8-K

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): December 30, 2009

ELIXIR GAMING TECHNOLOGIES, INC.

(Exact Name of Registrant as Specified in Its Charter)

Nevada	001-32161	91-1696010
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(I.R.S. Employer Identification Number)

Unit 3705, 37/F, The Centrium

60 Wyndham Street

Central, Hong Kong

(Address of principal executive offices)

+ 852-3151-3800

(Registrant’s telephone number, including area code)

Unit 2B, 29/F, The Centrium

60 Wyndham Street

Central, Hong Kong

(Former name or former address, if changed since last report)

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.

o   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14d-2(b)

o   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)

o   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)

Item 1.01              Entry into a Material Definitive Agreement.

On January 6, 2010, Elixir Gaming Technologies, Inc. (the “Company”) issued a press release announcing that, amongst other matters, it had entered into a Machines Operation and Participation Consolidation Agreement on December 30, 2009 (the “Consolidation Agreement”) with NagaWorld Limited (“NagaWorld”), a Hong Kong company and the wholly-owned subsidiary of the Hong Kong listed NagaCorp Ltd. The press release is attached to this Current Report on Form 8-K as Exhibit 99.1 and is incorporated into this Item 1.01 by reference.

On December 30, 2009, the Company entered into the Consolidation Agreement with NagaWorld for (a) exercising the option granted by NagaWorld pursuant to an option deed dated July 25, 2009 for placing an additional 200 electronic gaming machines (“Additional Machines”) on a participation basis at NagaWorld casino resort, a five-star hotel luxury casino resort in Cambodia and the only licensed full service casino in and around the capital city of Phnom Penh (“NagaWorld Casino”); and (b) with effect from the date of the Consolidation Agreement, superseding and replacing the terms of the existing operation of 440 electronic gaming machines at the NagaWorld Casino under the three previous agreements executed with NagaWorld dated December 13, 2008 (“December 08 Agreement”), June 15, 2009 (“June 09 Agreement”) and July 25, 2009 (“July 09 Agreement”)(collectively, the “Previous Agreements”) with new terms that aligned with the operation of the Additional Machines.

Under the Previous Agreements, (i) the Company and NagaWorld would share the win per unit per day (“WUD”) from the existing 440 machines and certain operating costs related to marketing and floor staff at a weighted average of 22.4% / 77.6% split, respectively; (ii) WUD from only 200 out of 440 existing machines would be settled and distributed daily to the Company; and (iii) both the term of December 08 Agreement and June 09 Agreement would expire in the first quarter of 2014 while the term of the July 09 Agreement would expire at the end of the third quarter of 2014.

Pursuant to the terms of the Consolidation Agreement, the Company and NagaWorld will have joint control over the operation of a total of 640 electronic gaming machines (comprising the Additional Machines and the existing 440 machines placed and in operation pursuant to the Previous Agreements), including floor staff and respective audit rights. The Company and NagaWorld will share the WUD from all the 640 machines and certain operating costs related to marketing and floor staff at a 25% / 75% split, respectively (subject to the Company’s entitlement to receive 100% of the WUD from certain machines during certain period of time as described below). WUD from all the 640 machines will be settled and distributed daily to the Company. The Consolidation Agreement is for a term commencing from the date thereof until the end of a six year period counting from March 1, 2010.

In consideration for the entering of the Consolidation Agreement by NagaWorld, the Company shall pay to NagaWorld a $1.38 million one-time non-refundable contract amendment fee and a commitment fee of $4.1 million. Both the one-time contract amendment fee and

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commitment fee are to be paid in three installments. The Company has paid the first 50% installment on December 30, 2009. The second 25% installment and the final 25% installment will become due and payable by the Company on or before January 15, 2010 and January 31, 2010, respectively.

