HONG KONG, May 4, 2017 /PRNewswire/ -- Entertainment
Gaming Asia Inc. (NASDAQ: EGT) ("Entertainment Gaming Asia" or "the
Company"), a gaming company focused on markets in Pan-Asia, today
reported operating results for the first quarter ended March 31, 2017.
Key Financial Metrics
- Consolidated revenue from continuing operations of $416,000 for the first quarter of 2017
- Net loss from continuing operations of $2.0 million for the first quarter of 2017
- Cash balance of $31.7 million and
zero debt as of March 31, 2017
Financial Performance
The Company's first quarter of 2017 consolidated revenue from
continuing operations was $416,000, a
decrease of 31% compared to $604,000
in the first quarter of 2016. First quarter of 2017 consolidated
revenue comprised $379,000 from
the Philippines gaming operations
and $37,000 from the commercial
testing of the social gaming application, City of Games, which
commenced in August 2016. The
year-on-year decline in consolidated revenue was primarily due to a
reduced operating base of electronic gaming machines (EGMs) for
the Philippines gaming operations
as a result of the expiration of the EGM leasing agreement with
Leisure World VIP Slot Club on June 30,
2016 and lower average daily net win per unit.
Selling, general and administrative (SG&A) and research and
development (R&D) expenses totaled $2.0
million for the first quarter of 2017 compared to
$1.2 million in the prior year
period. The increase primarily related to the ramping up of the
social gaming operations, which comprised $1.3 million in combined SG&A and R&D
expenses for the first quarter of 2017 compared to $399,000 in the first quarter of 2016.
In accordance with relevant accounting standards for software
development, the Company capitalizes certain software development
costs for the social gaming products. Therefore, SG&A and
R&D expenses are not indicative of total costs related to
social gaming. Total cumulative combined cash operating expenses
and capitalized costs related to the social gaming operations were
$1.4 million for the first quarter of
2017 and $5.4 million since inception
of the social gaming operations in the second half of 2015.
The Company reported adjusted LBITDA (losses before interest,
taxes, depreciation, amortization, stock-based compensation and
other non-cash operating income and expenses) from continuing
operations of $1.8 million in the
first quarter of 2017 compared to LBITDA of $649,000 in the first quarter of 2016.
Net loss from continuing operations was $2.0 million, or $0.14 per share, for the first quarter of 2017
compared to a loss of $1.1 million,
or $0.07 per share, for the first
quarter of 2016. The weighted average number of share count (basic
and diluted) was 14.5 million shares for both periods. The increase
in net loss from continuing operations was primarily due to lower
gaming operations revenue and higher operating costs and expenses
mainly related to the social gaming operations. This was partially
offset by lower depreciation and amortization expenses related to
the gaming operations.
The Company reported a net loss of $2.0
million for the first quarter of 2017 compared to a loss of
$1.5 million for the first quarter of
2016. The first quarter of 2017 results included a net loss of
$48,000 from the discontinued gaming
products and Cambodia gaming
operations compared to a net loss of $411,000 in the prior year period.
The Company's cash position as of March
31, 2017 was $31.7 million, a
decline of $1.9 million compared to
$33.6 million as of December 31, 2016 principally due to the negative
operating cash flow from the social gaming operations and corporate
overhead expenses.
Philippines Operations
On May 3, 2017, the Company
entered into a non-binding memorandum of understanding to sell its
remaining operating assets in the
Philippines for cash consideration of approximately
$1.9 million, which would provide the
Company an estimated pre-tax gain on disposal of approximately
$1.3 million. Subject to final
contract negotiations and due diligence, the sale is expected to
close within the second quarter of 2017. However, there can be no
assurance that the Company can conclude the sale for the
aforementioned terms, if at all.
About Entertainment Gaming Asia Inc.
Entertainment Gaming Asia Inc. (NASDAQ: EGT), an indirect,
majority-owned subsidiary of Melco International Development
Limited, is a gaming company engaged in the leasing of
electronic gaming machines to the gaming industry in the
Philippines. The Company is also developing a
free-to-play online social gaming platform focused on Asian
markets.
Forward Looking Statements
This press release contains forward-looking statements
concerning Entertainment Gaming Asia within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of
the Securities Exchange Act of 1934, as amended. Those
forward-looking statements include statements regarding the
Company's ability to sell its remaining operating assets in
the Philippines and to close the
potential transaction in the second quarter of 2017. Such
statements are subject to certain risks and uncertainties, and
actual circumstances, events or results may differ materially from
those projected in such forward-looking statements. Factors that
could cause or contribute to differences include, but are not
limited to, risks related to the Company's ability: to identify and
successfully develop new projects; acquire additional capital as
and when needed; adapt to potential changes in gaming policies and
political stability in the countries in which the Company operates;
the ability to successfully commercialize its social gaming
platform and operate in the social gaming market; and, those other
risks set forth in the Company's annual report on Form 10-K for the
year ended December 31, 2016 filed
with the SEC on April 11, 2017 and
subsequently filed quarterly reports on Form 10-Q. The Company
cautions readers not to place undue reliance on any forward-looking
statements. The Company does not undertake, and specifically
disclaims any obligation to update or revise such statements to
reflect new circumstances or unanticipated events as they
occur.
