Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2022 | May 10, 2022 | |
Cover [Abstract] | ||
Entity Registrant Name | Galaxy Gaming, Inc. | |
Entity Central Index Key | 0000013156 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2022 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Common Stock, Shares Outstanding | 23,779,599 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2022 | |
Trading Symbol | GLXZ | |
Entity Current Reporting Status | Yes | |
Entity Shell Company | false | |
Entity File Number | 000-30653 | |
Entity Tax Identification Number | 20-8143439 | |
Entity Address, Address Line One | 6480 Cameron Street Ste. 305 | |
Entity Address, City or Town | Las Vegas | |
Entity Address, State or Province | NV | |
Entity Incorporation, State or Country Code | NV | |
Entity Address, Postal Zip Code | 89118 | |
City Area Code | 702 | |
Local Phone Number | 939-3254 | |
Title of 12(b) Security | Common stock | |
Entity Interactive Data Current | Yes | |
Document Quarterly Report | true | |
Document Transition Report | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) | Mar. 31, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 17,242,102 | $ 16,058,714 |
Accounts receivable, net of allowance of $332,864 and $348,695, respectively | 4,332,696 | 4,377,165 |
Inventory | 752,699 | 770,248 |
Income tax receivable | 765,160 | 1,536,682 |
Prepaid expenses | 949,634 | 1,125,777 |
Other current assets | 162,690 | 21,536 |
Total current assets | 24,204,981 | 23,890,122 |
Property and equipment, net | 91,518 | 98,594 |
Operating lease right-of-use assets | 1,110,721 | 1,167,903 |
Assets deployed at client locations, net | 432,322 | 360,735 |
Goodwill | 1,091,000 | 1,091,000 |
Other intangible assets, net | 13,082,297 | 13,677,264 |
Other assets | 139,217 | 167,087 |
Total assets | 40,152,056 | 40,452,705 |
Current liabilities: | ||
Accounts payable | 488,235 | 374,323 |
Accrued expenses | 1,904,179 | 2,666,073 |
Revenue contract liability | 106,250 | 37,500 |
Current portion of operating lease liabilities | 223,842 | 222,806 |
Current portion of long-term debt | 934,433 | 1,100,369 |
Total current liabilities | 3,656,939 | 4,401,071 |
Long-term operating lease liabilities | 961,905 | 1,019,029 |
Long-term debt and liabilities, net | 52,363,551 | 52,143,810 |
Deferred tax liabilities, net | 6,537 | 175,218 |
Total liabilities | 56,988,932 | 57,739,128 |
Commitments and Contingencies (See Note 8) | ||
Stockholders’ deficit | ||
Preferred stock, 10,000,000 shares authorized, $0.001 par value; 0 shares issued and outstanding | ||
Common stock, 65,000,000 shares authorized; $0.001 par value; 23,762,933 and 23,523,969 shares issued and outstanding, respectively | 23,763 | 23,524 |
Additional paid-in capital | 16,885,816 | 16,380,597 |
Accumulated deficit | (33,557,313) | (33,543,351) |
Accumulated other comprehensive loss | (189,142) | (147,193) |
Total stockholders’ deficit | (16,836,876) | (17,286,423) |
Total liabilities and stockholders’ deficit | $ 40,152,056 | $ 40,452,705 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) | Mar. 31, 2022 | Dec. 31, 2021 |
Statement Of Financial Position [Abstract] | ||
Accounts receivables, net allowance | $ 332,864 | $ 348,695 |
Preferred Stock, Shares authorized | 10,000,000 | 10,000,000 |
Preferred Stock, Par Value | $ 0.001 | $ 0.001 |
Preferred Stock, Issued | 0 | 0 |
Preferred Stock, Outstanding | 0 | 0 |
Common Stock, Shares authorized | 65,000,000 | 65,000,000 |
Common Stock, par value | $ 0.001 | $ 0.001 |
Common Stock, Issued | 23,762,933 | 23,523,969 |
Common Stock, Outstanding | 23,762,933 | 23,523,969 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Revenue: | ||
Total revenue | $ 5,918,599 | $ 4,282,901 |
Costs and expenses: | ||
Cost of ancillary products and assembled components | 52,590 | 14,304 |
Selling, general and administrative | 3,043,359 | 2,711,052 |
Research and development | 199,070 | 118,701 |
Depreciation and amortization | 724,462 | 717,254 |
Share-based compensation | 310,002 | 316,640 |
Total costs and expenses | 4,329,483 | 3,877,951 |
Income from operations | 1,589,116 | 404,950 |
Other income (expense): | ||
Interest income | 2,233 | 382 |
Interest expense | (1,687,022) | (180,910) |
Share redemption consideration | (195,482) | |
Foreign currency exchange loss | (60,263) | (8,975) |
Change in fair value of interest rate swap liability | 49,822 | |
Total other expense, net | (1,745,052) | (335,163) |
(Loss) income before benefit for income taxes | (155,936) | 69,787 |
Benefit for income taxes | 141,974 | 18,950 |
Net (loss) income | (13,962) | 88,737 |
Foreign currency translation adjustment | (41,949) | (79,207) |
Comprehensive (loss) income | $ (55,911) | $ 9,530 |
Net (loss) income per share: | ||
Basic | $ 0 | $ 0 |
Diluted | $ 0 | $ 0 |
Weighted-average shares outstanding: | ||
Basic | 24,405,278 | 18,838,221 |
Diluted | 24,405,278 | 20,173,443 |
Licensing Fees | ||
Revenue: | ||
Total revenue | $ 5,918,599 | $ 4,282,901 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Changes in Stockholders' Deficit (Unaudited) - USD ($) | Total | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) |
Beginning balance, amount at Dec. 31, 2020 | $ (24,796,965) | $ 21,971 | $ 10,798,536 | $ (35,655,163) | $ 37,691 |
Beginning balance, shares at Dec. 31, 2020 | 21,970,638 | ||||
Net income (loss) | 88,737 | 88,737 | |||
Foreign currency translation loss | (79,207) | (79,207) | |||
Stock options exercised | 10,999 | $ 50 | 10,949 | ||
Stock options exercised, share | 50,000 | ||||
Share-based compensation | 316,640 | $ 55 | 316,585 | ||
Share based compensation, share | 55,000 | ||||
Ending balance, amount at Mar. 31, 2021 | (24,459,796) | $ 22,076 | 11,126,070 | (35,566,426) | (41,516) |
Ending balance, shares at Mar. 31, 2021 | 22,075,638 | ||||
Beginning balance, amount at Dec. 31, 2021 | (17,286,423) | $ 23,524 | 16,380,597 | (33,543,351) | (147,193) |
Beginning balance, shares at Dec. 31, 2021 | 23,523,969 | ||||
Net income (loss) | (13,962) | (13,962) | |||
Foreign currency translation loss | (41,949) | (41,949) | |||
Stock options exercised | 195,456 | $ 220 | 195,236 | ||
Stock options exercised, share | 219,999 | ||||
Share-based compensation | 310,002 | $ 19 | 309,983 | ||
Share based compensation, share | 18,965 | ||||
Ending balance, amount at Mar. 31, 2022 | $ (16,836,876) | $ 23,763 | $ 16,885,816 | $ (33,557,313) | $ (189,142) |
Ending balance, shares at Mar. 31, 2022 | 23,762,933 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Cash flows from operating activities: | ||
Net (loss) income | $ (13,962) | $ 88,737 |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||
Depreciation and amortization | 724,462 | 717,254 |
Amortization of right-of-use assets | 57,182 | 56,472 |
Amortization of debt issuance costs and debt discount | 369,741 | 12,243 |
Bad debt (recovery) expense | (15,831) | 76,160 |
