Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Mar. 28, 2018 | Jun. 30, 2017 | |
Document And Entity Information | |||
Entity Registrant Name | NEWGIOCO GROUP, INC. | ||
Entity Central Index Key | 1,080,319 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2017 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Is Entity a Well-known Seasoned Issuer? | No | ||
Is Entity a Voluntary Filer? | No | ||
Is Entity's Reporting Status Current? | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 10,612,870 | ||
Entity Common Stock, Shares Outstanding | 74,254,746 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,017 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Current Assets | ||
Cash and cash equivalents | $ 6,469,858 | $ 2,230,422 |
Accounts receivable | 116,489 | 16,919 |
Gaming accounts receivable | 1,163,831 | 535,408 |
Prepaid expenses | 87,692 | 91,577 |
Other current assets | 12,543 | 8,705 |
Total Current Assets | 7,850,413 | 2,883,031 |
Noncurrent Assets | ||
Restricted cash | 587,905 | 475,916 |
Property, plant and equipment | 280,111 | 203,660 |
Intangible assets | 3,245,748 | 3,690,978 |
Goodwill | 260,318 | 260,318 |
Investment in non-consolidated entities | 1 | 6,508 |
Total Noncurrent Assets | 4,374,083 | 4,637,380 |
Total Assets | 12,224,496 | 7,520,411 |
Current Liabilities | ||
Line of credit - bank | 177,060 | 726 |
Accounts payable and accrued liabilities | 1,606,560 | 1,006,739 |
Gaming accounts balances | 1,274,856 | 710,562 |
Taxes payable | 1,555,371 | 525,361 |
Advances from stockholders | 547,809 | 557,549 |
Liability in connection with acquisition | 142,245 | 125,375 |
Debentures, net of discount | 1,148,107 | 616,517 |
Derivative liability | 222,915 | 211,262 |
Promissory notes payable - other | 100,749 | 111,285 |
Promissory notes payable- related party | 318,078 | 318,078 |
Bank loan payable - current portion | 121,208 | 102,140 |
Total Current Liabilities | 7,214,958 | 4,285,594 |
Bank loan payable | 362,808 | 426,610 |
Other long term liabilities | 532,680 | 315,579 |
Total Liabilities | 8,110,446 | 5,027,783 |
Stockholders' Deficiency | ||
Common Stock, $0.0001 par value, 80,000,000 shares authorized; 74,143,590 and 74,018,590 shares issued and outstanding at December 31, 2017 and December 31, 2016 respectively | 7,415 | 7,402 |
Additional - paid in capital | 14,254,582 | 14,165,361 |
Accumulated other comprehensive income | (250,327) | (416,631) |
Accumulated deficit | (9,897,620) | (11,263,504) |
Total Stockholders' Equity | 4,114,050 | 2,492,628 |
Total Liabilities and Stockholders' Equity | $ 12,224,496 | $ 7,520,411 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2017 | Dec. 31, 2016 |
STOCKHOLDERS' EQUITY | ||
Capital stock - par value | $ 0.0001 | $ 0.0001 |
Capital stock - authorized | 80,000,000 | 80,000,000 |
Capital stock - issued | 74,143,590 | 74,018,590 |
Capital stock - outstanding | 74,143,590 | 74,018,590 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Loss) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Income Statement [Abstract] | ||
Revenue | $ 22,865,146 | $ 8,897,963 |
Costs and expenses | ||
Selling expenses | 14,672,099 | 5,846,019 |
General and administrative expenses | 5,597,881 | 4,512,812 |
Total Costs and Expenses | 20,269,980 | 10,358,831 |
Income (Loss) from Operations | 2,595,166 | (1,460,868) |
Other Expenses (Income) | ||
Interest expense, net of interest income | 482,367 | 727,328 |
Changes in fair value of derivative liabilities | (257,231) | (426,369) |
Imputed interest on related party advances | 24,365 | 8,807 |
Impairment on investment | 6,855 | |
Total Other Expenses | 256,356 | 309,766 |
Income (Loss) before income taxes | 2,338,810 | (1,770,634) |
Income taxes provision | 972,924 | 198,025 |
Net Income (Loss) | 1,365,886 | (1,968,659) |
Other Comprehensive Income (Loss) | ||
Foreign currency translation adjustment | 166,304 | (540,896) |
Comprehensive Income (Loss) | $ 1,532,190 | $ (2,509,555) |
Net Income (Loss) per common share - basic | $ 0 | $ 0 |
Net Income (Loss) per common share - diluted | $ 0.02 | $ (0.04) |
Weighted average number of common shares outstanding basic | 74,032,631 | 56,313,334 |
Weighted average number of common shares outstanding diluted | 75,344,948 | 56,313,334 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders Equity (Deficiency) - USD ($) | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income | Accumulated Deficit | Total |
Beginning Balance, Shares at Dec. 31, 2015 | 48,247,350 | ||||
Beginning Balance, Amount at Dec. 31, 2015 | $ 2,826 | $ 10,470,888 | $ 124,265 | $ (9,294,845) | $ 1,304,334 |
Shares issued for repayment of debt, shares | 4,452,798 | ||||
Shares issued for repayment of debt | $ 446 | 463,968 | 464,414 | ||
Shares issued for services, shares | 179,982 | ||||
Stock issued for services | $ 18 | 61,282 | 61,300 | ||
Shares issued for warrants exercised, shares | 29,768 | ||||
Shares issued for warrants exercised | $ 2 | 14,436 | 14,438 | ||
Share based compensation, shares | 8,999,100 | ||||
Share based compensation, value | $ 900 | 674,100 | 675,000 | ||
Common stock issued for the purchase of subsidiaries,shares | 12,102,190 | ||||
Common stock issued for the purchase of subsidiaries, amount | $ 1,210 | 2,358,953 | 2,360,163 | ||
Imputed interest on stock advances | 8,503 | 8,503 | |||
Beneficial conversion value of debt | 114,031 | 114,031 | |||
Foreign currency translation adjustment | (540,896) | (540,896) | |||
Net income (loss) | (1,968,659) | (1,968,659) | |||
Ending Balance, Shares at Dec. 31, 2016 | 74,011,188 | ||||
Ending Balance, Amount at Dec. 31, 2016 | $ 7,402 | 14,165,361 | (416,631) | 11,263,540 | 2,492,628 |
Shares issued for services, shares | 125,000 | ||||
Stock issued for services | $ 13 | 23,237 | 23,250 | ||
Share based compensation, value | |||||
Imputed interest on stock advances | 26,753 | 26,753 | |||
Beneficial conversion value of debt | 39,231 | 39,231 | |||
Foreign currency translation adjustment | 166,304 | 166,304 | |||
Net income (loss) | 1,365,884 | 1,365,884 | |||
Ending Balance, Shares at Dec. 31, 2017 | 74,143,590 | ||||
Ending Balance, Amount at Dec. 31, 2017 | $ 7,415 | $ 14,254,582 | $ (250,327) | $ (9,897,620) | $ 4,114,050 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Cash Flows from Operating Activities | ||
Net loss | $ 1,365,886 | $ (1,968,659) |
Adjustments to reconcile net loss to net cash used in operating activities | ||
Depreciation and amortization | 601,266 | 522,199 |
Amortization of deferred costs | 100,329 | 263,046 |
Non-cash interest | 205,216 | 569,558 |
Imputed interest on advances from stockholders | 24,365 | 8,807 |
Changes in fair value of derivative liabilities | (257,231) | (426,369) |
Impairment of assets | 6,855 | |
Stock issued for services | 23,250 | 297,319 |
Stock compensation | 675,000 | |
Bad debt expense | 135,953 | 69,268 |
Changes in operating assets and liabilities | ||
Prepaid expenses | (85,301) | (164,518) |
Accounts payable and accrued liabilities | 482,904 | 168,321 |
Accounts receivable | (91,603) | 348,324 |
Gaming accounts receivable | (654,287) | (444,619) |
Gaming account liabilities | 435,771 | 470,709 |
Taxes payable | 903,187 | 111,497 |
Other current assets | (2,304) | 17,837 |
Other current liabilities | 6,251 | |
Customer Deposits | 138,359 | 234,122 |
Long term liability | 26,059 | 27,787 |
Net Cash Provided by Operating Activities | 3,358,674 | 785,880 |
Cash Flows from Investing Activities | ||
Acquisition of property, plant and equipment | (180,722) | (145,918) |
Cash acquired on acquisition | 803,482 | |
Cash paid for acquisition | (200,313) | |
Increase in restricted cash | (45,142) | (263,223) |
Net Cash Provided by (Used in) Investing Activities | (225,864) | 194,028 |
Cash Flows from Financing Activities | ||
Proceeds of bank credit line, net of repayment | 165,925 | (315,526) |
Proceeds from (repayment of) bank loan | (109,104) | 553,350 |
Proceeds from promissory notes, net of repayment | 75,403 | |
Proceeds from debenture and convertible notes, net of repayment | 591,202 | 614,900 |
Advances from stockholders, net of repayment | (77,398) | 294,292 |
Net Cash Provided by Financing Activities | 570,625 | 1,222,419 |
Effect of change in exchange rate | 536,001 | (129,268) |
Net increase (decrease) in cash | 4,239,436 | 2,073,059 |
Cash - beginning of year | 2,230,422 | 157,363 |
Cash - end of year | 6,469,858 | 2,230,422 |
Supplemental disclosure of cash flow information: | ||
Cash paid during the year for: Interest | 277,271 | 158,586 |
Cash paid during the year for: Income taxes | 60,598 | 23,358 |
Supplemental cash flow disclosure for non-cash activities: | ||
Common shares issued to related parties for repayment of debt | 428,414 | |
Common shares issued for the acquisition of assets | 2,360,163 | |
Common shares issued for cashless exercise of warrants | $ 14,438 |
Nature of Business
Nature of Business | 12 Months Ended |
Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Business | 1. Nature of Business Newgioco Group, Inc. ("Newgioco Group" or "the Company") was incorporated in the state of Delaware on August 26, 1998 as Pender International Inc. On September 30, 2005, the Company changed its name to Empire Global Corp., and on July 20, 2016 changed its name to Newgioco Group, Inc. The Company maintains its principal executive offices headquartered in Toronto, Canada with wholly owned subsidiaries in Italy and Austria. Our subsidiaries include: Multigioco Srl (“Multigioco”) which was acquired on August 15, 2014, Rifa Srl (“Rifa”) which was acquired on January 1, 2015, as well as Ulisse Gmbh (“Ulisse”) and Odissea Betriebsinformatik Beratung Gmbh (“Odissea”) which were both acquired on July 1, 2016. Newgioco Group is now a vertically integrated company which owns and operates an innovative, certified Betting Platform Software (“BPS”) and offering a complete suite of online and offline leisure gaming services including a variety of lottery and casino gaming, as well as sports betting through a distribution network of retail betting locations situated throughout Italy. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies a) Basis of consolidation The consolidated financial statements include the financial statements of the Company and its subsidiaries, all of which are wholly owned. All significant inter-company transactions are eliminated upon consolidation. Certain amounts of prior periods were reclassified to conform with current period presentation. b) Use of estimates The preparation of the financial statements in conformity with Generally Accepted Accounting Principles ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates. These estimates and assumptions include valuing equity securities issued in share based payment arrangements, determining the fair value of assets acquired, allocation of purchase price, impairment of long-lived assets, the collectability of receivables and the value of deferred taxes and related valuation allowances. Certain estimates, including evaluating the collectability of receivables and advances, could be affected by external conditions, including those unique to our industry, and general economic conditions. It is possible that these external factors could have an effect on our estimates that could cause actual results to differ from our estimates. We re-evaluate all of our accounting estimates at least quarterly based on these conditions and record adjustments when necessary. c) Goodwill Goodwill is recognized for the excess of the purchase price over the fair value of tangible and identifiable intangible net assets of businesses acquired. Goodwill is not being amortized, but is reviewed at least annually for impairment. In our evaluation of goodwill impairment, we perform a qualitative assessment to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If the qualitative assessment is not conclusive, we proceed to a two-step process to test goodwill for impairment including comparing the fair value of the reporting unit to its carrying value (including attributable goodwill). Fair value for our reporting units is determined using an income or market approach incorporating market participant considerations and management's assumptions on revenue growth rates, operating margins, discount rates and expected capital expenditures. Fair value determinations may include both internal and third-party valuations. Unless circumstances otherwise dictate, we perform our annual impairment testing in the fourth quarter. We perform the allocation based on our knowledge of the market in which we operate, and our overall knowledge of the leisure betting and gaming industry. d) Loss Contingencies We may be subject to claims, suits, government investigations, and other proceedings involving competition and antitrust, intellectual property, privacy, indirect taxes, labor and employment, commercial disputes, content generated by our users, goods and services offered by advertisers or publishers using our website platforms, and other matters. Certain of these matters include speculative claims for substantial or indeterminate amounts of damages. We record a liability when we believe that it is both probable that a loss has been incurred, and the amount can be reasonably estimated. If we determine that a loss is possible and a range of the loss can be reasonably estimated, we disclose the range of the possible loss in the Notes to the Consolidated Financial Statements. We evaluate, on a monthly basis, developments in our legal matters that could affect the amount of liability that has been previously accrued, and the matters and related ranges of possible losses disclosed, and make adjustments and changes to our disclosures as appropriate. Significant judgment is required to determine both likelihood of there being and the estimated amount of a loss related to such matters. Until the final resolution of such matters, there may be an exposure to loss in excess of the amount recorded, and such amounts could be material. Should any of our estimates and assumptions change or prove to have been incorrect, it could have a material impact on our business, consolidated financial position, results of operations, or cash flows. e) Business Combinations We allocate the fair value of purchase consideration to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. Such valuations require management to make significant estimates and assumptions, especially with respect to intangible assets. Significant estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows from acquired users, acquired technology, and trade names from a market participant perspective, useful lives and discount rates. Management's estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. f) Long-Lived Assets We evaluate the carrying value of our long-lived assets for impairment by comparing the expected undiscounted future cash flows of the assets to the net book value of the assets when events or circumstances indicate that the carrying amount of a long-lived asset may not be recoverable. If the expected undiscounted future cash flows are less than the net book value of the assets, the excess of the net book value over the estimated fair value will be charged to earnings. Fair value is based upon discounted cash flows of the assets at a rate deemed reasonable for the type of asset and prevailing market conditions, appraisals, and, if appropriate, current estimated net sales proceeds from pending offers. g) Derivative Financial Instruments The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its financial instruments, including convertible notes and stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported as charges or credits to income. For option-based simple derivative financial instruments, the Company uses the Black-Scholes option-pricing model to value the derivative instruments at inception and subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. h) Earnings Per Share FASB ASC 260, "Earnings Per Share" provides for calculation of "basic" and "diluted" earnings per share. Basic earnings per share includes no dilution and is computed by dividing net income (loss) available to common shareholders by the weighted average common shares outstanding for the period. Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of an entity similar to fully diluted earnings per share. These potentially dilutive securities were not included in the calculation of loss per share for year ended December 31, 2016 because the effect would have been anti-dilutive. Accordingly, basic and diluted loss per common share is the same for year ended December 31, 2016. i) Currency translation Since the Company's subsidiaries operate in Europe, the subsidiaries functional currency is the Euro. In the consolidated financial statements, revenue and expense accounts are translated at the average rates during the period, and assets and liabilities are translated at period-end rates and equity accounts are translated at historical rate. Translation adjustments arising from the use of different exchange rates from period to period are included as a component of stockholders' equity. Gains and losses from foreign currency transactions are recognized in current operations. j) Revenue Recognition Revenues from sports-betting, casino, cash and skill games; slots, bingo and horse race wagers represent the gross pay-ins (also referred to as Turnover) from customers less gaming taxes and payouts to customers. Revenues are recorded when the game is closed. In addition, the Company receives commissions from the sale of scratch tickets and other lottery games. Commissions are recorded when the ticket for scratch off tickets and lottery tickets are sold. Revenues from Betting Platform Software (“BPS”) include license fees, training, installation, and product support services. Revenue is recognized when the significant risks and rewards of ownership are transferred or when the obligation is fulfilled. License fees are calculated as a percentage of each licensee’s level of activity and are contingent upon the licensee’s usage. The license fees were recognized on an accrual basis as earned. k) Cash and equivalents The Company considers all highly liquid debt instruments with maturities of three months or less at the time acquired to be cash equivalents. Cash equivalents represent short-term investments consisting of investment-grade corporate and government obligations, carried at cost, which approximates market value. The Company had no cash equivalents as of December 31, 2017 and December 31, 2016. The Company primarily places its cash with high-credit quality financial institutions, one of which is located in the United States and is insured by the Federal Deposit Insurance Corporation for up to $250,000 and another which is located in Italy and is insured by the Italian government. l) Gaming accounts receivable Gaming accounts receivable represents gaming deposits made by customers to their online gaming accounts either directly by credit card, bank wire, e-wallet or other accepted method through one of our websites or indirectly by cash collected at the cashier of a betting shop but not yet credited to our bank accounts and subject to normal trade collection terms without discounts. The Company periodically evaluates the collectability of its gaming accounts receivable and considers the need to record or adjust an allowance for doubtful accounts based upon historical collection experience and specific customer information. Actual amounts could vary from the recorded estimates. The Company does not require collateral to support customer receivables. The company recorded bad debt expense of $135,953 and $69,269 for the years ended December 31, 2017 and December 31, 2016, respectively. All balances previously recorded as allowance for doubtful accounts were written off as uncollectible. m) Gaming account balances Gaming account balances represent customer balances, including winnings and deposits, that are held as credits in online gaming accounts and have not as of yet been used or withdrawn by the customers. Customers can request payment from the Company at any time and the payment to customers can be made through bank wire, credit card, or cash disbursement from one of our locations. Online gaming account credit balances are non-interest bearing. n) Fair Value Measurements ASC Topic 820, Fair Value Measurement and Disclosures, defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. This topic also establishes a fair value hierarchy which requires classification based on observable and unobservable inputs when measuring fair value. There are three levels of inputs that may be used to measure fair value: Level 1: Observable inputs such as quoted prices (unadjusted) in active market for identical assets or liabilities. Level 2: Inputs other than quoted prices that are observable, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. Level 3: Unobservable inputs in which little or no market data exists, therefore developed using estimates and assumptions developed by us, which reflect those that a market participant would use. The carrying value of the Company's short-term investments, prepaid expenses, accounts receivables, other current assets, accounts payable and accrued liabilities, gaming account balance, and advances from shareholder approximate fair value because of the short-term maturity of these financial instruments. The derivative liability in connection with the conversion feature of the convertible debt and warrants is classified as a level 3 liability, and is the only financial liability measured at fair value on a recurring basis. The change in the Level 3 financial instrument is as follows: Balance at December 31, 2015 $ 28,375 Issued during the year ended December 31, 2016 609,256 Exercised during the year ended December 31, 2016 — Change in fair value recognized in operations (426,369) Balance at December 31, 2016 211,262 Issued during the year ended December 31, 2017 268,884 Change in fair value recognized in operations (257,231) Balance at December 31, 2017 $ 222,915 o) Property, plant and equipment Property, plant and equipment are stated at acquisition cost less accumulated depreciation and adjustments for impairment losses. Expenditures are capitalized only when they increase the future economic benefits embodied in an item of property, plant and equipment. All other expenditures are recognized as expenses in the statement of income as incurred. Depreciation is charged on a straight-line basis over the estimated remaining useful lives of the individual assets. Amortization commences from the time an asset is put into operation. The range of the estimated useful lives is as follows: Trademarks / names 14 years Office equipment 5 years Office furniture 8 1/3 years Signs and displays 5 years p) Leases Leases are reviewed and classified as capital or operating at their inception in accordance with ASC Topic 840, Accounting for Leases. For leases that contain rent escalations, the Company records rent expense on the straight line method. The difference between rent expense recorded and the amount paid is credited or charged to deferred rent account and is included in accrued expenses and other current liabilities. All lease agreements of the Company as lessees are accounted for as operating leases as of December 31, 2017 and 2016. q) Income Taxes We use the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, "Income Taxes." Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity's financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of the available positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets will not be realized. ASC Topic 740.10.30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740.10.40 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. We have no material uncertain tax positions for any of the reporting periods presented. The Company has elected to include interest and penalties related to uncertain tax positions, if determined, as a component of income tax expense. In Italy, tax years beginning 2012 forward, are open and subject to examination, while in Austria companies are open and subject to inspection for 5 years and 10 years for inspection of serious infractions. The Company is not currently under examination and it has not been notified of a pending examination. r) Comprehensive Income (Loss) Comprehensive income (loss) is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources, including foreign currency translation adjustments and unrealized gains and losses on marketable securities. The Company adopted FASB ASC 220-10-45, "Reporting Comprehensive Income". ASC 220-10-45 establishes standards for reporting and presentation of comprehensive income and its components in a full set of financial statements. Comprehensive income consists of net income and unrealized gains (losses) on available for sale marketable securities; foreign currency translation adjustments and changes in market value of future contracts that qualify as a hedge; and negative equity adjustments. s) Investment in Non-consolidated Entities Investments in non-consolidated entities are accounted for using the equity method or cost basis depending upon the level of ownership and/or the Company's ability to exercise significant influence over the operating and financial policies of the investee. When the equity method is used, investments are recorded at original cost and adjusted periodically to recognize the Company's proportionate share of the investees' net income or losses after the date of investment. When net losses from an investment are accounted for under the equity method exceed its carrying amount, the investment balance is reduced to zero and additional losses are not provided for. The Company resumes accounting for the investment under the equity method if the entity subsequently reports net income and the Company's share of that net income exceeds the share of net losses not recognized during the period the equity method was suspended. Investments are written down only when there is clear evidence that a decline in value that is other than temporary has occurred. The Company's investment in 2336414 Ontario Inc. and Intesa Sanpaolo Bank were accounted for using the cost method of accounting. The Company monitors its investment for impairment at least annually and make appropriate reductions in the carrying value if it determines that an impairment charge is required based on qualitative and quantitative information. t) Recent Accounting Pronouncements In January 2016, the FASB issued ASU 2016-01, Financial Instruments - Overall (Subtopic 740): Recognition and Measurement of Financial Assets and Financial Liabilities. The provisions of this update are effective for annual and interim reporting periods beginning after December 15, 2017. ASU 2016-01 enhances the reporting model for financial instruments to provide users of financial statements with more decision-useful information. The Company is currently assessing the impact of ASU 2016. In February 2016, the FASB issued ASU 2016-02, Leases. This update requires organizations that lease assets to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. The new guidance will also require additional disclosure about the amount, timing and uncertainty of cash flows arising from leases. The provisions of this update are effective for annual and interim periods beginning after December 15, 2018. The Company is currently assessing the impact that the adoption of ASU 2016-02 will have on the consolidated balance sheet and the consolidated results of operations. In May 2017, the FASB issued ASU 2017-09, Compensation-Stock Compensation (Topic 718), Scope of Modification Accounting. The amendments in this Update provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. The amendments in this Update are effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. In July 2017, the FASB issued ASU 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), Derivatives and Hedging (Topic 815). The amendments in Part I of this Update change the classification analysis of certain equity-linked financial instruments (or embedded features) with down round features. When determining whether certain financial instruments should be classified as liabilities or equity instruments, a down round feature no longer precludes equity classification when assessing whether the instrument is indexed to an entity’s own stock. The amendments also clarify existing disclosure requirements for equity-classified instruments. The amendments in Part I of this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company is currently assessing the impact of ASU 2016. There are no other recently issued accounting standards that are expected to have a material effect on our financial condition, results of operations or cash flows. |
Acquisition of offline and land
Acquisition of offline and land-based gaming assets | 12 Months Ended |
Dec. 31, 2017 | |
Business Combinations [Abstract] | |
