’s capital stock prior to the Share Exchange, participated in the Private Placement by investing US$5 million. The net proceeds received by Octavian Global after the payment of all offering expenses including, without limitation, legal fees, accounting fees and cash commissions paid to certain finders was US$10,199,812.64 (For a more detailed description of these fees, please see Section 13 titled “Certain Relationships and Related Transactions, and Director Independence – Private Placement,”).

On January 7, 2009, the Company effected a 1-for-5.0174 reverse split of our shares of Common Stock (the “Reverse Stock Split”). Except as otherwise noted, all references to the number of shares of our Common Stock throughout this annual report reflect the Reverse Stock Split.

Trademarks

All Octavian product names are trademarks of Octavian International, while all other product names are trademarks or registered trademarks of their respective owners. This annual report also contains trademarks, trade names and service marks of other companies, which are the property of their respective owners.

Our website is www.octavianinternational.com. The website is not part of this annual report. Our principal corporate executive offices are located at Bury House, 1 – 3 Bury Street, Guildford, Surrey GU2 4AW, UNITED KINGDOM and our telephone number is: +44 1483 543 543.

OUR COMPANY

We are a global provider of a full end-to-end suite of gaming systems and products. Our solutions offer full life-cycle gaming support and system solutions; the design, manufacture and marketing of computerized games; products for the lottery industry; and third party products. Our primary market focus is on emerging markets that we believe to be fast growing. We offer flexible, tailored, technical and operational support and solutions which, we believe, enable our customers to efficiently scale their operations over multiple locations.

Our products and services are provided through our four core business sectors: (1) OctaSystems; (2) OctaGames; (3) OctaLotto; and (4) OctaSupplies.

OctaSystems

Our OctaSystems business sector is comprised of two main products, our casino management system and our downloadable games systems.

Casino Management Systems

Octavian’s Symphony CE (Casino Edition) is a complete casino management system for slots and tables management either within a single casino or globally over multiple venues. This complete end-to-end solution covers all basic casino procedures: slots, tables, cash desk, registration, reception, security, loyalty, marketing and more. Symphony CE is designed to interface with the machines of virtually all other gaming manufacturers, as well as with other systems such as Point-of-Sale, signage and kiosks.

We provide a complete range of services from consulting, through design, procurement, installation, training and operational support for the management of casinos. Our extensive global infrastructure is both flexible and scaleable, providing customer support 24 hours a day and 7 days a week. We believe that the flexibility and scalability of a single system that manages both slots and tables and the levels of reporting and business intelligence that can be gained from this system distinguishes us from others in the gaming industry.

Symphony CE currently connects and supports approximately 7,800 machines worldwide, although prior to the closure of the Russian and Ukrainian markets in July 2009, over 30,000 machines were connected.

A primary benefit of our casino management system platform is that it allows casino operators the ability to control financial activities, allowing them to reduce the possibility of fraud and theft and comply with national or local legislation, that is increasingly being introduced in many countries. In addition, our systems have advanced data extraction and data warehouse capabilities to enable operators to generate reports that allow for an in-depth, real-time understanding of player profiles and business performance and to utilize data for targeted marketing campaigns across multiple locations. The control functions of the casino management system increase availability of machines and reduce down time by immediately identifying machines in need of service and notifying the operator’s service crew automatically. In our experience, developing such a networked gaming system is cost prohibitive for most medium to small operators. We believe that our competitive advantage is that we become an integral part of a gaming operator’s already existing information technology (“IT”) infrastructure, with the aim to increase efficiency and profitability.

Symphony CE (Casino Edition) – our end to end Casino Management System

Our most comprehensive system offering is our Symphony CE system. Symphony CE is our complete end to end system and covers and links together slot machines, gaming tables, the cash desk, player registration, reception, security, loyalty systems and marketing.

For clients that do not wish to have an end to end system but rather seek specific functions within our end to end system, we are able to deliver such functions modularly, from our end to end system and have the ability to ‘switch-on’ additional functionality of the Symphony CE system at a later point without major changes to the infrastructure. Our modular systems include Octavian ACP, Octavian GateManager™, Octavian CashManager™ and Octavian Business Intelligence Manager.

Octavian ACP - Our primary casino management systems for slot machines is Octavian ACP which we believe is a secure, highly flexible and reliable system with the capability to link machines from virtually all manufacturers, in multiple locations globally. The ACP platform, consisting of approximately 1.5 million lines of code that we regularly update, provides the following key ACP functions:

The Accounting Function: Provides all requested data from every linked machine, machine group, gaming hall and casino within the operator’s business. The system securely stores this data and transforms it into comprehensive reports and financial analysis. The key benefits to operators are the ability to:

Identify games that are the most popular with players;

Obtain real time information on the casino’s cash position;

Track all financial transactions; and

Eliminate time consuming manual processes of meter readings.

The Control Function: Performs detailed analysis of each machine and enhances system security. This function carries out real-time system diagnosis, including detection and identification of machine malfunctions, notification of unauthorized entry to any machine and monitoring of transmission links. Data can be customized easily to enable a variety of reporting functions and alerts. The key benefits to operators are the ability to quickly respond to machine malfunction to minimize downtime as well as to prevent fraud. In addition, the Control Function maintains a record of all attached systems, including status and physical locations, which is required by regulatory authorities in many jurisdictions.

The Progressives Function: Enables connected machines to be linked over multiple locations to both progressive and random or mystery jackpots, also known as a Wide Area Progressive (“WAP”) jackpot system. Jackpot groups can be configured locally or globally according to the operator’s precise business requirements. We believe that the ability to create WAPs increases the number of playing customers and operator revenues by offering bigger and better awards.

Symphony CE System Add-ons. Within Symphony CE we can also offer optional add-on features that enhance the functionality of the system such as cashless operations that allow players to use a pre-paid “Smart” or RFID card that enables players to play games to accumulate bonus points and gain automatic entry into a bonus jackpot draw, whilst this also allows operators Player Tracking and the ability to build strong profiles of their players and their habits and behaviour. TITO (Ticket In Ticket Out) is also available as an add-on to provide even more flexibility.

Octavian GateManager™. Octavian GateManager™ administers and reports player registration, guest services and activity on the gaming floor. It is a fully integrated player tracking system that captures player activity for a loyalty system. A loyalty system automatically enters players into sweepstakes such as jackpots and prize drawings or allows players to exchange accumulated points for cash or prizes, which we believe encourages players to return to our customers’ locations.

Octavian CashManager™. Octavian CashManager™ monitors transactions taking place in the casino gaming area and continuously updates player activity. Although not necessary, we believe that Octavian GateManager™ and Octavian CashManager™ work best when used alongside each other.

Octavian Business Intelligence Manager. Octavian Business Intelligence Manager is a data mining tool, which transforms transaction data into reports that provide operators with information on player behavior, player patterns, tables and slots actual and theoretical wins and jackpot drops, in order to assist with targeted marketing campaigns.

Symphony VE (VLT Edition)

The latest addition to the core Symphony framework infrastructure is Symphony VE (VLT Edition) which has been created as a response to the regulations of the Italian market, but which can be deployed in other similar markets. As well as providing flexible monitoring, accounting and reporting functions to control gaming machine operations, the Symphony VE system offers significant scope for business development through player tracking and wide-area multiple progressive jackpots, like Symphony CE

However, the system enables venues to offer games content from Octavian, as well as connect game servers which supply games from major games brands serving the market, via interfaces that ensure that all company sensitive material such as games math is not accessible to any other party other than the game originator. This allows a multitude of games to be run and updated on a single system, with lower ongoing maintenance.

Downloadable Game Systems

Symphony™ is our adaptable, scalable and cost-effective downloadable game system that meets the broadest range of gaming needs. We offer two versions of Symphony™: Symphony™ DE and Symphony™ LE.

Symphony™ DE offers a complete server-based platform for video lottery terminal projects, with the random number generator residing either on the server or gambling terminal dependent on customer and regulatory requirements or supplied from a 3rd party source. Supported by centralized audit, financial reporting and remote download of game content.

Symphony™ LE offers a complete integrated system for the management of electronic instant lottery tickets (pull-tabs and lottery type games), with a central-server providing series ticket storage, security event monitoring, financial reporting and downloadable game series content.

OctaSystems generated 33.7% of our consolidated revenues in the year ended December 31, 2009. As part of our business strategy, it is our goal to grow our OctaSystems business so that it comprises a significant percentage of our revenues going forward.

OctaGames

We have a portfolio of almost 100 games sold globally. We believe our OctaGames business has developed a reputation for developing games that are especially popular in emerging markets and known for their advanced graphics and attractive user interfaces. We support a wide variety of games which are tailored for electronic gaming machines (“EGMs”) and amusement with prizes machines (“AWPs”). EGMs are commonly known as slot machines and are casino gambling machines with three or more reels which spin when a button is pushed, while AWPs, which are popular in arcades, bars and restaurants throughout Europe, incorporate more limited payouts than slot machines with features that allow players to exercise some form of skill and strategy, such as video poker. We deliver our games through: (i) a complete machine with the games software installed on the board running on a terminal; (ii) game software installed on the board that can then be inserted into third party machines – Octavian game kits; or (iii) software form only, allowing a manufacturer to operate our games on its own games board. Our game kits are predominantly sold in the Italian market but are increasing in popularity in Latin America, especially Colombia and Argentina.

Previously, Octavian’s business strategy had included the development and sale of our own EGMs, the Maverick 1000. After no more than nominal sales of the “Maverick ®,” we decided to terminate our efforts to develop our own EGMs and continued to focus on the distribution of third party EGMs.Recently launched, the Maverick 3000 is an Octavian-branded version of the top-selling Novomatic FV 623 Gaminator® video slot cabinet with proven Novomatic hardware and Octavian games board and gaming content, together in one highly affordable package.

OctaGames generated 48.8% of our consolidated revenues in the year ended December 31, 2009. As part of our business strategy, it is our intention to grow our OctaGames business so that it comprises a significant percentage of our revenues going forward.

OctaLotto

Our OctaLotto business line has developed the SymphonyTM LE platform which provides lottery systems and solutions for state and local lotteries, especially in emerging markets. We develop systems and game content and provide complete end-to-end lottery solutions, from consulting and set-up, to systems implementation and supplier management, as well as marketing, training and ongoing support. The Symphony TM LE platform has been developed specifically for lottery, video lottery terminals and downloadable games operations. However, for each opportunity we look for the best-fit solution – considering other 3rd party solutions. Since December 2008 we have been operating a nationwide lottery for Rwanda for which we used a system supplied by Schenzhen G-Lot Technology Ltd., a Hong Kong based company (“G-Lot”).

Key benefits include:

A one-stop turnkey solution for existing and prospective lottery operators;

Innovative systems solutions to enable traditional lottery operators to sell tickets via networked gaming machines/video lottery terminals;

Related lottery products, such as traditional online games, mobile gaming, video lottery terminals and scratch cards;

The ability to provide wireless, mobile and Internet gaming products; and

Discrete services such as business and technology advice, training and mentoring, supplier management and ongoing lottery business development

We added the OctaLotto business sector to our core business in the fourth quarter 2008 following which we incorporated a new subsidiary, Octavian Rwanda Ltd, on February 26, 2009, to take advantage of a 10 year license for operating the national lottery of Rwanda.

OctaLotto generated 2.7% of our consolidated revenues in the year ended December 31, 2009. As part of our business strategy, it is not our intention to grow our OctaLotto business to any significant level going forward.

OctaSupplies

Our OctaSupplies business is a casino and amusement equipment supplier for game equipment and content as well as related services. We offer a full range of products from third-party manufacturers, including gaming machines and other innovative attractions and peripherals. The purchase of new devices in certain international markets is often costly, and where appropriate, we have started to recondition used devices for resale, which we sell on an “as is” basis.

During 2009, we offered products from the following third party suppliers:

Austrian Gaming Industries (a/k/a Novomatic)

We have distributed gaming products for AGI (a/k/a Novomatic) since 2001. The products we have distributed for AGI include Gaminator®, Multi-Gaminator® and Super-V+ Gaminator® (each of which is a multi-game solution that provides a choice of video games to the player). Distribution of AGI’s products have been targeted to selected markets, including substantially all countries in Latin America, other than Chile, Peru and Uruguay and the Commonwealth of Independent States (“CIS”), which includes Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Tajikistan, Turkmenistan, Uzbekistan and Ukraine.

International Game Technology (IGT)

We have distributed gaming products for International Game Technology (“IGT”) since 2005. The agreements to distribute IGT gaming machines (including slot machines and other video gaming terminals) in Russia and IGT EZ Pay® to selected markets across Europe, North Africa and the CIS expired in 2009. In October 2009 Octavian signed multiple agreements with IGT on behalf of the IGT/MGM/Bally cashless consortium. The agreements give Octavian its own licences to use the consortium's Cashless patents in the Octavian TITO product.

Until January 29, 2009 we had an agreement with TableMAX Holdings, LLC to distribute, install and support TableMAX Electronic Table Games systems globally, with the exclusion of the North American Free Trade Agreement member countries. That agreement has been terminated and we no longer have any rights or obligations under the agreement.

OctaSupplies generated 14.7% of our consolidated revenues in the year ended December 31, 2009. In the event that our business strategy to grow our OctaSystems and OctaGames businesses succeeds, our OctaSupplies business will continue to comprise a significantly lower percentage of our revenues going forward.

BUSINESS STRATEGY

Our current focus is to continue the growth of our proprietary systems and games business and reduce our reliance on offering third party products. Octavian has made significant investments over the past few years to develop our own innovative gaming products as well as systems infrastructure to provide hosted solutions. We intend to leverage these investments to produce a sustainable recurring revenue model with increased profitability.

We are currently executing the following initiatives to drive further expansion and profitability:

Expand our Operations Outside Russia. Following the imposition of significant restrictions on gaming in Russia from 1 July 2009, our growth strategy is to derive a significantly lower percentage of our revenues from Russia and from our OctaSupplies business. To date, we have been largely dependent on revenues generated from our operations in Russia, but we have worked to expand our operations in other markets and we continue to develop a more geographically diverse business in order to minimize our exposure to volatility in any one market.

Increase Proportion of Recurring Revenues and Long-Term Contracts. We have repositioned our business to increase our recurring revenue from our OctaSystems and OctaGames business lines. We plan to increase sales of our OctaSystems, and OctaGames products and services, as we believe that these will provide us a stronger base of recurring revenues, because of the higher margins that we recognize on these products and services. We believe this will provide a more predictable revenue stream with higher margins, improving financial viability, although we cannot assure you that we will be successful in achieving these results.

Increase Focus on Casino Management System. Currently we connect approximately 7,800 machines worldwide – almost 30,000 prior to the closure of the Russian and Ukrainian markets – and we believe that, based on internal market research, there is an estimated global market opportunity of at least two million machines that are still not linked to a casino management system that could benefit from our systems. Regulators in our target markets have recently signaled greater interest in instituting legislation that would require gaming machines to be electronically connected with a casino management system in order to ensure that all transactions and income are monitored, primarily for tax purposes. Because of our ability to connect other manufacturers’ products to our systems, our goal is to capture a greater market share of the gaming machines that are still offline. Our systems allow casino operators to link machines from multiple manufacturers, which we believe differentiates our service from others in the gaming industry. In addition, we believe that we are well equipped to provide gaming infrastructure for both large and small gaming customers.

Continue to Establish Long-Term Relationships with Casino and Amusement with Prize Machine Operators. Our aim is to continue to establish long-term, consulting relationships with customers by becoming an integral part of their operations. By consulting and providing the technological infrastructure for their operations, we seek to leverage our relationships to generate cross-selling opportunities.

Expand Portfolio of Service Offerings. We plan to continue to develop new technology and games through our R&D staff in order to provide additional services and create future growth.

Expand Product Reach. We plan to enter rapidly growing, emerging markets in Asia and expand in the more regulated areas of Latin America and Europe. Previously, the Company has focused on less regulated, emerging markets, where regulatory approval was not required. We are moving into other markets that may have other regulations. As part of that move, to the extent that these markets have more stringent regulatory requirements, we may obtain approvals and certifications to facilitate compliance with these regulations, such as obtaining certification from Gaming Laboratories International (“GLI”). For a description of GLI certification, please see the section titled “Business – Regulation”. We plan to continue developing partnerships with companies more familiar with local regulation, culture and methods to expedite entry into countries that currently allow gaming and those that may permit gaming in the future.

Continue Focus on Emerging Market Opportunities. We have been an early mover in nascent gaming markets. We have invested significant time over the last three years establishing relationships with customers and partners in Asia and other emerging markets, including Africa. We believe that these relationships will assist us in being a first mover in these markets.

Consolidate the Brand. We believe that the Octavian brand is well recognized in Latin America, the CIS, Europe and increasingly in Asia. As we expand into other markets such as Africa, we intend to increase our marketing activities, in order to promote the brand both at the local and global levels. With exposure at industry events and within trade publications, our goal is for our brand to be recognized as one that provides a full suite of leading systems infrastructure, games and supplies.

Expand through Strategic Acquisitions. Historically, we have grown both organically and through acquisitions. We believe there exist numerous opportunities to acquire companies with valuable technology and relationships. With further strategic acquisitions and other business partnerships, we believe that we will be able to expedite entry into new geographic territories and strengthen our product offering in emerging market sectors that we believe are fast growing.

MARKET REGIONS

We market our products and services in legalized gaming jurisdictions located in several regions throughout the world. Recently, our most significant market has become Italy, replacing Russia as a result of our continued pursuit to expand into markets outside of Russia, particularly in light of the fact that changing regulations have made it difficult to do business in Russia. A change in regulations in Italy gave us a significant opportunity. Our opportunities, challenges, and successes vary across these jurisdictions.

Russia and the Commonwealth of Independent States (“CIS”)

We commenced our operations in Russia and the CIS countries in 2001. We provided our ACP system and all technical support to one of the first major gaming operators in Russia and the CIS countries. We expanded our presence in the market by providing services to other gaming operators. We also expanded our product and service offerings to include the distribution of third-party products and our proprietary games. We have an office in Russia: our St. Petersburg office focuses on our OctaSystems, OctaGames, and OctaLotto business lines, research and development, and the operation of one of our global data centers.

Historically, Russia and the CIS countries has been our most significant market, representing 73.1% of our revenues in 2007 and 75.9% of our revenues in 2008. On December 29, 2006, the Russian government enacted legislation (No. 244FZ) that immediately restricted the number and the size of sites that can offer slot-machine operations. In addition, casinos would be limited to four geographic zones after July 1, 2009, and only gaming operators meeting certain specified revenue and assets thresholds would be permitted to operate casinos in these regions. This legislation effectively capped the market and caused a number of gaming suppliers to exit the marketplace. The legislation resulted in a reduction in our revenues from business in Russia and the CIS countries of approximately US$37.0 million (or 68 percent), from US$54.4 million in 2006 to US$17.2 million in 2007. In 2008, our revenues in Russia and the CIS countries increased to $30 million in the wider expectation that the implementation of the legislation would be delayed or softened. However, the full force of the legislation was enacted on 1 July 2009 resulting in our revenues in the CIS countries fading to close to nil after 1st of July 2009. This led to the decision to close the Moscow office which was solely involved in the OctaSupplies business line. Our St Petersburg office, in addition to being our research and development centre will serve as our base of operations for our activities in other CIS countries. Our long-term strategy is to diversify our business by increasing the amount of business we do in the CIS countries beyond Russia and into Armenia, Belarus, Georgia, Kazakhstan, Kyrgyzstan and Moldova.

The Ukraine also restricted gaming in mid 2009 and we therefore closed our sales and support office in Kiev.

Latin America and the Caribbean

Latin American and Caribbean markets show significant growth opportunities for the gaming industry. Legalized gaming is established in approximately 45 territories in this region, which we define as the Caribbean island nations, Mexico, Central America, and South America, with a market for machines in the following categories:

Slot halls;

Lotteries;

Casinos; and

Bingo operations and arcades.

We believe that Colombia, with approximately 69,000 machines in 2009 is an important market which offers potential growth opportunities. We expect legislation to be passed this year that will require gaming operators to link their machines to a centralized system. This legislation is currently being discussed, but we expect it to become effective sometime in 2010. Historically, lottery games have received greater acceptance than slot machines and other casino-related gaming machines, but we believe that support for casinos recently has grown, based on the number of well-known operators that have entered the market. Although the size and timing of market growth remain uncertain, we anticipate that opportunities will develop over the course of the next few years.

We believe that Peru is another important market in this region, which also provides opportunities for growth. After the crackdown of illegal operators in Peru, gambling revenues have increased to US$452 million for 2009. There are currently more than 60,000 slot machines distributed in more than 700 venues. . The Ministry of Tourism is set to implement a control system in July 2010 to tighten controls over slot machine gambling and certify gaming operators in Peru. If it passes, this legislation could increase our opportunities for growth in Peru over the next several years. We believe that certification by the Ministry of Tourism will increase the confidence of gaming companies and consumers in gaming operations, leading to more investment in gaming operations in Peru. We currently have 19 games certified for the Peruvian market, which has certification rules that are different than those of most other countries and uses its own local laboratory for game testing and certification.

Mexico first allowed casinos to begin operations in 2006, and the Mexican gaming industry generated approximately US$2 billion in revenue that year. We believe that Mexico will continue to be one of the fastest growing territories in Latin America, because new casinos could attract visitors from the United States as well as from Mexico. Based on our own internal research, we believe that there are currently approximately 90,000 machines in Mexico. We currently have 180 machines connected in Mexico and expect further installations to be completed in 2010.

Argentina has the most expansive gaming market in these regions and there are currently more than 80 casinos, 150 bingo halls, approximately 35,000 gaming machines and 1,200 roulette tables operated in the country. The gaming sector revenues in 2007 reached approximately US$2.5 billion. The country is divided into 23 provinces and each have there own autonomy to regulate their gaming industry within its jurisdiction. We operate a data center in Argentina, and we also continue to increase our share of machines connected through competitive pricing and established relationships with gaming operators.

We have a facility in each of Bogotá, Colombia and Buenos Aires, Argentina. Each of these locations hosts a global ACP data center, and we also conduct software research and development at our Buenos Aires location. Our Latin America and Caribbean operations encompass Brazil, Mexico, Argentina, Venezuela, Chile, Colombia, Peru, Puerto Rico, Ecuador, Guatemala, the Dominican Republic, Costa Rica, Trinidad, Tobago, Uruguay, El Salvador, Panama, Bolivia, Jamaica, Honduras, Paraguay, the Bahamas, Nicaragua, Haiti, Barbados, Suriname, Belize, Antigua, Barbuda and Saint Lucia. These operations contributed 22% of our revenues in 2009 and 17.1% of our revenues in 2008. We currently operate our Caribbean operations out of our office in Bogotá, Colombia. We derive our revenue in this region from our OctaSystems, OctaGames, and OctaSupplies business groups.

Europe

This region includes 21 countries, with an estimated total gaming market of US$28.4 billion in 2007 including approximately two million gaming machines. It encompasses:

Casinos;

Slot halls and arcades; and

Non-casino environments such as restaurants and pubs.

Germany had a total gaming market of approximately US$4.4 billion in revenue in 2008, with approximately US$1 billion for casinos revenue. We have a joint venture in Germany with an established distributor in that market to sell games we are developing for the German market. As of March 2010, there were 143 casinos and approximately 235,000 machines in Germany.

Italy’s market includes approximately 300,000 machines and revenue of approximately $1.5 billion in 2007. A change in the legislation to a more regulated Comma6A standard meant that these machines needed to be upgraded or replaced by 15 December 2009. Octavian Italy was set up in order to exploit these sales conditions by developing new games in Octavian’s St Petersburg office specifically for sale in the Italian market; to date 11 games have been approved for the Italian market. However, the introduction of the new Comma6B law in Italy was brought forward as the Italian government needed the revenues from the sale of the licenses in order to fund the reconstruction of the area around the town of L’Aquila which was hit by an earthquake in April 2009. Each new machine in the market for Comma6B generated US$21,500 for the government, in license fees payable in advance.

As new machines (Comma6B) with a higher payout are due to enter the market, the operators are reluctant to invest in Comma6A games. This has a negative effect on Octavian Italy’s revenues and stock levels. The early introduction of Comma6B rules left the operators uncertain as to their situation and as result operators are delaying ordering Comma6A games.

Although France’s total gaming market includes approximately 190 casinos, French legislation makes it extremely difficult to obtain gaming distribution licenses. Because of the stringent regulatory requirements, we do not currently pursue gaming opportunities in France.

Romania has one of the most extensive gaming markets in Eastern Europe. As of 2009, there were more than 20 casinos and approximately 50,000 slot machines in the country. A new gambling act was passed on June 26, 2009 to tighten control and connect every slot machine to a system.

The Greek government hopes to raise an extra US$573 million by regulating slot machines and is anticipated to open in 2010. Octavian anticipates establishing an office in Thessaloniki, Greece, should conditions in the local gaming market improve sufficiently to support a minor office.

Octavian currently does most of its business in Europe in Romania, Italy and Germany. Our European operations represented approximately 37% of our revenues in 2009, compared to 7.0% of our revenues in 2008.

Africa

Gaming in Africa is becoming more prevalent. About 30 countries possess casinos and gaming machines. In 2009 there were approximately 29,000 regulated machines in the entire African market. South Africa is the largest market in the region, with more than 40 casinos and approximately 38,000 slot machines. It is highly regulated, and we also believe currently there is only a limited opportunity for new operators to enter the South African market at this time due to this strict regulation. We believe that the next two largest markets are Morocco (725 machines) and Kenya (720 machines), both of which are small but, we believe, growing gaming machine markets.

In Rwanda we have an exclusive license from the Rwandan regulatory body to administer and operate Rwanda’s lottery through to 2019. We are distributing lottery terminals, establishing a distribution network, administering control procedures for the collection of receipts and payment of jackpots and marketing Rwanda’s lottery system, on an exclusive basis, throughout the term of the license. We are in discussion with the Rwandan mobile networks over plans to sell tickets as part of credit top ups, as the large majority of mobile phones are pre-paid and an SMS system has been fully tested and is ready to launch. Additionally, we have an exclusive license from the Rwandan regulatory body to operate gaming machines, sports betting and horse racing in Rwanda through 2014, which includes the right to extend through to 2019.

To date, the lottery and gaming markets in Rwanda are in the early stages of development and there can be no assurances that viable markets will ever evolve.

We are working with local operators to distribute 500 refurbished slot and similar machines in two African countries. We will receive payment equal to a percentage of the sales price of the machines along with a percentage of the profits made by the operators through 2013.

The first Symphony CE installation in Africa will be completed by the end of Q1 2010 in Lusaka, Africa – monitoring slots and tables.

Asia Pacific

Most Asian countries have some form of gaming, including casinos, lotteries, and hotel and club gaming. The largest markets are Macau (part of the People’s Republic of China), who posted gaming revenue of $US1.42billion in December 2009, which was up 48% from the same month the previous year. Australia, South Korea and Malaysia markets are also expanding in terms of revenue.

We anticipate growing demand in this region for casino management systems as Symphony CE’s slots and tables management is well suited for this market, especially with its junket management and capability to run wide area jackpots. The Philippines, together with Singapore, Cambodia and Vietnam, where major development projects are set for completion in 2010, are seen as key markets for Octavian.

The Philippines has approximately 7,000 slots machines and 700 tables generating $US2billion each year. We have spent considerable time in this marketplace in the second half of 2009 and will complete our first two installations of Symphony CE at the end of Q1 2010.

Gaming was approved in Singapore in 2005 and according to Deutsche Bank, is the second most lucrative gaming market in Asia after Malaysia, due to its low gaming tax rate of 9%. In January, 2010 Genting Group opened the first casino resort in Singapore and this will be quickly followed by the launch of a new casino resort by Las Vegas Sands.

We have also recruited a permanent Sales Consultant based in Macau, to position us well to form relationships with operators and show our commitment to the Asian marketplace as well as starting to work closely with an Asian team of technicians to provide local language support to our newest customers in the Philippines.

MARKETING AND SALES

Octavian primarily markets and sells its products and services through its direct and indirect sales staff (direct sales staff sell to end users, while indirect sales staff is comprised of sales managers who occasionally become involved in direct sales) and senior management, who are located in each of our global locations. As of March 30, 2010, we retain 8 direct and indirect sales representatives. The sales and marketing group is supported by a technical and project management team throughout the sales process.

Our sales process takes place throughout our year and can range from proposals for a small quantity of units to several hundred units. The duration of the sales process varies depending on the type and scale of products and services required, ranging from days for most games and machines, to as long as a year for a highly customized management system. Typically, a potential systems customer will participate in a formal evaluation and selection of a system vendor.

The level of sales available to us at any point in time can vary materially due to a number of factors, including the capital budgets of our customers, the availability of new products and services, the timing associated with any required regulatory approvals, and the success and features contained in the products and services sold by our competitors. The price paid for a full system can vary materially from customer to customer, depending on a number of factors, including the size of the gaming operation, the number of functions contained in the system specified and the level of post-sale support provided.

We generally complete our sales on a cash basis and only extend short term credit to customers on a case by case basis.

Although our direct sales force historically has generated most of our sales, we conduct a number of marketing activities including exhibiting at international and regional tradeshows, sponsorship of industry trade publications, and targeted email marketing.

We normally exhibit our products and services at the following annual tradeshows:

Tradeshow	Location	Month

ICE	London, United Kingdom	January
ENADA Primavera	Rimini, Italy	March
FADJA	Bogotá, Colombia	April
ELA	Mexico City, Mexico	May
G2E Asia	Macau, China	June
ENADA	Rome, Italy	October
SAGSE	Buenos Aires, Argentina	October
G2E	Las Vegas, United States	November

Key sales personnel have already and will continue to attend other exhibitions and conferences, including AmEx (Dublin), GEM (the Philippines), BEGE (Bulgaria), Preview (London), among others, in order to meet with existing clients and to follow up on leads generated from other shows and general activities. In total, we expect to be represented at over 30 international shows throughout 2010.

In addition to attending industry tradeshows, our Chief Executive Officer, Harmen Brenninkmeijer, is a regular speaker and moderator at tradeshow symposia and is on the advisory panel for the G2E tradeshows.

To maximize our brand exposure internationally, we have secured exclusive agreements with publications including:

We are the official sponsor of G3 magazine’s semi-annual market reviews – 2009 included an update on Europe and Latin America plus an in-depth overview of the Asian gaming market. G3 is a major industry publication published monthly by HP Publishing Limited and also distributed at major tradeshows. Because of Octavian’s sponsorship of the market reviews, our brand name and logo appear on every page of the issue devoted to the market report; the entire inside cover page is devoted to Octavian advertising and two additional advertisements for Octavian products and services appear in the front part of the issue.

We have sponsored the Casino International wall calendar for calendar years 2008/2009, and we have secured a similar arrangement for 2009/2010. The printed calendar is mailed to almost 5,000 subscribers worldwide and emailed in digital format to another 3,500 online subscribers.

We have a contract with Casino Review magazine for an Octavian advertisement to appear on the outside back cover of every issue. Casino Review is a monthly publication that is distributed both in print and digital format. It is published by Clarion Gaming, the organizers of the IGE tradeshow, and distributed to each year’s International Gaming Exhibition (“IGE”) exhibitors and attendees.

We have a long-standing relationship with Yogonet.com, publishers of a daily gaming industry newsletter, distributed by email. Our relationship dates back to the newsletter’s founding in 2003, when it was focused on the Latin American market, in which we have had a well-established presence for several years. Over the past year, it has become one of the industry’s most subscribed global newsletters. Octavian’s contract provides that each issue of the newsletter and the website contain Octavian banner advertisements and our relationship ensures that any story about Octavian is featured among the top five stories for that day.

We also utilize subscriber based HTML email marketing as a cost-effective, targeted method of publicizing our latest product developments. These emails are distributed to prospects in our sales database. We currently have approximately 3,000 names on our subscription list.

Sales Structures

OctaSystems

OctaSystems sales generally are structured in three ways. The first structure involves the customer purchasing the hardware and then paying a monthly license fee per machine for use of the software. These contracts are generally three years or longer in length, with varying fee structures. The second structure involves the customer purchasing the hardware and system outright for a one-time fee plus an ongoing service package from Octavian for support and software updates. Under this structure, the software remains the property of Octavian, and the customer uses components of the hardware to interface its machines to the Symphony CE system. While it is possible for a customer to purchase a system from us without ongoing support, it is extremely rare and we recommend the purchase of ongoing support to all of our customers. The third structure involves the customer purchasing the hardware and then paying Octavian a fixed percentage of the customer’s revenues for a contract period of 3 to 10 years. Under this structure, contracts sometimes provide that the charge for the system is included in the price of the hardware, in which case we charge a higher percentage of. In each case when there is an ongoing service contract, the customer is invoiced monthly for the appropriate fees.

The demand for casino management systems is driven by regulatory requirements in each applicable jurisdiction by casino operators’ competitive need to track device and player activity, and to establish and compile individual device and player profitability and other demographic information. These features also enable casinos to develop or enhance marketing strategies. Our revenues from our casino management systems are derived from selling our products and services to both new and existing customers.

OctaGames

OctaGames sales are generally structured in one of three ways. The first structure involves the customer purchasing a security-protected license for one or more of our games. A fee is charged for each copy of each game. The second structure involves third-party manufacturers outsourcing to us the development of one or more specific games. When we develop a requested game specifically for a customer, we generally require that a substantial portion of the contract cost be paid upfront and the balance upon acceptance by the customer of the delivered product. Games can also be charged based on usage. In this final recurring revenue model a customer will agree to pay a rate; the rate can be a fixed daily rate or based on a percentage of the slot machine’s profit.

OctaLotto

OctaLotto sales typically involve the customer purchasing the hardware and then paying Octavian a fixed percentage of the customer’s revenues (ticket sales) over the life of the system. In the case of Octavian Rwanda Ltd, sales represent ticket sales of the national lottery of Rwanda.

OctaSupplies

OctaSupplies sales generally are structured in two ways. The first involves outright sales of third-party machines which require initial payments on order and then the balance of the payments periodically over the 90 day period following shipment, subject to our having to accept longer payment periods in jurisdictions where our competitors offer payment terms extending as long as 18 months after delivery of the machines. In any event, we generally do not provide customers with payment terms extending more than ten months after delivery of the machines. The second method of payment involves the customer paying a fixed percentage of the machine’s sales over a period of years.

In certain cases, the original manufacturers of these products may be competing with us in markets where we also sell their products.

CUSTOMERS

Our customers fall into five broad categories:

(1)	major casino operators who purchase OctaSupplies products, casino management systems (including Symphony CE or Symphony VE), other machines, and games;

(2)	slot halls and other operations who purchase OctaSupplies products, casino management systems (including Symphony CE or Symphony VE), other machines, and games;

(3)	regulatory authorities who purchase and/or accredit casino management systems (including Symphony CE or Symphony VE); and

(4)	lottery operations who purchase OctaLotto services (including Symphony LE (Lottery Edition) and video lottery terminal games).

(5)	The general public in Rwanda who purchase tickets for the national lottery.

The demand for gaming devices and systems varies depending on the level of new construction and renovation of casinos and other gaming sites, as well as market conditions that might generate the need for new and replacement equipment and product and service innovation. Gaming devices generally have an average replacement cycle of three to seven years.

Octavian provides products and services on both an ongoing and a one-time basis. The volume of products for specific customers varies from year to year, and a significant customer in one year may not buy our products in a subsequent year.

Future sales of our products and services will be based on, among other elements, continued expansion of our product and service line, the success of our game content, the acceptance of our systems, our customer service levels, expansion into additional markets and our ability to maintain a competitive position against other providers who are producing similar products and services.

