FORM
6-K
UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Private
Issuer
Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934
Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934
For the
month of May
2010
Commission
File Number 000-30224
|
CRYPTOLOGIC
LIMITED
|
|
Marine
House, 3rd
Floor
Clanwilliam
Place
Dublin
2, Ireland
|
Indicate
by check mark whether the registrant files or will file annual reports under
cover Form 20-F or Form 40-F.
Form
20-F x
Form 40-F o
Indicate
by check mark if the registrant is submitting the Form 6-K in paper as permitted
by Regulation S-T Rule 101(b)(1): __
Note: Regulation S-T
Rule 101(b)(1) only permits the submission in paper of a Form 6-K if
submitted solely to provide an attached annual report to security
holders.
Indicate
by check mark if the registrant is submitting the Form 6-K in paper as permitted
by Regulation S-T Rule 101(b)(7): __
Note: Regulation S-T
Rule 101(b)(7) only permits the submission in paper of a Form 6-K if
submitted to furnish a report or other document that the registrant foreign
private issuer must furnish and make public under the laws of the jurisdiction
in which the registrant is incorporated, domiciled or legally organized (the
registrant’s “home country”), or under the rules of the home country exchange on
which the registrant’s securities are traded, as long as the report or other
document is not a press release, is not required to be and has not been
distributed to the registrant’s security holders, and, if discussing a material
event, has already been the subject of a Form 6-K submission or other
Commission filing on EDGAR.
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, thereunto
duly authorized.
|
Date:
May 7, 2010
|
CRYPTOLOGIC
LIMITED
 Stephen Taylor Chief
Financial Officer
|
Exhibit No. Description
99.1 Press Release dated
May 7, 2010 (“CryptoLogic announces Q1
2010 results”)
EXHIBIT
99.1
FOR
IMMEDIATE RELEASE
Symbol:
TSX: CRY & CXY; NASDAQ: CRYP; LSE: CRP
CryptoLogic
announces Q1 2010 results
May 7, 2010 (Dublin, IRELAND)
– CryptoLogic, a world leader in Internet casino and branded gaming
software, announces its financial results for the first quarter ending March 31,
2010.
Financial
summary:
|
¨
|
Revenue
of $7.6 million (Q4 2009: $9.9 million) reflecting subdued wagering
activity and reduced contribution from a key customer transition last year
as announced previously
|
|
¨
|
Branded
games revenue rose to $1.3 million (Q4 2009: $1.2 million), the fifth
sequential quarter of growth
|
|
¨
|
Operating
expenses decreased by 36% to $8.1 million (Q4 2009: $12.6
million)
|
|
¨
|
General
and administrative expense decreased 12% to $2.2 million (Q4 2009: $2.5
million)
|
|
¨
|
Loss
of $3.2 million (Q4 2009 Loss: $24.8
million)
|
|
¨
|
Net
cash at March 31, 2010: $19.7 million (Q4, 2009: $23.7
million). The decrease was due to the timing of a tax payment
of $1.4 million, which is ultimately recoverable, and the cash impact of
the operating losses of $2.4
million
|
Operating
highlights:
|
¨
|
Live
branded games increased to 92 at March 31, 2010 from 66 at December 31,
2009
|
|
¨
|
Signed multi-year
licensing deals for branded casino games with William Hill, Bet24 and
Betsson
|
|
¨
|
Along
with delivering a virtual casino lobby and streamlined registration
process, the company also participated in a rebranding and relaunch for a
major licensee
|
|
¨
|
During
Q1 the first suite of six 3D games were made available for
play
|
|
¨
|
Appointed
Huw Spiers as Chief Financial Officer with effect from August 15,
2010
|
2010
Outlook:
|
¨
|
Revenue
outlook to improve gradually, driven by recent improvement in wagering
activity and new licensees. Q2 revenue to date is ahead of the same period
in the previous quarter
|
|
¨
|
Branded
games revenue to gain momentum as new games come on
stream
|
|
¨
|
Number
of new branded games launched by licensees to date and generating revenues
currently at 108, with a backlog of approximately 92 games
|
|
¨
|
CryptoLogic’s
full Internet casino hosting suite for Betsafe.com to go live in
Q2
|
Brian
Hadfield, CryptoLogic's President and CEO, said: “While subdued wagering
activity impacted our revenues in the first quarter, the outlook for 2010 as a
whole remains encouraging. Operating costs have declined further while our
revenue base is showing signs of improvement in the second quarter. The start of
the World Cup soccer tournament in June provides short term uncertainty, however
with a strong backlog of new business we expect our results to improve gradually
as the year
3rd
Floor, Marine House, Clanwilliam Place,
Dublin
2, Ireland
unfolds. As would be expected, the company continues to assess its revenue streams, costs, and strategic direction as it moves towards profitability.”
