		Page
PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements	1

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	20

Item 4T.	Controls and Procedures	20

PART II – OTHER INFORMATION

Item 1.	Risk Factors	21

Item 6.	Exhibits	22

Signatures		22

Exhibit Index		23

POKERTEK, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,
	2009			2008			2009			2008
Revenue:
License and service fees		1,205,253		$	1,420,263		$	2,593,154		$	2,941,939
Product sales		313,779			2,419,827			1,061,746			4,099,647
Total revenue		1,519,032			3,840,090			3,654,900			7,041,586

Direct cost of revenue:
Depreciation of Pokerpro assets		672,168			658,583			1,338,408			1,226,578
Cost of product sales		265,140			1,724,940			878,438			2,953,873
Total direct cost of revenue		937,308			2,383,523			2,216,846			4,180,451

Operating Expenses:
Selling, general and administrative		1,631,256			2,303,225			3,488,513			4,698,341
Research and development		295,495			666,228			655,321			1,532,568
Share-based compensation expense		111,131			227,804			369,377			523,632
Depreciation		66,290			50,522			130,548			99,985
Total operating expenses		2,104,172			3,247,779			4,643,759			6,854,526

Operating loss		(1,522,448	)		(1,791,212	)		(3,205,705	)		(3,993,391	)

Interest income (expense), net		(96,564	)		(39,357	)		(181,271	)		26,498

Net loss before income taxes		(1,619,012	)		(1,830,569	)		(3,386,976	)		(3,966,893	)

Income tax provision		(21,421	)		(123,473	)		(63,970	)		(123,473	)

Net loss	$	(1,640,433	)	$	(1,954,042	)	$	(3,450,946	)	$	(4,090,366	)


Net loss per common share - basic and diluted	$	(0.15	)	$	(0.18	)	$	(0.31	)	$	(0.37	)

Weighted average common shares outstanding - basic and diluted		11,021,429			10,934,464			11,021,429			10,934,464

POKERTEK, INC.

CONSOLIDATED BALANCE SHEETS


	June 30, 2009
Assets	(unaudited)			December 31, 2008
Current assets:
Cash and cash equivalents	$	1,131,204		$	1,481,530
Investments		-			3,900,000
Accounts receivable, net		844,041			1,600,464
Inventory		2,957,221			3,547,099
Prepaid expenses and other assets		146,193			213,222
Total current assets		5,078,659			10,742,315

Other assets:
PokerPro systems, net		2,790,721			3,821,376
Property and equipment, net		518,673			599,772
Other assets		480,349			542,214

Total assets	$	8,868,402		$	15,705,677

Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable	$	935,955		$	1,590,681
Accrued liabilities		829,280			1,053,230
Long-term debt, current portion		2,025,044			2,889,261
Total current liabilities		3,790,279			5,533,172

Long-term debt		25,821			2,038,635

Total liabilities		3,816,100			7,571,807

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 11,021,429 shares at June 30, 2009 and December 31, 2008		-			-
Additional paid-in capital		42,828,711			42,459,333
Accumulated deficit		(37,776,409	)		(34,325,463	)
Total shareholders' equity		5,052,302			8,133,870

Total liabilities and shareholders' equity	$	8,868,402		$	15,705,677

POKERTEK, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)


	Six months ended June 30,
	2009			2008
Cash flows from operating activities:
Net loss	$	(3,450,946	)	$	(4,090,366	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		1,468,956			1,326,563
Share-based compensation expense		369,377			523,632
Provision for accounts and other receivables		26,705			-
Changes in assets and liabilities:
Accounts and other receivables		729,718			(1,053,519	)
Prepaid expenses and other assets		128,895			36,790
Inventory		589,878			(187,976	)
PokerPro systems		(307,753	)		(549,493	)
Accounts payable and accrued expenses		(878,676	)		948,597
Net cash used in operating activities		(1,323,846	)		(3,045,772	)
Cash flows from investing activities:
Purchases of property and equipment		(49,449	)		(63,481	)
Sale of investments		3,900,000			2,050,000
Net cash provided by investing activities		3,850,551			1,986,519
Cash flows from financing activities:
Proceeds from long-term debt		-			2,000,000
Proceeds from short-term debt		-			1,000,000
Repayments of short-term debt		(2,865,357	)		-
Repayments of capital lease		(11,674	)		(1,548	)
Net cash provided by (used in) financing activities		(2,877,031	)		2,998,452
Net increase (decrease) in cash and cash equivalents		(350,326	)		1,939,199
Cash and cash equivalents, beginning of year		1,481,530			1,229,980
Cash and cash equivalents, end of period	$	1,131,204		$	3,169,179

Supplemental Disclosure of Cash Flow Information
Cash paid for:
Interest	$	130,660		$	51,776
Income taxes	$	45,086		$	77,255

Non-cash transaction:
Capital lease obligation	$	-		$	52,034

The PokerPro system consists of electronic poker table(s) and related peripheral equipment providing commercial casinos, tribal casinos, cruise ships and card clubs with a fully-automated poker-room environment designed to improve the profitability of poker by enhancing the operator’s revenue opportunities and decreasing startup and operating costs. Heads-Up Challenge™ is an innovative amusement platform that enables two players to compete head to head against each other for entertainment purposes in non-gambling venues such as bars and restaurants.

These consolidated financial statements should be read in conjunction with the consolidated financial statements and related footnotes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2008. Certain reclassifications have been made to prior periods’ financial information to conform to the current period presentation. There were no material changes during the most recent fiscal quarter in the Company’s significant accounting policies as described in the Annual Report.

The accompanying consolidated financial statements have been prepared without audit and are presented in accordance with Article 8-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles in the United States (“U.S. GAAP”) for annual financial statements. In the opinion of management, these consolidated financial statements include all adjustments, which consist only of normal recurring adjustments, necessary for a fair statement of the Company’s results of operations for the periods presented. The results of operations for the three and six months ended June 30, 2009 are not necessarily indicative of the results to be expected for the entire year.

