andy emmy Andrea De León and Emma

andy & emmy Andrea De. León and Emma Rossoff November 2008

Mission Statement andy & emmy is the brand for city girls. Founded by two New York City teens, Andrea De. León and Emma Rossoff, andy & emmy strives to provide its customers with unique, but wearable, everyday clothing. andy & emmy’s youthful perspective of the world contributes to the individuality of the clothes that the company has created. The founders often draw inspiration from their Upper East Side Manhattan private school, The Chapin School, as well as from their travels abroad. After spending several years in a uniform, the girls cannot help but rebel through the creation of their own clothing company. The pair has high standards when it comes to fabric, using natural fibers. All of the patterns and designs are handmade by Emmy and edited by Andy’s Thai and Dominican heritage as well as Emmy’s repeated trips to fashion capitals such as Helsinki, Tokyo, and Paris allow the girls to take design ideas from major cities around the world. andy & emmy feels that no other brand allows young city girls to express who they truly are. Our customers are studious yet carefree, laid back yet concerned about their world, meticulous yet not afraid to make mistakes, and of course very social – they are happy, well- rounded individuals. andy & emmy wants the product not to inhibit its consumers but enhance them. Through their clothing, Andy and Emmy encourage every girl to be herself. Ultimately, remember, it is not about the clothes, but the person who is wearing them. 1

Executive Summary n n n We are designing fashion forward clothes for young women and teens, ages 15 -24, living in the greater New York City area with family incomes of $100, 000 or more a year. This is a market of over $518 million. andy & emmy was founded by Andrea De. León and Emma Rossoff, who have a background in business and design, respectively. We are seeking to raise $10, 000 from outside investors in the form of Preferred Equity Interests. We also plan to raise $15, 000 in the form of a loan. The investment period for this program is 2. 5 years and we are forecasting approximately a 38% compound annual return on investment for our Preferred Investors, a return equal to more than 2 times the original investment amount. Risk will be reduced by placing orders with our manufacturer only after retail sales orders are confirmed. We are filling an important market niche with an exciting and creative product. 2

Description of Preferred Interests n n n One-half of the investments, aggregating $5, 000, will be made on or about October 31 st, 2008. The second half of the investments, also aggregating $5, 000, will be made on or about March 31 st, 2009. Capital will be invested for 2. 5 years and will be returned to the investors at the end of the investment period, after repayment of the bank loan, on the following schedule: q q Return of initial investment 40% of remaining cash 3

Qualifications of the Founders n n n As New York City teenagers attending a private high school, The Chapin School, we have insight into the market we are targeting. As a creative duo, we can provide our customers with unique clothing; this creativity shines through every aspect of our line, from the design itself to the materials used. We are extremely social, which not only contributes to our awareness of our target consumer, but also contributes to the business aspect of our company; our congeniality gives us the ability to network and create greater awareness for our product. 4

Legal Structure and Ownership n n andy & emmy is a Partnership andy & emmy is owned by Andrea De. León and Emma Rossoff, each of whom owns 50% of the partnership interests. 5

Consumer and Market Analysis n n n andy & emmy will target young women and teens, ages 15 to 24, living in the greater New York City area. The U. S. Chamber of Commerce estimates that, in 2000, there were approximately 1. 3 million girls and young women in this sector. It is estimated that these individuals spend an average of $648 person on clothing per year for an aggregate spend of $842. 7 million. We estimate that approximately 75% of this spending is for tops, skirts and dresses-- the items that andy & emmy will be offering. The total market for tops, skirts and dresses amounts to approximately $632. 0 million of annual spending. We estimate that our target market, high-end shoppers, account for approximately 82% of the spending, or $518. 0 million, which is equal to $1, 539 per targeted shopper. 6

Targeted Market Segment n n andy & emmy will target fashion forward young women and teens who want to own one-of-a kind pieces to show off to their friends. We will target the middle to upper segments of this market, with price points of $250 to $350. We will target females who buy clothing at stores with price points similar to those found in small boutiques and high end department stores. andy & emmy will target approximately 336, 807 young women and teens who each spend approximately $2, 052 per year on clothing and $1, 539 on tops, skirts and dresses. 25. 9% 74. 1% 18% 82% 7

