UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 UNDER
THE SECURITIES EXCHANGE ACT OF 1934
For the month of March 2016
Commission File Number: 001-53087
IAO KUN GROUP HOLDING COMPANY LIMITED
(Translation of registrant’s name
into English)
Alameda Dr. Carlos D’ Assumpcao No:
181-187
Centro Comercial Comercial
Brilhantismo, 12 Andar T Macau
(Address of Principal Executive Office)
Indicate by check mark whether the registrant files or will
file annual reports under cover of Form 20-F or Form 40-F.
Form
20-F x Form 40-F ¨
Indicate by check mark if the
registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ¨
Indicate by check mark if the
registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ¨
Indicate by check mark whether the registrant by furnishing
the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b)
under the Securities Exchange Act of 1934.
Yes ¨ No x
If “Yes” is marked, indicate below the file number
assigned to the registrant in connection with Rule 12g3-2(b): 82-_______________.
Other Events.
On March 4, 2016, Iao
Kun Group Holding Company Limited (the “Company”) issued a press release announcing fourth quarter and full
year 2015 financial results. The press release is attached hereto as Exhibit 99.1.
Financial Statements and Exhibits.
Exhibit No. |
Description |
|
|
99.1 |
Press Release dated March 4, 2016 |
SIGNATURE
Pursuant to the requirements
of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
Dated: March 7, 2016 |
IAO KUN
GROUP HOLDING COMPANY LIMITED |
|
|
|
|
|
|
|
|
By: |
/s/ Yip Cheuk Fai |
|
|
|
Name: Yip Cheuk Fai Title: Chief Financial Officer |
|
Exhibit 99.1
Iao Kun Group Holding Company Limited
Announces Fourth Quarter and Full Year 2015 Financial Results
Hong Kong, China – March 4, 2016
– Iao Kun Group Holding Company Limited (“IKGH”) (NASDAQ: IKGH), which operates through its subsidiaries
and related promotion entities that act as VIP room gaming promoters and a collaborator, today announced unaudited financial results
for the fourth quarter and year ended December 31, 2015. All currency amounts are stated in United States dollars. Please
refer to the Annual Report on Form 20-F that will be filed with the Securities and Exchange Commission in March 2016 for
the full audited financial statements and related disclosures for the year ended December 31, 2015.
Fourth Quarter 2015 Highlights
| · | Rolling
Chip Turnover (a metric used by casinos to measure the aggregate amount of players’ bets and overall volume of VIP gaming
room business transacted, which is further defined below) for the three months ended December 31, 2015 was $1.2 billion,
a decrease of 57%, compared to $2.9 billion for the three months ended December 31, 2014. |
| · | Net
income, including gain from the change in fair value of contingent consideration of $15.4 million related to the King’s
Gaming, Bao Li Gaming and Oriental VIP Room acquisitions, was $12.2 million, or $0.19 net income per
share (basic and diluted), for the fourth quarter of 2015, compared to net income of $5.7 million, or $0.09 net
income per share (basic and diluted), for the same period of 2014. |
| · | Non-GAAP
income, which is operating income before amortization of intangible assets, impairment of goodwill and the change in fair value
of contingent consideration related to the acquisitions of King’s Gaming, Bao Li Gaming and Oriental VIP
Room, was $0.9 million, or $0.01 earnings per share (basic and diluted), for the three months ended December
31, 2015, compared to non-GAAP income of $8.0 million, or $0.13 earnings per share (basic and diluted), for the
three months ended December 31, 2014. |
Fourth Quarter 2015 Results
For the three months ended December
31, 2015, IKGH recorded revenue of $19.0 million, a 64% decrease from the same period of 2014, primarily due to lower Rolling
Chip Turnover during the quarter, as well as (i) a decrease of players for VIP baccarat, consistent with the overall decline of
gaming revenue in Macau; (ii) the economic downturn and ongoing anti-corruption campaign in mainland China, where the majority
of IKGH’s VIP gaming patrons reside; and (iii) the continued tightening of government policies in mainland China, including
restrictions on credit card usage.
