Elixir Gaming Technologies Reports Second Quarter 2008 Results

LAS VEGAS--(BUSINESS WIRE)--Elixir Gaming Technologies, Inc. (AMEX:EGT):

Conference Call:		Today, August 13 at 8:30 a.m. ET
Dial-in numbers:		212/231-6010 or 415/904-7310
Webcast:		www.elixirgaming.com
		Replay information provided below

Elixir Gaming Technologies, Inc. (AMEX:EGT) (“Elixir Gaming” or “the Company”), a leading technology and solutions provider to the Pan-Asian gaming industry, today reported operating results for the second quarter ended June 30, 2008 and reviewed recent corporate progress.

Recent Operating Highlights:

• A total of 14 venues and 1,262 installed units currently in operation comprised of 5 venues in the Philippines with a total of 663 installed units, 9 venues in Cambodia with a total of 599 installed units.

-- Philippines venues in operation reflect two new properties

opened this week with a total of 200 installed units in

operation.

• Optimization initiatives effected in the 2008 second quarter are leading to growth in win per day per device with reported average win per day per device. Average net win for the month of July was $51 ($47 for the Philippines and $56 for Cambodia), up from $33 in June and $29 for the second quarter. This represents increases of 55% and 76%, respectively. Total net revenue for the month of July was $388,821, an increase of 36% from $284,170 in June.

• Contract renegotiations for 9 Cambodian venues completed over the past several months resulting in a higher average revenue share percentage to Elixir Gaming.

Gordon Yuen, CEO of Elixir Gaming, commented, “With gaming machines now in operation throughout 14 venues on a revenue share basis in the Asia-Pacific region, Elixir Gaming’s primary focus is on driving continued improvements in the net win per day per machine as this will increase our return on investment in each of our markets. We are already achieving notable growth across many venues since initiating the operational improvement plan in the second quarter and we remain confident in the long-term effectiveness of this strategy.

“Our venue operating improvement plans are comprehensive and highlight the strength of our customer relationships. In addition to slot floor reconfigurations and changes to the game mix we are providing additional services and technical support at each venue. With recently renegotiated contracts for 9 Cambodian venues, Elixir Gaming is generating substantially higher revenue share on the net win per machine at these properties compared with levels based on the initial agreements in this market. These initiatives are helping to drive cash flow improvements.”

Joe Pisano, Executive Director & Executive Vice President, added, “The value Elixir Gaming brings to venue owners in emerging markets is highlighted by our growing footprint of venues in operation and under contract. In less than a year’s time, Elixir Gaming has become recognized as the premier turnkey casino partner in the regions where we operate and the success of our business plan is leading to new opportunities. We intend to expand our market penetration by securing additional high-quality, high-return contracts with reputable venue owners and developers. In this regard, we anticipate securing new agreements later this year.

“The Company’s focus on generating appropriate returns at each venue through the implementation of operating improvement strategies will be reflected in the pace of new venue openings throughout the balance of 2008. Two new venues were opened earlier this week in the Philippines and we expect several more venues to come on line over the balance of 2008. The upcoming openings will be outfitted with gaming devices from the Company’s current slot machine inventory.”

2008 and 2009 Operating Expectations

• The Company expects that it will have 16 to 18 venues in operation at December 31, 2008, compared to 14 venues currently in operation.
• Reflecting the Company’s focus on improving results from each of its operating venues through its optimization plans implemented across each venue and paced new venue opening schedule, Elixir Gaming believes that it will continue to build on its July revenue and average win per day per machine for the slot participation business.
• Given the growth in win per day per machine, the higher revenue share derived from Cambodia operations, and cost reduction strategies, Elixir Gaming expects to turn EBITDA positive in the second half of 2009.

Management Update

Elixir Gaming today reported on recent changes to its senior management team:

• David Reberger, Elixir Gaming’s Chief Financial Officer, has resigned effective August 15 to pursue other opportunities. Mr. Reberger will remain as a consultant to the Company for the remainder of the year. A global search for a new CFO is underway.
• Andy Tsui, CPA, has recently been appointed Vice President of Finance for Elixir Gaming and will be responsible for all financial reporting aspects of the Company. Mr. Tsui, a certified public accountant, joins Elixir Gaming from Minerals Technologies, Inc. and has ten years of public company financial experience.
• Tony Lam, who joined Elixir Gaming in January 2008, recently assumed the role of Senior Vice President Head of Operations. Mr. Lam is responsible for overseeing the implementation of the Company’s venue optimization strategies. Prior to joining Elixir Gaming, Mr. Lam was a senior executive with companies located both in the Asia Pacific and North American regions including CDC Corporation, a NASDAQ listed media and technology company that went through a period of significant growth related to acquisitions.

