FINAL TRANSCRIPT INNOVA Gaming Group, Inc. Second Quarter Results Event Date/Time: August 13, :00 p.m. E.T. Length: 36 minutes

Transcription

1 INNOVA Gaming Group, Inc. Second Quarter Results Event Date/Time: August 13, :00 p.m. E.T. Length: 36 minutes

2 CORPORATE PARTICIPANTS Richard M. Weil INNOVA Gaming Group, Inc. Chairman and Chief Executive Officer Stephen Koo INNOVA Gaming Group, Inc. Chief Financial Officer Jonathan Ross INNOVA Gaming Group, Inc. Head of Investor Relations CONFERENCE CALL PARTICIPANTS Robert Young Canaccord Genuity Analyst David McFadgen Cormark Securities Analyst Ralph Garcea Cantor Fitzgerald Analyst Maher Yagi Desjardins Securities Analyst Eyal Ofir Dundee Capital Markets Analyst 2

3 PRESENTATION Operator Hello everyone and welcome to INNOVA Gaming Group s 2015 Second Quarter Financial Results Conference Call. As a reminder, this conference call is being recorded on Thursday, August 13, At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question and answer session. Instructions will be provided at that time for research analysts to queue up for questions. If anyone is having any difficulty hearing the conference, please press star, followed by the zero for Operator assistance at any time. I will now turn the call over to Jonathan Ross, Head of Investor Relations for INNOVA Gaming Group. Please go ahead, Mr. Ross. Jonathan Ross Head of Investor Relations, INNOVA Gaming Group, Inc. Thanks, Dan. Good morning, everyone, and thanks for joining us today. INNOVA Gaming Group s 2015 second quarter results were released this morning. The press release, financial statements and MD&A are available on SEDAR, as well as on our website, innovagaminggroup.com. Before I pass the call over to Rick and Steve, we would like to remind listeners that portions of today s discussion, including those that express Management s expectations for estimates of our future performance or future events, including with respect to the deployment of additional machines and terminals, including in new jurisdictions, continuing and increased demand for our products, continued improvement of our product and product features, and the creation of higher sales volumes and 3

4 ongoing revenue, constitute forward-looking statements within the meaning of applicable securities laws. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by Management at this time, are inherently subject to significant business, economic, regulatory and competitive uncertainties and contingencies that could cause actual results or events to differ materially from those expressed or implied in such statements. Investors are cautioned not to put undue reliance on forward-looking statements. The forward-looking statements contained herein reflect INNOVA s current views with respect to future events and, except as required by law, INNOVA does not intend and undertakes no obligation to update any forward-looking statements to reflect, in particular, new information or future events, or otherwise. I will now pass the call over to Rick Weil, Chairman and Chief Executive Officer of INNOVA Gaming. Thanks, Jon. Good morning, everyone, and thank you for participating on today s call. I m joined on the call today by Steve Koo, Chief Financial Officer of INNOVA Gaming Group. We have been public now for just over a hundred days and while it has been a tough go in the stock market, we have hit a number of important milestones internally in a short period of time. I am 4

5 every bit as confident today about our future, both near term and long term, as I was at the time of our IPO. I d like to turn the call over to Steve now to walk us through the financials and then I will discuss some of the opportunities I see ahead of us. Stephen Koo Chief Financial Officer, INNOVA Gaming Group, Inc. Thanks, Rick, and good morning, everyone. Before I walk through the numbers, I just want to point out that INNOVA s Management team took control of the business from Amaya on May 5, so Q3 will actually be the first full quarter under INNOVA s leadership. INNOVA s financial statements are presented in US dollars and the results discussed during this call are all in US dollars. Revenue for the quarter was $5.5 million, driven primarily by our growing LT-3 business. This is 13 percent higher than the $4.8 million in Q2 of LT-3 revenue accounted for 85 percent of overall revenue, compared to 74 percent in the prior period. This shift is the result of both growth in LT-3 win per unit for terminals already in the field, as well as additional deployments coming online, albeit at a lower initial win per unit. At the same time, revenue in our legacy AGP business continues to taper off, as expected, due to continued challenges in the Class 2 market and our shift in focus towards the lottery sector. These factors have impacted our AGP-deployed footprint and win per unit per day. We re continuing to focus the majority of our efforts on LT-3 installs and would expect AGP revenue to continue to decline as a percentage of our overall revenue going forward. 5

