James G. LeBloch and Cathy Michelsen LeBloch - Page 6




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          shops by performing a variety of handyman services.  LeBloch also           
          advised Michelsen (initially in her capacity as a sole proprietor           
          and later in her capacity as an officer and director of NT) on              
          financial and legal matters related to the shops, as well as on             
          items to purchase as inventory for the shops.  LeBloch routinely            
          paid expenses for the shops out of his personal finances, and he            
          contemporaneously requested and obtained from the shops                     
          reimbursement for those payments through his submission to                  
          Michelsen of written reports that listed the specific expenses              
          that he paid on behalf of the shops, accompanied by any related             
          receipt.  During the subject years, LeBloch did not receive any             
          compensation for services that he performed for or on behalf of             
          the shops.                                                                  
               Each Nature’s Touch shop had a manager and three or four               
          other year round employees.4  The general duties of the managers,           
          with respect to the shops they managed, was to monitor the shop’s           
          inventory and report to Michelsen the need or desire for any                
          additional inventory; to oversee and schedule employees; to keep            
          the shop clean and orderly; and to prepare the shop’s receipts              
          for weekly deposit in the bank.  Michelsen’s main role in the               
          shops was to oversee the work of the managers by speaking to them           
          telephonically, usually once a day while they were at the shops             

               4 The number of employees at each shop increased                       
          approximately threefold during the seasonal 2-month period                  
          beginning on November 1.                                                    






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Last modified: November 10, 2007