Dakota Plains Holdings, Inc. Reports Fourth Quarter and Full Year 2012 Financial Results

Adjusted EBITDA for 2012 Increased 110.7% to $11.8 Million

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Mar 14, 2013, 07:40 ET

WAYZATA, Minn., March 14, 2013 /PRNewswire/ -- Dakota Plains Holdings, Inc. ("Dakota Plains" and "DAKP"), (OTC: DAKP) today announced financial results for the three and twelve months ended December 31, 2012.

Full Year 2012 Operational and Financial Summary

2012 marketing volumes increased approximately 526% over 2011 to 7.7 million barrels sold.
Transloading volumes in 2012 increased 37% over 2011 to 7.6 million barrels.
Adjusted EBITDA was $11.8 million for 2012 representing a 110.7% gain compared to 2011.
Total expenses for 2012 were $3.1 million, a 24.4% decrease compared 2011.
Dakota Plains completed a $6.1 million debt offering, restructuring its liabilities and enabling the Company to end the period with positive working capital and net cash.
The Company completed the purchase of 124 acres at its New Town facility in Mountrail County, North Dakota, increasing the contiguous acreage owned to 192 and facilitating a planned expansion of its transloading facility during 2013.
Sub-contracted with a new operations partner for its transloading facility, increasing its efficiency in the last few months of 2012.

Craig M. McKenzie, Chairman and Chief Executive Officer, Dakota Plains, said: "In 2012, our first year as a public company, our company achieved significant volume increases and turned in an exceptional year of growth. Rapid increases in Bakken crude oil production, shortfalls in pipeline capacity and the lack of available new railcars have positioned us as a key provider of crude oil infrastructure and logistics services in North Dakota's Williston Basin. We experienced a 526% increase in total barrels marketed during the year, achieved growth of 37% in our transloading volume, and more than doubled our EBITDA for the year. We ended the 2012 with an average monthly marketing volume of 642,000 barrels compared to 204,000 at the end of last year, and we look forward to another year of significant growth in 2013."

Mr. McKenzie continued, "We are currently in the late stages of planning another exciting phase of growth for our company which includes bringing equipment, materials, and other freight into the region by rail to store and distribute through state-of-the-art facilities. This expansion, when completed, will further enable us to leverage our resources and generate attractive returns for our shareholders."

Mr. McKenzie concluded, "We are confident that the long term fundamentals of our business are strong, and that we are well-positioned to take advantage of current and new opportunities that continue to emerge in this important region. We enter 2013 with a strong balance sheet, powerful partnerships, and continue to see robust demand for our services. We believe that our cash flow, as we measure in EBITDA, will grow substantially in 2013 to the $25 million to $30 million range, based on only moderate increases in transloading and trucking volumes."

Full Year 2012 Financial Results

Adjusted EBITDA for the full year ended December 31, 2012 more than doubled to $11.8 million from $5.6 million in 2011. The increase in Adjusted EBITDA was due primarily to increased volumes from the company's marketing and transloading joint ventures. Loss from operations for 2012 declined by 25% to $2.8 million compared to a loss from operations of $3.7 million for 2011. The net loss for the full year of 2012 was $2.0 million compared to a net loss of $3.1 million in 2011. The 2012 net loss was mainly driven by the expense related to an embedded derivative. This charge was partially offset by the $14.7 million reported as a gain on extinguishment of debt and by higher income from the Company's indirect ownership interest in its marketing joint venture, DPTS Marketing LLC.

Fourth Quarter 2012 Financial Results

Adjusted EBITDA for the fourth quarter of December 31, 2012 was $1.8 million compared to $3.0 million for the fourth quarter of 2011. The decrease was primarily due to the decrease in the income from our investments in our joint ventures for the fourth quarter of 2012. The decrease in the income from our transloading joint venture was due to an increase in expenses related to the engagement and implementation of a new contractor to manage the operations. The loss from operations for the fourth quarter was $0.7 million compared to a loss from operations of $1.0 million for the fourth quarter of 2011. Net income for the fourth quarter of 2012 was $10.3 million, or $0.24 per diluted share compared to a net loss of $2.4 million, or $(0.07) per diluted share in the fourth quarter of 2011. The net income for the fourth quarter of 2012 was primarily the result of the gain on the extinguishment of debt realized due to the restructuring of debt in November.

