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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">UNITED
      STATES</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">SECURITIES
      AND EXCHANGE COMMISSION</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">WASHINGTON,
      D.C. 20549</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 14pt; FONT-FAMILY: Times New Roman"><strong>FORM
      8-K</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">CURRENT
      REPORT</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">PURSUANT
      TO SECTION 13 OR 15(D) OF</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">THE
      SECURITIES EXCHANGE ACT OF 1934</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Date
      of
      Report (Date of earliest event reported): September 12, 2006</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 24pt; FONT-FAMILY: Times New Roman"><strong>Spectre
      Gaming, Inc.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Exact
      name of registrant as specified in its charter)</font></div>
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              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Minnesota</strong></font></div>
            </td>
            <td width="33%">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>0-25764</strong></font></div>
            </td>
            <td width="33%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>41-1675041</strong></font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td width="33%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>(State
                or other jurisdiction</strong></font></div>
            </td>
            <td width="33%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>(Commission
                File Number)</strong></font></div>
            </td>
            <td width="33%">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>(IRS
                Employer </strong></font></div>
            </td>
          </tr>
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            <td width="33%">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">&#160;<strong><font size="2">of
                incorporation)</font></strong></div>
            </td>
            <td width="33%">&#160;</td>
            <td width="33%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Identification
                No.)</strong></font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>14200
      23rd Avenue N.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Minneapolis,
      MN 55447</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Address
      of principal executive offices)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>(763)
      553-7601</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Registrant's
      telephone number, including area code) </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>n/a</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Former
      name or former address, if changed since last report)</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Check
      the
      appropriate box below if the Form 8-K filing is intended to simultaneously
      satisfy the filing obligation of the registrant under any of the following
      provisions:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">[&#160;
      ]&#160;&#160;&#160; Written communications pursuant to Rule 425 under the
      Securities Act (17 CFR 230.425)</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">[
      &#160;]&#160;&#160;&#160; Soliciting material pursuant to Rule 14a-12 under the
      Exchange Act (17 CFR 240.14a-12)</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">[
      &#160;]&#160;&#160;&#160; Pre-commencement communications pursuant to Rule
      14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">[
      &#160;]&#160;&#160;&#160; Pre-commencement communications pursuant to Rule
      13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      1.01 Entry Into Material Definitive Agreement.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Adoption
      of 2006 Stock Incentive Plan</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      September 12, 2006, the board of directors of Spectre Gaming, Inc. (the
&#8220;Company&#8221;) adopted the Company&#8217;s 2006 Stock Incentive Plan (the &#8220;2006 Plan&#8221;) and
      approved the reservation of 2,000,000 shares of Company common stock for
      issuance thereunder.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>General</em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      2006
      Plan provides for the issuance of incentives in the following forms: (i)
      non-statutory stock options and, subject to shareholder approval, incentive
      stock options; (ii) stock-appreciation rights (commonly referred to as &#8220;SARs&#8221;);
      (iii) restricted stock or restricted stock units; (iv) stock awards; and
      (v)&#160;performance awards (i.e., performance shares and performance units).
      Employees, officers and directors of, and key consultants to, the Company
      (including its subsidiaries and affiliates) are eligible to receive incentives
      under the 2006 Plan. A copy of the 2006 Plan is being filed as an exhibit to
      this report.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Administration</em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      2006
      Plan is to be administered by the board of directors through a compensation
      committee, to be composed entirely of non-employee directors who are intended
      to
      meet the criteria of &#8220;outside director&#8221; under Code Section 162(m) and
&#8220;non-employee director&#8221; under Section 16 of the Securities Exchange Act of 1934,
      or by the entire board of directors. The committee (or entire board, as the
      case
      may be) selects the participants who receive options or awards, the form of
      those awards, the number of shares or dollar targets of the options or awards
      and all terms and conditions of the options or awards. The committee or board
      also certifies the level of attainment of performance targets.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Maximum
      Stock Award Levels</em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      maximum number of shares available for awards under the 2006 Plan is 2,000,000.
      No individual participant may be granted stock options and SARs in any single
      fiscal year during the term of the 2006 Plan in respect of more than 500,000
      shares of common stock. In addition, the maximum number of performance shares
      issuable under the 2006 Plan to any participant for any fiscal year is 500,000
      shares.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Types
      of Incentives</em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Stock
      Options</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
      The
      committee or board may grant non-qualified and incentive stock options to
      eligible participants to purchase shares of common stock from the Company.
