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Galaxy Gaming Reports Record Q-2 Results

(August 14, 2014)

LAS VEGAS, Aug. 14, 2014 (GLOBE NEWSWIRE) -- Galaxy Gaming, Inc. (OTC:GLXZ), the world's largest independent developer, manufacturer and distributor of casino table games and enhanced systems, today announced its financial results for the quarter and the six months ending June 30, 2014.



Financial Highlights



Q-2 2014 vs Q-2 2013



  • Revenue of $2,463K increased 27% or $519K from $1,944K.


  • EBITDAS of $987K increased 25% or $199K from $788K.


  • Pre-tax profit of $233K increased 86% or $108K from $125K.


  • Net income of $109K increased 28% or $24K from $85K.



6 months 2014 vs 6 months 2013





  • Revenue of $4,727K increased 23% or $887K from $3,840K.


  • EBITDAS of $1,967K increased 23% or $366K from $1,601K.


  • Pre-tax profit of $478K increased 72% or $200K from $278K.


  • Net income of $261K increased 38% or $72K from $189K.



Q-2 2014 vs. Q-1 2014




  • Revenue of $2,463K increased 9% or $198K from $2,265K.


  • EBITDAS of $987K increased 1% or $7K from $980K.


  • Pre-tax profit of $233K decreased 5% or $11K from $244K.


  • Net income of $109K decreased 28% or $42K from $151K.



Executive Comments



"Following the best first quarter in our history, we posted our best-ever quarterly results in the second quarter," said Galaxy Gaming CEO Robert Saucier. "The 9% increase in recurring revenues from last quarter marks our 11th consecutive quarterly increase overall. We continue to expand our product lines, increase our footprint into new markets, and solidify our market share in existing markets. All-in-all, not a bad combination for continued success. Our team is dedicated to keeping this momentum going."



Besides the record revenue, recurring growth and positive trends, Company executives discussed the ways they believe Galaxy Gaming may be well-positioned to take advantage of ongoing and favorable industry developments. In the wake of substantial consolidation among gaming manufacturers, Company executives pointed out the value of being the world's largest independent table game provider. In addition, executives touted the Company's substantial growth into new European jurisdictions in France, Monaco and the Czech Republic. Galaxy added that these international markets are expected to be followed by additional expansion into other key domestic and other international territories.



"We continue to improve on our past successes, as evidenced by our strong organic growth year-over-year and between the quarters," said Gary A. Vecchiarelli, Galaxy's CFO. "Our annual revenue run-rate as of June 30,2014 is approaching $10 million, which is the direct result of increased demand for our products from casino operators and players alike."



Mr. Vecchiarelli specifically addressed higher operating expenses, and described it as evidence of the Company's strategic direction and internal focus. "Significant portions of our higher operating expenses were devoted to important investments in our products and our people, including our relocation to a new corporate headquarters four times the size of our previous space. We are already realizing significant benefits and true advantages in terms of both physical space, production capacity and the ability to exhibit our products in the best ways."



Conference Call



The Company will host an investor conference call to discuss its financial and operating results.



When: Monday, August 18th at 1:00pm Pacific Time (4:00pm Eastern)



US/Canada: (888) 505-4368



International: (719) 325-2455



Conference ID: 3397176



Web Presentation: http://www.galaxygaming.com/investor-relations



Financial Summary



Revenue. Total revenue for the second quarter increased 27% to $2,462,529, over the same quarter 2013. Revenue also increased 23% to $4,727,340 for the six month period ended June 30, 2014 over the same period 2013. Between the first and second quarter 2014, total revenues increased 9%. These increases are primarily due to additional placement of premium games and expansion into new territories. The annualized revenue run-rate as of June 30, 2014 is $9,845,416. 



Operating expenses. Operating expenses for the second quarter 2014 increased 25% to $1,954,688, over the same quarter 2013. Operating expenses also increased 21% for the six month period ended June 30, 2014 over the same period 2013. The primary drivers of the increase relates to increases in selling, general & administrative expenses. The SG&A increase is generally due to higher sales commissions based on increased sales, an increase in overall employee headcount and non-cash increased stock compensation expense. Between the first and second quarter 2014, operating expenses increased 12%, which included additional expenses related to the move of our corporate headquarters.



