Fiscal period values are FY, Q1, Q2, and Q3. 1st, 2nd and 3rd quarter 10-Q or 10-QT statements have value Q1, Q2, and Q3 respectively, with 10-K, 10-KT or other fiscal year statements having FY.
This is focus fiscal year of the document report in CCYY format. For a 2006 annual report, which may also provide financial information from prior periods, fiscal 2006 should be given as the fiscal year focus. Example: 2006.
The end date of the period reflected on the cover page if a periodic report. For all other reports and registration statements containing historical data, it is the date up through which that historical data is presented. If there is no historical data in the report, use the filing date. The format of the date is CCYY-MM-DD.
The type of document being provided (such as 10-K, 10-Q, 485BPOS, etc). The document type is limited to the same value as the supporting SEC submission type, or the word 'Other'.
Indicate number of shares or other units outstanding of each of registrant's classes of capital or common stock or other ownership interests, if and as stated on cover of related periodic report. Where multiple classes or units exist define each class/interest by adding class of stock items such as Common Class A [Member], Common Class B [Member] or Partnership Interest [Member] onto the Instrument [Domain] of the Entity Listings, Instrument.
Indicate 'Yes' or 'No' whether registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. This information should be based on the registrant's current or most recent filing containing the related disclosure.
Indicate whether the registrant is one of the following: Large Accelerated Filer, Accelerated Filer, Non-accelerated Filer. Definitions of these categories are stated in Rule 12b-2 of the Exchange Act. This information should be based on the registrant's current or most recent filing containing the related disclosure.
Boolean flag that is true when the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Amount, after allowance for credit loss, of right to consideration from customer for product sold and service rendered in normal course of business, classified as current.
Carrying amount as of the balance sheet date of the unpaid sum of the known and estimated amounts payable to satisfy all currently due domestic and foreign income tax obligations.
Carrying value as of the balance sheet date of obligations incurred and payable, pertaining to costs that are statutory in nature, are incurred on contractual obligations, or accumulate over time and for which invoices have not yet been received or will not be rendered. Examples include taxes, interest, rent and utilities. Used to reflect the current portion of the liabilities (due within one year or within the normal operating cycle if longer).
Accumulated change in equity from transactions and other events and circumstances from non-owner sources, net of tax effect, at period end. Excludes Net Income (Loss), and accumulated changes in equity from transactions resulting from investments by owners and distributions to owners. Includes foreign currency translation items, certain pension adjustments, unrealized gains and losses on certain investments in debt and equity securities, other than temporary impairment (OTTI) losses related to factors other than credit losses on available-for-sale and held-to-maturity debt securities that an entity does not intend to sell and it is not more likely than not that the entity will be required to sell before recovery of the amortized cost basis, as well as changes in the fair value of derivatives related to the effective portion of a designated cash flow hedge.
Excess of issue price over par or stated value of the entity's capital stock and amounts received from other transactions involving the entity's stock or stockholders. Includes adjustments to additional paid in capital. Some examples of such adjustments include recording the issuance of debt with a beneficial conversion feature and certain tax consequences of equity instruments awarded to employees. Use this element for the aggregate amount of additional paid-in capital associated with common and preferred stock. For additional paid-in capital associated with only common stock, use the element additional paid in capital, common stock. For additional paid-in capital associated with only preferred stock, use the element additional paid in capital, preferred stock.
Sum of the carrying amounts as of the balance sheet date of all assets that are recognized. Assets are probable future economic benefits obtained or controlled by an entity as a result of past transactions or events.
Sum of the carrying amounts as of the balance sheet date of all assets that are expected to be realized in cash, sold, or consumed within one year (or the normal operating cycle, if longer). Assets are probable future economic benefits obtained or controlled by an entity as a result of past transactions or events.
Sum of the carrying amounts as of the balance sheet date of all assets that are expected to be realized in cash, sold or consumed after one year or beyond the normal operating cycle, if longer.
Amount of currency on hand as well as demand deposits with banks or financial institutions. Includes other kinds of accounts that have the general characteristics of demand deposits. Also includes short-term, highly liquid investments that are both readily convertible to known amounts of cash and so near their maturity that they present insignificant risk of changes in value because of changes in interest rates. Excludes cash and cash equivalents within disposal group and discontinued operation.
Aggregate par or stated value of issued nonredeemable common stock (or common stock redeemable solely at the option of the issuer). This item includes treasury stock repurchased by the entity. Note: elements for number of nonredeemable common shares, par value and other disclosure concepts are in another section within stockholders' equity.
The portion of the carrying value of long-term convertible debt as of the balance sheet date that is scheduled to be repaid within one year or in the normal operating cycle if longer. Convertible debt is a financial instrument which can be exchanged for a specified amount of another security, typically the entity's common stock, at the option of the issuer or the holder.
The aggregate amount of receivables to be collected from related parties where one party can exercise control or significant influence over another party; including affiliates, owners or officers and their immediate families, pension trusts, and so forth, at the financial statement date. which are usually due within one year (or one business cycle).
Carrying amount as of the balance sheet date of obligations due all related parties. For classified balance sheets, represents the current portion of such liabilities (due within one year or within the normal operating cycle if longer).
Portion of the carrying amount as of the balance sheet date of obligations due all related parties that is payable after one year or beyond the normal operating cycle if longer.
Amount after accumulated impairment loss of an asset representing future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized.
Sum of the carrying amounts of all intangible assets, excluding goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges.
Sum of the carrying amounts as of the balance sheet date of all liabilities that are recognized. Liabilities are probable future sacrifices of economic benefits arising from present obligations of an entity to transfer assets or provide services to other entities in the future.
Total obligations incurred as part of normal operations that are expected to be paid during the following twelve months or within one business cycle, if longer.
The carrying value as of the balance sheet date of the current portion of long-term obligations drawn from a line of credit, which is a bank's commitment to make loans up to a specific amount. Examples of items that might be included in the application of this element may consist of letters of credit, standby letters of credit, and revolving credit arrangements, under which borrowings can be made up to a maximum amount as of any point in time conditional on satisfaction of specified terms before, as of and after the date of drawdowns on the line. Includes short-term obligations that would normally be classified as current liabilities but for which (a) postbalance sheet date issuance of a long term obligation to refinance the short term obligation on a long term basis, or (b) the enterprise has entered into a financing agreement that clearly permits the enterprise to refinance the short-term obligation on a long term basis and the following conditions are met (1) the agreement does not expire within 1 year and is not cancelable by the lender except for violation of an objectively determinable provision, (2) no violation exists at the BS date, and (3) the lender has entered into the financing agreement is expected to be financially capable of honoring the agreement.
Including the current and noncurrent portions, carrying value as of the balance sheet date of loans from a bank with maturities initially due after one year or beyond the normal operating cycle if longer.
Carrying value as of the balance sheet date of current portion of long-term loans payable to bank due within one year or the operating cycle if longer.
Amount, after unamortized (discount) premium and debt issuance costs, of long-term debt. Includes, but not limited to, notes payable, bonds payable, debentures, mortgage loans and commercial paper. Excludes capital lease obligations.
Including the current and noncurrent portions, aggregate carrying amount of all types of notes payable, as of the balance sheet date, with initial maturities beyond one year or beyond the normal operating cycle, if longer.
Sum of the carrying values as of the balance sheet date of the portions of long-term notes payable due within one year or the operating cycle if longer.
Aggregate par or stated value of issued nonredeemable preferred stock (or preferred stock redeemable solely at the option of the issuer). This item includes treasury stock repurchased by the entity. Note: elements for number of nonredeemable preferred shares, par value and other disclosure concepts are in another section within stockholders' equity.
Amount of asset related to consideration paid in advance for costs that provide economic benefits within a future period of one year or the normal operating cycle, if longer.
Amount after accumulated depreciation, depletion and amortization of physical assets used in the normal conduct of business to produce goods and services and not intended for resale. Examples include, but are not limited to, land, buildings, machinery and equipment, office equipment, and furniture and fixtures.
Amount before accumulated depreciation of physical assets used in the normal conduct of business to produce goods and services subject to or available for lease.
The noncurrent cash, cash equivalents and investments that is restricted as to withdrawal or usage. Restrictions may include legally restricted deposits held as compensating balances against borrowing arrangements, contracts entered into with others, or entity statements of intention with regard to particular deposits classified as long-term; that is not expected to be released from such existing restrictions within one year of the balance sheet date or operating cycle, whichever is longer. Excludes compensating balance arrangements that are not agreements which legally restrict the use of cash amounts shown on the balance sheet. Includes noncurrent cash equivalents and investments that are similarly restricted as to withdrawal, usage or disposal.
Total of all stockholders' equity (deficit) items, net of receivables from officers, directors, owners, and affiliates of the entity which are attributable to the parent. The amount of the economic entity's stockholders' equity attributable to the parent excludes the amount of stockholders' equity which is allocable to that ownership interest in subsidiary equity which is not attributable to the parent (noncontrolling interest, minority interest). This excludes temporary equity and is sometimes called permanent equity.
Total number of common shares of an entity that have been sold or granted to shareholders (includes common shares that were issued, repurchased and remain in the treasury). These shares represent capital invested by the firm's shareholders and owners, and may be all or only a portion of the number of shares authorized. Shares issued include shares outstanding and shares held in the treasury.
The maximum number of nonredeemable preferred shares (or preferred stock redeemable solely at the option of the issuer) permitted to be issued by an entity's charter and bylaws.
Total number of nonredeemable preferred shares (or preferred stock redeemable solely at the option of the issuer) issued to shareholders (includes related preferred shares that were issued, repurchased, and remain in the treasury). May be all or portion of the number of preferred shares authorized. Excludes preferred shares that are classified as debt.
Aggregate share number for all nonredeemable preferred stock (or preferred stock redeemable solely at the option of the issuer) held by stockholders. Does not include preferred shares that have been repurchased.
Amount after tax of increase (decrease) in equity from transactions and other events and circumstances from net income and other comprehensive income, attributable to parent entity. Excludes changes in equity resulting from investments by owners and distributions to owners.
Amount of gain (loss) recognized in settlement of litigation and insurance claims. Excludes claims within an insurance entity's normal claims settlement process.
Reflects the difference between the fair value of payments made to legally extinguish a debt and its carrying value at that time. This item excludes the write-off of amounts previously capitalized as debt issuance costs.
The aggregate total of expenses of managing and administering the affairs of an entity, including affiliates of the reporting entity, which are not directly or indirectly associated with the manufacture, sale or creation of a product or product line.
The amount of net income (loss) from continuing operations per each basic and diluted share of common stock or unit when the per share amount is the same for both basic and diluted shares.
The aggregate amount of gains or losses resulting from nonoperating activities (for example, interest and dividend revenue, property, plant and equipment impairment loss, and so forth).
Amount of revenue recognized from goods sold, services rendered, insurance premiums, or other activities that constitute an earning process. Includes, but is not limited to, investment and interest income before deduction of interest expense when recognized as a component of revenue, and sales and trading gain (loss).
Amount of increase (decrease) in additional paid in capital (APIC) resulting from recognition of deferred taxes for convertible debt with a beneficial conversion feature.
Number of shares of stock issued as of the balance sheet date, including shares that had been issued and were previously outstanding but which are now held in the treasury.
Total of all stockholders' equity (deficit) items, net of receivables from officers, directors, owners, and affiliates of the entity which are attributable to the parent. The amount of the economic entity's stockholders' equity attributable to the parent excludes the amount of stockholders' equity which is allocable to that ownership interest in subsidiary equity which is not attributable to the parent (noncontrolling interest, minority interest). This excludes temporary equity and is sometimes called permanent equity.
Amount of write-down of assets recognized in the income statement. Includes, but is not limited to, losses from tangible assets, intangible assets and goodwill.
Amount of currency on hand as well as demand deposits with banks or financial institutions. Includes other kinds of accounts that have the general characteristics of demand deposits. Also includes short-term, highly liquid investments that are both readily convertible to known amounts of cash and so near their maturity that they present insignificant risk of changes in value because of changes in interest rates. Excludes cash and cash equivalents within disposal group and discontinued operation.
Amount of increase (decrease) in cash and cash equivalents. Cash and cash equivalents are the amount of currency on hand as well as demand deposits with banks or financial institutions. Includes other kinds of accounts that have the general characteristics of demand deposits. Also includes short-term, highly liquid investments that are both readily convertible to known amounts of cash and so near their maturity that they present insignificant risk of changes in value because of changes in interest rates. Includes effect from exchange rate changes.
Amount of cash and cash equivalents, and cash and cash equivalents restricted to withdrawal or usage. Excludes amount for disposal group and discontinued operations. Cash includes, but is not limited to, currency on hand, demand deposits with banks or financial institutions, and other accounts with general characteristics of demand deposits. Cash equivalents include, but are not limited to, short-term, highly liquid investments that are both readily convertible to known amounts of cash and so near their maturity that they present insignificant risk of changes in value because of changes in interest rates.
The aggregate expense recognized in the current period that allocates the cost of tangible assets, intangible assets, or depleting assets to periods that benefit from use of the assets.
The increase (decrease) during the reporting period in the amount due from customers for the credit sale of goods and services; includes accounts receivable and other types of receivables.
The increase (decrease) during the reporting period in amount due within one year (or one business cycle) from customers for the credit sale of goods and services.
The increase (decrease) during the reporting period in the account that represents the temporary difference that results from Income or Loss that is recognized for accounting purposes but not for tax purposes and vice versa.
The increase (decrease) during the reporting period in the amounts payable to taxing authorities for taxes that are based on the reporting entity's earnings, net of amounts receivable from taxing authorities for refunds of overpayments or recoveries of income taxes.
The increase (decrease) during the reporting period in the amount of outstanding money paid in advance for goods or services that bring economic benefits for future periods.
Consideration given by issuer of convertible debt to provide an incentive for debt holders to convert the debt to equity securities. The expense is equal to the fair value of all securities and other consideration transferred in the transaction in excess of the fair value of securities issuable pursuant to the original conversion terms.
Amount of cash paid for interest, including, but not limited to, capitalized interest and payment to settle zero-coupon bond attributable to accreted interest of debt discount and debt instrument with insignificant coupon interest rate in relation to effective interest rate of borrowing attributable to accreted interest of debt discount; classified as operating and investing activities.
Amount of cash inflow (outflow) from financing activities, including discontinued operations. Financing activity cash flows include obtaining resources from owners and providing them with a return on, and a return of, their investment; borrowing money and repaying amounts borrowed, or settling the obligation; and obtaining and paying for other resources obtained from creditors on long-term credit.
Amount of cash inflow (outflow) from investing activities, including discontinued operations. Investing activity cash flows include making and collecting loans and acquiring and disposing of debt or equity instruments and property, plant, and equipment and other productive assets.
Amount of cash inflow (outflow) from operating activities, including discontinued operations. Operating activity cash flows include transactions, adjustments, and changes in value not defined as investing or financing activities.
The cash outflow for a loan, supported by a promissory note, granted to related parties where one party can exercise control or significant influence over another party; including affiliates, owners or officers and their immediate families, pension trusts, and so forth.
Interest paid other than in cash for example by issuing additional debt securities. As a noncash item, it is added to net income when calculating cash provided by or used in operations using the indirect method.
The cash outflow associated with the acquisition of long-lived, physical assets that are used in the normal conduct of business to produce goods and services and not intended for resale; includes cash outflows to pay for construction of self-constructed assets.
The cash inflow from the issuance of a long-term debt instrument which can be exchanged for a specified amount of another security, typically the entity's common stock, at the option of the issuer or the holder.
Amount of cash inflow from contractual arrangement with the lender, including but not limited to, letter of credit, standby letter of credit and revolving credit arrangements.
The cash inflow from a long-term borrowing made from related parties where one party can exercise control or significant influence over another party; including affiliates, owners or officers and their immediate families, pension trusts, and so forth. Alternate caption: Proceeds from Advances from Affiliates.
The difference between the carrying amount of a financial instrument subject to a registration payment arrangement recorded as temporary equity prior to adoption of FSP EITF 00-19-2 and the carrying amount reclassified to permanent equity upon the adoption of FSP EITF 00-19-2. Recorded as a cumulative effect adjustment to the beginning balance of retained earnings. Does not apply to registration payment arrangements that are no longer outstanding upon adoption of FSP EITF 00-19-2.
Amount of cash restricted as to withdrawal or usage. Cash includes, but is not limited to, currency on hand, demand deposits with banks or financial institutions, and other accounts with general characteristics of demand deposits.
Amount of net unrealized gain (loss) related to the change in fair value of foreign currency exchange rate derivatives designated as cash flow hedging instruments. Recorded in accumulated other comprehensive income to the extent that the cash flow hedge is determined to be effective.
Established in the state of Delaware in 1998,
Newgioco Group, Inc. (“Newgioco Group” or the “Company”) is an international commercial-stage, vertically
integrated company engaged in various aspects of the leisure gaming industry. We own and operate an innovative state-of-the-art
betting platform (“Platform”) and are a licensed leisure lottery and gaming operator offering online and offline leisure
gaming services, including a variety of lottery and casino gaming products, as well as sports betting products through a distribution
network of retail betting locations situated throughout Italy and internationally through various agents in eleven other countries
located in Africa and South America.
The Company’s subsidiaries include: Multigioco
Srl (“Multigioco”), acquired on August 15, 2014, Rifa Srl (“Rifa”), acquired on January 1, 2015, and Ulisse
GmbH (“Ulisse”) and Odissea Betriebsinformatik Beratung GmbH (“Odissea”) which were both acquired on July
1, 2016, Virtual Generation Limited (“VG”) and Naos Holding Limited, acquired on January 30, 2019 and a non-operating
subsidiary Newgioco Group, Inc. based in Canada.
The Company operates in one line of business
that provides certified betting Platform software (“Platform”) services to and the operating of leisure betting establishments
situated throughout Italy and in 11 other countries and is comprised of 3 geographically organized groups: an Operational Group;
Technology Group; and a Corporate Group, organized as follows:
a.
the Operational Group is based in Europe and maintains administrative and customer service offices headquartered in Rome, Italy with satellite offices for operations administration, and risk management and trading in Naples and Teramo, Italy and Valetta, Malta;
b.
the Technology Group is based in Innsbruck, Austria and manages software development, training and administration; and
c.
the Corporate Group is based in North America which includes a head office situated in Toronto, Canada with a satellite office in Boca Raton, Florida through which our CEO and CFO carry-out our corporate duties, handle day-to-day reporting and other operations such as U.S. development and planning, and through which various independent contractors and vendors are engaged.