Acquisition of offline and land-based gaming assets | 3. Acquisition of offline and land-based gaming assets Odissea Betriebsinformatik Beratung Gmbh (“Odissea”) Acquisition On June 30, 2016, the Company entered into a Share Exchange Agreement (“Odissea SPA”), which closed on July 1, 2016, with the shareholders of Odissea organized under the laws of Austria. Odissea operates a proprietary Betting Operating System. Pursuant to the agreement, the Company issued 8,772,200 shares of common stock in consideration for 100% of the issued and outstanding shares of Odissea. As a result of this acquisition, the sellers now hold approximately 11.83% of the issued and outstanding shares of common stock of the Company. Pursuant to the Odissea SPA, upon completion of certification of the Betting Operating System by the ADM, which was obtained on June 30, 2017, the sellers may exercise the option to resell to the Company 50% of the shares of common stock issued in consideration for the purchase price (or 4,386,100 shares) at a fixed price of U.S. $0.50 per share (the “Odissea Put Option”). As of the date of this report, the Odissea Put Option has been extended indefinitely by mutual consent. The purchase price was allocated to the fair market value of tangible and intangible assets acquired and liabilities assumed. Intangible assets will be amortized over their remaining useful life as follows: Remaining Useful Life Current assets $ 210,505 Property, Plant and Equipment 30,638 Identifiable intangible assets: Betting Operating System 1,685,371 15 years Less: liabilities assumed (215,935 ) Total identifiable assets less liabilities assumed 1,710,579 Total purchase price 1,710,579 Excess purchase price $ — Ulisse Gmbh (“Ulisse”) Acquisition On June 30, 2016, the Company entered into a Share Exchange Agreement (“Ulisse SPA”), which closed on July 1, 2016, with the shareholders of Ulisse organized under the laws of Austria. Ulisse operates an existing network of approximately 170 land-based Agency locations. Pursuant to the agreement, the Company issued 3,331,200 shares of common stock in consideration for 100% of the issued and outstanding shares of Ulisse. As a result of this acquisition, the sellers now hold approximately 4.49% of the issued and outstanding shares of common stock of the Company. Pursuant to the Ulisse SPA, subject to a purchase price adjustment to equal two times earnings before income taxes calculated on a pro rata basis from the Closing Date upon completion of the ADM license tender auction and the Rights obtained by the Company are assigned to the Ulisse locations the sellers may exercise the option to resell to the Company 50% of the shares of common stock issued in consideration for the purchase price (or 1,665,600) at a fixed price of U.S. $0.50 per share (the “Ulisse Put Option”). As of the date of this report, the Ulisse Put Option has been extended indefinitely by mutual consent. The purchase price was allocated to the fair market value of tangible and intangible assets acquired and liabilities assumed. Intangible assets will be amortized over their remaining useful life as follows: Remaining Useful Life Current assets $ 984,647 Property, Plant and Equipment 2,917 Identifiable intangible assets: Customer relationships 83,996 10 years Less: liabilities assumed (421,976 ) Total identifiable assets less liabilities assumed 649,584 Total purchase price 649,584 Excess purchase price $ — The Company has estimated the fair value of assets acquired and liabilities assumed in connection with acquisitions and is currently undergoing a formal valuation and upon completion of the third-party valuation will adjust these estimates accordingly. |
Intangible Assets
Intangible Assets | 12 Months Ended |
Dec. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | 4. Intangible Assets Intangible assets consist of the following: December 31, 2017 December 31, 2016 Life (years) Betting Platform Software $ 1,685,371 $ 1,685,371 15 Licenses 967,328 953,024 1.5 - 7 Location contracts 1,000,000 1,000,000 5 - 7 Customer relationships 870,927 870,927 10 - 15 Trademarks/names 110,000 110,000 14 Websites 40,000 40,000 5 4,673,626 4,659,322 Accumulated amortization (1,427,878) (968,344) Balance $3,245,748 $ 3,690,978 The Company evaluates intangible assets for impairment on an annual basis during the last month of each year and at an interim date if indications of impairment exist. Intangible asset impairment is determined by comparing the fair value of the asset to its carrying amount with an impairment being recognized only when the fair value is less than carrying value. The amortization expense was $445,233 and $458,087 for the years ended December 31, 2017 and December 31, 2016, respectively. Licenses obtained by the Company in the acquisitions of Multigioco and Rifa include a GAD online license as well as a Bersani and Monti land-based licenses issued by the Italian gaming regulator to Multigioco and Rifa, respectively. |
Restricted Cash
Restricted Cash | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Restricted Cash | 5. Restricted Cash Restricted Cash is cash held in a segregated bank account at Intesa Sanpaolo Bank S.p.A.(“Intesa Sanpaolo Bank”) as collateral against our operating line of credit with Intesa Sanpaolo Bank as well as Wirecard Bank as a security deposit for Ulisse betting operations |
Long Term Debt
Long Term Debt | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Long Term Debt | 6. Long Term Debt Long term debt represents the Italian "Trattamento di Fine Rapporto" (TFR) which is a severance amount set up by Italian companies to be paid to employees on termination or retirement as well as shop deposits that are held by Ulisse. Severance liability related to employees in Italy was $131,904 and $91,865 at December 31, 2017 and 2016, respectively. Customer deposit balance related to Ulisse operations was $400,775 and $223,714 at December 31, 2017 and 2016, respectively. |
Line of Credit-Bank
Line of Credit-Bank | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Line of Credit-Bank | 7. Line of Credit – Bank The Company currently maintains an operating line of credit for a maximum amount of EUR 300,000 (approximately U.S. $338,880) for Multigioco and EUR 50,000 (approximately U.S. $56,480) for Rifa from Intesa Sanpaolo Bank in Italy. The line of credit is secured by restricted cash on deposit at Intesa Sanpaolo Bank and guaranteed by certain shareholders of the Company and bears a fixed rate of interest at 5% per annum on the outstanding balance with no minimum payment, maturity or due date. |
Liability in connection with ac
Liability in connection with acquisition | 12 Months Ended |
Dec. 31, 2017 | |
Payables and Accruals [Abstract] | |
Liability in connection with acquisition | 8. Liability in Connection with Acquisition Liability in connection with acquisition represent non-interest bearing amount due by the Company’s subsidiaries toward the purchase price as per a purchase agreement between Newgioco Srl and the Company’s subsidiaries. The Company’s shareholder and VP of Regulatory Affairs, Beniamino Gianfelici, owns 50% shares of Newgioco Srl. |
Related party transactions and
Related party transactions and balances | 12 Months Ended |
Dec. 31, 2017 | |
Related Party Transactions [Abstract] | |
Related party transactions and balances | 9. Related Party Transactions and Balances Advances from stockholders represent non-interest bearing loans that are due on demand. Interest was imputed at 5% per annum. Balances of Advances from stockholders are as follows: December 31, 2017 December 31, 2016 Gold Street Capital Corp. $ 41,143 $ 1 Doriana Gianfelici 58,792 51,819 Other stockholders 447,874 505,729 Total advances from stockholders $ 547,809 $ 557,549 During the year ended December 31, 2017, Gold Street, the major stockholder of Newgioco Group, advanced $41,142 to the Company, net of repayment of $185,703. Also, the Company paid management fees to Gold Street Capital Corp. of $144,000 for the year ended December 31, 2017. Changes in advances from Doriana Gianfelici were due to the fluctuation in foreign exchange rates. During the year ended December 31, 2017, the Company paid management fees of $20,333 to Luca Pasquini. Advances from other stockholders comprise of the dividend accrued to former stockholders of Ulisse for the six month period prior to the acquisition of Ulisse on July 1, 2016, net of the advance of EUR 104,730 (approximately U.S. $118,303) to Luca Pasquini in 2017. The amounts due to the stockholders at December 31, 2017 are non-interest bearing and due on demand. Related-Party Debt Promissory notes payable to related parties of $318,077 represents amounts due to Braydon Capital Corp., a company owned by Claudio Ciavarella, the brother of our CEO. The amount due to Braydon Capital Corp. is comprised of the following: - a Promissory Note for $186,233 issued on December 15, 2015 that bears interest at a rate of 1% per month due in full on the Maturity Date of December 15, 2016. The Company and Braydon Capital have agreed to extend the Maturity Date indefinitely by mutual consent. - a Promissory Note for $90,750 issued on January 13, 2016 that bears interest at a rate of 1% per month due in full on the maturity date of January 13, 2017 that was subsequently amended to add $41,095 in additional funds received from Braydon Capital Corp. for a total of $131,845. The Company and Braydon Capital have agreed to extend the Maturity Date indefinitely by mutual consent. |
Investment in Non-consolidated
Investment in Non-consolidated Entities | 12 Months Ended |
Dec. 31, 2017 | |
Investments, All Other Investments [Abstract] | |
Investment in Non-consolidated Entities | 10. Investment in Non-consolidated Entities Investments in non-consolidated entities consists of the following: December 31, December 31, 2017 2016 2336414 Ontario Inc $ 875,459 $ 875,459 Intesa Sanpaolo Bank 1 6,729 875,459 882,188 Less impairment (875,459 ) (875,459 ) Total investment in non-consolidated entities $ 1 $ 6,729 On December 9, 2014, the Company invested CDN $1,000,000 (approximately U.S. $875,459) in a private placement of common shares of 2336414 Ontario Inc. ("2336414") representing 666,664 common shares or 2.3% of 2336414. 2336414 is an Ontario corporation and the parent company of Paymobile Inc. a carrier-class, PCI compliant transaction platform, delivering Visa prepaid card programs for social disbursements, corporate payroll replacement and cheque replacement. The Company subscribed for 666,664 Units (CDN $1,000,000) (approximately U.S. $875,458), with each Unit being comprised of one (1) common share in the capital of 2336414 and one-quarter (1/4) of one common share purchase warrant, which will require four quarter warrants to acquire one additional common share in the capital of 2336414, for CDN $2.25 within 18 months after the closing of the Offering, or such longer period of time as 2336414 may determine. The Company paid CDN $1,000,000 (approximately $875,459 USD) in cash, and obtained a promissory note from 2336414's subsidiary, Paymobile Inc. Since Paymobile has not produced any meaningful income, the Company has determined that it may not be able to realize its investment in 2336414 and has therefore decided to set up a 100% impairment on the investment made as of December 31, 2014. If the investment in 2336414 is unsuccessful, the Company may lose some or all of its investment in 2336414 Ontario Inc. On December 31, 2017 and 2016, the Company held $1 and $6,729 in shares of Intesa Sanpaolo Bank S.p.A. Intesa Sanpaolo Bank is a private mutual enterprise organized under Italian banking laws. The Company recorded impairment of $6,855 and $0 on the investment during the year ended December 31, 2017 and 2016, respectively. We carry the value of the shares of Intesa Sanpaolo Bank S.p.A and 2336414 Ontario Inc. at cost less impairment. The Company accounts for investment in non-consolidated entities using the cost method of accounting if the Company has an ownership interest below 20% and does not have the ability to exercise significant influence over an investee. The shares of Intesa Sanpaolo Bank and 2336414 Ontario Inc. do not have an active market. |
Stockholders Equity
Stockholders Equity | 12 Months Ended |
Dec. 31, 2017 | |
Equity [Abstract] | |
Stockholders Equity | 11. Stockholders’ Equity On November 28, 2017, the Company effected a two-for-one forward stock split of its common stock in the form of a 100% stock dividend to shareholders of record as of December 20, 2017. All share and earnings per share information have been retroactively adjusted to reflect the stock split. On June 15, 2017, the Company issued a total of 160,000 Restricted Stock Units to the independent Directors of the company, 40,000 units each. These Restricted stock units are vested at 25% per year after each completed year served on the Board of Directors. On October 3, 2017, the Company issued 50,000 shares of common stock to World Wide Financial Marketing for the investor and public relations services equal to $12,750. These shares were valued at market price on issuance date of $0.26 per share and recorded as an expense. On December 22, 2017, the Company issued 75,000 shares of common stock to World Wide Financial Marketing for the investor and public relations services equal to $10,500. These shares were valued at market price on issuance date of $0.14 per share and recorded as an expense. On March 8, 2016, the Company entered into a non-exclusive advisory agreement with Newbridge Securities Corp. (“Newbridge”). As consideration for these services, the Company agreed to pay Newbridge advisory fees of $15,000 and issue 100,000 restricted shares of common stock upon signing the agreement and 100,000 restricted shares of common stock upon the presentation of a Term Sheet. The Company paid a fee of $15,000, and on March 8, 2016 issued 100,000 shares of common stock which were valued at the market price of $0.475 per share and amortized over the service period of two months. On March 14, 2016, the Company entered into a Mutual Release Agreement with Typenex Co-Investment, LLC to extinguish future “true-up” provisions contained within the Convertible Note dated June 18, 2015 and the Transfer Agent Reserve shares related to the Note. Pursuant to the agreement, the Company issued 29,770 shares of common stock to Typenex Co-Investment, LLC. Those shares were valued at market price on issuance date of $0.48 per share and recorded as an expense. On June 6, 2016, the Company issued an aggregate of 80,000 shares of the Company’s common stock to two consultants for services provided to the Company. On November 15, 2016, the Company issued an aggregate of 9,000,000 shares of common stock as a performance based restricted stock award contingent on the closing of the July 1, 2016 acquisitions. The Company granted 3,000,000 shares each to Beniamino Gianfelici, a director of the Company, Alessandro Marcelli, a director of the Company, and Gold Street Capital, a related party. The restricted stock award was granted in lieu of a formalized equity incentive plan. Also on November 15, 2016, the Company issued an aggregate of 4,050,200 shares of common stock dated at 100% of the market price of $0.08 per share as follows: - 3,570,200 shares issued to Gold Street Capital Corp. for the payment of debt equal to $267,756; - 400,000 issued to Julia Lesnykh for the payment of debt equal to $30,000; - 80,000 issued to Andrei Sheptikita for the payment of debt equal to $6,000 On December 31, 2016, 112,000 shares of the Company's common stock were issued to Gold Street Capital Corp. at 100% of the market price of $0.21 per share for the payment of debt equal to $22,433. See Note 9 for additional common share transactions in repayment of debt. |
Debentures and Convertible Note
Debentures and Convertible Notes | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
