Poydras Gaming Finance Corp. Announces 2014 Third Quarter Financial Results

Q3 Revenue Increased by 40%

TSXV: PYD
TSXV: PYD.DB.U

VANCOUVER, Nov. 24, 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 third quarter ended September 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 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 (for additional information please see News Release dated May 9, 2014, and prospectuses dated April 22, 2014 and filed on SEDAR).

The third quarter results include the accounts of PGFC, Platform 9 and Poydras Gaming as well as the accounts of Windy Hill and PSF II for the full quarter.

Third quarter highlights

During the third quarter ended September 30, 2014, the Company focused on the development of a future growth pipeline including, most notably, the recently announced proposed acquisition of the Integrity Companies which will add revenue from approximately 1,550 incremental installed machines across 23 casinos.

"We are pleased to be able to show significant continued growth in our business as we deploy machines across our target markets and despite typical seasonal weakness in the Oklahoma market in the late summer quarter," said Peter Macy, CEO of Poydras. "We look forward to greatly enhancing that growth and profitability through the completion of our acquisition of Integrity in early 2015 as well additional new machine deployments."

Financial Results

Highlights of Poydras' financial performance during the three months ended September 30, 2014:

• Total Q3 2014 revenue increased 40% to $550,045, compared with Q2 2014 revenue of $393,015. The increase in revenue was due a higher number of deployed gaming machines in Q3 as compared to Q2 due to the acquisition of Windy Hill's operations on May 9, 2014 and purchases of additional gaming machines during Q3;
• Adjusted EBITDA for Q3 2014 increased to $29,804 from a loss of $52,588 due to the increased revenue and despite approximately $160,000 in additional legal and consulting expenses related to the acquisition of the Integrity Companies;
• Net loss for Q3 2014 decreased to $1,302,155 or $0.01 per share compared to $8,229,857 net loss or $0.09 loss per share in Q2 2014. The decrease in net loss was primarily the result of non-recurring and non-cash expenses that were recorded in Q2 upon completion of the RTO: reverse takeover public listing costs of $4,511,255 and unrealized loss on valuation of September 2013 convertible debentures of $3,079,814;
• As of September 30, 2014, Poydras had cash of $4,444,255, compared with $5,263,069 of cash on June 30, 2014. The quarter's reduction in cash reflects outlays of approximately $323,000 on the acquisition of new gaming equipment, reduction in outstanding debt of approximately $370,000 and spending approximately $432,000 on operating and merger and acquisition activities;
• As of September 30, 2014, Poydras had a working capital of $3,917,505 compared with $4,444,165 in working capital as of June 30, 2014. The decrease in working capital is mainly due to operational costs and repayment of debt and payables;
• As of September 30, 2014, Poydras had total assets of $12,828,419 consisting of cash of $4,444,255, receivables of $453,229, prepaid expenses of $155,993, prepaid placement fees of $2,418,131, gaming equipment of $3,159,945, loan receivable of $425,713 and intangible assets of $1,771,153; and
• As of September 30, 2014, Poydras had total liabilities of $9,049,943 consisting of $1,401,773 of current liabilities and $7,648,170 of non-current liabilities.

Highlights of Poydras' financial performance during the nine months ended September 30, 2014:

• Total revenue for the period ended September 30, 2014 period was $1,102,836 of which $1,085,916 came from leasing of gaming equipment to casinos and $16,920 came from interest earned on a loan receivable and interest bearing cash deposits; and
• For the period ended September 30, 2014, Poydras recorded a net loss of $10,664,683 or $0.14 loss per share. This net loss figure includes $1,102,836 of leasing revenue and interest income, $816,817 of operating expenses, $1,886,024 of general and administrative expenses, $3,572,926 of non-cash loss on valuation of September 2013 debentures and $4,511,255 of non-cash reverse takeover public listing costs.

