UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549







FORM
10-Q/A







x           QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934





For
the quarterly period ended September 30, 2009





OR





 ̈           TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934





For
the transition period
from             to





Commission
file number 000-25843


ELECTRONIC
GAME CARD, INC.


(Exact
Name of Registrant as Specified in Its Charter)







Nevada
              (State
      or Other Jurisdiction of
              Incorporation
      or Organization)
              
              5405
      Alton Parkway, Suite A-353, Irvine, CA 94602
              (Address
      of Principal Executive Offices)
            87-0570975
              (I.R.S.
      Employer
              Identification
      No.)
              
              NV
      89701
              (Zip
      Code)





(866)
924-2924


(Registrant’s
Telephone Number, Including Area Code)





(Former
Name, Former Address and Former Fiscal Year, if Changed Since Last
Report)








Indicate
by check mark whether the registrant: (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.    Yes xNo  ̈





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer.  See definition of
“accelerated filer” and “large accelerated filer” in Rule 12b-2 of the Exchange
Act.





Large
accelerated filer  ̈  Accelerated
filer ̈  Non-accelerated
filer  ̈Smaller reporting company x





Indicate
by check mark whether the registrant is a shell company (as defined by Rule
12b-2 of the Exchange Act.  Yes  ̈ No x





Indicate
the number of shares outstanding of each of the issuer’s classes of common
stock, as of the latest practicable date.





Class
            
            Outstanding at November 15,
      2009Common
      Stock, $0.001 par value
            
            70,086,709










NOTE
REGARDING FORWARD-LOOKING STATEMENTS





This
Quarterly Report on Form 10-Q contains forward-looking statements, including
statements regarding future revenues, research and development programs,
clinical trials and collaborations and our future cash
requirements.  The words or phrases “will”, “will likely result”, “are
expected to”, “will continue”, “estimate”, “project”, “potential”, “believe”,
“plan”, “anticipate”, “expect”, “intend”, or similar expressions and variations
of such words are intended to identify forward-looking
statements.  Statements that are not historical facts are based on our
current expectations, beliefs, assumptions, estimates, forecasts and projections
for our business and the industry and markets related to our
business.  The statements contained in this report are not guarantees
of future performance and involve certain risks, uncertainties and assumptions
which are difficult to predict.  Therefore, actual outcome and results
may differ materially from what is expressed in such forward-looking
statements.





The
forward-looking statements in this Quarterly Report on Form 10-Q speaks as of
the date of this report.  We expressly disclaim any obligations or
undertaking to disseminate any updates or revisions to any forward-looking
statement contained in this Quarterly Report to reflect any change in our
expectations with regard thereto or any change in events, conditions or
circumstances on which any forward-looking statement is based, except as may be
required by law.




2





ELECTRONIC
GAME CARD, INC.


TABLE
OF CONTENTS





PAGEPART
      I.
                                            FINANCIAL
      INFORMATIONITEM 1 – Financial
      StatementsConsolidated
      Balance Sheets as of September 30, 2009 (Unaudited), and December 31,
      2008
                                            4Consolidated
      Statements of Operations and Comprehensive Loss for the Fiscal Three
      Months and Nine Months Ended September 30, 2009 and 2008
      (Unaudited)
                                            5Consolidated
      Statements of Cash Flows for the Fiscal Six Months Ended September 30,
      2009 and September 30, 2008 (Unaudited)
                                            6Notes
      to Unaudited Consolidated Financial Statements
                                            7ITEM 2 – Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
                                            14ITEM 3 – Quantitative
      and Qualitative Disclosures About Market Risk
                                            17ITEM 4 – Controls and
      Procedures
                                            17PART
      II.
                                            OTHER
      INFORMATIONITEM 1 – Legal
      Proceedings
                                            17ITEM 2 – Changes in
      Securities
                                            17ITEM 3 – Defaults Upon
      Senior Securities
                                            18ITEM 4 – Submission of
      Matters to a Vote of Security Holders
                                            18ITEM 5 – Other
      Information
                                            18ITEM 6 –
      Exhibits
                                            18SIGNATURES
                                            19




3


PART I–FINANCIAL
INFORMATION





ITEM
1.  FINANCIAL STATEMENTS





ELECTRONIC
GAME CARD, INC.


CONSOLIDATED
BALANCE SHEETS




September 30, 2009
                    
                    
                    December 31, 2008(Unaudited)ASSETSCURRENT
      ASSETS:Cash
      and cash equivalents
                    
                    $
                    12,696,691
                    
                    
                    $
                    8,281,899Marketable
      securities
                    
                    
                    -
                    
                    
                    
                    876,186Accounts
      receivable
                    
                    
                    3,668,448
                    
                    
                    
                    2,757,685Deposit
      on inventory
                    
                    
                    1,214,333
                    
                    
                    
                    51,833Other
      receivables
                    
                    
                    162,757
                    
                    
                    
                    120,109VAT
      receivable
                    
                    
                    14,658
                    
                    
                    
                    25,916Common
      stock receivable
                    
                    
                    628,761
                    
                    
                    
                    -Deferred
      charges
                    
                    
                    -
                    
                    
                    
                    38,119Total
      current assets
                    
                    
                    18,385,648
                    
                    
                    
                    12,151,747Machinery
      and equipment
                    
                    
                    70,794
                    
                    
                    
                    68,900Office
      equipment
                    
                    
                    60,425
                    
                    
                    
                    58,078Furniture
      and fixtures
                    
                    
                    1,118
                    
                    
                    
                    1,017Less
      accumulated depreciation
                    
                    
                    (125,088
                    )
                    
                    
                    (106,398
                    )Net
      property, plant and equipment
                    
                    
                    7,249
                    
                    
                    
                    21,597OTHER
      ASSETSPatents,
      net
                    
                    
                    593,111
                    
                    
                    
                    258,321Investments
                    
                    
                    8,087,470
                    
                    
                    
                    6,497,470Total
      assets
                    
                    $
                    27,073,478
                    
                    
                    $
                    18,929,135LIABILITIES
      AND SHAREHOLDERS’ EQUITY/(DEFICIT)CURRENT
      LIABILITIES:Accounts
      payable
                    
                    $
                    769,578
                    
                    
                    $
                    749,118Accrued
      liabilities
                    
                    
                    1,358,264
                    
                    
                    
                    268,748Total
      current liabilities
                    
                    
                    2,127,842
                    
                    
                    
                    1,017,866Deferred
      license fees
                    
                    
                    -
                    
                    
                    
                    279,625Total
      liabilities
                    
                    
                    2,127,842
                    
                    
                    
                    1,297,491Series
      A 6% convertible preferred stock, $.001 par value, 10,000,000 shares
      authorized; 2,840,163 and 4,464,628 shares issued and outstanding at
      September 30, 2009 and December 31, 2008, respectively
                    
                    
                    2,840,163
                    
                    
                    
                    4,464,628SHAREHOLDERS’
      EQUITY/(DEFICIT)Common
      stock, $.001 par value, 100,000,000 shares authorized; 68,353,451 and
      57,137,661 shares issued and outstanding at September 30, 2009 and
      December 31, 2008, respectively
                    
                    
                    68,353
                    
                    
                    
                    57,137Additional
      paid in capital
                    
                    
                    36,772,260
                    
                    
                    
                    33,318,440Accumulated
      deficit
                    
                    
                    (13,618,404
                    )
                    
                    
                    (19,192,706
                    )Accumulated
      other comprehensive loss
                    
                    
                    (1,116,736
                    )
                    
                    
                    (1,015,855
                    )Total
      shareholders’ equity
                    
                    
                    22,105,473
                    
                    
                    
                    13,167,016Total
      liabilities and shareholders’ equity
                    
                    $
                    27,073,478
                    
                    
                    $
                    18,929,135





The
accompanying notes are an integral part of these unaudited financial
statements.


