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EGMI - Electronic Game Card, Inc. Reports First Quarter 2007 Earnings

http://biz.yahoo.com/prnews/070516/nyw013.html?.v=95

Electronic Game Card Achieves Its First Profitable Quarter

NEW YORK and LONDON, May 16 /PRNewswire-FirstCall/ -- Electronic Game Card, Inc. (OTC Bulletin Board: EGMI - News; "EGC"), today reported financial results for the quarter ending March 31, 2007. This first quarter of 2007 is a notable quarter for the company. Electronic Game Card has completed its shift from a development stage company to a commercialized entity, generating a material improvement in revenues and achieving profitability for the first time in its history.

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Revenues for the first quarter of 2007 were $990,000 which approximately equaled the revenues achieved during the entire year of 2006. The company's strategic plan to fully utilize its proprietary technology platform and reposition its sales strategy started to take form during the quarter. Electronic Game Card began expanding its addressable market beyond its U.S. lottery business to include gaming card promotion. Given the company's recent successful renegotiation of its exclusive distribution partnership with Scientific Games to cover the North American and Italian lottery markets, Electronic Game Card is freed to focus on broadening the use of the GameCard and aggressively address a number of significant industry opportunities it has begun to develop within the gaming and promotional markets.

The Company achieved profitability during the quarter reporting net income of $215,113 or $0.01 per share compared to a net loss of $1.9 million or $(0.08) for the first quarter of 2006.

Electronic Game Card's gross profit on revenue for the quarter ended March 31, 2007 was $735,000. Selling, general and administrative expenses (SG&A) declined during the first quarter 2007 to $331,000 as compared to first quarter 2006 at $549,000.

Cash and equivalents on March 31, 2007 were $2.8 million, a decrease of approximately $220,000 from the period ending December 31, 2006. Accounts receivable increased from $415,000 at year end 2006 to $981,000 first quarter 2007. As of March 31, 2007, Electronic Game Card had approximately 44.1 million shares of common stock outstanding, with fully diluted share count totaling 56.6 million. The aggregate proceeds if all options and warrants were to be exercised would approximate $5.4 million. At quarter end, the Company had a net operating tax loss carry forward of approximately $29.4 million that may be offset against future taxable income through 2023.

The physical design of the GameCard has been enhanced through modifications to circuit design, leading to a more robust product. Performance is constantly being reviewed to improve the GameCard still further. In addition to improved circuit design, the company is currently upgrading the MCU Body (chip) on a number of games, further enhancing reliability. Currently Electronic Game Card has a portfolio 17 games and anticipates introducing an additional 5 games over the next four quarters.

"Electronic Game Card has completed the turn around begun in the first quarter of 2006 and is now a fully commercial entity addressing a large and expanding market opportunity," commented a company spokesperson. "Having right-sized the company, and templatized the GameCard to potentially capture maximum gross margin, we are now prepared to meaningfully penetrate various target markets in conjunction with channel partners. Our goal over the next several quarters is to achieve production economies as we increase contract volumes, introduce new GameCard capabilities that could provide pricing flexibility and continue to fine tune our balance sheet. We anticipate consistent sequential quarterly growth in both revenues and profits. Now that we have finalized a licensing/royalty agreement with Scientific Games, we are able to refine our guidance for the current year projecting revenues of approximately $6 million which are projected to generate earnings per share of 4c.

About Electronic Game Card. Inc.

Electronic Game Card Inc., (OTCBB: EGMI - News), develops, produces and markets innovative games to the lottery, casino, and promotional industry worldwide. The Company's lead product is the EGC GameCard, a unique credit card-sized pocket game combining 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 state and national lotteries, Gaming and Casinos, Indian Gaming and the expanding sales promotion and incentive markets. EGMI develops sales and marketing relationships with agents globally and has a joint venture with a major lottery focused US listed corporation which owns approximately 8% of the EGMI common stock. For further information please visit www.electronicgamecard.com

July 2005, the Public Gaming Research Institute (PGRI) named the Electronic GameCard(TM) as a 2005 Lottery Product of the Year during its conference in Las Vegas. The PGRI award recognizes the importance of new products to the growth and continuing success of worldwide lotteries.

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.


ELECTRONIC GAME CARD, INC
CONSOLIDATED BALANCE SHEET
(Unaudited)

March 31, December 31,
2007 2006
ASSETS
CURRENT ASSETS
Cash and cash equivalents $2,833,280 $3,052,733
Accounts receivable 981,268 415,067
Deposit on inventory 97,571 97,571
Value Added Tax receivable 16,330 19,604
Deferred charges 304,952 343,071
Related party receivable - 79,275
Total Current Assets 4,233,401 4,007,321

PROPERTY AND EQUIPMENT
Plant and machinery 75,628 75,586
Office equipment 63,900 63,852
Furniture and fixtures 1,378 1,375
Less: Accumulated depreciation (81,712) (78,627)
Total Property and Equipment, Net 59,194 62,186

OTHER ASSETS
Patents 29,234 29,234
Investments, at cost 1,182,893 1,018,269
TOTAL ASSETS $5,504,722 $5,117,010

LIABILITIES AND STOCKHOLDERS' EQUITY/(DEFICIT)
CURRENT LIABILITIES
Accounts payable $1,165,252 $1,140,291
Interest payable 129,000 -
Total Current Liabilities 1,294,252 1,140,291

NON-CURRENT LIABILITIES
Deficit in Joint Venture 31,127 12,489

Total Non-Current Liabilities - 12,489
Total Liabilities 1,325,379 1,152,780

Series A6% convertible redeemable
preferred stock, par value $0.001,
10,000,000 shares authorized,
5,777,333 and 5,604,825 shares issued
and outstanding as of March 31, 2007 8,407,238 8,407,238

STOCKHOLDERS' EQUITY/(DEFICIT)
Common stock, par value $0.001, 100,000,000
shares authorized, 44,168,683 and
26,131,513 shares issued and outstanding
as of March 31, 2007 44,169 44,169
Additional paid-in capital 25,188,340 25,188,340
Currency translation adjustment (817,608) (754,560)
Accumulated deficit (28,652,796) (28,920,957)
Total Stockholders' Equity/(Deficit) (4,227,895) (4,443,008)
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY/(DEFICIT) $5,504,722 $5,117,010



ELECTRONIC GAME CARD, INC
Consolidated Statements of Operations
(Unaudited)

For the Three Months
March 31,
2007 2006

Revenue $990,538 $152,145
Cost of sales 255,345 82,486
Gross Profit 735,193 69,659

Operating expenses
Sales and marketing 1,172 19,399
General and administrative 104,617 167,354
Consulting expenses 95,005 188,348
Salaries and wages 112,245 174,309
Loss from joint venture 18,638
Total operating expenses 331,677 549,410

Net operating profit / (loss) 403,516 (479,751)

Other income (expenses)
Interest income 42,701 -
Interest expense (168,056) (1,458,995)
(125,355) (1,458,995)

Net Profit / (Loss) $278,161 $(1,938,746)

Foreign currency translation
adjustment gain / (loss) (63,048) (635)

Total Comprehensive Income / (Loss) $215,113 $(1,939,381)

Net Profit / (Loss) Per Common
Share - Basic and Diluted $0.01 $(0.08)

Weighted Average Number of
Shares Outstanding $44,168,683 $25,765,765