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QUANTUM INTERNATIONAL INCOME CORP. ANNOUNCES ANNUAL FINANCIAL RESULTS FOR THE 2018 FISCAL YEAR

Revenues up 396% in 2018 Fiscal Year; Closed Two Acquisitions in Q4 2018

(Toronto: June 29, 2018) Quantum International Income Corp. (the "Corporation" or "Quantum") (TSXV: QIC) is pleased to announce the filing of its financial results for the 2018 fiscal year. For more information, please see the consolidated financial statements of the Corporation for the fiscal year ended February 28, 2018 and the related management's discussion and analysis, which are available electronically on SEDAR under Quantum's issuer profile at www.sedar.com. All figures are in U.S. dollars unless otherwise noted.

“Fiscal 2018 has been a transformative year for Quantum,” said Manu K. Sekhri, Chief Executive Officer of Quantum. “We are now a market leader in Georgia with a considerable consolidation opportunity ahead of us. In fiscal 2018, we realized a five-fold increase in revenue and significantly grew EBITDA in our operating business. We believe this positions us well to continue to deliver sustainable growth to our shareholders in the coming financial year.”

Highlights – Fiscal Year Ended February 28, 2018
  • Generated gaming revenues of approximately $51.5 million, representing a 5-fold increase compared to revenues of approximately $10.4 million in the prior year.
  • For the year ended February 28, 2018, the Corporation generated Adjusted EBITDA of $19.1 million, compared to $1.4 million for annual fiscal year 2017.
  • Generated positive cash flow from operations of approximately $8.2 million, compared to $0.4 million in the same period last year.
  • Net loss of approximately $4.51 million for the fiscal year ended February 28, 2018, compared to a net loss of approximately $3.12 million for the 2017 fiscal year.
  • Basic and diluted loss per share for continuing operations was $0.12, compared to a loss per share of $0.082 in the same period last year.
  • Working capital of approximately $1.4 million, compared to a working capital deficit of approximately $3.8 million as at February 28, 2017.
  • For the year ended February 28, 2018, the Corporation closed nine acquisitions for a total purchase price of approximately $36.6 million, which increased the footprint of Lucky Bucks, LLC ("Lucky Bucks") by over 125% in Georgia.
  • Signed a commitment letter with Goldman Sachs Specialty Lending Group, L.P. for a $75 million multi-draw credit facility; which translates to interest savings of over $5 million per year. The credit facility subsequently closed in April 2018.
  • On February 23, 2018, the Corporation was recognized in the 2018 TSX Venture 50TM.
Note:

Part of this comparative period pre-dates Quantum's acquisition of its 51% interest in Lucky Bucks (the "Lucky Bucks Acquisition"). The Corporation completed the Lucky Bucks Acquisition without having to issue any equity, other than (i) the issuance of $3 million in common shares of the Corporation to the vendor of the business as partial consideration for the Lucky Bucks Acquisition, and (ii) $1.5 million in common shares of the Corporation issued to Quantum's lead lender in connection with the Lucky Bucks Acquisition (which shares were included in the transaction at the insistence of the lead lender). The consolidated financial statements of the Corporation for the fiscal year ended February 28, 2018 and the related management's discussion and analysis reflect enhanced disclosure relative to past practices in relation to the following items: business overview, operations, liquidity analysis, capital management, selected quarterly information, related party transactions, selected annual information, presentation of statement of comprehensive loss, debt covenants, long-term debt, restricted cash, warrants and share option plan. These enhanced disclosures were made by the Corporation following a continuous disclosure review of the Ontario Securities Commission.

Additional Lucky Bucks Interest Acquisition

The Corporation is also pleased to announce that Quantum and its wholly-owned subsidiary, Southern Star Gaming, LLC, have entered into a binding letter agreement dated June 28, 2018 with Lucky Bucks Ventures, Inc. and Mr. Anil Damani, pursuant to which Quantum will indirectly acquire an additional 9% of the membership interest in Lucky Bucks in exchange for cash consideration of $6 million (the "Additional Lucky Bucks Interest Acquisition"). As a result of the Additional Lucky Bucks Interest Acquisition, Quantum will increase its indirect ownership interest in Lucky Bucks from 51% to 60%, with a corresponding decrease in ownership interest of Lucky Bucks Ventures, Inc. in Lucky Bucks from 49% to 40%. On the closing date of the Additional Lucky Bucks Interest Acquisition, Lucky Bucks Ventures, Inc. will receive consideration of $3.75 million, with the remaining cash consideration of $2.25 million to be held by Lucky Bucks Ventures, Inc. in the form of an unsecured non-interest bearing promissory note due and payable in tranches no later than December 31, 2018.

