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SL, Inc.

Executive Summary as of December 2003

BUSINESS DESCRIPTION

SL, Inc. (“we,” “us,” “our,”) has developed and is licensing a web-based customer loyalty

software suite as a business growth tool for the rapidly developing small and medium-sized

business marketplace. This service allows small and medium sized businesses to increase their

customer retention and profitability by rewarding points for transactions and then allowing the

redemption of those points online for certificates or merchandise. The software does not require

specialized point-of-transaction interfacing, such as credit card readers, and does not require on-

site technical installation and is therefore inexpensive to initialize and maintain. The software is

modularized so that its many components can be sold as hosted turnkey business services or as

more customizable site licenses to either end-user companies or through an OEM or VAR

license.

MARKET CONDITIONS AND NEED

The majority of small to medium-sized businesses use the web for promotions and general

information. Most of these websites are non-interactive static presentations of information. This

approach fails to create an incentive for customer loyalty, and retention rates ultimately suffer.

Loyalty programs have proven highly effective in increasing customer retention and increasing

same store sales. The Harvard Business Review estimates that a 1% increase in customer loyalty

translates into a 15% increase in revenues.

Existing customer loyalty and rewards programs have been designed for very large companies

with thousands of daily transactions. These programs are expensive and highly sophisticated

systems built for very large organizations of over $500 million. These types of reward systems

are out of reach or are too technically challenging to our target market of small to medium sized

businesses.

Our services are cost effective and easily integrated with existing business websites. There are no

new technologies to implement at point of transaction, no new software to install on internal

systems, and no need to change the normal business transaction in order to implement our

system. SL, Inc. will therefore be bringing all the benefits of large corporate rewards programs to

the small business sector with minimal start-up requirements for our customers.

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COMPETITIVE ADVANTAGE

Our product has the advantage of being competitively priced while requiring minimal technology

and personnel to implement. The businesses we are targeting often do not have large IT

departments. We therefore believe that there will be an open market within the small to medium

sized business sector of under $100 million.

In the fitness industry we have the advantage of being the first to market an on-line rewards

service to approximately 13,000 health and fitness clubs with over 13.9 million members and

industry revenue exceeding $12.2 billion.

We have formed a number of strategic alliances, including well-known technology, media, and

direct marketing companies. In addition, we have several established contacts with leading

national sports associations.

We have also gained significant positive exposure through a well-known tennis celebrity and

anticipate leveraging the use of other popular sports celebrities in order to gain further exposure

within our target markets.

PRIMARY SALES OBJECTIVES AND REVENUE STREAMS

Sports, Health, and Racquet Clubs: We project licensing to approximately 2% of the 13,000

sports, health, and racquet clubs within our first 3 years. Revenue will be generated through the

following pricing model:

Setup fee – One time fee averaging $2,200

Monthly subscription – Averaging $200 per club

Specialty Retailers/Independent Retailers: We project licensing to approximately ½ % of the

130,000 Specialty Retailers/Independent Retailers within our first 3 years. Revenue will be

generated through the following pricing model:

Setup fee – One time fee averaging $4,000

Monthly subscription – Averaging $400 per retailer

SECONDARY SALES OBJECTIVES AND REVENUE STREAMS

Specialty Licensing to Organizations and Manufacturers: We project specialty licensing to a

small number of large organizations and product manufacturers. Our software suite has multiple

service value-added modules, which can be licensed as hosted services or as customizable site

licenses. In addition, we envision volume-licensing modules of the software to established VARs

and OEMs within each of our target markets. We estimate that our software suite can be easily

customized and licensed for use in these sectors. Revenue will be generated through the

following minimum pricing model:

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Setup fee – One time fee averaging $12,000

Monthly subscription – Averaging $3,000 per organization/manufacturer

Professional Services – We anticipate additional revenue from E-marketing services, direct mail,

transaction processing fees, other technology enhancements, computer kiosks, and custom web

services.

SALES AND MARKETING STRATEGIES

We anticipate changing the name of the corporation in the first quarter of 2004 from SL, Inc. to

Loyalty Solutions, Inc in order to better describe our business. This new name will more clearly

reflect our overall sales and marketing strategy which focuses our resources on selling to the

fitness industry, specialty retailers, national sports organizations, and product manufactures. We

plan to utilize the following means to reach our customers:

Charter Sales Strategy – We will sell to an initial 20 charter customers at a reduced price. These

initial customers will receive special pricing in exchange for giving us feedback on our software

as well as the use of their names in testimonials, advertising, and product promotions.

