SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 31, 2005
eGames, Inc.
(Exact name of registrant as specified in its charter)
Pennsylvania 0-27102 23-2694937
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(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
2000 Cabot Blvd. West, Suite 110, Langhorne, PA 19047-1833
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (215) 750-6606
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(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[] Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)
[] Soliciting material pursuant to Rule 14a-12 under the Exchange
Act (17 CFR 240.14a-12)
[] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
[] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition.
On October 31, 2005, eGames, Inc. (the "Company") issued a press release
announcing its results for the first quarter ended September 30, 2005. The full
text of the press release is set forth in Exhibit 99.1 hereto.
In accordance with General Instruction B.2 of Form 8-K, the information in this
Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed to be
"filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), or otherwise subject to the liability of that
section, and shall not be incorporated by reference into any registration
statement or other document filed under the Securities Act of 1933, as amended,
or the Exchange Act, except as shall be expressly set forth by specific
reference in such filing.
Item 9.01 Financial Statements and Exhibits.
(c) Exhibits.
The following document is filed as an exhibit to this report.
99.1 Press Release dated October 31, 2005.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
eGames, Inc.
By: /s/ Thomas W. Murphy
--------------------------------
Thomas W. Murphy, Vice President
and Chief Financial Officer
Dated: October 31, 2005
EXHIBIT 99.1
eGames Announces First Quarter Fiscal 2006 Financial Results
LANGHORNE, Pa., - Oct. 31, 2005 (PRIMEZONE) - eGames, Inc. (OTCBB: EGAM), a
publisher of Family Friendly(TM), affordably priced consumer entertainment PC
software games, today announced financial results for the three months ended
September 30, 2005.
Quarter ended September 30, 2005:
- ---------------------------------
Net sales increased by $116,000, or 10%, to $1,294,000, for the quarter ended
September 30, 2005, compared to $1,178,000 for the same quarter a year earlier.
Net loss was $54,000, or less than a penny per diluted share, for the quarter
ended September 30, 2005, compared to a net loss of $184,000, or $0.02 per
diluted share, for the same quarter a year earlier.
Financial Highlights:
- ---------------------
The $116,000 increase in net sales for the quarter ended September 30, 2005 was
driven by net sales increases to inventory liquidators and software retailers of
$73,000 and $21,000, respectively, in addition to a $66,000 increase in
licensing revenues. Partially offsetting these net sales increases was a $45,000
decrease in net sales to software distributors caused by a decline in sales to
Canadian software distributors.
For the quarter ended September 30, 2005, the Company realized a net loss of
$54,000 compared to a net loss of $184,000 for the same quarter a year ago. The
$130,000 decrease in net loss resulted from a $158,000 reduction in operating
expenses, which was partially offset by a $17,000 reduction in gross profit.
The following table represents the Company's net sales by distribution channel
for the quarters ended September 30, 2005 and 2004, respectively:
Net Sales by Distribution Channel
(rounded to the nearest thousand)
Quarters Ended
September 30,
------------------------------------------
Increase %
Distribution Channel 2005 % 2004 % (Decrease) Change
- -----------------------------------------------------------------------------------------
Software Distributors $ 770,000 59% $ 815,000 69% ($45,000) (6%)
Software Retailers 181,000 14% 160,000 14% 21,000 13%
Licensing 158,000 12% 92,000 8% 66,000 72%
Internet 74,000 6% 73,000 6% 1,000 1%
Inventory Liquidators 111,000 9% 38,000 3% 73,000 192%
- ------------------------------------------------------------------------------------------
Totals $ 1,294,000 100% $ 1,178,000 100% $ 116,000 10%
=========== ==== =========== ==== ========= ===
Comments:
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Jerry Klein, President and CEO of eGames, commented "The first quarter of fiscal
2006 represented a key period in our plan to return to profitability and
positive cash flow. We recently completed the acquisition of assets of
Cinemaware, Inc., bringing into our intellectual property portfolio key gaming
assets of this well-positioned PC and console game developer to support our
strategy of introducing higher-quality, higher-priced games for the PC and other
platforms. During the first quarter, we also focused on securing higher quality
product content and more attractive packaging for our $9.99 retail priced PC
games; increasing revenues within the very profitable licensing channel; and
converting end of lifecycle titles into cash through a viable network of
discount retailers and inventory liquidators."
