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Poydras Gaming Finance Corp. Announces 2014 Second Quarter Financial Results

VANCOUVER, Aug. 29, 2014 /CNW/ - POYDRAS GAMING FINANCE CORP. (formerly Great Northern Gold Exploration Corporation) (TSX-V: PYD) ("PGFC" or the "Company") has released financial results for the second quarter ended June 30, 2014 (all amounts expressed in US Dollars unless otherwise stated.)  On May 9, 2014, PGFC completed a reverse takeover ("RTO") acquisition of Poydras Specialty Finance Corp. ("PSFC") with its wholly-owned U.S. subsidiary Platform 9 Corporation ("Platform 9") which as of May 9, 2014 owned an overall 61.57% economic interest in its licensed operating subsidiary, Poydras Gaming LLC ("Poydras Gaming").  On May 9, 2014, the Company also acquired (i) a 100% interest in Windy Hill Capital LLC ("Windy Hill"), and (ii) the remaining 38.43% economic interest in Poydras Gaming by acquiring a 100% interest in Poydras Street Finance II LLC ("PSF II") and the co-general partnership interest in Poydras Gaming from Poydras Capital Partners LLC ("PCP").  Upon completion of the acquisitions, the Company owns a 100% interest in each of Windy Hill and Poydras Gaming, two licensed operating companies providing capital and gaming equipment to casino operators and vendors in the USA.

Concurrently with the RTO and the above-noted acquisitions on May 9, 2014, PGFC completed equity and convertible debenture prospectus offerings for gross proceeds of $3,068,807 and $7,732,000 respectively (please see News Release dated May 9, 2014, and prospectuses dated April 22, 2014 and filed on SEDAR).

The second quarter results include the accounts of PGFC, Platform 9 and Poydras Gaming for the full quarter as well as the accounts of Windy Hill and PSF II from the date of the RTO, May 9, 2014.

The Company expects to generate most of its revenue from leasing and financing gaming machines and related capital expenditures for existing casinos, new casino developments and gaming machine suppliers in the United States, through its wholly owned USA based subsidiaries Poydras Gaming and Windy Hill.  Currently, the Company owns or finances gaming machines in Oklahoma and California.  The Company is also taking steps to expand operations into Louisiana.

Second quarter summary  

During the second quarter ended June 30, 2014, the Company focused on the completion and integration of the RTO and concurrent funding.

Highlights during the second quarter

In conjunction with the RTO:

  • Completed funding of $3,068,807 in common equity and $7,732,000 in convertible debentures.

  • Completed acquisition of 100% of Windy Hill Capital LLC ("Windy Hill"), which generated EBITDA of $1,679,735 on revenue of $2,034,392 for the year ended December 31, 2013 for $ 3,919,388 in total consideration comprised of: (i) an aggregate of 6,705,409 common shares valued at $1,537,938 , (ii) unsecured promissory notes in the aggregate principal amount of $1,500,000 with a 10% interest rate and quarterly payments amortized over a three year term beginning six months from May 9, 2014 with a fair value of $1,381,450, and (iii) $1,000,000 in cash. Windy Hill holds an interest in long-term contracts on 126 gaming machines in operation at two casinos owned by a US federally recognized tribe in Oklahoma. 

  • Completed the acquisition of the 38.43% minority interest in Poydras Gaming LLC for $2,632,880 comprised of 5,811,354 common shares valued at $1,332,880 and $1,300,000 in cash.  As a result of the minority interest acquisition, the Company now owns 100% of the limited partnership and general partnership interests in Poydras Gaming LLC.

  • Converted CDN$3,000,000 convertible debentures (the "September 2013 debentures") principal into 30,000,000 common shares of the Company at the rate of CDN$0.10 per common share.

  • Revenue increased by 146% to $393,015 in Q2 2014 compared to Q1 2014;

  • Adjusted EBITDA  increased to $112,590 in Q2 2014 compared to a loss of $415,620 in Q1 2014 (please see MD&A for more detail on non-IFRS measure).

