PokerTek Reports First Quarter 2013 Financial Results

PokerTek Reports First Quarter 2013 Financial Results 
MATTHEWS, NC -- (Marketwired) -- 05/08/13 --  PokerTek, Inc. (NASDAQ:
PTEK) today reported financial results for the first quarter ended
March 31, 2013. 
Financial Highlights 


 
--  Recurring license and service fees increased 26%
--  Operating expenses remain well controlled
--  Balance sheet strengthened

  
"During the first quarter, we entered the South American market with
initial installations in Uruguay and Colombia and continued to
install games in Mexico," commented Mark Roberson, Chief Executive
Officer. "We are on track to grow penetration in our target markets,
our costs continue to be well controlled, and our balance sheet is
substantially improved. 
"Looking ahead, we expect product placement activity to increase and
operating results to continue to strengthen." 
Financial Summary 
Total revenue was $1.4 million for the first quarter of 2013 compared
to $1.7 million in 2012, a decrease of $0.3 million, or 17.1%. This
decrease was partially due to a change in product mix as the prior
year included higher revenues from product sales, which offset the
increases in recurring license and service fees in the current
period.  
Revenues from license and service fees increased $0.3 million, or
26%. The increase in license and service fees from the prior year
resulted from growth in leased games in Canada and Mexico, partially
offset by lower license and service fees from Europe.  
Revenues from systems and equipment sales decreased $0.6 million as
substantially all of the current period revenue was generated from
recurring license and service fees. The prior year results included
several product sales in Europe and a conversion of leased games to
product sales in the United States.  
Gross profit decreased by $0.3 million, or 19.7%, to $1.0 million for
the three months ended March 31, 2013, as compared to the three
months ended March 31, 2012. Gross profit margins were 75% for the
three months ended March 31, 2013 compared to 77% for the three
months ended March 31, 2012.  
Operating expenses were unchanged at $1.2 million for both quarterly
periods.  
Net loss from continuing operations for the three months ended March
31, 2013 was $0.2 million compared to net income of $59 thousand for
the three months ended March 31, 2012, due to the favorable impact of
higher sales of systems and equipment in the prior year, offsetting
the growth in recurring license and service fees in the current year.
Net income (loss) from continuing operations per common share was a
loss of $0.02 per common share (basic and diluted) compared to a
profit of $0.01 per common share (basic and diluted). 
EBITDAS, a non-GAAP financial measure (described below), was positive
$0.1 million in 2013 and $0.4 million in 2012.  
Balance Sheet and Cash Flow Information 
Cash provided by operating activities from continuing operations
improved by 40%, to $0.35 million for the three months ended March
31, 2013 compared to $0.25 million for the three months ended March
31, 2012. The improvement in cash provided by operating activities
was primarily due to working capital changes with accounts receivable
decreasing on more favorable collections and accounts payable
increasing due to the timing of inventory payments.  
Cash provided by financing activities was $0.46 million for the three
months ended March 31, 2013, compared to $50 thousand for the
comparable period in 2012. Cash provided by financing activities
primarily consists of proceeds from sales of common stock in both
periods. For the three months ended March 31, 2013, we also made
principal payments on the Founders' Loan.  
On March 1, 2013, we sold 460,000 shares of our common stock to ten
unaffiliated accredited investors at a price of $1.05 per share,
realizing gross proceeds of $0.48 million and net proceeds after
paying brokers' commission of $0.47 million. The offering was exempt
from the registration requirements of the Securities Act of 1933, as
amended (the Act) pursuant to Section 4(5) of the Act and Rule 506 of
Regulation D promulgated under the Act.  
As of March 31, 2013, the Company's cash and cash equivalents totaled
$1.0 million and total debt was $0.3 million. 
Gaming Positions Information 
Gaming positions deployed worldwide totaled 2,390 as of March 31,
2013 comprised of 2,240 PokerPro and 150 ProCore gaming positions. As
of March 31, 2012, our installed base consisted of 2,032 gaming
positions deployed worldwide comprised of 1,894 PokerPro gaming
positions and 138 ProCore gaming positions.  
Conference Call 
A conference call and webcast will be held on Wednesday, May 8, 2013
at 11:00 a.m. EDT for management to discuss the company's
first-quarter 2013 performance. Interested parties may listen to and
participate in the conference call by dialing (866) 515-2914
(U.S./Canada) or +1 (617) 399-5128 (Other) and entering passcode
71625865. A live webcast of the conference call will be available
through a link on our website, www.pokertek.com, under the heading
"Investors." For those unable to participate in the live call, an
archived replay will be made available on our website. A replay of
the conference call will also be available approximately two hours
after the conclusion of the call for approximately one week by
dialing (888) 286-8010 (U.S./Canada) or +1 (617) 801-6888 (Other) and
entering passcode 48767487. 
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 income (loss) from
continuing operations to exclude taxes, interest, and depreciation
and amortization, EBITDAS also excludes noncash charges, certain
non-recurring charges and share-based compensation expense. EBITDA
and EBITDAS are not measures of performance defined in accordance
with GAAP. However, EBITDAS is used internally in planning and
evaluating the company's operating performance. Accordingly,
management believes that disclosure of this metric offers investors,
bankers and other stakeholders an additional view of the company's
operations that, when coupled with the GAAP results, provides a more
complete understanding of the company's financial results. 
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 of GAAP net loss from
continuing operations to EBITDAS is included in the accompanying
financial schedules.  
About PokerTek, Inc. 
PokerTek, Inc. (NASDAQ: PTEK) (www.pokertek.com) is a licensed gaming
company headquartered in Matthews, NC that develops and distributes
electronic table games solutions for the gaming industry. The
company's products are installed worldwide, and include PokerPro and
Blackjack Pro. For more information, visit: www.pokertek.com. 
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 our gaming systems by
casinos and other customers, and the expected acceptance of our
gaming 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, the impact of global
macroeconomic and credit conditions on our business and the business
of our suppliers and customers, 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, competitive pressures, and our financial condition,
including our ability to maintain sufficient liquidity to operate our
business. 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                   
                                                                            
