Item 1. Business
Overview of the Company
We are a development stage company that was incorporated on December
10, 2010. We have commenced only limited operations, primarily focused on researching potential suppliers of music production equipment
for our intended business and the initial market for these services. We have never declared bankruptcy, have never been in receivership,
and have never been involved in any legal action or proceedings.
We have not generated any revenue to date and we do not expect to
generate revenues prior to 2013. We do not currently have sufficient capital to operate our business, and, we will require additional
funding in the future to sustain our operations. There is no assurance that we will have revenue in the future or that we will
be able to secure the necessary funding to develop our business.
Our specific goal is to provide music production services to independent
musicians at an affordable price. Assuming we raise the additional funds necessary for us to operate our business, initially we
are seeking to market our music production services in the New York metropolitan area. Eventually, we envision selling our services
in London, United Kingdom as well.
We intend to market our services primarily on the basis of price
that similar services will be offered to musicians at the low end of the market for these services. Our officers work from their
homes and our mailing address is 382 NE 191st St. # 84220,
Miami FL 33179
. Our telephone number is (888) 665 8884. Our President and Director,
Mr. Avraham Morgensterm resides primarily in London, England. Our Secretary and Director, Mr. Itai Freed resides primarily in Israel.
We do not currently have a website; however we have reserved a domain name (www.olieinc.com).
The Market Opportunity
The following market data regarding the US music production market
is based on publicly available information. We have not conducted any independent market studies to verify this data.
History
With the inception of the digital medium in music the industry itself
has become quite volatile and very interesting. When the format of MPEG-1 Audio Layer 3 (MP3) was introduced as a means to listen
to audio the music industry was literally turned on its heels. IPODs and MP3 players were taking over the world and replaced compact
disk players and other forms of audio playback. Along with this change came the user friendly and accommodating method of sharing
music between consumers rather than purchasing music in music stores, as was the case before the digital era. “There are
now about half as many CD sales in the U.S. as in 2000. A few years ago, record executives in London were shocked when young people
refused even free CDs. (http://online.wsj.com/article/SB123172053495272329.html).
Before the digital age, music was free, but in the form of radio,
which could be controlled. This was ideal for the music industry because radio was presented in the form of radio programming which
was very specific in the type of music that was being played. This was the control. With this format, radio could break regularly
to “pay the bills” as DJs would often say. Very lucrative advertising deals could be negotiated to bring the billions
of dollars to companies like Clear Channel, ViaCom, etc. (
http://nymag.com/nymetro/news/media/columns/medialife/6099/
)
With these monstrous companies running the show, music became formulaic
and formatted specifically to coincide with the profit models of these companies. If songs didn’t fit the model, they didn’t
get airplay. If the artist or record labels didn’t agree to terms with these companies then it would be virtually impossible
to achieve success. These companies could not only control what music was being listened to but also what acts would play the biggest
venues. Clear Channel, for example, is the largest music promotion company in the United States and artist are forced to use them
and comply to their musical formats in order to play high dollar venues around the globe. (
http://nymag.com/nymetro/news/media/columns/medialife/6099/
)
During this time in the late 90’s the music industry was a
$15 billion dollar industry (image taken from
http://www.businessinsider.com/these-charts-explain-the-real-death-of-the-music-industry-2011-2
). In the last ten years the industry has been more than cut in half due to the revolution of free digital music.
