Bustin' Out on the Penny Markets

GWIN (OTCBB: GWNI) operates in the fast growing and very large gaming industry. Congress estimates that the American sports betting market may be as high as $380 billion. GWIN is America’s only publicly traded sports betting advisor, or "handicapper", providing sports handicapping analysis and betting advice to sports bettors worldwide through multiple distribution channels. The company was in a quit mode but will now start releasing several press releases in the coming days because the American Football season just started!

The company announced huge news Thursday after the close. GWIN's Winning EDGE TV FOOTBALL Show will air on all owned and operated Fox Sports Net affiliates and will also air on more than 11 million additional Fox Sports Net homes on Direct TV. The CEO hinted on more news to come: "Over the coming days and weeks we will be releasing exciting news about attractive new media properties and distribution channels".

GWIN has achieved impressive revenue growth. In 2000 the company generated $1.05 million in sales, in 2001 the revenue grew to $3.24 mln, in the 7 months to July 2002 (change of fiscal year) stood at $3.03 million and in fiscal year 2003 the sales will be around $6.3 million.

GWIN just started their fiscal first quarter and we expect they will show a profit for the first time in the company's history. The company already realized an EBITDA-positive result of $115,000 in the three-month period ending April 30, 2003 and GWIN has enough cash on hand to reach profitability. Fiscal year 2004 will prove to be a break-out year for GWIN. Their distribution channels almost doubled from last year and we expect a big increase of the revenue along with a net profit.

- GWIN operates in the fast growing and very large gaming industry. Congress estimates that the American sports betting market may be as high as $380 billion. GWIN is the only public company to offer handicapping services to the domestic sports betting industry.

- There are multiple drivers of growth, e.g. through the addition of more account executives, new sales offices, additional products, acquisitions, and through securing new exposure and distribution channels for GWIN products and services.

- International opportunities offer significant expansion potential, e.g. with handicapping of soccer, rugby, cricket and horse racing in multiple languages.

- The company is on track to record revenues of around $6.3 million in fiscal year 2003, up over 100% from year ago levels.

- The strong and proven business model exhibits positive cash flow characteristics, with minimal working or fixed capital requirements. The sales force is 100% commission-based. Incremental revenues will flow through substantially to the bottom line. Break-even point will be achieved with around $7.5 million in revenues.

- GWIN will reach profitability in 2003.

GWIN is America’s only publicly traded sports betting advisor, or "handicapper", providing sports handicapping analysis and betting advice to sports bettors worldwide through multiple distribution channels such as the Company’s flagship television show, The Winning EDGE™, radio, and the Internet. Headquartered in Las Vegas, Nevada, GWIN came to the OTC bulletin board market through a reverse merger with a publicly traded shell in July 2001 and has seen its sales increase dramatically in the last 2 years as a public company.

GWIN’s business model is similar to a Wall Street securities firm. GWIN’s professional handicappers fill the role of stock analysts, and the Company’s account executives or "Sports Brokers" fill the role of stockbrokers. However the significant difference is that GWIN does not trade for its own account; it is not a betting company or bookmaker.

Just as stock investors have chosen professional advice, recommendations and money management since the stock market began - and stockbrokers, money managers and fund managers have successfully filled that role - amateur sports bettors need professional advice and money management too. As sports gambling continues its explosive growth globally, there will be more and more need for professional advice. GWIN’s goal is to fill that void and become the global brand name for sports information and handicapping advice. Major advantages over Wall Street are the absence of credible competition and government oversight and regulation.

GWIN’s prime revenue generating vehicle is The Winning EDGE™, a lively 30-minute, professionally produced, nationally broadcast television show. By analyzing historical factors and team tendencies, and by making predictions based on professional expertise, The Winning EDGE™ is an infomercial combination of a network football pre-game show and CNBC or Wall $treet Week. The Winning EDGE™ stars GWIN’s Chairman & CEO Wayne Allyn Root as host, along with world champion handicapper Larry Ness; 30-time national handicapping champion Al McMordie; Emmy Award-winning journalist and national sports radio personality Chet Coppock, and NFL Hall of Famer, Super Bowl MVP, and Dallas Cowboy legend, Randy White.

