Robert Freedman, Esq. Nicolas H.R. Dumont, Esq. Fenwick & West LLP 902 Broadway, Suite 14 New York, NY 10010 (212) 430-2600 |
Alexander D. Lynch, Esq. Barbra J. Broudy, Esq. Weil, Gotshal & Manges LLP 767 Fifth Avenue New York, NY 10153 (212) 310-8000 |
Large accelerated filer | ☐ | ☒ | ||||
Non-accelerated filer |
☐ | Smaller reporting company | ||||
Emerging growth company |
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Title of Each Class of Securities to be Registered |
Amount to be Registered (1) |
Proposed Maximum Offering Price Per Share |
Proposed Maximum Aggregate Offering Price (1)(2) |
Amount of Registration Fee (3)(4) | ||||
Class A-1 common stock, par value $0.0001 per share |
8,320,237(4) |
$13.05 |
$108,579,092.85 |
$14,093.57 | ||||
| ||||||||
|
(1) |
Includes the offering of additional shares of Class A-1 common stock pursuant to the underwriters’ option to purchase additional shares. |
(2) |
Pursuant to Rule 457(c) under the Securities Act, and solely for the purpose of calculating the registration fee, the proposed maximum offering price per share is $13.05, which is average of the $13.20 (high) and $12.89 (low) sales price of our Class A-1 common stock as reported on The New York Stock Exchange on September 14, 2020, which date is within five business days prior to filing this Registration Statement. |
(3) |
Calculated by multiplying the proposed maximum aggregate offering price of securities to be registered by 0.0001298. |
(4) |
Includes an aggregate of 8,320,237 shares of Class A-1 common stock offered by the registrant. As set forth below, 5,479,763 shares of the registrant’s Class A-1 common stock previously registered for resale on Registration No. 333-236501 are being carried forward to this registration statement pursuant to Rule 429 under the Securities Act and are being offered by the selling stockholders named herein. A filing fee of $143,564.95 was previously paid in connection with the prior registration statement. |
Per Share |
Total |
|||||||
Public offering price |
$ |
$ |
||||||
Underwriting discounts and commissions (1) |
$ |
$ |
||||||
Proceeds, before expenses, to us |
$ |
$ |
||||||
Proceeds, before expenses, to the selling stockholders |
$ |
$ |
(1) |
See “ Underwriting (Conflicts of Interest) |
Goldman Sachs & Co. LLC |
J.P. Morgan | |
Credit Suisse |
Deutsche Bank Securities |
TPG Capital BD, LLC |
The Raine Group |
1 |
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2 |
||||
3 |
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7 |
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8 |
||||
15 |
||||
17 |
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43 |
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44 |
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45 |
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46 |
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50 |
||||
65 |
||||
89 |
||||
97 |
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102 |
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113 |
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115 |
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118 |
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126 |
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131 |
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136 |
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136 |
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136 |
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F-1 |
• | The effect of COVID-19 on Accel’s operations and ability to operate; |
• | Accel’s ability to operate in existing markets or expand into new jurisdictions; |
• | Accel’s ability to manage its growth effectively; |
• | Accel’s ability to offer new and innovative products and services that fulfill the needs of licensed establishment partners and create strong and sustained player appeal; |
• | Accel’s dependence on relationships with key manufacturers, developers and third parties to obtain VGTs, amusement machines, and related supplies, programs, and technologies for its business on acceptable terms; |
• | the negative impact on Accel’s future results of operations by the slow growth in demand for VGTs and by the slow growth of new gaming jurisdictions; |
• | Accel’s heavy dependency on its ability to win, maintain and renew contracts with licensed establishment partners; |
• | unfavorable economic conditions or decreased discretionary spending due to other factors such as terrorist activity or threat thereof, epidemics or other public health issues, civil unrest or other economic or political uncertainties, that could adversely affect Accel’s business, results of operations, cash flows and financial conditions; and |
• | other risks and uncertainties indicated in this prospectus, including those set forth under the section entitled “ Risk Factors |
• | Total net revenues were approximately $89.0 million combined for July and August of 2020 as compared to $66.8 million combined for the comparable periods in 2019 and as compared to $81.0 million combined for January and February of 2020; and |
• | Due to additional expenses to operate responsibly during COVID-19, margins in July and August combined decreased approximately 20 basis points for net (loss) income and 80 basis points for Adjusted EBITDA compared to the prior year period. |
• | “business-to-business” |
• | operating a scalable business in fast-growing gaming segments that are primarily served by fragmented, sub-scale providers; |
• | data reporting solutions and analytics, offering insight and advice to help licensed establishment partners maximize revenues and ultimately grow their businesses; |
• | state-of-the-art |
• | comparatively low capital expenses and a comparatively asset-light operating model, in each case, when compared to casinos, which typically provide significantly higher capital-intensive offerings such as hotel accommodations, restaurants and stage-based entertainment; |
• | highly localized footprint that provides more access to gaming and convenience for consumers, as compared to regional casinos that market to players who may live up to several hours away and are thus prone to disruption of their feeder markets; and |
• | strong marketing, legal, compliance, cash management, financial and technical support systems, all of which remain in-house to boost efficiency and enhance the ability to serve as a premier gaming-as-a-service |
Class A-1 common stock offered by us |
8,000,000 shares (or 8,320,237 shares if the underwriters exercise their option to purchase additional shares in full) |
Class A-1 common stock offered by selling stockholders |
4,000,000 shares (or 5,479,763 shares if the underwriters exercise their option to purchase additional shares in full) |
Option to purchase additional shares of Class A-1 common stock |
We have granted the underwriters an option to purchase up to an aggregate of 320,237 shares of Class A-1 common stock and the selling stockholders have granted the underwriters an option to purchase up to an aggregate of 1,479,763 shares of Class A-1 common stock. This option is exercisable, in whole or in part, within 30 days after the date of this prospectus. |
Class A-1 common stock to be outstanding immediately after this offering |
91,784,083 shares (or 92,104,320 shares if the underwriters exercise their option to purchase additional shares in full). |
Use of proceeds |
We estimate that after deducting underwriting discounts and commissions and estimated offering expenses payable by us, we will receive approximately $ million of net proceeds from this offering. |
We currently intend to use the net proceeds from the offering for general corporate purposes which may include capital expenditures, repayment of debt, potential acquisitions and strategic business transactions. |
We will not receive any proceeds from the sale of shares of Class A-1 common stock by the selling stockholders, including pursuant to the underwriters’ exercise of their option to purchase additional shares. We will, however, bear the costs associated with the sale of shares by the selling stockholders, other than underwriting discounts and commissions. See “Use of Proceeds |
Risk Factors |
Investing in our Class A-1 common stock involves a high degree of risk. See “Risk Factors |
NYSE Symbol |
“ACEL.” |
Underwriting (Conflicts of Interest) |
An affiliate of TPG Capital BD, LLC, an underwriter in this offering, is a selling stockholder in this offering. As a result of the foregoing relationship, TPG Capital BD, LLC is deemed to have a “conflict of interest” within the meaning of FINRA Rule 5121. In addition, Gordon Rubenstein, one of our directors and a selling stockholder, is an employee of The Raine Group LLC. Raine Securities LLC, an underwriter in this offering, is a controlled affiliate of The Raine Group LLC. As a result of the foregoing relationship, Raine |
Securities LLC is also deemed to have a “conflict of interest” within the meaning of FINRA Rule 5121. Accordingly, this offering will be made in compliance with the applicable provisions of FINRA Rule 5121. Pursuant to that rule, the appointment of a qualified independent underwriter is not necessary in connection with this offering. In accordance with FINRA Rule 5121(c), no sales of the shares will be made to any discretionary account over which TPG Capital BD, LLC or Raine Securities LLC exercises discretion without the prior specific written approval of the account holder. |
• | licenses and/or permits; |
• | documentation of qualifications, including evidence of financial stability; |
• | other required approvals for companies who design, assemble, supply or distribute gaming equipment and services; and |
• | individual suitability of officers, directors, major equity holders, lenders, key employees and business partners. |
• | changes in local or regional economic conditions and unemployment rates; |
• | changes in local and state laws and regulations, including gaming laws and regulations; |
• | a decline in the number of residents in or near, or visitors to, licensed establishment partners; |
• | changes in the local or regional competitive environment; and |
• | adverse weather conditions and natural disasters (including weather or road conditions that limit access to licensed establishments). |
• | adopt additional rules and regulations under the implementing statutes; |
• | investigate violations of gaming regulations; |
• | enforce gaming regulations and impose disciplinary sanctions for violations of such laws, including fines, penalties and revocation of gaming licenses; |
• | review the character and fitness of manufacturers, distributors and operators of gaming services and equipment and make determinations regarding their suitability or qualification for licensure; |
• | review and approve transactions (such as acquisitions, material commercial transactions, securities offerings and debt transactions); and |
• | establish and collect related fees and/or taxes. |
• | a material weakness related to review of the consolidated financial statements and certain of the associated accounting analyses, journal entries and accounting reconciliations due, in part, to the lack of formally documented accounting policies and procedures, as well as headcount necessary to support consistent, timely and accurate financial reporting in accordance with U.S. GAAP; |
• | a material weakness in the design and implementation of internal controls relating to business combination accounting and route and customer acquisition cost accounting due to the absence of formalized internal controls surrounding the determination of the fair value for assets acquired and liabilities assumed in business combinations, the accounting for initial route and customer acquisition costs and the accounting for such assets; and |
• | a material weakness related to general information technology controls including the design and implementation of access and change management internal controls. |
• | Accel may not be able to continue to obtain insurance on commercially reasonable terms; |
• | Accel may incur losses from interruptions of business that exceed insurance coverage; |
• | Accel may be faced with types of liabilities that will not be covered by insurance; |
• | Accel’s insurance carriers may not be able to meet their obligations under the policies; or |
• | the dollar amount of any liabilities may exceed policy limits. |
• | cause Accel to incur greater costs and expenses in the protection of intellectual property; |
• | potentially negatively impact its intellectual property rights; |
• | cause one or more of its patents, trademarks, copyrights or other intellectual property interests to be ruled or rendered unenforceable or invalid; or |
• | divert management’s attention and resources. |
• | incur or guarantee additional indebtedness; |
• | make loans to others; |
• | make investments; |
• | merge or consolidate with another entity; |
• | make dividends and certain other payments, including payment of junior debt; |
• | create liens that secure indebtedness and guarantees thereof; |
• | transfer or sell assets; |
• | enter into transactions with affiliates; |
• | change the nature of Accel’s business; |
• | enter into certain burdensome agreements; |
• | make certain accounting changes; and |
• | in the case of Accel Entertainment, Inc., change its passive holding company status. |
• | the realization of any of the risk factors presented in this prospectus; |
• | actual or anticipated differences in Accel’s estimates, or in the estimates of analysts, for Accel’s revenues, Adjusted EBITDA, results of operations, level of indebtedness, liquidity or financial condition; |
• | additions and departures of key personnel; |
• | failure to comply with the requirements of the NYSE; |
• | failure to comply with the Sarbanes-Oxley Act or other laws or regulations; |
• | changes to gaming laws, regulations or enforcement policies of applicable gaming authorities; |
• | future issuances, sales, resales or repurchases or anticipated issuances, sales, resales or repurchases, of Accel’s capital stock; |
• | publication of research reports about Accel, its licensed establishments or the video gaming terminal industry generally; |
• | the performance and market valuations of other similar companies; |
• | commencement of, or involvement in, litigation involving Accel; |
• | broad disruptions in the financial markets, including sudden disruptions in the credit markets; |
• | speculation in the press or investment community; |
• | actual, potential or perceived control, accounting or reporting problems; and |
• | changes in accounting principles, policies and guidelines. |
• | any derivative action or proceeding brought on behalf of Accel; |
• | any action asserting a claim of breach of a fiduciary duty owed by any of Accel’s directors or officers to Accel or its stockholders, creditors or other constituents; |
• | any action asserting a claim against Accel or any of its directors or officers arising pursuant to any provision of the DGCL, the Charter or the Bylaws (as either may be amended and/or restated from time to time); or |
• | any action asserting a claim against Accel that is governed by the internal affairs doctrine. |
• | On an actual basis; and |
• | On an as adjusted basis to reflect the issuance of shares of common stock by us in this offering and the receipt of approximately $ million in net proceeds from the sale of such shares (assuming the underwriters do not exercise their option to purchase additional shares). |
As of June 30, 2020 |
||||||||
(In thousands, except par value and share amounts) | Actual |
As Adjusted |
||||||
Cash and cash equivalents |
$ | 148,834 | $ | |||||
|
|
|
|
|||||
Revolving credit facility |
$ | 50,500 | $ | |||||
Term Loan |
234,000 | |||||||
Delayed Draw Term Loan |
122,688 | |||||||
|
|
|
|
|||||
Total debt |
407,188 | |||||||
|
|
|
|
|||||
Stockholders’ equity: |
||||||||
Preferred Stock, par value of $0.0001; 1,000,000 shares authorized; 0 shares issued and outstanding at June 30, 2020 |
— | |||||||
Class A-1 common stock, par value $0.0001; 250,000,000 shares authorized; 78,382,405 shares issued and outstanding at June 30, 2020; 86,382,405 shares issued and outstanding, as adjusted |
8 | |||||||
Class A-2 common stock, par value $0.0001; 10,000,000 shares authorized; 3,403,363 shares issued and outstanding at June 30, 2020 |
1 | |||||||
Additional paid-in capital |
108,732 | |||||||
Accumulated deficit |
(43,710 | ) | ||||||
|
|
|
|
|||||
Total stockholders’ equity |
65,031 | |||||||
|
|
|
|
|||||
Total capitalization |
$ | 472,219 | $ | |||||
|
|
|
|
Six Months Ended June 30, |
Year Ended December 31, |
|||||||||||||||||||
(in thousands, except key metrics data) | 2020 |
2019 |
2019 |
2018 |
2017 |
|||||||||||||||
(Unaudited) |
(Audited) |
|||||||||||||||||||
Consolidated Statements of Operations Data: |
||||||||||||||||||||
Total net revenues |
$ | 105,607 | $ | 201,692 | $ | 424,385 | $ | 331,993 | $ | 248,435 | ||||||||||
Operating (loss) income |
(21,696 | ) | 17,975 | 13,336 | 24,869 | 18,170 | ||||||||||||||
(Loss) income before income tax (benefit) expense |
(28,434 | ) | 11,772 | (665 | ) | 15,225 | 10,065 | |||||||||||||
Net (loss) income |
$ | (23,240 | ) | $ | 8,323 | $ | (5,864 | ) | $ | 10,803 | $ | 8,311 | ||||||||
Consolidated Statements of Cash Flows Data: |
||||||||||||||||||||
Net cash (used in) provided by operating activities |
$ | (17,284 | ) | $ | 26,083 | $ | 45,565 | $ | 44,343 | $ | 33,097 | |||||||||
Net cash used in investing activities |
(4,002 | ) | (10,548 | ) | (151,532 | ) | (73,547 | ) | (70,870 | ) | ||||||||||
Net cash provided by (used in) financing activities |
44,717 | (8,257 | ) | 139,141 | 46,122 | 59,081 | ||||||||||||||
Other Financial Data: |
||||||||||||||||||||
Adjusted EBITDA (1) |
$ | 6,095 | $ | 40,669 | $ | 79,594 | $ | 63,815 | $ | 46,865 | ||||||||||
Adjusted net (loss) income (2) |
$ | (7,402 | ) | $ | 15,071 | $ | 22,695 | $ | 23,136 | $ | 17,310 | |||||||||
Key Metrics: |
||||||||||||||||||||
Licensed establishments (3) |
2,335 | 1,762 | 2,312 | 1,686 | 1,442 | |||||||||||||||
Video gaming terminals (4) |
11,108 | 8,082 | 10,499 | 7,649 | 6,439 | |||||||||||||||
Average remaining contract term (years) (5) |
6.8 | 7.4 | 6.9 | 7.6 | 8.3 | |||||||||||||||
Hold-per-day (6) (in whole dollars) |
$ | 124 | $ | 137 | $ | 130 | $ | 125 | $ | 115 |
(1) | Adjusted EBITDA is defined as net (loss) income plus amortization of route and customer acquisition costs and location contracts acquired; stock-based compensation expense; other expenses, net; tax effect of adjustments; depreciation and amortization of property and equipment; interest expense; and provision for income taxes. For additional information on Adjusted EBITDA and a reconciliation of net (loss) income to Adjusted EBITDA, see “— Non-GAAP Financial Measures—Adjusted EBITDA and Adjusted net (loss) income. |
(2) | Adjusted Net (loss) income is defined as net (loss) income plus amortization of route and customer acquisition costs and location contracts acquired; stock-based compensation expense; other expenses, net; and tax effect of adjustments. For additional information on Adjusted net (loss) income and a reconciliation of net (loss) income to Adjusted net (loss) income, see “— Non-GAAP Financial Measures—Adjusted EBITDA and Adjusted net (loss) income |
(3) | Based on Scientific Games International third-party terminal operator portal data which is updated at the end of each gaming day and includes licensed establishments that may be temporarily closed but still connected to the central system. This metric is utilized by Accel to continually monitor growth from existing locations, organic openings, acquired locations, and competitor conversions. |
(4) | Based on Scientific Games International third-party terminal operator portal data which is updated at the end of each gaming day and includes VGTs that may be temporarily shut off but still connected to the central system. This metric is utilized by Accel to continually monitor growth from existing locations, organic openings, acquired locations, and competitor conversions. |
(5) | Calculated by determining the average expiration date of all outstanding contracts, and then subtracting the applicable measurement date. The IGB limited the length of contracts entered into after February 2, 2018 to a maximum of eight years with no automatic renewals. |
(6) | Calculated by dividing the difference between cash deposited in all VGTs and tickets issued to players by the average number of VGTs in operation during the period being measured, and then further dividing such quotient by the number of days in such period. |
As of June 30, |
As of December 31, |
|||||||||||
(in thousands) | 2020 |
2019 |
2018 |
|||||||||
(Unaudited) |
(Audited) |
|||||||||||
Consolidated Balance Sheet Data: |
||||||||||||
Cash and cash equivalents |
$ | 148,834 | $ | 125,403 | $ | 92,229 | ||||||
Total current assets |
179,821 | 151,495 | 102,011 | |||||||||
Property and equipment, net |
123,759 | 119,201 | 92,442 | |||||||||
Total assets |
525,276 | 509,317 | 335,174 | |||||||||
Total current liabilities |
50,475 | 54,946 | 85,882 | |||||||||
Total long-term liabilities |
409,770 | 368,846 | 192,174 | |||||||||
Stockholders’ equity |
65,031 | 85,525 | 57,118 |
Six Months Ended June 30, |
Year Ended December 31, |
|||||||||||||||||||
(in thousands) | 2020 |
2019 |
2019 |
2018 |
2017 |
|||||||||||||||
Net (loss) income |
$ | (23,240 | ) | $ | 8,323 | $ | (5,864 | ) | $ | 10,803 | $ | 8,311 | ||||||||
Adjustments: |
||||||||||||||||||||
Amortization of route and customer acquisition costs and location contracts acquired (1) |
11,130 | 8,927 | 17,975 | 14,681 | 9,792 | |||||||||||||||
Stock-based compensation (2) |
2,387 | 256 | 2,236 | 453 | 804 | |||||||||||||||
Other expenses, net (3) |
4,336 | 1,370 | 19,649 | 3,030 | 1,331 | |||||||||||||||
Tax effect of adjustments (4) |
(2,015 | ) | (3,805 | ) | (11,301 | ) | (5,831 | ) | (2,928 | ) | ||||||||||
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|
|
|
|
|
|
|
|
|
|||||||||||
Adjusted net (loss) income |
$ | (7,402 | ) | $ | 15,071 | $ | 22,695 | $ | 23,136 | $ | 17,310 | |||||||||
