| Document and Entity Information | 12 Months Ended |
| Dec. 31, 2018USD ($)shares | |
| Fair value of warrants and convertibility feature of long term debt | |
| Entity Registrant Name | Lightning Gaming, Inc. |
| Entity Central Index Key | 0001392545 |
| Document Type | 10-K |
| Document Period End Date | Dec. 31, 2018 |
| 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 | $ | $ 4,688 |
| Entity Common Stock, Shares Outstanding | shares | 4,649,383 |
| Document Fiscal Period Focus | FY |
| Document Fiscal Year Focus | 2018 |
| Consolidated Balance Sheets - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
| ASSETS | ||
| Cash | $ 565,461 | $ 276,111 |
| Accounts receivable, net | 415,466 | 293,761 |
| Inventory | 584,221 | 121,962 |
| Prepaid expenses | 124,887 | 121,962 |
| Total Current Assets | 2,243,795 | 800,427 |
| Property, Plant and Equipment, net | 1,497,373 | 109,486 |
| Other Assets | 8,193 | 8,193 |
| License Fees, net of accumulated amortization | 9,339 | 6,283 |
| Total Assets | 3,758,700 | 924,389 |
| Liabilities and Stockholders' Deficit | ||
| Accounts payable | 191,751 | 122,008 |
| Accrued expenses | 98,241 | 85,104 |
| Current portion of long term notes payable | 572,298 | |
| Interest payable | 12,891 | |
| Total Current Liabilities | 898,181 | 332,112 |
| Long Term Debt and Other Liabilities | ||
| Long term notes payable | 1,178,113 | |
| Interest payable and other long term liabilities | ||
| Other long term liabilities | 32,344 | 43,185 |
| Fair value of warrants and convertibility feature of long term debt | ||
| Total Long Term Debt and Other Liabilities | 1,210,457 | 43,185 |
| Stockholders' Deficit | ||
| Preferred stock: $0.001 par value; authorized 10,000,000 shares, Series A Nonvoting capital stock 6,000,000 shares authorized, -0- shares issued and outstanding as of December 31, 2018 and 2017 | ||
| Common stock: $0.001 par value; authorized 90,000,000 shares; 4,916,285 shares issued at December 31, 2018 and 2017, 4,654,383 and 4,649,383 shares outstanding at December 31, 2018 and 2017, respectively | 4,917 | 4,917 |
| Additional paid in capital | 30,467,906 | 20,384,996 |
| Accumulated deficit | (28,835,250) | (29,854,310) |
| Treasury stock, 266,902 shares at cost, as of December 31, 2018 and 2017 | (20,811) | (19,811) |
| Total Stockholders' Deficit | 1,650,062 | 549,092 |
| Total Liabilities and Stockholders' Deficit | $ 3,758,700 | $ 924,389 |
| Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2018 | Dec. 31, 2017 |
| Stockholders' Deficit | ||
| Preferred stock, par value | $ 0.001 | $ 0.001 |
| Preferred stock, authorized shares | 10,000,000 | 10,000,000 |
| Preferred Stock Series A Nonvoting capital stock, authorized shares | 6,000,000 | 6,000,000 |
| Preferred Stock Series A Nonvoting capital stock, issued shares | 4,500,000 | 4,500,000 |
| Preferred Stock Series A Nonvoting capital stock, outstanding shares | 3,500,000 | 4,500,000 |
| Common stock, par value | $ 0.001 | $ 0.001 |
| Common stock, authorized shares | 90,000,000 | 90,000,000 |
| Common stock, issued shares | 4,916,285 | 4,649,383 |
| Common stock, outstanding shares | 4,916,285 | 4,649,383 |
| Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
| Dec. 31, 2018 | Dec. 31, 2017 | |
| Revenues | ||
| Lease, license and service fees | $ 2,259,216 | $ 2,189,981 |
| Sales of gaming products and parts | 3,420,434 | 597,913 |
| Total revenues | 5,679,650 | 2,787,894 |
| Costs and operating expenses | ||
| Cost of products sold | 1,585,589 | 46,597 |
| Operating expenses | 593,400 | 527,013 |
| Research and development | 383,494 | 367,348 |
| Selling, general & administrative expenses | 1,925,053 | 1,959,479 |
| Depreciation and amortization | 83,110 | 112,564 |
| Total costs and operating expenses | 4,570,646 | 3,013,001 |
| Operating loss | 1,109,004 | (225,107) |
| Non-operating income (expense) | ||
| Net interest expense | (66,944) | (2,849) |
| Change in value of warrants | ||
| Other income (expense) | (23,000) | |
| Net loss | $ 1,019,060 | $ (227,956) |
| Net loss per common share including Series A Nonvoting shares-basic and diluted | $ 0.03 | $ (0.01) |
| Weighted average Series A Nonvoting shares outstanding-basic and diluted | 33,300,000 | 33,300,000 |
| Weighted average common shares outstanding- basic and diluted | 4,680,815 | 4,688,474 |
| Consolidated Statements of Stockholders' Deficit - USD ($) | Series A Nonvoting Capital Stock | Common Stock | Nonvoting Common Stock | Additional Paid-In Capital | Retained Earnings / Accumulated Deficit | Treasury Stock | Total |
| Begining Balance, Shares at Dec. 31, 2016 | 4,916,285 | 227,811 | |||||
| Begining Balance, Amount at Dec. 31, 2016 | $ 4,917 | $ 30,348,856 | $ (29,626,354) | $ (18,811) | $ 741,908 | ||
| Issuance of Series A Nonvoting capital stock, Shares | 33,300,000 | ||||||
| Issuance of Series A Nonvoting capital stock, Amount | $ 33,300 | 22,744,066 | |||||
| Stock based compensation | $ 36,140 | 591 | |||||
| Issuance of Warrants | (1,000) | ||||||
| Net Loss | $ (227,956) | (227,956) | |||||
| Purchase of stock for the treasury, amount | (5,000) | ||||||
| Ending Balance, Shares at Dec. 31, 2017 | 4,916,285 | 33,300,000 | 30,384,996 | (29,854,310) | 261,902 | ||
| Ending Balance, Amount at Dec. 31, 2017 | 4,917 | $ 33,300 | $ (19,811) | 549,092 | |||
| Stock based compensation | 36,140 | ||||||
| Net Loss | $ 1,019,060 | 1,019,060 | |||||
