Elys Game Technology, Corp. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Restatement of prior period results (Tables)

Restatement of prior period results (Tables)

12 Months Ended

Dec. 31, 2018

	Prior to January 1, 2017			Year ended December 31, 2017			Year ended December 31, 2018			Total Restated

Depreciation and amortization	$	(339,258	)	$	21,183		$	(470,591	)	$	(788,666	)
Unrealized foreign exchange expense		(7,182	)		(60,267	)		(111,527	)		(178,976	)
Intercompany expense		(114,445	)		124,282			(331	)		9,506
Total increase in accumulated deficit		(460,885	)		85,198			(582,449	)		(958,136	)

Total Reduction in other Comprehensive loss		489,027			(112,088	)		646,968			1,023,907

Total Increase in Plant and Equipment and intangibles	$	28,142		$	(26,890	)	$	64,519		$	65,771

The reconciliation of the consolidated balance sheet as of December 31, 2018 is as follows:

	As Previously Reported			Depreciation and amortization adjustments			Foreign Exchange adjustments			Other Adjustments			As Restated

Current Assets
Cash and cash equivalents	$	6,289,903		$	—		$	—		$	—		$	6,289,903
Accounts receivable		10,082			—			—			—			10,082
Gaming accounts receivable		1,021,052			—			—			—			1,021,052
Prepaid expenses		124,712			—			—			—			124,712
Related party receivable		49,914			—			—			—			49,914
Other current assets		55,700			—			—			—			55,700
Total Current Assets		7,551,363			—			—			—			7,551,363

Noncurrent Assets
Restricted cash		1,560,539			—			—			—			1,560,539
Property, plant and equipment		354,799			121,248			—			—			476,047
Intangible assets		12,583,457			(55,477	)		—			—			12,527,980
Goodwill		262,552			—			—			—			262,552
Investment in non-consolidated entities		275,000			—			—			—			275,000
Total Noncurrent Assets		15,036,347			65,771			—			—			15,102,118
Total Assets	$	22,587,710		$	65,771		$	—		$	—		$	22,653,481

Current Liabilities
Line of credit - bank	$	750,000		$	—		$	—		$	—		$	750,000
Accounts payable and accrued liabilities		4,603,608			—			—			—			4,603,608
Gaming accounts balances		1,049,423			—			—			—			1,049,423
Taxes payable		1,056,430			—			—			—			1,056,430
Advances from stockholders		39,237			—			—			—			39,237
Liability in connection with acquisition		—			—			—			—			—
Debentures, net of discount		3,942,523			—			—			—			3,942,523
Derivative liability		—			—			—			—			—
Promissory notes payable – other		—			—			—			—			—
Promissory notes payable – related party		318,078			—			—			—			318,078
Bank loan payable – current portion		120,920			—			—			—			120,920
Total Current Liabilities		11,880,219			—			—			—			11,880,219

Bank loan payable		225,131			—			—			—			225,131
Other long-term liabilities		608,728			—			—			—			608,728
Total Liabilities		12,714,078			—			—			—			12,714,078

Stockholders' Equity
Preferred stock, $0.0001 par value; 20,000,000 shares authorized, none issued		—			—			—			—			—
Common Stock, $0.0001 par value, 160,000,000 shares authorized; 9,442,537 shares issued and outstanding as of December 31, 2018*		7,555			—			—			(6,611	)		944
Additional paid-in capital		23,956,309			—			—			6,611			23,962,920
Accumulated other comprehensive income		(1,081,338	)		854,437			178,976			(9,506	)		(57,431	)
Accumulated deficit		(13,008,894	)		(788,666	)		(178,976	)		9,506			(13,967,030	)
Total Stockholders' Equity		9,873,632			65,771			—			—			9,939,403
Total Liabilities and Stockholders’ Equity	$	22,587,710		$	65,771		$	—		$	—		$	22,653,481

* Adjusted for an 8 for 1 reverse stock split effective December 12, 2019.

