Galaxy Gaming, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

REVENUE RECOGNITION

REVENUE RECOGNITION

6 Months Ended

Jun. 30, 2019

Revenue From Contract With Customer [Abstract]

NOTE 3. REVENUE RECOGNITION

Revenue recognition. We generate revenue primarily from the licensing of our intellectual property. We also, occasionally, receive a one-time sale of certain products and/or reimbursement of our equipment.

License fees. We derive product lease and royalty revenue from negotiated recurring fee license agreements and the performance of our products. We account for these agreements as month-to-month contracts and recognize revenue each month as we satisfy our performance obligations by granting access to intellectual property to our clients. In addition, revenue associated with performance-based agreements is recognized during the month that the usage of the product or intellectual property occurs.

Some of our intellectual property requires the installation of certain equipment and both the intellectual property and the related equipment are licensed in one bundled package. We have determined that the equipment is not distinct from the intellectual property and, therefore, we have only one performance obligation and, as a result, the allocation of the transaction price to different performance obligations is not necessary.

Product sales. Occasionally, we sell certain incidental products or receive reimbursement of our equipment after the commencement of the new license agreement. Revenue from such sales is recognized as a separate performance obligation when we ship the items.

Disaggregation of revenue

The following table disaggregates our revenue by major source for the three and six months ended June 30, 2019 and 2018:

	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018

Table games	$	5,395,187	$	4,413,878	$	10,737,594	$	8,607,035
Other		3,999		122,295		8,344		289,832
Total revenue	$	5,399,186	$	4,536,173	$	10,745,938	$	8,896,867

The following table disaggregates our revenue by geographic location for the three and six months ended June 30, 2019 and 2018:

	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018

North America and Caribbean	$	3,907,953	$	3,494,692	$	7,752,478	$	6,945,401
Europe		1,491,233		1,041,481		2,993,460		1,951,466
Total revenue	$	5,399,186	$	4,536,173	$	10,745,938	$	8,896,867

Revenue contract liability

We invoice our clients monthly in advance for unlimited use of our intellectual property licenses and recognize a revenue contract liability that represents such advanced billing to our clients for unsatisfied performance. We reduce the revenue contract liability and recognize revenue when we transfer those goods or services and, therefore, satisfy our performance obligation.

The table below summarizes changes in the revenue contract liability during the six months ended June 30, 2019:

Beginning balance – January 1, 2019	$	1,438,492
Increase (advanced billings)		7,725,356
Decrease (revenue recognition)		(7,841,078	)
Ending balance – June 30, 2019	$	1,322,770

Revenue recognized during the six months ended June 30, 2019 that was included in the beginning balance of revenue contract liability above was $1,430,160.