Loss of Revenues Heightened by Planned Move

A 46.5 percent drop in revenues for the second quarter of 2007, has been announced by CryptoLogic. CryptoLogic is both a turnkey operation as well as being the publicly-listed gaming software developer who has partnered with such recognized stars as the World Poker Tour, Sun Poker, William Hill, InterPoker and Playboy.

Pointing to the company’s move and the US $4 million in reorganization costs paid out in relation to the establishment of the company’s new corporate headquarters in Ireland, the company which is based in Dublin, announced its second quarter loss of US $2.6 million. While speeding up certain expenditures in order to realize earlier benefits, the company has accelerated and accomplished its reorganization. This speeding up of expenditures has resulted in reorganization costs for the quarter going up $2.5 million more than previously planned. It has been projected that the overall reorganization cost will be US $0.9 million greater than the originally forecasted US $ 8.5 million. Cryptologic has explained that the increased cost is the result of a non-cash option expense associated with the hiring of Javaid Aziz, the new CEO.

Revenues of $16.2 million were generated during the second quarter according to the company, which is described by them as being a drop from the second quarter of 2006’s $30.2 million. This was explained as being primarily due largely to the effect of the U.S. prohibition on Internet gaming.

The company is essentially however, remaining positive with regard to its financial outlook, saying that it has taken major steps this quarter in its effort to return to its former rate of growth and profitability. CryptoLogic's new President and CEO Javaid Aziz points to an increase in operating revenue, and a decrease in operating costs as indicative of further projected growth.

Aziz points out that the company has begun 11 new customer sites since last December, and notes that CryptoLogic has four more in the pipeline awaiting introduction. These include two being designed for the Holland Casino, and one for the World Poker Tour. Aziz points to growing confidence in huge global brands, substantial growth from his company’s European base along with encouraging progress in Asia, saying that the company’s outlook is improving daily.

He also points to the company’s financial strength as demonstrated by its balance sheet as of June 30th, 2007, when net cash seated at $91.7 million. This however, represents a reduction from that of the first annual quarter when it stood at $103.8. This he explains to be the result of the $12.1 million in payouts generated by the company's popular and profitable cumulative jackpot games.

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