Change in fair value of interest rate swap liability | (49,822) | |
Deferred income tax | (168,681) | |
Share-based compensation | 310,002 | 316,640 |
Foreign currency exchange loss (gain) | 60,263 | (3,573) |
Changes in operating assets and liabilities: | ||
Accounts receivable | 14,836 | (1,139,395) |
Inventory | (110,710) | (70,010) |
Income tax receivable/payable | 793,522 | (42,816) |
Prepaid expenses and other current assets | 34,989 | 138,788 |
Other assets | 27,870 | (144,072) |
Accounts payable | 114,236 | (66,044) |
Accrued expenses | (784,082) | 834,001 |
Revenue contract liability | 68,750 | 77,083 |
Operating lease liabilities | (56,088) | (33,817) |
Net cash provided by operating activities | 1,426,499 | 767,829 |
Cash flows from investing activities: | ||
Investment in intangible assets | (59,616) | (49,900) |
Acquisition of property and equipment | (6,131) | (31,892) |
Net cash used in investing activities | (65,747) | (81,792) |
Cash flows from financing activities: | ||
Proceeds from stock option exercises | 195,456 | 10,999 |
Principal payments on long-term debt | (315,936) | (568,638) |
Net cash used in financing activities | (120,480) | (557,639) |
Effect of exchange rate changes on cash | (56,884) | (40,366) |
Net increase in cash and cash equivalents | 1,183,388 | 88,032 |
Cash and cash equivalents – beginning of period | 16,058,714 | 5,993,388 |
Cash and cash equivalents – end of period | 17,242,102 | 6,081,420 |
Supplemental cash flow information: | ||
Cash paid for interest | 1,358,531 | 112,487 |
Cash paid for income taxes | 500 | |
Supplemental schedule of non-cash activities: | ||
Debt modification fee payable | 50,185 | |
Inventory transferred to assets deployed at client locations | $ 128,259 | $ 29,849 |
NATURE OF OPERATIONS
NATURE OF OPERATIONS | 3 Months Ended |
Mar. 31, 2022 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
NATURE OF OPERATIONS | NOTE 1. NATURE OF OPERATIONS Unless the context indicates otherwise, references to “Galaxy Gaming, Inc.,” “we,” “us,” “our,” or the “Company,” refer to Galaxy Gaming, Inc., a Nevada corporation (“Galaxy Gaming”). We are an established global gaming company specializing in the design, development, acquisition, assembly, marketing and licensing of proprietary casino table games and associated technology, platforms and systems for the casino gaming industry. Casinos use our proprietary products and services to enhance their gaming operations and improve their profitability and productivity, as well as to offer popular cutting-edge gaming entertainment content and technology to their players. We market our products and services to online casinos worldwide and to land-based casino gaming companies in North America, the Caribbean, Central America, the United Kingdom, Europe and Africa as well as to cruise ship companies. We license our products and services for use solely in legalized gaming markets. We also license our content and distribute content from other companies to iGaming operators throughout the world. Disruptions due to the COVID-19 crisis continue to impact our results of operations. Most of the Company’s land-based customers have resumed normal operations. However, some of our customers rely on international travelers from countries that are still enforcing COVID-19 lockdowns or are affected by the war in Ukraine. We rely on third-party suppliers and manufacturers in China. Many of these suppliers were affected by COVID-19 and the worldwide supply chain disruptions that ensued and, in many cases, are continuing. These disruptions of our suppliers and their contract manufacturers may impact our sales and operating results going forward. |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2022 | |
Accounting Policies [Abstract] | |
SIGNIFICANT ACCOUNTING POLICIES | NOTE 2. SIGNIFICANT ACCOUNTING POLICIES Basis of presentation. The accompanying condensed financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and the rules of the SEC. In the opinion of management, the accompanying unaudited interim condensed financial statements contain all necessary adjustments (including all those of a recurring nature and those necessary in order for the financial statements to be not misleading) and all disclosures to present fairly our financial position and the results of our operations and cash flows for the periods presented. These unaudited interim condensed financial statements should be read in conjunction with the financial statements and the related notes thereto included in our 2021 10-K. The operating results for interim periods are not necessarily indicative of results that may be expected for any other interim period or for the full year. Basis of accounting. The financial statements have been prepared on the accrual basis of accounting in conformity with U.S. GAAP. Use of estimates and assumptions. We are required to make estimates, judgments and assumptions that we believe are reasonable based on our historical experience, contract terms, observance of known trends in our Company and the industry as a whole, and information available from other outside sources. Our estimates affect reported amounts for assets, liabilities, revenues, expenses and related disclosures. Actual results may differ from initial estimates. Consolidation. The financial statements are presented on a consolidated basis and include the results of the Company and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. Cash and cash equivalents. Our cash and cash equivalents consist of bank deposits. These deposits are in insured banking institutions, which are insured up to $ 250,000 per account. To date, we have not experienced uninsured losses, and we believe the risk of future loss is negligible. Accounts receivable and allowance for doubtful accounts. Accounts receivable are stated at face value less an allowance for doubtful accounts. Accounts receivable are non-interest bearing. The Company reviews the accounts receivable on a quarterly basis to determine if any receivables will potentially be uncollectible. The allowance for doubtful accounts is estimated based on specific customer reviews, historical collection trends and current economic and business conditions. Goodwill. Goodwill (Note 5) is assessed for impairment at least annually or at other times during the year if events or circumstances indicate that it is more-likely-than-not that the fair value of a reporting asset is below the carrying amount. If found to be impaired, the carrying amount will be reduced, and an impairment loss will be recognized. Other intangible assets, net. The following intangible assets have finite lives and are being amortized using the straight-line method over their estimated economic lives as follows: Patents 4 - 20 years Client relationships 9 - 22 years Trademarks 30 years Non-compete agreements 9 years Internally-developed software 3 years Other intangible assets (Note 5) are analyzed for potential