Item 1.
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Description of Business
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Overview
PlayBOX (US) Inc. (we or the Company) was incorporated on
April 1, 2005 as Boyd Holdings Inc. under the laws of the State of Nevada. We
operate through our wholly-owned subsidiary, PlayBOX Media Limited (PlayBOX
UK). We changed our name to PlayBOX (US) Inc. effective April 12, 2006 to
reflect our acquisition of PlayBOX UK and its business. PlayBOX UK was
incorporated on August 21, 2003 under the laws of the United Kingdom.
We are the owner of an online music hosting and downloading
application targeted at unsigned music acts and small- to medium-sized record
labels enabling them to establish their own music downloading or hosting
services. The application is offered with a number of supplemental services such
as hosting, streaming, e-commerce and digital rights management (DRM) using the
latest MP3 and Windows Multimedia technology. We pool these services together to
offer our clients a cost-effective and professional platform on which to sell
and promote their music products.
Our PlayBOX online music application consists of four dynamic
interfaces, namely White Label, Aggregator, Bespoke and Jukebox, that provide an
interface between artists and content owners and their listeners via the
Internet. The White Label interface provides artists a way to offer their music
for sale to listeners via the Internet by enabling them to download individual
songs either directly from our website or from the artists own website. The
Aggregator interface allows small- to medium-sized record labels with a music
catalogue of at least 50 tracks who wish to sell their tracks via an online
downloading store with e-commerce, tracking, reporting and billing functions
built in. The interface can be operated as a stand-alone website, or can be
integrated into the clients existing website. For our Bespoke interface, we
hire independent web designers to create specialized interfaces for particular
clients with unique needs and requirements quickly and cheaply. Finally, our
PlayBOX Jukebox interface provides music listeners with a unique way to listen
to their music and to manage their music collections visually on their personal
computer. The PlayBOX Jukebox also lets users submit their personal ratings of
the music they have stored on the Jukebox, and the Jukebox can even recommend
other music that will match the users taste.
We have completed the development of the PlayBOX online music
application. However, we have only commenced the process of commercializing our
technology and we have had very minimal sales to date. While we have achieved
initial sales, these sales cannot be viewed as significant in relation to our
operating expenses. Accordingly, we are in the early development stage of our
business. Further, we will require additional financing in order to complete
commercialization of our PlayBOX online music application. As a result of our
limited financing, our operations during the past year have been scaled back to
reflect our limited financial resources. Accordingly, we have not advanced our
business to the extent that we had planned during the past year. We have
recently brought in a director of business strategy, Mr. Harry Maloney, to
assist us in securing additional clients and advancing our business
operations.
We have earned only minimal revenues to date. Our plan of
operations, as described below, is to generate revenues from the sales of one or
more of the interfaces comprising our online music application. Our ability to
pursue our plan of operations has been limited during the past year and will be
limited during the coming year to the extent that we have not had and will not
have sufficient funds with which to pursue our plan of operations.
Our principal executive office is located at Suite 3.19, 130
Shaftesbury Avenue, London, England, W1D 5EU. Our telephone number is +44(0)20
7031 1187 and our fax number is +44(0)20 7031 1199.
-1-
Our Corporate Organization
We were incorporated on April 1, 2005 as Boyd Holdings Inc.
under the laws of the State of Nevada. On the date of our incorporation, we
appointed Annette Cocker, our initial founder, as our President, Secretary,
Treasurer and sole director. Ms. Cocker incorporated Boyd Holdings Inc. for the
purpose of creating a corporate entity to enter into a letter of intent to
acquire all of the issued and outstanding shares of PlayBOX UK and to pursue the
necessary financing to complete that acquisition.
On April 18, 2005, we entered into a letter of intent with
PlayBOX UK that contemplated our acquisition of PlayBOX UK subject to certain
conditions, including our raising a minimum of $200,000. The minimum financing
condition was imposed by the shareholders of PlayBOX UK in order to ensure that
we would have working capital necessary to fund our initial acquisition and
organizational expenses and to provide for additional funds for PlayBOX UKs
business.
We entered into a definitive share exchange agreement with
PlayBOX UK and the shareholders of PlayBOX UK, including Mr. Robert Burden
(currently our President, Chief Executive Officer, Chief Financial Officer,
Secretary, Treasurer and a director) on May 23, 2005. The share exchange
agreement originally contemplated a closing date of June 30, 2005. The closing
date was extended by agreement in order to provide PlayBOX UK with more time to
obtain necessary corporate approvals and to provide us with more time to raise
the required financing.
We completed an initial issuance of 500,000 shares of our common
stock at a price of $0.001 per share on April 8, 2005. In furtherance of our
$200,000 financing requirement, we completed a private placement of 4,500,000
shares of our common stock at a price of $0.01 per share for proceeds of $45,000
on May 31, 2005. On March 24, 2006, we completed a private placement of 705,139
shares of our common stock at a price of $0.05 per share for a total proceeds
of $35,256.95. These share issuances aggregating 5,705,139 are aggregated on
our financial statements on one line and shown as the shares issued upon the
acquisition of Playbox Media Limited. Because of the application of reverse
acquisition accounting rules, the dollar amount that relates to this share capital
became the net liabilities of Playbox Media Limited under reverse acquisition
accounting rules in the amount of $28,833. On March 24, 2006, we executed a
promissory note in connection with a $130,000 loan from Hillside Investment
Corporation, completing our $200,000 financing requirement.
We acquired all of the issued and outstanding shares of PlayBOX
UK pursuant to the share exchange agreement on March 24, 2006 in consideration
of our issuance of an aggregate of 12,000,000 shares of our common stock to the
shareholders of PlayBOX UK. Upon the completion of this share exchange
transaction, Mr. Burden was issued 1,410,072 shares of our common stock in
exchange for his shares in PlayBOX UK. PlayBOX Inc., one of the founding
shareholders of PlayBOX UK, was issued 9,956,835 shares of our common stock,
making it our largest shareholder. Outlander Management Ltd. (Outlander
Management), a private corporation that was PlayBOX UKs other founding
shareholder and that provided administrative services to PlayBOX UK, was issued
575,546 shares of our common stock. Outlander Management, PlayBOX Inc. and Mr.
Burden were each involved in the negotiation of the share exchange agreement as
shareholders of PlayBOX UK. Concurrent with closing, Mr. Burden, PlayBOX UKs
managing director, was appointed as our sole officer and director to replace Ms.
Cocker.