6 We installed 219 new LT-3 machines during Q2, bringing our total machines installed at the end of the quarter to 1,695. As of today, we re at 1,703 LT-3s in the field. Gross profit in Q2 was $4.8 million or 88 percent of sales. This compares to $4 million or 82 percent of sales in Q2 of The increase in gross margin was driven by a combination of factors, including our strategic decision last year to focus on our core LT-3 business, as well as the substantial reduction in the cost of our paper tickets resulting from our transition from a larger third-party Break Open Ticket to a smaller more price-efficient in-house Barcode Ticket also reflects the full benefit of our investment last year to upgrade our press imagers, which has improved printing efficiencies and costs across all our LT-3 markets. SG&A expenses were higher in the quarter, aligned with our plan to grow the business, as outlined at the time of our IPO. Selling expenses were higher Q2 by $100,000, compared to Q2 of This was primarily driven by increased business development and sales activity related to the additional LT-3 units that we deployed during the quarter. G&A expenses in Q2 were also higher than Q2 of 2014 by $2.2 million. The largest driver here was a $1.1 million discretionary IPO bonus paid to the Diamond Game Management team and employees. Amaya funded this team and in connection with the IPO. So, to get an accurate view of run rate G&A, you need to back that out, as we have, in calculating Adjusted EBITDA. 6

7 Professional and legal fees were $0.5 million higher in Q2 2015, compared to the prior year, primarily related to IPO expenses. Salaries and wages were also higher in the quarter, as we added a number of key senior management hires to help drive the business forward. Adjusted EBITDA was $1.4 million in Q2, compared to $1 million in the prior period. Average revenue per unit per day, or ARPU, for our LT-3 was $32 in Q2. While the deployment of new machines in the back half of Q1 and through Q2 may negatively impact ARPU going forward, we expect the new machines to move towards the $30 range as they become seasoned in the field. To wrap up, my primary focus over the past 100 days has been on establishing the necessary internal processes and infrastructure to support INNOVA s growth into a much larger company. We ve received a number of questions from investors regarding M&A, and it s obviously a strategy that we re reviewing carefully, having successively executed transactions in the past. What I m doing is working to ensure that when we do locate the right opportunity we re ready to integrate it quickly and accretively. We re doing all that work today to make that possible. With that, I ll turn it back over to Rick. Great, thanks, Steve. When we went public, one of our objectives was to deploy, on average, and throughout 2015, 25 to 30 LT-3 units per month into the field. We have deployed roughly 250 terminals since February, so we are already above that range, and are well positioned to continue to deploy units through the end of the year, based on the visibility we have now. Since the time of the IPO, 7

8 I have focused the majority of my time to customer visits and business development, alongside the dedicated team at Diamond. We are in late-stage discussions with a number of parties, which we expect to translate into deployed units in the field through the remainder of 2015, and into 2016, and beyond. We recently announced approval of the LT-3 in the State of New Hampshire and expect to sign distributors in short order, with the goal of starting to deploy terminals into that market before year end. While New Hampshire is a relatively small market, when taken in context of other US states, New Hampshire is a gaming-friendly jurisdiction and demand for our terminals is strong there. We have made a number of key hires in our first few months of operation, principally on the business and product development side of the business. We are focused on driving our top line growth and at the same time filling our pipeline with product improvements to grow win per day and expand our addressable market. Another focus of our growth strategy is increased functionality and features on existing machines in the market. We announced earlier today that in our largest current market, Ontario, we are operating three Bingo facilities on a trial basis with progressive jackpot and multi-price functionality. These upgraded features are designed to enhance the stay-in-play aspect of our machines by providing a larger local area progressive jackpot, as well as the ability to play at different monetary levels. Currently, at facilities outside of this trial, our machines in the province offer players a single denomination. Given the OLG s approval of our multi-price functionality, we hope to expand the features across our entire network in relatively short order. 8

