Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Jun. 25, 2020 | Jun. 28, 2019 | |
Document And Entity Information | |||
Entity Registrant Name | Newgioco Group, Inc. | ||
Entity Central Index Key | 0001080319 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2019 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Is Entity a Well-known Seasoned Issuer? | No | ||
Is Entity a Voluntary Filer? | No | ||
Is Entity's Reporting Status Current? | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
Entity Shell Business | false | ||
Entity Interactive Data | Yes | ||
Entity Public Float | $ 15,697,029 | ||
Entity Common Stock, Shares Outstanding | 12,332,996 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2019 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Current Assets | ||
Cash and cash equivalents | $ 5,182,598 | $ 6,289,903 |
Accounts receivable | 152,879 | 10,082 |
Gaming accounts receivable | 1,242,005 | 1,021,052 |
Prepaid expenses | 221,547 | 124,712 |
Related Party Receivable | 4,123 | 49,914 |
Other current assets | 461,398 | 55,700 |
Total Current Assets | 7,264,550 | 7,551,363 |
Non-Current Assets | ||
Restricted cash | 1,549,917 | 1,560,539 |
Property, plant and equipment | 520,725 | 476,047 |
Right of use assets | 792,078 | |
Intangible assets | 15,857,027 | 12,527,980 |
Goodwill | 1,663,385 | 262,552 |
Marketable securities | 177,500 | 275,000 |
Total Non-Current Assets | 20,560,632 | 15,102,118 |
Total Assets | 27,825,182 | 22,653,481 |
Current Liabilities | ||
Line of credit - bank | 1,000,000 | 750,000 |
Accounts payable and accrued liabilities | 6,800,765 | 3,969,532 |
Gaming accounts payable | 1,735,650 | 1,049,423 |
Taxes payable | 298,476 | 1,056,430 |
Advances from stockholders | 2,551 | 39,237 |
Deferred purchase consideration, net of discount of $120,104 | 1,682,280 | |
Deferred purchase consideration, Related Party, net of discount of $80,069 | 1,199,361 | |
Debentures, net of discount | 3,361,337 | |
Operating lease liability | 200,866 | |
Financial lease liability | 12,476 | |
Promissory notes payable-related party | 431,631 | |
Bank loan payable - current portion | 124,079 | 120,920 |
Total Current Liabilities | 16,417,841 | 7,417,173 |
Deferred tax liability | 1,315,954 | |
Debentures, net of discount | 4,463,046 | |
Operating lease liability | 548,747 | |
Financial lease liability | 25,025 | |
Bank loan payable | 96,786 | 225,131 |
Other long term liabilities | 619,544 | 608,728 |
Total Non-Current Liabilities | 2,606,056 | 5,296,905 |
Total Liabilities | 19,023,897 | 12,714,078 |
Stockholders' Deficiency | ||
Preferred stock, $0.0001 par value; 5,000,000 shares authorized, none issued | ||
Common stock, $0.0001 par value, 80,000,000 shares authorized; 11,949,042 and 9,442,537 shares issued and outstanding as of December 31, 2019 and 2018* | 1,194 | 944 |
Additional - paid in capital | 32,218,643 | 23,962,920 |
Accumulated other comprehensive income | (176,717) | (57,431) |
Accumulated deficit | (23,241,835) | (13,967,030) |
Total Stockholders' Equity | 8,801,285 | 9,939,403 |
Total Liabilities and Stockholders' Equity | $ 27,825,182 | $ 22,653,481 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
STOCKHOLDERS' EQUITY | ||
Preferred Stock - par value | $ 0.0001 | $ 0.0001 |
Preferred stock - authorized | 5,000,000 | 20,000,000 |
Preferred stock - issued | ||
Preferred stock - outstanding | ||
Common Stock - par value | $ 0.0001 | $ 0.0001 |
Common Stock - authorized | 80,000,000 | 160,000,000 |
Common Stock - issued | 11,949,042 | 9,442,537 |
Common Stock - outstanding | 11,949,042 | 9,442,537 |
Deferred Purchase Consideration[Member] | ||
Debt Discount | $ 120,104 | |
Deferred Purchase Consideration Related Party[Member] | ||
Debt Discount | $ 80,069 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Loss) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Income Statement [Abstract] | ||
Revenue | $ 35,583,131 | $ 34,575,097 |
Costs and expenses | ||
Selling expenses | 27,584,492 | 24,142,110 |
General and administrative expenses | 10,994,554 | 10,588,162 |
Total Costs and Expenses | 38,579,046 | 34,730,272 |
Loss Income from Operations | (2,995,915) | (155,175) |
Other (Expenses) Income | ||
Interest expense, net | (972,443) | (619,709) |
Amortization of debt discount | (4,154,922) | (1,995,128) |
Virtual Generation bonus earnout | (561,351) | |
Loss on share issuances | (44,063) | |
Other income | 149,565 | |
Imputed interest on related party advances | (761) | |
Gain on litigation settlement | 516,120 | |
Loss on issuance of convertible debt | (196,403) | |
Loss on marketable securities | (97,500) | (75,000) |
Total Other Expenses | (5,680,714) | (2,370,881) |
Loss Before Income Taxes | (8,676,629) | (2,526,056) |
Income taxes provision | (598,176) | (1,102,701) |
Net Loss | (9,274,805) | (3,628,757) |
Other Comprehensive Income (Loss) | ||
Foreign currency translation adjustment | (119,286) | (184,043) |
Comprehensive Loss | $ (9,394,091) | $ (3,812,800) |
Loss per common share- basic and diluted | $ (0.91) | $ (0.38) |
Weighted average number of common shares outstanding - basic and diluted | 10,226,432 | 9,485,993 |
Consoliated Statement of change
Consoliated Statement of changes in Stockholders Equity - USD ($) | Common Stock | Additional Paid-In Capital | Accumlulated Other Comprehensive Income | Accumulated Deficit | Total |
Beginning Balance, Shares at Dec. 31, 2017 | 9,267,948 | ||||
Beginning Balance, Amount at Dec. 31, 2017 | $ 927 | $ 14,548,951 | $ 126,612 | $ (10,338,273) | $ 4,338,217 |
Imputed interest on stock advances | 1,514 | 1,514 | |||
Shares issued for warrants, shares | 25,136 | ||||
Shares issued for warrants, amount | $ 3 | (3) | |||
Common stock issued with debentures, shares | 228,903 | ||||
Common stock issued with debentures, amount | $ 22 | 582,464 | 582,486 | ||
ASU 2017-11 adjustments to the beneficial conversion feature of debentures | 2,551,856 | 2,551,856 | |||
Warrants issued with debt | 2,951,429 | 2,951,429 | |||
Common stock issued for the purchase of subsidiaries,shares | 175,550 | ||||
Common stock issued for the purchase of subsidiaries | $ 18 | 5,587,657 | 5,587,675 | ||
Purchase of treasury stock, shares | (225,000) | ||||
Purchase of treasury stock, amount | $ (26) | (2,260,948) | (2,260,974) | ||
Foreign currency translation adjustment | (184,043) | (184,043) | |||
Net loss | (3,628,757) | (3,628,757) | |||
Ending Balance, Shares at Dec. 31, 2018 | 9,442,537 | ||||
Ending Balance, Amount at Dec. 31, 2018 | $ 944 | 23,962,920 | (57,431) | (13,967,030) | 9,939,403 |
Common stock issued with debentures, shares | 1,866,467 | ||||
Common stock issued with debentures, amount | $ 187 | 5,972,321 | 5,972,508 | ||
Common stock issued to settle deferred purchase consideration, shares | 341,235 | ||||
Common stock issued to settle deferred purchase consideration, amount | $ 34 | 1,027,279 | 1,027,313 | ||
Common stock issued to settle liabilities, shares | 284,721 | ||||
Common stock issued to settle liabilities | $ 28 | 1,009,953 | 1,009,981 | ||
Bonus shares issued to convetible debenture holders, shares | 14,082 | ||||
Bonus shares issued to convetible debenture holders, amount | $ 1 | 45,064 | 45,065 | ||
Stock based compensation | 201,106 | 201,106 | |||
Foreign currency translation adjustment | (119,286) | (119,286) | |||
Net loss | (9,274,805) | (9,274,805) | |||
Ending Balance, Shares at Dec. 31, 2019 | 11,949,042 | ||||
Ending Balance, Amount at Dec. 31, 2019 | $ 1,194 | $ 32,218,643 | $ (176,717) | $ (23,241,835) | $ 8,801,285 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Cash Flows from Operating Activities | ||
Net loss | $ (9,274,805) | $ (3,628,757) |
Adjustments to reconcile net loss to net cash (used in) provided by operating activities | ||
Depreciation and amortization | 946,185 | 697,266 |
Amortization of debt discount | 4,154,922 | 1,995,128 |
Non-cash interest | 745,762 | |
Virtual Generation bonus earnout | 561,351 | |
Loss on issuance of debt | 196,403 | |
Imputed interest on advances from stockholders | 1,514 | |
Unrealized loss on marketable securities | 97,500 | 75,000 |
Impairment (recovery) of assets | (518,354) | |
Stock based compensation expense | 201,106 | |
Bonus shares issued to debenture holders | 45,065 | |
Gain on settlement of liabilities | (1,003) | |
Bad debt (recovery) expense | 6,354 | |
Deferred taxation movement | (85,654) | |
Changes in Operating Assets and Liabilities | ||
Prepaid expenses | (90,353) | (37,021) |
Accounts payable and accrued liabilities | 2,973,916 | 3,062,419 |
Accounts receivable | (95,147) | 100,053 |
Gaming accounts receivable | (240,559) | 142,779 |
Gaming accounts payable | 701,029 | (225,433) |
Taxes payable | (438,235) | (498,941) |
Other current assets | 368,894 | 43,157 |
Long term liabilities | 22,294 | 76,048 |
Net Cash (Used in) Provided by Operating Activities | (145,520) | 1,401,302 |
Cash Flows from Investing Activities | ||
Acquisition of property, plant, and equipment, and intangible assets | (252,198) | (4,725,856) |
Acquisition of Virtual Generation, net of cash of $47,268 | (216,150) | |
Net Cash Used in Investing Activities | (468,348) | (4,725,856) |
Cash Flows from Financing Activities | ||
Proceeds from bank credit line, net | 250,000 | 750,000 |
Repayment of bank loan | (118,336) | (137,965) |
Repayment of bank credit line | (177,060) | |
Deferred purchase price payments | (672,871) | |
Proceeds from debentures and convertible notes, net of repayment | 6,883,906 | |
Proceeds from finance leases | 14,989 | |
Repayment of finance leases | (11,371) | |
Advance from related party | 58,144 | |
Payments to related party | (49,914) | |
Purchase of treasury stock | (2,261,307) | |
Advances from stockholders, net of repayment | (508,572) | |
Net Cash (Used in) Provided by Financing Activities | (479,445) | 4,499,088 |
Effect of change in exchange rate | (24,614) | (381,855) |
Net (decrease) increase in cash | (1,117,927) | 792,679 |
Cash and cash equivalents and restricted cash-beginning of the year | 7,057,763 | |
Reconciliation of cash, cash equivalents and restricted cash within the Balance Sheets to the Statement of Cash Flows | ||
Cash and cash equivalents | 5,182,598 | 6,289,903 |
Restricted cash included in non-current assets | 1,549,917 | 1,560,539 |
Total Reconciliation of cash, cash equivalents and restricted cash within the Balance Sheets to the Statement of Cash Flows | 6,732,515 | 7,850,442 |
Supplemental disclosure of cash flow information | ||
Cash paid during the year for: Interest | 227,006 | 619,709 |
Cash paid during the year for: Income taxes | 884,295 | 339,274 |
Supplemental cash flow disclosure for non-cash activities | ||
Conversion of convertible debt to common stock | 5,972,508 | |
Acquisition of Virtual Generation, deferred purchase consideration | 3,828,133 | |
Deferred purchase consideration settled by the issuance of common stock | 1,027,313 | |
Settlement of liabilities by the issuance of common stock | 1,009,981 | |
Cashless exercise of warrants | 20 | |
Common shares issued for the acquisition of intangible assets | 5,588,008 | |
Common stock issued with debt | 582,486 | |
Discount due to warrants issued with debt | 2,307,569 | |
Discount due to beneficial conversion feature | 2,551,856 | |
Discount due to broker warrants issued with debt | 643,860 | |
Reclassification of derivative liabilities to equity and cumulative effect of adoption of ASU 2017-11 | $ 222,915 |
Consolidated Statements of Ca_2
Consolidated Statements of Cash Flows (Parenthetical) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Statement of Cash Flows [Abstract] | ||
Acquisition of Virtual Generation, cash | $ 47,268 |
Nature of Business
Nature of Business | 12 Months Ended |
Dec. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Business | 1. Nature of Business Established in the state of Delaware in 1998, Newgioco Group, Inc. (“Newgioco Group” or the “Company”) is an international, vertically integrated commercial-stage company engaged in various aspects of the leisure gaming industry. The Company is a licensed gaming operator in the regulated Italian leisure betting market offering gaming services, including a variety of lottery, casino gaming and sports betting products through two distribution channels: an online channel and a land-based retail channel. Additionally, the Company is a global gaming technology company (known as a “Provider”), which owns and operates a betting software designed with a unique “distributed model” (“shop-client”) software architecture colloquially named Elys Game Board (the “Platform”). The Platform is a fully integrated “omni-channel” framework that combines centralized technology 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 date Domicile Functional Currency Newgioco Group, Inc. Parent Company USA US Dollar Multigioco Srl (“Multigioco”) August 15, 2014 Italy Euro Rifa Srl (“Rifa”) January 1, 2015 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 Naos Holdings limited (“Naos”) January 31, 2019 Malta Euro Newgioco Group Inc. (“NG Canada”) January 17, 2017 Canada Canadian Dollar Elys Technology Group Limited (“Elys”) April 4, 2019 Malta Euro Newgioco Colombia SAS November 22, 2019 Colombia Colombian Peso The Company operates in two lines of business: (i) provider of certified betting Platform software services to leisure betting establishments in Italy and 11 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 operates out of our principal executive offices in Toronto, Canada and satellite offices in the USA in Fort Lauderdale and Boca Raton, Florida, through which we carry-out corporate activities, handle day-to-day reporting and U.S. development planning, and through which various independent contractors and vendors are engaged. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. Accounting Policies and Estimates a) Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). All amounts referred to in the notes to the consolidated financial statements are in United States Dollars ($) unless stated otherwise. b) Principles of consolidation The consolidated financial statements include the financial statements of the Company and its subsidiaries, all of which are wholly-owned. All significant inter-company transactions are eliminated upon consolidation. Certain items in the prior periods were reclassified to conform to the current period presentation. All amounts referred to in the Notes to the consolidated financial statements are in United States Dollars ($) 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 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 assets, 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 conversion feature of our convertible debt was assessed in terms of ASC480 and the Company determined that the beneficial conversion feature was classified as equity and did not give rise to a derivative liability. 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, 2019 and 2018, respectively. The Company primarily places cash balances in the USA 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 $163,942 and $0 for the years ended December 31, 2019 and 2018, 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 to5 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 has no expiration date and is therefore not amortized. 