Net income. Net income for the second quarter 2014 increased 28% to $109,377, over the same quarter 2013. Net income also increased 38% to $260,542 for the six month period ended June 30, 2014 over the same period 2013. The increase was primarily due to significant growth in recurring revenue. Net income decreased 28% between the first and second quarter 2014, to $109,377. This decrease was primarily due to higher SG&A and tax provision recognized in the second quarter.



EBITDAS. EBITDAS, a non-GAAP financial measure (described below), for the second quarter 2014 increased 25% to $987,061 over the second quarter 2013. EBITDAS also increased 38% to $1,966,559 for the six month period ended June 30, 2014. Higher recurring revenues contributed to most of the increase in EBITDAS between the periods. Between the first and second quarter 2014, EBITDAS only increased 1%, due to higher operating expenses.



Balance Sheet and Cash Flow Information



Cash provided by operations was $1,407,953 for the six months ended June 30, 2014 compared to $999,657 for the six months ended June, 30 2013. The improvement in cash provided by operating activities was primarily due to the significant increase in total revenues.



Cash used in financing activities was $1,369,495 for the six months ended June 30, 2014 compared to $1,135,014 for the six months ended June 30, 2013. The increase in cash used in financing activities was primarily due to the increase in contractual principal payments due on notes payable.



As of June 30, 2014, the Company's cash and cash equivalents totaled $434,607.



Use of Non-GAAP Measures



Galaxy Gaming, Inc. prepares its consolidated financial statements in accordance with United States generally accepted accounting principles ("GAAP"). In addition to disclosing financial results prepared in accordance with GAAP, the Company discloses information regarding EBITDAS, which differs from the term EBITDA as it is commonly used. In addition to adjusting net income (loss) from continuing operations to exclude taxes, interest, and depreciation and amortization, EBITDAS also excludes noncash charges, certain non-recurring charges and share-based compensation expense. EBITDA and EBITDAS are not measures of performance defined in accordance with GAAP. However, EBITDAS is used internally in planning and evaluating the Company's operating performance. Accordingly, management believes that disclosure of this metric offers investors, bankers and other stakeholders an additional view of the Company's operations that, when coupled with the GAAP results, provides a more complete understanding of the Company's financial results.



EBITDAS should not be considered as an alternative to net loss or to net cash used in operating activities as a measure of operating results or of liquidity. It may not be comparable to similarly titled measures used by other companies, and it excludes financial information that some may consider important in evaluating the Company's performance. A reconciliation of GAAP net loss from continuing operations to EBITDAS is included in the accompanying financial schedules.



About Galaxy Gaming



Headquartered in Las Vegas, Galaxy Gaming (www.galaxygaming.com) develops, manufactures and distributes innovative proprietary table games, state-of-the-art electronic wagering platforms and enhanced bonusing systems to land-based, riverboat, cruise ships and online casinos worldwide. Through its iGaming partner Games Marketing Ltd., Galaxy Gaming licenses its proprietary table games to the online gaming industry. The Company is also expanding its global presence through its partnership with WPT Enterprises, Inc., owner of the World Poker Tour.



This press release may contain "forward looking" statements within the meaning of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, and is subject to the safe harbors created thereby. Forward looking statements are subject to change and involve risks and uncertainties that could significantly affect future results, including those risks detailed from time to time in the Company's filings with the Securities and Exchange Commission. Although the Company believes any expectations expressed in any forward looking statements are reasonable, future results may differ materially from those expressed in any forward looking statements. The Company undertakes no obligation to update the information in this press release except as required by law and represents that the information speaks only as of today's date.














































































































































































































































































GALAXY GAMING, INC.

