Parlay Entertainment Inc.
TSX VENTURE : PEI

Parlay Entertainment Inc.

November 27, 2009 13:59 ET

Parlay Entertainment Announces Results for Q3 2009

OAKVILLE, ONTARIO--(Marketwire - Nov. 27, 2009) -

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 nine-month periods ended September 30, 2009.

"Throughout our third quarter, we continued to make a significant investment in the establishment, development and organization of our managed solutions offering in Alderney and Canada through Parlay Game Services," said Mr. Scott White, Parlay's Chief Executive Officer. "Parlay Game Services is now operational with the first brand launched in the quarter with a number of additional launches scheduled for Q4 2009 and Q1 2010. As we noted in our previous disclosures, it is Parlay's intention to aggressively expand our managed solutions offering to accommodate the addition of new customers and brands across multiple languages and currencies."

Parlay generates revenue from software licensing, installation and implementation fees and support services. Consolidated revenues were $0.8 million in Q3 2009 compared to $2.5 million in Q3 2008.

Expenses in Q3 2009 were $1.5 million, down from $1.7 million in Q3 2008. The decrease represented reduced compensation expenses and reduced foreign exchange losses together with the absence of certain non-recurring expenses from Q3 2008 offset by restructuring expenses in Q3 2009.

Net loss for the quarter was $0.6 million, or $(0.05) per diluted share, compared to net income of $0.6 million, or $0.04 per diluted share in Q3 2008.

Consolidated revenues were $2.6 million for the first three quarters of 2009 compared to $7.3 million in the first three quarters of 2008.

Expenses in the first three quarters of 2009 were $4.3 million, down from $6.3 million in the first three quarters of 2008. The decrease represented reduced compensation expenses and reduced foreign exchange losses together with the absence of certain non-recurring expenses from the first three quarters of 2008.

Net loss for the first three quarters of 2009 was $1.3 million, or ($0.11) per diluted share, compared to a net income of $0.6 million, or $0.4 per diluted share, in the first three quarters of 2008.

Parlay remains debt free and Parlay's cash balance at September 30, 2009 was $1.0 million.



PARLAY ENTERTAINMENT INC.
CONSOLIDATED BALANCE SHEETS
(incorporated under the laws of the province of Ontario)

in whole Canadian dollars
(Unaudited) (Audited)
September 30, December 31,
ASSETS 2009 2008
------------ -----------
Current assets:
Cash $ 1,045,004 $ 3,226,615
Security deposit 85,790 -
Accounts receivable:
Trade, less allowance of approximately
$77,000 ($108,000 - 2008) 975,072 820,974
GST receivable 16,744 18,185
Income taxes recoverable 406,261 -
Prepaid expenses, deposits and other assets 223,609 184,075
Future income taxes 225,972 225,972
------------ -----------
Total current assets 2,978,452 4,475,821

Equipment - net 147,910 95,492
Future income taxes, net of valuation allowance 60,000 60,000
------------ -----------

$ 3,186,362 $ 4,631,313
------------ -----------

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
Accounts payable and accrued liabilities $ 435,784 $ 555,492
Income taxes payable - 59,819
Deferred revenue 432,099 280,364
------------ -----------
Total current liabilities 867,883 895,675
------------ -----------

Shareholders' equity:
Common shares, an unlimited number of
shares authorized, 12,249,265 shares issued
and outstanding (12,585,765 - 2008) 1,636,609 1,667,013
Contributed surplus 2,721,930 2,664,274
Accumulated other comprehensive income (loss) (356,615) (356,615)
Retained earnings (accumulated deficit) (1,683,445) (239,034)
------------ -----------
2,318,479 3,735,638
------------ -----------

$ 3,186,362 $ 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 Nine-Months Ended
September 30 September 30
------------ ------------
2009 2008 2009 2008
--------- --------- --------- ---------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenues:
Royalties $ 579,201 $ 828,586 $ 2,041,766 $ 3,824,915
Installation and
implementation fees 25,513 69,515 70,810 205,673
Software license fees - 1,516,024 - 2,831,997
Support services 178,148 221,709 458,414 433,463
--------- --------- --------- ---------
782,862 2,635,834 2,570,990 7,296,048
--------- --------- --------- ---------

Expenses:
Sales, marketing and
services to licensees 79,872 151,674 376,565 632,386
Research, software
development and
support services 844,513 931,226 2,578,266 3,299,765
General and
administrative 305,009 350,774 999,044 1,221,300
Amortization 27,697 31,401 71,970 106,432
Foreign exchange loss 130,827 259,455 150,798 349,649
Transaction fees - - - 557,072
Restructuring 99,664 - 99,664 113,550
--------- --------- --------- ---------
1,487,582 1,724,530 4,276,307 6,280,154
--------- --------- --------- ---------
Income (loss) before
income taxes (704,720) 911,304 (1,705,317) 1,015,894
--------- --------- --------- ---------

Income tax provision
(recovery)
Current (149,000) 346,241 (406,000) 442,250
Future - - - 15,252
--------- --------- --------- ---------
(149,000) 346,241 (406,000) 457,502
--------- --------- --------- ---------

Net income (loss) for
the period (555,720) 565,063 (1,299,317) 558,392

Retained earnings
(accumulated deficit),
beginning of period (1,127,725) (460,095) (239,034) (403,490)

