2009

Confidential Offering Memorandum

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Table of Contents

Objective ................................................................................................................................................. 3

Executive Summary ................................................................................................................................. 4

Jewelry Industry ...................................................................................................................................... 5

Overview ............................................................................................................................................. 5

Major Players ...................................................................................................................................... 6

Commoditization ................................................................................................................................. 7

Seasonality .......................................................................................................................................... 7

Customers Needs ................................................................................................................................ 7

Operations .............................................................................................................................................. 8

Process ................................................................................................................................................ 8

Products .................................................................................................................................................. 9

Jewelry ................................................................................................................................................ 9

Gems Stones ...................................................................................................................................... 12

Facilities ..................................................................................................... Error! Bookmark not defined.

Sales and Marketing .............................................................................................................................. 18

Management and Personnel .................................................................................................................. 19

Management ..................................................................................................................................... 19

Staff ................................................................................................................................................... 20

Appendix .................................................................................................... Error! Bookmark not defined.

Appendix One – Abbreviations & Definitions .......................................... Error! Bookmark not defined.

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Objective

This document provides an overview of Rothberg Jewelers, retailer of high quality gemstones and jewelry based in New York. It presents the company’s capabilities, strengths and growth opportunities.

Rothberg Jewelers (RJ), founded in 2006, has experienced rapid growth through sales in major TV networks. It primarily serves customers throughout the United States. The company combines expertise in sourcing gems, jewelry, diamonds, amber and ruby sapphire and leverages its well established relationships with major TV networks to provide superior quality products at the lowest prices in the market. The company‘s client base includes customers buying through TV and internet as well as companies buying wholesale. TV network contracts include Direct TV and dish Network.

The principals of Rothberg Jewelers are seeking debt and equity growth capital investment of $2 to $3 million to pay off existing debt and to seize opportunities now available to the company to grow revenue and enhance profit margin. This document is intended to introduce the business to qualified and interested potential investors.

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Executive Summary

Rothberg Jewelers, based in New York is a retailer of high quality gemstones and jewelry that primarily focuses it sales effort through partnerships with TV networks.

RJ supplies directly to the networks and relies on repeat customer sales. With 15 shopping channels per network, the company has been able to achieve five hours of aired programs with network, such as Direct TV and dish Network.

Part of RJ’s value proposition is product selection and quality, customer service and support, price, brand recognition, reputation, reliability and trust, website features and functionality, convenience, and delivery performance. The company competes favorably in the market for diamonds and fine jewelry by focusing on these factors.

Senior management at the company has identified a series of growth opportunities with the potential to drive annual revenue growth. The company plans to further develop the diamond market by adding an additional $1.0 million dollars in inventory. To do so, the company will need to secure $500,000 up front and will extend a credit for the remaining. Management projects that this will generate a 25% gross profit margin.

Rothberg Jewelers plans on further expanding its website platform. To do so, the company expects to spend approximately $50,000 in design and architecture of the platform. Management projects that this implementation will increase online traffic by about 20%.

Additional growth opportunities include a marketing expansion targeting major news papers such as the Wall Street Journal, Financial Times and New York Times and magazines such as Forbes and People, among others. Senior management believes that by expanding the marketing budget by $200,000, over $1.0 million will be realized.

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Jewelry Industry

Overview

The U.S. and Canadian retail jewelry industry accounted for approximately $63 billion of sales in 2008, according to publicly available data. The industry has been growing at a little over 5% annually, and in the last ten years, growth in diamond jewelry sales has been more than 30% faster than that of the overall jewelry market.

The U.S. retail jewelry industry is highly fragmented and competitive. Competition comes from different formats including a large number of independent, regional and local jewelry retailers, as well as with other national jewelry chains. Other competitors include department stores, discounters, direct mail suppliers, online retailers and television home shopping programs. Emerging competition comes from those non-specialty retailers, which are larger and have greater financial resources than the average jewelry retailer.

The industry is characterized by consumers’ discretionary spending dollars and, therefore, retailers compete with those who offer merchandise other than jewelry or giftware. Therefore, reputation for high quality products, brand recognition, store location, distinctive and value-oriented merchandise, personalized customer service and ability to offer private label credit card programs to customers wishing to finance are some of the main points of differentiation when it comes to competition.