Depreciation and amortization of property and equipment |
9,938 | 12,141 | 26,398 | 20,782 | 16,768 | |||||||||||||||
Interest expense |
6,738 | 6,203 | 12,860 | 9,644 | 8,105 | |||||||||||||||
Income tax (benefit) expense |
(3,179 | ) | 7,254 | 16,500 | 10,253 | 4,682 | ||||||||||||||
Loss on debt extinguishment |
— | — | 1,141 | — | — | |||||||||||||||
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|
|
|
|
|
|
|
|
|
|||||||||||
Adjusted EBITDA |
$ | 6,095 | $ | 40,669 | $ | 79,594 | $ | 63,815 | $ | 46,865 | ||||||||||
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|
(1) | Route and customer acquisition costs consist of upfront cash payments and future cash payments to third party sales agents to acquire the licensed video gaming establishments that are not connected with a business combination. Accel amortizes the upfront cash payment over the life of the contract, including expected renewals, beginning on the date the location goes live, and recognizes non-cash amortization charges with respect to such items. Future or deferred cash payments, which may occur based on terms of the underlying contract, are generally lower in the aggregate as compared to established practice of providing higher upfront payments, and are also capitalized and amortized over the remaining life of the |
contract. Future cash payments do not include cash costs associated with renewing customer contracts as Accel does not generally incur significant costs as a result of extension or renewal of an existing contract. Location contracts acquired in a business combination are recorded at fair value as part of the business combination accounting and then amortized as an intangible asset on a straight-line basis over the expected useful life of the contract of 10 years. “Amortization of route and customer acquisition costs and location contracts acquired” aggregates the non- cash amortization charges relating to upfront route and customer acquisition cost payments and location contracts acquired. |
(2) | Stock-based compensation consists of options, restricted stock units and warrants. |
(3) | Other expenses, net consists of (i) non-cash expenses including the remeasurement of contingent consideration liabilities, (ii) non-recurring expenses including expenses relating to lobbying efforts and legal expenses in Pennsylvania, lobbying efforts in Missouri and a settlement in connection with a gaming acquisition, and (iii) non-recurring expenses associated with the Business Combination. |
(4) | Calculated by excluding the impact of the non-GAAP adjustments from the current period tax provision calculations. |
• | follow social distancing requirements within the gaming area by moving the gaming equipment or installing spacers that meet IGB guidelines; |
• | determine how personal protective equipment usage requirements will be observed and enforced; |
• | develop procedures and schedules for cleaning, disinfecting and sanitizing the establishment as well the gaming area, including the VGTs; and |
• | proper signage to remind patrons of social distancing requirements, proper hand washing, use of sanitizers, use of personal protective equipment, and to stay at home if feeling sick. |
• | Gaming-as-a-service |
• | “business-to-business” |
• | operating a scalable business in fast-growing gaming segments that are primarily served by fragmented, sub-scale providers; |
• | data reporting solutions and analytics, offering insight and advice to help licensed establishment partners maximize revenues and ultimately grow their businesses; |
• | state-of-the-art |
|
• | comparatively low capital expenses and a comparatively asset-light operating model, in each case, when compared to casinos, which typically provide significantly higher capital-intensive offerings such as hotel accommodations, restaurants and stage-based entertainment; |
• | highly localized footprint that provides more access to gaming and convenience for consumers, as compared to regional casinos that market to players who may live up to several hours away and are thus prone to disruption of their feeder markets; and |
• | strong marketing, legal, compliance, cash management, financial and technical support systems, all of which remain in-house to boost efficiency and enhance the ability to serve as a premier gaming-as-a-service |
• | Strong relationships with licensed establishment partners. pre-renewals long before contracts expire and are a key element of our competitive differentiation. |
• | Proven track record in executing and integrating acquisitions. |
• | Diversified revenue base with limited churn. low-limit slots are more resilient to economic downturn as consumers typically continue to engage in locally convenient, lower cost forms of entertainment in such circumstances. Accel’s best-performing licensed establishment accounted for approximately $1.8 million, or less than 1% of gross revenue for the year ended December 31, 2019, its top 20 licensed establishments represented only 5% of gross revenue for the year ended December 31, 2019 and Accel’s licensed establishment partners each contributed an average of approximately $0.2 million of gross revenue for the year ended December 31, 2019. Accel’s voluntary contract renewal rate was over 98% for the three-year period ended December 31, 2019. While Accel experiences minor business disruptions each year due to business failures or natural disasters affecting licensed establishment partners, many of these sites reopen in subsequent years under new owners, and Accel believes it is best-positioned to reengage with those establishments as new licensed establishment partners because of its reputation and leading market position. Accel’s VGTs are geographically diversified across the state of Illinois, limiting systemic risk due to local weather patterns or regional economic downturns. Accel’s plans to expand into other states may further help to diversify its portfolio. |
• | Deep industry and vendor relationships. roll-up strategy positions it well with potential additional local operators who could benefit from Accel’s gaming-as-a-service |
|
• | Management team. co-founder, Andy Rubenstein, has led Accel since its inception in 2009, and its general counsel, Derek Harmer, and chief financial officer, Brian Carroll, have been with Accel since 2012 and 2014, respectively. Accel believes that its industry-leading management team has a reputation for integrity and compelling customer service. |
• | Company culture and training. |
• | Maintain competitive advantage in Illinois and increase VGT segment share. |
• | Expand operations into Pennsylvania. —Our Industry |
• | Expand operations in Georgia. |
|
• | Establish Player Rewards Program to further drive growth. gaming-as-a-service opt-in program is expected to allow data analysis with respect to each player, location and machine, which will in turn permit Accel to better assess performance and serve its partners. Although player rewards programs are not specifically prohibited in Illinois, applicable regulations have not been enacted, and the IGB has not approved any player rewards programs for any terminal operator. Accel has not applied to the IGB to establish any such program, but expects to apply in the event of applicable regulation enactment. |
• | Expand operations to other states. |
• | Expand ancillary service offerings to licensed establishments. “one-stop shop” for entertainment devices, including, for example, through Accel’s partnerships with complementary service providers such as DraftKings. Accel has observed that licensed establishment partners appreciate these services and continue to rely on Accel to provide them. Providing these services can also serve as a point of initial contact with potential partners who may decide to avail themselves later of Accel’s primary gaming services. As a result, Accel intends to continue prioritizing the installation of these devices and equipment. |
• | Sales team that drives the initial acquisition of licensed establishment partners. |
• | Dedicated on-boarding process that works with new licensed establishments to provide quick access to VGTs and other equipment. |
|
• | Relationship management team that offers value to licensed establishment partners. |
• | Digital and data analytics team that helps licensed establishment partners capture gaming revenue. |
• | Dedicated legal and compliance function that assists licensed establishment partners to remain in regulatory compliance. |
• | Strong relationships with equipment manufacturers to provide top-flight machines and software that help attract players. |
• | Cash collection and analytics. |
• | Marketing services that aid in player awareness and gameplay. business-to-business in-location entry option as well as a mobile app, player email and text messaging communications, indoor and outdoor signage, cooperative location advertising and other media to increase awareness and encourage gameplay. Accel believes that these initiatives increase Accel’s branding at each location. Accel believes that it has the most extensive and accomplished marketing team in the Illinois VGT segment. |
• | Best-in-class |
and solve technical issues with VGTs at licensed establishment partners in a timely manner. Accel’s service tracking process begins when a licensed establishment partner identifies an issue at their licensed establishment and contacts the service center. As of December 31, 2019, more than 17% of service issues are resolved by the call center directly without the need to dispatch any technician. In the event a technician is required, 92% of customer service issues are addressed on a first-time technician dispatch, with an average response time of 50 to 60 minutes. Replacement parts for VGTs, if required, are sourced from Accel’s offices and warehouses located across the state. Accel uses system analytics across its gaming-as-a-service |
• | Sports betting. |
• | follow social distancing requirements within the gaming area by moving the gaming equipment or installing spacers that meet IGB guidelines; |
• | determine how personal protective equipment usage requirements will be observed and enforced; |
• | develop procedures and schedules for cleaning, disinfecting and sanitizing the establishment as well the gaming area, including the VGTs; and |
• | proper signage to remind patrons of social distancing requirements, proper hand washing, use of sanitizers, use of personal protective equipment, and to stay at home if feeling sick. |
Three Months Ended June 30, |
Increase / (Decrease) |
|||||||||||||||
(in thousands, except %’s) | 2020 |
2019 |
Change ($) |
Change (%) |
||||||||||||
Revenues: |
||||||||||||||||
Net video gaming |
$ | — | $ | 100,994 | $ | (100,994 | ) | (100.0 | )% | |||||||
Amusement |
260 | 1,348 | (1,088 | ) | (80.7 | )% | ||||||||||
ATM fees and other revenue |
119 | 1,925 | (1,806 | ) | (93.8 | )% | ||||||||||
|
|
|
|
|
|
|||||||||||
Total revenues |
379 | 104,267 | (103,888 | ) | (99.6 | )% | ||||||||||
|
|
|
|
|
|
|||||||||||
Operating expenses: |
||||||||||||||||
Video gaming expenses |
— | 66,082 | (66,082 | ) | (100.0 | )% | ||||||||||
General and administrative |
10,451 | 17,476 | (7,025 | ) | (40.2 | )% | ||||||||||
Depreciation and amortization of property and equipment |
5,071 | 6,100 | (1,029 | ) | (16.9 | )% | ||||||||||
Amortization of route and customer acquisition costs and location contracts acquired |
5,565 | 4,624 | 941 | 20.4 | % | |||||||||||
Other expenses, net |
3,132 | 730 | 2,402 | 329.0 | % | |||||||||||
|
|
|
|
|
|
|||||||||||
Total operating expenses |
24,219 | 95,012 | (70,793 | ) | (74.5 | )% | ||||||||||
|
|
|
|
|
|
|||||||||||
Operating (loss) income |
(23,840 | ) | 9,255 | (33,095 | ) | (357.6 | )% | |||||||||
|
|
|
|
|
|
|||||||||||
Interest expense, net |
2,489 | 3,156 | (667 | ) | (21.1 | )% | ||||||||||
|
|
|
|
|
|
|||||||||||
(Loss) income before income tax (benefit) expense |
(26,329 | ) | 6,099 | (32,428 | ) | (531.7 | )% | |||||||||
|
|
|
|
|
|
|||||||||||
Income tax (benefit) expense |
(5,055 | ) | 1,771 | (6,826 | ) | (385.4 | )% | |||||||||
|
|
|
|
|
|
|||||||||||
Net (loss) income |
$ | (21,274 | ) | $ | 4,328 | $ | (25,602 | ) | (591.5 | )% | ||||||
|
|
|
|
|
|
Six Months Ended June 30, |
Increase / (Decrease) |
|||||||||||||||
(in thousands, except %‘s) | 2020 |
2019 |
Change ($) |
Change (%) |
||||||||||||
Revenues: |
||||||||||||||||
Net video gaming |
$ | 101,575 | $ | 195,169 | $ | (93,594 | ) | (48.0 | )% | |||||||
Amusement |
1,952 | 2,786 | (834 | ) | (29.9 | )% | ||||||||||
ATM fees and other revenue |
2,080 | 3,737 | (1,657 | ) | (44.3 | )% | ||||||||||
|
|
|
|
|
|
|||||||||||
Total revenues |
105,607 | 201,692 | (96,085 | ) | (47.6 | )% | ||||||||||
|
|
|
|
|
|
|||||||||||
Operating expenses: |
||||||||||||||||
Video gaming expenses |
67,980 | 127,703 | (59,723 | ) | (46.8 | )% | ||||||||||
General and administrative |
33,919 | 33,600 | 319 | 0.9 | % | |||||||||||
Depreciation and amortization of property and equipment |
9,938 | 12,141 | (2,203 | ) | (18.1 | )% | ||||||||||
Amortization of route and customer acquisition costs and location contracts acquired |
11,130 | 8,927 | 2,203 | 24.7 | % | |||||||||||
Other expenses, net |
4,336 | 1,346 | 2,990 | 222.1 | % | |||||||||||
|
|
|
|
|
|
|||||||||||
Total operating expenses |
127,303 | 183,717 | (56,414 | ) | (30.7 | )% | ||||||||||
|
|
|
|
|
|
|||||||||||
Operating (loss) income |
(21,696 | ) | 17,975 | (39,671 | ) | (220.7 | )% | |||||||||
|
|
|
|
|
|
|||||||||||
Interest expense, net |
6,738 | 6,203 | 535 | 8.6 | % | |||||||||||
|
|
|
|
|
|
|||||||||||
(Loss) income before income tax (benefit) expense |
(28,434 | ) | 11,772 | (40,206 | ) | (341.5 | )% | |||||||||
|
|
|
|
|
|
|||||||||||
Income tax (benefit) expense |
(5,194 | ) | 3,449 | (8,643 | ) | (250.6 | )% | |||||||||
|
|
|
|
|
|
|||||||||||
Net (loss) income |
$ | (23,240 | ) | $ | 8,323 | $ | (31,563 | ) | (379.2 | )% | ||||||
|
|
|
|
|
|
Year Ended December 31, |
Increase / Decrease |
|||||||||||||||
(in thousands, except %’s) | 2019 |
2018 |
Change |
Change % |
||||||||||||
Revenues: |
||||||||||||||||
Net video gaming |
$ | 410,636 | $ | 321,711 | $ | 88,925 | 27.6 | % | ||||||||
Amusement |
5,912 | 4,199 | 1,713 | 40.8 | % | |||||||||||
ATM fees and other revenue |
7,837 | 6,083 | 1,754 | 28.8 | % | |||||||||||
|
|
|
|
|
|
|||||||||||
Total revenues |
424,385 | 331,993 | 92,392 | 27.8 | % | |||||||||||
|
|
|
|
|
|
|||||||||||
Operating expenses: |
||||||||||||||||
Video gaming expenses |
271,999 | 210,507 | 61,492 | 29.2 | % | |||||||||||
General and administrative |
75,028 | 58,157 | 16,871 | 29.0 | % | |||||||||||
Depreciation and amortization of property and equipment |
26,398 | 20,782 | 5,616 | 27.0 | % | |||||||||||
Amortization of route and customer acquisition costs and location contracts acquired |
17,975 | 14,681 | 3,294 | 22.4 | % | |||||||||||
Other expenses, net |
19,649 | 2,997 | 16,652 | 555.6 | % | |||||||||||
|
|
|
|
|
|
|||||||||||
Total operating expenses |
411,049 | 307,124 | 103,925 | 33.8 | % | |||||||||||
|
|
|
|
|
|
|||||||||||
Operating income |
13,336 | 24,869 | (11,533 | ) | (46.4 | )% | ||||||||||
Interest expense |
12,860 | 9,644 | 3,216 | 33.3 | % | |||||||||||
Loss on debt extinguishment |
1,141 | — | 1,141 | — | ||||||||||||
|
|
|
|
|
|
|||||||||||
(Loss) income before income tax expense |
(665 | ) | 15,225 | (15,890 | ) | (104.4 | )% | |||||||||
Income tax expense |
5,199 | 4,422 | 777 | 17.6 | % | |||||||||||
|
|
|
|
|
|
|||||||||||
Net (loss) income |
$ | (5,864 | ) | $ | 10,803 | $ | (16,667 | ) | (154.3 | )% | ||||||
|
|
|
|
|
|
Year Ended December 31, |
Increase /Decrease |
|||||||||||||||
(in thousands, except %’s) | 2018 |
2017 |
Change |
Change % |
||||||||||||
Revenues: |
||||||||||||||||
Net video gaming |
$ | 321,711 | $ | 240,235 | $ | 81,476 | 33.9 | % | ||||||||
Amusement |
4,199 | 3,422 | 777 | 22.7 | % | |||||||||||
ATM fees and other revenue |
6,083 | 4,778 | 1,305 | 27.3 | % | |||||||||||
|
|
|
|
|
|
|||||||||||
Total revenues |
331,993 | 248,435 | 83,558 | 33.6 | % | |||||||||||
|
|
|
|
|
|
|||||||||||
Operating expenses: |
||||||||||||||||
Video gaming expenses |
210,507 | 157,010 | 53,497 | 34.1 | % | |||||||||||
General and administrative |
58,157 | 45,364 | 12,793 | 28.2 | % | |||||||||||
Depreciation and amortization of property and equipment |
20,782 | 16,768 | 4,014 | 23.9 | % | |||||||||||
Amortization of route and customer acquisition costs and location contracts acquired |
14,681 | 9,792 | 4,889 | 49.9 | % | |||||||||||
Other expenses, net |
2,997 | 1,331 | 1,666 | 125.2 | % | |||||||||||
|
|
|
|
|
|
|||||||||||
Total operating expenses |
307,124 | 230,265 | 76,859 | 33.4 | % | |||||||||||
|
|
|
|
|
|
|||||||||||
Operating income |
24,869 | 18,170 | 6,699 | 36.9 | % | |||||||||||
Interest expense |
9,644 | 8,105 | 1,539 | 19.0 | % | |||||||||||
|
|
|
|
|
|
|||||||||||
Income before income tax expense |
15,225 | 10,065 | 5,160 | 51.3 | % | |||||||||||
Income tax expense |
4,422 | 1,754 | 2,668 | 152.1 | % | |||||||||||
|
|
|
|
|
|
|||||||||||
Net income |
$ | 10,803 | $ | 8,311 | $ | 2,492 | 30.0 | % | ||||||||
|
|
|
|
|
|
• | Number of licensed establishments; |
• | Number of VGTs; |
• | Average remaining contract term (years); and |
• | Hold-per-day. |
As of June 30, |
Increase / (Decrease) |
|||||||||||||||
2020 |
2019 |
Change $ |
Change % |
|||||||||||||
Licensed establishments |
2,335 | 1,762 | 573 | 32.5 | % | |||||||||||
Video gaming terminals |
11,108 | 8,082 | 3,026 | 37.4 | % | |||||||||||
Average remaining contract term (years) (1) |
6.8 | 7.4 | (0.6 | ) | (8.1 | )% |
(1) | Excluding the Grand River Jackpot acquisition, the Average remaining contract life was 7.0 years as of June 30, 2020. |
June 30 |
Increase / (Decrease) |
|||||||||||||||
2020 |
2019 |
Change $ |
Change % |
|||||||||||||
Hold-per-day—for (1) |
— | $ | 139 | $ | (139 | ) | (100.0 | )% | ||||||||
Hold-per-day—for (2) |
$ | 124 | $ | 137 | $ | (13 | ) | (9.5 | )% |
(1) | There were no gaming days for the three months ended June 30, 2020, due to the IGB mandated COVID-19 shutdown. |
(2) | Excluding the Grand River Jackpot acquisition, Hold-per-day 76-eligible days of gaming (excludes 106 non-gaming days due to the IGB mandated COVID-19 shutdown). |
As of and for the year ended December 31, |
Increase / Decrease |
|||||||||||||||
2019 |
2018 |
Change |
Change % |
|||||||||||||
Licensed establishments |
2,312 | 1,686 | 626 | 37.1 | % | |||||||||||
Video gaming terminals |
10,499 | 7,649 | 2,850 | 37.3 | % | |||||||||||
Average remaining contract term (years) (1) |
6.9 | 7.6 | (0.7 | ) | (9.2 | )% | ||||||||||
Hold-per-day (2) |
$ | 130 | $ | 125 | $ | 5 | 4.0 | % |
(1) | Excluding the Grand River Jackpot acquisition, the average remaining contract life was 7.2 years as of December 31, 2019. |
(2) | Excluding the Grand River Jackpot acquisition, Hold-per-day |
As of and for the year ended December 31, |
Increase / Decrease |
|||||||||||||||
2018 |
2017 |
Change |
Change % |
|||||||||||||
Licensed establishments |
1,686 | 1,442 | 244 | 16.9 | % | |||||||||||
Video gaming terminals |
7,649 | 6,439 | 1,210 | 18.8 | % | |||||||||||
Average remaining contract term (years) |
7.6 | 8.3 | (0.7 | ) | (8.4 | )% | ||||||||||
Hold-per-day |
$ | 125 | $ | 115 | $ | 10 | 8.7 | % |
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
(in thousands) | 2020 |
2019 |
2020 |
2019 |
||||||||||||
Net (loss) income |
$ | (21,274 | ) | $ | 4,328 | $ | (23,240 | ) | $ | 8,323 | ||||||
Adjustments: |
||||||||||||||||
Amortization of route and customer acquisition costs and location contracts acquired (1 ) |
5,565 | 4,624 | 11,130 | 8,927 | ||||||||||||
Stock-based compensation (2) |
1,327 | 128 | 2,387 | 256 | ||||||||||||
Other expenses, net (3) |
3,132 | 754 | 4,336 | 1,370 | ||||||||||||
Tax effect of adjustments (4) |
(2,343 | ) | (2,311 | ) | (2,015 | ) | (3,805 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Adjusted net (loss) income |
$ | (13,593 | ) | $ | 7,523 | $ | (7,402 | ) | $ | 15,071 | ||||||
Depreciation and amortization of property and equipment |
5,071 | 6,100 | 9,938 | 12,141 | ||||||||||||
Interest expense, net |
2,489 | 3,156 | 6,738 | 6,203 | ||||||||||||
Income tax (benefit) expense |
(2,712 | ) | 4,082 | (3,179 | ) | 7,254 | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Adjusted EBITDA |
$ | (8,745 | ) | $ | 20,861 | $ | 6,095 | $ | 40,669 | |||||||
|
|
|
|
|
|
|
|
(1) | Route and customer acquisition costs consist of upfront cash payments and future cash payments to third party sales agents to acquire the licensed video gaming establishments that are not connected with a business combination. Accel amortizes the upfront cash payment over the life of the contract, including expected renewals, beginning on the date the location goes live, and recognizes non-cash amortization charges with respect to such items. Future or deferred cash payments, which may occur based on terms of the underlying contract, are generally lower in the aggregate as compared to established practice of providing higher upfront payments, and are also capitalized and amortized over the remaining life of the contract. Future cash payments do not include cash costs associated with renewing customer contracts as Accel does not generally incur significant costs as a result of extension or renewal of an existing contract. Location contracts acquired in a business combination are recorded at fair value as part of the business combination accounting and then amortized as an intangible asset on a straight-line basis over the expected useful life of the contract of 10 years. “Amortization of route and customer acquisition costs and location contracts acquired” aggregates the non-cash amortization charges relating to upfront route and customer acquisition cost payments and location contracts acquired. |
(2) | Stock-based compensation consists of options, restricted stock units and warrants. |
(3) | Other expenses, net consists of (i) non-cash expenses including the remeasurement of contingent consideration liabilities, (ii) non-recurring expenses including expenses relating to lobbying efforts and legal expenses in Pennsylvania and lobbying efforts in Missouri, (iii) non-recurring expenses and (iv) non-recurring costs associated with COVID-19. |
