After the 1000 machines are in place and Elixir gets their 25M shares...
Assuming no related expenses, 20% of the NET win on those machines would have to add $250K NET EARNINGS each quarter to add 1 penny to earnings just for this deal alone. Otherwise the 25M share dilution has a negative impact on EPS ....
Is that correct?
"Cambodia allows casinos to operate along its borders with Thailand, Vietnam and China. "The market in Cambodia is growing," says Macau-based Ken Jolly, General Manager, Asia Pacific of Aristocrat, the Australian gaming machine manufacturer.
Over three years, Cambodia has developed a gaming industry in casinos and clubs/arcades. Its 16 casinos operate mostly on its borders with neighbouring countries, each housing from 100 to 600 machines.
Cambodia also has a club/arcade market where slot rooms are permitted within some hotels. These establishments have anything from 40 to 200 machines. Jolly estimates that Cambodia has more than 30 clubs/arcades, offering collectively more than 4,000 machines. He says Cambodia offers good growth prospects for the industry.
Four-to five-star hotels in Vietnam are permitted to run gaming arcades"....
"The Philippines has flagged plans to build a series of casinos in Manila Bay. The Government-owned Philippine Amusement and Gaming Corporation (Pagcor) runs 13 casinos in the Philippines. Including its arcade markets, the Philippines now represents a market of more than 7,000 machines...."
Current average net win, from which VNX will take their 20% is $200 in the Philippines ( much higher in Manila, which is where these placements are) and Cambodia and $400 in Vietnam, which may be next on the list, Don't fall in to the "Asia poverty" trap, it is just plain not the case, and these properties do operate 24 hours per day.
I re-read your post and I misinterpreted what you wrote.
To hit your 46M the total gross profit is 125 day (assuming a 90% payback/10% gross profit)?
(1,250 Total Intake *.1 GP%)*.2 VNX% = 25/day *5000 machines = 125,000/day = ~11.4M Q/5000 machines or ~46M yr/5000 machines = ~$9K year/machine
That 1,250 daily intake still works out to be
(1,250/24)/60 = .86/minute 24hrs a day/every day/every machine
Don't you think that a-buck-a-minute, non-stop, on all 5000 machines is still a pretty high total-gross/machine estimate for the Phillipene and Cambodian markets?
Have you ever been to a casino (anywhere) where there was 100% EGM utilization at any point in the day?
Also, if retail for an IGT EGM is about $1000/machine, would wholesale be ~800 (including Elixir's Cost + 15% markup)? If so, that is an initial outlay of ~4M to buy the 5000 machines.
That puts VNX @ ~ 20M loss YTD at the end of Q3 (including the 12M YTD loss for Q1+Q2). I don't think that VNX will see break-even in 2007.
In Exhibit A of COMMON STOCK PURCHASE WARRANT
To Purchase 22,000,000 Shares of Common Stock of
VENDINGDATA CORPORATION ( http://sec.gov/Archives/edgar/data/1004673/000136231007001033/c70641exv99w1.htm ) is:
"Section 3. Exercise.
a) Exercise of Warrant. Subject to Section 2, exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company of a duly executed Notice of Exercise Form annexed hereto (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of such Holder appearing on the books of the Company) along with payment of the aggregate Exercise Price of the shares thereby purchased by wire transfer or cashier�s check drawn on a United States bank."
I don't think that there's any provision for a cashless exercise!
Also appearing is:
"Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock; (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock; (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights; (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation, merger or other business combination to which the Company is a party or any sale or transfer of all or substantially all of the assets of the Company, whereby the Common Stock is converted into other securities, cash or property; (E) a tender offer or exchange offer will be commenced (whether by the Company or another person) pursuant to which holders of the Common Stock will be permitted to tender or exchange their shares for other securities, cash or property; (F) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company; or (G) the Company proposes to take any other action that would require an adjustment of Exercise Price pursuant to Section 4; then, in each case, the Company shall cause to be mailed to the Holder at its last address as it shall appear upon the Warrant Register of the Company, at least 30 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distribution, redemption, rights or warrants are to be determined, (y) the date on which such reclassification, consolidation, merger, other business combination, sale, transfer dissolution, liquidation or winding up is expected to become effective or close or (z) the initial expiration date set forth in any tender offer or exchange offer for Common Stock, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, other business combination, sale, transfer or share exchange; provided that the failure to mail such notice or any defect therein or in the mailing thereof shall not affect the validity of the corporate action required to be specified in such notice."
Notice that you do NOT see:
"(H) the Company desperately needs cash"
Reading between the lines: Elixir won't exercise any warrants before expiration without a good, profitable-to-Elixir reason, and keeping Vendingdata afloat isn't one.
I'll admit that I did not look to see if Elixir can use a cashless warrant exercise. If they didn't, shame, shame on them.
For your sake let's assume that they can't do a cashless exercise and they really would have to put up money to exercise the warrants.
With 111 million shares outstanding and no cash, is the company worth $222 million?
Let's jump straight to the 2nd lesson....To back into that 125/machine/day for VNX, each machine would have to take in the following $$$....
Each machine has a certain payout ratio back to the player. Let's be a little conservative and say 90% average payback (10% total gross profit)
"Slot machines are typically programmed to pay out as winnings between 82 to 98 percent of the money that is wagered by players."
VNX gets 20% (or 1/5) of that gross profit. So to hit your 125/day for VNX, >>EVERY<< machine would have to take in 625/ day gross profit or 6250/day gross play activity...EVERY DAY of the year
Here's the formula that I used.
((125*5)/.1 = $6250/per day per machine (on 100% of the machines)
In a 24hr operation (which I do not think that these casinos are) that is ~260(USD)/hr all day every day on EVERY machine or about 4 bucks a MINUTE.
260 USD = 12,123 PHP (Pesos)/hr all day /every day.
In third-world Asian countries with a hight poverty rate, I think that is a very high daily volume/machine. Don't you?
If my formula is wrong. Please adjust and post the corrected formula.
I have no idea of actual average daily vol. Do you? I'm thinking that it is MUCH lower than 6250/day (USD).
I think that we'll just have to wait and see the real numbers at the end of the quarter and figure it out from there. Maybe some savy analyst will ask for the average daily take # on the CC and we can work forward from there.
"You can do the rest of the math, and that assumes the installations stop at 5,000."
Not sure why the assumption of 5000 machines. The deep pockets that are buying/have bought are assuming the total to be multiples of that #. We shall see.
$4.99 - $9.99 Had to recalculate because of the massive dilution. Sorry bout that. Hope nobody acted hastily on previous overly enthusiastic guidance.
The first lesson in enlightenment is that the total share count, when all is said and done, will be approx 211 million shares. To get to that number all warrants must be exercised, which is approx 100 million warrants. If the warrants are exercised vnx will have approx $250 million in cash, or slightly more than $1 per share in cash. Obviously, if no warrants exercised the fully diluted share count drops by the 100 million.
Second lesson is 5,000 machines at the conservative $125 per day and the conservative 20% yield slightly more than $46 million in revenue at an approx 90% gross margin. machines are depreciated over 3 years, with a useful life of 5 to 7. You can do the rest of the math, and that assumes the installations stop at 5,000.