All amounts in United States Dollars
Parlay Entertainment Inc. (TSX VENTURE:PEI), the world's leading supplier of
Internet bingo software, today announced its results for the three and
twelve-month periods ended December 31, 2007.
Results for the fourth quarter of fiscal 2007 include:
- Total revenue at $2,041,351, down 6% from Q4 2006.
- Royalty revenue at $1,883,784, down 6% from Q4 2006.
- Net loss at $372,850, or $0.03 per share, fully diluted, down from net income
of $32,591 in Q4 2006.
- EBITDA(1) decreased to $(497,432), from $110,459 in Q4 2006 and EBITDA(1)
margin decreased to (24)% from 5% in Q4 2006.
Results for fiscal 2007 include:
- Total revenue at $8,032,109, down 11% from 2006.
- Royalty revenue at $7,322,353, down 6% from 2006.
- Net loss of $76,608, or $0.01 per share, fully diluted, down from net income
of $1,238,846 in 2006.
- EBITDA(1) decreased to $86,378, from $2,192,804 in 2006 and EBITDA(1) margin
decreased to 1% from 24% in 2006.
"In 2007, Parlay was faced with a number of challenges, which most importantly
required that the Company adjust to a changing U.S. regulatory environment,"
said Scott White, Parlay Entertainment Inc.'s Chief Executive Officer. "While
these changes had a negative impact on revenue and earnings, Parlay made
significant investments in technology, sales and marketing. These investments
have allowed for the completion of several new U.K. and European-facing
licensing arrangements and, as these arrangements transition into active
businesses throughout 2008, we anticipate that they will make a meaningful
contribution to royalty revenue.
As multinational and brand-name companies continue to express interest in
Internet bingo" continued Mr. White, "we look forward to announcing new
licensing arrangements with our growing complement of U.K. and European focused
customers and strategic partners."
Parlay generates revenue from software licensing, installation fees and support
services. Consolidated revenues decreased to $2.0 million in Q4 2007 from $2.2
million in Q4 2006 or 6% quarter over quarter. The decrease represents 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 Q4 2007 were $2.6 million, up from $2.1 million in Q4 2006. The
increase represented adverse foreign exchange effects, increased bad debt
expense and certain non-recurring costs in Q4 2007 offset by the absence of
certain non-recurring costs from Q4 2006. The non-recurring costs in Q4 2007
were costs associated with the Lottofairness campaign and transaction fees
associated with the potential acquisition of the Company. The non-recurring
costs from Q4 2006 were ad-hoc incentive compensation awards for 2006.
Net loss for the quarter was $0.4 million, or $0.03 per diluted share, compared
to net income of $0.0 million, or $0.00 per diluted share in Q4 2006.
Consolidated revenues decreased to $8.0 million in fiscal 2007 from $9.0 million
in fiscal 2006 or an 11% decrease year over year. The decrease represents 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 fiscal 2007.
Expenses in fiscal 2007 were $8.1 million, up from $7.0 million in fiscal 2006.
The increase represented adverse foreign exchange effects, increased bad debt
expense and certain non-recurring costs in 2007 offset by the absence of certain
non-recurring costs from 2006 and the recognition of tax incentives for research
activities from 2004 and 2005 in 2007. The non-recurring costs in 2007 were
costs associated with the Lottofairness campaign and transaction fees associated
with the potential acquisition of the Company. The non-recurring costs from 2006
were ad-hoc incentive compensation awards for 2006 and transaction fees
associated with the potential acquisition of the Company.
Net loss for fiscal 2007 was $0.1 million, or $0.01 per diluted share, compared
to net income of $1.2 million, or $0.09 per diluted share in fiscal 2006.
