| Document and Entity Information - shares | 12 Months Ended | |
| Dec. 31, 2021 | Mar. 30, 2022 | |
| 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, 2021 | |
| Amendment Flag | false | |
| Current Fiscal Year End Date | --12-31 | |
| Is Entity's Reporting Status Current? | Yes | |
| Entity Filer Category | Non-accelerated Filer | |
| Entity Common Stock, Shares Outstanding | 4,649,383 | |
| Document Fiscal Period Focus | FY | |
| Document Fiscal Year Focus | 2021 | |
| EntityEmergingGrowthCompany | false | |
| Entity Small Business | true | |
| Entity Interactive Data Current | Yes | |
| Entity Incorporation State Country Code | NV | |
| Entity File Number | 000-52575 | |
| AuditorName | Assurance Dimensions | |
| AuditorLocation | Margate, Florida, USA | |
| AuditorFirmId | 5036 |
| Consolidated Balance Sheets - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
| ASSETS | ||
| Cash | $ 1,619,572 | $ 1,857,901 |
| Accounts receivable, net | 781,646 | 421,448 |
| Inventory | 834,264 | 1,148,549 |
| Prepaid expenses | 212,499 | 211,339 |
| Total Current Assets | 3,447,981 | 3,642,941 |
| Property, Plant and Equipment, net | 3,372,898 | 3,768,322 |
| Other Assets | 8,193 | 8,193 |
| License Fees, net of accumulated amortization | 32,950 | 2,672 |
| Total Assets | 7,245,022 | 7,869,055 |
| Liabilities and Stockholders' Deficit | ||
| Accounts payable | 519,239 | 289,724 |
| Accrued expenses | 125,584 | 172,687 |
| Current portion of long term notes payable | 683,484 | 591,118 |
| Interest payable | 188 | |
| Total Current Liabilities | 1,418,403 | 1,095,106 |
| Long Term Debt and Other Liabilities | ||
| Long term notes payable | 3,956,899 | 4,640,383 |
| Interest payable and other liabilities | 52,147 | |
| Other long term liabilities | 355,360 | 430,600 |
| Fair value of warrants and convertibility feature of long term debt | 714,350 | 84,671 |
| Total Long Term Debt and Other Liabilities | 5,078,756 | 5,115,654 |
| Commitments | ||
| 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, 2021 and 2020 | ||
| Common stock: $0.001 par value; authorized 90,000,000 shares; 4,916,285 shares issued; 4,649,383 outstanding at December 31, 2021 and 2020 | 4,917 | 4,917 |
| Nonvoting common stock: $0.001 par value; authorized 50,000,000 shares; 33,300,000 issued and outstanding at December 31, 2021 and 2020 | 33,300 | 33,300 |
| Additional paid in capital | 30,647,509 | 30,595,461 |
| Accumulated deficit | (29,917,052) | (28,994,572) |
| Treasury stock, 266,902 shares at cost | (20,811) | (20,811) |
| Total Stockholders' Equity | 747,863 | 1,618,295 |
| Total Liabilities and Stockholders' Equity | $ 7,245,022 | $ 7,869,055 |
| Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2021 | Dec. 31, 2020 |
| 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 | ||
| Preferred Stock Series A Nonvoting capital stock, outstanding shares | ||
| 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 | 4,916,285 |
| Common stock, outstanding shares | 4,649,383 | 4,649,383 |
| Consolidated Statements of Operations (Unaudited) - USD ($) | 12 Months Ended | |
| Dec. 31, 2021 | Dec. 31, 2020 | |
| Costs and operating expenses | ||
| Cost of products sold | $ 369,099 | $ 683,023 |
| Operating expenses | 283,988 | 466,475 |
| Research and development | 402,955 | 378,168 |
| Selling, general & administrative expenses | 1,955,205 | 1,622,515 |
| Depreciation and amortization | 34,434 | 13,584 |
| Total costs and operating expenses | 2,676,582 | 2,520,742 |
| Operating income (loss) | 441,962 | (255,076) |
| Non-operating income (expense) | ||
| Net interest expense | (731,738) | (909,548) |
| Change in value of warrants | (629,679) | 695,230 |
| Other income (expense) | 20,000 | |
| Net income | $ (922,480) | $ (445,739) |
| Net loss per common share including Series A Nonvoting shares-basic and diluted | $ (0.02) | $ (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 | 4,649,383 | 4,649,383 |
| Weighted average nonvoting common shares outstanding-basic and diluted | 33,300,000 | 33,300,000 |
| License and Service Fees | ||
| Revenues | ||
| Revenues | $ 3,948,945 | $ 2,878,008 |
| Sales of Gaming Products and Parts | ||
| Revenues | ||
| Revenues | 702,697 | 1,110,953 |
| Service Revenues | ||
| Revenues | ||
| Revenues | $ 4,651,642 | $ 3,988,961 |
| Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 12 Months Ended | |
| Dec. 31, 2021 | Dec. 31, 2020 | |
| Changes in Assets and Liabilities | ||
| Decrease in accounts receivable | $ (360,199) | $ 326,256 |
| Decrease in inventories | 442,587 | 533,327 |
| Increase (decrease) in accounts payable | 229,515 | (267,475) |
| Increase in accrued interest | 92,845 | |
| Increase in accrued expenses | (47,103) | (210,119) |
| Decrease in fair value of warrants and convertible feature of long term debt | 629,679 | (695,230) |
| NET CASH USED IN OPERATING ACTIVITES | 1,290,209 | 634,336 |
| CASH FLOWS FROM INVESTING ACTIVITIES | ||
| Purchase of equipment | (919,475) | (811,044) |
| Proceeds from sale of fixed assets | (32,500) | |
| Decrease in license fees | ||
| Net cash Used in Investing activities | (951,975) | (811,044) |
| CASH FLOWS FROM FINANCING ACTIVITIES | ||
| Net proceeds from issuance of Notes | 990,000 | |
| Payment on capital lease | 78,248 | |
| Net cash provided by financing activities | (576,563) | 435,860 |
| Net Increase (Decrease) in Cash | (238,329) | 259,152 |
| Cash - Beginning of period | 1,857,901 | 1,598,749 |
| Cash - End of period | 1,619,572 | 1,857,901 |
| Supplemental Disclosure of Non-Cash Financing Activities: | ||
| Extinguishment of accrued interest on loans | 92,845 | |
| Inventory transferred to fixed assets | 139,550 | 308,061 |
