Parlay Entertainment Inc.
TSX VENTURE : PEI

Parlay Entertainment Inc.

April 01, 2009 18:19 ET

Parlay Entertainment Announces Results for Q4 and Fiscal 2008

OAKVILLE, ONTARIO--(Marketwire - April 1, 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 twelve-month periods ended December 31, 2008.

"In 2008, Parlay took a very significant step to divest its US-facing business and focus on licensing its software to customers in the United Kingdom and Europe," said Mr. Scott White, Parlay's Chief Executive Officer. "The impact of that divestiture required that that we bring our cost structure into line with revenue, which efforts were substantially completed in Q4. We also anticipated that it could take up to three quarters to see the results of refocused sales and marketing initiatives translate into new royalty revenue."

Results for fiscal 2008 include:

- Total revenue at $8,537,669, down 1% from 2007.

- Royalty revenue at $4,696,576, down 40% from 2007.

- Software license fees of $2,922,089, a new caption from 2007.

- Net income of $497,909, or $0.04 per share, fully diluted, up from net loss of $50,687 in 2007.

- EBITDA(1) increased to $960,371, from $144,348 in 2007 and EBITDA(1) margin
increased to 11% from 2% in 2007.

Results for the fourth quarter of fiscal 2008 include:

- Total revenue at $1,241,621, down 38% from Q4 2007.

- Royalty revenue at $871,661, down 53% from Q4 2007.

- Software license fees of $90,092, a new caption from Q4 2007.

- New corporate record for support services revenue of $240,511, up 90% from Q4 2007.

- Net loss of $60,483, or $(0.00) per share, fully diluted, down from net loss of $370,652 in Q4 2007.

- EBITDA(1) increased to $(129,016), from $(495,356) in Q4 2007 and EBITDA(1) margin increased to (10)% from (25)% in Q4 2007.

"Recently executed licensing arrangements and new customer launches will increasingly contribute to revenue throughout 2009, while our cost base will remain static," said Mr. White. "Parlay ended 2008 with in excess of $3,200,000 in cash. We have continued to invest in our technology and human resources with our share re-purchases exceeding 1,700,000 shares since the commencement of our normal course issuer bid."

Parlay generates revenue from software licensing, installation fees and support services. Consolidated revenues were $1.2 million in Q4 2008 compared to $2.0 million in Q4 2007.

Expenses in Q4 2008 were $1.4 million, down from $2.5 million in Q4 2007. The decrease represented reduced compensation expenses, reduced bad debt expense and beneficial foreign exchange effects together with the absence of certain non-recurring expenses in Q4 2007.

Net loss for the quarter was $0.1 million, or $0.00 per diluted share, compared to a net loss of $0.4 million, or $0.03 per diluted share in Q4 2007.

Consolidated revenues were $8.5 million for 2008 compared to $8.6 million for 2007.

Expenses in 2008 were $7.7 million, down from $8.7 million in 2007. The decrease represented reduced compensation costs and reduced bad debt expense offset by adverse foreign exchange effects, certain non-recurring costs in 2008 and the absence of certain non-recurring expense reductions in 2007.

Net income in 2008 was $0.5 million, or $0.04 per diluted share, compared to a net loss of $0.1 million, or $0.00 per diluted share, in 2007.

Parlay remains debt free and Parlay's cash balance at December 31, 2008 was $3.2 million.

"As a consequential development of Parlay's divestiture of its US-facing business," noted Mr. White, "effective on October 1, 2008, we commenced accounting for our activities in Canadian dollars. All comparative financial information has been translated to Canadian dollars."



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 2008 2007
------------------------------

Current assets:
Cash $ 3,226,615 $ 1,810,375
Accounts receivable:
Trade, less allowance of approximately
$108,000 820,974 1,463,332
($384,000 - 2007)
GST receivable 18,185 77,178
Income taxes recoverable - 546,356
Prepaid expenses, deposits and other assets 184,075 128,618
Future income taxes 225,972 112,772
------------------------------
Total current assets 4,475,821 4,138,631

Equipment - net 95,492 200,710
Future income taxes, net of valuation allowance 60,000 64,227
------------------------------

$ 4,631,313 $ 4,403,568
------------------------------
------------------------------

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
Accounts payable and accrued liabilities $ 555,492 $ 1,006,183
Income taxes payable 59,819 -
Deferred revenue 280,364 288,075
------------------------------
Total current liabilities 895,675 1,294,258
------------------------------

