FIRST QUARTER PERFORMANCE AT PARLAY SLOWS

18 May 2007

US situation impacts revenues

Bingo software developer and turnkey provider Parlay Entertainment has reported pprofitable but slower business in the first quarter of 2007, due mainly to the impact of US legislative restrictions on online gambling.

In a statement from the Oakville, Canada firm, chief executive officer Scott F White said: "Revenue for Q1 2007, and in particular royalty revenue, may prove to be our low water mark for 2007 as we have witnessed stabilization in revenue generated from customers who are non-United Kingdom and non-European facing.

"We are very pleased to announce that, given the challenges faced by our industry, Q1 2007 will represent Parlay's 9th consecutive quarter of profitable operations. We anticipated, as did the analysts who reviewed our prospects for 2007, that there would be an adverse impact to our revenue from recent U.S. regulatory developments. We are pleased to note that this impact was within our expectations and that royalty revenue increased in each of the last two months of Q1 2007.

"More importantly, we anticipate that our deal flow from new United Kingdom and European facing customers will be robust for the rest of the year, further enhancing royalty and other revenue. We are continuing to invest in sales and marketing efforts world-wide with bingo being at the forefront for new technology initiatives with some of the largest players in the e-gaming, mainstream media and government sectors."

Highlights for the first quarter of fiscal 2007 include:

* Total revenue at $1 971 854, down 2 percent from Q1 2006.

* Royalty revenue at $1 810 570, down 3 percent from Q1 2006.

* Royalty revenue sequential decrease of $188 864 or 9 percent from Q4 2006.

* Net income at $109 882 or $0.01 per share, fully diluted, down from $291 661 in Q1 2006.

* EBITDA(1) decreased to $234 481, from $512 572 in Q1 2006 and EBITDA(1) margin decreased to 12 percent from 25 percent in Q1 2006.

Expenses in Q1 2007 were $1.78 million, up from $1.52 million in Q1 2006. The increase represented the impact of higher compensation costs and higher sales and marketing expenses offset by lower costs to support licensees.

The company remains debt free and Parlay's cash balance at March 31, 2007 was $1.8 million.

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