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Executive Summary

Mission Statement
It is ar.com's goal to enhance the development of electronic music by being the premier, comprehensive resource on the Internet for electronic music aficionados and producers. ar.com will democratize music, creation, distribution and consumption by:

  • assisting artists in the production of their music by providing samples and sound fonts at no cost
  • giving talented artists with few connections or resources the chance to distribute their music
  • giving small record labels the chance to distribute their music online, increasing their viability
  • allowing a fan of the music anywhere in the world instant access to a huge selection of releases from across the globe at very reasonable prices.

Executive Summary

A formidable opportunity has arisen from the combination of the advent of the Internet as a medium for music distribution, and the rise in popularity of a genre of music that is entirely composed with computer software - electronic music. Analysts predict that as much as 10% of music retailed in the U.S. in year 2002 will be purchased over the Internet1. "While sales (of this genre of music) account for less than 10 percent of overall music sales, the genre is growing."2 This genre has been largely ignored by most mainstream retailers and labels because of its non-traditional song formats that make it non-conducive for radio play.

It is audiorush.com inc.'s (ar.com's) plan to market the electronic genre of music via a web site (please see Appendix 6 on page 35) whereby consumers will download the music to their PCs. As a convenience, ar.com will write the purchased songs to CD and ship them directly to consumers who are not yet equipped to download music. The web site is designed for maximum user-friendliness, unlike any other music site today. ar.com's unique web design allows users to browse the selection effortlessly, while being able to automatically hear excerpts from each virtual CD.

The electronic genre of music is ideal for online distribution for the following reasons:

Ar.com is distinguished from its competitors in that:

Music sales over the Internet are made possible by:

The market

The market for electronic music is largely composed of University students. According to Jupiter Communications:

College students, typically have free broadband access that makes digital distribution much more feasible, not to mention the highest penetration rate of any online demographic. This audience is the first that will be compelled to purchase writable drive peripherals specifically for the digital delivery of commercial music.3

Aficionados of electronic music are raised in the age of the World Wide Web, making Internet distribution in tune with their lifestyle.

Management Team
ar.com's management has the proven entrepreneurial and management skills to succeed in running this innovative, market-driven company. They have the rare combination of top business school training and a strong connection with the electronic music market.

Offer and Use of Proceeds
The estimated net proceeds to be received by ar.com from the sale of common shares, is $330,000 (including $30,000 of expected expenses associated with the offering). ar.com intends to allocate $50,000 of the net proceeds towards the purchase its web site design, and the balance, in the amount of $250,000, towards funding salaries and working capital. The investor will receive 10% of the common shares in exchange.

The following table sets forth the capitalization of ar.com as at the dates indicated, before and after giving effect to the issue of common shares contemplated hereby.

Shareholders' equity Pro forma as at April 30, 1999 Pro forma as at April 30, 1999
after giving effects to the Common shares
No. of common shares (without par value) 2,970,000 3,300,000
Book value of equity (in $US) $297 $330,297

Ownership of Common Shares

As at April 30, 1999, on a pro forma basis, before the issue of common shares being offered, the ownership of ar.com's common shares will be as follows:

Office Number of Common Shares
Christianne Brunelle President 1,782,000
Ranya El-Masri Vice President Marketing 1,188,000

Exit Strategies

Three exit strategies are possible through which investors should be able to realize on their investment:

Summary Financial Information

3,300,000 outstanding shores 2000 2001 2002 2003 2004
Revenue $730,354 $2,921,377 $8,821,193 $23,336,002 $54,262,701
Net Income ($101,670) $418,280 $1,893,405 $5,896,208 $14,462,886
Net Book Value $71,044 $489,324 $2,382,729 $8,278,937 $22,741,824
Return on Ave. Equity $186,739 $282,368 $1,436,263 $5,368,429 $15,822,695
Gross Margins 54% 54% 54% 54% 54%
Earnings per share ($0.05) ($0.03) $0.13 $0.57 $4.38

1 Jupiter Communications, "Music Industry and the Internet", p.5
2 "Techno Tackles the Net", Niall McKay and Christopher Jones,
http://www.wired.com/news/print version/culture/story/16764.html?wnpg=all
3 Jupiter Communications, "Music Industry and the Internet", September 1998, p.9

Table of ContentsAppendices
1. Executive Summary
2. The Opportunity
3. Operations
4. Marketing Plan
5. Industry Analysis
6. Management Team
7. Financials
Technology Dissemination
Industry Information
Curriculum Vitaes
Media Calendar
audiorush.com web site
Sample Advertisement
Internet Banner
Positioning Map
Sample CD
All information herein is confidential and belongs to AudioRush.com