ISSUES UPDATE

To Our Distributor Leaders:

As XanGo continues to grow at a rapid pace, our company will come under added scrutiny. As a result, it becomes increasingly important for you, as leaders, to understand and educate your organization regarding compliance issues.

This was the course 200K Premier Select Corey Citron took this week when he informed his organization of the need to remove Dr. John Edwards, a third-party speaker, from the line-up of all his upcoming events. He also advised his downline not to engage John for conference calls or for any of their future events after finding out that he had again made several dangerous claims in violation of federal regulations on a conference call. We appreciate the stand Corey has taken to protect the company and all distributors’ business through this action. A copy of Corey’s e-mail is below.

In addition to Corey’s statement, we add our recommendation that distributors not use any of John Edwards’ CDs or printed materials to promote your business. We have not reviewed all of his materials. However, based on his latest conference call, we believe it is likely that his materials do not comply with the regulations that govern the kind of third-party materials distributors are allowed to use to promote their business.

We want to emphasize how seriously XanGo takes compliance with FDA and FTC regulations. XanGo does not condone the use of non-compliant literature by its distributors, and we stand ready to enforce consequences, including termination, for distributors who consistently violate these regulations. Fortunately, as we have said previously, our distributor base is one of good, honest people who want to comply with the law, and after proper education, most are willing to abide by the rules and therefore do not require discipline.

All distributors—and particularly you as leaders—should work to ensure that all third party materials or presentations used to promote your XanGo business comply with FDA and FTC regulations. As we have told you before, we are monitoring distributor sponsored conference calls and meetings—especially those involving doctors—and we are taking action against distributors who promote presenters who violate federal regulations.

We appreciate your tremendous leadership in this area and appreciate how you work together in the best interests of our company. Keep up the great work!

Your XanGo Management Team

Message from Corey Citron

As many of you know, there has been much recent publicity involving regulatory agencies (in both Canada and the USA) regarding what can and cannot be said about nutritional supplements.

The issue of compliance becomes especially serious when it regards a medical professional making claims. With this in mind, I very recently became aware of a conference call conducted last week by a distributor (not on my team) on which Dr. Edwards was invited to speak.

Unfortunately, on this call, Dr. Edwards (who is not a XanGo distributor himself anymore), in his passion for sharing XanGo, made some inappropriate comments regarding various diseases and even made a diagnosis that could jeopardize our respective businesses, and XanGo as a whole.

Therefore, in order to protect XanGo, I have made an important decision. As much as I and many of you like Dr. Edwards, and have come to call him a friend, we are at this time going to replace him in the lineup for all upcoming New School events.

Furthermore, I am going to have to advise you that Dr. Edwards will no longer be available to speak on conference calls and/or at live events. We all wish John the very best in whatever he decides to do and know that he will go on to touch and bless the lives of many people, as he did for so many of us.