Status Update Communication

Nihao Liu Shuyan,

We are writing to give you an update on your investment. Your investment area was hit with several very severe storms last month that caused flooding, phone, power and internet outages. Your salons were closed during that time around 4 full days. This impacted your last months statements.

Currently, your combined bank balance is $62,656. At this amount, we consider your investment at risk. You have two locations currently, Military Cutoff and Leland. Military Cutoff is doing okay. It is hard to tell how it is trending because of the impact of the storms. We are seeming modest gains in guest count here and there, but no substantial gains. We have a focused marketing campaign which is reaching thousands of homes in the area and we are seeing positive movement in guest retention at this location.

Leland is your second location. This location is a low performing location. The guest count has under-performed expectations. We recently replaced your manager there to a manager who is from the area in an effort to connect with the clients and bring her existing clients to the store. Since we made this change we started seeing better trends in a positive direction until the storms hit. Thankfully Leland has very low expenses so it is actually could break even quickly if things go as planned.

We have no plans to open the third salon until the first 2 salons stabilize for a period of time.

At this time, we do not feel that a capital call is necessary for this location, however one may be needed at a later date.

Please let us know if you have any questions.



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