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The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant's most recently completed second fiscal quarter.
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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.
Carrying value as of the balance sheet date of payments made in excess of existing cash balances, which will be honored by the bank but reflected as a loan to the entity. Overdrafts generally have a very short time frame for correction or repayment and are therefore more similar to short-term bank financing than trade financing.
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).
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.
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.
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 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.
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 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 impairment loss recognized in the period resulting from the write-down of the carrying amount of a finite-lived intangible asset to fair value.
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).
Adjustment to additional paid in capital resulting from the recognition of convertible debt instruments as two separate components - a debt component and an equity component. This bifurcation may result in a basis difference associated with the liability component that represents a temporary difference for purposes of applying accounting for income taxes. The initial recognition of deferred taxes for the tax effect of that temporary difference is as an adjustment to additional paid in capital.
Amount of decrease in additional paid in capital (APIC) resulting from direct costs associated with issuing stock. Includes, but is not limited to, legal and accounting fees and direct costs associated with stock issues under a shelf registration.
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 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 amount of impairment loss recognized in the period resulting from the write-down of the carrying amount of a finite-lived intangible asset to fair value.
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 receivables to be collected from other entities that could exert significant influence over the reporting entity.
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.
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.
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.
The cash inflow from the sale of a lease held for investment, which may be a lease of real estate, equipment or other fixed assets for a specified time in exchange for payment, usually in the form of rent.
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 net cash inflow or outflow from the excess drawing from an existing cash balance, which will be honored by the bank but reflected as a loan to the drawer.
The cash outflow for the payment of a long-term borrowing made from a related party 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: Payments for Advances from Affiliates.
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.
The cash outflow associated with the acquisition of a controlling interest in another entity or an entity that is related to it but not strictly controlled (for example, an unconsolidated subsidiary, affiliate, joint venture or equity method investment).
On November 2, 2020, the Company filed a Certificate
of Amendment to its Certificate of Incorporation with the Secretary of State of the State of Delaware to reflect its corporate
name change from Newgioco Group, Inc. to Elys Game Technology, Corp.
Established in the state of Delaware in 1998,
Elys Game Technology, Corp (“Elys” or the “Company”) is an international, vertically integrated commercial-stage
company engaged in various aspects of the leisure gaming industry. The Company is an Italian and Austrian 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 for updating, servicing and operations 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 and its subsidiaries are as follows:
Name
Acquisition or Formation Date
Domicile
Functional Currency
Elys Game Technology, Corp.
Parent Company
USA
US Dollar
Multigioco Srl (“Multigioco”)
August 15, 2014
Italy
Euro
Ulisse GmbH (“Ulisse”)
July 1, 2016
Austria
Euro
Odissea Betriebsinformatik Beratung GmbH
(“Odissea”)
July 1, 2016
Austria
Euro
Virtual Generation Limited (“VG”)
January 31, 2019
Malta
Euro
Newgioco Group Inc. (“NG Canada”)
January 17, 2017
Canada
Canadian Dollar
Elys Technology Group Limited
April 4, 2019
Malta
Euro
Newgioco Colombia SAS
November 22, 2019
Colombia
Colombian Peso
Elys Gameboard Technologies, LLC
May 28, 2020
USA
US Dollar
In January 2019, in connection with the acquisition
of VG, the Company acquired Naos Holdings Limited. The Company distributed all of the earnings of Naos Holdings Limited and the
remaining Naos legal entity was dissolved with effect from December 31, 2019.
The operations of the Company’s prior
subsidiary, Rifa Srl, were absorbed into the operations of Multigioco Srl with effect from January 30, 2020, and the remaining
Rifa legal entity was dissolved with effect from January 20, 2020.
The Company operates in two lines of business:
(i) provider of certified betting platform software services to leisure betting establishments in Italy and 9 other countries and;
(ii) the operating of web based as well as land-based leisure betting establishments situated throughout Italy. 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 satellite offices for operations administration in Naples and Teramo, Italy and San Gwann, 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 maintains an
executive suite in San Francisco, California and a Canadian office in Toronto, through which we carry-out corporate activities,
handle day-to-day reporting and U.S. development planning, and through which various employees, 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 consolidated financial statements
have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”).
For the purposes of its listing in Canada,
the Company is an “SEC Issuer” as defined under National Instrument 52-107 “Accounting Principles and Audit
Standards” and is relying on the exemptions of Section 3.7 of NI 52-107 and of Section 1.4(8) of the Companion Policy
to National Instrument 51-102 “Continuous Disclosure Obligations” (“NI 51-102CP”) which permits
the Company to prepare its financial statements in accord with U.S. GAAP.
b) Principles of consolidation
The consolidated financial statements include
the financial statements of the Company and its subsidiaries, all of which are wholly-owned. All significant inter-company transactions
are eliminated upon consolidation.
Certain items in the prior periods were reclassified
to conform to the current period presentation.
All amounts referred to in the Notes to the
consolidated financial statements are in United States Dollars ($) unless stated otherwise.
c) Foreign operations
The Company translated the assets and liabilities
of its foreign subsidiaries into US Dollars at the exchange rate in effect at year end and the results of operations and cash flows
at the average rate throughout the year. The translation adjustments are recorded directly as a separate component of stockholders’
equity, while transaction gains (losses) are included in net income (loss).
All revenues were generated in Euro and Colombian Pesos during the
years presented.
Gains and losses from foreign currency transactions
are recognized in current operations.
d) 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.
e) Use of Estimates
The preparation of consolidated 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 intangible assets and goodwill, the collectability of receivables, leasing arrangements,
convertible debentures, contingencies 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
the Company’s industry and general economic conditions. It is possible that these external factors could have an effect on
the Company’s estimates that could cause actual results to differ from the Company’s estimates. The Company re-evaluates
all of its accounting estimates at least quarterly based on these conditions and records adjustments when necessary.
f) 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 the Company’s 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 it believes that it is both probable
that a loss has been incurred, and the amount can be reasonably estimated. If the Company determines that a loss is possible, and
a range of the loss can be reasonably estimated, it discloses the range of the possible loss in the Notes to the Consolidated Financial
Statements.
The Company evaluates, on a regular basis,
developments in its 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 makes 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 the Company’s estimates and assumptions change or prove to have been incorrect, it could have a material impact
on its 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 the Company’s operations or financial
condition. The Company has insured and continues to insure against most of these types of claims.
g) 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 accounts
receivables, gaming accounts receivable, lines of credit - bank, accounts payable, gaming accounts payable and bank loans payable
approximate fair value because of the short-term maturity of these financial instruments.
h) Derivative Financial Instruments
ASC 815 generally provides three criteria that,
if met, require companies to bifurcate conversion options from their host instruments and account for them as free standing derivative
financial instruments. These three criteria include circumstances in which (a) the economic characteristics and risks of the embedded
derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the
hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value
under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur
and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument
subject to the requirements of ASC 815. ASC 815 also provides an exception to this rule when the host instrument is deemed to be
conventional, as described.
The Company determined that the conversion
feature of the convertible debt issued in May 2018 did not qualify as a derivative liability and is not bifurcated from the host
instrument but contains a beneficial conversion feature.
i) 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 December 31, 2020 and 2019, respectively.
The Company primarily places cash balances
in the U.S. 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.
j) 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 a bad debt expense of $90,705 and
$163,942 for the years ended December 31, 2020 and 2019, respectively. All balances previously recorded as allowance for doubtful
accounts were written off as uncollectible.
k) 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 of winnings 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.
l) Long Lived Assets
The Company evaluates the carrying value of
its 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.
m) Property, Plant and Equipment
Plant and equipment is 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 plant and equipment. All other expenditures are recognized as expenses in the
statement of operations 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)
Leasehold improvements
Life of the underlying lease
Computer and office equipment
3
to 5
Furniture and fittings
7 to 10
Computer Software
3 to 5
Vehicles
4 to 5
n) 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
Indefinite
Multigioco and Rifa ADM Licenses
1.5 - 7
Location contracts
5 - 7
Customer relationships
10 - 15
Trademarks/Tradenames
14
Websites
5
The Ulisse Bookmaker License has no expiration
date and is therefore not amortized but is tested from impairment on an annual basis in terms of ASC 350 using estimated fair
value.
o) 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 reporting unit exceeds its 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 the reporting unit exceeds its fair value. If the carrying amount of the reporting unit exceeds its fair value, an asset impairment
charge will be recognized in an amount equal to that excess.
In terms of ASC 350, the Company skipped the
requirement to perform a qualitative assessment and performed a quantitative assessment on its goodwill as of December 31, 2020
and determined that an impairment was not considered necessary.
p) Leases
The Company accounts for leases in terms of
ASC 842. In terms of ASC 842, the Company assesses whether any asset based leases entered into for periods longer than twelve months
meet the definition of financial leases or operation leases, by evaluating the terms of the lease, including the following; the
duration of the lease; the implied interest rate in the lease; the cash flows of the lease; and whether the Company intends to
retain ownership of the asset at the end of the lease term.
Leases which imply that the Company will retain
ownership at the end of the lease term are classified as financial leases, are included in plant and equipment with a corresponding
financial liability raised at the date of lease inception. Interest incurred on financial leases are expensed using the effective
interest rate method.
Leases which imply that the Company will not
acquire the asset at the end of the lease term are classified as operating leases, the Company’s right to use the asset is
reflected as a non-current right of use asset with a corresponding operational lease liability raised at the date of lease inception.
The right of use asset and the operational lease liability are amortized over the right of use period using the effective interest
rate implied in the operating lease agreement.
q) 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. The Company has no material uncertain tax positions for any of the reporting periods presented.
In Italy, tax years beginning 2016 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 2016 forward, are subject to examination.
The Company is not currently under examination and it has not been notified of a pending examination.
r) Revenue Recognition
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 Betting Platform include
software licensing fees, training, installation, and product support services. The Company does not sell its proprietary software.
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.
s) 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.
t) 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.
u) 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 dilutive impact on the number of shares outstanding should they be exercised. Securities that have the potential
to dilute shareholder's interests include unexercised stock options and warrants as well as unconverted debentures.
On December 12, 2019, the Company effected
an 1 for 8 reverse stock split, all references made to share or per share amounts in the accompanying consolidated financial statements
and applicable disclosures have been retroactively adjusted to reflect the reverse stock split.
v) 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.
w) Recent Accounting Pronouncements
In June 2016, the FASB issued ASU No. 2016-13,
Financial Instruments-Credit Losses (Topic 326): “Measurement of Credit Losses on Financial Instruments”, which replaces
the incurred loss methodology with an expected credit loss methodology that is referred to as the current expected credit loss
(CECL) methodology. ASU 2016-13 is effective for fiscal years beginning after December 15, 2019, with early adoption permitted.