Industry Trade Shows - We will focus our marketing expenditures on participation in fitness and

specialty retailing industry trade shows, and plan to use the business press targeting the specialty

business markets, as well as trade association newsletters, on-line web sites, and services as our

primary promotion focus during 2004 and 2005.

Direct Marketing - Our participation and membership in industry organizations within our target

markets will allow us to acquire lists of potential customers from which we can sell through

direct marketing methods.

Face-to-Face Presentations - We plan to travel and meet face to face with organizations and

manufacturers interested in specialty licensing of our software.

Additional Strategies – In addition, we plan to utilize online promotion, speaking engagements,

and charity PR events to enhance our selling efforts.

MARKET COMPETITION

We have identified several competitors offering customer reward point software. However, most

of these competitors’ products are priced significantly higher than our products; they are

targeting larger companies and are therefore not focusing on the small to medium sized business

sector. We therefore believe that SL, Inc. has a unique opportunity to quickly penetrate our target

small and medium sized business sector.

Our competitors in the fitness industry fall into one of three categories: (a) member billing and

membership management, (b) club membership retention, or (c) club services scheduling

software. Among the customer loyalty software products, the following described companies

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stand out as significant potential competitors. All of these software products are available either

through a web-based service or packaged software site licenses. We believe that we could

actually engage these potential competitors as OEMs or strategic partners, integrating our

rewards transaction and fulfillment modules into their solutions.

Member Billing and Membership Management: CheckFree RCM is a software application

focused primarily on providing electronic funds transfer, membership enrollment, and database

management with limited customer retention capabilities.

ASF International offers a web-based accounting and membership database service for a

monthly fee.

Club Membership Retention: We have identified Members First as our principal competitor.

They offer a rather complex online newsletter-publishing tool, membership profiling, service

scheduling, and email marketing for clubs to reach their members. They do not offer a point-

rewards system to increase customer loyalty and retention.

We have found our products and services are more competitively positioned than those offered

by Members First. In fact, we believe our rewards system is a strong complement to a fitness

club utilizing Members First products.

Club Service Scheduling Software: There are two primary companies Xpiron, Inc., and

Bookings Plus - that provide software for service scheduling. We have found that these

scheduling software companies are actually complementary to our product. As a result, we have

been moving towards forming a strategic partnership with these companies.

EXIT STRATEGY AND ROI

Dividends to Investors – We plan to pay a minimum dividend to investors of 25% of after tax

profits to preferred shareholders and 10% to common shareholders in any year in which we earn

over 15% gross profits.

Acquisition – The most realistic exit strategy for cashing out our investors will come through an

acquisition by a more established technology company seeking to broaden their product offering.

Over the next 12 – 18 months we will be leveraging our existing shareholders and board

members to identify and strategically position the company for acquisition.

IPO – Taking the company to an IPO is a less likely scenario for cashing out our investors;

however, through a steady growth of quarterly earnings, coupled with a friendly IPO market, we

would consider this as a possible exit strategy. It is also possible that through a merger or

acquisition with a pre IPO Company involving a stock swap, our investors would have the

possibility of their ROI materializing through the IPO of our acquiring company.

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FINANCIAL SUMMARY

FUNDS SOUGHT

We are seeking $1,000,000 in funding. These funds will primarily be used to hire senior

executives with established contacts in our target markets, acquire additional technical support,

ramp up sales and marketing, enhance our current product software, provide working capital, and

improve computer and networking services.

USE OF FUNDS

(Projected)

FY 04 FY 05 FY 06

Revenue $1,325,665 $2,894,800 $5,691,000

Fixed & Variable Costs $891,394 $2,687,636 $4,499,192

EBIT $434,291 $207,164 $1,191,808

Margin 32.76% 7.16% 20.94%

Use of Proceeds Total Percentage

Mgmt. Salaries $ 330,000 33.00%

IT Services/Hardware $ 40,000 4.00%

Senior Programmer $ 130,000 13.00%

Professional Services $75,000 7.00%

Sales and Marketing $ 200,000 20.00%

Operating Expenses $ 85,000 9.00%

Working Capital $140,000 14.00%

Total $ 1,000,000 100.00%

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MANAGEMENT TEAM

Mark Rollins, Chief Technology Officer

Mr. Rollins has over 35 years of experience in software development, during which he has led

the development of projects for Xerox, IBM, Intel, Microsoft, and Time, Inc. While at Xerox, he

received the Presidents Award, Vice Presidents Award, and several Research and Development

awards, as well as Development awards at IBM. Mr. Rollins holds several degrees, including a

Ph.D./A.B.D. from the Graduate Center of the City University of New York; an M.F.A. and an

M.A. from Pratt Institute; a B.S. from SUNY; and a B.A. from NYU, with majors in math,

physics, psychology, art, and art history.

