OAKVILLE, ONTARIO , the world's leading supplier of Internet
bingo software, today announced its results for the three and
nine-month periods ended September 30, 2007.
"With new licensing arrangements now generating revenue and with
other significant arrangements on the horizon, we expect royalty
revenue to expand over the next quarter and beyond" said Scott
White, President and Chief Executive Officer. "Multinational and
brand-name companies continue to explore the Internet bingo
vertical and we look forward to announcing new licensing
arrangements with our growing complement of U.K. and European
focused customers."
Highlights for the third quarter of fiscal 2007 include:
- Successful launch of Paddy Power's bingo offering
- Successful installation of Bet24's bingo offering
- Parlay software certification under the auspices of the Isle of Man
- Grant of Software Supply License by the U.K. Gambling Commission
- Canada Revenue Agency acceptance of SR&ED claims for 2004 and 2005
Results for the third quarter of fiscal 2007 include:
- Total revenue at $2,001,531, down 24% from Q3 2006.
- Royalty revenue at $1,788,223, down 8% from Q3 2006.
- Net income at $173,492, or $0.01 per share, fully diluted, down
from $501,931 in Q3 2006.
- EBITDA(1) decreased to $271,538, from $865,023 in Q3 2006 and
EBITDA(1) margin decreased to 14% from 33% in Q3 2006.
Results for the first three quarters of fiscal 2007 include:
- Total revenue at $5,990,758, down 13% from the first three quarters
of 2006.
- Royalty revenue at $5,438,569, down 6% from the first three
quarters of 2006.
- Net income at $296,242, or $0.02 per share, fully diluted, down
from $1,206,255 in the first three quarters of 2006.
- EBITDA(1) decreased to $583,810, from $2,082,345 in the first three
quarters of 2006 and EBITDA(1) margin decreased to 10% from 30% in
the first three quarters of 2006.
Parlay generates revenue from software licensing, installation
fees and support services. Consolidated revenues decreased to $2.0
million in Q3 2007 from $2.6 million in Q2 2006 or 24% quarter over
quarter. The decrease represents the absence in Q3 2007 of a
one-off revenue enhancement in Q3 2006 in the amount of $0.5
million and the detrimental impact on certain Company licensees
from changes in the business model of certain e-commerce providers.
A partial offset was the continuing growth across Parlay's
portfolio of licensees and the impact of new network partners
during the quarter.
Expenses in Q3 2007 were $1.8 million, unchanged from $1.8
million in Q3 2006. Although total expenses were unchanged in Q3
2007, the Company's was able to recognize tax incentives for
research activities which were offset by higher compensation costs,
including the impact of foreign exchange fluctuations, and the
absence of certain non-recurring costs from Q3 2006.
Net income for the quarter was $0.2 million, or $0.01 per
diluted share, compared to $0.5 million, or $0.03 per diluted share
in Q3 2006.
Consolidated revenues decreased to $6.0 million in the first
three quarters of 2007 from $6.9 million in the first three
quarters of 2006 or a 13% decrease nine-month period over
nine-month period. The decrease represents the absence in the
nine-month period in 2007 of a one-off revenue enhancement in the
amount of $0.5 million in the nine-month period in 2006 together
with the detrimental impact on certain Company licensees from
changes in the business model of certain e-commerce providers. A
partial offset was the continuing growth across Parlay's portfolio
of licensees and the impact of new network partners during the
first three quarters of 2007.
Expenses in the first three quarters of 2007 were $5.5 million,
up from $4.9 million in the first three quarters of 2006. The
increase represented the impact of higher compensation costs,
including the impact of adverse foreign exchange effects, offset by
the Company's ability to recognize tax incentives for research
activities and the absence of certain non-recurring costs from the
first three quarters of 2006.
Net income for the first three quarters of 2007 was $0.3
million, or $0.02 per diluted share, compared to $1.2 million, or
$0.08 per diluted share in the first three quarters of 2006.
Parlay remains debt free and Parlay's cash balance at September
30, 2007 was $1.8 million.
PARLAY ENTERTAINMENT INC.