Internet upstarts like Napster, an Internet site designed to share
music between users connected to it, became the primary source for consumers who didn’t want to pay for music. The concept
of Napster was it believed that music should be free to the people. “The battle for paying digital customers may have been
lost before it had truly begun. In 1999, Napster, a free online file-sharing service, made its debut. Not only did Napster help
change the way most people got music, it also lowered the price point from $14 for a CD to free.” (http://money.cnn.com/2010/02/02/news/companies/napster_music_industry/)
Record companies began to sue companies like Napster but soon realized this “pirating” of music would never stop. So
the lawsuits did stop and the industry took its hit. Along came the independent music scene. (http://nymag.com/nymetro/news/media/columns/medialife/6099/)
Artists hit the scene with independent music, not using the large
music production companies, rather they captured the interest of other artist who used their music in film (Magnolia and Good Will
Hunting) and a new revenue model was born. The artist no longer needed the “help” of large music companies like Clear
Channel and were able to become their own profitable entity. (
www.ic.arizona.edu/ic/indv10258/.../Leyshon
OntheReproduction
.pdf)
Independent music grew over the next decade and in combination with
the digital era (sharing MP3s) new genres of music were penetrating the consumer like never before. In fact the independent sector
of music became its own genre, referred to as Indie music. This format of music was not recognized by the industry in the start
and companies were still utilizing old models to bring new pop music into the industry. The concept of spending loads of money
to promote music and seeing a definitive return wasn’t working anymore. “Now just 44% of U.S. Internet users and 64%
of Americans who buy digital music think that that music is worth paying for, according to Forrester. The volume of unauthorized
downloads continues to represent about 90% of the market, according to online download tracker Big Champagne Media Measurement.”(
http://money.cnn.com/2010/02/02/news/companies/napster_music_industry/
)
So music companies and record labels have to change their tune and
cut costs in order to produce music for the masses and still see a revenue stream. Every penny can only be earned in the grind
and therefore penny pinching is a necessity. High cost music studios are in flux because $1000/hour to use high profile or famous
facilities doesn’t fit the model anymore. Independent musicians who self promote obviously can’t afford these costs
either. Even low-end studios charging $45-$100/day struggle to pay the bills. “The list of shuttered studios includes landmarks
to music history. We intend to be one of the few inexpensive, high sonic quality, music production options in the industry.
Music Production Services
As a music production company we plan to offer the following services,
the key to which at first will be Remote Post-Production Services:
Remote post production services – in the digital age,
production, track mixing, and mastering can all be done remotely and sent to clients. The only requirement for the studio, is
if the client does not have their own voice/music recorded in the actual original recording. Everything else can be done by
us at a later stage anywhere – remotely or on-site.
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Piece overdubbing – Our clients may ask us to add specific parts to songs already constructed and recorded such as adding piano to a song that already has drums, bass and guitar. Or adding sounds such as percussion, Hammond organ or mood based effects to increase the sonic value of a song
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Song writing – Our Secretary and Director, Mr. Itai Freed has recorded five albums of original self produced songwriting of various styles ranging from country to rock to indie and pop music. The purpose of this aspect of the business is to generate revenue in the licensing arena, increase awareness in our brand, generate interest in our sound and create a calling card as to what we do and who we are. In the music industry, and especially in production, there is no better business card than a catalog of CDs (or music files such as MP3) to demonstrate the realm and expanse of your work.
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Exclusive Editing - Editing can be a job of its own and we expect to offer it for studios or artist that don’t do it. Tracks would be completely recorded already and then brought to us with notes of what needs to be done. We would then edit the songs in a cleanup format and prepare it for the mixing stage.
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Music Production
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Music production - Working with individual artists or bands to produce their music from the ground up, start to finish. This will included sound and board engineering, editing, producing (presentation), and pre mixing. The production value added varies based on the need of the artist (s) we are working with. In some cases we may only be engineering sound and running the board while monitoring the band performing the instrumentation. In this process the role of the producer is to listen, provide feedback, work with tempo, and make valuable suggestions in order to bring out the best in the project at hand. In other projects, we anticipate being able to add musicianship by Mr. Freed and others, as well adding layers by bringing in our extensive realm of instrumentation. An example of this scenario would be working with a singer/songwriter who brings in a song and is in need of the band members to complete the recording process. If the singer/songwriter plays guitar we would add the necessary components to complete the song, such as, bass, piano, organ, lead guitar, drums, percussion, mandolin, etc. We will take these songs and bring them to the end of the recording and editing process to be handed of to be mixed and mastered. Based on our Secretary and Director, Mr. Freed’s experience of working with mixers and masters we will then offer a discounted rate if they choose to work with someone from our list of mixing and mastering network.
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On-Site Studio Recording – One aspect that separates us from our competitors is our Secretary and Director’s, Mr. Itai Freed experience and ability to take gear on the road and set up shop anywhere. Over the past four years, Mr. Freed has recorded successfully in four different countries.