Balance Sheet Summary

As of December 31, 2012, the company had cash and cash equivalents of $2.3 million, compared to $1.8 million as of December 31, 2011. Working capital as of December 31, 2012 was $2.3 million compared to a deficit of $1.7 million as of December 31, 2011. At December 31, 2012, the current ratio was 2.54:1 compared to 0.71:1 as of December 31, 2011. Stockholders' equity was $12.4 million at December 31, 2012, compared to $7.1 million as of December 31, 2011.

Adjusted EBITDA

Adjusted EBITDA is a non-GAAP measure. A reconciliation of this measure to its most directly comparable GAAP measure is included in the accompanying financial tables found later in this release. Management believes the use of this non-GAAP financial measure provides useful information to investors to gain an overall understanding of current financial performance. Specifically, management believes the non-GAAP results included herein provide useful information to both management and investors by excluding certain expenses and gains and losses on the extinguishment of debt that management believes are not indicative of Dakota Plains' core operating results. In addition, this non-GAAP financial measure is used by management for budgeting and forecasting as well as subsequently measuring Dakota Plains' performance, and management believes it is providing investors with a financial measure that most closely aligns to its internal measurement processes.

About Dakota Plains Holdings, Inc.

Dakota Plains Holdings, Inc. (OTC: DAKP) is a vertically-integrated, midstream energy company, which competes through its 50/50 joint ventures with affiliates of World Fuel Services Corporation (NYSE: INT) and Prairie Field Services, LLC, to provide customers with crude oil off take services that include marketing, transloading and trucking of crude oil and related products. Direct and indirect company assets include a proprietary trucking fleet, a transloading facility located in Mountrail County, North Dakota, which is centrally located within the Bakken formation, and 1,100 railroad tank cars.

Cautionary Note Regarding Forward Looking Statements

This announcement contains forward-looking statements that reflect the current views of Dakota Plains, including, but not limited to, statements regarding our future growth and plans for our business and operations. We do not undertake to update our forward-looking statements. These statements involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of lack of diversification, dependency upon strategic relationships, dependency on a limited number of major customers, competition for the loading, marketing and transporting of crude oil and related products, difficulty in obtaining additional capital that will be needed to implement business plans, difficulties in attracting and retaining talented personnel, risks associated with building and operating a transloading facility, changes in commodity prices and the demand for crude oil and natural gas, competition from other energy sources, inability to obtain necessary facilities, difficulty in obtaining crude oil to transport, increases in our operating expenses, an economic downturn or change in government policy that negatively impacts demand for our services, penalties we may incur, costs imposed by environmental laws and regulations, inability to obtain or maintain necessary licenses, challenges to our properties, technological unavailability or obsolescence, and future acts of terrorism or war, as well as the threat of war and other factors described from time to time in the company's reports filed with the U.S. Securities and Exchange Commission, including the report on Form 10-K, filed March 14, 2013, as amended and supplemented by subsequent reports from time to time.

For more information, please contact:

Company Contact	Investor Contact
Tim Brady, CFO	Peter Seltzberg, Hayden IR
[email protected]	[email protected]
Phone: 952.473.9950	Phone: 646.415.8972
www.dakotaplains.com	www.haydenir.com

- TABLES FOLLOW -

DAKOTA PLAINS HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2012 AND 2011

ASSETS
		December 31,
		2012	2011
CURRENT ASSETS
	Cash and Cash Equivalents	$ 2,340,083	$ 1,753,665
	Prepaid Expenses	30,632	16,756
	Due from Related Party	81,175	-
	Deferred Tax Asset	1,414,000	2,307,000
	Total Current Assets	3,865,890	4,077,421


PROPERTY AND EQUIPMENT
	Land	3,166,849	1,053,576
	Site Development	2,329,660	2,329,660
	Other Property and Equipment	45,292	42,075
	Total Property and Equipment	5,541,801	3,425,311
	Less - Accumulated Depreciation	424,833	259,520
	Total Property and Equipment, Net	5,116,968	3,165,791

PREFERRED DIVIDEND RECEIVABLE		819,178	317,808

INVESTMENT IN DPTS MARKETING LLC		21,905,797	11,996,571

INVESTMENT IN DAKOTA PETROLEUM TRANSPORT SOLUTIONS, LLC		5,331,599	2,890,280

FINANCE COSTS, NET		184,225	-

DEFERRED TAX ASSET		2,441,000	-

	Total Assets	$ 39,664,657	$ 22,447,871

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
	Accounts Payable	$ 239,674	$ 32,616
	Accrued Expenses	232,905	80,661
	Income Tax Payable	1,028,000	-
	Derivative Liability	-	5,540,000
	Deferred Rental Income	20,679	125,164
	Total Current Liabilities	1,521,258	5,778,441