Investor/analyst
conference call
CryptoLogic
will hold a conference call today at 8:30 a.m. EDT (1.30 p.m. BST)
to update investors on the company’s results in Q1 2010. The details of
the call are as follows:
|
Toll
Free North America:
Toll
Free UK:
|
1-866-223-7781
00
800-4222-8835
|
|
Toll
Free International:
|
(Country
Code) 800-4222-8835
|
|
Toronto
Dial-In Number:
|
416-340-8410
|
To
participate, please call five to ten minutes
prior to the 8:30 a.m. EDT/1:30 p.m. BST start of the teleconference. This
conference call will be recorded and available for replay approximately one hour
after the completion of the call, up until midnight (EDT time) May 14,
2010. To listen to the replay, please dial 416-695-5800 or for North America
only 1-800-408-3053, passcode 6122324#. A transcript of the
call will also be made available on CryptoLogic’s website at www.cryptologic.com
under Investor Information.
Webcast
To
accless the live audio webcast, please go to www.cryptologic.com
and click on Investor Information/Events, or http://events.digitalmedia.telus.com/cryptologic/050610/index.php
prior to 8:30 a.m. EDT/1:30 p.m. BST. Windows Media Player is required to listen
to the webcast. If you do not have the player, a free download is
available at www.microsoft.com. A
rebroadcast of the webcast will be available for 120 days.
For
more information, please contact:
|
CryptoLogic
+353
(0) 1 234 0415
|
Corfin
Communications
(UK media only) +44 207
977 0020
|
|
Stephen
Taylor, Chief Financial Officer
|
Neil
Thapar, Alexis Gore or Harry Chathli
|
2
Overview
Q1 2010
was a difficult quarter as sluggish wagering activity across the licensee base
and an anticipated decline in contribution from a key customer transition last
year continued to impact revenues.
Operating
costs significantly decreased in Q1 and the company expects to benefit from
further savings through 2010 as ongoing initiatives to streamline operations and
lower overall expenses take effect. Total staff members decreased from 211 to
198 over the quarter.
The
company achieved its fifth consecutive quarter of revenue growth from branded
casino games licensed by many of the world's leading online gaming operators
such as 888.com, Betfair, GalaCoral, and PartyGaming.
CryptoLogic’s
customer base continued to expand with two new licensees, Bet24 and Betsson,
signed in the quarter. In addition, the company also built upon its 10-year
relationship with William Hill with a multi-year licensing deal for at least 10
of its branded casino games, nine of which were launched by the end of
Q1.
Hosted
Casino
Revenue
from fully hosted virtual casino rooms provided to online gaming brand operators
declined from $8.7 million in Q4 2009 to $5.1 million in Q1 2010. Casino revenue
in Q4 2009 included a non recurring benefit of $0.8 million and a
reclassification from other revenue of $0.8 million. Excluding these items,
revenue in Q1 2010 decreased by $2.1 million reflecting lower wagering volumes
caused by tough economic conditions as well as the impact of a previously
reported transition by a key customer.
A major
rebranding and relaunch of the new virtual casino lobby, announced in Q4, was
completed in March 2010, albeit after some delay in new software implementation.
This rebranding and relaunch is the first such major investment by a major
licensee in many years and is aimed at driving long term growth. The new gaming
platform provides an opportunity for an expanded range of payment and e-cash
options to enable flexible registration and faster customer acquisition than
ever before. It will also help to gather additional data to enhance direct
marketing and promotional activity.
In
addition, the company also participated in a high profile Press and TV
advertising and marketing campaign with a key customer, InterCasino, which
provides new registered players with the opportunity to win a free trip to
space. Early results from the campaign have been encouraging and it is expected
to yield incremental benefits over the coming months.
CryptoLogic
is also preparing to launch its fully hosted casino suite for Betsafe.com in the
second quarter of 2010 under a multi-year licensing deal signed last year.
Betsafe is a leading online gaming operator with a growing customer base of over
250,000 players.
Branded
Games
Despite
generally lower wagering activity branded games revenues increased for the fifth
consecutive quarter to $1.3 million in Q1 2010 (Q4 2009: $1.2
million).
26 new
branded games were launched in the quarter taking the total number of games
rolled out by licensees and generating revenues to date to 108, with a further
backlog of approximately 92 games expected to go live in 2010. As anticipated, a
significant number of the 26 branded games were
3
launched
by licensees at the end of the first quarter. This means the revenue
contribution from the launched games will flow from the second
quarter.
E-gaming
innovation
During
the first quarter the company had a successful launch and trial of six 3D games
in a live environment. In this process 1,000 pairs of 3D glasses were
distributed and the results measured. Survey information of the player
experience was also captured. Both were positive.
Further,
in Q2 the Innovation Centre plans to launch two football based games to tie in
with the World Cup in South Africa.
Other
games from the Centre are due to be launched later in the year.
Financial
commentary
Total
revenue:
Revenue
for Q1 2010 was $7.6 million, a decrease of 23.1% when compared with the prior
quarter (Q4 2009: $9.9 million). After normalizing for a $0.8 million
benefit recorded in Q4 2009 from the revision of our estimate to discharge
future jackpot payouts, revenue decreased by 15.9%. Casino revenue in Q1 2010
was negatively impacted by weaker results from one of the company’s major
licensees as it has, as previously reported, transferred a significant portion
of its business to an alternate supplier of hosted Internet casino
services.
Branded
games revenue was $1.3 million in Q1 (Q4 2009: $1.2 million). At
March 31, 2010, the company had delivered 92 games, an increase of 89 games when
compared to the same period in the prior year. The company delivered
26 games during the quarter.
Operating
expenses
Operating
expenses were $8.1 million in Q1 2010 a decrease of 35.6% from the previous
quarter. (Q4 2009: $12.6 million). The decrease in the current quarter was due
to implementation of our reorganization plan as well as non recurring expenses
of $3.4 million in Q4 2009.
Loss and Loss per Diluted
Share:
Loss in
Q1 2010 was $3.2 million or $0.25 per diluted share (Q4 2009: $24.8 million or
$1.97 per diluted share).
Balance Sheet and Cash
Flow:
CryptoLogic’s
working capital at March 31, 2010 was $24.1 million or $1.74 per diluted share
(December 31, 2009: $26.5 million or $1.91 per diluted share).
At March
31, 2010, the company ended the quarter with $19.7 million of net cash, which
consists of cash and cash equivalents and security deposits, or $1.42 of net
cash per diluted share (December 31, 2009: $23.7 million or $1.71 per diluted
share). The decrease in net cash during the three months ended March
31, 2010 of approximately $4.0 million is due to the cash impact of operating
losses of approximately $2.4 million, and amounts paid for income tax of
approximately $1.4 million, which is ultimately recoverable.
2010
Outlook
|
¨
|
Revenue
outlook to improve gradually, driven by recent improvement in wagering
activity and new licensees. Q2 revenue to date is ahead of the same period
in the previous quarter
|
|
¨
|
Branded
games revenue to gain momentum as new games come on
stream
|
4
|
¨
|
Number
of new branded games launched by licensees to date and generating revenues
currently at 108, with a backlog of approximately 92 games
|
|
¨
|
CryptoLogic’s
full Internet casino hosting suite for Betsafe.com to go live in
Q2
|
CRYPTOLOGIC FORWARD LOOKING STATEMENT
DISCLAIMER:
Statements
in this press release, which are not historical are forward-looking statements
made pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements are based on certain factors and
assumptions including expected growth, results of operations, performance,
business prospects and opportunities, foreign exchange rates and effective
income tax rates. While the company considers these factors and assumptions to
be reasonable based on information currently available, they may prove to be
incorrect. Investors are cautioned that all forward-looking statements involve
risks and uncertainties including, without limitation, risks associated with the
company’s financial condition, prospects and opportunities, legal risks
associated with Internet gaming and risks of governmental legislation and
regulation, risks associated with market acceptance and technological changes,
risks associated with dependence on licensees and key licensees, risks relating
to international operations, risks associated with competition and other risks
detailed in the company’s filings with securities regulatory authorities. These
risks may cause results to differ materially from those projected in the
forward-looking statements. Forward-looking statements are given only as at the
date of this release and the company disclaims any obligation to update or
revise the forward-looking statements, whether as a result of new information,
future events or otherwise, except as otherwise required by law.