The Company has now deployed 326 slot machines in its core markets of Oklahoma and California.  The Company also has existing contracts to allow it the opportunity to place an additional 173 slot machines in 2014 for a total number of 499 deployed and deployable machines (see News Releases dated May 29, 2014, and August 11, 2014).

"Since the RTO closing, we have been focusing on deploying our capital to increase our portfolio of slot machine placements and assessing opportunities to grow through acquisition," said Peter Macy, CEO of Poydras Gaming. "We expect our financial results to improve in the second half of 2014 as we continue our roll-out of new games, as well as actively pursuing acquisition and joint venture opportunities.  In addition, the second half of 2014 financial results will include a full contribution from Windy Hill and dramatic reduction of professional fees now that the RTO process has been completed. "

Financial Results

During the six months ended June 30, 2014, Poydras reported a net loss of $9,362,528. The most significant factors driving Poydras' financial results during the current period are (i) reverse takeover public listing costs of $4,511,255 (which is a non-cash expense), (ii) unrealized loss on valuation of September 2013 convertible debentures of $3,572,926 (which is a non-cash expense), and (iii) general and administrative expenses of $1,193,954 (of which $268,431 is non-cash stock based compensation). General and administrative expenses include approximately $600,000 of non-recurring professional fees incurred during the process of structuring and acquiring of PSFC by PGFC in the RTO transaction. The unrealized loss on valuation of September 2013 debentures was recorded to recognize a liability for the increase in the estimated fair value of the September 2013 debentures conversion feature, which was a non-cash expense and liability. 

Highlights of Poydras' financial performance during the six months ended June 30, 2014:

  • For the period ended June 30, 2014, Poydras recorded a net loss of $9,362,528 or $0.12 loss per share.  The net loss was largely due to non-recurring costs associated with the reverse takeover and non-cash expenses as described above.

  • As at June 30, 2014, Poydras had total assets of $13,986,872 consisting of cash of $5,263,069, receivables of $509,324, prepaid expenses of $227,414, prepaid placement fees of $2,491,933, gaming equipment of $3,243,979, loan receivable of $406,467 and intangible assets of $1,844,686;

  • As at June 30, 2014, Poydras had total liabilities of $9,471,617 consisting of $1,851,536 of current liabilities and $7,620,081 of non-current liabilities;

The Company's results of operations for three months ended June 30, 2014 include operations of Windy Hill from the date of its acquisition on May 9, 2014.  During the years ended December 31, 2013 and December 31, 2012, Windy Hill generated $1,077,668 and $1,230,595 of net income respectively.  Windy Hill's EBITDA for the years ended December 31, 2013 and December 31, 2012 were $1,679,735 and $1,721,712 respectively (for definition of EBITDA and calculation thereof for Windy Hill, please refer to the Company's prospectuses dated April 22, 2014 which were filed on SEDAR).  Windy Hill's revenue and net income for the period from January 1, 2014 to the date of acquisition on May 9, 2014 is $613,347 and $237,696 respectively, which is excluded from the Company's results of operations.

Outlook

The Company expects financial performance to improve significantly in the 2nd half of 2014, due to the reduction of professional fees, fully consolidated contributions from Windy Hill (acquired during the 2nd quarter of 2014) and increased deployment of slot machines related to new and existing agreements.  In addition, Poydras Gaming Finance Corp. believes that there are opportunities to grow by acquiring installed slot machines and leasing operations.

Conference Call

The Company is also pleased to announce that it will be hosting an investor conference call on Tuesday, September 2, 2014 at 1:30pm Pacific Time (4:30pm Eastern Time). The purpose of this conference call will be to provide investors with an update of the financial results of the Company and subsequent events after completion of the RTO.  Representing Poydras Gaming Finance Corp. on the conference call will be:

Mr. Peter Macy, Chief Executive Officer
Mr. Adam Kniec, Chief Financial Officer

Following the update, a question and answer session will be held.  To participate, the dial-in instructions are as follows:

DATE:     

Tuesday, September 2, 2014

TIME:            

1:30pm Pacific Time / 4:30pm Eastern Time

Participant Dial-In Number(s):

North America Toll-Free Dial-In Number:           

1 (888) 390-0546

For Toronto:                                                                      

1 (416) 764-8688

For Vancouver:                                                

1 (778) 383-7413



A Taped Replay will be available until September 9, 2014.