                                                Three Months Ended March 31,
                                                ----------------------------
                                                     2013           2012    
                                                -------------  -------------
Revenue                                                                     
  License and service fees                      $   1,360,670  $   1,083,414
  Sales of systems and equipment                       30,451        594,523
                                                -------------  -------------
    Total revenue                                   1,391,121      1,677,937
Cost of revenue                                       353,549        385,979
                                                -------------  -------------
    Gross profit                                    1,037,572      1,291,958
                                                -------------  -------------
Operating expenses:                                                         
  Selling, general and administrative                 946,780        892,734
  Research and development                            168,427        199,784
  Share-based compensation expense                     70,778        108,249
  Depreciation                                          2,323          4,232
                                                -------------  -------------
    Total operating expenses                        1,188,308      1,204,999
                                                -------------  -------------
Operating loss                                       (150,736)        86,959
                                                -------------  -------------
  Interest expense, net                                10,543         20,855
                                                -------------  -------------
Net income (loss) from continuing operations                                
 before income taxes                                 (161,279)        66,104
                                                -------------  -------------
  Income tax provision                                 34,081          6,727
Net income (loss) from continuing operations         (195,360)        59,377
                                                -------------  -------------
  Income (loss) from discontinued operations              535         10,522
                                                -------------  -------------
Net income (loss)                               $    (194,825) $      69,899
                                                =============  =============
                                                                            
Net income (loss) from continuing operations                                
 per common share - basic and diluted           $       (0.02) $        0.01
Net income (loss) from discontinued operations                              
 per common share - basic and diluted                    0.00           0.00
                                                -------------  -------------
Net income (loss) per common share - basic and                              
 diluted                                        $       (0.02) $        0.01
                                                =============  =============
Weighted average common shares outstanding -                                
 basic and diluted                                  8,491,315      7,564,104
                                                                            
                                                                            
                                                                        
                                                                        
                             POKERTEK, INC.                             
                      CONSOLIDATED BALANCE SHEETS                       
                                                                        
                                            March 31,     December 31,  
                                              2013            2012      
                                         --------------  -------------- 
Assets                                                                  
Current assets:                                                         
  Cash and cash equivalents              $    1,048,761  $      235,757 
  Accounts receivable, net                      549,269         794,769 
  Inventory                                   1,288,070       1,342,950 
  Prepaid expenses and other assets             132,081          66,988 
                                         --------------  -------------- 
Total current assets                          3,018,181       2,440,464 
                                         --------------  -------------- 
                                                                        
Long-term assets:                                                       
  Gaming systems, net                         1,673,211       1,693,051 
  Property and equipment, net                    24,644          26,967 
  Other assets                                  167,362         171,498 
                                         --------------  -------------- 
Total long-term assets                        1,865,217       1,891,516 
                                         --------------  -------------- 
Total assets                             $    4,883,398  $    4,331,980 
                                         ==============  ============== 
                                                                        
Liabilities and Shareholders' Equity                                    
Current liabilities:                                                    
  Accounts payable                       $      365,163  $      274,609 
  Accrued liabilities                           605,351         569,404 
  Deferred revenue                              147,500          42,266 
  Long-term debt, current portion                66,216          59,571 
                                         --------------  -------------- 
Total current liabilities                     1,184,230         945,850 
                                         --------------  -------------- 
                                                                        