| Purchase of stock for the treasury, shares | $ 4,916,285 | 5,000 | |||||
| Purchase of stock for the treasury, amount | $ 4,917 | $ (1,000) | (1,000) | ||||
| Ending Balance, Shares at Dec. 31, 2018 | 33,300,000 | 266,902 | |||||
| Ending Balance, Amount at Dec. 31, 2018 | $ 33,300 | $ 30,467,906 | $ (28,835,250) | $ (20,811) | $ 1,650,062 |
| Nature of Business and Significant Accounting Policies | 12 Months Ended |
| Dec. 31, 2018 | |
| PaymentOnCapitalLease | |
| Nature of Business and Significant Accounting Policies | Note 1. Nature of Business and Summary of Significant Accounting Policies Nature of Business Lightning Poker was formed to manufacture and market a fully automated, proprietary electronic poker table (the “Poker Table”) to commercial and tribal casinos, card clubs, and other gaming and lottery venues. Lightning Poker’s Poker Table is designed to improve economics for casino operators while improving overall player experience. In 2008, the Company, as the sole member, established Lightning Slot Machines, LLC (“Lightning Slots”) through which it commenced the design, manufacture, marketing, sale and operation of video slot machines to customers in various gaming jurisdictions. The current slot machine products are: · Popeye · Jumbo Fish Stacks · Popeye’s Bonus Voyage · Jungle Book · Popeye’s Seven Seas · Jungle Jackpots · Olive Oyl’s Jumbo Stacks · Just Jackpots · Flash Gordon · Lightning Lotto · Garfield · Penny Palooza · Around the World in 80 Days · Screaming Links Multi · Beauty and the Beast · Si Shou · Candy Cash · Si Xiang · Cash Flow · Slotto · Cinderella · Snow White · Duck Dynamite · Swamp Fever · Fins N Wins · Swamp Frenzy · Golden Egg · Vampires Fortune · Goyaate · Year of the Horse · Great Balls of Fire · Ye Xian · Hao Yun · Zhang Jiao · Hua Mulan · Zuo Ci Our consolidated financial statements include the accounts of the Company, including All inter-company accounts and transactions have been eliminated. The accompanying consolidated financial statements have been prepared on a going concern basis, which assumes realization of all assets and settlement or payment of all liabilities in the ordinary course of business. For the year ended December 31, 2018, the Company had net income and cash flows from operations, recognized a significant increase in revenue during the year, has obtained financing to fund inventory purchases, and has maintained and sustained working capital surpluses. The generation of cash flow sufficient to meet the Company’s cash needs in the future will depend on the Company’s ability to distribute its products and successfully market them to more casinos. Based on our current financial condition, cash flow projections and anticipated revenues, we believe we have sufficient cash flows to support our operations for the next twelve months, however if supplemental financing becomes necessary, there is no assurance that the Company would be able to obtain such financing, on reasonable and feasible terms, or at all. If the Company needs additional funding and is unable to obtain it, its financial condition would be adversely affected. In that event, it would have to postpone or discontinue planned operations and projects for expansion. The Company’s continuance as a going concern is dependent upon these factors, among others. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. A summary of the Company’s significant accounting policies is as follows: Revenue Recognition Revenue generated under operating leases is recognized when the performance obligation is satisfied. Lease agreements are based on either a fixed daily or monthly rate, or a pre-determined percentage of the monthly net “rake” or “participation” revenue collected for each Poker Table and slot machine, subject to monthly minimums and maximums. Customers under fixed daily rate agreements are invoiced on the first day of the month at the agreed upon daily rate per unit for the number of days the unit is leased during the month, typically the total number of days in the month. Customers under rake revenue agreements are invoiced when participation reports are remitted to us detailing the monthly per unit per theme information including coin-in, net win, and days on the floor data. Revenue under both of these bases is recorded as lease revenue and recognized in the month to which the lease data pertains. There may be instances in which a lease is offered to a customer with the option to convert to a sale upon the completion of certain obligations such as a pre-determined paid or reduced-rate lease term and/or a free-trial period. In addition, circumstances may arise in which a customer wishes to purchase machines after being on lease at their facility. In all of these situations, the initial revenue is recorded as lease revenue as described above, and the agreed upon sales price is shown as sales revenue when the lease is converted to a sale and all performance obligations of the sale have been met. For sales of slot machines, a warranty on parts is typically offered which expires after a defined period of time, usually 90 days after delivery or installation date. One slot machine theme conversion per unit sold is also typically offered during the one year period beginning upon the delivery and/or installation of the slot machine, and only if the slot game fails to earn at least eighty percent of the rolling monthly slot machine gaming floor area average for the customer. The game theme