Parlay Entertainment Announces Results for Q3 2008

November 17, 2008 --

OAKVILLE, ONTARIO -- (Marketwire) -- 11/17/08 -- 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, 2008.

Results for the third quarter of fiscal 2008 include:

- Total revenue at $2,531,998, up 27% from Q3 2007.

- Royalty revenue at $796,612, down 55% from Q3 2007.

- Software license fees of $1,457,500, a new caption from Q3 2007.

- New corporate record for support services revenue of $211,871, up 32% from Q3 2007.

- New corporate record for net income of $544,253, or $0.04 per share, fully diluted, up from net income of $173,492 in Q3 2007.

- EBITDA(1) increased to $894,666, from $271,538 in Q3 2007 and EBITDA(1) margin increased to 35% from 14% in Q3 2007.

Results for the first three quarters of fiscal 2008 include:

- Total revenue at $7,158,118, up 19% from the first three quarters of 2007.

- Royalty revenue at $3,772,420, down 31% from the first three quarters of 2007.

- Software license fees of $2,762,500, a new caption from the first three quarters of 2007.

- Net income of $535,707, or $0.04 per share, fully diluted, up from net income of $296,242 in the first three quarters of 2007.

- EBITDA(1) increased to $1,050,524, from $583,810 in the first three quarters of 2007 and EBITDA(1) margin increased to 15% from 10% in the first three quarters of 2007.

"We remain committed to increasing our cash reserves through revenue growth from existing and new customers as well as from new product and service offerings and software licensing fees," said Scott White, Parlay's Chief Executive Officer. "We have a number of new customers who are in various stages of advancing their Internet bingo offerings and we anticipate these new customer launches to contribute to revenue commencing in Q1 2009. Our quarter just passed also included significant foreign exchange expense reflecting the remarkable strength of our reporting currency against each of sterling, the Euro and the Canadian dollar."

"We are also beginning to see," continued Mr. White, "the results of various restructuring initiatives which we commenced in Q2 2008 and which we have expanded. We anticipate that the full benefit of these adjustments will fully impact our cost structure in Q1 2009."

Parlay generates revenue from software licensing, installation fees and support services. Consolidated revenues were $2.5 million in Q3 2008 compared to $2.0 million in Q3 2007.

Expenses in Q3 2008 were $1.7 million, down from $1.8 million in Q3 2007. The decrease represented reduced compensation expenses offset by adverse foreign exchange effects and the absence of certain non-recurring expense reductions in Q3 2007.

Net income for the quarter was $0.5 million, or $0.04 per diluted share, compared to net income of $0.2 million, or $0.01 per diluted share in Q3 2007.

Consolidated revenues were $7.2 million for the first three quarters of 2008 compared to $6.0 million in the first three quarters of 2007.

Expenses in the first three quarters of 2008 were $6.2 million, up from $5.5 million in the first three quarters of 2007. The increase represented adverse foreign exchange effects, certain non-recurring costs in the first three quarters of 2008 and the absence of certain non-recurring expense reductions in Q3 2007 offset by reduced compensation expenses.

Net income for the first three quarters of 2008 was $0.5 million, or $0.04 per diluted share, compared to net income of $0.3 million, or $0.02 per diluted share, in the first three quarters of 2007.

Parlay remains debt free and Parlay's cash balance at September 30, 2008 was $3.2 million.