Parlay remains debt free and Parlay's cash balance at December 31, 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
---------------------
(Audited) (Audited)
December 31, December 31,
ASSETS 2007 2006
------------- ---------------
Current assets:
Cash $ 1,832,178 $ 3,129,216
Accounts receivable:
Trade, less allowance of approximately
$388,000 1,480,956 1,307,402
($118,000 - 2006)
GST receivable 78,108 7,943
Income taxes recoverable 552,936 -
Prepaid expenses, deposits and other assets 130,167 138,211
Future income taxes 114,130 -
------------- ---------------
Total current assets 4,188,475 4,582,772
Equipment - net 203,127 278,211
Future income taxes, net of valuation
allowance 65,000 40,000
------------- ---------------
$ 4,456,602 $ 4,900,983
------------- ---------------
------------- ---------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 1,018,301 $ 751,026
Income taxes payable - 592,976
Deferred revenue 291,544 225,801
------------- ---------------
Total current liabilities 1,309,845 1,569,803
------------- ---------------
Shareholders' equity:
Common shares, an unlimited number of
shares authorized, 13,012,265 shares issued
and outstanding (13,153,015 - 2006) 1,465,676 1,436,459
Contributed surplus 2,087,925 1,898,268
Retained earnings (accumulated deficit) (406,844) (3,547)
------------- ---------------
3,146,757 3,331,180
------------- ---------------
$ 4,456,602 $ 4,900,983
------------- ---------------
------------- ---------------
CONSOLIDATED STATEMENTS OF CHANGES
IN SHAREHOLDERS' EQUITY
(in whole U.S. dollars)
(Audited)
Retained
Earnings
Common Stock Contributed (Accumulated
Shares Amount Surplus Deficit) Total
---------------------------------------------------------------------------
Balance
December
31, 2005 12,728,265 $ 1,206,876 $ 1,734,391 $ (1,158,848) $1,782,419
Issuance
of stock
options - - 163,877 - 163,877
Exercise
of stock
options
and
warrants 596,250 248,313 - - 248,313
Repurchase
and
cancellation
of common
shares (171,500) (18,730) - (83,545) (102,275)
Net
income 2006 - - - 1,238,846 1,238,846
---------------------------------------------------------------------------
Balance
December
31, 2006 13,153,015 1,436,459 1,898,268 (3,547) 3,331,180
Issuance
of stock
options - - 189,657 - 189,657
Exercise
of stock
options
and
warrants 361,250 84,067 - - 84,067
Repurchase
and
cancellation
of common
shares (502,000) (54,850) - (326,689) (381,539)
Net loss -
2007 - - - (76,608) (76,608)
---------------------------------------------------------------------------
Balance
December
31, 2007 13,012,265 $ 1,465,676 $ 2,087,925 $ (406,844) $3,146,757
---------------------------------------------------------------------------
---------------------------------------------------------------------------
PARLAY ENTERTAINMENT INC.
CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)
(in whole U.S. dollars, except for per share amounts)
Three-Months Ended Twelve-Months Ended
December 31 December 31
2007 2006 2007 2006
-------------- -------------- -------------- -------------
(Unaudited) (Unaudited) (Audited) (Audited)
Revenues:
Royalties $ 1,883,784 $ 1,999,434 $ 7,322,353 $ 7,813,982
Installation
fees 28,956 45,935 150,113 186,419
Software
license fee - - - 480,000
Support
services 128,611 118,684 559,643 547,678
-------------- -------------- -------------- -------------
2,041,351 2,164,053 8,032,109 9,028,079
-------------- -------------- -------------- -------------
Expenses:
Sales,
marketing and
services to
licensees 290,739 301,383 1,073,820 1,046,428
Research,
software
development
and support
services 1,284,159 1,216,929 5,031,683 4,123,850
General and
administrative 630,559 535,282 1,842,701 1,497,710
Amortization 42,093 38,192 160,943 132,220
Net benefit of
prior years'
research
incentives - - (335,799) -
Lottofairness
campaign 242,376 - 242,376 -
PEIC
transaction
fees 90,950 - 90,950 -
Net Chartwell
business
combination
expenses - - - 167,287
-------------- -------------- -------------- -------------
2,580,876 2,091,786 8,106,674 6,967,495
-------------- -------------- -------------- -------------
Income (loss)
before income
taxes (539,525) 72,267 (74,565) 2,060,584
-------------- -------------- -------------- -------------
Income tax
provision
(recovery)
Current (27,545) 39,676 141,173 821,738
Future (139,130) - (139,130) -
-------------- -------------- -------------- -------------
(166,675) 39,676 2,043 821,738
-------------- -------------- -------------- -------------
Net income
(loss) for the
period $ (372,850) $ 32,591 $ (76,608) $ 1,238,846
-------------- -------------- -------------- -------------
-------------- -------------- -------------- -------------
Net income
(loss) per
share:
