Company achieves 130 percent year-over-year first quarter revenue increase and delivers $0.021 fully diluted earnings per share
NEW YORK, NY/LONDON, ENGLAND – May 14, 2008 - Electronic Game Card, Inc. (OTCBB: EGMI) (“EGC”), today reported financial results for its first quarter ended March 31, 2008. The Company accomplished significant progress during its first quarter of 2008, adding to its shareholder equity, building its cash balance, validating and protecting its technology and, further expanding its addressable market. Since year end 2007, Electronic Game Card has been issued its first series of patents, received Gaming Laboratory International approval, increased its customer base and recurring revenue stream and announced entry into two new markets.
The Company reported revenues for the first quarter of $2.3 million, an increase of over 130 percent from the first quarter of 2007 of $990,000, and an increase of approximately 28 percent from the fourth quarter 2007 revenues of $1.8 million.
The Company reported a comprehensive net income applicable to common stockholders of $1.3 million or $0.021 per diluted share for the first quarter of 2008 compared to net income of $215,000 or $0.004 per diluted share for the first quarter 2007 and net income of $1.7 million (inclusive of a one-time investment sale of $856,000) or $0.029 per diluted share in the fourth quarter of 2007. First quarter 2008 operating income was $1.4 million compared to operating income of $404,000 for the comparable period of 2007 and $956,000 achieved during the fourth quarter 2007.
For the three months ended March 31, 2008, Electronic Game Card’s gross profit on revenue totaled $1.7 million or 76 percent of revenues, representing the fifth consecutive quarter of gross margin in excess of company’s target level of approximately 70 percent.
Operating expenses during the first quarter 2008 totaled $367,000, an increase of approximately 11 percent over the first quarter 2007, which was attributed to an increase in general and administrative expenses of $24,000 and an increase in consulting expenses of $56,000 that was partially offset by a reduction in salaries of $25,000 as the company continued its shift towards outsourcing. Importantly, operating expenses declined by approximately 36 percent from the prior fourth quarter 2007 predominately as a result of completing the development of proprietary games, which lowered consulting costs. As the company expands its existing reach and launches new markets, management expects to add resources, but will adhere to established profitability targets.
Interest expense incurred during the quarter was reduced by $20,000 over the previous year first quarter to $148,000. This compares with interest expense of $163,000 in the fourth quarter of 2007. Interest income has been steadily rising from $43,000 first quarter 2007 to $49,000 fourth quarter 2007 to $62,000 first quarter 2008.
Cash and equivalents on March 31, 2008 were $5.7 million, an increase of approximately $954,000 from December 31, 2007 balance. Accounts receivable increased by approximately $300,000 to $2.6 million over the same period. Total liabilities declined by $56,000 over the three month period to $1.9 million, excluding the 6 percent convertible redeemable preferred debt, which has been reduced by approximately $1.0 million to $6.5 million since year end 2007.
As of March 31, 2008, Electronic Game Card had approximately 50.0 million shares of common stock outstanding, an increase of 2.0 million shares from year end 2007, predominately attributable to conversion of the redeemable preferred debt. The Company’s weighted average number of common shares fully diluted totaled 62.5 million (inclusive of the all options, warrants and the convertible redeemable preferred debt). The aggregate proceeds if all options and warrants were to be exercised would total in excess of $4.0 million. As of March 31, 2008 the Company had net operating tax loss carry forwards in excess of $21million that may be used to offset future taxable income through 2023. As of December 31, 2007, Electronic Game Card achieved positive stockholders equity for the first time in the Company’s history. On March 31, 2008, the Company’s stockholder’s equity totaled $3.9 million.
“As anticipated, first quarter 2006 marked the beginning of a profitable revenue growth period for the company. Over the past two years EGC was right-sized and has embraced a business model that is now highly profitable. Now that a strong foundation has been established, the company has just completed its fifth consecutive profitable quarter, the company is focused on organic revenue growth as well as expanding its addressable market while maintaining a tight cost discipline. The company’s goal for 2008 is to penetrate new and existing markets, continue to grow patented IP and build successful distribution partnerships. The company has made progress in all three fronts thus far in 2008 and has comfortably raised guidance last month to $11 million and $16 million in revenues, $0.10 and $0.14 fully diluted earnings per share for 2008 and 2009, respectively.”
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Contact
Yvonne L. Zappulla
Managing Director
Grannus Financial Advisors, Inc.
212-681-4108
yvonne@grannusfinancial.com
or
Roger Holdom
Electronic Game Card, Inc.
+44 207 451 2480
investor.relations@electronicgamecard.com
About Electronic Game Card. Inc.
Electronic Game Card Inc., (OTCBB: EGMI), develops, produces and markets innovative games to the promotional industry worldwide, casino and lottery. The Company’s lead product is the Electronic GameCard™, a unique credit card-sized pocket game combining patent-pending proprietary technology of interactive capability with “instant win” excitement.The "Electronic GameCard" can be programmed to suit a variety of gaming and promotion applications.
EGMI's client base is across the $100 billion global market of, sales promotion, gaming and casinos, Indian gaming and state and national lotteries markets. EGMI develops sales and marketing relationships with agents globally and has a technology licensing agreement with a major lottery focused US listed corporation. For further information please visit www.electronicgamecard.com
February 2008, Electronic GameCard™ received Gaming Laboratory International approval for security and product robustness. In July 2005, the Public Gaming Research Institute (PGRI) named the Electronic GameCard™ as a 2005 Lottery Product of the Year.
Certain statements in this news release may constitute “forward-looking” statements within the meaning of section 21E of the Securities and Exchange Act of 1934. The Company believes that its expectations, as expressed in these statements are based on reasonable assumptions regarding the risks and uncertainties inherent in achieving those expectations. These statements are not, however, guarantees of future performance and actual results may differ materially. Risk factors are listed in the most recent Annual Report on Form 10-KSB and Quarterly Report on Form 10-QSB filed with the Securities and Exchange Commission.
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