--12-310000013156Q2false0000013156us-gaap:CommonStockMember2021-12-3100000131562022-03-310000013156us-gaap:SalesRevenueNetMembersrt:NorthAmericaMemberglxz:CustomerTwoMemberus-gaap:CustomerConcentrationRiskMember2022-01-012022-06-300000013156us-gaap:PatentsMember2022-06-300000013156srt:MaximumMemberglxz:OneMonthAdjustedLondonInterBankOfferedRateLIBORMemberglxz:FortressCreditCorporationMemberglxz:AchievementOfNetLeverageTargetMemberglxz:SeniorSecuredTermLoanMember2021-11-152021-11-150000013156glxz:EbitdaBudgetTargetMemberglxz:EquityIncentivePlanMembersrt:ChiefExecutiveOfficerMemberglxz:AmendmentNumberThreeEmploymentAgreementMember2022-06-152022-06-150000013156us-gaap:RetainedEarningsMember2022-01-012022-03-310000013156us-gaap:AdditionalPaidInCapitalMember2022-03-310000013156glxz:CalendarYearTwoThousandAndTwentyThirdMemberglxz:EbitdaBudgetTargetMemberglxz:PresidentAndChiefExecutiveOfficerMemberglxz:AmendmentNumberThreeEmploymentAgreementMember2022-06-152022-06-150000013156srt:MaximumMember2022-01-012022-06-3000000131562021-01-012021-03-3100000131562021-03-310000013156srt:MaximumMemberus-gaap:PatentsMember2022-01-012022-06-3000000131562011-10-012011-10-310000013156us-gaap:NoncompeteAgreementsMember2022-01-012022-06-300000013156us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-06-3000000131562022-06-300000013156us-gaap:CommonStockMember2021-03-310000013156srt:MaximumMemberglxz:OneMonthAdjustedLondonInterBankOfferedRateLIBORMemberglxz:FortressCreditCorporationMemberglxz:SeniorSecuredTermLoanMember2021-11-152021-11-150000013156us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-04-012021-06-300000013156us-gaap:CommonStockMember2022-04-012022-06-300000013156us-gaap:AdditionalPaidInCapitalMember2021-12-310000013156glxz:NorthAmericaAndCaribbeanMember2022-04-012022-06-300000013156glxz:FortressCreditCorporationMemberglxz:SeniorSecuredTermLoanMember2022-01-012022-06-300000013156glxz:PresidentAndChiefExecutiveOfficerMemberglxz:AmendmentNumberThreeEmploymentAgreementMember2022-06-152022-06-1500000131562022-01-012022-06-300000013156glxz:FortressCreditCorporationMemberglxz:SeniorSecuredTermLoanMember2021-11-152021-11-150000013156srt:MinimumMemberglxz:FortressCreditCorporationMemberglxz:OneMonthAdjustedLondonInterBankOfferedRateLIBORMemberglxz:SeniorSecuredTermLoanMember2021-11-152021-11-150000013156srt:MinimumMemberus-gaap:PatentsMember2022-01-012022-06-300000013156us-gaap:CommonStockMember2021-01-012021-03-310000013156glxz:EbitdaBudgetTargetMemberglxz:PresidentAndChiefExecutiveOfficerMemberglxz:CalendarYearTwoThousandAndTwentyTwoMemberglxz:AmendmentNumberThreeEmploymentAgreementMember2022-06-152022-06-150000013156glxz:NorthAmericaAndCaribbeanMember2021-04-012021-06-300000013156us-gaap:CommonStockMember2022-03-310000013156us-gaap:TrademarksMembersrt:MinimumMember2022-01-012022-06-300000013156us-gaap:RetainedEarningsMember2021-03-310000013156us-gaap:RetainedEarningsMember2022-04-012022-06-300000013156glxz:SupplementalCashFlowInformationMember2022-01-012022-06-300000013156srt:MinimumMemberglxz:FortressCreditCorporationMember2022-04-012022-06-300000013156us-gaap:AdditionalPaidInCapitalMember2020-12-310000013156us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-06-300