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Electronic Game Card Reports Full Year and Fourth Quarter 2008 Earnings
Monday March 16, 2009, 4:00 pm EDT

- Company achieves 76 percent year over year revenue increase and delivers $0.10 fully diluted earnings per share

Electronic Game Card Board of Directors Authorizes Share Repurchase of up to 5 Percent Common Shares Outstanding

NEW YORK and LONDON, March 16 /PRNewswire-FirstCall/ -- Electronic Game Card, Inc. (OTC Bulletin Board: EGMI - News; "EGC"), today reported financial results for its full year and fourth quarter ended December 31, 2008. During the course of the last twelve months the company has delivered four profitable quarters and increased shareholder equity by $12 million, achieved cash balances net of all debt and convertible preferred of $3.5 million, expanded its software library from 25 to 32 titles, was awarded two patents, received GLI approval, and appointed senior executive management and board talent to deliver on the next phase of profitable revenue growth. In 2009, Electronic Game Card's management team expects to deliver continued strong growth with revenue in excess of $17 million and earnings per share of $0.14 per diluted share, as it continues to develop its product range to address new markets.

Revenues for the full year 2008 increased over 76 percent to $10.6 million from $6.0 million in 2007. The 76% revenue growth in 2008 was achieved despite adverse currency fluctuations impacting the reporting of the company's sales in the United Kingdom and Continental Europe. The British Pound declined by 26% against the dollar and the Euro declined by 6% against the dollar during 2008.

The Company reported an 81 percent year-over-year increase in net income applicable to common stockholders for 2008 of $6.3 million or $0.11 per basic share or $0.10 per diluted share, versus net income of $3.4 million or $0.07 per basic share or $0.06 per diluted share for 2007. Operating income was $6.0 million in 2008 compared to $3.0 million in the previous year. Electronic Game Card's gross profit on revenue was $8.1 million or 76 percent in 2008. As the Company moves into new markets led by new products such as the Know-It-All QuizCard, the gross margin percentage may decline due to an increase in high volume direct product sales into large consumer markets. It is anticipated that these sales will achieve higher volumes with lower margins than the company currently achieves, and although this has the effect of reducing the company's overall gross margin percentage the actual effect on the company's overall business would be accretive to earnings per share.

In line with increased revenues, total operating expenses increased 35 percent during 2008 to $2.1 million, and represented 19.5 percent of revenues, which is down from 25.5 percent of revenue incurred in 2007. Selling, general and administrative expenses increased by approximately $105,000 during 2008 to $760,000 as a result of an increase in marketing activity. Salaries and wages increased slightly during the twelve month period, while consulting expenses increased approximately 58 percent to $927,000 as the Company sought advice of regional gaming industry experts to support its market expansion. Company management expects to continue the use of regional consultants in the interim as it develops new markets, both in terms of products and geography. Interest expense for 2008 decreased by $61,000 to $591,000 due to the conversion of 3.1 million shares of Series A preferred stock to common stock during the year.

For the fourth quarter ended December 31, 2008, Electronic Game Card reported revenues of $2.8 million, a 58 percent increase over the prior year fourth quarter of $1.8 million, and compares to third quarter 2008 revenues of $3.0 million. The decrease in revenue from third quarter to the fourth quarter is predominately the result of adverse currency movements. A significant percentage of the Company's fourth quarter sales were denominated in British Pound Sterling, which witnessed a 25 percent decline in valuation in the final three months of 2008. The Company reported comprehensive net income applicable to common stockholders for the fourth quarter of $1.8 million or $0.03 per basic and diluted share and versus net income of $1.6 million or $0.03 per basic and diluted share for the fourth quarter 2007 and net income of $1.7 million or $0.03 per basic and diluted share for the third quarter 2008.