4





ELECTRONIC
GAME CARD, INC.


CONSOLIDATED
STATEMENTS OF OPERATIONS




(Unaudited)




For the Three Months Ended
                                                    
                                                    
                                                    For the Nine Months EndedSeptember 30,
                                                      2009
                                                    
                                                    
                                                    September 30,
                                                      2008
                                                    
                                                    
                                                    September 30,
                                                      2009
                                                    
                                                    
                                                    September 30,
                                                      2008Revenue
                                                    
                                                    $
                                                    4,238,061
                                                    
                                                    
                                                    $
                                                    3,043,566
                                                    
                                                    
                                                    $
                                                    10,245,698
                                                    
                                                    
                                                    $
                                                    7,823,870Cost
      of revenue
                                                    
                                                    
                                                    924,799
                                                    
                                                    
                                                    
                                                    744,000
                                                    
                                                    
                                                    
                                                    2,163,741
                                                    
                                                    
                                                    
                                                    1,905,589Gross
      margin
                                                    
                                                    
                                                    3,313,262
                                                    
                                                    
                                                    
                                                    2,299,566
                                                    
                                                    
                                                    
                                                    8,081,957
                                                    
                                                    
                                                    
                                                    5,918,281Operating
      expenses:Sales
      and marketing
                                                    
                                                    
                                                    94,550
                                                    
                                                    
                                                    
                                                    13,600
                                                    
                                                    
                                                    
                                                    165,696
                                                    
                                                    
                                                    
                                                    54,954General
      and administrative
                                                    
                                                    
                                                    256,276
                                                    
                                                    
                                                    
                                                    123,639
                                                    
                                                    
                                                    
                                                    619,751
                                                    
                                                    
                                                    
                                                    451,237Professional
      fees
                                                    
                                                    
                                                    408,219
                                                    
                                                    
                                                    
                                                    282,865
                                                    
                                                    
                                                    
                                                    986,868
                                                    
                                                    
                                                    
                                                    560,014Salaries
      and wages
                                                    
                                                    
                                                    89,047
                                                    
                                                    
                                                    
                                                    104,407
                                                    
                                                    
                                                    
                                                    245,728
                                                    
                                                    
                                                    
                                                    277,397Total
      operating expenses
                                                    
                                                    
                                                    848,092
                                                    
                                                    
                                                    
                                                    524,511
                                                    
                                                    
                                                    
                                                    2,018,043
                                                    
                                                    
                                                    
                                                    1,343,602Income
      from operations
                                                    
                                                    
                                                    2,465,170
                                                    
                                                    
                                                    
                                                    1,775,055
                                                    
                                                    
                                                    
                                                    6,063,914
                                                    
                                                    
                                                    
                                                    4,574,679Other
      income (expense):Interest
      income
                                                    
                                                    
                                                    80,799
                                                    
                                                    
                                                    
                                                    87,014
                                                    
                                                    
                                                    
                                                    232,932
                                                    
                                                    
                                                    
                                                    210,059Interest
      expense
                                                    
                                                    
                                                    (50,228
                                                    )
                                                    
                                                    
                                                    (147,747
                                                    )
                                                    
                                                    
                                                    (219,313
                                                    )
                                                    
                                                    
                                                    (443,041
                                                    )Gain
      on sale of investments & marketable securities
                                                    
                                                    
                                                    542,704
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    569,769
                                                    
                                                    
                                                    
                                                    122,900Total
      other income (expense)
                                                    
                                                    
                                                    573,275
                                                    
                                                    
                                                    
                                                    (60,733
                                                    )
                                                    
                                                    
                                                    583,388
                                                    
                                                    
                                                    
                                                    (110,082
                                                    )Net
      income before provision for income taxes
                                                    
                                                    
                                                    3,038,445
                                                    
                                                    
                                                    
                                                    1,714,322
                                                    
                                                    
                                                    
                                                    6,647,302
                                                    
                                                    
                                                    
                                                    4,464,597Provision
      for income taxes
                                                    
                                                    
                                                    1,073,000
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    1,073,000
                                                    
                                                    
                                                    
                                                    -Net
      income
                                                    
                                                    $
                                                    1,965,445
                                                    
                                                    
                                                    $
                                                    1,714,322
                                                    
                                                    
                                                    $
                                                    5,574,302
                                                    
                                                    
                                                    $
                                                    4,464,597Other
      comprehensive (loss) gain:Foreign
      currency translation loss
                                                    
                                                    
                                                    (231,331
                                                    )
                                                    
                                                    
                                                    (28,947
                                                    )
                                                    
                                                    
                                                    (100,881
                                                    )
                                                    
                                                    
                                                    (148,015
                                                    )Unrealized
      profit on marketable securities
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -Comprehensive
      income
                                                    
                                                    $
                                                    1,734,114
                                                    
                                                    
                                                    $
                                                    1,685,375
                                                    
                                                    
                                                    $
                                                    5,473,421
                                                    
                                                    
                                                    $
                                                    4,316,382Net
      income per common share (basic)
                                                    
                                                    $
                                                    0.03
                                                    
                                                    
                                                    $
                                                    0.03
                                                    
                                                    
                                                    $
                                                    0.09
                                                    
                                                    
                                                    $
                                                    0.08Weighted
      average number of common shares outstanding (basic)
                                                    
                                                    
                                                    65,109,353
                                                    
                                                    
                                                    
                                                    52,041,416
                                                    
                                                    
                                                    
                                                    63,046,824
                                                    
                                                    
                                                    
                                                    51,604,503Net
      income per common share (diluted)
                                                    
                                                    $
                                                    0.03
                                                    
                                                    
                                                    $
                                                    0.03
                                                    
                                                    
                                                    $
                                                    0.08
                                                    
                                                    
                                                    $
                                                    0.07Weighted
      average number of common shares outstanding (diluted)
                                                    
                                                    
                                                    72,151,865
                                                    
                                                    
                                                    
                                                    65,707,416
                                                    
                                                    
                                                    
                                                    69,286,884
                                                    
                                                    
                                                    
                                                    64,674,490


The
accompanying notes are an integral part of these unaudited financial
statements.




5


ELECTRONIC
GAME CARD, INC.


CONSOLIDATED
STATEMENTS OF CASH FLOWS




(Unaudited)




Nine months endedSeptember 30, 2009
                  
                  
                  September 30, 2008Cash
      flows from operating activities:Net
      income
                  
                  $
                  5,574,302
                  
                  
                  $
                  4,464,597Adjustments
      to reconcile net income from continuing operations to net cash used in
      operating activitiesDepreciation
      and amortization
                  
                  
                  18,690
                  
                  
                  
                  16,137Amortization
      of patents and licences
                  
                  
                  29,166
                  
                  
                  
                  -Amortization
      of deferred charges
                  
                  
                  38,119
                  
                  
                  
                  114,357Deferred
      license fees
                  
                  
                  (279,625
                  )
                  
                  
                  (375,000
                  )Stock
      issued for services
                  
                  
                  -
                  
                  
                  
                  192,000Gain
      on sale of investments
                  
                  
                  (415,075
                  )
                  
                  
                  (122,900
                  )Gain
      on sale of marketable securities
                  
                  
                  (154,694
                  )Preferred
      stock issued for interest
                  
                  
                  84,960
                  
                  
                  
                  -Change
      in assets and liabilities:Accounts
      receivable
                  
                  
                  (910,763
                  )
                  
                  
                  (1,770,166
                  )Deposit
      on inventory
                  
                  
                  (1,162,500
                  )
                  
                  
                  -Value
      Added Tax receivable
                  
                  
                  11,258
                  
                  
                  
                  874Other
      receivables
                  
                  
                  (42,648
                  )
                  
                  
                  (76,978
                  )Accounts
      payable
                  
                  
                  20,460
                  
                  
                  
                  (23,434
                  )Accrued
      liabilities and interest payable
                  
                  
                  1,081,381
                  
                  
                  
