News
. 03/12/01 Bits announces interim results

Bits' interim figures were in line with expectation. Sales comprise royalty advances from the Company's publishing contracts with Vivendi and Midway (for Die Hard and Thieves' World respectively). The Company's negative gross margin principally reflects the costs incurred on the development of the two Game Boy Advance titles (Wizards and Jet Riders) which are, as yet, unsigned, and thus have no associated publisher advance to cover them. Since the games are at a reasonably advanced stage of development, any future publisher deal for them will be recognised with minimal associated development cost and therefore feed straight through to the bottom line. The second half of the year is expected to show considerable revenue and PBT improvement over the first although the Company is not, now, expected to move into profitability until FY03.

06/08/02 Bits announces profits warning and fund-raising
Bits has become the latest games company to announce that it will not make full-year targets, following the cancellation of one of its two major publishing deals. Bits has agreed to buy back the publishing rights and has begun to search for an alternative publisher. In the mean time, the Company has been forced to initiate an emergency fund-raising for around £340k (net) to see it through to the end of October. Given the limited cashflow that the fundraising covers, Bits must be confident of securing a deal soon. Argonaut is also suffering from placing problems (see AGT 01/08/02 news) but at least has the fall-back of a substantial cash pile. Bits appears precariously positioned.

26/08/02 Bits completes fund-raising
Bits has completed its fund-raising although it needed to secure the majority of the funds from existing management, and in particular, Bits founder, Foo Katan. Based on the last few statements, Bits now appears to have just a few months to secure a new publishing contract. Difficult times indeed...

16/12/02 Interims

Bits' poor interim results reflect the loss of one of its two major publishing contracts earlier in the year (see 06/08 news above). The Company has continued developing products (hence the static cost of sale quantum) but during the period received less advance payments leading to a wider loss. The Company has also revealed that it has used up most of the funds raised in August and has yet to re-sign the contract. However, Bits appears to be making progress with the product's sale and is expects resolution one way or another by the middle of January 03. Although it announced that it had signed up two other projects (one console title and one handheld title) to publishers, these would not be sufficient to compensate for any failure to sign the key product. The future of the Company is now left on a knife edge.

15/01/03 Bits extends Die Hard publishing agreement
Bits has secured a lifeline in the form of extended publishing and distribution agreements for its Die Hard product with Fox Interactive and Vivendi Universal Games. Bits will produce an enhanced PlayStation 2 version of the title to be "co-published" (Bits has secured a higher royalty rate by funding a significant proportion of the conversion) by Fox in North America and distributed by Vivendi in Europe. The deal not only brings higher upside potential but also an advance which should help alleviate some of the cashflow difficulties experienced by the Company of late. This development represents a good first step towards recovery but will need to be accompanied by further publishing agreements if the Company is to remain at its current size...

0703/03 Bits secure more publishing agreements
.... which is precisely what the Company has now done. Bits has secured a development contract with US publisher THQ to develop Sega Arcade Gallery for the GBA and a new console title for Kotobuki, the games division of Japanese manufacturing giant Kemco. Both are timely deals and comprise advance payments to cover development costs and the potential for post-advance royalties. THQ are the largest third party publisher of Game Boy games whilst the Sega Arcade GBA title contains some of Sega's most successful older generation video games properties. Since this is a licence development deal, Bits are likely to receive only a modest royalty rate although sales volumes certainly have the potential to be high. Little information has been revealed about the Kotobuki deal other than the fact that it will likely re-use some of the technology created for the aborted Thieves World title. More information is expected in mid May.

02/05/03 Bits announces details of Kotobuki publishing deal
Bits have revealed more information about its publishing deal with Kotobuki. Bits is developing GameCube, PS2 and Xbox versions of Rogue Ops, a continuation of its Thieves World project (canned by Midway last year). The title is due for release by the end of calendar 2003.

 11/09/03 Full year results
The poor start to Bits financial year was tempered by a considerably improved second half which resulted in the Company breaking even on sales of £1.1m. Key to this was the signing, before the end of the financial year in March 03, of the Rogue Ops deal with Kotobuki. Post year-end, the Company can expect a good start to its FY04 with continuing development funding from Kotobuki and sales from its PS2 and Xbox Die Hard SKUs (for which Bits will receive a higher than normal royalty from publisher Vivendi). However, the Company has not announced any further publishing deals and it will need to secure a major new product development deal before the end of the financial year if it is to avoid a repeat of the financial problems encountered in 2002.

