MATTHEWS, N.C., Oct. 29 NC-PokerTek-earns-Q3
MATTHEWS, N.C., Oct. 29 /PRNewswire-FirstCall/ -- PokerTek, Inc. (Nasdaq:
PTEK) today reported financial results for the third quarter ended September
30, 2008.
(Logo: http://www.newscom.com/cgi-bin/prnh/20080828/CLTH082LOGO )
Third Quarter and Year-to Date 2008 Operating Highlights
-- Revenues increased 299% for the quarter and 339% year-to-date
-- Operating expenses declined $1.1 million from the third quarter of 2007
-- Net Loss improved 57% for the quarter and 39% year-to-date
-- EBITDAS, a non-GAAP financial measure improved 85% for the quarter and
67% year-to-date
-- Earnings Per Share improved 57% for the quarter and 42% year-to-date
-- Sold 331 Heads Up Challenge units for the quarter and 871 year-to-date
-- PokerPro table count increased to 272 from 131 at September 30, 2007.
Recent Announcements and Events
-- Entered regulatory field trials and opened automated poker rooms using
PokerPro at:
-- The Excalibur Hotel & Casino in Nevada
-- Horseshoe Casino Chicagoland in Indiana
-- French Lick Resort Casino in Indiana
-- Ameristar Casino Council Bluffs in Iowa
-- Secured seven Certified Australian Innovation Patents
-- Settled patent infringement lawsuit
-- Entered into a credit facility with Silicon Valley Bank
Revenue
Consolidated revenues for the third quarter of 2008 were $4.3 million, an
increase of 299% from the comparable period of 2007, and an increase of 12%
sequentially when compared to the second quarter of 2008. For the first nine
months of 2008, consolidated revenues were $11.3 million, an increase of 339%
from the comparable period of 2007. Revenue growth was driven by strong
performance in both the casino and amusement product lines.
Revenue from recurring license and service fees from PokerPro systems
totaled $1.5 million for the third quarter, an increase of 145% from the third
quarter of 2007. For the first nine months of 2008, recurring revenues were
$4.5 million, an increase of 158% from the comparable period of 2007. This
growth from prior year periods was primarily driven by growth in the number of
PokerPro systems deployed in casinos in the United States, Canada and on
cruise ships.
Product sales totaled $2.8 million for the third quarter, an increase of
509% from the third quarter of 2007. For the first nine months of 2008,
product sales were $6.9 million, an increase of 706% from the comparable
period of 2007.
The growth in product sales was directly attributable to the successful
launch of Heads-Up Challenge and increased international sales of casino
products. Sales of Heads-Up Challenge contributed $1.5 million for the third
quarter and $3.9 million for the first nine months of 2008. Sales of casino
products, primarily to Aristocrat International Pty., PokerTek's international
distributor, grew 196% to $1.3 million on a quarterly basis and 258% to $3.0
million for the first nine months of 2008 on strong European demand.
Operating Expenses
Consolidated operating expenses, including non-cash depreciation and
share-based compensation, were $3.8 million for the quarter ended September
30, 2008, a decrease of $1.1 million, or 23% from the third quarter of 2007.
For the first nine months, operating expenses were $11.9 million, essentially
flat when compared to the first nine months of 2007.
As a percent of total revenue, operating expenses improved to 89% of
revenue for the third quarter of 2008, as compared to 461% in the third
quarter of 2007. Improvements in operating expenses were directly
attributable to the rapid growth in casino and amusement revenues combined
with management initiatives to reduce operating expenses.
Operating Results
Net loss per common share was $(0.16) for the third quarter and $(0.53)
for the first nine months of 2008, an improvement of 57% from the third
quarter of 2007 and 42% from the first nine months of 2007.
EBITDAS, a non-GAAP financial measure, was $(0.5) million for the third
quarter and $(2.6) million for the first nine months of 2008. EBITDAS
improved 85% from $(3.5) million from the third quarter of 2007 and 67% from
$(8.0) million from the first nine months of 2007.
