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Share Name | Share Symbol | Market | Type |
---|---|---|---|
(MM) | NASDAQ:PTEK | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 1.35 | 0 | 01:00:00 |
PokerTek, Inc.
|
North Carolina
|
61-1455265
|
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
|
1150 Crews Road, Suite F, Matthews, North Carolina 28105
|
||
(Address of principal executive offices) (Zip Code)
|
(704) 849-0860
|
(Registrant’s telephone number, including area code)
|
o |
Large accelerated filer
|
o |
Accelerated filer
|
|
o |
Non-accelerated filer (do not check if a smaller reporting company)
|
x |
Smaller reporting company
|
CONSOLIDATED STATEMENTS OF OPERATIONS
|
||||||||
AND OTHER COMPREHENSIVE LOSS
|
||||||||
(Unaudited)
|
||||||||
Three Months Ended March 31,
|
||||||||
2014
|
2013
|
|||||||
Revenue
|
||||||||
License and service fees
|
$ | 1,083,881 | $ | 1,360,670 | ||||
Sales of systems and equipment
|
30,701 | 30,451 | ||||||
Total revenue
|
1,114,582 | 1,391,121 | ||||||
Cost of revenue
|
271,503 | 353,549 | ||||||
Gross profit
|
843,079 | 1,037,572 | ||||||
Operating expenses:
|
||||||||
Selling, general and administrative
|
898,932 | 946,780 | ||||||
Research and development
|
157,950 | 168,427 | ||||||
Share-based compensation expense
|
61,446 | 70,778 | ||||||
Depreciation
|
2,416 | 2,323 | ||||||
Total operating expenses
|
1,120,744 | 1,188,308 | ||||||
Operating loss
|
(277,665 | ) | (150,736 | ) | ||||
Interest expense, net
|
8,258 | 10,543 | ||||||
Net loss from continuing operations before income taxes
|
(285,923 | ) | (161,279 | ) | ||||
Income tax provision
|
- | 34,081 | ||||||
Net loss from continuing operations
|
(285,923 | ) | (195,360 | ) | ||||
Income from discontinued operations
|
- | 535 | ||||||
Net loss
|
$ | (285,923 | ) | $ | (194,825 | ) | ||
Other comprehensive loss:
|
||||||||
Adjustments to net loss
|
- | - | ||||||
Comprehensive loss
|
$ | (285,923 | ) | $ | (194,825 | ) | ||
Net loss from continuing operations per common share - basic and diluted
|
$ | (0.03 | ) | $ | (0.02 | ) | ||
Net income (loss) from discontinued operations per common share - basic and diluted
|
- | - | ||||||
Net loss per common share - basic and diluted
|
$ | (0.03 | ) | $ | (0.02 | ) | ||
Weighted average common shares outstanding - basic and diluted
|
9,363,434 | 8,491,315 | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
|
CONSOLIDATED BALANCE SHEETS
|
||||||||
(Unaudited)
|
||||||||
March 31, 2014
|
December 31, 2013
|
|||||||
Assets
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$ | 576,719 | $ | 415,533 | ||||
Accounts receivable, net
|
445,294 | 793,949 | ||||||
Inventory
|
825,473 | 869,631 | ||||||
Prepaid expenses and other assets
|
120,742 | 90,314 | ||||||
Total current assets
|
1,968,228 | 2,169,427 | ||||||
Long-term assets:
|
||||||||
Inventory
|
645,844 | 545,070 | ||||||
Gaming systems, net
|
1,087,422 | 1,224,931 | ||||||
Property and equipment, net
|
27,767 | 27,724 | ||||||
Other assets
|
116,080 | 110,740 | ||||||
Total long-term assets
|
1,877,113 | 1,908,465 | ||||||
Total assets
|
$ | 3,845,341 | $ | 4,077,892 | ||||
Liabilities and Shareholders' Equity
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$ | 208,593 | $ | 243,960 | ||||
Accrued liabilities
|
374,800 | 310,126 | ||||||
Deferred revenue
|
8,556 | 20,051 | ||||||
Long-term debt, current portion
|
72,427 | 70,822 | ||||||
Total current liabilities
|
664,376 | 644,959 | ||||||
Long-term liabilities:
|
||||||||
Long-term liability
|
158,752 | 167,523 | ||||||
Long-term debt
|
150,887 | 169,607 | ||||||
Total long-term liabilities
|
309,639 | 337,130 | ||||||
Total liabilities
|
974,015 | 982,089 | ||||||
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 100,000,000
|
- | - | ||||||
shares, issued and outstanding 9,363,434 and 9,363,434 shares at
|
||||||||
March 31, 2014 and December 31, 2013, respectively
|
||||||||
Additional paid-in capital
|
50,417,354 | 50,355,908 | ||||||
Accumulated deficit
|
(47,546,028 | ) | (47,260,105 | ) | ||||
Accumulated other comprehensive loss, net
|
- | - | ||||||
Total shareholders' equity
|
2,871,326 | 3,095,803 | ||||||
Total liabilities and shareholders' equity
|
$ | 3,845,341 | $ | 4,077,892 | ||||
The accompanying notes are an integral part of these consolidated financial statements.
