he agreement provides that VendingData will become a 75% owned subsidiary of Elixir with a strong and growing high margin recurring revenue base. The agreement is subject to certain conditions, including the approval of VendingData common stock shareholders, and is expected to close in the third quarter of 2007.
VendingData’s business model is expected to be significantly broadened to include the placement of slot machines on a participation basis throughout Asia, in addition to the existing table games based product lines. The new business line of placing slot machines otherwise referred to as electronic gaming machines, on participation is expected to provide the firm with an immediate, significant, high margin and greatly accelerated growing revenue stream which is predominately recurring.
Elixir will use its unique and extensive network to source venues throughout Asia to enter into gaming machine participation arrangements with VendingData. It will typically assist the operator in designing the gaming machine floor layout of the venue.
It is expected that by December 31, 2008, Elixir will have secured placements of over 3,000 gaming machines on participation for VendingData with an expectation of a net win rate per machine of approximately us$ 125. Per the agreement VendingData will receive 20% of the net win, or us$ 25 per machine per day for VendingData. Based on current projections, the growth in both number of gaming machines placed and EBITDA to VendingData from this new revenue stream is expected to be 50% or greater in 2009.
VendingData will acquire all of its future gaming machine requirements from Elixir. Elixir announced at the press conference the release of its next generation gaming machine technology on display at the Elixir Gaming Technologies booth at G2E Asia.