Debentures and Convertible Notes | 12. Debentures and Convertible Notes Debentures and convertible notes outstanding include the following: December 31, 2017 December 31, 2016 February 29, 2016 Convertible Note, net of discount of $0 and $85,898 $ 600,000 $ 514,102 April 4, 2016 Convertible Note, net of discount of $0 and $34,187 150,000 115,812 January 24, 2017 Debenture, net of discount of $7,446 136,032 — March 27, 2017 Convertible Debenture, net of discount of $50,994 68,571 — June 5, 2017 Convertible Debenture, net of discount of $72,541 47,024 — June 9, 2017 Convertible Debenture, net of discount of $36,940 22,842 — November 6, 2017 - December 11, 2017 Convertible Debentures, net of discounts of $55,063 148,198 — 1,172,667 629,914 Less: unamortized debt issuance costs (24,560) (13,397) $ 1,148,107 $ 616,517 February 29, 2016 and April 4, 2016 Convertible Notes On February 29, 2016, the Company closed a Securities Purchase Agreement with an unaffiliated private investor, to raise up to $750,000. The Company received gross proceeds from the initial private placement of $600,000. On April 4, 2016, the Company received the balance of gross proceeds of $150,000, less legal expenses of $15,000. Also, the company paid $75,000 in commissions for these notes. As part of the purchase agreement, the Company also issued a warrant to purchase 326,088 shares of Company’s common stock at $0.575 per share. These notes bear an interest rate of 12% per annum and were due in one year. The company continued to accrue interest at 22% past the due date. The notes were guaranteed by Confidi Union Impresa, an unrelated party. The Company repaid a total of $125,000 in the year ended December 31, 2017. These payments were applied to the interest accrued at the date of the payments with the remainder applied towards the accrued penalty. Accounts payable and accrued liabilities included a penalty and accrued interest on this Note of $242,207 and $56,441 at December 31, 2017 and December 31, 2016, respectively. See also Note 19 Subsequent Events. January 24, 2017 Debenture On January 24, 2017, the Company received gross proceeds from the initial private placement of CDN $180,000 (approximately U.S. $138,816) with a group of accredited investors. The Company incurred a total of CDN $14,400 (approximately U.S. $11,105) in finder’s fees to facilitate this transaction for net proceeds of CDN $165,600 (approximately U.S. $127,711). The debenture bears an interest rate of 10% per annum and is due in two years. As part of the purchase agreement, the Company also issued a warrant to purchase 36,000 of the Company’s common stock at $0.50 per share up to January 24, 2019. March 27, 2017 Convertible Debenture On March 27, 2017, the Company received gross proceeds from the initial private placement of CDN $150,000 (approximately U.S. $115,680) with a group of accredited investors. The Company incurred a total of CDN $5,000 (approximately U.S. $3,856) in finder’s fees to facilitate this transaction for net proceeds of CDN $145,000 (approximately U.S. $111,824). The convertible debenture bears an interest rate of 10% per annum and is due in two years. The debenture is convertible to shares of common stock of the Company at a price of $0.75 per share at any time up to March 27, 2019. As part of the purchase agreement, the Company also issued a warrant to purchase 30,000 of the Company’s common stock at $0.50 per share up to March 27, 2019. June 2017 Convertible Debentures On June 5, 2017, the Company received gross proceeds from the initial private placement of CDN $150,000 (approximately U.S. $115,680) with a group of accredited investors. The Company incurred a total of CDN $7,500 (approximately U.S. $5,784) in finder’s fees to facilitate this transaction for net proceeds of CDN $142,500 (approximately U.S. $109,896). The Debenture is convertible to shares of common stock of the Company at a price of $0.75 per share at any time up to June 5, 2019. As part of the purchase agreement, the Company also issued a warrant to purchase 30,000 of the Company’s common stock at $0.50 from November 5, 2017 to June 5, 2019. On June 9, 2017, The Company received additional gross proceeds of CDN $75,000 (approximately U.S. $57,840) in connection with the June 5, 2017 Securities Purchase Agreement. The Company incurred a total of CDN $3,750 (approximately U.S. $2,892) in finder’s fees to facilitate this transaction for net proceeds of CDN $71,250 (approximately U.S. $54,948). The debenture is convertible to shares of common stock of the Company at a price of $0.75 per share at any time up to June 5, 2019. As part of the purchase agreement, the Company also issued a warrant to purchase 15,000 of the Company’s common stock at $0.50 from November 9, 2017 to June 9, 2019. November and December 2017 Convertible Debentures Between November and December 2017 the Company has received additional gross proceeds of CDN $255,000 (approximately U.S. $196,656) in multiple tranches in connection with the June 5, 2017 Securities purchase Agreement. The Company incurred a total of CDN $12,750 (approximately U.S. $9,833) in finder’s fees to facilitate this transaction for net proceeds of CDN $242,250 (approximately U.S. $186,823). The debentures are convertible to shares of common stock of the Company at a price of $0.75 per share for a period of two years from the issue date. As part of the purchase agreement, the Company also issued a number of warrants to purchase an aggregate of 51,000 shares of the Company’s common stock at $0.50 which can be exercised from April and May 2018 until a day that is two years from the issue date. The issuance dates for these convertible debentures with corresponding gross proceeds in Canadian dollars are as follows: November 6, 2017 $ 90,000 November 14, 2017 50,000 November 15, 2017 20,000 November 22, 2017 30,000 December 5, 2017 40,000 December 11, 2017 25,000 $ 255,000 The commissions and finders' fees related to the notes and debentures were amortized over the life of the notes. The Company has determined that the conversion feature embedded in the convertible notes and debentures constitutes a derivative and has been bifurcated from the note and recorded as a derivative liability, with a corresponding discount recorded to the associated debt, on the accompanying balance sheet, and revalued to fair market value at each reporting period. See Note 16. Warrants issued in relation to the debentures and promissory notes are discussed in Note 15. |
Promissory Notes Payable
Promissory Notes Payable | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Promissory Notes Payable | 13. Promissory Notes Payable - Other On December 9, 2014, the Company obtained a promissory note for CDN $500,000 (approximately U.S. $436,796) from Paymobile Inc., a subsidiary of 2336414 Ontario Inc. (“2336414”) of which the Company owns 666,664 common shares, that bears interest at a rate of 1% per month on the outstanding balance. As of the date of this filing, the final payment of CDN $150,000 (approximately U.S. $115,680) was due on February 28, 2015 plus accrued interest. The Company and 2336414 have agreed to extend the due date indefinitely by mutual consent. Interest expense of $13,844 and $13,590 was recorded for the year ended December 31, 2017 and 2016, respectively. |
Bank Loan Payable
Bank Loan Payable | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Bank Loan Payable | 14. Bank Loan Payable On September 30, 2016, the Company obtained a loan of EUR 500,000 (approximately U.S. $564,800) from Intesa Sanpaolo Bank in Italy, which is secured by the Company's assets. The loan is amortized over 57 months ending September 30, 2021 with repayment started on January 31, 2017 in monthly installments of EUR 9,760 (approximately U.S. $11,025) with an underlying interest rate of 4.5 points above Euro Inter Bank Offered Rate ("EURIBOR"), subject to quarterly review. The company repaid EUR 96,586 (approximately U.S. $109,104) during the year ended December 31, 2017. |
Warrants
Warrants | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
Warrants | 15. Warrants On February 29, 2016, as per a Securities Purchase Agreement, the Company issued a warrant to purchase 260,870 shares of the Company’s common stock at $0.575 per share which may be exercised by the warrant holder between August 28, 2016 and February 28, 2019 (See Note 12). The warrant was issued in connection with the February 29, 2016 convertible Promissory Note. The fair value of the warrants of $106,583 was calculated using the Black-Scholes model on the date of issuance and was recorded as a debt discount, which has been amortized as interest expense over the life of the debt. On April 4, 2016, the Company issued a warrant to purchase 125,218 shares of the Company’s common stock at $0.575 per share which may be exercised by the warrant holder until April 4, 2019 (See Note 12). The warrant was issued in connection with the April 4, 2016 Convertible Promissory Note. The fair value of the warrants of $27,901 was calculated using the Black-Scholes model on the date of issuance and was recorded as a debt discount, which has been amortized as interest expense over the life of the debt. On April 4, 2016, the Company issued a warrant to purchase 124,440 shares of the Company’s common stock at $0.575 per share which may be exercised by the warrant holder until April 4, 2019. The warrant was issued to the placement agent in relation to securing the February 29, 2016 and April 4, 2016 convertible Promissory Notes (See Note 12). The fair value of the warrants of $53,236 was calculated using the Black-Scholes model on the date of issuance, and was recorded as a debt issuance cost, which has been amortized over the life of the debt. On January 24, 2017, the Company issued a warrant to purchase 36,000 of the Company’s common stock at $0.50 per share which may be exercised by the warrant holder from June 24, 2017 until January 24, 2019. The warrant was issued in connection with the January 24, 2017 Debenture (See Note 12). The fair value of the warrants of $13,973 was calculated using the Black-Scholes model on the date of issuance and was recorded as a debt issuance cost, which has been amortized as interest expense over the life of the debt. On March 27, 2017, the Company issued a warrant to purchase 30,000 of the Company’s common stock at $0.50 per share which may be exercised by the warrant holder from August 27, 2017 until March 27, 2019. The warrant was issued in connection with the March 27, 2017 Convertible Debenture (See Note 12). The fair value of the warrant of $11,923 was calculated using the Black-Scholes model on the date of issuance and was recorded as debt discount, which has been amortized as interest expense over the life of the debt. On June 5, 2017, the Company issued a warrant to purchase 30,000 of the Company’s common stock at $0.50 per share which may be exercised by the holder from November 5, 2017 to June 5, 2019. The warrant was issued in connection with the June 5, 2017 Convertible Debenture (see Note 12). The fair value of the warrant of $14,826 was calculated using the Black-Scholes model on the date of issuance and was recorded as debt discount, which has been amortized as interest expense over the life of the debt. On June 9, 2017, the Company issued a warrant to purchase 15,000 of the Company’s common stock at $0.50 per share which may be exercised from November 9, 2017 to June 9, 2019. The warrant was issued in connection with the June 9, 2017 Convertible Debenture (see Note 12). The fair value of the warrant of $7,489 was calculated using the Black-Scholes model on the date of issuance and was recorded as debt discount, which has been amortized as interest expense over the life of the debt. Between November and December 2017, the Company issued a number of warrants to purchase an aggregate of 51,000 shares of the Company’s common stock at $0.50 per share which may be exercised from April and May 2018 until a date that is two years from the issue date. The warrants was issued in connection with the November and December Convertible Debentures (see Note 12). The fair value of the warrants of $8,136 was calculated using the Black-Scholes model on the date of issuance and was recorded as debt discount, which has been amortized as interest expense over the life of the debt. The fair value of the warrants on the date of issuance as calculated using the Black-Scholes model was: Warrant Fair Value At issuance February 29, 2016 $ 106,583 April 4, 2016 $ 53,236 April 4, 2016 $ 27,901 January 24, 2017 $ 13,973 March 27, 2017 $ 11,923 June 5, 2017 $ 14,826 June 9, 2017 $ 7,489 November 6, 2017 $ 3,131 November 14, 2017 $ 1,640 November 15, 2017 $ 676 November 22, 2017 $ 948 December 5, 2017 $ 994 December 11, 2017 $ 747 The following assumptions were used to calculate the fair value at issuance: Warrant Date Exercise Price/sh Common Stock Price/sh Volatility Term Dividend Yield Interest Rate Forfeiture Risk February 29, 2016 $ 0.575 $ 0.45 200% 3 yrs 0% 0.91% 0% April 4, 2016 $ 0.575 $ 0.475 195% 3 yrs 0% 0.91% 0% April 4, 2016 $ 0.575 $ 0.475 195% 3 yrs 0% 0.91% 0% January 24, 2017 $ 0.50 $ 0.39 404% 2 yrs 0% 0.91% 0% March 27, 2017 $ 0.50 $ 0.40 390% 2 yrs 0% 0.91% 0% June 5, 2017 $ 0.50 $ 0.495 445% 2 yrs 0% 0.91% 0% June 9, 2017 $ 0.50 $ 0.495 445% 2 yrs 0% 0.91% 0% November 6, 2017 $ 0.50 $ 0.35 410% 2 yrs 0% 0.91% 0% November 14, 2017 $ 0.50 $ 0.33 413% 2 yrs 0% 0.91% 0% November 15, 2017 $ 0.50 $ 0.34 409% 2 yrs 0% 0.91% 0% November 22, 2017 $ 0.50 $ 0.318 414% 2 yrs 0% 0.91% 0% December 5, 2017 $ 0.50 $ 0.25 422% 2 yrs 0% 0.91% 0% December 11, 2017 $ 0.50 $ 0.30 433% 2 yrs 0% 0.91% 0% A summary of warrant transactions during the year ended December 31, 2017 is as follows: Warrant Shares Weighted Average Exercise Price Per Common Share Weighted Average Life Outstanding at December 31, 2016 467,928 $ 0.58 2.13 Issued 162,000 $ 0.50 2.00 Exercised — — — Expired (17,400) — — Outstanding at December 31, 2017 612,528 $ 0.54 1.37 Exercisable at December 31, 2017 561,528 $ 0.56 1.21 The following assumptions were used to calculate the fair value of warrants at December 31, 2017: Exercises price $0.50 - $0.575 Common stock price per share $0.26 Volatility 459% Weighted average life 1.37 years Dividend yield 0% Interest rate 0.91% Forfeiture risk 0% |
Derivative Liability and Fair V
Derivative Liability and Fair Value | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
Derivative Liability and Fair Value | 16. Derivative Liability and Fair Value The Company has evaluated the application of ASC 815 Derivatives and Hedging and ASC 815-40-25 to the warrants to purchase common stock issued with the convertible notes and debentures. Based on the guidance in ASC 815 and ASC 815-40-25, the Company concluded these instruments were required to be accounted for as derivatives due to the down round protection feature on the conversion price and the exercise price. The Company records the fair value of these derivatives on its balance sheet at fair value with changes in the values of these derivatives reflected in the statements of operations as “Gain (loss) on derivative liabilities.” These derivative instruments are not designated as hedging instruments under ASC 815 and are disclosed on the balance sheet under Derivative Liabilities. The Convertible Debenture issued March 27, 2017 and accrued interest are convertible into common shares at a fixed price of $0.75 prior to March 27, 2019. The gross proceeds from the sale of the debenture were recorded net of $70,617 related to the conversion feature and $11,923 was allocated to the warrants issued. The Convertible Debenture issued June 5, 2017, and accrued interest are convertible into common shares at a fixed price of $0.75 prior to June 5, 2019. The gross proceeds from the sale of the debenture were recorded net of $86,815 related to the conversion feature and $14,826 was allocated to the warrants issued. The Convertible Debenture issued June 9, 2017, and accrued interest are convertible into common shares at a fixed price of $0.75 prior to June 9, 2019. The gross proceeds from the sale of the debenture were recorded net of $43,874 related to the conversion feature and $7,489 was allocated to the warrants issued. The Convertible Debentures issued in November and December 2017, and accrued interest are convertible into common shares at a fixed price of $0.75 for a period of two years from the issue date. The gross proceeds from the sale of the debentures were recorded net of $50,461 related to the conversion feature and $8,136 was allocated to the warrants issued. The Company accounted for the convertible debentures in accordance with ASC 815 “Derivatives and Hedging.” Accordingly, the embedded conversion option is a derivative liability and is marked to market through earnings at the end of each reporting period. |
