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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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): October 18, 1996
MULTIMEDIA GAMES, INC.
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(Exact name of registrant as specified in its charter)
Texas 0-28318 74-2611034
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(State or other (File Number) (IRS Employer
jurisdiction of Identification No.)
incorporation)
7335 S. Lewis Avenue, Suite 204, Tulsa, Oklahoma 74136
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(Address of principal executive offices) (Zip Code)
(918) 494-0576
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Registrant's telephone number, including area code
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Item 5. Other Events
U.S. Attorney Investigation
On October 18, 1996, Multimedia Games, Inc. (the "Company") issued a
press release announcing that the Company had been informed by the U.S.
Attorney's office in Tulsa, Oklahoma, that the Company was part of an ongoing
criminal investigation to determine whether the Company's MegaMania bingo game
constitutes Class III or Class II gaming within the meaning of the Indian
Gaming Regulatory Act (the "Gaming Act"). A copy of the press release is
attached as Exhibit 99.1 and is incorporated herein by reference.
MegaMania has been designed and is operated as a Class II game within
the definition of bingo set forth in the Gaming Act. In a written opinion
dated July 10, 1996, the Company was informed by the National Indian Gaming
Commission ("NIGC"), of the NIGC's determination that MegaMania constituted a
Class II game. The Company has relied on the NIGC's opinion in conducting its
operations and believes that the NIGC made its determination with a complete
and accurate understanding of the facts and the applicable law. The Company is
unaware of any circumstances that would have caused the investigation by the
U.S. Attorney or on what basis the U.S. Attorney could conclude that MegaMania
is not a Class II game.
The Gaming Act classifies games that may be played on Indian land into
three categories. Class I gaming includes traditional Indian social and
ceremonial games and is regulated only by the tribes. Class II gaming includes
bingo, pull-tabs, lotto, punch boards, tip jars, instant bingo, certain card
games played under limited circumstances and other games similar to bingo if
those games are played at the same location where bingo is played. Class III
gaming consists of all forms of gaming that are not Class I or Class II, such
as video casino games, slot machines, most table games (e.g., blackjack and
craps) and keno.
Generally speaking, Class II gaming may be conducted on Indian lands
if the state in which the Indian reservation is located permits such gaming for
any purpose by any person. Class III gaming, on the other hand, may only be
conducted pursuant to a compact reached between the Indian tribe and the state
in which the tribe is located.
No assurances can be given that the U.S. Attorney will not conclude
that MegaMania is Class III gaming. If the U.S. Attorney does reach such a
conclusion, the Company intends to vigorously defend its position that
MegaMania is a Class II game. No assurances can be given that the Company will
be successful on the merits. If MegaMania is ultimately determined to be Class
III gaming, the loss of the MegaMania business would have a material adverse
effect upon the Company's financial condition and results of operation.
Relocation of MegaBingo Game Drawing and Satellite Uplink Operations
Prior to November, 1996, the Company's uplink transmission of its
closed-circuit
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satellite MegaBingo game has been broadcast from the Muscogee (Creek) Nation
("Creek") bingo facility in Tulsa, Oklahoma. On October 8, 1996, the Company
received a letter from the Muscogee (Creek) Nation Gaming Authority Board
("GOAB") purporting to terminate all agreements between the Company and the
GOAB. The letter indicated the Company failed to timely provide certain
information and failed to provide notice of the U.S. Attorney's investigation.
The Company disputes the contents of the letter and in view of the change in
the relationship between the Company and the GOAB, in November 1996, the
Company relocated its MegaBingo satellite uplink to the Cheyenne-Arapaho Lucky
Star gaming facility located approximately 20 miles west of Oklahoma City in
Concho, Oklahoma.
In addition, the Company removed all (approximately 70) of its
MegaMania machines from the Creek facilities and placed them in gaming
facilities of other tribes. The Company does not expect the loss of machines
at the Creek facilities will have a material adverse impact on the Company's
operations because it is the Company's experience that players will migrate to
alternative MegaMania sites in the geographic area rather than not play the
game. Further, the machines removed from the Creek site have been placed in
other gaming facilities and are generating gaming revenues, although there can
be no assurance that the gaming revenues generated in the new facilities will
equal those of the machines while in the Creek facilities.
The Company currently expects that MegaBingo will continue to be
played at the Creek facilities, notwithstanding the move of the satellite
uplink. However, there can be no assurance that such activity will be
continued or be continued at or near the level of play historically experienced
at the facilities before the move of the satellite uplink.
