On May 1, 2018, we adopted Accounting Standards Codification Topic 606,

Revenue from Contracts with Customers

(“ASC 606”) using a modified retrospective approach. See Note 2, “New Accounting Pronouncements and Legislation Issued,” for a discussion of the new revenue standard and its impact on our unaudited Condensed Consolidated Financial Statements. Prior to the adoption of ASC 606, complimentary revenues pertaining to food and beverage and other were included in gross revenues and excluded from net revenues through promotional allowances in the unaudited Condensed Consolidated Statements of Operations. Subsequent to the adoption of ASC 606, complimentary revenues are included in food and beverage, and other revenues, as appropriate, in the unaudited Condensed Consolidated Statements of Operations. Complimentary other revenues, whether provided as nondiscretionary complimentaries or discretionary complimentaries, were as follows for continuing operations:

	Three Months Ended				Nine Months Ended
	January 31, 2019		January 31, 2018		January 31, 2019		January 31, 2018
Food and beverage	$	992,595	$	1,012,407	$	2,863,087	$	2,991,976
Other		40,995		40,414		122,552		125,530
Total complimentries	$	1,033,590	$	1,052,821	$	2,985,639	$	3,117,506

U.S. generally accepted accounting principles defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date and establishes a three-level valuation hierarchy for disclosure of fair value measurements. The valuation hierarchy categorizes assets and liabilities measured at fair value into one of three different levels depending on the observability of the inputs employed in the measurement. The three levels are as follows:

Level 2 – Other inputs that are observable directly or indirectly such as quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability.

Financial instruments that potentially subject us to concentrations of credit risk are primarily notes receivable, cash and cash equivalents, accounts receivable and payable, and long term debt. Management performs periodic evaluations of the collectability of these notes and accounts receivable. Our cash deposits are held with large, well-known financial institutions, and, at times, such deposits may be in excess of the federally insured limit. The recorded value of cash, accounts receivable and payable, approximate fair value based on their short term nature; the recorded value of long term debt approximates fair value as interest rates approximate current market rates.

In February 2016, the Financial Accounting Standards Board (“FASB”) issued amended accounting guidance that changes the accounting for leases and requires expanded disclosures about leasing activities. Under the new guidance, lessees will be required to recognize a right-of-use asset and a lease liability, measured on a discounted basis, at the commencement date for all leases with terms greater than twelve months. Lessor accounting will remain largely unchanged, other than certain targeted improvements intended to align lessor accounting with the lessee accounting model and with the updated revenue recognition guidance. Lessees and lessors must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The amended guidance is effective for annual reporting periods (including interim periods within those periods) beginning after December 15, 2018, and early application is permitted. The Company is currently evaluating the impact this guidance will have on its financial position and results of operations.

In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09,

Revenue from Contracts with Customers

, which introduced a new standard related to revenue recognition, ASC 606. Under ASC 606, recognition of revenue occurs when a customer obtains control of promised goods or services in an amount that reflects the consideration to which the entity expects to receive in exchange for those goods or services. In addition, the new revenue standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from customer contracts. In July 2015, the FASB issued ASU No. 2015-14,

Revenue from Contracts with Customers - Deferral of the Effective Date

, which deferred the implementation of ASC 606 to be effective for fiscal years beginning after December 15, 2017.

The Company adopted ASC 606 during the first quarter 2019 using the modified retrospective approach to all contracts as of the date of initial application, which was May 1, 2018. Adoption of the new revenue standard principally affected (1) how we measure the liability associated with our loyalty program and (2) the classification and, as it related to the measurement of revenues and expenses between gaming; food and beverage; and retail, and other. The modified retrospective approach required the Company to recognize the impact of adopting ASC 606 as a cumulative effect adjustment to our beginning retained earnings, which was a decrease of $35,425 as of May 1, 2018. The cumulative effect adjustment related exclusively to re-measuring the liability associated with the loyalty program from a cost approach to an approach that reflects the estimated stand alone selling price (SSP) of the reward credits and certain tier benefits. In addition, the modified retrospective approach required the Company to provide disclosures describing the financial statement line items impacted by the new revenue standard (see below).

Prior to the adoption of ASC 606, we determined our liability for loyalty reward credits based on the estimated costs of goods and services to be provided and estimated redemption rates. Upon adoption of ASC 606, points awarded under our loyalty program constitute a material right and, as such, represent a performance obligation associated with the gaming contracts. Therefore, ASC 606 required us to allocate the revenues associated with the players’ activity between gaming revenue and the estimated SSP of the reward credits.

