After redeeming founder’s shares, Galaxy Gaming posts drop in net income Matthew Crowley, CDC Gaming Reports · May 15, 2019 at 4:37 pm A week after it redeemed a majority share in the company that had been held by its founder and former CEO, casino games maker Galaxy Gaming posted lower-first quarter income, though revenue rose. In a 10-Q filing with the Securities and Exchange Commission on Wednesday, Galaxy, a Las Vegas-based developer, manufacturer and distributor of casino table games and systems, said it had net income of $460,664, or 1 cent per share, in its first quarter ended March 31, down from net income of $536,798, or 1 cent per share, a year earlier.Adjusted interest before interest, taxes, depreciation and amortization, a cash flow measure excluding nonrecurring costs, rose 31.3 percent to $2.1 million from $1.6 million. Revenue rose 23.3 percent to $5.3 million from $4.3 million. In a statement accompanying the results, Galaxy CEO Todd Cravens said his company had never before had $5 million in revenue in a quarter and Chief Financial Officer Harry Hagerty said a cut in debt complemented the rises in EBDITA and revenue. The SEC filing said Galaxy’s long-term debt on March 31 was $8.3 million, down 3.5 percent from $8.6 million Dec. 31. Also in the statement, Cravens said Galaxy’s revenue in progressive games and internet gaming increased in the quarter. “We hope that this momentum will continue in 2019,” he said, “as we move forward in seeking licenses to sell in jurisdictions where we have not previously been able to do so.” On May 7, Galaxy said it redeemed all stock held by Triangulum Partners, a company controlled by founder and former CEO Robert Saucier. Before the redemption, Saucier was Galaxy’s majority shareholder. “Galaxy’s board of directors unanimously determined that the circumstances surrounding Triangulum’s ownership of shares satisfied the conditions set forth in the (articles of incorporation),” Galaxy wrote in the statement, explaining the redemption, “and that it was in the best interests of the company and its stockholders (other than Triangulum) to redeem all of Triangulum’s shares.” Saucier, who founded Galaxy in 2000, left the company in November without explanation. He’d 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 return for the redemption, the company said Triangulum received a $39 million promissory note that matures May 5, 2029 and bears a 2 percent annual interest rate. Accrued interest will be payable in arrears, the company said. The promissory note is unsecured and, under its terms, is subordinated to the company’s existing and future indebtedness. Galaxy may prepay principal and accrued interest fully or partially anytime, the statement said. Shortly after Saucier’s November exit, Galaxy said it retained Macquarie Capital to help explore options, including a sale of Triangulum’s majority stake. The May 7 statement didn’t say how many shares Triangulum stake’s constituted, but did say the shares had an average closing price of $1.68 each in the 30 days before the redemption. Galaxy’s shares closed unchanged at $1.80 on the Over-the-Counter Bulletin Board Wednesday. Galaxy said it amended its credit agreement with Nevada State Bank to adjust the company’s borrowing ability through waivers and adjustments. Galaxy has been closed-mouthed about its plans moving forward. In its fourth-quarter earnings statement April 1, Galaxy said it was considering expanding geographically but would comment only when it deemed “appropriate or necessary.” Follow Matthew Crowley on Twitter @copyjockey.