must be of the same category approved in the customer's gaming jurisdiction for use in the slot machine and the customer must provide written notice requesting the conversion, including certification of the average that serves as the basis for any such game theme conversion. In addition, the customer must return the original game theme components to the Company upon conversion of the slot game theme. For the years 2018 and 2017, there was no revenue generated from customers outside the United States. Four and three casino customers accounted for 56% and 18% of our revenues for the years ended December 31, 2018 and 2017, respectively. One casino group represented 7% and 12% of total revenues for each of the years ended December 31, 2018 and 2017, respectively. For the year ended December 31, 2018, the Company recorded no revenues related to performance obligations from prior periods. Effective January 1, 2018, the Company adopted Accounting Standard Codification 606 (“ASC 606”) with regards to revenue recognition as described more fully in Note 8 Use of Estimates Significant estimates include the recoverable value of long-lived assets and projected cash flows. Cash Concentrations of Credit Risk Receivables and Allowance for Doubtful Accounts At December 31, 2018 and 2017, accounts receivable from four casino customers represented 52% and 43%, respectively, of total accounts receivable. One customer represented 21% and 18% of the total accounts receivable balance as of December 31, 2018 and 2017, respectively. License Fees: Patents Research and Development Inventory Fair Value Measurements Property and Equipment Income Taxes The Company has assessed its tax position and does not believe there are any uncertain tax positions. Our policy is to record interest and penalties associated with unrecognized tax benefits as additional income taxes in the Statement of Operations. The Company has determined that there are no unrecognized tax benefits, and accordingly, has not recognized any interest or penalties during 2018 and 2017 related to unrecognized tax benefits. There is no accrual for interest or penalties as of December 31, 2018 and 2017. The Company files U.S. income tax returns and multiple state and foreign income tax returns. With few exceptions, the U.S. and state income tax returns filed for the tax years ending on December 31, 2015 and thereafter are subject to examination by the relevant taxing authorities. Advertising Impairment of Long-Lived Assets - Going Concern he Company evaluates whether there are conditions or events, considered in the aggregate, that raise substantial doubt about its ability to continue as a going concern for a period of one year after the date that the financial statements are issued, taking into consideration the quantitative and qualitative information regarding the Company’s current financial condition, conditional and unconditional obligations due and the funds and cash flow necessary to maintain operations within that time period. Based on management’s evaluation, the Company will be able to continue in operation on a going concern basis for at least the next twelve months from the date these financial statements are issued. Stock Option Plans Note 7 Earnings (loss) per share: The Company uses the two-class method in computing earnings per share. Under the two-class method, undistributed earnings are allocated among common and participating shares to the extent each security may share in such earnings. In computing earnings per share, the Company's Nonvoting Stock is considered a participating security. Each share of Nonvoting Stock has identical rights, powers, limitations and restrictions in all respects as each share of common stock of the Company including the right to receive the same consideration per share payable in respect of each share of common stock, except that holders of Nonvoting Stock shall have no voting rights or powers whatsoever. The following table summarizes the number of dilutive shares, which may dilute future earnings per share, outstanding for each of the periods presented: December 31, December 31, Stock options 4,215,000 4,315,000 |
| Inventory | 12 Months Ended |
| Dec. 31, 2018 | |
| PaymentOnCapitalLease | |
| Inventory | Note 2. Inventory Inventory consisted of the following: December 31, December 31, 2017 Finished products $ 403,080 $ 56,100 Raw materials 181,141 65,862 Inventory $ 584,221 $ 121,962 Inventory is stated at the lower of cost using the first-in, first-out method, or net realizable value. During 2018, the Company started using a new slot machine cabinet design for lease and sale. The cabinets, which are manufactured by a third-party and include monitors, toppers, stands and certain electronic components, are shown as finished products. Raw materials primarily consist of the flash drives, motherboards, spare parts and interchangeable electronic components for the slot machines. |
| Property and Equipment | 12 Months Ended |
| Dec. 31, 2018 | |
| PaymentOnCapitalLease | |
