2012-11-27 08:19:31 -
TORONTO, ONTARIO -- (Marketwire) -- 11/26/12 -- TransGaming Inc. (TSX VENTURE:TNG), would like to address the concerns evident in the marketplace regarding the current state of the business. The company's management, board, and employees are all committed and focused on ensuring the ongoing growth of TransGaming. We recognize and hear the questions and concerns raised by our shareholders regarding our cash flow and we have taken steps to restructure the company towards achieving an even more streamlined organization, with a reduced cost base. A number of alternatives remain under consideration, but for now we believe these steps will allow us to reach our goal of break-even by Q3 or Q4 of this fiscal year.
The business itself has demonstrated ongoing strength with a compounded annual growth rate in revenue in excess of 30% in the past 5 years. Even our detractors have cited significant revenue growth projections for this current fiscal year (2013), which we are on target to achieve.
As part of the effort to streamline the company, we have recently completed a major internal restructuring that has now organized the business into two P&L verticals: i) The Graphics & Portability Group (GPG) which handles all of our licensing of core IP related to Cider and SwiftShader; ii) The Digital Media Group (DMG) which handles all of our in-home content and digital distribution. We have integrated our acquired iTV business unit and our GameTree TV business unit together into a single unified division to leverage common resources and talent pool. Both groups operate as their own P&Ls and are being measured against internal budgets and forecasts. Additionally, over the last 2-3 quarters, we have implemented a 30% reduction in headcount to reduce expenses along with other cost constraining measures.
We have strong growth prospects ahead of us, which are outlined below.
For our Graphics and Portability Group:
-- This business segment has not received attention from shareholders but
continues to grow and generates high margin revenues.
-- We are working on a number of new Mac titles, on an ongoing basis, and
these titles are generating both upfront revenues as well as back-end
-- Our MMO games are performing well and gaining traction. The recently
announced Guild Wars 2 online game is exceeding user targets and will
drive revenues in the coming quarters.
-- We have a long-term business relationship with companies like EA and
Disney that bring a continual flow of new titles.
-- We have major licensing negotiations underway for our core IP with both
Cider and SwiftShader that we expect to close within Q3.
-- Overall, we expect our GPG group to generate strong revenues in FY2013
and to be profitable as a business unit.
For our Digital Media Group:
-- We recognize that GameTree TV deployments have taken considerably longer
then originally anticipated. The slower pace arises from the current
economic slowdown being experienced globally that has caused major
operators to become more conservative with their CapEx spending. That
said, TransGaming continues to negotiate new agreements and has seen the
level of activity increase.
-- Our SelecTV deployment is moving forward positively, albeit behind
schedule. The initial deployment plan was with a series of hotels in
Asia. However, SelecTV now has major hotels within the Toronto and the
broader Canadian market and both parties deemed it to be more effective
and efficient to begin deployments in TransGaming's home territory
instead of Asia. More information about the specific hotels will be
released early in the new year.
-- We are in active negotiations on the commercial agreement with a major
European service provider. We expect to execute an agreement early in
2013 and commence integration with a new operator towards launch with H1
-- We are actively working with the East Asian operator deployment
(announced June, 2012) and expect them to be ready to launch within the
second quarter of calendar 2013.
-- Our Asian partner relationship is now entering the negotiation stage of
full commercial terms. We are actively reviewing business terms and
legals and expect to execute a definitive agreement early in the new
-- We are imminently releasing a major update to Free which includes a
complete overhaul on the GameTree TV client and transitions the service
to a subscription only model at EUR4,99. This will improve the overall
ARPU for the GameTree TV service and this updated client will be
deployed on all upcoming new service providers.
-- We released a major update with DISH Network in October that has been
received very well and will provide increased revenues with higher ARPU.
-- Overall, and to reiterate, the GameTree TV business has taken longer to
materialize then projected. However, TransGaming today has 5 service
providers that we are actively working with or striving to launch by Q2
of calendar 2013. We are also front-loading our payment schedule with
new launches so that the service providers cover development and
integration fees. Between existing customers and new agreements being
signed, TransGaming has the largest Connected TV distribution footprint
in the world.
Finally, to strengthen the balance sheet, TransGaming is working with our investment bankers and financial institutions to evaluate a range of options that will provide the markets with the comfort that the company's current liquidity risk will be reduced.
We delivered a record FY13 Q1 and we expect continued strength in Q2, and the following quarters, towards a fiscal year that will be marked by the greatest year-over-year growth to-date. Therefore, we remain bullish about the company's future prospects.
About TransGaming Inc.
TransGaming Inc. (TSX VENTURE:TNG) is the global leader in the multiplatform deployment of interactive entertainment. TransGaming works with the industry's leading developers and publishers to enable and distribute games for Smart TVs, next-generation set-top boxes, Mac computers, and Linux/CE platforms. TransGaming is headquartered in Toronto, Canada.
This news release contains forward-looking statements. Actual events or results may differ materially from those described in the forward-looking statements due to a number of risks and uncertainties, including changes in financial and product market conditions. Forward-looking statements are based on management's estimates, beliefs, and opinions. The Company assumes no obligation to update forward-looking statements, other than as may be required by applicable law.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Chief Financial Officer
1.416.979.9900 x321 email@example.com