| Issuance of convertible debt option | ||
| Cash paid for interest | $ 679,289 | $ 746,051 |
| Nature of Business and Significant Accounting Policies | 12 Months Ended |
| Dec. 31, 2021 | |
| 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. 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 slot machines to customers in various gaming jurisdictions. Our consolidated financial statements include the accounts of the Company, including Lightning Poker and Lightning Slots. All inter-company accounts and transactions have been eliminated. For the year ended December 31, 2021, the Company recognized a net loss of $922,480 however it generated cash flows from operations, has sufficient inventory to fill outstanding lease and sales orders, and has maintained and sustained working capital surpluses. Due to the ongoing effects of the outbreak of the novel coronavirus disease (COVID-19), the Company’s operations, as well as our customers’, are open with limitations and through strict adherence to guidelines established by the Centers for Disease Control and Prevention (“CDC”) and each facility’s respective state or tribal government. The ability to measure the degree to which COVID-19 will impact the Company’s performance in its aftermath will depend on the continued duration and spread of COVID-19, as well as any future restrictions placed on us or our customers due to the outbreak, whether mandated or recommended. On May 7, 2020, we received $246,200 in funding under the federal loan program known as the Paycheck Protection Program (“PPP”) through the Small Business Association (“SBA”) which has helped to lessen the impact of COVID-19 for the expenses covered under the program. In addition, we received a $20,000 grant in September 2020 through our county government meant to provide economic support in the form of working capital for businesses suffering from the coronavirus COVID-19 public health emergency. On February 12, 2021, we received $237,030 in funding under the second round of the federal loan program known as PPP2 through the SBA which has helped to lessen the impact of COVID-19 for the expenses covered under the program. See Note 7 In addition, aggressive expense management has been employed to mitigate the adverse impact that COVID-19 has had on our operations and performance. We anticipate that the effects of COVID-19 on our operations will be temporary and we will continue to have the ability to meet our obligations, however the Company’s future performance will depend on the duration of COVID-19 and the Company’s ability to distribute its products and successfully market them to more casinos and gaming venues. Although we realized a net loss for the year ended December 31, 2021, based on our working capital surplus, financial condition, cash flow projections, anticipated revenues and financing agreements, 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 consolidated 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 win or “participation” revenue collected for each 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 revenue agreements are invoiced when participation reports are remitted to us detailing the monthly per unit per theme information including coin-in, net win, 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 may be 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 may also be 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 2021 and 2020, there was no revenue generated from customers outside the United States. Two casino customers accounted for 13% and 29% of our revenues for the years ended December 31, 2021 and 2020, respectively. One casino group represented 14% and 8% of total revenues for each of the years ended December 31, 2021 and 2020, respectively. For each of the years ended December 31, 2021 and 2020, the Company recorded no revenues related to performance obligations from prior periods. Use of Estimates Significant estimates include the recoverable value of long-lived assets, allowance for doubtful accounts, valuation of warrant liability fair value and projected cash flows. Actual results could differ from those estimates. Cash Concentrations of Credit Risk Receivables and Allowance for Doubtful Accounts At December 31, 2021, accounts receivable from four casino customers represented 45% of total accounts receivable. At December 31, 2020, four casino customers represented 32% of total accounts receivable. One customer represented 13% and 14% of the total accounts receivable balance as of December 31, 2021 and 2020, respectively. License Fees: Patents Research and Development product costs associated with the development of our products. As of December 31, 2021 and 2020, no amounts had been capitalized. Inventory Fair Value Measurements Accounting Standards Codification (“ASC”) 820 – Fair Value Measurement defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 further establishes a fair value hierarchy that prioritizes the inputs used in valuation techniques into the following three levels, giving the highest priority to Level 1 inputs and the lowest priority to Level 3 inputs: ● Level 1: Unadjusted quoted prices in active markets for identical assets and liabilities that the reporting entity can access at the measurement date; ● Level 2: Inputs other than quoted prices in active markets for identical assets and liabilities that are observable, either directly or indirectly; ● Level 3: Unobservable inputs for the asset or liability, including significant assumptions of the reporting entity and other market participants. The fair value of and the methodology used by the Company for the warrant liability is discussed in Note 