BALANCE SHEETS

 

ASSETS

June 30, 2014

(Unaudited)

December 31, 2013

(Unaudited)

Current assets:

 

 

Cash and cash equivalents

$ 434,607

$ 438,502

Restricted cash

264,916

244,416

Accounts receivables, net allowance for bad debts of $34,887 and $36,770

1,424,018

1,273,797

Prepaid expenses

94,777

34,973

Inventory

313,416

297,480

Note receivable – related party, current portion

18,765

18,212

Deferred tax asset

27,119

27,119

Other current assets

32,767

50,510

Total current assets

2,610,385

2,385,009

 

 

 

Property and equipment, net

271,883

44,952

Products leased and held for lease, net

106,018

85,883

Intangible assets, net

16,067,379

16,811,511

Goodwill

1,091,000

1,091,000

Note receivable – related party, net of current portion

364,533

365,086

Deferred tax assets, net of current portion

436,669

436,669

Other assets, net

47,228

7,245

 

 

 

Total assets

$ 20,995,095

$ 21,227,355

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

Current liabilities:

 

 

Accounts payable

$ 336,268

$ 241,754

Accrued expenses

372,168

322,402

Income taxes payable

156,921

34,655

Deferred revenue

597,209

526,922

Jackpot liabilities

269,543

246,522

Current portion of capital lease obligations

61,305

--  

Current portion of long-term debt

3,289,275

2,929,918

Total current liabilities

5,082,689

4,302,173

 

 

 

Deferred rent

52,724

--  

Capital lease obligations, net of current portion

173,313

--  

Long-term debt, net of debt discount, net of current portion

14,194,019

15,645,939

 

 

 

Total liabilities

19,502,745

19,948,112

 

 

 

Commitments and Contingencies (See Note 12)

 

 

 

 

 

Stockholders' equity

 

 

Preferred stock, 10,000,000 shares, $.001 par value preferred stock authorized; 0 shares issued and outstanding

--  

--  

Common stock, 65,000,000 shares authorized; $.001 par value 38,560,591 and 38,310,591 shares issued and outstanding

38,560

38,311

Additional paid-in capital

2,586,135

2,330,676

Stock warrants

49,168

190,053

Accumulated deficit

(741,646)

(1,002,188)

Accumulated other comprehensive income (loss)

(439,867)

(277,609)

Total stockholders' equity

1,492,350

1,279,243

 

 

 

Total liabilities and stockholders' equity

$ 20,995,095

$ 21,227,355











































































































































































































































 

GALAXY GAMING, INC.

STATEMENTS OF OPERATIONS

(Unaudited)

 

 

FOR THE THREE MONTHS ENDED

FOR THE SIX MONTHS ENDED

 

June 30, 2014

June 30, 2013

June 30, 2014

June 30, 2013

Revenue:

 

 

 

 

Product leases and royalties

$ 2,461,354

$ 1,931,376

$ 4,722,163

$ 3,820,806

Product sales and service

1,175

12,350

5,177

19,298

Total revenue

2,462,529

1,943,726

4,727,340

3,840,104

Costs and expenses:

 

 

 

 

Cost of ancillary products and assembled components

17,620

32,232

36,940

59,483

Selling, general and administrative

1,420,932

986,482

2,627,278

1,944,064

Research and development

98,051

138,835

211,387

239,280

Depreciation

28,451

11,280

42,744

21,440

Amortization

389,634

397,226

779,132

794,452

Total costs and expenses

1,954,688

1,566,055

3,697,481

3,058,719

 

 

 

 

 

Income from operations

507,841

377,671

1,029,859

781,385

 

 

 

 

 

Other income (expense):

 

 

 

 

Interest income

5,827

5,809

11,454

11,672

Interest expense

(280,445)

(258,543)

(563,682)

(515,560)

Gain on settlement

--

--

--  

--  

Total other income (expense)

(274,618)

(252,734)

(552,228)

(503,888)

Income before provision for income taxes

233,223

124,937

477,631

277,497

Benefit (provision) for income taxes

(123,846)

 (39,747)

(217,089)

(88,510)

Net income

$ 109,377

$ 85,190

$ 260,542

$ 188,987

 

 

 

 

 

Basic income per share

$ 0.00

$  0.00

$ 0.01

$ 0.00

Diluted income per share

$ 0.00

$ 0.00

$ 0.01

$ 0.00

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

Basic

38,535,591

38,310,591

38,459,897

38,310,591

Diluted

38,626,603

38,410,591

38,537,558

38,410,591
































































































































































































































































 

GALAXY GAMING, INC.

