Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2021 | Aug. 10, 2021 | |
Cover [Abstract] | ||
Entity Registrant Name | Galaxy Gaming, Inc. | |
Entity Central Index Key | 0000013156 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2021 | |
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 | 22,187,304 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2021 | |
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 ($) | Jun. 30, 2021 | Dec. 31, 2020 |
Current assets: | ||
Cash and cash equivalents | $ 5,779,612 | $ 5,993,388 |
Accounts receivable, net of allowance of $244,242 and $145,000, respectively | 4,518,011 | 2,493,254 |
Inventory | 698,945 | 668,525 |
Income tax receivable | 1,498,819 | 1,229,795 |
Prepaid expenses | 655,804 | 1,167,068 |
Other current assets | 25,315 | 10,803 |
Total current assets | 13,176,506 | 11,562,833 |
Property and equipment, net | 115,370 | 116,724 |
Operating lease right-of-use assets | 1,259,803 | 1,367,821 |
Assets deployed at client locations, net | 273,509 | 232,156 |
Goodwill | 1,091,000 | 1,091,000 |
Other intangible assets, net | 14,834,294 | 16,086,896 |
Other assets | 257,289 | 117,164 |
Total assets | 31,007,771 | 30,574,594 |
Current liabilities: | ||
Accounts payable | 378,104 | 467,792 |
Accrued expenses | 1,738,308 | 1,333,032 |
Revenue contract liability | 75,000 | 29,167 |
Current portion of long-term debt | 2,760,792 | 2,222,392 |
Current portion of operating lease liabilities | 217,927 | 195,411 |
Total current liabilities | 5,170,131 | 4,247,794 |
Long-term operating lease liabilities | 1,111,258 | 1,215,680 |
Long-term liabilities, net | 48,006,679 | 49,691,184 |
Interest rate swap liability | 66,009 | |
Deferred tax liabilities, net | 150,892 | 150,892 |
Total liabilities | 54,438,960 | 55,371,559 |
Commitments and Contingencies (See Note 11) | ||
Stockholders’ deficit | ||
Preferred stock, 10,000,000 shares authorized, $0.001 par value; 0 shares issued and outstanding, respectively | ||
Common stock, 65,000,000 shares authorized; $0.001 par value; 22,180,638 and 21,970,638 shares issued and outstanding, respectively | 22,181 | 21,971 |
Additional paid-in capital | 11,582,910 | 10,798,536 |
Accumulated deficit | (35,015,971) | (35,655,163) |
Accumulated other comprehensive (loss) income | (20,309) | 37,691 |
Total stockholders’ deficit | (23,431,189) | (24,796,965) |
Total liabilities and stockholders’ deficit | $ 31,007,771 | $ 30,574,594 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
Statement Of Financial Position [Abstract] | ||
Accounts receivables, net allowance | $ 244,242 | $ 145,000 |
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 | 22,180,638 | 21,970,638 |
Common Stock, Outstanding | 22,180,638 | 21,970,638 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Revenue: | ||||
Total revenue | $ 4,749,330 | $ 663,972 | $ 9,032,339 | $ 5,158,289 |
Costs and expenses: | ||||
Cost of ancillary products and assembled components | 19,599 | 7,902 | 33,903 | 29,713 |
Selling, general and administrative | 2,532,655 | 2,438,635 | 5,243,707 | 5,430,688 |
Research and development | 129,859 | 138,599 | 248,560 | 294,252 |
Depreciation and amortization | 720,488 | 454,485 | 1,437,742 | 924,291 |
Share-based compensation | 441,444 | 176,669 | 758,084 | 334,265 |
Total costs and expenses | 3,844,045 | 3,216,290 | 7,721,996 | 7,013,209 |
Income (loss) from operations | 905,285 | (2,552,318) | 1,310,343 | (1,854,920) |
Other income (expense): | ||||
Interest income | 388 | 2,126 | 771 | 23,900 |
Interest expense | (140,142) | (177,170) | (321,052) | (344,841) |
Share redemption consideration | (195,482) | (195,482) | (390,964) | (390,964) |
Foreign currency exchange gain (loss) | 11,355 | 11,302 | 2,271 | (115,989) |
Change in fair value of interest rate swap liability | 16,187 | 42,483 | 66,009 | (33,680) |
Total other expense | (307,694) | (316,741) | (642,965) | (861,574) |
Income (loss) before (provision) benefit for income taxes | 597,591 | (2,869,059) | 667,378 | (2,716,494) |
(Provision) benefit for income taxes | (47,136) | 662,477 | (28,186) | 626,515 |
Net income (loss) | 550,455 | (2,206,582) | 639,192 | (2,089,979) |
Foreign currency translation adjustment | 21,207 | (58,000) | ||
Comprehensive income (loss) | $ 571,662 | $ (2,206,582) | $ 581,192 | $ (2,089,979) |
Net income (loss) per share: | ||||
Basic | $ 0.03 | $ (0.12) | $ 0.03 | $ (0.12) |
Diluted | $ 0.03 | $ (0.12) | $ 0.03 | $ (0.12) |
Weighted-average shares outstanding: | ||||
Basic | 18,952,464 | 18,247,266 | 18,895,658 | 18,135,013 |
Diluted | 20,741,009 | 18,247,266 | 20,512,648 | 18,135,013 |
Licensing Fees | ||||
Revenue: | ||||
Total revenue | $ 4,749,330 | $ 663,972 | $ 9,032,339 | $ 5,158,289 |
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, 2019 | $ (27,632,622) | $ 18,018 | $ 5,795,636 | $ (33,446,276) | |
Beginning balance, shares at Dec. 31, 2019 | 18,017,944 | ||||
Net income (loss) | 116,605 | 116,605 | |||
Stock options exercised | 7,500 | $ 25 | 7,475 | ||
Stock options exercised, share | 25,000 | ||||
Share-based compensation | 157,596 | $ 63 | 157,533 | ||
Share based compensation, share | 63,333 | ||||
Ending balance, amount at Mar. 31, 2020 | (27,350,921) | $ 18,106 | 5,960,644 | (33,329,671) | |
Ending balance, shares at Mar. 31, 2020 | 18,106,277 | ||||
Beginning balance, amount at Dec. 31, 2019 | (27,632,622) | $ 18,018 | 5,795,636 | (33,446,276) | |
Beginning balance, shares at Dec. 31, 2019 | 18,017,944 | ||||
Net income (loss) | (2,089,979) | ||||
Ending balance, amount at Jun. 30, 2020 | (29,350,571) | $ 18,336 | 6,167,346 | (35,536,253) | |
Ending balance, shares at Jun. 30, 2020 | 18,336,277 | ||||
Beginning balance, amount at Mar. 31, 2020 | (27,350,921) | $ 18,106 | 5,960,644 | (33,329,671) | |
Beginning balance, shares at Mar. 31, 2020 | 18,106,277 | ||||
Net income (loss) | (2,206,582) | (2,206,582) | |||
Stock options exercised | 30,263 | $ 150 | 30,113 | ||
Stock options exercised, share | 150,000 | ||||
Share-based compensation | 176,669 | $ 80 | 176,589 | ||
Share based compensation, share | 80,000 | ||||
Ending balance, amount at Jun. 30, 2020 | (29,350,571) | $ 18,336 | 6,167,346 | (35,536,253) | |
Ending balance, shares at Jun. 30, 2020 | 18,336,277 | ||||
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 gain (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, 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) | 639,192 | ||||
Foreign currency translation gain (loss) | (58,000) | ||||
Ending balance, amount at Jun. 30, 2021 | (23,431,189) | $ 22,181 | 11,582,910 | (35,015,971) | (20,309) |
Ending balance, shares at Jun. 30, 2021 | 22,180,638 | ||||
Beginning balance, amount at Mar. 31, 2021 | (24,459,796) | $ 22,076 | 11,126,070 | (35,566,426) | (41,516) |
Beginning balance, shares at Mar. 31, 2021 | 22,075,638 | ||||
Net income (loss) | 550,455 | 550,455 | |||
Foreign currency translation gain (loss) | 21,207 | 21,207 | |||
Stock options exercised | 15,501 | $ 50 | 15,451 | ||
Stock options exercised, share | 50,000 | ||||
Share-based compensation | 441,444 | $ 55 | 441,389 | ||
Share based compensation, share | 55,000 | ||||
Ending balance, amount at Jun. 30, 2021 | $ (23,431,189) | $ 22,181 | $ 11,582,910 | $ (35,015,971) | $ (20,309) |
Ending balance, shares at Jun. 30, 2021 | 22,180,638 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Cash flows from operating activities: | ||
Net income (loss) | $ 639,192 | $ (2,089,979) |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 1,437,742 | 924,291 |
Amortization of right-of-use assets | 113,329 | 138,300 |
Amortization of debt issuance costs and debt discount | 30,308 | 18,121 |
Bad debt expense | 138,160 | 166,003 |
Change in fair value of interest rate swap liability | (66,009) | 33,680 |
Deferred income tax benefit | (626,515) | |
Share-based compensation | 758,084 | 334,265 |
Unrealized foreign exchange loss | 1,491 | 101,301 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (2,196,930) | 1,895,310 |
Inventory | (164,796) | (84,260) |
Income tax receivable/payable | (269,024) | (12,000) |
Prepaid expenses and other current assets | 499,068 | (115,281) |
Other assets | (140,124) | |
Accounts payable | (139,760) | 433,405 |
Accrued expenses | 410,314 | (1,039,786) |
Revenue contract liability | 45,833 | (923,009) |
Operating lease liabilities | (87,218) | (138,308) |
Net cash provided by (used in) operating activities | 1,009,660 | (984,462) |
Cash flows from investing activities: | ||
Investment in intangible assets | (49,900) | |
Acquisition of property and equipment | (40,863) | (22,480) |
Net cash used in investing activities | (90,763) | (22,480) |
Cash flows from financing activities: | ||
Proceeds from draw on revolving loan | 1,000,000 | |
Proceeds from Paycheck Protection Program | 835,300 | |
Proceeds from stock option exercises | 26,500 | 37,763 |
Principal payments on long-term debt | (1,128,400) | (834,790) |
Net cash (used in) provided by financing activities | (1,101,900) | 1,038,273 |
Effect of exchange rate changes on cash | (30,773) | (76,637) |
Net decrease in cash and cash equivalents | (213,776) | (45,306) |
Cash and cash equivalents – beginning of period | 5,993,388 | 9,686,698 |
Cash and cash equivalents – end of period | 5,779,612 | 9,641,392 |
Supplemental cash flow information: | ||
Cash paid for interest | 223,279 | 311,467 |
Cash paid for income taxes | 321,167 | |
Supplemental schedule of non-cash activities: | ||
Debt modification fee payable | 50,185 | |
Right-of-use assets obtained in exchange for lease liabilities | 5,312 | |
Inventory transferred to assets deployed at client locations | $ 134,376 | $ 24,617 |
NATURE OF OPERATIONS
NATURE OF OPERATIONS | 6 Months Ended |
Jun. 30, 2021 | |
