GameTech International of Reno says it's out of compliance with some of the terms on its bank loans, and the company cautions that it faces a difficult year.
The publicly held maker of electronic bingo systems and video lottery games reported an after-tax loss of $15 million for the quarter ended May 2 compared with a loss of $69,000 in the comparable period a year earlier.
GameTech posted an operating loss of $3 million during the spring quarter and decided that it's unlikely to recover deferred tax assets that it's been carrying on its books (Deferred tax assets, often net-loss carryovers, generally can be carried as an asset only if there's a good possibility that the company will have profits to be sheltered by the losses that are carried forward.).
The changes in tax accounting piled another $11.9 million onto the company's quarterly loss.
In a filing with the Securities and Exchange Commission last week, GameTech executives cautioned that they won't be able to execute the company's business plans unless GameTech raises fresh capital or generates more cash from sales.
"At the present time, we have no commitments for any financing, and there can be no assurance that capital will be available to us on commercially acceptable terms or at all," the company said in a quarterly filing with the SEC.
GameTech said its financial performance means it's out of compliance with some terms of a $25.9 million loan.
That debt requires payments of $7 million a year, said Bud Glisson, appointed chief executive officer of the company in February.
The lenders, led by U.S. Bank, agreed last week that they won't push the loan into default, but they boosted the interest rate on GameTech's borrowings by three percentage points and charged a $10,000 fee.
"We have a very constructive dialogue with the bank," Glisson said last week.
The company said revenues from its bingo-related products during the spring quarter fell 27 percent from the comparable quarter a year earlier as the weak national economy led to the closure of bingo halls.
Bill Fasig, GameTech's chief operating officer, said a new management team is focused on new products that meet short-term customer demands. The new team, he said, has reined in a wide-ranging R&D program.
"We were, to put it bluntly, all over the map," Fasig told investors last week.
He said, too, GameTech hasn't rolled out a new bingo product in three years, and competitors have taken advantage.
But the company, Fasig said, now has several new bingo products ready for introduction.
The company employs about 190, it said in a filing with the SEC in February.
GameTech's common stock, which has traded as high as $2.19 a share within the last year on NASDAQ, was quoted at 83 cents a share late last week.