The Winning EDGE™ TV show, along with other various media and advertising campaigns, generates significant interest from consumers interested in purchasing GWIN’s handicapping information. GWIN receives inbound calls that are then converted into sales by their team of "Sports Brokers". The "Sports Brokers" job, like a stockbroker, is then to build upon that call into long-term client relationships. Each call, whether or not converted into an immediate sale, is added to GWIN’s valuable database of potential customers. GWIN today has over 300,000 clients in their active database.

GWIN's business is highly seasonal. Because football and basketball are the most popular sports for wagering, the demand for the handicapping analysis for these sports is substantially higher than for any other sporting events. As a result, approximately 80% of their sales occur in the first and second quarters of our fiscal year. Because of these factors, the quarterly operating results are difficult to predict and are likely to vary in the future. We expect this seasonality to continue for the foreseeable future. If GWIN is successful in pursuing their strategy to expand the handicapping services to cover other sports that are popular internationally, such as soccer and cricket, GWIN may reduce the seasonality of their business.

The Company’s goal is to become the leading provider of sports handicapping information and advice in the U.S. and internationally.

A recent study by the U.S. Congress estimated that as much as $380 billion is wagered annually on sports within the U.S. More than 50% of Americans bet on the NFL Super Bowl; given gender demographics, it is thus clear that the vast majority of American males place a sports wager at least once a year.

However, sports gambling is legal only in Nevada, where it is tightly regulated; legal sports wagering represents a mere 1-3% of all sports betting. Most bettors wager with local bookmakers or internationally with "off-shore sports books" (Internet bookmakers).

GWIN’s current customer base is primarily North American. However, the explosion of interest in sports betting in the U.S. is clearly matched around the globe, with Asia the fastest growing market. Worldwide (adding in sports betting on soccer, cricket, rugby, Formula One and horse racing), we estimate the total amount spent on sports betting is close to a trillion dollars. That's easily explained when you realize that American football is not the biggest betting sport in the world – soccer is king when it comes to betting. The No. 2 betting sport in the world is cricket. Cricket is the national sport of India, a nation with a middle class of over 300 million – more than the total population of the United States.

Merrill Lynch has estimated that global on-line gaming could grow to $177 billion by 2015. Investrend, a respected Wall Street research firm, estimates that over 10 million gamblers are betting online this year. This number will increase to 15 million by 2004. The fastest-growing segment of online gamblers is also the Far East: Japan, China, Hong Kong, South Korea, Singapore, Thailand and Australia. Europeans aren't far behind – of the $38 billion spent this year on online entertainment by Europeans, almost 40 percent will be spent on gambling.

The average GWIN client wagers $120,000 per year. This represents an average wager of $400 per game and 300 bets per year. The average customer pays $1,200 to GWIN annually for advice; or 1% of the total amount wagered.

Management of GWIN estimates that perhaps 20% of large bettors are willing to pay for betting advice and that those bettors pay on average 1% of the amount wagered for that information. The market potential for betting advice may be modeled as follows:

Total wagered on sports annually in the US = $380 billion

Amount wagered by large players = x 25%

Amount wagered by potential GWIN customers = 1-in-5 x 20%

Average amount spent by bettors for handicapping advice = 1% x 1%

Thus, even if only 5% of bettors are willing to pay for handicapping advice, the addressable domestic sports betting market is conservatively estimated at $190 million. A market of at least that size again exists for global sports betting advice.

At present, GWIN’s breakdown of revenue by sport is approximately: American football: 60%; basketball: 33%; baseball 7%. The roll-out of other products thus provides a significant incremental revenue opportunity.