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, productivity and security, 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. Share Redemption. On May 6, 2019, we redeemed all 23,271,667 shares of our common stock held by Triangulum Partners, LLC (“Triangulum”), an entity controlled by Robert B. Saucier, Galaxy Gaming's founder, and, prior to the redemption, the holder of a majority of our outstanding common stock. Our Articles of Incorporation (the “Articles”) provide that if certain events occur in relation to a stockholder that is required to undergo a gaming suitability review or similar investigative process, we have the option to purchase all or any part of such stockholder’s shares at a price per share that is equal to the average closing share price over the thirty calendar days preceding the purchase. The average closing share price over the thirty calendar days preceding the redemption was $1.68 per share. The consideration owed to Triangulum for the redemption is $39,096,401 (the “Redemption Consideration Obligation”). See Note 10. There is ongoing litigation between the Company and Triangulum related to the redemption and other matters. See Note 11. Membership Interest Purchase Agreement. On August 21, 2020, the Company completed the acquisition of 100% of the member interests in Progressive Games Partners LLC (“PGP”). The entirety of the purchase price ($10,414,528) and transaction-related costs ($127,586) were allocated to customer relationships and are included in Other intangible assets, net, on the Company’s balance sheet. The cash portion of the purchase price was $6,425,000, and the balance of the purchase price was satisfied through the issuance of 3,141,361 shares of the Company’s common stock with a value of $1.27 per share on the date of the acquisition. The shares issued are being held in escrow pending the performance of the assets acquired during the twelve months following the acquisition. See Note 7 to our audited financial statements included in Item 8 “Financial Statements and Supplementary Financial Information” of our Form 10-K for the fiscal year ended December 31, 2020, filed with the SEC on March 31, 2021 (the “2020 10-K”) for further details. The Company also acquired certain receivables and payables in the net amount of $581,885, which was to be remitted to the sellers of PGP as the receivables and payables were settled. As of June 30, 2021, the balance owed to the sellers of PGP was settled in full. Management determined that, for accounting purposes, the PGP transaction did not meet the definition of a business combination and, therefore, was accounted for as an asset acquisition. COVID-19 . On March 11, 2020, the World Health Organization declared a pandemic related to the COVID-19 outbreak, which led to a global health emergency. The public health impact of the outbreak continues to remain largely unknown and still evolving. The related health crisis could continue to adversely affect the global economy, resulting in continued economic downturn that could impact demand for our products. On March 17, 2020, the Company announced that it suspended billing to customers who had closed their doors due to the COVID-19 outbreak. As a result, we did not earn revenue for the use of our games by our physical casino customers during the time that they were closed. In general, the online gaming customers who license our games through our distributor remained and continue to remain in operation in spite of the COVID-19 crisis. We earned revenue from them during the crisis and expect to continue to do so, but potentially at levels that may be lower than we previously received. Given the uncertainties around casino re-openings, we instituted a phased billing approach for our clients through fiscal year 2020, which resulted in us realizing substantially less revenue than we might otherwise expect. In addition, because of COVID-19-related financial pressures on our physical casino customers, there can be no assurance that our accounts receivable will be paid timely for revenues earned prior to the shutdowns. Finally, the Company was notified by some of the land-based casinos that they would be extending their payment terms. The phased billing approach for our physical casino customers instituted in 2020 is no longer in effect. Physical casino customers who are now open are being billed at pre-COVID billing levels. Similar to 2020, our online gaming customers continue to generate revenue in 2021. We also rely on third-party suppliers and manufacturers in China, many of whom were shut down or severely cut back production during some portion of 2020. Although this has not had a material effect on our supply chain, any future disruption of our suppliers and their contract manufacturers may impact our sales and operating results going forward. Because of the uncertainties of COVID-19, the Company drew on its Revolving Loan in the amount of $1,000,000 on March 12, 2020. Pursuant to the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), the Federal Reserve created the Main Street Priority Loan Program (“MSPLP”) to provide financing for small and medium-sized businesses. On October 26, 2020, the Company borrowed $4,000,000 from Zions Bancorporation N.A., dba Nevada State Bank under this program. See Note 10. Disruptions of the COVID-19 crisis continue to impact our results of operations. A significant portion of the Company’s land-based customers have reopened at limited capacity after the restrictions due to the COVID-19 crisis were lifted. However, during Q2 2021, some customers have been required to close again due to local regulations and conditions, and some customers will remain closed through the remainder of 2021. |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2021 | |
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 Securities and Exchange Commission (“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 2020 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 subsidiary, PGP. All intercompany transactions and balances have been eliminated in consolidation. Reclassifications. Certain accounts and financial statement captions in the prior periods have been reclassified to conform to the current period financial statement presentations. Cash and cash equivalents. We consider cash on hand and cash in banks as cash. We consider certificates of deposit and other short-term securities with maturities of three months or less when purchased as cash equivalents. Our cash in bank balances are deposited 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 monthly 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. Inventory. Inventory consists of ancillary products such as signs, layouts and bases for the various games and electronic devices and components to support all our electronic enhancements used on casino table games (“Enhanced Table Systems”), and we maintain inventory levels based on historical and industry trends. We regularly assess inventory quantities for excess and obsolescence primarily based on forecasted product demand. Inventory is valued at the lower of net realizable value or cost, which is determined by the average cost method. Assets deployed at client locations, net. Our Enhanced Table Systems are assembled by us and accounted for as inventory until deployed at our casino clients’ premises (Note 6). Once deployed and placed into service at client locations, the assets are transferred from inventory and reported as assets deployed at client locations. These assets are stated at cost, net of accumulated depreciation. Depreciation on assets deployed at client locations is calculated using the straight-line method over a three-year period. Property and equipment, net. Property and equipment are being depreciated over their estimated useful lives (three to five years) using the straight-line method of depreciation (Note 5). Property and equipment are analyzed for potential impairment whenever events or changes in circumstances indicate the carrying value may not be recoverable and exceeds their fair value. Goodwill. Goodwill (Note 7) 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 7) 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 June 30, 2021. Interest rates swap agreement . In May 2018, the Company entered into an interest rate swap agreement to reduce the impact of changes in interest rates on its floating rate long-term debt. The interest rate swap has not been designated a hedging instrument and is adjusted to fair value through earnings in the Company’s statements of operations. The interest rate swap agreement matured on May 1, 2021. 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 balance sheet 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 9). Revenue recognition. We account for our revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers . See Note 3. Costs of ancillary products and assembled components. Ancillary products include pay tables (display of payouts), bases, layouts, signage and other items as they relate to support of specific proprietary games in connection with the licensing of our games. Assembled components represent the cost of the equipment, devices and incorporated software used to support our Enhanced Table Systems. Research and development. We incur research and development (“R&D”) costs to develop our new and next-generation products. Our products reach commercial feasibility shortly before the products are released, and therefore R&D costs are expensed as incurred. Employee-related costs associated with product development are included in R&D costs. 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. Segmented 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. Share-based compensation. We recognize compensation expense for all restricted stock and stock option awards made to employees, directors and independent contractors. The fair value of restricted stock is measured using the grant date trading price of our stock. The fair value of stock option awards (Note 13) is estimated at the grant date using the Black-Scholes option-pricing model, and the portion that is ultimately expected to vest is recognized as compensation cost over the requisite service period. We have elected to recognize compensation expense for all options with graded vesting on a straight-line basis over the vesting period of the entire option. The determination of fair value using the Black-Scholes pricing model is affected by our stock price as well as assumptions regarding a number of complex and subjective variables, including expected stock price volatility, risk-free interest rate, expected dividends and projected employee stock option exercise behaviors. We estimate volatility based on historical volatility of our common stock, and estimate the expected term based on several criteria, including the vesting period of the grant and the term of the award. We estimate employee stock option exercise behavior based on actual historical exercise activity and assumptions regarding future exercise activity of unexercised, outstanding options. Other significant accounting policies. See Note 2 in Item 8 “Financial Statements and Supplementary Financial Information” included in our 2020 10-K. Recently adopted accounting standards. Simplifying the Accounting for Income Taxes. In December 2019, the FASB issued Accounting Standard Update No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (ASU 2019-12), which simplifies the accounting for income taxes. This guidance is effective for the first quarter of 2021 on a prospective basis. We have adopted the new standard effective January 1, 2021, and its adoption does not have a material impact on our consolidated financial statements. 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 ho w 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 | 6 Months Ended |
Jun. 30, 2021 | |