000013156us-gaap:TrademarksMembersrt:MaximumMember2022-01-012022-06-300000013156us-gaap:RetainedEarningsMember2021-01-012021-03-310000013156us-gaap:RetainedEarningsMember2021-12-310000013156us-gaap:AdditionalPaidInCapitalMember2022-04-012022-06-300000013156srt:MaximumMember2022-06-300000013156glxz:PresidentAndChiefExecutiveOfficerMemberglxz:CalendarYearTwoThousandAndTwentyTwoAndTwoThousandAndTwentyThirdMemberglxz:OfEbitdaTargetMemberglxz:AmendmentNumberThreeEmploymentAgreementMember2022-06-152022-06-1500000131562022-01-012022-03-310000013156us-gaap:EMEAMember2022-01-012022-06-300000013156us-gaap:AccountsReceivableMember2021-12-310000013156glxz:FortressCreditCorporationMemberglxz:SeniorSecuredTermLoanMember2021-11-150000013156us-gaap:WarrantMemberglxz:FortressCreditCorporationMemberglxz:SeniorSecuredTermLoanMember2021-11-150000013156us-gaap:NoncompeteAgreementsMember2021-12-310000013156srt:ScenarioForecastMember2022-01-012023-12-310000013156us-gaap:SellingGeneralAndAdministrativeExpensesMember2022-01-012022-06-3000000131562022-08-080000013156us-gaap:SoftwareDevelopmentMember2021-12-310000013156us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-310000013156glxz:InsuranceNotesPayableMember2021-12-310000013156us-gaap:CustomerRelationshipsMembersrt:MinimumMember2022-01-012022-06-300000013156us-gaap:PatentsMember2021-12-310000013156us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-12-310000013156us-gaap:RetainedEarningsMember2022-03-3100000131562020-12-310000013156us-gaap:SoftwareDevelopmentMember2022-06-300000013156us-gaap:AdditionalPaidInCapitalMember2022-06-300000013156us-gaap:SalesRevenueNetMembersrt:NorthAmericaMemberglxz:CustomerTwoMemberus-gaap:CustomerConcentrationRiskMember2022-06-3000000131562021-06-300000013156us-gaap:RetainedEarningsMember2020-12-310000013156country:IMsrt:MaximumMemberglxz:FortressCreditCorporationMember2021-11-302022-02-280000013156srt:MinimumMember2022-01-012022-06-300000013156us-gaap:SellingGeneralAndAdministrativeExpensesMember2022-04-012022-06-300000013156glxz:PresidentAndChiefExecutiveOfficerMemberglxz:CalendarYearTwoThousandAndTwentyTwoAndTwoThousandAndTwentyThirdMemberglxz:OneHundredFifteenPercentageOfEbitdaTargetMemberglxz:AmendmentNumberThreeEmploymentAgreementMember2022-06-152022-06-150000013156us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-03-310000013156glxz:PromissoryNoteMember2022-06-300000013156us-gaap:CommonStockMember2021-04-012021-06-300000013156glxz:NetIncomeMember2022-01-012022-06-300000013156glxz:FortressCreditCorporationMember2021-12-310000013156glxz:LicensingFeesMember2022-01-012022-06-300000013156us-gaap:EMEAMember2021-04-012021-06-300000013156us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-04-012022-06-300000013156us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-03-310000013156us-gaap:CommonStockMember2022-01-012022-03-310000013156glxz:NorthAmericaAndCaribbeanMember2021-01-012021-06-300000013156glxz:NorthAmericaAndCaribbeanMember2022-01-012022-06-300000013156us-gaap:AdditionalPaidInCapitalMember2021-01-012021-03-310000013156us-gaap:SalesRevenueNetMembersrt:NorthAmericaMemberglxz:CustomerTwoMemberus-gaap:CustomerConcentrationRiskMember2021-12-3100000131562022-04-012022-06-300000