While the Company and NagaWorld will share the WUD from the 640 machines at a 25% / 75% split, respectively, the Company will be entitled to 100% of the WUD from the 200 existing machines placed under the July 09 Agreement until it has received a total accumulated WUD of $7.3 million from the said 200 machines and 100% of the WUD from the Additional Machines until it has received a total accumulated WUD of $5.47 million from the Additional Machines (representing the $4.1 million commitment fee plus the Company’s 25% share of the WUD from the Additional Machines). If upon any termination of the Consolidation Agreement for whatever reasons, the Company has not received any or both of the said accumulated WUD amounts, then NagaWorld shall pay within seven days after termination, if applicable, (a) the difference between $5.84 million (being the commitment fee previously paid by the Company under the July 09 Agreement) and 75% of the WUD actually collected and received by the Company from the 200 machines placed under the July 09 Agreement during the period from the relevant machines operation date up to the date of termination; and (b) the difference between $4.1 million (being the commitment fee for placement of the Additional Machines) and 75% of the WUD actually collected and received by the Company from the Additional Machines during the period from the relevant machines operation date up to the date of termination. In addition, if the Consolidation Agreement is terminated for whatever reasons within six months from the date thereof, NagaWorld shall pay to the Company within seven days after termination, a sum equivalent to the contract amendment fee.

Item 2.06              Material Impairments.

On January 5, 2010, the board of directors of the Company, acting on the recommendation of Company management and the audit committee of the board of directors, approved a non-cash impairment charge to the Company’s gaming machine assets in the range of $11.5 to $13.5 million as of December 31, 2009.  On January 6, 2010, the Company issued a press release announcing the impairment. The press release is attached to this Current Report on Form 8-K as Exhibit 99.1 and is incorporated into this Item 2.06 by reference.

A substantial portion of the impairment is the write-down to fair market value of certain gaming machines in inventory deemed as non-performing for the Company’s current target markets or their customers’ preferences.  To a lesser extent, the impairment also includes the write-down of the Company’s Philippine operations’ gaming assets based on whether the current carrying value of the machines in operation in this market is higher than the expected value as forecasted by the projected future cash flows.  The Company intends to engage an independent valuation firm for purposes of confirming the specific amount of impairment to the Company’s Philippine operations’ gaming assets. The Company does not expect that the impairment charge will trigger any future cash expenditures.

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Item 9.01Financial Statements and Exhibits.

(d)The following exhibits are filed as exhibits to this Current Report on Form 8-K.

Exhibit No.	Description	Method of Filing
99.1	Press release dated January 6, 2010	Filed electronically herewith

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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.

	ELIXIR GAMING TECHNOLOGIES, INC.
Dated: January 6, 2010	/s/  Clarence Chung
	Clarence Chung
	Chief Executive Officer

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EX-99.1

Exhibit 99.1

For Immediate Release

CONTACTS:

Elixir Gaming

Traci Mangini

SVP, Corporate Finance

312/867-0848

ELIXIR GAMING TECHNOLOGIES ANNOUNCES PARTICIPATION CONSOLIDATION
AGREEMENT WITH LEADING CAMBODIAN CASINO RESORT NAGAWORLD

- New Agreement Includes Expanded Operations and Favorable Consolidated

Contract Terms —

- Elixir Gaming in Final Stages of Asset Valuation Analysis and Anticipates Recording
Non-Cash Impairment Charge of $11.5-$13.5 Million —

Hong Kong — January 6, 2010 - Elixir Gaming Technologies, Inc. (NYSE Amex: EGT) (“Elixir Gaming” or “the Company”), a leading technology and solutions provider to the Pan-Asian gaming industry, today announced that it has entered into a Machine Operation Participation Consolidation Agreement (“Agreement”) with NagaWorld Limited (“NagaWorld”), a wholly-owned subsidiary of the Hong Kong listed NagaCorp Ltd. (HKSE:3918), which includes a commitment to place an additional 200 electronic gaming machines on a participation basis at its NagaWorld casino resort.  In addition, the Agreement serves to amend and consolidate terms for all Elixir Gaming machine operations at NagaWorld, including increasing the overall average revenue share to Elixir Gaming to 25% and extending the contract duration. Elixir Gaming currently operates 440 gaming machine seats at NagaWorld, which achieved average win per unit per day (WUD) of over $200 for the months of November and December 2009. NagaWorld is a luxury casino resort in Cambodia and is the only licensed full service casino in and around the capital city of Phnom Penh.