Pursuant to an asset purchase agreement between us and PlayBOX
Inc., we acquired the intellectual property rights to the PlayBOX online music
application on March 31, 2006, in exchange for 10,000,000 shares of our common
stock. Concurrent with the completion of this acquisition, PlayBOX Inc.
transferred these 10,000,000 shares to The Keydata Technology Partnership 1 LLP
as part of its arrangement to re-acquire the online music application from The
Keydata Technology Partnership 1 LLP. These intellectual property rights were
originally acquired by the Keydata Technology Partnership 1 LLP in October 2003.
We could not complete the acquisition of intellectual property assets directly
from the Keydata Technology Partnership 1 LLP due to the fact that the Keydata
Technology Partnership 1 LLP originally held the intellectual property assets
subject to a security interest in favour of a creditor.
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PlayBOX Inc. was able to structure a transaction whereby it was
able to acquire the intellectual property and arrange for the discharge of the
security interest held by the creditor. This transaction structure required that
Keydata Technology Partnership 1 LLP incorporate a wholly owned subsidiary and
that the intellectual property be assigned to the wholly owned subsidiary.
Keydata Technology Partnership 1 LLP and PlayBOX Inc. then entered into a share
exchange agreement whereby PlayBOX Inc. acquired all of the shares of the wholly
owned subsidiary. As part of this acquisition, the security interest held by the
creditor against the intellectual property was discharged. PlayBOX Inc. was then
able to sell the intellectual property assets free and clear of any security
interest to us. We were not party to the share exchange agreement between
Keydata Technology Partnership 1 LLP and PlayBOX Inc. These shares were
transferred pursuant to Rule 903 of Regulation S of the Securities Act of
1933.
Ms. Cocker, Mr. Burden, Outlander Management and PlayBOX Inc.
are considered promoters of our company, having taken the initiative in
organizing our current business.
Recent Corporate Developments
Prospective Acquisition of Delta Leisure Group
Plc
We have entered into a letter of intent (the Letter of
Intent) dated December 14, 2007 for the proposed acquisition of 100% of the
issued capital of U.K based Delta Leisure Group Plc ("Delta") an established
distributor of an extensive catalogue of major music CD's, DVD's and video's
throughout the UK and Europe. This Letter of Intent is between the Company and
the shareholders of Delta and summarizes the basis on which the parties are
prepared to negotiate with a view to entering into a binding definitive
agreement for the completion of the acquisition (the Definitive Agreement).
Neither party will be bound to complete the acquisition until such time as the
Definitive Agreement has been negotiated and executed among the parties. The
Letter of Intent does not create any binding contracts, agreements or
obligations other than expressly provided therein.
Pursuant to the terms of the Letter of Intent, it is
contemplated that we will acquire 100% of the issued capital of Delta for a
combination of cash and stock. The completion of the transaction is subject to,
inter alia, completion of satisfactory due diligence by us; the execution of a
formal share purchase agreement; the receipt of all necessary approvals; and the
completion by the us of a minimum of $7m of debt or equity financing, which
funds will be used to pay the cash component of the acquisition and provide
working capital to allow us to execute on our business plan.
Delta, whose registered office is in Orpington, UK, holds 75%
of the shares in Delta Music Limited. Delta Music Limited, has two subsidiaries:
Delta Home Entertainment Ltd., and Delta Music Merchandising Ltd. Since its
inception in 1993, the Delta group of companies (the "Group") has become one of
the most recognized manufacturers and distributors of entertainment products in
the UK with client distribution outlets including Universal, Asda, Tesco, Aldi,
Sit-Up TV, TK Maxx, Toys-R-Us and Sainsbury's. In addition, Delta Music Limited
was an early mover in the growing on-line digital download industry.
There is no assurance that any definitive acquisition agreement
will be entered into. Further, there is no assurance that we will be able to
raise the financing necessary to enable it to complete the acquisition, even if
a definitive acquisition agreement is entered into.
Harry C. Maloney
On December 14, 2007, we appointed Mr. Henry (Harry) C. Maloney
as a member of our board of directors. Concurrent with Mr. Maloneys appointment
as our director, we entered into an Executive Employment Agreement with Mr.
Maloney whereby Mr. Maloney was appointed as our Director of Business Strategy.
A copy of the Executive Employment Agreement was filed as an exhibit to our
Current Report on Form 8-K filed with the SEC on December 20, 2007.
-3-
Corporate Organization Of PlayBOX UK
Incorporation
PlayBOX UK was incorporated in the United Kingdom on August 21,
2003. The founding shareholders of PlayBOX UK were PlayBOX Inc. and Outlander
Management. PlayBOX Inc. is a private corporation incorporated in the Republic
of Seychelles that is now our principal shareholder. Outlander Management is a
private corporation that is now one of our shareholders.
Ownership of the PlayBOX Application
The PlayBOX online music application was originally developed
by Just/Kidde APS, a company based in Sweden. The rights to the PlayBOX
application were subsequently acquired by PlayBOX Inc. Subsequent to this
acquisition, PlayBOX Inc. granted licenses to four entities to exploit the
PlayBOX application on September 12, 2003, with each entity acquiring rights to
a different territory. These four entities were HBI Sales Private Limited, Zacan
Holdings Proprietary Limited, ICT/Europetec Limited and MIR Technologies LLC
(Timothy M. Cocker, Director of MIR Technologies LLC, is the husband of Annette
Cocker, our original shareholder). These four licensees subsequently entered
into an agency exploitation agreement with PlayBOX UK, as described below, on
March 30, 2004. These license agreements were terminated on March 31, 2006 upon
our acquisition of the PlayBOX online music application as described below.
Subsequent to the grants of the licenses, PlayBOX Inc. sold its
rights in the PlayBOX application to The Keydata Technology Partnership 1 LLP, a
limited liability partnership that is not a related party to PlayBOX Inc.,
pursuant to a sales and purchase agreement on October 13, 2003. PlayBOX Inc.
reacquired the rights to the PlayBOX application from The Keydata Technology
Partnership 1 LLP on March 31, 2006 and subsequently sold these rights to us in
a concurrent transaction, as described below. The Keydata Technology Partnership
1 LLP became one of our principal shareholders as a result of the completion of
these transactions. See Acquisition of the PlayBOX Application below.
License and Agency Exploitation Agreements
PlayBOX UK entered into an agency exploitation agreement on
March 30, 2004 with the four entities that had each acquired license rights to
the PlayBOX application from PlayBOX Inc. Under the agency exploitation
agreement, PlayBOX UK was appointed as the agent of the four licensees for the
purpose of undertaking the commercial exploitation of the license rights to the
PlayBOX online music application. PlayBOX UK was obligated to carry out the
commercial exploitation of the PlayBOX application and to use its best efforts
to achieve an exploitation result in accordance with an agreed upon exploitation
forecast. In exchange for undertaking these duties, the licensees agreed to pay
to PlayBOX UK an amount equal to 25% of the gross income derived from the
exploitation of those license rights. The agency exploitation agreement was
terminated on March 31, 2006 concurrently with our acquisition of the PlayBOX
application from PlayBOX Inc., as described below. PlayBOX UK did not realize
any gross income from the exploitation of the PlayBOX application or earn any
payments during the term of the agency exploitation agreement.
