Press Releases
Parlay Entertainment Announces Record Financial Results for Q4 2005 and the 2005 Fiscal Year
Global leader in bingo software continues revenue growth and maintains profitable operations.
All amounts in United States Dollars
OAKVILLE , Canada — February 22, 2006 — Parlay Entertainment Inc. (TSX VENTURE:PEI)(PINK SHEETS:PRYNF), the world's leading supplier of Internet Bingo solutions, today announced record results for the three and twelve-month periods ended December 31, 2005.
Highlights for the fourth quarter of fiscal 2005 include:
- New corporate record for revenue at $1,773,910, up 13% from the prior record for Q3 2005 and up 79% from Q4 2004.
- New corporate record for royalty revenue at $1,628,060, up 10% from the prior record for Q3 2005 and up 73% from Q4 2004.
- Net income of $195,710 or $0.01 per share, fully diluted, up from the net loss of $314,888 recorded in Q4 2004.
- EBITDA(1) increased to $163,502 from $4,175 in Q4 2004 and EBITDA(1) margin increased to 9% from 0% in Q4 2004.
- Cash balances increased to $1,272,510, up 80% from December 31, 2004.
Highlights for fiscal 2005 include:
- New corporate record for revenue at $5,948,532, up 58% from the prior record in 2004.
- New corporate record for royalty revenue at $5,467,088, up 60% from the prior record in 2004.
- Net income of $657,533 or $0.05 per share, fully diluted, up from the net loss of $593,782 recorded in 2004.
- EBITDA(1) increased to $869,425 from $(211,658) in 2004 and EBITDA(1) margin increased to 15% from (6)% in 2004.
Achievements for the fourth quarter include:
- Existing bingo network, St. Minver Limited, launches additional international network partners with nine in place at December 31, 2005.
- Existing bingo network, The Gaming Network Limited, adds additional brands to their network with three in place at December 31, 2005.
- Existing licensee launches new site transacting in Euros and offered in the Spanish language to target the Spanish marketplace.
- Irish Rehab Lottery launches bingo offering with a charitable component to UK and European-facing players.
- Three new licensee sites go live.
- Completion of move to new premises to support the growth of the Company.
"Fiscal 2005 was the year in which Parlay's financial results began to reflect our efforts over the past few years, as well as the tremendous interest in Internet bingo, " said Scott F. White, President and CEO. "Our investments in technology, people, and our corporate infrastructure have provided us with a significant competitive advantage as the dominant supplier and patent holder in online bingo.
"Our first-mover deployment of a 90-number offering for the United Kingdom, Europe and Latin America has gained rapid marketplace acceptance. UK and European activity now represents approximately 40% of our revenue, compared to nil only 12 months ago. Over the last 12 months, our licensee, Bingos.co.uk, has become the most successful Internet bingo site, offering Internet bingo to players emanating from AOL (UK) Ltd., MSN UK and Lycos Europe. Our bingo network model, presently offered through St. Minver Limited and The Gaming Network Limited, offers media, gaming and retail brands, such as Virgin, Yahoo! UK & Ireland and Littlewoods Gaming, access to the soft-gaming market in a manner that no other Internet bingo software provider can. Over the last 12 months, we have helped position online bingo as the gaming alternative for the lucrative female audience that has thus far been underserved by the industry. We believe that substantial growth in online gaming will come from this audience in the years to come," Mr. White continued.
"While we are pleased with our progress, we believe the opportunities continue to be significant. We will continue to focus our sales efforts in the UK, Europe and Latin America throughout 2006 and we will continue to invest in our leading technology. Our recent launch of Parlay 4, the newest version of our software, demonstrates our commitment to offer the best experience possible for Internet bingo players. New generations of our software will further leverage the advancements we have made this year," Mr. White concluded.
Parlay generates revenue from software licensing, installation fees and e-digital and support services. Consolidated revenues increased to $1.8 million in Q4 2005 from $1.0 million in Q4 2004 or 79% quarter over quarter. The results represent continuing growth across Parlay's portfolio of licensees and the impact of new licensees during the quarter. In particular, Parlay is continuing to see growth activity from its licensees offering 90-number bingo to the UK marketplace.