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 goodwill 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 goodwill exceeds its fair value. If the carrying amount of the goodwill 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 and other intangible assets as of December 31, 2019, concluding that no impairment was considered necessary. p) 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 2015 forward, are open and subject to examination, while in Austria companies are open and subject to inspection for five years and ten years for inspection of serious infractions. In the United States and Canada, tax years beginning 2015 forward, are subject to examination. The Company is not currently under examination and it has not been notified of a pending examination. q) 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. r) 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. s) 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. t) 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. u) 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. v) Adoption of Accounting Standards In February 2016, the Financial Accounting Standards Board (“FSAB”) issued Accounting Standards Update (“ASU”), No. 2016-02, Leases (Topic 842) (ASC 842) The amendments in this update establishes a comprehensive new lease accounting model. The new standard: (a) clarifies the definition of a lease; (b) requires a dual approach to lease classification similar to current lease classifications; and (c) causes lessees to recognize leases on the balance sheet as a lease liability with a corresponding right-of-use asset for leases with a lease-term of more than twelve months. The new standard is effective for fiscal years and interim periods beginning after December 15, 2018, with early adoption permitted. A modified retrospective transition approach is required for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, including a number of optional practical expedients that entities may elect to apply. In July 2018, the FASB issued ASU No. 2018-11, Leases (Topic 842): Targeted Improvements, an update which provides another transition method, the prospective transition method, which allows entities to initially apply the new lease standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The Company adopted the new standard on January 1, 2019 using the prospective transition method. The Company has identified all material leases and reviewed the leases to determine the impact of ASC 842 on its consolidated financial statements. The Company has elected to apply all of the practical expedients to all leases, which include not reassessing (1) whether any expired or existing contracts are or contain leases, (2) lease classification for any expired or existing leases, and (3) initial direct costs for any existing leases. The adoption of the new standard resulted in; (i) the recording of a right-of-use asset of $646,138 and an operating lease liability of $617,352 on the consolidated balance sheet with effect from January 1, 2019 utilizing implicit borrowing rates where available and incremental borrowing rates where rates were not readily available. The right of use asset and operating lease liability are subsequently amortized. No cumulative effect adjustment to opening retained earnings was made as the amounts are immaterial. 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. The Company adopted ASU 2016-13 on January 1, 2020 on a modified retrospective basis, and is currently evaluating the impact of adoption of the amendments in these updates, which are not expected to have a material impact on the Company’s financial position, results of operations, and related disclosures. In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740), 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. The FASB issued several 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) provider of certified betting Platform software services to leisure betting establishments in Italy and 11 other countries and; (ii) the operating of web based as well as land based leisure betting establishments situated throughout Italy. y) Comparatives Certain items in the prior year were reclassified to conform to the current period presentation. These reclassifications had no impact on net loss or comprehensive loss. |
Acquisition of subsidiariess
Acquisition of subsidiariess | 12 Months Ended |
Dec. 31, 2019 | |
Business Combinations [Abstract] | |
Acquisition of subsidiaries | 3. Acquisition of subsidiaries Ulisse GmbH (“Ulisse”) Acquisition On June 30, 2016, the Company entered into a Share Exchange Agreement (“Ulisse SPA”), which closed on July 1, 2016, with the shareholders of Ulisse organized under the laws of Austria. Ulisse operates a network of approximately 170 land-based agency locations. Pursuant to the agreement, the Company issued 416,400 shares of common stock in consideration for 100% of the issued and outstanding shares of Ulisse. Pursuant to the Ulisse SPA, the purchase price was subject to an adjustment equal to two times earnings before income taxes calculated on a pro rata basis from the closing date upon completion of the license tender auction held by the Italian gaming regulator, Agenzia delle Dogane e dei Monopoli (“ADM”). The sellers were also permitted to exercise the option to resell to the Company 50% of the shares of common stock (or 208,200 shares) issued in consideration for the purchase price at a fixed price of $4.00 per share (the “Ulisse Put Option”). On May 31, 2018, the Company and Ulisse mutually agreed to exercise the Ulisse Put Option in lieu of completion of the ADM license tender auction. The Company repurchased and retired the shares issued in June 2016 with a purchase price adjustment to 10 million Euros (approximately $11.7 million). The purchase price adjustment was paid half in cash of €5 million (approximately $5.85 million) and the Company issued 591,950 shares of common stock to the sellers on May 31, 2018 to settle the balance of the purchase price adjustment at a closing price of $9.44 per share on May 31, 2018 Multigioco Acquisition On May 31, 2018, the Company and Multigioco mutually agreed to exercise the option to repurchase the shares issued to the shareholders of Multigioco at the closing of the acquisition of Multigioco on August 15, 2014 (“Multigioco Put Option”). The Company repurchased and retired the balance of 255,000 shares issued to the Multigioco sellers in exchange for €510,000 (approximately $595,000). Virtual Generation Limited (“VG”) Acquisition On January 30, 2019, the Company entered into a Share Exchange Agreement (“VG SPA”), with the shareholders of Virtual Generation (“VG”) organized under the laws of Republic of Malta (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. 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 have qualified for the earnout payment. 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. Virtual Generation Limited (“VG”) Acquisition (continued) 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. |
Restricted Cash
Restricted Cash | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Restricted Cash | 4. Restricted Cash Restricted cash consists of the following: · 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 · The Company maintains a $1,000,000 deposit at Metropolitan Commercial bank held as security against a $1,000,000 line of credit. See Note 10. |
Plant and Equipment
Plant and Equipment | 12 Months Ended |
Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
Plant and Equipment | 5. Plant and equipment December 31, 2019 December 31, 2018 Cost Accumulated depreciation Net book Net book Leasehold improvements $ 47,291 $ (14,886 ) $ 32,405 $ 8,038 Computer and office equipment 835,793 (522,969 ) 312,824 258,448 Fixtures and fittings 135,869 (78,271 ) 57,598 62,795 Vehicles 98,115 (25,589 ) 72,526 88,262 Computer software 125,831 (80,459 ) 45,372 58,504 $ 1,242,899 $ (722,174 ) $ 520,725 $ 476,047 The aggregate depreciation charge to operations was $283,497 and $228,715 for the years ended December 31, 2019 and 2018, respectively. The depreciation policies followed by the Company are described in Note 2. |
Leases
Leases | 12 Months Ended |
Dec. 31, 2019 | |
Notes to Financial Statements | |
Leases | 6. Leases Adoption of ASC Topic 842, “Leases” On January 1, 2019, the Company adopted Topic 842 using the modified retrospective method applied to leases that were in place as of January 1, 2019. Results for reporting periods beginning after January 1, 2019 are presented under Topic 842, while prior period amounts are not adjusted and continue to be reported in accordance with the Company’s historic accounting under Topic 840. The Company’s portfolio of leases contains both finance and operating leases that relate to real estate agreements, vehicles and office equipment agreements. Practical Expedients and Elections The Company elected the package of practical expedients permitted under the transition guidance, which allowed the Company to carryforward its historical lease classification, the Company’s assessment on whether a contract is or contains a lease, and its initial direct costs for any leases that exist prior to adoption of the new standard. The Company also elected to combine lease and non-lease components on the office equipment leases and elected the short-term lease recognition exemption for all leases that qualify. Discount Rate To determine the present value of minimum future lease payments for leases at January 1, 2019, the Company was required to use the rate implicit in the lease unless the rate is not determinable then a rate of interest that it would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment (the “incremental borrowing rate” or “IBR”). Operating leases Property and vehicle leases The Company determined the rate implicit in the lease or an IBR where that rate was not determinable. The Company used country specific rates based on the country the assets are located in. · Property leases The Company determined that rates ranging from 2.12% to 4.5% were a appropriate discount rates to apply to its real-estate operating leases. The Company entered into new real estate operating leases during the current period and determined an appropriate discount rate to apply to its operating leases was 2.12%. · Vehicle leases The Company determined that appropriate discount rates to apply to its vehicle operating leases ranged from 5.1% to 6.7%. Finance leases Computer and office equipment leases The Company has financed several items of computer and office equipment through vendor financing. The discount rates for finance leases ranged from 2.5% to 4.2%. Right of use assets Upon adoption of ASC 842, effective January 1, 2019, the Company recorded a right of use asset for operating leases of $646,138. Right of use assets are included in the consolidated balance sheet are as follows: December 31, 2019 Non-Current assets Right-of-use assets - operating leases, net of amortization $ 792,078 Right-of-use assets – finance leases, net of amortization (included in plant and equipment) $ 37,091 Lease costs consists of the following: Year ended December 31, 2019 Finance lease cost: $ 13,292 Amortization of right-of-use assets 11,890 Interest expense on lease liabilities 1,402 Operating lease cost 210,881 Total lease cost $ 224,173 Other lease information: Year ended December 31, 2019 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from finance leases $ (1,252 ) Operating cash flows from operating leases (210,881 ) Financing cash flows from finance leases (11,371 ) Right-of-use assets obtained in exchange for new finance leases 14,989 Right-of-use assets disposed of under operating leases prior to lease maturity (81,263 ) Right-of -use assets obtained in exchange for new operating leases $ 442,281 Weighted average remaining lease term – finance leases 3.46 years Weighted average remaining lease term – operating leases 3.74 years Weighted average discount rate – finance leases 3.52 % Weighted average discount rate – operating leases 3.42 % Maturity of Leases Finance lease liability The amount of future minimum lease payments under finance leases are as follows: Amount 2020 $ 13,611 2021 10,413 2022 8,431 2023 6,560 2024 802 Total undiscounted minimum future lease payments 39,967 Imputed interest (2,466 ) Total finance lease liability $ 37,501 Disclosed as: Current portion $ 12,476 Non-Current portion 25,025 $ 37,501 Operating lease liability The amount of future minimum lease payments under operating leases are as follows: Amount 2020 $ 222,497 2021 214,693 2022 180,470 2023 150,570 2024 and beyond 28,741 Total undiscounted minimum future lease payments 796,971 Imputed interest (47,358 ) Total operating lease liability $ 749,613 Disclosed as: Current portion $ 200,866 Non-Current portion 548,747 $ 749,613 |
Intangible Assets
Intangible Assets | 12 Months Ended |
Dec. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | 7. Intangible Assets Intangible assets consist of the following: December 31, 2019 December 31, 2018 Cost Accumulated depreciation Net book Net book Betting platform software $ 5,689,965 $ (637,320 ) $ 5,052,645 $ 1,405,134 Licenses 10,694,227 (764,732 ) 9,929,495 10,037,980 Location contracts 1,000,000 (768,688 ) 231,312 374,169 Customer relationships 870,927 (301,227 ) 569,700 630,161 Trademarks 116,175 (42,300 ) 73,875 75,583 Websites 40,000 (40,000 ) — 4,953 $ 18,411,294 $ (2,554,267 ) $ 15,857,027 $ 12,527,980 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. The Company recorded $771,665 and $468,551 in amortization expense for finite-lived assets for the years ended December 31, 2019 and 2018, respectively. Licenses obtained by the Company in the acquisitions of Multigioco and Rifa include a Gioco a Distanza (“GAD”) online license as well as a Bersani and Monti land-based licenses issued by the Italian gaming regulator to Multigioco and Rifa, respectively, as well as an Austrian Bookmaker License through the acquisition of Ulisse. The Company believes that the carrying amounts of its intangible assets are recoverable. However, if adverse events were to occur or circumstances were to change indicating that the carrying amount of such assets may not be fully recoverable, the assets would be reviewed for impairment and the assets may be impaired. |
Goodwill
Goodwill | 12 Months Ended |
Dec. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill | 8. Goodwill December 31, 2019 December 31, 2018 Opening balance $ 262,552 $ 260,318 Acquisition of Virtual Generation 1,401,608 — Impairment charge — — Foreign exchange movements (775 ) 2,234 Closing balance $ 1,663,385 $ 262,552 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 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. |
Marketable Securities
Marketable Securities | 12 Months Ended |
Dec. 31, 2019 | |
Investments, Debt and Equity Securities [Abstract] | |
Marketable Securities | 9. Marketable Securities 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, 2019, the shares of Zoompass were last quoted at $0.071 per share on the OTC market, resulting in an unrealized loss recorded to earnings related to these securities of $97,500 and $75,000 for the years ended December 31, 2019, and 2018 respectively. |
Line of Credit-Bank
Line of Credit-Bank | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
Line of Credit-Bank | 10. Line of Credit - Bank The Company maintains a $1,000,000 secured revolving line of credit from Metropolitan Commercial Bank in New York, which bears a fixed rate of interest of 3.00% on the outstanding balance with an interest only monthly minimum payment, no maturity or due date and is secured by a $1,000,000 security deposit, see Note 4. |
Convertible Debentures
Convertible Debentures | 12 Months Ended |
Dec. 31, 2019 | |
Notes to Financial Statements | |