The closing of the Additional Lucky Bucks Interest Acquisition remains subject to, among other things, the receipt of all necessary regulatory approvals (including the approval of the TSX Venture Exchange) and the parties entering into additional definitive transaction documents. Quantum expects to close the Additional Lucky Bucks Interest Acquisition in mid-July 2018. The Additional Lucky Bucks Interest Acquisition is considered to be a "related party transaction" for purposes of Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions ("MI 61-101") and Policy 5.9 – Protection of Minority Security Holders in Special Transactions of the TSX Venture Exchange, as Mr. Anil Damani, an "insider" of the Corporation, is the sole shareholder of Lucky Bucks Ventures, Inc. The Corporation is relying on exemptions from the formal valuation and minority shareholder approval requirements available under MI 61-101. The Corporation is exempt from the formal valuation requirement in section 5.4 of MI 61-101 in reliance on sections 5.5(a) and (b) of MI 61-101 as the fair market value of the transaction, insofar as it involves interested parties, is not more than the 25% of the Corporation's market capitalization, and no securities of the Corporation are listed or quoted for trading on prescribed stock exchanges or stock markets. Additionally, the Corporation is exempt from minority shareholder approval requirement in section 5.6 of MI 61-101 in reliance on section 5.7(b) as the fair market value of the transaction, insofar as it involves interested parties, is not more than the 25% of the Corporation's market capitalization. The board of directors of Quantum unanimously approved the Additional Lucky Bucks Interest Acquisition.

About Quantum International Income Corp.

The Corporation seeks opportunities to acquire and grow businesses in order to generate stable distributions for its shareholders, along with capital appreciation. The Corporation seeks to acquire operating businesses with a proven track record, an opportunity for growth and whose management wishes to continue to operate the business going forward. The Corporation’s investment approach is to grow through the acquisition of “platform” businesses that are consistent with its business strategy and acquisition criteria and then to continue to build revenues and earnings within these businesses. Potential acquisition targets may be private or public companies in a variety of industries. Acquisition of all or a majority of the ownership of each such business is preferred. Value will be created by seeking out high growth, high margin opportunities where the acquired businesses can maintain and develop the deep knowledge, expertise and understanding of their customers’ needs required to deliver superior service and command higher pricing and margins than the competition.

More information on Quantum is available at www.quantumincomecorp.com.

For further information please contact Quantum:

Manish Grigo

Vice President, Corporate Affairs

Tel. (416) 569-3292

manish@quantumincomecorp.com

 

Stephanie Lippa

Office Manager

Tel. (416) 477-3411

stephanie@quantumincomecorp.com

 

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Cautionary Statement Regarding Forward-Looking Information

This release contains certain information which, as presented, constitutes “forward-looking information” within the meaning of applicable Canadian securities laws. Forward-looking information involves statements that relate to future events and often addresses expected future business and financial performance, containing words such as “expect” and “intend”, statements that an action or event “may” or “will” be taken or occur, or other similar expressions. These statements and information are subject to various known and unknown risks and uncertainties, many of which are beyond the ability of the Corporation to control or predict, and which may cause Quantum’s actual results, performance or achievements to be materially different from those expressed or implied thereby, including, but not limited to, risks related to the inability by Quantum to complete the Acquisition, as well as other factors discussed in the Corporation’s annual information form dated July 23, 2015, (the “Annual Information Form”) which is available on SEDAR under Quantum’s profile at www.sedar.com. Forward-looking information is developed based on assumptions about such risks, uncertainties and other factors set out herein, in the Annual Information Form, and as otherwise disclosed from time to time on SEDAR under Quantum’s profile at www.sedar.com.

Unless otherwise specified in this release, information contained in this release is current as of the date of this release. Unless otherwise specified, all dollar amounts herein refer to Canadian dollars. The Corporation undertakes no obligation to update forward-looking statements except as may be required by applicable Canadian securities laws. Readers are cautioned against attributing undue certainty to forward-looking statements.