Expenses in Q4 2005 were $1.6 million, up from $1.0 million in Q4 2004. The increase represented the impact of higher compensation costs, higher sales and marketing costs and severance arrangements for a former officer. The non-recurring and non-cash costs incurred in Q4 2005 aggregated to $0.3 million.
Parlay was able to record a non-recurring reversal of a previously recorded income tax provision of $0.1 million in Q4 2005 following the finalization of certain tax compliance filings.
Net income for the quarter was $0.2 million, or $0.01 per diluted share, compared to a net loss of $0.3 million, or $(0.03) per diluted share in Q4 2004.
Parlay remains debt free with an increasing cash position. Parlay's cash balance at December 31, 2005 was $1.3 million.
Consolidated revenues increased to $5.9 million for 2005 compared to $3.8 million for 2004, or 58% year over year.
Expenses in 2005 were $5.1 million, up from $4.1 million in 2004. The increase represented the impact of higher compensation costs, higher sales and marketing costs together with costs incurred on the TSX Venture Exchange listing application process and the severance arrangements for a former officer. The non-recurring and non-cash costs incurred in 2005 aggregated to $0.8 million.
Parlay was able to record a non-recurring reversal of a previously recorded income tax provision of $0.2 million in 2005 following the finalization of certain tax compliance filings.
Net income for 2005 was $0.7 million, or $0.05 per diluted share, compared to a net loss of $0.6 million, or $(0.05) per diluted share in 2004.
PARLAY ENTERTAINMENT INC. CONSOLIDATED BALANCE SHEETS (incorporated under the laws of the province of Ontario)
in whole U.S. dollars --------------------- (Unaudited) (Audited) December 31, December 31, ASSETS 2005 2004 ------------- ------------- Current assets: Cash and cash equivalents $ 1,272,510 $ 708,897 Accounts receivable: Trade, less allowance of approximately $297,000 1,066,166 651,298 ($319,000 - 2004) Other 47,306 13,130 Income taxes recoverable 228,077 - Prepaid expenses, deposits and other assets 94,261 76,522 ------------- ------------- Total current assets 2,708,320 1,449,847
Equipment - net 210,540 81,554 Future income tax asset 40,000 20,000 ------------- -------------
$ 2,958,860 $ 1,551,401 ------------- ------------- ------------- -------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities: Accounts payable and accrued liabilities $ 533,877 $ 316,211 Income taxes payable 379,789 275,645 Deferred revenue 262,775 249,634 ------------- ------------- Total current liabilities 1,176,441 841,490 ------------- -------------
Shareholders' equity: Common shares, 50,000,000 shares authorized, 12,728,265 shares issued and outstanding (11,475,500 - 2004) 1,206,876 927,292 Contributed surplus 1,734,391 1,599,000 Retained earnings (accumulated deficit) (1,158,848) (1,816,381) ------------- ------------- 1,782,419 709,911 ------------- -------------
$ 2,958,860 $ 1,551,401 ------------- ------------- ------------- -------------
PARLAY ENTERTAINMENT INC. CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (in whole U.S. dollars)
Common Stock Shares Amount --------------------------------------------------------------------- Balance December 31, 2003 (Audited) 10,870,500 $ 10,871
Issuance of common shares 100,000 100
Issuance of stock options - -
Repurchase and cancellation of shares (20,000) (20)
Re-domestication transaction - 827,841
Issuance of stock options - -
Exercise of stock options 525,000 88,500
Net loss - 2004 - - ---------------------------------------------------------------------
Balance December 31, 2004 (Audited) 11,475,500 927,292
Issuance of common shares 62,765 36,834
Issuance of stock options - -
Exercise of stock options 1,190,000 242,750
Net income - 2005 - - ---------------------------------------------------------------------
Balance December 31, 2005 (Unaudited) 12,728,265 $ 1,206,876 --------------------------------------------------------------------- ---------------------------------------------------------------------
