Elixir Gaming Technologies Inc (EGT, Financial) filed Quarterly Report for the period ended 2010-06-30.
Elixir Gaming Technologies Inc has a market cap of $27.6 million; its shares were traded at around $0.2379 with a P/E ratio of 2.1 and P/S ratio of 1.8. EGT is in the portfolios of Jim Simons of Renaissance Technologies LLC.
Capital expenditures for Phase 1 include $1.76 million for the purchase of the land, which has been fully paid by two installments of approximately $850,000 in May 2010 and $910,000 in July 2010. Based on our preliminary estimated project timeline, projected cash flows, and the deferral of principal repayments until July 2011 on our unsecured promissory note due to EGT Entertainment, we believe we will be able to fund Phase 1 from cash on hand and projected cash flow from operations.
We also have implemented dramatic cost reductions initiatives, which resulted in a 34% decline in cash-based selling, general, and administrative expenses in 2010 compared to 2009 levels. We continue to exercise strict cost control and, as a result, have maintained cash-based selling, general and administrative expenses at the low end of our targeted range of $1.5 to $1.8 million for the second quarter of 2010. Importantly, we have effected these reductions without hindering our operational capabilities and still remain flexible enough to act on our growth plans.
Revenue from our gaming machine participation operations increased to $3.5 million for the three months ended June 30, 2010 doubling from $1.7 million in the same period in the prior year. Gross margin for the gaming participation business improved to 36% in the three months ended June 30, 2010 compared to negative gross margin of 49% in the same period in the prior year. Excluding non-cash items such as machine depreciation and asset write-downs, gross margin for the gaming participation business improved to 94% from 90%, respectively.
Based on the solid revenue performance, particularly from our operations at NagaWorld, and our continued strict cost control efforts, we have significantly improved our ability to generate and grow positive cash flow. We achieved positive Adjusted EBITDA (as defined below) of approximately $1.4 million for the three months ended June 30, 2010 up from approximately $1.3 million for the three months ended March 31, 2010. Cash flow provided from operations amounted to approximately $4.9 million for the six months ended June 30, 2010 compared with cash used in operations of approximately $3.9 million in the same period in the prior year.
In addition, we made further progress in improving our liquidity and financial flexibility to pursue selective growth opportunities in our gaming operations. In May 2010, we entered into another agreement with EGT Entertainment to further amend the unsecured promissory note originally issued in April 2008. Under these new terms, which became effective July 1, 2010, we will defer the repayment of principal on the outstanding principal balance of the note of approximately $9.2 million until July 2011. We will make interest only payments on a monthly basis at a rate of 5% per annum. In July 2011, we will resume monthly payments of principal and interest for a period of 18 months. The amended terms also require that we pay all the accrued interest for the period of July 1, 2009 to June 30, 2010, which had accrued at a rate of 5% per annum on the principal amount of approximately $9.2 million, in the total amount of approximately $458,000 on July 1, 2010.
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Elixir Gaming Technologies Inc has a market cap of $27.6 million; its shares were traded at around $0.2379 with a P/E ratio of 2.1 and P/S ratio of 1.8. EGT is in the portfolios of Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations:
The Land has a total area of approximately seven acres (30,000 square meters) and is located in the Takeo Province, a border area of Cambodia and Vietnam, which is approximately 125 miles (200 kilometers) south of Cambodias capital city Phnom Penh and connects the major cities of Southern Vietnam and Phnom Penh. The total consideration for the Land was $1.76 million, of which $850,000 was paid to the Seller in May 2010 as a deposit. The registration of the title of the Land under the name of Dreamworld Holding by the land office and the relevant authorities in Cambodia was completed on June 28, 2010 and, accordingly, we paid the balance of $910,000 to the Seller in mid-July 2010.Capital expenditures for Phase 1 include $1.76 million for the purchase of the land, which has been fully paid by two installments of approximately $850,000 in May 2010 and $910,000 in July 2010. Based on our preliminary estimated project timeline, projected cash flows, and the deferral of principal repayments until July 2011 on our unsecured promissory note due to EGT Entertainment, we believe we will be able to fund Phase 1 from cash on hand and projected cash flow from operations.
We also have implemented dramatic cost reductions initiatives, which resulted in a 34% decline in cash-based selling, general, and administrative expenses in 2010 compared to 2009 levels. We continue to exercise strict cost control and, as a result, have maintained cash-based selling, general and administrative expenses at the low end of our targeted range of $1.5 to $1.8 million for the second quarter of 2010. Importantly, we have effected these reductions without hindering our operational capabilities and still remain flexible enough to act on our growth plans.
Revenue from our gaming machine participation operations increased to $3.5 million for the three months ended June 30, 2010 doubling from $1.7 million in the same period in the prior year. Gross margin for the gaming participation business improved to 36% in the three months ended June 30, 2010 compared to negative gross margin of 49% in the same period in the prior year. Excluding non-cash items such as machine depreciation and asset write-downs, gross margin for the gaming participation business improved to 94% from 90%, respectively.
Based on the solid revenue performance, particularly from our operations at NagaWorld, and our continued strict cost control efforts, we have significantly improved our ability to generate and grow positive cash flow. We achieved positive Adjusted EBITDA (as defined below) of approximately $1.4 million for the three months ended June 30, 2010 up from approximately $1.3 million for the three months ended March 31, 2010. Cash flow provided from operations amounted to approximately $4.9 million for the six months ended June 30, 2010 compared with cash used in operations of approximately $3.9 million in the same period in the prior year.
In addition, we made further progress in improving our liquidity and financial flexibility to pursue selective growth opportunities in our gaming operations. In May 2010, we entered into another agreement with EGT Entertainment to further amend the unsecured promissory note originally issued in April 2008. Under these new terms, which became effective July 1, 2010, we will defer the repayment of principal on the outstanding principal balance of the note of approximately $9.2 million until July 2011. We will make interest only payments on a monthly basis at a rate of 5% per annum. In July 2011, we will resume monthly payments of principal and interest for a period of 18 months. The amended terms also require that we pay all the accrued interest for the period of July 1, 2009 to June 30, 2010, which had accrued at a rate of 5% per annum on the principal amount of approximately $9.2 million, in the total amount of approximately $458,000 on July 1, 2010.
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