Repurchase and
cancellation of
common shares - (154,570) (145,094) (204,504)

--------- --------- --------- ---------
Retained earnings
(accumulated deficit),
end of period $ (1,683,445) $ (49,602) $(1,683,445) $ (49,602)
--------- --------- --------- ---------

Net income (loss)
per share:
Basic $ (0.05) $ 0.04 $ (0.11) $ 0.04
--------- --------- --------- ---------
--------- --------- --------- ---------

Diluted $ (0.05) $ 0.04 $ (0.11) $ 0.04
--------- --------- --------- ---------
--------- --------- --------- ---------

Weighted average number
of common shares
outstanding:
Basic 12,237,598 13,228,098 12,289,932 13,232,682
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------

Diluted 12,237,598 13,679,352 12,289,932 13,232,682
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------



PARLAY ENTERTAINMENT INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in whole Canadian dollars)

Three-Months Ended Nine-Months Ended
------------------ -----------------
September 30 September 30
2009 2008 2009 2008
--------- --------- --------- ---------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Net income (loss) for
the period $ (555,720) $ 565,063 $ (1,299,317) $ 558,392

Changes in unrealized
gains (losses) on
translating the
comparative consolidated
financial statements of
the Company for the
three and nine-month
periods 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). - 146,176 - 242,215

--------- --------- --------- ---------
Comprehensive income
(loss) for the period $ (555,720) $ 711,239 $ (1,299,317) $ 800,607
--------- --------- --------- ---------
--------- --------- --------- ---------



PARLAY ENTERTAINMENT INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in whole Canadian dollars)

Three-Months Ended Nine-Months Ended
------------------ -----------------
September 30 September 30
2009 2008 2009 2008
--------- --------- --------- ---------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Cash flows from
operating activities:
Net income (loss) for
the period $ (555,720) $ 565,063 $ (1,299,317) $ 558,392
Adjustments to
reconcile net income
(loss) to net cash
provided by (used in)
operating activities:
Stock-based
compensation expense 10,673 62,674 57,656 204,642
Amortization 27,697 31,401 71,970 106,432
Changes in non-cash
working capital
items:
Security deposit (90,015) - (90,015) -
Accounts receivable (304,920) 561,970 (152,948) 472,601
Prepaid expenses,
deposits and other
assets 77,864 (27,352) (44,987) (32,098)
Accounts payable and
accrued liabilities 40,573 (170,635) (120,678) (553,372)
Income taxes
recoverable /
payable (149,001) 342,333 (466,080) 606,903
Deferred revenue 24,670 (1,429,033) 152,553 183,667
--------- --------- --------- ---------
Net cash provided by
(used in) operating
activities (918,179) (63,579) (1,891,846) 1,547,167
--------- --------- --------- ---------

Cash flows from
investing activities:
Purchases of equipment (7,361) (2,006) (124,177) (6,651)
Increase (decrease) in
accounts payable and
accrued liabilities
related to purchases
of equipment (1,319) - 2,403 -
--------- --------- --------- ---------
Net cash (used in)
investing activities (8,680) (2,006) (121,774) (6,651)
--------- --------- --------- ---------

Cash flows from financing
activities:
Repurchase of common
shares - (188,636) (203,745) (247,817)
Proceeds from issuance
of common shares 3,839 7,393 28,247 53,688
--------- --------- --------- ---------
Net cash provided by
(used in) financing
activities 3,839 (181,243) (175,498) (194,129)
--------- --------- --------- ---------

Effect of changes in
foreign currency
exchange rates on cash 7,606 107,528 7,507 195,460
--------- --------- --------- ---------

Net increase (decrease)
in cash (915,414) (139,300) (2,181,611) 1,541,847

Cash, beginning of
period 1,960,418 3,491,522 3,226,615 1,810,375
--------- --------- --------- ---------

Cash, end of period $ 1,045,004 $ 3,352,222 $ 1,045,004 $ 3,352,222
--------- --------- --------- ---------
--------- --------- --------- ---------

Supplemental cash
flow activities:
Income taxes paid $ - $ - $ 399,831 $ -
--------- --------- --------- ---------
--------- --------- --------- ---------
Income taxes (received) $ - $ - $ (339,300) $ (184,254)
--------- --------- --------- ---------
Interest paid
(received) $ 574 $ (13,368) $ (20,631) $ (32,940)
--------- --------- --------- ---------


(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,
2009 2008 2009 2008
--------- --------- --------- ---------

Net income (loss) $ (555,720) $ 565,063 $ (1,299,317) $ 558,392
Interest 574 (13,368) (20,631) (32,940)
Taxes (149,000) 346,241 (406,000) 457,502
Amortization 27,697 31,401 71,970 106,432
--------- --------- --------- ---------
EBITDA $ (676,449) $ 929,337 $ (1,653,978) $ 1,089,386
--------- --------- --------- ---------
--------- --------- --------- ---------

Revenue $ 782,862 $ 2,635,834 $ 2,570,990 $ 7,296,048
--------- --------- --------- ---------
--------- --------- --------- ---------

% -86% 35% -64% 15%
--------- --------- --------- ---------
--------- --------- --------- ---------


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.

(C) 2009 by Parlay Entertainment Inc.

The TSX Venture Exchange does not accept any responsibility for the adequacy or accuracy of this release.

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