Amax to join AR/VR gaming via acquisition

A subsidiary of local Amax International Holdings Limited has entered into a HK$63.5 million (US$8.11 million) agreement to purchase technology and mobile application company Explicitly Grand Investments Limited, according to a company filing with the Hong Kong Stock Exchange.
The agreement, originally entered into mid-July of this year, will involve the issuance of 150 million new shares by Amax, to be issued to the vendors – Gorgeous Smart and New Sphere – each of which holds a 50 per cent stake in Explicitly Grand. After issuance, the amount held by the two companies will equal approximately 9.75 per cent of Amax.
The acquisition by Amax comes about due to the ‘growing popularity of virtual reality and augmented reality, the future business prospects of mobile and digital industries’ and the valuation of the company at HK$64.4 million. To date, the company has obtained contracts with SHK Properties, Maxim’s Group and Haier Electronics, and has 10 service contracts with nine customers ‘with a total contract sum of over HK$7 million’ as well as a number of potential customers and letters of intent.
The vendors have guaranteed net profit for the group’s fiscal 2018, ending March 31, 2018 ‘will be no less than HK$4.91 million’, while that for the next fiscal year, ending March 31 2019, ‘will not be less than HK$6 million’. The company will be liable for payment should it not meet net profit guarantees.
Amax notes that the target company ‘will not only be serving as future revenue drivers, but also as cost saving and innovation drivers’ for Amax’s current business.
The group notes that it hopes to leverage the augmented and virtual reality and research capabilities of the company to expand into the entertainment business via apps and entertainment platforms and ‘simulation casino gambling’ using the technology.