TAJ SYSTEMS, INC.
THE YEAR IN REVIEW, AND A LOOK AHEAD TO 2007
Dear Fellow Shareholders, Family, and Friends,
October 23, 2006 marks the beginning of a new year on the Indian calendar. In honor of our most valuable market, the management team of Taj Systems has elected to perform an annual review of our business, and provide a glimpse of what the future holds in store for our exciting company.
The Business: The business of Taj Systems remains keenly focused on developing the best online gaming software for the Asian market, and more specifically the South Asian (Indian) market. The company has elected to focus on the Indian market for five primary reasons:
India boasts one of the fastest growing economies in the world;
The growth rate of Internet users is higher than any other largely populated country;
Playing cards is a favored past time among millions of Indians, men and women;
First-to-Market advantage – the market has largely been ignored during the early online gaming expansion resulting in virtually zero competition today;
Most of all, being Indian, we know our market better than any other!
Revenue Model: As a software development company, we have three key sources of revenue: new client set-up fees, recurring monthly licensing fees, and new software development revenue for clients such as TeenPatti.com. Set-up fees are one time charges imposed on new clients who wish to utilize our software and include the initial cost of the software. Monthly licensing fees include minimum monthly charges and are generated from customers offering real-money gaming. Software development revenue is derived by creating custom software for our clients or customizing existing software products for new licensees.
The History: One year ago, the current management team acquired controlling interest of a public company (Emerald Powerboats) which was formerly in the business of building power boats. At closing, the company had no assets or liabilities, only a management team with a lot of hope and big dreams. A year later, those dreams are materializing into a reality.
Our vision was to develop online gaming software of interest to the people of Southern Asia, more specifically – India; to develop an Internet version of the most popular card game played in our market. That game is called TeenPatti, and it is a traditional game played by millions of South Asians. It is important to note that we define our market as South Asian because TeenPatti is also widely played within countries bordering India, such as Pakistan, Nepal, Sri Lanka and others. It has grown through time as families have been passing on their love of the game to their kids for generations.
During most of 2006, our first year of operation, Taj Systems is best described as a development stage company set on one goal – to build an exciting gaming engine featuring the vastly popular TeenPatti card game. To jump start our efforts, Emerald Powerboats acquired Costa Rica based gaming software company, LoboGaming Corporation. Shortly thereafter, the formal name of the company was changed to Taj Systems, Inc. to better reflect the business of the company and relation to our target market.
The Game: Our product of choice is TeenPatti, a three-card version of Poker. In fact, like traditional Poker, it is easily learned within minutes, but can take years to master. Teen Patti correctly translated in Hindi actually means “three-card.” It is also similar to the Three-card Poker played in casinos throughout the US, but a significant difference is the player’s opponent. Like regular Poker, TeenPatti is played against other players, not against the House or the Casino as is the case with Three-card Poker tables in most casinos. The game is also very similar to the British game of Three-card Brag, and has also been known as Flash or Flush. TeenPatti is widely played by the Indian population throughout the world, especially during the current Diwali and New Year holiday season.
Today, Taj Systems remains focused on the South Asian market, but merits mention that future plans also include developing popular games of the North Asian, or Chinese market. We are proud to state we have assembled a qualified team of experienced programmers and animators capable of designing any type of gaming software.
The Year in Review:
The Accomplishments: The saying, “Time flies when you’re having fun,” could not be more true for the team at Taj. 2006 has gone by in the blink of an eye, because we have had such a busy year, as illustrated below in our list of accomplishments.
The software – the most important accomplishment of 2006 is the development and release of our proprietary TeenPatti software.
TeenPatti.com – prior to completion of the software, we had already signed on our first licensee. Besides our software, having TeenPatti.com as a licensee is the most valuable asset for Taj Systems as it is the most recognizable name and brand in the South Asian gaming market. In India, TeenPatti is to gambling as Kleenex is to tissue. Because brand recognition is everything when it comes to marketing, we also successfully brought on Threecard.com as an affiliate site for TeenPatti.com.
World TeenPatti Tour: Taj secured rights to the World TeenPatti Tour. A significant element of the Taj business plan included the development of a popular tour similar to the Poker industry which saw a sharp rise in the number of players resulting from widespread TV coverage of the game, or reality TV featuring TeenPatti tournaments in which anyone can play and win.
Marketing Partnerships: Taj developed strong alliances with Indian news and media publications in their respective markets, such as the Voice Media Group in Toronto, Ontario – the largest concentration of South Asians in North America.
Elephant Advertising – To ensure an effective marketing strategy, we hired the number one advertising and media agency servicing our target market.
Malta – In anticipation of the recent developments brought on by U.S. lawmakers against online gaming, our management team had already elected to re-domicile the company to Malta. Though we are not a gaming company, residing in the gaming friendly jurisdiction would be much more beneficial for our company.
World Series of TeenPatti – another of Taj Systems’ valuable assets. The World Series of TeenPatti brand has the potential of becoming a precious property similar to the World Series of Poker. The first WSOT tournament has already been organized and is scheduled to take place in May of 2007 in Reno, NV.
The above list provides a helpful summary of Taj Systems accomplishments as mentioned in news stories, but so many others confirm the smaller successes of the company. Announcements such as Taj’s penetration into its 100th country, thanks in large part to its licensee TeenPatti.com, are a significant milestone for the first year of operation. The company remains focused on building a sound foundation by placing an equal importance of fulfilling its small goals as well as the larger milestones.