25/11/03 Interim Results

Bits' interim results showed a marked improvement over the equivalent period last year and were driven largely by revenues from the Company's Rogue Ops deal with Japanese publisher Kemco. Although the title was released in the second half of Bits' financial year, the timely delivery of the product to Kemco triggered bonus payments which have been recognised in the first period. A further benefit of these payments is the augmentation they bring to the Company's balance sheet. Bits ended the period with some £651k in cash versus the panic-inducing £60k recorded at 30/09/02. Somewhat disappointingly, the Company's Die Hard products only produced a "modest" royalty flow during the period, although having earned-out all the advances, any future sales will trigger further payments.

27/08/04 SCi publishing deal
Bits has secured UK publisher SCi for its forthcoming PS2 and Xbox game, Constantine, based on the Keanu Reeves film of the same name. Constantine is itself based on DC Comics' Hellblazer graphic novels. The game is due for release with the film in February 2005. Bits took the unusual step of securing the licence directly from Warner Bros (owners of DC Comics and the studio behind the film) before approaching a publisher. This and the late stage of development that the product reached when Bits secured this publishing deal should maximise the potential for a profitable royalty flow although the game's sales will to a great extent hinge around the success of the film.

02/09/04 FY04 results
Arriving with less than a month until the end of its H105, Bits' results for the year to 31/03/04 showed turnover growth and a welcome (but albeit modest) return to profitability. Sales increased 9% to hit £1.9m whilst PBT was £0.1m versus a loss of £0.6m in FY03). The Company's second half performance was below expectation due principally to the poor performance of its Rogue Ops title. Despite the financial improvements, Bits continues to live on a knife-edge with cash reserves down from £651k at the interim stage to just £209k at the year-end. The Company did reveal that its SCi deal will yield advance payments although it is unclear whether this will be retained by Bits or is payable to Warner Bros.

29/11/04 FY05 Interim results

Bits showed marginally improved results compared to the first six months of its FY04 with sales down but profits up. The absolute P&L differences were too small to warrant comment although the Company's cash position as at 30/09/04 was just £186k down from £651k a year earlier. Bits described its cash position as "healthy" so presumably has converted some its net current assets (it had £1.2m of debtors and £0.7m of short-term creditors) into cash to justify this statement. The Company continues to subsist on publisher's advances and appears to remain focused on a single project at any one time. The current project is Constantine the global publishing rights for which it sold  to SCi. Although SCi is experiencing excellent rates of growth at present, it is still a European rather than a global publisher and Bits will likely suffer a diluted royalty stream for sales in North America where SCi has sold the rights on to a third party, THQ. With a games release date for Constantine expected to coincide with the launch of the film, Bits will be putting the finishing touches to the game during November and December. The Company does not appear to have a new project signed at this stage although it claims to be working on "new development opportunities" . Once again, Bits will need to sign a new deal quickly if it is to avoid the same cash problems it experienced after the completion and cancellation of some previous projects.

15/04/05 New publishing contract announced
Bits has revealed that it has secured a publishing contract with Japanese publisher Namco for an unnamed multi-platform title due for release at the end of 2004. The title is expected to be an original IP and will be released on PC, PS2, Xbox and PSP.

27/09/05 Prelims
Bits's revealed results for its FY05 that showed little progress from FY04. In a curiously skeleton-like preliminary results release, the Company indicated that, following the signing of a development deal with Namco for Payout Poker & Casino, the company is actively exploring other gambling market opportunities. The Company has £0.2m in cash and will continue to be reliant upon publisher advances as its Constantine game failed to generate material post-advance royalties. No other trading prospect details were revealed.

29/12/05 Interims and gambling software development contracts announced

Bits has continued in its efforts to diversify its business with the signing of new software development contracts with two online gambling companies, The Palace Group and Microgaming. The deals, announced in the 28th Dec, build upon the gambling game contract secured from Namco earlier in the year. This has led to the need for the Company to raise more capital (although the Company's interim cash balance was already zero) and although Bits reaffirms its commitment to the traditional video games business in its interim results statement, it is clear that the focus of the Company is increasingly shifting to online gambling. It also appears from the interims that the Company has reduced its overheads with a collapse in sales (from £1.1m to less than £0.3m) during the period only resulting in a modest loss before tax during the period of £66k.

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