The entire disclosure for the business description and basis of presentation concepts. Business description describes the nature and type of organization including but not limited to organizational structure as may be applicable to holding companies, parent and subsidiary relationships, business divisions, business units, business segments, affiliates and information about significant ownership of the reporting entity. Basis of presentation describes the underlying basis used to prepare the financial statements (for example, US Generally Accepted Accounting Principles, Other Comprehensive Basis of Accounting, IFRS).
The accompanying unaudited consolidated financial
statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”)
for interim financial information and the rules and regulations of the Securities and Exchange Commission. Accordingly, they do
not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management,
all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating
results for the three and nine months ended September 30, 2019 are not necessarily indicative of the results that may be expected
for the fiscal year ending December 31, 2019. The balance sheet at December 31, 2018 has been derived from the Company’s
audited consolidated financial statements at that date but does not include all of the information and footnotes required by U.S.
GAAP for complete financial statements. For further information, please refer to the consolidated financial statements and footnotes
thereto included in the Company’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2018, as filed with the
U.S. Securities and Exchange Commission (“SEC”).
All amounts referred to in the Notes to the
unaudited condensed consolidated financial statements are in United States Dollars ($) unless stated otherwise.
Basis of Consolidation
The unaudited condensed consolidated financial
statements include the financial statements of the Company and its subsidiaries in which it has at least a majority voting interest.
All significant inter-company accounts and transactions have been eliminated in the unaudited condensed consolidated financial
statements. The entities included in these unaudited condensed consolidated financial statements are as follows:
Company
Country of Incorporation
Percentage owned
%
Newgioco Group, Inc.
United States – Delaware
Parent
Newgioco Group, Inc (Canada)
Canada
100
Ulisse GmbH
Austria
100
Odissea Betriebsinformatik Beratung GMBH
Austria
100
Multigioco Srl.
Italy
100
Rifa Srl.
Italy
100
Virtual Generation Limited
Malta
100
Naos Holding Limited
Malta
100
Elys Technology Group Limited
Malta
100
Currency Translation
The Company's subsidiaries operate in Europe
with a functional currency of Euro and in Canada with a functional currency of Canadian dollars. In the consolidated financial
statements, revenue and expense accounts are translated at the average rates during the period, assets and liabilities are translated
at period-end rates and equity accounts are translated at historical rates. Translation adjustments arising from the use of different
exchange rates from period to period are included as a component of stockholders' equity. Gains and losses from foreign currency
transactions are recognized in current operations.
Use of Estimates
The preparation of the unaudited financial
statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts
of revenue and expenses during the reporting periods. Actual results could differ from those estimates. These estimates and assumptions
include valuing equity securities issued in share-based payment arrangements, determining the fair value of assets acquired, allocation
of purchase price, impairment of long-lived assets, the collectability of receivables and the value of deferred taxes and related
valuation allowances. Certain estimates, including evaluating the collectability of receivables and advances, could be affected
by external conditions, including those unique to our industry and general economic conditions. It is possible that these external
factors could have an effect on our estimates that could cause actual results to differ from our estimates. We re-evaluate all
of our accounting estimates at least quarterly based on these conditions and record adjustments when necessary.
Loss Contingencies
The Company may be subject to claims, suits,
government investigations, and other proceedings involving competition and antitrust, intellectual property, privacy, indirect
taxes, labor and employment, commercial disputes, content generated by our users, goods and services offered by advertisers or
publishers using our website platforms, and other matters. Certain of these matters include speculative claims for substantial
or indeterminate amounts of damages. The Company records a liability when we believe that it is both probable that a loss has been
incurred, and the amount can be reasonably estimated. If we determine that a loss is possible, and a range of the loss can be reasonably
estimated, we disclose the range of the possible loss in the Notes to the Consolidated Financial Statements.
The Company evaluates, on a monthly basis,
developments in our legal matters that could affect the amount of liability that has been previously accrued, and the matters and
related ranges of possible losses disclosed and make adjustments and changes to our disclosures as appropriate. Significant judgment
is required to determine both likelihood of there being and the estimated amount of a loss related to such matters. Until the final
resolution of such matters, there may be an exposure to loss in excess of the amount recorded, and such amounts could be material.
Should any of our estimates and assumptions change or prove to have been incorrect, it could have a material impact on our business,
consolidated financial position, results of operations, or cash flows.
To date, none of these types of litigation
matters, most of which are typically covered by insurance, has had a material impact on our operations or financial condition.
The Company has insured and continue to insure against most of these types of claims.
Derivative Financial Instruments
The Company does not use derivative instruments
to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its financial instruments, including
convertible debentures and stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify
as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument
is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported as
charges or credits to income.
For option-based simple derivative financial
instruments, the Company uses the Black-Scholes option-pricing model to value the derivative instruments at inception and subsequent
valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities
or as equity, is re-assessed at the end of each reporting period.
As a result of the adoption of ASU 2017-11
in the third quarter of 2018, the Company has no derivative financials instruments classified as a liability at September 30, 2019
and December 31, 2018.
Business Combinations
The Company allocates the fair value of purchase
consideration to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values. The
excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded
as goodwill.
Such valuations require management to make
significant estimates and assumptions, especially with respect to intangible assets. Significant estimates in valuing certain intangible
assets include, but are not limited to, future expected cash flows from acquired users, acquired technology, and trade names from
a market participant perspective, useful lives and discount rates. Management's estimates of fair value are based upon assumptions
believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from
estimates.
Fair Value Measurements
ASC Topic 820, Fair Value Measurement and Disclosures,
defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in
the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the
measurement date. This topic also establishes a fair value hierarchy which requires classification based on observable and unobservable
inputs when measuring fair value. There are three levels of inputs that may be used to measure fair value:
Level 1: Observable inputs such as quoted prices
(unadjusted) in active markets for identical assets or liabilities.
Level 2: Inputs other than quoted prices that
are observable, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets
and quoted prices for identical or similar assets or liabilities in markets that are not active.
Level 3: Unobservable inputs in which little
or no market data exists, therefore developed using estimates and assumptions developed by us, which reflect those that a market
participant would use.
The carrying value of the Company's short-term
investments, prepaid expenses, accounts receivables, other current assets, accounts payable and accrued liabilities, gaming account
balance, and advances from shareholder approximate fair value because of the short-term maturity of these financial instruments.
Cash and Cash Equivalents
The Company considers all highly liquid debt
instruments with maturities of three months or less at the time acquired to be cash equivalents. The Company had no cash equivalents
as of September 30, 2019 and December 31, 2018.
The Company primarily places cash with high-credit
quality financial institutions located in the United States which are insured by the Federal Deposit Insurance Corporation up to
a limit of $250,000 per institution, in Canada which are insured by the Canadian Deposit Insurance Corporation up to a limit of
CDN$100,000 per institution, in Italy which is insured by the Italian deposit guarantee fund Fondo Interbancario di Tutela dei
Depositi (FITD) up to a limit of €100,000 per institution, and in Germany which is a member of the Deposit Protection Fund
of the Association of German Banks (Einlagensicherungsfonds des Bundesverbandes deutscher Banken) up to a limit of €100,000
per institution.
Gaming Accounts Receivable
Gaming accounts receivable represent gaming
deposits made by customers to their online gaming accounts either directly by credit card, bank wire, e-wallet or other accepted
method through one of our websites or indirectly by cash collected at the cashier of a betting shop but not yet credited to the
Company’s bank accounts and subject to normal trade collection terms without discounts. The Company periodically evaluates
the collectability of its gaming accounts receivable and considers the need to record or adjust an allowance for doubtful accounts
based upon historical collection experience and specific customer information. Actual amounts could vary from the recorded estimates.
The Company does not require collateral to support customer receivables. The Company recorded bad debt expense $0 and $0 for the
three months ended September 30, 2019 and 2018, respectively, and $0 and $0 for the nine months ended September 30, 2019 and 2018,
respectively. All balances previously recorded as allowance for doubtful accounts were written off as uncollectible.
Gaming Accounts Payable
Gaming accounts payable represent customer
balances, including winnings and deposits, that are held as credits in online gaming accounts and have not as of yet been used
or withdrawn by the customers. Customers can request payment from the Company at any time and the payment to customers can be made
through bank wire, credit card, or cash disbursement from one of our locations. Online gaming account credit balances are non-interest
bearing.
Long-Lived Assets
The Company evaluates the carrying value of
our long-lived assets for impairment by comparing the expected undiscounted future cash flows of the assets to the net book value
of the assets when events or circumstances indicate that the carrying amount of a long-lived asset may not be recoverable. If the
expected undiscounted future cash flows are less than the net book value of the assets, the excess of the net book value over the
estimated fair value will be charged to earnings.
Fair value is based upon discounted cash flows
of the assets at a rate deemed reasonable for the type of asset and prevailing market conditions, appraisals, and, if appropriate,
current estimated net sales proceeds from pending offers.
Property, Plant and Equipment
Property, plant and equipment are stated at
acquisition cost less accumulated depreciation and adjustments for impairment losses. Expenditures are capitalized only when they
increase the future economic benefits embodied in an item of property, plant and equipment. All other expenditures are recognized
as expenses in the statement of income as incurred.
Depreciation is charged on a straight-line
basis over the estimated remaining useful lives of the individual assets. Amortization commences from the time an asset is put
into operation. The range of the estimated useful lives is as follows:
Description
Useful Life
(in years)
Office equipment
5
Office furniture
8 1/3
Signs and displays
5
Intangible Assets
Intangible assets are stated at acquisition
cost less accumulated amortization, if applicable, less any adjustments for impairment losses.
Amortization is charged on a straight-line
basis over the estimated remaining useful lives of the individual intangibles. Where intangibles are deemed to be impaired the
Company recognizes an impairment loss measured as the difference between the estimated fair value of the intangible and its book
value.
The range of the estimated useful lives is
as follows:
Description
Useful Life
(in years)
Betting Platform Software
15
Ulisse Bookmaker License
—
Multigioco and Rifa ADM Licenses
1.5 - 7
VG Licenses
—
Location contracts
5 - 7
Customer relationships
10 - 15
Trademarks/names
14
Websites
5
The Ulisse Bookmaker License and the VG Licenses
have no expiration date and are therefore not amortized.
Goodwill
The Company allocates the fair value of purchase
consideration to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values. The
excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded
as goodwill.
Such valuations require management to make
significant estimates and assumptions, especially with respect to intangible assets. Significant estimates in valuing certain intangible
assets include, but are not limited to, future expected cash flows from acquired users, acquired technology, and trade names from
a market participant perspective, useful lives and discount rates. Management's estimates of fair value are based upon assumptions
believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from
estimates.
The Company annually assesses whether the carrying
value of its intangible assets exceeds their fair value and, if necessary, records an impairment loss equal to any such excess.
Each interim reporting period, the Company assesses whether events or circumstances have occurred which indicate that the carrying
amount of an intangible asset exceeds its fair value. If the carrying amount of the intangible asset exceeds its fair value, an
asset impairment charge will be recognized in an amount equal to that excess. No asset impairment charges were incurred during
the three and nine months ended September 30, 2019 or September 30, 2018. $1,401,608 of goodwill was recorded as part of an acquisition
during the nine months ended September 30, 2019.
Income Taxes
The Company uses the asset and liability method
of accounting for income taxes in accordance with ASC Topic 740, “Income Taxes.” Under this method, income tax expense
is recognized for the amount of: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary
differences resulting from matters that have been recognized in an entity's financial statements or tax returns. Deferred tax assets
and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates
is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to
reduce the deferred tax assets reported if based on the weight of the available positive and negative evidence, it is more likely
than not some portion or all of the deferred tax assets will not be realized.
ASC Topic 740-10-30 clarifies the accounting
for uncertainty in income taxes recognized in an enterprise's financial statements and prescribes a recognition threshold and measurement
attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.
ASC Topic 740.10.40 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods,
disclosure, and transition. We have no material uncertain tax positions for any of the reporting periods presented.
The Company has elected to include interest
and penalties related to uncertain tax positions, if determined, as a component of income tax expense.
In Italy, tax years beginning 2015 forward,
are open and subject to examination, while in Austria companies are open and subject to inspection for five years and ten years
for inspection of serious infractions. In the United States and Canada, tax years beginning 2015 forward, are subject to examination.
The Company is not currently under examination and it has not been notified of a pending examination.
Revenue Recognition
In May 2014, the FASB issued Accounting Standards
Update (“ASU”) 2014-09, “Revenue from Contracts with Customers (Topic 606),” which requires revenue to
be recognized when promised goods or services are transferred to customers in an amount that reflects the consideration that is
expected to be received for those goods or services. The Company adopted ASC Topic 606 on January 1, 2018 and has determined that
the standard does not have a material impact on the nature and timing of revenues recognized.
The Company recognizes revenue when control
of its products and services is transferred to its customers in an amount that reflects the consideration the Company expects to
receive from its customers in exchange for those products and services. Revenues from sports-betting, casino, cash and skill games,
slots, bingo and horse race wagers represent the gross pay-ins (also referred to as turnover) from customers less gaming taxes
and payouts to customers. Revenues are recorded when the game is closed which is representative of the point in time at which the
Company has satisfied its performance obligation. In addition, the Company receives commissions from the sale of scratch tickets
and other lottery games. Commissions are recorded when the ticket for scratch off tickets and lottery tickets are sold.
Revenues from the Platform include license
fees, training, installation, and product support services. Revenue is recognized when transfer of control to the customer has
been made and the Company’s performance obligation has been fulfilled. License fees are calculated as a percentage of each
licensee’s level of activity and are contingent upon the licensee’s usage. The license fees are recognized on an accrual
basis as earned.
Stock-Based Compensation
The Company records its compensation expense
associated with stock options and other forms of equity compensation based on their fair value at the date of grant using the Black-Scholes
option pricing model. Stock-based compensation includes amortization related to stock option awards based on the estimated grant
date fair value. Stock-based compensation expense related to stock options is recognized ratably over the vesting period of the
option. In addition, the Company records expense related to Restricted Stock Units (“RSU’s”) granted based on
the fair value of those awards on the grant date. The fair value related to the RSUs is amortized to expense over the vesting term
of those awards. Forfeitures of stock options and RSUs are recognized as they occur.
Stock-based compensation expense for a stock-based
award with a performance condition is recognized when the achievement of such performance condition is determined to be probable.
If the outcome of such performance condition is not determined to be probable or is not met, no compensation expense is recognized
and any previously recognized compensation expense is reversed.
Comprehensive Income (Loss)
Comprehensive income (loss) is defined as the
change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources,
including foreign currency translation adjustments and unrealized gains and losses on marketable securities.
The Company adopted FASB ASC 220-10-45, “Reporting
Comprehensive Income”. ASC 220-10-45 establishes standards for reporting and presentation of comprehensive income and its
components in a full set of financial statements. Comprehensive income consists of net income and unrealized gains (losses) on
available for sale marketable securities and foreign currency translation adjustments.
Earnings Per Share
Financial Accounting Standards Board (“FASB”)
Accounting Standards Codification (“ASC”) 260, “Earnings Per Share” provides for calculation of “basic”
and “diluted” earnings per share. Basic earnings per share includes no dilution and is computed by dividing net income
(loss) available to common shareholders by the weighted average common shares outstanding for the period. Diluted earnings per
share reflects the potential dilution of securities that could share in the earnings of an entity and include warrants granted
and convertible debentures.
Related Parties
Parties are considered to be related to the
Company if the parties directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common
control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate
families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls
or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties
might be prevented from fully pursuing its own separate interests. The Company discloses all related party transactions. All transactions
are recorded at fair value of the goods or services exchanged.
Recent Accounting Pronouncements Not
Yet Adopted
In August 2018, the FASB issued ASU No. 2018-13,
Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement. The
purpose of this updated guidance is to improve the effectiveness and disclosures in the Notes to the financial statements. The
ASU removes the requirement to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy;
removes the policy for timing of transfers between levels; and removes the disclosure related to the valuation process for Level
3 fair value measurements. The ASU also modifies existing disclosure requirements which relate to the disclosure for investments
in certain entities which calculate net asset value and clarifies the disclosure about uncertainty in the measurements as of the
reporting date. For all entities, the effective date for this guidance is fiscal years beginning after December 15, 2019, including
interim periods within the reporting period, with early adoption permitted. Entities are also allowed to elect early adoption of
the eliminated or modified disclosure requirements and delay adoption of the new disclosure requirements until their effective
date. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements.
In January 2017, the FASB issued ASU No. 2017-04,
Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The main objective of this guidance is
to simplify the accounting for goodwill impairment by requiring that impairment charges be based upon the first step in the current
two-step impairment test under ASC 350. Currently, if the fair value of a reporting unit is lower than its carrying amount (Step
1), an entity calculates any impairment charge by comparing the implied fair value of goodwill with its carrying amount (Step 2).
The implied fair value of goodwill is calculated by deducting the fair value of all assets and liabilities of the reporting unit
from the reporting unit’s fair value as determined in Step 1. To determine the implied fair value of goodwill, entities estimate
the fair value of any unrecognized intangible assets and any corporate-level assets or liabilities that were included in the determination
of the carrying amount and fair value of the reporting unit in Step 1. Under this guidance, if a reporting unit’s carrying
amount exceeds its fair value, an entity will record an impairment charge based on that difference. The impairment charge will
be limited to the amount of goodwill allocated to that reporting unit. This guidance eliminates the requirement to calculate a
goodwill impairment charge using Step 2. This guidance does not change the guidance on completing Step 1 of the goodwill impairment
test. Under this guidance, an entity will still be able to perform the current optional qualitative goodwill impairment assessment
before determining whether to proceed to Step 1. The guidance in the ASU will be applied prospectively and is effective for the
Company for annual and interim impairment tests performed in periods beginning after December 15, 2019. The Company does not expect
the adoption of this ASU to have a significant impact on its consolidated financial statements.
In February 2016, the FASB issued ASU 2016-02,
Leases (Topic 842). ASU 2016-02 requires that a lessee recognize the assets and liabilities that arise from operating leases. A
lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right
of use asset representing its right to use the underlying asset for the lease term. For leases with a term of 12 months or less,
a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease
liabilities. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period
presented using a modified retrospective approach. Public business entities should apply the amendments in ASU 2016-02 for fiscal
years beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted for
all public business entities and all nonpublic business entities upon issuance.
The Company has reviewed all recently issued,
but not yet adopted, accounting standards in order to determine their effects, if any, on our consolidated results of operations,
financial position, and cash flows. Based on that review, the Company believes that none of these pronouncements will have a significant
effect on current or future earnings or operations.
Comparatives
Certain items in prior periods were reclassified
to conform to the current period presentation. These reclassifications had no impact on net loss or comprehensive loss.
