FCNE Four Corners Inc (PK)

Four Corners, Inc. (FCNE.PK) (the “Company”) today reported unaudited financial results for the 13-week and 26-week periods ended May 2, 2010 and the sale of its interest in Eclipse Gaming Systems LLC (“Eclipse”).

The Company had consolidated net income of $14,714 and a consolidated net loss of $42,819, respectively, for the 13-week and 26-week periods ended May 2, 2010, including losses attributable to the noncontrolling interest in Eclipse for those periods. For the 13 weeks ended May 2, 2010, Four Corners had net income from continuing operations of $243,741, a net loss from discontinued operations of $146,328 and net income of $97,413. For the 26 weeks ended May 2, 2010, Four Corners had net income from continuing operations of $421,719, a net loss from discontinued operations of $319,901 and net income of $101,818. Discontinued operations for both periods were comprised principally of the operating results of Eclipse.

As of May 2, 2010, Four Corners had approximately $560,000 of cash and total debt of approximately $6.3 million, net of discounts.

On May 7, 2010, Four Corners sold its 61.5% ownership interest in Eclipse for approximately $1.9 million in cash to a group of investors headed by Eclipse’s management. Four Corners also received a payment of approximately $700,000 for past indebtedness and expenses owed by Eclipse. As part of this transaction, Four Corners also obtained an exclusive license in most of Oklahoma and Texas to distribute Eclipse’s Class II, Oklahoma Compact-Class III, and Video Lottery Terminals products. The Company also assumed Eclipse’s agreement to supply games to an Indian Tribe in Oklahoma. Four Corners is licensed by that Tribe and has supplied 76 machines running Eclipse games to certain of its casinos under a revenue-participation agreement. The machines were acquired as part of the Eclipse transaction.

“On behalf of the entire management team and board of directors, I would like to thank everyone for their support. We remain excited about the future and believe that our recent changes at the Company have positioned us well for future growth and success,” said John J. Schreiber, the Company’s president, chief executive officer and chairman of the board of directors.

The unaudited operating results for the 13-week and 26-week periods ended May 2, 2010 are shown below together with accompanying statements of financial position and cash flows. These financial statements were prepared for internal use, have not been reviewed by the Company’s auditors and are subject to change. Also shown below are Aces Wired’s condensed financial statements for fiscal years 2009 and 2008. Although these statements are based on audited financial statements for those periods, they do not contain required informative disclosures and thus are not intended to be in accordance with U.S. generally accepted accounting principles.

About Four Corners

Four Corners (FCNE.PK) is a holding company of certain subsidiaries whose primary focus is the gaming industry. The Company’s wholly-owned subsidiary, K&B Sales, Inc., distributes bingo supplies and related equipment to charity bingo licensees in Texas. FC Distributing LLC, a wholly-owned subsidiary of the Company distributes gaming machines and other gaming related equipment to the Native American casino market.

      Four Corners, Inc. Condensed Consolidated Balance Sheet (Unaudited)   May 2, 2010

ASSETS

Current assets Cash and cash equivalents $ 560,069 Trade accounts receivable, net 1,092,270 Inventory, net 1,192,800 Other current assets 370,906 Discontinued operations (Eclipse)   2,136,807   Total current assets   5,352,852   Property and equipment, net 1,573,620 Other noncurrent assets   25,971   Total assets $ 6,952,443  

 

LIABILITIES AND STOCKHOLDERS' DEFICIENCY

Current liabilities Current maturities of notes payable to related parties $ 195,315 Trade accounts payable 307,856 Liabilities of discontinued amusement-with-prize operations 431,414 Other current liabilities 1,025,104 Discontinued operations (Eclipse)   919,026   Total current liabilities   2,878,715   Notes payable to related parties, less current maturities and discount 5,192,919 Other notes payable, less current maturities 14,197 Other noncurrent amounts due to related parties 414,547 Noncurrent liability of discontinued amusement-with-prize operations   214,335   Total liabilities   8,714,713   Stockholders' deficiency Total Four Corners, Inc. stockholders' deficiency (1,617,633 ) Noncontrolling interest in Eclipse   (144,637 ) Total stockholders' deficiency   (1,762,270 ) Total liabilities and stockholders' deficiency $ 6,952,443     Four Corners, Inc. Consolidated Statements of Operations For the 13-week and 26-week Periods ended May 2, 2010 (Unaudited)         Period ended May 2, 2010 13 weeks 26 weeks