                  320,447Net
      cash provided by operating activities
                  
                  
                  3,893,031
                  
                  
                  
                  2,739,934Cash
      flows from investing activities:Purchase
      of patents
                  
                  
                  (13,956
                  )
                  
                  
                  (86,343
                  )Purchase
      of property and equipment
                  
                  
                  (6,132
                  )
                  
                  
                  -Purchase
      of investments
                  
                  
                  (1,340,000
                  )
                  
                  
                  (958,207
                  )Proceeds
      from sale of investments
                  
                  
                  675,000
                  
                  
                  
                  433,754Proceeds
      from sale of marketable securities
                  
                  
                  1,030,880
                  
                  
                  
                  -Net
      cash provided by(used in) investing activities
                  
                  
                  345,792
                  
                  
                  
                  (610,796
                  )Cash
      flows from financing activities:Common
      stock receivable
                  
                  
                  (628,761
                  )
                  
                  
                  -Cash
      paid for share buy back
                  
                  
                  (798,472
                  )
                  
                  
                  -Proceeds
      from issuance of Common Stock
                  
                  
                  1,704,083
                  
                  
                  
                  -Net
      cash provided by financing activities
                  
                  
                  276,850
                  
                  
                  
                  -Foreign
      currency exchange effect on cash
                  
                  
                  (100,881
                  )
                  
                  
                  (148,015
                  )Net
      increase in cash and cash equivalents
                  
                  
                  4,414,792
                  
                  
                  
                  1,981,123Cash
      and cash equivalents at beginning of period
                  
                  
                  8,281,899
                  
                  
                  
                  4,753,040Cash
      and cash equivalents at end of period
                  
                  $
                  12,696,691
                  
                  
                  $
                  6,734,163Supplemental
      disclosure of cash flow information:Cash
      paid during the period for :Interest
                  
                  $
                  -
                  
                  
                  
                  -Income
      Taxes
                  
                  $
                  -
                  
                  
                  
                  -Supplemental
      disclosure of cash flow information:Shares
      issued for investments
                  
                  $
                  500,000
                  
                  
                  
                  1,083,673Shares
      issued for conversion of preference shares
                  
                  $
                  1,709,425
                  
                  
                  
                  1,032,884Shares
      issued for intangible assets
                  
                  $
                  350,000
                  
                  
                  
                  -


The
accompanying notes are an integral part of these unaudited financial
statements.




6




ELECTRONIC GAME CARD,
INC.


NOTES TO UNAUDITED
CONSOLIDATED FINANCIAL STATEMENTS





1.
            Organization and Basis
      of Presentation





Organization





The
      Company was incorporated under the laws of the England on April 6, 2000,
      under the name of Electronic Game Card, Ltd.  Until 2002, the
      Company remained dormant and had no operations until August 8
      2002.  On May 5, 2003, the Company entered into an agreement
      whereby it acquired 100% of the outstanding stock of Electronic Game Card
      Marketing, a Delaware Company.





On
      December 5, 2003, the Company acquired 100% of the outstanding stock of
      the Electronic Game Card, Inc. (Nevada) in a reverse
      acquisition.  At this time, a new reporting entity was created
      and the name of the Company was changed to Electronic Game Card,
      Inc.





The
Company is engaged in the development, marketing, sale and distribution of
recreational electronic software which is primarily targeted towards the global
sales promotion, gaming and lottery markets.  The Company’s patent
protected technology was originally conceived for the global sales promotion and
lottery industries and marketed under the name of Electronic
GameCardTM.  The shape of a pocket GameCard is flexible to clients’
needs but is currently approximately the size of a credit card, operated
electronically by touch and incorporating a microchip and LCD screen showing
numbers or icons.  Additional markets with considerable potential for
the Company's reward based games products are Indian Gaming, general gaming
outlets like bingo halls and casinos and private and social
lotteries.  The Company is launching its technology into new market
sectors such as Education, Sports/Hobbies and Celebrations.  The
Company designs its GameCards to play game types, formats and prize structures
as required by its customers.  The Company is building a software
library of generic game formats of popular, widely recognized and understood
themes.  The current software library stands at 35 unique
games.





Basis
of Presentation





The
unaudited consolidated financial statements included herein have been prepared
with accounting principles generally accepted in the United States for interim
financial information and pursuant to the rules and regulations of the
Securities and Exchange Commission.  They do not include all
information and notes required by generally accepted accounting principles for
complete financial statements.  However, except as disclosed herein,
there have been no material changes in the information disclosed in the notes to
the consolidated financial statements included in the Annual Report on Form 10-K
of Electronic Game Card, Inc. for the year ended December 31, 2008.





In the
opinion of management, all adjustments (including normal recurring accruals)
considered necessary for a fair presentation have been
included.  Operating results for the three and nine months ended
September 30, 2009 are not necessarily indicative of the results that may be
expected for any other interim period or the entire year.  For further
information, these unaudited consolidated financial statements and the related
notes should be read in conjunction with the Company’s audited consolidated
financial statements for the year ended December 31, 2008 included in the
Company’s Annual Report on Form 10-K.





Principles
of Consolidation





The
consolidated financial statements include the accounts of the following
companies:





·
            Electronic
      Game Card, Inc. (Nevada
Corporation)


·
            Electronic
      Game Card, Ltd. (English
Corporation)


·
            Electronic
      Game Card Marketing (A Delaware
Corporation)





The
results of subsidiaries acquired during the year are consolidated from their
effective dates of acquisition.  All significant inter-company
accounts and transactions have been eliminated.





Certain
amounts in the prior periods consolidated financial statements and notes have
been reclassified to conform to the current period’s
presentation.


7





Foreign
Currency Translation





The
Company's functional currency for its foreign subsidiary, Electronic Game Card
Ltd., is the British (UK) Pound and the reporting currency is the U.S.
Dollar.  All elements of financial statements are translated using a
current exchange rate.  For assets and liabilities, the exchange rate
at the balance sheet date is used.  Stockholders’ Equity is translated
using the historical rate.  For revenues, expenses, gains and losses
the weighted average exchange rate for the period is
used.  Translation gains and losses are included as a separate
component of stockholders’ equity as other comprehensive income or
loss.  Gain and losses resulting from foreign currency transactions
are included in comprehensive income or loss.





Pervasiveness
of Estimates





The
preparation of the consolidated financial statements in conformity with
generally accepted accounting principles in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the consolidated financial statements and the
reported amounts of revenues and expenses during the reporting
period.  Actual results could differ from those
estimates.





The
Company’s unaudited consolidated financial statements are based on a number of
estimates, including accruals for accounts payable and interest expense,
amortization of deferred charges, allowance for doubtful accounts, estimated
useful lives of property and equipment, and fair value of
investments.





Recent
Accounting Pronouncements





With the
exception of those stated below, there have been no recent accounting
pronouncements or changes in accounting pronouncements during the nine months
ended September 30, 2009, as compared to the recent accounting pronouncements
described in the Annual Report that are of material significance, or have
potential material significance, to the Company.





Effective
July 1, 2009, the Company adopted the Financial Accounting Standards Board
(“FASB”) Accounting Standards Codification (“ASC”) 105-10, Generally Accepted
Accounting Principles – Overall (“ASC 105-10”). ASC 105-10 establishes the FASB
Accounting Standards Codification (the “Codification”) as the source of
authoritative accounting principles recognized by the FASB to be applied by
nongovernmental entities in the preparation of financial statements in
conformity with U.S. GAAP.  Rules and interpretive releases of the SEC
under authority of federal securities laws are also sources of authoritative
U.S. GAAP for SEC registrants.  All guidance contained in the
Codification carries an equal level of authority.  The Codification
superseded all existing non-SEC accounting and reporting
standards.  All other non-grandfathered, non-SEC accounting literature
not included in the Codification is non-authoritative.  The FASB will
not issue new standards in the form of Statements, FASB Staff Positions or
Emerging Issues Task Force Abstracts. Instead, it will issue Accounting
Standards Updates (“ASUs”).  The FASB will not consider ASUs as
authoritative in their own right.  ASUs will serve only to update the
Codification, provide background information about the guidance and provide the
bases for conclusions on the change(s) in the
Codification.  References made to FASB guidance throughout this
document have been updated for the Codification.