In June 2009, the FASB issued Statement of Financial Accounting Standard No. 168 (“FAS 168”), The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles. FAS 168 establishes the FASB Accounting Standards Codification as the single source of authoritative non-governmental GAAP. This statement is effective for interim and annual reporting periods ending after September 15, 2009, and we do not expect the adoption to have any effect on the Company's results of operations, financial condition, or cash flows.

In May 2009, the FASB issued Statement of Financial Accounting Standard No. 165 (“FAS 165”), Subsequent Events. FAS 165 requires disclosures regarding subsequent events for events or transactions that occur after the balance sheet date but before the financial statements are issued, for public companies, and requires disclosure of the date through which an entity has evaluated subsequent events. This statement was effective for interim reporting periods ending after June 15, 2009. Management has evaluated all significant events and transactions occurring after June 30, 2009 through August 14, 2009, the date we issued these financial statements. During this period, we did not have any recognizable subsequent events. The adoption and application of FAS 165 did not have any effect on the Company's results of operations, financial condition, or cash flows.

In April 2009, the FASB issued FSP FAS 107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial Instruments. This FSB and APB require disclosures about fair value of financial instruments for interim reporting periods of publicly traded companies as well as in annual financial statements, as well as disclosures in summarized financial information at interim reporting periods. This statement was effective for interim reporting periods ending after June 15, 2009, and its adoption did not have a material effect on the Company’s results of operations, financial condition or cash flows.

In March 2008, the FASB issued Statement of Financial Accounting Standard No. 161 (“FAS 161”), Disclosures about Derivative Instruments and Hedging Activities. FAS 161 improves financial reporting on derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity’s financial position, financial performance and cash flows. The new standard is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. The Company is not currently the holder of any derivative instruments; therefore the adoption of FAS 161 did not have any effect on the Company's results of operations, financial condition, or cash flows.

In June 2008, the FASB issued FSP No. EITF 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities (“FSP EITF 03-6-1”). The FASB concluded in this FSP that unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents are participating securities and shall be included in the calculation of earnings per share pursuant to the two-class method. This FSP is effective for financial statements issued for fiscal years beginning after December 15, 2008, requiring all prior-period earnings per share data presented to be adjusted retrospectively. The Company does not have share-based payment awards containing nonforfeitable rights to dividends or dividend equivalents; therefore the adoption of FSP EITF 03-6-1did not have any effect on the Company's results of operations, financial condition, or cash flows.

In December 2007, the FASB issued Statement of Financial Accounting Standard No. 160 (“FAS 160”), Noncontrolling Interest in Consolidated Financial Statements – an amendment of ARB No. 51. FAS 160 changes reporting standards for noncontrolling interests in a subsidiary. The standard is effective for fiscal years beginning on or after December 15, 2008. The adoption of FAS No. 160 did not have a material impact on the Company's results of operations, financial condition, or cash flows.

On January 5, 2009, the Company exercised its rights under the UBS Rights Offering to sell the ARS investments to UBS at par. As a result, the Company received $1.0 million in net proceeds and liquidated its outstanding UBS Credit Facility in the amount of $2.9 million. Since the investments were redeemed at par, there was no realized gain or loss associated with this transaction. The Company has no remaining ARS investments and the UBS Credit Facility has been terminated.

	Level 3 Auction Rate Securities			Level 3 Rights Option			Level 3 Total
Balance at December 31, 2008	$	3,275,710		$	624,290		$	3,900,000
Sales, net		(3,275,710	)		(624,290	)		(3,900,000	)
Transfers to Level 3		-			-			-
Included in accumulated other comprehensive loss		-			-			-

Balance at March 31, 2009	$	-		$	-		$	-
Sales, net		-			-			-
Transfers to Level 3		-			-			-
Included in accumulated other comprehensive loss		-			-			-
Balance at June 30, 2009	$	-		$	-		$	-

SVB Credit Facility: On July 25, 2008, the Company entered into a credit facility with Silicon Valley Bank to support the Company’s working capital (the “SVB Credit Facility”). The SVB Credit Facility is nominally denoted as a $5.0 million facility with an actual maximum availability that varies based on specified percentages of domestic and foreign accounts receivable and inventory. Based on the Company’s accounts receivable and inventory levels on June 30, 2009, as of such date availability under the SVB Credit Facility was approximately $0.7 million, with no borrowings outstanding. The SVB Credit Facility has a one-year term and bears interest at an annual rate equal to the greater of prime plus 2.0% or 6.5%. The SVB Credit Facility includes covenants requiring the achievement of specified financial ratios and thresholds and contains other terms and conditions customary for this type of credit facility. As of June 30, 2009, the Company was in compliance with these covenants. The SVB Credit Facility is collateralized by security interests in substantially all of the assets of the Company. As of June 30, 2009, there were no amounts drawn under the SVB Credit Facility. Refer to Note 14 – Subsequent Events.

UBS Credit Facility: On August 13, 2008, the Company entered into a Credit Line Agreement (the “Line of Credit”) with UBS Bank USA for a demand revolving line of credit with respect to the Company’s ARS held in an account with UBS. On January 5, 2009, the Company exercised its rights under the UBS Rights Offering to sell the ARS investments to UBS at par. As a result, the Company liquidated its outstanding UBS Credit Facility in the amount of $2.9 million. The Company has no remaining ARS investments and the UBS Credit Facility has been terminated.

Founders’ Loan: On March 24, 2008, the Company entered into a loan agreement with Lyle A. Berman, James T. Crawford III, Arthur Lee Lomax and Gehrig H. “Lou” White. Messrs. Crawford, Lomax and White are the founders of the Company. Each of the lenders are also members of our board of directors, with Mr. Berman serving as Chairman and Mr. White serving as Vice Chairman. Upon closing, the lenders loaned the Company $2.0 million and the Company issued the lenders a promissory note in the principal amount of $2.0 million. The loan bears interest at 13% with all unpaid principal and interest payable on March 24, 2010. The Company intends to pay interest on a monthly basis and the loan may be repaid prior to maturity without penalty. The loan contains no restrictive covenants and is collateralized by security interests in the Company’s PokerPro systems deployed in North America and on cruise ships as of December 31, 2007. Refer to Note 14 – Subsequent Events.