013156us-gaap:NoncompeteAgreementsMember2022-06-300000013156us-gaap:AdditionalPaidInCapitalMember2021-06-300000013156us-gaap:EMEAMember2022-04-012022-06-3000000131562021-09-212021-09-210000013156us-gaap:ScenarioPlanMember2021-01-012021-06-300000013156us-gaap:AdditionalPaidInCapitalMember2022-01-012022-03-310000013156glxz:InsuranceNotesPayableMember2022-06-300000013156us-gaap:SoftwareDevelopmentMember2022-01-012022-06-300000013156us-gaap:SalesRevenueNetMembersrt:NorthAmericaMemberglxz:CustomerTwoMemberus-gaap:CustomerConcentrationRiskMember2021-01-012021-06-300000013156us-gaap:SalesRevenueNetMemberglxz:CustomerOneMemberus-gaap:CustomerConcentrationRiskMembersrt:EuropeMember2021-01-012021-06-300000013156us-gaap:CustomerRelationshipsMembersrt:MaximumMember2022-01-012022-06-300000013156us-gaap:ScenarioPlanMember2022-01-012022-06-300000013156us-gaap:EMEAMember2021-01-012021-06-300000013156srt:MaximumMemberglxz:FortressCreditCorporationMember2021-11-302021-11-300000013156glxz:LicensingFeesMember2022-04-012022-06-300000013156us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-01-012021-03-310000013156us-gaap:CustomerRelationshipsMember2022-06-300000013156glxz:LicensingFeesMember2021-01-012021-06-300000013156us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-01-012022-03-310000013156us-gaap:AdditionalPaidInCapitalMember2021-03-310000013156us-gaap:AdditionalPaidInCapitalMember2021-04-012021-06-300000013156us-gaap:CommonStockMember2020-12-3100000131562021-12-310000013156us-gaap:RetainedEarningsMember2022-06-300000013156glxz:PresidentAndChiefExecutiveOfficerMemberglxz:OneHundredTenPercentageOfEbitdaTargetMemberglxz:CalendarYearTwoThousandAndTwentyTwoAndTwoThousandAndTwentyThirdMemberglxz:AmendmentNumberThreeEmploymentAgreementMember2022-06-152022-06-150000013156us-gaap:CustomerRelationshipsMember2021-12-310000013156us-gaap:RetainedEarningsMember2021-04-012021-06-300000013156us-gaap:SalesRevenueNetMemberglxz:CustomerOneMemberus-gaap:CustomerConcentrationRiskMembersrt:EuropeMember2022-06-300000013156us-gaap:TrademarksMember2022-06-300000013156us-gaap:CommonStockMember2021-06-300000013156us-gaap:FederalFundsEffectiveSwapRateMemberglxz:FortressCreditCorporationMemberglxz:SeniorSecuredTermLoanMember2021-11-152021-11-150000013156us-gaap:AccountsReceivableMember2022-06-300000013156us-gaap:TrademarksMember2021-12-3100000131562021-04-012021-06-3000000131562021-09-202021-09-200000013156us-gaap:RetainedEarningsMember2021-06-300000013156us-gaap:LondonInterbankOfferedRateLIBORMemberglxz:FortressCreditCorporationMemberglxz:SeniorSecuredTermLoanMember2021-11-152021-11-150000013156us-gaap:CommonStockMember2022-06-300000013156stpr:WA2022-06-300000013156us-gaap:LondonInterbankOfferedRateLIBORMemberglxz:FortressCreditCorporationMemberglxz:AchievementOfNetLeverageTargetMemberglxz:SeniorSecuredTermLoanMember2021-11-152021-11-1500000131562021-01-012021-06-300000013156glxz:FortressCreditCorporationMember2022-06-300000013156glxz:LicensingFeesMember2021-04-012021-06-300000013156us-gaap:SalesRevenueNetMemberglxz:CustomerOneMemberus-gaap:CustomerConcentrationRiskMembersrt:EuropeMember2022-01-012022-06-30glxz:Segmentxbrli:purexbrli:sharesiso4217:USDxbrli:sharesglxz:Satelliteiso4217:USD