The improved net income for the three months
ended December 31, 2015 compared to the prior-year period was primarily a result of the change in contingent consideration, which
was a gain of $15.4 million for the fourth quarter of 2015 compared to a gain of $1.8 million for the same period of 2014, as well
as lower commissions to junket agents for the three months ended December 31, 2015 as a result of lower Rolling Chip Turnover compared
to the prior-year period. IKGH also incurred lower selling, general and administrative expenses for the three months ended December
31, 2015, primarily due to costs incurred in the prior-year period in connection with IKGH’s application to list on the Hong
Kong Stock Exchange that did not recur in the fourth quarter of 2015, reduced management fees and lower overall VIP Gaming Room
operating expenses.
“With a difficult 2015 behind us
and with the expectation that 2016 will also be a challenging year for VIP gaming in Macau, we continue to prudently manage our
capital to ensure we will be appropriately positioned when the market turns around,” said Mr. Lam Man Pou, Chairman of IKGH.
“At the same time, we continue to source additional VIP opportunities in overseas markets to allow us to further diversify
our revenue streams. We remain committed to finding suitable opportunities to expand our presence and ultimately generating long-term
value for our shareholders.”
Full Year 2015 Highlights
| · | Rolling
Chip Turnover for the year ended December 31, 2015 was $6.4 billion, a decrease of 61%, compared to $16.6 billion for the year
ended December 31, 2014. |
| · | Net
income, including gain from the change in fair value of contingent consideration of $30.2 million related to the King’s
Gaming, Bao Li Gaming and Oriental VIP Room acquisitions, was $5.1 million, or $0.08 net income per share (basic and diluted),
for the year ended December 31, 2015, compared to a net loss of $60.1 million, or $0.99 net loss per share (basic and diluted),
for the year ended December 31, 2014. During the year ended December 31, 2015, IKGH incurred a one-time $17.8 million
impairment of goodwill. |
| · | Non-GAAP
income was $9.0 million, or $0.14 earnings per share (basic and diluted), for the year ended December 31, 2015, compared to income
of $17.2 million, or $0.28 earnings per share (basic and diluted), for the year ended December 31, 2014. |
Outlook for 2016
For the first two months of 2016, IKGH’s
Rolling Chip Turnover was US$0.81 billion (an average of $0.41 billion per month), down 44% year-over-year, compared to US$1.44
billion (an average of $0.72 billion per month) for the first two months of 2015.
The Company is providing 2016 Rolling Chip
Turnover guidance for its five existing VIP rooms in Macau of between US$3.5 billion and US$4.5 billion.
Conference Call and Replay Information
IKGH will conduct a conference call to
discuss the financial results today at 8:30AM EST/9:30PM Macau. To participate, please dial one of the following numbers
at least 10 minutes prior to the scheduled start of the call:
1-888-556-4997 (United States/Canada)
10-800-714-0940 (North China)
10-800-140-0915 (South China)
800-968-149 (Hong Kong)
800-101-1739 (Singapore)
0800-404-7655 (United Kingdom)
1-719-325-2454 (Other International)
Interested parties may also access the
live call on the Internet at www.ikghcl.com (select Events and Presentations). Following its completion, a replay
of the call can be accessed on the Internet at the above link or through March 28, 2016 by calling either 1-877-870-5176 (U.S.
callers) or 1-858-384-5517 (International callers) and providing conference ID 1450876.
Definition of Rolling Chip Turnover
Rolling Chip Turnover is used by casinos
to measure the volume of VIP business transacted and represents the aggregate amount of non-negotiable chips players purchased.
Bets are wagered with “non-negotiable chips” and winning bets are paid out by casinos in so-called “cash” chips.
“Non-negotiable chips” are specifically designed for VIP players to allow casinos to calculate the commission payable
to VIP room gaming promoters and collaborator. Commissions are paid based on the total amount of “non-negotiable chips”
purchased by each player. VIP room gaming promoters therefore require the players to “roll,” from time to time, their
“cash chips” into “non-negotiable” chips for further betting (hence the term “Rolling Chip Turnover”).