(4) | Calculated by excluding the impact of the non-GAAP adjustments from the current period tax provision calculations. |
Year Ended December 31, |
||||||||||||
(in thousands) | 2019 |
2018 |
2017 |
|||||||||
Net (loss) income |
$ | (5,864 | ) | $ | 10,803 | $ | 8,311 | |||||
Adjustments: |
||||||||||||
Amortization of route and customer acquisition costs and location contracts acquired (1) |
17,975 | 14,681 | 9,792 | |||||||||
Stock-based compensation (2) |
2,236 | 453 | 804 | |||||||||
Other expenses, net (3 ) |
19,649 | 3,030 | 1,331 | |||||||||
Tax effect of adjustments (4) |
(11,301 | ) | (5,831 | ) | (2,928 | ) | ||||||
|
|
|
|
|
|
|||||||
Adjusted net income |
$ | 22,695 | $ | 23,136 | $ | 17,310 | ||||||
Depreciation and amortization of property and equipment |
26,398 | 20,782 | 16,768 | |||||||||
Interest expense |
12,860 | 9,644 | 8,105 | |||||||||
Income tax expense |
16,500 | 10,253 | 4,682 | |||||||||
Loss on debt extinguishment |
1,141 | — | — | |||||||||
|
|
|
|
|
|
|||||||
Adjusted EBITDA |
$ | 79,594 | $ | 63,815 | $ | 46,865 | ||||||
|
|
|
|
|
|
(1) | Route and customer acquisition costs consist of upfront cash payments and future cash payments to third party sales agents to acquire the licensed video gaming establishments that are not connected with a business combination. Accel amortizes the upfront cash payment over the life of the contract, including expected renewals, beginning on the date the location goes live, and recognizes non-cash amortization charges with respect to such items. Future or deferred cash payments, which may occur based on terms of the underlying contract, are generally lower in the aggregate as compared to established practice of providing higher upfront payments, and are also capitalized and amortized over the remaining life of the contract. Future cash payments do not include cash costs associated with renewing customer contracts as Accel does not generally incur significant costs as a result of extension or renewal of an existing contract. Location contracts acquired in a business combination are recorded at fair value as part of the business combination accounting and then amortized as an intangible asset on a straight-line basis over the expected useful life of the contract of 10 years. “Amortization of route and customer acquisition costs and location contracts acquired” aggregates the non-cash amortization charges relating to upfront route and customer acquisition cost payments and location contracts acquired. |
(2) | Stock-based compensation consists of options, restricted stock units and warrants. |
(3) | Other expenses, net consists of (i) non-cash expenses including the remeasurement of contingent consideration liabilities, (ii) non-recurring expenses including expenses relating to lobbying efforts and legal expenses in Pennsylvania, lobbying efforts in Missouri and a settlement in connection with a gaming acquisition, and (iii) non-recurring expenses associated with the Business Combination. |
(4) | Calculated by excluding the impact of the non-GAAP adjustments from the current period tax provision calculations. |
• | $100.0 million revolving credit facility, including a letter of credit facility with a $10.0 million sublimit and a swing line facility with a $10.0 million sublimit, |
• | $240.0 million initial term loan facility, and |
• | $125.0 million additional term loan facility. |
(a) | ABR plus a margin of 1.25% or |
(b) | LIBOR plus a margin of 2.25%. |
Six Months Ended June 30, |
||||||||
(in thousands) | 2020 |
2019 |
||||||
Net cash (used in) provided by operating activities |
$ | (17,284 | ) | $ | 26,083 | |||
Net cash used in investing activities |
(4,002 | ) | (10,548 | ) | ||||
Net cash provided by (used in) financing activities |
44,717 | (8,257 | ) |
Year Ended December 31, |
||||||||||||
(in thousands) | 2019 |
2018 |
2017 |
|||||||||
Net cash provided by operating activities |
$ | 45,565 | $ | 44,343 | $ | 33,097 | ||||||
Net cash used in investing activities |
(151,532 | ) | (73,547 | ) | (70,870 | ) | ||||||
Net cash provided by financing activities |
139,141 | 46,122 | 59,081 |
(in thousands, except per share data) |
First Quarter |
Second Quarter |
Third Quarter |
Fourth Quarter |
||||||||||||
2020: |
||||||||||||||||
Total revenues |
$ | 105,228 | $ | 379 | $ | — | $ | — | ||||||||
Operating income (loss) |
2,144 | (23,840 | ) | — | — | |||||||||||
Loss before income taxes |
(2,105 | ) | (26,329 | ) | — | — | ||||||||||
Net loss |
(1,966 | ) | (21,274 | ) | — | — | ||||||||||
Net loss per common share: |
||||||||||||||||
Basic (1) |
(0.03 | ) | (0.27 | ) | — | — | ||||||||||
Diluted (1) |
(0.03 | ) | (0.27 | ) | — | — | ||||||||||
2019: |
||||||||||||||||
Total revenues |
$ | 97,425 | $ | 104,267 | $ | 101,294 | $ | 121,399 | ||||||||
Operating income (loss) |
8,720 | 9,255 | 1,018 | (5,657 | ) | |||||||||||
Income (loss) before income taxes |
5,673 | 6,099 | (2,297 | ) | (10,140 | ) | ||||||||||
Net income (loss) |
3,995 | 4,328 | (1,598 | ) | (12,589 | ) | ||||||||||
Net (loss) income per common share: |
||||||||||||||||
Basic (1) |
0.07 | 0.07 | (0.03 | ) | (0.18 | ) | ||||||||||
Diluted (1) |
0.06 | 0.07 | (0.03 | ) | (0.18 | ) | ||||||||||
2018: |
||||||||||||||||
Total revenues |
$ | 78,425 | $ | 80,940 | $ | 81,713 | $ | 90,915 | ||||||||
Operating income |
7,092 | 6,766 | 4,681 | 6,330 | ||||||||||||
Income before income taxes |
5,038 | 4,554 | 2,514 | 3,119 | ||||||||||||
Net income |
3,593 | 3,233 | 2,126 | 1,851 | ||||||||||||
Net income per common share: |
||||||||||||||||
Basic (1) |
0.06 | 0.06 | 0.04 | 0.03 | ||||||||||||
Diluted (1) |
0.06 | 0.05 | 0.03 | 0.03 |
(1) | Share amounts have been retroactively restated to give effect to the reverse recapitalization that is discussed in Note 3 to the consolidated financial statements. |
Less than 1 Year |
Due in 1 to 3 years |
Due in 3 to 5 years |
Due in over 5 years |
Total |
||||||||||||||||
Credit facility principal payments (1) |
$ | 18,250 | $ | 36,500 | $ | 352,438 | $ | — | $ | 407,188 | ||||||||||
Interest payments on credit facility (2) |
10,110 | 18,873 | 11,612 | — | 40,595 | |||||||||||||||
Operating lease obligations (3) |
208 | 207 | 32 | — | 447 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total contractual obligations |
$ | 28,568 | $ | 55,580 | $ | 364,081 | $ | — | $ | 448,229 | ||||||||||
|
|
|
|
|
|
|
|
|
|
(1) | Term Loans require quarterly principal payments of 1.25% of the outstanding loan amounts on the Closing Date. |
(2) | Interest payable monthly on unpaid balances at variable per annum LIBOR rate plus applicable margin. |
(3) | Represents leased office space under agreements expiring between January 2020 through December 2023. |
Name |
Age |
Title | ||||
Andrew Rubenstein |
51 | Chief Executive Officer, President and Director | ||||
Karl Peterson (2)(3)(4) |
49 | Chairman and Director | ||||
Brian Carroll |
57 | Chief Financial Officer | ||||
Derek Harmer |
52 | General Counsel, Chief Compliance Officer and Secretary | ||||
Mark Phelan |
51 | Chief Revenue Officer | ||||
Michael Marino |
40 | Chief Commercial Officer | ||||
Ryan Hammer |
43 | President, Gaming Operations | ||||
Gordon Rubenstein |
48 | Director | ||||
Kathleen Philips (1)(2)(3) |
53 | Director | ||||
David W. Ruttenberg (1)(3)(4) |
78 | Director | ||||
Eden Godsoe (1)(2)(4) |
50 | Director | ||||
Kenneth B. Rotman |
53 | Director | ||||
Dee Robinson (3)(4) |
59 | Director |
(1) | Member of the audit committee |
(2) | Member of the compensation committee |
(3) | Member of the nominating and governance committee |
(4) | Member of the compliance committee |
• | selecting a firm to serve as the independent registered public accounting firm to audit the Company’s consolidated financial statements; |
• | ensuring the independence of the independent registered public accounting firm; |
• | discussing the scope and results of the audit with the independent registered public accounting firm and reviewing, with management and that firm, the Company’s interim and year-end operating results; |
• | establishing procedures for employees to anonymously submit concerns about questionable accounting or audit matters; |
• | considering the adequacy of the Company’s internal controls and internal audit function: |
• | reviewing proposed waivers of the global code of conduct for directors, executive officers, and employees (with waivers for directors or executive officers to be approved by the board of directors); |
• | reviewing material related party transactions or those that require disclosure; |
• | selecting a firm to serve as the independent registered public accounting firm to audit the Company’s consolidated financial statements; and |
• | approving or, as permitted, pre-approving all audit and non-audit services to be performed by the independent registered public accounting firm. |
• | reviewing and approving the compensation of the Company’s executive officers, other than the Company’s chief executive officer; |
• | evaluating the performance of the Company’s chief executive officer in light of the Company’s goals and objectives; |
• | reviewing and recommending to the Company Board the compensation of the Company’s directors; |
• | administering the Company’s cash and equity incentive plans; |
• | reviewing and approving, or making recommendations to the Company Board with respect to, incentive compensation and equity plans; and |
• | reviewing the Company’s overall compensation policies. |
• | identifying and recommending candidates for membership on the Company Board; |
• | recommending directors to serve on board committees; |
• | reviewing and recommending the Company’s corporate governance guidelines and policies; |
• | reviewing senior management succession, including with respect to the chief executive officer; |
• | evaluating, and overseeing the process of evaluating, the performance of the Company Board and individual directors; and |
• | assisting the Company Board on corporate governance matters. |
• | ensuring compliance with gaming laws, regulations, policies applicable to the operations of the Company in all jurisdictions in which it conducts business; |
• | providing appropriate reports to gaming authorities advising the authorities of the Company’s compliance efforts; |
• | performing due diligence in respect of proposed transactions and associations; and |
• | collecting information from gaming authorities to help the Company maintain and enhance its compliance with gaming laws and regulations. |
• | honesty and candor in the Company’s activities, including observance of the spirit, as well as the letter of the law; |
• | avoidance of conflicts between personal interests and the interests of the Company, or even the appearance of such conflicts; |
• | avoidance of payments to candidates running for government posts or other government officials; |
• | compliance with generally accepted accounting principles and controls; |
• | maintenance of the Company’s reputation and avoidance of activities which might reflect adversely on the Company; and |
• | integrity in dealing with the Company’s assets. |
Name and Principal Position |
Fiscal Year |
Salary |
Stock Awards($) (1) |
Option Awards($) (2) |
Nonequity Incentive Plan($) (3) |
All Other Compensation (4) |
Total ($) |
|||||||||||||||||||||
Andrew Rubenstein |
2019 | $ | 637,981 | $ | 1,094,220 | — | $ | 750,000 | $ | 10,346 | $ | 2,492,547 | ||||||||||||||||
Chief Executive Officer |
2018 | $ | 522,596 | $ | 988 | — | $ | 650,000 | $ | 12,178 | $ | 1,185,762 | ||||||||||||||||
Brian Carroll |
2019 | $ | 268,826 | — | — | — | $ | 12,521 | $ | 281,347 | ||||||||||||||||||
Chief Financial Officer |
2018 | $ | 256,025 | — | $ | 39,436 | $ | 55,000 | $ | 11,843 | $ | 362,304 | ||||||||||||||||
Derek Harmer |
2019 | $ | 308,751 | — | — | $ | 155,000 | $ | 12,951 | $ | 476,702 | |||||||||||||||||
General Counsel, Chief Compliance Officer and Secretary |
2018 | $ | 274,683 | — | $ | 63,098 | $ | 100,000 | $ | 8,648 | $ | 446,429 | ||||||||||||||||
Karl Peterson |
2019 | — | — | — | — | — | — | |||||||||||||||||||||
Former Chief Executive Officer (5) |
2018 | — | — | — | — | — | — |
(1) | The amounts reported in the “Stock Awards” column represent grant date fair value of the restricted stock granted to the NEOs during the fiscal years ended December 31, 2019 and December 31, 2018 as computed in accordance with FASB Accounting Standards Codification Topic 718. Note that the amounts reported in this column reflect the accounting cost for these stock options and do not correspond to the actual economic value that may be received by the NEOs from the restricted stock. |
(2) | The amounts reported in the “Option Awards” column represent the grant date fair value of the stock options granted to the NEOs during the fiscal years ended December 31, 2019 and December 31, 2018 as computed in accordance with FASB Accounting Standards Codification Topic 718. Note that the amounts reported in this column reflect the accounting cost for these stock options and do not correspond to the actual economic value that may be received by the NEOs from the stock options. |
(3) | The amount reported in the “Nonequity Incentive Plan Compensation” column represents the annual cash discretionary bonuses, which were approved by the Accel Board (as defined in “ Certain Relationships and Related Transactions |
(4) | “Other Compensation” consists of Accel’s matching contributions to the 401(k) Plan or other retirement plan, health insurance premiums, vehicle allowances and travel expenses. |
(5) | Karl Peterson ceased to be the Chief Executive Officer of Pace on November 20, 2019 in connection with the consummation of the Business Combination. |
Name |
Grant Date (1) |
Number of Securities Underlying Unexercised Options (#) Exercisable |
Number of Securities Underlying Unexercised Options (#) Unexercisable |
Option Exercise Price ($) |
Option Expiration Date |
|||||||||||||||
Andrew Rubenstein |
5/9/2016 | (2)(3) |
— | 343,770 | $ | 2.33 | 8/30/2021 | |||||||||||||
Brian Carroll |
5/9/2016 | (3)(4) |
— | 103,131 | $ | 2.33 | 8/30/2021 | |||||||||||||
12/12/2017 | (2)(3) |
4,297 | 12,891 | $ | 4.07 | 12/12/2023 | ||||||||||||||
12/19/2018 | (2)(3) |
4,297 | 17,188 | $ | 5.24 | 12/11/2024 | ||||||||||||||
Derek Harmer |
5/9/2016 | (3)(4) |
— | 103,131 | $ | 2.33 | 8/30/2021 | |||||||||||||
12/12/2017 | (2)(3) |
6,875 | 20,626 | $ | 4.07 | 12/12/2023 | ||||||||||||||
12/19/2018 | (2)(3) |
6,875 | 27,502 | $ | 5.24 | 12/11/2024 |
(1) | This table does not include warrants or performance-based Shares that the NEOs have received in connection with the consummation of the Business Combination. For additional information, please see the section entitled “ Principal and Selling Stockholders |
(2) | Granted under Accel’s 2016 Plan (as defined in “ —Equity Incentive Plans of Accel—Accel Entertainment, Inc.’s 2016 Equity Incentive Plan. |
(3) | Vesting commenced on the date that is one year after the grant date. |
(4) | Granted under Accel’s 2011 Plan (as defined in “ —Equity Incentive Plans of Accel—Accel Entertainment, Inc.’s 2016 Equity Incentive Plan |
• | Tranche I, equal to 1,666,666 shares of Class A-2 common stock, will be exchanged for shares of Class A-1 common stock if either (i) the EBITDA for the last twelve months (“LTM EBITDA Class A-1 common stock on the NYSE equals or exceeds $12.00 for at least twenty trading days in any consecutive thirty trading day period (which threshold was reached on January 14, 2020, resulting in the issuance of 1,596,636 shares of Class A-1 common stock upon exchange of shares of Class A-2 common stock); |
• | Tranche II, equal to 1,666,667 shares of Class A-2 common stock, will be exchanged for shares of Class A-1 common stock if either (i) the LTM EBITDA of the Company (as determined pursuant to the Restricted Stock Agreement) as of December 31, 2022, March 31, 2023 or June 30, 2023 equals or exceeds $152 million or (ii) the closing sale price of Class A-1 common stock on the NYSE equals or exceeds $14.00 for at least twenty trading days in any 30 trading day period; and |
• | Tranche III, equal to 1,666,667 shares of Class A-2 common stock, will be exchanged for shares of Class A-1 common stock if either (i) the LTM EBITDA of the Company (as determined pursuant to the Restricted Stock Agreement) as of December 31, 2023, March 31, 2024 or June 30, 2024 equals or exceeds $172 million or (ii) the closing sale price of Class A-1 common stock on the NYSE equals or |
exceeds $16.00 for at least twenty trading days in any 30 trading day period. The LTM EBITDA and LTM EBITDA thresholds will be reasonably adjusted by the independent directors of the Company Board from time to time to take into account the anticipated effect of any acquisitions or dispositions that exceed certain thresholds and are otherwise materially different from certain forecasts. |
• | in whole and not in part; |
• | at a price of $0.01 per Pace Warrant; |
• | upon not less than 30 days’ prior written notice of redemption (the “ 30-day redemption period ”) to registered holders of the Pace Public Warrants; and |
• | if, and only if, the reported last sale price of the Class A-1 common stock equals or exceeds $18.00 per share (as adjusted for share splits, share dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date the Company sends to the notice of redemption to the holders of the Pace Warrants. |
• | in whole and not in part; |
• | at a price equal to a number of shares of Class A-1 common stock to be determined by reference to the table below, based on the redemption date and the “fair market value” of the Class A-1 common stock (as defined below) except as otherwise described below; |
• | upon a minimum of 30 days’ prior written notice of redemption; and |
• | if, and only if, the last sale price of the Class A-1 common stock equals or exceeds $10.00 per share (as adjusted per share splits, share dividends, reorganizations, reclassifications, recapitalizations and the like) on the trading day prior to the date on which the Company sends the notice of redemption to the holders of Pace Warrants. |
Redemption Date (period to expiration of warrants) |
Fair Market Value of Class A-1 common stock |
|||||||||||||||||||||||||||||||||||
$10.00 |
$11.00 |
$12.00 |
$13.00 |
$14.00 |
$15.00 |
$16.00 |
$17.00 |
$18.00 |
||||||||||||||||||||||||||||
57 months |
0.257 | 0.277 | 0.294 | 0.310 | 0.324 | 0.337 | 0.348 | 0.358 | 0.365 | |||||||||||||||||||||||||||
54 months |
0.252 | 0.272 | 0.291 | 0.307 | 0.322 | 0.335 | 0.347 | 0.357 | 0.365 | |||||||||||||||||||||||||||
51 months |
0.246 | 0.268 | 0.287 | 0.304 | 0.320 | 0.333 | 0.346 | 0.357 | 0.365 | |||||||||||||||||||||||||||
48 months |
0.241 | 0.263 | 0.283 | 0.301 | 0.317 | 0.332 | 0.344 | 0.356 | 0.365 | |||||||||||||||||||||||||||
45 months |
0.235 | 0.258 | 0.279 | 0.298 | 0.315 | 0.330 | 0.343 | 0.356 | 0.365 | |||||||||||||||||||||||||||
42 months |
0.228 | 0.252 | 0.274 | 0.294 | 0.312 | 0.328 | 0.342 | 0.355 | 0.364 | |||||||||||||||||||||||||||
39 months |
0.221 | 0.246 | 0.269 | 0.290 | 0.309 | 0.325 | 0.340 | 0.354 | 0.364 | |||||||||||||||||||||||||||
36 months |
0.213 | 0.239 | 0.263 | 0.285 | 0.305 | 0.323 | 0.339 | 0.353 | 0.364 | |||||||||||||||||||||||||||
33 months |
0.205 | 0.232 | 0.257 | 0.280 | 0.301 | 0.320 | 0.337 | 0.352 | 0.364 | |||||||||||||||||||||||||||
30 months |
0.196 | 0.224 | 0.250 | 0.274 | 0.297 | 0.316 | 0.335 | 0.351 | 0.364 | |||||||||||||||||||||||||||
27 months |
0.185 | 0.214 | 0.242 | 0.268 | 0.291 | 0.313 | 0.332 | 0.350 | 0.364 | |||||||||||||||||||||||||||
24 months |
0.173 | 0.204 | 0.233 | 0.260 | 0.285 | 0.308 | 0.329 | 0.348 | 0.364 | |||||||||||||||||||||||||||
21 months |
0.161 | 0.193 | 0.223 | 0.252 | 0.279 | 0.304 | 0.326 | 0.347 | 0.364 | |||||||||||||||||||||||||||
18 months |
0.146 | 0.179 | 0.211 | 0.242 | 0.271 | 0.298 | 0.322 | 0.345 | 0.363 | |||||||||||||||||||||||||||
15 months |
0.130 | 0.164 | 0.197 | 0.230 | 0.262 | 0.291 | 0.317 | 0.342 | 0.363 | |||||||||||||||||||||||||||
12 months |
0.111 | 0.146 | 0.181 | 0.216 | 0.250 | 0.282 | 0.312 | 0.339 | 0.363 | |||||||||||||||||||||||||||
9 months |
0.090 | 0.125 | 0.162 | 0.199 | 0.237 | 0.272 | 0.305 | 0.336 | 0.362 | |||||||||||||||||||||||||||
6 months |
0.065 | 0.099 | 0.137 | 0.178 | 0.219 | 0.259 | 0.296 | 0.331 | 0.362 | |||||||||||||||||||||||||||
3 months |
0.034 | 0.065 | 0.104 | 0.150 | 0.197 | 0.243 | 0.286 | 0.326 | 0.361 | |||||||||||||||||||||||||||
0 months |
— | — | 0.042 | 0.115 | 0.179 | 0.233 | 0.281 | 0.323 | 0.361 |
• | The Pace Private Placement Warrants (including the shares of Class A-1 common stock issuable upon exercise of the Pace Private Placement Warrants) were subject to lock-up provisions that provided that the Pace Private Placement Warrants would not be transferable, assignable or salable until 30 days after the completion of an initial business combination and will not be redeemable, as applicable, so long as they are held by Initial Pace Sponsor or its permitted transferees, except that the Pace Private Placement Warrants (including the shares of Class A-1 common stock issuable upon exercise of the Pace Private Placement Warrants) can be transferred by such holders (a) to Pace’s officers or directors, any affiliates or family members of any of Pace’s officers or directors, members of Initial Pace Sponsor (which at the consummation of the Business Combination consisted of the Pace Sponsor Members), or any affiliates of Initial Pace Sponsor, (b) in the case of an individual, by gift to a member of the individual’s immediate family or to a trust, the beneficiary of which is a member of the individual’s immediate family, an affiliate of such person or to a charitable organization; (c) in the case of an individual, by virtue of laws of descent and distribution upon death of the individual; (d) in the case of an individual, pursuant to a qualified domestic relations order; (e) by private sales or transfers made in connection with the consummation of an initial business combination at prices no greater than the price at which the shares were originally purchased; (f) in the event of Pace’s liquidation prior to its completion of an initial business combination; (g) by virtue of the laws of the Cayman Islands or Initial Pace Sponsor’s limited liability company agreement upon dissolution of Initial Pace Sponsor; or (h) in the event of Pace’s liquidation, merger, share exchange, reorganization or other similar transaction which results in all of Pace’s stockholders having the right to exchange their Pace Public Shares for cash, securities or other property subsequent to Pace’s completion of an initial business combination; provided, however, that in the case of clauses (a) through (e) these permitted transferees must enter into a written agreement agreeing to be bound by these transfer restrictions. |