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 000-30653

 

img154403143_0.jpg 

Galaxy Gaming, Inc.

(Exact name of small business issuer as specified in its charter)

 

 

Nevada

 

20-8143439

(State or other jurisdiction of incorporation or organization)

 

(IRS Employer Identification No.)

 

 

 

6480 Cameron Street Ste. 305 – Las Vegas, NV 89118

(Address of principal executive offices)

 

(702) 939-3254

(Issuer’s telephone number)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading symbol

 

Name of exchange on which registered

Common stock

 

GLXZ

 

OTCQB marketplace

 

Indicate by check mark whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the issuer has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company.

 

Large accelerated filer

 

 

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

 

Smaller reporting company

 

 

 

 

 

 

 

 

Emerging growth company

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standard provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No

 

State the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:24,116,083 common shares as of August 8, 2022.

 

 


 

GALAXY GAMING, INC.

QUARTERLY REPORT ON FORM 10-Q FOR THE THREE MONTHS ENDED JUNE 30, 2022

TABLE OF CONTENTS

 

 

PART I

 

 

Item 1:

Financial Statements (unaudited)

3

Item 2:

Management’s Discussion and Analysis of Financial Condition and Results of Operations

15

Item 3:

Quantitative and Qualitative Disclosures About Market Risk

18

Item 4:

Controls and Procedures

18

 

 

PART II

 

 

Item 1:

Legal Proceedings

19

Item 2:

Unregistered Sales of Equity Securities and Use of Proceeds

19

Item 6:

Exhibits

20

 

2


 

PART I

 

ITEM 1. FINANCIAL STATEMENTS

Our financial statements included in this Form 10-Q are as follows:

 

Condensed Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021 (unaudited)

4

Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income for the three and six months ended June 30, 2022 and 2021 (unaudited)

5

Condensed Consolidated Statements of Changes in Stockholders’ Deficit for the three and six months ended June 30, 2022 and 2021 (unaudited)

6

Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2022 and 2021 (unaudited)

7

Notes to Condensed Consolidated Financial Statements (unaudited)

8

 

3


 

GALAXY GAMING, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

ASSETS

 

June 30,
2022

 

 

December 31,
2021

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

17,249,631

 

 

$

16,058,714

 

Accounts receivable, net of allowance of $333,978 and $348,695, respectively

 

 

4,661,439

 

 

 

4,377,165

 

Inventory

 

 

883,575

 

 

 

770,248

 

Income tax receivable

 

 

766,225

 

 

 

1,536,682

 

Prepaid expenses

 

 

971,559

 

 

 

1,125,777

 

Other current assets

 

 

8,575

 

 

 

21,536

 

Total current assets

 

 

24,541,004

 

 

 

23,890,122

 

Property and equipment, net

 

 

90,579

 

 

 

98,594

 

Operating lease right-of-use assets

 

 

1,118,888

 

 

 

1,167,903

 

Assets deployed at client locations, net

 

 

426,717

 

 

 

360,735

 

Goodwill

 

 

1,091,000

 

 

 

1,091,000

 

Other intangible assets, net

 

 

12,543,802

 

 

 

13,677,264

 

Other assets

 

 

258,879

 

 

 

167,087

 

Total assets

 

$

40,070,869

 

 

$

40,452,705

 

LIABILITIES AND STOCKHOLDERS’ DEFICIT

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

527,871

 

 

$

374,323

 

Accrued expenses

 

 

3,014,122

 

 

 

2,666,073

 

Revenue contract liability

 

 

75,000

 

 

 

37,500

 

Current portion of operating lease liabilities

 

 

237,915

 

 

 

222,806

 

Current portion of long-term debt

 

 

767,645

 

 

 

1,100,369

 

Total current liabilities

 

 

4,622,553

 

 

 

4,401,071

 

Long-term operating lease liabilities

 

 

957,095

 

 

 

1,019,029

 

Long-term debt and liabilities, net

 

 

52,585,791

 

 

 

52,143,810

 

Deferred tax liabilities, net

 

 

201,944

 

 

 

175,218

 

Total liabilities

 

 

58,367,383

 

 

 

57,739,128

 

Commitments and Contingencies (See Note 8)

 

 

 

 

 

 

Stockholders’ deficit

 

 

 

 

 

 

Preferred stock, 10,000,000 shares authorized, $0.001 par value;
   
0 shares issued and outstanding

 

 

 

 

 

 

Common stock, 65,000,000 shares authorized; $0.001 par value;
   
24,116,083 and 23,523,969 shares issued and outstanding, respectively

 

 

24,116

 

 

 

23,524

 

Additional paid-in capital

 

 

16,655,051

 

 

 

16,380,597

 

Accumulated deficit

 

 

(34,672,954

)

 

 

(33,543,351

)

Accumulated other comprehensive loss

 

 

(302,727

)

 

 

(147,193

)

Total stockholders’ deficit

 

 

(18,296,514

)

 

 

(17,286,423

)

Total liabilities and stockholders’ deficit

 

$

40,070,869

 

 

$

40,452,705

 

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

 

4


 

GALAXY GAMING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME

(Unaudited)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30, 2022

 

 

June 30, 2021

 

 

June 30, 2022

 

 

June 30, 2021

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

Licensing fees

 

$

5,676,195

 

 

$

4,749,330

 

 

$

11,594,794

 

 

$

9,032,339

 

Total revenue

 

 

5,676,195

 

 

 

4,749,330

 

 

 

11,594,794

 

 

 

9,032,339

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Cost of ancillary products and assembled components

 

 

50,439

 

 

 

19,599

 

 

 

103,029

 

 

 

33,903

 

Selling, general and administrative

 

 

3,483,918

 

 

 

2,532,655

 

 

 

6,527,277

 

 

 

5,243,707

 

Research and development

 

 

152,022

 

 

 

129,859

 

 

 

351,092

 

 

 

248,560

 

Depreciation and amortization

 

 

725,258

 

 

 

720,488

 

 

 