impairment at least annually or whenever events or changes in circumstances indicate the carrying value may not be recoverable and exceeds the fair value, which is the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the intangible assets. No impairment was recorded for the three months ended March 31, 2022 . Fair value of financial instruments. We estimate fair value for financial assets and liabilities in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurement (“ASC 820”). ASC 820 defines fair value, provides guidance for measuring fair value, requires certain disclosures and discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow) and the cost approach (cost to replace the service capacity of an asset or replacement cost). ASC 820 utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels: • 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 for the asset or liability, 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 that reflect the reporting entity’s own assumptions. The estimated fair values of cash equivalents, accounts receivable and accounts payable approximate their carrying amounts due to their short-term nature. The estimated fair value of our long-term debt approximates its carrying value based upon our expected borrowing rate for debt with similar remaining maturities and comparable risk. The Company currently has no financial instruments measured at estimated fair value on a recurring basis based on valuation reports provided by counterparties. Leases . We account for lease components (such as rent payments) separately from non-lease components (such as common-area maintenance costs, real estate and sales taxes and insurance costs). Operating and finance leases with terms greater than 12 months are recorded on the condensed consolidated balance sheets as right-of-use assets with corresponding lease liabilities. Lease expense is recognized on a straight-line basis using the discount rate implicit in each lease or our incremental borrowing rate at lease commencement date (Note 6). Revenue recognition. We account for our revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers . See Note 3. Foreign currency translation. The functional currency for PGP is the Euro. Gains and losses from settlement of transactions involving foreign currency amounts are included in other income or expense in the consolidated statements of operations. Gains and losses resulting from translating assets and liabilities from the functional currency to U.S. dollars are included in accumulated other comprehensive income or (loss) in the consolidated statements of changes in stockholders’ deficit. Net income per share. Basic net income per share is calculated by dividing net income by the weighted-average number of common shares issued and outstanding during the year. Diluted net income per share is similar to basic, except that the weighted-average number of shares outstanding is increased by the potentially dilutive effect of outstanding stock options and restricted stock, if applicable, during the year. Segment Information. We define operating segments as components of our enterprise for which separate financial information is reviewed regularly by the chief operating decision-makers to evaluate performance and to make operating decisions. We currently have two operating segments (land-based gaming and online gaming) which are aggregated into one reporting segment. Other significant accounting policies. Our significant accounting policies are described in our 2021 10-K. There have been no material changes to those policies. New accounting standards not yet adopted. Financial Instruments – Credit Losses. In February 2020, the FASB issued ASU No. 2020-02, Financial Instruments – Credit Losses (Topic 326). ASU 2020-02 provides updated guidance on how an entity should measure credit losses on financial instruments and delayed the effective date of Topic 326 for smaller reporting companies until fiscal years beginning after December 15, 2022. Early adoption is permitted. We do not believe the adoption of this guidance will have a material impact on our condensed consolidated financial statements or related disclosures. |
REVENUE RECOGNITION
REVENUE RECOGNITION | 3 Months Ended |
Mar. 31, 2022 | |
Revenue From Contract With Customer [Abstract] | |
REVENUE RECOGNITION | NOTE 3. REVENUE RECOGNITION Revenue recognition. We generate revenue primarily from the licensing of our intellectual property. We recognize revenue under recurring fee license contracts monthly as we satisfy our performance obligation, which consists of granting the customer the right to use our intellectual property. Amounts billed are determined based on flat rates or usage rates stipulated in the customer contract. Disaggregation of revenue The following table disaggregates our revenue by geographic location for the following periods: Three Months 2022 2021 North America and Caribbean $ 2,291,913 $ 2,451,896 Europe, Middle East and Africa 3,626,686 1,831,005 Total revenue $ 5,918,599 $ 4,282,901 Contract liabilities. Amounts billed and cash received in advance of performance obligations fulfilled are recorded as contract liabilities and recognized as performance obligations are fulfilled. Contract Assets. The Company’s contract assets consist solely of unbilled receivables which are recorded when the Company recognizes revenue in advance of billings. Unbilled receivables totaled $ 996,258 and $ 771,293 for the periods ended March 31, 2022 and December 31, 2021, respectively, and are included in the accounts receivable balance in the accompanying condensed consolidated balance sheets. |
INVENTORY
INVENTORY | 3 Months Ended |
Mar. 31, 2022 | |
Inventory Disclosure [Abstract] | |
INVENTORY | NOTE 4. INVENTORY Inventory consisted of the following at: March 31, December 31, 2022 2021 Raw materials and component parts $ 340,180 $ 413,320 Finished goods 412,519 356,928 Inventory, net $ 752,699 $ 770,248 |
GOODWILL AND OTHER INTANGIBLE A
GOODWILL AND OTHER INTANGIBLE ASSETS | 3 Months Ended |
Mar. 31, 2022 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
GOODWILL AND OTHER INTANGIBLE ASSETS | NOTE 5. GOODWILL AND OTHER INTANGIBLE ASSETS Goodwill. A goodwill balance of $ 1,091,000 was created as a result of a transaction completed in October 2011 with Prime Table Games, LLC (“PTG”). Other intangible assets, net. Other intangible assets, net consisted of the following at: March 31, December 31, 2022 2021 Patents $ 13,507,997 $ 13,507,997 Customer relationships 14,040,856 14,040,856 Trademarks 2,880,967 2,880,967 Non-compete agreements 660,000 660,000 Software 342,956 283,340 Other intangible assets, gross 31,432,776 31,373,160 Less: accumulated amortization ( 18,350,479 ) ( 17,695,896 ) Other intangible assets, net $ 13,082,297 $ 13,677,264 For the three months ended March 31, 2022 and 2021, amortization expense related to other intangible assets was $ 653,330 and $ 649,171 , respectively. |