Convertible Debentures | 11. Convertible Debentures 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 be converted into shares of the Company’s common stock at a price equal to $3.20 per share and the warrants can be 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 be converted into shares of the Company’s common stock at a price equal to $3.20 per share and the warrants can be 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 may be converted into shares of the Company’s common stock at a price equal to $3.20 per share and the warrants can be 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 may be converted into shares of the Company’s common stock at a price equal to $3.20 per share and the warrants can be 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 May 31, 2018 Warrants are exercisable at an exercise price of $4.00 per share and expire on May 31, 2020. The accounting treatment relating to the convertible debentures issued was in accordance with the guidance in ASC 480 and ASC 815. The proceeds received from the convertible debentures were; (i) net of finders fees issued to certain brokers; (ii) in addition, the Company issued shares of common stock to the convertible debenture holders; as well as (iii) certain two year warrants exercisable for shares of common stock at an exercise price of $4.00 per share; (iv) 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; and (v) the convertible debentures are convertible into shares of common stock at a conversion price of $3.20 per share. 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, the value of the warrants was recorded as a discount against the gross value of the convertible debentures and initially recorded as a derivative liability on the basis of standard anti-dilution language being interpreted as a down round feature, the warrants do not provide for any down round features and subsequent to the initial recording the Company adopted ASU 2017-11in September 2018 and eliminated the derivative liability; (v) The conversion feature of the convertible debentures was in-the-money at date of issuance, giving rise to a beneficial conversion feature valued at intrinsic value of $2,585,055. (vi) The company originally recorded the conversion feature as a derivative liability on the basis that the standard anti-dilution clauses in the convertible debt agreements relating to stock splits and stock mergers amounted to a down-round feature, the convertible debentures do not provide for down round features and accordingly, the Company adopted ASU2017-11 in September 2018 and eliminated the derivative liability. The total debt discount above amounted to $6,524,567 which is being amortized over the two year life of the debentures on a straight line basis. As of December 31, 2019 and 2018, the Company has outstanding, US Dollar convertible debentures of $2,083,000 and $3,268,000, respectively and Canadian Dollar denominated Convertible debentures of CDN$1,794,600 and CDN$6,801,165, respectively. During the year ended December 31, 2019, investors in Canadian Dollar convertible debentures converted the aggregate principal amount of CDN$5,367,400, including interest thereon of CDN$791,861 and investors in US Dollar convertible debentures converted the aggregate principal amount of $1,185,000, including interest thereon of $133,959, into 1,866,528 shares of common stock. The Aggregate convertible debentures outstanding consists of the following: December 31, 2019 December 31, 2018 Principal Outstanding Opening balance $ 8,529,751 $ 1,610,980 Additions — 7,080,308 Conversion to equity (5,240,736 ) — Foreign exchange movements 175,722 (161,537 ) 3,464,737 8,529,751 Accrued Interest Opening balance 520,523 — Interest expense 719,931 520,523 Conversion to equity (731,731 ) — Foreign exchange movements 15,504 — 524,227 520,523 Debenture Discount Opening balance (4,587,228 ) (462,872 ) Additions — (6,119,484 ) Amortization 3,959,601 1,995,128 (627,627 ) (4,587,228 ) Convertible Debentures, net $ 3,361,337 $ 4,463,046 |
Deferred Purchase Consideration
Deferred Purchase Consideration | 12 Months Ended |
Dec. 31, 2019 | |
Notes to Financial Statements | |
Deferred Purchase Consideration | 12. Deferred Purchase Consideration 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 have qualified for the earnout payment. 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 amounts 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: Description December 31, 2019 Principal Outstanding Promissory note due to non-related parties $ 2,745,811 Additional earnout earned 336,810 Settled by the issuance of common shares (616,387 ) Repayment in cash (607,555 ) Foreign exchange movements (56,295 ) 1,802,384 Present value discount on future payments Present value discount (242,089 ) Amortization 117,192 Foreign exchange movements 4,793 (120,104 ) Deferred purchase consideration, net $ 1,682,280 Disclosed as follows: Current liability $ 1,619,349 Long term liability 62,931 Deferred purchase consideration, net $ 1,682,280 |
Bank Loan Payable
Bank Loan Payable | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
Bank Loan Payable | 13. Bank Loan Payable 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. The Company made payments of €117,120 (approximately $131,163) for the year ended December 31, 2019 which included principal of €110,518 (approximately $123,769) and interest of €6,602 approximately $7,394) for the year ended December 31, 2019. |
Other Long Term Liabilities
Other Long Term Liabilities | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
Other Long Term Liabilities | 14. Other Long-term Liabilities Other long-term liabilities represent the Italian “Trattamento di Fine Rapporto” which is a severance amount set up by Italian companies to be paid to employees on termination or retirement as well as shop deposits that are held by Ulisse. Balances of other long-term liabilities were as follows: December 31, 2019 December 31, 2018 Severance liability $ 211,734 $ 168,706 Customer deposit balance 407,810 440,021 $ 619,544 $ 608,727 |
Related party
Related party | 12 Months Ended |
Dec. 31, 2019 | |
Related Party Transactions [Abstract] | |
Relateded party | 15. Related Parties Notes Payable, Related Party The Company had three promissory notes entered into in 2015 and 2016 with a related party with an aggregate principal amount outstanding of $318,078. The promissory notes bore interest at 12% to 24% per annum and were due on demand. On September 4, 2019, in terms of an agreement entered into with the note holder, the promissory notes amounting to $318,078 together with interest thereon of $139,383, totaling $457,461 were exchanged for 142,956 shares of common stock. The movement on notes payable, Related Party, consists of the following: December 31, 2019 December 31, 2018 Principal Outstanding Opening balance $ 318,078 $ 318,078 Settled by issuance of common shares (318,078 ) — — 318,078 Accrued Interest Opening balance 113,553 75,384 Interest expense 25,830 38,169 Conversion to equity (139,383 ) — — 113,553 Convertible Debentures, net $ — $ 431,631 Deferred Purchase consideration, Related Party 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 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 are to be settled as follows: (a) an aggregate of €956,800 in cash in 23 equal and consecutive monthly instalments of €41,600 with the first such payment due and payable on the date that is one month after the Closing Date; and (b) an aggregate of €564,400 in shares of the Company’s common stock in 17 equal and consecutive monthly instalments of €33,200 as determined by the average of the closing prices of such shares on the last 10 trading days immediately preceding the determination date of each monthly issuance, commencing on March 1, 2019. 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 have qualified for the earnout payment. 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 related party VG sellers amounts to €200,000 (approximately $224,540). 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: Description December 31, 2019 Principal Outstanding Promissory notes due to related parties $ 1,830,541 Additional earnout earned 224,540 Settled by the issuance of common shares (410,925 ) Repayment in cash (328,734 ) Foreign exchange movements (35,992 ) 1,279,430 Present value discount on future payments Present value discount (161,393 ) Amortization 78,128 Foreign exchange movements 3,195 (80,069 ) Deferred purchase consideration, net $ 1,199,361 Disclosed as follows: Current liability $ 1,157,407 Long term liability 41,954 Deferred purchase consideration, net $ 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, 2019 December 31, 2018 Related Party payables Gold Street Capital Corp. $ (2,551 ) $ (39,237 ) Related Party Receivables Luca Pasquini $ 4,123 $ — Amounts due to Gold Street Capital Corp., the major stockholder of Newgioco Group, are for reimbursement of expenses. The Company paid no management fees and $72,000 in management fees to Gold Street Capital Corp. during the years ended December 31, 2019 and 2018, respectively. In January 2018, the Company advanced €100,000 (approximately $116,000) to an officer to cover fees related to an application for a gaming license in Malta, under the name Ulisse Services, Ltd. The advance has been repaid and the gaming license in Malta is still under consideration. During the year ended December 31, 2018, the Company paid management fees of approximately €480,000 (approximately $549,000) to Ulisse Services, Ltd. to cover office and set-up expenses. Michele Ciavarella On July 5, 2019, the Company issued to Mr. Ciavarella, the Chief Executive Officer and chairman of the board and officer of the Company, 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 issued 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 per share. Gold Street Capital Gold Street Capital is wholly owned by Gilda Ciavarella, the spouse of Mr. Ciavarella. 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 On January 31, 2019, the Company acquired Virtual Generation for €4,000,000 (approximately $4,576,352), Mr. Pasquini was a 20% owner of Virtual Generation 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, 2019, the Company has paid Mr. Pasquini cash of €125,600 (approximately $141,014) and issued 68,247 shares valued at €183,800 (approximately $205,463). 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, which earnout is to be settled by the issue of shares of common stock of which Mr. Pasquini’s shares is €100,000 (approximately $112,270). On August 29, 2019, the Company issued to Mr. Pasquini, ten year options to purchase 25,000 shares of common stock at an exercise price of $2.80 per share. Gabriele Peroni On January 31, 2019, the Company acquired Virtual Generation Limited for €4,000,000 (approximately $4,576,352), Mr. Peroni was a 20% owner of Virtual Generation 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, 2019, the Company has paid Mr. Peroni cash of €167,200 (approximately $187,720) and issued 68,247 shares valued at €183,800 (approximately $205,463). 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, which earnout is to be settled by the issue of shares of common stock of which Mr. Peroni’s shares is €100,000 (Approximately $112,270). On August 29, 2019, the Company issued to Mr. Peroni, ten year options to purchase 25,000 shares of common stock at an exercise price of $2.80 per share. Franco Salvagni On August 29, 2019, the Company issued 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. Beniamino Gianfelici On August 29, 2019, the Company issued 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. Mark Korb On July 1, 2019, the Company issued 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. Paul Sallwasser On July 5, 2019, the Company issued 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. Steven Shallcross On July 5, 2019, the Company issued 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. |
Stockholders Equity
Stockholders Equity | 12 Months Ended |
Dec. 31, 2019 | |
Equity [Abstract] | |
Stockholders Equity | Notes to the Consolidated Financial Statements 16. Stockholders’ Equity 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 31, 2019, 32,450 shares of common stock valued at $101,763; · On March 1, 2019, 32,848 shares of common stock valued at $101,249; · On April 1, 2019, 29,975 shares of common stock valued at $86,328; · On May 1, 2019, 33,105 shares of common stock valued at $93,018; · On June 1, 2019, 37,256 shares of common stock valued at $92,961; · On July 1, 2019, 35,751 shares of common stock valued at $93,875; · On August 1, 2019, 35,048 shares of common stock valued at $91,810; · On September 1, 2019, 33,353 shares of common stock valued at $91,255; · On October 1, 2019, 26,285 shares of common stock valued at $90,526 · On November 1, 2019, 28,565 shares of common stock valued at $92,608 · On December 8, 2019, 26,610 shares of common stock valued at $91,922 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 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. |
Warrants
Warrants | 12 Months Ended |
Dec. 31, 2019 | |
Notes to Financial Statements | |
Warrants | 17. Warrants 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. The warrants were valued at fair value of $2,929,712 in terms of ASC 820 at the date of issuance, using a Black Sholes valuation model. A summary of all of the Company’s warrant activity during the period January 1, 2018 to December 31, 2019 is as follows: Year ended December 31, 2018 Exercise price/shares at issuance $ 4.00 – 4.60 Common stock share price $ 2.08 Risk free interest rate 0.91 % Expected life 1.37 years Expected volatility of underlying stock 459 % Expected dividend rate 0 % Number of shares Exercise price per share Weighted average exercise price Outstanding January 1, 2018 76,566 $ 4.32 $ 4.32 Granted 1,096,224 4.00 4.00 Forfeited/cancelled (27,000 ) 5.04 5.04 Exercised (40,761 ) 4.64 4.64 Expired (15,555 ) 4.64 4.64 Outstanding December 31, 2018 1,089,474 $ 4.00 4.00 Granted — — — Forfeited/cancelled — — — Exercised — — — Outstanding December 31, 2019 1,089,474 $ 4.00 $ 4.00 The following tables summarize information about warrants outstanding as of December 31, 2019: Warrants outstanding Warrants exercisable Exercise price Number of shares Weighted average remaining years Weighted average exercise price Number of shares Weighted average exercise price $ 4.00 1,089,474 0.41 $ 4.00 1,089,474 $ 4.00 |
Stock Options
Stock Options | 12 Months Ended |
Dec. 31, 2019 | |
Equity [Abstract] | |
Stock Options | 18. Stock options 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. No awards were granted under the 2018 Equity Incentive Plan as of December 31, 2018. 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 we issued options to purchase 70,625 shares of common stock to various employees at an exercise price of $2.80 per share. As of December 12, 2019, there was an aggregate of 315,938 options to purchase shares of common stock granted under our 2018 Equity Incentive Plan and 834,062 reserved for future grants. There were no option awards during or prior to the year ended December 31, 2018. The options awarded during the year ended December 31, 2019 were valued using a Black-Scholes option pricing model. The following assumptions were used in the Black-Scholes model: Year ended December 31, 2019 Exercise price 2.72 to 2.96 Risk free interest rate 1.50 to 2.04 Expected life of options 7 to 10 years Expected volatility of underlying stock 237.4 to 270.2 Expected dividend rate 0 % A summary of all of the Company’s option activity during the period January 1, 2019 to December 31, 2019 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 The following tables summarize information about stock options outstanding as of December 31, 2019: Options outstanding Options exercisable Exercise price Number of shares Weighted average remaining years Weighted Average exercise price Number of shares Weighted average exercise price $ 2.72 25,000 6.50 — $ 2.80 220,625 9.73 13,971 $ 2.96 70,313 9.52 35,859 315,938 9.30 $ 2.83 49,830 $ 2.92 The weighted-average grant-date fair values of options granted during the year ended December 31, 2019 was $899,704 ($2.85 per share), of which $201,106 was recorded as compensation cost for the year ended December 31, 2019. As of December 31, 2019, there were unvested options to purchase 237,982 shares of common stock. Total expected unrecognized compensation cost related to such unvested options is $698,598 which is expected to be recognized over a period of 47 months. The intrinsic value of the options at December 31, 2019 was $354,078. |
Revenues
Revenues | 12 Months Ended |
Dec. 31, 2019 | |