9 By its very nature, this business is going to progress at a fluctuating pace. This is why we work with an average number of units deployed per month. We are very confident that we will deploy at least 25 to 30 units per month on the LT-3 side. But, by the same token, though the sales cycle can be prolonged, once successively executed, it acts as a significant barrier to entry for others. The demand for non-traditional lottery venues is only getting stronger for the LT-3 and we are the only player purely focused on growing in this space and on tailoring our solution to exactly what the venues are asking for. I am very confident that we re going to continue to grow our LT-3 business in the coming months and years. Steve touched on M&A, and of course this is a part of our strategy. As a Management team, we have a significant amount of experience executing accretive acquisitions over the years and we see a number of opportunities in the lottery space. The lottery sector has been all but abandoned recently, as the industry consolidates and focuses on traditional casino gaming. We are already at various stages of discussion with a number of potential candidates, but are primarily focused on growing our core LT-3 business. We will not do an acquisition unless it is a good strategic fit and it is accretive, but we definitely have the bench strength to succeed there. Before I hand it over to Q&A, I d like to mention that we will have a full showing of our products at NASPL, the National Association of State and Provincial Lotteries Conference in Dallas in October. We would love to see you all there. At this point, I d like to ask the Operator to open the lines for questions. Thank you. 9

10 Q & A Operator At this time, I would like to advise everyone that in order to ask a question, you must press star, then the number one on your telephone keypad. We ll pause for just a moment to compile the Q&A roster. Your first question comes from the line of Robert Young with Canaccord Genuity. Your line is now open. Robert Young Analyst, Canaccord Genuity Hi, good morning, and thanks for taking my questions. The first area I wanted to focus on was the revenue per day that you reported, that you said $32, and you also said Stephen, I think you said that you expected to trend to $30. Could you talk about whether that s a near-term trend given the large number of units you ve deployed here in Q2, and that might rebound off of that number, or is $30 a near-term target for, say, 2015 and 2016? Stephen Koo Chief Financial Officer, INNOVA Gaming Group, Inc. Yes, hey, Robert. I think, really, the answer is as we deploy more units you know, the new units, when they come online, they don t come online at the $32 rate, they come below that, and our long-term expectation in terms of ARPU is $30, but to answer your question, I think what I was saying on the call was as we put more units out there, I think what you ll tend to see is that ll drag down the ARPU 10

11 that we report, but as those units sort of mature in the field, anywhere from three to six months, they gradually will trend back up to the $30 range. Robert Young Analyst, Canaccord Genuity Okay, and at a system level, is $30 average revenue the target for the Company, or should we expect it to move higher with some of the new features that you ve talked about? Stephen Koo Chief Financial Officer, INNOVA Gaming Group, Inc. Yes, yes, no, absolutely. I think right now what we re seeing, $30, is target for the Company, but certainly with the new features that we re adding, our expectation is that that number will move higher from there. Robert Young Analyst, Canaccord Genuity Are you seeing any benefit in the three trial locations in Ontario? Hey, Robert, this is Rick. It s still early, we ve just sort of launched that trial, but I could say that the early numbers are showing a bump, especially with the addition of the progressives, so we re very optimistic that we re going to see that, but, like I say, it s kind of early, but the early results are definitely optimistic. Robert Young Analyst, Canaccord Genuity 11

