Knobias ClipReport (8-30-2007)

Submitted from Knobias ClipReport

Silverstar Holdings Ltd. (SSTR) reported preliminary fourth quarter numbers during Wednesday’s session that had many take notice because of the large increases year over year.

The Company reported expectations of revenues for the fourth quarter to range between $11.5 million to $11.9 million, as compared to $467,000 in the fourth quarter of 2006. EBITDA is estimated to range between $4.0 million and $4.4 million for the fourth quarter, or between $0.40 and $0.44 per diluted share, as compared to a negative EBITDA of $1.8 million or ($0.19) per diluted share a year ago. Operating income is expected between $1.6 million and $1.9 million, or $0.15 to $0.18 per diluted share, as compared to a year-ago fourth quarter loss from continuing operations of $2.4 million or ($0.25) per share. The calculations were based on an estimated 10.4 million diluted shares.

Following the announcement, SSTR gained 42.5% on over 3.65 million shares traded. The Company is an international publisher and developer of interactive entertainment software. It currently owns Empire Interactive, PLC and Strategy First, Inc. Empire Interactive (www.empireinteractive.com) is a leading developer and publisher of interactive entertainment software games, including Starsky & Hutch, Big Mutha Truckers, Ford Racing and FlatOut. Empire's products are delivered on both console and PC platforms. Strategy First (www.strategyfirst.com) is a developer and worldwide publisher of entertainment software for the PC.

Contributing to the expected increased results was the recent acquisition of Empire Interactive consummated at the end of 2006.

The Company noted that their business model is successful when they release high profile titles alongside their other releases. They noted that games like Jackass, Hello Kitty, Pipe Dreams, Disciples III, and Ford Off Road Racing performed well and caused other names in their portfolio to receive attention as well.

The European market could also make an impact as the Company plans to release their back catalog of names to the continent over the next 12 months.

The Company has released preliminary reports before. In April, they announced revenue expectations of $4.3 million to $4.5 million for the third quarter. Incorporated into the release was a fourth quarter expectation of revenue between $10.5 million and $12.5 million. Following the preliminary results announcement, shares gained some 26.7% on 328 thousand shares in volume.

Shares held that gain until a private placement announcement in July caused them to fall until Wednesday’s news. While the entire placement amount wasn’t fully implemented, warrants were issued that allowed purchase of 4.34 million shares in the $2.10 range.

With the investors of the placement (CEO Clive Kabatznik and Michael Levy, Chairman were noted as two of the private parties) in the money at current levels and the Company possibly needing a cash injection to fund international sales efforts, another S-3 filing could be on the horizon.

In any event, with the extremely picky gaming consumers as their target audience and a cash position that has the possibility of being increased through additional dilutive measures, investors might be wise to watch.


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