Revenues [Abstract] | |
Revenues | 19. Revenues The following table represents disaggregated revenues from our gaming operations for the years ended December 31, 2019 and 2018. Net Gaming Revenues represents Turnover (also referred to as “Handle”), the total bets processed for the period, less customer winnings paid out, commissions paid to agents, and taxes due to government authorities, while Commission Revenues represents commissions on lotto ticket sales and Service Revenues is revenue invoiced for our Elys software service and royalties invoiced for the sale of virtual products. For the Year Ended December 31, 2019 2018 Handle (Turnover) Handle web-based $ 328,385,837 $ 235,891,170 Handle land-based 125,747,337 177,334,592 Total Handle (Turnover) $ 454,133,174 $ 413,225,762 Winnings/Payouts Winnings web-based 309,214,993 223,064,978 Winnings land-based 105,011,619 152,446,130 Total Winnings/Payouts 414,226,612 375,511,108 Gross Gaming Revenues $ 39,906,562 $ 37,714,654 Less: ADM Gaming Taxes 4,697,085 3,417,150 Net Gaming Revenues $ 35,209,477 $ 34,297,504 Betting platform software and services 373,654 277,593 Revenues $ 35,583,131 $ 34,575,097 |
Net Loss per Common Share
Net Loss per Common Share | 12 Months Ended |
Dec. 31, 2019 | |
Earnings Per Share [Abstract] | |
Net Loss per Common Share | 20. Net Loss per Common Share 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, 2019 and 2018, 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: Description Year ended December 31, 2019 Year ended December 31, 2018 Options 315,938 — Warrants 1,089,474 1,089,474 Convertible debentures 1,246,551 2,856,764 2,651,963 3,946,238 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 21. Income Taxes 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, 2019 and December 31, 2018. The Company's Italian subsidiaries are governed by the income tax laws of Italy. The corporate tax rate in Italy is 28.82% (IRES at 24% plus IRAP ordinary at 4.82%) on income reported in the statutory financial statements after appropriate tax adjustments. The Company's Austrian subsidiaries are governed by the income tax laws of Austria. The corporate tax rate in Austria is 25% on income reported in the statutory financial statements after appropriate tax adjustments. The Company's Canadian subsidiary is governed by the income tax laws of Canada and the Province of Ontario. The combined Federal and Provincial corporate tax rate in Canada is 26.5% on income reported in the statutory financial statements after appropriate tax adjustments. 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% and 35% during 2019 and 2018, respectfully, to the Company’s effective tax rate is as follows: December 31, 2019 December 31, 2018 U.S. Statutory rate $ 1,822,092 $ 530,472 Items not allowed for tax purposes (1,142,776 ) (716,534 ) Foreign tax rate differential (66,163 ) 394,401 Additional foreign taxation (15,190 ) — Prior year over provision 1,167 — Prior year net operating loss adjustment (917,820 ) — Movement in valuation allowances (279,486 ) (1,311,040 ) Income tax expense $ (598,176 ) $ (1,102,701 ) The Company has accumulated a net operating loss carry forward (“NOL”) of approximately $16.7 million as of December 31, 2019 in the U.S. The U.S. NOL carry forward includes adjustments based on prior year assessments of $4.9 million due the assessment of tax losses carried forward. This NOL may be offset against future taxable income through the year 2038. The company also has net operating loss carry forwards in Italy, Austria and Malta of approximately €0.12 million ($0.14 million) and in Canada of approximately CDN$0.4 million ($0.32 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, 2019 December 31, 2018 Current $ (683,830 ) $ (1,102,701 ) Deferred 85,654 — Total $ (598,176 ) $ (1,102,701 ) The tax effects of temporary differences that give rise to the Company’s net deferred tax assets and liabilities are as follows: December 31, 2019 December 31, 2018 Working capital movements $ 641,089 $ — Net loss carryforward - Foreign 119,251 124,407 Net loss carryforward - US 3,505,182 3,861,629 4,265,522 3,986,036 Less valuation allowance (4,265,522 ) (3,986,036 ) Deferred tax assets $ — $ — Intangible assets $ (1,315,954 ) $ — $ (1,315,954 ) $ — The Net loss carry forward for US entities includes an adjustment of $917,821 based on taxation assessments which differed to the amounts originally provided for. The following tax years remain subject to examination: USA: Three years from the date of tax return filing which is currently the 2017 to 2019 tax years Italy and Austria: Five years from the date of filing which is currently the 2015 to 2019 tax years Malta: Eight years from fiscal year end which is currently 2012 to 2019. The Company is not currently under examination and it has not been notified of a pending examination. There are no unrecognized tax benefits. |
Segment Reporting
Segment Reporting | 12 Months Ended |
Dec. 31, 2019 | |
Segment Reporting [Abstract] | |
Segment Reporting | 22. Segmental Reporting The Company has two reportable operating segments. These segments are: (i) Betting establishments Provider of certified betting Platform software services to leisure betting establishments in Italy and 11 other countries and; (ii) Betting platform software and services The operating of web based as well as land based leisure betting establishments situated throughout Italy. The operating assets and (liabilities) of the reportable segments are as follows: December 31, 2019 Betting establishments Betting platform software and services All other Total Purchase of Non-Current assets $ 202,042 $ 5,456,358 $ — $ 5,658,400 Assets Current assets 6,620,800 470,127 216,948 7,307,875 Non-Current assets 12,761,177 6,615,905 1,183,550 20,560,632 Liabilities Current liabilities (5,395,212 ) (615,564 ) (10,450,390 ) (16,461,166 ) Non-Current liabilities (1,266,145 ) (1,339,911 ) — (2,696,056 ) Intercompany balances 5,461,766 423,926 (5,885,692 ) — Net asset position $ 18,182,386 $ 5,554,483 $ (14,935,584 ) $ 8,801,285 The segment operating results of the reportable segments are disclosed as follows: Year ended December 31, 2019 Betting establishments Betting platform software and services All other Adjustments Total Net Gaming Revenue $ 35,209,477 $ 373,654 $ — $ — $ 35,583,131 Intercompany Service revenue 452,776 2,839,211 — (3,291,987 ) — 35,662,253 3,212,865 — (3,291,987 ) 35,583,131 Operating expenses Intercompany service expense 2,839,211 452,776 — (3,291,987 ) — Selling expenses 25,583,913 2,000,579 — — 27,584,492 General and administrative expenses 5,109,135 1,294,617 4,590,802 — 10,994,554 33,532,259 3,747,972 4,590,802 (3,291,987 ) 38,579,046 (Loss) income from operations 2,129,994 (535,107 ) (4,590,802 ) — (2,995,915 ) Other (expense) income Interest expense, net (190,206 ) 3 (782,240 ) — (972,443 ) Amortization of debt discount — — (4,154,922 ) — (4,154,922 ) Virtual Generation earnout — — (561,351 ) — (561,351 ) Loss on share issuances — — (44,063 ) — (44,063 ) Other income 114,818 — 34,747 — 149,565 Loss on marketable securities — — (97,500 ) — (97,500 ) Total other (expenses) income (75,388 ) 3 (5,605,329 ) — (5,680,714 ) Loss before Income Taxes 2,054,606 (535,104 ) (10,196,131 ) — (8,676,629 ) Income tax provision (641,528 ) (43,352 ) — — (598,176 ) Net Loss $ 1,413,078 $ (491,752 ) $ (10,196,131 ) $ — $ (9,274,802 ) The operating assets and (liabilities) of the reportable segments are as follows: December 31, 2018 Betting establishments Betting platform software and services All other Total Purchase of fixed assets $ 10,019,807 $ 167,322 $ 6,856 $ 10,193,985 Assets Current assets 7,026,752 62,395 462,216 7,551,363 Non-Current assets 12,289,853 1,562,295 1,249,970 15,102,118 Liabilities Current liabilities (4,393,736 ) (281,553 ) (2,741,884 ) (7,417,173 ) Non-Current liabilities (833,859 ) — (4,463,046 ) (5,296,905 ) Intercompany balances 2,177,319 223,409 (2,400,728 ) — Net asset position $ 16,266,329 $ 1,566,546 $ (7,893,472 ) $ 9,939,403 The segment operating results of the reportable segments are disclosed as follows: Year ended December 31, 2018 Betting establishments Betting platform software and services All other Adjustments Total Net Gaming Revenue $ 34,433,461 $ 141,636 $ — $ — $ 34,575,097 Intercompany Service revenue 260,063 2,168,870 — (2,428,933 ) — 34,693,524 2,310,506 — (2,428,933 ) 34,575,097 Operating expenses Intercompany service expense 2,168,870 260,063 — (2,428,933 ) — Selling expenses 24,142,110 — — — 24,142,110 General and administrative expenses 4,968,280 2,360,357 3,259,525 — 10,588,162 31,279,260 2,620,420 3,259,525 (2,428,933 ) 34,730,272 (Loss) income from operations 3,414,264 (309,914 ) (3,259,525 ) — (155,175 ) Other (expense) income Interest expense, net (25,910 ) — (593,799 ) — (619,709 ) Amortization of debt discount — — (1,995,128 ) — (1,995,128 ) Gain on litigation settlement — — 516,120 — 516,120 Imputed interest on related party advances — — (761 ) — (761 ) Loss on issuance of debt — — (196,403 ) — (196,403 ) Mark-to-market of marketable securities — — (75,000 ) — (75,000 ) Total other (expenses) income (25,910 ) — (2,344,971 ) — (2,370,881 ) Loss before Income Taxes 3,388,354 (309,914 ) (5,604,496 ) — (2,526,056 ) Income tax provision (1,082,919 ) (18,042 ) (1,740 ) — (1,102,701 ) Net Loss $ 2,305,435 $ (327,956 ) $ (5,606,236 ) $ — $ (3,628,757 ) |
Subsequent events
Subsequent events | 12 Months Ended |
Dec. 31, 2019 | |
Subsequent Events [Abstract] | |
Subsequent events | 23. Subsequent Events Subsequent to year end, between January 12, 2020 and May 20, 2020, the Company converted convertible debentures in the aggregate principal amount of $400,000 including interest thereon of $70,492 and CDN$305,600 (approximately $227,227) including interest thereon of CDN$42,504 (approximately $31,604) into 226,792 shares of common stock at a conversion price of $3.20 per share. The Company also repurchased a convertible debenture in the aggregate principal amount of CDN$10,000 (approximately $7,289, including interest thereon of CDN2,000 (approximately $1,458) on February 26, 2020. Additionally, 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 February 1, 2020, 23,890 shares of common stock valued at $91,542; · 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 February 15, 2020 the Company and Handle 19, Inc. a District of Columbia corporation (the “Customer”) entered into a Management Services Provider (“MSP”) agreement which is in effect for an initial term of 12 months commencing from the first date on which both parties receive the necessary licenses from the District of Columbia Office of Lottery and Gaming (“DC Lottery”), and the Customer may extend for an additional forty-eight (48) months at its sole discretion. The Customer has defined the first installation location at 319 Pennsylvania Ave, Southeast, Washington, DC (the “Establishment”). Under terms of the agreement, the Company shall: a) design, create, install and operate unique sports betting products and services for the Customer at the Establishment in compliance with District of Columbia law. This shall be a customized Americanized Interface. All equipment and software provided by Licensor shall meet the latest version of the GLI-33 or other generally accepted standards that are approved by the DC Lottery b) provide a customized Shop Client design as well as Ancillary Services for each individual Gaming Application activated by the Customer including the processing of payments of wagers for each of the activated Gaming Applications; c) provide Ancillary Services including customer support, technical support, financial support, risk management and Reporting Service for Settlement by the Service Provider, in full compliance with this Agreement and all applicable laws including, without limitation, the Legislation. The Company shall invoice the Customer a fee based on the Gross Gaming Revenue calculated after the assessment and payment of all relevant taxes imposed under the District of Columbia Sports Wagering Lottery Amendment of 2018. On May 28, 2020 the Company formed Elys Gameboard Technologies, LLC, a wholly owned subsidiary in the State of Delaware for the purposes of operating the Company’s US sports betting operations. The global coronavirus pandemic has created a significant disruption and uncertainty since March 2020. On March 11, 2020, the Company reported that approximately 150 betting shop locations throughout Italy were temporarily closed and that the closing of the physical locations did not affect the Company’s continuing online and mobile operations. The Company has also implemented a smart-work initiative to permit the safe separation of office staff during this period because government forced lockdowns made it impossible for the Company to access its administrative offices in Europe. Additionally, the cancellation of sports events around the world disrupted our ability to provide our sports betting products through our land-based establishments and online channels. These restrictions and other difficulties, in both not having sports betting events available to wager on and the backlog of tasks imposed on our employees upon the return to work, are affecting our ability to consistently deliver our products to market. 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. |
Nature of Business (Policies)
Nature of Business (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
Nature Of Business | |
Nature of Business | Nature of Business Established in the state of Delaware in 1998, Newgioco Group, Inc. (“Newgioco Group” or the “Company”) is an international, vertically integrated commercial-stage company engaged in various aspects of the leisure gaming industry. The Company is a licensed gaming operator in the regulated Italian leisure betting market offering gaming services, including a variety of lottery, casino gaming and sports betting products through two distribution channels: an online channel and a land-based retail channel. Additionally, the Company is a global gaming technology company (known as a “Provider”), which owns and operates a betting software designed with a unique “distributed model” (“shop-client”) software architecture colloquially named Elys Game Board (the “Platform”). The Platform is a fully integrated “omni-channel” framework that combines centralized technology 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 date Domicile Functional Currency Newgioco Group, Inc. Parent Company USA US Dollar Multigioco Srl (“Multigioco”) August 15, 2014 Italy Euro Rifa Srl (“Rifa”) January 1, 2015 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 Naos Holdings limited (“Naos”) January 31, 2019 Malta Euro Newgioco Group Inc. (“NG Canada”) January 17, 2017 Canada Canadian Dollar Elys Technology Group Limited (“Elys”) April 4, 2019 Malta Euro Newgioco Colombia SAS November 22, 2019 Colombia Colombian Peso The Company operates in two lines of business: (i) provider of certified betting Platform software services to leisure betting establishments in Italy and 11 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 operates out of our principal executive offices in Toronto, Canada and satellite offices in the USA in Fort Lauderdale and Boca Raton, Florida, through which we carry-out corporate activities, handle day-to-day reporting and U.S. development planning, and through which various independent contractors and vendors are engaged. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Basis of Presentation | a) Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). All amounts referred to in the notes to the consolidated financial statements are in United States Dollars ($) unless stated otherwise. |
Principles of Consolidation | 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. |
Foreign Operations | 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 during the years presented. Gains and losses from foreign currency transactions are recognized in current operations. |