Mr. Yuen added, “The Company appreciates all of David’s efforts in formulating the initial structure whereby Elixir Gaming effected its new business model in mid-2007. We wish him every success in his future endeavors. Andy brings to Elixir a strong background in financial reporting and management and we look forward to benefiting from his efforts. Finally, it is clear from our improving results in the Philippines and Cambodia that Tony is an excellent fit to lead our initiatives to implement operating improvement strategies in the field.”

Q2 Financial Review

Due to the timing of gaming machine placements, the operating results for the three-month period ended June 30, 2008 are not representative of the business model effected in September 2007 (whereby Elixir Gaming is placing gaming machines based on a revenue share model in Asia). Revenues from gaming machines on participation units were approximately $0.8 million in Q2 2008 compared to revenues of $0.5 million in Q1 2008 and $0.3 million in Q4 2007. Elixir Gaming’s 2008 second quarter total revenues of $3.7 million represent an increase of $0.3 million when compared to total revenues of $3.4 million for the second quarter of 2007.

For the second quarter of 2008, Elixir Gaming reported a net loss of $9.6 million, or ($0.08) per share, on a weighted average share count of 115.0 million shares compared to a net loss for the second quarter of 2007 of $4.8 million, or ($0.14) per share, on a weighted average share count of 35.0 million shares. Selling, general and administrative expenses (SG&A) for the 2008 second quarter period increased $2.6 million to $6.7 million compared to the prior year period. Without the effect of non-cash stock-based compensation expense, SG&A for the 2008 second quarter has increased $1.4 million to $4.2 million compared to the prior year period. The exercise prices of options contributing to the 2008 non-cash stock-based compensation expense ranged between $1.22 and $7.50 with a weighted average exercise price of $4.47.

Elixir Gaming is hosting a conference call and simultaneous webcast at 8:30 a.m. ET today, August 13, both of which are open to the general public. A presentation highlighting key elements of our prepared remarks from the conference call will be posted on our website at www.elixirgaming.com at the time of the call. The conference call number is 212/231-6010 or 415/904-7310. Questions and answers will be reserved for call-in analysts and investors. Interested parties may also access the live call on the Internet at www.elixirgaming.com; please allow 15 minutes to register and download and install any necessary software. Following its completion, a replay of the call can be accessed for thirty days on the Internet at www.elixirgaming.com.

About Elixir Gaming Technologies, Inc

Elixir Gaming Technologies Inc. (AMEX:EGT) is a member of Elixir Group, an innovator of gaming technology solutions and a wholly owned subsidiary of Melco International Development Limited. Elixir Gaming, in collaboration with Elixir International (which is also a member of Elixir Group), secures long-term contracts to provide comprehensive turn-key solutions to 3, 4 and 5 star hotels, cruise ships and other well-located venues throughout Asia that seek to offer casino gaming products. Elixir International assists the venue and venue owner with the licensing and regulatory process, physical casino design, construction management, slot and game floor design layout, purchases the gaming machines and systems from the industry’s leading gaming equipment suppliers and installs the gaming machines and systems such that the casino is delivered in a fully operational state. Elixir Gaming retains ownership of the gaming machines and systems and receives recurring daily fees of at least 20% of the net gaming win per machine and provides on-site maintenance. The Company has established a strategic presence in the Asia Pacific region with participation contracts in the Philippines, Cambodia, Vietnam and other Asian markets. For more information please visit www.elixirgaming.com.

Forward Looking Statements

This press release contains forward-looking statements concerning Elixir Gaming, Elixir Group and Elixir International 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. Those forward-looking statements include statements regarding expectations for the business relationship between Elixir Gaming, Elixir International, including the recurring revenue that may develop from the relationship with Elixir International, and the Elixir Gaming’s expectations for future revenue. Such statements are subject to certain risks and uncertainties, and actual circumstances, events or results may differ materially from those projected in such forward-looking statements. Factors that could cause or contribute to differences include, but are not limited to, risks related to Elixir International’s inability to place gaming machines at significant levels, risks related to whether the gaming machines placed generate the expected amount of net-win and risks related to the ability of Elixir Gaming to collect revenue and protect its assets and those other risks set forth in Elixir Gaming’s annual report on Form 10-K for the year ended December 31, 2007 filed with the SEC on March 31, 2008 and our Form 10-Q for the three months ended June 30, 2008 to be filed on August 14, 2008. Elixir Gaming cautions readers not to place undue reliance on any forward-looking statements. Elixir Gaming does not undertake, and specifically disclaims any obligation to update or revise such statements to reflect new circumstances or unanticipated events as they occur.