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Live venue recording – Because of our mobility option we will also offer live venue recording for bands that want to create a live album are document a special engagement such as a CD release party.
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Co-Songwriting – Many times bands or singer/songwriters (we’ll call them writers from here on) come into a studio with incomplete songs and need some help finishing them off. Whether that means adding a change to the song or writing a new part is based on writer’s vision. Co-songwriting results in the production company attaining a percentage of the rights to the song based on a negotiated agreement which, if/when the song starts to generate revenue, there is a percentage of revenue received from the royalties.
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Commercial work –We may also make music and recordings for commercial use such as television, radio, cinema, voice-over. The range of recordings that can be used are
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Voice tracks
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Musical Scores – Instrumentals
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Complete songs with lyrics
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Jingles
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Sounds
effects for radio or art performances
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Exclusive Editing - Editing can be a job of its own and we expect to offer it for studios or artist that don’t do it. Tracks would be completely recorded already and then brought to us with notes of what needs to be done. We would then edit the songs in a cleanup format and prepare it for the mixing stage.
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Studio Facilities
Studio facilities will be used specifically for recording the artists
who do not have their own original recordings and possibly all the other services we include in our business plan. Additionally,
everything can be done remotely as well. Meaning, the artist can record his voice and send to us digital for re-mastering, for
adding new instruments and band members, adding sound effects, voice addition, etc. We are also able to physically travel with
our gear (which can include microphones and our computers) to work on-site.
We do not plan to purchase equipment because it is our intention
to rent space within an operating studio or share studio space with another entity – similar to a executive office suite
in concept. We will either use the equipment already existing at the studio or our Director, Itai Freed will provide his equipment
free of charge to the company. The following equipment is necessary to operate a recording studio:
Microphone, Computer with pro-tools, speakers and an amplifier.
We budgeted $10,000 for a studio in New York because we believe
we will be able to share/rent space in an existing studio on an as required basis.
If we are unable to share/rent appropriate space, we will rent a
simple 400 sq foot commercial space, which, if necessary, we can outfit for less than $10,000 to become a fully working studio.
To outfit the studio we would need to sound proof the space – which can be done cheaply with styrofoam, fabrics and other
sound absorbing materials.
The critical element as regards quality — is that the m
icrophone
and cables need to be of a high quality. Our Secretary and Director, Mr. Freed has such equipment which will be made available
to us at no cost. If we do our own build out, we will seek to rent our space out to others for a fee.
If we share or rent space in an existing studio, there will be equipment
there — such as computer , microphone, pro-tools etc. There may also be musical instruments in the studio. A shared arrangement
will mean lower costs for us and based on our research many such fees are based on the amount of time we use the studio which is
turn is based on the amount of work we generate, We anticipate paying no more than $650 per month. But we have budgeted for more
to account for unforeseen expenses which are inevitable.
Marketing / Advertising
For a description of our marketing plans, please see the discussion
in the Management Discussion and Analysis section below.
Pricing of Our Music Production Services
We believe that we will be able to provide our services at very
competitive prices compared to industry prices. The idea is to pull in as many clients to our world of recording as possible and
slowly gain market awareness before we adjust our prices. Our price list is listed as follows:
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Recording sessions - $20/hour or $200/day. We will also offer negotiable options for the ”starving” musician.
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Recording Sessions with producer – Recording session prices plus a negotiable rate for production. Negotiable because, typically, if as producers we believe in the project we may take a nominal fee in exchange for royalty rights (see below for “rights” description).
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Commercial work
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Musical Instrumentals– $500/song. Typically, fees of this nature are negotiated based on the type of instrumental required. If a customer just needs some conga playing we charge much less. On the other hand, full band music with symphonic undertones would cost much more.
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Jingles – Such as catchy commercial songs. $250 we keep the rights unless otherwise negotiated.
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Sound effects – $40 per track of recorded sound effect. Art performance pieces negotiable based on pay scale of the artist
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Editing As an exclusive option - $100 per song.
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Piece overdubbing – We would change a negotiated price per overdub based on the complexity of the song with a minimal charge of $50 per overdubbed track.
