David Loren
Corporation (DLC) launched in June 2006 to develop and market the David
Loren (DL) brand under the Company’s trademarked brands David Loren
Collection, David Loren Dress, David Loren Beverly Hills, and David Loren
Studio, as well as to develop private label product. Private label product
is merchandise that is developed only for a particular merchant and carries
the merchant’s label rather than the designer’s label.

DLC
designs, produces and wholesales quality Moderate to Better women’s wear to
major department stores, mass merchants, specialty chains and Direct to
Consumer merchants, and develops, produces and wholesales fabric to its
large private label customers.

The David
Loren brand and its private label component is a women’s sportswear and
dress line designed and merchandised for the Missy/Contemporary female
consumer with an average age range of 25 to 60. The DL product has been
well received in department stores such as Dillard’s; specialty chain
stores such as The Gap and Banana Republic Outlet; mass merchants including
T. J. Maxx, Marshalls and Ross Stores; and on the Direct to Consumer
retailer Home Shopping Network.

DLC entered
into a merchandising agreement with Home Shopping Network and presented
David Loren Fashions in a national two-hour Prime Time debut presentation
on Home Shopping Network, and in a third hour on HSN’s now-defunct
affiliate America’s Store; both presentations aired in September 2006 and
featured the Company’s founder David Loren. During Mr. Loren’s three-hour
appearance 73 per cent of the total inventory was sold; eight of the items
sold out during their presentation (see a compressed video at
www.davidlorencorporation.com in the News and Events section). Mr. Loren
appeared in six HSN David Loren Fashions shows in 2007 averaging sales
between 70 per cent and 85 per cent. The Company is in the process of
designing a new concept Women’s line to present to HSN in 2010.

On or about
August of 2007 Mr. Loren came to believe that department stores were
destined to experience changes in the way they purchased product for resale
and that their product assortment would trend from primarily branded
business to private label. Accordingly, he re-directed DLC’s focus from
branded product to private label production and began shipping private
label product in the second half of 2008. By correctly predicting this
change in retailer business models, DLC was able to get a “jump start” on
the expanding private label business.

In the
latter months of 2008 the apparel industry began to decline in the midst of
a worldwide economic crisis. Most DLC customers weathered the storm by
reducing inventories and overhead; cancelling purchase orders for new
product; and reducing vendor margins on new purchases. As the apparel
industry returns to normalcy Mr. Loren’s plan to recover from the impact of
retailer survival strategies and to reinvigorate DLC’s business is to
cultivate retailers who have not only survived but in many cases maintained
profitability through cost control and other measures including Walmart,
Costco, Home Shopping Network, Dillard’s, T. J. Maxx and Marshalls, and The
Gap.

Mr. Loren
has had success over the years with each of these merchants with the
exception of Walmart, a retailer that he has only recently approached.

In addition
to direct retailer relationships DLC has also partnered with an independent
sales organization in New York City to present the DL product to other
major retailers with whom that firm has existing buying relationships
including Boston Proper, Cache, Stein Mart and others. This new partnership
also provides DLC with gratis use of a New York showroom, eliminating a
significant overhead expense in maintaining and staffing an office in the
City.

DLC has also entered into a commission-based relationship
with another industry veteran who has substantial retail connections. This
individual will present DLC product samples and solicit orders for her
relationships which include Macys, Bealls Florida, Belk Stores and Bon Ton
Stores. Her forte and experience is in the Moderate area which Mr. Loren
believes will continue to be the biggest purchase category for retailers
going forward – the Moderate Department merchandises product designed with
a Better Department appeal but at a Moderate Department price point. This
same retailer strategy was in place during Mr. Loren’s tenure at Kellwood
where he was very successful with his DLG Moderate collection in many of
these same retail stores.

DLC will
continue to be very aggressive in implementing this three-prong approach to
secure business for 2010. Mr. Loren has designed and merchandised different
product for each of the Company’s targeted retailers and will be using both
DL branded and private label product as appropriate.

In 2009 DLC
trimmed its overhead to the bone by initiating some of the same survival
strategies that our retail customers employed during the recent economic
downturn including eliminating salaried and contract positions in favor of
out-sourced relationships, closing the Company’s New York office in a favor
of a gratis location, and eliminating an expensive Beverly Hills lease
obligation. DLC also established a favorable production and production
financing relationship with a large independent production partner which
not only gives DLC direct access to vendor-approved factories but
eliminates the majority of costly factoring fees.

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David Loren
Corporation intends to build an international apparel and fabric sourcing
company with quality product offerings that inspire customer recognition
and trust, and that reflect a reputation for excellence in product quality
and value.

The
Company’s founder David Loren has a long history of identifying
opportunities in the marketplace and then moving swiftly to create product
for the ever-changing needs of the customer. Attentiveness to the demands
and aspirations of the consumer is on-going and is integrated into the
Company’s design philosophy to consistently produce fresh innovative
product at an affordable price. Mr. Loren’s forte is providing moderately
priced quality clothing that gives the consumer a sense of uniqueness and
allows her to make her own personal statement. It is this consumer-oriented
philosophy along with Mr. Loren’s grasp of merchant needs that defines the
Company.

