LeatherUp.com Record 2005 Sales

Total sales in 2005 for LeatherUp.com will come in around $8.5 Million. While most online leather stores have been growing at a slow 5-20% rate LeatherUp.com has been growing at 90-100% growth rate for the past 3 years. We contribute this to the fact we manufacture most our items and continued to improve our product line. Due to our high quality products at lower prices the word of mouth sales on leatherUp.com has exploded in 2005 and 2006 accounting for over 40% of our sales. People just love the products we offer and tell everyone about it. Cutting out the middleman and saving our customers 50%-80% on most items is key to our customer loyalty and dominance.

In 2003 we introduced the Xelement Leather Motorcycle Jackets and Motorcycle Boots line that has become a brand name within the motorcycle community and is coming out with some patented innovative products in 2006 that will revolutionize the motorcycle world. We have within 2 years become one of the largest sellers of Wolverine Licensed Harley Davidson Boots which complements our Xelement Motorcycle Jacket line. The cross selling has been tremendous. Harley riders have come to enjoy LeatherUp.com as there one stop destination were they can buy great quality Harley boots, high quality motorcycle jackets, chaps, and motorcycle accessories all in one place.

Our management expects to continue to dominate weaker leather players who think they can compete online with low gross margins and be able to pay for ever escalating prices of online ads with poor merchandising from 3rd party drop ship vendors. Management sees many small to mid size firms who drop ship from leather manufacturers try to compete against Leatherup.com. We see they fail over and over and year after year because they do not carry the inventory and have no control what is in stock and not, they are often at the mercy of middlemen drop shippers who often go out of stock at the critical Holiday Season.

Since LeatherUp.com manufactures most its own product, we can bring in extra inventory of fast selling items and make sure to meet the growing online demand. LeatherUp.com prices are lower for better quality since we are direct to the consumer. Other firms have to absorb large amounts of exchanges and refunds in January and it is generally enough to push most into bankruptcy.

Firms try to compete with LeatherUp.com low pricing thus not giving them enough gross margins to cover exchange and returned item costs, plus ever growing high advertising expense. LeatherUp.com brands have a more uniform fit and feel thus lowering our overall return and exchange rate. LeatherUp.com brands like USA Leather and Xelement also have more customer loyalty and satisfaction which generic name brands can not compete with. Plus the fact we can bring in unique designs of leather jacket and boots that are not available from anyone else.

LeatherUp.com has been reshaping the leather market online and offline for the past few years. Our prices are unmatched because of the direct from factory to consumer philosophy we prescribe too. We have completely eliminated distributor markup costs, shipping costs to distributors, and other related paper work. Our average $89.95 jacket generally sells for $199-229 at most retail outlets. For this reason the word of mouth our customers have given us over the past several years has exploded and continues to grow as further enhancements and upgrades are always being made to improve overall customer happiness and service.

LeatherUp.com wholesale products division MyLeather.com launched in late 2005 is also seeing massive gains as our selection and price points can not be matched. We hold at any given time over 100,000 items in stock ready to ship from our massive Los Angeles Warehouse next to the Los Angeles Convention and Staples Center. We should see sales upward of $15 million in 2006 and continued strong growth going forward with new product introduction from our overseas factories.