PLAN OF BUSINESS

General

DLH Sports, Inc. intends to develop and house a large sports and fitness center that is expected to match or exceed any other in Hampton Roads, Virginia.

The sports and fitness business is a dynamic industry, with total revenues for 1999 over $10.6 billion. Fitness clubs are opening rapidly in a variety of locations. The size and scope of these clubs vary from small, individually owned workout facilities, to very elaborate, publicly owned franchises. As of July 2000 there were 15,910 clubs in the United States with over 30 million total club members for an average of over 1,800 members per club. Multisport clubs like DLH Sports, Inc. will average over 2,800 members. One of the Company’s main challenges is to establish itself as a legitimate sports and fitness club that is appealing to each of its market segments.

The Facility

Weights and Fitness

The DLH Sports Complex and Fitness Center will include state-of-the-art equipment in free weights, machine weights and aerobic machines. The majority of the center will be located on the lower level of the complex that will surround the two basketball courts. This will allow the users the option of watching the activities, or to watch one of the many monitors that will be set up for their enjoyment or viewing.

A certified strength and conditioning specialist (CSCS) will run the fitness Sports Fitness Center and hire and train his/her staff to meet the demands of the members. The (CSCS} will report to and work directly with the complex’s sports coordinators, and his/her duties will include, but will not be limited to, general supervision, personalized training for members, program development for camps and clinics, and aiding in the marketing and promotional aspects of the facility.

Courts and Fields

Two full-sized basketball courts and an indoor football field will highlight the main floor of the facility. Along with these two sports, the courts will accommodate badminton, indoor soccer, indoor field hockey, touch football, gymnastics, dance, aerobics, and more. The hardwood courts will be manufactured and installed by leading manufacturers. DLH Sports Complex expects these courts to be the premier sports floors in all of Hampton Roads. DLH Sports expects to develop a reputation as the best facility for leagues, camps, or pick-up games.

The facility will also include a 200-meter indoor regulation track, which will circle the basketball courts and indoor football fields. The track will allow the facility to house local, national, and international track and field competitions. The facility will have what DLH Sports believes to be the only indoor regulation track in the Hampton Roads area.

With their education and vast experience in this area, staff coordinators with proper education and significant experience will schedule events and activities on these floors. The staff will also develop sports leagues, camps, and clinics, and conduct various day-to-day operations of the facility.

Food Services

On the lower level of the pool area the facility will include a food and beverage lounge where members of the facility can replenish their bodies. This area will have large in-house monitors so the members may have a birds-eye view of the happenings on the courts while enjoying their favorite non-alcoholic beverage and/or snack. Various big screen monitors will show sporting events, news, or other appropriate programs that members wish to watch, will also be included in this area.

DLH Sports will hire a qualified, experienced person to operate the food services aspect of the facility. He/she will have the responsibility to meet necessary standards and to report to, and work directly with, the administrative staff of DLH Sports to make sure the needs of the members in this area are met. If additional staff is required, this person will employ and train those people in accordance with DLH Sports policies.

Orthopedic/Massage Therapy

An area for an orthopedic/massage therapy clinic will be located on the main floor of the facility. This service will be available to both the general public and members of the facility at a cost reflective of the industry standard. DLH Sports believes that this amenity will be an added benefit to the users of the facility as it will be conveniently located inside the facility. At this time, DLH Sports is deciding on whether to hire orthopedic/massage therapists or to lease out the space to an established orthopedic/massage therapy practice.

Other Features and Services

The facility will include full-service locker rooms for both men and women that will accommodate up to 120 lockers. The facility will also include large shower areas, benches, sinks, and bathroom facilities.

The Complex will include a large childcare area that will allow members accompanied by children to access the facility at their convenience. The staff will be responsible for the care and well being of the children they are watching, along with providing a fun and interesting environment for the children. DLH Sports will offer this service to the facility members for a nominal fee.

The facility will include an administrative area with various offices and a conference room. These areas will be located on the upper level of the facility.

A pro shop will be strategically placed in the facility to attract impulsive buyers. The pro shop will sell sports shoes and apparel and, eventually, DLH Sports own line of products that will be available exclusively at the facility.

Market Analysis

DLH Sports believes that its facility will be the only multi-sport complex of its kind in Hampton Roads. Some aspect of the facility will cater mainly to the Virginia Beach residents. Other aspects, however, will appeal to everyone in Hampton Roads. Because of the diversity in the activities and programs available in the facility, DLH Sports’ market segments are varied and include dedicated workout enthusiasts, people who just want a few hours of fun and recreation, high school, community and college athletic teams.