| Property and Equipment | Note 3. Property and Equipment Property and equipment consisted of the following: December 31, 2018 December 31, 2017 Equipment, principally gaming equipment $ 3,208,481 $ 3,789,081 Delivery truck 28,140 28,140 Furniture and fixtures 104,314 100,041 Leasehold improvements 91,794 91,794 Property and equipment 3,432,729 4,009,056 Less accumulated depreciation (1,935,356 ) (3,899,570 ) Property and equipment, net $ 1,497,373 $ 109,486 During the year ended December 31, 2018, the Company determined that the Poker Tables that had previously been out on lease and returned from customers had no further use to the Company and no resale or scrap value. The Company wrote off the cost and corresponding accumulated depreciation of these Poker Tables of $1,276,039, with a $-0- net book value. Depreciation expense related to the property and equipment included in the consolidated Statements of Operations was $76,166 and $102,564 for the years ended December 31, 2018 and 2017, respectively. |
| License Fees | 12 Months Ended |
| Dec. 31, 2018 | |
| PaymentOnCapitalLease | |
| License Fees | Note 4. License Fees License fees consist of the following: December 31, 2018 December 31, Purchased licenses $ 351,605 $ 341,605 Less accumulated amortization (342,266 ) (335,322 ) License fees, net $ 9,339 $ 6,283 The weighted average useful life of purchased licenses is 3 years. Amortization expense included in the consolidated Statements of Operations and relating to the purchased licenses was $6,944 and $10,000 for the years ended December 31, 2018 and 2017, respectively. Estimated amortization expense related to recorded license fees is as follows: Year Ending December 31, Amount 2019 $ 3,783 2020 3,333 2021 2,223 $ 9,339 |
| Debt | 12 Months Ended |
| Dec. 31, 2018 | |
| PaymentOnCapitalLease | |
| Debt | Note 5. Notes Payable On July 17, 2018, the Company entered into a Master Loan Agreement (the “Loan”) with PDS Gaming LLC (“PDS” or the “Lender”) to make a series of advances under the Loan in the principal amount of up to $2,500,000 for the purposes of financing the purchase or manufacturing of equipment. The Loan will be evidenced by Promissory Notes (each a “Note” and collectively the “Notes”) executed by the Company payable to the order of the Lender, and secured by a Security Agreement dated of even date with the Loan, between the Company and the Lender (the “Security Agreement”) granting a security interest to the Lender in all of the Company’s right, title and interest in and to personal property, tangible and intangible, wherever located or situated and whether now owned or acquired or created. The Loan will be advanced, in parts, pursuant to the Loan and in the amounts of each Note during the advance period which expires on July 17, 2019. Each subsequent advance will be made at the Lender’s sole and absolute discretion. The Notes will bear interest on the outstanding principal amount at the lesser of the maximum rate or interest rate specified on each note based on a 360 day year. Payments consisting of principal and interest, as well as “Contingent Interest Payments” (“CIP”) of $3.50 per day for each on-line day up to a maximum of 730 on-line days for each unit financed under the Note are due and payable monthly. Each Note matures in 36 months and CIP obligations mature 48 months after the respective closing of each Note. Monthly payments of $16,083 on the initial advance (“Advance 1”), evidenced by a Note in the principal amount of $489,989, commenced on August 17, 2018. Monthly payments of $23,741 on the second advance (“Advance 2”), under a Note in the principal amount of $723,565, commenced on October 18, 2018. Monthly payments of $21,743 under the next advance (“Advance 3”), evidenced by a Note in the principal amount of $662,686, commenced on December 15, 2018. Notes payable consist of the following: Advance Date Maturity Date Interest Rate December 31, 2018 December 31, 2017 Advance 1 7/17/2018 7/17/2021 11 % $ 431,407 $ — Advance 2 9/18/2018 9/18/2021 11 % 671,986 — Advance 3 11/15/2018 11/15/2021 11 % 647,018 — Total Notes Payable 1,750,411 — Less: amounts classified as current (572,298 ) — Long-Term Notes Payable $ 1,178,113 $ — Interest expense and CIP obligations relating to these Notes were $54,939 and $7,161, respectively, for the year ended December 31, 2018. The following table lists the principal payments due on the Notes as of December 31, 2018: Year Ending December 31, Amount 2019 $ 572,298 2020 639,133 2021 538,980 $ 1,750,411 On January 21, 2019, the Company closed on its next advance (“Advance 4”) under the Loan. See Note 12 Note 6. Notes Payable – Related Party Notes payable to related party consist of the following: December 31, 2018 December 31, 2017 The Co-Investment Fund II, L.P. (“CI II”) $ — $ 100,000 Brian Haveson (“BH”) — 25,000 $ — $ 125,000 In September 2017, the Company entered into a Loan Agreement (“Loan”) with The Co-Investment Fund II, L.P. (“CI II”) and Brian Haveson (“BH”), collectively the lenders, for the principal amount of $125,000 for working capital purposes. The Loan was secured by a Security Agreement among the Company and its subsidiaries in which substantially all of the Company’s assets were pledged as collateral. The Loan was evidenced by promissory notes that were due on September 1, 2018, together with interest at the rate of 8% per annum, and with the provision that they may be prepaid at any time with written consent of the lender(s). The Company repaid the loans along with interest due on June 26, 2018. See Note 10 |
| Commitments | 12 Months Ended |
| Dec. 31, 2018 | |
| PaymentOnCapitalLease | |
