Entertainment Gaming Asia reported net income of $1.8 million, or $0.06 per share, on a weighted average diluted share count of approximately 30.8 million shares in the 2012 fiscal year. The 2012 fiscal year net income included $339,000 in non-cash impairment charges primarily associated with the write-down of certain gaming machines and systems as discussed above. Excluding these non-cash charges, net income was $2.1 million, or $0.07 per share, for the 2012 fiscal year. For the 2011 fiscal year, the Company reported net income of $642,000, or $0.02 per share, on a weighted average diluted share count of 29.7 million. Excluding the above-mentioned non-cash impairment charge in the fourth quarter of 2011, the Company reported net income of $2.0 million, or $0.07 per share, for the 2011 fiscal year.

The increase in net income for the fourth quarter and 2012 fiscal year was primarily the result of higher consolidated revenues, lower impairment charges, reduced stock-based compensation and interest expenses, and foreign currency gains compared to losses in the same periods of the prior year. This was partially offset by higher gaming division costs related to the new casino operations compared to the same periods of the prior year.

Relocation of Dolphin Gaming Chip and Plaque Facility is Underway

The Company has commenced the relocation process of the manufacturing facilities for its Dolphin gaming chips and plaques from Australia to Hong Kong. The high-security new site, located in the Shatin district of Hong Kong, has been secured and the plant renovation is underway. Based on the current timeline, the Company anticipates the new Hong Kong facility will be operational in the second quarter of 2013 and it expects minimal to no disruption in fulfilling gaming chip and plaque orders during the transition of the relocation.

With its comprehensive suite of products, strong relationships, and market presence in the attractive Asian gaming markets, the Company believes the relocation enhances its opportunity to expand its market presence in high-growth gaming markets and materially improve the profitability of this division. The labor cost savings and production efficiencies resulting from the relocation of these facilities combined with the benefits of the Company’s prior investments in these operations provide the potential to make Dolphin’s gaming chips and plaques a meaningful contributor to the Company’s long-term earnings.

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