Elixir Gaming Technologies, Inc. (AMEX:EGT):
| Conference Call: | Today, November 13 at 8:30 a.m. ET | ||||
| Dial-in numbers: | 212/676-5390 or 415/537-1979 | ||||
| Webcast: | |||||
| Replay information provided below |
Elixir Gaming Technologies, Inc. (AMEX:EGT) (“Elixir Gaming” or “the Company”), a leading technology and solutions provider to the Pan-Asian gaming industry, today reported operating results for the third quarter ended September 30, 2008 and reviewed recent corporate progress.
Recent Highlights:
- A total of 12 venues and 1,283 installed units in operation as of September 30, 2008, comprised of 5 venues in the Philippines with a total of 787 installed units, 7 venues in Cambodia with a total of 496 installed units.
- Total net revenue from machines on participation of $1.1 million, an increase of 38% from $0.8 million in the second quarter of 2008.
- Average net win for the third quarter was $47, up from $29 in the second quarter 2008 period.
- $17.8 million in cash as of September 30, 2008.
- Entered into new agreements with Elixir Group and Elixir International that immediately benefit the Company’s balance sheet and liquidity, reduce operating costs, and eliminate potential dilution.
- Dolphin chip division secures approximately US$2.7 million order to provide over one million RFID chips to City of Dreams casino in 1H 2009.
Clarence Chung, Chairman and Chief Executive Officer of Elixir Gaming, commented, “Our third quarter results reflect the initiatives implemented over the past several months aimed at generating improvements in the performance of our installed base of electronic gaming machines as well as some early benefits from cost savings measures recently enacted. Our focus remains on maintaining machines in venues where we can generate attractive returns for the Company. In this regard, we continue to review and analyze all of the facilities where we’ve made placements and eliminate under-performing venues while simultaneously adding new, high-quality venues. In addition, in Cambodia, Elixir Gaming is proactively assuming greater operating responsibilities with venue owners where we believe performance can be significantly improved and are evolving our business model towards becoming an operating partner at certain venues. We believe that our multi-faceted approach to fortifying our existing installed base will generate further improvements in our operating results going forward.
“Last week, Elixir Gaming entered into new agreements with Elixir Group and Elixir International, which significantly benefit our balance sheet and liquidity, reduce our operating costs, and eliminate the potential for a meaningful dilution of our shareholders. With these agreements in place, our existing cash balance and our strategic relationships, the Company has improved financial flexibility to source games to further grow our installed base of units and identify opportunities to expand into high-quality new gaming venues.
“Simultaneous with our evaluation of new opportunities to further our growth in the Asia-Pacific region, we continue to carefully analyze the results and operations of venues where we’ve already placed gaming machines. Based on this recent analysis, we are confident that these facilities are capably positioned to achieve attractive and sustainable long-term results. Nonetheless, the Company will continue to evaluate its operating improvement strategies at each facility on a regular basis.”
Significant RFID Gaming Chip Order
Elixir Gaming’s Dolphin division recently secured an order to supply RFID gaming chips for Melco Crown Entertainment’s (NASDAQ: MPEL) much-anticipated new City of Dreams casino resort in Macau. The order, for over one million RFID gaming chips, is valued at approximately AU$4.2 million (US$2.7 million). Elixir Gaming expects to record this revenue in the 2009 second quarter period. City of Dreams, located in Cotai, is expected to open in the first half of 2009 and will be an integrated urban entertainment resort featuring a 420,000 square foot casino with over 500 gaming tables and 1,500 gaming machines.
Fourth Quarter 2008 and 2009 Operating Expectations
- Minimum of 1,300 operating machines and 13 venues in operation at December 31, 2008, reflecting the ongoing optimization of the Company’s installed base.
- An installed base of at least 2,500 units at 2009 year end.
- Cost savings initiatives including the closing of the Company’s Macau and China manufacturing plant, further downsizing of the US office, voluntary senior executive salary reductions and additional headcount reductions that are expected to reduce our quarterly selling, general, and administrative (SG&A) cash expenses to under $3 million by the second quarter of 2009.
- The Company continues to expect to turn adjusted EBITDA (earnings before interest, taxes, depreciation, amortization, and stock-based compensation) positive in the second half of 2009, reflecting benefits from continued operational improvements in the slot participation business, the new agreements with Elixir Group, and the anticipated reduction in operating expenses.
Mr. Chung concluded, “With a healthy pipeline for new unit installations, a much improved balance sheet, a materially reduced annualized cost structure in 2009 compared to 2008 and programs centered on improving returns from our current operations, Elixir Gaming is better positioned to realize the potential of its unique and attractive business model. We will continue to focus on leveraging our established and growing Asia-Pacific market presence and developing additional key relationships to deliver increased value to our shareholders.”