The company identified the following errors
in the financial results for the periods ended September 30, 2019 and 2018.
Three and nine months ended September
30, 2019
The company restated its financial
statements for the year ended December 31, 2018, to correct the recording of non-cash amortization of intangible assets and the
depreciation of revalued plant and equipment which was incorrectly classified as other comprehensive income, the unrealized foreign
currency loss on convertible debentures denominated in Canadian Dollars and other immaterial adjustments, resulting in a restatement
of opening balances of plant and equipment of $121,243, intangible assets of $(55,475), other comprehensive income of $(1,023,907)
and opening retained earnings of $(958,138).
The Company had not accounted for
ASC 842 – leases, which was effective for periods beginning January 1, 2019, in its interim financial statements for the
periods ended March 31, 2019, June 30, 2019 and September 30, 2019.
The Company recorded a right-of-use
asset of $646,138 and an operating lease liability of $617,352 and an accrued liability of $28,786 as of January 1, 2019. An additional
$241,985 of operating leases were entered into and a further $22,707 of operating leases were terminated before maturity during
the nine months ended September 30, 2019. The amortization of the right-of-use asset amounted to $153,088, the amortization of
the operating lease liability was $136,269 and the accrued liability increased by $2,892.
The Company adjusted its accounting
for financial leases by recording an office equipment asset of $34,638 and a finance lease liability of $34,524 as of January 1,
2019. During the nine months ended September 30, 2019, an additional $15,043 of additional office equipment under financial leases
was recorded. The Company recorded a depreciation charge of $8,764 related to these assets, an interest charge of $1,071 and amortization
of financial leases of $9,411.
The Company modified its accounting
for the acquisition of Virtual Generation by accounting for the imputed deferred tax liability on the value of the Platform acquired,
resulting in an adjustment of $1,401,608 to deferred tax liability and recording of a goodwill asset on acquisition of $1,401,608.
The Virtual Generation platform, valued at $4,004,954, was amortized for the nine months ended September 30, 2019, resulting in
an amortization expense of $177,982 and a reduction in the deferred tax liability of $62,294.
The company had previously recorded
certain gains on share based transactions with related parties amounting to $282,101. These gains were reclassified as equity.
Other adjustments relating to the
recording of consolidated amortization expenses were incorrectly calculated, the net adjustment amounted to $112,634. In addition
certain foreign exchange movements of $23,998 were incorrectly recorded in comprehensive loss. Included in other adjustments is
a reclassification of selling expenses of $1,028,184 to general and administrative expenses to conform to current disclosure.
Due to a 1 for 8 reverse stock split
which took place on December 12, 2019, the outstanding shares and additional paid in capital was adjusted to take into account
the effects of the reverse stock split.
Three and nine months ended September
30, 2018
The error corrected in the financial
statements for the year ended December 31, 2018, resulted in an adjustment to depreciation and amortization expense of $352,943,
an adjustment to foreign exchange movements of $83,645, and an immaterial $331 adjustment to general and administrative expenses.
The reconciliation of the consolidated balance
sheet as of September 30, 2019 is as follows:
As Previously Reported
Prior year adjustment
Lease adjustments
Acquisition of Virtual Generation
Other Adjustments
As Restated
Current Assets
Cash and cash equivalents
$
4,910,994
$
—
$
—
$
—
$
—
$
4,910,994
Accounts receivable
104,731
—
—
—
—
104,731
Gaming accounts receivable
1,446,058
—
—
—
—
1,446,058
Prepaid expenses
197,953
—
—
—
—
197,953
Related party receivable
849
—
—
—
—
849
Other current assets
182,864
—
—
—
—
182,864
Total Current Assets
6,843,449
—
—
—
—
6,843,449
Non-Current Assets
Restricted cash
1,404,978
—
—
—
—
1,404,978
Property, plant and equipment
324,227
121,248
39,108
—
(10,430
)
474,153
Right-of-use assets
—
—
699,250
—
—
699,250
Intangible assets
16,132,375
(55,477
)
(177,982
)
128,156
16,027,072
Goodwill
266,920
—
—
1,401,608
(5,093
)
1,663,435
Other assets
10,907
—
—
—
—
10,907
Investment in non-consolidated entities
375,000
—
—
—
—
375,000
Total Non-Current Assets
18,514,407
65,771
738,358
1,223,626
112,633
20,654,795
Total Assets
$
25,357,856
$
65,771
$
738,358
$
1,223,626
$
112,633
$
27,498,244
Current Liabilities
Line of credit - bank
$
1,000,000
$
—
$
—
$
—
$
—
$
1,000,000
Accounts payable and accrued liabilities
4,080,575
—
31,678
—
—
4,112,253
Gaming accounts balances
2,578,116
—
—
—
—
2,578,116
Taxes payable
645,591
—
—
—
—
645,591
Advances from stockholders
8,019
—
—
—
—
8,019
Convertible Debt, net of discount of $1,755,287
6,376,410
—
—
—
—
6,376,410
Notes payable, net of discount of $120,853
1,397,815
—
—
—
—
1,397,815
Notes payable – related party, net of discount of $80,569
984,811
—
—
—
—
984,811
Bank loan payable – current portion
119,195
—
—
—
—
119,195
Operating lease liability
—
—
47,068
—
—
47,068
Financial lease liability
—
—
3,002
—
—
3,002
Total Current Liabilities
17,190,532
—
81,748
—
—
17,272,280
Non-current liabilities
Deferred tax liability
—
—
—
1,339,314
—
1,339,314
Notes payable, net of discount of $27,506
244,728
—
—
—
—
244,728
Notes payable – related party, net of discount of $18,338
163,152
—
—
—
—
163,152
Bank loan payable
124,670
—
—
—
—
124,670
Operating lease liability
—
—
621,695
—
—
621,695
Financial lease liability
—
—
36,843
—
—
36,843
Other long-term liabilities
204,100
—
—
—
—
204,100
Total Non-Current Liabilities
736,650
—
658,538
1,339,314
—
2,734,502
Total Liabilities
17,927,182
—
740,286
1,339,314
—
20,006,782
Stockholders' Equity
Preferred stock, $0.0001 par value; 5,000,000 shares authorized, none issued
—
—
—
—
—
—
Common Stock, $0.0001 par value, 80,000,000 shares authorized; 10,514,610 shares issued and outstanding as of September 30, 2019*
8,412
—
—
—
(7,360
)
1,052
Additional paid-in capital*
27,213,399
—
—
—
289,461
27,502,860
Accumulated other comprehensive income
(1,382,160
)
1,023,907
(1,618
)
—
(23,998
)
(383,869
)
Accumulated deficit
(18,408,977
)
(958,136
)
(310
)
(115,688
)
(145,470
)
(19,628,581
)
Total Stockholders' Equity
7,430,674
65,771
(1,928
)
(115.688
)
112,633
7,491,462
Total Liabilities and Stockholders’ Equity
$
25,357,856
$
65,771
$
738,358
$
1,223,626
$
112,633
$
27,498,244
* Adjusted for a 1 for 8 reverse stock split
effective December 12, 2019.
The reconciliation of the consolidated statement
of operations and comprehensive loss for the three months ended September 30, 2019 is as follows:
As Previously Reported
Lease
adjustments
Acquisition of Virtual Generation
Other Adjustments
As Restated
Revenue
$
6,755,845
$
-
$
-
$
-
6,755,845
Costs and Expenses
Selling expenses
3,156,446
-
-
(258,159
)
2,898,287
General and administrative expenses
3,259,195
(235
)
66,743
105,294
3,430,997
Total Costs and Expenses
6,415,641
(235
)
66,743
(152,865
)
6,329,284
Income from Operations
340,204
235
(66,743
)
152,865
426,561
Other (Expenses) Income
Other income
32,864
-
-
-
32,864
Interest expense, net of interest income
(1,092,887
)
(372
)
-
-
(1,093,259
)
Gain on settlement of liabilities
282,101
-
-
(282,101
)
-
Gain on marketable securities
125,000
-
-
-
125,000
Total Other (Expenses) Income
(652,922
)
(372
-
(282,101
)
(935,395
)
Loss Before Income Taxes
(312,718
)
(137
)
(66,743
)
(129,236
)
(508,834
)
Income tax provision
(283,905
)
-
23,360
-
(260,545
)
Net Loss
(596,623
)
(137
)
(43,383
)
(129,236
)
(769,379
)
Other Comprehensive Loss
Foreign currency translation adjustment
(212,009
)
-
-
(53,222
)
(265,231
)
Comprehensive Loss
$
(808,632
)
$
(137
)
$
(43,383
)
$
(182,458
)
$
(1,034,610
)
Loss per common share – basic and diluted*
$
(0.01
)
$
(0.01
)
Weighted average number of common shares outstanding – basic and diluted*
10,241,996
10,241,996
* Adjusted for a 1 for 8 reverse stock split
effective December 12, 2019.
The reconciliation of the consolidated statement
of operations and comprehensive loss for the nine months ended September 30, 2019 is as follows:
As Previously Reported
Lease
adjustments
Acquisition of Virtual Generation
Other Adjustments
As Restated
Revenue
$
25,127,494
$
—
$
—
$
—
$
25,127,494
Costs and Expenses
Selling expenses
17,602,950
—
—
(1,028,184
)
16,574,766
General and administrative expenses
8,919,962
(761
)
177,982
891,553
9,988,736
Total Costs and Expenses
26,522,912
(761
)
177,982
(136,631
)
26,563,502
Loss from Operations
(1,395,418
)
761
(177,982
)
136,631
(1,436,008
)
Other (Expenses) Income
Other income
40,589
—
—
—
40,589
Interest expense, net of interest income
(3,613,543
)
(1,071
)
—
—
(3,614,614
)
Gain on marketable securities
100,000
—
—
—
100,000
Loss on settlement of liabilities
246,158
—
—
(282,101
)
(35,943
)
Total Other (Expenses) Income
(3,226,796
)
(1,071
)
—
(282,101
)
(3,509,968
)
Loss Before Income Taxes
(4,622,214
)
(310
)
(177,982
)
(145,470
)
(4,945,976
)
Income tax provision
(777,869
)
—
62,294
—
(715,575
)
Net Loss
(5,400,083
)
(310
)
(115,688
)
(145,470
)
(5,661,551
)
Other Comprehensive Loss
Foreign currency translation adjustment
(300,822
)
(1,618
)
—
(23,998
)
(326,438
)
Comprehensive Loss
$
(5,700,905
)
$
(1,928
)
$
(115,688
)
$
(169,468
)
$
(5,987,989
)
Loss per common share – basic and diluted*
$
(0.57
)
$
(0.60
)
Weighted average number of common shares outstanding – basic and diluted*
9,925,380
9,925,380
* Adjusted for a 1 for 8 reverse stock split
effective December 12, 2019.
The reconciliation of the consolidated statement
of operations and comprehensive loss for the three months ended September 30, 2018 is as follows:
As Previously Reported
Depreciation and amortization adjustments
Foreign Exchange adjustments
Other Adjustments
As Restated
Revenue
$
7,823,286
$
—
$
—
$
—
$
7,823,286
Costs and Expenses
Selling expenses
5,314,436
—
—
—
5,314,436
General and administrative expenses
2,897,835
117,648
27,880
—
3,043,363
Total Costs and Expenses
8,212,271
117,648
27,880
—
8,357,799
Loss from Operations
(388,985
)
(117,648
)
(27,880
)
—
(534,513
)
Other (Expenses) Income
Interest expense, net of interest income
(329,618
)
—
—
—
(329,618
)
Loss on marketable securities
(2,500
)
—
—
—
(2,500
)
Total Other (Expenses) Income
(332,118
)
—
—
—
(332,118
)
Loss Before Income Taxes
(721,103
)
(117,648
)
(27,880
)
—
(866,631
)
Income tax provision
(83,356
)
—
—
—
(83,356
)
Net Loss
(804,459
)
(117,648
)
(27,880
)
—
(949,987
)
Other Comprehensive Loss
Foreign currency translation adjustment
(490,914
)
133,446
27,880
—
(329,588
)
Comprehensive Loss
$
(1,295,373
)
$
15,798
$
—
$
—
$
(1,279,575
)
Loss per common share – basic and diluted*
$
(0.14
)
$
(0.14
)
Weighted average number of common shares outstanding – basic and diluted*
9,317,537
9,317,537
The reconciliation of the consolidated statement
of operations and comprehensive loss for the nine months ended September 30, 2018 is as follows:
As Previously Reported
Depreciation and amortization adjustments
Foreign Exchange adjustments
Other Adjustments
As Restated
Revenue
$
25,239,812
$
—
$
—
$
—
$
25,239,812
Costs and Expenses
Selling expenses
17,218,036
—
—
—
17,218,036
General and administrative expenses
7,013,563
352,943
83,645
331
7,450,482
Total Costs and Expenses
24,231,599
352,943
83,645
331
24,668,518
Income from Operations
1,008,213
(352,943
)
(83,645
)
(331
)
571,294
Interest expense, net of interest income
(1,592,127
)
—
—
—
(1,592,127
)
Imputed interest on related party advances
(761
)
—
—
—
(761
)
Gain on litigation settlement
516,120
—
—
—
516,120
Loss on debt modification
(212,270
)
—
—
—
(212,270
)
Loss on marketable securities
(157,500
)
—
—
—
(157,500
)
Total Other (Expenses) Income
(1,446,538
)
—
—
—
(1,446,538
)
Loss Before Income Taxes
(438,325
)
(352,943
)
(83,645
)
(331
)
875,244
)
Income tax provision
(840,798
)
—
—
—
(840,798
)
Net Loss
(1,279,123
)
(352,943
)
(83,645
)
(331
)
(1,716,042
)
Other Comprehensive Loss
Foreign currency translation adjustment
(653,788
)
401,333
83,645
—
(168,810
)
Comprehensive Loss
$
(1,932,911
)
$
48,390
$
—
$
(331
)
$
(1,884,852
)
Loss per common share – basic and diluted*
$
(0.21
)
$
(0.20
)
Weighted average number of common shares outstanding – basic and diluted*
9,397,252
9,397,252
* Adjusted for a 1 for 8 reverse stock split
effective December 12, 2019.
The reconciliation of the consolidated statement
of cash flows for the nine months ended September 30, 2019 is as follows:
As Previously Reported
Lease
adjustments
Acquisition of Virtual Generation
Other Adjustments and reclassifications
As Restated
Cash Flows from Operating Activities
Net loss
$
(5,400,083
)
$
(310
)
$
(115,688
)
$
(145,470
)
$
(5,661,551
)
Adjustments to reconcile net loss to net cash generated by operating activities
Depreciation and amortization
485,351
8,764
177,982
15,310
687,407
Amortization of deferred costs
2,974,439
—
—
—
2,974,439
Stock based compensation charge
88,960
—
—
—
88,960
Non-cash interest
598,656
—
—
—
598,656
Gain on settlement of liabilities
(190,610
)
—
—
190,610
—
Loss on debt conversions
(46,426
)
—
—
91,492
45,066
Unrealized gain on trading securities
(100,000
)
—
—
—
(100,000
)
Deferred taxation movements
—
—
(62,294
)
—
(62,294
)
Changes in Operating Assets and Liabilities
Prepaid expenses
(69,957
)
—
—
—
(69,957
)
Accounts payable and accrued liabilities
643,411
—
—
—
643,411
Accounts receivable
(50,218
)
—
—
(50,218
)
Gaming accounts receivable
(487,330
)
—
—
—
(487,330
)
Gaming accounts liabilities
1,626,021
—
—
—
1,626,021
Taxes payable
(372,275
)
—
—
—
(372,275
)
Other current assets
(101,594
)
—
—
—
(101,594
)
Other assets
(11,239
)
—
—
—
(11,239
)
Long term liability
(387,523
)
—
—
—
(387,523
)
Net Cash used in operating Activities
(800,417
)
8,454
—
151,942
(640,021
)
Cash Flows from Investing Activities
Acquisition of property, plant, and equipment, and intangible assets
(114,821
)
(15,043
)
—
—
(129,864
)
Decrease in restricted cash
133,197
—
—
(133,197
)
—
Acquisition of Virtual Generation, net of cash of $47,268
46,435
—
(263,418
)
—
(216,983
)
Net Cash Used in Investing Activities
64,811
(15,043
)
(263,418
)
(133,197
)
(346,847
)
Cash Flows from Financing Activities
Proceeds from bank credit line, net
250,000
—
—
—
250,000
Repayment of bank loan
(88,567
)
—
—
—
(88,567
)
Repayment of deferred purchase consideration – non-related parties
(213,317
)
—
105,367
—
(107,950
)
Repayment of deferred purchase consideration – related parties
(399,901
)
—
158,051
—
(241,850
)
Movement in financial leases
—
6,589
—
—
6,589
Advance to related party
(11,975
)
—
—
—
(11,975
)
Advances from stockholders
14,227
—
—
—
14,227
Net Cash Used in Financing Activities
(449,533
)
6,589
263,418
—
(179,526
)
Effect of change in exchange rate
(193,770
)
—
—
(174,306
)
(368,076
)
Net decrease in cash
(1,378,909
)
—
—
(155,561
)
(1,534,470
)
Cash, cash equivalents and restricted cash – beginning of the period
6,289,903
—
—
1,560,539
7,850,442
Cash, cash equivalents and restricted cash – end of the period
$
4,910,994
$
—
$
—
$
1,404,978
$
6,315,972
Reconciliation of cash, cash equivalents and restricted cash within the balance sheet to the statement of cash flows
Cash and cash equivalents
$
4,910,994
$
—
$
—
$
—
$
4,910,994
Restricted cash
—
—
—
1,404,978
1,404,978
$
4,910,994
$
—
$
—
$
1,404,978
$
6,315,972
The reconciliation of the consolidated statement
of cash flows for the nine months ended September 30, 2018 is as follows:
As Previously Reported
Depreciation and
amortization
adjustments
Foreign
Exchange adjustments
Other Adjustments and reclassifications
As Restated
Cash Flows from Operating Activities
Net Loss
$
(1,279,123
)
$
(352,943
)
$
(83,645
)
$
(331
)
$
(1,716,042
)
Adjustments to reconcile net loss to net cash provided by operating activities
Depreciation and amortization
500,391
156,594
—
—
656,985
Amortization of deferred costs
58,188
—
—
—
58,188
Non-cash interest
1,193,434
—
—
—
1,193,434
Loss on debt modification
217,140
—
—
—
217,140
Imputed interest on advances from stockholders
1,514
—
—
—
1,514
Unrealized loss on trading securities
157,500
—
—
—
157,500
Recovery of assets
(516,120
)
—
—
—
(516,120
)
Bad debt expense
6,354
—
—
—
6,354
Changes in Operating Assets and Liabilities
Prepaid expenses
(180,651
)
—
—
—
(180,651
)
Accounts payable and accrued liabilities
1,776,266
—
—
331
1,776,597
Accounts receivable
98,823
—
—
—
98,823
Gaming accounts receivable
(108,033
)
—
—
—
(108,033
)
Gaming accounts liabilities
(242,907
)
—
—
—
(242,907
)
Taxes payable
(547,618
)
—
—
—
(547,618
)
Other current assets
(94,764
)
—
—
—
(94,764
)
Long term liability
72,480
—
—
—
72,480
Net Cash Provided by operating Activities
1,112,874
(196,349
)
(83,645
)
—
832,880
Cash Flows from Investing Activities
Acquisition of property, plant, and equipment, and intangible assets
(4,487,456
)
(203,068
)
—
—
(4,690,524
)
Decrease in restricted cash
(980,427
)
—
—
980,427
—
Net Cash Used in Investing Activities
(5,467,883
)
(203,068
)
—
980,427
(4,690,524
)
Cash Flows from Financing Activities
Proceeds from bank credit line
500,000
—
—
—
500,000
Repayment of bank credit line, net
(177,060
)
—
—
—
(177,060
)
Repayment of bank loan
(93,532
)
—
—
—
(93,532
)
Proceeds from debentures and convertible notes, net of repayment
6,883,906
—
—
—
6,883,906
Loan to related party
(190,509
)
—
—
—
(190,509
)
Purchase of treasury stock
(2,261,307
)
—
—
—
(2,261,307
)
Repayment to stockholders, net of advances
(406,142
)
—
—
—
(406,142
)
Net Cash Provided by Financing Activities
4,255,356
—
—
—
4,255,356
Effect of change in exchange rate
(561,516
)
399,417
83,645
—
(78,454
)
Net increase in cash
(661,169
)
—
—
980,427
319,258
Cash, cash equivalents and restricted cash – beginning of the period
6,469,858
—
—
587,905
7,057,763
Cash, cash equivalents and restricted cash – end of the period
$
5,808,689
$
—
$
—
$
1,568,332
$
7,377,021
Reconciliation of cash, cash equivalents and restricted cash within the balance sheet to the statement of cash flows
The entire disclosure for reporting accounting changes and error corrections. It includes the conveyance of information necessary for a user of the Company's financial information to understand all aspects and required disclosure information concerning all changes and error corrections reported in the Company's financial statements for the period.
The Company adopted ASU 2017-11 (“ASU
2017-11”) – Accounting for certain convertible debentures and warrants with down round features, in the prior year.
When determining whether certain financial
instruments should be classified as liabilities or equity instruments, a down round feature no longer precludes equity classification
when assessing whether the instrument is indexed to an entity’s own stock.
The Company determined that ASU 2017-11 is
applicable to the Company and the down round feature of the convertible debentures and warrants issued during the period February
2018 to June 2018, no longer qualified as derivative liabilities.
The amendments in this update were effective
for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, however early adoption was
permitted for all entities, including adoption in an interim period. The Company early adopted ASU 2017-11 in its September 30,
2018 quarterly report.
The adjustments were reflected as of January
1, 2018, the beginning of the fiscal year.
The adjustments made by the Company to its
opening balance sheet as of January 1, 2018 were as follows:
Convertible Debentures
Derivative Liability
Additional Paid-in Capital
Accumulated Deficit
Balance as of January 1, 2018
$
1,148,107
$
222,915
$
14,254,582
$
(9,897,620
)
Reclassified derivative liabilities and cumulative effect of adoption
—
(222,915
)
287,881
(64,966
)
Balance as of January 1, 2018, restated
$
1,148,107
$
—
$
14,542,463
$
(9,962,586
)
During the three and nine months ended September
30, 2018, the Company issued Convertible debenture units to investors amounting to $3,268,000 and CDN$7,162,000 (approximately
$6,502,000). Each unit consisting of a convertible debenture, common shares of stock and a warrant, refer to Note 1 below.
Due to the modified retrospective adoption
allowed under ASU 2017-11, the Company eliminated the derivative liability at the date of the issuance of the convertible debentures
and warrants and credited additional paid in capital and debited convertible debentures discount with $5,536,301 on the grant date
of the convertible debentures and warrants. The $5,536,301 was calculated using a Black-Scholes valuation model to measure and
allocate the following components of the convertible debenture units; (a) the beneficial conversion feature of the convertible
debentures; (b) the value of the warrants issued with the units; and the brokers warrants related to the issuance of the convertible
debenture units, after applying the relative fair value method to the derived Black-Scholes valuations. The common shares of stock
issued as part of the convertible debenture units were valued at the grant date at closing market prices at $582,486.
The Company eliminated the derivative liability
of $12,494,727 reflected on the consolidated balance sheet as of September 30, 2018 and the net derivative liability movements
through the consolidated statements of comprehensive loss of $5,498,876 and $5,244,587 for the three and nine months ended September
30, 2018 and the net derivative liability movement of $5,244,587 from the statement of cash flows for the nine months ended September
30, 2018.
The Company had originally calculated the
mark-to-market derivative liability on the grant date of the warrants and brokers warrants and the convertible debentures as an
additional charge of $23,513,240 and reflected this loss together with the loss realized on the modification of certain convertible
debentures and warrants of $212,270 as a loss on debt issuance. The $23,513,240 related to the mark-to-market derivative liability
movement at the grant date was reclassified as a mark-to-market movement in derivative liabilities for the three months and nine
months ended September 30, 2018, with a net loss on debt modification of $212,270.
The entire disclosure for classifying current financial statements, which may be different from classifications in the prior year's financial statements. Disclose any material changes in classification including an explanation of the reason for the change and the areas impacted.
5. Acquisition of betting software technology;
offline and land-based gaming assets
Ulisse GmbH (“Ulisse”) Acquisition
On June 30, 2016, the Company entered into
a Share Exchange Agreement (“Ulisse SPA”), which closed on July 1, 2016, with the shareholders of Ulisse organized
under the laws of Austria. Ulisse operates a network of approximately 170 land-based agency locations. Pursuant to the agreement,
the Company issued 416,400 shares of common stock in consideration for 100% of the issued and outstanding shares of Ulisse.
Pursuant to the Ulisse SPA, the purchase price
was subject to an adjustment equal to two times earnings before income taxes calculated on a pro rata basis from the closing date
upon completion of the ADM license tender auction. The sellers were also permitted to exercise the option to resell to the Company
50% of the shares of common stock (or 208,200 shares) issued in consideration for the purchase price at a fixed price of USD $4.00
per share (the “Ulisse Put Option”).
On May 31, 2018, the Company and Ulisse mutually
agreed to exercise the Ulisse Put Option in lieu of completion of the ADM license tender auction. The Company repurchased and retired
the shares issued in June 2016 with a purchase price adjustment to 10 million Euros (approximately USD $11.7 million). The purchase
price adjustment was paid half in cash of 5 million Euros (approximately USD $5.85 million) and the Company issued 591,950 shares
to the sellers on May 31, 2018 to settle the balance of the purchase price adjustment in shares of common stock at the closing
price of $9.44 per share on May 31, 2018.
Multigioco Acquisition
On May 31, 2018, the Company and Multigioco
mutually agreed to exercise the option to repurchase the shares issued to the shareholders of Multigioco at the closing of the
acquisition of Multigioco on August 15, 2014 (“Multigioco Put Option”). The Company repurchased and retired the balance
of 255,000 shares issued to the Multigioco sellers in exchange for EUR 510,000 (approximately USD $595,000).
Virtual Generation Limited (“VG”)
Acquisition
On January 30, 2019, the Company entered into
a Share Exchange Agreement (“VG SPA”), with the shareholders of Virtual Generation (“VG”) organized under
the laws of Republic of Malta. VG owns and has developed a virtual gaming software platform, together with all the ordinary shares
of Naos Holding Limited, a company organized under the laws of Republic of Malta (“Naos”) that owns 3,999 of the 4,000
issued and outstanding ordinary shares of VG. Pursuant to the agreement, the Company issued 65,298 shares of common stock in consideration
for 100% of the issued and outstanding shares of VG.
Pursuant to the Purchase Agreement, on the
Closing Date, the Company agreed to pay the Sellers the previously agreed to Four Million Euro (€4,000,000) in consideration
for all the ordinary shares of VG and Naos, on the Closing Date as follows:
i.
a cash payment of One Hundred and Eight Thousand Euro (€108,000);
ii.
the issuance of shares of the Company’s common stock valued at Eighty-Nine Thousand Euro (€89,000); and
iii.
the delivery of a non-interest bearing promissory note (the “Promissory Note”) providing for the payment of (a) an aggregate of €2,392,000 in cash in 23 equal and consecutive monthly instalments of €104,000 with the first such payment due and payable on the date that is one (1) month after the Closing Date; and (b) an aggregate of €1,411,000 in shares of the Company’s common stock in seventeen (17) equal and consecutive monthly instalments of €83,000 as determined by the average of the closing prices of such shares on the last ten (10) trading days immediately preceding the determination date of each monthly issuance, commencing on March 1, 2019.
The purchase price was allocated to the fair
market value of tangible and intangible assets acquired and liabilities assumed. Intangible assets will be amortized over their
remaining useful life as follows:
Cash
$
47,268
Current assets
178,181
Property, Plant and Equipment
41,473
Betting Platform
4,004,594
4,271,516
Less: liabilities assumed
(78,141
)
Less: Imputed Deferred taxation on identifiable intangible assets acquired
(1,401,608
)
Total identifiable assets less liabilities assumed
2,791,767
Goodwill arising on acquisition
1,401,608
Total purchase price
$
4,193,375
Intangible assets will be amortized over their
remaining useful life over a period of 15 years.
The €3,803,000 promissory note was recorded
as a liability owing to related parties of €1,521,000 (Note 11) and to third parties of €2,281,800 (Note 14).
The entire description for costs incurred to effect a business combination that have been expensed during the period. Such costs could include business integration costs, systems integration and conversion costs, and severance and other employee-related costs.
On January 1, 2019, the Company adopted Topic
842 using the modified retrospective method applied to leases that were in place as of January 1, 2019. Results for reporting periods
beginning after January 1, 2019 are presented under Topic 842, while prior period amounts are not adjusted and continue to be reported
in accordance with the Company’s historic accounting under Topic 840. The Company’s portfolio of leases contains both
finance and operating leases that relate to real estate agreements, vehicles and office equipment agreements.
Practical Expedients and Elections
The Company elected the package of practical
expedients permitted under the transition guidance, which allowed the Company to carryforward its historical lease classification,
the Company’s assessment on whether a contract is or contains a lease, and its initial direct costs for any leases that exist
prior to adoption of the new standard. The Company also elected to combine lease and non-lease components on the office equipment
leases and elected the short-term lease recognition exemption for all leases that qualify.
Discount Rate
To determine the present value of minimum future
lease payments for leases at January 1, 2019, the Company was required to use the rate implicit in the lease unless the rate is
not determinable then a rate of interest that it would have to pay to borrow on a collateralized basis over a similar term an amount
equal to the lease payments in a similar economic environment (the “incremental borrowing rate” or “IBR”).
Operating leases
Property and vehicle leases
The Company determined the rate implicit in
the lease or an IBR where that rate was not determinable. The Company used country specific rates based on the country the assets
are located in.
Property leases
The Company determined that rates ranging from
2.12% to 4.5% were appropriate discount rates to apply to its real-estate operating leases.
The Company entered into new real estate operating
leases during the current period and determined an appropriate discount rate to apply to its operating leases was 2.12%.
Vehicle leases
The Company determined that appropriate discount
rates to apply to its vehicle operating leases ranged from 5.1% to 6.7%.
Finance leases
Computer and office equipment leases
The Company has financed several items of computer
and office equipment through vendor financing. The discount rates for finance leases ranged from 2.5% to 4.2%.
Right of use assets
Upon adoption of ASC 842, effective January
1, 2019, the Company recorded a right of use asset for operating leases of $646,138.
Right of use assets are included in the consolidated
balance sheet are as follows:
September 30, 2019
Non-Current assets
Right-of-use assets - operating leases, net of amortization
$
699,250
Right-of-use assets – finance leases, net of amortization (included in plant and equipment)
$
39,108
Lease costs consists of the following:
Nine months ended
September 30, 2019
Finance lease cost:
$
—
Amortization of right-of-use assets
8,764
Interest expense on lease liabilities
1,070
9,834
Operating lease cost
154,797
Total lease cost
$
164,631
Other lease information:
Nine months ended
September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from finance leases
$
(1,070
)
Operating cash flows from operating leases
(154,797
)
Financing cash flows from finance leases
(8,341
)
Right-of-use assets obtained in exchange for new finance leases
15,043
Right-of-use assets disposed of under operating leases prior to lease maturity
(32,337
)
Weighted average remaining lease term – finance leases
3.67 years
Weighted average remaining lease term – operating leases
3.61 years
Weighted average discount rate – finance leases
3.50
%
Weighted average discount rate – operating leases
3.53
%
Maturity of Leases
Finance lease liability
The amount of future minimum lease payments
under finance leases are as follows:
Amount
2019
$
3,631
2020
13,223
2021
10,116
2022
8,439
2023
6,762
2024
784
Total undiscounted minimum future lease payments
42,955
Imputed interest
(3,110
)
Total finance lease liability
$
39,845
Disclosed as:
Current portion
$
3,002
Non-Current portion
36,843
$
39,845
Operating lease liability
The amount of future minimum lease payments
under operating leases are as follows:
The entire disclosure for operating leases of lessee. Includes, but is not limited to, description of operating lease and maturity analysis of operating lease liability.
Investments in non-consolidated entities consists
of 2,500,000 shares of Zoompass Holdings (“Zoompass”) and is accounted for at fair value, with changes recognized into
earnings in accordance with ASU 2016-1, “Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement
of Financial Assets and Financial Liabilities.”
On September 30, 2019, the shares of Zoompass
were last quoted at $0.15 per share on the OTC market, resulting in an unrealized gain recorded to earnings related to these securities
of $125,000 and $100,000 for the three and nine months ended September 30, 2019, respectively.
The entire disclosure for investments accounted for under the cost-method. The carrying amount of such investments may be adjusted, for example, distributions in excess of cost (return of capital) or for other-than-temporary impairments. The cost method and lower-of-cost or market, an adaptation of the cost method, is generally followed for most investments in noncontrolled corporations, in some corporate joint ventures, and to a lesser extent in unconsolidated subsidiaries in which the entity does not have the ability to exercise significant influence.
The Company evaluates intangible assets for
impairment on an quarterly basis during the last month of each year and at an interim date if indications of impairment exist.
Intangible asset impairment is determined by comparing the fair value of the asset to its carrying amount with an impairment being
recognized only when the fair value is less than carrying value. The Company recorded approximately $511,929 and $342,498 in amortization
expense for the finite-lived assets for the nine months ended September 30, 2019 and September 30, 2018 respectively.
Licenses obtained by the Company in the acquisitions
of Multigioco and Rifa include a Gioco a Distanza (“GAD”) online license as well as a Bersani and Monti land-based
licenses issued by the Italian gaming regulator (ADM) to Multigioco and Rifa, respectively, as well as an Austrian Bookmaker License
through the acquisition of Ulisse.
The Company believes that the carrying amounts
of its intangible assets are recoverable. However, if adverse events were to occur or circumstances were to change indicating that
the carrying amount of such assets may not be fully recoverable, the assets would be reviewed for impairment and the assets could
be impaired.
Restricted cash is cash held in a segregated
bank account at Intesa Sanpaolo Bank S.p.A. (“Intesa Sanpaolo Bank”) as collateral against a bank loan with Intesa
Sanpaolo Bank as well as Wirecard Bank as a security deposit for Ulisse betting operations. In addition, the Company maintains
a $1,000,000 deposit at Metropolitan Commercial bank held as security against a $1,000,000 line of credit. See Note 10.
Entity's cash and cash equivalents accounting policy with respect to restricted balances. Restrictions may include legally restricted deposits held as compensating balances against short-term borrowing arrangements, contracts entered into with others, or company statements of intention with regard to particular deposits; however, time deposits and short-term certificates of deposit are not generally included in legally restricted deposits.
The Company currently maintains an operating
line of credit for a maximum amount of €300,000 (approximately $340,000) for Multigioco and €50,000 (approximately $57,000)
for Rifa from Intesa Sanpaolo Bank in Italy. The line of credit is secured by restricted cash on deposit at Intesa Sanpaolo Bank
and guaranteed by certain shareholders of the Company and bears a fixed rate of interest at 5% per annum on the outstanding balance
with no minimum payment, maturity or due date.
In addition, the Company maintains a $1,000,000
secured revolving line of credit from Metropolitan Commercial Bank in New York, which bears a fixed rate of interest of 3.00% on
the outstanding balance with an interest only monthly minimum payment, no maturity or due date and is secured by a $1,000,000 security
deposit, see Note 9.
The Company had three promissory notes entered
into in 2015 and 2016 with a related party with an aggregate principal amount outstanding of $318,078. The promissory notes bore
interest at 12% per annum and were due on demand.
On September 4, 2019, in terms of an agreement
entered into with the note holder, the promissory notes amounting to $318,078 together with interest thereon of $139,383, totaling
$457,461 were exchanged for 1,143,652 shares of common stock.
In terms of the acquisition of Virtual Generation
Limited on January 31, 2019, disclosed in Note 5 above, the Company issued a non-interest bearing promissory note in the principal
amount of €3,803,000 owing to both related parties and non-related parties. The value of the promissory note payable to non-related
parties was €2,281,800 and to related parties was €1,521,200.
The promissory note is to be settled as follows:
(a)
an aggregate of €956,800 in cash in 23 equal and consecutive monthly instalments of €41,600 with the first such payment due and payable on the date that is one month after the Closing Date; and
(b)
an aggregate of €564,400 in shares of the Company’s common stock in 17 equal and consecutive monthly instalments of €33,200 as determined by the average of the closing prices of such shares on the last 10 trading days immediately preceding the determination date of each monthly issuance, commencing on March 1, 2019.
The future payments on the promissory note
was discounted to present value using the Company’s average cost of funding of 10%. The discount is being amortized over
the repayment period of the promissory note using the effective interest rate method.
The movement on notes payable consists of the
following:
Description
September 30, 2019
Principal Outstanding
Opening balance
$
318,078
Promissory note due to non-related parties
1,830,541
Settled by the issuance of common shares
(618,982
)
Repayment in cash
(213,353
)
Foreign exchange movements
(69,414
)
1,246,870
Accrued Interest
Opening balance
113,553
Interest expense
25,830
Settled by the issuance of common shares
(139,383
)
—
Present value discount on future payments
Present value discount
(161,393
)
Amortization
56,604
Foreign exchange movements
5,882
(98,907
)
Notes payable – Related Party, net
$
1,147,963
Disclosed as follows:
Current liability
$
984,811
Long term liability
163,152
Notes payable – Related Party, net
$
1,147,963
Advances from Stockholders
Advances from stockholders represent non-interest-bearing
loans that are due on demand.
Advances from stockholders are as follows:
September 30, 2019
December 31, 2018
Gold Street Capital Corp.
$
8,019
$
39,237
Amounts due to Gold Street Capital Corp., the
major stockholder of Newgioco Group, are for reimbursement of expenses. During the three and nine months ended September 30, 2018,
the Company paid management fees of $36,000 and $72,000 to Gold Street Capital Corp and no management fees during the three and
nine months ended September 30, 2019, respectively.
During the nine months ended September 30,
2018, the Company paid management fees of approximately $6,000 to our VP Technology and director, Luca Pasquini.
The entire disclosure for related party transactions. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates.
Effective December 12, 2019,
the Company performed a 1 for 8 reverse stock split. All equity issuances and references to equity have been adjusted to take into
account the reverse stock split.
The Company issued the following shares of
common stock to promissory note holders in terms of the agreement entered into for the acquisition of Virtual Generation Limited,
as disclosed in Note 5 above:
·
On January 30, 2019, 32,450 shares of common stock valued at $101,763;
·
On March 1, 2019, 32,847 shares of common stock valued at $101,249;
·
On April 1, 2019, 29,975 shares of common stock valued at $86,328;
·
On May 1, 2019, 33,105 shares of common stock valued at $93,018;
·
On June 1, 2019, 27,256 shares of common stock valued at $92,961;
·
On July 1, 2019, 35,751 shares of common stock valued at $93,875;
·
On August 1, 2019, 35,048 shares of common stock valued at $91,810;
·
On September 1, 2019, 33,353 shares of common stock valued at $91,255.
For the nine months ended September 30, 2019,
the Company issued a total of 513,485 shares of common stock, valued at $1,642,612, upon the conversion of convertible debentures
into equity (Note 13).
On April 22, 2019, the Company issued 14,083
shares of common stock, valued at $45,066, to certain convertible debenture holders as an incentive for them to transfer their
convertible debentures to another investor.
Between September 4, 2019 and September 17,
2019, the Company issued 284,720 shares of common stock, valued at $728,884 in settlement of promissory notes amounting to $457,461
and other liabilities amounting to $553,525.
The entire disclosure for shareholders' equity and share-based payment arrangement. Includes, but is not limited to, disclosure of policy and terms of share-based payment arrangement, deferred compensation arrangement, and employee stock purchase plan (ESPP).
In Terms of the acquisition of Virtual Generation
Limited on January 31, 2019, disclosed in Note 5 above, the Company issued a non-interest bearing promissory note of €3,803,000
owing to both related parties and non-related parties. The value of the promissory note payable related parties was €1,521,200
and to non-related parties was €2,281,800.
The promissory note payable to non-related
parties is to be settled as follows:
(a)
an aggregate of €1,435,200 in cash in 23 equal and consecutive monthly instalments of €62,400 with the first such payment due and payable on the date that is one month after the Closing Date; and
(b)
an aggregate of €846,600 in shares of the Company’s common stock in 17 equal and consecutive monthly instalments of €49,800 as determined by the average of the closing prices of such shares on the last 10 trading days immediately preceding the determination date of each monthly issuance, commencing on March 1, 2019.
The future payments on the promissory note
was discounted to present value using the Company’s average cost of funding of 10%. The discount is being amortized over
the repayment period of the promissory note using the effective interest rate method.
The movement on notes payable consists of the
following:
The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.
In September 2016, the Company obtained a loan
of €500,000 (approximately $580,000) from Intesa Sanpaolo Bank in Italy, which loan is secured by the Company's assets. The
loan has an underlying interest rate of 4.5 points above the Euro Inter Bank Offered Rate, subject to quarterly review and is amortized
over 57 months ending March 31, 2021. Monthly repayments of €9,760 began in January 2017.
The Company made payments of €58,560 (approximately
$66,146) for the nine months ended September 30, 2019 which included principal of approximately $52,239 (approximately $59,007)
and interest of €6,321 (approximately $7,140) for the nine months ended September 30, 2019.
In connection with the private placement agreements
entered into with accredited investors in the first and second quarter of 2018, for each $1,000 debenture unit the Company issued
two-year warrants to purchase up to 135,28 shares of the Company’s common stock and for each CDN $1,000 debenture unit the
Company issued two-year warrants to purchase up to 104.06 shares of the Company’s common stock at an exercise price of $4.00
per share.
A summary of all of the Company’s warrant activity during
the period January 1, 2018 to September 30, 2019 is as follows:
Number of shares
Exercise price per share
Weighted average exercise price
Outstanding January 1, 2018
76,566
$
4.32
$
4.32
Granted
1,096,224
4.00
4.00
Forfeited/cancelled
(27,000
)
5.04
(5.04
)
Exercised
(40,761
)
4.64
4.64
Expired
(15,555
)
4.64
4.64
Outstanding December 31, 2018
1,089,474
$
4.00
4.00
Granted
—
—
—
Forfeited/cancelled
—
—
—
Exercised
—
—
—
Outstanding September 30, 2019
1,089,474
$
4.00
$
4.00
The following tables summarize information about warrants outstanding
as of September 30, 2019:
In September 2018, the Company’s stockholders
approved our 2018 Equity Incentive Plan, which provides for a maximum of 1,150,000 awards that can be issued as options, stock
appreciation rights, restricted stock, stock units, other equity awards or cash awards. No awards were granted under the 2018 Equity
Incentive Plan as of December 31, 2018. During July 2019, the Company issued an aggregate of 95,313 options to purchase common
stock, of which options to purchase 25,000 shares of common stock were issued to its Chief Financial Officer, options to purchase
39,375 shares of common stock were issued to its Chief Executive Officer and options to purchase 30,938 shares of common stock
were issued to directors. During August 2019, the Company issued an aggregate of 150,000 options to purchase shares of common stock
of which options to purchase 25,000 shares of common stock were issued to each of Michele Ciavarella, its Chief Executive Officer,
Alessandro Marcelli, its Vice President of Operations, Luca Pasquini, its Vice President of Technology, Gabriele Peroni, its Vice
President Business Development, Franco Salvagni, its Vice President of Land-based Operations and Beniamino Gianfelici, its Vice
President Regulatory Affairs As of September 30, 2019, there was an aggregate of 245,313 options to purchase shares of common stock
granted under our 2018 Equity Incentive Plan and 904,687 reserved for future grants.
The options awarded during the three and nine
months ended September 30, 2019 were valued using a Black-Scholes option pricing model.
The following assumptions were used in the
Black-Scholes model:
Nine months ended
September 30,
2019
Exercise price
$
2.72 to 2.96
Risk free interest rate
1.50 to 2.04
%
Expected life of options
7 to 10 years
Expected volatility of underlying stock
237.4 to 247.9
%
Expected dividend rate
0
%
A summary of all of the Company’s option activity during the
period January 1, 2018 to September 30, 2019 is as follows:
Number of shares
Exercise price per share
Weighted average exercise price
Granted
245,313
$2.72 to $2.96
$
2.86
Forfeited/cancelled
—
—
—
Exercised
—
—
—
Outstanding September 30, 2019
245,313
$2.72 to $2.96
$
2.86
The following tables summarize information about stock options outstanding
as of September 30, 2019:
Options outstanding
Options exercisable
Exercise price
Number of shares
Weighted
average
remaining years
Weighted
Average
exercise price
Number of shares
Weighted
average
exercise price
$
2.72
25,000
6.75
—
$
2.80
150,000
9.92
3,125
$
2.96
70,313
9.77
18,281
245,313
9.55
$
2.86
21,406
$
2.96
The weighted-average grant-date fair values of options granted during
the nine months ended September 30, 2019 was $701,957 ($2.86 per share).
The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.
The following table represents disaggregated
revenues from our gaming operations for the three and nine months ended September 30, 2019 and 2018. Net Gaming Revenues represents
Turnover (also referred to as “Handle”), the total bets processed for the period, less customer winnings paid out,
commissions paid to agents, and taxes due to government authorities, while Commission Revenues represents commissions on lotto
ticket sales and Service Revenues is revenue invoiced for our ELYS software service and royalties invoiced for the sale of virtual
products.
The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts.
Basic loss per share is based on the weighted-average
number of common shares outstanding during each period. Diluted loss per share is based on basic shares as determined above, plus
the incremental shares that would be issued upon the assumed exercise of “in-the-money” warrants using the treasury
stock method and the inclusion of all convertible securities, including convertible debentures, assuming these securities were
converted at the beginning of the period or at the time of issuance, if later. The computation of diluted net loss per share does
not assume the issuance of common shares that have an anti-dilutive effect on net loss per share.
For the three months and nine months ended
September 30, 2019 and 2018, the following warrants and convertible debentures were excluded from the computation of diluted loss
per share as the result of the computation was anti-dilutive:
The Company is incorporated in the United States
of America and is subject to United States federal taxation. No provisions for income taxes have been made as the Company had no
U.S. taxable income for the nine months ended September 30, 2019 and September 30, 2018.
The Company's Italian subsidiaries are governed
by the income tax laws of Italy. The corporate tax rate in Italy is 28.82% (IRES at 24% plus IRAP ordinary at 4.82%) on income
reported in the statutory financial statements after appropriate tax adjustments.
The Company's Austrian subsidiaries are governed
by the income tax laws of Austria. The corporate tax rate in Austria is 25% on income reported in the statutory financial statements
after appropriate tax adjustments.
The Company's Canadian subsidiary is governed
by the income tax laws of Canada and the Province of Ontario. The combined Federal and Provincial corporate tax rate in Canada
is 26.5% on income reported in the statutory financial statements after appropriate tax adjustments.
On December 22, 2017, the President of the
United States signed into law Public Law No. 115-97, commonly referred to as the Tax Reform Act, following its passage by the United
States Congress. The Tax Act made significant changes to U.S. federal income tax laws, including reduction of the corporate tax
rate from 35.0% to 21.0%, limitation of the deduction for net operating losses to 80.0% of current year taxable income and elimination
of net operating loss carrybacks, one-time taxation of offshore earning at reduced rates regardless of whether they are repatriated,
elimination of U.S. tax on foreign earnings (subject to certain important exceptions), immediate deductions for certain new investments
instead of deductions for depreciation expense over time, and modifying or repealing many business deductions.
The Company continues to evaluate the accounting
for uncertainty in tax positions at the end of each reporting period. The guidance requires companies to recognize in their financial
statements the impact of a tax position if the position is more likely than not of being sustained if the position were to be challenged
by a taxing authority. The position ascertained inherently requires judgment and estimates by management.
The Company has accumulated a net operating
loss carry forwards (“NOL”) of approximately $4.0 million as of December 31, 2018 and continues to have losses from
operations. As part of the Tax Act, NOL’s generated in 2018 and later are not subject to an expiration period and are available
to offset 80% of taxable income in the year in which they are utilized. The federal and state NOL carryforwards generated prior
to 2018 will begin to expire in 2026. For the nine months ended September 30, 2019 the Company recorded additional losses and the
possibility of future cumulative losses still exists. Accordingly, the Company has continued to maintain a valuation allowance
against its net deferred tax assets.
Under Italian tax law, the operating loss carryforwards
available for offset against future profits can be used indefinitely. Operating loss carryforwards are only available for offset
against national income tax, up to the limit of 80% of taxable annual income. This restriction does not apply to the operating
loss incurred in the first three years of the Company's activity, which are therefore available for 100% offsetting.
Under Austrian tax law, the operating loss
carryforwards available for offset against future profits can be used indefinitely. Operating loss carryforwards are only available
for offset against national income tax, up to the limit of 75% of taxable annual income.
Under Canadian tax law, the operating loss
carryforwards available for offset against future profits can be used indefinitely.
The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.
Subsequent to the period covered by this report,
the principal amount of $100,000 and CDN $1,193,965 (approximately $898,340) of outstanding convertible debentures plus accrued
interest was presented to the Company for conversion into approximately 368,992 shares of common stock.
Other than disclosed above, the Company has
evaluated subsequent events through the date the financial statements were issued and did not identify any other subsequent events
that would have required adjustment or disclosure in the financial statements.
The entire disclosure for significant events or transactions that occurred after the balance sheet date through the date the financial statements were issued or the date the financial statements were available to be issued. Examples include: the sale of a capital stock issue, purchase of a business, settlement of litigation, catastrophic loss, significant foreign exchange rate changes, loans to insiders or affiliates, and transactions not in the ordinary course of business.
Established in the state of Delaware in 1998,
Newgioco Group, Inc. (“Newgioco Group” or the “Company”) is an international, vertically integrated commercial-stage
company engaged in various aspects of the leisure gaming industry. The Company is a licensed gaming operator in the regulated Italian
leisure betting market offering gaming services, including a variety of lottery, casino gaming and sports betting products through
two distribution channels: an online channel and a land-based retail channel. Additionally, the Company is a global gaming technology
company (known as a “Provider”), which owns and operates a betting software designed with a unique “distributed
model” (“shop-client”) software architecture colloquially named Elys Game Board (the “Platform”).
The Platform is a fully integrated “omni-channel” framework that combines centralized technology updating, servicing
and operation with multi-channel functionality to accept all forms of customer payment through the two distribution channels described
above. The omni-channel software design is fully integrated with a built-in player gaming account management system and sports
book.
The Company’s subsidiaries include: Multigioco
Srl (“Multigioco”), acquired on August 15, 2014, Rifa Srl (“Rifa”), acquired on January 1, 2015, and Ulisse
GmbH (“Ulisse”) and Odissea Betriebsinformatik Beratung GmbH (“Odissea”) which were both acquired on July
1, 2016, Virtual Generation Limited (“VG”) and Naos Holding Limited, acquired on January 30, 2019 and two non-operating
subsidiaries Newgioco Group, Inc. based in Canada and Elys Technology Group Limited based in Malta.
The Company operates in one line of business
that provides certified betting Platform software services to and the operating of leisure betting establishments situated throughout
Italy and in 11 other countries. The Company’s operations are carried out through the following three geographically organized
groups :
a)
an operational group is based in Europe and maintains administrative offices headquartered in Rome, Italy with sub offices for operations administration in Naples and Teramo, Italy and Valetta, Malta;
b)
a technology group which is based in Innsbruck, Austria and manages software development, training and administration; and
c)
a corporate group which is based in North America and operates out of our principal executive offices in Toronto, Canada and sub offices in Fort Lauderdale and Boca Raton, Florida a through which we carry-out corporate activities, handle day-to-day reporting and U.S. development planning, and through which various independent contractors and vendors are engaged.
The entire disclosure for the nature of an entity's business, major products or services, principal markets including location, and the relative importance of its operations in each business and the basis for the determination, including but not limited to, assets, revenues, or earnings. For an entity that has not commenced principal operations, disclosures about the risks and uncertainties related to the activities in which the entity is currently engaged and an understanding of what those activities are being directed toward.
The accompanying unaudited
consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United
States (“GAAP”) for interim financial information and the rules and regulations of the Securities and Exchange Commission.
Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation
have been included. Operating results for the three and nine months ended September 30, 2019 are not necessarily indicative of the results
that may be expected for the fiscal year ending December 31, 2019. The balance sheet at December 31, 2018 has been derived from
the Company’s audited consolidated financial statements at that date but does not include all of the information and footnotes
required by U.S. GAAP for complete financial statements. For further information, please refer to the consolidated financial statements
and footnotes thereto included in the Company’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2018, as
filed with the U.S. Securities and Exchange Commission (“SEC”).
All amounts referred to in
the Notes to the unaudited condensed consolidated financial statements are in United States Dollars ($) unless stated otherwise.
The unaudited condensed consolidated
financial statements include the financial statements of the Company and its subsidiaries in which it has at least a majority voting
interest. All significant inter-company accounts and transactions have been eliminated in the unaudited condensed consolidated
financial statements. The entities included in these unaudited condensed consolidated financial statements are as follows:
The Company's subsidiaries
operate in Europe with a functional currency of Euro and in Canada with a functional currency of Canadian dollars. In the consolidated
financial statements, revenue and expense accounts are translated at the average rates during the period, assets and liabilities
are translated at period-end rates and equity accounts are translated at historical rates. Translation adjustments arising from
the use of different exchange rates from period to period are included as a component of stockholders' equity. Gains and losses
from foreign currency transactions are recognized in current operations.
The preparation of the unaudited financial
statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts
of revenue and expenses during the reporting periods. Actual results could differ from those estimates. These estimates and assumptions
include valuing equity securities issued in share-based payment arrangements, determining the fair value of assets acquired, allocation
of purchase price, impairment of long-lived assets, the collectability of receivables and the value of deferred taxes and related
valuation allowances. Certain estimates, including evaluating the collectability of receivables and advances, could be affected
by external conditions, including those unique to our industry and general economic conditions. It is possible that these external
factors could have an effect on our estimates that could cause actual results to differ from our estimates. We re-evaluate all
of our accounting estimates at least quarterly based on these conditions and record adjustments when necessary.
The Company may be subject to claims, suits,
government investigations, and other proceedings involving competition and antitrust, intellectual property, privacy, indirect
taxes, labor and employment, commercial disputes, content generated by our users, goods and services offered by advertisers or
publishers using our website platforms, and other matters. Certain of these matters include speculative claims for substantial
or indeterminate amounts of damages. The Company records a liability when we believe that it is both probable that a loss has been
incurred, and the amount can be reasonably estimated. If we determine that a loss is possible, and a range of the loss can be reasonably
estimated, we disclose the range of the possible loss in the Notes to the Consolidated Financial Statements.
The Company evaluates, on a monthly basis,
developments in our legal matters that could affect the amount of liability that has been previously accrued, and the matters and
related ranges of possible losses disclosed and make adjustments and changes to our disclosures as appropriate. Significant judgment
is required to determine both likelihood of there being and the estimated amount of a loss related to such matters. Until the final
resolution of such matters, there may be an exposure to loss in excess of the amount recorded, and such amounts could be material.
Should any of our estimates and assumptions change or prove to have been incorrect, it could have a material impact on our business,
consolidated financial position, results of operations, or cash flows.
To date, none of these types of litigation
matters, most of which are typically covered by insurance, has had a material impact on our operations or financial condition.