COMPETITION

The market for gaming systems, games, lottery systems, and gaming machines is highly competitive, constantly evolving, and subject to technological change. Competition is a significant driver of new product and service development. We believe that principal competitive factors include:

· Product functionality and features;

· Product and service pricing;

· Availability and quality of support;

· Customer acceptance and player preference;

· Ease and speed of product implementation;

· Vendor and product reputation;

· Product architecture and technological innovations;

· Knowledge of gaming industry practices;

· Product accuracy and reliability; and

· Regulatory compliance and Gaming Laboratories International certification.

We believe we have a global competitive advantage as a result of our:

· Ability to customize products and services;

· Breadth of product and service offerings;

· High levels of customer service and support;

· Long history with customers;

· Geographic diversification of operations;

· Seasoned, experienced development staff;

· Worldwide brand recognition;

· Diverse library of innovative games;

· Investment in R&D; and

· The combined effect of our systems working together being greater than the sum of their parts.

Our competitors vary in size from small companies with limited resources to several large multi-national corporations with substantially greater financial, marketing and product development resources than ours. Our larger competitors have an advantage in being able to devote more resources to develop new technologies that are attractive to players and customers. Our competitors include, but are not limited to, the following manufacturers, service providers and distributors that have gaming products and services and are either authorized to sell or are in the licensing process in many foreign gaming jurisdictions:

OctaSystems global competitors include but are not limited to: Aristocrat Leisure Limited, Lottomatica S.p.A. (acquired Atronic in 2008), Bally Technologies, Inc., IGT, and Systems in Progress GmbH (owned by WMS Industries, Inc.). Competition is particularly strong in this market because of the number of providers and the limited number of casinos and jurisdictions in which they operate.

OctaGames global competitors include but are not limited to: Ainsworth Gaming Technology, Aristocrat Leisure Limited, Aruze Corp. (formerly known as Universal Distributing of Nevada), Bally Technologies, Inc., Unidesa Gaming & Systems (part of the Cirsa Group), Franco Gaming, Ltd. (a division of Recreativos Franco), Gauselmann Group, Lottomatica S.p.A. (acquired GTECH Corporation in 2006 and Atronic in 2008), International Game Technology, Konami Co. Ltd., Novomatic Industries (which is controlled by our principal shareholder, AGI), Scientific Games Corporation and WMS Industries, Inc.

OctaLotto global competitors include but are not limited to: Lottomatica S.p.A. (acquired GTECH Corporation in 2006), International Lottery & Totalizator Systems, Inc., IntraLot S.A., Scientific Games Corporation and WIN Systems International Holdings, Inc.

OctaSupplies global competitors include but are not limited to: Ainsworth Gaming Technology, Aristocrat Leisure Limited, Lottomatica S.p.A. (acquired Atronic in 2008), Bally Technologies. Inc., Belatra Co., Ltd., Fortuna Gaming Corp., Franco Gaming, Ltd. (a division of Recreativos Franco), Gauselmann Group, IGT, KARE Technology Company, Konami Co. Ltd., Novomatic Industries and Unicum Gaming (“SmartGames”).

MANUFACTURERS AND SUPPLIERS

We manufacture our hardware products through third-party manufacturers in Russia and Argentina. In Russia, we have outsourced the manufacturing of the ACP components to an aerospace company based in Moscow under a long-term contract that provides for minimum-order quantities, lead times and a maximum manufacture rate that is eligible for increase at our request. In Argentina, we have outsourced the manufacturing of the ACP components to a local manufacturer. We manufacture these components in Argentina for distribution in Argentina and for export, for tax and trade law reasons.

We also purchase certain component parts from third-party manufacturers, such as AGI and FutureLogic, Inc.

In general, we hold some spare parts for the items we manufacture, but we do not hold a material amount of final product. We generally order final product only after we have received a non-refundable down payment from the customer equal to approximately 50 percent of the contract value. If the customer subsequently cancels the order, we retain the down payment and generally are able to transfer the product to another pending customer product. We do not order final products other than in response to specific customer orders.

We believe that our sources of supply are generally adequate, and with multiple sources for the same component parts. We have a degree of duplication of the critical components of the system, with the intention of increasing reliability of the system in the event that any of our primary systems fail.

Generally, we do not have long term commitments with suppliers.

CUSTOMER SERVICE

We consider customer service an important aspect of our overall marketing strategy. We provide product delivery, installation, new product training, warranty, after-market technical support, supplemental equipment and spare parts, product retrofitting, game conversions, network systems, downloadable game and system upgrades, and casino operations consulting services. We employ trained customer service personnel in our data center locations, co-located with our R&D personnel, to whom our customer service staff have immediate access.

In addition, we generally offer parts and labor warranty for games and machines. We record warranty expenses for our OctaSupplies sales only. To date, we have not recorded any warranty claims, as they have been immaterial, with a negligible effect on our financial condition.

Octavian provides access to customer support service 24 hours a day, seven days a week. This support is live (24 hours per day, seven days per week, 365 days per year telephone support) for each of our products. In addition to the immediate technical support available via these hotlines, we also offer emergency site visits as needed. For hardware products, we also provide both product support and return service. We also offer field service support programs, spare parts programs and operational consulting to improve performance.

Product information is available through a restricted, user-identification and password-protected area of our website.

RESEARCH AND DEVELOPMENT

Octavian has made significant investments in R&D, developing advanced technical systems that are required to run and develop global gaming businesses. We employ over 77 employees worldwide in product development in dedicated groups including: specification, design, creation and production of hardware, communications, facilities, software, games design, graphics design, sound and video development, operations, installation and support. We believe that our presence in numerous overseas markets exposes us to local industry knowledge that contributes to our ability to innovate. We believe that one of our competitive advantages is our commitment to constant technological innovation, and we plan to develop new products through a combination of licensing, acquisitions and research activities.

Our primary development and support facility is located in St. Petersburg, Russia, with a secondary facility located in Buenos Aires, Argentina. In addition, we conduct some of our product development through outsourcing arrangements with unaffiliated third parties.

Our R&D team in St. Petersburg has been instrumental in the continual development of our ACP slots management system – a core module of Symphony CE (Casino Edition) and Casino VE (VLT Edition), evolving the product to allow Cashless, TITO (Ticket In Ticket Out), Player Tracking, Bonus Club features and Jackpots management including Wide Area Progressives, which allow players in multiple venues contribute to and play for the same jackpot via any linked machine. The St. Petersburg games department has delivered a portfolio of almost 100 titles comprising slot games, bingo, Keno, amusement with prize machines and downloadable games with varied multi-line options for multiple languages, denominations, countries and jurisdictions. Additionally, our team in St Petersburg is focused on the development of our Server Based (Symphony DE (Downloadable Edition) and LE (Lottery Edition) platform.

Our R&D employees in Argentina are dedicated to customization of the ACP systems for the Latin American market. This team works closely with our St. Petersburg staff on ACP product development..

TECHNOLOGY

We have developed several technologies which serve as the foundation of our systems platform. We also employ technologies and security policies designed to ensure that our operations and customer information are protected and secure. We believe that our technology infrastructure provides a flexible, scalable and reliable platform for the development and deployment of new services and solutions at a low cost. When we commence development of a new game, we use the latest technological architecture available and select long-life components with a goal of ensuring that the game or system remains viable for at least three to five years.

The systems supporting our operations are hosted at three facilities: St. Petersburg, Russia; Bogotá, Colombia; and Buenos Aires, Argentina. The facilities are highly secure environments, with standby systems that provide redundancy. The facilities are continuously staffed by trained personnel and have customer telephone support available 24 hours a day, seven days a week, with two back-up development teams on call. System capacity was built to support major expansion above existing levels and current utilization rarely rises above ten percent. We believe that our systems currently in place have ample power, redundancy, fire suppression capabilities, data transmission capability, and back-up provider arrangements to support current and anticipated near-term growth of the business. In addition, our systems are highly modular and easily can be expanded to handle substantial growth.

We implement security at multiple levels in our hardware and software platform and comply with various local gaming industry standards that are often rigorous and are designed to protect internal operations and customer data. We utilize multilevel enterprise firewalls and monitoring systems for intrusion detection and to filter all incoming network traffic. We operate and maintain the systems that support the web-based ACP access functions completely separately from our main database as an added layer of security.

Currently, our data center systems can service up to 150,000 transactions per minute, and our database capacity is greater than four terabytes of data. Additionally, we have designed our system and database to be easily expandable, as needed, and continuously operational.

All of our international sites are linked by a network allowing for flexible internal communications worldwide. Our communications infrastructure includes satellite links, fiber optics, broadband, wireless technology, fixed telephone lines and dial-up capability. We believe that our communication systems’ safeguards ensure that no data will be lost during power or communications outages.

Intellectual Property

Octavian’s intellectual property is comprised of trade secrets, industry and technical know-how, trademarks, copyrights, and issued and pending patents. Our intellectual property is a significant asset. We rely primarily on Russian intellectual property laws to protect our intellectual property and to a lesser extent on the laws of other jurisdictions in which our intellectual property is used. We also rely on privately negotiated license agreements, third-party non-disclosure and other agreements and other contractual provisions to protect our intellectual property rights. In addition, we use technical measures, such as encryption and other security measures, to protect our intellectual property from theft and piracy.

Our intellectual property includes the concepts, designs, features and manufacturing processes associated with our games, systems and machines. We currently hold more than 30 patents in Russia for various games, systems, systems components and processes. Although we no longer have plans to market and sell the Maverick ® electronic gaming machine, we hold trademarks related to the Maverick ® in Australia and the United States. We also have registered trademarks related to the Symphony TM in the European Union and the United States; trademarks related to Octavian GateManager™ in the European Union and trademarks related to Octavian CashManager™ in the European Union. Additionally we have registered the trademark Renegade™ in the European Union for our latest games board.

We do not seek formal legal protection for all of our intellectual property because we have found the expense unjustified after taking into account the potential benefits to be derived. Our products typically have a lifecycle that is shorter than the length of time required securing a patent and enforcing the patent protection. We believe that our contract and technical security measures sufficiently protect the majority of our intellectual property from theft and piracy.

We hold licenses to use third-party intellectual property as components of certain of our games systems. In addition, in order to connect our systems to certain machines, the machine manufacturers often grant us a right to use the portion of their IP that is necessary to allow us to do so and vice versa. Moreover, as part of our joint venture agreements, we often enter into mutual intellectual property exchange arrangements. We also subcontract development of certain system and games components to specialized developers and manufacturers and receive contracts to develop products from other companies. In each of these cases, we seek to ensure that our contracts provide for sufficient protection of our IP rights and assignment to us of all IP invented under subcontracting arrangements. In conjunction with our distribution agreements for our OctaSupplies business, we often obtain the right to use the supplier’s IP in order to provide ongoing service and support.

Our intellectual property is critical to our success and ability to compete, and if we fail to protect our intellectual property rights adequately, our competitors might gain access to, or gain the ability to duplicate or capitalize on, our technology. We negotiate beneficial intellectual property ownership provisions in our contracts and also require employees, consultants, advisors and collaborators to enter into confidentiality agreements in order to protect the confidentiality of our proprietary information and the assignment to us of all IP invented by those under contract to us.

Others may infringe upon or develop products in violation of our IP rights, and the issue of patents under pending applications is not a certainty. We are subject to general litigation risk related to our ability to enforce and maintain patents, copyrights, trademarks, and other IP rights. Seeking enforcement of or declaring our IP rights could result in other parties asserting that our rights are invalid, or alleging rights of their own against us. Our management is not aware of any current or threatened litigation involving our IP.

REGULATION

The distribution of gaming equipment, systems and services is subject to regulation by a variety of government agencies worldwide. Regulatory requirements vary from jurisdiction to jurisdiction and are constantly evolving, but they often include:

· Licenses and/or permits;

· Findings of suitability of directors, officers, major shareholders, and other key personnel;

· Technical requirements and approvals for certain equipment;

· Operational requirements, including data security;

· Documentation of financial record-keeping; and

· Responsible gaming compliance.

In Europe, we are subject to directives relating to hazardous substances, electrical equipment, conformity markings, safety standards and electromagnetic compliance. With regard to hazardous substances, we are subject to the Directive on the Restriction of the Use of Certain Hazardous Substances in Electrical and Electronic Equipment 2002/95/EC, (commonly referred to as the Restriction of Hazardous Substances Directive or RoHS) which was adopted in 2003 by the European Union and took effect in 2006. It restricts the use of six hazardous materials in the manufacture of various types of electronic and electrical equipment and is required to be enforced and become law in each member state. The RoHS is closely linked with the Waste Electrical and Electronic Equipment Directive 2002/96/EC which sets collection, recycling and recovery targets for electrical goods and is part of a legislative initiative to solve the problem of toxic e-waste. We also are required to obtain the Conformite Europeenne marking, which is a mandatory conformity mark on many products placed on the single market in the European Economic Area. With regard to safety standards, we are required to work closely with Underwriters Laboratories (UL), which is a company that has developed standards and testing systems to ensure products are safe. UL helps the insurance and re-insurance industry manage product liability risk, especially for fire safety. Finally, we are required to comply with the Electromagnetic Compatibility (“EMC”) compliance process.

In addition, Germany has special rules for casino management systems and amusement with prizes games. Our casino management system products comply with Germany’s requirements, and we are in the process of having our amusement with prizes products certified as compliant as well. The United Kingdom also has special requirements, with which we have complied with as necessary.

Italy has adopted special rules for AWP games and all our games are certified by the State Monopolies Autonomous Administration (“AAMS”), as required in this jurisdiction. AAMS is the government body that oversees the Italian gaming industry. In 2002, the government transferred the regulation of all gaming activities to the AAMS, a division of the Ministry of Economy and Finance. In connection with these regulations, Italy has adopted specific legislation referred to as Comma 6A legislation, which requires AWP machines to be equipped with a smart card that allows the AAMS, to access and check internal machine data to prevent fraud and safeguard players. Similarly, all AWP games running on the new machines are required to communicate with the smart card and be fully licensed.

Neither Colombia nor Argentina directly regulates the gaming industry, but Argentina has begun the process of requiring Gaming Laboratories International (“GLI”) certification for gaming equipment. The Peruvian gaming authorities require games to be certified for use in that market and we currently have 15 games approved internationally by GLI and 4 games approved specifically by BMM for Peru.

The nature of the industry and our worldwide operations make compliance with these requirements very time-consuming and require extensive resources. Before we initiate business in a given jurisdiction, we review all applicable policies, laws and regulations in order to ensure our ability to comply. In addition, we maintain a close working relationship with GLI throughout our product development process to ensure that our products meet their standards and those of particular markets. GLI is a widely recognized standard-setting and independent testing authority in the worldwide electronic gaming industry. While it is not a certifying authority, it is an independent gaming test house that is accredited by many gaming regulatory authorities throughout the world. GLI is not the only accepted accreditation standard in the world, but we believe that it is the most widely accepted one. Its clients are gaming regulators in jurisdictions all over the world, nearly 400 in all, and its customers are device and system suppliers that require GLI certification to maintain the distribution viability of their products throughout the gaming industry. GLI helps to ensure the integrity of the gaming industry. As a general rule, regulated markets throughout the world require GLI certification for gaming products sold in their jurisdictions. In unregulated markets, there are both jurisdictions that do not require certification by GLI or any other authority, and there are unregulated markets in which certain customers request products with GLI certification for their own business reasons. Once a gaming product has GLI certification, then, in any jurisdiction that has accredited GLI as a standard-setting body, regulatory approval of that gaming product is automatic. Currently, Octavian’s My ACP system – part of Symphony CE (Casino Edition), P-Box, ExtraCash, and more than 15 games titles meet GLI general global standards.

We anticipate that many of our existing games as well as those in development also will receive GLI approval. It is our corporate policy that, starting in 2008, every Octavian game will be submitted for GLI certification as soon as it has finished development and prior to its release. As part of the GLI certification process, we submit all of a game’s design documentation, source code, object code, compilers and compilation instructions, installation process, and hardware, as well as separate certification of the Random Number Generator software and safety certification.

Our compliance efforts are focused not only on gaming jurisdictional requirements but also on other applicable regulations, such as tax, environmental, excise and customs. Although many regulations at each level are similar or overlapping, we must satisfy all conditions, individually, for each jurisdiction. Determination of compliance in each jurisdiction is independently verified and generally does not depend on a determination of compliance in any other jurisdiction. Penalties for non-compliance can be severe.

Laws of the various gaming regulatory authorities are designed to protect the public and ensure that gaming is conducted honestly, competitively, and in a manner free from corruption. Regulatory oversight additionally ensures that the local authorities receive the appropriate amount of gaming tax revenues. Gaming financial reporting and systems therefore must demonstrate high reliability and integrity.

The gaming industry by its very nature is complex and constantly evolving, particularly in jurisdictions that are first beginning to permit gaming. We continue to devote significant resources to ensure regulatory compliance throughout our company. There can be no assurance, however, that any required licenses, approvals, or findings of suitability will be obtained or, if obtained, will not be conditional, suspended, or revoked, or that we will be able to obtain the necessary approvals for any future products as they are developed. If a license, approval or a finding of suitability is required by a regulatory authority, and we fail to obtain the necessary license, approval or finding, we may be prohibited from selling our products or services in that jurisdiction or we may be required to sell our products and services through other licensed entities at a reduced profit.

Octavian’s current strategy is focused on opportunities in emerging markets. We therefore do not conduct business in the United States and have not applied for a gaming license in any U.S. jurisdiction.

EMPLOYEES

As of December 31, 2009, Octavian employed 176 persons. None of our employees are subject to a collective bargaining arrangement, and we consider our relations with employees to be good. Of these employees, 17 are in management, 8 are in sales and marketing, 22 are in technical support, 77 are in research and development, 17 are in finance, 34 have miscellaneous duties.

RECENT DEVELOPMENTS

Agreements with AGI

Octavian is a non-exclusive distributor for AGI in various countries in Latin America, and CATS is a non-exclusive AGI distributor in Russia and the CIS. As such, AGI was Octavian’s largest supplier and, prior to the closing of the Share Exchange, Octavian had outstanding accounts payables of approximately €18,756,207 as of October 30, 2008 (US$23,979,810.65 based on the October 30, 2008 Exchange Rate of €1=US$1.2785). Pursuant to certain agreements between AGI and Octavian entered into immediately prior to the Share Exchange, AGI and Octavian agreed to the following:

AGI converted €4 million (US$5,114,000 based on the October 30, 2008 Exchange Rate of €1=US$1.2785) of accounts payable to it by Octavian into 652 Ordinary Shares of Octavian, representing 35 percent of the outstanding share capital of Octavian.

On October 30, 2008 AGI restructured €8 million (USD $11,466,400 at December 31, 2009 based on the December 31, 2009 exchange rate of €1=USD $1.4333) into a four-year loan (the “Loan Agreement”), which accrues interest at a rate of three-month USD LIBOR plus four percent (4%) (capped at a maximum rate of eight percent (8%)) per year, and is payable in equal monthly installments of €166,667 (USD $238,884 based on the December 31, 2009 exchange rate of €1=USD $1.4333) over a period of 48 months, commencing on October 30, 2008. As security for the obligation, the Company granted AGI a security interest in all intellectual property rights (including rights in software) in certain of the Company’s intellectual property, including the source and object code for the Company’s Accounting, Control, and Progressives product; the Company’s Maverick product and any modifications; and the Company’s Maverick games and any modifications, ExtraCash and Advanced Gaming Engine, along with all related materials (the “IP Rights”). The Company had not paid the monthly installments due in March and April 2009 and was technically in default of the Loan Agreement. With the agreement of AGI these installments were brought up to date immediately following the new private placement which closed on May 14, 2009 and the Company was no longer in default. For a more detailed discussion of the new private placement, please see the Form 8-K filed with the SEC on May 20, 2009 and incorporated herein by reference.

The Company had not paid the monthly installments due in June and July 2009 and was technically in default of the Loan Agreement. On August 4, 2009, the Company and AGI amended the loan agreement (the “Amendment Agreement”). Pursuant to the Amendment Agreement, monthly payments to be made under the Loan Agreement were suspended for a period of twelve (12) months, beginning on June 30, 2009 and ending on May 31, 2010, effectively extending the term of the Loan Agreement from 48 months to 60 months and, as of August 4, 2009, the Company is no longer in default. For a more detailed discussion of the Amendment Agreement and related transactions, please see the Form 8-K filed with the SEC on August 7, 2009 and incorporated herein by reference.

AGI invested US$5 million in the Private Placement.

Octavian agreed to repay outstanding accounts payable to AGI, as of the closing date of the Private Placement, in an aggregate amount of €6,756,207 (US$8,637,810.65 based on the October 30, 2008 Exchange Rate of €1 = US$1.2785) as follows: €2 million (US$2,557,000 based on the October 30, 2008 Exchange Rate of €1 = US$1.2785) from the proceeds of the Private Placement and the remaining balance in four equal installments of €1,189,051.45 payable on November 30, 2008, December 31, 2008, January 31, 2009 and February 28, 2009. The initial payment of €2 million was made from the proceeds of the Private Placement. The Company was late on all of the payments owed to AGI. Pursuant to the terms of the Debenture Purchase Agreement, Austrian AGI agreed to exchange (the “Exchange”) outstanding accounts payables owed to it by the Company, in the aggregate amount of $6,378,526, for (i) Convertible Debentures of the Company (the “Exchange Debentures”) with a principal amount of $6,378,526 which Exchange Debentures provided for similar terms as the Finance Debentures, except that they were issued without any original issue discount, (ii) an aggregate of 411,518 shares of Common Stock, (iii) five-year Common Stock Purchase Warrants, in the same form as Finance Warrants, to purchase up to an aggregate of 1,028,795 shares of Common Stock at an initial exercise price of $3.10 per share and (iv) seven-year Common Stock Purchase Warrants, in the same form as the Finance Warrants, to purchase up an aggregate of 1,028,795 shares of Common Stock at an initial exercise price of $4.65 per share, which exercise prices and the number of shares exercisable thereunder are subject to adjustment as set forth therein. Immediately upon the consummation of the Purchase Agreement, the Exchange Debenture was converted into 2,057,589 shares of Common Stock.

On August 4, 2009, we entered into a Loan Agreement (the “2009 Loan Agreement”) with AGI. Pursuant to the Loan Agreement, AGI agreed to loan the Company $2 million (the “2009 Loan”), to be made in two equal installments of $1 million. The first installment was to be made five (5) business days from the date of execution of the Loan Agreement and the second installment was to be made on or about August 15, 2009. Interest shall accrue at a rate of three month USD LIBOR plus four percent (4%) (capped at a maximum rate of eight percent (8%)) per year. Pursuant to the terms of the 2009 Loan Agreement, interest shall be paid on a monthly basis with the principal amount due and payable in full on June 30, 2010. As security for the 2009 Loan, the Company has granted a security interest in the IP Rights as further set forth in the Intellectual Property Rights Transfer Agreement by and among the Company, Ziria Enterprises Ltd, Harmen Brenninkmeijer and AGI, dated August 4, 2009 (the “Transfer Agreement”). Upon an event of default, the IP Rights shall transfer to AGI, pursuant to the terms and conditions of the Transfer Agreement. The 2009 Loan Agreement and the Transfer Agreement were filed as exhibits to the Company’s Current Report on Form 8-K filed with the SEC on August 7, 2009 and incorporated herein by reference

On November 19, 2009, we entered into a further loan agreement with AGI. Pursuant to the loan agreement, AGI agreed to loan the Company US$90,000 in order to facilitate the settlement of the debt owed to Mediciones Urbanas for the acquisition of Argelink on August 17, 2007. Interest shall accrue at a rate of three month USD LIBOR plus four percent (4%) (capped at a maximum rate of eight percent (8%)) per year. Pursuant to the terms of the loan agreement, interest shall be paid on a monthly basis with the principal amount due and payable in full on November 30, 2010.

Debentures and Warrants Purchase Agreement

On May 14, 2009, we entered into a Debentures and Warrants Purchase Agreement (the “Debenture Purchase Agreement”) with certain accredited investors (the “Investors”), and closed a private placement offering pursuant to which we raised gross proceeds of $4 million and, among other things, issued and sold (i) Original Issue Discount Convertible Debentures, a form of which is attached as Exhibit 4.5 to this current report and incorporated herein by reference (the “Finance Debentures”), with an aggregate principal face amount of $4,395,600, which Finance Debentures are convertible into shares of the Company’s common stock, par value $.001 per share (the “Common Stock”), at a conversion price of $3.10 per share, subject to adjustment as set forth therein, (ii) an aggregate of 283,587 shares of Common Stock to the Investors (the “Finance Shares”), (iii) five-year Common Stock Purchase Warrants, to purchase up to an aggregate of 645,161 shares of Common Stock at an initial exercise price of $3.10 per share and (iv) seven-year Common Stock Purchase Warrants to purchase up to an aggregate of 645,161 shares of Common Stock at an initial exercise price of $4.65 per share, which exercise prices and number of shares exercisable thereunder are subject to adjustment as set forth therein (the “Finance Warrants”). A form of Finance Warrant and a form of Finance Debenture were filed as exhibits in the Company’s Current Report on Form 8-K filed with the SEC on May 20, 2009 and incorporated herein by reference. The Debenture Purchase Agreement was filed as an exhibit in the Company’s Current Report on Form 8-K filed with the SEC on May 20, 2009 and incorporated herein by reference.

Stockholder Agreement

Concurrent with the Debenture Purchase Agreement, the Company entered into a Stockholder Agreement (the “Stockholder Agreement”) with Ziria Enterprises Limited (“Ziria”), a corporation of which Harmen Brenninkmeijer, the Company’s Chairman and Chief Executive Officer, is the sole shareholder; AGI; and Mr. Brenninkmeijer. Ziria, AGI and Mr. Brenninkmeijer are sometimes referred to hereafter collectively as the “Principal Stockholders” and each individually as a “Principal Stockholder.” Pursuant to the Stockholder Agreement, the Principal Stockholders and the Company agreed to certain terms and conditions regarding the ownership of the shares of Common Stock held by the Principal Stockholders (the “Principal Shares”), including certain restrictions on the voting and transfer of the Principal Shares, as well as management of the Company and its subsidiaries. In addition, the Stockholder Agreement provided that the board of directors of the Company (the “Board”) should consist of Mr. Brenninkmeijer, Peter Brenninkmeijer and Peter Moffitt, each of whom was a director of the Company prior to the execution of the Stockholder Agreement, and, in addition, one designee of AGI (the “AGI Designee”) and one designee of Harmen Brenninkmeijer (the “HB Designee”), which should be in addition to Mr. Brenninkmeijer’s seat on the Board. No additional seats on the Board could be created and no other person or entity could be appointed to the Board without the prior written consent of Harmen Brenninkmeijer and AGI; provided, however, that the AGI Designee could be removed at anytime by AGI and replaced by another person appointed solely by AGI. Similarly, the HB Designee could be removed at any time by Harmen Brenninkmeijer and replaced by another person appointed solely by him. The Stockholder Agreement further provided that the management of the Company should be conducted in the manner it was being conducted immediately prior to the execution of the Stockholder Agreement; provided that AGI had consent rights with respect to certain corporate actions as set forth therein. AGI subsequently appointed Charles Hiten as the AGI Designee.

All of the specific terms and conditions of the Stockholder Agreement are set forth in the copy of the Stockholder Agreement which was filed as an exhibit to the Company’s Current Report on Form 8-K filed with the SEC on May 20, 2009 and incorporated herein by reference.

Change of Control

As a result of the securities issued to AGI under the provisions of the Debenture Purchase Agreement and pursuant to the Exchange, AGI increased its beneficial ownership of our Common Stock to approximately 50.61% from approximately 31.2%. Such increase in AGI’s beneficial ownership is deemed to have been a change of control. AGI’s ownership of greater than 50% of our voting capital stock outstanding, effectively provided AGI with a sole right of approval with respect to all corporate actions of the Company requiring a vote of the Company’s stockholders. Additionally, pursuant to the terms of the Stockholder Agreement, the Company should not take (or, to the extent applicable, permitted any subsidiary of the Company to take) certain actions, or enter into any arrangement or contract to do certain actions, without the prior approval of the AGI Designee. Such actions included, but were not limited to: (i) making any amendment to the certificate of incorporation, by-laws or other organizational document of the Company or any material subsidiary; (ii) incurring capital expenditures in excess of $1,000,000 per annum; (iii) making an assignment of its assets for the benefit of its creditors or an assignment of the assets of another entity for the benefit of such entity’s creditors; (iv) entering into any joint venture with or equity investment in any Person, including any equity investment in any Subsidiary, in any amount greater than $250,000; (v) the issuance of Common Stock or Common Stock equivalents other than pursuant to a stock or option plan previously approved by the Board of Directors; and (vi) incurring, assuming or refinancing of any indebtedness or liens for borrowed money (including, without limitation, through capital leases, acting as a surety, the issuance of debt securities or the guarantee of indebtedness of another person) in an amount greater than $500,000 per annum. The foregoing list of actions of the Company is not intended to be a complete list of all actions specifically addressed under the terms of the Stockholder Agreement and is qualified in its entirety by reference to the Stockholder Agreement.

On November 12, 2009, the Company received notification from AGI that it had transferred all of its Common Stock to Mr. Charles Hiten, a member of our Board of Directors and an affiliate of AGI. As a result of such transfer, Mr. Hiten is the beneficial owner of approximately 50.61% of our Common Stock.

Agreements with PacificNet

On December 7, 2007, the Company entered into an Agreement for the acquisition by PacificNet Games of the entire issued share capital of the Company which was completed on January 22, 2008. Shortly after completion, the Company and PacificNet decided that it would not benefit their respective businesses to continue as one group and therefore the Company and PacificNet mutually agreed to terminate the merger agreement on March 28, 2008 and entered into a written agreement to document this on May 14, 2008. On May 14, 2008, all of the parties to the PacificNet Acquisition Agreement entered into the PacificNet Termination Agreement. The Service Agreement was also terminated. As a result of the termination of the PacificNet Acquisition Agreement, neither the remaining consideration shares of PacificNet common stock (1.1 million shares) nor any of the Earn-Out Amount was transferred or paid to Ziria, and all shares of Emperor were returned to Ziria and the 1.2 million shares of Pacific Net common stock to Ziria were returned to PacificNet. Upon the consummation of this transaction, Emperor was no longer a direct subsidiary of PacificNet, nor was the Company any longer an indirect subsidiary of PacificNet. Harmen Brenninkmeijer, our Chief Executive Officer and a director of the Company, resigned from the board of directors of PacificNet on May 21, 2008. PacificNet paid Sterne Agee & Leach, Inc., a company that acted as a consultant to the Company for the PacificNet Acquisition, 30,000 PacificNet shares. The Company owes PacificNet US$49,680 to reimburse PacificNet for the issuance of these shares.

The following are the terms of the PacificNet Termination Agreement:

The Company agreed to issue to PacificNet or its nominee an amount of shares of capital stock of the Company equal to five percent (5%) of the outstanding shares of the Company. The Company issued PacificNet 61 the Company’s Ordinary Shares on October 30, 2008 in satisfaction of this provision. Additionally, PacificNet was granted the option to, prior to May 14, 2009 and on only one occasion during such period, purchase additional shares of the Company’s stock at a per share purchase price equal to 85 percent of the most recent subscription price per share of the Company’s stock paid by third party investors in the Company up to a number of shares that would result in PacificNet owning five percent (5%) of the Company’s stock issued and outstanding on the date of exercise of the option. This option was not taken up by PacificNet during the exercise period. PacificNet agreed to issue to the Company 500,000 shares of PacificNet’s common stock. These PacificNet shares were subject to a one-year lock up and sale restriction, any sale of these shares must be communicated to PacificNet in advance, PacificNet has the right of refusal to arrange buyers for the shares, and PacificNet will be entitled to half of the net gain on any partial sale of PacificNet shares.

·	PacificNet and the Company agreed to use reasonable endeavors to formalize the following business opportunities:

A non-exclusive distribution agreement and license pursuant to which PacificNet will be appointed as a distributor of the Company’s products in Macau, provided that eBet would be the only other distributor permitted to distribute the Company’s products in that territory; and

A joint venture relationship relating to the development of future business opportunities in Macau and other territories in Asia.

The Company agreed to pay PacificNet US$200,000 in consideration for PacificNet’s localization and language translation of the Company’s products into the Chinese language. Additionally, the Company agreed to use its reasonable endeavors to meet minimum sales targets from the sale of PacificNet’s machines of: US$4 million during the twelve month period ended mid-year 2009 and US$6 million during the twelve month period ended mid-year 2010. The Company’s commitment to achieving these targets was agreed to by the Company undertaking to use its reasonable endeavors to comply. PacificNet agreed to provide all appropriate support to assist the Company in achieving these goals. On January 5, 2009, Octavian received a letter from PacificNet pursuant to which it has asserted a claim against Octavian for certain alleged events of default by Octavian under the PacificNet Termination Agreement (the “Claim”). Pursuant to the Claim, PacificNet has demanded payments, in an aggregate amount of $280,000, for certain services allegedly performed by PacificNet, as well as the reimbursement of certain expenses related to prior transactions between the parties. The Company’s management has reviewed the Claim and believes that it is without merit and plans to defend against any actions taken by PacificNet accordingly.

Change of company name

On the August 6, 2009, Argelink S.A. changed its name to Octavian de Argentina S.A. Argelink S.A. was incorporated on July 11, 2002 in Argentina, and became a wholly owned subsidiary of Octavian International, Ltd on August 17, 2007.

A NOTE ABOUT FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K (including the Exhibits hereto) contains certain “forward-looking statements” within the meaning of the of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and the Private Securities Litigation Reform Act of 1995, such as statements relating to our financial condition, results of operations, plans, objectives, future performance and business operations. Such statements relate to expectations concerning matters that are not historical fact. Accordingly, statements that are based on management's projections, estimates, assumptions and judgments are forward-looking statements. These forward-looking statements are typically identified by words or phrases such as “believe,” “expect,” “anticipate,” “plan,” “estimate,” “approximately,” “intend,” and other similar words and expressions, or future or conditional verbs such as “should,” “would,” “could,” and “may.” In addition, we may from time to time make such written or oral “forward-looking statements” in future filings with the Securities and Exchange Commission (the “Commission” or “SEC”) (including exhibits thereto), in our reports to shareholders, and in other communications made by or with our approval. These forward-looking statements are based largely on our current expectations, assumptions, plans, estimates, judgments and projections about our business and our industry, and they involve inherent risks and uncertainties. Although we believe that these forward-looking statements are based upon reasonable estimates and assumptions, we can give no assurance that our expectations will in fact occur or that our estimates or assumptions will be correct, and we caution that actual results may differ materially and adversely from those in the forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties, contingencies and other factors that could cause our or our industry's actual results, level of activity, performance or achievement to differ materially from those discussed in or implied by any forward-looking statements made by or on behalf of us and could cause our financial condition, results of operations or cash flows to be materially adversely effected. Accordingly, investors and all others are cautioned not to place undue reliance on such forward-looking statements. In evaluating these statements, some of the factors that you should consider include those described below under "Risk Factors" and elsewhere in this annual report.

Item 1A. Risk Factors

Our business prospects are subject to various risks and uncertainties that impact our business. You should carefully consider the following discussion of risks, and the other information provided in this annual report. The risks described below are not the only ones facing us. Additional risks that are presently unknown to us or that we currently deem immaterial may also impact our business.

Risks Related to Our Business

Substantially all of our intellectual property has been pledged as security for outstanding indebtedness.