| Commitments | Note 6. Commitments In November 2009, the Company entered into a lease agreement for its corporate offices which became effective in January 2010 for a term of sixty-seven months. In September 2014, the lease was amended to include the following: 1) an extension of the lease term to February 28, 2021; 2) modification of the minimum annual and monthly rents for the extended lease term; 3) a rent abatement period of six months commencing October 1, 2014; and 4) an option to extend the term for a period of five years. Rental expense is recognized on a straight-line basis over the life of the lease and is recorded as a deferred rent obligation during the abatement period. The deferred rent is reduced by the difference between the rent due and the straight-line expense upon commencement of the rental payments. Rental expense under this lease for the years ended December 31, 2018 and 2017 was $141,601 and $140,836, respectively. Future minimum lease payments are as follows: Year Ending December 31, Amount 2019 $ 104,366 2020 106,975 2021 18,124 $ 229,465 The Company routinely enters into license agreements for the use of intellectual properties and technologies. These agreements generally provide for royalty advances and license fee payments when the agreements are signed and minimum commitments which are cancelable in certain circumstances. In October 2009, the Company entered into an exclusive license agreement with Hearst Holdings, Inc. and King Features Syndicate Division to use the brands POPEYE and related family of characters in gaming devices distributed worldwide excluding the United Kingdom and Japan. The initial term of the agreement was for one year with the Company’s right to extend the agreement for eight additional one-year terms upon payment of minimum royalties. The Company paid the minimum royalties and extended the term of the agreement to December 2013. In April 2013, the Company was granted the right to sublicense the POPEYE brand for distribution to bar and salon customers only in Spain for the remainder of the renewal term. In December 2013, the Company and Hearst Holdings executed a second renewal agreement which extended the license and sublicense renewal term for the period January 1, 2014 to December 31, 2016. A third renewal agreement was executed in January 2017, extending the license and sublicense renewal term for the period January 1, 2017 to December 31, 2018. The third renewal agreement was subject to a guaranteed minimum royalty of $50,000, $25,000 payable on or before December 31, 2017 and $25,000 payable on or before December 31, 2018. The license period has expired and the Company opted not to extend the agreement. In October 2014, the Company entered into a license agreement with Paws, Inc. to use the brand Garfield and associated family of characters in gaming devices distributed worldwide. The initial term of the agreement ran from December 1, 2014 to November 30, 2017 and was subject to a guaranteed minimum royalty of $75,000. The Company paid $75,000 as non-refundable advances against the guaranteed royalty which were recoupable out of royalties earned on the license. The license period expired and the Company opted not to extend the agreement. All royalty obligations have been paid in full. In November 2014, the Company entered into a license agreement with Hearst Holdings, Inc. for the worldwide distribution of gaming devices using Flash Gordon and associated family of characters. The initial term of the agreement ran from November 1, 2014 to October 31, 2017 with royalties based on a percentage of revenues earned on the license, payable on a quarterly basis. The license period has expired and the Company opted not to extend the agreement. All royalty obligations have been paid in full. In July 2016, the Company entered into a license agreement with Ainsworth Game Technology Ltd for the intellectual property rights to use certain game technology in slot machines titled as Flash Gordon, Ye Xian and Cash Flow. The term of the agreement ran from July 1, 2016 to March 30, 2018 with royalties based on a percentage of revenues earned on the slot machines running the aforementioned titles, payable on a quarterly basis. The license period has expired and all royalty obligations have been paid in full. As of December 31, 2018, the Company estimates that there will be no future royalty payments. |
| Stockholders’ Deficit | 12 Months Ended |
| Dec. 31, 2018 | |
| PaymentOnCapitalLease | |
| Stockholders’ Deficit | Note 7. Stockholders’ Equity Stock Option Plans Options generally vest at 20% per year starting from the grant date and are fully vested after five years. The options can be exercised in partial or full amounts upon a change in control and at such other times as specified in the award agreements. In order to provide an incentive to designated employees, officers, directors, consultants, independent contractors and other service providers who perform services contributing to the growth of the Company, and by aligning the interests of participants with the interests of stockholders, the Board declared it advisable and in the Company’s best interest and on May 25, 2016, approved the 2016 Stock Option Plan (the “2016 Plan”). The 2016 Plan will permit the granting of nonqualified stock options. The shares underlying the options will be shares of the Company’s nonvoting common stock, par value $0.001 per share, and the total aggregate number of shares that may be issued under the 2016 Plan is 5,700,000 shares. The purchase price of each option will be determined by the Board at the time the option is granted, but in no event will be less than 100% of the fair market value of the common stock at the time of grant. Options granted will not be exercisable after 10 years from the grant date. The fair value of each option award is estimated on the date of grant using the Black-Scholes option pricing model. Expected volatility is based upon publicly traded companies with characteristics similar to those of the Company. The Company uses historical data to estimate option exercise and employee termination within the valuation model. The expected term of options granted represents the period of time that options granted are expected to be outstanding. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. A summary of option transactions in 2018 and 2017 under the 2007 Plan is as follows: Shares Weighted Average Exercise Price Options outstanding at January 1, 2017 885,000 $ 1.80 Options granted — — Options exercised — — Options cancelled (510,000 ) 2.53 Options outstanding at December 31, 2017 375,000 $ .81 Options granted — — Options exercised — — Options cancelled (100,000 ) 2.00 Options outstanding at December 31, 2018 275,000 $ 0.37 Options available for grant under the 2007 Plan at December 31, 2018 2,225,000 There were no options granted during the year ended December 31, 2017 under the 2007 Plan. On March 8, 2017, the Board of Directors approved by unanimous written consent, the authorization to grant to employees with at least one year of service, non-qualified stock options to purchase 4,015,000 shares of nonvoting common stock of the Company under its 2016 Plan. The options were issued at an exercise price of $.28 per share and vest ratably over five years. The options are subject to the terms and conditions of the 2016 Plan and each individual’s stock option agreement. On November 30, 2018, the Board of Directors, based on current valuation information available, authorized the reduction of the option exercise price to $.13 per share which was determined to be the market price of the Company’s stock on that date. The Company calculated the incremental fair value by calculating the fair value of the options immediately before and immediately after the modification. The fair value of the options immediately before the repricing is based on assumptions (e.g., volatility, expected term, etc.) reflecting the current facts and circumstances on the modification date and therefore, differs from the fair value calculated on the grant date. A summary of option transactions in 2018 and 2017 under the 2016 Plan is as follows: Shares Weighted Average Exercise Price Options outstanding at January 1, 2017 — $ — Options granted 4,015,000 0.13 Options exercised — — Options cancelled (75,000 ) 0.13 Options outstanding at December 31, 2017 3,940,000 $ 0.13 Options granted — — Options exercised — — Options cancelled — — Options outstanding at December 31, 2018 3,940,000 $ 0.13 Options available for grant under the 2016 Plan at December 31, 2018 1,760,000 Stock-based compensation expense is recognized in the Statements of Operations based on awards ultimately expected to vest and is adjusted for estimated forfeitures. The additional compensation expense arising from the modification of the exercise price amounted to $105,767 and is being recognized over the vesting period. Expense relating to the stock option plans was $82,910, which included $39,182 of cumulative incremental expense due to the option repricing, and $36,140 for the years ended December 31, 2018, and 2017, respectively. The following table summarizes information with respect to stock options outstanding at December 31, 2018: Options Outstanding Vested Options Weighted Average Weighted Weighted Weighted Remaining Average Aggregate Average Average Aggregate Contractual Exercise Intrinsic Contractual Exercise Intrinsic Number Life Years Price Value Number Term Years Price Value 2007 Plan 275,000 0.5 $0.37 — 275,000 0.5 $0.37 — 2016 Plan 3,940,000 8.2 $0.13 — 788,000 8.2 $0.13 — The following table summarizes information with respect to stock options outstanding at December 31, 2017: Options Outstanding Vested Options Weighted Average Weighted Weighted Weighted Remaining Average Aggregate Average Average Aggregate Contractual Exercise Intrinsic Contractual Exercise Intrinsic Number Life Years Price Value Number Term Years Price Value 2007 Plan 375,000 1.4 $0.81 — 375,000 1.4 $0.81 — 2016 Plan 3,940,000 9.2 $0.13 — — — — — As of December 31, 2018, all compensation costs related to share-based compensation arrangements granted under the 2007 Plan had been fully recognized. As of December 31, 2018, there was approximately $202,110 of total unrecognized compensation cost related to nonvested share-based compensation arrangements granted under the 2016 Plan, including $66,585 of incremental compensation expense stemming from the option repricing. The cost is expected to be recognized over a weighted-average period of 3.2 years at an estimated forfeiture rate of 0% for executives and 20% for non-executives. |
| Revenue | 12 Months Ended |
| Dec. 31, 2018 | |
| PaymentOnCapitalLease | |