Basic $ (0.03) $ 0.00 $ (0.01) $ 0.09
-------------- -------------- -------------- -------------
-------------- -------------- -------------- -------------
Diluted $ (0.03) $ 0.00 $ (0.01) $ 0.09
-------------- -------------- -------------- -------------
-------------- -------------- -------------- -------------
Weighted
average number
of common
shares
outstanding:
Basic 13,000,265 13,234,015 12,982,953 13,108,348
-------------- -------------- -------------- -------------
-------------- -------------- -------------- -------------
Diluted 13,000,265 14,064,245 12,982,953 14,272,700
-------------- -------------- -------------- -------------
-------------- -------------- -------------- -------------
PARLAY ENTERTAINMENT INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in whole U.S. dollars)
Three-Months Ended Twelve-Months Ended
December 31 December 31
2007 2006 2007 2006
------------ ----------- -------------- ------------
(Unaudited) (Unaudited) (Audited) (Audited)
Cash flows from
operating
activities:
Net income (loss)
for the period $ (372,850) $ 32,591 $ (76,608) $ 1,238,846
Adjustments to
reconcile net
income to
net cash provided
by operating
activities:
Stock option
expense 50,474 31,012 189,657 163,877
Amortization 42,093 38,192 160,943 132,220
Future income tax
(recovery) (139,130) - (139,130) -
Loss on disposal
of fixed assets - - - 2,158
Changes in
non-cash
working capital
items:
Accounts
receivable 77,868 74,445 (243,719) (201,873)
Prepaid expenses,
deposits and other
assets 57,660 50,975 8,044 (43,950)
Accounts payable
and accrued
liabilities 404,026 80,509 324,160 160,264
Income taxes
recoverable /
payable (28,545) (58,268) (1,135,672) 441,264
Deferred revenue (13,244) 22,147 65,743 (36,974)
------------ ----------- -------------- ------------
Net cash provided
by (used in)
operating
activities 78,352 271,603 (846,582) 1,855,832
------------ ----------- -------------- ------------
Cash flows from
investing
activities:
Purchases of
equipment (22,866) (26,301) (96,099) (202,049)
Increase
(decrease)
in accounts
payable
and accrued
liabilities
related
to purchases
of equipment (3,467) 8,798 (21,014) 21,014
------------ ----------- -------------- ------------
Net cash (used in)
investing
activities (26,333) (17,503) (117,113) (181,035)
------------ ----------- -------------- ------------
Cash flows from
financing
activities:
Repurchase of
common shares (46,102) (102,275) (381,539) (102,275)
Increase
(decrease)
in accounts
payable
and accrued
liabilities
related to
repurchase of
common shares - 35,871 (35,871) 35,871
------------ ----------- -------------- ------------
Cash used for
repurchase of
common shares (46,102) (66,404) (417,410) (66,404)
Proceeds from
issuance of common
shares 72,650 - 84,067 248,313
------------ ----------- -------------- ------------
Net cash provided
by (used in)
financing
activities 26,548 (66,404) (333,343) 181,909
------------ ----------- -------------- ------------
Net increase
(decrease) in cash 78,567 187,696 (1,297,038) 1,856,706
Cash, beginning of
period 1,753,611 2,941,520 3,129,216 1,272,510
------------ ----------- -------------- ------------
Cash, end of
period $ 1,832,178 $ 3,129,216 $ 1,832,178 $ 3,129,216
------------ ----------- -------------- ------------
------------ ----------- -------------- ------------
Supplemental cash
flow activities:
Income taxes paid
/(received) $ - $ 96,944 $ 849,036 $ 375,999
------------ ----------- -------------- ------------
------------ ----------- -------------- ------------
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 Twelve-Months Ended
December 31, December 31,
2007 2006 2007 2006
------------ ----------- ----------- ------------
Net income (loss) $ (372,850) $ 32,591 $ (76,608) $ 1,238,846
Interest - - - -
Taxes (166,675) 39,676 2,043 821,738
Amortization 42,093 38,192 160,943 132,220
------------ ----------- ----------- ------------
EBITDA $ (497,432) $ 110,459 $ 86,378 $ 2,192,804
------------ ----------- ----------- ------------
------------ ----------- ----------- ------------
Revenue $ 2,041,351 $ 2,164,053 $ 8,032,109 $ 9,028,079
------------ ----------- ----------- ------------
------------ ----------- ----------- ------------
% -24% 5% 1% 24%
------------ ----------- ----------- ------------
------------ ----------- ----------- ------------
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! and Paddy
Power. Parlay is headquartered in Oakville, Canada with offices in Bridgetown,
Barbados, and Valletta, Malta.
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.
(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.
(C) 2008 by Parlay Entertainment Inc.
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