The Company has insured and continue to insure against most of these types of claims.
The Company does not use
derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its financial
instruments, including convertible debentures and stock purchase warrants, to determine if such instruments are derivatives or contain
features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the
derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the
fair value reported as charges or credits to income.
For option-based simple derivative
financial instruments, the Company uses the Black-Scholes option-pricing model to value the derivative instruments at inception
and subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded
as liabilities or as equity, is re-assessed at the end of each reporting period.
As a result of the adoption
of ASU 2017-11 in the third quarter of 2018, the Company has no derivative financials instruments classified as a liability at
September 30, 2019 and December 31, 2018.
The Company allocates the
fair value of purchase consideration to the tangible and intangible assets acquired and liabilities assumed based on their estimated
fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities
is recorded as goodwill.
Such valuations require management
to make significant estimates and assumptions, especially with respect to intangible assets. Significant estimates in valuing certain
intangible assets include, but are not limited to, future expected cash flows from acquired users, acquired technology, and trade
names from a market participant perspective, useful lives and discount rates. Management's estimates of fair value are based upon
assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may
differ from estimates.
ASC Topic 820, Fair Value
Measurement and Disclosures, defines fair value as the exchange price that would be received for an asset or paid to transfer a
liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between
market participants on the measurement date. This topic also establishes a fair value hierarchy which requires classification based
on observable and unobservable inputs when measuring fair value. There are three levels of inputs that may be used to measure fair
value:
Level 1: Observable inputs such as quoted prices
(unadjusted) in active markets for identical assets or liabilities.
Level 2: Inputs other than quoted prices that
are observable, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets
and quoted prices for identical or similar assets or liabilities in markets that are not active.
Level 3: Unobservable inputs in which little or
no market data exists, therefore developed using estimates and assumptions developed by us, which reflect those that a market participant
would use.
The carrying value of the Company's short-term
investments, prepaid expenses, accounts receivables, other current assets, accounts payable and accrued liabilities, gaming account
balance, and advances from shareholder approximate fair value because of the short-term maturity of these financial instruments.
The Company considers all highly liquid debt instruments
with maturities of three months or less at the time acquired to be cash equivalents. The Company had no cash equivalents as of
September 30, 2019 and December 31, 2018.
The Company primarily places cash with high-credit
quality financial institutions located in the United States which are insured by the Federal Deposit Insurance Corporation up to
a limit of $250,000 per institution, in Canada which are insured by the Canadian Deposit Insurance Corporation up to a limit of
CDN$100,000 per institution, in Italy which is insured by the Italian deposit guarantee fund Fondo Interbancario di Tutela dei
Depositi (FITD) up to a limit of €100,000 per institution, and in Germany which is a member of the Deposit Protection Fund of
the Association of German Banks (Einlagensicherungsfonds des Bundesverbandes deutscher Banken) up to a limit of €100,000 per
institution.
Gaming accounts receivable represent gaming
deposits made by customers to their online gaming accounts either directly by credit card, bank wire, e-wallet or other accepted
method through one of our websites or indirectly by cash collected at the cashier of a betting shop but not yet credited to the
Company’s bank accounts and subject to normal trade collection terms without discounts. The Company periodically evaluates
the collectability of its gaming accounts receivable and considers the need to record or adjust an allowance for doubtful accounts
based upon historical collection experience and specific customer information. Actual amounts could vary from the recorded estimates.
The Company does not require collateral to support customer receivables. The Company recorded bad debt expense $0 and $0 for the
three months ended September 30, 2019 and 2018, respectively, and $0 and $0 for the nine months ended September 30, 2019 and 2018,
respectively. All balances previously recorded as allowance for doubtful accounts were written off as uncollectible.
Gaming accounts payable represent
customer balances, including winnings and deposits, that are held as credits in online gaming accounts and have not as of yet been
used or withdrawn by the customers. Customers can request payment from the Company at any time and the payment to customers can
be made through bank wire, credit card, or cash disbursement from one of our locations. Online gaming account credit balances are
non-interest bearing.
The Company evaluates the
carrying value of our long-lived assets for impairment by comparing the expected undiscounted future cash flows of the assets to
the net book value of the assets when events or circumstances indicate that the carrying amount of a long-lived asset may not be
recoverable. If the expected undiscounted future cash flows are less than the net book value of the assets, the excess of the net
book value over the estimated fair value will be charged to earnings.
Fair value is based upon
discounted cash flows of the assets at a rate deemed reasonable for the type of asset and prevailing market conditions, appraisals,
and, if appropriate, current estimated net sales proceeds from pending offers.
Property, plant and equipment
are stated at acquisition cost less accumulated depreciation and adjustments for impairment losses. Expenditures are capitalized
only when they increase the future economic benefits embodied in an item of property, plant and equipment. All other expenditures
are recognized as expenses in the statement of income as incurred.
Depreciation is charged on
a straight-line basis over the estimated remaining useful lives of the individual assets. Amortization commences from the time
an asset is put into operation. The range of the estimated useful lives is as follows:
Intangible assets are stated
at acquisition cost less accumulated amortization, if applicable, less any adjustments for impairment losses.
Amortization is charged on
a straight-line basis over the estimated remaining useful lives of the individual intangibles. Where intangibles are deemed to
be impaired the Company recognizes an impairment loss measured as the difference between the estimated fair value of the intangible
and its book value.
The range of the estimated
useful lives is as follows:
Description
Useful Life (in years)
Betting Platform Software
15
Ulisse Bookmaker License
—
Multigioco and Rifa ADM Licenses
1.5 - 7
VG Licenses
—
Location contracts
5 - 7
Customer relationships
10 - 15
Trademarks/names
14
Websites
5
The Ulisse Bookmaker License
and the VG Licenses have no expiration date and are therefore not amortized.
The Company allocates the
fair value of purchase consideration to the tangible and intangible assets acquired and liabilities assumed based on their estimated
fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities
is recorded as goodwill.
Such valuations require management
to make significant estimates and assumptions, especially with respect to intangible assets. Significant estimates in valuing certain
intangible assets include, but are not limited to, future expected cash flows from acquired users, acquired technology, and trade
names from a market participant perspective, useful lives and discount rates. Management's estimates of fair value are based upon
assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may
differ from estimates.
The Company annually assesses whether the carrying value of its intangible assets exceeds their fair value and, if necessary,
records an impairment loss equal to any such excess. Each interim reporting period, the Company assesses whether events or circumstances
have occurred which indicate that the carrying amount of an intangible asset exceeds its fair value. If the carrying amount of
the intangible asset exceeds its fair value, an asset impairment charge will be recognized in an amount equal to that excess.
No asset impairment charges were incurred during the three and nine months ended September 30, 2019 or September 30, 2018. $1,401,608 of goodwill
was recorded as part of an acquisition during the nine months ended September 30, 2019.
The Company uses the asset
and liability method of accounting for income taxes in accordance with ASC Topic 740, “Income Taxes.” Under this method,
income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year and (ii) deferred tax
consequences of temporary differences resulting from matters that have been recognized in an entity's financial statements or tax
returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years
in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities
of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation
allowance is provided to reduce the deferred tax assets reported if based on the weight of the available positive and negative
evidence, it is more likely than not some portion or all of the deferred tax assets will not be realized.
ASC Topic 740-10-30
clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements and prescribes a
recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position
taken or expected to be taken in a tax return. ASC Topic 740.10.40 provides guidance on derecognition, classification,
interest and penalties, accounting in interim periods, disclosure, and transition. We have no material uncertain tax
positions for any of the reporting periods presented.
The Company has elected to
include interest and penalties related to uncertain tax positions, if determined, as a component of income tax expense.
In Italy, tax years beginning
2015 forward, are open and subject to examination, while in Austria companies are open and subject to inspection for five years
and ten years for inspection of serious infractions. In the United States and Canada, tax years beginning 2015 forward, are subject
to examination. The Company is not currently under examination and it has not been notified of a pending examination.
In May 2014, the FASB issued
Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers (Topic 606),” which
requires revenue to be recognized when promised goods or services are transferred to customers in an amount that reflects the consideration
that is expected to be received for those goods or services. The Company adopted ASC Topic 606 on January 1, 2018 and has determined
that the standard does not have a material impact on the nature and timing of revenues recognized.
The Company recognizes revenue
when control of its products and services is transferred to its customers in an amount that reflects the consideration the Company
expects to receive from its customers in exchange for those products and services. Revenues from sports-betting, casino, cash and
skill games, slots, bingo and horse race wagers represent the gross pay-ins (also referred to as turnover) from customers less
gaming taxes and payouts to customers. Revenues are recorded when the game is closed which is representative of the point in time
at which the Company has satisfied its performance obligation. In addition, the Company receives commissions from the sale of scratch
tickets and other lottery games. Commissions are recorded when the ticket for scratch off tickets and lottery tickets are sold.
Revenues from the Platform
include license fees, training, installation, and product support services. Revenue is recognized when transfer of control to the
customer has been made and the Company’s performance obligation has been fulfilled. License fees are calculated as a percentage
of each licensee’s level of activity and are contingent upon the licensee’s usage. The license fees are recognized
on an accrual basis as earned.
The Company records its compensation
expense associated with stock options and other forms of equity compensation based on their fair value at the date of grant using
the Black-Scholes option pricing model. Stock-based compensation includes amortization related to stock option awards based
on the estimated grant date fair value. Stock-based compensation expense related to stock options is recognized ratably over the
vesting period of the option. In addition, the Company records expense related to Restricted Stock Units (“RSU’s”)
granted based on the fair value of those awards on the grant date. The fair value related to the RSUs is amortized to expense over
the vesting term of those awards. Forfeitures of stock options and RSUs are recognized as they occur.
Stock-based compensation
expense for a stock-based award with a performance condition is recognized when the achievement of such performance condition is
determined to be probable. If the outcome of such performance condition is not determined to be probable or is not met, no compensation
expense is recognized and any previously recognized compensation expense is reversed.
Comprehensive income (loss)
is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances
from non-owner sources, including foreign currency translation adjustments and unrealized gains and losses on marketable securities.
The Company adopted FASB
ASC 220-10-45, “Reporting Comprehensive Income”. ASC 220-10-45 establishes standards for reporting and presentation
of comprehensive income and its components in a full set of financial statements. Comprehensive income consists of net income and
unrealized gains (losses) on available for sale marketable securities and; foreign currency translation adjustments.
Financial Accounting Standards
Board (“FASB”) Accounting Standards Codification (“ASC”) 260, “Earnings Per Share” provides
for calculation of “basic” and “diluted” earnings per share. Basic earnings per share includes no dilution
and is computed by dividing net income (loss) available to common shareholders by the weighted average common shares outstanding
for the period. Diluted earnings per share reflects the potential dilution of securities that could share in the earnings of an
entity and include warrants granted and convertible debentures.
Parties are considered to
be related to the Company if the parties directly or indirectly, through one or more intermediaries, control, are controlled by,
or are under common control with the Company. Related parties also include principal owners of the Company, its management, members
of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal
if one party controls or can significantly influence the management or operating policies of the other to an extent that one of
the transacting parties might be prevented from fully pursuing its own separate interests. The Company discloses all related party
transactions. All transactions are recorded at fair value of the goods or services exchanged.
In August 2018, the FASB
issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair
Value Measurement. The purpose of this updated guidance is to improve the effectiveness and disclosures in the Notes to the financial
statements. The ASU removes the requirement to disclose the amount of and reasons for transfers between Level 1 and Level 2 of
the fair value hierarchy; removes the policy for timing of transfers between levels; and removes the disclosure related to the
valuation process for Level 3 fair value measurements. The ASU also modifies existing disclosure requirements which relate to the
disclosure for investments in certain entities which calculate net asset value and clarifies the disclosure about uncertainty in
the measurements as of the reporting date. For all entities, the effective date for this guidance is fiscal years beginning after
December 15, 2019, including interim periods within the reporting period, with early adoption permitted. Entities are also allowed
to elect early adoption of the eliminated or modified disclosure requirements and delay adoption of the new disclosure requirements
until their effective date. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements.
In January 2017, the FASB
issued ASU No. 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The main objective
of this guidance is to simplify the accounting for goodwill impairment by requiring that impairment charges be based upon the
first step in the current two-step impairment test under ASC 350. Currently, if the fair value of a reporting unit is lower than
its carrying amount (Step 1), an entity calculates any impairment charge by comparing the implied fair value of goodwill with
its carrying amount (Step 2). The implied fair value of goodwill is calculated by deducting the fair value of all assets and liabilities
of the reporting unit from the reporting unit’s fair value as determined in Step 1. To determine the implied fair value
of goodwill, entities estimate the fair value of any unrecognized intangible assets and any corporate-level assets or liabilities
that were included in the determination of the carrying amount and fair value of the reporting unit in Step 1. Under this guidance,
if a reporting unit’s carrying amount exceeds its fair value, an entity will record an impairment charge based on that difference.
The impairment charge will be limited to the amount of goodwill allocated to that reporting unit. This guidance eliminates the
requirement to calculate a goodwill impairment charge using Step 2. This guidance does not change the guidance on completing Step
1 of the goodwill impairment test. Under this guidance, an entity will still be able to perform the current optional qualitative
goodwill impairment assessment before determining whether to proceed to Step 1. The guidance in the ASU will be applied prospectively
and is effective for the Company for annual and interim impairment tests performed in periods beginning after December 15, 2019.
The Company does not expect the adoption of this ASU to have a significant impact on its consolidated financial statements.
In
February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 requires that a lessee recognize the assets and liabilities
that arise from operating leases. A lessee should recognize in the statement of financial position a liability to make lease payments
(the lease liability) and a right of use asset representing its right to use the underlying asset for the lease term. For leases
with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not
to recognize lease assets and lease liabilities. In transition, lessees and lessors are required to recognize and measure leases
at the beginning of the earliest period presented using a modified retrospective approach. Public business entities should apply
the amendments in ASU 2016-02 for fiscal years beginning after December 15, 2018, including interim periods within those fiscal
years. Early application is permitted for all public business entities and all nonpublic business entities upon issuance.
The Company has reviewed
all recently issued, but not yet adopted, accounting standards in order to determine their effects, if any, on our consolidated
results of operations, financial position, and cash flows. Based on that review, the Company believes that none of these pronouncements
will have a significant effect on current or future earnings or operations.
Certain items in prior periods
were reclassified to conform to the current period presentation. These reclassifications had no impact on net loss or comprehensive
loss.
Disclosure of accounting policy for basis of accounting, or basis of presentation, used to prepare the financial statements (for example, US Generally Accepted Accounting Principles, Other Comprehensive Basis of Accounting, IFRS).
The entire disclosure for the basis of presentation and significant accounting policies concepts. Basis of presentation describes the underlying basis used to prepare the financial statements (for example, US Generally Accepted Accounting Principles, Other Comprehensive Basis of Accounting, IFRS). Accounting policies describe all significant accounting policies of the reporting entity.
Disclosure of accounting policy for completed business combinations (purchase method, acquisition method or combination of entities under common control). This accounting policy may include a general discussion of the purchase method or acquisition method of accounting (including for example, the treatment accorded contingent consideration, the identification of assets and liabilities, the purchase price allocation process, how the fair values of acquired assets and liabilities are determined) and the entity's specific application thereof. An entity that acquires another entity in a leveraged buyout transaction generally discloses the accounting policy followed by the acquiring entity in determining the basis used to value its interest in the acquired entity, and the rationale for that accounting policy.
Disclosure of accounting policy for cash and cash equivalents, including the policy for determining which items are treated as cash equivalents. Other information that may be disclosed includes (1) the nature of any restrictions on the entity's use of its cash and cash equivalents, (2) whether the entity's cash and cash equivalents are insured or expose the entity to credit risk, (3) the classification of any negative balance accounts (overdrafts), and (4) the carrying basis of cash equivalents (for example, at cost) and whether the carrying amount of cash equivalents approximates fair value.
Disclosure of accounting policy for commitments and contingencies, which may include policies for recognizing and measuring loss and gain contingencies.
Disclosure of accounting policy for salaries, bonuses, incentive awards, postretirement and postemployment benefits granted to employees, including equity-based arrangements; discloses methodologies for measurement, and the bases for recognizing related assets and liabilities and recognizing and reporting compensation expense.
Disclosure of accounting policy regarding (1) the principles it follows in consolidating or combining the separate financial statements, including the principles followed in determining the inclusion or exclusion of subsidiaries or other entities in the consolidated or combined financial statements and (2) its treatment of interests (for example, common stock, a partnership interest or other means of exerting influence) in other entities, for example consolidation or use of the equity or cost methods of accounting. The accounting policy may also address the accounting treatment for intercompany accounts and transactions, noncontrolling interest, and the income statement treatment in consolidation for issuances of stock by a subsidiary.
Disclosure of accounting policy for derivatives entered into for trading purposes and those entered into for purposes other than trading including where and when derivative financial instruments and derivative commodity instruments and their related gains or losses are reported in the entity's statements of financial position, cash flows, and results of operations.
Disclosure of accounting policy for computing basic and diluted earnings or loss per share for each class of common stock and participating security. Addresses all significant policy factors, including any antidilutive items that have been excluded from the computation and takes into account stock dividends, splits and reverse splits that occur after the balance sheet date of the latest reporting period but before the issuance of the financial statements.
Disclosure of accounting policy for fair value measurements of financial and non-financial assets, liabilities and instruments classified in shareholders' equity. Disclosures include, but are not limited to, how an entity that manages a group of financial assets and liabilities on the basis of its net exposure measures the fair value of those assets and liabilities.
Disclosure of accounting policy for (1) transactions denominated in a currency other than the reporting enterprise's functional currency, (2) translating foreign currency financial statements that are incorporated into the financial statements of the reporting enterprise by consolidation, combination, or the equity method of accounting, and (3) remeasurement of the financial statements of a foreign reporting enterprise in a hyperinflationary economy.
Disclosure of accounting policy for goodwill. This accounting policy also may address how an entity assesses and measures impairment of goodwill, how reporting units are determined, how goodwill is allocated to such units, and how the fair values of the reporting units are determined.
Disclosure of accounting policy for income taxes, which may include its accounting policies for recognizing and measuring deferred tax assets and liabilities and related valuation allowances, recognizing investment tax credits, operating loss carryforwards, tax credit carryforwards, and other carryforwards, methodologies for determining its effective income tax rate and the characterization of interest and penalties in the financial statements.
Disclosure of accounting policy for finite-lived intangible assets. This accounting policy also might address: (1) the amortization method used; (2) the useful lives of such assets; and (3) how the entity assesses and measures impairment of such assets.