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 Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 North America and Caribbean $ 2,465,741 $ 159,085 $ 4,967,723 $ 3,291,260 Europe, Middle East and Africa 2,283,589 504,887 4,064,616 1,867,029 Total revenue $ 4,749,330 $ 663,972 $ 9,032,339 $ 5,158,289 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 $680,258 and $502,860 for the periods ended June 30, 2021 and December 31, 2020 and are included in the accounts receivable balance in the accompanying condensed consolidated balance sheets. |
INVENTORY
INVENTORY | 6 Months Ended |
Jun. 30, 2021 | |
Inventory Disclosure [Abstract] | |
INVENTORY | NOTE 4. INVENTORY Inventory consisted of the following at: June 30, December 31, 2021 2020 Raw materials and component parts $ 365,134 $ 300,244 Finished goods 333,811 368,281 Inventory, net $ 698,945 $ 668,525 |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 6 Months Ended |
Jun. 30, 2021 | |
Property Plant And Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | NOTE 5. PROPERTY AND EQUIPMENT Property and equipment, net, consisted of the following at: June 30, December 31, 2021 2020 Furniture and fixtures $ 312,639 $ 312,639 Automotive vehicles 215,127 215,127 Office and computer equipment 370,423 332,544 Leasehold improvements 35,531 32,547 Property and equipment, gross 933,720 892,857 Less: accumulated depreciation (818,350 ) (776,133 ) Property and equipment, net $ 115,370 $ 116,724 For the three months ended June 30, 2021 and 2020, depreciation expense related to property and equipment was $18,761 and $22,322, respectively. For the six months ended June 30, 2021 and 2020, depreciation expense related to property and equipment was $42,218 and $45,316, respectively. |
ASSETS DEPLOYED AT CLIENT LOCAT
ASSETS DEPLOYED AT CLIENT LOCATIONS | 6 Months Ended |
Jun. 30, 2021 | |
Leases Operating [Abstract] | |
ASSETS DEPLOYED AT CLIENT LOCATIONS | NOTE 6. ASSETS DEPLOYED AT CLIENT LOCATIONS Assets deployed at client locations, net, consisted of the following at: June 30, December 31, 2021 2020 Enhanced table systems $ 1,000,694 $ 890,560 Less: accumulated depreciation (727,185 ) (658,404 ) Assets deployed at client locations, net $ 273,509 $ 232,156 For the three months ended June 30, 2021 and 2020, depreciation expense related to assets deployed at client locations was $48,397 and $58,244, respectively. For the six months ended June 30, 2021 and 2020, depreciation expense related to assets deployed at client locations was $93,023 and $122,556, respectively. |
GOODWILL AND OTHER INTANGIBLE A
GOODWILL AND OTHER INTANGIBLE ASSETS | 6 Months Ended |
Jun. 30, 2021 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
GOODWILL AND OTHER INTANGIBLE ASSETS | NOTE 7. 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: June 30, December 31, 2021 2020 Patents $ 13,507,997 $ 13,507,997 Customer relationships 13,942,115 13,942,115 Trademarks 2,880,967 2,880,967 Non-compete agreements 660,000 660,000 Software 233,314 183,415 Other intangible assets, gross 31,224,393 31,174,494 Less: accumulated amortization (16,390,099 ) (15,087,598 ) Other intangible assets, net $ 14,834,294 $ 16,086,896 For the three months ended June 30, 2021 and 2020, amortization expense related to other intangible assets was $653,330 and $373,919, respectively. For the six months ended June 30, 2021 and 2020, amortization expense related to assets deployed at client locations was $1,302,502 and $756,418, respectively. Estimated future amortization expense is as follows: Twelve Months Ending June 30, Total 2022 $ 2,606,277 2023 1,735,114 2024 1,442,751 2025 1,424,276 2026 1,424,276 Thereafter 6,201,600 Total amortization $ 14,834,294 |
ACCRUED EXPENSES
ACCRUED EXPENSES | 6 Months Ended |
Jun. 30, 2021 | |
Payables And Accruals [Abstract] | |
ACCRUED EXPENSES | NOTE 8. ACCRUED EXPENSES Accrued expenses consisted of the following at: June 30, December 31, 2021 2020 Share redemption consideration $ 119,811 $ 510,776 Commissions and royalties 761,982 398,096 Payroll and related 630,561 173,487 Interest 109,685 95,879 Income tax payable — 42,218 Other 116,269 112,576 Total accrued expenses $ 1,738,308 $ 1,333,032 |
LEASES
LEASES | 6 Months Ended |
Jun. 30, 2021 | |
Leases [Abstract] | |
LEASES | NOTE 9. 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. As of June 30, 2021, our leases have remaining lease terms ranging from six months to 66 months. Supplemental balance sheet information related to leases is as follows: As of June 30, 2021 Amount Classification Operating leases: Operating lease right-of-use lease assets $ 1,259,803 Operating lease current liabilities $ 217,927 Current portion of operating lease liabilities Operating lease long-term liabilities 1,111,258 Long-term operating lease liabilities Total operating lease liabilities $ 1,329,185 Weighted-average remaining lease term: Operating leases 5.4 years Weighted-average discount rate: Operating leases 4.2 % The components of lease expense are as follows: Three Months Ended June 30, 2021 Amount Classification Operating lease cost $ 70,782 Selling, general and administrative expense Six Months Ended June 30, 2021 Amount Classification Operating lease cost $ 140,610 Selling, general and administrative expense Supplemental cash flow information related to leases is as follows: Six Months Ended June 30, 2021 Amount Classification Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 115,684 Net income Right-of-use assets obtained in exchange for lease liabilities: Operating leases $ 5,312 Supplemental cash flow information As of June 30, 2021, future maturities of our operating lease liabilities are as follows: Twelve Months Ending June 30, Amount 2022 $ 217,927 2023 213,145 2024 230,789 2025 250,429 2026 272,200 Thereafter 144,695 Total lease liabilities $ 1,329,185 |
LONG-TERM LIABILITIES
LONG-TERM LIABILITIES | 6 Months Ended |
Jun. 30, 2021 | |
Debt Disclosure [Abstract] | |
LONG-TERM LIABILITIES | NOTE 10. LONG-TERM LIABILITIES Long-term liabilities consisted of the following at: June 30, December 31, 2021 2020 Nevada State Bank credit agreement $ 7,641,200 $ 8,413,184 Main Street Priority Loan 4,000,000 4,000,000 Redemption Consideration Obligation 39,096,401 39,096,401 Vehicle notes payable 11,440 22,614 Insurance notes payable 173,952 519,194 Long-term liabilities, gross 50,922,993 52,051,393 Less: Unamortized debt issuance costs (155,522 ) (137,817 ) Long-term liabilities, net of debt issuance costs 50,767,471 51,913,576 Less: Current portion (2,760,792 ) (2,222,392 ) Long-term liabilities, net $ 48,006,679 $ 49,691,184 Share Redemption Consideration Obligation . On May 6, 2019, we issued a promissory note in the face amount of $39,096,401 to Triangulum in connection with the share redemption disclosed in Note 1. In the litigation that followed the share redemption (Note 11), Triangulum is disputing, among other things, the validity of the note and has not accepted its terms. Because Triangulum disputes the promissory note issued by the Company and its terms, the promissory note has not been given accounting effect in the Company’s financial statements. The Company has instead recorded a long-term obligation payable to Triangulum, based on the redemption value specified in our Articles of Incorporation. The obligation is classified as long-term because we do not expect that a final agreement with respect to the litigation will be reached between the parties in the next twelve months. We may repay the Redemption Consideration Obligation at any time but no later than May 6, 2029; however, there can be no assurance that Triangulum will accept such payments. Additional share redemption consideration is being accrued at 2% on the Redemption Consideration Obligation. We paid the first and second annual payments in the amounts of $781,928 on May 5, 2020 and May 6, 2021. Both payments were accepted by Triangulum. The Redemption Consideration Obligation is unsecured and is subordinated to our existing and future indebtedness. Nevada State Bank (“NSB”) Credit Agreement . The Company is party to a Credit Agreement with Zions Bancorporation, N.A. dba Nevada State Bank (as amended, the “Credit Agreement”). The Credit Agreement provides for a Term Loan in the initial amount of $11,000,000 and a Revolving Loan in the amount of $1,000,000. On March 12, 2020, the Company drew down $1,000,000 on the Revolving Loan component of the Credit Agreement. At June 30, 2021, the principal amount outstanding under the Term Loan component of the Credit Agreement was $6,641,200, bringing the total amount outstanding under the Credit Agreement at June 30, 2021 , to $7,641,200. On March 29, 2021, the Company entered into an amended and restated credit agreement with Zions Bancorporation, N.A. dba Nevada State Bank (“the A&R Credit Agreement”). The A&R Credit Agreement replaced the original Credit Agreement entered into by the Company with Zions Bancorporation, N.A. dba Nevada State Bank on April 24, 2018 and last modified on November 16, 2020. The A&R Credit Agreement provides for a Term Loan in the amount of $7,022,300 and a Revolving Loan in the amount of $1,000,000. If not paid earlier, amounts outstanding under the Revolving Loan mature on April 24, 2022, and amounts outstanding under the Term Loan mature on April 24, 2023. Under the A&R Credit Agreement, outstanding balances accrue interest based on one-month U.S. dollar London interbank offered rate (“LIBOR”) plus an applicable margin of 3.50% or 4.00%, depending on our Total Leverage Ratio (as defined in the A&R Credit Agreement). Effective December 31, 2021, LIBOR will no longer serve as a reference rate for bank loans, among other investment classes. The A&R Credit Agreement stipulates that a substitute index rate will be selected and used in lieu of LIBOR. The A&R Credit Agreement contains affirmative and negative financial covenants (as defined in the A&R Credit Agreement) and other restrictions customary for borrowings of this nature. In particular, we are required to maintain (i) a quarterly minimum Fixed Charge Coverage ratio of 1.25x; (ii) a quarterly maximum Total Leverage ratio of 22.50x for the quarter ending March 31, 2021, 10.00x for quarter ending June 30, 2021, 6.50x for the quarter ending September 30, 2021 with semi-annual step-downs of 0.25x commencing December 31, 2021 and quarterly thereafter; (iii) a quarterly maximum Senior Leverage ratio of 5.25x for the quarter ending March 31, 2021, 2.50x for the quarter ending June 30, 2021 and 2.00x quarterly thereafter; (iv) a quarterly Minimum EBITDA covenant of $2.4 million for each of the quarters ending March 31, 2021, June 30, 2021 and September 30, 2021 and $8.0 million quarterly thereafter; (v) a quarterly Minimum Liquidity covenant requiring the Company to have cash and cash equivalents