EGC reports results

NEW YORK and LONDON, England -- (PRESS RELEASE) -- Electronic Game Card, Inc. (OTC Bulletin Board: EGMI) ("EGC"), today reported financial results for the second quarter ended June 30, 2008, marking the Company's sixth sequential quarter of profitable growth. Since year end 2007, Electronic Game Card was issued its first series of patents, received Gaming Laboratory International approval, announced its entry into two new markets, and nominated Lord Steinberg as its executive chairman as well as two additional Board members. A proxy was issued on July 24, 2008 to give notice of the company's annual meeting of stockholders to be held on Tuesday, September 2, 2008 in New York, N.Y. for the purposes of Board election and to ratify the selection of independent auditors.

Electronic Game Card, Inc. reported second quarter 2008 revenues of $2.5 million, an increase of approximately 69 percent from the prior year second quarter level of $1.5 million and an 8 percent increase compared to revenues of $2.3 million in the first quarter of 2008.

The Company reported a comprehensive net income applicable to common stockholders of $1.34 million or $0.021 per diluted share for the second quarter of 2008 versus $668,000 or $0.011 per diluted share for the second quarter 2007 and a net income of $1.29 million or $0.021 per diluted share for the first quarter 2008. Second quarter 2008 operating income was $1.42 million compared to $754,000 in the comparable period of 2007 and $1.38 million achieved during the first quarter 2008.

For the three months ended June 30, 2008, Electronic Game Card's gross profit on revenue totaled $1.9 million yielding a gross margin of 75 percent, representing the sixth consecutive quarter of gross margin in excess of company's target level of approximately 70 percent.

Operating expenses during the second quarter 2008 totaled $452,000, an increase of approximately $116,000 percent over the second quarter 2007, which was attributed to an increase in consulting expenses of $64,000 due to development work on new products and an increase in sales, general and administrative expenses of $57,000 as the company continued its shift towards outsourcing. Operating expenses increased by $84,000 from the prior first quarter 2008 predominately as a result of an increase in sales and marketing expenses as the company expands its existing reach and launches new markets.

Interest expense incurred during the quarter was reduced by approximately $20,000 over the previous second quarter to $147,000. This compares with interest expense of $148,000 in the first quarter of 2008. Interest income totaled $62,000.

For the six months ended June 30, 2008, Electronic Game Card revenues increased to $4.8 million, a 94 percent increase compared to the comparable period in 2007. Comprehensive Net income applicable to common shareholder significantly improved for the current year six month period to $2.6 million or $0.041 per diluted share, compared to $883,000 or $0.015 per diluted share for the comparable period in 2007.

Cash and equivalents on June 30, 2008 were $6.9 million, an increase of approximately $2.2 million from year end December 31, 2007 and an increase of $1.2 million from the period ending March 31, 2008. Accounts receivable remained approximately flat with the prior first quarter 2008 at $2.6 million. Total liabilities increased by $100,000 over the three month period to $2.0 million, excluding the 6 percent convertible redeemable preferred debt, which stands at $6.5 million since year end 2007.

As of June 30, 2008, Electronic Game Card had approximately 51.4 million shares of common stock outstanding. The Company's weighted average number of common shares fully diluted totaled 64.9 million (inclusive of the all options, warrants and the common stock underlying the convertible redeemable preferred debt). The aggregate proceeds if all options and warrants were to be exercised would total in excess of $2.4 million. As of June 30, 2008 the Company had net operating tax loss carry forwards in excess of $24.7 million 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 June 30, 2008, the Company's stockholder's equity totaled $5.9 million, an increase of $2.0 million from March 30, 2008.

"During this second quarter Electronic Game Card strengthened its financial liquidity position as current assets exceeded current liabilities and debt for the first time. As of 31st December 2007 year end the company had current assets of $7.4 million against current liabilities of $1.4 million and redeemable convertible notes of $7.5 million, whilst at June 30th the company has current assets of $9.7 million against current liabilities of $2.0 million and redeemable convertible notes of $6.5 million," commented a company spokesperson.

"Over the past two years, the current management effort has right-sized the company and implemented a profitable business model with a large and growing addressable market. Our goal for 2008 continues to be to penetrate new and existing markets, continue to grow our patented IP and build successful distribution partnerships. We maintain our high degree of confidence in our $0.10 fully diluted earnings per share guidance for 2008 and have already begun to build a strong and growing pipeline to accomplish our $0.14 guidance for 2009. We intend to leave a strong foundation in place so that the next administration led, with shareholder approval, by Lord Steinberg can take our Company to the next level."