      The
      2006 Plan confers on the committee or board discretion, with respect to any
      such
      stock option, to determine the term of each option, the time or times during
      its
      term when the option becomes exercisable and the number and purchase price
      of
      the shares subject to the option. The exercise price of incentive stock options
      may not be less than 100% of the fair market value of the stock subject to
      the
      option on the date of the grant and, in some cases, may not be less than 110%
      of
      such fair market value. The exercise price of non-statutory options may not
      be
      less than 100% of the fair market value of the stock on the date of grant,
      with
      limited exceptions for awards that satisfy the requirements for deferred
      compensation under Section 409A of the Internal Revenue Code.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      maximum term of options under the 2006 Plan is ten years, except that in certain
      cases the maximum term is five years. Subject to the discretion of the committee
      or board, options under the 2006 Plan generally terminate pursuant to provisions
      contained in each option holder&#8217;s agreement with the Company. Nevertheless, no
      option may remain exercisable or continue to vest beyond its expiration date,
      and any incentive stock option that remains unexercised more than one year
      following termination by reason of death or disability, or more than three
      months following termination for other reasons, will be deemed a non-statutory
      stock option.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Stock-Appreciation
      Rights</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
      A
      stock-appreciation right or SAR is a right to receive, without payment to the
      Company, a number of shares, the amount of which is equal to the aggregate
      amount of the appreciation in the shares of common stock as to which the SAR
      is
      exercised. For this purpose, the &#8220;appreciation&#8221; in the shares consists of the
      amount by which the fair market value of the shares of common stock on the
      exercise date exceeds (a) in the case of an SAR related to a stock option,
      the
      purchase price of the shares under the option or (b) in the case of an SAR
      granted alone, without reference to a related stock option, an amount determined
      by the committee or board at the time of grant. The committee or board has
      the
      discretion to determine the number of shares as to which a SAR will relate
      as
      well as the duration and exercisability of a SAR.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Restricted
      Stock and Restricted Stock Units</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
      The
      committee or board may also grant shares of restricted stock that are subject
      to
      the continued employment of the participant and may also be subject to
      performance criteria at the discretion of the committee or board. Generally,
      if
      the participant&#8217;s employment terminates prior to the completion of the specified
      employment or the attainment of the specified performance goals, the awards
      will
      lapse (i.e., the restricted stock will be forfeited). The committee or board
      may
      provide for a prorated attainment of time-based restrictions. Generally, an
      award will not vest during a period less than one year following the date of
      the
      award unless the committee or board determines otherwise. During the restriction
      period, unless the committee or board determines otherwise, a participant who
      holds restricted stock will be entitled to vote the shares and to receive cash
      dividends, if any are declared. The committee or board may also grant restricted
      stock units, which represent rights to receive shares of common stock at a
      future date subject to terms and conditions, including a risk of forfeiture,
      established by the committee or board. Participants generally have not rights
      as
      stockholders with respect to the restricted stock units, except that they may
      have certain rights to receive an amount equal to dividends paid by the Company
      on the equivalent number of shares of common stock.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Stock
      Awards</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
      Stock
      awards consist of the transfer by the Company to an eligible participant of
      shares of common stock, without payment, as additional compensation for services
      to the Company. The number of shares transferred pursuant to any stock award
      is
      determined by the committee or board.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Performance
      Awards</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
      The
      committee or board may grant performance units or performance shares.
      Performance units entitle the participant to receive a specified dollar value,
      variable under conditions specified in the award, if the performance objectives
      specified in the award are achieved and the other terms and conditions thereof
      are satisfied. Performance shares entitle the participant to receive a specified
      number of shares of common stock, or the equivalent cash value, if the
      performance goals specified in the award are achieved and other terms are
      satisfied.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Performance
      goals for performance awards that are intended to qualify as &#8220;performance-based&#8221;
compensation within the meaning of Section 162(m) of the Code shall be based
      on
      one or more of the following financial criteria: earnings per share, operating
      income, net income, cash flow, gross profit, gross profit return on investment,
      gross margin return on investment, gross margin, working capital, earnings
      before interest and tax (EBIT), earnings before interest, tax, depreciation
      and
      amortization (EBITDA), return on equity, return on assets, return on capital,
      revenue growth, total shareholder return, and economic value added. For
      performance awards that are intended to so qualify under Section 162(m), the
      targets shall be established within the required time period. The committee
      or
      board, in its sole discretion, may modify the performance goals if it determines
      that circumstances have changed and modification is required to reflect the
      original intent of the performance goals; provided, however, that no such change
      or modification may be made to the extent it increases the amount of
      compensation payable to any participant who is a &#8220;covered employee&#8221; within the
      meaning of Code Section 162(m).</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">2</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Transferability
      of Incentives</em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Incentives
      granted under the 2006 Plan may not be transferred, pledged or assigned by
      the
      holder thereof except, in the event of the holder&#8217;s death, by will or the laws
      of descent and distribution to the limited extent provided in the 2006 Plan
      or
      the incentive, or (in the case of a stock option or a SAR) pursuant to a
      qualified domestic relations order as defined by the Code or Title I of the
      Employee Retirement Income Security Act, or the rules thereunder. Nevertheless,
      stock options and SARs may be transferred by the holder thereof to the holder&#8217;s
      spouse, children, grandchildren or parents (collectively referred to as &#8220;family
      members&#8221;), to trusts for the benefit of such family members, to partnerships or
      limited liability companies in which family members are the only partners or
      shareholders, or to entities exempt from federal income taxation pursuant to
      Code Section 501(c)(3).</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Effect
      of Certain Corporate Events</em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Unless
      otherwise provided in the agreement for an incentive, in the event of an
      acquisition of the Company through the sale of substantially all of the
      Company&#8217;s assets or through a merger, exchange, reorganization or liquidation of
      the Company or a similar event as determined by the compensation committee
      or
      board (collectively referred to herein as a &#8220;transaction&#8221;), the committee or
      board shall be authorized, in its sole discretion, to take any and all action
      it
      deems equitable under the circumstances, including but not limited
      to:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: -36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 36pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">terminating
                the 2006 Plan and all incentives and (i) granting the holders of
                outstanding vested options, in lieu of any shares of common stock
                they
                would be entitled to receive under such options, such stock, securities
                or
                assets, including cash, as would have been paid to such participants
                if
                their options had been exercised and such holder had received common
                stock
                immediately prior to such transaction (with appropriate adjustment
                for the
                exercise price, if any), (ii) granting the holders of performance
                shares
                and/or SARs that entitle the participant to receive common stock,
                in lieu
                of any shares of common stock each participant was entitled to receive
                as
                of the date of the transaction pursuant to the terms of such incentive,
                if
                any, such stock, securities or assets, including cash, as would have
                been
                paid to such participant if such common stock had been issued to
                and held
                by the participant immediately prior to such transaction; and (iii)
                treating holders of any incentive which does not entitle the participant
                to receive common stock in an equitable manner as determined by the
                committee or board</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: -36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 36pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">providing
                that participants holding outstanding vested common stock-based incentives
                shall receive, with respect to each share of common stock issuable
                pursuant to such incentives as of the effective date of any such
                transaction, at the determination of the committee or board, cash,
                securities or other property, or any combination thereof, in an amount