Competition Competitor Price Quality Compared to Our Business Free People $108 Mediocre Lesser quality Not fashion forward Urban Renewal $58 Mediocre Lesser quality and fabrics with simpler and less flattering construction Anthropologie $350 Good More expensive Unoriginal designs Juicy Couture $330 Good Unoriginal designs with less flattering construction Competitive Advantage All of our creativity is used to achieve our goal of making clothing that looks like something we have never seen before. Also, as teenagers, we know our market inside and out because ultimately, we are our market. People will want to buy clothing that is made and designed by someone their own age. 8

Product Line n n n Ten Initial Designs q 3 Dresses q 4 Skirts q 3 Tops 5 sizes: 0, 2, 4, 6, 8 Size 4 samples 50 SKU’s 2 Seasons per year: a fall/winter line and a spring/summer line. 9

Manufacturing n n Manufacturing will be contracted to YK Studio Inc, New York City. Manufacturer will fabricate and ship 175 units per season in the first year of operation. The manufacturing will be done only after all sales orders are placed-- we will only manufacture what we can sell. The economics of the average unit are as follows: Average Unit Price per Unit* $ 158. 60 Direct Labor per Unit $51. 43 Materials per Unit $40. 95 Total COGS Per Unit $92. 38 Other Variable Costs $30. 91 Total Variable Costs $123. 29 Gross Profit Per Unit $35. 31 *Assumes 35 units sold direct retail at a price of $249 per unit and 140 units sold wholesale at a price of $136 per unit (assumes the retailer resells these units at an average price of $300 per item) 10

Marketing Strategy n n n Retail Price: ranging from $250 -350 Product: An innovative line of clothing Promotion: Method Description Target Consumer Cost Word of Mouth People who like our clothing will tell others about it Females, ages 15 -24, in the greater New York City area $0 Website A portfolio of our Store owners designs that will allow and buyers prospective buyers to view our line. $1, 500 11

Distribution n Initial Distribution: q q n The Dressing Room Earnest Sewn Targeted Future Distribution: q q q Betsey Bunky Nini BOC Cantaloup CPW EDGE*ny. NOHO Honey in the Rough LF Liana Olive and Bettes Shatzi Wink 12

Start-Up Financial Requirements Start- Up Expenses Manufacturing (based on 175 pieces) $21, 575. 75 Retail Space $975 Website $1, 500 Administrative Expenses $1, 000 Start-up Investment $25, 000 * Please note, we intend to raise $6, 000 for sample making. We will secure orders with retailers before we raise the additional $19, 000. 13

Forecast Income Statement Profit or Loss: Four 1/2 Year Periods 14

Forecast Cash Flow Statement 15

Forecast Balance Sheet 16

Return On Investment 17

Return on Sales Period 1 2 3 4 Return on Sales . 09 . 19 . 23 . 32 For every $1 in sales we forecast our business will earn: $. 09 $. 19 $. 23 $. 32 18

Financial Ratio Analysis 1 st Period Break-Even on 175 Units Manufactured 158 Startup Investment Doubling Years for my start-up investment to double in value 2. 0 19

Key Investment Considerations n n n andy & emmy will create unique, but wearable, everyday clothing targeted at an important market niche: young women and teens, ages 15 -24. Our potential customers in the greater New York City area spend approximately $518 million per year on the items andy & emmy will market. We have identified our distribution outlets and will contract manufacture only what we can sell. andy & emmy will promote its products through the New York City private school network. Our business model forecasts profitability in the first period of operations and a 2. 5 year program that will double the investment of our initial investors. 20

Thank you for your consideration of: andy & emmy

Appendix Part I: Sketches for the Fall/ Winter 2009 line Part II: Breakdown of production costs

Fall/ Winter 2009

24

25

26

27

Production Costs 28

Cost of Materials / Direct Labor Manufacturing Costs: 1 Claire Dress Sewing costs for one unit Cutting costs for one unit Total $40 $17. 50 $57. 50 Material Description Cost /Quantity Cost per Unit Camel wool $18/ yd (3 yds) $35 Camel Lining $34 / yd (1/4 yd) $8. 50 Zipper $3 / zipper $3 5 buttons $3. 50 / (1/2 spool) $1. 75 Materials TOTAL MATERIALS/DIRECT LABOR $48. 25 $105. 75 29

Cost of Materials / Direct Labor Manufacturing Costs : 1 Julia Dress Sewing costs for one unit Cutting costs for one unit Total $40 $17. 50 $57. 50 Material Description Cost /Quantity Cost per Unit Blue wool $14 / yd (2. 5 yds) $35 Blue lining $20 / yd (1/2 yd) $10 Zipper $3 / zipper $3 $3. 50 / (1/2 spool) $1. 75 Materials TOTAL MATERIALS/DIRECT LABOR $ 49. 75 $107. 25 30