• | If holders of the Pace Private Placement Warrants elect to exercise them on a cashless basis, they would pay the exercise price by surrendering their warrants for that number of shares of Class A-1 common stock equal to the quotient obtained by dividing (x) the product of the number of shares of Class A-1 common stock underlying the warrants, multiplied by the excess of the “fair market value” (defined below) over the exercise price of the warrants by (y) the fair market value. The “fair market value” shall mean the average reported last sale price of the Class A-1 common stock for the 10 trading days ending on the third trading day prior to the date on which the notice of warrant exercise is sent to the warrant agent. |
• | The Business Combination Private Placement Warrants and Accel Public Warrants will expire five years after the consummation of the Business Combination, at 5:00 p.m., New York City time, or earlier upon redemption or liquidation. |
• | The Business Combination Private Placement Warrants and Accel Public Warrants (including the shares of Class A-1 common stock issuable upon exercise thereof) are subject to lock-up provisions that provide that so long as such warrants are held by a Seller receiving Business Combination Private Placement Warrants and/or Accel Public Warrants in connection with the Business Combination or its permitted transferees, such securities are not transferable, assignable or salable until 30 days after the consummation of the Business Combination and will not be redeemable, except that such warrants (including the shares of Class A-1 common stock issuable upon exercise thereof) may be transferred by such holders (a) to the Company’s officers or directors, any affiliates or family members of any of the Company’s officers or directors, any members of the Accel holder, or any affiliates of the Accel holder, (b) in the case of an individual, by gift to a member of the individual’s immediate family or to a trust, the beneficiary of which is a member of the individual’s immediate family, an affiliate of such person or to a charitable organization; (c) in the case of an individual, by virtue of laws of descent and distribution upon death of the individual; (d) in the case of an individual, pursuant to a qualified domestic relations order; (e) in the event of the Company’s liquidation, merger, share exchange, reorganization or other similar transaction which results in all of the Company’s stockholders having the right to exchange their Pace Public Shares for cash, securities or other property subsequent to the completion of the Business Combination; provided, however, that in the case of clauses (a) through (d) these permitted transferees must enter into a written agreement agreeing to be bound by these transfer restrictions. |
• | If holders of the Business Combination Private Placement Warrants and/or Accel Public Warrants elect to exercise them on a cashless basis, they would pay the exercise price by surrendering their warrants for that number of shares of Class A-1 common stock equal to the quotient obtained by dividing (x) the product of the number of shares of Class A-1 common stock underlying the warrants, multiplied by the excess of the “fair market value” (defined below) over the exercise price of the warrants by (y) the fair market value. The “fair market value” shall mean the average reported last sale price of the shares of Class A-1 common stock for the 10 trading days ending on the third trading day prior to the date on which the notice of warrant exercise is sent to the warrant agent. |
• | The Business Combination Private Placement Warrants and Accel Public Warrants may not be exercised if (a) prior to giving effect to the exercise, the holder such warrant beneficially owns less than 4.99% of the total number of shares of Class A-1 common stock issued and outstanding at such time and (b) after giving effect to such exercise, the holder of such warrant would beneficially own in excess of 4.99% of the total Class A-1 common stock issued and outstanding at such time. However, notwithstanding the foregoing limitation, the Business Combination Private Placement Warrants and Accel Public Warrants held by a holder that has obtained all required gaming approvals from applicable gaming authorities permitting such holder to beneficially own shares of Class A-1 common stock in an amount in excess of 4.99% of the total number of shares of Class A-1 common stock issued and outstanding at such time shall immediately be exercisable without regard to such limitation. |
• | a stockholder who owns fifteen percent or more of the Company’s outstanding voting stock (otherwise known as an “ interested stockholder |
• | an affiliate of an interested stockholder; or |
• | an associate of an interested stockholder, for three years following the date that the stockholder became an interested stockholder. |
• | the Company Board approves the transaction that made the stockholder an interested stockholder, prior to the date of the transaction; |
• | after the completion of the transaction that resulted in the stockholder becoming an interested stockholder, that stockholder owned at least 85% of the Company’s voting stock outstanding at the time the transaction commenced, other than statutorily excluded shares of common stock; or |
• | on or subsequent to the date of the transaction, the business combination is approved by the Company Board and authorized at a meeting of the Company’s stockholders, and not by written consent, by an affirmative vote of two-thirds of the outstanding voting stock not owned by the interested stockholder. |
• | one percent (1%) of the total number of shares of Common Stock outstanding as shown on the most recent report or statement published by the Company; or |
• | the average weekly reported trading volume of trading in such securities during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale. |
• | the issuer of the securities that was formerly a shell company has ceased to be a shell company; |
• | the issuer of the securities is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act; |
• | the issuer of the securities has filed all Exchange Act reports and material required to be filed, as applicable, during the preceding 12 months (or such shorter period that the issuer was required to file such reports and materials), other than Form 8-K reports; and |
• | at least one year has elapsed from the filing of our Current Report on Form 8-K, filed with the SEC on November 26, 2019, reflecting our status as an entity that is not a shell company. |
• | 1% of the total number of shares of our common stock then outstanding; or |
• | the average weekly reported trading volume of our common stock during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale. |
• | the issuer of the securities that was formerly a shell company has ceased to be a shell company; |
• | the issuer of the securities is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act; |
• | the issuer of the securities has filed all Exchange Act reports and material required to be filed, as applicable, during the preceding 12 months (or such shorter period that the issuer was required to file such reports and materials), other than Form 8-K reports; and |
• | at least one year has elapsed from the time that the issuer filed current Form 10 type information with the SEC reflecting its status as an entity that is not a shell company. |
• | each person known to the Company to be the beneficial owner of more than 5% of outstanding Company common stock; |
• | each of the Company’s executive officers and directors; |
• | all executive officers and directors of the Company as a group; and |
• | the selling stockholders. |
Beneficial Ownership of Class A-1 Shares Before Offering |
Class A-1 Shares to be Sold in the Offering |
Beneficial Ownership of Class A-1 Shares After Offering (Assuming Exercise of Option to Purchase Additional Class A-1 Shares in Full) |
Beneficial Ownership of Class A-1 Shares After Offering (Assuming No Exercise of Option to Purchase Additional Class A-1 Shares in Full) |
|||||||||||||||||||||||||
Name and Address of Beneficial Owners (1) |
Number of Shares |
Percentage |
Number of Shares |
Number of Shares |
Percentage |
Number of Shares |
Percentage |
|||||||||||||||||||||
5% Stockholders: |
|
|
|
|
|
|
||||||||||||||||||||||
The Rubenstein Family (2) (6) (8) |
14,801,676 | 17.67 | % | 900,000 | 13,901,676 | 15.09 | % | 14,144,713 | 15.41 | % | ||||||||||||||||||
Entities affiliated with Clairvest (3) |
16,898,868 | 20.17 | % | 3,379,774 | 13,519,094 | 14.68 | % | 14,431,773 | 15.72 | % | ||||||||||||||||||
Simcoe Capital Management, LLC (4) |
4,037,009 | 4.82 | % | — | 4,037,009 | 4.38 | % | 4,037,009 | 4.40 | % | ||||||||||||||||||
Fairview Capital Management, LLC (5) |
7,227,235 | 8.63 | % | — | 7,227,235 | 7.85 | % | 7,227,235 | 7.87 | % | ||||||||||||||||||
Named Executive Officers and Directors: |
||||||||||||||||||||||||||||
Andrew Rubenstein (6) |
8,637,854 | 10.31 | % | 500,000 | 8,137,854 | 8.84 | % | 8,272,875 | 9.01 | % | ||||||||||||||||||
Karl Peterson (7) |
3,155,512 | 3.77 | % | 250,036 | 2,905,476 | 3.15 | % | 2,991,717 | 3.26 | % | ||||||||||||||||||
Brian Carroll |
387,812 | * | 100,000 | 287,812 | * | 314,816 | * | |||||||||||||||||||||
Derek Harmer |
253,274 | * | 40,000 | 213,274 | * | 224,076 | * | |||||||||||||||||||||
Gordon Rubenstein (8) |
3,045,088 | 3.63 | % | 100,000 | 2,945,088 | 3.20 | % | 2,972,092 | 3.24 | % | ||||||||||||||||||
Kathleen Philips (9) |
40,000 | * | — | 40,000 | * | 40,000 | * |
Beneficial Ownership of Class A-1 Shares Before Offering |
Class A-1 Shares to be Sold in the Offering |
Beneficial Ownership of Class A-1 Shares After Offering (Assuming Exercise of Option to Purchase Additional Class A-1 Shares in Full) |
Beneficial Ownership of Class A-1 Shares After Offering (Assuming No Exercise of Option to Purchase Additional Class A-1 Shares in Full) |
|||||||||||||||||||||||||
Name and Address of Beneficial Owners (1) |
Number of Shares |
Percentage |
Number of Shares |
Number of Shares |
Percentage |
Number of Shares |
Percentage |
|||||||||||||||||||||
David W. Ruttenberg (10) |
1,987,878 | 2.37 | % | — | 1,987,878 | 2.16 | % | 1,987,878 | 2.17 | % | ||||||||||||||||||
Ken Rotman (11) |
— | * | — | — | * | — | * | |||||||||||||||||||||
Eden Godsoe (12) |
— | * | — | — | * | — | * | |||||||||||||||||||||
Dee Robinson |
— | * | — | — | * | — | * | |||||||||||||||||||||
All executive officers and directors as a group (13 persons) |
17,590,811 | 21.00 | % | 990,036 | 16,600,775 | 18.02 | % | 16,886,847 | 18.40 | % | ||||||||||||||||||
Selling Stockholders: |
||||||||||||||||||||||||||||
Jeffrey C Rubenstein, Trustee or his successors in trust, of the Susan Rubenstein Family Trust |
2,761,059 | 3.30 | % | 300,000 | 2,461,059 | 2.67 | % | 2,542,071 | 2.77 | % | ||||||||||||||||||
TPG Pace Governance, LLC (13) |
4,585,737 | 5.47 | % | 809,953 | 3,775,784 | 4.10 | % | 3,975,784 | 4.33 | % | ||||||||||||||||||
Clairvest Equity Partners V Limited Partnership (14) |
9,941,741 | 11.87 | % | 1,988,348 | 7,953,393 | 8.64 | % | 8,490,329 | 9.25 | % | ||||||||||||||||||
Clairvest Equity Partners V-A Limited Partnership(15) |
1,887,457 | 2.25 | % | 377,492 | 1,509,965 | 1.64 | % | 1,611,904 | 1.76 | % | ||||||||||||||||||
CEP V Co-Invest Limited Partnership(16) |
5,069,670 | 6.05 | % | 1,013,934 | 4,055,736 | 4.40 | % | 4,329,540 | 4.72 | % |
* | Less than 1 percent. |
(1) | Unless otherwise noted, the business address of each of the persons and entities listed above is 140 Tower Drive, Burr Ridge, IL 60527. |
(2) | Includes shares beneficially owned by Andrew Rubenstein, Gordon Rubenstein, Jeffrey C. Rubenstein and Jeffrey C. Rubenstein, as trustee, or his successors in trust, of the Susan Rubenstein Family Trust and reflects the shares being sold by each of them set forth separately in the table above. |
(3) | Includes shares beneficially owned by Clairvest Equity Partners V-A Limited Partnership, Clairvest Equity Partners V Limited Partnership and CEP V Co-Investment Limited Partnership and reflects the shares being sold by each of them set forth separately in the table above. Of the shares beneficially owned, each of the foregoing limited partnerships has the power to make voting and dispositive decisions with respect to such shares. Clairvest Group Inc. is the sole shareholder of (i) Clairvest GP (GPLP) Inc., which is the general partner of Clairvest General Partner V L.P., which is the general partner of (a) Clairvest Equity Partners V-A Limited Partnership and (b) CEP V Co-Investment Limited Partnership and (ii) Clairvest GP Manageco Inc., which is the general partner of Clairvest Equity Partners V Limited Partnership. |
(4) | Based solely on information contained in a Schedule 13G filed with the SEC by Simcoe Capital Management, LLC on November 25, 2019. Of the shares beneficially owned, Simcoe Capital Management, LLC reported that it had sole voting and dispositive power with respect to 0 shares, and shared voting and dispositive power with respect to 4,037,009 shares. The address for Simcoe Capital Management, LLC is 509 Madison Avenue, Suite 2200, New York, New York 10022. |
(5) | Based solely on information contained in a Schedule 13G filed with the SEC by Fairview Capital Investment Management, LLC on December 23, 2019. Of the shares beneficially owned, Fairview Capital Investment Management, LLC reported that it had sole voting and dispositive power with respect to 0 shares, and shared voting and dispositive power with respect to 7,227,235 shares. The address for Fairview Capital Investment Management, LLC is 300 Drakes Landing Road, Suite 250, Greenbrae, CA 94904. |
(6) | Includes shares beneficially owned by Mr. A. Rubenstein through Harry R, LLC, of which Mr. A. Rubenstein is the sole member and has shared voting and dispositive power thereto, and 21,885 shares of Class A-1 common stock issuable upon exercise of stock options within 60 days of September 18, 2020. The shares of Class A-1 common stock being sold in the offering are held by Andrew Rubenstein. |
(7) | Includes shares beneficially owned by Mr. Peterson through Peterson Capital Partners, L.P., of which Mr. Peterson is the President and has sole voting and dispositive power thereto, by Karter Peterson and by Kennedy Peterson. The shares of Class A-1 common stock being sold in the offering are held by Peterson Capital Partners, L.P. Peterson Capital Partners, L.P.’s address is 301 Commerce Street, Suite 3300, Fort Worth, TX 76102. |
(8) | Includes shares beneficially owned by Mr. G. Rubenstein through Fund Indy LLC, of which Mr. G. Rubenstein is the sole member and has shared voting and dispositive power thereto, The PrivateBank &Trust Company, as Custodian of the Gordon Rubenstein SEP IRA, of which Mr. G. Rubenstein is the sole member and has shared voting and dispositive power thereto and Gordon S. Rubenstein and Krista M. Ramonas Joint Revocable Trust, of which Mr. G. Rubenstein is the trustee and has shared voting and dispositive power thereto. The shares of Class A-1 common stock being sold in the offering are held by the Gordon S. Rubenstein and Krista M. Ramonas Joint Revocable Trust. |
(9) | The address of Ms. Philips is 301 Commerce Street, Suite 3300, Fort Worth, TX 76102. |
(10) | Includes shares beneficially owned by Mr. Ruttenberg, solely as trustee, or his successors in trust, of the David W. Ruttenberg Revocable Trust, as now or hereafter amended, of which Mr. Ruttenberg is the trustee and has sole voting and dispositive power thereto, and through Grant Place Fund LLC, of which Mr. Ruttenberg is a member and has shared voting and dispositive power thereto, Crilly Court Trust, of which Mr. Ruttenberg is the sole beneficiary and Lakewest Gaming G.P., of which Mr. Ruttenberg has sole voting and dispositive power. |
(11) | Mr. Ken Rotman is a director of the Company and the Chief Executive Officer and Managing Director of Clairvest Group Inc. The address of Mr. Rotman is c/o Clairvest Group Inc., 22 St. Clair Avenue East, Suite 1700, Toronto, Ontario, Canada M4T 2S3. |
(12) | The address of Ms. Godsoe is 301 Commerce Street, Suite 3300, Fort Worth, TX 76102. |
(13) | Includes 359,953 shares of Class A-1 common stock issuable upon the settlement of a warrant exchange within 60 days of September 18, 2020. The sole member of TPG Pace Governance, LLC is TPG Holdings III, L.P., a Delaware limited partnership, whose general partner is TPG Holdings III-A, L.P., a Cayman Islands limited partnership, whose general partner is TPG Holdings III-A, Inc., a Cayman Islands corporation, whose sole shareholder is TPG Group Holdings (SBS), L.P., a Delaware limited partnership, whose general partner is TPG Group Holdings (SBS) Advisors, LLC, a Delaware limited liability company, whose sole member is TPG Group Holdings (SBS) Advisors, Inc., a Delaware corporation. David Bonderman and James Coulter are sole shareholders of TPG Group Holdings (SBS) Advisors, Inc. and may therefore be deemed to be the beneficial owners of the securities held by TPG Pace Governance, LLC. Messrs. Bonderman and Coulter disclaim beneficial ownership of the securities held by TPG Pace Governance, LLC except to the extent of their pecuniary interest therein. The address of TPG Pace Governance, LLC is 301 Commerce Street, Suite 3300, Fort Worth, TX 76102. |
(14) | The address of Clairvest Equity Partners V Limited Partnership is c/o Clairvest Group Inc., 22 St. Clair Avenue East, Suite 1700, Toronto, Ontario, Canada M4T 2S3. See Note (3) above for more information. |
(15) | The address of Clairvest Equity Partners V-A Limited Partnership is c/o Clairvest Group Inc., 22 St. Clair Avenue East, Suite 1700, Toronto, Ontario, Canada M4T 2S3. See Note (3) above for more information. |
(16) | The address of CEP V Co-Invest Limited Partnership is c/o Clairvest Group Inc., 22 St. Clair Avenue East, Suite 1700, Toronto, Ontario, Canada M4T 2S3. See Note (3) above for more information. |
• | the amount involved exceeded or will exceed $120,000; and |
• | any of its directors, executive officers, or holders of more than 5% of its capital stock, or any member of the immediate family of the foregoing persons, had or will have a direct or indirect material interest, other than compensation and other arrangements that are described in the section titled “ Executive Compensation Accel Board |
• | financial institutions or financial services entities; |
• | broker-dealers; |
• | governments or agencies or instrumentalities thereof; |
• | qualified foreign pension funds (or any entities all of the interests of which are held by a qualified foreign pension fund); |
• | regulated investment companies; |
• | real estate investment trusts; |
• | expatriates or former long-term residents of the U.S.; |
• | persons that actually or constructively own five percent or more of our voting shares; |
• | insurance companies; |
• | dealers in securities or foreign currencies; |
• | “controlled foreign corporations,” “passive foreign investment companies,” and corporations that accumulate earnings to avoid U.S. federal income tax; |
• | dealers or traders subject to a mark-to-market Class A-1 common stock; |
• | persons holding shares of Class A-1 common stock as part of a “straddle,” hedge, integrated transaction or similar transaction; |
• | persons that receive shares of Class A-1 common stock upon the exercise of employee stock options or otherwise as compensation; |
• | U.S. holders (as defined below) whose functional currency is not the U.S. dollar; |
• | partnerships or other pass-through entities for U.S. federal income tax purposes and any beneficial owners of such entities; and |
• | tax-exempt entities. |
• | an individual who is a citizen or resident of the United States; |
• | a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any state thereof or the District of Columbia; or |
• | an estate the income of which is includible in gross income for U.S. federal income tax purposes regardless of its source; or |
• | a trust, if (i) a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons (as defined in the Code) have authority to control all substantial decisions of the trust or (ii) it has a valid election in effect under Treasury regulations to be treated as a U.S. person. |
• | a non-resident alien individual (other than certain former citizens and residents of the U.S. subject to U.S. tax as expatriates); |
• | a foreign corporation or |
• | an estate or trust that is not a U.S. holder; |
• | the gain is effectively connected with the conduct of a trade or business by the Non-U.S. holder within the United States (and, to the extent provided in an applicable income tax treaty, is attributable to a permanent establishment or fixed base maintained by the Non-U.S. holder in the United States); or |
• | our Class A-1 common stock constitutes a United States real property interest by reason of our status as a United States real property holding corporation (“USRPHC Non-U.S. holder in the United States. |
Underwriters |
Number of Shares |
|||
Goldman Sachs & Co. LLC |
||||
J.P. Morgan Securities LLC |
||||
Credit Suisse Securities (USA) LLC |
||||
Deutsche Bank Securities Inc. |
||||
TPG Capital BD, LLC |
||||
Raine Securities LLC |
||||
|
|
|||
Total |
12,000,000 | |||
|
|
No Exercise |
Full Exercise |
|||||||
Per share |
$ | $ | ||||||
Total |
$ | $ |
No Exercise |
Full Exercise |
|||||||
Per Share |
$ | $ | ||||||
Total |
$ | $ |
(a) | to any legal entity which is a qualified investor as defined under the Prospectus Regulation; |