                equal to the excess, if any, of the fair market value of such common
                stock
                on a date within ten days prior to the effective date of such transaction
                over the option price or other amount owed by a participant, if any,
                and
                that such incentives shall be cancelled, including the cancellation
                without consideration of all options that have an exercise price
                below the
                per share value of the consideration received by the Company in the
                transaction</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: -36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 36pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">providing
                that the 2006 Plan (or a replacement plan) shall continue with respect
                to
                incentives not cancelled or terminated as of the effective date of
                such
                transaction and provide to participants holding such Incentives the
                right
                to earn their respective incentives on a substantially equivalent
                basis
                (taking into account the transaction and the number of shares or
                other
                equity issued by such successor entity) with respect to the equity
                of the
                entity succeeding the Company by reason of such transaction,
                and</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: -36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">3</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: -36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br>&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 36pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">providing
                that all unvested, unearned or restricted incentives shall be void
                and
                deemed terminated, or, in the alternative, for the acceleration or
                waiver
                of any vesting, earning or restrictions on any
                incentive.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      addition, the committee or board may restrict the rights of participants in
      the
      event of a transaction to the extent necessary to comply with Section 16(b)
      of
      the Securities Exchange Act of 1934, the Code or any other applicable law or
      regulation.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Duration,
      Amendment and Termination</em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      board
      of directors may amend or discontinue the 2006 Plan at any time. However, no
      such amendment or discontinuance may adversely change or impair a previously
      granted incentive without the consent of the recipient thereof. Certain 2006
      Plan amendments require shareholder approval, including amendments which would
      increase the maximum number of shares of common stock which may be issued to
      all
      participants under the 2006 Plan, change the types of incentives that may be
      granted under the 2006 Plan, change the class of persons eligible to receive
      incentives under the 2006 Plan, or materially increase the benefits accruing
      to
      participants under the 2006 Plan.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Separation
      Agreement with Russell C. Mix</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      connection with the resignation by Russell C. Mix of his position as the
      Company&#8217;s Chief Executive Officer (see Items 1.02 and 5.02 below), the Company
      entered into a Separation and Release Agreement with Mr. Mix effective September
      12, 2006 (the &#8220;Separation Agreement&#8221;). Under the Separation Agreement, the
      parties agreed to the following:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 54pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
                termination of that certain Employment Agreement between the parties,
                dated as of April 16, 2004</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 54pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
                Company&#8217;s payment of $15,000 to Mr.
                Mix</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 54pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
                cancellation of options to purchase up to 600,000 shares of common
                stock
                subject to that certain Option Agreement dated as of March 22, 2004,
                and</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 54pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
                execution and delivery of a 12-month Consulting Agreement between
                the
                parties, pursuant to which Mr. Mix will provide certain consulting
                services relating primarily to regulatory and training matters in
                consideration aggregating approximately
                $100,000.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Prior
      to
      entering into the Separation Agreement, the Company entered into a new Option
      Agreement with Mr. Mix pursuant to which the Company granted Mr. Mix the right
      to purchase up to 450,000 shares of common stock at $1.00 per share until
      September 12, 2008. Copies of the Separation Agreement, Consulting Agreement
      and
      Option Agreement are being filed as exhibits to this report.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Increase
      in Executive and Key Personnel Salaries</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      September 12, 2006, the Company&#8217;s board of directors approved certain bonus
      payments and increases in salaries payable to two executives and one key
      employee. Specifically, the board of directors approved an increase in the
      salary payable to (i) D. Bradly Olah, the Company&#8217;s President and newly
      appointed Chief Executive Officer, to an annual amount of $250,000; (ii) Kevin
      M. Greer, the Company&#8217;s Chief Financial Officer, to an annual amount of
      $135,000; and (iii) Braun Martin, the Company&#8217;s Senior Vice President of
      Engineering, to an annual amount of $165,000. The board of directors also
      approved bonuses payable to Messrs. Olah and Greer in the amounts of $100,000
      and $20,000, respectively. The salary increases approved by the board of
      directors will be retroactive to September 1, 2006.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">4</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Cancellation
      of Certain Options</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      September 12, 2006, the Company&#8217;s board of directors approved the cancellation
      of certain outstanding common stock purchase options aggregating 1,550,000
      shares of common stock. The cancelled options included common stock purchase
      options held by executive officers (including Messrs. Greer and Olah) and
      directors (including Messrs. Kenneth Brimmer, Namon Witcher and Robert Bonev)
      aggregating 1,400,000 shares of common stock.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>New
      Option Grants</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      September 12, 2006, the Company&#8217;s board of directors approved the issuance of
      common stock purchase options aggregating 2,032,500 shares. All options were
      granted with a purchase price of $0.88 per share, the fair value of the
      Company&#8217;s common stock on September 12, 2006. Of the new grants, options for
      482,500 shares were granted pursuant to the 2006 Plan (all of which have a
      five-year term) and the remaining options were granted pursuant to the Company&#8217;s
      2004 Stock Option Plan (all of which have terms ranging from approximately
      four
      years to approximately nine years).</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Of
      the
      new option grants, Mr. D. Bradly Olah, the Company&#8217;s President and Chief
      Executive Officer, received options for the purchase of up to 600,000 common
      shares (100,000 of which shall expire on June 30, 2014 and the remainder of
      which shall expire on December 31, 2015); and Mr. Kevin M. Greer, the Company&#8217;s
      Chief Financial Officer, received options for the purchase of up to 500,000
      common shares (250,000 of which shall expire on December 31, 2010 and the
      reminder of which shall expire on September 12, 2011). In addition, Mr. Kenneth
      Brimmer, a director of the Company, received options for the purchase of 250,000
      common shares (expiring on December 31, 2014), and Messrs. Robert Bonev and
      Namon D. Witcher, both of whom are directors of the Company, each received
      options for the purchase of up to 150,000 common shares (in each case, expiring
      on December 31, 2014).</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Restricted
      Stock Grants to Directors</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      September 12, 2006, the Company&#8217;s board of directors approved a new policy for
      compensating members of the board of directors. Under the new policy, directors
      will receive annual grants of 25,000 shares of restricted and unregistered
      common stock that will vest ratably over three years. The annual grants will
      be
      made on June 30 of each year. In connection with the adoption of the policy,
      the
      board of directors approved the initial issuance of 25,000 shares of such
      restricted and unregistered common stock to each of the Company&#8217;s directors on
      September 12, 2006, which grant will represent the annual grant to directors
      for
      fiscal 2006.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
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        </div>
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      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">5</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      1.02 Termination of Material Definitive Agreement.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      disclosures made in Item 5.02 below are incorporated herein by this
      reference.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 54pt; TEXT-INDENT: -54pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 54pt; TEXT-INDENT: -54pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      5.02 Departure of Directors or Principal Officers; Election of Directors;
      Appointment of Principal Officers.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      September 12, 2006, the Company accepted the resignation of Russell C. Mix
      from
      his role as the Company&#8217;s Chief Executive Officer. The resignation was tendered
      pursuant to the terms and conditions of the Separation Agreement (see Item
      1.01
      above). On the same date, the Company appointed D. Bradly Olah as its new Chief
      Executive Officer. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Mr.
