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PokerTek Inc. Reports Operating Results (10-K)

March 27, 2012 | About:
10qk

10qk

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PokerTek Inc. (PTEK) filed Annual Report for the period ended 2011-12-31.

Pokertek Inc has a market cap of $7.5 million; its shares were traded at around $0.99 with and P/S ratio of 1.2.

Highlight of Business Operations:

Transfer Agent Our transfer agent is Broadridge Corporate Issuer Solutions, Inc. located at 1717 Arch Street, Suite 1300, Philadelphia, PA 19103, (877) 830-4936. Dividends To date no cash dividends have been paid with respect to our common stock and current policy of the Board is to retain any earnings to provide for growth. The payment of cash dividends in the future, if any, will depend on factors such as earnings levels, capital requirements, our overall financial condition and any other factors deemed relevant by our Board. Recent Sales of Unregistered Securities On June 24, 2010, we entered into a $5 million purchase agreement that was subsequently amended on September 27, 2010 (the “Purchase Agreement”) with Lincoln Park Capital Fund, LLC (“LPC”), an Illinois limited-liability company. In accordance with the Purchase Agreement, LPC, simultaneously with the execution of the Purchase Agreement, purchased from us 40,000 shares of our common stock and a warrant to purchase an additional 40,000 shares of our common stock at $2.75 per share, for an aggregate purchase price of $100,000. The warrant contains a call provision exercisable by us in the event our common stock trades above $7.50 per share for 20 consecutive days. The Purchase Agreement, as amended, provides that we have the right over a 30-month period, or until March 10, 2013, to sell shares of our common stock to LPC every two business days in the amount of $50,000, which amount may be increased under certain circumstances. The purchase price is determined based on the lesser of the lowest sale price on the purchase date or the average of the three lowest closing sale prices during the preceding 12 days. In consideration for entering into the agreement, we issued to LPC 55,000 shares of our common stock and may issue up to 72,000 additional shares of common stock on a pro rata basis only if and when we sell additional shares to LPC. These shares will be held by LPC for 30 months or until such time when the Purchase Agreement is terminated. Since June 24, 2010, we have sold an aggregate of 439,863 shares of our common stock to LPC for aggregate gross proceeds of $574,986, of which 291,549 shares were sold in 2011 resulting in gross proceeds of $324,990. We will control the timing and amount of any future sales of shares to LPC and are under no obligation to sell any additional shares to LPC. The Purchase Agreement may be terminated by us at any time at our discretion and without any cost to us. Except for a limitation on variable priced financings, there are no negative covenants, restrictions on future financing, penalties or liquidated damages in the Purchase Agreement. The proceeds received by us under the Purchase Agreement are expected to be used for working capital purposes. Item 6. Selected Financial Data. The following selected financial data has been derived from audited financial statements for the years ended December 31, 2011, 2010, 2009, 2008 and 2007. The selected financial data set forth below should be read together with Item 7 – “Management s Discussion and Analysis of Financial Condition and Results of Operations”, as well as Item 8 – “Financial Statements and Supplementary Data” and the related notes to those consolidated financial statements appearing elsewhere in this report. 15

Impact of Restatement on Quarterly Results of Operations. During the fourth quarter of 2011, we determined that our previously issued consolidated financial statements for the quarters ended March 31, June 30, and September 30, 2011 should be restated to revise conclusions regarding the application of new revenue recognition guidance. The restatement increased revenues by $0.3 million, gross profit by $0.2 million and decreased net loss from continuing operations and net loss by $0.2 million for both the three month period ended March 31, 2011 and for the nine month period ended September 30, 2011 as compared to the previously reported results. For the quarterly periods ended June 30, 2011 and September 30, 2011, the restatement had a modest impact, and the restatement did not affect Liquidity or Capital Resources for any interim period (see Note 17 “Restatement of Unaudited Interim Consolidated Financial Statements”). On a restated basis, for the three months ended March 31, 2011 revenue increased by 25.3% to $2.0 million from $1.6 million for the three months ended March 31, 2010, as higher license and service fees in Europe, Mexico and other international markets combined with increased revenue from the sale of gaming systems offset a decrease in revenue from Canada. Gross profit increased 48.2% to $1.4 million for the three months ended March 31, 2011 from $0.9 million for the three months ended March 31, 2010 with increased revenue and improvements in gross margins on better asset utilization and lower product costs. Net loss from continuing operations for the three months ended March 31, 2011 improved 66.3% to $0.3 million from $0.8 million for the three months ended March 31, 2010. Net loss for the three months ended March 31, 2011 improved 67.7% to $0.3 million from $0.9 million for the three months ended March 31, 2010. The decreases in net loss and net loss from continuing operations were primarily attributable to the increased revenue and gross margins as discussed above. On a restated basis for the nine month period ended September 30, 2011, revenue increased 19.9% to $5.2 million from $4.3 million for the nine months ended September 30, 2010. Revenue increased primarily due to higher license and service fees from Europe and other international markets combined with increased revenue from gaming system sales. Those increases were partially offset by Mexico where revenue had started to decline prior to our exit from the market during September 2011. Gross profit increased 31.1% to $3.6 million for the nine months ended September 30, 2011 from $2.8 million for the nine months ended September 30, 2010 due to increased revenue combined with improved asset utilization and reduced product costs. Net loss from continuing operations for the nine months ended September 30, 2011 improved 48.6% to $1.2 million from $2.4 million for the nine months ended September 30, 2010. Net loss for the nine months ended September 30, 2011 improved 65.5% to $1.2 million from $3.5 million for the nine months ended September 30, 2010. The decreases in net loss and net loss from continuing operations were primarily attributable to the increased revenue and gross margins as discussed above.

