KNBA Kinbasha Gaming International Inc (CE)

Kinbasha Gaming International, Inc. (OTCQX: KNBA), owner and operator of retail pachinko gaming centers in Japan, has released its financial results for its fiscal first quarter ended June 30, 2013.

Summary of Fiscal Q1 2014 Financial Results

• Net revenues decreased to $18.7 million in fiscal Q1 2014, compared to $23.9 million in fiscal Q1 2013.
• Net income improved to $761,000 in fiscal Q1 2014, compared to a net loss of $1.9 million in fiscal Q1 2013.
• Fully diluted earnings per share (EPS) improved to $0.06 in fiscal Q1 2014, compared to a loss of per share of $0.16 in fiscal Q1 2013.

Analysis of Fiscal Q1 2014 Financial Results

Kinbasha's functional currency is the yen, and accordingly its earnings and assets are denominated in yen. As a result, appreciation or depreciation in the value of the yen relative to the dollar would affect its financial results reported in dollars without giving effect to any underlying change in its business or results of operations. For fiscal Q1 2014, the yen compared to the dollar was materially weaker than for fiscal Q1 2013, as the exchange ratio increased by 23%. Accordingly, Kinbasha's results of its operations for fiscal Q1 2014 expressed in dollars appear materially weaker than when expressed in yen.

Net revenues decreased to $18.7 million for the fiscal first quarter ended June 30, 2013, from $23.9 million for the same period in 2012. The principal reason for this decrease was the change in the yen/dollar exchange rate. When expressed in yen, Kinbasha's revenues decreased less than 2% between these periods. In addition, Kinbasha sold three restaurants in July 2012, and thus had no revenues from these restaurants during fiscal Q1 2014.

Net income attributable to common shareholders improved to $761,000 for the quarter ended June 30, 2013 as compared to a net loss of $1.9 million in the same period of 2012. As a result, fully diluted EPS improved to $0.06 in the quarter ended June 30, 2013, compared to a loss per share of $0.16 in the quarter ended June 30, 2012.

The improvement to net income is generally attributed to enhanced market conditions, and the fact that in Q1 of fiscal 2013 the Company was still recovering from the March 2011 earthquake.

"We are pleased to report our financial results for fiscal Q1 2014," said Masatoshi Takahama, Chief Executive Officer of Kinbasha. "Despite slightly lower revenues due to the weaker yen, Kinbasha demonstrated the results of our continually streamlined operations by posting net income of $761,000, compared to a loss in the same quarter last year. As we continue to execute our strategic growth initiatives, we believe the decisions we have made will position Kinbasha to grow in our proven markets while also limiting expenses and reducing debt."

During the first quarter of fiscal 2014 the Company was able to reduce its total debt from $132.3 million at March 31, 2013 to $122.5 million as of June 30, 2013. As of June 30, 2013, the total debt included $100.2 million of principal and $22.3 million of accrued interest. In addition, debt in default decreased from $97.1 million at March 31, 2013 to $92.0 million at June 30, 2013. For the past several years, the Company has negotiated with its lenders and in many cases has obtained formal or informal forbearances and loan modifications that have allowed it to effectively extend the maturity of its debt through interest only and/or reduced principal payments.

Mr. Takahama concluded, "We believe the progress we have made in improving our financial metrics and continuing to negotiate deals with our banks will help us achieve our growth objectives. As the only pachinko company that is listed in the United States, Kinbasha has an advantage over our competition when it comes to building awareness and raising capital overseas. Going forward in fiscal 2014, Kinbasha's growth strategy is based on leveraging our existing brand and operational expertise to propel our expansion initiatives and to build long term shareholder value."

Earnings Conference Call

Kinbasha will host its earnings conference call on Wednesday, August 14, 2013, at 9:30 a.m. Eastern to discuss its fiscal Q1 2014 financial results. The conference call will include a Q&A session where investors will have the opportunity to ask questions of management.

The teleconference can be accessed by dialing 877-407-0782 when calling within the United States or 201-689-8567 when calling internationally. Please dial in 10 minutes prior to the beginning of the call. There will be a playback available until August 27, 2013. To listen to the playback dial 877-660-6853 when calling within the United States or 201-612-7415 when calling internationally and use replay ID number: 419552.

The conference call will be simultaneously webcast and available at: http://www.investorcalendar.com/IC/CEPage.asp?ID=171483

About Kinbasha Gaming International, Inc.

Based in Hitachi City, Japan, Kinbasha Gaming International, Inc. (OTCQX: KNBA) is a retail gaming company that operates 21 pachinko parlors in the Japanese prefectures of Ibaraki, Tokyo and Chiba. For more than 50 years, the company's retail gaming establishments have offered customers the opportunity to play the games of chance known as pachinko and pachislo. Pachinko is played on a device which resembles a vertical pinball machine and pachislo is played on a machine that resembles a western style slot machine. Pachinko and pachislo are collectively ranked as Japan's largest leisure activity. For more information on Kinbasha, please visit: www.kinbashainc.com

For comprehensive investor relations material, including fact sheets, multimedia resources, and videos regarding Kinbasha, please follow the appropriate link: Investor Portal, Overview Video and Investor Fact Sheet

Kinbasha shares are listed on the OTCQX. Investors can access free, real-time Level 2 quotes for the company at: www.otcmarkets.com/stock/KNBA/quote

Safe Harbor Statement

This release contains certain "forward-looking statements" relating to the business of the Company and its subsidiary companies. All statements, other than statements of historical fact included herein are "forward-looking statements" including statements regarding: the Company's business and operations; business strategy, plans and objectives of the Company and its subsidiaries; and any other statements of non-historical information. These forward-looking statements are often identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions, involve known and unknown risks and uncertainties. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company's periodic reports that are filed with the Securities and Exchange Commission and available on its website (http://www.sec.gov). All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.

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Investor Contact: Trilogy Capital Partners - Asia Darren Minton President 212-634-6413 Email Contact