1,449,720

 

 

 

1,437,742

 

Share-based compensation

 

 

315,408

 

 

 

441,444

 

 

 

625,410

 

 

 

758,084

 

Total costs and expenses

 

 

4,727,045

 

 

 

3,844,045

 

 

 

9,056,528

 

 

 

7,721,996

 

Income from operations

 

 

949,150

 

 

 

905,285

 

 

 

2,538,266

 

 

 

1,310,343

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

2,259

 

 

 

388

 

 

 

4,492

 

 

 

771

 

Interest expense

 

 

(1,697,435

)

 

 

(140,142

)

 

 

(3,384,457

)

 

 

(321,052

)

Share redemption consideration

 

 

 

 

 

(195,482

)

 

 

 

 

 

(390,964

)

Foreign currency exchange (loss) gain

 

 

(174,638

)

 

 

11,355

 

 

 

(234,901

)

 

 

2,271

 

Change in fair value of interest rate swap liability

 

 

 

 

 

16,187

 

 

 

 

 

 

66,009

 

Total other expense, net

 

 

(1,869,814

)

 

 

(307,694

)

 

 

(3,614,866

)

 

 

(642,965

)

(Loss) income before provision for income taxes

 

 

(920,664

)

 

 

597,591

 

 

 

(1,076,600

)

 

 

667,378

 

Provision for income taxes

 

 

(194,977

)

 

 

(47,136

)

 

 

(53,003

)

 

 

(28,186

)

Net (loss) income

 

 

(1,115,641

)

 

 

550,455

 

 

 

(1,129,603

)

 

 

639,192

 

Foreign currency translation adjustment

 

 

(113,585

)

 

 

21,207

 

 

 

(155,534

)

 

 

(58,000

)

Comprehensive (loss) income

 

$

(1,229,226

)

 

$

571,662

 

 

$

(1,285,137

)

 

$

581,192

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.05

)

 

$

0.03

 

 

$

(0.05

)

 

$

0.03

 

Diluted

 

$

(0.05

)

 

$

0.03

 

 

$

(0.05

)

 

$

0.03

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

24,665,496

 

 

 

18,952,464

 

 

 

24,506,442

 

 

 

18,895,658

 

Diluted

 

 

24,665,496

 

 

 

20,741,009

 

 

 

24,506,442

 

 

 

20,512,648

 

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

5


 

GALAXY GAMING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

(Unaudited)

 

 

 

Common Stock

 

 

Additional Paid-in

 

 

Accumulated

 

 

Accumulated Other Comprehensive

 

 

Total Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Loss

 

 

Deficit

 

Beginning balance, December 31, 2021

 

 

23,523,969

 

 

$

23,524

 

 

$

16,380,597

 

 

$

(33,543,351

)

 

$

(147,193

)

 

$

(17,286,423

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

(13,962

)

 

 

 

 

 

(13,962

)

Foreign currency translation loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(41,949

)

 

 

(41,949

)

Stock options exercised

 

 

219,999

 

 

 

220

 

 

 

195,236

 

 

 

 

 

 

 

 

 

195,456

 

Share-based compensation

 

 

18,965

 

 

 

19

 

 

 

309,983

 

 

 

 

 

 

 

 

 

310,002

 

Balance, March 31, 2022

 

 

23,762,933

 

 

$

23,763

 

 

$

16,885,816

 

 

$

(33,557,313

)

 

$

(189,142

)

 

$

(16,836,876

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

(1,115,641

)

 

 

 

 

 

(1,115,641

)

Foreign currency translation loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(113,585

)

 

 

(113,585

)

Surrender of options

 

 

(365,751

)

 

 

(366

)

 

 

(1,279,767

)

 

 

 

 

 

 

 

 

(1,280,133

)

Stock options exercised

 

 

671,665

 

 

 

672

 

 

 

733,641

 

 

 

 

 

 

 

 

 

734,313

 

Share-based compensation

 

 

47,236

 

 

 

47

 

 

 

315,361

 

 

 

 

 

 

 

 

 

315,408

 

Balance, June 30, 2022

 

 

24,116,083

 

 

$

24,116

 

 

$

16,655,051

 

 

$

(34,672,954

)

 

$

(302,727

)

 

$

(18,296,514

)

 

 

 

 

Common Stock

 

 

Additional Paid-in

 

 

Accumulated

 

 

Accumulated Other Comprehensive

 

 

Total Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Loss

 

 

Deficit

 

Beginning balance, December 31, 2020

 

 

21,970,638

 

 

