Business Summary — PPM Penny Racing Machines

This document provides a brief overview of PPM Penny Racing technology and the corresponding financial forecasts.

Pari-Mutuel wagering has been around for a very long time. Our technologies are based on the use of Pari-Mutuel pools wherein bets are aggregated; and from which winning wagers are paid.

The idea of utilizing data from previously run horse races for wagering purposes is a new concept for use in the horse racing industry. The PPM Penny Racing Machine draws upon a database of results from historical horse races to create new pools to be used for multi-race pari-mutuel events displayed in the framework of a new gaming machine. Players are not merely seeing the experience from an individual cost benefit equation, but more importantly as entertainment. A large number of machines are networked together in a pari-mutuel style gaming experience. The basic premise of the PPM Penny Racing Machine concept allows wagers to be made on previously run horse races via electronic machines. The machines store and automatically deliver the race to the bettor–who then has multiple wagering options. The system is similar to wagering on a live event, except the minimum bet is a penny. Our system provides a multi-tiered payout format that gives players an advantage.

The concept of Post Pari-Mutuel Penny Racing Machines linked to previously run horse races has been legalized in multiple states.

Our target markets are Indiana and Kentucky due to existing laws permitting wagering on previously historically run races.

We provide horse tracks and off-track betting establishments with entertaining, high speed gaming options. The successful implementation of our PPM Penny Racing Machines at race tracks and off-track betting locations will ultimately benefit the entire horse racing industry.

The concept has multiple applications for both land and internet-based operations. The worldwide interest in event wagering exceeds one Trillion Dollars per year.

Our patent broadly relates to a Wagering Web Service, used to coordinate a wagering event. It includes an administration application which:

1. Generates a first pool page for managing a first wager pool.
2. Interoperates with a banking application.
3. Interoperates with casino applications.
4. Sends and receives wagers from casino applications.
5. Coordinates a wager amount to the banking application.
6. Credits the first pool with the wager amount in a wager ledger.

It is in effect a system for Real-Time Pari-Mutuel Wagering. Among other things, the system includes sensors (e.g., on a card table) configured to generate readable data component signals when interoperating with readable data components (e.g. one, two and three-dimensional bar codes on playing cards, RFID tags in playing cards, and combinations thereof). The readable data component signals are received by a game-play component, allowing for Real-Time Wagering on an event (for example a poker game).

Current State of the Target Market for the Pari-Mutuel Penny Racing Machine.

With recent changes in gaming habits, the racing industry has been ravaged by the loss of bettors to other forms of wagering. The industry has moved towards a Racino style operation, mixing casino style games with traditional Pari-Mutuel horse racing options, to attract players back to the race tracks.

The PPM Penny Racing Machine has the capacity for high speed betting. We provide opportunities to wager on previously run horse races within a server based Pari-Mutuel payout structure. Pools are created and payments are distributed to players over time. The PPM Penny Racing Machine does not payout funds in a straight line odds schedule similar to traditional slot machines. Therefore the PPM Penny Racing Machine players benefit from a more generous redistribution of funds. This allows for more flexibility and choice in wagering options. We provide the potential for an extended period of wagering time, unlike the straight odds payment systems, currently the norm in the slot machine industry.

Our system is flexible. We can provide pools for race tracks worldwide. The server-based technology provides a risk-averse source of income to operators and state coffers alike. Pari-Mutuel pools cannot be negative. Therefore there is never a loss to the operator on any game or pool. The PPM Penny Racing Machine System provides the player an exciting gaming experience, the operator a consistent source of revenue, and the state a growing tax base.

Revenue Breakdown for the Pari-Mutuel Penny Racing Machine.

PPM Penny Racing Machines offer automated wagering on fifty races per a 30 to 45 minute game. By determining an average number of wagers a minute, and the average wager, we can calculate fairly precise estimates of gross and net revenues per machine. In the below calculations, we have used a figure of twelve races per minute with an average wager of $0.62 per race. It is likely new players will go slower and bet less, while experienced players will bet faster, and wager more. As more and more players become accustomed to the PPM Penny Racing Machine we will see them wager more, and play faster.