| Disclosure - Revenue | Note 8. Revenue The following table provides a breakdown of the revenue by category as included in the consolidated Statements of Operations: Year ended December 31, 2018 2017 Lease, license and service fees: Flat daily rate lease $ 1,615,266 $ 1,508,802 Participation lease 613,197 677,029 Placement and license fees 30,753 4,150 $ 2,259,216 $ 2,189,981 Sales of gaming products and parts: Slot machine sales $ 1,863,932 $ 588,680 Installation fees 940 2,581 Parts and ancillary items sales 1,555,562 6,652 $ 3,420,434 $ 597,913 The following table provides a breakdown of the lease revenue by product type: Year ended December 31, 2018 2017 Lease, license and service fees by product: Slot machines $ 2,242,250 $ 2,086,055 Poker Tables 16,966 103,926 $ 2,259,216 $ 2,189,981 |
| Income Taxes | 12 Months Ended |
| Dec. 31, 2018 | |
| PaymentOnCapitalLease | |
| Income Taxes | Note 9. Income Taxes The components of the income tax provision (benefit) for the years ended December 31, 2018 and 2017 are as follows: 2018 2017 Current tax expense: Federal $ — $ — State 23,000 — $ 23,000 $ — Deferred tax benefit (expense): Federal $ (199,000 ) $ 37,000 State (106,000 ) 19,000 Valuation reserve 305,000 (56,000 ) $ — $ — Net deferred tax assets consist of the following components as of December 31, 2018 and 2017: 2018 2017 Deferred tax asset: Net operating loss carryforward $ 3,777,000 $ 3,993,000 Accounts receivable reserves 2,000 3,000 Property and equipment (211,000 ) (117,000 ) Accrued expenses 61,000 61,000 Impairment charge 211,000 211,000 Start-up costs 10,000 14,000 Stock based compensation 78,000 55,000 Inventory reserves 3,000 4,000 Other 8,000 20,000 3,939,000 4,244,000 Less valuation allowance (3,939,000 ) (4,244,000 ) Net deferred taxes $ — $ — Due to the change in the corporate tax rate under the Tax Cuts and Jobs Act (“Tax Cuts”) signed into law in December 2017, a cumulative adjustment of $1,703,000 was made to the deferred tax asset and valuation allowance to account for the corporate tax rate reduction to 21% from 34%. A reconciliation of income tax expense at statutory rates to the income tax expense reported in the Statements of Operations is as follows for the years ended December 31, 2018 and 2017. Year ended December 31, 2018 2017 Federal tax benefit at statutory rate $ 214,000 $ (48,000 ) State tax benefit net of federal taxes 104,000 (18,000 ) Other 10,000 10,000 Increase (decrease) in valuation allowance (305,000 ) 56,000 Income tax expense $ 23,000 $ — As of December 31, 2018, the Company has available, for federal and state income tax purposes, net operating loss (“NOL”) carryforwards of approximately $13,110,000, which expire at various times through 2038. The utilization of the NOL carryforwards is dependent upon the ability of the Company to generate sufficient taxable income during the carryforward periods. The NOL carryforwards are also subject to certain limitations on their utilization should changes in Company ownership occur. The Company has not recognized any NOL carryforward benefits or other net deferred tax assets in the current financial statements. |
| Related Party Transactions | 12 Months Ended |
| Dec. 31, 2018 | |
| PaymentOnCapitalLease | |
| Related Party Transactions | Note 10. Related Party Transactions In September 2017, the Company borrowed $100,000 from The Co-Investment Fund II, L.P. (“CI II”) and $25,000 from its CEO/CFO and Director, Brian Haveson (“BH”). The notes were due on March 1, 2018 and included interest at the rate of 8% per annum, payable on a monthly basis. The proceeds of the loans were used for working capital purposes. On March 1, 2018, CI II and BH agreed to extend the maturity date on each of the promissory notes held to September 1, 2018. All other provisions of the notes remained unchanged and in full force. As of December 31, 2018, CI II owns 3.89% of the (voting) Common Stock and 100% of the Nonvoting Common Stock of the Company. CI II is managed by Cross Atlantic Capital Partners, wholly owned by Donald Caldwell, who is a Director and Shareholder of the Company. Frederick Tecce is also a Director and Shareholder of the Company and is a Managing Director of Cross Atlantic Capital Partners. During the years ended December 31, 2018 and 2017, respectively, interest expense on the notes from CI II and BH amounted to $4,844 and $2,849. The Company repaid the loans along with interest due on June 26, 2018. |
| Recently Issued Pronouncements | 12 Months Ended |
| Dec. 31, 2018 | |
| PaymentOnCapitalLease | |
| Concentration of Risk - Major Customer | Note 11. Recently Issued Pronouncements In May 2014, the FASB and the International Accounting Standards Board (“IASB”) issued converged guidance on recognizing revenue from contracts with customers. The new guidance removes inconsistencies in current revenue recognition requirements, provides a framework for addressing revenue issues, improves comparability of revenue recognition across industries, entities and jurisdictions, and provides more useful information to users of financial statements through improved disclosure requirements. In general, the update requires that a five-step principles based revenue recognition model be applied in recognizing revenue from contracts with customers: 1. Identify the contract(s) with a customer 2. Identify the performance obligations in the contract 3. Determine the transaction price 4. Allocate the transaction price to the performance obligations in the contract 5. Recognize revenue when (or as) the entity satisfies a performance obligation. This guidance replaces the numerous GAAP revenue recognition requirements that are industry specific and establishes the principles to report about the nature, timing, and uncertainty of revenue