Through the promoters, “non-negotiable chips” can be converted back into cash at any time. Betting using rolling chips,
as opposed to using cash chips, is also used by the Gaming Inspection and Coordination Bureau (“DICJ”) to distinguish
between VIP table revenue and mass market table revenue.
All of IKGH’s Macau VIP rooms are
on a revenue sharing remuneration model. On a win/loss split basis, the VIP room gaming promoter and collaborator receive an agreed
percentage of the “win” in the VIP gaming room (plus certain incentive allowances), and is required to also bear the
same percentage of losses that might be incurred. Revenue from VIP operation in Australia is based upon a mutually-agreed percentage
of the Rolling Chip Turnover.
About Iao Kun Group Holding Company
Limited
IKGH is a holding company which operates
through its subsidiaries and related promotion entities that act as VIP room gaming promoters and a collaborator, and is entitled
to receive all of the profits of the VIP gaming promoters and a collaborator from VIP gaming rooms. IKGH’s VIP room gaming
promoters and collaborator currently participate in the promotion of five major luxury VIP gaming facilities in Macau, China,
the largest gaming market in the world. One VIP gaming room is located at the top-tier 5-star hotel, the StarWorld Hotel &
Casino in downtown Macau, and another is located in the luxury 5-star hotel, the Galaxy Macau™ Resort in Cotai,
each of which is operated by Galaxy Casino, S.A. Additional VIP gaming rooms are located at the Sands Cotai Central and
City of Dreams Macau, both in Cotai, and Le Royal Arc Casino, located in NAPE, Downtown Macau. IKGH recently started
trial operations to the Australian casinos (Crown Perth Casino in Perth, Australia and the Crown Melbourne Casino in Melbourne,
Australia) to gain a greater understanding of the preferences of its junket agents and VIP players and the logistics of the market.
Forward-Looking Statements
This press release includes forward-looking
statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 that involve risks
and uncertainties. Forward-looking statements are statements that are not historical facts. Such forward-looking statements, based
upon the current beliefs and expectations of IKGH’s management, are subject to risks and uncertainties, which could cause
actual results to differ from the forward-looking statements. The gaming industry is characterized by an element of chance. Theoretical
win rates for IKGH’s promotion entities’ VIP gaming room operations depend on a variety of factors, some beyond their
control. In addition to the element of chance, theoretical win rates are also affected by other factors, including gaming patrons’
skill and experience, the mix of games played, the financial resources of gaming patrons, the spread of table limits, the volume
of bets placed by IKGH’s promotion entities’ gaming patrons and the amount of time gaming patrons spend on gambling
— thus VIP gaming rooms’ actual win rates may differ greatly over short time periods, such as from quarter to quarter,
and could cause their quarterly results to be volatile. These factors, alone or in combination, have the potential to negatively
impact the VIP gaming rooms’ win rates. Investors and potential investors should consult all of the information set forth
herein and should also refer to the risk factors set forth in IKGH’s Annual Report on Form 20-F to be filed in March
2016, and other reports filed or to be filed from time-to-time with the Securities and Exchange Commission.