Under the terms of the Agreement, Elixir Gaming exercised its option pursuant to its July 25, 2009 expansion contract to place 200 additional electronic gaming machine seats (“Additional Machines”) in certain prime areas of NagaWorld’s casino lobby floor and will share in the gross revenue generated by each of these machines. Elixir Gaming anticipates 120 of the Additional Machines to be in operation within the first quarter of 2010 and the remaining 80 to be in operation within the second quarter of 2010. In addition, the Agreement serves to amend and consolidate the terms of the Company’s prior contracts with NagaWorld, which will have the effect of regulating all slot and operations management of a maximum of 640 gaming machine seats at NagaWorld.  The amended and consolidated terms are effective December 30, 2009.

- more –

Under these terms, Elixir Gaming and NagaWorld will have joint control over the operation of all the Company’s electronic gaming machine seats, including floor staff and respective audit rights. Elixir Gaming and NagaWorld will share the revenue and certain operating costs, such as marketing and floor staff, at a 25% / 75% split, respectively, and Elixir Gaming will receive on a daily basis its relevant portion of the daily win in cash. The contract duration is six years and expires on February 28, 2016.  Furthermore, the terms include a first right of refusal for any other suitable and available areas for the operation of electronic gaming machines on the casino lobby floor of NagaWorld under the terms of this Agreement.  Elixir Gaming would generally have a period of two months from the time of availability to consider the placement of its units in the relevant area and no additional commitment fee would be required for the placement in such area provided that the Company’s total number of operating gaming machine seats do not exceed 640.

In consideration for the Agreement, Elixir Gaming shall pay to NagaWorld a $1.38 million one-time non-refundable contract amendment fee and an upfront commitment fee of $4.10 million for the Additional Machines. Both the one-time contract amendment fee and commitment fee are to be paid in three installments.  The first 50% installment thereof was paid on December 30, 2009, the second 25% payment thereof is due on or before January 15, 2010, and the third and final 25% installment is due on or before January 31, 2010.

Elixir Gaming will be entitled to 100% of the WUD from the Additional Machines until it has received the accumulated total of $5.47 million (the $4.10 million commitment fee plus Elixir Gaming’s 25% share of the WUD). As with all of the Company’s gaming machine seats placed under an upfront commitment fee arrangement, Elixir Gaming collects 100% of the cash gross net win from these units of which 25% is recorded as revenue.

Clarence Chung, Chairman and Chief Executive Officer of Elixir Gaming, commented, “We are pleased to work with our partner NagaWorld to continue to expand its slot floor operations.  With the addition of these 200 units, Elixir Gaming’s installed machine base at NagaWorld is expected to reach 640 seats during the second quarter of 2010.  With these additional units, Elixir Gaming will have gaming machines installed covering most of the currently available prime ground floor slot space at NagaWorld.  Given NagaWorld’s position as the exclusive casino license holder in the Phnom Penh area and our demonstrated success with our current slot operations at NagaWorld, we feel confident that we can continue to drive strong growth in participation revenue and cash flow with these additional placements.”

Also today, Elixir Gaming announced it is in the final stages of its annual valuation review of its gaming machine assets as required by U.S. Generally Accepted Accounting Principles (GAAP).  The review is being conducted in an effort to formulate the Company’s future deployment plans and determine the usability of its machines with a view to optimize machine performance. In accordance with GAAP and subject to final evaluation by an independent valuation firm, the Company anticipates recording a non-cash impairment charge in the range of $11.5 to $13.5 million as of December 31, 2009.

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A substantial portion of the impairment is the write-down to fair market value of certain gaming machines in inventory deemed as non-performing for the Company’s current target markets or their customers’ preferences. To a lesser extent, the impairment also includes the write-down of the Company’s Philippine operations’ gaming assets based on whether the current carrying value of the machines in operation in this market is higher than the expected value as forecasted by the projected future cash flows.  The Company considers the write-down prudent based on its assessment of gaming machine performance in its respective markets.

While the Company believes the Philippines remains a viable market for Elixir Gaming and its operations there are expected to continue to be a meaningful contributor to positive cash flow, based on market knowledge gained from its operating experience over the last year, the Company has re-evaluated its growth assumptions for its operations in this market.  Despite the downward revision of the revenue assumptions, with the benefit of the ramp-up of several immature venues and targeted marketing initiatives the Company still expects to improve average WUD in the Philippines in the range of 20% to 30% from current levels over the next two to three years.