|
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
|
||||||||||||||||||||||||
(Unaudited)
|
||||||||||||||||||||||||
Common Stock
|
Additional Paid-in Capital
|
Accumulated Deficit
|
Accumulated Other Comprehensive Income (Loss)
|
Total Shareholders' Equity
|
||||||||||||||||||||
Shares
|
Value
|
|||||||||||||||||||||||
Balance, December 31, 2013
|
9,363,434 | $ | - | $ | 50,355,908 | $ | (47,260,105 | ) | $ | - | $ | 3,095,803 | ||||||||||||
Issuances of common stock, net
|
- | - | - | - | - | - | ||||||||||||||||||
Share-based compensation, net
|
- | - | 61,446 | - | - | 61,446 | ||||||||||||||||||
Net loss
|
- | - | - | (285,923 | ) | - | (285,923 | ) | ||||||||||||||||
Balance, March 31, 2014
|
9,363,434 | $ | - | $ | 50,417,354 | $ | (47,546,028 | ) | $ | - | $ | 2,871,326 | ||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
||||||||
(Unaudited)
|
||||||||
Three Months Ended March 31,
|
||||||||
2014
|
2013
|
|||||||
Cash flows from operating activities:
|
||||||||
Net loss
|
$ | (285,923 | ) | $ | (194,825 | ) | ||
Net income (loss) from discontinued operations
|
- | (535 | ) | |||||
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||||||
Depreciation and amortization
|
158,869 | 199,419 | ||||||
Share-based compensation expense
|
61,446 | 70,778 | ||||||
Provision for doubtful accounts and other receivables
|
30,364 | 49,065 | ||||||
Changes in assets and liabilities:
|
||||||||
Accounts and other receivables
|
318,291 | 196,435 | ||||||
Prepaid expenses and other assets
|
(35,768 | ) | (60,957 | ) | ||||
Inventory
|
(56,616 | ) | 54,880 | |||||
Gaming systems
|
(18,944 | ) | (177,256 | ) | ||||
Accounts payable and accrued expenses
|
20,536 | 106,901 | ||||||
Deferred revenue
|
(11,495 | ) | 105,234 | |||||
Net cash provided by operating activities from continuing operations
|
180,760 | 349,139 | ||||||
Net cash provided by operating activities from discontinued operations
|
- | 535 | ||||||
Net cash used in operating activities
|
180,760 | 349,674 | ||||||
Cash flows from investing activities:
|
||||||||
Purchases of property and equipment
|
(2,459 | ) | - | |||||
Net cash used in investing activities
|
(2,459 | ) | - | |||||
Cash flows from financing activities:
|
||||||||
Proceeds from issuance of common stock, net of expenses
|
- | 473,800 | ||||||
Repayments of long-term debt
|
(17,115 | ) | (10,470 | ) | ||||
Net cash used in financing activities
|
(17,115 | ) | 463,330 | |||||
Net increase (decrease) in cash and cash equivalents
|
161,186 | 813,004 | ||||||
Cash and cash equivalents, beginning of year
|
415,533 | 235,757 | ||||||
Cash and cash equivalents, end of period
|
$ | 576,719 | $ | 1,048,761 | ||||
Supplemental Disclosure of Cash Flow Information
|
||||||||
Cash paid for:
|
||||||||
Interest
|
$ | 5,282 | $ | 17,361 | ||||
Income taxes
|
- | 33,291 | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
|
|
·
|
the pace of growth in the Company’s recurring-revenue gaming business, the related investments in inventory and level of spending on development and regulatory efforts;
|
|
·
|
the level of investment in development and approval of new products, entry into new markets, and investments in regulatory approvals;
|
|
·
|
its ability to control growth of operating expenses as it grows the business and expands with new products in new markets;
|
|
·
|
its ability to negotiate and maintain favorable payment terms with customers and vendors;
|
|
·
|
its ability to access the capital markets and maintain availability under its credit line;
|
|
·
|
demand for its products, and the ability of its customers to pay on a timely basis; and
|
|
·
|
general economic conditions as well as political events and legal and regulatory changes.