CONSOLIDATED BALANCE SHEETS
(incorporated under the laws of the province of Ontario)
in whole U.S. dollars
---------------------
(Unaudited) (Audited)
September 30, December 31,
ASSETS 2007 2006
------------------------------
Current assets:
Cash $ 1,753,611 $ 3,129,216
Accounts receivable:
Trade, less allowance of approximately
$187,000 ($118,000 - 2006) 1,581,615 1,307,402
Other 55,317 7,943
Income taxes recoverable 524,391 -
Prepaid expenses, deposits and other assets 187,827 138,211
------------------------------
Total current assets 4,102,761 4,582,772
Equipment - net 222,354 278,211
Future income tax asset 40,000 40,000
------------------------------
$ 4,365,115 $ 4,900,983
------------------------------
------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 617,742 $ 751,026
Income taxes payable - 592,976
Deferred revenue 304,788 225,801
------------------------------
Total current liabilities 922,530 1,569,803
------------------------------
Shareholders' equity:
Common shares, an unlimited number of
shares authorized, 12,775,265 shares
issued and outstanding (13,153,015 - 2006) 1,401,032 1,436,459
Contributed surplus 2,037,451 1,898,268
Retained earnings (accumulated deficit) 4,102 (3,547)
------------------------------
3,442,585 3,331,180
------------------------------
$ 4,365,115 $ 4,900,983
------------------------------
------------------------------
PARLAY ENTERTAINMENT INC.
CONSOLIDATED STATEMENTS OF INCOME AND
RETAINED EARNINGS (ACCUMULATED DEFICIT)
(in whole U.S. dollars, except for per share amounts)
(Unaudited)
Three-Months Ended Nine-Months Ended
September 30 September 30
2007 2006 2007 2006
------------------------------------------------------
Revenues:
Royalties $ 1,788,223 $ 1,937,754 $ 5,438,569 $ 5,814,548
Installation fees 53,326 49,053 121,157 140,484
Software license
fee - 480,000 - 480,000
Support services 159,982 180,861 431,032 428,994
------------------------------------------------------
2,001,531 2,647,668 5,990,758 6,864,026
------------------------------------------------------
Expenses:
Sales, marketing
and services to
licensees 257,822 232,853 783,081 745,045
Research, software
development and
support services 1,277,642 1,042,837 3,747,524 2,906,921
General and
administrative 530,328 339,668 1,212,142 962,428
Amortization 40,186 38,714 118,850 94,028
Net benefit of
prior years'
research incentives (335,799) - (335,799) -
Net Chartwell
business
combination
expenses - 167,287 - 167,287
------------------------------------------------------
1,770,179 1,821,359 5,525,798 4,875,709
------------------------------------------------------
Income before
income taxes 231,352 826,309 464,960 1,988,317
------------------------------------------------------
Income tax
provision
(recovery)
Current 57,860 324,378 168,718 782,062
Future - - - -
------------------------------------------------------
57,860 324,378 168,718 782,062
------------------------------------------------------
Net income for the
period 173,492 501,931 296,242 1,206,255
Retained earnings
(accumulated
deficit),
beginning of period (37,438) (454,524) (3,547) (1,158,848)
Repurchase and
cancellation of
common shares (131,952) - (288,593) -
------------------------------------------------------
------------------------------------------------------
Retained earnings
(accumulated
deficit),
end of period $ 4,102 $ 47,407 $ 4,102 $ 47,407
------------------------------------------------------
------------------------------------------------------
Net income per
share:
Basic $ 0.01 $ 0.04 $ 0.02 $ 0.09
------------------------------------------------------
------------------------------------------------------
Diluted $ 0.01 $ 0.03 $ 0.02 $ 0.08
------------------------------------------------------
------------------------------------------------------
Weighted average
number
of common
shares outstanding:
Basic 12,817,432 13,228,262 12,977,182 13,066,459
------------------------------------------------------
------------------------------------------------------
Diluted 13,710,625 14,394,249 13,899,898 14,293,039
------------------------------------------------------
------------------------------------------------------
PARLAY ENTERTAINMENT INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in whole U.S. dollars)
(Unaudited)
Three-Months Ended Nine-Months Ended
September 30 September 30
2007 2006 2007 2006
--------------------------------------------------
Cash flows from
operating
activities:
Net income for the
period $ 173,492 $ 501,931 $ 296,242 $ 1,206,255
Adjustments to
reconcile net
income to
net cash provided by
operating activities:
Stock option expense 78,786 43,357 139,183 132,865
Amortization 40,186 38,714 118,850 94,028
Loss on disposal of
fixed assets - - - 2,158
Changes in non-cash
working capital items:
Accounts receivable 232,775 196,276 (321,587) (276,318)
Prepaid expenses,
deposits and
other assets (56,509) (72,123) (49,616) (94,925)
Accounts payable and
accrued liabilities (140,166) (48,363) (115,737) 79,755
Income taxes
recoverable/payable (421,814) 257,375 (1,107,127) 499,532
Deferred revenue (24,949) (19,519) 78,987 (59,121)
--------------------------------------------------