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On-site Studio Recording - $300/day plus expenses
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Live venue recording - $500/day
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Why a musician would choose us
Studios around the world charge anywhere from $45 and up an hour
depending on the studio and where it is located. Prices vary so greatly that per hour and per day charges, when measured with the
quality of the recording are impossible to value and typically the consumer feels they paid too much for the quality of the end
result. Often this is not because of the actual studio but the producer’s vision and how it conflicts with the artist’s.
Or, perhaps the quality of the material is poor.
Competitive Advantages
Our music production services are intended to have the following
benefits:
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Flexibility in location of studio.
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Knowledge of demands of targeted market.
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Dependence on One or a Few Major Customers
The production of music for multiple musicians does not mandate
any dependence on one or a few major customers.
Patent, Trademark, License & Franchise Restrictions and Contractual
Obligations & Concessions
We have not entered into any franchise agreements or other contracts
that have given, or could give rise to, obligations or concessions. We intend to protect our private label for music production
on the basis of applicable trademark and tradename laws. Beyond our common law right to our trade name, we do not hold any other
intellectual property.
Research and Development Activities and Costs
We have not incurred any costs to date and have no plans to undertake
research and development activities during the next year of operation.
Costs and Effects of Compliance with Environmental Laws and Regulations
We are not in a business that involves the use of materials in a
manufacturing process where such materials are likely to result in the violation of any existing environmental rules and/or regulations.
Further, we do not own any real property that could lead to liability as a landowner. Therefore, we do not anticipate that there
will be any material costs associated with compliance with environmental laws and regulations.
Employees
We have commenced only limited operations; therefore, we have no
employees and do not anticipate having any employees during the first twelve months of operations. Our officers and Directors provide
service to us on an as-needed basis, and we will be relying heavily on our Secretary and Director, Mr. Freed. When we commence
full operations, we will need to hire full-time management and administrative support staff. For a detailed description, see "Plan
of Operation".
ITEM 1A. RISK FACTORS
In addition to the other information in this
Annual Report on Form 10-K, stockholders or prospective investors should carefully consider the following risk factors:
Risks Relating to Our Lack of Operating History
1. We are a development stage company and may never be able to
execute our business plan
.
Failure to secure the needed additional financing will have a serious effect on our ability
to execute our business plan.
We were incorporated on December 10, 2010. We currently have no
agreements to produce or distribute music rights, nor any customers or revenues. Although we have begun initial planning for the
marketing and distribution of music rights through our company, we may not be able to execute our business plan unless and until
we are successful in raising additional funds. We anticipate that we will require additional financing of approximately $60,000,
in addition to the $40,000 that has been invested by our current shareholders, to continue our operations and to remain operational
during the next twelve months. Such financing, if required, may not be forthcoming. Even if additional financing is available,
it may not be available on terms we find favorable. Failure to secure the needed additional financing will have a serious effect
on our company's ability to survive. At this time, there are no anticipated additional sources of funds in place.
2.
Investors in the shares offered pursuant to this Form S-1
will have their percentage interests in the Company diluted if management raises its projected $60,000 additional financing through
an equity offering.
Management believes that we will require an additional $60,000
to enable us to continue our planned activities for approximately 12 months after the offering and to fully commence our
market development and sale activities. As a result, we may make an additional stock offering which would dilute the
percentage interests of the investors in the shares offered by this Prospectus.
3. Our President, Director and majority shareholder Avraham Morgenstern,
does not have any experience in running a recording studio. We will rely heavily on our Secretary and Director, Mr. Itai Freed,
who does not have experience operating a business in New York.
Our President, Director and majority shareholder Avraham
Morgenstern, does not have any experience in running a recording studio. Though Mr. Morgenstern has experience in running an
entertainment based company in the United Kingdom, he does not have experience running a recording studio in the United
States. We will rely heavily on the knowledge and experience of our Secretary and Director Mr. Itai Freed. Mr. Freed, a
musician and sound engineer will be traveling every two months to the United States from Israel to supervise the operation of
the business. If Mr. Freed is unable to travel we will be forced to rely on contract employees and that could harm our
ability to succeed. Further, Mr. Freed does not have experience operating a business in New York,
4. Our business plan may be unsuccessful. Should the target market
not be as responsive as we anticipate, we will not have in place alternate services or products that we can offer to ensure our
continuation as a going concern.