|
Three Months Ended
|
||||||||
March 31,
|
||||||||
2014
|
2013
|
|||||||
Revenue
|
$ | - | $ | 535 | ||||
Cost of revenue
|
- | - | ||||||
Gross profit
|
- | 535 | ||||||
Operating expenses
|
- | - | ||||||
Net income from discontinued operations
|
$ | - | $ | 535 |
March 31,
|
December 31,
|
|||||||
2014
|
2013
|
|||||||
Accounts receivable
|
$ | 592,629 | $ | 910,920 | ||||
Allowance for doubtful accounts
|
(147,335 | ) | (116,971 | ) | ||||
Accounts receivable, net
|
$ | 445,294 | $ | 793,949 |
March 31,
|
December 31,
|
|||||||
2014
|
2013
|
|||||||
Raw materials and components
|
$ | 1,164,444 | $ | 1,182,150 | ||||
Gaming systems in process
|
297,274 | 331,536 | ||||||
Finished goods
|
225,239 | 116,114 | ||||||
Reserve
|
(215,640 | ) | (215,099 | ) | ||||
Inventory, net
|
$ | 1,471,317 | $ | 1,414,701 | ||||
Long-Term Inventory
|
645,844 | 545,070 | ||||||
Current Inventory
|
$ | 825,473 | $ | 869,631 |
March 31,
|
December 31,
|
|||||||
2014
|
2013
|
|||||||
Prepaid expenses
|
$ | 89,741 | $ | 62,924 | ||||
Other
|
31,001 | 27,390 | ||||||
Prepaid expenses and other assets
|
$ | 120,742 | $ | 90,314 | ||||
Deferred licensing fees, net
|
$ | 65,900 | $ | 60,560 | ||||
Other
|
50,180 | 50,180 | ||||||
Other assets
|
$ | 116,080 | $ | 110,740 |
March 31,
|
December 31,
|
|||||||
2014
|
2013
|
|||||||
Gaming systems
|
$ | 6,749,372 | $ | 6,716,864 | ||||
Less: accumulated depreciation
|
(5,661,950 | ) | (5,491,933 | ) | ||||
Gaming systems, net
|
$ | 1,087,422 | $ | 1,224,931 |
March 31,
|
December 31,
|
|||||||
2014
|
2013
|
|||||||
Equipment
|
$ | 464,863 | $ | 462,404 | ||||
Leasehold improvements
|
208,387 | 208,387 | ||||||
Capitalized software
|
157,067 | 157,067 | ||||||
830,317 | 827,858 | |||||||
Less: accumulated depreciation
|
(802,550 | ) | (800,134 | ) | ||||
Property and equipment, net
|
$ | 27,767 | $ | 27,724 |
March 31,
|
December 31,
|
|||||||
2014
|
2013
|
|||||||
Inventory received, not invoiced
|
164,846 | 156,075 | ||||||
Other liabilities and customer deposits
|
209,954 | 154,051 | ||||||
Accrued liabilities
|
$ | 374,800 | $ | 310,126 |
March 31,
|
December 31,
|
|||||||
2014
|
2013
|
|||||||
SVB Credit Facility
|
$ | - | $ | - | ||||
Founders' Loan
|
223,314 | 240,429 | ||||||
Total debt
|
223,314 | 240,429 | ||||||
Current portion of debt
|
72,427 | 70,822 | ||||||
Long-term portion of debt
|
$ | 150,887 | $ | 169,607 |
|
·
|
20,000 common stock warrants at an exercise price of $2.50 with an expiration date of March 31, 2015 issued in connection with a private placement in May 2010; and
|
|
·
|
40,000 common stock warrants at an exercise price of $2.75 with an expiration date of December 29, 2015 issued in connection with the LPC transaction.