The amendments in this update are required to be applied using the modified retrospective method with an adjustment to accumulated
deficit and are effective for the Company beginning with fiscal year 2020, including interim periods. The measurement of expected
credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including loan receivables
and held-to-maturity debt securities. An entity with trade receivables will be required to use historical loss information, current
conditions, and reasonable and supportable forecasts to determine expected lifetime credit losses. Pooling of assets with similar
risk characteristics is also required.
Since adopted on January 1, 2020, there
has not been any material impact on the Company’s financial position, results of operations, and related disclosures.
In December 2019, the Financial Accounting
Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2019-12, Income Taxes (Topic 740).
The Amendments in this update reduce the complexity in accounting for income taxes by removing certain exceptions to accounting
for income taxes and deferred taxes and simplifying the accounting treatment of franchise taxes, a step up in the tax basis of
goodwill as part of business combinations, the allocation of current and deferred tax to a legal entity not subject to tax in its
own financial statements, reflecting changes in tax laws or rates in the annual effective rate in interim periods that include
the enactment date and minor codification improvements.
This ASU is effective for fiscal years and
interim periods beginning after December 15, 2020.
The effects of this ASU on the Company’s
financial statements is not considered to be material.
In August 2020, the FASB issued ASU No. 2020-06,
debt with Conversion and Other Options (subtopic 470-20): and Derivatives and Hedging – Contracts in Entity’s Own Equity
(Subtopic 815-40). Certain accounting models for convertible debt instruments with beneficial conversion features or cash conversion
features are removed from the guidance and for equity instruments the contracts affected are free standing instruments and embedded
features that are accounted for as derivatives, the settlement assessment was simplified by removing certain settlement requirements.
This ASU is effective for fiscal years and
interim periods beginning after December 15, 2021.
The effects of this ASU on the Company’s consolidated financial
statements is currently being assessed and is expected to have an impact on the treatment of certain
The FASB issued several additional updates
during the period, none of these standards are either applicable to the Company or require adoption at a future date and none are
expected to have a material impact on the consolidated financial statements upon adoption.
x) Reporting by segment
The Company has two operating segments from
which it derives revenue. These segments are:
(i)
the operating of web based as well as land based leisure betting
establishments situated throughout Italy, and
(ii)
provider of certified betting Platform software services to leisure
betting establishments in Italy and 9 other countries.
y) Comparative
Certain expenses amounting to $2,000,579, classified
as selling expenses in the prior year were reclassified as general and administrative expenses for comparative purposes. These
expenses are related to operating our betting platforms and are more accurately reflected as general and administrative expenses,
in line with our current operations.
These reclassifications had no impact on net
loss or comprehensive loss.
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 (the “Sellers”) and acquired all of the issued and outstanding ordinary shares of VG.,
together with all the ordinary shares of Naos Holding Limited, a company organized under the laws of Republic of Malta (“Naos”)
that owned 3,999 of the 4,000 issued and outstanding ordinary shares of VG. VG owns and has developed a virtual gaming software
platform. The prior non-operating holding company subsidiary Naos was discontinued with effect on December 31, 2019.
Pursuant to the Purchase Agreement, on the
Closing Date, the Company agreed to pay the Sellers the previously agreed to consideration of €4,000,000 ($4,576,352) in consideration
for all the ordinary shares of VG and Naos, on the Closing Date as follows:
(i)
a cash payment of €108,000;
(ii)
the issuance of shares of the Company’s common stock valued
at €89,000; and
(iii)
the delivery of a non-interest bearing promissory note of €3,803,000,
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 was
one month after the Closing Date; and
(b)
an aggregate of €1,411,000 in shares of the Company’s
common stock in 17 equal and consecutive monthly instalments of €83,000 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, which issuances
commenced on March 1, 2019.
The €3,803,000 promissory note was originally
recorded as a liability owing to related parties of €1,521,200 (Note 15) and to third parties of €2,281,800 (Note 12).
Pursuant to the terms of the Purchase Agreement
that the Company entered into with VG, the Company agreed to pay the sellers of VG an earnout payment in shares of our common stock
equal to an aggregate amount of €500,000 (approximately $561,500), if the amounts of bets made by users of the VG platform
grew by more than 5% for the year ended December 31, 2019 compared to the year ended December 31, 2018. Based on the 18,449,380
tickets sold in 2019 the VG sellers qualified for the earnout payment of 132,735 shares of common stock at a price of $4.23 per
share, which shares were issued effective January 2020. The earnout payment was considered remote at the time of entering into
the transaction and was not recorded as a component of deferred purchase consideration, accordingly it has been expensed through
the Statement of Operations for the year ended December 31, 2019.
In terms of the agreement, the purchase price
was allocated to the fair market value of tangible and intangible assets acquired and liabilities assumed, as follows:
Amount
Purchase consideration, net of discount of $382,778
$
4,193,375
Fair value of assets acquired
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 acquired (Betting Platform)
(1,401,608
)
Total identifiable assets less liabilities assumed
2,791,767
Goodwill arising on acquisition
1,401,608
Total purchase consideration
$
4,193,375
The Betting Platform value was determined by
management, based on prior experience, and is being amortized over a period of 15 years, the expected useful life.
The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable).
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 for Multigioco as well as Wirecard Bank as a security deposit for Ulisse betting operations.
·
The Company maintains
a $1,000,000 deposit at Metropolitan Commercial bank held as security against a $500,000 line of credit. See Note 10.
The entire disclosure for cash and cash equivalent footnotes, which may include the types of deposits and money market instruments, applicable carrying amounts, restricted amounts and compensating balance arrangements. Cash and equivalents include: (1) currency on hand (2) demand deposits with banks or financial institutions (3) other kinds of accounts that have the general characteristics of demand deposits (4) 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. Generally, only investments maturing within three months from the date of acquisition qualify.
The aggregate depreciation charge to operations
was $354,552 and $283,497 for the years ended December 31, 2020 and 2019, respectively. The depreciation policies followed by the
Company are described in Note 2.
The entire disclosure for long-lived, physical asset used in normal conduct of business and not intended for resale. Includes, but is not limited to, work of art, historical treasure, and similar asset classified as collections.
The Company’s portfolio of leases contains
both finance and operating leases that relate to real estate agreements, vehicles and office equipment agreements.
Operating leases
Real estate agreements
The Company has several property lease agreements
in Italy and Austria which have terms in excess of a twelve month period, these property leases are for our administrative operations
in these countries. The Company does not and does not intend to take ownership of the property at the end of the lease term.
Vehicle agreements
The Company leases several vehicles for
business use purposes, the terms of these leases range from twenty four to thirty six months. The Company does not and does
not intend to take ownership of the vehicles at the end of the lease term.
Finance Leases
Office equipment agreements
The Company has entered into several finance leases for office
equipment, the term of these leases range from thirty six to sixty months. The Company takes ownership of the office equipment
at the end of the lease term.
Right of use assets
Right of use assets are included in the consolidated balance sheet
are as follows:
December 31,
2020
December 31,
2019
Non-current assets
Right of use assets - operating leases, net of amortization
$
687,568
$
792,078
Right of use assets - finance leases, net of depreciation – included in property, plant and equipment
$
27,119
$
37,091
Lease costs consists of the following:
Year ended December 31,
2020
2019
Finance lease cost:
$
14,040
$
13,292
Amortization of right-of-use assets
12,870
11,890
Interest expense on lease liabilities
1,170
1,402
Operating lease cost
265,081
210,881
Total lease cost
$
279,121
$
224,173
Other lease information:
Year ended December 31,
2020
2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from finance leases
$
(1,170
)
$
(1,252
)
Operating cash flows from operating leases
(265,081
)
(210,881
)
Financing cash flows from finance leases
(12,666
)
(11,371
)
Right-of-use assets obtained in exchange for new finance leases
470
14,989
Right-of-use assets disposed of under operating leases prior to lease maturity
(21,588
)
(81,263
)
Right-of -use assets obtained in exchange for new operating leases
$
84,918
$
442,281
Weighted average remaining lease term – finance leases
2.74 years
3.46 years
Weighted average remaining lease term – operating leases
2.83 years
3.74 years
Weighted average discount rate – finance leases
3.65
%
3.52
%
Weighted average discount rate – operating leases
3.59
%
3.42
%
Maturity of Leases
Finance lease liability
The amount of future minimum lease payments under finance leases
as of December 31, 2020 is as follows:
Amount
2021
11,342
2022
9,461
2023
7,581
2024
879
Total undiscounted minimum future lease payments
29,263
Imputed interest
(1,487
)
Total finance lease liability
$
27,776
Disclosed as:
Current portion
$
10,511
Non-Current portion
17,265
$
27,776
Operating lease liability
The amount of future minimum lease payments
under operating leases as of December 31, 2020 is as follows:
The entire disclosure for lessee entity's leasing arrangements including, but not limited to, all of the following: (a.) The basis on which contingent rental payments are determined, (b.) The existence and terms of renewal or purchase options and escalation clauses, (c.) Restrictions imposed by lease agreements, such as those concerning dividends, additional debt, and further leasing.
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 to Multigioco and Rifa, respectively, as well as an Austrian Bookmaker License
through the acquisition of Ulisse.
Intangible assets consist of the following:
December 31, 2020
December 31, 2019
Cost
Impairment charge
Accumulated amortization
Net book value
Net book value
Betting platform software
$
5,689,965
$
—
$
(1,016,651
)
$
4,673,314
$
5,052,645
Licenses
10,704,888
(4,900,000
)
(887,155
)
4,917,733
9,929,495
Location contracts
1,000,000
—
(911,545
)
88,455
231,312
Customer relationships
870,927
—
(361,690
)
509,237
569,700
Trademarks
119,477
—
(50,634
)
68,843
73,875
Websites
40,000
—
(40,000
)
—
—
$
18,425,257
$
(4,900,000
)
$
(3,267,675
)
$
10,257,582
$
15,857,027
The Company recorded $703,191 and $771,665
in amortization expense for finite-lived assets for the year ended December 31, 2020 and 2019, respectively, and an impairment
provision of $4,900,000 against indefinite lived licenses.
The estimated amortization expense over the next five year period
is as follows:
Amount
2021
622,285
2022
450,403
2023
449,958
2024
448,124
2025
448,124
Total estimated amortization expense
2,418,894
The Company evaluates intangible assets for
impairment on an annual 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 and the impairment is deemed to be permanent in nature.
In assessing the impairment of indefinite
lived licenses, the Company first performed a qualitative impairment test to determine if any impairment indicators were present,
impairment indicators were noted for indefinite life intangibles assets in the Ulisse operation.
