UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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) September 2, 2004
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Gaming & Entertainment Group, Inc.
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(Exact name of Registrant as specified in charter)
Utah
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(State or other jurisdiction of incorporation)
000-28399 59-1643698
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(Commission File Number) (IRS Employee Identification No.)
6757 Spencer St., Las Vegas, NV 84119
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (702) 407-2471
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(Former name or former address, if changed since last report)
Item 1.01 Entry into a Material Definitive Agreement.
On September 2, 2004, Gaming & Entertainment Group, Inc., a Utah
corporation (the "Company"), entered into a Senior Secured Bridge Note (the
"Bridge Note") in the amount of $750,000 with GEG Holdings, LLC, a Delaware
limited liability company ("GEG Holdings"). The Bridge Note matures on August
30, 2009.
The terms of the Bridge Note provide for the funding to occur in three
tranches. The first funding of $250,000 occurred on September 2, 2004. The
second and third tranches, each in the amount of $250,000, subject to the
satisfaction of certain conditions, will be funded on October 1 and November 1,
2004. The Bridge Note is secured by a perfected first priority security interest
in all of the intellectual property assets of the Company.
The outstanding principal amount of the Bridge Note accrues interest at
the Federal Funds Effective Rate of Interest (currently 1.5%), in effect from
time to time, plus six percent (6%) per annum and accrues semi-annually, in
arrears, on December 1, 2004 and on each June 1 and December 1 thereafter (each
an "Interest Payment Date"). The Bridge Note does not require the Company to
make cash interest payments until maturity. Interest will be payable in cash
only at maturity or, at the option of GEG Holdings, (A) by the issuance on each
Interest Payment Date of an immediately exercisable five (5) year warrant (an
"Interest Warrant") to purchase shares of a new class of convertible preferred
stock (the "Convertible Preferred Stock"), for an exercise price per share of
the lesser of (i) the average of the closing market price of the Company's
common stock, par value $.01 per share (the "Common Stock"), for the thirty (30)
days prior to the applicable Interest Payment Date, but in any event not less
than $0.40 per share, and (ii) $0.54 per share, that number of shares of
Convertible Preferred Stock equal to the interest payment then due, rounded up
to the nearest share; or (B) by the issuance on any subsequent Interest Payment
Date of an Interest Warrant, on the then fully accrued amount.
The Convertible Preferred Stock, upon issuance, would, among others, have
the following rights, preferences and privileges: (i) a liquidation preference
of $0.60 per share; (ii) no dividends; (iii) be convertible into shares of
Common Stock on a one-to-one basis; (iv) rank senior to all other series of
preferred stock outstanding; (v) include full ratchet anti-dilution protection;
(vi) right of first refusal with respect to any equity or convertible securities
issued by the Company; (vii) four immediate demand registration rights and
unlimited customary "piggy-back" rights; and (viii) certain protective voting
rights.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
Gaming & Entertainment Group, Inc. has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
Dated: September 9, 2004 Gaming & Entertainment Group, Inc.
By: /s/ Gregory L. Hrncir
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Gregory L. Hrncir, President