|
March 31,
|
December 31,
|
||
2014
|
2013
|
||
Expected Volatility
|
93%
|
94% - 97%
|
|
Expected Dividends
|
0
|
0
|
|
Expected Term
|
6 yrs
|
6 yrs
|
|
Risk-free Rate
|
1.15%
|
0.82% - 1.60%
|
Weighted Average
|
||||||||||||||||
Shares
|
Exercise Price
|
Remaining Contractual Term
|
Aggregate Intrinsic Value
|
|||||||||||||
Stock Options
|
||||||||||||||||
Outstanding at December 31, 2013
|
724,720 | $ | 4.68 | |||||||||||||
Granted
|
- | - | ||||||||||||||
Exercised
|
- | |||||||||||||||
Forfeited
|
- | - | ||||||||||||||
Expired
|
- | - | ||||||||||||||
Outstanding at March 31, 2014
|
724,720 | $ | 4.68 | 5.3 | $ | (2,630,875 | ) | |||||||||
Exercisable at March 31, 2014
|
715,316 | $ | 4.37 | 5.3 | $ | (2,377,417 | ) |
Weighted Average
|
|||||||||
Restricted Stock Units (RSUs)
|
Shares
|
Remaining Contractual Term
|
Grant Date Fair Value
|
||||||
Nonvested at December 31, 2013
|
253,312 | $ | 189,984 | ||||||
Granted
|
300,000 | 345,000 | |||||||
Vested
|
- | ||||||||
Forfeited
|
- | ||||||||
Nonvested at March 31, 2014
|
553,312 |
4.2
|
$ | 534,984 |
For Three Months Ended March 31,
|
||||||||
2014
|
2013
|
|||||||
Revenue:
|
||||||||
United States
|
$ | 801,899 | $ | 991,707 | ||||
Other Americas
|
268,675 | 371,506 | ||||||
Europe
|
32,633 | 15,150 | ||||||
Other International
|
11,375 | 12,758 | ||||||
$ | 1,114,582 | $ | 1,391,121 | |||||
March 31, 2014
|
December 31, 2013
|
|||||||
Long-lived assets, end of period:
|
||||||||
United States
|
$ | 434,957 | $ | 450,714 | ||||
Other America's
|
611,979 | 718,982 | ||||||
Europe
|
145,899 | 157,035 | ||||||
Other International
|
38,434 | 36,664 | ||||||
$ | 1,231,269 | $ | 1,363,395 |
Three Months Ended March 31,
|
||||||||||||
2014
|
2013
|
Change
|
||||||||||
Revenue
|
||||||||||||
License and service fees
|
$ | 1,083,881 | $ | 1,360,670 | (20.3 | %) | ||||||
Sales of systems and equipment
|
30,701 | 30,451 | 0.8 | % | ||||||||
Total revenue
|
1,114,582 | 1,391,121 | (19.9 | %) | ||||||||
Gross profit
|
843,079 | 1,037,572 | (18.7 | %) | ||||||||
Percentage of revenue
|
75.6 | % | 74.6 | % | ||||||||
Operating expenses
|
1,120,744 | 1,188,308 | (5.7 | %) | ||||||||
Interest expense, net
|
8,258 | 10,543 | (21.7 | %) | ||||||||
Income tax provision
|
- | 34,081 | (100.0 | %) | ||||||||
Net loss from continuing operations
|
(285,923 | ) | (195,360 | ) | (46.4 | %) | ||||||
Net loss from discontinued operations
|
- | 535 | (100.0 | %) | ||||||||
Net loss
|
$ | (285,923 | ) | $ | (194,825 | ) | (46.8 | %) |
Three Months Ended March 31,
|
||||||||||||
2014
|
2013
|
Change
|
||||||||||
Continuing Operations:
|
||||||||||||
Net cash provided by operating activities
|
$ | 180,760 | $ | 349,139 | $ | (168,379 | ) | |||||
Net cash used in investing activities
|
(2,459 | ) | - | (2,459 | ) | |||||||
Net cash used in/provided by financing activities
|
(17,115 | ) | 463,330 | (480,445 | ) | |||||||
Net cash provided by continuing operations
|
161,186 | 812,469 | (651,283 | ) | ||||||||
Net cash provided by operating activities of discontinued operations
|
- | 535 | $ | (535 | ) | |||||||
Net increase in cash and cash equivalents
|
161,186 | 813,004 | ||||||||||
Cash and cash equivalents, beginning of period
|
415,533 | 235,757 | ||||||||||
Cash and cash equivalents, end of period
|
$ | 576,719 | $ | 1,048,761 |
|
·
|
the pace of growth in our recurring-revenue gaming business, the related investments in inventory and level of spending on development and regulatory efforts;
|
|
·
|
the level of investment in development and approval of new products, entry into new markets, and investments in regulatory approvals;
|
|
·
|
our ability to control growth of operating expenses as we grow the business, expand with new products in new markets;
|
|
·
|
our ability to negotiate and maintain favorable payment terms with our customers and vendors;
|
|
·
|
our ability to access the capital markets and maintain availability under our credit line;
|
|
·
|
demand for our products, and the ability of our customers to pay us on a timely basis; and
|
|
·
|
general economic conditions as well as political events and legal and regulatory changes.