From 1990 to 1999, memberships in health clubs rose from 20.7 million to 30.6 million according to the latest statistics. DLH Sports believes that this trend will continue. Other reports show that the number of frequent users of fitness clubs increased by 84% during the same period. From recent surveys of over 360 fitness clubs, the eight most profitable programs for fitness centers were identified. DLH Sports offers six of these eight, including the top three. Due to the market for fitness clubs and the perceived need to enhance team sports training in Hampton Roads, DLH Sports believes that it can develop a significant presence in Hampton Roads.

The average number of members for multipurpose clubs registered in 1999 was over 2,104. The total number of clubs in 1999 was 3,185, many of which were fitness only clubs, which average just over 1,200 members.

DLH Sports’ Market Segments

Team Sports ~ DLH Sports expects that its most important market segment will be team training and sports. The DLH Sports facility will provide support services for many sport activities that are not currently available in the Hampton Roads area. Since Daniel Holland manages many NFL Players, DLH Sports projects that it can successfully market these players to access the facility for off season training and to sponsor football camps.

Weekend Warriors ~ “Weekend Warriors” will be an important market segment for DLH Sports. This category of members are generally categorized as people that don’t like to be locked into long-term commitments but like the freedom to come and go when the opportunity presents itself. DLH Sports will target this market segment with special promotions and periodic activities.

Dedicated Fitness Enthusiasts ~ DLH Sports also believes that those who view themselves as dedicated fitness enthusiasts will be an additional, important market segment for DLH Sports. This market segment is characterized as members who are very particular about the type of workout equipment they use. DLH Sports believes that as long as the right equipment is available, these enthusiasts will be willing to lock into long-term commitments with a facility.

Gym Enthusiast ~ An additional market segment for DLH Sports will be those people who love to be in a gym. Usually associated with basketball, gym enthusiasts seek out places to play, practice, or just hang out, usually at a very reasonable price. The better the atmosphere, and the more people to watch, the more gym enthusiasts are attracted to a facility. This is potentially a very large market segment for DLH Sports.

Families ~ This is a smaller, but important market segment for DLH Sports. DLH Sports has designed the facility to provide “something for everyone,” and we at DLH Sports expect that it will attract families that want to become members of the facility as well as families who simply want a few hours fun every now and again. DLH Sports will target families for participation in summer camps and activities that allow for fun and education for children while parents enjoy inexpensive babysitting.

Senior Citizens ~ With the baby boomer generation nearing retirement age, DLH Sports expects this market segment to be its fastest growing market. When provided with health promoting programs, DLH Sports believes that senior citizens will be wiling to participate due to the new focus on physical activity and encouragement from friends, family and physicians. In fact, this group was the fastest growing club membership segment over the last 10 years. It grew up to four times faster than other segments.

Business Travelers ~ DLH Sports expects travelers to the City of Virginia Beach to use DLH Sports’ facility for various purposes without the pressure and hassle of a required membership. DLH Sports believes the one-day walk-in fee will make the facility a very attractive place to work out.

Tourists ~ DLH Sports expects tourists who may be attracted to the facility because of its size and appearance to be another small market segment.

Exhibition Hall and Concert Arena ~ DLH Sports will also provide services to trade shows, concerts, and various events.

Marketing Strategy

DLH Sports believes that major factors like the newness, the size and convenient location of the DLH Sports Complex, the Hampton Roads community will graciously accept this facility. DLH Sports believes that people will be most attracted to the facilities numerous amenities and programs this facility has to offer.

DLH Sports will not rely only on word-of-mouth marketing strategies for customers to come and visit with us. Instead, DLH Sports will focus on its marketing strategies on those specific market segments that match the facility’s offerings.

DLH Sports’ main objective with its early marketing strategy will be to attract people to visit the facility. DLH Sports believes that once people see what it has to offer, and feel the atmosphere that they will want to return and participate in the many activities and programs that will be available.

The marketing strategy that DLH Sports will utilize to attract people to the facility will include:

• Sponsoring autograph sessions and camps supported by top professional athletes;
• Offering tours for junior and senior high schools during the building and early construction of the facility;
• Conducting a large “Grand Opening” to set in motion the facility that will be free to everyone;
• Hosting and/or supporting various community events that will bring in many people who otherwise would not visit our facility,
• Mailing out free day passes to residents of the surrounding Hampton Roads area.

Prior to the opening of the DLH Sports Complex facility, DLH Sports will utilize, print and use radio media to promote both the facility and the programs that are being offered.

Sales Strategy

Each person and team inquiring about a membership at the DLH Sports facility will be able to get any and all questions answered by a facility representative. During this brief discussion and tour, DLH Sports staff will describe to the potential member all the services, programs, and amenities the facility has to offer. DLH Sports believes that it will be important to establish a relationship of trust with its members.