Shareholders' equity:
Common shares, an unlimited number of
shares authorized, 12,585,765 shares issued
and outstanding (13,012,265 - 2007) 1,667,013 1,698,344
Contributed surplus 2,664,274 2,413,286
Accumulated other comprehensive income (loss) (356,615) (598,830)
Retained earnings (accumulated deficit) (239,034) (403,490)
------------------------------
3,735,638 3,109,310
------------------------------

$ 4,631,313 $ 4,403,568
------------------------------
------------------------------



PARLAY ENTERTAINMENT INC.
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(in whole Canadian dollars, except for per share amounts)

Three-Months Ended Twelve-Months Ended
December 31 December 31
----------- -----------
2008 2007 2008 2007
------------------------------------------------
(Unaudited) (Unaudited) (Audited) (Audited)
Revenues:
Royalties $ 871,661 $ 1,850,199 $ 4,696,576 $ 7,860,946
Installation fees 39,357 28,511 245,030 161,152
Software license fees 90,092 - 2,922,089 -
Support services 240,511 126,303 673,974 601,372
------------------------------------------------
1,241,621 2,005,013 8,537,669 8,623,470
------------------------------------------------

Expenses:
Sales, marketing and
services to licensees 186,904 285,801 819,290 1,151,878
Research, software
development and support
services 921,607 1,259,984 4,221,373 5,392,151
General and administrative 427,042 572,847 1,648,360 1,949,662
Amortization 22,556 41,320 128,989 172,626
Foreign exchange (gain)
/ loss (171,145) 47,371 178,503 (4,859)
Transaction fees - 91,234 557,053 91,234
Restructuring - - 113,550 -
Lottofairness campaign - 243,132 - 243,132
Net benefit of prior years'
research incentives - - - (344,076)
------------------------------------------------
1,386,964 2,541,689 7,667,118 8,651,748
------------------------------------------------

Income (loss) before
income taxes (145,343) (536,676) 870,551 (28,278)
------------------------------------------------

Income tax provision
(recovery)
Current 27,151 (26,460) 469,401 161,973
Future (112,011) (139,564) (96,759) (139,564)
------------------------------------------------
(84,860) (166,024) 372,642 22,409
------------------------------------------------

Net income (loss) for
the period $ (60,483) $ (370,652) $ 497,909 $ (50,687)
------------------------------------------------
------------------------------------------------

Net income (loss) per share:
Basic $ (0.00) $ (0.03) $ 0.04 $ (0.00)
------------------------------------------------

Diluted $ (0.00) $ (0.03) $ 0.04 $ (0.00)
------------------------------------------------
------------------------------------------------

Weighted average number of
common shares outstanding:

Basic 12,673,098 13,000,265 13,034,557 12,982,953
------------------------------------------------
------------------------------------------------

Diluted 12,673,098 13,000,265 13,372,949 12,982,953
------------------------------------------------
------------------------------------------------



PARLAY ENTERTAINMENT INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in whole Canadian dollars, except for per share amounts)

Three-Months Ended Twelve-Months Ended
December 31 December 31
----------- -----------
2008 2007 2008 2007
------------------------------------------------
(Unaudited) (Unaudited) (Audited) (Audited)

Net income (loss) for
the period $ (60,483) $ (370,652) $ 497,909 $ (50,687)

Changes in unrealized gains
(losses) on translating
the comparative
consolidated financial
statements of the Company
for the year ended
December 31, 2007 and the
consolidated financial
statements of the Company
for the nine-month period
ended September 30, 2008
from the U.S. dollar to
the Canadian dollar
following the change to the
Canadian dollar as the
functional and reporting
currency on October 1, 2008
(net of income taxes of nil). - 2,891 242,215 (598,830)

------------------------------------------------
Comprehensive income (loss)
for the period $ (60,483) (367,761) $ 740,124 $ (649,517)
------------------------------------------------
------------------------------------------------



PARLAY ENTERTAINMENT INC.
CONSOLIDATED STATEMENTS OF CHANGES INSHAREHOLDERS' EQUITY
(in whole Canadian dollars)
(Audited)

Accumulated
Other Retained
Compre- Earnings
hensive (Accumu-
Common Stock Contributed Income lated
Shares Amount Surplus (Loss) Deficit) Total
------------------------------------------------------------------

Balance
December
31, 2006 13,153,015 $1,673,905 $2,212,051 $- $(4,133) $3,881,823

Issuance
of
stock
options - - 201,235 - - 201,235

Exercise of
stock
options
and
warrants 361,250 83,558 - - - 83,558

Repurchase
and
cancel-
lation of
common
shares (502,000) (59,119) - - (348,670) (407,789)

Other
compre-
hensive
(loss)
- 2007 - - - (598,830) - (598,830)