IAO KUN GROUP HOLDING COMPANY LIMITED
F/K/A ASIA ENTERTAINMENT & RESOURCES LTD.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME
| |
For the
Three Months Ended | | |
For the
Three Months Ended | | |
For the
Year Ended | | |
For the
Year Ended | |
| |
December 31, 2015 | | |
December 31, 2014 | | |
December 31, 2015 | | |
December 31, 2014 | |
| |
| | |
| | |
| | |
| |
Revenue from VIP Gaming Operations | |
$ | 19,035,871 | | |
$ | 52,273,694 | | |
$ | 105,002,184 | | |
$ | 233,822,859 | |
Total Revenues | |
| 19,035,871 | | |
| 52,273,694 | | |
| 105,002,184 | | |
| 233,822,859 | |
| |
| | | |
| | | |
| | | |
| | |
Expenses | |
| | | |
| | | |
| | | |
| | |
- Commission to Agents | |
| 14,124,464 | | |
| 36,813,086 | | |
| 76,979,677 | | |
| 188,448,178 | |
- Selling, General and Administrative Expenses | |
| 3,971,264 | | |
| 7,160,189 | | |
| 18,351.625 | | |
| 26,506,299 | |
- Special Rolling Tax | |
| 122,076 | | |
| 286,652 | | |
| 642,268 | | |
| 1,662,714 | |
- Impairment of Goodwill | |
| - | | |
| - | | |
| 17,757,113 | | |
| - | |
- Amortization of Intangible Assets | |
| 4,093,318 | | |
| 4,090,625 | | |
| 16,369,467 | | |
| 16,365,034 | |
Total Expenses | |
| 22,311,122 | | |
| 48,350,552 | | |
| 130,100,150 | | |
| 232,982,225 | |
| |
| | | |
| | | |
| | | |
| | |
Operating (loss) income attributable to ordinary shareholders before change in fair value of contingent consideration | |
| (3,275,251 | ) | |
| 3,923,142 | | |
| (25,097,966 | ) | |
| 840,634 | |
| |
| | | |
| | | |
| | | |
| | |
Change in Fair Value of Contingent Consideration for the Acquisitions of King’s Gaming, Bao Li Gaming and Oriental | |
| 15,425,409 | | |
| 1,783,134 | | |
| 30,215,735 | | |
| (60,918,569 | ) |
Net Income (Loss) Attributable to Ordinary Shareholders | |
| 12,150,158 | | |
| 5,706,276 | | |
| 5,117,769 | | |
| (60,077,935 | ) |
| |
| | | |
| | | |
| | | |
| | |
Other Comprehensive Income (Loss) | |
| | | |
| | | |
| | | |
| | |
Foreign Currency | |
| | | |
| | | |
| | | |
| | |
- Translation Adjustment | |
| (13,960 | ) | |
| 391,040 | | |
| 89,182 | | |
| 65,092 | |
Total Comprehensive Income (Loss) | |
$ | 12,136,198 | | |
$ | 6,097,316 | | |
$ | 5,206,951 | | |
$ | (60,012,843 | ) |
| |
| | | |
| | | |
| | | |
| | |
Net Income (Loss) Per Share | |
| | | |
| | | |
| | | |
| | |
Basic | |
$ | 0.19 | | |
$ | 0.09 | | |
$ | 0.08 | | |
$ | (0.99 | ) |
Diluted | |
$ | 0.19 | | |
$ | 0.09 | | |
$ | 0.08 | | |
$ | (0.99 | ) |
Weighted Average Shares Outstanding | |
| | | |
| | | |
| | | |
| | |
Basic | |
| 62,416,761 | | |
| 61,396,667 | | |
| 62,116,749 | | |
| 60,781,915 | |
Diluted | |
| 62,959,381 | | |
| 61,478,528 | | |
| 62,292,834 | | |
| 60,781,915 | |
IAO KUN GROUP
HOLDING COMPANY LIMITED
F/K/A ASIA ENTERTAINMENT & RESOURCES
LTD.