Disclosure of accounting policy pertaining to new accounting pronouncements that may impact the entity's financial reporting. Includes, but is not limited to, quantification of the expected or actual impact.
Disclosure of accounting policy for long-lived, physical assets used in the normal conduct of business and not intended for resale. Includes, but is not limited to, basis of assets, depreciation and depletion methods used, including composite deprecation, estimated useful lives, capitalization policy, accounting treatment for costs incurred for repairs and maintenance, capitalized interest and the method it is calculated, disposals and impairments.
Disclosure of accounting policy for award under share-based payment arrangement. Includes, but is not limited to, methodology and assumption used in measuring cost.
Disclosure of accounting policy for revenue recognition on short-duration contracts, the timing of revenue recognition, and the bases for determining the amount of revenue recognized.
Disclosure of accounting policy for the use of estimates in the preparation of financial statements in conformity with generally accepted accounting principles.
Tabular disclosure of the characteristics, including initial carrying value, residual amount, weighted average useful life, of finite-lived intangible assets acquired during the period by major class. A major class is composed of intangible assets that can be grouped together because they are similar, either by nature or by their use in the operations of the company.
Tabular disclosure of the nature and effects of a restatement to correct an error in the reported results of operations of prior periods. When prior period adjustments are recorded, the resulting effects (both gross and net of applicable income tax) on the net income of prior periods are disclosed in the annual report for the year in which the adjustments are made, and amended filings of previously issued reports are typically issued.
Tabular disclosure of contingent payment arrangements including the terms that will result in payment and the accounting treatment that will be followed if such contingencies occur, including the potential impact on earnings per share if contingencies are to be settled in common stock of the entity. The description also may include the period over which amounts are expected to be paid, and changes in the amount since the previous reporting period. This also includes contingent options and commitments.
Tabular disclosure of undiscounted cash flows of finance lease liability. Includes, but is not limited to, reconciliation of undiscounted cash flows to finance lease liability recognized in statement of financial position.
Tabular disclosure of lessee's lease cost. Includes, but is not limited to, interest expense for finance lease, amortization of right-of-use asset for finance lease, operating lease cost, short-term lease cost, variable lease cost and sublease income.
Tabular disclosure of undiscounted cash flows of lessee's operating lease liability. Includes, but is not limited to, reconciliation of undiscounted cash flows to operating lease liability recognized in statement of financial position.
Tabular disclosure of assets, excluding financial assets and goodwill, lacking physical substance with a finite life, by either major class or business segment.
Tabular disclosure of debt extinguished which may include, amount of gain (loss), the income tax effect and the per share amount of the aggregate gain (loss), net of the related income tax.
Tabular disclosure of related party transactions. Examples of related party transactions include, but are not limited to, transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners and (d) affiliates.
Tabular disclosure of information on an original debt issue that has been converted in a noncash (or part noncash) transaction during the accounting period. "Part noncash" refers to that portion of the transaction not resulting in cash receipts or cash payments in the period. The information may be presented entirely or partially in this block of text or in the associated elements.
Tabular disclosure of information pertaining to short-term and long-debt instruments or arrangements, including but not limited to identification of terms, features, collateral requirements and other information necessary to a fair presentation.
Tabular disclosure of warrants or rights issued. Warrants and rights outstanding are derivative securities that give the holder the right to purchase securities (usually equity) from the issuer at a specific price within a certain time frame. Warrants are often included in a new debt issue to entice investors by a higher return potential. The main difference between warrants and call options is that warrants are issued and guaranteed by the company, whereas options are exchange instruments and are not issued by the company. Also, the lifetime of a warrant is often measured in years, while the lifetime of a typical option is measured in months. Disclose the title of issue of securities called for by warrants and rights outstanding, the aggregate amount of securities called for by warrants and rights outstanding, the date from which the warrants or rights are exercisable, and the price at which the warrant or right is exercisable.
Tabular disclosure of temporary equity. Temporary equity is a security with redemption features that are outside the control of the issuer, is not classified as an asset or liability in conformity with GAAP, and is not mandatorily redeemable. Includes any type of security that is redeemable at a fixed or determinable price or on a fixed or determinable date or dates, is redeemable at the option of the holder, or has conditions for redemption which are not solely within the control of the issuer. If convertible, the issuer does not control the actions or events necessary to issue the maximum number of shares that could be required to be delivered under the conversion option if the holder exercises the option to convert the stock to another class of equity. If the security is a warrant or a rights issue, the warrant or rights issue is considered to be temporary equity if the issuer cannot demonstrate that it would be able to deliver upon the exercise of the option by the holder in all cases. Includes stock with put option held by ESOP and stock redeemable by holder only in the event of a change in control of the issuer.
Tabular disclosure of assumption used to determine benefit obligation and net periodic benefit cost of defined benefit plan. Includes, but is not limited to, discount rate, rate of compensation increase, expected long-term rate of return on plan assets and interest crediting rate.
Tabular disclosure for stock option plans. Includes, but is not limited to, outstanding awards at beginning and end of year, grants, exercises, forfeitures, and weighted-average grant date fair value.
Tabular disclosure of the number and weighted-average exercise prices (or conversion ratios) for stock options and stock appreciation rights that were outstanding at the beginning and end of the year, exercisable at the end of the year, and the number of stock options and stock appreciation rights that were granted, exercised or converted, forfeited, and expired during the year.
Tabular disclosure of the profit or loss and total assets for each reportable segment. An entity discloses certain information on each reportable segment if the amounts (a) are included in the measure of segment profit or loss reviewed by the chief operating decision maker or (b) are otherwise regularly provided to the chief operating decision maker, even if not included in that measure of segment profit or loss.
Tabular disclosure of an entity's basic and diluted earnings per share calculations, including a reconciliation of numerators and denominators of the basic and diluted per-share computations for income from continuing operations.
Amount of increase in asset representing future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized resulting from a business combination.
Useful life of long lived, physical assets used in the normal conduct of business and not intended for resale, in 'PnYnMnDTnHnMnS' format, for example, 'P1Y5M13D' represents the reported fact of one year, five months, and thirteen days. Examples include, but not limited to, land, buildings, machinery and equipment, office equipment, furniture and fixtures, and computer equipment.
Useful life of finite-lived intangible assets, in 'PnYnMnDTnHnMnS' format, for example, 'P1Y5M13D' represents the reported fact of one year, five months, and thirteen days.
Amount, after allowance for credit loss, of right to consideration from customer for product sold and service rendered in normal course of business, classified as current.
Carrying amount as of the balance sheet date of the unpaid sum of the known and estimated amounts payable to satisfy all currently due domestic and foreign income tax obligations.
Carrying value as of the balance sheet date of obligations incurred and payable, pertaining to costs that are statutory in nature, are incurred on contractual obligations, or accumulate over time and for which invoices have not yet been received or will not be rendered. Examples include taxes, interest, rent and utilities. Used to reflect the current portion of the liabilities (due within one year or within the normal operating cycle if longer).
Accumulated change in equity from transactions and other events and circumstances from non-owner sources, net of tax effect, at period end. Excludes Net Income (Loss), and accumulated changes in equity from transactions resulting from investments by owners and distributions to owners. Includes foreign currency translation items, certain pension adjustments, unrealized gains and losses on certain investments in debt and equity securities, other than temporary impairment (OTTI) losses related to factors other than credit losses on available-for-sale and held-to-maturity debt securities that an entity does not intend to sell and it is not more likely than not that the entity will be required to sell before recovery of the amortized cost basis, as well as changes in the fair value of derivatives related to the effective portion of a designated cash flow hedge.
Excess of issue price over par or stated value of the entity's capital stock and amounts received from other transactions involving the entity's stock or stockholders. Includes adjustments to additional paid in capital. Some examples of such adjustments include recording the issuance of debt with a beneficial conversion feature and certain tax consequences of equity instruments awarded to employees. Use this element for the aggregate amount of additional paid-in capital associated with common and preferred stock. For additional paid-in capital associated with only common stock, use the element additional paid in capital, common stock. For additional paid-in capital associated with only preferred stock, use the element additional paid in capital, preferred stock.
Sum of the carrying amounts as of the balance sheet date of all assets that are recognized. Assets are probable future economic benefits obtained or controlled by an entity as a result of past transactions or events.
Sum of the carrying amounts as of the balance sheet date of all assets that are expected to be realized in cash, sold, or consumed within one year (or the normal operating cycle, if longer). Assets are probable future economic benefits obtained or controlled by an entity as a result of past transactions or events.
Sum of the carrying amounts as of the balance sheet date of all assets that are expected to be realized in cash, sold or consumed after one year or beyond the normal operating cycle, if longer.
Amount of currency on hand as well as demand deposits with banks or financial institutions. Includes other kinds of accounts that have the general characteristics of demand deposits. Also includes short-term, highly liquid investments that are both readily convertible to known amounts of cash and so near their maturity that they present insignificant risk of changes in value because of changes in interest rates. Excludes cash and cash equivalents within disposal group and discontinued operation.
Aggregate par or stated value of issued nonredeemable common stock (or common stock redeemable solely at the option of the issuer). This item includes treasury stock repurchased by the entity. Note: elements for number of nonredeemable common shares, par value and other disclosure concepts are in another section within stockholders' equity.
The portion of the carrying value of long-term convertible debt as of the balance sheet date that is scheduled to be repaid within one year or in the normal operating cycle if longer. Convertible debt is a financial instrument which can be exchanged for a specified amount of another security, typically the entity's common stock, at the option of the issuer or the holder.
The aggregate amount of receivables to be collected from related parties where one party can exercise control or significant influence over another party; including affiliates, owners or officers and their immediate families, pension trusts, and so forth, at the financial statement date. which are usually due within one year (or one business cycle).
Carrying amount as of the balance sheet date of obligations due all related parties. For classified balance sheets, represents the current portion of such liabilities (due within one year or within the normal operating cycle if longer).
Portion of the carrying amount as of the balance sheet date of obligations due all related parties that is payable after one year or beyond the normal operating cycle if longer.
Amount after accumulated impairment loss of an asset representing future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized.
Sum of the carrying amounts of all intangible assets, excluding goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges.
Sum of the carrying amounts as of the balance sheet date of all liabilities that are recognized. Liabilities are probable future sacrifices of economic benefits arising from present obligations of an entity to transfer assets or provide services to other entities in the future.
Total obligations incurred as part of normal operations that are expected to be paid during the following twelve months or within one business cycle, if longer.
The carrying value as of the balance sheet date of the current portion of long-term obligations drawn from a line of credit, which is a bank's commitment to make loans up to a specific amount. Examples of items that might be included in the application of this element may consist of letters of credit, standby letters of credit, and revolving credit arrangements, under which borrowings can be made up to a maximum amount as of any point in time conditional on satisfaction of specified terms before, as of and after the date of drawdowns on the line. Includes short-term obligations that would normally be classified as current liabilities but for which (a) postbalance sheet date issuance of a long term obligation to refinance the short term obligation on a long term basis, or (b) the enterprise has entered into a financing agreement that clearly permits the enterprise to refinance the short-term obligation on a long term basis and the following conditions are met (1) the agreement does not expire within 1 year and is not cancelable by the lender except for violation of an objectively determinable provision, (2) no violation exists at the BS date, and (3) the lender has entered into the financing agreement is expected to be financially capable of honoring the agreement.
Including the current and noncurrent portions, carrying value as of the balance sheet date of loans from a bank with maturities initially due after one year or beyond the normal operating cycle if longer.
Carrying value as of the balance sheet date of current portion of long-term loans payable to bank due within one year or the operating cycle if longer.
Amount, after unamortized (discount) premium and debt issuance costs, of long-term debt. Includes, but not limited to, notes payable, bonds payable, debentures, mortgage loans and commercial paper. Excludes capital lease obligations.
Amount after unamortized (discount) premium and debt issuance costs of long-term debt classified as noncurrent and excluding amounts to be repaid within one year or the normal operating cycle, if longer. Includes, but not limited to, notes payable, bonds payable, debentures, mortgage loans and commercial paper. Excludes capital lease obligations.
Sum of the carrying values as of the balance sheet date of the portions of long-term notes payable due within one year or the operating cycle if longer.
Aggregate par or stated value of issued nonredeemable preferred stock (or preferred stock redeemable solely at the option of the issuer). This item includes treasury stock repurchased by the entity. Note: elements for number of nonredeemable preferred shares, par value and other disclosure concepts are in another section within stockholders' equity.
Amount of asset related to consideration paid in advance for costs that provide economic benefits within a future period of one year or the normal operating cycle, if longer.
Amount after accumulated depreciation, depletion and amortization of physical assets used in the normal conduct of business to produce goods and services and not intended for resale. Examples include, but are not limited to, land, buildings, machinery and equipment, office equipment, and furniture and fixtures.
The noncurrent cash, cash equivalents and investments that is restricted as to withdrawal or usage. Restrictions may include legally restricted deposits held as compensating balances against borrowing arrangements, contracts entered into with others, or entity statements of intention with regard to particular deposits classified as long-term; that is not expected to be released from such existing restrictions within one year of the balance sheet date or operating cycle, whichever is longer. Excludes compensating balance arrangements that are not agreements which legally restrict the use of cash amounts shown on the balance sheet. Includes noncurrent cash equivalents and investments that are similarly restricted as to withdrawal, usage or disposal.
Total of all stockholders' equity (deficit) items, net of receivables from officers, directors, owners, and affiliates of the entity which are attributable to the parent. The amount of the economic entity's stockholders' equity attributable to the parent excludes the amount of stockholders' equity which is allocable to that ownership interest in subsidiary equity which is not attributable to the parent (noncontrolling interest, minority interest). This excludes temporary equity and is sometimes called permanent equity.
Total number of common shares of an entity that have been sold or granted to shareholders (includes common shares that were issued, repurchased and remain in the treasury). These shares represent capital invested by the firm's shareholders and owners, and may be all or only a portion of the number of shares authorized. Shares issued include shares outstanding and shares held in the treasury.
The maximum number of nonredeemable preferred shares (or preferred stock redeemable solely at the option of the issuer) permitted to be issued by an entity's charter and bylaws.
Total number of nonredeemable preferred shares (or preferred stock redeemable solely at the option of the issuer) issued to shareholders (includes related preferred shares that were issued, repurchased, and remain in the treasury). May be all or portion of the number of preferred shares authorized. Excludes preferred shares that are classified as debt.
Aggregate share number for all nonredeemable preferred stock (or preferred stock redeemable solely at the option of the issuer) held by stockholders. Does not include preferred shares that have been repurchased.
Amount of increase (decrease) in the value of a contingent consideration liability, including, but not limited to, differences arising upon settlement.
Amount after tax of increase (decrease) in equity from transactions and other events and circumstances from net income and other comprehensive income, attributable to parent entity. Excludes changes in equity resulting from investments by owners and distributions to owners.
The amount of net income or loss for the period per each share in instances when basic and diluted earnings per share are the same amount and reported as a single line item on the face of the financial statements. Basic earnings per share is the amount of net income or loss for the period per each share of common stock or unit outstanding during the reporting period. Diluted earnings per share includes the amount of net income or loss for the period available to each share of common stock or common unit outstanding during the reporting period and to each share or unit that would have been outstanding assuming the issuance of common shares or units for all dilutive potential common shares or units outstanding during the reporting period.
The difference between the book value and the sale price of options, swaps, futures, forward contracts, and other derivative instruments. This element refers to the gain (loss) included in earnings.
Amount of gain (loss) recognized in settlement of litigation and insurance claims. Excludes claims within an insurance entity's normal claims settlement process.
For a debtor, the aggregate gain (loss) recognized on the restructuring of payables arises from the difference between the book value of the debt before the restructuring and the fair value of the payments on the debt after restructuring is complete.
The aggregate total of expenses of managing and administering the affairs of an entity, including affiliates of the reporting entity, which are not directly or indirectly associated with the manufacture, sale or creation of a product or product line.
Consideration given by issuer of convertible debt to provide an incentive for debt holders to convert the debt to equity securities. The expense is equal to the fair value of all securities and other consideration transferred in the transaction in excess of the fair value of securities issuable pursuant to the original conversion terms.
The aggregate amount of gains or losses resulting from nonoperating activities (for example, interest and dividend revenue, property, plant and equipment impairment loss, and so forth).
Amount of revenue recognized from goods sold, services rendered, insurance premiums, or other activities that constitute an earning process. Includes, but is not limited to, investment and interest income before deduction of interest expense when recognized as a component of revenue, and sales and trading gain (loss).
Amount of write-down of assets recognized in the income statement. Includes, but is not limited to, losses from tangible assets, intangible assets and goodwill.
Amount of currency on hand as well as demand deposits with banks or financial institutions. Includes other kinds of accounts that have the general characteristics of demand deposits. Also includes short-term, highly liquid investments that are both readily convertible to known amounts of cash and so near their maturity that they present insignificant risk of changes in value because of changes in interest rates. Excludes cash and cash equivalents within disposal group and discontinued operation.
Amount of increase (decrease) in cash and cash equivalents. Cash and cash equivalents are the amount of currency on hand as well as demand deposits with banks or financial institutions. Includes other kinds of accounts that have the general characteristics of demand deposits. Also includes short-term, highly liquid investments that are both readily convertible to known amounts of cash and so near their maturity that they present insignificant risk of changes in value because of changes in interest rates. Includes effect from exchange rate changes.
Amount of cash and cash equivalents, and cash and cash equivalents restricted to withdrawal or usage. Excludes amount for disposal group and discontinued operations. Cash includes, but is not limited to, currency on hand, demand deposits with banks or financial institutions, and other accounts with general characteristics of demand deposits. Cash equivalents include, but are not limited to, short-term, highly liquid investments that are both readily convertible to known amounts of cash and so near their maturity that they present insignificant risk of changes in value because of changes in interest rates.
The aggregate expense recognized in the current period that allocates the cost of tangible assets, intangible assets, or depleting assets to periods that benefit from use of the assets.
The difference between the book value and the sale price of options, swaps, futures, forward contracts, and other derivative instruments. This element refers to the gain (loss) included in earnings.
The increase (decrease) during the reporting period in the amount due from customers for the credit sale of goods and services; includes accounts receivable and other types of receivables.
The increase (decrease) during the reporting period in amount due within one year (or one business cycle) from customers for the credit sale of goods and services.
The increase (decrease) during the reporting period in the account that represents the temporary difference that results from Income or Loss that is recognized for accounting purposes but not for tax purposes and vice versa.
The increase (decrease) during the reporting period in the amounts payable to taxing authorities for taxes that are based on the reporting entity's earnings, net of amounts receivable from taxing authorities for refunds of overpayments or recoveries of income taxes.
