Exhibit 99.1
Silverstar Holdings Reports First Quarter FY2009 Results
Q1 Revenues Up 127% y/y to $8.8 million; Adjusted EBITDA $1.77 million
BOCA RATON, FL – November 13, 2008 – 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
“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 makes us an ideal partner for any game developer.”
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, | | June 30, | |
| | 2008 | | 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 | ) | | ($4,446,509 | ) |
| | | | | | | |
Loss per share: | | | | | | | |
Basic and diluted | | | ($.03 | ) | | ($.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 | | | .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% |
Company 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