We are pleased with the progress thus far having achieved thousands of new player registrations during year one, and earned compliments from players on the quality of the software. The most exciting prospect about this business however is the fact that we have not yet tapped even 1% of the market, leaving a tremendous amount of upside for years to come.
The Obstacles: The success of a company is very much dependent upon its ability to overcome obstacles and setbacks. At Taj Systems we have experienced our fair share of both during year one of operation. Like any new software company, there were glitches, software and server crashes, and development faults. Halfway through the project, a new development team had to be hired to fix the problems of the first and recreate the software, resulting in a greater cost of development than originally projected. Though we have conquered these tribulations, one must be aware that such issues may arise again, and can adversely affect the company.
The climate of the gaming industry has changed dramatically during the past one year. We have witnessed companies in this industry lose over 50% of their valuations as a result of new bills passed by U.S. legislators, squeezing the industry’s primary revenue source. Key executives of top gaming companies were taken into custody while traveling to the U.S. sending shock waves of concern within the industry. For the time being, the U.S. government has successfully accomplished its goal of crippling the online gaming industry by restricting the use of U.S. currency by online gamers.
We firmly believe and support the theory it is far more advantageous (for many reasons) for the U.S. to legalize and regulate the industry rather than banning it all together. However, it doesn’t appear the government’s stance will change any time in the near future.
Thankfully, this measure doesn’t affect Taj Systems very much. Our management has felt the ban was eminent prior to legalization. Therefore, our business plan included a focus on Asia (not the U.S.) since inception. The eastern hemisphere also represents the greatest growth potential during the next five years. Since the U.S. ban was recently announced, we have already received many inquiries for our software as gaming operators are seeking to add products which can be used to attract players from Asia.
In summary, all companies undergo obstacles and pitfalls, but it’s how they respond that determines their ultimate success. We believe we have successfully navigated through our obstacles and delivered an excellent product to the market. This and the fact that a U.S. ban on online gaming which has been the greatest obstacle for 90% of our industry is actually a blessing for Taj Systems should prime this company for a promising year ahead.
The Year Ahead:
We are an optimistic team at Taj, and firmly believe 2007 will be even better than the last. With all that is planned including the launch of the World Series of TeenPatti, the move to Europe, the release of our new animated software product, Taj Systems should begin making a lot of noise in the online gaming community during the next twelve months. Let’s consider….
The Market: With over one billion people in India, gaming operators targeting this market is clearly the primary focus of Taj. In 2005 there were less than 33 million internet users in India; however, projections for the end of 2007 include approximately 100 million, a three fold increase.
Our primary market is the South Asian population, which includes South Asians around the world, not only those residing in Asia. Other key areas of concentration for Taj Systems are the United Kingdom, South Africa, Canada, and Australia, which also include sizeable populations of South Asians.
The Product: As a software company, one must be in constant development mode to improve and maintain the quality of the product, and stay at least one step ahead of the competition. We are proud to announce that our newest version of the software is complete and will soon be unveiled. One of the most exciting features of our new software includes a realistic feel of the game provided through a three-dimensional platform with characters so lifelike, you will be made to feel as though you are actually sitting and playing at a live table in a casino.
The Competition: We have the advantage of a First-to-Market player with very little competition in our space. At present there are only two operators which are aggressively targeting the Indian market, and we have one of them as our licensee (TeenPatti.com). As stated previously, TeenPatti.com owns the number one brand for this market and we are the beneficiary having them as a licensee. Through developing the software for TeenPatti.com, Taj also earned a 25% equity interest of the company, another valuable asset for Taj Systems.
It is likely that many more operators will begin targeting this market. This should be positive for Taj as these operators must license the necessary software from a vendor or create their own. Creating the software can require a significant amount of time and money, therefore, most small to mid-sized operators would opt to license from a provider. Today, Taj Systems is the only company in the world licensing TeenPatti software, therefore, we feel we are well positioned to take advantage of the Asian gaming boom.
2007 Milestones: In order to measure our success for the year ahead, we have already set our benchmarks and goals. During the upcoming year, we hope to…
Complete our move to Europe during the next 30 days.
File to become fully reporting prior to year end 2006, and attempt to qualify for listing on a more senior exchange such as the AMEX or OTC BB.
Release the newest version of our animated software on January 1, 2007, kicking off the New Year with a bang.
Launch the World Series of TeenPatti (WSOT) in May ’07 – the largest single TeenPatti or Three-card tournament in history with a prize pool greater than $1,000,000 in its first year. Begin creating a valuable brand in the WSOT.
Bring on two more licensees for TeenPatti software (currently under negotiations)
Launch the World TeenPatti Tour in late 2007, another brand owned by Taj. This is being designed as a collection of big money tournaments throughout the world, ultimately leading up to the 2nd World Series of TeenPatti in 2008.
We’ve set the bar high, but attainable, an important element in maintaining the high level of energy and excitement within our company. By this time next year when another Indian New Year is upon us, we hope to dissect the above list and check off each item as a completed milestone towards achieving success in 2007.
We thank you for your support, and whether you are Indian, American, European, Asian or African, we wish you a happy, safe, and prosperous New Year!
Thank you.
The Management Team
Taj Systems, Inc.
AI