UNAUDITED CONSOLIDATED BALANCE SHEETS
| |
December 31,
2015 | | |
December 31,
2014 | |
ASSETS | |
| | | |
| | |
CURRENT ASSETS | |
| | | |
| | |
Cash and Cash Equivalents | |
$ | 3,052,694 | | |
$ | 11,146,534 | |
Accounts Receivable, Net | |
| 1,460,251 | | |
| 1,529,052 | |
Markers Receivable | |
| 170,892,037 | | |
| 188,549,136 | |
Prepaid Expenses and Other Assets | |
| 1,448,155 | | |
| 348,777 | |
Total Current Assets | |
| 176,853,137 | | |
| 201,573,499 | |
| |
| | | |
| | |
Intangible Assets (net of accumulated amortization of $58,496,618 and $42,105,966 at December 31, 2015 and December 31, 2014, respectively) | |
| 105,645,737 | | |
| 121,968,648 | |
Goodwill | |
| - | | |
| 17,753,907 | |
Property and Equipment (net of accumulated depreciation of $169,798 and $108,913 at December 31, 2015 and December 31, 2014, respectively) | |
| 241,927 | | |
| 322,149 | |
Other Assets | |
| - | | |
| 23,427 | |
TOTAL ASSETS | |
$ | 282,740,801 | | |
$ | 341,641,630 | |
| |
| | | |
| | |
LIABILITIES AND SHAREHOLDERS’ EQUITY | |
| | | |
| | |
CURRENT LIABILITIES | |
| | | |
| | |
Lines of Credit Payable | |
$ | 41,908,984 | | |
$ | 32,392,020 | |
Accrued Expenses | |
| 6,030,996 | | |
| 11,682,653 | |
Bao Li Gaming Acquisition-Contingent Purchase Price Obligation | |
| 14,228,500 | | |
| 22,662,750 | |
Oriental VIP Room Acquisition-Contingent Purchase Price Obligation | |
| - | | |
| 13,738,762 | |
Loan Payable, Shareholders, current | |
| 2,827,584 | | |
| 2,612,490 | |
Total Current Liabilities | |
| 64,996,064 | | |
| 83,088,675 | |
| |
| | | |
| | |
Bao Li Gaming Acquisition-Contingent Purchase Price Obligation, net of current portion | |
| - | | |
| 19,628,881 | |
Oriental VIP Room Acquisition-Contingent Purchase Price Obligation, net of current portion | |
| - | | |
| 27,665,264 | |
Total Liabilities | |
| 64,996,064 | | |
| 130,382,820 | |
| |
| | | |
| | |
COMMITMENTS AND CONTINGENCIES | |
| | | |
| | |
| |
| | | |
| | |
SHAREHOLDERS’ EQUITY | |
| | | |
| | |
Preferred Shares, $0.0001 par value Authorized 1,150,000 shares; none issued | |
| - | | |
| - | |
Ordinary Shares, $0.0001 par value, Authorized 500,000,000 shares; 62,307,794 and 60,452,314 issued and outstanding at December 31, 2015 and December 31, 2014, respectively. | |
| 6,230 | | |
| 6,044 | |
Additional Paid-in Capital | |
| 133,236,655 | | |
| 130,048,153 | |
Retained Earnings | |
| 83,861,247 | | |
| 80,653,190 | |
Accumulated Other Comprehensive Income | |
| 640,605 | | |
| 551,423 | |
Total Shareholders’ Equity | |
| 217,744,737 | | |
| 211,258,810 | |
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | |
$ | 282,740,801 | | |
$ | 341,641,630 | |
| |
| | | |
| | |
Cash flow information (in thousands)
(unaudited)
| |
For
the
year ended December 31,
2015 | | |
For
the year ended December 31,
2014 | |
| |
| | |
| |
Net cash provided by operating activities | |
$ | 29,883 | | |
$ | 60,602 | |
Net cash used in investing activities | |
| (3 | ) | |
| (291 | ) |
Net cash used in financing activities | |
| (37,966 | ) | |
| (56,929 | ) |
Net (decrease) increase in cash and cash equivalents | |
$ | (8,086 | ) | |
$ | 3,382 | |
Non-GAAP Financial Measures
IKGH’s calculation of Non-GAAP income
(operating income before amortization of intangible assets, impairment of goodwill and change in fair value of contingent consideration)
and Non-GAAP EPS differs from EPS based on net income because it does not include amortization of intangible assets, impairment
of goodwill and change in fair value of contingent consideration. IKGH uses this information internally in evaluating its
operations and believes this information is important to investors because it provides users of IKGH’s financial information