of no less than $1.5 million at quarter ends through and including June 30, 2021 and $2.5 million quarterly thereafter; and (vi) a yearly maximum Maintenance Capital Expenditure covenant of 5% of total revenues for the prior year. The Company was in compliance with its Fixed Charge Coverage ratio, Senior Leverage ratio, Total Leverage ratio and Minimum Liquidity covenants as of June 30, 2021. However, the Company was not in compliance with its Minimum EBITDA covenant as of June 30, 2021. On May 13, 2021, the Company and NSB entered into a Forbearance to the A&R Credit Agreement, in which NSB agreed to forbear from exercising any of its rights or remedies that would result from the potential breaches of the Minimum EBITDA and Total Leverage ratio covenant for the quarters ending June 30, 2021 and September 30, 2021. The obligations under the A&R Credit Agreement are secured by substantially all of the assets of the Company. The Company’s wholly owned subsidiary, PGP is also a guarantor of the A&R Credit Agreement and related agreements. Main Street Priority Loan Borrowings (“MSPLP”) . On October 26, 2020, the Company obtained an unsecured loan of $4,000,000 through Zions Bancorporation, N.A. dba Nevada State Bank under section 13(3) of the Federal Reserve Act. The MSPLP bears interest at a rate of three-month U.S. dollar LIBOR plus 300 basis points (initially 3.215%), and interest payments during the first year will deferred and added to the loan balance. The MSPLP has a five-year As of June 30, 2021, future maturities of our long-term liabilities are as follows: Twelve Months Ending June 30, Total 2022 $ 2,760,792 2023 5,065,800 2024 600,000 2025 600,000 2026 2,800,000 Thereafter 39,096,401 Long-term liabilities, gross $ 50,922,993 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2021 | |
Commitments And Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 11. COMMITMENTS AND CONTINGENCIES Concentration of risk. We are exposed to risks associated with clients who represent a significant portion of total revenues. For the six months ended June 30, 2021 and 2020, respectively, we had the following client revenue concentrations: Location Six Months ended June 30, 2021 Revenue Six Months ended June 30, 2020 Revenue Accounts Receivable June 30, 2021 Accounts Receivable December 31, 2020 Client A Europe 28.4 % 12.9 % $ 439,872 $ 348,781 Client B North America 10.9 % 8.5 % $ 1,063,764 $ 400,663 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. As discussed in Note 1, we redeemed the shares of our common stock held by Triangulum, an entity controlled by Robert B. Saucier, the Company’s founder, and, prior to the redemption, the holder of a majority of our outstanding common stock. On May 6, 2019, the Company redeemed the shares of our common stock held by Triangulum. Also on May 6, 2019, the Company filed a lawsuit seeking: (i) a declaratory judgment that it acted lawfully and in full compliance with the Articles when it redeemed the Triangulum shares and (ii) certain remedies for breach of fiduciary duty and breach of contract by Triangulum and its Managing Member, Mr. Saucier (the “Triangulum Lawsuit”). The suit alleges that the redemption and the other relief sought by the Company are appropriate and in accordance with the Articles. The defendants to the Triangulum Lawsuit responded to the complaint, and Triangulum filed counterclaims. Triangulum also filed a Motion seeking a mandatory injunction requiring the Company to either reissue shares to Triangulum or reissue shares to be held in a constructive trust for Triangulum (the “Injunction Motion”). On July 11, 2019, the Nevada district court denied Triangulum’s Injunction Motion, finding, among other things, that the business judgment rule applies to the Board’s redemption decisions and the decisions were in the Company’s best interests. On September 6, 2019, Triangulum appealed the denial of the Injunction Motion to the Nevada Supreme Court. The Company submitted its brief in opposition, and Triangulum filed its reply brief. O On October 18, 2019, Saucier filed counterclaims against the Company and its Chairman of the Board, Mark Lipparelli, including a breach of contract claim alleging that the Company was obligated to pay Saucier his year-end bonus despite his resignation. The Company and Chairman Lipparelli filed an answer to the counterclaims. Subsequent to its original counterclaims, Triangulum filed amended counterclaims, which the Company and its Directors moved to dismiss on a number of legal grounds (the “Motion to Dismiss”). The Court denied the Motion to Dismiss. On May 6, 2020, Saucier made a demand of the Company under our Bylaws and an Indemnification Agreement between Saucier and the Company, for indemnity and advancement of funds seeking repayment of his attorneys’ fees and expenses he allegedly incurred in connection with the Company’s claims against him in the Triangulum Lawsuit. An independent counsel, selected per the terms of the Indemnification Agreement, concluded that Saucier was entitled to a small amount of indemnity funds related to the time he was employed by the Company, but denied an entitlement to indemnification thereafter. On May 19, 2020, Saucier commenced a separate action in Nevada district court by filing a complaint he verified as true, seeking advancement of indemnification fees to which he claims an entitlement under the Bylaws and an Indemnification Agreement (the “Advancement Lawsuit”). The Company filed its opposition on June 4, 2020. Saucier’s Motion was denied in a hearing that occurred on June 24, 2020. Saucier filed a notice of his appeal of the Nevada district court’s decision in the Advancement Lawsuit to the Nevada Supreme Court on August 10, 2020. Saucier subsequently moved for attorneys' fees related to the filing of the Advancement Lawsuit, which the Nevada district court granted, and the Company filed a notice of appeal to the Nevada Supreme Court. The appeal of the denial of Advancement to Saucier is fully briefed by the parties and the parties await a hearing date from the Nevada Supreme Court. Galaxy’s appeal of the first request of the grant of lawyer’s fees in litigating the Advancement action, is fully briefed by the parties. The parties await a hearing date on both matters from the Nevada Supreme Court. Saucier filed a separate supplemental motion for attorneys’ fees, which was denied by the Nevada district court, finding the fees incurred to be unreasonable, among other things. Saucier also appealed this ruling of the Nevada district court. Briefing on this third related matter began June 6, 2021. On July 22, 2020, in the Triangulum Lawsuit, the Company and its Directors filed a special motion to dismiss most of Triangulum and Saucier’s counterclaims under Nevada anti-SLAPP statute (Strategic Lawsuit Against Public Participation) because Triangulum and Saucier seek to impose liability on the Company and its Directors based upon their privileged communications with regulators. The Nevada district court denied the motion, and the Company and its Directors appealed the order to the Nevada Supreme Court. Discovery in the Triangulum Lawsuit is stayed pending the outcome of this appeal. The appeal is currently being briefed by the parties. The appeals to the Nevada Supreme Court by both Saucier and the Company in the Triangulum Lawsuit and the Advancement Lawsuit were referred to the Nevada Supreme Court’s mandatory Settlement Program. A consolidated settlement conference occurred on November 16, 2020, with no resolution of any of the issues on appeal or the lawsuit. The Nevada Supreme Court subsequently issued briefing schedules on the three appeals. On November 24, 2020, Triangulum filed a Motion for Partial Summary Judgment in the Triangulum Lawsuit in the Nevada district court, seeking a ruling that the Company violated Nevada law and its Articles by issuing a promissory note as consideration for the redeemed shares and that the redemption was ineffective as a matter of law (the “Triangulum MPSJ”). The Company opposed Triangulum’s MPSJ and filed its own Countermotion for Summary Judgment (the “CMSJ”), seeking a ruling that as a matter of law the business judgement rule applies and prohibits any judicial review of the Board’s decisions related to the redemption. During the January 20, 2021 hearing on both motions, the Nevada district court denied Triangulum’s MPSJ, finding that Nevada statutes allow for the payment of redemption consideration in the form of a promissory note and that the Company’s decisions to redeem and to issue a promissory note as consideration for the redemption are subject to the business judgment rule. The court further found again that the redeemed shares have been actually cancelled and cannot be placed in a constructive trust. The court also denied the Company’s CMSJ, without prejudice for the Company to refile after further discovery. On April 23, 2021, Triangulum appealed the District court’s denial of its MPSJ. Galaxy also appealed the denial of its CMSJ. Briefing on the appeals will begin in September 2021. On December 18, 2020 Saucier filed a separate lawsuit in Nevada district court (which was served on January 21, 2021), alleging breach of contract related to his demand for indemnity from the Company (the “Indemnity Lawsuit”). Similar to the Company’s position in the Advancement Lawsuit discussed above, the Company denies that he is entitled to indemnity and moved to dismiss the action on February 16, 2021. The Company filed a Motion to Reassign the case to the Judge presiding over the Triangulum Lawsuit and the Advancement Lawsuit. On February 18, 2021, the Company’s Motion to Reassign was granted. On February 16, 2021, the Company filed a Motion to Dismiss the Indemnity Lawsuit. The Company’s Motion to Dismiss was denied on April 19, 2021. The Company filed its Answer to the Indemnity Lawsuit. As mentioned above, discovery in the Triangulum Lawsuit has been stayed as a result of the Company’s appeal of the Anti-SLAPP motion decision to the Nevada Supreme Court. As such, the previously set April 2021 trial date cannot proceed until the discovery stay is lifted and after additional discovery proceeds. In September 2018, we were served with a complaint by TableMax Corporation (“TMAX”) regarding an Operation and License Agreement executed between TMax and Galaxy in February 2011 (the “TMAX Agreement”). We filed an answer denying the allegations and filed a partial motion for summary judgment seeking dismissal of the plaintiff’s claims. The suit was dismissed, subject to the right of the plaintiff to file an amended complaint on or before March 20, 2019. The plaintiff did not file an amended complaint within the time period set by the Judge. After that time, the Company considered the matter closed. TMAX filed a Motion for Leave to Amend their Complaint, which was granted by the Judge on May 11, 2020. On May 26, 2020 TMAX filed an Amended Complaint against the Company and other Co-Defendants. The Company filed a Motion To Enforce Settlement Or, In The Alternative, Motion To Dismiss And/Or For Summary Judgement and Request For Sanctions, on April 30, 2021. On June 22, 2021, Galaxy’s Motion to Dismiss was granted, with prejudice to the right of TMAX to file an amended complaint. An unexpected adverse judgment in any pending litigation could cause a material impact on our business operations, intellectual property, results of operations or financial position. Unless otherwise expressly stated, we believe costs associated with litigation will not have a material impact on our financial position or liquidity but may be material to the results of operations in any given period and accordingly, no provision for loss has been reflected in the accompanying financial statements related to these matters. |