The reconciliation of the consolidated balance sheet as of December 31, 2017 is as follows:

	As Previously Reported			Depreciation and amortization adjustments			Foreign Exchange adjustments			Other Adjustments			As Restated

Current Assets
Cash and cash equivalents	$	6,469,858		$	—		$	—		$	—		$	6,469,858
Accounts receivable		116,489			—			—			—			116,489
Gaming accounts receivable		1,163,831			—			—			—			1,163,831
Prepaid expenses		87,692			—			—			—			87,692
Other current assets		12,543			—			—			—			12,543
Total Current Assets		7,850,413			—			—			—			7,850,413

Noncurrent Assets
Restricted cash		587,905			—			—			—			587,905
Property, plant and equipment		280,111			(10,723	)		—			—			269,388
Intangible assets		3,245,748			11,975			—			—			3,257,723
Goodwill		260,318			—			—			—			260,318
Investment in non-consolidated entities		1			—			—			—			1
Total Noncurrent Assets		4,374,083			1,252			—			—			4,375,335
Total Assets	$	12,224,496		$	1,252		$	—		$	—		$	12,225,748

Current Liabilities
Line of credit - bank	$	177,060		$	—		$	—		$	—		$	177,060
Accounts payable and accrued liabilities		1,606,560			—			—			—			1,606,560
Gaming accounts balances		1,274,856			—			—			—			1,274,856
Taxes payable		1,555,371			—			—			—			1,555,371
Advances from stockholders		547,809			—			—			—			547,809
Liability in connection with acquisition		142,245			—			—			—			142,245
Debentures, net of discount		1,148,107			—			—			—			1,148,107
Derivative liability		222,915			—			—			—			222,915
Promissory notes payable – other		100,749			—			—			—			100,749
Promissory notes payable – related party		318,078			—			—			—			318,078
Bank loan payable – current portion		121,208			—			—			—			121,208
Total Current Liabilities		7,214,958			—			—			—			7,214,958

Bank loan payable		362,808			—			—			—			362,808
Other long-term liabilities		532,680			—			—			—			532,680
Total Liabilities		8,110,446			—			—			—			8,110,446

Stockholders' Equity
Preferred stock, $0.0001 par value; 20,000,000 shares authorized, none issued		—			—			—			—			—
Common Stock, $0.0001 par value, 160,000,000 shares authorized; 9,267,949 shares issued and outstanding as of December 31, 2017*		7,415			—			—			(6,488	)		927
Additional paid-in capital		14,254,582			—			—			6,488			14,261,070
Accumulated other comprehensive income		(250,327	)		319,327			67,449			(9,837	)		126,612
Accumulated deficit		(9,897,620	)		(318,075	)		(67,449	)		9,837			(10,273,307	)
Total Stockholders' Equity		4,114,050			1,252			—			—			4,115,302
Total Liabilities and Stockholders’ Equity	$	12,224,496		$	1,252		$	—		$	—		$	12,225,748

* Adjusted for an 8 for 1 reverse stock split effective December 12, 2019.

The reconciliation of the consolidated statement of operations and comprehensive loss for the year ended December 31, 2018 is as follows:

	As Previously Reported			Depreciation and amortization adjustments			Foreign Exchange adjustments			Other Adjustments			As Restated

Revenue	$	34,575,097		$	—		$	—		$	—		$	34,575,097

Costs and Expenses
Selling expenses		24,142,110			—			—			—			24,142,110
General and administrative expenses		10,005,713			470,591			111,527			331			10,588,162
Total Costs and Expenses		34,147,823			470,591			111,527			331			34,730,272

Income (Loss) from Operations		427,274			(470,591	)		(111,527	)		(331	)		(155,175	)

Other (Expenses) Income
Interest expense, net of interest income		(2,614,837	)		—			—			—			(2,614,837	)
Imputed interest on related party advances		(761	)		—			—			—			(761	)
Gain on litigation settlement		516,120			—			—			—			516,120
Loss on issuance of debt		(196,403	)		—			—			—			(196,403	)
Other Expense		(75,000	)		—			—			—			(75,000	)
Total Other Expenses (Income)		(2,370,881	)		—			—			—			(2,370,881	)

Loss Before Income Taxes		(1,943,607	)		(470,591	)		(111,527	)		(331	)		(2,526,056	)

Income tax provision		(1,102,701	)		—			—			—			(1,102,701	)

Net Loss	$	(3,046,308	)	$	(470,591	)	$	(111,527	)	$	(331	)	$	(3,628,757	)

Other Comprehensive Loss
Foreign currency translation adjustment		(831,011	)		535,110			111,527			331			(184,043	)

Comprehensive Loss	$	(3,877,319	)	$	64,519		$	—		$	—		$	(3,812,800	)

Loss per common share – basic*	$	(0.32	)										$	(0.38	)
Loss per common share – diluted*	$	(0.32	)										$	(0.38	)
Weighted average number of common shares outstanding – basic*		9,485,993												9,485,993
Weighted average number of common shares outstanding – diluted*		9,485,993												9,485,993

* Adjusted for an 8 for 1 reverse stock split effective December 12, 2019.