Capital Lease Obligation: During 2008, the Company entered into capital lease obligations totaling $73,273 to finance the purchase of a new internal-use ERP system. These capital lease obligations bear interest at an annual rate of 9.4% and have a term of 36 months, resulting in monthly payments of $2,396. At the end of the lease term, the Company has the option to purchase the software for $101. The net book value of the assets under lease at June 30, 2009 was $122,222. Related depreciation expense recognized during the three months and six months ended June 30, 2009 was $13,089 and $26,178, respectively, resulting in accumulated depreciation of $34,846.

The Company has established a salary deferral plan under Section 401(k) of the Internal Revenue Code covering substantially all employees. The plan allows eligible employees to defer 3% to 5% of their annual compensation. The Company matches the contributions equal to 100% on the first 3% of the deferral and 50% on the deferral from 3% to 5%. For the three months ended June 30, 2009 and June 30, 2008, the Company recorded contribution expense of $23,184 and $34,496, respectively. For the six months ended June 30, 2009 and June 30, 2008, the Company recorded contribution expense of $47,091 and $71,152, respectively.

For the three months ended June 30, 2009 and June 30, 2008, the Company recognized a tax provision of $21,421 and $123,473, respectively. For the six months ended June 30, 2009 and June 30, 2008, the Company recognized a tax provision of $63,970 and $123,473, respectively. These provisions are based principally on the Company’s estimated foreign income tax withholding liability which is attributable to the Company’s Canadian revenues.

License fees from and equipment sales to Aristocrat of $139,788 and $21,497, respectively, were recorded in the three months ended June 30, 2009, while $138,682 and $1,171,816, respectively, were recorded during the three months ended June 30, 2008. License fees from and equipment sales to Aristocrat of $313,452 and $102,025, respectively, were recorded in the six months ended June 30, 2009, while $285,725 and $1,980,305, respectively, were recorded during the six months ended June 30, 2008. As of June 30, 2009, $132,914 due from Aristocrat was included in accounts receivable in the accompanying balance sheet.

The Company leases its office and manufacturing facility under an annual operating lease from an entity owned and controlled by the Company’s President and the Company’s Vice Chairman of the Board of Directors. The lease expires in August 2011. Rent expense recorded for the leased space for the three months ended June 30, 2009 and June 30, 2008 was $48,800 and $54,900, respectively. Rent expense recorded for the leased space for the six months ended June 30, 2009 and June 30, 2008 was $103,700 and $109,800, respectively. This lease was amended as of June 1, 2009 with rent expense for the aggregate leased space adjusted to equal $14,200 per month.

On March 24, 2008, the Company entered into a loan agreement with Lyle A. Berman, James T. Crawford III, Arthur Lee Lomax and Gehrig H. “Lou” White. Messrs. Crawford, Lomax and White are the founders of the Company. Refer to Note 8, “Debt” for a description of the terms of this loan. During the first six months of 2009, the Company made $107,561 in aggregate interest payments and $0 in aggregate principal payments. Refer to Note 14 – Subsequent Events.

The Company’s business is organized and reported in two segments, PokerPro® and Heads-Up Challenge™, which are described in Note 1, Nature of Business and Basis of Presentation. The Heads-Up Challenge amusement product was launched and began operations during 2007. The Company evaluates the performance of its two segments primarily based on revenue and direct cost of revenue. The accounting policies of the segments are the same as those described in Note 1.


	Casino Products		Amusement Products		Corporate and Other		Total

Three months ended June 30, 2009

Revenue	$	1,230,153	$	288,879	$	-	$	1,519,032
Cost of product sales		22,965		242,175		-		265,140
Depreciation and amortization		694,358		15,663		28,437		738,458
Capital expenditures		-		37,738		1,518		39,256

Six months ended June 30, 2009

Revenue	$	2,718,808	$	936,092	$	-	$	3,654,900
Cost of product sales		54,298		824,140		-		878,438
Depreciation and amortization		1,382,788		30,045		56,123		1,468,956
Capital expenditures		-		37,738		11,711		49,449
Indentifiable assets		5,719,275		1,680,953		1,468,174		8,868,402

Three months ended June 30, 2008

Revenue	$	2,477,870	$	1,362,220	$	-	$	3,840,090
Cost of product sales		848,833		876,107		-		1,724,940
Depreciation and amortization		680,774		14,077		14,254		709,105
Capital expenditures		-		-		72,776		72,776

Six months ended June 30, 2008

Revenue	$	4,633,615	$	2,407,971	$	-	$	7,041,586
Cost of product sales		1,350,527		1,603,346		-		2,953,873
Depreciation and amortization		1,270,488		27,599		28,476		1,326,563
Capital expenditures		9,419		33,320		72,776		115,515
Indentifiable assets		7,604,644		2,493,727		7,203,833		17,302,204

Revenues by geographic area are determined based on the location of the Company’s customers. For the three months ended June 30, 2009 and 2008, sales to customers outside the United States accounted for 21% and 67% of the Company’s consolidated revenue, respectively. For the six months ended June 30, 2009 and 2008, sales to customers outside the United States accounted for 35% and 65% of the Company’s consolidated revenue, respectively.

	Three months ended June 30,				Six months ended June 30,
	2009		2008		2009		2008
Revenue:
United States	$	1,200,948	$	1,252,656	$	2,377,269	$	2,449,533
Europe		78,965		1,382,557		480,946		2,247,404
Canada		156,186		695,016		611,454		1,537,847
Australia		77,720		491,727		163,324		753,567
Other International		5,213		18,134		21,907		53,235
	$	1,519,032	$	3,840,090	$	3,654,900	$	7,041,586

On July 23, 2009, the Company entered into amendments to the SVB Credit Facility, which extended the maturity date for the facility to July 23, 2010, adjusted the facility amount to have a Facility Limit of $2.5 million with maximum advances determined based on the composition of our eligible accounts receivable and inventory balances and modified certain other provisions of the facility. The amendments are attached as exhibits 10.1 and 10.2 to this Form 10-Q. The SVB Credit Facility was also previously amended on or about December 23, 2008.

