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CLOUD-BASEDAUGMENTED REALITYVIRTUAL FITTING ROOMFOR APPAREL BRANDS AND RETAILERS

www. fittingreality.com

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Contents

1. Executive summary2. The opportunity3. Fitting Reality’s Solution4. Strategy and competition5. Where we are and where we are

going6. Team

EXECUTIVE SUMMARY

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Fitting Reality is a cloud-based virtual fitting room that offers its customers a unique interactive shopping experience solving their FIT/SUIT dilemma. Fitting Reality addresses the very basics of retail industry through creating new standards of tomorrow’s fashion retail.

Executive summary

US market of apparel & accessories reached $400bn in 2012 . Only about 10% of sales were made online.

70% of shoppers would not buy online since they can’t try on clothes before buying. 80% won’t purchase online a second time because of poor shopping experience.

Apparel & accessories is the 2nd largest online commerce category with expected growth of 17% in the next 3 years.

Fitting Reality introduces a unique virtual fitting room that gives online shoppers a seamless experience similar to an offline store.

With complex mathematics and physics at the core of its technology Fitting Reality offers online retailers and brands a scalable, easy to implement and cost effective platform that improves their customers’ experience.

Fitting Reality is on track to become the industry standard for virtual fitting due to its scalability and multi-platform.

We seek $2 mln to

reach break-even in 2015

The opportunity

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Apparel & accessories is one of the fastest growing online markets in the US

• Apparel & accessories is the second largest category of goods sold online after computers & electronics (with 20% of total e-commerce market)

• Still, only 10% of clothing is bought online and it is the fastest growing e-commerce category with expected CARG of c. 18% in 2013-2016 (vs. forecasted offline apparel CAGR of c.2%)

2010 2013* 2016*

28 54.2 87.8

* Figures for 2013 and 2016 are projections. Source: eMarketer, Apr 2013

US apparel and accessories retail e-commerce revenue from 2010 to 2016

(in billion U.S. dollars)

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Brands and retailers are boosting their spending on technology and digital marketing to compete in a dynamically changing environment

• According to a recent research by Forrester, 56% of  e-businesses are planning to increase their spending on commerce-related technology in the next year.

• Brick and mortar retailers are also ramping up their efforts as their online sales are surpassing offline and becoming their main business drivers.

…Online vs. offline GROWTH

…M-commerce

Nordstrom is planning to spend on technology $375 mln or 15% of their capital budget till 2016 as well as

investing in on-line retail start-ups

Online sales increased 21% year over year in the second quarter of 2013 for Abercrombie & Fitch Co. while total group sales declined.

…AUGMENTED REALITY

…customization

…social shopping

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However, most people still prefer to buy offline – online retailers cannot give a matching experience

c. 90% prefer to shop offline to

use the fitting room

14% of on-line purchasers are not

satisfied

c. 21% purchasers return clothes bought on-

line

… because 1. People cannot see, touch and feel the product.

2. People have problems choosing the right size/fit due to lack of uniformity in apparel sizing even within one manufacturer

3. Shoppers are seeking for the personal impact and inspiration from the creation personal looks and, they want to mix and match items on themselves.

Many people are still

unhappy buying online…

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As a result, online retailers are loosing money and customers..

• Uncertainty if it “suits” and “fits”

• Poor fit / wrong size / “unpleasant” fabric

• 70% of shoppers are searching online but don’t purchase, since they can’t try on clothes before buying

• Return rate for online retailers vary at 25-40% of revenue

• Ordering multiple sizes – higher working capital cost

• Unhappy customers – decrease of loyalty, lower repeat orders, lower conversions

All the above leads to higher costs and lower margins for online retailers

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Many are working on this challenge

Aim to:

•Improve returns

•Increase conversion

•Make customer happier – increase repeat purchases

3D-avatar fitting -

Size advisor

Zugara

Styko

Metail

Style guide –

Magic Mirror

Augmented Reality fitting

H&M, Showrooms.ru

DRESSFORMER

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But the problem still remains

… all existing solutions are far from offline experience:

requires to print out a measuring kit and measure oneselfonly 2% of items are modeled, the remaining are shown based on similarity

Too complicated and/or time consuming

Not easily accessible, especially via mobile

Too expensive for small/medium e-retailers

can’t be used on mobile/tablet due to using MS Kinect technology

cost/accuracy of modeling are prohibitive for most retailers/brands – especially in mass market or in fast fashion

specific requirements for measuring (standing in certain background, exactly 4 meters away from a laptop)requires physically going to a shopping mall to make a body scan

SOLUTION

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Our solution – customers can “try on” clothes on-line!