Acquisition Of The PlayBOX Application
We purchased the intellectual property rights to the PlayBOX
application from PlayBOX Inc. on March 31, 2006 pursuant to an intellectual
property asset purchase agreement between us and PlayBOX Inc. dated March 31,
2006. This acquisition followed the concurrent re-acquisition of the PlayBOX
application by PlayBOX Inc. from The Keydata Technology Partnership 1 LLP. We
issued 10,000,000 shares of our common stock to PlayBOX Inc. in consideration of
the transfer to us of the intellectual property rights to the PlayBOX
application. PlayBOX Inc. in turn transferred these 10,000,000 shares of our
common stock to The Keydata Technology Partnership 1 LLP in connection with its
concurrent
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acquisition of the intellectual property rights to the PlayBOX
application from The Keydata Technology Partnership 1 LLP. This transfer was
completed in accordance with Rule 903 of Regulation S of the Securities Act of
1933, as amended. The Keydata Technology Partnership 1 LLP became one of our
principal shareholders as a result of the completion of these transactions.
Initial Financing Of PlayBOX UK
PlayBOX UKs initial corporate activities were funded by
PlayBOX Inc. PlayBOX UK entered into a loan agreement dated October 4, 2003 with
PlayBOX Inc. whereby PlayBOX Inc. agreed to extend a secured loan facility to
PlayBOX UK in the maximum amount of £150,000 ($303,000, based on the foreign
exchange rate on July 10, 2007 of $2.02:£1.00) . As at April 28, 2005, PlayBOX
UKs outstanding debt to PlayBOX Inc. under the secured loan facility was
$159,065. PlayBOX UK and PlayBOX Inc. entered into a debt settlement agreement
on April 28, 2005 whereby the outstanding debt was settled by the issuance to
PlayBOX Inc. of 1,075,000 Ordinary A shares in the capital of PlayBOX UK at a
deemed value of £0.0837 per share. PlayBOX Inc. subsequently exchanged these
shares for 6,187,050 shares of our common stock upon completion of the share
exchange agreement on March 24, 2006.
Outlander Management Contract
Outlander Management entered into a services agreement with
PlayBOX UK on August 4, 2004 whereby Outlander Management agreed to provide
rent, administrative, legal administration, financial services and marketing and
sales support and advice to PlayBOX UK. The purpose of the services agreement
was to enable PlayBOX UK to obtain administrative and related services that
would enable PlayBOX UK to pursue its business without incurring all of these
costs directly. The administrative services included the use of shared office
space. Legal administration services included maintaining PlayBOX UKs
registered office, providing the services of a company secretary and making
statutory filings. Financial services include bookkeeping and maintaining
management accounts and statutory accounts. PlayBOX UK paid to Outlander
Management an amount equal to £2,350 per month ($4,747 per month based on a
foreign exchange rate on July 10, 2007 of $2.02:£1.00) in consideration for the
provision of these services.
The Outlander Management contract was terminated on June 30,
2005, at which time we entered into a new management contract with Azuracle
Limited (Azuracle), as described below.
Azuracle Management Contract
We entered into a management contract with Azuracle on July 1,
2005 concurrent with the termination of the Outlander Management service
agreement described above. Under the Azuracle management contract, Azuracle
provides us with office space in shared office premises and administration
services, including telephone, reception and Internet access services.
Presently, Azuracle is charging us a monthly management fee of £500 per month
($1,010 per month based on a foreign exchange rate on July 10, 2007 of
$2.02:£1.00) . Additional legal administration, financial, marketing and sales,
meeting room, stationary and information technology support services are to be
provided by Azuracle upon our request, at agreed upon rates.
PlayBOX Online Music Application
The PlayBOX music application offers a combination of dynamic
web-based interfaces that allow unsigned music artists and small- to
medium-sized record labels to sell their music and related products online,
either from our website or through their website should they have one. Our
online solution also provides a complete range of supplemental services such as
hosting, streaming, e-commerce and digital rights management, thus enabling us
to offer a full service solution to potential customers. We integrate these
services to offer a cost-effective and professional platform for the promotion
and sales of their music catalogues.
-5-
Interfaces
We offer four different specialised web-based interfaces that
are based on our PlayBOX music application, each of which can be visually
tailored to each clients specifications. The interfaces can be linked to the
clients own website or hosted on our own servers. The following is a breakdown
of the interfaces we offer.
White Label Interface
Our White Label interface is targeted towards unsigned artists
looking for a simple and cost-effective way to:
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Establish an online presence with little technical knowledge, enabling the
client to upload their own content, personalise their interface and use real
time tracking and download information provided by the PlayBOX application
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Stream their songs to listeners, either by a 30-second sample stream or a
full stream of the song at either high or low speed to enable users to play
all or part of a song with any type of Internet connection
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Offer users a free promotional download of their music
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Sell their songs online, including billing and e-commerce support for
secure payments using debit and credit cards
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Build their fan base by interacting by e-mail directly with listeners who
set up a personal account page on our website allowing an artist to provide
interested listeners with information on upcoming events and news releases
Pricing of the White Label interface depends on the number of
tracks uploaded by the client and the functionality required of the interface.
For example, if the client intends to use the interface only for marketing and
not sales, e-commerce support services will not be required.
Aggregator Interface
Smaller record labels wishing to promote their artists and make
their music catalogues available for purchase or streaming online frequently do
not have the resources available in-house to set-up and manage their own web
site. The PlayBOX Aggregator interface allows such potential clients to create
and manage an interactive online download store for music catalogues of between
50 and 1,000 songs, complete with e-commerce, tracking, reporting and billing
functions. The Aggregator interface is image-driven and offers music fans the
opportunity to visually search through each clients music catalogues by artist,
track or album image in addition to a regular search function.
The Aggregator interface can be integrated into either the
clients website or work as a complete stand-alone website served up to the
clients specified domain name. Independent web designers that we hire on a
project-by-project basis can work with the client to create a visually appealing
environment for their interface that enhances the clients current marketing,
complete with advertising, promotions and links to other websites. This
customized environment is then integrated with PlayBOXs back-end services (such
as e-commerce and digital rights management) to create a seamless online
marketing and sales tool which the client is free to manage as they choose.
PlayBOX also offers management services for this interface should the client
choose not to manage their site themselves.