Pursuant to a Stock Purchase Agreement dated July 31, 2009, between the Company and ICP Electronics, Inc., a Taiwan corporation (“ICP Electronics”), the Company agreed to sell 565,000 shares of its common stock to ICP Electronics. ICP Electronics is a manufacturer of Heads-Up Challenge units that the Company markets to its customers. The shares were sold in reliance upon an exemption from registration under the Securities Act of 1933, as amended, pursuant to Section 4(6) and Regulation S. The shares were valued at a price of $0.85 per share and were exchanged with ICP Electronics for 191 Heads-Up Challenge units for immediate delivery. In addition, the parties agreed to payment terms for the Company’s remaining purchase commitment with ICP, totaling $945,337, to be paid in installments of $39,389 over a 24 month period. In exchange, ICP will complete and deliver an additional 293 Heads-Up Challenge units as directed by the Company.

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Statements expressing expectations regarding our future (including pending gaming and patent approvals) and projections relating to products, sales, revenues and earnings are typical of such statements and are made under the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, statements about our plans, objectives, representations and contentions and are not historical facts and typically are identified by use of terms such as "may," "will," "should," "could," "expect," "plan," "anticipate," "believe," "estimate," "predict," "potential," "continue" and similar words, although some forward-looking statements are expressed differently.

All forward-looking statements are subject to the risks and uncertainties inherent in predicting the future. Our actual results may differ materially from those implied in these forward-looking statements as a result of many factors, including, but not limited to, overall industry environment, customer acceptance of our products, delay in the introduction of new products, further approvals of regulatory authorities, adverse court rulings, production and/or quality control problems, the denial, suspension or revocation of permits or licenses by regulatory or governmental authorities, termination or non-renewal of customer contracts, amendment or termination of our loans, disruption of our relationships with our suppliers, competitive pressures, general economic and political conditions, such as political instability, credit market uncertainty, inflationary pressures from higher energy and fuel costs and the rate of economic growth or decline in our principal geographic markets, each of which may be amplified by recent disruptions in the U.S. and global financial markets, our ability to access the capital markets, and our financial condition. These and other risks and uncertainties are described in more detail in our most recent Annual Report on Form 10-K, as well as other reports and statements that we file with the Securities and Exchange Commission.

Forward-looking statements speak only as of the date they are made and should not be relied upon as representing our views as of any subsequent date. We undertake no obligation to update or revise such statements to reflect new circumstances or unanticipated events as they occur, except as required by applicable laws, and you are urged to review and consider disclosures that we make in this and other reports that we file with the Securities and Exchange Commission that discuss factors germane to our business.

We currently have two product lines, PokerPro gaming products and Heads-Up Challenge amusement products. The PokerPro system is an electronic poker table that provides a fully-automated poker-room environment to tribal casinos, commercial casinos, cruise ships and card clubs. Heads-Up Challenge is an innovative heads-up amusement device that enables two players to compete against each other in a game of Texas Hold’em poker for entertainment purposes in non-gambling venues such as bars and restaurants.

License and service fees decreased by $0.2 million (15%) to $1.2 million for the three months ended June 30, 2009 as compared to $1.4 million for the three months ended June 30, 2008. The amount of license and service fees recognized in a given period is a function of the number of tables placed on lease, the contractual rates negotiated with our customers, and, in some cases, is determined as a percentage of the customer’s revenues. The decrease in license and service fees was impacted by all three of those factors, including the impact of impact of the current economic conditions on the rate of play at some of our customers. In addition, while the number of tables on lease grew modestly as compared to the prior period, the decline in the number of tables in Canada and other mix changes offset the increase in the number of tables.

Product sales decreased by $2.1 million (87%) to $0.3 million for the three months ended June 30, 2009 as compared to $2.4 million for the three months ended June 30, 2008. Product sales consist of casino products, primarily PokerPro systems sold to Aristocrat for deployment in international casinos, sales of consumables and peripheral equipment to our PokerPro customers, as well as sales of our Heads-Up Challenge amusement product.

Sales of the Heads-Up Challenge amusement product contributed $0.3 million in revenue for the three months ended June 30, 2009, as compared to $1.4 million in revenue for the comparable period of 2008. Demand from our customers for the Heads-Up Challenge product continued to be affected by a combination of weak economic conditions and the related impact on the ability of operators to finance and place amusement products. We sold 69 units during the three months ended June 30, 2009 as compared with 303 units during the three months ended June 30, 2008.

Sales of casino products for the three months ended June 30, 2009 amounted to $24,900, a decrease of $1.1 million over the comparable period in 2008. During the three months ended June 30, 2009, our international distributor did not place any orders for new PokerPro systems as the Eastern European markets that drove growth during the prior year were impacted by reduced operator demand. The casino product sales recognized during the three months ended June 30, 2009 resulted from sales of consumables and peripheral equipment to our PokerPro customers.

Direct Cost of Revenue. Direct cost of revenue consists of depreciation of PokerPro systems and the cost of PokerPro systems sold primarily to Aristocrat and the cost of Heads-Up Challenge product sales. Total direct costs decreased by $1.4 million (61%) to $0.9 million for the three months ended June 30, 2009. As a percentage of total revenues, direct cost of revenues was 62% of total revenues for the three months ended June 30, 2009, and for the comparable period in 2008.

Depreciation of PokerPro systems increased by $13,585 (2%) to $672,168 for the three months ended June 30, 2009 as compared to $658,583 for the three months ended June 30, 2008. Cost of product sales decreased by $1.5 million (85%) to $0.3 million for the three months ended June 30, 2009 as compared to $1.7 million for the three months ended June 30, 2008. This decrease in cost of sales was attributable to the lower unit product sales of both PokerPro and Heads-Up Challenge.