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How does it work for the customer?

1. Upload a photo (existing or new)

2. Enter your height (just once)

3. Register via Facebook and save your ShapeID

4. Start “trying on” clothes in every on-line shop which works with

Fitting Reality using your ShapeID

http://youtu.be/HS6uXTVX2DQ

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It is quick and hassle-free – just see your

photos in new garments

Makes shopping online more confident: helps solve the “DOES IT SUIT ME” problem – not only size

fitting

It is VISUAL – gives freedom to

experiment, mix and match, search for your

own style and share with others

Makes online shopping really

personalized

Can be used everywhere, on

any device – web, mobile.. and SmartTV

Fitting Reality makes the online fitting a seamless experience: try on clothes like in a real store

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Cost effective solution: low implementation cost, low support cost, lower returns by customers

Scalable: can be used by online retailers of all sizes

Quick to set up: for small retailers the platform can be implemented even in 1 day

Data reach: collect and use data insights about your customers based on individual ShapeID information and history of purchases

For e-retailers and brands – Fitting Reality is the first platform able to provide a scalable and accessible solution for mass market, ready to become an industry standard

Advantages for retailers

Advantages for brands

Higher Brand Loyalty

Better consumer insights – know what your customers want/who your customers are

Every $1 spent on Fitting Reality virtual fitting room will bring you additional sales of $20-$55 depending on the

store size

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How does it work for online stores

Web-interface to upload photos of clothes and receive code of “Try on” button

Easy to set up the “Try on” button of the web-page of a product

Technical support and quick integration of a solution (starting from 1 day)

Possibility to further decrease costs by creating the 3D models in-house

Strategy and competition

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Market segmentation and focus

Large online retailers & brands (c. 1000 stores)

Small online retailers & brands (c. 150,000

stores)

High street Mass market

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Our strategic focus is to start working with small and medium online retailers and brands, since there is no competition in this segment for the moment.

When we accumulate critical amount of ShapeIDs, we’ll target “big fish” to become an industry standard.

Strategic focus

Large online retailers & brands (c. 1000)

Small online retailers & brands (c. 150,000)

High street Mass market

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Opportunities to capture beyond core value proposition

For online retailers:ShapeID database - customers’ database, sales analytics and insights, retargeting based on the customers’ personal preferences

For customers:Digital IP cameras (Smart TV, Kinect, etc.) - video and real-time fitting in-house using digital IP cameras technologies

Personalized stylists’ advise based on ShapeID, blogs, social networks, mobile apps, etc.

For developers / agencies:Development of mobile applications (fashion, games, socializing)Google glasses implementation

For offline stores:Offline virtual fitting rooms in bricks-and-mortar stores

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Fitting Reality positioning against competitors

Mass market/

fast fashion

Developers

Scalable

Easy to use and integrate for online

retailers; simple and cheap process of

creating 3D models of clothes

Can be used on all platforms (web, smart

phone, tablet, Smart TV) to

shop at home, in the office, in

the airport, etc.

Data centric approach allows to create truly

personalized experiences

Open platform for developers to build

their own applications

FR offers an affordable solution for

all kinds of brands and retailers - a

technology that can be easily spread due

to low cost of implementation and

further support

FR focuses on mass market: fast fashion

brands, small and medium sized online shops,

blogs etc.

Accessible

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Exact size match User-aided no yes yes

Virtual “try on” option yes ”place against” no no

Mix & match yes yes no no

Video in progress no no no

Ability to use on mobile/tablet yes yes no no

Analytical reports availability yes yes yes no data

Cost for on-line retailers low low high not appl.

Implementation time from 1 day from 1 day 40-50 days not appl.