      Olah
      has served as the Company&#8217;s President and director since August 2, 2005 and
      previously served as a consultant to the Company since September 2003. Mr.
      Olah
      was the founder Chairman and Chief Executive Officer of Innovative Gaming
      Corporation of America from 1991 through February 1996, and also served as
      the
      Chief Financial Officer of that corporation from 1991 to 1993. Innovative Gaming
      Corporation of America was credited with launching the world&#8217;s first
      multi-station, multi-player electronic table games (Craps, Blackjack and
      Roulette). During various periods from April 1996 until May 2003, Mr. Olah
      served as a director, Chief Executive Officer and Chief Financial Officer of
      Wits Basin Precious Minerals, Inc. (WITM.OB). He also served as a director
      of
      Natural Resources Geophysical Corporation until its sale to Eagle Geophysical
      of
      Houston, Texas.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Mr.
      Olah&#8217;s current employment arrangement with the Company (effective as of
      September 1, 2006) provides him with an annual salary of $250,000 (see Item
      1.01
      above). In addition, on September 12, 2006 the Company&#8217;s board of directors
      approved a one-time lump sum bonus payment to Mr. Olah in the amount of
      $100,000.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      8.01 Other Events.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">issued
      a
      press release relating the financing transaction described in Items 1.01 and
      3.02 of this current report. A copy of the press release is being filed as
      an
      exhibit to this current report.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      9.01 Financial Statements and Exhibits.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(d)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Exhibits.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div align="center">
      <table cellpadding="0" cellspacing="0" width="87%">

          <tr>
            <td align="left" valign="top" width="13%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Exhibit</u></font></div>
            </td>
            <td align="left" valign="top" width="61%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Description</u></font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="13%">&#160;</td>
            <td align="left" valign="top" width="61%">&#160;</td>
          </tr>
          <tr>
            <td align="left" valign="top" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.1</font></div>
            </td>
            <td align="left" valign="top" width="61%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2006
                Stock Incentive Plan.</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="13%">&#160;</td>
            <td align="left" valign="top" width="61%">&#160;</td>
          </tr>
          <tr>
            <td align="left" valign="top" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.3</font></div>
            </td>
            <td align="left" valign="top" width="61%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Separation
                and Release Agreement with Russell C. Mix, dated as of September
                12,
                2006.</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="13%">&#160;</td>
            <td align="left" valign="top" width="61%">&#160;</td>
          </tr>
          <tr>
            <td align="left" valign="top" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.3</font></div>
            </td>
            <td align="left" valign="top" width="61%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Consulting
                Agreement with Russell C. Mix, dated as of September 12,
                2006.</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="13%">&#160;</td>
            <td align="left" valign="top" width="61%">&#160;</td>
          </tr>
          <tr>
            <td align="left" valign="top" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.4</font></div>
            </td>
            <td align="left" valign="top" width="61%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Stock
                Option Agreement with Russell C. Mix, dated as of September 12,
                2006.</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="13%">&#160;</td>
            <td align="left" valign="top" width="61%">&#160;</td>
          </tr>
          <tr>
            <td align="left" valign="top" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">99.1</font></div>
            </td>
            <td align="left" valign="top" width="61%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Press
                Release dated September 12, 2006.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">6</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br>&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">*<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">*<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">*<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">*<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">*</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>SIGNATURE</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
      to the requirements of the Securities Exchange Act of 1934, the registrant
      has
      duly caused this report to be signed on its behalf by the undersigned hereunto
      duly authorized.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 216pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br>
      <div align="left">
        <table cellpadding="0" cellspacing="0" width="100%">

            <tr>
              <td align="left" valign="top" width="36%">&#160;</td>
              <td align="left" colspan="2" valign="top" width="32%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Spectre
                  Gaming, Inc.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="36%">&#160;</td>
              <td align="left" valign="top" width="2%">&#160;</td>
              <td align="left" valign="top" width="30%">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="top" width="36%">&#160;</td>
              <td align="left" valign="top" width="2%"><font size="2">By: </font></td>
              <td align="left" valign="top" width="30%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>/s/
                  Kevin M.
