Table of Contents

I. Mission Statement II. Executive Summary III. The Business • Strengths and weaknesses • Legal Structure • Business Description • Organizational Structure • Service Description • Objectives • Keys To Success • Company Summary • Company Ownership • Location • Management and Personnel • Litigation • Risk Factors IV. The Marketing • Markets (Segmentation) • Overall potential market • Competition • Distribution and Sales • Marketing Strategy • Overall Industry Analysis • Market Analysis • Strategic Alliances • Technology • Future Products/Services • Industry and Market Trends • Sales (Strategy) V. The Financials • Uses of Funds • Income Statement • Cash Flow Statement • Balance Sheet • Income Projection • Break-Even Analysis VI. The Supporting Documents

Mission Statement:
Globally equalize the entertainment playing field by giving every individual an unbiased opportunity at accessing the right doors and taking control of their destiny.

Executive Summary:
MusXtreme LLC is an Internet company that embodies one of the four main facets of the entertainment industry, music. Musxtreme.com connects musical talent to the industry professionals that make everything happen, and the fans that make all of this possible by utilizing the power of compounding connections and sharing information (social network).

The Business Strengths and Weaknesses
Musxtreme.com is the combination of a social networking website and digital distribution platform that caters solely to the music industry. It allows users to maximize their exposure by creating a personalized “e-identity”, giving them equal access to established professionals in the business and their fans around the world, registered to the site. This is a forum for musicians to solicit their talents to the world and for industry professionals to seek and locate talent; Musxtreme.com serves as an interface for making that possible. Artists, musicians, producers, talent scouts, and music lovers, may post their works or interests online and solicit or simply create a new presence for themselves.

Although Musxtreme.com caters to the music industry, there are other sites in existence that incorporate some relating features (ex. Myspace Music). Using this as an example, Musxtreme.com will be preferred because of the distinctive features offered. For example, a solely independent artist will have access to worldwide distribution of their work without having to be signed to a major record label or distribution company. The artist will get the majority (91%) of their album revenue as opposed to the traditional “pennies on the dollar”.

Legal Structure:
Musxtreme LLC is an Internet based start-up business founded January 1, 2010 in Cerritos, CA by Timothy Hampton and Patrick Hodgson.

The choice of corporate entity is structured as a Limited Liability Company (LLC). A Limited Liability Company offers the maximum value in entity because of the initial small business benefits that it provides. A LLC is the best choice when dealing with start-up companies because this structure is cost effective and uncomplicated to set up while, still having the capability to support multiple classes of stock if needed. If and when the time comes to “convert” the LLC to a C-Corporation, the process is very simple. Whatever costs are incurred in the “conversion” process are offset by the upside received during the time that the company can benefit from being an LLC. Since the website will generate immediate revenue upon start-up, massive amounts of venture capital will not be required within infant stages.

An LLC offers the same full protection from seizure of personal assets that a C-Corp or S-Corp offers. Company procedures and documents are not required to be disclosed to the public and another great advantage is that a LLC is not taxed as an entity; hence, there is no double taxation occurring whereas a C-Corporation would be. One disadvantage is that a LLC does not really allow for shareholders. There are restrictions on who can invest in an LLC. For this reason, Musxtreme.com.com, LLC will be converted to the more appropriate business structure if and when the demand for venture capital is evident.

Business Description
Musxtreme.com is a digital distribution and social networking platform available to the public that solicits user’s works. Users have the option of creating a basic member account or upgrading to a sellers account tailored their personal needs. The goal of Musxtreme.com is to create a fully automated online system where simplicity and ease of use is key. A Social Networking Website focuses on the building and verifying of online social networks for communities of people who share common interests and activities (music), or who are interested in exploring the interests and activities of others. Musxtreme.com necessitates the use of provided software to make this possible. We focus on the neglected target market of independent musicians who aspire to solicit their musical talents.