About
CryptoLogic®
(www.cryptologic.com)
Focused
on integrity and innovation, CryptoLogic Limited is a leading public developer
and supplier of Internet gaming software. With more than 300 games, CryptoLogic
has one of the most comprehensive casino suites on the Internet, with
award-winning games featuring some of the world’s most famous action and
entertainment characters. The company’s licensees include many top Internet
gaming brands, including the “big four” international operators. CryptoLogic’s
leadership in regulatory compliance makes it one of the few companies with
gaming software certified to strict standards similar to land-based gaming.
WagerLogicâ
Limited, a wholly-owned subsidiary of CryptoLogic, is responsible for the
licensing of gaming software and services to blue-chip customers that offer
their games to non-U.S. based players around the world. For information on
WagerLogic, please visit www.wagerlogic.com.
5
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CRYPTOLOGIC
LIMITED
|
|
|
CONSOLIDATED
BALANCE SHEETS
|
|
|
(In
thousands of US dollars)
|
|
|
As at March 31, 2010 |
As
at December 31, 2009 |
||||||
| (unaudited) | (audited) | |||||||
| ASSETS | ||||||||
|
Current
assets:
|
||||||||
|
Cash
and cash equivalents
|
$ | 19,410 | $ | 23,447 | ||||
|
Security
deposits
|
250 | 250 | ||||||
|
Accounts
receivable and other
|
6,785 | 7,972 | ||||||
|
Income
taxes receivable
|
666 | 681 | ||||||
|
Prepaid
expenses
|
9,795 | 9,426 | ||||||
| 36,906 | 41,776 | |||||||
|
User
funds held on deposit
|
7,777 | 7,929 | ||||||
|
Future
income taxes
|
1,305 | 1,549 | ||||||
|
Capital
assets
|
7,236 | 7,774 | ||||||
|
Intangible
assets
|
4,182 | 4,342 | ||||||
| 57,406 | 63,370 | |||||||
|
LIABILITIES
AND SHAREHOLDERS' EQUITY
|
||||||||
|
Current
liabilities:
|
||||||||
|
Accounts
payable and accrued liabilities
|
12,035 | 13,156 | ||||||
|
Income
taxes payable
|
796 | 2,157 | ||||||
| 12,831 | 15,313 | |||||||
|
User
funds held on deposit
|
7,777 | 7,929 | ||||||
|
Future
income taxes
|
370 | 384 | ||||||
| 20,978 | 23,626 | |||||||
|
Minority
interest
|
2,646 | 2,948 | ||||||
|
Shareholders'
equity:
|
||||||||
|
Share
capital
|
33,977 | 33,916 | ||||||
|
Stock
options
|
7,805 | 7,633 | ||||||
|
Deficit
|
(8,000 | ) | (4,753 | ) | ||||
| 33,782 | 36,796 | |||||||
| $ | 57,406 | $ | 63,370 | |||||
6
|
|
CRYPTOLOGIC
LIMITED
|
|
|
CONSOLIDATED
STATEMENTS OF LOSS AND COMPREHENSIVE
LOSS
|
|
|
(In
thousands of US dollars, except per share
data)
|
|
|
(Unaudited)
|
| As
at March 31, 2010 |
As
at December 31, 2009 |
|||||||
| (unaudited) | (audited) | |||||||
|
Revenue
|
$ | 7,641 | $ | 10,134 | ||||
|
Expenses
|
||||||||
|
Operating
|
8,086 | 8,199 | ||||||
|
General
and administrative
|
2,178 | 3,124 | ||||||
|