LONG-TERM LIABILITIES
	Promissory Notes, Net of Debt Discount	25,614,683	9,000,000
	Deferred Rental Income	165,434	125,163
	Deferred Tax Liability	-	460,000
	Total Long-Term Liabilities	25,780,117	9,585,163

	Total Liabilities	27,301,375	15,363,604

STOCKHOLDERS' EQUITY
	Preferred Stock - Par Value $.001; 10,000,000 Shares Authorized; None Issued or Outstanding	-	-
	Common Stock, Par Value $.001; 100,000,000 Authorized, 41,839,433 and 37,014,018 issued and outstanding, respectively	41,839	37,014
	Additional Paid-In Capital	17,432,904	10,158,044
	Accumulated Deficit	(5,111,461)	(3,110,791)
	Total Stockholders' Equity	12,363,282	7,084,267

	Total Liabilities and Stockholders' Equity	$ 39,664,657	$ 22,447,871

DAKOTA PLAINS HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 2012, 2011 AND 2010

			Year Ended December 31,
			2012	2011	2010
REVENUES
	Rental Income - Related Party		$ 266,483	$ 314,581	$ 163,427

OPERATING EXPENSES
	General and Administrative Expenses		2,901,907	3,897,066	110,059
	Depreciation and Amortization		165,313	159,275	90,929
		Total Operating Expenses	3,067,220	4,056,341	200,988

LOSS FROM OPERATIONS			(2,800,737)	(3,741,760)	(37,561)

OTHER INCOME (EXPENSE)
	Income from Investment in Dakota Petroleum Transport Solutions, LLC		3,511,999	4,236,779	1,117,608
	Income from Investment in DPTS Marketing LLC		10,410,596	2,314,279	-
	Interest Expense (Net of Interest Income)		(29,211,978)	(3,371,812)	1,259
	Gain (Loss) on Extinguishment of Debt		14,708,909	(4,552,500)	-
	Other Expense		-	(2,777)	-
		Total Other Income (Expense)	(580,474)	(1,376,031)	1,118,867

INCOME (LOSS) BEFORE INCOME TAXES			(3,381,211)	(5,117,791)	1,081,306

INCOME TAX PROVISION (BENEFIT)			(1,380,541)	(2,007,000)	416,000

NET INCOME (LOSS)			$(2,000,670)	$(3,110,791)	$ 665,306

Net Income (Loss) Per Common Share – Basic and Diluted			$ (0.05)	$ (0.09)	$ 0.02

Weighted Average Shares Outstanding – Basic and Diluted			39,792,973	35,214,940	30,122,634

DAKOTA PLAINS HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED DECEMBER 31, 2012 AND 2011
(UNAUDITED)

			Three Months Ended December 31,
			2012	2011
REVENUES
	Rental Income - Related Party		$ 56,864	$ 80,280

OPERATING EXPENSES
	General and Administrative Expense		753,329	1,002,187
	Depreciation and Amortization		41,378	41,130
		Total Operating Expenses	794,707	1,043,317

LOSS FROM OPERATIONS			(737,843)	(963,037)

OTHER INCOME (EXPENSE)
	Income from Investment in Dakota Petroleum Transport Solutions, LLC		921,124	1,548,046
	Income from Investment in DPTS Marketing LLC		1,426,968	1,969,769
	Interest Expense (Net of Interest Income)		7,851	(1,888,655)
	Gain (Loss) on Extinguishment of Debt		14,708,909	(4,552,500)
	Other Expense		-	(1)
		Total Other Income (Expense)	17,064,852	(2,923,341)

INCOME (LOSS) BEFORE INCOME TAXES			16,327,009	(3,886,378)

INCOME TAX PROVISION (BENEFIT)			5,985,000	(1,523,000)

NET INCOME (LOSS)			$ 10,342,009	$(2,363,378)

Net Income (Loss) Per Common Share – Basic			$ 0.25	$ (0.07)
Net Income (Loss) Per Common Share – Diluted			$ 0.24	$ (0.07)

Weighted Average Shares Outstanding – Basic			41,109,462	36,029,398
Weighted Average Shares Outstanding – Diluted			42,592,489	36,029,398

DAKOTA PLAINS HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2012, 2011 AND 2010