We are a non-exclusive distributor for AGI. AGI was one of our largest suppliers and prior to completion of the Share Exchange, we had outstanding accounts payable of €18,756,207 (US$23,979,811 based on the October 30, 2008 Exchange Rate of €1=US$1.2785) owed to AGI. Pursuant to certain agreements we entered into with AGI immediately prior to the Share Exchange, AGI, in addition to agreeing to take such other actions as described in greater detail in Recent Developments – Agreements with AGI of our Business Section, restructured a portion of the accounts payable into the Loan Agreement, secured by a security interest in the IP Rights. The amounts owed to AGI that are secured by the IP Rights, which as of October 30, 2008 totaled €8 million (US$10,228,000 based on the October 30, 2008 Exchange Rate of €1=US$1.2785), were due and payable October 31, 2012. We had not paid the monthly installments due in June and July 2009 and we were technically in default of the Loan Agreement. On August 4, 2009, we entered into the Amendment Agreement, amending the Loan Agreement. In addition, we entered into the 2009 Loan Agreement with AGI. In the event that we are unable to pay the principal and interest owed under the AGI Loan or repay the 2009 Loan, the intellectual property constituting the IP Rights would be subject to transfer to AGI following a 30-day rectification period for a non-payment default.

A loss of the IP Rights would substantially harm our OctaSystems and OctaGames businesses and could render us unable to provide our systems solutions in the ordinary course if the IP Rights were sold or otherwise transferred to a third party and/or we were no longer permitted to use and incorporate the intellectual property constituting the IP Rights in our products and services.

We face intense competition, and our results of operations will be adversely affected if we fail to compete successfully.

We compete with a number of developers, manufacturers and distributors of similar products and technologies. Because of the high initial costs of installing a computerized monitoring system, customers for such systems generally do not change suppliers once they have installed a system. This may make it difficult for us to attract customers who have existing computerized monitoring systems.

Some of our competitors have greater name recognition, larger customer bases and significantly greater financial, technical, marketing, public relations, sales, distribution and other resources. Our larger competitors may have more resources to devote to research and development and may be able to obtain regulatory approval more efficiently and effectively.

There can be no assurance that our new game themes, products or systems will achieve market acceptance, or that we will be able to compete effectively with these companies. Our ability to remain competitive will depend in part on our ability to:

Enhance and improve the responsiveness, functionality and other features of the products and services that we offer and plan to offer;

Continue to develop our technical expertise;

Develop and introduce new services, applications and technologies to meet changing customer needs and preferences; and

Integrate the new technologies with existing systems.

If our competitors continue to develop new game themes and technologically innovative products and systems, and we fail to keep pace, our business could be adversely affected. Competition may result in price reductions, fewer customer orders and reduced gross margins. We may be unsuccessful in our attempts to compete, and competitive pressures may harm our business. In addition, increased competition could cause our sales cycle to lengthen as potential new customers take more time to evaluate competing technologies or delay their purchasing decisions in order to determine which technologies are able to develop mass appeal.

Our success in the gaming and lottery industries depends in large part on our ability to develop innovative products and systems. If we fail to keep pace with rapid innovations in product design and deployment, or if we are unable to quickly adapt our development processes to release innovative products or systems, our business could be negatively impacted.

If we are unable to respond to regulatory or industry standards effectively, or if we are unable to develop and integrate new technologies effectively, our growth and the development of our products and services could be delayed or limited. Our success is heavily dependent on our ability to develop new products and systems that are attractive not only to our customers, namely slot machine and table operators, other gaming enterprises and lottery authorities, but also to their customers, the end players. The demands of our customers and the tastes of their customers are continuously changing. Therefore, our future success depends upon our ability to continue to design and market technologically sophisticated products that meet our customers’ needs, including ease of use and adaptability but that are also unique and entertaining such that they achieve high levels of player appeal and sustainability as well. The success of our business will depend on our ability to develop and integrate new technologies effectively and address the increasingly sophisticated technological needs of our customers in a timely and cost-effective manner.

Our future success and our ability to remain competitive will depend in part on our ability to enhance and improve the responsiveness, functionality and features of our products and services in accordance with regulatory or industry standards in a timely and cost-effective manner. If we are unable to influence these standards or respond to such standards effectively, our growth and the development of certain products and services could be delayed or limited.

Because our revenue growth is partially dependent on the earning power and life span of our games and newer game themes tend to have a shorter life span than more traditional game themes, we face pressure to design and deploy new and successful game themes to maintain our revenue stream and remain competitive. While we feel we have been successful at developing new and innovative products, our ability to do so could be adversely affected by:

A decline in the popularity of our gaming and lottery products with players;

A decision by our customers or the gaming and industry in general to cut back on purchases of new games or systems in anticipation of newer technologies;

An inability to introduce new games, services or casino management and lottery systems on schedule as a result of delays in connection with regulatory product approval in the applicable jurisdictions, or otherwise;

An increase in the popularity of competitors' games and systems; and

A decline in consumer acceptance of our newest innovations.

We cannot assure that we will be successful in responding to these technological and industry challenges in a timely and cost-effective manner. If we are unable to develop or integrate new technologies effectively or to respond to these changing needs, our margins could decrease and our release of new products and services and our deployment of new technology could be adversely affected.

We rely on highly skilled personnel and, if we are unable to retain or motivate key personnel or hire qualified personnel, we may not be able to maintain our operations or grow effectively.

We are highly dependent on certain key members of our executive management team and technical staff, including, in particular, Harmen Brenninkmeijer, our Chief Executive Officer. We depend on the experience of our key personnel to execute our business strategy. Accordingly, the retention of key members of our executive management team and technical staff is particularly important to our future success. The departure or other loss of any such member of our executive management team or technical staff could harm our ability to effectively market our products. In addition, if we cannot find suitable replacements for such persons in a timely manner, it could have a material adverse effect on our business. We have entered into an employment agreement with Mr. Harmen Brenninkmeijer which expires on December 31, 2013, unless renewed.

Our success also will depend in large part on our ability to continue to attract, retain and motivate qualified highly skilled scientific and technical personnel. Competition for certain employees, particularly development engineers, is intense. We may be unable to continue to attract and retain sufficient numbers of highly skilled employees. If we are unable to attract and retain additional qualified and highly skilled employees, our business, financial condition and results of operations may be adversely affected.

Our success will depend on the continued reliability and performance of third-party manufacturers and suppliers for whom we distribute. Loss of a material supplier could have a material adverse effect on our ability to perform effectively under some contracts and service our customer base effectively.

We currently are a distributor of third-party gaming machines. Historically, the majority of our revenues have come from these sales, the majority of which has been sourced through a single manufacturer, AGI, during 2008 and 2009. In addition, we are materially dependent on a limited number of third parties to produce systems or assemblies necessary for us to produce our products. While we strive to have alternate suppliers provide us with many of our products, a loss of one or more of such suppliers could have a material adverse effect on our ability to operate effectively. An inability to contract with third-party manufacturers and suppliers to provide a sufficient supply of quality products on acceptable terms and on a timely basis could negatively impact our relationships with existing customers and cause us to lose revenue-generating opportunities with current and potential customers. Additionally, if we are unable to replace any of these manufacturers or suppliers promptly and on terms that are equal or not significantly less favorable, this could have a material adverse effect on our business and financial condition.

We could experience manufacturing interruptions, delays, or inefficiencies of our hardware products if we are unable to timely replace short-term supplier agreements or supplier agreements terminated on short-term notice.

Generally, we maintain short-term supplier agreements and supplier agreements that can be terminated on short-term notice. If the supply of a critical hardware product or component is delayed or curtailed due to a cancellation or termination of one of our supplier agreements, we may not be able to ship the related product in desired quantities and in a timely manner. We believe that there are enough alternative suppliers that a cancellation of one of our supplier agreements will not have a material adverse effect on our operations. However, even where multiple sources of supply are available, qualification of the alternative suppliers, and establishment of reliable supplies, could result in delays and a possible loss of sales, which could harm operating results.

We are dependent on certain major customers, and the loss of one of these customers would significantly affect our business and financial results.

Our business to date has been dependent on major contracts from a limited number of customers. Gaming, systems and lottery contracts are generally several years in length but may have varying durations. Some contracts contain cancellation clauses enabling either party to cancel the contract. In addition, after a contract period expires, the customer generally can re-open the contract for competitive bidding. If we fail to obtain additional contracts or if we lose any existing contracts due to cancellation or a competitive bidding situation, we may fail to realize a significant portion of revenues, which would adversely affect our business and financial results.

Customers may fail to pay us, negatively impacting our financial position. We are especially susceptible to this risk in the emerging markets in which we operate.

Customer financing is becoming an increasingly prevalent component of the sales process and therefore increases business risk of non-payment, especially in emerging markets. We maintain material accounts receivable balances with customers that, if we fail to collect on, could have a significant impact on our liquidity. These customer financing arrangements also delay our receipt of cash and can negatively impact our ability to enforce our rights upon default. In addition, if the national currency in markets in which we do business suffers significant depreciation, our customers may be unable to pay us, or we may receive significantly less than the amount owed to us.

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

Our products are highly complex and sophisticated and, from time to time, may contain design defects that are difficult to detect and correct. There can be no assurance that errors will not be found in new products after commencement of commercial shipments or, if discovered, that we will be able to correct such errors in a timely manner or at all. The occurrence of errors and failures in our products could result in loss of or delay in market acceptance of our products and correcting such errors and failures in our products could require us to expend significant amounts of capital. Our products are integrated into our customers’ networks and equipment and any defects could result in financial losses for our customers. The sale and support of these products may entail the risk of product liability or warranty claims based on damage to such networks and equipment. In addition, the failure of our products to perform to customer expectations could give rise to warranty claims. The consequences of such errors, failures and claims could have a material adverse effect on our business, results of operations and financial condition.

If customers in our industry reject the use of our technology or if our strategic decisions are not in sync with needs of our customers, the deployment of our technology may be delayed, and we may be unable to achieve revenue growth.

Customers in the gaming and lottery industries may delay or reject initiatives that relate to the deployment of our technology in various markets. Such a development would make the achievement of our business objectives in the affected markets difficult or impossible.

Our intellectual property protections may be insufficient to properly safeguard our technology. Expenses incurred with respect to monitoring, protecting and defending our intellectual property rights could adversely affect our business.

Effective protection of intellectual property rights may be unavailable or limited. To protect our intellectual property investments, we rely on a combination of patent, copyright, trademark and trade secret rights, confidentiality procedures and licensing arrangements.

Monitoring infringement and misappropriation of intellectual property can be difficult and expensive and we may not be able to detect infringement or misappropriation of our proprietary rights. In addition, in the event we detect infringement or misappropriation, we may incur significant litigation expenses protecting our intellectual property, which would reduce our ability to fund product initiatives. These expenses could have an adverse effect on our future cash flows and results of operations.

The gaming and lottery industries are constantly employing new technologies in both new and existing markets. Regulations that protect intellectual property generally are established on a country-by-country basis. We rely on a combination of patent and other technical security measures to protect our products and continue to apply for patents protecting such technologies. Notwithstanding these safeguards, we cannot assure that the protection of our proprietary rights will be adequate, or that our competitors will not independently develop similar technologies, duplicate our services or design around any of our patents or other intellectual property rights. Unlicensed copying and use of our intellectual property or illegal infringements of such intellectual property rights represent potential losses of revenue to us.

Furthermore, others may independently develop products similar or superior to ours without infringing on our intellectual property rights. It also is possible that others will independently develop the same or similar technologies or otherwise obtain access to the unpatented technologies upon which we rely for future growth and revenues. Failure to meaningfully protect our trade secrets, know-how or other proprietary information could adversely affect our future growth and revenues.

As part of our confidentiality procedures, we generally enter into non-disclosure agreements with our employees, directors, consultants and corporate partners, and we attempt to control access to and distribution of our technologies, documentation and other proprietary information. Despite these procedures, third parties may copy or otherwise obtain and make unauthorized use of our technologies or other proprietary information or independently develop similar technologies or information. The steps that we have taken to prevent misappropriation of our technologies or other proprietary information may not prevent their misappropriation, particularly outside the United States where laws or law enforcement practices may not protect our proprietary rights as fully as in the United States. We also may be subject to claims of moral rights from employees and developers.

We may be subject to claims of intellectual property infringement or invalidity.

As more companies engage in business activities relating to gaming and lottery technologies and develop corresponding intellectual property rights, it is increasingly likely that claims may arise which assert that some of our products or services infringe upon other parties’ intellectual property rights. These claims could subject us to costly litigation, divert management resources and result in the invalidation of our intellectual property rights. If we are found to infringe on the rights of others, we could be required to pay significant damages, cease production of infringing products, terminate our use of infringing technologies, develop non-infringing technologies or purchase a license to use the intellectual property in question from the owner. In these circumstances, continued use of technologies may require that we acquire such licenses to the intellectual property that is the subject of the alleged infringement. We might not be able to obtain these licenses on commercially reasonable terms or at all. Our use of protected technologies may result in liability that threatens our continuing operation.

The gaming and lottery industries are characterized by the rapid development of new technologies, which requires us to continuously introduce new products, as well as to expand into new markets that may be created. Therefore, our success depends in part on our ability to continually adapt our products and systems to incorporate new technologies and to expand into markets that may be created by new technologies. However, to the extent technologies are protected by the intellectual property rights of others, including our competitors, we may be prevented from introducing new products similar to these technologies or expanding into new markets. If the intellectual property rights of others prevent us from taking advantage of innovative technologies, our financial condition, operating results or prospects may be harmed.

Our future growth will depend on intellectual property provided by third parties, and such intellectual property may be subject to infringement claims and other litigation, which could adversely affect our business.

Our suppliers own the patent rights and other intellectual property rights in some of the products that we distribute. We rely on the ability of these suppliers to maintain and successfully enforce our rights to their technology. If our suppliers’ patents and other intellectual property rights are successfully challenged, invalidated or otherwise eliminated or diminished, we may lose the exclusive rights to such technology, and our competitive advantage in the industry could be adversely affected.

We face risks associated with our suppliers’ patent positions, including the potential and sometimes actual need from time to time to engage in significant legal proceedings to enforce their patents, the possibility that the validity or enforceability of patents may be denied and the possibility that third parties will be able to compete against us without infringing patents. In addition, budgetary concerns may cause us and/or our suppliers not to litigate against known infringers of patent rights, or may cause us or our suppliers not to file for patents or pursue patent protection in all jurisdictions where they may have value. If certain governmental entities infringe on our suppliers’ intellectual property rights, they may enjoy sovereign immunity from such claims. Failure to reliably enforce patent rights against infringers may make competition within the industry more difficult.

Our gaming systems, particularly our casino management system networks, may experience losses due to technical difficulties or fraudulent activities.

Our business relies on information technologies, both in-house and at customer and vendor locations. In addition, many of the systems we sell manage private personal information and protect information and locations involved in sensitive industry functions. Our success depends on our ability to avoid, detect, replicate and correct software and hardware errors and fraudulent manipulation of our products and systems. The protective measures that we use in these systems may not prevent security breaches, and failure to prevent security breaches may disrupt business and damage our reputation. A party who is able to circumvent security measures used in these systems could misappropriate sensitive or proprietary information, gain access to sensitive locations or materials, cause interruptions or otherwise damage products and services. To the extent any of our gaming machines or software experience errors or fraudulent manipulation, our customers may replace our products and services with those of our competitors. If unintended parties obtain sensitive data and information or otherwise sabotage our customers, we may receive negative publicity, incur liability to customers or lose the confidence of customers, any of which may cause the termination or modification of our contracts. In addition, the occurrence of errors in, or fraudulent manipulation of, our gaming machines or software may give rise to claims for lost revenues and related litigation by our customers and may subject us to investigation or other action by gaming regulatory authorities including suspension or revocation of our gaming licenses or disciplinary action. Further, our insurance coverage may be insufficient to cover losses and liabilities that may result from such events.

Additionally, in the event of such issues with our gaming machines or software, substantial engineering and marketing resources may be diverted from other areas to rectify the problem. In addition, we may be required to expend significant capital and other resources to protect us against the threat of security breaches or to alleviate problems caused by these breaches. Such protection or remedial measures may not be available at a reasonable price or at all, or may not be entirely effective if commenced.

Network disruptions could affect the performance of our services.

Our operations rely to a significant degree on the efficient and uninterrupted operation of complex technology systems and networks, which in some cases are integrated with those of third parties. Our hosted technology systems are potentially vulnerable to damage or interruption from a variety of sources including fire, earthquake, power loss, telecommunications or computer systems failure, human error, terrorist acts, war or other events. Although we pursue various measures to manage the risks related to network disruptions, there can be no assurances that these measures will be adequate or that the redundancies built into our systems and network operations will work as planned in the event of a disaster. Any outage in a network or system or other unanticipated problem that leads to an interruption or disruption of our service could have a material adverse effect on our operations, sales and operating results.

If our products or technologies currently in development do not achieve commercial success, our future revenue and business prospects could be adversely affected.

While we are pursuing and will continue to pursue product and technological development opportunities, there can be no assurance that such products or technologies will come to fruition or become successful. Furthermore, while a number of those products and technologies are being tested, we cannot provide any definite date by which they will be commercially viable and available, if at all. We may experience operational problems with such products after commercial introduction that could delay or prevent us from generating revenue or operating profits. Future operational problems could increase our costs, delay our plans or adversely affect our reputation or our sales of other products which, in turn, could materially adversely affect our success. We cannot predict which of the many possible future products or technologies currently in development will meet evolving industry standards and consumer demands. We cannot assure you that we will be able to adapt to technological changes or offer products on a timely basis or establish or maintain a competitive position.

Current borrowings, as well as potential future financings, may substantially increase our current indebtedness.

No assurance can be given that we will be able to generate the cash flows necessary to permit us to meet our fixed charges and payment obligations with respect to our debt, including payments pursuant to the AGI Loan. We could be required to incur additional indebtedness to meet these fixed charges and payment obligations. Any increased indebtedness may, among other things:

Adversely affect our ability to expand our business, market our products and make investments and capital expenditures;

Adversely affect the cost and availability of funds from commercial lenders, debt financing transactions and other sources; and

Create competitive disadvantages compared to other companies with lower debt levels.

Any inability to service our fixed charges and payment obligations, or the incurrence of additional debt, would have an adverse effect on our cash flows, results of operations and business generally.

An inability to maintain sufficient liquidity could negatively affect expected levels of operations and new product development.

Future revenue may not be sufficient to meet operating, product development and other cash flow requirements. Sufficient funds to service our debt and maintain new product development efforts and expected levels of operations may not be available, and additional capital, if and when needed by us, may not be available on terms acceptable to us. If we cannot obtain sufficient capital on acceptable terms when needed, we may not be able to carry out our planned product development efforts and level of operations, which could harm our business.

We may not be able to continue operating as a going concern.

In their report in connection with our financial statements as of December 31, 2009, and for the fiscal year then ended, our auditors included an explanatory paragraph stating that, because we had incurred net losses of US$12,493,826 and accumulated a deficit of $38,238,598 as of December 31, 2009, there is substantial doubt about our ability to continue as a going concern.

If our revenues and gross profit do not increase, we will continue to incur significant losses and will not become profitable. Further, even if we are able to raise additional financing for our operational and financing needs, we also intend to expand our business, which will result in increased expenses related to sales and marketing, research and development, cost of revenues and general and administrative costs. We cannot assure you that our revenues will grow at the same pace as our expenses or at all. Additionally, we may encounter unforeseen difficulties and complications that require additional unexpected expenditures. Our losses may increase in future periods, and there can be no assurance that we ever will achieve positive cash flows from operating activities or reach profitability.

Our financial results vary from quarter to quarter, which could negatively impact our business.

Various factors affect our quarterly operating results, some of which are not within our control. These factors include, among others:

The financial strength of the gaming industry;

Consumers’ willingness to spend money on leisure activities;

The timing and introduction of new products and services;

The mix of products and services sold;

The timing of significant orders from and shipments to customers;

Our product and service pricing and discounts;

The timing of acquisitions of other companies and businesses or dispositions; and

The general economic conditions.

These and other factors are likely to cause our financial results to fluctuate from quarter to quarter. Based on the foregoing, we believe that quarter-to-quarter comparisons of our results of operations may not be meaningful.

Our sales often reflect a limited number of large transactions, which may not recur on an annual basis. Consequently, revenues and operating results can vary substantially from period to period as a result of the timing of revenue recognition. Our business also could be impacted by natural or man-made disasters. We have taken steps to have disaster recovery plans in place, but such an event could have a significant impact on our business.

Certain market risks may affect our business, results of operations and prospects.

In the normal course of our business, we are routinely subjected to a variety of market risks, examples of which include, but are not limited to, interest rate movements, collectability of receivables and recoverability of residual values on leased assets. Further, some of our customers may experience financial difficulties or may otherwise not pay accounts receivable when due, resulting in increased write-offs. Although we do not anticipate any material losses in these risk areas, no assurances can be made that material losses will not be incurred in these areas in the future.

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

As a supplier of gaming machines, we must offer themes and products that appeal to gaming operators and players. If we are unable to anticipate or timely react to any significant changes in player preferences, such as a negative change in the trend of acceptance of our newest systems innovations or jackpot fatigue (declining play levels on smaller jackpots), the demand for our gaming products could decline. Further, our products could suffer a loss of floor space to table games and operators may reduce revenue sharing arrangements, each of which would harm our sales and financial results. In addition, general changes in consumer behavior, such as reduced travel activity and redirection of entertainment dollars to other venues, could result in reduced demand for our products.

We are exposed to currency risk from our operations in various countries.

A substantial portion of our revenues are now, and may continue to be, realized in several currencies. A significant portion of our operating and manufacturing expenses are paid in various currencies other than U.S. dollars. Fluctuations in the exchange rate between these currencies may have a material effect on our results of operations. In particular, we may be adversely affected by a significant weakening of the U.S. dollar against the Euro. If the rates of exchange move in adverse directions, this could reduce our liquidity, profits and ability to reinvest in future development. To date, we have not engaged in any hedging transactions but may engage in such transactions in the future to reduce our exposure to currency fluctuations.

We may need to hire additional employees or contract labor in the future in order to take advantage of new business opportunities arising from increased demand, which could impede our ability to achieve or sustain profitability.

Although there can be no assurance, we believe that the gaming market will demonstrate increased demand in future periods. Our current staffing levels could affect our ability to respond to increased demand for our services. In addition, to meet any increased demand and take advantage of new business opportunities in the future, we may need to increase our workforce through additional employees or contract labor, which would increase our costs. If we experience such an increase in costs, we may not succeed in achieving or sustaining profitability.

Our insurance coverage may be inadequate.

We maintain third-party insurance coverage against various liability risks and risks of property loss. While we believe that these arrangements are an effective way to insure against liability and property damage risks, the potential liabilities associated with those risks or other events could exceed the coverage provided by such arrangements.

Interpretations and policies regarding revenue recognition could cause us to defer recognition of revenue or recognize lower revenue and profits.

As our transactions increase in complexity with the sale of multi-element products and services, negotiation of mutually acceptable terms and conditions can extend the sales cycle and, in certain situations, may require us to defer recognition of revenue. We believe that we are in compliance with U.S. Generally Accepted Accounting Principles (“U.S. GAAP”); however these future, more complex, multi-product, multi-year transactions may require additional accounting analysis to account for them accurately, which could lead to unanticipated changes in our current revenue accounting practices and may contain terms affecting the timing of revenue recognition.

New products require regulatory approval and may be subject to complex revenue recognition standards, which could materially affect our financial results.

As we introduce new products and transactions become increasingly complex, additional analysis and judgment is required to account for them and to recognize revenues in accordance with U.S. GAAP. These transactions may include multi-element arrangements and/or software components. As our products and transactions change, applicable accounting principles or regulatory product approval delays could change the timing of revenue recognition and could adversely affect our financial results for any given period.

Our ability to bid on new contracts is dependent upon our ability to fund required up-front capital expenditures through our cash from operations or through financings.

Our contracts generally require significant up-front capital expenditures. Historically, we have funded these up-front costs through cash flows generated from operations and available cash on hand. Our ability to continue to procure new contracts will depend on, among other things, our liquidity level and our ability to obtain additional financing at commercially acceptable terms to finance the initial up-front costs. If we do not have adequate liquidity or are unable to obtain financing for these up-front costs on favorable terms or at all, we may not be able to bid on certain contracts, which could restrict our ability to grow and have a material adverse effect on our results of operations.

Our revenues fluctuate due to seasonal, weather and other variations and you should not rely upon our periodic operating results as indications of future performance.

Our revenues are subject to seasonal and weather variations. Revenues may reflect a limited number of large transactions, which may not recur on an annual basis. Consequently, revenues and operating results can vary substantially from period to period as a result of the timing of revenue recognition for major equipment sales and software license revenue. Our business could also be impacted by natural or man-made disasters such as Hurricane Katrina or the terrorist attack in New York on September 11, 2001. We have taken steps to have disaster recovery plans in place but there can be no assurance that such an event would not have a significant impact on our business.

We are dependent on the success and growth of our customers.

Our success depends on our customers buying our products to expand their existing operations, replace existing gaming machines or equip a new casino. Any slow down in the replacement cycle or delays in expansions or new openings may negatively impact our operations.

Casino operators in the gaming industry are undergoing a period of consolidation. The result of this trend is that a smaller number of companies control a larger percentage of our current and potential customer base. Because a significant portion of our sales come from repeat customers, to the extent one of our customers is sold to or merges with an entity that utilizes more of one of our competitors’ products and services, or that reduces spending on our products, our business could be negatively impacted. Additionally, to the extent the new owner allocates capital to expenditures other than gaming machines, such as hotel furnishings, restaurants and other improvements, or generally reduces expenditures, our business could be negatively impacted.

A substantial portion of our debt is subject to variable interest rates; rising interest rates could negatively impact our business.

Our borrowings from AGI bear interest at a variable rate. In addition, we may incur other variable rate indebtedness in the future. Carrying indebtedness subject to variable interest rates makes us more vulnerable to economic and industry downturns and reduces our flexibility in responding to changing business and economic conditions. Increases in interest rates on this indebtedness would increase our interest expense, which could adversely affect our cash flows and our ability to service our debt as well as our ability to grow the business.

We have limited financial resources which may be inadequate to meet our future financing needs.

Our business is a capital intensive business, and our financial resources are substantially smaller than the financial resources of our principal competitors. To continue our operations according to our business plan we will require additional equity or debt financing. There can be no assurance that we will be able to obtain the additional financial resources required to successfully compete on favorable commercial terms or at all. Failure to obtain such financing could result in the delay or abandonment of some or all of our plans for development and expansion, which could have a material adverse effect on our operating results and financial condition.

Our international operations subject us to additional risks and regulations, including the Foreign Corrupt Practices Act.

We have international operations in many foreign countries, including in Russia, Colombia and Rwanda. These activities are subject to risks inherent in operating in these countries, including government regulation, licensing requirements, currency restrictions and other restraints, burdensome taxes, risks of expropriation, threats to employees, political instability and terrorist activities, including extortion, and risks of action by U.S. and foreign governmental entities in relation to us. Should such circumstances occur, we might need to curtail, cease or alter our activities in a particular region or country. Our ability to deal with these issues may be affected by applicable U.S. laws and, in particular, potential conflicts between the requirements of U.S. law and the need to protect our employees and assets.

In addition, we are required to comply with the United States Foreign Corrupt Practices Act, which prohibits United States companies from engaging in bribery or other prohibited payments to foreign officials for the purpose of obtaining or retaining business. Foreign companies, including some of our competitors, are not subject to these prohibitions. Corruption, extortion, bribery, pay-offs, theft and other fraudulent practices occur from time-to-time in the countries in which we operate, including in Russia and Colombia. If our competitors engage in these practices they may receive preferential treatment from personnel of some companies, giving our competitors an advantage in securing business or from government officials who might give them priority in obtaining new licenses, which would put us at a disadvantage. Although we inform our personnel that such practices are illegal, there can be no assurance that our employees or other agents will not engage in such conduct for which we might be held responsible. If our employees or other agents are found to have engaged in such practices, we could suffer severe penalties.

Our prior association with PacificNet could expose us to claims or litigation.

On December 7, 2007, we entered into an agreement with PacificNet, Inc. relating to our becoming an indirect wholly-owned subsidiary of PacificNet. On May 14, 2008, this agreement and all rights and obligations of the parties thereunder were terminated. As a result, we no longer were an indirect subsidiary of PacificNet. We believe that PacificNet recently has experienced a significant downturn in its financial position, and it is possible that its financial difficulties could expose us to claims or litigation, due to our previous relationship with PacificNet. If we are named in any claims or litigation involving PacificNet, we may incur significant expenses defending or litigating such claims. These expenses could have an adverse effect on our future cash flows and results of operations. In addition, our obligations under our agreements with PacificNet are unclear and open to interpretation, which could lead to litigation if we and PacificNet differ on the interpretation of certain terms in the agreements.

We became public by means of a “reverse merger” transaction, and, as a result, we are subject to the risks associated with the prior activities of the public company.

Additional risks may exist because we became public through a “reverse merger” transaction which was effected through the Share Exchange. Prior to the Share Exchange on October 30, 2008, House Fly Rentals, Inc., our predecessor, was a development stage company with nominal assets and operations. We may require the cooperation or assistance of persons or organizations, such as auditors, previously associated with House Fly in connection with future matters that could be costly or difficult to secure. Although we performed a due diligence review of House Fly, we still may be exposed to undisclosed liabilities resulting from its prior operations and we could incur losses, damages or other costs as a result. In connection with the Share Exchange, claims may not be brought against such shareholders after six months from the closing of the Share Exchange. Therefore, any liabilities associated with the prior operations, capitalization or ownership of securities of our company by the shareholders of House Fly may be borne by our current shareholders.

Our business experiences variability in gross margins.

Our business experiences variability in gross margins on contracts due to numerous factors, including, among other things, the following:

Delays in project implementation;

Failure to achieve add-on sales to existing customers;

Changes in governmental regulation;

Changes in user specifications;

Level of commodity versus proprietary components applicable to customer system specifications;

Whether contracts have been extended or renewed and the amount of remuneration associated with such extensions or renewals;

Price competition in competitive bids, contract renewals and contract extensions;

Variations in costs of materials and manufacturing;

Variations in levels of efficiency of our workforce in delivering, implementing and servicing contracts;

Seasonality of issuance volumes;

Sales mix related to adoption of new products compared to sales of current products;

Strategic decisions on new business;

Depreciation and amortization of capitalized project costs related to new or upgraded programs; and

Variability in the extent to which we are able to allocate personnel expenses to capital projects and thereby amortize such costs over the life of the relevant contract, rather than expensing such costs in the quarter in which they are incurred.

As a result of the occurrence of one or more of the foregoing, we can expect that there will be fluctuations in our future operating results.

Unfavorable political developments, weak foreign economies, and other foreign risks may negatively impact our financial condition and results of operations.

Our business is dependent on international markets for the majority of our revenues. We expect that receivables with respect to sales outside of the United States will continue to account for a large portion of our total revenues. As a result, our business in these markets is subject to a variety of risks, including:

Social, political and economic instability;

Additional costs of compliance;

Tariffs and other trade barriers;

Recessions in foreign economies;

Expropriation, nationalization and limitation on repatriation of earnings;

Fluctuations in foreign exchange rates;

Adverse changes in the creditworthiness of parties with whom we have significant receivables;

Reduced protection of intellectual property rights in some countries;

Longer receivables collection periods and greater difficulty in collecting accounts receivable;

Difficulties in managing foreign operations;

Unexpected changes in regulatory requirements;

Ability to finance foreign operations;

Changes in consumer tastes and trends; and

Acts of war or terrorism.

Any of these international developments, or others, could adversely affect our financial condition and results of operations.

Future acquisitions could prove difficult to integrate, disrupt our business, dilute shareholder value and strain our resources.

As part of our business strategy, we intend to acquire businesses, services and technologies that we believe could complement or expand our business, augment our market coverage, enhance our technical capabilities, provide us with valuable customer contacts or otherwise offer growth opportunities. If we fail to achieve the anticipated benefits of any acquisitions we complete, our business, operating results, financial condition and prospects may be impaired. Acquisitions and investments involve numerous risks, including:

Difficulties in integrating operations, technologies, services, accounting and personnel;

Difficulties in supporting and transitioning customers of our acquired companies to our technology platforms and business processes;

Diversion of financial and management resources from existing operations;

Difficulties in obtaining regulatory approval for technologies and products of acquired companies;

Potential loss of key employees;

Dilution of our existing shareholders if we finance acquisitions by issuing convertible debt or equity securities, which dilution could adversely affect the market price of our stock;

Inability to generate sufficient revenues to offset acquisition or investment costs; and

Potential write-offs of acquired assets.

Acquisitions also frequently result in recording of goodwill and other intangible assets, which are subject to potential impairments in the future that could harm our operating results. It also is possible that at some point in the future we may decide to enter new markets, thus subjecting ourselves to new risks associated with those markets.

It may be difficult for you to enforce a U.S. judgment against us, our executive officers and our directors, or to assert U.S. securities laws claims in the United Kingdom or in other countries in which we operate or to serve process on our executive officers and directors.

All of our executive officers and directors are located outside the United States, and all of our assets and the assets of these persons are located outside the United States. Therefore, a judgment obtained against us or any of them in the United States, including one based on the civil liability provisions of the U.S. federal securities laws may not be collectible in the United States and may not be enforced by a court in the United Kingdom or in other countries in which we operate. Further, if a foreign judgment is enforced by a court in the United Kingdom or in other countries in which we operate, it generally will be payable in a non-U.S. currency. It also may be difficult for you to assert U.S. securities law claims in original actions instituted in the United Kingdom or in other countries in which we operate.

Risks Related to Our Industry

The gaming industry is heavily regulated, and the introduction of new regulation or changes in existing regulation by gaming authorities may adversely impact our ability to operate in our existing markets or expand our business.

The manufacture and distribution of gaming machines and the development of systems for various jurisdictions are subject to extensive federal, state and local regulation by various gaming authorities. Our ability to continue to operate in certain jurisdictions or our ability to expand into new jurisdictions could be adversely affected by:

Delays in adopting legislation to permit or expand gaming in new and existing jurisdictions;

Unfavorable public referendums, such as referendums to increase taxes on gaming revenues;

Unfavorable legislation affecting or directed at manufacturers, distributors or gaming operators;

Adverse changes in or findings of non-compliance with applicable governmental gaming regulations;

Unfavorable determinations or challenges to suitability by gaming regulatory authorities with respect to our officers, directors, major shareholders or key personnel; and

The adoption of new laws and regulations, or the repeal or amendment of existing laws and regulations.

To our knowledge, we and our key personnel have obtained, or applied for, all government licenses, registrations, findings of suitability, permits and approvals necessary to conduct our activities in the various jurisdictions in which we operate. However, there can be no assurance that licenses, registrations, findings of suitability, permits or approvals will be renewed in the future, or that new forms of approval necessary to operate in emerging or existing markets will be granted.

Government regulations and other actions affecting the lottery industry could have a negative effect on our business, results of operations or prospects.

In many jurisdictions where we currently operate or seek to do business, lotteries are not permitted unless expressly authorized by law. The successful implementation of our growth strategy and our business could be materially adversely affected if jurisdictions that do not currently authorize lotteries do not approve lotteries or if those jurisdictions that currently authorize lotteries do not continue to permit such activities.

Once authorized, the ongoing operations of lotteries and lottery operators are typically subject to extensive and evolving regulation. Lottery authorities generally conduct an intensive investigation of the winning vendor and its employees prior to and after the award of a lottery contract. Lottery authorities with which we do business may require the removal of any of our employees deemed to be unsuitable and are generally empowered to disqualify us from receiving a lottery contract or operating a lottery system as a result of any such investigation. Some jurisdictions also require extensive personal and financial disclosure and background checks from persons and entities beneficially owning a specified percentage (typically five percent or more) of our securities. The failure of these beneficial owners to submit to such background checks and provide required disclosure could jeopardize the award of a lottery contract to us or provide grounds for termination of an existing lottery contract. Additional restrictions are often imposed by international jurisdictions upon foreign corporations, such as us, seeking to do business there.

