Castle Megastore Emerges from Chapter 11 Stronger and More Competitive.

TEMPE, Ariz. -- Castle Megastore announced today it has emerged from bankruptcy, achieving a new milestone in its reinvention as a leading adult retailer. Mark A. Franks will take ownership and continue to fulfill the positions of president and chief executive officer.

The company officially exited its Chapter 11 reorganization after meeting all closing conditions to the company's plan of reorganization, which was confirmed by the U.S. Bankruptcy Court for the District of Arizona in an order entered on May 19, 2009.

In connection with closing the sale transaction, Castle Megastore Group, Inc. will take ownership and operate Castle Megastore's retail stores. The new Castle Megastore will continue to operate in its corporate office in Tempe, Ariz.

"Today marks a defining moment in the reinvention of Castle Megastore as a more customer-focused and leading adult retailer," says Franks. "This has been a challenging period, but now is the opportunity to take Castle Megastore to the next level and create a more focused and flexible brand.

"We are dedicated to adhering to our core values of exceptional service, revolutionary promotions and great product selections to the benefit of our customers, employees, industry partners and stakeholders. This is an exciting opportunity to re-position the company for long-term success," he says.

The new Castle Megastore will execute the key elements of its plan along with additional initiatives to achieve winning results. Concentrating on adding to the company's retail locations and continuing to expand the brand are only the beginning of new plans on the horizon.

The future is bright

"We launched a series of initiatives over the past few years to enhance the company's operational performance and refine our merchandising and marketing strategy," says Franks. "Now we are poised to take on new avenues to strengthen our brand."

Future innovations rolling out will be Castle Megastore's radio station and customer relationship management (CRM) technology.

Castle Radio will include personal interviews with the top performers in the industry. Live feeds from its more than 100 signings - and counting - will feature performers like Jenna Jameson, Ron Jeremy, Jesse Jane, Belladonna, Stoya and Tera Patrick. Castle Radio will also feature special events like the signature Halloween Fashion Show and bridal shows.

Utilizing CRM software, Castle Megastore will be able to analyze customer trends and send customized email communication to help drive sales. Along with personalized emails, customers will be able to sign up for a loyalty card that will provide exclusive benefits and discounts to members.

Franks' leadership

Under the leadership of Franks, this year has been a successful one for Castle Megastore. It is the recipient of the Retailer of the Year award at the XBIZ Awards held in Hollywood, Calif. The annual awards show honors excellence and achievement in adult film, novelty, Internet and retail categories.

Castle Megastore was also nominated for the Outstanding Retail Chain "O" Award, presented by AVN Media Network, AVN Novelty Business magazine and AVN Novelty Expo. The inaugural awards honor outstanding achievement in the pleasure product industry.

"Castle Megastore is thrilled to have won and been nominated for significant awards in the adult industry in the same year," says Franks. "We stand among distinguished industry leaders who have had the privilege of receiving awards like these in the past."

Castle Megastore is a leading adult retailer with 16 stores operating in Alaska, Arizona, New Mexico, Oregon and Washington. By providing excellent customer service and a wide array of product choices, Castle Megastore is leading the adult industry in each of its operating markets. Castle Megastore's mission is to lead the adult entertainment industry through exceptional service, revolutionary promotions and great product selection while redefining romance, intimacy and sex. More information at www.castlemegastore.com.

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