(b) | to fewer than 150 natural or legal persons (other than qualified investors as defined under the Prospectus Regulation), subject to obtaining the prior consent of the Representatives for any such offer; or |
(c) | in any other circumstances falling within Article 1(4) of the Prospectus Regulation, |
(a) | it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the Financial Services and Markets Act 2000 (as amended, the “FSMA”)) received by it in connection with the issue or sale of the shares in circumstances in which Section 21(1) of the FSMA does not apply to the company or the selling stockholders; and |
(b) | it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the shares in, from or otherwise involving the United Kingdom. |
Page |
||||
Accel Entertainment, Inc.—Audited Financial Statements |
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F-2 | ||||
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F-8 | ||||
Grand River Jackpot, LLC—Unaudited Financial Statements |
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F-43 | ||||
F-44 | ||||
F-45 | ||||
F-46 | ||||
F-47 | ||||
Grand River Jackpot, LLC—Audited Financial Statements |
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F-52 | ||||
F-53 | ||||
F-54 | ||||
F-55 | ||||
F-56 | ||||
F-57 | ||||
Accel Entertainment, Inc.—Unaudited Pro Forma Condensed Combined Financial Information |
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F-64 | ||||
F-65 | ||||
F-76 | ||||
Accel Entertainment, Inc.—Unaudited Financial Statements |
||||
F-80 | ||||
F-81 | ||||
F-82 | ||||
F-83 | ||||
F-84 |
(In thousands, except per share amounts) |
Years ended December 31, |
|||||||||||
2019 |
2018 |
2017 |
||||||||||
Revenues: |
||||||||||||
Net video gaming |
$ | $ | $ | |||||||||
Amusement |
||||||||||||
ATM fees and other revenue |
||||||||||||
|
|
|
|
|
|
|||||||
Total net revenues |
||||||||||||
|
|
|
|
|
|
|||||||
Operating expenses: |
||||||||||||
Video gaming expenses |
||||||||||||
General and administrative |
||||||||||||
Depreciation and amortization of property and equipment |
||||||||||||
Amortization of route and customer acquisition costs and location contracts acquired |
||||||||||||
Other expenses, net |
||||||||||||
|
|
|
|
|
|
|||||||
Total operating expenses |
||||||||||||
|
|
|
|
|
|
|||||||
Operating income |
||||||||||||
|
|
|
|
|
|
|||||||
Interest expense |
||||||||||||
Loss on debt extinguishment |
||||||||||||
|
|
|
|
|
|
|||||||
(Loss) income before income tax expense |
( |
) | ||||||||||
Income tax expense |
||||||||||||
|
|
|
|
|
|
|||||||
Net (loss) income |
$ | ( |
) | $ | $ | |||||||
|
|
|
|
|
|
|||||||
Net (loss) income per common share: |
||||||||||||
Basic (1) |
$ | ( |
) | $ | $ | |||||||
Diluted (1) |
( |
) | ||||||||||
Weighted average number of shares outstanding: |
||||||||||||
Basic (1) |
||||||||||||
Diluted (1) |
(1) | Per share and share amounts have been retroactively restated to give effect to the reverse recapitalization that is discussed in Note 3. |
(In thousands, except par value and share amounts) |
December 31, |
|||||||
2019 |
2018 |
|||||||
Assets |
||||||||
Current assets: |
||||||||
Cash |
$ | $ | ||||||
Prepaid expenses |
||||||||
Income taxes receivable |
||||||||
Investment in convertible notes (current) |
||||||||
Other current assets |
||||||||
|
|
|
|
|||||
Total current assets |
||||||||
|
|
|
|
|||||
Property and equipment, net |
||||||||
|
|
|
|
|||||
Other assets: |
||||||||
Route and customer acquisition costs, net |
||||||||
Location contracts acquired, net |
||||||||
Goodwill |
||||||||
Investment in convertible note, less current portion |
||||||||
Other assets |
||||||||
|
|
|
|
|||||
|
|
|
|
|||||
Total assets |
$ | $ | ||||||
|
|
|
|
|||||
Liabilities and Stockholders’ Equity |
||||||||
Current liabilities: |
||||||||
Current maturities of debt |
$ | $ | ||||||
Current maturities of capital lease |
||||||||
Current portion of route and customer acquisition costs payable |
||||||||
Accrued location gaming expense |
||||||||
Accrued state gaming expense |
||||||||
Accounts payable and other accrued expenses |
||||||||
Current portion of consideration payable |
||||||||
|
|
|
|
|||||
Total current liabilities |
||||||||
|
|
|
|
|||||
Long-term liabilities: |
||||||||
Debt, net of current maturities |
||||||||
Route and customer acquisition costs payable, less current portion |
||||||||
Consideration payable, less current portion |
||||||||
Deferred income tax liability |
||||||||
|
|
|
|
|||||
Total long-term liabilities |
||||||||
|
|
|
|
|||||
Stockholders’ equity (1) : |
||||||||
Preferred Stock, par value of $ |
||||||||
Class A-1 Common Stock, par value $ |
||||||||
Class A-2 Common Stock, par value $ |
||||||||
Treasury stock, at cost |
( |
) | ||||||
Additional paid-in capital |
||||||||
Accumulated deficit |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Total stockholders’ equity |
||||||||
|
|
|
|
|||||
Total liabilities and equity |
$ | $ | ||||||
|
|
|
|
(1) | Equity amounts have been retroactively restated to give effect to the reverse capitalization that is discussed in Note 3. |
(In thousands, except shares) |
Class A-1 Common Stock (1) |
Class A-2 Common Stock |
Additional Paid-In Capital (1) |
Treasury Stock |
Note Receivable, Stockholder |
Accumulated Deficit |
Total Stockholders’ Equity |
|||||||||||||||||||||||||||||||||
Shares |
Amount |
Shares |
Amount |
Shares |
Amount |
|||||||||||||||||||||||||||||||||||
Balance, January 1, 2017 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | $ | ( |
) | $ | |||||||||||||||||||||||||||
Repurchase of common stock |
— | — | — | — | — | ( |
) | ( |
) | — | — | ( |
) | |||||||||||||||||||||||||||
Exercise of common stock options |
— | — | — | — | — | |||||||||||||||||||||||||||||||||||
Exercise of warrants |
— | — | — | — | — | |||||||||||||||||||||||||||||||||||
Issuance of common stock pursuant to acquisition of business |
— | — | — | — | ||||||||||||||||||||||||||||||||||||
Issuance of note receivable and shares |
— | — | — | — | — | ( |
) | — | ( |
) | ||||||||||||||||||||||||||||||
Stock option compensation |
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||
Net income |
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Balance, December 31, 2017 |
$ | $ | $ | $ | $ | ( |
) | $ | ( |
) | $ | |||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Repurchase of common and preferred stock |
— | — | — | — | — | ( |
) | ( |
) | — | — | ( |
) | |||||||||||||||||||||||||||
Exercise of common stock options |
— | — | — | ( |
) | — | — | |||||||||||||||||||||||||||||||||
Receipt of stock previously issued pursuant to acquisition into treasury |
— | — | — | — | — | ( |
) | ( |
) | — | — | ( |
) | |||||||||||||||||||||||||||
Reclassification of contingent stock consideration |
— | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Settlement of note receivable issued |
— | — | — | — | — | ( |
) | ( |
) | — | — | |||||||||||||||||||||||||||||
Stock option compensation |
— | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Net income |
— | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Balance, December 31, 2018 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | $ | ( |
) | $ | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Exercise of common stock options |
— | — | — | ( |
) | — | — | |||||||||||||||||||||||||||||||||
Exercise of warrants |
— | — | — | — | — | |||||||||||||||||||||||||||||||||||
Employee stock option compensation |
— | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Contributed capital, professional service fees paid by shareholder |
— | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Effect of reverse recapitalization: |
||||||||||||||||||||||||||||||||||||||||
Shares exchanged for withholding on stock options and shares repurchased |
— | — | — | — | — | ( |
) | ( |
) | — | — | ( |
) | |||||||||||||||||||||||||||
Net equity infusion from reverse recapitalization |
— | — | ||||||||||||||||||||||||||||||||||||||
Cumulative transition adjustment for adoption of Topic 606, net of taxes |
— | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Net loss |
— | — | — | — | — | — | — | ( |
) | ( |
) | |||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Balance, December 31, 2019 |
$ | $ | $ | $ | $ | $ | ( |
) | $ | |||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) | See Note 3 for reverse recapitalization effects herein. |
ACCEL ENTERTAINMENT, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||||||||||
Year Ended 31, |
||||||||||||
(In thousands) |
2019 |
2018 |
2017 |
|||||||||
Cash flows from operating activities: |
||||||||||||
Net (loss) income |
$ | ( |
) | $ | $ | |||||||
Non-cash items included in net (loss) income: |
||||||||||||
Depreciation and amortization of property and equipment |
||||||||||||
Amortization of route and customer acquisition costs and location contracts acquired |
||||||||||||
Amortization of debt issuance costs |
||||||||||||
Contributed capital, professional service fees paid by shareholder |
||||||||||||
Stock option compensation |
||||||||||||
Loss (gain) on disposal of property and equipment |
||||||||||||
Loss on write-off of route and customer acquisition costs and route and customer acquisition costs payable |
||||||||||||
Loss on debt extinguishment |
||||||||||||
Remeasurement of contingent consideration |
||||||||||||
Accretion of interest on route and customer acquisition costs payable, contingent consideration, and contingent stock consideration |
||||||||||||
Deferred income taxes |
||||||||||||
Changes in operating assets and liabilities, net of acquisition of businesses: |
||||||||||||
Prepaid expenses and other current assets |
( |
) | ( |
) | ( |
) | ||||||
Income taxes receivable |
( |
) | ( |
) | ( |
) | ||||||
Route and customer acquisition costs |
( |
) | ( |
) | ( |
) | ||||||
Route and customer acquisition costs payable |
( |
) | ( |
) | ( |
) | ||||||
Accounts payable and accrued expenses |
( |
) | ( |
) | ||||||||
Consideration payable |
( |
) | ||||||||||
Other assets |
( |
) | ( |
) | ||||||||
|
|
|
|
|
|
|||||||
Net cash provided by operating activities |
||||||||||||
|
|
|
|
|
|
|||||||
Cash flows from investing activities: |
||||||||||||
Purchases of property and equipment |
( |
) | ( |
) | ( |
) | ||||||
Proceeds from the sale of property and equipment |
||||||||||||
Payments for location contracts acquired |
( |
) | ( |
) | ||||||||
Purchase of investment in convertible notes |
( |
) | ||||||||||
Business and asset acquisitions, net of cash acquired |
( |
) | ( |
) | ( |
) | ||||||
|
|
|
|
|
|
|||||||
Net cash used in investing activities |
( |
) | ( |
) | ( |
) | ||||||
|
|
|
|
|
|
|||||||
Cash flows from financing activities: |
||||||||||||
Proceeds from term loan |
||||||||||||
Payments on term loan |
( |
) | ( |
) | ( |
) | ||||||
Proceeds from delayed draw term loans |
||||||||||||
Payments on delayed draw term loans |
( |
) | ( |
) | ( |
) | ||||||
Net proceeds from line of credit |
( |
) | ||||||||||
Payments for debt issuance costs |
( |
) | ( |
) | ||||||||
Payments for repurchase of common shares |
( |
) | ( |
) | ||||||||
Proceeds from exercise of stock options and warrants |
||||||||||||
Payments on consideration payable |
( |
) | ( |
) | ( |
) | ||||||
Payments on capital lease obligation |
( |
) | ( |
) | ( |
) | ||||||
Net increase in outstanding checks in excess of bank balance |
||||||||||||
Proceeds from capital infusion in reverse recapitalization |
||||||||||||
Tax withholding on share-based payments |
( |
) | ||||||||||
|
|
|
|
|
|
|||||||
Net cash provided by financing activities |
||||||||||||
|
|
|
|
|
|
|||||||
Net increase in cash |
||||||||||||
Cash: |
||||||||||||
Beginning of year |
||||||||||||
|
|
|
|
|
|
|||||||
End of year |
$ | $ | $ | |||||||||
|
|
|
|
|
|
ACCEL ENTERTAINMENT, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) |
||||||||||||
(In thousands) |
2019 |
2018 |
2017 |
|||||||||
Supplemental disclosures of cash flow information: |
||||||||||||
Cash payments for: |
||||||||||||
Interest, net of amount of capitalized |
$ | $ | $ | |||||||||
Income taxes paid |
$ | $ | $ | |||||||||
Supplemental schedules of noncash investing and financing activities: |
||||||||||||
Purchases of property and equipment in accounts payable and accrued liabilities |
$ | $ | $ | |||||||||
Reclassification of contingent stock consideration from liabilities to equity |
$ | $ | $ | |||||||||
Acquisition of businesses and assets: |
||||||||||||
Total identifiable net assets acquired |
$ | $ | $ | |||||||||
Less cash acquired |
( |
) | ( |
) | ( |
) | ||||||
Less contingent consideration |
( |
) | ( |
) | ( |
) | ||||||
Less promissory note |
( |
) | ( |
) | ||||||||
Less common stock consideration |
( |
) | ||||||||||
Less contingent stock consideration |
( |
) | ||||||||||
|
|
|
|
|
|
|||||||
Cash purchase price |
$ | $ | $ | |||||||||
|
|
|
|
|
|
Note 1. |
|
Note 2. |
|
Note 2. |
Summary of Significant Accounting Policies (Continued) |
Note 2. |
Summary of Significant Accounting Policies (Continued) |
Years | ||
Video game terminals and equipment |
||
Amusement and other equipment |
||
Office equipment and furniture |
||
Computer equipment and software |
||
Leasehold improvements |
||
Vehicles |
||
Buildings and improvements |
Note 2. |
Summary of Significant Accounting Policies (Continued) |
Note 2. |
Summary of Significant Accounting Policies (Continued) |
Note 2. |
Summary of Significant Accounting Policies (Continued) |
Note 2. |
Summary of Significant Accounting Policies (Continued) |
Note 3. |
|
Note 3. |
Reverse Recapitalization (Continued) |
Amount |
||||
TPG Holdings Corp cash balance, November 19, 2019 |
$ | |||
Less redemption of Accel shares prior to reverse recapitalization |
( |
) | ||
|
|
|||
Cash balance prior to backstop equity financing |
||||
Plus funds from Investment Private Placement |
||||
|
|
|||
Cash balance prior to consummation of the reverse recapitalization |
||||
Less adjustments to equity infusion: |
||||
Payment for sponsor loan |
( |
) | ||
Transaction costs related to the reverse recapitalization, net of tax |
( |
) | ||
|
|
|||
Net equity infusion prior to stock issuance |
||||
Impact of stock issued in reverse recapitalization |
||||
|
|
|||
Net equity infusion from reverse recapitalization |
||||
Less impact from conversion of treasury stock and issuance of warrants |
( |
) | ||
|
|
|||
Net impact to additional paid-in-capital |
$ | |||
|
|
Note 3. |
Reverse Recapitalization (Continued) |
Accel Capital Stock—pre reverse recapitalization |
Number of Shares |
|||
Class A Common Stock |
||||
Class B Common Stock |
||||
Class C Preferred Stock |
||||
Class D Preferred Stock |
||||
|
|
|||
Total Shares of Accel Stock on November 20, 2019 |
||||
Exchange ratio |
||||
|
|
|||
Effect of exchange ratio to convert Accel stock to A-1 Common Stock |
||||
Shares issued in reverse recapitalization |
||||
|
|
|||
Total A-1 Common Stock |
||||
|
|
Note 4. |
Investment in Convertible Note |
Note 5. |
Property and Equipment |
2019 |
2018 |
|||||||
Video game terminals and equipment |
$ | $ | ||||||
Amusement and other equipment |
||||||||
Office equipment and furniture |
||||||||
Computer equipment and software |
||||||||
Leasehold improvements |
||||||||
Vehicles |
||||||||
Buildings and improvements |
||||||||
Land |
||||||||
Construction in progress |
||||||||
|
|
|
|
|||||
Total property and equipment |
||||||||
Less accumulated depreciation and amortization |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Property and equipment, net |
$ | $ | ||||||
|
|
|
|
Note 6. |
Route and Customer Acquisition Costs |
2019 |
2018 |
|||||||
Cost |
$ | $ | ||||||
Accumulated amortization |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Route and customer acquisition costs, net |
$ | $ | ||||||
|
|
|
|
Note 7. |
Location Contracts Acquired |
2019 |
2018 |
|||||||
Cost |
$ | $ | ||||||
Accumulated amortization |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Location contracts acquired, net |
$ | $ | ||||||
|
|
|
|
Year ending December 31: |
||||
2020 |
$ | |||
2021 |
||||
2022 |
||||
2023 |
||||
2024 |
||||
Thereafter |
||||
|
|
|||
Total |
$ | |||
|
|
Note 8. |
Goodwill |
Note 9. |
|
2019 |
2018 |
|||||||
New Credit Facility: |
||||||||
Revolving credit facility |
$ | $ | ||||||
Term Loan |
||||||||
Delayed Draw Term Loan (DDTL) |
||||||||
Prior Credit Facility: |
||||||||
Line of credit |
||||||||
Contract draw loan |
||||||||
Term loans |
||||||||
|
|
|
|
|||||
Total debt |
||||||||
Less: Debt issuance costs |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Total debt, net of debt issuance costs |
||||||||
Less: Current maturities |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Total debt, net of current maturities |
$ | $ | ||||||
|
|
|
|
• | $ |
• | $ |
• | $ |
Note 9. |
Debt (Continued) |
Note 9. |
Debt (Continued) |
Note 9. |
Debt (Continued) |
Year ending December 31: |
||||
2020 |
$ | |||
2021 |
||||
2022 |
||||
2023 |
||||
2024 |
||||
|
|
|||
Total debt |
$ | |||
|
|
2019 |
2018 |
|||||||
Carrying value |
$ | $ | ||||||
Estimated Fair value |
Note 10. |
Business and Asset Acquisitions |
Note 10. |
Business and Asset Acquisitions (Continued) |
Cash paid |
$ | |||
Contingent consideration |
||||
|
|
|||
Total consideration |
$ | |||
|
|
|||
Cash |
$ | |||
Location contracts acquired |
||||
Property and equipment: |
||||
Video game terminals and equipment |
||||
Land |
||||
Buildings |
||||
Vehicles |
||||
Goodwill |
||||
|
|
|||
Total assets acquired |
||||
Accounts payable assumed |
( |
) | ||
Accrued expenses assumed |
( |
) | ||
|
|
|||
Net assets acquired |
$ | |||
|
|
Note 10. |
Business and Asset Acquisitions (Continued) |
Quad B |
Skyhigh |
G3 |
Mike’s Amusement |
Family Amusement |
Total |
|||||||||||||||||||
Cash paid at closing |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
Contingent consideration payable |
||||||||||||||||||||||||
Promissory note |
||||||||||||||||||||||||
Due to seller |
||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total Consideration |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Cash |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
Video game terminals and equipment |
||||||||||||||||||||||||
Amusement and other equipment |
||||||||||||||||||||||||
Location contracts acquired |
||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total fair value of net assets acquired |
||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Note 10. |
Business and Asset Acquisitions (Continued) |
Note 10. |
Business and Asset Acquisitions (Continued) |
Cash paid at closing |
$ | |||
Issuance of common stock to seller |
||||
Contingent stock consideration |
||||
Due to seller |
||||
Contingent consideration |
||||
|
|
|||
Total consideration |
$ | |||
|
|
|||
Cash |
$ | |||
Video game terminals and equipment |
||||
Vehicles |
||||
Amusement and other equipment |
||||
Location contracts acquired |
||||
|
|
|||
Total assets acquired |
||||
Accrued expenses assumed |
( |
) | ||
|
|
|||
Net assets acquired |
$ | |||
|
|
Note 10. |
Business and Asset Acquisitions (Continued) |
Note 10. |
Business and Asset Acquisitions (Continued) |
2019 |
2018 |
2017 |
||||||||||
Revenues |
$ | $ | $ | |||||||||
Net (loss) income |
( |
) |
2019 |
2018 |
|||||||||||||||
Current |
Long- Term |
Current |
Long- Term |
|||||||||||||
TAV |
$ | $ | $ | $ | ||||||||||||
Abraham |
||||||||||||||||
Fair Share Gaming |
||||||||||||||||
Family Amusement |
||||||||||||||||
Skyhigh |
||||||||||||||||
G3 |
||||||||||||||||
Grand River |
||||||||||||||||
IGS |
||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
$ | $ | $ | $ | ||||||||||||
|
|
|
|
|
|
|
|
Note 11. |
|
Note 11. |
Fair Value Measurements (Continued) |
Fair Value Measurement at Reporting Date Using |
||||||||||||||||
December 31, 2019 |
Quoted Prices in Active Markets for Identical Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
|||||||||||||
Liabilities: |
||||||||||||||||
Contingent consideration |
$ | $ | $ | $ |
Note 11. |
Fair Value Measurements (Continued) |
Fair Value Measurement at Reporting Date Using |
||||||||||||||||
December 31, 2018 |
Quoted Prices in Active Markets for Identical Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
|||||||||||||
Liabilities: |
||||||||||||||||
Contingent consideration |
$ | $ | $ | $ |
2019 |
2018 |
2017 |
||||||||||
Liabilities: |
||||||||||||
Contingent consideration: |
||||||||||||
Beginning of year balance |
$ | $ | $ | |||||||||
Issuance of contingent consideration in connection with acquisitions |
||||||||||||
Payment of contingent consideration |
( |
) | ( |
) | ||||||||
Additional accruals included in earnings |
||||||||||||
|
|
|
|
|
|
|||||||
Ending balance |
$ | $ | $ | |||||||||
|
|
|
|
|
|
Note 12. |
|
Note 12. |
Stockholders’ Equity (Continued) |
• | Tranche I, equal to Class A-2 Shares, will be exchanged for Class A-1 Shares if either (i) the EBITDA for the last twelve months (“LTM EBITDA Class A-1 Shares on the New York Stock Exchange (“NYSE |
• | Tranche II, equal to Class A-2 Shares, will be exchanged for Class A-1 Shares if either (i) the LTM EBITDA of the Company (as determined pursuant to the Restricted Stock Agreement) as of December 31, 2022, March 31, 2023 or June 30, 2023 equals or exceeds $Class A-1 Shares on the NYSE equals or exceeds $ |
• | Tranche III, equal to Class A-2 Shares, will be exchanged for Class A-1 Shares if either (i) the LTM EBITDA of the Company (as determined pursuant to the Restricted Stock Agreement) as of December 31, 2023, March 31, 2024 or June 30, 2024 equals or exceeds $Class A-1 Shares on the NYSE equals or exceeds $ |
Note 12. |
Stockholders’ Equity (Continued) |
Note 12. |
Stockholders’ Equity (Continued) |
Redemption Date |
Fair Market Value of Class A-1 shares |
|||||||||||||||||||||||||||||||||||
(period to expiration of the New Accel Warrants) |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
|
2019 |
2018 |
|||||||
Class A-1 Common Stock warrants issued and outstanding |
||||||||
Class A-1 Common Stock options issued and outstanding |
||||||||
Conversion of Class A-2 Common Stock |
||||||||
|
|
|
|
|||||
Class A-1 Common Stock reserved for issuance |
||||||||
|
|
|
|
Note 13. |
|
Note 14. |
|
Note 15. |
|
Note 15. |
Stock-based Compensation (Continued) |
2019* |
2018 |
2017 | ||||
Expected approximate volatility |
||||||