Further, there have been, are currently, and may in the future continue to be, investigations of various types, conducted by governmental authorities into possible improprieties and wrongdoing in connection with efforts to obtain and/or the awarding of lottery contracts and related matters. In light of the fact that such investigations frequently are conducted in secret, we may not necessarily know of the existence of an investigation in which we might be involved. Because our reputation for integrity is an important factor in our business dealings with lottery and other governmental agencies, a governmental allegation or a finding of improper conduct by or attributable to us in any manner or the prolonged investigation of these matters by governmental or regulatory authorities could have a material adverse effect on our results of operations, business or prospects, including our ability to retain existing contracts or to obtain new or renewal contracts. In addition, adverse publicity resulting from any such proceedings could have a material adverse effect on our reputation and business.

Finally, sales generated by lottery games are dependent upon decisions over which we have no control made by lottery authorities with respect to the operation of these games, such as matters relating to the marketing and prize payout features of online lottery games. Because we are typically compensated in whole or in part based on a jurisdiction’s gross lottery sales, lower than anticipated sales due to these factors could have a material adverse effect on our revenues.

If we are unable to obtain GLI certification for a significant number or our games it may be difficult for us to market and sell our games in many of the countries in which we do business.

Once a gaming product has GLI certification, then, in any jurisdiction that has accredited GLI as a standard-setting body, regulatory approval of that gaming product is automatic. If our games are not certified by GLI, it may be difficult for us to market and sell them in jurisdictions in which GLI certification is either required or desirable.

Slow growth in the number of new casinos or the rate of replacement of existing gaming machines could limit or reduce our future profits.

Demand for our products is driven substantially by the replacement of existing gaming machines, the establishment of new gaming jurisdictions and the addition of new casinos or expansion of existing casinos within existing gaming jurisdictions. The establishment or expansion of gaming in any jurisdiction typically requires a public referendum or other legislative action. As a result, gaming continues to be the subject of public debate and there are numerous active organizations that oppose gaming. Opposition to gaming could result in restrictions on or even prohibitions of gaming operations in any jurisdiction.

Gaming opponents persist in their efforts to curtail the expansion of legalized gaming, which, if successful, could limit our existing operations.

Legalized gaming is subject to opposition from gaming opponents. There can be no assurance that this opposition will not succeed in preventing the legalization of gaming in jurisdictions where these activities are presently prohibited or prohibiting or limiting the expansion of gaming where it is currently permitted, in either case to the detriment of our business, financial condition, results and prospects.

Consumer spending on leisure activities is affected by changes in the economy and consumer tastes, as well as other factors that are difficult to predict and beyond our control.

We cannot ensure that demand for our products or services will remain constant. Consumers' willingness to spend money on leisure activities such as gaming is affected by changes in the economy and consumer tastes, both of which are both difficult to predict and beyond our control. Continued adverse developments affecting economies throughout the world, including a general tightening of the availability of credit, increasing interest rates, increasing energy costs, acts of war or terrorism, natural disasters, declining consumer confidence or significant declines in the stock market could lead to a further reduction in discretionary spending on leisure activities adversely affecting our business.

As a result of the many regulations imposed by various regulatory authorities on businesses involved in the gaming industry, there may be a limited number of potential candidates to acquire our business.

The manufacture and distribution of gaming machines and the development of systems for various jurisdictions are subject to extensive regulation, including, in some cases, requirements of suitability by gaming regulatory authorities with respect to major shareholders. As a result of these regulations, we may be unable to consummate the sale of our business to interested takeover candidates, simply because these individuals or entities are unable to comply with certain applicable regulations in the jurisdictions in which we conduct business. Therefore, even if a sale of our business is in the best interest of our shareholders, we may either be unable to complete such sale or we may be required to accept a lower price from a party who is able to complete the acquisition because it complies with the applicable regulations.

Risks Related to our Common Stock

We have not paid dividends in the past and do not expect to pay dividends in the future. Any return on your investment may be limited to the value of our Common Stock.

We never have paid cash dividends on our Common Stock and do not anticipate doing so in the foreseeable future. The payment of dividends on our Common Stock will depend on our earnings, financial condition and other business and economic factors that the board of directors may consider relevant. If we do not pay dividends, our Common Stock may be less valuable, because a return on your investment only will occur if our stock price appreciates.

Our Common Stock may be affected by limited trading volume and price fluctuations, each of which could adversely impact the value of our common stock.

Our Common Stock is listed on the Over the Counter Bulletin Board, and has had limited trading, prior to the date of this annual report, and there can be no assurance that an active trading market in our Common Stock will be maintained. In addition, we believe that factors such as quarterly fluctuations in our financial results and changes in the overall economy or the condition of the financial markets could cause the price of our Common Stock to fluctuate substantially. These fluctuations also may cause short sellers to enter the market from time to time in the belief that we will have poor results in the future. We cannot predict the actions of market participants and, therefore, can offer no assurances that the market for our stock will be stable or appreciate over time.

Because our Common Stock could in the future be deemed a “penny stock,” it might become more difficult for investors to sell shares of our Common Stock, and the market price of our Common Stock could be adversely affected.

Our Common Stock could, in the future, be deemed to be a “penny stock,” if, among other things, the stock price is below US$5.00 per share, the stock is not listed on a national securities exchange and the stock has not met certain net tangible asset or average revenue requirements. Broker-dealers who sell penny stocks must provide purchasers of these stocks with a standardized risk-disclosure document prepared by the Securities and Exchange Commission. A broker must obtain the purchaser’s written agreement to the purchase and must also give the purchaser bid and offer quotations and information regarding broker and salesperson compensation and a written determination that the penny stock is a suitable investment for the purchaser. Broker-dealers also must provide to customers that hold penny stocks in their accounts a monthly statement containing price and market information relating to the penny stock. If a penny stock is sold to an investor in violation of the penny stock rules, the investor may be able to cancel its purchase and obtain a full refund of money paid.

If they become applicable, the penny stock rules may make it difficult for investors to sell their shares of our Common Stock. Because of the rules and restrictions applicable to a penny stock, there is less trading in penny stocks, and the market price of our Common Stock may be adversely affected in the event that these rules and restrictions become applicable to us. Also, many brokers choose not to participate in penny stock transactions. Accordingly, investors may not always be able to resell their shares of our Common Stock publicly at times and prices that they feel are appropriate.

The price of our Common Stock may be volatile, and our Common Stock may trade at prices below the offering price

We anticipate that the market price of our Common Stock will be subject to wide fluctuations in response to several factors from time to time, including:

the evolving demand for our services;

our ability or inability to arrange for financing;

our ability to manage expenses;

changes in our pricing policies or our competitors;

global economic and political conditions;

investors’ perceptions of our prospects;

investors’ perceptions of the prospects of the gaming industry and, more broadly, the entertainment industry;

differences between our actual financial and operating results and those expected by investors and analysts;

changes in analysts’ recommendations or projections;

fluctuations in quarterly operating results;

announcements by us or our competitors of significant acquisitions, strategic partnerships, or divestitures;

changes or trends in our industry, including price volatility, trading volumes, competitive or regulatory changes, or changes in the gaming business;

adverse resolution of new litigation against us;

seasonality;

additions or departures of key personnel; and

broad market fluctuations.

In particular, announcements of potentially adverse developments, such as proposed regulatory changes, new government investigations, or the commencement or threat of litigation against us, as well as announced changes in our business plans or those of our competitors, could adversely affect the trading price of our Common Stock, regardless of the likely outcome of those developments. Broad market and industry factors may adversely affect the market price of our Common Stock, regardless of our actual operating performance. Our stock price also may be impacted by factors that are unrelated or disproportionate to our operating performance. These market fluctuations may adversely affect the market price of our Common Stock. As a result, our Common Stock may trade at prices significantly below the offering price. Declines in the price of our Common Stock may adversely affect our ability to recruit and retain key employees, including key professional employees.

If the shareholders whose shares of Common Stock are included in a currently pending registration statement became able to, and sell a large number of shares all at once or in blocks, the market price of our shares would most likely decline.

The market price of our Common Stock may fluctuate in the future, and future sales of shares of our Common Stock, could adversely affect the market price of our Common Stock. Shareholders could be diluted by such future sales and be further diluted upon the conversion or exercise of debentures or warrants into our Common Stock.

While none of our shares of Common Stock are currently registered pursuant to an effective registration statement, on January 22, 2009, the Company filed a post-effective amendment on Form S-1 with the SEC in order to resume the effectiveness of the registration statement filed on October 15, 2007 on Form SB-2 with the SEC. If and when this registration statement becomes effective again, the selling shareholders named in the prospectus that is a part of the registration statement will be able to sell their aggregate 747,414 shares of Common Stock. The offer or sale of a large number of these shares at any price may cause the market price to fall. If the selling shareholders sell a large number of shares, the market price of our Common Stock could decline significantly. Moreover, the perception in the public market that these shareholders might sell shares could depress the market price of Common Stock.

We may issue shares of our capital stock or debt securities in the future, which would reduce the equity interest of our security holders and may cause a change in control of our ownership.

Our articles of incorporation authorize the issuance of up to 150,000,000 shares of Common Stock. The issuance of additional shares of our Common Stock:

may cause a change in control if a substantial number of our shares of Common Stock are issued, which may affect, among other things, our ability to use our net operating loss carry-forwards, if any, and may result in the resignation or removal of our present officers and directors; and

may adversely affect prevailing market prices for our Common Stock, to the extent a trading market was to develop in the future.

Similarly, an issuance of additional debt securities may cause:

default and foreclosure on our assets if our operating revenues are insufficient to repay our debt obligations;

acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant;

our immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand; and

our inability to obtain necessary additional financing if the debt security contains covenants restricting our ability to obtain such financing while the debt security is outstanding.

Provisions contained in our Articles of Incorporation may deter a non-negotiated change of control.

Our Articles of Incorporation currently contain provisions which could be an impediment to a non-negotiated change in control, namely, an ability, without shareholder approval, to issue up to 10,000,000 shares of preferred stock with rights and preferences determined by the board of directors. If we should take this action, it could impede a non-negotiated change in control and thereby prevent shareholders from obtaining a premium for their common stock.

Item 1B. Unresolved Staff Comments

Smaller reporting companies are not required to provide the information required by this item.

Item 2. Properties.

We expect our current properties will be adequate for our near-term business needs. See Note 16, “Commitments and Contingencies,” to the Consolidated Financial Statements included in this annual report for more information about our lease commitments. Our business segments, as reported in our consolidated financial statements, utilize all of our facilities.

We lease our principal office spaces located at 1-3 Bury Street, Guildford, Surrey, United Kingdom. On May 1, 2008, we renegotiated our Lease Agreement with Bury House Properties Ltd. regarding the lease of our principal office spaces, encompassing a total of 3,331 square feet, pursuant to which we were obligated to pay monthly rent in the amount of British pounds 8,740 (US$16,493.25 based on the Average Exchange Rate for the period between May 1, 2008 and October 31, 2008 of GBP1=US$1.8871) for the period from May 1, 2008 through October 31, 2008 and British pounds 9,005 (US$14,119.39 based on the Average Exchange Rate for the period between November 1, 2008 and December 31, 2009 of GBP1=US$1.56795). We are obligated to pay monthly rent in the amount of British pounds 9,005 (US$14,343.16 based on the December 31, 2009 Exchange Rate of GBP1=US$1.5928) through April 30, 2010.

Our largest facility is located in St. Petersburg, Russia, where we lease a total of 954 square meters from Aquatoria LLC. Our systems R&D, customer service and support, data center and marketing and administration functions offices are located at this facility. We conduct worldwide operations from this location. Our lease agreement for this location provided for payment of 791,368 Russian Roubles per month (US$26,139 based on the December 31, 2009 Exchange Rate of RUB1=US$0.03303) and expires on October 30, 2010.

Our second largest facility also is located in St. Petersburg, Russia, where we lease a total of 642 square meters from Vektor LLC. Our games development and production offices are located at this facility. Our lease agreement for this location provides for payment of 494,354 Russian Roubles per month (US$14,967 based on the December 31, 2009 Exchange Rate of RUB1=US$0.03303) and expires on September 8, 2010.

Each of our facilities in Bogotá, Colombia and Buenos Aires, Argentina contains a data center that services worldwide operations and sales, technical support and administrative functions. We also lease approximately 400 square meters of bonded warehouse space in Bogotá. Additionally, we lease office space in Kigali, Rwanda.

Item 3. Legal Proceedings.

None.

Item 4. Submission of Matters to a Vote of Security Holders.

On November 27, 2008 stockholders of at least a majority of the issued and outstanding shares of our Common Stock (the “Voting Shareholders”) approved amending and restating the articles of incorporation of the Company in order to: (i) increase the total number of shares of our authorized capital stock to 160,000,000 from 75,000,000; (ii) increase the number of shares of our Common Stock to 150,000,000 shares; (iii) create of a new class of blank check preferred stock, par value $0.001 per share, consisting of 10,000,000 authorized shares; and (iv) set certain standard limitation of liability and indemnification provisions relating to our officers, directors and employees, as permitted pursuant to the Nevada Revised Statutes. The Voting Shareholders also approved a reverse split of our shares of Common Stock at a rate of one share for each 5.0174 shares of Common Stock issued and outstanding. All information relating to this vote of our security holders is set forth in the Company’s Current Report on Form 8-K filed with the SEC on December 4, 2008 and is incorporated herein by reference (File No. 333-146705).

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Market for Common Stock

Our Common Stock is quoted for trading on the OTC Bulletin Board under the symbol “OCTV”. It began being quoted on February 13, 2008 under the symbol “HSLY”, the symbol was changed to “OVGT” on November 14, 2008 and then changed to the current symbol on January 7, 2009. Our Common Stock has had minimal trading.

The following table contains information about the range of high and low bid prices for our Common Stock for each quarterly period indicated, since the inception of quotation on the OTC Bulletin Board on February 13, 2008, based upon reports of transactions on the OTC Bulletin Board. The high and the low bid prices for our common shares for each quarter, during the period from the date our common shares were first listed on the OTC Bulletin Board through December 31, 2008, are not available from the OTC Bulletin Board. In order for the OTC Bulletin Board to report the high and low bid prices for a particular security, there must be three market makers for that security. During the period from the date our common shares were first listed on the OTC Bulletin Board through December 31, 2009, there were not three market makers for our Common Stock. As such, the OTC Bulletin Board has not reported the high or low bid prices for our common shares during that period.

Fiscal Quarter End	Low Bid		High Bid
February 13, 2008 to March 31, 2008	$	N/A	$	N/A
June 30, 2008	$	N/A	$	N/A
September 30, 2008	$	N/A	$	N/A
December 31, 2008	$	N/A	$	N/A
March 31, 2009	$	N/A	$	N/A
June 30, 2009	$	N/A	$	N/A
September 30, 2009	$	N/A	$	N/A
December 31, 2009	$	N/A	$	N/A

Holders of Our Common Stock

As of March 30, 2010, we have 43 stockholders of record.

Options and Warrants

The Company has outstanding warrants to purchase an aggregate of up to 10,597,776 shares of our Common Stock. Of this amount (i) Ziria Enterprises Limited, a company controlled by Harmen Brenninkmeijer, our Chief Executive Officer and Chairman, holds a seven-year warrant to purchase up to 1,647,500 shares of our Common Stock at an exercise price of US$3.10 per share; (ii) AGI holds a seven-year warrant to purchase up to 1,073,333 shares of our Common Stock at an exercise price of US$3.10 per share; (iii) investors in the Private Placement hold warrants to purchase up to an aggregate of 7,541,460 shares of our Common Stock, 50% of which have a term of five years and an exercise price of US$3.10 per share and the other 50% of which have a term of seven years and an exercise price of US$4.65 per share; and (iv) designees of the finders in the Private Placement hold five-year warrants to purchase up to an aggregate of 335,483 shares of our Common Stock at an exercise price of US$3.10 per share.

Rule 144 Shares

Under SEC Rule 144, shareholders who are non-affiliates of a publicly-reporting company that never was a “shell company” under SEC rules may be able to sell their shares of common stock of the company under Rule 144 within six months after acquiring such shares, without any restrictions, other than such company continuing to remain current in the filing of its periodic reports with the SEC for an additional six months. Affiliates of that company also would be able to sell their shares under Rule 144, but would be subject to volume and trading limitations. Shareholders who purchase securities in a company that is or ever was a shell company or received their shares in a “reverse merger” with a shell company, which would apply to shareholders of the Company who held shares prior to the Share Exchange or who acquired shares in the Share Exchange and/or the Private Placement, are subject to a modified holding period. In this case, the holding period continues until the longer of (i) six months from the date of acquiring the securities and (ii) November 5, 2009 (the date which is one year following the date that the Company filed a current report on Form 8-K reporting that it ceased to be a “shell company.” In addition, if a company ever was a shell company, in order to utilize Rule 144 to effect a sale, the Company must have completed all its periodic report filings with the SEC during the 12-month period preceding such proposed sale. Therefore, the earliest that any shares of our Common Stock will become transferable pursuant to Rule 144 is November 5, 2009, provided that we have filed all of our periodic reports for the twelve-month period immediately prior to such date. Shares held by affiliates of the Company still will be subject to the volume and trading limitations of Rule 144, which will generally limit their sale to one percent of the number of shares of the Company’s Common Stock then outstanding, during any three-month period.

Preferred Stock

Our Amended and Restated Articles of Incorporation authorizes the issuance of up to 10,000,000 shares of blank check preferred stock, par value $.001 per share (the “Preferred Stock”). The Company has not yet issued any of its Preferred Stock.

Dividends and Dividend Policy

We have never paid any cash dividends on our Common Stock and do not anticipate paying cash dividends in the foreseeable future. Our current policy is to retain earnings, if any, to fund operations, and the development and growth of our business. Any future determination to pay cash dividends will be at the discretion of the Board of Directors and will be dependent upon the Company’s financial condition, results from operations, capital requirements, applicable contractual restrictions, restrictions in the organizational documents and any other factors that the Board of Directors deems relevant.

Registration Rights

Investors who participated in the Private Placement were granted piggyback registration rights. Under these rights, investors in the Private Placement have the right to include their shares in any registration that we effect under the Securities Act, subject to customer underwriter cutbacks. The underwriters of any underwritten offering have the right to limit on a pro rata basis the number of shares registered by these holders. We must pay all expenses, except for underwriters’ discounts and commissions, incurred in connection with these piggyback registration rights.

Pending Registration

On January 22, 2009, the Company filed a post-effective amendment on Form S-1 with the SEC in order to resume the effectiveness of the registration statement filed on October 15, 2007 on Form SB-2 with the SEC. If and when this registration statement resumes its effectiveness, the selling shareholders under the prospectus included in the registration statement will be able to sell their aggregate 747,408 shares of Common Stock.

Recent Sales of Unregistered Securities

Pursuant to the Debenture Purchase Agreement on May 14, 2009, the Company issued (i) Debentures in an aggregate principal amount of US$10,774,126; (ii) Warrants to purchase up to an aggregate of 3,347,912 shares of Common Stock; and (iii) 695,105 shares of Common Stock. The Finance Debentures are initially convertible into an aggregate of 1,417,935 shares of Common Stock and the Exchange Debentures were immediately converted into an aggregate of 2,057,589 shares of Common Stock. The Company raised gross proceeds of $4 million and cancelled existing indebtedness of $6,378,526. As a result of the Purchase Agreement, AGI increased its beneficial ownership of the voting shares of Common Stock to approximately 50.61% of the issued and outstanding Common Stock from approximately 31.2%. This offer and sale of securities was made in reliance upon the exemption from registration provided by Regulation S of the Securities Act, Section 4(2) of the Securities Act and Rule 506 of Regulation D promulgated under the Securities Act.

Pursuant to the Private Placement closed concurrently with the Share Exchange, on October 30, 2008, the Company issued (i) Debentures in an aggregate principal amount of US$14,285,700; (ii) Warrants to investors in the Private Placement to purchase up to an aggregate of 4,193,548 shares of our Common Stock; and (iii) 4,608,290 shares of our Common Stock. The Company raised gross proceeds of US$13 million in the Private Placement. The Share Exchange and Private Placement were discussed in greater detail in the Form 8-K that we filed on November 5, 2008. This offer and sale of securities was made in reliance upon the exemption from registration provided by Regulation S of the Securities Act, Section 4(2) of the Securities Act and Rule 506 of Regulation D promulgated under the Securities Act.

The Company also issued to certain designees of the finders 5-year warrants to purchase up to an aggregate of 335,484 shares of our Common Stock at an exercise price of US$3.10 per share. These warrants are on the same terms and include the same provisions as those issued to investors in the Private Placement.

The Company has also made the following issuances of unregistered securities during the past three years:

House Fly

On May 1, 2007, the Company issued 3,000,000 shares of our Common Stock at a price of US$0.005 per share, an aggregate of US$15,000, to Mr. McCall. These shares of Common Stock were repurchased by the Company concurrent with the Share Exchange. The offer and sale of securities was made in reliance upon the exemption from registration provided by Regulation S of the Securities Act, Section 4(2) of the Securities Act.

During July of 2007, the Company raised gross proceeds of US$28,500 through the sale of 2,850,000 shares of our Common Stock at a price of US$0.01 per share. As a result of the Reverse Stock Split, the number of shares were reduced to 568,023 shares of our Common Stock. The offer and sale of securities was made in reliance upon the exemption from registration provided by Regulation S of the Securities Act, Section 4(2) of the Securities Act.

During August of 2007, the Company raised gross proceeds of US$9,000 through the sale of 900,000 shares of our Common Stock at a price of US$0.01 per share. As a result of the Reverse Stock Split, the number of shares was reduced to 179,376 shares of our Common Stock. The offer and sale of securities was made in reliance upon the exemption from registration provided by Regulation S of the Securities Act, Section 4(2) of the Securities Act.

Octavian

AGI

Under the terms of certain agreements entered into with AGI, Octavian’s largest supplier of gaming supplies, on October 30, 2008, prior to the closing of the Share Exchange, AGI converted €4 million (US$5,114,000 based on the October 30, 2008 Exchange Rate of €1=US$1.2785) of accounts payable to it by Octavian into 652 Ordinary Shares of Octavian, representing 35 percent of the outstanding share capital of Octavian. These 652 Ordinary Shares were exchanged by AGI under the terms of the Share Exchange for 10,770,685 shares of our Common Stock. As a result of the Reverse Stock Split, the number of shares was reduced to 2,146,667 shares of our Common Stock. The offer and sale of securities was made in reliance upon the exemption from registration provided under Section 4(2) of the Securities Act.

Lilac

Lilac Advisors, LLC (“Lilac”) performed consulting services for Octavian in connection with the Share Exchange and Private Placement for which Octavian issued 149 Ordinary Shares of Octavian International in consideration for such services, which were exchanged for 2,470,232 shares of our Common Stock. As a result of the Reverse Stock Split, the number of shares were reduced to 492,333 shares of our Common Stock. The offer and sale of securities was made in reliance upon the exemption from registration provided under Section 4(2) of the Securities Act.

PacificNet

Pursuant to the PacificNet Termination Agreement,, Octavian agreed to issue to PacificNet or its nominee an amount of shares of capital stock of Octavian equal to five percent (5%) of the outstanding shares of Octavian. On October 30, 2008, prior to the closing of the Share Exchange, Octavian issued PacificNet 61 Ordinary Shares of Octavian on in satisfaction of this provision. These 61 Ordinary Shares were exchanged by PacificNet under the terms of the Share Exchange for 1,000,135 shares of our Common Stock. As a result of the Reverse Stock Split, the number of shares were reduced to 199,333 shares of our Common Stock. The offer and sale of securities was made in reliance upon the exemption from registration provided under Section 4(2) of the Securities Act.

Issuer Purchases of Equity Securities

On October 30, 2008, the Company entered into the Repurchase Agreement with Mr. McCall, pursuant to which the Company repurchased from Mr. McCall an aggregate of 3,000,000 pre-Reverse Split shares of our Common Stock, which represented 44.4% of the Company’s shares of Common Stock then issued and outstanding, for an aggregate purchase price of US$300,000.

Item 6. Selected Financial Data

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Whenever the terms “our,” “we” and the “Company” are used in this section, they refer to one or more of the following: Octavian Global, Octavian International and all other direct and indirect subsidiaries of Octavian International identified in this annual report. The following discussion and analysis is intended to enhance the reader’s understanding of our operation and current business environment. This information should be read in conjunction with our Business Description and Financial Statements and the notes thereto contained herein. Except for the historical information contained herein, the following discussion contains forward-looking statements and involves numerous risks and uncertainties (see “Special Note Regarding Forward-Looking Statements”). These risks and uncertainties include dependence on business from foreign customers sometimes in politically unstable regions, political and governmental decisions about the gaming industry, fluctuations in period-to-period operating results, and other factors discussed in the Risk Factors contained in this annual report. Actual results may differ materially from those contained in any forward-looking statements. Factors that could cause or contribute to such differences include risks detailed the section entitled “Risk Factors” and elsewhere in this annual report. For purposes of this sections, references to “Octavian” refer to Octavian Global, Octavian International and all other consolidated subsidiaries.

OVERVIEW

Octavian is a global provider of a full end-to-end suite of gaming systems and products in over 30 countries, covering all aspects of casino and gaming operations including venue and player registration through to table and slots management, through to player tracking and loyalty systems, to security. Our solutions include full life-cycle gaming support and systems solutions, design development, implementation and support, alongside game content creation, products for the lottery industry and resale of third-party products. We are an independent provider of networked CMS, games, AWPs, lotteries and other advanced gaming products and services in over 30 countries.

Our primary focus is to establish long lasting relationships with customers by providing a full end-to-end suite of innovative gaming solutions. Delivered through our core businesses: OctaSystems, OctaGames, OctaSupplies and OctaLotto, Octavian provides comprehensive solutions and infrastructure systems, which allow both large and small operators to increase efficiency, profitability and control while bringing their customers top-of-the-line, innovative, downloadable and installed games.

We are dedicated to generating financial growth by focusing on the three cornerstones of our business strategy: focusing on casino management systems, establishing participation contracts, and increasing sales of our own products while reducing re-sales of third-party products. Our current research and development efforts are dedicated to developing products that support our business strategy.

We plan to capitalize on new market opportunities to accelerate growth. Some of these opportunities may come from political action as governments look to introduce and regulate gaming to increase tax revenues in support of public programs. We seek to continue to expand our footprint globally, especially in emerging markets in Latin America and Africa. We consider strategic business combinations, investments and alliances to expand our geographic reach, product lines and customer base.

THE SHARE EXCHANGE AND RELATED TRANSACTIONS

On October 30, 2008:

House Fly effected the Repurchase;

Octavian International and House Fly consummated the Share Exchange;

House Fly effected the Subsidiary Merger and Name Change; and

Octavian Global Technologies, Inc. effected the Private Placement and the Reverse Stock Split.

Please refer to “Certain Relationships and Related Transactions, and Director Independence” for more information about the Share Exchange and Related Transactions.

CONSOLIDATED OPERATING RESULTS – A Year On Year Comparative Analysis

Significant fluctuations in year-to-year revenue are expected in the gaming industry. Individual contracts generally are of considerable value, and the timing of contracts and sales does not occur in a predictable trend. Contracts to supply hardware to the same customer may not recur or generally do not recur in the short-term. The gross profit margin varies from one contract to another, depending on the size of the contract and competitive market conditions. Accordingly, comparative results between periods are not indicative of trends in revenues or gross profit margins.

	For The Years Ended December 31,						Amount Change			Percentage Change
	2009			2008				2009 v 2008			2009 v 2008

Revenue
Systems	$	3,880,645		$	7,912,485		$	(4,031,840	)		-51	%
Games	$	5,687,919		$	2,263,159		$	3,424,760			151	%
Lottery	$	312,703		$	100,498		$	212,205			211	%
Supplies	$	1,823,734		$	29,350,925		$	(27,527,191	)		-94	%
Net Revenue	$	11,705,001		$	39,627,067		$	(27,922,066	)		-70	%

Cost of Revenue
Systems	$	1,356,120		$	1,914,228		$	(558,108	)		-29	%
Games	$	1,669,546		$	1,337,657		$	331,889			25	%
Lottery	$	382,687		$	248,060		$	134,627			54	%
Supplies	$	1,361,066		$	24,744,186		$	(23,383,120	)		-94	%
Total Cost of Revenue	$	4,769,419		$	28,244,131		$	(23,474,712	)		-83	%

Gross profit	$	6,935,581		$	11,382,936		$	(4,447,355	)		-39	%

Operating expenses
General, administrative and selling expenses	$	14,190,873		$	16,792,256		$	(2,601,383	)		-15	%
Depreciation and amortization	$	2,286,282		$	800,670		$	1,485,612			186	%
(Gain) Loss on disposal of fixed assets	$	40,572		$	(340,823	)	$	381,395			-112	%
Research and development	$	-		$	94,005		$	(94,005	)		-100	%
Capital raising fees	$	-		$	134,507		$	(134,507	)		-100	%
Impairment of investment	$	67,000		$	-		$	67,000			100	%
Total operating expenses	$	16,584,728		$	17,480,615		$	(895,887	)		-5	%

Loss from operations	$	(9,649,146	)	$	(6,097,679	)	$	(3,551,467	)		58	%

Non-operating income (expense):
Other income (expense)	$	19,341		$	189,969		$	(169,010	)		-90	%
Interest (expense )- Warrant and debt issue cost	$	(4,155,845	)	$			$	(4,155,845	)		100	%
Interest income (expense)	$	(541,598	)	$	(652,011	)	$	110,413			-17	%
Share of earnings (loss) in equity investment	$	582,485		$	273,237		$	364,718			133	%
Foreign currency transaction gain (loss)	$	1,556,482		$	(4,103,630	)	$	5,660,112			-138	%
	$			$			$
Total non-operating income (expense)	$	(2,539,135	)	$	(4,292,435	)	$	1808,770			-42	%

Net loss before taxes	$	(12,188,281	)	$	(10,390,114	)	$	(1,742,697	)		17	%

Taxation	$	260,369		$	387,363		$	(126,994	)		-33	%
Net Loss of continued operations	$	(12,448,650	)	$	(10,777,477	)	$	(1,615,704	)		15	%

Less: (Income)/Expense from discontinued operations	$	45,176		$	-		$	45,176			100	%
Net Loss including non-controlling stockholders' interest	$	(12,493,826	)	$	(10,777,477	)	$	(1,660,880	)		15	%

Less: Net (income) loss attributed to noncontrolling stockholders' interest	$	-		$	(6,276	)	$	6,276			-100	%
Net loss attributable to Octavian	$	(12,493,826	)	$	(10,783,753	)	$	(1,654,604	)		15	%

Other comprehensive income
Foreign currency translation adjustment	$	(1,320,882	)	$	4,966,392		$	(6,342,744	)		-128	%

Comprehensive Loss	$	(13,814,708	)	$	(5,817,361	)	$	(7,997,348	)		137	%

Earnings/ (Losses) before Interest, Tax, Depreciation and Amortisation	$	(5,149,086	)	$	(8,943,709	)	$	3,794,623			-42	%

Weighted average shares outstanding
Basic and diluted		9,763,993			4,008,388

Loss per share attributed to Octavian stockholders:
Basic and diluted	$	(1.28	)	$	(2.69	)

Revenues

Our products and services are provided through our four core business sectors: (1) OctaSystems; (2) OctaGames; (3) OctaLotto; and (4) OctaSupplies.

Our revenues for the year ended December 31, 2009 were US$11.7 million, representing a decrease of US$27.9 million or 70 percent compared to the year ended December 31, 2008, which mainly was the result of significantly lower OctaSupplies sales.

(amounts in thousands US$)	For the year ended December 31,				Variance			% Change
	2009		2008		2009 vs 2008			2009 vs 2008
Revenues
OctaSystems	$	3,881	$	7,912	$	(4,032	)		-51	%
OctaGames	$	5,688	$	2,263	$	3,425			151	%
OctaLotto	$	313	$	100	$	212			100	%
OctaSupplies	$	1,824	$	29,351	$	(27,527	)		-94	%
Total	$	11,705	$	39,627	$	(27,922	)		-70	%

OctaSupplies Revenues

(amounts in thousands US$)	For the year ended December 31,				Variance			% Change
	2009		2008		2009 vs 2008			2009 vs 2008
OctaSupplies revenues
CIS	$	1,218	$	26,001	$	(24,783	)		-95	%
EMEA	$	354	$	573	$	(219	)		-38	%
Latin America	$	252	$	2,777	$	(2,525	)		-91	%
Total	$	1,824	$	29,351	$	(27,527	)		-94	%

OctaSupplies sales decreased by approximately US$27.5 million or 94 percent for the year ended December 31, 2009 to approximately US$1.8 million compared to approximately $29.4 million for the year ended December 31, 2008. Approximately 89 percent of sales in 2008 represented OctaSupplies sales in Russia which have since been adversely affected by the legislative change significantly limiting gambling operations in Russia from July 2009. In the first half of 2008 there had been an expectation in the Russian market that the legislation would be reversed or postponed but by the second half of 2008 it became clear that this was not going to be the case and the Russian slot machine market collapsed and revenues were significantly affected.. Following the implementation of the restrictions on gaming operations in Russia in July 2009 the Group has not undertaken any OctaSupply sales in Russia and the sales office in Moscow has ceased trading. In 2009 the Latin American market was generally depressed and experienced difficult trading conditions, partly as a result of the influx of second hand machines exported from Russia, which led to the decrease in revenues of US$2.5 million in 2009.

OctaSystems Revenues

(amounts in thousands US$)	For the year ended							%
	December 31,				Variance			Change
	2009		2008		2009 vs 2008			2009 vs 2008
OctaSystems revenues
CIS	$	1,420	$	2,910	$	(1,490	)		-51	%
EMEA	$	297	$	1,332	$	(1,035	)		-78	%
Latin America	$	2,164	$	3,670	$	(1,506	)		-41	%
Total	$	3,881	$	7,912	$	(4,031	)		-51	%

OctaSystems revenue decreased by approximately US$4 million (51 percent) from approximately US$7.9 million during the year ended December 31, 2009 to approximately US$3.9 million in the year ended December 31, 2008. The legislative change in Russia had already begun to affect OctaSystems revenues in Russia in the year ended December 31, 2008. The effects of the changes were further felt in the year ended December 31, 2009 when the legislation came into effect and systems contracts ceased after 1 July 2009 causing revenue to decrease by US$1.5 million (51 percent) to US$1.4 million. Difficult trading conditions in the Latin American market has led to the decrease of approximately US$1.5million (41 percent) for the year ended December 31, 2008 to approximately US$2.2 million for the year ended December 31, 2009. The decrease in the EMEA revenue for the year ended December 31, 2008 of US$1 million (78 percent) to US$0.3 million for the year ended December 31, 2009 is a reflection of the overall reduction in system sales throughout Europe due to difficult market conditions.