The impairment process used was as follows:
·
based on qualitative impairment indicators bring present;
·
the Company utilized managements December 2020 annual operational
budget cash flows for the 2021 together with forecasted cash flows for the next four year period ending in 2025;
·
the budgeted and forecasted cash flows were adjusted for taxation
at the Company’s current effective tax rate;
·
working capital cash flow movements were estimated for the budget
and the forecast period using historical experience;
·
plant and equipment cash flow additions for the budget and forecast
period were estimated using historical experience and known cash flows;
·
net cash flow as determined by the above, were forecast in perpetuity
by using the forecast growth rate and the Company’s estimated Weighted Average Cost of Capital (“WACC”);
·
The forecast future cash flows were discounted back to present value
using the WACC;
·
WACC was determined by comparing the Company’s beta to that
of certain peer companies and determining what a reasonable WACC was compared to our calculated internal WACC, we determined that
due to recent volatility in the Company’s common stock price that a reasonable peer WACC is 10%.
The COVID-19 pandemic has resulted in the closure
of our land-based operations in the Italian market for an extended period of time and as the pandemic evolves and the markets in
which the Company operates continue to experience resurgences of the virus, we are uncertain as to the long-term impact on the
Company’s land-based operations. As such, the Company has made a strategic decision to transfer its Ulisse customer relationships
in Italy to Multigioco ahead of license renewals which are expected to take place within the next one to two years. The combined
Multigioco and Ulisse business under the Multigioco entity, which is an Italian based operator, substantially increases the Company’s
market share in Italy, and may improve the possibility of renewing our Italian licenses. Ulisse is based in Austria and may be
at a disadvantage and at risk of losing its ability to operate in the Italian market when licenses are renewed. Ulisse will focus
on developing gaming solutions for the Austrian and other European markets in the near term. The license under which Ulisse operates
in Italy, is not transferable to Multigioco and accordingly, based on a quantitative impairment analysis, an impairment charge
of $4,900,000 is considered appropriate.
The Company believes that the remaining 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
may be further impaired.
Goodwill represents the excess purchase price
paid over the fair value of assets acquired, including any other identifiable intangible assets.
On January 30, 2019, the Company acquired Virtual
Generation Limited, as disclosed in Note 3 above. The goodwill on acquisition arose as the proceeds paid on acquisition exceeded
the fair value of the identifiable assets less assumed liabilities and imputed deferred tax liabilities on identifiable intangible
assets by $1,401,608.
The Company evaluates goodwill for impairment
on an annual basis during the last month of each year and at an interim date if indications of impairment exist. Goodwill impairment
is determined by comparing the fair value of the reporting unit to its carrying amount with an impairment being recognized only when the
fair value is less than carrying value and the impairment is deemed to be permanent in nature.
Investments in marketable securities consists
of 2,500,000 shares of Zoompass Holdings (“Zoompass”) and is accounted for at fair value, with changes recognized in
earnings.
On December 31, 2020, the shares of Zoompass
were last quoted at $0.187 per share on the OTC market, resulting in an unrealized gain recorded to earnings related to these securities
of $290,000, The Company recorded an unrealized loss of $97,500 for the year ended December 31, 2019.
The entire disclosure for financial instruments. This disclosure includes, but is not limited to, fair value measurements of short and long term marketable securities, international currencies forward contracts, and auction rate securities. Financial instruments may include hedging and non-hedging currency exchange instruments, derivatives, securitizations and securities available for sale at fair value. Also included are investment results, realized and unrealized gains and losses as well as impairments and risk management disclosures.
The Company maintains a $1,000,000 secured
revolving line of credit from Metropolitan Commercial Bank in New York, of which $500,000 was drawn as of December 31, 2020, which
bears a fixed rate of interest of 3.00% on the outstanding balance with an interest only monthly minimum payment, and no maturity
date as long as the security deposit of $1,000,000 remains in place, see Note 4.
On February 26, 2018, the Company issued debenture
units to certain accredited investors (the “February 2018 Private Placement”). Each debenture unit was comprised of
(i) a debenture in the principal amount of CDN $1,000 bearing interest at a rate of 10% per annum, with a maturity date of two
years from the date of issuance, (ii) warrants to purchase up to 31.25 shares of the Company’s common stock at an exercise
price equal to the lesser of $5.00 or 125% of the proposed initial Canadian public offering price per warrant, expiring on February
25, 2020, and (iii) 20 shares of restricted common stock. The investors in the February 2018 Private Placement purchased an aggregate
principal amount of CDN $670,000 ($521,900) debentures and received warrants to purchase up to 20,938 shares of the Company’s
common stock and 13,875 shares of common stock. As a result of the lower debenture conversion price and the warrant exercise price
of the May 31, 2018 Private Placement described below, the whole or any part of the principal amount of the February 2018 Private
Placement debentures plus any accrued and unpaid interest may have been converted into shares of the Company’s common stock
at a price equal to $3.20 per share and the warrants could have been exercised at a price equal to $4.00 per share.
In April 2018, the Company issued debenture
units to certain investors (the “April 2018 Private Placement”). Each debenture unit was comprised of (i) a debenture
in the principal amount of CDN $1,000 bearing interest at a rate of 10% per annum, with a maturity date of two years from the date
of issuance, (ii) warrants to purchase up to 31.25 shares of the Company’s common stock at an exercise price equal to the
lesser of $5.00 or 125% of the proposed initial Canadian public offering price per warrant, expiring in April 2020, and (iii) 20
shares of restricted common stock. The investors in the April 2018 Private Placement purchased an aggregate principal amount of
CDN $135,000 ($105,200) debentures and received warrants to purchase up to 4,218.75 shares of the Company’s common stock
and 2,700 shares of restricted common stock. As a result of the lower debenture conversion price and the warrant exercise price
of the May 31, 2018 Private Placement described below, the whole or any part of the principal amount of the April 2018 Private
Placement debentures plus any accrued and unpaid interest may have been converted into shares of the Company’s common stock
at a price equal to $3.20 per share and the warrants could have been exercised at a price equal to $4.00 per share.
On April 19, 2018, the Company re-issued debenture
units that were first issued to certain investors between January 24, 2017 and January 31, 2018 in order to simplify the various
debentures into a single series with the same terms as new convertible debenture units issued on February 26, 2018 (the “April
19, 2018 Debentures”). Each debenture unit was comprised of (i) a debenture in the principal amount of CDN $1,000 bearing
interest at a rate of 10% per annum, with a maturity date of two years from the date of issuance, (ii) warrants to purchase up
to 31.25 shares of the Company’s common stock at an exercise price equal to the lesser of $5.00 or 125% of the proposed
initial Canadian public offering price per warrant, expiring on April 19, 2020, and (iii) 20 shares of restricted common stock.
The investors in the April 19, 2018 Private Placement received an aggregate principal amount of CDN $1,436,000 ($1,118,600) debentures,
warrants to purchase up to 44,875 shares of the Company’s common stock and 28,720 restricted shares of common stock. As
a result of the lower debenture conversion price and the warrant exercise price of the May 31, 2018 Private Placement described
below, the whole or any part of the principal amount of the April 19, 2018 Debentures plus any accrued and unpaid interest could
have been converted into shares of the Company’s common stock at a price equal to $3.20 per share and the warrants could
have been exercised at a price equal to $4.00 per share.
On May 11, 2018, the Company issued debenture
units to certain investors (the “May 11, 2018 Private Placement”). Each debenture unit was comprised of (i) a debenture
in the principal amount of CDN $1,000 bearing interest at a rate of 10% per annum, with a maturity date of two years from the date
of issuance, (ii) warrants to purchase up to 31.25 shares of the Company’s common stock at an exercise price equal to the
lesser of $5.00 or 125% of the proposed initial Canadian public offering price per warrant, expiring on May 11, 2020, and (iii)
20 shares of restricted common stock. The investors in the May 11, 2018 Private Placement purchased an aggregate principal amount
of CDN $131,000 ($102,000) debentures and received warrants to purchase up to 4,093.75 shares of the Company’s common stock
and 2,620 restricted shares of common stock. As a result of the lower debenture conversion price and the warrant exercise price
of the May 31, 2018 Private Placement described below, the whole or any part of the principal amount of the May 11, 2018 Private
Placement plus any accrued and unpaid interest could have been converted into shares of the Company’s common stock at a price
equal to $3.20 per share and the warrants could have been exercised at a price equal to $4.00 per share.
On May 31, 2018, the Company closed a private
placement offering of up to 7,500 units and entered into Subscription Agreements (the “Agreements”) with certain accredited
investors (the “May 31, 2018 Private Placement”). The units were offered in both U.S. and Canadian dollar denominations.
Each unit sold to U.S. investors was sold at a per unit price of $1,000 and was comprised of (i) a 10% convertible debenture in
the principal amount of $1,000 (the “U.S. Debentures”) maturing on May 31, 2020, (ii) 26 shares of our common stock
and (ii) warrants to purchase up to 135.25 shares of the Company’s common stock (the “U.S. Warrants”). Each unit
sold to Canadian investors was sold at a per unit price of CND $1,000 and was comprised of (i) a 10% convertible debenture in the
principal amount of CND $1,000 (the “Canadian Debentures” and together with the U.S. Debentures, the “May Debentures”),
(ii) 20 shares of our common stock and (ii) warrants to purchase up to 104.06 shares of our common stock (the “Canadian Warrants”
and together with the U.S. Warrants, the “May Warrants”).
The proceeds received from the convertible
debentures were net of finders fees paid to certain brokers. In addition, the Company also issued: (i) shares of common stock to
the convertible debenture holders; (iii) certain two year warrants exercisable for shares of common stock at an exercise price
of $4.00 per share; (iii) in conjunction with the finders fees paid, the Company also issued warrants to certain brokers on the
same terms and conditions as the warrants issued to the convertible debenture holders.
The convertible debentures were convertible
into shares of common stock at a conversion price of $3.20 per share.
The May Warrants and broker warrants
were exercisable at an exercise price of $4.00 per share and expired on May 31, 2020.
The accounting treatment of the above is as
follows:
(i)
The convertible debentures were recorded at gross value;
(ii)
The cash fee paid to the brokers was $427,314 and the fair value
of the warrants issued to the brokers were valued at fair value as described in (iv) below and were recorded as a debt discount
against the gross value of the convertible debentures;
(iii)
The shares of common stock issued to the convertible debenture holders
were valued at $582,486, the market price of the common stock on the date of issue and were recorded as debt discount against the
gross value of the convertible debt;
(iv)
The warrants issued to the convertible debenture holders and
brokers were valued at $2,929,712 using a Black-Scholes valuation model. These warrants were equity classified with a
beneficial conversion feature.
The total debt discount above amounted to $6,524,567
which was being amortized over the two year life of the debentures on a straight line basis.
Convertible debentures of $10,000 and CDN $65,000
(approximately $48,416) that had matured on May 31, 2020 were extended to August 29, 2020, of which CDN $35,000 was acquired by
a related party prior to extension, and a further $600,000 and CDN $242,000 (approximately $180,257) that had matured, had the
maturity date extended to September 28, 2020, of which $500,000 and CDN $207,000 were acquired by a related party, prior to extension.
