Galaxy Gaming shored up its finances during the third quarter, paying down $370,000 of debt and amending its credit agreement with Nevada State Bank. The company also reported revenue that topped year-earlier totals.
In a quarterly report filed Thursday with the Securities and Exchange Commission, Galaxy Gaming said its net income was $580,234, or 3 cents per diluted share, in the three months ended Sept. 30, down from net income of $791,968 or 2 cents per diluted share, a year earlier.
The diluted share count was 19.1 million, down from 41.2 million a year earlier.
Adjusted earnings before interest, taxes, depreciation and amortization, a cash flow measure that filters out nonrecurring costs, rose 22.2 percent to $2.2 million from $1.8 million. The company said higher earnings after the add-back in 2019 of expenses associated with the Triangulum lawsuit, a contested proxy campaign, rebranding expenses and severance expense lifted overall results.
On Aug. 7, the company said it rejected a slate of potential board nominees submitted by Robert Saucier, the company’s founder and former CEO, saying they were filed too late to be valid. The company said it had expected Saucier and Robert Pietrosanto, a former Galaxy senior sales specialist, to solicit Galaxy’s stockholders for the nominations.
The company said a notice of nomination for the 2019 annual meeting, slated for Aug. 28, would have had to arrive by June 29. Saucier and Pietrosanto submitted their names Aug. 2, the company said.
Galaxy’s third-quarter revenue rose 12.5 percent to $5.4 million from $4.8 million, buoyed by an 8 percent jump in North American segment revenue.
On May 7, Galaxy said it redeemed all 23.3 million shares of common stock held by Triangulum Partners, a company controlled by Saucier. Before the redemption, Saucier was Galaxy’s majority shareholder.
Saucier, who founded Galaxy in 2000, left the company in November 2018 without explanation. He resigned as Galaxy’s chairman and CEO in September 2017 after the Nevada Gaming Control Board had nearly denied his application for a license to distribute new games in Nevada. Saucier had also previously raised doubts with gaming regulators in California, Oregon and Washington.
In Thursday’s SEC, Galaxy said Saucier sued the company on Oct. 18, alleging his shares had been wrongfully redeemed and arguing that Galaxy Gaming was obligated to pay him year-end bonuses, despite his resignation. Galaxy said it will dispute the claims in court.
Galaxy has been expanding since redeeming Trangulum shares. The company received licenses in Maryland, Wisconsin and Ontario, Canada. In October, Arkansas licensed the company. Galaxy officials said in October that the company has been pursuing licenses in New Jersey, Mississippi and California and will file with other jurisdictions by year’s end, including Illinois, Missouri, Indiana and Pennsylvania.
Galaxy CEO Todd Cravens told CDC Gaming in October that the restructuring provided a “huge fundamental shift” for the company to open new opportunities regulatory hurdles with the ownership had stifled.
“We’re picking and choosing where we can go, and now we can make business decisions,” Cravens said. “It’s a bit more freeing. There are a lot of jurisdictions open to us now and more on the horizon.
Galaxy Gaming shares fell 8 cents, or 3.53 percent, Friday to close at $2.05 on the Over-the-Counter Bulletin Board. The shares have risen 46.4 percent in 2019.
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