Completion of Private Placement
On November 22, 1996, the Company completed the private placement (the
"Placement") of 1,158,833 shares of Common Stock and 1,158,833 Redeemable
Common Stock Purchase Warrants. The Common Stock and the Warrants were sold as
a Unit at a purchase price of $3.00 per unit. Total cash proceeds to the
Company from the Placement (which excludes the conversion to equity of $800,000
of bridge debt financing) was approximately $2,676,500 and net cash
proceeds(after deduction of fees, costs and commissions) was approximately
$2,200,000. The net cash proceeds are intended to finance the expansion of the
Company's MegaMania network.
Each Warrant is exercisable commencing on August 12, 1997, for one
share of Common Stock at a purchase price of $8.00 per share, subject to
certain adjustments. The Warrants are redeemable after August 12, 1997, for
$.10 per Warrant once the Company's Common Stock has maintained a closing price
of at least $12.00 per share for 20 connective trading days. A copy of the
company's press release announcing the
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completion of the Placement is attached hereto as Exhibit 99.2 and is
incorporated herein by reference.
Filing of Registration Statement On Behalf of Selling Stockholders
On November 25, 1996, the Company filed a registration statement with
the Securities and Exchange Commission on Form S-3 for the purpose of
registering the sale of 2,293,208 shares of Common Stock held by the various
Selling Stockholders named therein. Included in the shares being registered
are 175,000 shares of Common Stock issuable upon the exercise of warrants at a
purchase price of $3.50 per share. The Company will not receive any of the
proceeds from the sale of shares by the Selling Stockholders.
As of November 25, 1996, the Company had 4,026,783 shares of Common
Stock outstanding. Assuming the issuance of 175,000 additional shares upon the
exercise of the warrants, the shares included in the registration statement
represent approximately 55% of the issued and outstanding shares of Common
Stock. Virtually all of the 2,293,208 shares included in the registration
statement are subject to agreements between each Selling Stockholder and Walsh,
Manning Securities, Inc. ("Walsh, Manning"), pursuant to which the Selling
Stockholder has agreed not to sell such shares without the prior consent of
Walsh, Manning and has granted to Walsh, Manning a right of first refusal to
purchase any of the shares proposed to be sold. A copy of the Company's press
release relating to the filing of the registration statement is attached hereto
as Exhibit 99.3 and is incorporated herein by reference.
Item 7. Financial statements, Pro forma Financial Information and Exhibits.
Exhibit 99.1 Press Release dated October 18, 1996.
Exhibit 99.2 Press Release dated December 4, 1996.
Exhibit 99.3 Press Release dated December 5, 1996.
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.
MULTIMEDIA GAMES, INC.
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Dated: December 9, 1996
By: /s/ MIKE HOWARD
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Mike Howard
Vice President - Finance and
Chief Financial Officer
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
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<S> <C>
99.1 Press Release issued October 18, 1996
99.2 Press Release issued December 4, 1996
99.3 Press Release issued December 6, 1996
</TABLE>
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Exhibit 99.1
MULTIMEDIA CONFIDENT ABOUT COMPLIANCE
Tulsa, Okla. -- Multimedia Games, Inc. (NASD: MGAM) today announced
that it has been informed by the United States Attorney's Office in Tulsa,
Oklahoma, that they are conducting an investigation of whether, in their
opinion, the company's MegaMania game is Class II or Class III, as defined by
the Indian Gaming Regulatory Act of 1988. Class III games cannot be legally
played in a state unless a gaming tribe has negotiated a compact with the state
in which the games are to be played. Class II games require no such compact in
order to be played in a state, but only require that bingo can be played
legally by any person or organization within the state. MegaMania represents
approximately 25 percent of the gross revenues of MGAM for its fiscal year
ended September 30, 1996.
Gordon Graves, CEO of MGAM said, "We have relied on a determination
by the National Indian Gaming Commission ("NIGC") that the company's MegaMania
game is a Class II game. The NIGC is the agency charged by Congress to
regulate gaming on Indian lands. On July 10, 1996, the NIGC sent a letter to
MGAM confirming the NIGC's determination that MegaMania is a Class II game.
MGAM and the 15 tribes operating the MegaMania game have acted in reliance on
that determination by the Federal agency congressionally given regulatory
oversight of MGAM's activities.
