Sweet Escape Annual Report

a

sweet start.

Sweet Escape’s First Annual Report 2010

Inside A look

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In the beginning Our mission A message from Karen Our products Our year in numbers Our year to come

Sweet Escape’s “Classic” line of wrapping paper

Beginning In the

In the beginning, there was just an old storefront in St. Louis’ downtown district, a severe chocoholic named Karen, a LOT of chocolate and a big dream.

These elements were the foundation of the Sweet Escape chocolate company when it started in 2005.

In five years, Sweet Escape has become a national (soon to be international after the opening of our London store) chocolate company. Many say that it is because we offer more than just chocolate...we offer a chocolate experience. However, we say that it is because we have a true connection with loyal clients and shareholders like you.

Thanks to you, Sweet Escape has experienced a sweet start as a public company for the year 2010.

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The first Sweet Escape store est. 2005 in St. Louis, Mo.

Our

Mission

At Sweet Escape, we strive to offer our customers more than just chocolate; we offer them an entire chocolate experience. From the time they walk in the door, a customer can expect to really be able to understand and fully appreciate the art of making, presenting and eating chocolate, from picking the region of origin of the cocoa bean to watching our on-site chocolatiers at work to personalizing the packaging of their chocolate.

We believe that everyone should develop and refine their own personal tastes for chocolate.

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Sweet Escape 2010 Two of Sweet Escape’s boxing choices for wrapped chocolates.

Karen's

Message

Friends and Shareholders,

It’s finally here! It is our time now as a public company to share with all of you, our first stockholders, the wonderful things that have been happening at Sweet Escape.

The past five years have been an incredible ride. The success of Sweet Escape as a private company was substantial. However, now that we have gone public, we have experienced triplefold success thanks to supportive shareholders like you who believe in a company that believes in themselves... and in selling good chocolate to good people. In other words, we’ve had a sweet start as a public company.

As you will see, Sweet Escape’s attention to detail with our products and care and understanding of our customers has really taken us far in the confectionery world. We recently won Food and Wine Magazine’s Tastemaker’s Award for “making service hip” and also for “best dark chocolate.”

None of this would have been possible without your support, and for this Sweet Escape will always be grateful. The next time you see someone walk into a Sweet Escape store, know that our company (that includes you!) is helping people get away from the everyday.

Stay sweet,

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Escape 2010 Karen Fritschel, Founder and CEOSweet of Sweet Escape.

1 Origin of

cocoa

Sweet Escape offers beans from 5 countries known worldwide for growing stellar cocoa beans. Like wine, each cocoa bean has a distinct taste depending on where it comes from.

Costa Rica

Our

Products

Our unique chocolate packaging options reflect our belief that chocolate is a true treasure that should be shared with family and friends. At Sweet Escape, we hope that we can offer you the gift of a chocolate experience you will not forget and the ability to share a piece of that chocolate experience with those you love.

Currently, our customers go through three stages of choice in their chocolate experience:

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sweet and mild, with a hint of caramel and golden raisins

Ghana

soothing and earthy, with an intense bitter taste that lingers

Ecuador

smooth and mellow, with essence of berries and coffee

Brazil

light and fruity, with banana and orchid flavors

Venezuela

rich and complex, with a strong nutty flavor

2 Strength of

3 Packaging of

This is an important element of the chocolate process, as it depends on an individual’s palate.

Even a slight change in the percentage of bean used creates a totally new flavor.

Each chocolate shape has specific packaging choices.

Sweet Escape has three main options, although we can highly customize your order for a special occasion.

bean

25% very sweet milky

58% semisweet milky

64% bittersweet milky

chocolate

Flat square:

• wrapped in any paper • large box of chocolates

Rounded square: • small box of three chocolates • medium box of eight chocolates

Chocolate bars: • wrapped in any choice of paper

71% classic dark

80% bitter dark

Event packages:

• We do weddings, birthdays, holidays, graduations and more! Contact your local Sweet Escape chocolatier for more information.

Sweet Escape offers more than 1000 patterns of wrapping paper, some of which are shown above.

Who ever said thinking

inside the box

was a bad thing?

Introducing Sweet Escape’s assorted chocolates box.

sweet escape

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7

4 3

10

6

2

10 5

Last year's

Numbers

This past fiscal year, Sweet Escape has seen a significant increase in net income and net revenue. In effect, stock value has increased. Although cocoa prices have drastically increased due to transportation costs, this will not affect sales price or business.

Since this is our first year sharing our company information with shareholders, we thought we would share with you previous net incomes and revenues for our company when we were private. As you will see, your buying stock in our company greatly increases our productivity.

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8 4

2 5 5

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43 2 3

4

8 1

2

Sweet Escape states Soon-to-be Sweet Escape states (or countries)

Since the opening of our first store in St. Louis, our company has rapidly grown. We now have stores offering a unique chocolate experience in 25 states and within the next year we plan on opening stores in 7 more states and another country (England). With support from stockholders like you, we envision our company to be a truly global presence within the next five years.

Cocoa Prices

Cash Flow

Dividends paid per share

2010

100

90

1st quarter 2nd quarter 3rd quarter 4th quarter

Common Class B $ .2700 .2425 .2700 .2425 .2975 .2678 .2975 .2678

Total

$1.1350

70 60

1.0206

The amount of dividends paid per share increased slightly during the third quarter and maintained this value during the fourth quarter. Net income increased greatly this year, rivaled only by our net income in 2007.

2006

$90,000

2007

$100,500

2008

$79,500 $65,350

2009

$110,360

2010 0

80

2

4

6

8

10

12

Net Income (in ten thousands)

2010

2009

2008

2007

2006

Cocoa Futures Contract Prices (cents per pound)

Prices shown per year indicate high, average and low costs for each year.

This past year, prices per pound of cocoa bean increased drastically because of transportation costs.

2010 86.1 94.6 74.5

2009 70.0 74.9 67.1

2008 68.3 78.7 63.5

2007 68.7 76.8 62.1

2006 77.8 99.8 65.6

Summary of Cocoa Futures Contract Prices (cents per pound)

Our

Future

We hope that in this annual report you find that you have placed your trust in us for good reason. Sweet Escape is excited to share our future accomplishments with shareholders like you who are making it possible for us to expand our brand and offer our chocolate experience to even more people.

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Sweet Escape 2010 Sweet Escape’s new headquarters in St. Louis, MO, recently completed in 2009.

Here’s a little something to tide you over until you can come get away from the everyday with us...

if you can see this, someone probably stole your free Sweet Escape chocolate... lucky them.

Still have questions?

95 N. Broad Street St. Louis, MO 30566

302.420.2322 kfrit@gmail.com

sweetescape.com