Selling, General and Administrative Expenses. Selling, general and administrative expenses (“SG&A”) decreased by $0.7 million (29%) to $1.6 million for the three months ended June 30, 2009 as compared to $2.3 million for the three months ended June 30, 2008. This decrease was primarily due to lower salaries and other employee-related expenses as a result of the headcount reductions and other cost reduction initiatives implemented during 2008 and the first half of 2009. As a percentage of total revenues, SG&A expenses were 107% of total revenues for the three months ended June 30, 2009, compared with 60% of total revenues for the comparable period in 2008 on lower product sale revenues.

Research and Development Expenses. Research and development expenses decreased by $0.4 million (56%) to $0.3 million for the three months ended June 30, 2009 as compared to $0.7 million for the three months ended June 30, 2008. We continue to invest in software and hardware development to improve our gaming and amusement products through the addition of new games and features and to improve manufacturability. However, as our Heads-Up Challenge and PokerPro products are now fully commercialized, we have been able to reduce spending on pre-production engineering and internal development efforts.

Interest Income (expense), net. Interest expense increased $57,207 (145%) for the three months ended June 30, 2009 to $96,564 from $39,357 for the three months ended June 30, 2008. We incurred interest expense in 2009 on the loan from our founders of $64,821 and recognized loan origination and unused line fees associated with the credit line from Silicon Valley Bank totaling $30,461. In addition, we incurred interest on our capital lease of $1,282. During 2008, our interest expense was partially offset by interest income earned on our ARS investments, which were liquidated on January 5, 2009 and contributed essentially no income for the three months ended June 30, 2009.

Net Loss. Net loss for the three months ended June 30, 2009 was $1.6 million, an improvement of $0.3 million (16%) from $2.0 million for the three months ended June 30, 2008. Net loss per share, basic and diluted, was $0.15 per share for the three months ended June 30, 2009, an improvement of $0.03 (17%) per share from $0.18 for the comparable period of 2008. Net loss and net loss per share improved over the prior year period due primarily to the combination of lower direct cost of revenue from the casino and amusement product lines and lower operating expenses, partially offset by lower revenue.

License and service fees decreased by $0.3 million (12%) to $2.6 million for the six months ended June 30, 2009 as compared to $2.9 million for the six months ended June 30, 2008. The amount of license and service fees recognized in a given period is a function of the number of tables placed on lease, the contractual rates negotiated with our customers, and, in some cases, is determined as a percentage of the customer’s revenues. The decrease in license and service fees was impacted by all three of those factors, including the impact of impact of the current economic conditions on the rate of play at some of our customers. In addition, while the number of tables on lease grew modestly as compared to the prior period, the decline in the number of tables in Canada and other mix changes offset the increase in the number of tables.

Product sales decreased by $3.0 million (74%) to $1.1 million for the six months ended June 30, 2009 as compared to $4.1 million for the six months ended June 30, 2008. Product sales consist of casino products, primarily PokerPro systems sold to Aristocrat for deployment in international casinos, sales of consumables and peripheral equipment to our PokerPro customers, as well as sales of our Heads-Up Challenge amusement product.

Sales of the Heads-Up Challenge amusement product contributed $0.9 million in revenue for the six months ended June 30, 2009, as compared to $2.4 million in revenue for the comparable period of 2008. Demand from our customers for the Heads-Up Challenge product continued to be affected by a combination of weak economic conditions and the related impact on the ability of operators to finance and place amusement products. As a result, we sold 251 units during the six months ended June 30, 2009 as compared with 540 units during the six months ended June 30, 2008,.

Sales of casino products for the six months ended June 30, 2009 amounted to $125,653, a decrease of $1.6 million over the comparable period in 2008. During the six months ended June 30, 2009, our international distributor did not place any orders for new PokerPro systems as the Eastern European markets that drove growth during the prior year were impacted by reduced operator demand and they continue to work through their inventory. The casino product sales recognized during the first six months of 2009 resulted from sales of consumables and peripheral equipment to our PokerPro customers, as well as our share of the proceeds from the sale of tables by Aristocrat.

Direct Cost of Revenue. Direct cost of revenue consists of depreciation of PokerPro systems and the cost of PokerPro systems sold primarily to Aristocrat and the cost of Heads-Up Challenge product sales. Total direct costs decreased by $2.0 million (47%) to $2.2 million for the six months ended June 30, 2009. As a percentage of total revenues, direct cost of revenues was 61% of total revenues for the six months ended June 30, 2009, compared with 59% of total revenues for the comparable period in 2008.

Depreciation of PokerPro systems increased by $0.1 million (9%) to $ 1.3 million for the six months ended June 30, 2009 as compared to $1.2 million for the six months ended June 30, 2008. Cost of product sales decreased by $2.1 million (70%) to $0.9 million for the six months ended June 30, 2009 as compared to $3.0 million for the six months ended June 30, 2008. This decrease in cost of sales was attributable to the lower unit product sales of both PokerPro and Heads-Up Challenge.

Selling, General and Administrative Expenses. SG&A decreased by $1.2 million (26%) to $3.5 million for the six months ended June 30, 2009 as compared to $4.7 million for the six months ended June 30, 2008. This decrease was primarily due to lower salaries and other employee-related expenses as a result of the headcount reductions and other cost reduction initiatives implemented during 2008 and the first half of 2009. As a percentage of total revenues, SG&A expenses were 95% of total revenues for the six months ended June 30, 2009, compared with 67% of total revenues for the comparable period in 2008 on lower product sale revenues.

Research and Development Expenses. Research and development expenses decreased by $0.9 million (57%) to $0.7 million for the six months ended June 30, 2009 as compared to $1.5 million for the six months ended June 30, 2008. We continue to invest in software and hardware development to improve our gaming and amusement products through the addition of new games and features and to improve manufacturability. However, as our Heads-Up Challenge and PokerPro products are now fully commercialized, we have been able to reduce spending on pre-production engineering and internal development efforts.

Interest Income (Expense), net. Interest income (expense), net changed by $207,769 (784%) for the six months ended June 30, 2009 to an expense of $181,271 from income of $26,498 for the six months ended June 30, 2008. We incurred interest expense in 2009 on the loan from our founders of $128,930 and recognized loan origination and unused line fees associated with the credit line from Silicon Valley Bank totaling $48,156. In addition, we incurred interest on our capital lease of $2,700. During 2008, we earned interest income on our ARS investments, which were liquidated on January 5, 2009 and contributed essentially no income for the six months ended June 30, 2009.

Net Loss. Net loss for the six months ended June 30, 2009 was $3.5 million, an improvement of $0.6 million (16%) from $4.1 million for the six months ended June 30, 2008. Net loss per share, basic and diluted, was $0.31 per share for the six months ended June 30, 2009, an improvement of $0.06 (16%) per share from $0.37 for the comparable period of 2008. Net loss and net loss per share improved over the prior year period due primarily to the combination of lower direct cost of revenue from the casino and amusement product lines and lower operating expenses, partially offset by lower revenue.

We have incurred net operating losses since inception and operating expenses may continue to exceed revenues. We have typically funded our operating costs, research and development activities, working capital investments and capital expenditures associated with our growth strategy with proceeds from the issuances of our common stock, as well as through credit arrangements from financial institutions and a loan from certain members of our Board of Directors. These transactions are described in more detail following the discussion of cash flows below:

	Six Months Ended June 30,
	2009			2008			Change
Net cash used in operating activities	$	(1,323,846	)	$	(3,045,772	)	$	1,721,926
Net cash provided by investing activities		3,850,551			1,986,519			1,864,032
Net cash provided by (used in) financing activities		(2,877,031	)		2,998,452			(5,875,483	)

Net increase (decrease) in cash and cash equivalents		(350,326	)		1,939,199			(2,289,525	)

Cash and cash equivalents, beginning of year		1,481,530			1,229,980

Cash and cash equivalents, end of period	$	1,131,204		$	3,169,179

For the six months ended June 30, 2009, net cash used in operating activities was $1.3 million, as compared to $3.0 million for the six months ended June 30, 2008, a decrease of $1.7 million. The decrease in cash used in operating activities was primarily due to the reduction in net loss due to expense reduction initiatives and reduced inventory purchases, which were partially offset by reductions in accounts payable and accrued expenses.

Net cash used in financing activities was $2.9 million for the six months ended June 30, 2009, primarily due to the repayment of the UBS Credit Facility which occurred as a result of the sale of the ARS investment, as well as payments on our capital lease obligation. For the six months ended June 30, 2008, net cash provided by financing activities was $3.0 million, consisting primarily of proceeds from our loan to our founders ($2.0 million), and net advances from the UBS line of credit ($1.0 million).

We have the ability to impact the timing and extent of our cash needs primarily by managing the pace of growth in both our PokerPro and Heads-Up Challenge products and managing our operating expenses. However, we also have significant contractual obligations and our ability to control both the timing and extent of the cash needs of the business is not unlimited, particularly in light of the current economic climate and the capital intensive nature of the PokerPro business.

Our intent is to balance revenue growth with operating expense and working capital management, while carefully monitoring the impact of growth on our cash needs and cash balances. Accordingly, reductions in our working capital investments or declines in demand for our products or continued deterioration in general economic conditions could impact our ability to grow or to effectively manage our liquidity needs.

Based on the Company’s current capital structure and our anticipated growth plans, we intend to explore various alternatives to fund our growth, which may include raising additional funds through public or private offerings of our securities, obtaining additional credit facilities, converting our debt, or seeking alternative sources of financing which may or may not be available on favorable terms, if at all. If such sources of capital are not available, we may seek other avenues to fund the business, including sale/leaseback arrangements, transitioning our products from a capital intensive leasing strategy to a product sale strategy, seeking to sell assets of the Company, or reducing our operations.

Subsequent to the end of the quarter, we entered into amendments to our SVB Credit Facility and our Founders Loan, extending the term of both arrangements and allowing the Founders’ Loan to be paid in either stock or cash. In addition we entered into a Stock Purchase Agreement with a key vendor to issue common stock in exchange for inventory and to extend the timing of payments for our purchase commitments. Refer to Subsequent Events.

Founders’ Loan. On March 24, 2008, we entered into a loan agreement with Lyle A. Berman, James T. Crawford III, Arthur Lee Lomax and Gehrig H. “Lou” White. Messrs. Crawford, Lomax and White are the founders of the Company. Each of the lenders are also members of our board of directors, with Mr. Berman serving as Chairman and Mr. White serving as Vice Chairman. Upon closing, the lenders loaned us $2.0 million and we issued the lenders a promissory note in the principal amount of $2.0 million. The loan bears interest at an annual rate of 13% with all unpaid principal and interest payable on March 21, 2010. We are paying and intend to continue to pay interest on a monthly basis. The loan principal may be repaid prior to maturity without penalty. The loan contains no restrictive covenants and is collateralized by a security interest in our PokerPro systems deployed in North America and on cruise ships as of December 31, 2007. Refer to Subsequent Events.

SVB Credit Facility. On July 25, 2008, the Company entered into a credit facility with Silicon Valley Bank to support the Company’s working capital (the “SVB Credit Facility”). The SVB Credit Facility is nominally denoted as a $5.0 million facility with an actual maximum availability that varies based on specified percentages of domestic and foreign accounts receivable and inventory. Based on the Company’s accounts receivable and inventory levels on June 30, 2009, as of such date availability under the SVB Credit Facility was approximately $0.7 million, with no borrowings outstanding. The SVB Credit Facility has a one-year term and bears interest at an annual rate of the greater of prime plus 2.0% or 6.5%. The SVB Credit Facility includes covenants requiring the achievement of specified financial ratios and thresholds and contains other terms and conditions customary for this type of credit facility. As of June 30, 2009, the Company was in compliance with these covenants. The SVB Credit Facility is collateralized by security interests in substantially all of the assets of the Company. Refer to Subsequent Events.

We follow accounting principles generally accepted in the United States in preparing our financial statements, which require us to make certain estimates and apply judgments that affect our financial position and results of operations. We continually review our accounting policies and financial information disclosures. A summary of our significant accounting policies that require the use of estimates and judgments in preparing the financial statements was provided in our Annual Report on Form 10-K for the year ended December 31, 2008. During the six months ended June 30, 2009, there were no material changes to the accounting policies and assumptions previously disclosed.