Effective
January 1, 2008, the Company adopted FASB ASC 820-10, Fair Value Measurements
and Disclosures – Overall (“ASC 820-10”) with respect to its financial assets
and liabilities.  In February 2008, the FASB issued updated guidance
related to fair value measurements, which is included in the Codification in ASC
820-10-55, Fair Value Measurements and Disclosures – Overall – Implementation
Guidance and Illustrations.  The updated guidance provided a one year
deferral of the effective date of ASC 820-10 for non-financial assets and
non-financial liabilities, except those that are recognized or disclosed in the
financial statements at fair value at least annually.  Therefore, the
Company adopted the provisions of ASC 820-10 for non-financial assets and
non-financial liabilities effective January 1, 2009, and such adoption did not
have a material impact on the Company’s results of operations or financial
condition.





Effective
April 1, 2009, the Company adopted FASB ASC 820-10-65, Fair Value Measurements
and Disclosures – Overall – Transition and Open Effective Date Information (“ASC
820-10-65”).  ASC 820-10-65 provides additional guidance for
estimating fair value in accordance with ASC 820-10 when the volume and level of
activity for an asset or liability have significantly decreased.  ASC
820-10-65 also includes guidance on identifying circumstances that indicate a
transaction is not orderly.  The adoption of ASC 820-10-65 did not
have an impact on the Company’s results of operations or financial
condition.




8


Effective
April 1, 2009, the Company adopted FASB ASC 825-10-65, Financial Instruments –
Overall – Transition and Open Effective Date Information (“ASC 825-10-65”). ASC
825-10-65 amends ASC 825-10 to require disclosures about fair value of financial
instruments in interim financial statements as well as in annual financial
statements and also amends ASC 270-10 to require those disclosures in all
interim financial statements.  The adoption of ASC 825-10-65 did not
have a material impact on the Company’s results of operations or financial
condition.





Effective
January 1, 2008, the Company adopted FASB ASC 820-10, Fair Value Measurements
and Disclosures – Overall (“ASC 820-10”) with respect to its financial assets
and liabilities.  In February 2008, the FASB issued updated guidance
related to fair value measurements, which is included in the Codification in ASC
820-10-55, Fair Value Measurements and Disclosures – Overall – Implementation
Guidance and Illustrations.  The updated guidance provided a one year
deferral of the effective date of ASC 820-10 for non-financial assets and
non-financial liabilities, except those that are recognized or disclosed in the
financial statements at fair value at least annually.  Therefore, the
Company adopted the provisions of ASC 820-10 for non-financial assets and
non-financial liabilities effective January 1, 2009, and such adoption did not
have a material impact on the Company’s results of operations or financial
condition.





Effective
April 1, 2009, the Company adopted FASB ASC 820-10-65, Fair Value Measurements
and Disclosures – Overall – Transition and Open Effective Date Information (“ASC
820-10-65”). ASC 820-10-65 provides additional guidance for estimating fair
value in accordance with ASC 820-10 when the volume and level of activity for an
asset or liability have significantly decreased.  ASC 820-10-65 also
includes guidance on identifying circumstances that indicate a transaction is
not orderly.  The adoption of ASC 820-10-65 did not have an impact on
the Company’s results of operations or financial condition.





Effective
April 1, 2009, the Company adopted FASB ASC 825-10-65, Financial Instruments –
Overall – Transition and Open Effective Date Information (“ASC 825-10-65”). ASC
825-10-65 amends ASC 825-10 to require disclosures about fair value of financial
instruments in interim financial statements as well as in annual financial
statements and also amends ASC 270-10 to require those disclosures in all
interim financial statements.  The adoption of ASC 825-10-65 did not
have a material impact on the Company’s results of operations or financial
condition.





Effective
April 1, 2009, the Company adopted FASB ASC 855-10, Subsequent Events – Overall
(“ASC 855-10”).  ASC 855-10 establishes general standards of
accounting for and disclosure of events that occur after the balance sheet date
but before financial statements are issued or are available to be
issued.  It requires the disclosure of the date through which an
entity has evaluated subsequent events and the basis for that date – that is,
whether that date represents the date the financial statements were issued or
were available to be issued.  This disclosure should alert all users
of financial statements that an entity has not evaluated subsequent events after
that date in the set of financial statements being
presented.  Adoption of ASC 855-10 did not have a material impact on
the Company’s consolidated results of operations or financial
condition.  The Company has evaluated subsequent events through
September 30, 2009, to the date the financial statements were
issued.





Effective
July 1, 2009, the Company adopted FASB ASU No. 2009-05, Fair Value Measurements
and Disclosures (Topic 820) (“ASU 2009-05”).  ASU 2009-05 provided
amendments to ASC 820-10, Fair Value Measurements and Disclosures – Overall, for
the fair value measurement of liabilities.  ASU 2009-05 provides
clarification that in circumstances in which a quoted price in an active market
for the identical liability is not available, a reporting entity is required to
measure fair value using certain techniques.  ASU 2009-05 also
clarifies that when estimating the fair value of a liability, a reporting entity
is not required to include a separate input or adjustment to other inputs
relating to the existence of a restriction that prevents the transfer of a
liability.  ASU 2009-05 also clarifies that both a quoted price in an
active market for the identical liability at the measurement date and the quoted
price for the identical liability when traded as an asset in an active market
when no adjustments to the quoted price of the asset are required are Level 1
fair value measurements.  Adoption of ASU 2009-05 did not have a
material impact on the Company’s results of operations or financial
condition.





In
October 2009, the FASB issued ASU 2009-13, Multiple-Deliverable Revenue
Arrangements, (amendments to FASB ASC Topic 605, Revenue Recognition) (“ASU
2009-13”) and ASU 2009-14, Certain Arrangements That Include Software Elements,
(amendments to FASB ASC Topic 985, Software) (“ASU 2009-14”).  ASU
2009-13 requires entities to allocate revenue in an arrangement using estimated
selling prices of the delivered goods and services based on a selling price
hierarchy.  The amendments eliminate the residual method of revenue
allocation and require revenue to be allocated using the relative selling price
method.  ASU 2009-14 removes tangible products from the scope of
software revenue guidance and provides guidance on determining whether software
deliverables in an arrangement that includes a tangible product are covered by
the scope of the software revenue guidance.  ASU 2009-13 and ASU
2009-14 should be applied on a prospective basis for revenue arrangements
entered into or materially modified in fiscal years beginning on or after June
15, 2010, with early adoption permitted.  The Company does not expect
adoption of ASU 2009-13 or ASU 2009-14 to have a material impact on the
Company’s results of operations or financial condition.


9





FASB ASC
855, Subsequent Events (“ASC 855” and formerly referred to as FAS-165), modified
the subsequent event guidance.  The three modifications to the
subsequent events guidance are: 1) To name the two types of subsequent events
either as recognized or non-recognized subsequent events, 2) To modify the
definition of subsequent events to refer to events or transactions that occur
after the balance sheet date, but before the financial statement are issued or
available to be issued and 3) To require entities to disclose the date through
which an entity has evaluated subsequent events and the basis for that date,
i.e. whether that date represents the date the financial statements were issued
or were available to be issued.  This guidance is effective for
interim or annual financial periods ending after June 15, 2009, and should be
applied prospectively.