OctaGames Revenues

(amounts in thousands US$)	For the year ended							%
	December 31,				Variance			Change
	2009		2008		2009 vs 2008			2009 vs 2008
OctaGames revenues
CIS	$	2,130	$	1,091	$	1,039			95	%
EMEA	$	3,348	$	856	$	2,492			291	%
Latin America	$	210	$	316	$	(106	)		-34	%
Total	$	5,688	$	2,263	$	3,425			151	%

OctaGames sales increased by approximately US$3.4 million (151 percent) to approximately US$5.7 million for the year ended December 31, 2009 from approximately US$2.3 million for the year ended December 31, 2008. This is mainly due to a corporate decision to move sales focus from OctaSupply sales, generally characterised by being capital intensive, one off sales at lower margins, to OctaGames sales, with higher margins and often with recurring revenues. OctaGames sales in Europe increased by approximately US$2.5 million (291%) for the year ended December 31, 2009 as compared to the year ended December 31, 2008, primarily as a result of first-time sales of game licenses to the Italian market. There was an increase in sales in Russia of US$1 million for the year ended December 31, 2009 as compared to the year ended December 31, 2008. These also related to the development and sales of new games sold by our Russian office to the Italian market. Sales in Latin America decreased by approximately US$0.1 million (34 percent) from approximately US$ 0.3 million for the year ended December 31, 2008 to approximately US$ 0.2 million for the year ended December 31, 2009 as a result the difficult trading conditions in the region.

OctaLotto Revenues

(amounts in thousands US$)	For the year ended December 31,				Variance			% Change
	2009		2008		2009 vs 2008			2009 vs 2008
OctaLotto
CIS	$	-	$	72	$	(72	)		0	%
EMEA	$	313	$	29	$	284			100	%
Latin America	$	-	$	-	$	-			0	%
Total	$	313	$	101	$	212			100	%

OctaLotto sales increased by approximately US$0.2 million the year ended December 31, 2009 as compared to the year ended December 31, 2008. OctaLotto sales began in the latter part of 2008 with our operations in Rwanda and development centre in Russia; however the full launch of the Rwandan Lottery only occurred in 2009.

(amounts in thousands US$)	For the year ended December 31,							Variance			% Change
	2009				2008			2009 vs 2008			2009 vs 2008
Revenues and gross profit
Revenues		$	11,705		$	39,627		$	(27,922	)		-70	%
Cost of Revenues		$	4,769		$	28,244		$	(23,475	)		-83	%
Gross Profit		$	6,936		$	11,383		$	(4,447	)		-39	%
			59	%		29	%		-

The increase in margin reflects the higher proportion of OctaGames sold in 2009 which have a higher margin compared to our OctaSupplies sales.

Operating Expenses

Sales, general & administrative (“SG&A”) expenses decreased by approximately US$2.6 million, or 15 percent, for the year ended December 31, 2009 as compared to the year ended December 31, 2008, which is mainly as a result of general cost cutting procedures implemented during the year ended December 31, 2009. The effect of this cost cutting was offset by our bad debt expense which increased by approximately US$1.5 million to approximately US$2.8 million, taking into account debts older than six months.

(amounts in thousands US$)	For the year ended December 31,				Variance			% Change
	2009		2008		2009 vs 2008			2009 vs 2008
SG&A cost
Staff Costs	$	5,844	$	6,625	$	(781	)		-12	%
Other cost	$	5,504	$	8,837	$	(3,333	)		-38	%
SG&A excluding Bad debt	$	11,348	$	15,462	$	(4,114	)		-27	%
Bad Debts	$	2,843	$	1,330	$	1,513			114	%
Total SG&A cost incl Bad debt provision	$	14,191	$	16,792	$	(2,601	)		-15	%

Excluding bad debts, SG&A decreased approximately US$4.1 million or 27 percent from approximately US$15.5 million for the year ended December 31, 2008 to approximately US$11.3 million for the year ended December 31, 2009.

Staffing costs decreased approximately US0.7 million or 12 percent from approximately US$6.6 million for the year ended December 31, 2008 to approximately US$5.8 million for the year ended December 31, 2009. There has been a general reduction in staff numbers and external contractor costs, however the significance of the cost saving was offset slightly by the establishment of our office in Rwanda and as well as the termination packages which were required to be paid.

There was a decrease in other expenses of approximately US$3.3 million or 38 percent from approximately US$8.8 million for the year ended December 31, 2008 to approximately US$5.5 million for the year ended December 31, 2009. This is mainly due to the decrease in office costs as two subsidiaries closed their premises as well as a general company wide cost cutting in office related costs. Costs related to technical professional fees as well as legal and professional fees were decreased and where possible these requirements were covered in house.

The Company expenses the cost of advertising as incurred or, as appropriate, the first time the advertising takes place. Advertising costs for the year ended December 31, 2009 and 2008 was $ 87,637 and $100,255 respectively.

We have accounted for an increase in bad debt expense of approximately US$1.5 million (114 percent) for the year ended December 31, 2009 as compared to the year ended December 31, 2008, based on debt outstanding for more than six months for all customers in the group. These costs are related mainly to customers in the Latin American regions and loans receivable in the EMEA regions.

	For the year ended December 31,					Variance			% Change
	2009		2008			2009 vs 2008			2009 vs 2008

Operating expenses
Selling, general and administrative expenses	$	14,191	$	16,792		$	(2,601	)		-15	%
Depreciation and amortization	$	2,286	$	801		$	1,486			186	%
(Gain) / Loss on disposal of fixed assets	$	41	$	(341	)	$	381			-112	%
Research and development	$	-	$	94		$	(94	)		-100	%
Capital raising fees	$	-	$	135		$	(135	)		-100	%
Impairment of investment	$	67	$	-		$	67		NM
Total operating expenses	$	16,585	$	17,481		$	(896	)		-5	%

Depreciation and amortization increased by approximately US$1.5 million or 186 percent for the year ended December 31, 2009 compared to the year ended December 31, 2008 as a result of higher amortization expenses related to additions to our intangible assets. In particular, our intangible assets related to Product Development were written off in full in 2009.

Gains on disposal of assets of US$0.3 million in the year ended December 31, 2008 decreased to losses on disposal of fixed assets of US$0.4 million for the year ended December 31, 2009 as no material disposals of assets were made during the period.

For the year ended December 31, 2009 the PactNet investment was impaired by US$0.07 million as these listed shares performed adversely with the share price decreasing from the purchase price of US$0.18 per share to a closing price of US$0.046 per share on December 31, 2009.

Other Income (Expense) and Taxes

Interest expense decreased approximately US$0.1 million or 17 percent for the year ended December 31, 2009 when compared to the same period in 2008 as the interest charge on the AGI Loan is lower than that of the Ebet Loan the Group had in 2008. For the year ended December 31, 2009 interest is accrued on the current loan with AGI of €6,691,123 (US$ 9,590,230 based on the December 31, 2009 Exchange Rate of € 1 = US$ 1.4333) as well as two US dollar loans of US$ 2,007,337 and US$90,329.50 at December 31, 2009.

Interest expense related to the warrant and debt issuing costs were incurred as a result of the capital raising activities on October 30, 2008 and May 14, 2009; the amount for the year ended December 31, 2009 was $4,155,845.

In 2008, our 50 percent joint venture in Italy booked a loss due to the delayed implementation of new legislation, which would have expanded the gaming market in Italy. As a result of the delay, no new gaming products were allowed to be sold in Italy for the majority of 2008. With the implementation of the new legislation Italy became profitable at the end of 2008. During the year ended December 31, 2009 our 50% shareholding generated a gain of approximately US$0.6 million.

Corporate taxes decreased approximately US$0.12 million or 33 percent from approximately US$0.39 million for the year ended December 31, 2008 to approximately US$0.26 million for the year ended December 31, 2009, mainly due to the decreased taxes incurred in both Argentina and Russia as revenues in both those regions were less than the prior year.

Outside shareholders’ interests

For the first nine months of 2009 Octavian International owned 89.7 percent of the shares in Octavian Latin America SA, a company incorporated in Colombia and based in Bogotá. The remaining 10.3 percent of the shares were held by five individuals. On October 1, 2009 Octavian Latin America S.A., incorporated on July 22, 2005, became a wholly owned subsidiary of Octavian International, Ltd. Due to corporate governance changes companies in Colombia no longer require a minimum of five shareholders.

The Company also owns a 51% interest in Octavian Germany Limited and Octavian Germany GmbH. Both of these companies are dormant.

Since Octavian’ main operating companies are headquartered in the United Kingdom, we maintain our internal accounts in British pounds sterling. We invoice products in various local currencies. Fluctuations in exchange rates from reporting period to reporting period between various foreign currencies and the British pound sterling may have an impact on revenues and expenses, and this impact may be material in any individual reporting period.

For the year ended December 31, 2009, we had a foreign currency gain of approximately US$1.6 million compared with a loss of approximately US$4.1 million for the year ended December 31, 2008.

LIQUIDITY AND CAPITAL RESOURCES – December 31, 2009

Overview

In the highly competitive industry in which we operate, operating results may fluctuate significantly from period to period.

Our principal source of liquidity is cash from operations. Other sources of capital include, but are not limited to, loans from third parties, credit terms from our suppliers and a recent private placement of equity and convertible debt. At December 31, 2009, we had negative working capital of US$2.4 million.

(amounts in thousands)	For the Year Ended December 31,						Increase (decrease)
	2009			2008			Amount			%

Cash and cash equivalents	$	358		$	2,830		$	(2,472	)		-87	%
Total Current Assets	$	5,730		$	14,575		$	(8,845	)		-61	%
Total Current Liabilities	$	8,113		$	15,549		$	(7,436	)		-48	%
Net working deficit	$	(2,383	)	$	(974	)	$	(1,409	)		-145	%

Cash Flows Summary

(amounts in thousands US$)	For the Year Ended December 31						Variance			% Change
	2009			2008			2009 vs 2008			2009 vs 2008

Cashflow from operation activities	$	(1,561	)	$	(6,360	)	$	4,799			-75	%
Cashflow from investing activities	$	(3,426	)	$	(4,808	)	$	1,382			-29	%
Cashflow from financing activities	$	2,334		$	12,531		$	(10,197	)		-81	%
Effect of Exchange rate changes on
cash and cash equivalents	$	180		$	(971	)	$	1,151			-119	%
Net Cashflow	$	(2,472	)	$	392		$	(2,864	)		-731	%

Operating Activities

Our operating activities resulted in negative cash of US$1.8 million in 2009, which primarily was a result of the net losses of US$12.4 million we recognized during this period offset against non-cash expenses incurred during the period amounting to US$10 million. Further differences are explained by changes in our operating assets and liabilities and changes in long term liabilities as presented below.

(amounts in thousands US$)	For the Year Ended December, 31
	2009			2008

Net Income (Loss)	$	(12,494	)	$	(10,784	)
Add: non-cash expenses	$	7,332		$	6,688
Deduct (Add): changes in operating assets	$	5,208		$	(8,189	)
Add (deduct): changes in operating liabilities	$	(1,917	)	$	5,925
Add (deduct): changes in long term liabilities		310			-
Net Cash provided by operating activities	$	(1,561	)	$	(6,360	)

Non-cash expenses in 2009 amounted to US$7.3 million and related to a bad debt provision of US$2.8 million, depreciation and amortization costs of US$2.3 million, an increase in inventory reserves US$0.2 million and capital raising related expenses of US$4.2 million. These were offset by our earnings from our Italian joint venture of US$0.6 million and an exchange gain of $1.5 million.

Assets decreased US$5.2 million as result of a decrease in accounts receivable of US$5 million, a decrease in other receivables of US$0.6 million and an increase in inventory of US$0.4 million.

Operating liabilities decreased by US$1.9 million as a result of a decrease of accrued expenses of US$1.5 million, a decrease of customer deposits of US$0.2 million, an decrease in deferred revenue of US$0.2 million offset by an increase in accounts payable of US$0.1 million.

Long term liabilities increased by US$0.3 million in 2009 as a result of taking advantage of long payment terms offered by the Argentine tax authorities for settling outstanding tax liabilities.

Investing Activities

In 2009, the total cash outflows in investing activities were US$3.4 million, an decrease of US$1.4 million, or 28.7 percent, from US$4.8 million in 2008. Intangible assets increased by US$0.3 million, or 14.6 percent, from US$1.9 million in 2008 to US$2.2 million in 2009. This increase is attributable to the costs incurred in the development of the games for our various markets.

Cash outflows in the purchase of property and equipment decreased by US$0.7 million in 2009 to US$0.8 million.

Cash outflows for loans to related parties amounted to US$0.2 million.

Cash outflows for loans provided were US$0.2 million in 2009 in order to support suppliers helping to develop our new lottery operations in Rwanda.

Financing Activities

In 2009, cash inflows from financing activities were US$2.3 million, a decrease of approximately US$10.2 million from US$12.5 million in 2008.

During 2009, we reduced our short term overdrafts and loans by US$0.7million compared to US$1.4 million in 2008.

During 2009 the net value of fixed assets increased US$0.03 million or 2.3 percent from US$1.39 million to US$1.42 million.

FINANCIAL CONDITION – December 31, 2009

(amounts in thousands US$)	December 31,			December 31,			Variance			% Change
	2009			2008			2009 vs 2008			2009 vs 2008

Total Assets	$	11,728		$	18,947		$	(7,219	)		-38	%
Total Liabilities	$	31,145		$	33,590		$	(2,445	)		-7	%
Total Equity	$	(19,417	)	$	(14,644	)	$	(4,773	)		-33	%

Total Current Assets	$	5,730		$	14,575		$	(8,845	)		-61	%
Total Current Liabilities	$	8,113		$	15,549		$	(7,436	)		-48	%
Net working capital	$	(2,383	)	$	(974	)	$	(1,409	)		-145	%

At December 31, 2009, we had negative net assets of US$19.4 million and a negative working capital of US$2.4 million.

Total liabilities decreased US$2.4 million, or 7 percent, between December 31, 2008 and December 31, 2009 due to the debt for equity exchange whereby Austrian Gaming Industries GmbH agreed to convert outstanding accounts payable of US$6,378,526 to equity; this is offset by the additional loan raised with Austrian Gaming Industries GmbH for $2,000,000 and $90,000 in addition to the increase of Convertible Debentures.

The decrease in shareholders’ equity reflects the loss for the period of US$12.4 million plus the comprehensive foreign exchange loss of US$1.4 million offset against the debt equity swap and common share issue which generated an increase in paid up share capital of US$10 million and a stock subscription receivable of US$1 million .

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements with unconsolidated entities or other persons.

Purchase Commitments

From time to time, we enter into commitments with our vendors to purchase inventory at fixed prices or in guaranteed quantities. We were not party to any firm commitments as of December 31, 2009.

The Company currently leases two office spaces in St. Petersburg, Russia beginning in September 2009 and December 2009 under non-cancellable operating leases that expire on September 8, 2010 and October 30, 2010 respectively. The Company also leases office space as well as office equipment in the United Kingdom beginning in May 2008 and March 2009 that expires on April 30, 2010 and March 13, 2014 respectively. The Company also leases office space and equipment in Bogota, Colombia beginning between October 2007 and October 2009 that expire between March 2010 and October 2011. The Company leases an office in Buenos Aires, Argentina until July 31, 2012. Additionally the Company began to lease office space in Kigali for its Rwandan operations. This lease began in April 2009 and will expire in February 2011. Future minimum lease payments under non-cancellable operating leases with initial or remaining terms of one year or more are as follows:

	Operating Leases
Year ending December 31,
2010	$	614,782
2011	$	76,922
2012	$	32,647
2013	$	7,447
Thereafter		-
	$	731,798

Capital Expenditure and Other

During the 12 months ended December 31, 2009, the net value of fixed assets increased by US$0.03 million, as compared to December 31, 2008.

Share Repurchase Plan

None

Agreements with PacificNet

The following are the terms of the PacificNet Termination Agreement:

The Company agreed to issue to PacificNet or its nominee an amount of shares of capital stock of the Company equal to five percent (5%) of the outstanding shares of the Company. The Company issued PacificNet 61 the Company’s Ordinary Shares on October 30, 2008 in satisfaction of this provision. Additionally, PacificNet was granted the option to, prior to May 14, 2009 and on only one occasion during such period, purchase additional shares of the Company’s stock at a per share purchase price equal to 85 percent of the most recent subscription price per share of the Company’s stock paid by third party investors in the Company up to a number of shares that would result in PacificNet owning five percent (5%) of the Company’s stock issued and outstanding on the date of exercise of the option. This option was not taken up by PacificNet during the exercise period. PacificNet agreed to issue to the Company 500,000 shares of PacificNet’s common stock. These PacificNet shares will be subject to a one-year lock up and sale restriction, any sale of these shares must be communicated to PacificNet in advance, PacificNet has the right of refusal to arrange buyers for the shares, and PacificNet will be entitled to half of the net gain on any partial sale of PacificNet shares.

·	PacificNet and the Company agreed to use reasonable endeavours to formalize the following business opportunities:

A joint venture relationship relating to the development of future business opportunities in Macau and other territories in Asia.

The Company agreed to pay PacificNet US$200,000 in consideration for PacificNet’s localization and language translation of the Company’s products into the Chinese language. Additionally, the Company agreed to use its reasonable endeavours to meet minimum sales targets from the sale of PacificNet’s machines of: US$4 million during the twelve month period ended mid-year 2009 and US$6 million during the twelve month period ended mid-year 2010. The Company’s commitment to achieving these targets was agreed to by the Company undertaking to use its reasonable endeavours to comply. PacificNet agreed to provide all appropriate support to assist the Company in achieving these goals. On January 5, 2009, Octavian received a letter from PacificNet pursuant to which it has asserted a claim against Octavian for certain alleged events of default by Octavian under the PacificNet Termination Agreement (the “Claim”). Pursuant to the Claim, PacificNet has demanded payments, in an aggregate amount of $280,000, for certain services allegedly performed by PacificNet, as well as the reimbursement of certain expenses related to prior transactions between the parties. The Company’s management has reviewed the Claim and believes that it is without merit and plans to defend against any actions taken by PacificNet accordingly.

Subsequent Events

New Contracts

On January 26, 2010 the Company signed a 10-year contract with BetPlus (B Plus Giocolegale Ltd) for the deployment of the Octavian Symphony VE system to manage large-scale Comma6B-regulated AWP gaming operations across Italy.

BetPlus is the largest gaming concessionaire operating in Italy’s AWP market, which is strictly controlled by the Italian Government’s AAMS (Autonomous Administration of State Monopolies) and its Comma6 regulations.

BetPlus will deploy the centralised Octavian Symphony VE (VLT Edition) system to link gaming machines at multiple AWP venues across Italy and meet the latest Comma6B requirements. Initially around 12,000 machines will be connected and therefore this is a significant contract for the Company. The roll-out of the new Comma6B-compliant system is expected to take place in mid 2010. In parallel with the system deployment, Octavian is porting many of its Comma6A games titles to Comma6B.

Operations in Russia

Following the implementation of the restrictions on gaming operations in Russia in July 2009 the Group has not undertaken any OctaSupply sales in Russia and the sales office in Moscow is inactive. We are currently evaluating the viability of business in Russia.

CRITICAL ACCOUNTING POLICIES

In presenting our financial statements in conformity with accounting principles generally accepted in the United States, we are required to make estimates and assumptions that affect the amounts reported therein. Several of the estimates and assumptions we are required to make relate to matters that are inherently uncertain as they pertain to future events. However, events that are outside of our control cannot be predicted and, as such, they cannot be contemplated in evaluating such estimates and assumptions. If there is a significant unfavourable change to current conditions, it will likely result in a material adverse impact to our consolidated results of operations, financial position and in liquidity. We believe that the estimates and assumptions we used when preparing our financial statements were the most appropriate at that time. Presented below are those accounting policies that we believe require subjective and complex judgments that could potentially affect reported results.

Use of Estimates

The preparation of financial statements in conformity with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Areas that require estimates and assumptions include valuation of accounts receivable, other receivables, and inventory determination of useful lives of property and equipment, and intangible assets, and estimation of certain liabilities.

Cash and Cash Equivalents

Cash and cash equivalents include cash in hand and cash in time deposits, certificates of deposit and all highly liquid debt instruments with original maturities of three months or less.

Accounts Receivable

The Company maintains reserves for potential credit losses on accounts receivable. Management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves.

Inventories

Inventories are stated at the lower of cost or market value. Cost is determined using the first in, first out method. Management compares the cost of inventories with the market value, and allowance is made for writing down the inventories to their market value, if lower.

Other Receivable

Other receivable consists of prepayments and other non trading debts.

Property & Equipment

Property and equipment are stated at cost. Expenditures for maintenance and repairs are charged to earnings as incurred; additions, renewals and betterments are capitalized. When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts, and any gain or loss is included in operations. Depreciation of property and equipment is provided using the straight-line method for substantially all assets with estimated lives as follows:

Computer Equipment	3 years
Gaming Equipment	3 years
Fixtures and fittings	4 to 5 years

Research and Development

Research and development costs are charged to expense as incurred until technological feasibility has been established. These costs consist primarily of salaries and direct payroll related costs.

Software Development Costs

Software development costs related to computer games and network and terminal operating systems developed by the Company are capitalized in accordance with Statement of Financial Accounting Standards ("SFAS") No. 86, "Accounting for the Cost of Computer Software to be Sold, Leased, or Otherwise Marketed." Capitalization of software development costs begins upon the establishment of technological feasibility and is discontinued when the product is available for sale. When the software is a component part of a product, capitalization begins with the product reaches technological feasibility. The establishment of technological feasibility and the ongoing assessment for recoverability of capitalized software development costs require considerable judgment by management with respect to certain external factors including, but not limited to, technological feasibility, anticipated future gross revenues, estimated economic life, and changes in software and hardware technologies. Capitalized software development costs are comprised primarily of salaries and direct payroll related costs and the purchase of existing software to be used in the Company's products.

Amortization of capitalized software development costs is provided on a product-by-product basis on the straight-line method over the estimated economic life of the products (not to exceed three years). Management periodically compares estimated net realizable value by product with the amount of software development costs capitalized for that product to ensure the amount capitalized is not in excess of the amount to be recovered through revenues. Any such excess of capitalized software development costs to expected net realizable value is expensed at that time.

Long-Lived Assets

The Company applies the provisions of Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS 144”), which addresses financial accounting and reporting for the impairment or disposal of long-lived assets and supersedes SFAS No. 121, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of,” and the accounting and reporting provisions of APB Opinion No. 30, “Reporting the Results of Operations for a Disposal of a Segment of a Business.” The Company periodically evaluates the carrying value of long-lived assets to be held and used in accordance with SFAS 144. SFAS 144 requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amounts. In that event, a loss is recognized based on the amount by which the carrying amount exceeds the fair market value of the long-lived assets. Loss on long-lived assets to be disposed of is determined in a similar manner, except that fair market values are reduced for the cost of disposal. Based on its review, the Company believes that, as of December 31, 2008, there were no significant impairments of its long-lived assets.

Intangible Assets

Intangible assets consist of product developments, customer contracts, game developments, game work-in-progress and lottery development. All intangible assets are amortized over three years.

Revenue Recognition

The Company's revenue recognition policies are in compliance with Staff accounting bulletin (SAB) 104. Revenue is recognized when services are rendered to customers when a formal arrangement exists, the price is fixed or determinable, the delivery is completed, no other significant obligations of the Company exist and collectability is reasonably assured. Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as unearned revenue.

Unearned Revenue

Unearned revenue represents goods invoiced before year end but not delivered and therefore not included in revenue. These goods will be released into revenue once it is delivered. As at December 31, 2009 and 2008 unearned revenue amounted to $696,795 and $845,057 respectively.

Income Taxes

The Company utilizes SFAS No. 109 (ASC 740), “Accounting for Income Taxes,” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

The Company adopted the provisions of FASB Interpretation No. 48 (ASC 740), Accounting for Uncertainty in Income Taxes, on January 1, 2007. As a result of the implementation of FIN 48, the company made a comprehensive review of its portfolio of tax positions in accordance with recognition standards established by FIN 48. As a result of the implementation of Interpretation 48, the Company recognized no material adjustments to liabilities or stockholders’ equity. When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the accompanying balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination. Interest associated with unrecognized tax benefits are classified as interest expense and penalties are classified in selling, general and administrative expenses in the statements of income. The adoption of FIN 48 did not have a material impact on the Company’s financial statements.

Foreign Currency Transactions and Comprehensive Income

Accounting principles generally require that recognized revenue, expenses, gains and losses be included in net income. Certain statements, however, require entities to report specific changes in assets and liabilities, such as gain or loss on foreign currency translation, as a separate component of the equity section of the balance sheet. Such items are components of comprehensive income. The functional currency of the Company is British Pound. Translation loss of US$1,320,882 and gain of US$4,966,392 for the year ended December 31, 2009 and 2008, respectively, are classified as an item of other comprehensive income in the stockholders’ equity section of the consolidated balance sheet.

Statement of Cash Flows

In accordance with Statement of Financial Accounting Standards No. 95 (ASC 230), “Statement of Cash Flows,” cash flows from the Company’s operations are calculated based upon the local currencies. As a result, amounts related to assets and liabilities reported on the statement of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheet.

Minority Interest

The equity in the non-controlling interest in the German entity has been classified as “Noncontrolling stockholders' interest” in the accompanying consolidated balance sheets. Changes in equity in non-controlling interests arising from results of operations would have been recorded as “Net (income) loss attributed to noncontrolling stockholders' interest” in the accompanying consolidated statements of operations and other comprehensive income; however for the year ended December 31, 2009 there was no movement in Noncontrolling stockholders’ interest as the company is dormant.

Segment Reporting

Statement of Financial Accounting Standards No. 131 (“SFAS 131”) (ASC 280), “Disclosure About Segments of an Enterprise and Related Information” requires use of the “management approach” model for segment reporting. The management approach model is based on the way a Company’s management organizes segments within the company for making operating decisions and assessing performance. The Company has determined that it has 3 reportable segments: Octavian Europe Middle East and Africa, Octavian CIS, and Octavian Latin America (See Note 17 of the Financial Statements.)

Fair value of financial instruments

On January 1, 2008, the Company adopted SFAS No. 157 (ASC 820), Fair Value Measurements. SFAS No. 157 defines fair value, establishes a three-level valuation hierarchy for disclosures of fair value measurement and enhances disclosures requirements for fair value measures. The carrying amounts reported in the balance sheets for receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of fair value because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The three levels are defined as follow:

Level 1: inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2: inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

Level 3: inputs to the valuation methodology are unobservable and significant to the fair value measurement.

As of December 31, 2009, the Company did not identify any assets and liabilities that are required to be presented on the balance sheet at fair value.

Recent Pronouncements

In June 2009, the FASB issued SFASB No.167, Consolidation of Variable Interest Entities, which changes the consolidation rules as they relate to variable interest entities. Specifically, the new standard makes significant changes to the model for determining who should consolidate a variable interest entity, and also addresses how often this assessment should be performed. The statement is effective as of the beginning of each reporting’s entity’s first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period, and for interim and annual reporting periods thereafter. Earlier application is prohibited. The Company is currently evaluating both the timing and the impact of adoption of this standard on its consolidated financial statements.

In August 2009, the FASB issued Accounting Standards Update (“ASU”) 2009-05, which amends ASC Topic 820, Measuring Liabilities at Fair Value, which provides additional guidance on the measurement of liabilities at fair value. Specifically, when a quoted price in an active market for the identical liability is not available, the new standard requires that the fair value of a liability be measured using one or more of the valuation techniques that should maximize the use of relevant observable inputs and minimize the use of unobservable inputs. In addition, an entity is not required to include a separate input or adjustment to other inputs relating to the existence of a restriction that prevents the transfer of a liability. This standard is effective in the first reporting period beginning after issuance. We do not expect the adoption will have a material impact on our consolidated financial statements.

In October 2009, the FASB issued Accounting Standards Update (“ASU”) 2009-13, which amends ASC Topic 605, Revenue Recognition, to require companies to allocate revenue in multiple-element arrangements based on an element’s estimated selling price if vendor-specific or other third-party evidence of value is not available. ASU 2009-13 is effective for revenue arrangements entered into or materially modified in the fiscal year beginning on or after June 15, 2010. Early adoption is permitted. The Company is currently evaluating both the timing and the impact of the pending adoption of the ASU on its consolidated financial statements.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.

Item 8. Financial Statements and Supplementary Data.

The following financial statements are contained in this Annual Report:

- Report of Independent Registered Public Accounting Firm;

- Consolidated Balance Sheets - December 31, 2008 and 2007;

- Consolidated Statements of Operations – Years ended December 31, 2008 and 2007;

- Consolidated Statements of Changes in Stockholders' Equity - Years ended December 31, 2008 and 2007;

- Consolidated Statements of Cash Flow - Years ended December 31, 2008 and 2007; and

- Notes to Consolidated Financial Statements.

Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

None.

Item 9A(T). Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Our management is responsible for establishing and maintaining effective disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that are designed to be effective in providing reasonable assurance that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission (the “ SEC”), and that such information is accumulated and communicated to our management to allow timely decisions regarding required disclosure.

The Company’s management, under the supervision and with the participation of the Company's Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of the design and operation of the Company's disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) of the Exchange Act) as of December 31, 2009. Based upon that evaluation and the identification of the material weakness in the Company’s internal control over financial reporting as described below under “Management’s Report on Internal Control over Financial Reporting,” the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were not entirely effective as of the end of the period covered by this report to provide all assurances required.

Management’s Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting of the Company. Management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of our internal control over financial reporting as of December 31, 2009 based on the criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management concluded that, as of December 31, 2009, our internal control over financial reporting was not effective in providing reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles.

The Company was a “shell company” (as defined in Rule 12b-2 under the Exchange Act, until it consummated a “reverse merger” transaction on October 30, 2008, at which time it became subject to Section 404 of The Sarbanes-Oxley Act of 2002. From October 30, 2008 through December 31, 2009 we had limited resources for implementing effective internal control procedures over financial reporting.

The SEC defines a material weakness as a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.

Management’s assessment identified the following weaknesses in the Company’s internal control over financial reporting as of December 31, 2009: To mitigate our limited resources, we rely heavily on direct management oversight of transactions, along with the use of legal and accounting professionals. As we grow, we expect to increase our staff dedicated to the maintenance of our internal controls and procedures, which will enable us to implement adequate segregation of duties within the internal control framework.

This annual report does not include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Company's registered public accounting firm pursuant to temporary rules of the SEC that permit the Company to provide only management's report in this annual report.

Limitations on Effectiveness of Controls and Procedures

The effectiveness of our disclosure controls and procedures and our internal control over financial reporting is subject to various inherent limitations, including cost limitations, judgments used in decision making, assumptions about the likelihood of future events, the soundness of our systems, the possibility of human error, and the risk of fraud. Moreover, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions and the risk that the degree of compliance with policies or procedures may deteriorate over time. Because of these limitations, any system of disclosure controls and procedures or internal control over financial reporting may not be successful in preventing all errors or fraud or in making all material information known in a timely manner to the appropriate levels of management.

Item 9B. Other Information.

None

PART III

Item 10. Directors, Executive Officers and Corporate Governance.

Upon the consummation of the Share Exchange, we made the following changes to our Board of Directors and executive officers:

Concurrent with the consummation of the Share Exchange, Robert McCall, our sole director prior to the Share Exchange appointed Harmen Brenninkmeijer as a director of the Company.

Mr. McCall then resigned as Chief Executive Officer, Chief Financial Officer, President, Secretary, Treasurer, and a director of the Company.

Mr. Brenninkmeijer then authorized an amendment to the Company’s Bylaws permitting the number of directors serving on the Board to be set by the resolution of the Board of Directors and set the number at five directors. He also appointed Peter Moffitt and Peter Brenninkmeijer as directors of the Company and appointed all of the current executive officers of the company.

The following table sets forth the respective names, ages and positions of our directors, executive officers and key employees. All of the directors identified below were elected to the Board of Directors immediately after the consummation of the Share Exchange.

Names of Officers and Directors	Age	Position

Harmen Brenninkmeijer	45	Chief Executive Officer and Chairman of the Board of Directors
Peter Moffitt	56	President
Peter Brenninkmeijer	43	Chief Financial Officer and Secretary
Charles Hiten	40	Director

Each executive officer serves at the pleasure of our board of directors.

Executive Officers and Directors

Harmen Brenninkmeijer has been the Chief Executive Officer and a member of the Board of Directors of the Company since October 30, 2008 and has held the same positions with Octavian since he founded Octavian in September 2001. Mr. Harmen Brenninkmeijer also served as the President and owner of Xanadu Entertainment Ltd., from 2000 to March 2007, which has subsequently been sold To Raj Gaming (a Canadian Gaming Operator). Mr. Brenninkmeijer began his career in 1991 with Mikohn Gaming Corp. (Which became Progressive Gaming International Corporation and was subsequently purchased by IGT Corp.) In 1994, he founded the European Gaming Organisation, a trade group for European-based gaming manufacturers. In 1997, he established Avalon Casino Management CV. Mr. Brenninkmeijer served with Avalon Casino through 1999 and formed the casino division which operated several casino properties including the Playboy Casino in Rhodes, Greece. In 2000, Mr. Brenninkmeijer opened a Novomatic machine distributorship in Russia, which he subsequently folded into Octavian. He graduated in 1987 with a Business Degree from the InterManagement School in The Hague, The Netherlands. Mr. Harmen Brenninkmeijer and Mr. Peter Brenninkmeijer are brothers.

Peter Moffitt has been President and a Director of the Company since October 30, 2008 and has held the positions with Octavian since February 2008. Prior to joining Octavian, Mr. Moffitt was employed by the Unicum Group of Companies, a gaming company located in Russia, from May 2004 to February 2008. At Unicum, Mr. Moffitt was Chief Technology Officer from May 2004 to February 2008 and Vice President (Product Development) from January 2007 to February 2008. Prior to that, from December 2002 through May 2004, Mr. Moffitt was the President and owner of Moffitt Consulting Pty. Ltd., a technology consulting company incorporated in Australia. From April 1991 to December 2002, Mr. Moffitt was Chief Executive Officer and Chief Technology Officer of Bounty Ltd., an Australian gaming developer that he founded; concurrently he was Managing Director and Chief Technology Consultant at Odyssey Gaming Technology, also located in Australia. Mr. Moffitt earned a BSc (Computer Sciences) in 1987 and an MSc (Computer Sciences) in 1989 from California State University in Long Beach, California. He also received an MBA from Loyola Marymount University in Los Angeles, California in 1990.

Peter Brenninkmeijer has been the Chief Financial Officer, Secretary and a Director of the Company since October 30, 2008 and has held the same positions with Octavian since March 1, 2007. Prior to joining Octavian, from September 2005 through February 2007 he was the Financial Director of the Xanadu group of companies, a casino developer. From February 2001 through August 2005, Mr. Peter Brenninkmeijer was the Chief Financial Officer for Perot Systems Netherlands BV, a provider of information technology services located in Amersfoort, Netherlands. From 1996 to 2001, Peter worked for Mikohn Europe BV (now called Progressive Gaming International Corporation) where his responsibilities included opening Mikohn’s European office. He earned a Higher Business Administration Diploma in Accounting in 1989 from HEAO Leeuwarden, in the Netherlands. Mr. Harmen Brenninkmeijer and Mr. Peter Brenninkmeijer are brothers.

Charles Hiten currently serves, and has previously served, in various positions with Novomatic AG Holding, including its subsidiaries, an integrated global gaming company, since February 2001. Mr. Hiten currently serves as a managing director of the following Novomatic AG Holding subsidiaries: Chilean Enterprises SpA, since August 2008; SFI Resorts SA, since August 2008; Novomatic Investments Chile SA, since June 2007; Novomatic Holdings Chile Ltd, since April 2007; and NovoSun SA, since May 2007. From 2004 through March 2007, Mr. Hiten was the compliance officer of Novomatic AG Holding. From September 2003 through January 2009, Mr. Hiten was the managing director of Austrian Gaming Industries GmbH, a subsidiary of Novomatic AG Holding. Additionally, Mr. Hiten currently serves as a director of San Francisco Investments SA, a privately-held Chilean-based company that engages in the development, operation and management of casinos.