• 4 main principles: 1) Members will be paid bi-monthly for their sales. 2) Members will have the name and email address of everyone who purchases his or her works. 3) Members will always be allowed to sell their works, regardless of how many copies they sell or if signed by a major label (They must have originally started with Musxtreme.com PRIOR to signing a major label or distribution deal). 4) Indie will remain dominant, disallowing commercial artists to join.

The major profitability of Musxtreme.com will be through the following areas: 1) Advertising (Banner Ads) 2) Paid Membership [Sellers Account (Monthly Fee)] 3) Sale of artist’s works (Processing Fee % per Download) 4) Sponsored groups

• Market share: (Market Share = net revenues/net revenues of the industry)

The third party meeting systems is the traditional way that connections take place. With Musxtreme.com, that will no longer be the only method for connecting with the right people! Musxtreme.com removes that third party and allows the user to have direct contact with other professionals, fans, and entertainers. Musxtreme.com is democratizing the entertainment industry and will be the pivotal platform that will revolutionize the way the world communicates with the music industry. Any entertainer or professional, from the most renown record producer to the newest Indie singer will have to opportunity to expose their music globally. Worldwide access to distribution and solicitation of original works from everyday individuals will be a defining advantage against competitors. Musxtreme.com fills the void that prevents our target market from being able to sell, promote, and network simultaneously. Musxtreme.com will start by putting emphasis on the music industry, while creating basic extensions to other areas of the entertainment industry. Soon thereafter expansion into all entertainment related fields will be incorporated (fashion, film, & television).

Organizational Structure
The following are the different departments that make up the Musxtreme.com organizational structure:

• Sales • Research and development • Information technology • Marketing • Customer service • Finances and accounting • Purchasing • Human resources • Facilities

Musxtreme.com operations are small in nature, as this is a start-up company and the number of employees is limited.

Service Description:
Musxtreme.com is primarily web based and provides a collection of various ways for users to interact, such as chat, messaging, email, video, audio streaming, file sharing, blogging, discussion groups, and so on. All of these basic services are free to users, but service upgrades and unique additional features are available for a small fee.

Objectives • To become a major focal point in the music industry by becoming a key vehicle for exchanging information. • Become the primary choice in the minds of consumers for independent digital distribution.

Keys To Success • Continuously staying connected with our primary and secondary markets by understanding what they desire.

• Remain on the forefront of new technology for social networking and digital distribution platforms.

Company Summary:
Musxtreme.com connects people at little or no cost; this is beneficial for new talent, professionals, and music lovers looking to expand their contact base. Musxtreme.com acts as a customer relationship management tool for individuals or companies selling their services (i.e. Talent/Professionals). Since the entertainment industry operates globally, Musxtreme.com can make it easier to keep in touch with contacts around the world and provide a global platform to sale their works. Musxtreme.com allows users to create a profile correlated to their attributes. Users can customize their own profile and can be connected with other users by determining whom to allow into their personal extended network. However, the purchase of any digital download does not require prior authorization from the selling party.

Musxtreme.com has absorbed the traditional face-to-face referral networking practices of the entertainment industry and taken it online. People from all across the globe can come together and share talents, ideas, clients, and referrals in a mutually beneficial manner. We allow users to network with one another online, without ever having to meet someone face-to-face.

Currently, very few social networks charge money for membership. In part, this may be because social networking is a relatively new service, and the value of using them has not been firmly established in customers’ minds. One of the main reasons why social networks generate the revenue that they do is because of the deeper information that the sites have on each user. This allows much better targeted advertising than any other site can currently provide; hence, increased revenue from advertisers.

