Interactive Systems Worldwide Inc. (ISWI) News

WEST PATERSON, N.J., Jan. 16 /PRNewswire-FirstCall/ -- Interactive Systems Worldwide, Inc. (OTC Bulletin Board: ISWI.OB) today reported its audited financial results for its fiscal year ended September 30, 2007. Revenues for the year were $500,000, as compared with only $111,000 during fiscal 2006, an increase of 350%. Net loss and net loss per share applicable to common stock (basic and diluted) for fiscal 2007 improved to $2,421,000 and $0.20, respectively, as compared with $4,721,000 and $0.40, respectively, during fiscal 2006. This decrease of 49% in the net loss applicable to common stock in fiscal 2007 is primarily due to lower expenses and increased revenue and other income.

During Fiscal 2007, ISWI achieved an important milestone, the successful launch in the UK of the Company's enhanced, fully-integrated version of the SportXction(R) System with Sportingbet and Ladbrokes, two of the world's leading bookmakers. The system is operated by Global Interactive Gaming Ltd. ('GIG'), the Company's wholly owned UK subsidiary.

Bernard Albanese, ISWI's Chief Executive Officer, said, 'We are very pleased with the wagering volume from our operations in the UK. Since our launch approximately one year ago, the wagering volume handled by the system has steadily increased. The size of this increase in one year demonstrates the appeal of the product and should help us to secure additional business worldwide. The Company is in discussions with several major European bookmakers, and we are hopeful that the continued interest in the types of wagering offered by this unique system will result in the securing of one or more additional partners.'

Management's immediate priority is to address the Company's liquidity issues. ISWI anticipates that its existing resources will be adequate to fund its capital and operating requirements only through January 2008 unless it is able to raise additional capital or execute a strategic transaction. Management is hopeful that it can address the Company's immediate cash needs quickly, providing the Company more time to effect a longer-term solution.

The Company's financial statements for the year ended September 30, 2007, included an audit report containing a going concern qualification from its independent registered public accounting firm. Further information regarding the qualification can be found in the Company's Annual Report on Form 10-KSB for the year ended September 30, 2007.

Revenues for fiscal 2007 were $500,000, as compared with $111,000 during fiscal 2006. The increase in revenues in fiscal 2007 was primarily due to the launch of the Company's new integrated version of its SportXction(R) System. On December 5, 2006, the Company announced the launch of this enhanced product with Sportingbet. The Company subsequently announced on January 9, 2007 the launch of this product with Ladbrokes eGaming Ltd. Initially the Company's revenue from its agreements under which it operates this software was based upon several factors: the turnover, the hold and the contractual revenue (hold) split with its partners. However, in May 2007 the Company reached informal agreement with Ladbrokes and Sportingbet to restructure its agreements with them in order for the Company to receive fixed or minimum monthly payments. This resulted in increased revenues.

Cost of revenues for Fiscal 2007 were $531,000, as compared to $542,000 during Fiscal 2006. The decrease in Fiscal 2007 was primarily due to lower amortization expenses associated with capitalized product enhancements that had become fully amortized.

Research and development expense for Fiscal 2007 was $377,000, as compared to $497,000 during Fiscal 2006. The decrease in Fiscal 2007 was primarily due to lower payroll costs partially offset by a reduction in the amount of software development costs which met the criteria for capitalization.

General and administrative expenses during Fiscal 2007 were $2,289,000, as compared to $3,526,000 during Fiscal 2006. The decrease was primarily due to lower payroll costs, lower professional fees, lower compensation costs and a reduction in marketing costs.

Interest income during Fiscal 2007 was $55,000, as compared to interest expense of $2,000 during Fiscal 2006. In Fiscal 2006, the Company incurred interest expense in relation to its outstanding Debentures, which have been satisfied primarily through the issuance of shares of Common Stock. The Debentures were fully repaid in May 2006.

Other income for the Fiscal 2007 was $460,000, as compared to $3,000 during Fiscal 2006. In Fiscal 2007, other income represents settlement of a dispute with a vendor as well as settlements from the Company's patent infringement litigation. In Fiscal 2006, other income represents the change in value of the Company's liability associated with the registration rights agreements associated with its private placements.