- financial tables follow -

Elixir Gaming Technologies   Consolidated Statements of Operations   (Unaudited)
			Three Months Ended June 30,								Six Months Ended June 30,
			2008				2007				2008				2007
Revenues:
Gaming machine participation		$	768,911			$	―			$	1,287,528			$	―
Table game products			570,472				1,682,956				1,250,502				3,638,979
Non-gaming products			2,328,581				1,729,848				4,061,458				3,160,725
			3,667,964				3,412,804				6,599,488				6,799,704
Operating costs and expenses:
Cost of gaming machine participation			2,209,741				―				3,597,942				―
Cost of table game products			273,142				1,456,253				924,347				2,943,316
Cost of non-gaming products			1,938,385				1,550,654				3,470,870				3,144,851
Selling, general and administrative			6,738,877				4,124,604				11,880,465				7,061,979
Impairment of assets			1,368,829				―				1,368,829				―
Research and development			275,589				147,876				599,310				410,634
Depreciation and amortization			237,915				322,722				469,036				654,398
Restructuring charges			2,706				―				168,276				―
			13,045,184				7,602,109				22,479,075				14,215,178
Loss from operations			(9,377,220	)			(4,189,305	)			(15,879,587	)			(7,415,474	)
Other income (expense):
Interest expense and finance fees			(220,234	)			(636,632	)			(274,520	)			(1,307,744	)
Interest income			155,436				89,286				522,187				103,159
Foreign currency gain/(loss)			(198,439	)			―				641,527				―
Other			79,768				(92,528	)			160,294				394,919
			(183,469	)			(639,874	)			1,049,488				(809,666	)
Income tax benefit/(expense)			9,643				―				(22,498	)			―
Net loss		$	(9,551,046	)		$	(4,829,179	)		$	(14,852,597	)		$	(8,225,140	)
Basic and diluted loss per share		$	(0.08	)		$	(0.14	)		$	(0.13	)		$	(0.24	)
Weighted average common shares outstanding			114,956,451				35,008,041				114,940,007				33,691,311

Elixir Gaming Technologies CONSOLIDATED BALANCE SHEETS
			June 30, 2008				December 31, 2007
ASSETS			(Unaudited)
Current assets:
Cash and cash equivalents		$	27,320,020			$	68,286,820
Current portion of accounts receivable, trade, net of allowance for uncollectibles of $274,730 and $176,666			3,116,188				1,689,909
Other receivables, net of allowance for uncollectibles of $41,542 and $0			425,559				298,940
Inventories			1,565,224				1,686,670
Prepaid expenses and other current assets			915,079				975,549
			33,342,070				72,937,888
Accounts receivable, trade, net of current portion			―				60,421
Gaming machines and systems, net of accumulated depreciation of $3,829,267 and $569,926			50,583,639				39,193,962
Property and equipment, net of accumulated depreciation of $3,568,336 and $3,039,933			4,725,598				3,934,532
Intangible assets, net of accumulated amortization of $2,021,492 and $1,689,096			5,153,925				5,486,321
Goodwill			84,210				84,210
Prepaid commissions			―				1,398,800
Deposits and other assets			6,793,792				617,894
		$	100,683,234			$	123,714,028
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable		$	1,711,856			$	1,798,459
Amount due to related party			6,798,922				29,601,448
Note payable to related party, current portion			7,297,485				―
Accrued expenses			2,905,889				5,248,458
Short-term debt			13,544				31,893
Capital lease obligations, current portion			285,131				480,663
Customer deposits			244,148				197,019
			19,256,975				37,357,940
Capital lease obligations, net of current portion			854,205				916,444
Note payable to related party, net of current portion			6,541,841				―
Other liabilities			194,402				99,966
Deferred tax liability			1,084,950				1,051,745
			27,932,373				39,426,095
Stockholders' equity:
Common stock, $0.001 par value, 300,000,000 shares authorized; 114,956,671 and 114,914,934 shares issued and outstanding			114,957				114,916
Additional paid-in-capital			415,761,413				411,323,072
Accumulated other comprehensive income			(716,498	)			406,358
Accumulated deficit			(342,409,011	)			(327,556,413	)
			72,750,861				84,287,933
		$	100,683,234			$	123,714,028