SPOOZ Inc (SPZI)

[Renavatio]

My email and response from Paul:

Mike,

My answers are in red below. I hope I have answered them as completely as possible, however, I would invite your trader friend to stop by the Spooz offices if he/she has additional questions.

Best Regards,

Paul

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From:
Sent: Tuesday, June 12, 2007 8:40 PM
To: [e-mail]; [e-mail]
Subject: Some Investor Questions about Spooz Software & TT Relationship

Hi Paul & Darryl,

I am a new investor with SPZI and had a friend who is far more educated than me on the subject look into your products and evaluate your relationship with Trading Technologies. Please forgive me, but my friend who is a derivatives trader there in Chicago had a few questions for me to pass on to you. I bought SPZI based solely on technicals but if there is some real merit to the Spooz story, then I will switch my strategy to more of a long term hold and will acquire a larger position (probably in the 10M share range). So please do help me answer the following questions. I know you are busy, but I appreciate it very much. It also might be productive to get my friend to do the product demo at some point in the future…

Q-I was saying that routing the orders through TT is a huge improvement to the business plan. TT is the largest front-end provider of trading software for professional traders. I've used their software for years and know it inside and out. I was recently offered a position at their company. It’s rated one of the best places to work and they are one of the largest growing trading-related firms in the world. They have basically cornered the market in front-end trading execution software- its quite a feat. The only problem is that even though Spooz is teaming up with TT, they then have to make the relationship with TT an acceptable format for the brokerage firm that the end user is holding his capital with.

A-We market through brokers. The brokers are, in reality our customer, so, since TT already connects to 110 brokers, we will approach those brokers to enter into joint marketing agreements. These brokers look at SpoozToolz as a value-add. In other words it will accomplish one of two things for a broker/distributor partner; 1) It will attract new customers, 2) it will cause existing customers increase trade frequency and volume. Also, TT has to be charging a fee for this relationship. I used to pay $1200 a month to use their software as a professional trader, which is the cheapest rate a person could achieve. TT charges $ 0.05 per side for each contract traded, except in the instance of spreads, where the TT charge remains the same. The broker pays this cost. In addition, TT may, or may not, charge our customers an additional $ 0.10 per side if their patents remain in tact, but will only be the case if these4 trades are executed on our vertical depth book. The upshot is that TT makes, at most, $ 0.15 per side for outrights or spreads. All of these costs are passed on to Spooz customers.

Q-Their software is revolutionary and reliable, with access to all major futures exchanges in the world. Now the problem is, with this new relationship, what will the third party broker do to make this relationship compatible with the firm that is monitoring and controlling the risk and financial parameters of the trader.

A-This is accomplished through a TT product called X – Risk. All compatible brokers set up global, and individual, risk perameters that filter executions. This is totally controlled by the broker where the customer holds his/her account.

Q-My guess is that there is little they will do to improve compatibility, since brokers want the order routed through them and would NOT be happy to see that the order is routed through an electronic front-end platform that is the giant of the industry and directly competes with their own proprietary software. So, with this new relationship with TT, how will the third party broker respond to make this compatible with the trader's account? There has to be an approved account to trade through where the capital risk and limitations are determined before you can route orders through TT. Is that relationship in order? How is Spooz going to proceed to make that work?”

A-These relationships have already been completed. The broker does not care whether a trader is executing on X-Trader, the TT Auto-spreader, of SpoozToolz. This is transparent to the broker, and any risk profile that currently exists would not change regardless of the front-end application.