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Major Players

The largest jewelry retailer in the combined U.S. and Canadian markets is believed to be Wal-Mart Stores, Inc. Other significant segments of the fine jewelry industry include national chain department stores (such as J.C. Penney Company, Inc.), other general merchandise stores, specialty retail jewelers (such as Signet Jewelers Limited) and apparel and accessory stores. The remainder of the retail jewelry industry is comprised primarily of catalog and mail order houses, direct-selling establishments, TV shopping networks (such as QVC, Inc.) and online jewelers. The remaining jewelry specialty stores tend to be smaller national or regional chains or local, independently owned, single-location retailers.

Not only do smaller entities need to compete with corporate chains with a national brand, all are increasingly challenged by online jewelry retailers, who can reach a national clientele and still carry very low overhead. During the fiscal year ended 2008, the online retailer of diamonds and jewelry, Blue Nile, expanded its operations to offer products for sale to customers in over 35 additional countries and territories throughout the world. The company’s merchandise consists of diamonds and jewelry, with a particular focus on engagement diamonds and settings. The company generated revenue of $295.3 million for 2008.

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Commoditization

The increased prevalence of gem certification programs has helped to standardize the value of diamonds, making it easier for customers to compare prices. Retailers must compensate by offering proprietary products and a high level of service.

Seasonality

Specialty retailers of fine jewelry are seasonal in nature. The majority of revenue is derived during the months of November through January accounting for Christmas and New Year. Other important periods include Valentine’s Day and Mother’s Day. As a result, companies operating in this segment will tend to generally have the lowest revenue in the third quarter (as a result of the lack of recognized gift giving holidays) and highest in the fourth quarter.

Customers Needs

Smaller regional chains and independents stores need to be able to compete with the advertising budget, and consequent national brand awareness, of national corporations, and all jewelry retailers are competing for consumers’ discretionary dollars.

Both national corporate chains and local independent jewelers are finding ways to meet these challenges, whether by adding value through better customer service or unique product lines, adding “buy online” functionality to their web sites, or targeting geographic or socio-economic market segments that are otherwise underserved.

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Rothberg Jewelers targets the middle age, 49+ year old population in the U.S. With a population over of 300 million, this segment encompasses the fastest growing market with over 12.8% of the population being 65 and older. The rate of growth of the elderly population (persons 65 years old and over) has greatly exceeded the growth rate of the population of the country as a whole. Under the Census Bureau's middle series projections, the number of persons 65 years old and over was more than double by the middle of the next century to 80 million. About 1 in 8 Americans were elderly in 1994, but about 1 in 5 would be elderly by the year 2030. The company primarily targets housewives and retirees. These groups increase spending habits and move to Florida during winter time.

Financial performance and results of operations depend significantly on economic conditions and their impact on consumer spending. Luxury products, such as diamonds and fine jewelry, are discretionary purchases for consumers.

Rothberg Jewelers Operations

Process

Rothberg Jewelers primarily focuses on TV network and internal sales. TV network shows air from 3:00 to 10:00 pm. Sales are primarily generated through phone orders. Each order is assigned an identification number. Orders can be customized for size, type of cut, and stones among other things. If the product is on stock and there is no customization, it is shipped the next day. If the product needs size customization, then is shipped within a week. If the product needs setting customization, then it is considered a “special sell” and can take up to three weeks to ship.

Additionally, the company offers appraisals that take approximately four to five business days. Sales include gems and jewelry, diamonds, amber, ruby sapphire among others precious and semi-precious products. The company has an information technology system in place to track, quote, trace, report, search, schedule orders.

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Products

RJ offers a wide range of products for its customers, primarily concentrating in high quality jewelry, gems stones, diamonds and coins among others.

Jewelry

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Gems Stones

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RJ is able to achieve gross margin of over 40% for jewelry and about 50%

for gemstones. The company has established several sales procedures including discount program, bidding processes and special prices for regular shoppers.

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Sales and Marketing

American Value Channel generates new sales primarily through TV networks including Direct TV and dish Networks. The company’s marketing strategy is designed to increase brand recognition, generate consumer traffic, acquire customers, build a loyal customer base and promote repeat purchases.