FASB ASC
105, Generally Accepted Accounting Principles (“ASC 105” and formerly referred
to as FAS 168) establishes the FASB Accounting Standards Codification as the
source of authoritative accounting principles recognized by the FASB to be
applied by non-governmental entities in the preparation of financial statements
in conformity with GAAP.  Rules and interpretive releases of the
Securities and Exchange Commission (SEC) under authority of federal securities
laws are also sources of authoritative GAAP for SEC registrants.  ASC
105 is effective for financial statements issued for interim and annual periods
ending after September 15, 2009.




2.
            Income
      Taxes





The
Company is subject to income taxes in the United States of America, United
Kingdom, and the state of New York. As of September 30, 2009 and 2008, the
Company had approximately $-0- and $13,810,000, respectively, in net operating
loss carry forwards for U.S. income tax reporting purposes.Current tax laws limit the amount of loss available to be offset
against future taxable income when a substantial change in ownership
occurs.  Therefore, the amount available to offset future taxable
income may be limited.  In establishing a provision for income tax
expense, the Company must make judgments and interpretations about the
application of these inherently complex tax laws.  The Company must
also make estimates about when in the future certain items will affect taxable
income in the various tax jurisdictions, both domestic and
foreign.  Disputes over interpretations of the tax laws may be subject
to review/adjudication by the court systems of the various tax jurisdictions or
may be settled with the taxing authority upon examination or audit.





A tax
benefit has been reported in the financial statements to the extent that it can
be utilized to offset current income tax.  The remaining potential tax
benefits of the loss carry-forwards are offset by a valuation
allowance.





For the
nine months ended September 30, 2009 and 2008 income tax expense was $1,073,000
and $0, respectively. The income tax expense provision is
included in the Company's accrued liabilities at September 30,
2009.


As
      at September 30,
                    
                    2009
                    
                    
                    2008Income
      Tax Provision at Statutory Rates
                    
                    $
                    2,553,000
                    
                    
                    $
                    1,657,000Adjustment
      to reconcile to the Income Tax Provision :Valuation
      Allowances
                    
                    
                    -
                    
                    
                    
                    -Benefit
      of Net Operating Loss carry forward
                    
                    
                    (1,480,000
                    )
                    
                    
                    (1,657,000
                    )Provision
      for Income Tax
                    
                    $
                    1,073,000
                    
                    
                    $
                    -





Income
taxes are recorded in accordance with Accounting Standards Codification
sub-topic 740-10, Income Taxes (“ASC 740-10”).  ASC 740-10 requires
the recognition of deferred tax assets and liabilities to reflect the future tax
consequences of events that have been recognized in the financial statements or
tax returns.  Measurement of the deferred items is based on enacted
tax laws.  In the event the future consequences of differences between
financial reporting bases and tax bases of the Company’s assets and liabilities
result in a deferred tax assets, ASC 740-10 requires an evaluation of the
probability of being able to realize the future benefits indicated by such
assets.  A valuation allowance related to a deferred tax asset is
recorded when it is more likely than not that some portion or the entire
deferred tax asset will not be realized.




10





3.
            Related Party
      Transactions





During
the three and nine months ended September 30, 2009, the Company incurred rent
expense of $19,700 and $49,249 for the London office compared with $17,517 and
$52,550 for the comparable periods of 2008, respectively, which it rents from an
affiliate of the Company.




4.
            Fair Value of
      Financial Instruments





Fair
Value Measurements





ASC
825-10 defines fair value as the price that would be received from selling an
asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date.  When determining the fair value
measurements for assets and liabilities required or permitted to be recorded at
fair value, the Company considers the principal or most advantageous market in
which it would transact and considers assumptions that market participants would
use when pricing the asset or liability, such as inherent risk, transfer
restrictions, and risk of nonperformance.  ASC 825-10 establishes a
fair value hierarchy that requires an entity to maximize the use of observable
inputs and minimize the use of unobservable inputs when measuring fair value.
ASC 825-10 establishes three levels of inputs that may be used to measure fair
value:




Level
      1
                          -
                          Quoted
      prices in active markets for identical assets or
    liabilities.Level
      2
                          -
                          Observable
      inputs other than Level 1 prices such as quoted prices for similar assets
      or liabilities; quoted prices in markets with insufficient volume or
      infrequent transactions (less active markets); or model-derived valuations
      in which all significant inputs are observable or can be derived
      principally from or corroborated by observable market data for
      substantially the full term of the assets or
  liabilities.Level
      3
                          -
                          Unobservable
      inputs to the valuation methodology that are significant to the
      measurement of fair value of assets or
  liabilities.




To the
extent that valuation is based on models or inputs that are less observable or
unobservable in the market, the determination of fair value requires more
judgment.  In certain cases, the inputs used to measure fair value may
fall into different levels of the fair value hierarchy. I n such cases, for
disclosure purposes, the level in the fair value hierarchy within which the fair
value measurement is disclosed is determined based on the lowest level input
that is significant to the fair value measurement.





The
following table presents the Company's fair value hierarchy for those financial
assets and liabilities measured at fair value on a recurring basis as of
September 30, 2009 and December 31, 2008:





September
      30, 2009
                      
                      
                      December
      31, 2008Level
                      
                      
                      Fair
                        Value
                      
                      
                      Carrying
                        Amount
                      
                      
                      Fair
                        Value
                      
                      
                      Carrying
                        AmountAssetsCash
      and cash equivalents
                      
                      
                      1
                      
                      
                      $
                      12,696,691
                      
                      
                      $
                      12,696,691
                      
                      
                      $
                      8,281,899
                      
                      
                      $
                      8,281,899Marketable
      Securities
                      
                      
                      1
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      876,186
                      
                      
                      
                      876,186Other
      receivables
                      
                      
                      3
                      
                      
                      
                      162,757
                      
                      
                      
                      162,757
                      
                      
                      
                      120,109
                      
                      
                      
                      120,109Investments
                      
                      
                      3
                      
                      
                      
                      8,087,470
                      
                      
                      
                      8,087,470
                      
                      
                      
                      6,497,470
                      
                      
                      
                      6,497,470




11





5.
            Stock Options /
      Warrants





In
accordance with the fair value recognition provisions of ASC 718-10, we estimate
the stock-based compensation cost at the grant date based on the fair value of
the award and recognize it as an expense on a graded vesting schedule over the
requisite service period of the award.





The
Company has adopted two stock compensation plans entitled the 2007 Equity
Compensation Plan and 2008 Equity Compensation Plan.  Pursuant to
these Equity Compensation Plans, grants of shares can be made to:





(i)
            designated
      employees of Electronic Game Card Inc. (the “Company”) and its
      subsidiaries including Electronic Game Card
Ltd,





(ii)
            certain
      advisors who perform services for the Company or its subsidiaries,
      and





(iii)
            non-employee members of the Board
      of Directors of the Company (the “Board”) with the opportunity to receive
      grants of incentive stock options, nonqualified options, share
      appreciation rights, restricted shares, dividend equivalent rights and
      cash awards.  The Company believes that the Plan will encourage
      the participants to contribute materially to the growth of the Company,
      thereby benefiting the Company’s shareholders, and will align the economic
      interests of the participants with those of the
      shareholders.  The both Equity Compensation Plans provide for
      options equivalent up to 10% of the issued share capital of the company to
      be offered to those qualifying under the scheme.  On February 6,
      2007 the Company issued 3,000,000 options to management and staff at an
      exercise price of 17.5c per share and 3,000,000 at an exercise price of
      25c per share.  In September and October 2008 the company
      committed to issue 3,000,000 options at an exercise price of $0.52 and in
      February 2009, issued 3,000,000 options at an exercise price of
      $0.355.





The
company has a total of 7,084,529 options and warrants outstanding at September
30, 2009.