In April 2009, the FASB issued FSP FAS 107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial Instruments. This FSB and APB require disclosures about fair value of financial instruments for interim reporting periods of publicly traded companies as well as in annual financial statements, as well as disclosures in summarized financial information at interim reporting periods. This statement was effective for interim reporting periods ending after June 15, 2009, and its adoption did not have a material effect on our results of operations, financial condition or cash flows.

In March 2008, the FASB issued Statement of Financial Accounting Standard No. 161 (“FAS 161”), Disclosures about Derivative Instruments and Hedging Activities. FAS 161 improves financial reporting on derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity’s financial position, financial performance and cash flows. The new standard is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. We are not currently the holder of any derivative instruments, and thus the adoption of FAS 161 did not have any effect on our results of operations, financial condition, or cash flows.

In June 2008, the FASB issued FSP No. EITF 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities (“FSP EITF 03-6-1”). The FASB concluded in this FSP that unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents are participating securities and shall be included in the calculation of earnings per share pursuant to the two-class method. This FSP is effective for financial statements issued for fiscal years beginning after December 15, 2008, requiring all prior-period earnings per share data presented to be adjusted retrospectively. We do not have share-based payment awards containing nonforfeitable rights to dividends or dividend equivalents; therefore, the adoption of FAS 161 did not have any effect on our results of operations, financial condition, or cash flows.

In December 2007, the FASB issued Statement of Financial Accounting Standard No. 160 (“FAS 160”), Noncontrolling Interest in Consolidated Financial Statements – an amendment of ARB No. 51. FAS 160 changes reporting standards for noncontrolling interests in a subsidiary. The standard is effective for fiscal years beginning on or after December 15, 2008. The adoption of FAS No. 160 did not have a material impact on our results of operations, financial condition, or cash flows.

On July 23, 2009, we entered into amendments to the SVB Credit Facility, which extended the maturity date for the facility to July 23, 2010, adjusted the facility amount to have a Facility Limit of $2.5 million with maximum advances determined based on the composition of our eligible accounts receivable and inventory balances and modified certain other provisions of the facility. The amendments are attached as exhibits 10.1 and 10.2 to this Form 10-Q. The SVB Credit Facility was also previously amended on or about December 23, 2008.

Pursuant to a Stock Purchase Agreement dated July 31, 2009, between the Company and ICP Electronics, Inc., a Taiwan corporation (“ICP Electronics”), the Company agreed to sell 565,000 shares of its common stock to ICP Electronics. ICP Electronics is a manufacturer of Heads-Up Challenge units that we market to our customers. The shares were sold in reliance upon an exemption from registration under the Securities Act of 1933, as amended, pursuant to Section 4(6) and Regulation S. The shares were valued at a price of $0.85 per share and were exchanged with ICP Electronics for 191 Heads-Up Challenge units for immediate delivery. In addition, the parties agreed to payment terms for the remaining purchase commitment with ICP, totaling $945,337, to be paid in installments of $39,389 over a 24 month period. In exchange, ICP will complete and deliver an additional 293 Heads-Up Challenge units as directed by us.

The Company maintains disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act), which are designed to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Acting Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

As of June 30, 2009, an evaluation of the effectiveness of the Company’s disclosure controls and procedures was conducted under the supervision of, and reviewed by, the Company’s Acting Chief Executive Officer and Chief Financial Officer. Based on that evaluation, the Company’s Acting Chief Executive Officer and Chief Financial Officer has concluded that the Company’s disclosure controls and procedures were effective as of June 30, 2009, to enable the Company to record, process, summarize and report in a timely manner the information that the Company is required to disclose in its Exchange Act reports, and that such information is accumulated and communicated to the Company’s management, including its Acting Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

We utilized a software package for our general ledger that did not provide certain automated general controls, such as the presence of edit reports and workflow approvals. We replaced our general ledger and other financial systems during the fourth quarter of 2008, but we had not performed sufficient testing as of June 30, 2009 to affect management’s assessment of the effectiveness of internal control over financial reporting.

These significant deficiencies have been previously reported to our Audit Committee by our management and to our independent registered public accounting firm, and we have continued to provide the Audit Committee with additional reports regarding the status of these significant deficiencies as of June 30, 2009. Our management continues to believe that these significant deficiencies are not indicative of a material weakness in our internal control over financial reporting. As reported in our Annual Report on Form 10-K for the year ended December 31, 2008, we also implemented a number of compensating controls as of December 31, 2008, including more timely reconciliations, enhanced review and approval procedures, and more robust physical inventory counting and valuation procedures. These compensating controls continued to operate as of June 30, 2009.

We implemented certain financial modules of SAP Business One during the fourth quarter of 2008 and, during the period ended June 30, 2009, we continued the process of configuring the application software package, training our staff, and preparing for the implementation of the non-financial modules of the ERP system. We expect to implement the non-financial modules during the second half of the 2009. However, we can provide no assurance that implementation of SAP Business One will be successful or will fully resolve all significant deficiencies.

In addition to the other information set forth in this quarterly report on Form 10-Q and set forth below, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2008, which could materially affect our business, financial condition or future results. The risks described in our Annual Report on Form 10-K and our other reports and statements that we file with the SEC, including those contained in our quarterly reports on Form 10-Q, are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

We recently changed our distribution model for the Heads-Up Challenge amusement business. We no longer sell the product to distributors on a non-recurring, one-time sale basis, but instead place units directly with operators who pay us on a recurring lease basis. If we are unable to attract sufficiently qualified operators, if those operators are unsuccessful in placing product, or if those operators fail to pay us, this change could have an adverse impact effect on us. In addition, we will collect cash from these operators on an annuity, recurring basis, expansion of this program could create cash flow needs that could have an adverse effect on us, or cause us to need to raise additional capital.