Reorganization
|
29 | 532 | ||||||
|
Finance
|
15 | 21 | ||||||
|
Amortization
|
740 | 1,305 | ||||||
| 11,048 | 13,181 | |||||||
|
Loss
before undernoted
|
(3,407 | ) | (3,047 | ) | ||||
|
Interest
income
|
42 | 171 | ||||||
|
Loss
before income taxes and minority interest
|
(3,365 | ) | (2,876 | ) | ||||
|
Income
taxes:
|
||||||||
|
Current
|
(107 | ) | (160 | ) | ||||
|
Future
|
230 | (1,342 | ) | |||||
| 123 | (1,502 | ) | ||||||
|
Loss
before minority interest
|
(3,488 | ) | (1,374 | ) | ||||
|
Minority
interest
|
(241 | ) | (78 | ) | ||||
|
Loss
and comprehensive loss
|
$ | (3,247 | ) | $ | (1,296 | ) | ||
|
Loss
per common share
|
||||||||
|
Basic
|
$ | (0.25 | ) | $ | (0.10 | ) | ||
|
Diluted
|
$ | (0.25 | ) | $ | (0.10 | ) | ||
|
CRYPTOLOGIC
LIMITED
|
|||||||||||
|
CONSOLIDATED
STATEMENTS OF (DEFICIT)/RETAINED EARNINGS
|
|||||||||||
|
(In
thousands of US dollars)
|
|||||||||||
|
(Unaudited)
|
|||||||||||
| For
the three months ended March 31, |
||||||||
| 2010 | 2009 | |||||||
|
(Deficit)/Retained
earnings, beginning of period
|
$ | (4,753 | ) | $ | 32,032 | |||
|
Loss
|
(3,247 | ) | (1,296 | ) | ||||
|
(Deficit)/Retained
earnings, end of period
|
$ | (8,000 | ) | $ | 30,736 |
7
|
|
CRYPTOLOGIC
LIMITED
|
|
|
CONSOLIDATED
STATEMENTS OF CASHFLOWS
|
|
|
(In
thousands of US dollars)
|
|
|
(Unaudited)
|
|
For
the three months
|
||||||||
|
ended
March 31,
|
||||||||
|
2010
|
2009
|
|||||||
|
Cash
flows from (used in):
|
||||||||
|
Operating
activities:
|
||||||||
|
Loss
|
$ | (3,247 | ) | $ | (1,296 | ) | ||
|
Adjustments
to reconcile loss to cash provided by (used in) operating
activities:
|
||||||||
|
Amortization
|
740 | 1,305 | ||||||
|
Unrealized
gain on forward contract
|
(72 | ) | (127 | ) | ||||
|
Reorganization
expense
|
29 | 532 | ||||||
|
Future
income taxes
|
230 | (1,342 | ) | |||||
|
Minority
interest
|
(241 | ) | (78 | ) | ||||
|
Stock
options
|
172 | 321 | ||||||
| (2,389 | ) | (685 | ) | |||||
|
Change
in operating assets and liabilities:
|
||||||||
|
Accounts
receivable and other
|
1,187 | (750 | ) | |||||
|
Prepaid
expenses
|
(296 | ) | (300 | ) | ||||
|
Accounts
payable and accrued liabilities
|
(1,150 | ) | (2,778 | ) | ||||
|
Income
taxes payable
|
(1,346 | ) | (203 | ) | ||||
| (3,994 | ) | (4,716 | ) | |||||
|
Financing
activities:
|
— | — | ||||||
|
Investing
activities:
|
||||||||
|
Purchase
of capital assets
|
(43 | ) | (116 | ) | ||||
|
Purchase
of other investments
|
— | (200 | ) | |||||
|
Decrease
in restricted cash
|
— | 2,175 | ||||||
| (43 | ) | 1,859 | ||||||
|
Decrease
in cash and cash equivalents
|
(4,037 | ) | (2,857 | ) | ||||
|
Cash
and cash equivalents, beginning of period
|
23,447 | 36,348 | ||||||
|
Cash
and cash equivalents, end of period
|
$ | 19,410 | $ | 33,491 | ||||
8