As an incentive for extending the maturity
date of the convertible debentures, the debenture holders were granted two year warrants exercisable for 301,644 shares of common
stock at an exercise price of $3.75 per share, of which 144,041 were granted to related parties and three year warrants exercisable
for 72,729 shares of common stock at an exercise price of $5.00 per share, of which 36,010 were issued to related parties. All
of the convertible debentures with extended maturity dates, with the exception of one convertible debenture of CDN $35,000, were
repaid during 2020. The remaining convertible debenture of CDN $35,000 was repaid in 2021.
During the year ended December 31, 2020, investors
in Canadian Dollar convertible debentures converted the aggregate principal amount of CDN $317,600, including interest thereon
of CDN $45,029 and investors in US Dollar convertible debentures converted the aggregate principal amount of $400,000, including
interest thereon of $70,492 into 230,134 shares of common stock.
The Aggregate convertible debentures outstanding consists of the
following:
In terms of the acquisition of Virtual Generation
on January 31, 2019, disclosed in Note 3 above, the Company issued non-interest bearing promissory notes of €3,803,000 owing
to both related parties and non-related parties. The value of the promissory notes payable related parties was €1,521,200
and to non-related parties was €2,281,800.
The promissory notes payable to non-related
parties are 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 was 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, which issuances commenced
on March 1, 2019.
Pursuant to the terms of the Purchase Agreement
that the Company entered into with VG, the Company agreed to pay the sellers of VG an earnout payment in shares of our common stock
equal to an aggregate amount of €500,000 (approximately $561,500), if the amounts of bets made by users of the VG platform
grew by more than 5% for the year ended December 31, 2019 compared to the year ended December 31, 2018. Based on the 18,449,380
tickets sold in 2019 the VG sellers qualified for the earnout payment of 132,735 shares of common stock at a price of $4.23 per
share, which shares were issued effective January 2020. The earnout payment was considered remote at the time of entering into
the transaction and was not recorded as a component of deferred purchase consideration, accordingly it has been expensed through
the statement of operations for the year ended December 31, 2019. The amount due to the non-related party VG sellers amounted to
€300,000 (approximately $336,810).
The future payments on the promissory notes
were 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 deferred purchase consideration
consists of the following:
In September 2016, the Company obtained a loan
of €500,000 (approximately $545,000) 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% 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.
In terms of a directive by the Italian Government,
in order to provide financial relief due to the Covid-10 pandemic, Multigioco was able to suspend repayments of the loan for a
period of six months and the maturity date of the loan was extended to March 31, 2022, the interest rate remains the same at 4.5%
above the Euro Inter Bank Offered Rate with monthly repayments revised to $9,971.
The Company made payments of €59,396 (approximately
$67,783) which included principal of €54,638 (approximately $62,353) and interest of €4,758 approximately $5,430) for
the year ended December 31, 2020.
On March 11, 2020, the Company received an
advance of $300,000 in terms of a Promissory Note (“PN”) entered into with Forte Fixtures and Millwork, Inc., a Company
controlled by the brother of our Executive Chairman. The PN bears no interest and is repayable on demand.
The movement on notes payable, Related Party,
consists of the following:
December 31,
2020
December 31,
2019
Principal Outstanding
Opening balance
$
—
$
318,078
Additions
300,000
—
Repayment
(200,000
)
—
Applied to warrant exercise
(100,000
)
—
Settled by issuance of common shares
—
(318,078
)
—
—
Accrued Interest
Opening balance
—
113,553
Interest expense
22,521
25,830
Repayment
(14,465
)
—
Applied to warrant exercise
(8,056
)
—
Conversion to equity
—
(139,383
)
—
—
Promissory Notes Payable – Related Party
$
—
$
—
Convertible notes acquired, Related Party
Forte Fixtures and Millworks acquired certain
convertible notes from third parties that had matured on May 31, 2020. The convertible notes had an aggregate principal amount
of $150,000 and only the accrued interest of $70,000 on a note with an aggregate principal amount of $350,000 and notes with an
aggregate principal amount of CDN $207,000, the maturity date of these convertible notes was extended to September 28, 2020. The
convertible notes together with interest thereon, amounting to $445,020 were repaid between August 23, 2020 and October 21, 2020.
As an incentive for extending the maturity
date of the convertible debentures, Forte Fixtures was granted two year warrants exercisable for 134,508 shares of common stock
at an exercise price of $3.75 per share and three year warrants exercisable for 33,627 shares of common stock at an exercise price
of $5.00 per share. These warrants were exercised on December 30, 2020, for gross proceeds of $630,506.
Deferred Purchase consideration, Related
Party
In terms of the acquisition of VG on January
17, 2019, disclosed in Note 3 above, the Company issued non-interest bearing promissory notes in the principal amount of €3,803,000
owing to both related parties and non-related parties. The value of the promissory notes payable to non-related parties was €2,281,800
and to related parties was €1,521,200.
The related party promissory notes are due
to Luca Pasquini, a director and officer of the Company and Gabriele Peroni, an officer of the Company.
The promissory notes were 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
of the acquisition (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.
Pursuant to the terms of the Purchase Agreement
that the Company entered into with VG, the Company agreed to pay the VG Sellers an earnout payment in shares of our common stock
equal to an aggregate amount of €500,000 (approximately $561,500), if the amounts of bets made by users of the VG platform
grew by more than 5% for the year ended December 31, 2019 compared to the year ended December 31, 2018. Based on the 18,449,380
tickets sold in 2019 the VG sellers qualified for the earnout payment of 132,735 shares of common stock at a price of $4.23 per
share, which shares were issued effective January 2020.
The amount due to the related party VG Sellers
amounted to €200,000 (approximately $224,540) and was settled during January 2020 by the issuance of 53,094 shares of common
stock at $4.23 per share.
The movement on deferred purchase consideration
consists of the following:
Description
December 31,
2020
December 31,
2019
Principal Outstanding
Promissory notes due to related parties
$
1,279,430
$
1,830,541
Additional earnout earned
—
224,540
Settled by the issuance of common shares
(482,978
)
(410,925
)
Repayment in cash
(471,554
)
(328,734
)
Foreign exchange movements
57,230
(35,992
)
382,128
1,279,430
Present value discount on future payments
Present value discount
(80,069
)
(161,393
)
Amortization
76,222
78,128
Foreign exchange movements
(1,327
)
3,196
(5,174
)
(80,069
)
Deferred purchase consideration, net
$
376,954
$
1,199,361
Related party (payables) receivables
Related party payables and receivables represent
non-interest-bearing (payables) receivables that are due on demand.
The balances outstanding are as follows:
December 31,
2020
December 31,
2019
Related Party payables
Gold Street Capital Corp.
$
—
$
(2,551
)
Luca Pasquini
(565
)
—
$
(565
)
$
(2,551
)
Related Party Receivables
Luca Pasquini
$
1,519
$
4,123
Gold Street Capital
Gold Street Capital
is wholly owned by Gilda Ciavarella, the spouse of Mr. Ciavarella.
Amounts due to Gold Street Capital Corp.,
the major stockholder of Elys, are for reimbursement of expenses. During the period 2017 to 2019, Gold Street Capital funded the
Company operations utilizing personal credit cards. These shareholder loan accounts were only refunded when the Company had available
cash. The shareholder claimed reimbursement of the calculated interest expense of these shareholder loans at the rate of 18.99%,
resulting in an interest charge of $50,494 for the year ended December 31, 2020. No interest was charged in prior periods.
Gold Street Capital
acquired certain convertible notes that had matured on May 31, 2020, amounting to CDN $35,000 from third parties, the maturity
date of these convertible notes was extended to September 28, 2020. The convertible notes together with interest thereon, amounting
to CDN $44,062 (approximately $34,547) was outstanding at December 31, 2020. This amount was repaid subsequent to period end.
As an incentive for
extending the maturity date of the convertible debentures, all debenture holders, including Gold Street Capital, were granted
two-year warrants exercisable at an exercise price of $3.75 per share, and three-year warrants exercisable at an exercise price
of $5.00 per share. Gold Street Capital was granted two year-warrants exercisable for 9,533 shares of common stock at $3.75 per
share and three-year warrants exercisable for 2,383 shares of common stock at $5.00 per share.
On September 4, 2019,
the Company issued 15,196 shares of common stock to Gold Street Capital in settlement of $48,508 of advances made to the Company
for certain reimbursable expenses.
Luca Pasquini
Amounts due to Luca Pasquini is for advances
made to various subsidiaries for working capital purposes and receivables for expense advances.
On January 31, 2019,
the Company acquired VG for €4,000,000 (approximately $4,576,352), Mr. Pasquini was a 20% owner of VG and was due gross
proceeds of €800,000 (approximately $915,270). The gross proceeds of €800,000 was to be settled by a payment in cash
of €500,000 over a twelve month period and by the issuance of common stock valued at €300,000 over an eighteen month
period. As of December 31, 2020, the Company has paid Mr. Pasquini cash of €333,100 (approximately $399,061) and issued
112,521 shares valued at €300,000 (approximately $334,791).
In addition, due to
the attainment of an earnout clause per the agreement, a further €500,000 (approximately $561,351) was earned as of December
31, 2019, of which Mr. Pasquini’s share was €100,000 (approximately $112,270), which earnout was settled by the issue
of 26,547 shares of common stock during January 2020.
On August 29, 2019,
the Company granted to Mr. Pasquini, ten year options to purchase 25,000 shares of common stock at an exercise price of $2.80
per share.
On October 1, 2020, the Company granted to
Mr. Pasquini a ten year option to purchase 58,000 shares of common stock at an exercise price of $2.03 per share.
Michele Ciavarella
On December 30, 2020, Mr. Ciavarella resigned
as the Chief Executive Officer of the Company and retained the position as Executive Chairman. In connection with Mr. Ciavarella’s
appointment as the Executive Chairman, the Company entered into an amendment, dated December 30, 2020 to his employment agreement,
dated December 31, 2018, as amended on July 5, 2019, by and between the Company and Mr. Ciavarella. Pursuant to the Amendment,
Mr. Ciavarella’s: (i) position at the Company was changed to Executive Chairman; (ii) term of employment was extended three
years to December 31, 2024; and (iii) base salary was increased to $500,000. The Amendment further provides that in lieu of cash,
and to the extent shares are then available for grant under the Company’s 2018 Equity Incentive Plan, as amended, Mr. Ciavarella
may elect to receive, as of the first business day in January of each year of employment, up to 50% of his base salary as a restricted
stock grant of shares of the Company’s common stock under the Plan, vesting monthly over a 12-month period. For the year
ended December 31, 2021, Mr. Ciavarella has agreed to receive $140,000 of his base salary as a restricted stock grant.
On July 5, 2019, the Company granted to Mr.
