RELATED PARTY TRANSACTIONS

12 Months Ended

Apr. 30, 2014

RELATED PARTY TRANSACTIONS [Abstract]

RELATED PARTY TRANSACTIONS

5. RELATED PARTY TRANSACTIONS

During the years ended April 30, 2014 and 2013, revenues from all related party agreements for sales of products and services totaled approximately $11.9 million (52% of total revenue) and $4.2 million (40% of total revenue), respectively. Accounts receivable balances at April 30, 2014 and 2013 were $11,000 and $411,000, respectively, from these customers. Descriptions of the transactions with the Company’s related parties in the years ended April 30, 2014 and 2013 are presented below.

Berjaya Lottery Management (H.K.) Ltd.

In 1996, the Company entered into an agreement to purchase specific inventory on behalf of Berjaya Lottery Management (H.K.) Ltd. (“BLM”), the owner of 71.3% of ILTS’s outstanding voting stock as of April 30, 2014. 

Over time, the Company has sold or used portions of the BLM inventory in unrelated third-party transactions. The sale or use of the inventory resulted in a liability to BLM for the cost of the items utilized.

The financial activities and balances related to BLM were as follows:

·    There were no related party sales to BLM in the years ended April 30, 2014 and 2013;

·    There were no accounts receivable balances from BLM at April 30, 2014 and 2013;

·    Liabilities to BLM arising from the sale or use of the BLM inventory, recorded as “Payable to Parent,” were $152,000 and $202,000 as of April 30, 2014 and 2013, respectively; and

·    There were no inventory balances held for BLM as of April 30, 2014 and 2013.

Sports Toto Malaysia Sdn. Bhd.

The Company provides lottery products, software development and software support services to Sports Toto Malaysia (“STM”), an affiliate of BLM and a related party.  

In January 2013, the Company received from STM, an order valued at approximately $11 million for lottery products. Shipments of these products were completed in fiscal 2014 and the related revenue was recognized.

The financial activities and balances related to transactions with STM were as follows:

·    Revenue of approximately $11.7 million recognized on the sale of lottery products and supporting services during the year ended April 30, 2014. Revenue recognized on the performance of contract deliverables and sale of support services totaled approximately $3 million during the year ended April 30, 2013;

·    There was deferred revenue of $10,000 on lottery products and support services as of April 30, 2014, compared to $3.3 million as of April 30, 2013; and

·    There was no accounts receivable balance as of April 30, 2014. Accounts receivable balance from STM totaled $410,000 as of April 30, 2013.

Philippine Gaming Management Corporation

The Company provides lottery products and software development to Philippine Gaming Management Corporation (“PGMC”), a related party and a subsidiary of BLM.

In addition, the Company provides PGMC with terminal spare parts on an ongoing basis and support services on an as-needed basis.

The financial activities and balances related to transactions with PGMC were as follows:

·    Revenues recognized on the sale of lottery products and support services totaled approximately $72,000 during the year ended April 30, 2014, compared to $1.1 million in 2013; 

·    There were no deferred revenue balances as of April 30, 2014 and 2013; and

·    There were no accounts receivable balances as of April 30, 2014 and 2013.

Natural Avenue Sdn. Bhd.

The Company provides Natural Avenue Sdn. Bhd. (“Natural Avenue”), an affiliate of BLM and a related party, with lottery and software products, support services and spare parts.  

The financial activities and balances related to transactions with Natural Avenue were as follows:

·    Revenues of $142,000 were recognized on the sale of support services and licensing during the years ended April 30, 2014 and 2013;  

·    There were deferred revenue balances of $4,000 on lottery product licensing as of April 30, 2014 and 2013; and

·    Accounts receivable balance was $11,000 as of April 30, 2014, compared to $1,000 as of April 30, 2013.

Sports Toto Computers Sdn. Bhd.

The Company engages Sports Toto Computers Sdn. Bhd. (“STC”), a related party, to provide consulting, programming and other related services to the Company.

During the years ended April 30, 2014 and 2013, the Company incurred approximately $203,000 and $196,000, respectively.