10 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 2021 and 2020 related to unrecognized tax benefits. There is no accrual for interest or penalties as of December 31, 2021 and 2020. The Company files U.S. income tax returns and multiple state income tax returns. With few exceptions, the U.S. and state income tax returns filed for the tax years ending on December 31, 2018 and thereafter are subject to examination by the relevant taxing authorities. Advertising Impairment of Long-Lived Assets - Going Concern : T 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 10 Warrants: Notes 5 10 Earnings 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 2,975,000 3,925,000 Warrant 7,000,000 7,000,000 9,975,000 10,925,000 Reclassification Depreciation expense related to the gaming equipment under lease and license fee costs reported under Operating expenses in the prior year’s consolidated Statements of Operations have been reclassified to conform to the current year’s presentation. These reclassifications had no effect on the reported results of operations. |
| Inventory | 12 Months Ended |
| Dec. 31, 2021 | |
| PaymentOnCapitalLease | |
| Inventory | Note 2. Inventory Inventory consisted of the following: December 31, December 31, Finished products $ 613,939 $ 983,866 Raw materials 220,325 164,683 Inventory $ 834,264 $ 1,148,549 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. In both December 2020 and December 2021, parts and cabinets remaining in inventory that were associated with the former slot machine cabinet design in use prior to the implementation of the new design in 2018, and parts that were initially purchased for the new cabinet design and were deemed unusable, were determined to be obsolete and were destroyed and discarded. The cost of the discarded inventory in December 2021 was $11,247 and $39,980 in December 2020. In addition, $54,415 in costs of slot machine cabinets in testing, that were subsequently not used for manufacture, were written off in December 2020. These costs are included in the Statements of Operations under operating expenses. |
| Property and Equipment | 12 Months Ended |
| Dec. 31, 2021 | |
| PaymentOnCapitalLease | |
| Property and Equipment | Note 3. Property and Equipment Property and equipment consisted of the following: December 31, 2021 December 31, 2020 Equipment, principally gaming equipment $ 6,150,286 $ 5,928,277 Delivery truck 78,247 28,140 Furniture and fixtures 89,162 90,206 Leasehold improvements 91,794 91,794 Property and equipment 6,409,489 6,138,417 Less accumulated depreciation (3,036,591 ) (2,370,095 ) Property and equipment, net $ 3,372,898 $ 3,768,322 In both July 2021 and December 2020, the Company determined that the slot machines that were built using the former slot machine cabinet design and that had previously been out on lease and returned from customers, had no further use to the Company and no resale or scrap value and were destroyed and discarded. Ancillary items associated with these slot machines were also determined to have no resale or scrap value. The cost of the slot machines and associated items that were scrapped in July 2021 was $153,891 with a net book value of $-0-. The cost of the slot machines and associated items that were scrapped in December 2020 was $684,344 with a net book value of $-0-. Depreciation expense related to the gaming equipment under lease is listed separately in the consolidated Statements of Operations as costs of revenue. Depreciation expense related to all other property and equipment included in the consolidated Statements of Operations was $32,212 and $10,251 for the years ended December 31, 2021 and 2020, respectively. |
| License Fees | 12 Months Ended |
| Dec. 31, 2021 | |
| PaymentOnCapitalLease | |
| License Fees | Note 4. License Fees License fees consist of the following: December 31, 2021 December 31, Purchased licenses $ 379,660 $ 347,160 Less accumulated amortization (346,710 ) (344,488 ) License fees, net $ 32,950 $ 2,672 Under a patent cross license agreement with a licensor, the Company was required to pay an upfront per unit license fee on games (slot machines) placed in service, each identifiable by a unique serial number. Prior to May 31, 2020, the licenses for gaming machine patents and technology had been added to the cost of slot machines built for sale or lease using a capitalization rate per machine. The capitalization rate was based on expected annual machine production and adjusted accordingly based on actual versus projected units produced. As of May 31, 2020, machine production for the remainder of the 2020 calendar year was projected to be nominal due to COVID-19 and the cost of licenses for gaming technology as of that date of $27,000 were expensed as license fees on a straight-line basis at $6,750 per month over the remaining initial term of the license period ending September 30, 2020. Upon amendments of the patent cross license agreement in March and October 2020, license fees incurred after September 30, 2020 at $45,000 per quarter were expensed on a straight-line basis at $15,000 per month. On November 30, 2021, the agreement was further amended reverting to a per unit fee on machines. In December 2021, the Company paid $32,500 upfront for the first 50 machines to be deployed under the new agreement, with subsequent fees due and payable on a quarterly basis and based on machines initially deployed in the preceding calendar quarter. The $650 per unit fee for the licenses will be added to the cost of slot machines as they are built for sale or lease. The weighted average useful life of purchased source code licenses is 3 years. Amortization expense included in the consolidated Statements of Operations and relating to the purchased licenses was $2,222 and $3,333 for the years ended December 31, 2021 and 2020, respectively. The purchased source code license was fully amortized as of September 30, 2021. |