Ciavarella, the then Chief Executive Officer and Chairman of the board , ten year options to purchase 39,375 shares of common stock
at an exercise price of $2.96 per share.
On August 29, 2019, the Company granted to
Mr. Ciavarella ten year options to purchase 25,000 shares of common stock at an exercise price of $2.80 per share.
On September 4, 2019, Mr. Ciavarella converted
$500,000 of accrued salaries into 125,000 shares of common stock at a conversion price of $4.00 per share.
On October 1, 2020, the Company granted to
Mr. Ciavarella, a ten year option to purchase 140,000 shares of common stock at an exercise price of $2.03 per share.
Matteo Monteverdi
Effective September 21, 2020, the Board of
Directors (the “Board”) appointed Mr. Monteverdi, as President of the Company and effective December 30, 2020, Mr.
Monteverdi was appointed as the Chief Executive Officer of the Company.
Mr. Monteverdi has previously served as an
independent strategic advisor to the Company since March 2020 and has developed a firm understanding of the unique technological
capabilities of the Company’s Elys Game Board betting platform and has established a strong rapport with the Company’s
current management team.
In connection with his appointment, the Company
and Mr. Monteverdi entered into a written employment agreement (the “Employment Agreement”) for an initial four-year
term, which provides for the following compensation terms:
·
an annual base salary
of $395,000 subject to increase, but not decrease, at the discretion of the Board;
·
the opportunity to earn
a Management by Objectives bonus (“MBO Bonus”) of 0 to 100% of annual base salary with a target bonus of 50% upon the
achievement of 100% of a target objective that is mutually agreed on by both the Company and Mr. Monteverdi; and
·
Equity Incentive Options
to purchase 648,000 shares of common stock that vest pro rata on each of September 1, 2021, September 1, 2022, September 1, 2023
and September 1, 2024.
Mr. Monteverdi is also eligible to participate
in the Company’s 2018 Equity Incentive Plan and to participate in the Company’s employee benefit plans as in effect
from time to time on the same basis as generally made available to other senior executives of the Company or in the alternative
may substitute the payment amount that would be paid for health benefits towards contributions to a 401k plan.
In addition, the Employment Agreement also
provides for certain payments and benefits in the event of a termination of his employment under specific circumstances. If, during
the term of the Employment Agreement, his employment is terminated by the Company other than for “cause,” death or
disability or by Mr. Monteverdi for “good reason” (each as defined in his agreement), he would be entitled to receive
from the Company in equal installments over a period of six (6) months (1) an amount equal to one (1) times the sum of: (A) his
base salary and (B) an amount equal to the highest annual MBO Bonus paid to him (if any) in respect of the two (2) most recent
fiscal years of the Company but not more than his MBO Bonus for the-then current fiscal year (provided if such termination occurs
within the first twelve (12) months of the Agreement, the amount shall be Executive’s MBO Bonus for the-then current fiscal
year); (2) in lieu of any MBO Bonus for the year in which such termination occurs, payment of an amount equal to (A) the MBO Bonus
(if any) which would have been payable to Mr. Monteverdi had he remained in employment with the Company during the entire year
in which such termination occurred, multiplied by (B) a fraction the numerator of which is the number of days Mr. Monteverdi was
employed in the year in which such termination occurs and the denominator of which is the total number of days in the year in which
such termination occurs. In addition, he will be entitled to continue to receive under the Employment Agreement an amount equal
to the reimbursement of up to $2,000 a month in third-party medical and welfare benefits for Mr. Monteverdi and his dependents,
until the earlier of: (A) a period of twelve (12) months after the termination date, or (B) the date Mr. Monteverdi becomes eligible
to receive such coverage under a subsequent employer’s insurance plan.
Mr. Monteverdi’s receipt of the termination
payments and benefits is contingent upon execution of a general release of any and all claims arising out of or related to his
employment with the Company and the termination of his employment, and compliance with the restrictive covenants described in
the following paragraph.
Gabriele Peroni
On January 31, 2019, the Company acquired VG
for €4,000,000 (approximately $4,576,352), Mr. Peroni was a 20% owner of VG and was due gross proceeds of €800,000 (approximately
$915,270). The gross proceeds of €800,000 was to be settled by a payment in cash of €500,000 over a twelve month period
and by the issuance of common stock valued at €300,000 over an eighteen month period. As of December 31, 2020, the Company
has paid Mr. Peroni cash of €354,400 (approximately $424,579) and issued 112,521 shares valued at €300,000 (approximately
$334,791).
In addition, due to the attainment of an earnout
clause per the agreement, a further €500,000 (approximately $561,351) was earned as of December 31, 2019, of which Mr. Peroni’s
share was €100,000 (approximately $112,270), which earnout was settled by the issue of 26,547 shares of common stock during
January 2020.
On August 29, 2019, the Company granted to
Mr. Peroni, ten year options to purchase 25,000 shares of common stock at an exercise price of $2.80 per share.
On October 1, 2020, the Company granted to
Mr. Peroni a ten year option to purchase 36,000 shares of common stock at an exercise price of $2.03 per share.
Mr. Peroni received
salary payments through his wholly owned private company Dueci Srl.
Alessandro Marcelli
On August 29, 2019, the Company granted to
Mr. Marcelli, an officer of the Company, ten year options to purchase 25,000 shares of common stock at an exercise price of $2.80
per share.
On October 1, 2020, the Company granted to
Mr. Marcelli a ten year option to purchase 56,000 shares of common stock at an exercise price of $2.03 per share.
Mr. Marcelli received salary payments
through his wholly owned private company AB Consulting Srl.
Franco Salvagni
On August 29, 2019, the Company granted to
Mr. Salvagni, an officer of the Company, ten year options to purchase 25,000 shares of common stock at an exercise price of $2.80
per share.
On October 1, 2020, the Company granted to
Mr. Salvagni a ten year option to purchase 36,000 shares of common stock at an exercise price of $2.03 per share.
Mr. Salvagni received salary payments
through his wholly owned private company FSDS Srl.
Beniamino Gianfelici
On August 29, 2019, the Company granted to
Mr. Gianfelici, an officer of the Company, ten year options to purchase 25,000 shares of common stock at an exercise price of $2.80
per share.
On October 1, 2020, the Company granted to
Mr. Gianfelici a ten year option to purchase 35,000 shares of common stock at an exercise price of $2.03 per share.
Mr. Gianfelici received salary
payments through his wholly owned private company FG Immobiliare Srl.
Mark Korb
On July 5, 2019, the Company granted to Mr.
Korb, the chief financial officer of the Company, seven year options to purchase 25,000 shares of common stock at an exercise price
of $2.72 per share.
On October 1, 2020, the Company granted to
Mr. Korb a ten year option to purchase 58,000 shares of common stock at an exercise price of $2.03 per share.
Mr. Korb billed the Company through
his wholly owned private company Korb Management Services, LLC.
Paul Sallwasser
On July 5, 2019, the Company granted to Mr.
Sallwasser, a director of the Company, ten year options to purchase 20,625 shares of common stock at an exercise price of $2.96
per share.
On October 1, 2020, the Company granted to
Mr. Sallwasser a ten year option to purchase 55,000 shares of common stock at an exercise price of $2.03 per share.
Steven Shallcross
On July 5, 2019, the Company granted to Mr.
Shallcross, a director of the Company, ten year options to purchase 10,313 shares of common stock at an exercise price of $2.96
per share.
On October 1, 2020, the Company granted to
Mr. Shallcross a ten year option to purchase 35,000 shares of common stock at an exercise price of $2.03 per share.
Phillipe Blanc
On October 1, 2020, the Company appointed Mr.
Philippe Blanc as a director of the Company.
On October 1, 2020, the Company granted to
Mr. Blanc a ten year option to purchase 55,000 shares of common stock at an exercise price of $2.03 per share.
Richard Cooper
Mr. Cooper received director fees of $30,000 and $15,000 for the
years ended December 31, 2020 and 2019, respectively.
Clive Kabatznik
Mr. Kabatznik received director fees of $10,000 and $30,000 for
the years ended December 31, 2020 and 2019, respectively.
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.
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, as disclosed
in Note 3 above.
·
On January 1, 2020, 22,030
shares of common stock valued at $93,077;
·
On January 1, 2020, 132,735
shares of common stock valued at $561,350;
·
On February 27, 2020,
23,890 shares of common stock valued at $91,541;
·
On March 1, 2020, 25,690
shares of common stock valued at $96,372;
·
On April 1, 2020, 61,040
shares of common stock valued at $90,745;
·
On May 1, 2020, 24,390
shares of common stock valued at $91,265;
·
On June 1, 2020, 29,300
shares of common stock valued at $92,321;
·
On July 1, 2020, 35,130
shares of common stock valued at $91,265.
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 284,721 shares of common stock, valued at $728,884 in settlement of promissory notes amounting to $457,461
and other liabilities amounting to $553,525.
For the year ended December 31, 2020, the Company
issued a total of 230,326 shares of common stock, valued at $739,004, upon the conversion of convertible debentures into equity
and for the year ended December 31, 2019, the Company issued a total of 1,866,528 shares of common stock, valued at $5,972,507,
upon the conversion of convertible debentures into equity (Note 11).
On August 17, 2020, the Company closed its
underwritten public offering of 4,166,666 units at a price of $2.40 per unit for gross proceeds of $9,999,998, before underwriting
commission of $800,000 and other offering expenses. Each unit consists of one share of common stock and one five year warrant exercisable
for one share of common stock at an exercise price of $2.50 per share.
The Company granted the underwriters a forty-five
day option to purchase up to 624,999 shares of common stock and/or warrants at a price of $2.39 per share and $0.01 per five year
warrant exercisable for one share of common stock at an exercise price of $2.50 per share. The underwriters were also issued a
three year warrant exercisable for 208,333 shares of common stock at an exercise price of $3.00 per share.
On September 3, 2020, the underwriters executed
a partial exercise of the option to purchase 624,999 units and purchased only the warrants at a purchase price of $0.01 per warrant,
less underwriters commission of $500, for net proceeds of $5,250.
On December 30, 2020, the Company entered into
a settlement agreement with its previous chairman whereby it issued 8,469 shares of common stock at a value of $46,666 to settle
the balance owing to $46,666.
Between December 18, 2020 and December 31,
2020, investors exercised warrants for 3,321,226 shares of common stock at exercise prices ranging from $2.50 to $5.00 per share
for gross proceeds of $8,541,896, and the use of proceeds from promissory notes, related party of $108,056 was applied to the warrant
exercise.
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.
In connection with the convertible debenture
agreements entered into with accredited investors in the first and second quarters 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. These warrants expired unexercised.
On May 31, 2020, in terms of convertible debt
extension agreements entered into with investors, the Company granted two year warrants exercisable for 301,644 shares of common
stock at an exercise price of $3.75 per share until May 31, 2022 and three year warrants exercisable for 72,729 shares of common
stock at an exercise price of $5.00 per share until May 31, 2023.