PARLAY ENTERTAINM ENT INC. CONSOLIDATED BALANCE SHEETS (incorporated under the laws of the province of Ontario) in whole U.S. dollars (Unaudited) (Audited) September 30, December 31, ASSETS 2008 2007 ------------ ----------- Current assets: Cash $ 3,162,816 $ 1,832,178 Accounts receivable: Trade, less allowance of approximately $95,000 1,074,260 1,480,956 ($388,000 - 2007) GST receivable 20,902 78,108 Income taxes recoverable - 552,936 Prepaid expenses, deposits and other assets 161,674 130,167 Future income taxes 114,130 114,130 ------------ ----------- Total current assets 4,533,782 4,188,475 Equipment - net 104,876 203,127 Future income taxes, net of valuation allowance 50,000 65,000 ------------ ----------- $ 4,688,658 $ 4,456,602 ------------ ----------- ------------ ----------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable and accrued liabilities $ 475,114 $ 1,018,301 Income taxes payable 42,797 - Deferred revenue 471,831 291,544 ------------ ----------- Total current liabilities 989,742 1,309,845 ------------ ----------- Shareholders' equity: Common shares, an unlimited number of shares authorized, 12,930,265 shares issued and outstanding (13,012,265 - 2007) 1,476,925 1,465,676 Contributed surplus 2,289,461 2,087,925 Retained earnings (accumulated deficit) (67,470) (406,844) ------------ ----------- 3,698,916 3,146,757 ------------ ----------- $ 4,688,658 $ 4,456,602 ------------ ----------- ------------ ----------- PARLAY ENTERTAINMENT INC. CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (in whole U.S. dollars, except for per share amounts) Three-Months Ended Nine-Months Ended ------------------ ----------------- September 30 September 30 2008 2007 2008 2007 ---------- ----------- ----------- ----------- (Unaudited) (Unaudited) (Unaudited) (Unaudited) Revenues: Royalties $ 796,612 $ 1,788,223 $ 3,772,420 $ 5,438,569 Installation fees 66,015 53,326 201,325 121,157 Software license fees 1,457,500 - 2,762,500 - Support services 211,871 159,982 421,873 431,032 ---------- ----------- ----------- ----------- 2,531,998 2,001,531 7,158,118 5,990,758 ---------- ----------- ----------- ----------- Expenses: Sales, marketing and services to licensees 145,392 257,822 621,926 783,081 Research, software development and support services 895,405 1,278,629 3,247,715 3,751,992 General and administrative 336,979 554,758 1,201,955 1,256,226 Amortization 30,210 40,186 104,711 118,850 Foreign exchange (gain)/loss 246,704 (25,417) 335,931 (48,552) Transaction fees - - 554,407 - Restructuring - - 113,533 - Net benefit of prior years' research incentives - (335,799) - (335,799) ---------- ----------- ----------- ----------- 1,654,690 1,770,179 6,180,178 5,525,798 Income before income taxes 877,308 231,352 977,940 464,960 ---------- ----------- ----------- ----------- Income tax provision Current 333,055 57,860 427,233 168,718 Future - - 15,000 - ---------- ----------- ----------- ----------- 333,055 57,860 442,233 168,718 ---------- ----------- ----------- ----------- Net income for the period 544,253 173,492 535,707 296,242 Retained earnings (accumulated deficit), beginning of period (464,499) (37,438) (406,844) (3,547) Repurchase and cancellation of common shares (147,224) (131,952) (196,333) (288,593) ---------- ----------- ----------- ----------- Retained earnings (accumulated deficit), end of period $ (67,470) $ 4,102 $ (67,470) $ 4,102 ---------- ----------- ----------- ----------- ---------- ----------- ----------- ----------- Net income per share: Basic $ 0.04 $ 0.01 $ 0.04 $ 0.02 ---------- ----------- ----------- ----------- ---------- ----------- ----------- ----------- Diluted $ 0.04 $ 0.01 $ 0.04 $ 0.02 ---------- ----------- ----------- ----------- ---------- ----------- ----------- ----------- Weighted average number of common shares outstanding: Basic 12,999,765 12,817,432 13,155,043 12,977,182 ---------- ----------- ----------- ----------- ---------- ----------- ----------- ----------- Diluted 13,397,405 13,710,625 13,586,770 13,899,898 ---------- ----------- ----------- ----------- ---------- ----------- ----------- ----------- PARLAY ENTERTAINMENT INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in whole U.S. dollars) Three-Months Ended Nine-Months Ended ------------------ ----------------- September 30 September 30 2008 2007 2008 2007 ---------- ----------- ----------- ----------- (Unaudited) (Unaudited) (Unaudited) (Unaudited) Cash flows from operating activities: Net income for the period $ 544,253 $ 173,492 $ 535,707 $ 296,242 Adjustments to reconcile net income to net cash provided by operating activities: Stock option expense 60,255 78,786 201,536 139,183 Amortization 30,210 40,186 104,711 118,850 Future income tax provision - - 15,000 - Changes in non-cash working capital items: Accounts receivable 552,632 232,775 463,902 (321,587) Prepaid expenses, deposits and other assets (26,795) (56,509) (31,507) (49,616) Accounts payable and accrued liabilities (163,185) (104,295) (543,187) (79,866) Income taxes recoverable/payable 333,054 (421,814) 595,733 (1,107,127) Deferred revenue (1,420,885) (24,949) 180,287 78,987 ---------- ----------- ----------- ----------- Net cash provided by (used in) operating activities (90,461) (82,328) 1,522,182 (924,934) ---------- ----------- ----------- ----------- Cash flows from investing activities: Purchases of equipment (1,848) (31,246) (6,460) (73,233) (Decrease) in accounts payable and accrued liabilities related to purchases of equipment - (7,756) - (17,547) ---------- ----------- ----------- ----------- Net cash (used in) investing activities (1,848) (39,002) (6,460) (90,780) ---------- ----------- ----------- ----------- Cash flows from financing activities: Repurchase of common shares (179,641) (155,646) (237,844) (335,437) (Decrease) in accounts payable and accrued liabilities related to repurchase of common shares - - - (35,871) ---------- ----------- ----------- ----------- Cash used for Repurchase of common shares (179,641) (155,646) (237,844) (371,308) Proceeds from issuance of common shares 7,000 6,000 52,760 11,417 ---------- ----------- ----------- ----------- Net cash (used in) financing activities (172,641) (149,646) (185,084) (359,891) ---------- ----------- ----------- ----------- Net increase (decrease) in cash (264,950) (270,976) 1,330,638 (1,375,605) Cash, beginning of period 3,427,766 2,024,587 1,832,178 3,129,216 ---------- ----------- ----------- ----------- Cash, end of period $ 3,162,816 $ 1,753,611 $ 3,162,816 $ 1,753,611 ---------- ----------- ----------- ----------- Supplemental cash flow activities: Income taxes paid/(received) $ (174,003) $ 55,366 $ (174,003) $ 849,036 ---------- ----------- ----------- ----------- ---------- ----------- ----------- ----------- Interest (received) $ (12,852) $ - $ (32,127) $ - ---------- ----------- ----------- ----------- ---------- ----------- ----------- ----------- (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, 2008 2007 2008 2007 ----------- ----------- ----------- ----------- Net income $ 544,253 $ 173,492 $ 535,707 $ 296,242 Interest (12,852) - (32,127) - Taxes 333,055 57,860 442,233 168,718 Amortization 30,210 40,186 104,711 118,850 ----------- ----------- ----------- ----------- EBITDA $ 894,666 $ 271,538 $ 1,050,524 $ 583,810 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- Revenue $ 2,531,998 $ 2,001,531 $ 7,158,118 $ 5,990,758 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- % 35% 14% 15% 10% ----------- ----------- ----------- -----------

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 Bingo solutions, including Virgin, Yahoo!, Paddy Power, NetPlay TV and the St. Minver, TGN and BingoNexus 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,

(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 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.

Contacts:
Parlay Entertainment Inc.
Scott White
CEO
(905) 337-6505
Email: swhite@parlaygroup.com

Parlay Entertainment Inc.
David Callander
CFO
(905) 337-6516
Email: dcallander@parlaygroup.com
Website: www.parlaygroup.com

Copyright @ Marketwire

---