Retained Additional Earnings Contributed Paid In (Accumulated Surplus Capital Deficit) Total ---------------------------------------------------------------------
Balance December 31, 2003 (Audited) $ - $ 2,113,144 $(1,222,599) $ 901,416
Issuance of common shares - 18,900 - 19,000 Issuance of stock options - 279,154 - 279,154
Repurchase and Cancellation of shares - (3,980) - (4,000)
Re-domestication transaction 1,579,377 (2,407,218) - -
Issuance of stock options 19,623 - - 19,623
Exercise of stock options - - - 88,500
Net loss - 2004 - - (593,782) (593,782) ---------------------------------------------------------------------
Balance December 31, 2004 (Audited) 1,599,000 - (1,816,381) 709,911
Issuance of common shares - - - 36,834
Issuance of stock options 135,391 - - 135,391
Exercise of stock options - - - 242,750
Net income - 2005 - - 657,533 657,533 ---------------------------------------------------------------------
Balance December 31, 2005 (Unaudited) $1,734,391 $ - $(1,158,848) $1,782,419 --------------------------------------------------------------------- ---------------------------------------------------------------------
PARLAY ENTERTAINMENT INC. CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND RETAINED EARNINGS (ACCUMULATED DEFICIT) (in whole U.S. dollars, except for per share amounts)
Three-Months Ended Twelve-Months Ended ------------------ ------------------- December 31 December 31 ----------- ----------- 2005 2004 2005 2004 ---------- ---------- ---------- ---------- (Unaudited) (Unaudited) (Unaudited) (Audited) Revenues: Royalties $ 1,628,060 $ 940,025 $5,467,088 $3,418,742 Installation fees 60,971 35,486 251,983 128,501 e-digital and support services 84,879 15,294 229,461 195,837 Other income - - - 25,000 ---------- ---------- ---------- ---------- 1,773,910 990,805 5,948,532 3,768,080 ---------- ---------- ---------- ----------
Expenses: Sales, marketing and services to licensees 276,413 170,813 1,014,962 660,539 Research, software development and support services 682,031 446,364 2,275,611 1,878,211 General and administrative 371,674 454,111 1,227,111 1,457,329 Amortization 20,113 20,296 68,382 86,029 TSX Venture Exchange Listing - 25,933 170,710 25,933 ---------- ---------- ---------- ---------- 1,350,231 1,117,517 4,756,776 4,108,041 Restructuring provision - (110,591) - (102,591) License agreement termination write-offs (recovery) (50,000) - 60,423 60,317 Severance arrangement for former officer 330,290 - 330,290 - ---------- ---------- ---------- ---------- 1,630,521 1,006,926 5,147,489 4,065,767 ---------- ---------- ---------- ----------
Income (loss) before income taxes 143,389 (16,121) 801,043 (297,687) ---------- ---------- ---------- ----------
Income tax provision (recovery) Current 67,860 (363) 377,696 17,012 Current - re-domestication (120,181) 290,198 (214,186) 290,198 Future - 8,932 (20,000) (11,115) ---------- ---------- ---------- ---------- (52,321) 298,767 143,510 296,095 ---------- ---------- ---------- ----------
Net income (loss) for the period 195,710 (314,888) 657,533 (593,782)
Retained earnings (accumulated deficit), beginning of period (1,354,558) (1,501,493) (1,816,381) (1,222,599) ---------- ---------- ---------- ----------
Retained earnings (accumulated deficit), end of period $(1,158,848)$(1,816,381)$(1,158,848)$(1,816,381) ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income (loss) per share: Basic $ 0.02 $ (0.03) $ 0.05 $ (0.05) ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Diluted $ 0.01 $ (0.03) $ 0.05 $ (0.05) ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Weighted average number of common shares outstanding: Basic 12,595,500 11,125,500 12,081,056 10,935,917 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Diluted 14,165,470 11,125,500 13,370,759 10,935,917 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
PARLAY ENTERTAINMENT INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in whole U.S. dollars)
Three-Months Ended Twelve-Months Ended ------------------ ------------------- December 31 December 31 ----------- ----------- 2005 2004 2005 2004 ---------- ---------- ---------- ---------- (Unaudited) (Unaudited) (Unaudited) (Audited)
