WEST PATERSON, N.J., May 16 /PRNewswire-FirstCall/ -- Interactive Systems Worldwide, Inc. (OTC Bulletin Board: ISWI) today reported its unaudited financial results for the fiscal second quarter ended March 31, 2008. Revenues for the quarter ended March 31, 2008 were $259,000, as compared with $69,000 during the same period in the prior year, an increase of 275%. The increase was due to increased revenues resulting from 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, as well as revenue generated by a Purchase Order for software development to add additional features to the SportXction(R) System to satisfy the requirements of the Ontario Lottery and Gaming Corporation (OLG).

Net loss and net loss per share applicable to common stock (basic and diluted) for the three months ended March 31, 2008 were $382,000 and $0.03, respectively, compared with $753,000 and $0.06 during the same quarter last year. This decrease of 49% in the net loss applicable to common stock in the 2007 period is primarily due to the Company's increased revenues and its cost reduction initiatives.

Cost of revenues for the three months ended March 31, 2008 was $205,000, as compared with $141,000 during the same period in the prior year. The increase in 2008 was primarily due to higher expenses associated with the OLG software development.

Research and development expense for the three months ended March 31, 2008 was $6,000, as compared with $133,000 during the same period in the prior year. This decrease in 2008 was primarily due to significantly lower payroll costs.

General and administrative expenses for the three months ended March 31, 2008 were $360,000, as compared with $608,000 during the same period in the prior year. The decrease was primarily due to lower payroll costs and professional fees and decreased non-cash compensation expense associated with warrants and common stock which were issued to consultants during the 2007 period.

Interest expense for the three months ended March 31, 2008 was $8,000 as compared to interest income of $28,000 during the same period in the prior year. In Fiscal 2008, the Company incurred interest expense on its promissory notes.

Liquidity and Capital Resources

As of March 31, 2008, the Company had liquid resources totaling $124,000, which consisted of cash and cash equivalents.

The Company's operations currently do not generate positive cash flow. The Company has taken a number of steps to improve cash flow by securing minimum monthly cash receipts from existing customers and new licensees and by reducing operating costs in the areas of payroll, rent, professional fees and consultants. On April 21, 2008, pursuant to a note purchase agreement, the Company sold $50,000 principal amount of 14% Non-Negotiable Promissory Notes due July 31, 2008 (the "Notes") in a private placement exclusively to accredited investors who are existing stockholders. The purpose of the financing was to (i) temporarily address the Company's liquidity crisis by providing working capital to enable the Company to continue its operations beyond April 2008 and (ii) pay past due and current accounts payable of the Company. The note purchase agreement provides that until the earlier of (a) payment of all principal and accrued interest on the Notes, or (b) August 1, 2008, the Company may not (i) declare or pay any cash dividends or make any cash distributions on its common stock or preferred stock or purchase or otherwise acquire for value, directly or indirectly, any of its outstanding common stock or preferred stock; or (ii) increase the salary of any Company officer above the salary which such officer is being paid as of the date of the Notes.

Management's immediate priority is to address the Company's short and long-term liquidity issues. The Company anticipates that, based on its current level of revenues and costs and without any proceeds from an equity financing or strategic transaction, its existing resources will be adequate to fund its capital and operating requirements only through June 2008.

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 its wholly owned subsidiary, Global Interactive Gaming Ltd. (GIG).

During the three months ended March 31, 2008, the Company continued software development to add additional features to the SportXction(R) System in order to satisfy the requirements of OLG. The Company and OLG had expected to negotiate a development/licensing agreement, which would allow OLG to conduct a six-month field trial of the modified SportXction(R) System, after its completion, for use in up to two casinos. The purchase order allowed the commencement of software development while the definitive licensing agreement is being negotiated. Actual delivery of the modified software will not occur until after signing the licensing agreement. This agreement has not yet been negotiated. The Company is hopeful that this field trial will lead to a broader implementation in multiple casinos and other on-site gaming venues throughout Ontario, Canada. If successful, the system will have applicability in other Canadian provinces, as well.

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, how long the Company's cash resources will be sufficient to satisfy the Company's needs, whether the Company will be successful in solving its liquidity issues, and whether the Company will have to cease operations. 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
                                  Unaudited
            (Amounts in thousands except share and per share data)

                                                 Three Months Ended March 31,
                                                     2008            2007

    Revenues                                         $259             $69

    Costs and expenses:
      Cost of revenues                                205             141
      Research and development expense                  6             133

    General and administrative expense                360             608
                                                      571             882

        Operating loss                               (312)           (813)

    Interest expense (income), net                      8             (28)
          Net loss                                   (320)           (695)
    Preferred stock dividend                          (62)            (58)

          Net loss applicable to common
           shareholders                             $(382)          $(753)

    Net loss per share applicable to common
     shareholders - basic and diluted              $(0.03)         $(0.06)

    Weighted average basic and
     diluted common shares outstanding         12,265,715      12,201,605



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

                                                    March 31,   September 30,
                                                       2008          2007

    Cash and short term investments
     (including marketable securities)                 $124          $284
    Total current assets                               $336          $473
    Total assets                                       $701          $901

    Current liabilities                              $1,263          $835
    Total liabilities                                  $982          $835

    Stockholders' (deficit) equity                    $(562)          $66

SOURCE Interactive Systems Worldwide, Inc.