$

21,971

 

 

$

10,798,536

 

 

$

(35,655,163

)

 

$

37,691

 

 

$

(24,796,965

)

Net income

 

 

 

 

 

 

 

 

 

 

 

88,737

 

 

 

 

 

 

88,737

 

Foreign currency translation loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(79,207

)

 

 

(79,207

)

Stock options exercised

 

 

50,000

 

 

 

50

 

 

 

10,949

 

 

 

 

 

 

 

 

 

10,999

 

Share-based compensation

 

 

55,000

 

 

 

55

 

 

 

316,585

 

 

 

 

 

 

 

 

 

316,640

 

Balance, March 31, 2021

 

 

22,075,638

 

 

$

22,076

 

 

$

11,126,070

 

 

$

(35,566,426

)

 

$

(41,516

)

 

$

(24,459,796

)

Net income

 

 

 

 

 

 

 

 

 

 

 

550,455

 

 

 

 

 

 

550,455

 

Foreign currency translation gain

 

 

 

 

 

 

 

 

 

 

 

 

 

 

21,207

 

 

 

21,207

 

Stock options exercised

 

 

50,000

 

 

 

50

 

 

 

15,451

 

 

 

 

 

 

 

 

 

15,501

 

Share-based compensation

 

 

55,000

 

 

 

55

 

 

 

441,389

 

 

 

 

 

 

 

 

 

441,444

 

Balance, June 30, 2021

 

 

22,180,638

 

 

$

22,181

 

 

$

11,582,910

 

 

$

(35,015,971

)

 

$

(20,309

)

 

$

(23,431,189

)

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

6


 

GALAXY GAMING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

 

Six Months Ended

 

 

 

June 30, 2022

 

 

June 30, 2021

 

Cash flows from operating activities:

 

 

 

 

 

 

Net (loss) income

 

$

(1,129,603

)

 

$

639,192

 

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

1,449,720

 

 

 

1,437,742

 

Amortization of right-of-use assets

 

 

116,051

 

 

 

113,329

 

Amortization of debt issuance costs and debt discount

 

 

741,981

 

 

 

30,308

 

Bad debt (recovery) expense

 

 

(14,717

)

 

 

138,160

 

Change in fair value of interest rate swap liability

 

 

 

 

 

(66,009

)

Deferred income tax

 

 

26,726

 

 

 

-

 

Share-based compensation

 

 

625,410

 

 

 

758,084

 

Foreign currency exchange loss

 

 

234,644

 

 

 

1,491

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

(385,529

)

 

 

(2,196,930

)

Inventory

 

 

(294,193

)

 

 

(164,796

)

Income tax receivable/payable

 

 

752,315

 

 

 

(269,024

)

Prepaid expenses and other current assets

 

 

164,307

 

 

 

499,068

 

Other assets

 

 

(91,792

)

 

 

(140,124

)

Accounts payable

 

 

153,067

 

 

 

(139,760

)

Accrued expenses

 

 

(289,371

)

 

 

410,314

 

Revenue contract liability

 

 

37,500

 

 

 

45,833

 

Operating lease liabilities

 

 

(113,861

)

 

 

(87,218

)

Net cash provided by operating activities

 

 

1,982,655

 

 

 

1,009,660

 

Cash flows from investing activities:

 

 

 

 

 

 

Investment in internally developed software

 

 

(174,926

)

 

 

(49,900

)

Acquisition of property and equipment

 

 

(18,433

)

 

 

(40,863

)

Net cash used in investing activities

 

 

(193,359

)

 

 

(90,763

)

Cash flows from financing activities:

 

 

 

 

 

 

Proceeds from stock option exercises

 

 

304,517

 

 

 

26,500

 

Principal payments on long-term debt

 

 

(632,724

)

 

 

(1,128,400

)

Net cash used in financing activities

 

 

(328,207

)

 

 

(1,101,900

)

Effect of exchange rate changes on cash

 

 

(270,172

)

 

 

(30,773

)

Net increase (decrease) in cash and cash equivalents

 

 

1,190,917

 

 

 

(213,776

)

Cash and cash equivalents – beginning of period

 

 

16,058,714

 

 

 

5,993,388

 

Cash and cash equivalents – end of period

 

$

17,249,631

 

 

$

5,779,612

 

Supplemental cash flow information:

 

 

 

 

 

 

Cash paid for interest

 

$

2,742,388

 

 

$

223,279

 

Cash paid for income taxes

 

$

 

 

$

321,167

 

Supplemental schedule of non-cash activities: