Elixir Gaming reports results

LAS VEGAS, Nevada -- (PRESS RELEASE) -- Elixir Gaming Technologies, Inc. (AMEX:EGT) ("Elixir Gaming" or "the Company"), a leading technology and solutions provider to the Pan-Asian gaming industry, today reported operating results for the second quarter ended June 30, 2008 and reviewed recent corporate progress.

Recent Operating Highlights:

* A total of 14 venues and 1,262 installed units currently in operation comprised of 5 venues in the Philippines with a total of 663 installed units, 9 venues in Cambodia with a total of 599 installed units.

-- Philippines venues in operation reflect two new properties opened this week with a total of 200 installed units in operation.

* Optimization initiatives effected in the 2008 second quarter are leading to growth in win per day per device with reported average win per day per device. Average net win for the month of July was $51 ($47 for the Philippines and $56 for Cambodia), up from $33 in June and $29 for the second quarter. This represents increases of 55% and 76%, respectively. Total net revenue for the month of July was $388,821, an increase of 36% from $284,170 in June.

* Contract renegotiations for 9 Cambodian venues completed over the past several months resulting in a higher average revenue share percentage to Elixir Gaming.

Gordon Yuen, CEO of Elixir Gaming, commented, "With gaming machines now in operation throughout 14 venues on a revenue share basis in the Asia-Pacific region, Elixir Gaming's primary focus is on driving continued improvements in the net win per day per machine as this will increase our return on investment in each of our markets. We are already achieving notable growth across many venues since initiating the operational improvement plan in the second quarter and we remain confident in the long-term effectiveness of this strategy.

"Our venue operating improvement plans are comprehensive and highlight the strength of our customer relationships. In addition to slot floor reconfigurations and changes to the game mix we are providing additional services and technical support at each venue. With recently renegotiated contracts for 9 Cambodian venues, Elixir Gaming is generating substantially higher revenue share on the net win per machine at these properties compared with levels based on the initial agreements in this market. These initiatives are helping to drive cash flow improvements."

Joe Pisano, Executive Director & Executive Vice President, added, "The value Elixir Gaming brings to venue owners in emerging markets is highlighted by our growing footprint of venues in operation and under contract. In less than a year's time, Elixir Gaming has become recognized as the premier turnkey casino partner in the regions where we operate and the success of our business plan is leading to new opportunities. We intend to expand our market penetration by securing additional high-quality, high-return contracts with reputable venue owners and developers. In this regard, we anticipate securing new agreements later this year.

"The Company's focus on generating appropriate returns at each venue through the implementation of operating improvement strategies will be reflected in the pace of new venue openings throughout the balance of 2008. Two new venues were opened earlier this week in the Philippines and we expect several more venues to come on line over the balance of 2008. The upcoming openings will be outfitted with gaming devices from the Company's current slot machine inventory."

2008 and 2009 Operating Expectations

* The Company expects that it will have 16 to 18 venues in operation at December 31, 2008, compared to 14 venues currently in operation.

* Reflecting the Company's focus on improving results from each of its operating venues through its optimization plans implemented across each venue and paced new venue opening schedule, Elixir Gaming believes that it will continue to build on its July revenue and average win per day per machine for the slot participation business.

* Given the growth in win per day per machine, the higher revenue share derived from Cambodia operations, and cost reduction strategies, Elixir Gaming expects to turn EBITDA positive in the second half of 2009.

Management Update

Elixir Gaming today reported on recent changes to its senior management team:

* David Reberger, Elixir Gaming's Chief Financial Officer, has resigned effective August 15 to pursue other opportunities. Mr. Reberger will remain as a consultant to the Company for the remainder of the year. A global search for a new CFO is underway.

* Andy Tsui, CPA, has recently been appointed Vice President of Finance for Elixir Gaming and will be responsible for all financial reporting aspects of the Company. Mr. Tsui, a certified public accountant, joins Elixir Gaming from Minerals Technologies, Inc. and has ten years of public company financial experience.

* Tony Lam, who joined Elixir Gaming in January 2008, recently assumed the role of Senior Vice President Head of Operations. Mr. Lam is responsible for overseeing the implementation of the Company's venue optimization strategies. Prior to joining Elixir Gaming, Mr. Lam was a senior executive with companies located both in the Asia Pacific and North American regions including CDC Corporation, a NASDAQ listed media and technology company that went through a period of significant growth related to acquisitions.

Mr. Yuen added, "The Company appreciates all of David's efforts in formulating the initial structure whereby Elixir Gaming effected its new business model in mid-2007. We wish him every success in his future endeavors. Andy brings to Elixir a strong background in financial reporting and management and we look forward to benefiting from his efforts. Finally, it is clear from our improving results in the Philippines and Cambodia that Tony is an excellent fit to lead our initiatives to implement operating improvement strategies in the field."

Q2 Financial Review

Due to the timing of gaming machine placements, the operating results for the three-month period ended June 30, 2008 are not representative of the business model effected in September 2007 (whereby Elixir Gaming is placing gaming machines based on a revenue share model in Asia). Revenues from gaming machines on participation units were approximately $0.8 million in Q2 2008 compared to revenues of $0.5 million in Q1 2008 and $0.3 million in Q4 2007. Elixir Gaming's 2008 second quarter total revenues of $3.7 million represent an increase of $0.3 million when compared to total revenues of $3.4 million for the second quarter of 2007.

For the second quarter of 2008, Elixir Gaming reported a net loss of $9.6 million, or ($0.08) per share, on a weighted average share count of 115.0 million shares compared to a net loss for the second quarter of 2007 of $4.8 million, or ($0.14) per share, on a weighted average share count of 35.0 million shares. Selling, general and administrative expenses (SG&A) for the 2008 second quarter period increased $2.6 million to $6.7 million compared to the prior year period. Without the effect of non-cash stock-based compensation expense, SG&A for the 2008 second quarter has increased $1.4 million to $4.2 million compared to the prior year period. The exercise prices of options contributing to the 2008 non-cash stock-based compensation expense ranged between $1.22 and $7.50 with a weighted average exercise price of $4.47.