LEASES
LEASES | 3 Months Ended |
Mar. 31, 2022 | |
Leases [Abstract] | |
LEASES | NOTE 6. LEASES Lessee We have operating leases for our corporate office, two satellite facilities in the state of Washington and for certain equipment. We account for lease components (such as rent payments) separately from the non-lease components (such as common-area maintenance costs, real estate and sales taxes and insurance costs). The discount rate represents the interest rate implicit in each lease or our incremental borrowing rate at lease commencement date. On September 21, 2021, we executed a third amendment to one of our satellite facilities to amend the lease expiration date from December 31, 2021 to December 31, 2023 , with monthly base rents of $ 1,025 from January 1, 2022 to December 31, 2023. As a result of the amendment, we recorded a $ 23,293 increase to operating lease right-of-use assets and operating lease liabilities. As of March 31, 2022 , our leases have remaining lease terms ranging from three months to 57 months. Supplemental balance sheet information related to leases is as follows: As of March 31, 2022 Amount Classification Operating leases: Operating lease right-of-use lease assets $ 1,110,721 Operating lease current liabilities $ 223,842 Current portion of operating lease liabilities Operating lease long-term liabilities 961,905 Long-term operating lease liabilities Total operating lease liabilities $ 1,185,747 Weighted-average remaining lease term: Operating leases 4.7 years Weighted-average discount rate: Operating leases 4.2 % The components of lease expense are as follows: Three Months Ended March 31, 2022 Amount Classification Operating lease cost $ 70,905 Selling, general and administrative expense Supplemental cash flow information related to leases is as follows: Three Months Ended March 31, 2022 Amount Classification Cash paid for amounts included in the Operating cash flows from operating leases $ 68,840 Net income Right-of-use assets obtained in exchange Operating leases $ — Supplemental cash flow information As of March 31, 2022, future maturities of our operating lease liabilities are as follows: Twelve Months Ending March 31, Amount 2023 $ 223,842 2024 235,551 2025 245,204 2026 266,645 2027 214,505 Thereafter — Total lease liabilities $ 1,185,747 |
LONG-TERM LIABILITIES
LONG-TERM LIABILITIES | 3 Months Ended |
Mar. 31, 2022 | |
Debt Disclosure [Abstract] | |
LONG-TERM LIABILITIES | NOTE 7. LONG-TERM LIABILITIES Long-term liabilities consisted of the following at: March 31, December 31, 2022 2021 Fortress credit agreement $ 59,850,000 $ 60,000,000 Insurance notes payable 334,433 500,369 Long-term liabilities, gross 60,184,433 60,500,369 Less: Unamortized debt issuance costs ( 6,886,449 ) ( 7,256,190 ) Long-term liabilities, net of debt issuance costs 53,297,984 53,244,179 Less: Current portion ( 934,433 ) ( 1,100,369 ) Long-term liabilities, net $ 52,363,551 $ 52,143,810 For most of 2021, our long-term liabilities consisted of term and revolving notes owed to Nevada State Bank, borrowings under the Main Street Priority Loan Program, and redemption consideration owed to Triangulum Partners LLC. All of those liabilities were paid in full from the proceeds of the Fortress Credit Agreement. Fortress Credit Agreement. On November 15, 2021, the Company entered into a senior secured term loan agreement with Fortress Credit Corp. (“Fortress Credit Agreement”) in the amount of $ 60 million. The Fortress Credit Agreement bears interest at a rate equal to, at the Company’s option, either (a) LIBOR (or a successor rate, determined in accordance with the Fortress Credit Agreement) plus 7.75 %, subject to a reduction to 7.50 % upon the achievement of a net leverage target or (b) a base rate determined by reference to the greatest of (i) the federal funds rate plus 0.50 %, (ii) the prime rate as determined by reference to The Wall Street Journal’s “Prime Rate” and (iii) the one-month adjusted LIBOR rate plus 1.00 %, plus 6.75 %, subject to a reduction to 6.50 % upon the achievement of a net leverage target. The Fortress Credit Agreement has a final maturity of November 13, 2026 . The obligations under the Fortress Credit Agreement are guaranteed by the Company’s subsidiaries and are secured by substantially all of the assets of the Company and its subsidiaries. The Fortress Credit agreement requires, among other things, principal payments of $ 150,000 per quarter and includes an annual sweep of 50 % of excess cash flow beginning in 2023. The Fortress Credit Agreement contains affirmative and negative financial covenants (as defined in the Fortress Credit Agreement) and other restrictions customary for borrowings of this nature. The Company was required to maintain a Total Net Leverage Ratio of 8.00 x for the quarter ending March 31, 2022, and the Company was in compliance with that covenant. Also, t he Fortress Credit Agreement requires that the Company not allow balances in bank accounts that are not covered by an account control agreement to exceed $ 1 million at any month-end. The bank accounts held by PGP in the Isle of Man are not covered by account control agreements and the balances in those accounts exceeded $ 1 million at the end of November and December 2021 and January and February 2022. In March 2022, the balances in those accounts were reduced to less than $ 1 million. The Company informed Fortress of the covenant breach, and a Consent and Waiver Agreement was executed among the Company, Fortress as Agent, and the Lenders party to the Fortress Credit Agreement on March 16, 2022. In connection with entering into the Fortress Credit Agreement, the Company also issued warrants to purchase a total of up to 778,320 shares of the Company’s common stock to certain affiliates of Fortress at a price per share of $ 0.01 (the “Warrants”). The Warrants are exercisable at any time, subject to certain restrictions. As of March 31, 2022, future maturities of our long-term liabilities are as follows: Twelve Months Ending March 31, Total 2023 $ 934,433 2024 600,000 2025 600,000 2026 600,000 2027 57,450,000 Thereafter — Long-term liabilities, gross $ 60,184,433 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2022 | |
