Overview

Inca Designs Inc. designs, sources and sells high fashion designer swimwear, resort wear and accessories for the wholesale and retail markets under the brand names Inca, Incagirl, Incabag and Inca Junior. This New York-based swimwear and resort wear designer markets its apparel through nearly 100 upscale department and specialty stores, including Barneys New York, Bergdorf Goodman, Saks Fifth Avenue and Neiman Marcus. Inca branded apparel is sold in South America, Europe, Asia, the Middle East and the Caribbean.

The Inca brand was launched by fashion designer Stephanie Hirsch in 1996. During a trip to Peru and while traveling the Inca trails, Ms. Hirsch was inspired by the beauty of her surroundings to create a line of handbags that incorporated bright colors, intricate detailing and exotic textiles. The handbag line enjoyed immediate success and gained strong visibility when Hollywood celebrities such as Jennifer Aniston, Halle Berry and Salma Hayek became early customers. Ms. Hirsch expanded her business by adding luxury swimwear and resort wear inspired with exotic influences of Morocco, Mexico, Asia and Bali. Today, Inca Designs competes successfully with high-end designer brands such as Masson and Dolce & Gabbana and fashionable ready-to-wear lines such as Theory and Diane. Inca apparel has been featured in the world’s leading fashion magazines, including Vogue, Harper's Bazaar, Glamour, Allure, Lucky, Marie Claire, Cosmopolitan and Oprah, and in the Sports Illustrated swimsuit edition.

Inca Designs markets its apparel lines through approximately 50 major US retailers and 20-30 international retailers. In addition, the Company recently opened a flagship store on New York’s Upper East Side and will soon add a second retail store in Miami’s trendy South Beach area. The Company plans to establish a network of between four and ten retail stores by 2010. Inca has also expanded its apparel lines to include children’s and teen’s fashions and has also launched a line of home accessories. The Company has already booked approximately $500,000 in sales in early 2008 with expectations to reach the $3 million milestone in annualized sales over the next 12 to 18 months.

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Investment Highlights

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Industry Statistics

The global apparel, accessories and luxury goods market has grown 3.8% annually since 2002 to reach $1127.6 billion in 2006. This market includes clothing for men, women and children, jewelry, watches and leather goods. The women’s wear segment was the most lucrative in 2006, accounting for 42.9% of industry revenues.

The US retail apparel market generated sales of $295.5 billion in 2006 and accounted for 34.6% of global apparel sales. Women’s wear represented 58.3% of US apparel sales, followed by menswear (35%) and infantswear (6.8%).

Sales of women’s wear in the US grew 2.3% in 2006 (37.1% of global sales) to $172.2 billion. Sales of dresses, skirts and trousers contributed 45.4% of US women’s wear sales.

Sales of swimwear and beachwear grew to $12.9 billion in 2006 and are forecast to reach $13.5 billion by 2012.

According to Just-Style research, women's swimwear as a percentage of the overall swimwear market will decline modestly from 70% in 2006 to 69% in 2012. Over the same period, children’s swimwear will grow from 13% to 14% of the overall market. Inca markets apparel in both the children’s and women’s swimwear category.

US swimwear is marketed across a growing number of industry distribution channels. Rapid improvements in technology have shortened the fashion development timetable from years to months, particularly in the high-fashion and high-performance areas. Designers are also aggressively marketing their brands overseas to increase sales opportunities.

According to NPD, apparel sales through specialty stores and national chains are outperforming apparel sales through mass merchant channels.

Growth in specialty apparel channels comes from unisex retailers (which grew 15% between 2004 and 2006) and children's and women's specialty retailers (up 7% from 2004).

According to NDP, 33% of loyal retail customers account for 67% of upscale retail store sales. The greatest increases in upscale loyalists were among consumers with household incomes exceeding $80,000 and in the 25-34 and 55+ age groups. An AccuPanel analysis of 50 upscale retailers, including leading department and specialty stores, indicated that loyal consumers who purchase more than 25% of their apparel from those retailers are increasing, despite a drop in the overall number of shoppers. Loyalists are more than twice as likely to shop in an upscale store and on average spend 50% more per shopping trip. These shoppers typically spend $95 per shopping trip, versus $61 per trip for the average retail shopper.

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Products

Inca Designs produces a wide variety of designer swimwear, resort wear and accessories sourced through strategic manufacturing partners in the US, India, China, and Southeast Asia. Inca’s “Resort Lifestyle Experience” concept caters to both the contemporary fashion and designer markets.

Inca markets complete lines of swimwear, resort wear, handbags, shoes and accessories. The Company recently introduced its Inca Junior product line, which includes boy’s shirts, tunics, shorts and lounge pants, and its Inca Girl collection, which features designs for fashion-conscious teens and juniors. In addition, the Company recently launched a new line of home accessories, which includes luxury silk pillows, embroidered towels, table cloths and other items. In the future, Inca may introduce its own jewelry, footwear, intimate apparel, fashion accessories and furniture lines.

