Gross profit was up to $2.4 million which is an increase of 140% compared to $1.0 million for the same period in 2006. This increase is also attributed to slightly lower costs of new PC title production. Recorded net profit from operations for the first quarter ended March 31, 2007, was $1.1 million versus net loss of $1.2 million in Q1 2006. Net profits for the quarter amounted to $0.8 million, increasing significantly from $1.2 million in net losses the first quarter of 2006, reversing a trend of quarterly losses. This quarter, profits per share went up to $0.03 per share from a loss per share of $0.05 in Q1 of the previous year.
Successfully released and upcoming titles, a continued development contract with Sony Entertainment Europe, and a focus on savings in general and administrative expenses, all contributed to strong first quarter results. Further marketing investments were also made to ensure visibility and success of released titles.
"The profit results from our clear and independent strategy, and continued focus on the development and release of quality games through our network of trusted distributors. We expect this trend which started to become visible in the second half of last year to continue," said Playlogic's President, Willem M. Smit. "Playlogic is reversing its initial losses and will continue to invest in its further growth by acquiring and publishing high quality content on all platforms to diversify our product portfolio."
The Company expects revenues and gross profits to increase according to the release of the new line-up of high quality titles. Initially revenues might fluctuate per quarter mirroring actual release dates but as more titles become available, Playlogic expects to see steady revenue with continued profitability.
Approximately $4.5 million will be equity and $5.5 million will be in loans. Two loans have been received; one of $3.4 million was received last year. The second loan of $2.1 million at an annual interest of 10% was received in the first quarter of this year. To date, a total of $8.7 million has been committed and/or received.
The newly attracted funds will be used to improve the working capital and equity position of the Company and to allow the Company to execute its business plan and adhere to release schedules.
This new emission of approximately 3.9 million common shares is priced at $1.15 per share. Purchase of two common shares in this emission entitles the purchaser to one warrant which will give the holder the right to purchase one additional common share of the Company at an exercise price of $2.75 for a period of five years. After closing, there will be approximately 28.5 million shares outstanding.
In the last four years, Playlogic has invested approximately $50 million into the organization of the Company and in the development of its portfolio to obtain the position of worldwide-licensed game publisher on all platforms.
Playlogic's portfolio includes games that are being developed by several teams at the Playlogic Game Factory, Playlogic's in-house development studio based in Breda, as well as games developed by a number of studios throughout the world with approximately 300 people of external development staff. Currently, 10 games on 12 platforms are in the works, including "Xyanide Resurrection," "Obscure II" and "Age of Pirates: Captain Blood," which will be published this year. Recent worldwide releases include "Ancient Wars: Sparta," "Infernal," "Age of Pirates: Caribbean Tales," "World Racing 2," "Knights of the Temple 2" and "Gene Troopers."