Commitments And Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 8. COMMITMENTS AND CONTINGENCIES Concentration of risk. We are exposed to risks associated with clients who represent a significant portion of total revenues. For the three months ended March 31, 2022 and 2021, respectively, we had the following client concentrations: Location Three Months Ended March 31, 2022 Three Months Ended March 31, 2021 Accounts Accounts Client A Europe 31.0 % 29.7 % $ 514,137 $ - Client B North America 8.5 % 11.2 % $ 472,798 $ 138,338 Legal proceedings. In the ordinary course of conducting our business, we are, from time to time, involved in various legal proceedings, administrative proceedings, regulatory government investigations and other matters, including those in which we are a plaintiff or defendant, that are complex in nature and have outcomes that are difficult to predict. There are no current or threatened legal proceedings. Intellectual property agreements. From time to time, the Company purchases intellectual property from third-parties and the Company, in turn, utilizes that intellectual property in certain games sold to clients. In these purchase agreements, the Company may agree to pay the seller of the intellectual property a fee, if and when, the Company receives revenue from games containing the intellectual property. |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Mar. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE 9. INCOME TAXES Our forecasted annual effective tax rate (“AETR”) at March 31, 2022 was 6.66 %, as compared to 12.92 % at March 31, 2021. This decrease was primarily due t o the reduced tax benefits from foreign rate differential, increased benefit for foreign derived intangible income and a change in valuation allowance as a result of changes in estimates of current-year ordinary income considered in determining the forecasted AETR. For the three months ended March 31, 2022 and 2021 , our effective tax rate (“ETR”) was 143.35 % and ( 27.15 )%, respectively. The increase in the ETR for the three months ended March 31, 2022 is a result of favorable discrete items related to excess tax benefits from stock-based compensation that exceeded pre-tax book loss for the quarter. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Mar. 31, 2022 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 10. SUBSEQUENT EVENTS On April 20, 2022, the Company entered into a Cooperation Agreement (the “Cooperation Agreement”) with Tice Brown (“Mr. Brown”). Pursuant to the terms of the Cooperation Agreement, Mr. Brown has agreed to (1) irrevocably withdraw his proposed nomination of himself to the Board of Directors of the Company (the “Board”) and his proposal requesting that the Board declassify the Board by electing each director on an annual basis, with respect to the 2022 Annual Meeting of Stockholders (the “2022 Annual Meeting”), (2) immediately cease all solicitation efforts in connection with the 2022 Annual Meeting and (3) cause all voting securities of the Company owned beneficially by Mr. Brown and for which he has the right to direct the vote, to be cast in favor of each of the Company’s proposals and for each of the Board’s nominees for director at the 2022 Annual Meeting. In addition, the Company has agreed to form a hiring committee consisting of two current members of the Board and one independent stockholder who has owned shares of the Company’s common stock for more than two years (the “Hiring Committee”) for the purpose of identifying and unanimously recommending to the Board a qualified candidate (the “Independent Director”) to fill the vacancy created by Mr. William Zender, who intends to resign as a member of the Board. The Board has agreed to promptly cause the Independent Director, subject to the satisfaction of certain qualifications and requirements as set forth in the Cooperation Agreement, to be appointed to the Board for a term expiring at the 2024 Annual Meeting of Stockholders. The Cooperation Agreement also provides for certain “standstill” provisions that restrict Mr. Brown and his affiliates from, among other things, engaging in any solicitation of proxies or written consents with respect to the voting securities of the Company or acquiring any securities of the Company that would result in Mr. Brown having beneficial ownership of more than 9.9 % of the Company’s voting securities. The standstill provisions expire on the date that is two years after the 2022 Annual Meeting, unless the Cooperation Agreement is earlier terminated in accordance with the terms thereof. The Cooperation Agreement also provides Mr. Brown with certain Board observer rights prior to the appointment of the Independent Director. |
SIGNIFICANT ACCOUNTING POLICI_2
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2022 | |
Accounting Policies [Abstract] | |
Basis of presentation and Basis of accounting | Basis of presentation. The accompanying condensed financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and the rules of the SEC. In the opinion of management, the accompanying unaudited interim condensed financial statements contain all necessary adjustments (including all those of a recurring nature and those necessary in order for the financial statements to be not misleading) and all disclosures to present fairly our financial position and the results of our operations and cash flows for the periods presented. These unaudited interim condensed financial statements should be read in conjunction with the financial statements and the related notes thereto included in our 2021 10-K. The operating results for interim periods are not necessarily indicative of results that may be expected for any other interim period or for the full year. Basis of accounting. The financial statements have been prepared on the accrual basis of accounting in conformity with U.S. GAAP. |
Use of estimates and assumptions | Use of estimates and assumptions. We are required to make estimates, judgments and assumptions that we believe are reasonable based on our historical experience, contract terms, observance of known trends in our Company and the industry as a whole, and information available from other outside sources. Our estimates affect reported amounts for assets, liabilities, revenues, expenses and related disclosures. Actual results may differ from initial estimates. |
Consolidation | Consolidation. The financial statements are presented on a consolidated basis and include the results of the Company and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. |
Cash, cash equivalents | Cash and cash equivalents. Our cash and cash equivalents consist of bank deposits. These deposits are in insured banking institutions, which are insured up to $ 250,000 per account. To date, we have not experienced uninsured losses, and we believe the risk of future loss is negligible. |
Accounts receivable and allowance for doubtful accounts | Accounts receivable and allowance for doubtful accounts. Accounts receivable are stated at face value less an allowance for doubtful accounts. Accounts receivable are non-interest bearing. The Company reviews the accounts receivable on a quarterly basis to determine if any receivables will potentially be uncollectible. The allowance for doubtful accounts is estimated based on specific customer reviews, historical collection trends and current economic and business conditions. |
Goodwill | Goodwill. Goodwill (Note 5) is assessed for impairment at least annually or at other times during the year if events or circumstances indicate that it is more-likely-than-not that the fair value of a reporting asset is below the carrying amount. If found to be impaired, the carrying amount will be reduced, and an impairment loss will be recognized. |