The increase (decrease) during the reporting period in the amount of outstanding money paid in advance for goods or services that bring economic benefits for future periods.
The net cash inflow or outflow for the increase (decrease) associated with funds that are not available for withdrawal or use (such as funds held in escrow) and are associated with underlying transactions that are classified as investing activities.
Consideration given by issuer of convertible debt to provide an incentive for debt holders to convert the debt to equity securities. The expense is equal to the fair value of all securities and other consideration transferred in the transaction in excess of the fair value of securities issuable pursuant to the original conversion terms.
Amount of cash paid for interest, including, but not limited to, capitalized interest and payment to settle zero-coupon bond attributable to accreted interest of debt discount and debt instrument with insignificant coupon interest rate in relation to effective interest rate of borrowing attributable to accreted interest of debt discount; classified as operating and investing activities.
Amount of cash inflow (outflow) from financing activities, including discontinued operations. Financing activity cash flows include obtaining resources from owners and providing them with a return on, and a return of, their investment; borrowing money and repaying amounts borrowed, or settling the obligation; and obtaining and paying for other resources obtained from creditors on long-term credit.
Amount of cash inflow (outflow) from investing activities, including discontinued operations. Investing activity cash flows include making and collecting loans and acquiring and disposing of debt or equity instruments and property, plant, and equipment and other productive assets.
Amount of cash inflow (outflow) from operating activities, including discontinued operations. Operating activity cash flows include transactions, adjustments, and changes in value not defined as investing or financing activities.
The cash outflow for a loan, supported by a promissory note, granted to related parties where one party can exercise control or significant influence over another party; including affiliates, owners or officers and their immediate families, pension trusts, and so forth.
Interest paid other than in cash for example by issuing additional debt securities. As a noncash item, it is added to net income when calculating cash provided by or used in operations using the indirect method.
The cash outflow associated with the acquisition of long-lived, physical assets that are used in the normal conduct of business to produce goods and services and not intended for resale; includes cash outflows to pay for construction of self-constructed assets.
The cash inflow from the issuance of a long-term debt instrument which can be exchanged for a specified amount of another security, typically the entity's common stock, at the option of the issuer or the holder.
Amount of cash inflow from contractual arrangement with the lender, including but not limited to, letter of credit, standby letter of credit and revolving credit arrangements.
Amount of cash restricted as to withdrawal or usage. Cash includes, but is not limited to, currency on hand, demand deposits with banks or financial institutions, and other accounts with general characteristics of demand deposits.
Equity impact of the value of stock that has been repurchased during the period and has not been retired and is not held in treasury. Some state laws may mandate the circumstances under which an entity may acquire its own stock and prescribe the accounting treatment therefore. This element is used when state law does not recognize treasury stock.
Amount of net unrealized gain (loss) related to the change in fair value of foreign currency exchange rate derivatives designated as cash flow hedging instruments. Recorded in accumulated other comprehensive income to the extent that the cash flow hedge is determined to be effective.
Carrying value as of the balance sheet date of obligations incurred through that date and payable for contractual rent under lease arrangements. Used to reflect the current portion of the liabilities (due within one year or within the normal operating cycle if longer).
The expense charged against earnings for the periodic recognition of capitalized leases. This element may apply to energy companies that lease mineral producing properties and to other enterprises that capitalize property, plant, or equipment obtained through capital leases.
Fair value portion of borrowing which can be exchanged for a specified number of another security at the option of the issuer or the holder, for example, but not limited to, the entity's common stock.
The difference between the book value and the sale price of options, swaps, futures, forward contracts, and other derivative instruments. This element refers to the gain (loss) included in earnings.
Fair value, after the effects of master netting arrangements, of a financial liability or contract with one or more underlyings, notional amount or payment provision or both, and the contract can be net settled by means outside the contract or delivery of an asset, expected to be settled within one year or normal operating cycle, if longer. Includes assets not subject to a master netting arrangement and not elected to be offset.
The amount of the liability for the conversion option reclassified to stockholders' equity when the embedded option no longer required separation from the host instrument.
option to resell to the Company 50% of the shares of common stock (or 208,200 shares) issued in consideration for the purchase price at a fixed price of USD $0.50 per share (the “Ulisse Put Option”)
Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.
Amount of consideration transferred, consisting of acquisition-date fair value of assets transferred by the acquirer, liabilities incurred by the acquirer, and equity interest issued by the acquirer.
Carrying value as of the balance sheet date of notes payable (with maturities initially due after one year or beyond the operating cycle if longer), excluding current portion.
Equity impact of the value of stock that has been repurchased and retired during the period. The excess of the purchase price over par value can be charged against retained earnings (once the excess is fully allocated to additional paid in capital).
The aggregate expected value at the end of their useful life of a major finite-lived intangible asset class acquired during the period either individually or as part of a group of assets (in either an asset acquisition or business combination). A major class is composed of intangible assets that can be grouped together because they are similar, either by their nature or by their use in the operations of a company.
Weighted average amortization period of finite-lived intangible assets acquired either individually or as part of a group of assets, in 'PnYnMnDTnHnMnS' format, for example, 'P1Y5M13D' represents the reported fact of one year, five months, and thirteen days.
In a business combination in which the amount of net identifiable assets acquired and liabilities assumed exceeds the aggregate consideration transferred or to be transferred (as defined), this element represents the amount of gain recognized by the entity.
Amount of currency on hand as well as demand deposits with banks or financial institutions, acquired at the acquisition date. Includes other kinds of accounts that have the general characteristics of demand deposits. Also includes short-term, highly liquid investments that are both readily convertible to known amounts of cash and so near their maturity that they present insignificant risk of changes in value because of changes in interest rates.
Amount of assets that are expected to be realized or consumed within one year or the normal operating cycle, if longer, acquired at the acquisition date.
This item represents liabilities associated with restructuring or exit activities of the acquiree, existing at the acquisition date (present liabilities of the acquiree).
Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.
Amount of asset retirement obligations settled, or otherwise disposed of, during the period. This may include asset retirement obligations transferred to third parties associated with the sale of a long-lived asset.
Weighted average remaining lease term for finance lease, in 'PnYnMnDTnHnMnS' format, for example, 'P1Y5M13D' represents reported fact of one year, five months, and thirteen days.
Amount of single lease cost, calculated by allocation of remaining cost of lease over remaining lease term. Includes, but is not limited to, single lease cost, after impairment of right-of-use asset, calculated by amortization of remaining right-of-use asset and accretion of lease liability.
Weighted average remaining lease term for operating lease, in 'PnYnMnDTnHnMnS' format, for example, 'P1Y5M13D' represents reported fact of one year, five months, and thirteen days.
If disclosed, the amount of imputed interest necessary to reduce an unconditional purchase obligation to present value on an unrecorded unconditional purchase obligation.
Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.
Sum of the carrying amounts of all intangible assets, excluding goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges.
The aggregate expense charged against earnings to allocate the cost of intangible assets (nonphysical assets not used in production) in a systematic and rational manner to the periods expected to benefit from such assets. As a noncash expense, this element is added back to net income when calculating cash provided by or used in operations using the indirect method.
Carrying amount as of the balance sheet date of cash collateral held for borrowed securities, for which the cash is restricted as to withdrawal or usage.
The carrying value as of the balance sheet date of the current portion of long-term obligations drawn from a line of credit, which is a bank's commitment to make loans up to a specific amount. Examples of items that might be included in the application of this element may consist of letters of credit, standby letters of credit, and revolving credit arrangements, under which borrowings can be made up to a maximum amount as of any point in time conditional on satisfaction of specified terms before, as of and after the date of drawdowns on the line. Includes short-term obligations that would normally be classified as current liabilities but for which (a) postbalance sheet date issuance of a long term obligation to refinance the short term obligation on a long term basis, or (b) the enterprise has entered into a financing agreement that clearly permits the enterprise to refinance the short-term obligation on a long term basis and the following conditions are met (1) the agreement does not expire within 1 year and is not cancelable by the lender except for violation of an objectively determinable provision, (2) no violation exists at the BS date, and (3) the lender has entered into the financing agreement is expected to be financially capable of honoring the agreement.
The carrying value as of the balance sheet date of the current and noncurrent portions of long-term obligations drawn from a line of credit, which is a bank's commitment to make loans up to a specific amount. Examples of items that might be included in the application of this element may consist of letters of credit, standby letters of credit, and revolving credit arrangements, under which borrowings can be made up to a maximum amount as of any point in time conditional on satisfaction of specified terms before, as of and after the date of drawdowns on the line. Includes short-term obligations that would normally be classified as current liabilities but for which (a) postbalance sheet date issuance of a long term obligation to refinance the short term obligation on a long term basis, or (b) the enterprise has entered into a financing agreement that clearly permits the enterprise to refinance the short-term obligation on a long term basis and the following conditions are met (1) the agreement does not expire within 1 year and is not cancelable by the lender except for violation of an objectively determinable provision, (2) no violation exists at the BS date, and (3) the lender has entered into the financing agreement is expected to be financially capable of honoring the agreement.
The carrying value as of the balance sheet date of the current portion of long-term obligations drawn from a line of credit, which is a bank's commitment to make loans up to a specific amount. Examples of items that might be included in the application of this element may consist of letters of credit, standby letters of credit, and revolving credit arrangements, under which borrowings can be made up to a maximum amount as of any point in time conditional on satisfaction of specified terms before, as of and after the date of drawdowns on the line. Includes short-term obligations that would normally be classified as current liabilities but for which (a) postbalance sheet date issuance of a long term obligation to refinance the short term obligation on a long term basis, or (b) the enterprise has entered into a financing agreement that clearly permits the enterprise to refinance the short-term obligation on a long term basis and the following conditions are met (1) the agreement does not expire within 1 year and is not cancelable by the lender except for violation of an objectively determinable provision, (2) no violation exists at the BS date, and (3) the lender has entered into the financing agreement is expected to be financially capable of honoring the agreement.
The amount of an asset, typically cash, provided to a counterparty to provide certain assurance of performance by the entity pursuant to the terms of a written or oral agreement, such as a lease.
The number of new shares issued in the conversion of stock in a noncash (or part noncash) transaction. Noncash is defined as transactions during a period that do not result in cash receipts or cash payments in the period. "Part noncash" refers to that portion of the transaction not resulting in cash receipts or cash payments in the period.
Carrying amount as of the balance sheet date of obligations due all related parties. For classified balance sheets, represents the current portion of such liabilities (due within one year or within the normal operating cycle if longer).
The number of shares issued as [noncash or part noncash] consideration for a business or asset acquired. Noncash is defined as transactions during a period that affect recognized assets or liabilities but that do not result in cash receipts or cash payments in the period. "Part noncash" refers to that portion of the transaction not resulting in cash receipts or cash payments in the period.
Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.
Carrying amount as of the balance sheet date of obligations due all related parties. For classified balance sheets, represents the current portion of such liabilities (due within one year or within the normal operating cycle if longer).
Portion of the carrying amount as of the balance sheet date of obligations due all related parties that is payable after one year or beyond the normal operating cycle if longer.
Amount of long-term debt payable, sinking fund requirements, and other securities issued that are redeemable by holder at fixed or determinable prices and dates maturing in the next fiscal year following the latest fiscal year. Excludes interim and annual periods when interim periods are reported on a rolling approach, from latest balance sheet date.
The amount for notes payable (written promise to pay), due to related parties. Used to reflect the current portion of the liabilities (due within one year or within the normal operating cycle if longer).
Amount of cash inflow (outflow) from long-term debt by a related party. Related parties, include, but are not limited to, affiliates, owners or officers and their immediate families, and pension trusts.
Carrying value as of the balance sheet date of the portion of long-term notes having the highest claim on the assets of the issuer in case of bankruptcy or liquidation, due within one year or the normal operating cycle, if longer. Senior note holders are paid off in full before any payments are made to debt holders having a lesser priority of repayment.
A fee charged for services from professionals such as doctors, lawyers and accountants. The term is often expanded to include other professions, for example, pharmacists charging to maintain a medicinal profile of a client or customer.
Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.
The number of shares issued in exchange for the original debt being converted in a noncash (or part noncash) transaction. "Part noncash" refers to that portion of the transaction not resulting in cash receipts or payments in the period.
Description of the reverse stock split arrangement. Also provide the retroactive effect given by the reverse split that occurs after the balance sheet date but before the release of financial statements.
Amount of noncash expense included in interest expense to amortize debt discount and premium associated with the related debt instruments. Excludes amortization of financing costs. Alternate captions include noncash interest expense.
The portion of the carrying value of long-term convertible debt as of the balance sheet date that is scheduled to be repaid within one year or in the normal operating cycle if longer. Convertible debt is a financial instrument which can be exchanged for a specified amount of another security, typically the entity's common stock, at the option of the issuer or the holder.
Amount, before unamortized (discount) premium and debt issuance costs, of long-term debt. Includes, but is not limited to, notes payable, bonds payable, commercial loans, mortgage loans, convertible debt, subordinated debt and other types of debt.
Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.
Sum of the carrying values as of the balance sheet date of the portions of long-term notes payable due within one year or the operating cycle if longer.
Amount of long-term debt payable, sinking fund requirements, and other securities issued that are redeemable by holder at fixed or determinable prices and dates maturing in the next fiscal year following the latest fiscal year. Excludes interim and annual periods when interim periods are reported on a rolling approach, from latest balance sheet date.
Including the current and noncurrent portions, aggregate carrying amount of all types of notes payable, as of the balance sheet date, with initial maturities beyond one year or beyond the normal operating cycle, if longer.
Sum of the carrying values as of the balance sheet date of the portions of long-term notes payable due within one year or the operating cycle if longer.
The cash inflow from borrowings supported by a written promise to pay an obligation that is uncollateralized (where debt is not backed by the pledge of collateral).
Number of securities into which each warrant or right may be converted. For example, but not limited to, each warrant may be converted into two shares.
Amount to be paid per share that is classified as temporary equity by entity upon redemption. Temporary equity is a security with redemption features that are outside the control of the issuer, is not classified as an asset or liability in conformity with GAAP, and is not mandatorily redeemable. Includes any type of security that is redeemable at a fixed or determinable price or on a fixed or determinable date or dates, is redeemable at the option of the holder, or has conditions for redemption which are not solely within the control of the issuer. If convertible, the issuer does not control the actions or events necessary to issue the maximum number of shares that could be required to be delivered under the conversion option if the holder exercises the option to convert the stock to another class of equity. If the security is a warrant or a rights issue, the warrant or rights issue is considered to be temporary equity if the issuer cannot demonstrate that it would be able to deliver upon the exercise of the option by the holder in all cases. Includes stock with put option held by ESOP and stock redeemable by holder only in the event of a change in control of the issuer.
Value of outstanding derivative securities that permit the holder the right to purchase securities (usually equity) from the issuer at a specified price.
The estimated dividend rate (a percentage of the share price) to be paid (expected dividends) to holders of the underlying shares over the option's term.
The estimated measure of the percentage by which a share price is expected to fluctuate during a period. Volatility also may be defined as a probability-weighted measure of the dispersion of returns about the mean. The volatility of a share price is the standard deviation of the continuously compounded rates of return on the share over a specified period. That is the same as the standard deviation of the differences in the natural logarithms of the stock prices plus dividends, if any, over the period.
Expected term of award under share-based payment arrangement, in 'PnYnMnDTnHnMnS' format, for example, 'P1Y5M13D' represents reported fact of one year, five months, and thirteen days.
The number of shares under options that were cancelled during the reporting period as a result of occurrence of a terminating event specified in contractual agreements pertaining to the stock option plan.
The number of shares into which fully or partially vested stock options outstanding as of the balance sheet date can be currently converted under the option plan.
Weighted-average exercise price, at which grantee can acquire shares reserved for issuance, for fully vested and expected to vest exercisable or convertible options. Includes, but is not limited to, unvested options for which requisite service period has not been rendered but that are expected to vest based on achievement of performance condition, if forfeitures are recognized when they occur.
Expected term of award under share-based payment arrangement, in 'PnYnMnDTnHnMnS' format, for example, 'P1Y5M13D' represents reported fact of one year, five months, and thirteen days.
Fair value of options vested. Excludes equity instruments other than options, for example, but not limited to, share units, stock appreciation rights, restricted stock.
Amount to be paid per share that is classified as temporary equity by entity upon redemption. Temporary equity is a security with redemption features that are outside the control of the issuer, is not classified as an asset or liability in conformity with GAAP, and is not mandatorily redeemable. Includes any type of security that is redeemable at a fixed or determinable price or on a fixed or determinable date or dates, is redeemable at the option of the holder, or has conditions for redemption which are not solely within the control of the issuer. If convertible, the issuer does not control the actions or events necessary to issue the maximum number of shares that could be required to be delivered under the conversion option if the holder exercises the option to convert the stock to another class of equity. If the security is a warrant or a rights issue, the warrant or rights issue is considered to be temporary equity if the issuer cannot demonstrate that it would be able to deliver upon the exercise of the option by the holder in all cases. Includes stock with put option held by ESOP and stock redeemable by holder only in the event of a change in control of the issuer.
The amount of excise and sales taxes included in sales and revenues, which are then deducted as a cost of sales. Includes excise taxes, which are applied to specific types of transactions or items (such as gasoline or alcohol); and sales, use and value added taxes, which are applied to a broad class of revenue-producing transactions involving a wide range of goods and services.
Amount of revenue recognized from goods sold, services rendered, insurance premiums, or other activities that constitute an earning process. Includes, but is not limited to, investment and interest income before deduction of interest expense when recognized as a component of revenue, and sales and trading gain (loss).
Securities (including those issuable pursuant to contingent stock agreements) that could potentially dilute basic earnings per share (EPS) or earnings per unit (EPU) in the future that were not included in the computation of diluted EPS or EPU because to do so would increase EPS or EPU amounts or decrease loss per share or unit amounts for the period presented.
Additional shares included in the calculation of diluted EPS as a result of the potentially dilutive effect of call options and warrants using the treasury stock method.
Additional shares included in the calculation of diluted EPS as a result of the potentially dilutive effect of convertible debt securities using the if-converted method.
Additional shares included in the calculation of diluted EPS as a result of the potentially dilutive effect of outstanding written put options using the reverse treasury stock method.
Percentage of the difference between reported income tax expense (benefit) and expected income tax expense (benefit) computed by applying the domestic federal statutory income tax rates to pretax income (loss) from continuing operations applicable to statutory income tax expense (benefit) outside of the country of domicile.
The amount of the original debt being converted in a noncash (or part noncash) transaction. "Part noncash" refers to that portion of the transaction not resulting in cash receipts or cash payments in the period.
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