PipShark Saturday, 07/24/10 01:40:19 AM Re: None Post # of 23 Notes from 10k Filing date 03/31/2010 We classify our businesses into two segments: wholesale and retail. Our wholesale business consists of wholesale-channel sales made principally to famous brands, department stores and specialty stores located throughout Europe, U.S., Japan and the People’s Republic of China (the “PRC”). We have a focus on well-known, middle-to-high grade casual wear, sportswear, and outerwear brands. Our retail business which consists of retail-channel sales directly to consumers through full-price retail stores located throughout the PRC. Although we have our own manufacturing facilities, we currently outsource most manufacturing to our strategic alliances as part of our overall business strategy. Outsourcing allows us to maximize our production capacity and maintain flexibility while reducing capital expenditures and the costs of keeping skilled workers on production lines during low season. Our management oversees the long-term contractors and inspects products manufactured by them to ensure that they meet our high quality control standards and timely delivery. Our annual production capacity including outsourcing orders is in excess of 12 million pieces. The primary business objective for our wholesale segment is to expand our portfolio into higher class brands, expand our customer base and improve margins The business objective for our retail segment is to further establish a leading brand of women’s apparel and to build a nationwide retail distribution channel in China. As of December 31, 2009 we operated 185 stores. During 2009 we opened 100 stores and closed 8 stores. We expect to open an additional 80-100 stores in 2010. Total sales for the year ended December 31, 2009 were $89.9 million a decrease of 7.8% from the year ended December 31, 2008. Although sales in our retail business increased significantly during 2009, sales in our wholesale business decreased 18.4% due to the global economic slowdown. Sales generated from our retail business contributed 14.7% or $13.2 million of our total sales for the year ended December 31, 2009, an increase of 276.3% compared to $3.5 million for the year ended December 31, 2008. We had 185 LA GO GO stores at December 31, 2009, compared to 93 LA GO GO stores at December 31, 2008. In 2009 we opened 100 new LA GO GO stores and closed 8 stores Sales in their wholesale business decreased due to the economic downturn. Nothing really surprising about that. What got my attention is growth in the company's retail business. It appears they may be building a brand name right in the middle of a recession!