- financial tables follow -
|
Entertainment
Gaming Asia Inc.
|
|
Consolidated
Statements of Comprehensive Loss
|
|
(unaudited)
|
|
|
|
|
|
Three-Month Period
Ended
March
31,
|
|
(amounts in
thousands, except per share data)
|
|
|
|
2017
|
|
2016
|
|
Revenues:
|
|
|
|
|
|
|
|
|
Gaming
operations
|
|
|
$
|
379
|
|
$
|
604
|
|
Social
gaming
|
|
|
|
37
|
|
|
—
|
|
Total
revenues
|
|
|
|
416
|
|
|
604
|
|
|
|
|
|
|
|
|
|
Operating costs and
expenses:
|
|
|
|
|
|
|
|
|
Cost of
gaming operations
|
|
|
|
|
|
|
|
|
Gaming property and equipment depreciation
|
|
|
|
67
|
|
|
104
|
|
Casino contract amortization
|
|
|
|
—
|
|
|
93
|
|
Other gaming related intangibles amortization
|
|
|
|
—
|
|
|
63
|
|
Other operating costs
|
|
|
|
161
|
|
|
162
|
|
Cost of social
gaming
|
|
|
|
143
|
|
|
—
|
|
Selling, general and
administrative expenses
|
|
|
|
1,805
|
|
|
758
|
|
Research and
development expenses
|
|
|
|
215
|
|
|
397
|
|
Depreciation and
amortization
|
|
|
|
22
|
|
|
24
|
|
Total operating costs
and expenses
|
|
|
|
2,413
|
|
|
1,601
|
|
|
|
|
|
|
|
|
|
Loss from continuing
operations
|
|
|
|
(1,997)
|
|
|
(997)
|
|
|
|
|
|
|
|
|
|
Other
income/(expenses):
|
|
|
|
|
|
|
|
|
Interest
income
|
|
|
|
61
|
|
|
2
|
|
Foreign currency
(losses)/gains
|
|
|
|
(23)
|
|
|
46
|
|
Other
|
|
|
|
3
|
|
|
4
|
|
Total other
income
|
|
|
|
41
|
|
|
52
|
|
|
|
|
|
|
|
|
|
Loss from continuing
operations before income tax
|
|
|
|
(1,956)
|
|
|
(945)
|
|
|
|
|
|
|
|
|
|
Income tax
expenses
|
|
|
|
(37)
|
|
|
(119)
|
|
|
|
|
|
|
|
|
|
Net loss from
continuing operations
|
|
|
|
(1,993)
|
|
|
(1,064)
|
|
Net loss from
discontinued operations, net of tax
|
|
|
|
(48)
|
|
|
(411)
|
|
|
|
|
|
|
|
|
|
Net loss attributable
to EGT stockholders
|
|
|
$
|
(2,041)
|
|
$
|
(1,475)
|
|
Other comprehensive
(loss)/income:
|
|
|
|
|
|
|
|
|
Foreign
currency translation
|
|
|
|
(20)
|
|
|
1
|
|
Total other
comprehensive (loss)/income, net of tax
|
|
|
|
(20)
|
|
|
1
|
|
Comprehensive loss
attributable to EGT stockholders
|
|
|
$
|
(2,061)
|
|
$
|
(1,474)
|
|
|
|
|
|
|
|
|
|
Per share data (basic
and diluted):
|
|
|
|
|
|
|
|
|
Loss
|
|
|
$
|
(0.14)
|
|
$
|
(0.10)
|
|
Loss
from continuing operations
|
|
|
$
|
(0.14)
|
|
$
|
(0.07)
|
|
Loss
from discontinued operations, net of tax
|
|
|
$
|
—
|
|
$
|
(0.03)
|
|
|
|
|
|
|
|
|
|
Weighted average
basic and diluted common shares outstanding
|
|
|
|
14,464
|
|
|
14,460
|
In the 2016 fiscal year, the
Company sold the principal assets related to the gaming products
operations and all the gaming assets in Cambodia and exited both of these businesses.