Expected dividends |
||||||
Expected term (in years) |
None | |||||
Risk-free rate |
||||||
Stock price |
$ |
$ |
* | there were |
2019 |
2018 |
2017 |
||||||||||
Options granted |
||||||||||||
Vesting period (in years) |
— |
Outstanding options |
Shares |
Weighted Average Grant Date Fair Value |
Weighted Average Exercise Price |
|||||||||
Outstanding at January 1, 2017 |
$ | $ | ||||||||||
Granted |
||||||||||||
Exercised |
( |
) | ||||||||||
Forfeited/expired |
( |
) | ||||||||||
|
|
|||||||||||
Outstanding at December 31, 2017 |
||||||||||||
Granted |
||||||||||||
Exercised |
( |
) | ||||||||||
Forfeited/expired |
( |
) | ||||||||||
|
|
|||||||||||
Outstanding at December 31, 2018 |
||||||||||||
Granted |
||||||||||||
Exercised |
( |
) | ||||||||||
Forfeited/expired |
( |
) | ||||||||||
|
|
|||||||||||
Outstanding at December 31, 2019 |
||||||||||||
|
|
Note 15. |
Stock-based Compensation (Continued) |
Nonvested options |
Shares |
Weighted Average Grant Date Fair Value |
||||||
Nonvested at January 1, 2017 |
$ | |||||||
Granted |
||||||||
Vested |
( |
) | ||||||
Forfeited |
( |
) | ||||||
|
|
|||||||
Nonvested at December 31, 2017 |
||||||||
Granted |
||||||||
Vested |
( |
) | ||||||
Forfeited |
( |
) | ||||||
|
|
|||||||
Nonvested at December 31, 2018 |
||||||||
Granted |
||||||||
Vested |
( |
) | ||||||
Forfeited |
( |
) | ||||||
|
|
|||||||
Nonvested at December 31, 2019 |
||||||||
|
|
Note 16. |
|
Note 16. |
Income Taxes (Continued) |
2019 |
2018 |
2017 |
||||||||||
Current provision |
||||||||||||
Federal |
$ | ( |
) | $ | ( |
) | $ | |||||
State |
||||||||||||
|
|
|
|
|
|
|||||||
Total current provision |
( |
) | ||||||||||
|
|
|
|
|
|
|||||||
Deferred provision |
||||||||||||
Federal |
||||||||||||
State |
||||||||||||
|
|
|
|
|
|
|||||||
Total deferred provision |
||||||||||||
|
|
|
|
|
|
|||||||
Total income tax expense |
$ | $ | $ | |||||||||
|
|
|
|
|
|
2019 |
2018 |
2017 |
||||||||||
Computed “expected” tax (benefit) expense |
$ | ( |
) | $ | $ | |||||||
Increase (decrease) in income taxes resulting from: |
||||||||||||
State income taxes |
||||||||||||
Return-to-provision |
||||||||||||
Permanent items |
( |
) | ||||||||||
Enacted rate change |
( |
) | ||||||||||
Other |
( |
) | ( |
) | ||||||||
|
|
|
|
|
|
|||||||
Total income tax expense |
$ | $ | $ | |||||||||
|
|
|
|
|
|
Note 16. |
Income Taxes (Continued) |
2019 |
2018 |
|||||||
Deferred tax assets: |
||||||||
Net operating loss carryforwards |
$ | $ | ||||||
Location contracts acquired |
||||||||
Other |
||||||||
|
|
|
|
|||||
|
|
|
|
|||||
Deferred tax liabilities: |
||||||||
Property and equipment |
||||||||
|
|
|
|
|||||
$ | ( |
) | $ | ( |
) | |||
|
|
|
|
2019 |
2018 |
|||||||||||||||
Amount |
Expiration |
Amount |
Expiration |
|||||||||||||
Federal net operating losses |
$ | 2033 - 2039 |
$ | 2031 - 2038 | ||||||||||||
State net operating losses |
2024 - 2031 | 2023 - 2030 |
Note 17. |
|
Note 17. |
Commitments and Contingencies (Continued) |
Years ending December 31: |
||||
2020 |
$ | |||
2021 |
||||
2022 |
||||
2023 |
||||
2024 |
||||
|
|
|||
Total |
$ | |||
|
|
Note 17. |
Commitments and Contingencies (Continued) |
Note 17. |
Commitments and Contingencies (Continued) |
Note 18. |
|
Note 18. |
Related-Party Transactions (Continued) |
Note 19. |
|
2019 |
2018 |
2017 |
||||||||||
Net (loss) income |
$ | ( |
) | $ | $ | |||||||
|
|
|
|
|
|
|||||||
Basic weighted average outstanding shares of common stock |
||||||||||||
Dilutive effect of stock-based awards for common stock |
||||||||||||
Dilutive effect of stockholder notes receivable for common stock |
||||||||||||
Dilutive effect of warrants for common stock |
||||||||||||
|
|
|
|
|
|
|||||||
Diluted weighted average outstanding shares of common stock |
||||||||||||
|
|
|
|
|
|
|||||||
Earnings (loss) per share: |
||||||||||||
Basic |
$ | ( |
) | $ | $ | |||||||
Diluted |
$ | ( |
) | $ | $ |
Note 20. |
|
(Unaudited) June 30, 2019 |
December 31, 2018 |
|||||||
Assets |
||||||||
Current assets: |
||||||||
Cash |
$ | 10,634,920 | $ | 9,830,118 | ||||
Receivables |
79,693 | 185,843 | ||||||
Inventories |
326,961 | 271,928 | ||||||
Prepaid expenses and other assets |
380,837 | 458,989 | ||||||
|
|
|
|
|||||
Total current assets |
11,422,411 | 10,746,878 | ||||||
|
|
|
|
|||||
Property and equipment: |
||||||||
Land and land improvements |
74,737 | 86,237 | ||||||
Building and building improvements |
901,774 | 1,005,274 | ||||||
Furniture and equipment |
45,754,866 | 42,994,883 | ||||||
Vehicles |
1,583,539 | 1,458,235 | ||||||
|
|
|
|
|||||
48,314,916 | 45,544,629 | |||||||
Less accumulated depreciation |
37,671,249 | 35,498,475 | ||||||
|
|
|
|
|||||
Net property and equipment |
10,643,667 | 10,046,154 | ||||||
|
|
|
|
|||||
Intangible contract rights and noncompete agreements, net of accumulated amortization |
2,612,417 | 3,245,037 | ||||||
|
|
|
|
|||||
$ | 24,678,495 | $ | 24,038,069 | |||||
|
|
|
|
|||||
Liabilities and Members’ (Deficit) |
||||||||
Current liabilities: |
||||||||
Current maturities of long-term debt |
$ | 548,480 | $ | 1,500,000 | ||||
Current maturities of long-term debt for intangible contract rights |
46,168 | 112,822 | ||||||
Accounts payable |
1,964,097 | 1,152,674 | ||||||
Related party accounts payable |
608,961 | 509,313 | ||||||
Accrued expenses |
2,970,166 | 2,537,855 | ||||||
|
|
|
|
|||||
Total current liabilities |
6,137,872 | 5,812,664 | ||||||
|
|
|
|
|||||
Long-term debt, less current maturities, net |
48,603,418 | 48,042,818 | ||||||
Long-term debt for intangible contract rights, less current maturities |
108,825 | 108,825 | ||||||
Other long-term related party payable |
4,980,362 | 4,594,768 | ||||||
|
|
|
|
|||||
53,692,605 | 52,746,411 | |||||||
|
|
|
|
|||||
Commitments and contingencies (Note 6) |
||||||||
Members’ (deficit) |
(35,151,982 | ) | (34,521,006 | ) | ||||
|
|
|
|
|||||
$ | 24,678,495 | $ | 24,038,069 | |||||
|
|
|
|
2019 |
2018 |
|||||||
Net revenue: |
||||||||
Gaming—video gaming terminals |
$ | 29,458,013 | $ | 27,898,382 | ||||
Amusement |
357,809 | 348,476 | ||||||
ATM fee income |
436,637 | 382,971 | ||||||
|
|
|
|
|||||
30,252,459 | 28,629,829 | |||||||
|
|
|
|
|||||
Expenses: |
||||||||
Salaries and wages |
2,235,919 | 2,019,813 | ||||||
Payroll taxes |
183,400 | 163,612 | ||||||
Employee benefits |
218,082 | 253,429 | ||||||
|
|
|
|
|||||
Personnel costs |
2,637,401 | 2,436,854 | ||||||
|
|
|
|
|||||
Earnout commissions |
725,973 | 909,063 | ||||||
Gaming taxes |
8,837,492 | 8,369,603 | ||||||
Video gaming terminal fees |
10,482,079 | 9,909,649 | ||||||
Amusement |
33,322 | 26,121 | ||||||
Supplies |
115,667 | 110,152 | ||||||
Advertising |
171,882 | 108,821 | ||||||
Contractual services |
201,382 | 224,372 | ||||||
Taxes and license fees |
64,037 | 65,953 | ||||||
Auto fuel and licenses |
116,468 | 121,122 | ||||||
Travel |
47,465 | 35,158 | ||||||
Repairs and maintenance |
413,928 | 300,787 | ||||||
Rent |
10,818 | 6,818 | ||||||
Insurance |
156,234 | 134,421 | ||||||
Utilities and telephone |
324,916 | 317,115 | ||||||
Legal and professional fees |
293,895 | 179,135 | ||||||
Related party management service fee |
99,648 | 99,648 | ||||||
Amortization of intangible assets |
916,566 | 1,246,615 | ||||||
Depreciation |
2,297,421 | 3,664,724 | ||||||
Gain on sale of property and equipment |
(62,335 | ) | (731 | ) | ||||
Other |
52,236 | 52,468 | ||||||
|
|
|
|
|||||
Other operating expenses |
25,299,094 | 25,881,014 | ||||||
|
|
|
|
|||||
Operating income |
2,315,964 | 311,961 | ||||||
|
|
|
|
|||||
Other (expense): |
||||||||
Amortization of debt issuance costs |
(60,600 | ) | (60,600 | ) | ||||
Interest |
(2,886,340 | ) | (2,777,516 | ) | ||||
|
|
|
|
|||||
(2,946,940 | ) | (2,838,116 | ) | |||||
|
|
|
|
|||||
Net (loss) |
$ | (630,976 | ) | $ | (2,526,155 | ) | ||
|
|
|
|
Balance, December 31, 2017 |
$ | (30,128,790 | ) | |
Net (loss) |
(2,526,155 | ) | ||
|
|
|||
Balance, June 30, 2018 |
$ | (32,654,945 | ) | |
|
|
|||
Balance, December 31, 2018 |
$ | (34,521,006 | ) | |
Net (loss) |
(630,976 | ) | ||
|
|
|||
Balance, June 30, 2019 |
$ | (35,151,982 | ) | |
|
|
2019 |
2018 |
|||||||
Cash flows from operating activities: |
||||||||
Net loss |
$ | (630,976 | ) | $ | (2,526,155 | ) | ||
Adjustments to reconcile net loss to net cash provided by operating activities: |
||||||||
Depreciation |
2,297,421 | 3,664,724 | ||||||
Amortization |
977,166 | 1,307,215 | ||||||
(Gain) on sale of property and equipment |
(62,335 | ) | (731 | ) | ||||
Changes in working capital components: |
||||||||
Receivables |
106,150 | 15,056 | ||||||
Inventories and prepaid expenses |
23,119 | 124,077 | ||||||
Accounts and related party payables and accrued expenses |
583,932 | (82,665 | ) | |||||
Long-term payable for related party earnout |
385,594 | 563,852 | ||||||
|
|
|
|
|||||
Net cash provided by operating activities |
3,680,071 | 3,065,373 | ||||||
|
|
|
|
|||||
Cash flows from investing activities: |
||||||||
Purchase of property and equipment |
(2,107,792 | ) | (1,279,273 | ) | ||||
Proceeds from sales of property and equipment |
34,643 | 21,409 | ||||||
Purchase of intangible contract rights |
(283,946 | ) | (203,613 | ) | ||||
|
|
|
|
|||||
Net cash used in investing activities |
(2,357,095 | ) | (1,461,477 | ) | ||||
|
|
|
|
|||||
Cash flows from financing activities: |
||||||||
Proceeds from borrowings on long-term debt |
500,000 | 500,000 | ||||||
Principal payments on long-term debt |
(1,018,174 | ) | (1,326,070 | ) | ||||
|
|
|
|
|||||
Net cash used in financing activities |
(518,174 | ) | (826,070 | ) | ||||
|
|
|
|
|||||
Net increase in cash |
804,802 | 777,826 | ||||||
Cash: |
||||||||
Beginning |
9,830,118 | 9,372,403 | ||||||
|
|
|
|
|||||
Ending |
$ | 10,634,920 | $ | 10,150,229 | ||||
|
|
|
|
|||||
Supplemental disclosure of cash flow information, cash paid for interest |
$ | 2,951,033 | $ | 2,777,216 | ||||
|
|
|
|
|||||
Supplemental disclosure of noncash investing and financing activities, accounts payable incurred for purchases of property and equipment |
$ | 1,425,586 | $ | 3,945 | ||||
|
|
|
|
Note 1. |
Nature of Business and Significant Accounting Policies |
Note 1. |
Nature of Business and Significant Accounting Policies (Continued) |
Note 1. |
Nature of Business and Significant Accounting Policies (Continued) |
Note 2. |
Intangibles |
June 30, 2019 |
December 31, 2018 |
|||||||
Contract rights and noncompete agreements |
$ | 18,824,564 | $ | 18,540,618 | ||||
Less accumulated amortization |
(16,212,147 | ) | (15,295,581 | ) | ||||
|
|
|
|
|||||
Balance |
$ | 2,612,417 | $ | 3,245,037 | ||||
|
|
|
|
Six months ending December 31, 2019 |
$ | 965,655 | ||
Years ending December 31: |
||||
2020 |
855,784 | |||
2021 |
253,301 | |||
2022 |
118,564 | |||
2023 |
104,330 | |||
Thereafter |
314,783 | |||
|
|
|||
$ | 2,612,417 | |||
|
|
Note 3. |
Long-Term Borrowings and Pledged Assets |
June 30, 2019 |
December 31, 2018 |
|||||||
Related party financing agreement (A) |
$ | 49,434,700 | $ | 49,886,220 | ||||
Less deferred financing fees |
(282,802 | ) | (343,402 | ) | ||||
Less current maturities |
(548,480 | ) | (1,500,000 | ) | ||||
|
|
|
|
|||||
$ | 48,603,418 | $ | 48,042,818 | |||||
|
|
|
|
(A) | The Company entered into a loan and security agreement with Fund Co. on October 31, 2016 under which they received proceeds of approximately $53,680,000. The principal and interest payments due on this agreement total $7,500,000 per year provided that such amount will be increased so that the minimum principal paid is not less than $1,500,000. Interest on the outstanding balance is variable and is at one-month LIBOR plus an applicable margin based on the current rates being charged on the Senior Debt. The actual rates as of June 30, 2019 and December 31, 2018 were 11.15% and 11.27%, respectively. Total interest paid on related party debt was approximately $2,798,000 and $2,700,000 for the six months ended of June 30, 2019 and June 30, 2018, respectively. The remaining outstanding balance plus any accrued interest is due on October 31, 2021. |
Six months ending December 31, 2019 |
$ | 548,480 | ||
Years ending December 31: |
||||
2020 |
1,500,000 | |||
2021 |
47,386,220 | |||
|
|
|||
$ | 49,434,700 | |||
|
|
Note 4. |
State Gaming Taxes and Video Gaming Terminal Fees |
Note 5. |
Employee Benefits |
Note 6. |
Contingencies |
Note 7. |
Subsequent Events |
Assets |
||||
Current assets: |
||||
Cash |
$ | 9,830,118 | ||
Receivables |
185,843 | |||
Inventories |
271,928 | |||
Prepaid expenses and other assets |
458,989 | |||
|
|
|||
Total current assets |
10,746,878 | |||
|
|
|||
Property and equipment: |
||||
Land and land improvements |
86,237 | |||
Building and building improvements |
1,005,274 | |||
Furniture and equipment |
42,994,883 | |||
Vehicles |
1,458,235 | |||
|
|
|||
45,544,629 | ||||
Less accumulated depreciation |
35,498,475 | |||
|
|
|||
Net property and equipment |
10,046,154 | |||
|
|
|||
Intangible contract rights and noncompete agreements, net of accumulated amortization |
3,245,037 | |||
|
|
|||
$ | 24,038,069 | |||
|
|
Liabilities and Members’ Deficit |
||||
Current liabilities: |
||||
Current maturities of long-term debt |
$ | 1,500,000 | ||
Current maturities of long-term debt for intangible contract rights |
112,822 | |||
Accounts payable |
1,152,674 | |||
Related party accounts payable |
509,313 | |||
Accrued expenses |
2,537,855 | |||
|
|
|||
Total current liabilities |
5,812,664 | |||
|
|
|||
Long-term debt, less current maturities |
48,042,818 | |||
Long-term debt for intangible contract rights, less current maturities |
108,825 | |||
Other long-term related party payable |
4,594,768 | |||
|
|
|||
52,746,411 | ||||
|
|
|||
Commitments and contingencies (Note 6) |
||||
Members’ deficit |
(34,521,006 | ) | ||
|
|
|||
$ | 24,038,069 | |||
|
|
Net revenue: |
||||
Gaming—video gaming terminals |
$ | 54,754,771 | ||
Amusement |
665,139 | |||
ATM fee income |
769,753 | |||
|
|
|||
56,189,663 | ||||
|
|
|||
Expenses: |
||||
Salaries and wages |
4,205,769 | |||
Payroll taxes |
327,267 | |||
Employee benefits |
451,764 | |||
|
|
|||
Personnel costs |
4,984,800 | |||
|
|
|||
Earnout commissions |
1,762,901 | |||
Gaming taxes |
16,426,612 | |||
Video gaming terminal fees |
19,478,481 | |||
Amusement |
46,630 | |||
Supplies |
211,498 | |||
Advertising |
247,317 | |||
Contractual services |
439,867 | |||
Taxes and license fees |
100,869 | |||
Auto fuel and licenses |
254,180 | |||
Travel |
70,922 | |||
Repairs and maintenance |
713,075 | |||
Rent |
15,636 | |||
Insurance |
269,791 | |||
Utilities and telephone |
636,284 | |||
Legal and professional fees |
559,367 | |||
Related party management service fee |
199,296 | |||
Amortization of intangible assets |
2,102,017 | |||
Depreciation |
6,354,531 | |||
Gain on sale of property and equipment |
(63,478 | ) | ||
Other |
102,794 | |||
|
|
|||
Other operating expenses |
49,928,590 | |||
|
|
|||
Operating income |
1,276,273 | |||
|
|
|||
Other (expense): |
||||
Amortization of debt issuance costs |
(121,200 | ) | ||
Interest |
(5,547,289 | ) | ||
|
|
|||
(5,668,489 | ) | |||
|
|
|||
Net loss |
$ | (4,392,216 | ) | |
|
|
Balance, December 31, 2017 |
$ | (30,128,790 | ) | |
Net loss |
(4,392,216 | ) | ||
|
|
|||
Balance, December 31, 2018 |
$ | (34,521,006 | ) | |
|
|
Cash flows from operating activities: |
||||
Net loss |
$ | (4,392,216 | ) | |
Adjustments to reconcile net loss to net cash provided by operating activities: |
||||
Depreciation |
6,354,531 | |||
Amortization |
2,223,217 | |||
Gain on sale of property and equipment |
(63,478 | ) | ||
Changes in working capital components: |
||||
Receivables |
(110,342 | ) | ||
Inventories and prepaid expenses |
9,584 | |||
Accounts and related party payables and accrued expenses |
562,374 | |||
Long-term payable for related party earnout |
1,083,803 | |||
|
|
|||
Net cash provided by operating activities |
5,667,473 | |||
|
|
|||
Cash flows from investing activities: |
||||
Purchase of property and equipment |
(2,647,926 | ) | ||
Proceeds from sales of property and equipment |
95,286 | |||
Purchase of intangible contract rights |
(672,980 | ) | ||
|
|
|||
Net cash used in investing activities |
(3,225,620 | ) | ||
|
|
|||
Cash flows from financing activities: |
||||
Proceeds from borrowings on long-term debt |
500,000 | |||
Principal payments on long-term debt |
(2,484,138 | ) | ||
|
|
|||
Net cash used in financing activities |
(1,984,138 | ) | ||
|
|
|||
Net increase in cash |
457,715 | |||
Cash: |
||||
Beginning |
9,372,403 | |||
|
|
|||
Ending |
$ | 9,830,118 | ||
|
|
|||
Supplemental disclosure of cash flow information, cash paid for interest |
$ | 5,620,410 | ||
|
|
|||
Supplemental disclosures of noncash investing and financing activities: |
||||
Accounts payable incurred for purchases of property and equipment |
$ | 666,136 | ||
|
|
|||
Writeoff of intangible asset and related debt |
$ | 392,000 | ||
|
|
Note 1. |
Nature of Business and Significant Accounting Policies |
Note 1. |
Nature of Business and Significant Accounting Policies (Continued) |
Note 1. |
Nature of Business and Significant Accounting Policies (Continued) |
Note 2. |
Intangibles |
Contract Rights and Noncompete Agreements |
||||
Balance, December 31, 2017 |
$ | 5,066,074 | ||
Additions |
672,980 | |||
Write-off |
(392,000 | ) | ||
Amortization |
(2,102,017 | ) | ||
|
|
|||
Balance, December 31, 2018 |
$ | 3,245,037 | ||
|
|
Years ending December 31: |
||||
2019 |
$ | 1,713,860 | ||
2020 |
793,498 | |||
2021 |
235,535 | |||
2022 |
100,797 | |||
2023 |
86,563 | |||
Thereafter |
314,784 | |||
|
|
|||
$ | 3,245,037 | |||
|
|
Note 3. |
Long-Term Borrowings and Pledged Assets |
Related party financing agreement (A) |
$ | 49,886,220 | ||
Less deferred financing fees |
343,402 | |||
Less current maturities |
1,500,000 | |||
|
|
|||
$ | 48,042,818 | |||
|
|
(A) | The Company entered into a loan and security agreement with Fund Co. on October 31, 2016 under which they received proceeds of approximately $53,680,000. The principal and interest payments due on this |
Note 3. |
Long-Term Borrowings and Pledged Assets (Continued) |
agreement total $7,500,000 per year provided that such amount will be increased so that the minimum principal paid is not less than $1,500,000. Interest on the outstanding balance is variable and is at one-month LIBOR plus an applicable margin based on the current rates being charged on the Senior Debt. The actual rates as of December 31, 2018 were 11.27%. Total interest paid on related party debt was approximately $5,460,000 for the year ended December 31, 2018. The remaining outstanding balance plus any accrued interest is due on October 31, 2021. |
Years ending December 31: |
||||
2019 |
$ | 1,500,000 | ||
2020 |
1,500,000 | |||
2021 |
46,886,220 | |||
|
|
|||
$ | 49,886,220 | |||
|
|
Location contracts and noncompete agreement (1) |
$ | 17,750 | ||
Location contracts (2) |
8,750 | |||
Location contracts (3) |
59,450 | |||
Location contracts (4) |
28,186 | |||
Location contracts (5) |
4,870 | |||
Location contracts (6) |
102,641 | |||
|
|
|||
221,647 | ||||
Less current maturities |
112,822 | |||
|
|
|||
$ | 108,825 | |||
|
|
(1) | Location contracts and noncompete : The Company entered into an agreement in the amount of $698,000 for the purchase of 18 VGT location contracts ($26,000 to $51,000 per contract). As part of the agreement they paid $25,000 upon closing. The remaining balance is being incurred at the designated rate per location contract included in the agreement as each location is activated and payments are being made in quarterly installments equal to 1/20th of the contract price. There were eight locations activated under this contract as of December 31, 2018. There is also an option to purchase up to five additional location contracts at prices ranging from $26,000 to $36,000 per contract. There was also a separate noncompete agreement included in this purchase whereby the Company must pay consideration of $20,000 per year in 20 equal quarterly installments. The balances owed on location contracts and the noncompete agreement was $17,750 as of December 31, 2018. |
(2) | Location contracts : The Company entered into an agreement in the amount of $1,080,000 for the purchase of 24 VGT location contracts ($40,000 or $45,000 per contract). As part of the agreement they paid $50,000 upon closing. The remaining balance is being incurred at the designated rate per location contract included in the agreement as each location is activated and payments are being made in either 12 or 20 equal quarterly installments of principal and interest at a rate of 8%. There were six locations activated under this agreement as of December 31, 2018. |
Note 3. |
Long-Term Borrowings and Pledged Assets (Continued) |
(3) | Location contracts : The Company entered into an agreement to purchase VGT location contracts from an individual at a price of $30,000 each. In order to qualify as a legitimate contract, the contract term must be at least three years. The Company is required to pay $1,000 per executed contract when delivered and then pay the remaining $29,000 per contract in 20 equal quarterly installments of $1,450. There were eight active locations under this agreement as of December 31, 2018. |
(4) | Location contracts : The Company entered into an agreement in the amount of $1,325,000 for the purchase of up to 50 VGT location contracts ($25,000 or $30,000 per contract). As part of the agreement they paid $120,000 upon closing. The remaining balance is being incurred at the designated rate per location contract included in the agreement as each location is activated and payments are made in 60 equal quarterly installments. There were ten locations activated under this agreement as of December 31, 2018. There is also an option for the seller to provide up to 50 additional location contracts at a price of $25,000 per contract if all locations are delivered within the time frame noted in the agreement. |
(5) | Location contracts : The Company entered into an agreement in the amount of $200,000 for the purchase of up to four VGT location contracts ($50,000 per contract). As part of the agreement they paid $5,000 upon closing. The remaining balance is being incurred at the designated rate per location contract as each location is activated and payments are made in 20 equal quarterly installments of $2,438. There was one location activated under this agreement as of December 31, 2018. There is also an option for the seller to provide up to five additional location contracts at a price of $30,000 per contract if all locations are delivered within the time frame noted in the agreement. |