The reconciliation of the consolidated statement of operations and comprehensive loss for the year ended December 31, 2017 is as follows:

	As Previously Reported			Depreciation and amortization adjustments			Foreign Exchange adjustments			Other Adjustments			As Restated

Revenue	$	22,865,146		$	—		$	—		$	—		$	22,865,146

Costs and Expenses
Selling expenses		14,672,099			—			—			—			14,672,099
General and administrative expenses		5,597,881			(21,183	)		60,267			(124,282	)		5,512,683
Total Costs and Expenses		20,269,980			(21,183	)		60,267			(124,282	)		20,184,782

Income (Loss) from Operations		2,595,166			21,183			(60,267	)		124,282			2,680,364

Other (Expenses) Income
Interest expense, net of interest income		(482,367	)		—			—			—			(482,367	)
Changes in fair value of derivative liabilities		257,231			—			—			—			257,231
Imputed interest on related party advances		(24,365	)		—			—			—			(24,365	)
Impairment on investment		(6,855	)		—			—			—			(6,855	)
Total Other Expenses (Income)		(256,356	)		—			—			—			(256,356	)

Income (Loss) Before Income Taxes		2,338,810			21,183			(60,267	)		124,282			2,424,008

Income tax provision		(972,924	)		—			—			—			(972,924	)

Net Income (Loss)	$	1,365,886		$	21,183		$	(60,267	)	$	124,282		$	1,451,084

Other Comprehensive Income (Loss)
Foreign currency translation adjustment		166,304			(48,073	)		60,267			(124,282	)		54,216

Comprehensive Income (Loss)	$	1,532,190		$	(26,890	)	$	—		$	—		$	1,505,300

Income (loss) per common share – basic*	$	0.15											$	0.16
Income (loss) per common share – diluted*	$	0.15											$	0.15
Weighted average number of common shares outstanding – basic*		9,254,079												9,254,079
Weighted average number of common shares outstanding – diluted*		9,418,119												9,418,119

* Adjusted for an 8 for 1 reverse stock split effective December 12, 2019.

The reconciliation of the consolidated statement of cash flows for the year ended December 31, 2018 is as follows:

	As Previously Reported			Depreciation and amortization adjustments			Foreign Exchange adjustments			Other Adjustments			As Restated

Cash Flows from Operating Activities
Net loss	$	(3,046,308	)	$	(470,591	)	$	(111,527	)	$	(331	)	$	(3,628,757	)

Adjustments to reconcile net loss to net cash generated by operating activities
Depreciation and amortization		488,464			208,792			—			—			697,256
Amortization of deferred costs		58,188			—			—			—			58,188
Non-cash interest		1,995,128			—			—			—			1,995,128
Loss on issuance of debt		196,403			—			—			—			196,403
Imputed interest on advances from stockholders		1,514			—			—			—			1,514
Unrealized loss on trading securities		75,000			—			—			—			75,000
Impairment (recovery) of assets		(518,354	)		—			—			—			(518,354	)
Bad debt expense		6,354			—			—			—			6,354
Changes in Operating Assets and Liabilities
Prepaid expenses		(95,209	)		—			—			—			(95,209	)
Accounts payable and accrued liabilities		3,062,422			—			—			331			3,062,753
Accounts receivable		100,053			—			—			—			100,053
Gaming accounts receivable		142,779			—			—			—			142,779
Gaming accounts liabilities		(225,433	)		—			—			—			(225,433	)
Taxes payable		(498,941	)		—			—			—			(498,941	)
Other current assets		(43,156	)		—			—			—			(43,156	)
Long term liability		76,048			—			—			—			76,048
Net Cash Provided by operating Activities		1,774,952			(261,799	)		(111,527	)		—			1,401,626