                  Greer&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
                  </u></font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="36%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Date:
                  September 18, 2006</font></div>
              </td>
              <td align="left" valign="top" width="2%">
              </td>
              <td align="left" valign="top" width="30%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Kevin
                  M. Greer, Chief Financial
                  Officer</font></div>
              </td>
            </tr>

        </table>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 216pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br>&#160;</div>
    <div>&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
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        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">7</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
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    <div><br>&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>EXHIBIT
      INDEX</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="left" valign="top" width="13%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Exhibit</u></font></div>
            </td>
            <td align="left" valign="top" width="61%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Description</u></font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="13%">&#160;</td>
            <td align="left" valign="top" width="61%">&#160;</td>
          </tr>
          <tr>
            <td align="left" valign="top" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.1</font></div>
            </td>
            <td align="left" valign="top" width="61%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2006
                Stock Incentive Plan.</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="13%">&#160;</td>
            <td align="left" valign="top" width="61%">&#160;</td>
          </tr>
          <tr>
            <td align="left" valign="top" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.3</font></div>
            </td>
            <td align="left" valign="top" width="61%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Separation
                and Release Agreement with Russell C. Mix, dated as of September
                12,
                2006.</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="13%">&#160;</td>
            <td align="left" valign="top" width="61%">&#160;</td>
          </tr>
          <tr>
            <td align="left" valign="top" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.3</font></div>
            </td>
            <td align="left" valign="top" width="61%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Consulting
                Agreement with Russell C. Mix, dated as of September 12,
                2006.</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="13%">&#160;</td>
            <td align="left" valign="top" width="61%">&#160;</td>
          </tr>
          <tr>
            <td align="left" valign="top" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.4</font></div>
            </td>
            <td align="left" valign="top" width="61%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Stock
                Option Agreement with Russell C. Mix, dated as of September 12,
                2006.</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="13%">&#160;</td>
            <td align="left" valign="top" width="61%">&#160;</td>
          </tr>
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">99.1</font></div>
            </td>
            <td align="left" valign="top" width="61%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Press
                Release dated September 12, 2006.</font></div>
            </td>
          </tr>

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{"company-data": {"conformed-name": "SPECTRE GAMING INC", "cik": "0000891389", "assigned-sic": "7385", "irs-number": "411675041", "state-of-incorporation": "MN", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "000-25764", "film-number": "061096170"}, "business-address": {"street1": "800 NICOLLET MALL", "street2": "SUITE 2690", "city": "MINNEAPOLIS", "state": "MN", "zip": "55402", "phone": "612-279-2005"}, "former-company": [{"former-conformed-name": "ONELINK INC", "date-changed": "20000823"}, {"former-conformed-name": "ONELINK COMMUNICATIONS INC", "date-changed": "19971118"}, {"former-conformed-name": "MARKETLINK INC", "date-changed": "19950320"}]}
UNITED
      STATES
SECURITIES
      AND EXCHANGE COMMISSION
WASHINGTON,
      D.C. 20549
FORM
      8-K
CURRENT
      REPORT
PURSUANT
      TO SECTION 13 OR 15(D) OF
THE
      SECURITIES EXCHANGE ACT OF 1934
Date
      of
      Report (Date of earliest event reported): September 12, 2006
Spectre
      Gaming, Inc.
(Exact
      name of registrant as specified in its charter)
Minnesota
0-25764
41-1675041
(State
                or other jurisdiction
(Commission
                File Number)
(IRS
                Employer
of
                incorporation)
Identification
                No.)
14200
      23rd Avenue N.
Minneapolis,
      MN 55447
(Address
      of principal executive offices)
(763)
      553-7601
(Registrant's
      telephone number, including area code)
n/a
(Former
      name or former address, if changed since last report)
Check
      the
      appropriate box below if the Form 8-K filing is intended to simultaneously
      satisfy the filing obligation of the registrant under any of the following
      provisions:
[ 
      ]    Written communications pursuant to Rule 425 under the
      Securities Act (17 CFR 230.425)
[
       ]    Soliciting material pursuant to Rule 14a-12 under the
      Exchange Act (17 CFR 240.14a-12)
[
       ]    Pre-commencement communications pursuant to Rule
      14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[
       ]    Pre-commencement communications pursuant to Rule
      13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item
      1.01 Entry Into Material Definitive Agreement.
Adoption
      of 2006 Stock Incentive Plan
On
      September 12, 2006, the board of directors of Spectre Gaming, Inc. (the
"Company") adopted the Company's 2006 Stock Incentive Plan (the "2006 Plan") and
      approved the reservation of 2,000,000 shares of Company common stock for
      issuance thereunder.
General
The
      2006
      Plan provides for the issuance of incentives in the following forms: (i)
      non-statutory stock options and, subject to shareholder approval, incentive
      stock options; (ii) stock-appreciation rights (commonly referred to as "SARs");
      (iii) restricted stock or restricted stock units; (iv) stock awards; and
      (v) performance awards (i.e., performance shares and performance units).
      Employees, officers and directors of, and key consultants to, the Company
      (including its subsidiaries and affiliates) are eligible to receive incentives
      under the 2006 Plan. A copy of the 2006 Plan is being filed as an exhibit to
      this report.
Administration
The
      2006
      Plan is to be administered by the board of directors through a compensation
      committee, to be composed entirely of non-employee directors who are intended
      to
      meet the criteria of "outside director" under Code Section 162(m) and
"non-employee director" under Section 16 of the Securities Exchange Act of 1934,
      or by the entire board of directors. The committee (or entire board, as the
      case
      may be) selects the participants who receive options or awards, the form of
      those awards, the number of shares or dollar targets of the options or awards
      and all terms and conditions of the options or awards. The committee or board
      also certifies the level of attainment of performance targets.