Management Comments
"We're pleased with our third quarter results," said Chris Halligan,
PokerTek's CEO. "This is a challenging business environment to say the least;
however we continued to grow our revenues, manage our costs and achieve
several major milestones during the quarter. We are particularly proud of our
field trial installation at the Excalibur Hotel and Casino in Las Vegas,
Nevada where we've installed 12 tables. As the industry leader in automated
poker, we are optimistic about the future."
Mark Roberson, PokerTek's CFO, added "In addition to delivering
significant revenue growth and expense reductions, we're also pleased to have
settled our litigation with Lightning Gaming, Inc. The settlement was
achieved without any material impact on the Company's financial position and
we are now able to fully focus our attention and resources on managing the
business."
Conference Call
PokerTek will host a conference call to discuss its third quarter 2008
results on Wednesday October 29, 2008 at 5:00 p.m. Eastern Daylight Time.
Interested parties may listen to and participate in the conference call by
dialing (888) 713-4213 (U.S./Canada) or (617) 213-4865 (Other) and entering
passcode 73880620. The conference call will be webcast simultaneously through
a link on our website, www.pokertek.com, under the heading "Investors," as
well as at www.earnings.com and www.streetevents.com. A replay of the
conference call will be available approximately two hours after the conclusion
of the call for approximately 24 hours by dialing (888) 286-8010 (U.S./Canada)
or (617) 801-6888 (Other) and entering passcode 42514975. A replay of the
conference call will also be made available for one year on our website,
www.pokertek.com, under the heading "Investors."
Use of Non-GAAP Measures
PokerTek, Inc. prepares its consolidated financial statements in
accordance with United States generally accepted accounting principles
("GAAP"). In addition to disclosing financial results prepared in accordance
with GAAP, the Company discloses information regarding EBITDAS, which differs
from the term EBITDA as it is commonly used. In addition to adjusting net
loss to exclude income taxes, interest expense, and depreciation and
amortization, EBITDAS also excludes noncash charges and share-based
compensation expense. EBITDA and EBITDAS are not measures of performance
defined in accordance with GAAP. However, EBITDAS is used internally by
PokerTek's management to make strategic decisions, including evaluating the
company's operating performance and for making spending decisions.
Accordingly, management believes that disclosure of this metric offers
investors, lenders and other stakeholders with an additional view of the
Company's operations that, when coupled with the GAAP results, provides a more
complete understanding of the Company's results of operations. We have chosen
to provide this supplemental information to enable investors to perform
additional comparisons of operating results and to analyze financial
performance excluding the effect of certain non-cash expenses, unusual items
and share-based compensation expense, which may obscure trends in PokerTek's
underlying performance.
EBITDAS should not be considered as an alternative to net loss or to net
cash used in operating activities as a measure of operating results or of
liquidity. It may not be comparable to similarly titled measures used by other
companies, and it excludes financial information that some may consider
important in evaluating the Company's performance. A reconciliation GAAP net
loss to EBITDAS is included in the accompanying financial schedules.
About PokerTek, Inc.
PokerTek, Inc. (Nasdaq: PTEK), headquartered in Matthews, NC, develops and
markets products for the casino and amusement industries. PokerTek developed
PokerPro(R) automated poker tables and related software applications to
increase casino revenue, reduce expenses, and attract new players into poker
rooms by offering interactive poker that is fast, fun and mistake-free.
Heads-Up Challenge(TM) is a two-player table that allows bar and restaurant
patrons to compete head-to-head in various games for amusement purposes.
Heads-Up Challenge increases earnings for game operators and provides patrons
unique and challenging on-site entertainment. Both products are installed
worldwide.
For more information, please visit the company's website at
www.pokertek.com or contact Mark Roberson at 704.849.0860 x101.