12 Great, and the way the contract is structured with Ontario, does any of that flow into your revenue per day, the win per unit is higher the way it s structured now, or how would INNOVA benefit from those features? Stephen Koo Chief Financial Officer, INNOVA Gaming Group, Inc. You ll see the number in win per unit, but, if you recall, you know, our contract in Ontario, we get a portion of what we get compensated on is the number of tickets we sell. So, as we add more features that drive players to play more, we benefit from the ticket sales portion of that. Robert Young Analyst, Canaccord Genuity Okay, and last question for me. The 219 unit deployments in Q2 is a very strong number, congratulations on that. It s double the rate you re highlighting in the outlook going forward, and just looking at the number here, where you re at today, at 1,703, it s a little ahead of the pace that you re already showing in the current quarter, and I was wondering if you could talk about the near-term deployments that you re seeing, say, through the end of Sure. That s a good point, Robert, and what I d like to say is that while we re up on sort of the high end of the average of 30 per month for the first two quarters, the summer months typically, July and August, we don t deploy very many terminals, because it s holiday time and our customers, you know, shut down parts of their organizations. So, while we re like you say, the number looks pretty high and we re very happy about that, I think, for Q3, that number is going to drop because we re not 12

13 deploying a whole of terminals during the summer months, and then pick back up again as we go into Q4. So, I m still comfortable with hitting the average of 25 to 30, but, as I said earlier, it s cyclical, as we ve talked about. So, Q3, over the summer, that number is going to drop, on average, below where I think we ve been and then pick back up again in Q4. Robert Young Analyst, Canaccord Genuity Okay, great. Thanks for answering my questions. I ll hope back into queue. Thanks, Robert, appreciate it. Operator Your next question comes from the line of David McFadgen with Cormark. Your line is now open. David McFadgen Analyst, Cormark Securities A couple of questions. So, if you look at the LT-3 deployments in the quarter, were any of those done on an outright sales method, or they re all like recurring revenue? Stephen Koo Chief Financial Officer, INNOVA Gaming Group, Inc. A portion of those were placed into Michigan which are outright sales, but we get a portion there s a portion of our Michigan contract that compensates us on maintenance revenue and service revenue. David McFadgen Analyst, Cormark Securities 13

14 Okay. Could you tell us how many of those deployed in the quarter were an outright sale? Stephen Koo Chief Financial Officer, INNOVA Gaming Group, Inc. Yes, just the units in Michigan, so that was approximately 57. David McFadgen Analyst, Cormark Securities Okay. Then, when we look at your income statement, the EBITDA was a little better than what we were looking for. I was just wondering was there any timing of expenses or some expenses shifted into Q3 as opposed to Q2, was there anything like that happening? Stephen Koo Chief Financial Officer, INNOVA Gaming Group, Inc. No, no, nothing like that. I think, really, as you look at Q2, when you look at our Adjusted EBITDA reconciliation, the biggest thing hitting there were just sort of the one-time items related to the IPO, but I m not seeing any sort of expense items shifting between quarter to quarter. David McFadgen Analyst, Cormark Securities Okay. Then, when I look at how you calculate your Adjusted EBITDA, there s a line there that says standard inventory adjustment and I was just wondering what that is. Stephen Koo Chief Financial Officer, INNOVA Gaming Group, Inc. Yes. So, as we sort of mentioned on the call, we re benefiting in many ways from the investment we made in our printing press and it s sort of reducing the cost of our ticket substantially, and so, in conjunction with that, you know, the inventory that we have with tickets, we needed to make an 14

15 adjustment in terms of how much the value is there. So, that s what we re showing, that 211 that you see there is a reflection of that. David McFadgen Analyst, Cormark Securities Okay. I guess that s effectively an is that a non-cash item, is that why re adding it back, or it s a one-time expense? Stephen Koo Chief Financial Officer, INNOVA Gaming Group, Inc. It s one time, a one-time expense. David McFadgen Analyst, Cormark Securities Yes, okay. Okay, I guess that s it for me. Thank you. Great. Thanks, David. Operator Your next question comes from the line of Ralph Garcea with Cantor Fitzgerald. Your line is now open. Ralph Garcea Analyst, Cantor Fitzgerald Good morning, gentlemen. Good morning, Ralph. Ralph Garcea Analyst, Cantor Fitzgerald 15

