OUR BUSINESS MODEL

Current thinking in the SLS market contends that an SLS portfolio is diversified if the underwriting, disease groups, carriers and individual life expectancies of its component policies are well mixed. That philosophy is neither adequate nor safe.

Mitigating risk in a SLS portfolio does not end with diversified underwriting, averaging the outcome of two independent life expectancy estimators and running standard deviations on normal distributions of mortality - it starts there. In addition to following all of the best practices in the industry, we evaluate every life settlement purchase (be it a policy or an entire portfolio) with our proprietary risk-assessment software - ClearView. This new risk rating tool takes a dynamic look at mortality data (it assumes that current mortality trends are more important than static mortality tables, for example), makes broader (and more stable) assumptions of risk using Student-t distributions, couples Monte Carlo with GARCH, and, generally, operates under the assumption that outliers are both the biggest reality - and the most under weighted factor - in sizing risk.

ClearView is a three-dimensional life expectancy (LE) model that goes well beyond standard deviation, kurtosis and skew. Most companies simply calculate the average LE (50% expire by the expectancy date), the median, or use the "80% die by" rule of thumb in their modeling. The differences (and the resulting implications for investors) are huge.

Using average or median life expectancy calculations alone unnecessarily expose an SLS portfolio to dangerously high table bias (the systematic under- or over-estimation of life expectancies by medical underwriters.) Even small variations in mean-extension (the insured live longer than expected) cause the net present value of a portfolio to fall - demanding that initial asset pricing be adjusted.

Beyond the numbers, ClearView - unlike any other evaluation tool in the market - looks at non-empirical, but critical asset features such as the month in which the original policy was underwritten (it can have a substantial effect on the accuracy of the life expectancy estimate), the clinical condition of a spouse at the time of his/her spouse's demise and the implications of wealth, for example, as they impact assumptions made under the "law of large numbers" used by most underwriters.

Inaccurate life expectancy estimation isn't primarily due to faulty or incomplete data … it's due primarily to faulty and look-alike methods of evaluating data. The protocols used by carriers are designed to enhance their own profitability - therefore life expectancy is understated. Only The Independent Life Settlement Advisory Group takes life expectancy and risk analysis beyond the norms used by others in the industry.

We believe that the ClearView risk rating tool will, over time, become the SLS industry gold standard. In the meantime, the Company believes that ClearView will open significant revenue opportunities in the areas of shorting the equity of overly-aggressive portfolios, generating significant fees from large portfolio buyers and sellers, and by licensing its use to carriers for the purposes of structuring SLS-backed debt obligations and underwriting mortality wraps.

Risk & Our Investment Policy

Because the SLS market is young, investors have legitimate concerns:

• How will new medical and pharmaceutical therapies impact older populations (i.e., increased longevity)?
• What are the implications of premium financing on the quality of the SLS assets available for purchase?
• What is the likelihood that the insurance industry might take more aggressive actions in the marketplace?
• How well will current pricing models hold up in the long haul?

"Buying and holding" assets is the standard practice in the investment community. However, as a stand-alone strategy buy-and-hold does not adequately address long-term concerns. Our investment strategy - using several different buying tactics simultaneously - helps mitigate these risks. Each tactic is designed to accomplish two things:

• It must either match or beat the best-priced asset of its breed or take extraordinary advantage of a specific market opportunity; and,
• It must provide a hedge against a weakness in one of our other purchasing tactics.

Being simultaneously active in the secondary market (illiquid) and the tertiary market (highly liquid) gives us both the stability (and accelerating accretive value) of the seasoned buy-and-hold assets and the arbitrage in institutional trading.

On the other hand, trading counterbalances buy-and-hold strategies if market pricing tightens significantly. Trading keeps us in the market continually - a proven risk mitigation strategy in the equity markets.

Competition

The SLS market has traditionally been split between two types of companies: brokers (who represent the insurance policy owner's interest) and providers (finance companies who represent the investor). The Independent Life Settlement Advisory Group is best described as a "super" provider that includes SLS brokerage and portfolio management under its umbrella of services. Already, the lines between brokering and providing access to SLS assets are blurred. We believe that the market continues to mature in ways that are creating vast new opportunities for a company like ours that bridges the gaps in the long chain of SLS services.

There are a handful of providers in the market who cater exclusively to institutional investors ($100+ million starting portfolios): Coventry, Peachtree, Maple Life Financial are companies of this type. While these companies have provided a valuable and high-quality function in the past, they have not evolved to accommodate the legion of more modest investors who have been excluded from this market, and none of them have introduced new products that use an SLS asset in creative new ways. While we believe their service is, generally, exemplary, their model is staid. They buy SLS assets exclusively for huge institutional investors, they do not share risk, and they view the SLS portfolio only in terms of their clients' investment horizons or hurdle rates. We believe there will continue to be a need for this type of company – but larger opportunities await a more nimble and broad-based company like ours.

Life Partners, Inc. (LPI), is the only company in the world, to our knowledge, that provides market access to small, accredited investors. They do for the small investor essentially what the providers listed above do for the institutional investor. The service formulas for both these types of providers are similar, and plain vanilla. Even so, the publicly-traded LPI, with just 20 employees headquartered in sleepy Waco, Texas, earned $8.0 million of income on $19.3 million in revenue for the quarter ending November, 2007. The 164% increase in revenue from the prior year's quarter was dwarfed by their eye-popping 515% jump in income. We believe that these numbers are an excellent harbinger of the high upside potential in this emerging market.

Recent Business Developments

The Company has contracted with Faegre & Benson, Minneapolis, Minnesota. Faegre & Benson is a highly-regarded, top-100 U.S. law firm with offices in the United States, England, Germany and China.

The Company has signed acquisition and management agreements with Living Benefits, LLC, and Marquee Fiduciary Advisors, LLC, both of Minnetonka, Minnesota. These two firms are leaders in the trading markets, having consummated a number of multi-100-million-dollar transactions in the past two years. Their blue-chip client list and transaction details are available to qualified investors on request.