=====BUSINES S MODEL ======

Gem Adviser with Inclusions Gem Adviser with Inclusions

• Compares Cuts in Uniform Lighting • Based on Octonus visualization technology • Visualize 3D inclusions shape • Free online exchange of designed / scanned • Tracks proprietary / patented cuts GAI - Business Logic Publicity Customer Stone Status

Define requirements to future stone Candidates Advertisement of shops and jewelers Collect 3D models fitting the requirements: - Online shops subscription - Himself from Web - Sharing stones by E-mail

Publicity relevant to viewed stones: Compare 3D models by characteristics. Take best ones to Shortlist. - Brands Shortlist

- Cutters Compares 3D models by appearance in same lighting conditions. - Shops

If necessary: ask help on online forum

Purchase

Visit shops to check real stones

Purchase GAI - Candidates

File Edit Item View Help GAI My Choices

Earrings Choice – Main for Engagement Liza’s Description Subscribe CandidatesCandidates ‐‐ +12 Short List Engagement ring Main diamond +12 All Filter… New +12 Clear Water Smart Buy Low Price #User_1 164 items from 505 Satellit diamo… +4 Tie clip Shape: Round Hearts & Arrows : Only Include Exclude Save as…

Cut grade: from To AGS0: Only Include Exclude

Carat: from 0.99 To 1.1 Certificate: GIA AGS Other

Color: from To Depth: From To %

Clarity: from To Table: From To % Exit filter

Status Add Date Shape Cut Grade Color Clarity Certificate Depth Size Price Price per Carat Observed 06.06.2008 Round Excellent 1.01 H VS2 GIA 58.3% 6.61 × 6.52 × 3.83 mm $4,724 $4,724 Sources Observed 06.06.2008 Round Excellent 1.01 H VS2 GIA 58.3% 6.61 × 6.52 × 3.83 mm $4,724 $4,724 Observed 06.06.2008 Round Excellent 1.00 H VS2 GIA 59.2% 6.61 × 6.52 × 3.83 mm $4,724 $4,724 STORE Observed 06.06.2008 Round Excellent 1.00 H VS2 GIA 58.3% 6.61 × 6.52 × 3.83 mm $4,424 $4,424 PriceScope.com Observed 06.06.2008 Round Excellent 1.00 H VS2 GIA 58.3% 6.61 × 6.52 × 3.83 mm $4,424 $4,424 Happy Skull Observed 06.06.2008 Round Excellent 1.00 H VS2 GIA 58.3% 6.61 × 6.52 × 3.83 mm $4,424 $4,424 Observed 06.06.2008 Round Excellent 1.01 H VS2 GIA 58.3% 6.61 × 6.52 × 3.83 mm $4,424 $4,424 iDia Observed 06.06.2008 Round Excellent 1.01 H VS2 GIA 58.3% 6.61 × 6.52 × 3.83 mm $4,378 $4,378 FORUMS New 08.08.2008 Round Good 1.01 H VS2 GIA 58.3% 6.61 × 6.52 × 3.83 mm $4,378 $4,378 Observed 06.06.2008 Round Excellent 1.01 H VS2 GIA 58.3% 6.61 × 6.52 × 3.83 mm $4,378 $4,378 PriceScope Observed 06.06.2008 Round Excellent 1.01 H VS2 GIA 58.3% 6.61 × 6.52 × 3.83 mm $4,378 $4,378 KNOWLEDGE New 08.08.2008 Round Good 1.01 H VS2 GIA 59.2% 6.61 × 6.52 × 3.83 mm $4,332 $4,332 Observed 06.06.2008 Round Excellent 1.01 H VS2 GIA 58.3% 6.61 × 6.52 × 3.83 mm $4,332 $4,332 #Article Observed 06.06.2008 Round Excellent 1.01 H VS2 GIA 58.3% 6.61 × 6.52 × 3.83 mm $4,332 $4,332 #Article Observed 06.06.2008 Radiant Excellent 1.01 H VS2 GIA 58.3% 6.61 × 6.52 × 3.83 mm $4,332 $4,332 Colored Gems Observed 06.06.2008 Radiant Excellent 1.01 H VS2 GIA 59.2% 6.61 × 6.52 × 3.83 mm $4,202 $4,202 #Article #Article

SHORT LIST (drag the diamond you like here)

Details Comparison New Rating… GAI - Shortlist История изменений Начало прототипа Edit Item View Help GAI My Choices

Earrings Choice – Main diamond for Engagement ring Liza’s pendant Description Subscribe Candidates‐‐ +12+11 Short List Engagement ring Main diamond +12+11 Satellit diamo… +4 Shape Color Liza Seller Price Comment Tie clip Round ‐ Excellent (GIA) H WHITEFLASH $12,000 I like it

Asscher ‐ Excellent (GIA)

H USA Certed $8,000 Sources Hmm... Nice Cape Town Revised STORE PriceScope.com Happy Skull Radiant ‐ Excellent (GIA) iDia H abazias $8,000 FORUMS Hmm also PriceScope

KNOWLEDGE #Article Radiant ‐ Excellent (GIA) When he asked about #Article the H color on an EC, he H USA Certed $6,000 Colored Gems says he has no reservations or hesitation … #Article #Article

Details Comparison (3)Comparison New Rating… Ask Forum… Ask Dealer… GAI - Visual Choice

File Edit Item View Help GAI Comparison: Candidates – Main diamond for Engagement ring

STANDARD OF COMPARISON

Hide TOLKOWSKY IDEAL CUT 1.52 ct 1.01 ct 1.01 ct 1.01 ct inclusions (Standard of comparison) $12,000 $4,724 $4,700 $4,424 (Hold F4) The Tolkowsky Ideal cut Clarity Clarity Clarity Clarity has 58 facets of perfectly identical proportions. In Rating: Rating: Rating: Rating: fact, this is the only round Note: Note: Note: Note: shaped diamond perfect in Symmetry, Cut and Polish and allowing the brilliance to radiate from within the stone.