The
      following table sets forth the options outstanding as of September 30,
      2009 and 2008:





Options
                      
                      
                      Weighted
                        Average
                        Exercise Price
                      
                      
                      Weighted
                        Average Fair
                        ValueOptions
      outstanding, September 30, 2008
                      
                      
                      8,700,000
                      
                      
                      $
                      0.38
                      
                      
                      
                      -Granted,
      exercise price more than fair value
                      
                      
                      3,000,000
                      
                      
                      $
                      0.36
                      
                      
                      
                      -Granted,
      exercise price more than fair value
                      
                      
                      1,000,000
                      
                      
                      $
                      0.52-
      Exercised
                      
                      
                      (5,950,000
                      )
                      
                      $
                      0.22
                      
                      
                      
                      --
      Cancelled
                      
                      
                      (750,000
                      )
                      
                      $
                      0.42
                      
                      
                      
                      -Options
      outstanding, September 30, 2009
                      
                      
                      6,000,000
                      
                      
                      $
                      0.48
                      
                      
                      
                      -


For options exercised prior to September
30, 2009, the exercising parties owed approximately $628,761, which amount was
paid in October 2009.  Accordingly, this amount has been classified as
common stock receivable as of September 30, 2009.


A summary
of the options outstanding as of September 30, 2009, by range of exercise prices
is shown as follows:





Exercise
                          Price
                        
                        Options
                          Outstanding
                        
                        
                        Weighted
                          Average
                          Exercise
                          Price
                        
                        
                        Shares /
                          Warrants
                          Currently
                          Exercisable
                        
                        
                        Weighted
                          Average
                          Exercise Price
                          Currently
                          Exercisable
                        
                        Weighted
                          Average
                          Contractual
                          Remaining
                          Life$
                        0.52
                        
                        
                        3,000,000
                        
                        
                        $
                        0.52
                        
                        
                        
                        0
                        
                        
                        $
                        0.0
                        
                        4.25
      years$
                        0.36
                        
                        
                        3,000,000
                        
                        
                        $
                        0.36
                        
                        
                        
                        0
                        
                        
                        $
                        0.0
                        
                        2.75
      years




12


The
following table sets forth the summary of warrants issued, expired and
outstanding as of September 30, 2009 and 2008 by range of exercise
price:





Exercise
                                  Price
                                
                                
                                Warrants
                                
                                
                                Weighted
                                  Average
                                  Exercise
                                  Price
                                
                                
                                Warrants
                                  Currently
                                  Exercisable
                                
                                
                                Weighted
                                  Average
                                  Exercise
                                  Price
                                  Currently
                                  Exercisable
                                
                                
                                Weighted
                                  Average
                                  Contractual
                                  Remaining
                                  Life
                                
                                
                                $Issued
                                
                                $
                                0.50
                                
                                
                                
                                2,183,307
                                
                                
                                $
                                0.50
                                
                                
                                
                                2,183,307
                                
                                
                                $
                                0.50
                                
                                
                                0.5
      years
                                
                                
                                
                                1,091,654Issued
                                
                                $
                                1.25
                                
                                
                                
                                477,723
                                
                                
                                $
                                1.25
                                
                                
                                
                                477,723
                                
                                
                                $
                                1.25
                                
                                
                                0.5
      years
                                
                                
                                
                                883,788Issued
                                
                                $
                                0.52
                                
                                
                                
                                500,000
                                
                                
                                $
                                0.52
                                
                                
                                
                                500,000
                                
                                
                                $
                                0.52
                                
                                
                                4.0
      years
                                
                                
                                
                                260,000September
      30, 2008
                                
                                
                                
                                
                                
                                
                                3,161,030
                                
                                
                                
                                
                                
                                
                                
                                3,161,030
                                
                                
                                $
                                0.62
                                
                                
                                1.1
      years
                                
                                
                                
                                2,235,442Exercised
                                
                                $
                                0.50
                                
                                
                                
                                (2,076,501
                                )
                                
                                $
                                0.50
                                
                                
                                
                                (2,076,501
                                )
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -September
      30, 2009
                                
                                
                                
                                
                                
                                
                                1,084,529
                                
                                
                                
                                
                                
                                
                                
                                1,084,529
                                
                                
                                $
                                0.62
                                
                                
                                1.1
      years
                                
                                
                                
                                2,235,442




6.
            Series A Preferred
      Convertible Stock





On March
24, and April 6th, 2005
the Company sold a total of $8,666,000 Convertible Promissory Notes to
accredited investors in a private placement of securities.  This note
was payable upon written demand on or after March 31, 2007, and was converted
into Series A Preferred Convertible Stock (“Series A”) at the Company’s election
on November 29, 2006.  Each share of Series A is convertible into one
share of Common Stock at no cost by stockholder and may be redeemable by the
Company not later than March 15, 2010.  Series A pays interest at 6%
per annum.  Dividends payable are included within accrued liabilities
on the Company’s balance sheet.  Also, the Registrant issued one (1)
warrant (a "Warrant") to acquire one (1) share of Series A Preferred Stock for
every two shares of Series A stock at an original exercise price of $1.85
per share.  The Warrants shall be exercisable to acquire
shares of Series A upon the effectiveness of actions by the Registrant's
shareholders to authorize the Series A.  The Series A Warrants first
issued on March 24, 2005 expire on March 24, 2010.





The
Warrants are now exercisable at
$0.50 per share of Series A, subject to adjustment, and are exercisable for a
period of 5 years expiring on March 15, 2010  In addition, at the
option of the holder, each Warrant is also immediately exercisable directly to
acquire, instead of shares of Series A, shares of Common Stock on an
as-converted-from-Series-A basis.  Unexercised Warrants shall expire
earlier upon notice by the Company to the holders of the Warrants following any
consecutive 30-day trading period during which the Common Stock trades on its
principal market at a price at or above three (3) times the then applicable
exercise price with average daily volume of at least 100,000 shares (subject to
adjustment of such trading volume threshold in the event of stock splits,
reverse stock splits, stock dividends, recapitalizations or similar
events).





Currently
there are 2,840,163 Series A shares outstanding and there were 1,709,425
conversions in the nine-month period ended September 30, 2009.





7.
            Investments





As of
September 30, 2009 and December 31, 2008 the company had investments in the
following entities:





September 30,
                      2009
                    
                    
                    December 31,
                      2008Prize
      Mobile Ltd
                    
                    $
                    1,860,235
                    
                    
                    $
                    1,860,235XOGO
      Ltd
                    
                    
                    1,314,735
                    
                    
                    
                    1,314,735Rosario
      Technologies Ltd
                    
                    
                    4,537,500
                    
                    
                    
                    2,572,500Quiz
      Factory
                    
                    
                    375,000
                    
                    
                    
                    500,000DG2L
      Technologies
                    
                    
                    -
                    
                    
                    
                    250,000Total
      Cost
                    
                    $
                    8,087,470
                    
                    
                    $
                    6,497,470




13




The
company holds 19.61% of Prize Mobile and less than 10% of each of the respective
privately held entities which approximates the company’s pro rata share of their
underlying value.  The company made these investments in technologies
which are complimentary to its current technologies or has received stock from
sale of other investments.  It is not practicable to estimate the fair
value of the Company’s investment in the common stock of these entities because
of the lack of quoted market prices and the inability to estimate fair value
without incurring excessive costs.  However, management believes that
the carrying amount of $8,087,470 was not impaired as of September 30,
2009.


8.
              Subsequent
      Events




In October 2009, the Company entered
into a Memorandum of Understanding with an unrelated private foreign company to
form a strategic partnership to market, sell and distribute that entity's
intellectual property in North America.
 
 In November 2009, the Company undertook
necessary changes to its management and board of directors due to the untimely
passing of its Executive Chairman.
 
 The Company has evaluated subsequent
events through November 20, 2009, the date these financial statements were
issued.


ITEM
      2.
            MANAGEMENT’S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS





The
following information should be read in conjunction with the consolidated
financial statements and notes thereto appearing elsewhere in this Form
10-Q.