Taped Replay Toll Free Number:                             

1 (888) 390-0541

Taped Replay Toronto Dial-in Number:                

1 (416) 764-8677

Taped Replay Password:                                             

891316

For additional information please see the SEDAR website at www.sedar.com.

About Poydras Gaming Finance Corp.:
Poydras Gaming is focused on leasing and financing gaming machines (such as slot machines) and related capital expenditures for existing casinos, new casino developments and gaming machine suppliers in the United States.  It owns and finances slot machines including long-term lease contracts across four casinos in Oklahoma and a financing agreement with a gaming machine supplier based out of California.  Additional information about the Company can be found on the SEDAR website at www.sedar.com.

Neither the 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.

Certain information in this news release is considered forward-looking within the meaning of certain securities laws and is subject to important risks, uncertainties and assumptions. This forward‐looking information includes, among other things, information with respect to the Company's beliefs, plans, expectations, anticipations, estimates and intentions. The words "may", "could", "should", "would", "suspect", "outlook", "believe", "anticipate", "estimate", "expect", "intend", "plan", "target" and similar words and expressions are used to identify forward‐looking information. The forward-looking information in this news release describes the Company's expectations as of the date of this news release.

EBITDA (earnings before interest, taxes, depreciation and amortization) is a financial measure that does not have a standardized meaning under IFRS.   As there is no standardized method of calculating this measure, Windy Hill's EBITDA may not be directly comparable with similarly titled measures used by other companies.  Poydras considers Windy Hill's EBITDA to be relevant indicator for measuring trends in performance and Windy Hill's ability to generate funds to meet its working capital and capital expenditure requirements. EBITDA is not a generally accepted earnings measure and should not be considered as an alternative to net income (loss) or cash flows as determined in accordance with IFRS.

Adjusted EBITDA and reconciliation to net income (loss) is as follows:



6 Months Ended

June 30

2014

Quarter Ended

June 30

2014

Quarter Ended

March 31

2014



($)

($)

($)






Net Income (loss)


(9,362,528)

(8,229,857)

(1,132,671)

Adjustments:






Depreciation of equipment


246,565

157,753

88,812


Amortization of placement fees


96,879

60,345

36,534


Amortization of intangible assets


42,697

42,697

-


Financing costs


320,745

222,152

98,593


Loss on valuation of convertible debentures


3,572,926

3,079,814

493,112


Reverse takeover public listing


4,511,255

4,511,255

-


Stock based compensation


268,431

268,431

-

Adjusted EBITDA


(303,030)

112,590

(415,620)

The results or events anticipated or predicted in such forward-looking information may differ materially from actual results or events. Material factors which could cause actual results or events to differ materially from such forward-looking information include, among others, risks arising from general economic conditions and adverse industry events.

The Company cautions that the foregoing list of material factors is not exhaustive. When relying on the Company's forward-looking information to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. The Company has assumed a certain progression, which may not be realized. It has also assumed that the material factors referred to in the previous paragraph will not cause such forward-looking information to differ materially from actual results or events. However, the list of these factors is not exhaustive and is subject to change and there can be no assurance that such assumptions will reflect the actual outcome of such items or factors.

THE FORWARD-LOOKING INFORMATION CONTAINED IN THIS NEWS RELEASE REPRESENTS THE EXPECTATIONS OF THE COMPANY AS OF THE DATE OF THIS NEWS RELEASE AND, ACCORDINGLY, IS SUBJECT TO CHANGE AFTER SUCH DATE. READERS SHOULD NOT PLACE UNDUE IMPORTANCE ON FORWARD‐LOOKING INFORMATION AND SHOULD NOT RELY UPON THIS INFORMATION AS OF ANY OTHER DATE. WHILE THE COMPANY MAY ELECT TO, IT DOES NOT UNDERTAKE TO UPDATE THIS INFORMATION AT ANY PARTICULAR TIME.

SOURCE Poydras Gaming Finance Corp.

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