Exhibit 99.1
Silverstar Holdings Reports First Quarter 2008 Results
Q1 Revenues Total $3.9 Million vs. $279,000 Year-Ago Quarter
BOCA RATON, FL – November 14, 2007 – Silverstar Holdings, Ltd. (NASDAQ: SSTR), an international publisher and developer of interactive entertainment software, reported record financial results for its first quarter 2008 ended September 30, 2007.
Financial Results
First Quarter Fiscal 2008 as compared to the same period a year ago:
· | Revenues for the quarter totaled $3.9 million, a 1291% increase from $279,000 a year ago. The increase over the year-ago quarter is primarily due to the acquisition of Empire Interactive, which occurred in December 2006. |
| | |
· | Net loss totaled $4.4 million or ($0.35) per share, compared to a loss of $941,000 or ($0.10) per share a year-ago. |
| | |
· | Adjusted EBITDA (earnings before interest, taxes, depreciation, amortization, and stock-based compensation), a non-GAAP measure, totaled a loss of $1.2 million or ($0.09) per share, as compared to a loss of $0.5 million or ($0.05) per share a year ago. The company recorded depreciation and amortization charges of approximately $2.7 million in the first quarter, compared to $50,000 in the same period last year. A reconciliation of adjusted EBITDA to operating income is included at the end of this release. |
“For a first fiscal quarter, this was a new record for revenue for our company,” said Clive Kabatznik, CEO of Silverstar Holdings Ltd. “As expected and previously discussed, Q1 will by far represent the low water mark as compared to our plans and projections for the balance of the year, particularly in terms of the release of our high-profile titles. We remain on target for our 2008 revenue and earnings forecast.”
Operational Highlights
· | Released six SKUs during the first quarter: Project Fashion (PC); Full Metal Alchemist (DS); Enemy Engaged 2 (PC); GODS: Lands of Infinity (PC); 1914 Shells of Fury (PC); and Ducati World Championship (PC). |
· | Empire introduced Animal Paradise, a fun and engaging virtual pet SIM for the Nintendo DS. |
· | Empire Interactive granted five-year, exclusive worldwide licensing rights to XENDEX Holding GmbH, a global mobile entertainment company, to develop, publish and distribute a selection of Empire's leading titles on the mobile platform. |
· | Strengthened executive management team with the addition of Lawrence R. Litowitz as the company’s new chief financial officer, Karim Farghaly as new head of North American sales, and Vipul Patel as new head of European Sales. |
Continued Kabatznik, “During the quarter, we continued to leverage our large back catalog and transition our most popular offerings to next-gen game platforms, like Xbox 360, Nintendo DS and Wii. We also executed on our forecasted annual release schedule, releasing six smaller SKUs in the first quarter, and continued to build on Empire’s international presence and unique European distribution network. The release schedule for this fiscal year continues to look strong, with at least 16 SKUs planned for release in fiscal Q2 and another 26 in the pipeline for release in the second half of the fiscal year.”
Based on this schedule, the company continues to anticipate revenues will exceed $40 million for the full fiscal year ending June 30, 2008, with adjusted EBITDA in the range of 17.5% to 25.0% or $7 million to $10 million. Due to a structured release schedule designed to enhance sales and profitability, the company continues to anticipate that 110% of its adjusted EBITDA will occur in the final three quarters of the fiscal year.
The 16 SKUs planned for release in the second quarter include, Jackass (PS2, PSP), Animal Paradise (DS), Speedball II: Brutal Deluxe (Xbox 360) and International Cricket Captain (PS2, PSP).
Conference Call
Silverstar will host a conference call today 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: 1-888-200-2794
International callers: 1-973-935-8766
Conference ID#: 9358330
Internet Simulcast: http://viavid.net/dce.aspx?sid=000046C9
The call will be available for replay starting at 7:30 p.m. Eastern Time until December 13, 2007:
Toll-Free Replay number: 1-877-519-4471
International Replay number: 1-973-341-3080
Replay PIN #: 9358330
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. It currently owns Empire Interactive, PLC and Strategy First, Inc. Empire Interactive (www.empireinteractive.com) is a leading developer and publisher of interactive entertainment software games, including Starsky & Hutch, Big Mutha Truckers, Ford Racing and FlatOut. Empire's products are delivered on both console and PC platforms. Strategy First (www.strategyfirst.com) is a developer and worldwide publisher of entertainment software for the PC. For more information about Silverstar Holdings visit http://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.
Contact:
Silverstar Holdings Ltd.
Clive Kabatznik, President and CEO
Tel 561-479-0040
clive@silverstarholdings.com
Investor Relations:
Liolios Group, Inc.
