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Parlay Entertainment Inc.: Parlay Entertainment Announces Results for Q3 2008

OAKVILLE, ONTARIO--(Marketwire - Nov. 17, 2008) - 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.