As a result, all revenue and expenses associated with the gaming
products operations and Cambodia
gaming operations have been reclassified as discontinued operations
for the periods presented.
|
Entertainment
Gaming Asia Inc.
|
|
Consolidated
Balance Sheets
|
|
|
|
March
31,
2017
|
|
December 31,
2016
|
|
(amounts in
thousands, except per share data)
|
|
(unaudited)
|
|
|
|
ASSETS
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
31,705
|
$
|
33,599
|
|
Accounts receivable,
net
|
|
126
|
|
128
|
|
Other
receivables
|
|
1,079
|
|
1,051
|
|
Inventories
|
|
12
|
|
21
|
|
Prepaid expenses and
other current assets
|
|
290
|
|
235
|
|
Total current
assets
|
|
33,212
|
|
35,034
|
|
|
|
|
|
|
Gaming equipment,
net
|
|
322
|
|
389
|
|
Property and
equipment, net
|
|
892
|
|
915
|
|
Goodwill
|
|
312
|
|
315
|
|
Intangible assets,
net
|
|
1,472
|
|
1,512
|
|
Deferred tax
asset
|
|
59
|
|
59
|
|
Prepayments, deposits
and other assets
|
|
1,209
|
|
1,204
|
|
Total
assets
|
$
|
37,478
|
$
|
39,428
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Accounts
payable
|
$
|
336
|
$
|
79
|
|
Amounts due to related
parties
|
|
205
|
|
160
|
|
Accrued
expenses
|
|
825
|
|
1,118
|
|
Income tax
payable
|
|
197
|
|
161
|
|
Deferred
revenue
|
|
17
|
|
2
|
|
Customer deposits and
other current liabilities
|
|
73
|
|
54
|
|
Total current
liabilities
|
|
1,653
|
|
1,574
|
|
|
|
|
|
|
Other
liabilities
|
|
446
|
|
441
|
|
Deferred tax
liabilities
|
|
5,654
|
|
5,654
|
|
Total
liabilities
|
|
7,753
|
|
7,669
|
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
|
Common stock, $.001
par value, 250,000,000 shares authorized;14,464,220 shares issued
and outstanding
|
|
14
|
|
14
|
|
Additional
paid-in-capital
|
|
47,854
|
|
47,827
|
|
Accumulated other
comprehensive income
|
|
565
|
|
585
|
|
Accumulated
losses
|
|
(18,709)
|
|
(16,668)
|
|
Total EGT
stockholders' equity
|
|
29,724
|
|
31,758
|
|
Non-controlling
interest
|
|
1
|
|
1
|
|
Total stockholders'
equity
|
|
29,725
|
|
31,759
|
|
Total liabilities and
stockholders' equity
|
$
|
37,478
|
$
|
39,428
|
|
Entertainment
Gaming Asia Inc.
|
|
Adjusted LBITDA
from Continuing Operations
|
|
(unaudited)
|
|
|
|
|
|
Three-Month Period
Ended March 31,
|
|
(amounts in
thousands)
|
|
|
2017
|
|
|
2016
|
|
Net loss from
continuing operations – GAAP
|
|
$
|
(1,993)
|
|
$
|
(1,064)
|
|
Interest
income
|
|
|
(61)
|
|
|
(2)
|
|
Income tax
expenses
|
|
|
37
|
|
|
119
|
|
Depreciation and
amortization
|
|
|
186
|
|
|
284
|
|
Stock-based
compensation expenses
|
|
|
27
|
|
|
14
|
|
Adjusted LBITDA from
continuing operations
|
|
$
|
(1,804)
|
|
$
|
(649)
|
|
|
|
|
|
|
|
|
Adjusted LBITDA is losses before interest, taxes, depreciation,
amortization, stock-based compensation and other non-cash operating
income and expenses. Adjusted LBITDA is presented exclusively as a
supplemental disclosure because management believes that it is
widely used to measure the performance, and as a basis for
valuation, of gaming companies. Management uses Adjusted LBITDA as
a measure of the operating performance of its segments and to
compare the operating performance of its operations with those of
its competitors. The Company also presents Adjusted LBITDA because
it is used by some investors as a way to measure a company's
ability to incur and service debt, make capital expenditures and
meet working capital requirements. Gaming companies have
historically reported LBITDA as a supplement to financial measures
in accordance with generally accepted accounting principles in
the United States ("GAAP").
Adjusted LBITDA should not be considered as an alternative to
operating income as an indicator of the Company's performance, as
an alternative to cash flows from operating activities as a measure
of liquidity, or as an alternative to any other measure determined
in accordance with GAAP. Unlike net income/(loss), Adjusted LBITDA
does not include depreciation or interest expense
and, therefore, does not reflect current or future capital
expenditures or the cost of capital. The Company compensates for
these limitations by using Adjusted LBITDA as only one of several
comparative tools, together with GAAP measurements, to assist in
the evaluation of operating performance. Such GAAP measurements
include operating income, net income/(loss), cash flows from
operations and cash flow data. The Company has significant uses of
cash flows, including capital expenditures, taxes and other
non-recurring charges, which are not reflected in Adjusted LBITDA.
Entertainment Gaming Asia's calculation of Adjusted LBITDA may be
different from the calculation methods used by other companies and,
therefore, comparability may be limited.
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/entertainment-gaming-asia-inc-reports-first-quarter-2017-results-300451524.html
SOURCE Entertainment Gaming Asia Inc.