Company Ownership • Timothy Hampton (Founder & CEO) • Patrick Hodgson(Co-Founder & CEO) • MusXtreme, LLC. Owns and operates Musxtreme.com

Location:

MusXtreme, LLC.
18620 Palo Verde Avenue
Suite A.
Cerritos, Ca 90703

Management and Personnel:

Timothy Hampton Credentials/Education: • California State University, Long Beach -Bachelors in Business Administration; Emphasis in Marketing • Capitol Records (Sales) • 100.3 The BEAT FM/ Radio One (DJ, Producer, Promotions) • Disk Jockey (Eight Years)

Pat Dean Credentials/Education • California State University, Long Beach - Bachelors of Arts in Journalism

• UCLA Extension -Certificate in Marketing (in progress)

• Fours years experience in Public Relations

Clovis Clark Credentials/Education: • 12+ years of experience in design and building web sites • Certified in 15 different web based programming languages and development platforms. • Computer Languages: PHP, MySQL, ADO, ASP, CSS2, HTML, JavaScript, Jet SQL, VBScript, WML, WMLScript, WSH, XHTML, XML DOM, XSLT. • Completion of the Microsoft MCSE certification program.

Litigation:
The company is not currently engaged in or threatened with any litigation or other legal proceedings.

Risk Factors

The Marketing Markets (Segmentation)

• Age Range: 18-24 (Initial Target Market), 25-34 (Secondary Target Market), 35-54 (Tertiary Target Market)

• Gender: Male (Primary) & Female (Secondary) • Race: Caucasian, African-American, Asian, Hispanic • Initial Geographic Area of focus but not limited to: Los Angeles. • Educational Level: HS, Some College • Occupations: Part-time job w/ an interest in music. • Internet Surfing Habits: 20-60mins per day. (Social Network Usage-FaceBook, Twitter, MySpace) • Buying and Spending Habits: 34 yrs –Younger ($599 < per/yr spent online) 35 yrs ($600> Per/yr spent online)

VALS Segments: Primary Market: Experiencers (12% of the pop.) • Buy on impulse • Like the new, offbeat, and risky • Like socializing • Concerned about image • Unconforming, but admire wealth, power, and fame • Spend much of disposable income on socializing • Extroverted • Unconventional • Enthusiastic and impulsive • Follow fashion and fads • Attend to advertising • Listens to music Secondary Market: Strivers (13% of the pop.) ▪ Look to peer group for motivation and approval ▪ Dissatisfied ▪ Impulsive ▪ Approval seeking ▪ Image conscious ▪ Limited discretionary income, but carry credit balances ▪ Spend on clothing and personal gratification products ▪ Prefer Digital Entertainment to reading

Overall potential market: • Primary: Aspiring individuals who believe they have what it takes to take it to the next level (Independent Artists) • Secondary: Supporting Fans. • Tertiary: Professionals searching for the next star (Talent Scouts).

Competition: 1. Soundclick.com 2. TuneCore.com 3. CDBaby.com
The company’s main competition mentioned above have some of the same basic features in a social network: Myspace.com (Myspace Music) and Talenthub.net. Myspace.com has worldwide brand recognition. Talenthub.net is the only other social network where it specifically appeals to the entertainment industry only, but member registration is extremely low at ≈ 3,000. Use of Talenthub.net is extremely difficult while Myspace.com does not solely focus on the music industry. Musxtreme.com caters to the music artist, focuses on ease of use, and allows members the opportunity to generate revenue.

Other competitors include the variety of other social networks out there that have only partial reference to independent music networking & sales. iTunes music and Soundclick.com are predominantly on the sales side of the spectrum. iTunes music is limited to mainstream music, which disallows the average musician from creating a presence for themselves. Soundclick.com has very little brand name awareness and does not incorporate establishing a strong network of contacts. At Musxtreme.com our niche is satisfying the void in the distribution of independent music and breaking down the political walls in the music business in terms of generating an immediate personal income. We offer distinctive features and luxuries that the majority of sites simply do not have.

While many of these competitors are nationally recognized brands, Musxtreme.com believes it can attract a massive following by demonstrating ease of use to the user, instilling higher user value, illustrating to the user, the possible lucrativeness of being a member to Musxtreme.com, and show the limitless possibilities of increasing their extended network of “friends, fans, etc.”.

Distribution and Sales
Basic membership is free. Service upgrades and unique additional features will incur a service charge of $11.95/mo for a sellers account. Musxtreme.com retains a 9% processing fee, paying 100% of the profit directly to the artist for each audio download.

User Sales: • Sale of Audio works (MP3s) ($11.95/mo) • Sale of Written Compositions • Posting in the classifieds. (This will cater to professionals and others looking to seek talent for work)

Non-User Sales (Advertising): • Website advertisement • Banner Ads • Sponsored Groups (Record Labels, Entertainment groups, & Individuals) • Pay-Per-Click Links • E-mail publishing (A section in the opt-in newsletter)

Marketing (Strategy) 1) Viral Marketing Strategies (Rapid multiplication of website views) 2) Public Relations (Press Release/Qtr) 3) Search Engine Optimization (Increasing search rankings) 4) Networking (at talent shows & major events in the music industry) 5) Site Linking Strategies (Link Exchange Program) 6) E-mail publishing [Newsletter Blast (Opt-In List)] 7) Traditional media (All Company Documentation) • Paid Advertising (Bench Ads, Radio Promo, Billboards, Taxi Ads, Bus Ads, Magazine Ads, Flyers, Posters) • Banner Ads • Sponsorships • Pay-Per-Click Links • Paid Ads in Targeted E-mail Newsletters

Overall Industry Analysis

Digital Single Sales in the World in 2005

Rank Country Digital Sales Share in 2005

1 USA 85.0%
2 EU (European Union) 13.2%
3 UK 6.3%
4 Germany 5.0%
5 France 1.9%
6 Japan 1.7%
7 Australia 0.48% ≈100.0%

Market Analysis
Nielsen SoundScan reported that the big four accounted for 81.87% of the US music market in 2005, while independent labels obtained 18.13% in the US and 28.4% globally.
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Strategic Alliances

• Local Entertainment Companies that produce Talent Showcases (Go Productions) • University Talent Shows (UC, CSU, JC) • Local Radio Stations (Power 106 & KIIS FM, Indie 103.1)

Technology

Logo: [pic]

Website Layout:

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Future Products/Services: • Classifieds Section • Ring Tones • Text Messaging Voting System (Songs/ Videos) • Sale of Video works ($9.95/mo + 19%/sale) • Mp3 Downloading via mobile devices • Ticket sales to events (Events Section) • Musxtreme.com available in multiple languages • Voice Communication (Voice Messaging)

Industry and Market Trends
According to ComScore Networks, an Internet statistics company, the mainstream demographic of social network usage is 35-64 years of age. The shift in demographics from a relatively younger user base reflects the "mainstream effect". As a site gets better known to a broader group of people, there will be a greater diversity of age groups visiting. These facts are pertinent to MySpace.com whose media attention appeals to the younger age range and even Facebook.com who originally started out for college students only and is now open to everyone.

Sales (Strategy)

The Financials Uses of Funds 1) Domain Name Registration ($10/yr.) 2) Create LLC. ($300-$750) 3) Logo ($100) 4) Copyrights (Company, Slogan) 5) Trademark ($400) 6) Graphic Designer ($30/hr) 7) Website Designer ($0????) 8) Hosting service/ ISP ($10/mo.) (Varies depending on space/Bandwidth) 9) Merchant account (PayPal Per Transaction Fee)

$5.95 USD/mo. = 5.95 USD (1 USD = 1.00000 USD) - 0.00 USD (2.5% Currency Conversion Fee) - 0.17 USD (2.9% PayPal transaction fee) - 0.30 USD (Pay Pal fixed fee) = 0.47 USD (Total Pay Pal Fees) = 5.48 USD/mo. (Profit)

$0.99 USD/download = 0.99 USD (1 USD = 1.00000 USD) - 0.00 USD (2.5% Currency Conversion Fee) - 0.03 USD (2.9% Pay Pal transaction fee) - 0.30 USD (Pay Pal fixed fee) = 0.33 USD (Pay Pal Fees) = 0.66 USD/download (Profit)

10) Business Account (Wells Fargo-$5,000)