INCOME TAXES
INCOME TAXES | 6 Months Ended |
Jun. 30, 2021 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE 12. INCOME TAXES Our forecasted annual effective tax rate (“AETR”) at June 30, 2021 was 12.8%, as compared to 22.2% at June 30, 2020. This decrease was primarily due to excess tax benefits from stock-based compensation, utilization of tax credits, foreign rate differential, Subpart F inclusion 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 six months ended June 30, 2021 and 2020, our effective tax rate (“ETR”) was 4.2 and 23.1%, respectively. The decrease in the ETR for the six months ended June 30, 2021 is a result of the foreign rate differential, Subpart F inclusion, changes in valuation allowance and favorable discrete items related to excess tax benefits from stock-based compensation.. |
SHARE-BASED COMPENSATION
SHARE-BASED COMPENSATION | 6 Months Ended |
Jun. 30, 2021 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
SHARE-BASED COMPENSATION | NOTE 13. SHARE-BASED COMPENSATION Stock Options On May 10, 2018, the Board ratified and confirmed the 2014 Equity Incentive Plan (the “2014 Plan”). The 2014 Plan is a broad-based plan under which shares of our common stock are authorized for issuance for awards, including stock options, stock appreciation rights, restricted stock, and cash incentive awards to members of our Board, executive officers, employees and independent contractors June 30, 2021 total of 7,550,750 shares of our common stock were authorized for issuance. As of June 30, 2021, 963,701 shares During the six months ended June 30, 2021 and 2020, we issued 60,000 and 225,000 options to purchase our common stock, respectively, to members of our Board, executive officers, employees and independent contractors. The fair value of all stock options granted for the six months ended June 30, 2021 and 2020 was determined to be $94,829 and $255,017, respectively, using the Black-Scholes option pricing model with the following assumptions: Options Issued Six Months ended June 30, 2021 Options Issued Six Months ended June 30, 2020 Dividend yield 0 % 0 % Expected volatility 63.50% - 68.74% 70.98 % Risk-free interest rate 0.48% - 0.87% 1.39 % Expected life (years) 5.00 5.00 A summary of stock option activity is as follows: Common Stock Options Weighted- Average Exercise Price Aggregate Intrinsic Value Weighted- Average Remaining Contractual Term (Years) Outstanding – December 31, 2020 2,982,000 $ 1.08 $ 2,101,780 2.35 Issued 60,000 2.90 — — Exercised (100,000 ) 0.27 (285,925 ) — Forfeited or expired (42,000 ) 1.04 — — Outstanding – June 30, 2021 2,900,000 $ 1.14 $ 7,275,000 1.99 Exercisable – June 30, 2021 2,051,667 $ 0.93 $ 5,588,442 1.35 A summary of unvested stock option activity is as follows: Common Stock Options Weighted- Average Exercise Price Aggregate Intrinsic Value Weighted- Average Remaining Contractual Term (Years) Unvested – December 31, 2020 845,000 $ 1.55 $ 197,608 3.83 Granted 60,000 2.90 — — Vested (15,000 ) 1.82 — — Forfeited (41,666 ) 1.04 — — Unvested – June 30, 2021 848,334 $ 1.66 $ 1,686,559 3.52 As of June 30, 2021, our unrecognized share-based compensation expense associated with the stock options issued was $ 511,629 average period of 1.89 years. Restricted Awards During the six months ended June 30, 2021 , we issued of 110,000 res $360,250 to in consideration of their service on the Board. These shares vested immediately on the grant date. An additional 80,000 restricted shares of our common stock valued at $181,600 were issued to an employee of the Company on February 17, 2021. These shares were granted in consideration of the individual’s service to the Company. These shares vest on November 12, 2021. As of 2,291,133 235,000 |
SIGNIFICANT ACCOUNTING POLICI_2
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2021 | |
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 Securities and Exchange Commission (“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 2020 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 subsidiary, PGP. All intercompany transactions and balances have been eliminated in consolidation. |
Reclassifications | Reclassifications. Certain accounts and financial statement captions in the prior periods have been reclassified to conform to the current period financial statement presentations. |
Cash, cash equivalents | Cash and cash equivalents. We consider cash on hand and cash in banks as cash. We consider certificates of deposit and other short-term securities with maturities of three months or less when purchased as cash equivalents. Our cash in bank balances are deposited 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 monthly 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. |
Inventory | Inventory. Inventory consists of ancillary products such as signs, layouts and bases for the various games and electronic devices and components to support all our electronic enhancements used on casino table games (“Enhanced Table Systems”), and we maintain inventory levels based on historical and industry trends. We regularly assess inventory quantities for excess and obsolescence primarily based on forecasted product demand. Inventory is valued at the lower of net realizable value or cost, which is determined by the average cost method. |
Assets deployed at client locations, net | Assets deployed at client locations, net. Our Enhanced Table Systems are assembled by us and accounted for as inventory until deployed at our casino clients’ premises (Note 6). Once deployed and placed into service at client locations, the assets are transferred from inventory and reported as assets deployed at client locations. These assets are stated at cost, net of accumulated depreciation. Depreciation on assets deployed at client locations is calculated using the straight-line method over a three-year period. |
Property and equipment, net | Property and equipment, net. Property and equipment are being depreciated over their estimated useful lives (three to five years) using the straight-line method of depreciation (Note 5). Property and equipment are analyzed for potential impairment whenever events or changes in circumstances indicate the carrying value may not be recoverable and exceeds their fair value. |
Goodwill | Goodwill. Goodwill (Note 7) 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 7) 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 June 30, 2021. |
Interest rates swap agreement | Interest rates swap agreement . In May 2018, the Company entered into an interest rate swap agreement to reduce the impact of changes in interest rates on its floating rate long-term debt. The interest rate swap has not been designated a hedging instrument and is adjusted to fair value through earnings in the Company’s statements of operations. The interest rate swap agreement matured on May 1, 2021. |
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 balance sheet 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 9). |
Revenue Recognition | Revenue recognition. We account for our revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers . See Note 3. |
Costs of ancillary products and assembled components | Costs of ancillary products and assembled components. Ancillary products include pay tables (display of payouts), bases, layouts, signage and other items as they relate to support of specific proprietary games in connection with the licensing of our games. Assembled components represent the cost of the equipment, devices and incorporated software used to support our Enhanced Table Systems. |
Research and development | Research and development. We incur research and development (“R&D”) costs to develop our new and next-generation products. Our products reach commercial feasibility shortly before the products are released, and therefore R&D costs are expensed as incurred. Employee-related costs associated with product development are included in R&D costs. |
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. |
Segmented Information | Segmented 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. |
Share-based compensation | Share-based compensation. We recognize compensation expense for all restricted stock and stock option awards made to employees, directors and independent contractors. The fair value of restricted stock is measured using the grant date trading price of our stock. The fair value of stock option awards (Note 13) is estimated at the grant date using the Black-Scholes option-pricing model, and the portion that is ultimately expected to vest is recognized as compensation cost over the requisite service period. We have elected to recognize compensation expense for all options with graded vesting on a straight-line basis over the vesting period of the entire option. The determination of fair value using the Black-Scholes pricing model is affected by our stock price as well as assumptions regarding a number of complex and subjective variables, including expected stock price volatility, risk-free interest rate, expected dividends and projected employee stock option exercise behaviors. We estimate volatility based on historical volatility of our common stock, and estimate the expected term based on several criteria, including the vesting period of the grant and the term of the award. We estimate employee stock option exercise behavior based on actual historical exercise activity and assumptions regarding future exercise activity of unexercised, outstanding options. |
Recently adopted accounting standards | Recently adopted accounting standards. Simplifying the Accounting for Income Taxes. In December 2019, the FASB issued Accounting Standard Update No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (ASU 2019-12), which simplifies the accounting for income taxes. This guidance is effective for the first quarter of 2021 on a prospective basis. We have adopted the new standard effective January 1, 2021, and its adoption does not have a material impact on our consolidated financial statements. |
