Asia's Answer to the Poker Boom?

An unusual partnership emerged last week when a leading health industry firm purchased the assets of Mahjong Systems Limited (MSL), a company that has developed Internet Mahjong software.

"With Mahjong Mania, we will bring multiplayer skill games to Asia on Asian terms." -Adriaan Brink

The deal provides an immediate injection of capital for MSL as it gears up to launch a multiplayer Mahjong system for the Internet later this year.

The investor, Events International Holding Corp., is a Canadian publicly traded company specializing in convention and meeting planning for the healthcare industry. The MSL deal is the company's first venture in the gambling space.

The deal calls for Events Holdings Corp. to acquire all of MSL's issued and outstanding stock by issuing 9 million shares of EIH common shares worth nearly $900,000.

EIH will also acquire all of MSL's assets, which include the intellectual property, software and development of the Mahjong Mania Internet gaming software, as well as software licensing agreements. EIH will additionally get the source code and all software created under the MahjongMania.com URL, the Web site MahjongClub.com and 19 other Mahjong-related URLs.

The deal is coup for I-gaming veteran Adriaan Brink. The South African national, who also holds British citizenship, played a key role in bringing Liechtenstein-based PlusLotto online.

Brink will become president of EIH and receive 810,000 shares of the company. MSL president and CEO Ian Sherrington, a co-founder of Mahjong Mania, will be issued 8.1 million shares.

For now, MSL is operating from Turks and Caicos, where it is licensed. EIH isn't commenting on whether it will relocate.

Brink believes Mahjong could experience the same popularity on the Internet as poker.

"With poker on the Internet earning in excess of $4 million per day, the market for multiplayer skill games is well established," Brink said. "With Mahjong Mania, we will bring multiplayer skill games to Asia on Asian terms."

MSL's most valuable asset might be its new multiplayer Internet gaming software, which is billed as the first mahjong system on the Internet designed for an aggregated player base.

All of MSL's efforts to date have been in the research and development phase of the project. MahjongClub.com is an active site, but MSL has yet to generate any revenue. Nor has it signed any licensees (although it has licensing agreements pending).

MSL stated in an un-audited financial report provided to EIH that it has invested $1.6 million into the research and development of Mahjong Mania.

Officials with EIH said they expect the required technology development and the delivery of the Mahjong Mania software to potential licensees to be completed within five months of the deal's closing.

Albert Barbusci, chairman and CEO of EIH, said the Mahjong agreement represents a significant milestone for his company as it looks to diversify its operations.

"We are very excited about the prospects and potential of the Mahjong Mania Internet gaming software developed by MSL," Barbusci said. "I am eager to get to work with Ian Sherrington and his team of software developers. The multiplayer software will be the first of its kind to reach the audience that populates the worldwide Internet gaming marketplace, and we are confident this will yield significant benefits for our shareholders."

Often referred to as "Asian poker," Mahjong is the most widely played game in China and is hugely popular throughout Asia. Its popularity has also spread to North America and Europe. The game is at the heart of the enormous terrestrial gambling market in Asia, but has yet to translate into the Internet space.

Founded in 1976, EIH expanded its business from convention organizing to include the marketing and administration of a specialized medical portal (obgynworld), e-commerce consulting and an agency handling healthcare advertising and communications.

EIH began to redirect its focus during the second half of 2003 from meeting planning to new areas showing greater long-term promise. It was during this period that the company shifted to a wide range of online business options.

Sherrington acknowledged that EIH is an unusual partner for Mahjong, but he said the company's proven track record makes it an excellent partner.

"We are very happy to partner with EIH, given its success in the areas of marketing and advertising, which will help drive the exploitation of our multiplayer Internet gaming software on a worldwide basis," Sherrington said.