Other intangible assets, net | Other intangible assets, net. The following intangible assets have finite lives and are being amortized using the straight-line method over their estimated economic lives as follows: Patents 4 - 20 years Client relationships 9 - 22 years Trademarks 30 years Non-compete agreements 9 years Internally-developed software 3 years Other intangible assets (Note 5) are analyzed for potential impairment at least annually or whenever events or changes in circumstances indicate the carrying value may not be recoverable and exceeds the fair value, which is the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the intangible assets. No impairment was recorded for the three months ended March 31, 2022 . |
Fair value of financial instruments | Fair value of financial instruments. We estimate fair value for financial assets and liabilities in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurement (“ASC 820”). ASC 820 defines fair value, provides guidance for measuring fair value, requires certain disclosures and discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow) and the cost approach (cost to replace the service capacity of an asset or replacement cost). ASC 820 utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels: • 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 for the asset or liability, 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 that reflect the reporting entity’s own assumptions. The estimated fair values of cash equivalents, accounts receivable and accounts payable approximate their carrying amounts due to their short-term nature. The estimated fair value of our long-term debt approximates its carrying value based upon our expected borrowing rate for debt with similar remaining maturities and comparable risk. The Company currently has no financial instruments measured at estimated fair value on a recurring basis based on valuation reports provided by counterparties. |
Leases | Leases . We account for lease components (such as rent payments) separately from non-lease components (such as common-area maintenance costs, real estate and sales taxes and insurance costs). Operating and finance leases with terms greater than 12 months are recorded on the condensed consolidated balance sheets as right-of-use assets with corresponding lease liabilities. Lease expense is recognized on a straight-line basis using the discount rate implicit in each lease or our incremental borrowing rate at lease commencement date (Note 6). |
Revenue Recognition | Revenue recognition. We account for our revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers . See Note 3. |
Foreign currency translation | Foreign currency translation. The functional currency for PGP is the Euro. Gains and losses from settlement of transactions involving foreign currency amounts are included in other income or expense in the consolidated statements of operations. Gains and losses resulting from translating assets and liabilities from the functional currency to U.S. dollars are included in accumulated other comprehensive income or (loss) in the consolidated statements of changes in stockholders’ deficit. |
Net income per share | Net income per share. Basic net income per share is calculated by dividing net income by the weighted-average number of common shares issued and outstanding during the year. Diluted net income per share is similar to basic, except that the weighted-average number of shares outstanding is increased by the potentially dilutive effect of outstanding stock options and restricted stock, if applicable, during the year. |
Segment Information | Segment Information. We define operating segments as components of our enterprise for which separate financial information is reviewed regularly by the chief operating decision-makers to evaluate performance and to make operating decisions. We currently have two operating segments (land-based gaming and online gaming) which are aggregated into one reporting segment. |
New accounting standards not yet adopted | New accounting standards not yet adopted. Financial Instruments – Credit Losses. In February 2020, the FASB issued ASU No. 2020-02, Financial Instruments – Credit Losses (Topic 326). ASU 2020-02 provides updated guidance on how an entity should measure credit losses on financial instruments and delayed the effective date of Topic 326 for smaller reporting companies until fiscal years beginning after December 15, 2022. Early adoption is permitted. We do not believe the adoption of this guidance will have a material impact on our condensed consolidated financial statements or related disclosures. |
SIGNIFICANT ACCOUNTING POLICI_3
SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Accounting Policies [Abstract] | |
Finite Lived Intangible Assets Estimated Economic Lives | The following intangible assets have finite lives and are being amortized using the straight-line method over their estimated economic lives as follows: Patents 4 - 20 years Client relationships 9 - 22 years Trademarks 30 years Non-compete agreements 9 years Internally-developed software 3 years |
REVENUE RECOGNITION (Tables)
REVENUE RECOGNITION (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Revenue From Contract With Customer [Abstract] | |
Summary of Disaggregation of Revenue by Geographic Location | The following table disaggregates our revenue by geographic location for the following periods: Three Months 2022 2021 North America and Caribbean $ 2,291,913 $ 2,451,896 Europe, Middle East and Africa 3,626,686 1,831,005 Total revenue $ 5,918,599 $ 4,282,901 |
INVENTORY (Tables)
INVENTORY (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory | Inventory consisted of the following at: March 31, December 31, 2022 2021 Raw materials and component parts $ 340,180 $ 413,320 Finished goods 412,519 356,928 Inventory, net $ 752,699 $ 770,248 |
GOODWILL AND OTHER INTANGIBLE_2
GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Schedule of Other Intangible Assets, Net | Other intangible assets, net consisted of the following at: March 31, December 31, 2022 2021 Patents $ 13,507,997 $ 13,507,997 Customer relationships 14,040,856 14,040,856 Trademarks 2,880,967 2,880,967 Non-compete agreements 660,000 660,000 Software 342,956 283,340 Other intangible assets, gross 31,432,776 31,373,160 Less: accumulated amortization ( 18,350,479 ) ( 17,695,896 ) Other intangible assets, net $ 13,082,297 $ 13,677,264 |
LEASES (Tables)
LEASES (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Leases [Abstract] | |