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 ho w 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) | 6 Months Ended |
Jun. 30, 2021 | |
Accounting Policies [Abstract] | |
Schedule of 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 June 30, December 31, 2021 2020 Patents $ 13,507,997 $ 13,507,997 Customer relationships 13,942,115 13,942,115 Trademarks 2,880,967 2,880,967 Non-compete agreements 660,000 660,000 Software 233,314 183,415 Other intangible assets, gross 31,224,393 31,174,494 Less: accumulated amortization (16,390,099 ) (15,087,598 ) Other intangible assets, net $ 14,834,294 $ 16,086,896 |
REVENUE RECOGNITION (Tables)
REVENUE RECOGNITION (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
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 Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 North America and Caribbean $ 2,465,741 $ 159,085 $ 4,967,723 $ 3,291,260 Europe, Middle East and Africa 2,283,589 504,887 4,064,616 1,867,029 Total revenue $ 4,749,330 $ 663,972 $ 9,032,339 $ 5,158,289 |
INVENTORY (Tables)
INVENTORY (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory | Inventory consisted of the following at: June 30, December 31, 2021 2020 Raw materials and component parts $ 365,134 $ 300,244 Finished goods 333,811 368,281 Inventory, net $ 698,945 $ 668,525 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Property Plant And Equipment [Abstract] | |
Schedule of Property and Equipment, Net | Property and equipment, net, consisted of the following at: June 30, December 31, 2021 2020 Furniture and fixtures $ 312,639 $ 312,639 Automotive vehicles 215,127 215,127 Office and computer equipment 370,423 332,544 Leasehold improvements 35,531 32,547 Property and equipment, gross 933,720 892,857 Less: accumulated depreciation (818,350 ) (776,133 ) Property and equipment, net $ 115,370 $ 116,724 |
ASSETS DEPLOYED AT CLIENT LOC_2
ASSETS DEPLOYED AT CLIENT LOCATIONS (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Leases Operating [Abstract] | |
Schedule of Assets Deployed at Client Locations, Net | Assets deployed at client locations, net, consisted of the following at: June 30, December 31, 2021 2020 Enhanced table systems $ 1,000,694 $ 890,560 Less: accumulated depreciation (727,185 ) (658,404 ) Assets deployed at client locations, net $ 273,509 $ 232,156 |
GOODWILL AND OTHER INTANGIBLE_2
GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Schedule of 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 June 30, December 31, 2021 2020 Patents $ 13,507,997 $ 13,507,997 Customer relationships 13,942,115 13,942,115 Trademarks 2,880,967 2,880,967 Non-compete agreements 660,000 660,000 Software 233,314 183,415 Other intangible assets, gross 31,224,393 31,174,494 Less: accumulated amortization (16,390,099 ) (15,087,598 ) Other intangible assets, net $ 14,834,294 $ 16,086,896 |
Schedule of Estimated Future Amortization Expense | Estimated future amortization expense is as follows: Twelve Months Ending June 30, Total 2022 $ 2,606,277 2023 1,735,114 2024 1,442,751 2025 1,424,276 2026 1,424,276 Thereafter 6,201,600 Total amortization $ 14,834,294 |
ACCRUED EXPENSES (Tables)
ACCRUED EXPENSES (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Payables And Accruals [Abstract] | |
Schedule of Accrued Expenses | Accrued expenses consisted of the following at: June 30, December 31, 2021 2020 Share redemption consideration $ 119,811 $ 510,776 Commissions and royalties 761,982 398,096 Payroll and related 630,561 173,487 Interest 109,685 95,879 Income tax payable — 42,218 Other 116,269 112,576 Total accrued expenses $ 1,738,308 $ 1,333,032 |
LEASES (Tables)
LEASES (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Leases [Abstract] | |
Schedule of Supplemental Balance Sheet Information Related to Leases | Supplemental balance sheet information related to leases is as follows: As of June 30, 2021 Amount Classification Operating leases: Operating lease right-of-use lease assets $ 1,259,803 Operating lease current liabilities $ 217,927 Current portion of operating lease liabilities Operating lease long-term liabilities 1,111,258 Long-term operating lease liabilities Total operating lease liabilities $ 1,329,185 Weighted-average remaining lease term: Operating leases 5.4 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 June 30, 2021 Amount Classification Operating lease cost $ 70,782 Selling, general and administrative expense Six Months Ended June 30, 2021 Amount Classification Operating lease cost $ 140,610 Selling, general and administrative expense |
Schedule of Supplemental Cash Flow Information Related to Leases | Supplemental cash flow information related to leases is as follows: Six Months Ended June 30, 2021 Amount Classification Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 115,684 Net income Right-of-use assets obtained in exchange for lease liabilities: Operating leases $ 5,312 Supplemental cash flow information |
Schedule of Future Maturities of Operating Lease Liabilities | As of June 30, 2021, future maturities of our operating lease liabilities are as follows: Twelve Months Ending June 30, Amount 2022 $ 217,927 2023 213,145 2024 230,789 2025 250,429 2026 272,200 Thereafter 144,695 Total lease liabilities $ 1,329,185 |
LONG-TERM LIABILITIES (Tables)
LONG-TERM LIABILITIES (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Liabilities | Long-term liabilities consisted of the following at: June 30, December 31, 2021 2020 Nevada State Bank credit agreement $ 7,641,200 $ 8,413,184 Main Street Priority Loan 4,000,000 4,000,000 Redemption Consideration Obligation 39,096,401 39,096,401 Vehicle notes payable 11,440 22,614 Insurance notes payable 173,952 519,194 Long-term liabilities, gross 50,922,993 52,051,393 Less: Unamortized debt issuance costs (155,522 ) (137,817 ) Long-term liabilities, net of debt issuance costs 50,767,471 51,913,576 Less: Current portion (2,760,792 ) (2,222,392 ) Long-term liabilities, net $ 48,006,679 $ 49,691,184 |
Schedule of Future Maturities of Long-term Liabilities | As of June 30, 2021, future maturities of our long-term liabilities are as follows: Twelve Months Ending June 30, Total 2022 $ 2,760,792 2023 5,065,800 2024 600,000 2025 600,000 2026 2,800,000 Thereafter 39,096,401 Long-term liabilities, gross $ 50,922,993 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Commitments And Contingencies Disclosure [Abstract] | |
Schedule of Client Revenue Concentrations | For the six months ended June 30, 2021 and 2020, respectively, we had the following client revenue concentrations: Location Six Months ended June 30, 2021 Revenue Six Months ended June 30, 2020 Revenue Accounts Receivable June 30, 2021 Accounts Receivable December 31, 2020 Client A Europe 28.4 % 12.9 % $ 439,872 $ 348,781 Client B North America 10.9 % 8.5 % $ 1,063,764 $ 400,663 |
SHARE-BASED COMPENSATION (Table
SHARE-BASED COMPENSATION (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Summary of Stock Options Pricing | Options Issued Six Months ended June 30, 2021 Options Issued Six Months ended June 30, 2020 Dividend yield 0 % 0 % Expected volatility 63.50% - 68.74% 70.98 % Risk-free interest rate 0.48% - 0.87% 1.39 % Expected life (years) 5.00 5.00 |
Summary of Stock Option Activity | A summary of stock option activity is as follows: Common Stock Options Weighted- Average Exercise Price Aggregate Intrinsic Value Weighted- Average Remaining Contractual Term (Years) Outstanding – December 31, 2020 2,982,000 $ 1.08 $ 2,101,780 2.35 Issued 60,000 2.90 — — Exercised (100,000 ) 0.27 (285,925 ) — Forfeited or expired (42,000 ) 1.04 — — Outstanding – June 30, 2021 2,900,000 $ 1.14 $ 7,275,000 1.99 Exercisable – June 30, 2021 2,051,667 $ 0.93 $ 5,588,442 1.35 |
Summary of Unvested Stock Option Activity | A summary of unvested stock option activity is as follows: Common Stock Options Weighted- Average Exercise Price Aggregate Intrinsic Value Weighted- Average Remaining Contractual Term (Years) Unvested – December 31, 2020 845,000 $ 1.55 $ 197,608 3.83 Granted 60,000 2.90 — — Vested (15,000 ) 1.82 — — Forfeited (41,666 ) 1.04 — — Unvested – June 30, 2021 848,334 $ 1.66 $ 1,686,559 3.52 |
NATURE OF OPERATIONS - (Details
NATURE OF OPERATIONS - (Details Narrative) - USD ($) | Aug. 21, 2020 | Mar. 12, 2020 | May 06, 2019 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | Oct. 26, 2020 |
Significant Business Developments [Line Items] | |||||||
Common stock redemption description | Our Articles of Incorporation (the “Articles”) provide that if certain events occur in relation to a stockholder that is required to undergo a gaming suitability review or similar investigative process, we have the option to purchase all or any part of such stockholder’s shares at a price per share that is equal to the average closing share price over the thirty calendar days preceding the purchase. The average closing share price over the thirty calendar days preceding the redemption was $1.68 per share. | ||||||
Common stock redemption price per share | $ 1.68 | ||||||
Redemption consideration owed | $ 50,922,993 | $ 52,051,393 | |||||
Cash portion of purchase price for acquisition of other intangible assets, net | 49,900 | ||||||
Drew on revolving loan amount | $ 1,000,000 | $ 1,000,000 | |||||
Progressive Games Partners LLC | |||||||
Significant Business Developments [Line Items] | |||||||
Percentage of acquisition of member interest | 100.00% | ||||||
Acquisition of certain receivables and payables net amount | 581,885 | ||||||
Progressive Games Partners LLC | Other Intangible Assets, Net | |||||||
Significant Business Developments [Line Items] | |||||||
Cash portion of purchase price for acquisition of other intangible assets, net | $ 6,425,000 | ||||||
Issuance of shares of common stock for acquisition of other intangible assets, net | 3,141,361 | ||||||
Issuance of shares of common stock price per share | $ 1.27 | ||||||
Progressive Games Partners LLC | Customer Relationships | |||||||
Significant Business Developments [Line Items] | |||||||
Purchase price | $ (10,414,528) | ||||||
Transaction-related costs | $ (127,586) | ||||||
Share Redemption Consideration Obligation | |||||||
Significant Business Developments [Line Items] | |||||||
Redemption consideration owed | $ 39,096,401 | 39,096,401 | 39,096,401 | ||||
Main Street Priority Loan Facility | |||||||
Significant Business Developments [Line Items] | |||||||
Redemption consideration owed | $ 4,000,000 | $ 4,000,000 | |||||
Main Street Priority Loan Facility | Nevada State Bank | |||||||
Significant Business Developments [Line Items] | |||||||
Unsecured Debt | $ 4,000,000 | ||||||