16 Congrats on the deployment number. Even with the seasonality and the slowdown, let s say, through Q2, if you get that sort of number in Q4, do you think you can exit the year with 2,000 units, LT- 3 units deployed exiting 2015? Well, you know, actually, it s Q3 that ll be slow, but, yes well, it s hard to say right at this point, but I think we can get close to that number. Ralph Garcea Analyst, Cantor Fitzgerald Okay, and when you introduced sort of the progressive and the multi-price ticketing, what sort of sales cycle was that compared to the original sales cycle? I mean, can you go in there intra-quarter, introduce this new functionality and then roll it out within the quarter or a couple of quarters? I wish it was that easy, Ralph, but as you know for example, in Ontario, the lottery is regulated by the AGCO, the Alcohol and Gaming Commission. So, we had submitted these features to them last year, they were tested, they were reviewed, and then once they approved it, we then can get in front of the OLG and do that. So, I think, you know, the more experience we have with both the AGCO and OLG, I think we ll be able to sort of condense some of that time. So, I don t think it s one month we introduce it and the next month it rolls out, but from six or seven months to sort of three months, for example, is probably not impossible, but we re encouraged by their sort of openness to look at new features, let s put it that way. 16

17 Ralph Garcea Analyst, Cantor Fitzgerald Do you get that same openness in the US, in these cross-borders, and you can leverage the development you ve done here to roll out in your US states? Absolutely. In terms of the credibility we get with what we re doing in Ontario for our US customers, absolutely, but, again, we d have to work directly with the regulator in any given state, but going through these processes definitely gives us the ability and the experience and the credibility, for sure. Ralph Garcea Analyst, Cantor Fitzgerald Then, just from the show in Dallas, I mean, when you typically get leads out of that show, or RFP opportunities, are you still looking at sort of an 18- to 24-month sales cycle coming out of that show, or Well Ralph Garcea Analyst, Cantor Fitzgerald (Inaudible) reference sites, does that get moved up a bit? Yes, I think so. I mean, look, we re not waiting for the show to talk to these people. I m out there having meetings with lotteries now. I think the show will be a great way to showcase where we 17

18 are with our existing customers and cultivate some new ones, because we ll have all our products there, and, yes, I m hopeful, the more time that goes by where we re operating in these five jurisdictions, that that will sort of help us and get that time to be a little bit shorter, but we re working on things now, and have been, Ralph, that will sort of turn to real business, hopefully, in the next year or so. Ralph Garcea Analyst, Cantor Fitzgerald Okay, and then just one last one for Steve, I guess. Now, that you ve been there 100 days plus, were there any surprises on the IT side or the systems side that sort of caught you off guard, and do you have everything in place, like you said earlier, to capitalize on the M&A side, if something is presented to you? Stephen Koo Chief Financial Officer, INNOVA Gaming Group, Inc. Yes, no, thanks. We re continuing to work through it. I don t think anything surprised me. Obviously, when you go from a private company to a public reporting company, there s always sort of challenges, and as part of the quarter, we sort of beefed up our staff here and we re working hard to put all the processes and systems in place, but other than what I expect most people would sort of experience in that sort of transition, there s nothing sort of to highlight beyond that, so I m very confident about what we re doing over here. Ralph Garcea Analyst, Cantor Fitzgerald 18

19 Then, on the headcount side, I guess for Rick, where are you now and then where do you see yourself sort of by the end of the year as you make these last few hires on the sales side, or wherever you need to add to that? I think we re at about 75 employees right now. I think right now we re in pretty good shape in terms of the number of people and where we ve brought people in to build some of the business development and finance roles. So, I think, with the exception of maybe some field people that we add as the business grows, I think, from the corporate side, we re in pretty good shape. Ralph Garcea Analyst, Cantor Fitzgerald Okay. Thank you. Thanks, Ralph. Operator Your next question comes from the line of Maher Yagi with Desjardins. Your line is now open. Maher Yagi Analyst, Desjardins Securities Yes, good morning. Thank you for taking my question. I wanted to ask you if you can provide maybe the backlog of, let s say, signed LT-3 machines that you expect to eventually connect. Stephen Koo Chief Financial Officer, INNOVA Gaming Group, Inc. 19