Klein continued, "We realize that for eGames to grow we must expand our business
presence beyond the value-priced PC software market and begin to penetrate other
retail gaming markets, such as higher-priced PC and other gaming platforms,
which represent greater growth and profit potential compared to the value-priced
PC software market segment. We will continue to implement this more aggressive
and opportunistic growth strategy in an effort to realize improved financial
results during the second half of our fiscal 2006. As we do, we will also search
for ways to improve the distribution of our software titles to the major North
American retailers."
eGames, Inc.
Balance Sheets
(Unaudited) (Audited)
As of As of
September 30, June 30,
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ASSETS 2005 2005
- ------ ------------- -----------
Current assets:
Cash and cash equivalents $ 2,181,206 $ 2,412,162
Accounts receivable, net 772,631 269,168
Inventory, net 811,492 893,766
Prepaid and other expenses 367,027 313,684
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Total current assets 4,132,356 3,888,780
Furniture and equipment, net 44,099 49,881
Intangible assets 24,089 24,089
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Total assets $ 4,200,544 $ 3,962,750
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LIABILITIES AND STOCKHOLDERS' EQUITY
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Current liabilities:
Accounts payable $ 410,273 $ 156,592
Accrued expenses 430,554 409,640
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Total current liabilities 840,827 566,232
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Stockholders' equity:
Common stock 9,179,827 9,179,827
Additional paid-in capital 1,653,316 1,636,144
Accumulated deficit (6,972,009) (6,918,036)
Treasury stock (501,417) (501,417)
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Total stockholders' equity 3,359,717 3,396,518
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Total liabilities and stockholders'
equity $ 4,200,544 $ 3,962,750
=========== ===========
eGames, Inc.
Statements of Operations
(Unaudited)
Quarters Ended
September 30,
----------------------------
2005 2004
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Net sales $ 1,294,012 $ 1,177,829
Cost of sales 703,806 571,158
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Gross profit 590,206 606,671
Operating expenses:
Product development 84,028 239,115
Selling, general and administrative 568,228 571,132
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Total operating expenses 652,256 810,247
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Operating loss (62,050) (203,576)
Interest income, net 8,077 1,230
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Loss before income taxes (53,973) (202,346)
Benefit for income taxes - 0 - 18,024
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Net loss ($ 53,973) ($ 184,322)
============ ============
Net loss per common share:
- Basic ($ 0.00) ($ 0.02)
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- Diluted ($ 0.00) ($ 0.02)
======= =======
Weighted average common shares
outstanding - Basic 10,906,754 10,102,673
Dilutive effect of common share - 0 - - 0 -
equivalents ------------ ------------
Weighted average common shares
outstanding - Diluted 10,906,754 10,102,673
============ ============
About eGames, Inc.
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eGames, Inc., headquartered in Langhorne, PA, publishes and markets a
diversified line of Family Friendly(TM), affordably priced consumer
entertainment PC software games. The Company promotes the eGames(TM) and
Cinemaware(TM) brands in order to generate customer loyalty, encourage repeat
purchases and differentiate eGames software products to retailers and consumers.
Additional information regarding eGames, Inc. can be found at www.egames.com and
www.cinemaware.com. eGames -- Where the "e" is for Everybody!(R)
Forward-Looking Statement Safe Harbor:
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This press release contains certain forward-looking statements, including
without limitation, statements regarding: the Company's intention to expand its
business beyond the value-priced PC software market and into other retail gaming
markets, such as higher-priced PC and other gaming platforms; the expectation
that higher-priced PC and other gaming platforms represent greater growth and
profit potential compared to the value-priced PC market segment; the Company's
implementation of more aggressive and opportunistic growth strategies; the
Company's efforts to improve the distribution of its software titles to the
major North American retailers; and other statements that contain the words
"believes," "expects," "may," "should," or "anticipates." The actual results
achieved by the Company and the factors that could cause actual results to
differ materially from those indicated by the forward-looking statements are in
many ways beyond the Company's control. The Company cautions readers that the
risks and uncertainties that may affect the Company's future results and
performance include, but are not limited to, those discussed under the heading
"Factors Affecting Future Performance" in the Company's Annual Report on Form
10-KSB for the fiscal year ended June 30, 2005, as filed with the Securities and
Exchange Commission.
CONTACT:
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eGames, Inc.
Jerry Klein, President & CEO
(215) 750-6606 (Ext. 118)
Tom Murphy, Vice President & CFO
(215) 750-6606 (Ext. 113)