Cash Flows from Investing Activities
Acquisition of property, plant, and equipment, and intangible assets		(4,455,099	)		(270,757	)		—			—			(4,725,856	)
Increase in restricted cash		(972,634	)		—			—			—			(972,634	)
Net Cash Used in Investing Activities		(5,427,733	)		(270,757	)		—			—			(5,698,490	)

Cash Flows from Financing Activities
Proceeds from bank credit line, net		750,000			—			—			—			750,000
Repayment of bank loan		(137,965	)		—			—			—			(137,965	)
Repayment of bank credit line		(177,060	)		—			—			—			(177,060	)
Proceeds from debentures and convertible notes, net of repayment		6,883,906			—			—			—			6,883,906
Advance to related party		(49,914	)		—			—			—			(49,914	)
Purchase of treasury stock		(2,261,307	)		—			—			—			(2,261,307	)
Advances from stockholders, net of repayment		(508,572	)		—			—			—			(508,572	)
Net Cash Provided by Financing Activities		4,499,088			—			—			—			4,499,088

Effect of change in exchange rate		(1,026,262	)		532,556			111,527			—			(382,179	)

Net decrease in cash		(179,955	)		—			—			—			(179,955	)
Cash – beginning of the year		6,469,858			—			—			—			6,469,858
Cash – end of the year	$	6,289,903		$	—		$	—		$	—		$	6,289,903

The reconciliation of the consolidated statement of cash flows for the year ended December 31, 2017 is as follows:

	As Previously Reported			Depreciation and amortization adjustments			Foreign Exchange adjustments			Other Adjustments			As Restated

Cash Flows from Operating Activities
Net income	$	1,365,886		$	21,183		$	(60,267	)	$	124,282		$	1,451,084

Adjustments to reconcile net income to net cash generated by operating activities
Depreciation and amortization		601,266			(21,183	)		—			—			580,083
Amortization of deferred costs		100,329			—			—			—			100,329
Non-cash interest		205,216			—			—			—			205,216
Imputed interest on advances from stockholders		24,365			—			—			—			24,365
Change in fair value of derivative liabilities		(257,231	)		—			—			—			(257,231	)
Impairment of assets		6,855			—			—			—			6,855
Stock issued for services		23,250			—			—			—			23,250
Bad debt expense		135,953			—			—			—			135,953
Changes in Operating Assets and Liabilities
Prepaid expenses		(85,301	)		—			—			—			(85,301	)
Accounts payable and accrued liabilities		482,904			—			—			—			482,904
Accounts receivable		(91,603	)		—			—			—			(91,603	)
Gaming accounts receivable		(654,287	)		—			—			—			(654,287	)
Gaming accounts liabilities		435,771			—			—			—			435,771
Taxes payable		903,187			—			—			—			903,187
Other current assets		(2,304	)		—			—			—			(2,304	)
Customer deposits		138,359			—			—			—			138,359
Long term liability		26,059			—			—			—			26,059
Net Cash Provided by operating Activities		3,358,674			—			(60,267	)		124,282			3,422,689

Cash Flows from Investing Activities
Acquisition of property, plant, and equipment, and intangible assets		(180,722	)		—			—			—			(180,722	)
Increase in restricted cash		(45,142	)		—			—			—			(45,142	)
Net Cash Used in Investing Activities		(225,864	)		—			—			—			(225,864	)

Cash Flows from Financing Activities
Proceeds from bank credit line, net		165,925			—			—			—			165,925
Repayment of bank loan		(109,104	)		—			—			—			(109,104	)
Proceeds from debentures and convertible notes, net of repayment		591,202			—			—			—			591,202
Repayment to stockholders, net of advances		(77,398	)		—			—			—			(77,398	)
Net Cash Provided by Financing Activities		570,625			—			—			—			570,625

Effect of change in exchange rate		536,001			—			60,267			(124,282	)		471,986

Net decrease in cash		4,239,436			—			—			—			4,239,436
Cash – beginning of the year		2,230,422			—			—			—			2,230,422
Cash – end of the year	$	6,469,858		$	—		$	—		$	—		$	6,469,858