Additional features of the Aggregator interface are:
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A secure payment facility allowing users to purchase downloadable versions
of music tracks
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The ability to capture user details through membership opt-in, allowing the
aggregator to create a database of users and giving the user their own account
page
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The ability to offer a sample of the artists track as a ringtone for users
to download to their mobile phones
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An artist-only area where artists can interact with each other and upload
their latest demo/promo for their peers to comment on
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An online forum where registered users can interact
Pricing of the Aggregator interface is quoted on a per client
basis in relation to the number of hours of development time required to satisfy
each clients particular needs.
Bespoke Interfaces
Independent website developers and designers that we hire on a
project-by-project basis can create an interface to handle a range of
specialized client requests. For example, PlayBOX recently created an interface
for a music upload competition sponsored by one of its clients, The Little
Bazaar. This interface allows registered music artists to upload their latest
songs to the interface once per month. Downloaded songs are tracked by the
interface and listed on a Top 20 chart. The artists with the most downloaded
tracks during that month become eligible to win a number of prizes sponsored by
The Little Bazaar and PlayBOX. Each winners songs are displayed on the website,
and users have the option to listen or download the songs. Winners from previous
months are listed in a winners archive.
The Little Bazaar music upload competition is one example of
the flexibility and functionality that our Bespoke interface can provide. The
Little Bazaar is our only Bespoke interface to date, but other possible Bespoke
interfaces include comprehensive chart listings, hard copy music or video sales,
and websites incorporating elements from our White Label and Aggregator
interfaces.
Music Jukebox Interface
The PlayBOX Music Jukebox interface is a free service which
allows users to both listen to music and manage their personal computer music
collections online in an image-driven environment, rather than a text-based one
as most are. This feature will be of particular interest to users with a large
music collection, and will allow them to organize and find the music they want
in their own collections much more easily than with traditional means. Users can
also rate the individual songs and albums in their collections, and the
interface uses this information to recommend music from PlayBOXs artist clients
that might match the users tastes, based on the music in their own collection.
The PlayBOX Music Jukebox also lets users transfer their music to and from
portable devices which can play MP3 or other similar music files, and can stream
the music directly to such portable devices. This interface acts as an
integrated service with our other interfaces, which we believe will encourage
use of our website and increase traffic.
Services
PlayBOX offers a number of services that work in conjunction
with our interfaces and enhance their value to our clients. Clients can send us
their content on compact disk in a raw format (such as WAV), which we then
process into Windows Media files, which are smaller and more easily downloaded
by users from the Internet. These files are then stored on our server and
supplied to consumers. A detailed discussion of these services follows.
Hosting and bandwidth
The music files which artists wish to sell to users of PlayBOX
are stored or hosted on our server, which we lease from Open Hosting Ltd., a
dedicated server service. A single song usually requires about 7MB of storage
space. With our server, we provide bandwidth which enables users to download
files over the Internet. PlayBOX runs a Linux server, having 1,000 GB of
bandwidth per month, out of Open Hostings
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facility in London UK. Open Hosting provides 24-hour support
and duplicate servers to guarantee 99.9% up-time. Although Open Hosting
guarantees 99.9% up-time, there can be no assurance that unforeseen events will
not interrupt our services. Current pricing for our hosting and bandwidth
services is as follows:
Pckg
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Disk Space
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Bandwidth
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Cost per month
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A
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100 MB
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2 GB
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£25.00
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B
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300 MB
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5 GB
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£40.00
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C
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500 MB
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7 GB
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£60.00
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D
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1 GB
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20 GB
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£120.00
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E
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2 GB
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40 GB
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£180.00
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F
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5 GB
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100 GB
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£350.00
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G
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10 GB
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200 GB
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£600.00
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H
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20 GB
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400 GB
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£1000.00
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I
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100 GB
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800 GB
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£1700.00
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These prices are subject to change by us.
Ripping and Encoding
PlayBOX can encode audio for use on our website from a variety
of source material, including compact discs and WAV format into MP3, Windows
Media files or Advanced Audio Coding (AAC or MP4) file formats. PlayBOX uses the
latest audio file compression technology to ensure the quality of the original
music content is kept intact after compression.
Sound quality of audio files is typically measured in kilobytes
per second (kbps), which measures the amount of data transferred per second of
time. The higher the kbps, the faster the data is transferred and the better the
file will sound when it is played (192 kbps is considered CD-quality).
Our typical Bit Rates for streaming are:
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30 Second Sample: 64kbps 220kbps
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Full length track stream: 64kbps 220kbps
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Free Download: 64kbps 220kbps
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Paid-for Download 220kbps+
Digital Rights Management
Digital rights management (DRM) is a system for protecting the
copyrights of data (including music) circulated via the Internet or other
digital media by enabling secure distribution and/or disabling illegal
distribution of the data. Typically, a DRM system protects intellectual property
by either encrypting the data so that it can only be accessed by authorized
users or preventing the data from being freely distributed.
PlayBOX uses Microsoft Windows Media® DRM, a proven platform to
protect and securely deliver content for playback on a computer, portable music
device or network device. The platform is flexible enough to be used to download
single tracks or entire albums. The current version of Windows Media DRM enables
additional scenarios, such as downloads to multiple music storage devices and
multiple
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burning or recording of the same song. This promises to provide
consumers with an even greater access to protected audio and video content.
eCommerce
PlayBOX utilizes Barclaycards Merchant Services proprietary
ePDQ System to process its secure online payments. Barclaycards payment
handling process is widely recognized in the UK. Once a PlayBOX user has chosen
one or more songs or products from our website that they wish to purchase, they
are directed to the Barclaycards ePDQ Cardholder Payment Interface (or
CPI), a secure payment environment, where the user can pay for their purchases
either by debit card or major credit card. Once the user has completed the ePDQ
CPI transaction, they are returned to the PlayBOX website and the user is
emailed a password and Internet link to where they can download the track or
album.
Tracking and Billing
This value-added service allows PlayBOX clients to gain a much
better understanding of their fan base. Each PlayBOX users movements through
the different PlayBOX interfaces is logged, and this information, along with
other data including their collective purchases and where they are logging in
from, is made available to our clients in real time. In conjunction with this
service, PlayBOX provides a monthly report to clients who use this service. This
report provides a breakdown of usage and sales figures.
Pricing and Revenue Sources
The prices that we plan to charge our clients for configuration
and installation of our PlayBOX interfaces will be based on the number of artist
or aggregator templates configured and the number of tracks uploaded to the
interface. In addition to these initial fees, we plan to charge monthly hosting
fees quoted based on the amount of hard drive space on our server each customer
required. Exact prices vary according to the size of the client. Prices for
configuration and installation of Bespoke interfaces vary according to the time
and resources required.
Our services will be bundled and sold in packages with our
interfaces. These packages are differentiated solely in the type of audio
streaming offered. Packages are priced per track uploaded or made available for
purchase on the application by the customer.