Revenue

Bingo supply and services $ 4,443,709 $ 8,212,056

Expenses

Cost of sales (bingo products) 2,318,538 4,287,979 Bingo supply and services 1,134,623 2,127,133 Corporate overhead   628,401     1,147,766   Total expenses   4,081,562     7,562,878   Operating income   362,147     649,178  

Other income (expense)

Interest income - 150 Interest expense   (110,006 )   (210,809 ) Total other income (expense), net   (110,006 )   (210,659 ) Income from continuing operations before income taxes 252,141 438,519 Income tax expense (Texas margin tax)   (8,400 )   (16,800 ) Net income from continuing operations 243,741 421,719 Net loss from discontinued operations   (229,027 )   (464,538 ) Net income (loss) 14,714 (42,819 ) Net loss attributable to noncontrolling interest   (82,699 )   (144,637 ) Net income attributable to Four Corners, Inc. $ 97,413   $ 101,818   Net income (loss) per share attributable to Four Corners, Inc. common stockholders - Basic and Diluted Net income from continuing operations $ 0.02 $ 0.04 Net loss from discontinued operations   (0.01 )   (0.03 ) Net income $ 0.01   $ 0.01   Weighted average number of Four Corners, Inc. common shares outstanding Basic   10,479,658     10,479,658   Diluted   10,494,719     10,512,489   Net income (loss) attributable to Four Corners, Inc. common stockholders Net income from continuing operations $ 243,741 $ 421,719 Net loss from discontinued operations   (146,328 )   (319,901 ) Net income $ 97,413   $ 101,818         Four Corners, Inc. Condensed Consolidated Statement of Cash Flows For the 26-week Period ended May 2, 2010 (Unaudited)   Net cash provided by Operating Activities of Continuing Operations $ 192,313 Cash flows from Investing Activities of Continuing Operations: Deposit on sale of Eclipse Gaming Systems, LLC 100,000 Insurance proceeds from casualty loss of property and equipment 9,033 Acquisitions of property and equipment   (201,531 ) Net cash used in investing activities of continuing operations   (92,498 ) Cash flows from Financing Activities of Continuing Operations: Repayments of notes payable to related parties (108,937 ) Repayments of other notes payable (3,476 ) Payments of installment purchase agreement   (202,442 ) Net cash used in financing activities of continuing operations   (314,855 ) Net cash used in Discontinued Operations   (248,908 ) Net decrease in cash and cash equivalents (463,948 ) Cash and cash equivalents - beginning of the period 1,024,017 Cash and cash equivalents - end of the period $ 560,069           Aces Wired, Inc. Condensed Consolidated Balance Sheets   November 1, November 2, 2009 2008

ASSETS

Current assets Cash and cash equivalents $ 1,024,017 $ 835,056 Trade accounts receivable, net 978,527 857,607 Inventory, net 932,763 820,708 Other current assets   257,747       450,580 Total current assets   3,193,054       2,963,951 Property and equipment, net 2,799,463 2,388,733 Intangible assets, net 569,618 714,249 Other noncurrent assets   30,720     55,691 Total assets $ 6,592,855   $ 6,122,624  

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)

Current liabilities Trade accounts payable $ 631,763 $ 1,459,044 Current maturities of notes payable to related parties 164,634 1,366,584 Current maturities of other notes payable 252,382 - Liabilities of discontinued amusement-with-prize operations 493,414 1,882,344 Other current liabilities   769,955     495,739

Total current liabilities

  2,312,148     5,203,711 Notes payable to related parties, less current maturities and discount 5,251,563 233,959 Other notes payable, less current maturities 125,840 - Other noncurrent amounts due to related parties 432,031 345,842 Other noncurrent liabilities   204,810     15,846 Total liabilities   8,326,392     5,799,358 Total stockholders' equity (deficiency)   (1,733,537 )   323,266 Total liabilities and stockholders' equity (deficiency) $ 6,592,855   $ 6,122,624 Aces Wired, Inc. Consolidated Statements of Operations For the 52-week and 53-week Periods ended November 1, 2009 and November 2, 2008         Period ended November 1, November 2,   2009     2008  