Maximum
      Stock Award Levels
The
      maximum number of shares available for awards under the 2006 Plan is 2,000,000.
      No individual participant may be granted stock options and SARs in any single
      fiscal year during the term of the 2006 Plan in respect of more than 500,000
      shares of common stock. In addition, the maximum number of performance shares
      issuable under the 2006 Plan to any participant for any fiscal year is 500,000
      shares.
Types
      of Incentives
Stock
      Options
.
      The
      committee or board may grant non-qualified and incentive stock options to
      eligible participants to purchase shares of common stock from the Company.
      The
      2006 Plan confers on the committee or board discretion, with respect to any
      such
      stock option, to determine the term of each option, the time or times during
      its
      term when the option becomes exercisable and the number and purchase price
      of
      the shares subject to the option. The exercise price of incentive stock options
      may not be less than 100% of the fair market value of the stock subject to
      the
      option on the date of the grant and, in some cases, may not be less than 110%
      of
      such fair market value. The exercise price of non-statutory options may not
      be
      less than 100% of the fair market value of the stock on the date of grant,
      with
      limited exceptions for awards that satisfy the requirements for deferred
      compensation under Section 409A of the Internal Revenue Code.
The
      maximum term of options under the 2006 Plan is ten years, except that in certain
      cases the maximum term is five years. Subject to the discretion of the committee
      or board, options under the 2006 Plan generally terminate pursuant to provisions
      contained in each option holder's agreement with the Company. Nevertheless, no
      option may remain exercisable or continue to vest beyond its expiration date,
      and any incentive stock option that remains unexercised more than one year
      following termination by reason of death or disability, or more than three
      months following termination for other reasons, will be deemed a non-statutory
      stock option.
Stock-Appreciation
      Rights
.
      A
      stock-appreciation right or SAR is a right to receive, without payment to the
      Company, a number of shares, the amount of which is equal to the aggregate
      amount of the appreciation in the shares of common stock as to which the SAR
      is
      exercised. For this purpose, the "appreciation" in the shares consists of the
      amount by which the fair market value of the shares of common stock on the
      exercise date exceeds (a) in the case of an SAR related to a stock option,
      the
      purchase price of the shares under the option or (b) in the case of an SAR
      granted alone, without reference to a related stock option, an amount determined
      by the committee or board at the time of grant. The committee or board has
      the
      discretion to determine the number of shares as to which a SAR will relate
      as
      well as the duration and exercisability of a SAR.
Restricted
      Stock and Restricted Stock Units
.
      The
      committee or board may also grant shares of restricted stock that are subject
      to
      the continued employment of the participant and may also be subject to
      performance criteria at the discretion of the committee or board. Generally,
      if
      the participant's employment terminates prior to the completion of the specified
      employment or the attainment of the specified performance goals, the awards
      will
      lapse (i.e., the restricted stock will be forfeited). The committee or board
      may
      provide for a prorated attainment of time-based restrictions. Generally, an
      award will not vest during a period less than one year following the date of
      the
      award unless the committee or board determines otherwise. During the restriction
      period, unless the committee or board determines otherwise, a participant who
      holds restricted stock will be entitled to vote the shares and to receive cash
      dividends, if any are declared. The committee or board may also grant restricted
      stock units, which represent rights to receive shares of common stock at a
      future date subject to terms and conditions, including a risk of forfeiture,
      established by the committee or board. Participants generally have not rights
      as
      stockholders with respect to the restricted stock units, except that they may
      have certain rights to receive an amount equal to dividends paid by the Company
      on the equivalent number of shares of common stock.
Stock
      Awards
.
      Stock
      awards consist of the transfer by the Company to an eligible participant of
      shares of common stock, without payment, as additional compensation for services
      to the Company. The number of shares transferred pursuant to any stock award
      is
      determined by the committee or board.
Performance
      Awards
.
      The
      committee or board may grant performance units or performance shares.
      Performance units entitle the participant to receive a specified dollar value,
      variable under conditions specified in the award, if the performance objectives
      specified in the award are achieved and the other terms and conditions thereof
      are satisfied. Performance shares entitle the participant to receive a specified
      number of shares of common stock, or the equivalent cash value, if the
      performance goals specified in the award are achieved and other terms are
      satisfied.
Performance
      goals for performance awards that are intended to qualify as "performance-based"
compensation within the meaning of Section 162(m) of the Code shall be based
      on
      one or more of the following financial criteria: earnings per share, operating
      income, net income, cash flow, gross profit, gross profit return on investment,
      gross margin return on investment, gross margin, working capital, earnings
      before interest and tax (EBIT), earnings before interest, tax, depreciation
      and
      amortization (EBITDA), return on equity, return on assets, return on capital,
      revenue growth, total shareholder return, and economic value added. For
      performance awards that are intended to so qualify under Section 162(m), the
      targets shall be established within the required time period. The committee
      or
      board, in its sole discretion, may modify the performance goals if it determines
      that circumstances have changed and modification is required to reflect the
      original intent of the performance goals; provided, however, that no such change
      or modification may be made to the extent it increases the amount of
      compensation payable to any participant who is a "covered employee" within the
      meaning of Code Section 162(m).
2
Transferability
      of Incentives
Incentives
      granted under the 2006 Plan may not be transferred, pledged or assigned by
      the
      holder thereof except, in the event of the holder's death, by will or the laws
      of descent and distribution to the limited extent provided in the 2006 Plan
      or
      the incentive, or (in the case of a stock option or a SAR) pursuant to a
      qualified domestic relations order as defined by the Code or Title I of the
      Employee Retirement Income Security Act, or the rules thereunder. Nevertheless,
      stock options and SARs may be transferred by the holder thereof to the holder's
      spouse, children, grandchildren or parents (collectively referred to as "family
      members"), to trusts for the benefit of such family members, to partnerships or
      limited liability companies in which family members are the only partners or
      shareholders, or to entities exempt from federal income taxation pursuant to
      Code Section 501(c)(3).
