Mr. Spegg: I founded the company in 1996. At that time, we did a business plan that has proven to be correct for music on the Internet. This is being proven on a day-to-day basis by all the things that all of the other music on the Internet companies are doing wrong, such MP3.com, specifically, and Napster, etc. We set out to build a music database that included all of the major companies' hit products, in other words, top 40 songs from Universal, EMI, BMG, Sony, Warner. We originally set out to build that database in an MP3 format, deliverable in a fairly low quality over 28kbps modems, but also decided to compress all of the music in a total of six different qualities ranging from that low AM mono-sounding quality, to a broadcast quality, that we would be delivered to radio stations. We also realised from day one that banner ads on the Internet would not be sufficient income to break-even on a product like this. And from the very first stream that we sent out, we added a radio-style, 10-second ad after every three songs that we deliver in a streaming fashion. So we became a streaming music company, not a download company where people could listen to the music that they wanted to. But in order to allow us to build revenue streams that would satisfy investors, we also designed and developed three business-to- business streaming music products. One, to go into record stores in form of a listening post where you could listen to any CD at the store by simply scanning the bar code, in other words, the CD jacket in front of our bar code reader. It would then stream the music over the Internet and show graphics, related information, etc. That's our B2B product number one. Our B2B product number two is a product designed for the broadcasters for speciality radio stations where we give them a number of music services, but, most significantly, a database or archive that they can call on, preview, research, and then download the broadcast- quality files that they need for their on-air broadcasts. That's business-to-business product number two. Business-to-business product number three is a competitive product to the Muzak(r) products where we stream music into industrial locations, restaurants, office buildings, etc., but in a totally randomised fashion, so that they do not have to listen to the same program day after day, hour after hour because the Muzak(r) product is mainly delivered on CD and they play the same 90 minutes of music over and over again for two weeks. We deliver a never- ending randomised stream and the ability for them to insert their own messaging, whether that's a promotional message, a motivational message for factory, informational message for railroad station or airport. All three of these business-to-business product lines have now started their revenue streams with significant business in the pipeline in all three of them. We have installations of the Listening Post already in two fairly large chains, and are negotiating with at least another half dozen very large chains. We have the Muzak(r) competition, which we call Industrial Sound Services, installed in about 20 different locations already and negotiating with operators of the properties that have as many as 500 properties per operator. The Broadcast product, we are working with Citadel Communications. We have 200 stores in the secondary markets on a contract basis, and we have just signed an agreement with the Corus Broadcast Group, which have another 46 radio stations. And, again, the work on that is progressing very nicely and the products are second to none. We are heads-over-tails in front of the competition in all three of these products. We call the consumer product RadioMOI, for Music On the Internet. It is the first music service on the Internet that was licensed by the record industry from day one and this goes back to early 1997. We negotiated with the industry for proper licensing, and received, finally, in 1999, the very first license granted by the RIAA, the Recording Industry Association of America. We pay them monthly royalties based on the reports that we generate, and we report to them everything that we stream. In other words, which song, how often it was streamed, which country it was streamed into, and the demographic make- up of the listener. All this capability has existed in our product since day one. So the first stream that went out had all that reporting and royalty information attached to it. It's becoming obvious now that from the MP3 suit and from the Napster suit, and from the vigilant pursuit of the record industry of Webcasts, or downloaders, that 99% of them did not pay any attention to the copyright law or to trying to get licensed by the industry. This, again, proves that we did the right thing. We are also right now negotiating with some of the majors for on-demand play. What that means is that sometime in the future, the user will have a jukebox at home and on their computer where they can play what they want, when they want. This will be based on the subscription, or possibly on a pay-per-play basis. The software for that product has been in existence. We have had that written since 1997, and we have tested it thoroughly. It's working like a charm on that product. We'll be waiting for the contracts from the major record industry. That is the overview of the product. The financial overview is as such: in 1996, we started operating out of Toronto, Canada. We raised an initial half million dollars from friends and family, then an additional $4 million approximately from venture-type investors, intelligent investors, experienced investors, both in the islands, the Caribbean and in Europe. In Europe, we have investors out of Germany, Switzerland and Sweden. When we did our business plan and estimated how much we would need before break-even, we took the product to the Neuer Markt with the help of a bank out of Berlin, Berliner Effektenbank AG, and raised 13.5 million Euros at that time. We have approximately half of that money still available in cash, so our burn rate is fairly low, about $500,000 per month. We expect to be at a break-even position before this cash runs out. However, in order to do a marketing blitz especially on our business-to-business products, we are right now pursuing another private placement with a strategic partner of approximately $10 million and hope to get a listing on NASDAQ sometime in the spring of next year. In the process of doing this IPO, we exported the company to Delaware. We are now a Delaware corporation, with a head office in New York, with the production office remaining in Toronto, a European sales office out of Zurich, and our first franchise operator in Abu Dhabi. The franchise operator gets the right to sell our business-to-business products in a geographic territory and has a mandate to add their musical heritage to our global music database. We are now negotiating with another half dozen potential franchise operators in countries like Germany, France, Italy, Spain, India, Taiwan, and expect to have 20 franchise offers to sign up by the end of 2002.
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