BOARD OF DIRECTORS

Audit, Nominating and Compensation Committees; Nominating Process

Our Board of Directors does not have standing audit, nominating or compensation committees, committees performing similar functions, or charters for such committees. Instead, the functions that might be delegated to such committees are carried out by our Board of Directors, to the extent required. Our Board of Directors believes that the cost of establishing such committees, including the costs necessary to recruit and retain qualified independent directors to serve on our Board of Directors and such committees and the legal costs to properly form and document the authority, policies and procedures of such committees are not justified under our current circumstances.

We have no audit committee financial expert. We believe that the cost related to retaining a financial expert at this time is prohibitive. We believe the services of a financial expert are not warranted. Our Board of Directors believes that its current members have sufficient knowledge and experience to fulfill the duties and obligations of the audit committee for our company.

Our Board of Directors does not currently have a policy for the qualification, identification, evaluation, or consideration of board candidates. Our Board of Directors does not believe that a defined policy with regard to the qualification, identification, evaluation, or consideration of candidates recommended by shareholders is necessary at this time, due to the fact that we have not received any shareholder recommendations in the past. Our board of directors believes that the participation of all directors in the consideration of director nominees is appropriate, given the size of our board of directors. Our board of directors also will consider qualified director candidates identified by a member of senior management or by a shareholder. However, it is our general policy to re-nominate qualified incumbent directors and, absent special circumstances, our board of directors will not consider other candidates when a qualified incumbent consents to stand for re-election.

The Board of Directors considers the following minimum criteria when reviewing a director nominee: (1) director candidates must have the highest character and integrity, (2) director candidates must be free of any conflict of interest which would violate applicable laws or regulations or interfere with the proper performance of the responsibilities of a director, (3) director candidates must possess substantial and significant experience which would be of particular importance in the performance of the duties of a director, (4) director candidates must have sufficient time available to devote to our affairs in order to carry out the responsibilities of a director and (5) director candidates must have the capacity and desire to represent the best interests of our shareholders. Our board of directors screens candidates, does reference checks and conducts interviews, as appropriate. Our board of directors does not evaluate nominees for director any differently because the nominee is or is not recommended by a shareholder.

During 2008, none of our executive officers served as a member of the board of directors or on the compensation committee of a corporation where any of its executive officers served on our board of directors.

We expect to create one or more of such committees and/or policies as determined by our Board of Directors, provided that we will be required to have audit and compensation committees when, and if, our shares of Common Stock commence trading on the NASDAQ Capital or Global Market or on a national securities exchange such as the American Stock Exchange.

Change in Control Agreements

None.

Code of Ethics

We have not yet adopted a Code of Business Conduct and Ethics that applies to our principal executive officer, principal financial officer, and principal accounting officer or controller, or persons performing similar functions. However, we intend to adopt a formal Code of Business Conduct and Ethics.

Board Meetings

During our last fiscal year, our board of directors held several scheduled meetings. All proceedings of the Board of Directors were minuted and approved.

Involvement in Certain Legal Proceedings

There have been no events under any bankruptcy act, no criminal proceedings and no judgments, injunctions, orders or decrees material to the evaluation of the ability and integrity of any director, executive officer, promoter or control person of Company during the past five years.

Director Independence

Our Common Stock is quoted on the OTC bulletin board interdealer quotation system which does not have director independence requirements. Under NASDAQ rule 4200(a)(15), a director is not considered to be independent if he or she also is an executive officer or employee of the corporation.

Term of Office

Our directors are appointed for a one-year term to hold office until the next annual general meeting of our shareholders or until removed from office in accordance with our bylaws. Our officers are appointed by our board of directors and hold office until removed by the board.

Compliance with Section 16(a) of the Exchange Act

For the fiscal year ended December 31, 2008 our directors and executive officers and 10% owners were not required to file Section 16(a) reports.

Item 11. Executive Compensation.

Summary Compensation Table

The following table sets forth the compensation earned for services rendered to Octavian for the two most recently completed years by (i) Octavian’s Principal Executive Officer and (ii) the two additional most highly compensated executive officers whose total compensation during the last fiscal year exceeded US$100,000.

Name and Principal Position	Year	Salary ($)			Bonus ($)		Stock Awards ($)			Option Awards ($)		Non- Equity Incentive Plan Compensation ($)		Nonqualified Deferred Compensation Earnings ($)		All Other Compensation ($)		Total Compensation ($)

Harmen Brenninkmeijer,	2009	$	397,741															$	397,741
Chief Executive Officer	2008	$	365,813	(1)		—	$	663,400	(4)		—		—		—		—	$	1,209,213

Peter Brenninkmeijer,	2009	$	254,556			—					—		—		—		—	$	254,556
Chief Financial Officer	2008	$	280,944	(2)		—		—			—		—		—		—	$	280,944
Peter Moffitt	2009	$	375,000			—					—		—		—		—	$	375,000
President	2008	$	262,000	(3)		—		—			—		—		—		—	$	262,000

(1) Harmen Brenninkmeijer served as the Chief Executive Officer of Octavian on a consulting basis during the years 2006 and 2007. Octavian contracted for his services from Hudson Trading Limited (“Hudson Trading”), a corporation formed under the laws of Cyprus and owned 100 percent by Mr. Harmen Brenninkmeijer. From January 1, 2008 through October 31, 2008, Mr. Brenninkmeijer was paid €20,000 per month (US$29,265 based on the 2008 Average Exchange Rate of €1=US$1.4633). Mr. Brenninkmeijer’s salary increased to €25,000 per month from November 1, 2008 through December 31, 2008 (US$36,581.26 based on the 2008 Average Exchange Rate of €1=US$1.4633). From January 1, 2009 through June 30, 2009 Mr Brenninkmeijer was paid €25,000 per month (US$35,833 based on the 2009 Average Exchange Rate of €1=US$1.4333). Mr. Brenninkmeijer’s salary decreased to €21,250 per month from July 1, 2009 through December 31, 2009 (US$30,458 based on the 2009 Average Exchange Rate of €1=US$1.4333).

(2) Peter Brenninkmeijer served as the Interim Chief Financial Officer of Octavian from March 2007 through March 2008 on a consulting basis. Mr. Peter Brenninkmeijer was appointed Group Financial Director (Chief Financial Officer) of Octavian and became an employee of Octavian in April 2008. From January 1, 2008 through December 31, 2008, Mr Brenninkmeijer was paid €16,000 per month (US$23,412.01 per month based on the 2008 Average Exchange Rate of €1=US$1.4633). From January 1, 2009 through June 30, 2009 Mr Brenninkmeijer was paid €16,000 per month (US$22,933 based on the 2009 Average Exchange Rate of €1=US$1.4333). Mr. Brenninkmeijer’s salary decreased to €13,600 per month from July 1, 2009 through December 31, 2009 (US$19,493 based on the 2009 Average Exchange Rate of €1=US$1.4333).

(3) Peter Moffitt served as President of Octavian on a consulting basis from 11 February 2008. Mr Moffitt was paid $25,000 per month from February 11, 2008 through December 31, 2008. From January 1, 2009 through December 31, 2009, Mr Moffitt was paid $31,250 per month.

(4) On December 31, 2008, pursuant to his employment agreement, Mr. Brenninkmeijer was entitled to receive 214,000 shares of Common Stock, valued at $3.10 per share. The shares were issued on January 22, 2009. These shares were subsequently sold to AGI at the same time as the Debenture Purchase Agreement on May 14, 2009

Outstanding Equity Awards at end of Last Fiscal Year

None of the named executive officers of Octavian held any options at December 31, 2009. We have never made any grants of plan-based awards. We did not have any outstanding equity awards as of December 31, 2009. We have never had any options exercised or stock vested. We have no pension benefits or nonqualified deferred compensation. We are required to make payments upon a change in control to the holders of the Debentures and Warrants. Under the Debentures, it is an event of default and they can accelerate. Under the Warrants, the holders have a redemption right equal to the Black-Scholes value of the Warrants.

Director Compensation

Octavian has historically not paid any of its directors for their services as directors and does not anticipate doing so. Mr Charles Hiten is a director but does not receive any remuneration from the company. All other directors are remunerated by the company and details of their contracts of employment are included below.

Employment Contracts

Harmen Brenninkmeijer

We entered into an Amended and Restated Employment Agreement with Mr. Brenninkmeijer, effective as of May 14, 2009 (the “Amended Agreement”), which amends and restates that certain Employment Agreement dated October 30, 2008 by and between the Company and Mr. Brenninkmeijer, as amended on December 8, 2008 (the “Prior Agreement”). The terms of the Amended Agreement supersede and replace the terms of the Prior Agreement and govern the relationship between the parties thereto regarding the subject matter set forth therein.

Under the terms of this Amended Agreement, we have agreed to pay Mr. Brenninkmeijer an annual base salary of €300,000 (US$429,990 based on the December 31, 2009 Exchange Rate of €1=US$1.4333). From January 1, 2009 through June 30, 2009 Mr Brenninkmeijer was paid €25,000 per month (US$35,833 based on the 2009 Average Exchange Rate of €1=US$1.4333). Mr. Brenninkmeijer’s salary decreased to €21,250 per month from July 1, 2009 through December 31, 2009 (US$30,458 based on the 2009 Average Exchange Rate of €1=US$1.4333). In addition, Mr. Brenninkmeijer also has been granted a right to be issued shares of Common Stock on an annual basis through December 31, 2013, in amounts ranging from 214,000 to 642,000 shares per annum (the “Earn Out Shares”), provided that we have achieved certain minimum EBITDA for each of those applicable years (ranging from EBITDA of -0- in 2008 to US$35,726,016 in 2013). On January 9, 2009, the Company issued to Mr. Brenninkmeijer 214,000 Earn Out Shares. Furthermore, we have issued Mr. Brenninkmeijer a seven-year warrant to purchase up to an additional 2,720,833 shares of our Common Stock, at an exercise price of $3.10 per share and on other similar terms as those provided in the Warrants to investors in the Private Placement, 1,073,333 of which Mr. Brenninkmeijer assigned to AGI. Mr. Brenninkmeijer is entitled to participate in all benefits available to executives of the Company and we have agreed to reimburse Mr. Brenninkmeijer for US$10,000,000 of life insurance with a cap of $50,000 on annual premiums reimbursable.

We may terminate Mr. Brenninkmeijer’s employment at anytime for cause. If we terminate his employment without cause or if he resigns for certain permitted reasons, we are required to pay his base salary through December 31, 2013, as well as issue him any Earn Out Shares earned through such date. These rights terminate immediately if we terminate his employment for cause or he resigns for any reason other than one of the permitted reasons.

Mr. Brenninkmeijer has also agreed not to solicit our customers for business or our employees for hire, during the term of his employment agreement and for 12 months thereafter. He has also agreed not to participate in a competing business, during the term of his employment agreement and for 12 months thereafter, unless his employment is terminated without cause or he resigns for one of the permitted reasons, in which case this covenant expires upon the termination of his employment.

Peter Moffitt

We also entered into a Service Agreement with Mr. Moffitt effective as of October 16, 2008. Under the terms of this Service Agreement, Mr. Moffitt is employed as the President of Octavian, for which he receives a salary of US$375,000 per annum. Mr. Moffitt also is entitled to receive a discretionary annual bonus based on his performance and the performance of Octavian but no bonus was paid during the course of 2009. Mr. Moffitt has agreed not to be engaged in any business that is competitive with the business of Octavian, during his employment with Octavian and for two years after the termination of the Service Agreement.

Peter Brenninkmeijer

Octavian entered into a Statement of Particulars of Employment with Peter Brenninkmeijer effective as of April 2, 2008. Under the terms of his employment agreement, Mr. Peter Brenninkmeijer is employed as the Group Financial Director of Octavian, for which he receives a salary of €192,000 per annum (US$275,194 based on the December 31, 2009 Exchange Rate of €1=US$1.4333). From January 1, 2009 through June 30, 2009 Mr Brenninkmeijer was paid €16,000 per month (US$22,933 based on the 2009 Average Exchange Rate of €1=US$1.4333). Mr. Brenninkmeijer’s salary decreased to €13,600 per month from July 1, 2009 through December 31, 2009 (US$19,493 based on the 2009 Average Exchange Rate of €1=US$1.4333). Mr. Peter Brenninkmeijer also is entitled to receive a discretionary annual bonus based on his performance and the performance of Octavian but no bonus was paid during the course of 2009. Mr. Peter Brenninkmeijer has agreed not to be engaged in any business that is competitive with the business of Octavian, during his employment with Octavian and for two years after the termination of his employment agreement.

Family Relationships

Mr. Harmen Brenninkmeijer, our Chief Executive Officer, and Mr. Peter Brenninkmeijer, our Chief Financial Officer, are brothers.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The following table provides information concerning beneficial ownership of our capital stock as of March 30, 2010, by:

Each shareholder, or group of affiliated shareholders, that we know owns more than 5% of any class of our outstanding capital stock;

Each of our named executive officers;

Each of our directors; and

All of our directors and named executive officers as a group.

For more information regarding our principal shareholders and the relationship, position and office they have had with us, see “Certain Relationships and Related Transactions” and “Management – Directors and Executive Officers”. As of March 30, 2010, there were 10,769,093 shares of our Common Stock outstanding.

Except as indicated in the footnotes to this table, and subject to applicable community property laws, the persons or entities named have sole voting and investment power with respect to tall shares of our Common Stock shown as beneficially owned by them. Unless otherwise indicated in the footnotes, the principal address of each of the shareholders and the directors and officers identified below is c/o Octavian International Limited, Bury House, 1-3 Bury Street, Guildford, Surrey, GU2 4AW, United Kingdom.

Name and Address of Beneficial Owner	Title of Class	Amount and Nature of Beneficial Ownership (1)			Percentage of Class (2)
5% Shareholders:

Ziria Enterprises Limited (3)	Common Stock		3,295,000	(4)		30.60	%

Management:
Charles Hiten (5)	Common Stock		5,450,120	(6)		50.61	%

Harmen Brenninkmeijer (3)	Common Stock		3,295,000	(7)		30.60	%

Peter Moffitt	Common Stock		—			*	%

Peter Brenninkmeijer	Common Stock		—			*	%

All executive officers and directors as a group (3 persons)	Common Stock		8,745,120			81.21	%

* Less than 1%

(1)

Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Shares of common stock subject to options and warrants exercisable or convertible at or within 60 days are deemed outstanding for computing the percentage of the person holding such option or warrant but are not deemed outstanding for computing the percentage of any other person. The indication herein that shares are beneficially owned is not an admission on the part of the listed shareholder that he, she or it is or will be a direct or indirect beneficial owner of those shares.

(2)	Based upon 10,769,102 shares of our Common Stock issued and outstanding as of March 30, 2010. Does not include any shares of our Common Stock issuable upon conversion of convertible debentures, warrants or options of the Company outstanding.

(3)

Ziria Enterprises Limited is a corporation formed and existing under the laws of Cyprus. Harmen Brenninkmeijer, our Chief Executive Officer and a director, indirectly owns 100 percent of the outstanding equity interests of Ziria Enterprises Limited, as a result of his ownership of 100 percent of the outstanding equity interests of Balaton Holding Ltd., a corporation formed and existing under the laws of the British Virgin Islands, which owns 100 percent of the outstanding equity interests of Ziria Enterprises.

(4)	Includes 3,295,000 shares issued pursuant to the Share Exchange Transaction.

(5)	Charles Hiten is an affiliate of Austrian Gaming Industries GmbH, which is 100% owned by Novomatic AG Holding, an Austrian public company. All shares of our Common Stock held by AGI were transferred to Mr. Hiten on November 12, 2009.

(6)

Includes (i) 2,146,667 shares of our Common Stock issued to AGI in the Share Exchange Transaction, (ii) 354,484 shares of our Common Stock issued to AGI in the Private Placement and (iii) 2,948,969 shares of our Common Stock issued to AGI pursuant to the Debenture Purchase Agreement and Exchange. Does not include (i) 1,772,419 shares of our Common Stock issuable upon conversion of the Debenture issued to AGI in the Private Placement; (ii) 1,329,315 shares of our Common Stock issuable upon conversion of the Debenture issued to AGI in the Debenture Purchase Agreement (iii) 1,612,903 shares of our Common Stock issuable to AGI upon exercise of Warrants issued to AGI in the Private Placement; (iv) 3,267,266 shares of our Common Stock issuable to AGI upon exercise of Warrants issued to AGI in the Debenture Purchase Agreement and (v) 1,073,333 shares usable upon exercise of a seven-year warrant exercisable at US$3.10 per share, since, under the terms of these securities, they may not be exercised or converted by AGI for more than 60 days, to the extent that AGI then beneficially owns greater than 4.99% of the issued and outstanding shares of our Common Stock or such exercise or conversion would cause it to own greater than 4.99%.

(7)

Includes 3,295,000 shares issued pursuant to the Share Exchange Transaction and held by Ziria. Does not include 1,647,500 shares issuable upon exercise of a seven-year warrant at US$3.10 per share and (iii) 214,000 Earn Out Shares issued to Mr. Brenninkmeijer on January 9, 2009, under the Employment Agreement and subsequently transferred to AGI. Does not include any of the up to 2,780,000 Earn Out Shares which may be issuable to Mr. Brenninkmeijer under the terms of his Employment Agreement, as none of these shares is issuable within sixty days of the date of this annual report.

Item 13. Certain Relationships and Related Transactions, and Director Independence.

Review, Approval and Ratification of Transactions with Related Persons

The general policy of the Company is that all material transactions with a related party, as well as all material transactions in which there is an actual, or, in some cases, perceived conflict of interest, including repurchases of our Common Stock, including from our executive officers, are subject to prior review and approval by our board of directors.

Share Exchange Agreement

On October 30, 2008, Octavian Global f/k/a House Fly, entered into the Share Exchange with Octavian International and the Octavian Securities Holders, pursuant to which, among other things, the Octavian Securities Holders contributed all of their securities of Octavian International to Octavian Global in exchange for Octavian Global’s issuance to them of certain securities of Octavian Global.

Immediately prior to the consummation of the Share Exchange Transaction:

The Company’s name was House Fly Rentals, Inc.

House Fly was a shell company with nominal assets and operations;

Robert McCall was House Fly’s President, Chief Executive Officer, Chief Financial Officer, Secretary, Treasurer and a member of the Company’s Board of Directors;

Mr. McCall owned 44.4 percent of the Company’s issued and outstanding securities;

House Fly owned 100 percent of a newly created Nevada corporation called Octavian Global Technologies, Inc., which had no operations or assets (“Octavian Global Sub”); and

The Octavian Securities Holders owned all of the outstanding securities of Octavian International.

Pursuant to the terms of the Share Exchange, the Company issued to the shareholders of Octavian International (the “Octavian Securities Holders”) an aggregate of 6,133,333 shares of House Fly common stock, resulting from the exchange of 16,527 shares of the Company’s Common Stock, for each outstanding Ordinary Share of Octavian International exchanged by the Octavian Securities Holders. Pursuant to the terms of the Share Exchange, along with the Repurchase Agreement (described hereafter), House Fly acquired 100 percent of the issued and outstanding securities of Octavian International and by acquiring the operating business of Octavian International, the Company ceased to be a shell company.

The securities House Fly issued to the Octavian Securities Holders located outside of the United States were issued pursuant to an applicable exemption from registration under Regulation S promulgated under the Securities Act or Regulation D promulgated under the Securities Act (“Regulation D”) and/or Section 4(2) of the Securities Act. The securities House Fly issued to Octavian Securities Holders within the United States were issued pursuant to the exemption from registration provided pursuant to Regulation D and/or Section 4(2) of the Securities Act.

Additionally, pursuant to the Share Exchange, Octavian Global made representations and warranties to Octavian International and the Octavian Securities Holders, and Octavian International made representations and warranties to Octavian Global, in each case, regarding their respective businesses, operations and affairs. All representations and warranties in the Share Exchange terminated on April 30, 2009. In the event that the representations and warranties made by the Company or the House Fly Shareholders resulted in damages to us and/or the Octavian Securities Holders, the limitation on liability afforded to the House Fly Shareholders and the termination of the representations and warranties prevented a recovery of all damages incurred. The representations and warranties of each of the parties in the Share Exchange (and in any related documents or agreements) did not state all of the facts necessary to completely and accurately represent the true state of affairs of Octavian Global and Octavian International, as the case may be, and were subject to significant qualifications and exceptions. Rather, such representations and warranties were primarily intended to serve as an allocation of risk among the parties. Accordingly, such representations and warranties should not be relied upon or viewed as accurate statements of actual facts or disclosure by either of the parties.

As a result of the Share Exchange and the consummation of the transactions pursuant to the Repurchase Agreement, the Company experienced a change in control and ceased to be a shell company. Octavian International became the Company’s wholly-owned subsidiary and we are continuing the business plan of Octavian International.

The foregoing description of the Share Exchange is only a summary and is qualified in its entirety by reference to the Share Exchange, a copy of which was filed as an exhibit to the Company’s Current Report of Form 8-K filed with the SEC on November 5, 2008 (File No. 333-146705) and is incorporated herein by reference.

McCall Shares

House Fly issued 3,000,000 total shares of Common Stock at a price of $0.005 per share to its then-president, Mr. McCall for total consideration of $15,000 effective May 1, 2007. This issuance was made to Mr. McCall, who is a sophisticated individual and was in a position of access to relevant and material information regarding House Fly’s operations at that time. The shares were issued pursuant to Section 4(2) of the Securities Act of 1933 and were restricted shares as defined in the Securities Act.

On October 30, 2008, the Company also entered into the Repurchase Agreement with Mr. McCall, pursuant to which the Company repurchased from Mr. McCall an aggregate of 597,919 shares of our Common Stock, which represented 44.4 percent of the Company’s shares of Common Stock then issued and outstanding, for an aggregate purchase price of US$300,000.

The foregoing description of the Repurchase Agreement is only a summary and is qualified in its entirety by reference to the Repurchase Agreement, a copy of which was filed as an exhibit to the Company’s Current Report of Form 8-K filed with the SEC on November 5, 2008 (File No. 333-146705) and is incorporated herein by reference.

Family relationships between any of the selling shareholders and Robert McCall our former President and Sole Director:

Bonnie Hicks	Sister

Barry Hicks	Brother-in-law

Private Placement

Concurrent with the closing of the Share Exchange, the Company entered into the Purchase Agreement with certain accredited investors and closed the Private Placement. Additionally, investors in the Private Placement received the Warrants and the Shares. AGI, Octavian’s principal supplier of casino gaming machines and a holder of 35 percent of Octavian prior to the Share Exchange Transaction, participated in the Private Placement by investing US$5 million. The net proceeds received by Octavian Global after the payment of all offering expenses including, without limitation, legal fees, accounting fees and cash commissions paid to certain finders (described below) was US$10,199,812.64.

Octavian also entered into a finder’s agreement with Oppenheimer & Co. Inc. (“Oppenheimer”), whereby Oppenheimer was engaged to act as a finder, but not as an agent, to the Company in connection with the Private Placement. Pursuant to this finder’s agreement, the Company paid Oppenheimer a cash finders fee of US$1,091,172.13 out of the proceeds of the Private Placement. The Company also issued to Oppenheimer and/or its designees 5-year warrants to purchase, in the aggregate, 309,677 shares of our Common Stock at an exercise price of US$3.10 per share. The warrants are substantially on the same terms and include the same provisions as those issued to investors in the Private Placement and, similarly the exercise price of these warrants was not adjusted as a result of the Reverse Stock Split described above.

At the closing of the private placement, we paid the escrow agent US$2,500, AGI US$30,000 for legal fees, Vicis Capital Master Fund US$30,000 for legal fees and US$75,000 in origination fees, and North East Finance (a finder for one of the investors) US$80,000 in origination fees along with a five-year warrant to purchase up to 25,806 shares of our Common Stock at an exercise price of US$3.10, the US$80,000 of which was netted out of the fee we paid to Oppenheimer.

Pursuant to the Private Placement and the Purchase Agreement, Octavian and the Company made representations and warranties to the investors regarding Octavian’s business, operations and affairs, and agreed to indemnify and hold each of them and each of their affiliates harmless for breaches of Octavian’s representations, warranties and covenants contained in those agreements, subject to certain limitations. The representations and warranties of the Company in the purchase agreements (and in any related documents or agreements) do not state all of the facts necessary to completely and accurately represent the true state of Octavian’s affairs, and are subject to significant qualifications and exceptions. Rather, such representations and warranties are primarily intended to serve as an allocation of risk among Octavian and the investors. Accordingly, such representations and warranties should not be relied upon or viewed as accurate statements of actual facts or disclosure by Octavian.

Agreements with AGI

Octavian is a non-exclusive distributor for AGI in various countries in Latin America, and CATS is a non-exclusive AGI distributor in Russia and the CIS. As such, AGI is and has been Octavian’s largest supplier and, prior to the closing of the Share Exchange, Octavian had outstanding accounts payables of approximately €18,756,207 as of October 30, 2008 (US$23,979,810.65 based on the October 30, 2008 Exchange Rate of €1=US$1.2785). Pursuant to certain agreements between AGI and Octavian entered into immediately prior to the Share Exchange, AGI and Octavian agreed to the following:

AGI invested US$5 million in the Private Placement.

Debentures and Warrants Purchase Agreement

Stockholder Agreement

Change of Control

Agreements with PacificNet

On December 7, 2007, (i) Octavian, Emperor and Ziria entered into the PacificNet Acquisition Agreement with (ii) PacificNet,. The terms of the PacificNet Acquisition Agreement provided for the acquisition by PacificNet of all of the outstanding securities of Emperor. This acquisition was completed on January 22, 2008, upon which Emperor became a direct wholly-owned subsidiary of PacificNet and Octavian became an indirect wholly-owned subsidiary of PacificNet. The purchase price payable by PacificNet was (i) up to 2,330,000 shares of PacificNet’s common stock, representing approximately 19.5 percent of PacificNet’s then outstanding shares of common stock and (ii) the Earn-Out Amount. The shares of PacificNet common stock were required to be placed in escrow at closing and were to be released upon the satisfaction of certain requirements under the PacificNet Acquisition Agreement. Additionally, the Earn-Out Amount was to be paid to Octavian over a period of time in installments from 2009 through 2012. In connection with the agreement, Harmen Brenninkmeijer was named to the board of directors of PacificNet and entered into the Service Agreement with PacificNet. Mr. Brenninkmeijer never performed any services for PacificNet, and neither PacificNet nor Octavian ever compensated him under the terms of the Executive Service Agreement.

On May 14, 2008, all of the parties to the PacificNet Acquisition Agreement entered into the PacificNet Termination Agreement. The Service Agreement also was terminated. As a result of the termination of the PacificNet Acquisition Agreement, neither the remaining consideration shares of PacificNet common stock (being 1.1 million) nor any of the Earn-Out Amount were transferred/paid to Ziria, and all shares of Emperor were returned to Ziria and the 1.2 million shares of PacificNet common stock to Ziria were returned to PacificNet. Upon the consummation of this transaction, Emperor was no longer a direct subsidiary of PacificNet, nor was Octavian any longer an indirect subsidiary of PacificNet. Harmen Brenninkmeijer resigned from the board of directors of PacificNet on May 21, 2008. PacificNet paid Sterne Agee & Leach, Inc., a company that acted as a consultant to Octavian for the PacificNet Acquisition, 30,000 PacificNet shares.

In satisfaction of its obligations under the PacificNet Termination Agreement, Octavian issued to PacificNet 61 Ordinary Shares of Octavian International prior to the Share Exchange, which were exchanged for 199,333 shares of our Common Stock. As part of its settlement agreement with PacificNet, Inc., PacificNet was granted the one-time right to purchase up to a number of shares that would cause its ownership of Octavian International as of the date of exercise of the option to equal 5% of the equity of Octavian International provided that such right was exercised prior to May 14, 2009. No option to exercise was undertaken by PacificNet prior to this deadline.

PacificNet also agreed, under the terms of the PacificNet Termination Agreement, to issue 500,000 shares of PacificNet’s common stock to Octavian as it directs. These PacificNet shares were subject to a one-year lock up and sale restriction, any sale of these shares must be communicated to PacificNet in advance, PacificNet has the right of refusal to arrange buyers for the shares, and PacificNet will be entitled to half of the net gain on any partial sale of PacificNet shares.

PacificNet and Octavian further agreed, under the terms of the PacificNet Termination Agreement, to use reasonable endeavors to formalize the following business opportunities:

A non-exclusive distribution agreement and license pursuant to which PacificNet will be appointed as a distributor of Octavian’s products in Macau, provided that eBet would be the only other distributor permitted to distribute Octavian’s products in that territory; and

A joint venture relationship relating to the development of future business opportunities in Macau and other territories in Asia.

Upon receipt of funding, Octavian agreed to pay PacificNet US$200,000 in consideration for PacificNet’s localization and language translation of Octavian’s products into the Chinese language. Additionally, Octavian agreed to use its reasonable endeavors to meet minimum sales targets from the sale of PacificNet’s machines of: US$4 million during the twelve month period ended mid-year 2009 and US$6 million during the twelve month period ended mid-year 2010. Octavian’s commitment to achieving these targets was agreed to by Octavian undertaking to use its reasonable endeavors to comply. PacificNet agreed to provide appropriate support to assist in achieving these goals. On January 5, 2009, Octavian received a letter from PacificNet pursuant to which it has asserted a claim against Octavian for certain alleged events of default by Octavian under the PacificNet Termination Agreement (the “Claim”). Pursuant to the Claim, PacificNet demanded payments, in an aggregate amount of $280,000, for certain services allegedly performed by PacificNet, as well as the reimbursement of certain expenses related to prior transactions between the parties. The Company’s management has reviewed the Claim and believes that it is without merit and plans to defend against any actions taken by PacificNet accordingly.

Agreement with Lilac

Lilac performed consulting services for Octavian in connection with the Share Exchange and Private Placement for which Octavian issued 149 Ordinary Shares of Octavian International in consideration for such services, which were exchanged for 492,333 shares of our Common Stock.

Indemnification Agreements

The Company has not currently entered into indemnification agreements with any of its officers or directors but may do so in the future.

Item 14. Principal Accountant Fees and Services

Our principal outside auditor is Kabani & Co. (“Kabani”). Set forth below are the fees and expenses for Kabani for each of the last two years for the following services provided to us:

	2009		2008

Annual Audit Fees	$	115,000	$	115,000

Audit-Related Fees for the review of the 10-Q quarterly reports	$	80,000	$	80,000

Tax Fees	$	—	$	—

Other Fees	$	—	$	—

Total Fees	$	195,000	$	195,000

Part IV

Item 15. Exhibits, Financial Statement Schedules

a)	The financial statements included as part of this Form 10-K are identified in the index to the financial statements appearing in Item 8 of this Form 10-K and which index is incorporated in this Item 15 by reference.

b)	Exhibits

Exhibit Number and Document Description

Exhibit		Description

2.1		Share Exchange Agreement by and among Octavian International Limited, House Fly Rentals, Inc., Robert McCall and the shareholders of Octavian International Limited , dated October 30, 2008 (1)

2.2		Agreement and Plan of Merger between House Fly Rentals, Inc. and Octavian Global Technologies, Inc., dated as of October 30, 2008 (1)

3(i).1		Amended and Restated Articles of Incorporation, as filed with the Secretary of State of Nevada on December 1, 2008 (2)

3(i).2		Articles of Merger, as filed with the Secretary of State of Nevada on November 3, 2008 (1)

3(ii).1		Amended and Restated Bylaws (1)

4.1		Form of Debenture pursuant to the Securities Purchase Agreement between Octavian Global Technologies, Inc. (f/k/a House Fly Rentals Inc. and certain purchasers, dated October 30, 2008 (1)

4.2		Form of Warrant pursuant to the Securities Purchase Agreement between Octavian Global Technologies, Inc. (f/k/a House Fly Rentals Inc. and certain purchasers, dated October 30, 2008 (1)

4.3		Form of Warrant pursuant to the Employment Agreement by and between Octavian Global Technologies, Inc. and Harmen Brenninkmeijer, dated October 30, 2008 (1)

4.4		Specimen of Common Stock Certificate (3)

4.5		Form of Debenture pursuant to the Debentures and Warrants Purchase Agreement between Octavian Global Technologies, Inc. and certain purchasers, dated May 14, 2009 (4)

4.6		Form of Warrant pursuant to the Debentures and Warrants Purchase Agreement between Octavian Global Technologies, Inc. and certain purchasers, dated May 14, 2009 (4)

5.1		Opinion and Consent of The O’Neal Law Firm, P.C.(5)

10.1		EZpay Distributorship Agreement between Octavian International Europe and IGT Europe, dated October 3, 2007 (1)

10.2		Software Escrow Agreement between Austrian Gaming Industries GmbH, Octavian International and NCC Escrow International Limited, dated, October 30, 2008 (1)

10.3		Lilac Advisors, LLC Engagement Letter, dated April 24, 2008 (1)

10.4

Framework Agreement by and among Octavian International Limited, Ziria Enterprises Ltd, Harmen Brenninkmeijer and Austrian Gaming Industries GmbH dated August 11, 2008 (1)

10.5		Intellectual Property Rights Transfer Agreement by and among Octavian International Limited, Ziria Enterprises Ltd, Harmen Brenninkmeijer and Austrian Gaming Industries GmbH dated October 30, 2008 (1)

10.6		Loan Agreement between Austrian Gaming Industries GmbH and Octavian International Limited dated October 30, 2008 (1)

10.7		Deed of Amendment by and among Ziria Enterprises Limited, PacificNet Games International Corporation, PacificNet Inc., Octavian International Limited and Emperor Holdings Limited, dated May 14, 2008 (1)

10.8		Acquisition Agreement by and among Ziria Enterprises Limited, PacificNet Games International Corporation, PacificNet Inc., Octavian International Limited and Emperor Holdings Limited, dated December 7, 2007 (1)

10.9		Contract of Rendering of Services No. ACP-01-08 between Firm Profit and Octavian SPb Ltd., dated November 23, 2007, as amended by the Additional Agreement No 1 to the Contract of Rendering of Services No ACP-01-08, dated January 1, 2008, as further amended by the Additional Agreement to the Contract of Rendering of Services No. ACP-01-08, dated January 21, 2008, as further amended by the Additional Agreement to the Contract of Rendering of Services No ACP-01-08, dated February 1, 2008 (1)*

10.10		Contract for Rendering Services No. ACP-03-08 between SPM 1 and Octavian International Ltd., dated November 23, 2007, as amended by the Additional No 1 to the Contract of Rendering of Services No ACP-03-08, dated January 1, 2008 (1)*

10.11		Contract of Rendering of Services No ACP-02-08 between Jackpot LLC and Octavian International Limited, dated November 23, 2007, as amended by the Additional No 1 to the Contract of Rendering of Services No ACP-02-08, dated January 1, 2008 (1)*

10.12		Securities Purchase Agreement between Octavian Global Technologies, Inc. (f/k/a House Fly Rentals Inc.) and certain purchasers, dated October 30, 2008 (1)

10.13		Employment Agreement by and between Octavian Global Technologies, Inc. and Harmen Brenninkmeijer, dated October 30, 2008 (1)

10.14		Service Agreement between Octavian International Limited and Peter Moffitt dated October 16, 2008 (1)

10.15		Statement of Particulars of Employment From Octavian International Ltd. to Peter Brenninkmeijer, dated March 15, 2008 (1)

10.16		Letter Agreement between Octavian International Limited and Oppenheimer & Co. Inc., dated October 8, 2008 (1)

10.17		Amendment No. 1 to Employment Agreement between Octavian Global Technologies, Inc. and Harmen Brenninkmeijer dated December 8, 2008 (6)

10.18		Debentures and Warrants Purchase Agreement between Octavian Global Technologies, Inc. and certain purchasers, dated May 14, 2009 (4)

10.19		Consent and Amendment between Octavian Global Technologies, Inc. and certain purchasers, dated May 14, 2009 (4)

10.20		Stockholder Agreement by and among Octavian Global Technologies, Inc., Ziria Enterprises Limited, Harmen Brenninkmeijer and Austrian Gaming Industries GmbH, dated May 14, 2009 (4)

10.21		Amended and Restated Employment Agreement between Octavian Global Technologies, Inc. and Harmen Brenninkmeijer, dated May 14, 2009 (4)

10.22		Loan Agreement between Austrian Gaming Industries GmbH and Octavian International Limited, dated August 4, 2009 (7)

10.23		Intellectual Proprty Rights Transfer Agreement by and among Octavian International Limited, Ziria Enterprises Ltd., Harmen Brennikmeijer and Austrian Gaming Industries GmbH, dated August 4, 2009 (7)

10.24		Form of Software Escrow Agreement between Austrian Gaming Industries GmbH, Octavian International Limited and NCC Escrow Internationa Limited (7)

10.25		Amendment Agreement between Austrian Gaming Industries GmbH and Octavian International Limited, dated August 4, 2009 (7)

16.1		Letter dated November 10, 2008 to the Securities and Exchange Commission from John Kinross-Kennedy, C.P.A.(8)

21		Subsidiaries (9)

31.1		Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-4(a)) (9)

31.2		Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a)) (9)

32.1		Certificate of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as Adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(b)) (9)

32.2		Certificate of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(b)) (9)

(1) Incorporated by reference from the Company’s Current Report on Form 8-K filed with the SEC on November 5, 2008 (File No. 333-146705)

(2) Incorporated by reference from the Company’s Current Report on Form 8-K filed with the SEC on December 4, 2008 (File No. 333-146705)

(3) Incorporated by reference from the Company’s Post Effective Amendment No. 1 to the Registration Statement on Form S-1/A filed with the SEC on January 22, 2009 (File No. 333-146705)

(4) Incorporated by reference from the Company’s Current Report on Form 8-K filed with the SEC on May 14, 2009 (File No. 333-146705)

(5) Incorporated by reference from the Company’s Registration Statement on Form SB-2 filed with the SEC on October 15, 2007

(6) Incorporated by reference from the Company’s Current Report on Form 8-K filed with the SEC on January 8, 2009 (File No. 333-146705)

(7) Incorporated by reference from the Company’s Current Report on Form 8-K filed with the SEC on August 7, 2009

(8) Incorporated by reference from the Company’s Current Report on Form 8-K/A filed with the SEC on November 10, 2008

(9) Filed herewith

* Confidential treatment requested with respect to portions of this document

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the United Kingdom on March 30, 2010.