In addition to the above, prior to the adoption of ASC 606, complimentary revenues pertaining to food and beverage and retail were included in gross revenues and excluded from net revenues through promotional allowances in the unaudited Condensed Consolidated Statements of Operations and the estimated costs of providing such complimentary goods and services were included as gaming expenses in the unaudited Condensed Consolidated Statements of Operations. However, subsequent to the adoption of ASC 606, food and beverage, and other services furnished to our guests on a complimentary basis is measured at the estimated SSP and included as revenues within food and beverage and other as appropriate, in the unaudited Condensed Consolidated Statements of Operations, with a corresponding decrease in casino revenues. Additionally, subsequent to the adoption of ASC 606, the costs of providing such complimentary goods and services is included as expenses within food and beverage and other as appropriate, in the unaudited Condensed Consolidated Statements of Operations.

The

amount

by which each line item in continuing operations in our unaudited Condensed Consolidated Statement of Operations for the three and nine months ended January 31, 2019 was affected by the new revenue standard as compared with the accounting guidance that was in effect before the change was as follows:

	For the three months ended January 31, 2019
	As Reported - With Adoption of ASC 606		As Adjusted - Without Adoption of ASC 606			Effect of Accounting Change Increase/(Decrease)
Revenues:
Casino	$	11,547,379	$	12,580,969		$	(1,033,590	)
Food and beverage		2,665,342		2,665,342			-
Other		351,656		351,656			-
Gross revenues		14,564,377		15,597,967			(1,033,590	)
Less promotional allowances		-		(1,033,590	)		1,033,590
Net revenues		14,564,377		14,564,377			-

Expenses:
Casino		5,342,905		6,215,934			(873,029	)
Food and beverage		2,345,769		1,503,539			842,230
Other		57,038		26,239			30,799
Marketing and administrative		4,396,277		4,396,277			-
Facility		430,201		430,201			-
Corporate		1,630,561		1,630,561			-
Depreciation and amortization		112,537		112,537			-
Total operating expenses		14,315,288		14,315,288			-
Operating income	$	249,089	$	249,089		$	-

Net income from continuing operations	$	42,881	$	42,881		$	-

	For the nine months ended January 31, 2019
	As Reported - With Adoption of ASC 606			As Adjusted - Without Adoption of ASC 606			Effect of Accounting Change Increase/(Decrease)
Revenues:
Casino	$	35,051,766		$	38,033,727		$	(2,981,961	)
Food and beverage		7,675,267			7,675,267			-
Other		1,071,966			1,071,966			-
Gross revenues		43,798,999			46,780,960			(2,981,961	)
Less promotional allowances		-			(2,985,639	)		2,985,639
Net revenues		43,798,999			43,795,321			3,678

Expenses:
Casino		16,684,984			19,193,189			(2,508,205	)
Food and beverage		6,793,978			4,375,020			2,418,958
Other		170,858			77,933			92,925
Marketing and administrative		13,265,222			13,265,222			-
Facility		1,315,761			1,315,761			-
Corporate		4,261,090			4,261,090			-
Depreciation and amortization		357,193			357,193			-
Gain on sale of assets		(34,356	)		(34,356	)		-
Total operating expenses		42,814,730			42,811,052			3,678
Operating income	$	984,269		$	984,269		$	-

Net income from continuing operations	$	473,394		$	473,394		$	-

In November 2016, the FASB issued ASU No. 2016-18,

Statement of Cash Flows - Restricted Cash (Topic 230)

, which amends the existing guidance relating to the disclosure of restricted cash and restricted cash equivalents on the statement of cash flows. The ASU requires that amounts generally described as restricted cash or restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The Company adopted this guidance on May 1, 2018 on a retrospective basis and the updated disclosures are reflected for the periods presented in the Condensed Consolidated Statements of Cash Flows. For the nine months ended January 31, 2018, the change in restricted cash of ($64,537) was previously reported within net cash provided by operating activities.

A variety of proposed or otherwise potential accounting guidance is currently under study by standard-setting organizations and certain regulatory agencies. Due to the tentative and preliminary nature of such proposed accounting guidance, the Company has not yet determined the effect, if any, that the implementation of such proposed accounting guidance would have on its consolidated financial statements.