| Notes Payable | 12 Months Ended |
| Dec. 31, 2021 | |
| PaymentOnCapitalLease | |
| Notes Payable | Note 5. Notes Payable On November 27, 2019 (the “Closing Date”), the Company entered into a Master Loan Agreement (the “Loan”) with PDS Gaming – Nevada, LLC (“PDS Gaming” or the “Lender”) to make a series of advances under the Loan in the principal amount of up to $7,000,000 in order to (i) re-finance existing outstanding indebtedness of the Company which totaled $3,765,792, (ii) finance the Company’s purchase or manufacturing of equipment and (iii) to be used for general working capital. The Loan is evidenced by Promissory Notes (each a “Note” and collectively the “Notes”) executed by the Company payable to the order of the Lender, and is secured by a Security Agreement dated of even date with the Loan, between the Company and the Lender 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 is advanced, in parts, pursuant to the Loan and in the amounts of each Note during the advance period which ran until November 30, 2020. The Notes bear interest on the outstanding principal amount at a rate per annum equal to an annual rate of 13%. Payments consisting of principal and interest for each advance financed under the Note are due and th The initial advance dated November 27, 2019 is evidenced by a Note in the principal amount of $5,000,000 (“Advance 9”). Monthly payments of $91,616 on Advance 9 commenced on January 1, 2020 and will mature on December 1, 2024. On January 29, 2020, the Company closed on Advance 10 under the Loan with PDS Gaming which is evidenced by a Note in the principal amount of $1,000,000. Monthly payments of $18,309 commenced on March 1, 2020, and the Note matures on February 1, 2025. As inducement to the Lender to make the Loan, the Company issued to the Lender a warrant (“Warrant”) entitling the Lender to purchase up to 7,000,000 shares of common stock of the Company which is equal to 15.6% of the outstanding common stock on the Closing Date. The Warrant is detachable with an exercise price of $0.05 per share and expires ten years from the Closing Date. The Warrant cannot be exercised until PDS Gaming is fully licensed in all of the Company’s gaming jurisdictions. The Company calculated the fair value of the Warrant to be $779,901 at the time of issuance using the Black-Scholes pricing model, and under ASC 480, recorded the Warrant as a liability. See Note 10 On the Closing Date, the Company recorded the percentage of the Loan remaining for advance in proportion to the total Loan, i.e. 2/7 ($2,000,000/$7,000,000) or 28.6% or $229,829, as a deferred debt commitment fee which was amortized on a straight-line basis until the end of the advance period which expired on November 30, 2020. In January 2020, a $10,000 loan fee was paid to the Lender and the fee as well as the proportionate amount of the unamortized deferred fee attributable to the $1,000,000 advance of Debt discount of $137,509 was calculated as the cost associated with the debt in proportion to the total cost of the debt that was refinanced or reacquired and is presented as a direct reduction to the value of the debt and is being amortized over the life of the advance using the interest method. The balance of the debt discount attributable to the advance taken on November 27, 2019 was $73,975 and $103,874 as of December 31, 2021 and 2020, respectively. The Loan is subject to covenant clauses whereby the Company is required to meet certain key financial ratios. Due to the material effect that COVID-19 has had on the Company’s revenues, the Lender amended the Loan in September 2020, providing a waiver of compliance with the financial ratio covenants and extending and resetting the compliance with the covenants until the quarter ending June 30, 2021. Due to the continued impact of COVID-19 on the Company’s operations, the Lender executed a second amendment to the Loan in March 2021, which waived compliance with the financial ratio covenants and further extended and reset compliance with the covenants commencing with the quarter ending December 31, 2021. As of December 31, 2021, the Company is in compliance with the amended covenants. As of December 31, 2021 and 2020, Notes payable, net of debt discount, consist of the following: Advance Date Maturity Date Note Amount Monthly Payment Interest Rate December 31, 2021 December 31, 2020 PDS Gaming Advance 9 11/27/2019 12/1/2024 $ 5,000,000 $ 91,616 13 % $ 3,889,153 $ 4,397,410 PDS Gaming Advance 10 1/29/2020 2/1/2025 $ 1,000,000 $ 18,309 13 % 751,230 834,091 Total Notes Payable 4,640,383 4,837,004 Less: amounts classified as current (683,484 ) (439,594 ) Long-Term Notes Payable $ 3,956,899 $ 4,397,410 The following table lists the future principal payments, net of debt discount, due on the Notes as of December 31, 2021: Year Ending Amount 2022 $ 683,484 2023 790,371 2024 2,768,025 2025 398,503 $ 4,640,383 The following table provides a breakdown of the interest expense related to the Notes payable as included in the consolidated Statements of Operations: Year ended December 31, 2021 2020 Interest on Notes payable $ 675,721 $ 746,651 Amortization of deferred debt commitment fee — 111,415 Amortization of debt discount 52,261 51,482 $ 727,982 $ 909,548 |
| Auto Loan | 12 Months Ended |
| Dec. 31, 2021 | |
| Accounting Policies [Abstract] | |
