|TNA.V - Q1 2017 Financial Results + MD&A Highlights|
Common Shares: 124,716,865
Insider/Institutional Holdings: 95,967,855 or 77.51%
All information can be found at www.sedar.com
Financials (All numbers are in US Dollars)
Property, Plant & Equipment: $10,632,512
Game Licenses: $65,867
Accounts Receivable: $97,561
Tax Receivable: $163,850
Other Assets: $142,623
Total Assets: $24,423,821
Deferred Tax: $348,000
Notes Payable: $6,772,440
Notes Payable(related parties): $652,656
Other Payables: $3,665,833
Note Payable(current): $383,897
Note Payable Related Parties(current): $179,897
Total Liabilities: $12,002,723
Year - Sales - Net Income
2014 - $30,555,757 - $2,720,669 - $0.02c EPS - Not converted into CAD yet
2015 - $33,338,543 - $3,933,883 - $0.03c EPS - Not converted into CAD yet
2016 - $33,326,624 - $1,909,408 - $0.015c EPS - Not converted into CAD yet
2017(Q1) - $8,229,974 - $337,347 - $0.003c EPS – Not converted into CAD yet
**Note** - Q1 2017 showed a slightly lower profit because Tukwila casino was still operating until February. As well, the prior expense of CEO Monty Harmon was part of this quarter. On top of this all, a new mandatory wage increase was implemented due to Washington law which added $200,000 in additional G&A expenses. Q2 2017 should look better with Tukwila completely closed, Monty removed and management making additional cuts.
MD&A Highlights – Full MD&A Can be found at www.Sedar.com
Net revenue for the quarter ended March 31, 2017 was $8,229,974, a decrease of $29,496 compared to the same period in the prior year. Gaming dollars dropped were 5% lower than the prior year quarter but that decrease was almost entirely offset by an increase in the hold percentage. The income from operations was $609,385 compared to $992,326 in the prior year quarter. This decrease was primarily due to an increase of labour and benefit expense of $282,178. The labour and benefit expenses increased due to an increase in the minimum wage and additional labour expenses at the Palace Casino Tukwila. The minimum wage increased from $9.47 to $11.00/hourly effective January 1, 2017. The Palace Casino Tukwila opened full gaming operations in mid-June 2016. Labour costs there were high in order to fully staff the casino. Due to the disappointing operating results, Palace Casino Tukwila was closed February 4, 2017.
Net income before taxes was $538,789 compared to $833,048 in the same quarter of 2016, a $294,259 decrease. The majority of this decrease came from additional labour and benefit expenses.
Working capital at March 31, 2017 was $1,864,783 compared to working capital of $1,744,546 at December 31, 2016. With sustained healthy revenues and ongoing game protection and expense controls, management expects continued profitable operations sufficient to exceed the cash demands necessary for the company to meet it’s future obligations.
The company’s assets at March 31, 2017, totalled $24,423,821 compared to liabilities of $12,002,723. At December 31, 2016, total assets were $23,922,129 compared to total liabilities of $11,838,378.
The company’s cash at March 31, 2017 was $5,514,878 compared to $4,563,587 at December 31, 2016. These amounts include “Restricted Cash” balances of $1,441,333 and $914,071 respectively. “Restricted Cash” balances are jackpot funds held for prizes being offered at the casinos. Cash provided by operating activities for the quarter ended March 31, 2017 was $1,250,501 compared to $1,043,234 for the quarter ended March 31, 2016.
Liquidity and Capital Resources
Historically, the companies sources of funding have been debt and equity financing and cash flow from operations. As of March 31, 2017, the company had arm’s length debt of $7,156,337, all related to mortgages, including the acquisition of the Lakewood property. Related party debt totalled $832,553 which is owed to Michels Development for the note from Goldies in Shoreline.
On June 1 2015, the company amended the Goldies Casino related party note with Michels Development. The revision, effective June 1 2015, extended the due date from April 15, 2016 to May 31, 2018; changed the monthly payment from $16,000 to a minimum of $20,000 and increased the interest rate from 5% to 8%. The note was paid in full on May 19, 2017.
The company continues to have access to the $1.2 million line of credit available to Tacoma Casino LLC, and Pete’s Flying Aces, Inc. from the vendor of the companies, Michels Development. As of May 25, 2017 this balance is $0.
Transactions Subsequent to End of Quarter
The Goldies Casino note payable to Michels Development was paid in full on May 19, 2017
The Tukwila property is still listed for sale at $2 million USD. The company has a book price of this asset at $1.4 million USD and was purchased in 2014.