Exhibit No.		Description

10.1		Second Amendment to Loan and Security Agreement, dated July 23, 2009, between PokerTek, Inc. and Silicon Valley Bank.

10.2		Second Amendment to Export-Import Bank Loan and Security Agreement, dated July 23, 2009, between PokerTek, Inc. and Silicon Valley Bank.

10.3		Board Member Agreement, dated July 15, 2009, between PokerTek, Inc. and Lyle Berman.

10.4		Board Member Agreement, dated July 15, 2009, between PokerTek, Inc. and Gehrig H. White.

10.5		Board Member Agreement, dated July 15, 2009, between PokerTek, Inc. and Joseph J. Lahti.

10.6		Board Member Agreement, dated July 15, 2009, between PokerTek, Inc. and Arthur L. Lomax.

10.7		Indemnification Agreement, dated July 15, 2009, between PokerTek, Inc. and Joseph J. Lahti.

10.8		Indemnification Agreement, dated July 15, 2009, between PokerTek, Inc. and Arthur L. Lomax.

10.9		Indemnification Agreement, dated July 15, 2009, between PokerTek, Inc. and James T. Crawford, III.

10.10		Indemnification Agreement, dated July 15, 2009, between PokerTek, Inc. and Gehrig H. White.

10.11		Indemnification Agreement, dated July 15, 2009, between PokerTek, Inc. and Mark D. Roberson.

10.12		Employment Agreement dated July 16, 2009, between PokerTek, Inc. and Mark D. Roberson.

10.13		Employment Agreement dated July 16, 2009, between PokerTek, Inc. and James T. Crawford, III.

10.14		Amendment No. 1 to a $2.0 million Secured Promissory Note between PokerTek, Inc. and Lyle Berman, Gehrig H. White, James T. Crawford, III, and Arthur L. Lomax, effective as of July 9, 2009.

31.1		Certification of Acting Chief Executive Officer and 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 Acting 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.

Exhibit No.		Description

10.1		Second Amendment to Loan and Security Agreement, dated July 23, 2009, between PokerTek, Inc. and Silicon Valley Bank.

10.2		Second Amendment to Export-Import Bank Loan and Security Agreement, dated July 23, 2009, between PokerTek, Inc. and Silicon Valley Bank.

10.3		Board Member Agreement, dated July 15, 2009, between PokerTek, Inc. and Lyle Berman.

10.4		Board Member Agreement, dated July 15, 2009, between PokerTek, Inc. and Gehrig H. White.

10.5		Board Member Agreement, dated July 15, 2009, between PokerTek, Inc. and Joseph J. Lahti.

10.6		Board Member Agreement, dated July 15, 2009, between PokerTek, Inc. and Arthur L. Lomax.

10.7		Indemnification Agreement, dated July 15, 2009, between PokerTek, Inc. and Joseph J. Lahti.

10.8		Indemnification Agreement, dated July 15, 2009, between PokerTek, Inc. and Arthur L. Lomax.

10.9		Indemnification Agreement, dated July 15, 2009, between PokerTek, Inc. and James T. Crawford, III.

10.10		Indemnification Agreement, dated July 15, 2009, between PokerTek, Inc. and Gehrig H. White.

10.11		Indemnification Agreement, dated July 15, 2009, between PokerTek, Inc. and Mark D. Roberson.

10.12		Employment Agreement dated July 16, 2009, between PokerTek, Inc. and Mark D. Roberson.

10.13		Employment Agreement dated July 16, 2009, between PokerTek, Inc. and James T. Crawford, III.

10.14		Amendment No. 1 to a $2.0 million Secured Promissory Note between PokerTek, Inc. and Lyle Berman, Gehrig H. White, James T. Crawford, III, and Arthur L. Lomax, effective as of July 9, 2009.

31.1		Certification of Acting Chief Executive Officer and 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 Acting 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.

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)

	o Large accelerated filer	o	Accelerated filer
	o Non-accelerated filer (do not check if a smaller reporting company)	x	Smaller reporting company

	June 30,			December 31,
	2009			2008
Raw materials and components	$	1,431,454		$	1,341,933
PokerPro systems in process		378,374			611,974
Finished goods		1,475,951			1,859,515
Reserve		(328,558	)		(266,323	)
Inventory, net	$	2,957,221		$	3,547,099

	June 30,			December 31,
	2009			2008
PokerPro systems	$	7,888,086		$	8,217,515
Temporarily idle PokerPro systems (a)		709,396			531,899
		8,597,482			8,749,414
Less: accumulated depreciation (a)		(5,806,761	)		(4,928,038	)
PokerPro systems, net	$	2,790,721		$	3,821,376

	June 30,			December 31,
	2009			2008
Equipment	$	759,764		$	722,027
Leasehold improvements		199,948			189,917
Capitalized software		157,067			155,387
		1,116,779			1,067,331
Less: accumulated depreciation		(598,106	)		(467,559	)
Property and equipment, net	$	518,673		$	599,772

				Weighted Average
	Shares			Exercise Price		Remaining Contractual Term		Aggregate Intrinsic Value
Outstanding at January 1, 2009		2,023,263		$	8.06
Granted		-			-
Exercised		-			-
Forfeited		(382,838	)		10.81
Expired		-			-

Outstanding at June 30, 2009		1,640,425		$	7.42		6.7	$	(10,917,043	)

Exercisable at June 30, 2009		1,332,113		$	7.16		6.4	$	(8,527,201	)

	Total		Less than 1 year		1 - 3 years		3 - 5 years		More than 5 years

Debt obligations(1)	$	2,195,000	$	2,195,000	$	-	$	-	$	-
Operating lease obligations(2)		378,800		204,000		174,800		-		-
Capital lease obligations(3)		55,872		28,747		27,125		-		-
Purchase obligations(4)		1,418,363		1,418,363		-		-		-
Other long-term liabilities		-		-		-		-		-
Total	$	4,048,035	$	3,846,110	$	201,925	$	-	$	-

	POKERTEK, INC.

Date: August 14, 2009	/s/ Mark D. Roberson
	Acting Chief Executive Officer and Chief Financial Officer (Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer)