Press Releases
Parlay Entertainment Announces 10th Consecutive Profitable Quarter
All amounts in United States Dollars
OAKVILLE , Canada — Aug 9, 2007 — Parlay Entertainment Inc. (TSX VENTURE: PEI.V), the world's leading supplier of Internet bingo software, today announced its results for the three and six-month periods ended June 30, 2007.
"Revenue for Q2 2007 recovered slightly from the levels recorded in Q1 2007 as revenue generated from customers who are non-United Kingdom and non-European facing has stabilized" said Mr. Scott F. White, President and CEO. "With a licensing arrangement with Stan James previously announced and at least three UK/European-facing customer announcements forthcoming," continued White "we expect further growth in the second half of 2007 and beyond. Although the e-gaming industry has seen its challenges over the past twelve months, we confirm unprecedented growth in on-line bingo, which is now at an inflection point. We are not surprised to see the start of consolidation as multinational and brand-name interest has arrived and as these prospects begin to validate e-bingo's community, entertainment and social networking attributes.
"While sales cycles for Parlay's new business opportunities are more lengthy and onerous, we are pleased by the progress to date and the traction of our products internationally. We look forward to being able to make announcements on our new business opportunities in the near future," concluded Mr. White.
Results for the second quarter of fiscal 2007 include:
- Total revenue sequential increase of $45,519 or 2% from Q1 2007.
- Royalty revenue sequential increase of $29,206 or 2% from Q1 2007.
- Total revenue at $2,017,373, down 8% from Q2 2006.
- Royalty revenue at $1,839,776, down 8% from Q2 2006.
- Net income at $12,868, or $0.00 per share, fully diluted, down from $412,663 in Q2 2006.
- EBITDA(1) decreased to $77,791, from $704,750 in Q2 2006 and EBITDA(1) margin decreased to 4% from 32% in Q2 2006.
Results for the first half of fiscal 2007 include:
- Total revenue at $3,989,227, down 5% from the first half of 2006.
- Royalty revenue at $3,650,346, down 6% from the first half of 2006.
- Net income at $122,750, or $0.01 per share, fully diluted, down from $704,324 in the first half of 2006.
- EBITDA(1) decreased to $312,272, from $1,217,322 in the first half of 2006 and EBITDA(1) margin decreased to 8% from 29% in the first half of 2006.
Parlay generates revenue from software licensing, installation fees and support services. Consolidated revenues decreased to $2.0 million in Q2 2007 from $2.2 million in Q2 2006 or 8% quarter over quarter. The decrease represents the detrimental impact on certain Company licensees from changes in the business model of certain e-commerce providers. This impact was particularly felt in Q1 2007 and revenue for Q2 2007 represents a 2% increase on a sequential basis over Q1 2007. 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 Q2 2007 were $2.0 million, up from $1.5 million in Q2 2006. The increase represented the impact of higher compensation costs and higher costs to support licensees together with the absence of certain non-recurring cost reductions from Q2 2006 offset by lower sales and marketing expenses.
Net income for the quarter was $0.0 million, or $0.00 per diluted share, compared to $0.4 million, or $0.03 per diluted share in Q2 2006.
Consolidated revenues decreased to $4.0 million in the first half of 2007 from $4.2 million in the first half of 2006 or a 5% decrease six-month period over six-month period. The decrease represents the detrimental impact on certain Company licensees from changes in the business model of certain e-commerce providers. This impact was particularly felt in Q1 2007. A partial offset was the continuing growth across Parlay's portfolio of licensees and the impact of new network partners during the first half of 2007.
Expenses in the first half of 2007 were $3.8 million, up from $3.1 million in the first half of 2006. The increase represented the impact of higher compensation costs and higher costs to support licensees together with the absence of certain non-recurring cost reductions from the first half of 2006.
Net income for the first half of 2006 was $0.1 million, or $0.01 per diluted share, compared to $0.7 million, or $0.05 per diluted share in the first half of 2006.
Parlay remains debt free and Parlay's cash balance at June 30, 2007 was $2.0 million.
PARLAY ENTERTAINMENT INC.
CONSOLIDATED BALANCE SHEETS
(incorporated under the laws of the province of Ontario)
in whole U.S. dollars
---------------------
(Unaudited) (Audited)
June 30, December 31,
ASSETS 2007 2006
-----------------------------
Current assets:
Cash $ 2,024,587 $ 3,129,216
Accounts receivable:
Trade, less allowance of
approximately $98,000 ($118,000 - 2006) 1,838,014 1,307,402
Other 31,693 7,943
Income taxes recoverable 92,337 -
Prepaid expenses, deposits and other assets 131,318 138,211
-----------------------------
Total current assets 4,117,949 4,582,772
Equipment - net 241,534 278,211
Future income tax asset 40,000 40,000
-----------------------------
$ 4,399,483 $ 4,900,983
-----------------------------
-----------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 729,793 $ 751,026
Income taxes payable - 592,976
Deferred revenue 329,737 225,801
-----------------------------
Total current liabilities 1,059,530 1,569,803
-----------------------------
Shareholders' equity:
Common shares, an unlimited number of
shares authorized, 12,967,265 shares
issued and outstanding
(13,153,015 - 2006) 1,418,726 1,436,459
Contributed surplus 1,958,665 1,898,268
Retained earnings (accumulated deficit) (37,438) (3,547)
-----------------------------
3,339,953 3,331,180
-----------------------------
$ 4,399,483 $ 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 Six-Months Ended
------------------ -----------------
June 30 June 30
------- -------
2007 2006 2007 2006
-----------------------------------------------------
Revenues:
Royalties $ 1,839,776 $ 2,007,908 $ 3,650,346 $ 3,876,794
Installation fees 27,958 42,806 67,831 91,431
Support services 149,639 152,426 271,050 248,133
-----------------------------------------------------
2,017,373 2,203,140 3,989,227 4,216,358
-----------------------------------------------------
Expenses:
Sales, marketing
and services
to licensees 254,494 347,734 525,259 512,192
Research, software
development and
support services 1,362,066 899,520 2,469,882 1,864,084
General and
administrative 323,022 251,136 681,814 622,760
Amortization 38,790 31,074 78,664 55,314
-----------------------------------------------------
1,978,372 1,529,464 3,755,619 3,054,350
-----------------------------------------------------
Income before income
taxes 39,001 673,676 233,608 1,162,008
-----------------------------------------------------
Income tax provision
(recovery)
Current 26,133 261,013 110,858 457,684
Future - - - -
-----------------------------------------------------
26,133 261,013 110,858 457,684
-----------------------------------------------------
Net income for the
period 12,868 412,663 122,750 704,324
Retained earnings
(accumulated
deficit),
beginning of period 52,216 (867,187) (3,547) (1,158,848)
Repurchase and
cancellation
of common shares (102,522) - (156,641) -
-----------------------------------------------------
Retained earnings
(accumulated
deficit),
end of period $ (37,438) $ (454,524) $ (37,438) $ (454,524)
-----------------------------------------------------
-----------------------------------------------------
Net income per share:
Basic $ 0.00 $ 0.03 $ 0.01 $ 0.05
-----------------------------------------------------
-----------------------------------------------------
Diluted $ 0.00 $ 0.03 $ 0.01 $ 0.05
-----------------------------------------------------
-----------------------------------------------------
Weighted average
number of
common shares
outstanding:
Basic 13,039,765 13,144,932 13,057,057 12,985,348
-----------------------------------------------------
-----------------------------------------------------
Diluted 14,029,250 14,516,228 14,021,986 14,364,904
-----------------------------------------------------
-----------------------------------------------------
PARLAY ENTERTAINMENT INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in whole U.S. dollars)
(Unaudited)
Three-Months Ended Six-Months Ended
------------------------------------------------------
June 30 June 30
------------------------------------------------------
2007 2006 2007 2006
------------------------------------------------------
Cash flows from
operating
activities:
Net income for the
period $ 12,868 $ 412,663 $ 122,750 $ 704,324
Adjustments to
reconcile net
income to
net cash
provided by
operating
activities:
Stock option expense 26,939 42,446 60,397 89,508
Amortization 38,790 31,074 78,664 55,314
Loss on
Disposal
of fixed
assets - 2,158 - 2,158
Changes in
non-cash
working
capital items:
Accounts receivable (53,580) (179,849) (554,362) (472,594)
Prepaid expenses,
deposits and
other assets (6,053) 39,257 6,893 (22,802)
Accounts payable
and accrued
liabilities 256,107 170,867 24,429 128,118
Income taxes
recoverable/
payable 38,187 452,770 (685,313) 242,157
Deferred revenue 39,217 (14,250) 103,936 (39,602)
------------------------------------------------------
Net cash provided by
(used in)
operating activities 352,475 957,136 (842,606) 686,581
------------------------------------------------------
Cash flows from
investing
activities:
Purchases of
equipment (19,300) (57,146) (41,987) (99,974)
Increase (decrease)
in accounts
payable and
accrued
liabilities
related to
purchases of
equipment (3,964) (11,257) (9,791) 4,291
------------------------------------------------------
Net cash (used in)
investing
activities (23,264) (68,403) (51,778) (95,683)
------------------------------------------------------
Cash flows from
financing
activities:
Repurchase of
common
shares (116,717) - (179,791) -
Decrease in
accounts
payable
and accruals
related
to repurchase
of common
shares - - (35,871) -
------------------------------------------------------
Cash used for
repurchase
of common
shares (116,717) - (215,662) -
Proceeds from
issuance of
common shares 4,667 159,529 5,417 214,613
------------------------------------------------------
Net cash provided
by(used in)
financing
activities (112,050) 159,529 (210,245) 214,613
------------------------------------------------------
Net increase
(decrease)
in cash 217,161 1,048,262 (1,104,629) 805,511
Cash,
beginning of
period 1,807,426 1,029,759 3,129,216 1,272,510
------------------------------------------------------
Cash, end of period $2,024,587 $2,078,021 $2,024,587 $2,078,021
------------------------------------------------------
------------------------------------------------------
Supplemental
cash flow
activities:
Income taxes
paid /
(received) $ (13,554) $ (193,257) $ 793,670 $ 213,972
------------------------------------------------------
------------------------------------------------------
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 Six-Months Ended
------------------------ --------------------------
June 30, June 30,
------------------ -----------------------
2007 2006 2007 2006
------------ ------------- ------------- -------------
Net income $ 12,868 $ 412,663 $ 122,750 $ 704,324
Interest - - - -
Taxes 26,133 261,013 110,858 457,684
Amortization 38,790 31,074 78,664 55,314
------------ ------------- ------------- -------------
EBITDA $ 77,791 $ 704,750 $ 312,272 $ 1,217,322
------------ ------------- ------------- -------------
------------ ------------- ------------- -------------
Revenue $ 2,017,373 $ 2,203,140 $ 3,989,227 $ 4,216,358
------------ ------------- ------------- -------------
------------ ------------- ------------- -------------
% 4% 32% 8% 29%
------------ ------------- ------------- -------------
------------ ------------- ------------- -------------
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⊃, 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.
Contact:
Scott F. 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.