Effect
      of Certain Corporate Events
Unless
      otherwise provided in the agreement for an incentive, in the event of an
      acquisition of the Company through the sale of substantially all of the
      Company's assets or through a merger, exchange, reorganization or liquidation of
      the Company or a similar event as determined by the compensation committee
      or
      board (collectively referred to herein as a "transaction"), the committee or
      board shall be authorized, in its sole discretion, to take any and all action
      it
      deems equitable under the circumstances, including but not limited
      to:
·
terminating
                the 2006 Plan and all incentives and (i) granting the holders of
                outstanding vested options, in lieu of any shares of common stock
                they
                would be entitled to receive under such options, such stock, securities
                or
                assets, including cash, as would have been paid to such participants
                if
                their options had been exercised and such holder had received common
                stock
                immediately prior to such transaction (with appropriate adjustment
                for the
                exercise price, if any), (ii) granting the holders of performance
                shares
                and/or SARs that entitle the participant to receive common stock,
                in lieu
                of any shares of common stock each participant was entitled to receive
                as
                of the date of the transaction pursuant to the terms of such incentive,
                if
                any, such stock, securities or assets, including cash, as would have
                been
                paid to such participant if such common stock had been issued to
                and held
                by the participant immediately prior to such transaction; and (iii)
                treating holders of any incentive which does not entitle the participant
                to receive common stock in an equitable manner as determined by the
                committee or board
·
providing
                that participants holding outstanding vested common stock-based incentives
                shall receive, with respect to each share of common stock issuable
                pursuant to such incentives as of the effective date of any such
                transaction, at the determination of the committee or board, cash,
                securities or other property, or any combination thereof, in an amount
                equal to the excess, if any, of the fair market value of such common
                stock
                on a date within ten days prior to the effective date of such transaction
                over the option price or other amount owed by a participant, if any,
                and
                that such incentives shall be cancelled, including the cancellation
                without consideration of all options that have an exercise price
                below the
                per share value of the consideration received by the Company in the
                transaction
·
providing
                that the 2006 Plan (or a replacement plan) shall continue with respect
                to
                incentives not cancelled or terminated as of the effective date of
                such
                transaction and provide to participants holding such Incentives the
                right
                to earn their respective incentives on a substantially equivalent
                basis
                (taking into account the transaction and the number of shares or
                other
                equity issued by such successor entity) with respect to the equity
                of the
                entity succeeding the Company by reason of such transaction,
                and
3
·
providing
                that all unvested, unearned or restricted incentives shall be void
                and
                deemed terminated, or, in the alternative, for the acceleration or
                waiver
                of any vesting, earning or restrictions on any
                incentive.
In
      addition, the committee or board may restrict the rights of participants in
      the
      event of a transaction to the extent necessary to comply with Section 16(b)
      of
      the Securities Exchange Act of 1934, the Code or any other applicable law or
      regulation.
Duration,
      Amendment and Termination
The
      board
      of directors may amend or discontinue the 2006 Plan at any time. However, no
      such amendment or discontinuance may adversely change or impair a previously
      granted incentive without the consent of the recipient thereof. Certain 2006
      Plan amendments require shareholder approval, including amendments which would
      increase the maximum number of shares of common stock which may be issued to
      all
      participants under the 2006 Plan, change the types of incentives that may be
      granted under the 2006 Plan, change the class of persons eligible to receive
      incentives under the 2006 Plan, or materially increase the benefits accruing
      to
      participants under the 2006 Plan.
Separation
      Agreement with Russell C. Mix
In
      connection with the resignation by Russell C. Mix of his position as the
      Company's Chief Executive Officer (see Items 1.02 and 5.02 below), the Company
      entered into a Separation and Release Agreement with Mr. Mix effective September
      12, 2006 (the "Separation Agreement"). Under the Separation Agreement, the
      parties agreed to the following:
·
the
                termination of that certain Employment Agreement between the parties,
                dated as of April 16, 2004
·
The
                Company's payment of $15,000 to Mr.
                Mix
·
The
                cancellation of options to purchase up to 600,000 shares of common
                stock
                subject to that certain Option Agreement dated as of March 22, 2004,
                and
·
The
                execution and delivery of a 12-month Consulting Agreement between
                the
                parties, pursuant to which Mr. Mix will provide certain consulting
                services relating primarily to regulatory and training matters in
                consideration aggregating approximately
                $100,000.
Prior
      to
      entering into the Separation Agreement, the Company entered into a new Option
      Agreement with Mr. Mix pursuant to which the Company granted Mr. Mix the right
      to purchase up to 450,000 shares of common stock at $1.00 per share until
      September 12, 2008. Copies of the Separation Agreement, Consulting Agreement
      and
      Option Agreement are being filed as exhibits to this report.
Increase
      in Executive and Key Personnel Salaries
On
      September 12, 2006, the Company's board of directors approved certain bonus
      payments and increases in salaries payable to two executives and one key
      employee. Specifically, the board of directors approved an increase in the
      salary payable to (i) D. Bradly Olah, the Company's President and newly
      appointed Chief Executive Officer, to an annual amount of $250,000; (ii) Kevin
      M. Greer, the Company's Chief Financial Officer, to an annual amount of
      $135,000; and (iii) Braun Martin, the Company's Senior Vice President of
      Engineering, to an annual amount of $165,000. The board of directors also
      approved bonuses payable to Messrs. Olah and Greer in the amounts of $100,000
      and $20,000, respectively. The salary increases approved by the board of
      directors will be retroactive to September 1, 2006.