20 Yes, I think, from our perspective, like Rick mentioned on the call, the business is a little bit as you deploy units, there s a little bit of seasonality and it tends to be a little bit lumpy. So, as we think about going forward, I think if you stick to the guidance that we ve given of about 20 to 25 to 30 units, on average, per month for the full year, I think that s sort of representative of sort of the backlog, if you will, that we have. I think backlog, as you think about it at any point in time for us, backlog isn t necessarily representative of the health of the business, just because of the way our clients tend to order, is they may put in an order for quite a few units, and then it takes time, we spend a lot of time working with them to deploy those units. So, if you take a snapshot at any one point in time, we could be working through an order from a customer, and then once we ve finished deploying those units, then the customer, our expectation is they will sort of refresh that. So, at any one point in time the backlog sort of moves around, so I think it s a lot easier just to go by what we look at as sort of on average what we expect to do for the year, and the 25 to 30 units per month average, I think is a very safe assumption for us. Maher Yagi Analyst, Desjardins Securities Okay, and in terms of you talked about the Ontario new features that you re launching, but if we take a step back here so I m trying to figure out the progressive jackpot and the new features that you re implementing. In your view, and through your discussions with the different organizations you re pitching this to, can you maybe talk a little bit about what is your expectation about the increased 20

21 revenue generation based from these features, from what your plans are looking at; and second, when you re looking at launching these additional services in the US, can you talk a little bit about not specific regions or jurisdictions, but, in your view, do you expect to see potential launches in the US in this year with these new features? Well, to answer your first question, these feature sets were developed by Diamond and were sort of enhanced through the deployment of AGP systems in the past, and what we did is we upgraded them and then deployed them, in the case of Ontario, at these three test sites. It s hard for me to predict right now, Maher, what the upside would be, because it s relatively early, but while we talk about the average of US$30 per day as being the win that we get off the machines, we re optimistic, and what we re seeing is that the features increase that, but by what percentage, I think it s a little bit early for us, but we definitely believe, and we ve seen in other places where we ve done that, it goes up. In the case of the US, again, it s jurisdiction by jurisdiction, but of course we are talking now in the locations where we are, like in Maryland and others, to look at deploying them, so we re in conversations with the lotteries. Just like in Ontario, we ve submitted, in some of the jurisdictions, or about to, the technology to get approved, and then once it s approved we can look at deployment. So, to answer your question in terms of US opportunities, we re definitely talking to our customers about doing the same thing as we did in Ontario. Maher Yagi Analyst, Desjardins Securities 21

22 Okay, that s very helpful, and just one last question for me. You talked about M&A in your prepared remarks. Can you share with us a little bit your view on what does a good potential candidate look like for you, not specifying the specifics of the company itself, but in terms of accretion, in terms of are you looking for software, are you looking for patent, are you looking for new jurisdictions, you know, maybe just help us figure out your views on that? Well, I guess the answer is all of the above, but, seriously, we re looking at a couple of different areas, we re not just focused on one. There s, like you mentioned, sort of software or technology or platforms. We re very focused on the lottery industry and there s a lot of companies out there, some of them are small sort of start-ups and others have been around for a while, that are providing either a service or a technology to lotteries, or charity sectors. So, we ve got a matrix of different industries and companies that sort of play in the lottery space. As I said, we re looking for businesses that are accretive and that would bring some real value to our business. In our industry, there isn t a company that s exactly like us, like a competitor that we d want to acquire. It s going to be a business that s going to sit alongside of what we do and leverage perhaps our public company infrastructure, as well as our experience in the lottery industry. Maher Yagi Analyst, Desjardins Securities That s helpful. Thank you very much. 22