As of September 30, 2007, the Company had liquid resources totaling $284,000 which consisted of cash.

Sales, Marketing and Development:

The Company continues to market the SportXction(R) Sports Wagering System in those jurisdictions where sports wagering is legal. The Company is in discussions with several domestic and foreign companies in the gaming industry and it is hopeful that it will be able to add additional software licensees and bookmaking partners to the UK service it provides through GIG.

The Company continues software development to add additional features to the SportXction(R) System in order to satisfy the requirements of the Ontario Lottery and Gaming Corporation ('OLG'). In September 2007, the Company announced the receipt of a $175,000 purchase order from OLG to provide software modifications and other services. The Company is currently negotiating a licensing agreement with OLG, which would allow them to conduct a six-month field trial of the modified SportXction(R) product, after its completion, for use in up to two casinos. The Company is optimistic that this field trial will lead to a broader implementation in multiple casinos and other on-site gaming venues throughout Ontario, Canada.

The Company announced in December that it signed an agreement in principle with Neptune Race and Sports Book, Inc. ('Neptune'). This non-binding agreement provides the commercial framework for an anticipated licensing agreement to be negotiated between the two parties for the use of the Company's sports wagering software.

About Interactive Systems Worldwide, Inc.

Interactive Systems Worldwide, Inc. (OTC Bulletin Board: ISWI.OB) has designed, developed and patented a proprietary software system, the SportXction System, which enables play-by-play wagering during the course of live sporting events. ISWI, through its wholly owned subsidiary Global Interactive Gaming Ltd. (GIG), operates the SportXction(R) System in the U.K., in conjunction with established media and traditional wagering partners. The system can accept wagers from the Internet, handheld wireless devices, interactive televisions, and standalone kiosks. The system can be used for any live broadcast event.

     Contacts:

     Interactive Systems Worldwide, Inc.
     Bernard Albanese
     Chief Executive Officer
     Phone:  973-256-8181

FORWARD-LOOKING STATEMENTS: The forward-looking statements contained herein are subject to certain risks and uncertainties that could cause actual results to differ materially from those reflected in the forward-looking statements, including, but not limited to, whether the growth in wagering volume will continue, whether the Company will be able to sign additional license or partner agreements, whether the purchase order received from OLG will result in the signing of additional agreements, whether the agreement in principle signed with Neptune will result in a licensing agreement, how long the Company's cash resources will be sufficient to satisfy the Company's needs, and whether the Company will be successful in solving its liquidity issues. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's analysis only as of the date hereof. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date thereof. Readers should carefully review the risks described in other documents the Company files from time to time with the Securities and Exchange Commission, including Annual Reports, Quarterly Reports and Current Reports on Form 8-K.

                               -TABLES FOLLOW-



             Interactive Systems Worldwide Inc. and Subsidiaries
                    Consolidated Statements of Operations
            (Amounts in thousands except share and per share data)

                                                           Years Ended
                                                          September 30,
                                                     2007              2006

    Revenues                                         $500              $111

    Costs and expenses:
      Cost of revenues                                531               542
      Research and development expense                377               497
      General and administrative expense            2,289             3,526
                                                    3,197             4,565

          Operating loss                           (2,697)           (4,454)

    Interest (income) expense, net                    (55)                2
    Other income                                     (460)               (3)
          Net loss                                 (2,182)           (4,453)
    Preferred Stock dividends                        (239)             (268)
          Net loss applicable to common stock     $(2,421)          $(4,721)

    Net loss per share applicable to common
     stock -- basic and diluted                    $(0.20)           $(0.40)

    Weighted average basic and diluted
     common shares outstanding                 12,210,918        11,844,557



                      Interactive Systems Worldwide Inc.
                   Summary Consolidated Balance Sheet Data
                          (All amounts in thousands)

                                           September 30,         September 30,
                                               2007                  2006
    Cash and short term investments
     (including marketable securities)         $284                   $2,182

    Total current assets                       $473                   $2,423
    Total assets                               $901                   $3,172

    Current liabilities                        $835                     $999
    Total liabilities                          $835                     $999


    Stockholder's equity                        $66                   $2,173

SOURCE Interactive Systems Worldwide, Inc.