Schedule of Supplemental Balance Sheet Information Related to Leases | Supplemental balance sheet information related to leases is as follows: As of March 31, 2022 Amount Classification Operating leases: Operating lease right-of-use lease assets $ 1,110,721 Operating lease current liabilities $ 223,842 Current portion of operating lease liabilities Operating lease long-term liabilities 961,905 Long-term operating lease liabilities Total operating lease liabilities $ 1,185,747 Weighted-average remaining lease term: Operating leases 4.7 years Weighted-average discount rate: Operating leases 4.2 % |
Schedule of Components of Lease Expense | The components of lease expense are as follows: Three Months Ended March 31, 2022 Amount Classification Operating lease cost $ 70,905 Selling, general and administrative expense |
Schedule of Supplemental Cash Flow Information Related to Leases | Supplemental cash flow information related to leases is as follows: Three Months Ended March 31, 2022 Amount Classification Cash paid for amounts included in the Operating cash flows from operating leases $ 68,840 Net income Right-of-use assets obtained in exchange Operating leases $ — Supplemental cash flow information |
Schedule of Future Maturities of Operating Lease Liabilities | As of March 31, 2022, future maturities of our operating lease liabilities are as follows: Twelve Months Ending March 31, Amount 2023 $ 223,842 2024 235,551 2025 245,204 2026 266,645 2027 214,505 Thereafter — Total lease liabilities $ 1,185,747 |
LONG-TERM LIABILITIES (Tables)
LONG-TERM LIABILITIES (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Liabilities | Long-term liabilities consisted of the following at: March 31, December 31, 2022 2021 Fortress credit agreement $ 59,850,000 $ 60,000,000 Insurance notes payable 334,433 500,369 Long-term liabilities, gross 60,184,433 60,500,369 Less: Unamortized debt issuance costs ( 6,886,449 ) ( 7,256,190 ) Long-term liabilities, net of debt issuance costs 53,297,984 53,244,179 Less: Current portion ( 934,433 ) ( 1,100,369 ) Long-term liabilities, net $ 52,363,551 $ 52,143,810 |
Schedule of Future Maturities of Long-term Liabilities | As of March 31, 2022, future maturities of our long-term liabilities are as follows: Twelve Months Ending March 31, Total 2023 $ 934,433 2024 600,000 2025 600,000 2026 600,000 2027 57,450,000 Thereafter — Long-term liabilities, gross $ 60,184,433 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Commitments And Contingencies Disclosure [Abstract] | |
Schedule of Client Revenue Concentrations | For the three months ended March 31, 2022 and 2021, respectively, we had the following client concentrations: Location Three Months Ended March 31, 2022 Three Months Ended March 31, 2021 Accounts Accounts Client A Europe 31.0 % 29.7 % $ 514,137 $ - Client B North America 8.5 % 11.2 % $ 472,798 $ 138,338 |
SIGNIFICANT ACCOUNTING POLICI_4
SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) | 3 Months Ended |
Mar. 31, 2022USD ($)Segment | |
Significant Accounting Policies [Line Items] | |
Impairment of intangible assets | $ | $ 0 |
Number of operating segment | Segment | 2 |
Number of reporting segment | Segment | 1 |
Maximum | |
Significant Accounting Policies [Line Items] | |
Cash, FDIC Insured Amount | $ | $ 250,000 |
SIGNIFICANT ACCOUNTING POLICI_5
SIGNIFICANT ACCOUNTING POLICIES - Finite Lived Intangible Assets Estimated Economic Lives (Details) | 3 Months Ended |
Mar. 31, 2022 | |
Patents | Minimum | |
Finite Lived Intangible Assets [Line Items] | |
Finite lived intangible assets useful life | 4 years |
Patents | Maximum | |
Finite Lived Intangible Assets [Line Items] | |
Finite lived intangible assets useful life | 20 years |
Client Relationships | Minimum | |
Finite Lived Intangible Assets [Line Items] | |
Finite lived intangible assets useful life | 9 years |
Client Relationships | Maximum | |
Finite Lived Intangible Assets [Line Items] | |
Finite lived intangible assets useful life | 22 years |
Trademarks | |
Finite Lived Intangible Assets [Line Items] | |
Finite lived intangible assets useful life | 30 years |
Non-compete Agreements | |
Finite Lived Intangible Assets [Line Items] | |
Finite lived intangible assets useful life | 9 years |
Internally-developed Software | |
Finite Lived Intangible Assets [Line Items] | |
Finite lived intangible assets useful life | 3 years |
REVENUE RECOGNITION - Summary o
REVENUE RECOGNITION - Summary of Disaggregation of Revenue by Geographic Location (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Disaggregation Of Revenue [Line Items] | ||
Total revenue | $ 5,918,599 | $ 4,282,901 |
North America and Caribbean | ||
Disaggregation Of Revenue [Line Items] | ||
Total revenue | 2,291,913 | 2,451,896 |
Europe, Middle East and Africa | ||
Disaggregation Of Revenue [Line Items] | ||
Total revenue | $ 3,626,686 | $ 1,831,005 |
REVENUE RECOGNITION (Details Na
REVENUE RECOGNITION (Details Narrative) - USD ($) | Mar. 31, 2022 | Dec. 31, 2021 |
Accounts Receivable | ||
Disaggregation Of Revenue [Line Items] | ||
Unbilled receivables | $ 996,258 | $ 771,293 |
INVENTORY - Schedule of Invento
INVENTORY - Schedule of Inventory (Details) - USD ($) | Mar. 31, 2022 | Dec. 31, 2021 |
Inventory Disclosure [Abstract] | ||
Raw materials and component parts | $ 340,180 | $ 413,320 |
Finished goods | 412,519 | 356,928 |
Inventory, net | $ 752,699 | $ 770,248 |
GOODWILL AND OTHER INTANGIBLE_3
GOODWILL AND OTHER INTANGIBLE ASSETS (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | |
Oct. 31, 2011 | Mar. 31, 2022 | Mar. 31, 2021 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |||
Goodwill resulted from transaction | $ 1,091,000 | ||
Amortization expense | $ 653,330 | $ 649,171 |
GOODWILL AND OTHER INTANGIBLE_4
GOODWILL AND OTHER INTANGIBLE ASSETS - Schedule of Other Intangible Assets, Net (Details) - USD ($) | Mar. 31, 2022 | Dec. 31, 2021 |
Finite Lived Intangible Assets [Line Items] | ||
Other intangible assets, gross | $ 31,432,776 | $ 31,373,160 |
Less: accumulated amortization | (18,350,479) | (17,695,896) |
Other intangible assets, net | 13,082,297 | 13,677,264 |
Patents | ||
Finite Lived Intangible Assets [Line Items] | ||
Other intangible assets, gross | 13,507,997 | 13,507,997 |
Customer Relationships | ||
Finite Lived Intangible Assets [Line Items] | ||
Other intangible assets, gross | 14,040,856 | 14,040,856 |
Trademarks | ||
Finite Lived Intangible Assets [Line Items] | ||
Other intangible assets, gross | 2,880,967 | 2,880,967 |
Non-compete Agreements | ||
Finite Lived Intangible Assets [Line Items] | ||
Other intangible assets, gross | 660,000 | 660,000 |
Software | ||
Finite Lived Intangible Assets [Line Items] | ||
Other intangible assets, gross | $ 342,956 | $ 283,340 |
LEASES (Details Narrative)
LEASES (Details Narrative) | Sep. 21, 2021USD ($) | Sep. 20, 2021 | Mar. 31, 2022Satellite | Dec. 31, 2023USD ($) |
Lessee Lease Description [Line Items] | ||||
Operating lease expiration date | Dec. 31, 2023 | Dec. 31, 2021 | ||
Increase in operating lease right-of-use assets and operating lease liabilities | $ 23,293 | |||
Minimum | ||||
Lessee Lease Description [Line Items] | ||||