Paul Pedrazas, VP of Marketing Mr. Pedrazas brings to us a strong proven track record in developing a successful business within

the high technology and business-to-business industries. After a long career in direct marketing

for the computer industry, including management positions with Data General Corporation, The

Interface Group, (producers of the COMDEX computer trade show), and Oracle Corporation,

Mr. Pedrazas established his own direct marketing agency, Response Associates in 1991.

Response Associates, based in San Francisco, creates and manages high response lead

generation, direct mail, E-mail and Web promotions for high technology companies. Mr.

Pedrazas brings a unique background in understanding how to best utilize complex technology

products and comprehensive marketing strategies, as well as his unique experience in developing

and managing a successful corporation.

Mike Dombrowski, Founder, Executive Vice President Mr. Dombrowski has 26 years of experience in tennis, including 19 years as a certified

professional with the United States Professional Tennis Association. He graduated from the

University of North Carolina at Asheville with a bachelor’s degree in Business Administration.

Mr. Dombrowski is a former nationally ranked tennis player and, in 1983, was awarded the

honor of Academic All American Tennis Team by the National Association of Intercollegiate

Athletics. In addition to serving as an officer, Mr. Dombrowski is also one of our co-founders.

Robert Plummer, Founder Dr. Plummer is a lecturer in the Department of Computer Science at Stanford University. Dr.

Plummer holds a Masters degree in Computer Science from Stanford University and a Ph.D. in

Computer Science from the University of Texas at Austin. Dr. Plummer was the creator/founder

of cc:Mail, Inc., one of the first email systems for PC’s, which was purchased by Lotus/IBM.

Dr. Plummer is also one of our founders and has served as an advisor to the company.

Larry Krieger, Director Mr. Krieger is a proven executive and team builder with over 20 years of experience in the

fitness and wellness industry. Mr. Krieger has successfully built fitness and racquet clubs and has

served as the President of The International Health and Racquet Sports Association (IHRSA).

Mr. Krieger is a strategic and innovative thinker who transforms and builds businesses, making

them highly profitable. Mr. Krieger’s industry contacts allow us to shorten our sales cycle and

product exposure by introducing us to the largest, most influential companies in the fitness

industry.

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COMPANY DISCLAIMER

The information contained in this executive summary has been prepared to assist interested

parties in making their own evaluation of SL, Inc., and does not purport to contain all of the

information that a prospective investor may desire. In all cases, interested parties should conduct

their own investigation and analysis of SL, Inc. and the data set forth in the executive summary.

We make no representation or warranty as to the accuracy or completeness of the information

contained in this executive summary or made available in connection with any further

investigation of SL, Inc., including any estimates or projections. SL, Inc. shall not have any

liability for any representations (express or implied) contained in, or for any omissions from, this

executive summary or any other written or oral communications transmitted to the recipient.

Nothing contained herein should be relied upon as a promise or representation regarding future

events or performance. SL, Inc. has not retained an independent party to verify the information

contained herein, nor has an independent appraisal of SL, Inc.’s assets or operations been made.

Moreover, the information contained herein speaks as of the date hereof; SL, Inc. has no

obligation to update any such information. The only representations and warranties that will have

any legal effect will be those specifically set out in a definitive agreement when and if executed,

and subject to such limitations and restrictions set forth in such written agreement.

FORWARD-LOOKING STATEMENTS

This executive summary contains certain forward-looking statements that include, among other

things, discussions of our business strategy and expectations concerning our position in the

industry and market share, future operations, margins, profitability, liquidity and capital

resources, as well as statements concerning the development of products and the achievement of

cost savings and efficiencies. All of these forward-looking statements are based on estimates and

assumptions made by our management that, although believed to be reasonable, are inherently

uncertain. Therefore, undue reliance should not be placed on these statements and estimates. We

cannot assure that any of these statements or estimates will be realized, and it is likely that actual

results will differ materially from those contemplated by such forward-looking statements in the

business plan, or in any other documentation provided by us. They should not be regarded as

representations that we will be able to achieve our objectives.