The success of our business plan is dependent on our having an inexpensive
high sonic quality to our music production, and on our marketing and sale of these music production services as a valid option
in the independent music industry. Our ability to develop this market and sell our music production services to independent musicians
is unproven, and the lack of operating history makes it difficult to validate our business plan. As a technology based entity,
marketing and sales will be driven through the marketing of our services in myspace and on facebook. In addition, the success of
our business plan is dependent upon the market acceptance of, and our intended competitive pricing for, our music production services.
Should independent musicians and the other target market not be as responsive as we anticipate, we will not have in place alternate
services or products that we can offer to ensure our continuation as a going concern
.
5. We have no operating history and have incurred losses of over
$45,000 since inception, which we expect to continue in the future. We recognize that if we are unable to generate revenues, our
business will most likely fail.
Management believes that an additional investment of $60,000 will
be sufficient to enable us to commence our market development and sale activities, and to continue our planned activities for approximately
12 months after the offering. We also expect to continue to incur operating losses in future periods. These losses will occur because
we do not yet have any revenues to offset the expenses associated with the marketing and sale of our music production services.
We cannot guarantee that we will ever be successful in generating revenues in the future. We recognize that if we are unable to
generate revenues, we will not be able to earn profits or continue operations.
There is no history upon which to base any assumption as to the
likelihood that we will prove successful, and we can provide investors with no assurance that we will generate any operating revenues
or ever achieve profitable operations. If we are unsuccessful in addressing these risks, our business will most likely fail.
6. There is no public market for the securities and even if a
market is created, the market price of our common stock will be subject to volatility
.
Prior to this offering, there has been no public market for our
securities and there can be no assurance that an active trading market for the securities offered herein will develop after this
offering, or, if developed, be sustained. We anticipate that, upon completion of this offering, our common stock will be eligible
for quotation on the OTC Bulletin Board. If, for any reason, however, our securities are not eligible for initial or continued
quotation on the OTC Bulletin Board or a public trading market does not develop, purchasers of the common stock may have difficulty
selling their securities should they desire to do so and purchasers of our common stock may lose their entire investment if they
are unable to sell our securities.
Risks Relating to Our Business
7. Our executive officers and Directors have significant voting
power and may take different actions from actions sought by our other stockholders.
Our officers and Directors own approximately 83% of the
outstanding shares of our common stock. These stockholders will be able to exercise significant influence over all matters
requiring stockholder approval. This influence over our affairs might be adverse to the interest of our other stockholders.
In addition, this concentration of ownership could delay or prevent a change in control and might have an adverse effect on
the market price of our common stock.
8. Since our officers and Directors may work or consult for other
companies, their other activities could slow down our operations
.
Our officers and Directors are not required to work exclusively
for us and do not devote all of their time to our operations. Presently, our officers and Directors allocate only a portion of
their time to the operation of our business. Since our officers and Directors are currently employed full-time elsewhere, they
are each able to commit to us only up to 5-10 hours a week. Therefore, it is possible that their pursuit of other activities may
slow our operations and reduce our financial results because of the slow-down in operations.
9. We may not have effective internal controls which could adversely
affect investor confidence in our internal controls over financial reporting.
In connection with Section 404 of the Sarbanes-Oxley Act of 2002,
we need to assess the adequacy of our internal control, remediate any weaknesses that may be identified, validate that controls
are functioning as documented and implement a continuous reporting and improvement process for internal controls. We may discover
deficiencies that require us to improve our procedures, processes and systems in order to ensure that our internal controls are
adequate and effective and that we are in compliance with the requirements of Section 404 of the Sarbanes-Oxley Act. If the deficiencies
are not adequately addressed, or if we are unable to complete all of our testing and any remediation in time for compliance with
the requirements of Section 404 of the Sarbanes-Oxley Act and the SEC rules under it, we would be unable to conclude that our internal
controls over financial reporting are designed and operating effectively, which could adversely affect investor confidence in our
internal controls over financial reporting.
Further, we will not be required to conduct any evaluation of the
effectiveness of our internal controls over our financial reporting – until at least our second year – that is the
fiscal year included in the second annual report. And, as a smaller reporting company, we are exempt from any auditor attestation
requirements regarding management’s reports on the effectiveness of internal controls over financial reporting.
As a result, by the time we make such review, it is possible that
it if there is a problem, by the time it is discovered, the investors may have lost their investment.
10. Our key Officer and Director, Mr. Itai Freed resides primarily
in Israel. Any attempt to enforce liabilities upon Mr. Freed under U.S. Securities and Bankruptcy Laws may be difficult.
Since our key Officer and Director, Mr. Itai
Freed is located in Israel, any attempt to enforce liabilities upon such individual under the U.S. securities and bankruptcy laws
may be difficult.
In accordance with the Israeli Law on Enforcement
of Foreign Judgments, 5718-1958, and subject to certain time limitations (the application to enforce the judgment must be made
within five years of the date of judgment or such other period as might be agreed between Israel and the United States), an Israeli
court may declare a foreign civil judgment enforceable if it finds that:
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the judgment was rendered by a court which was, according to the laws of the State in which the court is located, competent to render the judgment;
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the judgment may no longer be appealed;
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the obligation imposed by the judgment is enforceable according to the rules relating to the enforceability of judgments in Israel and the substance of the judgment is not contrary to public policy; and;
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the judgment is executory in the State in which it was given.
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An Israeli court will not declare a foreign
judgment enforceable if:
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the judgment was obtained by fraud;
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there is a finding of lack of due process;
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the judgment was rendered by a court not competent to render it according to the laws of private international law in Israel;
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the judgment is in conflict with another judgment that was given in the same matter between the same parties and that is still valid; or
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the time the action was instituted in the foreign court, a suit in the same matter and between the same parties was pending before a court or tribunal in Israel.
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In general, an obligation imposed by the judgment
of a United States court is enforceable according to the rules relating to the enforceability of judgments in Israel, and a United
States court is considered competent to render judgments according to the laws of private international law in Israel.
Furthermore, Israeli courts may not adjudicate
a claim based on a violation of U.S. securities laws if the court determines that Israel is not the most appropriate forum in which
to bring such a claim. Even if an Israeli court agrees to hear such a claim, it may determine that Israeli law, not U.S. law, is
applicable to the claim. If U.S. law is found to be applicable, the content of applicable U.S. law must be proven as a fact, which
can be a time-consuming and costly process.
Since our key Officer and Director does not
reside in the United States it may be difficult for courts in the United States to obtain jurisdiction over our foreign assets
or persons, and, as a result, it may be difficult or impossible for you to enforce judgments rendered against us or our sole Director
or Officer in United States courts. Thus, investing in us may pose a greater risk because should any situation arise in the future
in which you have a cause of action against these persons or us, you may face potential difficulties in bringing lawsuits or, if
successful, in collecting judgments against these persons or us.
11. Our President and majority shareholder, Mr. Avraham Morgenstern
resides primarily in London, England. Any attempt to enforce liabilities upon Mr. Morgenstern under U.S. Securities and Bankruptcy
Laws may be difficult.
Since our President, Director and majority shareholder, Mr. Avraham
Morgenstern is resides primarily in London, England, any attempt to enforce liabilities upon such individual under the U.S. securities
and bankruptcy laws may be difficult.
Risks Relating to Our Strategy and Industry
12. If we are unable to attract and retain the interest of musicians
to use our music production services to produce their albums, we will not be successful.
We will rely significantly on our ability to attract and retain
the interest of our musician clients looking to produce and sell their works. We will compete for musician clients with other music
producers and sellers, including the major record companies, which produce and distribute music for independent musicians. We will
need to continually evaluate and build our musician network to keep pace with their needs and to remain competitive in our business.
We may be unable to identify or obtain the participation of a sufficient number of qualified musicians, which may decrease the
potential for the growth of our business. We cannot assure that we will be successful in signing up musicians. The cost of attracting
musicians to utilize our production services may be higher than we anticipate, and, as a result, our profitability could be minimal.