General





Electronic
Game Card, Inc. (referred to as "EGC", "us", "we" or "Company") is a supplier of
innovative games to the promotional, gaming and lottery markets
worldwide.  The Company’s lead product is the EGC GameCard, a unique
credit card-sized pocket game combining interactive capability with "instant
win" excitement.





The
Company





Electronic
Game Card, Inc. is an emerging international corporation developing reward based
games for the sales promotions, casino and lottery and incentive
markets.  EGC’s core product is the Electronic GameCardTM, a unique and
innovative proprietary technology adapted to a platform, with patents pending
worldwide and with the technology that can be adapted to other
markets.  The EGC GameCard was designed by us to be rich in
functionality, customizable, portable, and cost efficient.  The
GameCard platform is currently embedded in a credit card size digital device
with an LCD window, touch pad controls and microchip, allowing for many game
formats to be programmed to suit a variety of applications in several industry
sectors.





EGC’s
GameCards are used in the sales promotion market as an incentive or loyalty
sales promotion tool to be given away by the brand promoter to the consumer with
prizes given as rewards for winning simple fun games designed specially for the
brand. An opportunity exists for the Company to sell GameCards for re-sale to
the public as a gaming device in selected areas of the casino market in which
blackjack, poker, bingo or similar games may be played.  In other
areas of the world, however, re-sale is permitted and EGC expects to start
marketing its range of game formats as soon as they are developed during the
year.  EGC also intends to leverage its gaming, manufacturing and
technology IP knowledge to the wider market place anticipated from rapidly
expanding areas of digital communications offering reward based games
opportunities.





Sales
Promotion Market





The sales
promotion prize and competition market is one in which the promoter (usually a
well known brand) must not be seen to obtain money for entry, and where no
purchase of the brand's goods is necessary in order not to fall under the laws
by which lotteries are regulated.  Our GameCards can be applied to a
broad range of potential promotional opportunities although introducing a new
product into the sales and promotion marketing arena, despite its demand for
novelty products and innovative ideas, takes time and adaptability to market
needs.





Within
the sales promotion market, the Poker sector has developed into a distinct and
vibrant opportunity.  In Europe, Australasia and South Africa playing
and watching Poker at tournaments and, on-line or on television has moved from a
specialist area to mainstream entertainment and gaming in the last 12
months.





The large
number of Poker players and viewers form a substantial and dynamic opportunity
for the gaming sector, and the profile being generated by marketers is of a
vibrant and expanding sector with increased promotional budgets.  The
Company is currently working on development of specialist GameCards and
promotions to extend the interest and impact of Poker to maximize this
opportunity.




14





Lottery
Market





Lottery
operators currently make use of paper scratch cards to give players an "instant"
win or lose reward experience.  Over the last several years, scratch
cards have become increasingly large and complex to accommodate consumer demand
for multiple plays and multiple chances to win.  The EGC Electronic
GameCardTM offers the potential to simplify the scratch card while giving the
opportunity to raise the selling price to consumers and increase
sales.  Our product has been seen by some leaders in the lottery
industry as potentially providing the next contemporary digital evolution of the
scratch card, offering multiple plays and multiple chances to win in an
entertaining and secure manner while using existing methods of distribution as
with scratch cards.





Indian
Gaming Market





The
Indian Gaming on Native American Tribal Lands covers parts of 28 States within
the United States of America and represents a significant portion of the total
gaming industry.  The NIGC report that the market was over $26 billion
dollars in revenue in 2007 with 405 casinos operated by more than 240 tribes
across the United States and Canada.





The
Company has a legal opinion from the National Indian Gaming Commission (“NIGC”)
that the EGC GameCard is a Class II device under IGRA (Indian Gaming Regulatory
Act).  The Class II designation is significant because it exempts the
Company from becoming subject to the state license procedures and
requirements.





Business
Strategy





The
Company has continued to expand its volume production of the Electronic
GameCardsTM.  This necessitated the cost effective and secure design of
GameCards from the manufacturers, involving quality control practices of an
extremely high level.  The Company marketed the Electronic GameCardTM
in conjunction with Scientific Games International, Inc. through the
distribution agreement for North America, Mexico and Italy distribution of
Electronic GameCardsTM to the lottery industry and directly to sales promotion
companies and lotteries in Europe excluding Italy.  Staff is
responsible for either selling the GameCards direct in the case of sale
promotion products or in the case of lotteries, through an exclusive
distribution license.





We market
our products through agents in the US, Europe and the rest of the
World.  We currently have outlets in Irvine, California and London
(U.K.).  Our management team has relevant experience in their
appropriate markets to contract agents and distributors to sell and increase
product.





Indian
Gaming appertains solely to the sale of GameCards as gaming devices directly to
the public in casinos and reservations owned and operated by Indian Tribes in
the USA.  The Company has received Class II classification for its
products from the National Indian Gaming Council (NIGC).





Product
Development





The
Company has a continuous program of product development comprising improvement
of existing designs and additions to the suite of games currently on offer to
clients.  Game design is divided into four stages; concept
development, software writing, testing and finally
manufacturing.  Product development and improvement is generated by
in-house review and response to specific customer recommendations.





The
production team continues to focus on physical and software improvements and
this has resulted in sourcing higher specification Chip, more complex LCD
display and changes to the depth of the GameCard casing.





This
increased depth in the casing will allow us to explore the use of replaceable
(AAA alkaline batteries), which will lead to increased product
longevity.





The
production team is also looking at the advantages of increasing the overall size
of the GameCard with a view to refreshing the existing portfolio by offering a
larger product with improved LCD visibility.





Additionally
a new checksum function, using a Base 16 code will be added to the GameCard
software to provide a coded product verification solution for Client’s back
office users and Gaming Regulators.





The key
focus for the last quarter has been on the Know It All quiz card and Thomas
& Friends projects.





The
development of the general knowledge gaming platform, now known as the iQuizCard
Digital Squirt TM,  was revised after the development of the original
working prototypes following internal discussions and with key stake holder
partners, including manufacturers and designers. The iQuizCard Digital Squirt
TMhas now been enhanced to offer a stronger consumer proposition with integrated
audio and large buttons and up dated player ergonomics to increase the relevance
of the playing platform for today’s consumer and be ready for shipment to
retails for the 2010 schedule.





In the
meantime, work on the game script for the 2nd variation, using an improved 6 x 5
dot matrix STN LCD screen is underway and software testing on this is due to
take place by the end of the next quarter.


15





The
GameCard has passed a series of tests by Gaming Laboratories, Inc. (GLI), one of
the most respected testing houses in the global gaming
industry.  These tests proved the GameCard’s ability to resist
attempts at manipulating the IC logic or otherwise breaching the numerous
security measures incorporated in the GameCard.  This formal
endorsement by GLI of the GameCard’s effective security defenses demonstrates
the Company’s continuing commitment to product development and
security.





We are
now able to offer customers a library of 35 games most of which can be
personalized to their specific design requirements.





Results
of Operations





The
company has recorded $4,238,061 of revenues this quarter compared with
$3,043,566 in the same period in 2008 and $10,245,698 and $7,823,870 in the
comparable nine month periods to September 30, 2009 and 2008.  This
represents revenue growth of 39.2% and 31% respectively on the comparable
periods and has been derived from repeat business, additional licensing and also
trial orders of new lines introduced at the end of last year.  This
may be regarded as volume growth as there have been no price increases compared
with the same period last year.





Gross
Profit for the three months ended September 30, 2009 was $3,313,262 an increase
of 44.1% compared with $2,299,566 in the comparable period in 2008 and for the
nine months ended September 30, 2009.   Gross Profit was
$8,081,957 compared with $5,918,281 in the comparable period in 2008, 36.6%
higher.  The overall increase in gross profit dollars ($) was directly
attributable to the increase in Revenues.  The slight percentage (%)
increase in gross profit margin reflected the increase in license fees which
have minimal associated cost.  The company purchases its manufactured
stock in USD and all cost of product is dependent on the strength of the
currency at the time of ordering.