Operational Highlights

During the third quarter, Poydras acquired 30 additional slot machines, bringing its machine count to 326 increasing its revenue base and expanding its footprint in Oklahoma and California.  The Company will continue to deploy additional games across its 173 additional contracted long-term placements over the next several months, approximately 125 of which will be placed in a new casino facility expected to be opened in 2015.

Poydras' most significant operational development was execution of a definitive agreement to acquire the Integrity Companies, a leading third-party provider of slot machines to Native American casinos, for $17 million in a combination of cash, stock and assumed debt, with an additional earn-out of up to $3 million payable in 2016 subject to certain performance metrics (for additional information please see News Release dated September 29, 2014).  Integrity is based in Norman, Oklahoma and serves Native American casinos across Oklahoma as well as the only Federally-regulated casino in Texas.  The acquisition is scheduled to close in the first quarter of 2015 and is expected to add $5.5-$6.5 million of incremental annual EBITDA to Poydras' financial performance based on projections and the inclusion of certain assets as a part of the acquisition.   In addition, Integrity is expected to add significantly to Poydras' pipeline of new placement opportunities. Poydras management is evaluating a range of financing alternatives to close the acquisition using a combination of debt and equity and will be providing the market with further guidance shortly.

Conference Call

The Company is also pleased to announce that it will be hosting an investor conference call on Tuesday, November 25, 2014 at 8:00am Pacific Time (11:00am 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, November 25, 2014
TIME:	8:00am Pacific Time / 11:00am Eastern Time

Participant Dial-In Number(s):

North America Toll-Free Dial-In Number:	1 [phone]
For Toronto:	1 [phone]
For Vancouver:	1 [phone]

A Taped Replay will be available until December 2, 2014.

Taped Replay Toll Free Number:	1 [phone]
Taped Replay Toronto Dial-in Number:	1 [phone]
Taped Replay Password:	896220 #

Non-IFRS Measures

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

			9 Months Ended September 30 2014	Quarter Ended September 30 2014	Quarter Ended June 30 2014	Quarter Ended March 31 2014
			($)	($)	($)	($)
Net Income (loss)			(10,664,683)	(1,302,155)	(8,229,857)	(1,132,671)
Adjustments:
	Depreciation of equipment		441,004	194,439	157,753	88,812
	Amortization of placement fees		170,680	73,801	60,345	36,534
	Amortization of intangible assets		116,230	73,533	42,697	-
	Financing costs		690,998	370,253	222,152	98,593
	Foreign exchange (gain) loss		211,109	376,287	(165,178)	-
	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		512,077	243,646	268,431	-
Adjusted EBITDA			(438,404)	29,804	(52,588)	(415,620)

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.

Adjusted EBITDA is a financial measure that does not have a standardized meaning under IFRS. Adjusted EBITDA is defined as earnings before financing charges, income taxes, depreciation, amortization, stock based compensation, unrealized foreign exchange and non-recurring costs. 

During the current quarter, the Company modified its definition of Adjusted EBITDA by excluding from net income/loss unrealized foreign exchange gain/loss recorded in PGFC on translation of the USD denominated $7,732,000 convertible debentures into PGFC's Canadian dollar functional currency, which is then being translated into USD reporting currency.  The Company believes that this non-cash unrealized gain/loss does not impact the Company's ability to purchase additional machines, to meet the liquidity needs and also to measure our core business performance.

As there is no standardized method of calculating Adjusted EBITDA, it may not be directly comparable with similarly titled measures used by other companies.  The Company considers the Adjusted EBITDA to be a relevant indicator for measuring trends in performance and ability to generate funds to service its debt and to meet its future working capital and capital expenditure requirements. Adjusted EBITDA is not a generally accepted earnings measure and should not be considered in isolation or as an alternative to net income (loss), cash flows or other measures of performance prepared in accordance with IFRS.

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.

Peter Macy, CEO, Poydras Gaming Finance Corp., Phone: [phone], Email: [email protected]

Related Links

www.greatnortherngold.com