| Auto Loan | Note 6. Auto Loan On January 30, 2021, the Company financed the purchase of a 2021 Ford F-650 box truck to be used as its delivery truck. The purchase price of the truck of $78,248 was financed with Ford Credit (“FC”) for a term of sixty months at an annual percentage rate of 5.54%. Monthly payments of $1,500 commenced March 16, 2021. The principal balance of the loan on December 31, 2021 was $66,816, and interest expense in the consolidated Statements of Operations related to the auto loan for the year ended December 31, 2021 was $3,756. The following table lists the future principal payments due to FC on the auto loan as of December 31, 2021: Year Ending Amount 2022 $ 14,669 2023 15,502 2024 16,378 2025 17,313 2026 2,954 $ 66,816 |
| Deferred Income | 12 Months Ended |
| Dec. 31, 2021 | |
| Revenue Recognition and Deferred Revenue [Abstract] | |
| Deferred Income | Note 7. Deferred Income In March 2020, Congress established the Paycheck Protection Program (“PPP”) to provide relief to small businesses during the coronavirus pandemic (“COVID-19”) as part of the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act. The legislation authorized Treasury to use the Small Business Association’s (“SBA’s”) 7(a) small business lending program to fund forgivable loans that qualifying businesses could spend to cover payroll, mortgage interest, rent, and utilities during the “Covered Period” defined as the 8-week period starting on the date the PPP loan proceeds are received. Upon meeting certain criteria as specified in the PPP program, the loans are eligible for partial or total forgiveness. On June 5, 2020, the PPP Flexibility Act of 2020 (the “Act”) was signed into law, giving borrowers flexibility with certain criteria under the PPP program including extension of the Covered Period to 24 weeks from 8 weeks, reduction to 60% of the payroll costs requirement (previously 75%), extension of the payment deferral period, extension of the full-time equivalent (“FTE”) restoration deadline to December 31, 2020, and safe harbor provisions to remove the FTE reduction in forgiveness under limited circumstances. In June 2020, the AICPA issued Technical Question and Answer (“TQA”) 3200.18, Borrower Accounting for a Forgivable Loan Received Under the Small Business Administration Paycheck Protection Program IAS 20 provides a model for the accounting of different forms of government assistance, which includes forgivable loans. Under this model, government assistance is not recognized until there is reasonable assurance (similar to the probable threshold in U.S. GAAP) that any conditions attached to the assistance will be met and the assistance will be received. Once there is reasonable assurance that the conditions will be met, the earnings impact of the grant is recorded on a systematic basis over the periods in which the entity recognizes as expenses the related costs for which the grants are intended to compensate. Hence, a business entity would record the cash inflow from the PPP loan as a deferred income liability and subsequently reduce the liability, with the offset through earnings as either a credit in the income statement or a reduction of the related expenses, as it recognizes the related cost to which the loan relates, for example, payroll expense. In December 2020, the Consolidated Appropriations Act was passed providing additional COVID-19 relief to small businesses by providing a second round of PPP loans, referred to as PPP2, including a second PPP loan for small businesses facing significant revenue declines in any 2020 quarter compared to the same quarter in 2019. In addition, borrowers can select any Covered Period between 8 and 24 weeks. The Company applied for and received proceeds of $237,030 through the PPP2 program on February 12, 2021 and elected a 12-week Covered Period. The Company determined both through internal calculations and those provided by the AICPA’s forgiveness model, that all criteria for forgiveness based on both the CARES Act and the Act have been met as of December 31, 2021 and that the PPP2 loan will be 100% forgiven. In analogizing to IAS 20, the Company considers the PPP2 loan a grant that is expected to be forgiven and as such, recorded the proceeds as a deferred income liability when received and recognized the PPP2 grant as a reduction of the related expenses to which the loan was intended to compensate. For the Covered Period February 12, 2021 through May 6, 2021, the Company incurred the following costs related to and compensated through the PPP2 proceeds and which are expected to be forgiven in their entirety: Salaries and wages $ 228,541 401K match 7,295 Payroll taxes 1,194 Total eligible and forgivable $ 237,030 As of December 31, 2021, in accordance with methods acceptable under IAS 20, the Company reduced the PPP2 deferred income liability and offset the expenses listed above by their respective amounts, leaving a balance remaining of $-0- as of that date. In February 2022, the Company received notification from its bank that the application for forgiveness was approved by the SBA, confirming that the PPP2 loan has been forgiven in its entirety. The Company applied for and received proceeds of $246,200 through the PPP program on May 7, 2020, prior to the enactment of the Act. Based on the flexibility provided under the Act, the Company elected to extend its Covered Period to 24 weeks. The Company determined both through internal calculations and those provided by the AICPA’s forgiveness model, that all criteria for forgiveness based on both the CARES Act and the Act have been met as of July 15, 2020 and that the PPP loan will be 100% forgiven. In analogizing to IAS 20, the Company considered the PPP loan a grant that is expected