Revenue

Bingo supply and services $ 15,763,878 $ 14,918,125 Game development and sales   1,580,202     27,092   Total revenue   17,344,080     14,945,217  

Expenses

Cost of sales (bingo products) 8,521,918 8,144,671 Bingo supply and services 3,837,332 3,827,638 Game development and sales 2,316,871 1,009,805 Corporate overhead 1,753,913 3,067,783 Amusement-with-prize legal proceedings 2,701,667 1,604,804 Net loss resulting from the shutdown of amusement-with-prize operations   28,238     1,081,974   Total expenses   19,159,939     18,736,675   Operating loss   (1,815,859 )   (3,791,458 )

Other income (expense)

Interest income 935 26,182 Interest expense (including interest on related party indebtedness of $502,202 in 2009 and $69,602 in 2008) (535,799 ) (73,310 ) Other   -     (31,145 ) Total other income (expense), net   (534,864 )   (78,273 ) Loss from continuing operations before income taxes and minority interest (2,350,723 ) (3,869,731 ) Income tax benefit (expense) 126,680 (20,444 ) Minority interest in net loss from continuing operations   -     187,750   Net loss from continuing operations (2,224,043 ) (3,702,425 ) Net loss from discontinued operations   (44,009 )   (10,261,194 ) Net loss (2,268,052 ) (13,963,619 ) Deemed dividend on Series A convertible preferred stock   -     (399,250 ) Net loss available to common stockholders $ (2,268,052 ) $ (14,362,869 ) Net loss per common stock share - Basic and Diluted Net loss from continuing operations $ (0.21 ) $ (0.40 ) Net loss from discontinued operations - (1.11 ) Deemed dividend on Series A convertible preferred stock   -     (0.05 ) Net loss available to common stockholders $ (0.21 ) $ (1.56 ) Weighted average number of common stock shares outstanding - Basic and Diluted   10,479,658     9,222,632     Aces Wired, Inc. Condensed Consolidated Statements of Cash Flows For the 52-week and 53-week Periods ended November 1, 2009 and November 2, 2008         Period ended November 1, November 2, 2009 2008   Net cash used in Operating Activities of Continuing Operations $ (1,180,127 ) $ (1,223,014 ) Cash flows from Investing Activities of Continuing Operations: Proceeds from sales of property and equipment 530,585 22,200 Acquisitions of property and equipment (1,020,296 ) (1,373,321 ) Capitalized expenditures for game software development (37,175 ) (325,936 ) Deferred acquisition costs - (557,132 ) Other   (54 )   (105 ) Net cash used in investing activities of continuing operations   (526,940 )   (2,234,294 ) Cash flows from Financing Activities of Continuing Operations: Loan proceeds allocated to notes payable issued under credit facility with related party, net of issuance costs 4,583,149 - Proceeds from issuance of other notes payable to related parties 1,316,731 227,850 Proceeds from sale of Series A convertible preferred stock - 1,040,000 Proceeds from sale of common stock, net of issuance costs - 679,791 Loan proceeds allocated to detachable warrants issued under credit facility with related party 243,061 - Capital contributions from minority interest - 156,250 Proceeds from issuance of other notes payable 112,950 - Repayments of notes payable to related parties (3,139,933 ) - Repayments of other notes payable (132,144 ) - Repayments of installment purchase agreement (49,520 ) (345,564 ) Distributions to minority interest   (20,000 )   -   Net cash provided by financing activities of continuing operations   2,914,294  

 

  1,758,327   Net cash used in Discontinued Operations   (1,018,266 )   (1,076,008 ) Net increase (decrease) in cash and cash equivalents 188,961 (2,774,989 ) Cash and cash equivalents - beginning of the period 835,056 3,610,045 Cash and cash equivalents - end of the period $ 1,024,017   $ 835,056