Cash and equivalents on December 31, 2008 were $9.2 million, an increase of $4.4 million from the December 31, 2007 level, and an increase of $1.3 million from the prior third quarter 2008 level. Accounts receivable increased year-over-year by $434,000 to $2.8 million, representing a DSO (Days Sales Outstanding) of 94 days, which compares to a DSO of 140 days for the previous year. At year end 2008, the Company's current ratio was 11.9-to-1, compared to 6.1-to-1 for the previous year level. The Company achieved positive shareholder equity for the first time on December 31, 2007, which has consistently grown through December 31, 2008 to $13.3 million.

As of December 31, 2008, Electronic Game Card had approximately 56.8 million shares of common stock outstanding, an increase of approximately 3.5 million shares from September 30, 2008 predominately reflecting the conversion of the Series A 6% Convertible Redeemable Preferred Stock during December 2008. The weighted average number of fully diluted common shares used in the calculation of the 2008 fully diluted earnings per share was 63.1 million shares, reflecting the use of the treasury stock method and the exclusion of options, warrants and the convertible preferred, if anti-dilutive. During the most recent Board of Directors meeting held February 23, 2009, the company has elected to authorize a 5 percent share repurchase program subject to convertible preferred shareholder approval. As of December 31, 2008 the Company had net operating tax loss carry forwards of $11.9 million in the United States and $7.2 million in the United Kingdom that may be used to offset future taxable income through 2023.

"2008 marked the Company's second successful profitable growth year. Our balance sheet is strong and our net cash balance is building consistently. Our company's technology platform is robust and has been prepared to quickly evolve into the next stage of the Company's growth. Electronic Game Card is securely positioned to achieve its earnings guidance of $0.14 per share for 2009," commented Kevin Donovan, CEO of Electronic Game Card, Inc. "The arrival of new management with new, innovative ideas, enthusiasm and key business relationships, will mark an inflection point in the growth of EGC, which should add to growth during 2009 as new opportunities in each of the company's three core business segments of gaming, promotions, and education materialize."


CONFERENCE CALL
Date/Time: Monday, March 16, 2009--4:30 p.m. (ET)
Telephone Number: 888-679-8034
International Dial-In Number: 617-213-4847
Participant Pass code: 73153638
Internet Access: www.electronicgamecard.com or
www.earnings.com

It is recommended that participants phone-in at least 10 minutes before the call is scheduled to begin. Participants may pre-register for the call at -https://www.theconferencingservice.com/prereg/key.process?key=P8G437EPW

Pre-registrants will be issued a pin number to use when dialing into the live call which will provide quick access to the conference by bypassing the operator upon connection. A replay of the conference call in its entirety will be available approximately one hour after its completion by dialing 888-286-8010 (U.S.), 617-801-6888 (International) and entering the pass code 88853143 and on the Internet at www.earnings.com.


Contact:

Yvonne L. Zappulla
Managing Director
Grannus Financial Advisors, Inc.
[phone]
[e-mail]

or

Kevin Donovan
Chief Executive Officer
Electronic Game Card, Inc.
[phone]
[e-mail]

About Electronic Game Card, Inc.

Electronic Game Card Inc., (OTC Bulletin Board: EGMI - News), develops, produces and markets innovative games to the promotional industry worldwide, toys and games, casinos and lottery. The Company's lead product is the EGC Electronic GameCard(TM), a unique credit card-sized pocket game combining patent and patent-pending proprietary technology of interactive capability with "instant win" excitement. The "EGC Electronic GameCard(TM)" 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 and distributors globally and currently has agents and distributors in North America, United Kingdom, Ireland, Mexico, Italy, Sweden, Norway, Denmark, Finland, South Africa Australia, New Zealand and Japan.

For further information please visit www.electronicgamecard.com

February 2008, Electronic GameCard(TM) received Gaming Laboratory International approval for security and product robustness. In July 2005, the Public Gaming Research Institute (PGRI) named the Electronic GameCard(TM) 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.