to be forgiven and as such, recorded the proceeds as a deferred income liability when received and recognized the PPP grant as a reduction of the related expenses to which the loan was intended to compensate. For the period May 7, 2020 through October 21, 2020, the Covered Period, the Company incurred the following costs related to and compensated through the PPP proceeds and which are expected to be forgiven in their entirety: Salaries and wages $ 165,767 Group health insurance 32,758 401K match 4,157 Subtotal payroll expenses 202,682 Rent 40,925 Utilities 2,593 Total eligible and forgivable $ 246,200 As of December 31, 2020, in accordance with methods acceptable under IAS 20, the Company reduced the PPP deferred income liability and offset the expenses listed above by their respective amounts, leaving a balance remaining of $-0- as of that date. In March 2021, the Company received notification from its bank that the application for forgiveness was approved by the SBA, confirming that the PPP loan has been forgiven in its entirety. |
| Leases | 12 Months Ended |
| Dec. 31, 2021 | |
| PaymentOnCapitalLease | |
| Note Payable Related Party | Note 8. Leases In November 2009, the Company entered into a lease agreement for its corporate office and warehouse facility 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. In August 2020, a second amendment to the lease was executed to include: 1) an extension of the In September 2020, the remaining balances in the right-of-use asset and lease liability associated with the first amendment to the lease of $37,016 and $44,417, respectively, were eliminated and the difference of $7,401 was adjusted as a credit to rent expense. On September 30, 2020, the right-of-use asset and corresponding lease liability of $462,858 were recorded to account for the second amendment to the lease. The following table summarizes the right-of-use asset and lease liability as of December 31, 2021: Right-of-use Asset $ 383,000 Lease Liability Current $ 75,239 Long-term 355,360 $ 430,599 Net of the elimination of the remaining balances from the first amendment to the lease and the PPP forgivable amount as listed in Note 7 The following table summarizes the Company’s scheduled future minimum lease payments as of December 31, 2021: Year Ended December 31: 2022 $ 106,985 2023 109,299 2024 111,612 2025 113,925 2026 77,106 Minimum lease payments 518,927 Less: imputed interest (88,328 ) Present value of minimum lease payments 430,599 Less: current maturities of lease liability 75,239 Long-term lease liability $ 355,360 As of December 31, 2021 and 2020, the weighted-average remaining lease term for the building lease was 4.7 years and 5.7 years, respectively. Due to the fact that we do not have access to the rate implicit in the lease, we utilized our incremental borrowing rate as the discount rate. The weighted average discount rate associated with the lease as of December 31, 2021 and 2020 was 8%. |
| Commitments | 12 Months Ended |
| Dec. 31, 2021 | |
| PaymentOnCapitalLease | |
| Commitments | Note 9. Commitments and Contingencies The Company routinely enters into license agreements for the use of intellectual properties and technologies. These agreements generally provide for license fee payments when the agreements are signed and minimum commitments, which are cancellable in certain circumstances. On March 10, 2020, the Company and a licensor amended the terms under a patent cross license agreement dated February 28, 2017, which required the Company to pay an upfront per unit license fee on games (slot machines) placed in service after the agreement date and for a period of five years and settled on the amount due upon audit conducted by the licensor for the period March 1, 2017 through September 30, 2019. Upon the payment of the $158,250 audit settlement amount, the Company was released from all claims under the agreement. The amendment removed the upfront per unit license fee and replaced it with a quarterly un-recoupable fee of $45,000 payable within fifteen days after the end of each calendar quarter and removed all audit provisions. The amendment terminates after five years from October 1, 2019, or September 30, 2024. The $66,000 difference between the $203,250 combined amount paid by the Company for the audit settlement and the quarterly license fee, and the $269,250 balance in the estimated liability for the license fee, was reversed in March 2020 and is included as a reduction to the operating expenses. On October 13, 2020, the agreement was further amended allowing the Company to defer the payment of the quarterly fees according to the deferred payment schedule as delineated in the agreement, extended the termination of the agreement to December 31, 2024, increased the final four quarterly payments to $50,000 and extended the final four quarterly payments beyond the termination date to 2025. As described in Note 4 On November 30, 2021, the agreement was further amended reverting to a per unit fee on games. The amendment stipulated that the Company pay fees outstanding under the previous amendment plus upfront fees for the first 50 games/serial numbers to be deployed under the new agreement. Subsequent fees will be due and payable on a quarterly basis and based on games initially deployed in the preceding calendar quarter. In December 2021, upon payment of $45,000 for fees outstanding under the previous amendment plus $32,500 for the initial games to be deployed under the amendment, the Company was released from all claims under the previous amendment. In November 2021, the Company reversed the remaining $195,000 in accrued liability for the quarterly license fee which resulted in a reduction to the operating expenses. License fees included as operating expenses in the consolidated Statements of Operations for the years ended December 31, 2021 and 2020 were ($45,000) and $96,000, respectively. |