Business Combinations | 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. |
Use of 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 assets, 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. |
Loss Contingencies | 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. |
Fair Value Measurements | 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. |
Derivative 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 did not qualify as a derivative liability and is not bifurcated from the host instrument but contains a beneficial conversion feature. |
Cash and Cash Equivalents | 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, 2019 and 2018, respectively. The Company primarily places cash balances in the USA 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 | 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 $163,942 and $0 for the years ended December 31, 2019 and 2018, respectively. All balances previously recorded as allowance for doubtful accounts were written off as uncollectible. |
Gaming Accounts Payable | 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. |
Long-Lived Assets | 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.’’ |
Property, Plant and Equipment | 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 to5 Furniture and fittings 7 to 10 Computer Software 3 to 5 Vehicles 4 to 5 |
Intangible Assets | 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 has no expiration date and is therefore not amortized. |
Goodwill | 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 goodwill 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 goodwill exceeds its fair value. If the carrying amount of the goodwill 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 and other intangible assets as of December 31, 2019, concluding that no impairment was considered necessary. |
Income Taxes | p) 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 2015 forward, are open and subject to examination, while in Austria companies are open and subject to inspection for five years and ten years for inspection of serious infractions. In the United States and Canada, tax years beginning 2015 forward, are subject to examination. The Company is not currently under examination and it has not been notified of a pending examination. |
Revenue Recognition | q) 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. |
Stock Based Compensation | r) Stock-Based Compensation The Company records its compensation expense associated with stock options and other forms of equity compensation based on their fair value at the date of grant using the Black-Scholes option pricing model. Stock-based compensation includes amortization related to stock option awards based on the estimated grant date fair value. Stock-based compensation expense related to stock options is recognized ratably over the vesting period of the option. In addition, the Company records expense related to Restricted Stock Units (“RSU’s”) granted based on the fair value of those awards on the grant date. The fair value related to the RSUs is amortized to expense over the vesting term of those awards. Forfeitures of stock options and RSUs are recognized as they occur. Stock-based compensation expense for a stock-based award with a performance condition is recognized when the achievement of such performance condition is determined to be probable. If the outcome of such performance condition is not determined to be probable or is not met, no compensation expense is recognized and any previously recognized compensation expense is reversed. |
Comprehensive Income (Loss) | s) 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. |
Earnings Per Share | t) 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. |
Related Parties | u) 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. |
Adoption of accounting standards | v) Adoption of Accounting Standards In February 2016, the Financial Accounting Standards Board (“FSAB”) issued Accounting Standards Update (“ASU”), No. 2016-02, Leases (Topic 842) (ASC 842) The amendments in this update establishes a comprehensive new lease accounting model. The new standard: (a) clarifies the definition of a lease; (b) requires a dual approach to lease classification similar to current lease classifications; and (c) causes lessees to recognize leases on the balance sheet as a lease liability with a corresponding right-of-use asset for leases with a lease-term of more than twelve months. The new standard is effective for fiscal years and interim periods beginning after December 15, 2018, with early adoption permitted. A modified retrospective transition approach is required for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, including a number of optional practical expedients that entities may elect to apply. In July 2018, the FASB issued ASU No. 2018-11, Leases (Topic 842): Targeted Improvements, an update which provides another transition method, the prospective transition method, which allows entities to initially apply the new lease standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The Company adopted the new standard on January 1, 2019 using the prospective transition method. The Company has identified all material leases and reviewed the leases to determine the impact of ASC 842 on its consolidated financial statements. The Company has elected to apply all of the practical expedients to all leases, which include not reassessing (1) whether any expired or existing contracts are or contain leases, (2) lease classification for any expired or existing leases, and (3) initial direct costs for any existing leases. The adoption of the new standard resulted in; (i) the recording of a right-of-use asset of $646,138 and an operating lease liability of $617,352 on the consolidated balance sheet with effect from January 1, 2019 utilizing implicit borrowing rates where available and incremental borrowing rates where rates were not readily available. The right of use asset and operating lease liability are subsequently amortized. No cumulative effect adjustment to opening retained earnings was made as the amounts are immaterial. |
Recent Accounting Pronouncements Not Yet Adopted | 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. The Company adopted ASU 2016-13 on January 1, 2020 on a modified retrospective basis, and is currently evaluating the impact of adoption of the amendments in these updates, which are not expected to have a material impact on the Company’s financial position, results of operations, and related disclosures. In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740), 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. The FASB issued several 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. |
Reporting by segment | x) Reporting by segment The Company has two operating segments from which it derives revenue. These segments are: (i) provider of certified betting Platform software services to leisure betting establishments in Italy and 11 other countries and; (ii) the operating of web based as well as land based leisure betting establishments situated throughout Italy. |
Comparatives | y) Comparatives Certain items in the prior year were reclassified to conform to the current period presentation. These reclassifications had no impact on net loss or comprehensive loss. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Property, plant and equipment useful life | Description Useful Life (in years) Leasehold improvements Life of the underlying lease Computer and office equipment 3 to5 Furniture and fittings 7 to 10 Computer Software 3 to 5 Vehicles 4 to 5 |
Intangible assets useful life | 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 |
Acquisitions (Tables)
Acquisitions (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Business Combinations [Abstract] | |
Purchase Price - Acquisitions | 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 |
Plant and Equipment (Tables)
Plant and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
Plant and Equipment | December 31, 2019 December 31, 2018 Cost Accumulated depreciation Net book Net book Leasehold improvements $ 47,291 $ (14,886 ) $ 32,405 $ 8,038 Computer and office equipment 835,793 (522,969 ) 312,824 258,448 Fixtures and fittings 135,869 (78,271 ) 57,598 62,795 Vehicles 98,115 (25,589 ) 72,526 88,262 Computer software 125,831 (80,459 ) 45,372 58,504 $ 1,242,899 $ (722,174 ) $ 520,725 $ 476,047 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Notes to Financial Statements | |
Right of use assets and lease costs | Right of use assets are included in the consolidated balance sheet are as follows: December 31, 2019 Non-Current assets Right-of-use assets - operating leases, net of amortization $ 792,078 Right-of-use assets – finance leases, net of amortization (included in plant and equipment) $ 37,091 Lease costs consists of the following: Year ended December 31, 2019 Finance lease cost: $ 13,292 Amortization of right-of-use assets 11,890 Interest expense on lease liabilities 1,402 Operating lease cost 210,881 Total lease cost $ 224,173 Other lease information: Year ended December 31, 2019 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from finance leases $ (1,252 ) Operating cash flows from operating leases (210,881 ) Financing cash flows from finance leases (11,371 ) Right-of-use assets obtained in exchange for new finance leases 14,989 Right-of-use assets disposed of under operating leases prior to lease maturity (81,263 ) Right-of -use assets obtained in exchange for new operating leases $ 442,281 Weighted average remaining lease term – finance leases 3.46 years Weighted average remaining lease term – operating leases 3.74 years Weighted average discount rate – finance leases 3.52 % Weighted average discount rate – operating leases 3.42 % |
Maturity of Lease Liabilities | Finance lease liability The amount of future minimum lease payments under finance leases are as follows: Amount 2020 $ 13,611 2021 10,413 2022 8,431 2023 6,560 2024 802 Total undiscounted minimum future lease payments 39,967 Imputed interest (2,466 ) Total finance lease liability $ 37,501 Disclosed as: Current portion $ 12,476 Non-Current portion 25,025 $ 37,501 Operating lease liability The amount of future minimum lease payments under operating leases are as follows: Amount 2020 $ 222,497 2021 214,693 2022 180,470 2023 150,570 2024 and beyond 28,741 Total undiscounted minimum future lease payments 796,971 Imputed interest (47,358 ) Total operating lease liability $ 749,613 Disclosed as: Current portion $ 200,866 Non-Current portion 548,747 $ 749,613 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangibles | December 31, 2019 December 31, 2018 Cost Accumulated depreciation Net book Net book Betting platform software $ 5,689,965 $ (637,320 ) $ 5,052,645 $ 1,405,134 Licenses 10,694,227 (764,732 ) 9,929,495 10,037,980 Location contracts 1,000,000 (768,688 ) 231,312 374,169 Customer relationships 870,927 (301,227 ) 569,700 630,161 Trademarks 116,175 (42,300 ) 73,875 75,583 Websites 40,000 (40,000 ) — 4,953 $ 18,411,294 $ (2,554,267 ) $ 15,857,027 $ 12,527,980 |
Goodwill (Tables)
Goodwill (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill | December 31, 2019 December 31, 2018 Opening balance $ 262,552 $ 260,318 Acquisition of Virtual Generation 1,401,608 — Impairment charge — — Foreign exchange movements (775 ) 2,234 Closing balance $ 1,663,385 $ 262,552 |
Other Long Term Liabilities (Ta
Other Long Term Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Other Long Term Liabilities Tables Abstract | |
Other Long Term Liabilities | December 31, 2019 December 31, 2018 Severance liability $ 211,734 $ 168,706 Customer deposit balance 407,810 440,021 $ 619,544 $ 608,727 |
Debentures and Convertible Note
Debentures and Convertible Notes (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Debentures And Convertible Notes | |
Debentures outstanding | December 31, 2019 December 31, 2018 Principal Outstanding Opening balance $ 8,529,751 $ 1,610,980 Additions — 7,080,308 Conversion to equity (5,240,736 ) — Foreign exchange movements 175,722 (161,537 ) 3,464,737 8,529,751 Accrued Interest Opening balance 520,523 — Interest expense 719,931 520,523 Conversion to equity (731,731 ) — Foreign exchange movements 15,504 — 524,227 520,523 Debenture Discount Opening balance (4,587,228 ) (462,872 ) Additions — (6,119,484 ) Amortization 3,959,601 1,995,128 (627,627 ) (4,587,228 ) Convertible Debentures, net $ 3,361,337 $ 4,463,046 |
Deferred Purchase Considerati_2
Deferred Purchase Consideration (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Notes to Financial Statements | |
Deferred Purchase consideration | Description December 31, 2019 Principal Outstanding Promissory note due to non-related parties $ 2,745,811 Additional earnout earned 336,810 Settled by the issuance of common shares (616,387 ) Repayment in cash (607,555 ) Foreign exchange movements (56,295 ) 1,802,384 Present value discount on future payments Present value discount (242,089 ) Amortization 117,192 Foreign exchange movements 4,793 (120,104 ) Deferred purchase consideration, net $ 1,682,280 Disclosed as follows: Current liability $ 1,619,349 Long term liability 62,931 Deferred purchase consideration, net $ 1,682,280 |
Related party (Tables)
Related party (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Related Party Transactions [Abstract] | |
Related party debt | December 31, 2019 December 31, 2018 Principal Outstanding Opening balance $ 318,078 $ 318,078 Settled by issuance of common shares (318,078 ) — — 318,078 Accrued Interest Opening balance 113,553 75,384 Interest expense 25,830 38,169 Conversion to equity (139,383 ) — — 113,553 Convertible Debentures, net — 431,631 |
Related party deferred purchase consideration | Description December 31, 2019 Principal Outstanding Promissory notes due to related parties $ 1,830,541 Additional earnout earned 224,540 Settled by the issuance of common shares (410,925 ) Repayment in cash (328,734 ) Foreign exchange movements (35,992 ) 1,279,430 Present value discount on future payments Present value discount (161,393 ) Amortization 78,128 Foreign exchange movements 3,195 (80,069 ) Deferred purchase consideration, net $ 1,199,361 Disclosed as follows: Current liability $ 1,157,407 Long term liability 41,954 Deferred purchase consideration, net $ 1,199,361 |
Related party | December 31, 2019 December 31, 2018 Related Party payables Gold Street Capital Corp. $ (2,551 ) $ (39,237 ) Related Party Receivables Luca Pasquini $ 4,123 $ — |
Warrants (Tables)
Warrants (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Notes to Financial Statements | |
Black-scholes modle | Year ended December 31, 2018 Exercise price/shares at issuance $ 4.00 – 4.60 Common stock share price $ 2.08 Risk free interest rate 0.91 % Expected life 1.37 years Expected volatility of underlying stock 459 % Expected dividend rate 0 % |
Summary of warrants | Number of shares Exercise price per share Weighted average exercise price Outstanding January 1, 2018 76,566 $ 4.32 $ 4.32 Granted 1,096,224 4.00 4.00 Forfeited/cancelled (27,000 ) 5.04 5.04 Exercised (40,761 ) 4.64 4.64 Expired (15,555 ) 4.64 4.64 Outstanding December 31, 2018 1,089,474 $ 4.00 4.00 Granted — — — Forfeited/cancelled — — — Exercised — — — Outstanding December 31, 2019 1,089,474 $ 4.00 $ 4.00 |
Warrants outstanding | Warrants outstanding Warrants exercisable Exercise price Number of shares Weighted average remaining years Weighted average exercise price Number of shares Weighted average exercise price $ 4.00 1,089,474 0.41 $ 4.00 1,089,474 $ 4.00 |
Stock Options (Tables)
Stock Options (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Equity [Abstract] | |
Assumptions | Year ended December 31, 2019 Exercise price 2.72 to 2.96 Risk free interest rate 1.50 to 2.04 Expected life of options 7 to 10 years Expected volatility of underlying stock 237.4 to 270.2 Expected dividend rate 0 % |