Q3 Financial Review
Revenues from gaming machines on participation were approximately $1.1 million in Q3 2008 compared to revenues of $0.8 million in Q2 2008 and $0.5 million in Q1 2008. Elixir Gaming’s 2008 third quarter total revenues of $3.6 million represent an increase of $0.8 million when compared to total revenues of $2.8 million for the third quarter of 2007.
For the third quarter of 2008, Elixir Gaming reported a net loss of $7.3 million, or ($0.06) per share, on a weighted average share count of 114.9 million shares compared to a net loss for the third quarter of 2007 of $213.7 million, or ($4.67) per share, on a weighted average share count of 45.8 million shares, which reflected several significant non-cash, non-operating charges related to the Company’s Securities Purchase and Product Participation Agreement and the change in business strategy associated with this agreement. SG&A for the 2008 third quarter period, without the effect of non-cash stock-based compensation expense, was $3.9 million, an increase of $1.9 million from the year-ago period and a decrease of $0.3 million from the 2008 second quarter period.
Elixir Gaming is hosting a conference call and simultaneous webcast at 8:30 a.m. ET today, November 13, both of which are open to the general public. The conference call number is 212/676-5390 or 415/537-1979. Questions and answers will be reserved for call-in analysts and investors. Interested parties may also access the live call on the Internet at www.elixirgaming.com; please allow 15 minutes to register and download and install any necessary software. Following its completion, a replay of the call can be accessed for thirty days on the Internet at www.elixirgaming.com.
About Elixir Gaming Technologies, Inc.
Elixir Gaming Technologies, Inc. (AMEX:EGT) is a provider of gaming technology solutions. The Company secures long-term contracts to provide comprehensive turn-key solutions to 3, 4, and 5 star hotels and other well-located venues throughout Asia that seek to offer casino gaming products. The Company retains ownership of the gaming machines and systems and receives recurring daily fees that average in excess of 20% of the net gaming win per machine and provides on-site maintenance. The Company has established a strategic presence in the Asia Pacific region with a focus on the Philippines, Cambodia, and Vietnam markets. For more information please visit www.elixirgaming.com.
Forward Looking Statements
This press release contains forward-looking statements concerning Elixir Gaming, Elixir Group and Elixir International within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Those forward-looking statements include statements regarding expectations for the business of Elixir Gaming, its working capital requirements and future revenue and profitability. Such statements are subject to certain risks and uncertainties, and actual circumstances, events or results may differ materially from those projected in such forward-looking statements. Factors that could cause or contribute to differences include, but are not limited to, risks related to Elixir Gaming’s inability to place gaming machines at significant levels, whether the gaming machines placed generate the expected amount of net-win, the ability of Elixir Gaming to acquire additional capital as and when needed, the ability of Elixir Gaming to collect revenue and protect its assets and those other risks set forth in Elixir Gaming’s annual report on Form 10-K for the year ended December 31, 2007 filed with the SEC on March 31, 2008 and our Form 10-Q for the three months ended September 30, 2008 to be filed on November 14, 2008. Elixir Gaming cautions readers not to place undue reliance on any forward-looking statements. Elixir Gaming does not undertake, and specifically disclaims any obligation to update or revise such statements to reflect new circumstances or unanticipated events as they occur.
Elixir Gaming Technologies Consolidated Statements of Operations (Unaudited) | ||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2008 | 2007 | 2008 | 2007 | |||||||||||||
| Revenues: | ||||||||||||||||
| Gaming machine participation | $ | 1,109,144 | $ | 131,356 | $ | 2,396,673 | $ | 131,356 | ||||||||
| Table game products | 417,304 | 1,014,001 | 1,667,806 | 4,652,980 | ||||||||||||
| Non-gaming products | 2,084,950 | 1,669,445 | 6,146,407 | 4,830,170 | ||||||||||||