| Stockholders Equity | 12 Months Ended |
| Dec. 31, 2021 | |
| PaymentOnCapitalLease | |
| Stockholders' Deficit | Note 10. Stockholders’ Equity Stock Option Plans 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 permits 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 2020 under the 2007 Plan is as follows: Shares Weighted Average Exercise Price Options outstanding at December 31, 2019 5,000 $ 2.00 Options granted — — Options exercised — — Options cancelled (5,000 ) 2.00 Options outstanding at December 31, 2020 — $ 0.00 Options available for grant under the 2007 Plan at December 31, 2020 — 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 2021 and 2020 under the 2016 Plan is as follows: Shares Weighted Average Exercise Price Options outstanding at December 31, 2019 3,925,000 $ 0.13 Options granted — — Options exercised — — Options cancelled — — Options outstanding at December 31, 2020 3,925,000 $ 0.13 Options granted 500,000 0.13 Options exercised — — Options cancelled (1,450,000 ) 0.13 Options outstanding at December 31, 2021 2,975,000 $ 0.13 Options available for grant under the 2016 Plan at December 31, 2021 2,725,000 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 is being recognized over the vesting period. Expense relating to the stock option plans was $52,048 and $63,034 for the years ended December 31, 2021, and 2020, respectively. The following table summarizes information with respect to stock options outstanding at December 31, 2021: 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 2016 Plan 2,975,000 5.3 $0.13 - 2,290,000 5.2 $0.13 - The following table summarizes information with respect to stock options outstanding at December 31, 2020: 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 2016 Plan 3,925,000 7.2 $0.13 - 1,540,000 7.2 $0.13 - As of December 31, 2020, all compensation costs related to share-based compensation arrangements granted under the 2007 Plan had been fully recognized. As of December 31, 2021, there was approximately $9,652 of total unrecognized compensation cost related to nonvested share-based compensation arrangements granted under the 2016 Plan. The cost is expected to be recognized over a weighted-average period of 0.8 years at an estimated forfeiture rate of 0% for executives and 20% for non-executives. Warrant *The “Expiration Date” was initially defined under the Warrant as 36 months. The Warrant was revoked, amended and reissued on December 27, 2019 and defined the Expiration Date as 119 months from date of issuance of the amended Warrant, which was the original intent between the Company and the Lender. The Warrant contains a put feature providing the right to the holder, i.e. the Lender, for a net cash settlement in the event of a fundamental transaction which is defined under the Warrant as a sale of all of the stock, voting stock, or all, or substantially all, of the assets of the Company. Under such a transaction, the holder can require the Company to purchase any unexercised shares under the Warrant at the pro-rata share of the sales price or calculated value less the exercise price of the Warrant share. The fair value of the warrant is estimated using the Black-Scholes pricing model and is recognized as a liability in the accompanying consolidated condensed Balance Sheets. The following assumptions were used to determine the fair value of the Warrant at December 31, 2021 and 2020: December 31, 2021 December 31, Stock price $ 0.13 $ 0.02 Exercise price $ 0.05 $ 0.05 Weighted average volatility 68.2 % 67.7 % Expected dividend yield — — Expected term (in years) 7.9 8.9 Weighted average risk-free interest rate 1.4 % 0.9 % There currently is no public market for the Company’s stock price. The valuation of the Company was determined by utilizing a formula of six (6) times the Company’s Earnings Before Interest Taxes, Depreciation and Amortization (“EBITDA”) for the prior twelve (12) month period minus all outstanding debt of the Company plus all cash and cash equivalents owned by the Company which is defined in the Warrant agreement as the Calculated Value (“CV”) of the Company. Volatility is based on the average stock price of comparable public companies in the industry. The pandemic COVID-19 had a significant impact on the operating results of the Company and the stock prices of the comparable public companies, and the CV of the Company reflected that impact at the December 31, 2020 measurement date at $0.02 price per share. Based on the volatility in stock price of the comparable public companies and the significant improvement to the Company’s revenues and performance post COVID-19, the CV resulted in a $0.13 price per share which was used in the Black Scholes model to determine fair value of the Warrant at December 31, 2021. The following table reconciles the change in the fair value of the warrant liability classified as Level 3 in the fair value hierarchy: Warrant Liability Balance at December 31, 2019 $ 779,901 Net change in fair value (695,230 ) Balance at December 31, 2020 84,671 Net change in fair value 629,679 Balance at December 31, 2021 $ 714,350 The following table is a summary of the Warrant activity for the years ended December 31, 2021 and 2020: Shares Weighted Average Exercise Price Warrants at December 31, 2019 7,000,000 $ 0.05 Warrants granted — — Warrants exercised — — Warrants cancelled — — Warrants at December 31, 2020 7,000,000 $ 0.05 Warrants granted — — Warrants exercised — — Warrants cancelled — — Warrants at December 31, 2021 7,000,000 $ 0.05 Warrants exercisable at December 31, 2021 7,000,000 The following table summarizes information with respect to the Warrant outstanding at December 31, 2021: Warrant Outstanding Weighted Average Weighted Remaining Average Aggregate Contractual Exercise Intrinsic Shares Life (Years) Price Value 7,000,000 7.9 $0.05 - The following table summarizes information with respect to the Warrant outstanding at December 31, 2020: Warrant Outstanding Weighted Average Weighted Remaining Average Aggregate Contractual Exercise Intrinsic Shares Life (Years) Price Value 7,000,000 8.9 $0.05 - |