The company airs its Direct TV program on Channel 224, 7 days a week from 5:00pm-10:00pm, EST and from 1:00 pm to 7:00pm, PST. Dish Network program airs on Channel 221, 7 days a week 5:00 pm to 10:00 pm, EST and from 1:00 pm to 7:00pm, PST

Additionally, the company also operates an e-commerce web platform. The company primarily focuses on customer within the United States. Rothberg Jewelers employs two full-time sales representatives who cover sales and business development for the company.

The company has built a well respected consumer brand by employing an informative sales process that empowers customers while offering a broad selection of high quality jewelry at competitive prices. American Value Channel website showcases dozens of diamonds, gemstones and a number of styles of fine jewelry, including rings, earrings, necklaces, pendants, and bracelets.

The company provides customization of jewelry and offers customers the ability to customize rings, pendants and earrings. Over time, the company has been able to develop an efficient online cost structure and a unique supply solution that eliminates traditional layers of wholesalers and brokers, allowing the company to purchase products at lower prices.

The company’s selective inventory attracts customers. As a result, it is able to minimize the costs associated with carrying diamond inventory and limit the risk of potential mark-downs.

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Management and Personnel

Rothberg Jewelers is led by William Perdue, Chairman of the Board and CEO of company. With over 25 years of experience in gemstones, he assumes the responsibilities of COO. Mr. Perdue has a 46% ownership stake on the company. Prior to Rothberg Jewelers, Mr. Perdue worked in the automobile parts industry. He also founded Royal Gems in 1990 and remains active in the company’s operations. Mr. Perdue draws $50,000 of salary per year. Mr. Perdue holds a Bachelor Degree in Commerce from Columbia University.

Senior Management

Thomas Samson: President of Rothberg Jewelers – Mr. Samson is responsible for buying products and attending trade shows. He focuses on negotiation and buying processes of bulk purchases. He holds an 18% ownership stake in the company. Mr. Samson draws $50,000 of salary per year. Mr. Samson also runs his family business, STB Gems Inc. Mr. Samson holds a Bachelor Degree in Commerce from BU.

Sam Greer: Director of Board - Mr. Greer is responsible for the diamond department. He is trained to cut and polish diamonds. Mr. Greer runs Patdiam, a wholesale exporter of diamonds in India that creates diamond tools and jewelry. Mr. Greer does not draw any salary from the company. Mr. Greer currently lives in Mumbai and acts as an investing partner, but it is not active day to day operations of Rothberg Jewelers. He holds an 18% ownership stake in the company and is responsible for securing merchandise and attending industry tradeshows.

Marvin Rosenberg: VP of Marketing - Mr. Rosenberg has over 13 years

of experience in the TV shopping business. Mr. Rosenberg was born and raised in Brazil. Exposed to gems as a young child, he started his career by taking courses with GIA gem Institute of America and soon graduated as diamond grader. Some of his responsibilities include colored stone, grading, gem ID, and business development. Mr. Rosenberg moved to US in 1999 and became involved with a wholesale business, Opal by GNT. Mr. Mr. Rosenberg also worked for retail stores doing appraisals. In 2001, he started working for GSN where he

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hosted a sales show. Shortly after, he became the top sales producer of the company. He achieved over $20 million in TV sales in a span of 3 years.

Mr. Rosenberg is a partner of Rothberg Jewelers. As such, he is responsible for merchandising. He is also responsible for training other co-hosts. He represents some small wholesaler companies such as Orion Gems. Mr. Rosenberg holds a 9% ownership stake and currently draws $175,000 (down from $200,000).

Nicholas Rothberg: VP of Finance - Mr. Rothberg was born and raised in India. He came to the U.S. when he was 21. Mr. Rothberg has years of experience in accounting. In 1986, he worked with a family friend and developed his expertise in diamonds. Shortly after, Mr. Rothberg joined RosyStar Inc where he initially became a shareholder and then owner. Mr. Rothberg started his own company in 1996 and took it from $0 in revenue to $6.0 million in wholesale. Mr. Rothberg joined RJ and became a working partner. He invested seed capital and was responsible for payroll, account payable and vendor relationship among other accounting tasks. Mr. holds a 9% ownership stake and currently draws $200,000 in salary per year. Mr. Rothberg holds a Bachelor Degree in Accounting from Ohio State University.

Staff Rothberg Jewelers staff includes approximately 35 full-time and part-time, non-

union employees and contractors. Below please find an organizational diagram with Rothberg Jewelers organizational structure:

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