Triangulum | |||||||
Significant Business Developments [Line Items] | |||||||
Shares redeemed | 23,271,667 |
SIGNIFICANT ACCOUNTING POLICI_4
SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) | 3 Months Ended | 6 Months Ended |
Jun. 30, 2021USD ($) | Jun. 30, 2021USD ($)Segment | |
Significant Accounting Policies [Line Items] | ||
Impairment of intangible assets | $ | $ 0 | |
Interest rate swap agreement maturity date | May 1, 2021 | |
Number of operating segment | Segment | 2 | |
Number of reporting segment | Segment | 1 | |
Change in accounting principle, accounting standards update, adopted [true false] | true | true |
Change in accounting principle, accounting standards update, adoption date | Jan. 1, 2021 | Jan. 1, 2021 |
Change in accounting principle, accounting standards update, immaterial effect [true false] | true | true |
Accounting Standards Update [Extensible List] | us-gaap:AccountingStandardsUpdate201912Member | |
Maximum | ||
Significant Accounting Policies [Line Items] | ||
Cash, FDIC Insured Amount | $ | $ 250,000 | $ 250,000 |
Property plant and equipment useful life | 5 years | |
Minimum | ||
Significant Accounting Policies [Line Items] | ||
Property plant and equipment useful life | 3 years |
SIGNIFICANT ACCOUNTING POLICI_5
SIGNIFICANT ACCOUNTING POLICIES - Finite Lived Intangible Assets Estimated Economic Lives (Details) | 6 Months Ended |
Jun. 30, 2021 | |
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 | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Disaggregation Of Revenue [Line Items] | ||||
Total revenue | $ 4,749,330 | $ 663,972 | $ 9,032,339 | $ 5,158,289 |
North America and Caribbean | ||||
Disaggregation Of Revenue [Line Items] | ||||
Total revenue | 2,465,741 | 159,085 | 4,967,723 | 3,291,260 |
Europe, Middle East and Africa | ||||
Disaggregation Of Revenue [Line Items] | ||||
Total revenue | $ 2,283,589 | $ 504,887 | $ 4,064,616 | $ 1,867,029 |
REVENUE RECOGNITION (Details Na
REVENUE RECOGNITION (Details Narrative) - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
Accounts Receivable | ||
Disaggregation Of Revenue [Line Items] | ||
Unbilled receivables | $ 680,258 | $ 502,860 |
INVENTORY - Schedule of Invento
INVENTORY - Schedule of Inventory (Details) - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
Inventory Disclosure [Abstract] | ||
Raw materials and component parts | $ 365,134 | $ 300,244 |
Finished goods | 333,811 | 368,281 |
Inventory, net | $ 698,945 | $ 668,525 |
PROPERTY AND EQUIPMENT - Schedu
PROPERTY AND EQUIPMENT - Schedule of Property and Equipment, Net (Details) - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
Property Plant And Equipment [Line Items] | ||
Property and equipment, gross | $ 933,720 | $ 892,857 |
Less: accumulated depreciation | (818,350) | (776,133) |
Property and equipment, net | 115,370 | 116,724 |
Furniture and Fixtures | ||
Property Plant And Equipment [Line Items] | ||
Property and equipment, gross | 312,639 | 312,639 |
Automotive Vehicles | ||
Property Plant And Equipment [Line Items] | ||
Property and equipment, gross | 215,127 | 215,127 |
Office and Computer Equipment | ||
Property Plant And Equipment [Line Items] | ||
Property and equipment, gross | 370,423 | 332,544 |
Leasehold Improvements | ||
Property Plant And Equipment [Line Items] | ||
Property and equipment, gross | $ 35,531 | $ 32,547 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Property Plant and Equipment Excluding Assets Leased to Others | ||||
Property Plant And Equipment [Line Items] | ||||
Depreciation expense | $ 18,761 | $ 22,322 | $ 42,218 | $ 45,316 |
ASSETS DEPLOYED AT CLIENT LOC_3
ASSETS DEPLOYED AT CLIENT LOCATIONS - Schedule of Assets Deployed at Client Locations, Net (Details) - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
Leases Operating [Abstract] | ||
Enhanced table systems | $ 1,000,694 | $ 890,560 |
Less: accumulated depreciation | (727,185) | (658,404) |
Assets deployed at client locations, net | $ 273,509 | $ 232,156 |
ASSETS DEPLOYED AT CLIENT LOC_4
ASSETS DEPLOYED AT CLIENT LOCATIONS (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Leases Operating [Abstract] | ||||
Depreciation expense related to assets deployed at client locations | $ 48,397 | $ 58,244 | $ 93,023 | $ 122,556 |
GOODWILL AND OTHER INTANGIBLE_3
GOODWILL AND OTHER INTANGIBLE ASSETS (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||
Oct. 31, 2011 | Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |||||
Goodwill resulted from transaction | $ 1,091,000 | ||||
Amortization expense | $ 653,330 | $ 373,919 | $ 1,302,502 | $ 756,418 |
GOODWILL AND OTHER INTANGIBLE_4
GOODWILL AND OTHER INTANGIBLE ASSETS - Schedule of Other Intangible Assets, Net (Details) - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
Finite Lived Intangible Assets [Line Items] | ||
Other intangible assets, gross | $ 31,224,393 | $ 31,174,494 |
Less: accumulated amortization | (16,390,099) | (15,087,598) |
Other intangible assets, net | 14,834,294 | 16,086,896 |
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 | 13,942,115 | 13,942,115 |
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 | $ 233,314 | $ 183,415 |
GOODWILL AND OTHER INTANGIBLE_5
GOODWILL AND OTHER INTANGIBLE ASSETS - Schedule of Estimated Future Amortization Expense (Details) | Jun. 30, 2021USD ($) |
Goodwill And Intangible Assets Disclosure [Abstract] | |
2022 | $ 2,606,277 |
2023 | 1,735,114 |
2024 | 1,442,751 |
2025 | 1,424,276 |
2026 | 1,424,276 |
Thereafter | 6,201,600 |
Total amortization | $ 14,834,294 |
ACCRUED EXPENSES - Schedule of
ACCRUED EXPENSES - Schedule of Accrued Expenses (Details) - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
Payables And Accruals [Abstract] | ||
Share redemption consideration | $ 119,811 | $ 510,776 |
Commissions and royalties | 761,982 | 398,096 |
Payroll and related | 630,561 | 173,487 |
Interest | 109,685 | 95,879 |
Income tax payable | 42,218 | |
Other | 116,269 | 112,576 |
Total accrued expenses | $ 1,738,308 | $ 1,333,032 |
LEASES (Details Narrative)
LEASES (Details Narrative) | 6 Months Ended |
Jun. 30, 2021Satellite | |
Minimum | |
Lessee Lease Description [Line Items] | |
Operating leases and finance leases remaining lease term | 6 months |
Maximum | |
Lessee Lease Description [Line Items] | |
Operating leases and finance leases remaining lease term | 66 months |
Washington | |
Lessee Lease Description [Line Items] | |
Operating leases, number of leased assets | 2 |
LEASES - Schedule of Supplement
LEASES - Schedule of Supplemental Balance Sheet Information Related to Leases (Details) - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
Operating leases: | ||
Operating lease right-of-use lease assets | $ 1,259,803 | $ 1,367,821 |
Operating lease current liabilities | 217,927 | 195,411 |
Operating lease long-term liabilities | 1,111,258 | $ 1,215,680 |
Total operating lease liabilities | $ 1,329,185 | |
Weighted-average remaining lease term: | ||
Operating leases | 5 years 4 months 24 days | |
Weighted-average discount rate: | ||
Operating leases | 4.20% |
LEASES - Schedule of Components
LEASES - Schedule of Components of Lease Expense (Details) - USD ($) | 3 Months Ended | 6 Months Ended |
Jun. 30, 2021 | Jun. 30, 2021 | |
Selling, General and Administrative Expense | ||
Lessee Lease Description [Line Items] | ||
Operating lease cost | $ 70,782 | $ 140,610 |
LEASES - Schedule of Suppleme_2
LEASES - Schedule of Supplemental Cash Flow Information Related to Leases (Details) | 6 Months Ended |
Jun. 30, 2021USD ($) | |
Net Income | |
Cash paid for amounts included in the measurement of lease liabilities: | |
Operating cash flows from operating leases | $ 115,684 |
Supplemental Cash Flow Information | |
Right-of-use assets obtained in exchange for lease liabilities: | |
Operating leases | $ 5,312 |
LEASES - Schedule of Future Mat
LEASES - Schedule of Future Maturities of Operating Lease Liabilities (Details) | Jun. 30, 2021USD ($) |
Operating Lease [Abstract] | |
Operating Leases, 2022 | $ 217,927 |
Operating Leases, 2023 | 213,145 |
Operating Leases, 2024 | 230,789 |
Operating Leases, 2025 | 250,429 |
Operating Leases, 2026 | 272,200 |
Operating Leases, Thereafter | 144,695 |
Operating Leases, Total lease liabilities | $ 1,329,185 |
LONG-TERM LIABILITIES - Schedul
LONG-TERM LIABILITIES - Schedule of Long-term Liabilities (Details) - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 | May 06, 2019 |
Debt Instrument [Line Items] | |||
Long-term liabilities, gross | $ 50,922,993 | $ 52,051,393 | |
Less: Unamortized debt issuance costs | (155,522) | (137,817) | |
Long-term liabilities, net of debt issuance costs | 50,767,471 | 51,913,576 | |
Less: Current portion | (2,760,792) | (2,222,392) | |
Long-term liabilities, net | 48,006,679 | 49,691,184 | |
Main Street Priority Loan Facility | |||
Debt Instrument [Line Items] | |||
Long-term liabilities, gross | 4,000,000 | 4,000,000 | |
Share Redemption Consideration Obligation | |||
Debt Instrument [Line Items] | |||
Long-term liabilities, gross | 39,096,401 | 39,096,401 | $ 39,096,401 |
Nevada State Bank Credit Agreement | |||
Debt Instrument [Line Items] | |||
Long-term liabilities, gross | 7,641,200 | 8,413,184 | |
Vehicle Notes Payable | |||
Debt Instrument [Line Items] | |||
Long-term liabilities, gross | 11,440 | 22,614 | |
Insurance Notes Payable | |||
Debt Instrument [Line Items] | |||
Long-term liabilities, gross | $ 173,952 | $ 519,194 |
LONG-TERM LIABILITIES (Details
LONG-TERM LIABILITIES (Details Narrative) - USD ($) | May 06, 2021 | Mar. 29, 2021 | May 05, 2020 | Mar. 12, 2020 | May 06, 2019 | Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Jun. 30, 2021 | Jun. 30, 2020 | Oct. 26, 2020 |
Debt Instrument [Line Items] | |||||||||||
Drew on revolving loan amount | $ 1,000,000 | $ 1,000,000 | |||||||||
Nevada State Bank Credit Agreement | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Principal amount outstanding | $ 7,641,200 | $ 7,641,200 | |||||||||
Revolving Credit Facility | Nevada State Bank Credit Agreement | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Drew on revolving loan amount | $ 1,000,000 | ||||||||||
NSB and Credit Agreement | Revolving Credit Facility | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Borrowing capacity | $ 1,000,000 | $ 1,000,000 | |||||||||