| Revenue | 12 Months Ended |
| Dec. 31, 2021 | |
| PaymentOnCapitalLease | |
| Revenue | Note 11. Revenue The following table provides a breakdown of the revenue by category as included in the consolidated Statements of Operations: Year ended December 31, 2021 2020 Lease, license and service fees: Flat daily rate lease $ 2,781,686 $ 2,067,941 Participation lease 1,145,529 801,067 Placement and license fees 21,730 9,000 $ 3,948,945 $ 2,878,008 The following table provides a breakdown of the sales of gaming products and parts as included in the consolidated Statements of Operations: Year ended December 31, 2021 2020 Sales of gaming products and parts: Slot machine sales $ 455,220 $ 1,027,000 Parts and ancillary items sales 247,477 83,953 $ 702,697 $ 1,110,953 |
| Other Income | 12 Months Ended |
| Dec. 31, 2021 | |
| Other Income and Expenses [Abstract] | |
| Other Income | Note 12. Other Income As a business headquartered in Delaware County (the “County”), Pennsylvania, with less than $9,000,000 in annual revenues and fewer than 100 employees, the Company was eligible to apply to the County’s Economic Oversight Development Board (“EDOB”) for a Business Assistance Grant Program funded by money received under the Federal CARES Act and known as “Delco Strong 2”, for a maximum grant amount of $20,000. Grants under the program were intended to provide economic support in the form of working capital for businesses suffering financial hardships from the coronavirus COVID-19 public health emergency. In July 2020, the Company submitted the application along with the required financial information and certification of losses caused by the COVID-19 pandemic. The County and the EDOB approved the Company’s application and awarded the grant to the Company for the maximum amount of $20,000 in September 2020. |
| Income Taxes | 12 Months Ended |
| Dec. 31, 2021 | |
| PaymentOnCapitalLease | |
| Income Taxes | Note 13. Income Taxes The components of the income tax provision for the years ended December 31, 2021 and 2020 are as follows: Year ended December 31, 2021 2020 Current tax expense: Federal $ — $ — State 3,219 — $ 3,219 $ — Deferred tax benefit: Federal $ 98,000 $ 259,000 State 51,000 136,000 Valuation reserve (149,000 ) (395,000 ) $ — $ — Net deferred tax assets consist of the following components as of December 31, 2021 and 2020: Year ended December 31, 2021 2020 Deferred tax asset: Net operating loss carryforward $ 4,290,000 $ 4,161,000 Accounts receivable reserves 2,000 2,000 Property and equipment (475,000 ) (478,000 ) Accrued expenses 250,000 235,000 Impairment charge 211,000 211,000 Start-up costs 3,000 4,000 Stock based compensation 130,000 115,000 Inventory reserves 1,000 1,000 Other (26,000 ) (14,000 ) 4,386,000 4,237,000 Less valuation allowance (4,386,000 ) (4,237,000 ) Net deferred taxes $ — $ — 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, 2021 and 2020. Year ended December 31, 2021 2020 Federal tax benefit at statutory rate $ (194,000 ) $ (94,000 ) State tax benefit net of federal taxes (68,781 ) (35,000 ) Warrant valuation 181,000 (200,000 ) PPP deductible expenses (68,000 ) (71,000 ) Other 4,000 5,000 Increase in valuation allowance 149,000 395,000 Income tax expense $ 3,219 $ — As of December 31, 2021, the Company has available, for federal and state income tax purposes, net operating loss (“NOL”) carryforwards of approximately $14,894,000. $12,773,000 of the NOL carryforwards expire at various times through 2038 and $2,121,000 of the NOLs can be carried forward indefinitely. 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. The current tax expense represents the amount of estimated minimum state taxes payable. |
| Recent Pronouncements | 12 Months Ended |
| Dec. 31, 2021 | |
| PaymentOnCapitalLease | |
| Related Party | Note 14. Recently Issued Pronouncements In December 2019, the FASB issued an update within the scope of Topic 740, Income Taxes. The update simplifies the accounting for income taxes by removing certain exceptions to the general principles within the Topic and improves consistent application of and simplifies GAAP for other areas by clarifying and amending existing guidance. The amendments in this update became effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020 and did not have a material impact on our consolidated financial statements. In June 2016, the FASB issued the update Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which changes the estimation of credit losses from an “incurred loss” methodology to one that reflects “expected credit losses” (the Current Expected Credit Loss model, or CECL) which requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. Measurement under CECL is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect collectability of reported amounts. The amendments in the update are effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. The Company continues to evaluate the impact, if any, the implementation of the CECL model will have on our financial statements. |