This press release contains forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of
the Securities Exchange Act of 1934, as amended, which are made in accordance
with the Private Securities Litigation Reform Act of 1995. The forward-looking
statements herein include, but are not limited to, the expected adoption of
the PokerPro systems by casinos and other customers and the expected
acceptance of the PokerPro systems by players. Our actual results may differ
materially from those implied in these forward-looking statements as a result
of many factors, including, but not limited to, overall industry environment,
customer acceptance of our products, delay in the introduction of new
products, further approvals of regulatory authorities, adverse court rulings,
production and/or quality control problems, the denial, suspension or
revocation of permits or licenses by regulatory or governmental authorities,
termination or non-renewal of customer contracts, amendment or termination of
our loans with Silicon Valley Bank, competitive pressures, general economic
and political conditions, such as political instability, credit market
uncertainty, inflationary pressures from higher energy and fuel costs and the
rate of economic growth or decline in our principal geographic markets, each
of which may be amplified by recent disruptions in the U.S. and global
financial markets, the possible effect of anti-dilution provisions in our
outstanding warrants, and our financial condition. These and other risks and
uncertainties are described in more detail in our most recent annual report on
Form 10-K and other reports filed with the Securities and Exchange Commission.
Forward-looking statements speak only as of the date they are made. We
undertake no obligation to update or revise such statements to reflect new
circumstances or unanticipated events as they occur, except as required by
applicable laws, and you are urged to review and consider disclosures that we
make in the reports that we file with the Securities and Exchange Commission
that discuss other factors germane to our business.
POKERTEK, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
Three Months EndedNine Months Ended
September 30, September 30,
2008 2007 2008 2007
Revenues:
License and service
fees $1,521,341 $621,413 $4,463,280 $1,731,515
Product sales 2,772,144 455,4396,871,791 852,609
---------- ---------- ---------- ----------
Total revenues 4,293,4851,076,852 11,335,0712,584,124
---------- ---------- ---------- ----------
Costs and operating
expenses:
Cost of product sales 2,088,570 379,7155,042,443 697,167
Selling, general and
administrative2,388,9913,257,9397,424,2997,181,482
Research and
development 716,3631,144,5862,435,5963,274,665
Depreciation 726,870 563,4772,053,4331,396,728
---------- ---------- ---------- ----------
Total costs and
operating expenses 5,920,7945,345,717 16,955,771 12,550,042
---------- ---------- ---------- ----------
Operating loss (1,627,309) (4,268,865) (5,620,700) (9,965,918)
Interest income
(expense), net (50,576) 178,909 (24,078) 438,163
---------- ---------- ---------- ----------
Net loss before income
taxes (1,677,885) (4,089,956) (5,644,778) (9,527,755)
Income tax provision (75,150) - (198,623) -
---------- ---------- ---------- ----------
Net loss $(1,753,035) $(4,089,956) $(5,843,401) $(9,527,755)
========== ========== ========== ==========
Net loss per common
share - basic and
diluted$(0.16) $(0.37) $(0.53) $(0.92)
Weighted average
common shares
outstanding - basic
and diluted10,934,464 10,920,257 10,934,464 10,304,001
POKERTEK, INC.
