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PokerTek reports results

Fourth Quarter Financial Results

Q4 Highlights

• Installed 47 tables during the quarter
• Quarterly license fee revenue increased sequentially by 44.3%, from $135,000 to $195,000
• Introduced several PokerPro® product enhancements, including the PokerPro® Heads-Up(TM) table, the addition of Omaha and the ability to run multi-table tournaments.

"We made significant progress toward our goals both during the fourth quarter and throughout 2006," stated Lou White, PokerTek's Chief Executive Officer. "We expanded our customer base from two customers in 2005 to sixteen customers at over 30 sites, bringing our total installed systems to 77 PokerPro tables. We continue to build a strong pipeline both domestically and internationally and anticipate continued growth during fiscal 2007. We are excited about the potential of our new product features, which are designed to make PokerPro more enjoyable for players and more profitable for operators. We continued to invest in the protection of our intellectual property by filing an additional 13 patent applications during the quarter, which brings our total patent applications to 50."

Revenues from both license fees and equipment sales relating to the PokerPro system totaled approximately $954,000 during the three-month period ended December 31, 2006, up from approximately $267,000 in the same period in 2005. Revenues consisted of aggregate license fees for the three-month period ended December 31, 2006 and the same period in 2005 of approximately $195,000 and $228,000, respectively.

The quarterly net loss increased to approximately $3,007,000 from approximately $1,249,000 in the same period in 2005, creating a net loss per common share, basic and diluted, of ($0.32) compared to ($0.14) for the fourth quarter of fiscal year 2005. The increases in the following factors were the primary components affecting the increased loss for the fourth quarter of 2006 as compared to the fourth quarter of 2005: research and development related to the PokerPro Heads-Up table as well as continued product enhancements; employees' salaries and benefits; costs associated with being a public company; fees related to compliance with licensing and regulatory requirements; depreciation expense primarily related to the PokerPro systems in place; travel expenses, primarily related to sales opportunities and trade shows; and advertising and marketing the PokerPro system.

Year-to-Date Financial Results

Revenues from both license fees and equipment sales totaled approximately $1,980,000, up from approximately $314,000 in the same period in 2005. Revenues consisted of: aggregate license fees for the year-ended December 31, 2006 and the same period in 2005 of approximately $824,000 and $270,000, respectively, and the remainder of revenue is primarily from equipment sales to our international distributor, Aristocrat International Pty. Limited.

The net loss increased to approximately $9,146,000 from approximately $3,701,000 in the same period in 2005, creating a net loss per common share, basic and diluted, of ($0.97) compared to ($0.49) for fiscal year 2005. The increases in the following factors were the primary components affecting the increased loss fiscal year 2006 as compared 2005: research and development related to the PokerPro Heads-Up table as well as continued product enhancements; employees' salaries and benefits; costs associated with being a public company; fees related to compliance with licensing and regulatory requirements; depreciation expense primarily related to the PokerPro systems in place; travel expenses, primarily related to sales opportunities and trade shows; advertising and marketing the PokerPro system; and non-cash stock option expense recorded in accordance with Statement of Financial Accounting Standards No. 123R. Partially offsetting the increase in expenses was an increase in interest income. At December 31, 2006, PokerTek had no debt and approximately $9.4 million total cash and cash equivalents.

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