Sales and
Marketing costs were $94,550 for the three months ended September 30, 2009
compared with $13,600 in the same period for 2008, the increase is due primarily
to heightened marketing effort on new products.  Sales and Marketing
costs were $165,696 compared with $54,954 in the comparable nine month period in
2008.  The current staffing levels are expected to increase as our
sales and marketing team increase activity in the North America and the Pacific
Rim.





General
and Administration expenses were $256,276 for the three months ended September
30, 2009, an increase of 107.3% compared with $123,639 for the same period in
2008.  For the nine months ended September 30, 2009, General and
Administration expenses were $619,751 and $451,237, an increase of 37.3% for the
comparable period in 2008.  The increases reflect the higher staffing
levels associated with new management, additional Directors and expenses
relating to establishing the Company’s new head quarters in Irvine,
CA.





Professional
fees were higher at $408,219 for the three months ended September 30, 2009, an
increase of 44.3% compared with $282,865 for the same period in 2008, and for
the nine months ended September 30, 2009, professional fees were $986,868 and
$560,014 for the comparable period in 2008, an increase of
76.2%.  These increases were largely due to higher costs resulting
from the strengthened management team including consultants now in
place.  Consulting fees related to the new management charged in
this fiscal year total $703,000.





Salaries
and payroll costs for the three months ended September 30, 2009 were $89,047
compared with $104,407 in 2008, lower than the comparable period and for the
nine months ended September 30, 2009, salaries and payroll costs were $245,728
and $277,397 for the comparable period in 2008.  The staff costs in
the United Kingdom have reduced, but this is partially offset by higher
consulting charges.





Operating
income excluding the interest charges for the three months to September 30, 2009
was $2,465,170 compared with $1,775,055, an increase of 38.9% for the comparable
period in 2008, and for the nine months ended September 30, 2009, operating
income was $6,063,914 compared with $4,574,679 in the comparable period in 2008,
an increase of 24.6%.  Higher revenues and lower cost of sales
combined to produce this improvement.





Total
comprehensive income for the three months to September 30, 2009 was $1,734,114
compared with $1,685,375, an increase of 2.9% for the comparable period of 2008,
and for the nine months ended September 30, 2009, total comprehensive income was
$5,473,421 compared with $4,316,582 for the comparable period in 2008, 26.8%
higher.  There was a foreign currency loss of $100,881 for the nine
months ended September 30, 2009.





Basic
earnings per share were $0.03 for the three months ended September 30, 2009
compared with $0.03 in the comparable period of 2008, and $0.09 for the nine
months ended September 30, 2009 compared with $0.08 in the comparable period of
2008.  Fully diluted earnings per share were $0.03 for the three
months ended September 30, 2009 compared with $0.03 in the comparable period of
2008 and $0.08 for the nine months ended September 30, 2009 compared with $0.07
in the comparable period of 2008.




16





Liquidity
and Financial Resources





The
Company had cash and cash equivalents of $12,696,691 at September 30, 2009
compared to $6,734,163 at September 30, 2008.  Operating expenses were
approximately $848,092 for the quarter.  As of September 30, 2009,
EGC’s current assets were $18,385,648 and current liabilities were
$2,127,842.  Stockholders’ equity at September 30, 2009 was
$22,105,473.  We had net cash provided by operating activities for the
nine months ended September 30, 2009 and 2008 of $3,893,031 and $2,739,934,
respectively.





Off-Balance
Sheet Arrangements





As of the
date of this Report, the Company does not have any off-balance sheet
arrangements that have or are reasonably likely to have a current or future
effect on the Company’s financial condition, changes in financial condition
revenues or expenses, results of operations, liquidity, capital expenditures or
capital resources that are material to investors.  The term
“off-balance sheet arrangement” generally means any transaction, agreement or
other contractual arrangement to which an entity unconsolidated with the Company
is a party, under which the Company has (i) any obligation arising under a
guarantee contract, derivative instrument or variable interest; or (ii) a
retained or contingent interest in assets transferred to such entity or similar
arrangement that serves as credit, liquidity or market risk support for such
assets.




ITEM
      3.
            QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK





There
have been no material changes in our market risk since December 31,
2008.  We have Series A convertible preference stock which carries a
6% dividend and is redeemable in March 2010.  There are currently
2,840,163 of Series A outstanding.





Interest
Rate Risk





We do not
engage in trading market risk sensitive instruments or purchasing hedging
instruments or “other than trading” instruments that are likely to expose us to
market risk, whether interest rate, foreign currency exchange, commodity price
or equity price risk.  We have not purchased options or entered into
swaps, or forward or future contracts.  We do consider that we have
any significant exposure to interest rate variations.





ITEM
      4.
            CONTROLS
      AND PROCEDURES





At the
end of the period covered by this report the Company carried out an evaluation
under the supervision and with the participation of the Company’s management
including the Company’s Chief Executive Officer and the Company’s Interim Chief
Financial Officer of the effectiveness of the design and operation of the
Company’s disclosure controls and procedures (as defined in Rules 13a-15e and
15d -15-e under the Securities Exchange Act of 1934 as
amended).  Based on this evaluation, the Company’s Chief
Executive Officer and the Company’s Interim Chief Financial Officer
the Company concluded that information is recorded, processed, summarized and
reported within the time period specified by the Commission’s rules and forms,
and that information is accumulated and communicated to our management,
including our Chief Executive Officer and our Interim Chief Financial Officer,
as appropriate to allow timely decisions regarding required
disclosure.  Under the supervision and with the participation of our
Chief Executive Officer (or acting Chief Executive Officer, as the case may be)
and our Interim Chief Financial Officer, we evaluated the effectiveness of
the design and operation of our disclosure controls and procedures (as defined
in Rule 13a-15(e) under the Exchange Act) as of September 30, 2009, the end of
the period.  Following the review by our Chief Executive Officer (or
acting Chief Executive Officer, as the case may be) and our Interim Chief
Financial Officer, each of them has determined that our disclosure controls and
procedures are effective.





Changes
in Internal Controls over Financial Reporting





There
were no changes in the Company’s internal controls over financial reporting that
occurred during the period covered by this report that has materially affected,
or are reasonably likely to materially affect the Company's internal control
over financial reporting.





PART
II - OTHER INFORMATION





ITEM
      1.
            LEGAL
      PROCEEDINGS





None.





ITEM
      2.
            CHANGES
      IN SECURITIES





None.




17





ITEM
      3.
            DEFAULTS
      UPON SENIOR SECURITIES





None.





ITEM
      4.
            SUBMISSION
      OF MATTERS TO A VOTE OF SECURITY
HOLDERS





None.





ITEM
      5.
            OTHER
      INFORMATION





None.





ITEM
      6.
            EXHIBITS
      AND REPORTS ON FORM 8-K





(a)
            The
      following exhibits are included as part of this
  report:





Exhibit
                    
                    Description





31.1
            Certification
      Pursuant to Section 302 of the Sarbanes-Oxley Act of
  2002.





31.2
            Certification
      Pursuant to Section 302 of the Sarbanes-Oxley Act of
  2002.





32.1
            Certification
      Pursuant to Section 906 of the Sarbanes-Oxley Act of
  2002.





32.2
            Certification
      Pursuant to Section 906 of the Sarbanes-Oxley Act of
  2002.


18





SIGNATURES





In
accordance with the requirements of the Exchange Act, the Registrant caused this
report to be signed on its behalf by the undersigned, thereby duly
authorized.





ELECTRONIC
      GAME CARDDate
      :  November 15, 2009
            By:  /s/ Lee J.
    ColeLee
      ColeExecutive
      Officer





Date
      :  November 15, 2009
            By:  /s/ Linden J.
      BoyneLinden
      J. BoyneSecretary
      / Treasurer(Principal
      Financial Officer)





End
of Filing




19