Revenues
Revenues | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Revenues | 17. Revenues The following table sets forth the breakdown of net gaming revenues: Year Ended Year Ended December 31, December 31, 2017 2016 Turnover Turnover web-based $ 106,785,302 $ 103,033,957 Turnover land-based 111,734,469 18,917,917 Total Turnover $ 218,519,771 $ 121,951,874 Winnings/Payouts Winnings web-based 100,860,085 96,728,850 Winnings land-based 94,201,786 16,487,782 Total Winnings/payouts 195,061,871 113,216,632 Gross Gaming Revenues $ 23,457,900 $ 8,735,242 Less: ADM Gaming Taxes 1,761,935 1,592,926 Net Gaming Revenues $ 21,695,965 $ 7,142,316 Add: Commission Revenues 281,285 1,105,389 Add: Service Revenues 887,896 650,258 Total Revenues $ 22,865,146 $ 8,897,963 Turnover represents the total bets processed for the period. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 18. Income Taxes The Company is incorporated in the United States of America and is subject to United States federal taxation. No provisions for income taxes have been made as the Company had no U.S. taxable income for the years ended December 31, 2017 and December 31, 2016. The Company's Italian subsidiaries are governed by the income tax laws of Italy. The corporate tax rate in Italy is 28.82% (IRES at 24% plus IRAP ordinary at 4.82%) on income reported in the statutory financial statements after appropriate tax adjustments. The Company's Austrian subsidiaries are governed by the income tax laws of Austria. The corporate tax rate in Austria is 25% on income reported in the statutory financial statements after appropriate tax adjustments. The Company's Canadian subsidiary is governed by the income tax laws of Canada and the Province of Ontario. The combined Federal and Provincial corporate tax rate in Canada is 26.5% on income reported in the statutory financial statements after appropriate tax adjustments. The reconciliation of income tax expense at the U.S. statutory rate of 35% to the Company’s effective tax rate is as follows: December 31, 2017 December 31, 2016 U.S. Statutory rate $818,584 $ (623,595) Tax rate difference between Italy, Austria, Canada and U.S. (428,353) (49,618) Change in Valuation Allowance 558,187 847,449 Permanent difference 24,506 23,789 Effective tax rate $ 972,924 $ 198,025 The Company has accumulated a net operating loss carry forward ("NOL") of approximately $12 million as of December 31, 2017 in the U.S. This NOL may be offset against future taxable income through the year 2037. The use of these losses to reduce future income taxes will depend on the generation of sufficient taxable income prior to the expiration of the NOL. The Company periodically evaluates whether it is more likely than not that it will generate sufficient taxable income to realize the deferred income tax asset. At the present time, management cannot presently determine when the Company will be able to generate sufficient taxable income to realize the deferred tax asset; accordingly, a 100% valuation allowance has been established to offset the asset. Utilization of NOLs are subject to limitation due to any ownership change (as defined under Section 382 of the Internal Revenue Code of 1986) which resulted in a change in business direction. Unused limitations may be carried over to future years until the NOLs expire. Utilization of NOLs may also be limited in any one year by alternative minimum tax rules. Under Italian tax law, the operating loss carryforwards available for offset against future profits can be used indefinitely. Operating loss carryforwards are only available for offset against national income tax, up to the limit of 80% of taxable annual income. This restriction does not apply to the operating loss incurred in the first three years of the Company's activity, which are therefore available for 100% offsetting. Under Austrian tax law, the operating loss carryforwards available for offset against future profits can be used indefinitely. Operating loss carryforwards are only available for offset against national income tax, up to the limit of 75% of taxable annual income. Under Canadian tax law, the operating loss carryforwards available for offset against future profits can be used indefinitely. The provisions for income taxes consist of currently payable income tax in Italy and Austria. The provisions for income taxes are summarized as follows: December 31, 2017 December 31, 2016 Current $ 972,924 $ 198,025 Deferred - - Total $ 972,924 $ 198,025 The tax effects of temporary differences that give rise to the Company’s net deferred tax asset are as follows: December 31, 2017 December 31, 2016 Net loss carryforward - Foreign $2,732 $ 11,874 Net loss carryforward - US 4,540,465 3,949,432 4,543,197 3,961,306 Less valuation allowance (4,543,197) (3,961,306) Deferred tax assets $ - $ - |
Subsequent events
Subsequent events | 12 Months Ended |
Dec. 31, 2017 | |
Subsequent Events [Abstract] | |
Subsequent events | 19. Subsequent Events a. On February 26, 2018, the Company closed a Securities Purchase Agreement with a group of accredited investors to raise up to CDN $1,800,000 (approximately U.S. $1,419,334). The Company received gross proceeds from the initial private placement of CDN $670,000 (approximately U.S. $528,308). The Company incurred a total of CDN $33,500 (approximately U.S. $26,415) in finder’s fees to facilitate this transaction for net proceeds of CDN $636,500 (approximately U.S. $501,892) as well as 5% of the gross amount in broker warrants with terms identical to the debenture’s warrants. This convertible debenture bears an interest rate of 10% per annum and is due in two years. As part of the purchase agreement, the debenture is convertible at the lesser price of $0.50 or the proposed IPO price at any time up to February 26, 2020. The Company also issued a warrant to purchase 167,500 of the Company’s common stock at the lesser of $0.625 per share or 125% of the IPO price per warrant up to February 26, 2020 and issued 160 restricted shares of common stock per each debenture unit. As a result the Company issued 111,000 restricted common shares in connection with the gross proceeds received by the Company on closing. b. The Company has paid the amount subject to legal proceedings to Darling Capital, LLC in full. c. On January 15, 2018, the Company retained Echelon Wealth Partners Inc. (“Echelon”) to act as our financial advisor and to provide capital markets and strategic advice related to the proposed listing common shares on the Canadian Securities Exchange via an initial public offering and completing a concurrent or associated financing between CDN $3,000,000 (approximately U.S. $2,413,710) and CDN $5,000,000 (approximately U.S. $4,022,850). The Company incurred an initial fee of CDN $30,000 (approximately U.S. 24,137). |
Nature of Business (Policies)
Nature of Business (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Nature Of Business Policies | |
Nature of Business | Nature of Business Newgioco Group, Inc. ("Newgioco Group" or "the Company") was incorporated in the state of Delaware on August 26, 1998 as Pender International Inc. On September 30, 2005, the Company changed its name to Empire Global Corp., and on July 20, 2016 changed its name to Newgioco Group, Inc. The Company maintains its principal executive offices headquartered in Toronto, Canada with wholly owned subsidiaries in Italy and Austria. Our subsidiaries include: Multigioco Srl (“Multigioco”) which was acquired on August 15, 2014, Rifa Srl (“Rifa”) which was acquired on January 1, 2015, as well as Ulisse Gmbh (“Ulisse”) and Odissea Betriebsinformatik Beratung Gmbh (“Odissea”) which were both acquired on July 1, 2016. Newgioco Group is now a vertically integrated company which owns and operates an innovative, certified Betting Platform Software (“BPS”) and offering a complete suite of online and offline leisure gaming services including a variety of lottery and casino gaming, as well as sports betting through a distribution network of retail betting locations situated throughout Italy. |
Summary of Significant Accoun27
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Basis of consolidation | a) Basis of consolidation The consolidated financial statements include the financial statements of the Company and its subsidiaries, all of which are wholly owned. All significant inter-company transactions are eliminated upon consolidation. Certain amounts of prior periods were reclassified to conform with current period presentation. |
Use of estimates | b) Use of estimates The preparation of the financial statements in conformity with Generally Accepted Accounting Principles ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates. These estimates and assumptions include valuing equity securities issued in share based payment arrangements, determining the fair value of assets acquired, allocation of purchase price, impairment of long-lived assets, the collectability of receivables and the value of deferred taxes and related valuation allowances. Certain estimates, including evaluating the collectability of receivables and advances, could be affected by external conditions, including those unique to our industry, and general economic conditions. It is possible that these external factors could have an effect on our estimates that could cause actual results to differ from our estimates. We re-evaluate all of our accounting estimates at least quarterly based on these conditions and record adjustments when necessary. |
Goodwill | c) Goodwill Goodwill is recognized for the excess of the purchase price over the fair value of tangible and identifiable intangible net assets of businesses acquired. Goodwill is not being amortized, but is reviewed at least annually for impairment. In our evaluation of goodwill impairment, we perform a qualitative assessment to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If the qualitative assessment is not conclusive, we proceed to a two-step process to test goodwill for impairment including comparing the fair value of the reporting unit to its carrying value (including attributable goodwill). Fair value for our reporting units is determined using an income or market approach incorporating market participant considerations and management's assumptions on revenue growth rates, operating margins, discount rates and expected capital expenditures. Fair value determinations may include both internal and third-party valuations. Unless circumstances otherwise dictate, we perform our annual impairment testing in the fourth quarter. We perform the allocation based on our knowledge of the market in which we operate, and our overall knowledge of the leisure betting and gaming industry. |
Loss Contingencies | d) Loss Contingencies We may be subject to claims, suits, government investigations, and other proceedings involving competition and antitrust, intellectual property, privacy, indirect taxes, labor and employment, commercial disputes, content generated by our users, goods and services offered by advertisers or publishers using our website platforms, and other matters. Certain of these matters include speculative claims for substantial or indeterminate amounts of damages. We record a liability when we believe that it is both probable that a loss has been incurred, and the amount can be reasonably estimated. If we determine that a loss is possible and a range of the loss can be reasonably estimated, we disclose the range of the possible loss in the Notes to the Consolidated Financial Statements. We evaluate, on a monthly basis, developments in our legal matters that could affect the amount of liability that has been previously accrued, and the matters and related ranges of possible losses disclosed, and make adjustments and changes to our disclosures as appropriate. Significant judgment is required to determine both likelihood of there being and the estimated amount of a loss related to such matters. Until the final resolution of such matters, there may be an exposure to loss in excess of the amount recorded, and such amounts could be material. Should any of our estimates and assumptions change or prove to have been i |
Business Combinations | e) Business Combinations We allocate the fair value of purchase consideration to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. Such valuations require management to make significant estimates and assumptions, especially with respect to intangible assets. Significant estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows from acquired users, acquired technology, and trade names from a market participant perspective, useful lives and discount rates. Management's estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. |
Long-Lived Assets | f) Long-Lived Assets We evaluate the carrying value of our long-lived assets for impairment by comparing the expected undiscounted future cash flows of the assets to the net book value of the assets when events or circumstances indicate that the carrying amount of a long-lived asset may not be recoverable. If the expected undiscounted future cash flows are less than the net book value of the assets, the excess of the net book value over the estimated fair value will be charged to earnings. Fair value is based upon discounted cash flows of the assets at a rate deemed reasonable for the type of asset and prevailing market conditions, appraisals, and, if appropriate, current estimated net sales proceeds from pending offers. |
Derivative Financial Instruments | g) Derivative Financial Instruments The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its financial instruments, including convertible notes and stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported as charges or credits to income. For option-based simple derivative financial instruments, the Company uses the Black-Scholes option-pricing model to value the derivative instruments at inception and subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. |