Stock option activity | 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 |
Stock options outstanding | Options outstanding Options exercisable Exercise price Options Number of shares Weighted average remaining years Weighted Average exercise price Options Number of shares Weighted average exercise price $ 2.72 25,000 6.50 — $ 2.80 220,625 9.73 13,971 $ 2.96 70,313 9.52 35,859 315,938 9.30 $ 2.83 49,830 $ 2.92 |
Net Loss per Common Share (Tabl
Net Loss per Common Share (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Earnings Per Share [Abstract] | |
Net Loss per share | Description Year ended December 31, 2019 Year ended December 31, 2018 Options 315,938 — Warrants 1,089,474 1,089,474 Convertible debentures 1,246,551 2,856,764 2,651,963 3,946,238 |
Revenues (Tables)
Revenues (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Revenues [Abstract] | |
Revenue | For the Year Ended December 31, 2019 2018 Handle (Turnover) Handle web-based $ 328,385,837 $ 235,891,170 Handle land-based 125,747,337 177,334,592 Total Handle (Turnover) $ 454,133,174 $ 413,225,762 Winnings/Payouts Winnings web-based 309,214,993 223,064,978 Winnings land-based 105,011,619 152,446,130 Total Winnings/Payouts 414,226,612 375,511,108 Gross Gaming Revenues $ 39,906,562 $ 37,714,654 Less: ADM Gaming Taxes 4,697,085 3,417,150 Net Gaming Revenues $ 35,209,477 $ 34,297,504 Betting platform software and services 373,654 277,593 Revenues $ 35,583,131 $ 34,575,097 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Income Taxes Tables Abstract | |
Reconciliation of income tax expense | December 31, 2019 December 31, 2018 U.S. Statutory rate $ 1,822,092 $ 530,472 Items not allowed for tax purposes (1,142,776 ) (716,534 ) Foreign tax rate differential (66,163 ) 394,401 Additional foreign taxation (15,190 ) — Prior year over provision 1,167 — Prior year net operating loss adjustment (917,820 ) — Movement in valuation allowances (279,486 ) (1,311,040 ) Income tax expense $ (598,176 ) $ (1,102,701 ) |
Deferred tax assets | December 31, 2019 December 31, 2018 Current $ (683,830 ) $ (1,102,701 ) Deferred 85,654 — Total $ (598,176 ) $ (1,102,701 ) |
Provisions for income taxes | December 31, 2019 December 31, 2018 Working capital movements $ 641,089 $ — Net loss carryforward - Foreign 119,251 124,407 Net loss carryforward - US 3,505,182 3,861,629 4,265,522 3,986,036 Less valuation allowance (4,265,522 ) (3,986,036 ) Deferred tax assets $ — $ — Intangible assets $ (1,315,954 ) $ — $ (1,315,954 ) $ — |
Segment Reporting (Tables)
Segment Reporting (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Segment Reporting [Abstract] | |
Operating assets and liabilities | December 31, 2019 Betting establishments Betting platform software and services All other Total Purchase of Non-Current assets $ 202,042 $ 5,456,358 $ — $ 5,658,400 Assets Current assets 6,620,800 470,127 216,948 7,307,875 Non-Current assets 12,761,177 6,615,905 1,183,550 20,560,632 Liabilities Current liabilities (5,395,212 ) (615,564 ) (10,450,390 ) (16,461,166 ) Non-Current liabilities (1,266,145 ) (1,339,911 ) — (2,696,056 ) Intercompany balances 5,461,766 423,926 (5,885,692 ) — Net asset position $ 18,182,386 $ 5,554,483 $ (14,935,584 ) $ 8,801,285 December 31, 2018 Betting establishments Betting platform software and services All other Total Purchase of fixed assets $ 10,019,807 $ 167,322 $ 6,856 $ 10,193,985 Assets Current assets 7,026,752 62,395 462,216 7,551,363 Non-Current assets 12,289,853 1,562,295 1,249,970 15,102,118 Liabilities Current liabilities (4,393,736 ) (281,553 ) (2,741,884 ) (7,417,173 ) Non-Current liabilities (833,859 ) — (4,463,046 ) (5,296,905 ) Intercompany balances 2,177,319 223,409 (2,400,728 ) — Net asset position $ 16,266,329 $ 1,566,546 $ (7,893,472 ) $ 9,939,403 |
Operating results | Year ended December 31, 2019 Betting establishments Betting platform software and services All other Adjustments Total Net Gaming Revenue $ 35,209,477 $ 373,654 $ — $ — $ 35,583,131 Intercompany Service revenue 452,776 2,839,211 — (3,291,987 ) — 35,662,253 3,212,865 — (3,291,987 ) 35,583,131 Operating expenses Intercompany service expense 2,839,211 452,776 — (3,291,987 ) — Selling expenses 25,583,913 2,000,579 — — 27,584,492 General and administrative expenses 5,109,135 1,294,617 4,590,802 — 10,994,554 33,532,259 3,747,972 4,590,802 (3,291,987 ) 38,579,046 (Loss) income from operations 2,129,994 (535,107 ) (4,590,802 ) — (2,995,915 ) Other (expense) income Interest expense, net (190,206 ) 3 (782,240 ) — (972,443 ) Amortization of debt discount — — (4,154,922 ) — (4,154,922 ) Virtual Generation earnout — — (561,351 ) — (561,351 ) Loss on share issuances — — (44,063 ) — (44,063 ) Other income 114,818 — 34,747 — 149,565 Loss on marketable securities — — (97,500 ) — (97,500 ) Total other (expenses) income (75,388 ) 3 (5,605,329 ) — (5,680,714 ) Loss before Income Taxes 2,054,606 (535,104 ) (10,196,131 ) — (8,676,629 ) Income tax provision (641,528 ) (43,352 ) — — (598,176 ) Net Loss $ 1,413,078 $ (491,752 ) $ (10,196,131 ) $ — $ (9,274,802 ) Year ended December 31, 2018 Betting establishments Betting platform software and services All other Adjustments Total Net Gaming Revenue $ 34,433,461 $ 141,636 $ — $ — $ 34,575,097 Intercompany Service revenue 260,063 2,168,870 — (2,428,933 ) — 34,693,524 2,310,506 — (2,428,933 ) 34,575,097 Operating expenses Intercompany service expense 2,168,870 260,063 — (2,428,933 ) — Selling expenses 24,142,110 — — — 24,142,110 General and administrative expenses 4,968,280 2,360,357 3,259,525 — 10,588,162 31,279,260 2,620,420 3,259,525 (2,428,933 ) 34,730,272 (Loss) income from operations 3,414,264 (309,914 ) (3,259,525 ) — (155,175 ) Other (expense) income Interest expense, net (25,910 ) — (593,799 ) — (619,709 ) Amortization of debt discount — — (1,995,128 ) — (1,995,128 ) Gain on litigation settlement — — 516,120 — 516,120 Imputed interest on related party advances — — (761 ) — (761 ) Loss on issuance of debt — — (196,403 ) — (196,403 ) Mark-to-market of marketable securities — — (75,000 ) — (75,000 ) Total other (expenses) income (25,910 ) — (2,344,971 ) — (2,370,881 ) Loss before Income Taxes 3,388,354 (309,914 ) (5,604,496 ) — (2,526,056 ) Income tax provision (1,082,919 ) (18,042 ) (1,740 ) — (1,102,701 ) Net Loss $ 2,305,435 $ (327,956 ) $ (5,606,236 ) $ — $ (3,628,757 ) |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details 1) | 12 Months Ended | |||
Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2019CAD ($) | Dec. 31, 2019EUR (€) | |
Accounting Policies [Abstract] | ||||
FDIC Insured Amount | $ 250,000 | $ 100,000 | € 100,000 | |
Bad Debt Expense | 163,942 | $ 0 | ||
Goodwill acquired in acquisition | $ 1,401,608 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details 2) | 12 Months Ended |
Dec. 31, 2019 | |
Computer and Office equipment [Member] | Minimum [Member] | |
Useful Life | 3 years |
Computer and Office equipment [Member] | Maximum[Member] | |
Useful Life | 5 years |
Furniture and fittings [Member] | Minimum [Member] | |
Useful Life | 7 years |
Furniture and fittings [Member] | Maximum[Member] | |
Useful Life | 10 years |
Computer Software [Member] | Minimum [Member] | |
Useful Life | 3 years |
Computer Software [Member] | Maximum[Member] | |
Useful Life | 5 years |
Vehicles [Member] | Minimum [Member] | |
Useful Life | 4 years |
Vehicles [Member] | Maximum[Member] | |
Useful Life | 5 years |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies (Details 3) | 12 Months Ended |
Dec. 31, 2019 | |
Betting platform system [Member] | |
Useful Life | 15 years |
Multigioco and Rifa ADM Licenses [Member] | Minimum [Member] | |
Useful Life | 1 year 5 months |
Multigioco and Rifa ADM Licenses [Member] | Maximum[Member] | |
Useful Life | 7 years |
Location contracts [Member] | Minimum [Member] | |
Useful Life | 5 years |
Location contracts [Member] | Maximum[Member] | |
Useful Life | 7 years |
Customer relationships [Member] | Minimum [Member] | |
Useful Life | 10 years |
Customer relationships [Member] | Maximum[Member] | |
Useful Life | 15 years |
Trademarks[Member] | |
Useful Life | 14 years |
Website [Member] | |
Useful Life | 5 years |
Acquisitions (Details Narrative
Acquisitions (Details Narrative) | 1 Months Ended | 5 Months Ended | 6 Months Ended | 12 Months Ended | |||||
Jan. 30, 2019USD ($) | Jan. 30, 2019EUR (€) | May 31, 2018USD ($)$ / sharesshares | May 31, 2018EUR (€)shares | Jun. 30, 2016shares | Dec. 31, 2019USD ($) | Dec. 31, 2019EUR (€) | Dec. 31, 2018USD ($) | ||
Business Acquisition [Line Items] | |||||||||
Repurchased and retired shares, value | $ | $ (2,261,307) | ||||||||
Issuance of common stock, value | $ | 5,587,675 | ||||||||
Virtual Generation bonus earnout | $ | $ (561,351) | ||||||||
Ulisse [Member] | |||||||||
Business Acquisition [Line Items] | |||||||||
Purchase price | $ 11,700,000 | € 10,000,000 | |||||||
Share issued for acquisition | shares | 591,950 | 591,950 | 416,400 | ||||||
Agreement | option to resell to the Company 50% of the shares of common stock (or 208,200 shares) issued in consideration for the purchase price at a fixed price of USD $4.00 per share (the “Ulisse Put Option”) | ||||||||
Purchase price paid in cash | $ 5,850,000 | € 5,000,000 | |||||||
Share price | $ / shares | $ 9.44 | ||||||||
Multigioco [Member] | |||||||||
Business Acquisition [Line Items] | |||||||||
Repurchased and retired shares, share | shares | 255,000 | 255,000 | |||||||
Repurchased and retired shares, value | $ 595,000 | € 510,000 | |||||||
Virtual Generation [Member] | |||||||||
Business Acquisition [Line Items] | |||||||||
Purchase price | $ 4,576,352 | € 4,000,000 | |||||||
Issuance of common stock, value | 89,000 | ||||||||
Purchase price paid in cash | 108,000 | ||||||||
Promissory Note | € 3,803,000 | ||||||||
Number of payments | 23 | 23 | 17 | 17 | |||||
Payments on Loan | € 104,000 | € 83,000 | |||||||
Total payments | 2,392,000 | 1,411,000 | |||||||
Principal payments | € 1,435,200 | 846,600 | |||||||
Virtual Generation bonus earnout | $ 561,500 | [1] | € 500,000 | ||||||
[1] | 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 have qualified for the earnout payment. |
Acquisition- Purchase price (De
Acquisition- Purchase price (Details) - Virtual Generation [Member] | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Business Combination, Separately Recognized Transactions [Line Items] | |
Purchase price | $ 4,193,374 |
Fair value of assets acquired | |
Cash | 47,268 |
Current assets | 178,181 |
Property, Plant and Equipment | 41,473 |
Betting Platform | 4,004,594 |
Identifiable intangible assets: | $ 4,271,516 |
Remaining useful life | 15 years |
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 identifiable assets less liabilities assumed | $ 4,193,375 |
Restricted Cash (Details)
Restricted Cash (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Restricted Cash [Abstract] | ||
Line of credit - bank | $ 1,000,000 | $ 750,000 |
Collateral | $ 1,000,000 |
Plant and Equipment - Plant and
Plant and Equipment - Plant and Equipment (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Plant and Equipment, gross | $ 1,242,899 | |
Accumulated Depreciation | (722,174) | |
Property, plant and equipment | 520,725 | $ 476,047 |
Leasehold improvements [Member] | ||
Plant and Equipment, gross | 47,291 | |
Accumulated Depreciation | (14,886) | |
Property, plant and equipment | 32,405 | 8,038 |
Computer and Office equipment [Member] | ||
Plant and Equipment, gross | 835,793 | |
Accumulated Depreciation | (522,969) | |
Property, plant and equipment | 312,824 | 258,448 |
Fixtures and fittings[Member] | ||
Plant and Equipment, gross | 135,869 | |
Accumulated Depreciation | (78,271) | |
Property, plant and equipment | 57,598 | 62,795 |
Vehicles[Member] | ||
Plant and Equipment, gross | 98,115 | |
Accumulated Depreciation | (25,589) | |
Property, plant and equipment | 72,526 | 88,262 |
Computer software [Member] | ||
Plant and Equipment, gross | 125,831 | |
Accumulated Depreciation | (80,459) | |
Property, plant and equipment | $ 45,372 | $ 58,504 |
Plant and Equipment (Details Na
Plant and Equipment (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation charge | $ 283,497 | $ 228,715 |
Leases - Right of Use Assets (D
Leases - Right of Use Assets (Details Narrative) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Leases [Abstract] | ||
Right of use asset for operating leases | $ 792,078 | $ 646,138 |
Right of use assets for finance leases | $ 37,091 |
Leases Cost (Details Narrative)
Leases Cost (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Lease, Cost [Abstract] | ||
Amortization of right-of-use assets | $ 11,890 | |
Interest expense on lease liabilities | 1,402 | |
Finance lease cost | 13,292 | |
Operating lease cost | 210,881 | |
Total lease cost | 224,173 | |
Cash paid for amounts included in the measurement of lease liabilities | ||
Operating cash flows from finance leases | (1,252) | |
Operating cash flows from operating leases | (210,881) | |
Financing cash flows from finance leases | (11,371) | |
Right-of-use assets obtained in exchange for new finance leases | 14,989 | |
Right-of-use assets disposed of under operating leases prior to lease maturity | (81,263) | |
Right-of -use assets obtained in exchange for new operating leases | $ 442,281 | |
Weighted average remaining lease term - finance leases | 3 years 167 days 21 hours 36 minutes | |
Weighted average remaining lease term - operating leases | 3 years 270 days 2 hours 24 minutes | |
Weighted average discount rate- finance leases | 3.52% | |
Weighted average discount rate- operating leases | 3.42% |
Leases - Maturity of Lease Liab
Leases - Maturity of Lease Liabilities (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Maturity of Lease Liabilities | ||
Financial lease liability, Current | $ 12,476 | |
Financial lease liability, Non-Current | 25,025 | |
Operating lease liability, Current | 200,866 | |
Operating lease liability,Non-Current | 548,747 | |
Financial lease liability [Member] | ||
Maturity of Lease Liabilities | ||
2020 | 13,611 | |
2021 | 10,413 | |
2022 | 8,431 | |
2023 | 6,560 | |
2024 | 802 | |
Total undiscounted lease payments | 39,967 | |
Less: Imputed interest | (2,466) | |
Present value of lease liabilities | 37,501 | |
Financial lease liability, Current | 12,476 | |
Financial lease liability, Non-Current | 25,025 | |
Operating lease liability [Member] | ||
Maturity of Lease Liabilities | ||
2020 | 222,497 | |
2021 | 214,693 | |
2022 | 180,470 | |
2023 | 150,570 | |
2024 | 28,741 | |
Total undiscounted lease payments | 796,971 | |
Less: Imputed interest | (47,358) | |
Present value of lease liabilities | 749,613 | |
Operating lease liability, Current | 200,866 | |
Operating lease liability,Non-Current | $ 548,747 |
Intangible Assets - Intangibles
Intangible Assets - Intangibles (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Intangible assets, gross | $ 18,411,294 | |
Accumulated amortization | (2,554,267) | |
Intangible assets | 15,857,027 | $ 12,527,980 |
Betting platform system [Member] | ||
Intangible assets, gross | 5,689,965 | |
Accumulated amortization | (637,320) | |
Intangible assets | 5,052,645 | 1,405,134 |
License [Member] | ||
Intangible assets, gross | 10,694,227 | |
Accumulated amortization | (764,732) | |
Intangible assets | 9,929,495 | 10,037,980 |
Location contracts [Member] | ||
Intangible assets, gross | 1,000,000 | |
Accumulated amortization | (768,688) | |
Intangible assets | 231,312 | 374,169 |
Customer relationships [Member] | ||
Intangible assets, gross | 870,927 | |
Accumulated amortization | (301,227) | |
Intangible assets | 569,700 | 630,161 |
Trademarks[Member] | ||
Intangible assets, gross | 116,175 | |
Accumulated amortization | (42,300) | |
Intangible assets | 73,875 | 75,583 |
Website [Member] | ||
Intangible assets, gross | 40,000 | |
Accumulated amortization | (40,000) | |
Intangible assets | $ 4,953 |
Intangible Assets (Details Narr
Intangible Assets (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization Expense | $ 771,665 | $ 468,551 |