						Retained
				Additional	Stock	Earnings	Total
		Common Stock		Paid-In	Subscriptions	(Accumulated	Stockholders'
		Shares	Amount	Capital	Receivable	Deficit)	Equity

Balance – December 31, 2009		29,766,462	$ 29,766	$ 1,650,361	$ (110,000)	$ (55,293)	$ 1,514,834

	Sale of Common Shares at $0.775 Per Share	700,000	700	541,800	-	-	542,500

	Issuance of Common Shares Related to Consulting Agreements	126,282	126	46,602	-	-	46,728

	Payment on Subscription Receivable	-	-	-	110,000	-	110,000

	Net Income	-	-	-	-	665,306	665,306

Balance – December 31, 2010		30,592,744	30,592	2,238,763	-	610,013	2,879,368

	Sale of Common Shares at $2.125 Per Share	1,500,000	1,500	3,186,000	-	-	3,187,500

	Sale of Common Shares at $4.00 Per Share	500,000	500	1,999,500	-	-	2,000,000

	Issuance of Common Shares Related to Consulting Agreements	2,280,000	2,280	2,161,470	-	-	2,163,750

	Issuance of Common Shares Related to Administrative Services Agreement
		2,000	2	4,248	-	-	4,250

	Issuance of Restricted Common Shares	600,000	600	(600)	-	-	-

	Issuance of Common Shares as a Stock Dividend	1,441,774	1,442	(1,442)	-	-	-

	Issuance of Common Shares to Board of Directors	40,000	40	84,960	-	-	85,000

	Issuance of Common Shares for Finance Costs	7,500	8	29,992	-	-	30,000

	Cash Dividend Paid	-	-	(1,331,619)	-	(610,013)	(1,941,632)

	Share-Based Compensation	-	-	425,756	-	-	425,756

	Issuance of Common Shares Pursuant to Exercise of Warrants	50,000	50	14,200	-	-	14,250

	Warrants Issue Included in Debt Discount	-	-	1,346,816	-	-	1,346,816

	Net Loss	-	-	-	-	(3,110,791)	(3,110,791)

Balance – December 31, 2011		37,014,018	37,014	10,158,044	-	(3,110,791)	7,084,267

	Acquisition of MCT Holding Corporation	640,200	640	(640)	-	-	-

	Issuance of Common Shares Pursuant to Exercise of Warrants	2,386,578	2,387	(2,387)	-	-	-

	Share-Based Compensation	-	-	477,604	-	-	477,604

	Issuance of Restricted Common Shares	38,437	38	(38)	-	-	-

	Issuance of Common Shares Pursuant to Debt Restructure	1,757,075	1,757	6,130,435	-	-	6,132,192

	Issuance of Common Shares to Board of Directors	3,125	3	24,997	-	-	25,000

	Warrants Issued Included in Debt Discount	-	-	644,889	-	-	644,889

	Net Loss	-	-	-	-	(2,000,670)	(2,000,670)

Balance – December 31, 2012		41,839,433	$ 41,839	$ 17,432,904	$ -	$ (5,111,461)	$ 12,363,282

DAKOTA PLAINS HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2012, 2011 AND 2010


		Year Ended December 31,
		2012	2011	2010
CASH FLOWS FROM OPERATING ACTIVITIES
	Net Income (Loss)	$ (2,000,670)	$(3,110,791)	$ 665,306
	Adjustments to Reconcile Net Income (Loss) to Net Cash
	Provided by (Used in) Operating Activities
	Depreciation and Amortization	165,313	159,275	90,929
	Amortization of Debt Discount	58,272	1,346,816	-
	Amortization of Finance Costs	10,837	-	-
	(Gain) Loss on Extinguishment of Debt	(14,708,909)	4,552,500	-
	Loss on Disposal of Property and Equipment	-	2,776	-
	Loss on Derivative Liability	27,311,802	1,167,500	-
	Deferred Income Taxes	(2,412,000)	(2,010,000)	196,000
	Issuance of Common Stock for Consulting Fees	-	2,168,000	46,728
	Increase (Decrease) in Deferred Rental Income	40,271	(100,546)	225,709
	Income from Investment in Dakota Petroleum Transport Solutions, LLC	(3,511,999)	(4,236,779)	(1,117,608)
	Income from Investment in DPTS Marketing LLC	(10,410,596)	(2,314,279)	-
	Non-Cash Rental Income	(42,783)	(80,986)	(20,246)
	Share-Based Compensation	502,604	510,756	-
	Changes in Working Capital and Other Items:
	Decrease in Trade Receivables	-	-	19,161
	Increase in Prepaid Expenses	(13,876)	(16,756)	-
	Increase in Due from Related Party	(81,175)	-	-
	Increase (Decrease) in Accounts Payable	207,058	(6,184)	8,000
	Increase (Decrease) in Income Taxes Payable	1,028,000	(220,000)	220,000
	Increase (Decrease) in Accrued Expenses	152,244	80,661	(19,147)
	Increase (Decrease) in Deferred Rental Income	(104,485)	12,310	112,854
	Net Cash Provided by (Used in) Operating Activities	(3,810,092)	(2,095,727)	427,686