Earnings Per Share | h) Earnings Per Share FASB ASC 260, "Earnings Per Share" provides for calculation of "basic" and "diluted" earnings per share. Basic earnings per share includes no dilution and is computed by dividing net income (loss) available to common shareholders by the weighted average common shares outstanding for the period. Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of an entity similar to fully diluted earnings per share. These potentially dilutive securities were not included in the calculation of loss per share for year ended December 31, 2016 because the effect would have been anti-dilutive. Accordingly, basic and diluted loss per common share is the same for year ended December 31, 2016. |
Currency translation | i) Currency translation Since the Company's subsidiaries operate in Europe, the subsidiaries functional currency is the Euro. In the consolidated financial statements, revenue and expense accounts are translated at the average rates during the period, and assets and liabilities are translated at period-end rates and equity accounts are translated at historical rate. Translation adjustments arising from the use of different exchange rates from period to period are included as a component of stockholders' equity. Gains and losses from foreign currency transactions are recognized in current operations. |
Revenue Recognition | j) Revenue Recognition Revenues from sports-betting, casino, cash and skill games; slots, bingo and horse race wagers represent the gross pay-ins (also referred to as Turnover) from customers less gaming taxes and payouts to customers. Revenues are recorded when the game is closed. In addition, the Company receives commissions from the sale of scratch tickets and other lottery games. Commissions are recorded when the ticket for scratch off tickets and lottery tickets are sold. Revenues from Betting Platform Software (“BPS”) include license fees, training, installation, and product support services. Revenue is recognized when the significant risks and rewards of ownership are transferred or when the obligation is fulfilled. License fees are calculated as a percentage of each licensee’s level of activity and are contingent upon the licensee’s usage. The license fees were recognized on an accrual basis as earned. |
Cash and Cash Equivalents | k) Cash and equivalents The Company considers all highly liquid debt instruments with maturities of three months or less at the time acquired to be cash equivalents. Cash equivalents represent short-term investments consisting of investment-grade corporate and government obligations, carried at cost, which approximates market value. The Company had no cash equivalents as of December 31, 2017 and December 31, 2016. The Company primarily places its cash with high-credit quality financial institutions, one of which is located in the United States and is insured by the Federal Deposit Insurance Corporation for up to $250,000 and another which is located in Italy and is insured by the Italian government. |
Gaming accounts receivable | l) Gaming accounts receivable Gaming accounts receivable represents gaming deposits made by customers to their online gaming accounts either directly by credit card, bank wire, e-wallet or other accepted method through one of our websites or indirectly by cash collected at the cashier of a betting shop but not yet credited to our bank accounts and subject to normal trade collection terms without discounts. The Company periodically evaluates the collectability of its gaming accounts receivable and considers the need to record or adjust an allowance for doubtful accounts based upon historical collection experience and specific customer information. Actual amounts could vary from the recorded estimates. The Company does not require collateral to support customer receivables. The company recorded bad debt expense of $135,953 and $69,269 for the years ended December 31, 2017 and December 31, 2016, respectively. All balances previously recorded as allowance for doubtful accounts were written off as uncollectible. |
Gaming balances | m) Gaming account balances Gaming account balances represent customer balances, including winnings and deposits, that are held as credits in online gaming accounts and have not as of yet been used or withdrawn by the customers. Customers can request payment from the Company at any time and the payment to customers can be made through bank wire, credit card, or cash disbursement from one of our locations. Online gaming account credit balances are non-interest bearing. |
Fair Value Measurements | n) Fair Value Measurements ASC Topic 820, Fair Value Measurement and Disclosures, defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. This topic also establishes a fair value hierarchy which requires classification based on observable and unobservable inputs when measuring fair value. There are three levels of inputs that may be used to measure fair value: Level 1: Observable inputs such as quoted prices (unadjusted) in active market for identical assets or liabilities. Level 2: Inputs other than quoted prices that are observable, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. Level 3: Unobservable inputs in which little or no market data exists, therefore developed using estimates and assumptions developed by us, which reflect those that a market participant would use. The carrying value of the Company's short-term investments, prepaid expenses, accounts receivables, other current assets, accounts payable and accrued liabilities, gaming account balance, and advances from shareholder approximate fair value because of the short-term maturity of these financial instruments. The derivative liability in connection with the conversion feature of the convertible debt and warrants is classified as a level 3 liability, and is the only financial liability measured at fair value on a recurring basis. The change in the Level 3 financial instrument is as follows: Balance at December 31, 2015 $ 28,375 Issued during the year ended December 31, 2016 609,256 Exercised during the year ended December 31, 2016 — Change in fair value recognized in operations (426,369) Balance at December 31, 2016 211,262 Issued during the year ended December 31, 2017 268,884 Change in fair value recognized in operations (257,231) Balance at December 31, 2017 $ 222,915 |
Property, plant and equipment | o) Property, plant and equipment Property, plant and equipment are stated at acquisition cost less accumulated depreciation and adjustments for impairment losses. Expenditures are capitalized only when they increase the future economic benefits embodied in an item of property, plant and equipment. All other expenditures are recognized as expenses in the statement of income as incurred. Depreciation is charged on a straight-line basis over the estimated remaining useful lives of the individual assets. Amortization commences from the time an asset is put into operation. The range of the estimated useful lives is as follows: Trademarks / names 14 years Office equipment 5 years Office furniture 8 1/3 years Signs and displays 5 years |
Leases | p) Leases Leases are reviewed and classified as capital or operating at their inception in accordance with ASC Topic 840, Accounting for Leases. For leases that contain rent escalations, the Company records rent expense on the straight line method. The difference between rent expense recorded and the amount paid is credited or charged to deferred rent account and is included in accrued expenses and other current liabilities. All lease agreements of the Company as lessees are accounted for as operating leases as of December 31, 2017 and 2016. |
Income Taxes | q) Income Taxes We use the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, "Income Taxes." Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity's financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of the available positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets will not be realized. ASC Topic 740.10.30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740.10.40 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. We have no material uncertain tax positions for any of the reporting periods presented. The Company has elected to include interest and penalties related to uncertain tax positions, if determined, as a component of income tax expense. In Italy, tax years beginning 2012 forward, are open and subject to examination, while in Austria companies are open and subject to inspection for 5 years and 10 years for inspection of serious infractions. The Company is not currently under examination and it has not been notified of a pending examination. |
Comprehensive Income (Loss) | r) Comprehensive Income (Loss) Comprehensive income (loss) is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources, including foreign currency translation adjustments and unrealized gains and losses on marketable securities. The Company adopted FASB ASC 220-10-45, "Reporting Comprehensive Income". ASC 220-10-45 establishes standards for reporting and presentation of comprehensive income and its components in a full set of financial statements. Comprehensive income consists of net income and unrealized gains (losses) on available for sale marketable securities; foreign currency translation adjustments and changes in market value of future contracts that qualify as a hedge; and negative equity adjustments. |
Investment in Non-consolidated Entities | s) Investment in Non-consolidated Entities Investments in non-consolidated entities are accounted for using the equity method or cost basis depending upon the level of ownership and/or the Company's ability to exercise significant influence over the operating and financial policies of the investee. When the equity method is used, investments are recorded at original cost and adjusted periodically to recognize the Company's proportionate share of the investees' net income or losses after the date of investment. When net losses from an investment are accounted for under the equity method exceed its carrying amount, the investment balance is reduced to zero and additional losses are not provided for. The Company resumes accounting for the investment under the equity method if the entity subsequently reports net income and the Company's share of that net income exceeds the share of net losses not recognized during the period the equity method was suspended. Investments are written down only when there is clear evidence that a decline in value that is other than temporary has occurred. The Company's investment in 2336414 Ontario Inc. and Intesa Sanpaolo Bank were accounted for using the cost method of accounting. The Company monitors its investment for impairment at least annually and make appropriate reductions in the carrying value if it determines that an impairment charge is required based on qualitative and quantitative information. |
Recent Accounting Pronouncements | t) Recent Accounting Pronouncements In January 2016, the FASB issued ASU 2016-01, Financial Instruments - Overall (Subtopic 740): Recognition and Measurement of Financial Assets and Financial Liabilities. The provisions of this update are effective for annual and interim reporting periods beginning after December 15, 2017. ASU 2016-01 enhances the reporting model for financial instruments to provide users of financial statements with more decision-useful information. The Company is currently assessing the impact of ASU 2016. In February 2016, the FASB issued ASU 2016-02, Leases. This update requires organizations that lease assets to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. The new guidance will also require additional disclosure about the amount, timing and uncertainty of cash flows arising from leases. The provisions of this update are effective for annual and interim periods beginning after December 15, 2018. The Company is currently assessing the impact that the adoption of ASU 2016-02 will have on the consolidated balance sheet and the consolidated results of operations. In May 2017, the FASB issued ASU 2017-09, Compensation-Stock Compensation (Topic 718), Scope of Modification Accounting. The amendments in this Update provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. The amendments in this Update are effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. In July 2017, the FASB issued ASU 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), Derivatives and Hedging (Topic 815). The amendments in Part I of this Update change the classification analysis of certain equity-linked financial instruments (or embedded features) with down round features. When determining whether certain financial instruments should be classified as liabilities or equity instruments, a down round feature no longer precludes equity classification when assessing whether the instrument is indexed to an entity’s own stock. The amendments also clarify existing disclosure requirements for equity-classified instruments. The amendments in Part I of this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company is currently assessing the impact of ASU 2016. There are no other recently issued accounting standards that are expected to have a material effect on our financial condition, results of operations or cash flows. |
Summary of Significant Accoun28
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Property, plant and equipment useful life | Trademarks / names 14 years Office equipment 5 years Office furniture 8 1/3 years Signs and displays 5 years |
Level 3 Fair Value Measurements | Balance at December 31, 2015 $ 28,375 Issued during the year ended December 31, 2016 609,256 Exercised during the year ended December 31, 2016 — Change in fair value recognized in operations (426,369) Balance at December 31, 2016 211,262 Issued during the year ended December 31, 2017 268,884 Change in fair value recognized in operations (257,231) Balance at December 31, 2017 $ 222,915 |
Acquisitions (Tables)
Acquisitions (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Business Combinations [Abstract] | |
Purchase Price - Acquisitions | Odissea Betriebsinformatik Beratung Gmbh (Odissea) Acquisition Remaining Useful Life Current assets $ 210,505 Property, Plant and Equipment 30,638 Identifiable intangible assets: Betting Operating System 1,685,371 15 years Less: liabilities assumed (215,935 ) Total identifiable assets less liabilities assumed 1,710,579 Total purchase price 1,710,579 Excess purchase price $ — Ulisse Gmbh (Ulisse) Acquisition Remaining Useful Life Current assets $ 984,647 Property, Plant and Equipment 2,917 Identifiable intangible assets: Customer relationships 83,996 10 years Less: liabilities assumed (421,976 ) Total identifiable assets less liabilities assumed 649,584 Total purchase price 649,584 Excess purchase price $ — |
Intangible Assets (Tables)
Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangibles | December 31, 2017 December 31, 2016 Life (years) Betting Platform Software $ 1,685,371 $ 1,685,371 15 Licenses 967,328 953,024 1.5 - 7 Location contracts 1,000,000 1,000,000 5 - 7 Customer relationships 870,927 870,927 10 - 15 Trademarks/names 110,000 110,000 14 Websites 40,000 40,000 5 4,673,626 4,659,322 Accumulated amortization (1,427,878) (968,344) Balance $3,245,748 $ 3,690,978 |
Related party transactions an31
Related party transactions and balances (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Related Party Transactions [Abstract] | |