Cost of Materials / Direct Labor Manufacturing Costs : 1 Sloan Dress Sewing costs for one unit Cutting costs for one unit Total $40 $17. 50 $57. 50 Material Description Cost /Quantity Cost per Unit Black wool $8. 50 / yd (2. 5 yds) $21. 25 Black lining $34 / yd (1/2 yd) $17 Zipper $3 / zipper $3 $3. 50 / (1/2 spool) $1. 75 TOTAL $ 43 Materials TOTAL MATERIALS/DIRECT LABOR $100. 50 31

Cost of Materials / Direct Labor Manufacturing Costs: 1 Chloe Top Sewing costs for one unit Cutting costs for one unit Total $25 $17. 50 $42. 50 Material Description Cost /Quantity Cost per Unit Camel cotton $14 / yd (2 yds) $28 Red wool $34 / yd (1/10 yd) $3. 40 Zipper $3 / zipper $3 $3. 50 / (1/2 spool) $1. 75 Materials TOTAL MATERIALS/DIRECT LABOR $36. 15 $78. 65 32

Cost of Materials / Direct Labor Manufacturing Costs: 1 Alex Top Sewing costs for one unit Cutting costs for one unit Total $25 $17. 50 $42. 50 Material Description Cost /Quantity Cost per Unit Blue wool $8 / yd (1/2 yd) $4 Grey Jersy $34 / yd (1 yd) $34 Zipper $3 / zipper $6 $3. 50 / (1/2 spool) $1. 75 Materials TOTAL MATERIALS/DIRECT LABOR $ 42. 75 $85. 25 33

Cost of Materials / Direct Labor Manufacturing Costs: 1 Jesse Top Sewing costs for one unit Cutting costs for one unit Total $25 $17. 50 $42. 50 Material Description Cost /Quantity Cost per Unit Brown wool $14 / yd (1 yd) $14 $34 / yd (1/4 yd) $8. 5 $3 / zipper $3 $3. 50 / (1/2 spool) $1. 75 Materials Zipper TOTAL MATERIALS/DIRECT LABOR $ 27. 25 $69. 75 34

Cost of Materials / Direct Labor Manufacturing Costs: 1 Rima Skirt Sewing costs for one unit Cutting costs for one unit Total $25 $17. 50 $42. 50 Material Description Cost /Quantity Cost per Unit Grey wool $14 / yd (2 yds) $28 Grey lining $34 / yd (1/5 yd) $6. 80 Zipper $3 / zipper $3 $3. 50 / (1/2 spool) $1. 75 Materials TOTAL MATERIALS/DIRECT LABOR $ 39. 55 $82. 05 35

Cost of Materials / Direct Labor Manufacturing Costs: 1 Charlotte Skirt Sewing costs for one unit Cutting costs for one unit Total $25 $17. 50 $42. 50 Material Description Cost /Quantity Cost per Unit Camel Wool $14 / yd (2 yds) $28 Red Wool $34 / yd (1/5 yd) $6. 80 Zipper $3 / zipper $3 Camel Lining $3. 50 / (1/2 spool) $1. 75 Materials TOTAL MATERIALS/DIRECT LABOR $ 39. 55 $82. 05 36

Cost of Materials / Direct Labor Manufacturing Costs: 1 Anna Skirt Sewing costs for one unit Cutting costs for one unit Total $25 $17. 50 $42. 50 Material Description Cost /Quantity Cost per Unit Brown wool $14 / yd (2 yds) $28 Red wool $34 / yd (1/5 yd) $6. 80 Zipper $3 / zipper $3 Brown lining $3. 50 / (1/2 spool) $1. 75 Materials TOTAL MATERIALS/DIRECT LABOR $ 39. 55 $82. 05 37

Cost of Materials / Direct Labor Manufacturing Costs: 1 Chapin Skirt Sewing costs for one unit Cutting costs for one unit Total $25 $17. 50 $42. 50 Material Description Cost /Quantity Cost per Unit Blue wool $14 / yd (2 yds) $28 Blue lining $34 / yd (1/5 yd) $6. 80 Zipper $3 / zipper $3 $3. 50 / (1/2 spool) $1. 75 Materials TOTAL MATERIALS/DIRECT LABOR $ 39. 55 $82. 05 38

39