The Company anticipates it will purchase additional gaming machines to supplement existing inventory and source future targeted deployment plans. Given the Company’s strong current and projected future cash flow generation capability from its operations at NagaWorld (including the recoupment of commitment fees paid and the Company’s share of net wins from its machine installed base at NagaWorld), the state of the previously-owned gaming machine market, and its strong relationships with gaming equipment manufacturers, Elixir Gaming anticipates funding its 2010 gaming machine purchases for its existing project pipeline from cash on hand and expected net cash flow from operations.

Clarence Chung concluded, “Elixir Gaming remains focused on and committed to its operations in its existing markets of Cambodia and the Philippines.  The valuation review of our gaming machine assets will complete the Company’s restructuring of its operations under our new management and the resulting write-down will not only help the Company to better align revenue and the related costs but also will rationalize the carrying value of the assets against the projected income for the Philippines market. Further, the reduced depreciation expense will accelerate the time needed for us to achieve positive GAAP earnings.

“With the completion of our restructuring, our improved financial flexibility, and continued strong cash flow  projected from our operations at NagaWorld, we feel confident we now have the right operating model, experience, and relationships to capitalize on high-potential growth opportunities in the emerging Asian gaming markets and to enhance shareholder value.”

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About Elixir Gaming Technologies, Inc.

Elixir Gaming Technologies, Inc. (NYSE Amex: EGT) is a provider of gaming technology solutions. The Company secures long-term contracts to provide comprehensive turn-key solutions to 3, 4, and 5 star hotels and other well-located venues in Asia that seek to offer casino gaming products. The Company retains ownership of the gaming machines and systems and receives recurring daily fees based on an agreed upon percentage of the net gaming win per machine and provides on-site maintenance. The Company has established a strategic presence in the Asia Pacific region with a focus on the Philippines and Cambodia markets.  For more information please visit www.elixirgaming.com.

About NagaCorp Ltd.

NagaCorp Ltd. (3918.HK) operates NagaWorld, the only licensed 5-Star Hotel Casino Resort in Phnom Penh, the capital of Cambodia. NagaCorp holds a casino license issued by the Royal Government of Cambodia, which gives the company the rights to operate the casino for 70 years commencing January 1995 with 41 years exclusivity within a 200 kilometer radius of Phnom Phen (except the Cambodia-Vietnam boarder area, Bokor, Kirirom Mountains, and Sihanoukville.) One of Cambodia’s most popular tourist destinations, NagaWorld currently has, among others, 508 rooms, 176 table games, a premium meeting, incentive travel, convention, and exhibition (MICE) facility, a retail shopping area, a collection of restaurants and bars, a karaoke lounge, and a spa. NagaCorp Ltd. is incorporated in Cayman Islands with limited liability and its securities are listed on the Main Board of The Stock Exchange of Hong Kong Limited.

Forward Looking Statements

This press release contains forward-looking statements concerning Elixir Gaming, within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.  Those forward-looking statements include statements regarding expectations for the business of Elixir Gaming, its working capital requirements and future revenue and profitability.  Such statements are subject to certain risks and uncertainties, and actual circumstances, events or results may differ materially from those projected in such forward-looking statements.  Factors that could cause or contribute to differences include, but are not limited to, risks related to Elixir Gaming’s inability to place gaming machines at significant levels, whether the gaming machines placed generate the expected amount of net-win, the ability of Elixir Gaming to acquire additional capital as and when needed, the ability of Elixir Gaming to collect revenue and protect its assets and those other risks set forth in Elixir Gaming’s annual report on Form 10-K for the year ended December 31, 2008 filed with the SEC on March 30, 2009 and our Form 10-Q for the three months ended September 30, 2009 filed on November 10, 2009.  Elixir Gaming cautions readers not to place undue reliance on any forward-looking statements.  Elixir Gaming does not undertake, and specifically disclaims any obligation to update or revise such statements to reflect new circumstances or unanticipated events as they occur.

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