23 Thanks, Maher, appreciate it. Operator Again, if you would like to ask a question, please dial star, one on your telephone keypad. Your next question comes from the line of Eyal Ofir with Dundee Capital. Your line is now open. Eyal Ofir Analyst, Dundee Capital Markets Thanks. Just to clarify the Ontario opportunity here with the progressives, are you going to be upgrading units in the field or this is going to be carved off for new deployments? Oh, no, this feature set can be integrated to the terminals that are in the field. The three tests that we re doing were added to machines that were in the field already, Eyal. Eyal Ofir Analyst, Dundee Capital Markets Okay, good, and then the software upgrade, as well, for the multi-price feature, as well? Yes, that s correct, both of those are in yes, that s correct. Eyal Ofir Analyst, Dundee Capital Markets How do you guys when you put that in, I mean, the tickets that are sitting inside, they have, I think, a fixed dollar value, or something, so would you guys do like a ratio of that value? 23

24 Yes, what we would have to do that s a good point. When we run with local area progressives, the tickets that are running in the machine would be a different sort of version than are in the machines today without the progressives. So, all we would do is, in the particular jurisdiction, we would run out the inventory of the current games and then when location A now wanted to migrate over to a progressive, we would deliver the ticket stock that s got the progressive jackpot winners within the ticket set into those machines, you know, put the software in and then start running. Eyal Ofir Analyst, Dundee Capital Markets Okay, that sounds good. In terms of the kind of newer opportunities, not the stuff in the pipeline with the current couple of customers that you re showing this to, but are you speaking to any states now in the pipeline that, you know, have a back seat, looked at this as an option out of the gate, versus kind of doing this as an upgrade down the road? I think, in the case of the multi-price, we re having sort of showing that to some customers. The progressives, we ve got some existing customers that are looking at, and others that I think some of them are looking at it as a feature to add after they start. One of the things you look at when you re putting these machines out is where you want to start and then what features you want to add or game content you want to look at deploying to keep people engaged in the product, so there s a little bit of balance. Every jurisdiction kind of looks at it differently in terms of how they want to launch it. We ve seen both. 24

25 Eyal Ofir Analyst, Dundee Capital Markets Okay, and then just I know you got a bunch of questions on the pipeline just from a currentyear standpoint, but what s your outlook for 2016? What does the pipeline look like? Obviously, in your industry, it takes some time to land clients and to get through deployment processes, so what are you seeing out there that s getting you excited for next year? Well, I think we ve well, we don t give guidance, but I do believe we re on track to maintain that sort of 25 to 30 terminals a month. We feel comfortable that we ve got enough business going in the pipeline and the funnel that we can maintain that. So, I think at this point that s kind of where we see next year. I think, on the sort of the win per unit side, we re comfortable, again, with sort of the $30 and optimistic that we may see that go up a little bit as we deploy these feature sets. In terms of our organization and our structure, I think Steve s pretty comfortable that we ve got the team and the infrastructure, so we won t have to make much changes on that side next year, either. Eyal Ofir Analyst, Dundee Capital Markets Okay, and you guys looking to are you guys having discussion beyond North America, in terms of new countries, to deploy into? Good question, good question, Eyal. I mean, yes, the answer is yes, I m definitely talking to and looking at some jurisdictions outside of the US and Canada as potential targets for our product, yes. 25

26 Eyal Ofir Analyst, Dundee Capital Markets Okay, and is maybe some of your M&A strategy that as you acquire so many locals to help you facilitate (inaudible). That s a good question. That s a possibility. We re certainly looking at other M&A candidates outside of North America, as well, and potentially, if it made sense to acquire part of a business to help us get into an international jurisdiction, that s certainly a possibility. Eyal Ofir Analyst, Dundee Capital Markets Okay. Okay, thanks, I ll pass the line. Appreciate it, thanks, Eyal. Operator There are no further questions at this time. I will now turn the call back to Jon Ross for closing remarks. Jonathan Ross Head of Investor Relations, INNOVA Gaming Group, Inc. I just want to say thanks, everyone, for participating in the call today. If you have any questions, feel free to give us a shout, we re here to help, for the remainder of the day. We ll have a transcript out sort of this afternoon that I ll send around to the list. Thanks very much and hope you have a great day. 26

27 Operator This concludes today s conference call. You may now disconnect. 27