Over the past two years, MGAM has, as a part of its practice to be
proactive in its regulatory compliance, been in regular contact with the NIGC,
various U.S. Attorney's office, the attorney general from numerous states, and
with various local authorities in an effort to assure that its games are
conducted in compliance with all applicable laws. MGAM believes the
determinations reached by the NIGC were done with a complete understanding of
the law and should be seen as conclusive. Nevertheless, it is possible that
other agencies of the Federal government, such as the U.S. Attorney, which
either have or claim to have jurisdiction, may have different opinions. If
challenged by other agencies, MGAM believes that it and the sovereign nations
which participate in the MegaMania games will be successful on the merits.
A conference call will be held for any interested party on Monday,
October 21, 1996, at 4:00 p.m. Eastern Standard Time to discuss this matter and
other matters that might be of interest to the participants. Parties
interested in participating in the conference should contact Mike Howard at
918/494-0576.
Multimedia Games, Inc., through its wholly owned subsidiary,
MegaBingo, Inc. Has exclusive contracts with over 50 Indian nations to provide
linked games that are integrated among multiple halls. Multimedia Games, Inc.
Is the nation's leading provider of linked high-stakes bingo games, electronic
based bingo games and data processing services and products to the Indian
gaming industry.
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Exhibit 99.2
MULTIMEDIA GAMES, INC. ANNOUNCES
COMPLETION OF PRIVATE EQUITY OFFERING
DECEMBER 3, 1996, TULSA, OK - MULTIMEDIA GAMES, INC. NASD: MGAM) announced
today that the Company has completed the previously disclosed private placement
of its common stock. Approximately 1.2 million shares of the Company's common
stock were sold in the placement, which totaled approximately $3.5 million.
Each share of common stock sold in the placement was accompanied by a
detachable warrant to purchase another share of the Company's common stock for
$8.00. The warrants are redeemable for $.10 each once the Company's common
stock has maintained a closing price of at least $12.00 for 20 consecutive
trading days. The warrants cannot be exercised prior to August 12, 1997.
Net cash proceeds from the placement, which exclude the conversion to equity of
$800,000 in bridge debt financing, will be approximately $2.2 million. The
cash proceeds are intended to finance the expansion of the Company's
MegaMania(TM) network.
According to Gordon Graves, Chairman and CEO of MULTIMEDIA GAMES, INC., "This
placement is an integral part of our plan to expand the MegaMania(TM) network
and its completion marks another milestone for the Company. This offering
should enable us to purchase enough equipment to install another 1,000
MegaMania(TM) machines. We are hopeful that the warrants will ultimately
provide us with an additional source of significant capital to further develop
MegaMania(TM) and other business opportunities for the Company."
MULTIMEDIA GAMES, INC., through its wholly owned subsidiary, MegaBingo, Inc.
has exclusive contracts with over 50 Indian nations to provide linked games that
are integrated among multiple halls. MULTIMEDIA GAMES, INC. is the nation's
leading provider of linked high-stakes bingo games, electronic based bingo
games and data processing services and products to the Indian gaming industry.
Contact: Mike Howard Multimedia Games, Inc.
Gordon Graves (800) 726-2494
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Exhibit 99.3
MULTIMEDIA GAMES, INC. ANNOUNCES
FILING OF REGISTRATION STATEMENT
DECEMBER 4, 1996, TULSA, OK - MULTIMEDIA GAMES, INC. (NASD; MGAM) announced
today that is has filed a registration statement with the Securities and
Exchange Commission for the sale of approximately 2.3 million shares of the
Company's common stock held by various selling stockholders. The Company will
not receive any of the proceeds from the sale of the shares sold by the selling
stockholders.
Substantially all of the shares of the Selling Stockholders being registered by
the company are subject to agreements between the Selling Stockholders and the
placement agent, Walsh Manning Securities, Inc., which do not allow the Selling
Stockholders to dispose of their shares without the written consent of Walsh
Manning.
MULTIMEDIA GAMES, INC., through its wholly owned subsidiary, MegaBingo, Inc.
has exclusive contracts with over 50 Indian nations to provide linked games
that are integrated among multiple halls. MULTIMEDIA GAMES, INC. is the
nation's leading provider of linked high-stakes bingo games, electronic based
bingo games and data processing services and product to the Indian gaming
industry.
Contact: Mike Howard Multimedia Games, Inc.
Gordon Graves (800) 726-2494