Related party transactions and balances | December 31, 2017 December 31, 2016 Gold Street Capital Corp. $ 41,143 $ 1 Doriana Gianfelici 58,792 51,819 Other stockholders 447,874 505,729 Total advances from stockholders $ 547,809 $ 557,549 |
Investment in Non-consolidate32
Investment in Non-consolidated Entities (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Investments, All Other Investments [Abstract] | |
Non-consolidated entities | December 31, December 31, 2017 2016 2336414 Ontario Inc $ 875,459 $ 875,459 Intesa Sanpaolo Bank 1 6,729 875,459 882,188 Less impairment (875,459 ) (875,459 ) Total investment in non-consolidated entities $ 1 $ 6,729 |
Debentures and Convertible No33
Debentures and Convertible Notes (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Debentures And Convertible Notes Tables | |
Debentures outstanding | December 31, 2017 December 31, 2016 February 29, 2016 Convertible Note, net of discount of $0 and $85,898 $ 600,000 $ 514,102 April 4, 2016 Convertible Note, net of discount of $0 and $34,187 150,000 115,812 January 24, 2017 Debenture, net of discount of $7,446 136,032 — March 27, 2017 Convertible Debenture, net of discount of $50,994 68,571 — June 5, 2017 Convertible Debenture, net of discount of $72,541 47,024 — June 9, 2017 Convertible Debenture, net of discount of $36,940 22,842 — November 6, 2017 - December 11, 2017 Convertible Debentures, net of discounts of $55,063 148,198 — 1,172,667 629,914 Less: unamortized debt issuance costs (24,560) (13,397) $ 1,148,107 $ 616,517 |
Additional Debenture Proceeds | November 6, 2017 $ 90,000 November 14, 2017 50,000 November 15, 2017 20,000 November 22, 2017 30,000 December 5, 2017 40,000 December 11, 2017 25,000 $ 255,000 |
Warrants (Tables)
Warrants (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
Debenture | Warrant Fair Value At issuance February 29, 2016 $ 106,583 April 4, 2016 $ 53,236 April 4, 2016 $ 27,901 January 24, 2017 $ 13,973 March 27, 2017 $ 11,923 June 5, 2017 $ 14,826 June 9, 2017 $ 7,489 November 6, 2017 $ 3,131 November 14, 2017 $ 1,640 November 15, 2017 $ 676 November 22, 2017 $ 948 December 5, 2017 $ 994 December 11, 2017 $ 747 |
Weighted average assumptions | Warrant Date Exercise Price/sh Common Stock Price/sh Volatility Term Dividend Yield Interest Rate Forfeiture Risk February 29, 2016 $ 0.575 $ 0.45 200% 3 yrs 0% 0.91% 0% April 4, 2016 $ 0.575 $ 0.475 195% 3 yrs 0% 0.91% 0% April 4, 2016 $ 0.575 $ 0.475 195% 3 yrs 0% 0.91% 0% January 24, 2017 $ 0.50 $ 0.39 404% 2 yrs 0% 0.91% 0% March 27, 2017 $ 0.50 $ 0.40 390% 2 yrs 0% 0.91% 0% June 5, 2017 $ 0.50 $ 0.495 445% 2 yrs 0% 0.91% 0% June 9, 2017 $ 0.50 $ 0.495 445% 2 yrs 0% 0.91% 0% November 6, 2017 $ 0.50 $ 0.35 410% 2 yrs 0% 0.91% 0% November 14, 2017 $ 0.50 $ 0.33 413% 2 yrs 0% 0.91% 0% November 15, 2017 $ 0.50 $ 0.34 409% 2 yrs 0% 0.91% 0% November 22, 2017 $ 0.50 $ 0.318 414% 2 yrs 0% 0.91% 0% December 5, 2017 $ 0.50 $ 0.25 422% 2 yrs 0% 0.91% 0% December 11, 2017 $ 0.50 $ 0.30 433% 2 yrs 0% 0.91% 0% |
Warrants | Warrant Shares Weighted Average Exercise Price Per Common Share Weighted Average Life Outstanding at December 31, 2016 467,928 $ 0.58 2.13 Issued 162,000 $ 0.50 2.00 Exercised — — — Expired (17,400) — — Outstanding at December 31, 2017 612,528 $ 0.54 1.37 Exercisable at December 31, 2017 561,528 $ 0.56 1.21 |
Black-scholes modle | Exercises price $0.50 - $0.575 Common stock price per share $0.26 Volatility 459% Weighted average life 1.37 years Dividend yield 0% Interest rate 0.91% Forfeiture risk 0% |
Revenues (Tables)
Revenues (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Revenue | Year Ended Year Ended December 31, December 31, 2017 2016 Turnover Turnover web-based $ 106,785,302 $ 103,033,957 Turnover land-based 111,734,469 18,917,917 Total Turnover $ 218,519,771 $ 121,951,874 Winnings/Payouts Winnings web-based 100,860,085 96,728,850 Winnings land-based 94,201,786 16,487,782 Total Winnings/payouts 195,061,871 113,216,632 Gross Gaming Revenues $ 23,457,900 $ 8,735,242 Less: ADM Gaming Taxes 1,761,935 1,592,926 Net Gaming Revenues $ 21,695,965 $ 7,142,316 Add: Commission Revenues 281,285 1,105,389 Add: Service Revenues 887,896 650,258 Total Revenues $ 22,865,146 $ 8,897,963 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Income Taxes Tables | |
Reconciliation of income tax expense | December 31, 2017 December 31, 2016 U.S. Statutory rate $818,584 $ (623,595) Tax rate difference between Italy, Austria, Canada and U.S. (428,353) (49,618) Change in Valuation Allowance 558,187 847,449 Permanent difference 24,506 23,789 Effective tax rate $ 972,924 $ 198,025 |
Deferred tax assets | December 31, 2017 December 31, 2016 Current $ 972,924 $ 198,025 Deferred - - Total $ 972,924 $ 198,025 |
Provisions for income taxes | December 31, 2017 December 31, 2016 Net loss carryforward - Foreign $2,732 $ 11,874 Net loss carryforward - US 4,540,465 3,949,432 4,543,197 3,961,306 Less valuation allowance (4,543,197) (3,961,306) Deferred tax assets $ - $ - |
Summary of Significant Accoun37
Summary of Significant Accounting Policies (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Accounting Policies [Abstract] | ||
FDIC Insured Amount | $ 250,000 | |
Bad Debt Expense | $ 135,953 | $ 69,269 |
Summary of Significant Accoun38
Summary of Significant Accounting Policies (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Change in the Level 3 financial instrument [Rollforward] | ||
Beginnng Balance | $ 211,262 | $ 28,375 |
Issued during the year | 268,884 | 609,256 |
Exercised during the year | ||
Change in fair value recognized in operations | (257,231) | (426,369) |
Ending Balance | $ 222,915 | $ 211,262 |
Summary of Significant Accoun39
Summary of Significant Accounting Policies (Details 2) | 12 Months Ended |
Dec. 31, 2016 | |
Trademarks / names [Member] | |
Useful Life | 14 years |
Office equipment [Member] | |
Useful Life | 5 years |
Office furniture [Member] | |
Useful Life | 8 years 4 months |
Signs and displays [Member] | |
Useful Life | 5 years |
Acquisition- Purchase price (De
Acquisition- Purchase price (Details) | 12 Months Ended |
Dec. 31, 2016USD ($) | |
Odissea [Member] | |
Business Combination, Separately Recognized Transactions [Line Items] | |
Current assets | $ 210,505 |
Property, Plant and Equipment | 30,638 |
Identifiable intangible assets: | $ 1,685,371 |
Remaining useful life | 15 years |
Less: liabilities assumed | $ (215,935) |
Total identifiable assets less liabilities assumed | 1,710,579 |
Total purchase price | 1,710,579 |
Ulisse [Member] | |
Business Combination, Separately Recognized Transactions [Line Items] | |
Current assets | 984,647 |
Property, Plant and Equipment | 2,917 |
Identifiable intangible assets: | $ 83,996 |
Remaining useful life | 10 years |
Less: liabilities assumed | $ (421,976) |
Total identifiable assets less liabilities assumed | 649,584 |
Total purchase price | $ 649,584 |
Acquisitions (Details Narrative
Acquisitions (Details Narrative) | 6 Months Ended |
Jun. 30, 2016shares | |
Odissea [Member] | |
Business Acquisition [Line Items] | |
Share issued for acquisition | 8,772,200 |
Ownership | 11.83% |
Agreement | Pursuant to the Odissea SPA, upon completion of certification of the Betting Operating System by the ADM, which was obtained on June 30, 2017, the sellers may exercise the option to resell to the Company 50% of the shares of common stock issued in consideration for the purchase price (or 4,386,100 shares) at a fixed price of U.S. $0.50 per share (the “Odissea Put Option”). As of the date of this report, the Odissea Put Option has been extended indefinitely by mutual consent. |
Ulisse [Member] | |
Business Acquisition [Line Items] | |
Share issued for acquisition | 3,331,200 |
Ownership | 4.49% |
Agreement | Pursuant to the Ulisse SPA, subject to a purchase price adjustment to equal two times earnings before income taxes calculated on a pro rata basis from the Closing Date upon completion of the ADM license tender auction and the Rights obtained by the Company are assigned to the Ulisse locations the sellers may exercise the option to resell to the Company 50% of the shares of common stock issued in consideration for the purchase price (or 1,665,600) at a fixed price of U.S. $0.50 per share (the “Ulisse Put Option”). As of the date of this report, the Ulisse Put Option has been extended indefinitely by mutual consent.. |
Intangible Assets - Intangibles
Intangible Assets - Intangibles (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Intangible assets, gross | $ 4,673,626 | $ 4,659,322 |
Accumulated amortization | (1,427,878) | (968,344) |
Intangible assets | 3,245,748 | 3,690,978 |
Betting Operating System [Member] | ||
Intangible assets, gross | 1,685,371 | 1,685,371 |
Licenses [Member] | ||
Intangible assets, gross | 967,328 | 953,024 |
Location contracts [Member] | ||
Intangible assets, gross | 1,000,000 | 1,000,000 |
Customer relationships [Member] | ||
Intangible assets, gross | 870,927 | 870,927 |
Trademarks/names [Member] | ||
Intangible assets, gross | 110,000 | 110,000 |
Website [Member] | ||
Intangible assets, gross | $ 40,000 | $ 40,000 |
Intangible Assets - Useful life
Intangible Assets - Useful life (Details) | 12 Months Ended |
Dec. 31, 2016 | |
Betting Operating System [Member] | |
Useful Life | 15 years |
Licenses [Member] | Minimum [Member] | |
Useful Life | 1 year 5 months |
Licenses [Member] | Maximum [Member] | |
Useful Life | 7 years |
Location contracts [Member] | Minimum [Member] | |
Useful Life | 5 years |
Location contracts [Member] | Maximum [Member] | |
Useful Life | 7 years |
Customer relationships [Member] | Minimum [Member] | |
Useful Life | 10 years |
Customer relationships [Member] | Maximum [Member] | |
Useful Life | 15 years |
Trademarks/names [Member] | |
Useful Life | 14 years |
Website [Member] | |
Useful Life | 5 years |
Intangible Assets (Details Narr
Intangible Assets (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization Expense | $ 445,233 | $ 458,087 |
Long Term Debt (Details)
Long Term Debt (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Italy [Member] | ||
Severance liability | $ 131,904 | $ 91,865 |
Ulisse [Member] | ||
Customer deposit | $ 400,775 | $ 223,714 |
Line of Credit-Bank (Details Na
Line of Credit-Bank (Details Narrative) | Dec. 31, 2017USD ($) | Dec. 31, 2017EUR (€) |
Multgioco [Member] | ||
Line of credit | $ 338,880 | € 300,000 |
Interest rate | 5.00% | 5.00% |
Rifa Srl[Member] | ||
Line of credit | $ 56,480 | € 50,000 |
Related party transactions an47
Related party transactions and balances - Related party (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Related Party Transaction [Line Items] | ||
Balance of advances from stockholders | $ 547,809 | $ 557,549 |
Gold Street Capital Corp. [Member] | ||
Related Party Transaction [Line Items] | ||
Balance of advances from stockholders | 41,143 | 1 |
Doriana Gianfelici [Member] | ||
Related Party Transaction [Line Items] | ||
Balance of advances from stockholders | 58,792 | 51,819 |
Other Stockholders [Member] | ||
Related Party Transaction [Line Items] | ||
Balance of advances from stockholders | $ 447,874 | $ 505,729 |
Related party transactions an48
Related party transactions and balances (Details Narrative) | Jan. 13, 2017USD ($) | Jan. 13, 2016USD ($) | Dec. 15, 2015USD ($) | Nov. 15, 2016shares | Dec. 31, 2017USD ($) | Dec. 31, 2017EUR (€) | Dec. 31, 2016USD ($) |
Related Party Transaction [Line Items] | |||||||
Advance from related party | $ (77,398) | $ 294,292 | |||||
Shares issued for debt, shares | shares | 4,050,200 | ||||||
Related Party [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Interest rate | 5.00% | 5.00% | |||||
Gold Street Capital Corp. [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Advance from related party | $ 41,142 | ||||||
Debt repaid | 185,703 | ||||||
Management fee paid | 144,000 | ||||||
Luca Pasquini [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Dividend Accrued | 118,303 | € 104,730 | |||||
Management fee paid | 20,333 | ||||||
Braydon Capital Corp. [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Interest rate | 1.00% | 1.00% | |||||
Promissory note | $ 90,750 | $ 186,233 | 318,078 | ||||
Advance from related party | $ 41,095 | $ 90,750 | $ 131,845 |
Investment in Non-consolidate49
Investment in Non-consolidated Entities (Details) | 12 Months Ended | ||
Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2017CAD ($) | |
Schedule of Equity Method Investments [Line Items] | |||
Total investment in non-consolidated entities | $ 875,459 | $ 882,188 | |
Less impairment | (875,459) | (875,459) | |
Investment in non-consolidated entities | 1 | 6,508 | |
2336414 Ontario Inc. [Member] | |||
Schedule of Equity Method Investments [Line Items] | |||
Total investment in non-consolidated entities | 875,459 | 875,459 | $ 1,000,000 |
Intesa Sanpaolo Bank[Member] | |||
Schedule of Equity Method Investments [Line Items] | |||
Total investment in non-consolidated entities | 1 | 6,729 | |
Less impairment | $ 6,855 | $ 0 |
Investment in Non-consolidate50
Investment in Non-consolidated Entities (Details Narrative) (USD $) - 2336414 Ontario Inc. [Member] - shares | 12 Months Ended | |
Dec. 31, 2017 | Dec. 09, 2014 | |
Schedule of Equity Method Investments [Line Items] | ||
Common shares owned | 666,664 | 666,664 |
Ownership | 2.30% | |
Additional Information | The Company subscribed for 666,664 Units (CDN $1,000,000) (approximately U.S. $875,458), with each Unit being comprised of one (1) common share in the capital of 2336414 and one-quarter (1/4) of one common share purchase warrant, which will require four quarter warrants to acquire one additional common share in the capital of 2336414, for CDN $2.25 within 18 months after the closing of the Offering, or such longer period of time as 2336414 may determine. |
Stockholders Equity (Details Na
Stockholders Equity (Details Narrative) | 9 Months Ended | 11 Months Ended | 12 Months Ended | |||
Oct. 03, 2017USD ($)$ / sharesshares | Nov. 15, 2016USD ($)shares | Dec. 31, 2017USD ($)$ / sharesshares | Dec. 22, 2017USD ($)$ / sharesshares | Dec. 31, 2016USD ($)$ / sharesshares | ||
Stock split | two-for-one forward stock split | |||||
Stock split dividend | 1 | |||||
Shares issue for services, amount | $ | $ 23,250 | $ 61,300 | ||||
Restricted stock award, shares | 9,000,000 | |||||
Shares issued for debt, shares | 4,050,200 | |||||
Directors [Member] | ||||||
Restricted stock award, shares | [1] | 160,000 | ||||
Vested | 25% per year after each completed year served | |||||
World Wide Financial Marketing [Member] | ||||||
Shares issue for services, shares | 50,000 | 75,000 | ||||
Shares issue for services, amount | $ | $ 12,750 | $ 10,500 | ||||
Share price | $ / shares | $ 0.26 | $ 0.14 | ||||
Newbridge [Member] | ||||||
Shares commitment for advisory fees, shares | 100,000 | |||||
Advisory fees commitment | $ | $ 15,000 | |||||
Share price | $ / shares | $ 0.475 | |||||
Typenex [Member] | ||||||
Shares issued for debt, shares | 29,770 | |||||
Share price | $ / shares | $ 0.48 | |||||
Consultants[Member] | ||||||
Shares issue for services, shares | 80,000 | |||||
Beniamino Gianfelici [Member] | ||||||
Restricted stock award, shares | 3,000,000 | |||||
Alessandro Marcelli [Member] | ||||||
Restricted stock award, shares | 3,000,000 | |||||
Gold Street Capital Corp. [Member] | ||||||
Restricted stock award, shares | 3,000,000 | |||||
Shares issued for debt, shares | 3,570,200 | 112,000 | ||||
Share price | $ / shares | $ 0.21 | |||||
Shares issued for debt, amount | $ | $ 267,756 | $ 22,433 | ||||
Julia Lesnykh [Member] | ||||||
Shares issued for debt, shares | 400,000 | |||||
Shares issued for debt, amount | $ | $ 30,000 | |||||
Andrei Sheptikita [Member] | ||||||
Shares issued for debt, shares | 80,000 | |||||
Shares issued for debt, amount | $ | $ 60,000 | |||||
[1] | 40,000 units each |
Debentures and Convertible No52
Debentures and Convertible Notes (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Debenture | $ 1,172,667 | $ 629,914 |
Less: unamortized debt issuance costs | (24,560) | (13,397) |
Debenture, net of discount | 1,148,107 | 616,517 |
February 29, 2016 [Member] | ||
Debenture | 600,000 | 514,102 |
Debt discount | 0 | 85,898 |
April 4, 2016 [Member] | ||
Debenture | 150,000 | 115,812 |
Debt discount | 0 | 34,187 |
January 24,2017 [Member] | ||
Debenture | 136,032 | |
Debt discount | 7,446 | |
March 27, 2017 [Member] | ||
Debenture | 68,571 | |
Debt discount | 50,994 | |
June 5, 2017 [Member] | ||
Debenture | 47,024 | |
Debt discount | 72,541 | |
June 9, 2017 [Member] | ||
Debenture | 22,842 | |
Debt discount | 36,940 | |
November 6, 2017 [Member] | ||
Debenture | 148,198 | |
Debt discount | $ 55,063 |
Debentures and Convertible No53
Debentures and Convertible Notes (Details Narrative) | 12 Months Ended | |||||||||
Dec. 31, 2017USD ($)$ / sharesshares | Dec. 31, 2017CAD ($)shares | Dec. 31, 2016USD ($) | Dec. 31, 2017CAD ($) | Dec. 11, 2017USD ($) | Dec. 05, 2017USD ($) | Nov. 22, 2017USD ($) | Nov. 15, 2017USD ($) | Nov. 14, 2017USD ($) | Nov. 06, 2017USD ($) | |
February 29, 2016 [Member] | ||||||||||
Private Placement | $ | $ 750,000 | |||||||||
Proceeds from private placement | $ | $ 600,000 | |||||||||
Interest rate | 12.00% | 12.00% | ||||||||
Warrants to purchase | shares | 326,088 | 326,088 | ||||||||
Penalty | $ | $ 242,207 | $ 56,441 | ||||||||
Price per share | $ 0.575 | |||||||||
Payment on Loan | $ | $ 125,000 | |||||||||
April 4, 2016 [Member] | ||||||||||
Proceeds from private placement | $ | 150,000 | |||||||||
Legal Expenses | $ | $ 15,000 | |||||||||
Interest rate | 12.00% | 12.00% | ||||||||
Interest rate, effective | 22.00% | 22.00% | ||||||||
Commissions | $ | $ 75,000 | |||||||||
January 24,2017 [Member] | ||||||||||
Issue Value | 138,816 | $ 180,000 | ||||||||
Finders Fees | 11,105 | $ 14,400 | ||||||||
Net Proceeds | $ 127,711 | $ 165,600 | ||||||||
Interest rate | 10.00% | 10.00% | ||||||||
Warrants to purchase | shares | 36,000 | 36,000 | ||||||||
Warrant price | $ 0.50 | |||||||||
March 27, 2017 [Member] | ||||||||||
Issue Value | $ 115,680 | 150,000 | ||||||||
Finders Fees | 3,856 | $ 5,000 | ||||||||
Net Proceeds | $ 111,824 | $ 145,000 | ||||||||
Interest rate | 10.00% | 10.00% | ||||||||
Warrants to purchase | shares | 30,000 | 30,000 | ||||||||
Warrant price | $ 0.50 | |||||||||
Price per share | $ .75 | |||||||||
June 5, 2017 [Member] | ||||||||||
Issue Value | $ 115,680 | 150,000 | ||||||||
Finders Fees | 5,784 | $ 7,500 | ||||||||
Net Proceeds | $ 109,896 | $ 142,500 | ||||||||
Warrants to purchase | shares | 30,000 | 30,000 | ||||||||
Warrant price | $ 0.50 | |||||||||
Price per share | $ 0.75 | |||||||||
June 9, 2017 [Member] | ||||||||||
Issue Value | $ 57,840 | 75,000 | ||||||||
Finders Fees | 2,892 | $ 3,750 | ||||||||
Net Proceeds | $ 54,948 | $ 71,250 | ||||||||
Warrants to purchase | shares | 15,000 | 15,000 | ||||||||
Warrant price | $ 0.50 | |||||||||
Price per share | $ 0.75 | |||||||||
November 6, 2017 [Member] | ||||||||||
Issue Value | $ 196,656 | $ 255,000 | ||||||||
Finders Fees | 9,833 | $ 12,750 | ||||||||
Net Proceeds | $ 186,823 | $ 242,250 | ||||||||
Warrants to purchase | shares | 51,000 | 51,000 | ||||||||
Warrant price | $ 0.50 | |||||||||
Price per share | $ 0.75 | |||||||||
November 6, 2017 [Member] | CDN | ||||||||||
Issue Value | $ | $ 25,000 | $ 40,000 | $ 30,000 | $ 20,000 | $ 50,000 | $ 90,000 |
Debentures and Convertible No54
Debentures and Convertible Notes (Details Narrative Additional) (USD $) - November 6, 2017 [Member] | Dec. 31, 2017USD ($) | Dec. 31, 2017CAD ($) | Dec. 11, 2017USD ($) | Dec. 05, 2017USD ($) | Nov. 22, 2017USD ($) | Nov. 15, 2017USD ($) | Nov. 14, 2017USD ($) | Nov. 06, 2017USD ($) |
Issue Value | $ 196,656 | $ 255,000 | ||||||
CDN | ||||||||
Issue Value | $ 25,000 | $ 40,000 | $ 30,000 | $ 20,000 | $ 50,000 | $ 90,000 |
Promissory Notes Payable (Detai
Promissory Notes Payable (Details Narrative) | 1 Months Ended | 12 Months Ended | ||||
Feb. 28, 2015USD ($) | Feb. 28, 2015CAD ($) | Dec. 31, 2017USD ($)shares | Dec. 31, 2016USD ($) | Dec. 09, 2014USD ($)shares | Dec. 09, 2014CAD ($)shares | |
Debt Instrument [Line Items] | ||||||
Promissory note payable | $ 100,749 | $ 111,285 | ||||
2336414 Ontario Inc. [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Promissory Note | $ 500,000 | |||||
Promissory note payable | $ 500,000 | |||||
Common shares owned | shares | 666,664 | 666,664 | 666,664 | |||
Payments on Promissory Note | $ 150,000 | |||||
2336414 Ontario Inc. | ||||||
Debt Instrument [Line Items] | ||||||
Promissory note payable | $ 436,796 | |||||
Payments on Promissory Note | $ 115,680 | $ 150,000 | ||||
Interest Expense | $ 13,844 | $ 13,590 |
Bank Loan Payable (Details Narr
Bank Loan Payable (Details Narrative) - Bank Loan [Member] | 12 Months Ended | |
Dec. 31, 2017USD ($) | Dec. 31, 2017EUR (€) | |
Proceeds for notes payable | $ 564,800 | € 500,000 |
Number of payments | 57 | 57 |
Monthly installments | $ 11,025 | € 9,760 |
Payments on Loan | $ 109,104 | € 96,586 |
Fair Value Warrant (Details)
Fair Value Warrant (Details) - USD ($) | Dec. 31, 2017 | Dec. 22, 2017 | Dec. 05, 2017 | Nov. 22, 2017 | Nov. 15, 2017 | Nov. 14, 2017 | Nov. 06, 2017 |
February 29, 2016 Warrant [Member] | |||||||
Debt Conversion [Line Items] | |||||||
Warrants to purchase | 260,870 | ||||||
Exercise price | $ .575 | ||||||
Fair value of Warrant | $ 106,583 | ||||||
April 4, 2016 Warrant [Member] | |||||||
Debt Conversion [Line Items] | |||||||
Warrants to purchase | 125,218 | ||||||
Exercise price | $ .575 | ||||||
Fair value of Warrant | $ 27,901 | ||||||
April 4, 2016 Additional Warrant [Member] | |||||||
Debt Conversion [Line Items] | |||||||
Warrants to purchase | 124,440 | ||||||
Exercise price | $ .575 | ||||||
Fair value of Warrant | $ 53,236 | ||||||
January 24, 2017 Warrant [Member] | |||||||
Debt Conversion [Line Items] | |||||||
Warrants to purchase | 36,000 | ||||||
Exercise price | $ 0.50 | ||||||
Fair value of Warrant | $ 13,973 | ||||||
March 27, 2017 Warrant [Member] | |||||||
Debt Conversion [Line Items] | |||||||
Warrants to purchase | 30,000 | ||||||
Exercise price | $ 0.50 | ||||||
Fair value of Warrant | $ 11,923 | ||||||
June 5, 2017 Warrant [Member] | |||||||
Debt Conversion [Line Items] | |||||||
Warrants to purchase | 30,000 | ||||||
Exercise price | $ 0.50 | ||||||
Fair value of Warrant | $ 14,826 | ||||||
June 9, 2017 Warrant [Member] | |||||||
Debt Conversion [Line Items] | |||||||
Warrants to purchase | 7,500 | ||||||
Exercise price | $ 0.50 | ||||||
Fair value of Warrant | $ 7,489 | ||||||
November 6, 2017 Warrant [Member] | |||||||
Debt Conversion [Line Items] | |||||||
Warrants to purchase | 51,000 | ||||||
Exercise price | $ 0.50 | $ 0.50 | $ 0.50 | $ 0.50 | $ 0.50 | $ 0.50 | $ 0.50 |
Fair value of Warrant | $ 8,136 | $ 747 | $ 994 | $ 948 | $ 676 | $ 1,640 | $ 3,131 |
Warrants - Assumptions (Details
Warrants - Assumptions (Details) - $ / shares | 10 Months Ended | 11 Months Ended | 12 Months Ended | ||||
Nov. 14, 2017 | Nov. 06, 2017 | Dec. 05, 2017 | Nov. 22, 2017 | Nov. 15, 2017 | Dec. 31, 2017 | Dec. 22, 2017 | |
February 29, 2016 Warrant [Member] | |||||||
Exercise price | $ .575 | ||||||
Share price | $ 0.45 | ||||||
Volatility | 200.00% | ||||||
Weighted average life | 3 years | ||||||
Dividend yield | 0.00% | ||||||
Interest rate | 0.91% | ||||||
Risk of forfeiture | 0.00% | ||||||
April 4, 2016 Warrant [Member] | |||||||
Exercise price | $ .575 | ||||||
Share price | $ 0.475 | ||||||
Volatility | 195.00% | ||||||
Weighted average life | 3 years | ||||||
Dividend yield | 0.00% | ||||||
Interest rate | 0.91% | ||||||
Risk of forfeiture | 0.00% | ||||||
April 4, 2016 Additional Warrant [Member] | |||||||
Exercise price | $ .575 | ||||||
Share price | 0.95 | ||||||
January 24, 2017 Warrant [Member] | |||||||
Exercise price | 0.50 | ||||||
Share price | $ 0.39 | ||||||
Volatility | 404.00% | ||||||
Weighted average life | 2 years | ||||||
Dividend yield | 0.00% | ||||||
Interest rate | 0.91% | ||||||
Risk of forfeiture | 0.00% | ||||||
March 27, 2017 Warrant [Member] | |||||||
Exercise price | $ 0.50 | ||||||
Share price | $ 0.40 | ||||||
Volatility | 390.00% | ||||||
Weighted average life | 2 years | ||||||
Dividend yield | 0.00% | ||||||
Interest rate | 0.91% | ||||||
Risk of forfeiture | 0.00% | ||||||
June 5, 2017 Warrant [Member] | |||||||
Exercise price | $ 0.50 | ||||||
Share price | $ 0.495 | ||||||
Volatility | 445.00% | ||||||
Weighted average life | 2 years | ||||||
Dividend yield | 0.00% | ||||||
Interest rate | 0.91% | ||||||
Risk of forfeiture | 0.00% | ||||||
June 9, 2017 Warrant [Member] | |||||||
Exercise price | $ 0.50 | ||||||
Share price | $ 0.495 | ||||||
Volatility | 445.00% | ||||||
Weighted average life | 2 years | ||||||
Dividend yield | 0.00% | ||||||
Interest rate | 0.91% | ||||||
Risk of forfeiture | 0.00% | ||||||
November 6, 2017 Warrant [Member] | |||||||
Exercise price | $ 0.50 | $ 0.50 | $ 0.50 | $ 0.50 | $ 0.50 | $ 0.50 | $ 0.50 |
Share price | $ 0.33 | $ 0.35 | $ 0.25 | $ 0.318 | $ 0.34 | $ 0.30 | |
Volatility | 413.00% | 410.00% | 422.00% | 414.00% | 409.00% | 433.00% | |
Weighted average life | 2 years | ||||||
Dividend yield | 0.00% | ||||||
Interest rate | 0.91% | ||||||
Risk of forfeiture | 0.00% |
Warrants (Details)
Warrants (Details) - Warrant [Member] | 12 Months Ended |
Dec. 31, 2017USD ($)$ / sharesshares | |
Warrant Shares [Rollforward] | |
Outstanding at beginning of period | shares | 467,928 |
Issued during the period | shares | 162,000 |
Excercised during the period | shares | |
Expired during the period | shares | (17,400) |
Outstanding at end of period | shares | 612,528 |
Exercisable at end of period | $ | $ 561,528 |
Weighted Average Exercise Price Per Common Share | |
Outstanding at beginning of period | $ / shares | $ 0.58 |
Issued during the period | $ / shares | 0.50 |
Exercised during the period | $ / shares | |
Outstanding at end of period | $ / shares | 0.54 |
Exercisable at end of period | $ / shares | $ 0.56 |
Weighted Average Life per Warrant | |
Outstanding at beginning of period | 2 years 1 month 3 days |
Issued | 2 years |
Outstanding at end of period | 1 year 3 months 7 days |
Exercisable at end of period | 1 year 2 months 1 day |
Fair Value - Warrants (Details)
Fair Value - Warrants (Details) | 12 Months Ended |
Dec. 31, 2017$ / shares | |
Minimum [Member] | |
Exercise price | $ 0.50 |
Maximum [Member] | |
Exercise price | 0.575 |
Derivative Liability [Member] | |
Share price | $ 0.26 |
Volatility | 459.00% |
Weighted average life | 1 year 3 months 7 days |
Dividend yield | 0.00% |
Interest rate | 0.91% |
Risk of forfeiture | 0.00% |
Derivative Liability and Fair61
Derivative Liability and Fair Value (Details Narrative) | 12 Months Ended |
Dec. 31, 2017USD ($)$ / shares | |
Price per share | $ / shares | $ 0.75 |
March 27, 2017 [Member] | |
Proceeds from the sale of the debentures-conversion feature of the embedded conversion option | $ 70,617 |
Proceeds from the sale of the debentures-Warrant | 11,923 |
June 5, 2017 [Member] | |
Proceeds from the sale of the debentures-conversion feature of the embedded conversion option | 86,815 |
Proceeds from the sale of the debentures-Warrant | 14,826 |
June 9, 2017 [Member] | |
Proceeds from the sale of the debentures-conversion feature of the embedded conversion option | 43,874 |
Proceeds from the sale of the debentures-Warrant | 7,489 |
November and December, 2017 [Member] | |
Proceeds from the sale of the debentures-conversion feature of the embedded conversion option | 50,461 |
Proceeds from the sale of the debentures-Warrant | $ 8,136 |
Revenues (Details)
Revenues (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Gaming Revenues | ||
Total Turnover | $ 218,519,771 | $ 121,951,874 |
Less: Winnings/payouts | 195,061,871 | 113,216,632 |
Gross Gaming Revenues | 23,457,900 | 8,735,242 |
Less: ADM Gaming Taxes | 1,761,935 | 1,592,926 |
Net Gaming Revenues | 21,695,965 | 7,142,316 |
Add: Commission Revenues | 281,285 | 1,105,389 |
Add: Service Revenues | 887,896 | 650,258 |
Revenue | 22,865,146 | 8,897,963 |
Web-based [Member] | ||
Gaming Revenues | ||
Total Turnover | 106,785,302 | 103,033,957 |
Less: Winnings/payouts | 100,860,085 | 96,728,850 |
Land-based [Member] | ||
Gaming Revenues | ||
Total Turnover | 111,734,469 | 18,917,917 |
Less: Winnings/payouts | $ 94,201,786 | $ 16,487,782 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) | 12 Months Ended | |
Dec. 31, 2017USD ($) | ||
Income Tax Disclosure [Abstract] | ||
Net operating loss carryforward | $ 12,000,000 | |
Italy corporate tax rate | 28.82% | [1] |
Austrian corporate tax rate | 25.00% | |
U.S. statutory rate | 35.00% | |
Canadian corporate tax rate | 26.50% | |
[1] | IRES at 24.0% plus IRAP ordinary at 4.82% |
Income Taxes (Details 1)
Income Taxes (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | ||
U.S. statutory rate | $ 818,584 | $ (623,595) |
Tax rate difference between Italy and U.S. | (428,353) | (49,618) |
Change in valuation allowance | 558,187 | 847,449 |
Permanent difference | 24,506 | 23,789 |
Effective tax rate | $ 972,924 | $ 198,025 |
Income Taxes (Details 2)
Income Taxes (Details 2) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Income Taxes Details 2 | ||
Current | $ 972,924 | $ 198,025 |
Deferred | ||
Income tax expense | $ 972,924 | $ 198,025 |
Income Taxes (Details 3)
Income Taxes (Details 3) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Income Tax Disclosure [Abstract] | ||
Net loss carryforward- Foreign | $ 2,732 | $ 11,874 |
Net loss carryforward-US | 4,540,465 | 3,949,432 |
Valuation allowance | (4,543,197) | (3,961,306) |
Deferred tax assets |
Subsequent events (Details)
Subsequent events (Details) - Subsequent Event [Member] | Jan. 15, 2018USD ($) | Jan. 15, 2018CAD ($) | Feb. 26, 2018USD ($)$ / sharesshares | Feb. 26, 2018CAD ($)shares | |
Subsequent Event [Line Items] | |||||
Private Placement | $ 1,419,334 | $ 1,800,000 | |||
Proceeds from private placement | 528,308 | 670,000 | |||
Finders Fees | $ 24,137 | $ 30,000 | 26,415 | 33,500 | |
Net Proceeds from private placement | $ 501,892 | $ 636,500 | |||
Interest rate | 10.00% | 10.00% | |||
Warrants to purchase | 167,500 | 167,500 | |||
Warrant price | $ / shares | [1] | $ 0.625 | |||
Shares issued for private placement, shares | 111,000 | 111,000 | |||
Minimum[Member] | |||||
Subsequent Event [Line Items] | |||||
Private Placement | 2,413,710 | 3,000,000 | |||
Maximum [Member] | |||||
Subsequent Event [Line Items] | |||||
Private Placement | $ 4,022,850 | $ 5,000,000 | |||
[1] | or 125% of the IPO price per warrant |