A&R Credit Agreement | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt instrument, covenant compliance | The A&R Credit Agreement contains affirmative and negative financial covenants (as defined in the A&R Credit Agreement) and other restrictions customary for borrowings of this nature. In particular, we are required to maintain (i) a quarterly minimum Fixed Charge Coverage ratio of 1.25x; (ii) a quarterly maximum Total Leverage ratio of 22.50x for the quarter ending March 31, 2021, 10.00x for quarter ending June 30, 2021, 6.50x for the quarter ending September 30, 2021 with semi-annual step-downs of 0.25x commencing December 31, 2021 and quarterly thereafter; (iii) a quarterly maximum Senior Leverage ratio of 5.25x for the quarter ending March 31, 2021, 2.50x for the quarter ending June 30, 2021 and 2.00x quarterly thereafter; (iv) a quarterly Minimum EBITDA covenant of $2.4 million for each of the quarters ending March 31, 2021, June 30, 2021 and September 30, 2021 and $8.0 million quarterly thereafter; (v) a quarterly Minimum Liquidity covenant requiring the Company to have cash and cash equivalents of no less than $1.5 million at quarter ends through and including June 30, 2021 and $2.5 million quarterly thereafter; and (vi) a yearly maximum Maintenance Capital Expenditure covenant of 5% of total revenues for the prior year. The Company was in compliance with its Fixed Charge Coverage ratio, Senior Leverage ratio, Total Leverage ratio and Minimum Liquidity covenants as of June 30, 2021. | ||||||||||
Step down leverage ratio | 0.25% | ||||||||||
Step down leverage ratio description | semi-annual step-downs of 0.25x commencing December 31, 2021 and quarterly thereafter | ||||||||||
Maximum senior leverage ratio | 2.50% | 5.25% | |||||||||
Minimum required EBITDA covenant for prior quarter | $ 2,400,000 | $ 2,400,000 | |||||||||
Minimum required EBITDA covenant for current quarter | 2,400,000 | 2,400,000 | |||||||||
Minimum required EBITDA covenant for next quarter | 2,400,000 | 2,400,000 | |||||||||
Minimum required EBITDA covenant for thereafter | 8,000,000 | 8,000,000 | |||||||||
Minimum liquidity covenant required of cash and cash equivalents for current quarter | 1,500,000 | 1,500,000 | |||||||||
Minimum liquidity covenant required of cash and cash equivalents for thereafter | $ 2,500,000 | $ 2,500,000 | |||||||||
A&R Credit Agreement | Forecast | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Maximum senior leverage ratio | 2.00% | ||||||||||
A&R Credit Agreement | Minimum | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Fixed charge coverage ratio | 1.25% | ||||||||||
A&R Credit Agreement | Maximum | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Leverage ratio | 10.00% | 22.50% | |||||||||
Percentage of maintenance capital expenditures to be made from prior fiscal year total revenues | 5.00% | ||||||||||
A&R Credit Agreement | Maximum | Forecast | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Leverage ratio | 6.50% | ||||||||||
A&R Credit Agreement | Nevada State Bank | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt instrument, interest rate terms | outstanding balances accrue interest based on one-month U.S. dollar London interbank offered rate (“LIBOR”) plus an applicable margin of 3.50% or 4.00%, depending on our Total Leverage Ratio (as defined in the A&R Credit Agreement). | ||||||||||
A&R Credit Agreement | Revolving Credit Facility | Nevada State Bank | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Borrowing capacity | $ 1,000,000 | ||||||||||
Maturity date | Apr. 24, 2022 | ||||||||||
Share Redemption Consideration Obligation | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt instrument, face amount | $ 39,096,401 | ||||||||||
Debt instrument, redemption period, start date | May 6, 2019 | ||||||||||
Debt instrument, redemption period, end date | May 6, 2029 | ||||||||||
Interest rate | 2.00% | ||||||||||
Debt instrument, annual payment | $ 781,928 | $ 781,928 | |||||||||
Term Loan | Nevada State Bank Credit Agreement | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Principal amount outstanding | $ 6,641,200 | $ 6,641,200 | |||||||||
Term Loan | NSB and Credit Agreement | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Borrowing capacity | $ 11,000,000 | $ 11,000,000 | |||||||||
Term Loan | A&R Credit Agreement | Nevada State Bank | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Borrowing capacity | $ 7,022,300 | ||||||||||
Maturity date | Apr. 24, 2023 | ||||||||||
Leverage Ratio Less Than 2.0 | A&R Credit Agreement | Nevada State Bank | LIBOR | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt instrument, applicable margin rate | 3.50% | ||||||||||
Leverage Ratio 2.0 or Greater | A&R Credit Agreement | Nevada State Bank | LIBOR | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt instrument, applicable margin rate | 4.00% | ||||||||||
Main Street Priority Loan Facility | Nevada State Bank | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Unsecured Debt | $ 4,000,000 | ||||||||||
Variable rate basis, description | three-month U.S. dollar LIBOR plus 300 basis points (initially 3.215%) | ||||||||||
Debt instrument, initial interest rate | 3.215% | 3.215% | |||||||||
Loan, maturity period | 5 years | ||||||||||
Debt instrument, amortization price percentage principal amount outstanding | 15.00% | ||||||||||
Main Street Priority Loan Facility | Nevada State Bank | LIBOR | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt instrument, applicable margin rate | 3.00% |
LONG-TERM LIABILITIES - Sched_2
LONG-TERM LIABILITIES - Schedule of Future Maturities of Long-term Liabilities (Details) - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
Debt Instrument [Line Items] | ||
Long-term liabilities, gross | $ 50,922,993 | $ 52,051,393 |
Promissory Note | ||
Debt Instrument [Line Items] | ||
2022 | 2,760,792 | |
2023 | 5,065,800 | |
2024 | 600,000 | |
2025 | 600,000 | |
2026 | 2,800,000 | |
Thereafter | 39,096,401 | |
Long-term liabilities, gross | $ 50,922,993 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Schedule of Client Revenue Concentrations (Details) - Customer Concentration Risk - Revenue - USD ($) | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
Europe | Client A | |||
Product Information [Line Items] | |||
Concentration Risk | 28.40% | 12.90% | |
Accounts Receivable | $ 439,872 | $ 348,781 | |
North America | Client B | |||
Product Information [Line Items] | |||
Concentration Risk | 10.90% | 8.50% | |
Accounts Receivable | $ 1,063,764 | $ 400,663 |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES (Details Narrative) | 6 Months Ended |
Jun. 30, 2021USD ($) | |
Loss Contingencies [Line Items] | |
Lawsuit filing date | May 6, 2019 |
Pending Litigation | |
Loss Contingencies [Line Items] | |
Provision for loss on legal proceedings | $ 0 |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Income Tax Contingency [Line Items] | ||
Effective tax rate | 4.20% | 23.10% |
Plan | ||
Income Tax Contingency [Line Items] | ||
Effective tax rate | 12.80% | 22.20% |
SHARE-BASED COMPENSATION (Detai
SHARE-BASED COMPENSATION (Details Narrative) - USD ($) | Feb. 17, 2021 | Jun. 30, 2021 | Jun. 30, 2020 |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Fair market value of shares granted | $ 94,829 | $ 255,017 | |
Unrecognized share-based compensation expense | $ 511,629 | ||
Unrecognized share-based compensation expense, weighted-average period of amortization | 1 year 10 months 20 days | ||
Restricted Awards | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Restricted shares outstanding | 2,291,133 | ||
Restricted shares unvested | 235,000 | ||
Restricted Awards | Board Members | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Restricted common stock, granted | 110,000 | ||
Restricted common stock granted, value | $ 360,250 | ||
Restricted Awards | Employee and Contractor | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Restricted common stock, granted | 80,000 | ||
Restricted common stock granted, value | $ 181,600 | ||
Common Stock | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Stock options granted | 60,000 | 225,000 | |
2014 Plan | Common Stock | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Shares authorized for issuance of awards | 7,550,750 | ||
Shares available for issuance of awards | 963,701 |
SHARE-BASED COMPENSATION - Summ
SHARE-BASED COMPENSATION - Summary of Stock Options Pricing (Details) - Stock Option | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Dividend yield | 0.00% | 0.00% |
Expected volatility | 70.98% | |
Expected volatility, minimum | 63.50% | |
Expected volatility, maximum | 68.74% | |
Risk-free interest rate | 1.39% | |
Risk free interest rate, minimum | 0.48% | |
Risk free interest rate, maximum | 0.87% | |
Expected life (years) | 5 years | 5 years |
SHARE-BASED COMPENSATION - Su_2
SHARE-BASED COMPENSATION - Summary of Stock Option Activity (Details) - Common Stock | 6 Months Ended | 12 Months Ended |
Jun. 30, 2021USD ($)$ / sharesshares | Dec. 31, 2020USD ($)$ / sharesshares | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Beginning Balance, number of shares | shares | 2,982,000 | |
Options Issued, number of shares | shares | 60,000 | |
Options Exercised, number of shares | shares | (100,000) | |
Options Forfeited or expired, number of shares | shares | (42,000) | |
Ending Balance, number of shares | shares | 2,900,000 | 2,982,000 |
Ending Balance, Options Exercisable | shares | 2,051,667 | |
Beginning Balance, Weighted-Average Exercise Price | $ / shares | $ 1.08 | |
Options Issued, Weighted-Average Exercise Price | $ / shares | 2.90 | |
Options Exercised, Weighted-Average Exercise Price | $ / shares | 0.27 | |
Options Forfeited or expired, Weighted-Average Exercise Price | $ / shares | 1.04 | |
Ending Balance, Weighted-Average Exercise Price | $ / shares | 1.14 | $ 1.08 |
Ending Balance, Options Exercisable, Weighted-Average Exercise Price | $ / shares | $ 0.93 | |
Options Outstanding, Aggregate Intrinsic Value | $ | $ 7,275,000 | $ 2,101,780 |
Options Exercised, Aggregate Intrinsic Value | $ | (285,925) | |
Options Exercisable, Aggregate Intrinsic Value | $ | $ 5,588,442 | |
Weighted-Average Remaining Contractual Term (Years) | 1 year 11 months 26 days | 2 years 4 months 6 days |
Weighted-Average Remaining Contractual Term (Years), Exercisable | 1 year 4 months 6 days |
SHARE-BASED COMPENSATION - Su_3
SHARE-BASED COMPENSATION - Summary of Unvested Stock Option Activity (Details) - Common Stock - USD ($) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2021 | Dec. 31, 2020 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Beginning Balance, number of shares | 845,000 | |
Options Granted, number of shares | 60,000 | |
Options Vested, number of shares | (15,000) | |
Options Forfeited, number of shares | (41,666) | |
Ending Balance, number of shares | 848,334 | 845,000 |
Beginning Balance, Weighted-Average Exercise Price | $ 1.55 | |
Granted, Weighted-Average Exercise Price | 2.90 | |
Vested, Weighted-Average Exercise Price | 1.82 | |
Forfeited, Weighted-Average Exercise Price | 1.04 | |
Ending Balance, Weighted-Average Exercise Price | $ 1.66 | $ 1.55 |
Aggregate Intrinsic Value | $ 1,686,559 | $ 197,608 |
Weighted-Average Remaining Contractual Term (Years) | 3 years 6 months 7 days | 3 years 9 months 29 days |