OCTAVIAN GLOBAL TECHNOLOGIES, INC.

Dated: March 30, 2010	By:	/s/Harmen Brenninkmeijer
		Harmen Brenninkmeijer
		Chairman and Chief Executive Officer

Dated: March 30, 2010	By:	/s/Peter Brenninkmeijer
		Peter Brenninkmeijer
		Chief Financial Officer and Director

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

Signature	Title	Date

/s/ Harmen Brenninkmeijer	Chairman and Chief Executive Officer	March 30, 2010
Harmen Brenninkmeijer	(Principal Executive Officer)

/s/ Peter Brenninkmeijer	Chief Financial Officer and Director	March 30, 2010
Peter Brenninkmeijer	(Principal Financial Officer and Principal
	Accounting Officer)

/s/ Peter Moffitt	President and Director	March 30, 2010
Peter Moffitt

OCTAVIAN GLOBAL TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008

Contents

		Page
Reports of Independent Registered Public Accounting Firms		F-2

Consolidated Financial Statements

Consolidated Balance Sheets as of December 31, 2009 and 2008		F-4

Consolidated Statements of Operations For the Years Ended December 31, 2009 and 2008		F-5

Consolidated Statements of Stockholders’ Deficit For the Years Ended December 31, 2009 and 2008		F-6

Consolidated Statements of Cash Flows For the Years Ended December 31, 2009 and 2008		F-7

Notes To Consolidated Financial Statements		F-8

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors of Octavian Global Technologies, Inc. and Subsidiaries.

We have audited the accompanying consolidated balance sheets of Octavian Global Technologies Inc. and Subsidiaries (the "Company") as of December 31, 2009 and 2008, and the related consolidated statements of operations, stockholders' deficit and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. As of and for the year ended December 31, 2009, we did not audit the financial statements of Octavian Italy S.r.l., whose equity investment by the Company amounts to $864,049 as on December 31, 2009, and total share of net income in the equity amounts to $582,485 for the year ended December 31, 2009. Those statements were audited by other auditors whose reports have been furnished to us, and in our opinion, insofar as it relates to the amounts included for Octavian Italy S.r.l. for the year ended December 31, 2009 are based solely on the report of the other auditors.

We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits and the report of the other auditors provide a reasonable basis for our opinion.

In our opinion, based on our audits and the reports of other auditors, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Octavian Global Technologies Inc. and Subsidiaries and the results of its consolidated operations and its cash flows for the years ended December 31, 2009 and 2008 in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. During the year ended December 31, 2009, the Company incurred net losses of $13,814,708. In addition, the Company has working capital deficit of $2,382,825 and accumulated deficit of $38,238,598 as of December 31, 2009. The Company's operations are mainly dependent upon one major supplier Austrian Gaming Industries to whom the Company's total purchases amounting $470,000 for the year ended December 31, 2009 and owes approximately $12 million as of December 31, 2009. These factors, among others, as discussed in Note 1 to the consolidated financial statements, raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Kabani & Company, Inc.

CERTIFIED PUBLIC ACCOUNTANTS

Los Angeles, California

March 31, 2010

F-2

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of

Octavian International Limited.

We have audited the accompanying balance sheet of Octavian Italy S.r.l. as of December 31, 2009, and the related statements of operations and shareholders' deficit for the period from January 1, 2009 to December 31, 2009 (not presented separately herein). These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company's internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Octavian Italy S.r.l. at December 31, 2009, and the results of its operations for the period from January 1, 2009 to December 31, 2009, in conformity with U.S. generally accepted accounting principles.

BDO S.p.A.

/s/ Alessandro Gigliarano

Alessandro Gigliarano

(Director)

Verona, Italy

March 31, 2010

F-3

Octavian Global Technologies, Inc. and Subsidiaries

CONSOLIDATED BALANCE SHEETS

AS OF DECEMBER 31, 2009 AND DECEMBER 31, 2008

	December 31,			December 31,
	2009			2008
ASSETS

CURRENT ASSETS:
Cash and cash equivalents	$	357,641		$	2,829,641
Accounts receivable, net of allowance for		-
doubtful accounts of $3,257,188 and $11,474,117		1,104,406			7,038,708
Loans receivable		79,640			469,161
Loans receivable - related parties		1,020,183			1,348,359
Inventories, net		1,575,415			1,475,826
Other receivable		892,172			809,681
Value added taxes receivable		700,506			603,360
Total current assets		5,729,963			14,574,736

PROPERTY AND EQUIPMENT, net		1,418,345			1,386,246

INVESTMENTS		892,829			226,094

INTANGIBLE ASSETS, net		3,687,293			2,759,572

TOTAL ASSETS	$	11,728,430		$	18,946,648

LIABILITIES AND DEFICIT

CURRENT LIABILITIES:
Accounts payable	$	1,299,353		$	7,097,203
Accrued expenses		2,011,539			2,887,280
Bank overdrafts		10,111			87,955
Current portion of loan payables		3,934,534			3,570,369
Customer deposits		160,438			397,482
Unearned revenue		696,795			845,057
Shares to be issued to an officer		-			663,400
Shares to be issued to investors		18			-

Total current liabilities		8,112,788			15,548,746

LONG TERM LIABILITIES:
Loans payable		7,953,258			7,796,931
Tax Liability		303,591			-
Convertible debenture		14,775,667			10,244,505
		23,032,516			18,041,436

DEFICIT:
Octavian stockholders' deficit:
Preferred stock, $0.001 par value, 10,000,000 shares authorized; none issued and outstanding
Common stock, $0.001 par value; 150,000,000 shares authorized;
10,751,378 and 7,802,408 issued and outstanding at December 31, 2009
and December 31, 2008, respectively		10,751			7,802
Additional paid-in capital		15,820,256			5,781,837
Stock Subscription Receivable		(1,000,000	)		-
Accumulated other comprehensive income		3,953,919			5,274,801
Accumulated deficit		(38,238,598	)		(25,744,772	)
Total Octavian stockholders' deficit		(19,453,672	)		(14,680,332	)
Noncontrolling interest		36,798			36,798
Total deficit		(19,416,874	)		(14,643,534	)

TOTAL LIABILITIES AND DEFICIT	$	11,728,430		$	18,946,648

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

F-4

Octavian Global Technologies, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2009 AND 2008

	Year Ended December 31,
	2009			2008

Revenue
Systems	$	3,880,645		$	7,912,485
Games		5,687,919			2,263,159
Lottery		312,703			100,498
Supplies		1,823,734			29,350,925
Net Revenue		11,705,001			39,627,067

Cost of Revenue
Systems		1,356,120			1,914,228
Games		1,669,546			1,337,657
Lottery		382,687			248,060
Supplies		1,361,066			24,744,186
Total Cost of Revenue		4,769,419			28,244,131

Gross profit		6,935,582			11,382,936

Operating expenses
General, administrative and selling expenses		14,190,873			16,792,256
Depreciation and amortization		2,286,282			800,670
(Gain) Loss on disposal of fixed assets		40,572			(340,823	)
Research and development		-			94,005
Capital raising fees		-			134,507
Impairment of investment		67,000			-
Total operating expenses		16,584,727			17,480,615

Loss from operations		(9,649,146	)		(6,097,679	)

Non-operating income (expense):
Other income , net		19,341			189,969
Interest expense- Warrant and debt issue cost		(4,155,845	)
Interest expense		(541,598	)		(652,011	)
Share of earnings in equity investment		582,485			273,237
Foreign currency transaction gain (loss)		1,556,482			(4,103,630	)

Total non-operating expense		(2,539,135	)		(4,292,435	)

Net loss before taxes and discontinued operations		(12,188,281	)		(10,390,114	)

Taxation		260,369			387,363
Net Loss including non-controlling interest before discontinued operations		(12,448,650	)		(10,777,477	)

Less: (Income)/Expense from discontinued operations		45,176			-
Net Loss including non-controlling interest		(12,493,826	)		(10,777,477	)

Less: Net (income) loss attributed to non-controlling interest		-			(6,276	)
Net loss attributable to Octavian		(12,493,826	)		(10,783,753	)

Other comprehensive income:
Foreign currency translation adjustments		(1,320,882	)		4,966,392

Comprehensive Loss	$	(13,814,708	)	$	(5,817,361	)

Weighted average shares outstanding
Basic and diluted		9,763,993			4,008,388

Loss per share attributed to Octavian stockholders:
Basic and diluted	$	(1.28	)	$	(2.69	)

*Basic and diluted weighted average number of shares are considered equivalent as the effect of dilutive shares is anti-dilutive

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

F-5

Octavian Global Technologies, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT

FOR THE YEAR ENDED DECEMBER 31, 2009

							Additional			Other						Stock			Total
	Common Stock						Paid-in			Comprehensive			Retained			Subscription			Stockholders'
	Shares			Amount			Capital			Income			Earnings			Receivable			Deficit

Balance, December 31, 2007		3,294,050		$	3,294		$	-		$	308,409			(14,961,019	)	$	-		$	(14,649,316	)

Shares issued in settlement of account payable		2,147,574			2,148			5,109,115												5,111,263

Shares issued for consulting services		490,797			491			219,595												220,086

Shares issued in satisfaction of obligations		200,930			201			89,799												90,000

Shares issued in connection with reverse merger		1,345,318			1,345			17,330												18,675

Shares repurchased and cancelled		(597,919	)		(598	)		(299,402	)											(300,000	)

Shares issued with convertible debenture		921,658			921			444,375												445,296

Warrant expense for employee compensation								109,130												109,130

Warrants issued with convertible debenture								84,087												84,087

Warrants issued as finders fee								6,607												6,607

Warrants issued as financing costs								1,201												1,201

Change in foreign currency translation gain											4,966,392									4,966,392

Net loss														(10,783,753	)					(10,783,753	)

Balance, December 31, 2008		7,802,408			7,802			5,781,837			5,274,801			(25,744,772	)					(14,680,332	)

Shares of common stock issued to officer		214,000			214			663,186												663,400

Debt equity Swap		2,057,589			2,058			8,465,340									(1,000,000	)		7,467,398

Shares of common stock issued as debt issuing costs		677,381			677			909,892												910,569

Change in foreign currency translation gain											(1,320,882	)								(1,320,882	)

Net Loss														(12,493,826	)					(12,493,826	)

Balance, December 31, 2009		10,751,378		$	10,751		$	15,820,255		$	3,953,919		$	(38,238,598	)	$	(1,000,000	)	$	(19,453,673	)

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

F-6

Octavian Global Technologies, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEAR ENDED DECEMBER, 2009, AND 2008

	December 31,			December 31,
	2009			2008

CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss	$	(12,493,826	)	$	(10,777,477	)
Adjustments to reconcile net loss
to net cash used in operating activities:
Depreciation and amortization		2,286,282			800,670
Foreign exchange gain/loss		(1,556,482	)		4,103,630
(Gain)/loss on disposal of property and equipment		40,572			(340,823	)
Bad debt expense		2,843,094			1,330,497
Inventory reserves		145,659			-
Share of earnings from equity investment		(582,485	)		(273,237	)
Amortization of debt discounts		4,155,845			60,503
Shares of common stock issued to an officer		-			663,400
Shares of common stock issued for consulting services		-			220,086
Warrant expense for financing costs		-			7,808
Warrant expense for employee compensation		-			109,130
(Increase) / decrease in assets:
Accounts receivable		5,043,560			(5,732,299	)
Other receivable		588,705			(339,881	)
Inventory		(418,182	)		167,452
Prepaid expenses and other current assets		-			2,178
Other assets		(5,964	)		(2,286,614	)
Increase / (decrease) in liabilities:
Accounts payable		81,066			6,175,967
Accrued expenses		(1,532,609	)		1,886,646
Customer deposits		(238,104	)
Deferred revenue		(227,888	)		(2,137,605	)
Long term tax liabilities		310,247			-

Net cash used in operating activities		(1,560,510	)		(6,359,969	)

CASH FLOWS FROM INVESTING ACTIVITIES

Purchases of property and equipment		(818,677	)		(1,496,684	)
Increase of intangible assets		(2,228,701	)		(1,945,085	)
Collections on loans from related parties		-			48,976
Increase in loans receivable		(192,192	)		(1,434,023	)
Loans to related parties		(186,390	)		-
Cash acquired in reverse merger		-			18,675

Net cash used in investing activities		(3,425,960	)		(4,808,141	)

CASH FLOWS FROM FINANCING ACTIVITIES:

Repayments on short term loans		(584,356	)		(1,408,351	)
Repayments on short term overdrafts		(81,274	)		-
Issuance of convertible debenture		3,000,000			13,000,000
Repurchase of shares of common stock		-			(300,000	)
Issuance of notes payable					1,239,668
Net cash provided by financing activities		2,334,370			12,531,317

Effect of exchange rate changes on cash and cash equivalents		180,100			(971,212	)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(2,472,000	)		391,995

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR		2,829,641			2,437,646

CASH AND CASH EQUIVALENTS, END OF YEAR	$	357,641		$	2,829,641

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Interest paid	$	480,212		$	554,283
Income taxes paid	$	220,715		$	720,866

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING
AND FINANCING ACTIVITIES:

Issuance of common stock to settle accounts payable		66,400		$	5,111,263
Issuance of common stock in repayment of accounts payable		371,499		$	90,000
Reclassification of account payable to note payable		539,088		$	10,188,000
Conversion of related party account payable to convertible debenture	$	6,378,526			-

Issued subscription receivable for 354,484 shares of common stock	$	1,000,000		$	-

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

F-7

Note 1 – The Company and Summary of Significant Accounting Policies

Organization and Line of Business

The Company is a global provider of a full end-to-end suite of gaming systems and product in over 30 countries, covering all aspects of casino and gaming operations including venue and player registration through to table and slots management, through to player tracking and loyalty systems, to security. Our solutions include full life-cycle gaming support and systems solutions, design development, implementation and support, alongside game content creation, products for the lottery industry and resale of third-party products.

The Company’s primary focus is to establish long lasting relationships with customers by providing a full end-to-end suite of innovative gaming solutions. Delivered through the Company’s core businesses, OctaSystems, OctaGames, OctaSupplies and OctaLotto, the Company provides comprehensive solutions and infrastructure systems allowing both large and small operators to increase efficiency, profitability and control while bringing their customers top-of-the-line, innovative, downloadable and installed games.

On October 30, 2008, House Fly Rentals, Inc (“House Fly”) a Nevada corporation, entered into a Share Exchange Agreement with Octavian International Limited (“Octavian”) and the holders of all of the issued and outstanding securities of the Octavian by which all of the securities of Octavian were exchanged for securities in House Fly. Pursuant to the terms of the Share Exchange Agreement, House Fly acquired 100 percent of the issued and outstanding shares of Octavian. Accordingly, the merger was accounted for as a reverse acquisition of House Fly by Octavian and resulted in a recapitalization of Octavian in a manner similar to the pooling of interest method. Concurrent with the merger, the name of House Fly was changed to Octavian Global Technologies, Inc (“the Company”) effective November 30, 2008.

Pursuant to the Purchase Agreement discussed in Note 14, on October 30, 2008, the Company effected a 1-for-5.0174 reverse stock split of its shares of Common Stock pursuant to which the conversion price of the Debentures (see Note 10) and the exercise price and number of shares under the Warrant (see Note 13), by each of their respective terms, shall not be adjusted as a result of the reverse stock split. All shares disclosed in these consolidated financial statements are stated on a post-split basis.

Pursuant to the terms of the Purchase Agreement on May 14, 2009, Austrian Gaming Industries, GmbH (AGI), the Company’s principal supplier of casino gaming machines and a holder of approximately 31.2 percent of the issued and outstanding Common Stock prior to the consummation of the Purchase Agreement, agreed to exchange outstanding accounts payable with the Company of $6,378,526 for Original Issue Discount Convertible Debentures (and together with the Finance Debenture) with a principal amount of $6,378,526 which Debentures are convertible at a conversion price of $3.10 per share, subject to adjustment therein, Common Stock Purchase Warrants to purchase up an aggregate of 2,057,590 shares of Common Stock (1,028,795 shares at an initial exercise price of $3.10 per share for 5 years and 1,028,795 shares at an initial exercise price of $4.65 per share for 7 years, which exercise prices and the number of shares exercisable thereunder are subject to adjustment therein for cashless exercise) and an aggregate of 411,518 shares of Common Stock. Immediately upon the consummation of the Purchase Agreement, the Exchange Debentures were converted into 2,057,589 shares of Common Stock. AGI increased its beneficial ownership of the voting shares of Common Stock to approximately 50.6% of the issued and outstanding Common Stock from approximately 31.2%.

Going Concern

As shown in the accompanying consolidated financial statements, the Company incurred accumulated losses of $38,238,598 and a negative net working capital of $ 2,382,825 as of December 31, 2009. In addition, the Company’s operations are dependent on one major supplier, Austrian Gaming Industries, to whom the Company owes approximately $11.7 million as of December 31, 2009. These matters raise substantial doubt about the Company’s ability to continue as a going concern.

Revenues generated in Russia were adversely affected by the legislative change significantly limiting gambling operations in Russia from July 2009. Consequently the Russian slot machine and system markets collapsed which halted almost all revenue in Russia

F-8

In view of the matters described in the preceding paragraph, recoverability of a major portion of the recorded asset amounts shown in the accompanying balance sheet is dependent upon continued operations of the Company, which in turn is dependent upon the Company’s ability to raise additional capital, obtain financing and to succeed in its future operations. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

Basis of Presentation

The accompanying consolidated financial statements include the accounts of Octavian Global Technologies, Inc. and its subsidiaries as follows:

Subsidiary	Place Incorporated	% Owned
Octavian International Ltd.	England and Wales	100
Casino Amusement Technology Supplies Ltd.	England and Wales	100
Octavian Latin America S.A.	Colombia	100
Octavian International (Europe) Ltd.	England and Wales	100
Octavian International (Latin America) Ltd.	England and Wales	100
Octavian Ukraine	Ukraine	100
Octavian SPb	Russia	100
Atlantis	Russia	100
Argelink S.A.	Argentina	100
Octavian Italy Srl	Italy	50
Octavian Germany Limited	England and Wales	51
Octavian Germany GmbH (a wholly owned subsidiary of Octavian Germany Limited)	Germany	51

Octavian Rwanda Limited (formerly Tilia International Limited) was incorporated on February 26, 2009 in Rwanda as a wholly owned subsidiary of Octavian International Limited. Octavian Rwanda was granted a license by the Rwandan authorities to exclusively operate the country’s public lottery and to enable it to operate slot machines within the country. The lottery operations, previously set up with the help of Octavian but operated by an independent company, have been rolled into Octavian Rwanda.

On the August 6, 2009, Argelink S.A. changed its name to Octavian de Argentina S.A. Argelink S.A.was incorporated on July 11, 2002 in Argentina, and became a wholly owned subsidiary of Octavian International, Ltd on August 17, 2007.

On October 1, 2009, Octavian Latin America S.A., which was incorporated on July 22, 2005 in Colombia, became a wholly owned subsidiary of Octavian International, Ltd. Due to corporate governance changes companies in Colombia no longer require a minimum of five shareholders.

On October 1, 2009, Octavian Ukraine was closed due to the sudden and abrupt gaming ban imposed by the government of Ukraine at the end of June 2009.

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America. The Company’s functional currency is the British Pound (GBP) and the Company’s subsidiaries use their local currencies: Colombian Peso (COP); Russian Rouble (RUB); Argentine Peso (ARS); Euro (EUR), Rwandan Francs (RWF) and Ukraine Hryvnia (UAH), as their functional currency. However, the accompanying consolidated financial statements have been translated and presented in United States Dollars ($).

For comparative purposes, prior year’s consolidated financial statements have been reclassified to conform to report classifications of the current year.

Note 2 – Summary of Significant Accounting Policies

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of Octavian Global Technologies, Inc. and its subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

F-9

Use of Estimates

Cash and Cash Equivalents

Cash and cash equivalents include cash in hand and cash in time deposits, certificates of deposit and all highly liquid debt instruments with original maturities of three months or less.

Accounts Receivable

Inventories

Inventory is stated at the lower of cost or market. Cost is determined using the first in, first out method. Management compares the cost of inventories with the market value, and allowance is made for writing down the inventories to their market value, if lower. As of December 31, 2009 and December 31, 2008 the Company believes that the reserve is adequate.

Other Receivable

Other receivable consists of prepayments, supplier commissions, other debtors and Value Added Tax.

Property and Equipment

Computer Equipment	3 years
Gaming Equipment	3 years
Fixtures and fittings	4 - 5 years

Investments

The Company has 50% ownership in the joint venture company that is accounted for using the equity method. The Company's share of earnings from the affiliated company is reflected in income as earned, while dividends are credited against the investments in affiliated companies when received (Note 15)

The Company has investment in various entities as on December 31, 2009 and 2008, as per follows:

	December 31,		December 31,
	2009		2008
Investment under equity method (Note 15)	$	864,049	$	226,094
Investments - others		28,780
Total	$	892,829	$	226,094

Research and Development

Research and development costs are charged to expense as incurred until technological feasibility has been established. These costs consist primarily of salaries and direct payroll related costs.

Software Development Costs

Software development costs related to computer games and network and terminal operating systems developed by the Company are capitalized in accordance with Statement of Financial Accounting Standards ("SFAS") No. 86 (ASC 985), "Accounting for the Cost of Computer Software to be Sold, Leased, or Otherwise Marketed." Capitalization of software development costs begins upon the establishment of technological feasibility and is discontinued when the product is available for sale. When the software is a component part of a product, capitalization begins with the product reaches technological feasibility. The establishment of technological feasibility and the ongoing assessment for recoverability of capitalized software development costs require considerable judgment by management with respect to certain external factors including, but not limited to, technological feasibility, anticipated future gross revenues, estimated economic life, and changes in software and hardware technologies. Capitalized software development costs are comprised primarily of salaries and direct payroll related costs and the purchase of existing software to be used in the Company's products.

F-10

Note 7 below gives further information regarding the value of software development costs capitalised and amortized by the Company.

Long-Lived Assets

The Company applies the provisions of Statement of Financial Accounting Standards No. 144 (ASC 360), “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS 144”), which addresses financial accounting and reporting for the impairment or disposal of long-lived assets and supersedes SFAS No. 121, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of,” and the accounting and reporting provisions of APB Opinion No. 30, “Reporting the Results of Operations for a Disposal of a Segment of a Business.” The Company periodically evaluates the carrying value of long-lived assets to be held and used in accordance with SFAS 144 (ASC 360). SFAS 144 requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amounts. In that event, a loss is recognized based on the amount by which the carrying amount exceeds the fair market value of the long-lived assets. Loss on long-lived assets to be disposed of is determined in a similar manner, except that fair market values are reduced for the cost of disposal. Based on its review, the Company believes that, as of December 31, 2009 and December 31, 2008, there were no impairments of its long-lived assets.

Intangible Assets

Intangible assets consist of product developments, intangible game developments, game work-in-progress, game development and lottery development. All intangible assets are amortized over 3 years.

Included in the total cost of intangible assets at December 31, 2009 is an amount of $1,961,166 which relates to incomplete games development and lottery projects which are not yet amortized. Substantially all of the intangible assets are pledged as security for outstanding indebtedness.

Revenue Recognition

Revenue is recognized when services are rendered to customers when a formal arrangement exists, the price is fixed or determinable, the delivery is completed, no other significant obligations of the Company exist and collectability is reasonably assured. In particular, revenues from the sales of gaming equipment, other hardware, games and installation costs for systems are recognized on delivery; recurring revenues for systems are recognized in the period in which they are operated by our customers. Where the company delivers multiple deliverables to the same customer these are valued and invoiced separately and the revenue recognition policy follows that described earlier in this paragraph. Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as unearned revenue.

The Company at times enters arrangements whereby it shares the revenues with the customer, mainly by placing gaming machines in an operators premises and sharing the revenues with the operator. In these cases the Company will recognise the revenue once the meters of the gaming machines are read, normally remotely, and the operator is invoiced the Company’s share of the revenues.

Unearned Revenue

Advertising Costs

The Company expenses the cost of advertising as incurred or, as appropriate, the first time the advertising takes place. Advertising costs for the years ended December 31, 2009 and 2008 were $87,637and $100,255 respectively.

F-11

Income Taxes

The Company adopted the provisions of FASB Interpretation No. 48 (ASC 740), Accounting for Uncertainty in Income Taxes, on January 1, 2007. As a result of the implementation of the standard, the company made a comprehensive review of its portfolio of tax positions in accordance with recognition standards established by FIN 48 (ASC 740). As a result of the implementation of the standard, the Company recognized no material adjustments to liabilities or stockholders’ equity. When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the accompanying balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination. Interest associated with unrecognized tax benefits are classified as interest expense and penalties are classified in selling, general and administrative expenses in the statements of income. The adoption of FIN 48 did not have a material impact on the Company’s financial statements.

Concentration of credit risk

Cash includes cash on hand and demand deposits in accounts maintained within England, Colombia, Russia, Rwanda, Argentina, Italy and Germany. Certain financial instruments, which subject the Company to concentration of credit risk, consist of cash. The Company does not maintain balances at financial institutions located in the United States. The balances held are not covered by the Federal Deposit Insurance Corporation. As of December 31, 2009 and December 31, 2008, the Company had deposits totalling $357,641 and $2,829,641, respectively. The Company has not experienced any losses in such accounts.

Foreign Currency Transactions and Comprehensive Income

The reporting currency of the Company is the U.S. dollar. The Company’s functional currency is the British Pound (GBP) and the Company’s subsidiaries use their local currencies: Colombian Peso (COP); Russian Rouble (RUB); Argentine Peso (ARS); Euro (EUR), Rwandan Francs (RWF) and Ukraine Hryvnia (UAH), as their functional currency. Assets and liabilities are translated using the exchange rates prevailing at the balance sheet date. Translation adjustments resulting from this process are included in accumulated other comprehensive income (loss) in the consolidated statements of stockholders’ equity. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred.

The Company recorded translation losses of $1,320,882 and gains of $4,966,392 for the year ended December 31, 2009 and 2008, respectively. Asset and liability amounts at December 31, 2009 and December 31, 2008 were translated at 0.62783 GBP and 0.6071 GBP to USD $1.00, respectively. Equity accounts were stated at their historical rates. The average translation rates applied to income statement accounts for the years ended December 31, 2009 and 2008 were 0.6386 and 0.54491 to USD $1.00, respectively. In accordance with Statement of Financial Accounting Standards No. 95(ASC 230), “Statement of Cash Flows,” cash flows from the Company’s operations are calculated based upon the local currencies. As a result, amounts related to assets and liabilities reported on the statement of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheet.

Foreign Currency Transaction Gains and Losses

Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred. For the years ended December 31, 2009 and 2008, the Company recorded net transaction gains/ (losses) of approximately $1,556,482 and $(4,103,630), respectively. Historically, the Company has not entered into any currency trading or hedging transactions, although there is no assurance that the Company will not enter into such transactions in the future.

F-12

Non-controlling Stockholders’ Interest

The Company owns a 51% interest in Octavian Germany Limited and Octavian Germany GmbH. Minority interests in these subsidiaries are included in the accompanied financial statements. The equity in the non-controlling interest in the Colombian entity has been classified as “Noncontrolling stockholders’ interests” in the accompanying consolidated balance sheets. Changes in equity in non-controlling interests arising from results of operations have been recorded as “Net (income) loss attributed to non-controlling stockholders' interest” in the accompanying consolidated statements of operations.

Certain amounts presented for prior periods that were previously designated as minority interests have been reclassified to conform to the current year presentation. Effective January 1, 2009, the Company adopted SFAS No. 160 (ASC 810) , “Non-controlling Interests in Consolidated Financial Statements, which established new standards governing the accounting for and reporting of non-controlling interests (NCIs) in partially owned consolidated subsidiaries and the loss of control of subsidiaries. Certain provisions of this standard indicate, among other things, that NCIs (previously referred to as minority interests) be treated as a separate component of equity, not as a liability (as was previously the case); that increases and decreases in the parent’s ownership interest that leave control intact be treated as equity transactions, rather than as step acquisitions or dilution gains or losses; and that losses of a partially owned consolidated subsidiary be allocated to the NCI even when such allocation might result in a deficit balance. This standard also required changes to certain presentation and disclosure requirements. The provisions of the standard were applied to all NCIs prospectively, except for the presentation and disclosure requirements, which were applied retrospectively to all periods presented. As a result, upon adoption, the Company retroactively reclassified the “Non-controlling stockholders’ interest” balance previously included in the “Other liabilities” section of the consolidated balance sheet to a new component of equity with respect to NCIs in consolidated subsidiaries. The adoption also impacted certain captions previously used on the consolidated statement of income, largely identifying net loss including NCI and net loss attributable to Octavian.

Segment Reporting

Statement of Financial Accounting Standards No. 131 (“SFAS 131”) (ASC 280), “Disclosure About Segments of an Enterprise and Related Information” requires use of the “management approach” model for segment reporting. The management approach model is based on the way a Company’s management organizes segments within the company for making operating decisions and assessing performance. The Company has determined that it has 3 reportable segments: Octavian EMEA, Octavian CIS, and Octavian Latin America (See Note 18).

Basic and Diluted Losses Per Share

Earnings per share is calculated in accordance with the SFAS No. 128, “Earnings Per Share” (SFAS 128) (ASC 260). Basic earnings per share is based upon the weighted average number of common shares outstanding. Diluted earnings per share is based on the assumption that all dilutive convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. As of December 31, 2009 the following potential dilutive shares were excluded from diluted loss per share for all periods presented because of their anti-dilutive effect.

	December 31, 2009		December 31, 2008
Warrants	$	10,597,776	$	7,249,865
Convertible notes		6,026,226		4,608,290
Total	$	16,624,002	$	11,858,155

Fair value of financial instruments

Level 1: inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

F-13

Level 3: inputs to the valuation methodology are unobservable and significant to the fair value measurement.

As of December 31, 2009, the Company did not identify any assets and liabilities that are required to be presented on the balance sheet at fair value.

Recent Pronouncements

In June 2009, the FASB issued ASC 105 (previously SFAS No. 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles ("GAAP") - a replacement of FASB Statement No. 162), which will become the source of authoritative accounting principles generally accepted in the United States recognized by the FASB to be applied to nongovernmental entities. The Codification is effective in the third quarter of 2009, and accordingly, the Quarterly Report on Form 10-Q for the quarter ending September 30, 2009 and all subsequent public filings will reference the Codification as the sole source of authoritative literature. The Company does not believe that this will have a material effect on its consolidated financial statements.

In June 2009, the FASB issued ASC 855 (previously SFAS No. 165, Subsequent Events), which establishes general standards of accounting for and disclosures of events that occur after the balance sheet date but before the financial statements are issued or available to be issued. It is effective for interim and annual periods ending after June 15, 2009. There was no material impact upon the adoption of this standard on the Company’s consolidated financial statements.

In June 2009, the FASB issued ASC 860 (previously SFAS No. 166, “Accounting for Transfers of Financial Assets”) , which requires additional information regarding transfers of financial assets, including securitization transactions, and where companies have continuing exposure to the risks related to transferred financial assets. SFAS 166 eliminates the concept of a “qualifying special-purpose entity,” changes the requirements for derecognizing financial assets, and requires additional disclosures. SFAS 166 is effective for fiscal years beginning after November 15, 2009. The Company does not believe this pronouncement will impact its financial statements.

In June 2009, the FASB issued ASC 810 (previously SFAS No. 167) for determining whether to consolidate a variable interest entity. These amended standards eliminate a mandatory quantitative approach to determine whether a variable interest gives the entity a controlling financial interest in a variable interest entity in favor of a qualitatively focused analysis, and require an ongoing reassessment of whether an entity is the primary beneficiary. These amended standards are effective for us beginning in the first quarter of fiscal year 2010 and we are currently evaluating the impact that adoption will have on our consolidated financial statements.

Reclassifications

Certain comparative amounts have been reclassified to conform to the current period’s presentation

F-14

Note 3 - Other Receivable

Other receivables comprises of the following:

	December 31, 2009		December 31, 2008
Prepayments	$	581,054	$	722,825
Other debtors		275,320		86,856
Supplier commissions		35,798		-
Total	$	892,172	$	809,681

Note 4 – Inventories

Inventories are is as follows:

	December 31, 2009			December 31, 2008
Raw materials	$	748,996		$	675,860
Work in process		943,066			351,186
Finished goods		848,949			754,900
Other inventory		-			239,634
Total		2,541,011			2,021,580
Less reserve for obsolescence		(965,596	)		(545,754	)
Inventory, net	$	1,575,415		$	1,475,826

Note 5 – Loans Receivable

Loans receivable comprises the following:

	December 31, 2009			December 31, 2008
Mutual International Ltd	$	60,000		$	99,950
Be First Group, Inc		572,220			296,852
Gex Technologies		79,640			72,359
Provision on Loans Receivable		(632,220	)	_
Total	$	79,640		$	469,161

The Mutual International loan relates to a $60,000 convertible non bearing loan. This short term unsecured loan was entered into on July 21, 2009. Octavian International Limited may initiate conversion of the loan to 1,000 shares plus $99 shareholders loan (due on demand) per share in Be First Group at any time. Mutual International is a partner in our African lottery operations.

