Iao Kun Group (IKGH) Revises Q3, H116 Results; Notes Impact of Riskier Markers Receivable Collectability
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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 $1.71 net loss per share (basic and diluted).
There is no change to non-GAAP loss, defined as operating loss before amortization of intangible assets, impairment of goodwill and intangible assets, provision for doubtful accounts and the change in fair value of contingent consideration related to the acquisitions of King’s Gaming, Bao Li Gaming and Oriental VIP Room, for the three and six months ended June 30, 2016.
Please refer to the Form 6-K that will be filed with the Securities and Exchange Commission for the revised full unaudited financial statements and related disclosures for the three and six months ended June 30, 2016.
|IAO KUN GROUP HOLDING COMPANY LIMITED|
|REVISED CONSOLIDATED STATEMENTS OF OPERATIONS|
|AND COMPREHENSIVE LOSS|
|For the Three Months||For the Three Months||For the Six Months||For the Six Months|
|June 30, 2016||June 30, 2015||June 30, 2016||June 30, 2015|
|Revenue from VIP Gaming Operations||$||10,578,785||$||21,869,783||$||28,500,970||$||63,571,015|
|- Commission to Junket Agents||9,035,121||19,253,556|
|- Selling, General and Administrative Expenses||4,472,369||4,644,627|
|- Special Rolling Tax||86,007||173,698||205,836||393,263|
|- Impairment of Goodwill||-|
|- Amortization of Intangible Assets||4,064,631||4,092,683|
|- Impairment of Intangible Assets||97,279,517||-|
|-Provision for Doubtful Accounts||21,461,434||-||21,461,434||-|
|Operating loss attributable to ordinary shareholders before change in fair value of contingent consideration||(125,820,294||)||(24,048,917||)||(129,315,847||)||(20,048,116||)|
|Change in Fair Value of Contingent Consideration for the Acquisitions of King's Gaming, Bao Li Gaming and Oriental VIP Room||-||244,129||-||13,325,814|
|Net Loss Attributable to Ordinary Shareholders||(125,820,294||)||(23,804,788||)||(129,315,847||)||(6,722,302||)|
|Other Comprehensive Income (loss)|
|- Translation Adjustment||(189,762||)||35,828||(374,176||)||52,991|
|Total Comprehensive Loss||$||(126,010,056||)||$||(23,768,960||)||$||(129,690,023||)||$||(6,669,311||)|
|Net Loss Per Share|
|Weighted Average Shares Outstanding|
IAO KUN GROUP HOLDING COMPANY LIMITED
|REVISED CONSOLIDATED BALANCE SHEETS|
|June 30, 2016||December 31, 2015|
|Cash and Cash Equivalents||$||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 $169,798 at June 30, 2016 and December 31, 2015, respectively)||187,890||241,927|
|LIABILITIES AND SHAREHOLDERS' EQUITY|
|Lines of Credit Payable||$||35,955,925||$||41,908,984|
|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|
|COMMITMENTS AND CONTINGENCIES|
|Preferred Shares, $0.0001 par value Authorized 1,150,000 shares; none issued||-||-|
Ordinary Shares, $0.0001 par value,Authorized 500,000,000 shares; 62,453,774 and 62,307,794 issued and outstanding at June 30, 2016 and December 31, 2015, respectively.
|Additional Paid-in Capital||133,436,640||133,236,655|
|Retained (Deficit) Earnings||(45,954,230||)||83,861,247|
|Accumulated Other Comprehensive Income||266,429||640,605|
|Total Shareholders' Equity||87,755,084||217,744,737|
|TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY||$||146,103,261||$||282,740,801|
Iao Kun Group Holding Company Limited
James Preissler, +1 646-450-8808
Source: Iao Kun Group Holding Company Limited
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