Matt Glover or Ron Both
Tel 949-574-3860
info@liolios.com
Reconciliation of Operating Income to Adjusted EBITDA
In addition to other measures, management evaluates operating results based upon an adjusted “EBITDA," which is defined as operating 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 income for the periods indicated.
| | Quarters ended Sept 30 |
Adjusted EBITDA Reconciliation | 2007 | 2006 |
Operating Income (Loss) | ($4,037) | ($573) |
Depreciation | 44 | 8 |
Amortization of Intangibles | 2,112 | 42 |
Amortization of Software Development Costs | 590 | 0 |
Stock Based Compensation | 102 | 23 |
Operating EBITDA | ($1,190) | ($500) |
Operating EBITDA per Share | ($0.09) | ($0.05) |
Weighted Avg. # of Shares Outstanding | 12,783 | 9,149 |
SILVERSTAR HOLDINGS, LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
| | September 30, | June 30, |
| | 2007 | 2007 |
Current assets: | (Unaudited) | |
Cash and cash equivalents (Includes restricted cash of $676,023 and $590,990) | $7,408,833 | $3,693,149 |
Cash restricted for foreign tax estimated liability | 779,368 | 1,064,040 |
Accounts receivable, net | 1,934,499 | 6,908,846 |
Inventories, net | 911,964 | 900,128 |
Current portion of long term notes receivable | 326,135 | 256,982 |
Prepaid expenses and other current assets | 396,815 | 669,730 |
Assets available for sale | 513,727 | 505,650 |
Total current assets | $12,271,341 | $13,998,525 |
| | | |
Property, plant and equipment, net | 481,933 | 488,031 |
Software development costs, net | 5,829,673 | 5,183,033 |
Investments in non-marketable securities | 1,131,066 | 1,143,566 |
Long term notes receivable | 116,464 | 214,222 |
Goodwill, net | 949,559 | 890,038 |
Intangible assets, net | 19,116,755 | 20,611,189 |
Deferred tax asset | 638,882 | 625,217 |
Deferred charges and other assets | 335,111 | 631,843 |
Total assets | $40,870,784 | $43,785,664 |
| | | |
Liabilities and stockholders' equity: | | |
Current liabilities: | | |
Lines of credit | 2,005,674 | 2,875,472 |
Notes payable- acquisition | 3,060,656 | 5,475,179 |
Earn out notes payable - acquisition | 3,931,521 | 3,847,426 |
Accounts payable | 4,955,163 | 6,959,835 |
Accrued royalty expense | 2,790,010 | 2,937,887 |
Accrued payroll tax expense | 1,038,609 | 1,585,196 |
Accrued expenses | 1,698,504 | 1,770,656 |
Deposits on July 2007 private placement | - | 630,403 |
Estimated liability for foreign tax | 321,615 | 616,458 |
Total current liabilities | $19,801,752 | $26,698,512 |
| | | |
Convertible secured debenture | 2,067,973 | 4,790,779 |
Other long-term liabilities | 424,989 | 412,363 |
Total liabilities | $22,294,714 | $31,901,654 |
| | | |
Liabilities and 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; 17,589,619 | | |
(1,496,700 shares in treasury) and 9,621,891 shares issued and outstanding, | | |
respectively | 175,895 | 96,218 |
Common stock, Class B, $0.01 par value; 2,000,000 shares authorized; 835,260 shares | | |
issued and outstanding | 8,353 | 8,353 |
Common stock, FSAH Class B $0.001 par value; 10,000,000 shares authorized; 2,671,087 | | |
shares issued and outstanding | 600 | 600 |
Additional paid-in capital | 78,692,017 | 67,843,919 |
Accumulated deficit | (61,243,485) | (56,796,978 |
Other comprehensive income | 942,690 | 731,898 |
Total stockholders' equity | $18,576,070 | $11,884,010 |
Total liabilities and stockholders' equity | $40,870,784 | $43,785,664 |
SILVERSTAR HOLDINGS, LTD. AND SUBSIDIARIES |
CONSOLIDATED STATEMENTS OF OPERATION
(UNAUDITED) |
| | Three Months Ended September 30, |
| | 2007 | 2006 |
| | | |
Net Revenues | $3,878,677 | $278,745 |
Operating Expenses: | | |
Cost of sales | 1,598,802 | 119,569 |
Development costs and royalties | 613,504 | 68,041 |
Selling, general and administrative | 2,958,380 | 613,955 |
Amortization of software development costs | 590,106 | - |
Amortization of acquired intangibles | 2,111,666 | 42,361 |
Depreciation | 43,654 | 7,730 |
Total operating expenses | 7,916,112 | 851,656 |
Operating loss | (4,037,435) | (572,911) |
Other income (expense) | (12,495) | 11 |
Foreign currency gain (loss) | 133,798 | (262,073) |
Amortization of convertible debt discounts and issuance costs | (431,169) | (159,107) |
Interest expense | (168,457) | (102,826) |
Interest income | 69,249 | 155,468 |
Net loss | ($4,446,509) | ($941,438) |
| | | |
Loss per share: | | |
Basic and diluted | ($.35) | ($.10) |
| | | |
Weighted average common stock outstanding: | | |
Basic and diluted | 12,783,366 | 9,149,034 |