with additional useful information in evaluating operating performance for the periods and is more consistently comparable to the
prior periods. Notwithstanding the foregoing, Non-GAAP income and EPS should not be considered an alternative to, or more
meaningful than, net income and EPS as determined in accordance with GAAP. The following is a reconciliation of IKGH’s
net income to Non-GAAP income and GAAP EPS to IKGH’s Non-GAAP EPS:
| |
For
the Three Months Ended December 31, 2015 | | |
For
the Three Months
Ended December 31,
2014 | | |
For
the
Year Ended
December 31,
2015 | | |
For
the Year Ended
December 31,
2014 | |
| |
| | |
| | |
| | |
| |
Net Income (Loss) attributable to ordinary shareholders | |
$ | 12,150,158 | | |
$ | 5,706,276 | | |
$ | 5,117,769 | | |
$ | (60,077,935 | ) |
| |
| | | |
| | | |
| | | |
| | |
Amortization of intangible assets | |
| 4,093,318 | | |
| 4,090,625 | | |
| 16,369,467 | | |
| 16,365,034 | |
| |
| | | |
| | | |
| | | |
| | |
Impairment of goodwill | |
| - | | |
| - | | |
| 17,757,113 | | |
| - | |
| |
| | | |
| | | |
| | | |
| | |
Change in fair value of contingent consideration | |
| (15,425,409 | ) | |
| (1,783,134 | ) | |
| (30,215,735 | ) | |
| 60,918,569 | |
| |
| | | |
| | | |
| | | |
| | |
Non-GAAP Income (before amortization of intangible assets, impairment of goodwill and change in fair value of contingent consideration) | |
$ | 818,067 | | |
$ | 8,013,767 | | |
$ | 9,028,614 | | |
$ | 17,205,668 | |
| |
| | | |
| | | |
| | | |
| | |
Weighted Average Shares Outstanding | |
| | | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| | |
Basic | |
| 62,416,761 | | |
| 61,396,667 | | |
| 62,116,749 | | |
| 60,781,915 | |
Diluted | |
| 62,959,381 | | |
| 61,478,528 | | |
| 62,292,834 | | |
| 61,002,086 | |
| |
For the Three Months Ended December
31, 2015 | | |
For the Three Months Ended December
31, 2014 | |
| |
Basic | | |
Fully
Diluted | | |
Basic | | |
Fully
Diluted | |
| |
| | | |
| | | |
| | | |
| | |
Net income per share attributable to ordinary shareholders | |
$ | 0.19 | | |
$ | 0.19 | | |
$ | 0.09 | | |
$ | 0.09 | |
| |
| | | |
| | | |
| | | |
| | |
Amortization of intangible assets | |
| 0.07 | | |
| 0.07 | | |
| 0.07 | | |
| 0.07 | |
| |
| | | |
| | | |
| | | |
| | |
Change in fair value of contingent consideration | |
| (0.25 | ) | |
| (0.25 | ) | |
| (0.03 | ) | |
| (0.03 | ) |
| |
| | | |
| | | |
| | | |
| | |
Non-GAAP income per share (before amortization of intangible assets and change in fair value of contingent consideration) | |
$ | 0.01 | | |
$ | 0.01 | | |
$ | 0.13 | | |
$ | 0.13 | |
| |
For the Year Ended
December 31, 2015 | | |
For the Year Ended
December 31, 2014 | |
| |
Basic | | |
Fully
Diluted | | |
Basic | | |
Fully
Diluted | |
| |
| | |
| | |
| | |
| |
Net income (loss) per share attributable to ordinary shareholders | |
$ | 0.08 | | |
$ | 0.08 | | |
$ | (0.99 | ) | |
$ | (0.99 | ) |
| |
| | | |
| | | |
| | | |
| | |
Amortization of intangible assets | |
| 0.26 | | |
| 0.26 | | |
| 0.27 | | |
| 0.27 | |
| |
| | | |
| | | |
| | | |
| | |
Impairment of goodwill | |
| 0.29 | | |
| 0.29 | | |
| - | | |
| - | |
| |
| | | |
| | | |
| | | |
| | |
Change in fair value of contingent consideration | |
| (0.49 | ) | |
| (0.49 | ) | |
| 1.00 | | |
| 1.00 | |
| |
| | | |
| | | |
| | | |
| | |
Non-GAAP income per share (before amortization of intangible assets, impairment of goodwill and change in fair value of contingent consideration) | |
$ | 0.14 | | |
$ | 0.14 | | |
$ | 0.28 | | |
$ | 0.28 | |
Contact:
Iao Kun Group Holding Company Limited
James Preissler, +1 646-450-8808
preissj@ikghcl.com
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