Rate characteristic: Clarity Add to Short List Details =====BUSINES S MODEL ======

Consumer Brands (ʻNext Diamondʼ) Creating Consumer Brand Designed Small diamonds: 0.5 ct - 4.0 ct with OctoNus 1 Octonus cut Customer Feedback design library (stones, up to 100) LightBox in the shop

Octonus and partner(s):

• cut the stone Octonus partner • release grading reports insures • deliver the stock of roughs

Jewelry shop* has Customer compares 10 cuts (stones): Octonus and standard cuts

in standard lighting: Customer orders Permanent collection: • new cut, for 5 stones, including • on Web-site (GAI) desired Carat, H&A Round, Princess • identify participating shop Color and Clarity*

Franchising * • Short-term collection: • compare cuts in the shop* LightBox 5 new stones, updated

% * Shop franchise includes: % 3d party proprietary cuts Octonus technology, cut samples, LightBox, support, sales % Creating Consumer Brand Designed Exclusive diamonds: 50-100 ct / fancy colors with OctoNus

Customer Feedback 1 Octonus cut design library (models) 3D model with planning

Octonus and partner(s): Partner buys and scans • cut the stone exclusive roughs to • release grading reports obtain 3D models • deliver the order

3D models Customer compares with planing planning options, Customer orders displayed in simulates future stones participating shops* with DC Franchising * % * Shop franchise includes: % 3d party proprietary cuts Octonus technology, cut samples, LightBox, support, sales % Current market situation (recall)

Limited stock of rough Big stock of polished

Customer Cutter Shop

Consignation

Customer is unknown. Pre-cut roughs Polished roughs Consignation (4-6 months) His choice is unpredictable. 1-2 weeks 1-2 months

Money back after sale: • Turnover: 0.5 year - 1 year 6-12 months • Customer choice is unpredictable • Shops have to stock various cuts / clarities / ... • Stock liquidity: low • Credits for cutters to keep up the chain Next Diamond

No hopeless stocks Big stock of pre-cut roughs of polished

Customer Cutter Shop

Order Delivery

Customer makes choice Pre-cut roughs Polished roughs Consignation (4-6 months) 1-2 weeks 1-2 months

Money back promptly

• Low polished stocks: cutter makes what is required • No long consignation: quicker turnover, higher profit • Financial health: Rough stocks have higher liquidity than polished • Consumer feedback => consumer brand => consumer confidence Next Diamond

Big stock of pre-cut roughs increases cutters profit

Current Market

Cut Order Limited choice of roughs Bad fit Example: available instantly Cutter uses 1.01 ct, cushion VS1, H 1.10+ct or VVS or F-G сolor

Next Diamond

Cut Order Big choice of ready roughs Optimal fit Example: (measured, window opened) No material wasted 1.01 ct, cushion VS1, H Higher Profit. Creating Consumer Brand Designed with OctoNus

DELIVERY TIME

0.5 - 4 ct: GRADING 4-6 weeks

Exclusive rough: Stone delivered with grading report • 1-2 months from associated grader which includes Carat / Color / Clarity grades (GIA scale) * Time for polishing is shortcut by rough stock and assures Cut authenticity and allocations plans prepared in advance. • • AGS / GIA certification is up to the customer. As guarantor, Octonus will pay PLACES TO START off price difference if stone obtained lower grade from AGS / GIA. For 2 0.5ct - 4ct: grades low: the difference + penalty. UK, Germany, Italy, France Dubai, India, China, USA

Exclusive rough: London, New York, Dubai, Hong-Kong, Geneva, Moscow, Tokyo Creating Consumer Brand Designed Diamond supply pipeline replaced by diamond cycle with OctoNus

Cut New cuts launched Auction at ‘Cut Expo’ Computer-aided rough planning

INNOVATION SUPPLY

Cut Color & Contest Clarity viewer

Manufacturer or designer make Sales of exclusive new trend branded diamonds

Sales Agent feedback sellers Retail / e-tail CONSUMER agents sell with visual quality tools BRANDING DEMAND * like in and car industry =====BUSINES S MODEL ======

Cut Game Cut Game / Web Contest

Active Voters get rewarded Not promoted cuts

Subjective grade: Diamond Diam online community manufacturing Calc Customers TOP 10 Pre-ordered wearing Auction sales distinctive Objective grade: Outside diamonds DiamCalc PR and contractors promotion

IP Protection

Design Earning

Project revenue

Customers: large retailers, prestige brand names, new entrants to the industry

Value: fashion, exclusivity, customer approval, brand visibility

Market: 5-10 new designs / year Interface sample Octonus Philosophy

• Increase profit of Associated Cutters • Invest to existing clients, rather than search for new one

Octonus Their market Increase Profit of They grow faster market share share increases Associated Cutters than Sarins’ increases How to get better margins?

Make exclusive goods

Consumer Brands

Brand value is not affected by raw material prices

Customer Confidence

repeated sales Customer Brand Ladder Loyalty Regular Relevance Trial Awareness

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Gem Adviser with Next Diamond Cut Game

SUPPORT LINE

Cut Show Diamond Cut DOP for Novel cuts Conference presented on Fancy Cuts March 2009 BaselWorld and Lausanne other expos. Thank you.