Net income
- 2007 - - - - (50,687) (50,687)
------------------------------------------------------------------

Balance
December
31, 2007 13,012,265 1,698,344 2,413,286 (598,830) (403,490) 3,109,310

Issuance of
stock
options - - 250,988 - - 250,988

Exercise of
stock
options 282,500 53,688 - - - 53,688

Repurchase
and
cancel-
lation of
common
shares (709,000) (85,019) - - (333,453) (418,472)

Other
compre-
hensive
income
- 2008 - - - 242,215 - 242,215

Net income
- 2008 - - - - 497,909 497,909
------------------------------------------------------------------

Balance
December
31, 2008 12,585,765 $1,667,013 $2,664,274 $(356,615) $(239,034) $3,735,638
------------------------------------------------------------------
------------------------------------------------------------------



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


Three-Months Ended Twelve-Months Ended
December 31 December 31
----------- -----------
2008 2007 2008 2007
---------------------------------------------
(Unaudited) (Unaudited) (Audited) (Audited)

Cash flows from operating
activities:
Net income for the period $ (60,483) $ (370,652) $ 497,909 $ (50,687)
Adjustments to reconcile net
income to net cash provided
by operating activities:
Stock option expense 46,346 49,513 250,988 201,235
Amortization 22,556 41,320 128,989 172,626
Future income tax provision
(recovery) (112,011) (139,564) (96,759) (139,564)
Changes in non-cash working
capital items:
Accounts receivable 228,751 76,462 701,351 (261,810)
Prepaid expenses, deposits
and other assets (23,359) 56,619 (55,457) 8,641
Accounts payable and
accrued liabilities 102,680 396,734 (450,691) 348,222
Income taxes recoverable
/ payable 82 (28,030) 606,175 (1,220,104)
Deferred revenue (191,378) (13,005) (7,711) 70,623
---------------------------------------------
Net cash provided by (used in)
operating activities 13,184 69,397 1,574,794 (870,818)
---------------------------------------------


Cash flows from investing
activities:
Purchases of equipment (6,890) (22,660) (13,541) (94,955)
(Decrease) in accounts payable
and accrued liabilities
related to purchases of
equipment - (3,426) - (20,764)
---------------------------------------------
Net cash (used in) investing
activities (6,890) (26,086) (13,541) (115,719)
---------------------------------------------

Cash flows from financing
activities:
Repurchase of common shares (170,655) (45,460) (418,472) (407,789)
(Decrease) in accounts payable
and accrued liabilities
related to repurchase of
common shares - - - (35,444)
---------------------------------------------
Cash used for repurchase of
common shares (170,655) (45,460) (418,472) (443,233)
Proceeds from issuance of
common shares - 71,400 53,688 83,558
---------------------------------------------
Net cash (used in) financing
activities (170,655) 25,940 (364,784) (359,675)
---------------------------------------------

Effect of changes in foreign
currency exchange rates
on cash 38,754 (5,999) 219,771 (489,888)
---------------------------------------------

Net increase (decrease)
in cash (125,607) 63,252 1,416,240 (1,836,100)

Cash, beginning of period 3,352,222 1,747,123 1,810,375 3,646,475
---------------------------------------------

Cash, end of period $ 3,226,615 $ 1,810,375 $3,226,615 $1,810,375
---------------------------------------------
---------------------------------------------

Supplemental cash flow
activities:

Income taxes paid
/ (received) $ - $ - $ (184,254) $ 985,481
---------------------------------------------
---------------------------------------------

Interest (received) $ (6,229) $ - $ (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,
2008 2007 2008 2007
---------------------------------------------------

Net income (loss) $ (60,483) $ (370,652) $ 497,909 $ (50,687)
Interest (6,229) - (39,169) -
Taxes (84,860) (166,024) 372,642 22,409
Amortization 22,556 41,320 128,989 172,626
---------------------------------------------------
EBITDA $ (129,016) $ (495,356) $ 960,371 $ 144,348
---------------------------------------------------
---------------------------------------------------

Revenue $ 1,241,621 $ 2,005,013 $ 8,537,669 $ 8,623,470
---------------------------------------------------
---------------------------------------------------

% -10% -25% 11% 2%
---------------------------------------------------


About Parlay Entertainment

Parlay Entertainment Inc. is the world's leading developer and licensor of Internet and TV bingo solutions. As the inventor and holder of Internet bingo(2) patents, Parlay was 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 solutions, including Virgin, Yahoo!, Paddy Power, NetPlay TV and the St. Minver and TGN bingo networks. Parlay's head offices are 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, Canadian Patents No. 2,340,152 and 2,618,843, with other Patent applications pending in other countries

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

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