4
Cancellation
      of Certain Options
On
      September 12, 2006, the Company's board of directors approved the cancellation
      of certain outstanding common stock purchase options aggregating 1,550,000
      shares of common stock. The cancelled options included common stock purchase
      options held by executive officers (including Messrs. Greer and Olah) and
      directors (including Messrs. Kenneth Brimmer, Namon Witcher and Robert Bonev)
      aggregating 1,400,000 shares of common stock.
New
      Option Grants
On
      September 12, 2006, the Company's board of directors approved the issuance of
      common stock purchase options aggregating 2,032,500 shares. All options were
      granted with a purchase price of $0.88 per share, the fair value of the
      Company's common stock on September 12, 2006. Of the new grants, options for
      482,500 shares were granted pursuant to the 2006 Plan (all of which have a
      five-year term) and the remaining options were granted pursuant to the Company's
      2004 Stock Option Plan (all of which have terms ranging from approximately
      four
      years to approximately nine years).
Of
      the
      new option grants, Mr. D. Bradly Olah, the Company's President and Chief
      Executive Officer, received options for the purchase of up to 600,000 common
      shares (100,000 of which shall expire on June 30, 2014 and the remainder of
      which shall expire on December 31, 2015); and Mr. Kevin M. Greer, the Company's
      Chief Financial Officer, received options for the purchase of up to 500,000
      common shares (250,000 of which shall expire on December 31, 2010 and the
      reminder of which shall expire on September 12, 2011). In addition, Mr. Kenneth
      Brimmer, a director of the Company, received options for the purchase of 250,000
      common shares (expiring on December 31, 2014), and Messrs. Robert Bonev and
      Namon D. Witcher, both of whom are directors of the Company, each received
      options for the purchase of up to 150,000 common shares (in each case, expiring
      on December 31, 2014).
Restricted
      Stock Grants to Directors
On
      September 12, 2006, the Company's board of directors approved a new policy for
      compensating members of the board of directors. Under the new policy, directors
      will receive annual grants of 25,000 shares of restricted and unregistered
      common stock that will vest ratably over three years. The annual grants will
      be
      made on June 30 of each year. In connection with the adoption of the policy,
      the
      board of directors approved the initial issuance of 25,000 shares of such
      restricted and unregistered common stock to each of the Company's directors on
      September 12, 2006, which grant will represent the annual grant to directors
      for
      fiscal 2006.
5
Item
      1.02 Termination of Material Definitive Agreement.
The
      disclosures made in Item 5.02 below are incorporated herein by this
      reference.
Item
      5.02 Departure of Directors or Principal Officers; Election of Directors;
      Appointment of Principal Officers.
On
      September 12, 2006, the Company accepted the resignation of Russell C. Mix
      from
      his role as the Company's Chief Executive Officer. The resignation was tendered
      pursuant to the terms and conditions of the Separation Agreement (see Item
      1.01
      above). On the same date, the Company appointed D. Bradly Olah as its new Chief
      Executive Officer.
Mr.
      Olah
      has served as the Company's President and director since August 2, 2005 and
      previously served as a consultant to the Company since September 2003. Mr.
      Olah
      was the founder Chairman and Chief Executive Officer of Innovative Gaming
      Corporation of America from 1991 through February 1996, and also served as
      the
      Chief Financial Officer of that corporation from 1991 to 1993. Innovative Gaming
      Corporation of America was credited with launching the world's first
      multi-station, multi-player electronic table games (Craps, Blackjack and
      Roulette). During various periods from April 1996 until May 2003, Mr. Olah
      served as a director, Chief Executive Officer and Chief Financial Officer of
      Wits Basin Precious Minerals, Inc. (WITM.OB). He also served as a director
      of
      Natural Resources Geophysical Corporation until its sale to Eagle Geophysical
      of
      Houston, Texas.
Mr.
      Olah's current employment arrangement with the Company (effective as of
      September 1, 2006) provides him with an annual salary of $250,000 (see Item
      1.01
      above). In addition, on September 12, 2006 the Company's board of directors
      approved a one-time lump sum bonus payment to Mr. Olah in the amount of
      $100,000.
Item
      8.01 Other Events.
issued
      a
      press release relating the financing transaction described in Items 1.01 and
      3.02 of this current report. A copy of the press release is being filed as
      an
      exhibit to this current report.
Item
      9.01 Financial Statements and Exhibits.
(d)
Exhibits.
Exhibit
Description
10.1
2006
                Stock Incentive Plan.
10.3
Separation
                and Release Agreement with Russell C. Mix, dated as of September
                12,
                2006.
10.3
Consulting
                Agreement with Russell C. Mix, dated as of September 12,
                2006.
10.4
Stock
                Option Agreement with Russell C. Mix, dated as of September 12,
                2006.
99.1
Press
                Release dated September 12, 2006.
6
*
*
*
*
*
SIGNATURE
Pursuant
      to the requirements of the Securities Exchange Act of 1934, the registrant
      has
      duly caused this report to be signed on its behalf by the undersigned hereunto
      duly authorized.
Spectre
                  Gaming, Inc.
By:
/s/
                  Kevin M.
                  Greer
Date:
                  September 18, 2006
Kevin
                  M. Greer, Chief Financial
                  Officer
7
EXHIBIT
      INDEX
Exhibit
Description
10.1
2006
                Stock Incentive Plan.
10.3
Separation
                and Release Agreement with Russell C. Mix, dated as of September
                12,
                2006.
10.3
Consulting
                Agreement with Russell C. Mix, dated as of September 12,
                2006.
10.4
Stock
                Option Agreement with Russell C. Mix, dated as of September 12,
                2006.
99.1
Press
                Release dated September 12, 2006.
8