Goodwill - Goodwill (Details)
Goodwill - Goodwill (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Opening balance | $ 262,552 | $ 260,318 |
Acquisition of Virtual Generation | 1,401,608 | |
Impairment charge | ||
Foreign exchange movements | (1,022) | 2,234 |
Goodwill | $ 1,663,385 | $ 262,552 |
Marketable Securities (Details
Marketable Securities (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Investments, Debt and Equity Securities [Abstract] | ||
Marketable securities, shares | 2,500,000 | |
Per Share | $ 0.071 | |
Loss on marketable securities | $ (97,500) | $ (75,000) |
Line of Credit-Bank (Details Na
Line of Credit-Bank (Details Narrative) - Revolving Line of Credit [Member] | Dec. 31, 2019USD ($) |
Line of credit | $ 1,000,000 |
Security Deposit | $ 1,000,000 |
Interest rate | 3.00% |
Convertible Debt (Details Narra
Convertible Debt (Details Narrative) | 12 Months Ended | ||||
Dec. 31, 2019USD ($)$ / sharesshares | Dec. 31, 2019CAD ($)shares | Dec. 31, 2018USD ($) | Dec. 31, 2019CAD ($)shares | Dec. 31, 2018CAD ($) | |
Convertible Debentures | $ 2,083,000 | $ 3,268,000 | $ 1,794,600 | $ 6,801,165 | |
Broker Fee | $ | 427,314 | ||||
Common stock issued with debt | $ | $ 582,486 | ||||
Warrants fair value | $ | 2,929,712 | ||||
Conversion feature of the convertible debentures, intrinsic Value | $ | 2,585,055 | ||||
Debt Discount | $ | 6,524,567 | ||||
Convertible Debentures [Member] | |||||
Princpal | 1,185,000 | 5,367,400 | |||
Interest | 133,959 | $ 791,861 | |||
Issuance of common shares | $ | $ 1,866,528 | ||||
February 2018 Private Placement [Member] | |||||
Debenture carrying value, note payable | $ | $ 1,000 | ||||
Interest rate | 10.00% | 10.00% | |||
Maturity date | Feb. 25, 2020 | Feb. 25, 2020 | |||
Warrants to purchase shares | 31.25 | 31.25 | |||
Initial Warrant price | $ / shares | $ 5 | ||||
Resticted common stock, shares | 20 | 20 | |||
Proceeds from private placement | $ 521,900 | $ 670,000 | |||
Shares issued for warrants, shares | 20,938 | 20,938 | |||
Shares issued for private placement, shares | 13,875 | 13,875 | |||
Price per share | $ / shares | $ 3.20 | ||||
Warrant price | $ / shares | $ 4 | ||||
April 2018 Private Placement [Member] | |||||
Debenture carrying value, note payable | $ | $ 1,000 | ||||
Interest rate | 10.00% | 10.00% | |||
Maturity date | Apr. 30, 2020 | Apr. 30, 2020 | |||
Warrants to purchase shares | 31.25 | 31.25 | |||
Initial Warrant price | $ / shares | $ 5 | ||||
Resticted common stock, shares | 20 | 20 | |||
Proceeds from private placement | $ 105,200 | $ 135,000 | |||
Shares issued for warrants, shares | 4,218.75 | 4,218.75 | |||
Shares issued for private placement, shares | 2,700 | 2,700 | |||
Price per share | $ / shares | $ 3.20 | ||||
Warrant price | $ / shares | $ 4 | ||||
April 19, 2018 Private Placement [Member] | |||||
Debenture carrying value, note payable | $ | $ 1,000 | ||||
Interest rate | 10.00% | 10.00% | |||
Maturity date | Apr. 19, 2020 | Apr. 19, 2020 | |||
Warrants to purchase shares | 31.25 | 31.25 | |||
Initial Warrant price | $ / shares | $ 5 | ||||
Resticted common stock, shares | 20 | 20 | |||
Proceeds from private placement | $ 1,118,600 | $ 1,436,000 | |||
Shares issued for warrants, shares | 44,875 | 44,875 | |||
Shares issued for private placement, shares | 28,720 | 28,720 | |||
May 11, 2018 Private Placement [Member] | |||||
Debenture carrying value, note payable | $ | $ 1,000 | ||||
Interest rate | 10.00% | 10.00% | |||
Maturity date | May 11, 2020 | May 11, 2020 | |||
Warrants to purchase shares | 31.25 | 31.25 | |||
Initial Warrant price | $ / shares | $ 5 | ||||
Resticted common stock, shares | 20 | 20 | |||
Proceeds from private placement | $ 102,000 | $ 131,000 | |||
Shares issued for warrants, shares | 4,093.75 | 4,093.75 | |||
Shares issued for private placement, shares | 2,620 | 2,620 | |||
Price per share | $ / shares | $ 3.20 | ||||
Warrant price | $ / shares | $ 4 | ||||
May 31, 2018 Private Placement [Member] | |||||
Private Placement , units | 7,500 | 7,500 | |||
Debenture carrying value, note payable | $ 1,000 | $ 1,000 | |||
Interest rate | 10.00% | 10.00% | |||
Maturity date | May 31, 2020 | May 31, 2020 | |||
Warrants to purchase shares | 26 | 26 | |||
Initial Warrant price | $ / shares | $ 135.25 | ||||
Resticted common stock, shares | 20 | 20 | |||
Price per share | $ / shares | $ 104.60 |
Convertible Debt (Details)
Convertible Debt (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Foreign exchange movements | $ (1,022) | $ 2,234 |
Debenture Discount | ||
Amortization | 4,154,922 | 1,995,128 |
Convertible Debenture | 3,361,337 | |
Debentures [Member] | ||
Convertible Debt, gross | 8,529,751 | 1,610,980 |
Additions | 7,080,308 | |
Conversion to equity | (5,240,736) | |
Foreign exchange movements | 175,722 | (161,537) |
Convetible debt, ending | 3,464,737 | 8,529,751 |
Accrued Interest | ||
Accrued interest, opening balance | 520,523 | |
Interest expense | 719,931 | 520,523 |
Conversion to equity | (731,731) | |
Foreign exchange movements | 15,504 | |
Accrued interest, ending balance | 524,227 | 520,523 |
Debenture Discount | ||
Debenture Discount, opening balance | (4,587,228) | (462,872) |
Additions | (6,119,484) | |
Amortization | 3,959,601 | 1,995,128 |
Debenture Discount, ending balance | $ (627,627) | (4,587,228) |
Convertible Debenture | $ 4,463,046 |
Disclosure - Deferred Purchase
Disclosure - Deferred Purchase Consideration (Details Narrative) - Virtual Generation [Member] - EUR (€) | Dec. 31, 2019 | Jan. 30, 2019 |
Debt Instrument [Line Items] | ||
Promissory note payable | € 3,803,000 | |
Related Party [Member] | ||
Debt Instrument [Line Items] | ||
Promissory note payable | € 1,521,200 | |
Non Related Party [Member] | ||
Debt Instrument [Line Items] | ||
Promissory note payable | € 2,281,800 |
Deferred Purchase Considerati_3
Deferred Purchase Consideration - Deferred Purchase consideration (Details) (USD $) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Present value discount on future payments | ||
Deferred purchase consideration, net | $ 1,682,280 | |
Deferred purchase consideration, Current | 1,682,280 | |
Notes Payable [Member] | ||
Principal Outstanding | ||
Promissory note due to non-related parties, beginning | 2,745,811 | |
Additional earnout earned | 336,810 | |
Settled by the issuance of common shares | (616,387) | |
Repayment in cash | (607,555) | |
Foreign exchange movements | (56,295) | |
Promissory note due to non-related parties, ending | 1,802,384 | 2,745,811 |
Present value discount on future payments | ||
Present value discount, beginning | (242,089) | |
Amortization | 117,192 | |
Foreign exchange movements | 4,793 | |
Present value discount, ending | (120,104) | $ (242,089) |
Deferred purchase consideration, net | $ 1,682,280 |
Bank Loan Payable (Details Narr
Bank Loan Payable (Details Narrative) - Bank Loan [Member] | 12 Months Ended | ||||
Dec. 31, 2019USD ($) | Dec. 31, 2019EUR (€) | Dec. 31, 2016USD ($) | Dec. 31, 2016EUR (€) | Dec. 31, 2019EUR (€) | |
Proceeds for notes payable | $ 545,000 | € 500,000 | |||
Number of payments | 57 | 57 | |||
Payments on Loan | $ 131,163 | € 117,120 | |||
Principal payments | 123,769 | € 110,518 | |||
Principal payments | € 9,760 | ||||
Interest payments | $ 7,394 | € 6,602 |
Other Long Term Liabilities (De
Other Long Term Liabilities (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Other long term liabilities | $ 619,544 | $ 608,728 |
Serverance Liability [Member] | ||
Other long term liabilities | 211,734 | 168,706 |
Customer deposit balance [Member] | ||
Other long term liabilities | $ 407,810 | $ 440,021 |
Related party transactions and
Related party transactions and balances (Details Narrative) | 12 Months Ended | ||
Dec. 31, 2019USD ($)shares | Dec. 31, 2019EUR (€)shares | Dec. 31, 2018USD ($) | |
Related Party Transaction [Line Items] | |||
Notes payable - related party | $ 431,631 | ||
Issuance of common stock, value | 5,587,675 | ||
Interest rate | 12.00% | 12.00% | |
Debt repaid | $ 49,914 | ||
Management fee paid | 549,000 | ||
Vritual Generation Limited Related Party[Member] | |||
Related Party Transaction [Line Items] | |||
Principal payments | € | € 956,800 | ||
Issuance of common stock, value | € | 564,400 | ||
Original payment | € | 41,600 | ||
Monthly installments | € | € 33,200 | ||
Related Party[Member] | |||
Related Party Transaction [Line Items] | |||
Issuance of common stock, value | $ 457,461 | ||
Issuance of common stock, shares | shares | 42,956 | 42,956 | |
Accrued interest | $ 139,383 | ||
Promissory note | $ 457,461 |
Related party transactions an_2
Related party transactions and balances (Details) | 12 Months Ended | ||
Dec. 31, 2019USD ($) | Dec. 31, 2019EUR (€) | Dec. 31, 2018USD ($) | |
Accrued Interest | |||
Convertible Debentures, net | $ 431,631 | ||
Present value discount on future payments | |||
Notes payable - Related Party, net | 1,147,963 | ||
Deferred purchase consideration, Related Party, net of discount of $75,319 | 1,199,361 | ||
Related party Notes Payable [Member] | |||
Principal Outstanding | |||
Opening balance | 318,078 | 318,078 | |
Settled by the issuance of common shares | (318,078) | ||
Ending balance | 318,078 | ||
Accrued Interest | |||
Accrued interest, opening balance | 113,553 | 75,384 | |
Interest expense | 25,830 | 38,169 | |
Settled by the issuance of common shares | (139,383) | ||
Accrued interest, ending balance | 113,553 | ||
Convertible Debentures, net | 431,631 | ||
Present value discount on future payments | |||
Present value discount, beginning | (161,393) | ||
Amortization | 56,604 | ||
Foreign exchange movements | 5,882 | ||
Present value discount, ending | (98,907) | 161,393 | |
Related party Deferred Purchase Consideration [Member] | |||
Principal Outstanding | |||
Opening balance | 1,830,541 | ||
Additional earnout earned | 224,540 | € 200,000 | |
Settled by the issuance of common shares | (410,925) | ||
Repayment in cash | (328,734) | ||
Foreign exchange movements | (35,992) | ||
Ending balance | 1,279,430 | 1,830,541 | |
Present value discount on future payments | |||
Present value discount, beginning | (161,393) | ||
Amortization | 78,128 | ||
Foreign exchange movements | 3,195 | ||
Present value discount, ending | (80,069) | $ 161,393 | |
Notes payable - Related Party, net | 1,199,361 | ||
Deferred purchase consideration, Related Party, net of discount of $4,750 | $ 41,954 |
Related party transactions an_3
Related party transactions and balances - Related party (Details) - USD ($) | 8 Months Ended | 12 Months Ended | |
Sep. 04, 2019 | Dec. 31, 2018 | Dec. 31, 2019 | |
Related Party Transaction [Line Items] | |||
Advances from stockholders | $ 39,237 | $ 2,551 | |
Gold Street Capital Corp. [Member] | |||
Related Party Transaction [Line Items] | |||
Advances from stockholders | 39,237 | 2,551 | |
Managment Fees | $ 72,000 | ||
Other Stockholders [Member] | |||
Related Party Transaction [Line Items] | |||
Advances from stockholders | |||
Luca Pasquini [Member] | |||
Related Party Transaction [Line Items] | |||
Advances from stockholders | $ 4,123 | ||
Managment Fees |
Related party transactions an_4
Related party transactions and balances Additional (Details Narrative) | 1 Months Ended | 6 Months Ended | 8 Months Ended | 12 Months Ended | |||||
Jan. 31, 2019USD ($) | Jan. 31, 2019EUR (€) | Jul. 05, 2019$ / sharesshares | Jul. 01, 2019$ / sharesshares | Sep. 04, 2019USD ($)$ / sharesshares | Aug. 29, 2019$ / sharesshares | Dec. 31, 2019USD ($)$ / sharesshares | Dec. 31, 2019EUR (€)shares | Dec. 31, 2018USD ($)shares | |
Stock Options available | 834,062 | 1,150,000 | |||||||
Per share | $ / shares | $ 2.85 | ||||||||
Stock based compensation | $ | $ 201,106 | ||||||||
Common stock issued to settle liabilities | $ | 1,009,981 | ||||||||
Issuance of common stock, value | $ | $ 5,587,675 | ||||||||
Virtual Generation bonus earnout | $ | $ (561,351) | ||||||||
Chief Excutive Officer [Member] | |||||||||
Stock option term | 10 years | 10 years | |||||||
Stock Options available | 39,375 | 25,000 | |||||||
Per share | $ / shares | $ 2.96 | $ 4 | $ 2.8 | ||||||
Stock based compensation | $ | $ 500,000 | ||||||||
Stock based compensation, shares | 125,000 | ||||||||
Gold Street Capital Corp. [Member] | |||||||||
Common stock issued to settle liabilities, shares | 15,196 | ||||||||
Common stock issued to settle liabilities | $ | $ 48,508 | ||||||||
Luca Pasquini [Member] | |||||||||
Stock option term | 10 years | ||||||||
Stock Options available | 25,000 | ||||||||
Per share | $ / shares | $ 2.80 | ||||||||
Purchase price | $ 4,576,352 | € 4,000,000 | |||||||
Issuance of common stock, shares | 68,247 | 68,247 | |||||||
Issuance of common stock, value | 300,000 | $ 205,463 | € 183,800 | ||||||
Purchase price paid in cash | $ 915,270 | 800,000 | |||||||
Payments on Loan | 500,000 | 141,014 | 125,600 | ||||||
Total payments | € | € 800,000 | ||||||||
Virtual Generation bonus earnout | $ 112,270 | € 100,000 | |||||||
Gabriele Peroni [Member] | |||||||||
Stock option term | 10 years | ||||||||
Stock Options available | 25,000 | ||||||||
Per share | $ / shares | $ 2.80 | ||||||||
Issuance of common stock, shares | 68,247 | 68,247 | |||||||
Issuance of common stock, value | $ 205,463 | € 183,800 | |||||||
Payments on Loan | 187,720 | 167,200 | |||||||
Virtual Generation bonus earnout | $ 112,270 | € 100,000 | |||||||
Franco Salvagni [Member] | |||||||||
Stock option term | 10 years | ||||||||
Stock Options available | 25,000 | ||||||||
Per share | $ / shares | $ 2.80 | ||||||||
Beniamino Gianfelici [Member] | |||||||||
Stock option term | 10 years | ||||||||
Stock Options available | 25,000 | ||||||||
Per share | $ / shares | $ 2.80 | ||||||||
Mark Korb[Member] | |||||||||
Stock option term | 7 years | ||||||||
Stock Options available | 25,000 | ||||||||
Per share | $ / shares | $ 2.72 | ||||||||
Paul Sallwasser[Member] | |||||||||
Stock option term | 10 years | ||||||||
Stock Options available | 20,625 | ||||||||
Per share | $ / shares | $ 2.96 | ||||||||
Steven Sallwasser[Member] | |||||||||
Stock option term | 10 years | ||||||||
Stock Options available | 10,313 | ||||||||
Per share | $ / shares | $ 2.96 |
Stockholders Equity (Details Na
Stockholders Equity (Details Narrative) - USD ($) | Jan. 02, 2020 | Feb. 01, 2020 | Jan. 31, 2019 | Mar. 01, 2020 | Mar. 01, 2019 | Apr. 01, 2020 | Apr. 02, 2019 | May 01, 2020 | May 01, 2019 | Apr. 22, 2019 | Jun. 01, 2020 | Jun. 01, 2019 | Jul. 02, 2019 | Aug. 01, 2019 | Sep. 01, 2019 | Oct. 02, 2019 | Nov. 01, 2019 | Dec. 08, 2019 | Dec. 31, 2019 | Dec. 31, 2018 |
Share issued for acquisition, amount | $ 5,587,675 | |||||||||||||||||||
Virtual Generation [Member] | ||||||||||||||||||||
Share issued for acquisition, shares | 22,030 | 23,890 | 32,450 | 25,690 | 32,848 | 61,040 | 29,975 | 24,390 | 33,105 | 29,300 | 37,256 | 35,751 | 35,048 | 33,353 | 26,285 | 28,565 | 26,610 | |||
Share issued for acquisition, amount | $ 93,077 | $ 91,542 | $ 101,763 | $ 96,372 | $ 101,249 | $ 90,745 | $ 86,328 | $ 91,265 | $ 93,018 | $ 92,321 | $ 92,961 | $ 93,875 | $ 91,810 | $ 91,255 | $ 90,526 | $ 92,608 | $ 91,922 | |||
Debentures [Member] | ||||||||||||||||||||
Shares issued for debt, shares | 14,083 | 1,866,528 | ||||||||||||||||||
Shares issued for debt, amount | $ 45,066 | $ 5,972,507 | ||||||||||||||||||
Promissory Notes [Member] | ||||||||||||||||||||
Shares issued for debt, shares | 284,721 | |||||||||||||||||||
Shares issued for debt, amount | $ 728,884 | |||||||||||||||||||
Liabilities [Member] | ||||||||||||||||||||
Shares issued for debt, shares | 457,461 | |||||||||||||||||||
Shares issued for debt, amount | $ 553,525 |
Warrants (Details Narrative)
Warrants (Details Narrative) | 12 Months Ended | ||
Dec. 31, 2019USD ($)shares | Dec. 31, 2018$ / sharesshares | Dec. 31, 2018CAD ($)shares | |
Warrants fair value | $ | $ 2,929,712 | ||
Investors [Member] | |||
Debenture carrying value | $ | $ 1,000 | ||
Warrants to purchase shares | shares | 135.28 | ||