The Be First Group loan is unsecured and non interest bearing. The value of the loan is $297,000 as at November 20, 2008 when it was first made. During the third quarter of the year this loan was increased by $275,220 to $572,220. Mutual International is owned by Be First Group. The loan is due on demand.

The Gex Technologies loan is a short term loan signed on December 22, 2008. The loan was due on June 30, 2009, but remains unpaid to date. The Company is currently discussing the extension of the loan with Gex Technologies. This loan of ₤50,000 (USD 79,640) is secured by the source codes and assets of the ‘Spot the Ball’ game developed by Gex Technologies. There’s a 9% interest on the loan. No interest is accrued as of December 31, 2009 as the amount was insignificant.

The Be First Group and Mutual International loans have been provided for as the recovery of these loans is not likely at this stage.

F-15

Note 6 – Property and Equipment

The following are the details of the property and equipment:

	December 31, 2009			December 31, 2008
Computer Equipment	$	834,560		$	785,410
Gaming Equipment		1,959,602			1,410,579
Fixtures and fittings		182,804			368,729
Total		2,976,966			2,564,718
Less accumulated depreciation		(1,558,621	)		(1,178,472	)
Property and equipment, net	$	1,418,345		$	1,386,246

Depreciation expense for the years ended December 31, 2009 and 2008 was $746,165 and $306,373, respectively.

Note 7 – Intangible Assets

The following are the details of intangible assets:

	December 31, 2009			December 31, 2008
Product development	$	1,262,724		$	1,139,051
Customer contract		816,244			816,244
Work in progress		1,301,260			663,948
Game development		2,165,022			887,381
Lottery development		498,464			-
Total		6,043,715			3,506,624
Less Accumulated amortization		(2,356,422	)		(747,052	)
Intangibles, net	$	3,687,293		$	2,759,572

Amortization expense for the years ended December 31, 2009 and 2008 was $1,540,117 and $494,297, respectively. Amortization expense for the years ended December 31, 2010, 2011, 2012 and 2013 is expected to be $816,180, $600,921, $255,123, and $0, respectively. Substantially all of the intangible assets are pledged as security for outstanding indebtedness.

Note 8 – Loans Payable

Loans payable consist of the following:

The following are the details of short term loans payable:

	December 31, 2009			December 31, 2008
Loan payable to Mediciones Urbanas	$	135,000		$	629,686
Loan from PacificNet		64,895			52,448
Loan from Austrian Gaming Industries (“AGI”)		11,687,897			10,566,427
Other loans		-			118,739
Total		11,887,792			11,455,255
Less current portion		(3,934,534	)		(3,658,324	)
Long Term portion	$	7,953,258		$	7,796,931

Octavian is a non-exclusive distributor for AGI in various countries in Latin America, and Octavian’s wholly-owned subsidiary Casino & Amusement Technology Supplies is a non-exclusive AGI distributor in Russia and the Commonwealth of Independent States member countries. As such, AGI has been Octavian’s largest supplier and, prior to the closing of the Share Exchange (see Note 14); Octavian had outstanding accounts payables to AGI.

Pursuant to certain agreements between AGI and Octavian entered into immediately prior to the Share Exchange, AGI and Octavian agreed to the following:

F-16

·	AGI converted €4 million (USD $5,111,263) of accounts payable to it by the Company into 2,157,574 common shares of the Company, representing 28% percent of the outstanding common shares of the Company at December 31, 2008.

·	AGI invested USD $5,000,000 in the Private Placement. (see Note 10)

The Company repaid AGI €2 million (USD $3,255,830 based on the October 30, 2008 Exchange Rate of €1=US$1.2783) of accounts payable at the closing of the Private Placement (see Note 10) and was due to repay the remaining accounts payable balance in four equal instalments of €1,189,051 (USD $1,704,267 based on the December, 2009 Exchange Rate of €1=USD $1.4333) on November 30, 2008, December 31, 2008, January 31, 2009, and February 28, 2009. These payments were not made and the remaining balance of accounts payable with AGI was converted to shares on May 14, 2009.

Further to the above on August 4, 2009, we entered into a Loan Agreement with AGI. Pursuant to the Loan Agreement, AGI agreed to loan the Company $2 million, to be made in two equal instalments of $1 million. The first instalment was made on August 5, 2009 and the second instalment was made on August 17, 2009. Interest accrues at a rate of three month USD LIBOR plus four percent (4%) (capped at a maximum rate of eight percent (8%)) per year. Pursuant to the terms of the Loan Agreement, interest is paid on a monthly basis with the principal amount due and payable in full on June 30, 2010. As security for the Loan, the Company has granted a security interest in certain of its intellectual property. Upon an event of default, the IP Rights shall transfer to AGI.

In addition, AGI agreed to suspend the principal amount repayable on the €8 million loan for a period of twelve calendar months starting June 30, 2009 until May 31, 2010. Interest is required to be paid as normal.

The loan payable to Mediciones Urbanas is interest free. This loan was assumed as part of the acquisition of Argelink on August 17, 2007. The loan calls for payments of $45,000 monthly from the date of the acquisition until the loan’s maturity in January 2010. At December 31, 2009 the facility was two months overdue and without penalty and default clauses coming into effect. The loan was repaid in full in March 2010.

Interest expense in the years ended December 31, 2009 and 2008 was $ 541,598 and $652,011, respectively.

Note 9 – Accrued Expenses and Other Liabilities

Accrued expenses and other liabilities comprises of the following:

	December 31, 2009		December 31, 2008
		-
Audit fees	$	173,372	$	170,852
Fixed assets purchased		172,285		512,415
Legal fees		191,099		92,204
Sales commission		-		399,833
Accrued Interest		520,848
Accrued bonus		127,424		98,305
Contractors’ fees		-		40,945
Warranty provision		-		437,246
Other creditors		301,590		465,442
Other taxes		234,919		527,237
Accrued payroll		290,002		142,801
Total	$	2,011,539	$	2,887,280

F-17

Note 10 – Convertible Debenture Private Placement

On October 30, 2008, concurrent with the closing of the Share Exchange Transaction, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain accredited investors and closed a private placement offering pursuant to which it raised gross proceeds of $13,000,000 and, among other things, issued and sold ten percent discount convertible debentures (“Debentures”) with an aggregate principal amount of $14,285,700 convertible into shares of the Company’s Common Stock (“Conversion Shares”) at an initial conversion price of $3.10, subject to adjustment other than for the reverse stock split discussed below. Additionally, investors in the Private Placement received (i) common stock purchase warrants to purchase up to an aggregate of 4,193,548 shares of Common Stock (2,096,774 shares at an initial exercise price of $3.10 per share and 2,096,774 shares at an initial exercise price of $4.65 per share, which exercise prices and the number of shares exercisable thereunder were subject to adjustment other than for the reverse stock split discussed below (the “Warrants”) and (ii) an aggregate of 921,658 shares of Common Stock (the “Shares,” and, together with the Debentures and Warrants, the “Private Placement Securities”). AGI, Octavian’s previous principal supplier of casino gaming machines and a holder of 35 percent of Octavian prior to the Share Exchange Transaction, participated in the Private Placement by investing $5 million (see Note 14). The net proceeds received by the Company after the payment of all offering expenses including, without limitation, legal fees, accounting fees and cash commissions paid to certain finders (described below) was $10,199,812.

Pursuant to the Purchase Agreement, the Company agreed, promptly following the closing of the transactions contemplated under the Purchase Agreement, to effect a 1-for-5.0174 reverse stock split of its shares of Common Stock pursuant to which the conversion price of the Debentures and the exercise price and number of shares under the Warrant, by each of their respective terms, would not be adjusted as a result of the reverse stock split.

The Company also entered into a finder’s agreement with Oppenheimer & Co. Inc. (“Oppenheimer”), whereby Oppenheimer was engaged to act as a finder, but not as an agent, to the Company in connection with the Private Placement. Pursuant to this finder’s agreement, the Company paid Oppenheimer a cash finder’s fee of US$1,091,172 out of the proceeds of the Private Placement. The Company also issued to Oppenheimer and/or its designees 5-year warrants to purchase, in the aggregate, 283,871 shares of Common Stock at an exercise price of US$3.10 per share. The warrants are substantially on the same terms and include the same provisions as those issued to investors in the Private Placement and, similarly, the exercise price of these warrants were not adjusted as a result of the reverse stock split described above.

On May 14, 2009, we entered into a Debentures and Warrants Purchase Agreement with certain accredited investors, and closed a private placement offering pursuant to which we raised gross proceeds of $4 million and, among other things, issued and sold our Original Issue Discount Convertible Debentures with an aggregate principal amount of $4,395,600 which Debentures are convertible into shares of the Company’s Common Stock at a conversion price of $3.10 per share, subject to adjustment therein. Additionally, the Investors received Common Stock Purchase Warrants to purchase up to an aggregate of 1,417,936 shares of Common Stock (645,161 shares at an initial exercise price of $3.10 per share for 5 years and 645,161 shares at an initial exercise price of $4.65 per share for 7 years, which exercise prices and the number of shares exercisable there under are subject to adjustment) and an aggregate of 283,587 shares of Common Stock. The Company allocated the investment proceeds to the debt and warrants based on their relative fair values. The relative fair value of the warrants using the Black Scholes method assuming a volatility of the stock of 91%, term of five years and a discount of 1.98% and 2.62% was determined to be $805,074 which was recorded as debt discount, a reduction of the carrying amount of the debt. The beneficial conversion feature on the notes was $0. The debt discount on the face value of $395,600 along with the finders’ fee of $104,376 and fair value of the 283,587 shares of $371,499 was also recorded as debt discount. The debt discount will be amortized over the term of the note and charged to interest expense. During the period ended December 31, 2009 $135,159 of warrant discount and $146,306 of other discount was expensed.

Pursuant to the terms of the Purchase Agreement, AGI, the Company’s previous principal supplier of casino gaming machines and a holder of approximately 31.2 percent of the issued and outstanding Common Stock prior to the consummation of the Purchase Agreement, agreed to exchange outstanding accounts payable with the Company of $6,378,526 for Original Issue Discount Convertible Debentures (and together with the Finance Debenture) with a principal amount of $6,378,526 which Debentures are convertible at a conversion price of $3.10 per share, subject to adjustment therein, Common Stock Purchase Warrants to purchase up an aggregate of 2,057,590 shares of Common Stock (1,028,795 shares at an initial exercise price of $3.10 per share for 5 years and 1,028,795 shares at an initial exercise price of $4.65 per share for 7 years, which exercise prices and the number of shares exercisable hereunder are subject to adjustment therein) and an aggregate of 411,518 shares of Common Stock. Immediately upon the consummation of the Purchase Agreement, the Exchange Debentures were converted into 2,057,589 shares of Common Stock. AGI increased its beneficial ownership of the voting shares of Common Stock to approximately 50.6% of the issued and outstanding Common Stock from approximately 31.2%. The Company allocated the investment proceeds to the debt and warrants based on their relative fair values. The relative fair value of the warrants using the Black Scholes method assuming a volatility of the stock of 91%, term of five years and a discount of 1.98% and 2.62% was determined to be $ 1,283,798 which was recorded as debt discount, a reduction of the carrying amount of the debt. The beneficial conversion feature on the notes was $0. The fair value of the 411,518 shares of $539,088 was also recorded as debt discount. The debt discount was amortized completely on the conversion of the debenture.

F-18

Interest expense related to amortization of debt discounts, plus accrued interest on these debentures was $496,250 and $3,138,747 for the three and nine months to December 31, 2009 respectively. The unamortized debt discount amount of $4,401,883 was applied to reduce the outstanding amount due under the convertible debenture as at December 31, 2009. The three year debentures mature on October 29, 2011 and May 13, 2012.

Note 11 – Customer Deposits

Customer deposits represent those amounts that the Company receives in advance on order placement or on delivery or before delivery. Customer deposits amounted to $160,438 and $397,482 at December 31, 2009 and December 31, 2008, respectively.

Note 12 – Stockholders’ Equity

On December 31, 2008, Mr Harmen Brenninkmeijer, the Company’s Chief Executive Officer, was entitled to receive 214,000 shares as part of his conditions of employment, for services performed prior to December 31, 2008. The shares were valued at the exercise price of $3.10 per share and were expensed during the year ended December 31, 2008 at a total cost of $663,400 and included under shares to be issued. The shares were issued to Mr. Brenninkmeijer on January 22, 2009.

There are no options outstanding relating to Shareholder’s Equity as at December 31, 2009 and December 31, 2008.

Note 13 – Common Stock Purchase Warrants

Following is a summary of the Company’s warrant activity for the year ended December 31, 2009:

	Number of Warrants		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in years)
Outstanding , December 31, 2008		7,249,865	$	3.56	$	5.58
Granted		3,347,912		3.88		5.37
Exchanged		-		-
Forfeited		-		-
Outstanding , December 31, 2009		10,597,777		3.66		4.83
Exercisable		10,597,777	$	3.66	$	4.83

F-19

Note 14 – Share Exchange Agreement with Octavian Global Technologies, Inc.

On October 30, 2008, Octavian International Ltd (“Octavian”) entered into a Share Exchange Agreement with Octavian Global Technologies, Inc. (previously known as House Fly Rentals, Inc.), pursuant to which, among other things, Octavian’s security holders contributed 100% of their securities of Octavian in exchange for Octavian Global’s issuance of certain securities.

Immediately prior to the consummation of the transactions contemplated under the Share Exchange Agreement, and the change of House Fly Rentals Inc.’s name to Octavian Global Technologies, Inc. (the “Share Exchange Transaction”):

Octavian Global Technologies Inc.’s name was House Fly Rentals, Inc.

House Fly was a shell company with nominal assets and operations;

Robert McCall was House Fly’s President, Chief Executive Officer, Chief Financial Officer, Secretary, Treasurer and a member of House Fly’s Board of Directors;

Mr. McCall owned 44.4 percent of House Fly’s issued and outstanding securities;

House Fly owned 100 percent of a newly created Nevada corporation called Octavian Global Technologies, Inc., which had no operations or assets (“Octavian Global Sub”); and

The Company’s securities holders owned all of the outstanding securities of the Company.

Pursuant to the terms of the Share Exchange Agreement, Octavian Global Technologies, Inc. issued to the Company’s securities holders an aggregate of 6,133,311 shares of House Fly Common Stock, resulting from the exchange of approximately 3,294 shares of Octavian Global Technologies, Inc.’s common stock, par value $0.001 per share (“Common Stock”), for each outstanding Ordinary Share of the Company exchanged by the Company’s securities holders. Pursuant to the terms of the Share Exchange Agreement, along with the Repurchase Agreement (described hereafter), House Fly acquired 100% of the issued and outstanding securities of Octavian and by acquiring the operating business of Octavian, Octavian Global Technologies, Inc. ceased to be a shell company.

Of the 1,862 common shares of Octavian exchanged in the Share Exchange Transaction for 6,133,311 common shares in House Fly Rentals, (which occurred prior to the Private Placement) (i) 652 common shares of Octavian issued to AGI in connection with the conversion of certain accounts payable were exchanged by AGI for 2,147,647 shares of House Fly common stock; (ii) 149 common shares of Octavian issued to Lilac as compensation for consulting services were exchanged by Lilac for 490,747 shares of House Fly common stock; (iii) 61 common shares of Octavian held by PacificNet were exchanged by PacificNet for 200,930 shares of House Fly common stock; and (iv) 1,000 common shares held by Ziria Enterprises Limited, the company that was then the sole shareholder of Octavian (“Ziria”) (a company which is 100%-indirectly owned by Harmen Brenninkmeijer, our founder, Chief Executive Officer and a director of the Company) were exchanged for 3,293,937 shares of common stock.

The securities issued by House Fly were all issued to the Octavian Securities Holders located outside of the United States pursuant to an applicable exemption from registration under Regulation S promulgated under the Securities Act of 1933, as amended (the “Securities Act”) or Regulation D promulgated under the Securities Act (“Regulation D”) and/or Section 4(2) of the Securities Act.

Additionally, pursuant to the Share Exchange Agreement, Octavian Global Technologies, Inc. made representations and warranties to the Company and the Company’s securities holders, and the Company made representations and warranties to Octavian Global Technologies, Inc., in each case regarding their respective businesses, operations and affairs. All representations and warranties in the Share Exchange Agreement terminated on April 30, 2009.

On the Closing Date of the Share Exchange Agreement, the Company also entered into a repurchase agreement (the “Repurchase Agreement”) with Mr. McCall, pursuant to which the Company repurchased from Mr. McCall an aggregate of 597,919 shares of House Fly common stock (the “Repurchase Shares”), which represented 44.4% of House Fly’s total common stock then issued and outstanding, for an aggregate purchase price of $300,000 (the “Repurchase”).

F-20

As a result of the Share Exchange Transaction and the consummation of the transactions pursuant to the Repurchase Agreement, Octavian Global Technologies, Inc. experienced a change in control and ceased to be a shell company. Octavian became Octavian Global Technologies, Inc.’s wholly-owned subsidiary, and the Company is continuing its business plan. The transaction was treated as a reverse merger for reporting purposes and subsequent to the closing of the transaction, the historical financial results became those of Octavian.

Private Placement

Concurrent with the closing of the Share Exchange Transaction, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain accredited investors and closed a private placement offering pursuant to which it raised gross proceeds of $13,000,000. Additionally, investors in the Private Placement received common stock purchase warrants and shares of the Company’s common stock. For additional details of the private placement, see Note 10. For details of the warrants issued, see Note 13. For details of the common stock issued, see above.

Pursuant to the Purchase Agreement discussed above, on October 30, 2008, the Company effected a 1-for-5.0174 reverse stock split of its shares of Common Stock pursuant to which the conversion price of the Debentures (see Note 10) and the exercise price and number of shares under the Warrant (see Note 13), by each of their respective terms, were not adjusted as a result of the reverse stock split.

The Company also entered into a finder’s agreement with Oppenheimer & Co. Inc. (“Oppenheimer”), whereby Oppenheimer was engaged to act as a finder, but not as an agent, to the Company in connection with the Private Placement. Pursuant to this finder’s agreement, the Company paid Oppenheimer a cash finder’s fee of $1,091,172 out of the proceeds of the Private Placement. The Company also issued to Oppenheimer and/or its designees 5-year warrants to purchase, in the aggregate, 283,871 shares of Common Stock at an exercise price of US$3.10 per share. The warrants are substantially on the same terms and include the same provisions as those issued to investors in the Private Placement and, similarly, the exercise price of these warrants will not be adjusted as a result of the reverse stock split described above.

At the closing of the private placement, we paid the escrow agent $2,500, AGI $30,000 for legal fees, Vicis Capital Master Fund $30,000 for legal fees and $75,000 in origination fees, and North East Finance (a finder for one of the investors) $80,000 in origination fees along with a five-year warrant to purchase up to 51,613 shares of our common stock at an exercise price of $3.10, the $80,000 of which was netted out of the fee the Company paid to Oppenheimer.

Note 15 - Related Party Transactions

2009 Transactions

During the year ended December 31, 2009 services performed by Mr. H Brenninkmeijer in the amount of $99,060 were invoiced from Hudson Trading Limited, a company incorporated under the laws of Cyprus.

2008 Transactions

During the year ended December 31, 2008 services performed by Mr. H Brenninkmeijer in the amount of $365,813 were invoiced from Hudson Trading Limited., a company incorporated under the laws of Cyprus. During the year ended December 31, 2008, an office was rented in Cyprus from Xanadu Entertainment Ltd., a company owned by Mr. H. Brenninkmeijer. Rent paid totaled $1,890. This rent agreement was terminated in 2007.

Octavian Italy

The Company loaned Octavian Italy (our 50% owned entity) a short term non interest bearing loan. The maximum amount we made available to Octavian Italy is €500,000 (US$716,650 based on the December 31, 2009 Exchange Rate of €1=US$1.4333) and the balance at December 31, 2009 was €233,169 (US$344,201 based on the December 31, 2009 Exchange Rate of €1=US$1.4333) included in loan receivables – related parties in the accompanied financial statements. In addition we have an intercompany debtor of €478,615 (US$685,999 based on the December 31, 2009 Exchange Rate of €1=USD $1.4333) relating to sales of games to our Italian joint venture partner.

In the year ended December 31, 2009 invoiced sales to Octavian Italy amounted to €2,290,280 (US$3,194,093 based on the January 1, 2009 to December 31, 2009 Average Exchange Rate of €1=USD $1.39463)

F-21

Investment in Octavian Italy Srl

On July 20, 2005 Octavian International Limited entered into an investment agreement with Euro Gruppo Giochi Srl to set up a joint venture Octavian Italy Srl which would be owned 50% Octavian International Ltd/ 50% Euro Gruppo Giochi Srl. Octavian Italy Srl is a games distributor operating out of Italy.

As per FASB ASC 323-10-15-8) (formerly APB 18, par. 17), the company uses the equity method for accounting the investment. As of December 31, 2009, the Company booked investment gains of US$ 792,736

The Company’s investment in equity for the years ended December 31, 2009 and December 31, 2008 are shown as follows:

	For the Year Ended December, 31
	2009		2008

Investment in equity at beginning of year	$	226,094	$	-
Investment during the year
Share of earnings of associated companies		582,485		226,094
Effect of foreign currency translation		55,470		-
Total investment in equity at December 31, 2009	$	864,049	$	226,094

The Company’s share of earnings of associated company for the years ended December 31, 2009 and 2008 are shown as follows:

	For the Year Ended December, 31
	2009			2008

Net profit of Octavian Italy Srl	$	1,164,970		$	452,188
Percentage of ownership in Octavian Italy Srl		50	%		50	%
Share of earnings of associated companies	$	582,485		$	226,094

AGI

On May 14, 2009, we entered into a Debentures and Warrants Purchase Agreement with certain accredited investors, and closed a private placement offering pursuant to which we raised gross proceeds of $4 million and, among other things, issued and sold our Original Issue Discount Convertible Debentures with an aggregate principal amount of $4,395,600 which Debentures are convertible into shares of the Company’s Common Stock at a conversion price of $3.10 per share, subject to adjustment therein. Additionally, the Investors received Common Stock Purchase Warrants to purchase up to an aggregate of 1,417,936 shares of Common Stock (645,161 shares at an initial exercise price of $3.10 per share for 5 years and 645,161 shares at an initial exercise price of $4.65 per share for 7 years, which exercise prices and the number of shares exercisable there under are subject to adjustment for cashless exercise) and an aggregate of 283,587 shares of Common Stock. The Company allocated the investment proceeds to the debt and warrants based on their relative fair values. The relative fair value of the warrants using the Black Scholes method assuming a volatility of the stock of 91%, term of five years and a discount of 1.98% and 2.62% was determined to be $805,074 which was recorded as debt discount, a reduction of the carrying amount of the debt. The beneficial conversion feature on the notes was $0. The debt discount on the face value of $395,600 along with the finders’ fee of $104,376 and fair value of the 283,587 shares of $371,499 was also recorded as debt discount. The debt discount will be amortized over the term of the note and charged to interest expense. During the period ended December 31, 2009 $135,159 of warrant discount and $146,306 of other discount was expensed.

Pursuant to the terms of the Purchase Agreement, AGI, the Company’s principal supplier of casino gaming machines and a holder of approximately 31.2 percent of the issued and outstanding Common Stock prior to the consummation of the Purchase Agreement, agreed to exchange outstanding accounts payable with the Company of $6,378,526 for Original Issue Discount Convertible Debentures (and together with the Finance Debenture) with a principal amount of $6,378,526 which Debentures are convertible at a conversion price of $3.10 per share, subject to adjustment therein, Common Stock Purchase Warrants to purchase up an aggregate of 2,057,590 shares of Common Stock (1,028,795 shares at an initial exercise price of $3.10 per share for 5 years and 1,028,795 shares at an initial exercise price of $4.65 per share for 7 years, which exercise prices and the number of shares exercisable thereunder are subject to adjustment therein for cashless exercise) and an aggregate of 411,518 shares of Common Stock. Immediately upon the consummation of the Purchase Agreement, the Exchange Debentures were converted into 2,057,589 shares of Common Stock. AGI increased its beneficial ownership of the voting shares of Common Stock to approximately 50.6% of the issued and outstanding Common Stock from approximately 31.2%. The Company allocated the investment proceeds to the debt and warrants based on their relative fair values. The relative fair value of the warrants using the Black Scholes method assuming a volatility of the stock of 91%, term of five years and a discount of 1.98% and 2.62% was determined to be $ 1,283,798 which was recorded as debt discount, a reduction of the carrying amount of the debt. The beneficial conversion feature on the notes was $0. The fair value of the 411,518 shares of $539,088 was also recorded as debt discount. The debt discount was amortized completely on the conversion of the debenture.

F-22

Note 16 – Commitments and Contingencies

Leases

	Operating Leases
Year ending December 31,
2010	$	614,782
2011		76,922
2012		32,647
2013		7,447
Thereafter		-
	$	731,798

Litigation

The Company may be subject, from time to time, to various legal proceedings relating to claims arising out of its operations in the ordinary course of its business. The Company currently is not party to any legal proceedings, the adverse outcome of which, individually or in the aggregate, management believes would have a material adverse effect on the business, financial condition or results of operations of the Company.

Potential Claim

PacificNet

On January 5, 2009, Octavian received a letter from PacificNet pursuant to which it has asserted a claim against Octavian for certain alleged events of default by Octavian under the PacificNet Termination Agreement (the “Claim”). Pursuant to the Claim, PacificNet has demanded payments, in an aggregate amount of $280,000, for certain services allegedly performed by PacificNet, as well as the reimbursement of certain expenses related to prior transactions between the parties. The Company’s management has reviewed the Claim and believes that it is without merit and plans to defend against any actions taken by PacificNet accordingly.

Note 17 – Income Taxes

Net operating losses for tax purposes of approximately $32 million at December 31, 2009 are available for carryover in various foreign jurisdictions. We have provided a 100% valuation allowance for the deferred tax benefit resulting from the net operating loss carryover. In addressing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences are deductible. When we demonstrate a history of profitable operation we will reduce our valuation allowance at that time.

F-23

A reconciliation of the provision for (benefit from) income tax expense with the expected income tax computed by applying the federal statutory income tax rate to income before provision for (benefit from) income taxes for the years ended December 31, 2009 and 2008 was as follows:

	December 31,			December 31,
	2009			2008
Statutory income tax rate of operating jurisdictions		-35	%		-35	%
Utilization of net operating loss		35	%		35	%
Valuation allowance		0	%		0	%
Other Effective income tax rate		3	%		3	%

Significant components of the Company’s deferred tax assets and liabilities are as follows:

	December 31, 2009			December 31, 2008
Deferred tax assets: - other current assets	$	245,000		$	$391,000
Deferred income tax – Net operating loss carry forward		11,276,000			9,500,000
Valuation allowance		(11,521,000	)		(9,891,000	)
Net deferred tax assets	$	—		$	—

During the year ended December 31, 2008, the Company did not utilize its federal net operating loss carry-forwards.

There were no unrecognized tax benefits as of the date of adoption and there are no unrecognized tax benefits included in the balance sheet at December 31, 2008, that would, if recognized, affect the effective tax rate.

Note 18 – Segment Information

The Company’s predominant businesses are the research and development, manufacture, marketing, distribution, and sale of state-of-the-art systems and gaming solutions. The Company provides network integrated solutions which provide a centralized platform to manage, control, and monitor existing gaming and lottery operations and machines. Additionally, the Company distributes gaming machines and equipment from third party suppliers as well as the Company’s proprietary Maverick 1000 slot machine. The Company operates in three geographic segments: Octavian EMEA, Octavian CIS, and Octavian Latin America.

Octavian EMEA consists of four regional sales offices: the Guildford, United Kingdom global headquarters and regional offices in Verona, Italy, Kigali, Rwanda and Spremberg, Germany. Established in 2002 as the Global Head Office of the Company, Guildford is home to the core functions of the Company including Finance, Marketing and Management, with regional autonomy granted to the regional offices to allow each General Manager to ensure that their respective teams understand the market requirements in which they operate and deliver the appropriate solutions from the Company’s product portfolio.

Octavian CIS consists of one regional offices: St. Petersburg, Russia. The team in St Petersburg have been instrumental in the continual development of the ACP (Account Control Progressive) slots management system, evolving the product to allow Cashless & Player Tracking, EZ Pay integration, Bonus Club features to be added and more recently in developing Octavian GateManager and Octavian CashManager tables management system and bridging both systems to provide the full spectrum of functionality to manage venues of slots any tables of any size worldwide.

Octavian Latin America consists of two regional offices: Buenos Aires, Argentina and Bogota, Colombia. Key products for the Latin American market have been My ACP together with ExtraCash and SprintPay with the Company’s games, as well as supplying gaming machine kits. The latter revenue stream to be strengthened by replacing the hardware of third party machines with the Company’s game kits which include software and hardware which has already gained much interest from Latin America, especially as it offers significant cost benefits from lower importation taxes and local assembly benefits, in addition to being competitively priced.

F-24

The following tables summarize segment information for the years ended December 31, 2009 and 2008:

	December 31,			December 31,
	2009			2008

Revenue from unrelated entities
Octavian EMEA	$	4,311,359		$	2,789,533
Octavian CIS		4,768,693			30,073,716
Octavian Latin America		2,624,948			6,763,818
	$	11,705,001		$	39,627,067

Intersegment revenues
Octavian EMEA		9,686
Octavian CIS	$	2,460,258		$	1,811,529
Octavian Latin America		350,977			359,652
	$	2,820,921		$	2,171,181

Total revenues
Octavian EMEA	$	4,321,046		$	2,789,533
Octavian CIS		7,228,951			31,885,245
Octavian Latin America		2,975,925			7,123,470
Less intersegment revenues		(2,820,921	)		(2,171,181	)
	$	11,705,001		$	39,627,067

Income (Loss) from operations
Octavian EMEA	$	(7,083,553	)	$	(10,594,843	)
Octavian CIS		(1,390,123	)		4,112,115
Octavian Latin America		(1,175,471	)		385,049
	$	(9,649,146	)	$	(6,097,679	)

Income tax (expense) benefit
Octavian EMEA	$	-		$	-
Octavian CIS		(115,076	)		(196,358	)
Octavian Latin America	$	(145,293	)	$	(191,005	)
	$	(260,369	)	$	(387,363	)

Net income (loss)
Octavian EMEA	$	(9,168,165	)	$	(18,166,356	)
Octavian CIS		(1,510,359	)		6,427,917
Octavian Latin America		(1,815,303	)		960,963
Minority interest	$	-		$	(6,276	)
	$	(12,493,826	)	$	(10,783,752	)

Provision for depreciation and amortization
Octavian EMEA	$	2,039,793		$	668,799
Octavian CIS		23,622			626
Octavian Latin America		222,867			131,245
	$	2,286,282		$	800,670

F-25

	December 31,		December 31,
	2009		2008

Total Assets
Octavian EMEA	$	5,468,598	$	8,989,329
Octavian CIS		5,533,556		6,948,222
Octavian Latin America		726,276		3,009,097
	$	11,728,430	$	18,946,648

Note 19 – PacificNet Agreement

On December 7, 2007, Octavian entered into an Agreement for the acquisition by PacificNet Games of the entire issued share capital of the Octavian which was completed on January 22, 2008. Shortly after completion, the Octavian and PacificNet decided that it would not benefit their respective businesses to continue as one group and therefore the Octavian and PacificNet mutually agreed to terminate the merger agreement on March 28, 2008 and entered into a written agreement to document this on May 14, 2008. On May 14, 2008, all of the parties to the PacificNet Acquisition Agreement entered into a Deed of Amendment (the “PacificNet Termination Agreement”), pursuant to which the PacificNet Acquisition Agreement and all rights and obligations of the parties thereunder were terminated. The Service Agreement was also terminated. As a result of the termination of the PacificNet Acquisition Agreement, neither the remaining consideration shares of PacificNet common stock (1.1 million shares) nor any of the Earn-Out Amount were transferred/paid to Ziria, and all shares of Emperor were returned to Ziria and the 1.2 million shares of Pacific Net common stock to Ziria were returned to PacificNet. Upon the consummation of this transaction, Emperor was no longer a direct subsidiary of PacificNet, nor was Octavian any longer an indirect subsidiary of PacificNet. Harmen Brenninkmeijer, our Chief Executive Officer and a director of Octavian, resigned from the board of directors of PacificNet on May 21, 2008. PacificNet paid Sterne Agee & Leach, Inc., a company that acted as a consultant to Octavian for the PacificNet Acquisition, 30,000 PacificNet shares.

The following are the terms of the PacificNet Termination Agreement:

Octavian agreed to issue to PacificNet or its nominee an amount of shares of capital stock of Octavian equal to five percent (5%) of the outstanding shares of Octavian. Octavian issued PacificNet 62 shares (equal to 200,930 shares in Octavian Global Technologies Inc) of Octavian’s common stock on October 30, 2008 in satisfaction of this provision (see Note 14). Additionally, PacificNet was granted the option to, prior to May 14, 2009 and on only one occasion during such period, purchase additional shares of the Company’s stock at a per share purchase price equal to 85 percent of the most recent subscription price per share of the Company’s stock paid by third party investors in the Company up to a number of shares that would result in PacificNet owning five percent (5%) of the the Company’s stock issued and outstanding on the date of exercise of the option. As of May 14, 2009, this option expired. PacificNet agreed to issue to the Company 500,000 shares of PacificNet’s common stock. These PacificNet shares will be subject to a one-year lock up and sale restriction, which expired on May 14, 2009, any sale of these shares must be communicated to PacificNet in advance, PacificNet has the right of refusal to arrange buyers for the shares, and PacificNet will be entitled to half of the net gain on any partial sale of PacificNet shares.

PacificNet and the Company agreed to use reasonable endeavours to formalize the following business opportunities:

A joint venture relationship relating to the development of future business opportunities in Macau and other territories in Asia.

The Company agreed to pay PacificNet $200,000 in consideration for PacificNet’s localization and language translation of the Company’s products into the Chinese language. Additionally, the Company agreed to use its reasonable endeavors to meet minimum sales targets from the sale of PacificNet’s machines of $4 million during the twelve month period ended mid-year 2009 and $6 million during the twelve month period ended mid-year 2010. The Company’s commitment to achieving these targets was agreed to by the Company undertaking to use its reasonable endeavors to comply. PacificNet agreed to provide all appropriate support to assist the Company in achieving these goals.

As at December 31, 2009, the Company impaired the investment in PacificNet securities by $67,000 as a permanent decline in the value of their investment.

F-26

Note 20 – Current Vulnerability Due to Certain Concentrations

The Company’s operations are also carried out in the U.K., Argentina, Colombia, Russia, Rwanda and Italy. Accordingly, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environments in these countries and by the general state of the economy in these countries.

The Company’s operations in South America and Africa are subject to specific considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic and legal environments and foreign currency exchange. The Company's results may be adversely affected by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things.

Note 21 – Subsequent Events

The Company has evaluated events subsequent to December 31, 2009 to assess the need for potential recognition or disclosure in this Report. Such events were evaluated through March 31, 2010, the date these financial statements were issued. Based upon this evaluation, it was determined that no subsequent events occurred that require recognition in the financial statements and that the following items represent subsequent events that merit disclosure herein:

New Contracts

Operations in Russia

F-27

Octavian Global Technologies, Inc. - FORM 10-K - March 31, 2010

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