Net cash provided by
(used in) operating
activities (118,199) 897,648 (960,805) 1,584,229
--------------------------------------------------
Cash flows from
investing activities:
Purchases of equipment (31,246) (75,774) (73,233) (175,748)
Increase (decrease) in
accounts payable and
accrued liabilities
related to purchases
of equipment (7,756) 7,925 (17,547) 12,216
--------------------------------------------------
Net cash (used in)
investing activities (39,002) (67,849) (90,780) (163,532)
--------------------------------------------------
Cash flows from
financing activities:
Repurchase of common
shares (155,646) - (335,437) -
Decrease in accounts
payable and accruals
related to repurchase
of common shares 35,871 - - -
--------------------------------------------------
Cash used for repurchase
of common shares (119,775) - (335,437) -
Proceeds from issuance
of common shares 6,000 33,700 11,417 248,313
--------------------------------------------------
Net cash provided by
(used in) financing
activities (113,775) 33,700 (324,020) 248,313
--------------------------------------------------
Net increase (decrease)
in cash (270,976) 863,499 (1,375,605) 1,669,010
Cash, beginning of period 2,024,587 2,078,021 3,129,216 1,272,510
--------------------------------------------------
Cash, end of period $ 1,753,611 $ 2,941,520 $ 1,753,611 $ 2,941,520
--------------------------------------------------
--------------------------------------------------
Supplemental cash flow
activities:
Income taxes paid/
(received) $ 55,366 $ 65,083 $ 849,036 $ 279,055
--------------------------------------------------
--------------------------------------------------
Interest paid $ - $ - $ - $ -
--------------------------------------------------
--------------------------------------------------
(1) Management believes that EBITDA (earnings before interest,
income taxes and amortization) is a useful supplemental measure of
performance. However, EBITDA is not a recognized earnings measure
under generally accepted accounting principles ("GAAP") and does
not have a standardized meaning. Therefore, EBITDA may not be
comparable to similar measures presented by other companies.
EBITDA is reconciled to net income as follows:
Three-Months Ended Nine-Months Ended
September 30, September 30,
2007 2006 2007 2006
--------------------------------------------------------
Net income $ 173,492 $ 501,931 $ 296,242 $ 1,206,255
Interest - - - -
Taxes 57,860 324,378 168,718 782,062
Amortization 40,186 38,714 118,850 94,028
--------------------------------------------------------
EBITDA $ 271,538 $ 865,023 $ 583,810 $ 2,082,345
--------------------------------------------------------
--------------------------------------------------------
Revenue $ 2,001,531 $ 2,647,668 $ 5,990,758 $ 6,864,026
--------------------------------------------------------
--------------------------------------------------------
% 14% 33% 10% 30%
--------------------------------------------------------
--------------------------------------------------------
About Parlay Entertainment
Parlay Entertainment Inc. is the world's leading developer and
licensor of Internet bingo software. As the inventor and patent
holder of Internet bingo(2), Parlay is the first company in the
world to develop and deploy a commercial Internet bingo product.
Parlay bingo is available in both 75-number and 90-number versions
and is complemented by a full suite of lottery and casino games.
Our multi-player, multi-platform technology is used to power more
online bingo sites than any other software provider in the world.
Some of the world's best known brands use Parlay Bingo solutions,
including Virgin, Yahoo!, MSN and Littlewoods Gaming. Parlay is
headquartered in Oakville, Canada with offices in Bridgetown,
Barbados, and Valletta, Malta.
(2) United States Patent No. 6,585,590 "Method and system for
operating a bingo game on the internet", with other Patent
applications pending in other countries
For more information on Parlay solutions and services, please
visit our website at www.parlaygroup.com.
This document may contain statements about expected future
events and/or financial and operating results of Parlay
Entertainment Inc. that are forward-looking. By their nature,
forward-looking statements require the Company to make assumptions
and are subject to inherent risks and uncertainties. There is
significant risk that predictions and other forward-looking
statements will not prove to be accurate. Readers are cautioned not
to place undue reliance on forward-looking statements as a number
of factors could cause actual future results, conditions, actions
or events to differ materially from the targets, expectations,
estimates or intentions expressed in the forward-looking
statements.
The TSX Venture Exchange does not accept any responsibility for
the adequacy or accuracy of this release.
Contacts: Parlay Entertainment Inc. Scott White President &
CEO (905) 337-6505 Email: swhite@parlaygroup.com Parlay
Entertainment Inc. David Callander CFO (905) 337-6516 Email:
dcallander@parlaygroup.com Website: www.parlaygroup.com
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