PokerTek Reports Second Quarter 2011 Financial Results

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
(Unaudited)
		Three Months Ended June 30,									Six Months Ended June 30,
			2011				2010					2011				2010
Revenue		$	1,578,003			$	1,281,940				$	3,260,629			$	2,849,960
Cost of revenue			457,688				513,300					934,359				1,140,951
Gross profit			1,120,315				768,640					2,326,270				1,709,009
Operating expenses:
Selling, general and administrative			1,109,073				1,184,351					2,295,241				2,309,538
Research and development			241,056				247,256					505,816				532,436
Share-based compensation expense			108,687				148,464					266,638				370,043
Depreciation			20,478				34,373					40,759				73,705
Total operating expenses			1,479,294				1,614,444					3,108,454				3,285,722
Operating loss			(358,979	)			(845,804	)				(782,184	)			(1,576,713	)
Interest expense, net			26,727				37,018					53,009				69,573
Net loss from continuing operations before income taxes			(385,706	)			(882,822	)				(835,193	)			(1,646,286	)
Income tax provision			15,003				9,866					19,541				38,607
Net loss from continuing operations			(400,709	)			(892,688	)				(854,734	)			(1,684,893	)
Loss from discontinued operations			(429	)			(1,147,199	)				(10,403	)			(1,211,587	)
Net loss		$	(401,138	)		$	(2,039,887	)			$	(865,137	)		$	(2,896,480	)
Net loss from continuing operations per common share - basic and diluted		$	(0.06	)		$	(0.15	)			$	(0.13	)		$	(0.29	)
Net loss from discontinued operations per common share - basic and diluted			-				(0.20	)				-				(0.21	)
Net loss per common share - basic and diluted		$	(0.06	)		$	(0.35	)			$	(0.13	)		$	(0.50	)
Weighted average common shares outstanding - basic and diluted			6,609,726				5,851,058					6,411,406				5,740,174

POKERTEK, INC.
CONSOLIDATED BALANCE SHEETS
		June 30, 2011 (Unaudited)				December 31, 2010
Assets
Current assets:
Cash and cash equivalents		$	1,168,598			$	666,179
Accounts receivable, net			1,067,907				1,057,511
Inventory			977,548				997,064
Prepaid expenses and other assets			239,672				213,495
Net assets of discontinued operations			331,547				379,441
Total current assets			3,785,272				3,313,690
Long-term assets:
Gaming systems, net			2,028,692				2,255,030
Property and equipment, net			51,838				80,755
Other assets			275,770				402,498
Total long-term assets			2,356,300				2,738,283
Total assets		$	6,141,572			$	6,051,973
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable		$	498,599			$	327,662
Accrued liabilities			468,207				648,604
Deferred revenue			929,531				817,789
Long-term liability - related party, current portion			40,163				21,402
Long-term debt, current portion			3,538				30,793
Current liabilities of discontinued operations			84,463				113,185
Total current liabilities			2,024,501				1,959,435
Long-term liabilities:
Deferred revenue			5,750				118,436
Long-term liability - related party			303,435				368,598
Long-term debt			700,000				800,000
Total long-term liabilities			1,009,185				1,287,034
Total liabilities			3,033,686				3,246,469
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 40,000,000			-				-
shares, issued and outstanding 6,923,950 and 6,187,853 shares at
June 30, 2011 and December 31, 2010, respectively
Additional paid-in capital			47,995,141				46,827,622
Accumulated deficit			(44,887,255	)			(44,022,118	)
Total shareholders' equity			3,107,886				2,805,504
Total liabilities and shareholders' equity		$	6,141,572			$	6,051,973

POKERTEK, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
		Six Months Ended June 30,
		2011				2010
Cash flows from operating activities:
Net loss		$	(865,137	)		$	(2,896,480	)
Net loss from discontinued operations			10,403				1,211,587
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization			752,960				1,066,915
Share-based compensation expense			266,638				370,043
Provision for doubtful accounts and other receivables			124,547				30,958
Changes in assets and liabilities:
Accounts and other receivables			(108,927	)			424,040
Prepaid expenses and other assets			78,001				72,987
Inventory			7,674				336,998
Gaming systems			(485,863	)			(709,281	)
Accounts payable and accrued expenses			(55,862	)			(216,792	)
Deferred revenue			(562	)			(24,422	)
Net cash provided by (used in) operating activities from continuing operations			(276,128	)			(333,447	)
Net cash provided by (used in) operating activities from discontinued operations			(17,629	)			87,164
Net cash provided by (used in) operating activities			(293,757	)			(246,283	)
Cash flows from investing activities:
Purchases of property and equipment			-				(5,688	)
Net cash used in investing activities			-				(5,688	)
Cash flows from financing activities:
Proceeds from issuance of common stock, net of expenses			823,431				332,691
Repayments of capital lease			(27,255	)			(12,814	)
Net cash provided by (used in) financing activities			796,176				319,877
Net increase (decrease) in cash and cash equivalents			502,419				67,906
Cash and cash equivalents, beginning of year			666,179				636,374
Cash and cash equivalents, end of period		$	1,168,598			$	704,280
Supplemental Disclosure of Cash Flow Information
Cash paid for:
Interest		$	38,118			$	37,396
Income taxes			18,051				49,510
Non-cash transactions:
Amortization of commitment fee issued in common stock		$	22,550			$	-
Gaming inventory purchase - related party			-				396,500
Issuance of common stock for commitment fee			-				112,750
Issuance of common stock for debt cancellation			100,000				-
Transfers from inventory to property and equipment			11,842				-

POKERTEK, INC.
RECONCILIATION TO EBITDAS
(UNAUDITED)
		Three Months Ended June 30,								Six Months Ended June 30,
			2011				2010				2011				2010
Net loss from continuing operations		$	(400,709	)		$	(892,688	)		$	(854,734	)		$	(1,684,893	)
Interest (income) expense, net			26,727				37,018				53,009				69,573
Income tax provision			15,003				9,866				19,541				38,607
Other taxes			6,376				1,276				16,090				18,631
Depreciation and amortization			377,131				473,418				752,960				1,066,915
Stock-based compensation expense			108,687				148,464				266,638				370,043
EBITDAS (1)		$	133,215			$	(222,646	)		$	253,504			$	(121,124	)
(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.

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