Current Report Filing (8-k)
May 17 2016 - 9:54AM
Edgar (US Regulatory)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of report (Date of earliest event
reported): May 11, 2016
ENTERTAINMENT GAMING ASIA INC.
(Exact Name of Registrant as Specified in
Its Charter)
Nevada
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001-32161
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91-1696010
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(State or Other Jurisdiction of Incorporation)
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(Commission File Number)
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(I.R.S. Employer Identification Number)
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Unit C1, Ground Floor, Koon Wah Bldg.,
No.2 Yuen Shun Circuit, Yuen Chau Kok,
Shatin, New Territories, Hong Kong SAR
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(Address of principal executive offices)
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+ 852-3151-3800
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(Registrant’s telephone number, including area code)
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Not applicable
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(Former name or former address, if changed since last report)
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Check the appropriate box below if the Form 8-K filing
is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions.
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Item 1.01 Entry into a Material Definitive Agreement
On May 11, 2016, we
entered into an Asset Purchase Agreement pursuant to which we sold substantially all of our assets dedicated to the design, manufacture
and distribution of chips, plaques and layouts for gaming tables to Gaming Partners International Corporation (“GPI”).
The transaction under the Agreement closed on May 11, 2016.
Under the terms of
the Agreement, we sold to GPI certain assets of our wholly-owned subsidiary, Dolphin Products Limited (“Dolphin”),
including fixed assets, raw materials and inventory and intellectual property for cash consideration of approximately $5.9 million.
The consideration includes a purchase price of approximately $5.4 million and $530,000 for restrictive covenants related to a non-compete
arrangement given by us, Dolphin and Mr. Clarence Chung. The purchase price will be paid out in installments over a 24-month period
after closing, with approximately $3.2 million paid at closing and approximately $1.1 million to be paid on each of the first two
anniversaries of the closing. Payment related to the restrictive covenants was paid after closing. GPI also paid to us an amount
equal to four months’ rental for the Dolphin factory subject to a cap of $260,000 after closing and will pay a fixed sum
of $520,000 for costs related to the termination of Dolphin employees within 60 days of closing.
In addition, GPI will
make earn-out payments to Dolphin. These earn-out payments include: 3% of net revenue on certain sales to specific Asian-based
casinos over the next five years subject to a cap of a total of $500,000,000 of net revenue; and 15% of net revenues on sales to
our related party casinos for an indefinite time period for the first $10,000,000 of net revenue and, in addition, 3% of net revenue
from these related party casino sales over the next five years subject to a cap of $30,000,000 of net revenue. Dolphin shall only
be entitled to earn-out payments above $900,000.
The Agreement includes
customary representations, warranties and covenants by us and GPI, including each party’s agreement to indemnify the other
against certain claims or losses resulting from certain breaches of representations, warranties or covenants under the Agreement
and third-party claims arising before and after the close. The asset sale represents our exit from the business of design, manufacture
and distribution of chips, plaques and layouts for gaming tables and, as part of the transaction, we have agreed with GPI not to
engage in the manufacture of gaming chips, plaques, jetons, playing cards and layouts for gaming tables in competition with GPI.
In connection with
the close of the transaction under the Agreement, Dolphin and GPI settled and released each other of all claims relating to the
civil actions instituted by GPI against Dolphin in the High Court of the Hong Kong Special Administrative Region in December 2015.
Item 2.01 Completion of Acquisition
or Disposition of Assets
On May 11, 2016, we
completed our sale of substantially all of our assets dedicated to the design, manufacture and distribution of chips, plaques and
layouts for gaming tables to Gaming Partners International Corporation. The terms of the asset sale are reported in
Item 1.01 above.
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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ENTERTAINMENT GAMING ASIA INC.
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Dated: May 17, 2016
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/s/ Clarence Chung
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Clarence (Yuk Man) Chung
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Chief Executive Officer
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