STATEMENTS OF CASH FLOWS

 

 

FOR THE SIX MONTHS ENDED

JUNE 30,

 

Cash flows from operating activities:

2014

(Unaudited)

2013

(Unaudited)

Net income for the period

$ 260,542

$ 188,987

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

Depreciation expense

42,744

21,440

Amortization expense

779,132

794,452

Amortization of debt discount

104,316

104,316

Deferred income tax provision

-- 

88,510

Share-based compensation

114,823

2,902

Changes in operating assets and liabilities:

 

 

Increase in restricted cash

(20,500)

(18,253)

(Increase) decrease in accounts receivable

(150,414)

(22,902)

Decrease (increase) in other current assets

17,743

(4,481)

Increase in inventory

(52,079)

(132,507)

(Increase) decrease in prepaid expenses

(59,804)

(45,365)

(Increase) in other long-term assets

(40,889)

-- 

Increase (decrease) in accounts payable

94,346

4,583

Increase (decrease) in accrued expenses

49,695

(38,649)

Increase in income taxes payable

122,266

-- 

Increase in deferred revenue

70,287

40,370

Increase in jackpot liabilities

23,021

16,254

Increase in deferred rent

52,724

-- 

Net cash provided by operating activities

1,407,953

999,657

 

 

 

Cash flows from investing activities:

 

 

Acquisition of property and equipment

(8,791)

(18,347)

Acquisition of intangible assets

(35,000)

-- 

Payments received on note receivable

-- 

4,177

Net cash (used in) provided by investing activities

(43,791)

(14,170)

 

 

 

Cash flows from financing activities:

 

 

Principal payments on capital leases

(9,352)

-- 

Principal payments on notes payable

(1,360,143)

(1,135,014)

Net cash used in financing activities

(1,369,495)

(1,135,014)

 

 

 

Effect of exchange rate changes on cash

1,438

(5,728)

 

 

 

Net decrease in cash and cash equivalents

(3,895)

(155,255)

Cash and cash equivalents – beginning of period

438,502

398,424

Cash and cash equivalents – end of period

$ 434,607

$ 243,169

 

 

 

Supplemental cash flow information:

 

 

Cash paid for interest

$ 563,682

$ 515,560

Inventory transferred to leased assets

$ 36,550

$ 27,898

Cash paid for income taxes

$ --

$ --

Supplemental non-cash financing activities information:

 

 

Assets acquired by capital lease

$ 243,970

$ --

Effect of exchange rate on note payable in foreign currency

$ 74,935

$ 603,774































































































 

GALAXY GAMING, INC.

RECONCILIATION TO EBITDAS

 

 

Three Months

 Ended June 30,

Six Months

 Ended June 30,

Three Months

 Ended March 31,

 

2014

2013

2014

2013

2014

Net income

$ 109,377

$ 85,190

$ 260,542

$ 188,987

$  151,165

Interest income

(5,827)

(5,809)

(11,454)

(11,672)

(5,627)

Interest expense

280,445

258,543

563,682

515,560

283,237

Income tax provision (benefit)

123,846 

39,747 

217,089 

88,510 

93,243 

Depreciation

28,451 

11,280 

42,744 

21,439 

14,293 

Amortization

389,634 

397,226 

779,132 

794,452 

389,499 

Share based compensation

61,135 

1,451 

114,823 

2,902 

53,688 

EBITDAS(1)

$ 987,061

$ 787,628

$ 1,966,558

$ 1,600,178

$  979,498


(1) EBITDAS is defined as net income (loss) from continuing operations before interest, taxes, depreciation, amortization, share-based compensation, and non-cash charges. EBITDAS does not purport to represent net earnings or net cash used in operating activities, as those terms are defined under generally accepted accounting principles, and should not be considered as an alternative to such measurements or as indicators of the Company's performance. The Company's definition of EBITDAS may not be comparable with similarly titled measures used by other companies.


CONTACT: Jonathan Wilcox
(702) 939-3254



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Related Keywords: GAMING, EARNINGSCzech Republic, France, USA, Inc., Other,


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