(6) | Location contracts : The Company entered into an amended purchase agreement in May 2013 in the amount of $200,000 for the purchase of nine VGT location contracts. The agreement requires monthly payments of $2,209 including principal and interest at a rate of 6% and matures in May 2023. There were six locations activated under this agreement as of December 31, 2018. There is also an option for the seller to deliver additional contracts at a price of $25,000 per contract. |
Years ending December 31: |
||||
2019 |
$ | 112,822 | ||
2020 |
47,871 | |||
2021 |
25,034 | |||
2022 |
25,038 | |||
2023 |
10,882 | |||
|
|
|||
$ | 221,647 | |||
|
|
Note 4. |
State Gaming Taxes and Video Gaming Terminal Fees |
Note 4. |
State Gaming Taxes and Video Gaming Terminal Fees (Continued) |
Note 5. |
Employee Benefits |
Note 6. |
Contingencies |
Note 7. |
Subsequent Events |
Historical Accel Entertainment, Inc. |
Pro Forma Adjustments |
Pro Forma |
||||||||||||
Revenues: |
||||||||||||||
Net video gaming |
$ | 410,636 | $ | 40,980 | (3a) |
$ | 451,616 | |||||||
Amusement |
5,912 | 481 | (3a) |
6,393 | ||||||||||
ATM fees and other revenue |
7,837 | 601 | (3a) |
8,438 | ||||||||||
|
|
|
|
|
|
|||||||||
Total net revenues |
424,385 | 42,062 | 466,447 | |||||||||||
|
|
|
|
|
|
|||||||||
Operating expenses: |
||||||||||||||
Video gaming expenses |
271,999 | 27,870 | (3a) |
299,869 | ||||||||||
General and administrative |
75,028 | 7,056 | (3a) |
82,084 | ||||||||||
Depreciation and amortization of property and equipment |
26,398 | 3,244 | (3a) |
28,333 | ||||||||||
(1,309 | ) | (3b) |
||||||||||||
Amortization of route and customer acquisition costs and location contracts acquired |
17,975 | 1,253 | (3a) |
21,773 | ||||||||||
2,545 | (3c) |
|||||||||||||
Other expenses, net |
19,649 | (115 | ) | (3a) |
9,444 | |||||||||
462 | (3d) |
|||||||||||||
(10,552 | ) | (3e) |
||||||||||||
|
|
|
|
|
|
|||||||||
Total operating expenses |
411,049 |
30,454 |
441,503 |
|||||||||||
|
|
|
|
|
|
|||||||||
Operating income |
13,336 |
11,608 |
24,944 |
|||||||||||
Interest expense |
12,860 |
4,427 | (3a) |
17,965 |
||||||||||
(4,427 | ) | (3f) |
||||||||||||
5,105 | (3g) |
|||||||||||||
Loss on debt extinguishment |
1,141 |
— | 1,141 | |||||||||||
|
|
|
|
|
|
|||||||||
Loss before income tax expense |
(665 |
) |
6,503 |
5,838 |
||||||||||
Income tax expense |
5,199 | 1,985 | (3h) |
7,184 | ||||||||||
|
|
|
|
|
|
|||||||||
Net loss |
$ |
(5,864 |
) |
$ |
4,518 |
$ |
(1,346 |
) | ||||||
|
|
|
|
|
|
|||||||||
Net loss per common share—basic and diluted |
($ | 0.09 | ) | $ | (0.02 | ) | ||||||||
Weighted average number of shares outstanding—basic and diluted |
61,850 | 14,787 | (3i) |
76,637 |
Assuming No Additional Redemptions |
Assuming Maximum Redemptions |
|||||||||||||||||||||||||||
Accel (Historical) |
Pace (Historical) |
Grand River (Note 2) |
Pro Forma Adjustments |
Pro Forma |
Redemption Adjustments |
Pro Forma |
||||||||||||||||||||||
Revenues: |
||||||||||||||||||||||||||||
Net video gaming |
$ | 195,168,399 | $ | — | $ | 29,458,013 | $ | — | $ | 224,626,412 | $ | — | $ | 224,626,412 | ||||||||||||||
Amusement |
2,785,981 | — | 357,809 | — | 3,143,790 | — | 3,143,790 | |||||||||||||||||||||
ATM fees and other revenue |
3,737,275 | — | 436,637 | — | 4,173,912 | — | 4,173,912 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total net revenues |
201,691,655 | — | 30,252,459 | — | 231,944,114 | — | 231,944,114 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Operating expenses: |
||||||||||||||||||||||||||||
Video gaming expenses |
127,703,073 | — | 20,045,544 | — | 147,748,617 | — | 147,748,617 | |||||||||||||||||||||
General and administrative |
33,600,191 | — | 4,687,063 | — | 38,287,254 | — | 38,287,254 | |||||||||||||||||||||
Depreciation and amortization of property and equipment |
12,141,013 | — | 2,297,421 | (818,164 | )(4aa) | 13,620,270 | — | 13,620,270 | ||||||||||||||||||||
Amortization of route and customer acquisition costs and location contracts acquired |
8,926,713 | — | 916,566 | 1,287,601 | (4bb) | 11,130,880 | — | 11,130,880 | ||||||||||||||||||||
Professional fees, formation costs and other expenses |
— | 4,575,958 | — | — | 4,575,958 | — | 4,575,958 | |||||||||||||||||||||
Other operating expenses |
1,345,716 | — | (10,099 | ) | — | 1,335,617 | — | 1,335,617 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total operating expenses |
183,716,706 |
4,575,958 |
27,936,495 |
469,437 |
216,698,596 |
— |
216,698,596 |
|||||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Operating income (loss) |
17,974,949 |
(4,575,958 |
) |
2,315,964 |
(469,437 |
) |
15,245,518 |
— |
15,245,518 |
|||||||||||||||||||
Interest expense (income) |
6,202,560 | (5,105,671 | ) | 2,946,940 | 5,105,671 | (4cc) | 8,289,789 | 628,658 | (4gg) | 8,918,447 | ||||||||||||||||||
(859,711 | )(4dd) | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Income (loss) before income tax expense |
11,772,389 |
529,713 |
(630,976 |
) |
(5,575,108 |
) |
6,955,729 |
(628,658 |
) |
6,327,072 |
||||||||||||||||||
Income tax expense |
3,449,599 | — | — | (72,211 | )(4ee) | 3,377,388 | 188,597 | (4hh) | 3,565,986 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Net income (loss) |
$ |
8,322,790 |
$ |
529,713 |
$ |
(630,976 |
) |
$ |
(5,502,897 |
) |
$ |
3,578,341 |
$ |
(817,255 |
) |
$ |
2,761,086 |
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Net income per share of stock — basic |
$ | 2.47 | $ | 0.01 | $ | 0.04 | $ | 0.04 | ||||||||||||||||||||
Net income per share of stock — diluted |
$ | 2.32 | $ | 0.01 | $ | 0.04 | $ | 0.04 | ||||||||||||||||||||
Weighted average shares of stock outstanding — basic |
3,368,298 | 56,250,000 | 24,217,044 | (4ff) | 83,835,342 | 13,217,044 | (4ff) | 72,835,342 | ||||||||||||||||||||
Weighted average shares of stock outstanding — diluted |
3,592,061 | 56,250,000 | 23,993,281 | (4ff) | 83,835,342 | 12,993,281 | (4ff) | 72,835,342 |
• | the Stock Purchase, including the Business Combination Private Placement; |
• | the Merger; |
• | the Pace Domestication; |
• | the Sponsor Transactions; |
• | the distribution by Pace Sponsor to Pace Sponsor Members of all of Pace Sponsor’s Class A-1 Shares, Class A-2 Shares and remaining Private Placement Warrants; |
• | the Director Class F Share Exchange; and |
• | the Investment Private Placement. |
Pro Forma Assuming No Additional Redemptions |
Pro Forma Assuming Maximum Redemptions |
|||||||
Shares transferred at closing |
29,385,934 | 29,385,934 | ||||||
Value per share (1) |
$ | 10.25 | $ | 10.25 | ||||
|
|
|
|
|||||
Total share consideration |
$ | 301,222,294 | $ | 301,222,294 | ||||
Plus: Cash consideration (2) |
350,000,000 | 350,000,000 | ||||||
|
|
|
|
|||||
Total consideration at closing |
$ | 651,222,294 | $ | 651,222,294 | ||||
|
|
|
|
(1) | For illustrative purposes, based on the balance of the Trust Account of approximately $427,988,915 as of June 30, 2019 after September 20, 2019 redemptions, the estimated per share redemption price would have been approximately $10.25. |
(2) | The voting and economic interest of Pace shareholders set forth in this proxy statement/prospectus assume the Sellers make aggregate Cash Elections of $350,000,000. |
Grand River |
Presentation Adjustments |
Grand River (as adjusted) |
||||||||||
Current assets: |
||||||||||||
Cash |
$ | 10,634,920 | $ | — | $ | 10,634,920 | ||||||
Receivables |
79,693 | (79,693 | )(2a) | — | ||||||||
Inventories |
326,961 | (326,961 | )(2a) | — | ||||||||
Prepaid expenses |
— | 380,837 | (2b) | 380,837 | ||||||||
Prepaid expenses and other assets |
380,837 | (380,837 | )(2b) | — | ||||||||
Other current assets |
— | 406,654 | (2a) | 406,654 | ||||||||
|
|
|
|
|
|
|||||||
Total current assets |
11,422,411 | — | 11,422,411 | |||||||||
|
|
|
|
|
|
|||||||
Property and equipment: |
||||||||||||
Land and land improvements |
74,737 | (74,737 | )(2c) | — | ||||||||
Building and building improvements |
901,774 | (901,774 | )(2c) | — | ||||||||
Furniture and equipment |
45,754,866 | (45,754,866 | )(2c) | — | ||||||||
Vehicles |
1,583,539 | (1,583,539 | )(2c) | — | ||||||||
|
|
|
|
|
|
|||||||
48,314,916 | (48,314,916 | ) | — | |||||||||
Less accumulated depreciation |
(37,671,249 | ) | 37,671,249 | (2c) | — | |||||||
|
|
|
|
|
|
|||||||
Net property and equipment |
10,643,667 | (10,643,667 | ) | — | ||||||||
Property and equipment, net |
— | 10,643,667 | (2c) | 10,643,667 | ||||||||
Location contracts acquired, net |
— | 2,612,417 | (2d) | 2,612,417 | ||||||||
Intangible contract rights and noncompete agreements, net of accumulated amortization |
2,612,417 | (2,612,417 | )(2d) | — | ||||||||
|
|
|
|
|
|
|||||||
24,678,495 |
— |
24,678,495 |
||||||||||
|
|
|
|
|
|
|||||||
Liabilities and Members’ (Deficit) |
||||||||||||
Current liabilities: |
||||||||||||
Current maturities of long-term debt |
548,480 | 548,480 | ||||||||||
Current portion of consideration payable |
— | 46,168 | (2e) | 46,168 | ||||||||
Current maturities of long-term debt for intangible contract rights |
46,168 | (46,168 | )(2e) | — | ||||||||
Accounts payable |
1,964,097 | 1,964,097 | ||||||||||
Related party accounts payable |
608,961 | 608,961 | ||||||||||
Accrued expenses |
2,970,166 | 2,970,166 | ||||||||||
|
|
|
|
|
|
|||||||
Total current liabilities |
6,137,872 | — | 6,137,872 | |||||||||
Long-term debt, less current maturities, net |
48,603,418 | 48,603,418 | ||||||||||
Consideration payable, less current portion |
— | 108,825 | (2f) | 108,825 | ||||||||
Long-term debt for intangible contract rights, less current maturities |
108,825 | (108,825 | )(2f) | — | ||||||||
Other long-term related party payable |
4,980,362 | 4,980,362 | ||||||||||
|
|
|
|
|
|
|||||||
53,692,605 | — | 53,692,605 | ||||||||||
Members’ (deficit) |
(35,151,982 | ) | — | (35,151,982 | ) | |||||||
|
|
|
|
|
|
|||||||
24,678,495 |
— |
24,678,495 |
||||||||||
|
|
|
|
|
|
Grand River |
Presentation Adjustments |
Grand River (as adjusted) |
||||||||||
Net revenue: |
||||||||||||
Gaming — video gaming terminals |
$ | 29,458,013 | $ | — | $ | 29,458,013 | ||||||
Amusement |
357,809 | — | 357,809 | |||||||||
ATM fee income |
436,637 | — | 436,637 | |||||||||
|
|
|
|
|
|
|||||||
30,252,459 | — | 30,252,459 | ||||||||||
|
|
|
|
|
|
|||||||
Expenses: |
||||||||||||
Salaries and wages |
2,235,919 | (2,235,919 | )(2g) | — | ||||||||
Payroll taxes |
183,400 | (183,400 | )(2g) | — | ||||||||
Employee benefits |
218,082 | (218,082 | )(2g) | — | ||||||||
|
|
|
|
|
|
|||||||
Personnel costs |
2,637,401 | (2,637,401 | )(2g) | — | ||||||||
|
|
|
|
|
|
|||||||
Video gaming expenses |
— | 20,045,544 | (2h) | 20,045,544 | ||||||||
General and administrative |
— | 4,687,063 | (2g) | 4,687,063 | ||||||||
Earnout commissions |
725,973 | (725,973 | )(2h) | — | ||||||||
Gaming taxes |
8,837,492 | (8,837,492 | )(2h) | — | ||||||||
Video gaming terminals fees |
10,482,079 | (10,482,079 | )(2h) | — | ||||||||
Amusement |
33,322 | (33,322 | )(2g) | — | ||||||||
Supplies |
115,667 | (115,667 | )(2g) | — | ||||||||
Advertising |
171,882 | (171,882 | )(2g) | — | ||||||||
Contractual services |
201,382 | (201,382 | )(2g) | — | ||||||||
Taxes and license fees |
64,037 | (64,037 | )(2g) | — | ||||||||
Auto fuel and licenses |
116,468 | (116,468 | )(2g) | — | ||||||||
Travel |
47,465 | (47,465 | )(2g) | — | ||||||||
Repair and maintenance |
413,928 | (413,928 | )(2g) | — | ||||||||
Rent |
10,818 | (10,818 | )(2g) | — | ||||||||
Insurance |
156,234 | (156,234 | )(2g) | — | ||||||||
Utilities and telephone |
324,916 | (324,916 | )(2g) | — | ||||||||
Legal and professional fees |
293,895 | (293,895 | )(2g) | — | ||||||||
Related party management service fee |
99,648 | (99,648 | )(2g) | — | ||||||||
Amortization of intangible assets |
916,566 | (916,566 | )(2i) | — | ||||||||
Amortization of route and customer acquisition costs and location contracts acquired |
— | 916,566 | (2i) | 916,566 | ||||||||
Depreciation |
2,297,421 | (2,297,421 | )(2j) | — | ||||||||
Depreciation and amortization of property and equipment |
— | 2,297,421 | (2j) | 2,297,421 | ||||||||
Gain on sale of property and equipment |
(62,335 | ) | 62,335 | (2k) | — | |||||||
Other |
52,236 | (62,335 | )(2k) | (10,099 | ) | |||||||
|
|
|
|
|
|
|||||||
Other operating expenses |
25,299,094 | 2,637,401 | 27,936,495 | |||||||||
|
|
|
|
|
|
|||||||
Operating income |
2,315,964 | — | 2,315,964 | |||||||||
Other: |
||||||||||||
Amortization of debt issuance costs |
60,600 | (60,600 | )(2I) | — | ||||||||
Interest |
2,886,340 | 60,600 | (2I) | 2,946,940 | ||||||||
|
|
|
|
|
|
|||||||
2,946,940 | — | 2,946,940 | ||||||||||
|
|
|
|
|
|
|||||||
Net (loss) |
$ | (630,976 | ) | $ | — | $ | (630,976 | ) | ||||
|
|
|
|
|
|
Grand River |
Presentation Adjustments |
Grand River (as adjusted) |
||||||||||
Net revenue: |
||||||||||||
Gaming — video gaming terminals |
$ | 54,754,771 | $ | — | $ | 54,754,771 | ||||||
Amusement |
665,139 | — | 665,139 | |||||||||
ATM fee income |
769,753 | — | 769,753 | |||||||||
|
|
|
|
|
|
|||||||
56,189,663 | — | 56,189,663 | ||||||||||
|
|
|
|
|
|
|||||||
Expenses: |
||||||||||||
Salaries and wages |
4,205,769 | (4,205,769 | )(2g) | — | ||||||||
Payroll taxes |
327,267 | (327,267 | )(2g) | — | ||||||||
Employee benefits |
451,764 | (451,764 | )(2g) | — | ||||||||
|
|
|
|
|
|
|||||||
Personnel costs |
4,984,800 | (4,984,800 | )(2g) | — | ||||||||
|
|
|
|
|
|
|||||||
Video gaming expenses |
— | 37,667,994 | (2h) | 37,667,994 | ||||||||
General and administrative |
— | 8,749,532 | (2g) | 8,749,532 | ||||||||
Earnout commissions |
1,762,901 | (1,762,901 | )(2h) | — | ||||||||
Gaming taxes |
16,426,612 | (16,426,612 | )(2h) | — | ||||||||
Video gaming terminals fees |
19,478,481 | (19,478,481 | )(2h) | — | ||||||||
Amusement |
46,630 | (46,630 | )(2g) | — | ||||||||
Supplies |
211,498 | (211,498 | )(2g) | — | ||||||||
Advertising |
247,317 | (247,317 | )(2g) | — | ||||||||
Contractual services |
439,867 | (439,867 | )(2g) | — | ||||||||
Taxes and license fees |
100,869 | (100,869 | )(2g) | — | ||||||||
Auto fuel and licenses |
254,180 | (254,180 | )(2g) | — | ||||||||
Travel |
70,922 | (70,922 | )(2g) | — | ||||||||
Repair and maintenance |
713,075 | (713,075 | )(2g) | — | ||||||||
Rent |
15,636 | (15,636 | )(2g) | — | ||||||||
Insurance |
269,791 | (269,791 | )(2g) | — | ||||||||
Utilities and telephone |
636,284 | (636,284 | )(2g) | — | ||||||||
Legal and professional fees |
559,367 | (559,367 | )(2g) | — | ||||||||
Related party management service fee |
199,296 | (199,296 | )(2g) | — | ||||||||
Amortization of intangible assets |
2,102,017 | (2,102,017 | )(2i) | — | ||||||||
Amortization of route and customer acquisition costs and location contracts acquired |
— | 2,102,017 | (2i) | 2,102,017 | ||||||||
Depreciation |
6,354,531 | (6,354,531 | )(2j) | — | ||||||||
Depreciation and amortization of property and equipment |
— | 6,354,531 | (2j) | 6,354,531 | ||||||||
Gain on sale of property and equipment |
(63,478 | ) | 63,478 | (2k) | — | |||||||
Other |
102,794 | (63,478 | )(2k) | 39,316 | ||||||||
|
|
|
|
|
|
|||||||
Other operating expenses |
49,928,590 | 4,984,800 | 54,913,390 | |||||||||
|
|
|
|
|
|
|||||||
Operating income |
1,276,273 | — | 1,276,273 | |||||||||
Other: |
||||||||||||
Amortization of debt issuance costs |
121,200 | (121,200 | )(2l) | — | ||||||||
Interest |
5,547,289 | 121,200 | (2l) | 5,668,489 | ||||||||
|
|
|
|
|
|
|||||||
5,668,489 | — | 5,668,489 | ||||||||||
|
|
|
|
|
|
|||||||
Net (loss) |
$ | (4,392,216 | ) | $ | — | $ | (4,392,216 | ) | ||||
|
|
|
|
|
|
(a) | Other current assets |
(b) | Prepaid expenses |
(c) | Property and equipment, net |
(d) | Location contracts acquired, net |
(e) | Current portion of consideration payable |
(f) | Consideration payable, less current portion |
(g) | General and administrative |
(h) | Video gaming expenses |
(i) | Amortization of route and customer acquisition costs and location contracts acquired |
(j) | Depreciation and amortization of property and equipment |
(k) | Other operating expenses |
(l) | Interest |
Purchase Price |
||||
Cash consideration |
$ | 100,000,000 | ||
Working capital adjustment |
1,337,111 | |||
Contingent consideration |
7,292,000 | |||
|
|
|||
$ | 108,629,111 | |||
|
|
|||
Purchase Price Allocation |
||||
Cash and cash equivalents |
$ | 10,634,920 | ||
Prepaid expenses |
380,837 | |||
Other current assets |
406,654 | |||
Goodwill |
46,465,931 | |||
Property and equipment, net |
21,176,000 | |||
Location contracts acquired |
52,900,000 | |||
|
|
|||
Total assets |
$ | 131,964,342 | ||
Accounts payable |
1,964,097 | |||
Other accrued expenses |
2,970,166 | |||
Consideration payable |
154,993 | |||
Deferred tax liability |
18,245,975 | |||
|
|
|||
Total liabilities |
$ | 23,335,231 | ||
|
|
|||
Total Preliminary Fair Value of Net Assets Acquired |
$ | 108,629,111 | ||
|
|
(a) | Represents release of cash held in the Trust Account that becomes available to fund the Business Combination. |
(b) | Close out of the equity of Accel, which is replaced by Class A-1 shares, Class A-2 shares, and estimated cash consideration of $350.0 million in connection with the Business Combination. |
(c) | To record payment of deferred underwriters’ fees from the Pace IPO, payable at the consummation of the Business Combination. |
(d) | Represents an adjustment to record the payment of estimated costs related to the Business Combination, which are nonrecurring. |
(e) | Issuance and sale of 4,696,675 Class A-1 Shares at a purchase price of $10.22 per share, or an aggregate of approximately $48 million, in the Investment Private Placement. |
(f) | Represents actual redemption of 3,247,267 Public Shares on September 20, 2019 at the estimated per share redemption of $10.25 as of June 30, 2019, which is equal to $33.3 million. Actual shares were redeemed at a per share price of $10.29 resulting in a redemption payment of $33.4 million. |
(g) | Represents the preliminary net adjustment to cash in connection with the acquisition of Grand River. |
Cash consideration transferred |
$ | (100,000,000 | ) | |
Proceeds of new borrowings, net of issuance fees |
99,400,000 | |||
Estimated working capital adjustment |
(1,337,111 | ) | ||
|
|
|||
Unaudited pro forma adjustment |
$ |
(1,937,111 |
) |
(h) | Represents the elimination of historical property and equipment, net of $10.6 million and recognition of new property and equipment of $21.2 million resulting from the Grand River acquisition. |
(i) | Represents the elimination of historical location contracts acquired, net of $2.6 million and recognition of new location contracts acquired of $52.9 million resulting from the Grand River acquisition. |
(j) | Represents the recognition of goodwill as a result of the Grand River acquisition. |
(k) | Represents the extinguishment of Grand River’s existing debt of $49.2 million, which includes a current portion of $0.5 million and unamortized debt issuance costs of $0.3 million. |
(l) | Represents contingent consideration payable to Grand River members based on the preliminary purchase price allocation. |
(m) | Represents the extinguishment of Grand River’s related party payable of $5.6 million, which includes a current portion of $0.6 million. |
(n) | Represents the estimated adjustment for deferred tax taxes as result of tax impact from changes in assets and liabilities due to the acquisition of Grand River. |
(o) | Represents the reclassification of the redeemable portion of the Public Shares to permanent equity and conversion of Public Shares to Class A-1 Shares in connection with the Pace Domestication. |
(p) | Represents the conversion of Founder Shares to Class F Shares in connection with the Pace Domestication. |
(q) | Surrender of 1,250,000 Class F Shares and exchange of 10,000,000 Class F Shares for 8,000,000 Class A-1 Shares and 2,000,000 Class A-2 Shares in the Class F Share Exchange. |
(r) | Elimination of historical retained earnings of Pace. |
(s) | Elimination of historical equity of Grand River. |
(t) | Represents the maximum redemption of 11,000,000 Public Shares at the estimated per share redemption of $10.25, which is equal to $112.8 million, being the balance of the Trust Account as of June 30, 2019, divided by 41,752,733 Public Shares held by Pace public shareholders after September 20, 2019 redemption. |
(u) | Represents additional net debt of $30.0 million cash proceeds from the issuance of the new financing to fund the maximum redemptions as part of the Business Combination. |
(aa) | Represents the elimination of historical depreciation expense of Grand River, and recognition of depreciation expense in connection with fair value of property and equipment. The adjustment in depreciation is based on the estimated fair value and Accel’s historical useful lives of 7 years to 35 years and is calculated using the straight-line method. Grand River’s historic useful lives ranged between 3 to 40 years. |
Six Months Ended June 30, 2019 |
Year Ended December 31, 2018 |
|||||||
Estimated preliminary depreciation expense on property and equipment |
$ | 1,479,257 | $ | 2,958,514 | ||||
Less: historical depreciation expense |
(2,297,421 | ) | (6,354,531 | ) | ||||
|
|
|
|
|||||
Unaudited pro forma adjustment |
$ |
(818,164 |
) |
$ |
(3,396,017 |
) |
(bb) | Represents the elimination of historical amortization expense of Grand River, and recognition of amortization expense in connection with fair value of intangibles related to location contracts acquired. The fair value of identifiable intangible asset is determined using the “income approach”. Amortization expense of fair value intangibles is calculated using the straight-line method over the estimated remaining useful lives of 12 years. |
Six Months Ended June 30, 2019 |
Year Ended December 31, 2018 |
|||||||
Estimated preliminary amortization expense on intangible assets |
$ | 2,204,167 | $ | 4,408,333 | ||||
Less: historical amortization expense |
(916,566 | ) | (2,102,017 | ) | ||||
|
|
|
|
|||||
Unaudited pro forma adjustment |
$ |
1,287,601 |
$ |
2,306,316 |