Once a client is properly registered and their tracks uploaded
onto the PlayBOX application, we plan to charge a 15% commission on total
revenues earned from sales of those tracks in each month in which these revenues
exceed £1,000. We will collect these fees directly from our Barclaycard Online
Merchant Account at the end of each month before transferring all net revenues
to the customer directly to their account. Along with monthly net revenues, we
will provide a comprehensive tracking and billing report which gives the
customer a breakdown of the months transactions and the revenues earned.
Development Of PlayBOX Application
Development Work Completed by Us
On March 30, 2004, PlayBOX UK entered into an agency
exploitation agreement whereby it undertook to commercially exploit the PlayBOX
application on behalf of four entities that had originally been granted license
rights to the technology by PlayBOX Inc. Robert Burden was hired as managing
director of PlayBOX UK effective May 1, 2004 with a view to establishing a
commercially viable sales and marketing plan for the exploitation of the PlayBOX
application. Mr. Burden then set in place a number of technology development
enhancement projects designed to allow PlayBOX UK to effectively exploit the
PlayBOX application. These projects were completed by Xeris S.R.O., a software
development company based in Prague. These projects included the following:
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1.
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first phase of the design and development of the White
Label Interface, which commenced on November 1, 2004 and completed on
February 1, 2005, and which involved designing and integrating the
following operational features:
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a)
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registration process
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b)
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shopping basket
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c)
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Barclays ePDQ integration
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d)
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streaming track ability
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e)
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free and paid-for download
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f)
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ability to personalise front-end design of white
label
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|
|
g)
|
tiered level of administration access for artist and
PlayBOX administrator
|
|
|
|
|
|
|
h)
|
secure certificate integration
|
|
|
|
|
|
|
i)
|
tracking and reporting facility
|
|
|
|
|
|
2.
|
first phase of the design and development of the
Aggregator Interface, which commenced on November 1, 2004 and completed on
February 1, 2005, and which involved designing and integrating the
following operational features:
|
|
|
|
|
|
|
a)
|
registration process
|
|
|
|
|
|
|
b)
|
shopping basket
|
|
|
|
|
|
|
c)
|
Barclays ePDQ integration
|
|
|
|
|
|
|
d)
|
streaming track ability
|
|
|
|
|
|
|
e)
|
free and paid-for download
|
|
|
|
|
|
|
f)
|
ability to personalise front-end design of white
label
|
|
|
|
|
|
|
g)
|
tiered level of administration access for artist and
PlayBOX administrator
|
|
|
|
|
|
|
h)
|
secure certificate integration
|
|
|
|
|
|
|
i)
|
tracking and reporting facility
|
|
|
|
|
|
|
j)
|
bulk email broadcast to registered users html and plain
text
|
|
|
|
|
|
|
k)
|
news and advertising personalisation
|
|
|
|
|
|
|
l)
|
about us, gigs, events pages added
|
|
|
|
|
|
|
m)
|
top ten releases and new releases listings
added
|
|
|
|
|
|
|
n)
|
CD cover size track image added for download by
consumers
|
|
|
|
|
|
3.
|
first phase of the design and development of the Bespoke
Interface, which commenced on April 5, 2005 and completed on May 1, 2005,
and which involved designing and integrating the following operational
features:
|
|
|
|
|
|
|
a)
|
registration process
|
|
|
|
|
|
|
b)
|
ability for user to upload track
|
|
|
|
|
|
|
c)
|
ability for administrator to listen to and rate uploaded
music
|
|
|
|
|
|
|
d)
|
top 20 listing of tracks selected by
administrator
|
|
|
|
|
|
|
e)
|
ability to select a winner and archive previous
winners
|
|
|
|
|
|
|
f)
|
full tracking and reporting of all movements on the
interface
|
-10-
|
|
g)
|
ability to bulk email all registered users of the
interface
|
|
|
|
|
|
4.
|
second phase of the design and development of the White
Label Interface, which commenced on May 18, 2005 and completed on June 26,
2005, and which involved designing and integrating the following
operational features:
|
|
|
|
|
|
|
a)
|
resize of white label, was too large before
|
|
|
|
|
|
|
b)
|
ability to change background image of white
label
|
|
|
|
|
|
|
c)
|
the ability to change the shopping basket icon
|
|
|
|
|
|
|
d)
|
adding the ability to add a large image on the left of
the white label for promotional purposes
|
|
|
|
|
|
5.
|
second phase of the design and development of the Bespoke
Interface and automation of The Little Bazaar Top 20 upload process, which
commenced on June 24, 2005 and completed on June 30, 2005. This work
simplified the rating process to allow the client administrator the
ability to more easily rate and upload the top 20 tracks and the winning
track into the interface.
|
Design Objectives
Our objective is to offer artists and record labels
professional and quality driven services that allow the client to concentrate on
making music while PlayBOX takes care of their online presence.
With the demands of the modern day music industry, unsigned
artists and small/medium record labels do not have the resources and time to put
together a professional online presence. Our objective is to handle this in a
few easy steps by offering the client:
|
1.
|
The ability to capture users details and the ability to
send bulk emails (news letters/promotions) to these users.
|
|
|
|
|
2.
|
The ability to take and process online credit/debit card
transactions, through a simple and secure easy to use process.
|
|
|
|
|
3.
|
The ability to stream sample music via their
website.
|
|
|
|
|
4.
|
A searchable and professional portfolio of their content
in an online secure (wrapped in Digital Rights Management).
|
|
|
|
|
5.
|
The hosting of all relevant content and images.
|
|
|
|
|
6.
|
The ability to offer third party advertising (banner, sky
scrappers and block advertisements) from their website. These
advertisements can also help in cross promotion of the clients
content.
|
|
|
|
|
7.
|
The ability to track and report on all movements and
sales within their site. Offering the ability of real time and up-to-date
statistical analysis of sales downloads, streamed music and use
registration.
|
|
|
|
|
8.
|
The ability to constantly update the system and change
the design. The interfaces are white labels and can be easily changed to
allow a different experience for the clients user
base.
|
The PlayBOX service is not unique, but our business strategy is
to provide services comparable to those of our competitors at what we believe to
be lower prices based on our understanding of our competitors pricing. There
can be no assurance, however, that our competitors will not match, or even
undercut, our pricing. As we set-up and administrate the service as part of the
package, all the artists/record label need to do is hand over the content and
sign off on the design. Our objective is to make the process as simple as
possible for the client. Using our service, they will receive a tracking report
at the end of the month and
-11-
a cheque for the amount of content sold, thus enabling the
client to concentrate on creating more music content to be uploaded.