Financial Statements Follow


ELECTRONIC GAME CARD, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

December 31, December 31,
2008 2007
ASSETS

CURRENT ASSETS $ $
Cash 8,281899 4,753,040
Cash equivalents 876,186 -
Accounts receivable 2,757,685 2,323,543
Deposit on inventory 51,833 70,071
Other receivables 120,109 92,100
Deferred charges 38,119 190,595
Value Added Tax receivable 25,916 31,531
TOTAL CURRENT ASSETS 12,151,747 7,460,880

PROPERTY AND EQUIPMENT
Plant and equipment, net 68,900 76,073
Office equipment 58,078 66,965
Furniture & fixtures 1,016 1,402
Less accumulated depreciation (106,398) (100,390)
PROPERTY AND EQUIPMENT, NET $21,596 $44,050

OTHER ASSETS
Patents 258,321 183,034
Investments 6,497,470 2,886,427
TOTAL ASSETS $18,929,135 $10,574,391

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES
Accounts payable $749,118 $659,891
Accrued expenses 268,748 560,046
TOTAL CURRENT LIABILITIES 1,017,866 1,219,937

NON-CURRENT LIABILITIES
Deferred license fees 279,625 779,625

TOTAL LIABILITIES 1,297,491 1,999,562
Series A 6% Convertible Redeemable
Preferred Stock $.001 par value;
10,000,000 shares authorized;
4,420,404 issued and outstanding
in 2008 and 7,507,729 in 2007. 4,464,628 7,582,806

STOCKHOLDERS' EQUITY
(DEFICIT)
Preferred stock; $0.001 par value;
10,000,000 shares authorized - -
Common stock; $0.001 par
value; 100,000,000
shares authorized; 57,109 48,012
57,109,428 and 48,011,851 shares
issued and outstanding in 2008
and 2007,
Respectively
Additional paid in capital 33,321,352 27,264,272
Accumulated other comprehensive loss (1,018,738) (856,693)
Accumulated deficit (19,192,707) (25,463,568)
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) 13,277,402 992,023

TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $18,929,135 $10,574,391



ELECTRONIC GAME CARD, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME


For the Three For the Twelve
Months Ended Months Ended
December 31, December 31,
2008 2007 2008 2007
Revenues 2,824,726 1,787,834 $10,640,596 $6,038,058
Cost of sales 644,558 343,460 2,550,147 1,474,312
Gross margin 2,180,168 1,444,375 8,098,449 4,563,747

Operating expenses
Sales and marketing 24,221 23,286 79,175 28,489
General and
Administrative 229,398 104,200 680,635 535,740
Consulting expenses 366,940 302,015 926,954 584,600
Salaries and wages 106,435 58,498 383,832 370,633
Loss from joint venture - - - 18,638
Total operating expenses 726,994 497,999 2,070,595 1,538,100


Income (loss) from
Operations 1,453,175 956,376 6,027,854 3,025,647

Other income (expense)
Interest income 81,806 48,877 291,865 196,546
Interest expense (147,747) (162,924) (590,988) (651,790)
Gain on termination of
joint venture - - - 31,127
Gain on sale of investments 419,231 855,860 542,131 855,860
Total other income (expense) 353,290 741,813 243,008 431,743
Provision for income taxes - - - -

Net income (loss) 1,806,265 1,698,189 $6,270,862 $3,355,256

Foreign currency
translation loss (11,147) (43,613) (159,162) (102,133)

Comprehensive income /
(loss) 1,795,118 1,654,576 $6,111,700 $3,355,256


Net income per share - basic $.03 $0.03 $0.11 $0.07
Net income per share - diluted $.03 $0.03 $0.10 $0.06
Comprehensive income per
share - basic $.03 $0.03 $0.11 $0.06
Comprehensive income per
share - diluted $.03 $0.03 $0.10 $0.06
Weighted average shares
outstanding - basic 56,851,000 48,011,851 56,851,000 48,011,851

Weighted average shares
outstanding - diluted 63,102,255 51,761,851 63,102,255 51,761,851