(cc) | Elimination of interest income on the Trust Account. There is no related tax impact. |
(dd) | Interest expense on the proceeds from the credit facilities drawn used to finance the acquisition of Grand River and the reversal of interest expense on historical Grand River debt. |
Six Months Ended June 30, 2019 |
Year Ended December 31, 2018 |
|||||||
Estimated preliminary interest expense on additional borrowings, including amortization of debt issuance costs |
$ | 2,087,229 | $ | 4,192,257 | ||||
Less: historical interest expense and amortization of debt issuance costs |
(2,946,940 | ) | (5,668,489 | ) | ||||
|
|
|
|
|||||
Unaudited pro forma adjustment |
$ |
(859,711 |
) |
$ |
(1,476,232 |
) |
(ee) | Represents the net impact on income taxes resulting from an income tax benefit attributable to application of the statutory tax rate of 30% for the periods presented. The tax impacts of the Business Combination were estimated on the applicable law in effect on June 30, 2019, inclusive of the effects of the Tax Act. |
(ff) | As the Business Combination is being reflected as if it had occurred at the beginning of the period presented, the calculation of weighted average shares outstanding for basic and diluted net income per share assumes that the Pace Shares issuable relating to the Business Combination have been outstanding for the entire period presented. |
Assuming No Additional Redemptions |
Assuming Maximum Redemptions |
|||||||
Pace Public Shareholders |
41,752,733 | 30,752,733 | ||||||
Pace Initial Shareholders |
7,500,000 | 7,500,000 | ||||||
Private Placement Investors |
4,696,675 | 4,696,675 | ||||||
Donor-Advised Fund |
500,000 | 500,000 | ||||||
Accel Shareholders |
29,385,934 | 29,385,934 | ||||||
|
|
|
|
|||||
Pro Forma Shares Outstanding — Basic & Diluted |
83,835,342 |
72,835,342 |
||||||
|
|
|
|
(gg) | Represents additional interest and amortization of debt issuance costs of $0.6 million and $1.3 million for the six months ended June 30, 2019 and year ended December 31, 2018, respectively, associated with the additional debt drawn to fund maximum redemptions in connection with the Business Combination as described in note 4(u) above as if the debt had been issued as of the earliest period presented. |
(hh) | Represents tax provision adjustment for additional debt as described in note 4(u) at a statutory rate of 30.0% related to the operating adjustments for the for the periods presented. The tax impacts of the Business Combination were estimated on the applicable laws in effect for the periods presented, inclusive of the effects of the Tax Act. |
(a) | Reflects the recognition of pre-combination activities of Grand River. |
(b) | Represents the elimination of historical depreciation expense of Grand River, and recognition of depreciation expense in connection with fair value of property and equipment through September 16, 2019. The adjustment in depreciation is based on the estimated fair value and Accel Entertainment Inc.’s historical |
useful lives of 3 years to 29 years and is calculated using the straight-line method. Grand River’s historic useful lives ranged between 3 to 40 years. |
Year Ended December 31, 2019 |
||||
Depreciation expense on property and equipment |
$ | 1,935 | ||
Less: historical depreciation expense |
(3,244 | ) | ||
|
|
|||
Unaudited pro forma adjustment |
$ |
(1,309 |
) |
(c) | Represents the elimination of historical amortization expense of Grand River, and recognition of amortization expense in connection with fair value of intangibles related to location contracts acquired through September 16, 2019. The fair value of identifiable intangible asset is determined using the “income approach.” Amortization expense of fair value intangibles is calculated using the straight-line method over the estimated remaining useful lives of 10 years. |
Year Ended December 31, 2019 |
||||
Amortization expense on intangible assets |
$ | 3,798 | ||
Less: historical amortization expense |
(1,253 | ) | ||
|
|
|||
Unaudited pro forma adjustment |
$ |
2,545 |
(d) | Represents the increase in operating expenses recorded in the Pace historical unaudited consolidated statement of operations prior to the reverser recapitalization. |
(e) | Represents the elimination of non-recurring transaction costs. |
(f) | Represents the reversal of historical interest expense incurred prior to September 16, 2019 on extinguished Grand River debt. |
(g) | In conjunction with the closing of the reverse recapitalization, Accel entered into a credit agreement on November 13, 2019 to refinance Accel’s existing financing arrangement. The new financing arrangement includes draw at close amounts, net of issuance costs, of $48.7 million in the revolving credit facility, $234.0 million in the initial term loan facility, and $58.5 million in the additional term loan facility, with total outstanding borrowings totalling $341.2 million, net of issuance costs of $8.8 million. The revolving loans and term loans bear interest at LIBOR plus a margin of 2.25%. The following represents the adjustment to record the interest expense on the refinanced debt as if the debt was borrowed on January 1, 2018, including amortization of debt issuance costs, and the subsequent removal of Accel’s interest expense related to the old debt instruments. |
Year Ended December 31, 2019 |
||||
Interest expense on refinancing arrangement, including amortization of debt issuance costs |
$ | 17,965 | ||
Less: Accel interest expense on historic financing arrangements |
(12,860 | ) | ||
|
|
|||
Unaudited net pro forma adjustment |
$ |
5,105 |
(h) | Represents the net impact on income taxes resulting from an income tax benefit attributable to application of the effective tax rate of 28.51% for December 31, 2019. The pro forma adjustment tax impacts were estimated on the applicable law in effect on December 31, 2019, inclusive of the effects of the Tax Act. |
Year Ended December 31, 2019 |
||||
Tax impact on Grand River acquisition |
$ | 433 | ||
Tax impact on removal of Accel interest expense on refinanced loans and non-reoccurring transaction costs |
$ | 6,674 | ||
Tax impact on addition of interest expense on refinanced loans |
(5,122 | ) | ||
|
|
|||
Unaudited pro forma adjustment |
$ |
1,985 |
(i) | As the reverse recapitalization is being reflected as if it had occurred at January 1, 2019, the calculation of weighted average shares outstanding for basic and diluted net income per share assumes that the TPG Pace Holding Inc. shares issued relating to the reverse recapitalization have been outstanding for the entire period presented. |
Number of shares |
||||
Pace Public Shareholders |
18,813 | |||
Pace Initial Shareholders |
7,500 | |||
Private Placement Investors |
4,696 | |||
Donor-Advised Fund |
500 | |||
Accel Shareholders |
45,128 | |||
|
|
|||
Pro Forma Shares Outstanding—Basic & Diluted |
76,637 |
|||
|
|
(In thousands, except per share amounts) |
Three Months Ended June 30, |
Six Months Ended June 30, |
||||||||||||||
2020 |
2019 |
2020 |
2019 |
|||||||||||||
Revenues: |
||||||||||||||||
Net video gaming |
$ | $ | $ | $ | ||||||||||||
Amusement |
||||||||||||||||
ATM fees and other revenue |
||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total net revenues |
||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Operating expenses: |
||||||||||||||||
Video gaming expenses |
||||||||||||||||
General and administrative |
||||||||||||||||
Depreciation and amortization of property and equipment |
||||||||||||||||
Amortization of route and customer acquisition costs and location contracts acquired |
||||||||||||||||
Other expenses, net |
||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total operating expenses |
||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Operating (loss) income |
( |
) | ( |
) | ||||||||||||
Interest expense, net |
||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
(Loss) income before income tax (benefit) expense |
( |
) | ( |
) | ||||||||||||
Income tax (benefit) expense |
( |
) | ( |
) | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net (loss) income |
$ | ( |
) | $ | $ | ( |
) | $ | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Net (loss) income per common share: |
||||||||||||||||
Basic (1) |
$ | ( |
) | $ | $ | ( |
) | $ | ||||||||
Diluted (1) |
( |
) | ( |
) | ||||||||||||
Weighted average number of shares outstanding: |
||||||||||||||||
Basic (1) |
||||||||||||||||
Diluted (1) |
(1) | Per share and share amounts for 2019 have been retroactively restated to give effect to the reverse recapitalization that is discussed in Note 1. |
(In thousands, except par value and share amounts) |
June 30, 2020 |
December 31, 2019 |
||||||
Assets |
(Unaudited) |
|||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | $ | ||||||
Prepaid expenses |
||||||||
Income taxes receivable |
||||||||
Investment in convertible notes (current) |
||||||||
Other current assets |
||||||||
|
|
|
|
|||||
Total current assets |
||||||||
|
|
|
|
|||||
Property and equipment, net |
||||||||
|
|
|
|
|||||
Other assets: |
||||||||
Route and customer acquisition costs, net |
||||||||
Location contracts acquired, net |
||||||||
Goodwill |
||||||||
Investment in convertible notes, less current portion |
||||||||
Other assets |
||||||||
|
|
|
|
|||||
|
|
|
|
|||||
Total assets |
$ | $ | ||||||
|
|
|
|
|||||
Liabilities and Stockholders’ Equity |
||||||||
Current liabilities: |
||||||||
Current maturities of debt |
$ | $ | ||||||
Current portion of route and customer acquisition costs payable |
||||||||
Accrued location gaming expense |
||||||||
Accrued state gaming expense |
||||||||
Accounts payable and other accrued expenses |
||||||||
Current portion of consideration payable |
||||||||
|
|
|
|
|||||
Total current liabilities |
||||||||
|
|
|
|
|||||
Long-term liabilities: |
||||||||
Debt, net of current maturities |
||||||||
Route and customer acquisition costs payable, less current portion |
||||||||
Consideration payable, less current portion |
||||||||
Deferred income tax liability |
||||||||
|
|
|
|
|||||
Total long-term liabilities |
||||||||
|
|
|
|
|||||
Stockholders’ equity : |
||||||||
Preferred Stock, par value of $ |
||||||||
Class A-1 Common Stock, par value $ |
||||||||
Class A-2 Common Stock, par value $ |
||||||||
Additional paid-in capital |
||||||||
Accumulated deficit |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Total stockholders’ equity |
||||||||
|
|
|
|
|||||
Total liabilities and equity |
$ | $ | ||||||
|
|
|
|
(In thousands, except shares) |
Class A-1 Common Stock |
Class A-2 Common Stock |
Additional Paid-In Capital |
Accumulated Deficit |
Total Stockholders’ Equity |
|||||||||||||||||||||||
Shares |
Amount |
Shares |
Amount |
|||||||||||||||||||||||||
Balance, January 1, 2020 |
$ | $ | $ | $ | ( |
) | $ | |||||||||||||||||||||
Conversion of Class A-2 Common Stock to Class A-1 Common Stock |
— | ( |
) | — | — | — | — | |||||||||||||||||||||
Stock-based compensation |
— | — | — | — | — | |||||||||||||||||||||||
Net loss |
— | — | — | — | — | ( |
) | ( |
) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balance, March 31, 2020 |
( |
) | ||||||||||||||||||||||||||
Exercise of common stock options |
— | — | — | — | ||||||||||||||||||||||||
Stock-based compensation |
— | — | — | — | — | |||||||||||||||||||||||
Net loss |
— | — | — | — | — | ( |
) | ( |
) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balance, June 30, 2020 |
$ | $ | $ | $ | ( |
) | $ | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands, except shares) |
Class A-1 Common Stock (1) |
Additional Paid-In Capital (1) |
Treasury Stock (1) |
Accumulated Deficit |
Total Stockholders’ Equity |
|||||||||||||||||||||||
Shares |
Amount |
Shares |
Amount |
|||||||||||||||||||||||||
Balance, January 1, 2019 |
$ | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | |||||||||||||||||
Exercise of warrants |
— | — | ||||||||||||||||||||||||||
Employee stock option compensation |
— | — | — | — | — | |||||||||||||||||||||||
Net income |
— | — | — | — | — | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
March 31, 2019 |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||
Exercise of common stock options |
— | — | — | — | ||||||||||||||||||||||||
Exercise of warrants |
— | — | — | — | ||||||||||||||||||||||||
Employee stock option compensation |
— | — | — | — | — | |||||||||||||||||||||||
Net income |
— | — | — | — | — | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balance, June 30, 2019 |
$ | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) | Share amounts for 2019 have been retroactively restated to give effect to the reverse capitalization that is discussed in Note 1. |
Six Months Ended June 30, |
||||||||
(In thousands) |
2020 |
2019 |
||||||
Cash flows from operating activities: |
||||||||
Net (loss) income |
$ | ( |
) | $ | ||||
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: |
||||||||
Depreciation and amortization of property and equipment |
||||||||
Amortization of route and customer acquisition costs and location contracts acquired |
||||||||
Amortization of debt issuance costs |
||||||||
Stock-based compensation |
||||||||
Loss (gain) on disposal of property and equipment |
( |
) | ||||||
Net loss on write-off of route and customer acquisition costs and route and customer acquisition costs payable |
||||||||
Remeasurement of contingent consideration |
( |
) | ||||||
Payments on consideration payable |
( |
) | ||||||
Accretion of interest on route and customer acquisition costs payable, contingent consideration, and contingent stock consideration |
||||||||
Deferred income taxes |
( |
) | ||||||
Changes in operating assets and liabilities: |
||||||||
Prepaid expenses and other current assets |
( |
) | ||||||
Income taxes receivable |
( |
) | ||||||
Route and customer acquisition costs |
( |
) | ( |
) | ||||
Route and customer acquisition costs payable |
( |
) | ( |
) | ||||
Accounts payable and accrued expenses |
( |
) | ||||||
Other assets |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Net cash (used in) provided by operating activities |
( |
) | ||||||
|
|
|
|
|||||
Cash flows from investing activities: |
||||||||
Purchases of property and equipment |
( |
) | ( |
) | ||||
Proceeds from the sale of property and equipment |
||||||||
|
|
|
|
|||||
Net cash used in investing activities |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Cash flows from financing activities: |
||||||||
Payments on term loan |
( |
) | ( |
) | ||||
Proceeds from delayed draw term loans |
||||||||
Payments on delayed draw term loans |
( |
) | ( |
) | ||||
Net payments on line of credit |
( |
) | ( |
) | ||||
Payments for debt issuance costs |
( |
) | ||||||
Proceeds from exercise of stock options and warrants |
||||||||
Payments on consideration payable |
( |
) | ( |
) | ||||
Payments on capital lease obligation |
( |
) | ||||||
|
|
|
|
|||||
Net cash provided by (used in) financing activities |
( |
) | ||||||
|
|
|
|
|||||
Net increase in cash and cash equivalents |
||||||||
Cash and cash equivalents: |
||||||||
Beginning of period |
||||||||
|
|
|
|
|||||
End of period |
$ | $ | ||||||
|
|
|
|
|||||
Supplemental disclosures of cash flow information: |
||||||||
Cash payments for: |
||||||||
Interest, net of amount of capitalized |
$ | $ | ||||||
Income taxes |
$ | $ | ||||||
Supplemental schedules of noncash investing and financing activities: |
||||||||
Purchases of property and equipment in accounts payable and accrued liabilities |
$ | $ |
Three months ended June 30, 2020 |
Six months ended June 30, 2020 |
|||||||
Decrease to depreciation expense |
$ | $ | ||||||
Decrease to net loss |
$ | $ | ||||||
Decrease to loss per share |
$ | $ |
Years | ||
Video gaming terminals and equipment |
||
Amusement and other equipment |
||
Office equipment and furniture |
||
Computer equipment and software |
||
Leasehold improvements |
||
Vehicles |
||
Buildings and improvements |
June 30, 2020 |
December 31, 2019 |
|||||||
Video game terminals and equipment |
$ | $ | ||||||
Amusement and other equipment |
||||||||
Office equipment and furniture |
||||||||
Computer equipment and software |
||||||||
Leasehold improvements |
||||||||
Vehicles |
||||||||
Buildings and improvements |
||||||||
Land |
||||||||
Construction in progress |
||||||||
|
|
|
|
|||||
Total property and equipment |
||||||||
Less accumulated depreciation and amortization |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Property and equipment, net |
$ | $ | ||||||
|
|
|
|
June 30, 2020 |
December 31, 2019 |
|||||||
Cost |
$ | $ | ||||||
Accumulated amortization |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Route and customer acquisition costs, net |
$ | $ | ||||||
|
|
|
|
June 30, 2020 |
December 31, 2019 |
|||||||
Cost |
$ | $ | ||||||
Accumulated amortization |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Location contracts acquired, net |
$ | $ | ||||||
|
|
|
|
June 30, 2020 |
December 31, 2019 |
|||||||
2019 Senior Secured Credit Facility: |
||||||||
Revolving credit facility |
$ | $ | ||||||
Term Loan |
||||||||
Delayed Draw Term Loan (DDTL) |
||||||||
|
|
|
|
|||||
Total debt |
||||||||
Less: Debt issuance costs |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Total debt, net of debt issuance costs |
||||||||
Less: Current maturities |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Total debt, net of current maturities |
$ | $ | ||||||
|
|
|
|
• | $ |
• | $ |
• | $ |
Three months ended June 30, 2019 |
Six months ended June 30, 2019 |
|||||||
Revenues |
$ | $ | ||||||
Net income |
June 30, 2020 |
December 31, 2019 |
|||||||||||||||
Current |
Long-Term |
Current |
Long-Term |
|||||||||||||
TAV |
$ | $ | $ | $ | ||||||||||||
Abraham |
||||||||||||||||
Fair Share Gaming |
||||||||||||||||
Family Amusement |
||||||||||||||||
Skyhigh |
||||||||||||||||
G3 |
||||||||||||||||
Grand River |
||||||||||||||||
IGS |
||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
$ | $ | $ | $ | ||||||||||||
|
|
|
|
|
|
|
|
Fair Value Measurement at Reporting Date Using |
||||||||||||||||
June 30, 2020 |
Quoted Prices in Active Markets for Identical Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
|||||||||||||
Liabilities: |
||||||||||||||||
Contingent consideration |
$ | $ | $ | $ |
Fair Value Measurement at Reporting Date Using |
||||||||||||||||
December 31, 2019 |
Quoted Prices in Active Markets for Identical Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
|||||||||||||
Liabilities: |
||||||||||||||||
Contingent consideration |
$ | $ | $ | $ |
• | Tranche I, equal to Class A-2 Shares, will be exchanged for Class A-1 Shares if either (i) the EBITDA for the last twelve months (“LTM EBITDA Class A-1 Shares on the New York Stock Exchange (“NYSE |
• | Tranche II, equal to Class A-2 Shares, will be exchanged for Class A-1 Shares if either (i) the LTM EBITDA of the Company (as determined pursuant to the Restricted Stock Agreement) as of December 31, 2022, March 31, 2023 or June 30, 2023 equals or exceeds $Class A-1 Shares on the NYSE equals or exceeds $ |
• | Tranche III, equal to Class A-2 Shares, will be exchanged for Class A-1 Shares if either (i) the LTM EBITDA of the Company (as determined pursuant to the Restricted Stock Agreement) as of December 31, 2023, March 31, 2024 or June 30, 2024 equals or exceeds $Class A-1 Shares on the NYSE equals or exceeds $ |
Redemption Date |
Fair Market Value of Class A-1 shares |
|||||||||||||||||||||||||||||||||||
(period to expiration of the New Accel Warrants) |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
|
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2020 |
2019 |
2020 |
2019 |
|||||||||||||
Net (loss) income |
$ | ( |
) | $ | $ | ( |
) | $ | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Basic weighted average outstanding shares of common stock |
||||||||||||||||
Dilutive effect of stock-based awards for common stock |
||||||||||||||||
Dilutive effect of stockholder notes receivable for common stock |
||||||||||||||||
Dilutive effect of warrants for common stock |
||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Diluted weighted average outstanding shares of common stock |
||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Earnings (loss) per share: |
||||||||||||||||
Basic |
$ | ( |
) | $ | $ | ( |
) | $ | ||||||||
Diluted |
$ | ( |
) | $ | $ | ( |
) | $ |
Goldman Sachs & Co. LLC |
J.P. Morgan | |
Credit Suisse |
Deutsche Bank Securities |
TPG Capital BD, LLC |
The Raine Group |
Item 13. |
Other Expenses of Issuance and Distribution. |
Securities and Exchange Commission registration fee |
$ | 14,093.57 | ||
FINRA filing fee |
27,513.50 | |||
Accounting fees and expenses |
475,000.00 | |||
Legal fees and expenses |
400,000.00 | |||
Transfer agent and registrar fees and expenses |
25,000.00 | |||
Financial printing and miscellaneous expenses |
75,000.00 | |||
|
|
|||
Total |
$ | 1,016,607.07 | ||
|
|
Item 14. |
Indemnification of Directors and Officers. |
Item 15. |
Recent Sales of Unregistered Securities. |
Item 16. |
Exhibits and Financial Statements. |
* | Filed herewith. |
** | Previously filed. |
† | Indicates management contract or compensation plan or agreement. |
+ | Certain information has been excluded from this exhibit because it is not material and would likely cause competitive harm to the registrant if publicly disclosed. |
Item 17. |
Undertakings. |
(1) | For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective. |
(2) | For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. |
Accel Entertainment, Inc. | ||||
By: | /s/ Derek Harmer | |||
Name: | Derek Harmer | |||
Title: | General Counsel, Chief Compliance Officer and Secretary |
Name |
Title |
Date | ||
* Andrew Rubenstein |
Chief Executive Officer, President and Director (Principal Executive Officer) | September 21, 2020 | ||
* Brian Carroll |
Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) |
September 21, 2020 | ||
* Karl Peterson |
Director | September 21, 2020 | ||
* Gordon Rubenstein |
Director | September 21, 2020 | ||
* Kathleen Philips |
Director | September 21, 2020 | ||
* David W. Ruttenberg |
Director | September 21, 2020 | ||
* Eden Godsoe |
Director | September 21, 2020 | ||
* Kenneth B. Rotman |
Director | September 21, 2020 | ||
/s/ Dee Robinson Dee Robinson |
Director | September 21, 2020 |
By: | /s/ Derek Harmer | |
Attorney-in-Fact |