Impact of Restatement on Quarterly Results of Operations. During the fourth quarter of 2011, we determined that our previously issued consolidated financial statements for the quarters ended March 31, June 30, and September 30, 2011 should be restated to revise conclusions regarding the application of new revenue recognition guidance. The restatement increased revenues by $0.3 million, gross profit by $0.2 million and decreased net loss from continuing operations and net loss by $0.2 million for both the three month period ended March 31, 2011 and for the nine month period ended September 30, 2011 as compared to the previously reported results. For the quarterly periods ended June 30, 2011 and September 30, 2011, the restatement had a modest impact, and the restatement did not affect Liquidity or Capital Resources for any interim period (see Note 17 “Restatement of Unaudited Interim Consolidated Financial Statements”). On a restated basis, for the three months ended March 31, 2011 revenue increased by 25.3% to $2.0 million from $1.6 million for the three months ended March 31, 2010, as higher license and service fees in Europe, Mexico and other international markets combined with increased revenue from the sale of gaming systems offset a decrease in revenue from Canada. Gross profit increased 48.2% to $1.4 million for the three months ended March 31, 2011 from $0.9 million for the three months ended March 31, 2010 with increased revenue and improvements in gross margins on better asset utilization and lower product costs. Net loss from continuing operations for the three months ended March 31, 2011 improved 66.3% to $0.3 million from $0.8 million for the three months ended March 31, 2010. Net loss for the three months ended March 31, 2011 improved 67.7% to $0.3 million from $0.9 million for the three months ended March 31, 2010. The decreases in net loss and net loss from continuing operations were primarily attributable to the increased revenue and gross margins as discussed above. On a restated basis for the nine month period ended September 30, 2011, revenue increased 19.9% to $5.2 million from $4.3 million for the nine months ended September 30, 2010. Revenue increased primarily due to higher license and service fees from Europe and other international markets combined with increased revenue from gaming system sales. Those increases were partially offset by Mexico where revenue had started to decline prior to our exit from the market during September 2011. Gross profit increased 31.1% to $3.6 million for the nine months ended September 30, 2011 from $2.8 million for the nine months ended September 30, 2010 due to increased revenue combined with improved asset utilization and reduced product costs. Net loss from continuing operations for the nine months ended September 30, 2011 improved 48.6% to $1.2 million from $2.4 million for the nine months ended September 30, 2010. Net loss for the nine months ended September 30, 2011 improved 65.5% to $1.2 million from $3.5 million for the nine months ended September 30, 2010. The decreases in net loss and net loss from continuing operations were primarily attributable to the increased revenue and gross margins as discussed above.

On a restated basis, for the three months ended March 31, 2011 revenue increased by 25.3% to $2.0 million from $1.6 million for the three months ended March 31, 2010, as higher license and service fees in Europe, Mexico and other international markets combined with increased revenue from the sale of gaming systems offset a decrease in revenue from Canada. Gross profit increased 48.2% to $1.4 million for the three months ended March 31, 2011 from $0.9 million for the three months ended March 31, 2010 with increased revenue and improvements in gross margins on better asset utilization and lower product costs. Net loss from continuing operations for the three months ended March 31, 2011 improved 66.3% to $0.3 million from $0.8 million for the three months ended March 31, 2010. Net loss for the three months ended March 31, 2011 improved 67.7% to $0.3 million from $0.9 million for the three months ended March 31, 2010. The decreases in net loss and net loss from continuing operations were primarily attributable to the increased revenue and gross margins as discussed above.

On a restated basis for the nine month period ended September 30, 2011, revenue increased 19.9% to $5.2 million from $4.3 million for the nine months ended September 30, 2010. Revenue increased primarily due to higher license and service fees from Europe and other international markets combined with increased revenue from gaming system sales. Those increases were partially offset by Mexico where revenue had started to decline prior to our exit from the market during September 2011. Gross profit increased 31.1% to $3.6 million for the nine months ended September 30, 2011 from $2.8 million for the nine months ended September 30, 2010 due to increased revenue combined with improved asset utilization and reduced product costs. Net loss from continuing operations for the nine months ended September 30, 2011 improved 48.6% to $1.2 million from $2.4 million for the nine months ended September 30, 2010. Net loss for the nine months ended September 30, 2011 improved 65.5% to $1.2 million from $3.5 million for the nine months ended September 30, 2010. The decreases in net loss and net loss from continuing operations were primarily attributable to the increased revenue and gross margins as discussed above.

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