13. We are a small company with limited resources compared to
some of our current and potential competitors and we may not be able to compete effectively and increase market share.
Most of our current and potential competitors have longer operating
histories, significantly greater resources and name recognition, and a larger base of musician clients than we have. As a result,
these competitors have greater name credibility with our potential musician clients and customers. Our competitors also may be
able to adopt more aggressive pricing policies and devote greater resources to the development, promotion, and sale of their products
and services than we can to ours. To be competitive, we must continue to invest significant resources in research and development,
sales and marketing, and customer support. We may not have sufficient resources to make these investments or to develop the technological
advances necessary to be competitive, which in turn will cause our business to suffer and restrict our profitability potential.
14. We face exposure to copyright claims.
Even though we are not the creator of the musical works we will
be producing, we may face exposure if any of the musicians whose works we produce and sell are deemed to have unlawfully copied
the works of another musician or record label. As a result, we may be enjoined from selling certain products and we may have to
redirect resources to defend ourselves from any such claim, which could have a material adverse effect on our business, financial
condition, and operating results.
15. Failure to meet customers’ expectations or deliver
expected music performance could result in losses and negative publicity, which would harm our business.
If the digitally produced music which we plan to produce fails to
perform in the manner expected by our customers or digitalized music becomes obsolete, then our revenues may be delayed or lost
due to adverse customer reaction. In addition, negative publicity about us and our music production company could adversely affect
our ability to attract musicians or retain customers. Furthermore, disappointed musicians and customers may initiate claims for
damages against us, regardless of our responsibility for their disappointment.
16. If we do not retain key personnel to support our services
and ongoing operations such failure could adversely affect our business.
The marketing and sale of our music production services will continue
to place a significant strain on our limited personnel, management, and other resources. Our future success depends upon the continued
services of our executive officers and the hiring of key employees and contractors who have critical industry experience and relationships
that we rely on to implement our business plan. The loss of the services of any of our officers or the lack of availability of
other skilled personnel would negatively impact our ability to market and sell the music production services, which could adversely
affect our financial results and impair our growth.
17. The music business is subject to subject to rapid technological
change which could negatively impact our business
Our business is in an emerging market that is characterized by rapid
changes in customer requirements, frequent introductions of new and enhanced products and services, and continuing and rapid technological
advancement. To compete successfully in the music business , we must continue to design, develop, and sell new and enhanced products
and services that provide increasingly higher levels of performance and reliability at lower cost. These new and enhanced products
and services must take advantage of technological advancements and changes, and respond to new customer requirements. Our success
in designing, developing, and selling such products and services will depend on a variety of factors, including:
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Identifying and responding to customer demands for new products and services;
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Keeping abreast of technological changes;
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Timely developing and implementing new product offerings and features;
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Maintaining performance quality;
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Providing cost-effective service and support; and
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Promoting our products and expanding our market share.
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If we are unable, due to resource constraints or technological or
other reasons, to develop and introduce new or enhanced products and services in a timely manner, if such new or enhanced products
and services do not achieve sufficient market acceptance, or if such new or enhanced product or service introductions decrease
demand for our existing products and services, our operating results would decline and our business would not grow.
18. Since we have yet to generate revenues from our intended
business, our lack of business diversification could result in the loss of your investment if revenues from our primary products
decrease
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Currently, our business is focused on the marketing and sale of
music production services and the distribution of digital music for independent artists. We do not have any other lines of business
or other sources of revenue if we are unable to successfully implement our business plan. Our lack of business diversification
could cause you to lose all or some of your investment if we are unable to generate revenues by the sale of the music production
services or the distribution of digitalized music and we do not have any other lines of business or alternative revenue sources.
19. An unsuccessful material strategic transaction or relationship
could result in operating difficulties and other harmful consequences to our business.
We expect to evaluate a wide array of potential strategic transactions
and relationships with third parties. From time to time, we may engage in discussions regarding potential acquisitions or joint
ventures. Any of these transactions could be material to our financial condition and results of operations, and the failure of
any of these material relationships and transactions may have a negative financial impact on our business.