Electronic Game Card Announces the Activation of Native American Gaming Contract for $10.25 Million
Company Converts 44 percent of Series A Preferred Shares and Repurchases Underlying Stock
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NEW YORK and LONDON, Feb. 5 /PRNewswire-FirstCall/ -- Electronic Game Card, Inc. (OTC Bulletin Board: EGMI - News; "EGC"), announced today that an important contractual milestone had been reached in the launch of the Native American business with the start of its five year distribution contract with Sovereign Game Cards, LLC. In addition, the company's financial position has been improved by the completion of an agreement to repurchase and retire 2,851,686 shares of Series A 6% Convertible Redeemable Preferred EGC Stock and 960,000 warrants from an Institutional Investor for approximately $800,000.
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The initial contractual requirement by Sovereign Game Cards, LLC ("SGC") was received by Electronic Game Card on December 31, 2008. This triggered the start of the five-year, exclusive distribution contract to Native American Gaming territories by SGC for a minimum aggregated royalty payment of $10.25 million to EGC over the period. Under the terms of the 5-year exclusive agreement, SGC will produce, market, sell and distribute EGC Electronic GameCard(TM) units to Native American Indian-owned casinos and their related charity and beneficial lotteries within the United States and Canada. EGC will receive minimum royalty fees of $1 million during the first twelve months following commencement of the contract, increasing by $500,000 each succeeding twelve month period through the fourth term, and increasing by $750,000 in the final twelve month period.
Tom L. Darwin, founder and managing principal of Sovereign Game Cards, LLC expressed his company's enthusiasm in signing the licensing agreement with Electronic Game Card, Inc., "The EGC Electronic GameCard(TM) is the next generation of instant win tickets for revenue and Native American Indian gaming promotions. Operator and industry response has been extremely positive to the Sovereign Game Card's proposition and we have verified a robust business model that has been converted into contracted relationships with North America Casino operators for deliveries of EGC Electronic GameCard(TM) in 2009. Sovereign Game Card and its affiliates and distributors have long established relationships with tribal leaders and Native American Indian communities throughout the U.S., including more than twenty-five tribes representing hundreds of Native American Indian run Casinos and retail operations in Florida, New Mexico, Arizona, Oklahoma, Oregon, Louisiana, Michigan and California."
Electronic Game Card, Inc. has also completed an agreement to repurchase and retire 2,851,686 million shares of Series A 6% Convertible Redeemable Preferred Stock and 960,000 warrants from an Institutional Investor, completing its sale of its investment in the Company. To execute this agreement the company requested and received approval for the repurchase agreement by a majority of the investors who hold a majority interest in the Series A Preferred shares. The process for repurchase and retirement of the shares was completed in January 2009 and the repurchase agreement has therefore reduced Company's outstanding series preferred stock from $6.5 million to $3.7 million.
"This announcement shows the high degree of focus of the EGC Board of Directors to maximize revenue while looking to use the company's financial resources to best increase shareholder value and strengthen the company's fiscal structure," commented Lord Steinberg, Executive Chairman of Electronic Game Card, Inc. "This news, combined with the arrival of Kevin Donovan as the new Chief Executive Officer, and Anna Houssels as Executive Vice President of Sales for Electronic Game Card, on February 1, 2009, sends a clear message that EGC is entering a very exciting growth phase. Within the present economic environment, the focus on the current business, the growth of products and identified new business sectors, demonstrates the Board's commitment to growing EGC revenues and enhancing shareholder value."
Contact:
Yvonne L. Zappulla
Managing Director
Grannus Financial Advisors, Inc.
Call 212-681-4108
email yvonne@grannusfinancial.com
or
Kevin Donovan
Chief Executive Officer
Electronic Game Card, Inc.
Call 888-341-3421
email investor.relations@electronicgamecard.com
About Electronic Game Card. Inc.
Electronic Game Card Inc., (OTCBB: 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-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.
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