In terms of the underwritten public offering
disclosed in note 16 above, the Company granted 4,166,666 five year warrants, exercisable at $2.50 per share to the subscribers.
In addition, the Company granted the underwriter 208,333 three year warrants exercisable at $3.00 per share, and in terms of the
underwriters’ over-allotment option, the Company granted an additional 624,999 five year warrants exercisable at $2.50 per
share to the Underwriter.
The warrants issued during the year ended
December 31, 2020, were assessed in terms of ASC480-10,Distinguishing between Liabilities and Equity, and ASC 815-10,Derivatives
and Hedging Transactionsto determine if they met equity classification or liability classification. After considering the
guidance provided by the ASC under both ASC 480-10 and ASC 815-10, the Company determined that equity classification was appropriate.
The warrants awarded
during the year ended December 31, 2020 were valued using a Black-Scholes option pricing model.
The following assumptions
were used in the Black-Scholes model:
Year ended
December 31, 2020
Exercise price
$2.50 to $5.00
Risk free interest rate
0.16 to 0.29
%
Expected life of warrants
2 to 5 years
Expected volatility of underlying stock
139.5 to 183.5
Expected dividend rate
0
%
A summary of all of the Company’s warrant
activity during the period January 1, 2019 to December 31, 2020 is as follows:
Number of shares
Exercise price per share
Weighted average exercise price
Outstanding January 1, 2019
1,089,474
$
4.00
$
4.00
Granted
—
—
—
Forfeited/cancelled
—
—
—
Exercised
—
—
—
Expired
—
—
—
Outstanding December 31, 2019
1,089,474
$
4.00
$
4.00
Granted
5,374,371
2.50 to 5.00
2.62
Forfeited/cancelled
(1,089,474
)
4.00
4.00
Exercised
(3,321,226
)
2.50 - 5.00
2.62
Outstanding December 31, 2020
2,053,145
$
2.50 to 5.00
$
2.63
The following tables summarize information
about warrants outstanding as of December 31, 2020:
In September 2018, our 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.
On October 1, 2020, the Board approved an amendment
to the Company’s 2018 Equity Incentive Plan (the “Plan”) to increase the maximum number of shares that may be
granted as an award under the Plan to any non-employee director during any one calendar year to: (i) chairperson or lead director
– 300,000 shares of common stock; and (ii) other non-employee director - 250,000 shares of common stock, which reflects an
increase in the annual limits for awards to be granted to non-employee directors under the Plan.
On November 20, 2020, the Company held its
2020 Annual Meeting of Stockholders. At the Annual Meeting, the Company’s stockholders approved an amendment to the Company’s
2018 Equity Incentive Plan to increase the number of shares of common stock that the Company will have authority to grant under
the plan by an additional 1,850,000 shares of common stock.
During July 2019, we 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 our Chief Financial
Officer, options to purchase 39,375 shares of common stock were issued to our Chief Executive Officer and options to purchase 30,938
shares of common stock were issued to directors. During August 2019, we 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, our Chief
Executive Officer, Alessandro Marcelli, our Vice President of Operations, Luca Pasquini, our Vice President of Technology, Gabriele
Peroni, our Vice President Business Development, Franco Salvagni, our Vice President of Land-based Operations and Beniamino Gianfelici,
our Vice President Regulatory Affairs. On November 11,2019 the Company granted options to purchase 70,625 shares of common stock
to various employees at an exercise price of $2.80 per share.
During September 2020, in terms of the employment
agreement entered into with Mr. Monteverdi, the Company granted options to purchase 648,000 shares of common stock that vest pro
rata on each of September 1, 2021, September 1, 2022, September 1, 2023 and September 1, 2024.
On October 1, 2020, the Board granted to each
of Michele Ciavarella, Alessandro Marcelli, Luca Pasquini, Gabriele Peroni, Frank Salvagni, Beniamino Gianfelici and Mark Korb,
an option to purchase 140,000, 56,000, 58,000, 36,000, 36,000, 35,000 and 58,000 shares of the Company’s common stock, respectively,
under the Company’s 2018 Equity Incentive Plan. The shares of common stock underlying the option awards each vest pro rata
on a monthly basis over a thirty-six month period. The options are exercisable for a period of ten years from the date of grant
and have an exercise price of $2.03 per share.
On October 1, 2020, the Board also granted
to each of Paul Sallwasser, Steven Shallcross and Philippe Blanc, as non-executive members of the Board, an option to purchase
55,000, 35,000 and 55,000 shares of the Company’s common stock, respectively, under the Company’s 2018 Equity Incentive
Plan. The shares of common stock underlying the option awards each vest pro rata on a monthly basis over a twelve month period.
The options are exercisable for a period of ten years from the date of grant and have an exercise price of $2.03 per share.
On October 1, 2020, the board granted options
to purchase 95,000 shares of common stock to various employees at an exercise price of $2.03 per share.
The options awarded during the year ended December
31, 2020 were valued using a Black-Scholes option pricing model.
The following assumptions were used in the
Black-Scholes model:
Year ended
December 31, 2020
Exercise price
$1.84 to $2.03
Risk free interest rate
0.68%
Expected life of options
10 years
Expected volatility of underlying stock
231.1 to 231.4
%
Expected dividend rate
0
%
A summary of all of the Company’s option activity during the
period January 1, 2019 to December 31, 2020 is as follows:
Number of shares
Exercise price per share
Weighted average exercise price
Granted
315,938
$2.72 to $2.96
$
2.84
Forfeited/cancelled
—
—
—
Exercised
—
—
—
Outstanding December 31, 2019
315,938
$2.72 to $2.96
$
2.84
Granted
1,307,000
$1.84 to $2.03
$
1.95
Forfeited/Cancelled
—
—
—
Exercised
—
—
—
Outstanding December 31, 2020
1,622,938
$1.84 to $2.96
$
2.11
The following tables summarize information about stock options outstanding
as of December 31, 2020:
Options outstanding
Options exercisable
Exercise price
Number of shares
Weighted average remaining years
Weighted Average exercise price
Number of shares
Weighted average exercise price
$
1.84
648,000
9.73
—
$
2.03
659,000
9.75
79,083
—
$
2.72
25,000
5.50
25,000
$
2.80
220,625
8.73
69,128
$
2.96
70,313
8.52
70,313
1,622,938
9.49
$
2.11
243,524
$2.59
The weighted-average grant-date fair values
of options granted during the year ended December 31, 2020 was $2,542,423 ($1.95 per share). $518,106 was recorded as compensation
cost for the year ended December 31, 2020. As of December 31, 2020, there were unvested options to purchase $1,379,414 shares of
common stock. Total expected unrecognized compensation cost related to such unvested options is $2,722,022 which is expected to
be recognized over a period of 44 months.
The intrinsic value of the options at December
31, 2020 was $6,151,366.
The following table represents disaggregated
revenues from our gaming operations for the years ended December 31, 2020 and 2019. 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 years ended December 31, 2020 and 2019,
the following options, 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 years ended December 31, 2020 and December 31, 2019.
The Company's Italian subsidiaries are governed
by the income tax laws of Italy. The corporate tax rate in Italy is 27.9% (IRES at 24% plus IRAP ordinary at 3.9%) 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.
The Company's Colombian subsidiary is governed
by the income tax laws of Colombia. The corporate tax rate in Colombia is 31% on income reported in the statutory financial statements
after appropriate tax adjustments.
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 reconciliation of income tax expense at
the U.S. statutory rate of 21% during 2020 and 2019, to the Company’s effective tax rate is as follows:
December 31,
2020
December 31,
2019
U.S. Statutory rate
$
1,896,305
$
1,822,092
Items not allowed for tax purposes
(2,113,651
)
(1,142,776
)
Foreign tax rate differential
(90,772
)
(66,163
)
Additional foreign taxation
(36,939
)
(15,190
)
Withholding tax on dividends
(162,112
)
—
Prior year over provision
—
1,167
Prior year net operating loss adjustment
—
(917,820
)
Movement in valuation allowances
(323,114
)
(279,486
)
Other differences
(76,361
)
—
Income tax expense
$
(906,644
)
$
(598,176
)
The Company has accumulated a net operating
loss carry forward (“NOL”) of approximately $17.9 million as of December 31, 2020 in the U.S. The U.S. NOL carry forward
includes adjustments based on prior year assessments of $0.3 million due the assessment of tax losses carried forward. Net operating
losses of $11.1 million expire from 2033 to 2037 and a further $6.8 million has an indefinite life. The company also has net operating
loss carry forwards in Italy, Austria and Malta of approximately €0.11 million ($0.15 million) and in Canada of approximately
CDN $0.4 million ($0.33 million). The use of these losses to reduce future income taxes will depend on the generation of sufficient
taxable income prior to the expiration of the NOL. The Company periodically evaluates whether it is more likely than not that it
will generate sufficient taxable income to realize the deferred income tax asset. At the present time, management cannot presently
determine when the Company will be able to generate sufficient taxable income to realize the deferred tax asset; accordingly, a
100% valuation allowance has been established to offset the asset.
Utilization of NOLs are subject to limitation
due to any ownership change (as defined under Section 382 of the Internal Revenue Code of 1986) which resulted in a change in business
direction. Unused limitations may be carried over to future years until the NOLs expire. Utilization of NOLs may also be limited
in any one year by alternative minimum tax rules.
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 provisions for income taxes consist of
currently payable income tax in Italy, Malta and Austria and deferred tax movements on intangible assets.
The provisions for income taxes are summarized
as follows:
December 31,
2020
December 31,
2019
Current
$
(837,973
)
$
(683,830
)
Withholding tax
(162,112
)
—
Deferred
93,441
85,654
Total
$
(906,644
)
$
(598,176
)
The tax effects of temporary differences that
give rise to the Company’s net deferred tax assets and liabilities are as follows:
December 31, 2020
December 31, 2019
Working capital movements
$
693,465
$
641,089
Plant and equipment
6,925
—
Net loss carryforward - Foreign
135,568
119,251
Net loss carryforward - US
3,752,678
3,505,182
4,588,636
4,265,522
Less valuation allowance
(4,588,636
)
(4,265,522
)
Deferred tax assets
$
$
—
Intangible assets
$
(1,222,514
)
$
(1,315,954
)
Deferred Tax Liability
$
(1,222,514
)
$
(1,315,954
)
The Net loss carry forward for US entities
includes an adjustment of $0.3 million based on taxation assessments which differed to the amounts originally provided for.
The following tax years remain subject to examination:
USA:
Generally three years from the date of tax return filing which is currently the 2018 to 2020 tax years.
Italy:
Generally five years from
the date of filing which is currently the 2016 to 2020 tax years.
Austria:
Generally tax years 2019 and 2020.
Malta:
Eight years from fiscal year end which is currently 2013 to 2020.
Colombia:
Three years in the case of taxable profits and five years where taxable losses are realized.
The Company is not currently under examination
and it has not been notified of a pending examination.
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.
The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.
Subsequent to year end, warrants were exercised
for 1,150,776 shares of common stock for gross proceeds of $2,876,940, additionally, brokers warrants were exercised for 208,333
shares of common stock for gross proceeds of $624,999 and other debenture warrants were exercised for 36,709 shares for gross proceeds
of $171,839.
Deferred purchase consideration
The deferred purchase consideration of €333,300
($407,552) was repaid.
Convertible debenture
The remaining convertible debenture of CDN
$35,000 ($27,442), including interest thereon was repaid.
Line of Credit
On January 11, 2021, the company repaid the
outstanding balance of $500,000 on the revolving line of credit at Metropolitan Commercial Bank in full.
The Company has evaluated subsequent events
through the date the financial statements were issued, other than disclosed above, we did not identify any other subsequent events
that would have required adjustment or disclosure in the financial statements.
The entire disclosure for significant events or transactions that occurred after the balance sheet date through the date the financial statements were issued or the date the financial statements were available to be issued. Examples include: the sale of a capital stock issue, purchase of a business, settlement of litigation, catastrophic loss, significant foreign exchange rate changes, loans to insiders or affiliates, and transactions not in the ordinary course of business.
The accompanying consolidated financial statements
have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”).
For the purposes of its listing in Canada,
the Company is an “SEC Issuer” as defined under National Instrument 52-107 “Accounting Principles and Audit
Standards” and is relying on the exemptions of Section 3.7 of NI 52-107 and of Section 1.4(8) of the Companion Policy
to National Instrument 51-102 “Continuous Disclosure Obligations” (“NI 51-102CP”) which permits
the Company to prepare its financial statements in accord with U.S. GAAP.
The consolidated financial statements include
the financial statements of the Company and its subsidiaries, all of which are wholly-owned. All significant inter-company transactions
are eliminated upon consolidation.
Certain items in the prior periods were reclassified
to conform to the current period presentation.
All amounts referred to in the Notes to the
consolidated financial statements are in United States Dollars ($) unless stated otherwise.
The Company translated the assets and liabilities
of its foreign subsidiaries into US Dollars at the exchange rate in effect at year end and the results of operations and cash flows
at the average rate throughout the year. The translation adjustments are recorded directly as a separate component of stockholders’
equity, while transaction gains (losses) are included in net income (loss).
All revenues were generated in Euro and Colombian Pesos during the
years presented.
Gains and losses from foreign currency transactions
are recognized in current operations.
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 preparation of consolidated 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 intangible assets and goodwill, the collectability of receivables, leasing arrangements,
convertible debentures, contingencies 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
the Company’s industry and general economic conditions. It is possible that these external factors could have an effect on
the Company’s estimates that could cause actual results to differ from the Company’s estimates. The Company re-evaluates
all of its accounting estimates at least quarterly based on these conditions and records 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 the Company’s 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 it believes that it is both probable
that a loss has been incurred, and the amount can be reasonably estimated. If the Company determines that a loss is possible, and
a range of the loss can be reasonably estimated, it discloses the range of the possible loss in the Notes to the Consolidated Financial
Statements.
The Company evaluates, on a regular basis,
developments in its 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 makes 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 the Company’s estimates and assumptions change or prove to have been incorrect, it could have a material impact
on its 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 the Company’s operations or financial
condition. The Company has insured and continues to insure against most of these types of claims.
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 accounts
receivables, gaming accounts receivable, lines of credit - bank, accounts payable, gaming accounts payable and bank loans payable
approximate fair value because of the short-term maturity of these financial instruments.
ASC 815 generally provides three criteria that,
if met, require companies to bifurcate conversion options from their host instruments and account for them as free standing derivative
financial instruments. These three criteria include circumstances in which (a) the economic characteristics and risks of the embedded
derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the
hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value
under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur
and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument
subject to the requirements of ASC 815. ASC 815 also provides an exception to this rule when the host instrument is deemed to be
conventional, as described.
The Company determined that the conversion
feature of the convertible debt issued in May 2018 did not qualify as a derivative liability and is not bifurcated from the host
instrument but contains a beneficial conversion feature.
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 December 31, 2020 and 2019, respectively.
The Company primarily places cash balances
in the U.S. 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 a bad debt expense of $90,705 and
$163,942 for the years ended December 31, 2020 and 2019, 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 of winnings 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
its 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.
Plant and equipment is 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 plant and equipment. All other expenditures are recognized as expenses in the
statement of operations 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
Indefinite
Multigioco and Rifa ADM Licenses
1.5 - 7
Location contracts
5 - 7
Customer relationships
10 - 15
Trademarks/Tradenames
14
Websites
5
The Ulisse Bookmaker License has no expiration
date and is therefore not amortized but is tested from impairment on an annual basis in terms of ASC 350 using estimated fair value.
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 reporting unit exceeds its 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 the reporting unit exceeds its fair value. If the carrying amount of the reporting unit exceeds its fair value, an asset impairment
charge will be recognized in an amount equal to that excess.
In terms of ASC 350, the Company skipped the
requirement to perform a qualitative assessment and performed a quantitative assessment on its goodwill as of December 31, 2020
and determined that an impairment was not considered necessary.
termined that there were no indicators present to perform a quantitative assessment
on the fair value of goodwill.
The Company accounts for leases in terms of
ASC 842. In terms of ASC 842, the Company assesses whether any asset based leases entered into for periods longer than twelve months
meet the definition of financial leases or operation leases, by evaluating the terms of the lease, including the following; the
duration of the lease; the implied interest rate in the lease; the cash flows of the lease; and whether the Company intends to
retain ownership of the asset at the end of the lease term.
Leases which imply that the Company will retain
ownership at the end of the lease term are classified as financial leases, are included in plant and equipment with a corresponding
financial liability raised at the date of lease inception. Interest incurred on financial leases are expensed using the effective
interest rate method.
Leases which imply that the Company will not
acquire the asset at the end of the lease term are classified as operating leases, the Company’s right to use the asset is
reflected as a non-current right of use asset with a corresponding operational lease liability raised at the date of lease inception.
The right of use asset and the operational lease liability are amortized over the right of use period using the effective interest
rate implied in the operating lease agreement.
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. The Company has no material uncertain tax positions for any of the reporting periods presented.
In Italy, tax years beginning 2016 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 2016 forward, are subject to examination.
The Company is not currently under examination and it has not been notified of a pending examination.
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 Betting Platform include
software licensing fees, training, installation, and product support services. The Company does not sell its proprietary software.
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.
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 dilutive impact on the number of shares outstanding should they be exercised. Securities that have the potential
to dilute shareholder's interests include unexercised stock options and warrants as well as unconverted debentures.
On December 12, 2019, the Company effected
an 1 for 8 reverse stock split, all references made to share or per share amounts in the accompanying consolidated financial statements
and applicable disclosures have been retroactively adjusted to reflect the reverse stock split.
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 June 2016, the FASB issued ASU No. 2016-13,
Financial Instruments-Credit Losses (Topic 326): “Measurement of Credit Losses on Financial Instruments”, which replaces
the incurred loss methodology with an expected credit loss methodology that is referred to as the current expected credit loss
(CECL) methodology. ASU 2016-13 is effective for fiscal years beginning after December 15, 2019, with early adoption permitted.
The amendments in this update are required to be applied using the modified retrospective method with an adjustment to accumulated
deficit and are effective for the Company beginning with fiscal year 2020, including interim periods. The measurement of expected
credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including loan receivables
and held-to-maturity debt securities. An entity with trade receivables will be required to use historical loss information, current
conditions, and reasonable and supportable forecasts to determine expected lifetime credit losses. Pooling of assets with similar
risk characteristics is also required.
Since adopted on January 1, 2020, there
has not been any material impact on the Company’s financial position, results of operations, and related disclosures.
In December 2019, the Financial Accounting
Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2019-12, Income Taxes (Topic 740).
The Amendments in this update reduce the complexity in accounting for income taxes by removing certain exceptions to accounting
for income taxes and deferred taxes and simplifying the accounting treatment of franchise taxes, a step up in the tax basis of
goodwill as part of business combinations, the allocation of current and deferred tax to a legal entity not subject to tax in its
own financial statements, reflecting changes in tax laws or rates in the annual effective rate in interim periods that include
the enactment date and minor codification improvements.
This ASU is effective for fiscal years and
interim periods beginning after December 15, 2020.
The effects of this ASU on the Company’s
financial statements is not considered to be material.
In August 2020, the FASB issued ASU No. 2020-06,
debt with Conversion and Other Options (subtopic 470-20): and Derivatives and Hedging – Contracts in Entity’s Own Equity
(Subtopic 815-40). Certain accounting models for convertible debt instruments with beneficial conversion features or cash conversion
features are removed from the guidance and for equity instruments the contracts affected are free standing instruments and embedded
features that are accounted for as derivatives, the settlement assessment was simplified by removing certain settlement requirements.
This ASU is effective for fiscal years and
interim periods beginning after December 15, 2021.
The effects of this ASU on the Company’s
consolidated financial statements is currently being assessed and is expected to have an impact on the treatment of certain convertible
instruments and the derivative liabilities associated with these convertible instruments.
The FASB issued several additional updates
during the period, none of these standards are either applicable to the Company or require adoption at a future date and none are
expected to have a material impact on the consolidated financial statements upon adoption.
Certain expenses amounting to $2,000,579, classified
as selling expenses in the prior year were reclassified as general and administrative expenses for comparative purposes. These
expenses are related to operating our betting platforms and are more accurately reflected as general and administrative expenses,
in line with our current operations.
These reclassifications had no impact on net
loss or comprehensive loss.
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 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 related to debt. Includes, but is not limited to, debt issuance costs, the effects of refinancings, method of amortizing debt issuance costs and original issue discount, and classifications of debt.
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 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.
The entire disclosure for loss and gain contingencies. Describes any existing condition, situation, or set of circumstances involving uncertainty as of the balance sheet date (or prior to issuance of the financial statements) as to a probable or reasonably possible loss incurred by an entity that will ultimately be resolved when one or more future events occur or fail to occur, and typically discloses the amount of loss recorded or a range of possible loss, or an assertion that no reasonable estimate can be made.
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 asset used in normal conduct of business and not intended for resale. Includes, but is not limited to, work of art, historical treasure, and similar asset classified as collections.
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 the use of estimates in the preparation of financial statements in conformity with generally accepted accounting principles.
Tabular disclosure of a material business combination completed during the period, including background, timing, and recognized assets and liabilities. This table does not include leveraged buyouts.
Tabular disclosure of physical assets used in the normal conduct of business and not intended for resale. Includes, but is not limited to, balances by class of assets, depreciation and depletion expense and method used, including composite depreciation, and accumulated deprecation.
