Silverstar Holdings Reports First Quarter FY2009 Results

Q1 Revenues Up 127 Percent Y/Y to $8.8 Million; Adjusted EBITDA $1.77 Million


BOCA RATON, Fla., Nov. 13, 2008 (GLOBE NEWSWIRE) -- 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



  * Released nine significant PC and console SKUs, as compared to one
    in the same period a year ago.

  * First quarter releases comprised several well-received titles,
    including Pipe Mania (Nintendo DS, PSP, PS2, PC), Unsolved Crimes
    (Nintendo DS), Animal Paradise (Nintendo DS -- North America),
    Jackass: the Game (Nintendo DS), Ford Racing Off Road (Nintendo
    Wii) and FlatOut Ultimate Carnage (PC).

  * The company entered into a strategic distribution agreement with
    Atari, Inc. for North American sales. Titles shipped and
    distributed exclusively by Atari in the first quarter included
    Animal Paradise Nintendo DS, Pipe Mania (Nintendo DS, PSP, PS2,
    PC) and Unsolved Crimes (Nintendo DS).

  * Empire's sales to North America totaled more than $2.0 million in
    the quarter, as compared to a minimal amount in the comparable
    quarter of 2007.

  * Sold Razorworks software studio to a UK game developer. This is
    expected to reduce operating costs by approximately $3.0 million
    in fiscal 2009.

"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 make us an ideal partner for any game developer."

Conference Call

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, 2008        June 30, 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                           ($0.03)        ($0.35)
                                            ===========    ===========

 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                                     0.09       (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%
                                         ============

            

Coordonnées