|
Total
|
Less than
1 year
|
1 - 3 years
|
3 - 5 years
|
More than
5 years
|
||||||||||||||||
Debt obligations
(1)
|
$ | 223,314 | $ | 72,427 | $ | 150,887 | $ | - | $ | - | ||||||||||
Operating lease obligations
(2)
|
330,701 | 136,548 | 194,153 | - | - | |||||||||||||||
Purchase obligations
(3)
|
476,166 | 476,166 | - | - | - | |||||||||||||||
Other long-term liabilities
(4)
|
323,598 | 164,846 | 158,752 | - | - | |||||||||||||||
Total
|
$ | 1,353,779 | $ | 849,987 | $ | 503,792 | $ | - | $ | - | ||||||||||
(1) Represents the outstanding principal amount and interest on our Founders' Loan
|
||||||||||||||||||||
(2) Represents operating lease agreements for office and storage facilities and office equipment
|
||||||||||||||||||||
(3) Represents open purchase orders with our vendors
|
||||||||||||||||||||
(4) Represents purchase of gaming inventory from Aristocrat
|
|
·
|
the occurrence of any event, change or other circumstance that could give rise to the termination of the Merger Agreement;
|
|
·
|
the inability to complete the Merger due to the failure to obtain shareholder approval or the failure to satisfy other conditions required for the consummation of the Merger;
|
|
·
|
failure or delay in consummation of the Merger for other reasons;
|
|
·
|
that the proposed transaction disrupts current plans and operations;
|
|
·
|
the effect of the announcement of the Merger on our customer relationships, operating results and business generally;
|
|
·
|
the diversion of our management’s attention from our ongoing business concerns;
|
|
·
|
the outcome of any legal proceedings that may be instituted against us and/or others relating to the Merger Agreement;
|
|
·
|
limitations placed on our ability to operate the business by the Merger Agreement; and
|
|
·
|
the amounts of the costs, fees, expenses and charges related to the Merger.
|
Exhibit No.
|
Description
|
|||||||||
10.1
|
Eighth Amendment to the Loan and Security Agreement, dated February 27, 2014, between the Registrant and Silicon Valley Bank (incorporated by reference to Exhibit 10.1 from our Form 8-K filed on March 4, 2014).
|
|||||||||
10.2**
|
Employment Agreement, dated March 4, 2014, between the Registrant and Mark Roberson (incorporated by reference to Exhibit 10.2 from our Form 8-K filed on March 4, 2014).**
|
|||||||||
10.3**
|
Employment Agreement, dated March 4, 2014, between the Registrant and James Crawford (incorporated by reference to Exhibit 10.3 from our Form 8-K filed on March 4, 2014).**
|
|||||||||
10.4**
|
April 22, 2014 Amendment to Employment Letter Dated March 4, 2014 between PokerTek, Inc. and Mark Roberson (incorporated by reference to Exhibit 10.45 from our Form 10-K/A for the year ended December 31, 2013 filed on April 29, 2014).**
|
|||||||||
10.5**
|
April 22, 2014 Amendment to Employment Letter Dated March 4, 2014 between PokerTek, Inc. and James Crawford (incorporated by reference to Exhibit 10.46 from our Form 10-K/A for the year ended December 31, 2013 filed on April 29, 2014).**
|
|||||||||
31.1
|
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
|
|||||||||
31.2
|
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
|
|||||||||
32.1
|
Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
|
|||||||||
101.INS
|
XBRL Instance Document*
|
|||||||||
101.SCH
|
XBRL Taxonomy Extension Schema*
|
|||||||||
101.CAL
|
XBRL Taxonomy Calculation Linkbase*
|
|||||||||
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase*
|
|||||||||
101.LAB
|
XBRL Taxonomy Extension label Linkbase*
|
|||||||||
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase*
|
|||||||||
*Filed herewith.
|
||||||||||
**This exhibit is a management contract or compensatory plan or arrangement.
|
POKERTEK, INC.
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||
Date: May 15, 2014
|
||
/s/ Mark D. Roberson
|
||
Mark D. Roberson
|
||
Chief Executive Officer and Chief Financial Officer
|
||
(Principal Executive Officer and Principal Financial Officer)
|
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