Long-term liabilities:                                                  
  Long-term liability                           199,894         219,494 
  Long-term debt                                223,314         240,429 
                                         --------------  -------------- 
Total long-term liabilities                     423,208         459,923 
                                         --------------  -------------- 
Total liabilities                             1,607,438       1,405,773 
                                                                        
Commitments and contingencies                                           
                                                                        
Common stock subject to rescission               71,183          71,183 
                                                                        
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 40,000,000 shares, issued                                 
   and outstanding 8,625,498 and                      -               - 
   7,490,124 shares at December 31, 2012                                
   and December 31, 2011, respectively                                  
  Additional paid-in capital                 50,026,500      49,481,922 
  Accumulated deficit                       (46,821,723)    (46,626,898)
                                         --------------  -------------- 
Total shareholders' equity                    3,204,777       2,855,024 
                                         --------------  -------------- 
Total liabilities and shareholders'                                     
 equity                                  $    4,883,398  $    4,331,980 
                                         --------------  -------------- 
                                                                        
                                                                        
                                                                            
                                                                            
                               POKERTEK, INC.                               
                   CONSOLIDATED STATEMENTS OF CASH FLOWS                    
                                (Unaudited)                                 
                                                                            
                                               Three Months Ended March 31, 
                                               ---------------------------- 
                                                    2013           2012     
                                               -------------  ------------- 
Cash flows from operating activities:                                       
  Net income (loss)                            $    (194,825) $      69,899 
  Net income from discontinued operations               (535)       (10,522)
Adjustments to reconcile net loss to net cash                               
 used in operating activities:                                              
  Depreciation and amortization                      199,419        196,186 
  Share-based compensation expense                    70,778        108,249 
  Provision for doubtful accounts and other                                 
   receivables                                        49,064        (27,926)
Changes in assets and liabilities:                                          
  Accounts and other receivables                     196,435         63,582 
  Prepaid expenses and other assets                  (60,957)       (12,772)
  Inventory                                           54,879        199,753 
  Gaming systems                                    (177,255)      (331,921)
  Accounts payable and accrued expenses              106,902        (14,367)
  Deferred revenue                                   105,234          8,413 
                                               -------------  ------------- 
Net cash provided by operating activities from                              
 continuing operations                               349,139        248,574 
Net cash provided by operating activities from                              
 discontinued operations                                 535         64,945 
                                               -------------  ------------- 
Net cash provided by operating activities            349,674        313,519 
                                               -------------  ------------- 
                                                                            
Net cash used in investing activities                      -              - 
                                               -------------  ------------- 
                                                                            
Cash flows from financing activities:                                       
  Repayments of long-term debt                       (10,470)             - 
  Proceeds from issuance of common stock, net                               
   of expenses                                       473,800         49,999 
                                               -------------  ------------- 
Net cash provided by financing activities            463,330         49,999 
                                               -------------  ------------- 
Net increase in cash and cash equivalents            813,004        363,518 
Cash and cash equivalents, beginning of year         235,757        606,229 
                                               -------------  ------------- 
Cash and cash equivalents, end of period       $   1,048,761  $     969,747 
                                               =============  ============= 
                                                                            
Supplemental Disclosure of Cash Flow                                        
 Information                                                                
Cash paid for:                                                              
  Interest                                     $      17,361  $      27,382 
  Income taxes                                        33,291          7,686 
                                                                            
Non-cash transactions:                                                      
  Amortization of commitment fee issued in                                  
   common stock                                $           -  $      11,275 
                                                                            
                                                                            

 
                                                                            
                                                                            
                               POKERTEK, INC.                               
                          RECONCILIATION TO EBITDAS                         
                                 (UNAUDITED)                                
                                                                            
                                                                            
                                                                            
                                                Three Months Ended March 31,
                                                     2013           2012    
                                                -------------  -------------
Net income (loss) from continuing operations    $    (195,360) $      59,377
Interest expense, net                                  10,543         20,855
Income tax provision                                   34,081          6,727
Other taxes                                             2,088          2,805
Depreciation and amortization                         199,419        196,186
Stock-based compensation expense                       70,778        108,249
                                                -------------  -------------
  EBITDAS (1)                                   $     121,549  $     394,199
                                                =============  =============
                                                                            
                                                                            
(1) EBITDAS is defined as net income (loss) from continuing operations      
 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.         

  
Contact: 
Mark Roberson
Chief Executive Officer
PokerTek, Inc.
704.849.0860, x101
investorrelations@pokertek.com 
 
 
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