All amounts in Canadian Dollars
Parlay Entertainment Inc. (TSX VENTURE:PEI), the world's leading supplier of
Internet and TV bingo software solutions, today announced its results for the
three and twelve-month periods ended December 31, 2009.
"2009 was a transitional year for Parlay with significant challenges but also
the emergence of numerous opportunities. As a result of our divestiture in 2008,
we commenced developing a strategy to replace recurring revenue which was lost
as a result of that transaction" said Scott White, Parlay's Chief Executive
Officer. "Given the significant consolidation in the online bingo sector, and
the fact that some of our customers were part of that consolidation, timing was
such that our business model could be expanded allowing us to move into the
business of operating gaming platforms. Throughout 2009 we invested significant
financial and human capital resources in the development of our Alderney and
North American gaming platforms, which operate under the brand Parlay Games
Services. Although these platforms are accelerating in terms of growth today, we
generated very little return from this significant investment in 2009, resulting
in a substantial loss and cash burn."
"With 2009 as our reformulation year," concluded Mr. White "we are pleased to
report that we have in excess of 40 networked partner sites, which are either
launched or launching within PGS. We have numerous prospective partner
arrangements in various stages of development. With the market changing again
because of additional consolidation, we are now in a unique position to offer
services to various customers who are searching for new solutions in the bingo
vertical. With a revised cost structure and a robust and envied technology
platform, it will be our intention to supplement our traditional software
licensing model throughout 2010 with the growth of PGS throughout the world. As
we have outlined previously, our offering will be flexible and unique, fostering
customer access into multiple software technologies offering multiple software
vendors, both gaming and non-gaming products and multiple languages and
currencies"
Parlay generates revenue from software licensing, installation and
implementation fees and support services. Consolidated revenues were $0.8
million in Q4 2009 compared to $1.2 million in Q4 2008.
Expenses in Q4 2009 were $1.4 million, unchanged from $1.4 million in Q4 2008.
Increased foreign exchange losses offset reduced compensation expenses.
A beneficial tax adjustment increased the tax recovery recorded in Q4 2009 by
$0.4 million.
Net loss for the quarter was $0.06 million, or $(0.01) per diluted share,
compared to net loss of $0.06 million, or $(0.00) per diluted share, in Q4 2008.
Consolidated revenues were $3.4 million for 2009 compared to $8.5 million in
2008. 2008 consolidated revenues included the proceeds from the divestiture
which were non-recurring software license fees of $2.9 million.
Expenses in 2009 were $5.6 million, down from $7.7 million in 2008. The decrease
represented reduced compensation expenses together with the absence of certain
non-recurring expenses from 2008.
A beneficial tax adjustment increased the tax recovery recorded in 2009 by $0.4
million.
Net loss for 2009 was $1.4 million, or ($0.11) per diluted share, compared to a
net income of $0.5 million, or $0.04 per diluted share, in 2008.
Parlay remains debt free and Parlay's cash balance at December 31, 2009 was $1.1
million. Corporate income tax refunds received (and to be received) in 2010 are
estimated at $1.2 million.
PARLAY ENTERTAINMENT INC.
CONSOLIDATED BALANCE SHEETS
(incorporated under the laws of the province of Ontario)
in whole Canadian dollars
(Audited) (Audited)
December 31, December 31,
ASSETS 2009 2008
-------------------------
Current assets:
Cash $ 1,057,345 $ 3,226,615
Security deposit 84,590 -
Accounts receivable:
Trade, less allowance of approximately $61,000 597,802 820,974
($108,000 - 2008)
GST receivable 26,611 18,185
Income taxes recoverable 1,211,233 -
Prepaid expenses, deposits and other assets 214,573 184,075
Future income taxes - 225,972
-------------------------
Total current assets 3,192,154 4,475,821
Equipment - net 129,671 95,492
Future income taxes, net of valuation allowance - 60,000
-------------------------
$ 3,321,825 $ 4,631,313
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 535,735 $ 555,492
Income taxes payable - 59,819
Deferred revenue 390,093 280,364
-------------------------
Total current liabilities 925,828 895,675
-------------------------
Shareholders' equity:
Common shares, an unlimited number of shares
authorized, 12,649,265 shares issued and
outstanding (12,585,765 - 2008) 1,737,831 1,667,013
Contributed surplus 2,761,792 2,664,274
Accumulated other comprehensive income (loss) (356,615) (356,615)
Retained earnings (accumulated deficit) (1,747,011) (239,034)
-------------------------
2,395,997 3,735,638
-------------------------
$ 3,321,825 $ 4,631,313
-------------------------
PARLAY ENTERTAINMENT INC.
CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND RETAINED EARNINGS
(ACCUMULATED DEFICIT)
(in whole Canadian dollars, except for per share amounts)
Three-Months Ended Twelve- Months Ended
December 31 December 31
--------------------------------------------------
2009 2008 2009 2008
--------------------------------------------------
(Unaudited) (Unaudited) (Audited) (Audited)
Revenues:
Royalties $ 510,538 $ 871,661 $ 2,552,304 $ 4,696,576
Installation and
implementation fees 28,523 39,357 99,333 245,030
Software license fees 121,135 90,092 121,135 2,922,089
Support services 123,011 240,511 581,425 673,974
--------------------------------------------------
783,207 1,241,621 3,354,197 8,537,669
--------------------------------------------------
Expenses:
Sales, marketing and
services to licensees 181,329 186,904 557,894 819,290
Research, software
development and support
services 850,816 921,607 3,429,082 4,221,373
General and
administrative 274,703 427,042 1,273,747 1,648,360
Amortization 22,656 22,556 94,626 128,989
Foreign exchange (gain)
loss 36,269 (171,145) 187,067 178,503
Restructuring - - 99,664 113,550
Transaction fees - - - 557,053
--------------------------------------------------
1,365,773 1,386,964 5,642,080 7,667,118
--------------------------------------------------
Income (loss) before
income taxes (582,566) (145,343) (2,287,883) 870,551
--------------------------------------------------
Income tax provision
(recovery)
Current (579,000) 27,151 (985,000) 469,401
Future 60,000 (112,011) 60,000 (96,759)
--------------------------------------------------
(519,000) (84,860) (925,000) 372,642
--------------------------------------------------
Net income (loss) for the
period $ (63,566) $ (60,483) $ (1,362,883) $ 497,909
Net income (loss) per
share:
Basic $ (0.01) $ (0 .00) $ (0.11) $ 0.04
--------------------------------------------------
Diluted $ (0.01) $ (0 .00) $ (0.11) $ 0.04
Weighted average number of
common
shares outstanding:
Basic 12,515,932 12,673,098 12,346,432 13,034,557
--------------------------------------------------
Diluted 12,515,932 12,673,098 12,346,432 13,372,949
--------------------------------------------------
PARLAY ENTERTAINMENT INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in whole Canadian dollars)
Three -Months Ended Twelve -Months Ended
--------------------------------------------------
December 31 December 31
2009 2008 2009 2008
--------------------------------------------------
(Unaudited) (Unaudited) (Audited) (Audited)
Net income (loss) for the
period $ (63,566) $ (60,483) $ (1,362,883) $ 497,909
Changes in unrealized
gains (losses) on
translating the
comparative consolidated
financial statements of
the Company for the nine-
month period ended
September 30, 2008 from
the $U.S . to the
Canadian dollar following
the adoption of the
Canadian dollar as the
functional and reporting
currency on October 1,
2008 (net of income taxes
of nil). - - - 242,215
--------------------------------------------------
Comprehensive income
(loss) for the period $ (63,566) $ (60,483) $ (1,362,883) $ 740,124
--------------------------------------------------
PARLAY ENTERTAINMENT INC.
CONSOLIDATED STATEMENTS OF CHANGES IN
SHAREHOLDERS' EQUITY
(in whole Canadian dollars)
(Audited)
Common Stock Contributed
Shares Amount Surplus
------------------------------------
Balance December 31, 2007 13,012,265 $ 1,698,344 $ 2,413,286
Issuance of stock options - - 250,988
Exercise of stock options 282,500 53,688 -
Repurchase and cancellation of
common shares (709,000) (85,019) -
Other com prehensive income - 2008 - - -
Net income - 2008 - - -
------------------------------------
Balance December 31, 2008 12,585,765 1,667,013 2,664,274
Issuance of stock options - - 97,518
Exercise of stock options 527,500 129,469 -
Repurchase and cancellation of
common shares (464,000) (58,651) -
Net loss - 2009 - - -
------------------------------------
Balance December 31, 2009 12,649,265 $ 1,737,831 $ 2,761,792
------------------------------------
PARLAY ENTERTAINMENT INC.
