BOCA RATON, Fla., Nov. 13, 2008 (GLOBE NEWSWIRE) -- Silverstar Holdings, Ltd. (Nasdaq:SSTR), a leading international publisher and developer of interactive entertainment software, reported financial results for the first quarter of fiscal 2009 ended September 30, 2008.
First Quarter Fiscal 2009 Financial Results
Revenues for the first quarter 2009 totaled $8.8 million, a 127% increase from $3.9 million a year ago. The quarter's strong results were driven primarily by the successful launch and resales of the following products: FlatOut Ultimate Carnage PC, Animal Paradise DS, Ford Off Road Wii, Jackass DS and Pipemania PC, PS2, DS, and PSP.
Adjusted EBITDA, a non-GAAP measure, totaled $1.77 million or $0.09 per share, an increase of $3.7 million from a loss of $1.2 million or ($0.09) per share in the same quarter a year ago. A more detailed discussion and reconciliation of adjusted EBITDA to operating income is included at the end of this release.
Net loss totaled $0.7 million or ($0.03) per share, as compared to a net loss of $4.4 million or ($0.35) per share a year ago.
Quarter-end cash, restricted cash and short-term investments totaled $1.6 million, as compared to $2.9 million at June 30, 2008
First Quarter Fiscal 2009 Operational Highlights
* Released nine significant PC and console SKUs, as compared to one
in the same period a year ago.
* First quarter releases comprised several well-received titles,
including Pipe Mania (Nintendo DS, PSP, PS2, PC), Unsolved Crimes
(Nintendo DS), Animal Paradise (Nintendo DS -- North America),
Jackass: the Game (Nintendo DS), Ford Racing Off Road (Nintendo
Wii) and FlatOut Ultimate Carnage (PC).
* The company entered into a strategic distribution agreement with
Atari, Inc. for North American sales. Titles shipped and
distributed exclusively by Atari in the first quarter included
Animal Paradise Nintendo DS, Pipe Mania (Nintendo DS, PSP, PS2,
PC) and Unsolved Crimes (Nintendo DS).
* Empire's sales to North America totaled more than $2.0 million in
the quarter, as compared to a minimal amount in the comparable
quarter of 2007.
* Sold Razorworks software studio to a UK game developer. This is
expected to reduce operating costs by approximately $3.0 million
in fiscal 2009.
"This quarter represented the highest revenue and EBITDA first quarter in our company's history and starts fiscal 2009 on a strong note," said Clive Kabatznik, CEO of Silverstar Holdings. "Our results were driven by the strong performance of our subsidiary, Empire Interactive. The sales volume of Empire's releases met or exceeded our expectations in both Europe and North America. Animal Paradise DS continued to sell exceptionally well in Europe and was launched in North America during the quarter.
"Additionally, Ford Racing Off Road Wii sold particularly well in the United Kingdom, where it achieved strong chart rankings as a Top 10 Wii product," said Kabatznik. "Looking forward, the launch of Hello Kitty DS will likely be the high point of the second quarter, with current orders pointing to one of the most successful product launches in our history.
"Our recent signing of an exclusive relationship with PlayFirst, covering several popular and award-winning titles, demonstrates our drive and ability to continue to expand our product pipeline and portfolio. PlayFirst's selection of us reflects how our unmatched strengths in publishing and international distribution make us an ideal partner for any game developer."
Conference Call
Silverstar will host a conference call today, November 13, 2008 at 4:30 p.m. Eastern time. A brief presentation by management will be followed by a question and answer period. To participate in the call, dial the appropriate number 5-10 minutes prior to the start time, request the Silverstar Holdings conference call and provide the conference ID.
Domestic callers: 1-800-862-9098 International callers: 1-785-424-1051 Conference ID#: 7SILVERSTAR Internet Simulcast: http://viavid.net/dce.aspx?sid=0000584E
The call will be available for replay starting at 7:30 p.m. Eastern Time until December 13, 2008:
Toll-Free Replay number: 1-800-283-8183 International Replay number: 1-402-220-0867 (No passcode required)
If you have any difficulty connecting with the conference call or webcast, please contact the Liolios Group at 949-574-3860.
About Silverstar Holdings
Silverstar Holdings Ltd. is an international publisher and developer of interactive entertainment software that operates primarily through two wholly-owned subsidiaries: Empire Interactive, PLC and Strategy First, Inc. Empire Interactive, www.empireinteractive.com, is an award-winning developer and publisher of interactive entertainment software games, including Starsky & Hutch, Big Mutha Truckers, Ford Racing and FlatOut series. Empire's products are delivered on both console and PC platforms. Strategy First, www.strategyfirst.com, is a worldwide publisher of entertainment software for the PC, including the award winning Disciples, Jack Keene, Jagged Alliance, and Space Empires series. For more information about Silverstar Holdings, go to www.silverstarholdings.com.
The statements which are not historical facts contained in this press release are forward-looking statements that involve certain risks and uncertainties, including but not limited to risks associated with the uncertainty of future financial results, additional financing requirements, development of new products, regulatory approval processes, the impact of competitive products or pricing, technological changes, the effect of economic conditions and other uncertainties detailed in the company's filings with the Securities and Exchange Commission. Key assumptions underlying the company's guidance for future periods include continued consumer acceptance of the Wii and DS from Nintendo, Xbox 360 from Microsoft, and PSP from Sony; the ability to develop and publish products that capture market share for these next generation systems, while continuing to leverage opportunities on legacy platforms; as well as the timely delivery of the titles detailed in this release. All trademarks are the property of their respective owners.