Future Development
We believe that changes in technology and increased competition
will require that we constantly review and improve the functionality of PlayBOX
application in response to client and user feedback and changing technologies.
We have identified a second round of development requirements that we presently
plan to complete for the PlayBOX application, as described below.
We do not have the internal ability to carry out software
development work on our PlayBOX software. Accordingly, we have outsourced the
software upgrades and developments planned for our PlayBOX software to Xeris
S.R.O., a private software development company that is not a related party to
us, as well as to another independent web designer. We also anticipate engaging
Xeris S.R.O., the independent web designer we have used to date, or other
independent website developers or designers for future software development work
on a project-by-project basis.
Additional software development is planned for the PlayBOX
Jukebox that will permit users to access it from any mobile phone having
MP3-player capabilities. This will allow users to have music from the PlayBOX
website streamed to any mobile phone with Internet access via Bluetooth or
GPRS.
Once we have finished updating the PlayBOX Jukebox, we plan to
evaluate developing a hardware product for use with the PlayBOX Jukebox. This
would be a PlayBOX-branded device to be developed by Mini-box.com, a computer
electronics company based in the UK, using the proprietary Mini-itx reference
hardware platform (
www.mini-itx.com
). It would
come with PlayBOX pre-installed and configured Linux Operating System to provide
a home music jukebox operated from a remote control or a wireless keyboard using
a TV as the monitor and a users existing hi-fi equipment as the music transport
mechanism.
The PlayBOX application also has sufficient flexibility to
support other types of media, such as books, film and video games. Up-and-coming
film makers, game makers and authors will have the opportunity of selling
themselves to a new generation of consumer that is looking for more in the way
of choice and style. While these opportunities are presently not part of our
immediate plan of operations, we plan to evaluate these potential market
opportunities as we pursue our primary business objectives.
Each of these proposed developments is contingent on PlayBOX
accessing sufficient funds to put its development plans in place. There is no
guarantee that PlayBOX will be able to secure such funding.
Marketing
We plan to exploit our online music solution in its present
form and to develop the marketplace for our PlayBOX interfaces, namely our White
Label, Aggregator and Bespoke solutions. Our primary marketing objective at
present is to make the PlayBOX interfaces and services available to the market,
building awareness of our artists and record labels. Our current sales and
marketing plan focuses heavily on unsigned artists and small record labels. For
this strategy to be successful, we must put in place strategic partnerships with
companies that have access to large quantities of both unsigned artists and
up-and-coming record labels. Examples of potential strategic partners include
events and music promotion companies, music colleges, industry music commissions
and associations and music development networks and agencies.
Being a digital download service provider, we do not plan to
target music consumers directly. Our plan to commercialize the PlayBOX online
music application will begin with marketing the White Label interface. We
believe this product will be the most demanded product initially and is our best
product to promote while building our name within the industry. Our focus will
be on signing a critical mass of
-12-
artists and record labels to service contracts, and then
working with them to promote their content directly to consumers through the
PlayBOX portal. We are at the early stages of the commercialization of our
application, and accordingly there is no assurance that our initial marketing
efforts will be successful. Further, we may elect to change our strategy in
response to our success or lack of success in pursuing commercialization of our
technology.
We have compiled a software development schedule with the goal
of ensuring that as new formats and technologies are launched into the
marketplace, we will be able to sustain our competitive position. We believe
that this additional development work will enable us to enhance our product
offerings and give us potential reselling options to existing customers and
additional potential revenue streams.
First Phase White Label
To successfully commercialize our online music application, we
believe that we must complete a number of strategic initiatives. First, we plan
to create awareness of our White Label interface, as this product will be the
main focus of our initial marketing efforts. We will rely on direct contact with
artists in the London, England area. Marketing materials will be simple and
inexpensive, relying mainly on leafleting, fly posting and advertising in select
industry trade press and magazines. To further enable efficient use of our
marketing budget, PlayBOX has become a member of the British Phonographic
Institute (BPI). The BPI is the governing body for the recording industry in the
UK with ties to almost all aspects of the music industry including record
labels, artist managers, distributors and retail organisations. As a member of
the BPI, we have access to their database including contacts for all other BPI
members. We plan to use this information to develop strategic partnerships with
key live music venues and local promotion companies to host competitions and
promote events. We believe that events like these will raise the profile of our
service within our desired market while providing us with a first look at new
artists. Once contact with a potential new client is initiated, we will attempt
to sign these artists to initial contracts of at least 6 months, using the offer
of one or two months of free use of the interface if the artist is willing to
commit for longer. Once we have a number of artists signed to contracts, we
anticipate that word of mouth will be a major factor in gaining the momentum
that will be required to successfully grow this part of our business.
Second Phase Aggregator
We expect that the marketing process for the Aggregator
interface will be longer, as the record labels to which the interface will be
targeted will likely wish to see a larger critical mass of product offerings on
and users of the PlayBOX website before committing. PlayBOXs membership in the
BPI will be an important tool in accessing record label executives. We will also
look at forming strategic partnerships or reseller arrangements with
distribution companies and other companies that have access to a large number of
record labels, including events and music promotion companies, music colleges,
industry music commissions and associations and music development networks and
agencies.
Third Phase
The next step will be to combine the White Label and Aggregator
interfaces into a main PlayBOX portal, which we plan to be the hub for the
system, and which will also offer these artists and labels another sales
pipeline. This hub will initially service the UK, with the intention of
launching the service into other markets once we have gained a foothold in the
UK market.
Marketing Activities to Date
Our marketing activities to date have been centred on raising
the profile of the PlayBOX website to artists in the United Kingdom and
introducing our online music application to prospective strategic partners. Our
level of marketing activity has been restrained by our limited financial
resources. We have limited our marketing efforts to date to free online
resources such as forums, blogs and free advertisements on
-13-
traditional music artists websites such as Artistmanager.com
and RecordOfTheDay.com. Our focus has been to raise our profile through
communications with key industry contacts. Once established in the UK, our goal
is to move into the global music marketplace by launching our services in other
countries, particularly in the United States, which is the largest music market.
However, we do not have any current plans to expand beyond the UK because we
believe that it is important to secure our brand in the UK before expanding to
other countries.
Direct Marketing
PlayBOX has released a test version of its artists interface
at
http://myplaybox.com/?pid=29
. This allows
PlayBOX to provide potential clients with a fully functional interface to use in
its marketing program. In addition, a Bespoke interface we developed with CD
distribution company The Little Bazaar (
www.littlebazaar.co.uk
) provides additional incentive
for artists and record labels to try our service and begin the process of
building a fan base through the PlayBOX website. This interface is currently
available at
http://www.littlebazaar.co.uk/pages/upload-competition.php
and gives the artists an opportunity to earn prizes from both PlayBOX
and The Little Bazaar should their songs be among the most downloaded during
each successive month.