CONSOLIDATED STATEMENTS OF CHANGES IN
SHAREHOLDERS' EQUITY
(in whole Canadian dollars)
(Audited)
Accumulated Retained
Other Earnings
Comprehensive (Accumulated
Income (Loss) Deficit) Total
------------------------------------------
Balance December 31, 2007 $ (598,830) $ (403,490) $ 3,109,310
Issuance of stock options - - 250,988
Exercise of stock options - - 53,688
Repurchase and cancellation of
common shares - (333,453) (418,472)
Other com prehensive income - 2008 242,215 - 242,215
Net income - 2008 - 497,909 497,909
------------------------------------------
Balance December 31, 2008 (356,615) (239,034) 3,735,638
Issuance of stock options - - 97,518
Exercise of stock options - - 129,469
Repurchase and cancellation of
common shares - (145,094) (203,745)
Net loss - 2009 - (1,362,883) (1,362,883)
------------------------------------------
Balance December 31, 2009 $ (356,615) $ (1,747,011) $ 2,395,997
------------------------------------------
PARLAY ENTERTAINMENT INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in whole Canadian dollars)
Three-Months Ended Twelve- Months Ended
--------------------------------------------------
December 31 December 31
2009 2008 2009 2008
--------------------------------------------------
(Unaudited) (Unaudited) (Audited) (Audited)
Cash flows from operating
activities:
Net income (loss) for the
period $ (63,566) $ (60,483) $ (1,362,883) $ 497,909
Adjustments to reconcile
net income (loss) to net
cash provided by (used
in) operating
activities:
Stock-based compensation
expense 39,862 46,346 97,518 250,988
Amortization 22,929 22,556 94,899 128,989
Future income tax
provision (recovery) 60,000 (112,011) 60,000 (96,759)
Changes in non -cash
working capital items:
Security deposit - - (90,015) -
Accounts receivable 360,331 228,751 207,383 701,351
Prepaid expenses,
deposits and other
assets 9,864 (23,359) (35,123) (55,457)
Accounts payable and
accrued liabilities 105,090 102,680 (15,588) (450,691)
Income taxes recoverable
/ payable (579,000) 82 (1,045,080) 606,175
Deferred revenue (40,200) (191,378) 112,353 (7,711)
--------------------------------------------------
Net cash provided by (used
in) operating activities (84,690) 13,184 (1,976,536) 1,574,794
--------------------------------------------------
Cash flows from investing
activities:
Purchases of equipment (4,556) (6,890) (128,733) (13,541)
Increase in accounts
payable and accrued
liabilities related to
purchases of equipment 827 - 3,230 -
--------------------------------------------------
Net cash (used in)
investing activities (3,729) (6,890) (125,503) (13,541)
--------------------------------------------------
Cash flows from financing
activities:
Repurchase of common
shares - (170,655) (203,745) (418,472)
Proceeds from issuance of
common shares 101,222 - 129,469 53,688
--------------------------------------------------
Net cash provided by (used
in) financing activities 101,222 (170,655) (74,276) (364,784)
--------------------------------------------------
Effect of changes in
foreign currency exchange
rates on cash (462) 38,754 7,045 219,771
--------------------------------------------------
Net increase (decrease) in
cash 12,341 (125,607) (2,169,270) 1,416,240
Cash, beginning of period 1,045,004 3,352,222 3,226,615 1,810,375
--------------------------------------------------
Cash, end of period $ 1,057,345 $ 3,226,615 $ 1,057,345 $ 3,226,615
Supplemental cash flow
activities:
Income taxes paid $ - $ - $ 399,831 $ -
--------------------------------------------------
Income taxes (received) $ - $ - $ (339,300) $ (184,254)
--------------------------------------------------
Interest paid (received) $ 315 $ (6,229) $ (20,316) $ (39,169)
--------------------------------------------------
(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,
2009 2008 2009 2008
--------------------------------------------------
Net incom e (loss) $ (63,566) $ (60,483) $ (1,362,883) $ 497,909
Interest 315 (6,229) (20,316) (39,169)
Taxes (519,000) (84,860) (925,000) 372,642
Amortization 22,656 22,556 94,626 128,989
--------------------------------------------------
EBITDA $ (559,595) $ (129,016) $ (2,213,573) $ 960,371
--------------------------------------------------
--------------------------------------------------
Revenue $ 783,207 $ 1,241,621 $ 3,354,197 $ 8,537,669
--------------------------------------------------
--------------------------------------------------
% -71% -10% -66% 11%
--------------------------------------------------
--------------------------------------------------
About Parlay Entertainment
Parlay Entertainment Inc. is one of the pioneers and technology leaders in the
online gaming industry. As the inventor and holder of Internet bingo2 patents,
Parlay was the first company in the world to develop and deploy a commercial
Internet bingo product. Parlay offers its customers a number of technology
solutions which include the commercial deployment of its award winning software
along with value-added Parlay Game Services managed solutions in Alderney and
North America. PGS includes hosting services, shared games and, in the case of
PGS Alderney, pooled liquidity across the European marketplace. Some of the
world's best known brands use Parlay solutions. Parlay's head offices are
located in Oakville, Canada. Parlay is licensed or certified to conduct business
in Alderney, the United Kingdom, Isle of Man and 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.
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