The Company also plans to launch new product lines (jewelry, intimate apparel, furniture, etc.) that will leverage its growing brand name and drive incremental sales. Co-branding events with the media and with wholesalers in the US and abroad will be explored as avenues for promoting brand visibility. The Company may also pursue select co-branding opportunities with athletic teams and motor sport racing teams.

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Marketing Strategy

The Company employs innovative marketing techniques to promote its lifestyle apparel and plans to develop a network of Inca-branded retail stores, supported by high impact advertising, on-line sales, brand building and customer loyalty programs.

Inca has gained invaluable free advertising through coverage of its apparel lines in leading national and international fashion magazines such as InStyle, Vogue, Town & Country, Glamour, Cosmopolitan, Lucky, Elle, Travel & Leisure, Oprah, Maxim and Esquire.

It has also received immense visibility and brand-building assistance from Hollywood celebrities who have been photographed wearing Inca apparel such as Carmen Electra, Jennifer Aniston and Denise Richards.

Inca works with nearly 100 upscale, global retailers who carry its high-fashion brand. These include Neiman Marcus, Barney’s New York, Bergdorf Goodman, Saks Fifth Avenue, Nordstrom, Henri Bendel, Fred Segal CA, Scoop New York, Jill Roberts, Everything But Water, Planet Blue, Victoria’s Secret and many others. The Company’s new Inca Junior apparel line is being showcased in its New York City store and its Inca Girls collection for girls ages 3 to 11 is available at Barney’s New York and 35 other retail stores nationwide. Barneys New York has been carrying Inca branded apparel for several years.

In addition to sales through upscale retailers, Inca is establishing its own network of retail stores. The Company recently opened a flagship store in New York City at 71st and Lexington Avenue that offers high-end personalized services such as custom sizing and selection and personal shopping. Another retail location will soon open in Miami’s trendy South Beach area and additional stores are planned for Atlanta, Los Angeles, Dubai, Macau, London, St. Tropez, Hawaii and Mexico. Inca plans to open between four and ten retail stores by 2010 along with a New York City showroom.

The Company also plans to launch new product lines (jewelry, intimate apparel, furniture, etc.) that will leverage its growing brand name and drive incremental sales. Co-branding events with the media and with wholesalers in the US and abroad will be explored as avenues for promoting brand visibility. The Company may also pursue select co-branding opportunities with athletic teams and motor sport racing teams.

Recent News and Press Releases

Upscale Fashion Retailers Barney's New York, Scoop, Intermix, and Lisa Kline to Carry INCA Line for Spring 2008
Business Wire (Mon, Mar 17)

INCA Designs, Inc. to Consolidate Post Merger Financials Detailing $2 Million in Revenue since Inception
Business Wire (Mon, Mar 17)

INCA DESIGNS INC Financials
EDGAR Online Financials (Wed, Dec 19)

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Management

Stephanie Hirsch, President and Secretary

Stephanie Hirsch, Inca Design’s President and Secretary, has worked in fashion and design throughout her entire business career. Ms. Hirsch founded Inca in 1996 and designs all of Inca’s apparel and accessory offerings. Her inspiration for the Company’s innovative designs came during a trip to Peru where she encountered exotic colors, fabric textures and details, which are incorporated into Inca designs and serve to differentiate the Inca brand. She is a graduate of Tulane University and was the recipient of the Fashion Group International Award for her accessory designs.

Stacy Josloff, CEO and CFO

Stacy Josloff, the Company’s CEO and CFO, joined Inca in May 2005. Her responsibilities include business strategy, marketing, sales public relations, merchandising and finance. Prior to joining Inca, she spent 10 years as a high profile sales executive at Ralph Lauren and Max Mara USA. Since Ms. Josloff joined Inca, the Company’s gross sales have tripled. She was also instrumental in launching the new Inca Girl brand. Ms. Josloff graduated from the University of Michigan with a Bachelor of Fine Arts degree.

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Contacts

Stephen Taylor at Taylor Capital
email: stephtayl9@aol.com
phone: (973) 351-3868
fax: (973) 453-8385

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FORWARD LOOKING STATEMENTS

This report includes forward-looking statements that reflect Inca Designs Inc. current expectations about its future results, performance, prospects and opportunities. Inca Designs Inc. has tried to identify these forward-looking statements by using words and phrases such as "may," "will," "expects," "anticipates," "believes," "intends," "estimates," "plan," "should," "typical," "preliminary," "we are confident" or similar expressions. These forward-looking statements are based on information currently available and are subject to a number of risks, uncertainties and other factors that could cause Inca Designs Inc.'s actual results, performance, prospects or opportunities to differ materially from those expressed in, or implied by, these forward-looking statements. These risks, uncertainties and other factors include, without limitation, the Company's growth expectations and ongoing funding requirements, and specifically, the Company's growth prospects with scalable customers, and those outlined above. Other risks include the Company's limited operating history, the Company's history of operating losses, consumers' acceptance, the Company's use of licensed technologies, risk of increased competition, the potential need for additional financing, the terms and conditions of any financing that is consummated, the limited trading market for the Company's securities, the possible volatility of the Company's stock price, the concentration of ownership, and the potential fluctuation in the Company's operating results.

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