Common stock, shares issued for private placement, shares | shares | 104.06 | ||
Price per share | $ / shares | $ 4 | ||
Warrant [Member] | |||
Shares issued for warrants, shares | shares | 70,625 | ||
Warrants fair value | $ | $ 2,929,712 |
Warrants (Details)
Warrants (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Weighted Average Exercise Price Per Common Share | ||
Outstanding at end of period | $ 2.85 | |
Warrant [Member] | ||
Warrant Shares [Rollforward] | ||
Outstanding at beginning of period | 1,089,474 | 76,566 |
Issued during the period | 1,096,224 | |
Excercised during the period | (40,761) | |
Canceled during the period | (27,000) | |
Expired during the period | (15,555) | |
Outstanding at end of period | 1,089,474 | 1,089,474 |
Weighted Average Exercise Price Per Common Share | ||
Outstanding at beginning of period | $ 4 | $ 4.32 |
Issued during the period | 4 | |
Canceled during the period | 5.04 | |
Exercised during the period | 4.64 | |
Expired during the period | 4.64 | |
Outstanding at end of period | $ 4 | $ 4 |
Weighted Average Life per Warrant | ||
Exercisable at end of period | 4 months 1 day |
Warrants - Assumptions (Details
Warrants - Assumptions (Details) - Warrant [Member] | 12 Months Ended |
Dec. 31, 2019$ / shares | |
Share price per share | $ 2.08 |
Risk free interest rate | 0.91% |
Expected life | 1 year 135 days 1 hour 12 minutes |
Expected volatility of underlying stock | 459.00% |
Expected dividend rate | 0.00% |
Maximum[Member] | |
Exercise price | $ 4.60 |
Minimum [Member] | |
Exercise price | $ 4 |
Stock Options - Assumptions (De
Stock Options - Assumptions (Details) | 12 Months Ended |
Dec. 31, 2019$ / shares | |
Expected life of options | 9 years 3 months |
Stock options [Member] | |
Expected dividend rate | 0.00% |
Stock options [Member] | Minimum [Member] | |
Exercise price per share | $ 2.72 |
Risk free interest rate | 150.00% |
Expected life of options | 7 years |
Expected volatility of underlying stock | 237.40% |
Stock options [Member] | Maximum[Member] | |
Exercise price per share | $ 2.96 |
Risk free interest rate | 204.00% |
Expected life of options | 10 years |
Expected volatility of underlying stock | 270.20% |
Stock Options - Stock option ac
Stock Options - Stock option activity (Details) - $ / shares | 7 Months Ended | 8 Months Ended | 12 Months Ended |
Jul. 31, 2019 | Aug. 31, 2019 | Dec. 31, 2019 | |
Stock option Activity | |||
Options outstanding, shares | 315,938 | ||
Weighted average exercise price | |||
Options outstanding, weighted average exercise price | $ 2.83 | ||
Stock option [Member] | |||
Stock option Activity | |||
Options outstanding, shares | |||
Granted | 315,938 | ||
Forfeited/cancelled | |||
Exercised | 95,313 | 150,000 | |
Options outstanding, shares | 315,938 | ||
Weighted average exercise price | |||
Options outstanding, weighted average exercise price | |||
Granted | 2.72 | ||
Forfeited/cancelled | |||
Exercised | |||
Options outstanding, weighted average exercise price | $ 2.72 |
Stock Options - Stock options o
Stock Options - Stock options outstanding (Details) | 12 Months Ended |
Dec. 31, 2019$ / sharesshares | |
Options outstanding, shares | 315,938 |
Options oustanding, weighted average remaining years | 9 years 3 months |
Options outstanding, weighted average exercise price | $ / shares | $ 2.83 |
Options exercisable, shares | 49,830 |
Options exercisable, weighted average exercise price | $ / shares | $ 2.92 |
$2.72[Member] | |
Exercise price per share | $ / shares | $ 2.72 |
Options outstanding, shares | 25,000 |
Options oustanding, weighted average remaining years | 6 years 5 months |
Options exercisable, shares | |
$2.80[Member] | |
Exercise price per share | $ / shares | $ 2.80 |
Options outstanding, shares | 220,625 |
Options oustanding, weighted average remaining years | 9 years 7 months 3 days |
Options exercisable, shares | 13,971 |
$2.96[Member] | |
Exercise price per share | $ / shares | $ 2.96 |
Options outstanding, shares | 70,313 |
Options oustanding, weighted average remaining years | 9 years 5 months 2 days |
Options exercisable, shares | 35,859 |
Stock Options (Details Narrativ
Stock Options (Details Narrative) - USD ($) | 7 Months Ended | 8 Months Ended | 12 Months Ended | ||
Jul. 31, 2019 | Aug. 31, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | ||
Stock Options available | 834,062 | 1,150,000 | |||
Options outstanding, shares | 315,938 | ||||
Fair values of options | $ 899,704 | ||||
Per share | $ 2.85 | ||||
Stock based compensation expense | $ 201,106 | ||||
Unvested options, shares | 237,982 | ||||
Unvested options, amount | $ 698,598 | ||||
Intrinsic Value of stock options | $ 354,078 | ||||
Stock option [Member] | |||||
Stock options issued for common stock | 95,313 | 150,000 | |||
Options outstanding, shares | 315,938 | ||||
Executives [Member] | |||||
Stock options issued for common stock | 25,000 | 25,000 | [1] | ||
Chief Excutive Officer [Member] | |||||
Stock options issued for common stock | 39,375 | ||||
Directors [Member] | |||||
Stock options issued for common stock | 30,938 | ||||
Chief Financial Officer [Member] | |||||
Stock options issued for common stock | 200,000 | ||||
[1] | Six Executive Officers |
Revenues (Details)
Revenues (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Net Gaming Revenues | $ 35,583,131 | $ 34,575,097 |
Revenue | 35,583,131 | 34,575,097 |
Handle Web-based [Member] | ||
Total Turnover | 328,385,837 | 235,891,170 |
Less: Winnings/payouts | 309,214,993 | 223,064,978 |
Handle Land-based [Member] | ||
Total Turnover | 125,747,337 | 177,334,592 |
Less: Winnings/payouts | 105,011,619 | 152,446,130 |
Gaming Revenue [Member] | ||
Total Turnover | 454,133,174 | 413,225,762 |
Less: Winnings/payouts | 414,226,612 | 375,511,108 |
Gross Gaming Revenues | 39,906,562 | 37,714,654 |
Less: ADM Gaming Taxes | 4,697,085 | 3,417,150 |
Net Gaming Revenues | 35,209,477 | 34,297,504 |
Betting platform software and services | 373,654 | 277,593 |
Revenue | $ 35,583,131 | $ 34,575,097 |
Net Loss per Common Share - Net
Net Loss per Common Share - Net Loss per share (Details) - shares | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Earnings Per Share [Abstract] | ||
Options | 315,938 | |
Warrants | 1,089,474 | 1,089,474 |
Convertible debentures | 1,246,551 | 2,856,764 |
Anti-dilutive shares | 2,651,963 | 3,946,238 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | ||
Net operating loss carryforward | $ 16,700,000 | |
Net operating loss carryforward adjustments on prior year | $ 4,900,000 | |
Italy corporate tax rate | 28.82% | |
Austrian corporate tax rate | 25.00% | |
U.S. statutory rate | 21.00% | 35.00% |
Canadian corporate tax rate | 26.50% | |
Net loss carry forward for US entities | $ 917,821 |
Income Taxes (Details 1)
Income Taxes (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | ||
U.S. statutory rate | $ 1,822,092 | $ 530,472 |
Items not allowed for tax purposes | (1,142,776) | (716,534) |
Foreign tax rate differential | (66,163) | 394,401 |
Additional foreign taxation | (15,190) | |
Prior year over provision | 1,167 | |
Prior year net operating loss adjustment | (917,820) | |
Movement in valuation allowances | (279,486) | (1,311,040) |
Effective tax rate | $ (598,176) | $ (1,102,701) |
Income Taxes (Details 2)
Income Taxes (Details 2) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Income Taxes Details 3Abstract | ||
Current | $ (683,830) | $ (1,102,701) |
Deferred | 85,654 | |
Income tax expense | $ (598,176) | $ (1,102,701) |
Income Taxes (Details 3)
Income Taxes (Details 3) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Income Tax Disclosure [Abstract] | ||
Working capital movements | $ 641,089 | |
Net loss carryforward- Foreign | 119,251 | 124,407 |
Net loss carryforward-US | 3,505,182 | 3,861,629 |
Total Net loss carryforward | 4,265,522 | 3,986,036 |
Valuation allowance | (4,265,522) | (3,986,036) |
Deferred tax assets | ||
Intangible assets | $ (1,315,954) |
Segment Reporting - Operating a
Segment Reporting - Operating assets and liabilities (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Purchase of Non-Current assets | $ 5,658,400 | $ 10,193,985 |
Assets | ||
Total Current Assets | 7,264,550 | 7,551,363 |
Total Non-Current Assets | 20,560,632 | 15,102,118 |
Liabilities | ||
Total Current Liabilities | (16,417,841) | (7,417,173) |
Total Non-Current Liabilities | (2,606,056) | (5,296,905) |
Intercompany balances | ||
Net Asset position | 8,801,285 | 9,939,403 |
Betting Establishments [Member] | ||
Purchase of Non-Current assets | 202,042 | 10,019,807 |
Assets | ||
Total Current Assets | 6,620,800 | 7,026,752 |
Total Non-Current Assets | 12,761,177 | 12,289,853 |
Liabilities | ||
Total Current Liabilities | (5,395,212) | (4,393,736) |
Total Non-Current Liabilities | (1,266,145) | (833,859) |
Intercompany balances | 5,461,766 | 2,177,319 |
Net Asset position | 18,182,386 | 16,266,329 |
Betting Platform Software and Services [Member] | ||
Purchase of Non-Current assets | 5,456,358 | 167,322 |
Assets | ||
Total Current Assets | 470,127 | 62,395 |
Total Non-Current Assets | 6,615,905 | 1,562,295 |
Liabilities | ||
Total Current Liabilities | (615,564) | (281,553) |
Total Non-Current Liabilities | (1,339,911) | |
Intercompany balances | 423,926 | 223,409 |
Net Asset position | 5,554,483 | 1,566,546 |
All Other [Member] | ||
Purchase of Non-Current assets | 6,856 | |
Assets | ||
Total Current Assets | 216,948 | 462,216 |
Total Non-Current Assets | 1,183,550 | 1,249,970 |
Liabilities | ||
Total Current Liabilities | (10,450,390) | (7,204,930) |
Total Non-Current Liabilities | ||
Intercompany balances | (5,885,692) | (2,400,728) |
Net Asset position | $ (14,935,584) | $ (7,893,472) |
Segment Reporting - Operating r
Segment Reporting - Operating results (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Net Gaming Revenues | $ 35,583,131 | $ 34,575,097 |
Intercompany Service revenue | ||
Revenue | 35,583,131 | 34,575,097 |
Operating expenses | ||
Intercompany service expense | ||
Selling expenses | 27,584,492 | 24,142,110 |
General and administrative expenses | 10,994,554 | 10,588,162 |
Total Costs and Expenses | 38,579,046 | 34,730,272 |
(Loss) income from operations | (2,995,915) | (155,175) |
Other (Expenses) Income | ||
Interest expense, net | (972,443) | (619,709) |
Amortization of debt discount | (4,154,922) | (1,995,128) |
Virtual Generation bonus earnout | (561,351) | |
Loss on share issuances | (44,063) | |
Gain on litigation settlement | 516,120 | |
Imputed interest on related party advances | (761) | |
Loss on issuance of debt | (196,403) | |
Other income | 149,565 | |
Loss on marketable securities | (97,500) | (75,000) |
Total Other Expenses | (5,680,714) | (2,370,881) |
Loss Before Income Taxes | (8,676,629) | (2,526,056) |
Income taxes provision | (598,176) | (1,102,701) |
Net Loss | (9,274,805) | (3,628,757) |
Betting Establishements [Member] | ||
Net Gaming Revenues | 35,209,477 | 34,433,461 |
Intercompany Service revenue | 452,776 | 260,063 |
Revenue | 35,662,253 | 34,693,524 |
Operating expenses | ||
Intercompany service expense | 2,839,211 | 2,168,870 |
Selling expenses | 25,583,913 | 24,142,110 |
General and administrative expenses | 5,109,135 | 4,968,280 |
Total Costs and Expenses | 33,532,259 | 31,279,260 |
(Loss) income from operations | 2,129,994 | 3,414,264 |
Other (Expenses) Income | ||
Interest expense, net | (190,206) | (25,910) |
Amortization of debt discount | ||
Virtual Generation bonus earnout | ||
Loss on share issuances | ||
Other income | 114,818 | |
Loss on marketable securities | ||
Total Other Expenses | (75,388) | (25,910) |
Loss Before Income Taxes | 2,054,606 | 3,388,354 |
Income taxes provision | (641,528) | (1,082,919) |
Net Loss | 1,413,078 | 2,305,435 |
Betting Platform Software and Services [Member] | ||
Net Gaming Revenues | 373,654 | 141,636 |
Intercompany Service revenue | 2,839,211 | 2,168,870 |
Revenue | 3,212,865 | 2,310,506 |
Operating expenses | ||
Intercompany service expense | 452,776 | 260,063 |
Selling expenses | 2,000,579 | |
General and administrative expenses | 1,294,617 | 2,360,357 |
Total Costs and Expenses | 3,747,972 | 2,620,420 |
(Loss) income from operations | (535,107) | (309,914) |
Other (Expenses) Income | ||
Interest expense, net | 3 | |
Amortization of debt discount | ||
Virtual Generation bonus earnout | ||
Loss on share issuances | ||
Other income | ||
Loss on marketable securities | ||
Total Other Expenses | 3 | |
Loss Before Income Taxes | (535,104) | (309,914) |
Income taxes provision | (43,352) | (18,042) |
Net Loss | (491,752) | (327,956) |
All other [Member] | ||
Net Gaming Revenues | ||
Intercompany Service revenue | ||
Revenue | ||
Operating expenses | ||
Intercompany service expense | ||
Selling expenses | ||
General and administrative expenses | 4,590,802 | 3,259,525 |
Total Costs and Expenses | 4,590,802 | 3,259,525 |
(Loss) income from operations | (4,590,802) | (3,259,525) |
Other (Expenses) Income | ||
Interest expense, net | (782,240) | (593,799) |
Amortization of debt discount | (4,154,922) | (1,995,128) |
Virtual Generation bonus earnout | (561,351) | |
Loss on share issuances | (44,063) | |
Gain on litigation settlement | 516,120 | |
Imputed interest on related party advances | (761) | |
Loss on issuance of debt | (196,403) | |
Other income | 34,747 | |
Loss on marketable securities | (97,500) | (75,000) |
Total Other Expenses | (5,605,329) | (2,344,971) |
Loss Before Income Taxes | (10,196,131) | (5,604,496) |
Income taxes provision | (1,740) | |
Net Loss | (10,196,131) | (5,606,236) |
Adjustements [Member] | ||
Net Gaming Revenues | ||
Intercompany Service revenue | (3,291,987) | (2,428,933) |
Revenue | (3,291,987) | (2,428,933) |
Operating expenses | ||
Intercompany service expense | (3,291,987) | (2,428,933) |
Selling expenses | ||
General and administrative expenses | ||
Total Costs and Expenses | (3,291,987) | (2,428,933) |
(Loss) income from operations | ||
Other (Expenses) Income | ||
Interest expense, net | ||
Amortization of debt discount | ||
Virtual Generation bonus earnout | ||
Loss on share issuances | ||
Other income | ||
Loss on marketable securities | ||
Total Other Expenses | ||
Loss Before Income Taxes | ||
Income taxes provision | ||
Net Loss |
Subsequent events (Details)
Subsequent events (Details) | Jan. 02, 2020USD ($)shares | Feb. 01, 2020USD ($)shares | Jan. 31, 2019USD ($)shares | Mar. 01, 2020USD ($)shares | Feb. 26, 2020USD ($) | Feb. 26, 2020CAD ($) | Mar. 01, 2019USD ($)shares | Apr. 01, 2020USD ($)shares | Apr. 02, 2019USD ($)shares | May 20, 2020USD ($)$ / shares | May 20, 2020CAD ($) | May 01, 2020USD ($)shares | May 01, 2019USD ($)shares | Jun. 01, 2020USD ($)shares | Jun. 01, 2019USD ($)shares | Jul. 02, 2019USD ($)shares | Aug. 01, 2019USD ($)shares | Sep. 01, 2019USD ($)shares | Oct. 02, 2019USD ($)shares | Nov. 01, 2019USD ($)shares | Dec. 08, 2019USD ($)shares | Dec. 31, 2018USD ($) | May 20, 2020CAD ($) | Feb. 26, 2020CAD ($) |
Share issued for acquisition, amount | $ 5,587,675 | |||||||||||||||||||||||
Virtual Generation [Member] | ||||||||||||||||||||||||
Share issued for acquisition, shares | shares | 22,030 | 23,890 | 32,450 | 25,690 | 32,848 | 61,040 | 29,975 | 24,390 | 33,105 | 29,300 | 37,256 | 35,751 | 35,048 | 33,353 | 26,285 | 28,565 | 26,610 | |||||||
Share issued for acquisition, amount | $ 93,077 | $ 91,542 | $ 101,763 | $ 96,372 | $ 101,249 | $ 90,745 | $ 86,328 | $ 91,265 | $ 93,018 | $ 92,321 | $ 92,961 | $ 93,875 | $ 91,810 | $ 91,255 | $ 90,526 | $ 92,608 | $ 91,922 | |||||||
Subsequent Events [Member] | ||||||||||||||||||||||||
Principal of debt | $ 400,000 | |||||||||||||||||||||||
Repurchase amount | $ 7,289 | $ 10,000 | ||||||||||||||||||||||
Conversion to equity | 227,227 | $ 305,600 | ||||||||||||||||||||||
Interest protion | $ 1,458 | $ 2,000 | 31,604 | $ 42,504 | ||||||||||||||||||||
Settled by the issuance of common shares | $ 226,792 | |||||||||||||||||||||||
Conversion price | $ / shares | $ 3.20 |