Mr. Loren
has identified a first niche opportunity in the Better zone where he has
created competitive product at a lower average price point. A second niche
is identified for knit separates in the Better department; these separates
give the consumer access to an affordable product that fills a void
expressed by executive merchants at better department stores. A third
opportunity exists with the Home Shopping Network venue whose customer is
looking for comfortable, colorful trend-right design in a larger range of
sizes.
The Company’s fourth opportunity lies with mass merchants such
as Costco and T. J. Maxx for whom David Loren Corporation has created
private label product specific to their price points and with specialty
chains such as The Gap, Inc.’s stores The Gap, Banana Republic and Banana
Republic Outlet stores, and Old Navy for whom the Company has designed and
produced private label dresses, sportswear and individual items. DLC has
been in talks with Walmart regarding a new brand initiative; should Walmart
decline DLC will search for another platform to launch this product
line.

In 2008 DLC
expanded its business model to include fabric development and production.
As a vertical operation the Company has had some initial success in
developing and producing a core fabric for The Gap. While the Company has
not abandoned this area of its business, meeting the price points targeted
by Gap and other merchants in an increasingly competitive market will
require negotiating more favorable terms with its current fabric mill
relationship as well as establishing new ones.

DLC
complements its brands and core-competencies with a flexible infrastructure
and a variety of reliable production resources, both off-shore and
domestic, allowing the Company to consistently meet merchant and customer
demands.

Industry Analysis

Women’s
wear represents a multi-billion dollar market of exceptional breadth and
depth that offers opportunity in a variety of marketing channels including
department stores, mass merchants, and Direct to Consumer
venues.

The 2008 -
2009 financial meltdown created an uneasy economy with ripples in consumer
confidence. As apparel industry authorities review 2009 sales results and
discuss what lies ahead, many agree that we are operating within new global
economy rules and are speculating that they will create new opportunities
for those retailers savvy enough to understand and leverage
them.

Both
consumers and businesses have dealt with a great deal of uncertainty in
2009. Most of the year has been marked by consumers reigning in
discretionary spending while retailers and shopping center owners were
focused on what it will take to get consumers shopping at pre-recession
levels. Some of the key questions industry stakeholders have are: when the
economy improves will consumers return to their old shopping habits and
haunts or have their spending patterns been irreversibly altered by the
recession; after the recession, where will the consumer want to shop; and
what factors will influence their buying decisions?

A 2009
Shopping Habit Report by the International Council of Shopping Centers
indicates that while the majority of consumers in America rated their
current financial situation as good (35 percent), fair (40 percent) or
excellent (7 percent), only 18 percent rated their financial situation as
poor, and that consumers are somewhat optimistic regarding the next 12
months. Over 40 percent of those surveyed believe their financial situation
will improve over the next 12 months, while 47 percent believe it will stay
the same and only 11 percent say their situation will get worse. Over
three-fourths of the shoppers reported that they have cut back in some way
over the past 12 months. Between 40 – 50 percent reported cutting back in
most retail categories with the categories least likely to be affected were
visits to discount stores and grocery stores, and purchases of necessities.
Most shoppers were somewhat more likely to attribute their change in
shopping behavior to precautionary measures and concerns in general rather
than to economic reasons (such as a job loss or wage reduction). In fact
shoppers’ perception of their financial situation had a bigger impact on
their shopping behaviors than did their income. Among those who rated their
financial situation as excellent only half reported cutting back in the
last 12 months. In comparison, 75 percent of those with incomes of $
100,000 or more reported cutting back, and women were much more likely to
report that they had cut back on their shopping; this may be due to the
fact that women are typically responsible for a larger share of the
household shopping. While 80 percent of consumers reported cutting back
over the last 12 months, only 40 percent report that they expect to
increase their shopping behavior when the economy improves. The areas with
the greatest likelihood of increased use were shopping trips in general,
department store visits and purchase of discretionary goods. All this said,
Kathy Grannis of the National Retail Federation recently noted that “as
shoppers and retailers set their sights on the holiday season, low prices
and pent-up demand helped entice Americans back into the
stores.”

Retail
sales results released by the Commerce Department indicated that department
store sales increased 0.7 percent in November compared with October, but
declined 4.7 percent compared with a year earlier to $15.75 billion.
Specialty store sales declined 0.7 percent month-to-month, but increased
0.9 percent compared with November 2008 to $17.48 billion. Wholesale clubs
and superstores sales increased 3.6 percent with retailers in this category
such as Costco “increasing expansion plans over the next few years, showing
that the retailer isn’t concerned that the recession and pullback in
consumer spending will last forever,” according to Ian Ritter of bnet.com.
Ritter continued by saying that “Costco is undertaking this increase in
stores when sales at its 413 U.S. locations aren’t as good as they were in
the past. Same store sales rose only one percent year over year during its
first quarter, while net sales rose six percent. For all of the previous
fiscal year, sales at stores open at least a year were down two
percent.”

Plunkett
Research, Ltd. ties retail sales directly to the health of the U. S.
Economy and consumer disposable income. Their estimates indicate that 2009
could be the bottom in this cyclical downturn with real GDP growth
returning in 2010. That said, all current trends indicate further
challenges in retailing with the bright spots being retailers like
Wal-Mart, Costco and others where consumers know they can find everyday low
prices on quality merchandise.

Revenue Streams

David Loren
Corporation Management projects that the Company will generate tens of
millions of dollars of revenues via the broad spectrum of retail marketing
channels including department stores, mass merchants, specialty chain
stores and a Direct to Consumer merchant. The Company is also producing
private label product for retailers and large branded wholesaler/retailers
in to maximize the Company’s revenue potential.