PokerTek reports Q3 results

MATTHEWS, North Carolina -- (PRESS RELEASE) -- PokerTek, Inc. (NASDAQ: PTEK) today reported financial results for the third quarter and nine months ended September 30, 2007. Highlights of recent announcements and operating results are as follows:

Recent Announcements

The company announced several significant new customer installations during the third quarter, including:

* The announcement of the world's largest fully automated poker room -- running exclusively on PokerTek poker tables – at Four Winds Casino Resort, and

* The installation of PokerPro tables in the Galaxy StarWorld Hotel and Casino in Macau, the world's largest gaming market.

The company announced two changes to its executive management team:

* Chris Halligan, who joined PokerTek over a year ago, was appointed as the company's Chief Executive Officer; and

* Mark Roberson, who joined PokerTek in October 2007, was appointed as the company's Chief Financial Officer.

Third Quarter 2007 Operating Highlights

Revenues for the third quarter of 2007 increased 350% to $1.1 million from $0.2 million for the third quarter of 2006.

Net loss for the third quarter of 2007 increased 77% to $4.1 million, or ($0.37) per diluted share, from $2.3 million, or ($0.24) per diluted share, in the third quarter of 2006.

The company's gaming table count increased to 131 at September 30, 2007, a 26% increase from 104 PokerPro tables at June 30, 2007 and a 524% increase from 21 at September 30, 2006.

Nine Month 2007 Operating Highlights

Revenues for the first nine months of 2007 increased 152% to $2.6 million from $1.0 million in the first nine months of 2006.

Net loss for the nine months ended September 30, 2007 increased 55% to $9.5 million, or ($0.92) per diluted share, from $6.1 million, or ($0.65) per diluted share, for the nine months ended September 30, 2006.

"We finished the third quarter of 2007 with 131 PokerPro casino tables installed worldwide and saw several customers open fully automated, PokerPro poker rooms. Our growth in the casino space is on track," stated Chris Halligan, PokerTek's Chief Executive Officer. "Q3 also marked the first shipments of Heads Up Challenge, World Series of Poker edition, our new amusement product. Early field reports from restaurants and bars are encouraging."

Revenues

Revenue growth for the company was primarily driven by increased license fees and product sales of PokerPro casino tables. License fees, which tend to lag the actual growth in table count, grew due to the larger number of revenue producing PokerPro tables deployed under licensing agreements in cruise ships, international casinos, and domestic casinos. Product sales increased primarily due to increased demand for PokerPro systems from Aristocrat International Pty. Limited and its affiliates, PokerTek's international distributor and a significant shareholder, for use in its international casino business.

Net Loss

PokerTek continues to invest in the development of new markets for both automated casino poker tables and amusement devices. As such, company expenses exceeded revenues in the third quarter and for the first nine months of 2007, resulting in a net loss.

Also contributing to the net loss was an abnormal level of legal and professional fees in the third quarter of 2007 related to (a) patent applications to protect company intellectual property, (b) legal costs related to the investigation of the company's former Chief Financial Officer and (c) charges related to the Tellis lawsuit.

Cash Flow

For the nine months ended September 30, 2007, net cash used for operating activities was $7.6 million, an increase of $1.4 million from $6.2 million for the nine months ended September 30, 2006. Free cash flow, defined as cash flow from operations less capital expenditures, was a use of cash of $10.8 million for the first nine months of 2007, as compared to a use of cash of $7.4 million in the first nine months of 2006.

At September 30, 2007, PokerTek had no debt and approximately $11.1 million in cash and cash equivalents.