CASH FLOWS FROM INVESTING ACTIVITIES
	Purchases of Property and Equipment	(2,116,490)	(788,126)	(1,534,587)
	Cash Paid for Investment in Dakota Petroleum Transport Solutions, LLC	-	-	(50,000)
	Cash Paid for Investment in DPTS Marketing LLC	-	(10,000,100)	-
	Cash Received from Dakota Petroleum Transport Solutions, LLC	1,113,463	1,952,210	659,102
	Net Cash Used in Investing Activities	(1,003,027)	(8,836,016)	(925,485)

CASH FLOWS FROM FINANCING ACTIVITIES
	Proceeds from Issuance of Common Stock	-	5,187,500	652,500
	Proceeds from Exercise of Warrants	-	14,250	-
	Repayments of Notes Payable - Related Parties	-	-	(240,000)
	Cash Paid for Finance Costs	(195,062)	-	-
	Cash Paid for Debt Extinguishment Costs	(45,401)	(150,000)	-
	Cash Dividend Paid	-	(1,941,632)	-
	Repayment of Promissory Notes	(500,000)	-	-
	Proceeds from Promissory Notes	6,140,000	-	-
	Proceeds from Senior Promissory Notes	-	3,500,000	-
	Proceeds from Junior Promissory Notes	-	5,500,000	-
	Net Cash Provided by Financing Activities	5,399,537	12,110,118	412,500

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		586,418	1,178,375	(85,299)

CASH AND CASH EQUIVALENTS – BEGINNING OF PERIOD		1,753,665	575,290	660,589

CASH AND CASH EQUIVALENTS – END OF PERIOD		$ 2,340,083	$ 1,753,665	$ 575,290


Supplemental Disclosure of Cash Flow Information
	Cash Paid During the Period for Interest	$ 1,831,353	$ 858,082	$ 34,849
	Cash Paid During the Period for Income Taxes	$ 3,459	$ 211,220	$ -

	Non-Cash Financing and Investing Activities:
	Purchase of Property and Equipment Paid Subsequent to Period End	$ 30,800	$ 30,800	$ 73,078
	Fair Value of Warrants Issued for Debt Discount	$ 1,048,889	$ 1,346,816	$ -
	Payment of Debt Extinguishment Costs through Issuance of Common Stock	$ -	$ 30,000	$ -
	Preferred Dividend Receivable	$ 501,370	$ 317,808	$ -
	Satisfaction of Derivative Liability with Common Stock	$ 6,132,192	$ -	$ -
	Promissory Notes Issued to Satisfy Derivative Liability	$ 11,965,300	$ -	$ -
	Loss on Extinguishment of Debt Related to Derivative Liability	$ -	$ 4,372,500	$ -


Dakota Plains Holdings, Inc.
Reconciliation of Adjusted EBITDA


	Three Months Ended		Year Ended
	December 31,		December 31,
	2012	2011	2012	2011	2010
Net Income (Loss)	$ 10,342,009	$ (2,363,378)	$ (2,000,670)	$ (3,110,791)	$ 665,306
Add Back:
Income Tax Provision (Benefit)	5,985,000	(1,523,000)	(1,380,541)	(2,007,000)	416,000
Depreciation and Amortization	41,378	41,130	165,313	159,275	90,929
Share Based Compensation - Employees and Directors	128,644	123,252	502,604	510,756	-
Share Based Compensation - Consultants	-	231,921	-	2,168,000	46,728
Interest Expense	(7,851)	1,888,655	29,211,978	3,371,812	-
Loss (Gain) on Extinguishment of Debt	(14,708,909)	4,552,500	(14,708,909)	4,552,500	-
Adjusted EBITDA	$ 1,780,270	$ 2,951,080	$ 11,789,775	$ 5,644,552	$ 1,218,963

SOURCE Dakota Plains Holdings, Inc.

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