James Lee 10:35 (BST)
22/05/2008

Conspiracy Entertainment has announced its financial results for the first quarter ended March 31, 2008, revealing a net loss of over USD 7 million despite USD 3.2 million in revenue.

The developer's gross profit was reported at USD 790,854 with operating expenses of USD 682,816, leaving Conspiracy with an operational income of USD 108,038, compared to a net loss of USD 172,940 the previous year.

Despite overall improvement, an expense of USD 7.5 million attributed to the recalculation of the company's derivative liability due to an increase in share price, left the company with an overall loss of USD 7.4 million.

"Despite an increase in staff, professional fees and SG&A expenses to support the release of five titles in the first quarter, we achieved operational profitability. Our net income from operations increased by over $275,000 to $108,038, a dramatic turnaround from an operational loss just one year ago," said Keith Tanaka, CFO of Conspiracy Entertainment.

"The net loss for the quarter was entirely attributed to the recalculation of our derivative liability. Excluding this adjustment, our net income for the quarter would have been close to breakeven."

"We remain very optimistic that sales momentum will continue to improve our operational income and profitability as we execute on several new product development and distribution agreements in the second quarter of 2008," Tanaka added.