CONSOLIDATED BALANCE SHEETS
September 30,
Assets 2008
(unaudited) December 31, 2007
Current assets:
Cash and cash equivalents $2,534,767$1,229,980
Short-term investments - 5,950,000
Accounts receivable, net 2,015,634 968,536
Inventory 3,156,898 2,642,481
Prepaid expenses and other assets261,924 331,199
--------------------
Total current assets 7,969,22311,122,196
--------------------
Other assets:
PokerPro systems, net 4,188,076 4,991,634
Property and equipment, net 625,943 605,046
Long-term investments 3,580,975 -
Other assets 553,413 377,029
--------------------
Total assets $16,917,630 $17,095,905
====================
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $1,756,302$1,465,202
Accrued liabilities1,272,046 964,173
Short-term debt2,463,143 -
--------------------
Total current liabilities5,491,491 2,429,375
--------------------
Long-term debt 2,029,850 -
Commitments and contingencies
Shareholders' equity:
Preferred stock, no par value per
share; authorized 5,000,000, none
issued and outstanding- -
Common stock, no par value per share;
authorized 100,000,000 shares,
issued and outstanding 10,934,464
shares at September 30, 2008 and
December 31, 2007 - -
Additional paid-in capital42,245,40541,353,220
Accumulated deficit (32,530,091) (26,686,690)
Accumulated other comprehensive loss(319,025)-
--------------------
Total shareholders' equity 9,396,28914,666,530
--------------------
Total liabilities and shareholders'
equity$16,917,630 $17,095,905
====================
POKERTEK, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Nine Months Ended September 30,
2008 2007
Cash flows from operating activities:
Net loss $(5,843,401) $(9,527,755)
Adjustments to reconcile net loss to
net cash used in operating
activities:
Depreciation 2,053,433 1,396,728
Share-based compensation expense 892,185 588,036
Provision for accounts and other
receivables 11,48547,129
Changes in assets and liabilities:
Accounts and other receivables(1,058,583) (280,232)
Prepaid expenses and other assets (107,109) (6,891)
Inventory (514,417) (236,317)
PokerPro systems (1,099,155) (2,920,870)
Accounts payable and accrued expenses598,972 433,541
--------------------
Net cash used in operating activities (5,066,590) (10,506,631)
--------------------
Cash flows from investing activities:
Purchases of property and equipment (119,583) (321,607)
Sale of investments2,050,00023,850,000
Purchase of investments- (25,200,000)
--------------------
Net cash provided by (used in)
investing activities1,930,417(1,671,607)
--------------------
Cash flows from financing activities:
Proceeds from long-term debt 2,000,000 -
Proceeds from short-term debt 2,620,086 -
Repayments of short-term debt (173,641)
Proceeds from issuance of common
stock, net of expenses-12,512,261
Proceeds from common stock options
exercised -65,271
Repayments of capital lease (5,485)-
--------------------
Net cash provided by financing
activities 4,440,96012,577,532
--------------------
Net increase in cash and cash
equivalents 1,304,787 399,294
Cash and cash equivalents, beginning
of period 1,229,980 1,803,501
--------------------
Cash and cash equivalents, end of
period $2,534,767$2,202,795
====================
Supplemental Disclosure of Cash Flow
Information
Cash paid for:
Interest $194,811$2,811
Income taxes178,055 -
Non-cash transaction:
Capital lease obligation$52,034$-
POKERTEK, INC.
Reconciliation of
EBITDAS to Net Loss
(unaudited)
Three Months EndedNine Months Ended
September 30, September 30,
2008 2007 2008 2007
Net loss, as reported $(1,753,035) $(4,089,956) $(5,843,401) $(9,527,755)
Interest income
(expense), net 50,576 (178,909) 24,078 (438,163)
Income tax provision75,150- 198,623-
Other taxes 3,1325,292 43,198 22,613
Depreciation 726,870 563,4772,053,4331,396,728
Stock-based
compensation expense 368,553 224,955 892,185 588,036
---------- ---------- ---------- ----------
EBITDAS(1)$(528,754) $(3,475,141) $(2,631,884) $(7,958,541)
========== ========== ========== ==========
(1) EBITDAS is defined as net loss before interest, taxes, depreciation,
amortization, share-based compensation, and non-cash charges. EBITDAS
does not purport to represent net earnings or net cash used in
operating activities, as those terms are defined under generally
accepted accounting principles, and should not be considered as an
alternative to such measurements or as indicators of the Company's
performance. The Company's definition of EBITDAS may not be comparable
with similarly titled measures used by other companies.
SOURCE PokerTek, Inc.