Ease of use Upload 1 photo Special requirements for background and

distance

Print out a measuring kit and measure

oneself

3D body scan using special equipment in shopping mall

Fitting Reality: key differentiators from competitors

Capital raised to date $1,8 mln - $ 9,8mln $ 30mln

Funct

ionalit

yTim

e &

co

stEase

Zugara is our closest analogue, but their service requires specific equipment and a camera position - thus is more prohibitive for end users.

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How we monetize

* Targets for the end of FY’15**Cost savings would be gained going forward due to:

1) optimisation of software; 2) economy on scale; 3) outsourcing ShapeID creation to be done by customers themselves.

Online Stores*:Small (≈30K

unique users; 30K of revenue)

Medium (≈200K unique users;

$216K of revenue)

Large (≈2500K unique users;

$3000K of revenue)

% of store revenue 5% 3% 2%

Monthly revenue per store ($) 315 1 134 8 400

Costs per store** ($) 129 429 1 696

Profit per store ($) 186 705 6 704

Addressable market for FY’14-15 (stores)

2 500 100 10

Target market for FY’14-15 (stores)

≈150 000 ≈50 000 ≈1 000

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Go-to-Market Strategy

Low customer acquisition cost – no need for large direct sales force, main focus on seamless of self-service through website

Focus on mass market (small e-retailers and brands) to build market share and ShapeID base, gather customer analytics Use website as main

channel to work with clients – 24/7 sales approach: customers can subscribe and start using FR via website in just a day

Create the buzz and spread the word

Use of affiliates and partners in web commerce solutions market (e.g. Insales)

Get BIG FISH Accounts through direct sales efforts

WHERE WE ARE And where we’re going

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Where we are

Our key achievements to date include:

Research and development of the product

Early adaption projects and

first sales

Marketing research

Fall 2011

2012 Spring 2013

September 2013

Business concept

development and fund

raising

Marketing research in

the USA and

Europe

Launching a beta

version of the

product

Opening a sales office in

the USA

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Where we are going

By the end of 2013

20142015

• $1,8 mln invested into technology development• Pilot tests with 12

online retailers in Russia completed• 6,000+ ShapeIDs

• $670,000+ revenue • API open for

developers• 380+ online retailers

worldwide using virtual fitting room• 170,000+ ShapeIDs• Website traffic:

50,000+ unique users per quarter

• $7 mln+ revenue• 2500 small, 30

medium and 3 large retailers using virtual fitting room• 2 mln ShapeIDs• Website traffic:

160,000+ unique users per quarter

We are looking for $2 mln from an investor with expertise in building international technology

companies

OUR TEAM

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Experienced Technology and General Management Executive with substantial entrepreneurial experience

Startup Access, MIT Enterprise Forum of Russia, Abrys Consulting / AB Systems

Minerva Capital Partners, Webiki.ru, Sloan School of Management

Massachusetts Institute of Technology

President, Co-Founder of one of the biggest system integrators in the Russian North-West. RAMAX International employs over 200 qualified professionals in its three offices in St. Petersburg and Moscow. Annual Turnover (2012) - $65 mln

Founder of Integro Technologies Ltd. (www.integrotechnologies.ru), software development, deployment and post-sale support for logistics, aviation, transportation. Total revenue (2012) – $18 mln

Co-founder and investor -  POCHTOMAT (www.logibox.ru), an integrated network of automated post-offices.

Lev RazumovskiyInvestor

Sergey GribovAdvisor

Our team

Alexey Streltsov Technical Director

7 years in software development. Alexey’s skills and expertise: C++, C#, Objective-C programming, Java, Server Architecture, Algorithms, Math, Software development, MySQL, Agile, Distributed Systems

Emin Aliev Business Development, USA ,

Lumata (ex-Buongiorno), State University of Management (Moscow, Russia), GUU Mindshare Interaction, New Age Training NYU

Inga NakhmansonCo-founder and CEO

Inga founded the first augmented reality developer company in Russia in 2009 - AR Door. The company has successfully implemented more than 40 projects for big brands both in Russia and abroad

Inga Nakhmanson, CEO+7 916 332 65 03

inga.nakhmanson@fittingreality.com

Join us in building the online shopping experience of tomorrow!

try@fittingreality.comwww.fittingreality.com