| 3,611,398 | 2,814,802 | 10,210,886 | 9,614,506 | |||||||||||||
| Operating costs and expenses: | ||||||||||||||||
Cost of gaming machine participation | 2,701,113 | 156,645 | 6,299,055 | 156,645 | ||||||||||||
| Cost of table game products | 507,512 | 891,840 | 1,431,859 | 3,835,156 | ||||||||||||
| Cost of non-gaming products | 1,791,863 | 1,782,129 | 5,262,733 | 4,926,980 | ||||||||||||
| Selling, general and administrative | 5,338,206 | 6,381,386 | 17,218,671 | 13,443,365 | ||||||||||||
| Impairment of assets | ― | 29,609,085 | 1,368,829 | 29,609,085 | ||||||||||||
| Participation acquisition fees | ― | 175,070,000 | ― | 175,070,000 | ||||||||||||
| Research and development | 178,243 | 328,981 | 777,552 | 739,612 | ||||||||||||
| Depreciation and amortization | 310,886 | 71,632 | 779,922 | 726,030 | ||||||||||||
| Restructuring charges | ― | 1,622,532 | 168,276 | 1,622,532 | ||||||||||||
| 10,827,823 | 215,914,230 | 33,306,897 | 230,129,405 | |||||||||||||
| Loss from operations | (7,216,425 | ) | ((213,099,428 | ) | (23,096,011 | ) | (220,514,899 | ) | ||||||||
| Other income (expense): | ||||||||||||||||
| Interest expense and finance fees | (290,355 | ) | (512,290 | ) | (564,876 | ) | (1,820,034 | ) | ||||||||
| Interest income | 107,420 | (404 | ) | 629,606 | 102,755 | |||||||||||
| Foreign currency gain/(loss) | (3,100 | ) | (9,340 | ) | 638,427 | (9,340 | ) | |||||||||
| Other | 85,556 | (379,175 | ) | 245,851 | 15,744 | |||||||||||
| (100,479 | ) | (901,209 | ) | 949,008 | (1,710,875 | ) | ||||||||||
| Income tax benefit/(expense) | ― | 347,573 | (22,498 | ) | 347,573 | |||||||||||
| Net loss | $ | (7,316,904 | ) | $ | (213,653,064 | ) | $ | (22,169,501 | ) | $ | (221,878,201 | ) | ||||
| Basic and diluted loss per share | $ | (0.06 | ) | $ | (4.67 | ) | $ | (0.19 | ) | $ | (5.88 | ) | ||||
| Weighted average common shares outstanding | 114,946,671 | 45,780,514 | 114,945,602 | 37,765,328 | ||||||||||||
Elixir Gaming Technologies CONSOLIDATED BALANCE SHEETS | ||||||
| September 30, 2008 | December 31, 2007 | |||||
| ASSETS | (Unaudited) | |||||
| Current assets: | ||||||
| Cash and cash equivalents | $ | 17,844,228 | $ | 68,286,820 | ||
Current portion of accounts receivable, trade, net of | 3,051,809 | 1,689,909 | ||||
| Other receivables, net of allowance for uncollectibles of $25,042 and $0 | 674,756 | 298,940 | ||||
| Inventories | 1,343,539 | 1,686,670 | ||||
| Prepaid expenses and other current assets | 672,069 | 975,549 | ||||
| 23,586,401 | 72,937,888 | |||||
| Accounts receivable, trade, net of current portion | ― | 60,421 | ||||
Gaming machines and systems, net of accumulated | 60,882,056 | 39,193,962 | ||||
Property and equipment, net of accumulated depreciation | 4,392,560 | 3,934,532 | ||||
Intangible assets, net of accumulated amortization | 4,985,939 | 5,486,321 | ||||
| Goodwill | 84,210 | 84,210 | ||||
| Prepaid commissions | ― | 1,398,800 | ||||
| Deposits and other assets | 4,203,181 | 617,894 | ||||
| $ | 98,134,347 | $ | 123,714,028 | |||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||
| Current liabilities: | ||||||
| Accounts payable | $ | 1,439,220 | $ | 1,798,459 | ||
| Amount due to related party | 13,524,455 | 29,601,448 | ||||
| Note payable to related party, current portion | 7,444,409 | ― | ||||
| Accrued expenses | 2,885,824 | 5,248,458 | ||||
| Short-term debt | 16,239 | 31,893 | ||||
| Capital lease obligations, current portion | 255,277 | 480,663 | ||||
| Customer deposits | 213,043 | 197,019 | ||||
| 25,778,467 | 37,357,940 | |||||
| Capital lease obligations, net of current portion | 669,916 | 916,444 | ||||
| Note payable to related party, net of current portion | 4,624,727 | ― | ||||
| Other liabilities | 388,294 | 99,966 | ||||
| Deferred tax liability | 966,744 | 1,051,745 | ||||
| 32,428,148 | 39,426,095 | |||||
| Stockholders' equity: | ||||||
Common stock, $0.001 par value, 300,000,000 shares authorized; | 114,957 | 114,916 | ||||
| Additional paid-in-capital | 417,236,476 | 411,323,072 | ||||
| Accumulated other comprehensive income | (1,919,334) | 406,358 | ||||
| Accumulated deficit | (349,725,900) | (327,556,413) | ||||
| 65,706,199 | 84,287,933 | |||||
| $ | 98,134,347 | $ | 123,714,028 | |||
Contacts:
Traci Mangini, 702-617-4741
SVP,
Corporate Finance
or
Investors:
Jaffoni & Collins
Incorporated
Richard Land/Dave Jacoby, 212-835-8500
egt@jcir.com
