Goodwill and Intangible asset

6 Months Ended

Jun. 30, 2013

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets Disclosure [Text Block]

Note 7: Goodwill and Intangible asset

Goodwill represents the difference between purchase cost and the fair value of net assets acquired in business acquisitions. Indefinite lived intangible assets, representing trademarks and trade names, are not amortized unless their useful life is determined to be finite. Long-lived intangible assets are subject to amortization using the straight-line method. Goodwill and indefinite lived intangible assets are tested for impairment annually as of June 30, 2013 and more often if a triggering event occurs, by comparing the fair value of each reporting unit to its carrying value. The Company qualitatively assessed whether it was more likely than not that goodwill and indefinite lived intangibles assets impairment existed and concluded that impairment did not exist as of June 30, 2013.

	Goodwill
Balance, December 31, 2012	$	-
Acquisition (Note 4)		4,972
Balance, June 30, 2013	$	4,972

Intangible assets	Estimated Useful Life	As of June 30, 2013		As of December 31, 2012
Intellectual Property	9 years	$	1,913	$	1,913
Software and website development	3 Years		524		-
Customer list	5 Years		109		-
Trademark	1 1/2 Years		6
Less: Accumulated amortization			(249)		(118)
Intangible assets, net			2,303		1,795

Estimated future annual amortization expense as of:

Year	Intellectual Property		Software and website development		Customer list		Trademark
2013		102		91		11		1
2014		204		183		22		2
2015		204		179		22		2
2016		204		44		22		-
2017		204		-		22		-
Thereafter		776		-		8		-

On May 11, 2012, the Company entered into a Contribution and Sale Agreement (the “Sale Agreement”) with J&S Gaming, Inc. (“J&S”), and MGT Gaming, Inc. (“MGT Gaming”) for the acquisition of U.S. Patent #7,892,088, entitled “Gaming Device Having a Second Separate Bonusing Event” (“The Patent”). The Patent acquired was recorded at its estimated fair value of $1,913 at the date of closing in exchange for $200 cash and a four (4) year warrant to purchase 350,000 shares of the Company’s Common stock at an exercise price of $4.00 per share, subject to certain anti-dilution provisions (the “Warrants”). Due to certain anti-dilution provisions, the Warrants are recorded as a liability, and consequently “marked-to-market” to the fair value at the end of each reporting period. On May 20, 2013, the Company modified the Warrant granted to J&S Gaming to eliminate the anti-dilution provision in the Warrant. The Company paid the holder $25 in cash consideration for the modification. On May 20, 2013, the Company had 403,029 warrants outstanding with a fair value of $1,164 carried as a derivative liability. The signed modification agreement allowed the Company to reclassify the $1,164 from derivative liability into shareholders’ equity. During the three and six months ended June 30, 2013, the Company recognized a $605 mark-to-market loss and a $363 mark-to-market loss associated to this agreement.

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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