We signed an agreement with Chameleon PR, a UK-public relations
company on September 8, 2004 to plan and provide publicity as PlayBOX attempted
to increase its visibility. This agreement is no longer in effect.
At present, PlayBOX has an agreement with Equal Records, a
Swedish-based record label, that allows us to have a test version of our White
Label interface running on their website (
www.equalrecords.com
).
Our Web Site
We have created a corporate web presence (www.play-box.com),
which we use as an information portal to facilitate our marketing efforts. It
gives us an easy, visual way to demonstrate our application and allow potential
clients to find out more about PlayBOX services, pricing and product updates,
client studies and links to strategic partners.
We believe that offering the PlayBOX Jukebox as a complimentary
service to all users of the PlayBOX website will be essential in drawing traffic
to our website and our clients songs and products. Once we have established a
user base of at least 1,000 users, we will then attempt to build an additional
revenue stream by offering advertising or promotions space on our website.
Intellectual Property
We own intellectual property rights relating to the PlayBOX
online music application that includes trade secrets and copyright. We seek to
protect our intellectual property by generally limiting access to it, treating
portions of it as trade secrets and obtaining confidentiality or non-disclosure
agreements from persons who are given access to it, including our
developers.
Trademark Applications
PlayBOX made an initial trademark application for the name
PlayBOX in the United Kingdom in 2004. The application was rejected due to
identical applications already being in existence. We have been advised by legal
counsel it may be possible to re-apply for trademark protection by adding a
distinctive (not descriptive) logo or an extra word or words to the PlayBOX
name. We plan to evaluate a re-submission for trademark application with a
distinctive (not descriptive) logo or an extra word or words as our business
progresses and if we have sufficient funds with which to pursue the trademark
application.
-14-
Given the lack of success with our initial trademark
application and the possible conflicting marks identified by our trademark
searches, we cannot provide investors with any assurance that we will be able to
achieve any trademark protection for the PlayBOX name online music
application. As a result, third parties might be able to sell competing products
with names incorporating these terms, and our ability to build goodwill and
brand recognition for our products may be compromised. Further, there is a risk
that a competitor or other business or person may claim that our use of the
PlayBOX name in connection with our online music application violates the
trademark or other intellectual property rights of the competitor or other
business or person. We have not received any such claims to date.
Patents
PlayBOX Inc. filed for patent protection in the United Kingdom
for the PlayBOX application as of January 31, 2004. PlayBOX Inc. decided not to
proceed with the patent process after their research determined that similar
technologies existed in the public domain. The patent application was allowed to
lapse. Accordingly, we believe it is likely that we will not be able to obtain
any patent protection for the PlayBOX on-line music application.
Compliance With Government Regulation
In the United Kingdom, PlayBOX will need to acquire a Joint
Online Download License through MCPS-PRS alliance (The Mechanical-Copyright
Protection Society (MCPS), The Performing Right Society (PRS) and their
operational alliance). This license will allow PlayBOX to sell copyrighted media
through its networks on behalf of artists and record labels. The license covers
all copyrighted works sold and a percentage of revenue earned from works sold is
then paid monthly to the MCPS-PRS alliance. The cost to obtain the license
includes a £500 (equal to approximately $1,010 based on a foreign exchange rate
on July 10, 2007 of $2.02:£1.00) set-up fee, a £200 (equal to approximately $404
based on a foreign exchange rate on July 10, 2007 of $2.02:£1.00) per quarter
ongoing license fee and a 8.5% revenue sharing fee. Given this expense, we have
determined to pursue this license at such time as we sign up a client that would
require that we obtain the license to sell copyrighted media through our
networks.
In order to satisfy other UK government regulations, we have
acquired an Entrust Secure Certificate, which ensures the security of the
interface to users wishing to purchase content. In addition, we have acquired a
Data Protection Certificate, which ensures the data that we capture from a user
will not be passed to any third party that might cause damaging effects to that
user.
Although our goal is to eventually launch our services in other
countries, we do not have any current plans to expand beyond the UK. If we
expand our services into other countries, we will have to analyze the government
regulations that will apply to the operation of our business in these new
markets. As we presently have no immediate plans to expand beyond the UK market,
we have not yet ascertained what these government regulations will be and their
impact on our cost of doing business in any new markets.
Competition
The legal music download industry in which we operate only
really took off in March 2004 with the launch of iTunes by Apple Inc. In the
time since then, a large number of competitors have moved into this young
marketplace, bringing new elements and innovations. In the last two years, the
industry has become very vast, with many different offerings and products
available.
Although we would like to eventually launch our services in
other countries, our current focus is to market to artists and small- to
medium-sized record labels in the UK. Our PlayBOX software and services focus on
this niche in the music download marketplace, where there are still few
competitors. At this stage we can break our competition down into Digital Music
Services and Digital Download Service Providers. In the future, however, as the
music industry takes more control of the online digital distribution of its
content, the record labels/publishers, offline content distributors and well
established
-15-
artists/musicians likely will be looking at directly
controlling the online download market with their own services.
The following is a breakdown of the main competitive elements
that exist at this present moment:
Digital Music Services
A digital music service sells licensed music content to
consumers online via a website or music application. For a music service to
function, it needs to obtain access to as much content as possible, offering its
consumers as much choice as possible. There are a number of models of services,
each one aimed at creating the optimum user experience.
There are now a large number of these services worldwide and
they all have unique elements that attract consumers. Apple Inc. is the present
market leaderit has a market share of over 60% with its combined iTunes and
iPod offerings. iTunes was one of the first legal digital music services and
offers an end-to-end service for the consumer. Apple offers a free downloadable
music application/library that allows users to manage and listen to music on
their computer. From this application, the user can access the Internet and the
iTunes music service, where they can sample and purchase music. This music is
offered on an à-la carte/pay-as-you-go basis. This means a user can purchase one
track at a time or a whole album. The opposite service to this is the
subscription based service, such as Napster or Rhapsody, where a subscribed user
has access to a set number of tracks for a monthly fee.