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 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 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 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 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 extent of the entity's reliance on its major customers, if revenues from transactions with a single external customer amount to 10 percent or more of entity revenues, including the disclosure of that fact, the total amount of revenues from each such customer, and the identity of the reportable segment or segments reporting the revenues. The entity need not disclose the identity of a major customer or the amount of revenues that each segment reports from that customer. For these purposes, a group of companies known to the entity to be under common control is considered a single customer, and the federal government, a state government, a local government such as a county or municipality, or a foreign government is each considered a single customer.
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.
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 the components of income tax expense attributable to continuing operations for each year presented including, but not limited to: current tax expense (benefit), deferred tax expense (benefit), investment tax credits, government grants, the benefits of operating loss carryforwards, tax expense that results from allocating certain tax benefits either directly to contributed capital or to reduce goodwill or other noncurrent intangible assets of an acquired entity, adjustments of a deferred tax liability or asset for enacted changes in tax laws or rates or a change in the tax status of the entity, and adjustments of the beginning-of-the-year balances of a valuation allowance because of a change in circumstances that causes a change in judgment about the realizability of the related deferred tax asset in future years.
Tabular disclosure of the components of net deferred tax asset or liability recognized in an entity's statement of financial position, including the following: the total of all deferred tax liabilities, the total of all deferred tax assets, the total valuation allowance recognized for deferred tax assets.
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.
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 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.
The number of shares issued in connection with an own-share lending arrangement entered into by the entity, in contemplation of a convertible debt offering or other financing.
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.
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.
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.
Amount of accumulated depreciation, depletion and amortization for physical assets used in the normal conduct of business to produce goods and services.
Amount before accumulated depreciation, depletion and amortization of physical assets used in the normal conduct of business and not intended for resale. Examples include, but are not limited to, land, buildings, machinery and equipment, office equipment, and furniture and fixtures.
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 amount of expense recognized in the current period that reflects the allocation of the cost of tangible assets over the assets' useful lives. Includes production and non-production related depreciation.
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.
Amount of lessee's undiscounted obligation for lease payment for finance lease to be paid in next fiscal year following current fiscal year. Excludes interim and annual periods when interim periods are reported from current statement of financial position date (rolling approach).
Amount of lessee's undiscounted obligation for lease payment for finance lease to be paid in fourth fiscal year following current fiscal year. Excludes interim and annual periods when interim periods are reported from current statement of financial position date (rolling approach).
Amount of lessee's undiscounted obligation for lease payment for finance lease to be paid in third fiscal year following current fiscal year. Excludes interim and annual periods when interim periods are reported from current statement of financial position date (rolling approach).
Amount of lessee's undiscounted obligation for lease payment for finance lease to be paid in second fiscal year following current fiscal year. Excludes interim and annual periods when interim periods are reported from current statement of financial position date (rolling approach).
Amount of lessee's undiscounted obligation for lease payment for operating lease to be paid in next fiscal year following current fiscal year. Excludes interim and annual periods when interim periods are reported from current statement of financial position date (rolling approach).
Amount of lessee's undiscounted obligation for lease payment for operating lease to be paid in fourth fiscal year following current fiscal year. Excludes interim and annual periods when interim periods are reported from current statement of financial position date (rolling approach).
Amount of lessee's undiscounted obligation for lease payment for operating lease to be paid in third fiscal year following current fiscal year. Excludes interim and annual periods when interim periods are reported from current statement of financial position date (rolling approach).
Amount of lessee's undiscounted obligation for lease payment for operating lease to be paid in second fiscal year following current fiscal year. Excludes interim and annual periods when interim periods are reported from current statement of financial position date (rolling approach).
If disclosed, the amount of imputed interest necessary to reduce an unconditional purchase obligation to present value on an unrecorded unconditional purchase obligation.
Amount of loss from the write-down of an asset representing the 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.
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.
The amount of impairment loss recognized in the period resulting from the write-down of the carrying amount of a finite-lived intangible asset to fair value.
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.
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.
Total loss recognized during the period from the impairment of goodwill plus the loss recognized in the period resulting from the impairment of the carrying amount of intangible assets, other than goodwill.
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.
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.
Including the current and noncurrent portions, carrying amount of debt identified as being convertible into another form of financial instrument (typically the entity's common stock) as of the balance sheet date, which originally required full repayment more than twelve months after issuance or greater than the normal operating cycle of the company.
The rate of interest that was being paid on the original debt issue that is being converted in the 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.
The amount of expense during the period for floor brokerage fees paid to other broker-dealers to execute trades on their behalf, stock exchange fees, order flow fees, and clearance fees.
Additional shares included in the calculation of diluted EPS as a result of the potentially dilutive effect of equity unit purchase agreements using the treasury stock method.
Including the current and noncurrent portions, carrying amount of debt identified as being convertible into another form of financial instrument (typically the entity's common stock) as of the balance sheet date, which originally required full repayment more than twelve months after issuance or greater than the normal operating cycle of the company.
Expiration, mandatory redemption, or due date, in CCYY-MM-DD format, of the financial instrument issued in exchange for the original debt being converted in a noncash or part noncash transaction.
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.
The cash outflow for an obligation which places a lender in a lien position behind debt having a higher priority of repayment (senior loan) in liquidation of the entity's assets scheduled to be repaid within one year or in the normal operating cycle of the entity, if longer.
Amount of tangible or intangible assets, including a business or subsidiary of the acquirer transferred by the entity to the former owners of the acquiree. Excludes cash.
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.
The number of shares issued in connection with an own-share lending arrangement entered into by the entity, in contemplation of a convertible debt offering or other financing.
Amount of long-term debt payable, sinking fund requirement, and other securities issued that are redeemable by holder at fixed or determinable price and date, maturing in next fiscal year following current fiscal year. Excludes interim and annual periods when interim periods are reported from current statement of financial position date (rolling approach).
Amount of borrowings as of the balance sheet date from the Federal Home Loan Bank, which are primarily used to cover shortages in the required reserve balance and liquidity shortages.
Liability for amount due employees, in addition to wages and any other money that employers owe employees, when their employment ends through a layoff or other termination. For example, a company may provide involuntarily terminated employees with a lump sum payment equal to one week's salary for every year of employment.
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).
The cash inflow or outflow associated with long-term loans for 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 (Payments for) Advances to Affiliates.
Amount of long-term debt payable, sinking fund requirement, and other securities issued that are redeemable by holder at fixed or determinable price and date, maturing in next fiscal year following current fiscal year. Excludes interim and annual periods when interim periods are reported from current statement of financial position date (rolling approach).
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.
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).
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.
Including the current and noncurrent portions, carrying amount of debt identified as being convertible into another form of financial instrument (typically the entity's common stock) as of the balance sheet date, which originally required full repayment more than twelve months after issuance or greater than the normal operating cycle of the company.
Amount of expense for salary and wage arising from service rendered by nonofficer and officer employees. Excludes allocated cost, labor-related nonsalary expense, and direct and overhead labor cost included in cost of good and service sold.
Period over which grantee's right to exercise award under share-based payment arrangement is no longer contingent on satisfaction of service or performance condition, in 'PnYnMnDTnHnMnS' format, for example, 'P1Y5M13D' represents reported fact of one year, five months, and thirteen days. Includes, but is not limited to, combination of market, performance or service condition.
Number, after forfeiture, of shares or units issued under share-based payment arrangement. Excludes shares or units issued under employee stock ownership plan (ESOP).
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 Company granted the underwriters a forty five day option to purchase up to 624,999 units at a price of $2.40 per unit, each unit consisting of one share of common stock and one five year warrant exercisable for one share of common stock at an exercise price of $2.50 per share. The underwriters were also issued a five year warrant exercisable for 208,333 shares of common stock at an exercise price of $3.00 per share.
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Each unit consists of one share of common stock and one five year warrant exercisable for one share of common stock
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 maximum 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.
The estimated measure of the minimum 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.
The floor of a customized range of exercise prices for purposes of disclosing shares potentially issuable under outstanding stock option awards on all stock option plans and other required information pertaining to awards in the customized range.
The ceiling of a customized range of exercise prices for purposes of disclosing shares potentially issuable under outstanding stock option awards on all stock option plans and other required information pertaining to awards in the customized range.
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.
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.
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 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 maximum 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.
The estimated measure of the minimum 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.
The floor of a customized range of exercise prices for purposes of disclosing shares potentially issuable under outstanding stock option awards on all stock option plans and other required information pertaining to awards in the customized range.
The ceiling of a customized range of exercise prices for purposes of disclosing shares potentially issuable under outstanding stock option awards on all stock option plans and other required information pertaining to awards in the customized range.
Fair value of options vested. Excludes equity instruments other than options, for example, but not limited to, share units, stock appreciation rights, restricted stock.
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).
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 maximum 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.
The estimated measure of the minimum 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.
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.
The amount of the valuation allowance recorded in a business combination against deductible temporary differences for which related tax benefits will be recorded as a reduction of the acquired entity's income tax expense (after such benefits are first being applied to reduce goodwill and then other noncurrent intangible assets to zero).
Amount 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 attributable to deduction for dividend.
The amount of income tax expense or benefit for the period computed by applying the domestic federal statutory tax rates to pretax income from continuing operations.
Amount 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 attributable to nondeductible expenses.
Amount 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 attributable to other adjustments.
Amount 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 attributable to tax exempt income, equity in earnings (loss) of an unconsolidated subsidiary, minority noncontrolling interest income (loss), tax holiday, disposition of a business, disposition of an asset, repatriation of foreign earnings, repatriation of foreign earnings jobs creation act of 2004, increase (decrease) in enacted tax rate, prior year income taxes, increase (decrease) in deferred tax asset valuation allowance, and other adjustments.
Amount 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 attributable to revisions of previously reported income tax expense (benefit).
Amount 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 attributable to foreign tax credit.
Amount 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 attributable to income (loss) exempt from income taxes.
Amount before allocation of valuation allowances of deferred tax asset attributable to deductible domestic operating loss carryforwards. Excludes state and local operating loss carryforwards.
Amount before allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences from property, plant, and equipment.
The portion of the valuation allowance pertaining to the deferred tax asset representing potential future taxable deductions from net operating loss carryforwards for which it is more likely than not that a tax benefit will not be realized.
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.
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.
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.
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 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 impairment loss recognized in the period resulting from the write-down of the carrying amount of a finite-lived intangible asset to fair value.
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 cash outflow for payment of an obligation from a lender, including but not limited to, letter of credit, standby letter of credit and revolving credit arrangements.
The cash outflow for an obligation which places a lender in a lien position behind debt having a higher priority of repayment (senior loan) in liquidation of the entity's assets scheduled to be repaid within one year or in the normal operating cycle of the entity, if longer.
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