Daily Revenue Example:

1. $4,464 per machine per day — based on 12 wagers per minute (or one bet every 5 seconds) at an average bet of $0.62 for 10 hours of daily play.
2. The operator will hold 10% of the daily take, or in this case $446.40 per machine per day.
3. State taxes of 1% will be removed, in this example $44.64 per day.
4. Processing fee of $10 per machine per day.
5. Revenue sharing agreement with racetrack at a 50/50 split, will net $195.88 each.

Example:

6000 machines for 365.25 days = Net Revenues $428,977,200 per year each

Racetrack revenue may be used to:

1. Increase purses;
2. Market the Post Pari-Mutuel Penny Racing machines;
3. Hire additional workers, and provide better wages and benefits; and
4. Fuel breeders and agriculture businesses within the state(s).

General required steps for the implementation of PPM Penny Racing Machines:

Step 1: The racetrack puts aside and rehabilitates a dedicated space in their grandstand specifically for the PPM Penny Racing Machines, and supplies electricity to the machines.
Step 2: We will provide machines. Our initial estimate for full deployment is 6,000 machines between the States of Indiana and Kentucky alone.
Step 3: Our Tote affiliate runs the operation, tying the machines into the Tote system of the track thereby creating crossover wagering for the Race Track.

PPM Penny Racing Machines vs. Slot Machines at Race Tracks.

A racetrack requires an expensive license to add slot machines to their offering. The current environment demands a licensing fee of $150 to $250 Million Dollars, with a supplemental per machine tax of $25,000 as they are installed, plus an additional cost of $14,000 per machine. Each operator could potentially be required to invest $500 million for the right to have slot machines at their respective racetracks. Therefore, prior to a single bet being placed, each racetrack is potentially in debt $500 Million Dollars. Authorities could also theoretically require an additional separate building for the slot machines, updated parking, additional staff; and more. The racetracks could spend well over One Billion Dollars in order to install 6000 slot machines.

In comparison, because the PPM Penny Racing Machines are simply another form of Pari-Mutuel Wagering, the race tracks main cost is to renovate their current facility to hold the PPM Penny Racing Machines. There is no licensing fee or a per machine tax of $25,000.00. In general, the difference between PPM Penny Racing Machines and slot machines is a net saving of $950 million dollars.

Traditional slot machines are taxed on a machine by machine basis, at a higher marginal tax rate than the PPM Penny Racing Machines. The average slot machine may yield revenues of $385 dollars a day, however, after reductions for taxes, financing, and facility renovations, the racetrack owner may be left with less than $100 per machine per day.

Compare the risk reward for the traditional slot machine vs. the risk reward for the PPM Penny Racing Machines. You will see PPM Penny Racing technology is superior on every front.

Conclusion

The bottom line is revenue payback for slot machines extends over several years at a minimal 9% cost of capital compared to PPM Penny Racing Machine’s revenue payback. We estimate slot machine costs of more than One Billion Dollars compared to a $50 Million Dollar renovation costs by using our PPM Penny Racing Machine technology.

A final added benefit is, our machines will take bets on actual horse races. Slot machines cannot fulfill this function.

The PPM Penny Racing Machines are the best fit to fulfill the needs of the current race tracks and off track betting parlors as they move into the future.

We have assembled a team of dedicated gaming and business development professionals who are now turning these estimates into reality.

We have limited this analysis to current commitments to the States of Indiana and Kentucky. Over 40 other jurisdictions are also available to us in the United States.

Our eleven patents provide worldwide protection and coverage for up to 20 years.

The Pari-Mutuel process of the PPM Penny Racing Machine has inherent advantages over fixed-odds slots. Coupled with our patents, it allows us to offer many exclusive features to players.

Example: Change Odds Jackpots will revolutionize the market-place. Fixed odds slots cannot follow us because of statutes and patent protection.

Finally, it is very important to note that Pari-Mutuel betting on horse races using our Post Pari-Mutuel Racing Machine technology is exempt according to the 1961 Interstate Wire Act. This allows us to access the worldwide internet and to attract foreign bettors.

Our system will create tax revenues and profits in the United States of America.