from contracts with customers to users of financial statements. Additions to this update were issued by the FASB and IASB in March 2016, clarifying the operability and understandability on principal versus agent considerations. In April 2016, further clarifications were issued on two aspects: identifying performance obligations and clarifying the licensing implementation guidance. An additional update was issued in May 2016, which included a technical correction, clarifying the objective of assessing the collectability criterion, the presentation of sales and other similar taxes collected from customers, specifying that the measurement date for noncash consideration is at contract inception, and practical guidance for applying contract modifications and completed contracts at the transition date. Additional technical corrections and improvements to clarify and correct unintended application of the guidance were issued in December 2016. These updates do not change the core principles of this guidance but rather provide clarification and implementation within the scope of this topic. The guidance became effective for annual and interim reporting periods beginning after December 15, 2017. The Company adopted ASC 606 on January 1, 2018 using the modified retrospective application transition method for any contracts that were not complete as of that date. Although this update required enhancements to the processes related to this guidance and the control activities within them, the updates in this guidance had an immaterial impact on operations and revenue. There were no uncompleted contracts as of January 1, 2018. In February 2016, the FASB finalized the accounting standard and issued an update under the Leases topic. The update provides for major changes by lessees in that a lessee must recognize on its statement of financial position both an asset (“right-of-use”), representing its right to use the underlying asset, and a lease liability for all leases, other than short-term leases with terms of twelve months or less. The guidance defines a lease as a contract, or part of a contract, that conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration. Control over the use of the identified asset means that the customer has both (1) the right to obtain substantially all of the economic benefits from the use of the asset and (2) the right to direct the use of the asset. Differentiation between finance and operating leases still remains however the most notable difference from previous guidance is recognizing the asset and liability on the statement of financial position for operating leases. For finance leases, lessees are required to: 1. Recognize a right-of-use asset and a lease liability in the statement of financial position which is initially measured at the present value of the lease payments; 2. Recognize interest in the statement of comprehensive income on the lease liability separately from amortization of the right-of-use asset; and 3. Classify in the statement of cash flows repayments of the principal portion of the lease liability within financing activities and payments of interest on the lease liability and variable lease payments within operating activities. For operating leases, lessees are required to: 1. Recognize a right-of-use asset and a lease liability in the statement of financial position which is initially measured at the present value of the lease payments; 2. Recognize a single lease cost, generally allocated over the lease term on a straight-line basis; and 3. Classify all cash payments in the statement of cash flows as operating activities. Under the update, lessor accounting for leases remains largely unchanged providing that lessor accounting is aligned with changes made to the lessee accounting guidance and key aspects under the revenue recognition guidance. The amendments in this update as well as the targeted and codification improvements issued in July 2018, are effective for fiscal and interim periods beginning after December 15, 2018. The Company completed its review and assessment of the impact that this guidance will have on our financial statements and has determined that one lease agreement for the Company’s corporate offices, as described in more detail in Note 6. Commitments In November 2016, the FASB issued an update under the Statement of Cash Flows topic which applies to entities that have restricted cash or restricted cash equivalents and are required to present a statement of cash flows. The update requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts described as restricted cash or restricted cash equivalents, and that the amounts generally described as restricted cash and restricted cash equivalents be included in the beginning-of-period and end-of-period total amounts shown on the statement. The amendments in this update became effective for interim periods and fiscal years beginning after December 15, 2017 and did not have a material impact on our financial statements. |
| Subsequent Events | 12 Months Ended |
| Dec. 31, 2018 | |
| Subsequent Events [Abstract] | |
| Subsequent Events | Note 12. Subsequent Event On January 21, 2019, the Company closed on Advance 4 under the Loan with PDS. The advance is evidenced by a Note in the principal amount of $581,700 and bears interest at an annual rate of 11%. Monthly payments of $19,085 commence on February 21, 2019, and the Note matures on January 21, 2022. |
