Iao Kun Group (IKGH) Revises Q3, H116 Results; Notes Impact of Riskier Markers Receivable Collectability

October 7, 2016 8:04 AM EDT
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Iao Kun Group Holding Company Limited (Nasdaq: IKGH) announced that after a further assessment by management of the collectability of markers receivable as of June 30, 2016, the Company believes there are approximately $21.5 million in markers receivable at an elevated risk of collectability. Accordingly, the Company is revising its unaudited financial results for the three and six months ended June 30, 2016 to include a non-cash $21.5 million provision for doubtful accounts.

As a result of the revision, net loss for the second quarter of 2016 is now reported to be $125.8 million, or $1.99 net loss per share (basic and diluted), compared to net loss of $23.8 million, or $0.38 net loss per share (basic and diluted), for the same period of 2015. The net loss in the second quarter of 2016 also includes a one-time $97.3 million impairment of intangible assets, while during the second quarter of 2015, IKGH incurred a one-time $17.8 million impairment of goodwill. Previously, net loss for the second quarter of 2016 was reported to be $104.4 million, or $1.65 net loss per share (basic and diluted).

In addition, net loss for the six months ended June 30, 2016 is now reported to be $129.3 million, or $2.05 net loss per share (basic and diluted), compared to net loss of $6.7 million, or $0.11 net loss per share (basic and diluted), for the same period of 2015. Previously, net loss for the six months ended June 30, 2016 was reported to be $107.9 million, or $1.71 net loss per share (basic and diluted).

There is no change to non-GAAP loss, defined as operating loss before amortization of intangible assets, impairment of goodwill and intangible assets, provision for doubtful accounts and the change in fair value of contingent consideration related to the acquisitions of King’s Gaming, Bao Li Gaming and Oriental VIP Room, for the three and six months ended June 30, 2016.

Please refer to the Form 6-K that will be filed with the Securities and Exchange Commission for the revised full unaudited financial statements and related disclosures for the three and six months ended June 30, 2016.

IAO KUN GROUP HOLDING COMPANY LIMITED
REVISED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS
(Unaudited)
For the Three Months For the Three Months For the Six Months For the Six Months
Ended Ended Ended Ended
June 30, 2016 June 30, 2015 June 30, 2016 June 30, 2015
Revenue from VIP Gaming Operations $10,578,785 $21,869,783 $28,500,970 $63,571,015
Total Revenues 10,578,785 21,869,783 28,500,970 63,571,015
Expenses
- Commission to Junket Agents 9,035,121 19,253,556

22,760,102

47,251,688

- Selling, General and Administrative Expenses 4,472,369 4,644,627

7,973,559

10,036,683

- Special Rolling Tax 86,007 173,698 205,836 393,263
- Impairment of Goodwill -

17,754,136

- 17,754,136
- Amortization of Intangible Assets 4,064,631 4,092,683

8,136,369

8,183,361

- Impairment of Intangible Assets 97,279,517 -

97,279,517

-

-Provision for Doubtful Accounts 21,461,434 - 21,461,434 -
Total Expenses 136,399,079 45,918,700 157,816,817 83,619,131
Operating loss attributable to ordinary shareholders before change in fair value of contingent consideration (125,820,294) (24,048,917) (129,315,847) (20,048,116)
Change in Fair Value of Contingent Consideration for the Acquisitions of King's Gaming, Bao Li Gaming and Oriental VIP Room - 244,129 - 13,325,814
Net Loss Attributable to Ordinary Shareholders (125,820,294) (23,804,788) (129,315,847) (6,722,302)
Other Comprehensive Income (loss)
Foreign Currency
- Translation Adjustment (189,762) 35,828 (374,176) 52,991
Total Comprehensive Loss $(126,010,056) $(23,768,960) $(129,690,023) $(6,669,311)
Net Loss Per Share
Basic $(1.99) $(0.38) $(2.05) $(0.11)
Diluted $(1.99) $(0.38) $(2.05) $(0.11)
Weighted Average Shares Outstanding
Basic 63,103,781 62,150,102 63,103,781 61,871,123
Diluted 63,103,781 62,150,102 63,103,781 61,871,123

IAO KUN GROUP HOLDING COMPANY LIMITED

REVISED CONSOLIDATED BALANCE SHEETS
June 30, 2016 December 31, 2015
(Unaudited)
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents $5,658,773 $3,052,694
Accounts Receivable, Net 906,590 1,460,251
Markers Receivable (net of allowance for doubtful accounts of $21,461,434 and $0 at June 30, 2016 and December 31, 2015, respectively) 137,829,757 170,892,037
Prepaid Expenses and Other Assets 1,520,251 1,448,155
Total Current Assets 145,915,371 176,853,137
Intangible Assets, net - 105,645,737
Property and Equipment (net of accumulated depreciation of $191,897 and $169,798 at June 30, 2016 and December 31, 2015, respectively) 187,890 241,927
TOTAL ASSETS $146,103,261 $282,740,801
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Lines of Credit Payable $35,955,925 $41,908,984
Accrued Expenses 3,654,553 6,030,996
Dividend payable 499,630 -
Bao Li Gaming Acquisition-Purchase Price Obligation 14,228,500 14,228,500
Loan Payable, Shareholders, current 4,009,569 2,827,584
Total Current Liabilities 58,348,177 64,996,064
Total Liabilities 58,348,177 64,996,064
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Preferred Shares, $0.0001 par value Authorized 1,150,000 shares; none issued - -

Ordinary Shares, $0.0001 par value,Authorized 500,000,000 shares; 62,453,774 and 62,307,794 issued and outstanding at June 30, 2016 and December 31, 2015, respectively.

6,245 6,230
Additional Paid-in Capital 133,436,640 133,236,655
Retained (Deficit) Earnings (45,954,230) 83,861,247
Accumulated Other Comprehensive Income 266,429 640,605
Total Shareholders' Equity 87,755,084 217,744,737
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $146,103,261 $282,740,801

Iao Kun Group Holding Company Limited

James Preissler, +1 646-450-8808

preissj@ikghcl.com

Source: Iao Kun Group Holding Company Limited



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