The following table shows the business models of the major
competing digital music service providers:
Service
|
Core Offer
|
Payment Method
|
Unique Offering
|
iTunes
|
à-la-carte downloads
|
pay per song, music
allowance accounts, gift
certificates sold at
iTunes and Apple
Stores
|
audiobooks, share music samples
via email, exclusive tracks and on-
demand videos, customised
playlists, transfer to portable
player (iPod)
|
Napster 2.0
|
track streaming,
customised
streaming,
à-la-carte downloads
|
monthly subscription for
Napster Premium, pay
per song, Napster Card
sold at over
14,000
retailers
|
playlist recommendations and
sharing, exclusive material (on-
demand videos, free online music
magazine, exclusive tacks, in-
studio performances), transfer to
portable player
|
Rhapsody
|
track streaming,
customised
streaming
|
monthly subscription,
with
additional charge
for CD burning
|
access music from any PC
|
MusicMatch
|
track streaming,
customised
streaming,
à-la-carte downloads
|
one-off fee for
MusicMatch
Jukebox
Plus, pay per song
thereafter
|
transfer to portable players,
personalise CD package, new
music recommendations based on
customer playlist
|
OD2
(branded by
HMV, Fnac,
MSN, etc.)
|
track streaming, à-la-
carte
downloads
|
pre-payment credits
(activities
such as
downloads and streams
have different credit
value),
pay per song,
subscription
|
discounts for products paid with
credits, transfer to portable player,
news and special features
with
artists
|
-16-
The way we differ from iTunes and the other major digital music
services (other than OD2) is that we offer the services needed to distribute
music content online directly to artists and record labels. OD2 does provide
major companies and record labels with the ability to distribute content
directly, but this service (and its higher pricing structure as compared to
ours) is focused on large, well-financed clients that are not our target
clientele.
Through our service, record labels or artists have the ability
to distribute music online just like iTunes, with their own service, directly
from their website, at a price point that we believe is attractive and
affordable to individual artists and small- to medium-sized record companies.
Our business model allows artists and record labels to sell their music at
whatever price they wish on an à-la-carte (pay-as-you-go) basis.
Apple iTunes, Napster and the other digital music service
providers are much larger and well-established than we are and have
significantly more resources than we do. Although they do not currently provide
distribution services directly to artists and record labels like we do (other
than OD2, which focuses on major record companies and labels), there can be no
assurance that they will not enter this market (or in the case of OD2, expand
their market to include individual artists and small- to medium-sized record
companies). It would be difficult for us to compete with such well-established,
well-financed companies.
Digital Download Service Providers (DSP)
Our future goal is to be a digital download service provider by
establishing our own online service to attract Internet users to our brand and
our clients services. A digital download service provider offers the relevant
services that allow a music company to start selling music downloads from their
own personalised web shop. Some of the services offered include:
|
1.
|
Design and development
|
|
|
|
|
2.
|
ePayment
|
|
|
|
|
3.
|
Hosting
|
|
|
|
|
4.
|
Streaming bandwidth
|
|
|
|
|
5.
|
Tracking and reporting on the service
|
|
|
|
|
6.
|
Extra content to sell
|
|
|
|
|
7.
|
Music Download Chart Listing
|
In addition to these services, some digital download providers
compile services through strategic partnerships with specialist service
providers and then offer music companies an entire array of services that allow
them to start trading music and other content online.
Market Leaders
There are a number of large competitors currently operating in
this industry that provide digital music services, including:
|
1.
|
RealNetworks (www.realnetworks.com)
|
|
|
|
|
2.
|
Apple Inc. (www.apple.com/itunes)
|
|
|
|
|
3.
|
Microsoft (www.microsoft.com)
|
|
|
|
|
4.
|
Sony Online Entertainment (www.sonyconnect.com)
|
|
|
|
|
5.
|
Napster (www.napster.com)
|
-17-
|
6.
|
OD2/Loudeye (www.ondemanddistribution.com)
|
Apple is the frontrunner in this industry with almost 60%
market share, driven mainly by their digital rights management software
(Fairplay) and their iPod digital music device. Because iPod users must use
Apples download platform iTunes to load music onto their iPod, Apple has
essentially secured its own marketplace. OD2, which is the company behind
MyCokeMusic, is the top supplier of white label music platforms across Europe.
Its client base is music retailers, major brands that want to enhance their
brand value by providing a music service, and Internet service provides, mobile
phone companies and existing media providers that want to expand beyond the
services they offer.
Apple, OD2 and the other DSPs listed above have aimed their
services predominantly at large record labels and music publishers. There is
always the risk that they might tailor their services towards our niche target
market of artists and small- to medium-sized record labels. These companies have
financial and other resources far in excess of ours, and it would be difficult
for us to compete with them if they were to enter our niche market.
Our strategy is to differentiate ourselves from Apple, OD2 and
other DSPs by targeting the niche market consisting of unsigned artists and
small- to medium-sized record labels, and by offering them a complete solution
to marketing their music catalogues online. We are not the first company to
target this niche market, but we believe we are the first to offer artists the
option of selling their music directly from their own website.
Our Most Direct Competitors
We believe the following companies, which are headquartered in
the UK, currently form PlayBOXs most direct competition with respect to our
target markets:
1.
|
7 Digital Ltd. (www.7digital.com)
|
|
|
2.
|
MPP Global Ltd. (www.mppglobal.com)
|
|
|
3.
|
DA Recordings Ltd.
(www.emusu.com)
|
These three companies, like us, are fairly new, having launched
their services within the past two years. As such, none of them have
significantly more experience than we do.
Both 7 Digital and MPP Global offer services that use very
similar models to PlayBOXsthat is, they provide a hosted solution running all
client services. 7 Digital is a larger company than PlayBOX and focuses on more
established artists and record labels as well as broadcast and retail companies
in the UK, the United States and several other countries. 7 Digitals products
are more expensive than ours, a vital concern for independent acts and labels.
In addition, we believe that 7 Digital does not offer the level of bespoke or
customizable solutions or promotional services that we do.
MPP Global is also a larger company than we are and, like 7
Digital, targets more established artists and record labels as well as broadcast
and retail companies in the UK, the United States, the EU and other parts of the
world. MPP Global offers its clients the ability to sell individual music or
video downloads or subscriptions to music or video content; however, MPP
Globals set-up and monthly fees for these services are currently significantly
higher than ours.
DA Recordings offers a service called emusu.com (this service
was formerly known as Music Control). Like us, DA Recordings is a small company
specifically focused on providing services similar to our services to unsigned
artists and record labels in the UK. However, based on our understanding of DA
Recordings current business model and pricing, we believe that we provide more
features and a higher level of promotional support at a competitive
price-point.
-18-
Employees
As of December 31, 2007, we have two full-time employees,
namely Mr. Robert Burden and Mr. Harry C. Maloney, our directors and executive
officers.
Research And Development Expenditures
We have spent the following amounts on research and development
activities, which activities have been comprised of product and corporate
development:
|
Fiscal Year
ended
September 30,
2007
|
Fiscal Year
ended
September 30,
2006
|
Cumulative From
Incorporation
(August 21,
2003) to September 30,
2007
|
Amount of Research and
Development Expenditures
|
$Nil
|
$1,081
|
$29,152
|
Subsidiaries
We have one wholly-owned subsidiary, namely PlayBOX UK.