Operating leases and finance leases remaining lease term | 3 months | |||
Maximum | ||||
Lessee Lease Description [Line Items] | ||||
Operating leases and finance leases remaining lease term | 57 months | |||
Scenario Forecast | ||||
Lessee Lease Description [Line Items] | ||||
Operating lease, monthly base rents | $ 1,025 | |||
Washington | ||||
Lessee Lease Description [Line Items] | ||||
Operating leases, number of leased assets | Satellite | 2 |
LEASES - Schedule of Supplement
LEASES - Schedule of Supplemental Balance Sheet Information Related to Leases (Details) - USD ($) | Mar. 31, 2022 | Dec. 31, 2021 |
Operating leases: | ||
Operating lease right-of-use lease assets | $ 1,110,721 | $ 1,167,903 |
Operating lease current liabilities | 223,842 | 222,806 |
Operating lease long-term liabilities | 961,905 | $ 1,019,029 |
Total operating lease liabilities | $ 1,185,747 | |
Weighted-average remaining lease term: | ||
Operating leases | 4 years 8 months 12 days | |
Weighted-average discount rate: | ||
Operating leases | 4.20% |
LEASES - Schedule of Components
LEASES - Schedule of Components of Lease Expense (Details) | 3 Months Ended |
Mar. 31, 2022USD ($) | |
Selling, General and Administrative Expense | |
Lessee Lease Description [Line Items] | |
Operating lease cost | $ 70,905 |
LEASES - Schedule of Suppleme_2
LEASES - Schedule of Supplemental Cash Flow Information Related to Leases (Details) | 3 Months Ended |
Mar. 31, 2022USD ($) | |
Net Income | |
Cash paid for amounts included in the measurement of lease liabilities: | |
Operating cash flows from operating leases | $ 68,840 |
LEASES - Schedule of Future Mat
LEASES - Schedule of Future Maturities of Operating Lease Liabilities (Details) | Mar. 31, 2022USD ($) |
Operating Lease [Abstract] | |
2023 | $ 223,842 |
2024 | 235,551 |
2025 | 245,204 |
2026 | 266,645 |
2027 | 214,505 |
Operating Leases, Total lease liabilities | $ 1,185,747 |
LONG-TERM LIABILITIES - Schedul
LONG-TERM LIABILITIES - Schedule of Long-term Liabilities (Details) - USD ($) | Mar. 31, 2022 | Dec. 31, 2021 |
Debt Instrument [Line Items] | ||
Long-term liabilities, gross | $ 60,184,433 | $ 60,500,369 |
Less: Unamortized debt issuance costs | (6,886,449) | (7,256,190) |
Long-term liabilities, net of debt issuance costs | 53,297,984 | 53,244,179 |
Less: Current portion | (934,433) | (1,100,369) |
Long-term liabilities, net | 52,363,551 | 52,143,810 |
Fortress Credit Corp. | ||
Debt Instrument [Line Items] | ||
Long-term liabilities, gross | 59,850,000 | 60,000,000 |
Insurance Notes Payable | ||
Debt Instrument [Line Items] | ||
Long-term liabilities, gross | $ 334,433 | $ 500,369 |
LONG-TERM LIABILITIES (Details
LONG-TERM LIABILITIES (Details Narrative) - Fortress Credit Corp. - USD ($) | Feb. 28, 2022 | Jan. 31, 2022 | Dec. 31, 2021 | Nov. 30, 2021 | Nov. 15, 2021 | Mar. 31, 2022 | Mar. 31, 2022 |
Minimum | |||||||
Debt Instrument [Line Items] | |||||||
Account control agreement balance reduced amount | $ 1,000,000 | ||||||
Maximum | |||||||
Debt Instrument [Line Items] | |||||||
Account control agreement balance reduced amount | $ 1,000,000 | ||||||
Maximum | Isle of Man | |||||||
Debt Instrument [Line Items] | |||||||
Account control agreement balance reduced amount | $ 1,000,000 | $ 1,000,000 | $ 1,000,000 | $ 1,000,000 | |||
Senior Secured Term Loan | |||||||
Debt Instrument [Line Items] | |||||||
Borrowing capacity | $ 60,000,000 | ||||||
Maturity date | Nov. 13, 2026 | ||||||
Debt instrument, interest rate terms | The Fortress Credit Agreement bears interest at a rate equal to, at the Company’s option, either (a) LIBOR (or a successor rate, determined in accordance with the Fortress Credit Agreement) plus 7.75%, subject to a reduction to 7.50% upon the achievement of a net leverage target or (b) a base rate determined by reference to the greatest of (i) the federal funds rate plus 0.50%, (ii) the prime rate as determined by reference to The Wall Street Journal’s “Prime Rate” and (iii) the one-month adjusted LIBOR rate plus 1.00%, plus 6.75%, subject to a reduction to 6.50% upon the achievement of a net leverage target. | ||||||
Amortization payments per quarter | $ 150,000 | ||||||
Percentage of excess cash flow on annual sweep | 50.00% | ||||||
Total net leverage ratio | 8.00% | ||||||
Senior Secured Term Loan | Warrants | |||||||
Debt Instrument [Line Items] | |||||||
Warrants issued to purchase shares | 778,320 | ||||||
Warrants issued price per share | $ 0.01 | ||||||
Senior Secured Term Loan | LIBOR | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, applicable margin rate | 7.75% | ||||||
Senior Secured Term Loan | LIBOR | Achievement of Net Leverage Target | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, applicable margin rate | 7.50% | ||||||
Senior Secured Term Loan | Federal Funds Rate | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, applicable margin rate | 0.50% | ||||||
Senior Secured Term Loan | One-month Adjusted LIBOR | Minimum | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, applicable margin rate | 1.00% | ||||||
Senior Secured Term Loan | One-month Adjusted LIBOR | Maximum | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, applicable margin rate | 6.75% | ||||||
Senior Secured Term Loan | One-month Adjusted LIBOR | Maximum | Achievement of Net Leverage Target | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, applicable margin rate | 6.50% |
LONG-TERM LIABILITIES - Sched_2
LONG-TERM LIABILITIES - Schedule of Future Maturities of Long-term Liabilities (Details) - USD ($) | Mar. 31, 2022 | Dec. 31, 2021 |
Debt Instrument [Line Items] | ||
Long-term liabilities, gross | $ 60,184,433 | $ 60,500,369 |
Promissory Note | ||
Debt Instrument [Line Items] | ||
2023 | 934,433 | |
2024 | 600,000 | |
2025 | 600,000 | |
2026 | 600,000 | |
2027 | 57,450,000 | |
Long-term liabilities, gross | $ 60,184,433 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Schedule of Client Revenue Concentrations (Details) - Customer Concentration Risk - Revenue - USD ($) | 3 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | |
Europe | Client A | |||
Product Information [Line Items] | |||
Concentration Risk | 31.00% | 29.70% | |
Accounts Receivable | $ 514,137 | ||
North America | Client B | |||
Product Information [Line Items] | |||
Concentration Risk | 8.50% | 11.20% | |
Accounts Receivable | $ 472,798 | $ 138,338 |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Income Tax Contingency [Line Items] | ||
Effective tax rate | 143.35% | (27.15%) |
Plan | ||
Income Tax Contingency [Line Items] | ||
Effective tax rate | 6.66% | 12.92% |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) - Subsequent Event | Apr. 20, 2022Member |
Subsequent Event [Line Items] | |
Number of board members in committee | 2 |
Number of independent stockholders in committee | 1 |
Maximum | |
Subsequent Event [Line Items] | |
Expected percentage voting securities of related party | 9.90% |