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PokerTek Inc. Reports Operating Results (10-K/A)

July 16, 2010 | About:

PokerTek Inc. (PTEK) filed Amended Annual Report for the period ended 2009-12-31.

Pokertek Inc. has a market cap of $10.7 million; its shares were traded at around $0.728 with and P/S ratio of 1.6.

Highlight of Business Operations:

ICP Electronics is the holder of 4.89% of the issued and outstanding shares of Common Stock of the Company following a stock purchase transaction whereby the Company issued 565,000 shares of Common Stock in exchange for inventory valued at $480,250 based on a share price of $0.85 per share, which was the closing bid price on the day preceding the transaction. In connection with the stock purchase, the Company agreed to schedule its remaining purchase commitment with 24 monthly payments of $39,389 starting October 2009, with such payments being made in exchange for title to additional inventory. As of October 9, 2009, the Company agreed to sell 120,000 shares of its common stock to ICP Electronics pursuant to the Stock Purchase Agreement dated July 31, 2009. The shares were valued at a price of $0.90 per share and were exchanged with ICP Electronics in payment for products and services.

On September 3, 2009, Lyle A. Berman, Chairman of PokerTek s Board of Directors, participated in a private placement of the Company s Common Stock. Mr. Berman invested $250,000 to purchase 328,947 shares at $0.76, the consolidated closing bid price immediately preceding the transaction.

The Company currently leases its office and manufacturing facility from an entity owned and controlled by the Company s President and Vice Chairman of the Board of Directors. The entity purchased the building while the Company was already a tenant. The lease terms were negotiated and are consistent with the rent paid by other tenants in the building. Rent expense recorded for the leased space for the years ended December 31, 2009, 2008 and 2007 was $188,900, $219,600 and $160,766, respectively.

On September 10, 2009, the Company entered into an agreement with Lyle A. Berman, James T. Crawford and Arthur L. Lomax to convert an aggregate $1.2 million principal amount of the loans into common stock. Gehrig H. White and Arthur L. Lomax continue to hold $500,000 and $300,000 principal amounts, respectively, of the loans.

Rent expense for the years ended December 31, 2009, 2008 and 2007 was $232,921, $261,688 and $192,636, respectively.

On August 21, 2009, a complaint was filed against the Company in the United States District Court for the District of Nevada by Marvin Roy Feldman. The plaintiff is seeking unspecified monetary damages related to the Company's distribution of PokerPro in Mexico. Prior to filing the complaint, the plaintiff provided correspondence to the Company requesting $250,000 or four PokerPro tables as compensation. While litigation is inherently unpredictable and subject to judicial and other risks beyond our control, we estimate the potential cost of this matter to range between $0 and $250,000. We believe that we have several meritorious defenses to these claims, and we intend to defend ourselves vigorously.

Read the The complete Report

About the author:

Charlie Tian, Ph.D. - Founder of GuruFocus. You can now order his book Invest Like a Guru on Amazon.

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