Cash flows from operating activities: Net income (loss) for the period $ 195,710 $ (314,888) $ 657,533 $ (593,782) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Stock option and share expense 54,069 34,305 172,225 317,779 Amortization 20,113 20,296 68,382 86,029 Loss on disposal of equipment 1,010 - 1,010 - Restructuring (recovery) - (110,591) - (102,591) License agreement termination write-offs (recovery) (50,000) - 60,423 60,317 Future income tax provision (recovery) - 8,932 (20,000) (11,115) Changes in non-cash working capital items: Accounts receivable (126,189) (30,283) (509,467) (104,611) Prepaid expenses, deposits and other assets (23,447) (23,403) (17,739) (31,980) Accounts payable and accrued liabilities 71,225 163,374 147,931 72,315 Restructuring reserve payments - (5,505) - (61,714) Income taxes recoverable / payable 67,803 368,783 (123,933) 517,184 Deferred revenue 16,281 102,868 13,141 149,037 ---------- ---------- ---------- ---------- Net cash provided by operating activities 226,575 213,888 449,506 296,868 ---------- ---------- ---------- ----------
Cash flows from investing activities: Purchases of equipment (122,392) (24,577) (200,459) (43,778) Increase in accounts payable and accrued liabilities related to purchases of equipment 69,735 - 69,735 - ---------- ---------- ---------- ---------- Cash used for purchases of equipment (52,657) (24,577) (130,724) (43,778) Proceeds on disposal of equipment 2,081 1,238 2,081 2,747 ---------- ---------- ---------- ---------- Net cash (used in) investing activities (50,576) (23,339) (128,643) (41,031) ---------- ---------- ---------- ----------
Cash flows from financing activities: Proceeds from issuance of common shares 39,800 88,500 242,750 88,500 Repurchase of common shares - - - (4,000) ---------- ---------- ---------- ---------- Net cash provided by (used in) investing activities 39,800 88,500 242,750 84,500 ---------- ---------- ---------- ----------
Net increase in cash 215,799 279,049 563,613 340,337
Cash and cash equivalents, beginning of period 1,056,711 429,848 708,897 368,560 ---------- ---------- ---------- ----------
Cash and cash equivalents, end of period $ 1,272,510 $ 708,897 $1,272,510 $ 708,897 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Cash and cash equivalents consist of the following: Cash $ 1,272,510 $ 635,336 $1,272,510 $ 635,336 Cash equivalents - 73,561 - 73,561 ---------- ---------- ---------- ---------- $ 1,272,510 $ 708,897 $1,272,510 $ 708,897 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Supplemental cash flow activities: Income taxes paid / (received) $ - $ (78,948) $ 287,386 $ (209,974) ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- 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 ----------- ----------- 2005 2004 2005 2004 ---------- ---------- ---------- ----------
Net income $ 195,710 $ (314,888) $ 657,533 $ (593,782) Interest - - - - Taxes (52,321) 298,767 143,510 296,095 Amortization 20,113 20,296 68,382 86,029 ---------- ---------- ---------- ---------- EBITDA $ 163,502 $ 4,175 $ 869,425 $ (211,658) ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Revenue $ 1,773,910 $ 990,805 $ 5,948,532 $ 3,768,080 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
% 9% 0% 15% -6% ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
About Parlay Entertainment
Parlay Entertainment Inc. is the world's leading developer and dominant licensor of Internet Bingo solutions. 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 has an eight year proven track record built on the success of our clients: In 2005, more than 2.8 players wagered nearly $2 billion USD on gaming sites that use Parlay software. Parlay is headquartered in Oakville, Canada with offices in Bridgetown, Barbados, and Valletta, Malta.
Contact:
Scott White
Parlay Entertainment Inc.
President & CEO
+1 (905) 337-6505
David Callander
Parlay Entertainment Inc.
CFO
+1 (905) 337-6516
For more information on Parlay solutions and services, please visit our Web site 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.
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.
© 2010 by Parlay Entertainment Inc.