SILVERSTAR HOLDINGS, LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
Sept.30, 2008 June 30, 2008
------------- -------------
Current assets:
Cash and cash equivalents $ 969,061 $ 2,215,109
Cash restricted for foreign tax
estimated liability 658,084 677,344
Accounts receivable, net 2,277,002 2,232,343
Inventories, net 765,777 445,927
Current portion of long term
notes receivable 144,410 216,633
Prepaid expenses and other
current assets 520,093 364,576
Assets available for sale -- 80,205
------------- -------------
Total current assets $ 5,334,427 $ 6,232,137
------------- -------------
Property, plant and equipment, net 375,052 403,723
Software development costs, net 7,195,107 8,045,698
Investments in non-marketable
securities 1,131,066 1,131,066
Intangible assets, net 4,828,210 5,732,835
Deferred charges and other assets 695,087 864,689
------------- -------------
Total assets $ 19,558,949 $ 22,410,148
============= =============
Liabilities and stockholders'
equity
Current liabilities:
Lines of credit $ 1,172,111 $ 1,618,164
Bridge Loan payable 260,000 --
Notes payable - acquisition 2,428 2,666
Earn out notes payable -
acquisition 115,938 405,437
Accounts payable 1,722,791 5,041,603
Accrued royalty expense 1,624,443 1,472,424
Accrued payroll tax expense 640,753 817,269
Accrued expenses 4,090,252 2,276,573
Estimated liability for
foreign tax 271,566 279,514
------------- -------------
Total current liabilities $ 9,900,282 $ 11,913,650
------------- -------------
Convertible secured debenture 7,461,428 7,354,637
Other long term liabilities 416,200 421,363
------------- -------------
Total liabilities $ 17,777,910 $ 19,689,650
============= =============
Stockholders' equity
Preferred stock, $0.01 par value;
5,000,000 shares authorized; no
shares issued and outstanding -- --
Common stock, class A, $0.01 par
value, 50,000,000 shares
authorized; 20,129,611 (1,496,700
shares in treasury) and 19,956,177
shares issued and outstanding,
respectively 199,945 198,210
Common stock, class B, $0.01 par
value, 2,000,000 shares
authorized; no shares issued and
outstanding -- --
Common stock, FSAH class B, $0.001
par value, 10,000,000 shares no
shares issued and outstanding -- --
Additional paid-in capital 83,605,604 83,304,462
Accumulated deficit (81,942,270) (81,282,895)
Other comprehensive income (82,243) 500,721
------------- -------------
Total stockholders' equity $ 1,781,039 $ 2,720,498
------------- -------------
Total liabilities and
stockholders' equity $ 19,558,949 $ 22,410,148
============= =============
SILVERSTAR HOLDINGS, LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended
September 30,
2008 2007
----------- -----------
Net revenues $8,822,027 $3,878,677
Operating expenses:
Cost of sales 3,948,616 1,598,802
Development costs and royalties 612,004 613,504
Selling, general and administrative 3,091,280 2,958,380
Amortization of software development
costs 1,109,457 590,106
Amortization of acquired intangibles 487,245 2,111,666
Depreciation 54,334 43,654
----------- -----------
Total operating expenses 9,302,936 7,916,112
----------- -----------
Operating loss (480,909) (4,037,435)
Other income (expense) 302,306 (12,495)
Foreign currency gain (loss) (161,094) 133,798
Amortization of convertible debt discounts
and issuance costs (276,394) (431,169)
Gain on sale of fixed assets 177,637 --
Interest expense (242,964) (168,457)
Interest income 22,040 69,249
----------- -----------
Net loss ($659,378) ($4,446,509)
=========== ===========
Loss per share:
Basic and diluted ($0.03) ($0.35)
=========== ===========
Weighted average common stock outstanding:
Basic and diluted 20,067,108 12,783,366
=========== ===========
Reconciliation of Operating Income to Adjusted EBITDA
In addition to other measures, management evaluates operating results based upon an adjusted "EBITDA," (income before depreciation and amortization, interest expense, income taxes, and stock based compensation) each of which is presented on the company's Consolidated Statements of Operations. The company's presentation of adjusted EBITDA, a non-GAAP measure, may not be comparable to similarly titled measures used by other companies. Any of these items could be significant to the company's financial results. The following table reconciles adjusted EBITDA to operating loss for the periods indicated.
Quarters Ended
September 30,
2008 2007
------- -------
Adjusted EBITDA reconciliation:
Operating loss ($481) ($4,037)
Depreciation 54 44
Amortization of intangibles 487 2,112
Amortization of software development costs 1,109 590
Non-cash compensation 117 102
------- -------
Operating EBITDA $1,286 ($1,190)
Other Income 302 (12)
Gain on sale of fixed Assets 178 --
Adjusted EBITDA $1,766 ($1,202)
EBITDA per share 0.09 (0.09)
Weighted average number of shares outstanding 20,067 12,783
First Quarter Fiscal 2009 Revenue by Platform and Geographic Area
Beginning this quarter, the company will begin to report unaudited supplemental financial information, including platform revenue mix and geographic revenue mix.
Platform Revenue Mix
------------
Q1 2009
------------
Consoles
Nintendo Wii 18%
Sony Playstation 2 (PS2) 9%
Handheld
Nintendo Dual Screen (DS) 33%
Sony Playstation Portable (PSP) 11%
PC
Boxed Goods 20%
Licensing 3%
Online/Digital Download 6%
============
Total 100%
============
Geographic Revenue Mix
North America 34%
Europe 66%
============
100.0%
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